## United States Court of Appeals for the Federal Circuit

05-1490, -1551

PHARMASTEM THERAPEUTICS, INC., Plaintiff-Appellant,

v. VIACELL, INC., Defendant-Cross Appellant, and CRYO-CELL INTERNATIONAL, INC., CORCELL, INC., Defendants-Cross Appellants, and CBR SYSTEMS, INC. (fo rmerly known as Cord Blood Registry, Inc.), Defendant-Cross Appellant, and BIRTHCELLS TECHNOLOGY, INC. and BIO-CELL, INC., Defendants.

Paul J. Andre , Perkins Coie, LLP, of Menlo Park , California, argued for plaintiffappellant Pharmastem Therapeutics, In c. With him on the brief was Lisa Kobialka

. John C. Englander , Goodwin Procter LLP, of Boston, Massachusetts, argued for defendant-cross appellant ViaCell, Inc. With him on the brief were Paul F. Ware, Jr. and Elaine Herrmann Blais . Of counsel on the brief was Richard M. Wyner , of Washington, DC. James J. Rodgers , Dilworth Paxson LLP, of Philade lphia, Pennsylvania, argued for defendants-cross appellants Cryo-Cell Inter national, Inc., et al. Of counsel was Evelyn H. McConathy , Drinker Biddle & Reath LLP, of Philadelphia, Pennsylvania.2

Thomas F. Chaffin , Pillsbury Winthrop Shaw Pittman LLP, of Palo Alto, California, argued for defendant-cross appellant CBR Systems, Inc. With him on the brief was William F. Abrams . Of counsel on the brief were Guillermo E. Baeza , of McLean, Virginia, and Kevin M. Fong , of San Francisco, California. Appealed from: United States District Court for the District of Delaware Chief Judge Gregory M. Sleet

## United States Court of Appeals for the Federal Circuit

05-1490,-1551 PHARMASTEM THERAPEUTICS, INC., Plaintiff-Appellant,

v. VIACELL, INC., Defendant-Cross Appellant, and

CRYO-CELL INTERNATIONAL, INC., CORCELL, INC., Defendants-Cross Appellants, and CBR SYSTEMS, INC. (fo rmerly known as Cord Blood Registry, Inc.), Defendant-Cross Appellant, and BIRTHCELLS TECHNOLOGY, INC. and BIO-CELL, INC., Defendants.

__________________ _________ DECIDED: July 9, 2007

__________________ _________ Before NEWMAN, BRYSON, and PROST, Circuit Judges

. Opinion for the court filed by Circuit Judge BRYSON. Dissenting opinion filed by Circuit Judge NEWMAN.BRYSON, Circuit Judge

. This patent infringement action wa s brought by appellant PharmaStem Therapeutics, Inc., in the United States Dis trict Court for the District of Delaware. PharmaStem sued six defendants (four of which are appellees bef ore us in this appeal), alleging that the defendants had infringed two patents owned by PharmaStem, U.S. Patent No. B1 5,004,681 (“the ’681 patent”) and U.S. Patent No. 5,192,553 (“the ’553 patent”), a continuation-in- part of the ’681 patent. At the conclusion of the trial, the jury returned verdicts for PharmaStem on both patents, finding both patents infringed and not invalid. The jury also rejected the defendants’ counterclaims of inequitable conduct and violation of the antitrust laws. The defendants filed motions for judgment as a matter of law (“JMOL”) and a new trial. In response, the district court in itially entered an order gr anting a new trial on the issue of infringement of the ’681 patent and JM OL of noninfringement as to the ’553 patent. Subsequently, however, the court vaca ted the new trial order as to the ’681 patent and instead entered JMOL of noninfringement as to that patent. The court denied the defendants’ JMOL motions with re spect to various asserted grounds of patent invalidity. PharmaStem now appeals from the JMOL orders on infringement, and the defendants cross-appeal from the court’s refusal to gr ant JMOL on invalidity. We affirm the district court’s judgment as to th e infringement issues. With respect to the counterclaim of invalidity for obviousness, ho wever, we reverse the judgment and direct the entry of judgment for the defendants.

05-1490,-1551 2I The two patents in suit recite compos itions and methods relating to a medical procedure for treating persons with compro mised blood and immune systems. The treatment is based on the discovery that blo od from a newborn infant’s umbilical cord is a rich source of a type of stem cells us eful for rebuilding an individual’s blood and immune system after that system has been compromised by disease or a medical treatment such as chemotherapy. Stem cells are fundamental (or “immature,” or “pri mitive”) cells from which specialized (or “mature”) cells derive. Hemat opoietic stem cells are stem cells that are ultimately responsible for producing the va rious specialized cells of the blood and immune (or “hematopoietic”) system. Hematopoiet ic stem cells produce progenitor cells and more hematopoietic stem ce lls. The progenitor cells, whic h are less primitive than the stem cells, in turn give rise to the variet y of specialized cells that constitute the blood and immune system. Although hematopoietic stem cells are pr esent in various types of human tissue, they are found in unusually high concentrati on and potency in umbilical cord blood. The ’681 and ’553 patents describe a process for collecting a newbor n infant’s umbilical cord blood at the time of birth, te sting it for suitability for late r use, preserving it through cryopreservation, and infusing it into an in dividual (either the donor or another person, preferably one with a closely matched blood ty pe) whose hematopoietic stem cells have been destroyed. The object of such transplantati ons is to effect grafting. A successful graft results when the donor’s stem cells mi grate into the recipient’s bone marrow,

05-1490,-1551 3resulting in the renewed produc tion of normal, specialized bl ood cells and ultimately the reconstitution of the recipient’ s entire blood and immune system. As issued, the ’681 patent contained very broad claims. Claim 1 recited a composition comprising “a plurality of vi able human neonatal orfetal hematopoietic stem cells derived from the bl ood [and a] cryopreservative.” In reexamination, several of the original claims were cancelled. Claim 1 was amended to read as follows: A cryopreserved therapeutic com position comprising viable human neonatal or fetal hematopoietic stem cells derived from the umbilical cord blood or placental blood of a single hum an collected at t he birth of said human, in which said cells are present in an amount sufficient to effect hematopoietic reconstitution of a human adult; and an amount of cryopreservative sufficient for cryopreservation of said cells. Claim 2, which is dep endent on claim 1, was amended to re cite the composition of claim 1 “which further comprises viable human neonatal or fetal hematopoietic progenitor cells.” Each of the defendants offers a service to families of newborn infants in which blood from the infant’s umbilical cord is collected and cryopreser ved for possible later use. The defendants repr esent in their promotional litera ture that the preserved cord blood may be useful for reconstituting the donor’s hematopoietic system in the event that system is damaged or destroyed as a result of disease or other causes. Some of the promotional literature advises that the preserved cord blood may also be useful for treating closely related member s of the infant’s family. In the infringement action brought agai nst all six defendants, PharmaStem asserted claims 1 and 2 of the ’681 patent, as amended in reexamination, and claims 13, 19, 47, 53, and 57 of the ’553 patent. Claims 13, 47, and 57 of the ’553 patent are independent claims. Claim 13 provides as follows:
05-1490,-1551 4A method for hematopoietic or i mmune reconstitution of a human comprising: (a) isolating human neonatal or fetal blood components containing hematopoietic stem cells; (b) cryopreserving the blood components; (c) thawing the blood components; and (d) introducing the blood compon ents into a suitable human host, such that the hematopoiet ic stem cells are viable and can proliferate with the host. Claim 47 is similar except that it re fers to the blood components “containing hematopoietic stem and progenito r cells.” Dependent claims 19 and 53 add that the blood components are isolated by collection from an umbilical cord. Independent claim 57 provides as follows: A method for hematopoietic or i mmune reconstitution of a human comprising introducing into the hum an a composition comprising human neonatal or fetal hematopoietic stem cells derived from t he blood, in which the stem cells have been pr eviously cryopreserved. II Following the jury’s verdict finding in fringement of both pat ents by all four appellants, the district c ourt granted the defendants’ JMOL motions and entered a judgment of noninfringem ent with respect to both patents. The court agreed with the defendants that, in light of the legal theories pressed by PharmaStem at trial, the evidence failed to show that any of the defendants had infri nged any of the asserted claims of either patent in suit. As to infringement of t he asserted ’681 patent claims, the district court focused on the requirement that the recited compositions contai n stem cells “in an amount sufficient to effect hematopoietic recons titution of a human adult.” To prove infringement, the court explai ned, PharmaStem was required to adduce evidence that the defendants’ cord blood units contained a sufficient supply of stem cells to effect
05-1490,-1551 5successful reconstitution of an adult. Th e court concluded that PharmaStem had failed to do so. In addressing the sufficiency of the evidence on that issue, the trial court first ruled that it should have excluded the trial testimony of Dr. Mary Hendrix, PharmaStem’s expert witness on infringem ent. The court noted that although Dr. Hendrix was “an accomplished stem cell biologist,” she bas ed her infringement opinion “entirely on an analysis of t he defendants’ marketing materials, without ever considering any data regarding the composition of the defendants’ cord blood units.” The court explained that Dr. Hendrix wa s not qualified as an expert in marketing or advertising and, in any event, “her so-called analysis of the defendants’ marketing materials was well within the jury’s common knowledge, common sense and common experience.” The court pointed out that Dr. Hendrix’s opinion that all of the defendants’ cord blood units infringe was based on her conclusion that the defendants’ pr omotional materials “promise stem cells for pediatric and adult trans plantation.” In that respect, according to the court, “her opinion of infr ingement is no more than a lay-person’s interpretation of the defendants’ marketing materials.” The court therefore ruled that her testimony should have been excluded and that “permitti ng PharmaStem to couch its presentation of this evidence in the form ofan expert opini on was an error.” The district court then pointed out that the evidenc e at trial overwhelmingly indicated that not all units of cord blood obtained from a singl e individual at birth contain enough stem cells to reconstitute an adult. The court explained that PharmaStem did not attempt to prove by testing or by refe rence to data collected by the defendants that at least some of the cord blood samples preserved by the defendants satisfied that

05-1490,-1551 6requirement. Instead, the court noted, Pharma Stem adopted the strategy of trying to prove, principally through r epresentations made by the def endants in their marketing materials and other documents, that all of t he preserved cord blood samples infringed. As a consequence, the court explained, Pha rmaStem “presented no evidence to the jury from which it could conclude that any s pecific cord blood unit or units stored by any of the defendants contained stem cells in a sufficient amount to reconstitute a human adult.” Because there was “no legally suffici ent evidentiary basis for a reasonable jury to find that all, or any specific number, of the defendants’ cord blood units infringe the ’681 patent,” the court granted the defendants’ motion for JMOL as to the ’681 patent claims. As to infringement of the ’553 patent, the district c ourt granted the defendants’ motions for JMOL because it concluded that PharmaStem had failed to prove that the defendants were guilty of contri butory infringement, which was PharmaStem’s theory of liability. Under the court’s instructions, t he jury was required to answer three questions in the affirmative in order to find that any of the defendants contributorily infringed the ’553 patent. Specifically, the jury was requir ed to find (1) that cryopreserved cord blood has no substantial noninfringing uses; (2) that the defendants and transplant physicians were acting in concert or working together to complete the process of infringement of the asserted claims of the ’553 patent; and (3) that the defendants contributorily infringed “by selling or offering to sell cry opreserved cord blood th at was actually used by a third party in the direct infringement” of the asserted claims. The court held that there was sufficient evidence at trial to support the jury’s a ffirmative answers to the first two questions. With respect to the third ques tion, however, the court held that there

05-1490,-1551 7was no evidence in the record to support t he jury’s affirmative answer. The court explained its ruling as follows: It is undisputed that the defendants do not own the cord blood units. Rather the units are owned by the cl ients, or familie s, and the defendants in turn provide services with respect to the processing and storing of the compositions. Although the def endants charge enrollment, processing, and banking fees with respect to their storage services, they do not sell or offer to sell the cord blood units. Indeed, t he record evidence on this issue is clear that the defendants sell a service, not cord blood units. Because the court ruled that liability for contributory infringement “is clearly dependent upon the accused infringer’s se lling or offering to sell a component of the patented process, here cord blood units,” the court held that the jury’s verdict could not stand. The court therefore granted JMOL as to the asserted claims of the ’553 patent. Although granting the def endants’ motions for JMOL as to infringement, the district court denied their motions for JMOL of invalidity with respect to the asserted claims. As to obviousness, the court ruled that the evidence at tr ial showed that there were problems associated wit h the use of other transpl ant tissues, such as bone marrow and adult blood, and that there was “t remendous skepticism in the transplant field regarding the use of cord blood as a tr ansplant tissue.” Although the court stated that a jury could have found from the evidence that the asserted claims would have been obvious, the court ruled that the evidenc e was sufficient to en title the jury to conclude that “prior to the inventions of the Patents-In-Suit, t hose in the field of hematopoietic reconstitution would not hav e expected cord blood to be a successful transplant tissue.” As to anticipation, the district court agai n ruled that the evidence was sufficient to support the jury’s verdict that the prior art reference on which the defendants relied did

05-1490,-1551 8not anticipate the asserted claims. The court explained that the jury was entitled to find that the prior art reference did not prove that there were stem cells in umbilical cord blood, and that the jury could reasonably have concluded that the suggestion of introducing stem cells into a human host was not “a sufficiently enabling disclosure to warrant a finding of anticipation.” Finally, the district court rejected the def endants’ argument that the ’681 patent was invalid for indefiniteness. The court a cknowledged that claim 1 of the ’681 patent does not specify a particular nu mber of cells or volume of blood that is required to infringe. Nonetheless, the c ourt concluded that “the record supports that the ’681 Patent’s claim language is as precise as the subject matter permi ts.” Moreover, the court ruled that the record contained evidence establishing that “a person of skill in the art would have understood what an amount of cord blood stem cells sufficient to effect hematopoietic reconstitution of a human adult means.” PharmaStem has appealed from the por tion of the district court’s judgment granting JMOL of noninfringement with respect to both patents. The defendants have cross-appealed from the portion of the judgment upholding the ju ry’s verdict that the two patents are not invalid on grounds of anticipation, obviousness, or (in the case of the ’681 patent) indefiniteness. III With respect to infringement of the ’681 patent, the dispute on appeal is a narrow one. The only contested limitation of the assert ed claims is the limitation requiring that the claimed composition contain neonatal or fetal hematopoi etic stem cells “in an amount sufficient to effect hematopoietic recons titution of a human adult.” PharmaStem

