Bio-Rad Laboratories, Inc. v. 10X Genomics, Inc.

UNITED STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

___________________________________

)

BIO-RAD LABORATORIES, INC. and )

PRESIDENT AND FELLOWS OF HARVARD )

COLLEGE, )

Plaintiffs, )

)

v. ) CIVIL ACTION

) NO. 19-12533-WGY

10X GENOMICS, INC., )

)

Defendant. )

___________________________________)

YOUNG, D.J. August 31, 2020

MEMORANDUM AND ORDER

I. INTRODUCTION

This motion to dismiss 10X Genomics’ (“10X”) antitrust

counterclaims is the latest maneuver by Bio-Rad Laboratories

(“Bio-Rad”) in the multi-district struggle between these two

competitors. The current engagement grows out of a complaint

Bio-Rad filed in this Court on December 18, 2019, accusing 10X

of infringing on one of its patents and two patents it licenses

from the President and Fellows of Harvard College (“Harvard”).

See generally Compl., ECF No. 1. This Court has already

considered and denied 10X’s motion to dismiss that complaint,

ECF No. 24, though in so doing it transferred one of the three

patents to the Northern District of California where the parties

have other ongoing litigation. See generally, Bio-Rad Labs.,

Inc. v. 10X Genomics, Inc., No. 19-12533-WGY, 2020 U.S. Dist.

LEXIS 76156 (D. Mass. Apr. 30, 2020). Before the Court now is a

set of antitrust counterclaims that 10X brought prior to that

decision. See 10X Partial Am. Answer Bio-Rad and Pres. Fellow

Harvard College Compl. and 10X Am. Counterclaims Bio-Rad

(“Answer”), ECF No. 53; Antitrust Counterclaims (“Def.’s

Counterclaims”), id.; Pl.’s Mot. Dismiss 10X Antitrust

Counterclaims (“Pl.’s Mot. Dismiss”), ECF No. 68.1

In its counterclaims, 10X paints Bio-Rad as an aggressor

illegally exploiting its market power to harm competition in

three distinct markets, corresponding to two types of genetic

analysis, as well as the market for genetic droplet research

technology generally. Def.’s Counterclaims ¶ 7. Bio-Rad moves

for dismissal of the counterclaims under Federal Rule of Civil

Procedure 12(b)(6), arguing 10X is trying to penalize it for

successfully enforcing its patents. Pl.’s Mem. Supp. Mot.

Dismiss 10X’s Antitrust Counterclaims (“Pl.’s Mem.”), ECF No.

69.

1 10X also brought a separate set of patent counterclaims in

the same filing, which this opinion does not address. See

Def.’s Counterclaims ¶ 152, Declaratory Judgment Counterclaims,

id. ¶ 205, Patent Counterclaims. Harvard has realigned to 10X’s

side of the Patent Infringement Counterclaims. See Stip.

Realign Harvard Counterclaim Pl. Certain Counterclaims, ECF No.

112; Order, ECF No. 114.

10X must allege only “enough facts to state a claim to

relief that is plausible on its face.” Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 570 (2007). It is therefore far too

early to answer the question whether 10X has unearthed an

illegal scheme on the part of Bio-Rad to establish a monopoly in

life sciences analysis, or whether this suit is merely the

parting shot of a competitor defeated one too many times in the

field. It is enough to say that 10X has alleged sufficient

facts to survive the motion to dismiss on some, but not all, of

its claims, and save the moment of ultimate decision for summary

judgment or trial.

For the reasons given below, the Court GRANTS the motion to

dismiss as to counterclaim counts I, III, and IV, and DENIES the

motion to dismiss with respect to counts II, V, VI, and VII.

A. Background and Procedural History

Bio-Rad and 10X are competitors in the market for life

sciences tools. See Def.’s Counterclaims ¶¶ 7-9. Two

particular types of genetic research tools are at issue in this

case. The first is droplet digital polymerase chain reaction

(“ddPCR”), a genetic sequencing tool that allows scientists to

calculate the presence and quantity of a target DNA molecule in

a sample. Id. ¶ 19. The second is what 10X terms “Next-

Generation Sequencing” (“NGS”) sample preparation or “NGS Sample

Prep,” a set of techniques for reading known or unknown

nucleotide sequences in DNA. Id. ¶¶ 7, 20. Bio-Rad competes in

the ddPCR market, while both parties compete in the NGS Sample

Prep market. Id. ¶¶ 56-59. Universities, pharmaceutical

companies, hospitals, governments, and other customers of the

$50,000,000,000 annual market for life science tools require DNA

sequencers such as the ones produced by both companies to

conduct research and scientific operations. Id. ¶ 41.

The fates of 10X and Bio-Rad have been forever-entangled.

In 2012, after Bio-Rad acquired the life sciences firm

QuantaLife, three scientists from QuantaLife who briefly had

been working for Bio-Rad left to form 10X. Answer ¶ 22. The

two parties have since brought their disputes over intellectual

property to courts around the country. Bio-Rad is the plaintiff

in the underlying patent litigation before this Court. Bio-Rad

has also prosecuted patent infringement cases against 10X in

Delaware, see RainDance Techs., Inc. v. 10X Genomics, Inc., No.

15-152-RGA, 2016 WL 927143 (D. Del. March 4, 2016) vacated in

part 2020 WL 4431893 (Fed. Cir. Aug. 3, 2020) (the “152 case”);

Bio-Rad Labs., Inc. v. 10x Genomics, Inc., 322 F. Supp. 3d 537

(D. Del. 2018), and before the U.S. International Trade

Commission, see Certain Microfluidic Devices, Inv. No. 337-TA-

1068, 2019 WL 7049092 (U.S.I.T.C. Dec. 18, 2019) (the “1068 ITC

Investigation”). Bio-Rad is the plaintiff pursuing patent

claims in the Northern District of California, see Bio-Rad

Labs., Inc. et al. v. 10X Genomics, Inc., Civ. A. No. 3:17-04339

(N.D. Cal. July 31, 2017), while 10X is the patent plaintiff

before a different session of that court, see Compl., 10X

Genomics, Inc. v. Bio-Rad Labs., Inc., Civ. A. No. 4:18-cv-00209

(N.D. Cal. Jan. 9, 2018). 10X was also the plaintiff in a

successful separate action against Bio-Rad before the ITC. See

In the Matter of Certain Microfluidic Systems, Inv. No. 337-TA-

1100, 2020 WL 748729 (U.S.I.T.C. Feb. 12, 2020) (the “1100 ITC

Investigation”). The above list is not exhaustive, but

demonstrates the parties’ appetite for litigation is exhausting.

In 2017, Bio-Rad acquired the life sciences company

RainDance Technologies, Inc. (“RainDance”), the owner of patents

related to ddPCR analysis, one of the technologies at issue in

these counterclaims. Def.’s Counterclaims ¶¶ 10, 19, 21.

RainDance is the company which originally brought the Delaware

patent litigation, the 152 case; Bio-Rad stepped into its shoes

following the acquisition. See Bio-Rad, 322 F. Supp. 3d at

539.

10X brought these antitrust counterclaims on January 24,

2020, amended them on February 5, 2020, and submitted a second

set of amended counterclaims on July 13, 2020 without further

altering the antitrust portion. ECF Nos. 32, 53, 113. The

parties have fully briefed the issues. See Pl.’s Mem.; Def.’s

Opp’n Mot. Dismiss 10X’s Antitrust Counterclaims (“Def.’s

Opp’n”), ECF No. 75; Pl.’s Reply Mot. Dismiss 10X’s Antitrust

Counterclaims (“Pl.’s Reply”), ECF No. 84. This Court’s April

30, 2020 decision does not address these counterclaims but does

summarize the underlying facts of the alleged patent

infringement that gave rise to the current action. See Bio-Rad,

2020 U.S. Dist. LEXIS 76156, at *3-9.

B. Alleged Facts

10X alleges that Bio-Rad has engaged in illegal

anticompetitive behavior in three markets, which it terms the

ddPCR market, the Droplet Single-Cell Product market (“DSCP

market”), and the Droplet Genetic Analysis Technology market

(“DGAT market”). Def.’s Counterclaims ¶¶ 61-76.

The biological analysis technique of polymerase chain

reaction (“PCR”) uses the rapid heating and cooling of strands

of DNA in order to make numerous copies. Id. ¶¶ 46-47.

“Digital” PCR involves dividing the DNA into sub-units, then

running tests on each of the subunits to see if they react for a

desired genetic sequence, allowing for a quantitative count of

that sequence. Id. ¶ 48. The technology at issue here uses

droplets as sub-units, thus the first “d” in “ddPCR.” Id. Bio-

Rad developed its ddPCR patent portfolio by acquiring QuantaLife

in 2011, and expanded it by acquiring RainDance in 2017, as

Raindance had multiple patents in the field. Id. ¶¶ 49-52. 10X

alleges that ddPCR is more accurate, sensitive, and easier to

use than other PCR analysis techniques, and thus customers do

not view other techniques as reasonable substitutes. Id. ¶¶ 62-

63. 10X alleges that Bio-Rad had a 90% market share in the

ddPCR field prior to its acquisition of RainDance, and that it

maintains over 90% control of the field after this acquisition.

