Bayer Ag v. Housey Pharmaceuticals, Inc.

• Decision Date: 22 August 2003
• Docket Number: No. 02-1598.,02-1598.
• Parties: BAYER AG and Bayer Corporation, Plaintiffs-Appellees, v. HOUSEY PHARMACEUTICALS, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

340 F.3d 1367

BAYER AG and Bayer Corporation, Plaintiffs-Appellees, v. HOUSEY PHARMACEUTICALS, INC., Defendant-Appellant.

No. 02-1598.

United States Court of Appeals, Federal Circuit.

Decided August 22, 2003.

Jeffrey B. Bove, Connolly Bove Lodge & Hutz LLP, of Wilmington, Delaware, argued for plaintiffs-appellees. With him on the brief were Rudolf E. Hutz, Mary W. Bourke and Thomas F. Poché.

Joseph A. Grear, Stanheim & Grear, Ltd., of Chicago, Illinois, argued for defendant-appellant. With him on the brief were Rolf O. Stadheim, Gregory M. Jordan, and George C. Summerfield. Of counsel were M. Duncan Grant and Joseph Naylor, Pepper Hamilton LLP, of Wilmington, Delaware.

Morgan Chu, Irell & Manella LLP, of Los Angeles, California, for amici curiae Affymetrix, Inc., et al. With him on the brief were Laura W. Brill, Lisa Partain, and Jason G. Sheasby.

Before MAYER, Chief Judge, DYK and PROST, Circuit Judges.

DYK, Circuit Judge.

Housey Pharmaceuticals, Inc. ("Housey") appeals from the judgement of the United States District Court for the District of Delaware dismissing its counterclaim for infringement of United States Patent Nos. 4,980,281, 5,266,464, 5,688,655, and 5,877,007 for failure to state a claim. Because we conclude that infringement under 35 U.S.C. § 271(g) is limited to physical goods that were manufactured and does not include information generated by a patented process, and because the physical goods here (drug products) were not "manufactured" by a process claimed in the asserted patents, we affirm the dismissal of Housey's infringement claims.

BACKGROUND

Housey is the assignee of U.S. Patents Nos. 4,980,281, 5,266,464, 5,688,655, and 5,877,007 (collectively "the Housey patents") all entitled "Method of Screening for Protein Inhibitors and Activators."¹ The patents are directed to "a method of screening for substances which specifically inhibit or activate a particular protein affecting the cultural or morphological characteristics of the cell expressing the protein." U.S. Pat. No. 5,877,007 col. 1, ll. 18-21. The expression of the "particular protein" (referred to as the "protein of interest") results in a change in one or more identifiable characteristics of the cells expressing it. According to the disclosed and claimed method, a cell line is produced that is characterized by a higher production of the protein of interest relative to an original cell line. By applying substances ("agents") to both cell lines, it is possible to determine whether the agent is an activator or inhibitor of protein activity.² Thus, for example, if a link between a protein and a disease is discovered, the disclosed method provides a process for identifying the effect that different agents have on the activity of the suspect protein.

On March 6, 2001, Bayer AG and Bayer Corporation ("Bayer") filed a complaint seeking declaratory judgment of invalidity, unenforceability, and non-infringement of the Housey patents. On March 27, 2001, Housey filed an answer to the complaint and asserted a counterclaim for infringement of the Housey patents. The counterclaim alleged that Bayer "directly infringed claims of each of the patents-in-suit" and "contributed to infringement or induced others to infringe the patents-in-suit." (Answer to Complaint and Counterclaim at 4). Additionally, Housey alleged that Bayer "infringed the method claims of the patents in suit pursuant to 35 U.S.C. Sec. 271(g)." Id. at 5. The factual basis of Housey's infringement claim as stated in the counterclaim was that:

Pursuant to 35 U.S.C. § 295, this Court may presume that a product was made [by Housey's] patented methods where there is a substantial likelihood that it was so made by and [Housey] has made reasonable efforts to determine the process actually used. Here, there is substantial likelihood that [Housey's] methods were used by Bayer to make the characterization of a pharmacologically active agent. Further, [Housey] has requested the defendants to identify the methods used in its facilities, but the [sic] Bayer has failed to do so. [Housey] has made the required reasonable efforts.

Id. at 4-5.

