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Not Reported in F.Supp., 1995 WL 512171 (S.D.N.Y.)
(Cite as: 1995 WL 512171 (S.D.N.Y.))
Only the Westlaw citation is currently available.
United States District Court, S.D. New York.
NOVO NORDISK OF NORTH AMERICA, INC.,
Novo Nordisk Pharmaceuticals, Inc., and Novo
Nordisk A/S, Plaintiffs,
v.
GENENTECH, INC., Defendant.
Civ. A. No. 94 Civ. 8634 (CBM).
Aug. 28, 1995.
ORDER REGARDING PUBLIC VERSION OF
FINDINGS OF FACT AND CONCLUSIONS OF
LAW DATED JUNE 28, 1995
MOTLEY, District Judge.
*1 Upon agreement by the parties, it is hereby
ORDERED that the attached is the Public
Version of the Court's Findings of Fact and
Conclusions of Law dated June 28, 1995 on
Defendant's Motion for A Preliminary Injunction.
FINDINGS OF FACT AND CONCLUSIONS OF
LAW ON DEFENDANT'S MOTION FOR
PRELIMINARY INJUNCTION
MOTLEY, District Judge.
I. BACKGROUND
A. Procedural Background
1. On November 30, 1994 plaintiffs Novo
Nordisk of North America, Inc. (“NNNA”), Novo
Nordisk Pharmaceuticals, Inc. (“NNPI”), and Novo
Nordisk A/S (“NNAS”) (collectively hereinafter
referred to as “Novo”) commenced an action against
Genentech for, inter alia, a declaratory judgment that
Genentech's United States Patent No. 4,601,980 (the
'980 patent) is invalid and not infringed by Novo.
2. On or about May 9, 1995, Novo received
approval from the United States Food and Drug
Administration (the “FDA”) to market and sell its
human growth hormone (“hGH”) product,
Norditropin®, in the United States. (Def. Ex. 89).
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
3. On May 12, 1995, Genentech moved, by order
to show cause, for a temporary restraining order and
a preliminary injunction prohibiting Novo from
marketing and selling Norditropin® in the United
States in violation of Claim 2 of t [[[[Editor's Note:
Public version with redactions by court.] The court
denied Genentech's motion for a temporary
restraining order but scheduled an expedited hearing
on Genentech's motion for a preliminary injunction.
4. Beginning on May 22, 1995, and concluding
on June 14, 1995, the court held an evidentiary
hearing on Genentech's motion for a preliminary
injunction. On June 14, 1995, the court issued a
temporary restraining order so as to maintain the
status quo pending the court's ruling on Genentech's
motion.
B. The Parties
5. Genentech is a Delaware corporation with its
principal place of business in South San Francisco,
California. It was founded in 1976 and since that time
has become a leading bio-pharmaceutical company.
(Tr. 387, Whiting). Genentech presently
manufactures and distributes five commercial human
genetically-engineered recombinant pharmaceutical
products, including two human growth hormone
(“hGH”) products (called Protropin® and Nutropin®).
(Tr. 317, Whiting; 278-283, Rizzuto).
6. NNAS is a corporation organized and existing
under the laws of Denmark, and is one of the world's
leading manufacturers of pharmaceutical products,
with worldwide revenues in 1994 of $2.223 billion.
(Tr. 486, 488-89, Hansen). Its insulin sales in the
United States alone (through its wholly-owned
subsidiary, NNPI) were $125 million in 1994. (Tr.
858, Barfod). NNAS markets and sells several
genetically-engineered pharmaceutical products
including recombinantly-produced insulin and
recombinantly-produced hGH (Norditropin®). (Tr.
483-484, 488-489, 491, 493-494, Hansen).
7. NNPI, located in Princeton, New Jersey, is a
wholly-owned subsidiary of NNAS. (Def. Ex. 100, p.
65). NNPI employs a sales force of approximately its
primary responsibility is the sales and marketing of
NNAS' pharmaceutical products (primarily insulin) to
hospitals, wholesalers and retail organizations in the
United States. (Tr. 860, Barfod).
 *2 8. NNNA, located in New York, New York,
is a wholly-owned subsidiary of NNAS. (Def. Ex.
100, p. 65).
C. Human Growth Hormone--Background
9. hGH is a naturally-occurring protein secreted
by the human pituitary gland. (Tr. 267, Johanson).
10. Prior to 1985, children with a significant
deficiency of hGH were treated by periodic injections
of hGH which was derived from the pituitary glands
(“pit-hGH”) of human cadavers. (Tr. 169-170,
Johanson). In or about 1985, the FDA withdrew its
approval for pit-hGH because of its association with
the deaths of several children from Creutzfeld-Jacob
disease. As a result, there was no approved source of
hGH available in the United States. (Tr. 185-187,
Johanson).
11. By 1985, Genentech had developed a
genetically-engineered hGH product through
recombinant DNA technology, Protropin®, but it had
not been approved by the FDA. (Tr. 187, Johanson).
Soon after pit-hGH was taken off the market, the
FDA authorized Genentech to provide its
recombinant hGH product free of charge to over 100
patients in critical need of the product under a
“compassionate use” protocol. (Tr. 187, Johanson).
Later that same year, Protropin® was approved by the
FDA. (Tr. 210-211, Johanson).
II. THE APPLICABLE LEGAL STANDARD FOR
THIS MOTION
12. The Federal Circuit has articulated four
factors to consider in determining whether to issue a
preliminary injunction to maintain the status quo and
restrain infringement: i) a reasonable likelihood of
success regarding the validity of the patent and the
fact of infringement; ii) the threat of irreparable harm
in the absence of injunctive relief; iii) the balance of
equities; and iv) the public interest. Hybritech, Inc. v.
Abbott Laboratories, 849 F.2d 1446, 1451 (Fed. Cir.
1988).
III. LIKELIHOOD OF SUCCESS ON THE
MERITS
A. Related Proceeding Before the International
Trade Commission
13. In a proceeding before the International
Trade Commission, Genentech alleged that Novo was
infringing, inter alia, the '980 Patent by importing
Norditropin®. In the Matter of Certain
Recombinantly Produced Human Growth Hormones.
ITC Inv. No. 337-TA-358 (“ITC proceeding”). In his
Initial Determination issued on November 17, 1994,
the Administrative Law Judge (“ALJ”) found, based
on what he characterized as an incomplete record,
that the '980 patent was valid and infringed by Novo.
(Def. Exs. 31 and 32). The ITC proceeding was
dismissed by the ITC following the Initial
Determination of the ALJ as a sanction for what he
found was non-compliance with discovery
requirements. Genentech has appealed the ITC's
decision to the United States Court of Appeals for the
Federal Circuit.
14. This court recently dismissed Novo's
antitrust claim predicated on Genentech's allegedly
bringing bad faith litigation in the ITC. As this court
stated after its own review of the ITC decision:
After becoming familiar with the ITC proceeding,
it is clear why plaintiffs do not wish for this Court
to consider the determinations of the ALJ. These
determinations completely undermine plaintiffs'
contentions that the ITC proceeding was a sham.
The ITC found (1) based on defendant Genentech's
complaint that sufficient bases existed for the ITC
to commence an investigation against plaintiffs for
infringement of these patents; (2) the ALJ decided
no less than six motions for summary
determination, five brought by plaintiffs attacking
the substance of defendant's patents; and (3) the
ALJ ultimately held (although based on an
incomplete record) that plaintiffs were infringing
defendant's '980 patent. Therefore, defendant's ITC
proceeding can in no way be termed objectively
baseless because the facts speak loudly to the
contrary.
*3 (Order, May 7, 1995).
15. The ALJ held his decision to be based on an
incomplete record because Genentech had not
produced certain documents which Genentech
characterizes as privileged but which the ALJ held
were not privileged based on waiver. While the ALJ's
decision is based on a potentially incomplete record
should the documents be determined to have been
waived, the ALJ nonetheless made detailed findings
and conclusions based on an evidentiary record on
the merits.

Not Reported in F.Supp., 1995 WL 512171 (S.D.N.Y.)
(Cite as: 1995 WL 512171 (S.D.N.Y.))
16. The court takes judicial notice of the ALJ's
decision that Claim 2 of the '980 patent is not invalid
and is infringed by Novo and has considered it as
supporting the court's conclusion of one among many
factors of a likelihood of success by Genentech. The
court, as indicated below, has independently made its
conclusions with respect to the likelihood of success
on the merits.
B. The Technological Background
17. Genetic information is possessed by all cells.
(Tr. 34, Chamberlin). It is located in a molecule
called “DNA” or deoxyribonucleic acid. (Id.). A gene
is a DNA sequence which contains information
coding for protein. (Tr. 37, Chamberlin). DNA is a
code which is “expressed”, i.e., the genetic
information provides a code the cell uses to make
specific proteins. (Tr. 34, Chamberlin).
18. The DNA molecule is made up of a series of
“codons”, strung together like beads on a string. (Tr.
37, Chamberlin). Each codon is made from three
nucleotides which are chemical building blocks,
abbreviated A,T,G and C, and each codon “codes”
for a specific “amino acid”. (Tr. 35, Chamberlin).
Amino acids are the building blocks of proteins --
just as DNA is a string of codons, protein is a
corresponding string of amino acids. (Tr. 37,
Chamberlin). The coding relationship between DNA
and the protein is determined by the genetic code.
(Id.).
19. “Expression” consists of the “transcription”
and “translation” of a DNA sequence. (Tr. 1709,
Falkinham). The result of expression is an
“expression product” called a protein, a linked
sequence of amino acids. (Tr. 1709, Falkinham).
20. In gene expression, first the DNA sequence
(containing the genetic information) is copied into a
molecule called RNA (or ribonucleic acid) during a
process called “transcription.” (Tr. 36, Chamberlin;
1719, Falkinham).
21. The RNA transcription product is referred to
as “messenger RNA”, because it carries the genetic
recipe for the protein from the DNA to the protein
building machinery of the cell called the ribosome.
(Tr. 1722-1723, Falkinham). In making proteins, the
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
Page 3
ribosome reads each three letter codon of “messenger
RNA” and “translates” each three letter codon in
RNA to a single amino acid. (Tr. 35-37, Chamberlin;
1709-1714, Falkinham). Thus, the second step of
gene expression is called “translation” which is
carried out in accordance with the genetic code. (Tr.
36 Chamberlin). “Expression” is complete when
translation has been completed. (Tr. 1727-1728,
Falkinham; 1619, Rzucidlo).
*4 22. A “start” codon is a three nucleotide
sequence which starts or turns on the translation
process (i.e., the codon ATG in DNA which is the
codon AUG in the corresponding mRNA). (Tr. 1716,
Falkinham). The codon AUG encodes the amino acid
methionine (or formyl methionine). (Tr. 1725,
Falkinham). In order to express any gene there must
be a start codon. (Tr. 1725, 1740-1742, Falkinham).
As a result, the expression product always begins
with methionine, the amino acid encoded by the start
codon. (Id.). The '980 patent so states at col. 1, lines
24-28.
23. Recombinant DNA technology involves the
use of cloning technology to induce bacterial hosts to
produce useful synthesized human proteins in
abundant quantities. (Tr. 1720-1722, Falkinham).
“Cloning” is a process that allows one to cut out a
single gene or sets of genes from the entire genetic
information of an organism and then place it
specifically into bacteria or other organisms. (Tr. 41,
Chamberlin). In bacteria, there exist small genetic
elements called “plasmids” which are illustrated as
“circles” of DNA which have the property of being
able to replicate (copy themselves) independently.
(Id.). Because of this property, it is possible to cut
open plasmids and insert pieces of other DNA into
them and, when such an insertion has been done, the
plasmid can be placed into bacteria where it will
propagate. (Id.). This is the cloning process. (Id.)
These plasmids are also called “cloning” vehicles.
(Def. Ex. 1, col. 2, lines 20-23; Tr. 43, Chamberlin).
The bacterial host is induced to “express”--transcribe
and translate-- a gene for a protein and thus produces
an expression product (protein) which is then isolated
and purified. (Def. Ex. 1).
