Medimmune, Inc. v. Genentech, Inc.

• Decision Date: 07 February 2008
• Docket Number: No. CV 03-2567 MRP (CTx).,CV 03-2567 MRP (CTx).
• Citation: 535 F.Supp.2d 1000
• Parties: MEDIMMUNE, INC., Plaintiff, v. GENENTECH, INC., et al., Defendants.
• Court: U.S. District Court — Central District of California

Page 1000

535 F.Supp.2d 1000

MEDIMMUNE, INC., Plaintiff, v. GENENTECH, INC., et al., Defendants.

No. CV 03-2567 MRP (CTx).

United States District Court, C.D. California.

February 7, 2008.

COPYRIGHT MATERIAL OMITTED

Aaron P. Maurer, David C. Kiernan, Gerson A. Zweifach, Jessamyn S. Berniker, Paul B. Gaffney, Philip A. Sechler, Rebecca S. Legrand, Richard S. Scott, Williams and Connolly LLP, Washington, DC, Andrea Weiss Jeffries, Donald William Ward, Munger Tolles & Olson, Los Angeles, CA, Elliot M. Olstein, Carella Byrne Bain Gilffilan Cecchi Steward & Olstein, Roseland, NJ, for Plaintiff.

Bryan K. Anderson, Edward G. Poplawski, Paul D. Tripodi, II, Sandra S. Fujiyama, Sidley Austin Brown & Wood, David I. Gindler, Joseph M. Lipner, Laura W. Brill, Morgan Chu, William Joss Nichols, Richard E. Lyon, III, Irell and Manella LLP, Los Angeles, CA, Christopher S. Yates, Daniel M. Wall, Dean G. Dunlavey, J. Thomas Rosch, James Kevin Lynch, Mark A. Flagel, Robert J. Gunther, Jr., Latham & Watkins, Daralyn J. Durie, David J. Silbert, John W. Keker, Jon B. Streeter, Mark A. Lemley, Steven Arthur Hirsch, Keker & Van Nest, San Francisco, CA, Gordon A. Goldsmith, Duarte, CA, for Defendants.

ORDER (1) GRANTING DEFENDANTS' CROSS MOTION FOR PARTIAL DISMISSAL; (2) GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT ON PLAINTIFF'S FOURTH CAUSE OF ACTION; (3) DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT ON PLAINTIFF'S FIRST AND SECOND CAUSES OF ACTION; AND (4) DENYING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT FOR NON-IFRINGEMENT

MARIANA R. PFAELZER, District Judge.

Before the Court are Defendants' MOTION FOR SUMMARY JUDGMENT ON PLAINTIFF'S FIRST, SECOND, AND FOURTH CAUSES OF ACTION, Defendants' CROSS MOTION FOR PARTIAL DISMISSAL, and Plaintiffs MOTION FOR PARTIAL SUMMARY JUDGMENT OF NON-INFRINGEMENT. After consideration of the relevant arguments, for the reasons that follow, the Court grants Defendants' MOTION FOR SUMMARY JUDGMENT ON PLAINTIFF'S FOURTH CAUSE OF ACTION and its CROSS MOTION FOR PARTIAL DISMISSAL OF MEDIMMUNE'S CLAIMS. The Court denies Defendants' MOTION FOR SUMMARY JUDGMENT ON PLAINTIFF'S FIRST AND SECOND CAUSES OF ACTION and Plaintiffs MOTION FOR PARTIAL SUMMARY JUDGMENT OF NON-INFRINGEMENT.

I. BACKGROUND

Plaintiff MedImmune is a biotechnology company that develops and produces antibody therapies. Defendants Genentech and City of Hope (collectively, "Genentech") are co-assignees of U.S. Patent No. 6,331,415 ("'415 patent" or "Cabilly II patent"). On June 4, 1997, MedImmune and Genentech entered, into a license agreement whereby MedImmune agreed to pay royalties on products that would "if not licensed under [that Agreement], infringe one or more claims of [the pending '415 patent], which have neither expired nor been declared invalid by a court or other body of competent jurisdiction from which no appeal has been or may be taken." Decl. Of W. Joss Nichols Supp. Defendants' Mot. For Summ. J., Ex. 3 ¶ 1.10.

After the patent issued on December 18, 2001, MedImmune paid royalties pursuant to this license agreement for its Synagis product, a monoclonal antibody approved for the prevention of serious lower respiratory disease. The payments were made under protest, and on August 13, 2003, MedImmune filed the instant complaint ("first amended complaint" or "FAC") in this Court, while continuing to pay royalties due under, the agreement, The First Cause of Action in the FAC seeks declaratory judgment that MedImmune owes no royalty payments under the license agreement. The Second and Third Causes of Action `seek declaratory judgment that the '415 Patent is invalid and unenforceable, respectively. The Fourth Cause of Action seeks declaratory judgment that the Synagis product does not infringe any valid and enforceable claim of the '415 Patent.

