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Not Reported in F.Supp., 1995 WL 512171 (S.D.N.Y.)


(Cite as: 1995 WL 512171 (S.D.N.Y.))

Only the Westlaw citation is currently available. 3. On May 12, 1995, Genentech moved, by order
to show cause, for a temporary restraining order and
a preliminary injunction prohibiting Novo from
marketing and selling Norditropin® in the United
United States District Court, S.D. New York. States in violation of Claim 2 of t [[[[Editor's Note:
Public version with redactions by court.] The court
NOVO NORDISK OF NORTH AMERICA, INC., denied Genentech's motion for a temporary
restraining order but scheduled an expedited hearing
Novo Nordisk Pharmaceuticals, Inc., and Novo
on Genentech's motion for a preliminary injunction.
Nordisk A/S, Plaintiffs,
4. Beginning on May 22, 1995, and concluding
v.
on June 14, 1995, the court held an evidentiary
hearing on Genentech's motion for a preliminary
GENENTECH, INC., Defendant.
injunction. On June 14, 1995, the court issued a
temporary restraining order so as to maintain the
status quo pending the court's ruling on Genentech's
Civ. A. No. 94 Civ. 8634 (CBM). motion.
Aug. 28, 1995.
B. The Parties
ORDER REGARDING PUBLIC VERSION OF 5. Genentech is a Delaware corporation with its
FINDINGS OF FACT AND CONCLUSIONS OF principal place of business in South San Francisco,
LAW DATED JUNE 28, 1995 California. It was founded in 1976 and since that time
MOTLEY, District Judge. has become a leading bio-pharmaceutical company.
*1 Upon agreement by the parties, it is hereby (Tr. 387, Whiting). Genentech presently
manufactures and distributes five commercial human
ORDERED that the attached is the Public genetically-engineered recombinant pharmaceutical
Version of the Court's Findings of Fact and products, including two human growth hormone
Conclusions of Law dated June 28, 1995 on (“hGH”) products (called Protropin® and Nutropin®).
Defendant's Motion for A Preliminary Injunction. (Tr. 317, Whiting; 278-283, Rizzuto).

FINDINGS OF FACT AND CONCLUSIONS OF 6. NNAS is a corporation organized and existing


LAW ON DEFENDANT'S MOTION FOR under the laws of Denmark, and is one of the world's
PRELIMINARY INJUNCTION leading manufacturers of pharmaceutical products,
MOTLEY, District Judge. with worldwide revenues in 1994 of $2.223 billion.
I. BACKGROUND (Tr. 486, 488-89, Hansen). Its insulin sales in the
A. Procedural Background United States alone (through its wholly-owned
1. On November 30, 1994 plaintiffs Novo subsidiary, NNPI) were $125 million in 1994. (Tr.
Nordisk of North America, Inc. (“NNNA”), Novo 858, Barfod). NNAS markets and sells several
Nordisk Pharmaceuticals, Inc. (“NNPI”), and Novo genetically-engineered pharmaceutical products
Nordisk A/S (“NNAS”) (collectively hereinafter including recombinantly-produced insulin and
referred to as “Novo”) commenced an action against recombinantly-produced hGH (Norditropin®). (Tr.
Genentech for, inter alia, a declaratory judgment that 483-484, 488-489, 491, 493-494, Hansen).
Genentech's United States Patent No. 4,601,980 (the
'980 patent) is invalid and not infringed by Novo. 7. NNPI, located in Princeton, New Jersey, is a
wholly-owned subsidiary of NNAS. (Def. Ex. 100, p.
2. On or about May 9, 1995, Novo received 65). NNPI employs a sales force of approximately its
approval from the United States Food and Drug primary responsibility is the sales and marketing of
Administration (the “FDA”) to market and sell its NNAS' pharmaceutical products (primarily insulin) to
human growth hormone (“hGH”) product, hospitals, wholesalers and retail organizations in the
Norditropin®, in the United States. (Def. Ex. 89). United States. (Tr. 860, Barfod).

© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.


*2 8. NNNA, located in New York, New York, Norditropin®. In the Matter of Certain
is a wholly-owned subsidiary of NNAS. (Def. Ex. Recombinantly Produced Human Growth Hormones.
100, p. 65). ITC Inv. No. 337-TA-358 (“ITC proceeding”). In his
Initial Determination issued on November 17, 1994,
C. Human Growth Hormone--Background the Administrative Law Judge (“ALJ”) found, based
9. hGH is a naturally-occurring protein secreted on what he characterized as an incomplete record,
by the human pituitary gland. (Tr. 267, Johanson). that the '980 patent was valid and infringed by Novo.
(Def. Exs. 31 and 32). The ITC proceeding was
10. Prior to 1985, children with a significant dismissed by the ITC following the Initial
deficiency of hGH were treated by periodic injections Determination of the ALJ as a sanction for what he
of hGH which was derived from the pituitary glands found was non-compliance with discovery
(“pit-hGH”) of human cadavers. (Tr. 169-170, requirements. Genentech has appealed the ITC's
Johanson). In or about 1985, the FDA withdrew its decision to the United States Court of Appeals for the
approval for pit-hGH because of its association with Federal Circuit.
the deaths of several children from Creutzfeld-Jacob
disease. As a result, there was no approved source of 14. This court recently dismissed Novo's
hGH available in the United States. (Tr. 185-187, antitrust claim predicated on Genentech's allegedly
Johanson). bringing bad faith litigation in the ITC. As this court
stated after its own review of the ITC decision:
11. By 1985, Genentech had developed a
genetically-engineered hGH product through After becoming familiar with the ITC proceeding,
recombinant DNA technology, Protropin®, but it had it is clear why plaintiffs do not wish for this Court
not been approved by the FDA. (Tr. 187, Johanson). to consider the determinations of the ALJ. These
Soon after pit-hGH was taken off the market, the determinations completely undermine plaintiffs'
FDA authorized Genentech to provide its contentions that the ITC proceeding was a sham.
recombinant hGH product free of charge to over 100 The ITC found (1) based on defendant Genentech's
patients in critical need of the product under a complaint that sufficient bases existed for the ITC
“compassionate use” protocol. (Tr. 187, Johanson). to commence an investigation against plaintiffs for
Later that same year, Protropin® was approved by the infringement of these patents; (2) the ALJ decided
FDA. (Tr. 210-211, Johanson). no less than six motions for summary
determination, five brought by plaintiffs attacking
II. THE APPLICABLE LEGAL STANDARD FOR the substance of defendant's patents; and (3) the
THIS MOTION ALJ ultimately held (although based on an
12. The Federal Circuit has articulated four incomplete record) that plaintiffs were infringing
factors to consider in determining whether to issue a defendant's '980 patent. Therefore, defendant's ITC
preliminary injunction to maintain the status quo and proceeding can in no way be termed objectively
restrain infringement: i) a reasonable likelihood of baseless because the facts speak loudly to the
success regarding the validity of the patent and the contrary.
fact of infringement; ii) the threat of irreparable harm
in the absence of injunctive relief; iii) the balance of *3 (Order, May 7, 1995).
equities; and iv) the public interest. Hybritech, Inc. v.
Abbott Laboratories, 849 F.2d 1446, 1451 (Fed. Cir. 15. The ALJ held his decision to be based on an
1988). incomplete record because Genentech had not
produced certain documents which Genentech
III. LIKELIHOOD OF SUCCESS ON THE characterizes as privileged but which the ALJ held
MERITS were not privileged based on waiver. While the ALJ's
A. Related Proceeding Before the International decision is based on a potentially incomplete record
Trade Commission should the documents be determined to have been
13. In a proceeding before the International waived, the ALJ nonetheless made detailed findings
Trade Commission, Genentech alleged that Novo was and conclusions based on an evidentiary record on
infringing, inter alia, the '980 Patent by importing the merits.
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Not Reported in F.Supp., 1995 WL 512171 (S.D.N.Y.)


(Cite as: 1995 WL 512171 (S.D.N.Y.))

ribosome reads each three letter codon of “messenger


16. The court takes judicial notice of the ALJ's RNA” and “translates” each three letter codon in
decision that Claim 2 of the '980 patent is not invalid RNA to a single amino acid. (Tr. 35-37, Chamberlin;
and is infringed by Novo and has considered it as 1709-1714, Falkinham). Thus, the second step of
supporting the court's conclusion of one among many gene expression is called “translation” which is
factors of a likelihood of success by Genentech. The carried out in accordance with the genetic code. (Tr.
court, as indicated below, has independently made its 36 Chamberlin). “Expression” is complete when
conclusions with respect to the likelihood of success translation has been completed. (Tr. 1727-1728,
on the merits. Falkinham; 1619, Rzucidlo).

B. The Technological Background *4 22. A “start” codon is a three nucleotide


17. Genetic information is possessed by all cells. sequence which starts or turns on the translation
(Tr. 34, Chamberlin). It is located in a molecule process (i.e., the codon ATG in DNA which is the
called “DNA” or deoxyribonucleic acid. (Id.). A gene codon AUG in the corresponding mRNA). (Tr. 1716,
is a DNA sequence which contains information Falkinham). The codon AUG encodes the amino acid
coding for protein. (Tr. 37, Chamberlin). DNA is a methionine (or formyl methionine). (Tr. 1725,
code which is “expressed”, i.e., the genetic Falkinham). In order to express any gene there must
information provides a code the cell uses to make be a start codon. (Tr. 1725, 1740-1742, Falkinham).
specific proteins. (Tr. 34, Chamberlin). As a result, the expression product always begins
with methionine, the amino acid encoded by the start
18. The DNA molecule is made up of a series of codon. (Id.). The '980 patent so states at col. 1, lines
“codons”, strung together like beads on a string. (Tr. 24-28.
37, Chamberlin). Each codon is made from three
nucleotides which are chemical building blocks, 23. Recombinant DNA technology involves the
abbreviated A,T,G and C, and each codon “codes” use of cloning technology to induce bacterial hosts to
for a specific “amino acid”. (Tr. 35, Chamberlin). produce useful synthesized human proteins in
Amino acids are the building blocks of proteins -- abundant quantities. (Tr. 1720-1722, Falkinham).
just as DNA is a string of codons, protein is a “Cloning” is a process that allows one to cut out a
corresponding string of amino acids. (Tr. 37, single gene or sets of genes from the entire genetic
Chamberlin). The coding relationship between DNA information of an organism and then place it
and the protein is determined by the genetic code. specifically into bacteria or other organisms. (Tr. 41,
(Id.). Chamberlin). In bacteria, there exist small genetic
elements called “plasmids” which are illustrated as
19. “Expression” consists of the “transcription” “circles” of DNA which have the property of being
and “translation” of a DNA sequence. (Tr. 1709, able to replicate (copy themselves) independently.
Falkinham). The result of expression is an (Id.). Because of this property, it is possible to cut
“expression product” called a protein, a linked open plasmids and insert pieces of other DNA into
sequence of amino acids. (Tr. 1709, Falkinham). them and, when such an insertion has been done, the
plasmid can be placed into bacteria where it will
propagate. (Id.). This is the cloning process. (Id.)
20. In gene expression, first the DNA sequence These plasmids are also called “cloning” vehicles.
(containing the genetic information) is copied into a (Def. Ex. 1, col. 2, lines 20-23; Tr. 43, Chamberlin).
molecule called RNA (or ribonucleic acid) during a The bacterial host is induced to “express”--transcribe
process called “transcription.” (Tr. 36, Chamberlin; and translate-- a gene for a protein and thus produces
1719, Falkinham). an expression product (protein) which is then isolated
and purified. (Def. Ex. 1).
21. The RNA transcription product is referred to
as “messenger RNA”, because it carries the genetic C. The Invention of the '980 Patent
recipe for the protein from the DNA to the protein 24. The '980 patent, entitled MICROBIAL
building machinery of the cell called the ribosome. EXPRESSION OF A GENE FOR HUMAN
(Tr. 1722-1723, Falkinham). In making proteins, the GROWTH HORMONE, was issued on July 22, 1986

© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.


to David V. Goeddel and Herbert L. Heyneker and is
assigned to Genentech. (Def. Ex. 1). Genentech D. The Problem Solved By The '980 Patent
originally applied for this patent on July 5, 1979. 28. When the inventors of the '980 patent,
(Id.). The '980 patent expires on July 22, 2003. The Genentech scientists David Goeddel and Herbert
'980 was subject to a request for reexamination in the Heyneker, set out to produce human growth
Patent Office. (Pl. Ex. 3). The validity of the '980 hormone, their initial challenge was to obtain an hGH
patent was also challenged in an ITC proceeding. gene that could be used to produce hGH
(Def. Exs. 31 and 32). recombinantly. (Pl Ex., 3, p. 48-49; Tr. 1138, Villa-
Komaroff). It was known at the time that use of the
25. The '832 patent (which was the first issued original genomic DNA for the entire 191 amino acids
patent in the '980 patent “family tree” (Def. Ex. of the pit-hGH gene would not result in the
52A)) was subject to a restriction requirement by the expression of human growth hormone in a bacterial
Patent Office (Def. Ex. 52A). A restriction host because it contained introns (interrupting
requirement means that the Patent Office has made a sequences) which interfered with expression. (Tr.
determination that there are separate, patentability 1878-1879, Falkinham). Chemical synthesis had been
distinct inventions in one application. In the '832 used successfully the year before to construct the
patents, the method claims which issued in the '980 gene for a different protein, somatostatin (a brain
patent were determined to be separate from the hormone), that was much shorter than the hGH gene,
“quasi-synthetic” gene claims of the '832 patent. but chemical synthesis of a long gene such as that
needed to encode hGH would have been impractical
26. The '980 patent claims methods of producing and time consuming. (Def. Ex. 1, col. 3).
hGH recombinantly, (Tr. 1778-1779, Falkinham;
Def. Ex. 1) and, in particular, methods for expressing 29. An alternative to the chemical synthesis of a
human growth hormone genes in bacterial hosts. (Tr. gene is to isolate the desired gene from biological
42-43, Chamberlin; 1906-1907, Peet; 1777-1778, sources and then to clone it by using a so-called
Falkinham). Met-hGH and hGH are among the “cDNA technique”. (Def. Ex. 1, Col. 3; Tr. 132,
possible human growth hormone products that can be Falkinham). In the cDNA technique, instead of using
produced using the methods of the '980 patent -- met- the original genomic DNA of the gene, a new version
hGH has 192 amino acids and hGH has 191 amino of that DNA, called complementary (or copy) DNA
acids. (Tr. 1757-1778, Falkinham). The methods of or “cDNA” is created. (Tr. 41, Chamberlin; 1717-
the '980 patent do not limit the source of the genetic 1724, Falkinham). cDNA is, however, generally
material used to construct a recombinant plasmid more useful than genomic DNA because it does not
containing an hGH gene. (Tr. 1878-1880, contain introns which, if they remained, would
Falkinham). Therefore, the methods of the '980 patent disrupt the expression of the final product in bacteria.
cover the use of a gene encoding the amino acids of (Tr. 1751, Falkinham).
human growth hormone. (Id.; Tr. 1912-1914, Peet)
30. However, making hGH from sources such as
*5 27. In simplest terms, the invention of the cDNA or genomic DNA presented another problem.
'980 patent involves installing, in a bacterial cell, a These sources of DNA for hGH encode not only the
gene for human growth hormone which the cell can desired protein, itself, but also a so-called “leader
transcribe and translate, i.e., “express.” (Tr. 1709, sequence”--a series of additional amino acids --
1721-1722, Falkinham). These cells provide a new attached at the beginning of the protein. (Tr. 132-134,
source from which an amino acid sequence 1750-1751 Falkinham). The leader sequence is put
containing hGH is recovered and processed to there in nature to help the hGH emerge from the
produce hGH or met-hGH, both suitable for the mammalian pituitary cell after expression, and is
treatment of growth hormone deficiency. (Id.; Def. clipped off automatically in nature as the hGH leaves
Ex. 1). Both met-hGH and hGH are bioactive. (Def. the pituitary cell. (Tr. 1754, 1836, Falkinham). Prior
Ex. 1, col. 7, lines 55-57). Met-hGH is Protropin® to the invention of the '980 patent, no one was able to
sold by Genentech; hGH without the “met” is sold as figure out how to obtain hGH without the leader
Nutropin®))) by Genentech (and is also sold as sequence recombinantly. (Tr. 101-102, Chamberlin;
Humatrope®, by Lilly). (Tr. 188, 207-209, Johanson). 252, 1836, Falkinham). In bacteria, the leader is not
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(Cite as: 1995 WL 512171 (S.D.N.Y.))

clipped off automatically and is not specifically remaining cDNA hGH fragment. (Def. Ex.1., col. 9,
engineered to allow for extra-cellular (outside the lines 36 to col. 10, line 19, col. 10, line 44 to col. 11,
cell) cleavage. (Tr. 1755-1756, Falkinham). The line 5). The resulting “semi-synthetic” gene was then
leader sequence thus remained attached to the hGH inserted in a bacterial cell and artificially produced
and rendered it non-functional. (Def. Ex. 1, col, 3; Tr. for the first time functional hGH. (Def. Ex. 1, col. 11,
1907-1909, Peet; 1881-1882, Falkinham). lines 28-31). Genomic DNA encoding the first 23
amino acids of hGH is another source for those
*6 31. The so-called leader sequence problem codons for purposes of the process of the '980 patent,
was the subject of a speech by Dr. Goodman on because no introns exist in the genomic DNA for the
August 16-20, 1978. (Tr. 93-94, Chamberlin). Dr. first 23 codons of hGH, and they can be fused to the
Goodman, at the time a highly skilled molecular remaining cDNA fragment and to a specifically
biologist at the University of California involved in engineered and chemically synthesized DNA
efforts to develop recombinant growth hormones, sequence encoding [[[Editor's Note: Public version
stated that he had succeeded in obtaining the rat with redactions by court.] which will allow
growth hormone gene only with the complete leader expression of a human growth hormone gene in a
sequence, and that he had very few ideas about how bacterial host. (Tr.1878-1879, Falkinham; 1912-
to remove the leader sequence. (Id.). Up to almost a 1913, Peet).
year after the filing of the '980 patent, Dr. Goodman
was unable to find a way to remove the leader E. Claim Interpretation--The Scope of Claim 2 of
sequence, even though he claimed to have isolated the '980 Patent
the entire human growth hormone gene with the *7 33. The Federal Circuit has held that the
leader sequence. (Tr. 95, Chamberlin). Goodman's interpretation and construction of a patent claim is a
unworkable solution is reflected in the file history of matter of law to be determined exclusively by the
the '980 patent as the Goodman work and the Martial court. Markman v. Westview Instruments, Inc., 52
work. (Def. Ex. 3, pp. 118-119; Tr. 1754-1755, F.3d 967, ----, 34 U.S.P.Q. 2d 1321, 1322 (Fed. Cir.
Falkinham; 1906-1911, Peet; Def. Ex. 130). 1995) (en banc). To determine the meaning of claims,
courts look to the claim language, the specification,
32. The inventors of the '980 patent, Goeddel and and the prosecution history. Unique Concepts, Inc. v.
Heyneker, provided the solution to the leader Brown, 939 F.2d 1558, 1561 (Fed. Cir. 1991);
sequence problem. As indicated in the preferred SmithKline Diagnostics v. Helena Laboratories
embodiment of the '980 patent, the inventors took Corp., 859 F.2d 878, 882 (Fed. Cir. 1988);
cDNA encoding both hGH and its leader sequence, Minnesota Mining and Manufacturing Co. v.
cut off a portion of the cDNA coding for the leader Johnson & Johnson Orthopaedics, Inc., 976 F.2d
sequence and a portion of the hGH codons and 1559, 1576-77 (Fed. Cir. 1992). The prosecution
obtained codons 24-191 of hGH. (Def. Ex. 1, Col. 10, history “is of primary significance in understanding
lines 50-51). At that time, DNA could not be “cut” the claims” because it provides an “‘undisputed
anywhere at will. One “cleavage site” at which a cut public record”’ of the proceedings in the Patent and
could be made was located inside the hGH gene, 23 Trademark Office. Markman, 52 F.3d at ----, 34
codons from the leader sequence. (Id.). Throwing U.S.P.Q. 2d at 1330. Extrinsic evidence, such as
away the leader sequence portion, along with the first expert and inventor testimony, dictionaries, and
23 codons of the hGH gene, left an incomplete gene learned treatises, also are relevant to the
for hGH. (Def. Ex.1, col. 10, lines 51-53). Goeddel interpretation of patent claims. Id. at ---- 1331; see
and Heyneker's solution involved replacing the also SmithKline, 859 F.2d at 882. Additionally,
cDNA encoding the first 23 amino acids of hGH with claims should be “construed as one skilled in the art
the first 23 codons for hGH from other sources. (Tr. would construe them.” SmithKline, 859 F.2d at 882;
1912-1913, Peet). In the preferred embodiment of the Markman, 52 F.3d at ----, 34 U.S.P.Q. 2d at 1329.
'980 patent, Goeddel and Heyneker chemically
synthesized a DNA fragment corresponding to the 23 34. Claim 2 of the '980 patent claims:
codons missing from the cDNA hGH fragment plus a
“start” codon (“ATG”--coding for the amino acid A method for producing human growth hormone
methionine), and fused that fragment to the which method comprises culturing bacterial

© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.


transformants containing recombinant plasmids
which will, in a transformant bacterium, express a (2) The Meaning of “Unaccompanied by ... Other
gene for human growth hormone unaccompanied Extraneous Protein Bound Thereto”
by the leader sequence of human growth hormone 39. Claim 2 contains the language:
or other extraneous protein bound thereto, and
isolating and purifying said expressed human “... express a gene for human growth hormone
growth hormone. unaccompanied by the leader sequence of human
growth hormone or other extraneous protein bound
(Def. Ex. 1, col. 14). thereto...” (Def. Ex. 1).

