Essential Pharmaceuticals v. Lifeblood Medical

7/29/2019 Essential Pharmaceuticals v. Lifeblood Medical

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UNITED STATES ISTRICTCOURTEASTERN ISTRICT OFPENNSYLVANIA

ESSENTIALPHARMACEUTICALS, LC

P l a i n t i f f , CIVIL ACTION NO.

LIFEBLOOD MEDICAL, NC.,Defendant.

DEMANDFORJURYTRIAL

COMPLAINT

P l a i n t i f f ,ESSENTIALPHARMACEUTICALS, LC(E s s e n t i a l " ) , o r i t s complainta g a i n s t Defendant LIFEBLOOD MEDICAL, NC.(L i f e b l o o d" ) , a l l e g e s as o l l o w s :

NATUREOFTHECASE1 . This s a n c t i o n s e e k i n g a e c l a r a t o r y judgment h a t E s s e n t i a l has not n f r i n g e d

a n y l a i m s o f .S. a t e n t N o . ,220,538 t h e "'538 a t e n t" ) , d e c l a r a t o r y judgme n t h a t E s s e n t i a lhas no t r e a c h e d a License a nd Supply Agree me n t i t h L i f e b l o o d ( t h e "Agree me n t" ) , a n dd a m a g e s o r L i f e b l o o d ' s b r e a c h o f h e Agreement. A o p y o f h e ' 5 3 8 a t e n t i s a t t a c h e d h e r e t oa s E x h i b i t A.

2. An c t u a l c o n t r o v e r s y ha s r i s e n a n d now x i s t s between s s e n t i a l a nd L i f e b l o o dc o n c e r n i n g t h e i r r e s p e c t i v e r i g h t s an d d u t i e s under h e Agreem e nt and h e ' 5 3 8 a t e n t i n t h a tL i f e b l o o d has breached t s o b l i g a t i o n s under h e Agreemen t, nd L i f e b l o o d contends s s e n t i a l ' sc u r r e n t conduct s i n b r e a c h o f h e Agree me n t n d w i l l i n f r i n g e o n e or m o r e l a i m s o f h e ' 5 3 8p a t e n t .


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3 . E s s e n t i a l seeks damages o r L i f e b l o o d ' s b r e a c h of h e Agreement,and E s s e n t i a lf u r t h e r d e s i r e s a u d i c i a l d e t e r m i n a t i o n of t s r i g h t s and d u t i e s and a e c l a r a t i o n as o whether thas b r e a c h e d t h e Agreement or i n f r i n g e d any claims of h e '538 p a t e n t .

THE ARTIES

4. E s s e n t i a l i s a Delaware l i m i t e d l i a b i l i t y company with t s p r i n c i p a l p l a c e ofb u s i n e s s a t 770 N e w t o w n-Yardley Road, u i t e 212,Newtown, e n n s y l v a n i a .

Upon n f o r m a t i o n and b e l i e f , L i f e b l o o d i s a New e r s e y c o r p o r a t i o n with t sp r i n c i p a l p l a c e of u s i n e s s a t 83 South S t r e e t , S u i t e 101, r e e h o l d , New e r s e y .

JURISDICTIONAND VENUE

6. This Court has p e r s o n a l u r i s d i c t i o n over L i f e b l o o d because t t r a n s a c t s b u s i n e s s

i n and has c o n t r a c t e d t o supply s e r v i c e s o r t h i n g s i n t h e C o mmonw e a l th o f e n n s y l v a n i a ,i n c l u d i n g e n t e r i n g t h e Agreement w i t h E s s e n t i a l , and L i f e b l o o d d e r i v e s s u b s t a n t i a l revenue fromi t s a c t i v i t i e s i n t h e Common w ea lt h of e n n s y l v a n i a .

7 . This Court has s u b j e c t m a t t e r u r i s d i c t i o n over Counts I and I I under 28 U.S.C. 1331 and 1338(a) and has supplemental u r i s d i c t i o n over Count I I under 2 8 U.S.C. 3 6 7 ( a ) .