Id. ¶¶ 11, 65. 10X is a customer of Bio-Rad in the ddPCR

market. Id. ¶ 27.

The Droplet Single-Cell Product Market (“DSCP market”) is

the market for tools that use droplets to analyze DNA sequences

in single cells. Id. at 68. It is a sub-market of the larger

NGS Sample Prep market. Id. ¶¶ 10, 20. 10X is in the business

of NGS sample preparation through its Next GEM product line, and

Bio-Rad competes in the NGS market through its ddSEQ product.

Id. ¶ 16, 29. 10X claims it is impractical to conduct single-

cell NGS sample preparation without using droplets, allowing no

reasonable substitutes for DSCP market products. Id. ¶ 69. 10X

alleges that the two companies together constitute a majority of

the market. Id. ¶ 71.

The third market, the Droplet Genetic Analysis Technology

Market (“DGAT market”), is upstream from the other two. It

consists of the technology and intellectual property underlying

all droplet-based genetic analysis. Id. ¶ 73. 10X alleges

that, if Bio-Rad’s patent rights are as broad as it claims, it

would be a monopolist in this market, allowing it to charge

higher royalties because consumers would have no reasonable

alternatives. Id. ¶ 74. 10X is a competitor in this market

because it holds patents and markets products in the downstream

DSCP Market, and is a customer because it licenses products in

this market. Id. ¶ 76.

C. 10X’s Claims

10X’s counterclaims grow entirely from Bio-Rad’s

acquisition of RainDance. 10X claims this acquisition violated

antitrust laws with regard to all three markets. Id. ¶¶ 10, 77.

As evidence of the deal’s illegality, 10X asserts that the

acquisition of RainDance has allowed Bio-Rad to achieve near-

monopoly market power in the ddPCR and DGAT markets by

eliminating a competitor and consolidating RainDance’s patents.

Id. ¶¶ 77, 81, 84, 88.

10X points to specific anticompetitive practices in all

three markets. In the ddPCR market, 10X alleges that Bio-Rad

has eliminated RainDance’s R&D and product lines, thus removing

a potential competitor and reaping monopoly profits. Id. ¶¶ 78-

81, 104-105. In the DGAT market, 10X asserts that the

acquisition was part of a larger pattern of Bio-Rad snapping up

competitors, and that the result has been that Bio-Rad owns a

“thicket of patents” that make it difficult for competitors to

enter the market or operate given the litigation risk, leading

to an anticompetitive increase in patent licensing prices. Id.

¶¶ 85, 87, 89-90, 93-94, 105. Finally, regarding the DSCP

market, 10X alleges that Bio-Rad has “specific intent” to drive

10X out of the market using its campaign of aggressive

litigation. Id. ¶ 96.

Because many of Bio-Rad’s actions in the current litigation

stem from the patents it acquired in buying RainDance, 10X

argues that the assertion of these patents itself represents a

cognizable antitrust injury as an illegal attempt to monopolize.

Id. ¶¶ 94, 96-99. 10X asserts that the 152 case is part of this

pattern of anticompetitive behavior and would have resolved more

in its favor but for Bio-Rad’s illicit aggregation of market

power. Id. ¶ 30 (citing RainDance Techs., 2016 U.S. Dist. LEXIS

33875). It views the current case as another example of Bio-

Rad’s aggressive use of litigation to hobble it as a competitor.

Id. ¶¶ 96, 102.

Count I of the counterclaims alleges that Bio-Rad’s

acquisition of RainDance in the DSCP market was unlawful under

Section 7 of the Clayton Act, 15 U.S.C. § 18, because it has

lessened competition substantially and tended toward creating a

monopoly in this market. Id. ¶¶ 114-117.

Count II alleges that, similarly, Bio-Rad’s acquisition of

Raindance has lessened competition and tended toward creating a

monopoly in the upstream DGAT market, in violation of Section 7

of the Clayton Act, 15 U.S.C. § 18. Id. ¶¶ 119-120.

Count III alleges that Bio-Rad has attempted to monopolize

the DSCP market, a violation of Section 2 of the Sherman Act, 15

U.S.C. § 2, by engaging in predatory and anticompetitive

conduct, including the unlawful acquisition of Raindance,

refusing to license its patent at reasonable rates, and

weaponizing its patent portfolio in litigation. Id. ¶¶ 123-126.

Count IV alleges that Bio-Rad’s acquisition of RainDance,

the filing of the current litigation, and the enforcement of the

152 case represent an illegal attempt to monopolize or attempt

to monopolize the DGAT Market in violation of Section 2 of the

Sherman Act, 15 U.S.C. § 2, because, should they be successful,

Bio-Rad will achieve monopolistic market share in this

technology market space. Id. ¶¶ 131-133.

Count V alleges that Bio-Rad’s acquisition of RainDance was

unlawful under Section 7 of the Clayton Act, 15 U.S.C. § 18,

with regard to the ddPCR market because it has consolidated an

existing monopoly. Id. ¶¶ 134-137.

Count VI alleges that Bio-Rad has monopolized or attempted

to monopolize the ddPCR market in a manner illegal under Section

2 of the Sherman Act, 15 U.S.C. § 2. Id. ¶¶ 138-142.

Count VII alleges unfair competition under the California

Business and Professions Code § 17200 et seq. Id. ¶¶ 144-148.

10X contends that Bio-Rad’s actions have harmed California

residents in the scientific and medical community who depend on

innovation and competitive pricing in these markets. Id. ¶ 149.

10X requests that the Court declare that Bio-Rad

acquisition of Raindance was unlawful, that it unlawfully

monopolized or attempted to monopolize the three markets, and

that it engaged in unfair competition. Id. at 85. It also

seeks an injunction against continued unfair competition, an

injunction requiring Bio-Rad to divest all patents, licenses,

and products obtained from the RainDance acquisition, or

alternatively an injunction requiring Bio-Rad to license at

“competitive rates.” Id. at 86. It finally requests triple

damages for the antitrust injuries it has incurred. Id.

II. LEGAL FRAMEWORK

A. Pleading standard

At the motion to dismiss stage the Court accepts all well-

pleaded factual allegations in the complaint as true and draws

all reasonable inferences in the plaintiff’s favor. See

Langadinos v. American Airlines, Inc., 199 F.3d 68, 69 (1st Cir.

2000). The pleading standard for antitrust cases is no higher

than the “plausibility” standard for other causes of action.

See Twombly, 550 U.S. at 570. A party faces a heavy burden in

moving to dismiss antitrust counterclaims, In re Nexium

(Esomeprazole) Antitrust Litig., 968 F. Supp. 2d 367, 385 (D.

Mass. 2013), but this Court need not allow claims to survive

when the well-pleaded facts fail reasonably to support the

alleged legal conclusions. Ocasio-Hernandez v. Fortuño-Burset,

640 F.3d 1, 12-13 (1st Cir. 2011).

B. Antitrust Harm and Injury

Section 7 of the Clayton Act bans the acquisition of stock

in a company when “the effect of such acquisition may be

substantially to lessen competition, or to tend to create a

monopoly.” 15 U.S.C. § 18; California v. American Stores Co.,

495 U.S. 271, 284 (1990). Section 2 of the Sherman Act makes it

a crime to “monopolize, or attempt to monopolize . . . any part

of the trade or commerce among the several States.” 15 U.S.C. §

2. To plead monopolization, a plaintiff must allege “(1) the

possession of monopoly power in the relevant market and (2) the

willful acquisition or maintenance of that power as

distinguished from growth or development as a consequence of a

superior product, business acumen, or historic accident.”

United States v. Grinnell Corp., 384 U.S. 563, 570 71 (1966).

Market power is defined in economic terms as “the ability

to raise prices above those that would be charged in a

competitive market.” Nat’l Collegiate Athletic Ass’n v. Board

of Regents of the Univ. of Okla., 468 U.S. 85, 109 n.38 (1984).

Monopoly power is defined as “the power to control prices or

exclude competition,” and requires a heightened degree of market

power. United States v. E. I. du Pont de Nemours & Co.

(Cellophane), 351 U.S. 377, 391 (1956). It is very common for

firms to assert some market power without that market power

rising to cognizance under the antitrust laws, and some degree

of market power may be pro-competitive by granting firms excess

profits to invest in research and development. See Erik

Hovenkamp & Herbert Hovenkamp, Buying Monopoly: Antitrust Limits

on Damages for Externally Acquired Patents, 25 Tex. Intell.