05-1490,-1551 9contends that all of the cord blood samp les the defendants have preserved infringe claim 1 of the ’681 patent bec ause the evidence at trial was sufficient to show that all those cord blood units contained enough stem cells to effect the hematopoietic reconstitution of a human adult. The defendant s contend that PharmaStem failed to prove that any of their cryopreserved samples sa tisfy that limitation. As the district court noted, PharmaStem did not attempt to use direct testing or other scientific evidence to prove that any particular cord blood sample or group of samples preserved by any of the def endants contained enough stem cells to reconstitute a human adult. Instead, Pharma Stem relied on indire ct evidence in the form of advertising and other materials genera ted by the defendants, scientific evidence relating to stem cell research in general , testimony from representatives of the defendants, and testimony by their own expert wit ness, Dr. Hendrix. Th e district court, however, concluded that PharmaStem’s ev idence did not constitute substantial evidence in support of PharmaSt em’s theory of infringement. A The trial court was correct in ruling that the evidence of the defendants’ advertising and other material s did not provide a sufficient basis for a finding of infringement. That evidence consisted of various statements by each of the defendants that the cord blood samples they preserved could be potentially useful not only for the donor but also for the donor’s relati ves, including adult relatives. To be sure, there is no prohibition again st using the admissions of a party, whether in the form of marketing materials or otherwise, as evidence in an infringement action; such admissions are entitled to weight along with all other evidence of

05-1490,-1551 10infringement. In this case, however, wh ile the defendants’ st atements touted the possible therapeutic uses the cord blood mi ght have for the child and members of the child’s family in the future, none of the statements r epresented that the stem cells in any of the cryopreserved cord blood samples were sufficient in number to effect hematopoietic reconstitution of an adult, as is required by claim 1 of the reexamined ’681 patent. Instead, the def endants’ statements emphasiz ed the potentia l therapeutic usefulness of the cord blood in general and re ferred to future uses of stored blood in adult transplants only as possibilities. For example, PharmaStem introduced a stat ement from a website maintained by defendant CBR Systems, Inc., which referred to the number and character of cord blood transplants worldwide as of that time. The statement recited that “umbilical cord blood has been used in more than 2,500 transplants by children and adults. In many cases, the cord blood was used by the baby’s sibli ng. Other transplants have occurred for the newborn himself, the newborn’s mother, fat her, and the newborn’s cousin.” With respect to its own preserved cord blood units, CBR stated that it had provided “over two dozen samples for use in transplantation,” t hat most have been used for siblings, but that in one instance the new born’s “cord blood stem cells were transplanted to her mother to treat chronic myelogenous leukemia.” Those statements fall short of proving t hat any (much less all) of CBR’s cord blood samples contained enough st em cells to reconstitute an adult. The first statement simply recited that among t he 2500 world-wide transplants, some had been conducted on adults. The second statement reflected that one such adult transfer was attempted with a CBR cord blood sample. Neither st atement made any representation whether or

05-1490,-1551 11to what extent the particular transplants had succeeded in reconstituting the adults’ hematopoietic systems. Nor di d the specific reference to the one adult transplant represent that the transplant was successful or that only a single unit of cord blood was used in the transplant. Those gaps in the proof are significant, because the evidence showed that as of the time of trial the great majority of all cord blood transplants worldwide had been for the treatment of children. In addition, the evidence showed that in most cases involving adult transplantati ons, the transplant physicians had used two units of cord blood, not the one unit obtai ned at the time of a single birth. Uncontradicted evidence at trial showed that two units were used because in most cases the physicians regarded a single unit as insufficient for an adul t transplantation. PharmaStem introduced similar statement s from defendant CorCell, Inc. In particular, PharmaStem pointed to a statement in CorC ell’s promotional literature that if cord blood could be saved, “it would be a perfect match for the donor, but could also provide life saving benefits fo r siblings, and other family members.” Several other statements by CorCell were to the same effe ct—that cord blood could potentially be of benefit not only to the child but also to other members of the child’s family. As in the case of CBR, however, those statements did not constitute representations that single units of CorCell’s preserved cord blood woul d contain a sufficient number of stem cells to reconstitute an adult. PharmaStem notes in passing that one sample of CorCell’s preserved cord blood was used in an adult transplantation, but the evidence at trial showed that the adult transplant did not graft and the patient died. Accordingly, that evidence provides no support at all for PharmaStem’s theory of infringement.

05-1490,-1551 12With respect to defendant Cryo-Cell In ternational, Inc., PharmaStem again introduced statements from the company’s websit e that cord blood is a source of stem cells for the child or “possibly” other fam ily members. PharmaStem’s expert witness, Dr. Hendrix, interpreted that statement to refer to adult family members and to constitute a representation that each unit of cord blood preserved by Cryo-Cell contains enough stem cells to reconstitute an adult. The st atements about possible use for other family members, however, do not amo unt to representations that any single stored unit would be sufficient by itself to rec onstitute an adult, much less that all of the samples have that capacity. Similarly, PharmaStem introduced eviden ce that defendant ViaCell, Inc., had advertised that cord blood c ould be stored “for pot ential use by a sibling, parent, first cousin or the newborn itself.” While ViaCell’s promotional materials stated that cord blood had been used in adult transplantation efforts, PharmaStem points to no representation by ViaCell that a single unit of its stor ed cord blood had ever been successfully used to effect hematopoietic reconstitution of an adult. B In addition to the evidence of the def endants’ statements, PharmaStem also relied on evidence that each of the defendant s tested their cord blood samples before cryopreserving them. Like the defendants’ statements, however, that evidence also failed to establish that the preserved sample s contained sufficient numbers of stem cells to effect hematopoietic reconstitution of an adult. The testing evidence showed that the defendants used various means to screen the cord blood samples before submitting them for cryopreservation. Those tests included determining whether the samples

05-1490,-1551 13contained more than a minimum volume of bl ood, whether the samples were free of contamination, and whether they contained a minimum number of viable nucleated cells. Each of those testing measures was designed to increase the likelihood that the cord blood units contained viable stem cell s and could be therapeutically useful. That evidence did not show, however, that the te sting excluded all samples that lacked the capacity to reconstitute an adult, because there was no showin g that the defendants chose to preserve only those samples that contained sufficient stem cells for adult reconstitution, much less that their test ing procedures had that effect. Nor did PharmaStem argue that the defendants’ tests c ould be used to show that some subset of all of the preserved samples contained enough stem cells to reconstitute an adult. To the contrary, the evidence showed that t he defendants saved cord blood samples when the defendants thought the sample s might be of some potentia l therapeutic use, which would include transplantation of an infant or a young child. C In its brief on appeal, PharmaStem refers to two pieces of scientific evidence introduced at trial that Pharma Stem contends support its clai m of infringement of the ’681 patent. The first is a paper published in 2001 in the New England Journal of Medicine regarding the use of umbilical cord blood in adult transplantations. That paper was cited in promotional materials of CB R and CorCell. Alt hough the paper showed that cord blood could have restorative effect s for adults, it did not disclose whether any or all of the transplantations consisted of only a single cord blood unit. The paper therefore did nothing to prove how often a single cord blood un it from a single infant is sufficient for adult reconstitu tion. For that reason, the 2001 paper provided no

05-1490,-1551 14evidentiary basis from which to infer that the particular cord blood samples preserved by any of the defendants cont ained a sufficient quantity of stem cells for adult reconstitution. A second piece of scientific evidenc e featured by PharmaStem is a 2003 publication by the federal Food and Drug Administration reporting that an advisory committee studying cord blood transplantat ions had recommended that physicians be permitted to conduct adult transplantations “as l ong as the stem cell dose is adequate.” That evidence is likewise not probative of infringement because the report makes no reference to whether a single unit of cord bl ood would be used in such transplantations. In fact, the transplant physician who made t he presentation that led to the advisory committee’s recommendation explained at trial that his recommendation against limiting transplants by age was “[b]ecause we coul d do cord blood transplants using two cord blood transplant [units].” Thus, neither of the scientific exhibits cited by PharmaStem addresses whether a single cord blood unit from a single infant is sufficient to reconstitute an adult’s hematopoietic system. Moreov er, and significantly, neit her addresses the critical question whether the particular samples pr eserved by the defendants contained sufficient stem cells for that purpose. Those two pieces of scientific evidence therefore do not overcome the problem with PharmaSt em’s evidence that the district court pointed out—that while PharmaStem may hav e demonstrated that the preserved cord blood units had significant therapeutic uses, and while cord blood in some amounts could be used to treat adults, the evidence was not sufficient to show that the particular

05-1490,-1551 15cord blood units stored by t he defendants contained sufficient numbers of stem cells to reconstitute the hematopoietic system of a human adult. D PharmaStem’s failure to establish that any of the preserved cord blood samples contained sufficient stem cells to reconstitute an adult was not merely a technical flaw in its proof. The evidence at trial showed that the great majority of cord blood transplantations between the firs t successful transplantation in 1988 and the time of trial had been in children. Indeed, it was not until 1995 that a cord blood transplant was even attempted in an adult. The evidence also showed that more than a single unit of cord blood was used for mo st cord blood transplants per formed on adults; the single unit collected at an individual ’s birth was frequently regarded as insufficient to effect hematopoietic reconstitution of an adult. In support of its infringement claim, P harmaStem points out that each of the defendants provided a small numberof cord blood units to transplant physicians for use in transplantation procedures. The eviden ce shows that the four defendants had provided a total of 33 units of cord blood to transplanters by the time of trial. For the most part, however, that evi dence did not distinguish be tween transplantations of children and transplantations of adults. To the extent that the evidence distinguished between the two, it showed that most of the supplied samples were used for transplantations of children. Moreover, with respect to the adult transplantations, PharmaStem has not pointed to any evidence that even a single transplanted cord blood unit from one of the def endants resulted in the successf ul reconstitution of the hematopoietic system of an adult. Thus, the evidence regarding the transplants

05-1490,-1551 16generally, and the defendants’ experience with transplants in particular, provides no basis from which to infer that some or a ll of the cord blood units preserved by the defendants must have contained a sufficient number of stem cells for adult reconstitution. For that reas on, the district court was corre ct to hold that the evidence was insufficient to support the jury’s verd ict of infringement of the ’681 patent. Contrary to PharmaStem’s contention, the district court’s ruling did not convert a determination as to damages into a ruling on lia bility. Because of the manner in which PharmaStem sought to prove infringement, it committed itself to a course that had “allor-nothing” consequences. The district cour t was correct to conclude that, having chosen not to try to prove that particular cord blood samples or categories of samples contained sufficient stem cells to effect hematopoietic reconstitution of an adult, PharmaStem took the risk that the court would conclude that it had failed to prove that any of the defendants’ cryopreserved samples infringed. The district court’s narrow disposition of the JMOL issue simply held PharmaStem to the consequences of the strategy it adopted at trial. E In reaching this conclusion, we reject PharmaStem’s contenti on that the district court abused its discretion when it determined, fo llowing the trial, that the infringement opinion of PharmaStem’s expert witness Dr . Hendrix should have been struck. The district court found her testimony unhelpful to the jury, and not an appropriate subject for expert evidence, because it consisted almost entirel y of her quoting from the promotional information and other material s in which the defendants described their business operations for potent ial customers and investors, and drawing inferences from

05-1490,-1551 17those materials. The district court did not abuse its discretion in concluding that the jury was fully capable of understand ing those materials without expert assistance and that Dr. Hendrix’s testimony should have been excluded. See General Electric Co. v. Joiner , 522 U.S. 136, 141 (1997) (abuse of discretion standard applies to district court’s decision to exclude expert testimony). Dr. Hendrix concluded from those material s that the defendants had in effect admitted that all of the cord blood samples that the defendants pr eserved contained a sufficient quantity of stem ce lls to reconstitute an adult. In particular, Dr. Hendrix interpreted the defendants’ stat ements about their processes for preserving cord blood samples to mean that each of them tested the samples “to determine if there is a sufficient amount of cells for reconstitution for an adult. And then after that time, they cryopreserve it for storage.” She admitted that she did not exam ine the data obtained by the defendants from their test ing of the samples; that s he did not know how many, if any, successful adult transplantations had been done with cord blood samples preserved by any of the def endants; and that she did not know whether, when the defendants tested the samples, they determined whether the samples were “sufficient for an adult or sufficient for a child or suffi cient for any purpose.” In sum, Dr. Hendrix admitted that a particular company’s decisi on to store a particular sample did not necessarily mean the sample was su fficient to reconstitute an adult. Nonetheless, she maintained that “[i]f the cord bloods are being stored, and the co mpanies promise that— I mean they state in their websites that there are sufficient cells that they make available for transplantation, pediatric, sibling, older and adults, then I believe that there is the

05-1490,-1551 18potential in all of t hose samples that are stored in fr ozen sanctuary to provide that service.” There are two problems with Dr. Hendrix’s testimony, as the district court pointed out. First, because her testimony was almost entirely based on an interpretation of the defendants’ marketing materials and materials di rected to investors, any expertise on Dr. Hendrix’s part as a cell biologist was of no apparent help to the jury. 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 adu lt was not a matter as to which Dr. Hendrix’s expertise was of any apparent use. See Daubert v. Merrell Dow Pharms., Inc. , 509 U.S. 579, 592 (1993) (admission of expert te stimony “is premised on an assumption that the expert’ s opinion will have a reliable ba sis in the knowledge and experience of his discipline”). Second, not only was her expertise not necessary or useful to interpret the defendants’ materials, but her interpretation was not a reasonable one. Nowhere did the defendant s represent that any of the preserved cord blood samples (much less all of them) contained a sufficient number of stem cells to reconstitute an adult. The representations t hat the cord blood was of potential use not only for infants and children but also for adults falls significantly short of a representation that the indivi dual cryopreserved cord bl ood samples each contained enough stem cells to reconstitute an adult. To be sure, Dr. Hendrix stat ed in conclusory terms that she relied for her opinion not only on the defendants’ materials, but al so on scientific litera ture, testimony of experts, and the depositions of representat ives of the defendants. She made clear, however, that her opinion was based principa lly on the assertions by the defendants