202.8 . This Court has a u t h o r i t y t o g r a n t d e c l a r a t o r y r e l i e f under 28 U.S.C. 201 and

9. V e nu e s p r o p e r under 28 U.S.C. 1391 and 1 4 0 0 ( b ) .FACTUALBACKGROUND

1 0 . L i f e b l o o d ' s L i f o r C e l l p r o d u c t i s a s erum and animal p r o t e i n f r e e s o l u t i o n i n t e n d e dt o be u s e d , among o t h e r p u r p o s e s , as a u b s t i t u t e f o r f e t a l bovine s erum and a s ac r y o p r e s e r v a t i v e .

~ r J


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1 1 . Under h e Agreement, n t e r e d on September 8, 010, i f e b l o o d g r a n t e d t oE s s e n t i a l an x c l u s i v e l i c e n s e t o o f f e r f o r s a l e , e l l , m a r k e t , d i s t r i b u t e , and e x p o r t L i f e b l o o d ' sL i f o r C e l l p r o d u c t s . L i f e b l o o d r e t a i n e d t h e r i g h t s t o make, ave made, nd import h e L i f o r C e l lp r o d u c t s , b u t L i f e b l o o d a g r e e d i t would m a n u f a c t u r e t h e L i f o r C e l l p r o d u c t s and s u p p l y them t oE s s e n t i a l . I f L i f e b l o o d i s e v e r u n a b l e o r u n w i l l i n g t o s u p p l y E s s e n t i a l ' s needs o r L i f o r C e l lp r o d u c t s , L i f e b l o o d f u r t h e r a g r e e d t o g r a n t t o E s s e n t i a l a i c e n s e t o make, ave made, nd importL i f o r C e l l p r o d u c t s .

1 2 . A f t e r e n t e r i n g t h e Agreement, s s e n t i a l i n t e n d e d t o i n t r o d u c e t h r e e serum anda n i m a l p r o t e i n f r e e p r o d u c t s b a s e d on L i f e b l o o d ' s L i f o r C e l l p r o d u c t : C e l l - E s s , Cryo- E s s , andC l i n - E s s c o l l e c t i v e l y , t h e " E s s e n t i a l P r o d u c t s" ) . The C e l l- E s s p r o d u c t i s t o be a u b s t i t u t e f o rf e t a l b o v i n e serum; h e Cryo- E s s p r o d u c t i s t o be a r y o p r e s e r v a t i v e ; and t h e C l i n - E s s p r o d u c t i st o be a r a n s p o r t a t i o n m e d i u m o r t i s s u e s and e l l s .

1 3 . B e f o r e e n t e r i n g t h e Agreement, i f e b l o o d r e p r e s e n t e d t o E s s e n t i a l t h a t t sL i f o r C e l l p r o d u c t was m e r c h a n t a b l e and i t f o r t h e s e t h r e e p u r p o s e s .

1 4 . A f t e r e n t e r i n g t h e Agreement, s s e n t i a l l e a r n e d t h a t t h e L i f o r C e l l p r o d u c t doesn o t work s a u b s t i t u t e f o r f e t a l bovine serum o r a s a r y o p r e s e r v a t i v e , which meant h a tL i f o r C e l l c o u l d not be used o r E s s e n t i a l ' s a n t i c i pa t e d C e l l- E s s o r Cryo- E s s p r o d u c t s . E s s e n t i a lf i n a n c e d s u b s t a n t i a l r e s e a r c h and development o modify h e L i f o r C e l l p r o d u c t , b u t c a n n o t m akei t work a s a e p l a c e m e n t f o r f e t a l bovine serum o r a s a r y o p r e s e r v a t i v e .

1 5 . A c c o r d i n g l y , s s e n t i a l u l t i m a t e l y i n c u r r e d s u b s t a n t i a l expense o d e v e l o p i t s ow nserum and animal r o t e i n f r e e s o l u t i o n t h e " E s s e n t i a l Formula") h a t t c o u l d use o r a l l of h eE s s e n t i a l P r o d u c t s .

