Massachusetts Institute of Technology v. Shire PLC, C.A. No. 1:13-CV-10020-MLW, 2014 WL 404696 (D. Mass. Feb. 2, 2014) (Wolf, D.J.) [Motion to Dismiss for Failure to State a Claim of Inducement Infringement].

Plaintiffs Massachusetts Institute of Technology and Children’s Medical Corporation (collectively “MIT”) sued defendants Shire Regenerative Medicine, Inc. (“SRM”) Shire PLC (“Shire”) and Shire Pharmaceuticals, Inc. (“Shire Pharmaceuticals”) alleging infringement of U.S. Patent Nos. 5,759,830 and 5,770,193. The patents relate to fibrous scaffolds containing cells for producing vascularized tissue in vivo and methods of producing the same.

MIT sued the defendants alleging that a product, Dermagraft, for treating foot ulcers of Diabetic patients infringes both patents. SRM produces and sells Dermagraft, while the other two defendants are in the Shire corporate hierarchy. MIT alleged that SRM directly infringed both patents, while Shire and Shire Pharmaceuticals induced infringement and willfully infringed both patents.

Shire and Shire Pharmaceuticals filed motions to dismiss under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction and under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. Both Shire and Shire Pharmaceuticals argued that they did not have sufficient contacts in Massachusetts for a finding of personal jurisdiction. Shire and Shire Pharmaceuticals also argued that the amended complaint lacked allegations sufficient to sustain claims of induced and willful infringement.

Personal Jurisdiction Was Satisfied

MIT made a prima facie showing that both the Massachusetts long-arm statute and due process were satisfied and the Court denied the motion to dismiss for lack of personal jurisdiction. Even though SRM was the actual producer, seller, and marketer of Dermagraft, the Court noted that both Shire and Shire Pharmaceuticals had contacts with Massachusetts. Shire’s CEO was quoted in an article in the Boston Globe as conducting extensive business in Massachusetts and taking a hands on approach to its subsidiaries, including SRM. MIT also provided evidence that Shire Pharmaceuticals controls the hiring and sales force of SRM and manages hiring and staffing operations for SRM, including positions in Massachusetts, that involve reimbursement questions for Dermagraft.

Pleading Requirements for Inducement Infringement Were Not Met

The claims for inducement and willful infringement against Shire and Shire Pharmaceuticals were dismissed for failure to state a claim. The Court applied Federal Circuit case law codifying the specific intent requirement for inducement infringement. A claim for inducement infringement “requires knowledge that the induced acts constitute patent infringement,” but a showing of willful blindness can also satisfy this knowledge requirement. The Court noted that the amended complaint contained few allegations concerning induced infringement such that the heightened pleading requirement for inducement infringement in Bell Atlantic and Iqbal was not met.

The complaint referenced two letters from MIT to SRM and Shire Pharmaceuticals. In 2011, MIT sent letters to SRM and Shire Pharmaceuticals informing them of the patents and inviting them to engage in discussions with MIT before the suit was filed. In 2012, MIT sent a letter alleging infringement to SRM alone. The Court considered these letters because they were referenced in the complaint, but found that they were insufficient to support the inducement infringement claims. The letters were not sent to Shire, so there were no facts to support the specific intent required for inducement infringement. While Shire Pharmaceuticals received the 2011 letter, the letter noted that MIT had “not yet evaluated the relationship between Shire’s Dermagraft product and MIT’s patents, and in particular [had] not assessed the possibility that Dermagraft and/or its manufacture, use or sale might fall within the scope of one or more MIT claims.” While plaintiffs argued that the Court should consider affidavit evidence about Shire’s CEO overseeing SRM and Shire Pharmaceutical’s involvement with SRM’s hiring and marketing, the Court refused to consider this evidence because the documents were not referenced in the complaint itself.

The Court gave leave to amend the complaint because there was no evidence the request was made in bad faith or intended to slow progress of the case. Additionally, the Court also noted that the “evidence presented in connection with the motion to dismiss for lack of personal jurisdiction suggests an amendment may not be futile.”

The willful infringement claim against Shire was dismissed because there were no other allegations concerning other forms of infringement.