TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA v. ST. JUDE CHILDREN'S RESEARCH HOSPITAL
MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE STEWART DALZELL ON 11/13/2013. 11/14/2013 ENTERED AND COPIES MAILED, E-MAILED.(kk, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
TRUSTEES OF THE UNIVERSITY
ST. JUDE CHILDREN’S RESEARCH
TRUSTEES OF THE UNIVERSITY
ST. JUDE CHILDREN’S RESEARCH
November 13, 2013
These actions concern the nature of an immunotherapy
for cancer treatment that Dr. Carl June, M.D., Director of the
Translational Research Program and a professor at the University
of Pennsylvania (“the University” or “Penn”), developed.
parties’ claims sound in patent and contract law, and the
dispute centers on the question of whether Dr. June’s
immunotherapy (the “June Construct”) contains “material” within
the meaning of two Materials Transfer Agreements the University
executed with St. Jude Children’s Research Hospital (“St.
We here consolidate the earlier contract action (C.A.
No. 12-4122) and the later patent action (C.A. No. 13-1502) and
consider St. Jude’s motion for partial summary judgment in the
contract action and Penn’s partial motion to dismiss St. Jude’s
counterclaims in the patent action.1
motion for a separate trial.
We also consider St. Jude’s
For the reasons discussed herein,
we will deny in part the motion to dismiss, deny the summary
judgment motion, and deny the motion for a separate trial.
will then set a schedule for discovery and trial.
On April 12, 2013, we issued an opinion in which we
detailed the procedural and factual history of this dispute.
Trustees of Univ. of Pennsylvania v. St. Jude Children's
Research Hosp., No. 12-4122, 2013 WL 1499518 (E.D. Pa. Apr. 12,
Because those histories guide our consideration of the
instant motions, and because the parties’ recent submissions
provide more information about the facts giving rise to the
conflict, we will rehearse the procedural history briefly and
the factual history in detail.
We have jurisdiction over the contract claims pursuant to 28
U.S.C. § 1332 because the parties are diverse -- St. Jude is a
citizen of Tennessee and the University is a citizen of
Pennsylvania, see C.A. No. 12-4122 Am. Comp. ¶¶ 1-2, and the
amount in controversy exceeds $75,000. We have jurisdiction
over the patent action pursuant to 28 U.S.C. §§ 1331 and
On July 11, 2012 St. Jude filed a breach of contract
action against the University in the Western District of
Tennessee seeking injunctive relief and damages on the ground
that the University had breached two Materials Transfer
Agreements (“MTAs” or “Agreements”) the parties had executed.
Apr. 20, 2013 Mem. at 6-7.
Eight days later, the University filed a breach of
contract action here.
It then submitted an amended complaint in
that action in September of 2012.2
On October 10, 2012 the
United States District Court for the Western District of
Tennessee transferred the St. Jude case to this District
pursuant to 28 U.S.C. § 1404(a), and we consolidated the
On March 19, 2013, the United States Patent and
Trademark Office issued U.S. Patent No. 8,399,645, (the “‘645
patent”) entitled “Chimeric Receptors with 4-1BB Stimulatory
Signaling Domain” to St. Jude.
Three days later the University
filed a separate action in this Court seeking a declaration that
it was not infringing on that patent and that the patent was
invalid, see C.A. No. 13-1502, Comp. ¶¶ 9, 34-39.
The amended complaint sought damages for tortious interference
with prospective contractual relations and a declaratory
judgment that the University did not materially breach the 2003
and 2007 Agreements and that the 2003 Agreement had been
terminated. We dismissed the tort claim in our April 2013
moved to dismiss, and on June 10, 2013 the University filed an
amended complaint in which it again sought our declaration of
its non-infringement and the patent’s invalidity.
See C.A. No.
13-1502, Am. Comp. ¶¶ 34-39.3
St. Jude filed an Answer and Counterclaims, asserting
that Penn is infringing and contributorily infringing on the
‘645 patent by using and commercializing the June Construct, and
that this infringement is willful.
Through its counterclaims
St. Jude seeks a judgment in its favor in C.A. No. 13-1502, a
declaration that the patent is valid and enforceable and that
Penn is infringing upon it and that such infringement has been
willful and deliberate.
It also seeks an injunction from
further infringement or contributory infringement, and damages.
See C.A. No. 13-1502 Counterclaims ¶¶ 22-34.
dismiss the willful infringement claim.
Penn moves to
See C.A. No. 13-1502
When the University filed the patent action, we
directed the parties to show cause why we should not consolidate
it with the contract action, see C.A. No. 13-1502, Docket No. 4.
The University responded that it did not oppose consolidation,
see April 26, 2013 epistolary submission.
St. Jude responded by
St. Jude’s motion to dismiss the original complaint is thus
moot. See Fed. R. Civ. P. 15(a)(1)(B) (a party may amend its
pleading once as a matter of course within twenty-one days after
service of a motion under Rule 12(b)).
submitting a motion for partial summary judgment and positing
that by the time the parties had submitted briefing in the
patent case the contract case might be resolved by summary
St. Jude Resp. to Order to Show Cause.
As an alternative to summary judgment, St. Jude moved
for a separate trial on “[t]he question of whether the June
Construct incorporates and was made with Material” under the
St. Jude MSJ at 23.
We thus consider here our initial suggestion of
consolidation, the University’s motion to dismiss St. Jude’s
counterclaim for willful infringement, and St. Jude’s motion for
partial summary judgment or, in the alternative, a separate
This action between the University and St. Jude
concerns two MTAs between the parties, the “2003 MTA” and the
We will describe the undisputed facts as the
parties have presented them.4
The Campana Construct
Where we draw the facts from one party’s pleading, we will note
any factual dispute by the other party.
The MTAs arose out of immunotherapy research Dr. Dario
Campana and Dr. Chihaya Imai5 conducted at St. Jude.
early 2000s Dr. Campana developed a protein molecule called an
“anti-CD19 chimeric antigen receptor” (“CAR”).
genetic process we will recount below, Dr. Campana inserted the
CAR into T cells, a type of white blood cell that directs immune
responses and attacks infected or cancerous cells.6
One end of
the CAR protruded from the T cell, enabling it to latch onto a
tumor cell “antigen.”
St. Jude MSJ at 4 (citing Declaration of
Dr. John Gray, Ex. to St. Jude MSJ, at ¶ 6).
When the T cell
connected with the antigen, the other end of the CAR directed
the T cell to “attack and destroy” the target cell.
Dr. Campana reproduced this result by developing a
cDNA, a DNA7 molecule containing a nucleotide8 sequence encoding
St. Jude, in its motion for summary judgment, refers to Drs.
Campana and Imai collectively as “Campana”. Though we recognize
Dr. Imai’s contributions -- and his existential independence
from Dr. Campana -- we will adopt that convention here for the
sake of simplicity in a matter that is already quite complex.
We also note that Dr. Campana is no longer with St. Jude and now
works as a professor in the Department of Pediatrics at the
National University of Singapore. Campana Dec., Ex. to St. Jude
MSJ, at ¶ 1.
For more information, see, e.g., National Institute of Allergy
and Infectious Diseases, “Immune System”, available at
When James Watson and Francis Crick introduced the world to
their depiction to the now-iconic double helix of DNA in their
brief note in the 25 April 1953 issue of Nature, “Molecular
Structure of Nucleic Acids: A Structure for Deoxyribase Nucleic
Acid”, they ended their short article with what is almost
the structure of the CAR, and inserting it into the DNA of a T
Thus, when the T cell replicated, the new T cells also
included the CAR.
Through this process Dr. Campana
“creat[ed] a population of T cell progeny that can be used to
treat CD19+ B-cell cancers, such as acute and chronic leukemia
and non-Hodgkin’s lymphoma”.
St. Jude MSJ at 5.
In order to
insert the CAR-encoded cDNA into the T cell DNA, Dr. Campana
used a “retroviral 'vector'” as a “molecular delivery vehicle”.
Dr. Campana presented his findings at an American
Society of Hematology conference in San Diego, California, in
December of 2003.
