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Case 1:10-cv-00433-LPS-MPT Document 206 Filed 06/25/13 Page 1 of 56 PageID #: 4418

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

CORNELL UNIVERSITY, CORNELL
RESEARCH FOUNDATION, INC., LIFE
TECHNOLOGIES CORPORATION, and
APPLIED BIOSYSTEMS, LLC,

Plaintiffs,

v.

ILLUMINA, INC.,

I. INTRODUCTION

C. A. No. 10-433-LPS-MPT

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Defendant.




REPORT AND RECOMMENDATION

On May 10, 2010, Cornell University, Cornell Research Foundation, Inc.

(collectively, “Cornell”), Life Technologies Corporation (“Life Technologies”), and

Applied Biosystems, LLC (“Applied Biosystems”) (collectively, “plaintiffs”) brought this

action against Illumina, Inc. (“defendant”), alleging infringement of eight patents.1

Defendant answered on August 23, 2010, asserting counterclaims seeking declaratory

judgment of invalidity and non-infringement of each patent.2 Defendant did not initially

plead any affirmative defenses or counterclaims concerning a covenant not to sue.3 On

October 4, 2010, defendant amended its answer to include that plaintiffs’ claims are

barred, as to Life Technologies and Applied Biosystems, based on a “grant of a

1 D.I. 1.
2 D.I. 13 at 16-18.
3 Id. at 15-18.

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covenant not to sue [defendant].”4

Thereafter, defendant filed a motion to bifurcate the covenant issue, and stay the

patent infringement case, pursuant to FED. R. CIV. P. 42(b).5 While that motion was

pending, plaintiffs amended their complaint to add claims of infringement for three

additional patents.6 On October 20, 2011, the court granted defendant’s motion to

bifurcate and stay.7

Subsequently, defendant filed its amended answer and counterclaims to

plaintiffs’ first amended complaint.8 In this pleading, defendant added a counterclaim for

breach of the same contract that served as the basis for its covenant not to sue

affirmative defense.9 On May 23, 2012, a Report and Recommendation was issued

granting plaintiffs’ motion to dismiss defendant’s breach of contract counterclaim, under

FED. R. CIV. P. 12(b)(6), for failure to state a claim upon which relief can be granted, and

denying defendant’s request to file an amended counterclaim, pursuant to FED. R. CIV.

P. 15(a).10 The Report and Recommendation was adopted by the Honorable Leonard

4 D.I. 15 at 15, ¶ 6.
5 D.I. 26. The supporting brief is found at D.I. 27.
6 D.I. 63. As a result, the patents-in-suit include: U.S. Patent Nos. 6,797,470

(the “‘470 patent”); 7,083,917 (the “‘917 patent”); 7,166,434 (the “‘434 patent”);
7,312,039 (the “‘039 patent”); 7,320,865 (the “‘865 patent”); 7,332,285 (the “‘285
patent”); 7,364,858 (the “‘858 patent”); 7,429,453 (the “‘453 patent”); 7,892,746 (the
“‘746 patent”); 7,892,747 (the “‘747 patent”); and 7,893,233 (the “‘233 patent”).
According to plaintiffs, the ‘747 patent, “asserted only against a product line that Illumina
concedes is not covered by the covenant not to sue (D.I. 88 [“Stipulation”]), is not at
issue in the bifurcated proceedings.” D.I. 173 at 4 n.3.

7 D.I. 82 (Transcript of Oral Argument Hearing) at 48:7-11.
8 D.I. 92.
9 Id. at 25, ¶¶ 34-40.
10 D.I. 157.

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P. Stark on June 29, 2012.11 Presently before the court are the defendant’s12 and

plaintiffs’13 cross-motions for summary judgment on the covenant not to sue issue, and

plaintiffs’ motion to strike.14 The parties’ cross-motions for summary judgment are

directed to a covenant not to sue contained in a settlement and cross license agreement

(“Settlement Agreement”) between Applera Corporation (“Applera”) and defendant

Illumina.15 Before considering the parties’ respective arguments in their cross-motions

for summary judgment, however, the court must address plaintiffs’ motion to strike.

II.

Motion To Strike

A.

Summary of Arguments

In their motion to strike, plaintiffs argue:16

(1) Defendant’s reply brief17 relies on inadmissible evidence from an incomplete

record on the parties’ settlement negotiations, including the negotiation history, draft

settlement agreements, and correspondence.

11 D.I. 165.
12 D.I. 167. The briefs and supporting documents are found at D.I. 168

(defendant’s opening brief) and D.I. 169 (declaration of David G. Hanson, counsel for
Illumina).

13 D.I. 172. The briefs and supporting documents are found at D.I. 173 (plaintiffs’

consolidated opening brief and answering brief), D.I. 174 (appendix A), and D.I. 175
(appendix B).

14 D.I. 184. The briefs and supporting documents are found at D.I. 185 (plaintiffs’
opening brief), D.I. 186 (plaintiffs’ appendix), D.I. 195 (defendant’s answering brief), D.I.
196 (declaration of Jessica Hutson Polakowski, counsel for Illumina), and D.I. 199
(plaintiffs’ reply brief).

15 See D.I. 169, Ex. 3 (Settlement Agreement). After executing the Settlement

Agreement, Applera went through a series of business transactions/mergers and name
changes, the consequences of which are at the root of the parties’ summary judgment
arguments.

16 D.I. 185 at 3.
17 D.I. 179.

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(2) Defendant’s reply brief contains arguments and alleged facts that were not

included in defendant’s opening brief.

B.

Discussion

Plaintiffs move to strike portions of defendant’s response to plaintiffs’ motion for

summary judgment and reply in support of defendant’s motion for summary judgment.18

Plaintiffs contend defendant’s arguments violate the parties’ confidentiality agreements,

the California mediation privilege,19 and this court’s Local Rules governing the form and

contents of briefs, memoranda of points and authorities, and appendices.20 More

specifically, they argue defendant’s reply brief relies on inadmissible evidence from an

incomplete, and therefore, inaccurate record of the parties’ settlement negotiations, and

contains arguments and facts not included in defendant’s opening brief.21 Defendant

notes motions to strike under FED. R. CIV. P. 12(f)22 are “generally disfavored, unless the

matter is clearly irrelevant to the litigation or will prejudice the adverse party.”23

Additionally, “[w]hen ruling on a motion to strike, the [c]ourt must construe all facts in

favor of the nonmoving party and deny the motion if the defense is sufficient under law.

