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Supreme Court Hears Oral Arguments in Life Technologies, Promega Infringement Case

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WASHINGTON, DC (GenomeWeb) – What does the word "all" mean? What does the phrase "substantial portion" mean? And how important was Applied Biosystem's AmpliTaq Gold DNA polymerase to short tandem repeat detection kits sold by Life Technologies in Europe in the early 2000s?

These were among the questions debated by the eight justices of the US Supreme Court on Tuesday in oral arguments for Life Technologies versus Promega, a case that has mushroomed into a test of the limits of the US laws enforcing patent protection. Rule one way and the court might weaken patent protection. Rule too far the other way, and it potentially opens up international companies to patent troll attack and could make sourcing components made in the US a major headache.

The Supreme Court's decision will likely either uphold or reverse the Federal Circuit's Court of Appeals ruling that Life Tech, now a Thermo Fisher Scientific subsidiary, owes Promega $52 million for infringing on IP related to forensic DNA testing kits. That Life Tech infringed on the IP isn't the matter at hand. The damages are a portion of worldwide sales that Promega feels entitled to under an obscure section of US patent law that opens up companies to liability if their infringement can be in certain cases tied to manufacturing components of the product in the US.

It has never been a simple case to follow. In 2006, Applied Biosystems, now also a Thermo Fisher subsidiary, cross-licensed technology with Promega, including the Tautz patent for examining DNA polymorphisms, but only for use in forensics and human identity applications. In 2008, Applied Biosystems merged with Invitrogen to form Life Tech, which has since been acquired by Thermo Fisher

In 2010, Promega sued Life Tech for also selling the kits for training forensic scientists, an "application" that Promega felt infringed on the original agreement.

Through several levels of US courts, issues about the patents persisted until finally, there was only one left to be resolved by the country's highest court. It involved a provision in US patent law inserted to prevent companies from infringing on intellectual property by manufacturing components in the US but leaving assembly, a trivial task in the historical examples, to be done overseas.

The US statutes as written bracket a range of possibilities in such scenarios: making all the parts in the US — or everything except a few screws — and shipping them outside the country with instructions constitutes infringement; so is making even just a single but all-important component, one that must meet a high bar of criticality and for which there are essentially no other uses.

But that leaves a gray area. What if there are three "critical" components and only one is made in the US? What if a component is so useful that it becomes a commodity or staple item commonly sold all across the world? The size of that gray area — how many and what kinds of components constitute a substantial portion — will have to be decided by the court.

"One is never enough" to comprise a substantial portion, Zachary Tripp, assistant to the US Solicitor General, told the court, when not considering the extreme case spelled out in the statutes. The Solicitor General's office, which represents the federal government before the court, aligned itself with Life Tech and suggested a mostly quantitative legal test for determining if US-sourced components made a company liable for infringement.

Promega's counsel, WilmerHale attorney Seth Waxman, himself a former Solicitor General, argued for a more qualitative test, factoring in importance to the final product. A quantitative rule would be too rigid to apply universally and importance was better left determined by a jury.

"Our view is that 'substantial portion' is a flexible concept," WilmerHale attorney Thomas Saunders said at a post-argument panel discussion held at the American University Washington Law Center. "It's a fact question for the jury to determine."

Finnegan attorney Doris Hines, representing the American Intellectual Property Law Association, a group that submitted a legal brief advising the Court (but not in favor of either side), called Tripp's "one cannot be enough" rule a bright-line test, adding that "the court has been rejecting bright-line tests in patent law. It should not be adopted here either," she said.

Tripp conceded in his exchange with the court that if the number of US-made components were greater than one, the calculus might change.  "Numbers are important, but not the whole ballgame," he said.

Notably, during oral arguments, Justice Anthony Kennedy cited a brief filed by Agilent Technologies in support of Life Technologies. John Griem, Jr., an attorney at Carter Ledyard & Milburn representing Agilent and an author of the brief, said it was practically focused and aimed to educate the court on modern supply chains, an area potentially impacted by the decision.

"This case does not merely concern an arcane point of patent law," the Agilent brief said. "Rather, it involves a serious threat to US manufacturing operations reflecting a lack of understanding of modern manufacturing and supply chain management, global sourcing of components, and manufacturing constraints in regulated industries."

Manufacturing has changed considerably since Congress wrote the law in question, for economic reasons and not to violate US patent law, Agilent said. It pointed to its own Dako Estrogen/Progesterone antibody-based diagnostic tests for breast cancer, which features several components that can be made in the US.

Allowing just one component to trigger liability of infringement "would unduly burden companies relying on global sourcing of components because they will now need to factor in the potential for patent liability on worldwide sales on finished products whenever they site a component manufacturing facility in the US or consider using a common component from the US."

"The Federal Circuit's test creates an exception that swallows the rule," Agilent wrote. If the polymerase used by Life Tech could be considered important enough, then any commodity component could be; indeed, most components of diagnostic test kids could be considered "essential" by this reasoning, the firm said.

Here is where the case veers into the policy arena. If the Supreme Court upholds the Federal Circuit's result, it would effectively discourage US manufacturing, not only in diagnostics and life sciences, but in any industry, Agilent said.

Including just a single component made in the US would require, at the very least, extra attention from a patent attorney as to how to manage the risk, Griem said at the panel discussion. "It would be a very large risk that would be hard to manage," he said.

The Supreme Court justices will still have to meet to vote on the case and render opinions on the reasoning behind the decisions. There is no estimate of when to expect a decision. 

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