St. Jude MSJ at 5; Penn Opp. at 3.
conference, Dr. June wrote to Dr. Campana saying,
Your data at ASH with the CD19 ScFv was
striking. I was wondering if you might want
certainly the most striking understatement in the history of
science: ”It has not escaped our notice that the specific
pairing we have postulated immediately suggests a possible
copying mechanism for the genetic material.” Their work won
them the Nobel Prize in Medicine and Physiology on December 10,
1962. The Nature note and its double helix are reproduced in
Horace Freeland Judson, The Eighth Day of Creation 196-98 (1979)
As Judson points out at 29, nucleic acids’ “presence in all
cells was as quickly demonstrated” as their chemistry was, but
“[t]heir function remained unknown.” By the beginning of the
twentieth century "the three constituents of nucleic acids had
been described," id., and the last, known as a base, was a
“three-piece subassembly . . . called a nucleotide, a homely
word, precise, indispensable, and ubiquitous in this science,
indeed much like the word ‘iamb’ in poetics, for it expresses
not just a particular sort of construction but a unit of length
and even a category of significance.” Id.
to have an inter-institutional collaboration
to test this? . . . I think that
retroviruses are going to be problematic as
vectors due to the leukemic risk, and the
higher efficiency of the lentivirus is
another reason making it attractive to
switch. Would you consider letting my lab
create the lentiviral vector from your
construct, and then I can ship you
transduced T cells to compare to the
Dec. 10, 2003 E-mail from June to Campana, Campana Dec., Ex. to
St. Jude MSJ, Ex. 4.
In order to facilitate this exchange, the parties
entered into the first MTA at issue here on December 17, 2003.
Id. at ¶ 13.
That Agreement defined the “Material” St. Jude was
transferring as “the anti-CD19-BB-ζ chimeric T-cell receptor
construct, including any progeny, portions, unmodified
derivatives and any accompanying know-how or data”.
¶ 1, St. Jude MSJ Ex. A.
2003 MTA at
The Agreement provided that “the
Material will only be used to create a lentiviral chimeric Tcell receptor construct to be used in pre-clinical studies”, id.
at ¶ 3, and “may not be used in humans” or “for any commercial
Id. at ¶ 4.
It further provided that the University
would “not commercialize any product that contains Material
without the prior written approval of St. Jude”, id. at ¶ 8,
that the University would jointly publish any “result[s] from
the collaborative research study” with St. Jude, id. at ¶ 6, and
that it would “notify St. Jude within sixty (60) days of filing
any patent application which claims subject matter that contains
or incorporates the Material or which claims a method of
manufacture or use of the Material.”
Id. at ¶ 8.
Pursuant to the MTA, St. Jude sent the anti-CD19-BB-ζ
chimeric receptor construct to the University, St. Jude MSJ at
7, Penn Resp. in Opp. at 7.
After receiving the construct, Drs.
Milone and June sent e-mails requesting information about the
gene sequence to Drs. Campana and Imai.
Dr. June requested a
sequence of the plasmid, and he asked, “how do you detect
surface expression of the scfv; do you have an antibody to [do]
Dec. 17, 2003 E-mail from June to Campana, Campana Dec.
Dr. Campana responded by sending the sequence of the
anti-CD19-BB-ζ and explained, “We detect surface expression with
a goat-anti-mouse F(ab)2 biotin from Jackson Immunoresearch,
followed by streptavidin PerCP from Becton Dickinson.”
2003 E-mail from Campana to June, Campana Dec. Ex. 5.
Milone then wrote, “I realized that the sequence for the CD19truncated receptor is likely to have a different 3’ end compared
with the other 2 constructs.
to our lentivirus system.
We need to use PCR to transfer it
Could you tell me what sequence is at
the 3’ end of the CD19-truncated?”
Dec. 23, 2003 E-mail from
Milone to Imai, Campana Dec. Ex. 5.
Dr. Imai responded with
“files containing sequence for anti-CD19-truncated and MSCV-
IRES-GFP retroviral vector.”
Dec. 23, 2003 E-mail from Imai to
Milone, Campana Dec. Ex. 5.
Penn does not contest that St. Jude sent the construct
and the gene sequence, but it argues that the sequence and the
other information did not constitute “know-how” under the MTA
The sequence of a plasmid or DNA sequence,
such as the CD19-BB-z CAR sequence included
in the Attachment, is readily obtainable by
a person skilled in the art of molecular
biology using commonly employed sequencing
techniques, as were widely available at the
time the materials were received from St.
Penn Resp. in Opp. at 9, citing Milone Dep., Ex. C to Penn Resp.
in Opp., at ¶ 7.
Dr. Milone avers that it is “common practice
amongst scientific and academic research institutions that, when
one institution sends biological material such as a plasmid to
another, it also sends a text version of DNA sequences . . . so
the recipient scientist does not have to independently sequence”
the material, but that had St. Jude not provided the sequence,
Dr. Milone “otherwise could have derived [the information] from
[his] own sequencing of the biological materials provided by St.
Milone Dep. at ¶ 7.
The June Construct
When Dr. June proposed using a lentiviral vector,
rather than a retroviral vector, he and others at Penn,
including Dr. Michael Milone, were “the first researchers to
work with a lentiviral vector (a modified form of HIV-1) for
immunotherapy in cancer patients, having determined that the use
of a lentivirus was the most effective way to accomplish genetic
modification of human T cells”.
Penn Resp. in Opp. at 7.
contends that Drs. Milone and June could not use the St. Jude
CAR cDNA because it was designed to be introduced through a
retroviral vector, and it thus “lacked the required sequences at
the beginning and end of the DNA anti-CD19-BB-z chain to allow
it to recombine into the University’s pre-existing lentiviral
Penn Resp. in Opp. at 8, citing Milone Dec. Ex. C, at
Instead, Penn avers that Dr. Milone developed a separate
“primer-based polymerase chain reaction (“PCR”)” that would
generate a DNA sequence similar to the one that Dr. Campana had
constructed but modified to contain “appropriate restriction
enzyme sites on the ends to facilitate recombination into the
University’s lentiviral vector.”
Campana Dec. at ¶ 12.
Penn alleges that this new sequence differed from the sequence
in the Campana Construct in that it “included five nucleotide
differences at the ends of the sequence” to facilitate
incorporation into the lentiviral vector.
Id. at ¶ 13.
Moreover, Penn contends that the new sequence differed
from the sequence in the Campana Construct in that it contained
a modified nucleotide in the CAR sequence leading to “an amino
acid change from the original amino acid sequence encoded by the
Dr. Milone also avers that “[t]he modified anti-CD19BB-z did not contain any physical part of the Campana Construct.
It was composed completely of nucleotides from Dr. June’s
laboratory during the PCR reaction”, and “after the PCR process
. . . the original Campana Construct physically existed as it
did before the process.”
Id. at ¶ 14.
Drs. Milone and June
completed the June Construct by incorporating the modified antiCD19-BB-ζ sequence into a lentiviral plasmid that had been
created earlier in Dr. June’s laboratory.
Id. at ¶ 15.
University thus describes the June Construct as a “modified
derivative” of the Campana Construct.
Penn Resp. in Opp. at 7.
St. Jude’s account of the genetic makeup of the June
construct appears similar to Penn’s account in fact, if not in
St. Jude describes the June Construct as a
“lentiviral vector clone” consisting of “the anti-CD19 cDNA
provided by St. Jude, incorporated into a lentiviral vector
delivery vehicle”, St. Jude MSJ at 8.
St. Jude asserts that
“[t]he cDNA of the June Construct consisted of the identical
approximately 1,500-base-pair sequence provided by St. Jude,
with the exception of a single-base-pair difference that appears
to be the kind of ‘copying error’ (or mutation) that can occur
in a process called PCR amplification.”
Id. (emphasis in
The "exception" to which St. Jude refers appears to
be the difference Dr. Milone cited as causing an amino acid
St. Jude thus concludes that “even with the base pair
difference, the June Construct contains the largest possible
nucleotide ‘portion’ -- all but one base pair out of
approximately 1,500 -- of the anti-CD19 cDNA ‘Material’ St. Jude
provided, and it was made with the accompanying data and knowhow St. Jude provided.”
Id. at 8-9.
