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Biotech company Cellular Dynamics International, Inc. (CDI) and the Wisconsin Alumni Research Foundation (WARF), its academic research partner, were booted out of a Wisconsin federal court Sept. 12 ( Cellular Dynamics Int’l, Inc. v. Lonza Walkersville, Inc. , 2017 BL 319929, W.D. Wis., No. 17-cv-0027-slc, 9/12/17 ).
CDI and WARF’s patent battle against Lonza Walkersville, Inc. over stem cell-related patents didn’t have enough connections to the Wisconsin forum, U.S. Magistrate Judge Stephen L. Crocker of the U.S. District Court for the Western District of Wisconsin said. Crocker sent the case to federal court in Maryland, where Lonza is based.
The transfer ruling shows the continuing impact of the U.S. Supreme Court’s May decision in TC Heartland LLC v. Kraft Food Group Brands LLC limiting where patent owners can sue. Courts across the country, including the Wisconsin federal court here, are grappling with applying TC Heartland‘s principles, including determining just what constitutes a regular and established place of business for purposes of maintaining a patent suit in a particular court.
Post- TC Heartland, an alleged patent infringer can be sued only where it is incorporated or has a principal place of business or where it committed the alleged infringement and has a regular and established place of business. This generally means defendants in patent litigation will enjoy a home court advantage because they will likely have to be sued where they have a strong presence.
“The decision is interesting because it has a thorough analysis of what does not constitute a ‘regular and established place of business’ post- TC Heartland,” Anne Li of Crowell & Moring LLP, who represents Lonza, told Bloomberg BNA Sept. 14.
Meanwhile, an attorney for WARF told Bloomberg BNA it had no comment on the litigation. Attorneys for CDI didn’t respond to Bloomberg BNA’s request for comment.
In this case, CDI and WARF sued Lonza in January in Wisconsin federal court alleging Lonza developed and sold induced pluripotent stem cells as well as the Lonza kit, a platform for generating stem cells, that directly or indirectly infringed five CDI patents and two patents WARF licensed to CDI.
After the Supreme Court handed down the decision in TC Heartland, Lonza asked the court to transfer the litigation to Maryland on the grounds it was improper for the suit to remain in Wisconsin court because Lonza didn’t have a regular and established place of business in that state.
The court agreed with Lonza.
Crocker said Maryland-based Lonza, which is incorporated in Delaware, didn’t have real estate, employees, or inventory in Wisconsin and couldn’t be considered to have a regular and established place of business there.
Nor were Lonza’s occasional exchanges of information and collaboration with the University of Wisconsin for research purposes or its use of a Wisconsin company to perform quality testing of its products enough to establish a sufficient corporate presence in the state, Crocker said.
"[T]he question is not merely whether Lonza Walkersville has been ‘present’ in Wisconsin or has some connections to it, but whether it maintains a ‘regular and established’ place of business in this district,” Crocker wrote.
Lonza’s hiring a Wisconsin company or working with academic researchers in the state isn’t the same as Lonza itself having a regular place of business there, he said.
After TC Heartland, he said, more is required for a court to be able to hear a patent case against a non-resident corporation.
Crocker also rejected the plaintiffs’ argument Lonza waived its rights to object to the suit’s remaining in Wisconsin because the company had entered into a laboratory supply contract with the University of Wisconsin in which it agreed to be sued in Dane County, Wis., to resolve disputes arising under that contract.
The patent dispute between Lonza, CDI, and WARF doesn’t arise under Lonza’s agreement with the University of Wisconsin, the court said, and, accordingly, the forum selection clause in that agreement doesn’t apply to the current patent dispute.
The patents at issue in the litigation are U.S. Patent Nos.:
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