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`Document: 24 Page: 58
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`Filed: 10/18/2019
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`Appx292 78:58-62 (emphasis added). Which "reaction"? Again, the one
`
`in the preamble-which occurs in the microfluidic system.
`
`In a long line of cases, this Court has held that the same device(cid:173)
`
`using words like "the" or "said" to refer back to a preamble(cid:173)
`
`communicates the drafter's intention to treat the preamble as limiting.
`
`See Pacing Techs., LLC v. Garmin Int'l, Inc., 778 F.3d 1021, 1024 (Fed.
`
`Cir. 2015); Bicon, Inc. v. Straumann Co., 441 F.3d 945, 952-53 (Fed. Cir.
`
`2006); NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282, 1306 (Fed.
`
`Cir. 2005), abrogated on other grounds by Zoltek Corp. v. United States,
`
`672 F.3d 1309 (Fed. Cir. 2012) (en bane); Eaton Corp. v. Rockwell Int'l
`
`Corp., 323 F.3d 1332, 1339-40 (Fed. Cir. 2003).
`
`This Court did exactly that in the one case the district court
`
`discussed, Tom Tom, Inc. v. Adolph, 790 F.3d 1315 (Fed. Cir. 2015).
`
`When a claim's body used the phrase "said mobile unit" and "the mobile
`
`unit" to refer back to the "mobile unit" mentioned in the preamble, this
`
`Court held that meant the "mobile unit" in question must have the
`
`particular attributes recited in the preamble. Id. at 1323; see also Bell,
`
`55 F.3d at 621 (claim's use of "said packet" meant that the packet in
`
`question must have the particular attributes recited in the preamble);
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`46
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`10X Exhibit 1086, Page 58
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`Document: 24 Page: 58
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`Filed: 10/18/2019
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`Appx292 78:58-62 (emphasis added). Which "reaction"? Again, the one
`
`in the preamble-which occurs in the microfluidic system.
`
`In a long line of cases, this Court has held that the same device(cid:173)
`
`using words like "the" or "said" to refer back to a preamble(cid:173)
`
`communicates the drafter's intention to treat the preamble as limiting.
`
`See Pacing Techs., LLC v. Garmin Int'l, Inc., 778 F.3d 1021, 1024 (Fed.
`
`Cir. 2015); Bicon, Inc. v. Straumann Co., 441 F.3d 945, 952-53 (Fed. Cir.
`
`2006); NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282, 1306 (Fed.
`
`Cir. 2005), abrogated on other grounds by Zoltek Corp. v. United States,
`
`672 F.3d 1309 (Fed. Cir. 2012) (en bane); Eaton Corp. v. Rockwell Int'l
`
`Corp., 323 F.3d 1332, 1339-40 (Fed. Cir. 2003).
`
`This Court did exactly that in the one case the district court
`
`discussed, Tom Tom, Inc. v. Adolph, 790 F.3d 1315 (Fed. Cir. 2015).
`
`When a claim's body used the phrase "said mobile unit" and "the mobile
`
`unit" to refer back to the "mobile unit" mentioned in the preamble, this
`
`Court held that meant the "mobile unit" in question must have the
`
`particular attributes recited in the preamble. Id. at 1323; see also Bell,
`
`55 F.3d at 621 (claim's use of "said packet" meant that the packet in
`
`question must have the particular attributes recited in the preamble);
`
`46
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`10X Exhibit 1086, Page 58
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`Document: 24 Page: 59
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`Filed: 10/18/2019
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`Proveris Sci. Corp. v. Innovasystems, Inc., 739 F.3d 1367, 1373 (Fed.
`
`Cir. 2014) ("The phrase 'the image data' clearly derives antecedent basis
`
`from the 'image data' that is defined in greater detail in the preamble.").
`
`So too here, "the reaction" and "the microfluidic system" must be the
`
`ones the preamble describes, and therefore subject to the preamble's
`
`limitations.
`
`Second, the specification's focus on the location of the reactions
`
`reinforces the same conclusion. Beyond the titles, which are themselves
`
`revealing, the abstracts describe the "present invention" as "methods of
`
`conducting reactions within [microfabricated] substrates"-i.e., in
`
`microfluidic chips. Appx188 (emphasis added). The patents also
`
`consistently specify that the reaction occurs "in" the microfluidic
`
`system. See, e.g., Appx287-288 67:24-25, 67:60-62, 68:42-43.
