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Janssen Biotech, Inc. v. Celltrion Healthcare Co., Ltd.

United States District Court, D. Massachusetts

October 31, 2017

JANSSEN BIOTECH, INC., Plaintiff,
v.
CELLTRION HEALTHCARE CO., LTD., ET AL., Defendants.

          MEMORANDUM AND ORDER

          WOLF, D.J.

         I. INTRODUCTION

         Plaintiff Janssen Biotech, Inc. ("Janssen") alleges that defendants Celltrion Healthcare, Co., Ltd. and Celltrion, Inc. (together, "Celltrion"), and Hospira, Inc. ("Hospira") have infringed U.S. Patent No. 7, 598, 083 (the "'083 Patent"). Defendants have moved to dismiss for lack of standing. They claim that Janssen lacks standing because it is not the sole owner of the •083 Patent and the other co-owners have not joined Janssen as plaintiffs as required by Section 262 of the Patent Act, 35 U.S.C. §262. See Ethicon, Inc. v. U.S. Surgical Corp., 135 F.3d 1456, 1467 (Fed. Cir. 1998). In particular, defendants allege that the inventors, in a series of employee secrecy agreements (the "Agreements"), assigned the rights to the '083 Patent to more than 200 other companies, including Johnson and Johnson ("J&J") and its subsidiaries and affiliates.

         The court, however, finds that the Agreements assigned the patent rights to Janssen's predecessor Centocor, Inc. ("Centocor") alone. Therefore, Janssen is the sole owner of the '083 Patent and is not required to join any other party to maintain this action. Accordingly, the motion to dismiss is being denied.

         II. THE COMPLAINT AND PROCEDURAL HISTORY

         A. The Complaint

         The facts as alleged in the complaint are as follows.

         Janssen produces Remicade, a biologic medicine whose active ingredient is a monoclonal antibody called infliximab. See Compl. at SISI38. Growing the cells that produce biologic medicines like infliximab requires a composition called "cell culture media." Janssen alleges that it holds the '083 Patent. The patent claims a "soluble composition suitable for producing a final volume of cell culture media, " and lists 61 ingredients in varying concentrations. Compl. Ex. A. It names as inventors David Epstein, Roger Monsell, Joseph Horowitz, Susan Lenk, Sadettin Ozturk, and Christopher Marsh. See id. Centocor, Janssen's predecessor, is named as the assignee. See id.

         Celltrion produces a biosimilar to Remicade called Inflectra, which received Food and Drug Administration ("FDA") approval on April 5, 2016. See id. at ¶ 52. Third-party HyClone makes the cell culture media that Celltrion uses to produce its biosimilar infliximab product. Id. at ¶ 7. Hospira collaborates with Celltrion to market Inflectra. See id. at 59. Plaintiff alleges that Celltrion infringes the '083 Patent by employing HyClone to manufacture the media under Celltrion*s direction and control, and by inducing HyClone to infringe the patent.[1] See id. at 551, 101, 111. It alleges that Hospira is liable for Celltrion's actions as a joint venturer and induces Celltrion to infringe the patent by ordering Inflectra from it, among other things. See id. at 583.

         B. Procedural History

         On March 6, 2015, plaintiff initiated Civil Action No. 15-10698 (the "2015 Action") alleging, among other things, technical infringement of the '083 Patent under the Biologies Price Competition and Innovation Act.[2] On June 14, 2016, after obtaining more information in discovery, plaintiffs filed a second action alleging actual infringement of the '083 Patent under the Patent Act, 35 U.S.C. §271(a) and (b) . The cases were consolidated and scheduled for trial beginning on February 13, 2017.

         At a January 18, 2017 scheduling conference, the parties requested that the court address certain legal issues concerning the appropriate measure of damages and plaintiffs' entitlement to a permanent injunction if defendants were found to have infringed the '083 Patent. The court subsequently ordered the parties to file memoranda addressing these issues.

         In their memorandum, defendants argued for the first time that Janssen failed to join all co-owners of the '083 Patent in either action and, therefore, lacked standing. In particular, defendants argued that four of the inventors of the '083 Patent had, in their Agreements with Centocor, assigned their rights to the '083 Patent not only to Janssen's predecessor, Centocor, but also to Janssen's parent, J&J, and all of J&J's subsidiaries and affiliates (together, the "J&J Family" of companies) . As explained earlier, a plaintiff's failure to join all co-owners in an action for patent infringement requires dismissal without prejudice for lack of jurisdiction. See Ethicon, 135 F.3d at 1467.

         On February 8, 2017, the court heard oral argument on the issue of standing and found that the Agreements, which did not clearly assign patent rights to Janssen's predecessor Centocor, raise serious questions concerning its jurisdiction. As the parties agreed, those questions required the postponement of trial to permit the filing of a motion to dismiss for lack of jurisdiction and limited additional discovery.

         On February 22, 2017, plaintiffs filed a motion to dismiss the 2015 and 2016 Actions for lack of standing due to plaintiffs1 alleged failure to join all co-owners of the '083 Patent. The parties conducted limited discovery in connection with that motion. On March 6, 2016, Janssen and J&J entered into an agreement that states that Janssen is the sole owner of the '083 Patent, and that neither J&J nor any of its operating companies ever owned any interest in the '083 patent. See C.A. No. 15-10698, Docket No. 521-7. Janssen filed that agreement on March 8, 2017 with its opposition to the motion to dismiss. See id.

         On June 30, 2017, before briefing concerning the motion to dismiss was complete, the parties agreed to the dismissal of all of the claims for infringement of the '083 Patent in the 2015 Action and the complete 2016 Action, each without prejudice. See C.A. No. 15-10698, Docket No. 582 at 2-3.