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1 6 . A f t e r L i f e b l o o d l e a r n e d i n J a n u a r y 2013 h a t E s s e n t i a l i n t e n d e d t o m a n u f a c t u r et h e E s s e n t i a l P r o d u c t s u s i n g t h e E s s e n t i a l Formula w i t h a m a n u f a c t u r e r o t h e r t h a n L i f e b l o o d ,L i f e b l o o d informed E s s e n t i a l t h a t t s m a n u f a c t u r e of h e E s s e n t i a l P r o d u c t s w i t h a a n u f a c t u r e ro t h e r t h a n L i f e b l o o d would be a r e a c h of h e Agreem ent and would c o n s t i t u t e i n f r i n g e m e n t oft h e'3 a t e n t .

1 7 . The Agreement s governed by h e laws of h e S t a t e of elaware.COUNT

Declaratory Ju d g m e n t ofNoninfr ingem ent of he '538 Patent

1 8 . E s s e n t i a l r e s t a t e s an d e a l l e g e s p a r a g r a p h s 1 t h r o u g h 1 7 .1 9 . An c t u a l c o n t r o v e r s y e x i s t s between s s e n t i a l and L i f e b l o o d a s t o w h e t h e r t h e

'538 a t e n t i s n o t i n f r i n g e d by s s e n t i a l .20. Because L i f e b l o o d ' s L i f o r C e l l p r o d u c t s d o not u n c t i o n a s a u b s t i t u t e f o r f e t a l

b o v i n e serum o r a s a r y o p r e s e r v a t i v e , E s s e n t i a l h a s d e v e l o p e d i t s own s s e n t i a l Formula, whichf u n c t i o n s a s a u b s t i t u t e f o r f e t a l bovine serum and a s a r y o p r e s e r v a t i v e .

21. E s s e n t i a l h a s m a d e n d / o r ha d m a d e t s E s s e n t i a l Formula.22. L i f e b l o o d h a s informed E s s e n t i a l t h a t t s m a n u f a c t u r e of h e E s s e n t i a l Formula

i n f r i n g e s t h e '538 a t e n t . I n a a n u a r y 22, 013 e t t e r from L i f e b l o o d t o E s s e n t i a l , J o s e p hF i s c h e r , L i f e b l o o d ' s p r e s i d e n t an d CEO, x p l a i n e d t h a t t h e E s s e n t i a l Formula c o u l d n o t havebeen c r e a t e d w i t h o u t u t i l i z i n g t h e p a t e n t e d knowledge h a t i s c o n t a i n e d i n L i f e b l o o d MedicalP a t e n t f o r L i f o r C e l l [ i . e . , t h e '538 a t e n t ] . "(Exh. C.)

23. F u r t h e r , d u r i n g a meeting w i t h E s s e n t i a l on e b r u a r y 27, 013, r. i s c h e rt h r e a t e n e d t h a t E s s e n t i a l ' s m a n u f a c t u r e of h e E s s e n t i a l Formula n f r i n g e s t h e '538 a t e n t .

24. A u d i c i a l d e c l a r a t i o n i s n e c e s s a r y an d a p p r o p r i a t e so h a t E s s e n t i a l m a y s c e r t a i ni t s r i g h t s a s t o whether t i n f r i n g e s t h e '538 a t e n t .

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25. E s s e n t i a l does not n f r i n g e t h e '538 p a t e n t d i r e c t l y , c o n t r i b u t o r i l y , o r byinducement e c a u s e i t s E s s e n t i a l Formula does not r a c t i c e any o f h e c l a i m s of h e '538 p a t e n t .

26. E s s e n t i a l r e q u e s t s t h a t t h e Court n t e r a e c l a r a t o r y judgment h a t E s s e n t i a l h a sn o t and does not n f r i n g e any c l a i m o f h e '538 p a t e n t .

