DEWEYBALLANTINELLP333SouthGrand
`
`
`
`AvenueLosAngeles,California90071-1530
`
`\ooo\1o\u:.t>L'»aN
`
`10
`
`1- B)
`
`7- DJ
`
`14:
`
`16
`
`17
`
`19
`
`20
`
`22
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Jeffrey R. Witham (SBN: 116392)
`Tanya L. Hunter (SBN: 197761)
`DEWEY BALLANTINE LLP
`333 South Grand Avenue
`Los Angeles, California 90071-1530
`Telephone: (213) 621-6000
`Facsimile: (213)621-6100
`
`Harvey Kurzweil
`Joseph Angland
`Aldo A. Badini
`Henry J. Ricardo
`Paul T. Olszowka
`Brian S. McGrath
`DEWEY BALLANTINE LLP
`1301 Avenue of the Americas
`New York, New York 10019-6092
`Telephone: (212) 259-8000
`Facsimile: (212) 259-6333
`
`Elliot M. Olstein
`CARELLA, BYRNE, BAIN,
`GILFILLAN, CECCHI, STEWART
`& OLSTEIN, P.C.
`Six Becker Farm Road
`Roseland, New Jersey 07068-1739
`Telephone: (973) 994-1700
`Facsimile: (973) 994-1744
`
`Attorneys for Plaintiff
`MEDIMMUNE, INC.
`
`UNITED STATES DISTRICT COURT
`
`CENTRAL DISTRICT OF CALIFORNIA
`
`IVIEDHVIMUNE, INC.
`
`Case No. 03-2567 MIRP (CTX)
`
`Plaintiff.
`
`VS.
`
`GENENTECH, INC., CITY OF HOPE, and
`CELLTECH R&D LTD.
`
`Defendants.
`
`PLAINTIFF MEDIMMUNE, INC.'S FIRST
`AMENDED COMPLAINT FOR:
`
`1.
`2.
`
`P°>’.°‘!~":““-’
`
`Declaratory Judgment;
`Patent Invalidity;
`Patent Unenforceability,
`Non-Infringement;
`Section 1 of the Sherman Act;
`Section 2 of the Sherman Act;
`The Cartwright Act; and
`Section 17200 of the Cal. Bus. & Profs.
`Code.
`
`DEMAND FOR JURY TRIAL
`
`
`
`Genzyme Ex. 1046, pg 1051
`GNE-GSK 00061405
`
`
`
`Genzyme Ex. 1046, pg 1051
`
`

`
`
`
`DEWEYBALLANTINELLP333SouthGrand
`
`
`
`AvenueLosAngelcs,California90071-1530
`
`pa
`
`S\OOO\lO\lJn-#0-)I\)
`
`y.-5 p-I
`
`r- IQ
`
`—- DJ
`
`«- -5
`
`n-- LII
`
`a—I O\
`
`0-4 \l
`
`u—- 00
`
`r—- \O
`
`N6
`
`I9 —I
`
`NN
`
`NLa)
`
`N«D-
`
`IN)U:
`
`Ix)O\
`
`N\l
`
`Non
`
`JURISDICTION AND VENUE
`
`1.
`
`Plaintiff Medlmmune, Inc. ("MedImmune") seeks declaratory relief
`
`pursuant to Fed. R. Civ. P. 57 and 28 U.S.C. §§ 2201 and 2202. This Court has subject matter
`
`jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337 and l338(a). This Court has jurisdiction over
`
`the state law claims asserted hereunder pursuant to 28 U.S.C. § 1367. This Court has personal
`
`jurisdiction overdefendant Genentech, Inc. ("Genentech") based on its principal place of
`
`business in California. This Court has personal jurisdiction over defendant City ofHope
`
`("COH") based on its organization under the laws of the state of California and because its
`
`principal place of operation is in California. This Court has personal jurisdiction over defendant
`
`Celltech R&D Ltd. ("Celltech") based on its activities in this jurisdiction, including, but not
`
`limited to, Celltech's filing of a suit against Genentech under 35 U.S.C. § 146 in the Northern
`
`District of California captioned Celltech R&D Ltd. v. Genentech, Inc., Civ. Act 01-3560]CS
`
`(N.D. Cal. 2001).
`
`2.
`
`Venue is proper in this district pursuant to 28 U.S.C. §§ l391(b), (c), (d),
`
`and 15 U.S.C. §§ 15, 22.
`
`'
`
`THE PARTIES
`
`3.
