Astellas Inst. for Regenerative Med. v. Imstem Biotechnology, Inc.

458 F.Supp.3d 95

ASTELLAS INSTITUTE FOR REGENERATIVE MEDICINE, et al., Plaintiffs,

v.IMSTEM BIOTECHNOLOGY, INC., et al., Defendants.

Civil Action No. 17-cv-12239-ADB

United States District Court, D. Massachusetts.

Signed March 4, 2020

Brenda Danek, Pro Hac Vice, Lauren K. Sharkey, Pro Hac Vice, Latham & Watkins LLP, Chicago, IL, Charles H. Sanders, Latham & Watkins LLP, Boston, MA, David P. Frazier, Pro Hac Vice, Michael A. Morin, Pro Hac Vice, Rebecca L. Rabenstein, Pro Hac Vice, Latham & Watkins LLP, Washington, DC, Yi Sun, Pro Hac Vice, Latham & Watkins LLP, San Diego, CA, for Plaintiff Astellas Institute for Regenerative Medicine.

David P. Frazier, Pro Hac Vice, Michael A. Morin, Pro Hac Vice, Rebecca L. Rabenstein, Pro Hac Vice, Latham & Watkins LLP, Washington, DC, Lauren K. Sharkey, Pro Hac Vice, Latham & Watkins LLP, Chicago, IL, Charles H. Sanders, Latham & Watkins LLP, Boston, MA, for Plaintiff Stem Cell & Regenerative Medicine International, Inc.

Wayne A. Keown, Martha C. Gaythwaite, Taylor R. Neff, Timothy R. Shannon, Verrill Dana, LLP, Portland, ME, Benjamin M. Stern, Verrill Dana, LLP, Boston, MA, for Defendants ImStem Biotechnology, Inc., Xiaofang Wang.

Timothy R. Shannon, Wayne A. Keown, Martha C. Gaythwaite, Verrill Dana, LLP, Portland, ME, Benjamin M. Stern, Verrill Dana, LLP, Boston, MA, for Defendant Ren-He Xu.

MEMORANDUM AND ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT

BURROUGHS, D.J.

Plaintiffs Astellas Institute for Regenerative Medicine ("Astellas") and Stem Cell & Regenerative Medicine International, Inc. ("SCRMI") (collectively, "Plaintiffs") filed this action against Defendants ImStem Biotechnology, Inc. ("ImStem"), Dr. Xiaofang Wang ("Dr. Wang"), and Dr. Ren-He Xu ("Dr. Xu") (collectively, "Defendants"), alleging claims for correction of inventorship of a patent under 35 U.S.C. § 256, unfair trade practices under Massachusetts General Laws Chapter 93A, conversion, unjust enrichment, misappropriation of trade secrets, negligent misrepresentation, and breach of contract. [ECF No. 113]. Defendants filed counterclaims for correction of inventorship of two different patents under 35 U.S.C. § 256 and unjust enrichment. [ECF No. 91].

Currently pending before the Court are Plaintiffs’ motion for partial summary judgment, [ECF No. 127], and Defendants’ cross-motion for partial summary judgment, [ECF No. 131]. For the following reasons, Plaintiffs’ motion for partial summary judgment, [ECF No. 127], is GRANTED in part and DENIED in part, and Defendants’ cross-motion for partial summary judgment, [ECF No. 131], is DENIED.

I. BACKGROUND

A. Procedural Background

On November 13, 2017, Plaintiffs filed suit against Defendants, seeking a correction of inventorship on Patent No. 9,745,551 ("the ’551 Patent") and other state-law remedies. [ECF No. 1]. On January 10, 2018, Defendants filed their answer and counterclaims, seeking correction of inventorship of Patent No. 8,961,956 ("the '956 Patent") and unjust enrichment. [ECF No. 20]. On January 31, 2018, Plaintiffs filed a motion to dismiss the counterclaims, [ECF No. 21], which the Court denied on September 28, 2018, [ECF No. 37]. On August 28, 2019, Defendants filed an amended answer and counterclaim complaint, which added a claim for correction of inventorship on Patent No. 8,962,321 ("the '321 Patent"). [ECF No. 91]. On September 6, 2019, Plaintiffs answered the counterclaims, [ECF No. 92], and on October 3, 2019, Plaintiffs filed an amended complaint, [ECF No. 113]. Defendants filed a second amended answer on October 17, 2019. [ECF No. 114].

Plaintiffs filed their motion for partial summary judgment on December 19, 2019, [ECF No. 127], seeking (1) summary judgment on their claim to add Dr. Robert Lanza ("Dr. Lanza") and Dr. Erin Kimbrel ("Dr. Kimbrel") as co-inventors on the ’551 patent ; (2) summary judgment to reject Defendants’ affirmative defenses to Plaintiffs’ breach of contract claim; and (3) summary judgment on Defendants’ unjust enrichment counterclaim solely to preclude Defendants from seeking monetary damages on that claim, [ECF No. 128-1 at 5–6]. Defendants filed their motion for partial summary judgment on December 19, 2019, [ECF No. 131], seeking summary judgment on Plaintiffs’ state-law claims (Counts III–VII) on the grounds that they are barred by their respective statutes of limitations, [ECF No. 132 at 7]. Defendants also seek summary judgment on Plaintiffs’ breach of contract claim (Count VIII), arguing that there is no contract. [Id. at 23]. The parties each filed oppositions and reply briefs and the motions are now ripe for resolution. See [ECF Nos. 142, 145, 155, 161].

B. Factual Summary

Except as otherwise noted, the following facts are not in dispute.

