Anticancer, Inc. v. Pfizer, Inc. , 769 F.3d 1323 ( 2014 )

United States Court of Appeals
for the Federal Circuit
______________________
ANTICANCER, INC.,
Plaintiff-Appellant,
v.
PFIZER, INC.,
Defendant-Appellee,
AND
CROWN BIOSCIENCE, INC.,
Defendant-Appellee,
AND
DOES 1-10,
Defendants.
_____________________
2013-1056
______________________
Appeal from the United States District Court for the
Southern District of California in No. 11-CV-0107, Judge
Janis L. Sammartino.
______________________
Decided: October 20, 2014
______________________
RICHARD A. CLEGG, Law Office of Richard Clegg, of
San Diego, California, argued for plaintiff-appellant.
2 ANTICANCER, INC. v. PFIZER, INC.
RICHARD DE BODO, Bingham McCutchen LLP, of San-
ta Monica, California, argued for defendant-appellee
Pfizer, Inc. With him on the brief was OLGA BERSON. Of
counsel on the brief was STANLEY J. PANIKOWSKI, DLA
Piper US LLP, of San Diego, California.
JING JAMES LI, LiLaw Inc., of Los Altos, California,
argued for defendant-appellee Crown Bioscience, Inc.
______________________
Before NEWMAN, REYNA, and TARANTO, Circuit Judges.
NEWMAN, Circuit Judge.
This litigation concerns patents owned by AntiCancer,
Inc. on technology related to the imaging of gene expres-
sion using a green fluorescent protein linked to a gene
promoter. The fluorescent protein is derived from a
species of green-glowing jellyfish named Aequorea victo-
ria. The patented inventions are described as useful for
drug discovery and evaluation in cancer control and
treatment.
Appeal is from the district court’s summary judgment
of noninfringement entered not on the substantive merits
of any issue raised in the complaint, but on a procedural
aspect at the threshold of the litigation arising from
application of the Patent Local Rules of the Southern
District of California. The district court imposed a fee-
shifting sanction as a condition of permitting AntiCancer
to supplement the Preliminary Infringement Contentions
that the district court found defective under Patent Local
Rule 3.1. The court ordered that AntiCancer may sup-
plement its Contentions, provided that it concurrently pay
the attorney fees and costs incurred by the defendants in
connection with their motion for summary judgment
related to the Contentions. AntiCancer objected to this
condition, and the district court entered summary judg-
ANTICANCER, INC. v. PFIZER, INC. 3
ment of noninfringement and duly dismissed the com-
plaint with prejudice. For the reasons we shall discuss,
we conclude that the fee-shifting condition was improper-
ly imposed; the judgment based thereon is vacated.
BACKGROUND
On January 19, 2011, AntiCancer filed a complaint
against Pfizer, Inc. in the United States District Court for
the Southern District of California, with counts for breach
of license agreement, breach of the duty of good faith and
fair dealing, and unjust enrichment. The complaint
recited that AntiCancer, in a contractual arrangement
initially with Wyeth Pharmaceuticals, later acquired by
Pfizer, disclosed technology relating to fluorescent pro-
teins and their DNA linkage and imaging in mammals,
and the technology’s use in cancer drug evaluation and
treatment.
After the complaint was filed, AntiCancer came upon
several publications authored by scientists at Pfizer and
Crown Bioscience, Inc. AntiCancer stated that these
publications show the use of AntiCancer’s technology and
infringement of AntiCancer’s patents, and requested
permission to amend the complaint by adding counts for
patent infringement and adding Crown Bioscience as a
defendant. The district court granted the motion on
November 8, 2011.
On September 21, 2011, the district court held a case
management conference, and on that same date the court
issued a “Case Management Conference Order Regulating
Discovery and Other Pretrial Proceedings,” AntiCancer,
Inc. v. Pfizer Inc., No. 11CV107 (S.D. Cal. Sept. 21, 2011),
ECF No. 13. The Order provided that: “On or before
November 14, 2011, Plaintiff shall serve on all parties a
‘Disclosure of Asserted Claims and Preliminary Infringe-
ment Contentions,’” in accordance with the Patent Local
Rules. Id. at 1-2. The Order also set the discovery sched-
ule, with claim construction discovery to be completed by
4 ANTICANCER, INC. v. PFIZER, INC.
March 26, 2012, fact discovery to be completed by Sep-
tember 4, 2012, and expert discovery to be completed by
October 29, 2012. Id. at 8, 11.
On November 9, 2011, AntiCancer filed a First
Amended Complaint adding Crown Bioscience as a de-
fendant and adding patent infringement counts. Anti-
Cancer filed its “Disclosure of Asserted Claims and
Preliminary Infringement Contentions” on November 14,
2011, as required by the Case Management Conference
Order. This document drew primarily on the scientific
publications of Pfizer and Crown Bioscience, and consist-
ed of 22 pages, including 18 pages of patent claim charts.
The Contentions stated that AntiCancer “reserves the
right to amend or supplement its identification of asserted
claims, accused instrumentalities, and priority dates, as
well as its claim charts, based on further investigation
and discovery.” J.A. 83-84. On January 31, 2012, the
deadline for completing fact discovery was extended to
December 4, 2012, and the deadline for expert discovery
was extended to January 29, 2013. Am. Case Mgmt.
Conf. Order, AntiCancer (S.D. Cal. Jan. 31, 2012), ECF
No. 32.
