On December 27, 2023, Chief Judge Catherine Eagles of the U.S. District Court for the Middle District of North Carolina granted a motion for preliminary injunction by Natera Inc. enjoining NeoGenomics Laboratories Inc. from making, using, selling, or offering for sale in the United States the RaDaR assay or similar assay or product. Natera, Inc. v. NeoGenomics Labs., Inc., No. 23-629, D.I. 169, slip op. at 1, 21 (M.D.N.C. Dec. 27, 2023). After finding for Natera on likelihood of success on the merits, irreparable harm, and the balance of the equities, Judge Eagles found that the public interest favored granting a preliminary injunction. Id. at 1, 17, 18, 20–21.
Background
Natera holds two method patents, Patent No. 11,519,035 (“the ’035 patent”), providing methods and compositions for amplifying targeted genetic material with high specificity, and Patent No. 11,530,454 (“the ’454 patent”), providing methods, systems, and computer readable medium for detecting variations in genetic material indicative of disease or disease recurrence. Id. at 1–2. Natera practices the patents in its product marketed under the brand name Signatera, while NeoGenomics offers a competing product under the brand name RaDaR. Id. at 2. RaDaR has been used in clinical cancer research since April 2020, and has been commercially available since March 2023. Id.
Signatera and RaDaR both work by identifying trace amounts of circulating DNA fragments from cancer cells within the bloodstream, referred to as circulating tumor DNA . Id. Signatera and RaDaR detect molecular residual disease (MRD), the presence of small amounts of tumor DNA molecules in patient’s body after treatment of cancer. Id. at 3. Both tests are tumor-informed MRD tests. Id. Tumor-informed tests are personalized, as they are designed from a patient’s genetic information obtained from a tissue biopsy of the patient’s tumor, in contrast to tumor-naïve tests, which are faster but less accurate. Id. Doctors often prefer tumor-informed tests to tumor-naïve tests. Id.
The MRD testing market is predicted to grow substantially in the next few years. Id. at 4. As a leader in the MRD test market, Natera has 74% of the total market share for both tumor-informed and tumor-naïve tests. Id. RaDaR is the only other tumor-informed MRD test that is available for clinical use and covered by private insurance, while other competitors in the MRD space generally offer only tumor-naïve products. Id. Until recently, a third tumor-informed MRD test branded as PCM was available. However, the District of Delaware permanently enjoined clinical use of this test because it infringed other patents held by Natera. Id. at 4 n.3 (citing redacted permanent injunction entered in Natera, Inc. v. ArcherDX, Inc., No. 20-CV-125 (D. Del. Nov. 21, 2023)).
Findings for the preliminary injunction
Success on the merits
The court found a likelihood of success on the merits because, for the ’035 patent, Natera showed it would likely prove infringement, and that NeoGenomics failed to raise a substantial question of validity. Id. at 5–14. Although NeoGenomics contended that two dependent claims had additional limitations that RaDaR did not meet, the court found claim 1 was “not restricted by the added limitation in the dependent claim,” and this argument did not weaken Natera’s likelihood of success on the merits as to infringement of claim 1. Id. at 7.
On validity, NeoGenomics primarily argued that the ’035 patent was obvious based on the Fluidigm Access Array System that used DNA samples from tumor tissue rather than cell-free DNAId. at 9. The court found that “there were many well-known barriers to using [cell-free DNA],” that “presented obstacles to successfully amplifying and sequencing circulating tumor DNA with precision during the relevant time period.” Id. at 10. This made it unlikely that a person skilled in the art would have been motivated to modify Access Array to use cell-free DNA and anticipated success. Id. Therefore, the court held that NeoGenomics had not raised a substantial question of validity. Id. at 13.
In view of the findings and conclusions on the ’035 patent, the court declined to address whether Natera had shown a likelihood of success on the ’454 patent. Id. at 14.
Irreparable harm
The court found Natera would likely suffer irreparable harm because it would be “forced to compete against products that incorporate and infringe its own patented inventions.” Id. at 14 (quoting Douglas Dynamics, LLC v. Buyers Prods. Co., 717 F.3d 1336, 1345 (Fed. Cir. 2013)). Specifically, the court found NeoGenomics was Natera’s only competitor in the tumor-informed MRD marketplace. Id. at 15, 16. Consequently, “[i]f forced to compete against RaDaR for participation in future clinical studies, Natera could lose out on [biopharmaceutical] partnerships that substantially impact Signatera’s future success, a loss that is challenging to quantify.” Id. at 15. Further, as a pioneer in the tumor-informed MRD market, Natera had a “first mover advantage,” including a period of exclusivity that Natera has a right to as the patent holder. Id. As Natera has never licensed the ’035 patent, the court found “Natera’s position as first mover will be unfairly cut short if RaDaR remains on the market.” Id.