C. The Invention of the '980 Patent
24. The '980 patent, entitled MICROBIAL
EXPRESSION OF A GENE FOR HUMAN
GROWTH HORMONE, was issued on July 22, 1986
to David V. Goeddel and Herbert L. Heyneker and is
assigned to Genentech. (Def. Ex. 1). Genentech
originally applied for this patent on July 5, 1979.
(Id.). The '980 patent expires on July 22, 2003. The
'980 was subject to a request for reexamination in the
Patent Office. (Pl. Ex. 3). The validity of the '980
patent was also challenged in an ITC proceeding.
(Def. Exs. 31 and 32).
25. The '832 patent (which was the first issued
patent in the '980 patent “family tree” (Def. Ex.
52A)) was subject to a restriction requirement by the
Patent Office (Def. Ex. 52A). A restriction
requirement means that the Patent Office has made a
determination that there are separate, patentability
distinct inventions in one application. In the '832
patents, the method claims which issued in the '980
patent were determined to be separate from the
“quasi-synthetic” gene claims of the '832 patent.
26. The '980 patent claims methods of producing
hGH recombinantly, (Tr. 1778-1779, Falkinham;
Def. Ex. 1) and, in particular, methods for expressing
human growth hormone genes in bacterial hosts. (Tr.
42-43, Chamberlin; 1906-1907, Peet; 1777-1778,
Falkinham). Met-hGH and hGH are among the
possible human growth hormone products that can be
produced using the methods of the '980 patent -- met-
hGH has 192 amino acids and hGH has 191 amino
acids. (Tr. 1757-1778, Falkinham). The methods of
the '980 patent do not limit the source of the genetic
material used to construct a recombinant plasmid
containing an hGH gene. (Tr. 1878-1880,
Falkinham). Therefore, the methods of the '980 patent
cover the use of a gene encoding the amino acids of
human growth hormone. (Id.; Tr. 1912-1914, Peet)
*5 27. In simplest terms, the invention of the
'980 patent involves installing, in a bacterial cell, a
gene for human growth hormone which the cell can
transcribe and translate, i.e., “express.” (Tr. 1709,
1721-1722, Falkinham). These cells provide a new
source from which an amino acid sequence
containing hGH is recovered and processed to
produce hGH or met-hGH, both suitable for the
treatment of growth hormone deficiency. (Id.; Def.
Ex. 1). Both met-hGH and hGH are bioactive. (Def.
Ex. 1, col. 7, lines 55-57). Met-hGH is Protropin®
sold by Genentech; hGH without the “met” is sold as
Nutropin®))) by Genentech (and is also sold as
Humatrope®, by Lilly). (Tr. 188, 207-209, Johanson).
D. The Problem Solved By The '980 Patent
28. When the inventors of the '980 patent,
Genentech scientists David Goeddel and Herbert
Heyneker, set out to produce human growth
hormone, their initial challenge was to obtain an hGH
gene that could be used to produce hGH
recombinantly. (Pl Ex., 3, p. 48-49; Tr. 1138, Villa-
Komaroff). It was known at the time that use of the
original genomic DNA for the entire 191 amino acids
of the pit-hGH gene would not result in the
expression of human growth hormone in a bacterial
host because it contained introns (interrupting
sequences) which interfered with expression. (Tr.
1878-1879, Falkinham). Chemical synthesis had been
used successfully the year before to construct the
gene for a different protein, somatostatin (a brain
hormone), that was much shorter than the hGH gene,
but chemical synthesis of a long gene such as that
needed to encode hGH would have been impractical
and time consuming. (Def. Ex. 1, col. 3).
29. An alternative to the chemical synthesis of a
gene is to isolate the desired gene from biological
sources and then to clone it by using a so-called
“cDNA technique”. (Def. Ex. 1, Col. 3; Tr. 132,
Falkinham). In the cDNA technique, instead of using
the original genomic DNA of the gene, a new version
of that DNA, called complementary (or copy) DNA
or “cDNA” is created. (Tr. 41, Chamberlin; 1717-
1724, Falkinham). cDNA is, however, generally
more useful than genomic DNA because it does not
contain introns which, if they remained, would
disrupt the expression of the final product in bacteria.
(Tr. 1751, Falkinham).
30. However, making hGH from sources such as
cDNA or genomic DNA presented another problem.
These sources of DNA for hGH encode not only the
desired protein, itself, but also a so-called “leader
sequence”--a series of additional amino acids --
attached at the beginning of the protein. (Tr. 132-134,
1750-1751 Falkinham). The leader sequence is put
there in nature to help the hGH emerge from the
mammalian pituitary cell after expression, and is
clipped off automatically in nature as the hGH leaves
the pituitary cell. (Tr. 1754, 1836, Falkinham). Prior
to the invention of the '980 patent, no one was able to
figure out how to obtain hGH without the leader
sequence recombinantly. (Tr. 101-102, Chamberlin;
252, 1836, Falkinham). In bacteria, the leader is not

Not Reported in F.Supp., 1995 WL 512171 (S.D.N.Y.)
(Cite as: 1995 WL 512171 (S.D.N.Y.))
clipped off automatically and is not specifically
engineered to allow for extra-cellular (outside the
cell) cleavage. (Tr. 1755-1756, Falkinham). The
leader sequence thus remained attached to the hGH
and rendered it non-functional. (Def. Ex. 1, col, 3; Tr.
1907-1909, Peet; 1881-1882, Falkinham).
*6 31. The so-called leader sequence problem
was the subject of a speech by Dr. Goodman on
August 16-20, 1978. (Tr. 93-94, Chamberlin). Dr.
Goodman, at the time a highly skilled molecular
biologist at the University of California involved in
efforts to develop recombinant growth hormones,
stated that he had succeeded in obtaining the rat
growth hormone gene only with the complete leader
sequence, and that he had very few ideas about how
to remove the leader sequence. (Id.). Up to almost a
year after the filing of the '980 patent, Dr. Goodman
was unable to find a way to remove the leader
sequence, even though he claimed to have isolated
the entire human growth hormone gene with the
leader sequence. (Tr. 95, Chamberlin). Goodman's
unworkable solution is reflected in the file history of
the '980 patent as the Goodman work and the Martial
work. (Def. Ex. 3, pp. 118-119; Tr. 1754-1755,
Falkinham; 1906-1911, Peet; Def. Ex. 130).
32. The inventors of the '980 patent, Goeddel and
Heyneker, provided the solution to the leader
sequence problem. As indicated in the preferred
embodiment of the '980 patent, the inventors took
cDNA encoding both hGH and its leader sequence,
cut off a portion of the cDNA coding for the leader
sequence and a portion of the hGH codons and
obtained codons 24-191 of hGH. (Def. Ex. 1, Col. 10,
lines 50-51). At that time, DNA could not be “cut”
anywhere at will. One “cleavage site” at which a cut
could be made was located inside the hGH gene, 23
codons from the leader sequence. (Id.). Throwing
away the leader sequence portion, along with the first
23 codons of the hGH gene, left an incomplete gene
for hGH. (Def. Ex.1, col. 10, lines 51-53). Goeddel
and Heyneker's solution involved replacing the
cDNA encoding the first 23 amino acids of hGH with
the first 23 codons for hGH from other sources. (Tr.
1912-1913, Peet). In the preferred embodiment of the
'980 patent, Goeddel and Heyneker chemically
synthesized a DNA fragment corresponding to the 23
codons missing from the cDNA hGH fragment plus a
“start” codon (“ATG”--coding for the amino acid
methionine), and fused that fragment to the
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
Page 5
remaining cDNA hGH fragment. (Def. Ex.1., col. 9,
lines 36 to col. 10, line 19, col. 10, line 44 to col. 11,
line 5). The resulting “semi-synthetic” gene was then
inserted in a bacterial cell and artificially produced
for the first time functional hGH. (Def. Ex. 1, col. 11,
lines 28-31). Genomic DNA encoding the first 23
amino acids of hGH is another source for those
codons for purposes of the process of the '980 patent,
because no introns exist in the genomic DNA for the
first 23 codons of hGH, and they can be fused to the
remaining cDNA fragment and to a specifically
engineered and chemically synthesized DNA
sequence encoding [[[Editor's Note: Public version
with redactions by court.] which will allow
expression of a human growth hormone gene in a
bacterial host. (Tr.1878-1879, Falkinham; 1912-
1913, Peet).
E. Claim Interpretation--The Scope of Claim 2 of
the '980 Patent
*7 33. The Federal Circuit has held that the
interpretation and construction of a patent claim is a
matter of law to be determined exclusively by the
court. Markman v. Westview Instruments, Inc., 52
F.3d 967, ----, 34 U.S.P.Q. 2d 1321, 1322 (Fed. Cir.
1995) (en banc). To determine the meaning of claims,
courts look to the claim language, the specification,
and the prosecution history. Unique Concepts, Inc. v.
Brown, 939 F.2d 1558, 1561 (Fed. Cir. 1991);
SmithKline Diagnostics v. Helena Laboratories
Corp., 859 F.2d 878, 882 (Fed. Cir. 1988);
Minnesota Mining and Manufacturing Co. v.
Johnson & Johnson Orthopaedics, Inc., 976 F.2d
1559, 1576-77 (Fed. Cir. 1992). The prosecution
history “is of primary significance in understanding
the claims” because it provides an “‘undisputed
public record”’ of the proceedings in the Patent and
Trademark Office. Markman, 52 F.3d at ----, 34
U.S.P.Q. 2d at 1330. Extrinsic evidence, such as
expert and inventor testimony, dictionaries, and
learned treatises, also are relevant to the
interpretation of patent claims. Id. at ---- 1331; see
also SmithKline, 859 F.2d at 882. Additionally,
claims should be “construed as one skilled in the art
would construe them.” SmithKline, 859 F.2d at 882;
Markman, 52 F.3d at ----, 34 U.S.P.Q. 2d at 1329.
34. Claim 2 of the '980 patent claims:
A method for producing human growth hormone
which method comprises culturing bacterial
 transformants containing recombinant plasmids
which will, in a transformant bacterium, express a
gene for human growth hormone unaccompanied
by the leader sequence of human growth hormone
or other extraneous protein bound thereto, and
isolating and purifying said expressed human
growth hormone.
(Def. Ex. 1, col. 14).
The parties dispute the following three points as
to Claim 2.
(1) The Meaning of “Human Growth Hormone” in
the '980 Patent
35. The '980 patent has the headings
“BACKGROUND OF THE INVENTION,”
“SUMMARY OF THE INVENTION,” “DETAILED
DESCRIPTION OF THE INVENTION” and
“CONSTRUCTION AND EXPRESSION OF A
CLONING VEHICLE FOR HUMAN GROWTH
HORMONE”. (Def. Ex. 1). Under the heading
“Background of the Invention”, and its subheading
“Human Growth Hormone,” the '980 patent defines
pit-hGH as consisting of 191 amino acids.
36. Under the heading “Detailed Description of
the Invention”, the inventors disclose that:
“Of course, the expression product will in every
case commence with the amino acid coded for by
the translation start signal (in the case of ATG, F-
Methionine). One can expect this to be removed
intracellularly or in any event to leave the
bioactivity of the ultimate product essentially
unaffected.”
(Def. Ex. 1.). Thus in the '980 Patent, the
inventors indicated that the met could stay onto the
ultimate product.
37. Genentech's experts, Drs. Chamberlin,
Falkinham and Peet all testified that the '980 patent
defined hGH as either with or without “met” attached
to the amino acid sequence 1-191. (Tr. 58,
Chamberlin; 155, 215-220, Falkinham; (916 Peet).
*8 38. The Court finds that the term “human
growth hormone” in Claim 2 includes “met-hGH”
and “hGH”.
(2) The Meaning of “Unaccompanied by ... Other
Extraneous Protein Bound Thereto”
39. Claim 2 contains the language:
“... express a gene for human growth hormone
unaccompanied by the leader sequence of human
growth hormone or other extraneous protein bound
thereto...” (Def. Ex. 1).