Further, a court should not grant a motion to strike a defense unless the insufficiency of

the defense is clearly apparent.”24

18 D.I. 179.
19 Cal. Evid. Code § 1119 (2012).
20 D. Del. LR 7.1.3(c)(2).
21 D.I. 185 at 3.
22 “The court may strike from a pleading an insufficient defense or any redundant,

immaterial, impertinent, or scandalous matter.” FED. R. CIV. P. 12(f).

23 Seidel v. Lee, 954 F. Supp. 810, 812 (D. Del. 1996).
24 Symbol Techs., Inc. v. Aruba Networks, Inc., 609 F. Supp. 2d 353, 356 (D. Del.

2009) (internal quotations and citations omitted).

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1.

Inadmissible Evidence - Settlement Negotiations and
Settlement Agreement Drafts

Plaintiffs contend defendant’s reply brief relies on inadmissible evidence from the

parties’ settlement negotiations. For the following reasons, plaintiffs’ motion to strike

inadmissible evidence from the settlement negotiations is granted.

a.

Negotiation Record

Plaintiffs note defendant and Applera25 entered into a confidentiality agreement

where “any information discussed, exchanged, or disclosed” during negotiations “will be

used only for settlement purposes” and not for “discovery or at trial or for any other

purpose in any proceeding or litigation.”26 Thus, they argue defendant cannot rely on

the negotiation history to clarify the terms “Defined Product,” “Blocking Patents,” and

“necessarily infringed.”27 Defendant counters, by relying on material covered by the

confidential agreements in their opening brief, plaintiffs “opened the door to the use of

the ‘negotiation record,’ and equity requires that [defendant] also be allowed to rely on

this evidence.”28

As to defendant’s argument, plaintiffs contend they objected to defendant’s

evidence as inadmissible, and cited a settlement related document should the evidence

be admitted.29 Plaintiffs maintain such an “evidentiary proffer is a well-accepted tool of

trial, and eliminates the unfairness of having an incomplete record should the objection

25 As discussed below, Applera is the predecessor of plaintiff, Applied

Biosystems.

26 D.I. 175, Confidentiality Agreement at B144-47.
27 D.I. 185 at 4.
28 D.I. 195 at 5 (citing D.I. 173 at 9).
29 D.I. 185 at 6.

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about admissibility turn out to be wrong.”30

While defendant does not cite any authority to support its proposition, evidence

from the settlement agreement can be used if “offered for a purpose other than to prove

the specific details of a negotiated claim.”31 “Evidence of agreements in general, or a

policy of making a particular type of agreement may be relevant and not prohibited by

Rule 408 as long as it ‘does not extend to the terms of those licenses granted in

settlement of litigation.’”32 Even if plaintiffs “opened the door,” that door should remain

closed where plaintiffs’ references to the settlement agreement were inappropriate, and

neither parties’ evidence would be admissible.

Plaintiffs maintain defendant’s arguments on pages nineteen to twenty-two of its

reply brief,33 based on the parties’ settlement negotiations, are inadmissible. Because

defendant relies upon settlement negotiations to prove the specific details or terms, the

arguments based upon the parties’ settlement negotiations contained in pages nineteen

to twenty,34 and twenty-one to twenty-two,35 of defendant’s reply brief are inadmissible.36

(D. Del. 2007).

30 Id.; see also FED. R. EVID. 103(a)(2).
31 Inline Connection Corp. v. AOL Time Warner Inc., 470 F. Supp. 2d 435, 440

32 Id. (citation omitted).
33 D.I. 179.
34 Specifically, the inadmissible language is from “[e]vidence from the parties’

negotiations of the Agreement conclusively shows that ‘Defined Products’ was intended
to cover both BeadChip and SAM” to “[a]ccordingly, the Court should reject Plaintiffs’
attempt to limit the definition of ‘an Illumina BeadArray’ to a single product (fiber-optic
based SAMs), instead of the broader meaning agreed to by the parties.” D.I. 186, Ex. A
at 19-20.

35 Id., Ex. A at 21-22.
36 The court’s conclusion equally applies to plaintiffs’ argument regarding
defendant’s opening brief (“[t]he Parties’ negotiations demonstrate that ‘Defined
Product’ includes SAM and BeadChip,” and “[t]he parties’ negotiations support
[defendant’s] interpretation” of “necessarily infringed.”) D.I. 179 at 19-22. Plaintiffs also

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b.

California Mediation Privilege

The California mediation privilege bars the admissibility, discovery, and

disclosure of any evidence, including writings and communications, “prepared for the

purpose of, in the course of, or pursuant to, a mediation or a mediation consultation.”37

An exception to § 1119 exists if the parties expressly agree in writing to waive the

protection. Plaintiffs represent no such consent exists here.38 Defendant contends a

private contract cannot constrain the court’s ability to admit or exclude relevant

evidence,39 and “[a]n appropriate protective order can alleviate problems and concerns

regarding both confidentiality and scope of the discovery material produced in a

particular case.”40

Plaintiffs point out when there is a question of general contract interpretation, the

contend even if defendant had raised these arguments at the proper time, plaintiffs
would have had difficulty responding because defendant blocked discovery on the
negotiations. D.I. 185 at 9. Likewise, they allege they would also have difficulty
responding to defendant’s other arguments that “Illumina negotiated for and secured
broader freedom by requiring inclusion of more, not fewer, amplification methods,” and
defendant’s contention that the Settlement Agreement’s to “an Illumina BeadArray” is
“broader” than the earlier language. Id. at 9-10 (citing D.I. 179 at 22). Again, the
negotiation history is inadmissible.

