The U.S. Court of Appeals for the Federal Circuit affirmed a district court’s judgment of non-infringement of two patents relating to cryopreserved human neonatal or fetal hematopoietic stem cells from umbilical cord or placental blood, and reversed the judgment that the patents were not invalid for obviousness. PharmaStem Therapeutics Inc. v. ViaCell Inc., Case Nos. 05-1490, -1551 (Fed. Cir., July 9, 2007) (Bryson, J.; Newman, J., dissenting).
PharmaStem sued six defendants alleging that the defendants had infringed two patents owned by PharmaStem, U.S. Patent No. B1 5,004,681 (the ’681 patent) and U.S. Patent No. 5,192,553 (the ’553 patent), a continuation-in-part of the ’681 patent. The patents in suit recite compositions and methods relating to a medical procedure for treating persons with compromised blood and immune systems. The treatment is based on the discovery that blood from a newborn infant’s umbilical cord is a rich source of a type of stem cells useful for rebuilding an individual’s blood and immune system after that system has been compromised by disease or a medical treatment such as chemotherapy.
Following the jury’s verdict finding infringement of both patents, the district court granted the defendants’ judgment as a matter of law (JMOL) motions and entered a judgment of non-infringement with respect to both patents. The district court agreed with the defendants that, in light of the legal theories pressed by PharmaStem at trial, the evidence failed to show that any of the defendants had infringed any of the asserted claims of either patent in suit. Although granting the defendants’ motions for JMOL as to infringement, the district court denied their motions for JMOL of invalidity with respect to the asserted claims. PharmaStem appealed.
The Federal Circuit agreed with the district court that defendants’ proffered evidence of infringement of the ’681 patent, which consisted almost entirely of advertising materials, did not provide a sufficient basis for a finding of infringement. Overall, the Court found that the evidence failed to establish the central issue of whether the preserved samples contained sufficient numbers of stem cells to effect hematopoietic reconstitution of an adult. The Court also agreed with the district court that PharmaStem had failed to prove that the defendants were guilty of contributory infringement of the ’553 patent and upheld the lower court’s interpretation of the contributory infringement statute to require "a sale or an offer of sale of a product; the statute is not satisfied … by the provision of a service for compensation." Here, the Federal Circuit noted that the cord blood remained at all times the property of the families whose infants supplied it, and that the defendants merely stored and maintained the blood until it was requested under the terms of a contract between the parties.
Turning to the jury verdict on the issue of obviousness, the Court applied Third Circuit law to the standard of review and limited its inquiry to whether there was substantial evidence supporting the jury’s verdict. The Court stated that the obviousness standard required the patent challenger to show that a person of ordinary skill in the art would have had reason to attempt to make the claimed invention and would have had a reasonable expectation of success in doing so. The Court found no serious question as to whether there was a suggestion or motivation to devise the patented composition or process. The Court noted that the more difficult question was whether the prior art would have given rise to a reasonable expectation that cord blood could be successfully used in transplants for hematopoietic reconstitution. The Court found PharmaStem’s expert testimony that none of the prior art showed that cord blood contains stem cells irreconcilable with statements made by the inventors in the joint specification and with the teachings of prior art references themselves.
In dissent, Judge Newman accused the majority of limiting patentability to the serendipitous and unexpected, in contravention of established patent law, which recognizes that advances of great power may be based as much on persistent and skilled investigation as on the flash of creative genius.
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