`
`Plaintiff Medlmmune, by and through its undersigned attorneys, brings
`
`this action under antitrust, patent, and unfair competition laws against defendants Genentech,
`
`COH and Celltech (collectively, "Defendants") seeking to challenge an illegal and
`
`anticompetitive agreement between Genentech and Celltech to secure the issuance of an invalid
`
`and unenforceable patent. Medlmmune seeks declaratory relief that the patent is invalid,
`
`unenforceable and/or not infiinged by MedImmune's Synagis® product and that Medlmmune
`
`owes no payments under license agreements with Genentech.
`
`14.
`
`Medlrnmune is a Delaware corporation with its principal place of business
`
`in Gaithersburg, Maryland. Medlmmune uses biotechnology to develop and produce antibody
`
`therapies.
`
`S.
`
`MedImmune's most successful product, Synagis®, is used for the
`
`prevention of serious lower respiratory tract disease caused by respiratory syncytial virus
`
`2
`
`Genzyme Ex. 1046, pg 1052
`GNE-GSK 00061406
`
`
`
`Genzyme Ex. 1046, pg 1052
`
`

`
`
`
`
`
`DEWEYBALLANTINELLP333SouthGrand
`
`
`
`AvenueLosAngeles,Callfornla90071-1530 3
`
`81»-IN)
`
`("RSV") in pediatric patients at high risk ofRSV disease. RSV infection can be fatal in certain
`
`high-risk pediatric patients.
`
`6.
`
`Defendant Genentech is a Delaware corporation with its principal place of
`
`business in South San Francisco, California.
`
`7.
`
`Defendant COH is a California non-for-profit organization with its
`
`principal place ofoperation in Duarte, California. COH is an assignee ofthe patent at issue in
`this case.
`
`8.
`
`Upon information and belief, Celltech is a British company with its
`
`principal place of business in Slough, England. Through an intermediary, the Medical Research
`
`Counsel, Celltech sub-licensed Medlmmune to use the technology patented in U.S. Patent No.
`
`4,816,397 (the "Boss Patent").
`
`SUMMARY OF THIS ACTION
`
`9.
`
`Medlmmune has filed this action to challenge an illegal and
`
`anticompetitive agreement (the "Agreement") between Genentech and Celltech, two large
`
`biotechnology companies, which has the effect of creating a 29-year patent monopoly over what
`
`Genentech now claims is the "fimdarnental technology" required for the artificial synthesis of
`
`antibody molecules. Medlmmune likewise seeks a declaration that the patent improperly created
`
`by this Agreement is invalid, unenforceable and/or not infringed by MedImmune's sale of its
`
`antibody product, Synagis®, and that Medlmmune owes no payments under license agreements
`
`with Genentech.
`
`10.
`
`Genentech and Celltech have conceded the existence of the Agreement but
`
`to date have refiised to make it public. Their refusal to disclose the Agreement is purportedly
`
`based on confidentiality grounds, notwithstanding the fact that the alleged "invention" at issue is
`
`already twenty years old and is described in issued patents. Nonetheless, the parties’ own press
`
`releases and public filings about the terms of the Agreement have demonstrated its collusive
`
`nature and the fact that it benefits only Celltech and Genentech, while harming competition.
`
`11.
`
`The Agreement between Celltech and Genentech was reached in the
`
`context of a dispute that began in the United States Patent and Trademark Office ("PTO")
`
`3
`
`Genzyme Ex. 1046, pg 1053
`GNE-GSK 00061407
`
`
`
`Genzyme Ex. 1046, pg 1053
`
`

`
`
`
`DEWEYBALLANTINELLP333SouthGrand
`
`
`
`AvenueLosAngeles,California90071-1530
`
`and
`
`C\OOO\)O\tII-litntd
`
`7-4
`
`3...: y_n
`
`:-4 IQ
`
`n-I DJ
`
`v-A #
`
`>-n ‘I’!
`
`—I O\
`
`-0 \l
`
`u-I 00
`
`v— \O
`
`I90
`
`N) I-0
`
`ION
`
`[9L»)
`
`N-83
`
`I0Ln
`
`[0O\
`
`hi\I
`
`I9 ®
`
`between Genentech and Celltech regarding priority of invention. Simply put, Genentech asserted
`
`that its assignors had invented the same subject matter claimed by the Boss Patent before
`
`Celltech's assignors. Thus, Genentech asserted that the Boss Patent held by Celltech (which had
`
`been in effect since 1989) should never have issued and that, instead, a new patent should be
`
`granted to Genentech covering this same technology. At the time the Agreement was entered
`
`into, the PTO had already rejected Genentech's assertion that it, and not Celltech, was entitled to
`
`a patent after conducting an administrative proceeding, known as an interference, that lasted
`
`seven years. Additionally, a federal court that considered Genentech's appeal had already
`
`rejected Genentech's attempts to obtain summary judgment in its favor.
