IN RE COLUMBIA UNIVERSITY PATENT LITIGATION

330 F.Supp.2d 12 (2004) | Cited 4 times | D. Massachusetts | August 16, 2004

MEMORANDUM AND ORDER

I. SUMMARY

On September 24, 2002, the United States Patent and TrademarkOffice (the "PTO") issued U.S. Patent No. 6,455,275 (the "'275patent"). The Trustees of Columbia University in the City of NewYork ("Columbia") own the '275 patent. The plaintiffs in thesefive cases are drug companies. They each license a portfolio ofpatent rights from Columbia, including the '275 patent (the "Axelpatents"). The plaintiffs contend that the '275 patent is invalidand unenforceable and, therefore, refuse to pay Columbiaroyalties under their respective agreements. The plaintiffs filedlawsuits against Columbia in several courts seeking, among otherthings, declarations that the '275 patent is both invalid andunenforceable. On April 8, 2004, the Judicial Panel onMultidistrict Litigation transferred all cases relating to the'275 patent to this court for coordinated or consolidatedpretrial proceedings.

On February 27, 2004, a non-profit organization called thePublic Patent Foundation ("PPF") filed a request with the PTO forre-examination of the '275 patent. On May 6, 2004, the PTOgranted this request and commenced re-examination proceedings. On June10, 2004, Columbia filed a motion to stay all litigation pendingthe conclusion of the PTO's re-examination and processing of are-issue application Columbia promised that it would file in theimmediate future (the "Motion to Stay"). The plaintiffsunanimously oppose the Motion to Stay.

On June 22, 2004, the court heard oral argument on the Motionto Stay. For the reasons explained in this Memorandum, the Motionto Stay these cases completely is being denied. However, thecourt has identified the contention that the '275 patent isinvalid under the doctrine of non-statutory double patenting asone that should be able to be quickly developed and decided in2004, either on a motion for summary judgment or at a trial to beconducted in December 2004. Thus, the court has established aschedule for doing so and is otherwise substantially staying thiscase.

II. FACTS AND PROCEDURAL HISTORY

The court described in detail the genesis of the '275 patentand other patents in its family (the "Axel patents") in aMemorandum and Order recently issued in one of these cases,Biogen Idec MA Inc. v. Trustees of Columbia University, C.A.No. 03-11329-MLW, slip. op. at 4-10 (D. Mass. Aug. 13, 2004). Ofparticular note is the fact that the '275 patent issued onSeptember 24, 2002, over twenty-two years after itsgreat-great-great-great-greatgreat-grandparent application (the"'513 application) was filed on February 25, 1980. There are now five cases pending in this MultidistrictLitigation. The parties opposing Columbia are: Biogen Idec MAInc. ("Biogen"), Genzyme Corporation ("Genzyme") and AbbottBioresearch Center, Inc. ("Abbott") in C.A. No. 03-11329; Wyethand Genetics Institute LLC in C.A. No. 03-11570; Amgen andImmunex in C.A. No. 04-10740, which originated in the CentralDistrict of California; Genentech, Inc. in C.A. No. 04-11546,which originated in the Northern District of California; andJohnson & Johnson in C.A. No. 04-10743, which originated in theSouthern District of New York.

As indicated earlier, on February 27, 2004 the PPF filed arequest with the PTO for re-examination of the '275patent1 and on May 6, 2004, the PTO decided to re-examinethe '275 patent. The substantial new question of patentabilitythat prompted this decision is essentially the same non-statutorydouble patenting argument that the plaintiffs are presenting tothe court in this litigation. See Order Granting Request for ExParte Reexamination, No. 90/006,953 (PTO May 6, 2004).

