United States District Court, D. Delaware
SANOFI-AVENTIS U.S. LLC, SANOFI-AVENTIS DEUTSCHLAND GMBH, and SANOFI WINTHROP INDUSTRIE, Plaintiffs,
MERCK SHARP & DOHME CORP., Defendant.
before the Court are Defendant's Motion for Summary
Judgment of Noninfringement (D.I. 180) and Plaintiffs'
Motion to Strike or, in the Alternative, for Leave to File a
Sur-Reply (D.I. 219). The issues have been fully briefed.
(D.I. 181, 197, 213, 219, 232, 235). For the reasons stated
herein, Defendant's Motion for Summary Judgment (D.I.
180) is DENIED. Plaintiffs' motion to
strike (D.I. 219) is DISMISSED AS MOOT.
September 16, 2016, Plaintiffs sued Defendant for patent
infringement. (D.I. 1). Plaintiffs' second amended
complaint accuses Defendant of infringing eleven
patents that relate to insulin drug formulations
and insulin injection pen devices. (D.I. 93, pp. 3-5; D.I.
181, p. 1).
issue here are the '044, '486, '069, '844,
'105, and '005 patents, which the parties refer to as
"the OB Pen Patents." (D.I. 181, p. 1; D.I. 197, p. 1).
Third-party Ypsomed AG ("Ypsomed") supplies
Defendant with components for Defendant's injection pen
devices. (D.I. 181, p. 1). Defendant contends that it does
not infringe the OB Pen Patents as a matter of law because in
February 2009, Sanofi-Aventis Deutschland GmbH
("Sanofi") and Ypsomed signed an agreement granting
Ypsomed a license to the rights under Plaintiffs'
European patent EP 1603 611 ("EP 611") and its
"equivalent patents" to manufacture and produce
components of the OB Pen Patents and sell them to third
parties. (Id.). Since Ypsomed has a license to the
disputed patents, Defendant argues, the doctrines of patent
exhaustion and implied license preclude a finding that
Defendant infringes. (Id. pp. 10-13). Plaintiffs
disagree with Defendant's interpretation of
"equivalent patents" and Defendant's conclusion
that the OB Pen Patents are licensed. (D.I. 197, pp. 1-2).
Plaintiffs assert, among other things, that the license is
invalid because it fails to specify which patents are
licensed and fails to specify a price term, both of which
Plaintiffs maintain are essential under German law.
(Id. p. 11).
to the February 2009 agreement, Ypsomed and Sanofi had
entered into other patent license agreements. In April 2008,
Ypsomed and Sanofi settled a patent dispute, entering into a
settlement agreement that also contained a provision under
which Ypsomed would supply Sanofi with components for
Plaintiffs' SoloSTAR® pen injector product. (D.I.
181, p. 3; D.I. 197, p. 2). The April 2008 "supply
agreement" granted Ypsomed a "non-exclusive,
worldwide, non-sublicensable and royalty free right to use
[Sanofi's] Intellectual Property Rights to the extent
strictly necessary for [Ypsomed] to carry out its
obligations" to supply components to Sanofi. (D.I. 201-2
at 11). Sanofi and Ypsomed entered into another agreement in
December 2008 to settle an opposition Sanofi had filed
against European patent EP 1 568 388 Bl ("EP 388"),
owned by Ypsomed. (D.I. 181, p. 4; D.I. 197, p. 3). The
December 2008 agreement granted Sanofi:
a non-exclusive, irrevocable and free of charge license under
TecPharma's Patent EP 1568 388 Bl and all world-wide
equivalents claiming the same priority (hereinafter referred
to as "Patent", Annex listing all Patent
application numbers) to manufacture, use, sell, promote
and/or distribute drug delivery devices to administer
pharmaceutical substances in the fields of diabetes and
thrombosis or any components or subassemblies thereof
(hereinafter referred to as "Device/s").
(D.I. 201-3 at 3). During negotiations for the December 2008
license, Ypsomed's initial proposal recited a license to
EP 388 only. (D.I. 182 at 343-45). Plaintiffs
counter-proposed expanding the license to include "all
world-wide equivalents claiming the same priority."
(Id. at 332-35, 338).
December 23, 2008, Ypsomed informed Sanofi that it intended
to file an opposition proceeding against EP 611 unless
Ypsomed and Sanofi could agree to a license. (D.I. 201-4 at
2). At that time Ypsomed provided a proposed license modeled
on the EP 388 agreement. (Id. at 2-4). On February
3, 2009, Sanofi responded, proposing an agreement under which
Ypsomed would agree not to challenge EP6ll and Sanofi would
grant Ypsomed immunity from a patent infringement suit by
Plaintiff. (D.I. 201-6 at 2, 4-5). Two days later, Sanofi
offered a second proposal which would grant Ypsomed a
royalty-free license to EP 611 and an option for a license on
"all world-wide equivalent patents claiming the same
priority as [EP 611], " specifying that, "The
Parties shall in good faith negotiations determine the scope,
terms and conditions of such a license." (D.I. 201-7 at
2, 4-5). Ypsomed responded the next day by proposing a
revised version of the agreement; one of the proposed
revisions was to convert the option to an irrevocable
nonexclusive license. (D.I. 201-8). In its response, Ypsomed
commented on some of the changes in its proposal, stating
that, "It is crucial for Ypsomed to include the right to
sell the Device to third parties, and to have a final
understanding on equivalent patents." (Id. at
2). Sanofi indicated that it was "willing to accept most
of [Ypsomed's] proposed changes, " but that it was
"important for [Sanofi] to point out that the
[provision] in Art. 1(2) shall not include competitors of
Sanofi-Aventis." (D.I. 201-9). Therefore, Sanofi
proposed a modification to § l(2) of the agreement
so that § 1(2) would read, "The license rights
granted under § 1(1) shall include the right to have
manufactured the Device by Affiliates of Ypsomed or by a
third party contractor." (Id. at 4; D.I. 182 at
381). Ypsomed did not explicitly take issue with Sanofi's
proposed restriction that the license not cover sales by
Ypsomed to competitors of Sanofi-Aventis. (See D.I.
