Opinion
Case No.: 22-cv-00676-H-MSB
2023-03-30
FATE THERAPEUTICS, INC.; and Whitehead Institute for Biomedical Research, Plaintiffs, v. SHORELINE BIOSCIENCES, INC.; and Dan S. Kaufman, Defendants.
Aimee Housinger, Pro Hac Vice, Greenberg Traurig, LLP, Houston, TX, Brent Douglas Sokol, Lisa Christine McCurdy, Greenberg Traurig, LLP, Los Angeles, CA, Danielle Marie Zapata, Pro Hac Vice, Giancarlo Luca Scaccia, Pro Hac Vice, Jonathan David Ball, Pro Hac Vice, Jeffrey Ray Colin, Pro Hac Vice, Rose Cordero Prey, Pro Hac Vice, Greenberg Traurig, P.A., New York, NY, Daniel Doft, Duane Morris LLP, San Diego, CA, Joseph Thomas Ergastolo, Wright, L'Estrange & Ergastolo, San Diego, CA, for Plaintiffs. Drew Alan Hillier, Sarah Jane Vandervalk, Eric Martin Acker, Brian M. Kramer, Wesley W.L. Chen, Morrison & Foerster LLP, San Diego, CA, Jose Luis Ramos, Hooper, Lundy & Bookman, P.C., San Diego, CA, Michael Allen Jacobs, Morrison and Foerster LLP, San Francisco, CA, for Defendant Shoreline Biosciences, Inc. Justin T. Goodwin, Dto Law, Los Angeles, CA, Nicole G. Malick, Delgado Tarango O'Neill LLP, Los Angeles, CA, Robin Assaf Wofford, Jason Michael Avelar, Wilson Turner Kosmo LLP, San Diego, CA, Sudip Kundu, Pro Hac Vice, Dto Law, New York, NY, for Defendant Dan S. Kaufman. Molly A. Jones, Crowell & Moring LLP, San Francisco, CA, for Amicus Lonza Walkersville, Inc.
Aimee Housinger, Pro Hac Vice, Greenberg Traurig, LLP, Houston, TX, Brent Douglas Sokol, Lisa Christine McCurdy, Greenberg Traurig, LLP, Los Angeles, CA, Danielle Marie Zapata, Pro Hac Vice, Giancarlo Luca Scaccia, Pro Hac Vice, Jonathan David Ball, Pro Hac Vice, Jeffrey Ray Colin, Pro Hac Vice, Rose Cordero Prey, Pro Hac Vice, Greenberg Traurig, P.A., New York, NY, Daniel Doft, Duane Morris LLP, San Diego, CA, Joseph Thomas Ergastolo, Wright, L'Estrange & Ergastolo, San Diego, CA, for Plaintiffs. Drew Alan Hillier, Sarah Jane Vandervalk, Eric Martin Acker, Brian M. Kramer, Wesley W.L. Chen, Morrison & Foerster LLP, San Diego, CA, Jose Luis Ramos, Hooper, Lundy & Bookman, P.C., San Diego, CA, Michael Allen Jacobs, Morrison and Foerster LLP, San Francisco, CA, for Defendant Shoreline Biosciences, Inc. Justin T. Goodwin, Dto Law, Los Angeles, CA, Nicole G. Malick, Delgado Tarango O'Neill LLP, Los Angeles, CA, Robin Assaf Wofford, Jason Michael Avelar, Wilson Turner Kosmo LLP, San Diego, CA, Sudip Kundu, Pro Hac Vice, Dto Law, New York, NY, for Defendant Dan S. Kaufman. Molly A. Jones, Crowell & Moring LLP, San Francisco, CA, for Amicus Lonza Walkersville, Inc.
ORDER DENYING DEFENDANTS' PARTIAL MOTION TO DISMISS
MARILYN L. HUFF, District Judge
On February 17, 2023, Defendant Shoreline Biosciences, Inc. ("Shoreline") filed a partial motion to dismiss Plaintiffs Fate Therapeutics, Inc. ("Fate") and Whitehead Institute for Biomedical Research ("Whitehead")'s supplemental first amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. (Doc. No. 166.) On February 23, 2023, Defendant Dan S. Kaufman filed a notice of joinder in Defendants' partial motion to dismiss. (Doc. No. 198.) On March 6, 2023, Plaintiffs filed their response in opposition to Shoreline's partial motion to dismiss. (Doc. No. 217.) On March 13, 2023, Shoreline filed a reply. (Doc. No. 221.)
A hearing on the motion to dismiss is currently scheduled for April 10, 2023 at 10:30 a.m. The Court, pursuant to its discretion under Local Rule 7.1(d)(1), determines the matter is appropriate for resolution without oral argument, submits the motion on the parties' papers, and vacates the hearing. For the reasons below, the Court denies Defendants' partial motion to dismiss.
Background
In the present action, Plaintiffs assert claims for patent infringement under 35 U.S.C. §§ 271(a), (b), and (g) against Defendants Shoreline and Kaufman, alleging claims for infringement of U.S. Patent Nos. 8,071,369 ("the '369 Patent"), 8,932,856 ("the '856 Patent"), 8,951,797 ("the '797 Patent"), 8,940,536 ("the '536 Patent"), 9,169,490 ("the '490 Patent"), 10,457,917 ("the '917 Patent"), and 10,017,744 ("the '744 Patent") (collectively, "the asserted patents"). (Doc. No. 162, Supp. FAC ¶¶ 157-414.) Specifically, Plaintiffs allege that Defendants, individually and acting in concert, make, use, sell, offer for sale, and/or import induced pluripotent stem cells ("iPSCs") that infringe one or more claims of the asserted patents. (Id. ¶ 140; see, e.g., id. ¶¶ 162 ("Defendants' use of their 'iPSC-derived cell therapy manufacturing platform' infringed at least claim 1 of the '369 Patent."), ¶ 212 ("iPSCs used by Defendants to make at least the iPSC-derived natural kill (NK) cell platforms are made by a process that comprises at least each step of claim 1 of the '856 Patent.").)