`
`12.
`
`Notwithstanding Celltech's legal victories over Genentech in this
`
`controversy, some time prior to March 16, 2001 Celltech and Genentech entered into the
`
`Agreement, pursuant to which (a) Genentech was declared the winner of the legal dispute
`
`between them and awarded priority of invention; (b) the PTO would immediately be asked to
`
`revoke Celltech's Boss Patent; and (c) the PTO would be asked to issue simultaneously a new
`
`patent to Genentech substantially identical to the Boss Patent (the "New Cabilly Patent"), but
`
`with a fresh 17-year life.
`
`13.
`
`By entering the Agreement, Celltech obtained more benefits than it ever
`
`could have achieved simply by prevailing in the lawsuit with Genentech. Significantly, a
`
`Celltech Annual Report revealed that Genentech agreed to provide Celltech with a "preferential"
`
`license to the New Cabilly Patent. Moreover, although Celltech agreed to an immediate
`
`revocation of its Boss Patent, upon infomiation and belief, it suffered no monetary harm from
`
`doing so. According to a Celltech press release, Genentech agreed to make Celltech whole for
`any royalties Celltech would have received had its Boss Patent remained in existence until 2006,
`
`when it was to expire. Thus, as part of the Agreement, Genentech agreed to pay Celltech, the
`
`nominal "loser" in the legal dispute, the royalties that Celltech would have received had Celltech
`
`won. Additionally, Celltech benefits to the extent that Genentech uses the New Cabilly Patent to
`
`harm competitors of Celltech.
`
`
`
`Genzyme Ex. 1046, pg 1054
`GNE-GSK 00061408
`
`
`
`Genzyme Ex. 1046, pg 1054
`
`

`
`
`
`DEWEYBALLANTINELLP333SouthGrand
`
`
`
`AvenueLosAngeles,California90071-1530
`
`N)
`
`\DOO\10\Llt-JBUJ
`
`10
`
`ll
`
`12
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`14.
`
`The Agreement thus provided Genentech with monopoly power based on
`
`a brand new patent with a full l7-year life that would enable Genentech to deny competitors
`
`access to what it asserts to be fundamental technology necessary for the production of
`
`monoclonal antibodies.
`
`15.
`
`The Agreement has profoundly and fundamentally altered the competitive
`
`landscape in the biotechnology industry. Before the Agreement, Celltech had granted its
`
`competitors broad access to this technology by liberally licensing its Boss Patent. Upon
`
`information and belief, in reliance upon the permissive licensing policy of Celltech and the
`
`expectation that the patent would expire in 2006, numerous biotechnology companies, including
`
`Medlmmune, launched research programs to develop monoclonal antibody products that
`
`potentially could provide great health benefits to society.
`
`16.
`
`Many of these health and life-enhancing products are now in clinical trials
`
`to obtain FDA approval and are being prepared for commercialization. Genentech's New Cabilly
`
`Patent is an obstacle that can prevent these new antibody products from coming to market.
`
`17.
`
`Genentech is thus in a position to demand a much higher royalty for use of
`
`this technology until 2018 (when the New Cabilly Patent will expire). Thus, the Agreement
`
`allows Genentech to exclude competitors from the market until 2018 or reap monopoly profits
`
`from any licenses which it may choose to grant. Celltech also benefits from this state of affairs
`
`because it has "preferential access" to the New Cabilly Patent and to the extent that the New
`
`Cabilly Patent may be used to exclude firms that compete with Celltech.
