United States District Court, D. Massachusetts
ESOTERIX GENETIC LABORATORIES LLC, Plaintiff/Counterclaim Defendant,
QIAGEN INC. and QIAGEN MANCHESTER, LTD., Defendants/Counterclaim-Plaintiffs. and LABORATORY CORPORATION OF AMERICA HOLDINGS, Counterclaim Defendant,
MEMORANDUM AND ORDER
ALLISON D. BURROUGHS U.S. DISTRICT JUDGE
Esoterix Genetic Laboratories LLC (“Esoterix”)
filed this action against Defendants Qiagen Inc. and Qiagen
Manchester, LTD. (collectively, “Qiagen”),
alleging that Qiagen exceeded the scope of the parties'
License Agreement, and thereby infringed upon Esoterix's
patent rights. Esoterix's operative Complaint [ECF No. 7]
(“Compl.”), alleged 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).
moved to dismiss the Complaint, arguing that the
patent-in-suit, U.S. Patent No. 7, 294, 468 (the
“'468 Patent”), was invalid because it was
directed to a “law of nature, ” which is not
eligible for patent protection under 35 U.S.C. § 101. In
a Memorandum and Order dated September 25, 2015, the Court
found that the '468 Patent claims were drawn to
ineligible subject matter, and that the '468 Patent was
therefore invalid. See Esoterix Genetic Labs. LLC v.
Qiagen Inc., 133 F.Supp.3d 349 (D. Mass. 2015)
(hereinafter, “Qiagen I”). Accordingly,
the Court dismissed Count I of Esoterix's Complaint,
which alleged infringement of the '468 Patent.
Id. at 360-61. The Court, however, declined to
dismiss Esoterix's state-law claims alleged in Counts II,
III, and IV. Id. at 363-64.
filed an Amended Answer to the remaining claims. [ECF No.
109]. Qiagen also asserted counterclaims against Esoterix and
Esoterix's parent company, Laboratory Corporation of
America Holdings (“LabCorp”). See id.
(“Counterclaims”). Specifically, Qiagen seeks a
declaratory judgment of invalidity with respect to four
additional patents, which are related to the
'468 Patent; namely, U.S. Patent Nos. 7, 964, 349
(“the '349 Patent”); 8, 105, 769 (“the
'769 Patent”); 8, 465, 916 (“the '916
Patent”); and 9, 035, 036 (“the '036
Patent”). See Counterclaims, Counts II-V).
In addition, Qiagen seeks a declaratory judgment of
non-infringement with respect to the four additional patents
(Count VI), and a declaratory judgment regarding the
parties' respective contractual rights under the
operative License Agreement - specifically, that Qiagen does
not owe Esoterix any royalties, due to the invalidity of the
underlying Licensed Patents. Id. (Count I). Qiagen
also seeks restitution of all royalties it paid to Esoterix
under the Licensing Agreement after the date that Qiagen
first challenged the validity of the '468 Patent.
Id. (Count VII). Finally, Qiagen alleges claims
against Esoterix and LabCorp for tortious interference with
contractual relationships (Count VIII), and tortious
interference with prospective business relationships (Count
before the Court are (1) Qiagen's Motion for Judgment on
the Pleadings with respect to its Counterclaims [ECF No. 88];
and (2) Esoterix and LabCorp's Cross-Motion to Dismiss
Qiagen's Counterclaims. [ECF No. 98]. Qiagen asks the
Court to find that the four additional patents-in-suit are
ineligible for patent protection under 35 U.S.C. § 101
for essentially the same reasons that this Court invalidated
the '468 Patent. Esoterix and LabCorp, however, have
moved to dismiss all of Qiagen's Counterclaims, on the
grounds that this Court lacks subject matter jurisdiction
over them. In the alternative, Esoterix and LabCorp oppose
Qiagen's Motion for Judgment on the Pleadings, arguing
that the four additional patents-in-suit are drawn to
patentable subject matter under § 101.
reasons set forth in this Memorandum and Order, Esoterix and
LabCorp's Motion to Dismiss is DENIED, and
Qiagen's Motion for Judgment on the Pleadings is
Court briefly reviews the factual background of this case,
which is set forth in greater detail in the Court's prior
Memorandum and Order. See Qiagen I, 133 F.Supp.3d
'468 Patent, which is titled “Method to Determine
Responsiveness of Cancer to Epidermal Growth Factor Receptor
Targeting Treatments, ” claims a method for determining
whether particular types of pharmaceutical compounds 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 genes. See
'468 Patent; Compl. ¶¶ 21-24. 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 and Trademark
Office issued the '468 Patent on November 13, 2007.
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 practicing the claims of specific
patents set forth in Schedule A to the License Agreement,
including but not limited to the '468
Patent. In exchange for this license, DxS would
pay royalties on sales of its products, 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 LabCorp.
Id. ¶¶ 2, 21. LabCorp, in turn, created
Esoterix as a wholly-owned subsidiary, to control the
purchased assets. Thus, at all relevant times, Esoterix held
all right, title, and interest in the '468 Patent and
served as licensor under the License Agreement. Id.
Amended Complaint, Esoterix alleges that Qiagen exceeded the
scope of the license and breached certain promises made in
the License Agreement. 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 noncommercial 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.
