Amgen, Inc. v. Chugai Pharmaceutical Co., Ltd.

• Decision Date: 03 December 1992
• Docket Number: Civ. A. No. 87-2617-Y,91-12174-Y.
• Citation: 808 F. Supp. 894
• Parties: AMGEN, INC., Plaintiff, v. CHUGAI PHARMACEUTICAL CO., LTD. and Genetics Institute, Inc., Defendants. ORTHO PHARMACEUTICAL CORP., Cilag Gesellschaft M.B.H., Cilag N.V., Cilag Ltd., Cilag S.A.R.L., Cilag G.M.B.H., Cilag S.P.A., Cilag-Medicamenta, LDA., Johnson & Johnson S.A. (Cilag Division), Cilag AB, Cilag AG, and Cilag AG International, Plaintiffs, v. GENETICS INSTITUTE, INC. and Amgen Inc., Defendants.
• Court: U.S. District Court — District of Massachusetts

808 F. Supp. 894

AMGEN, INC., Plaintiff, v. CHUGAI PHARMACEUTICAL CO., LTD. and Genetics Institute, Inc., Defendants.

ORTHO PHARMACEUTICAL CORP., Cilag Gesellschaft M.B.H., Cilag N.V., Cilag Ltd., Cilag S.A.R.L., Cilag G.M.B.H., Cilag S.P.A., Cilag-Medicamenta, LDA., Johnson & Johnson S.A. (Cilag Division), Cilag AB, Cilag AG, and Cilag AG International, Plaintiffs, v. GENETICS INSTITUTE, INC. and Amgen Inc., Defendants.

Civ. A. Nos. 87-2617-Y, 91-12174-Y.

United States District Court, D. Massachusetts.

December 3, 1992.

Allan van Gestel, Goodwin, Proctor & Hoar, Dale A. Malone, Allegretti & Witcoff, Ltd., Boston, MA, for Amgen, Inc.

Herbert Weissblum, Jager, Smith & Stetler, Boston, MA, Eugene M. Gelernter, Richard H. Savage, David F. Dobbins, Patterson, Belknap, Webb & Tyler, New York City, for Ortho Pharmaceutical Corp. William F. Lee, Hale & Dorr, Boston, MA, Paul H. Heler, Karen J. Kramer, Scott A. Brown, Kenyon & Kenyon, New York City, Ian Crawford, Todd & Weld, Boston, MA, for Genetics Institute, Inc.

MEMORANDUM AND ORDER

YOUNG, District Judge.

I. INTRODUCTION

A. The Underlying Actions

The motions before the Court stem from two actions which were consolidated by this Court's order on August 27, 1991. The lead case, Civil Action No. 87-2617-Y, is a suit for patent infringement by Amgen, Inc. ("Amgen") against Genetics Institute, Inc. ("Genetics") and Chugai Pharmaceutical Co., Ltd. ("Chugai"). In the lead case, Amgen has already prevailed on the issue of liability: Amgen's U.S. Patent No. 4,703,008 ("the '008 patent") was determined to be valid and Genetics was found to have infringed it. See Amgen, Inc. v. Chugai Pharmaceutical Co., 706 F.Supp. 94 (D.Mass.1989) ("Amgen I"), aff'd in part and rev'd in part, Amgen, Inc. v. Chugai Pharmaceutical Co., 927 F.2d 1200 (Fed.Cir.1991) ("Amgen II"), cert. denied, ___ U.S. ___, 112 S.Ct. 169, 116 L.Ed.2d 132 (1991). The issue of damages remains to be litigated.

After the liability determination was made in the lead case, Ortho Pharmaceutical Corp. ("Ortho") and its co-plaintiffs filed the member case, Civil Action No. 91-12174-Y, against Genetics and Amgen. Ortho seeks damages for the infringement of the '008 patent.¹

B. The Motions Before The Court

Genetics now moves either to dismiss Ortho's amended complaint or for summary judgment on the grounds (i) that the amended complaint fails to state a claim upon which relief can be granted because Ortho and the Cilag co-plaintiffs lack standing to bring this action for patent infringement, (ii) that this Court lacks jurisdiction over the subject matter of the amended complaint, and (iii) that prior pending actions instituted elsewhere by Ortho require that the Court dismiss Ortho's amended complaint. Amgen also moves to dismiss Ortho's amended complaint for failure to state a claim on the ground that Ortho lacks standing to bring its action.²

Ortho and its co-plaintiffs cross-move pursuant to Federal Rules of Civil Procedure 42 and 56 for leave to intervene in the lead case for the limited purpose of moving for partial summary judgment limiting the damages recoverable by plaintiff Amgen.

II. THE FACTUAL BACKGROUND

A. Amgen's '008 Patent

This dispute centers around U.S. Patent No. 4,703,008 ("the '008 patent"), a patent issued in 1987 to Dr. Fu-Kuen Lin, an Amgen employee, who assigned his rights to the patent to Amgen. The claims in the '008 patent cover certain products of recombinant DNA technology used to produce Erythropoietin ("EPO"), an important therapeutic agent in the treatment of various blood disorders. More specifically, the '008 patent covers the purified and isolated DNA sequences encoding EPO and the host cells transformed or transfected with a DNA sequence which are used to produce EPO. Amgen II, 927 F.2d at 1203-04. Thus the '008 patent does not cover the product EPO itself, which can also be produced by methods that do not use any recombinant DNA technology. See id.³

B. Ortho's License Agreements

In 1984, three years prior to the issuance of the patent, Amgen and Kirin Brewery Company ("Kirin") established a joint venture, Kirin-Amgen, Inc. ("Kirin-Amgen"). At that time, Amgen assigned certain rights to Kirin-Amgen in the then pending application for the '008 patent.