05-1490,-1551 19that the preserved cord blood had potential uses for adults as well as for children. Moreover, Dr. Hendrix did not explain how her reliance on any of the other sources of information supported her inference about w hether the defendants’ preserved samples contained an infringing quantity of stem cells. In short, we agree with the trial cour t that the defendants’ materials did not constitute sufficient proof of infringement of the ’681 patent and that those materials did not become proof of infringem ent when Dr. Hendrix read t hose materials back to the jury from the witness stand. T here was therefore nothing in Dr. Hendrix’s testimony that sufficed to remedy the insufficiency that the district court pointed out in PharmaStem’s other evidence of infringement of the ’681 patent. IV With respect to infringement of the ’ 553 patent, the issue presented to us is again a narrow one. There is no dispute that in the 33 instances in whic h the defendants’ cord blood samples were used in transplant proc edures, samples of cord blood containing stem cells were collected, cryopreserved, thawed, and introduced into the patient’s body. In no case, however, were all those steps performed by the same party. Instead, the defendants were typically re sponsible for collecting and cryopreserving the cord blood samples, while transpl ant physicians unrelated to t he defendants thawed the cord blood and used it fo r transplanting. In light of the fact t hat the defendants did not perfo rm all the steps of the patented method, PharmaStem bas ed its claim of infringement of the ’553 patent on the theory of contributory in fringement. The district court in structed the jury on contributory

05-1490,-1551 20infringement and gave the jury special verdict questions that directed the jury’s inquiry to the requirements of that theory. The court instructed the jury that in or der to prove contri butory infringement, PharmaStem was required to prove, inter alia , (1) that the defendant s “sold or offered to sell cryopreserved cord blood to a transpl anter” and (2) that the cryopreserved cord blood that was “sold or offered for sale by the defendant was used by a single entity, or alternatively, by a group of entities that ar e acting in concert or working together to complete the process of infringement.” The pertinent special verdict questions corresponding to those instructions required t he jury to find that “the defendants and the transplant physicians are acting in concert orworking together to complete the process of infringement” of the assert ed claims of the ’553 patent (special verdict question 4) and that the defendants “contributor ily infringed the ’553 patent by selling or offering to sell cryopreserved cord blood that was actually used by a third party in the direct infringement” of any of the asserted cl aims (special verdict question 5). PharmaStem’s theory of cont ributory infringement was based on the contributory infringement section of the Patent Act, 35 U.S.C. § 271( c), which provides: “Whoever offers to sell or sells . . . a component of a patented machine, manufacture, combination or composition, or a materi al or apparatus for use in pr acticing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such pat ent” shall be liable as a contributory infringer. The jury found in PharmaStem’s favor on each of the special verdict questions pertaining to contributory infringement and accordingly returned a verdict of liability against all of the defendants on the ’553 patent.

05-1490,-1551 21The issue on appeal is whether there was substantial evidence to support the jury’s finding, in response to special verd ict question 5, that each of the defendants “contributorily infringed the ’553 patent by selling or offering to sell cryopreserved cord blood that was actually used by a third party in . . . direct infringement” of that patent. The district court ruled that the evidence wa s sufficient to show that the defendants sold a service to families of newborn infants (colle ction, processing, and cryopreservation of the newborn’s umbilical cord blood), but not to show that they sold the cord blood units themselves, which belonged to the families throughout, and certainly not to show that the defendants sold the cord blood units to the transplanters. The district court construed the contributor y infringement statute to require a sale or an offer of sale of a product; the statute is not satisfied, the court ruled, by the provision of a service for compensation. Because liability under section 271(c) “is clearly dependent upon the accused infringer’s selling or offering to sell a component of the patented process, here cord blood units,” the court held th at the jury’s verdict on contributory infringement could not st and, and it therefore granted the defendants’ JMOL motions with respect to the ’553 patent. In challenging the district court’s ruli ng, PharmaStem first argues that the jury could properly characterize as a “sale” t he transaction in which the defendants obtained unprocessed umbilical cord blood, convert ed it into a therapeutically useful, cryopreserved cord blood product, and later prov ided it to transplant physicians at the behest of the client family. While cord bl ood is certainly a pro duct, the transaction between the defendants and their clients is plai nly not the sale of “a material or apparatus for use in practicing a patented process,” as is required by section 271(c)

05-1490,-1551 22with respect to method patents. The evidenc e at trial showed that the cord blood remained the property of the families th roughout the period in which the defendants stored it. The defendants were never owners of the blood, but instead were merely bailees; they were not free to dispose of the blood as they chose, but were contractually obligated to preserve it pending the families’ need for it at some point in the future. On those occasions when the cord blood was n eeded, the defendants pr ovided the blood to transplanters in satisfaction of their contractual obligation to ship the families’ cord blood samples to a transplanter upon direction. Neither that transaction nor any earlier transaction between the families and the def endants constituted a “sale” of the cord blood. See Sturm v. Boker , 150 U.S. 312, 329–30 (1893) (“The recognized distinction between bailment and sale is that, when the i dentical article is to be returned in the same or in some altered form, the contract is one of bailment, and the title to the property is not changed. On the other hand, when there is no obligation to return the specific article, and the receiver is at libertyto return another thing of value, he becomes a debtor to make the return, and the title to the property is changed.”). Rather, as the trial court held, the transaction between the families and the defendants constituted the provision of a service for a fee. In the alternative, PharmaSt em argues that even if the district court was correct to characterize the defendants’ activities as providing a service rather than selling a product, the court still should have upheld the jury ’s verdict of contributory infringement. In this regard, PharmaStem argues that sect ion 271(c) is not limited to the sale of a product, but extends to the sale of a service.

05-1490,-1551 23PharmaStem’s argument is contrary to both the language and the legislative history of section 271(c). T he statute provides, in perti nent part, that a contributory infringer is one who “offers to sell or sells within the United States a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process.” Although that language descr ibes in various different ways the items that may be sold for purpos es of creating liabili ty for contributory infringement, all of the descriptions refer to t he sale of a product of some sort; none of them refer to the provision of a service. Under the plain langu age of the statute, a person who provides a servic e that assists another in committing patent infringement may be subject to liability under section 271 (b) for active inducement of infringement, but not under section 271(c) fo r contributory infringement. The legislative background of section 271(c) makes clear that the district court was correct to construe that statute as conf ined to its plain terms. Prior to the 1952 Patent Act, no statute defined contributory infringement. Inst ead, as a result of court decisions, infringement was divided into two categories: “direct infringement,” which was the unauthorized making, using, or selling of the patented inventi on, and “contributory infringement,” which was “any other activity where, alt hough not technically making, using, or selling, the defendant displayed sufficient culpabil ity to be held liable as an infringer.” Hewlett-Packard Co. v. Bausch & Lomb Inc. , 909 F.2d 1464, 1469 (Fed. Cir. 1990). The 1952 Act did not ma ke a substantive change in the law of contributory infringement, but it divided the judicially created category of cont ributory infringement into two statutory subsections, section 2 71(b) (inducement of infringement) and section 271(c) (contributory infringement). The most common type of pre-1952 contributory

05-1490,-1551 24infringement cases were those in which “a seller would sell a component that was not covered by the claims of a patent but wh ich had no other use except the claimed product or process.” Id. That form of contributory infr ingement was codified in section 271(c). Id. The Senate Report on the 1952 Act confirms that section 271(c) was intended to deal with a particular subset of what had previously been considered contributory infringement, consisting of cases in which a party sells a particular component that is known to be intended for an infringing use and is useful only for infringement. The Senate Report states that se ction 271(b) recites “in broad terms that one who aids and abets an infringement is likewise an infringer” whereas secti on 271(c) deals specifically with the most common form of contributory in fringement and “is much more restricted than many proponents of contributor y infringement believe should be the case.” S. Rep. No. 89-1959, at 8, 28 (1952) (characterizi ng section 271(c) as applying to “one who sells a component part of a patent ed invention or material or apparatus for use therein”), reprinted in 1952 U.S.C.C.A.N. 2394, 2402, 2421; see also Jones v. Radio Corp. of Am. , 131 F. Supp. 83, 83 (S.D.N.Y. 1955) (in li ght of legislative history of 1952 Act, section 271(c) does not apply if the defendant did not sell a component of the patented combination). In summary, the district court correctly concluded that the defendants did not sell a product and that what they provided to cu stomers was a service for compensation. The evidence showed that the cord blood the defendants collected and preserved was never their property; instead, it remained th e property of the families who engaged their services. The defendants were never the owner s of the blood and thus never “sold” the

05-1490,-1551 25blood to the families when it was needed. The di strict court therefore properly held that the defendants could not be found liable for c ontributory infringement under section 271(c). 1 There is another reason why the jury’s ve rdict in this case cannot stand. The court instructed the jury, without objection from PharmaStem, that it was necessary for the sale in question to be made “t o a transplanter.” Yet even if a sale of a service were deemed sufficient to constitute a “sale” for purposes of section 271(c), there was no evidence that any of the defend ants made a sale of either pr oducts or services to the transplanters. To the contrary, the evid ence showed that the service the defendants provided was a service to the donor families, for which the families paid a fee, and that

1 The parties and the district court discussed the issue of joint infringement in the context of determining whet her there was infringing conduc t sufficient to serve as a predicate for a finding of contributory in fringement. PharmaStem did not argue before the district court, and does not argue here, that liabi lity could be premised on a theory of “joint” or “divided” infri ngement, even in the absence of a finding of contributory infringement under 35 U.S.C. § 271(c). Under that theory, two related parties are both deemed liable for direct infringement of a method patent when each performs some steps of the claimed method. The viability and sco pe of that theory of liability is a subject of considerable debate; it has been addressed in a number of district court cases, adverted to in a few of this cour t’s cases, and discussed at some length by commentators. See On Demand Mach. Corp. v. Ingram Indus., Inc. , 442 F.3d 1331, 1334 (Fed. Cir. 2006); Cross Med. Prods., Inc. v. Medtronic Sofamor Danek, Inc. , 424 F.3d 1293, 1311 (Fed. Cir. 2005); Kristin E. Gerdelman, Subsequent Performance of Process Steps by Different Entities: Time to Close Another Loophol e in U.S. Patent Law , 53 Emory L.J. 1987 (2004); Mark A. Lemley et al., Divided Infringement Claims , 33 AIPLA Q.J. 255 (2005); Sriranga Veeraraghavan, Joint Infringement of Patent Claims: Advice for Patentees , 23 Santa Clara Computer & High Tech L.J. 211 (2006). That issue is squarely pres ented in a case now pendi ng before this court, BMC Resources, Inc. v. Paymentech, L.P. , No. 2006-1503. In this case, PharmaStem’s theory of liability was that the defendants were liable under section 271(c) for cont ributory infringement, not under section 271(a) for direct infringement, and PharmaStem has continued to press that theory on appeal. We therefore are not presen ted with the question whether the defendants could have been hel d liable under section 271(a) under a theory of joint direct infringement through their activiti es in conjunction with the transplanters. 05-1490,-1551 26there was no sale of any sort by the defendants to the transplanters or any fee paid by the transplanters to the defendants. The defendants simply transferred the cord blood units to designated transplanters upon directi on from the families. Such a transaction does not constitute a “sale” to a transplan ter under any definition of the term “sale.” Accordingly, the district c ourt properly concluded that th e jury’s verdict was legally insufficient to establish infri ngement under the law of the case as given by the court to the jury and accepted by the parties. We therefore uphold the portion of the court’s judgment granting the defendants’ JMOL mo tions with respect to the ’553 patent. V The jury returned verdicts in favo r of PharmaStem on the defendants’ counterclaims challenging the validity of the tw o patents in suit. In its opinion on the defendants’ JMOL motions, the district court hel d that the jury’s verdicts on the validity issues were supported by substantial evidence. In thei r cross-appeal, the defendants contest the portions of the trial court’s judgm ent rejecting their challenges to the patents on grounds of anticipation, obviousness, and (in the case of the ’681 patent) indefiniteness. Each of those issues presents a close question. Because we hold that the district court should have granted the de fendants’ motion for JMOL on the issue of obviousness, it is not necessary for us to address the defend ants’ arguments with respect to the issues of i ndefiniteness and anticipation. A Obviousness is a legal conc lusion that we review de novo. The statutory standard requires us to decide whether the subject matter of the claimed invention “would have been obvious at the time the in vention was made to a person of ordinary

05-1490,-1551 27skill in the art to which [the subject matterof the invention] pertains.” 35 U.S.C. § 103(a); Eli Lilly & Co. v. Zenith Goldline Pharms., Inc. , 471 F.3d 1369, 1377 (Fed. Cir. 2006); DyStar Textilfarben GmbH & Co. Deut schland KG v. C.H. Patrick Co. , 464 F.3d 1356, 1360 (Fed. Cir. 2006). U nderpinning that legal issue are factual questions relating to the scope and content of the prior art, the differences between the prior art and the claimed invention, the level of ordinary skill in the art, and any relevant secondary considerations, such as commercia l success, long-felt need, and the failure of others. See Eli Lilly , 471 F.3d at 1377; DyStar , 464 F.3d at 1360; Medichem, S.A. v. Rolabo, S.L. , 437 F.3d 1157, 1164 (Fed. Cir. 2006). Un der Third Circuit law, which in this case dictates the standard for reviewi ng the denial of the motion for JMOL, we review the district court’s action “ de novo by reapplying the JMOL standard” applied by the district court. Seachange Int’l, Inc. v. C-COR Inc. , 413 F.3d 1361, 1368 (Fed. Cir. 2005). Thus, in reviewing the denial of th e JMOL motion on the issue of obviousness, we examine the evidence in the light most favorable to the verdict and determine whether a reasonable jury could have found all the facts necessary to support the verdict of nonobviousness, i.e., whether su bstantial evidence supports the verdict. See Caver v. City of Trenton , 420 F.3d 243, 262 (3d Cir. 2005); Connell v. Sears, Roebuck & Co. , 722 F.2d 1542, 1546 (Fed. Cir. 1983). B The defendants contend that th e two patents in suit ar e invalid for obviousness based on a combination of several prior art re ferences. In such a case, the burden falls on the patent challenger to show by clearand convincing evidenc e that a person of ordinary skill in the art would have had reason to attempt to make the composition or

