Veracyte Inc v. Sonic Healthcare USA Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Veracyte Inc v. Sonic Healthcare USA Inc (Delaware)
  • Defendant: Sonic Healthcare USA, Inc. (Delaware); Clinical Pathology Laboratories, Inc. (Texas)
  • Plaintiff's Counsel: The Dacus Firm, P.C.; Wilson Sonsini Goodrich & Rosati, P.C.
• Case Identification: 2:25-cv-00459, E.D. Tex., 06/04/2025
• Venue Allegations: Venue is alleged to be proper in the Eastern District of Texas because Defendants are subject to personal jurisdiction, have allegedly committed acts of patent infringement in the district, and have regular and established places of business within the district.
• Core Dispute: Plaintiff alleges that Defendants' ThyroSeq v3 GC molecular testing service for thyroid nodules infringes five patents related to methods for classifying tissue samples and guiding treatment using gene expression analysis and trained algorithms.
• Technical Context: The technology lies in the field of molecular diagnostics, specifically using genomic and transcriptomic data to improve the diagnosis of thyroid nodules that are deemed "indeterminate" by traditional cytopathology, thereby aiming to reduce unnecessary diagnostic surgeries.
• Key Procedural History: The complaint does not mention any prior litigation, Inter Partes Review (IPR) proceedings, or licensing history relevant to the asserted patents.

Case Timeline

Date	Event
2009-05-07	'554 & '503 Patents Priority Date
2009-12-09	'924, '504 & '238 Patents Priority Date
2011-01-01	Veracyte's Afirma GEC commercially launched (stated as "in 2011")
2013-09-01	ThyroSeq v1 announced (stated as "September 2013")
2014-05-01	Veracyte's Afirma Malignancy Classifiers launched (stated as "May 2014")
2014-06-12	ThyroSeq v2 announced
2017-07-01	Veracyte's Afirma GSC launched (stated as "July 2017")
2018-01-01	ThyroSeq v3 launched (stated as "in or around 2018")
2018-10-30	'924 Patent Issued
2020-06-02	'504 Patent Issued
2024-11-08	'554 Patent Issued
2025-05-13	'503 Patent Issued
2025-05-20	'238 Patent Issued
2025-06-04	Complaint Filing Date

II. Technology and Patent(s)-in-Suit Analysis

U.S. Patent No. 10,114,924 - "Methods for Processing or Analyzing Sample of Thyroid Tissue"

• Patent Identification: U.S. Patent No. 10,114,924 ("'924 Patent"), "Methods for Processing or Analyzing Sample of Thyroid Tissue," issued October 30, 2018 Compl. ¶22

The Invention Explained

• Problem Addressed: The patent addresses the clinical challenge of cytologically "indeterminate" thyroid nodule biopsies, where it is unclear if the nodule is benign or malignant Compl. ¶3 This uncertainty often leads to diagnostic surgeries that are later found to be unnecessary, as a high percentage of such nodules are benign '924 Patent, col. 6:64-7:6 The patent notes deficiencies in prior methods, including subjectivity and lack of reproducibility '924 Patent, col. 6:50-57
• The Patented Solution: The invention provides a method to classify these indeterminate samples using molecular data. The process involves performing gene expression analysis on a portion of the indeterminate sample, inputting the resulting data into a computer-implemented algorithm, and using that algorithm to generate a classification of the sample as positive or negative for cancer '924 Patent, abstract The algorithm is "trained" using a separate set of known benign and malignant samples to achieve a specified level of accuracy '924 Patent, col. 107:23-31
• Technical Importance: The invention offers a systematic, objective method to resolve diagnostic ambiguity for thyroid nodules, which could significantly reduce the number of unnecessary thyroid surgeries performed each year Compl. ¶58

Key Claims at a Glance

• The complaint asserts infringement of at least Claim 1 Compl. ¶63
• The essential elements of independent Claim 1 include:
  • Obtaining a thyroid tissue sample from a subject suspected of having thyroid cancer.
  • Subjecting a first portion of the sample to cytological testing that indicates the sample is "indeterminate."
  • Upon this finding, assaying gene expression products from a second portion of the sample to yield a data set.
  • Using a programmed computer to input the data set into a "trained algorithm" to classify the sample as positive or negative for cancer with at least 90% accuracy.
  • Electronically outputting a report with the classification.
• The complaint alleges infringement of "one or more claims" of the patent Compl. ¶63

U.S. Patent No. 10,672,504 - "Algorithms for Disease Diagnostics"

