Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

StemCells, Inc. v. Neuralstem, Inc.

United States District Court, D. Maryland

July 22, 2015

STEMCELLS, INC., et al., Plaintiffs,
v.
NEURALSTEM, INC., et al., Defendants

Page 624

For Stemcells, Inc., Stemcells California, Inc., Plaintiffs: Isaac S Crum, PRO HAC VICE, Brandon Herrick Barnes, McDermott Will and Emery LLP, Washington, DC; John Robert Fuisz, PRO HAC VICE, The Fuisz Law Firm, Washington, DC; William G Gaede, III, PRO HAC VICE, McDermott Will and Emery LLP, Menlo Park, CA.

For Neuralstem, Inc., Consol Plaintiff: Alan Lynn Barry, Brian J Arnold, LEAD ATTORNEYS, PRO HAC VICE, Bell Boyd and Lloyd LLP, Chicago, IL; James P Ulwick LEAD ATTORNEY, Kramon and Graham PA, Baltimore, MD; Michael Thomas Murphy, LEAD ATTORNEY, K and L Gates LLP, Washington, DC; Sanjay Krishna Murthy, LEAD ATTORNEY, PRO HAC VICE, K& L GATES LLP, Chicago, IL; Christina N Goodrich, PRO HAC VICE, K and L Gates LLP, Los Angeles, CA; Devon Curtis Beane, PRO HAC VICE, K and L Gates LLP, Chicago, IL.

For StemCells, Inc., a Delaware Corporation, Consol Plaintiff: Andrew A Kumamoto, LEAD ATTORNEY, PRO HAC VICE, McDermott Will and Emery LLP, Palo Alto, CA; John Robert Fuisz, LEAD ATTORNEY, PRO HAC VICE, The Fuisz Law Firm, Washington, DC; William G Gaede, III, LEAD ATTORNEY, PRO HAC VICE, McDermott Will and Emery LLP, Menlo Park, CA; Brandon Herrick Barnes, McDermott Will and Emery LLP, Washington, DC.

For neurospheres holding Stemcells California, Inc., Consol Plaintiff: Andrew A Kumamoto, LEAD ATTORNEY, PRO HAC VICE, McDermott Will and Emery LLP, Palo Alto, CA; John Robert Fuisz, LEAD ATTORNEY, PRO HAC VICE, The Fuisz Law Firm, Washington, DC; William G Gaede, III, LEAD ATTORNEY, PRO HAC VICE, McDermott Will and Emery LLP, Menlo Park, CA.

For Neuralstem, Inc., Defendant: James P Ulwick, LEAD ATTORNEY, Kramon and Graham PA, Baltimore, MD; Alan Lynn Barry, Brian J Arnold, PRO HAC VICE, Bell Boyd and Lloyd LLP, Chicago, IL; Christina N Goodrich, PRO HAC VICE, K and L Gates LLP, Los Angeles, CA; Devon Curtis Beane, Michael J Abernathy, Sanjay Krishna Murthy, PRO HAC VICE, K and L Gates LLP, Chicago, IL; Jackson Ho, PRO HAC VICE, K and L Gates LLP, Boston, MA; Michael Thomas Murphy, K and L Gates LLP, Washington, DC.

For StemCells, Inc., Stemcells California, Inc., Consol Defendants: John Robert Fuisz, LEAD ATTORNEY, PRO HAC VICE, The Fuisz Law Firm, Washington, DC; William G Gaede, III, LEAD ATTORNEY, PRO HAC VICE, McDermott Will and Emery LLP, Menlo Park, CA; Brandon Herrick Barnes, McDermott Will and Emery LLP, Washington, DC.

For Neuralstem, Inc., a Delaware corporation, Consol Defendant: Alan Lynn Barry, LEAD ATTORNEY, PRO HAC VICE, Bell Boyd and Lloyd LLP, Chicago, IL; James P Ulwick, LEAD ATTORNEY, Kramon and Graham PA, Baltimore, MD; Michael J Abernathy, Sanjay Krishna Murthy, LEAD ATTORNEYS, PRO HAC VICE, K and L Gates LLP, Chicago, IL; Michael Thomas Murphy, LEAD ATTORNEY, K and L Gates LLP, Washington, DC; Christina N Goodrich, PRO HAC VICE, K and L Gates LLP, Los Angeles, CA; Devon Curtis Beane, PRO HAC VICE, K and L Gates LLP, Chicago, IL.