Prop. L.J. 39, 70-71 (2017) (“Buying Monopoly”).

A private plaintiff cannot merely allege that the defendant

violated the Sherman or Clayton Acts, which is termed

“anticompetitive harm” or “antitrust harm.” That plaintiff has

standing only if it suffered injury as a direct result of the

alleged anticompetitive harm, and that type of injury is an

“antitrust injury.” Broadcom Corp. v. Qualcomm Inc., 501 F.3d

297, 320-21 (3d Cir. 2007). An antitrust injury is defined as

“injury of the type the antitrust laws were intended to prevent

and that flows from that which makes defendants’ acts unlawful.”

Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489

(1977) (rejecting the argument that any economic injury, such as

lost profits, stemming from a merger unlawful under the Clayton

Act is actionable). For example, in American Sales Co., LLC v.

AstraZeneca LP (In re Nexium (Esomeprazole) Antitrust Litig.),

the First Circuit upheld a jury verdict finding that two drug

companies had committed an antitrust violation through a

“reverse payment” scheme designed to keep the generic

manufacturer out of the market, but that the plaintiffs, a class

of retailers and purchasers, were not entitled to Clayton Act

relief because they had failed to show they had suffered

antitrust injury as a result. 842 F.3d 34, 60 (1st Cir. 2016).

III. ANALYSIS

A. Preliminary Matters

1. Fed. R. Civ. Proc. 13(a)

Bio-Rad argues that all counterclaims should be barred

under Fed. R. Civ. Proc. 13(a) because they qualify as

compulsory counterclaims that should have been brought in the

152 Case. Pl.’s Mem. 8 (citing McCaffrey v. Rex Motor Transp.,

Inc., 672 F.2d 246, 248-49 (1st Cir. 1982)).

Rule 13(a) directs that a counterclaim is compulsory when

it “arises out of the same transaction or occurrence” as the

original claim and “does not require adding another party over

whom the court cannot acquire jurisdiction.” Fed. R. Civ. P.

13(a)(1). The Supreme Court held in Mercoid Corp. v. Mid-

Continent Inv. Co. that antitrust counterclaims in a patent

infringement case are permissive, rather than compulsory, and so

may be brought in a separate case. 320 U.S. 661, 671 (1944).

While many circuits have since cabined this ruling to the

specific facts of the case, the First Circuit has not. Fowler

v. Sponge Prods. Corp., 246 F.2d 223, 227 (1st Cir. 1957).

In Eon Labs., Inc. v. SmithKline Beecham Corp., 298 F.

Supp. 2d 175, 180 (D. Mass. 2003), this Court cited approvingly

to the Second Circuit’s decision in Critical-Vac Filtration

Corp. v. Minuteman Int’l Inc. which narrowed Mercoid by

distinguishing between counterclaims for misuse of patents (such

as anticompetitive behavior), which are permissive because they

are based on a separate set of facts than the underlying case,

versus counterclaims for invalidity of patents, derived from the

same set of facts and thus properly falling under the Rule 13

compulsory framework, 233 F.3d 697, 703 (2d Cir. 2000). Unlike

the counterclaims in Eon Labs, 10X’s counterclaims in this case

are all based on Bio-Rad’s alleged misuse of its patents to

engage in anticompetitive behavior, rather than their underlying

validity, so they are permissive and not barred by Rule 13(a).

See Amphastar Pharm., Inc. v. Momenta Pharm., Inc., 297 F. Supp.

3d 222, 230-231 (D. Mass. 2018) (Gorton, J.).

2. The Noerr-Pennington Doctrine

Bio-Rad argues that patent enforcement, unless brought in

bad faith or as a result of fraud on the patent office, does not

constitute anticompetitive harm or injury under the Noerr-

Pennington doctrine. Pl.’s Mem. 10. Bio-Rad is essentially

correct, though in the First Circuit litigation may constitute

antitrust injury for purposes of standing and damages.

The Noerr-Pennington doctrine, propagated by the Supreme

Court in Eastern R.R. Presidents Conference v. Noerr Motor

Freight, Inc., 365 U.S. 127, 139-40 (1961), and in United Mine

Workers v. Pennington, 381 U.S. 657, 670 (1965), shields

government petitioning activity from antitrust liability,

including the enforcement of patents through litigation. United

Food & Commer. Workers Unions & Employers Midwest Health

Benefits Fund v. Novartis Pharm. Corp., 902 F.3d 1, 4 (1st Cir.

2018). There are only two exceptions: if the patent is obtained

through fraud, or if the patent litigation is a “sham” covering

impermissible anticompetitive conduct. Id. at 5 (citing Walker

Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172

(1965); Professional Real Estate Invs., Inc. v. Columbia

Pictures Indus., 508 U.S. 49, 51 (1993) (holding that patent

litigation is a “sham” only if it is “objectively baseless” and

designed to interfere with a competitor’s business

relationships); see California Motor Transport Co. v. Trucking

Unlimited, 404 U.S. 508, 511 (1972). As a result, the Noerr-

Pennington doctrine bars this Court from regarding litigation

brought in good-faith as anticompetitive harm. See McGuire Oil

Co. v. Mapco, Inc., 958 F.2d 1552, 1561 (11th Cir. 1992).

10X contends the Noerr-Pennington Doctrine is inapplicable

because it was the original acquisition of RainDance that caused

anticompetitive harm as monopolization or attempt to monopolize.

Def.’s Opp’n at 6-7 (citing Amphastar Pharm. Inc. v. Momenta

Pharms., Inc., 850 F.3d 52, 57 (1st Cir. 2017)).2 Bio-Rad

counters by saying that these lawsuits are immunized from

antitrust scrutiny because lawful petitioning behavior is not

illegal “either standing alone or as part of a broader scheme.”

Pl.’s Reply 7 (quoting Pennington, 381 U.S. at 670).

Insofar as 10X is arguing that non-baseless litigation by

Bio-Rad can constitute anticompetitive harm, the Noerr-

Pennington doctrine shields even litigation brought by a

monopolist or aspiring monopolist with the subjective intent of

harming a competitor, so long as it is not baseless. See

Professional Real Estate, 508 U.S. at 59. For example, in P.R.

Tel. Co. v. San Juan Cable Co. LLC, the court found that efforts

by the accused monopolist to exclude a rival through government

lobbying and repeated lawsuits could not constitute Sherman Act

violations because none of the lawsuits was baseless. 196 F.

Supp. 3d 207, 244 (D.P.R. 2016) (Woodcock, J.), aff’d, 874 F.3d

767 (1st Cir. 2017). Thus, non-baseless litigation cannot

2 In the patent portion of this case, 10X does attack the

validity of the RainDance patents as the product of inequitable

conduct. See Answer Second Am. Counterclaims ¶¶ 99-105. 10X

does not, however, argue that Bio-Rad’s litigation campaign

constituted misrepresentation or sham. See Def.’s Opp’n 6-7

(“Bio-Rad argues that under the Noerr-Pennington doctrine,

patent litigation only violates the antitrust laws if it is a

‘sham.’ . . . But 10X’s claim is that Bio-Rad’s acquisition of

RainDance patents was unlawful, not that the individual patent

lawsuit on its own violates the antitrust laws.”).

constitute anticompetitive harm under the Sherman Act for

purposes of monopolization or attempted monopolization claims:

This is not to say that litigation is actionable under

the antitrust laws merely because the plaintiff is

trying to get a monopoly. He is entitled to pursue

such a goal through lawful means, including litigation

against competitors. The line is crossed when his

purpose is not to win a favorable judgment against a

competitor but to harass him, and deter others, by the

process itself -- regardless of outcome -- of

litigating.

Professional Real Estate Investors, 508 U.S. at 74-75 (Souter,

J., concurring) (quoting Grip-Pak, Inc. v. Illinois Tool Works,

Inc., 694 F.2d 466, 472 (7th Cir. 1982)).

A separate question is whether such litigation can

constitute antitrust injury if an independent Clayton or Sherman

Act violation exists. The starting point for analyzing this

question is Amphastar, in which the First Circuit, after ruling

that the plaintiffs had properly alleged antitrust harm by

claiming the defendants had lied to a standard-setting

organization, considered whether litigation by the defendant

could constitute antitrust injury for purposes of calculating

damages. 850 F.3d at 54, 57-58. The court concluded the

plaintiff could receive antitrust treble damages for costs

incurred, and that the injury caused by lawsuits could be

considered antitrust injury when part of a larger scheme. Id.

at 57. The court cited approvingly to McGuire Oil for the

proposition that “the institution of state court litigation

against the Sherman Act plaintiff . . . could furnish the source

of the antitrust injury . . . even if it could not provide a

basis for a Sherman Act violation under the Noerr-Pennington

doctrine.” Id. at 57 (omissions in original) (quoting 958 F.2d

at 1561). This Court reads the quotation from McGuire Oil as

indicating litigation can constitute antitrust injury, but not

antitrust harm. See Premier Elec. Constr. Co. v. National Elec.

