Schering Corp. v. Zeneca Inc., Civil Action No. 95-566-RRM.

• Decision Date: 20 February 1996
• Docket Number: Civil Action No. 95-566-RRM.
• Citation: 958 F.Supp. 196
• Court: U.S. District Court — District of Delaware
• Parties: SCHERING CORPORATION, Plaintiff, Roussel-Uclaf SA, Joined As Involuntary Plaintiff, v. ZENECA INC. and Zeneca Holdings, Inc., Defendants.

958 F.Supp. 196

SCHERING CORPORATION, Plaintiff, Roussel-Uclaf SA, Joined As Involuntary Plaintiff, v. ZENECA INC. and Zeneca Holdings, Inc., Defendants.

Civil Action No. 95-566-RRM.

United States District Court, D. Delaware.

February 20, 1996.

Steven Balick, and Amy Quinlan, Ashby and Geddes, Wilmington, DE; Gregory L. Diskant, Jeffrey I.D. Lewis, Michael J. Timmons, Robert Lehrburger, and Jennifer Pariser, Patterson, Belknap, Webb and Tyler LLP, New York City; Robert J. Trainor, James R. Nelson, Thomas D. Hoffman, and Jane G. Wasman, Schering Corporation, Kenilworth, NJ, for Plaintiff Schering Corporation.

Arthur G. Connolly, Jr., and Gerard M. O'Rourke, Connolly, Bove, Lodge and Hutz, Wilmington, DE; James F. Lesniak, Joseph R. Re, and Joseph R. Jennings, Knobbe, Martens, Olson and Bear, Newport Beach, CA, for Involuntary Plaintiff Roussel-Uclaf SA.

Jack B. Blumenfeld, and Mary B. Graham, Morris, Nichols, Arsht and Tunnell, Wilmington, DE; E. Anthony Figg, Steven Lieberman, Bart G. Newland, Joseph A. Hynds, Jeffrey B. McIntyre, and Mark I. Bowditch, Rothwell, Figg, Ernst and Kurz, Washington, DC; Arthur F. Cohen, and Joel M. Cohen, Davis, Polk and Wardwell, New York City; William C. Lucas, and Laura Davies, Zeneca, Inc., Wilmington, DE, for Defendants Zeneca Inc. and Zeneca Holdings Inc.

OPINION

McKELVIE, District Judge.

This is a patent case. Plaintiff Schering Corporation ("Schering") and involuntary plaintiff Roussel-Uclaf SA ("Roussel") are the co-owners of U.S. Patent No. 4,472,382 (the "'382 Patent"). The '382 patent claims a method of treating prostate cancer and benign prostatic hypertrophy, which is a benign enlargement of the prostate common in men over 50 years of age. The claimed method involves applying two therapies at the same time — introducing chemicals, known as antiandrogens, into the body to neutralize the effect of certain male hormones, known as androgens, while introducing other chemicals into the body to inhibit the production of androgens. This method of treatment is known as "combination therapy."

On September 19, 1995, Schering filed a complaint against Zeneca Inc. and Zeneca Holdings Inc. (collectively "Zeneca"), alleging that Zeneca's manufacture, marketing, and sale of bicalutamide, an antiandrogen, for use in combination therapy infringes the claims of the '382 patent. Schering joined Roussel as an involuntary plaintiff pursuant to Rule 19(a) of the Federal Rules of Civil Procedure ("FRCP").

On October 23, 1995, Zeneca filed an answer in which it denied infringement and counterclaimed for a declaratory judgment that the '382 patent is invalid, unenforceable, and not infringed. Zeneca also asserted a Sherman Act antitrust counterclaim against Schering. On November 1, 1995, Zeneca amended its answer to include the affirmative defense that it had a license from Roussel to manufacture and sell bicalutamide for use in combination therapy.

On November 6, 1995, Zeneca filed a motion for summary judgment of non-infringement based on the license that Roussel granted to Zeneca. Roussel filed a brief joining Zeneca's motion for summary judgment. On November 20, 1995, the court held a hearing on Zeneca's motion. After the hearing, Schering filed a cross-motion for summary judgment on Zeneca's license defense. This is the court's decision on both Zeneca's and Schering's motions for summary judgment.

I. FACTUAL BACKGROUND

The parties have completed briefing for both Schering's and Zeneca's motions for summary judgment. In addition, the parties have briefed a motion by Schering for a preliminary injunction against Zeneca, and the court held a hearing on Schering's motion for a preliminary injunction on January 5, 8, and 9, 1996. The court draws the following factual summary from the complaint and counterclaims, the briefs for all three motions, and the November and January hearings.

