10X Genomics, Inc. v. Vizgen, Inc.

681 F.Supp.3d 252

10X GENOMICS, INC. and President and Fellows of Harvard College, Plaintiffs, v. VIZGEN, INC., Defendant.

Case No. 22-595-MFK

United States District Court, D. Delaware

Signed July 10, 2023

Karen Jacobs, Cameron Paul Clark, Morris, Nichols, Arsht & Tunnell LLP, Wilmington, DE, Kiley White, Pro Hac Vice, Li Shen, Pro Hac Vice, Matthew D. Powers, Pro Hac Vice, Paul T. Ehrlich, Pro Hac Vice, Robert L. Gerrity, Pro Hac Vice, Redwood Shores, CA, Ronald J. Pabis, Pro Hac Vice, Washington, DC, Samantha A. Jameson, Pro Hac Vice, Durham, NC, Stefani C. Smith, Pro Hac Vice, for Plaintiff 10X Genomics, Inc.

Karen Jacobs, Cameron Paul Clark, Morris, Nichols, Arsht & Tunnell LLP, Wilmington, DE, Cortlan S. Hitch, Kenneth Laurence Dorsney, Morris James LLP, Wilmington, DE, Geoffrey M. Raux, Pro Hac Vice, Michael J. Tuteur, Pro Hac Vice, Ruben J. Rodrigues, Pro Hac Vice, Boston, MA, Sarah E. Reiger, Pro Hac Vice, for Plaintiff President and Fellows of Harvard College.

Pilar Gabrielle Kraman, James L. Higgins, Young, Conaway, Stargatt & Taylor LLP, Wilmington, DE, Adam B. Wolfson, Pro Hac Vice, Los Angeles, CA, Angus Chen, Ph.D, Pro Hac Vice, Catherine T. Mattes, Pro Hac Vice, New York, NY, David L. Bilsker, Pro Hac Vice, Sam Stake, Pro Hac Vice, San Francisco, CA, Kathleen Marini, Pro Hac Vice, Boston, MA, Kevin P.B. Johnson, Pro Hac Vice, Victoria F. Maroulis, Pro Hac Vice, Andrew Bramhall, Pro Hac Vice, Redwood Shores, CA, for Defendant.

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge:

10x Genomics, Inc. and the President and Fellows of Harvard College have sued Vizgen, Inc., a biotechnology company, for patent infringement. Vizgen has asserted several counterclaims, which 10x and Harvard separately moved to dismiss. On February 2, 2023, the Court dismissed Vizgen's breach of warranty and negligent misrepresentation counterclaims (counterclaims 2 and 3), but otherwise denied the motions. See 10x Genomics, Inc. v. Vizgen, Inc., No. 22-595-MFK, 654 F.Supp.3d 310 (D. Del. Feb. 2, 2023). In answering 10x and Harvard's second amended complaint, Vizgen asserted six new counterclaims (counterclaims 17-22). 10x and Harvard (collectively, 10x) have jointly moved to dismiss the additional counterclaims under Rule 12(b)(6) for failure to state a claim. For the reasons stated below, the Court denies the motion, except with respect to counterclaim 22, which the Court dismisses.

Background

The Court assumes familiarity with this case's factual and procedural background, which this Court discussed in its prior written opinion. See 10x Genomics, 654 F.Supp.3d 310. The following background is relevant to 10x and Harvard's current motion to dismiss Vizgen's amended counterclaims 17-22.

10x and Vizgen are both biotechnology research companies specializing in single-cell spatial transcriptomics (SST). Both companies developed SST products designed to conduct spatial analysis of single-cell gene expression information. Vizgen's product is called MERSCOPE, and 10x's product is called Xenium In Situ. Vizgen's MERSCOPE platform is based on its MERFISH technology, which was developed by Harvard professor Dr. Xiaowei Zhuang and her colleagues. 10x's Xenium stems from its acquisition of ReadCoor, Inc., and CartaNA, which each had nascent SST products. ReadCoor was founded by Dr. George Church, another Harvard professor studying SST.

A. The NIH grant agreement

In May 2009, Dr. Church and Harvard jointly applied for grant funding from the National Institutes of Health (NIH) under the "Centers of Excellence in Genomics Science" program for their proposed research center, the Center for Transcriptional Consequences of Human Genetic Variation (CTCHGV). Countercl. ¶ 22. The application sought $20 million in funding from April 1, 2010, through March 31, 2015. In the "Overview," the application explained that "[a]s a matter of principle, Professor Church strongly believes in open dissemination of knowledge and technology[ ] and is therefore committed to making CTCHGV innovations available to the larger research community: both directly through tools and methods for immediate use by individual researchers, and by technology transfer to industry, whereby companies incorporate the innovations into their products." Dkt. no. 138-2 at 117.

