Systems, Inc. v. Top Stamp, Inc., 926 F. Supp. 466 (D.N.J. 1996)), but it also bears the initial burden of establishing a prima facie case of nexus between the secondary characteristic -- commercial success -- and the merits of the claimed invention. In re GPAC Inc., 57 F.3d 1573, 1580 (Fed. Cir. 1995). Thus, the patentee bears the initial burden of demonstrating both that there is a commercial success and that there is a nexus between that which is patented and that which is sold." Demaco Corp. v. F. Von Langsdorff Licensing Ltd., 851 F.2d 1387, 1392 (Fed. Cir. 1988).
In the instant case, Boehringer's vaccines, RespPRRS TM and RespPRRS/Repro TM are the single largest selling veterinary vaccine in the United States. They are produced by growing the virus on a monolayer of MA-104 simian cell line at temperature of 34 to 37 degrees in suitable growth medium and in presence of Bovine calf serum until at least 10% CPE is observed. This production process is subsumed within the definition of the '778 Patent and therefore, the court finds a direct nexus. Therefore, the court acknowledges that Boehringer's commercial success weighs in favor of nonobviousness.
. Failure of others to Solve the PRRS mystery
Additionally, Boehringer has argued that "long felt need for a PRRS vaccine" and the failure of others to solve the PRRS mystery supports a nonobvious determination.. See Plaintiff's Br. at 14; Plaintiff's Reply Br. at 14; Boehringer Finding No. 193. I find that while a need existed, it has been embellished. In the late 1980's, PRRS became a devastating disease and as Schering noted, "demanded the attention and effort of every segment of the swine industry." See Boehringer Finding No. 16, 17 (citing Plaintiff's Ex. 20 Schering's "Animal Health Forum" at 1). Because the disease confounded the scientific community and because Boehringer's did not manufacture a vaccine until 1994, Boehringer argues that a "long felt need existed." That claim is somewhat exaggerated. Boehringer's story should be contrasted with other illuminating facts. The disease first became "alarming" in 1988. Boehringer isolated the virus in 1991, three years later. The attenuation process which eventually produced the vaccine was time consuming and was completed in 1994. Thus, while there was definitely a need to isolate the virus, it should not be characterized as long felt.
. Evidence of Copying
Evidence of copying is a relevant secondary characteristic which should be considered. Boehringer has argued that one of Schering's scientists, Dr. Richard Hesse, copied Boehringer's method of isolating PRRS on simian cell lines. See Boehringer Finding No. 72-80. In September 1991. Hesse attended the Minnesota Swine Conference where Drs. Collins, Benfield and Harris reported on their progress in isolating and characterizing the PRRS virus. Dr. Benfield showed slides of the PRRS virus growing, but he did not identify the cell line. Boehringer has alleged that Hesse studied the slide and eventually figured out that Boehringer was using MA-104 cell lines. Schering did not initially isolate the virus on simian cells, but it used MA-104 at later passages. Essentially, Boehringer believes that Hesse's attendance at the conference evidences copying.
That Hesse attended the conference cannot confirm Boehringer's accusation. It is one thing to be intellectually stimulated and inspired by a speech made at a conference; it is another to equate that occurrence with evidence of copying. Certainly, the speech at the conference was illuminating, but without any direct or concrete evidence whatsoever, this court cannot conclude that Hesse copied Boehringer's method.
Although the secondary characteristics add weight to Boehringer's claim, it does not tip the scale in the plaintiff's favor. At this preliminary stage, the court need not conclusively resolve the validity question, but rather, it must "make an assessment of the persuasiveness of the challenger's evidence recognizing that it is doing so without all evidence that may come out at trial " New England Braiding, supra, at 883. The court may deny a preliminary injunction because the evidence raises a substantial question even though the defense may not be "entirely fleshed out." See Id. Based upon the prior art discussion, one cannot ignore that Schering's defense raises substantial questions about the validity of the '778 Patent. Proof of commercial success cannot turn the tide in this case. Therefore, Boehringer has not satisfied its burden of proving likelihood of success.