`
`18. With its New Cabilly Patent in hand, Genentech immediately exercised its
`
`illegally obtained monopoly by advising Medlmmune that the New Cabilly Patent covers
`
`MedImmune's Synagis® product. As a consequence of this assertion, Medlmmune began to
`
`make and continues to make significant payments to Genentech under an agreement entered into
`
`by Medlmmune and Genentech on or about June 5, 1997 (the "1997 License Agreement"). This
`
`1997 License Agreement provided rights to various intellectual property, including the patent
`
`application that later matured into the New Cabilly Patent. Afier issuance of the New Cabilly
`
`Patent, Medlmmune was forced to obtain additional license agreements from Genentech on or
`5
`
`Genzyme Ex. 1046, pg 1055
`GNE-GSK 00061409
`
`
`
`Genzyme Ex. 1046, pg 1055
`
`

`
`
`
`DEWEYBALLANTINELLP333SouthGrand
`
`
`
`AvenueLosAngeles,California90071-1530
`
`about February 7, 2003 -- at substantial cost - to cover seven new products that Medlmmune has
`
`been developing (the "2003 License Agreements") (collectively the 1997 and 2003 License
`
`Agreements are referred to herein as the "License Agreements“).
`
`19.
`
`Medlmmune now seeks relief from Genentech and Celltech for their
`
`activities in violation of Sections 1 and 2 of the Sherman Act, Section 16720 of the California
`
`Cartwright Act and Section 17200 ofthe California Business & Professions Code in connection
`
`with the illegal and anticompetitive Agreement.
`
`20.
`
`Medlrnrnune also seeks a declaration that: (a) the New Cabilly Patent
`
`I
`
`(which is co-owned by Genentech and COI-I) is invalid; (b) the New Cabilly Patent is
`unenforceable; (c) MedImmune's sales of its Synagis® product do not infringe any valid claim of
`
`the New Cabilly Patent; and (d) Medlmmune owes no payments to Genentech under the License
`
`Agreements.
`
`GENENTECH AND CELLTECH REACH THEIR AGREEMENT
`
`AND CREATE THE NEW CABILLY PATENT
`
`I 21.
`
`On April 8, 1983, Shmuel Cabilly, Herbert L. Heyneker, William E.
`
`Holmes, Arthur D. Riggs and Ronald B. Wetzel (collectively, the "Applicants") filed U.S. Patent
`
`Application No. 483,457 (the "Old Cabilly Application"). Upon information and belief, Shrnuel
`
`Cabilly and Arthur D. Riggs were afliliated with COH, while Herbert L. Heyneker, William E.
`
`Holmcsuand Ronald B. Wetzel were afliliated with Genentech. Upon information and belief,
`
`interests in this application and any subsequently issued patents wereassigned to Genentech and
`
`COH.
`
`H
`
`22.
`
`Based on the Old Cabilly Application, on March 28, 1989 the PTO issued
`
`I U.S. Patent No. 4,816,567 (the "Old Cabilly Patent") to the above named Applicants.
`
`23.
`
`On June 10, 1988 the Applicants filed U.S. Patent Application No.
`
`205,419 (the "New Cabilly Application") as a continuation to the Old Cabilly Application.
`
`24.
`
`On the same day the Old Cabilly Patent was issued, March 28, 1989,
`
`Celltech was issued the Boss Patent.
`
`
`
`20
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Genzyme Ex. 1046, pg 1056
`GNE-GSK 00061410
`
`
`
`Genzyme Ex. 1046, pg 1056
`
`

`
`
`
`DEWEYBALLANTINELLP333SouthGrand
`
`AvenueLosAngeles,Callt'o_rnla.90‘It71-1530
`
`25.
`
`After the Boss Patent was issued, Genentech sought to claim the purported
`
`invention of the Boss Patent as its own. Genentech therefore amended its New Cabilly
`
`Application by including claims copied fiom the Boss Patent, which caused the PTO Board of
`
`Patent Appeals & Interferences (the "PTO Board") to initiate an interference proceeding to
`
`determine priority of invention, i.e., who was first purportedly to invent the subject matter
`
`claimed by both Celltech and Genentech.
`
`The Seven Year PTO Interference
`
`26.
`
`On February 28, 1991 the PTO Board declared a patent interference
`
`between Genentech's New Cabilly Application and the Boss Patent on the basis that both
`
`claimed the same purported invention.
`
`A
`
`27.
`
`Genentech and Celltech then spent the next seven years in an adversarial
`
`interference proceeding before the PTO Board, each arguing that it was the first to make the
`
`purported invention at issue.
`
`28.
`
`On August 13, 1998 the PTO Board held that Genentech had failed to
`
`carry its burden ofproving that it was the first to make the purported invention and therefore
`
`held that Cel1tech's Boss Patent was entitled to priority over the New Cabilly Application.
`
`Genentech Appeals and Discovers "New" Evidence
`
`29.