The parties dispute the following three points as 40. The language of Claim 2 makes the
to Claim 2. interpretation of this phrase of the claim clear. The
claim language “extraneous protein bound thereto”
(1) The Meaning of “Human Growth Hormone” in was added to Claim 2 at the suggestion of the Patent
the '980 Patent Examiner. The claim language “the leader sequence
35. The '980 patent has the headings of human growth hormone or other” was added to
“BACKGROUND OF THE INVENTION,” Claim 2 in response to a prior art rejection advanced
“SUMMARY OF THE INVENTION,” “DETAILED by the Patent Office based on a combination of two
DESCRIPTION OF THE INVENTION” and references -- the “leader sequence - hGH gene” of
“CONSTRUCTION AND EXPRESSION OF A Goodman et al. and the general expression method of
CLONING VEHICLE FOR HUMAN GROWTH Itakura et al. (Pl. Ex. 3, 107-110; Tr. 101, 102,
HORMONE”. (Def. Ex. 1). Under the heading Chamberlin; 1908-1909, 1916-1917, Peet).
“Background of the Invention”, and its subheading Applicants pointed out that the combination
“Human Growth Hormone,” the '980 patent defines advanced by the examiner would still produce, in
pit-hGH as consisting of 191 amino acids. bacteria, the uncleavable fusion product of the leader
sequence-hGH protein. (Pl. Ex. 3, 113-114; Id.). This
36. Under the heading “Detailed Description of is the problem solved by the '980 patent, as found
the Invention”, the inventors disclose that: above. The applicants pointed out that the '980
invention permitted expression of cleavable fusion-
“Of course, the expression product will in every hGH products and added the “unaccompanied by the
case commence with the amino acid coded for by leader sequence of human growth hormone”
the translation start signal (in the case of ATG, F- language to Claim 2 to reinforce that fact. (Pl. Ex. 3,
Methionine). One can expect this to be removed 132-139; Tr. 43, Chamberlin; 1733, 1741-1748,
intracellularly or in any event to leave the Falkinham; 1908, 1910, Peet). At the same time, the
bioactivity of the ultimate product essentially applicants added the word “or other,” thus
unaffected.” establishing that the “extraneous protein bound
thereto” recited in Claim 2 is other protein which,
when expressed in bacteria is like the leader sequence
(Def. Ex. 1.). Thus in the '980 Patent, the of human grewth hormone when it is expressed in
inventors indicated that the met could stay onto the bacteria, i.e., noncleavable. (Tr. 1906-1911, 1934,
ultimate product. Peet: 1875-1876, Falkinham; Def. Ex. 136; Pl. Ex. 3,
138-140). Thus, the language “unaccompanied by ...
37. Genentech's experts, Drs. Chamberlin, or other extraneous protein bound thereto” in Claim 2
Falkinham and Peet all testified that the '980 patent means without uncleavable protein.
defined hGH as either with or without “met” attached
to the amino acid sequence 1-191. (Tr. 58, 41. Novo's expert Dr. Villa-Komaroff, testified
Chamberlin; 155, 215-220, Falkinham; (916 Peet). that the phraseology of Claim 2 “unaccompanied by
the leader sequence of human growth hormone or
*8 38. The Court finds that the term “human other extraneous protein bound thereto” meant that
growth hormone” in Claim 2 includes “met-hGH” the human growth hormone was unaccompanied by
and “hGH”. anything and was therefor superfluous. (Tr. 1133,
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Villa-Komaroff). The court finds this position to be mature, 191 amino acid human growth hormone only,
untenable insofar as it would render the language something known to be scientifically impossible, and
specifically required to be added by the examiner as that therefore Claim 2 covers nothing, and (b) that the
surplusage. It would also be directly contrary to the alternative “fusion” method is not covered by Claim
language of the '980 patent at column 7, lines 54-57, 2. Novo relies in part on the '021 patent of Genentech
cited in ¶ 34, above. Later, Novo's expert concluded to support its interpretation of Claim 2 as limited to
that the language allowed for cleavable protein but direct expression. However, the court finds that the
only where the protein could be cleaved '021 patent is irrelevant to this issue because the '021
intracellularly. The court finds that the file history of file history describes “met-hGH” (the product
the '980 patent and the '980 specification clearly claimed in the '021 patent) as merely the product of
indicate that the cleavage can be intracellular or “one embodiment” of the process described in the
extracellular. The court thus finds that Claim 2 of the '980 patent. (Pl. Ex. 37)
'980 patent only requires that the expression product
be “unaccompanied” by uncleavable protein. 45. Novo's proposed construction of Claim 2 of
the '980 patent was explained in the testimony of its
(3) The '980 Patent Covers Both “Direct expert, Dr. Villa-Komaroff, who stated her opinion
Expression” And “Cleavable Fusion Expression” that Claim 2 is limited to “direct expression” of the
of hGH mature (1-191) human growth hormone gene, and
*9 42. The '980 patent specification describes that since direct expression of the mature human
“direct” expression of met-hGH as the preferred growth hormone gene is impossible. Claim 2 covers
embodiment of the invention. (Def. Ex. 1). However, nothing at all. (Tr. 1091-1092, Villa-Komaroff). Dr.
the preferred embodiment is not the only embodiment Villa-Komaroff admitted that this was a very strange
of the invention. (Tr. 260, Falkinham). result. (Tr. 1075, Villa-Komaroff)

43. Genentech contends and its expert witnesses 46. Dr. Villa-Komaroff conceded on cross-
Drs. Chamberlin, Falkinham and Peet testified that examination, however, that Claim 2 does not contain
the specification and file history of the '980 patent the limiting term “direct expression”, nor does it
clearly establish that Claim 2 of the '980 patent contain the limiting term “mature human growth
covers two alternatives within the process for hormone” (Tr. 1057-1059, Villa-Komaroff). Thus on
expressing a human growth hormone gene. The first its face, the language in the claim does not have the
is the so-called “direct” expression, where the hGH is limitations which Novo seeks to import into the
produced having the f-met amino acid at the end of claim. Novo's patent expert, Mr. Eugene Rzucidlo,
the hGH, giving a product of 192 amino acids admitted the word “expression” would be “the
commonly referred to as “met-hGH.” The second is generic term for various types of expression, both
the so-called “cleavable fusion” expression, where directed and fusion, yes.” (Tr. 1627, Rzucidlo). For
the hGH is produced with specially engineered the reasons explained below, the court finds that
cleavable protein attached to hGH; the cleavable Novo's contentions are belied by the language of the
protein is specifically cleaved from the hGH, leaving claim and is specifically contradicted by the clear
a product of 191 amino acids. (Def. Ex. 1; Tr. 42-43, disclosures in the '980 patent specification and file
Chamberlin; 1729-1734, 1874-1877, Falkinham; history. Thus, the court finds that Claim 2 covers
1905-1912, Peet). both “direct” expression and “cleavable fusion”
expression.
44. As Novo's expert, Dr. Villa-Komaroff has
admitted, the '980 Patent specification discusses two *10 47. Claim 2 covers direct expression because
alternatives -- direct expression and cleavable fusion in direct expression, as explicitly stated in the claim,
expression. (Tr. 1112-1118, Villa-Komaroff). Novo the gene codes for human growth hormone
does not dispute that Claim 2 of the '980 patent “unaccompanied by the leader of human growth
covers “direct” expression of a human growth hormone or other extraneous protein bound thereto”.
hormone gene, but it contends (a) that Claim 2 was In addition, the '980 specification makes clear that
intended by the inventors to cover direct expression Claim 2 is not limited to “direct” expression, but
(transcription and translation) of a gene encoding includes the alternative “cleavable fusion”

© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.


expression. permit extra-cellular cleavage of extraneous
protein, yielding the bioactive form.
48. In particular, the “cleavable fusion”
expression is described in the '980 patent in several (Tr. 257 Falkinham). The court rejects Novo's
places. First, the '980 specification states: assertion that it should simply ignore the language in
the Summary of the Invention and column 7 which
Applications will appear in which it is desirable to clearly is intended to convey that Claim 2 covers both
express not only the amino acid sequence of the a “direct” expression method and a “cleavable
intended product, but also a measure of extraneous fusion” expression method.
but specifically engineered protein. (Def. Ex. 1,
col. 7, lines 3 - 6). 51. In the file history of the '980 patent, both the
claim language and basis for distinguishing the prior
Novo's patent expert, Mr. Rzucidlo, conceded art changed in a manner which makes clear that
that this describes a cleavable fusion precess wherein Claim 2 covers both direct and fusion expression. (Pl.
the gene encoding the amino acid sequence of a Ex. 3; Tr. 1910-1912, Peet). Thus, in paper # 18 (a
fusion product is expressed. (Tr. 1363, Rzucidlo). response dated March 13, 1985), the work of the
Goodman group, published in Martial et al., was
49. The '980 specification then describes by way distinguished from the '980 invention on the basis
of example four applications in which such cleavable that Goodman's human growth hormone was part of
fusion human growth hormone expression products an uncleavable fusion product as follows:
could be made in a manner that would be of utility to
those in the field of recombinant DNA technology. *11 Martial et al. report the construction of an
(Def. Ex. 1, col. 7, lines 3-57). The four examples expression vector containing DNA for the entire
show that the inventors envisioned that there might coding region for the human growth hormone gene
be advantages for some purposes of utilizing a fusion still linked to the 3'-untranslated portion of human
process rather than a direct expression process. (Tr. growth hormone ... , all still linked to DNA
257, Falkinham). encoding the N-terminal region of the trpD
protein.... Further, the Martial et al. DNA sequence
The '980 specification further states that the is devoid of any restriction site that would enable
invention includes: specific cleavage to yield only the full-length
CDNA for mature HGH.
intended product conjugated to but specifically
cleavable from extraneous protein. (Def. Ex. 1, col. Upon expression, Martial et al. obtained no more
7, lines 50-51). than a fusion product consisting of three linked
sequences. The fusion product [hGH] stuck to its
leader sequence and trpD protein had no selective
50. In addition, the Summary of the Invention at cleavage site that would permit human growth
column 4 of the '980 patent provides as follows: hormone devoid of extraneous protein bound
thereto to be obtained.
The present invention provides methods and means
for expressing quasi-synthetic genes wherein (Pl. Ex. 3., pp. 102-108) (emphasis added).
reverse transcription provides a substantial portion,
preferably a majority, of the coding sequence
without laborious resort to entirely synthetic 52. Again, in the file history of the '980 patent, in
construction, while synthesis of the remainder of paper #21 (an amendment dated November 27,
the coding sequence affords a completed gene 1985), after discussing certain prior art and referring
capable of expressing the desired polypeptide to that art, the applicants stated:
unaccompanied by bio-inactivating leader
sequences or other extraneous protein. However it is noteworthy that even if expression of
Alternatively, the synthetic remainder may yield a this DNA [the hGH trpD bDNA] could be achieved
proteolysis-resistant conjugate so engineered as to ... it would be expression of a fusion product with
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no selective cleavage site that would permit human occurring between an applicant for a patent and the
growth hormone free of extraneous protein bound Patent Office was in the nature of a dialogue; that the
thereto to be obtained. applicant could claim his invention as broadly as the
prior art would allow, and that the applicant could
(Pl. Ex. 3, p. 118-119) (emphasis added). change and broaden the scope of his claims at any
time. (Tr. 1888-1889, Peet, see also Tr. 1648-1649,
53. The above excerpts from the file history Rzucidlo). In addition, Dr. Peet testified that it was a
show that the applicants for the '980 patent requirement of patent examiners to review the entire
distinguished the prior art from the '980 invention by file history of a patent application at the time when a
showing that the prior art had not included a selective patent was to be allowed, to ensure that the file
cleavage site allowing for expression of human history as a whole supported the claims which were
growth hormone without the uncleavably bound to be allowed. (Tr. 1898, Peet).
leader sequence. (Pl. Ex. 3, 102-103, 118-119; Tr.
1741-1748, Falkinham; 1908-1910, Peet). In contrast, 57. The court thus finds that Claim 2 of the '980
the invention of the '980 patent involves methods patent includes both direct expression in bacteria of
which permit the production of human growth met-hGH where the met may or may not be cleaved
hormone without the leader sequence “bound post expression as well as [Editor's Note: Public
thereto” by either direct expression or a fusion version with redactions by court.]
expression containing extraneous cleavable protein.
(Id.) F. Novo's Infringement of the '980 Patent
58. The determination of infringement is a two-
54. Moreover, during prosecution of the step process. First, the language of the claims must be
application, at the suggestion of the patent examiner, interpreted; and second, the accused device or
the phrase “without extraneous protein bound process must be compared to the claim language as
thereto” was substituted in Claim 2 for the term properly interpreted. Read Corp. v. Portec, Inc., 970
“unaccompanied by extraneous conjugated protein” F.2d 816, 822 (Fed. Cir. 1992). In evaluating
specifically for the purpose of making clear that the infringement it should be kept in mind that the '980
claim covers expressing genes encoding both direct patent represents a pioneering contribution by
and cleavable fusion products. (Tr. 98-99, Goeddel/Heyneker to the basic development of the
Chamberlin; Tr. 1747-1748, Falkinham). The biotechnology industry. As such, the '980 patent is
examiner was specifically directed to pages 14-15 of entitled to a broad construction consistent with the
the application (which became column 7) when the scope and importance of its achievement. Texas
examiner suggested the language “extraneous protein Instruments v. U.S. Intern. Trade Com'n., 846 F.2d
bound thereto.” 1369, 1370 (Fed. Cir. 1988).