Contractors Ass’n, Inc., 814 F.2d 358, 372-76 (7th Cir. 1987)

(ruling cost of fighting litigation could constitute sole

antitrust injury when the litigation resulted from a separate

Sherman Act violation); McGuire Oil, 958 F.2d at 1561 (ruling

litigation was not antitrust injury when there was no separate

predicate anticompetitive act); see also Order Mot. Dismiss at

26, 29 Intel Corp. v. Fortress Inv. Grp., LLC, Civ. A. No. 19-

07651 (N.D. Cal. July 15, 2020), ECF No. 190 (noting that

litigation can constitute antitrust injury when used to enforce

illegally-consolidated patents).

3. Divestiture

Bio-Rad argues that the doctrine of laches ought bar 10X

from seeking the “draconian” remedy of divestiture. Pl.’s Mem.

at 18. It accuses 10X of unreasonably delay in bringing the

antitrust counterclaims given that they are based on the three-

year-old RainDance merger. It also notes that leading scholars

in the field favor a laches period of less than four years for

divestiture. Id.(citing Phillip E. Areeda & Herbert Hovenkamp,

Antitrust Law: An Analysis of Antitrust Principles and Their

Application § 1205b (4th ed. 2018)).

The doctrine of laches is an affirmative defense which asks

the court to consider “whether the plaintiff’s delay in bringing

suit was unreasonable and whether the defendant was prejudiced

by the delay.” Fleet Nat’l Bank v. Gray (In re Bankvest Capital

Corp.), 375 F.3d 51, 61 (1st Cir. 2004). The burden to prove

prejudice and unreasonable delay rests squarely on the shoulders

of the moving party. Id. The laches defense is fact-intensive

and typically not resolved at the pleading stage. Vineberg v.

Bissonnette, 548 F.3d 50, 57 (1st Cir. 2008).

Bio-Rad argues that the alleged facts giving rise to 10X’s

complaint arose three years ago, that there is no reasonable

excuse for its delay, and that it would be unduly prejudiced by

the remedy of divestiture because it has already fully

integrated RainDance. Pl.’s Mem. 19. 10X points out that many

of the antitrust injuries it alleges, including the present

litigation, arose well after the RainDance merger, and that it

is asking only for the divestiture of specific patents rather

than the entirety of RainDance’s assets. Def.’s Opp’n. 18-19.

At the current stage this Court will adhere to the Ninth

Circuit’s analysis that a maximum laches period of four years is

appropriate because it is the statute of limitation contained in

Section 4 of the Clayton Act. See Solo v. SD-3C LLC, 751 F.3d

1081, 1086 (9th Cir. 2014). Bio-Rad may be able to show after

developing the record that divestiture would be inequitable

because of the amount of time that has passed, but this Court

would note that as matter of law the laches period resets after

each separate antitrust injury. Id.

Putting aside laches, 10X has made a prima facie case for

divestiture. Divestiture is inappropriate when two firms have

already integrated and where divestiture would require more than

the separation of mere “stock or discrete tangible assets.”

Taleff v. Southwest Airlines Co., 828 F. Supp. 2d 1118, 1124

(N.D. Cal. 2011) (quoting Ginsburg v. InBev NV/SA, 623 F.3d

1229, 1234 (8th Cir. 2010)). Here, however, 10X is requesting

the divestiture of specific Bio-Rad patents, see Def.’s Opp’n at

18, a lesser request than the untangling of entire companies, as

was requested in Ginsberg, 623 F.3d at 1235. Thus, it is

premature to bar the remedy of divestiture.

B. Market Definition

Bio-Rad argues that 10X’s three market definitions are

implausible. It points out that the 152 case defined ddPCR and

Droplet Single-Cell Products as being in the same market of

“products that perform genetic analysis on a droplet platform,”

and asks this court to find the same. Pl.’s Mem. 17 (quoting

Bio-Rad, 2019 WL 3322322, at *2). It also argues that 10X’s

definition of the DGAT market is insufficient because it does

not plead the specific “metes and bounds” of the market or the

firms’ respective market shares. Id. at 3.

“The outer boundaries of a product market are determined by

the reasonable interchangeability of use or the cross-elasticity

of demand between the product itself and substitutes for it.”

Brown Shoe Co. v. United States, 370 U.S. 294, 325 (1962). At

the pleading stage, a plaintiff plausibly must allege that the

products in the defined market are not reasonably

interchangeable for products outside the defined market, and

that consumers are not likely to substitute other products if

the given product becomes more expensive. See Queen City Pizza,

Inc. v. Domino’s Pizza, Inc., 124 F.3d 430, 437 (3d Cir. 1997).

Once a plaintiff plausibly alleges a market, the determination

whether the defined market is correct is a question of fact not

suitable for dismissal under Rule 12(b)(6). See In re Nexium,

968 F. Supp. 2d at 388 (citing Todd v. Exxon Corp., 275 F.3d

191, 199–200 (2d Cir. 2001)).

10X argues it has sufficiently pleaded that the three

different products perform different functions and should not be

considered within the same market, and that it has met the

technical pleading requirements by stating there are no

reasonable substitutes and a potential monopolist could

profitably increase prices. Def.’s Opp’n 12. It also argues

that Bio-Rad mischaracterizes the District of Delaware case,

which merely found 10X and Bio-Rad were competing in the NGS

Sample Prep space, a fact that does not contradict its market

definitions. Id. (citing Bio-Rad, 2019 WL 3322322 at *2).

Bio-Rad is correct that the District of Delaware court

defined the product market as encompassing both ddPCR and DSCP,

as 10X itself acknowledged in its briefs appealing that case.

See Pl.’s Mem., Ex. E, Brief of Appellant-Defendant 10X 74, Bio-

Rad Inc. v. 10X Genomic Inc., Nos. 19-2255, -2285 (Fed. Cir.

Oct. 18, 2019), ECF No. 69-6. The doctrine of collateral

estoppel does not, however, require this Court to define the

“market” in the same way as the 152 case because the type of

market being defined here is not “the same as that involved in

the earlier action.” Ramallo Bros. Printing, Inc. v. El Dia,

Inc., 490 F.3d 86, 90 (1st Cir. 2007). The Delaware court

considered market definition for patent infringement rather than

antitrust violations; it was asking the question of whether the

two parties were direct competitors, not the question of whether

their products were reasonably interchangeable with potential

outside substitutes. Bio-Rad, 2019 WL 3322322 at *1-2; see also

Herbert Hovenkamp, Markets in IP and Antitrust, Faculty

Scholarship at Penn Law 2133, 2141-2143 (2011) (examining the

similarities and differences between markets in IP law and

antitrust). Once 10X and Bio-Rad have an opportunity to develop

the factual record to address specific antitrust indicia, this

Court may, or may not, find the antitrust market to match the

District of Delaware’s definition of the patent infringement

market. At the pleading stage, however, 10X sufficiently

alleges the “metes and bounds” of the market as being defined by

particular technological processes, and that available

technological alternatives are inferior, and thus poor

substitutes. Def.’s Counterclaims ¶¶ 62-63, 68-69;. Eastman

Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 482 (1992).

Despite Bio-Rad’s arguments, 10X also sufficiently has

pleaded the “metes and bounds” of the DGAT market, though

hazily. A technology market is defined as “the smallest group

of technologies and goods over which a hypothetical monopolist

of those technologies and goods likely would exercise market

power.” Hynix Semiconductor Inc. v. Rambus Inc., Nos. CV-00-

20905, C-05-00334, C-05-02298, C-06-00244, 2008 U.S. Dist. LEXIS

123822, at *15 (N.D. Cal. Jan. 5, 2008) (quoting U.S. Dept. of

Justice & Fed. Trade Comm’n, Antitrust Guidelines for the

Licensing of Intellectual Property § 3.2.2 (1995)). This

definition is conceptually similar to defining any other market.

Id. Technology markets are certainly easier to discern when

coextensive with a technological standard, see, e.g., Qualcomm,

501 F.3d at 315, but they may also be defined as the underlying

technologies required to “manufacture, import or sell” a

specific downstream product. See Sandisk Corp. v. Kingston

Tech. Co., No. 10-243-bbc, 2010 U.S. Dist. LEXIS 152534, at *9-

10 (W.D. Wis. Nov. 15, 2010).