b. Other Validity Arguments -- Schering's Inventorship Claims
In light of my conclusion that Schering has raised a substantial defense with respect to obviousness, I need not consider other validity arguments. Nevertheless, it is worth noting that under two different yet related legal theories which I will discuss below, Schering argues that Boehringer's patent does not name all of the proper inventors and is therefore invalid and unenforceable. Specifically, the '778 Patent named Danny Chladek, David Gorcyca, Louis Harris, but not James Collins and David Benfield, even though the latter two worked with Boehringer on PRRS. Boehringer has named the two scientists as inventors on other PRRS related patent applications, but not the '778 Patent. See Boehringer Finding No. 68 Before getting together with Boehringer, Collins and Benfield produced a tissue homogenate from which an inoculum could be prepared, but they had not discovered a receptive cell line to grow the virus. Collins sent his inoculum samples to Boehringer and Boehringer's scientists observed CPE on a partial cell line derived from a monkey kidney, MA-104. Subsequently, Boehringer used Collins and Benfield to perform Koch's Postulates and confirm its success. Even though my decision on this issue will not impact upon the final decision, the court finds that for reasons which will be explained below, Schering's defenses lack substantial merit and are unavailing.
i. Defendant's Checkpoint Analogy
In reliance upon the foregoing, Schering argues that Collins and Benfield were joint inventors and that Boehringer's failure to name them invalidates the patent. The law prescribes that "when an invention is made by two or more persons jointly, they shall apply for patent jointly . . . ." 35 U.S.C. § 116. The Federal Circuit has explained that "a joint invention is the product of collaboration of the inventive endeavors of two or more persons working toward the same end and producing an invention by their aggregate efforts." Kimberly-Clark v. Proctor & Gamble, 973 F.2d 911, 916 (Fed. Cir. 1992). Following Kimberly-Clark, the defendant asserts that "isolation," as claimed in the '778 Patent was a "collaborative effort." See Defendant's Br. at 26. According to Schering, had Collins and Benfield not provided the "inoculum containing 'the virus,'" Harris would never have been able to "inoculate" the virus on sheet of simian cells. See Id. at 27.
Schering analogizes the instant case to Checkpoint Systems, Inc. v. United States International Trade Commission, 54 F.3d 756 (Fed. Cir. 1995), where the court grounded its decision to invalidate a patent on the fact that the plaintiff's patent application did not name a prior inventor. According to the court, where the patentee misdesignates the inventor with deceptive intent, the court may invalidate the patent. Id. at 763. However, a good faith error in a designation of inventorship does not render a patent invalid. Id.
In Checkpoint, the plaintiff patented a deactivatable resonant tag for use in electronic security systems by retailers to deter shoplifting. The patent named one of plaintiff's employees, Lichtblau, as the inventor. Another employee, Kaltner, had previously developed a tag which fell within the scope of the patented claims. When inquiries were made regarding whether Checkpoint intended to patent Kaltner's invention, Checkpoint responded that it would take care of the matter. In the litigation, Checkpoint claimed that it did not name Kaltner because it believed that Kaltner had abandoned his invention. Under 35 U.S.C. § 102(g), a person cannot obtain a patent if the invention was made by another who had not abandoned it. In Checkpoint, the Federal Circuit disagreed with the abandonment argument and invalidated the patent because Checkpoint had not inadvertently failed to name Kaltner as the inventor. Rather, the court concluded, the employer had dodged Kaltner's inquiries and intentionally deceived the PTO. As the court explained,
Checkpoint might have responded to Kaltner's inquiries by filing a patent application on Kaltner's invention and letting the PTO resolve the questions of prior Inventorship and entitlement to a patent rather than ignoring Kaltner's Inventorship role and attempting to enforce a Lichtblau patent on an invention that Kaltner made first.
Id. at 763.
The court suspected that Checkpoint did not name Kaltner because he would not have been obligated to assign his invention to his employer. The court assumed that Checkpoint's decision was financially motivated and offered the following dicta: a first inventor should not be "cavalierly tossed aside in favor of a second inventor from who the employer has more advantageous contract rights." Id.