40. The language of Claim 2 makes the
interpretation of this phrase of the claim clear. The
claim language “extraneous protein bound thereto”
was added to Claim 2 at the suggestion of the Patent
Examiner. The claim language “the leader sequence
of human growth hormone or other” was added to
Claim 2 in response to a prior art rejection advanced
by the Patent Office based on a combination of two
references -- the “leader sequence - hGH gene” of
Goodman et al. and the general expression method of
Itakura et al. (Pl. Ex. 3, 107-110; Tr. 101, 102,
Chamberlin; 1908-1909, 1916-1917, Peet).
Applicants pointed out that the combination
advanced by the examiner would still produce, in
bacteria, the uncleavable fusion product of the leader
sequence-hGH protein. (Pl. Ex. 3, 113-114; Id.). This
is the problem solved by the '980 patent, as found
above. The applicants pointed out that the '980
invention permitted expression of cleavable fusion-
hGH products and added the “unaccompanied by the
leader sequence of human growth hormone”
language to Claim 2 to reinforce that fact. (Pl. Ex. 3,
132-139; Tr. 43, Chamberlin; 1733, 1741-1748,
Falkinham; 1908, 1910, Peet). At the same time, the
applicants added the word “or other,” thus
establishing that the “extraneous protein bound
thereto” recited in Claim 2 is other protein which,
when expressed in bacteria is like the leader sequence
of human grewth hormone when it is expressed in
bacteria, i.e., noncleavable. (Tr. 1906-1911, 1934,
Peet: 1875-1876, Falkinham; Def. Ex. 136; Pl. Ex. 3,
138-140). Thus, the language “unaccompanied by ...
or other extraneous protein bound thereto” in Claim 2
means without uncleavable protein.
41. Novo's expert Dr. Villa-Komaroff, testified
that the phraseology of Claim 2 “unaccompanied by
the leader sequence of human growth hormone or
other extraneous protein bound thereto” meant that
the human growth hormone was unaccompanied by
anything and was therefor superfluous. (Tr. 1133,

Not Reported in F.Supp., 1995 WL 512171 (S.D.N.Y.)
(Cite as: 1995 WL 512171 (S.D.N.Y.))
Villa-Komaroff). The court finds this position to be
untenable insofar as it would render the language
specifically required to be added by the examiner as
surplusage. It would also be directly contrary to the
language of the '980 patent at column 7, lines 54-57,
cited in ¶ 34, above. Later, Novo's expert concluded
that the language allowed for cleavable protein but
only where the protein could be cleaved
intracellularly. The court finds that the file history of
the '980 patent and the '980 specification clearly
indicate that the cleavage can be intracellular or
extracellular. The court thus finds that Claim 2 of the
'980 patent only requires that the expression product
be “unaccompanied” by uncleavable protein.
(3) The '980 Patent Covers Both “Direct
Expression” And “Cleavable Fusion Expression”
of hGH
*9 42. The '980 patent specification describes
“direct” expression of met-hGH as the preferred
embodiment of the invention. (Def. Ex. 1). However,
the preferred embodiment is not the only embodiment
of the invention. (Tr. 260, Falkinham).
43. Genentech contends and its expert witnesses
Drs. Chamberlin, Falkinham and Peet testified that
the specification and file history of the '980 patent
clearly establish that Claim 2 of the '980 patent
covers two alternatives within the process for
expressing a human growth hormone gene. The first
is the so-called “direct” expression, where the hGH is
produced having the f-met amino acid at the end of
the hGH, giving a product of 192 amino acids
commonly referred to as “met-hGH.” The second is
the so-called “cleavable fusion” expression, where
the hGH is produced with specially engineered
cleavable protein attached to hGH; the cleavable
protein is specifically cleaved from the hGH, leaving
a product of 191 amino acids. (Def. Ex. 1; Tr. 42-43,
Chamberlin; 1729-1734, 1874-1877, Falkinham;
1905-1912, Peet).
44. As Novo's expert, Dr. Villa-Komaroff has
admitted, the '980 Patent specification discusses two
alternatives -- direct expression and cleavable fusion
expression. (Tr. 1112-1118, Villa-Komaroff). Novo
does not dispute that Claim 2 of the '980 patent
covers “direct” expression of a human growth
hormone gene, but it contends (a) that Claim 2 was
intended by the inventors to cover direct expression
(transcription and translation) of a gene encoding
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
Page 7
mature, 191 amino acid human growth hormone only,
something known to be scientifically impossible, and
that therefore Claim 2 covers nothing, and (b) that the
alternative “fusion” method is not covered by Claim
2. Novo relies in part on the '021 patent of Genentech
to support its interpretation of Claim 2 as limited to
direct expression. However, the court finds that the
'021 patent is irrelevant to this issue because the '021
file history describes “met-hGH” (the product
claimed in the '021 patent) as merely the product of
“one embodiment” of the process described in the
'980 patent. (Pl. Ex. 37)
45. Novo's proposed construction of Claim 2 of
the '980 patent was explained in the testimony of its
expert, Dr. Villa-Komaroff, who stated her opinion
that Claim 2 is limited to “direct expression” of the
mature (1-191) human growth hormone gene, and
that since direct expression of the mature human
growth hormone gene is impossible. Claim 2 covers
nothing at all. (Tr. 1091-1092, Villa-Komaroff). Dr.
Villa-Komaroff admitted that this was a very strange
result. (Tr. 1075, Villa-Komaroff)
46. Dr. Villa-Komaroff conceded on cross-
examination, however, that Claim 2 does not contain
the limiting term “direct expression”, nor does it
contain the limiting term “mature human growth
hormone” (Tr. 1057-1059, Villa-Komaroff). Thus on
its face, the language in the claim does not have the
limitations which Novo seeks to import into the
claim. Novo's patent expert, Mr. Eugene Rzucidlo,
admitted the word “expression” would be “the
generic term for various types of expression, both
directed and fusion, yes.” (Tr. 1627, Rzucidlo). For
the reasons explained below, the court finds that
Novo's contentions are belied by the language of the
claim and is specifically contradicted by the clear
disclosures in the '980 patent specification and file
history. Thus, the court finds that Claim 2 covers
both “direct” expression and “cleavable fusion”
expression.
*10 47. Claim 2 covers direct expression because
in direct expression, as explicitly stated in the claim,
the gene codes for human growth hormone
“unaccompanied by the leader of human growth
hormone or other extraneous protein bound thereto”.
In addition, the '980 specification makes clear that
Claim 2 is not limited to “direct” expression, but
includes the alternative “cleavable fusion”
expression.
48. In particular, the “cleavable fusion”
expression is described in the '980 patent in several
places. First, the '980 specification states:
Applications will appear in which it is desirable to
express not only the amino acid sequence of the
intended product, but also a measure of extraneous
but specifically engineered protein. (Def. Ex. 1,
col. 7, lines 3 - 6).
Novo's patent expert, Mr. Rzucidlo, conceded
that this describes a cleavable fusion precess wherein
the gene encoding the amino acid sequence of a
fusion product is expressed. (Tr. 1363, Rzucidlo).
49. The '980 specification then describes by way
of example four applications in which such cleavable
fusion human growth hormone expression products
could be made in a manner that would be of utility to
those in the field of recombinant DNA technology.
(Def. Ex. 1, col. 7, lines 3-57). The four examples
show that the inventors envisioned that there might
be advantages for some purposes of utilizing a fusion
process rather than a direct expression process. (Tr.
257, Falkinham).
The '980 specification further states that the
invention includes:
intended product conjugated to but specifically
cleavable from extraneous protein. (Def. Ex. 1, col.
7, lines 50-51).
50. In addition, the Summary of the Invention at
column 4 of the '980 patent provides as follows:
The present invention provides methods and means
for expressing quasi-synthetic genes wherein
reverse transcription provides a substantial portion,
preferably a majority, of the coding sequence
without laborious resort to entirely synthetic
construction, while synthesis of the remainder of
the coding sequence affords a completed gene
capable of expressing the desired polypeptide
unaccompanied by bio-inactivating leader
sequences or other extraneous protein.
Alternatively, the synthetic remainder may yield a
proteolysis-resistant conjugate so engineered as to
permit extra-cellular cleavage of extraneous
protein, yielding the bioactive form.
(Tr. 257 Falkinham). The court rejects Novo's
assertion that it should simply ignore the language in
the Summary of the Invention and column 7 which
clearly is intended to convey that Claim 2 covers both
a “direct” expression method and a “cleavable
fusion” expression method.
51. In the file history of the '980 patent, both the
claim language and basis for distinguishing the prior
art changed in a manner which makes clear that
Claim 2 covers both direct and fusion expression. (Pl.
Ex. 3; Tr. 1910-1912, Peet). Thus, in paper # 18 (a
response dated March 13, 1985), the work of the
Goodman group, published in Martial et al., was
distinguished from the '980 invention on the basis
that Goodman's human growth hormone was part of
an uncleavable fusion product as follows:
*11 Martial et al. report the construction of an
expression vector containing DNA for the entire
coding region for the human growth hormone gene
still linked to the 3'-untranslated portion of human
growth hormone ... , all still linked to DNA
encoding the N-terminal region of the trpD
protein.... Further, the Martial et al. DNA sequence
is devoid of any restriction site that would enable
specific cleavage to yield only the full-length
CDNA for mature HGH.
Upon expression, Martial et al. obtained no more
than a fusion product consisting of three linked
sequences. The fusion product [hGH] stuck to its
leader sequence and trpD protein had no selective
cleavage site that would permit human growth
hormone devoid of extraneous protein bound
thereto to be obtained.
(Pl. Ex. 3., pp. 102-108) (emphasis added).
52. Again, in the file history of the '980 patent, in
paper #21 (an amendment dated November 27,
1985), after discussing certain prior art and referring
to that art, the applicants stated:
However it is noteworthy that even if expression of
this DNA [the hGH trpD bDNA] could be achieved
... it would be expression of a fusion product with

Not Reported in F.Supp., 1995 WL 512171 (S.D.N.Y.)
(Cite as: 1995 WL 512171 (S.D.N.Y.))
no selective cleavage site that would permit human
growth hormone free of extraneous protein bound
thereto to be obtained.
(Pl. Ex. 3, p. 118-119) (emphasis added).
53. The above excerpts from the file history
show that the applicants for the '980 patent
distinguished the prior art from the '980 invention by
showing that the prior art had not included a selective
cleavage site allowing for expression of human
growth hormone without the uncleavably bound
leader sequence. (Pl. Ex. 3, 102-103, 118-119; Tr.
1741-1748, Falkinham; 1908-1910, Peet). In contrast,
the invention of the '980 patent involves methods
which permit the production of human growth
hormone without the leader sequence “bound
thereto” by either direct expression or a fusion
expression containing extraneous cleavable protein.
(Id.)
54. Moreover, during prosecution of the
application, at the suggestion of the patent examiner,
the phrase “without extraneous protein bound
thereto” was substituted in Claim 2 for the term
“unaccompanied by extraneous conjugated protein”
specifically for the purpose of making clear that the
claim covers expressing genes encoding both direct
and cleavable fusion products. (Tr. 98-99,
Chamberlin; Tr. 1747-1748, Falkinham). The
examiner was specifically directed to pages 14-15 of
the application (which became column 7) when the
examiner suggested the language “extraneous protein
bound thereto.”
55. In further support of this conclusion, it is also
clear from the file history that the phrase “a gene for
human growth hormone” was used to avoid limiting
the process to a quasi-synthetic gene made up of
cDNA and synthetic DNA that would be produced
via direct expression. (Pl. Ex. 3, 109; Tr. 1912-1914,
Peet). As Genentech expert Dr. Peet explained, Claim
2 was amended to change the phrase “the gene” to “a
gene” to broaden the claim to use of a gene
constructed from any available sources of DNA,
including genomic DNA, in either direct or cleavable
fusion expression. (Tr. 1913-1916, Peet) and the
Examiner understood that the claim had been
broadened. (Pl. Ex. 3, 109).