With regard to the five nucleotide differences at the
end of the sequence, St. Jude contends that “all Penn did with
the anti-CD19 CAR cDNA it received from St. Jude was to copy it
exactly using common polymerase chain reaction (“PCR”)
techniques, and to add five nucleotide base pairs at each end so
the cDNA could be spliced into a lentiviral vector.”
Reply at 49.
The 2007 MTA
In 2007 St. Jude sent Penn an e-mail saying that it
had “reason to believe Dr. June may have sent the receptor to an
investigator outside the University of Pennsylvania” and noted
Penn opposed St. Jude’s motion for leave to file a reply brief,
and it objects to our consideration of that brief on a number of
grounds, including that the brief’s exhibits contain hearsay
statements that we may not consider in deciding a motion for
summary judgment. Penn Resp. in Opp. to Reply at 5. We will
grant St. Jude leave to reply, and we will consider the legal
arguments it raises in that brief, but we will not consider the
exhibits appended to its reply.
that it needed to determine whether “Dr. June is planning to
conduct clinical trials using St. Jude materials”, Jan. 11, 2007
e-mail from Hawkins to Donohue, Hawkins Dec., Ex. to St. Jude
MSJ, Ex. 1.
Kurt Schwinghammer, then Director of Licensing at
Penn, responded that Dr. June was planning to conduct a clinical
trial, and that he had told Dr. Campana that he intended to do
Feb. 5, 2007 E-mail from Schwinghammer to Hawkins, Hawkins
Dec. Ex. 2.
Three days later, St. Jude replied that Dr. Campana
would not object to clinical trials moving forward, but that
from St. Jude’s standpoint “a new clinical trial agreement will
need to be executed between the University and St. Jude before
clinical trials proceed.”
St. Jude MSJ at 9-10, quoting Feb. 8,
2007 e-mail from Hawkins to Schwinghammer, Hawkins Dec. Ex. 3.
On February 28, 2007, St. Jude again wrote to Penn that “a new
MTA for clinical use must be executed between the University and
St. Jude to provide St. Jude with the appropriate protections.”
On April 16, 2007, Donald T. Deyo, Director of
Corporate Contracts in Penn’s Office of Research Services,
wrote, “[w]e acknowledge the necessity of a new MTA since the
anti-CD19-BB-zeta receptor materials are now to be used in a
Apr. 16, 2007 E-mail from Deyo to Hawkins,
Hawkins Dec. Ex. 5.
On or about February 8, 2008, the parties executed a
second MTA, dated it October 2, 200710, allowing Dr. June to
proceed with clinical trials.
Penn Resp. in Opp. at 4.
2007 MTA, St. Jude MSJ Ex. B;
That agreement contained the same
definition of “Material” as found in the 2003 agreement.11
MTA at ¶ 1.
Penn’s Alleged Breaches
In April of 2009, Dr. Campana and Dr. June, with
others, co-authored an article in Molecular Therapy, Campana
Dec. ¶ 6, in which they noted that “[t]he cDNA for the CARs that
contain a truncated form of the TCR-ζ intracellular domain . . .
were generated at St[.] Jude’s Children[;]s Research Hospital.
These complete CAR sequences were amplified directly from the
provided plasmids by PCR.”12
Campana Dec. Ex. 1 at 8.
In August 2011 Dr. June described the results of his
clinical trials in articles in The New England Journal of
Medicine, New Eng. J. Med. 8:725-733 (2011) and Science
Translational Medicine, 2011; 3(95):95ra73.
12, Exs. C and D.
See St. Jude MSJ at
St. Jude contends, and Penn does not dispute,
We refer to this agreement, as the parties do, as the 2007
The term in the 2007 Agreement is “Materials”, rather than
“Material”, but the definition is the same.
“PCR”, or Polymerase Chain Reaction, is a method used to make
large numbers of copies of specific DNA segments. See St. Jude
MSJ at 8 n.5.
that “neither article . . . acknowledge[d] St. Jude as the
source of the anti-CD19 CAR cDNA”, St. Jude MSJ at 12.
wrote to Penn asking if the receptor used in the trials the
articles described was the same receptor St. Jude had provided.
Hawkins Dep., Ex. to St. Jude MSJ, Ex. 6.
Responding to this
(and other inquiries) from St. Jude, Penn’s director of legal
affairs, Kathryn A. Donohue, wrote to St. Jude and said, “We
incorporated the cDNA from Dr. Campana/St. Jude into the
St. Jude MSJ at 13 (quoting Sept. 22, 2011 E-mail from
Donohue to Marsh, Watts Dec., Ex. to St. Jude MSJ, Ex. 2).
Donohue included a diagram, above which she wrote, “In the
schema below (from the NEJM paper), the large circle represents
the entire vector, and the portion of the vector that represents
the St. Jude sequence is circled in blue.”
Id. (emphasis in
Donohue continued that the paper in which Dr.
Campana was included as a co-author was “incorporated as ref #5
of the NEJM paper, and is an acknowledgment of Dr. Campana and
The parties dispute the significance of these
communications, as we will discuss below.
St. Jude points out that when other researchers asked
Dr. June for the construct, he told them they needed to obtain
permission from Dr. Campana and St. Jude, see, e.g., Esther
Allay Dec., Ex. to St. Jude MSJ, Ex. 6 (Nov. 19, 2011 e-mail
from Dr. June to Dr. Stephen Gottschalk saying, “I would be
happy to send you the BBz CAR.
You would also need to get
permission from dario campana [sic] at St. Jude.
He sent us a
retroviral plasmid in 2003, and we modified the CAR and adapted
for lentivirus.”); Ex. 3 (Sept. 27, 2011 e-mail from Dr. June to
a researcher at the National Cancer Center in Korea saying “[i]t
turns out that you also need an MTA from Dr. Dario Campana at
St. Jude/Singagpore [sic], or at least his permission, for me to
send you the plasmid.
We originally made the CD19:BB:Z
lentiviral vector from a retroviral vector that Dario made.”).
Dr. June’s declaration suggests a different
He avers that “[a]t no point have I ever
understood the [MTAs] . . . to restrict the transfer of the June
Construct, developed in my laboratory at the University, since
the June Construct does not physically contain any of the
Material provided by St. Jude under the 2003 MTA.”
Ex. A to Penn Resp. in Opp., at ¶ 14.
Dr. June says that before
August 29, 2011 he “sent samples of the June Construct to
researchers at other universities . . . without directing them
to St. Jude for permission.”
Id. at ¶ 15.
On August 29, 2011, an Associate General Counsel for
St. Jude, McGehee Marsh, sent a letter to Donohue referring to
Dr. June’s recent publications and saying, “[w]e simply need to
know if the receptor used in the clinical trial is the one
obtained from St. Jude.
If it was, we would like to understand
why Dr. June did not acknowledge St. Jude’s contribution . . .
Aug. 29, 2011 Letter from Marsh to Donohue, June Dec. Ex. 1.
After Penn received this letter, Dr. June avers that
“solely in order to avoid a legal dispute and out of an
abundance of caution,” he “directed any researchers who wanted
[him] to send them the June Construct to St. Jude so that St.
Jude would not later take issue with such transfer.”
In a November 22, 2011 letter, the University informed
St. Jude that it wished to terminate the MTA13.
No. 12-4122 Am.
Comp. Ex. F.
The University contends that it “contractually agreed
to exclusively negotiate with Novartis regarding a groundbreaking collaboration that would develop Dr. June’s cellular
immunotherapy for general cancer patient use.”
Id. ¶ 27.
According to the amended complaint, “The University . . .
actively negotiated with Novartis a collaboration under which
the University would receive funding that would allow it to
continue with clinical trials of the Penn Immunotherapy without
undue delay”, and “[a]s of July 10, 2012, the University and
Novartis had made substantial progress towards reaching an
In its amended complaint the University says this letter
informed St. Jude it wished to terminate the 2003 MTA, but the
letter refers to the 2007 MTA in its subject line and does not
make clear which MTA the University sought to terminate. In any
event, the distinction does not affect our decision here.
agreement that would allow continued development of the Penn
Id. ¶¶ 28-29.
In St. Jude’s counterclaims in the patent action, St.