Following Checkpoint, Schering argues that although this case involves joint inventorship and not prior inventorship, Boehringer could have advised the PTO of the facts and let it resolve the issue of proper Inventorship, rather than attempt to enforce a patent listing only plaintiff's employee's with whom plaintiff had "advantageous contract rights." See Defendant's Br. at 30. On the other hand while Boehringer does not challenge Schering's interpretation of the law, it finds somewhat dubious the suggestion that Collins and Benfield were joint inventors.
Here, the validity of the '778 Patent turns on whether Schering can prove: first, that Collins and Benfield were joint inventors and second, that Boehringer deceptively omitted them from the patent. As with the Section 103 inquiry, because the patentee is entitled to a presumption of validity, at a trial on the merits, the defendant would bears the burden of proving invalidity by clear and convincing evidence. Litton Systems v. Honeywell, 87 F.3d 1559, 1566 (Fed. Cir. 1996), cert. denied, 137 L. Ed. 2d 323, 117 S. Ct. 1240 (1997). But, at the preliminary injunction stage, the patentee must demonstrate that "in light of the presumptions and burdens that will inhere at trial on the merits, . . . its infringement claim will likely withstand [the defendant's] challenge to the validity . . . of the . . . patent." Genentech, Inc. v. Novo Nordisk A/S, 108 F.3d 1361, 1364 (Fed. Cir. 1997). In other words, to succeed in its preliminary injunction motion, the patentee must demonstrate that the alleged infringer's defense lacks "substantial merit." New England Braiding Co., Inc. v. A.W. Chesterton Co., 970 F.2d 878, 882-83 (Fed. Cir. 1992); see also M & R Marking Systems, Inc. v. Top Stamp, Inc., 926 F. Supp. 466 (D.N.J. 1996).
(a) Checkpoint: the Joint Inventorship Prong
With respect to Checkpoint's first prong, the court finds that Boehringer properly omitted Collins and Benfield. There is no question that the subject matter claimed -- a method of growing and isolating the virus -- was conceived solely by the named inventors. The court agrees that had Collins and Benfield not provided Harris with the inoculum containing the virus, they would not have been able to isolate the virus, but that does not mean that they should be entitled to joint inventorship rights. Harris might have obtained necessary material from Collins and Benfield, but the patent does not claim a compound. It claims a method developed exclusively by Harris. Additionally, for purposes of considering the validity of this particular patent, I do not find it significant that Collins and Benfield were the ones to do the confirmatory work. That Collins and Benfield were the ones to perform Koch's postulate and conclude that Harris had been successful does not mean that they are joint inventors. The patent claims a method and nothing else.
(b) Checkpoint: Deceptive Intent
Even if Collins and Benfield were joint inventors, Boehringer would still meet its burden because Boehringer did not exhibit any deceptive intent in "misdesignating" the inventors of the patent. See Checkpoint, supra, at 763. Here, Schering relies solely on the existence of commercial incentive to exclude Collins and Benfield from the patent. Under 35 U.S.C. § 262, in the absence of any agreement, joint inventors "may make, use, offer to sell, or sell the patented invention . . . without the consent of and without accounting to the other owners." Because Collins and Benfield were not members of Boehringer's laboratory, they were not controlled by Boehringer and therefore, if named as joint inventors, would have an undivided interest in the patent. From this, Schering asks the court to infer that Boehringer excluded Collins and Benfield to maintain a financial advantage. Essentially, Schering suggests. Boehringer wanted to monopolize all potential financial benefit.