*12 56. Dr. Peet testified that the conduct
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
Page 9
occurring between an applicant for a patent and the
Patent Office was in the nature of a dialogue; that the
applicant could claim his invention as broadly as the
prior art would allow, and that the applicant could
change and broaden the scope of his claims at any
time. (Tr. 1888-1889, Peet, see also Tr. 1648-1649,
Rzucidlo). In addition, Dr. Peet testified that it was a
requirement of patent examiners to review the entire
file history of a patent application at the time when a
patent was to be allowed, to ensure that the file
history as a whole supported the claims which were
to be allowed. (Tr. 1898, Peet).
57. The court thus finds that Claim 2 of the '980
patent includes both direct expression in bacteria of
met-hGH where the met may or may not be cleaved
post expression as well as [Editor's Note: Public
version with redactions by court.]
F. Novo's Infringement of the '980 Patent
58. The determination of infringement is a two-
step process. First, the language of the claims must be
interpreted; and second, the accused device or
process must be compared to the claim language as
properly interpreted. Read Corp. v. Portec, Inc., 970
F.2d 816, 822 (Fed. Cir. 1992). In evaluating
infringement it should be kept in mind that the '980
patent represents a pioneering contribution by
Goeddel/Heyneker to the basic development of the
biotechnology industry. As such, the '980 patent is
entitled to a broad construction consistent with the
scope and importance of its achievement. Texas
Instruments v. U.S. Intern. Trade Com'n., 846 F.2d
1369, 1370 (Fed. Cir. 1988).
59. Plaintiffs and defendant both agree that
[Editor's Note: Public version with redactions by
court.]
60. Novo's method for making Norditropin®, its
product, [Editor's Note: Public version with
redactions by court.]
61. [Editor's Note: Public version with redactions
by court.]
The court finds that Novo's strategy for making
hGH was derived directly from information
contained from the Goeddel-Heyneker paper in
Nature and, thus, from the '980 patent specification.
(Tr. 594-596, Dalboge).
62. Novo admits to [Editor's Note: Public version
with redactions by court.]
63. In addition to utilizing the cDNA containing
[Editor's Note: Public version with redactions by
court.]
64. [Editor's Note: Public version with redactions
by court.]
65. [Editor's Note: Public version with redactions
by court.]
66. [Editor's Note: Public version with redactions
by court.]
67. [Editor's Note: Public version with redactions
by court.]
68. [Editor's Note: Public version with redactions
by court.]
69. Novo argues that its process for
manufacturing Norditropin® does not infringe Claim
2 of the '980 patent [Editor's Note: Public version
with redactions by court.] Additionally, according to
Novo, [Editor's Note: Public version with redactions
by court.] However, the Court has found that Claim 2
of the '980 patent covers a cleavable fusion
expression process. Moreover, Novo has admitted in
its filings with the FDA that [Editor's Note: Public
version with redactions by court.]
The court finds that [Editor's Note: Public
version with redactions by court.] is expressed from a
DNA sequence containing a gene for hGH. The court
also finds that the phrase “unaccompanied by the
leader sequence of human growth hormone or other
extraneous protein bound thereto” means without
uncleavable protein. Since [Editor's Note: Public
version with redactions by court.] from the 191
amino acids of hGH, [Editor's Note: Public version
with redactions by court.] is not “extraneous protein
bound thereto.” Thus, Novo does not avoid a finding
of infringement by [Editor's Note: Public version
with redactions by court.]
70. The Claim 2 limitation “a gene for human
growth hormone...” does not specify or limit the
source of the genetic material used for the human
growth hormone gene. (Tr. 1912-1914, Peet). The use
of chemically synthesized DNA is merely one
example in the '980 specification for obtaining a
portion of a human growth hormone gene, but clearly
the claim was not intended to be limited to this single
example. (Id.).
*13 Novo expresses a human growth hormone
gene in accordance with the process of Claim 2 of the
'980 patent. (Def. Ex. 1; Tr. 141; 1778-1780,
Falkinham).
71. Based on the foregoing, the court finds that
Novo's process for making human growth hormone
literally infringes Claim 2 of the 980 patent.
Novo's [Editor's Note: Public version with
redactions by court.] will express a gene for human
growth hormone as specified in Claim 2 because its
DNA sequence codes for amino acids 1-191 of
human growth hormone.
Further, Novo's DNA is [Editor's Note: Public
version with redactions by court.]
72. The language “isolating and purifying said
expressed human growth hormone” does not specify
or limit the ways to isolate and purify the hormone.
(Tr. 1779, Falkinham). At the end of the Novo
process hGH has been isolated and purified. (Id.).
73. Novo contends that its process involves
various purported improvements over the process of
the '980 patent. Thus, Novo contends that the '980
patent does not describe how to cut back a large
fragment of genomic material so as to obtain only the
desired fragment which encodes for amino acid 1 to
23. (Tr. 649, Dalboge). Novo furthers contends that
the '980 patent does not describe how to place codons
containing a cleavable amino extension on the human
growth hormone gene. (Tr. 650, Dalboge). Novo
further contends that the '980 patent does not suggest
that the amino extension should have an even number
of amino acids which are negatively charged. (Tr.
650-651, Dalboge). Novo further asserts that the '980
patent does not disclose its cleaving agent by which
an amino extension can be cleaved from human
growth hormone. (Tr. 650-651, Dalboge).

Not Reported in F.Supp., 1995 WL 512171 (S.D.N.Y.)
(Cite as: 1995 WL 512171 (S.D.N.Y.))
74. Novo ignores that Claim 2 of the '980 patent
recites a method which “comprises” several steps. In
patent law, the term “comprises” is a term of art
which means that Claim 2 does not exclude
additional unrecited elements. Molecular Research
Corp. v. CBS, Inc., 793 F.2d 1261 (Fed. Cir. 1986);
A.B. Dick Co. v. Burroughs Corp., 713 F.2d 700, 703
(Fed.Cir. 1983)(District Court erred by finding non-
infringement when accused device included elements
not specified in the patent claims). All that is
necessary for infringement is that Novo's method
includes the elements of Claim 2. In any event, the
court finds that Novo's purported improvements were
generally disclosed or known in the art.
75. The court notes Novo's assertion that it has
made improvements to the process of the '980 patent
and independently developed its process. For
example, Novo contends that the '980 patent does not
disclose a cleaving agent by which an amino [Editor's
Note: Public version with redactions by court.]
However, at the time the inventors applied for the
'980 patent, the art disclosed numerous examples of
[Editor's Note: Public version with redactions by
court.] Likewise, Novo's use of [Editor's Note: Public
version with redactions by court.] cannot be deemed
an improvement to the process since the [[[Editor's
Note: Public version with redactions by court.] which
Genentech disclosed in the '980 patent specification.
Novo has not shown that the use of [[[Editor's Note:
Public version with redactions by court.] has any
particular advantages which improve the process.
Likewise, Novo's use of [[Editor's Note: Public
version with redactions by court.] cannot be deemed
an improvement since the examples in the '980 patent
specification explicitly state that Claim 2 was
intended to cover [Editor's Note: Public version with
redactions by court.] which could utilize such a The
court finds that Novo failed to prove that it
independently developed its process.
76. However, even assuming that the Novo
process may involve improvements over the
processes of Claim 2 of the '980 patent, as a matter of
law, Novo's improved process nonetheless infringes
the processes of the '980 patent. It is basic hornbook
law that even if a party independently develops
patentable improvements to a process and obtains
patents on the improvement, the improved process
can still literally infringe a dominant patent. Since a
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
Page 11
patent grants to the patentee and its assigns only the
right to exclude others from making, using, or selling
the invention, the patentee cannot claim any
affirmative right to make, use or sell the invention 35
U.S.C. § 154. Thus, the owner of an improvement
(method) patent may own a valid patent, but may still
be restrained from making, using or selling the
invention, by the enforcement of a valid dominant or
blocking patent of another party. Furthermore, as the
Federal Circuit has held, “‘an embellishment’ made
possible by technological advances may not permit
an accased device to escape ‘the web of
infringement.”’ Datascope Corp. v. SMEC, Inc.,
776 F.2d 320, 326 (Fed. Cir. 1985), cert. denied, 493
U.S. 1024, 110 S.Ct. 729, 107 L.Ed.2d 747 (1990),
citing Hughes Aircraft Co. v. United States, 717 F.2d
1351, 1365 (Fed. Cir. 1983).
77. A patent on the improvement carries no right
to practice the invention in violation of the rights of
the owner of the patent on the basic or broad
invention. See, e. g., Richardson v. Suzuki Motor Co.,
868 F.2d 1226, 1240 (Fed. Cir.), cert. denied, 493
U.S. 853, 110 S.Ct. 154, 107 L.Ed.2d 112 (1989) (“A
device that embodies improvements on a claimed
structure does not automatically avoid the reach of
the claim.); Atlas Powder Co. v. E. I. Du Pont de
Nemours & Co., 750 F.2d 1569, 1580 (Fed. Cir.
1984). (“[W]here [the] defendant has appropriated
the material features of the patent in suit,
infringement will be found ‘even when those features
have been supplemented and modified to such an
extent that the defendant may be entitled to a patent
for the improvement,”’); Carpet Seaming Tape
Licensing v. Best Seam, Inc., 616 F.2d 1133, 1142
(9th Cir. 1980), cert. denied, 464 U.S. 818, 104 S.Ct.
78, 78 L.Ed.2d 89 (1988) (stating that patents on
basic processes and products may block patents on
improvements to those products and processes);
Temco Elec. Motor Co. v. Apco Mfg. Co., 275 U.S.
319, 328, 48 S.Ct. 170, 173, 72 L.Ed. 298 (1928)
(stating that it is an established principle that an
“improver cannot appropriate the basic patent of
another, and that the improver without a license is an
infringer, and may be sued as such”).
*14 78. The court further finds that there is
substantial evidence that Novo engaged in blatant
copying of the process of the '980 patent. While
Novo scientist Dr. Dalboge denied that Novo
developed its strategy for making human growth
hormone from the '980 patent and the related
publication of its inventors in Nature (Def. Ex. 107)
Dr. Dalboge's testimony is not credible. In the related
ITC Proceeding. Dr. Dalboge admitted that Novo
[Editor's Note: Public version with redactions by
court.] Nature paper, and he confirmed the accuracy
of that testimony in the more recent hearing before
this court. [[[[Editor's Note: Public version with
redactions by court.] In fact, Dr. Dalboge admitted
that he read the Nature article of Dr. Goeddel and Dr.
Heyenker when he started working on the project at
Novo for prodacing hGH. (Tr. 596-597).
79. Based on the foregoing. Genentech has
established a strong likelihood of success on the
merits of its patent infringement claim against Novo
based on the '980 patent.
G. Validity of the '980 Patent
80. The '980 patent is presumed valid under 35
U.S.C. § 282:
“A patent shall be presumed valid....The burden of
establishing invalidity of a patent or any claim
thereof shall rest on the party asserting such
invalidity.”
The determination of whether Genentech has
demonstrated a reasonable likelihood of success must
be made in the context of the presumption of validity
that the '980 patent will enjoy at trial and Novo's
heavy burden of establishing invalidity by clear and
convincing proof. Orthokinetics Inc. v. Safety Travel
Chairs, Inc., 806 F.2d 1565, 1570 (Fed. Cir. 1986);
Robertson, 820 F.2d at 388. For Genentech to meet
its burden on likelihood of success on validity, it
must only show that it is likely that Novo will not
prove invalidity by clear and convincing evidence.
Genentech has met its burden.
81. The burden is on Novo to come forward with
an affirmative defense to the validity of the patent.
Roper, 757 F.2d at 1270; New England Braiding Co.,
Inc. v. A.W. Chesterton Co., 970 F.2d 878, 882 (Fed.
Cir. 1992). The only prior art Novo cites in support
of its claim of invalidity is the Itakura et al. '619
patent. The Patent Office considered this same prior
art (in the form of the Itakura et al. '270 patent (which
has the same specification as the '619 patent)) before
it granted the '980 patent. (Tr. 45-46, Chamberlin;
1136. Villa-Komaroff; Ex. 3., p. 120). The fact that
Novo felies only upon prior art considered by the
Patent Office renders the presumption of Validity of
the '980 patent even more difficult to overcome.
