Esoterix Genetic Labs. LLC v. Qiagen Inc.

• Citation: 133 F.Supp.3d 349
• Decision Date: 25 September 2015
• Docket Number: Civil Action No. 14-cv-13228-ADB
• Parties: Esoterix Genetic Laboratories LLC, Plaintiff, v. Qiagen Inc. and Qiagen Manchester, Ltd., Defendants.
• Court: U.S. District Court — District of Massachusetts

133 F.Supp.3d 349

Esoterix Genetic Laboratories LLC, Plaintiff,

v.Qiagen Inc. and Qiagen Manchester, Ltd., Defendants.

Civil Action No. 14-cv-13228-ADB

United States District Court, D. Massachusetts.

Signed September 25, 2015

Beth D. Jacob, Clifford Katz, Jaclyn M. Metzinger, Robert I. Steiner, Kelley Drye & Warren LLP, New York, NY, James M. Campbell, Christopher Robert Howe, Campbell, Campbell, Edwards & Conroy, PC, Boston, MA, for Plaintiff.

Daniel A. Nadel, Marc Segal, Robert R. Baron, Ballard Spahr LLP, Philadelphia, PA, Peter E. Ball, Ryan M. Cunningham, Sally & Fitch LLP, Boston, MA, for Defendants.

MEMORANDUM AND ORDER

BURROUGHS

, D.J.

I. INTRODUCTION

Plaintiff Esoterix Genetic Laboratories LLC ("Esoterix") brings this action against Defendants Qiagen Inc. and Qiagen Manchester, LTD. (collectively, "Qiagen"), alleging that Qiagen has exceeded the scope of a license agreement and thereby infringed upon Esoterix's patent rights. Esoterix's Amended Complaint [ECF No. 7 ("Compl.") ], alleges claims for patent infringement (Count I); violation of Massachusetts General Laws Ch. 93A (Count II); breach of contract (Count III); and breach of the duty of good faith and fair dealing (Count IV).

Before the Court is Qiagen's Motion to Dismiss the Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6)

, for failure to state a claim upon which relief may be granted. [ECF No. 26.] Qiagen argues that the patent-in-suit, U.S. Patent No. 7,294,468, is invalid because it purports to cover an unpatentable "law of nature" and that, as a result, Esoterix's patent infringement claim is not viable, and all of Esoterix's state-law claims must also be dismissed. For the reasons discussed in this Memorandum and Order, Qiagen's Motion to Dismiss is allowed in part and denied in part.

II. FACTS ALLEGED IN THE COMPLAINT

Esoterix is the assignee of U.S. Patent No. 7,294,468 (the "'468 Patent")

, titled "Method to Determine Responsiveness of Cancer to Epidermal Growth Factor Receptor Targeting Treatments." See '468 Patent ; Compl. ¶¶ 21-24.¹ The '468 Patent claims a method for determining whether particular types of pharmaceutical drugs are likely to be effective in treating non-small cell lung cancer in a patient, based on the presence or absence of certain nucleotide variances in the patient's gene. More specifically, the inventors discovered that there is a positive correlation between the existence of particular naturally-occurring nucleotide variations on a person's epidermal growth factor receptor ("EGFR") gene, and the likelihood that specific pharmaceutical compounds (namely, gefitinib or erlotinib ) will be effective in treating non-small lung cancers in that person. See '468 Patent, 519:44-520:49. The patent application was filed on December 4, 2005, and the U.S. Patent Office issued the '468 Patent on November 13, 2007.

Previously, all right, title, and interest in the '468 Patent

was owned by non-party Genzyme Corporation ("Genzyme"). In 2008, Genzyme entered into a License Agreement (the "License Agreement") with non-party DxS, Ltd. ("DxS"). The License Agreement granted DxS a non-exclusive license to manufacture and sell certain products utilizing the '468 Patent, in exchange for royalty payments, among other terms and conditions. Compl. ¶¶ 18, 25-32. In or around September 2009, DxS was acquired by a Qiagen entity, and Qiagen therefore assumed DxS's rights and obligations as licensee under the License Agreement. Id. ¶ 20. In December 2010, Genzyme sold certain assets (including all its rights to the '468 Patent, as well as its rights as licensor under the License Agreement) to Laboratory Corporation of America Holdings ("LabCorp"). Id. ¶¶ 2, 21. LabCorp, in turn, created Esoterix as a wholly-owned subsidiary, to control the purchased assets, and Esoterix now holds all right, title, and interest in the '468 Patent, and claims to be the successor-in-interest to Genzyme under the License Agreement. Id. ¶¶ 23-24.

