Regents of the University of California v. Eli Lilly & Co.

• Decision Date: 22 July 1997
• Docket Number: No. 96-1175,96-1175
• Citation: 43 USPQ2d 1398,119 F.3d 1559
• Parties: The REGENTS OF THE UNIVERSITY OF CALIFORNIA, Plaintiff-Appellant, v. ELI LILLY AND COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1559

119 F.3d 1559

43 U.S.P.Q.2d 1398

The REGENTS OF THE UNIVERSITY OF CALIFORNIA, Plaintiff-Appellant, v. ELI LILLY AND COMPANY, Defendant-Appellee.

No. 96-1175.

United States Court of Appeals Federal Circuit.

July 22, 1997.

Rehearing Denied; Suggestion for Rehearing In Banc Declined

Oct. 24, 1997.

Harold J. McElhinny, Morrison & Foerster LLP, San Francisco, CA, argued for plaintiff-appellant. With him on the brief were Donald S. Chisum, Alan K. Palmer, Rachel Krevans, and Debra A. Shetka. Also with him on the brief were Arthur I. Neustadt, Jean-Paul Lavalleye, Marc R. Labgold, and William J. Healey, Oblon, Spivak, McClelland, Maier & Neustadt, P.C., Arlington, VA. Of counsel was Gladys H. Monroy, Morrison & Foerster LLP, San Francisco, CA.

Charles E. Lipsey, Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P., Washington, DC, argued for defendant-appellee. With him on the brief were Donald R. Dunner, Howard W. Levine, and John R. Alison. Of counsel on the brief was Amy E. Hamilton, Eli Lilly and Company, Indianapolis, IN.

Before NEWMAN, LOURIE, and BRYSON, Circuit Judges.

LOURIE, Circuit Judge.

The Regents of the University of California (UC) appeal from the judgment of the District Court for the Southern District of Indiana, holding that Eli Lilly & Company (Lilly) does not infringe U.S. Patent 4,652,525 or U.S. Patent 4,431,740 in its manufacture of human insulin; that the asserted claims of the '525 patent are invalid; and that both patents are unenforceable. Regents of the Univ. of Cal. v. Eli Lilly and Co., 39 USPQ2d 1225 (S.D.Ind.1995). We hold that the district court (1) properly exercised jurisdiction over this case for trial on the merits, (2) did not err in concluding that the asserted claims of the '525 patent are invalid for failure to provide an adequate written description of the subject matter of the asserted claims, and (3) did not clearly err in finding that Lilly did not infringe the '740 patent. We further hold that the district court (4) abused its discretion in holding that the '525 and '740 patents are unenforceable. We therefore affirm-in-part and reverse-in-part.

BACKGROUND

In 1990, UC brought this action in the Northern District of California, alleging that Lilly was infringing claims 1, 2, and 4-7 of the '525 patent under the doctrine of equivalents and infringing claims 2-3, 5-6, 8-10, and 13-14 of the '740 patent, either literally or under the doctrine of equivalents. Lilly responded that it does not infringe any of the asserted claims, that the asserted claims are invalid, and that the patents are unenforceable. Lilly did not assert any counterclaims against UC.

The patents in suit relate to recombinant DNA technology ¹ and, more specifically, to recombinant plasmids and microorganisms that produce human insulin, a protein involved in the regulation of sugar metabolism. A person unable to produce insulin is afflicted with diabetes. Prior to the development of recombinant techniques for the production of human insulin, diabetic patients were treated with injections of animal insulin, which often caused allergic reactions. Human insulin produced by recombinant methods is less likely to produce such reactions. It consists of two separate amino acid chains, a 21-amino acid A chain and a 30-amino acid B chain, which are linked only by disulfide bonds. Healthy people produce insulin in vivo via the terminal enzymatic cleavage of preproinsulin (PPI) to yield proinsulin (PI), a single amino acid chain consisting of the A and B chains, linked by a sequence of additional amino acids that positions the A and B chains so that the disulfide bonds are readily formed. The PI is then further cleaved to liberate the linking sequence and yield insulin.

The '525 patent, the application for which was filed in May 1977, was based upon the determination of the PI and PPI cDNA sequences found in rats. Claim 1 of that patent reads as follows: "A recombinant plasmid replicable in procaryotic host containing within its nucleotide sequence a subsequence having the structure of the reverse transcript of an mRNA of a vertebrate, which mRNA encodes insulin." (emphasis added). Claim 2 relates to a recombinant procaryotic microorganism containing vertebrate insulin-encoding cDNA. Claims 4 and 5 depend from claim 2, and are limited, respectively, to mammalian and human insulin cDNA. Claim 6 depends from claim 1 and requires that the plasmid contain "at least one genetic determinant of the plasmid col E1." Claim 7 depends from claim 2 and requires that the microorganism be of a particular strain.

