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Ni-Q, LLC v. Prolacta Bioscience, Inc.

United States District Court, D. Oregon

February 14, 2019

Ni-Q, LLC, Plaintiff and Counter-Defendant,
PROLACTA BIOSCIENCE, INC., Defendant and Counter-Plaintiff

          Brenna K. Legaard and Angela E. Addae, Schwabe, Williamson & Wyatt pc, Of Attorneys for Plaintiff.

          Kristin L. Cleveland, KLARKQUIST SPARKMAN LLP, Orion Armon, COOLEY LLP, Alexandra Mayhugh, COOLEY LLP, Of Attorneys for Defendant.


          Michael H. Simon United States District Judge.

         In this patent action, the Court previously granted partial summary judgment in favor of Plaintiff Ni-Q, LLC (“Ni-Q”), finding that the asserted claims of the subject patent are invalid and that Plaintiff did not infringe the asserted claims. Ni-Q had sought a declaration of invalidity and noninfringement and Defendant Prolacta Bioscience, Inc. (“Prolacta”) had asserted a counterclaim against Ni-Q for infringement, seeking money damages and injunctive relief. Those claims have now been resolved with the Court's Opinion and Order granting Plaintiff's motion for summary judgment. The sole claim remaining in this case is Plaintiff's claim for money damages and injunctive relief under Oregon's Unlawful Trade Practices Act (“UTPA”), Oregon Revised Statutes (“ORS”) § 646.605, et seq. Prolacta moves for summary judgment against this claim. For the reasons discussed below, Prolacta's motion for summary judgment is denied.


         A. Summary Judgment

         A party is entitled to summary judgment if the “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party has the burden of establishing the absence of a genuine dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The court must view the evidence in the light most favorable to the non-movant and draw all reasonable inferences in the non-movant's favor. Clicks Billiards Inc. v. Sixshooters Inc., 251 F.3d 1252, 1257 (9th Cir. 2001). Although “[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge . . . ruling on a motion for summary judgment, ” the “mere existence of a scintilla of evidence in support of the plaintiff's position [is] insufficient.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 255 (1986). “Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citation and quotation marks omitted).

         B. Oregon's UTPA

         Ni-Q alleges that Prolacta has violated Oregon's UTPA. Specifically, Ni-Q alleges that Prolacta violated ORS § 646A.810(2) by asserting a patent infringement claim in bad faith. ORS § 646A.810(2) provides:

A person or the person's affiliate may not communicate a demand, or cause another person to communicate a demand, to a recipient if in the demand the person or the person's affiliate alleges, asserts or claims in bad faith that the recipient has infringed or contributed to infringing a patent or the rights that a patentee has . . . under the patent.

         ORS § 646A.810(2).

         In addition, ORS § 646A.810(4) provides a list of possible conditions that “[a] court may consider . . . as evidence that a person or the person's affiliate has, in bad faith, alleged, asserted or claimed an infringement of a patent.” These include that the person making the demand did not properly compare the claims of the patent to the features of the allegedly infringing product (§ 646A.810(4)(d)) and that the person making the demand knew or should have known that the claim of infringement was without merit or was deceptive (§ 646A.810(4)(f)). Any violation of ORS § 646A.810(2) constitutes an unlawful practice under ORS § 646.608, which triggers the right to file suit.


         Prolacta is a corporation that produces and sells human milk formula to medical service providers. Prolacta sells its formula to hospitals for $180 per ounce, and a single premature infant might consume thousands of dollars' worth of formula during the course of his or her hospital stay. Ni-Q is a relatively new entrant into the market for producing and selling human milk formula. Ni-Q is a competitor of Prolacta. Ni-Q's human milk formula is sold at a significantly lower price than is Prolacta's.

         On November 11, 2016, Prolacta sent a letter (“November 11 Letter”) to the Chief Executive Officer (“CEO”) of Ni-Q, Bill Pfost. ECF 25-2 at 1. The letter's stated intent was to apprise Mr. Pfost of the patents owned by Prolacta. Prolacta admitted to having “very limited visibility into the products and processes being developed by [Ni-Q].” Id. Nonetheless, Prolacta expressed a suspicion “that [Ni-Q] may be relying on matching donor genetic identity marker profiles with donated milk samples.” Id.

         In the November 11 Letter, Prolacta alleges that Ni-Q infringed U.S. Patent No. 8, 628, 921 (the '921 Patent), among other patents. This patent involves “methods and systems for diagnosing or screening human milk samples to confirm that the milk is from a defined source.” ECF 57-1 at 5. Prolacta acquired the '921 Patent through an assignment of ownership rights from the inventors. Ni-Q asserts that the '921 Patent has an effective filing date of March 20, 2008, and Prolacta does not dispute this date.[1]

         Claim 1 of the '921 Patent describes “[a] method for determining whether a donated mammary fluid was obtained from a specific subject.” This method comprises:

(a) testing a donated biological sample from the specific subject to obtain a least one reference identity marker profile for at least one marker;
(b) testing a sample of the donated mammary fluid to obtain at least one identity marker profile in step (a);
(c) comparing the identity marker profiles, wherein a match between [them] indicates that the mammary fluid was obtained from the specific subject; and
(d) processing the donated mammary fluid . . . wherein the processed donated mammary fluid comprises a human protein constituent of 11-20 mg/mL; a human fat constituent of 35-55 mg/mL; and a human carbohydrate constituent of 70-120 mg/mL.

'921 Patent at 21:45-65. In the November 11 Letter, Prolacta encouraged Ni-Q to review the '921 Patent, among others, to ensure that Ni-Q was not infringing the patented method of using genetic information from donated ...

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