Other than the general principle that joint inventors may independently pursue opportunities to make money off their inventions, there is no evidence of deceptive intent. A defendant should not be permitted to support its claim by invoking financial incentive motive because that motive would appear in every case. The defendant must point to something more concrete to demonstrate a substantial defense. Here, Schering's defense lacks substantial merit and the court is not inclined to accept it.
ii. Inequitable Conduct
In a related legal argument, Schering posits that the '778 Patent is unenforceable because it was procured through inequitable conduct. Inequitable conduct means any "'affirmative misrepresentation of a material fact, failure to disclose material information, or submission of false material information, coupled with an intent to deceive." Refac International, Ltd. v. Lotus Development Corp., 81 F.3d 1576, 1581 (Fed. Cir. 1996) (quoting Molins PLC v. Textron, Inc., 48 F.3d 1172, 1178 (Fed. Cit. 1995)). Where a court finds that a patentee engaged in inequitable conduct, it may invalidate the patent. See Refac International, Ltd. v. Lotus Development Corp., 81 F.3d 1576 (Fed. Cir. 1996). The party alleging "inequitable conduct" must prove the "threshold elements" of materiality and intent by clear and convincing evidence. Id. However, in the instant preliminary injunction proceeding, the plaintiff bears the burden of demonstrating that Schering's defense lacks substantial merit.
Specifically, defendant contends that Boehringer's failure to name Collins and Benfield as joint inventors and its failure to identify Collins and Benfield's work as prior art constituted inequitable conduct. In conducting its analysis, this court must examine the totality of the circumstances and decide whether the patent applicant's conduct was so "culpable that the patent should not be enforced." Molins, supra, at 1178; see also Id. "Material" information exists when there is a "substantial likelihood that a reasonable examiner would have considered the information important in deciding whether to allow the application to issue as a patent." Refac. supra, at 1581. "Intent" means "design, resolve, or determination with which a person acts: a state of mind in which a person seeks to accomplish a given result through a course of action." Molins, supra, at 1180. It "need not be proven by direct evidence" and is "most often proven by a showing of acts, the natural consequences of which are presumably intended by the actor." Id. Because this court's inquiry must consider materiality and intent together, "the more material the omission or misrepresentation, the less intent that must be shown to reach a conclusion of inequitable conduct." Akzo N.V. v. United States International Trade Commission, 808 F.2d 1471, 1481-82 (Fed. Cir. 1986).
(a). Failure to Disclose Material Information
Schering's first argument -- "failure to disclose material information" -- requires the same analysis as that conducted above to consider the Checkpoint analogy. First, because Collins and Benfield were not joint inventors, failure to disclose that information is not material. Second, for the reasons mentioned above, there is no deceptive intent. Therefore, Schering's "failure to disclose" argument fails.
(b) Affirmative Misrepresentation
Schering's second inequitable conduct argument -- affirmative misrepresentation of a material fact -- focuses on Boehringer's alleged failure to apprise the Examiner of prior art in existence at the time of its patent application. Essentially, Schering contends that patent specification refers to work performed by Collins and Benfield and disguises it as its own. If Collins and Benfield were not joint inventors, their work constitutes prior art, which, according to Schering should have been disclosed to the Examiner.
In the section entitled "Invention," the specification states that:
A tissue homogenate obtained from piglets in SIRS-infected herds consistently reproduced the respiratory and reproductive forms of SIRS when intransally inoculated in gnotobiotic piglets and pregnant sows. Gnotobiotic piglets so inoculated with either unfiltered or filtered . . . inoculum became anorectic and developed microscopic lung lesions similar to lesions seen in SIRS-affected herds. The same inoculum also caused reproductive effects identical to those seen in SIRS-infected herds. A viral agent has been recovered from the tissue homogenate . . . .
See '778 Patent.
All but the last sentence represents the prior work performed by Collins and Benfield. However, even if it constitutes prior art not disclosed to the examiner, it is not material to the obviousness inquiry. There is nothing in Collins and Benfield's work that would have made the '778 Patent obvious. Collins and Benfield might have discovered that PRRS was a porcine virus, but for that, in itself, did not make the invention obvious. If the '778 is unenforceable under Section 103(a), it is because swine influenza had already been isolated. Anyway, the examiners already assumed that PRRS was caused by a virus Moreover, even if it were material. Schering cannot satisfy the intent prong.