Hewlett-Packard Co. v. Bausch & Lomb, Inc., 909
F.2d 1464, 1467 (Fed.Cir. 1990). (Tr. 1662-1663.
Rzucidlo).
82. The Patent Office's denial of the request for
reexamination of the '980 patent (i.e., a request that
the Patent Office revisit the patentability of an
invention in view of “new” prior art) further
strengthens the presumption of the '980 patent's
validity. See Hewlett-Packard Co., 909 F.2d at 1467.
In denying reexamination, the Patent Office
confirmed the validity of '980 patent.
1. The Prior Art Defense Raised By Novo
*15 83. In contending that the '980 patent is
invalid. Novo relies solely upon the Itakura et al. '619
patent. (Tr. 23, Statement of Novo's Counsel).
84. Novo argues that the '619 patent renders
obvious the process covered by the '980 patent
because the '619 patent claims a generic process for
both direct and fusion expression of polypeptides in
bacteria. Novo adheres to this argument despite the
fact that its counsel has admitted in open court that a
gene capable of producing bioactive human growth
hormone was unavailable until the invention of the
'980 patent. (Tr. 1031-1033). Novo's scientific expert
admitted that the inventors of the '980 patent were the
first ones who were able to get a gene for hGH
without the leader sequence. (Tr. 1138, Villa-
Komaroff). Novo argues that once Genentech
constructed the recombinant hGH plasmid and “had”
the hGH gene, it could simply plug that plasmid and
gene into the '619 patent's expression system, which
taught, inter alia, that one needs to place a start
codon (an “AUG” encoding methionine) in front of
the structural gene in order to initiate translation. (Tr.
1033 Statement of Novo's counsel). Novo relies upon
In re Durden, 763 F.2d 1406 (Fed.Cir. 1985) to
support its obviousness position. Durden merely
stands for the proposition that a method of making a
compound may be obvious, under the particular
circumstances of that case.
85. However, Novo errs when it fails to
recognize that the process of the '980 patent
represented a patentable invention over the process of
the '619 patent because the '980 inventors developed

Not Reported in F.Supp., 1995 WL 512171 (S.D.N.Y.)
(Cite as: 1995 WL 512171 (S.D.N.Y.))
a method for producing human growth hormone, a
process that solved the leader sequence problem and
resulted for the first time in the production of
recombinant hGH. (Tr. 1747-1748, Falkinham).
Indeed, as Dr. Villa-Komaroff, Novo's expert,
admitted, the Patent Office allowed the '980 patent on
the explicit basis that, insofar as the '980 patent
teaches a process for obtaining a human growth
hormone gene, constructing a recombinant plasmid
containing a growth hormone gene and using that
gene and recombinant plasmid to express
recombinant human growth hormone, the process of
the '980 patent represented a patentable invention
over the generic process of the '619 patent. (Tr. 1135-
1139, Villa-Komaroff). The court also concludes that
the Durden case is not applicable here. The
controlling authority is In re Pleuddemann, 910 F.2d
823 (Fed. Cir. 1990) which stands for the proposition
that methods of using novel compositions (here, the
leaderless hGH gene) are patentable. Moreover, in
Pleuddemann, the Federal Circuit distinguished
Durden on the basis that the Patent Office rejection
was based on the flaw that the inventor's new
compounds (here, leaderless hGH) was prior art.
Thus, the court finds that Pleuddemann, not Durden
controls here. In addition, contrary to the contentions
of Novo's expert Rzucidlo (Tr. 1579, Rzucidlo),
Durden was decided after the '980 patent issued.
*16 86. Novo's scientific expert testified that
with Itakura et al. alone, you would not obtain hGH,
“you would get pieces.” (Tr. 1137, Villa-Komaroff).
87. Therefore, the court finds that the '980 patent
represents an invention over the '619 patent and is not
rendered obvious by the '619 patent.
88. The court takes judicial notice of the fact that
in the ITC Proceeding the Administrative Law Judge
considered whether the '619 patent renders the '980
invalid and determined that the '619 patent does not
invalidate the '980 patent. (Tr. 46, Def. Ex. 31).
89. The court finds and concludes based on the
evidence thus far adduced that the '619 patent neither
teaches nor renders obvious the '980 patent. This
determination is further and amply supported by
objective secondary considerations.
2. Non-Obviousness: Secondary Considerations
Support Validity
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
Page 13
90. In determining the issue of a patent's validity,
the court must also consider the “objective evidence
of non-obviousness” or “secondary considerations”
when presented by the patent holder. Glaverbel
Societe Anonyme v. Northlake Marketing & Supply,
Inc., 45 F.3d 1550, 1555 (Fed. Cir. 1995); Stratoflex,
Inc. v. Aeroquip Corp., 713 F.2d 1530, 1539 (Fed.
Cir. 1983). The Federal Circuit has underscored the
importance of such secondary evidence, explaining:
Indeed, evidence of secondary considerations may
often be the most probative and cogent evidence in
the record. It may often establish that an invention
appearing to have been obvious in light of the prior
art was not.
Stratoflex, 713 F.2d 1530, 1538 (Fed. Cir.
1983).FN1
91. The criteria that have emerged for these
secondary considerations include: (1) the commercial
success of the products covered by the patent (
Simmons Fastener Corp. v. Illinois Tool Works, Inc.,
739 F.2d 1573, 1575, 1576 (Fed. Cir. 1984), cert.
denied, 471 U.S. 1065, 105 S.Ct. 2138, 85 L.Ed.2d
496 (1985) ([T]he evidence of secondary
considerations in this case, particularly commercial
saccess, is extremely strong, and is entitled to great
weight.”); In re Sernaker, 702 F.2d 989, 997 (Fed.
Cir. 1983) (concurring opinion); (2) long felt need in
the art satisfied by the invention in the patent (
Stratoflex, 713 F.2d 1530, 1540 (Fed. Cir. 1983); In
re Mahurkar Patent Litigation, 831 F. Supp. 1354,
1378 (N.D. Ill. 1993) (“The existence of an enduring,
unmet need is strong evidence that the invention is
novel, not obvious, and not anticipated.”); (3) failure
of others to make the invention ( Minnesota Mining
and Manufacturing Co. v. Johnson & Johnson
Qrthopaedics, Inc., 976 F.2d 1559, 1575 (Fed. Cir.
1992)); and (4) copying the invention by others in the
field ( American Medical Systems, Inc. v. Medical
Engineering Corp., 794 F. Supp. 1370, 1385-86
(E.D. Wis. 1992), aff'd in part, rev'd in part, 6 F.3d
1523 (Fed. Cir. 1993), cert. denied, --- U.S. ----, 114
S. Ct. 1647, 128 L.Ed.2d 366 (1994)).
(a) Commercial Success
92. Genentech's development and ultimate sale
of its recombinantly produced hGH products
pursuant to the process of the '980 patent have
resulted in extraordinary “commercial success.”
Genentech's human growth hormone products,
Protropin® (approved in 1985) and Nutropin®
(approved in 1994) are being marketed for the
treatment of growth hormone deficiency in children.
(Tr. 275,277, Rizzuto). Genentech's U.S. gross sales
of hGH have steadily increased over the years from
approximately $43.5 million in 1986 to $185.1
million in 1991 and $225.4 million in 1994. (Tr. 317,
Whiting; Def. Ex. 92, 99). The products of the '980
patent are indisputably commercial successes.
(b) Long Felt Need
*17 93. A long felt need for the artificial growth
hormone existed prior to the introduction of
Genentech's recombinantly produced hGH products
because prior to Genentech's invention. hGH from
natural sources was in short supply and was
unavailable to treat all children who needed the
treatment. (Tr. 169-170, Johanson).
(c) Failure of Others
94. The invention of the '980 patent is
underscored by the failure of others to develop a
viable process for the production of hGH. At the time
Goeddel and Heyneker filed the '980 patent, the
scientists at the University of California had failed to
obtain an hGH coding sequence from which hGH
could be produced. Indeed, up to almost a year after
the filing of the application for the '980 patent, Dr.
Goodman and his group were unable to find a way to
remove the leader sequence, even though he had
succeeded in obtaining the entire human growth
hormone gene with the leader sequence. (Tr. 95,
Chamberlin).
(d) Copying the Invention by Others in the Field
95. The imitation of Genentech's work by Novo
forms an important clue of non-obviousness.
96. Thus, the court finds that the evidence of
secondary considerations present here create an
overwhelming case for its finding that Genentech is
likely to succeed on the issue of validity of the '980
patent.
3. The Lack of Enablement Defense Raised By
Novo
97. The test of enablement is whether one of
ordinary skill in the art could make and use the
invention from the disclosures in the patent coupled
with information known in the art. United States v.
Telectronics, Inc., 857 F.2d 778 (Fed. Cir. 1988).
Some experimentation is allowable because patent
specifications are not supposed to be production
specifications. Northern Telecom, Inc. v. Datapoint
Corp., 908 F.2d 931 (Fed. Cir. 1990). Disclosure of
one specific example, coupled with the general
manner in which the example was conducted,
allowed other permutations of the invention to be
practiced without undue experimentation.
Telectronics, 857 F.2d 778. Although what is known
in the prior art can be used to satisfy the enablement
requirement, a patent specification need not disclose,
and preferably omits, what is well-known in the art.
Hybritech, Inc. v. Monoclonal Antibodies, 802 F.2d
1367 (Fed. Cir. 1986).
98. Novo argues that if the '980 patent is
construed to cover fusion expression processes, it is
not enabled because it did not teach one how to
construct a synthetic amino-extension or how to
cleave the amino extension “extraneous protein”
from the amino acids encoding hGH. (Tr. 1141,
Villa-Komaroff). However, Novo's own experts
admitted that by the time of the '980 invention, those
skilled in the art knew how to synthesize an amino
extension with a start codon, such as Novo's MEAE.
(Tr. 1141-1143, Villa-Komaroff). Moreover, the
testimony of Genentech's expert, and documentary
evidence, conclusively establish that selective
enzymatic cleavage agents (including cathepsinc and
dipeptidyltransferase) substantially equivalent to the
cleavage agent utilized in Novo's [Editor's Note:
Public version with redactions by court.] were well
known to those skilled in the art [Editor's Note:
Public version with redactions by court.] Therefore,
Novo's non-enablement argument is rejected.
Genentech has established that the examples in the
patent contained sufficient disclosure to enable those
skilled in the art to utilize a process for expressing
the hGH gene in cleavable fasion form.
IV. IRREPARABLE HARM
A. Genentech Will Suffer Irreparable Harm To Its
Goodwill and Reputation Among Its Customers.
Including Pediatric Endocrinologists and Others. If
Novo Is Permitted To Enter The Market and Is
Subsequently Enjoined
(1) Pediatric Endocrinology
*18 99. Endocrinology is the study of the glands
of internal secretion. (Tr. 166, Johanson).

Not Reported in F.Supp., 1995 WL 512171 (S.D.N.Y.)
(Cite as: 1995 WL 512171 (S.D.N.Y.))
100. Pediatric endocrinologists treat children
who have thyroid disease, diabetes, sex gland
disorders, and growth hormone deficiency, and a
major part of their practice is referrals of children
who have short stature. (Tr. 166-169, Johanson).
101. There are only approximately 700 pediatric
endocrinologists in the United States. (Tr. 167,
Johanson).
(2) The Development of the Growth Hormone
Market In the United States
102. Growth hormone therapy involves
injections of human growth hormone on a daily basis,
or multiple times per week, for several years, with the
duration of treatment depending on the needs and
circumstances of each individual child. (Tr. 170-171,
Johanson).
103. Treatment with human growth hormone has
been proven to be remarkably successful. (Tr. 171,
Johanson). The result is to make children as tall as
their genes would enable them to be if they had no
growth hormone therapy. (Id.).