201-10). Ypsomed did, however, take issue with the word
"contractor, " insisting that it be deleted
because, "If the patent lapses in the opposition
[Ypsomed] would not face any kind of a restriction of the
distribution rights to third party contractors."
(Id.). It thus appears as though Ypsomed opposed
Sanofi's proposed restriction, and any restriction that
would limit the entities to which Ypsomed could sell.
February 9, 2009, Sanofi and Ypsomed had both signed the
agreement. The agreement ultimately granted Ypsomed a
non-exclusive royalty-free license to EP 611 and a
non-exclusive royalty-bearing license to "all world-wide
equivalent patents claiming the same priority as [EP 611]
(hereinafter referred to as 'Equivalent/s')."
(D.I. 182 at 381-82). Section 1(2), which deals with the
royalty-free license to EP 611, does not include a
restriction relating to third party "contractors."
(Id. at 381 ("The license rights granted under
§ 1(1) shall include the right to have manufactured the
Device by Affiliates of Ypsomed or by a third party and shall
include the right to have sold, promoted and/or distributed
the Device by Affiliates of Ypsomed or by a third
party.") (emphasis omitted)). Section 2(2) of the
February 2009 agreement reflects that the parties did not
reach agreement on the details of the license to equivalent
patents, leaving "further details of such a license on
Equivalents" to subsequent "good faith
negotiations." (Id. at 382). The February 2009
agreement contains a provision selecting German law to govern
disputes arising under the agreement. (Id. at 383).
Despite this choice of law provision, the agreements appear
to have initially been drafted in English.
concluding the February 2009 agreement, Sanofi and Ypsomed
engaged in subsequent negotiations for a proposed
cross-license agreement in September 2011 (D.I. 201-13) and a
proposed license agreement in February 2015 (D.I. 201-12).
Ypsomed's September 2011 proposal contemplated a
cross-license to the WO2003075985 ("WO 985") and
WO2007115424 ("WO 424") patents and all of their
"world-wide equivalent patents and counterparts claiming
the same priority, including all existing and future
divisions, continuations, continuations in part, reissues,
re-examinations and utility models claiming the same
priority." (D.I. 201-13 at 8). Ypsomed's February
2015 proposal would have granted a "non-transferable,
world-wide and free of charge license under EP [2 600 922
("EP 922")] and all its equivalent patents, patent
applications, reissues, re-examinations, extensions,
divisions and continuations claiming the same priorities as
EP 922 (all together the 'Patent')." (D.I.
201-12 at 3).
asserts that the "equivalent patents" provision of
the February 2009 agreement grants Ypsomed a license to the
OB Pen Patents because the agreement "defines
'equivalent patents' as patents 'claiming the
same priority as [EP 611], '" and the OB Pen Patents
claim the same priority as EP 611. (D.I. 181, pp. 8-9).
Therefore, Defendant contends, summary judgment is
appropriate because Ypsomed's sale to Defendant of
injection pen device components manufactured under that
license exhausts Plaintiffs' patent rights in the
components sold. (Id. pp. 10-11). Plaintiffs submit
that I should deny summary judgment, arguing that the
"equivalent patents" in the license do not cover
the OB Pen Patents, and that the license is invalid under
German law. (D.I. 197, pp. 11, 14-15).
court shall grant summary judgment if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law."
Fed.R.Civ.P. 56(a). The moving party has the initial burden
of proving the absence of a genuinely disputed material fact
relative to the claims in question. Celotex Corp. v.
Catrett, 477 U.S. 317, 330 (1986). Material facts are
those "that could affect the outcome" of the
proceeding, and "a dispute about a material fact is
'genuine' if the evidence is sufficient to permit a
reasonable jury to return a verdict for the nonmoving
party." Lamont v. New Jersey, 637 F.3d 177, 181
(3d Cir. 2011) (quoting Anderson v. Liberty Lobby Inc.,
Ml U.S. 242, 248 (1986)). The burden on the moving party
may be discharged by pointing out to the district court that
there is an absence of evidence supporting the non-moving
party's case. Celotex, 477 U.S. at 323.
burden then shifts to the non-movant to demonstrate the
existence of a genuine issue for trial. Matsushita Elec.
Indus. Co. v. Zenith Radio Corp.,475 U.S. 574, 586-87
(1986); Williams v. Borough of West Chester, Pa.,891 F.2d 458, 460-61 (3d Cir. 1989). A non-moving party
asserting that a fact is genuinely disputed must support such
an assertion by: "(A) citing to particular parts of
materials in the record, including depositions, documents,
electronically stored information, affidavits or
declarations, stipulations ..., admissions, interrogatory
answers, or other materials; or (B) ...