Induced pluripotent stem cells ("iPSCs") "are pluripotent stem cells generated from somatic cells by reprogramming." (Doc. 162, Supp. FAC ¶ 31; see Doc. No. 184, Answer to Supp. FAC ¶ 31; see also Doc. No. 151-14, Plath Decl. ¶ 59; Doc. No. 152, Snyder Decl. ¶ 43.) "Four specific genes—cMYC, OCT3/4, SOX2 and KLF4—encoding transcription factors play a role in converting or reprogramming somatic cells into pluripotent stem cells." (Doc. 162, Supp. FAC ¶ 32; see Doc. No. 184, Answer to Supp. FAC ¶ 32; Doc. No. 204, Answer to Supp. FAC ¶ 32; see also Doc. No. 184, Counterclaims ¶ 43 ("iPSCs are generated in culture from somatic cells through the introduction of reprogramming factors that transform a somatic cell into a pluripotent state."); Doc. No. 152, Snyder Decl. ¶¶ 41, 43.)
Plaintiff Whitehead is the owner via assignment of the asserted patents. See U.S. Patent No. 8,071,369, at [73] (issued Dec. 6, 2011); U.S. Patent No. 8,932,856, at [73] (issued Jan. 13, 2015); U.S. Patent No. 8,951,797, at [73] (issued Feb. 10, 2015); U.S. Patent No. 8,940,536, at [73] (issued Jan. 27, 2015); U.S. Patent No. 9,169,490, at [73] (issued Oct. 27, 2015); U.S. Patent No. 10,017,744, at [73] (issued Jul. 10, 2018); U.S. Patent No. 10,457,917, at [73] (issued Oct. 29, 2019). Plaintiffs allege that Fate is the exclusive licensee of the asserted patents. (Doc. No. 162, Supp. FAC ¶¶ 16, 19.)
The '369 Patent is entitled "Compositions for reprogramming somatic cells" and was issued on December 6, 2011. '369 Patent at [45], [54]. The '856 Patent is entitled "Methods for reprogramming somatic cells" and was issued on January 13, 2015. '856 Patent at [45], [54]. The '797 Patent is entitled "Compositions for identifying reprogramming factors" and was issued on February 10, 2015. '797 Patent at [45], [54]. The '536 Patent is entitled "Methods for making somatic cells more susceptible to reprogramming" and was issued on January 27, 2015. '536 Patent at [45], [54]. The '490 Patent is entitled "Methods for reprogramming somatic cells" and was issued on October 27, 2015. '490 Patent at [45], [54]. The '744 Patent is entitled "Methods for reprogramming somatic cells" and was issued on Jul. 10, 2018. '744 Patent at [45], [54]. The '917 Patent is entitled "Methods for reprogramming somatic cells" and was issued on October 29, 2019. '917 Patent at [45], [54].
The asserted patents are all related and all share a common specification. (See Doc. No. 149 at 5 & n.2; Doc. No. 151 at 2 & n.2 (agreeing that the asserted patents all share the same specification); see also Doc. No. 162, Supp. FAC ¶ 132.) The shared specification states that the disclosed invention is directed to "methods for reprogramming somatic cells to a less differentiated state." '369 Patent col. 2 ll. 24-25; see also id. at [57] ("The invention provides methods for reprogramming somatic cells to generate multipotent or pluripotent cells.").
The Court will cite to the '369 Patent's specification as the "shared specification" of the asserted patents.
Independent claim 1 of the '369 Patent claims:
A composition comprising an isolated primary somatic cell that comprises an exogenously introduced nucleic acid encoding an Oct4 protein operably linked to at least one regulatory sequence.'369 Patent col. 20 ll. 40-43.
Independent claim 1 of the '856 Patent claims:
A method of making a somatic cell more susceptible to reprogramming to a pluripotent state comprising introducing at least one exogenous nucleic acid encoding Oct 4 operably linked to at least one regulatory sequence into the cell, thereby increasing expression of Oct4 protein in the somatic cell, wherein increased expression of Oct4 protein makes the cell more susceptible to reprogramming to a pluripotent state.'856 Patent col. 20 ll. 38-44.
Independent claim 1 of the '797 Patent claims:
A composition comprising an isolated primary somatic cell that comprises an exogenously introduced nucleic acid encoding Oct 4, wherein the exogenously introduced nucleic acid increases Oct4 expression in the cell.'797 Patent col. 20 ll. 40-43.
Independent claim 1 of the '536 Patent claims:
A method of making a primary somatic cell more susceptible to reprogramming to a less differentiated state, comprising: introducing an exogenous nucleic acid encoding an Oct 4 protein operably linked to at least one regulatory sequence into the somatic cell, wherein expression of the exogenously introduced nucleic acid results in making the somatic cell more susceptible to reprogramming to a less differentiated state.'536 Patent col. 20 ll. 37-44.
Independent claim 1 of the '490 Patent claims:
A somatic cell comprising an exogenous nucleic acid encoding Oct4 and an amount of Oct4 expression comparable to the amount of Oct4 expression in an embryonic stem cell.'490 Patent col. 20 ll. 39-41.
