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Celsis in Vitro, Inc. v. CellzDirect, Inc.

United States District Court, N.D. Illinois, Eastern Division

March 13, 2015

CELSIS IN VITRO, INC., Plaintiff,
v.
CELLZDIRECT, INC., a Delaware Corporation and wholly-owned subsidiary of INVITROGEN CORPORATION; and INVITROGEN CORPORATION, a Delaware Corporation, Defendants

For Celsis Holdings, Inc., In Vitro, Inc., Plaintiffs: Jordan A. Sigale, LEAD ATTORNEY, Adam Glenn Kelly, Julie Lynn Langdon, Loeb & Loeb LLP, Chicago, IL.

For CellzDirect, Inc., a Delaware Corporation and wholly-owned subsidiary, Defendant: C. Kevin Speirs, David G. Mangum, Francis M. Wikstrom, Michael R Mccarthy, Ii, PRO HAC VICE, Parsons, Behle & Latimer, Salt Lake City, UT; Jonathan Andrew Muenkel, Scott Miller, PRO HAC VICE, Life Technologies Corp., Carlsbad, CA; Rip Finst, PRO HAC VICE, Carlsbad, CA; Robert David Donoghue, Holland & Knight LLP, Chicago, IL.

For Invitrogen Corporation, a Delaware Corporation, Defendant: Francis M. Wikstrom, Michael R Mccarthy, Ii, PRO HAC VICE, Parsons, Behle & Latimer, Salt Lake City, UT; Jonathan Andrew Muenkel, Scott Miller, PRO HAC VICE, Life Technologies Corp., Carlsbad, CA; Rip Finst, PRO HAC VICE, Carlsbad, CA; Robert David Donoghue, Holland & Knight LLP, Chicago, IL.

For In Vitro, Inc., Counter Defendant: Jordan A. Sigale, LEAD ATTORNEY, Adam Glenn Kelly, Julie Lynn Langdon, Loeb & Loeb LLP, Chicago, IL.

For Invitrogen Corporation, a Delaware Corporation, CellzDirect, Inc., a Delaware Corporation and wholly-owned subsidiary, Counter Claimants: Michael R Mccarthy, Ii, PRO HAC VICE, Parsons, Behle & Latimer, Salt Lake City, UT; Rip Finst, PRO HAC VICE, Carlsbad, CA; Robert David Donoghue, Holland & Knight LLP, Chicago, IL; Scott Miller, PRO HAC VICE, Life Technologies Corp., Carlsbad, CA.

MEMORANDUM OPINION AND ORDER

Milton I. Shadur, Senior United States District Judge.

Defendants CellzDirect, Inc. and Invitrogen Corp. (hereafter collectivized as " LTC," the corporation that has succeeded to their interests) bring a motion for summary judgment of patent invalidity under 35 U.S.C. § § 101 and 112 (Dkt. 335).[1] Also pending is LTC's Motion To Limit Damages to a Reasonable Royalty on LTC's Accused Sales (Dkt. 337). Because this Court finds the patent at issue invalid under Section 101, LTC's Dkt. 335 motion is granted and its second Dkt. 337 motion is consequently denied as moot.

Standard of Review

Every Rule 56 movant bears the burden of establishing the absence of any genuine issue of material fact (Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)).[2] For that purpose courts consider the evidentiary record in the light most favorable to nonmovants and draw all reasonable inferences in their favor (Lesch v. Crown Cork & Seal Co., 282 F.3d 467, 471 (7th Cir. 2002)). But a nonmovant must produce more than " a mere scintilla of evidence" to support the position that a genuine issue of material fact exists (Wheeler v. Lawson, 539 F.3d 629, 634 (7th Cir. 2008)) and " must come forward with specific facts demonstrating that there is a genuine issue for trial" (id.). Ultimately summary judgment is warranted only if a reasonable jury could not return a verdict for the nonmovant (Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). What follows is a summary of the facts,[3] viewed in the light most favorable to nonmovant Celsis.

Whether a patent is valid under either Section 101 or Section 112 is a question of law (Fort Properties, Inc. v. Am. Master Lease LLC, 671 F.3d 1317, 1320 (Fed. Cir. 2012) as to Section 101 and Microprocessor Enhancement Corp. v. Texas Instruments Inc., 520 F.3d 1367, 1374 (Fed. Cir. 2008) as to Section 112). And because there is a statutory presumption of patent validity, LTC must prove invalidity by clear and convincing evidence (Trimed, Inc. v. Stryker Corp., 608 F.3d 1333, 1340 (Fed. Cir. 2010)), at least with respect to Section 112. Although a recent concurring opinion in Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 720-21 (Fed. Cir. 2014) has suggested that no such presumption attaches to patent eligibility -- and hence to patent validity -- under Section 101, this opinion need not pause to consider that possibility, for the well-settled facts compel a finding of invalidity under Section 101 regardless of which standard this Court applies.