• Patent Identification: U.S. Patent No. 10,672,504 ("'504 Patent"), "Algorithms for Disease Diagnostics," issued June 2, 2020 Compl. ¶23

The Invention Explained

• Problem Addressed: Like the '924 patent, this invention aims to provide more accurate and objective cancer diagnostics to overcome the limitations and ambiguities of traditional methods '504 Patent, col. 7:1-6
• The Patented Solution: This patent claims a more specific method focused on a defined panel of genes. The method involves sequencing nucleic acids from a thyroid sample to measure the expression levels of two or more genes from a specific list of eleven (ALK, CALCA, DICER1, etc.). This data is then processed by a trained algorithm to classify the sample with at least 85% accuracy '504 Patent, abstract '504 Patent, col. 112:1-17
• Technical Importance: By narrowing the analysis to a curated set of high-value genetic markers, the invention seeks to create a targeted and highly specific diagnostic test for thyroid cancer Compl. ¶81

Key Claims at a Glance

• The complaint asserts infringement of at least Claim 1 Compl. ¶86
• The essential elements of independent Claim 1 include:
  • Sequencing nucleic acid molecules from a thyroid sample to yield gene expression data corresponding to two or more genes from a specified Markush group of 11 genes (ALK, CALCA, etc.).
  • Using a "trained algorithm" on a computer to process the data and generate a classification of the sample as positive or negative for cancer with at least 85% accuracy.
  • Electronically outputting a report with the classification.
• The complaint alleges infringement of "one or more claims" of the patent Compl. ¶86

U.S. Patent No. 12,110,554 - "Methods for Classification of Tissue Samples as Positive or Negative for Cancer"

• Patent Identification: U.S. Patent No. 12,110,554 ("'554 Patent"), "Methods for Classification of Tissue Samples as Positive or Negative for Cancer," issued November 8, 2024 Compl. ¶24
• Technology Synopsis: The patent describes a method for classifying a cytologically indeterminate tissue sample by assaying both nucleic acid molecules for gene expression levels and for genetic mutations. This combined data set is then processed by a trained algorithm to generate a cancer classification Compl. ¶102 '554 Patent, abstract
• Asserted Claims: Independent Claim 1 Compl. ¶108
• Accused Features: The ThyroSeq v3 GC test is accused of infringing by allegedly assaying both gene expression levels and genetic mutations from indeterminate thyroid samples and using a trained algorithm to classify them Compl. ¶¶114-116

U.S. Patent No. 12,297,503 - "Methods for Classification of Tissue Samples as Positive or Negative for Cancer"

• Patent Identification: U.S. Patent No. 12,297,503 ("'503 Patent"), "Methods for Classification of Tissue Samples as Positive or Negative for Cancer," issued May 13, 2025 Compl. ¶25
• Technology Synopsis: This patent claims a method for treating thyroid cancer. The method involves analyzing both RNA (for gene expression) and DNA (for genetic mutations) from an indeterminate fine needle aspirate (FNA) sample, using a classification algorithm, and, responsive to a positive classification, administering a therapeutic intervention selected from a group including thyroidectomy, lobectomy, and others Compl. ¶¶125-126 '503 Patent, abstract
• Asserted Claims: Independent Claim 19 Compl. ¶131
• Accused Features: The complaint alleges infringement by the ThyroSeq v3 GC testing process, where the test results are used to direct subsequent therapeutic interventions performed by healthcare providers Compl. ¶130 Compl. ¶142

U.S. Patent No. 12,305,238 - "Methods for Treatment of Thyroid Cancer"

• Patent Identification: U.S. Patent No. 12,305,238 ("'238 Patent"), "Methods for Treatment of Thyroid Cancer," issued May 20, 2025 Compl. ¶26
• Technology Synopsis: Similar to the '503 patent, this patent claims a method of treating thyroid cancer. It involves analyzing mRNA levels from a specific group of genes in an indeterminate FNA sample, using computer processing to classify the sample, and administering a treatment such as thyroidectomy in response to a positive classification Compl. ¶152 '238 Patent, abstract
• Asserted Claims: Independent Claim 1 Compl. ¶157
• Accused Features: The complaint alleges infringement by the ThyroSeq v3 GC testing service, which provides a classification that allegedly directs or causes healthcare providers to administer the claimed therapeutic treatments Compl. ¶156 Compl. ¶166

III. The Accused Instrumentality

Product Identification

• The accused instrumentality is the "ThyroSeq v3 GC testing" service offered by Defendants Compl. ¶63