37 Cal. Evid. Code § 1119 (2012).
38 Id. § 1122.
39 D.I. 195 at 5-8; see also FED. R. EVID. 402; Pearson v. Miller, 211 F.3d 57, 66
(3d Cir. 2000) (“when there are federal law claims in a case also presenting state law
claims, the federal rule favoring admissibility, rather than any state law privilege, is the
controlling rule” (citation omitted)). Defendant argues because plaintiffs breached the
confidentiality agreements first, they cannot now enforce the agreements. See Durrell
v. Sharp Healthcare, 108 Cal. Rptr. 3d 682, 697 (2010) (“[I]t is elementary that one party
to a contract cannot compel another to perform while he himself is in default.” (alteration
in original) (citation omitted)). As discussed, the negotiation history is inadmissible.
40 USAA Cas. Ins. Co. v. Smith, C.A. No. 1:10CV115, 2012 WL 967368, at *6

(N.D. W. Va. Mar. 21, 2012) (citation omitted).

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court looks to applicable state law.41 “[I]n a civil case, state law governs privilege

regarding a claim or defense for which state law supplies the rule of decision.”42

Plaintiffs argue that presently, “the only issues ripe for decision by the Court are

contract interpretation issues governed by state law.”43 Since the law to be applied at

this stage is state law, that is, California law, which specifically addresses the use of

writings and communications in mediation, the previously noted arguments contained in

pages twenty-one to twenty-two44 of defendant’s reply brief are inadmissible.

c.

Incomplete Record

Plaintiffs maintain defendant “created an incomplete factual record and blocked

discovery on the very negotiations it relies on in its reply brief,” and should not be

allowed to rely on the negotiation history.45 By such conduct, plaintiffs argue defendant

“has used the confidentiality agreements and the California mediation privilege as a

shield against discovery and, therefore, should not be allowed to use self-serving parts

of the negotiation history as a sword in its motion for judgment.”46

Defendant counters, because plaintiffs did not agree to waive any rights under

41 St. Clair Intellectual Prop. Consultants, Inc. v. Palm, Inc., C.A. No. 06-404 JJF-
LPS, 2009 WL 1220546, at *8 (D. Del. May 4, 2009); Texas Instruments Inc. v. Tessera,
Inc., 231 F.3d 1325, 1329 (Fed. Cir. 2000) (applying California state law to interpret
license agreement).

42 FED. R. EVID. 501.
43 D.I. 199 at 2-3.
44 D.I. 186, Ex. A at 21-22.
45 D.I. 185 at 4-5; see also D.I. 186, Ex. B (plaintiffs’ subpoena to produce

documents); id., Ex. C (objecting to subpoena pursuant to California mediation privilege
and the confidentiality agreements); id., Ex. D (offering to produce requested
information if “clients (specifically, Applied Biosystems) waive any rights they may have
under the September 18, 2003 confidentiality agreement”); id., Ex. E (refusing to waive
rights).

46 D.I. 185 at 5.

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the September 18, 2003 confidentiality agreement in return for production of

documents, “it was Plaintiffs, not Illumina, who blocked discovery of this information.”47

As such, it alleges “[p]laintiffs should not be entitled to use the parties’ negotiation

history as both a shield and a sword, presenting partial evidence of the parties’

negotiation history, and, at the same time, preventing Illumina from offering its evidence

of the negotiation history, which would provide a complete and accurate record.”48

Nevertheless, for the reasons discussed above, because information disclosed during

negotiations is inadmissible for discovery or at trial or for any other purpose in any

proceeding or litigation, the incomplete record issue is moot.

2.

Inadmissible Evidence - New Arguments and Alleged Facts

Plaintiffs point out a party may not “reserve material for the reply brief which

should have been included in a full and fair opening brief.”49 They contend defendant’s

reply brief “raised numerous new arguments and cited new evidence that could have,

and should have, been raised in its opening brief.”50 Defendant argues its “reply” brief

was actually a “reply in support of its own motion for summary judgment, combined with

a response to Plaintiffs’ own motion for summary judgment” pursuant to the briefing

schedule.51 As such, the arguments and evidence in defendant’s brief were “either

explicitly contained within Illumina’s initial brief or directly responsive to an argument

47 D.I. 195 at 8.
48 Id. at 9.
49 D. Del. LR 7.1.3(c)(2); see also Ad Hoc Comm. of Equity Holders of Tectonic

Network, Inc. v. Wolford, 554 F. Supp. 2d 538, 562 n.168 (D. Del. 2008); Rockwell
Techs., LLC. v. Spectra-Physics Lasers, Inc., C.A. No. 00-589 GMS, 2002 WL 531555,
at *3 (D. Del. Mar. 26, 2002).

50 D.I. 185 at 7.
51 D.I. 195 at 9.

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raised by Plaintiffs.”52 Plaintiffs note while defendant was given twenty pages for its

answering brief to oppose plaintiffs’ cross motion,53 and ten pages in its reply brief to

address plaintiffs’ answering brief,54 through its conflated answering and reply brief,

defendant reserved material for its reply brief which should have been in its opening

brief.55

Plaintiffs state:

Illumina moved for summary judgment on the following three discrete
issues addressed in its opening brief: (1) that the lawsuit is barred by the
covenant not to sue in the 2004 Agreement (based on the definitions of
“Defined/Modified Defined Product,” “Blocking Patents,” and “Excluded
Patent Claims”); (2) that the Cornell Plaintiffs and Applied Biosystems lack
standing; and (3) that Life Technologies and Applied Biosystems are
bound by the covenant not to sue.56

Further:

Plaintiffs answered Illumina’s motion and opened on their cross-motion,
moving on the following four independent grounds: (1) that Life
Technologies is not bound by the covenant not to sue; (2) that the Cornell
Plaintiffs are not bound by the covenant not to sue; (3) that the Cornell
Patents are not “owned or licensed by Applera” and therefore are not
“Blocking Patents” covered by the covenant; and (4) that the Cornell
Patents are not “necessarily infringed[”] by the “Defined Product” and,
therefore, are not “Blocking Patents.”57

At first blush, many of the aforementioned issues overlap. Defendant’s brief

does not clearly delineate where its answering or reply briefs begin and end.58 Despite

these concerns, the court will address defendant’s combined brief, and plaintiff’s claims

52 Id. at 10.
53 D.I. 173.
54 Id.
55 D.I. 199 at 7-8; see also D. Del. LR 7.1.3.
56 Id. at 7 (citing D.I. 168).
57 Id. at 7-8 (citing D.I. 173).
58 D.I. 168.