Prior to regulatory approval and during the term of the
License Agreement, Qiagen paid Esoterix royalties for its
purported 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. Thus, Esoterix's Complaint asserts claims against
Qiagen for, inter alia, breach of the License
Agreement, infringement of the '468 Patent, violations of
Massachusetts General Laws Chapter 93A, and violations of the
duty of good faith and fair dealing.
September 25, 2015, the Court granted in part Qiagen's
Motion to Dismiss, holding that the claims of the '468
Patent were not directed to eligible subject matter under the
standard set forth in Alice Corp. v. CLS Bank
International, 134 S.Ct. 2347 (2014) and Mayo
Collaborative Services v. Prometheus Laboratories, Inc.,
132 S.Ct. 1289 (2012). See Qiagen I, 133 F.Supp.3d
at 359-60. The Court held that the method claimed in the
'468 Patent was directed to a “law of nature,
” because it “describes the correlation between a
naturally-occurring mutation in a cancer cell, and the
likelihood that a particular type of known pharmaceutical
compound will be effective in treating that type of
cancer.” Id. at 358. The Court also held that
there was nothing “transformative” in the claims
of the '468 Patent that amounted to a novel application
of the natural law, or that otherwise warranted patent
protection. Id. at 359. Instead, the Court held that
the method claimed in the '468 Patent (1) identifies a
law of nature that explains why a known cancer treatment is
more effective in treating a certain population of patients,
and (2) tells scientists and doctors that they can
“apply” that law of nature by testing for the
relevant gene mutations using methods well-known in the art.
Id. at 359. Thus, the Court concluded that the
'468 Patent was invalid, and dismissed Esoterix's
corresponding claim for infringement. Id. at 360-61.
The Court declined, however, to dismiss Esoterix's claims
for breach of the License Agreement, breach of the duty of
good faith and fair dealing, and violations of Chapter 93A,
holding that those claims did not depend on the validity of
the '468 Patent. See Id. at 363-64.
through its Counterclaims, now seeks a declaratory judgment
that four additional Licensed Patents are invalid, for the
same reasons the Court invalidated the '468 Patent.
See Counterclaims, ¶¶ 42-60. Qiagen
asserts that the four new patents-in-suit also fall within
the Patent Rights licensed in the 2008 License Agreement,
because they all claim priority to the patent application
that issued the'468 Patent. Qiagen also notes that all of
the Licensed Patents share “virtually identical
specifications, ” and that three out of the four
additional patents (i.e., the '349, the
'769, and the '916 Patents) claim the same method
recited in the '468 Patent, “albeit using slightly
broader or narrower (though equally ineligible)
language.” Qiagen further argues that the fourth,
'036 Patent, is equally ineligible because it merely
claims “a kit for practicing the methods of the
invention, ” and is thus directed to the same natural
law as the '468 Patent.
also seeks a declaratory judgment regarding the parties'
respective rights under the Licensing Agreement -
specifically, that because the Licensed Patents are all
invalid, Qiagen is not contractually obligated to pay
royalties under the terms of the License Agreement, and is
entitled to recoup all royalties that it paid (under
protest), after the date Qiagen first challenged the validity
of the '468 Patent. See Counterclaims,
¶¶ 35-41, 65-74.
also asserts a claim for declaratory judgment of
non-infringement, arguing that “even absent
Qiagen's rights under the License Agreement, ” its
test kits do not infringe the claims of the four additional
patents-in-suit. Id. ¶¶ 61-64.
Qiagen alleges that Esoterix and LabCorp wrongfully
interfered with Qiagen's customer relations. Id.
¶¶ 75-90. Specifically, Qiagen alleges that
Esoterix and LabCorp sent letters to third parties who had
purchased test kits from Qiagen, informing them that Esoterix
and LabCorp held the patent rights to the Licensed Patents,
and instructing the third parties to contact LabCorp to
discuss the matter. Id. ¶¶ 30-32. These
letters allegedly failed to mention that LabCorp knew the
customer had purchased the test kits from Qiagen, a licensee.
Further, LabCorp and Esoterix allegedly continued to send
these letters even after the FDA granted regulatory approval
for commercial sales of the test kits in July 2013, which
gave Qiagen the right to sell the kits for all licensed uses.
Id. ¶ 32. Qiagen alleges that these letters
were improper in motive or means, in that they did not
mention Qiagen's license, and were designed to deter
third parties from doing business with Qiagen. Id.
MOTION TO DISMISS FOR LACK OF SUBJECT MATTER
threshold matter, Esoterix and LabCorp argue that this Court
lacks subject matter jurisdiction over Qiagen's
Counterclaims and should therefore decline to reach the
invalidity issue raised in Qiagen's Motion for Judgment
on the Pleadings. Specifically, Esoterix and LabCorp contend
that in January 2016, they gave Qiagen a “covenant not
to sue on the Patents, ” which had the effect of
eliminating any case or controversy between the parties
concerning the patents-in-suit, and depriving the Court of
Article III jurisdiction over Qiagen's Counterclaims.
III, Section 2 of the United States Constitution
“limits the exercise of judicial power to
‘cases' and ‘controversies.'”
Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 239
(1937). In this case, Qiagen's counterclaims for
declaratory judgment arise out of the Declaratory Judgment
Act, which provides that:
[i]n a case of actual controversy within its jurisdiction . .
. any court of the United States, upon the filing of an
appropriate pleading, may declare the rights and other legal
relations of any interested party seeking such ...