For Karl K Johe, an individual, Consol Defendant: Alan Lynn Barry, LEAD ATTORNEY, PRO HAC VICE, Bell Boyd and Lloyd LLP, Chicago, IL; Michael J Abernathy, LEAD ATTORNEYS, PRO HAC VICE, K and L Gates LLP, Chicago, IL; Michael Thomas Murphy, LEAD ATTORNEY, K and L Gates LLP, Washington, DC Devon Curtis Beane, PRO HAC VICE, K and L Gates LLP, Chicago, IL.

For I Richard Garr, an individual, Consol Defendant: Alan Lynn Barry, LEAD ATTORNEY, PRO HAC VICE, Bell Boyd and Lloyd LLP, Chicago, IL; Michael Thomas Murphy, LEAD ATTORNEY, K and L Gates LLP, Washington, DC; Sanjay Krishna Murthy, LEAD ATTORNEY, Michael J Abernathy, Devon Curtis Beane, PRO HAC VICE, K and L Gates LLP, Chicago, IL.

For StemCells, Inc., Stemcells California, Inc., Consol Counter Claimants, Consol Third Party Plaintiff: John Robert Fuisz, PRO HAC VICE, The Fuisz Law Firm, Washington, DC; William G Gaede, III, PRO HAC VICE, McDermott Will and Emery LLP, Menlo Park, CA; Brandon Herrick Barnes, McDermott Will and Emery LLP, Washington, DC.

For Neuralstem, Inc., Consol Counter Defendant: Alan Lynn Barry, LEAD ATTORNEY, PRO HAC VICE, Bell Boyd and Lloyd LLP, Chicago, IL; James P Ulwick, LEAD ATTORNEY, Kramon and Graham PA, Baltimore, MD; Michael Thomas Murphy, LEAD ATTORNEY, K and L Gates LLP, Washington, DC; Sanjay Krishna Murthy, LEAD ATTORNEY, Devon Curtis Beane, PRO HAC VICE, K and L Gates LLP, Chicago, IL; Christina N Goodrich, PRO HAC VICE, K and L Gates LLP, Los Angeles, CA.

For Richard Garr, Karl Johe, Consol Third Party Defendants: Devon Curtis Beane, PRO HAC VICE, K and L Gates LLP, Chicago, IL; Michael Thomas Murphy, LEAD ATTORNEY, K and L Gates LLP, Washington, DC.

For Neuralstem, Inc., Counter Claimant: James P Ulwick, LEAD ATTORNEY, Kramon and Graham PA, Baltimore, MD; Alan Lynn Barry, Brian J Arnold, LEAD ATTORNEYS, PRO HAC VICE, Bell Boyd and Lloyd LLP, Chicago, IL; Christina N Goodrich, PRO HAC VICE, K and L Gates LLP, Los Angeles, CA; Sanjay Krishna Murthy, LEAD ATTORNEY, Devon Curtis Beane, Jackson Ho, Michael J Abernathy, PRO HAC VICE, K and L Gates LLP, Chicago, IL; Michael Thomas Murphy, K and L Gates LLP, Washington, DC.

For Stemcells, Inc., Stemcells California, Inc., Counter Defendants: Isaac S Crum, PRO HAC VICE, Brandon Herrick Barnes, McDermott Will and Emery LLP, Washington, DC.

For Stemcells California, Inc., Stemcells, Inc., Counter Defendants, Counter Claimants: Isaac S Crum, PRO HAC VICE, Brandon Herrick Barnes, McDermott Will and Emery LLP, Washington, DC; John Robert Fuisz, PRO HAC VICE, The Fuisz Law Firm, Washington, DC; William G Gaede, III, PRO HAC VICE, McDermott Will and Emery LLP, Menlo Park, CA.

For Neuralstem, Inc., Counter Defendant, Counter Claimant: James P Ulwick, LEAD ATTORNEY, Kramon and Graham PA, Baltimore, MD; Alan Lynn Barry, Brian J Arnold, Bell Boyd and Lloyd LLP, Chicago, IL; Christina N Goodrich, PRO HAC VICE, K and L Gates LLP, Los Angeles, CA; Devon Curtis Beane, Michael J Abernathy, PRO HAC VICE, K and L Gates LLP, Chicago, IL; Jackson Ho, K and L Gates LLP, Boston, MA; Michael Thomas Murphy, K and L Gates LLP, Washington, DC; Sanjay Krishna Murthy, K& L GATES LLP, Chicago, IL.