104. Prior to Genentech's first United States
clinical trials for recombinant human growth
hormone which began in 1981, the only known
treatment for growth hormone deficiency in children
was growth hormone extracted from the pituitary
glands of cadavers. (Tr. 169, Johanson).
105. By about 1983, fewer than 2,000 patients
could be treated each year in the United States
although as many as 20,000 children needed
treatment at that time. (Tr. 170, Johanson).
106. In 1984, a number of children treated with
pituitary-derived hGH died from Creutzfeldt-Jacob
disease, a neurologic disorder which usually occurs
in elderly people. As a result, pituitary growth
hormone was taken off the market in the United
States in 1985. (Tr. 185, Johanson).
107. When pituitary derived growth hormone
was taken off the market. Genentech's recombinant
human growth hormone had been used in clinical
trials, but had not been approved by the FDA for
general use (Tr. 186-187, Johanson). Therefore, when
pituitary derived growth hormone was taken off the
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
Page 15
market, no growth hormone therapy was available
(except for those children who were participating in
clinical trials with Genentech's recombinant hGH and
those whom the FDA permitted to receive
Genentech's recombinant hGH on an emergency
basis). (Tr. 187-188, Johanson).
108. In 1985, the FDA approved Genentech's
Protropin® (met-hGH) human growth hormone
product, and granted it Orphan Drug Status. (Tr. 210-
211, Johanson).
109. From a medical and clinical standpoint,
there is no difference in safety and efficacy between
Genentech's Protropin® human growth hormone (met-
hGH) and its Nutropin® human growth hormone
(met-less hGH), or among those products, Novo's
Norditropin® and Eli Lilly and Company's (“Lilly”)
Humatrope®. (Tr. 213, Johanson).
(3) Genentech's Efforts to Build Goodwill
110. Genentech sponsors a number of programs
to build goodwill among physicians. These include
the National Cooperative Growth Study (“NCGS”),
its Uninsured Patient Program, a reimbursement
program, and other programs involving education for
patients and parents involved in growth hormone
therapy. (Tr. 274, Rizzuto).
*19 111. NCGS is a study which Genentech
initially instituted at the behest of the FDA which
required Genentech to follow 500 patients that had
been involved in clinical trials of Protropin ® for a
number of years following the FDA's approval of
Protropin® in 1985. (Tr. 173, Johanson). The vast
data base created in the program became such a
valuable resource for the pediatric endocrine
community that the program was expanded to all of
the patients treated with Genentech's hGH. It supplies
a wealth of information to pediatric endocrinologists
who receive its various reports (Id.; Def. Exs. 79, 81,
82) and who often request information from its data
base. (Id.). To date over 20,000 patients have been
enrolled in the study which is ongoing. (Tr. 173,
Johanson).
112. Genentech pays the cost of NCGS [Editor's
Note: Public version with redactions by court.] (Tr.
275, Rizzuto). NCGS has resulted in significant
goodwill for Genentech among pediatric
endocrinologists. (Tr. 275, Rizzuto).

113. Pursuant to Genentech's uninsured patients
program, any patient who requires any of
Genentech's products and cannot afford it will be
given the product at no cost. Since 1985, Genentech
has given away at least $136 million of human
growth hormone to more than 5,000 patients. (Tr.
275, Rizzuto).
114. Genentech's reimbursement assistance
program assists patients and physicians through the
process of obtaining reimbursement for the cost of
treatment from insurance companies. (Tr. 275-276,
Rizzuto).
(4) The Administration of Recombinant Human
Growth Hormone To Children
115. Recombinant hGH must be administered by
injection which is usually administered by the parents
of the children who are being treated. (Tr. 179-180,
Johanson). It is provided in powder form with a
separate vial of diluent. The process of reconstituting
the powder into injectable form is complex and
involves many steps, including preparing the vials
with an alechol sponge, using a sterile technique with
needles, miving the liquid diluent into the powder
carefully so that the protein is not agitated to the
point of decomposition and assuring that the
appropriate amount is pulled into a syringe for
iniection. (Tr. 179-180, Johanson). For some
families, particularly those who are less sophisticated
or educated, it has been very difficult to learn this
process, and in some cases, children receive
treatment from a visiting nurse or in visits to a health
department. (Tr. 192, Johanson).
116. There are significant differences among the
available hGH products. For example, Lilly sells only
one size vial of hGH, Genentech sells a 5 and a 10
milligram vial, and Novo plans to sell 4 and 8
milligram vials [Editor's Note: Public version with
redactions by court.] Novo also manufactures a so-
called “pen system” for administration. [Editor's
Note: Public version with redactions by court.] Due
to differences among the available hGH products,
patients who switch from one product to another will
require additional instruction from their doctors
and/or nurses. (Tr. 191-193, Johanson; [Editor's Note:
Public version with redactions by court.]).
117. Doctors in the United States who begin a
course of treatment utilizing one growth hormone
product are reluctant to switch to another growth
hormone product during the course of treatment (Tr.
203-204, Johanson; Tr. 719-720, Capuano). Thus, for
example, most doctors who began to treat patients
with Protropin®, Genentech's met-hGH product,
continued to utilize Protropin® for those patients even
after Lilly's and Genentech's met-less hGH became
available (Tr. 909-911, Barford). For that reason, if
permitted to enter the market.
*20 118. Genentech's expert pediatric
endocrinologist, Dr. Ann Johanson, has expressed the
opinion that Genentech's goodwill could be seriously
and irreparably harmed if Novo is allowed to sell its
hGH product in the U.S., and then after two years,
Novo is taken off the market by reason of an
injunction obtained at Genentech's request. (Tr. 193,
Johanson). In such circumstances, there would be
psychological trauma to some patients and physicians
who have been using the Novo product would have to
explain to their patients (and their parents) why the
product they had been receiving for some time is no
longer available to them (Id., 193). According to Dr.
Johanson, for some parents, this would raise a
significant question concerning the hormone that they
had been receiving and some children might stop
taking human growth hormone altogether at that
point (Id.).
119. Peter J. Rizzuto, Genentech's Senior
Product Manager for Endocrine Products, who
maintains regular contacts with the pediatric
endocrinology community, expressed similar
opinions. He believes that many physicians, parents
and children are likely to be angry at Genentech
because of Genentech's role in taking Novo's product
off the market (Tr. 193, Johanson, Tr. 288-289,
Rizzuto).
120. For the reasons explained below, the court
finds that the testimony presented by Novo from
[Editor's Note: Public version with redactions by
court.] and Mr. Barford does not rebut Genentech's
showing of irreparable harm. Novo's own expert,
[Editor's Note: Public version with redactions by
court.] conceded that doctors are likely to be resentful
if they are forced to switch products [Editor's Note:
Public version with redactions by court.]
Q. Do you know what the attitude of doctors is

Not Reported in F.Supp., 1995 WL 512171 (S.D.N.Y.)
(Cite as: 1995 WL 512171 (S.D.N.Y.))
when their HMO or managed care organizations
tell them that they have to switch from one brand
of drug to another?
A. Attitude of Doctors?
Q. Yes.
A. I'm sure that they are not happy to have this
freedom taken away from them.
Q. That's because doctors think that their treatment
of patients shouldn't be interfered with by things
like HMO's and patient considerations and
economic considerations like simply price, isn't
that correct?
A. I think doctors like to have the freedom to
decide what drug to use. You mentioned price, I
think many doctors are concerned about price.
Q. But they like to make their own decisions as to
treatment?
A. Yes sir, they do.
Q. And tend to resent it if somebody else makes
that decision for them, isn't that right.
A. I believe so.
121. The court finds that the experience
discussed by Novo's experts in connection with the
mandatory switches of patients from pituitary-derived
hGH to recombinant hGH in Europe is not relevant to
the situation here because that switch was a medical
necessity. The switch from pituitary derived hGH to
recombinant hGH resulted when pituitary derived
hGH was taken off the market because of the risk that
pituitary-derived hGH would cause Creutzfeldt-Jacob
disease. [Editor's Note: Public version with
redactions by court.] In the present situation,
switching would be required not because of medical
necessity, but because Genentech obtained an
injunction to enforce its patent rights.
*21 122. The court further finds that the general
testimony offered by Novo's experts concerning
switches of patients who utilize other drugs is not
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
Page 17
relevant to the situation at hand. Novo has made no
showing of the circumstances in which such product
switches involving other drugs have occurred or of
the reasons for such product switches, and experience
with regard to other drugs utilized primarily by adults
(such as insulin) is not probative. The Court notes
that [Editor's Note: Public version with redactions by
court.] comparison between patient switches in
cortisone products, which are administered orally in
the form of pills, [Editor's Note: Public version with
redactions by the court.] and human growth hormone,
which is administered by injection, is particularly
unpersuasive.
123. In addition, the court finds that Novo
experts [Editor's Note: Public version with redactions
by court.] lack sufficient experience to provide
credible opinion testimony. [Editor's Note: Public
version with redactions by court.] has never practiced
medicine in the United States, [Editor's Note: Public
version with redactions by court.], and treats only 20-
25 patients in Denmark with growth hormone
deficiency [Editor's Note: Public version with
redactions by court.] is not yet board certified in
pediatric endocrinology [[[[Editor's Note: Public
version with redactions by court.] and is currently
treating only 30-50 patients with growth hormone,
none of whom have been on treatment for more than
three years [Editor's Note: Public version with
redactions by court.] and he has never treated growth
hormone patients through their entire therapy (Id.).
124. In contrast, Dr. Johanson, who was
characterized by Novo's expert, as a “pioneer” in
growth hormone therapy [Editor's Note: Public
version with redactions by court.], has a wealth of
experience on which to base her testimony. Her
testimony was consistent with that of NNPI's
President, Ken Capuano, that doctors in the United
States are reluctant to switch patients from one
growth hormone product to another. (Tr. 719-720,
Capuano).
125. The court finds based on the testimony of
Dr. Johanson and Mr. Rizzuto, that it would be
difficult for children treated with hGH and their
parents to learn one complex process of
administration and then to be required to relearn and
be reinstructed on another process of administration
and that switching brands during the course of long-
term therapy would impose a burden on them. (Tr.
192, Johanson). This would be particularly difficult
for parents and patients who previously had found it
very difficult to learn the administration process.
(Id.).
126. The court further finds that if Novo is
allowed to sell its human growth hormone product in
the United States and then after two years or more is
taken off the market by reason of an injunction,
Genentech's goodwill with doctors and patients will
be damaged irreparably (Tr. 193, Johanson).
Physicians who had been using the Novo product
would have to explain to their patients (and their
parents) why the hGH they had been receiving for
some period of time is no longer available to them.
(Id.). Many physicians, parents and children are
likely to be angry and resentful against Genentech
because of Genentech's role in taking Novo's product
off the market.
B. Genentech Will Suffer Irreparable Harm If Novo
Is Allowed To Enter The Market Because It Will
Lose Revenues and Will Be Required To Reduce Its
Research and Development Activities
(1) The Market For Human Growth Hormone
*22 127. When Genentech's Protropin® hGH
product was approved in 1985, Genentech had 100%
of the United States hGH market, a situation which
continued for approximately one and one-half years.
(Tr. 276, Rizzuto). In March 1987, Lilly entered the
market with its Humatrope® hGH product. (Id.). As a
result, Genentech's market share has steadily declined
to its present market share of approximately 70%,
with Lilly supplying hGH to the remaining
approximately 30%. (Tr. 276-77, Rizzuto).
128. There is a relatively small number of
physicians who prescribe hGH. Even those who do
not always have control over which drug product to
prescribe, because managed care organizations,
health maintenance organizations and hospital
pharmacies often dictate which products doctors may
use [Editor's Note: Public version with redactions by
court.]. For these reasons, the market for hGH is
particularly subject to disruption and good will built
in that market is uniquely vulnerable.
(2) Genentech's Commitment to Research and
Development
129. Since its inception in 1976, Genentech has
expended nearly $2 billion dollars in research and
development. (Tr. 325, Whiting).
