CAFC: Infringement Not Proven in Marketing Materials

By Robert Ambrogi Esq
Expert testimony based largely on the opponents' marketing and advertising materials provided no proof of infringement of stem-cell patents and should have been excluded from trial, a divided three-judge panel of the Federal Circuit Court of Appeals ruled June 9th.

The stem-cell biologist's testimony – which consisted almost entirely of quotations from the defendants' promotional and investment materials – was neither appropriate for an expert, nor helpful to the jury, the court concluded in affirming the trial court's post-trial order striking the testimony.

"The district court did not abuse its discretion in concluding that the jury was fully capable of understanding those materials without expert assistance and that [the expert's] testimony should have been excluded," Circuit Judge William C. Bryson wrote for the majority, in which Circuit Judge Sharon Prost joined.

But a dissenting opinion by Circuit Judge Pauline Newman argued that exclusion of the expert's testimony was without legal basis under Daubert v. Merrell Dow Pharmaceuticals.

"[I]t is clear that the district court's (and my colleagues') exclusion of the entire testimony of this eminent scientist on this ground is not what the Daubert ruling is about," Judge Newman wrote. "There was no testimony contrary to the view of [the expert] of the scope of the representations made in the marketing materials, and no challenge to the accuracy of her statements."


The ruling came in a patent infringement action brought by PharmaStem Therapeutics against six defendants alleging infringement of two U.S. patents (B1 5,004,681 and 5,192,553). The two patents cover a procedure that uses stem cells taken from a newborn's umbilical cord to treat persons with compromised blood and immune systems.

Each of the defendants offers a service to families of newborns in which they collect blood from the umbilical cord and preserve it for possible later use. The defendants represent in their promotional literature that the preserved blood may be useful for reconstituting the donor's hematopoietic system if it is ever damaged by disease or other causes.

At the conclusion of the trial, the jury returned a verdict in favor of PharmaStem finding infringement of both patents. On defendants' motions for judgment as a matter of law, the district court lifted the verdict and entered judgments of non-infringement with respect to both patents.

In so doing, the district court found that PharmaStem had failed to provide evidence proving a critical requirement of its patent. The two patents covered compositions containing stem cells "in an amount sufficient to effect hematopoietic reconstitution of a human adult." Therefore, to prove infringement, PharmaStem had to show that the blood defendants collected had a sufficient supply of stem cells to meet this purpose, the court said.

PharmaStem's expert, a stem cell biologist, based her infringement opinion entirely on her analysis of the defendants' marketing materials, "without ever considering any data regarding the composition of the defendants’ cord blood units," the district court found. Given that she was not an expert in marketing or advertising and that her analysis was well within the jury's common knowledge, the district court ruled that it should not have allowed her to testify at trial. "[H]er opinion of infringement is no more than a lay-person’s interpretation of the defendants’ marketing materials,” the district court said.

Without its expert's testimony, PharmaStem had no evidence that at least some of the cord blood samples collected by defendants met the stem-cell sufficiency requirement covered by its patents. Without this evidence, there was no proof of infringement, the district court concluded.


On appeal, the Federal Circuit concluded that the lower court was correct in ruling that the evidence of the defendants’ marketing materials did not provide a sufficient basis for a finding of infringement. There is no prohibition against using the admissions of a party – whether in the form of marketing materials or otherwise – as evidence in an infringement action, the court said. The problem here, however, was that the materials did not establish the fact in contention.

"[W]hile the defendants’ statements touted the possible therapeutic uses the cord blood might have for the child and members of the child’s family in the future, none of the statements represented that the stem cells in any of the cryopreserved cord blood samples were sufficient in number to effect hematopoietic reconstitution of an adult," the court explained.

The Federal Circuit agreed with the district court that PharmaStem's expert's testimony as to her interpretation of the defendants' marketing materials should not have been admitted and provided no proof of infringement.

"[B]ecause her testimony was almost entirely based on an interpretation of the defendants’ marketing materials and materials directed to investors, any expertise on [her] part as a cell biologist was of no apparent help to the jury," the court reasoned. "Whether or not the materials constituted admissions by the defendants that some or all of the preserved samples contained enough stem cells to reconstitute an adult was not a matter as to which [her] expertise was of any apparent use."

In addition to being unnecessary, the expert's interpretation was also unreasonable, the court said. It found that the representations defendants made in their marketing materials fell "significantly short" of the conclusions the expert derived from them.

"In short," said the court, "we agree with the trial court that the defendants' materials did not constitute sufficient proof of infringement … and that those materials did not become proof of infringement when [the expert] read those materials back to the jury from the witness stand."


In her dissent, Circuit Judge Newman takes issue with "the tardy rejection of the testimony of PharmaStem's expert witness." This was a misapplication of Daubert, she says, "for there was no criticism of the expert's scientific credentials or her analysis of the prior art and the state of the science."

Given that the expert made no error of law or scientific fact, the court was wrong to exclude her testimony simply because she also gave her opinion of defendants' marketing statements, Judge Newman asserted.

"There was no testimony contrary to the view of [the expert] of the scope of the representations made in the marketing materials, and no challenge to the accuracy of her statements," she wrote. "Presentation of expert testimony was in compliance with the general rule that 'typically expert testimony will be necessary in cases involving complex technology,' … and this expert's testimony did not cross the boundaries of admissibility."

The case is PharmaStem Therapeutics Inc. v. Viacell Inc., Case Nos. 05-1490, 05-1551 (Fed. Cir., July 9, 2007).



Robert Ambrogi Esq

We are proud to partner with an author of Bob’s caliber to provide exclusive articles for our legal clients and leading industry experts. Robert J. Ambrogi is a news media veteran and the only person ever to hold the top editorial positions at the two leading national U.S. legal newspapers, the National Law Journal and Lawyers Weekly USA. He is currently a Massachusetts lawyer who represents clients at the intersection of law, media and technology. He is also internationally known for his writing and blogging about the Internet and technology. Media and Technology Law Bob represents a range of businesses and individuals, concentrating in print and electronic media companies and the editorial, sales, marketing and technology professionals who work in them. He also counsels businesses and individuals in employment matters. Arbitration and Mediation An established professional in alternative dispute resolution, Bob has been an arbitrator since 1994, focusing on labor and employment and securities disputes. A mediator in a range of civil disputes, Bob completed the training required by Massachusetts law to protect confidentiality.

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