55. In further support of this conclusion, it is also 59. Plaintiffs and defendant both agree that
clear from the file history that the phrase “a gene for [Editor's Note: Public version with redactions by
human growth hormone” was used to avoid limiting court.]
the process to a quasi-synthetic gene made up of
cDNA and synthetic DNA that would be produced 60. Novo's method for making Norditropin®, its
via direct expression. (Pl. Ex. 3, 109; Tr. 1912-1914, product, [Editor's Note: Public version with
Peet). As Genentech expert Dr. Peet explained, Claim redactions by court.]
2 was amended to change the phrase “the gene” to “a
gene” to broaden the claim to use of a gene 61. [Editor's Note: Public version with redactions
constructed from any available sources of DNA, by court.]
including genomic DNA, in either direct or cleavable
fusion expression. (Tr. 1913-1916, Peet) and the The court finds that Novo's strategy for making
Examiner understood that the claim had been hGH was derived directly from information
broadened. (Pl. Ex. 3, 109). contained from the Goeddel-Heyneker paper in
Nature and, thus, from the '980 patent specification.
*12 56. Dr. Peet testified that the conduct

© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.


(Tr. 594-596, Dalboge). growth hormone...” does not specify or limit the
source of the genetic material used for the human
62. Novo admits to [Editor's Note: Public version growth hormone gene. (Tr. 1912-1914, Peet). The use
with redactions by court.] of chemically synthesized DNA is merely one
example in the '980 specification for obtaining a
63. In addition to utilizing the cDNA containing portion of a human growth hormone gene, but clearly
[Editor's Note: Public version with redactions by the claim was not intended to be limited to this single
court.] example. (Id.).

64. [Editor's Note: Public version with redactions *13 Novo expresses a human growth hormone
by court.] gene in accordance with the process of Claim 2 of the
'980 patent. (Def. Ex. 1; Tr. 141; 1778-1780,
Falkinham).
65. [Editor's Note: Public version with redactions
by court.]
71. Based on the foregoing, the court finds that
Novo's process for making human growth hormone
66. [Editor's Note: Public version with redactions literally infringes Claim 2 of the 980 patent.
by court.]
Novo's [Editor's Note: Public version with
67. [Editor's Note: Public version with redactions redactions by court.] will express a gene for human
by court.] growth hormone as specified in Claim 2 because its
DNA sequence codes for amino acids 1-191 of
68. [Editor's Note: Public version with redactions human growth hormone.
by court.]
Further, Novo's DNA is [Editor's Note: Public
69. Novo argues that its process for version with redactions by court.]
manufacturing Norditropin® does not infringe Claim
2 of the '980 patent [Editor's Note: Public version 72. The language “isolating and purifying said
with redactions by court.] Additionally, according to expressed human growth hormone” does not specify
Novo, [Editor's Note: Public version with redactions or limit the ways to isolate and purify the hormone.
by court.] However, the Court has found that Claim 2 (Tr. 1779, Falkinham). At the end of the Novo
of the '980 patent covers a cleavable fusion process hGH has been isolated and purified. (Id.).
expression process. Moreover, Novo has admitted in
its filings with the FDA that [Editor's Note: Public
version with redactions by court.] 73. Novo contends that its process involves
various purported improvements over the process of
the '980 patent. Thus, Novo contends that the '980
The court finds that [Editor's Note: Public patent does not describe how to cut back a large
version with redactions by court.] is expressed from a fragment of genomic material so as to obtain only the
DNA sequence containing a gene for hGH. The court desired fragment which encodes for amino acid 1 to
also finds that the phrase “unaccompanied by the 23. (Tr. 649, Dalboge). Novo furthers contends that
leader sequence of human growth hormone or other the '980 patent does not describe how to place codons
extraneous protein bound thereto” means without containing a cleavable amino extension on the human
uncleavable protein. Since [Editor's Note: Public growth hormone gene. (Tr. 650, Dalboge). Novo
version with redactions by court.] from the 191 further contends that the '980 patent does not suggest
amino acids of hGH, [Editor's Note: Public version that the amino extension should have an even number
with redactions by court.] is not “extraneous protein of amino acids which are negatively charged. (Tr.
bound thereto.” Thus, Novo does not avoid a finding 650-651, Dalboge). Novo further asserts that the '980
of infringement by [Editor's Note: Public version patent does not disclose its cleaving agent by which
with redactions by court.] an amino extension can be cleaved from human
growth hormone. (Tr. 650-651, Dalboge).
70. The Claim 2 limitation “a gene for human
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patent grants to the patentee and its assigns only the


74. Novo ignores that Claim 2 of the '980 patent right to exclude others from making, using, or selling
recites a method which “comprises” several steps. In the invention, the patentee cannot claim any
patent law, the term “comprises” is a term of art affirmative right to make, use or sell the invention 35
which means that Claim 2 does not exclude U.S.C. § 154. Thus, the owner of an improvement
additional unrecited elements. Molecular Research (method) patent may own a valid patent, but may still
Corp. v. CBS, Inc., 793 F.2d 1261 (Fed. Cir. 1986); be restrained from making, using or selling the
A.B. Dick Co. v. Burroughs Corp., 713 F.2d 700, 703 invention, by the enforcement of a valid dominant or
(Fed.Cir. 1983)(District Court erred by finding non- blocking patent of another party. Furthermore, as the
infringement when accused device included elements Federal Circuit has held, “‘an embellishment’ made
not specified in the patent claims). All that is possible by technological advances may not permit
necessary for infringement is that Novo's method an accased device to escape ‘the web of
includes the elements of Claim 2. In any event, the infringement.”’ Datascope Corp. v. SMEC, Inc.,
court finds that Novo's purported improvements were 776 F.2d 320, 326 (Fed. Cir. 1985), cert. denied, 493
generally disclosed or known in the art. U.S. 1024, 110 S.Ct. 729, 107 L.Ed.2d 747 (1990),
citing Hughes Aircraft Co. v. United States, 717 F.2d
75. The court notes Novo's assertion that it has 1351, 1365 (Fed. Cir. 1983).
made improvements to the process of the '980 patent
and independently developed its process. For 77. A patent on the improvement carries no right
example, Novo contends that the '980 patent does not to practice the invention in violation of the rights of
disclose a cleaving agent by which an amino [Editor's the owner of the patent on the basic or broad
Note: Public version with redactions by court.] invention. See, e. g., Richardson v. Suzuki Motor Co.,
However, at the time the inventors applied for the 868 F.2d 1226, 1240 (Fed. Cir.), cert. denied, 493
'980 patent, the art disclosed numerous examples of U.S. 853, 110 S.Ct. 154, 107 L.Ed.2d 112 (1989) (“A
[Editor's Note: Public version with redactions by device that embodies improvements on a claimed
court.] Likewise, Novo's use of [Editor's Note: Public structure does not automatically avoid the reach of
version with redactions by court.] cannot be deemed the claim.); Atlas Powder Co. v. E. I. Du Pont de
an improvement to the process since the [[[Editor's Nemours & Co., 750 F.2d 1569, 1580 (Fed. Cir.
Note: Public version with redactions by court.] which 1984). (“[W]here [the] defendant has appropriated
Genentech disclosed in the '980 patent specification. the material features of the patent in suit,
Novo has not shown that the use of [[[Editor's Note: infringement will be found ‘even when those features
Public version with redactions by court.] has any have been supplemented and modified to such an
particular advantages which improve the process. extent that the defendant may be entitled to a patent
Likewise, Novo's use of [[Editor's Note: Public for the improvement,”’); Carpet Seaming Tape
version with redactions by court.] cannot be deemed Licensing v. Best Seam, Inc., 616 F.2d 1133, 1142
an improvement since the examples in the '980 patent (9th Cir. 1980), cert. denied, 464 U.S. 818, 104 S.Ct.
specification explicitly state that Claim 2 was 78, 78 L.Ed.2d 89 (1988) (stating that patents on
intended to cover [Editor's Note: Public version with basic processes and products may block patents on
redactions by court.] which could utilize such a The improvements to those products and processes);
court finds that Novo failed to prove that it Temco Elec. Motor Co. v. Apco Mfg. Co., 275 U.S.
independently developed its process. 319, 328, 48 S.Ct. 170, 173, 72 L.Ed. 298 (1928)
(stating that it is an established principle that an
76. However, even assuming that the Novo “improver cannot appropriate the basic patent of
process may involve improvements over the another, and that the improver without a license is an
processes of Claim 2 of the '980 patent, as a matter of infringer, and may be sued as such”).
law, Novo's improved process nonetheless infringes
the processes of the '980 patent. It is basic hornbook *14 78. The court further finds that there is
law that even if a party independently develops substantial evidence that Novo engaged in blatant
patentable improvements to a process and obtains copying of the process of the '980 patent. While
patents on the improvement, the improved process Novo scientist Dr. Dalboge denied that Novo
can still literally infringe a dominant patent. Since a developed its strategy for making human growth

© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.