Here, 10X has defined the downstream market as “droplet-

based genetic analysis products,” which properly delineates the

boundary of the upstream technology market with reference to the

relevant product. Def.’s Counterclaims ¶ 72; cf. Sandisk Corp.,

2010 U.S. Dist. LEXIS 152534, at *10. The fact that 10X has not

specified the applicable patents or intellectual property is not

fatal to its market definition, as a technology market may be

defined by the economic cross-elasticity of substitute

technologies rather than by reference to specific intellectual

property. Hynix Semiconductor Inc., 2008 U.S. Dist. LEXIS

123822, at *17; see also U.S. Dept. of Justice & Fed. Trade

Comm’n, Antitrust Guidelines for the Licensing of Intellectual

Property § 3.2.2 (2017). 10X incorporates this issue of

economic substitution by pleading that “[a] hypothetical

monopolist in the [DGAT market] could profitably impose a small

but significant and non-transitory increase in price of that

technology above the price in a competitive market.” Def.’s

Counterclaims ¶ 73. Its market definition is plausible as it

describes droplet-based analysis as a specific discipline within

the life sciences that encompasses ddPCR, DCSP, and other

techniques for which there are no reasonable substitutes. Id.

¶¶ 19-20, 49, 56, 63-69. The defined technology market is also

not so inherently broad that it becomes implausible by covering

numerous unrelated technologies. Cf. Order Mot. Dismiss at 15,

Intel Corp. Civ. A. No. 19-07651 (“The market as defined in the

complaint covers all patents for ‘high tech’ (whatever that

means exactly) electronic products . . . .”).

With that said, 10X’s market definitions –- particularly

its definition of the technology market -- barely cross the

required threshold of specificity. Cf. Intellectual Ventures I

LLC v. Capital One Fin. Corp., No. 13-cv-00740, 2013 U.S. Dist.

LEXIS 177836, at *15-21 (E.D. Va. Dec. 18, 2013) (ruling

plaintiff’s technology market definition implausible because,

inter alia, it did not plead that there were no available

substitutes). 10X has still pleaded the technical elements for

its market definitions, though, and that is enough for now.

C. Clayton Act Violations

A private plaintiff may bring an action for a Clayton Act

antitrust violation for monetary damages under the Section 4 of

the Clayton Act, 15 U.S.C. § 15, or injunctive relief under

Section 16, 15 U.S.C. § 26. To succeed, the plaintiff must show

both a Clayton Act violation and an antitrust injury. See

Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 344

(1990).

1. Count I: Clayton Act Violation in Droplet Single-

Cell Product Market

10X alleges that Bio-Rad violated the Clayton Act in the

DSCP Market through its acquisition of RainDance. Def.’s

Counterclaims ¶¶ 114-117. 10X alleges the acquisition of

RainDance was an antitrust violation because it was likely to

harm competition by excluding competitors with “superior

products” and by reducing innovation in the market. Id. ¶ 116.

It alleges it has suffered antitrust injury by being forced to

fight Bio-Rad’s litigation campaign, being denied “necessary”

patents, and potentially being excluded from the market. Id. ¶

117.

To allege that the acquisition of RainDance was a violation

of the Clayton Act with respect to the DSCP market, 10X must

provide facts indicating that the effect of the merger “may be

substantially to lessen competition, or tend to create a

monopoly.” United States v. Philadelphia Nat’l Bank, 374 U.S.

321, 387 (1963) (quoting 15 U.S.C. § 7). Absent mitigating

evidence, a merger will be found to substantially lessen

competition when it produces a firm controlling an undue

percentage share of the market, and results in a significant

increase in the concentration of firms in that market. Id. at

363. A claimant must show a “reasonable probability” of

violation, rather than a “mere possibility.” United States v.

E. I. du Pont de Nemours & Co., 353 U.S. 586, 598 (1957)

(emphasis added). If a firm exerts market power at the time of

suit, and that market power is traceable to a previous merger, a

court may use that as evidence that the previous merger (even if

it occurred well in the past) may have violated the Clayton Act.

Id. at 592.

RainDance was never a major competitor in the DSCP market.

Def.’s Counterclaims ¶ 15. In fact, “RainDance had . . . no

product that competed with 10X in single-cell NGS Sample Prep.”

Id. ¶ 30. Furthermore, 10X alleges that Bio-Rad began competing

in the NGS Sample Prep market only around the time it acquired

RainDance. Id. ¶ 29. This alone undermines 10X’s claim because

it is generally implausible that the acquisition of patents

violates the Clayton Act if the acquiring party is using such

acquisition to enter a market where it did not previously

compete. See SCM Corp. v. Xerox Corp., 463 F. Supp. 983, 1002

(D. Conn. 1978); SCM Corp., 645 F.2d at 1208 (affirming the

lower court and holding that “whether limitations should be

imposed on the patent rights of an acquiring party should be

dictated by the extent of the power already possessed by that

party in the relevant market into which the products embodying

the patented art enter”).

Furthermore, 10X alleges that it -- not Bio-Rad -- was the

one with the leading share in the DSCP market at the time of

filing, and that the two firms between them provide “the

majority of all products in the market” at the time of filing.

Id. ¶ 71. In other litigation, 10X has claimed that it is an

“established market leader in single cell genomics,” with its

Chromium single-cell instruments used at “93 of the top 100

research institutions and 13 of the top 15 biopharmaceutical

companies.” See Pl.’s Mem., Attach. 2, Am. Compl. ¶ 9, 10X

Genomics, Inc. v. Celsee, Inc., Civ. A. No. 19-00862 (D. Del.

Nov. 14, 2019), ECF No. 69-2. In this litigation, it never

specifies Bio-Rad’s market share either at the time of filing or

at the time of the RainDance acquisition. Thus, there is no way

for this Court to evaluate market share to determine whether

Bio-Rad is exerting unlawful market power in the DSCP market now

or at the time of merger, while 10X’s proclamations in the

Celsee case make such an inference implausible. See Spectrum

Sports v. McQuillan, 506 U.S. 447, 455 (1993) (noting that the

plaintiff must generally provide a definition of the relative

market and examination of market power).

10X asserts that Bio-Rad’s acquisition of RainDance was

unlawful because it allowed Bio-Rad to aggregate a large patent

portfolio, forming the platform for future litigation. Def.’s

Counterclaims ¶¶ 25-36. This argument is unavailing because the

acquisition of patents through merger is not anticompetitive

absent market power, as patents do not themselves inherently

confer market power over the downstream product. Illinois Tool

Works Inc. v. Indep. Ink, Inc., 547 U.S. 28, 46 (2006).

10X also fails plausibly to allege that the merger gave

Bio-Rad market power in the DSCP market as its arguments are

implausible or conclusory. First, it alleges that Bio-Rad’s

newly-combined post-merger patent portfolio allowed it to win

the 152 Case, when RainDance lacked the leverage to achieve

anything more than a settlement. Def.’s Counterclaims ¶¶ 30,

111-112. This is not evidence of improper market power in the

DSCP market. That Bio-Rad’s larger patent portfolio after the

RainDance acquisition made it more likely to succeed in

litigation –- even if credited as true -– provides no evidence

of market power in the downstream DSCP product market, but only

potential evidence that it had market power in its own corner of

the aggregated technology market, which is tautological because

patents are designed to provide a limited monopoly over the

exact technology they describe. United States v. Univis Lens

Co., 316 U.S. 241, 250 (1942).

Second, 10X alleges that Bio-Rad charges supracompetitive

prices for its patent licenses in the DSCP market. The presence

of supracompetitive pricing for licenses can be a strong

indicator of market power. See Rebel Oil Co. v. Atlantic

Richfield Co., 51 F.3d 1421, 1434 (9th Cir. 1995). Claiming

that prices are supracompetitive is a legal conclusion rather

than a fact, however, and must be supported by specific factual

allegations. See Jacobs v. Tempur-Pedic Int’l, Inc., 626 F.3d

1327, 1340 (11th Cir. 2010). Here, 10X does not allege with

specificity how the prices Bio-Rad charges for licensing are

actually supracompetitive within the DSCP market. Furthermore,

as this claim must be based on an allegation that the Raindance

merger itself caused the supracompetitive pricing, SCM Corp.,

645 F.2d at 1208, it is not plausible because Bio-Rad was not

competing in this market at the time of the acquisition. See

Def.’s Counterclaims ¶¶ 37, 74, 105, 126. Therefore, this

argument cannot support an inference of market power within the

DSCP Market.

Where 10X has failed to allege a viable Clayton Act

violation, its claim that Bio-Rad’s campaign of litigation was

anticompetitive cannot provide a basis for liability because

that litigation is protected Noerr-Pennington activity. See

Professional Real Estate Investors, 508 U.S. at 59. Costs

incurred in litigation can constitute antitrust injury only if

there is an underlying anticompetitive harm. McGuire Oil Co.,

958 F.2d at 1561.

Similarly, 10X cannot claim it suffered an antitrust injury

from Bio-Rad’s charging of increased prices or refusal to

license the technology at issue in the 152 Case. Def.’s

Counterclaims ¶ 110. “[T]here is no duty to aid competitors.”