05-1490,-1551 28device, or carry out the clai med process, and would have had a reasonable expectation of success in doing so. See Medichem , 437 F.3d at 1164; Noelle v. Lederman , 355 F.3d 1343, 1351–52 (Fed. Cir. 2004); Brown & Williamson Tobacco Co. v. Philip Morris, Inc. , 229 F.3d 1120, 1121 (Fed. Cir. 2000); see also KSR Int’l Co. v. Teleflex Inc. , 127 S. Ct. 1727, 1740 (2007) (a combination of elements “must do more than yield a predictable result”; combining elements that work together “in an unexpected and fruitful manner” would not have been obvious). In view of the prior art references, the fi rst part of that test is plainly satisfied here. The idea of using cry opreserved cord blood to effect hematopoietic reconstitution was not new at the time the inventors filed the applications that matured into the ’681 and ’553 patents. Two of the prior art references—art icles by Ende and Knudtzon— suggest using cord blood for that purpose. Two others—an article by Koike and a doctoral dissertation by Vidal—suggest cry opreservation and storage of the cord blood until needed. Accordingly, this is not a ca se in which there is any serious question whether there was a suggestion or motivation to devise the patented composition or
process. The more difficult question is whether t he prior art would have given rise to a reasonable expectation of succe ss in creating the process cl aimed in the ’553 patent and the composition claimed in the ’681 patent. In addressing that question, the parties focus on whether the inventor s had a reasonable expectation that cord blood could be successfully used in transplants for hematopoietic reconstitution. On the question whether the inventors had a reasonable expectation of success, the district court relied principally on test imony by PharmaStem’s expert, Dr. Irwin

05-1490,-1551 29Bernstein. In testimony cited by the c ourt, Dr. Bernstein explained that there were problems with transplant tissues that had been used previously, including bone marrow and adult blood; that those working in the transplant field di d not believe blood would be suitable as a transplant tissue; and that res earchers in his group we re surprised at the successful result of the first transplant of cord blood into a human. That evidence, according to the court, justified the jury in finding that persons of skill in the field of hematopoietic reconstitution “would not have expected cord blood to be a successful transplant tissue.” In light of that evidence and the evidence of secondary considerations such as long- felt need and commercial success, and in light of the PTO’s issuance of the patents over several of the prior art references that were in issue at trial, the court concluded that “there is no basis to overturn the jury’s verdict that the PatentsIn-Suit are not obvious.” The defendants argue that the prior art suggested using cryopreserved cord blood for hematopoietic reconstitution and showed that persons of skill in the field would have had a reasonable expectation that the use of cord blood in transplants would be successful. For that reason, according to the defendants, the asserted claims were obvious as a matter of law. Like the district court, PharmaStem relie s principally on Dr. Bernstein’s testimony to support its argument that the asserted cl aims of the ’681 and ’553 patents were not invalid for obviousness. Citing his testimony , PharmaStem argues that those skilled in the art at the time of the inventions “did not even yet know of the presence of stem cells in cord blood.” PharmaStem argues that Dr. Bernstein’s asse rtion that it was not known that cord blood contained stem cells, comb ined with his testimony regarding problems

05-1490,-1551 30with transplant tissues used prior to the ’681 and ’553 patents, shows that those in the field of hematopoietic reconstitution “woul d not have expected cord blood to be a successful transplant tissue.” The cornerstone of Dr. Bernstein’s testimony at trial was that no ne of the prior art showed that cord blood contai ns stem cells. According to Dr. Bernstein, the presence of stem cells in cord blood was not conclu sively established before the mouse studies described in the joint specification and the 1 988 human cord blood transplant referred to in the specification of the ’553 patent. The problem with Dr. Bernstein’ s testimony about the prior art references is that it cannot be reconciled with statements made by the inventors in the joint specification and with the prior art references themselves . Dr. Bernstein distinguished each of the prior art references on the ground that none of them disclosed the presence of stem cells in cord blood. Even t hough some of the references re ferred to stem cells as being present in cord blood, Dr. Bernstein took th e position that those st atements in the prior art references reflected flawed nomenclature and that the most the data underlying the prior art references showed wa s that cord blood contained progenitor cells. Progenitor cells are the cells that generate several different types of cells that make up the blood and immune system but are less primitive than hematopoietic stem cells. According to Dr. Bernstein, it was not proved that st em cells, as opposed to the less primitive progenitor cells, are present in cord bl ood until the patentees performed the mouse experiments reported in the joint specif ication. Those experiments showed that relatively small amounts of fetal blood were sufficient to effect hematopoietic reconstitution in lethally irradiated mice. Dr. Bernstein added that in light of the poor

05-1490,-1551 31results obtained with transplantat ions of adult blood “it had to take a leap of thinking that cord blood was different.” The joint specification, however, tells a different story. Th ere, the inventors acknowledged that it wa s previously known that the proper ties of cord blood are quite different from those of adult blood and that hematopoietic stem cells had been found in cord blood in much greater concentration s than in adult blood. Citing a number of references, the inventors stated the following: A human hematopoietic colony-fo rming cell with the ability to generate progenitors for secondary col onies has been ident ified in human umbilical cord blood. In addition, hematopoietic stem cells have been demonstrated in human umbilical cord bl ood, by colony fo rmation, to occur at a much higher level than that found in the adult. The presence of circulating hematopoietic progenitor ce lls in human fetal blood has also been shown. Human fetal and neonatal blood has been reported to contain megakaryocyte and burst eryt hroblast progenitors with increased numbers of erythroid progenitors in human cord blood or fetal liver relative to adult blood. ’681 patent, col. 4, ll. 15–34 (cit ations omitted); ’553 patent, col. 4, ll. 21–42 (citations omitted). That excerpt from the specificati on cannot be squared with Dr. Bernstein’s characterization of the prior ar t. Contrary to Dr. Bernstein’ s contention that the prior art did not disclose the presence of stem cells in cord blood, the inventors cited several prior art references and stated flatly t hat “hematopoietic stem cells have been demonstrated in human umbilical cord blood.” Moreover, t he inventors noted that the prior art references showed that the concentra tion of stem cells in cord blood was “at a much higher level than in the adult.” No r can those statements in the specification be dismissed as reflecting a careless use of t he term “hematopoietic stem cell,” i.e., the use of that term when the inventors meant to refer to progenitor ce lls. That is made
05-1490,-1551 32clear by context, as the sentence that immediately follows the reference to “hematopoietic stem cells” stat es that “the presence of hemat opoietic progenit or cells in human fetal blood has also been shown.” Accordingly, PharmaStem’s argument that stem cells had not been proved to exist in cord blood prior to the experiments described in the patents is contrary to the representation in the s pecification that the prior art disclosed stem cells in cord blood. Admissions in the specification regarding t he prior art are binding on the patentee for purposes of a later inquiry into obviousness. See Constant v. Advanced Micro Devices, Inc. , 848 F.2d 1560, 1570 (Fed. Cir. 1988) (“A statement in the patent that something is in the prior art is binding on the applicant and patentee for determinations of anticipation and obviousness.”); Sjolund v. Musland , 847 F.2d 1573, 1577–79 (Fed. Cir. 1988) (patent specification admitted that certain matter was prio r art, and thus “the jury was not free to disregard [that matte r]” and “must have accepted [it] as prior art, as a matter of law”); In re Fout , 675 F.2d 297, 300 (CCPA 1982); In re Nomiya , 509 F.2d 566, 571 (CCPA 1975). Nor is there any unfairness in holding the inventors to the consequences of their admissions, as their characterization of the prior art as showing the presence of stem cells in cord blood is hardly unreasonabl e. At trial, t he defendants’ expert acknowledged that, prior to the time of the first successful cord blood transplant, stem cells could not be conclusively proved to be present in cord blood. He explained, however, that in light of the discovery of su bstantial numbers of pr ogenitor cells in cord blood—roughly equivalent to the number of such cells in bone marrow—it was

05-1490,-1551 33appropriate for the authors of the prior art references to infe r the presence of stem cells in cord blood, even though positive proof of their presence wa s not available. The prior art references provide strong support for that interpretation. Mouse studies reported by Barnes in a 1964 article showed that the blood of fetal and neonatal mice contained a much greater concentration of colony-forming units (i.e., progenitor cells) than adult blood. Barnes identified th e colonies in question as containing stem cells. A 1974 article by Knudtzon similarl y noted that an “increased concentration of hemopoietic stem cells has be en found in the blood of m ouse embryos when compared to the concentration after birt h.” Knudtzon also conduct ed tests on human umbilical cord blood, determining t hat the concentration of in vitro colony-forming cells in cord blood is likewise much greater than in hum an adult blood and that the concentration is comparable to the concentration in bone marro w tissue. Knudtzon concluded that “the finding of an increased concentr ation of colony-forming ce lls in human cord blood comparable in number with human bone marrow cultures indicates that cord blood might be used as a source of hemopoietic st em cells for the restoration of bone marrow function in humans.” Two year s later, a case study by E nde reported a transfusion of 45 milliliters of human cord bl ood into a human patient, whic h resulted in a temporary hematopoietic graft that lasted for five weeks. Ende cited other research indicating that a similar or even larger amount of bone marrow would be needed to achieve a successful permanent graft. A 1978 article by Prindull not ed that animal experiments showed that fetal blood contains more than 100 times as many stem cells as are present in adult blood and suggested that because the fetal hematopoiet ic system is in a state of physiologic

05-1490,-1551 34proliferation, human cord blood could constitute a source of hematopoietic stem cells. An article by Koike, in 1982, described the results of freezing and thawing cells derived from bone marrow and cord blood. It showed that even immature progenitor cells can survive cryopreservation and concluded t hat because cord blood contains “many pluripotent and nearby progenitor cells comparable to marrow cells,” cord blood or other fetal tissue could be a useful source of hematopoietic progenitor cells for transplantation. In 1985, a doctoral dissert ation by Vidal concluded, based on various studies, that “cord blood contains sufficien t hematopoietic stem cells to effect a transplant,” that “cord blood can be used for th is purpose,” and that “cryopreserved cord blood banks might exist.” That collection of prior art shows (1) t hat bone marrow transplants can result in hematopoietic reconstitution; (2) that co rd blood, like bone marrow but unlike adult blood, contains large numbers of progenitor ce lls; and (3) that the high concentration of primitive progenitor cells in co rd blood suggests that in hum ans, as in mice, the cells responsible for hematopoiesis migr ate at about the time of birth from fetal organs to the bone marrow. Under those circumstances, it was reasonable for the inventors of the patent, like the authors of the prior art references, to in fer the presence of high concentrations of stem cells in cord blood, even though the pr ior art studies did not offer conclusive proof of their presence. C Given that the jury was legal ly required to find that that those of skill in the art would believe that cord bl ood contained hemat opoietic stem cells, the question before us is whether a reasonable jury c ould nonetheless have f ound the invention

05-1490,-1551 35nonobvious. We conclude a reasonable ju ry could not have done so. While the inventors may have proved conclusively w hat was strongly suspected before—that umbilical cord blood is capable of hematopoi etic reconstitution—and while their work may have significantly advanced the stat e of the science of hematopoietic transplantations by eliminating any doubt as to the presence of stem ce lls in cord blood, the mouse experiments and the conclusions dr awn from them were not inventive in nature. Instead, the inventors merely used r outine research methods to prove what was already believed to be the case . Scientific confirmation of what was already believed to be true may be a valuable cont ribution, but it does not gi ve rise to a patentable invention. See KSR , 127 S. Ct. at 1732 (“Granting patent protection to advances that would occur in the ordinary c ourse without real innovation retards progress . . . .”); Pfizer, Inc. v. Apotex, Inc. , 480 F.3d 1348, 1367–69 (Fed. Cir. 2007) (simply because the formation and properties of a new comp ound must be verified through testing does not mean that the compound satisf ies the test for patentability “since the expectation of success need only be reas onable, not absolute”); In re Merck & Co. , 800 F.2d 1091, 1097 (Fed. Cir. 1986) (“Obviousness does not r equire absolute predictability.”). Good science and useful contributions do not necessarily result in patentability. This court’s decision in In re O’Farrell , 853 F.2d 894, 903 (Fed. Cir. 1988), provides useful guidance for determining w hether the expectation of success from a particular line of inquiry is great enough to render a result ing invention obvious. The court noted that obviousness “does not requi re absolute predictability of success. Indeed, for many inventions t hat seem quite obvious, there is no absolute predictability of success until the invention is reduced to pr actice.” 853 F.2d at 903. On the other

05-1490,-1551 36hand, the court explained, an invention would not be invalid for obviousness if the inventor would have been motiva ted “to vary all parameters or try each of numerous possible choices until one possibly arrived at a successful result, where the prior art gave either no indication of which parameters were critical or no direction as to which of many possible choices is likely to be successful.” Id. Likewise, an invention would not be deemed obvious if all that was suggested “was to explore a new technology or general approach that seemed to be a promising field of experimentation, where the prior art gave only general guidance as to the particular form of the claimed invention or how to achieve it.” Id. ; see also Medichem, S.A. v. Rolabo, S.L. , 437 F.3d 1157, 1166– 67 (Fed. Cir. 2006). This case is not one in which “the prio r art gave either no indication of which parameters were critical or no direction as to which of m any possible choices is likely to be successful,” nor is it one in which the prior art “gave onl y general guidance as to the particular form of the inventio n or how to achieve it.” O’Farrell , 853 F.2d at 903. The prior art suggested cryopreservi ng cord blood from a single infant and transplanting that blood into a patient to achi eve hematopoietic reconstituti on. PharmaStem does not suggest, and Dr. Bernstein’s testimony did not reveal, that there was an array of possible choices as to how to achieve that obj ective or that there were problems to be solved in implementing the prior art suggesti on that were not adumbrated in the prior art. To the contrary, the joint specific ation indicates that each step of the cryopreservation and transplantation procedur e had been spelled out in the prior art. PharmaStem does not claim t hat there was anything novel about the method by which it proposed to collect, cryopreserve, and transplant the cord blood. Instead, in responding