The gravamen of Esoterix's claims in this case is that Qiagen exceeded the scope of the license, and breached certain promises made in the License Agreement. Notably, the License Agreement only allowed Qiagen to sell certain types of products at certain times, and it drew a key distinction between "Licensed Products" and "Licensed Research Products." Id. ¶¶ 26-29. Licensed Products included diagnostic kits (for determining the presence of EGFR mutations) that would be marketed and sold for commercial use. Id. ¶ 27. Licensed Research Products were limited to diagnostic kits that would be sold for non-commercial, research use only. Id. ¶¶ 28-29. Under the terms of the License Agreement, Qiagen could only sell Licensed Research Products for non-commercial use until regulatory approval was obtained for commercial use. Id. ¶ 30. Regulatory approval for the test kits was not obtained until July 2013. Id. ¶ 37. Esoterix concedes that prior to regulatory approval and during the term of the License Agreement, Qiagen paid Esoterix royalties for its sales of Licensed Research Products. Id. ¶¶ 34-35. Esoterix, however, alleges that a substantial number of those sales were impermissibly made for commercial use, rather than solely for research purposes, as required by the License Agreement and the non-exclusive patent rights it granted to Qiagen. Id. ¶¶ 36, 38.

In Count I of the Amended Complaint, Esoterix alleges that when Qiagen offered for sale and sold those test kits for uses other than those authorized by the License Agreement, Qiagen infringed the claims in Esoterix's '468 Patent

. Id. ¶¶ 45-54. Esoterix further alleges that Qiagen's actions induced patent infringement and contributed to infringement by others. Id. ¶¶ 55-56. In Count II, Esoterix alleges that Qiagen acted in bad faith by offering test kits for commercial use prior to regulatory approval, and thereby violated Massachusetts General Laws Ch. 93A. Id. ¶¶ 59-70. Count III sets forth a claim for breach of contract, alleging that Qiagen breached the terms of the License Agreement. Id. ¶¶ 73-77. In Count IV, Esoterix alleges that Qiagen also breached the duty of good faith and fair dealing that arose under the License Agreement. Id. ¶¶ 79-89. Esoterix claims that it has suffered damages as a result of Qiagen's actions, seeid. ¶¶ 57-58, 71-72, 78, 90-91, and it seeks compensatory damages, plus certain statutory enhancements, as well as costs and attorneys' fees.

III. THE '468 PATENT

The '468 Patent

claims a method for "determining an increased likelihood of pharmacological effectiveness of treatment by gefitinib or erlotinib in an individual diagnosed with non-small lung cancer...." '468 Patent 519:43-48. The significance of this invention is explained in the patent's specification. Epithelial cell cancers, which include non-small cell lung cancers, are diseases characterized by abnormal, accelerated growth of epithelial cells. Id. 1:43-47. Epidermal growth factor receptor ("EGFR"), a protein expressed on the surface of those epithelial cells, is the product of a growth-promoting oncogene (erbB or ErbB1). Id. 2:3-17. This oncogene is believed to play a pivotal role in the development of epithelial cell cancers. Id. 2:16-18. Thus, scientists have explored inhibiting EGFR as a method of treating such cancers. One area of exploration involves EGFR tyrosine kinase inhibitors. Id. 2:58-3:14. Two of the more advanced compounds in clinical development in this area include gefitinib (developed by AstraZeneca UK Ltd), and erlotinib (developed by Genetech, Inc. and OSI Pharmaceuticals). Id. 3:15-22. The use of the drugs is limited, however, because patients can develop a resistance to their therapeutic effects, and some patients simply do not respond to these drugs at all. As noted in the patent, tyrosine kinase inhibitor therapies, such as gefitinib, are not effective for the "vast majority" of non-small lung cancer patients. Id. 3:57-59.

The key discovery made by the inventors of the '468 Patent

is that the presence of certain mutations in the kinase domain of a patient's EGFR gene substantially increases the sensitivity of EGFR to tyrosine kinase inhibitor therapy. Id. 3:59-63. By determining whether or not a patient has such mutations in his or her EGFR, a doctor or scientist can predict the likelihood that the patient will respond to tyrosine kinase inhibitor therapies like gefitinib

and erlotinib. Id. 4:5-8. The abstract of the '468 Patent describes the invention as a "method for determining the responsiveness of cancer to an epidermal growth factor receptor (EGFR) treatment." Noting that "the presence of at least one variance in the kinase domain of the erbB1 gene confers sensitivity to the tyrosine kinase inhibitor gefitinib," the abstract explains that a "diagnostic assay"—i.e., a test—for these mutations will allow doctors to administer gefitinib, erlotinib and other inhibitors to those patients most likely to respond to the drugs.

Accordingly, Claim 1, the only independent claim in the patent, claims

[a] method for determining an increased likelihood of pharmacological effectiveness of treatment by gefitinib

or erlotinib in an individual diagnosed with non-small cell lung cancer comprising:

Obtaining DNA from a non-small cell lung cancer tumor sample from the individual; and determining the presence or absence of at least one nucleotide variance in exon 18, 19, or 21 of the epidermal growth factor receptor (EGFR) gene in the DNA, wherein the presence of at least one nucleotide variance selected from:

1) An in-frame deletion in exon 19 of the EGFR gene consisting of a deletion within codons 746 to 753 that results in amino acid changes comprising a deletion of at least amino acids leucine, arginine, and glutamic acid at position 747, 748, and 749 of SEQ ID NO:512;

2) A substitution in exon 21 that results in an amino acid change consisting of a substitution of arginine for leucine at position 858 (L858R) of SEQ ID NO:512, or a substitution in exon 21 that results in an...