Schering Corp. v. Roussel-UCLAF SA
| Decision Date | 08 January 1997 |
| Docket Number | No. 96-1246,ROUSSEL-UCLAF,96-1246 |
| Citation | 104 F.3d 341,41 USPQ2d 1359 |
| Parties | , 41 U.S.P.Q.2d 1359 SCHERING CORPORATION, Plaintiff-Appellant, v.SA, Involuntary Plaintiff-Appellee, v. ZENECA INC. and Zeneca Holdings Inc., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Federal Circuit |
Gregory L. Diskant, Patterson, Belknap, Webb & Tyler, LLP, New York City, argued for plaintiff-appellant. With him on the brief were Jeffrey I.D. Lewis, Jennifer L. Pariser, Michael J. Timmons. Of counsel on the brief were Robert J. Trainor and Jane G. Wasman, Schering Corporation, Kenilworth, NJ.
Donald R. Dunner, Finnegan, Henderson, Farabow, Garrett & Dunner, Washington D.C., argued for involuntary plaintiff-appellee. With him on the brief was John R. Thomas. Also with him on the brief were James F. Lesniak, Joseph R. Re, and Joseph F. Jennings, Knobbe, Martens, Olson & Bear, Newport Beach, CA.
E. Anthony Figg, Rothwell, Figg, Ernst & Kurz, of Washington, D.C. argued for defendants-appellees. With him on the brief were Steven Lieberman and Joseph A. Hynds. Also with him on the brief were Jack B. Blumenfeld, Morris, Nichols, Arsht & Tunnell, Wilmington, DE, and Joel M. Cohen, Davis, Polk & Wardwell, of New York City. Of counsel on the brief were William C. Lucas and Laura J. Davies, Zeneca, Inc., Wilmington, DE.
Before PLAGER, Circuit Judge, SMITH, Senior Circuit Judge, and BRYSON, Circuit Judge.
Plaintiff Schering Corporation (Schering) and involuntary plaintiff Roussel-UCLAF SA (Roussel) are co-owners of a pharmaceutical patent. In October 1995, Roussel granted a license under the patent to defendants Zeneca Inc. and Zeneca Holdings, Inc. (collectively, Zeneca). Shortly before the license was granted, however, Schering filed an infringement action against Zeneca. When Zeneca sought to interpose the license as a defense, Schering responded that a prior agreement between Schering and Roussel barred Roussel from granting the license to Zeneca and that the license was therefore not a valid defense to Schering's charge of infringement. The district court granted Zeneca's motion for partial summary judgment, holding that the Schering-Roussel agreement did not render the Zeneca license invalid. We agree with the district court that Roussel was entitled to grant a license to Zeneca, and we therefore affirm.
The patent in question, U.S. Patent No. 4,472,382 (the '382 patent), is a patent for a method of treating prostate cancer through the use of a combination of drugs. The treatment, referred to as "combination therapy," calls for the use of an antiandrogen, a drug that neutralizes the effect of certain hormones in the body. One of the two inventors assigned his rights under the '382 patent to Roussel; the other inventor later assigned his rights to Schering.
Both Schering and Roussel developed antiandrogens. In 1989, Schering obtained approval from the Food and Drug Administration (FDA) to sell its antiandrogen, flutamide, in the United States for use in combination therapy. Roussel developed its own antiandrogen, nilutamide, which it sold abroad, but Roussel did not enter the United States market because Roussel's U.S. marketing partner was not interested in distributing nilutamide in the United States.
When a dispute arose in 1989 regarding the validity of the assignment by which Schering obtained its co-ownership interest in the '382 patent, Schering and Roussel sought to resolve their respective rights in the patent by agreement. Accordingly, the two parties executed a series of agreements governing their rights under the '382 patent and recognizing their status as co-owners. One of the agreements, the "co-ownership agreement," provided that each company would be allowed to market its antiandrogen in the United States for use in the patented combination therapy. Paragraph 5 of the agreement addressed the issue of third party infringement and provided as follows:
Upon the discovery by any party of any infringement of [the '382 patent], such party shall notify the other diligently: if the parties agree to do so, appropriate legal action in connection therewith shall be undertaken by the parties jointly. In the event that such action is taken, each party shall contribute equally to the expenses of any such action. If any damages for infringement are awarded by a final decree or judgment, then after deducting all expenses arising from the litigation and reimbursing each party for its contributions, the remainder shall be divided equally among the contributing parties. If one party shall not wish to join or continue in any such action, but the other party shall wish to institute or continue such action, said one party shall render all reasonable assistance to said other party in connection therewith at said other party's expense and said other party shall be entitled to retain all recoveries obtained with respect to such action.