`
`The specification is also revealing on another dimension: This
`
`Court has found it telling when a specification describes an "inventive
`
`concept" that is not achieved unless the device operates in the manner
`
`described only in the preamble. Proveris, 739 F.3d at 1373; Deere, 703
`
`F.3d at 1358. That is the case here-twice over. The specification notes
`
`two "advantage[s]" over the prior art: The invention enables the
`
`47
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`10X Exhibit 1086, Page 59
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`Filed: 10/18/2019
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`researcher to "obtain information involving complex reactions at several
`
`times, simultaneously, simply by observing the channels at different
`
`distances from the point of origin." Appx272 38:51-54 (emphasis
`
`added). Likewise, "[t]he reaction time can be monitored at various
`
`points along a channel-each point will correspond to a different
`
`reaction or mixing time." Appx272 38:55-57 (emphasis added). By
`
`definition, any reaction that is monitored in the channels is happening
`
`on the chip, which means the reaction is occurring in the microfluidic
`
`system. There is no way to achieve those inventive objectives unless the
`
`reaction occurs "in a microfluidic system," as the preamble specifies.
`
`The final guidepost, the prosecution history, supports the same
`
`conclusion. In the very office actions allowing these claims, the
`
`examiner amended the preambles to specify that the reactions are
`
`conducted "in plugs in a microfluidic system." Appx8625-8629;
`
`Appx8631-8635. The examiner also amended the titles of the patents to
`
`emphasize that the reactions occur "in plugs in a microfluidic system."
`
`Appx8626; Appx8632. It is telling that she considered the location of
`
`the reaction important enough to insert it prominently into the claims
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`and titles of the patents.
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`48
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`10X Exhibit 1086, Page 60
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`Filed: 10/18/2019
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`Putting all these guideposts together, the preambles limit the
`
`claimed reactions to ones that take place when the plugs are "in the
`
`microfluidic system." The preambles are "'necessary to give life,
`
`meaning, and vitality' to the claim[s]." Catalina Mktg., 289 F.3d at 808
`
`(citation omitted).
`
`The district court's rationale for reaching the opposite conclusion
`
`was neither consistent nor clear. On claim construction, lOx argued
`
`that the entire preamble (including "in a microfluidic system") is
`
`limiting; Bio-Rad argued that the preamble was not limiting at all.
`
`Appx7011-7016. The district court devised its own construction: "The
`
`entire preamble is not limiting," but it "is limiting only to the extent
`
`that it provides an antecedent basis." Appx8845-8846. The court later
`
`acknowledged being "puzzled" by its own construction. Appx29725.
`
`The court then issued a summary judgment ruling that was premised
`
`on the view that the preamble is limiting. Appx22262-22263. On the
`
`first day of trial, however, the court changed direction again.
`
`Appx29726.
`
`Ultimately, the court prohibited lOx from arguing that reactions
`
`must take place in the microfluidic system. Appx294 72-294 73. It
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`49
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`10X Exhibit 1086, Page 61
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`Filed: 10/18/2019
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`explained its reasoning for the first time when it denied lOx's request
`
`for post-trial relief. Appx29427-29428. The court correctly concluded
`
`"[t]hat 'reaction' and 'microfluidic system' provide antecedent basis for
`
`the use of those terms in the body of the claim," but then held that "the
`
`portion of the preamble that states 'conducting a reaction in plugs in a
`
`microfluidic system' is not limiting." Appx29428. The court's only
`
`explanation for the distinction was that "[n]othing in the body of the
`
`claims further limits the location of the reaction." Appx29426-29427.
`
`By that logic, no preamble would ever be limiting. The district
`
`court failed to address any of the guideposts this Court has prescribed.
`
`Thus, for example, the court discussed this Court's opinion in TomTom
`
`at length. But it overlooked the crucial point, discussed above (at 46),
`
`that TomTom actually found a portion of a preamble limiting because
`
`the body of the claim directed the reader back to the preamble with
`
`words like "the" and "such," just as these claims do.
