Pharmastem Therapeutics, Inc. v. Viacell, Inc.

Decision Date09 July 2007
Docket NumberNo. 05-1551.,No. 05-1490.,05-1490.,05-1551.
PartiesPHARMASTEM THERAPEUTICS, INC., Plaintiff-Appellant, v. VIACELL, INC., Defendant-Cross Appellant, and Cryo-Cell International, Inc., CorCell, Inc., Defendants-Cross Appellants, and CBR Systems, Inc. (formerly known as Cord Blood Registry, Inc.), Defendant-Cross Appellant, and Birthcells Technology, Inc. and Bio-Cell, Inc., Defendants.
CourtU.S. Court of Appeals — Federal Circuit

Paul J. Andre, Perkins Coie, LLP, of Menlo Park, CA, argued for plaintiff-appellant PharmaStem Therapeutics, Inc. With him on the brief was Lisa Kobialka.

John C. Englander, Goodwin Procter LLP, of Boston, MA, argued for defendant-cross appellant ViaCell, Inc. With him on the brief were Paul F. Ware, Jr. and Elaine Herrmann Blais. Of counsel on the brief was Richard M. Wyner, of Washington, DC.

James J. Rodgers, Dilworth Paxson LLP, of Philadelphia, PA, argued for defendants-cross appellants Cryo-Cell International, Inc., et al. Of counsel was Evelyn H. McConathy, Drinker Biddle & Reath LLP, of Philadelphia, PA.

Thomas F. Chaffin, Pillsbury Winthrop Shaw Pittman LLP, of Palo Alto, CA, argued for defendant-cross appellant CBR Systems, Inc. With him on the brief was William F. Abrams. Of counsel on the brief were Guillermo E. Baeza, of McLean, VA, and Kevin M. Fong, of San Francisco, CA.

Before NEWMAN, BRYSON, and PROST, Circuit Judges.

Opinion for the court filed by Circuit Judge BRYSON. Dissenting opinion filed by Circuit Judge NEWMAN.

BRYSON, Circuit Judge.

This patent infringement action was brought by appellant PharmaStem Therapeutics, Inc., in the United States District Court for the District of Delaware. PharmaStem sued six defendants (four of which are appellees before us in this appeal), alleging that the defendants had infringed two patents owned by PharmaStem, U.S. Patent No. B1 5,004,681 ("the '681 patent") and U.S. Patent No. 5,192,553 ("the '553 patent"), a continuation-in-part of the '681 patent. At the conclusion of the trial, the jury returned verdicts for PharmaStem on both patents, finding both patents infringed and not invalid. The jury also rejected the defendants' counterclaims of inequitable conduct and violation of the antitrust laws.

The defendants filed motions for judgment as a matter of law ("JMOL") and a new trial. In response, the district court initially entered an order granting a new trial on the issue of infringement of the `681 patent and JMOL of noninfringement as to the '553 patent. Subsequently, however, the court vacated the new trial order as to the '681 patent and instead entered JMOL of noninfringement as to that patent. The court denied the defendants' JMOL motions with respect to various asserted grounds of patent invalidity. PharmaStem now appeals from the JMOL orders on infringement, and the defendants cross-appeal from the court's refusal to grant JMOL on invalidity. We affirm the district court's judgment as to the infringement issues. With respect to the counterclaim of invalidity for obviousness, however, we reverse the judgment and direct the entry of judgment for the defendants.

I

The two patents in suit recite compositions and methods relating to a medical procedure for treating persons with compromised blood and immune systems. The treatment is based on the discovery that blood from a newborn infant's umbilical cord is a rich source of a type of stem cells useful for rebuilding an individual's blood and immune system after that system has been compromised by disease or a medical treatment such as chemotherapy.

Stem cells are fundamental (or "immature," or "primitive") cells from which specialized (or "mature") cells derive. Hematopoietic stem cells are stem cells that are ultimately responsible for producing the various specialized cells of the blood and immune (or "hematopoietic") system. Hematopoietic stem cells produce progenitor cells and more hematopoietic stem cells. The progenitor cells, which are less primitive than the stem cells, in turn give rise to the variety of specialized cells that constitute the blood and immune system.