Independent claim 1 of the '744 Patent claims:
A method of making a somatic cell more susceptible to reprogramming to a cell having a less differentiated state, comprising:
obtaining a somatic cell that comprises an exogenously introduced polynucleic acid encoding Oct4 protein, and an exogenously introduced polynucleic acid encoding Sox2 or Nanog protein; wherein the exogenously introduced polynucleic acids result in making the somatic cell more susceptible to reprogramming to a less differentiated state.'744 Patent col. 21 ll. 14-23.
Independent claim 1 of the '917 Patent claims:
A method of making a somatic cell more susceptible to reprogramming to a less differentiated state, comprising: introducing an exogenous nucleic acid encoding an Oct 4 protein operably linked to at least one regulatory sequence into the somatic cell, thereby increasing expression of Oct4 protein in the somatic cell, wherein increased expression of Oct 4 protein makes the cell more susceptible to reprogramming; and wherein the exogenous nucleic acid is transiently transfected into the somatic cell.'917 Patent col. 21 ll. 16-24.
On May 13, 2022, Plaintiffs filed a complaint against Defendants, alleging claims for infringement of the '369 Patent, the '856 Patent, the '797 Patent, the '536 Patent, the '490 Patent, and the '917 Patent. (Doc. No. 1, Compl. ¶¶ 66-236.) On July 6 and 7, 2022, Defendants filed answers and counterclaims to Plaintiffs' original complaint. (Doc. Nos. 36, 39.)
Neither defendant filed a Rule 12(b)(6) motion to dismiss the original complaint even though the original complaint contains many of the same allegations and claims that Defendants now challenge in the present Rule 12(b)(6) motion to dismiss. (Compare Doc. No. 1, Compl. with Doc. No. 162, Supp. FAC.)
On August 12, 2022, the Court issued a scheduling order. (Doc. No. 51.) On January 3, 2023, Plaintiffs filed a first amended complaint against Defendants, adding a claim for infringement of the '744 Patent. (Doc. No. 112, FAC ¶¶ 375-414.) On January 10, 2023, the Court issued an amended scheduling order. (Doc. No. 115.)
On February 14, 2023, Plaintiffs filed a supplemental first amended complaint - the operative complaint. (Doc. No. 162, Supp. FAC.) On February 17 and 23, 2023, Defendants filed answers and counterclaims to Plaintiffs' supplemental first amended complaint. (Doc. Nos. 184, 199.)
On February 28, 2023, the Court issued a claim construction order construing disputed claim terms from the asserted patents. (Doc. No. 208.) On March 27, 2023, the Court denied Shoreline's motion for partial summary judgment. (Doc. No. 226.)
By the present motion, Defendants move pursuant to Federal Rule Civil of Procedure 12(b)(6) to dismiss portions of Plaintiffs' supplemental first amended complaint. (Doc. No. 183.) Specifically, Defendants move to dismiss: (1) Plaintiffs' claims for direct infringement under 35 U.S.C. § 271(a) to the extent they are based on iPSCs manufactured by third parties; (2) Plaintiffs' claims for induced infringement under 35 U.S.C. § 271(b); (3) Plaintiffs' claims for direct infringement under 35 U.S.C. § 271(g); and (4) Plaintiffs' claims for willful infringement. (See id. at 3, 26.)
The Court notes that the memorandum of points and authorities filed in support of Defendants' partial motion to dismiss was 26 pages in length in violation of Civil Local Rule 7.1(h). (See Doc. No. 183.) The Court advises Defendants to follow the Court's local rules for all future filings.
Discussion
I. Legal Standards for a Rule 12(b)(6) Motion to Dismiss
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the pleadings and allows a court to dismiss a complaint if the plaintiff has failed to state a claim upon which relief can be granted. See Conservation Force v. Salazar, 646 F.3d 1240, 1241 (9th Cir. 2011) (citing Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001)). Federal Rule of Civil Procedure 8(a)(2) requires that a pleading that states a claim for relief contain "a short and plain statement of the claim showing that the pleader is entitled to relief." The function of this pleading requirement is to " 'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.' " Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)).
A complaint will survive a Rule 12(b)(6) motion to dismiss if it contains "enough facts to state a claim to relief that is plausible on its face." Id. at 570, 127 S.Ct. 1955. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). "A pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.' " Id. (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. "While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Id. at 679, 129 S.Ct. 1937. Accordingly, dismissal for failure to state a claim is proper where the claim "lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory." Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008); see Los Angeles Lakers, Inc. v. Fed. Ins. Co., 869 F.3d 795, 800 (9th Cir. 2017).
In reviewing a Rule 12(b)(6) motion to dismiss, a district court must " 'accept the factual allegations of the complaint as true and construe them in the light most favorable to the plaintiff.' " Los Angeles Lakers, 869 F.3d at 800 (quoting AE ex rel. Hernandez v. Cty. of Tulare, 666 F.3d 631, 636 (9th Cir. 2012)). But a court need not accept "legal conclusions" as true. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. "Further, it is improper for a court to assume the claimant "can prove facts which it has not alleged or that the defendants have violated the . . . laws in ways that have not been alleged." Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983).
In addition, a court may consider documents incorporated into the complaint by reference and items that are proper subjects of judicial notice. See Coto Settlement v. Eisenberg, 593 F.3d 1031, 1038 (9th Cir. 2010). If the court dismisses a complaint for failure to state a claim, it must then determine whether to grant leave to amend. See Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995); Telesaurus VPC, LLC v. Power, 623 F.3d 998, 1003 (9th Cir. 2010).