hormone from the '980 patent and the related Novo felies only upon prior art considered by the
publication of its inventors in Nature (Def. Ex. 107) Patent Office renders the presumption of Validity of
Dr. Dalboge's testimony is not credible. In the related the '980 patent even more difficult to overcome.
ITC Proceeding. Dr. Dalboge admitted that Novo Hewlett-Packard Co. v. Bausch & Lomb, Inc., 909
[Editor's Note: Public version with redactions by F.2d 1464, 1467 (Fed.Cir. 1990). (Tr. 1662-1663.
court.] Nature paper, and he confirmed the accuracy Rzucidlo).
of that testimony in the more recent hearing before
this court. [[[[Editor's Note: Public version with 82. The Patent Office's denial of the request for
redactions by court.] In fact, Dr. Dalboge admitted reexamination of the '980 patent (i.e., a request that
that he read the Nature article of Dr. Goeddel and Dr. the Patent Office revisit the patentability of an
Heyenker when he started working on the project at invention in view of “new” prior art) further
Novo for prodacing hGH. (Tr. 596-597). strengthens the presumption of the '980 patent's
validity. See Hewlett-Packard Co., 909 F.2d at 1467.
79. Based on the foregoing. Genentech has In denying reexamination, the Patent Office
established a strong likelihood of success on the confirmed the validity of '980 patent.
merits of its patent infringement claim against Novo
based on the '980 patent. 1. The Prior Art Defense Raised By Novo
*15 83. In contending that the '980 patent is
G. Validity of the '980 Patent invalid. Novo relies solely upon the Itakura et al. '619
80. The '980 patent is presumed valid under 35 patent. (Tr. 23, Statement of Novo's Counsel).
U.S.C. § 282:
84. Novo argues that the '619 patent renders
“A patent shall be presumed valid....The burden of obvious the process covered by the '980 patent
establishing invalidity of a patent or any claim because the '619 patent claims a generic process for
thereof shall rest on the party asserting such both direct and fusion expression of polypeptides in
invalidity.” bacteria. Novo adheres to this argument despite the
fact that its counsel has admitted in open court that a
The determination of whether Genentech has gene capable of producing bioactive human growth
demonstrated a reasonable likelihood of success must hormone was unavailable until the invention of the
be made in the context of the presumption of validity '980 patent. (Tr. 1031-1033). Novo's scientific expert
that the '980 patent will enjoy at trial and Novo's admitted that the inventors of the '980 patent were the
heavy burden of establishing invalidity by clear and first ones who were able to get a gene for hGH
convincing proof. Orthokinetics Inc. v. Safety Travel without the leader sequence. (Tr. 1138, Villa-
Chairs, Inc., 806 F.2d 1565, 1570 (Fed. Cir. 1986); Komaroff). Novo argues that once Genentech
Robertson, 820 F.2d at 388. For Genentech to meet constructed the recombinant hGH plasmid and “had”
its burden on likelihood of success on validity, it the hGH gene, it could simply plug that plasmid and
must only show that it is likely that Novo will not gene into the '619 patent's expression system, which
prove invalidity by clear and convincing evidence. taught, inter alia, that one needs to place a start
Genentech has met its burden. codon (an “AUG” encoding methionine) in front of
the structural gene in order to initiate translation. (Tr.
81. The burden is on Novo to come forward with 1033 Statement of Novo's counsel). Novo relies upon
an affirmative defense to the validity of the patent. In re Durden, 763 F.2d 1406 (Fed.Cir. 1985) to
Roper, 757 F.2d at 1270; New England Braiding Co., support its obviousness position. Durden merely
Inc. v. A.W. Chesterton Co., 970 F.2d 878, 882 (Fed. stands for the proposition that a method of making a
Cir. 1992). The only prior art Novo cites in support compound may be obvious, under the particular
of its claim of invalidity is the Itakura et al. '619 circumstances of that case.
patent. The Patent Office considered this same prior
art (in the form of the Itakura et al. '270 patent (which 85. However, Novo errs when it fails to
has the same specification as the '619 patent)) before recognize that the process of the '980 patent
it granted the '980 patent. (Tr. 45-46, Chamberlin; represented a patentable invention over the process of
1136. Villa-Komaroff; Ex. 3., p. 120). The fact that the '619 patent because the '980 inventors developed
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a method for producing human growth hormone, a 90. In determining the issue of a patent's validity,
process that solved the leader sequence problem and the court must also consider the “objective evidence
resulted for the first time in the production of of non-obviousness” or “secondary considerations”
recombinant hGH. (Tr. 1747-1748, Falkinham). when presented by the patent holder. Glaverbel
Indeed, as Dr. Villa-Komaroff, Novo's expert, Societe Anonyme v. Northlake Marketing & Supply,
admitted, the Patent Office allowed the '980 patent on Inc., 45 F.3d 1550, 1555 (Fed. Cir. 1995); Stratoflex,
the explicit basis that, insofar as the '980 patent Inc. v. Aeroquip Corp., 713 F.2d 1530, 1539 (Fed.
teaches a process for obtaining a human growth Cir. 1983). The Federal Circuit has underscored the
hormone gene, constructing a recombinant plasmid importance of such secondary evidence, explaining:
containing a growth hormone gene and using that
gene and recombinant plasmid to express Indeed, evidence of secondary considerations may
recombinant human growth hormone, the process of often be the most probative and cogent evidence in
the '980 patent represented a patentable invention the record. It may often establish that an invention
over the generic process of the '619 patent. (Tr. 1135- appearing to have been obvious in light of the prior
1139, Villa-Komaroff). The court also concludes that art was not.
the Durden case is not applicable here. The
controlling authority is In re Pleuddemann, 910 F.2d Stratoflex, 713 F.2d 1530, 1538 (Fed. Cir.
823 (Fed. Cir. 1990) which stands for the proposition 1983).FN1
that methods of using novel compositions (here, the
leaderless hGH gene) are patentable. Moreover, in
Pleuddemann, the Federal Circuit distinguished 91. The criteria that have emerged for these
Durden on the basis that the Patent Office rejection secondary considerations include: (1) the commercial
was based on the flaw that the inventor's new success of the products covered by the patent (
compounds (here, leaderless hGH) was prior art. Simmons Fastener Corp. v. Illinois Tool Works, Inc.,
Thus, the court finds that Pleuddemann, not Durden 739 F.2d 1573, 1575, 1576 (Fed. Cir. 1984), cert.
controls here. In addition, contrary to the contentions denied, 471 U.S. 1065, 105 S.Ct. 2138, 85 L.Ed.2d
of Novo's expert Rzucidlo (Tr. 1579, Rzucidlo), 496 (1985) ([T]he evidence of secondary
Durden was decided after the '980 patent issued. considerations in this case, particularly commercial
saccess, is extremely strong, and is entitled to great
weight.”); In re Sernaker, 702 F.2d 989, 997 (Fed.
*16 86. Novo's scientific expert testified that Cir. 1983) (concurring opinion); (2) long felt need in
with Itakura et al. alone, you would not obtain hGH, the art satisfied by the invention in the patent (
“you would get pieces.” (Tr. 1137, Villa-Komaroff). Stratoflex, 713 F.2d 1530, 1540 (Fed. Cir. 1983); In
re Mahurkar Patent Litigation, 831 F. Supp. 1354,
87. Therefore, the court finds that the '980 patent 1378 (N.D. Ill. 1993) (“The existence of an enduring,
represents an invention over the '619 patent and is not unmet need is strong evidence that the invention is
rendered obvious by the '619 patent. novel, not obvious, and not anticipated.”); (3) failure
of others to make the invention ( Minnesota Mining
88. The court takes judicial notice of the fact that and Manufacturing Co. v. Johnson & Johnson
in the ITC Proceeding the Administrative Law Judge Qrthopaedics, Inc., 976 F.2d 1559, 1575 (Fed. Cir.
considered whether the '619 patent renders the '980 1992)); and (4) copying the invention by others in the
invalid and determined that the '619 patent does not field ( American Medical Systems, Inc. v. Medical
invalidate the '980 patent. (Tr. 46, Def. Ex. 31). Engineering Corp., 794 F. Supp. 1370, 1385-86
(E.D. Wis. 1992), aff'd in part, rev'd in part, 6 F.3d
89. The court finds and concludes based on the 1523 (Fed. Cir. 1993), cert. denied, --- U.S. ----, 114
evidence thus far adduced that the '619 patent neither S. Ct. 1647, 128 L.Ed.2d 366 (1994)).
teaches nor renders obvious the '980 patent. This
determination is further and amply supported by (a) Commercial Success
objective secondary considerations. 92. Genentech's development and ultimate sale
of its recombinantly produced hGH products
2. Non-Obviousness: Secondary Considerations pursuant to the process of the '980 patent have
Support Validity resulted in extraordinary “commercial success.”

© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.


Genentech's human growth hormone products, Telectronics, Inc., 857 F.2d 778 (Fed. Cir. 1988).
Protropin® (approved in 1985) and Nutropin® Some experimentation is allowable because patent
(approved in 1994) are being marketed for the specifications are not supposed to be production
treatment of growth hormone deficiency in children. specifications. Northern Telecom, Inc. v. Datapoint
(Tr. 275,277, Rizzuto). Genentech's U.S. gross sales Corp., 908 F.2d 931 (Fed. Cir. 1990). Disclosure of
of hGH have steadily increased over the years from one specific example, coupled with the general
approximately $43.5 million in 1986 to $185.1 manner in which the example was conducted,
million in 1991 and $225.4 million in 1994. (Tr. 317, allowed other permutations of the invention to be
Whiting; Def. Ex. 92, 99). The products of the '980 practiced without undue experimentation.
patent are indisputably commercial successes. Telectronics, 857 F.2d 778. Although what is known
in the prior art can be used to satisfy the enablement
(b) Long Felt Need requirement, a patent specification need not disclose,
*17 93. A long felt need for the artificial growth and preferably omits, what is well-known in the art.
hormone existed prior to the introduction of Hybritech, Inc. v. Monoclonal Antibodies, 802 F.2d
Genentech's recombinantly produced hGH products 1367 (Fed. Cir. 1986).
because prior to Genentech's invention. hGH from
natural sources was in short supply and was 98. Novo argues that if the '980 patent is
unavailable to treat all children who needed the construed to cover fusion expression processes, it is
treatment. (Tr. 169-170, Johanson). not enabled because it did not teach one how to
construct a synthetic amino-extension or how to
(c) Failure of Others cleave the amino extension “extraneous protein”
94. The invention of the '980 patent is from the amino acids encoding hGH. (Tr. 1141,
underscored by the failure of others to develop a Villa-Komaroff). However, Novo's own experts
viable process for the production of hGH. At the time admitted that by the time of the '980 invention, those
Goeddel and Heyneker filed the '980 patent, the skilled in the art knew how to synthesize an amino
scientists at the University of California had failed to extension with a start codon, such as Novo's MEAE.
obtain an hGH coding sequence from which hGH (Tr. 1141-1143, Villa-Komaroff). Moreover, the
could be produced. Indeed, up to almost a year after testimony of Genentech's expert, and documentary
the filing of the application for the '980 patent, Dr. evidence, conclusively establish that selective
Goodman and his group were unable to find a way to enzymatic cleavage agents (including cathepsinc and
remove the leader sequence, even though he had dipeptidyltransferase) substantially equivalent to the
succeeded in obtaining the entire human growth cleavage agent utilized in Novo's [Editor's Note:
hormone gene with the leader sequence. (Tr. 95, Public version with redactions by court.] were well
Chamberlin). known to those skilled in the art [Editor's Note:
Public version with redactions by court.] Therefore,
(d) Copying the Invention by Others in the Field Novo's non-enablement argument is rejected.
95. The imitation of Genentech's work by Novo Genentech has established that the examples in the
forms an important clue of non-obviousness. patent contained sufficient disclosure to enable those
skilled in the art to utilize a process for expressing
the hGH gene in cleavable fasion form.
96. Thus, the court finds that the evidence of
secondary considerations present here create an
overwhelming case for its finding that Genentech is IV. IRREPARABLE HARM
likely to succeed on the issue of validity of the '980 A. Genentech Will Suffer Irreparable Harm To Its
patent. Goodwill and Reputation Among Its Customers.
Including Pediatric Endocrinologists and Others. If
Novo Is Permitted To Enter The Market and Is
3. The Lack of Enablement Defense Raised By Subsequently Enjoined
Novo (1) Pediatric Endocrinology
97. The test of enablement is whether one of *18 99. Endocrinology is the study of the glands
ordinary skill in the art could make and use the of internal secretion. (Tr. 166, Johanson).
invention from the disclosures in the patent coupled
with information known in the art. United States v.
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100. Pediatric endocrinologists treat children market, no growth hormone therapy was available
who have thyroid disease, diabetes, sex gland (except for those children who were participating in
disorders, and growth hormone deficiency, and a clinical trials with Genentech's recombinant hGH and
major part of their practice is referrals of children those whom the FDA permitted to receive
who have short stature. (Tr. 166-169, Johanson). Genentech's recombinant hGH on an emergency
basis). (Tr. 187-188, Johanson).
101. There are only approximately 700 pediatric
endocrinologists in the United States. (Tr. 167, 108. In 1985, the FDA approved Genentech's
Johanson). Protropin® (met-hGH) human growth hormone
product, and granted it Orphan Drug Status. (Tr. 210-
(2) The Development of the Growth Hormone 211, Johanson).
Market In the United States
102. Growth hormone therapy involves 109. From a medical and clinical standpoint,
injections of human growth hormone on a daily basis, there is no difference in safety and efficacy between
or multiple times per week, for several years, with the Genentech's Protropin® human growth hormone (met-
duration of treatment depending on the needs and hGH) and its Nutropin® human growth hormone
circumstances of each individual child. (Tr. 170-171, (met-less hGH), or among those products, Novo's
Johanson). Norditropin® and Eli Lilly and Company's (“Lilly”)
Humatrope®. (Tr. 213, Johanson).
103. Treatment with human growth hormone has
been proven to be remarkably successful. (Tr. 171, (3) Genentech's Efforts to Build Goodwill
Johanson). The result is to make children as tall as 110. Genentech sponsors a number of programs
their genes would enable them to be if they had no to build goodwill among physicians. These include
growth hormone therapy. (Id.). the National Cooperative Growth Study (“NCGS”),
its Uninsured Patient Program, a reimbursement
104. Prior to Genentech's first United States program, and other programs involving education for
clinical trials for recombinant human growth patients and parents involved in growth hormone
hormone which began in 1981, the only known therapy. (Tr. 274, Rizzuto).
treatment for growth hormone deficiency in children
was growth hormone extracted from the pituitary *19 111. NCGS is a study which Genentech
glands of cadavers. (Tr. 169, Johanson). initially instituted at the behest of the FDA which
required Genentech to follow 500 patients that had
105. By about 1983, fewer than 2,000 patients been involved in clinical trials of Protropin ® for a
could be treated each year in the United States number of years following the FDA's approval of
although as many as 20,000 children needed Protropin® in 1985. (Tr. 173, Johanson). The vast
treatment at that time. (Tr. 170, Johanson). data base created in the program became such a
valuable resource for the pediatric endocrine
106. In 1984, a number of children treated with community that the program was expanded to all of
pituitary-derived hGH died from Creutzfeldt-Jacob the patients treated with Genentech's hGH. It supplies
disease, a neurologic disorder which usually occurs a wealth of information to pediatric endocrinologists
in elderly people. As a result, pituitary growth who receive its various reports (Id.; Def. Exs. 79, 81,
hormone was taken off the market in the United 82) and who often request information from its data
States in 1985. (Tr. 185, Johanson). base. (Id.). To date over 20,000 patients have been
enrolled in the study which is ongoing. (Tr. 173,
Johanson).
107. When pituitary derived growth hormone
was taken off the market. Genentech's recombinant
human growth hormone had been used in clinical 112. Genentech pays the cost of NCGS [Editor's
trials, but had not been approved by the FDA for Note: Public version with redactions by court.] (Tr.
general use (Tr. 186-187, Johanson). Therefore, when 275, Rizzuto). NCGS has resulted in significant
pituitary derived growth hormone was taken off the goodwill for Genentech among pediatric
endocrinologists. (Tr. 275, Rizzuto).

© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.


course of treatment utilizing one growth hormone
113. Pursuant to Genentech's uninsured patients product are reluctant to switch to another growth
program, any patient who requires any of hormone product during the course of treatment (Tr.
Genentech's products and cannot afford it will be 203-204, Johanson; Tr. 719-720, Capuano). Thus, for
given the product at no cost. Since 1985, Genentech example, most doctors who began to treat patients
has given away at least $136 million of human with Protropin®, Genentech's met-hGH product,
growth hormone to more than 5,000 patients. (Tr. continued to utilize Protropin® for those patients even
275, Rizzuto). after Lilly's and Genentech's met-less hGH became
available (Tr. 909-911, Barford). For that reason, if
114. Genentech's reimbursement assistance permitted to enter the market.
program assists patients and physicians through the
process of obtaining reimbursement for the cost of *20 118. Genentech's expert pediatric
treatment from insurance companies. (Tr. 275-276, endocrinologist, Dr. Ann Johanson, has expressed the
Rizzuto). opinion that Genentech's goodwill could be seriously
and irreparably harmed if Novo is allowed to sell its
(4) The Administration of Recombinant Human hGH product in the U.S., and then after two years,
Growth Hormone To Children Novo is taken off the market by reason of an
115. Recombinant hGH must be administered by injunction obtained at Genentech's request. (Tr. 193,
injection which is usually administered by the parents Johanson). In such circumstances, there would be
of the children who are being treated. (Tr. 179-180, psychological trauma to some patients and physicians
Johanson). It is provided in powder form with a who have been using the Novo product would have to
separate vial of diluent. The process of reconstituting explain to their patients (and their parents) why the
the powder into injectable form is complex and product they had been receiving for some time is no
involves many steps, including preparing the vials longer available to them (Id., 193). According to Dr.
with an alechol sponge, using a sterile technique with Johanson, for some parents, this would raise a
needles, miving the liquid diluent into the powder significant question concerning the hormone that they
carefully so that the protein is not agitated to the had been receiving and some children might stop
point of decomposition and assuring that the taking human growth hormone altogether at that
appropriate amount is pulled into a syringe for point (Id.).
iniection. (Tr. 179-180, Johanson). For some
families, particularly those who are less sophisticated 119. Peter J. Rizzuto, Genentech's Senior
or educated, it has been very difficult to learn this Product Manager for Endocrine Products, who
process, and in some cases, children receive maintains regular contacts with the pediatric
treatment from a visiting nurse or in visits to a health endocrinology community, expressed similar
department. (Tr. 192, Johanson). opinions. He believes that many physicians, parents
and children are likely to be angry at Genentech
116. There are significant differences among the because of Genentech's role in taking Novo's product
available hGH products. For example, Lilly sells only off the market (Tr. 193, Johanson, Tr. 288-289,
one size vial of hGH, Genentech sells a 5 and a 10 Rizzuto).
milligram vial, and Novo plans to sell 4 and 8
milligram vials [Editor's Note: Public version with 120. For the reasons explained below, the court
redactions by court.] Novo also manufactures a so- finds that the testimony presented by Novo from
called “pen system” for administration. [Editor's [Editor's Note: Public version with redactions by
Note: Public version with redactions by court.] Due court.] and Mr. Barford does not rebut Genentech's
to differences among the available hGH products, showing of irreparable harm. Novo's own expert,
patients who switch from one product to another will [Editor's Note: Public version with redactions by
require additional instruction from their doctors court.] conceded that doctors are likely to be resentful
and/or nurses. (Tr. 191-193, Johanson; [Editor's Note: if they are forced to switch products [Editor's Note:
Public version with redactions by court.]). Public version with redactions by court.]

117. Doctors in the United States who begin a Q. Do you know what the attitude of doctors is
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when their HMO or managed care organizations relevant to the situation at hand. Novo has made no
tell them that they have to switch from one brand showing of the circumstances in which such product
of drug to another? switches involving other drugs have occurred or of
the reasons for such product switches, and experience
A. Attitude of Doctors? with regard to other drugs utilized primarily by adults
(such as insulin) is not probative. The Court notes
Q. Yes. that [Editor's Note: Public version with redactions by
court.] comparison between patient switches in
cortisone products, which are administered orally in
A. I'm sure that they are not happy to have this the form of pills, [Editor's Note: Public version with
freedom taken away from them. redactions by the court.] and human growth hormone,
which is administered by injection, is particularly
Q. That's because doctors think that their treatment unpersuasive.
of patients shouldn't be interfered with by things
like HMO's and patient considerations and 123. In addition, the court finds that Novo
economic considerations like simply price, isn't experts [Editor's Note: Public version with redactions
that correct? by court.] lack sufficient experience to provide
credible opinion testimony. [Editor's Note: Public
A. I think doctors like to have the freedom to version with redactions by court.] has never practiced
decide what drug to use. You mentioned price, I medicine in the United States, [Editor's Note: Public
think many doctors are concerned about price. version with redactions by court.], and treats only 20-
25 patients in Denmark with growth hormone
Q. But they like to make their own decisions as to deficiency [Editor's Note: Public version with
treatment? redactions by court.] is not yet board certified in
pediatric endocrinology [[[[Editor's Note: Public
A. Yes sir, they do. version with redactions by court.] and is currently
treating only 30-50 patients with growth hormone,
Q. And tend to resent it if somebody else makes none of whom have been on treatment for more than
that decision for them, isn't that right. three years [Editor's Note: Public version with
redactions by court.] and he has never treated growth
hormone patients through their entire therapy (Id.).
A. I believe so.
124. In contrast, Dr. Johanson, who was
121. The court finds that the experience
characterized by Novo's expert, as a “pioneer” in
discussed by Novo's experts in connection with the
growth hormone therapy [Editor's Note: Public
mandatory switches of patients from pituitary-derived
version with redactions by court.], has a wealth of
hGH to recombinant hGH in Europe is not relevant to
experience on which to base her testimony. Her
the situation here because that switch was a medical
testimony was consistent with that of NNPI's
necessity. The switch from pituitary derived hGH to
President, Ken Capuano, that doctors in the United
recombinant hGH resulted when pituitary derived
States are reluctant to switch patients from one
hGH was taken off the market because of the risk that
growth hormone product to another. (Tr. 719-720,
pituitary-derived hGH would cause Creutzfeldt-Jacob
Capuano).
disease. [Editor's Note: Public version with
redactions by court.] In the present situation,
switching would be required not because of medical 125. The court finds based on the testimony of
necessity, but because Genentech obtained an Dr. Johanson and Mr. Rizzuto, that it would be
injunction to enforce its patent rights. difficult for children treated with hGH and their
parents to learn one complex process of
administration and then to be required to relearn and
*21 122. The court further finds that the general
be reinstructed on another process of administration
testimony offered by Novo's experts concerning
and that switching brands during the course of long-
switches of patients who utilize other drugs is not
term therapy would impose a burden on them. (Tr.

© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.