On March 12, 2012, Pfizer filed a motion for summary
judgment on the patent infringement counts, stating that
the Preliminary Infringement Contentions were defective
because the “charts are missing claim limitations for each
and every claim of each asserted patent, and/or do not
identify specifically how Pfizer allegedly practiced each
element of the asserted claims.” Pfizer’s Notice of Mot. &
Mot. Summ. J. at 1, AntiCancer (S.D. Cal. Mar. 12, 2012),
ECF No. 38. Crown Bioscience joined this motion. Anti-
Cancer responded that its Preliminary Infringement
Contentions complied with the Patent Local Rules and
that the presentations in the claim charts associated the
claim elements or steps with a designated portion of the
scientific publications of Pfizer and Crown Bioscience.
AntiCancer also filed with its opposition brief the declara-
ANTICANCER, INC. v. PFIZER, INC. 5
tion of Dr. Robert M. Hoffman, the founder and President
of AntiCancer, who explained how a person skilled in this
field of science would understand the claim terms and
their relation to the Pfizer and Crown Bioscience publica-
tions.
The district court found the information in the claim
charts deficient as to three claim elements, and author-
ized AntiCancer to supplement its Preliminary Infringe-
ment Contentions but required that AntiCancer
concurrently pay the defendants’ attorney fees and costs
related to the summary judgment motion. 1 The district
court gave the defendants fourteen days in which to
submit an accounting of their attorney fees and costs and
gave AntiCancer fourteen days thereafter in which to file
amended Preliminary Infringement Contentions and
concurrently pay the defendants’ attorney fees and costs,
or to “object [to the] conditions for amendment, in which
event summary judgment will be granted in Defendants’
favor.” Dist. Ct. Op. at 15-16. AntiCancer objected to the
fees/costs condition, 2 and the district court entered sum-
mary judgment of noninfringement. 3
On July 16, 2012, the district court entered a Judg-
ment in a Civil Case, stating “IT IS ORDERED AND
ADJUDGED that summary judgment is hereby granted
in favor of Defendant Crown Bioscience, Inc. on the fourth
1 AntiCancer, Inc. v. Pfizer Inc., No. 11CV107 (S.D.
Cal. June 1, 2012), ECF No. 63 (“District Court Opinion”)
(conditional order granting summary judgment of nonin-
fringement).
2 Notice of Objection to Court’s Conditions for
Amendment, AntiCancer (S.D. Cal. June 29, 2012), ECF
No. 73.
3 AntiCancer (S.D. Cal. July 2, 2012), ECF No. 74
(order entering summary judgment on patent infringe-
ment claims).
6 ANTICANCER, INC. v. PFIZER, INC.
and fifth claims for relief in AntiCancer’s Second Amend-
ed Complaint.” AntiCancer (S.D. Cal. July 16, 2012), ECF
No. 80. 4
The parties then settled the contract claims and filed
a “Joint Motion and Stipulation of Voluntary Dismissal,
with Prejudice.” AntiCancer (S.D. Cal. Sept. 26, 2012),
ECF No. 85. Upon the parties’ joint stipulation, the
district court dismissed AntiCancer’s Second Amended
Complaint with prejudice. 5 AntiCancer then filed its
Notice of Appeal, wherein AntiCancer stated it was ap-
pealing “from the judgment entered in this action on July
16, 2012.” 6
AntiCancer argues on appeal that the fee-shifting
condition and its consequences was a sanction, that the
sanction was unwarranted, and that the summary judg-
ment based on the condition was improper. AntiCancer
states that it provided all information available to it at
the time it filed its Contentions, that it complied with the
Patent Local Rules, that there was no bad faith or other
sanctionable behavior, and that further details of the
defendants’ practice of the claimed inventions required
discovery of the unpublished laboratory procedures of
Pfizer and Crown Bioscience. AntiCancer also states that
its pleadings met the requirements of the Federal Rules of
Civil Procedure and that, even without supplementation,
4 We note that the fourth claim for relief in Anti-
Cancer’s Second Amended Complaint is against Pfizer
only, and the fifth claim for relief is against Pfizer and
Crown Bioscience. Second Am. Compl. 9-10, AntiCancer
(S.D. Cal. June 22, 2012), ECF. No. 72.
5 Order Granting Joint Mot. & Stipulation of Vol-
untary Dismissal, with Prejudice, AntiCancer (S.D. Cal.
Sept. 28, 2012), ECF No. 86.
6 Notice of Appeal, AntiCancer (S.D. Cal. Oct. 26,
2012), ECF No. 87.
ANTICANCER, INC. v. PFIZER, INC. 7
its Preliminary Infringement Contentions complied with
the Patent Local Rules. AntiCancer appeals from the
requirement for payment of the defendants’ attorney fees
and costs as a condition for continuing the litigation.
DISCUSSION
A. Standard of Review
The grant of summary judgment is reviewed without
deference. See Flex–Rest, LLC v. Steelcase, Inc., 455 F.3d
1351, 1357 (Fed. Cir. 2006). Summary judgment is ap-
propriate when there is no genuine issue of material fact
and the movant is entitled to judgment as a matter of law.
See Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 250 (1986).
A district court’s application of its local rules is re-
viewed on the standard of abuse of discretion. See O2
Micro Int’l Ltd. v. Monolithic Power Sys., Inc., 467 F.3d
1355, 1366-67 (Fed. Cir. 2006). The district court’s exer-
cise of its disciplinary authority is reviewed on the stand-
ard of abuse of discretion. Chambers v. NASCO, Inc., 501
U.S. 32, 55 (1991); see also In re Keegan Mgmt. Co. Sec.
Litig., 78 F.3d 431, 436 (9th Cir. 1996). Abuse of discre-
tion may be established when the court commits a clear
error of judgment in weighing the relevant facts or exer-
cises its discretion based upon an error of law or clearly
erroneous factual findings. See, e.g., Erico Int’l Corp. v.
Vutec Corp., 516 F.3d 1350, 1353 (Fed. Cir. 2008); United
States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009).