With respect to intent, Schering has argued that intent "flows from the initial commercially motivated decision to exclude Collins and Benfield as inventors." Defendant's Br. at 33. However, that argument has been dismissed in my Checkpoint analysis. See discussion. supra.
For the foregoing reasons, Schering's other validity and enforceability challenges fail.
4. Literal Infringement Claim and Infringement under the Doctrine of Equivalents Claim
As I have already noted, at the preliminary injunction stage, a patentee must establish a likelihood of success on the merits with respect to the patent's validity, enforceability, and infringement. See Nutrition 21 v. United States, 930 F.2d 867, 869 (Fed. Cir. 1991). If Boehringer's had satisfied its burden with respect to validity, it would also have had to establish the likelihood of either literal infringement or infringement under the doctrine of equivalents. But in light of my findings, even if Schering's method were identical to the claims in the '778 Patent, Boehringer could not establish likelihood of success because Schering has demonstrated that substantial questions exist as to whether the patent is valid. See Id. Therefore, without considering the infringement issue, I find that Boehringer cannot establish likelihood of success.
5. Failure to Establish Likelihood of Success
The plaintiff is not entitled to a preliminary injunction unless it carries its burden on both the likelihood of success and the irreparable harm factor. See Reebok, supra, at 1556 (fed Cir. 1994). The court must deny the preliminary injunction where the movant has failed to carry its burden on either factor. Therefore, the court need not consider any other factors if the defendant has not demonstrated likelihood of success. See Id.; New England Braiding Co., 970 F.2d at 883. Nevertheless, the court will make findings with respect to irreparable harm.
B. Irreparable Harm
If Boehringer had satisfied its burden of proving the likelihood of success by demonstrating both validity and infringement, it would have been entitled to a rebuttable presumption of irreparable harm. See Polymer Technologies, Inc. v. Bridwell, 103 F.3d 970, 973 (Fed. Cir. 1996). Boehringer has failed to meet its burden and thus, cannot avail itself of that presumption. See PPG Industries, 75 F.3d 1558, 1566 (Fed. Cir. 1996); Circle R. Inc. v. Smithco Mfg., 919 F. Supp. 1272, 1301 (N.D. Iowa 1996).
In the instant case, Boehringer alleges that if it is denied the preliminary injunction, it will be irreparably harmed for the following reasons: first, it will lose market share; second, the loss in revenue and in the size of its workforce will result in a decrease in funding for research and development; third, it will suffer damage to its goodwill; and fourth, the duration of the monopoly will be cut short.
At the moment, Schering and Boehringer are the only ones selling this kind of PRRS vaccine. There is no question that Boehringer will suffer in its market share due to Schering's sales. but Schering has indicated that it will be able to compensate any loss in revenues. The court is aware that the loss in market share is not easily recoverable. See Stein Industries v. Jarco Industries, 934 F. Supp. 55, 58 (E.D.N.Y. 1996). As the Federal Circuit has stated, "because the principal value of a patent is its statutory right to exclude, the nature of the patent grant weighs against holding that monetary damages will always suffice to make the patentee whole." Hybritech Inc. v. Abbott Laboratories, 849 F.2d 1446, 1457. Nevertheless, the "application of a concept that every patentee is always irreparably harmed by an alleged infringer's pretrial sales would . . . disserve that patent system." See Reebok, supra, at 1558. Here, Schering is a major drug company and will be able to compensate Boehringer for any loss. To prove irreparable harm, Boehringer must provide some "reasoned analysis" for why monetary damages would be insignificant and it has not done so. See Nutrition 21, 930 F.2d at 871. Instead, it chooses to rely upon a presumption to which it is not entitled. Therefore, loss of market share does not weigh in Boehringer's favor. See Id., supra, at 871 (finding no irreparable harm because the defendant would be "answerable in damages" and the plaintiff had not provided any "reasoned analysis" for the inadequacy of money damages).