`
`Faced with its loss before the PTO Board, on October 9, 1998 Genentech
`
`commenced a civil action, Genentech, Inc. v. Celltech R & D Ltd., Case No. C98-3926 MMC
`
`("Civil Action"), in the United States District Court for the Northern District of California under
`
`35 U.S.C. § 146 to appeal the decision of the PTO Board awarding priority of invention to
`
`Celltech.
`
`30.
`
`The Civil Action lasted for more than two years, and included extensive
`
`depositions, document production and expert disclosure.
`
`31.
`
`More than nine years into the dispute, sometime in early 2000, Shmuel
`
`Cabilly claimed to have found - for the very first time - a draft patent application dated
`
`February 25, 1983 (the "Draft Cabilly Application") in his files in Israel that, according to
`
`Genentech, established that Cabilly and his colleagues had invented the technology a mere 30
`7
`
`Genzyme Ex. 1046, pg 1057
`GNE-GSK 00061411
`
`
`
`Genzyme Ex. 1046, pg 1057
`
`

`
`Ix)
`
`\O®\lO\klI.bl.oJ
`
`10
`
`11
`
`I-- [Q
`
`—A DJ
`
`—- J8
`
`r-- UI
`
`16
`
`17
`
`
`
`DEWEYBALLANTINELLP333SouthGrand
`
`
`
`AvenueLosAngeles,Cnlifomla90071-1530
`
`19
`
`12o
`
`2 1
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`days before the invention date accorded to the Boss Patent based on its March 25, 1983 British
`
`Patent Application (the "British Patent Application") filing date.
`
`32.
`
`Based on the late and highly convenient unearthing of this allegedly
`
`critical evidence, Genentech moved the District Court for summaryjudgment that it should be
`
`entitled to priority of invention over Celltech. Genentech argued that because the Draft Cabilly
`
`Application contained each and every element ofthe claimed invention, and was dated earlier
`
`than the Boss priority date of March 25, 1983, Genentech should be awarded priority of
`
`invention over Boss because Genentech allegedly demonstrated "conception" of the invention by
`
`no later than the date of the draft. Further, Genentech argued that it was "reasonably diligent" in
`
`preparing and filing the application, which it conceded was a legal prerequisite to being awarded
`
`priority. However, in the Civil Action, Genentech was relying on the alleged diligence of its
`
`attorneys in preparing the patent application and "constructive" reduction to practice, which was
`different from the theory of inventor diligence and actual reduction to practice it had argued
`
`before the “PTO Board.
`
`Motive to Collude
`
`33.
`
`In opposing Genentech's priority argument in the Civil Action based on
`
`the Drafi Cabilly Application, Celltech asserted that the drafi fell short of satisfying the legal
`
`requirements for "conception" in that it did not set forth each and every element ofthe invention.
`
`Additionally, Celltech argued that Genentech had changed its basic theory of the case from what
`it asserted before the PTO Board, a tactic which is not permitted in appeals from PTO
`
`interference proceedings.
`
`34. _ Genentech responded by pointing out that the Draft Cabilly Application
`
`contained at least as much detail as Celltech's March 25, 1983 British Patent Application.
`
`Separately, Genentech also moved for summary judgment that Celltech was not entitled to the
`
`March 25, 1983 priority date because of defects in the British Patent Application. Genentech's
`
`motion thus called into question whether Celltech had actually invented the disputed technology.
`
`35.
`
`Thus, the dispute over the Dralt Cabilly Application caused each party to
`
`argue that the other was not in possession of the "invention" at issue in early 1983. This new
`
`8
`
`Genzyme Ex. 1046, pg 1058
`GNE-GSK 00061412
`
`
`
`Genzyme Ex. 1046, pg 1058
`
`

`
`
`
`DEWEYBALLANTINELLP333SouthGrand
`
`
`
`AvenueLosAngeles,California90071-1530
`
`posture meant that Genentech and Celltech each argued that the other was not entitled to the
`
`patent in question. Genentech and Celltech, which had waged this priority dispute for nine years,
`
`should have appreciated the possibility that at the end of a protracted legal battle, neither side
`
`would end up with a valid patent. This realization provided a strong motive for the Agreement
`
`that they entered.
`
`36.
`
`The illegal and anticompetitive Agreement was reduced to writing by
`
`Genentech and Celltech sometime afier July 31, 2000, when the Court denied Genentech‘s
`
`motions for summary judgment. Upon information and belief, Genentech and Celltech entered
`
`into the Agreement with a bad faith intent to limit and injure competition as illustrated by the
`
`fact that the Agreement called for Celltech to concede defeat to Genentech and sacrifice the Boss
`
`Patent. Celltech did so, notwithstanding the facts that it had just defeated Genentech‘s summary
`
`judgment motions based on the "newly discovered" evidence, and that Celltech had established
`
`priority in the PTO after a seven-year proceeding.
