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Illumina Sues Guardant Health Over Patents, Trade Secrets, Breach of Contract

This story has been updated to correct the name of Guardant Health's colorectal cancer screening assay, Guardant Shield and to add comments from Illumina.

NEW YORK – Illumina on Thursday filed a lawsuit against Guardant Health with the US District Court for the District of Delaware for correction of inventorship, trade secret misappropriation, and breach of contract.

The sequencing technology firm is alleging that Guardant co-CEOs Helmy Eltoukhy and AmirAli Talasaz misappropriated Illumina's confidential information and filed patent applications for their liquid biopsy startup based on Illumina's intellectual property.

According to Illumina, Eltoukhy and Talasaz applied for patents now assigned to Guardant based on technology they developed while they were still employed by Illumina. "Eltoukhy even helped to prepare patent claims while an Illumina employee, using Illumina information and equipment to do so," the firm wrote in its complaint.

Evidence related to these claims came to light in 2019 in the context of a separate legal battle between Guardant, Foundation Medicine, and Personal Genome Diagnostics, which recently resulted in a settlement agreement under which Foundation has licensed patents from Guardant and agreed to pay royalties.

Foundation Medicine had served a third-party subpoena on Illumina for documents relating to Eltoukhy's communications, which led to discovery that Eltoukhy had taken a swath of documents, including those marked "Company Confidential," when he resigned in 2013, and had forwarded information from Illumina employees to his personal Gmail account and then to Talasaz who had left Illumina for Guardant in June 2012.

In subsequent months, Eltoukhy's name as an inventor was removed from a number of Guardant patent applications. The court presiding over the litigation also issued an order finding that Eltoukhy had improperly deleted or attempted to delete information, including confidential Illumina documents, from his personal files after being deposed.

"Guardant continues to apply for intellectual property, including patents, that use confidential, proprietary, and trade secret information that Eltoukhy and Talasaz misappropriated from Illumina and that include inventive contributions made by Illumina personnel, including Eltoukhy while he was an Illumina employee," Illumina wrote in its complaint. "Guardant also continues to develop technology and products using the confidential, proprietary, trade secret information," the firm added.

Guardant responded in a statement, calling the suit an attempt to stifle competition and retaliate against it for registering antitrust concerns regarding Illumina's acquisition of cancer early detection firm Grail.

"Nearly a decade after these patents were filed, Illumina's lawsuit frivolously challenges our ownership and authorship of our intellectual property, which is the backbone of our vital work," John Saia, Guardant's senior VP, general counsel and corporate secretary, said in the statement.

He called the lawsuit an attempt to slow Guardant's progress in the early detection marketplace as it prepares to launch its colorectal cancer screening assay Guardant Shield.

Although Saia said Guardant's long-term supply agreement with Illumina "remains in force" and its work will not be interrupted, the company "cannot stand by" and will "vigorously defend" against what he called false IP claims on the part of Illumina.

An Illumina spokesperson echoes this, saying the firm has not plans to change its business relationship with Guardant, but argued that there is not merit to Guardant's claim that the suit was filed to suppress competition in the market.

Illumina stated in its complaint that Eltoukhy and Talasaz, who were hired in 2008 and 2009 respectively, worked on a project to create a sequencing device for processing minimally invasive blood draws for cancer diagnostics and other applications. Allegedly, on Dec. 9, 2011, while still employed by Illumina, the two anonymously incorporated Guardant as a Delaware corporation, filing patent applications for inventions originating at Illumina.

The firm claims that during the time that Talasaz had left Illumina, but Eltoukhy was still employed, the latter funneled proprietary information to the former. In addition, Illumina believes Eltoukhy's removal of documents marked confidential after his resignation represents misappropriation of trade secrets, which has resulted in "severe competitive harm" associated with significant monetary damages.

"At a minimum, Illumina is entitled to a reasonable royalty as compensation for defendants' actions," the firm wrote, adding that the activities of Guardant's founders also warrant "exemplary damages under California Civil Code."

Illumina asked the court to correct inventorship of a slew of patents, adding Eltoukhy's Illumina colleague, Frank Steemers, as an inventor and declaring Illumina the rightful owner by assignment.

The company is seeking an award of damages in an amount to be proven at trial, including but not limited to actual losses, unjust enrichment, lost profits, and/or imposition of a reasonable royalty.

Illumina also wants temporary, preliminary, and permanent injunctive relief against Guardant and an order directing the defendants to purge any and all records of Illumina trade secrets or confidential information from their possession.

In late morning trade on the Nasdaq, shares of Guardant's stock were up less than a percent at $53.67.