For Stemcells, Inc., Counter Defendant: Brandon Herrick Barnes, McDermott Will and Emery LLP, Washington, DC.

For Stemcells California, Inc., Counter Defendant: Brandon Herrick Barnes, Isaac S Crum, McDermott Will and Emery LLP, Washington, DC; John Robert Fuisz, PRO HAC VICE, The Fuisz Law Firm, Washington, DC; William G Gaede, III, PRO HAC VICE, McDermott Will and Emery LLP, Menlo Park, CA.

Page 625

MEMORANDUM OPINION

ROGER W. TITUS, UNITED STATES DISTRICT JUDGE.

Three scientists walk into a lab. They emerge with an important scientific discovery but, as is frequently the case, a contentious patent dispute later arises. After nearly a decade of litigation that has spanned two federal judges, and produced enough pages of memoranda to clear a forest, Plaintiffs still have not officially unlocked the doors to the courthouse. The discovery by Defendants of a terse, one-page document threw a monkey wrench into this high-stakes litigation, as it called into question whether Plaintiffs had standing to bring their patent infringement claims. The Court held a bench trial to determine the issue of standing, and as

Page 626

more fully explained below, concludes that Plaintiffs lack standing to bring their patent infringement claims. Accordingly, the Complaint will be dismissed.

Background[1]

A. Drs. Tetzlaff, Weiss, Reynolds, and the Initial Discovery

In July of 1989, Dr. Wolfram Tetzlaff, a specialist in spinal cord injuries who is a Ph.D. and a licensed physician, was offered a position as a faculty member at the University of Calgary, and began setting up his laboratory. ECF No. 476 at 41-43, Dec. 12, 2014 Tr. Trans. 41:8-43:4. Brent Reynolds, then a Ph.D. candidate, was hired to work in Dr. Tetzlaff's lab.[2] ECF No. 474 at 48-49, Dec. 9, 2014 Tr. Trans. 48:24-49:2.

Dr. Reynolds' work was supported by a studentship funded by the Pharmaceutical Manufacturer's Association of Canada and the Medical Research Council of Canada. ECF No. 478-11 at 4; ECF No. 476 at 55-56, Dec. 9, 2014 Tr. Trans. 55:19-56:7. Dr. Reynolds asserted that Dr. Tetzlaff initially paid his salary from the budget he received to start his lab. ECF No. 474 at 62, Dec. 9, 2014 Tr. Trans. 62:11-22. However, there is no evidence that Dr. Reynolds' salary was ever paid by Dr. Tetzlaff personally, and Dr. Reynolds admitted on cross-examination that he was unaware of the specific details of how his work was funded. Id. at 139-142, Dec. 9, 2014 Tr. Trans. 139:7-142:8.

Next door to Dr. Tetzlaff's lab was the lab of Dr. Samuel Weiss, another young professor who was working with tissue culture. ECF No. 476 at 43-44, Dec. 12, 2014 Tr. Trans. 43:25-44:24; ECF No. 474 at 51, Dec. 9, 2014 Tr. Trans. 51:16-19. Although Dr. Reynolds had been hired to work under Dr. Tetzlaff, he eventually began working in Dr. Weiss' lab; Dr. Reynolds had developed an increasingly severe animal allergy, and unlike Dr. Tetzlaff, Dr. Weiss did not work with live animals. ECF No. 474 at 51, Dec. 9, 2014 Tr. Trans. 51:1-25. However, because of the proximity of their labs, and due to the fact that they were essentially the only faculty in their wing of the building, the three scientists encountered each other frequently and collaborated on projects. ECF No. 476 at 44-45, Dec. 12, 2014 Tr. Trans. 44:8-45:5.

Dr. Reynolds came into possession of gangliocytes, a naturally occurring chemical compound in the body, that he obtained from a company in Italy. ECF No. 474 at 50, Dec. 9, 2014 Tr. Trans. 50:15-25. He decided to put the gangliocytes, along with an epidermal growth factor, into a tissue culture with neurons to see if the combination resulted in more neurons surviving. ECF No. 474 at 52, Dec. 9, 2014 Tr. Trans. 52: 2-10. The results were unexpected. Not only did the combination result in more neurons surviving, but also it resulted in the massive proliferation of neurons. ECF No. 474 at 53, Dec. 9, 2014 Tr. Trans. 53:8-10.

