United States District Court, S.D. California
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS
(ECF NO. 252)
GONZALO P. CURIEL, District Judge.
After two rounds of summary judgment on the issue of whether their allegedly infringing activities fall within the "safe harbor" provided by 35 U.S.C. § 271(e)(1), defendants Santaris Pharma A/S Corp. and Santaris Pharma A/S (both, Defendants or Santaris) move to dismiss plaintiff Isis Pharmaceuticals, Inc.'s (Plaintiff or Isis) first amended complaint (FAC) to the extent that the FAC is premised on the sale or offer for sale of Isis's patented methods. (ECF No. 252-1.) Defendants' motion to dismiss has been fully briefed, (ECF Nos. 260, 267), and the Court finds it suitable for disposition without oral argument, see Civil Local Rule 7.1.d.1.
Plaintiff alleges infringement of three patents: 6, 326, 199 (199 patent), 6, 066, 500 (500 patent), and 6, 440, 739 (739 patent). The 199 patent claims methods of reacting certain "gapmer" or "gapped" oligonucleotide compounds in a cell. The 500 patent and the 739 patent each claim methods and compounds. The 500 patent claims a method for contacting cells or tissues in a laboratory dish with antisense compounds that inhibit the expression of the human beta catenin protein. The 739 patent is similar to the 500 patent, except that it claims methods and compounds that affect a different protein: glioma-associated oncogene-2 (Gli2).
Plaintiff alleges the foregoing patents embody a "platform" technology that enables Plaintiff to design, evaluate, and develop candidate antisense compounds. Plaintiff alleges that Santaris sells these antisense drug discovery services and products to U.S. pharmaceutical companies in direct competition with Isis. Plaintiff alleges these sales are memorialized in commercial agreements with its pharmaceutical collaborators, pursuant to which Santaris agreed to transfer property and/or perform services for a certain price. Plaintiff alleges these sales and offers for sale occurred in the U.S., and that Santaris's sales and offers to sale have harmed Isis and the value of its patents.
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Dismissal is warranted under Rule12(b)(6) where the complaint lacks a cognizable legal theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984); see Neitzke v. Williams, 490 U.S. 319, 326 (1989) ("Rule12(b)(6) authorizes a court to dismiss a claim on the basis of a dispositive issue of law."). Alternatively, a complaint may be dismissed where it presents a cognizable legal theory yet fails to plead essential facts under that theory. Robertson, 749 F.2d at 534.
In reviewing a motion to dismiss under Rule 12(b)(6), the court must assume the truth of all factual allegations and must construe all inferences from them in the light most favorable to the nonmoving party. Thompson v. Davis, 295 F.3d 890, 895 (9th Cir. 2002); Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996).
Here, the success of Defendants' motion to dismiss turns largely on the legal question of whether the sale or offer for sale of a patented method may serve as a basis for infringement liability under 35 U.S.C. § 271(a).
Defendants argue that, "under § 271(a), method claims can only be infringed by use, when the steps of the claims are performed-they cannot be infringed through a sale, or an offer for sale." (ECF No. 252-1 at 6.) Defendants contend the "legislative history of § 271(a), Federal Circuit case law, and better-reasoned district court decisions compel this conclusion." (Id.)
In response, Plaintiff argues Defendants' position lacks merit because the "plain language of Section 271(a) could not be clearer." (ECF No. 260 at 6.) Plaintiff thus argues that, because § 271(a) is unambiguous, Defendants err under the rules of statutory construction by resorting to legislative history to argue that the sale or offer for sale of a method claim does not constitute infringement under § 271(a). Plaintiff further argues that Defendants' position is contrary to, or misapplies, relevant case law.
Section 271(a) provides: "Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term therefor, infringes the patent."
In construing § 271(a), the Federal Circuit has recognized that "the concept of use' of a patented method or process is fundamentally different from the use of a patented system or device." NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282, 1317 (Fed. Cir. 2005) (citing In re Kollar, 286 F.3d 1326, 1332 (Fed Cir. 2002) (recognizing "the distinction between a claim to a product, device, or apparatus, all of which are tangible items, and a claim to a process, which consists of a series of acts or steps.... [A process] consists of doing something, and therefore has to be carried out or performed."); Joy Techs, Inc. v. Flakt, Inc., 6 F.3d 770, 773 (Fed Cir. 1993) ("The law is unequivocal that the sale of equipment to perform a process is not a sale of the process within the meaning of section 271(a).")); Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617, 628 (2008) (observing, in the context of patent exhaustion, that "a patented method may not be sold in the same way as an article or device").
The Federal Circuit has also recognized that "[i]t is well established that a patent for a method or process is not infringed unless all steps or stages of the claimed process are utilized.'" NTP, 418 F.3d at 1318 (quoting Roberts Dairy Co. v. United States, 530 F.2d 1342, 1354 (1976). "Because a process is nothing more than the sequence of actions of which it is comprised, the use of a process necessarily involves doing or performing each of the steps recited." NTP, 418 F.3d at 1318. Thus, when presented with a situation where some steps of a patented process occurred outside the United States, the Federal Circuit held "that a process cannot be used within' the United States as required by section 271(a) unless each of the steps is performed within this country." Id . And, only if each of the steps was performed within the United States, would the process patent be infringed. See id.
The Federal Circuit then went on to address the issue that is directly relevant to the instant motion: "the issue of whether a method claim may be infringed by selling or offering to sell within the meaning of section 271(a)." Id.
Explaining that neither "sale" or "offers to sale" as used in § 271(a) are defined by statute, the Federal Circuit began its analysis with these terms. Id. at 1319. Observing that it had, in the past, used dictionaries and the Uniform Commercial Code to define the phrase "sale for importation" in connection with an International Trade Commission case, the Federal Circuit turned to Black's Law Dictionary to define the term "sale" as used in § 271(a). Id . Using the Black's definition, the court concluded "the ordinary meaning of a sale includes the concept of a transfer of title or property, " and that it was thus "difficult to envision what property is transferred merely by one party performing the ...