05-1490,-1551 37to the defendants’ obviousness challenge , PharmaStem focuses entirely on the purported novelty of its proof th at stem cells are present in fetal blood, a demonstration that Dr. Bernstein testified was necessary to give transplant physicians sufficient confidence in the use of cord blood for hemat opoietic reconstitution to try the procedure on humans. As we have expl ained, however, providing proof sufficient to justify conducting in vivo procedures on humans, while useful, is not a test of patentability. The evidence at trial demonstr ated that the patentees did not invent a new procedure or a new composition; instead, they simply prov ided experimental proof that the cord blood could be used to effect hematopoietic reconsti tution of mice and, by extrapolation, could be expected to work in humans as well. D In addition to its reliance on Dr. Bern stein’s testimony about the prior art references, PharmaStem invokes various se condary considerations that it contends support the jury’s verdict on obviousness. In particular, PharmaStem points to evidence that the inventors were widely recognized as pioneers in the use of cord blood for hematopoietic reconstitution, includi ng statements by t he defendants and their representatives. Defendant ViaCord’s bu siness plan praised the inventors as “trailblazers,” and a founder of defendant Cryo-Cell wrote to the inventors’ company and stated: “[N]o one will ev er dispute that you, as the pi oneers in the medical technology . . . will be the frontrunners in the field of utilizing the blood from t he umbilical cord for restoring hematopoietic [sic] through marrow tr ansplants.” Even the defendants’ expert had previously referred to the inventors as the first to suggest the use of human umbilical cord blood as a source of trans plantable hematopoietic stem cells, although he

05-1490,-1551 38disclaimed those statements at trial on the ground that he had subsequently determined that it was incorrect to give the inventor s credit for conceiving the invention. The problem with that evidence is that there was no indicati on that the praise for the inventors’ work was based on any inventive cont ribution they made, as opposed to their proof, through laboratory work, that fetal blo od contains large numbers of stem cells. As noted, the former is a basis for pat entability; the latter is not. PharmaStem also points to Dr. Bernstein’s testimony that researchers in his group in Seattle were “surprised” at the successful human cord blood transplantation in 1988. There are two problems with that evidence. First, there was no indication that either Dr. Bernstein or mem bers of his research group were previously aware of the prior art references that la id the groundwork for the inventors’ experiments. Dr. Bernstein stated that his surprise at the su ccessful use of cord blood was based on the poor results obtained with transpl ants of adult blood; he did not state that the success of the human transplant would have been surprising to one familiar with the prior art references introduced at trial, including th ose references that featured the important differences between adult blood and cord blood as potential transplant tissues. Second, Dr. Bernstein tied the “surprise” of his research group to the success of the 1988 human cord blood transplant, not to the results reported in the patents. Although the transplant was based on work done by the inventors, it took place long after the filing of the applicat ion for the ’681 patent and shor tly before the filing of the application for the ’553 patent. As a result, t he specification of the ’681 patent does not refer to the 1988 transplant at all, and the specification of the ’553 patent does not contain any account of the resu lts of that transplant. At t he time of the application for

05-1490,-1551 39the ’553 patent, all that wa s known and disclosed about the 1988 transplant was that it had been attempted. Moreover, although it is tr ue, as PharmaStem argued, that physicians began performing human transplants only after t he inventors conducted their mouse experiments, the evidence at trial showed that physicians we re reluctant to try a new procedure such as a cord blood transplant on humans without a very strong scientific basis for concluding that it was likely to work . The prior art already indicated that cord blood was likely to be a valuab le source of hematopoietic st em cells; the mouse studies merely provided supporting evidence for that conclusion, evidence that the transplant physicians regarded as sufficient to just ify trying the procedure on a human child. E Finally, PharmaStem argues that the jury’s verdict is su pported by the decision of the Patent and Trademark Office (“PTO”) to issue the ’681 and ’553 patents, and to confirm the ’681 patent following reexamination, over some of the same references that the defendants cited at trial. When the party asserting invalidity relies on references that were considered during examination or reexamination, that party “bears the added burden of overcoming the def erence that is due to a qualified government agency presumed to have done its job.” Polaroid Corp. v. Eastman Kodak Co. , 789 F.2d 1556, 1560 (Fed. Cir. 1986); see also Al-Site Corp. v. VSI Int’l, Inc. , 174 F.3d 1308, 1323 (Fed. Cir. 1999). The examiner who issued th e reexamination certific ate for the ’681 patent summarized her analysis of the prior art by stating that none of the cited references “addresses the presence of hem atopoietic stem cells in umbilical cord or placental

05-1490,-1551 40blood, that these cells may successfully be cry opreserved, or that, as a collection from a single human at birth, these cells may compri se an amount that is sufficient to effect hematopoietic reconstitution of a human adult.” That explan ation is flawed for three reasons. First, as we have explained, the prio r art references and the admissions in the specification address the pres ence of hematopoietic stem cells in cord blood, even though the references may not conclusively prove their presence. Second, Koike established that cord blood could be cryopr eserved without substantial losses in the population of progenitor cells; the inventors contributed not hing more with respect to cryopreservation, as their mouse experimen ts were not performed with cryopreserved blood. Third, while the joint specification states that the amount of cord blood obtained at the time of birth would often be sufficient to transplant an adult, the inventors reached that conclusion simply by comparing the known properties of bone marrow against the results of routine testing of t heir own cord blood samples. The specification explains that, because of the inability to determine the number of stem cells present in a particular co mposition, researcher s and transplanters use surrogate assays from which they can infer t hat stem cells are pr esent and in roughly what numbers. One of the su rrogate assays that the joint specification describes in detail and that was the subject of testimony at trial is the assay for CFU-GM (colonyforming units for granulyte and macrophage cells), i.e., progenitor cells that produce the more specialized granulyte and macrophage cells. The inve ntors compared the results of conventional CFU-GM assays of cord blood samples with published reports of the number of CFU-GM in bone marrow samples sufficient for successful hematopoietic reconstitution. ’681 patent, col. 50, line 64, to col. 51, line 15; ’553 patent, col. 51, ll.

05-1490,-1551 4144–68. Thus, the inventors r eported that prior art studie s showed that in cases involving autologous bone marrow transplants, “rapid repopulation of hematopoiesis in patients with acute leukemia was associated with as few as 0.25 mi llion progenitor cells [CFU-GM].” ’681 patent, col. 13, ll. 49–54. The inventor s’ assays of cord blood samples, confirmed by prior art studies, s howed that 50 milliliters of cord blood would contain up to more t han 0.5 million CFU-GM. Id. , col. 13, ll. 55–63. Thus, the inventors’ conclusion that a single unit of cord blood can result in hemat opoietic reconstitution of an adult was simply the result of a compar ison between the well-known properties of bone marrow and their own conventional assays of a number of samples of cord blood. In sum, while the issue of obviousness in this case presents us with a difficult question in light of the standar ds of proof and review that are applied to an appellate challenge to a jury verdict of nonobviousness, we are persuaded that there was clear and convincing evidence that the asserted claims of the ’681 and ’553 patents would have been obvious and that it was unreasonable for the ju ry to reach the opposite conclusion. We therefore reverse the denial of JMOL on that is sue and remand to the district court for entry of j udgment in the defendants’ favor. VI This was a closely contested case bot h at trial and on appeal, and the JMOL motions presented the district court with an unusually difficult set of challenges. We are satisfied that the district court correctly reso lved each of the issues that the parties have raised and we have addressed on appeal, with the sole exc eption of the cross-appeal on the issue of obviousness. We therefore affirm the judgment of the district court with respect to the appeal but reverse the judgm ent on the cross-appeal with respect to the

05-1490,-1551 4205-1490,-1551 43 issue of obviousness. As to t hat issue, we reverse and rema nd to the district court for entry of judgment in the defendants’ favor. Each party shall bear its own co sts for this appeal and cross-appeal. AFFIRMED IN PART, REVERSED IN PART, and REMANDED

.

## United States Court of Appeals for the Federal Circuit

05-1490, -1551

PHARMASTEM THERAPEUTICS, INC., Plaintiff-Appellant, v. VIACELL, INC., Defendant-Cross Appellant, and CRYO-CELL INTERNATIONAL, INC., CORCELL, INC., Defendants-Cross Appellants, and CBR SYSTEMS, INC. (formerly known as Cord Blood Registry, Inc.), Defendant-Cross Appellant,

v. BIRTHCELLS TECHNOLOGY, INC. and BIO-CELL, INC., Defendants.

NEWMAN, Circuit Judge , dissenting.

I respectfully dissent. After a three week trial the jury sustained the validity of these patents, the district court in a thorough opinion upheld the verdic ts of validity, and validity was confirmed in three reex aminations by the Patent and Trademark Office. Today my colleagues on this panel hold that the inventions in the '681 patent and its continuation-inpart the '553 patent are obvious to them, and not infringed.05-1490, -1551 2 The undisputed evidence at tr ial was that these long-sought life-saving inventions were achieved amid general scientific skepticism, despite the extensive research that was being conducted by many scientists in this field, as set forth in the patents in suit. The discoveries of these inventors were met wit h universal acclaim and widespread utilization, including the founding of many commercial enterpr ises, all of which are reported to have licensed the patents except for these defendants. Unimpressed by these considerations, my colleagues on this panel now reconstruct t hese inventions by selection and inference, with perfect hindsight of the discoveries. The evidence at trial was t hat this achievement eluded persons working in the field, despite speculation concerning its potential and recognition of its value if it could actually be achieved; despite the powerful interest in such a life-saving advance. Instead, my colleagues simply reweigh selectively extracted evidence, ignore the actual peer response and acclaim at the time these inventions were made, and decide that this long-sought advance would have been obvious to this court. Inventors Edward A. Boyse, Hal E. Broxmeyer, and Gordon W. Douglas made possible a new industry with PharmaStem's pr edecessor Biocyte, Inc., founded by the inventors. The record contai ns many publications reporting t he work of these inventors, and the evidence was undisputed that they were the first to achieve the transplantation of umbilical cord stem cells for reconstituti on of the human hematopoietic system. Although my colleagues manage to reconstruct this extensive scientific effort as si mple routine that is obvious to judges, the processes of discove ry in complex science make it particularly necessary to view the achievement in the contex t of the knowledge at the time the invention was made, and to judge it as it was judged by scientific peers at that time, with the assistance of the hard fact of commercial success in a field in which the need was great05-1490, -1551 3 and success had long been eluded. See Graham v. John Deere Co. , 383 U.S. 1, 17-18 (1966) ("Such secondary considerations as commercial success, long felt but unsolved needs, failure of others, etc., might be utilized to give light to the circumstances surrounding the origin of the subject matter sought to be patented.") (quoted in KSR International Co. v. Teleflex Inc. , 127 S. Ct. 1727, 1734 (2007)). The panel majority scours the prior art fo r clues that could fit the eventual achievement, and then rules that the achievement was obvious, no matter that it eluded the others whose work is now compiled by this cour t so as to invalidate these patents. The "prior art" selected by my co lleagues spans many years of scientific interest and effort, yet the ultimate discovery of the presence of st em cells along with or instead of progenitor cells, the successful preservation of these cells, the extensive experimentation with transplantation into animal models and ulti mately into humans, and the successful hematopoietic reconstitution of blood that has been destroyed by disease or radiation, was not achieved in the prior art. The judicial determination of "obviousness" should be made in the context of the state of k nowledge at the time these inventions were made. Nor should the courts lose sight of the powerful policy that underlies the patent law, whereby recognition and protection of technological and scient ific advance is legally established in order to serve the public interest in havi ng the benefit of such advance through economic enterprise. My colleagues ignore not only t he scientific experts who testified at the trial, but also the PTO examiners who conducted t he three reexaminations. In Dickinson v. Zurko , 527 U.S. 150 (1999) this court was reminded of its obligation to gi ve appropriate deference to agency expertise, including that of the PTO. The references that are analyzed by the panel05-1490, -1551 4 majority, in its sua sponte finding of obviousness, were before the PTO for examination and multiple reexaminations. My colleagues do not explain where the PTO went wrong; instead, they rearrange the past, criticize the acclaim heaped on thes e inventors, and propose that if the people in this field knew what this court knows, they would not have been so impressed. To the contrary: the acclaim sounded by even these defendants is a powerful testament to how this invention was viewed. From my colleagues' invalidation of these patents on the ground of obviousness, reversing t he jury verdict, I res pectfully dissent. I must also dissent from the rejection of the jury verdict of infringement, for the district court applied a new and incorrect evidentiary standar d that does not warrant ratification. THE VALIDITY ISSUES The jury's special verdicts upholding patent validity were sustained by the district court on post-trial motions. The defendants rais ed the ever-present multiple grounds of attack that appear in patent cases, and cross- appeal the jury verdicts on the issues of anticipation, indefiniteness, and obviousness, but do not appeal t he verdicts for the plaintiff on the issues of inventorship, inequitable c onduct, and antitrust violation. My colleagues reverse the jury verdict of unobviousness, and decline to reach the verdicts upholding validity on the issues of antici pation and indefiniteness. The dist rict court sustained each of these verdicts. These issues were also ra ised for multiple reexaminations, and the PTO upheld patent validity on these grounds. The teaching of Cardinal Chemical Co. v. Morton International, Inc. , 508 U.S. 83, 97 (1993) ("[T]he Federal Circuit is not a court of last resort. If that court had jurisdiction while the case was pending before it, the case rema ins alive (barring other changes) when it05-1490, -1551 5 comes to us. The Federal Circu it's determination that the pa tents were not infringed is subject to review in this Court, and if we re verse that determination, we are not prevented from considering the question of validity merely because a lower court thought it superfluous."), strongly encourages our appellate review of the major issues that were decided and appealed, if such issues would be relevant to patent validity upon further proceedings in the Court. Review of the issues of validity that were litigated sheds further light on the nature of t he invention; leaving these issues in silent limbo, despite the elaborate trial and appellate briefing and argument of these issues, distorts the context of the jury verdicts as well as t he reexaminations. In this cont ext I discuss the several issues of validity that are appealed, and explain why their judgment also warrants affirmance.