II. Analysis
A. Plaintiffs' Claims for Direct Infringement Under 35 U.S.C. § 271(a)
In the operative complaint, Plaintiffs allege that Defendants directly infringe the asserted patents under 35 U.S.C. § 271(a). (Doc. No. 162, Supp. FAC ¶¶ 159-69, 192-204, 232-41, 264-76, 304-14, 337-49, 377-89.) In their motion, Defendants move to dismiss Plaintiffs' direct infringement claims to the extent the claims are based on iPSCs that were manufactured by third parties, such as Lonza. (Doc. No. 183 at 7, 22.) Defendants argue that that the operative complaint insufficiently pleads direct infringement related to Defendants' use of those third-party iPSCs. (Id. at 7-8.)
In response, Plaintiffs contend that Defendants' motion is based on a misunderstanding of the allegations in the operative complaint. (Doc. No. 217 at 6.) Plaintiffs explain that they have not and do not assert a theory of infringement against Defendants under § 271(a) based on their use of the Lonza iPSCs. (Id.) Plaintiffs explain that they only allege claims for infringement under 35 U.S.C. § 271(g) based on Defendants' use of the Lonza iPSCs. (Id.) In light of this clarification and representation by Plaintiffs, the Court denies as moot Defendants' partial motion to dismiss Plaintiffs' claims for direct infringement related to the third-party iPSCs as there is nothing to dismiss.
Moreover, the Court notes that Defendants' motion to dismiss on this basis does not appear to be procedurally proper. Rule 12(b)(6) provides a basis for dismissing "a claim" for relief. Fed. R. Civ. P. 12(b)(6). It is not clear to the Court that Rule 12(b)(6) provides a basis for dismissing certain theories of infringement and/or certain accused products from an otherwise adequately pleaded claim for infringement.
B. Plaintiffs' Claims for Induced Infringement Under 35 U.S.C. § 271(b)
In the operative complaint, Plaintiffs allege claims for induced infringement of the asserted patents under 35 U.S.C. § 271(b) against Defendants. (Doc. No. 162, Supp. FAC ¶¶ 172-75, 207-10, 244-47, 279-82, 317-20, 352-55, 392-95.) Defendants argue that Plaintiffs' claims for induced infringement should be dismissed because Plaintiffs have failed to adequately allege pre-suit knowledge, and Plaintiffs have failed to adequately allege specific intent to encourage infringement. (Doc. No. 183 at 23-25.)
In their opposition, Plaintiffs clarify that their claims for induced infringement under § 271(b) are not based on Defendants' use of the Lonza iPSCs. (Doc. No. 217 at 6.)
Under 35 U.S.C. § 271(b), "whoever actively induces infringement of a patent shall be liable as an infringer." 35 U.S.C. § 271(b). Liability under § 271(b) "requires knowledge that the induced acts constitute patent infringement." Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 766, 131 S.Ct. 2060, 179 L.Ed.2d 1167 (2011); see Warsaw Orthopedic, Inc. v. NuVasive, Inc., 824 F.3d 1344, 1347 (Fed. Cir. 2016) ("[P]roof of induced infringement requires not 'only knowledge of the patent' but also 'proof the defendant knew the [induced] acts were infringing.' " (quoting Commil USA, LLC v. Cisco Sys., Inc., 575 U.S. 632, 640, 642, 135 S.Ct. 1920, 191 L.Ed.2d 883 (2015))). In order to state a claim for induced infringement, "a complaint must plead facts plausibly showing that the accused infringer 'specifically intended [another party] to infringe [the patent] and knew that the [other party]'s acts constituted infringement.' " Lifetime Indus., Inc. v. Trim-Lok, Inc., 869 F.3d 1372, 1376-77 (Fed. Cir. 2017) (quoting In re Bill of Lading Transmission & Processing Sys. Pat. Litig., 681 F.3d 1323, 1336 (Fed. Cir. 2012)); accord Nalco Co. v. Chem-Mod, LLC, 883 F.3d 1337, 1355 (Fed. Cir. 2018).
In addition, a claim for induced infringement requires "an underlying act of direct infringement.' " Nalco, 883 F.3d at 1355 (" 'It is axiomatic that [t]here can be no inducement or contributory infringement without an underlying act of direct infringement.' ") (quoting Bill of Lading, 681 F.3d at 1333); see Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1322 (Fed. Cir. 2009) (" '[A] finding of inducement requires a threshold finding of direct infringement.' ") (quoting Ricoh Co. v. Quanta Computer Inc., 550 F.3d 1325, 1341 (Fed. Cir. 2008)). But "[t]o state a claim for indirect infringement . . . a plaintiff need not identify a specific direct infringer if it pleads facts sufficient to allow an inference that at least one direct infringer exists." Bill of Lading, 681 F.3d at 1336.