As described earlier, on June 10, 2004, Columbia filed a motion to stay this case pending re-examination, which theplaintiffs unanimously oppose. In the Motion to Stay, Columbiaclaimed that it would soon file a request that the PTO re-issuethe '275 patent. On June 17 or 18, 2004, Columbia filed itsre-issue application. Columbia included portions of thatapplication as exhibits to a declaration submitted in connectionwith its Reply Memorandum in support of the Motion to Stay.However, before that date, the plaintiffs had no informationabout the scope of and grounds for the re-issue application.Accordingly, the plaintiffs, which were required to fileoppositions to the Motion to Stay by June 16, 2004, were hamperedin their ability to respond to the Motion to Stay. Thus, on June21, 2004 the plaintiffs filed a surreply in opposition to theMotion to Stay addressing the contents of the re-issueapplication.

Columbia's re-issue application is being prosecuted by John P.White and Gary J. Gershik of Cooper & Dunham LLP. White has since1980 also prosecuted the '275 patent and other Axel patents.

The '275 patent as issued contains 20 claims. The re-issueapplication seeks to cancel claim 4, amend claims 1 and 6 through18, and add 17 new claims.

III. ANALYSIS

The parties acknowledge that the court has the "inherent powerto manage [its] dockets and stay proceedings, including theauthority to order a stay pending conclusion of a PTOreexamination" and re-issue. Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988). Columbia argues that the courtshould exercise this power and allow the Motion to Stay in orderto prevent duplicative proceedings before the PTO and the court,and to eliminate the risk that the PTO proceedings might moot,limit or alter the issues presented to the court. These argumentsare not persuasive. Therefore, the court chooses not to exerciseits power in the facts and circumstances of this case.

The courts and the PTO take different approaches to examiningthe validity of a patent. Id. at 1428. Consequently, the courtsand the PTO may properly reach different conclusions on the sameevidence. Id. The court may also consider different oradditional evidence. Id. at 1427. Perhaps most importantly, thecourt can consider additional issues such as prosecution lachesand inequitable conduct that the PTO either will not or cannotconsider. See 37 C.F.R. § 1.291(b) ("Protests raising . . .inequitable conduct issues will be entered in the applicationfile, generally without comment."); Manual of Patent ExaminingProcedure ("MPEP") § 1901.06 ("The examiner will not, under anycircumstances, treat or discuss those arguments or pointsdirected by . . . `inequitable conduct.'"); MPEP § 2216("Questions relating to grounds of rejection other than thosebased on prior art patents or printed publications should not beincluded in the request [for reexamination] and will not beconsidered by the examiner if included. Examples of suchquestions that will not be considered are public use, on sale,and fraud."). Judicial proceedings are also far more adversarial than re-examination and re-issueproceedings before the PTO. See MPEP § 1901.07 (discussinglimited involvement of protestor in re-issue proceedings);37 C.F.R. § 1.550(g) (discussing limited involvement of requesterand third parties in re-examination proceedings). Therefore,judicial proceedings have a significant advantage in reaching acorrect result.

Columbia argues that "the reissue proceeding also provides anopportunity for the PTO to address plaintiffs' arguments that the'275 patent is unenforceable because of prosecution laches."Columbia's Mem. in Supp. of Mot. to Stay at 12. This isincorrect. In In re Bogese, 303 F.3d 1362, 1367-68 (Fed. Cir.2002), the Federal Circuit held that the PTO may refuse to granta patent because of prosecution laches. However, it alsore-affirmed the 1975 decision of the Patent and Trademark OfficeBoard of Appeals in Ex Parte Hull, 191 U.S.P.Q. 157 (PTO Bd.Apps. 1975) that required the PTO to give an applicant noticebefore it could properly order forfeiture of patent rights.Bogese, 303 F.3d at 1368-69. Thus, although the PTO could putColumbia on notice that future dilatory prosecution during there-issue application might result in forfeiture and, if Columbiaignored the warning, refuse to re-issue the patent, it does notappear that the PTO could properly revoke the '275 patent basedon any dilatory conduct that has already occurred.

Perhaps more importantly, a complete inquiry into possible prosecution laches will be difficult without the ability tocompel the testimony, subject to cross-examination, of John P.White about the delays in the prosecution of the '275 patent.Columbia does not suggest that the PTO has this power.