Facts

United States Patent No. 7,604,929 (" the '929 Patent," LTC St. Ex. A) protects several variants on a claimed process for cryogenically freezing hepatocytes (a type of liver cell). Hepatocytes are useful for a variety of testing, diagnostic and treatment purposes (id. at col. 5 ll. 26-27), but before Celsis' innovation there were significant problems with using hepatocytes for those purposes (id. at col. 2 l. 22 to col. 3 l. 67). First, hepatocytes have a short lifespan, and their supply is inconsistent because it is dependent upon the availability of liver cells (id. at col. 2 ll. 30-32). Moreover, to test drugs accurately researchers prefer to use pools of hepatocytes from many different liver donors (id. at col. 3 ll. 33-49). But until Celsis's contribution, pooling hepatocytes from different donors was difficult due to the erratic supply and short lifespan of the cells (id. at col. 3 ll. 49-52).

Accordingly scientists sought ways to cryopreserve hepatocytes for later use (id. at col. 2 ll. 36-40), but both scientists and researchers found that cryopreservation significantly decreased cell viability (id. at col. 3 ll. 5-8). Prevailing wisdom therefore taught that cells could be frozen only once and then had to be used or discarded (LTC St. Ex. B [" Hardy Dep." ] 129:2-129:6). That severely limited the creation of pooled hepatocyte products ('929 Patent col. 3 ll. 30 to col. 4 ll. 6).

Essentially the method taught in the '929 Patent shows that cells can be frozen and refrozen without losing significant cell viability, so that pooled hepatocyte products are far more readily attained ('929 Patent col. 3 l. 61 to col. 4 l. 6). That process can be summarized as (1) thawing previously frozen cells, (2) separating nonviable cells from viable ones using " density gradient fractionation (especially Percoll density centrifugation)" and (3) refreezing the cells (id. at col. 4 ll. 38-50). With nonviable cells separated out, the resulting cell preparation contains a higher concentration of viable cells that can be subjected to repeated cryopreservation and thawing for drug testing and other purposes (C. Resp. ¶ ¶ 14-16; '929 Patent col. 9 l. 61 to col. 10 l. 67). Co-inventor James Hardy stated that the enhanced viability of the solution is attributable to a change in ratios: Reducing the raw number of nonviable cells in the solution necessarily increases the ratio of viable cells to overall cells in the solution. Hardy could not confirm that the process improved the health of any one individual viable cell (C. Resp. ¶ ¶ 14-16), though he did note that dead and dying cells can release harmful substances into cell solutions, so that removing nonviable cells benefits the population of viable cells (C. Resp. Ex. 37 49:25-50:6).

Here is the relevant language of Claim 1 ('929 Patent at col. 19 l. 55 to col. 20 l. 20), which is also representative of the other claims at issue:

1. A method of producing a desired preparation of multi-cryopreserved hepatocytes, said hepatocytes, being capable of being frozen and thawed at least two times, and in which greater than 70% of the hepatocytes of said preparation are viable after the final thaw, said method comprising:
(A) subjecting hepatocytes that have been frozen and thawed to density gradient fractionation to separate viable hepatocytes from non-viable hepatocytes,
(B) recovering the separated viable hepatocytes, and
(C) cryopreserving the recovered viable hepatocytes to thereby form said desired preparation of hepatocytes without requiring a density gradient step after thawing the hepatocytes for the second time, wherein the hepatocytes are not plated between the first and second cryopreservations, and wherein greater than 70% of the hepatocytes of said preparation are viable after the final thaw.

As for the process involved in twice cryopreserving hepatocytes, it duplicated the technique used for single cryopreservation: subjecting the cells to density gradient fractionation (to sort out the viable from the nonviable cells) and then freezing them (Hardy Dep. 129:18-130:6; LTC St. ¶ ¶ 8-12).

Armed with the discovery that cells were capable of being twice frozen, Celsis built on that prior art method by repeating it. As Hardy himself admitted in his deposition, the critical advance was the discovery that cells could be frozen more than once and still retain viability ((Hardy Dep.. 127:9-131:21) (emphasis added)):

A: My recollection, I haven't thought about this in awhile, but I think initially we just proved that you could twice freeze the cells and still have viable cells. And then we added Percoll, later, because we wanted the viable cell count to be higher, you know, what our standard specification was above 70 ...

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