Verizon Commc’ns, Inc. v. Law Offices of Curtis V. Trinko, LLP,

540 U.S. 398, 411 (2004). A patent, by design, grants a limited

monopoly to the patent-holder, and refusal to license absent a

separate violation of the law does not constitute an antitrust

violation. See Data Gen. Corp. v. Grumman Sys. Support Corp.,

36 F.3d 1147, 1186 (1st Cir. 1994), abrogated on other grounds

by Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154 (2010).

Neither can it claim antitrust injury from its need to develop

“costly” alternatives to licensing patents held by RainDance,

which is simply the product of normal competition. Def.’s

Counterclaims ¶ 110.

Taken as a whole, Bio-Rad’s alleged actions in the DSCP

market constitute nothing more than healthy competition. 10X

has thus failed to state a claim for a Section 7 violation with

respect to the DSCP market.

2. Count II: Clayton Act Violation in Droplet Genetic

Analysis Technology Market

10X alleges that the RainDance merger violates the Clayton

Act because it substantially lessens competition in the

technology market. Id. ¶¶ 118-121. More specifically, 10X

alleges that Bio-Rad’s new-found monopoly on patents in the DGAT

market has allowed it to raise licensing costs to supra-

competitive levels, refuse to license patents to competitors,

and foreclose competition. Id. ¶ 105. For the antitrust

injury, 10X alleges that it has had to pay increased prices for

licenses, has been denied licenses, has had to develop new

technologies to remain in the market, and faces exclusion from

the market by virtue of the antitrust litigation. Id. ¶¶ 110,

121.

Unlike the DSCP product market, here 10X has plausibly

alleged that Bio-Rad’s acquisition of Raindance may have

substantially reduced competition. Id. ¶ 119. 10X alleges that

RainDance and Bio-Rad competed in the defined DGAT market

(unlike the DSCP market), id. ¶ 82, and that the acquisition

reduced competition for licenses by removing a potential

competitor. Id. ¶ 87. The Clayton Act can bar the acquisition

of patents if the effect of that acquisition would be to lessen

competition substantially or create a monopoly. Eastman Kodak

Co. v. Goodyear Tire & Rubber Co., 114 F.3d 1547, 1557 (Fed.

Cir. 1997), overruled on other grounds by Cybor Corp. v. FAS

Techs., Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc).

The first step in the analysis is to ask whether the

RainDance acquisition, at the time it occurred, plausibly could

have allowed Bio-Rad to exert market power in the DGAT market.

It is plausible that the acquisition of one competitor by

another –- when both were active in the market -- substantially

reduced competition in that market. SCM Corp., 645 F.2d at

1208. Neither party disputes that Bio-Rad currently possesses

broad patent rights in what 10X has defined as the DGAT market.

Def.’s Counterclaims ¶ 74. A patent does not automatically

confer market power, Illinois Tool Works, 547 U.S. at 46, but

technology markets are defined by the ownership of intellectual

property, so a court may infer that a firm holding a large

percentage (typically over 65%) of patents in the defined market

is exerting market power. See PNY Techs., Inc. v. SanDisk

Corp., 2012 U.S. Dist. LEXIS 55965, at *23 (quoting Image Tech.

Servs. v. Eastman Kodak Co., 125 F.3d 1195, 1206 (9th Cir.

1997).

10X does not allege Bio-Rad’s market share, instead stating

that, if Bio-Rad’s assertions in court of its patent rights in

the DGAT market are true it “would be a monopolist in this

market.” Def.’s Counterclaims ¶ 74. The label of “monopolist”

is conclusory, and this Court accords it no weight. 10X’s

allegation that Bio-Rad raised royalty prices due to the

reduction in competition when it acquired RainDance, id. ¶¶ 12,

74, does, however, provide some indication of newly-acquired

market power. See In re Nexium, 968 F. Supp. 2d at 389 (citing

Coastal Fuels of P.R., Inc. v. Caribbean Petroleum Corp., 79

F.3d 182, 196-97 (1st Cir. 1996)). Unlike in the DSCP market,

RainDance, 10X, and Bio-Rad are plausibly alleged to have all

been competitors in the same technology market. Def.’s

Counterclaims ¶ 12.3 10X has therefore alleged facts from which

this Court could infer both reduced output (the reduction in

number of competitors providing licenses) and increased prices

for a sustained period of time, which are the required elements

to allege market power when the exact market share is not

defined. See Rebel Oil Co., 51 F.3d at 1433-34. With that

said, these two allegations barely pass the threshold of

specificity required for the Court to evaluate them, and do so

only because 10X has alleged a plausible mechanism of reduced

competition. Cf. Intellectual Ventures I LLC, 2013 U.S. Dist.

LEXIS 177836, at *12-28 (dismissing Sherman Act claims because

of lack of specific allegations in the pleadings, and because

plaintiff failed to explain why prices did not merely reflect

defendant’s lawful right to charge the patent license fee the

market would bear).

As to whether 10X has alleged antitrust injury from this

conduct, it has advanced plausible allegations of competitive

injury in the payment of supracompetitive licensing fees. See

In re Nexium, 968 F. Supp. 2d at 389.

3 10X’s allegation that the resolution of the 152 case in

Bio-Rad’s favor also indicates market power in the DGAT market,

Def.’s Counterclaims ¶ 86, while possible in theory, is simply

too teneous to support a finding of market power as it relies on

the unprovable speculation that RainDance itself could not have

achieved the same outcome. See Twombly, 550 U.S. at 555.

10X has not, however, advanced a plausible theory of

antitrust injury from the 152 case, because any injuries

stemming from this litigation was not caused “by reason of

anything forbidden in the antitrust laws.” Brunswick, 429 U.S.

at 488. The facts alleged here are similar to Eastman Kodak,

where the Federal Circuit dismissed a claim under the Clayton

Act because the plaintiff “would have suffered these same

injuries regardless of who had acquired and enforced the patent

against it.” 114 F.3d at 1558. Here, if the RainDance merger

had never happened, 10X would still be subject to the exact same

claims of patent infringement, as illustrated by the fact that

RainDance chose to sue prior to its acquisition. Def.’s

Counterclaims ¶ 30. With that said, because 10X has alleged

antitrust harm, the other lawsuits (including this one) brought

by Bio-Rad could potentially qualify as antitrust injury for the

purposes of damages. Amphastar, 850 F.3d at 57-58.

The Court therefore DENIES Bio-Rad’s motion to dismiss as

to Count II.

3. Count V: Clayton Act Violation in ddPCR Market

10X alleges that Bio-Rad’s acquisition of RainDance

violated the Clayton Act in the ddPCR market, arguing there was

anticompetitive harm because 10X is a consumer in this product

market and has been forced to pay supracompetitive prices.

Def.’s Counterclaims ¶¶ 134-137.

10X alleges that Bio-Rad currently controls over 90% of the

ddPCR market, id. ¶ 65, and that at the time of the acquisition,

RainDance competed in the market with a share of less than 10%.

Id. ¶ 51. It additionally alleges that there are now fewer

products available in the ddPCR market. Id. ¶ 104. A firm

increasing its market share above 90% through horizontal merger

is a classic example of conduct that may negatively impact

competition though monopolizing behavior. See Hewlett-Packard

Co. v. Boston Sci. Corp., 77 F. Supp. 2d 189, 195-96 (D. Mass.

1999) (Saris, J.) (“For pleading purposes, an allegation of

market share of 70 percent has been held to be an adequate basis

for an inference of power in a relevant market.”) (citing

International Audiotext Network, Inc. v. AT & T, 893 F. Supp.

1207, 1217 (S.D.N.Y. 1994))). Thus, 10X has properly alleged a

violation of the Clayton Act.

10X claims antitrust injury in this market in having to pay

supracompetitive prices for ddPCR products. See Def.’s

Counterclaims ¶ 137. Bio-Rad argues that this claim is

insufficiently precise to survive a motion to dismiss, as 10X

does not allege any of the actual prices it has paid, nor

whether RainDance’s prices were less expensive. Pl.’s Reply 4.

Bio-Rad further argues, id. at 11, that 10X’s allegations

in this market are no more specific than pleadings that other

courts have dismissed. See Tempur-Pedic Int’l, 626 F.3d at 1340

(holding an allegation insufficient that stated plaintiff’s

resale price fixing agreements “have unreasonably restrained, do

unreasonably restrain, and will continue to unreasonably

restrain trade and commerce in the visco-elastic mattress market

. . . by eliminating price competition” (omission in original));

Intellectual Ventures, 2013 U.S. Dist. LEXIS 177836, at *20

(holding complaint to be insufficient when it made “conclusory

allegations that [the defendant] has demanded and received

‘supracompetitive prices’” without specifying the prices of

royalties or licenses, or why those prices are

supracompetitive). 10X distinguishes Tempur-Pedic by noting

that, in that case, the plaintiffs had failed to explain the

mechanism of anticompetitive harm, whereas 10X has clearly

explained that mechanism in its complaint. Def.’s Opp’n 10-11.