There are some factors in this case that favor a stay. Thecases are at an early stage. Proceedings before the PTO tend tobe significantly less expensive than litigation. Resolution ofthe PTO proceedings could simplify some of the issues that thecourt must decide or change the issues by altering the languageof the claims in the '275 patent.

However, these factors are outweighed by countervailingconsiderations. Re-examination proceedings are not fully open tothe public or truly adversarial. Indeed, Chapter 2200 of theManual of Patent Examining Procedure is captioned, in part, "ExParte Reexamination of Patents." The plaintiffs have no right tobe heard unless they file their own requests for re-examination,which could generate more delay. The plaintiffs' limited rightsto protest re-issue under Chapter 1900 of the MPEP are not anadequate substitute for proceedings before this court. Asprotesters, the plaintiffs would not be fully informed of allaspects of the proceedings, such as interviews between White andthe examiner, or have a right to appeal adverse decisions. Nor,as discussed earlier, would the plaintiffs be able to presenttheir claims of prosecution laches or inequitable conduct to thePTO.

The average re-examination takes 21 months. See Norton Decl. Ex. E. However, the PTO will not cancel claims until after thetime for appeal has expired and any appeals have terminated.See 35 U.S.C. § 307. Thus, if Columbia is dissatisfied with theresults of the proceedings, the process may take significantlylonger as Columbia appeals to the Board of Patent Appeals andInterferences and then to the Court of Appeals for the FederalCircuit. The parties offer no statistics as to the typical lengthof a re-issue proceeding. However, if the court stays these casespending the outcome of the PTO proceedings, the PTO will treatthe re-issue application with special priority. In spite of thistreatment, however, Columbia will retain significant influenceover the length of re-issue proceedings. This case, on the otherhand, can proceed significantly faster because the court intendsto focus first on the non-statutory double patenting claimsraised by the plaintiffs and has established a schedule for theresolution of those claims, on a motion for summary judgment orby trial, in 2004. See June 23, 2004 Order (Docket No. 32).

A stay would significantly harm the plaintiffs. While any stayis in effect, the drug companies' potential damages will mount.The uncertainty over whether they owe Columbia royalties on theirproducts might create difficulties in pricing those products. Itmay also cause the drug companies to delay introduction of newproducts or needlessly invest money in efforts to design aroundan invalid patent. Such efforts are likely to be extremely costlyin a highly regulated industry such as the one in which the drug companies compete because changes in their product designs ormanufacturing processes may require regulatory approval.

Eliminating this uncertainty is the very reason that theplaintiffs brought these declaratory judgment actions. It is alsothe reason that Congress and the President created a declaratoryjudgment remedy. See 28 U.S.C. § 2201.2

A stay would also have the effect, if not the purpose, ofcausing delay in a case which involves, in part, the assertionthat the '275 patent is unenforceable under the doctrine ofprosecution laches because of the twenty-two year delay inprosecution that has already taken place. See Symbol Techs.,Inc. v. Lemelson Med., Educ. & Research Found., 277 F.3d 1361(Fed. Cir. 2002); In re Bogese, 303 F.3d 1362 (Fed. Cir. 2002). Now, over twenty-fouryears after he first filed the '513 application, John P. White,on behalf of Columbia, is telling the PTO that the patent shouldbe re-issued because the issued claims are not broad enough. Ifthe claims of the '275 patent are invalid as issued, the broaderclaims may be invalid as well. In denying the motion of Biogenand Genzyme to preliminarily enjoin termination of their licenseagreements, this court found that they have shown that they arelikely to prevail in proving that if the '275 patent is valid, itis unenforceable because of prosecution laches. See BiogenIdec MA Inc., supra, slip op. at 21-23. This finding militatesagainst granting the complete stay of this case that Columbiaseeks.