Anticipation The jury found that the patents had not been proven invalid on the ground of anticipation. "Anticipation" means lack of novelty; that is, that the invention was already known. It is a factual question whose finding, when tried to a jury, is reviewed for support by substantial evidence on the record as a whole. Acromed Corp. v. Sofamor Danek Group, Inc. , 253 F.3d 1371, 1378-79 (Fed. Cir. 2001); Advanced Display Sys. v. Kent State Univ. , 212 F.3d 1272, 1281 (Fed. Cir. 2000). A patent claim is deemed antic ipated when every element and limitation of the claim is found in a single prior art reference, either explicitly or inherently. Dayco Products, Inc. v. Total Containment, Inc. , 329 F.3d 1358, 1368 (Fed. Cir. 2003). In order to anticipate, the reference must place a person who has ordinar y skill in the field of the invention, in possession of the invention. See Akzo N.V. v. United States Int'l Trade Comm'n , 808 F.2d05-1490, -1551 6 1471, 1479 (Fed. Cir. 1986) ("antic ipation requires that each and every element of the claimed invention be disclosed in a prior art refe rence. In addition, the prior art reference must be enabling, thus placing the allegedl y disclosed matter in the possession of the public.") The reference on which the defendants rely fo r anticipation is an article by Kenichi Koike entitled "Cryopreservati on of Pluripotent and Committ ed Hemopoietic Progenitor Cells from Human Bone Marrow and Cord Blood," 25 Acta Paediatrica Japonica 275 (1983). Koike describes the pres ervation, by freezing in liqui d nitrogen, of pluripotent and progenitor cells of bone marrow and umbilical cord blood, and shows that these cells retain much of their progenitor activi ty upon thawing. Koike does not mention stem cells, and states that "hematopoietic progenitor cells, es pecially pluripotent pr ogenitor cells are the most important to r epopulate the bone marrow." Id. at 276. Koike concludes with the suggestion that fetal cells or organs may be a source of progenitor cells for marrow transplantation, in the following statement: [T]he results that cord blood cells contain many pluripotent and nearby progenitor cells comparable to marrow cells, indicate that fetal hematopoietic cells or organs may be useful as one of the sources of hematopoietic progenitor cells for marrow transplantation. Koike at 281. The defendants argued at trial, and repeat on this appeal, that even if stem cells were not known or shown by Ko ike to be present in umbilical cord blood, the claims are "inherently" anticipated by Koike because stem cells were present even if unknown. PharmaStem responded that inherent anticipation is avoided by lack of recognition, by lack of enablement, and by the limitations in the cl aims, including for the '681 claims the05-1490, -1551 7 limitations to therapeutic com positions and the requirements t hat the cryopreserved cord blood units contain sufficient stem cells to reconstitute an adult. These aspects were extensively probed at the tria l, and witnesses explained the various claim limitations and the prior art. The district court, on post-trial motions, held t hat the jury verdict that the claims are not anticipated was supported by substantial evidence. The court referred to testimony of the expert witnesses for both sides, who agreed that Koike did not show hematopoietic reconstitution using cord blood, and that Koike did not enable transplantation. The defendant's expert witness testifi ed (on cross-examination) t hat Koike's small samples could not contain a therapeutic amount of stem cells, and that the Koike article does not reflect knowledge of stem cells or indicate thei r presence to persons of skill in the field or show how to achieve transplantation of cord blood cells. As explained in In re Donohue , 766 F.2d 531, 533 (Fed. Cir. 1985), possession of the invention adequate to show anticipation requires that a person of ordinary sk ill in the field of the invention would discern every element of the inventi on in the allegedly anticipating reference, and know how to carry it out based on the state of knowl edge at the time of the reference. See , e.g. , Elan Pharms., Inc. v. Mayo Found. , 346 F.3d 1051, 1054 (Fed. Cir. 2003) (a claim "cannot be anticipated by a prior art reference if the all egedly anticipatory disclosur es cited as prior art are not enabled"). There was s ubstantial evidence that Koike did not establish that there were stem cells in umbilical cord blood norteach a therapeutic composition for use in hematopoietic reconstitution of a human adult. The '681 patent describes the prior art in detail, including the following with respect to stem cells in human umbilical cord blood:05-1490, -1551 8 A human hematopoietic colony-forming cell with the ability to generate progenitors for secondary colonies has been identified in human umbilical cord blood (Nakahata, T. and Ogawa, M., 1982, J. Clin. Invest . 70:1324-1328). In addition, hematopoietic stem cells have been demonstr ated in human umbilical cord blood, by colony formation, to occur at a much higher level than that found in the adult (Prindull, G., et al., 1978, Acta Paediatr. Scand . 67:413-416; Knudtzon, S., 1974, Blood 43(3):357-361). '681 patent, col. 4, lines 15-24. The '681 patent explains that the differences between stem and progenitor cells are operational and depend on f unctional rather than on morphological criteria. Col. 3, lines 4-39. In functional assays, stem cells can be identified by spleen colony forming units (CFU-S), whereas mult ipotent progenitor cells can be identified through colony-forming unit-granulocyte, erythrocyte, monocyte/macrophage, megakaryocyte (CFU-GEMM) relatively di fferentiated progenitor cells through colony-forming unit-granulocyte, macrophage (CFU-GM) and burst-forming unit-erythroid (BFU-E). Id. at col. 26, lines 1-16. Koike, in det ermining the viability of the cryopreserved fetal bone marrow and cord blood, employed CFU-GM and BFU-E assays to measure progenitor cells, not stem cells. The patent examiner concluded, and witnesse s at trial testified, that the Koike reference is directed to progenitor cells, not st em cells. The reexamination record was in evidence, wherein t he examiner stated: The remaining references that recited umbilical cord blood, specifically the Koike and Vidal references, recited the cryopreservation of a Ficoll-Hypaque fraction of umbilical cord blood and did not provide any evidence that viable human neonatal or fetal hematopoietic stem cells were present in the thawed samples. Notice of Intent to Iss ue Reexamination Certificate at 4 (Jan. 11, 2000). The examiner observed that Koike did not m ention stem cells and did not s how or enable transplantation to an adult, and that although Koike postulat ed that cord blood may be a source of05-1490, -1551 9 hematopoietic progenitor cells, Koike did not show how or if such use could be achieved. The examiner's reasons for allowance included the following: . . . Since hematopoietic stem cells engage in both replication and differentiation, the presenc e of progenitors (differentiated stem cells) is not predictive of the presence of stem cells. All of the prior art references which taught the cryopreservation of a Fico li-Hypaque fraction of umbilical cord blood assayed for the presence of progeni tor cells and merely theorized on the presence of stem cells. None of the prior art references demonstrated the presence of stem cells in the umbilical cord blood. Id. When the reference relied on at trial was before the patent exami ner, a reasonable jury may give weight to the examiner's view of the reference when deciding whether invalidity has been proved by clear and convincing evidence. See Hewlett-Packard Co. v. Bausch & Lomb Inc. , 909 F.2d 1464, 1467 (Fed. Cir. 1990) (referring to the particularly heavy burden in establishing invalidity on the same pr ior art that was examined in the PTO). The defendants argue that it is irrelevant whether Koike described or recognized the presence of stem cells in cord blood, because they were inherently t here. However, as discussed in Turbo Care Div. Of Demag Delaval Turbom achinery Corp. v. General Electric Co. , 264 F.3d 1111, 1119 (Fed. Cir. 2001), "[i]n orderfor a disclosure to be inherent,'the missing descriptive matter must necessarily be present in the [original] applicant's specification such that one skilled in the art could recognize such a disclosure," (quoting Tronzo v. Biomet, Inc. , 156 F.3d 1154, 1159 (Fed. Cir. 1998)). As the district court pointed out and as the expert witnesses testified, Koik e does not show the cl aim limitations to therapeutic compositions or t hat the cryopreserved blood uni ts must be from a single human or that stem cells mu st be present in an amount sufficient for hematopoietic reconstitution of a human adult, or suggest how to conduct a successful transplantation. Witnesses testified that persons in this field of science did not have the knowledge to05-1490, -1551 10 routinely fill these omissions, and reinforce the examiner's statement t hat "the presence of progenitors (differentiated stem cells) is not predictive of the presenc e of stem cells." See Reexamination Notice of Intent , supra ; see also Elan Pharmaceuticals , 346 F.3d at 1057 (discussing the need for evidence on the question of whether the refe rence placed a person of ordinary skill in possession of the invention as claimed); Rosco, Inc. v. Mirror Lite Co. , 304 F.3d 1373, 1380 (Fed. Cir. 2002) ("Under the doctri ne of inherency, if an element is not expressly disclosed in a prior art reference, t he reference will still be deemed to anticipate a subsequent claim if the missing el ement 'is necessarily present in the thing described in the reference, and that it would be so recognized by persons of ordinary skill.'") Particularly when the science or technology is new or comple x, a bare suggestion or hope that requires significant experimentation fo r implementation or verification is not an invalidating "anticipation" of that which is ultimately achieved. These aspects were explored at the trial, with witnesses for both sides agreeing that it was not known, at the time of the Koike reference, how to use cord blood for marrow transplantation and human reconstitution. The district court concluded that a reasonable jury could have found that no single refer ence described all of the '681 patent claim limitations, explicitly or inher ently. The panel should review th is issue in the interest of finality, and rule that the verdic t that anticipation of the '681 claimed invention had not been established was supported by substantial evidence, and wa s properly sustained by the district court. The '553 claims are directed to method st eps, including the step of introducing the stem cells into a human host. The district court summarized the evidence as follows:05-1490, -1551 11 It is undisputed that Koike did not intr oduce cord blood into a human, which is a necessary limitation of the '553 Pat ent. The defendants claim that Koike's suggestion that introducing the stem ce lls into a human host should be done is a sufficiently enabling disclosure to warrant a finding of ant icipation. Even so, the record contains substantial evi dence from which a jury could find that a person of ordinary skill in the art would not have been so enabled. PharmaStem , 2004 WL 2898061 at *4. The defendants argue that Koike is as enabling as the patents in suit -- an argument that could well have been rejected by the jury , for the '681 patent describes extensive animal transplantation experiments and shows surr ogate assays of overone hundred cord blood units, and the '553 patent in cludes details of the transpl antation of cryopreserved fetal cord stem cells to recons titute the blood of a five-year-old child who was suffering from Fanconi's Anemia; in contrast with the abs ence of any such information in the Koike reference. The district court held that there was substantia l evidence whereby a reasonable jury could have found that the Koik e reference did not anticipate the '553 claims. I agree. The panel should review and re solve this issue, whic h was fully appealed, in the interest of finality.

Indefiniteness A similar obligation applies to the cr oss-appeal of validity on the ground of indefiniteness. The matter was fully pres ented on the appeal to this court, and warrants resolution. The defendants challenged both patents under 35 U.S.C. ' 112, arguing that the claims are indefinite because, at the time the patent applications were filed, stem cells in umbilical cord and placental blood could not be identified and the stem cell content could not be measured. The defendants' position is that measurem ent of stem cell content05-1490, -1551 12 required actually transplanting the blood into a host and observing its effect, and that since the '681 composition claims require stem cells "in an amount sufficient to effect hematopoietic reconstitution of a human adult," the defendants could not k now if they were infringing the claims. PharmaStem's position is that surrogate animal te sts, as shown in its patents, adequately measure stem cell content. PharmaStem points out that the defendants all test the cord blood before placi ng it in storage and when releasing it for transplant. The jury found that the claims were not invalid on this ground, answering Question No. 10: Question No. 10 Have the Defendants proven by cl ear and convincing evidence that the '681 patent is indefinite in that on November 12, 1987, a person of ordinary skill in the art would not have been able to determine from the patent what the claimed invention covers? YES NO X Witnesses explained at the trial that the '681 specification describes the conduct of surrogate assays and their use to test for st em cells, and correlates the surrogate assays with therapeutic stem cell effect. Reviewing the evidence, the district court referred to the expert testimony of Dr. Malcolm Moore, a ce ll biologist, that the patents provide "ample information to determine the amount of co rd blood needed for transplant in adults and children, and that the scientific community has in fact perfo rmed numerous transplants into adults. Moore Tr. at 340-348." PharmaStem , 2004 WL 2898061 at *5. Section 112 requires that the claims point out "the subject matter which the applicant regards as his invention," impl ementing the purpose of claims to identify what has been invented and found patentable, so that "one skilled in the ar t would understand the bounds of the claim when read in light of the specification." Miles Laboratories, Inc. v. Shandon,05-1490, -1551 13 Inc. , 997 F.2d 870, 875 (Fed. Cir. 1993) ("If the clai ms read in light of the specification reasonably apprise those skilled in the ar t of the scope of the invention, ' 112 demands no more.") The courts have recognized, particularly in fields of new and evolving knowledge, that the claims can be no mo re precise than the knowledge in the field permits. See Hybritech Inc. v. Monoclonal Antibodies, Inc. , 802 F.2d 1367, 1385 (Fed. Ci r. 1986) ("'if the claims, read in light of the specification, reasonably apprise those skill ed in the art both of the utilization and scope of the in vention, and if the language is as precise as the subject matter permits, the courts can demand no more'") (quoting Shatterproof Glass Corp. v. Libbey-Owens Ford Co