In O2 Micro, this court discussed when and whether
Federal Circuit law or regional circuit law applies to
issues arising under patent local rules, and concluded
that it depends on whether the issue is of substantive
patent law or of regional procedure. 467 F.3d at 1364
(“There is an important distinction between local rules of
general applicability, which by definition are not unique
to patent law and where we apply regional circuit law,
8 ANTICANCER, INC. v. PFIZER, INC.
and local rules that only apply to patent cases.” (footnote
omitted)).
The question of whether a filing under the Patent Lo-
cal Rules needs supplementation may involve substantive
patent law, but the question of whether fee-shifting is an
appropriate condition for such supplementation is primar-
ily a matter of discipline under the court’s inherent au-
thority, not substantive patent law. See Baldwin
Hardware Corp. v. FrankSu Enter. Corp., 78 F.3d 550,
560-62 (Fed. Cir. 1996); see also Monsanto Co. v. E.I. Du
Pont de Nemours & Co., 748 F.3d 1189, 1196 (Fed. Cir.
2014).
The federal courts have the inherent powers that “‘are
necessary to the exercise of all others.’” Roadway Ex-
press, Inc. v. Piper, 447 U.S. 752, 764 (1980) (quoting
United States v. Hudson, 7 U.S. 32, 34 (1812)). The
Supreme Court has observed that action “in bad faith,
vexatiously, wantonly, or for oppressive reasons” may
incur sanctions in the form of attorney fees under the
court’s inherent powers. Alyeska Pipeline Serv. Co. v.
Wilderness Soc’y, 421 U.S. 240, 258-59 (1975) (quotation
omitted). Invocation of the district court’s inherent pow-
ers is a matter of regional circuit law, rather than Federal
Circuit law. See Monsanto, 748 F.3d at 1196 (“When
reviewing the imposition of sanctions under a district
court’s inherent powers, we apply the law of the regional
circuit in which the district court sits . . . .”).
Under Ninth Circuit precedent, “[b]efore awarding
sanctions under its inherent powers . . . the court must
make an explicit finding that counsel’s conduct ‘constitut-
ed or was tantamount to bad faith.’” Primus Auto. Fin.
Servs., Inc. v. Batarse, 115 F.3d 644, 648 (9th Cir. 1997)
(quoting Roadway Express, 447 U.S. at 767); see also
Yagman v. Republic Ins., 987 F.2d 622, 628 (9th Cir.
1993) (“Courts may not invoke these [inherent] powers
ANTICANCER, INC. v. PFIZER, INC. 9
without a ‘specific finding of bad faith.’” (quoting United
States v. Stoneberger, 805 F.2d 1391, 1393 (9th Cir.
1986))). This rigid imposition that district courts make an
explicit finding of bad faith is justified under Ninth Cir-
cuit law because of the “very potency [of] inherent pow-
ers.” Yagman, 987 F.2d at 628.
Here, the district court’s conditional fee-shifting sanc-
tion appears to be grounded in the court’s inherent powers
relating to the “general conduct of the litigation,” rather
than on any specific infraction such as violation of 28
U.S.C. §1927 or Rule 11. Primus Auto., 115 F.3d at 648;
see id. (“Although the district court failed to specify the
authority for its order, we can deduce the source of its
power for purposes of our review. . . . [W]e will assume
that the court relied on its inherent powers.”); see also
Jones v. Williams, 68 Fed. App’x 857, 859 (9th Cir. 2003)
(“Since the district court did not specify the authority
under which sanctions were imposed, we assume that the
court was exercising its inherent powers . . . .”); Irwin v.
Colletti, No. 98-15019, 1999 WL 109662, at *1 n.3 (9th
Cir. Feb. 26, 1999) (“The district court did not specify the
authority for its fee award. . . . [W]e conclude that the
district court relied upon its inherent powers in awarding
fees . . . .”).
Of significance to our review is the Ninth Circuit’s re-
quirement of an explicit finding of bad faith before impos-
ing a sanction. We note the Ninth Circuit’s recognition of
the importance of this requirement, see Primus Auto., 115
F.3d at 649-50, as well as the Supreme Court’s observance
of the gravity of district courts invoking their inherent
authority, see, e.g., Roadway Express, 447 U.S. at 764
(“Because inherent powers are shielded from direct demo-
cratic controls, they must be exercised with restraint and
discretion.”).
10 ANTICANCER, INC. v. PFIZER, INC.
We apply this guidance to the “factual and legal pre-
requisites to the exercise of this [inherent] power,” Zam-
brano v. City of Tustin, 885 F.2d 1473, 1478 (9th Cir.
1989), surrounding Patent Local Rule 3.1 as here applied,
including the asserted deficiencies of AntiCancer’s sub-
missions.
B. Patent Local Rule 3.1
The purpose of preliminary infringement contentions
as required by Patent Local Rule 3.1 is to assist the court
and guide the parties in focusing on potentially disposi-
tive issues, providing a framework for discovery and
generally facilitating the proceedings. See, e.g., Network
Caching Tech. LLC v. Novell, Inc., No. C-01-2079, 2003
WL 21699799, at *5 (N.D. Cal. Mar. 21, 2003) (“PICs
[preliminary infringement contentions] are not meant to
provide a forum for litigation of the substantive issues;
they are merely designed to streamline the discovery
process.”).
