Board of Trustees of Leland v. Roche Molecular

• Decision Date: 16 April 2007
• Docket Number: No. C 05-04158 MHP.,C 05-04158 MHP.
• Citation: 487 F.Supp.2d 1099
• Court: U.S. District Court — Northern District of California
• Parties: The BOARD OF TRUSTEES OF the LELAND STANFORD JUNIOR UNIVERSITY, Plaintiff, v. ROCHE MOLECULAR SYSTEMS, INC.; Roche Diagnostics Corporation; Roche Diagnostics Operations, Inc.; and Roche Diagnostic Systems, Inc., Defendants. Roche Molecular Systems, Inc.; Roche Diagnostics Corporation; and Roche Diagnostics Operations, Inc., Counterclaimants, v. The Board of Trustees of the Leland Stanford Junior University; Thomas Merigan; and Mark Holodniy, Counterclaim Defendants.

487 F.Supp.2d 1099

The BOARD OF TRUSTEES OF the LELAND STANFORD JUNIOR UNIVERSITY, Plaintiff, v. ROCHE MOLECULAR SYSTEMS, INC.; Roche Diagnostics Corporation; Roche Diagnostics Operations, Inc.; and Roche Diagnostic Systems, Inc., Defendants.

Roche Molecular Systems, Inc.; Roche Diagnostics Corporation; and Roche Diagnostics Operations, Inc., Counterclaimants, v. The Board of Trustees of the Leland Stanford Junior University; Thomas Merigan; and Mark Holodniy, Counterclaim Defendants.

No. C 05-04158 MHP.

United States District Court, N.D. California.

April 16, 2007.

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Ricardo Rodriguez, Michelle S. Rhyu, Stephen Cassidy Neal, Cooley Godward Kronish LLP, Palo Alto, CA, Anthony J. Patek, Attorney at Law, San Francisco, CA, for Plaintiff.

Adrian Mary Pruetz, Pruetz Law Group LLP, Manhattan Beach, CA, Brian C. Cannon, Robert W. Stone Jeremy A. Burns, Quinn Emanuel Urquahart Oliver & Hedges, LLP, Tun-Jen Chiang, Attorney at Law, Redwood Shores, CA, Jeffrey Neil Boozell, Quinn Emanuel Urquhart Oliver & Hedges, LLP, Los Angeles, CA, for Defendants.

MEMORANDUM & ORDER

Cross-Motion for Summary Judgment

PATEL, District Judge.

On October 14, 2005 plaintiff Board of Trustees of the Leland Standford Junior University ("plaintiff" or "Stanford") brought this action against Roche Molecular Systems, Inc., Roche Diagnostics Corporation, Roche Diagnostics Operations, Inc., and Roche Diagnostic Systems, Inc.¹ (collectively "defendants," "Counterclaimants" or "Roche") alleging infringement of U.S. Patents Nos. 5,968.730 ("the '730 patent") and 6,503,705 ("the '705 patent"). On November 17, 2005 Roche filed a counterclaim against Stanford, naming Dr. Thomas Merigan ("Merigan") as an additional counterclaim defendant. In June 2006, Roche amended its counterclaim without objection to add Dr. Mark Holodniy ("Holodniy") as a counterclaim defendant. Although counterclaim defendant. Although counterclaimants assert fourteen counterclaims, the relevant counterclaims to this motion are Counterclaim Four, for Declaratory Judgment of Ownership of the '730 and '705 patents against Stanford, and Counterclaim Six, for Declaratory Judgment of License to the '730 and '705 patents against Stanford. These counterclaims have also been pled as affirmative defense. Now before the court are the parties' cross-motions for summary judgment on Roche's ownership and license claims.² The court has considered the parties" arguments fully, and for the reasons set forth below, the court rules as follows.

BACKGROUND

This patent dispute concerns the application of Polymerase Chain Reaction (PCR) technology in the context of HIV/ AIDS research. Stanford currently owns two patents titled "Polymerase Chain Reaction Assays for Monitoring Antiviral Therapy and Making Therapeutic Decisions in the Treatment of Acquired Immunodeficiency Syndrome." The '705 patent is a continuation of the '730 patent. The patents involve correlating measurements of HIV nucleic acids obtained via a PCR assay with determining whether or not a therapy is effective. It is undisputed that Stanford developed the PCR assay disclosed in its patents after working with Cetus Corporation ("Cetus"), which later sold its PCR assets and business to Roche. The extent and legal effect of the collaboration between Stanford and Cetus is the subject of the instant cross-motions for summary judgment.

Counterclaim defendant Merigan joined Cetus' Scientific Advisory Board in 1979. Merigan Dep. at 73:10-14, 91:6-92:7, 95:19-99:1. At that time, Merigan was a Professor of Medicine at Stanford whose research focused on infectious diseases. Id. at 24:3-25:14. Cetus sought Merigan's expertise in furtherance of obtaining regulatory approval for the drug Interleukin-2 ("IL-2"), the development of which was Cetus' main research focus at that time. Id. at 95:19-98:5; White Dep. at 53:22-54:8, 61:1-5, 63:14-24. As part of Merigan's relationship with Cetus, Cetus and Merigan entered into formal consulting agreements signed in 1980, 1984 and 1991. Rhyu Dec., Exhs. 351, 352, 356 & 369. The agreements recognized Merigan's obligations to Stanford. Rhyu Dec., Exhs. 351 ¶ 3(a), 352 ¶ 3(a), 356 ¶ 3, 369 ¶ 4.