Defendants argue that Plaintiffs' claims for induced infringement should be dismissed because Plaintiffs fail to adequately allege pre-suit knowledge of the asserted patents. (Doc. No. 183 at 23-25.) In the operative complaint, Plaintiffs allege that "Defendants have been aware of the [asserted patents] and that they infringe the [asserted patents] since at least May 14, 2020 by virtue of Dr. Kaufman's position as a Scientific Advisor for Fate Therapeutics and the renown of the Asserted Patents in the industry." (Doc. No. 162, Supp. FAC ¶¶ 173, 208, 245, 280, 318, 353, 393.) To support these allegations, Plaintiffs allege that Defendant Kaufman was previously a "Scientific Advisor" to Plaintiff Fate. (Id. ¶¶ 5, 34.) Plaintiffs allege that in his role as a scientific advisor, Dr. Kaufman had access to Fate's "proprietary iPSC technology and was aware of patents Fate Therapeutics licensed from Whitehead Institute, including the Asserted Patents." (Id. ¶ 36.) Plaintiffs further allege that Defendant Kaufman attended a private Fate Investor Dinner on December 6, 2019 where he "had access to information about Fate Therapeutics' iPSC technology and the Asserted Patents." (Id. ¶ 39.) Plaintiffs further allege that Defendant Kaufman along with Fate published research that used iPSC cell lines that were reprogrammed using the compositions and methods claimed in the asserted patents. (Id. ¶ 40.) Plaintiffs allege that Defendant Kaufman subsequently co-founded Defendant Shoreline on or about May 14, 2020. (Id. ¶ 41.) These facts are sufficient to plausibly allege that Defendants had pre-suit knowledge of the asserted patents. See Lifetime, 869 F.3d at 1375, 1380 (finding allegations of knowledge sufficient where the patentee alleged that two of its engineers with knowledge of the asserted patent and the patentee's products left and began working for the accused infringer in the months before the original complaint was filed).
Defendants also argue that Plaintiffs' claims for induced infringement should be dismissed because Plaintiffs fail to adequately allege specific intent to encourage infringement. (Doc. No. 183 at 25.) The Federal Circuit has explained that a patentee adequately pleads intent "where it allege[s] knowledge of the patent and ha[s] plausibly pleaded that the defendants' customers performed the claim[s]." Lifetime, 869 F.3d at 1380 (citing Bill of Lading, 681 F.3d at 1341-42). As explained above, Plaintiffs have adequately alleged pre-suit knowledge of the asserted patents. Further, in the operative complaint, Plaintiffs allege that the asserted patents claim a "groundbreaking iPSC reprogramming platform" that "transforms somatic cells (such as skin fibroblast cells) into iPSC cells." (Doc. No. 162, Supp. FAC ¶ 136; see also id. ¶¶ 2, 4, 10, 124.) Plaintiffs allege that Defendants "instructed and/or supervised" third parties to produce iPSCs as claimed by the asserted composition patents or by a method that uses the inventions claimed in the asserted method patents. (Id. ¶¶ 175, 210, 247, 282, 320, 355, 395; see also id. ¶ 49 ("Shoreline and Dr. Kaufman use and/or obtain from third parties iPSC lines made using Plaintiffs' iPSC platform technology, including the use of exogenously introduced nucleic acid encoding OCT4, to generate the induced pluripotent stem cells from which Shoreline's immunotherapy treatments are derived."), ¶¶ 10, 174, 209, 246, 281, 319, 354, 394.) These factual allegations are sufficient to plausibly plead that the relevant third parties practice and infringe the asserted patents. As such, Plaintiffs have adequately alleged specific intent to encourage infringement of the asserted patents. See Nalco, 883 F.3d at 1356; Bill of Lading, 681 F.3d at 1341-42; vPersonalize Inc. v. Magnetize Consultants Ltd., 437 F. Supp. 3d 860, 877 (W.D. Wash. 2020) (finding allegations sufficient to allege intent where patentee alleged that the defendant "instruct[ed] users to use a 3D Kit Builder" "in a manner that directly infringes" the asserted patent).
In sum, Plaintiffs have adequately stated claims for induced infringement under § 271(b). As a result, the Court denies Defendants' motion to dismiss Plaintiffs' claims for induced infringement.
C. Plaintiffs' Claims for Direct Infringement Under 35 U.S.C. § 271(g)
In the operative complaint, Plaintiffs allege that Defendants infringe the asserted method patents - the '856 Patent, the '536 Patent, the '744 Patent, and the '917 Patent - under 35 U.S.C. § 271(g). (Doc. No. 162, Supp. FAC ¶¶ 211-14, 283-86, 356-59, 396-99.) In support of their § 271(g) claims, Plaintiffs allege that "Lonza [Walkersville, Inc.] and/or other third parties make iPSCs using the process[es] patented in [the asserted method patents], and Defendants have purchased or otherwise obtained such iPSC lines that were created by Lonza and/or other third parties." (Id. ¶¶ 213, 285, 358, 398.) Plaintiffs further allege that Defendants use these iPSCs "to make at least the iPSC-derived natural killer (NK) cell platforms." (Id. ¶¶ 212, 284, 357, 397.)
Section 271(g) of the Patent Act provides:
Whoever without authority imports into the United States or offers to sell, sells, or uses within the United States a product which is made by a process patented in the United States shall be liable as an infringer, if the importation, offer to sell, sale, or use of the product occurs during the term of such process patent. In an action for infringement of a process patent, no remedy may be granted for infringement on account of the noncommercial use or retail sale of a product unless there is no adequate remedy under this title for infringement on account of the importation or other use, offer to sell, or sale of that product. A product which is made by a patented process will, for purposes of this title, not be considered to be so made after—
(1) it is materially changed by subsequent processes; or
(2) it becomes a trivial and nonessential component of another product.