Jude avers, and Penn does not dispute, that Penn “entered an
‘alliance’ and ‘an exclusive global research and licensing
agreement’ with Novartis in August 2012 to commercialize the
cells, lentiviral vectors, and CARs that Penn now calls
‘CTL019’”, St. Jude Counterclaim ¶ 15, Ex. B.
See also Press
Release, Perelman School of Medicine, University of
Pennsylvania, "University of Pennsylvania and Novartis Form
Alliance to Expand Use of Personalized T Cell Therapy for Cancer
Patients" (Aug. 6, 2012) (available at
On January 10, 2013, in-Pharma Technologist.com, a Web
site that provides “Breaking News on Global Pharmaceutical
Technology & Manufacturing”, reported that Novartis had
purchased a manufacturing plant with “the technological
competence and equipment to support both clinical and commercial
production for CTL019 as well as other therapies in the area of
human autologous cellular immunotherapy products.”
Jude Answer, Ex. C, available at http://www.inpharmatechnologist.com/content/view/print/728836.
explained that “CTL019 is Novartis’ first candidate CAR therapy
and is currently being studied as a test pilot at the University
St. Jude avers that “one or more
applications have been filed” with the U.S. Food and Drug
Administration for the CTL019 cells, CTL019 lentiviral vectors,
and CTL019 CARs.
St. Jude Counterclaims ¶ 17.
St. Jude applied for a patent for the Campana
Construct on July 12, 2012, and it received a patent on March
19, 2013, United States Patent No. 8,399,645, entitled “Chimeric
Receptors with 4-1BB Stimulatory Signaling Domain” (the “‘645
See St. Jude Counterclaims ¶¶ 8, 18, 21.
to St. Jude, “The [‘645 patent] generally discloses compositions
and methods for genetically modifying human immune cells to
enable them to manufacture chimeric antigen receptors . . . and
then to recognize and attack certain types of cancer cells.”
Id. at ¶ 9.
Under Fed. R. Civ. P. 42(a), we have “broad power” to
consolidate cases that share “common question[s] of law or
Ellerman Lines, Ltd. v. Atlantic & Gulf Stevedores,
Inc., 339 F.2d 673, 675 (3d Cir. 1964).
Here, the facts
underlying the patent suit are almost identical to those
underlying the contract action.
Indeed, in the amended
complaint in the patent action, Penn avers that “[t]he subject
matter of the ‘645 patent directly relates to the same subject
matter at issue in the [contract action].”
No. 13-1502 Am.
Comp. ¶ 27.
St. Jude opposed consolidation, apparently on the
theory that its motion for summary judgment in the contract case
was such a slam dunk that we would readily grant it, thereby
clearing the path for victory in the subsequent patent case.
Because, as we discuss below, we do not find that summary
judgment is warranted, we are not persuaded by St. Jude’s
We will thus consolidate the actions.
Penn’s Motion to Dismiss
Penn moves to dismiss the allegations of willful
infringement in St. Jude’s counterclaim under Fed. R. Civ. P.
Standard of Review
Under Fed. R. Civ. P. 12(b)(6), a defendant may move
the Court to dismiss a complaint on the ground that it fails to
“state a claim upon which relief can be granted”, and the moving
defendant bears the burden of proving that this is so, see Fed.
R. Civ. P. 12(b)(6), see also Hedges v. United States, 404 F.3d
744, 750 (3d Cir. 2005).
As the Supreme Court held in Bell Atlantic Corp. v.
Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662
(2009), in order to survive a Rule 12(b)(6) motion, “a complaint
must contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its face’”, Iqbal,
556 U.S. at 678 (quoting Twombly, 550 U.S. at 570).
A claim is
plausible “when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged”, Iqbal, 556 U.S. at 678.
Penn argues here that St. Jude has failed to allege
sufficient facts to state a claim for willful infringement.
As our Court of Appeals has explained post-Twombly and
Iqbal, when considering a motion to dismiss under Fed. R. Civ.
P. 12(b)(6), the district courts must engage in a two-part
First, the factual and legal elements of a
claim should be separated. The District
Court must accept all of the complaint’s
well-pleaded facts as true, but may
disregard any legal conclusions. Second, a
District Court must then determine whether
the facts alleged in the complaint are
sufficient to show that the plaintiff has a
“plausible claim for relief.”
Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009).
For the first part of this test, we refer to the facts as we
have recounted them above.
In In re Seagate Technology, LLC, 497 F.3d 1360 (Fed.
Cir. 2007), the Court of Appeals for the Federal Circuit held
that in the patent context “to establish willful infringement, a
patentee must show by clear and convincing evidence that the
infringer acted despite an objectively high likelihood that its
actions constituted infringement of a valid patent”, id. at
The Federal Circuit also held that if a patent holder
demonstrated that the alleged infringer’s conduct had met this
objective test, the holder must then show that the risk “was
either known or so obvious that it should have been known to the
St. Jude makes much of the issue of whether Seagate
announced a new standard for pleading or for proving a claim of
willful infringement, see St. Jude Resp. in Opp. at 5-7, arguing
that the case “set forth a heightened standard for proving
willfulness at trial, not for pleading it.”
Id. at 5.
does not directly argue that Seagate does establish a heightened
pleading standard for willful infringement claims, instead
urging us to analyze St. Jude’s claim under Fed. R. Civ. P. 8,
see Penn MTD at 1.
Courts applying Seagate in the motion to dismiss
context have not treated it as establishing a heightened
pleading standard, but have instead found it to be an
The Federal Circuit’s decisions on patent law are binding on
our resolution of the dispute, as the Federal Circuit has
exclusive appellate jurisdiction over cases in which our
jurisdiction is based on federal patent law. Christianson v.
Colt Industries Operating Corp., 486 U.S. 800, 807-08 (1988).
explanation of the elements of the cause of action of willful
Under this reading, a plaintiff states a claim
for willful infringement if it pleads sufficient factual matter,
accepted as true, to allow us to “draw the reasonable inference
that the defendant is liable”, Iqbal, 556 U.S. at 678, for
“act[ing] despite an objectively high likelihood that its
actions constituted infringement of a valid patent” where the
risk was either known or was so obvious that it should have been
Seagate, 497 F.3d at 1371.
See, e.g., MONEC Holding AG
v. Motorola Mobility, Inc., 897 F. Supp. 2d 225, 235-36 (D. Del.
2012) (discussing Seagate as outlining the standard a plaintiff
must meet in “prov[ing] a cause of action for willful
infringement” and finding, in light of Seagate, that “a
plaintiff alleging a cause of action for willful infringement
must ‘plead facts giving rise to at least a showing of objective
recklessness of the infringement risk’”, which requires
allegations of “‘factual circumstances in which the patents-insuit are called to the attention’ of the defendants”, id. at 236
(quoting St. Clair Intellectual Prop. Consultants, Inc. v.
Hewlett-Packard Co., No. 10-425, 2012 WL 1134318, at *2-3 (D.
Del. Mar. 28, 2012) (internal alterations omitted)).
We will thus apply the 12(b)(6) analysis we described
above, treating Seagate as announcing the elements of the claim
of willful infringement.
Willful Infringement Claim
There can be no question that Penn knew of the patent
-- Penn filed its action for non-infringement and nonenforceability on March 22, 2013, three days after the patent
As we described above, St. Jude has alleged facts
regarding Penn’s partnership with Novartis that, if taken as
true, demonstrate that Penn was commercializing CTL019 T cells,
polynucleotides encoding CTL019 CARs, and CTL019 lentiviral
vectors whose compositions are covered by the ‘645 patent.
These facts suffice to state a claim that Penn acted in the face
of an “objectively high likelihood” that it was infringing on a
This finding is consistent with other courts’
analyses of motions to dismiss willful infringement claims.
See, e.g., Medtrica Solutions, Ltd. v. Cygnus Medical, LLC, No.