It appears undisputed that AntiCancer’s complaint
complied with the Federal Rules of Civil Procedure. See
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (complaint
must contain sufficient facts to plausibly show that com-
plainant may be entitled to relief); Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 556 (2007) (allegations in com-
plaint must “plausibly suggest[]” the accused conduct to
“raise a reasonable expectation that discovery will reveal
evidence” of such accused conduct). The issue on appeal
relates to the fee-shifting sanction imposed as a condition
of supplementing AntiCancer’s Preliminary Infringement
Contentions under Patent Local Rule 3.1. Rule 3.1 states:
Not later than fourteen (14) days after the Ini-
tial Case Management Conference, a party claim-
ing patent infringement must serve on all parties
a “Disclosure of Asserted Claims and Preliminary
Infringement Contentions.” Separately for each
ANTICANCER, INC. v. PFIZER, INC. 11
opposing party, the “Disclosure of Asserted Claims
and Preliminary Infringement Contentions” must
contain the following information:
a. Each claim of each patent in suit that is alleg-
edly infringed by each opposing party;
b. Separately for each asserted claim, each ac-
cused apparatus, product, device, process, method,
act, or other instrumentality (“Accused Instru-
mentality”) of each opposing party of which the
party is aware. This identification must be as
specific as possible. Each product, device and ap-
paratus must be identified by name or model
number, if known. Each method or process must
be identified by name, if known, or by any prod-
uct, device, or apparatus which, when used, alleg-
edly results in the practice of the claimed method
or process;
c. A chart identifying specifically where each ele-
ment of each asserted claim is found within each
Accused Instrumentality, including for each ele-
ment that such party contends is governed by 35
U.S.C. § 112(6), the identity of the structure(s),
act(s), or material(s) in the Accused Instrumental-
ity that performs the claimed function;
d. Whether each element of each asserted claim is
claimed to be literally present and/or present un-
der the doctrine of equivalents in the Accused In-
strumentality;
e. For any patent that claims priority to an earli-
er application, the priority date to which each as-
serted claim allegedly is entitled; and
f. If a party claiming patent infringement asserts
that its own apparatus, product, device, process,
method, act, or other instrumentality practices
the claimed invention, the party must identify,
12 ANTICANCER, INC. v. PFIZER, INC.
separately for each asserted claim, each such ap-
paratus, product, device, process, method, act, or
other instrumentality that incorporates or reflects
that particular claim.
The Southern District of California adopted Patent
Local Rules similar to those of the Northern District of
California and refers to decisions of the Northern District
as authority for their interpretation. 7 See NessCap Co.,
Ltd. v. Maxwell Techs., Inc., No. 07cv0704, 2008 WL
152147, at *1 (S.D. Cal. Jan. 16, 2008) (“[B]ecause the
Southern District’s Patent Local Rule 3.4(a) is similar in
all material respects to the corresponding patent local
rules promulgated by the Northern District of Califor-
nia . . . this Court relies on published and unpublished
precedent from that court[] as persuasive authority.”); see
also Zest IP Holdings, LLC v. Implant Direct Mfg., LLC,
No. 10cv0541, 2013 WL 1626111, at *5 (S.D. Cal. Apr. 15,
2013) (looking to Northern District case law with respect
to Patent Local Rule 3.1); Ameranth, Inc. v. Pizza Hut,
Inc., No. 12cv1659, 2013 WL 3894880, at *5 (S.D. Cal.
July 26, 2013) (same); accord Dist. Ct. Op. at 5 n.4 (“This
Order cites to out-of-district case law interpreting patent
local rules promulgated by other districts that are sub-
stantively similar to our own as persuasive authority.”
(citing NessCap, 2008 WL 152147, at *1)); id. at 6. We
observed in O2 Micro that the Northern District’s rules
were designed to “‘require parties to crystallize their
theories of the case early in the litigation’ so as to ‘prevent
the shifting sands approach to claim construction.’” 467
F.3d at 1364 (quoting Atmel Corp. v. Info. Storage Devices,
7 The Southern District of California adopted
amended patent local rules on February 8, 2013. This
decision is directed to the rules in effect at the time of
these proceedings.
ANTICANCER, INC. v. PFIZER, INC. 13
Inc., No. C 95-1987, 1998 WL 775115, at *2 (N.D. Cal.
Nov. 5, 1998)).
The district court cited the explanation by the North-
ern District of California that “‘infringement contentions
need not prove infringement’ but must ‘outline a plain-
tiff’s theories of infringement.’” Dist. Ct. Op. at 6 (quoting
Data Retrieval Tech., LLC v. Sybase, No. C 08-5481, 2009
U.S. Dist. LEXIS 129454, at *8 (N.D. Cal. Sept. 11,
2009)). In Shared Memory Graphics LLC v. Apple, Inc.,
the Northern District explained that “Rule 3-1 does not
necessarily require the patent holder to produce evidence
of infringement.” 812 F. Supp. 2d 1022, 1025 (N.D. Cal.
2010). In Genentech, Inc. v. Trustees of University of
Pennsylvania, the Northern District summarized:
The purpose of the disclosure rules is to fur-
ther the goal of full, timely discovery and provide
all parties with adequate notice of and infor-
mation with which to litigate their cases. In ana-
lyzing disclosures in the parallel context of
infringement contentions pursuant to Patent L.R.
3–1, courts have distinguished between the re-
quired identification of the precise element of any
accused product alleged to practice a particular
claim limitation, and every evidentiary item of
proof showing that the accused element did in fact
practice the limitation.
No. C 10–2037, 2012 WL 424985, at *1 (N.D. Cal. Feb. 9,
2012) (citations and quotations omitted).
We apply this guidance to determine whether the
sanction here imposed as a condition of supplementing
the Rule 3.1 Preliminary Infringement Contentions was
an abuse of discretion.