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of new arguments and new alleged facts.59

a.

New Arguments

For the following reasons, plaintiffs’ motion to strike new arguments is granted in

part and denied in part.

i.

Evasion of the Covenant

Plaintiffs contend defendant merely speculates that they “shifted patent license

rights to evade the Covenant, in derogation of Illumina’s rights.”60 Defendant counters

that no new argument exists in its combined brief, and plaintiffs are merely contorting

the facts regarding the mergers and acquisitions to avoid their obligations under the

Settlement Agreement, including the covenant.61 Despite each side’s spin, and, even if

defendant’s comment is mere conjecture, the court agrees this is not a new argument.

ii.

Readers

Plaintiffs maintain defendant argues, for the first time in its reply brief, that

“Illumina’s readers, used to practice GoldenGate and DASL, also fall within the

definition of Defined Products.”62 They point out defendant’s opening brief only argued

“Illumina’s GoldenGate™ and DASL™ assays, performed using BeadChip arrays,

‘SAM’ or VeraCode beads – are Defined and Modified Defined Products, respectively.”63

59 D. Del. LR 5.1.2.
60 D.I. 179 at 4 n.5, 17; see also D.I. 174 at A087-88, Jay Flatley, Illumina’s CEO,

Deposition at 160:17-161:4, 161:13-20 (admitting nothing is improper or unfair about a
reverse triangular merger).

61 D.I. 168 at 5 (stating, in defendant’s opening brief, “[p]laintiffs’ attempts to

contort the mergers and acquisitions described above in order to evade their obligations
flout the letter and spirit of the Agreement”).

62 D.I. 179 at 17.
63 D.I. 168 at 1. Plaintiffs also argue even if defendant’s reliance on the

negotiation history is not improper, defendant should have included in its opening brief

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Defendant contends because plaintiffs argued genuine material factual issues exist

regarding whether the accused assays, Bead-Based products and readers fall within

“Defined Products,” it is allowed to respond to plaintiffs’ arguments.64 The court finds

defendant, in its combined brief,65 merely responds to arguments raised in plaintiffs’

answering brief on the issue of readers and Defined Products, and is not improperly

raising new argument.66

iii.

“Essentially Identical” And “Exactly The Same”

Plaintiffs contend defendant’s argument that “Illumina’s GoldenGate and DASL

assays performed using VeraCode Beads are Modified Defined Products”67 is premised

on the assertion in defendant’s opening brief that “[t]he chemistry of the GoldenGate or

DASL assay performed using VeraCode Beads is essentially identical to the chemistry

used to perform steps one through four of Exhibit 1 using SAM and BeadChip as of

August 2004.”68 In its reply brief, defendant alleges “[t]he GoldenGate and DASL

assays are performed in exactly the same manner, using the same steps of Exhibit 1.”69

Plaintiffs maintain omitting this argument in defendant’s opening brief precludes raising

the reference concerning the parties’ negotiations as evidence that “‘Defined Product’
includes SAM and BeadChip.” D.I. 179 at 19-20. Plaintiffs clearly argue in their
opening brief that SAM and BeadChip are defined products. D.I. 168 at 11-12.

64 D.I. 195 at 11 (citing D.I. 173 at 22-25) (emphasis added).
65 D.I. 179.
66 Norman v. Elkin, 726 F. Supp. 2d 464, 468 n.2 (D. Del. 2010) (denying motion

to strike because plaintiff did not reserve material for the reply brief which should be
included in a full and fair opening brief, but responded to arguments raised in
defendants’ answering brief).

67 D.I. 179 at 20.
68 D.I. 168 at 12 (emphasis added).
69 D.I. 179 at 20 (emphasis added).

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it now,70 and “to the extent that [defendant] believed that [defendant’s] own documents

supported its argument that assays using VeraCode beads are ‘Modified Defined

Products,’ [defendant] should have cited that material in its opening brief.”71

Defendant counters the “in exactly the same manner” language is consistent with

the argument in its initial brief, and was merely responsive to plaintiffs’ assertions

concerning the similarities between the products.72

The parties dispute the meaning of “substantially similar” as it applies to

“Modified Defined Products.” As plaintiffs argue, there is a difference between

“essentially identical” and “exactly the same.” In its opening brief,73 defendant uses the

term “essentially identical,” but notes “minor differences,” suggesting a distinction

between its use of the terms “essentially identical” and “exactly the same.” By using a

term with a more restrictive meaning in its reply brief, defendant is essentially making a

new argument, and therefore, the material on page twenty concerning “Modified Defined

Products”74 is struck, along with defendant’s own documents cited in support of its

argument that assays are performed “in exactly the same manner.”75

iv.

PCR Method Patents

Plaintiffs point out defendant, in its opening brief, did not argue equating “Genetic

Analysis Patents [to] PCR method patents is contrary to the express purpose of the

70 D.I. 185 at 10.
71 Id. (citing D.I. 180, Exs. 19-22).
72 D.I. 195 at 12.
73 D.I. 186, Ex. A at 20.
74 D.I. 186, Ex. A at 20 (passage starting with “Illumina’s GoldenGate and DASL

assay”).

75 D.I. 180, Exs. 19-22.

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claimed invention.”76 Defendant counters it “spent nearly three pages in its initial brief

addressing this argument.”77 The court finds defendant’s argument is not new as its

opening brief discusses that the claims at issue do not constitute “Excluded Patent

Claims” since they are not claimed inventions that are PCR methods.78

b.