. , 758 F.2d 613, 624 (F ed. Cir. 1985)). See also , e.g. , Marley Mouldings, Ltd. v. Mikron Indus. , 417 F.3d 1356, 1361 (Fed. Cir. 2005) (when a claim "is not insolubly ambiguous, it is not invalid for indefiniteness"); Exxon Research & Eng'g Co. v. United States , 265 F.3d 1371, 1375 (Fed. Cir . 2001) ("if the meaning of the claim is discernible, even though the task may be formi dable and the conclusion may be one over which reasonable persons will disagree, we have held the claim sufficiently clear to avoid invalidity on indefiniteness grounds"). The defendant s argue that even if this criterion is met, it is inadequate to satisfy ' 112 in this case because the defendants had no way of being certain whether any unit of cord blood infringed the claims. The defendants argue that even if the science later evolved so that stem cell content could be directly measured, such information did not exist when the '681 application was filed. To patent an invention when t he science or technology to which it is directed is incompletely developed or understood, requires t hat it be described and claimed in terms adequate to communicate, to persons experienced in the field of the invention, what has05-1490, -1551 14 been discovered. The '681 patent states that "any of numer ous assays for hematopoietic stem or progenitor cells may be used." Col. 25, lines 49-50. For example: [A]n item cell assay for CFU-S (colony forming unit-spleen) can be done. In this assay, cells considered to be mult ipotential stem cells with self-renewal capacity can be measured by counting t he number of colonies (nodules) on the spleen(s) of lethally-irradiated mice that have been inoculated with a composition containing the cells. Col. 26, lines 1-7. The CF U-S assay is done essentially the same way as progenitor cell assays such as BFU-E/CFU-GEMM and CFU-GM assays. Col. 48, lines 42-43. The specification states: A survey of published reports indicates that the number of CFU-GM infused for autologous bone marrow reconstituti on in human patients, can be relied on as an indicator of the potential for su ccessful hematopoietic reconstitution (Spitzer, G., et al., 1980, Blood 55(2): 317-323; D ouay et al., 1986, Exp. Hematol. 14:358-365). By standardizing pub lished data by patient weight, and assuming a patient weight of 150 pounds (67.5 kilograms) , the calculated number of CFU-GM needed for successful hematopoietic reconstitution using autologous bone marrow cells ranges from 2-425x10 4 , with faster recovery noted using greater than 10x10 4 CFU-GM. Col. 50, line 64 to col. 51, line 8. The exper t testimony at trial ex plained this and other descriptive text, whereby a reasonable jury could have concluded that the assays described in the patent serve to ascertain whether suffici ent amounts of stem cells are present in the preserved cord blood to reconstitute the host. It was not disputed that the information in the specification is as definite as the state of scientific knowledge at the time of filing. It has been recognize d that the "existence of an inescapable area of uncertainty is not sufficient justification for deny ing to the patentee the fruits of his invention." Ga. Pac. Corp. v. U.S. Plywood Corp. , 258 F.2d 124, 136 (2d Cir. 1958) ("the policy of the patent statute contemplates granting protection to valid inventions, and this policy would be defeated if protection were to be accorded only to those patents05-1490, -1551 15 which were capable of precise definition. The judicial function requires a balancing of these competing considerations in the individual case." ) The district court fulfilled this judicial function, stating, in denying the defendants' motion for JMOL, t hat: "Given that there is no determinate or determinable minimum amount of cord blood for therapeutic usefulness in humans, the record supports that the '681 cl aim language is as precise as the subject matter permits." PharmaStem , 2004 WL 2898061 at *5 (citing Hybritech , supra ). As the district court ruled, there wa s substantial evidence whereby the jury could have found that the claims of the '681 and ' 553 patents would be understood by per sons in the field of the invention. The verdict that the claims are not invalid for indefiniteness should be sustained, and should be reviewed, not left dangling on appeal.

Obviousness The ultimate solution of a previously intractable problem can indeed appear to become apparent in hindsight after the final successful step is taken. Yet that final step in this case was not taken by those who came before, and was clearly not "obvious" to contemporaries, who acclaimed the achi evement. Even the defendant s' expert witness acknowledged that before the workof these inventor s "stem cells could not be conclusively proved to be present in cord blood." Maj. op. at 42. Nonetheless this court rejects the testimony and admissions of the defendants, and us es present knowledge of the inventors' success to find that it was obvious all along. When trial is to a jury, the court instruct s the jury as to the applicable law, and the jury applies the law to the facts as it finds them. Appellate review is on the standard of determining whether there was substantial evidence to sup port the jury's express or05-1490, -1551 16 presumed factual findings, and whether the jury applied the correct law to those findings. See C.R. Bard, Inc. v. M3 Systems, Inc. , 157 F.3d 1340, 1351-52 (Fed. Cir. 1998) ("We review a jury verdict of obviousness to det ermine whether substantial evidence supports the factual findings predicate to the legal conclusion of obviousness and whether such findings can support the verdict, with appropriate consideration of the presumption of validity and the requirement that obviousness be proved by clearand convincing evidence; factual inferences are drawn and credibility det erminations are accepted in favor of the verdict winner.") The question is whether the ju ry's verdict is sustainable on the evidence presented, not whether we c ould have or would have gone the other way on the evidence presented. The jury answered "NO" to the questi on whether the '681 and '553 claimed inventions "would have been obvious to a pers on of ordinary skill in the field of the invention." Responding to the defendants' chall enge to the verdict, PharmaStem points to the evidence of the extensive research in this fi eld of science -- much of which is set forth in the patent specifications -- and to the specific claim limitat ions. The broadest composition claim (the '681 patent) is as follows: 1. A cryopreserved therapeut ic composition comprising: viable human neonatal or fetal hematopoi etic stem cells derived from the umbilical cord blood or placental blood of a single human collected at the birth of said human, in which said cells are present in an amount sufficient to effect hematopoietic reconstitution of a human adult; and an amount of cryopreservative su fficient for cryopreservation of said cells.05-1490, -1551 17 This claim was the subject of two reexaminat ions, one preceding this litigation, the second completed during the past year. For the first reexamination, the ex aminer's reasons for allowance included the following: The claims as amended now avoid the prior art for the following reasons. First, it was noted that the only piece of prior art which taught a composition which could have combined an amount of viable human neonatal or fetal hematopoietic stem cells sufficient to effe ct hematopoietic re constitution of a human adult was the reference of Ende. The Ende reference, published in 1972, recited the treatment of an individual undergoing treatment for leukemia who received a series of co rd blood infusions from multiple donors and showed a transient change in red blood cell phenotype. Even though the authors of the Ende article describe the procedure as "transpl antation," it is clear that such treatment did not resu lt in hematopoietic reconstitution. Further, since no HLA typing was perfo rmed, and multiple infusions were performed, one of ordinary skill in the ar t would have taken the disclosure of Ende to be equivalent to blood tr ansfusions and would have had no expectation that the hematopoietic rec onstitution of a human adult could have been performed. As a transfusion com position, one of or dinary skill would have had no motivation to cryopreserve t he cord blood, since whole blood for transfusion is not froz en, but stored st 4 " C and Ende further points out that any hospital with a maternity ward woul d provide sufficient aliquots of fresh cord blood. Notice of Intent to Iss ue Reexamination Certificate at 3-4 (Jan. 11, 2000). The examiner discussed the state of the science, the content of the prior art, the known sensitivity of fetal liver and thymus stem cells to freezing, and the unpredictability of this field, and concluded: This disclosure combined with the ack nowledged sensitivity of hematopoietic stem cells from fetal liver and thymus to cryopreservation and the fact that DMSO is toxic to fetal liver progenitor cells at concentrations nontoxic to bone marrow cells provides an unpredictability in the art of cryopreservation of stem cells from different sources that renders the s uggestions of the prior art references as to the therapeutic us es of umbilical cord blood (whether cryopreserved or not) as a course of hematopoietic stem ce lls a situation of "obvious to try," which fails to provi de a prima facie finding of obviousness . .

. . Id. at 4.05-1490, -1551 18 For the second reexaminat ion, the examiner discussed additional arguments involving the same references on which this court now relies to invalidate the patent: At the time of the instant invention the use of cord blood for hematopoietic reconstitution had never been a ccomplished. Additionally, in vitro expansion of cord-blood stem cells prior to patient implantation had not been successfully employed, and indeed is not in use as of today as indicated by the Dr. Zander declaration. Accordingly, determination of a pharmaceutically efficacious and safe dosage that re sults in human adult hematopoietic reconstitution would necessarily require undue experimentation, thus precluding enablement. In this respect, it was patentee's in vitro progenitor assays taken in conjunction with in vitro mice testing showing hematopoietic reconstitution with a relatively small amount of neonatal bl ood, that provided the necessary teaching to enable the obtaining of effect ive hematopoietic reconstituting dosages in children (extr apolatable to adults) by utilizing cord blood volumes (50-100 ml) derived from a single adult. Thus, neither the Koike reference taken alone anticipates , nor a combination of references render obvious, the instant ly claimed invention. Reexamination -- Reasons fo r Patentability/Confirmation (Dec. 29, 2006). No error has been shown in this analysis, which warrants defer ence in accordance with the strictures of the Administrative Procedure Act. See Dickinson v. Zurko , 527 U.S. at 164 ("A reviewing court reviews an agency's reasoning to determine w hether it is "arbitrary" or "capricious," or, if bound up with a record-based factual conclu sion, to determine whether it is supported by "substantial evidence."), citing SEC v. Chenery Corp. , 318 U.S. 80, 89-93 (1943). The record contains testimony that scientis ts working in the field of hematopoietic reconstitution did not expect cord blood to be a successful transplant tissue or a useful source of hematopoietic stem cells. There was testimony that earlier efforts at using cord blood had encountered problems, and that there was skeptic ism and surprise at the inventors' achievement. The reaction of scientif ic peers after the achiev ement is relevant to whether the invention would indeed have been obvious at the time it was made. See Cardiac Pacemakers, Inc. v. St. Jude Medical, Inc. , 381 F.3d 1371, 1376 (Fed. Cir. 2004)05-1490, -1551 19 (evidence of skepticism that the multi-mode tr eatment of the invent ion could be achieved supported the jury verdict of nonobviousness); Metabolite Laboratories, Inc. v. Laboratory Corp. of America Holdings , 370 F.3d 1354, 1368 (Fed. Cir. 2004) (evidence that skilled artisans were initially skeptical about the invention supported the jury's verdict of nonobviousness). The significance of the inventors' work wa s in evidence, including their founding of Biocyte and spawning of the industry of collecti ng and cryofreezing umbilical cord blood. In evidence was defendant ViaCord's "business plan" which identified these inventors as "the trailblazers": The founding scientists are core resear chers in this field and have published many related articles. Biocyte's ti me, energies, and financial resources have been spent doing much education and developm ent in this field. They are the trailblazers. A communication to these inventors from the founder of defendant Cryo-Cell stated: [N]o one will ever dispute that you, as the pioneers in the medical technology . . . will be the frontrunners in the field of utilizing of the blood from the umbilical cord for restoring hematopoietic through marrow transplants. Such evidence assists in replacing judicial hi ndsight with objective det ermination as of the time of the invention. See Vandenberg v. Dairy Equip. Co. , 740 F.2d 1560, 1567 (Fed. Cir. 1984) (in "determining the question of obvious ness, inquiry should always be made into whatever objective evidence of nonobviousness there may be"). In Graham v. John Deere Co , 383 U.S. 1, 17-18, 36 (1966) the Court couns eled that "Such secondary considerations as commercial success, long felt but unsolved needs , failure of others, etc., "serve to guard against slipping into use of hindsight and to resi st the temptation to read into the prior art the teachings of the invent ion in issue," cited in KSR v. Teleflex , 127 S. Ct. at 1734.05-1490, -1551 20 PharmaStem's expert, Dr. Bern stein, testified that no pr ior art showed that cord blood contains stem cells, and that persons of skill in this field would not have had a reasonable expectation of success in carrying out the claimed process. Dr. Bernstein also discussed the early uncertainties and mi staken understanding conc erning stem and progenitor cells. His testimony is now disputed by this court, denying it the weight that a reasonable jury could have given it. Dr. Bernstei n had explained at the tria l that at the time of filing the patent application the differences between stem cells and progenitor cells could not be measured and were not well understood. The jury could have accepted this testimony, and indeed the defendants di d not refute it; but the panel majority now holds that the inventors' apparently inconsistent use of stem and progenitor terminology constitutes an "admission[] in the specification regarding t he prior art" which is then "binding on the patentee for purposes of a later inquiry into obvi ousness." Maj. op. at 42. This is not a simple issue, but the jury c ould reasonably have concluded, as did the district court, that the prior art did not show that there were st em cells in cord blood, and that one of ordinary skill in this field would not have had a reas onable expectation of successful use of cord blood to reconstitute a human adult. A reasonable jury could have found that these inventors were not simply conducting a routine optimization, as my colleagues now rule on what they de scribe as the "more difficult question [of] whether the prior art woul d have given rise to a reasonable expectation of success in creating the [claim ed inventions]." My colleagues state that they are "plainly satisfied" that "a person of ordinary skill in the art would have had reason to attempt to make [the claimed inventions]." I agree that t here was reason to seek a cure for destroyed blood cells, and that scientists have been seeking such a cure for a long time, including05-1490, -1551 21 those scientists whose work is the cited prior art. There has been much hopeful speculation about the potential of stem cells, although this re medy eluded those who came before. It is often far easier to recognize the problem than to find and demonstrate the solution. The patent law recognizes that adv ances of great power may be based as much on persistent and skilled investigation as on the flash of creative genius, for both serve to transcend that which was previously achieved. See 35 U.S.C. ' 103 ("Patentability shall not be negatived by the manner in which the invent ion was made.") My colleagues go too far in limiting the patent system to the serendipitous and the unexpected. Maj. op. at 35 ("while their work may have significantly advanced the state of the science of hematopoietic transplantations by eliminating any doubt as to the presence of stem cells in cord blood," they "merely used routine research methods to prove what was already believed to be the case"). Further, these scientis ts not only established the pres ence of stem cells, but also enabled their development for preservati on and hematopoietic reconstitution. The court's approach reflects misperception of the scientific proc ess as well as the patent purpose. Scientific me thodology usually starts with a hypothesis based on what is already known; the record shows that seve ral scientists mentioned the idea of rebuilding destroyed blood cells. However, none achieved this long-sought goal, and the record shows the extreme skepticism concerning even the possibility of this achievement. The district court found that ther e was "tremendous skepticism in the transplant field regarding the use of cord blood as a transplant tissue," and that the jury could have found that "prior to the inventions of the Patents-in-suit, thos e in the field of hemat opoietic reconstitution would not have expected cord blood to be a successful transplant tissue."05-1490, -1551 22 Nonetheless, my colleagues deny the value of this long-sought result, whereby for the first time umbilical blood was preserved and recovered and used to reconstitute the hematopoietic systems in mammals, demonstrated with the mice experiments reported in the '681 patent, and the human transplant in the '553 patent. Not even the defendants denigrate the inventors' achiev ement as "merely supporting evidence" for an "expected" result, as in the maj. op. at 39. Even if this court were not required to recognize the substantial evidence in support of the jury ve rdict, even if APA deference were not required to the three PTO reexaminati ons, one must pause at the powerful evidence of the acclaim that was accorded to this achievement, by these defendants as well as by scientific peers. There was substantial evidence whereby the jury could have sustained the unobviousness of the '681 and '553 inventions. I must, respectfully, dissent from the panel majority's invalidation of these patents on this ground. INFRINGEMENT The jury found infringement of the '681 and '553 patents. In determining whether substantial evidence supported the verdict, t he evidence before the jury and all reasonable inferences therefrom must be viewed in the li ght that is favorable to the verdict, without substituting the court's view of t he evidence for that of the jury. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 254-55 (1986); see SIBIA Neurosciences, Inc. v. Cadus Pharm. Corp. , 225 F.3d 1349, 1355 (Fed. Cir. 2000) ("In revie wing the record, we must draw all reasonable inferences in favor of the pr evailing party, and not make credibility determinations or substitute our view of the c onflicting evidence for that of the jury.") My colleagues, like the district court, grant JMOL on a ruling of law and evidence that was not presented to the jury, and that in all event s does not support reversal of the verdict.05-1490, -1551 23 My colleagues appear to hold that in fringement cannot be found because the cryopreserved cord blood "relates only as possib ilities" for "future use in adult transplants." Indeed, this entire system is designed for possible fu ture needs of the infant itself or family members. The defendants' testim ony was uniformly to the effect that this "possibility" was the purpose of their preservati on service (the record also describes a case in which the cord blood was used to treat the mother's exis ting disease). The evidence was that most but not all of the cryopreserved cord blood t hat has been transplanted was to children, with about ten percent transplanted to adul ts. PharmaStem is correct that this ratio relates to damages, and does not simply serve to negate all liability for infringement. The district court ruled that Pharma Stem had not proved infringement because PharmaStem did not separately analyze the stem cell content of eac h sample of cord blood. PharmaStem presented evidence that separate analysis was unnecessary because each defendant had analyzed each sample before accepting it for storage. Every defendant testified that the blood it collected and stored was analyzed for cell content at the time of collection. The ju ry was not instructed that such evidence was inadequate and inadmissible -- as the district court ruled post-tr ial. On the evidence pr esented, this is not a sound basis for rejecting the jury's verdict. The tardy rejection of the testimony of PharmaStem's expert witness, Dr. Hendr ix, is an inappropriate application of Daubert and its succeeding cases, on which the panel majority relies, for there was no criticism of the expert's scientific credentials orher analysis of the prior art and the state of the science. See Daubert v. Merrell Dow Pharms. , 509 U.S. 579, 590 (1993) (for a scientific assertion to "qualify as 'scientific knowledge, ' an inference or assertion must be derived by the scientific05-1490, -1551 24 method"); Kumho Tire Co. v. Carmichael , 526 U.S. 137 (1999) (the principles of Daubert apply broadly to "scientific, technical, or other specialized knowledge"). The district court's ground of exclusion was not that Dr. Hendrix made an error of law or of scientific fact, but simply that she also stated her opinion c oncerning the defendants' marketing statements that t hey test and preserve cord and neonatal blood for possible future child and adult use -- testimony that the district court criticiz ed because it did not require scientific expertise. Whatev er the virtue of that criticism, it is clear that the district court's (and my colleagues') exclusion of the ent ire testimony of this eminent scientist on this ground is not what the Daubert ruling is about. There was no testimony contrary to the view of Dr. Hendrix of the scope of the representations made in the marketing materials, and no challenge to the accuracy of her statement s. Presentation of expert testimony was in compliance with the general ru le that "typically expert testimony will be necessary in cases involving complex technology," Centricut, LLC v. Esab Group, Inc. , 390 F.3d 1361, 1370 (Fed. Cir. 2004), and this expert's test imony did not cro ss the boundaries of admissibility.