On April 16, 2001, Bayer filed a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure with respect to Housey's counterclaim for infringement under § 271(g), arguing that the provision "applies only to methods of manufacture, and does not apply to [Housey's] method patent claims ... [which] cover methods of use, not methods of manufacturing." (Pls.' Br. In Supp. Of their Mot. to Dismiss Infringement Claim Under 35 U.S.C. § 271(g) at 2.). Bayer argued that "Section 271(g) is inapplicable as a matter of law and [Housey's] claim for infringement of its method claims under Section 271(g) should be dismissed." Id. Bayer characterized Housey's infringement allegations as follows:

1. Bayer is liable as an infringer when it sells in the United States a pharmaceutical composition containing a substance determined to be an inhibitor or activator of a target protein by use either in the United States or abroad of the [Housey] United States patented methods.

2. Bayer AB is liable as an infringer when it imports into the United States research data or information obtained from using the [Housey] patented methods.

Id. at 4.

In its opposition to Bayer's motion to dismiss, Housey similarly described its counterclaim for infringement under § 271(g) as comprising two separate claims, the first of which was directed to "the critical information, the identification and characterization of a drug, [which] is made by [the] patented process" and the second of which was directed to "the drug made by [the] patented process." (ICT's Opp'n to Bayer's Mot. to Dismiss 35 U.S.C. 271(g) Claim at 2.). The parties, therefore, were in substantial agreement as to the scope of the counterclaim for infringement, characterizing it as extending to both the importation of a pharmaceutical composition identified by the patented process and the importation of information generated by the patented process.

The district court interpreted Housey's infringement claim under § 271(g) to encompass:

(1) [the sale] in the United States [of] a drug that was determined to be an inhibitor or activator of a target protein using the patented methods; and (2) import[ation] into or use in the United States [of] knowledge and information reflecting the identification or characterization of a drug acquired from using the patented methods.

Bayer AG v. Housey Pharms., Inc., 169 F. Supp 2d. 328, 329 (D.Del.2001). Based on this interpretation, the court dismissed Housey's claim for infringement under § 271(g) for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure. The court concluded that "[u]pon a plain reading of the statute, ... Section 271(g) addresses only products derived from patented manufacturing processes, i.e., methods of actually making or creating a product as opposed to methods of gathering information about, or identifying, a substance worthy of further development." Id. at 330. On August 12, 2002, the court entered final judgment under Rule 54(b) of the Federal Rules of Civil Procedure in favor of Bayer on Housey's section 271(g) counterclaims. Housey timely appealed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).³

DISCUSSION

We review issues of statutory construction without deference. Doyon Ltd. v. United States, 214 F.3d 1309, 1314 (Fed.Cir.2000). We review the grant of a motion to dismiss under Rule 12(b)(6) by applying the procedural law of the regional circuit. C & F Packing Co., Inc. v. IBP, Inc., 224 F.3d 1296, 1306 (Fed.Cir.2000).

I

This case presents questions concerning the interpretation of § 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. § 271(g) (2000) (emphases added). We are concerned here in particular with the meaning of the phrase "a product which is made by a [patented] process." We have construed portions of this statute in a number of previous cases. See, e.g., Mycogen Plant Sci., Inc. v. Monsanto Co., 252 F.3d 1306, 1318 (Fed.Cir.2001). However, this case presents issues not previously addressed. When interpreting statutory language, "words of a statute [are given] their `ordinary, contemporary, common meaning,' absent an indication Congress intended them to bear some different import." Williams v. Taylor, 529 U.S. 420, 431, 120 S.Ct. 1479, 146 L.Ed.2d 435 (2000) (citations omitted). Dictionaries of the English language provide the ordinary meaning of words used in statutes. See, e.g., Carey v. Saffold, 536 U.S. 214, 219-220, 122 S.Ct. 2134, 153 L.Ed.2d 260 (2002).

II

Housey offers two theories as to why section 271(g) is applicable here. First, it contends that the information produced by Bayer using the patented processes claimed in the Housey patents is itself a product made by a patented process. Bayer, in turn, argues that (1) the word "made" means "manufactured" and that (2) information is not a manufactured product. There is no serious dispute between the parties concerning the second of these two propositions: if only products that have been "manufactured" are within the scope of 35 U.S.C. § 271(g), it necessarily follows that the statute applies only to physical goods and that information is not included. Webster's Third New International Dictionary ("Webster's") defines the verb form of "manufacture" as "to make (as...