New Facts

Plaintiffs contend that by referencing a 2003 Illumina press release, defendant

introduces new factual material in support of its argument that the Sentrix Array Matrix

and BeadChip are both an Illumina BeadArray.79 Defendant responds the 2003 press

release was publicly available, and was used to counter plaintiffs’ argument that

BeadChip products are not Illumina BeadArrays.80

In their response to defendant’s opening brief, plaintiffs discuss whether

BeadChip products are Illumina BeadArrays.81 Since this was not in the section relating

to plaintiffs’ opening brief, defendant is not responding to plaintiffs’ argument.82 Rather,

plaintiffs are responding to defendant’s contentions, with defendant adding factual

material in its reply brief not previously included in its opening brief. Therefore,

plaintiffs’ motion to strike new facts is granted, and the factual material on page

76 D.I. 179 at 25.
77 D.I. 195 at 13 (citing D.I. 168 at 18-20).
78 D.I. 168 at 18-20.
79 D.I. 185 at 12 (citing D.I. 179 at 18).
80 D.I. 195 at 14 (citing D.I. 196, Jessica Hutson Polakowski, counsel for Illumina,

Declaration at 3, ¶ 13; Id., Exs. 8, 9; D.I 173 at 24-25).

81 Id. at 22-25.
82 D.I. 168 at 11-12.

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eighteen of defendant’s reply brief83 will not be considered.84

3.

Leave to File a Sur-Reply

In light of the findings herein, it is unnecessary for plaintiffs to file a sur-reply brief

to purportedly “provide a full and fair opportunity to respond to [defendant’s] newly

raised factual and legal arguments.”85 The court denies plaintiffs’ motion to strike on

three issues: (1) the evasion of covenant argument, (2) the readers argument, and (3)

the PCR method patents argument. For the evasion and PCR method patents

arguments, defendant included its position in its opening brief,86 and plaintiffs suffer no

prejudice because they had a chance to reply.87 As to the readers argument,88

defendant was responding to issues raised in plaintiffs’ answering brief.89

III.

Cross-Motions for Summary Judgment

A.

Legal Standard

Summary Judgment is appropriate if the “pleadings, the discovery and disclosure

materials on file, and any affidavits show that there is no genuine issue as to any

material fact and the movant is entitled to a judgment as a matter of law.”90 Once there

has been adequate time for discovery, Rule 56(c) mandates judgment against the party

83 D.I. 186, Ex. A at 18.
84 See D. Del. LR 7.1.3(c)(2) (“[t]he party filing the opening brief shall not reserve

material for the reply brief which should have been included in a full and fair opening
brief”).

85 D.I. 185 at 1 n.1.
86 See D.I. 168 at 5, 18-20.
87 Seidel v. Lee, 954 F. Supp. 810, 812 (D. Del. 1996) (stating motions to strike

under FED. R. CIV. P. 12(f) “are generally disfavored, unless the matter is clearly
irrelevant to the litigation or will prejudice the adverse party”).

88 D.I. 173 at 22-25.
89 Norman, 726 F. Supp. 2d at 468 n.2.
90 FED. R. CIV. P. 56(c)(2).

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who “fails to make a sufficient showing to establish the existence of an element

essential to that party’s case, and on which that party will bear the burden of proof at

trial.”91 When a party fails to make such a showing, “there can be no ‘genuine issue as

to any material fact’ since a complete failure of proof concerning an essential element of

the nonmoving party’s case necessarily renders all other facts immaterial.”92 The

moving party is therefore entitled to judgment as a matter of law because “the

nonmoving party has failed to make a sufficient showing on an essential element of her

case with respect to which she has the burden of proof.”93 A dispute of material fact

exists where “the evidence is such that a reasonable jury could return a verdict for the

nonmoving party.”94

The moving party bears the initial burden of identifying portions of the record

which demonstrate the absence of a genuine issue of material fact.95 However, a party

may move for summary judgment with or without supporting affidavits.96 Therefore, “the

burden on the moving party may be discharged by ‘showing’ – that is, pointing out to the

district court – that there is an absence of evidence supporting the nonmoving party’s

case.”97

If the moving party has demonstrated an absence of material fact, the nonmoving

party must then “come forward with specific facts showing that there is a genuine issue

91 Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).
92 Id. at 323.
93 Id.
94 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
95 Celotex, 477 U.S. at 323.
96 Id.
97 Id. at 325.

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for trial.”98 If the nonmoving party bears the burden of proof at trial, he “must go beyond

the pleadings in order to survive a motion for summary judgment.”99 That party “may

not rest upon the mere allegations or denials of his pleadings, but must set forth specific

facts showing that there is a genuine issue for trial.”100 At the summary judgment stage,

the court is not to “weigh the evidence and determine the truth of the matter, but to

determine whether there is a genuine issue for trial.”101 Further, “there is no issue for

trial unless there is sufficient evidence favoring the nonmoving party for a jury to return

a verdict for that party.”102 The threshold inquiry therefore is “determining whether there

is a need for trial – whether, in other words, there are any genuine factual issues that

properly can be resolved only by a finder of fact because they may reasonably be

resolved in favor of either party.”103

This standard does not change merely because there are cross-motions for

summary judgment.104 Cross-motions for summary judgment:

are no more than a claim by each side that it alone is entitled to summary
judgment, and the making of such inherently contradictory claims does not
constitute an agreement that if one is rejected the other is necessarily justified or
that the losing party waives judicial consideration and determination whether
genuine issues of material fact exist.105

Moreover, “[t]he filing of cross-motions for summary judgment does not require the court

98 FED. R. CIV. P. 56(c).
99 Yeager’s Fuel, Inc. v. Pennsylvania Power & Light Co., 22 F.3d 1260, 1273 (3d

Cir. 1994).

100 Anderson, 477 U.S. at 248.
101 Id. at 249.
102 Id.
103 Id. at 250.
104 Appelmans v. City of Philadelphia, 826 F.2d 214, 216 (3d Cir. 1987).
105 Rains v. Cascade Indus., Inc., 402 F.2d 241, 245 (3d Cir. 1968).

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to grant summary judgment for either party.”106

B.

Background

In 2004, in an attempt to resolve disputes following a joint development venture,

Applera and Illumina entered into a settlement and cross license agreement

(“Settlement Agreement”).107 The Settlement Agreement included a covenant not to

sue, under which “Applera . . . its Successors, or its assigns” would not bring suit

against Illumina for infringement of “the Blocking Patents by the Defined Product or

Modified Defined Product.”108 The Settlement Agreement included an integration

clause109 and a California choice of law provision.110

Subsequent to execution of the Settlement Agreement, a series of business

transactions occurred. As recited in the parties’ Stipulation of Agreed Facts:111

1) Applied Biosystems Inc. was formed on June 24, 2008 as a direct,
wholly owned subsidiary of Applera Corporation.

