A. Natterman & Cie Gmbh v. Bayer Corp.

• Decision Date: 18 April 2006
• Docket Number: Civil Action No. 03-CV-2268.
• Citation: 428 F.Supp.2d 253
• Parties: A. NATTERMAN & CIE GMBH, and Aventis Behring L.L.C., Plaintiffs and Counterclaim Defendants v. BAYER CORPORATION and Bayer Healthcare LLC., Defendants and Counterclaimants, v. Aventis Behring GmbH, Counterclaim Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

428 F.Supp.2d 253

A. NATTERMAN & CIE GMBH, and Aventis Behring L.L.C., Plaintiffs and Counterclaim Defendants v. BAYER CORPORATION and Bayer Healthcare LLC., Defendants and Counterclaimants, v. Aventis Behring GmbH, Counterclaim Defendant.

Civil Action No. 03-CV-2268.

United States District Court, E.D. Pennsylvania.

April 18, 2006.

Dori Johnson Hines, James B. Monroe, Paul. W. Browning, Timothy B. Donaldson, Finnegan, Henderson, Farabow, Garrett & Dunner, Washington, DC, for Plaintiffs.

Jeffrey B. Bove, Mary W. Bourke, Rudolf E. Hutz, Thomas F. Poche, Connolly Bove Lodge & Hutz LLP, Wilmington, DE, Richard D. Watkins, Woodcock Washburn LLP, Philadelphia, PA, for Defendants.

Robert R. Baron, Jr., Ballard, Spahr, Andrews and Ingersoll, Charles S. Marion, Pepper Hamilton LLP, Philadelphia, PA, for Plaintiffs and Counter Defendants.

Beatrice O'Donnell, Duane Morris LLP, Helena I. Poch Ciechanowski, Duane Morris, LLP, Philadelphia, PA, for Defendants and Counter Claimants.

MEMORANDUM AND ORDER

ANITA B. BRODY, District Judge.

In this patent infringement action, Plaintiffs A. Nattermann & Cie GmbH ("Nattermann") and Aventis Behring L.L.C. bring suit against Defendants Bayer Corporation and Bayer Healthcare LLC for alleged infringement of U.S. Patent No. 5,565,427 ("the '427 patent"). Defendants bring counterclaims against Plaintiffs and Counterclaim Defendant Aventis Behring GmbH.¹ Plaintiff Nattermann is the owner of the '427 patent, Counterclaim Defendant Aventis Behring GmbH has a non-exclusive license to the patent, and Plaintiff Aventis Behring L.L.C. has a sublicense. The '427 patent involves a drug used in the treatment of hemophilia. Plaintiffs claim that an anti-hemophilila drug marketed by Defendants under the name KOGENATE® FS infringes the '427 patent. Defendants bring counterclaims against Plaintiffs for, inter alia, breach of a 1998 Supply Agreement entered into by Bayer and Centeon L.L.C., a predecessor of Plaintiff Aventis Behring L.L.C., under which Bayer was to manufacture its KOGENATE® product for Centeon L.L.C.

Before me is Defendants' motion for summary judgment on their fourth affirmative defense of license under the '427 patent. Defendants claim that the 1998 Supply Agreement between Bayer and Centeon L.L.C. granted Defendants an express license under the '427 patent and that this license is a complete defense to the instant patent infringement suit.² Also before me is Plaintiffs' motion for summary judgment on Defendants' affirmative defense of license and Defendants' third counterclaim for breach of contract. Plaintiffs seek a judgment that Defendants have no express or implied license under the '427 patent and that, as a result, Defendants' counterclaim for breach of contract fails as a matter of law.³ For the reasons that follow, I will deny both motions.

I. FACTUAL BACKGROUND⁴

For purposes of the instant motions, the relevant undisputed⁵ facts are as follows.

A. The 1993 Patent Settlement Agreement

In 1993, Defendants' predecessor Miles Inc. ("Miles") and Rhône Poulenc Rorer Inc. ("RPR"), parent company of Centeon L.L.C.'s predecessor Armour Pharmaceutical Co. ("Armour"), signed an agreement ("the 1993 Patent Settlement Agreement") settling their previous patent litigation. (Id. ¶ 1.) As a result of the 1993 Patent Settlement Agreement, Bayer AG, the parent company of Miles, received an express license to certain patents, known as the "Scripps patents," involving recombinant factor VIII technology used in the treatment of hemophilia. (Id. ¶ 2.)

B. The 1994 Supply Agreement

As part of the 1993 Patent Settlement Agreement, Miles and Armour, the predecessors of Bayer and Centeon L.L.C. respectively, entered into the 1994 Supply Agreement. (Pls.' Statement Undisp. Facts ¶ 6; Pls.' Opp. Defs.' Mot. Summ. J. Ex. 4.) The 1994 Supply Agreement obligated Bayer to supply Centeon L.L.C. "with certain defined quantities of recombinant factor VIII (the `Product' as further defined below). ..." (Pls.' Statement Undisp. Facts ¶ 7; Ex. 4 at 1.) The "Product" of the 1994 Supply Agreement consisted of Bayer AG's first-generation KOGENATE 0 product. (Pls.' Statement Undisp. Facts ¶ 9; Ex. 4 at 2-3, Ex. A.) Under the 1994 Supply Agreement, Bayer supplied Centeon L.L.C. with KOGENATE®, and Centeon L.L.C. sold this product under its own HELIXATE® trade-name. (Pls.' Statement Undisp. Facts ¶ 10.) Section 9 of the 1994 Supply Agreement states:

No license, express or implied, is granted by one party to the other hereunder, save for those purposes which permit performance, by each party, of its obligations under this Agreement.