By its terms, "Section 271(g) prohibits the unauthorized importation into the United States, or sale or use within the United States, of a 'product which is made by a process patented in the United States.' " Momenta Pharms., Inc. v. Teva Pharms. USA Inc., 809 F.3d 610, 615 (Fed. Cir. 2015) (quoting 35 U.S.C. § 271(g)) (emphasis removed); see Syngenta Crop Prot., LLC v. Willowood, LLC, 944 F.3d 1344, 1359 (Fed. Cir. 2019) (Section 271(g) "makes clear that the acts that give rise to liability under § 271(g) are the importation, offer for sale, sale, or use within this country of a product that was made by a process patented in the United States."). The "principal purpose" of § 271(g) is "to prevent a patent owner's competitors from avoiding the patent by producing products outside the United States and then importing them." Mycogen Plant Sci., Inc. v. Monsanto Co., 252 F.3d 1306, 1318 (Fed. Cir. 2001), judgment vacated on other grounds by 535 U.S. 1109, 122 S.Ct. 2324, 153 L.Ed.2d 153 (2002); see Syngenta, 944 F.3d at 1362 ("§ 271(g) was enacted to 'extend protection to the products' resulting from practicing a patented process and to 'prevent circumvention of a U.S. process patentee's rights through manufacture abroad and subsequent importation into the United States of products made by the patented process.' " (emphasis added by Federal Circuit) (quoting S. Rep. No. 83, 100th Cong., 1st Sess., 46, 48 (1987))).
In their motion, Defendants move to dismiss Plaintiffs' § 271(g) claims on the grounds that the claims only allege domestic activity and fail to allege that the iPSCs at issue were imported into the United States. (Doc. No. 183 at 9-16.) Defendants contend that § 271(g) does not apply to domestically manufactured products. (See id.) On March 27, 2023, the Court issued an order denying Shoreline's motion for partial summary judgment, and the Court rejected that argument. (Doc. No. 226.) In so doing, the Court held that, by its plain and unambiguous terms, § 271(g) applies to both foreign-made products and domestically manufactured products. (Id. at 16.) That holding is now law of the case. As such, the Court denies Defendants' motion to dismiss to extent it is based on their contention that § 271(g) only applies to foreign-made products.
In their motion to dismiss, Defendants also argue that Plaintiffs' § 271(g) claims should be dismissed because the relevant products of the patented process were "materially change[d]" before the iPSCs reached Shoreline. (Doc. No. 183 at 16-22.) In response, Plaintiffs contend that Defendants' "material change" defense is premature as it involves factual issues that are not appropriate for resolution through a Rule 12(b)(6) motion. (Doc. No. 217 at 12-13.) On reply, Defendants contend that based on the allegations in the operative complaint regarding the claimed technology, the complaint pleads itself into § 271(g)(1)'s exception to liability, and, thus, resolution of this issue is appropriate at the pleading stage. (Doc. No. 225 at 6-7.)
Under § 271(g)(1), if "the product made by the patented process is 'materially changed by subsequent processes,' " then importation, offer to sell, sale, or use of the product "does not constitute infringement under § 271(g)." Amgen Inc. v. F. Hoffman-La Roche Ltd., 580 F.3d 1340, 1377 (Fed. Cir. 2009) (quoting 35 U.S.C. § 271(g)(1)). The Federal Circuit has explained: "The 'materially changed' exception of § 271(g) requires, at a minimum, that there be a real difference between the product imported, offered for sale, sold, or used in the United States and the products produced by the patented process." Bio-Tech. Gen. Corp. v. Genentech, Inc., 80 F.3d 1553, 1560 (Fed. Cir. 1996). "Whether a change in a product is material is a factual determination" for the trier of fact. Biotec Biologische Naturverpackungen GmbH & Co. KG v. Biocorp, Inc., 249 F.3d 1341, 1352 (Fed. Cir. 2001). Because the Federal Circuit has characterized § 271(g)(1) as a "defense" or "exception," district courts have held that § 271(g)(1) is not an "element[ ] of a § 271(g) claim that must be affirmatively pled." Kyowa Hakka Bio, Co. v. Ajinomoto Co., No. CV 17-313, 2018 WL 834583, at *9 (D. Del. Feb. 12, 2018) (citing Kinik Co. v. Int'l Trade Comm'n, 362 F.3d 1359, 1362 (Fed. Cir. 2004)).
Plaintiffs' § 271(g) infringement claims are based on Defendants' alleged use of iPSCs that were manufactured by third parties. (See Doc. No. 162, Supp. FAC ¶¶ 212-13, 284-85, 357-58, 397-98.) In the operative complaint, Plaintiffs allege that iPSCs are "pluripotent stem cells generated from somatic cells by reprogramming," and that "[f]our specific genes—cMYC, OCT3/4, SOX2 and KLF4—encoding transcription factors play a role in converting or reprogramming somatic cells into pluripotent stem cells." (Id. ¶¶ 31-32; see also Doc. No. 218 at 4-6.) At claim construction, Plaintiffs conceded that: "The inventors originally pursued claims directed to 'reprogramming a somatic cell' using exogenously introduced Oct4," but "the Examiner rejected those claims." (Doc. No. 151 at 6.) And, according to Plaintiffs, "the claims were amended to specify that exogenous Oct4 makes the cells 'more susceptible' to reprogramming and were subsequently allowed." (Id.)
At claim construction the Court construed the term "[makes / making / make] the [somatic] cell more susceptible to reprogramming" as "[primes / priming / prime] the [somatic] cell to improve the cloning efficiency of the subsequent reprogramming." (Doc. No. 208 at 33.)