B. Collaboration and Agreement

All three scientists, including Dr. Tetzlaff, collaborated to confirm and refine the discovery. Dr. Tetzlaff provided key assistance in confirming that proliferation of cells was in fact taking place, in determining what type of cells were being proliferated, in designing and executing the first human experiments, and in demonstrating

Page 627

the potential utility of the technology in the human adult brain. ECF No. 474 at 126, Dec. 9, 2014 Tr. Trans. 126:1-127:8 (Dr. Reynolds testifying that Dr. Weiss assisted with identifying a method to confirm proliferation of cells); ECF No. 476 at 52, Dec. 12, 2014 Tr. Trans. 52:3-53:3; ECF No. 478-9 at 2, 5-7.

The collaboration of all three scientists is strongly corroborated by a number of contemporaneous documents. One is a grant application jointly submitted by Drs. Weiss and Tetzlaff in 1990 detailing the extent of their collaborative efforts with regard to the discovery (the " 1990 Grant Application" ). ECF No. 478-11. This grant application states that Dr. Tetzlaff will be a " co-ordinator of all phases of molecular biology experiments." Id. at 32. The others are various abstracts and articles on which all three scientists are credited with authorship.[3] ECF No. 478-3; ECF No. 478-4; ECF No. 478-5.

The three scientists, recognizing the potential commercial value of the invention, agreed to divide ownership amongst themselves. ECF No. 476 at 57, Dec. 12, 2014 Tr. Trans. 57:15-58:8. Consistent with their understanding, Drs. Weiss, Tetzlaff and Reynolds signed a document on January 3, 1991 (the " 1991 Memo" ) that stated:

This letter is to indicate the allotment of interests to the inventors of the above invention.
45% - Dr. Samuel Weiss, Dept. of Pathology
45% - Mr. Brent Allan Reynolds, Dept. of Pathology
10% - Dr. Wolfram Tetzlaff, Dept. of Anatomy
The inventors are in agreement with this assignment which relates to 50% of any profits derived from this invention, the other 50% being assigned to the University of Calgary through their agent University Technologies International, Inc. per the current policy relating to Intellectual Property.[4] (emphasis added)

ECF No. 478-8. This document, dated January 2, 1991, was addressed to Beverly A. Sheridan of University Technologies, Inc. (" UTI" ). Id. UTI was the entity responsible for commercializing inventions made by faculty and staff at the University of Calgary. ECF No. 474 at 86-87, Dec. 9, 2014 Tr. Trans. 86:25-87:2.

On January 3, 1991, Drs. Weiss and Reynolds, but not Dr. Tetzlaff, signed an agreement (the " 1991 Assignment" ) purporting to assign their interest in the invention to UTI; the document represented that no other party had a claim to the invention. ECF No. 478-10. UTI ultimately failed to successfully commercialize the invention, and it was purportedly reassigned to Drs. Weiss and Reynolds, who set about attempting to commercialize the invention themselves. ECF No. 474 at 108; Tr. Tran. 108:9-109:1.

C. The Patent Application

Drs. Weiss and Reynolds filed Patent Application 07/726,812 (the " 812 Application" ) on July 8, 1991. ECF No. 402-2 at 46-121. On February 2, 1994, the United

Page 628

States Patent and Trademark Office (" PTO" ) rejected several claims in the '812 Application for failing to list Dr. Tetzlaff as an inventor, even though he was listed as an author on Abstract 474.2 in Volume 16 of the Society for Neuroscience Abstracts. ECF No. 299-4 at 12.

Faced with this rejection by the PTO, Jan Brunelle, the attorney prosecuting the '812 Application, contacted Dr. Tetzlaff and requested that he provide her with information regarding his contributions to the invention. ECF No. 478-9 at 2-3. Dr. Tetzlaff responded with a detailed letter outlining his contributions. Id. at 4-7. Based on his response, Ms. Brunelle concluded that Dr. Tetzlaff was not an inventor. Id. at 8-10. Drs. Weiss and Reynolds submitted declarations to the PTO minimizing Dr. Tetzlaff's role and asserting that his involvement consisted primarily of giving financial support to Dr. Reynolds. The Court finds that these declarations significantly misrepresented the important role that Dr. Tetzlaff played in the conception and reduction to practice of the invention, ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.