The application stated in its "Data and Materials Dissemination Plan" (DMDP) that "[i]n line with long-standing Church Lab commitments, we continue to champion concepts that we helped establish for the genome sequencing community that encourage rapid data deposition and technology transfer, such as 'Open Source Biology,' " the "goal" of which "is to prevent exclusive licenses from potentially interfering with technology transfer." Id. at 130. The application went on to state that "[i]n this regard," CTCHGV would "try to move our technology either into the public domain or non-exclusive licensing mechanisms well before they would be normally publishable." Id.

The "Commercialization" subsection of the DMDP stated that "[a]s described above, CTCHGV will pursue open and non-exclusive licensing agreements that encourage innovations to be made widely available to researchers and commercial entities." Id. at 131. The subsequent sentence explains that "Professor Church has been on the Harvard-wide Copyright and Patent Committee (CPC) for years, a recipient of numerous successful patents, and is in constant contact with the HMS Office of Technology Licensing (OTL)." Id. The application then lists Professor Church's "[c]urrent company Scientific Advisory roles" and "[p]ast [c]ompanies licensing Church lab patents or software." Id. In the following "Resource Sharing Plan" section, the application states that "[t]o broaden the availability to the research community of innovations developed by CTCHGV, the Church Lab will work with the Harvard Medical School Office of Technology Licensing to obtain open and non-exclusive licenses that will encourage commercialization of these innovations. Please refer to the DMDP for additional details." Id. at 133.

In September 2010, the NIH accepted Harvard's grant application and awarded $19 million dollars. NIH's "Notice of Award" states that "[t]his award is pursuant to the authority of 42 USC 241 42 CFR 52 and is subject to the requirements of this statute and regulation and of other referenced, incorporated or attached terms and conditions." Dkt. no. 138-3 at 1. The notice further states that "[a]cceptance of this award including the 'Terms and Conditions' is acknowledged by the grantee when funds are drawn down or otherwise obtained from the grant payment system." Id. In Section IV titled "HG Special Terms and Conditions," the notice states that "[c]ompliance with the data and materials sharing and release plans, described on pages 117-118 and 130-133 of the grant application is a condition of this award. Failure to comply with these plans may result in termination of the award." Id. at 4.

B. Harvard's licensing agreements

In 2016, after NIH had finished funding the project, ReadCoor and Harvard entered into an exclusive license agreement, which included the patents 10x now asserts in this suit. Vizgen alleges that 10x's asserted patents originate from patents that were developed by Dr. Church and Harvard under their NIH grant funding and that a statement to that effect appears in each asserted patent.

In 2019, Vizgen entered into a licensing agreement with Harvard for several other patent rights. Vizgen alleges that the agreement required it to commercialize its MERFISH technology. During negotiations, Vizgen shared its intended business plans at Harvard's request, and Harvard did not inform Vizgen that its plans would require patent rights that Harvard had already exclusively licensed to ReadCoor. Pursuant to their agreement, Vizgen provided Harvard updates on its progress commercializing MERSCOPE and publicly announced commercial launch plans in March 2021.

C. 10x and Harvard's "open early, closed late" scheme

Vizgen alleges that after 10x acquired ReadCoor in 2020, Harvard and 10x worked together to draft patent claims purporting to cover Vizgen's MERFISH technology and claiming earlier priority dates. Then, in 2022, 10x and Harvard initiated this suit against Vizgen for patent infringement. "While Harvard had initially promised the open dissemination of the ReadCoor intellectual property to the NIH[ ] and led Vizgen to believe the same leading up to the September 2019 Vizgen negotiations," Vizgen alleges that "[t]he filing of th[is] lawsuit confirms Harvard's reversal of its previous 'open' policy towards Vizgen." Countercl. ¶ 108. Vizgen describes this as 10x and Harvard's "open early, closed late" scheme to gain a monopoly in the SST market. Id. ¶¶ 121, 133.

Vizgen alleges that after "luring Vizgen in" during the "open early" part of the scheme to "cause[ ] Vizgen and others to commit to Harvard's alleged technology," Harvard then "closed" by claiming "that virtually all SST technology was covered by other patents . . . off limits to Vizgen and any other potential competitors." Id. ¶ 133. "Given the cutting-edge nature of the SST Market," only one other company, NanoString Technologies, Inc., has commercialized an SST product. Id. ¶ 116. NanoString's product is subject to a related infringement suit brought by 10x and Harvard. Vizgen alleges that the only remaining choices for "Vizgen and others" are to "pay extortionate fees to 10x" or "exit the SST market." Id. ¶ 133. Meanwhile, 10x "advertise[s] that it wants to create an 'end-to-end ecosystem' that will lock-in researchers to using 10x products." Id. ¶ 138. Vizgen alleges that these "lock-in effects ha[ve] been described by 10x executives as a 'critical component of [10x]'s business model.' " Id.

Discussion

To survive dismissal under Federal Rule of Civil Procedure 12(b)(6), a complaint need only "contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' "...