C. The Preliminary Infringement Contentions
AntiCancer states that its Contentions showed its
theories of infringement, provided notice of the infor-
14 ANTICANCER, INC. v. PFIZER, INC.
mation to be obtained by discovery, and complied with the
letter and purpose of Patent Local Rule 3.1. AntiCancer’s
Rule 3.1 filing stated that “[t]he attached Asserted Claims
and Preliminary Contentions Charts . . . identify to the
extent possible based on information currently in Anti-
Cancer’s possession where each element of each asserted
claim is found within each accused instrumentality of
which AntiCancer is aware.” J.A. 85. AntiCancer states
that its “infringement theories were as crystallized as
they could be” before AntiCancer could “possibly have
taken any discovery to support its infringement claims
and to learn the actual details of the defendants’ internal
research activities.” Appellant Br. at 8-9, 13.
The patents are United States Patent No. 6,649,159
(the ’159 patent) and Reissue Patent No. RE 39,337 (the
’337 patent). The ’159 patent is for a method of monitor-
ing gene expression using fluorescence imaging. Claim 1
recites:
1. A method to monitor the ability of a pro-
moter to promote expression in an animal of an
endogenous gene that is controlled by said pro-
moter, which method comprises:
a) delivering, to an animal, cells containing a
nucleic acid encoding a fluorophore operatively
linked to the promoter of said endogenous gene
whose ability to promote expression is to be ana-
lyzed; and
b) observing the presence, absence or intensity
of the fluorescence generated by said fluorophore
at various locations in said animal by whole-body
external fluorescent optical imaging,
whereby the ability of said promoter to pro-
mote expression is monitored, and
wherein said fluorophore is a protein that is
autofluorescent such that no substrates or cofac-
tors are needed for it to fluoresce.
ANTICANCER, INC. v. PFIZER, INC. 15
With its Contentions for the ’159 patent, AntiCancer
incorporated the Pfizer publication entitled “Defects in
Embryonic Development of EGLN1/PHD2 Knockdown
Transgenic Mice are Associated with Induction of Igfbp in
the Placenta,” published at 390 Biochemical and Biophys-
ical Research Communications 370 (2009). This article
describes experiments using green fluorescent protein
imaging of gene expression in mouse embryos. In its
claim charts, AntiCancer included Figure 2 from that
publication, captioned “Embryoplacenta l effects of the
localization of intense (+++) GFP fluorescence in EGNLI
RNAi hairpin treated embryos,” showing mouse embryos
with these effects.
The ’337 patent is directed to a mouse model in a pro-
cess called “surgical orthotopic implantation,” in which
fragments of human tumors are implanted into the corre-
sponding organ of a living mouse. Claim 1 of the ’337
patent as reissued recites:
1. A nude mouse model for progression of
human neoplastic disease, the progression of said
disease being characterized by growth of a prima-
ry tumor site and metastasis to secondary tumor
sites,
wherein said mouse has histologically intact
human neoplastic tissue of at least 1 mm in size
transplanted onto an organ of said mouse which
corresponds to the human organ from which said
tissue is originally obtained;
and has sufficient immuno-deficiency to allow
said transplanted neoplastic tissue to grow at said
primary site and metastasize to said secondary
tumor sites, so as to mimic the progression of the
neoplastic disease including the metastatic behav-
ior of said neoplastic disease in humans.
With its Contentions for the ’337 patent, AntiCancer
included a Pfizer-Crown Bioscience poster presentation
ANTICANCER, INC. v. PFIZER, INC. 17
Pfizer’s Mem. P. & A. Supp. Mot. Summ. J. Noninfringe-
ment Based on Defective Infringement Contentions 11,
AntiCancer (S.D. Cal. Mar. 12, 2012), ECF No. 38-1.
The district court held that AntiCancer’s claim charts
did not provide all of the information the Patent Local
Rules require. The district court held that the claim
charts were deficient as to three elements: the “promoter
monitoring” and “delivering cells” elements of the ’159
patent, and the “metastasis to a second site” element of
the ’337 patent.
AntiCancer argues that the Contentions and claim
charts adequately showed the connection between these
claim elements and the information in the Pfizer and
Crown Bioscience publications, and showed, prima facie,
the presence of these elements in the accused activities.
AntiCancer states that the degree of specificity in its
Contentions and claim charts was in accordance with the
Patent Local Rules, and further specificity and detail will
require discovery of the defendants’ non-public, internal
activities. AntiCancer stresses that the Patent Local
Rules contemplate that discovery will follow from the
Preliminary Infringement Contentions, and that it is not
expected or intended that the Contentions must provide
complete proof of infringement before the patentee has a
meaningful opportunity to conduct discovery.
On the role of discovery in the specificity of the Pre-
liminary Infringement Contentions, it cannot be ignored
that AntiCancer’s Preliminary Contentions were required
to be filed within two months of the district court’s Case
Management Conference Order and just five days after
AntiCancer filed its First Amended Complaint adding the
infringement counts and party-defendant Crown Biosci-
ence, with nearly ten months remaining until the close of
fact discovery pursuant to the original Case Management
Conference Order. The commentary on preliminary
infringement contentions in those district courts that
18 ANTICANCER, INC. v. PFIZER, INC.
have adopted similar local rules is that the contentions
precede discovery and are intended to facilitate discovery.
This court, in O2 Micro, mentioned “the broad discovery
regime under the Federal Rules of Civil Procedure, espe-
cially given the particular importance of discovery in
complex patent cases.” 467 F.3d at 1365.
We note the limiting language of Patent Local Rule
3.1, requiring the plaintiff to identify the accused prod-
ucts, instrumentalities, or acts “of which the party is
aware”; and to be “as specific as possible,” with the name
or model number of the accused product, device, or appa-
ratus “if known.” These requirements harmonize the
Local Rule with the discovery provided by the Federal
Rules and warrant consideration when reviewing the
district court’s fee-shifting sanction.