`
`Instead, the only lesson the district court extracted from Tom Tom
`
`was that it is possible for one part of a preamble to be limiting even
`
`though another portion is not, when the two are "separate[]." 790 F.3d
`
`at 1323. There, the preamble contained two phrases that the parties
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`50
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`Filed: 10/18/2019
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`stipulated should be construed independently: "A method for [1]
`
`generating and updating data [2] for use in a destination tracking
`
`system of at least one mobile unit comprising .... " Id. at 1318, 1323
`
`(numbers added). This Court found the second phrase limiting (for the
`
`reasons discussed) even though the first phrase was not. Id. at 1323-24.
`
`But just because it is possible to give different effect to two "separate[]"
`
`phrases in a preamble does not mean that it's the norm. Id. at 1323.
`
`As important, TomTom does not authorize different treatment where,
`
`as here, the terms are not "separate." By its own account, the district
`
`court here carved up a single phrase as follows, giving limiting effect to
`
`the bolded terms but not to the italicized ones nested around them:
`
`"conducting a reaction in plugs in a microfluidic system."
`
`Appx29428. The district court's dissection of the preamble is not just
`
`"puzzl[ing]," Appx29725, but paradoxical.
`
`B. As a matter of law, lOx does not infringe under the
`correct construction of the claims.
`
`Because the district court's "incorrect claim construction ...
`
`remove[d] from the jury a basis on which the jury could reasonably have
`
`reached a different verdict, the verdict should not stand." Cardiac
`
`Pacemakers, Inc. v. St. Jude Med., Inc., 381 F.3d 1371, 1383 (Fed. Cir.
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`51
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`10X Exhibit 1086, Page 63
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`Case: 19-2255
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`Document: 24 Page: 64 Filed: 10/18/2019
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`2004). Bio-Rad is not entitled to another trial, because the evidence
`
`does not support an infringement verdict under the correct claim
`
`construction. See, e.g., Saffran v. Johnson & Johnson, 712 F.3d 549,
`
`563-64 (Fed. Cir. 2013) (entering judgment of non-infringement after
`
`reversing claim construction). Based on the undisputed evidence
`
`presented at trial, the biological/autocatalytic reactions occur in the
`
`thermal cycler, which is not part of lOx's microfluidic system. So as a
`
`matter of law, the claimed reactions do not occur "in a microfluidic
`
`system."
`
`There is no dispute that lOx's "proprietary barcoding reactions,"
`
`Appx15733-Landlord, PHASE, and GEM-RT--do not occur until
`
`after a researcher removes the droplets from the microchannel and
`
`places them in the thermal cycler. Appx29860; Appx30169-301 71; see
`
`Appx29579 ("I think every droplet system that I'm aware of ... moved to
`
`a thermal cycler to do their reactions.").
`
`Bio-Rad has no evidence that any other relevant reaction occurs
`
`before the droplets are placed in the thermal cycler. Bio-Rad pointed to
`
`the dissolution of the gel beads as a "biological" (but not "autocatalytic")
`
`reaction. Appx29848. But the evidence Bio-Rad relied on to prove that
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`52
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`the reaction occurred in lOx's controller did not reflect "lOx Genomics
`
`products in any way." Appx30376-30378; see Appx29926-29928. And,
`
`the dissolution of the polyacrylamide gel beads is not a biological
`
`reaction under the district court's construction. Appx8871; Appx29848;
`
`Appx30593; Appx30596-30597.
`
`The record is also clear that the thermal cycler is not part of the
`
`microfluidic system. Bio-Rad's expert Dr. Sia testified that lOx's
`
`"microfluidic system" consists of a "microfluidic chip," "reagents that are
`
`loaded into the chip," and the controller "that is used to run that
`
`microfluidic chip." Appx29812; see Appx29814 ("[T]his is their product.
`
`It's introducing reagents into the microfluidic chip putting the chip into
`
`an instrument and that instrument runs the chip. This is a microfluidic
`
`system."); Appx29818; Appx30523.
`
`Moreover, the thermal cycler is indisputably not a lOx product;
`
`they are "common" to "most labs," which purchase them separately from
`
`"a lot of different companies." Appx30170; see Appx30171-30172. The
`
`reactions therefore do not even occur in a lOx product, let alone within
`
`lOx's microfluidic system.