COUNT IDeclaratory Ju d g m e n t That s s e n t i a l

Ha s No t Breached the A g r e e m e n t27. E s s e n t i a l r e s t a t e s an d r e a l l e g e s p a r a g r a p h s 1 t h r o u g h 26.28. An c t u a l c o n t r o v e r s y has a r i s e n an d n o w e x i s t s between E s s e n t i a l an d L i f e b l o o d

c o n c e r n i n g t h e i r r e s p e c t i v e r i g h t s an d d u t i e s under h e Agreement. i f e b l o o d c o n t e n d s t h a tE s s e n t i a l m u s t m a n u f a c t u r e t h e E s s e n t i a l P r o d u c t s e x c l u s i v e l y w i t h L i f e b l o o d , an d t h a t E s s e n t i a lw i l l b r e a c h t h e Agreem e n t f t r e t a i n s a n o t h e r m a n u f a c t u r e r t o m a n u f a c t u r e any o f h e E s s e n t i a lP r o d u c t s a l t h o u g h E s s e n t i a l i n t e n d s t o u s e t h e E s s e n t i a l Formula, which L i f e b l o o d does n o t o wno r c o n t r o l under h e Agreement.

29. The E s s e n t i a l Formula s not a Product" o v e r e d by h e Agreement e c a u s e i t i sn o t ow ne d o r c o n t r o l l e d by L i f e b l o o d , does n o t have t h e s a m e chemical o m p o s i t i o n a s anyp r o d u c t L i f e b l o o d ha s e v e r m a n u f a c t u r e d o r s o l d under h e L i f o r C e l l t r a d e m a r k , an d i s n o tc o v e r e d by an y o f h e p a t e n t s l i c e n s e d under h e Agreement. C o mp a r e d t o L i f o r C e l l , t h eE s s e n t i a l Formula n c l u d e s d i f f e r e n t i n g r e d i e n t s (and o m i t s m a n y t h e r s ) o make t work a s as u b s t i t u t e f o r f e t a l bovine serum a nd a s a r y o p r e s e r v a t i v e , which L i f o r C e l l i s not a p a b l e o fd o i n g .

30. Moreover, under h e Agreement, i f e b l o o d r e p r e s e n t e d an d w a r r a n t e d t h a t " t h eL i c e n s e d P a t e n t R i g h t s [ i . e . , t h e '538 p a t e n t ] c o v e r t h e P r o d u c t . " Because h e '538 p a t e n t doesn o t c o v e r t h e E s s e n t i a l Formula, h a t formula s not a r o d u c t under h e Agreement.


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3 1 . E s s e n t i a l d e s i r e s a u d i c i a l d e t e r m i n a t i o n of t s r i g h t s and u t i e s , an d a e c l a r a t i o nt h a t t i s n o t r e q u i r e d under h e Agreement o u s e L i f e b l o o d t o m a n u f a c t u r e any of h e E s s e n t i a lP r o d u c t s u s i n g t h e E s s e n t i a l Formula.

3 2 . E s s e n t i a l has i v e n L i f e b l o o d n o t i c e t h a t t i n t e n d s t o p u r s u e o t h e r m a n u f a c t u r e r sf o r t s E s s e n t i a l P r o d u c t s .(Exh. .)

33. L i f e b l o o d ' s p r e s i d e n t and CEO, o s e p h F i s c h e r , e n t a a n u a r y 22, 0 1 3 1 e t t e r t oA l l a n Weber, s s e n t i a l ' s CEO, s s e r t i n g t h a t E s s e n t i a l ' s " s t a t e m e n t of u r s u i n g o t h e rm a n u f a c t u r i n g o p t i o n s i s c u r r e n t l y i n v i o l a t i o n of h e Agreement." Exh. C . )

34. This t a t e m e n t from L i f e b l o o d t o E s s e n t i a l c o n f i r m s t h e r e i s an c t u a l c o n t r o v e r s ybetween s s e n t i a l and L i f e b l o o d r e g a r d i n g whether s s e n t i a l i s r e q u i r e d under h e Agreement or e t a i n L i f e b l o o d t o m a n u f a c t u r e t h e E s s e n t i a l P r o d u c t s u s i n g t h e E s s e n t i a l Formula.