2) Effective July 1, 2008, Applied Biosystems Inc. merged with and into
Applera Corporation (the “Applied Biosystems Inc. – Applera Corporation
Merger”).

3) Applera Corporation continued as the surviving entity in the Applied
Biosystems Inc. – Applera Corporation Merger.

4) Applied Biosystems Inc. ceased to exist as a separate corporation as a
result of the Applied Biosystems Inc. – Applera Corporation Merger.

106 Krupa v. New Castle County, 732 F. Supp. 497, 505 (D. Del. 1990).
107 D.I. 168 at 2; see also D.I. 169, Ex. 3 (Settlement and Cross License

Agreement).

108 D.I. 169, Ex. 3 at ¶ 4.7. Capitalized terms, such as “Successors,” “Blocking
Patents,” “Defined Product,” and “Modified Defined Product,” are defined terms in the
Settlement Agreement.

109 Id. at ¶ 8.2.
110 Id. at ¶ 8.5.
111 D.I. 140.

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5) The name of Applera Corporation changed to Applied Biosystems Inc.
as part of the Applied Biosystems Inc. – Applera Corporation Merger.

6) Atom Acquisition Corporation was formed on October 9, 2008 as a
direct, wholly owned subsidiary of Atom Acquisition, LLC.

7) Effective November 21, 2008, Atom Acquisition Corporation merged
with and into Applied Biosystems Inc. (the “Atom Acquisition Corporation –
Applied Biosystems Inc. Merger”).

8) Applied Biosystems Inc. continued as the surviving corporation in the
Atom Acquisition Corporation – Applied Biosystems Inc. Merger.

9) Atom Acquisition Corporation ceased to exist as a separate corporation
as a result of the Atom Acquisition Corporation – Applied Biosystems Inc.
Merger.

10) Atom Acquisition, LLC was formed on June 9, 2008, as a direct, wholly
owned subsidiary of Invitrogen Corporation.

11) Effective November 21, 2008 and after the merger between Atom
Acquisition Corporation and Applied Biosystems Inc., Applied Biosystems
Inc. merged with and into Atom Acquisition, LLC (the “Applied Biosystems
Inc. – Atom Acquisition, LLC Merger”).

12) Atom Acquisition, LLC continued as the surviving company in the
Applied Biosystems Inc. – Atom Acquisition, LLC Merger.

13) Applied Biosystems Inc. ceased to exist as a separate corporation as
a result of the Applied Biosystems Inc. – Atom Acquisition, LLC Merger.

14) The name of Atom Acquisition, LLC changed to Applied Biosystems,
LLC as part of the Applied Biosystems Inc. – Atom Acquisition, LLC
Merger.

15) LT Name Corporation was formed on November 6, 2008 as a direct,
wholly owned subsidiary of Invitrogen Corporation.

16) Effective November 21, 2008, LT Name Corporation merged with and
into Invitrogen Corporation (the “LT Name Corporation – Invitrogen
Corporation Merger”).

17) Invitrogen Corporation continued as the surviving corporation in the LT
Name Corporation – Invitrogen Corporation Merger.

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18) LT Name Corporation ceased to exist as a separate corporation as a
result of the LT Name Corporation – Invitrogen Corporation Merger.

19) The name of Invitrogen Corporation changed to Life Technologies
Corporation as part of the LT Name Corporation – Invitrogen Corporation
Merger.

In 2009, Cornell granted Life Technologies a New Exclusive Licence Agreement

to the patents-in-suit (“2009 NELA”).112

C.

Summary of Arguments

In moving for summary judgment, defendant argues:113

(1) Life Technologies is bound by the covenant not to sue because it is Applera’s

Successor, Affiliate, and affiliate. Applied Biosystems is bound by the covenant not to

sue because it is Applera’s Successor, and because after merging with Applera, Applied

Biosystems stepped into Applera’s shoes and assumed Applera’s contractual

obligations as a matter of Delaware corporate law.

(2) Cornell and Applied Biosystems lack standing to sue defendant. Cornell

contractually waived its right to sue defendant for infringement by granting Life

Technologies an exclusive license to the patents-in suit and explicitly contracted away

its right to sue defendant via the 2009 NELA. Applied Biosystems has no ownership

interest in the patents-in-suit.

(3) The covenant not to sue bars plaintiffs’ infringement claims as it protects

defendant from suits alleging infringement of the “Blocking Patents” by “Defined

Products” and “Modified Defined Products.” The accused products are Defined

112 D.I. 169, Ex. 2, New Exclusive License Agreement.
113 D.I. 168 at 1-2.

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Products and Modified Defined Products, the patents-in-suit are Blocking Patents, and

the asserted patent claims are not the “Excluded Patent Claims” exempted from the

covenant not to sue.

In their cross motion for summary judgment, plaintiffs argue:114

(1) Life Technologies is not bound by the covenant not to sue because it is not

Applera, Applera’s Successor, or Applera’s assign.

(2) Cornell is not bound by the covenant not to sue because Cornell is not

Applera, Applera’s Successor, or Applera’s assign.

(3) The covenant not to sue protects defendant from suits alleging infringement

of the “Blocking Patents” that are “owned or licensed by Applera,” and the patents-in-

suit are not owned or licensed by Applera.

(4) The covenant not to sue protects defendant from suits alleging infringement

of the “Blocking Patents” that “would necessarily be infringed” by the sale, manufacture,

or use of the “Defined Product,” and the patents in suit are not necessarily infringed

because the Defined Product can be used without infringing the patents.

D.

Discussion - Motion For Summary Judgment - Breadth of Covenant
Not To Sue - Parties

Plaintiffs move for summary judgment that Cornell and Life Technologies are not

bound by the covenant not to sue. Defendant moves for summary judgment that Life

Technologies and Applied Biosystems are bound by the covenant not to sue.