Nevertheless, in the operative complaint, Plaintiffs allege that the asserted patents claim a "groundbreaking iPSC reprogramming platform" that "transforms somatic cells (such as skin fibroblast cells) into iPSC cells." (Doc. No. 162, Supp. FAC ¶ 136; see also id. ¶¶ 2, 4, 10, 124.) Further, Plaintiffs allege:
Shoreline and Dr. Kaufman use and/or obtain from third parties iPSC lines made using Plaintiffs' iPSC platform technology, including the use of exogenously introduced nucleic acid encoding OCT4, to generate the induced pluripotent stem cells from which Shoreline's immunotherapy treatments are derived. On information and belief, Dr. Kaufman and Shoreline could not have obtained human iPSCs suitable for generating immunotherapies, and could not have done so as quickly as they did, without infringing the Asserted Patents.(Id. ¶ 49; see also id. ¶¶ 68-72, 95-117.) At the Rule 12(b)(6) stage, the Court must accept these factual allegations by Plaintiffs as true and construe them in the light most favorable to Plaintiffs. See Los An geles Lakers, 869 F.3d at 800 (quoting AE ex rel. Hernandez, 666 F.3d at 636). Further, several district courts have found that a "materially change" defense generally presents factual disputes that are inappropriate for resolution at the Rule 12(b)(6) stage. See, e.g., Kyowa Hakka, 2018 WL 834583, at *9 ("[T]he 'materially changed' provision . . . involves factual issues not appropriate for resolution in a Rule 12(b)(6) motion."); Viking Techs., LLC v. SquareTrade Inc., No. CV 20-1509-CFC-JLH, 2021 WL 7209514, at *5 (D. Del. Dec. 9, 2021), report and recommendation adopted by No. CV 20-1509-CFC/JLH, 2022 WL 611058 (D. Del. Jan. 5, 2022) ("Defendants may ultimately be right that the accused display assemblies fall outside the scope of § 271(g), but it is premature to make that determination at the motion to dismiss stage without further factual development."); Janssen Pharmaceutica, N.V. v. Mylan Pharms. Inc., No. CV 15-760-SLR/SRF, 2016 WL 5723652, at *2 (D. Del. Sept. 29, 2016) ("To the extent defendants are arguing a material-change defense, . . . such a defense presents a factual dispute not for resolution on the pleadings."); Millennium Cryogenic Techs., Ltd. v. Weatherford Artificial Lift Sys., Inc., No. CV H-12-0890, 2012 WL 12894799, at *2 (S.D. Tex. Sept. 5, 2012). As such, the Court agrees with Plaintiffs that resolution of Defendants' "materially change" defense would be inappropriate at the Rule 12(b)(6) stage in light of the allegations in the operative complaint. In sum, the Court denies Defendants' motion to dismiss Plaintiffs' § 271(g) infringement claims.
The Court notes that the two district court cases cited in Defendants' motion to dismiss are decisions resolving motions for summary judgment. See Flexsys Am. LP v. Kumho Tire U.S.A., Inc., 726 F. Supp. 2d 778, 798-802 (N.D. Ohio 2010); Genentech, Inc. v. Boehringer Mannheim GmbH, 47 F. Supp. 2d 91, 104-12 (D. Mass. 1999). (See Doc. No. 183 at 17-18.)
The Court's denial of Defendants' motion to dismiss based their "materially change" defense is without prejudice to Defendants raising this issue at a later stage in the proceedings, such as through a motion for summary judgment. Indeed, the Court notes that particularly in circumstances such as these, where the case is post-claim construction and with less than three months left before the close of fact and expert discovery, a factual issue like this is better addressed through a motion for summary judgment with briefing based on the Court's claim constructions as opposed to a Rule 12(b)(6) motion to dismiss based solely on the allegations in the complaint.
D. Plaintiffs' Allegations of Willful Infringement
In the operative complaint, Plaintiffs allege that Defendants' direct infringement of the asserted patents has been and will continue to be "willful and deliberate" and that Defendants' indirect infringement of the asserted patents has been "knowing and intentional." (Doc. No. 162, Supp. FAC ¶¶ 182-84, 222-24, 254-56, 294-96, 327-29, 367-69, 407-09.) Defendants argues that Plaintiffs' claims for willful infringement should be dismissed because the operative complaint fails to plausibly allege that Defendants knew or should have known of the asserted patents, and the complaint fails to plausibly allege that Defendants have acted egregiously. (Doc. No. 183 at 25-26.)
Willful infringement requires a finding of "deliberate or intentional infringement." SRI Int'l, Inc. v. Cisco Sys., Inc., 14 F.4th 1323, 1330 (Fed. Cir. 2021); see Eko Brands, LLC v. Adrian Rivera Maynez Enter., Inc., 946 F.3d 1367, 1378 (Fed. Cir. 2020) ("Under Halo, the concept of 'willfulness' requires a jury to find no more than deliberate or intentional infringement."); see also Halo Elecs., Inc. v. Pulse Elecs., Inc., 579 U.S. 93, 105, 136 S.Ct. 1923, 195 L.Ed.2d 278 (2016) ("The subjective willfulness of a patent infringer, intentional or knowing, may warrant enhanced damages, without regard to whether his infringement was objectively reckless."). The Federal Circuit has explained that subjective willfulness can be shown by "proof that the defendant acted despite a risk of infringement that was either known or so obvious that it should have been known to the accused infringer." WesternGeco LLC v. ION Geophysical Corp., 837 F.3d 1358, 1362 (Fed. Cir. 2016), rev'd on other grounds, — U.S. —, 138 S. Ct. 2129, 201 L.Ed.2d 584 (2018); accord Arctic Cat Inc. v. Bombardier Recreational Prods. Inc., 876 F.3d 1350, 1371 (Fed. Cir. 2017) . In light of this, district courts have held that "in order to sufficiently plead willful infringement, a plaintiff must allege facts plausibly showing that as of the time of the claim's filing, the accused infringer: (1) knew of the patent-in-suit; (2) after acquiring that knowledge, it infringed the patent; and (3) in doing so, it knew, or should have known, that its conduct amounted to infringement of the patent." Välinge Innovation AB v. Halstead New England Corp., No. CV 16-1082-LPS-CJB, 2018 WL 2411218, at *13 (D. Del. May 29, 2018) , report and recommendation adopted by No. CV 16-1082-LPS-CJB, 2018 WL 11013901 (D. Del. Nov. 6, 2018); accord BillJCo, LLC v. Apple Inc., 583 F. Supp. 3d 769, 775 (W.D. Tex. 2022); NovaPlast Corp. v. Inplant, LLC, No. CV207396KMJBC, 2021 WL 5770264, at *9 (D.N.J. Dec. 6, 2021); Lytone Enter., Inc. v. Agrofresh Sols., Inc., No. CV 20-678-LPS, 2021 WL 534868, at *6 (D. Del. Feb. 12, 2021), report and recommendation adopted by No. CV 20-678-LPS-SRF, 2021 WL 1153002 (D. Del. Mar. 26, 2021); see also Sonos, Inc. v. Google LLC, 591 F. Supp. 3d 638, 644 (N.D. Cal. 2022) ("[A]llegations of an infringer's knowledge of the patent and of infringement must raise a plausible inference that the defendant had the specific intent to infringe.").
