Novo Nordisk of North America, Inc. v. Genentech, Inc.

• Citation: 77 F.3d 1364,37 USPQ2d 1773
• Decision Date: 26 February 1996
• Docket Number: No. 95-1424,95-1424
• Parties: NOVO NORDISK OF NORTH AMERICA, INC., Novo Nordisk Pharmaceuticals, Inc., and Novo Nordisk, A/S, Plaintiffs-Appellants, v. GENENTECH, INC., Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Page 1364

77 F.3d 1364

37 U.S.P.Q.2d 1773

NOVO NORDISK OF NORTH AMERICA, INC., Novo Nordisk

Pharmaceuticals, Inc., and Novo Nordisk, A/S, Plaintiffs-Appellants, v. GENENTECH, INC., Defendant-Appellee.

No. 95-1424.

United States Court of Appeals,

Federal Circuit.

Feb. 26, 1996.

Rehearing Denied; Suggestion for Rehearing In Banc Declined

April 16, 1996.

Appealed from United States District Court Southern District of New York, Judge Motley.

Albert L. Jacobs, Jr., Graham & James, New York City, argued, for plaintiffs-appellants. With him on the brief were Mark H. Sparrow, Jesse D. Reingold, Kelly L. Morron, Gerard F. Diebner and Daniel A. Ladow.

Nicholas L. Coch, Rogers & Wells, New York City, argued, for defendant-appellee. With him on the brief were John E. Kidd, Leora Ben-Ami and Philip E. Roux.

Before ARCHER, Chief Judge, RICH, and LOURIE, Circuit Judges.

LOURIE, Circuit Judge.

Novo Nordisk of North America, Inc., Novo Nordisk Pharmaceuticals, Inc., and Novo Nordisk A/S (collectively "Novo") appeal from the decision of the United States District Court for the Southern District of New York granting a preliminary injunction in favor of Genentech, Inc. Novo Nordisk of North Am., Inc. v. Genentech, Inc., No. 94 Civ. 8634 (CBM) (S.D.N.Y. June 28, 1995) (preliminary injunction order). Because the court applied an erroneous claim construction in determining that Genentech established a likelihood of success on the merits of its patent infringement counterclaim, we vacate the injunction.

BACKGROUND

Human growth hormone ("hGH") is a 191-amino acid polypeptide hormone secreted by the anterior pituitary gland. It has important metabolic effects, including stimulation of protein synthesis and cellular uptake of amino acids. The patent in suit, U.S. Patent 4,601,980 ('980 patent), assigned to Genentech Prior to the '980 invention, hGH could be obtained for therapeutic use only by extracting it from the pituitary glands of human cadavers. Known recombinant DNA methods for producing hGH were deficient; they yielded not only the amino acid sequence of the protein, but also a "leader sequence" of additional amino acids at the beginning of the protein. In the natural synthesis, the leader sequence enables the protein to emerge from a pituitary cell after expression; the leader is then enzymatically removed. When hGH is recombinantly expressed in a bacterial host, however, the leader is not removed and it renders the resulting expression product biologically inactive.

                is directed to a recombinant DNA method for producing a 191- or 192-amino acid human growth hormone expression product that is identical, or essentially identical, and functionally equivalent to the natural hormone. 1  The product is useful in treating hypopituitary dwarfism in children
                

The invention claimed in the '980 patent solved this problem by providing a method for directly expressing a human growth hormone expression product without a leader sequence. The inventors started with complementary DNA ("cDNA") encoding hGH and its leader sequence, and cleaved the cDNA encoding the leader sequence together with a portion of the codons encoding hGH to obtain a cDNA fragment containing hGH codons 24-191. Next, they synthesized a DNA fragment corresponding to the 23 missing codons plus a "start" codon, and fused that DNA fragment to the cDNA fragment. They inserted the resulting semi-synthetic gene into bacterial cells, which directly expressed a 192-amino acid product, met-hGH, consisting of the hGH molecule and one additional amino acid, methionine ("met"), coded for by the start codon. ² Met-hGH has essentially the same bioactivity as the natural hormone, hGH. The '980 patent teaches that the extra methionine residue may be cleaved intracellularly in the bacterial host to produce a product that is identical to the natural hormone. Genentech sells met-hGH and hGH under the trademarks Protropin TM and Humatrope TM, respectively.

Novo does not produce human growth hormone by direct expression. Rather, it produces hGH by a "cleavable fusion expression" process that involves combining, in a plasmid: (1) a cDNA fragment containing hGH codons 24-191, (2) a genomic DNA fragment containing hGH codons 1-23, and (3) DNA encoding certain additional, cleavable amino acids. ³ Novo inserts the plasmid into a bacterial host, which expresses a fusion protein consisting of the hGH molecule and the additional amino acids. In a final step, the additional amino acids are cleaved, leaving an hGH product of 191 amino acids. Novo manufactures hGH in Denmark, and it plans to import the product for sale in the United States under the trademark Norditropin TM.