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`53
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`Filed: 10/18/2019
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`III. The Damages Award Should Be Vacated.
`
`The jury awarded Bio-Rad its full asserted damages of
`
`$23.9 million, representing a 15% royalty on worldwide sales of all
`
`instruments, chips, and reagents. Appx29441. The award should be
`
`vacated, as based on evidence that was both inadmissible and
`
`insufficient.
`
`In the hypothetical negotiation, lOx would have negotiated with
`
`RainDance and the University of Chicago. Appx30605-30606.
`
`Normally, the analysis would begin with "[a]ctual licenses to the
`
`patented technology," which are generally the most "highly probative as
`
`to what constitutes a reasonable royalty for those patent rights."
`
`LaserDynamics, Inc. v. Quanta Comput., Inc., 694 F.3d 51, 79 (Fed. Cir.
`
`2012). In keeping with this norm, lOx's expert, Dr. Ryan Sullivan,
`
`relied on the University of Chicago's license of the asserted patents to
`
`RainDance. Appx30665-30666; Appx31864-31881; Appx32713-32729.
`
`That was an exclusive license for a royalty of 1 % on instruments and 3%
`
`on consumables (or less, with a royalty-stacking offset). Appx30667;
`
`Appx30672; Appx32717. It was one of 15 licenses with rates ranging
`
`from 0.25% to 3%. Appx16178-16194; Appx29161; Appx30609-30610.
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`54
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`Document: 24 Page: 67 Filed: 10/18/2019
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`Bio-Rad's damages expert, James Malackowski, swept away all 15
`
`licenses, including the license to the asserted patents, and focused
`
`exclusively on three outliers. Appx30066-30068. In his opinion,
`
`RainDance and Chicago would have demanded, and lOx would have
`
`paid, a 15% royalty on all of lOx's sales, Appx30062-30064-15 times
`
`what Chicago accepted on instruments and 5 times what it accepted on
`
`consumables in its negotiation with RainDance.
`
`lOx moved to exclude Mr. Malackowski's opinion as relying on
`
`non-comparable licenses and for failing to apportion damages.
`
`Appxl 7010-17016 (Daubert). At first, the district court rejected Mr.
`
`Malackowski's methodology for lack of apportionment. Appx22361-
`
`22362. Mr. Malackowski then submitted a new report, relying on the
`
`same inputs and reaching the same 15% outcome with little further
`
`analysis. Appx22390-22392. Mr. Malackowski still did not apportion,
`
`but merely asserted that the patents covered by the three cherry-picked
`
`licenses represented a similar value to the licensed products as the
`
`asserted patents do to lOx's products. Appx22392; see Appx22864-
`
`22880. Nonetheless, the district court admitted his testimony.
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`Appx25650-25653.
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`55
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`Document: 24 Page: 68
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`Filed: 10/18/2019
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`After the jury delivered its verdict, the district court held that one
`
`of Mr. Malackowski's three reference licenses was not comparable, yet
`
`upheld the verdict anyway. Appx29441-29446. The verdict should be
`
`vacated for that reason alone. It should also be vacated, whether on
`
`sufficiency or admissibility grounds, because: (A) the other two licenses
`
`were not comparable either; and (B) regardless, the award was not
`
`properly apportioned.
`
`A. Bio-Rad's expert relied on licenses that were not
`comparable to the hypothetical negotiation.
`
`Bio-Rad was permitted to rely on "[t]he rates paid by the licensee
`
`for the use of other patents comparable to the patent in suit," Georgia-
`
`Pac. Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y.
`
`1970), but it "had the burden to prove that the licenses were sufficiently
`
`comparable to support the ... damages award," Lucent Techs., Inc. v.
`
`Gateway, Inc., 580 F.3d 1301, 1329 (Fed. Cir. 2009).
