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Molecular Diagnostics Laboratories v. Hoffmann-La Roche

December 1, 2005

MOLECULAR DIAGNOSTICS LABORATORIES, PLAINTIFF,
v.
HOFFMANN-LA ROCHE INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Henry H. Kennedy, Jr. United States District Judge

MEMORANDUM OPINION & ORDER

Molecular Diagnostics Laboratories ("MDL") brings this action against Hoffmann-La Roche, Inc., Roche Molecular Systems, Inc. (collectively, "Roche"), PE Corporation, PE Biosystems Group, the Perkin-Elmer Corporation, PE Applied Biosystems, and Applera Corporation (collectively, "Applera"), on behalf of itself and a class of all those similarly situated, alleging that Roche and Applera violated the Sherman Act, 15 U.S.C. §§ et seq. MDL claims that it was forced to pay an artificially inflated price for Thermus aquaticus DNA polymerase ("Taq") as a result of the enforcement by Applera and Roche of a patent allegedly obtained by fraud. Currently before the court are Roche's and Applera's motions to dismiss MDL's complaint. Upon consideration of the motions, the opposition thereto, and the record of this case, the court concludes that the motions must be denied.

I. BACKGROUND

Taq is a thermostable enzyme derived from Thermus aquaticus bacteria and an important component of a process known as "polymerase chain reaction" ("PCR"). PCR is a technique used to replicate DNA, allowing small DNA samples to yield larger quantities that can then be studied or manipulated. During the PCR process, a sample of DNA is subjected to rapid fluctuations between extreme temperatures-Taq is able to withstand these volatile temperature changes and still remain an effective catalyst for the replication of DNA.

Thermus aquaticus was discovered in the 1960s and, because it is able to survive in high temperature environments, its potential application in the PCR process was quickly recognized. Cetus Corporation ("Cetus") was among the scientific teams that attempted to isolate a thermostable polymerase from Thermus aquaticus. As early as 1985, Cetus and the Perkin-Elmer Corporation*fn1 entered into a joint venture called PECI, created "to commercialize Cetus's DNA amplification technology." Compl. ¶ 21. After a number of unsuccessful patent applications, on December 26, 1989, the United States Patent & Trademark Office ("PTO") issued Cetus U.S. Patent No. 4,889,818("'818 patent") for the DNA polymerase contained in Thermus aquaticus.

In 1991 Cetus assigned the '818 patent to Roche as part of a transaction valued at approximately $300 million.*fn2 Compl. ¶ 17. Roche also purchased Cetus's ownership interest in PECI, thereby assuming Cetus's position in the partnership. Compl. ¶ 22. In addition, various members of the Applera and Roche defendants subsequently entered into a distribution agreement used to facilitate the production, sale, and distribution of Taq.

Both Roche and Applera currently remain active in the Taq-market.

MDL, a direct purchaser of Taq, alleges that the market dominance enjoyed by Roche and Applera results from a fraudulently obtained patent. According to MDL, the application for the '818 patent "materially misrepresented[ed] facts, omitt[ed] specific and important contrary data, misstat[ed] scientific principles, mispresent[ed] the content of prior art, and falsely report[ed] data." Compl. ¶ 29.

On September 23, 2004 MDL filed the instant action. MDL claims that Applera and Roche, through the enforcement of the '818 patent and "a variety of schemes and agreements,"*fn3 have conspired to monopolize the market for Taq, and restrained trade to the detriment of competitors and consumers. As a result of Applera's and Roche's allegedly anticompetitive behavior, MDL asserts that it has suffered antitrust injury by being forced to pay "supra-competitive prices for Taq and PCR-related products." Compl. ¶ 61.

II. DISCUSSION

Applera and Roche each move to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(6) and 9(b) on a variety of grounds. The court will address their arguments in turn.

A. Standing

A grant of a patent exempts the holder from the normal prohibition against monopolies. See Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172, 177 (1965) ("A patent . . . is an exception to the general rule against monopolies and to the right to access to a free and open market.") (quoting Precision Instrument Mfg. Co. v. Auto. Maintenance Mach. Co., 324 U.S. 806, 816 (1945)). This immunity from federal antitrust laws, however, is stripped away when a patent is procured by fraudulent conduct.

In Walker Process, the Supreme Court permitted plaintiffs to seek treble damages under the antitrust laws when the fraudulent procurement of a patent is coupled with a violation of section 2 of the Sherman Act. Id. at 178. Here, MDL maintains that Applera and Roche used the '818 patent, procured by fraud, to monopolize the market for Taq. Because MDL is a direct consumer of Taq, MDL asserts that it has standing to prosecute a Walker Process claim as an injured party under the antitrust laws. In response, both Applera and Roche argue that the Walker Process decision did not contemplate direct consumers as suitable plaintiffs in this type of action. Rather, they contend, the only entity with standing to bring a Walker Process claim is a competitor or, more specifically, an entity against whom a fraudulently obtained patent is, or could be, enforced.*fn4

Applera and Roche rely on In re Remeron Antitrust Litig., 335 F. Supp. 2d 522 (D.N.J. 2004), and Carrot Components Corp. v. Thomas & Betts Corp., 229 U.S.P.Q. 61 (D.N.J. 1986), in support of the proposition that Walker Process claims are available exclusively to those against whom a patent is enforced. The court finds that neither of these authorities is controlling, nor in this instance, persuasive.

Carrot Components is factually distinguishable. Unlike here, the plaintiff in Carrot Components was not a customer of the defendant, but rather claimed to be a competitor. The court dismissed the complaint because the plaintiff "failed to establish that defendant had sought to enforce the patent against plaintiff, or that plaintiff had some reasonable basis for fearing such attempted enforcement." 229 U.S.P.Q. at 64. The ruling was limited to the facts of that case, and did not purport to establish a rule of general applicability.

The court in In re Remeron, by comparison, did find that a direct purchaser lacked standing to bring a Walker Process claim. However, the court offered little justification for its holding, stating:

Plaintiffs, as direct purchasers, neither produced mirtzapine nor would have done so; moreover, Plaintiffs were not party to the initial patent infringement suits. Plaintiffs may not now claim standing to bring a Walker Process claim by donning the cloak of a Clayton Act monopolization claim.

335 F. Supp. 2d at 529. The holding cites no controlling precedent, nor offers any compelling ...


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