On May 28, 2026, Judge Noël Wise of the United States District Court for the Northern District of California granted a motion to dismiss all federal antitrust claims brought by a developer of next-generation DNA sequencing (“NGS”) instruments against a provider allegedly dominating the market for those instruments. The court held that plaintiff failed to plead the foundational elements of its Sherman Act Section 1, Sherman Act Section 2, and Clayton Act Section 3 (exclusive dealing and tying) claims. Element Biosciences, Inc. v. Illumina, Inc., No. 25-cv-08026-NW (N.D. Cal. May 28, 2026).
Plaintiff and defendant both develop, manufacture, and sell DNA sequencing tools, and are direct competitors in the sale of short-read NGS instruments (sequencing of shorter DNA fragments). Defendant entered the market in 2007 by acquiring one of the pioneers of NGS technology and, according to plaintiff, has led NGS instruments and other related markets ever since. Plaintiff was founded in 2017 by scientists seeking to innovate in the instrument market and launched its competing sequencers in 2022. Defendant allegedly holds an 80–90% share of the relevant NGS instrument market and also dominates the adjacent markets for the consumables and repair services that are specific to its short-read NGS instruments.
Plaintiff alleged that defendant undertook a broad scheme to exclude plaintiff from the market through four interrelated anticompetitive tactics: (i) threatening to raise the price of consumables and instrument services to coerce customers into buying new instruments from defendant; (ii) conditioning discounts on customers’ exclusive use of defendant’s products; (iii) pricing below marginal cost, including through bundled discounts (e.g., 50%+); and (iv) raising questions of plaintiff’s financial viability among existing and prospective customers. Defendant moved to dismiss all of plaintiff’s claims.
The court analyzed plaintiff’s Sherman Act Section 1 and Clayton Act Section 3 claims together because the Ninth Circuit views the elements required to establish a violation as essentially identical. In support of these claims, plaintiff advanced two theories, exclusive dealing and tying. The court found both insufficiently pleaded.
On exclusive dealing, the court recognized that the Ninth Circuit recently held that exclusive arrangements may be de facto even where a contract does not expressly require exclusivity, reasoning that dismissing such a claim solely because the contract lacks express exclusivity language would impose an overly formalistic rule. However, even a de facto theory requires plaintiff to show that express or implied contractual terms substantially foreclosed customers from dealing with a competitor. Here, plaintiff focused on the allegedly coercive features of defendant’s customer relationships (e.g., threatening price increases if purchasing from plaintiff) but did not allege an underlying contractual relationship or any specific provisions that locked customers into purchasing only from defendant. The court further observed that one customer’s rejection of defendant’s alleged exclusivity offer undercut the allegation that the customer was prevented from purchasing from other suppliers.
On tying, the court explained that plaintiff must allege, among other things, that defendant tied two distinct products or services. The court found that plaintiff’s allegations were internally inconsistent. Plaintiff defined NGS instruments, consumables, and services as three separate product markets, yet simultaneously alleged that consumables and services are proprietary to each manufacturer’s instruments and cannot be used interchangeably across brands. As the court observed, that proprietary relationship undercuts the premise that consumables and services are products distinct from the instruments themselves. Because plaintiff failed to reconcile these competing characterizations, the court dismissed the tying claim.
Plaintiff grounded its Sherman Act Section 2 monopolization and attempted monopolization claims in four anticompetitive theories, exclusive dealing, tying, predatory pricing, and disparagement. The court rejected the exclusive dealing and tying theories for the same reasons they failed under Section 1.
As for predatory pricing, plaintiff must allege that the prices were below its rivals’ costs and that there was a dangerous probability of recouping the below-cost pricing. Although the court acknowledged that, at the pleading stage, a plaintiff need not allege below-marginal-cost pricing with precision, it found plaintiff’s allegations of 50%+ discounts yielding prices below marginal production cost to be insufficient because plaintiff did not offer any facts to support its theory that defendant priced below its costs, provided no support for defendant’s costs, and offered no sense of scale.
Finally, the court noted that a competitor’s disparaging statements are presumed to have only a de minimis effect on competition, and that to overcome that presumption a plaintiff must allege, among other things, that the statements were clearly false, clearly material, and continued for prolonged periods. The court found that plaintiff had not adequately pleaded that defendant’s alleged statements relating to its impending demise were clearly false because they concerned uninformed, forward-looking opinions not provable facts. According to the court, the statements also appeared to be isolated, one-off instances rather than prolonged conduct. As such, plaintiff failed to overcome the de minimis presumption for disparaging statements.
The court accordingly granted defendant’s motion to dismiss in full, but permitted plaintiff to amend, finding that amendment would not be futile and identifying specific pleading deficiencies plaintiff could attempt to cure. The decision illustrates there is a meaningful difference between alleging a generalized theory of anticompetitive behavior and a complaint that plausibly alleges facts sufficient to satisfy the threshold requirements for each cause of action.