`
`Instead of meeting that burden, Bio-Rad violated this Court's
`
`directions in two ways: First, it excluded the Chicago/RainDance
`
`license to the asserted patents in favor of three licenses that are not
`
`comparable (let alone more comparable than the license that included
`
`the asserted patents). See ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d
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`56
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`Case: 19-2255
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`Document: 24 Page: 69
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`Filed: 10/18/2019
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`860, 870-73 (Fed. Cir. 2010) (rejecting expert's reliance on insufficiently
`
`comparable licenses to the exclusion of the one agreement to the
`
`asserted patents). Second, Bio-Rad cited to only the highest-value
`
`licenses while excluding the many other licenses, which "served no
`
`purpose other than to increase the reasonable royalty rate above rates
`
`more clearly linked to the economic demand for the claimed technology."
`
`LaserDynamics, 694 F.3d at 80 (internal citations omitted) (error to
`
`permit testimony to non-comparable licenses "to the exclusion of the
`
`many licenses expressly for the" asserted patent).
`
`Mr. Malackowski's excuse for cherry-picking the outlier licenses
`
`was that patentees impose higher rates on "competitors," Appx30071-
`
`30076; see Appxl 7066, so any license between non-competitors
`
`(including the Chicago/RainDance license covering the patents-in-suit)
`
`was utterly irrelevant, Appx30064-30067. Never mind that the
`
`hypothetical licensors here-Chicago and RainDance-never actually
`
`competed with lOx. Appx29618; Appx30102-30103. And never mind
`
`that the licenses Mr. Malackowski chose-on different technologies in
`
`wildly different circumstances-do not come close to demonstrating a
`
`15% norm for competitors on this technology in this case.
`
`57
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`10X Exhibit 1086, Page 69
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`Case: 19-2255
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`Document: 24 Page: 70
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`Filed: 10/18/2019
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`Applera/Bio-Rad. The first license is simple: The district court
`
`held that Bio-Rad failed to show it was comparable. So the jury should
`
`never have heard it. Appx29443-29445. Bio-Rad acceded to this license
`
`from Applera with a 15% royalty on sales of PCR instruments as Bio(cid:173)
`
`Rad was on the verge of being held in contempt of an injunction.
`
`Appx29605-29606; Appx30613-30614; Appx32029-32065. The rate was
`
`so high because PCR is a Nobel Prize-winning invention that "launched
`
`the human genome project." Appx30578. As the district court
`
`explained, the license is not comparable because lOx's controller is not a
`
`PCR instrument and the asserted patents are not PCR patents.
`
`Appx29444-29445.
`
`On this basis alone, this Court should at least order a new trial.
`
`The admission of improper testimony is not harmless unless "it is
`
`highly probable that the error[] did not affect the outcome of the case."
`
`Hirst v. Inverness Hotel Corp., 544 F.3d 221, 228 (3d Cir. 2008). There
`
`can be no such confidence here, since this was one out of only three
`
`licenses adduced in support of the verdict, it is the only one that covers
`
`the sale of instruments, and it is the only license reflecting the single
`
`15% rate the jury adopted, as distinguished from a range.
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`58
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`Document: 24 Page: 71
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`Filed: 10/18/2019
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`AppliedBio/QuantaLife. In the second license, QuantaLife
`
`agreed to pay AppliedBio 10-15% for certain reagents also for PCR.
`
`Appx30152-30153; Appx30617-30619; Appx32568-32630. Those are two
`
`critical distinctions.
`
`First, the license does not require payments for instruments-or
`
`even chips. Appx30152-30153; Appx30616-30617. The reagents sold at
`
`around $2.00, yielding a royalty payment of 24 cents per unit.
`
`Appx30153; Appx30619. That 10-15% rate cannot be uncritically
`
`translated into a rate for instruments bearing price tags of $60,000 to
`
`$125,000, Appx30615, any more than a 15% royalty on a gallon of gas
`
`translates into the royalty rate on the price of the entire car.
`
`Mr. Malackowski made no adjustments for the difference-even though
`
`the most probative license in the record (the Chicago/RainDance
`
`license) applied different rates to instruments and consumables.
`
`Appx32717.
`
`Second, the PCR focus was as disqualifying here as the district
`
`court found it to be for Applera/Bio-Rad: This license covered a PCR
`
`enzyme that "transformed the field" and "enabled modern molecular
`
`biology." Appx30577-30578; see Appx29597; Appx29894-29895; supra 7.
