University of Utah v. Max-Planck-Gesellschaft Zur Foerderung Der Wissenschaften E.V. , 851 F.3d 1317 ( 2017 )

United States Court of Appeals
for the Federal Circuit
______________________
UNIVERSITY OF UTAH,
Plaintiff-Appellee
v.
MAX-PLANCK-GESELLSCHAFT ZUR
FOERDERUNG DER WISSENSCHAFTEN E.V., A
CORPORATION ORGANIZED UNDER THE LAWS
OF GERMANY, MAX-PLANCK-INNOVATION
GMBH, A CORPORATION ORGANIZED UNDER
THE LAWS OF GERMANY, WHITEHEAD
INSTITUTE FOR BIOMEDICAL RESEARCH, A
DELAWARE CORPORATION, MASSACHUSETTS
INSTITUTE OF TECHNOLOGY, A
MASSACHUSETTS CORPORATION, ALNYLAM
PHARMACEUTICALS, INC., A DELAWARE
CORPORATION, ROBERT L. CARET, PRESIDENT
OF THE UNIVERSITY OF MASSACHUSETTS IN
HIS OFFICIAL CAPACITY, JAMES R. JULIAN, JR.,
CHRISTINE M. WILDA, SENIOR VICE PRESIDENT
FOR ADMINISTRATION & FINANCE AND
UNIVERSITY TREASURER OF THE UNIVERSITY
OF MASSACHUSETTS, IN HIS OFFICIAL
CAPACITY, JAMES P. MCNAMARA, EXECUTIVE
DIRECTOR, OFFICE OF TECHNOLOGY
MANAGEMENT OF THE UNIVERSITY OF
MASSACHUSETTS, IN HIS OFFICIAL CAPACITY,
THEIR PREDECESSORS AND SUCCESSORS IN
OFFICE,
Defendants-Appellants
UNIVERSITY OF MASSACHUSETTS, A
2 UNIVERSITY OF UTAH v. MAX-PLANCK-GESELLSCHAFT
MASSACHUSETTS CORPORATION, DAVID J.
GRAY,
Defendants
______________________
2016-1336
______________________
Appeal from the United States District Court for the
District of Massachusetts in No. 1:11-cv-10484-PBS,
Judge Patti B. Saris.
______________________
Decided: March 23, 2017
______________________
MARK CARLSON, Hagens, Berman, Sobol, Shapiro
LLP, Seattle, WA, argued for plaintiff-appellee. Also
represented by STEVE BERMAN.
MORGAN CHU, Irell & Manella LLP, Los Angeles, CA,
argued for defendants-appellants. Also represented by
DAVID ISAAC GINDLER, ALAN J. HEINRICH; SANDRA
HABERNY, Newport Beach, CA.
______________________
Before O’MALLEY, REYNA, and WALLACH, Circuit
Judges.
REYNA, Circuit Judge.
Defendants-Appellants (“Max Planck”) appeal a deci-
sion of the United States District Court for the District of
Massachusetts, which found that this case was not “ex-
ceptional” within the meaning of 35 U.S.C. § 285 and thus
denied Max Planck’s motion for attorney fees. The dis-
trict court did not abuse its discretion. We therefore
affirm.
UNIVERSITY OF UTAH v. MAX-PLANCK-GESELLSCHAFT 3
BACKGROUND
A. Discovery of the Patented Invention
The underlying dispute concerns inventorship of the
Tuschl II patents, 1 which relate to the field of RNA inter-
ference (“RNAi”). RNAi is a process for “silencing” certain
genes from expressing the proteins they encode, which
may be useful in treating a variety of diseases, particular-
ly those associated with overactive or mutated genes.
In March 2000, well before the Tuschl II invention
was reduced to practice, Dr. Thomas Tuschl and his
colleagues published an article describing their various
discoveries in the field of RNAi. Less than a month later,
Dr. Brenda Bass, of the University of Utah (“UUtah”),
published a mini-review in Cell magazine that summa-
rized the state of RNAi research, focusing on Dr. Tuschl’s
article. In addition to summarizing current research, Dr.