Functionality and Market Context

• The complaint alleges that ThyroSeq v3 GC is a molecular test used to assess thyroid nodules that have received an indeterminate result from cytopathology Compl. ¶¶67-69 The test allegedly involves using next-generation sequencing to analyze a patient's sample for both DNA and RNA alterations Compl. ¶39 Compl. ¶68 The resulting data is allegedly processed by a "trained algorithm" to classify the nodule and generate a report indicating the probability of cancer Compl. ¶39 Compl. ¶71 Compl. ¶72
• The complaint provides a flowchart from the ThyroSeq website illustrating the product's workflow for a patient with a Bethesda III-IV cytology result (indeterminate), leading to a test result and patient management recommendation Compl. p. 15 It also includes screenshots of sample "THYROSEQ® V3 GC RESULTS SUMMARY" reports showing a "Test Result" (Negative or Positive), a "Probability of Cancer," and a "Potential Management" recommendation (e.g., "Observation" or "Surgical excision") Compl. p. 22
• The complaint positions ThyroSeq and Plaintiff's Afirma test as the two primary commercial competitors in this specific molecular diagnostics field Compl. ¶42

IV. Analysis of Infringement Allegations

'924 Patent Infringement Allegations

Claim Element (from Independent Claim 1)	Alleged Infringing Functionality	Complaint Citation	Patent Citation
(a) obtaining said sample of thyroid tissue of said subject...	Sonic obtains a fine-needle aspiration (FNA) tissue sample of a thyroid nodule for ThyroSeq testing.	¶67	col. 21:8-23
(b) subjecting a first portion of said sample of thyroid tissue to cytological testing that indicates that said first portion of said sample of thyroid tissue is indeterminate.	The ThyroSeq test is ordered for and performed on samples that have already undergone FNA analysis and were found to be indeterminate.	¶69	col. 29:30-41
(c) upon identifying said first portion of said sample of thyroid tissue as indeterminate, assaying by sequencing... said gene expression products from a second portion... to yield a data set...	Sonic uses targeted amplification-based next-generation sequencing technology to detect abnormal gene expression alterations in the indeterminate sample.	¶70	col. 35:1-36
(d) in a programmed computer, inputting said data set... to a trained algorithm to generate a classification of said sample... at an accuracy of at least 90%, wherein said trained algorithm is trained with a plurality of training samples...	Sonic allegedly uses a training tissue set to establish cutoffs and develop its ThyroSeq algorithm, which is alleged to achieve an accuracy of 92.1%.	¶71	col. 107:23-28
(e) electronically outputting a report that identifies said classification of said sample of thyroid tissue as positive or negative for said thyroid cancer.	Sonic produces an electronic report that classifies the sample and provides a probability of cancer, as shown in its results summaries.	¶72	col. 107:32-34

'504 Patent Infringement Allegations

Claim Element (from Independent Claim 1)	Alleged Infringing Functionality	Complaint Citation	Patent Citation
(a) sequencing nucleic acid molecules from said sample of thyroid tissue to yield data comprising one or more levels of gene expression products... wherein said one or more levels of gene expression products correspond to a plurality of genes comprising two or more genes selected from the group consisting of: ALK, CALCA, DICER1, IGF2BP3, MET, NTRK1, NTRK3, PAX8, PTEN, PTTG1 and THADA.	Sonic allegedly uses sequencing technology to analyze 112 genes, and the complaint alleges that this panel includes all 11 genes from the claimed Markush group.	¶90; ¶92	col. 112:1-7
(b) using a trained algorithm in a computer to process said data... to generate a classification... at an accuracy of at least 85%... wherein said trained algorithm is trained with a plurality of training samples... that is different from said sample...	Sonic allegedly uses a training tissue set to develop its algorithm and establish cutoffs to distinguish cancer from benign nodules with an accuracy alleged to be 90.9%.	¶93	col. 112:8-14
(c) electronically outputting a report that identifies said classification of said sample of thyroid tissue as positive or negative for said thyroid cancer.	Sonic allegedly produces an electronic report that classifies the sample and informs management of the patient.	¶94	col. 112:15-17

• Identified Points of Contention:
  • Scope Questions: For the '504 patent, a factual dispute may arise regarding whether the accused ThyroSeq test actually analyzes "two or more genes" from the specific 11-gene Markush group recited in the claim. While the complaint alleges this Compl. ¶92, it will be a matter for discovery and proof. For the '924 patent, a question may be whether the workflow of obtaining a sample already deemed indeterminate by a third party satisfies the claim language of "subjecting a first portion" and then "assaying... a second portion."
  • Technical Questions: A key technical question for all asserted patents is whether the "trained algorithm" used by the accused ThyroSeq test operates in a manner consistent with the algorithms described and claimed in the patents. The specific nature of the machine learning model, its training data, and its classification method will be points of contention. The complaint asserts that the accused test meets the claimed accuracy thresholds (e.g., >90% for the '924 patent and >85% for the '504 patent), but the underlying methodology will be subject to scrutiny Compl. ¶71 Compl. ¶93