12-538, 2012 WL 5726799, at *1 (W.D. Wash., Nov. 15, 2012) (“The
allegations that Medtrica has had notice of the ‘023 Patent
since 2011 and has continued to make and sell the Appli-Kit and
Revital-Ox . . . are sufficient to ‘make out the barest factual
assertion’ to state a claim for willful infringement”) (quoting
IpVenture, Inc. v. Cellco P’ship, No. 10-4755, 2011 WL 207978,
at *2 (N.D. Cal. Jan. 21, 2011)); Oracle Corp. v. DrugLogic,
Inc., 807 F. Supp. 2d 885, 902 (N.D. Cal. 2011) (finding that
plaintiff had stated a claim where it alleged that defendant was
aware of the disputed patent and had “actual notice” of the
infringement claims) (citing Milwaukee Elec. Tool Corp. v.
Hitachi Koki, Ltd., No. 09-948, 2011 WL 665439, at *5 (E.D. Wis.
Feb. 14, 2011) for the proposition that the “allegation that the
defendants were aware of the plaintiffs’ five patents and that
the defendants allegedly had infringed and continued to infringe
upon, is sufficient to plead willful infringement”).
Penn’s filing of C.A. No. 13-1502 fortifies our
In its amended complaint, Penn alleges -- as it had
to in order to demonstrate the propriety of a declaratory
judgment -- that “a substantial and continuing controversy
exists between the University and St. Jude regarding whether the
University is liable for infringing the ‘645 patent.”
1502 Am. Comp.
We will therefore deny in part Penn’s motion to
dismiss the claim of willful infringement.
Pre-Filing Conduct vs. Post-Filing Conduct
We deny the motion to dismiss only “in part” because
the finding that St. Jude has alleged facts sufficient to state
a claim for willful infringement by no means ends our analysis - we must also consider, under Seagate, whether St. Jude’s
failure to seek a preliminary injunction is fatal to a
willfulness claim for the “post-filing” period, and, if so,
whether the post-filing period begins to run at the date Penn
filed the action or the date St. Jude filed its counterclaims.
In Seagate, the Federal Circuit explained that “in
ordinary circumstances, willfulness will depend on an
infringer’s prelitigation conduct.”
Seagate, 497 F.3d at 1374.
The Court noted that while “a willfulness claim asserted in the
original complaint must necessarily be grounded exclusively in
the accused infringer’s pre-filing conduct”, when an accused
infringer acts willfully after a patent holder has filed a
complaint, the patentee may “move for a preliminary injunction,
which generally provides an adequate remedy for combating postfiling willful infringement.”
The Federal Circuit reasoned
that a patentee who does not attempt to exercise his right to
prevent further infringement in this way “should not be allowed
to accrue enhanced damages based solely on the infringer’s postfiling conduct.”
Penn accurately notes that “St. Jude has made no
motion to preliminarily enjoin the University from engaging in
the accused infringing activities”, and it argues that “[t]he
absence of a motion for preliminary injunction is fatal to the
viability of St. Jude’s claim that the University’s activities
are and continue to be willful.”
Penn MTD at 6.
takes Seagate to mean that “an allegation of willful
infringement must either be made based on the accused
infringer’s pre-litigation knowledge, or be maintained only if
the patentee seeks a preliminary injunction”, id.
St. Jude characterizes the Seagate language as dictum,
and it argues that although “[d]istrict courts are divided over
whether Seagate announced a per se requirement that a
preliminary injunction motion be filed . . . no such motion is
necessary where willfulness is premised on pre-suit knowledge of
the asserted point.” St. Jude Resp. in Opp. at 9 (emphasis in
St. Jude also points out an important distinction
between the instant matter and the Seagate line -- in those
cases, the patentee filed the suit alleging infringement, and so
the suit itself often notified the alleged infringer of the
For example, in McRO, Inc. v. Namco Bandai Games
America, Inc., CV 12-10322-CW (FFMx) (C.D. Cal. Jul. 11, 2013),
on which Penn relies, Penn MTD Ex. A, the Court considered
whether plaintiff could bring a willfulness claim where “the
alleged knowledge of the patent resulted only from the filing of
the original complaint in the action and the plaintiff has not
sought a preliminary injunction.”
Id. at 9.
The Court found
that the plaintiff could not sustain such a claim because
Seagate “drastically limit[ed] the availability of willfulness
claims when notice is delivered via lawsuit.”
Id. at 10.
Inc. does not apply here, as there is no question that Penn knew
of the patent before either party filed suit.
But Seagate’s reasoning is not limited to such a
As we noted above, Seagate also suggests that a
patentee for whom a preliminary injunction remedy is available
should not sleep on his rights and thereby accrue greater
damages after filing suit.
Seagate, 497 F.3d at 1374.
Anascape, Ltd. v. Microsoft Corp., No. 9:06-158, 2008 WL
7182476, at *3 (E.D. Tex. Apr. 25, 2008) (denying willful
infringement claim where patentee “did not even attempt to stop
any alleged infringing activity” by moving for a preliminary
That logic does extend to this dispute, and we
thus find that St. Jude’s failure to seek a preliminary
injunction limits Penn’s liability for alleged willful
The question of when the “post-suit” timeline begins
is complicated in this matter where Penn -- the alleged
infringer -- sued first, seeking to vindicate its claim that it
was not infringing on any valid patent St. Jude held, and where
the willful infringement claim came later, in St. Jude’s
In a typical case, where the patentee files
suit, courts have found that a patentee’s obligation to seek a
preliminary injunction begins upon the filing of the willful
infringement claim, see, e.g., LML Holdings, Inc. v. Pacific
Coast Dist. Inc., No. 11-6173, 2012 WL 1965878, at *5-6 (N.D.
Cal. May 30, 2012); Clouding, IP, LLC v. Amazon.com, Inc., No.
12-641, 642, 675, 2013 WL 2293452 (D. Del. May 24, 2013)
(finding that the “post-filing” period began when the patentee
filed an amended complaint containing a willfulness claim, not
when the patentee filed the original complaint).
Without acknowledging that this case diverges from the
usual pattern, Penn assumes that the “post-filing” period
commenced when it filed its suit, see Penn MTD at 7.
argues that the post-filing period did not begin until it filed
its counterclaims alleging willful infringement, see St. Jude
Resp. in Opp. at 10.
St. Jude’s suggested approach is consistent with
caselaw finding that the post-filing period begins at the time a
patentee files a willful infringement claim.
Moreover, a contrary finding would have the bizarre effect of
encouraging alleged infringers to file declaratory actions
immediately after the issuance of a patent so that they could
infringe on valid patents with no fear of a willfulness claim.
This result is inconsistent with the damages scheme the Federal
Circuit established in Beatrice Foods Co. v. New England
Printing & Lithographing Co., 923 F.2d 1576 (Fed. Cir. 1991)15
and clarified in Seagate.
We thus find that St. Jude is not entitled to damages
for willful infringement for the period beginning on June 27,
2013, when it filed its counterclaims, and we will grant Penn’s
motion to dismiss insofar as it relates to this period.
St. Jude’s Motion for Summary Judgment
We turn to St. Jude’s motion for partial summary
judgment, initially filed in C.A. No. 12-4122, in which St. Jude
asks us to determine, as a matter of law, that
[t]he “lentiviral vector clone” (that Penn’s
pleadings call the “June Construct”), which
Penn made from biological material and
accompanying data and know-how provided by
St. Jude pursuant to the Collaboration and
Materials Transfer Agreement dated December
10, 2003 (the “2003 MTA”), and which it has
used in clinical trials pursuant to the
Materials Transfer Agreement dated October
2, 2007 (the “2007 MTA”), contains and was
made with “Material” within the plain
meaning of the two MTAs.
St. Jude MSJ at 1 (emphasis added).
Beatrice Foods Co. established the principle that in order to
receive an award of enhanced damages a patentee must make a
showing of willful infringement. 923 F.2d at 1578.
Standard of Review
As is well-settled, a party moving for summary
judgment bears the initial burden of informing the district
court of the basis for its argument that there is no genuine
issue of material fact by “identifying those portions of ‘the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any,’ which
it believes demonstrate the absence of a genuine issue of
material fact”, Celotex Corp. v. Catrett, 477 U.S. 317, 323
If the moving party carries this initial burden, the
Rules then oblige “the nonmoving party to go beyond the
pleadings and by [his] own affidavits, or by the ‘depositions,
answers to interrogatories, and admissions on file,’ designate
‘specific facts showing that there is a genuine issue for
Id. at 324 (quoting Fed. R. Civ. P. 56).