         On May 31, 2017, Janssen filed this case. Defendants again moved to dismiss, arguing that the court lacks jurisdiction unless Janssen joins each of the more than 200 members of the J&J Family that defendants assert are co-owners of the '083 Patent. On October 13, 2017, the court heard oral argument on the motion.

         III. LEGAL STANDARDS

         A. Motion To Dismiss for Lack of Subject Matter Jurisdiction

         The court must satisfy itself that it has subject-matter jurisdiction before the merits of this case can be decided. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94-95 (1998). When, here, "the facts relevant to the jurisdictional inquiry are not intertwined with the merits of the plaintiff's claim...the trial court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case." Torres-Negron v. J & N Records, LLC, 504 F.3d 151, 163 (1st Cir. 2007); see also DDB Techs., L.L.C. v. MLB Advanced Media, L.P, 517 F.3d 1284, 1291-92 (Fed. Cir. 2008).

         B. Standing

         To establish that the court has subject matter jurisdiction, the plaintiff has the burden of proving by a preponderance of the evidence that it has standing to sue. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992).

         One co-owner acting alone lacks standing and must "join as plaintiffs all co-owners" of the patent. Ethicon, 135 F.3d at 1467 (citing Waterman v. Mackenzie, 138 U.S. 252, 255 (1891)). In addition, any co-owners must ordinarily consent to join an infringement suit and cannot be joined involuntarily under Federal Rule of Civil Procedure 19. See STC.UNM v. Intel Corp., 754 F.3d 940, 945-46 (Fed. Cir. 2014). In Ethicon, the Federal Circuit characterized this standing requirement as "a matter of substantive patent law, " which gives "one co-owner...the right to impede the other co-owner's ability to sue infringers by refusing to voluntarily join in such a suit." 135 F.3d at 1468 (citing 35 U.S.C. §262). The rule protects alleged infringers from being subject to multiple lawsuits, and potentially conflicting rulings and judgments. See IpVenture, Inc. v. Prostar Computer, Inc., 503 F.3d 1324, 1325 (Fed. Cir. 2007) (citing Indep. Wireless Tel. Co. v. Radio Corp. of Am., 269 U.S. 459, 468 (1926)).

         C. Interpretation of Patent Assignments

         Patent owners may assign or transfer their ownership interests in a patent as personal property. See 35 U.S.C. §261. Section 261 provides that patents "shall be assignable in law by an instrument in writing" which may "take the form of a patent license or any other written instrument that transfers patent rights." Morrow v. Microsoft Corp., 499 F.3d 1332, 1337 n. 3 (Fed. Cir. 2007) . "State law governs contractual obligations and transfers of property rights, including those relating to patents." Regents Of Univ. Of New Mexico v. Knight, 321 F.3d 1111, 1118 (Fed. Cir. 2003). "[The Federal Circuit] treats an agreement granting patent rights as a contract and interpret[s] its terms consistent with the choice of law provision in the agreement in question." Diamond Coating Techs., LLC v. Hyundai Motor Am., 823 F.3d 615, 618 (Fed. Cir. 2016).

         In this case, the relevant Agreements state that New Jersey law governs their terms. See Exhibit A to the Declaration of Kenneth Dow (Docket No. 27-1) at 3, 6, 10, and 14 of 15. In interpreting a contract under New Jersey law, the court must "discern and implement the common intention of the parties." McMahon v. City of Newark, 195 N.J. 526, 546 (2008). However, "a contracting party is bound by the apparent intention he outwardly manifests to the other contracting party. To the extent that his real, secret intention differs therefrom, it is entirely immaterial." Frangella v. Frangella, 2013 WL 4792863, at *5 ( N.J.Super.Ct.App.Div. 2013). Therefore, the court's role is to "consider what is written in the context of the circumstances at the time of drafting and to apply a rational meaning in keeping with the expressed general purpose." McMahon, 195 N.J. at 546 (emphasis added). "The quest is for the reasonably certain meaning of the language used, taken as an entirety, considering the situation of the parties, the attendant circumstances, the operative usages and practices, and the objects the parties were striving to achieve." George M. Brewster & Sion, Inc. v. Catalytic Constr. Co., 17 N.J. 20, 32 (1954); accord Manahawkin Convalescent v. O'Neill, 217 N.J. 99, 118 (2014)("Courts enforce contracts based on the intent of the parties, the express terms of the contract, surrounding circumstances and the underlying purpose of the contract. ").

         "When the terms of [a] contract are clear, " the court must "enforce it as written and not...make a better contract for either of the parties, " as "the parties are entitled to make their own contracts." McMahon, 195 N.J. at 545-46. A contract is not "clear" and is instead ambiguous "if its terms are susceptible to at least two reasonable alternative interpretations, or when it contains conflicting terms." Woodhaven Lumber & Millwork, Inc. v. Monmouth Design & Development Co., Inc., 2014 WL 1326994, at *6 ( N.J.Super.Ct.App.Div. 2014); 5907 Blvd. L.L.C. v. W. N.Y. Suites, L.L.C., 2013 WL 3762695, at *4 ( N.J.Super.Ct.App.Div. 2013). If the contract is ambiguous, the court must give the contracting "parties' practical construction of the contract... controlling weight in determining a contract's interpretation." Cty. of Morris v. Fauver, 153 N.J. 80, 103 (1998).

         "To determine whether a contract is ambiguous, " and "to discover the intention of the parties, " courts may consider evidence outside the text of the contract. Frangella, 2013 WL 4792863, at *5 (citing Conway v. 287 Corp. Ctr. Assocs., 187 N.J. 259, 268-69 (2006)) . Such extrinsic evidence includes "the circumstances leading up to the formation of the contract, custom, usage, and the interpretation ...


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