The same reasoning distinguishes Intellectual Ventures as well,

though 10X does not specifically address it. See 2013 U.S.

Dist. LEXIS 177836 at *20.

While the allegations are perhaps a bit lacking in

specificity, they are plausible and sufficient to put Bio-Rad on

notice of the alleged violation. Bio-Rad’s motion to dismiss as

to Count V is therefore DENIED.

D. Sherman Act Violations

A plaintiff claiming a violation of Section 2 of the

Sherman Act must allege both “the possession of monopoly power

in the relevant market” and “the willful acquisition or

maintenance of that power as distinguished from growth or

development as a consequence of a superior product, business

acumen, or historic accident.” Grinnell Corp., 384 U.S. at

570 71.

The acquisition of patents can constitute monopolization

when “the dominant competitor in a market acquires a patent

covering a substantial share of the same market.” SCM Corp.,

645 F.2d at 1205, 1210; see also Buying Monopoly, at 54-55

(noting that buying up all the patents in a field can constitute

either anticompetitive conduct as a means of excluding rivals,

or procompetitive conduct by enabling a firm’s internal

innovation). Maintenance of monopoly power is barred only if it

is done through anticompetitive conduct. See Trinko, 540 U.S.

at 407. Conversely, “[c]onduct that impairs the opportunities

of rivals and either does not further competition on the merits

or does so in an unnecessarily restrictive way may be deemed

anticompetitive.” Qualcomm, 501 F.3d at 308 (citing Aspen

Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 604-05

(1985)).

To demonstrate an attempt to monopolize, the plaintiff must

show “(1) that the defendant has engaged in predatory or

anticompetitive conduct with (2) a specific intent to monopolize

and (3) a dangerous probability of achieving monopoly power.”

Spectrum Sports, 506 U.S. at 456. Some conduct that is illegal

for a monopolist is legal for an aspiring monopolist because it

would not have an anticompetitive effect unless undertaken by a

firm possessing monopoly power. United States v. Dentsply

Int’l, Inc., 399 F.3d 181, 187 (3rd Cir. 2005). The showing of

specific intent requires “a specific intent to destroy

competition or build monopoly,” not mere competition. Times-

Picayune Publ’g Co. v. United States, 345 U.S. 594, 626 (1953).

The showing of “dangerous probability” requires the same type of

analysis as finding a monopoly in the relevant market, as well

as the defendant’s alleged ability to harm competition in that

market. Spectrum Sports, 506 U.S. at 456.

Not all monopolies are necessarily anticompetitive.

Trinko, 540 U.S. at 407 (“The mere possession of monopoly power,

and the concomitant charging of monopoly prices, is not only not

unlawful; it is an important element of the free-market

system.”). The additional element required to prove a violation

of the Sherman Act is called “predatory” or “exclusionary”

conduct. See Dentsply, 399 F.3d at 186-87. This type of

conduct is defined as conduct that is both illegal and is

designed “to foreclose competition, gain a competitive

advantage, or to destroy a competitor." Id. (quoting Eastman

Kodak, 504 U.S. at 482-83).

Much of 10X’s arguments for Sherman Act violations fall

apart under this scrutiny. 10X argues, for all of its Sherman

Act counts, that the predicate illegal act of monopolization was

Bio-Rad’s acquisition of RainDance. Def.’s Opp’n 1; Def.’s

Counterclaims ¶¶ 122-133, 138-142. Yet, as discussed supra

III.C.1, most of its theories of how it was harmed are not in

fact examples of anticompetitive action.

Most importantly, Bio-Rad’s entire campaign of litigation

against 10X cannot constitute exclusionary acts because it is

protected by the Noerr-Pennington doctrine. See supra II.C.3.

The exception to this rule endorsed by the First Circuit, see

Amphastar, 850 F.3d at 57-58, applies only to a finding of

anticompetitive injury for purposes of liability or standing,

not for the finding of an antitrust cause of action. Even were

this Court to consider the litigation part of an anticompetitive

“scheme” to monopolize, Continental Ore Co. v. Union Carbide &

Carbon Corp., 370 U.S. 690, 707 (1962), the Noerr-Pennington

doctrine would still render it protected conduct for purposes of

finding a violation of the Sherman Act. See Amphastar, 850 F.3d

at 57; Abbott Labs. v. Teva Pharms. USA, Inc., 432 F. Supp. 2d

408, 428-30 (D. Del. 2006). Additionally, several of 10X’s

other theories of anticompetitive harm are unavailing because

the alleged acts are not actually anticompetitive, such as

settling the 152 case on favorable terms, or forcing 10X to

innovate alternatives to Bio-Rad’s patents. See supra II.C.1.

1. Count III: Sherman Act Violation for Attempted

Monopolization of Droplet Single-Cell Product

Market

10X alleges that Bio-Rad engaged in anticompetitive conduct

in violation of Section 2 of the Sherman Act through the

following actions: “(a) Unlawfully acquiring RainDance and the

RainDance patent portfolio. (b) Refusing to license its patent

portfolios at reasonable rates, or at all. (c) Using that

portfolio to file patent litigation against actual or potential

competitors seeking to use technology for genetic analysis on a

droplet platform.” Def.’s Counterclaims ¶ 123.

10X pleads that these actions are anti-competitive because

the lawsuits have imposed great costs on the company, the lack

of access to patents is hampering its ability to innovate, and,

should the lawsuit be successful, it will be “excluded” from the

market. Id. ¶ 126. It alleges Bio-Rad’s specific intent to

monopolize in reference to statements by Annette Tumolo, Bio-

Rad’s Executive Vice President and President, Life Science

Group, indicating that Bio-Rad intended to use litigation as a

means of forcing 10X’s acquisition, and by reference to Bio-Rad

announcing the litigation in a manner designed to sabotage 10X’s

initial public offering. Id. ¶¶ 96, 99, 100, 124. Finally, it

pleads that Bio-Rad’s actions have created a dangerous

probability of allowing it to achieve monopoly power. Id. ¶

126.

10X’s arguments fail on the first prong of the attempted

monopolization analysis. First, 10X does not allege that Bio-

Rad had anything close to monopoly power (or even significant

market power) in the DSCP market at the time of its merger with

RainDance, see Pl.’s Reply 5, so the acquisition cannot be the

unlawful predicate act of monopolization for a Section 2

violation. Cf. SCM Corp., 645 F.2d at 1205. Second, refusal to

license to a rival is anticompetitive only when done by an

existing monopolist, which Bio-Rad is not. CSU, L.L.C., 203

F.3d at 1329. Third and finally, Bio-Rad’s litigation campaign

cannot constitute the exclusionary act because it is protected

by the Noerr-Pennington doctrine. Amphastar, 850 F.3d at 57-

58.

Regarding the specific intent requirement, 10X must allege

“a specific intent to destroy competition or build monopoly.”

Times-Picayune, 345 U.S. at 626 (1953). It has indeed alleged

sufficient facts to draw an inference that Bio-Rad’s litigation

campaign may be taking place with the intent of driving 10X out

of business, see Def.’s Counterclaims ¶ 96, but absent

illegally-acquired market power, there is nothing

anticompetitive about this intent.

Regarding the showing of a dangerous probability of

achieving monopoly power, the litigation itself cannot serve as

the predicate anticompetitive harm under Noerr-Pennington, so

any acquisition of market power that Bio-Rad achieved through

litigation must be treated as “growth or development as a

consequence of a superior product, business acumen, or historic

accident.” Grinnell Corp., 384 U.S. at 570 71.

10X has not pleaded sufficient facts to indicate

anticompetitive conduct in the DSCP market. Count III therefore

does not survive.

2. Count IV: Sherman Act Violation for

Monopolization or Attempted Monopolization of

Genetic Analysis Technology Market

10X alleges that Bio-Rad has monopolized or attempted to

monopolize the DGAT market in violation of Section 2 of the

Sherman Act. Def.’s Counterclaims ¶¶ 128-133. It articulates

two theories. First, that Bio-Rad’s acquisition of RainDance

constituted monopolization, maintenance of monopoly power, or

attempted monopolization; and second, that Bio-Rad’s enforcement

of its RainDance patent also constitutes monopolization or

attempted monopolization because it obtained these patents

illegally. Id.