`
`37.
`
`According to publicly available statements, the Agreement required
`
`Genentech to make Celltech whole by compensating Celltech for the royalties it would have
`
`received under the Boss Patent. Such "reverse payments" (so-called because they were made by
`Genentech, the nominal winner in the "settlement," to Celltech, the nominal loser) thus provided
`
`Celltech all the benefits it would have received had it preserved the victory it had earned at the
`
`PTO Board.
`
`38.
`
`Indeed, the Agreement put Celltech in a position better than any outcome
`
`it could have obtained in litigation. Celltech has publicly admitted that Genentech agreed to give
`
`Celltech and its products "preferential access" to Genentech‘s New Cabilly Patent, which could
`
`keep competitors at bay, or at a competitive disadvantage,ifor twelve years longer than Celltech's
`
`Boss Patent could have done so.
`
`Genentech and Celltech Submit A Deficient Proposed Order to the District Court
`
`39.
`
`The parties submitted a proposed order to the District Court in order to
`
`implement their Agreement. The proposed order contained a "finding" that Genentech won the
`
`priority controversy as a matter oflaw because the Draft Cabilly Application constituted
`
`9
`
`\O00\lO\U’t-BUJIQ
`
`10
`
`11
`
`12
`
`14
`
`I- U-
`
`-4 O\
`
`v—- %
`
`I- \D
`
`20
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Genzyme Ex. 1046, pg 1059
`GNE-GSK 00061413
`
`
`
`Genzyme Ex. 1046, pg 1059
`
`

`
`
`
`
`DEWEYBALLANTINELLP333SouthGrand
`
`
`
`AvenueLosAngeles,California90071-1530
`
`._a
`
`S\OOO\lO\UI-BU-)I\J
`
`pan pa
`
`—- 10
`
`u—- U)
`
`- LII
`
`|—‘flbill\IO\-§
`
`9-: ®
`
`hi \O
`
`N0
`
`NJ r—-
`
`NN
`
`NL»)
`
`N<§
`
`Is) 1)!
`
`Is)0
`
`B.)\I
`
`I9W
`
`evidence of "conception" prior to the Boss Patent. In fact, as Celltech had argued successfully in
`
`opposition to Genentech's summary judgment motion, the Draft Cabilly Application did no such
`
`thing in that it was missing certain key elements of the claimed invention. Having first
`
`convinced the Court that the Drafi Cabilly Application did not prove conception as a matter of
`
`law, Celltech reversed course completely and asked the Courtto find that it did.
`
`40.
`
`Moreover, the findings in the proposed order were insufficient as a matter
`
`of law to declare Genentech the prevailing party. In addition to the requirement that Genentech
`
`show "conception" before the Boss priority date, it also was necessary as a matter of well
`
`established patent law for Genentech to show "reasonable diligence" during the critical period in
`
`order to pre—date the Boss Patent. Despite the fact that both Celltech and Genentech recognized
`
`and briefed this legal requirement in connection with the summary judgment motions, the
`
`proposed order contained no finding with respect to the essential requirement of "reasonable
`
`diligence." Moreover, Celltech's concession was flatly inconsistent with Celltech's previous
`
`argument that Genentech was precluded from relying on its proffered theory of "attorney
`
`diligence," having failed to raise this issue in the PTO interference proceeding.
`
`41.
`
`Other than striking the word "proposed" in the title, the District Court on
`
`March 16, 200l.signed without change the proposed order that the parties had submittedjointly 7
`
`in order to implement their illegal and anticompetitive Agreement (the "Order").
`
`42.
`
`The March 16, 2001 Order (drafted by Genentech and Celltech) remanded
`
`the case back to the PTO Board for further action consistent with the Agreement. Specifically,
`
`the Order directed the PTO Board to do three things: (a) "to vacate the PTO's decision in Cabilly,
`
`et al. v. Boss et al., Patent Interference No. 102,572"; (b) "to revoke and vacate United States
`
`Patent No.|4,8l6,397, issued March 28, 1989 to Boss, et al.''; and (c) "to grant and issue to
`
`Genentech's Inventors (with Genentech as the assignee), with the issue date being the same as
`
`the date ofrevocation of United States Patent No. 4,816,397 [the Boss Patent], a United States
`
`patent .
