Free Letter - District Court of Delaware - Delaware

Case 1 :04-cv-00901-JJF Document 399 Filed 03/01 /2007 Page 1 of 3
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1'HIlOI`Bi.lT.3.(@1T1I1HT..CDIf1 1,
BY l%}»FILING
The Honorable Joseph J. Farnan, Ir.
United States District Court
844 King Street
Wilmington, DE l9801
Re: Affymetrix, inc. v. lllumina Inc., CA. No. 04-CV-90i JJF
Dear Judge Farnan:
We write in response to Hlumina’s March l letter concerning 2006 damages.
Given that lliurnina’s 2006 sales more than doubled its total sales from 2002 to 2005
combined, Illumina now seeks to preclude Affymetrix from seeking damages covering 2006.
There is no basis to do so. At`t`yrnetrix’s damages theory has been "long and well known."
Affymetrix has always claimed damages (lost profits and reasonable royalty) for 2006.
in his originai report, filed on September 15, 2006, AtTy1netrix’s economics expert
asserted that Affyrnetrix was entitied to lost profits and reasonable royalty damages for the
entirety of 2006. Because Illumina had only produced data through 2005 at that point, the
expert’s 2006 damages numbers were based on estimates of lllumina’s 2006 sales. Affymetrix
repeatedly requested updated sales information. Affymetrix updated its report within one week
ot` receiving 1ilumina’s 2006 sales data on February 20, 2007. Now lllumina seeks to preclude
Affymetrix from claiming any damages for 2006. This would severely prejudice Affymetrix.
A brief history ofthe events leading up to the current dispute is helpful:
* December 7, 2005 ~— At a hearing in this matter, Iliurnina requested that
Aftymetrix be denied discovery on products "that are in the pipeline, the Rr&D pipeline and may
be coming out throughout the litigation? The Court granted the request, stating "you’re going to
have to understand that at some point, they’re going to he exposed. And we can do some quick
catch up on those products."

Case 1:O4—cv—OO901-JJF Document 399 Filed O3/O1/2007 Page 2 of 3
The Honorable Joseph J. Faman, Ir.
i\/{arch 1, 2007
?age 2
* December 23, 2005 ~ Less than three weeks after the hearing, llumina started
selling an array using an assay not previously offered for sale, the lntiniurn ll assay. Thereafter,
during 2006, lllurnina offered for sale "new" array products. No pertinent characteristic of these
products was "new" to this lawsuit. For example:
l) Illumina introduced new content —~ i.e., new oligo sequences W on Sentrix
Arraylvlatrix products and BeadChips. The new oligos content- oligo
sequences e are irrelevant to the infringement analysis.
2) Illumina introduced whole genome genotyping products on BeadChi.ps
using both Intinium I and Intiniunr ll chemistry. The differences between
lntinium I and Infiniurn Il chemistry are irrelevant to the infringement
analysis as to the asserted claims from the ‘432, ‘365 and ‘53l patents}
3) lllurnina has not made any changes to its software or instruments that are
relevant to infringement ofthe asserted claims.
* September 15, 2006 - Affymetrix submitted expert reports from its technical and
economics experts. Affymetrix’s technical experts opined that the products offered for sale in
2006 (as discussed above) infringe the asserted claims of the relevant patents.; Affyrnetrix’s
economics expert included those products in his 2006 estimates.
* October 30, 2006 - Affymetrix requested lllumina provide updated 2006 sales
information to "catch up" with the actual sales. [llumina ignored this request.
* December 8, 2006 e Affyrnetrix followed up on its October 30 letter via email.
lllumina did not respond.
* February 5, 2007 ·—— ln the pretrial order, Affymetrix stated that "[b]oth lllumina
and Affyntetrix close their FY 2006 books in the first week of Febn1ary” and that “Affyinetrix
will produce its updated financial sufficient for the damages experts to update their reports
through calendar year 2006 by February l6, 200‘7." Affymetrix requested that the Court order
lllurnina to update its sales as well.
* February 8, 2007 W- The Court ordered Illumina to update its sales through 2006,
noting that it is "not an uncommon practice to update the damages expert report."
* February 15, 2007 —— Affymetrix provided lllumina with updated data for 2006.
E The ‘243 patent was not asserted against lnfiniurn I or Intinium ll products. The ‘7l 6
patent is only being asserted against lntiniurn 1.
2 Affymetrix’s expert opined to the best of his ability as to products known at the time of
his report in September of 2006.

Case 1:O4—cv—OO901-JJF Document 399 Filed O3/O1/2007 Page 3 of 3
The Honorabie Joseph J. Farnan, lr.
March l, 2007
Page 3
* February 20, 2007 rrHil.lII1iI'1.B. provided 2006 sates data for products released
prior to December 7, 2005. That same night Affymetrix asked Illuinina, given the late
production of voluminous, disaggregated sales data, when it would accept the updated report.
Relying on the Cou1t’s statement that discovery on those products would not go forward
immediately flluinina refused to provide any sales data for products first offered for sale after
December 7, 2005. lllumina however ignored the Court’s statements that the parties would later
have to "catch up" on those products.
* February 21, 2007 - lllurnina responded that no date would be acceptable,
stating that it was "highly inappropriate" to be updating damages, despite the Court’s recent
order to do so.
* February 27, 2007 ~ Affymetnx provided an updated damages numbers.
Because Illumina’s "updated" numbers included only data for products first sold before
December 7, 2005 (less than 50% of its 2006 sales), Affyrnetrix’s expert provided two sets of
updated numbers. One set included the actual sales for the products included in lllumina’s recent
production. The second set included those sales plus an estimate ofthe remaining infringing
sales for 2006 based on Illuniina’s public disclosures.
Obviously, lllumina would prefer that damages be limited to 2005 and earlier. There is,
however, no basis to limit the damages in this trial. lllumina has long been aware of
Affyrnetrix’s damages theories.3 Affyrnetrix’s updated expert report numbers were timely given
the late and incomplete production of 2006 data from lliumina. Thus, Affymetrix requests that
the Court deny lllumina’s request to timit Affymetrix’s damages presentation at trial.
Respectfully,
2 S (//J}?
l\/laryelle1i.QNoreil cc: Dr. Peter T. Dalleo, Clerk (by hand)
Richard K. Herrmann, Esquire (by hand)
Marcus E. Semel, Esquire (by e—n1ail)
3 Affynietrix understands the Cou1t’s Order of February S, 2007 to preclude Affymetrix
from seeking ptice erosion damages in this case. Affymetrix is not seeking such damages
either for 2006 or earlier.