In PharmaStem Therapeutics, Inc. v. Viacell, Inc., No. 05 Civ. 1490 and 1551 (Fed. Cir. July 9, 2007) (Newman, J., dissenting), the Court of Appeals for the Federal Circuit (CAFC) affirmed a district court’s judgment that PharmaStem's evidence of direct infringement failed to show that six defendants had infringed the claims of PharmaStem's patents. Id., slip. op. at 5. At issue were two patents--U.S. Patent No. 5,004,681 and U.S. Patent No. 5,192,553--that are directed to compositions and methods of treating persons with compromised blood and immune systems using hematopoietic stem cells, particularly cells obtained from umbilical cord blood. To prove direct infringement, PharmaStem was required to adduce evidence that the defendants’ cord blood units contained a sufficient supply of stem cells to effect successful reconstitution of an adult. Id.
To establish the sufficiency of the defendant's blood units, PharmaStem introduced at trial defendants' own advertising materials by way of expert opinion testimony. Upon defendants' motion for JMOL, the trial court excluded the expert's testimony, concluding that while PharmaStem's expert was "an accomplished stem cell biologist," she was not qualified as an expert in marketing or advertising and "her so-called analysis of the defendants’ marketing materials was well within the jury’s common knowledge, common sense and common experience." Id. at 6. The court then explained that PharmaStem had not attempted to prove by testing or by reference to data collected by the defendants that at least some of the cord blood samples preserved by the defendants satisfied the sufficiency requirement. Instead, the trial court noted, PharmaStem "adopted the strategy of trying to prove, principally through representations made by the defendants in their marketing materials and other documents, that all of the preserved cord blood samples infringed." Id. at 6-7.
The CAFC agreed with the district court, stating that PharmaStem's expert's "testimony [was] unhelpful to the jury, and not an appropriate subject for expert evidence, because it consisted almost entirely of her quoting from the promotional information and other materials in which the defendants described their business operations for potential customers and investors, and drawing inferences from those materials." Id. at 17. The CAFC also recognized PharmaStem's failure to establish through experimental evidence that any of the preserved cord blood samples contained sufficient stem cells to reconstitute an adult, stating:
"Because of the manner in which PharmaStem sought to prove infringement, it committed itself to a course that had 'all-or-nothing' consequences. The district court was correct to conclude that, having chosen not to try to prove that particular cord blood samples or categories of samples contained sufficient stem cells to effect hematopoietic reconstitution of an adult, PharmaStem took the risk that the court would conclude that it had failed to prove that any of the defendants’ cryopreserved samples infringed. The district court’s narrow disposition of the JMOL issue simply held PharmaStem to the consequences of the strategy it adopted at trial." Id.
Comments:
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The justifications for not conducting experiments to prove direct infringement are many, and often are based on a risk-benefit analysis involving, for example, the level of damages at stake in the litigation, the perceived strength of one's case-in-chief, the perceived validity or enforceability of the patents-at-suit, and the perceived value of the patents to the patentee. Other factors may include the cost and time needed to find and hire experts and conduct experiments, a recognition that experiments are often unpredictable (especially in the chemical arts), and the time investment relating to managing experts, which, if resources are limited, can distract from other matters needing attention.
According to court papers filed August 20, Plaintiffs Thirty Eight Street, Inc., and Vantage Hospitality Group, Inc. (formerly Best Value Inn Brand Membership, Inc.) are Florida entities that allegedly own the marks BEST VALUE INN, BEST VALUE (right), and AMERICAS BEST VALUE INN BY VANTAGE. Defendant State Line, LC, is reportedly a Hagerstown, Maryland-based entity. Defendant Bharat Patel is allegedly a Maryland resident and owns State Line LC. The filed Complaint alleges that Defendants infringed the asserted marks under 15 U.S.C. § 1114; violated the false advertising provisions of the Lanham Act, 15 U.S.C. § 1125(a); contributorily and/or vicariously infringed the marks; and violated several Maryland state statutes and common laws (e.g., Maryland Unfair or Deceptive Trade Practices Statute, unfair competition). Plaintiffs are seeking an injunction, destruction of advertising materials, and an award of monetary damages, among other requested relief.