As noted, the Settlement Agreement is governed by California law.115

114 D.I. 173 at 2-3.
115 D.I. 169, Ex. 3 at ¶ 8.5.

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Under California law, the fundamental goal of contract interpretation is to
give effect to the mutual intent of the parties as it existed at the time of
contracting. Because California law recognizes that the words of a written
instrument often lack a clear meaning apart from the context in which the
words are written, courts may preliminarily consider any extrinsic evidence
offered by the parties. If the court decides, after consideration of this
evidence, that the language of a contract, in the light of all the
circumstances, is fairly susceptible of either one of the two interpretations
contended for, extrinsic evidence relevant to prove either of such
meanings is admissible. If, however, the court decides that the contract is
not reasonably susceptible to more than one interpretation, the court can
reject the assertion of ambiguity.116

Further:

The words of a contract are to be understood in their ordinary and popular
sense. A contract provision is considered ambiguous when it is capable of
two or more reasonable constructions, but such provisions must be
construed in the context of the instrument as a whole and cannot be found
to be ambiguous in the abstract.117

The court may also look to dictionary definitions when determining the meaning of

words in a contract.118 “On a motion for summary judgment, a court may properly

interpret a contract as a matter of law only if the meaning of the contract is

unambiguous.”119

1.

Settlement Agreement

The preamble of the Settlement Agreement recites:

This is a Settlement and Cross Licence Agreement . . . by and between

116 Skilstaf, Inc. v. CVS Caremark Corp., 669 F.3d 1005, 1014-15 (9th Cir. 2012)

(internal quotation marks, anterations, and citations omitted).

117 Progeny Ventures, Inc. v. W. Union Fin. Servs., Inc., 752 F. Supp. 2d 1127,

1132 (C.D. Cal. 2010) (internal quotation marks and citations omitted.).

118 Dean v. United of Omaha Life Ins. Co., C.A. No. 05-6067 GHK, 2007 WL

7079558, at *4 n.2 (C.D. Cal. Aug. 27, 2007) (citing MacKinnon v. Truck Ins. Exch., 73
P.3d 1205 (Cal. 2003)).

119 Century 21 Real Estate LLC v. All Prof’l Realty, Inc., 889 F. Supp. 2d 1198,

1219 (E.D. Cal. 2012) (citation omitted).

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(1) Applera Corporation . . . and all of its affiliates, divisions, and Affiliates
(as defined in Article 1 of this Agreement), including but not limited to
Applera Corporation – Applied Biosystems Group, an operating group of
Applera Corporation . . . (collectively, Applera Corporation and all of its
affiliates and Affiliates are “Applera”); and (Illumina, Inc. . . . and all of its
affiliates, divisions, and Affiliates (collectively, Illumina, Inc. and all of its
affiliates and Affiliates are “Illumina”).120

The covenant not to sue at issue recites:

Subject to Illumina’s payment pursuant to section 5.1, Applera covenants
that at no time during the term of this Agreement will it, its Successors, or
its assigns make any claim or commence or prosecute against Illumina, its
officers, directors, attorneys, shareholders, affiliated or related companies,
Affiliates, employees, agents, assigns, Successors, distributors,
customers (direct or indirect), or other transferees any suit, action,
arbitration, or proceeding of any kind based upon assertion of infringement
of the Blocking Patents by the Defined Product or Modified Defined
Product.121

The Settlement Agreement defines “Affiliate” as follows:

“Affiliate” means, with respect to a Party, any Person that, directly or
indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, such Party; where “control” refers to the
ownership, directly or indirectly, of the lesser of at least fifty percent (50%)
or the highest percentage permitted by applicable law of the voting
securities or other ownership interests of a Person (or Party) or otherwise
the ability to direct the management of such Person (or Party).122

“Successor” is defined as “an entity that acquires all or substantially all of the assets of

Applera or Illumina, or of one or more operating divisions thereof, or an entity that

merges into or with Applera or Illumina or any Affiliate of either.”123 The agreement also

120 D.I. 169, Ex. 3 at L0000201 (emphasis added).
121 Id. at ¶ 4.7(a) (emphasis added).
122 Id. at ¶ 1.7. “Party” is defined as “Applera or Illumina, according to the

appropriate context and usage. ‘Parties’ shall mean Applera and Illumina.” Id. at ¶ 1.6.
“Person” is defined as “any individual, group, corporation, partnership, limited liability
company, joint venture, association or other organization or entity (including, without
limitation, any governmental agency or political subdivision thereof). Id. at ¶ 1.8.

123 Id. at ¶ 1.9.

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provides that the parties, Applera and Illumina, and their “successors and assigns” are

“irrevocably” bound to its terms.124

Initially, the parties disagree as to which entities are bound by the covenant not

to sue. Plaintiffs point to the covenant’s recitation that “Applera covenants that at no

time during the term of this Agreement will it, its Successors, or its assigns”125 as

demonstrating the covenant only covers Applera, Applera’s Successors, or Applera’s

assigns. Defendant agrees those entities are bound, but maintains the preamble

defined “Applera” as more than just “Applera Corporation”: “Applera Corporation . . .

and all of its affiliates, divisions, and Affiliates (as defined in Article 1 of this Agreement),

including but not limited to Applera Corporation – Applied Biosystems Group, an

operating group of Applera Corporation . . . (collectively, Applera Corporation and all of

its affiliates and Affiliates are ‘Applera’).”126 According to defendant, that demonstrates

the parties expanded the definition of “Applera” to include Affiliates and affiliates,127 and,

therefore, those entities are also bound by the covenant not to sue.128

Considering the Settlement Agreement as a whole, the court rejects defendant’s

position.

First, the remainder of the preamble does not support a definition of “Applera” as

including Applera’s Affiliates and affiliates. As plaintiffs note, the preamble describes

124 Id. at ¶ 8.10.
125 Id. at ¶ 4.7(a) (emphasis added).
126 Id. at L0000201 (emphasis added).
127 Both “Affiliates” as defined in the Settlement Agreement and any entity

qualifying as an “affiliate” under corporate common law.

128 Neither party makes arguments based upon Applera’s “assigns” (from the

covenant not to sue) or Applera’s “divisions” (from the preamble).