In any event, if, as threatened, Columbia counterclaims againstthe plaintiffs for allegedly infringing activities that occurbefore the '275 patent is re-issued, the court will still have toconstrue the original claims in order to determine if the scopeof the claims is identical. See Bloom Eng'g Co. v. N. Am. Mf'gCo., 129 F.3d 1247, 1250 (Fed. Cir. 1997). "Unless a claimgranted or confirmed upon reexamination is identical to anoriginal claim, the patent can not be enforced against infringingactivity that occurred before issuance of the reexaminationcertificate." Id. Columbia has not disclaimed its intent topursue such claims, nor has it argued that the preliminaryamendments it submitted as part of its re-issue application wouldprevent it from doing so. Therefore, Columbia's argument that"[g]iven that claim interpretation will play a central role in this litigation, itmakes no sense to proceed with these . . . related actions whenit is entirely possible that some or all of the claims of the'275 patent may be amended as a result of reexamination orreissue" is diminished in force. Columbia's Mem. in Supp. of Mot.to Stay at 10; accord Columbia's Reply at 5-6.

In view of the foregoing, Columbia's request that thisMultidistrict Litigation be stayed completely is being denied.

However, as indicated earlier, at the June 22, 2004 hearing thecourt identified the contention that the '275 patent is invalidunder the doctrine of non-statutory double patenting as one thatshould be able to be quickly developed and decided in 2004,either on a motion for summary judgment or at a trial to beconducted in December 2004. See Geneva Pharms., Inc. v.Glaxosmithkline PLC, 349 F.3d 1373, 1377-78 (Fed. Cir. 2003);Biogen Idec MA Inc., supra, slip op. at 16, 18-21. Therefore,the court established a schedule for the resolution of thenon-statutory double patenting issue in 2004, and otherwisesubstantially stayed the remainder of this case to permit theparties to focus on that issue, which may, as a practical matter,end these cases.3 See June 23, 2004 Order (Docket No.32). IV. ORDER

Accordingly, it is hereby ORDERED that Columbia's Motion toStay Litigation Pending Outcome of Reexamination and ReissueProceedings in the Patent and Trademark Office (Docket No. 6) isDENIED.

1. It appears that the President and Executive Director of thePublic Patent Foundation was until recently employed byPatterson, Belknap, Webb & Tyler LLP ("PBWT"). PBWT representsJohnson & Johnson in this litigation. However, the attorney fromPBWT appearing for Johnson & Johnson states that "J&J and PBWThad no knowledge of PPF's decision to request reexamination ofthe '275 patent until after the request was filed and publicizedby PPF. Neither J&J nor PBWT consented to or authorized thefiling of PPF's request." Johnson & Johnson's Opp. to Mot. toStay at 2. The court finds no evidence that any plaintiff wasinvolved in the request for re-examination.

2. The importance of eliminating uncertainty regarding thescope and validity of patents was also one of the driving forcesbehind the formation of the Court of Appeals for the FederalCircuit. The Reagan Administration did strongly support the creation of the Federal Circuit based, among other things, upon the recommendation of then-Secretary of Commerce, the late Malcolm Baldridge. Having served as the very successful Chief Executive of Scovill Industries, Secretary Baldridge often expressed the view that successful business executives are able to "manage around" adversity; they cannot handle uncertainty. And as the several federal circuits drifted farther and farther apart in their interpretations of key sections of the patent code, the inevitable uncertainty actually called into question the viability of an effective U.S. patent system for protecting new technology.Hon. Gerald J. Mossinghoff, Statement Before the Federal TradeCommission and Department of Justice Hearings on Competition &Intellectual Property Law and Policy in the Knowledge-BasedEconomy 6 (Feb. 6, 2002), available athttp://www.ftc.gov/os/comments/intelpropertycomments/mossinghoffgeraldj.pdf.

3. The court may permit the depositions of certain elderlywitnesses to be taken in order to preserve their testimony on allissues in the event that a decision of the non-statutory doublepatenting question does not resolve these cases. See June 23,2004 Order ¶ 3.

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