130. At Genentech, scientists are encouraged to
engage in so-called curiosity projects, utilizing 10%
of their time for discretionary research. (Tr. 321-322,
Whiting). Genentech has discovered products and
potential products through such projects, the most
notable example of which is Pulmozyme. (Tr. 321-
322; Whiting). In general, however, these scientific
projects, are not geared to short-term commercial
research.
131. In 1994 alone, Genentech spent
approximately $ 314.4 million on research and
development, representing 40% of Genentech's total
revenues, and 47% of its total costs and expenses.
(Tr. 322, Whiting). Most other biopharmaceutical
companies do not come close to devoting such a
substantial percentage of their revenues to research
and development. (Tr. 323-25, Whiting; Def. Ex. 84).
132. Genentech's primary focus is on the
discovery of breakthrough products that meet unmet
medical needs. Developing breakthrough products for
unmet medical needs is inherently riskier and costlier
than the development of other products for which
treatment exists--so-called “me-too” products. (Tr.
326, Whiting).
133. At Genentech, the level of research and
development expenditures has been directly related to
revenues and historically, changes in anticipated
revenues have resulted in [Editor's Note: Public
version with redactions by court.]
(3) Novo's Projected Market Share In the hGH
Market And Genentech's Loss of Funds Available
For Research And Development
134. [Editor's Note: Public version with
redactions by court.]
135. Genentech and Novo both presented their
projections concerning Novo's likely share of the
United States hGH market if Novo is permitted to
enter the market during the pendency of this
litigation, and the resulting loss of revenues to
Genentech. As Novo's economic expert, Stephen
Kalos, stated, economic projections as to future
events are dependent upon the assumptions built into
them, and experts often disagree concerning such

Not Reported in F.Supp., 1995 WL 512171 (S.D.N.Y.)
(Cite as: 1995 WL 512171 (S.D.N.Y.))
assumptions and reselling projections (Tr. 1263-
1265, Kalos).
*23 136. Not surprisingly, based on the various
assumptions which they have elected to utilize,
Genentech and Novo disagree as to the extent to
which Novo would capture market share if it is
permitted to enter the market during the pendency of
this case. The estimates given by Mr. Barford and
adopted by Mr. Kalos, who testified that Genentech's
loss of revenues would be insignificant, appear to be
based on a number of faulty assumptions:
(a) [Editor's Note: Public version with redactions
by court.] Genentech estimates that the number is
5,000 (Tr. 286-287, Rizzuto);
(b) [Editor's Note: Public version with redactions
by court.]
(c) [Editor's Note: Public version with redactions
by court.]
(d) Novo assumes that the average age for new
patients is between 4 and 7 years; (Tr. 907, Barford).
The NCGS data offered by Genentech shows that the
average age for new patients is 9.5 years (Def. Ex.
81). Older children will generally require larger doses
of hGH than Novo has assumed.
137. Even accepting Novo's projections, Novo's
economic expert concedes that Genentech could
maintain its present level of research and
development from 1995-1997 only by changing its
business priorities [Editor's Note: Public version with
redactions by court.] (Tr. 1194-1195, Kalos).
138. [Editor's Note: Public version with
redactions by court.] [Editor's Note: Public version
with redactions by court.] Counsel's statement brings
into question the credibility of the testimony of
Novo's witnesses on this issue. However, even
accepting the assumptions of Novo's witnesses, as
opposed to the representations of its counsel. Novo's
entry in the market will reduce Genentech's revenues
in a significant amount.
(4) If Novo Is Permitted To Enter The Market,
Genentech Will Irreparably Lose Goodwill
Customers and its Research and Development
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
Page 19
Programs Will Be Irreparably Harmed
139. A party who makes a clear or strong
showing of patent validity and infringement is
entitled to a presumption of irreparable harm. The
party need go no further with any additional
affirmative factual showing to support that
presumption. Smith Int'l, Inc. v. Hughes Tool Corp.,
718 F.2d 1573, 1581 (Fed. Cir.), cert. denied, 464
U.S. 996, 104 S.Ct. 493, 78 L.Ed.2d 687 (1983), cert.
denied, 474 U.S. 827, 106 S.Ct. 87, 88 L.Ed.2d 71
(1988). (“The very nature of the patent right is the
right to exclude others. Once the patentee's patents
have been held to be valid and infringed, he should
be entitled to the full enjoyment and protection of his
patent rights.”); H.H. Robertson v. United Steel Deck,
Inc., 820 F.2d 384, 390 (Fed. Cir. 1987) (“irreparable
harm has been presumed when a clear showing has
been made of patent validity and infringement....The
opportunity to practice an invention during the
notoriously lengthy course of patent litigation may
itself tempt infringers.”). Having found that
Genentech has proven a strong likelihood of success
on the merits, the court concludes that there is a
presumption of irreparable harm.
140. The loss of goodwill ordinarily constitutes
irreparable harm because it is impossible to quantify
and cannot be adequately rectified by money
damages. Gateway Eastern Railway Co. v. Terminal
Railroad Assoc. of St. Louis, 35 F.3d 1134, 1140 (7th
Cir. 1994) (finding that a showing of injury to
goodwill can constitute irreparable harm that is not
compensable by an award of money damages); Ideal
Toy Corp. v. Chinese Arts & Crafts, Inc., 530 F.
Supp. 375, 380 (S.D.N.Y. 1981) (Motley. J.)
(irreparable injury found where there was loss of
goodwill). Moreover, the loss of goodwill and
potential revenue caused by an infringer's actions
during the pendency of litigation may constitute
irreparable harm to the patent holder. American
Home Products Corp. v. Johnson & Johnson Corp.,
22 U.S.P.Q. 2d 1561, 1567, 1991 WL 255825
(E.D.Pa. 1991). As explained below, Genentech has
established that its goodwill would be irreparably
harmed if Novo is permitted to enter the market, and
is later enjoined because of the likely resentment and
anger of doctors and patients who will blame
Genentech for forcing them to switch products.
*24 141. The Federal Circuit has recognized that
expected decreases in funds available for research
and development resulting from anticipated loss of
revenues and market share constitute an irreparable
harm:
“Without the right to obtain an injunction, the right
to exclude granted to the patentee would have only
a fraction of the value it was intended to have, and
would no longer be as great an incentive to engage
in the toils of scientific and technological
research.”
Smith Int'l v. Hughes Tool Co., 718 F.2d 1573,
1577-78, 219 U.S.P.Q. 686, 689-690 (Fed. Cir.), cert.
denied, 464 U.S. 996, 104 S.Ct. 493, 78 L.Ed.2d 687
(1985) (emphasis added) (reversing denial of
preliminary injunction); Hybritech, 849 F.2d at 1456
(holding that the effects on research if interim relief
is not granted to be a factor to be considered in
determining irreparable harm). As shown below, the
court finds that Novo's entry into the U. S. market
will cause irreparable harm to Genentech by
decreasing the funds available to it for research and
development.
142. Novo argues that Genentech, being a
financially stable and cash-rich company, cannot
claim irreparable harm because (a) it could easily dip
into cash reserves, reduce earnings, or borrow funds
to overcome the shortfall in research and
development funds and (b) if Genentech ultimately
prevails at trial, it would be made whole by the
damages it would be awarded against Novo.
However, Novo cannot force Genentech to change its
financial priorities or make unanticipated financial
adjustments in order to cover a shortfall in research
and development funds. Novo fails to recognize that
reduction in earnings and shareholder value,
borrowing, or shifting priorities for use of cash
reserves could also result in irreparable harm to
Genentech in other aspects of its business.
143. Moreover, there is no guaranty that
damages which would be awarded following a
verdict in favor of Genentech could fully compensate
Genentech. For example, if Genentech reduces its
cash reserves to fund the shortfall in research and
development, and thereby has insufficient cash to
take advantage of an acquisition or investment
opportunity, there would be no way to calculate the
potential harm to Genentech and no guaranty that a
damages award to Genentech in this case could
compensate Genentech for its loss. There can be no
assurance that damages could compensate Genentech
for its losses of customers and market share. (Tr. 288,
Rizzuto).
144. The Federal Circuit has held that
infringement may have market effects, such as loss of
market shares, never fully compensable by damages
and, as such, may constitute irreparable harm. Atlas
Powder Co. v. Ireco Chemicals, 773 F.2d 1230, 1233
(Fed. Cir. 1985); Hybritech, 849 F.2d at 1457; see
also Maitland Co., Inc. v. Terra First, Inc., 33
U.S.P.Q. 2d 1882, 1896, 1994 WL 773882 (D.S.C.
1994) (“A United States District Court can find
irreparable harm based on loss of market share,
especially when considered in conjunction with such
other evidence as has been presented here.”);
Critikon, Inc. v. Becton Dickinson Vascular Access,
Inc., 28 U.S.P.Q. 2d 1362, 1370, 1993 WL 330532
(D.Del. 1993) (granting a preliminary injunction
where the patentee in a two-competitor market stood
to lose its dominant market share and prospective
business opportunities): Henkel Corp. v. Coral, Inc.,
754 F. Supp. 1280 (N.D.Ill. 1990), aff'd, 945 F.2d
416 (Fed. Cir. 1991) (finding that damage to market
share and reputation are not measurable strictly in
monetary terms). Indeed, the Federal Circuit has
recognized that the patent statute provides monetary
relief for infringement, but that a preliminary
injunction maintaining the status quo is paramount:
*25 “it does not follow that a money award is also
the sole remedy against future infringement. The
patent statute further provides injunctive relief to
preserve the legal interests of the parties against
future infringement which may have market effects
never fully compensable in money. If monetary
relief were the sole relief afforded by the patent
statute then injunctions would be unnecessary and
infringers could become compulsory licensees for
as long as the litigation lasts.”
Atlas Powder, 733 F.2d at 1233.
146. Even accepting Novo's projections, the
shortfall in revenues that would result from Novo's
entry onto the market would force Genentech to
reduce its expenditures on research and development.
Aside from market disruption and loss of market
share, the loss of funds otherwise devoted to research
would result in irreparable and incalculable loss to

Not Reported in F.Supp., 1995 WL 512171 (S.D.N.Y.)
(Cite as: 1995 WL 512171 (S.D.N.Y.))
Genentech. It is impossible to know whether the
projects that would have to be cut would lead to
breakthrough pharmaceutical products which its
Genentech's mission.
IV. THE BALANCE OF EOUITIES TIPS
DECIDEDLY IN GENENTECH'S FAVOR
147. Genentech's pioneering '980 patent and its
vast expenditures for research and development
created hGH technology resulting in the development
of the United States market for hGH.
148. It is vital for Genentech to maintain its
research and development efforts if it is to continue
to develop breakthrough pharmaceutical products.
149. Genentech will suffer substantial and
irreparable loss of goodwill, market share, and
customers in the event Novo is permitted to enter the
market now and is later enjoined.
150. Genentech obtained the '980 patent, which
is presumptively valid and, thus, obtained the right to
exclude others from making a product which
infringes the patent. Its patent rights under the '980
patent expire in 2003. Yet if Novo is permitted to
enter the market, and if it takes two or more years for
this case to be tried, and an additional year or so for
the appeals process, Genentech might be left with
only 5 years or less of remaining patent protection.
See, H.H. Robertson Co. v. United Steel Deck, Inc.,
820 F.2d 384, 391 (Fed. Cir. 1987) (granting
preliminary injunction where “patent does not have
many years left”; Sensormatic Electronic Corp. v.
Minnesota Mining Co., 10 U.S.P.Q.2d 1467, 1988
WL 391518 (S.D. Fla. 1988) (granting preliminary
injunction where patient has only 2 years left that
were “critical” to the future of the industry).
151. In contrast. Novo has not yet entered into
the United States market and will suffer no harm
from a preliminary injunction which would merely
maintain the status quo. As the Federal Circuit has
recognized. “[w]hen the movant has shown the
likelihood that the acts complained of are unlawful,
the preliminary injunction ‘preserves the status quo if
it prevents future trespass' ...” Robertson, 820 F.2d
at 390-391 (preliminary injunction affirmed). See
also Atlas Powder, 773 F.2d at 1234 (upholding a
preliminary injunction where 66f a party's total sales
were enjoined and 200 employees would be laid off,
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
Page 21
even though the patent would expire within the year).