A factual dispute is genuine
[I]f the evidence is such that a reasonable
jury could return a verdict for the
nonmoving party. . . . The mere existence of
a scintilla of evidence in support of the
plaintiff’s position will be insufficient;
there must be evidence on which the jury
could reasonably find for the plaintiff.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 252 (1986).
A fact is “material” if it “might affect the outcome of the suit
under the governing law”.
Id. at 248.
We “must draw all reasonable inferences in favor of
the nonmoving party, and [we] may not make credibility
determinations or weigh the evidence.”
Reeves v. Sanderson
Plumbing Prods., Inc., 530 U.S. 133, 150 (2000), cited in Amour
v. County of Beaver, PA, 271 F.3d 417, 420 (3d Cir. 2001)).
The Parties Do Not Dispute
The Physical Make-Up of the June Construct
According to Penn, we should deny summary judgment on
the question of whether the June Construct contains “materials”
under the MTA because there exists “a genuine issue of fact
regarding the makeup of the June Construct”, Penn Resp. in Opp.
Penn argues that “St. Jude’s motion for summary judgment
is premised on the factual assertion that the June Construct has
a portion of the Campana Construct in it” because St. Jude makes
assertions such as, “[t]he ‘lentiviral vector clone’ of the CAR
that Penn made pursuant to the 2003 MTA consisted of the antiCD19 cDNA provided by St. Jude, incorporated into a lentiviral
vector delivery vehicle.”
But the dispute as to the physical make-up of the June
Construct appears to be rhetorical rather than factual.
parties seem to agree that the June Construct contains a copy of
the cDNA sequence from the Campana Construct, with one base pair
difference and a change to accommodate the lentiviral vector.
St. Jude refers to the June Construct as containing an “exact
copy of all but one of the approximately 1,500 base pairs
comprising the cDNA supplied by St. Jude”, St. Judge MSJ at 20,
and describes it as a “lentiviral vector clone”, id. at 8
St. Jude thus does not appear to contend that
the June Construct contains a physical portion of the Campana
Construct -- instead, St. Jude argues that by using a gene
sequence identical to that of the Campana Construct, except for
the differences we just mentioned, Dr. June has created a
construct that “contains” a “portion” of the anti-CD19-BB-ζ and
is thus subject to the commercialization and crediting
restrictions of the MTAs.
Thus, whether the copy of the Campana Construct
sequence in the June Construct constitutes a “portion” under the
MTA is a matter not of factual dispute but of contract
Pennsylvania Contract Law
Under Pennsylvania contract law16, we seek to ascertain
“the intent of the parties”, Kripp v. Kripp, 849 A.2d 1159, 1163
(Pa. 2004), and where there is a written contract whose terms
are “clear and unambiguous, the intent of the parties is to be
ascertained from the document itself.”
Id. (citing Hutchison v.
Sunbeam Coal Corp., 519 A.2d 385, 390 (Pa. 1986)).
A contract is ambiguous if “it is reasonably
susceptible of different constructions and capable of being
understood in more than one sense”, id.
As Pennsylvania courts
have made clear, “the mere fact that the parties do not agree
upon the proper construction” does not render a contract
ambiguous, Metzger v. Clifford Realty Corp., 476 A.2d 1, 5 (Pa.
Super. Ct. 1984) (quoting Commonwealth State Highway and Bridge
Auth. v. E.J. Albrecht Co., 430 A.2d 328, 330 (Pa. 1981)).
St. Jude assumes in its motion that Pennsylvania law applies.
See St. Jude MSJ at 19-20. The University responds by arguing
Pennsylvania law, but it maintains that “[s]uch response should
not be construed as an admission that Pennsylvania law is the
appropriate law under a choice of law analysis.” Penn Resp. in
Opp. at 15 n.3. As we noted above, Penn is a citizen of
Pennsylvania, see No. 12-4122 Am. Comp. ¶ 1, and it appears that
Dr. June’s actions took place in Pennsylvania. St. Jude is a
Tennessee citizen, see No. 12-4122 Am. Comp. ¶ 2. The MTAs
contain no choice of law clause, and in our April 4, 2013
Memorandum we conducted a choice of law analysis with regard to
Penn’s tort claim, and, finding no real conflict between
Pennsylvania and Tennessee law, applied Pennsylvania law. Here,
the only non-Pennsylvania citizen, St. Jude, has argued under
Pennsylvania law and neither party has given us any reason to
believe Pennsylvania law does not apply. We will thus apply
Pennsylvania law here.
If a contract is unambiguous, we interpret it as a
matter of law, but if we find that it is ambiguous its meaning
is a question for the finder of fact.
See also, e.g., Ins.
Adjustment Bureau, Inc. v. Allstate Ins. Co., 905 A.2d 462, 469
In Pennsylvania, “the course of the parties’
performance under a contract is always relevant in interpreting
Matthews v. Unisource Worldwide, Inc., 748 A.2d
219, 222 (Pa. Super. Ct. 2000) (citing Atlantic Richfield Co. v.
Razumic, 390 A.2d 736, 741 n.6 (1978)).
See also, e.g.,
Restatement (Second) of Contracts § 202(5) (“Wherever
reasonable, the manifestations of intention of the parties to a
promise or agreement are interpreted as consistent with each
other and with any relevant course of performance, course of
dealing, or usage of trade.”).
The Language of the MTAs
St. Jude argues that the terms of the MTAs are
According to St. Jude, “[t]he 2003 MTA and the
2007 MTA each plainly define Material to include ‘any’
‘portions’ and ‘accompanying know-how and data’”, and “a
‘portion’ is ‘a part of a whole’”.
St. Jude MSJ at 20 (quoting
Oxford Dictionaries, available at
“Data” are “facts or statistics collected together for
reference or analysis”, id., while “know-how” is “practical
knowledge or skill; expertise”, id.
Thus, on St. Jude’s
reading, “an exact copy of all but one of the approximately
1,500 base pairs comprising the cDNA supplied by St. Jude was a
‘portion’ of the Material”, and “the data files and technical
information that St. Jude’s Imai sent to Penn’s Milone . . .
were ‘accompanying know-how and data’”.
Penn suggests, without concluding, that the contract
is ambiguous, see Penn Resp. in Opp. at 15-16, and it offers an
alternative interpretation of the contract language.
to Penn, the phrase “progeny, portions, unmodified derivatives
and any accompanying know-how or data” does not encompass the
June Construct because the June Construct is a “modified
derivative,” or “a substance created from all or part of
another, but . . . requir[ing] a change relative to the original
substance during the creation process”, Penn Resp. in Opp. at
We typically rely upon the peerless The Oxford English
Dictionary for what Simon Winchester rightly described as The
Meaning of Everything in the title of his 2003 history of the
OED, but because the OED includes the similar definition, “a
part of any whole”, as one of nine ways of using “portion” as a
noun, we defer here to St. Jude’s source. XII Oxford English
Dictionary 154-55, def. II.5.a (2d ed. 1989). We note that
another of the nine definitions the OED offers is “[t]he part
(of anything) allotted or belonging to one person; a share”, id.
at 154, def. I.1.a., as in, “1772 Junius Lett. lxviii. (1820)
338 The study of the law requires but a moderate portion of
Only on this one point do we diverge from James
Murray and his learned team.
Penn contrasts this with an unmodified derivative, which
the agreement specifically includes and which Penn describes as
“a substance that can be formed directly from another without a
change to the original substance”.
Penn argues that the
contract’s definition of materials “does not broadly encompass
any and all derivatives of the biological materials provided”,
but instead “specifies very limited types of derivatives of the
biological materials to be included”, of which “modified
derivatives” is not one.
Reading modified derivatives as excluded from the MTA
is also appropriate, Penn contends, in light of paragraph three
of the 2007 MTA where Penn agreed that “the Materials are
provided for the sole purpose of allowing [Penn] to use
Materials to produce a molecular lentiviral vector clone
incorporating Materials . . . for application in ex vivo
autologous cell modification . . . .”
in Opp. at 17 (emphasis added).