Bass’ mini-review included several of her own hypotheses
about enzymatic processes that may be responsible for the
RNAi activity reported in Dr. Tuschl’s article. One of
those hypotheses involved molecules that have a feature
called “3’ overhangs,” which are certain double-stranded
RNA (“dsRNA”) molecules with a nucleotide overhang on
the 3’ ends of dsRNA.
After publishing his article, Dr. Tuschl transitioned to
a new line of research that would result in the patented
Tuschl II invention. Dr. Tuschl and his colleagues focused
on design and testing of candidate molecules to advance
their goal of developing synthetic drugs that could trigger
RNAi in mammals and be used for therapeutic purposes.
It is undisputed that Dr. Tuschl read Dr. Bass’ mini-
review, recognized her hypothesis that 3’ overhangs may
1 The Tuschl II patents include U.S. Patent Nos.
7,056,704; 7,078,196; 8,329,463; 8,362,231; 8,372,968;
8,445,237; 8,765,930; 8,778,902; 8,796,016; and 8,853,384.
4 UNIVERSITY OF UTAH v. MAX-PLANCK-GESELLSCHAFT
be relevant to RNAi, and tested that hypothesis. Those
tests were successful; data from cloning and sequencing
revealed that species with 3’ overhangs were prevalent in
active RNAi systems. See, e.g., ’704 patent col. 18
l. 14−col. 19 l. 25. Based on these data, the Tuschl II
inventors chemically synthesized candidate molecules
with and without 3’ overhangs and tested for RNAi activi-
ty. See id. They determined that small synthetic dsRNA
with 3’ overhangs (dubbed “siRNA”) can be more effective
at inducing RNAi than dsRNAs without 3’ overhangs. See
id. The Tuschl II inventors demonstrated that their
synthetic siRNAs could trigger RNAi for therapeutic
purposes in mammals, including humans. See id. at
col. 21 l. 27−col. 23 l. 67.
Max Planck filed a patent application for the discov-
ery. Dr. Bass’ mini-review was cited as prior art during
prosecution of all ten of the Tuschl II patents, each of
which issued. After the patent applications were filed,
the Tuschl II inventors published two articles reporting
their findings. Dr. Bass was a journal referee for both
articles, and she recommended publication.
B. Inventorship Challenge
UUtah, on behalf of Dr. Bass, sued Max Planck for
correction of ownership, claiming that Dr. Bass should be
named as either a sole or joint inventor of the Tuschl II
patents. UUtah’s claim of sole inventorship turned on
allegations that Dr. Bass reduced to practice the concept
that molecules with 3’ overhangs would be integral to
RNAi, focusing primarily on Dr. Bass’ mini-review in Cell
magazine. Its claim of joint inventorship turned on
alleged collaboration between Dr. Bass and the Tuschl II
inventors that occurred over several conversations at
various academic conferences. J.A. 162−65.
Max Planck moved to dismiss, but the district court
denied the motion, finding that UUtah sufficiently alleged
the facts necessary to state claims for sole and joint
UNIVERSITY OF UTAH v. MAX-PLANCK-GESELLSCHAFT 5
inventorship. J.A. 144−46. The parties proceeded to
discovery.
During her deposition, Dr. Bass made several admis-
sions undermining UUtah’s allegation that Dr. Bass
reduced the Tuschl II invention to practice. When asked
if she ever did “any of the experiments or generate[d] any
of the data that is included in the Tuschl II patents,” she
responded: “Not that I know of.” J.A. 4109. She ex-
plained that: “The subject of the Tuschl II patent is trying
to figure out how to put siRNAs on cells and make them
work. My lab does not study that downstream pathway.”
J.A. 4103. When asked if her lab “ever studied how to put
siRNAs on cells and make them work,” she responded:
“No.” Id. When asked if she ever tested siRNAs as agents
for targeting messenger RNAs for research or therapeutic
purposes, she responded: “No.” J.A. 4107. In relation to
her role as a journal referee for the articles that revealed
the Tuschl II findings, Dr. Bass was asked whether she
suggested to anyone that she was not being properly
credited as the discoverer of the 3’ overhangs, and she
responded: “I don’t think it would have ever crossed my
mind to say that.” J.A. 4112.