35. T h e Court has u r i s d i c t i o n o v e r t h i s d e c l a r a t o r yjudgment l a i m under 28 U.S.C. 1 3 3 8 ( a ) e c a u s e i t n e c e s s a r i l y r a i s e s a e d e r a l i s s u e , a c t u a l l y d i s p u t e d and u b s t a n t i a l , n t h a t tw i l l r e q u i r e t h e Court o d e t e r m i n e t h e scope of h e ' 5 38 p a t e n t t o d e t e r m i n e whether h eE s s e n t i a l Formula s a Product" o v e r e d under h e Agreement. Product" s d e f i n e d a s "anys erum an d a n i m a l p r o t e i n f r e e s o l u t i o n a n d / o r c e l l c u l t u r e m e d i u m o w n e d or o n t r o l l e d byL i f e b l o o d . " A Product" s f u r t h e r d e f i n e d a s any r o d u c t "having m o d i f i e d c h e m i c a lc o m p o s i t i o n s a s s p e c u l a t e d i n t h e L i c e n s e d P a t e n t R i g h t s i . e . , t h e '583 a t e n t ] . " F i n a l l y , undert h e Agreement, i f e b l o o d r e p r e s e n t e d an d w a r r a n t e d t h a t " t h e L i c e n s e d P a t e n t R i g h t s i . e . , t h e'583 a t e n t ] c o v e r t h e P r o d u c t . " T h e r e f o r e , o d e t e r m i n e whether h e E s s e n t i a l Formula s a"Product" nder h e Agreement, h e Court i l l n e c e s s a r i l y have o d e c i d e whether h e E s s e n t i a lFormula s c o v e r e d by h e scope of h e '538 a t e n t , an s s u e of e d e r a l law.

C ' !


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36. E s s e n t i a l r e q u e s t s t h a t t h e Court n t e r a e c l a r a t o r y judgment h a t t i s n o tr e q u i r e d under h e Agreement o r e t a i n L i f e b l o o d t o m a n u f a c t u r e t h e E s s e n t i a l P r o d u c t s u s i n gt h e E s s e n t i a l Formu la and t h a t E s s e n t i a l m ay e t a i n o t h e r m a n u f a c t u r e r s and i s n o t r e q u i r e d t opay any r o y a l t i e s t o L i f e b l o o d f o r p r o d u c t s m a n u f a c t u r e d by t h e r m a n u f a c t u r e r s .

COiJNT I IBreach of Contract

37. E s s e n t i a l r e s t a t e s and r e a l l e g e s p a r a g r a p h s 1 t h r o u g h 36.38. The Agreement s a a l i d an d e n f o r c e a b l e c o n t r a c t between E s s e n t i a l and

L i f e b l o o d .39. I n t h e Agreement, i f e b l o o d r e p r e s e n t e d an d w a r r a n t e d t o E s s e n t i a l t h a t

L i f e b l o o d ' s L i f o r C e l l p r o d u c t s a r e "merchantable" and f i t f o r t h e i r i n t e n d e d p u r p o s e s . " TheL i f o r C e l l p r o d u c t s a x e serum and animal p r o t e i n f r e e s o l u t i o n s i n t e n d e d t o be u s e d , amo ng o t h e rp u r p o s e s , a s a u b s t i t u t e f o r f e t a l b o v i n e serum and a s a r y o p r e s e r v a t i v e .

40. The L i f o r C e l l p r o d u c t s do n o t w o r k a s a u b s t i t u t e f o r f e t a l b o v i n e serum o r a s ac r y o p r e s e r v a t i v e . Among t h e r p r o b l e m s , h e nanoliposomes u s e d i n L i f e b l o o d ' s p r o d u c t do n o thave a i g h enough f a t c o n t e n t , h e growth f a c t o r s i n L i f e b l o o d ' s s o l u t i o n a r e u n s t a b l e an d s u b -t h e r a p e u t i c , an d t h e c r y o p r e s e r v a t i v e i n L i f e b l o o d ' s p r o d u c t i s t o x i c t o c e l l s .