2007 MTA ¶ 3; Penn Resp.
This passage does not refer to
the lentiviral clone as itself a “material”, and the
commercialization constraints in the 2003 MTA and 2007 MTA do
not refer to products “incorporating Materials”, but those
“contain[ing] materials” (2003 MTA) or “contain[ing] a portion
of the Materials, . . . derived from the Materials, or which
could not have been produced but for the use of the Materials.”
Penn argues that the June Construct does not
contain a “portion” of the materials because it does not contain
“a physical part of the whole provided by St. Jude”, Penn Resp.
in Opp. at 20, but instead contains a modified derivative.
Penn also points to paragraph five of the 2007 MTA
which provides that with regard to patents “[o]wnership shall
follow inventorship according to US patent law.”
this as demonstrating a “clear intent . . . to allow the
University to research and create a new substance in which it
would presumably have its own rights”, while under St. Jude’s
interpretation, “even a copy of a single nucleotide, molecule,
or even atom from the Campana Construct would constitute a
‘portion’ of the Materials”, Penn Resp. in Opp. at 20-21.
St. Jude and Penn reach contrary conclusions about the
scope of the definition of “materials”, and we find that both
The contract is thus facially ambiguous.
e.g., Ins. Adjustment Bureau, Inc., 905 A.2d at 469 (finding
that opposing parties’ interpretations were both reasonable and
so “the Agreement on its face is ambiguous”).
We now consider evidence of the course of performance
and trade usage to determine whether these shed sufficient light
on the matter to resolve the ambiguity.
Course of Performance
St. Jude argues that “[o]ver nearly eight years, Penn
repeatedly performed, acknowledged, and admitted its obligations
under the 2003 MTA and the 2007 MTA Agreements in accordance
with its full agreement that the June Construct contained and
was made with Materials.”
St. Jude MSJ at 20-21.
points to Dr. June’s crediting of Dr. Campana, Deyo’s e-mail
acknowledging “the necessity of a new MTA” before proceeding
with clinical trials of the June Construct, and Donahue’s e-mail
diagramming the lentiviral vector, including the portion of the
vector that represented the Campana Construct.
Penn argues that the fact that Dr. June occasionally
gave credit to Dr. Campana does not capture the course of
performance because other articles -- indeed, the articles that
form the basis for St. Jude’s breach of contract action -- did
not credit Dr. Campana, as we discussed above.
Penn, Dr. June did not always credit Dr. Campana because he did
not believe he had a contractual obligation to do so -- instead,
he did so in order to comply with “standard practice in the
field of academic research [of] identify[ing] the source of
Penn Resp. in Opp. at 23.
With regard to Donahue’s letter, Penn argues
persuasively that the “portion” to which Donahue referred was
not a “portion” of the Campana Construct within the meaning of
the MTA, but the portion of the June Construct which contained
the gene sequence from the Campana Construct.
seems plainly accurate, and under it Donahue’s statement does
not shed light on Penn’s understanding of whether the June
Construct contained “material” within the meaning of the MTAs.
Penn does not dispute St. Jude’s recounting of Deyo’s
The evidence Penn presents -- including evidence of
Dr. June’s varied treatment of the June Construct in crediting
St. Jude and in sharing materials -- does demonstrate a genuine
dispute of fact as to Penn’s understanding of the scope of the
Though Dr. June’s occasional efforts to credit Dr.
Campana and to seek Dr. Campana’s permission before sharing the
June Construct may shed light on Penn’s understanding of the
agreements, these efforts do not elucidate the agreements’
See, e.g., J.W.S. Delavau, Inc. v. Eastern America
Transport & Warehousing, Inc., 810 A.2d 672, 684 (Pa. Super. Ct.
2002) (“Pennsylvania case law indicates ‘course of performance’
can only be used to interpret, but not to supplement, the terms
of an existing agreement.”).
St. Jude dismisses Penn’s evidence as “self-serving
declarations of undisclosed intent”, St. Jude Reply at 8, but
the credibility of witnesses precisely presents a question for a
As St. Jude puts it, Penn is “deathly silent” on this issue.
St. Jude Reply at 7.
finder of fact.
It is of course well-settled that we may not
make credibility determinations in deciding a motion for summary
See, e.g., Marino v. Indus. Crating Co., 358 F.3d
241, 247 (3d Cir. 2004).
In light of this evidence, Deyo’s e-
mail is insufficient to demonstrate that there is no genuine
issue of material fact with respect to Penn’s understanding.
thus find that the course of performance does not resolve the
contracts’ facial ambiguity.
Penn claims that we must read the terms of the MTAs in
light of their trade usage.
As the United States Supreme Court
long ago explained, “[t]he proper office of a custom or usage in
trade is to ascertain and explain the meaning and intention of
the parties to a contract . . . which could not be done without
the aid of this extrinsic evidence.”
U.S. 383, 390 (1870).
Barnard v. Kellogg, 77
Whether a trade usage exists is a
question of fact for the jury, see, e.g., Albus v. Toomey, 116
A. 917, 918 (Pa. 1922); Simon Wrecking Co. v. AIU Ins. Co., 530
F. Supp. 2d 706, 715 (E.D. Pa. 2008) (Brody, J.).
Restatement (Second) of Contracts § 222(2) (“The existence and
scope of a usage of trade are to be determined as questions of
St. Jude objects that “the mere injection of purported
trade usage into a party’s opposition to a motion for summary
judgment will not defeat the motion”, St. Jude Reply at 14, and,
although we agree as a general matter, we find that here Penn
has pointed to sufficient evidence to give rise to a genuine
issue of material fact as to whether a trade usage affected the
parties’ understanding of the agreements’ terms.
Penn argues that reading “materials” in the MTAs not
to include the June Construct is consistent with the purpose of
MTAs within the medical research field.
Penn produces an
affidavit of Dr. Wesley D. Blakeslee, the Executive Director of
Johns Hopkins Technology Transfer at Johns Hopkins University,
who avers that “[a]s a general matter, MTAs between scientific
research institutions are drafted to govern the exchange of
tangible materials . . . and are not intended to govern
concepts, ideas or future intellectual property derived from the
use of the tangible materials.”
Blakeslee Dec., Penn Resp. in
Opp. Ex. B, at ¶ 8.
St. Jude objects that Blakeslee’s Declaration is
“conclusory” and “sweeping” in its opinions, and it suggests
that Penn has introduced “scant factual evidence” to support its
trade usage theory.
St. Jude demonstrates considerable chutzpa
in objecting to the volume of Penn’s evidence when St. Jude
moved for summary judgment before discovery, and its argument
does not accord with our role as a court reviewing a summary
As the Supreme Court has made clear, we may
not “weigh the evidence”, and we must “draw all reasonable
inferences in favor of the nonmoving party”, Reeves, 530 U.S. at
150, when ruling on a summary judgment motion.
We thus cannot
discard the evidence Penn has provided on the ground that Penn
did not provide enough support for its argument.
St. Jude next objects to Blakeslee’s interpretation on
the ground that it would render the 2007 MTA “meaningless”, and
so a construction based on it must fail as a matter of law.
Jude Reply at 18.
Blakeslee suggests that the MTA governed only
the physically transferred materials, and St. Jude argues that
if this were true there would be no need for the 2007 MTA, which
did not accompany a physical materials transfer, and which the
parties reached ostensibly so that Penn could use the June
Construct in clinical trials.
If the June Construct did not
contain or was not made using “material” within the meaning of
the 2003 MTA, St. Jude’s argument goes, the parties would not
have needed to execute a second MTA for the materials' use in
But St. Jude makes this argument before
conducting any discovery that would shed light on the parties’
understanding of the scope of the materials used during the
clinical trials and the purpose of the 2007 MTA.
further evidence of the parties’ understanding at the time they
entered into the second MTA, we cannot say as a matter of law
that Blakeslee’s interpretation would render the 2007 MTA
meaningless and would thus be useless in shedding light on the
question of whether there is a dispute as to trade usage.