Turning to the three claim elements for which the dis-
trict court found AntiCancer’s Preliminary Infringement
Contentions deficient, we review compliance with Patent
Local Rule 3.1 in the context of the condition the district
court imposed on AntiCancer’s ability to supplement the
Contentions. In the end, considering the language and
purposes of the Local Rule, and the record of what Anti-
Cancer disclosed in its Contentions and the limited,
specific criticisms of the Contentions’ sufficiency, we
conclude that there is no reasonable basis for making the
finding of bad faith that would be required to sustain the
fees sanction, without which summary judgment here is
improper. Indeed, we do not see how revised Contentions
could be insufficient if AntiCancer added to them the brief
explanations it provided in its opposition to summary
judgment.
1. promoter monitoring
Each asserted ’159 patent claim includes the clause
“whereby the ability of said promoter to promote expres-
sion is monitored.” See ’159 patent col. 24 l. 44 - col. 26 l.
12. The district court observed that “in support of its
ANTICANCER, INC. v. PFIZER, INC. 19
allegation of infringement” of the promoter monitoring
element, AntiCancer’s Contentions identified Figure 2
and the Pfizer publication’s statement that “[t]he localiza-
tion and intensity of GFP fluorescence in conceptuses
from both treatment groups was varied.” The district
court concluded that “[o]n its face, the text from the paper
says nothing about ‘promoters’ or ‘monitoring.’” Dist. Ct.
Op. at 8. The court found that the citations to portions of
the Pfizer publication, or the incorporation of its full text,
did not “suppl[y] sufficient information for how Pfizer
allegedly practiced the Promoter Monitoring element,”
Dist. Ct. Op. at 8, and stated that “AntiCancer needs to
connect the dots for how Pfizer’s research . . . reads on the
asserted claim language,” id. at 9.
AntiCancer states that further specificity would be
obtained with discovery and faults the district court for
granting summary judgment before there was claim
construction “or a comparison of the properly construed
claims to the accused methods.” Appellant Br. at 19. See,
e.g., Ameranth, Inc. v. Papa John’s USA, Inc., 946 F.
Supp. 2d 1049, 1057-61 (S.D. Cal. 2013) (denying motion
for summary judgment and holding that defendant’s
allegation that preliminary infringement contentions
lacked sufficient specificity “turns the issue into one of
claim construction rather than sufficiency of the PICs
[preliminary infringement contentions],” and was thus
premature); Network Caching, 2003 WL 21699799, at *4
(“Patent LR 3–1 does not require [the plaintiff] to produce
evidence of infringement . . . .”).
AntiCancer continues to stress that its Preliminary
Infringement Contentions stated that the disclosures and
claim charts “identify to the extent possible based on
information currently in AntiCancer’s possession where
each element of each asserted claim is found within each
accused instrumentality of which AntiCancer is aware.”
Appellant Br. at 24-25. AntiCancer had argued in its
brief opposing the motion for summary judgment that “it
20 ANTICANCER, INC. v. PFIZER, INC.
would be clear to any competent scientist or even a lay-
man, that measuring the ‘intensity’ of any process is
another way of saying that the process is being ‘moni-
tored,’” and provided the declaration of its founder and
President, Dr. Robert M. Hoffman, explaining this sci-
ence. The Hoffman declaration states that “it is impossi-
ble to measure the intensity of a process without
monitoring it, since intensity refers to a degree of meas-
urement which is monitored over time.” Decl. Robert M.
Hoffman at 3, AntiCancer (S.D. Cal. Apr. 2, 2012), ECF
No. 40-1. Dr. Hoffman explained that the Pfizer publica-
tion
clearly indicates that the promoter was monitored
in this experiment. Fluorescence intensity was
graded as either “0, +, ++, or +++.” Therefore, ex-
pression of GFP varied from “0” at the lowest end
to “+++” at the highest end, which means the ac-
tivity (intensity) of the promoter linked to GFP
was varied. The scientist conducting this experi-
ment could only have rated the varying intensity
of the GFP promoter by monitoring it.
Id.
The district court apparently gave weight to the inclu-
sion of additional explanation in AntiCancer’s opposition
brief and the Hoffman declaration, and remarked that
AntiCancer was “capable” of making the “connection”
between the Pfizer publication and the claim elements.
Dist. Ct. Op. at 9. The court observed that AntiCancer’s
brief contained more details than its Contentions, and
stated:
Indeed, in its opposition brief [AntiCancer] makes
this connection: “[I]t is the signal of GFP fluores-
cence which indicates the activity of the promoter,
and the ‘localization and intensity’ of such fluores-
cence, and thereby of the promoter, is determined
ANTICANCER, INC. v. PFIZER, INC. 21
by viewing or imagining the subject over time – in
other words, by monitoring it.”
Id. (quoting AntiCancer’s brief in opposition to motion for
summary judgment of noninfringement). The district
court thus suggested that this information should have
been included in the Preliminary Infringement Conten-
tions. AntiCancer does not object to such inclusion, but
objects to the fee-shifting condition placed on this inclu-
sion.
As we review the nature of the deficiencies that were
found by the district court, and the condition imposed on
AntiCancer’s supplementation of the Contentions, Anti-
Cancer reasonably argues that its “infringement theories
were as crystallized as they could be under the circum-
stances, five (5) days after it had filed its First Amended
Complaint with its infringement claims.” Appellant Br.
at 13. AntiCancer argues that there was no uncertainty
as to the subject matter that was charged with infringe-
ment, and that the supplemental information sought by
the district court would be obtained by discovery, as
contemplated by the Patent Local Rules, as well as the
broad discovery regime provided for by the Federal Rules
of Civil Procedure. The district court referred to the
requirement that “the degree of specificity under Local
Rule 3–1 must be sufficient to provide reasonable notice
to the defendant why the plaintiff believes it has a ‘rea-
sonable chance of proving infringement.’” Shared Memory
Graphics, 812 F. Supp. 2d at 1025 (quoting View Eng’g,
Inc. v. Robotic Vision Sys., Inc., 208 F.3d 981, 986 (Fed.