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`59
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`Case: 19-2255
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`Document: 24 Page: 72
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`Filed: 10/18/2019
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`The district court reached a different result here based on the testimony
`
`of Bio-Rad's technical expert, Dr. Sia, that (1) the
`
`AppliedBio/QuantaLife license covered "reagents for doing ... PCR in
`
`the droplets," Appx29895; and (2) the Ismagilov patents also "deal with
`
`the subject [of] trying to do PCR and trying to do it better using the
`
`droplet technologies," Appx29894; see Appx29445-29446. That is like
`
`saying a license to the recipe for Coca-Cola is comparable to a license to
`
`an improved bottling machine, because Coca-Cola is something you can
`
`bottle.
`
`1 Ox was not bargaining for a license to PCR (or anything like the
`
`prized Coca-Cola recipe), because lOx's accused products do not conduct
`
`PCR in droplets. Appx30254. And the asserted patents do not claim
`
`"reagents for doing the PCR"; they mention PCR-an already well
`
`known reaction-as an example of a reaction that can hypothetically be
`
`performed in a droplet, but teach no advancements to PCR technology.
`
`Appx276 45:30-33.
`
`As with the Applera license, what one company would pay for PCR
`
`reagents that "enabled modern molecular biology," Appx30577, has no
`
`bearing on what lOx would pay for the asserted patents. As discussed
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`(at 20-22), the Ismagilov patents-mainly copied verbatim from another
`
`patent-do not improve PCR and were nothing close to transformative
`
`in microfluidics.
`
`Mr. Malackowski, for his part, addressed none of this. He found
`
`the license comparable merely because it was "between competitors,
`
`comparable technology, non-exclusive." Appx30080-30081. Such
`
`"'superficial testimony' and the simple recitation of royalty numbers"
`
`simply does "not support the jury's award when no analysis is offered."
`
`Whitserve, LLC v. Comput. Packages, Inc., 694 F.3d 10, 32 (Fed. Cir.
`
`2012).
`
`CaliperlllainDance. The third license was one Caliper granted
`
`to RainDance for a portfolio of 550+ patents. Appx29932-29933. This
`
`one, too, did not cover instruments, but only reagents and chips. The
`
`license had two rates: RainDance agreed to pay 2% for "non-screening"
`
`uses, which did not compete with Caliper, but 15% for "screening" uses
`
`that "directly and demonstrably impact sales of Caliper's products."
`
`Appx30076; Appx30620; Appx32631-32712. RainDance "never paid at a
`
`15% rate" because it never competed with Caliper. Appx30620. The
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`61
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`license was not comparable along several of the same dimensions as the
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`AppliedBio license-and more.
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`First, a license on consumables cannot be applied with no
`
`adjustments to a license on very expensive instruments. Supra 59.
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`Second, the technology was different. Caliper's technology
`
`involved some aspects of microfluidics, but "not droplets." Appx29892.
`
`The district court accepted Dr. Sia's opinion that the Caliper license
`
`was comparable because it "dealt with microfluidics and all sorts of
`
`ways to control fluids," which "is similar to ... the subject matter" of the
`
`asserted patents. Appx29892; see Appx29442-29443. But a license to a
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`portfolio of 550+ microfluidics patents is not "similar to" a license to
`
`three patents that largely share a specification and deal with discrete
`
`aspects of droplet generation and manipulation. Supra 20-22. Dr. Sia
`
`and Mr. Malackowski's testimony left the jury without the evidence
`
`needed to "adequately evaluat[e] the probative value of' the
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`Caliper/RainDance license. Lucent, 580 F.3d at 1328 (rejecting reliance
`
`on IBM's portfolio-wide "personal computer" license as applied to a
`
`hypothetical negotiation to a specific feature of computer program); see
`
`also LaserDynamics, 694 F.3d at 80 (rejecting a comparison between
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`62
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`DVD-related licensing programs and the patent-in-suit despite the
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`overlap in DVD focus, because "no evidence shows that [the licensing
`
`programs] even involve[d] a disc discrimination method.").
`
`Third, the 15% rate in that license was pure fiction. See Wordtech
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`Sys., Inc v. Integrated Networks Sols., Inc., 609 F.3d 1308, 1320 (Fed.