A. The Physiology and Treatment of Prostate Cancer

Scientists have discovered that certain male hormones, known as androgens, are linked to the development and growth of prostate cancer. The most common androgen is testosterone. Testosterone is produced as the result of a complex chain of chemical reactions in the body. A portion of the brain, known as the hypothalamus, monitors the level of testosterone in the body. When the hypothalamus perceives a shortage of testosterone, it releases what is known as luteinizing-hormone release hormone ("LHRH"). LHRH signals the pituitary gland to produce luteinizing hormone ("LH"), and LH then signals the testes to produce testosterone. The adrenal glands also produce precursor androgens, which metabolize into androgens in the tissue cells of the prostate. Testosterone and androgens from the adrenal glands feed healthy prostate cells, but they also help prostate cancer cells to grow.

1. Treatments Before the '382 Patent

Based on the linkage between androgens and prostate cancer, scientists have developed a number of medical treatments. The earliest treatments involved either castration or the administration of a female hormone, known as estrogen. Both of these treatments lower the level of testosterone circulating in the blood. However, neither treatment cures prostate cancer, and both are flawed. The administration of estrogen can cause blood clots and serious cardiovascular risks. Castration is nonreversible and undesirable for many sociological and psychological reasons.

In response to the problems of these earlier treatments, scientists developed newer treatments. One treatment involves introducing antiandrogens to neutralize the effect of androgens in the body. Antiandrogens are chemicals that bind to androgen receptors on prostate cells, thus preventing androgens from binding to those receptor sites. Another treatment involves introducing LHRH into the body to reduce the number of androgens. When LHRH is administered in large doses, it first causes the testes to produce more testosterone. However, the constant bombardment of LHRH eventually causes the hypothalamus to believe that the body does not need testosterone. Thus, the administration of large doses of LHRH effectively results in chemical castration. LHRH is available in a synthetic form, which is known as an "LHRH agonist" or "LHRH analog."

Unfortunately, these treatments have not been much more successful than the earlier treatments. Introducing antiandrogens into the body, and thereby blocking androgen receptors, leads the hypothalamus to conclude that the body is not producing enough androgens. Consequently, the hypothalamus increases the production of testosterone to make up for the perceived shortage. This is known as the "escape" or "feedback" problem. Introducing LHRH or an LHRH agonist into the body temporarily stimulates the hypothalamus to overproduce testosterone in dangerous amounts. This is known as the "flare" problem. In addition, LHRH and LHRH agonists do not stop the production of precursor androgens by the adrenal glands.

2. Combination therapy and the '382 Patent

Two scientists, Fernand Labrie and Jean-Pierre Raynaud, sought to develop a treatment for prostate cancer that avoided the problems of existing treatments. Labrie and Raynaud decided to combine the use of an antiandrogen with the use of an LHRH agonist. They anticipated that the antiandrogens would shield androgen receptors from the flare problem caused by an LHRH agonist and from precursor androgens still produced by the adrenal glands. In addition, they anticipated that an LHRH agonist would eliminate the feedback problem caused by antiandrogens by stopping the production of testosterone.

Based on their success with this combination therapy, Labrie and Raynaud applied for and received the '382 patent. The '382 patent claims a method of combining the administration of an antiandrogen to neutralize androgens in the body with the administration of an LHRH agonist to reduce the amount of testosterone in the body. Labrie assigned his rights under the '382 patent in the United States to Schering. Raynaud assigned his rights under the '382 patent in the United States to Roussel.

B. The Facts Underlying the Present Litigation

Zeneca markets bicalutamide, an antiandrogen, for use in combination therapy. Zeneca sells bicalutamide under the registered trademark Casodex®. Schering alleges that Zeneca's marketing of Casodex® infringes the '382 patent. Zeneca claims that it has a license from Roussel to market Casodex®. Schering responds that Roussel did not have the ability to grant a license to Zeneca based on Schering's Co-Ownership Agreement with Roussel. An evaluation of these arguments requires a summary of the negotiation of the Co-Ownership Agreement and the events that have occurred since between Schering, Roussel, and Zeneca.

1. Schering and Roussel negotiate the Co-Ownership Agreement

Sometime in 1988, a dispute developed between Labrie, Roussel, and Schering as to whether Labrie improperly assigned his rights under the '382 patent in the United States to Schering. In December of 1989, Schering, Roussel, and Labrie settled this dispute by entering into three separate agreements, only one of which is relevant here. Schering and Roussel executed the relevant agreement, which is referred to as the "Co-Ownership Agreement."

Paragraph 1 of the Co-Ownership Agreement recognizes that Schering and Roussel are co-owners of the '382 patent and guarantees each company the right to market their respective antiandrogens in the United States. Paragraphs 2, 3, and 4 establish the rights, responsibilities, and division of costs with respect to the maintenance and prosecution of the '382 patent and other patents co-owned by the parties. Paragraph 5 establishes the rights, responsibilities, and division of costs with respect to bringing infringement actions against third parties.

The language of Paragraph 5 of the Co-Ownership Agreement is relevant to the present lawsuit. Paragraph 5 states:

Upon the discovery by any p...