Other admissions during her deposition directly con-
tradicted UUtah’s allegations that Dr. Bass collaborated
with the Tuschl II inventors. The only supported allega-
tion was that Dr. Bass and Dr. Tuschl met for dinner
during a conference and discussed Dr. Tuschl’s research
in relation to Dr. Bass’ hypothesis relating to the 3’ over-
hangs. J.A. 4104, 4108, 4113−16, 4124.
On the eve of the deadline for dispositive motions in
district court, UUtah withdrew its sole inventorship
claims, with prejudice. J.A. 180−84. Nevertheless,
UUtah declined to withdraw its joint inventorship claim.
The district court granted Max Planck’s motions for
summary judgment with respect to the joint inventorship
claims.
6 UNIVERSITY OF UTAH v. MAX-PLANCK-GESELLSCHAFT
The district court reasoned that there was no evidence
to support a finding of collaboration between Dr. Bass and
the Tuschl II inventors. While Dr. Bass’ mini-review was
admittedly integral to the Tuschl inventors’ research, the
mini-review was already in the public domain by the time
the Tuschl inventors relied on it. Therefore, the district
court reasoned, the Tuschl II inventors’ reliance on the
mini-review could not, on its own, support a finding of
collaboration. J.A. 4068−69. The district court recognized
the evidence that Dr. Tuschl and Dr. Bass had one discus-
sion over dinner that may have influenced Dr. Tuschl’s
invention, but declined to find that such discussion at an
academic conference could constitute the collaboration
needed to establish joint inventorship. J.A. 4073−76.
C. Motion for Attorney Fees
Max Planck sought eight million dollars in attorney
fees pursuant to 35 U.S.C. § 285, arguing that the case
was “exceptional” within the meaning of this section for
three reasons. First, Max Planck argued that, when
viewed in light of Dr. Bass’ deposition testimony, UUtah
lacked any meaningful basis for filing its correction of
inventorship suit. According to Max Planck, UUtah
either filed its complaint without properly interviewing
Dr. Bass, or filed its complaint knowing that Dr. Bass’
testimony would undermine the allegations. Second, Max
Planck argued that UUtah’s delay in withdrawing its sole
inventorship claim until the eve of summary judgment
indicates that UUtah knew its claim was meritless.
Third, Max Planck argued that UUtah’s claimed damages
were extortionately high.
The district court denied the motion for fees. The dis-
trict court disagreed that the case was objectively unrea-
sonable when all reasonable inferences were drawn in
UUtah’s favor. J.A. 4. The summary judgment record
supported UUtah’s contentions that Dr. Tuschl incorpo-
rated Dr. Bass’ hypothesis into his research, that Dr.
UNIVERSITY OF UTAH v. MAX-PLANCK-GESELLSCHAFT 7
Bass’ work made a significant contribution to the patent-
ed invention, and that the contribution was corroborated
by the mini-review published in Cell magazine. J.A. 4.
The district court also explained that, even though
UUtah could not ultimately produce the evidence neces-
sary to win, its inventorship claim was predicated on a
valid interpretation of Kimberly-Clark Corp. v. Proctor &
Gamble Distributing Co., 973 F.2d 911, 917 (Fed. Cir.
1992), which held that one inventor seeing a relevant
report and building upon it might be an element of joint
behavior supporting collaboration. According to the
district court, UUtah was entitled to base its case on
seeking an extension of the holding in Kimberly-Clark,
even though it did not prevail.
The district court agreed that UUtah’s sole inventor-
ship argument had little factual support, but credited
UUtah for withdrawing that argument prior to summary
judgment. The district court also agreed that Utah’s
damages request was high, but declined to find anything
exceptional about its position. Ultimately, the district
court concluded that this case was not exceptional be-
cause: “Although Utah may have been asking for pie in
the sky, that does not differentiate this case from most
patent cases.” J.A. 5−6.
Max Planck appeals. We have jurisdiction pursuant
to 28 U.S.C. § 1295(a)(1).