Drs. Kimbrel and Lanza developed a method for making mesenchymal stem cells ("MSCs") from a human embryonic stem cell using a cell called a hemangioblast as an intermediate. [ECF No. 130-1 ¶ 26; ECF No. 146 ¶ 26]. Astellas referred to these cells as "HB-MSCs" to denote that the MSCs had been derived from hemangioblasts. [ECF No. 130-1 ¶ 28; ECF No. 146 ¶ 28]. In July 2010, Drs. Kimbrel, Lanza, Wang, and Xu embarked on a scientific collaboration. [ECF No. 133 ¶ 1; ECF No. 144-1 ¶ 1; ECF No. 130-1 ¶ 29]. Dr. Kimbrel provided Drs. Wang and Xu with her confidential protocol for making hemangioblasts from human embryonic stem cells, and for making HB-MSCs. [ECF No. 133 ¶ 2; ECF No. 113 ¶ 35; ECF No. 130-1 ¶ 29; ECF No. 146 ¶ 29]. The parties dispute the purposes for which the protocols were shared. Plaintiffs maintain that their disclosure of the protocols was for the limited purpose of allowing Drs. Wang and Xu to use the cells in connection with an animal model for multiple sclerosis. [ECF No. 130-1 ¶ 30]. Defendants claim that the disclosure was not limited to this purpose. [ECF No. 146 ¶ 30].

On July 12, 2012, Drs. Wang and Xu filed U.S. Provisional Patent Application No. 61/670,787. [ECF No. 130-1 ¶ 31; ECF No. 146 ¶ 31]. Plaintiffs argue that the provisional application led to the ’551 patent, [ECF No. 130-1 ¶ 33], while Defendants counter that this mischaracterizes the patent application process. [ECF No. 146 ¶ 33]. The ’551 patent cites the 61/670,787 provisional application as a "related U.S. application." [ECF No. 136-36 at 1 ( ’551 patent) ].

The parties dispute whether Drs. Wang and Xu's provisional application disclosed and claimed as their own the method for making HB-MSCs that Dr. Kimbrel shared with them, [ECF No. 130-1 ¶ 32; ECF No. 146 ¶ 32], and whether the ’551 patent discloses Dr. Kimbrel's method, [ECF No. 130-1 ¶ 34; ECF No. 146 ¶ 34]. Claim 1 of the ’551 patent is the only independent claim, which sets forth a method of deriving HB-MSCs that includes a step of culturing the cells serum free, feeder free, and with a GSK3 inhibitor. [ECF No. 130-1 ¶¶ 35, 36; ECF No. 146 ¶¶ 35, 36]. This step was not part of the protocol that Dr. Kimbrel shared with Drs. Wang and Xu. See [ECF No. 130-1 ¶ 37; ECF No. 146 ¶ 37]. The parties dispute whether this step is the sole basis for Defendants’ theory that Drs. Wang and Xu should be inventors on the ’551 patent. [ECF No. 130-1 ¶ 37; ECF No. 146 ¶ 37].

II. LEGAL STANDARD

Summary judgment is appropriate where the movant demonstrates that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "A fact is material if its resolution might affect the outcome of the case under the controlling law." Cochran v. Quest Software, Inc., 328 F.3d 1, 6 (1st Cir. 2003). "A genuine issue exists as to such a fact if there is evidence from which a reasonable trier could decide the fact either way." Id. When reviewing the record, the court "must take the evidence in the light most flattering to the party opposing summary judgment, indulging all reasonable inferences in that party's favor." Id. The First Circuit has noted that this standard "is favorable to the nonmoving party, but it does not give him a free pass to trial." Hannon v. Beard, 645 F.3d 45, 48 (1st Cir. 2011). "The factual conflicts upon which he relies must be both genuine and material," Gomez v. Stop & Shop Supermarket Co., 670 F.3d 395, 397 (1st Cir. 2012), and the court may discount "conclusory allegations, improbable inferences, and unsupported speculation," Cochran, 328 F.3d at 6 (quoting Medina-Muñoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir. 1990) ).

"To succeed in showing that there is no genuine dispute of material fact," the moving party must point to "specific evidence in the record that would be admissible at trial." Ocasio-Hernandez v. Fortuño-Burset, 777 F.3d 1, 4 (1st Cir. 2015). "That is, it must ‘affirmatively produce evidence that negates an essential element of the non-moving party's claim,’ or, using ‘evidentiary materials already on file ... demonstrate that the non-moving party will be unable to carry its burden of persuasion at trial.’ " Id. at 4–5 (quoting Carmona v. Toledo, 215 F.3d 124, 132 (1st Cir. 2000) ). "One of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses ...." Celotex Corp. v. Catrett, 477 U.S. 317, 323–24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the movant takes the position that the record fails to make out any trial-worthy question of material fact, "it is the burden of the nonmoving party to proffer facts sufficient to rebut the movant's assertions." Nansamba v. No. Shore Med. Ctr., Inc., 727 F.3d 33, 40 (1st Cir. 2013).

III. DISCUSSION

A. Inventorship

Plaintiffs seek summary judgment to add Drs. Kimbrel and Lanza as co-inventors on the ’551 patent issued to Defendants. [ECF No. 128-1 at 5]. Defendants claim that, although the ’551 patent includes steps from the HB-MSC protocol provided by Drs. Kimbrel and Lanza, these were not inventive contributions because they were contained in prior art at the time of the ’551 Patent Cooperation Treaty ("PCT") filing. [ECF No. 145 at 4–5].

"A person...