V. Key Claim Terms for Construction

• The Term: "trained algorithm" (appears in asserted claims of '924, '504, '554 patents)

• Context and Importance: This term is central to the computational aspect of the inventions. The definition will be critical in determining whether the specific machine learning or statistical model used in the ThyroSeq test falls within the scope of the claims. Practitioners may focus on this term because the patents disclose multiple types of algorithms, and the breadth of this term will be a key issue.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The specifications provide a non-limiting list of potential algorithms, such as "k-nearest neighbor algorithms, ... support vector machine algorithms, genetic algorithms, ... and any combination thereof" '924 Patent, col. 107:29-32 This language may support an interpretation that covers a wide range of machine learning techniques.
  • Evidence for a Narrower Interpretation: The patents also provide specific examples of implementation, such as using "support vector machine (SVM) for classification" '924 Patent, col. 70:25-26 A defendant may argue that the term should be interpreted in light of these more specific embodiments, potentially limiting its scope to the types of algorithms explicitly detailed.

• The Term: "indeterminate" (appears in asserted claim of '924 patent)

• Context and Importance: This term defines the specific clinical scenario and patient sample type to which the patented method applies. Its construction is important because the claim requires acting upon a sample that has been identified as "indeterminate" by a prior cytological test.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The patent specification uses the term alongside "ambiguous" and "suspicious" '924 Patent, col. 2:6-7 '924 Patent, Fig. 18A, which could support a construction covering any sample that is not definitively benign or malignant based on initial cytology.
  • Evidence for a Narrower Interpretation: The background of the invention focuses on the well-defined clinical problem of "indeterminate" cytopathology results, which constitute "about 15%-30% of thyroid cytopathology" Compl. ¶3 A defendant might argue the term should be construed more narrowly to align with specific, established categories of indeterminate results in a formal classification system like the Bethesda System for Reporting Thyroid Cytopathology.

VI. Other Allegations

• Indirect Infringement: The complaint alleges that Defendants induce infringement of the asserted patents by encouraging and instructing others, such as physicians and clinical laboratories, to use the ThyroSeq v3 GC test in an infringing manner. This is allegedly done through marketing materials, test ordering instructions, and the generation of reports that guide treatment decisions Compl. ¶73 Compl. ¶95 Compl. ¶118 Compl. ¶143 Compl. ¶167 For the method-of-treatment claims, the complaint specifically alleges that treatment providers who order the test and then perform the claimed therapies are direct infringers, and that Sonic induces this infringement Compl. ¶144 Compl. ¶168
• Willful Infringement: The complaint alleges willful infringement for all asserted patents. The basis for this allegation is that Sonic, as a direct competitor, has allegedly "closely monitored Veracyte and its patented Afirma line of tests" and was aware of Veracyte's intellectual property through public press releases and SEC filings Compl. ¶52 Compl. ¶74 The complaint alleges that Sonic knew of the Asserted Patents by or shortly after their issue dates and, at a minimum, upon service of the complaint Compl. ¶53

VII. Analyst's Conclusion: Key Questions for the Case

• A core issue will be one of patent eligibility: the patents claim methods that analyze gene expression (a natural phenomenon) using computer algorithms (an abstract idea). The court will have to decide whether the claims, taken as a whole, are directed to patent-ineligible subject matter or if they represent a patentable application of these concepts by reciting an inventive concept that improves the technical field of medical diagnostics, as the complaint argues (e.g.,Compl. ¶¶58-59).
• A second key question will be one of factual overlap and claim construction: does the accused ThyroSeq v3 test meet every limitation of the asserted claims? This will likely involve detailed technical disputes over the meaning of terms like "trained algorithm" and a factual inquiry into whether the accused test analyzes the specific gene panels required by certain claims (e.g., the 11-gene Markush group in the '504 patent).
• For the method of treatment claims ('503 and '238 patents), a central question will be divided infringement: can Veracyte prove that Sonic directs or controls the actions of physicians who administer treatment based on the ThyroSeq test results? Because Sonic performs the analysis and a separate medical professional performs the treatment, the court will need to determine if Sonic's influence is sufficient to attribute all steps of the claimed method to a single actor.