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`Cir. 2010). Mr. Malackowski seemed to think that RainDance's
`
`acceptance of a potential 15% competitor rate proved that any
`
`competitor would accept that same rate. Appx30079. But RainDance
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`never exceeded the 2% rate, because it never competed with Caliper.
`
`Appx30620-30621. Even Bio-Rad recognized that Caliper "hadn't
`
`thought about droplets or what RainDance wanted to do." Appx29591.
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`Indeed, when conducting due diligence on licenses needed for the
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`ddPCR product, Bio-Rad determined that "what Caliper is doing ... was
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`in no way competing with anything [Bio-Rad] planned to do with the
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`droplets." Appx29595.
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`If you run a profitable deli and lease out the adjacent storefront to
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`a drycleaner for "$500 if used as a drycleaner or $50,000 if used as a
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`deli," that may say something about your desire to prevent a competitor
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`from entering the market, but it says nothing about the actual market
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`rate for delis. So too here, a price that no one expected RainDance ever
`
`to pay cannot support an opinion that actual competitors would pay
`
`15% and therefore cannot support the jury's verdict. And, more
`
`importantly, it cannot support applying a prohibitively expensive rate(cid:173)
`
`which kicked in only if sales "directly and demonstrably impact" the
`
`licensor-to lOx, which never sold a product that competes with
`
`RainDance's products. Appx30102-30103; Appx30620.
`
`***
`
`Bio-Rad did no more than "alleg[ e] a loose or vague comparability
`
`between different technologies or licenses," which "does not suffice" to
`
`support the jury's verdict. LaserDynamics, 694 F.3d at 79. Telling the
`
`jury that three outlier rates-chosen over numerous others in the 0.25-
`
`3% range-reflect a universal 15% "competitor" rate does not "account
`
`for 'the technological and economic differences' between" the licenses
`
`and the hypothetical negotiation. Wordtech, 609 F.3d at 1320. Bio(cid:173)
`
`Rad's expert opinion therefore cannot support the jury's verdict. See id.;
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`Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1227 (Fed. Cir. 2014).
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`It was impermissible to let the jury fill in the gaps based on "speculative
`
`and unreliable evidence divorced from proof of economic harm linked to
`
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`the claimed invention." ResQNet.com, 594 F.3d at 868. For this reason
`
`alone, the damages award should be vacated.
`
`B. Bio-Rad's expert did not apportion damages to the
`value of the patented technology.
`
`Even if the reference licenses were comparable, the verdict cannot
`
`stand because Mr. Malackowski failed to apportion. Bio-Rad was
`
`required to '"give evidence tending to separate or apportion the
`
`defendant's profits and the patentee's damages between the patented
`
`feature and the unpatented features, and such evidence must be
`
`reliable and tangible, and not conjectural or speculative."' CSIRO, 809
`
`F.3d at 1130 (quoting Garretson, 111 U.S. at 121).
`
`There is no dispute that lOx's products have numerous non-
`
`infringing features and components-and highly consequential ones at
`
`that. Appx30091; Appx30669-30671. That much is evident from the
`
`technological challenges lOx overcame, and all the ways in which its
`
`single-cell products outperform Bio-Rad's ddSEQ, even though both
`
`systems use droplets. Supra 12-15, 17-18.
`
`Nevertheless, Mr. Malackowski opined that it was appropriate to
`
`take the 15% royalty in his cherry-picked reference licenses and slap it
`
`onto lOx's products, with no adjustment at all. Appx30074-30075;
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`Appx30091. He claimed that that this 15% rate was already
`
`apportioned because he had "looked at the relative value of the droplets
`
`technology that's at issue in this case versus the non-infringing
`
`contributions that lOx asserts it brings," and then compared that
`
`"general relationship" to the licensed technology and unlicensed
`
`features of the licensed product. Appx30074-30075. In other words, he
`
`purported to compare these two ratios:
`
`Asserted patents
`N oninfringing features
`of 10x's products
`
`v.
`
`Licensed patents
`Unlicensed features
`of licensed products
`
`He never provided any numerical values to support his analysis. Yet,
`
`coincidentally, the ratio on the right turned out to be the same in each
`
`of the three licenses he considered. And even more coincidentally, those
`
`three ratios all turned out to be the same as the one on the left. Only by
`
`supporting that quadruple coincidence could Mr. Malackowski apply the
`
`same royalty rate across all these products.