192, Johanson). This would be particularly difficult development. (Tr. 325, Whiting).
for parents and patients who previously had found it
very difficult to learn the administration process. 130. At Genentech, scientists are encouraged to
(Id.). engage in so-called curiosity projects, utilizing 10%
of their time for discretionary research. (Tr. 321-322,
126. The court further finds that if Novo is Whiting). Genentech has discovered products and
allowed to sell its human growth hormone product in potential products through such projects, the most
the United States and then after two years or more is notable example of which is Pulmozyme. (Tr. 321-
taken off the market by reason of an injunction, 322; Whiting). In general, however, these scientific
Genentech's goodwill with doctors and patients will projects, are not geared to short-term commercial
be damaged irreparably (Tr. 193, Johanson). research.
Physicians who had been using the Novo product
would have to explain to their patients (and their 131. In 1994 alone, Genentech spent
parents) why the hGH they had been receiving for approximately $ 314.4 million on research and
some period of time is no longer available to them. development, representing 40% of Genentech's total
(Id.). Many physicians, parents and children are revenues, and 47% of its total costs and expenses.
likely to be angry and resentful against Genentech (Tr. 322, Whiting). Most other biopharmaceutical
because of Genentech's role in taking Novo's product companies do not come close to devoting such a
off the market. substantial percentage of their revenues to research
and development. (Tr. 323-25, Whiting; Def. Ex. 84).
B. Genentech Will Suffer Irreparable Harm If Novo
Is Allowed To Enter The Market Because It Will 132. Genentech's primary focus is on the
Lose Revenues and Will Be Required To Reduce Its discovery of breakthrough products that meet unmet
Research and Development Activities medical needs. Developing breakthrough products for
(1) The Market For Human Growth Hormone unmet medical needs is inherently riskier and costlier
*22 127. When Genentech's Protropin® hGH than the development of other products for which
product was approved in 1985, Genentech had 100% treatment exists--so-called “me-too” products. (Tr.
of the United States hGH market, a situation which 326, Whiting).
continued for approximately one and one-half years.
(Tr. 276, Rizzuto). In March 1987, Lilly entered the 133. At Genentech, the level of research and
market with its Humatrope® hGH product. (Id.). As a development expenditures has been directly related to
result, Genentech's market share has steadily declined revenues and historically, changes in anticipated
to its present market share of approximately 70%, revenues have resulted in [Editor's Note: Public
with Lilly supplying hGH to the remaining version with redactions by court.]
approximately 30%. (Tr. 276-77, Rizzuto).
(3) Novo's Projected Market Share In the hGH
128. There is a relatively small number of Market And Genentech's Loss of Funds Available
physicians who prescribe hGH. Even those who do For Research And Development
not always have control over which drug product to 134. [Editor's Note: Public version with
prescribe, because managed care organizations, redactions by court.]
health maintenance organizations and hospital
pharmacies often dictate which products doctors may
use [Editor's Note: Public version with redactions by 135. Genentech and Novo both presented their
court.]. For these reasons, the market for hGH is projections concerning Novo's likely share of the
particularly subject to disruption and good will built United States hGH market if Novo is permitted to
in that market is uniquely vulnerable. enter the market during the pendency of this
litigation, and the resulting loss of revenues to
Genentech. As Novo's economic expert, Stephen
(2) Genentech's Commitment to Research and Kalos, stated, economic projections as to future
Development events are dependent upon the assumptions built into
129. Since its inception in 1976, Genentech has them, and experts often disagree concerning such
expended nearly $2 billion dollars in research and
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assumptions and reselling projections (Tr. 1263- Programs Will Be Irreparably Harmed
1265, Kalos). 139. A party who makes a clear or strong
showing of patent validity and infringement is
*23 136. Not surprisingly, based on the various entitled to a presumption of irreparable harm. The
assumptions which they have elected to utilize, party need go no further with any additional
Genentech and Novo disagree as to the extent to affirmative factual showing to support that
which Novo would capture market share if it is presumption. Smith Int'l, Inc. v. Hughes Tool Corp.,
permitted to enter the market during the pendency of 718 F.2d 1573, 1581 (Fed. Cir.), cert. denied, 464
this case. The estimates given by Mr. Barford and U.S. 996, 104 S.Ct. 493, 78 L.Ed.2d 687 (1983), cert.
adopted by Mr. Kalos, who testified that Genentech's denied, 474 U.S. 827, 106 S.Ct. 87, 88 L.Ed.2d 71
loss of revenues would be insignificant, appear to be (1988). (“The very nature of the patent right is the
based on a number of faulty assumptions: right to exclude others. Once the patentee's patents
have been held to be valid and infringed, he should
(a) [Editor's Note: Public version with redactions be entitled to the full enjoyment and protection of his
by court.] Genentech estimates that the number is patent rights.”); H.H. Robertson v. United Steel Deck,
5,000 (Tr. 286-287, Rizzuto); Inc., 820 F.2d 384, 390 (Fed. Cir. 1987) (“irreparable
harm has been presumed when a clear showing has
been made of patent validity and infringement....The
(b) [Editor's Note: Public version with redactions opportunity to practice an invention during the
by court.] notoriously lengthy course of patent litigation may
itself tempt infringers.”). Having found that
(c) [Editor's Note: Public version with redactions Genentech has proven a strong likelihood of success
by court.] on the merits, the court concludes that there is a
presumption of irreparable harm.
(d) Novo assumes that the average age for new
patients is between 4 and 7 years; (Tr. 907, Barford). 140. The loss of goodwill ordinarily constitutes
The NCGS data offered by Genentech shows that the irreparable harm because it is impossible to quantify
average age for new patients is 9.5 years (Def. Ex. and cannot be adequately rectified by money
81). Older children will generally require larger doses damages. Gateway Eastern Railway Co. v. Terminal
of hGH than Novo has assumed. Railroad Assoc. of St. Louis, 35 F.3d 1134, 1140 (7th
Cir. 1994) (finding that a showing of injury to
137. Even accepting Novo's projections, Novo's goodwill can constitute irreparable harm that is not
economic expert concedes that Genentech could compensable by an award of money damages); Ideal
maintain its present level of research and Toy Corp. v. Chinese Arts & Crafts, Inc., 530 F.
development from 1995-1997 only by changing its Supp. 375, 380 (S.D.N.Y. 1981) (Motley. J.)
business priorities [Editor's Note: Public version with (irreparable injury found where there was loss of
redactions by court.] (Tr. 1194-1195, Kalos). goodwill). Moreover, the loss of goodwill and
potential revenue caused by an infringer's actions
138. [Editor's Note: Public version with during the pendency of litigation may constitute
redactions by court.] [Editor's Note: Public version irreparable harm to the patent holder. American
with redactions by court.] Counsel's statement brings Home Products Corp. v. Johnson & Johnson Corp.,
into question the credibility of the testimony of 22 U.S.P.Q. 2d 1561, 1567, 1991 WL 255825
Novo's witnesses on this issue. However, even (E.D.Pa. 1991). As explained below, Genentech has
accepting the assumptions of Novo's witnesses, as established that its goodwill would be irreparably
opposed to the representations of its counsel. Novo's harmed if Novo is permitted to enter the market, and
entry in the market will reduce Genentech's revenues is later enjoined because of the likely resentment and
in a significant amount. anger of doctors and patients who will blame
Genentech for forcing them to switch products.
(4) If Novo Is Permitted To Enter The Market,
Genentech Will Irreparably Lose Goodwill *24 141. The Federal Circuit has recognized that
Customers and its Research and Development expected decreases in funds available for research

© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.


and development resulting from anticipated loss of compensate Genentech for its loss. There can be no
revenues and market share constitute an irreparable assurance that damages could compensate Genentech
harm: for its losses of customers and market share. (Tr. 288,
Rizzuto).
“Without the right to obtain an injunction, the right
to exclude granted to the patentee would have only 144. The Federal Circuit has held that
a fraction of the value it was intended to have, and infringement may have market effects, such as loss of
would no longer be as great an incentive to engage market shares, never fully compensable by damages
in the toils of scientific and technological and, as such, may constitute irreparable harm. Atlas
research.” Powder Co. v. Ireco Chemicals, 773 F.2d 1230, 1233
(Fed. Cir. 1985); Hybritech, 849 F.2d at 1457; see
Smith Int'l v. Hughes Tool Co., 718 F.2d 1573, also Maitland Co., Inc. v. Terra First, Inc., 33
1577-78, 219 U.S.P.Q. 686, 689-690 (Fed. Cir.), cert. U.S.P.Q. 2d 1882, 1896, 1994 WL 773882 (D.S.C.
denied, 464 U.S. 996, 104 S.Ct. 493, 78 L.Ed.2d 687 1994) (“A United States District Court can find
(1985) (emphasis added) (reversing denial of irreparable harm based on loss of market share,
preliminary injunction); Hybritech, 849 F.2d at 1456 especially when considered in conjunction with such
(holding that the effects on research if interim relief other evidence as has been presented here.”);
is not granted to be a factor to be considered in Critikon, Inc. v. Becton Dickinson Vascular Access,
determining irreparable harm). As shown below, the Inc., 28 U.S.P.Q. 2d 1362, 1370, 1993 WL 330532
court finds that Novo's entry into the U. S. market (D.Del. 1993) (granting a preliminary injunction
will cause irreparable harm to Genentech by where the patentee in a two-competitor market stood
decreasing the funds available to it for research and to lose its dominant market share and prospective
development. business opportunities): Henkel Corp. v. Coral, Inc.,
754 F. Supp. 1280 (N.D.Ill. 1990), aff'd, 945 F.2d
142. Novo argues that Genentech, being a 416 (Fed. Cir. 1991) (finding that damage to market
financially stable and cash-rich company, cannot share and reputation are not measurable strictly in
claim irreparable harm because (a) it could easily dip monetary terms). Indeed, the Federal Circuit has
into cash reserves, reduce earnings, or borrow funds recognized that the patent statute provides monetary
to overcome the shortfall in research and relief for infringement, but that a preliminary
development funds and (b) if Genentech ultimately injunction maintaining the status quo is paramount:
prevails at trial, it would be made whole by the
damages it would be awarded against Novo. *25 “it does not follow that a money award is also
However, Novo cannot force Genentech to change its the sole remedy against future infringement. The
financial priorities or make unanticipated financial patent statute further provides injunctive relief to
adjustments in order to cover a shortfall in research preserve the legal interests of the parties against
and development funds. Novo fails to recognize that future infringement which may have market effects
reduction in earnings and shareholder value, never fully compensable in money. If monetary
borrowing, or shifting priorities for use of cash relief were the sole relief afforded by the patent
reserves could also result in irreparable harm to statute then injunctions would be unnecessary and
Genentech in other aspects of its business. infringers could become compulsory licensees for
as long as the litigation lasts.”
143. Moreover, there is no guaranty that
damages which would be awarded following a Atlas Powder, 733 F.2d at 1233.
verdict in favor of Genentech could fully compensate
Genentech. For example, if Genentech reduces its 146. Even accepting Novo's projections, the
cash reserves to fund the shortfall in research and shortfall in revenues that would result from Novo's
development, and thereby has insufficient cash to entry onto the market would force Genentech to
take advantage of an acquisition or investment reduce its expenditures on research and development.
opportunity, there would be no way to calculate the Aside from market disruption and loss of market
potential harm to Genentech and no guaranty that a share, the loss of funds otherwise devoted to research
damages award to Genentech in this case could would result in irreparable and incalculable loss to
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Genentech. It is impossible to know whether the even though the patent would expire within the year).
projects that would have to be cut would lead to
breakthrough pharmaceutical products which its *26 152. Novo's argument that Genentech comes
Genentech's mission. to this court with unclean hands and should be
penalized here because of its purported discovery
IV. THE BALANCE OF EOUITIES TIPS abuses in the ITC Proceeding is not well taken.
DECIDEDLY IN GENENTECH'S FAVOR Different rights and claims were at issue in the ITC
147. Genentech's pioneering '980 patent and its Proceeding and Genentech's alleged discovery
vast expenditures for research and development misconduct in the ITC Proceeding does not relate to
created hGH technology resulting in the development rights at issue in this case.FN2 For purposes of
of the United States market for hGH. relevance to this case, any purported discovery abuse
was cured by Genentech in July 1994 when
148. It is vital for Genentech to maintain its Genentech produced the so-called GLP documents to
research and development efforts if it is to continue Novo. Novo has had these documents for nine
to develop breakthrough pharmaceutical products. months. There is no reason to believe that it cannot
receive a fair adjudication of the issues on this
149. Genentech will suffer substantial and motion and a full and fair adjudication of the issues at
irreparable loss of goodwill, market share, and trial in this action. Moreover, Genentech has already
customers in the event Novo is permitted to enter the suffered a severe sanction in the ITC and there is no
market now and is later enjoined. basis for imposing a further sanction in this
proceeding. This is especially true because
Genentech has appealed the ruling of the ITC and it
150. Genentech obtained the '980 patent, which would not be appropriate to penalize Genentech here
is presumptively valid and, thus, obtained the right to based on findings of an administrative agency that
exclude others from making a product which will soon be reviewed in the Federal Circuit.
infringes the patent. Its patent rights under the '980 However, even if there were no appeal pending in the
patent expire in 2003. Yet if Novo is permitted to Federal Circuit, it would be inappropriate for this
enter the market, and if it takes two or more years for Court to place a limitation on Genentech's procedural
this case to be tried, and an additional year or so for and substantive rights in this proceeding based on
the appeals process, Genentech might be left with purported misconduct as to which Genentech has
only 5 years or less of remaining patent protection. already suffered a severe sanction.
See, H.H. Robertson Co. v. United Steel Deck, Inc.,
820 F.2d 384, 391 (Fed. Cir. 1987) (granting
preliminary injunction where “patent does not have 153. Novo argues that the court erred during the
many years left”; Sensormatic Electronic Corp. v. hearing when it refused to admit into the record
Minnesota Mining Co., 10 U.S.P.Q.2d 1467, 1988 certain so-called “GLP” documents which were
WL 391518 (S.D. Fla. 1988) (granting preliminary among the group of documents which Genentech
injunction where patient has only 2 years left that unintentionally produced to the parties in another
were “critical” to the future of the industry). patent infringement litigation (the “MDL
Litigation”), see, In Re Recombinant DNA
Technology Patent and Contract Litigation, 30
151. In contrast. Novo has not yet entered into U.S.P.Q. 2d 1881, 1906, 1994 WL 270712 (S.D. Ind.
the United States market and will suffer no harm 1994) (Dillin, J.). However, Novo ignores the fact
from a preliminary injunction which would merely that in an Order agreed to by Genentech and Novo
maintain the status quo. As the Federal Circuit has that was so-ordered by the Court on May 17, 1995,
recognized. “[w]hen the movant has shown the the parties agreed that for purposes of facilitating the
likelihood that the acts complained of are unlawful, expeditious resolution of this motion without the
the preliminary injunction ‘preserves the status quo if need for the Court to decide the complex issue
it prevents future trespass' ...” Robertson, 820 F.2d relating to whether Genentech has waived its
at 390-391 (preliminary injunction affirmed). See privilege as to the GLP documents, the GLP
also Atlas Powder, 773 F.2d at 1234 (upholding a documents could be submitted to the court in camera
preliminary injunction where 66f a party's total sales without waiver of Genentech's right to maintain its
were enjoined and 200 employees would be laid off,

© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.


claim of privilege as to the documents and to object admission binding on client since out-of-court
to their admissibility. (Order, May 17, 1995). During statements are not recitations of client's position);
the hearing on Genentech's motion for a preliminary U.S. v. McKeon, 738 F.2d 26 (2d Cir. 1984)
injunction, the Court ruled that certain GLP (cautioning against liberally finding attorneys' out-of-
documents which Novo attempted to introduce into court statements as admissions). If statements such as
the record were privileged and inadmissible for those described in the GLP documents proffered by
purposes of this hearing, especially in light of the Novo were rejected, every rejected suggestion by an
facts that (i) Genentech's production of the attorney, consultant or expert retained by a party
documents to Novo was pursuant to an Order of the would be admissible under the hearsay rule,
Administrative Law Judge in the ITC Proceeding notwithstanding the fact that the party could not
which is being appealed to the Federal Circuit, (ii) know what the statement would be before it was
Genentech's production of the documents to the made. See, Sanford v. Johns Mansville Sales Corp.,
parties in the MDL Litigation was found by the MDL 923 F.2d 1142, 1149-50 (5th Cir. 1991).
court to have been unintentional, resulting only in a
limited waiver, and not a subject matter waiver, 30 155. On June 12, 1995, Novo moved for
U.S.P.Q. at 1910, and (iii) the GLP documents were reconsideration of the court's determination that for
unintentionally produced to the parties in the MDL purposes of the hearing on Genentech's motion for a
Litigation pursuant to a protective order which preliminary injunction, the GLP documents proffered
required the parties to that case to maintain them in by Novo were deemed privileged and, alternatively,
strict confidence for use solely in connection with for certification under 28 U.S.C. § 1292. (Tr. 1694 -
that case, 30 U.S.P.Q. at 1907-1908. The court 1700). The court denied the motion (Tr. 1700). After
specifically ruled that following adjudication of this reviewing the GLP documents submitted by Novo in
motion, the parties would have the opportunity to camera, the court determined that the motion for
fully brief the issue of whether Genentech has waived certification did not raise a controlling question of
its attorney-client privilege and work product law, the resolution of which would materially
immunity with respect to the GLP documents. advance the conduct of the litigation (Id.) In so
ruling, the court determined none of the privileged
*27 154. Because the court ruled that the GLP information disclosed in the GLP documents
documents were privileged for purposes of the submitted in camera by Novo is of material
hearing on the motion for a preliminary injunction, significance to the outcome of Genentech's motion
the court did not decide during the hearing the issue and, therefore, that the legal issues relating to
of whether the GLP documents proffered by Novo Genentech's claim of privilege as to the documents
would otherwise have been admissible, an issue are not controlling questions of law. Novo fails to
which has been fully briefed by the parties. The court understand that this is a motion for a preliminary
now finds that even if it were ultimately determined injunction and that every conceivable legal and
that Genentech waived any applicable privilege, the factual issue in the case can not be resolved prior to
documents proffered by Novo are not admissible. adjudication of this motion.
Novo made no showing that the documents were
adoptive or vicarious admissions by Genentech. At *28 156. Novo's argument based on the so-called
best, the privileged GLP documents offered by Novo “grandfather clause” of 35 U.S.C. § 271(g), is
are internal memoranda of Genentech's legal team unavailing. § 271(g) instructs a court to allow an
discussing possible legal strategies and tactics, While entity which made a substantial investment to
they reflect the internal thought processes and continue to use, sell or import its product “to the
deliberations of Genentech's lawyers, they do not extent equitable” to protect that entity's commercial
reflect positions adopted by Genentech or by counsel investment or business commenced in the United
on its behalf, nor do they reflect admissions by agents States prior to January 1, 1988. The testimony of
of Genentech. Instead, they are inadmissible hearsay. Novo's witnesses establish that
See, Rules 801(d)(2)(B), 801(d)(2)(D), Fed. R. Evid;
Headman v. Berman Leasing Co., 352 F. Supp. 211, 157. While Novo filed a New Drug Application
213-214 (E.D. Pa. 1972) (statement by attorney in with the FDA for Norditropin® on May 15, 1987, the
telephone conversation with adversary attorney not filing of this New Drug Application cannot be
Page 23

Not Reported in F.Supp., 1995 WL 512171 (S.D.N.Y.)


(Cite as: 1995 WL 512171 (S.D.N.Y.))

considered a substantial investment. pharmaceutical industry's investment into the


discovery of new drugs.”).
158. Any investments of Novo prior to January
1, 1988 which [Editor's Note: Public version with 163. In addition, it is in the public interest to
redactions by court.] minimize disruption in customers selection and usage
of products with the issuance of a preliminary
159. Moreover, Novo concedes that [Editor's injunction which precludes long-term utilization of
Note: Public version with redactions by court.] and reliance on an allegedly infringing product.
Furthermore, there are no equities in Novo's favor. Critikon, Inc. v. Becton Dickinson Vascular Access,
Novo has already recouped many times over its de Inc., 28 U.S.P.Q. 2d 1362, 1371, 1993 WL 330532
minimus investment in the United States through its (D.Del. 1993) (granting a preliminary injunction and
worldwide sales. When Novo Nordisk U.S.A. filed its finding it in the public interest to minimize disruption
NDA in 1987 and when its parent, Nordisk Gentofte in hospitals' selection of safety catheters even though
merged into Novo in 1989, Novo and its affiliates hospitals had already begun to use the infringing
were aware that Novo could not come into the U.S. catheter because patentee would most likely succeed
market until at least 1994 because of Lilly's Orphan at trial on the issue of infringement). If Novo were
Drug Status for its Humatrope® hGH (Tr. 787-793; permitted to enter the market for a period of two
Def. Ex. 53). In these circumstances, Novo is not years or more pending final adjudication of the
entitled to equitable rights under the grandfather claims in this action and were then enjoined, children
clause. and their parents would suffer significant
psychological trauma as their physicians undertake
160. In sum, the Court finds that the balance of the difficult task of explaining why the product they
equities weigh decidedly in favor of Genentech. have been using has been taken off the market. In
such circumstances, it is in the public interest that the
status quo be maintained.
V. THE PUBLIC INTEREST FAVORS THE
GRANTING OF A PRELIMINARY INJUNCTION
161. The Federal Circuit has held that public VI. CONCLUSION
interest favors the grant of injunctions, including *29 For the reasons stated above, this court
preliminary injunctions, to stop patent infringement. grants Genentech's motion for a preliminary
Smith International, Inc. v. Hughes Tool Co., 718 injunction.
F.2d 1573, 1578 (Fed. Cir. 1983) (“Without the right
to obtain an injunction, the right to exclude granted to FN1. Such evidence “must be considered ...
the patentee would have only a fraction of the value it and is not merely ‘icing on the cake”’
was intended to have ...”). Indeed, the “protection of Hybritech, Inc. v. Monoclonal Antibodies,
patents furthers a strong public policy...advanced by Inc., 802 F.2d 1367, 1380 (Fed. Cir. 1986),
granting preliminary injunctive relief when it appears cert. denied, 480 U.S. 947, 107 S.Ct. 1606,
that, absent such relief, patent rights will be 94 L.Ed.2d 792 (1987) (emphasis supplied).
flagrantly violated”. Robertson, 820 F.2d at 391. See also Panduit Corp. v. Dennison Mfg.
Co., 774 F.2d 1082, 1099 (Fed. Cir. 1985)
162. Moreover, the patent grant functions as a (“The human, real world story in evidence
means of raising the expected return to be gained here not only reflects the inadequacy of the
from basic research to overcome the researcher's prior art, but compels a conclusion of non-
risk. Eli Lilly and Co. v. Premo Pharmaceutical obviousness of the claimed inventions in
Labs., 630 F.2d 120, 137 (3d Cir.), cert. denied, 449 suit”), vacated and remanded on other
U.S. 1014, 101 S.Ct. 573, 66 L.Ed.2d 473 (1980); grounds, 475 U.S. 809, 106 S.Ct. 1578, 89
Ortho Pharmaceutical Corp. v. Smith, 18 U.S.P.Q. L.Ed.2d 817 aff'd on remand, 810 F.2d 1561
2d 1977, 1989, 1990 WL 121353 (E.D.Pa. 1990), (Fed. Cir.), cert. denied, 481 U.S. 1052, 107
aff'd, 959 F.2d 936 (Fed. Cir. 1992) (“The policy S.Ct. 2187, 95 L.Ed.2d 843 (1987).
rationales behind the patent statutes generally apply
with even greater strength in the case of drug patents. FN2. The “defense of unclean hands applies
It is in the public interest to protect the only with respect to the right in suit.”

© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.


Warner Bros., Inc. v. Gay Toys, Inc., 724
F.2d 327, 334 (2d Cir. 1983) (finding no
unclean hands as to plaintiff's unfair
competition claim even though plaintiff
threatened defendant with prosecution on a
false trademark claim which had slight
factual support); Mallis v. Bankers Trust
Co., 615 F.2d 68, 75 (2d Cir. 1980), cert.
denied, 449 U.S. 1123, 101 S.Ct. 938, 67
L.Ed.2d 109 (1981) (“New York law
ordinarily permits an unclean hands defense
only when plaintiff's reprehensible conduct
is ‘directly related to the subject matter in
litigation and the party seeking to invoke the
[unclean hands] doctrine was injured by
such conduct.”’ (citing Weiss v. Mayflower
Doughnut Corp., 1 N.Y.2d 310, 316, 152
N.Y.S.2d 471, 474, 135 N.E.2d 208, 210
(1956)).

S.D.N.Y.,1995.
Novo Nordisk of North America, Inc. v. Genentech,
Inc.
Not Reported in F.Supp., 1995 WL 512171
(S.D.N.Y.)

END OF DOCUMENT