Cir. 2000)). However, the question on appeal is not
whether the district court properly required additional
specificity in these Contentions, but whether a fee-
shifting sanction was appropriately attached to the court’s
authorization to supplement the Contentions.
Ninth Circuit precedent negates the imposition of a
fee-shifting sanction absent an explicit finding of bad
22 ANTICANCER, INC. v. PFIZER, INC.
faith. Although the district court described the Conten-
tions as “woefully insufficient” and “vague,” and described
AntiCancer as “act[ing] unreasonably” and “disingenuous”
in submitting the Contentions, Dist. Ct. Op. at 14, there is
no explicit finding of bad faith. Indeed, the district court’s
observation that AntiCancer’s brief in opposition to the
motion for summary judgment and the Hoffman declara-
tion might meet the court’s concerns weighs against any
inference of bad faith. We thus conclude that a fee-
shifting sanction conditioned on AntiCancer’s supplemen-
tation for the “promoter monitoring” element cannot be
sustained.
2. delivering cells
The “delivering cells” element appears in each of the
asserted ’159 patent claims, as “delivering, to an animal,
cells containing a nucleic acid encoding a fluorophore
operatively linked to the promoter.” See ’159 patent col.
24 l. 44 - col. 26 l. 12. AntiCancer’s claim charts refer to
the Pfizer publication and the publication’s statement
that “we generated transgenic mice expressing EGLN1
shRNA.”
EGLN1 shRNA denotes the mouse expression of a
known genetic trait. The district court observed Anti-
Cancer’s argument to be that
it is a basic scientific concept that in order to have
a transgenic mouse, cells must have been deliv-
ered. In other words, inherent within the state-
ment ‘we generated transgenic mice expressing
EGLN1 shRNA’ is the concept that cells contain-
ing a nucleic acid encoding a fluorophore were de-
livered to an animal.
Dist. Ct. Op. at 11 n.8.
The defendants argued that the Pfizer publication did
not show the “delivering cells” element, but merely de-
scribed the fluorescent mice used by Pfizer. AntiCancer
ANTICANCER, INC. v. PFIZER, INC. 23
responded that “[a]lthough the Pfizer Article does not
explicitly state that GFP [green fluorescent protein]-
labeled cells were delivered, such delivery is so implicit
that it needs no statement . . . [because] it could not be
done any other way than by ‘delivering cells,’ a basic
scientific concept that should be well understood by a
company with Pfizer’s expertise.” AntiCancer Opp’n Mot.
Summ. J. at 5, AntiCancer (S.D. Cal. Apr. 2, 2012), ECF
No. 41. AntiCancer argued that identification of the
information in the Pfizer publication by the AntiCancer
Preliminary Infringement Contentions and claim charts
satisfied the requirements of the Patent Local Rules, for
the step of “delivering cells” would be “apparent to a
competent scientist, or even a layman.” Id.
The district court compared the claim language “de-
livering, to an animal, cells containing a nucleic acid
encoding a fluorophore,” with the language of the Pfizer
publication “we generated transgenic mice expressing
EGLN1 shRNA,” and stated:
As Pfizer correctly notes, the cited sentence does
not mention cells. It does not mention delivering
cells, fluorophores, or nucleic acids encoding fluor-
ophores to animals. The quoted sentence only re-
fers to animals (i.e., ‘transgenic mice’) with a
particular genetic trait (i.e., ‘expressing’ a particu-
lar gene—‘EGLN1 shRNA’).
Dist. Ct. Op. at 10 (internal quotations and citation
omitted). The district court concluded that “AntiCancer
in no way attempts to make a connection between the
sentence provided and the claim language, and the PICs
additionally draw no connection between Figure 2 and the
relevant claim language.” Id. However, the district court
observed that AntiCancer had elaborated on this element
in its opposition brief, the court stating: “Essentially,
Anticancer argues that because its [sic] common
knowledge that GFP comes from jellyfish—not mice—‘the
24 ANTICANCER, INC. v. PFIZER, INC.
GFP gene had to have been delivered.’” Dist. Ct. Op. at
11 (quoting AntiCancer Opp’n Mot. Summ. J. at 5).
The district court ruled that the Contentions for the
“delivering cells” element did not “suppl[y] sufficient
information for how Pfizer allegedly practiced this ele-
ment. . . . cit[ing] to a single sentence from the Pfizer
paper as evidence that Pfizer infringed this element.”
Dist. Ct. Op. at 10. The court stated that “the connections
between the claim language and the ‘evidence of the
accused instrumentality’ that AntiCancer makes in its
opposition brief need to be set forth in the PICs, even if
they are ‘basic scientific concepts’ that are generally
known or publicly available.” Dist. Ct. Op. at 11 (citing
Linex Techs., Inc. v. Belkin Int’l, Inc., 628 F. Supp. 2d 703,
709 (E.D. Tex. 2008)).
The district court faulted the Preliminary Infringe-
ment Contentions for failing to provide sufficient “evi-
dence” of the accused instrumentalities and “information”
about how Pfizer practiced the “delivering cells” element.
Dist. Ct. Op. at 10-11. AntiCancer argues that, as prece-
dent has established, the purpose of the Contentions is to
outline the theories of infringement and streamline
discovery, not to provide proof of infringement. See O2
Micro, 467 F.3d at 1364 (the Contentions are intended to
“crystallize [the infringement] theories . . . so as to pre-
vent the shifting sands approach to claim construction”
(internal quotation marks omitted)).