Even considering the larger MRD market, including tumor-naïve products, the court found there was still irreparable harm. Id. at 16. Natera showed that RaDaR was used in at least one clinical study and was promoted by NeoGenomics to Natera’s customers. Id. Despite the lack of evidence of lost sales and RaDaR’s relatively new entry into the market, the court found “[c]ompetition and potential lost sales from RaDaR are likely to occur and cause harm.” Id. The court further found a causal nexus between the likely infringement and harm because “the likely infringement allows NeoGenomics to offer RaDaR as a tumor informed MRD assay,” and “RaDaR’s ability to perform tumor informed testing is what drives consumer demand for it.” Id. at 17–18.
Balance of equities
The court found the balance of equities favored granting a preliminary injunction. Id. at 18. The court observed that Signatera was important to Natera’s economic success because (1) Signatera was identified as Natera’s “most valuable offering” and advances related to Signatera were “key to Natera’s future success”; (2) revenue from Signatera was predicted to make up most of Natera’s total growth in revenue; and (3) the “vast majority” of Natera’s revenue attributable to oncology products had come from “clinical Signatera volume growth.” Id. In contrast, NeoGenomics was not dependent on RaDaR because RaDaR was only recently becoming commercially available and constituted just one out of the “over 600 tests NeoGenomics offered related to cancer diagnostics.” Id. at 19. NeoGenomics’s significant expense to acquire RaDaR did not tip the balance of equities in favor of NeoGenomics. Id. (citing Bio-Rad Lab’ys, Inc. v. 10X Genomics Inc., 967 F.3d 1353, 1378 (Fed. Cir. 2020)). Therefore, “[t]he harm to Natera if a preliminary injunction is not granted outweighs the harm to NeoGenomics in granting the injunction.” Id. (citing Metalcraft of Mayville, Inc. v. The Toro Co., 848 F.3d 1358, 1369 (Fed. Cir. 2017)).
Public interest
Addressing the public interest factor, the court balanced “protecting the patentee’s rights with any adverse effects on the public” and found the public interest tips in favor of granting a preliminary injunction.” Id. at 19-20 (citing i4i Ltd. P’ship v. Microsoft Corp., 598 F.3d 831, 863 (Fed. Cir. 2010)). The court noted “[a]nyone in need of a tumor informed MRD test will be able to get one from Natera,” as “Signatera is clinically validated for use with the same cancers as RaDaR,” and Natera had the capacity to take on more customers. Id. at 20. Moreover, the preliminary injunction “can be crafted in a way that does not disrupt clinical trials and ongoing research and so that current patients can continue to use RaDaR.” Id.
While agreeing with NeoGenomics that consumer choice is important, the court also observed that “competition from an infringing product does not benefit the public, and it impedes innovation.” Id. (citing Douglas Dynamics LLC v. Buyers Prods. Co., 717 F.3d 1336, 1346 (Fed. Cir. 2013)). Because Natera had made a strong showing on its success on the merits, the court found “[t]he need to protect consumer choice does not weigh heavily in favor of denying an injunction, in light of other evidence.” Id.
Nevertheless, the court and the parties agreed that current patients already using RaDaR cannot use Signatera as a substitute. Id. at 21. As the public generally benefits from clinical trials and research projects, the public interest did not support enjoining the current uses of RaDaR despite the potential for infringement. Id. Thus, the court agreed to craft the preliminary injunction to avoid disruption to ongoing treatment, research, and clinical studies, and granted Natera’s motion. Id.
Analysis and impact
Judge Eagles’ analysis on public interest is noteworthy for its emphasis on the public interest in upholding patent rights over the availability of a medical product to the public. See supra. This analysis contrasts with the position that courts have taken in other life sciences cases, where it is often emphasized that “public interest favors availability” of a treatment to the public, especially when the treatment has been approved by the Food and Drug Administration. See, e.g., Baxalta Inc. v. Genentech, Inc., No. 17-509, 2018 WL 3742610, at *13 (D. Del. Aug. 7, 2018) (Dyk, J.). Similarly, in Abbreviated New Drug Application litigations, some judges consider the public interest factor to be neutral, as the structure of the Hatch-Waxman Act “recognizes the competing public interests of protecting valid patent rights and increasing competition in the pharmaceutical industry by facilitating the approval of generic versions of drugs.” Sebela Int’l Ltd. v. Actavis Labs. FL, Inc., No. 17-4689-CCC-MF, 2017 WL 4782807 at *9 (D.N.J. Oct. 20, 2017). Here, the fact that RaDaR is a diagnostic product, as opposed to a therapeutic product, may have played a role in the court’s analysis.
Going forward, it will be worth monitoring whether courts are more amenable to finding that the public interest weighs in favor of granting preliminary injunctions in the diagnostics field. In this case, NeoGenomics filed a notice of appeal as to the preliminary injunction on the day the court granted Natera’s preliminary injunction motion. Natera, Inc. v. NeoGenomics Labs., Inc., No. 23-629 (M.D.N.C. Dec. 27, 2023), ECF No. 173. In response to Neogenomic’s motion to modify the preliminary injunction, the court has ordered Natera to post security, with the preliminary injunction to go into effect once the security is posted. Id. (M.D.N.C. Jan. 10, 2024) at D.I. 193. We will report on any updates from the Federal Circuit addressing Judge Eagles’ analysis.