Novo sued Genentech in district court, seeking a declaratory judgment that the '980 patent is invalid and not infringed by Novo. Genentech counterclaimed for infringement and moved for a preliminary injunction, arguing that Novo's importation of hGH into the United States would literally infringe claim 2 of the '980 patent (see infra ). Genentech contended, inter alia, that claim 2 covers both the direct expression and cleavable fusion expression of human growth hormone. The district court accepted Genentech's claim interpretation and thus held that Genentech had established a likelihood of success on the merits of its infringement counterclaim. In addition, the court found that Genentech had shown that Novo's assertion of invalidity lacked merit. The court also found that the equities and public interest were in Genentech's favor and that Genentech

                would suffer irreparable harm absent a preliminary injunction.   The court therefore entered a preliminary injunction against Novo.   This appeal followed.   We have jurisdiction pursuant to 28 U.S.C. § 1292(c) (1994)
                

DISCUSSION

The grant or denial of a preliminary injunction pursuant to 35 U.S.C. § 283 is within the discretion of the district court. We Care, Inc. v. Ultra-Mark Int'l Corp., 930 F.2d 1567, 1570, 18 USPQ2d 1562, 1564 (Fed.Cir.1991). Accordingly, a court's decision granting a preliminary injunction will be overturned on appeal only upon a showing that the court abused its discretion. Joy Technologies, Inc. v. Flakt, Inc., 6 F.3d 770, 772, 28 USPQ2d 1378, 1380 (Fed.Cir.1993). An abuse of discretion may be established by showing that the court made a clear error of judgment in weighing relevant factors or exercised its discretion based upon an error of law or clearly erroneous factual findings. Id.

As the moving party, Genentech had to establish a right to a preliminary injunction in light of four factors: (1) a reasonable likelihood of success on the merits; (2) irreparable harm if the injunction were not granted; (3) the balance of hardships tipping in its favor; and (4) the impact of the injunction on the public interest. We Care, Inc., 930 F.2d at 1570, 18 USPQ2d at 1564; Hybritech Inc. v. Abbott Labs., 849 F.2d 1446, 1451, 7 USPQ2d 1191, 1195 (Fed.Cir.1988); Nutrition 21 v. United States, 930 F.2d 867, 869, 18 USPQ2d 1347, 1349 (Fed.Cir.1991) ("[A]t the preliminary injunction stage, because of the extraordinary nature of the relief, the patentee carries the burden of showing likelihood of success on the merits with respect to the patent's validity, enforceability, and infringement."). If the patentee makes a "clear showing" that the asserted patent is not invalid and that it is infringed, then the patentee is entitled to a presumption of irreparable harm. Atlas Powder Co. v. Ireco Chems., 773 F.2d 1230, 1233, 227 USPQ 289, 292 (Fed.Cir.1985).

A. Likelihood of Success on the Merits

1. Infringement--Process Patent Amendments Act

Historically, it was not an act of patent infringement to import into the United States a product made abroad by a process patented in the United States. Therefore, Congress, concerned that foreign competitors were appropriating valuable American inventions, enacted the Process Patent Amendments Act of 1988 ("PPAA"). ⁴ The PPAA made it an act of patent infringement to import, sell, or use in the United States, without authorization, a product made by a process patented in the United States. 35 U.S.C.A. § 271(g) (West Supp.1995). ⁵

Genentech contends that Novo's importation of hGH into the United States infringes Genentech's patent rights because, Genentech asserts, Novo's process of making hGH literally infringes claim 2 of the '980 patent. Genentech's counterclaim is thus based upon 35 U.S.C.A. § 271(g), which provides:

Whoever without authority imports into the United States or offers to sell, sells, or uses within the United States a product which is made by a process patented in the United States shall be liable as an infringer, if the importation, offer to sell, sale, or use of the product occurs during the term of such process patent.... A product which is made by a patented process will, for purposes of this title, not be considered to be so made after--

(1) it is materially changed by subsequent processes; or

(2) it becomes a trivial and nonessential component of another product.

35 U.S.C.A. § 271(g).

Section 271(g) requires that a patentee establish, inter alia, that an accused infringer imported, offered to sell, sold, or used a product made by a process falling within the scope of one or more claims of the patentee's The district court held that Novo's method of making hGH fell within the literal scope of claim 2 of the '980 patent. On appeal, Novo contends that the court erred in its claim construction and that such error led the court to incorrectly conclude that Genentech established a likelihood of success on the merits. We agree.

                United States patent. 6  Whether Genentech proved that Novo's process was within the scope of the asserted claim is the only question we need decide in this appeal. 7
                

Determining whether a patent claim is infringed requires a two-step analysis: "First, the claim must be properly construed to determine its scope and meaning. Second, the claim as properly construed must be...