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past actions of “Applera” and “Illumina,”129 but none of those actions was taken by the

parties’ Affiliates or affiliates. Plaintiffs assert Applera and Illumina themselves took

each of the recited actions.130

Plaintiffs also contend the covenant not to sue granted by Illumina contains

redundant and unnecessary language if defendant’s position were accepted:

Illumina covenants that at no time will it, its Successors, or its assigns
make any claim or commence or prosecute against Applera, or its officers,
directors, attorneys, shareholders, affiliated or related companies,
Affiliates, employees, agents assigns, Successors, distributors, customers
(direct or indirect), or other transferees . . . .131

Plaintiffs point to similar redundancies that would exist if the covenant provisions

describing the covenant beneficiaries: “Applera or its . . . affiliated or related

companies, Affiliates.”132 The definition of “Successor” would likewise contain

redundant and unnecessary references to Applera and its Affiliates under defendant’s

definition: “A ‘Successor’ shall mean . . . an entity that merges into or with Applera or

Illumina or any Affiliate of either.”133 Finally, plaintiffs argue the references to “Affiliates”

in the releases and cross licenses would be redundant if “Applera” included its

“Affiliates”: “Applera . . . hereby fully and forever releases Illumina and its past and

129 D.I. 169, Ex. 3 at L0000201 (1st-6th Recitals).
130 Defendant did not dispute this assertion.
131 D.I. 169, Ex. 3 at ¶ 4.8(a) (emphasis added).
132 Id. at ¶ 4.8(b). Cf. also id. at ¶ 4.7(a) (“Illumina, its . . . affiliated or related

companies, Affiliates”); id. at ¶ 4.7(b) (“Illumina, its . . . affiliated or related companies,
Affiliates”).

133 Id. at ¶ 1.9.

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present . . . Affiliates”;134 “Illumina grants to Applera and its Affiliates . . . .”135

Because defendant’s definition would be contrary to the recitals in the preamble,

and create redundant and unnecessary language throughout the substantive portion of

the Settlement Agreement, the court rejects defendant’s position and determines the

entities bound by the covenant not to sue are: Applera, Applera’s Successors, or

Applera’s assigns. Based on this determination, the court need not address the parties’

arguments concerning an entity’s status as an Affiliate or affiliate of Applera.

2.

Cornell

Plaintiffs move for summary judgment that Cornell is not bound by the covenant

not to sue, noting defendant never argued Cornell falls within the language of the

covenant not to sue, and there is no contention Cornell was a party to the Settlement

Agreement.136 As a result, plaintiffs maintain Cornell cannot be bound by that

covenant.137 In briefing, defendant does not contest this issue. Consequently, plaintiffs’

motion for summary judgment that Cornell is not bound by the covenant not to sue is

granted.

3.

Applied Biosystems

Defendant moves for summary judgment that Applied Systems is bound by the

covenant not to sue because it is Applera’s Successor. Plaintiffs do not contest this

134 Id. at ¶ 4.1. Cf. also id. at ¶ 4.3 (“Illumina . . . hereby fully and forever

releases Applera and its past and present . . . Affiliates”).

135 Id. at ¶ 4.6. Cf. also id. at ¶ 4.5 (Applera grants to Illumina and its Affiliates

. . . . No right to sublicense is granted to Illumina or its Affiliates . . . . The license does
not convey to Illumina or its Affiliates any license to . . . .”).

136 D.I. 173 at 18.
137 E.E.O.C. v. Waffle House, Inc., 534 U.S. 279, 294 (stating “a contract cannot

bind a nonparty”).

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issue. In fact, they make repeated references to Applied Biosystems being Applera’s

Successor in their briefs.138 Consequently, defendant’s motion for summary judgment

that Applied Biosystems is bound by the covenant not to sue is granted.

4.

Life Technologies

The parties each move for summary judgment on the question of whether Life

Technologies is bound by the covenant not to sue. Defendant asserts Life

Technologies is so bound as Applera’s Successor; plaintiffs disagree with that assertion.

Defendant argues Applied Biosystems stepped into the shoes of Applera through

the string of corporate transactions described above. Under Delaware law, the

surviving entity of a merger absorbs all rights and responsibilities of the parties to a

merger: “all debts, liabilities and duties of the respective constituent corporations shall

thenceforth attach to said surviving or resulting corporation, and may be enforced

against it to the same extent as if said debts, liabilities and duties had been incurred or

contracted by it.”139 Further, “the policy of the law is so clear that survival [of a merged

entity’s contractual obligations] should be taken as the normal course of events.”140

138 See, e.g., D.I. 173 at 13 (“Applied Biosystems, the corporate successor to

Applera . . . .”); id. (“Applera merged with and into Applied Biosystems, thereby making
Applied Biosystems the Successor to Applera.”); (“Applied Biosystems–the Successor
to Applera . . . .”); D.I. 187 at 6 n.5 (“The fact that Applied Biosystems is a Successor to
Applera is irrelevant, as no right to the Cornell Patents now flow through Applied
Biosystems . . . .”).

139 8 Del. C. § 259 (a). Section 259 “appl[ies] to mergers or consolidations

between corporations and limited liability companies.” 8 Del. C. 264(e).

140 W. Air Lines, Inc. v. Allegheny Airlines, Inc., 313 A.2d 145, 154 (Del. Ch.

1973) (citation omitted); see also Fitzsimmons v. Western Airlines, Inc., 290 A.2d 682,
685 (Del. Ch. 1972) (“It is . . . a matter of statutory law that a Delaware corporation may
not avoid its contractual obligations by merger; those duties ‘attach’ to the surviving
corporation and may be enforced against it.’ In short, the survivor must assume the
obligations of the constituent.”).

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Consequently, defendant asserts that, by operation of law, Applied Biosystems is to be

treated as if Applied Biosystems itself had contracted the obligations of the covenant not

to sue.141

The Settlement Agreement defined “Successor” to mean “an entity that acquires

all or substantially all of the assets of Applera or Illumina, or of one or more operating

divisions thereof, or an entity that merges into or with Applera or Illumina or any Affiliate

of either.” Because Life Technologies acquired all or substantially all of the assets of

Applied Biosystems, which stepped into the shoes of Applera, it is bound by the

covenant not to sue as a Successor to Applera.142 Therefore, defendant’s motion for

summary judgment that Life Technologies is boun