`
`The first problem with Mr. Malackowski's analysis is that it does
`
`not apportion to the value of the patented technology as a matter of law.
`
`The starting point for apportionment must be the actual value of the
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`patented technology, not the value of other technology to other
`
`products. For example, in CSIRO, the district court relied on
`
`negotiations over a license to the asserted patent to set a royalty rate.
`
`This Court accepted that comparable license's "built in apportionment"
`
`as a "starting point" because the rate was "negotiated over the value of
`
`the asserted patent." 809 F.3d at 1303.
`
`The second problem is that there is no evidence supporting any of
`
`Mr. Malackowski's coincidences. Mr. Malackowski's testimony lacks
`
`any evidence that he actually performed the analysis he claimed to have
`
`performed. He gave no actual numbers. He provided no facts that a
`
`jury could have used to confirm that he actually balanced the novel
`
`equation that he proposed. Neither he nor any other witness provided
`
`useful evidence showing the relative value of the licensed technology
`
`and unlicensed features in the reference licenses. So Bio-Rad had no
`
`proof supporting the righthand side of the formula. Without that
`
`analysis, there is no way to say that the lefthand side has been properly
`
`apportioned.
`
`Mr. Malackowski is an accountant. Appx30059-30060. Because
`
`he lacks technical expertise, he could not-and did not purport to-
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`opine on the technical contributions of any patent. Appx30067-30068.
`
`Instead, he relied on Dr. Sia and Ms. Tumolo to draw conclusions about
`
`the technologies covered by the licenses. Appx30067-30068;
`
`Appx30082. But they did not fill in the gaps.
`
`Bio-Rad/Applera. For the Bio-Rad/Applera license (which the
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`district court found not comparable), Mr. Malackowski "pick[ed] an
`
`example number" to illustrate how he would undertake the
`
`apportionment analysis, and in the same breath concluded he was "good
`
`to go with the 15 percent." Appx30073-30075.
`
`CaliperlllainDance. For the Caliper/RainDance license,
`
`Mr. Malackowski relied on Dr. Sia, who explicitly conceded he did not
`
`undertake the purported apportionment analysis:
`
`Q. And you did not ... do any analysis of the licensed
`products for the RainDance license versus the licensed
`products in this case, the lOx products, you didn't do that in
`your report, did you?
`
`A. No, ... that wasn't really part of the scope.
`
`Appx29934. Ms. Tumolo, meanwhile, simply asserted that the Caliper
`
`patents were "a small part of the value of [RainDance's] products ... in
`
`my mind." Appx29592. She never explained how a "small part of the
`
`value" could ever translate into a 15% royalty. (Perhaps because
`
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`RainDance never paid a 15% royalty. Supra 63-64.) Yet from that
`
`testimony and unadmitted "information that [he] reviewed in this case,"
`
`Mr. Malackowski told the jury "it was comparable both at a technical
`
`economic and rights perspective." Appx30078-30079. He did not
`
`identify the unlicensed features of RainDance's product (the
`
`denominator in his formula). He did not say whether those unnamed
`
`features were important. So he had no basis for balancing the equation
`
`and concluding no adjustment to the (fictional) 15% rate was necessary.
`
`AppliedBio/QuantaLife. As to the AppliedBio/QuantaLife
`
`license, Ms. Tumolo testified only that the licensed patents cover "sort
`
`of basic rights if you want to do PCR," Appx29597, while unspecified
`
`"software," "chemistry," and "emulsion work" was the "value in [her]
`
`mind" of QuantaLife's product, Appx29604-29605. Based on nothing
`
`but these sparse observations and Dr. Sia's testimony that the
`
`AppliedBio patents cover "some reagents that would help you to do
`
`PCR," Appx29894-29895, Mr. Malackowski testified:
`
`[L]ook at the technology [AppliedBio] brought to the table,
`the ddPCR technology[,] versus [what] QuantaLife was
`bringing to the table, which is the list of factors or
`technology that wasn't included in the license. And, again, I
`was able to confirm that that relative ratio would not be
`greater on the green circle than it was on the blue circle.
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`69
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`Case: 19-2255
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