41. T h e r e f o r e , L i f e b l o o d b r e a c h e d t h e Agreement b e c a u s e i t r e p r e s e n t e d andw a r r a n t e d t h a t i t s L i f o r C e l l p r o d u c t s w o r k a s a u b s t i t u t e f o r f e t a l bovine serum an d a s ac r y o p r e s e r v a t i v e .

42. Under h e Agreement, s s e n t i a l p a i d $500,000 o L i f e b l o o d f o r r i g h t s i n t h eL i f o r C e l l p r o d u c t s , e x p r e s s l y r e l y i n g o n L i f e b l o o d ' s r e p r e s e n t a t i o n s and w a r r a n t i e s .

43. Because h e L i f o r C e l l p r o d u c t s do not u n c t i o n a s a u b s t i t u t e f o r f e t a l b o v i n eserum o r a s a r y o p r e s e r v a t i v e , E s s e n t i a l h a s i n c u r r e d o v e r $500,000 n e x p e n s e s o v e r t h e p a s t

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two y e a r s u n s u c c e s s f u l l y t r y i n g t o modify h e L i f o r C e l l p r o d u c t t o f u n c t i o n f o r t h o s e p u r p o s e sand u l t i m a t e l y d e v e l o p i n g t h e E s s e n t i a l Formula.

44. A c c o r d i n g l y , E s s e n t i a l r e q u e s t s t h a t t h e Court n t e r judgment awarding tdamages n t h e amount of t l e a s t $ 1 , 0 0 0 , 0 0 0 t o compensate t f o r L i f e b l o o d ' s b r e a c h of h eAgreement.

PRAYERFORRELIEFWHEREFORE, s s e n t i a l r e s p e c t f u l l y r e q u e s t s t h a t t h e Court n t e r judgment:a . i n f a v o r of s s e n t i a l and a g a i n s t L i f e b l o o d on l l of s s e n t i a l ' s c l a i m s ;b . f i n d i n g L i f e b l o o d has b r e a c h e d t h e Agreement i t h E s s e n t i a l ;c . d e c l a r i n g t h a t E s s e n t i a l has n o t b r e a c h e d t h e Agreement i t h L i f e b l o o d ;d . d e c l a r i n g t h a t E s s e n t i a l has n o t i n f r i n g e d the'S38 p a t e n t ;e . awarding E s s e n t i a l a l l a c t u a l , i n c i d e n t a l , and o n s e q u e n t i a l damages a d e q u a t e t o

compensate o r L i f e b l o o d ' s b r e a c h of h e Agreement o g e t h e r w i t h i n t e r e s t ;

a n d ,f . awarding E s s e n t i a l t s c o s t s and a t t o r n e y ' s f e e s a s p e r m i t t e d under p p l i c a b l e law;

g . awarding s s e n t i a l such o t h e r r e l i e f a s t h e Court m a y d e e m u s t and p r o p e r .JURYDEMAND

Under Rule 38(b)of h e F e d e r a l Rules of i v i l P r o c e d u r e , E s s e n t i a l d e m a n d s a r i a l byj u r y f o r a l l c l a i m s so r i a b l e .


9/9

Dated: March 13, 2013 HANGLEYARONCHICKSEGAL UDLIN& CHILLER

Of o u n s e l :Robert M. e r s t e i nJohn R . L a b b eM a r s h a l l , G e r s t e i n& orun LLP23 3 South Wacker Drive6300 W i l l i s TowerChicago, IL 60606-6357(312) 74-9579

By; W ~Jo S. SummersA t t ~ l r n e y I . D . No . 41854

On e Lo g a n Square, 7 t h F l o o rP h i l a d e l p h i a ,PA 19103-6933(215) [email protected] t t o r n e y s or l a i n t i f f s

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