On `April 26, 2004, the Court followed then-controlling Gen-Probe, Inc. v. Vysis, Inc., 359 F.3d 1376 (Fed.Cir.2004), and granted Genentech's motion to dismiss MedImmune's First, Second, Third, and Fourth Causes of Action for lack of subject matter jurisdiction because MedImmune remained a licensee in "good standing" by continuing to pay royalties under the agreement. Medimmune, Inc. v. Genentech, Inc. (MedImmune I), No. CV 03-2567 MRP, 2004 U.S. Dist. LEXIS 28680 (C.D.Cal. Apr. 26, 2004). The Federal Circuit affirmed in Medimmune, Inc. v. Genentech, Inc. (Medimmune II), 427 F.3d 958, 961 (Fed.Cir.2005), and the Supreme Court granted certiorari. 546 U.S. 1169, 126 S.Ct. 1329, 164 L.Ed.2d 46 (2006). On January 9, 2007, the Supreme Court reversed the decision of the Federal. Circuit, holding that the standard for subject matter jurisdiction is satisfied without MedImmune's breach of the license agreement. See MedImmune, Inc. v. Genentech, Inc. (MedImmune III), ___ U.S. ___, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007). The Supreme Court remanded to this Court to proceed with the case. Id.

Accordingly, the Court conducted a Markman hearing, and on August 16, 2007, issued a Claim Construction Order construing several terms in the '415 Patent. In an August 23, 2007 teleconference, MedImmune stipulated, in light of the Claim Construction Order, that its production of Synagis infringes Claim 33 of the patent (but for the license agreement). Plaintiffs Mot. For Partial Summ. J. Of Non-Infringement ("Pl.'s Mot.") at 5. Med-Immune thereafter filed a MOTION FOR PARTIAL SUMMARY JUDGMENT OF NON-INFRINGEMENT on October 29, 2007, seeking a ruling from this Court that Synagis does not infringe any claim other than Claim 33. A month later, Genentech responded by filing an unconditional, irrevocable covenant not to sue or seek royalties (from MedImmune) with respect to Synagis on any Claim of the '415 Patent other than Claim 33 (the "covenant"). See Defendants' Covenant Re Synagis ["Covenant Not to Sue"], Decl. of David I. Gindler ("Gindler Decl."), Ex. A (promising never to assert "that any activities related to Synagis, whether occurring before or after the date of this covenant, infringe ... any claim of the [Cabilly II] patent except Claim 33....").

On November 26, 2007, Genentech filed its MOTION FOR SUMMARY JUDGMENT ON PLAINTIFF'S FIRST, SECOND, AND FOURTH CAUSES OF ACTION. Defendants' Mot. For Summ. J. On Pl. First, Second, and Fourth Causes of Action ("Defs.' Mot."). In brief Genentech contends that summary judgment is appropriate for MedImmune's First Cause of Action ("Contractual Rights and Obligations") because MedImmune's stipulation regarding Claim 33 establishes that it presently owes royalties under the terms of the contract. Genentech further argues that it is entitled to summary judgment on MedImmune's Second Cause of Action ("Patent Invalidity") because (1) there is no substantive cause of action for "patent invalidity" created by either patent law or the Declaratory Judgment Act; (2) the doctrine of "licensee estoppel" bars MedImmune's invalidity claim; and (3) the policies of the Declaratory Judgment Act and the equities in this case present a scenario where the Court should exercise its discretion to decline to hear invalidity. Finally, Genentech argues that MedImmune's admission regarding Claim 33 compels a finding of summary judgment for Genentech on MedImmune's Fourth Cause of Action ("Non-Infringement").

After filing its summary judgment motion, Genentech filed a CROSS MOTION FOR PARTIAL DISMISSAL OF MEDIMMUNE'S CLAIMS, which seeks to "confine this litigation to claim 33 of the '415 patent" because its covenant extinguishes the Court's subject matter jurisdiction over all claims of the '415 Patent except Claim 33. Defendants' Cross Mot. For Partial Dismissal of Med-Immune's Claims ("Defs.' Cross Mot."), at 1.

II. LEGAL STANDARD FOR SUMMARY JUDGMENT

Summary judgment is proper "if `the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact, and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c) (2007). In order for the nonmoving party to prevail, there must be evidence sufficient to allow a reasonable jury to return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In this inquiry, "[t]he evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor." Id. at 255, 106 S.Ct. 2505.

III. DISCUSSION

A. Genentech's Cross Motion for Partial Dismissal of MedImmune's Claims

1. Arguments

Genentech argues that the effect of the Covenant Not to Sue is unambiguous under Federal Circuit caselaw: it extinguishes subject matter jurisdiction as to all claims except for Claim 33. While Med-Immune does not contest the basic framework provided by Benitec Australia, Ltd. v. Nucleonics, Inc., 495 F.3d 1340 (Fed. Cir.2007), and, Super Sack Mfg. Corp. v. Chase Packaging Corp., 57 F.3d 1054 (Fed.Cir.1995), it argues that the covenant should not be given jurisdictional effect for two main reasons: because it was improperly brought, and because NuMax, the successor product to Synagis, supports retaining jurisdiction.

2. Legal Standard

A claim for declaratory judgment may only be brought to resolve an "actual controversy". 28 U.S.C. § 2201. Thus, a party seeking to base jurisdiction on the Declaratory Judgment Act bears the burden of proving that the facts alleged, "under all the circumstances," demonstrate a "substantial" controversy of "sufficient immediacy" to warrant a declaratory judgment. Benitec, 495 F.3d at 1343 (citing MedImmune, Inc. v. Genentech, Inc., ___ U.S. ___, ___, 127 S.Ct. 764, 771, 166 L.Ed.2d 604 (2007)). An actual controversy must exist through all stages of the litigation, not only at the time the declaratory action is filed. Arizonans for Official English v. Arizona, 520 U.S. 43, 117 S.Ct. 1055, 137 L.Ed.2d 170 (1997).

Under Federal Circuit precedent, a properly executed covenant not to sue for infringement not only moots the...