10X alleges, similar to its Clayton Act claims, that the

acquisition of RainDance was unlawful because it consolidated

monopoly power through acquisition, rather than “superior

products, business acumen, or historic accident.” Def.’s

Counterclaims ¶¶ 129-130. It further alleges that Bio-Rad’s

continued defense of its victory in the 152 case, and its

pressing of litigation in the case before this Court, represent

an unlawful attempt to consolidate this monopoly. Def.’s

Counterclaims ¶ 130. It alleges these actions are

anticompetitive for the same reasons as in Count III, as the

DGAT market is upstream from the DSCP market, so any

consolidation in the DGAT market will drive up prices and lead

to potential exclusion in the DSCP market. Id. ¶ 132.

Additionally, 10X alleges attempted monopolization because, if

the lawsuits are successful, Bio-Rad will effectively achieve

monopoly power by forcing 10X to pay excessive royalties or

forcing it out of the market. Id. ¶ 131.

As an initial matter, 10X cannot succeed on its theories

that rely on Bio-Rad’s litigation as the mechanism of either

monopolization or attempted monopolization because non-baseless

litigation is protected under Noerr-Pennington. This is true

even were this Court to find that the acquisition of RainDance

violated the Clayton Act by reducing competition in the DGAT

market, because that acquisition would be illegal only insofar

as it increased Bio-Rad’s market power, and litigation is

protected conduct regardless of the plaintiff’s market power.

Cf. P.R. Tel. Co., 874 F.3d at 773-75 (Barron, J., concurring)

(analyzing extent of protections afforded by the Noerr-

Pennington doctrine to litigation brought by a “monopolist”).

Even more fatal to its case, 10X has failed plausibly to

allege that Bio-Rad is an actual monopolist in the DGAT market

either now or at the time of the RainDance acquisition. See

Twombly, 550 U.S. 566. As discussed supra, III.C.2, 10X has

nudged its Clayton Acts claims in the DGAT market across the

threshold of plausibility by alleging facts that may indicate

market power. It has not, however, alleged sufficient facts to

indicate monopoly market power. As 10X itself noted in its

brief, the standard for alleging monopoly is higher than the

standard for alleging the degree of market power sufficient to

state a claim under the Clayton Act. See Def.’s Opp’n 6

(“‘Acquisition by a monopolist [of competing patents] . . .

should presumptively be a § 2 ‘exclusionary practice’” and “‘a

patent is a productive asset [so] § 7 of the Clayton Act . . .

may condemn such mergers even where the licensee is not a

monopolist.’” (ellipses and alterations in original) (quoting

Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law § 707 (4th

ed. 2013-2018)).

In fact, the record of litigation between the parties and

10X’s own statements make it implausible that Bio-Rad holds a

monopoly in the market. 10X is a self-proclaimed “lead

innovator” in the downstream DSCP sub-market and holds numerous

patents in that sub-market. Def.’s Counterclaims ¶¶ 71, 76.

Furthermore, both parties have successfully enforced patents

against the other, and both parties have been unsuccessful in

the enforcement of other patents, indicating healthy

competition. Compare the 1068 ITC Investigation (finding that

10X had infringed Bio-Rad’s patent), with the 1100 ITC

investigation (finding that Bio-Rad had infringed 10X’s

patents). In this context, 10X’s barebones allegations that

Bio-Rad reduced licenses and increased prices following the

RainDance acquisition are insufficient plausibly to allege

monopoly dominance. Cf. Intellectual Ventures, 2013 U.S. Dist.

LEXIS 177836 at *19-20. 10X states that Bio-Rad “alleges that

it has broad rights . . . [that] if true, would mean that Bio-

Rad would be a monopolist in the market,” Def.’s Counterclaims ¶

74, but this statement is merely an unsupported legal

conclusion.

10X has also failed to allege what percentage of the DGAT

market it believes Bio-Rad either currently controls or

controlled at the time of the RainDance acquisition. See Dep’t

of Justice, Competition and Monopoly: Single-Firm Conduct Under

Section 2 of the Sherman Act 21 (2015) (available at:

https://www.justice.gov/sites/default/files/atr/legacy/2008/09/1

2/236681_chapter2.pdf) (noting that courts typically require a

showing of at least 55-70% of the market to indicate the

presence of a monopoly, and that a share of the market below 50%

is likely inadequate as matter of law). It also has failed to

allege that there are “significant” barriers to entry preventing

another firm from entering the market. 10X has not alleged

there is anything unusual about this market that creates

significant barriers to entry, as where one party controls a

technological standard. Cf. Qualcomm Inc., 501 F.3d at 314. It

does allege that Bio-Rad has created a “thicket of patents” that

“requires innovators to obtain costly licenses or face the task

of inventing newly designed products that are not alleged to be

infringing,” Def.’s Counterclaims ¶ 87, but forcing competitors

either to pay for a license or innovate is the very purpose of

patents. See Brullote v. Thys Co., 379 U.S. 29, 33 (1964) (“A

patent empowers the owner to exact royalties as high as he can

negotiate with the leverage of that monopoly.”); Data Gen.

Corp., 36 F.3d at 1186.

Finally, 10X’s theories of attempted monopolization are

unavailing because nothing that Bio-Rad is alleged to have done

post-merger would constitute exclusionary conduct unless it was

already a monopolist. The RainDance acquisition itself cannot

constitute attempted monopolization absent exclusionary conduct.

Spectrum Sports, 506 U.S. at 456. Its refusal to license to a

rival (or charge whatever the market will bear) does not qualify

as such conduct unless it is already a monopolist. Data Gen.

Corp., 36 F.3d at 1185. If Bio-Rad is not a monopolist, its

subjective intent in refusing to license or enforcing its

patents is “immaterial.” CSU, L.L.C., 203 F.3d at 1327.

In conclusion, because it is not plausibly pleaded that

Bio-Rad is a monopolist in the DGAT market, and because it has

not taken any actions that –- lacking monopoly power -- would be

exclusionary, the motion to dismiss as to Count IV is GRANTED.

3. Count VI: Sherman Act Violation for

Monopolization of ddPCR Market

10X alleges that Bio-Rad has monopolized the ddPCR market

through its unlawful acquisition of RainDance. Def.’s

Counterclaims ¶¶ 138-142. It further alleges that it has

suffered anticompetitive harm in the market by being forced to

pay supracompetitive prices for ddPCR devices and consumables,

having to defend against lawsuits, and having its ability to

innovate hampered. Id. ¶ 141.

As with its Clayton Act claim, 10X has sufficiently alleged

a Sherman Act Section 2 violation in the ddPCR market. 10X’s

allegation that Bio-Rad possesses a 90% market share at the time

of the acquisition, and further increased its market share by

acquiring RainDance, is sufficient to allege a Sherman Act

violation because it indicates that a dominant competitor

further entrenched its monopoly by consolidating its hold on the

market. SCM Corp., 645 F.2d at 1205, 1210. The payment of

supracompetitive prices constitutes a valid antitrust injury for

this claim, as well as Count V. Bio-Rad’s motion to dismiss as

to Count VI is therefore DENIED.

D. Count VII: Unfair Competition in Violation of

California’s Business & Professions Code § 17200

10X alleges violations of the California Unfair Competition

law, section 17200 et seq. of the California Business and

Professions Code, on the same grounds as its previous counts.

Section 17200 prohibits a variety of unfair practices,

including antitrust violations. See Cel-Tech Commc’ns, Inc. v.

Los Angeles Cellular Tel. Co., 20 Cal. 4th 163, 186-87 (1999)

(holding that the word “unfair” in section 17200 encompasses

“conduct that threatens an incipient violation of an antitrust

law, or violates the policy or spirit of one of those laws

because its effects are comparable to or the same as a violation

of the law, or otherwise significantly threatens or harms

competition”). The standard for a violation of section 17200 is

similar to the federal standard. Id. at 186. Conduct that a

court rules does not constitute a violation under the federal

antitrust laws will not support a finding under section 17200

either. LiveUniverse, Inc. v. MySpace, Inc., 304 Fed. Appx.

554, 557 (9th Cir. 2008).

Bio-Rad argues that, because 10X has failed to state a

claim on any of its federal counts, this Court must also dismiss

the section 17200 claim. Pl.’s Mem. 18. Alternatively, Bio-Rad

argues that 10X’s arguments should be barred under California’s

anti-SLAPP provision, Cal. Civ. Proc. Code § 425.16., which

guards First Amendment-covered activity including Noerr-

Pennington protected patent petitioning. Pl.’s Mem. 18 n.12.

Both of Bio-Rad’s arguments are unavailing. Because three

of 10X’s six counts survive the motion to dismiss, this court

also DENIES the motion to dismiss as to Count VII.

III. CONCLUSION

For the reasons given above, this Court GRANTS Bio-Rad’s

motion to dismiss, ECF No. 68, with respect to counterclaim

Counts I and III, and IV, and DENIES the motion to dismiss with

respect to counterclaim Counts II, V, VI, and VII.

SO ORDERED.

/s/ William G. Young

WILLIAM G. YOUNG

U.S. DISTRICT JUDGE