/>iLate last week in Natera, Inc. v. NeoGenomics Laboratories, Inc. (24-1324), the Federal Circuit affirmed a preliminary injunction ruling from the lower court that mostly prohibits NeoGenomics from selling its oncology test marketed as RaDaR®. In doing so, the appellate panel confirms that the district court need not conduct claim construction at the preliminary injunction stage and also reiterates an accused infringer’s burden when arguing invalidity to challenge a patent owner’s likelihood of success on the merits of its infringement claim(s).
Background
Last summer, Natera sued competitor NeoGenomics in the Middle District of North Carolina for infringement of U.S. Patent Nos. 11,519,035 and 11,530,454. This came just a few short months after NeoGenomics announced its commercial offering of RaDaR, marketed as a liquid biopsy test to assess the efficacy of cancer treatment and the risk of cancer recurrence through detection of trace amounts of circulating tumor DNA (ctDNA) within the bloodstream (also referred to as molecular/minimal residual disease (MRD)). Natera’s test — marketed as Signatera™ — is also a ctDNA test for treatment monitoring and molecular/minimal residual disease (MRD) assessment in patients previously diagnosed with cancer. Both tests are tumor-informed, i.e., designed from a patient’s genetic information based on a tissue biopsy of the patient’s tumor.
Natera also moved for a preliminary injunction.
Lower Court Decision
In granting the preliminary injunction motion, the district court evaluated (1) Natera’s likelihood of success on the merits of its infringement claim with respect to the ʼ035 patent; (2) the likelihood of irreparable injury to Natera without the injunction; (3) the balance of equities; and (4) the public interest.
With respect to the first factor, while NeoGenomics presented both non-infringement and invalidity defenses, the district court found Natera likely to succeed in proving infringement of the ʼ035 patent and NeoGenomics to have failed to raise a substantial question of invalidity. The district court did not opine on the likelihood of success of Natera’s ’454 patent infringement claim. The injunction ordered NeoGenomics to stop making, using, selling, or offering for sale its RaDaR assay, as well as promoting, advertising, marketing, servicing, distributing, or supplying the RaDaR assay.
NeoGenomics appealed and challenged the district court’s analysis with respect to each of the four factors.
Appellate Reversal
The appellate panel reviewed the grant of preliminary injunction for abuse of discretion. Cutting to the chase, it found none.
More specifically, with respect to the first factor — the likelihood of success of Natera’s infringement claims — NeoGenomics took the position that the district court failed to resolve a key dispute on claim construction. However, the appellate panel found no legal error in the district court conducting its infringement analysis without explicit claim construction. Not only does the court have no obligation to construe claims at the preliminary injunction stage, neither party presented a claim construction dispute to the court. In fact, NeoGenomics did not raise the claim construction dispute until its motion to stay the preliminary injunction pending appeal. Moreover, with respect to NeoGenomics’ argument that to infringe the PCR process in its RaDaR assay must satisfy two steps of the method claimed in the ʼ035 patent (which was purportedly contrary to prior precedent), the panel found no error in the lower court’s claim scope applied in its likelihood of infringement analysis.
In addition, the panel discerned no clear error by the lower court in finding that NeoGenomics failed to raise a substantial question of patent validity. In particular, the Federal Circuit clarified that, while an accused infringer “‘need not make out a case of actual invalidity’ to avoid a preliminary injunction but need only show a substantial question of invalidity,” there is no lower “mere vulnerability” to the invalidity standard as NeoGenomics argued. The panel was also critical of NeoGenomics’ obviousness arguments and found that Natera’s considerable evidence of obstacles preventing a skilled artisan from properly amplifying and sequencing cfDNA to arrive at the claimed invention to be effectively overcome by NeoGenomics’ “conclusory arguments without meaningful supporting documentation.”
The panel was also not swayed by NeoGenomics’ challenges to the district court’s findings on irreparable harm. NeoGenomics had argued that the district court’s finding was based on a misinterpretation of the Federal Circuit’s holding in Presidio Components v. American Technical Ceramics to impose an unconditional rule that direct competition with an alleged infringer creates irreparable harm. The panel disagreed that the lower court imposed any such categorical rule, and noted that the lower court also found other supporting factors such as Natera’s unwillingness to license its patent, potential for lost partnerships, and difficulties faced by patients switching between the two tests. NeoGenomics had also argued that the causal nexus for the alleged harm was tied to the tumor-informed nature of the assay, which was not claimed in the asserted Natera patents. However, the appellate panel ruled that there was sufficient evidence to show that the tumor-informed nature of RaDaR assay could not be achieved without practicing the claims of the ʼ035 patent such that there was a sufficient nexus to establish irreparable harm.
With respect to the public interest factor, the Federal Circuit was not persuaded by NeoGenomics’ argument that no test (including Signatera) can adequately replace the high sensitivity of RaDaR to meet patients’ needs, especially given that both RaDaR and Signatera are approved for the same cancer indications. In addition, the panel found that the injunction order was sufficiently tailored to prevent any harm to cancer patients. More specifically, the injunction carved out exceptions for patients already using RaDaR and for certain finalized or in-process research projects, studies, and clinical trials. Thus, the Federal Circuit took no issue with the district court’s courts conclusion that the public interest factor weighs in favor of the preliminary injunction. In fact, it applauded the lower court in its structuring of the injunction to avoid public harm while at the same time largely prohibiting the use, manufacture, or sale of RaDaR for cancer remission.
Key Takeaways
First, while a district court has no obligation to construe claim terms in order to rule on a preliminary injunction motion, if there is a term that could be pivotal in the court’s determination of the first factor, the claim construction dispute should be raised early and often. For example, raising the claim construction dispute in the opposition brief before the district court, at the technology tutorial, and/or at the preliminary injunction hearing may help to establish that the district court abused its discretion if an appeal becomes necessary.
Second, although a defendant’s burden at the preliminary injunction stage is only to show a “substantial question” of invalidity, making a showing under that standard is likely more attainable with comprehensive invalidity arguments backed by meaningful supporting documentation.
Third, this is a compelling example of how patents can and do create barriers (temporary and/or permanent) to market entry and/or success for competitors. Thus far, Natera has been successful in wielding its IP to interfere with its competitors’ ability to market and sell rival products. Indeed, in addition to this preliminary injunction, Natera was also granted a permanent injunction against Invitae Corporation and its Personalized Cancer Monitoring (PCM) product at the end of 2023. Natera’s unwillingness to license (as noted by the lower court) and proven appetite to enforce its patents will likely allow Natera to dominate the diagnostic testing market in this specific area unless and until NeoGenomics or another competitor is able to adequately design around the patents and stay out of Natera’s crosshairs.
Fourth, it is not often that preliminary injunctions are granted in U.S. patent litigation. But, when one is, it packs quite a punch. Shortly after the lower court issued its ruling in late December, NeoGenomics shares (NEO) plunged 16.49%. In comparison, Natera’s stock is at an all-time high (up over 80% just in the last six months).