*26 152. Novo's argument that Genentech comes
to this court with unclean hands and should be
penalized here because of its purported discovery
abuses in the ITC Proceeding is not well taken.
Different rights and claims were at issue in the ITC
Proceeding and Genentech's alleged discovery
misconduct in the ITC Proceeding does not relate to
rights at issue in this case.FN2 For purposes of
relevance to this case, any purported discovery abuse
was cured by Genentech in July 1994 when
Genentech produced the so-called GLP documents to
Novo. Novo has had these documents for nine
months. There is no reason to believe that it cannot
receive a fair adjudication of the issues on this
motion and a full and fair adjudication of the issues at
trial in this action. Moreover, Genentech has already
suffered a severe sanction in the ITC and there is no
basis for imposing a further sanction in this
proceeding. This is especially true because
Genentech has appealed the ruling of the ITC and it
would not be appropriate to penalize Genentech here
based on findings of an administrative agency that
will soon be reviewed in the Federal Circuit.
However, even if there were no appeal pending in the
Federal Circuit, it would be inappropriate for this
Court to place a limitation on Genentech's procedural
and substantive rights in this proceeding based on
purported misconduct as to which Genentech has
already suffered a severe sanction.
153. Novo argues that the court erred during the
hearing when it refused to admit into the record
certain so-called “GLP” documents which were
among the group of documents which Genentech
unintentionally produced to the parties in another
patent infringement litigation (the “MDL
Litigation”), see, In Re Recombinant DNA
Technology Patent and Contract Litigation, 30
U.S.P.Q. 2d 1881, 1906, 1994 WL 270712 (S.D. Ind.
1994) (Dillin, J.). However, Novo ignores the fact
that in an Order agreed to by Genentech and Novo
that was so-ordered by the Court on May 17, 1995,
the parties agreed that for purposes of facilitating the
expeditious resolution of this motion without the
need for the Court to decide the complex issue
relating to whether Genentech has waived its
privilege as to the GLP documents, the GLP
documents could be submitted to the court in camera
without waiver of Genentech's right to maintain its
claim of privilege as to the documents and to object
to their admissibility. (Order, May 17, 1995). During
the hearing on Genentech's motion for a preliminary
injunction, the Court ruled that certain GLP
documents which Novo attempted to introduce into
the record were privileged and inadmissible for
purposes of this hearing, especially in light of the
facts that (i) Genentech's production of the
documents to Novo was pursuant to an Order of the
Administrative Law Judge in the ITC Proceeding
which is being appealed to the Federal Circuit, (ii)
Genentech's production of the documents to the
parties in the MDL Litigation was found by the MDL
court to have been unintentional, resulting only in a
limited waiver, and not a subject matter waiver, 30
U.S.P.Q. at 1910, and (iii) the GLP documents were
unintentionally produced to the parties in the MDL
Litigation pursuant to a protective order which
required the parties to that case to maintain them in
strict confidence for use solely in connection with
that case, 30 U.S.P.Q. at 1907-1908. The court
specifically ruled that following adjudication of this
motion, the parties would have the opportunity to
fully brief the issue of whether Genentech has waived
its attorney-client privilege and work product
immunity with respect to the GLP documents.
*27 154. Because the court ruled that the GLP
documents were privileged for purposes of the
hearing on the motion for a preliminary injunction,
the court did not decide during the hearing the issue
of whether the GLP documents proffered by Novo
would otherwise have been admissible, an issue
which has been fully briefed by the parties. The court
now finds that even if it were ultimately determined
that Genentech waived any applicable privilege, the
documents proffered by Novo are not admissible.
Novo made no showing that the documents were
adoptive or vicarious admissions by Genentech. At
best, the privileged GLP documents offered by Novo
are internal memoranda of Genentech's legal team
discussing possible legal strategies and tactics, While
they reflect the internal thought processes and
deliberations of Genentech's lawyers, they do not
reflect positions adopted by Genentech or by counsel
on its behalf, nor do they reflect admissions by agents
of Genentech. Instead, they are inadmissible hearsay.
See, Rules 801(d)(2)(B), 801(d)(2)(D), Fed. R. Evid;
Headman v. Berman Leasing Co., 352 F. Supp. 211,
213-214 (E.D. Pa. 1972) (statement by attorney in
telephone conversation with adversary attorney not
admission binding on client since out-of-court
statements are not recitations of client's position);
U.S. v. McKeon, 738 F.2d 26 (2d Cir. 1984)
(cautioning against liberally finding attorneys' out-of-
court statements as admissions). If statements such as
those described in the GLP documents proffered by
Novo were rejected, every rejected suggestion by an
attorney, consultant or expert retained by a party
would be admissible under the hearsay rule,
notwithstanding the fact that the party could not
know what the statement would be before it was
made. See, Sanford v. Johns Mansville Sales Corp.,
923 F.2d 1142, 1149-50 (5th Cir. 1991).
155. On June 12, 1995, Novo moved for
reconsideration of the court's determination that for
purposes of the hearing on Genentech's motion for a
preliminary injunction, the GLP documents proffered
by Novo were deemed privileged and, alternatively,
for certification under 28 U.S.C. § 1292. (Tr. 1694 -
1700). The court denied the motion (Tr. 1700). After
reviewing the GLP documents submitted by Novo in
camera, the court determined that the motion for
certification did not raise a controlling question of
law, the resolution of which would materially
advance the conduct of the litigation (Id.) In so
ruling, the court determined none of the privileged
information disclosed in the GLP documents
submitted in camera by Novo is of material
significance to the outcome of Genentech's motion
and, therefore, that the legal issues relating to
Genentech's claim of privilege as to the documents
are not controlling questions of law. Novo fails to
understand that this is a motion for a preliminary
injunction and that every conceivable legal and
factual issue in the case can not be resolved prior to
adjudication of this motion.
*28 156. Novo's argument based on the so-called
“grandfather clause” of 35 U.S.C. § 271(g), is
unavailing. § 271(g) instructs a court to allow an
entity which made a substantial investment to
continue to use, sell or import its product “to the
extent equitable” to protect that entity's commercial
investment or business commenced in the United
States prior to January 1, 1988. The testimony of
Novo's witnesses establish that
157. While Novo filed a New Drug Application
with the FDA for Norditropin® on May 15, 1987, the
filing of this New Drug Application cannot be

Not Reported in F.Supp., 1995 WL 512171 (S.D.N.Y.)
(Cite as: 1995 WL 512171 (S.D.N.Y.))
considered a substantial investment.
158. Any investments of Novo prior to January
1, 1988 which [Editor's Note: Public version with
redactions by court.]
159. Moreover, Novo concedes that [Editor's
Note: Public version with redactions by court.]
Furthermore, there are no equities in Novo's favor.
Novo has already recouped many times over its de
minimus investment in the United States through its
worldwide sales. When Novo Nordisk U.S.A. filed its
NDA in 1987 and when its parent, Nordisk Gentofte
merged into Novo in 1989, Novo and its affiliates
were aware that Novo could not come into the U.S.
market until at least 1994 because of Lilly's Orphan
Drug Status for its Humatrope® hGH (Tr. 787-793;
Def. Ex. 53). In these circumstances, Novo is not
entitled to equitable rights under the grandfather
clause.
160. In sum, the Court finds that the balance of
equities weigh decidedly in favor of Genentech.
V. THE PUBLIC INTEREST FAVORS THE
GRANTING OF A PRELIMINARY INJUNCTION
161. The Federal Circuit has held that public
interest favors the grant of injunctions, including
preliminary injunctions, to stop patent infringement.
Smith International, Inc. v. Hughes Tool Co., 718
F.2d 1573, 1578 (Fed. Cir. 1983) (“Without the right
to obtain an injunction, the right to exclude granted to
the patentee would have only a fraction of the value it
was intended to have ...”). Indeed, the “protection of
patents furthers a strong public policy...advanced by
granting preliminary injunctive relief when it appears
that, absent such relief, patent rights will be
flagrantly violated”. Robertson, 820 F.2d at 391.
162. Moreover, the patent grant functions as a
means of raising the expected return to be gained
from basic research to overcome the researcher's
risk. Eli Lilly and Co. v. Premo Pharmaceutical
Labs., 630 F.2d 120, 137 (3d Cir.), cert. denied, 449
U.S. 1014, 101 S.Ct. 573, 66 L.Ed.2d 473 (1980);
Ortho Pharmaceutical Corp. v. Smith, 18 U.S.P.Q.
2d 1977, 1989, 1990 WL 121353 (E.D.Pa. 1990),
aff'd, 959 F.2d 936 (Fed. Cir. 1992) (“The policy
rationales behind the patent statutes generally apply
with even greater strength in the case of drug patents.
It is in the public interest to protect the
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
Page 23
pharmaceutical industry's investment into the
discovery of new drugs.”).
163. In addition, it is in the public interest to
minimize disruption in customers selection and usage
of products with the issuance of a preliminary
injunction which precludes long-term utilization of
and reliance on an allegedly infringing product.
Critikon, Inc. v. Becton Dickinson Vascular Access,
Inc., 28 U.S.P.Q. 2d 1362, 1371, 1993 WL 330532
(D.Del. 1993) (granting a preliminary injunction and
finding it in the public interest to minimize disruption
in hospitals' selection of safety catheters even though
hospitals had already begun to use the infringing
catheter because patentee would most likely succeed
at trial on the issue of infringement). If Novo were
permitted to enter the market for a period of two
years or more pending final adjudication of the
claims in this action and were then enjoined, children
and their parents would suffer significant
psychological trauma as their physicians undertake
the difficult task of explaining why the product they
have been using has been taken off the market. In
such circumstances, it is in the public interest that the
status quo be maintained.
VI. CONCLUSION
*29 For the reasons stated above, this court
grants Genentech's motion for a preliminary
injunction.
FN1. Such evidence “must be considered ...
and is not merely ‘icing on the cake”’
Hybritech, Inc. v. Monoclonal Antibodies,
Inc., 802 F.2d 1367, 1380 (Fed. Cir. 1986),
cert. denied, 480 U.S. 947, 107 S.Ct. 1606,
94 L.Ed.2d 792 (1987) (emphasis supplied).
See also Panduit Corp. v. Dennison Mfg.
Co., 774 F.2d 1082, 1099 (Fed. Cir. 1985)
(“The human, real world story in evidence
here not only reflects the inadequacy of the
prior art, but compels a conclusion of non-
obviousness of the claimed inventions in
suit”), vacated and remanded on other
grounds, 475 U.S. 809, 106 S.Ct. 1578, 89
L.Ed.2d 817 aff'd on remand, 810 F.2d 1561
(Fed. Cir.), cert. denied, 481 U.S. 1052, 107
S.Ct. 2187, 95 L.Ed.2d 843 (1987).
FN2. The “defense of unclean hands applies
only with respect to the right in suit.”
 Warner Bros., Inc. v. Gay Toys, Inc., 724
F.2d 327, 334 (2d Cir. 1983) (finding no
unclean hands as to plaintiff's unfair
competition claim even though plaintiff
threatened defendant with prosecution on a
false trademark claim which had slight
factual support); Mallis v. Bankers Trust
Co., 615 F.2d 68, 75 (2d Cir. 1980), cert.
denied, 449 U.S. 1123, 101 S.Ct. 938, 67
L.Ed.2d 109 (1981) (“New York law
ordinarily permits an unclean hands defense
only when plaintiff's reprehensible conduct
is ‘directly related to the subject matter in
litigation and the party seeking to invoke the
[unclean hands] doctrine was injured by
such conduct.”’ (citing Weiss v. Mayflower
Doughnut Corp., 1 N.Y.2d 310, 316, 152
N.Y.S.2d 471, 474, 135 N.E.2d 208, 210
(1956)).

S.D.N.Y.,1995.
Novo Nordisk of North America, Inc. v. Genentech,
Inc.
Not Reported in F.Supp., 1995 WL 512171
(S.D.N.Y.)

END OF DOCUMENT