In 1994, Zeneca was developing its own antiandrogen, bicalutamide. Zeneca contacted Roussel to explore the possibility of Zeneca's obtaining a license under the '382 patent so that it could sell bicalutamide for use in combination therapy. At about the same time, Schering contacted Roussel and proposed an arrangement under which Schering would obtain exclusive rights under the '382 patent. Roussel did not advise either Schering or Zeneca that it was engaged in discussions with the other.
In early 1995, Roussel elected to license Zeneca rather than grant exclusive rights under the '382 patent to Schering. Zeneca and Roussel then began negotiating the terms of the proposed license.
In April and May 1995, Zeneca began promoting bicalutamide, which it planned to sell in the United States after obtaining FDA approval. Upon learning of Zeneca's marketing plans, Schering advised Roussel by letter of what it termed Zeneca's "potential infringement" of the '382 patent; Schering explained that in its view the sale of bicalutamide for use in combination therapy would infringe the claims of the '382 patent when the drug was approved by the FDA. The letter requested that Roussel undertake joint legal action against Zeneca "as soon as the [FDA] approval is imminent"; if Roussel elected not to join Schering in the infringement suit, the letter stated, Schering expected that Roussel would "render all reasonable assistance to Schering Corporation" pursuant to paragraph 5 of the co-ownership agreement.
During September 1995, Roussel and Zeneca were actively negotiating a license under the '382 patent. On September 19, Schering attorneys called a Roussel representative to request Roussel's assistance in a possible lawsuit against Zeneca. The Roussel representative advised the Schering attorneys that Roussel was engaged in licensing negotiations with Zeneca. That afternoon, Schering filed an action against Zeneca in district court, alleging infringement of the '382 patent. By way of relief, Schering sought a declaration that Zeneca's "manufacture, sale and/or importation" of bicalutamide for use in combination therapy infringed the '382 patent and an injunction prohibiting Zeneca from making, selling, offering to sell, or importing bicalutamide for use in combination therapy. On the same day that it filed the complaint, Schering notified Roussel of the lawsuit and invoked its rights under paragraph 5 of the co-ownership agreement.
Two weeks later, the FDA approved bicalutamide for use in combination therapy, and Roussel and Zeneca promptly signed a licensing agreement. The Roussel-Zeneca agreement gave Zeneca a non-exclusive license to manufacture, import, use, sell, and offer to sell bicalutamide for any use that, if unlicensed, could constitute infringement of the '382 patent. The agreement also provided a license to all persons who purchased, prescribed, or used bicalutamide from Zeneca or from authorized third parties.
Zeneca answered by denying infringement and filing a counterclaim, in which it sought to have the '382 patent declared invalid and unenforceable, and also requested damages on an antitrust theory. Zeneca subsequently filed an amended answer in the Schering lawsuit, setting up the license agreement as a complete defense to Schering's claim of infringement.
The district court granted Zeneca's motion for partial summary judgment on Schering's complaint, rejecting Schering's argument that the co-ownership agreement barred Roussel from granting a license to Zeneca once Schering had filed its infringement suit. The court refused to adopt the general principle that an agreement between co-owners permitting either one to sue unilaterally for infringement "create[s] a mandatory rule of contract construction causing a co-owner to forfeit its right to license." The court further held that the provision in paragraph 5 of the co-ownership agreement requiring each co-owner to provide "reasonable assistance" in connection with infringement litigation brought by the other co-owner "does not prevent Roussel from granting a license to Zeneca or any third party." Because it concluded that Roussel had granted a valid license to Zeneca, the court held that Zeneca enjoyed a complete defense against Schering's infringement claim. The court declined to reach the counterclaims asserted by Zeneca, but determined that judgment should be entered on the infringement claim under Fed.R.Civ.P. 54(b) so as to permit an immediate appeal to this court.
There is no dispute as to the principles that provide the backdrop for this case. Each co-owner of a United States patent is ordinarily free to make, use, offer to sell, and sell the patented invention without regard to the wishes of any other co-owner. 35 U.S.C. § 262. Each co-owner's ownership rights carry with them the right to license others, a right that also does not require the consent of any other co-owner. See, e.g., Willingham v. Star Cutter Co., 555 F.2d 1340, 1344, 194 USPQ 249, 253 (6th Cir.1977) (...
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