`
`. .." (Emphasis added).
`
`10
`
`Genzyme Ex. 1046, pg 1060
`GNE-GSK 00061414
`
`
`
`Genzyme Ex. 1046, pg 1060
`
`

`
`
`
`DEWEYBALLANTINELLP333SouthGrand
`
`
`
`AvenueLosAngcles,California90071-1530
`
`pa
`
`PTO Board Expresses Concerns Regarding the Agreement
`43.
`In response to the District Court's Order, the PTO Board revoked the Boss
`
`a|\OOO\lO\UI-IBUJIQ
`7''‘DiD—¢idD-I0-ID-—lD-IVD00x)O\U143U)N)
`
`|—J
`
`.—u
`
`MO
`
`K) -—o
`
`N!IQ
`
`I0(.0
`
`NA
`
`63U:
`
`26
`
`270
`
`28
`
`Patent, but refused to issue the New Cabilly Patent, noting that neither the parties nor the District
`
`Court had any authority to compel the PTO to issue a patent, particularly when the administrative
`
`examination process had not been completed. '
`
`44.
`
`The fact that the Agreement called for the instantaneous issuance of the
`
`New Cabilly Patent, when the parties well knew that the examination process had not been
`
`completed, is further evidence of their bad faith and their intent to prevent the PTO from
`
`examining the patentability of the alleged invention.
`
`45.
`
`The PTO Board expressed concerns about the parties’ Agreement. Among
`
`other things, the PTO Board noted that the Agreement effectively created a 29-year patent: "We
`
`will note that if a patent is issued to Cabilly, its term will begin to run now and the public has
`
`already been subject to patent rights of Boss since 1989, and that the interference has been V
`
`pending since l99l."
`
`46.
`
`Additionally, the PTO Board expressed concern that Celltech had
`
`seemingly abandoned a winning position. In particular, there was no indication that Celltech had
`
`raised with the District Court the issue of whether Genentech's "newly discovered" Drafl Cabilly
`
`Application should have been precluded fi'om evidence because Genentech had not shown that it
`
`was diligent in locating this evidence during the more than seven year interference proceeding
`
`before the PTO Board.
`
`47.
`
`In response to the PTO's refusal to issue the New Cabilly Patent to
`
`Genentech at the same time it revoked the Boss Patent, Celltech filed a new federal court action
`
`in the United States District Court for the Northern District of California seeking an order
`directing the PTO to issue a patent to Genentechr Thus, it appears that Celltech claimed to be
`
`aggrieved by the failure of the PTO to issue a patent to Genentech. Because of the Agreement,
`
`however, Celltech's concern was understandable: Not only had Genentech agreed to make
`
`Celltech whole for any "lost" royalties from the Boss Patent, but Genentech had also agreed to
`
`give Celltech "preferential access" to its New Cabilly Patent; thus, it was now in Celltech's
`
`ll
`
`Genzyme Ex. 1046, pg 1061
`GNE-GSK 00061415
`
`
`
`Genzyme Ex. 1046, pg 1061
`
`

`
`
`
`DEWEYBALLANTINELLP333SouthGrand
`
`
`
`AvenueLosAngeles,California90071-1530
`
`1
`
`interest to have the New Cabilly Patent issue so that it could jointly dominate the market with
`
`2 Genentech.
`
`3
`
`4
`
`Examination of the New Cabilly Application:
`
`Inequitable Conduct
`
`5
`48.
`Despite its stated reservations, the PTO Board referred the New Cabilly
`6 Application to a patent examiner to continue prosecution, given that a major impediment toithe
`7
`issuance ofthe patent (namely, the Boss Patent) had now been removed by the agreement
`
`8
`
`9
`
`10
`
`11
`
`between Genentech and Celltech resolving the priority dispute.
`
`49.
`
`Given that the PTO had issued identical claims in 1989 in the form of the
`
`Boss Patent, the PTO had no reason to believe that the claims that Genentech sought in the New
`
`Cabilly Application were unpatentable, nor was the PTO given any reason to consider this issue
`
`12 while the interference was still pending. Indeed, the only direction that the PTO Board gave to
`
`the PTO examiner was to consider certain references that Genentech had submitted in 199l,eafzer
`
`the PTO had declared the interference. There is no indication that the PTO examiner handling
`
`the matter in 1991 ever considered these references.
`
`50.