STANDARD OF REVIEW
We apply an abuse of discretion standard to all as-
pects of a district court’s determination regarding fees
under § 285. Highmark Inc. v. Allcare Health Mgmt. Sys.,
Inc., 134 S. Ct. 1744, 1749 (2014). An abuse of discretion
occurs when a district court’s decision commits legal error
or is based on a clearly erroneous assessment of the
evidence. Id. at 1748 n.2. “A factual finding is clearly
erroneous if, despite some supporting evidence, we are left
8 UNIVERSITY OF UTAH v. MAX-PLANCK-GESELLSCHAFT
with the definite and firm conviction that a mistake has
been made.” Insite Vision Inc. v. Sandoz, Inc., 783 F.3d
853, 858 (Fed. Cir. 2015).
DISCUSSION
Max Planck argues that the district court disregarded
the Supreme Court’s direction in Octane Fitness, LLC v.
Icon Health & Fitness, Inc., 134 S. Ct. 1749 (2014) by
failing to consider the substantive weakness of UUtah’s
litigation position in light of Dr. Bass’ deposition testimo-
ny. We disagree.
A district court “in exceptional cases may award rea-
sonable attorney fees to the prevailing party.” 35 U.S.C.
§ 285. An exceptional case “is simply one that stands out
from others with respect to the substantive strength of a
party’s litigating position (considering both the governing
law and the facts of the case) or the unreasonable manner
in which the case was litigated.” Octane Fitness, 134 S.
Ct. at 1756. This is “a simple discretionary inquiry; it
imposes no specific evidentiary burden, much less such a
high one.” Id. at 1758.
District courts have discretion to make exceptional
case determinations on a case-by-case basis, considering
the totality of the circumstances. Id. at 1756. Therefore,
there is “no precise rule or formula for making these
determinations.” Id. A “case presenting either subjective
bad faith or exceptionally meritless claims may sufficient-
ly set itself apart from mine-run cases to warrant a fee
award.” Id. at 1757. Other non-exclusive factors that
may support a finding of exceptional case include frivo-
lousness, motivation, objective unreasonableness of a
case’s factual or legal components, and the need in partic-
ular circumstances to advance considerations of compen-
sation and deterrence. Id. at 1756 n. 6. The district court
made no finding that any of these factors applied here.
UNIVERSITY OF UTAH v. MAX-PLANCK-GESELLSCHAFT 9
The district court provided a thorough explanation for
why it did not find this case to be exceptional. Max
Planck’s argument that the district court abused its
discretion in failing to follow the Octane Fitness frame-
work presumes that there is a precise Octane Fitness
framework. That is not correct. Octane Fitness provides
several suggestions that might guide a district court’s
discretionary decision. For example, Octane Fitness
suggests that objective unreasonableness may support the
finding of an exceptional case. Id. While the district
court agreed that UUtah’s case was weak and based on
insufficient evidentiary support, it provided a detailed
explanation as to why it disagreed that UUtah’s case was
objectively unreasonable.
Rather than providing any set formula to dictate the
district court’s consideration of this issue, Octane Fitness
defines an exceptional case as one that “stands out from
others with respect to the substantive strength of a par-
ty’s litigating position.” Id. at 1756 The district court
explained why UUtah’s position did not stand out from
other patent cases, and Octane Fitness does not require
anything more.
This court has recognized that the Supreme Court’s
opinions in Octane Fitness and Highmark stress a district
court’s discretion to determine whether a case is excep-
tional on a case-by-case basis, considering the totality of
the circumstances:
“[B]ecause [the district court] lives with the case
over a prolonged period of time,” Highmark, 134
S. Ct. at 1748, it is in a better position to deter-
mine whether a case is exceptional and it has dis-
cretion to evaluate the facts on a case-by-case
basis. Octane Fitness, 134 S. Ct. at 1756.
SFA Sys., LLC v. Newegg Inc. 793 F.3d 1344, 1351 (Fed.
Cir. 2015) (alterations in original).
10 UNIVERSITY OF UTAH v. MAX-PLANCK-GESELLSCHAFT
Max Planck presents evidence from the record sug-
gesting that the district court failed to take certain facts
into account and overstated the factual and legal strength
of UUtah’s position. UUtah presents evidence from the
record suggesting the contrary and defending its litigation
strategy. We should be wary to wade in such circumstan-
tial waters. The trial judge was in the best position to
understand and weigh these issues. She had no obliga-
tion to write an opinion that reveals her assessment of
every consideration. This court will not second guess her
determination. We affirm.
AFFIRMED