PCR was initially developed by Cetus scientists in the mid-1980s. Holodniy Dep. at 84:19-85:11. Through the use of PCR, scientists are able to make billions of copies of specific sequences of DNA from a small number of starting molecules. Cetus scientist Kary Mullis received the Nobel Prize in chemistry for his work developing PCR. Id. at 85:12-21. In 1985, Cetus began looking for ways to use PCR to detect and quantify the presence of HIV in blood. Sninsky Dec. ¶¶ 5-9; see also Kwok Dep. at 46:8-15. Meanwhile, Merigan had become focused on the treatment of AIDS in his own research. Merigan Dep. at 25:20-27:10. Merigan helped establish Stanford's Center for AIDS Research, and became the Director of the Center in the late 1980s. Id. at 25:20-27:10.

The collaboration between Cetus and Stanford concerning the use of PCR in HIV/AIDS research began in 1988, when the two entities were involved in a clinical trial exploring the efficacy of using IL-2 to treat AIDS patients. Groves Dec. ¶ 4; Schwartz Dep. at 48:20-50:20; Holodniy Dep. at 18:16-23. Merigan and Dr. David Schwartz headed the Stanford team. During his time with Cetus, Merigan entered into a number of Materials Transfer Agreements establishing Merigan's right to use Cetus' proprietary materials and information in exchange for a non-exclusive, royalty-free license to Cetus for any intellectual property developed as a result of the MTA. Chiang Dec., Exhs. 4-6; Ostrach Dep. at 91:5-94:25.

As part of the clinical trial, the Cetus team used PCR to quantitative the HIV levels of the participating patents. Groves Dec. ¶ 5; Schwartz Dep. at 49:24-50:13. The patient samples were provided by Merigan and Schwartz so that Cetus could perform its PCR assays. Groves Dep. at 45:24-47:10; Merigan Dep. at 62:17-64:13. Cetus shared the results of the PCR testing with Merigan and Schwartz throughout the summer and fall of 1988. Groves Dec. ¶¶ 6-8, Exh. 1; Groves Dep. at 45:6-46:23. Stanford subsequently sought to independently reproduce the results of Cetus' PCR testing, and Drs. Merigan and Schwartz requested "a written copy of the Cetus protocol for extraction, amplification and quantitation of HIV DNA" using PCR by letter dated November 7, 1988. Chiang Dec., Exh. 8; Merigan Dep. at 281:13-283:8.

The following month, Cetus attempted to enter into an additional Materials Transfer Agreement with Stanford, Merigan, and Schwartz via letter dated December 19, 1988 ("the 1988 MTA"). Chiang Dec., Exh. 10; Groves Dec. ¶ 10; Merigan Dep. at 288:17-291:8. The MTA was signed in February 1989. Chiang Dec., Exh. 10. Pursuant to the MTA, Cetus would provide Stanford with "certain research substances and know-how" in exchange for certain concessions on `the part of Stanford. Chiang Dec., Exh. 10; Groves Dec. ¶ 10; Ostrach Dep. at 90:16-91:3; Schwartz Dep. at 44:24-46:3, 60:19-61:9. Specifically, the MTA provides that Stanford will (1) "inform CETUS, in confidence, of research results related to the Material ... [and] CETUS shall be free to use such data and information for any purpose;" (2) identify Cetus' role in the development of any "invention ... that may be commercially useful" when disclosing the invention to Stanford's patent agent; and (3) supply Cetus with a copy of any such disclosures for Cetus' evaluation purposes. Chiang Dec., Exh. 10 ¶¶ 2, 7 & 8. The MTA further provided that Cetus was given "the first option to an exclusive license, at a reasonable royalty to be negotiated in good faith ..., or at CETUS' option, a nonexclusive license." Id. at ¶ 8. Stanford asserts that there is no evidence that any materials were actually transferred to Schwartz or Merigan pursuant to this agreement. Merigan Dep. at 66:5-7, 68:4-69:6, 290:24-291:8. Merigan testified that the Cetus PCR tests on Stanford samples conducted in Fall 1988 were only "semiquantitative" and would require "considerable effort" to improve them before they could provide clinically useful information. Id. at 271:21-273:25. Schwartz likewise testified that the Cetus results were "inadequate for quantitation." Schwartz Dep. at 99:21-105:22.

Within a few weeks of the 1988 MTA agreement, counterclaim defendant Mark Holodniy, then a fellow in Stanford's Division of Infectious Diseases, began spending time at Cetus in order to explore the use of PCR techniques in his work. Holodniy had joined Stanford in July 1988 as part of a fellowship program that involved "working on HIV trials with antiretroviral drugs" and "develop[ing] some sort of marker to be able to assess the effectiveness of therapy." Holodniy Dep. at 103:24-104:18. Holodniy had no previous PCR experience prior to joining Stanford. Id. at 83:9-85:4. Holodniy began working in Merigan's lab in October 1988, working to "find a molecular based test to measure the effectiveness of antiviral treatments." Id. at 113:12-114:1; Merigan Dep. at 78:3-79:1, 80:10-81:11. Holodniy spent several months at Stanford doing research and experiments related to PCR. Holodniy Dec. ¶¶ 7 & 8; Chiang Dec., Exh. 5 at 4; Holodniy Dep. at 139:16-140:10, 143:2-144:16, 146:13-23. In February 1989, after Merigan suggested that Holodniy spend time at Cetus to develop a better assay for quantitating the level of nucleic acids, Holodniy began commuting daily to Cetus. Holodniy Dec. ¶ 9; Chiang Dec., Exh. 9 at 5-6; Holodniy Dep. at 13:24-14:5. According to Holodniy's deposition testimony, his role in working at Cetus was "to develop an assay at Stanford that [they] could use to monitor treatment" after "discussions with Cetus scientists about the feasibility of establishing a quantitative assay." Id. at 152:20-153:11. Holodniy was assigned a lab bench in Cetus' Clinical Group, and had...