Penn Has Demonstrated A
Genuine Issue of Material Fact
As To The Meaning of the Contract
The agreement is facially ambiguous, and the parties’
conduct under it does not resolve that ambiguity.
there is a question of fact as to what the trade usage is and
whether it affected the parties’ understanding of the MTAs’
Summary judgment is thus unwarranted.
St. Jude’s Motion for a Separate Trial
St. Jude moves in the alternative for a separate trial
on the issue of whether the June Construct contained and was
made with “material” within the meaning of the 2003 and 2007
St. Jude MSJ at 23.
Penn opposes this motion on the
ground that “piecemeal resolution of issues in separate trials
will only serve to prolong the parties’ dispute, not accelerate
Penn Resp. in Opp. at 26.
We agree with St. Jude that an expeditious resolution
of the threshold question of whether the June Construct contains
and was made with “material” within the meaning of the MTAs will
help resolve the case.
But we do not agree that separate trials
are necessary in order to accomplish this aim.
Instead, in the
accompanying Order, we will establish a brief discovery schedule
followed by a trial on all claims.
Because the case involves
both legal and equitable claims, we address the parties’ jury
trial rights below.
The Seventh Amendment provides that “[i]n Suits at
common law, where the value in controversy shall exceed twenty
dollars, the right of trial by jury shall be preserved.”
United States Supreme Court has explained that this Amendment
gives a litigant a right to a jury trial for actions “analogous
to ‘Suits at common law.’”
Tull v. United States, 481 U.S. 412,
The jury trial right does not extend to suits that
would have been brought in equity, and so in order to determine
whether a litigant has that right courts must “examine both the
nature of the action and of the remedy sought.”
Where a case includes both legal and equitable claims,
if the issues underlying the two are common, “the legal claims
involved in the action must be determined prior to any final
court determination of respondents’ equitable claims.”
Queen, Inc. v. Wood, 369 U.S. 469, 479 (1962).
Although “[d]etermination of whether a claim stated by
the complaint is triable by the court or by a jury will normally
not be dependent upon the ‘legal’ or ‘equitable’ character of
the counterclaim”, there are cases, such as one where “the
plaintiff seeks a declaration of invalidity or non-infringement
of a patent, in which the relief sought by the counterclaim will
determine the nature of the entire case.”
Beacon Theatres, Inc.
v. Westover, 359 U.S. 500, 519 n.13 (1959) (Stewart, J.,
dissenting) (citing Moore’s Federal Practice (2d ed.) § 38.29)
Penn’s amended complaint in C.A. No. 12-4122 seeks a
St. Jude’s complaint, originally filed in
the Western District of Tennessee and now consolidated with C.A.
No. 12-4122, contains only a breach of contract claim for which
St. Jude seeks damages.
Both parties included a jury demand in
their complaints in that action.
In C.A. No. 13-1502, Penn seeks determinations of noninfringement and invalidity, and St. Jude counterclaims, seeking
declaratory relief and damages.
Both parties again include jury
As our Court of Appeals has explained, a declaratory
judgment action is neither legal nor equitable in nature, and if
it “does not fit into one of the existing equitable patterns but
is essentially an inverted law suit -- an action brought by one
who would have been a defendant at common law -- then the
parties have a right to a jury”, AstenJohnson, Inc. v. Columbia
Cas. Co., 562 F.3d 213, 223 (3d Cir. 2009) (quoting OwensIllinois, Inc. v. Lake Shore Land Co., 610 F.2d 1185, 1189 (3d
In order to determine whether the action falls
under this category, we are to consider “in what kind of suit
the claim would have come to court if there were no declaratory
judgment remedy”, Owens-Illinois, Inc., 610 F.2d at 1189.
Penn’s declaratory judgment claims in the contract
case would have come -- and did come, in St. Jude’s Tennessee
complaint -- in the form of a breach of contract action.
extent that such an action seeks damages it is a legal claim and
requires a jury trial.
See, e.g., 9 Charles Allen Wright &
Arthur R. Miller, Federal Practice and Procedure § 2316 (3d ed.,
updated April 2013) (“An action for damages for breach of
contract is legal in nature and therefore triable to a jury”);
Wills v. Young, 255 F.2d 65, 67 (3d Cir. 1958) (contrasting “an
action at law for damages for breach of contract” with “an
action in equity for specific performance”).
Penn and St. Jude
are thus entitled to a jury determination on St. Jude’s breach
of contract claim for damages and Penn’s declaratory judgment
claims in C.A. No. 12-4122.
With regard to St. Jude’s claim for a preliminary
injunction, this is an equitable remedy that we will consider.
See, e.g., N.A.A.C.P. v. North Hudson Regional Fire & Rescue,
707 F. Supp. 2d 520, 541 (D.N.J. 2010) (Debevoise, J.) (“a
preliminary injunction is an equitable remedy, which the Court,
in its discretion, considers by balancing and weighing the
Under Dairy Queen, we will dispose of the
equitable claims after a jury considers the legal claims.
Penn also seeks a declaratory judgment in the patent
In In re Lockwood, 50 F.3d 966 (Fed. Cir. 1995), the
Federal Circuit observed that “declaratory judgment actions are,
for Seventh Amendment purposes, only as legal or equitable in
nature as the controversies on which they are founded.”
The Federal Circuit found that a declaratory judgment
action by a potential infringer should be considered “as a suit
for patent infringement in which the affirmative defense of
invalidity has been pled”, id. at 974.
Lockwood looked to the
nature of patent actions in the eighteenth century and found
that “[i]n eighteenth-century England, allegations of patent
infringement could be raised in both actions at law and suits in
equity”, id. at 975, and “[t]he choice of forum and remedy, and
thus of the method of trial, was left with the patentee.”
The Federal Circuit reasoned that “[u]nder both English and
As the Northern District of Illinois summarized, the Supreme
Court vacated the Federal Circuit’s decision in Lockwood after
Lockwood withdrew its jury demand, American Airlines, Inc. v.
Lockwood, 515 U.S. 1182 (1995); Barry S. Wilson, Patent
Invalidity and the Seventh Amendment; Is the Jury Out?, 34 San
Diego L.Rev. 1787, 1796 (1997), and so Lockwood is not binding,
but it is persuasive as a “source of guidance” and as an
indication of the Federal Circuit’s likely position on the
Seventh Amendment question. Pfizer Inc. v. Novopharm Ltd., No.
00 C 1475, 2001 WL 477163, at *3 (N.D. Ill. May 3, 2001) (citing
Christianson v. Colt Indus. Operating Corp., 870 F.2d 1292,
1298–99, n. 7 (7th Cir.1989)).
American practice . . . it was the patentee who decided in the
first instance whether a jury trial on the factual questions
relating to validity would be compelled”, and so the patentee
retained the option of a jury trial even when “the validity of
his patents comes before the court in a declaratory judgment
action for invalidity rather than as a defense in an
Id. at 976.
In Tegal Corp. v. Tokyo Electron America, Inc., 257
F.3d 1331 (Fed. Cir. 2001), the Federal Circuit cited Lockwood’s
canvass of eighteenth century patent law and explained that
“[i]f the patentee sought an injunction and an accounting, the
patentee went to a court of equity.
If, however, the patentee
sought only damages, a court of law was used.”
Id. at 1340
(internal citations omitted).
Thus, under the Federal Circuit’s jurisprudence the
remedy the patentee seeks determines the nature of the action.
See also, e.g., Kao Corp. v. Unilever U.S., Inc., No 01-680,
2003 WL 1905635, at *3 (D. Del. Apr. 17, 2003) (“the patentee’s
infringement case is the linchpin of the Federal Circuit’s
Seventh Amendment analyses”).
Here, where St. Jude's counterclaims seek damages, the
action is necessarily legal and the parties may try their patent
claims to a jury.
As mentioned, we will make a determination as
to the equitable relief they seek after a jury trial.
For the reasons stated herein, we will consolidate the
actions, deny as moot St. Jude’s motion to dismiss Penn’s
initial patent complaint, grant in part and deny in part Penn’s
motion to dismiss St. Jude’s willful infringement counterclaim,
and deny St. Jude’s motion for partial summary judgment and
motion for separate trial.
In the accompanying Order, we set a
discovery and trial schedule.
BY THE COURT:
/S/ STEWART DALZELL
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