The '740 patent, the application for which was filed in September 1979, was based upon the determination of human PPI and PI cDNA sequences and the development of "tailoring" techniques for the incorporation of human PI cDNA into a recombinant plasmid. Using these techniques, a specific semi-synthetic DNA may be incorporated into a suitable transfer vector. Using one such tailoring technique, the human PI cDNA and the plasmid into which it is incorporated may be modified so that they contain complimentary oligo-dC and oligo-dG ends, which facilitate the formation of the recombinant plasmid. Independent claim 2 of the '740 patent reads: "A DNA transfer vector comprising an inserted cDNA consisting essentially of a deoxynucleotide sequence coding for human proinsulin, the plus strand of said cDNA having a defined 5' end, said 5' end being the first deoxynucleotide of the sequence coding for said proinsulin." (emphasis added). Dependent claim 3 is directed, inter alia, to a recombinant microorganism containing the transfer vector of claim 2. Claim 5 reads: "A DNA transfer vector comprising a deoxynucleotide sequence coding for human proinsulin consisting essentially of a plus strand having the sequence: [nucleotides that encode human proinsulin, described in structural terms]." (emphasis added). Claim 6 depends from claim 5 in the same manner that claim 3 depends from claim 2: it is directed to a recombinant microorganism containing the transfer vector of claim 5. Claim 8 is directed to an example of a human PI-encoding recombinant plasmid described in the specification; and claims 9 and 10, to microorganisms containing that plasmid. Claims 13 and 14 are directed to a subset of the transfer vector genus of claim 5 and accordingly depend from claim 5.

Lilly makes human PI using a semi-synthetic DNA to yield a cleavable fusion protein ² that consists of a bacterial protein, a "cleavable linkage" consisting of a single methionine residue, and human PI. After the fusion protein is produced, the desired human PI is obtained by cleaving it from the remainder of the fusion protein.

In 1992, pursuant to 28 U.S.C. § 1407 (1994), the Judicial Panel on Multidistrict Litigation (JPML) consolidated this case with five other related cases for pre-trial proceedings in the District Court for the Southern District of Indiana. In re Recombinant DNA Tech. Patent and Contract Litig., No. 912 (J.P.M.L. Feb. 19, 1992). UC petitioned this court for a writ of mandamus, seeking to vacate the transfer order as barred by the Eleventh Amendment and inconsistent with various prior decisions in the consolidated cases, including two decisions of the District Court for the Northern District of California in this case. See In re Regents of the Univ. of Cal., 964 F.2d 1128, 1131-32, 22 USPQ2d 1748, 1751-52 (Fed.Cir.1992). We denied UC's petition, holding that the transfer did not force unconsented suit upon UC and thus was permissible for purposes of pretrial discovery. Id., at 1134, 964 F.2d 1128, 22 USPQ2d at 1754.

In 1994, responding to Lilly's pretrial motion, the District Court for the Southern District of Indiana transferred venue to itself for trial on the merits pursuant to 28 U.S.C. § 1404(a) (1994). After conducting a bench trial, the court issued a memorandum opinion in which it ruled, inter alia, that (1) Lilly does not infringe the asserted claims of either patent, 39 USPQ2d at 1228-39, (2) the asserted claims of the '525 patent, those directed to mammalian, vertebrate, and human cDNA, are invalid for lack of an adequate written description, id. at 1239-41, and (3) both patents are unenforceable due to inequitable conduct on the part of UC, id. at 1247-58. UC appeals from these rulings. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1) (1994).

DISCUSSION

A. Jurisdiction and Venue

As a preliminary matter, UC argues that the District Court for the Southern District of Indiana lacked jurisdiction to hear this case on the merits and was an inappropriate venue for trial. UC first argues that the Eleventh Amendment deprives the Indiana court of jurisdiction. Specifically, UC asserts that by choosing to bring suit in the District Court for the Northern District of California, it waived its Eleventh Amendment immunity only in California federal courts. Relying on Port Authority Trans-Hudson Corp. v. Feeney, 495 U.S. 299, 307, 110 S.Ct. 1868, 1873-74, 109 L.Ed.2d 264 (1990), UC argues that the Eleventh Amendment bars the transfer of this case for trial on the merits. Lilly responds that the Eleventh Amendment is inapplicable where, as here, a state asserts a claim and no counterclaim against the state is involved. We agree with Lilly that the Eleventh Amendment does not preclude trial in Indiana.

The Eleventh Amendment provides that: "The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State." U.S. Const. amend. XI. The Supreme Court has recently confirmed that "the reference to actions 'against one of the United States' encompasses not only actions in which a State is named as a defendant, but also certain actions against state agents and state instrumentalities," such as UC. Regents of the Univ. of Cal. v. Doe, --- U.S. ----, ----, 117...