(Pls.' Statement Undisp. Facts ¶ 11; Ex. 4 at 28.)

C. The 1998 Supply Agreement

From 1997 to 1998, Bayer and Centeon L.L.C. renegotiated the 1994 Supply Agreement and formed the 1998 Supply Agreement. (Pls.' Statement Undisp. Facts ¶ 13.) Bayer and Centeon L.L.C. renegotiated the Supply Agreement, in part, so that each party could secure continued access to future recombinant factor VIII products. (Id. ¶ 14.) Under the 1998 Supply Agreement, Bayer agreed to "continue to provide quantities of human recombinant Factor VIII to Centeon under the terms and conditions specified herein ...." (Id. ¶ 15; Defs.' Mot. Summ. J. Ex. A at 1.) The 1998 Supply Agreement was to be "considered part of the Settlement Agreement between Bayer AG and Armour just as the 1994 Agreement was part of said Settlement Agreement." (Pls.' Statement Undisp. Facts ¶ 16; Ex. A at 1.) The parties incorporated Section 9 of the 1994 Agreement into Section 10 of the 1998 Agreement. (Pls.' Statement Undisp. Facts ¶ 18; Ex. A at 27.)

D. KOGENATE® FS and the 1998 Supply Agreement

When the parties negotiated and signed the 1998 Supply Agreement, Bayer was marketing its first-generation KOGENATE® product, which does not infringe the '427 patent. (Pls.' Statement Undisp. Facts ¶¶ 19, 22.) The 1998 Supply Agreement provides that Centeon L.L.C. and its successors would receive access to later improvements of Bayer's KOGENATE® product. (Pls.' Statement Undisp. Facts ¶ 24; Ex. A. at 3.) One such contemplated improvement that was specifically contemplated in the Agreement was called KOGENATE® II.⁶ (Id. ¶ 27.) KOGENATE® II was defined in the 1998 Supply Agreement as "an antihemophilic Factor VIII (Recombinant) protein to be formulated as a sterile, stable, purified, freezedried concentrate, purified and formulated without the use of albumin." (Id. ¶ 28.) Bayer has assigned the trademark KOGENATE® FS to the KOGENATE® II Product referenced in the 1998 Supply Agreement. (Id. ¶ 29.) At the time Bayer and Centeon L.L.C signed the 1998 Supply Agreement, Bayer had not provided Centeon L.L.C. with full specifications for any future recombinant factor VIII product in development, including KOGENATE® FS. (Id. ¶ 26.)

E. The '427 Patent

The application that issued as the '427 patent, entitled "Stabilized Factor VIII Preparations," was filed in the United States Patent and Trademark Office ("PTO") on April 7, 1992 and issued on October 15, 1996. (Pls.' Statement Undisp. Facts ¶ 56.) Dr. Wilfried Freudenberg is the named inventor on the '427 patent. (Id. ¶ 58.) In 1992, Dr. Freudenberg assigned to Behringwerke AG his entire right, title, and interest in the application that ultimately issued as the '427 patent. (Id. ¶ 59.) Shortly after the '427 patent issued, Behringwerke AG merged with Hoechst AG. (Id. ¶ 60.) As the legal successor to Behringwerke AG, Hoechst AG became the owner of the '427 patent after the parties merged. (Id. ¶ 61.) In 1997, Hoechst AG assigned its entire right, title, and interest in the '427 patent to Centeon Pharma GmbH. (Id. ¶ 62.) Centeon Pharma GmbH changed its name to Aventis Behring GmbH, and on or about January 26, 2000, the assignment of the '427 patent was formally changed to Aventis Behring GmbH. (Id. ¶ 66.) Aventis Behring GmbH sold the '427 patent to A Nattermann & Cie GmbH, as reflected in an assignment document filed in the PTO on March 21, 2003. (Id. ¶ 68.)

Bayer first became aware of the '427 patent in December of 1996, when the '427 patent was cited during the prosecution of U.S. Patent 5,763,401. (Id. ¶ 3 1.)

II. LEGAL STANDARD

Pursuant to Federal Rule of Civil Procedure 56(c), summary judgment should be granted "if, after drawing all reasonable inferences from the underlying facts in the light most favorable to the non-moving party, the court concludes that there is no genuine issue of material fact to be resolved at trial and the moving party is entitled to judgment as a matter of law." Kornegay v. Cottingham, 120 F.3d 392, 395 (3d Cir.1997). A factual dispute is "genuine" if the evidence would permit a reasonable jury to find for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.E d.2d 202 (1986).

In deciding a motion for summary judgment, the court must draw all reasonable inferences in the non-moving party's favor. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

With respect to Defendants' motion for summary judgment on their affirmative defense of license, it is the moving party (Defendants) who will bear the burden of proof at trial. Where the moving party has the burden of proof at trial on the issue for which summary judgment is sought, the moving party must show affirmatively the absence of a genuine issue of material fact: it must show that, on all the essential elements of its case on which it bears the burden of proof, no reasonable jury could find for the non-moving party. See In re Bressman, 327 F.3d 229, 237-38 (3d Cir.2003) (citing United States v. Four Parcels of Real Property, 941 F.2d 1428, 1438 (11th Cir.1991)).

With respect to Plaintiffs' motion for summary judgment on the Defendants' affirmative defense of license and Defendants' counterclaim for breach of contract, it is the non-moving party (again the Defendants) who will bear the burden of proof at...