Defendants argue that Plaintiffs' claims for willful infringement should be dismissed because Plaintiffs have failed to adequately allege pre-suit knowledge of the asserted patents. (Doc. No. 183 at 25.) As previously explained in regard to Plaintiffs' claims for induced infringement, the operative complaint contains sufficient factual allegations to plausibly allege that Defendants had pre-suit notice of the asserted patents. (See Doc. No. 182, Supp. FAC ¶¶ 5, 34, 36, 39-41, 173, 208, 245, 280, 318, 353, 393.) See Lifetime, 869 F.3d at 1375, 1380 (finding allegations of knowledge sufficient where the patentee alleged that two of its engineers with knowledge of the asserted patent and the patentee's products left and began working for the accused infringer in the months before the original complaint was filed).
Defendants also argue that Plaintiffs' claims for willful infringement should be dismissed because Plaintiffs have failed to plausibly allege that Defendants acted egregiously. (Doc. No. 183 at 25-26.) "District courts have split on whether a patent owner must adequately plead egregiousness as part of its willful infringement 'claim' since it serves a proxy of sorts for enhanced damages." Sonos, 591 F. Supp. 3d at 644; compare Gobalo, LLC v. Horizon Grp. USA, Inc., No. 21-CV-1639 TWR (MSB), 2022 WL 3588415, at *3 (S.D. Cal. Aug. 22, 2022) (" 'a plaintiff must also show that the defendant engaged in egregious misconduct' " (quoting Smith v. Extreme Performance 1, LLC, No. 520CV00328RGKSHK, 2020 WL 5092913, at *5 (C.D. Cal. June 23, 2020))); Dali Wireless, Inc. v. Corning Optical Commc'ns LLC, No. 20-CV-06469-EMC, 638 F.Supp.3d 1088, 1100-01 (N.D. Cal. Nov. 3, 2022); Genentech, Inc. v. Eli Lilly & Co., No. 18-CV-1518 JLS (JLB), 2019 WL 4345788, at *5 (S.D. Cal. Sept. 12, 2019); Finjan, Inc. v. Cisco Sys., Inc., No. 17-CV-00072-BLF, 2018 WL 7131650, at *5 (N.D. Cal. Feb. 6, 2018) ("[A] complaint must contain some allegations which make it plausible that the accused infringer's behavior was egregious . . . ."); with Välinge, 2018 WL 2411218, at *9 ("[T]he Court concludes that in considering whether a patentee has successfully pleaded willful infringement, it should no longer require that the patentee plead facts plausibly evidencing "egregious" infringement conduct."); BillJCo, 583 F. Supp. 3d at 779 ("This Court will follow Välinge in refusing to impose an egregiousness pleading requirement."); Therabody, Inc. v. Tzumi Elecs. LLC, No. 21CV7803PGGRWL, 2022 WL 17826642, at *5 (S.D.N.Y. Dec. 19, 2022); Merrill Mfg. Co. v. Simmons Mfg. Co., 553 F. Supp. 3d 1297, 1307 (N.D. Ga. 2021). After reviewing these competing district court decisions, the Court agrees with the holdings and analyses set forth in Välinge, Sonos, Merrill, Therabody, and BillJCo. See also Eko, 946 F.3d at 1378 ("Under Halo, the concept of 'willfulness' requires a jury to find no more than deliberate or intentional infringement.").
In sum, Plaintiffs have adequately alleged that Defendants had pre-suit knowledge of the asserted patents and that Defendants have deliberately and willfully infringed the asserted patents. The operative complaint adequately puts Defendants on notice of the requested relief, which some courts characterize as claims for willful infringement. Defendants' arguments are better suited for a motion for summary judgment when the record is more fully developed. As such, the Court denies Defendants' motion to dismiss Plaintiffs' allegations of willful infringement.
In Sonos, the district court explained: "[P]atent plaintiffs will usually couch their requests for enhanced damages as claims for willful infringement, and defendants will then often seek to dismiss those claims at the outset. Some district courts in response have treated willful infringement as a distinct claim that can be subject to a motion to dismiss." 591 F. Supp. 3d at 642.
Conclusion
For the reasons above, the Court denies Defendants' partial motion to dismiss.
IT IS SO ORDERED.