We conclude that, in view of AntiCancer’s presenta-
tion of the “delivering cells” element at this stage, and
applying the law of the Ninth Circuit concerning the
standards for fee-shifting, the district court exceeded its
discretionary authority in imposing a fee-shifting sanction
as a condition of proceeding with the litigation.
ANTICANCER, INC. v. PFIZER, INC. 25
3. metastasis to a second site
The third element for which the district court held the
Preliminary Infringement Contentions to be deficient is
“metastasis to a second site” in the ’337 patent claims.
The claims are directed to “a nude mouse model for pro-
gression of human neoplastic disease, the progression of
said disease being characterized by growth of a primary
tumor site and metastasis to secondary tumor sites,
wherein said mouse has . . . sufficient immuno-deficiency
to allow said transplanted neoplastic tissue to grow at
said primary site and metastasizing to said secondary
tumor sites.” ’337 patent col. 11 ll. 13-67. AntiCancer’s
Contentions recited the following text from the defend-
ants’ poster presentation as corresponding to this ele-
ment:
“Tumor fragments derived from patient tumor tis-
sues were surgically implanted into the left lobe of
nude mouse liver”; “Sutent treatment significantly
inhibited orthotopic HCC tumor growth; Plasma
samples were collected at different time points for
alpha-feto-protein (AFP) measurement. At termi-
nation, tumors were excised from liver and their
weights and sizes were recorded”; “In addition,
histological analysis confirmed that orthotopically
implanted primary human tumors maintained
their histopathological characteristics.”
Disclosure of Asserted Claims and Preliminary Infringe-
ment Contentions at 95-96, AntiCancer (S.D. Cal. Mar.
12, 2012), ECF 38-4.
The defendants argued that the passages quoted from
their poster presentation were insufficient to establish a
connection between this claim element and the defend-
ants’ activities, because the poster does not specifically
describe the implanted tumor as metastasizing to a
second location. AntiCancer responded that the ’337
patent claims require sufficient mouse immuno-deficiency
26 ANTICANCER, INC. v. PFIZER, INC.
to “allow said transplanted neoplastic tissue to grow at
said primary site and metastasize to said secondary
tumor sites,” and that the defendants’ publications show-
ing growth of the tumor at the site of implantation “is
direct evidence that the mice used were sufficiently im-
muno-deficient to allow for growth at the primary site and
for metastasis at secondary sites.” AntiCancer Opp’n
Mot. Summ. J. at 4-6. The district court stated:
AntiCancer has left out the essential connection
between the claim language and the allegedly in-
fringing acts. How does the growth of the tumor
at the primary site provide ‘direct evidence’ that
the mice were sufficiently immuno-deficient to al-
low for metastasis to secondary sites? By skip-
ping this essential connection, AntiCancer leaves
Defendants—and the Court—guessing at how the
patent was allegedly infringed, hindering Defend-
ants’ ability to prepare an effective defense.
Dist. Ct. Op. at 13.
AntiCancer states that its Contentions were not defi-
cient, and that the district court’s question of “how” tumor
growth relates to immuno-deficiency transcends the
requirement of Local Rule 3.1, to simply provide “a chart
identifying specifically where each element of each assert-
ed claim is found within each Accused Instrumentality.”
AntiCancer also states that it identified the activities
meeting the “metastasis to a second site” element, and
that persons of skill in this science would readily under-
stand that the tumor control described in the defendants’
publication also related to metastasis.
In Network Caching, the Northern District court ex-
plained that the Preliminary Infringement Contentions
“are not meant to provide a forum for litigation of the
substantive issues; they are merely designed to stream-
line the discovery process.” 2003 WL 21699799, at *5.
The Preliminary Infringement Contentions do not need to
ANTICANCER, INC. v. PFIZER, INC. 27
include proof or direct evidence of infringement, as the
various decisions on the Patent Local Rules have ex-
plained.
We again conclude that the district court’s fee-shifting
condition for supplementing the Contentions was unwar-
ranted, applying the Ninth Circuit’s requirement of bad
faith for imposition of sanctions as discussed, e.g., in
Primus Automotive, 115 F.3d at 648.
CONCLUSION
Summary judgment is appropriate when there is no
reasonable possibility that the non-movant could prevail
upon proper pleadings and a full and fair trial. See Fed.
R. Civ. P. 56; Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 250 (1986). Here, the district court granted sum-
mary judgment based on its finding that AntiCancer’s
Preliminary Infringement Contentions were deficient and
because AntiCancer objected to the fee-shifting sanction
imposed as a condition of supplementing the Contentions.
When a complaint meets the standards of the Federal
Rules, and there has been no reasonable opportunity for
discovery and evidentiary development of the issues, it is
rarely appropriate to summarily decide the merits against
the complainant. We need not intrude upon the district
court’s authority to require supplementation of the Pre-
liminary Infringement Contentions when such supple-
mentation may assist the procedures of trial. However,
exercise of a court’s inherent authority to levy a sanction
as a condition of supplementing the Contentions requires
conduct that “constituted or was tantamount to bad
faith.” Roadway Express, 447 U.S. at 767. There is no
finding, and there is no basis for a finding, of such impro-
priety here.
We conclude that the district court exceeded its dis-
cretion in imposing the condition of payment of the de-
fendants’ attorney fees and costs in order to permit
28 ANTICANCER, INC. v. PFIZER, INC.
AntiCancer to supplement its Preliminary Infringement
Contentions. We vacate the condition, and the summary
judgment based thereon. The case is remanded for fur-
ther proceedings.
VACATE AND REMANDED