Additionally, I note that Boehringer has suggested that as a result of its loss in revenue and in the size of its workforce, there will be a decrease in funding for research and development. See Plaintiff's Br. at 19 (citing Genentech, Inc. v. Novo Nordisk A/S, 935 F. Supp. 260, 283 (S.D.N.Y. 1996), vacated on other grounds, 108 F.3d 1361, 1997 WL 110026 (Fed. Cir. 1997)). This factor weighs in Boehringer's favor.
Thirdly, Boehringer argues that it will suffer irreparable damage to its goodwill. Allegedly, this damage will be particularly severe given the remarkably different approaches taken by Schering and Boehringer in selling their product. Whereas Boehringer sells directly to veterinarians, Schering sells its product as over the counter medication. Boehringer believes that because PRRS is difficult to diagnose without the assistance of a veterinarian, it should not be sold over the counter. If a farmer uses the vaccine on a pig sick with something other than PRRS, when the pig does not get better, the farmer will blame the vaccine. During the hearing. Paul Hays testified that there are
examples of cases where people have gotten a hold of PRRS vaccines without the use of diagnostics, and because they had a coughing piglet or sick piglet, they vaccinated with PRRS and expected that to be the end all to their problems. And in fact pigs were still coughing because the PRRS vaccine didn't work, and with a continued approach of having a product on the market over the counter, this is beginning to give all PRRS vaccines a black eye. Hays Testimony, Tr. at 2.93.
Here, Boehringer warns that all PRRS vaccines will suffer and its reputation and sales will be impugned by over the counter sales. See Plaintiff's Br. at 21. While loss of goodwill may qualify as irreparable harm, (see Bio-Technology General Corp. v. Genentech, Inc., 80 F.3d 1553, 1565 (Fed. Cir.), cert. denied, 136 L. Ed. 2d 197, 117 S. Ct. 274 (1996); Gateway Eastern Railway Co. v. Terminal Railroad, 35 F.3d 1134, 1140 (7th Cir. 1994)), Boehringer has not offered any concrete evidence in support of its claim. There are advantages and disadvantages to both sales strategies, but both have been approved and this court will not make any judgments about them where the evidence is so lacking.
Finally, Boehringer has argued that the monopoly afforded it may be of "shortened duration" due to first, "ongoing research in the field that may make that patented invention obsolete" second, the fact that "some herds becoming naturally immune to PRRS," and third, some farmers vaccinating only sows. The Federal Circuit has recognized that in some situations, the value of the patent may be fleeting because it may be bypassed by new technology. See Hybritech, supra, at 1456. Boehringer has not demonstrated the existence of that factor. For one reason, only Boehringer's first argument regarding "ongoing research" relates to new technology and that argument is far too speculative. Boehringer's invention may be replaced by new technology, but it has not provided anything more specific. Moreover, even if Boehringer could satisfy this factor, it might make the case closer, but it would not overcome its other problems with respect its market share and goodwill arguments. See Hewlett-Packard Company v. Genrad, Inc., 882 F. Supp. 1141, 1153 (D. Mass. 1995).
For the foregoing reasons, Boehringer has not satisfied the "irreparable harm" factor. Even if it had satisfied this factor, the court could not grant its motion because it has not demonstrated likelihood of success. See Reebok, supra.
C. Other Factors
Because Boehringer has failed to satisfy the first two preliminary injunction findings, the court need not make findings on the final two -- the balancing of interests and the public interest. See 32 F.3d 1552 at 1556. Even if those factors weighed in favor of Boehringer, the plaintiff could not avail itself of the extraordinary injunctive relief it requests.
For the reasons detailed in this opinion, plaintiff's motion for a preliminary injunction is DENIED.
ORDER - ENTERED on THE DOCKET 10-7-97
This matter comes before the court on plaintiff's motion for a preliminary injunction in its patent infringement action; and this court, after considering the submitted briefs, the testimony and the evidence adduced at the hearing, and the record before the court; and for the reasons detailed in an opinion issued this same day; and for good cause shown;
IT IS ON THIS 6th day of October, 1997
ORDERED that plaintiff's motion for a preliminary injunction is DENIED.
Harold A. Ackerman, U.S.D.J.