`
`Thus, afler the July 25, 2001 PTO Board decision, prosecution of the New
`
`Cabilly Application resumed before a new patent examiner who had no familiarity with the
`
`previous prosecution of this application, much less with the interference proceeding in the PTO
`
`or the resulting Civil Action.
`
`A
`
`51.
`
`During examination of the New Cabilly Application, while under a duty of
`
`candor to the PTO, Genentech and/or COH engaged ininequitable conduct with intent to mislead
`
`to PTO in an effort to obtain the New Cabilly Patent.
`
`Patentability Defects
`
`52.
`
`Genentech failed to comply with its duty of candor to the PTO because it
`
`failed to provide to the PTO examiner meaningful disclosure of the significant, material issues as
`
`to the patentability of the claimed invention which became known to Genentech no later than
`
`during the course of the summary judgment briefing in the Civil Action.
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`12
`
`Genzyme Ex. 1046, pg 1062
`GNE-GSK 00061416
`
`
`
`Genzyme Ex. 1046, pg 1062
`
`

`
`
`
`DEWEYBALLANTINELLP333SouthGrand
`
`
`
`AvenueLusAngeles,California90071-1530
`
`IN)
`
`\OO0-lO\U'I-lib.)
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`l6
`
`I7
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`53.
`
`During the course of the Civil Action, Celltech developed and presented
`
`expert evidence that cast serious doubt upon whether Genentech's final (or draft) New Cabilly
`
`Application enabled the claimed invention, which is a requirement of section 1 12 of the patent
`
`laws. Celltech's expert opined that "Genentech's purported ‘conception’ lacked a critical
`
`component:
`
`the Genentech inventors never came up with a workable method for producing ‘an
`
`Ig [immunoglobulin] molecule or an immunologically functional lg fragment’ as the
`
`[interference] Count requires. Celltech has presented expert testimony .
`
`.
`
`. showing that
`
`Genentech's [final] patent application and laboratory notebooks are completely devoid of a
`
`workable conception because of this failing. In particular, Genentech lacked a method for
`
`combining ('refolding') the recombinantly expressed heavy and light chain proteins into a
`
`functional molecule." Opposition to Genentech's Motion for Summary Adjudication that
`
`Genentech Conceived of the Invention Before March 25, 1983 at p. 1. In other words, Celltech
`
`offered evidence that Genentech's final New Cabilly Application did not enable the disputed
`
`invention as required by 35 U.S.C. § 112.
`
`54.
`
`Additionally, Celltech's expert Dr. Jonathan S. Weissman concluded in his
`
`expert report (which was quoted in Celltech's Opposition to Genentech's Motion for Summary
`
`Adjudication that Genentech Conceived ofthe Invention Before March 25, 1983) that
`
`"Expression of the heavy and light chains fi'orn cotransfonned E. coli host cells as described in
`
`Genentech's patent application does not produce correctly folded lg molecules or
`
`immunogologically fimctional Ig fragments. .
`
`.
`
`. [A]s of March 25, 1983, a scientist of ordinary
`
`skill in the art would not, without extensive experimentation, have been able to arrive at
`
`refolding conditions capable of generating an immunologically functional protein. Indeed, even
`
`after extensive experimentation, proper folding conditions may not have been possible to find.
`
`Genentech never determined such refolding conditions."
`55.
`Afortiori, ifGenentech's final New Cabilly Application was insufficient
`
`evidence of a complete conception because it lacked a solution to the refolding problem, as
`
`Celltech urged, then the Draft Cabilly Application, which was the basis for the settlement, was
`
`also insufficient. Indeed, the Drafi Cabilly Application had a section heading entitled
`13
`
`Genzyme Ex. 1046, pg 1063
`GNE-GSK 00061417
`
`
`
`Genzyme Ex. 1046, pg 1063
`
`

`
`
`
`DEWEYllALLAN'I'INELLP333SouthGrand
`
`
`
`AvenueLosAngeles,California90071-1530
`
`N)
`
`\OOO\JO\'JI-{>00
`
`10.
`
`ll
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`"Reconstitution [refolding] of Antibody from Recombinant K and Gamma Chains." However,
`
`that section of the Draft Cabilly Application was completely blank. Therefore, the Draft Cabilly
`
`Application (which fonned the basis of Genentech's priority claims in the Civil Action) had
`
`absolutely no teaching on a critical part of the purported invention.
`
`56.
`
`Thus, no later than the summary judgment briefing, Genentech became
`
`aware of evidence raising issues as to the patentability ofthe New Cabilly Application claims
`
`because of a lack of enablement. Such information was ma