On September 30, 1985, Ortho entered into Technology License Agreements ("TLA's") and Product License Agreements ("PLA's") with Kirin-Amgen and Amgen separately. From Kirin-Amgen, Ortho obtained (1) an "exclusive license"⁴ to sell EPO manufactured using the inventions claimed in the '008 patent throughout the world (except in the U.S., China, and Japan) for all human use except diagnostics, and (2) the right to manufacture EPO, in one location, using the inventions claimed in the '008 patent for sales everywhere outside of the United States (except China and Japan) for all human use except diagnostics. In exchange, Kirin-Amgen received the right to royalties on Ortho's sales abroad. See PLA of Kirin-Amgen and Ortho, Articles 2 and 4, reprinted in Affidavit of Eugene Gelernter ("Gelernter Aff."), Exh. A.

From its license agreements with Amgen, Ortho obtained (1) an "exclusive license" to manufacture EPO using the invention claimed in the '008 patent, in one location, for use or sale in the U.S. for all human use except dialysis and diagnostics, and (2) an "exclusive license" to manufacture EPO using the invention claimed in the '008 patent, in one location in the United States, for use and sale outside the United States (excluding China and Japan). See PLA of Amgen and Ortho § 2.01, reprinted in Gelernter Aff., Exh. B; TLA of Amgen and Ortho § 2.01, reprinted in Affidavit of Ian Crawford ("Crawford Aff."), Exh. F. In return, Amgen would receive royalties on Ortho's resulting sales of EPO in the U.S. Id. at § 4.01.⁵

Both the TLA and the PLA executed by Ortho and Amgen also contain the virtually identical section 8.02 entitled "Infringement by Third Parties." Section 8.02 establishes the rights and obligations of the parties with respect to bringing, defending, and maintaining any appropriate suit or action in the event of a third-party infringement of any licensed patents.

C. The Production and Sale of EPO by Genetics

During the same period, Genetics manufactured EPO in the United States using inventions claimed under its '195 patent issued in June, 1987. Genetics had an agreement with Boehringer Mannheim ("Boehringer"), a German corporation, giving Boehringer the exclusive rights to distribute and sell in Europe EPO manufactured in the U.S. by Genetics under the '195 patent. Under this agreement Genetics made extensive sales of bulk EPO to Boehringer, amounting to $34,100,000.00. Gelernter Aff., Exh. C at 4. In turn, Boehringer made extensive retail sales of this EPO to its customers in Europe.

D. The Resulting Litigation

On October 27, 1987, the date the '008 patent issued, Kirin-Amgen assigned the patent to Amgen. On the same date, Amgen brought suit against Genetics for infringement of the '008 patent. Prior to the trial on the liability issue in the Amgen action, Ortho moved to intervene. Amgen opposed this motion and the Court denied the motion.⁶

The liability phase of the Amgen action was resolved in 1991: Genetics was adjudged to have infringed certain claims of the '008 patent. See Amgen, Inc. v. Chugai Pharmaceutical Co., 706 F.Supp. 94 (D.Mass.1989) ("Amgen I"), aff'd in part and rev'd in part, Amgen, Inc. v. Chugai Pharmaceutical Co., 927 F.2d 1200 (Fed. Cir.1991) ("Amgen II"), cert. denied, ___ U.S. ___, 112 S.Ct. 169, 116 L.Ed.2d 132 (1991).⁷ Thus, the issue of liability having been resolved, all that remains to be litigated in this lead case is the issue of damages.

In August, 1991, Ortho and its co-plaintiffs brought an action for damages based on patent infringement against Genetics. Ortho, having obtained from Amgen and Kirin-Amgen the exclusive right to sell in Europe EPO manufactured under the '008 patent, sued to recover damages arising from lost EPO sales in Europe due to Genetics' bulk sale of EPO to Boehringer and Boehringer's retail sales of this EPO throughout Europe. Genetics and Amgen, granted leave to intervene, moved to dismiss Ortho's complaint or for summary judgment. Ortho subsequently amended its complaint to name Amgen as a defendant. As stated above, Genetics and Amgen here move again for dismissal or summary judgment on essentially the same grounds as in their earlier motions. Ortho and its co-plaintiffs cross-move for leave to intervene in the lead case, Amgen's action, for the limited purpose of moving for partial summary judgment to limit the damages recoverable by plaintiff Amgen in that action.

III. THE CENTRAL ISSUES

A. The Ortho Action

First, both Genetics and Amgen move for dismissal on the ground that Ortho and its Cilag co-plaintiffs lack standing to bring this infringement action. They contend that, as a general rule of patent law, only the patent owner can bring an infringement action with respect to the patent in issue. They acknowledge that there is a legal exception permitting an "exclusive licensee" to bring such an infringement action if it joins the patent owner, but they argue that neither Ortho nor any of the Cilag co-plaintiffs is an "exclusive licensee" for purposes of this patent infringement action.

Second, they state that, even if Ortho is held to be an exclusive licensee and thus has the "legal capacity" to sue, Ortho does not have "contractual standing" to sue because the terms of § 8.02 of both its TLA and its PLA with Amgen confer on Amgen an exclusive right to sue under the circumstances of this case.

In addition, Genetics contends that this Court lacks subject matter jurisdiction over Ortho's action. More specifically, Genetics claims the Court does not have subject matter jurisdiction because: (i) Ortho's claim of damages arises from the retail sales of the product EPO in Europe, but the '008 patent does not cover EPO, just the gene...