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Roche Diagnostics Corp. v. Meso Scale Diagnostics, LLC

United States District Court, D. Delaware

September 13, 2019

ROCHE DIAGNOSTICS CORP., Plaintiff,
v.
MESO SCALE DIAGNOSTICS, LLC, Defendants. MESO SCALE DIAGNOSTICS, LLC, Counterclaim Plaintiff
v.
ROCHE DIAGNOSTICS CORP. and BIOVERIS CORPORATION Counterclaim Defendants

          MEMORANDUM ORDER

          HONORABLE LEONARD P. STARK, UNITED STATES DISTRICT JUDGE

         Pending before the Court is Roche Diagnostic Corp.'s ("Roche") motion for summary judgment.[1] (D.I. 170) The motion asks the Court to hold that Meso Scale Diagnostics, LLC ("Meso") is foreclosed from: (1) asserting direct and indirect infringement for sales to Roche's dual-use customers; (2) arguing that Roche's ProCell reagent is part of a "kit;" (3) arguing that a claimed Y-Linker element refers to a pre-bound linker; and (4) arguing that Roche's electrodes are "disposable."

         Having considered the parties' briefing (D.I. 171, 192, 204) and related materials, and having heard oral argument on July 23 ("Tr."), [2] IT IS HEREBY ORDERED that Roche's motion (D.I. 170) will be GRANTED IN PART and DENIED IN PART. Certain issues presented in the motion will also remain under advisement, pending the Court's review of supplemental briefing being ordered, as explained below.

         1. The parties' dispute with respect to direct infringement for dual-use customers turns on the meaning of a 2003 License Agreement ("2003 Agreement") between IGEN and Roche, [3] in which Roche was granted "only for use in the Field[4], an irrevocable, perpetual, Non-Exclusive ... license under the Licensed ECL Technology." (D.I. 175-1 Ex. 30 at A-1133, § 2.1) Stated differently, Roche was permitted to sell products covered by IGEN's patents for certain "in-field" use, but not for "out-of-field" use. (Id. at A-1133) It is undisputed that some of Roche's sales were to customers who used the product both in-field and out-of-field. (D.I. 171 at 9-10) The parties refer to such customers as dual-use customers.

         The issue presented by the motion is whether Roche is liable for sales to dual-use customers. The 2003 Agreement, in defining "Field," provides in pertinent part:

in the event a Product that has been sold or placed solely for the [in-field] uses specified [] above, is incidentally used outside those specified uses without the knowledge or consent of LLC or any of its Affiliate Sublicensees (without a duty to inquire or investigate), then such incidental use shall be considered inside the Field and such sale or placement shall not retroactively be considered outside the Field.

(Id. at A-1131-32, § 1.7(c)) (emphasis added) It is undisputed that Roche consented to the 2003 Agreement, including this definition of "Field." (Id. at A-1153)

         In earlier litigation (involving the same parties here) in the Delaware Court of Chancery, Vice Chancellor Parsons had this to say about the "Field" provision of the 2003 Agreement: "Meso conceivably may have viable [patent] infringement or other claims against Roche for its actions since 2007, when it allegedly began operating deliberately outside of the Field." Meso Scale Diagnostics, LLC v. Roche Diagnostics GmbH, 2014 WL 2919333, at *28 (Del. Ch. June 25, 2014), aff'd, 116 A.3d 1244 (Del. 2015) (emphasis added). The Vice Chancellor's statement was dicta. See Id. ("The question of whether Roche infringed on Meso's ECL-related intellectual property rights, however, is distinct from, and has no bearing on, the breach of contract claim that Meso pursued at trial in this litigation.") (emphasis added). Still, Roche now seizes on this language to argue that is liable only for deliberate out-of-field sales - and, therefore, not for dual-use customers (as their out-of-field use was incidental and not known by or consented to by Roche). (D.I. 171 at 14-16)

         This Court is not bound by the Chancery Court's interpretation of the Field provision. Nevertheless, having undertaken an independent review of the 2003 Agreement, the Court (consistent with the view of Vice Chancellor Parsons) concludes that, due to the "Field" provision, Roche may be liable only for deliberate out-of-field sales, where "deliberate" is defined as "non-incidental, and with knowledge or consent." (D.I. 175-1 Ex. 30 at A-1131-32) Thus, Meso cannot prove infringement merely by pointing to sales to dual-use customers; it must also show that Roche knew, at the time of sale, those dual-use customers would non-incidentally use the product out-of-field. Otherwise, the sale cannot be the basis for a finding of patent infringement. (Id. at A-1131 -32)

         In opposing this conclusion, Meso faults Roche's reliance on § 2.5 of the Agreement - an enforcement mechanism whereby 65% of out-of-field sales would be paid to IGEN - a provision to which Meso asserts it did not consent. (D.I. 192 at 8-10) Even assuming arguendo that Meso did not consent to § 2.5, Meso indisputably consented to § 2.1 (the license rights) (D.I. 192 at 9), which incorporates the definition of "Field" from § 1.7. In this way, through § 2.1, Meso in effect "grant[ed] Roche a[] license to make non-deliberate out-of-field sales." (D.I. 192 at 9)

         Meso also argues that a second license agreement between IGEN and Roche in 2007 ("2007 Agreement") superseded the 2003 Agreement. (D.I. 192 at 10) However, the section of the 2007 Agreement upon which Meso relies is no more than an integration clause. (D.I. 192-1 Ex. 6 at 14, § 13.10) More pertinent is Section 13.8 of the 2007 Agreement, which expressly states "the terms of this Agreement do not amend or supersede, and shall not be used to interpret, the terms of the Existing License . .. dated as of July 24, 2003 [i.e., the 2003 Agreement]." (Id.) (emphasis added) Based on this explicit language, the Court concludes that the 2007 Agreement did not supersede the 2003 Agreement.

         Based on the briefing to date and oral argument, it is unclear how Meso believes the record contains evidence from which a reasonable fact finder could find that Roche had knowledge of non-incidental out-of-field use by dual-use customers. Meso will be provided a limited, final opportunity to brief this point. The schedule and length for such briefing is included at the end of this Order.

         2. Roche's motion for summary judgment directed at inducing infringement by dual-use customers is DENIED.

         "In order to succeed on a claim of inducement, the patentee must show, first that there has been direct infringement," and "second that the alleged infringer knowingly induced infringement and possessed specific intent to encourage another's infringement." Minn. Mining & Mfg. Co. v. Chemque, Inc.,303 F.3d 1294, 1304-05 (Fed. Cir. 2002). The principal dispute here relates to how the rights granted under the 2003 Agreement to Roche interact with what Meso must show to prove Roche met the intent element of induced infringement. (Compare D.I. 171 at 18-19 with D.I. 192 at 13) Roche contends that Meso must prove that Roche intended to encourage dual-use customers' out-of-field use. Meso counters ...


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