Although hematopoietic stem cells are present in various types of human tissue, they are found in unusually high concentration and potency in umbilical cord blood. The '681 and '553 patents describe a process for collecting a newborn infant's umbilical cord blood at the time of birth, testing it for suitability for later use, preserving it through cryopreservation, and infusing it into an individual (either the donor or another person, preferably one with a closely matched blood type) whose hematopoietic stem cells have been destroyed. The object of such transplantations is to effect grafting. A successful graft results when the donor's stem cells migrate into the recipient's bone marrow, resulting in the renewed production of normal, specialized blood cells and ultimately the reconstitution of the recipient's entire blood and immune system.

As issued, the '681 patent contained very broad claims. Claim 1 recited a composition comprising "a plurality of viable human neonatal or fetal hematopoietic stem cells derived from the blood [and a] cryopreservative." In reexamination, several of the original claims were cancelled. Claim 1 was amended to read as follows:

A cryopreserved therapeutic composition comprising viable human neonatal or fetal hematopoietic stem cells derived from the umbilical cord blood or placental blood of a single human collected at the birth of said human, in which said cells are present in an amount sufficient to effect hematopoietic reconstitution of a human adult; and an amount of cryopreservative sufficient for cryopreservation of said cells.

Claim 2, which is dependent on claim 1, was amended to recite the composition of claim 1 "which further comprises viable human neonatal or fetal hematopoietic progenitor cells."

Each of the defendants offers a service to families of newborn infants in which blood from the infant's umbilical cord is collected and cryopreserved for possible later use. The defendants represent in their promotional literature that the preserved cord blood may be useful for reconstituting the donor's hematopoietic system in the event that system is damaged or destroyed as a result of disease or other causes. Some of the promotional literature advises that the preserved cord blood may also be useful for treating closely related members of the infant's family.

In the infringement action brought against all six defendants, PharmaStem asserted claims 1 and 2 of the '681 patent, as amended in reexamination, and claims 13, 19, 47, 53, and 57 of the '553 patent. Claims 13, 47, and 57 of the '553 patent are independent claims. Claim 13 provides as follows:

A method for hematopoietic or immune reconstitution of a human comprising:

(a) isolating human neonatal or fetal blood components containing hematopoietic stem cells;

(b) cryopreserving the blood components;

(c) thawing the blood components; and

(d) introducing the blood components into a suitable human host, such that the hematopoietic stem cells are viable and can proliferate with the host.

Claim 47 is similar except that it refers to the blood components "containing hematopoietic stem and progenitor cells." Dependent claims 19 and 53 add that the blood components are isolated by collection from an umbilical cord. Independent claim 57 provides as follows:

A method for hematopoietic or immune reconstitution of a human comprising introducing into the human a composition comprising human neonatal or fetal hematopoietic stem cells derived from the blood, in which the stem cells have been previously cryopreserved.

II

Following the jury's verdict finding infringement of both patents by all four appellants, the district court granted the defendants' JMOL motions and entered a judgment of noninfringement with respect to both patents. The court agreed with the defendants that, in light of the legal theories pressed by PharmaStem at trial, the evidence failed to show that any of the defendants had infringed any of the asserted claims of either patent in suit.

As to infringement of the asserted '681 patent claims, the district court focused on the requirement that the recited compositions contain stem cells "in an amount sufficient to effect hematopoietic reconstitution of a human adult." To prove infringement, the court explained, PharmaStem was required to adduce evidence that the defendants' cord blood units contained a sufficient supply of stem cells to effect successful reconstitution of an adult. The court concluded that PharmaStem had failed to do so.

In addressing the sufficiency of the evidence on that issue, the trial court first ruled that it should have excluded the trial testimony of Dr. Mary Hendrix, PharmaStem's expert witness on infringement. The court noted that although Dr. Hendrix was "an accomplished stem cell biologist," she based her infringement opinion "entirely on an analysis of the defendants' marketing materials, without ever considering any data regarding the composition of the defendants' cord blood units." The court explained that Dr. Hendrix was not qualified as an expert in marketing or advertising and, in any event, "her so-called analysis of the defendants' marketing materials was well within the jury's common knowledge, common sense and common experience." The court pointed out that Dr. Hendrix's opinion that all of the defendants' cord blood units infringe was based on her conclusion that the defendants' promotional materials "promise stem cells for pediatric and adult transplantation." In that respect, according to the court, "her opinion of infringement is no more than a lay-person's interpretation of the defendants' marketing materials." The court therefore ruled that her testimony should have been excluded and that "permitting PharmaStem to couch its presentation of this evidence in the form of an expert opinion was an error."

The district court...

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