The '681 Patent The district court granted JMOL of noninfri ngement of the '681 pa tent on the ground that PharmaStem had not proved that 100% of the defendants' pr eserved cord and neonatal blood contained sufficient stem cells to reconstitute an adult. The district court reasoned that since PharmaStem t ook the litigation pos ition that it was entitled to damages measured as a royalty based on 100% of the preserved blood, to prove infringement PharmaStem had to prove that 100% of the pr eserved blood contained sufficient stem cells05-1490, -1551 25 to provide adult reconstitution, by analyzing 100% of the preserved blood. As I have mentioned, PharmaStem complains that this cr iterion differed from t hat on which the jury was instructed, and also states that even this criterion was met by substantial evidence presented at the trial. My colleagues, overturning the jury verdict, hold that there is no infringement of the '681 patent because PharmaStem did not retest every unit of stored blood to determine its stem cell content. They ignore the evidence that every unit was te sted by each defendant before being placed into cryogenic storage; ev ery defendant so testif ied. It was not disputed that retesting of every unit could use up a significant am ount of the precious preserved blood. No defendant a sserted that it routinely cr yogenically preserved cord blood that did not contain suffi cient stem cells to be potentia lly useful for hematopoetic reconstitution. A reasonable jury could have c onsidered this evidence to find that each element of the claims was met. Instead, my co lleagues simply rule that without testing of the stored units there can be no liability at all. That evident iary theory was not presented to the jury; it is too late to criticize as legally inadequate the test imony that was based on the defendants' own representati ons concerning the content of the stored umbilical and neonatal blood. The verdict of infringement was supported by the defendants' own testimony setting forth their requirements fo r stem cell content before accepting cord blood for cryopreservation. For example, defendant CBR's Scientific Director testified that every unit of cord blood presented to CBR for storage is test ed to see if it contai ns a sufficient amount of stem cells to have "a good probability of being us eful in the clinical setting." In evidence were CBR's website statement s that "transplants have occu rred for the newborn himself,05-1490, -1551 26 the newborn's mother, father, and the newborn's cousin," and "umbilical cord blood from unrelated donors can restore hematopoiesis in adults who receive myeloablative therapy and associated with acceptable rates of seve re acute and chronic GVHD [Graft vs. Host Disease]." The President of defendant CorCell testified that "what our market ing materials state [is] that it may be used to treat the donor or siblings or potent ially parents," and that although only one CorCell stored cord blood uni t had thus far been transplanted, that transplant was to an adult. There was testim ony that CorCell's cord blood samples are tested for "total nucleated, CD-34+ and viability cell counts before and after processing," and "a colony-forming assay is conducted to evaluate the quality and quantity of umbilical stem cells," and that a sample is usually not pr eserved if its stem ce ll content is determined to be unsuitable for possible future use. The jury was shown CorCell's representation to investors that "a recent st udy of twenty-five (25) pati ents, published in the New England Journal of Medicine, similarly indicates that cryopreserved umbilical cord blood stem cells can be successfully engrafted in children and adults with a variety of hematologic or immunologic disorders." The jury saw evidence t hat CorCell defines pote ntial recipients of the stored stem cells as "the fa mily members of the newborn, mother, father, siblings and possibly grandparents." Defendant ViaCell's founder testified that each cord blood sample was tested to ensure that there is a sufficient amount of stem cell content to be therapeutically useful, as determined by ViaCell's Scientific Advisory Board. ViaCell's Senior Vice President testified that ViaCell counts the cells in every co llected sample, and that its standard procedure states: "A minimum tota l NC count of 3.0 x 10 8 is required to proceed with processing." A05-1490, -1551 27 ViaCell memorandum to investors stated that about 10% of all cord blood transplants were in adults, and a ViaCell witness testified that ViaCell informs the public about adult use. At the trial none of the defendants denied the stem cell c ontent of the blood they cryopreserved, other than to st ate that for the few cases wher e their analysis at collection showed weak stem cell content they would cons ult with the infant's fa mily before accepting and freezing the blood. The jury heard the defendants' testimony and unqualified representations concerning thei r screening of every stored samp le of cord blood for stem cell content, and that they did not distingui sh between potential child and adult use of the stem cells. The jury could have relied on the defendants' testimony that their minimum threshold for cryopreservation is sufficient stem cells for transplantation, and that all of the defendants included possible adult use in their publicly-stated reasons for storing fetal cord and neonatal blood. PharmaStem poi nts out that it was neithernecessary nor prudent to test each unit of the defendants' stored blood for stem cell content, when each defendant had already done so. The jury was instructed: "A defendant is li able for directly infringing PharmaStem's patents if you find that PharmaStem has pr oven by a preponderance of the evidence that they have made, used, offered for sale or sold a composition that includes each and every element of at least one of t he asserted claims of the '681 patent." The theory that each stored sample had to be separately analyzed by PharmaStem to show infringement was not presented as law to the jury. This was a new standard for infringeme nt, for the jury was not told that the defendants' anal yses of stem cell content coul d not provide evidence of stem cell content.05-1490, -1551 28 When there is substantial evi dence in support of the jury's verdict, it is irrelevant whether the appellate court would have preferr ed different or additional evidence. "When the jury is supplied with sufficient valid factual information to support the verdict it reaches, that is the end of a matter . . . . the jury's factual conclusion may not be set aside by a JMOL order." McGinley v. Franklin Sports, Inc. , 262 F.3d 1339, 1355 (Fed. Cir. 2001). The district court erred in holding that it was nec essary for PharmaStem to analyze, or provide detailed analysis results, for the individual blood units in order to fi nd infringement. My colleagues commit the same error, reweighing t he evidence to reach their preferred result, rather than considering whether substantial ev idence as presented at the trial supports the verdict that was reached by the jury.

The '553 Patent It was agreed at trial that t he claims of the '553 patent are not infringed until the step of transplanting the stem cells takes place. Si nce relatively few transpl ants of stored blood had been done, the royalties awar ded by the jury were modest, and were not appealed. However, the verdict of infringement is supported by substantial evidence, and should stand. There was substantial ev idence that each step of the cl aimed invention is performed by the defendants followed by a transplant su rgeon. Referring to claim 13, the defendants isolate the umbilical cord and placental blood c ontaining stem cells and cryopreserve it in liquid nitrogen; claim clauses (a ) and (b). When instructed on behalf of the donor or family members, the blood is delivered to a surgical environment where it is thawed, claim clause (c), and transplanted into the human host, claim clause (d):05-1490, -1551 29 13. A method for hematopoietic or immune reconstitution of a human comprising: (a) isolating human neonatal or fe tal blood components containing hematopoietic stem cells; (b) cryopreserving the blood components; (c) thawing the blood components; and (d) introducing the blood components into a suitable human host, such that the hematopoietic stem cells are viable and can proliferate within the host. The jury found the defendants liable for "acting in concert or work ing together" with the transplant physicians, or contributing to the infringement of the '553 patent, upon answering the following questions: Question No. 3: Substantial Non-Infringing Use Has PharmaStem proven by a preponderance of the evidence that cryopreserved cord bl ood has no substantial noninfringing use? YES X NO Question No. 4: Direct Infringement Has PharmaStem proven by a preponderance of the ev idence that defendants and the transplant physi cians are acting in concert or working toget her to complete the process of infringement of claims 13, 19, 47, 53, or 57 of the '553 patent by performing each and every one of the steps in any of those claims? YES X NO Question No. 5: Contributory Infringement Has PharmaStem proven that a defendant has contributorily infr inged the '553 patent by selling or offering to sell cryopreserved cord blood that was actually us ed by a third party in the direct infringement of any of claims 13, 19, 47, 53, or 57 of the '553 patent? Answer separately for each defendant

. ViaCell YES X NO _____ CBR YES X NO _____ Cryo-Cell YES X NO _____ CorCell YES X NO _____05-1490, -1551 30 PharmaStem thus received special verdicts of both direct joint infringement and contributory infringement. My colleagues grant JMOL on the ground that since the defendants are providing a servic e, not selling a product, they can not meet the "sale" requirement of contributory infringement, 35 U.S.C. ' 271(c). 1 PharmaStem points out that a reasonable jury could have found that t he defendants sell (rent) their blood-storage facilities to the donor's family, and that the def endants either contribute to or act in concert with the transplanting surgeon to practice the claimed method. The principles of patent infringement are not negated when the steps of a method claim are performed by more than one entity. There was no instruction as to legal impossibility of liability as to the '553 pat ent, and no objection was raised to the verdict questions. We are not told whether the legal theory of sale or rent was ai red at the trial, but it is apparent that the jury was fully apprised of the nature of the accused activities, as reflected in the jury questions. The processes of litigation require appellate review on the premises of the jury trial, lest invited error dominate trial tactics.

1 ' 271(c). Whoever offers to sell or sells within the United St ates or imports into the United States a co mponent of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substant ial noninfringing use, shall be liable as a contributory infringer.05-1490, -1551 31 No objection was raised to the jury instructions. The distinction relied on by the panel majority, that the defendants were bailees, not sellers, does not negate the principles of infringement, whether viewed as joint in fringement or contributory infringement. See , e.g. , On Demand Machine Corp. v. Ingram Indus., Inc. , 442 F.3d 1331, 1334 (Fed. Cir. 2006) (approving instruction that "It is not necessary for the acts that constitute infringement to be performed by one person or entity.") Pharma Stem is correct that the issue to which this evidence app lies relates to damages, not infringement, and points to the small amount of damages awarded for infringem ent of the '553 patent (damages for the '553 patent were not appealed by the defendants). It is irrelevant whether any steps of a method claim can be viewed as a "service;" infringement requires only that the st eps be performed. As discussed in Dawson Chemical Co. v. Rohm and Haas Co. , 448 U.S. 176, 188 (1980), the purpose of the contributory infringement statute is "to protect patent rights from subversion by those who, without directly infringing the patent themselves, engage in acts designed to facilitate infringement by others," a criterion that t he jury could have found was met by the facts and relationships of this case. On the instructi ons to the jury, the verdict of liability for contributory or joint infringement of the '553 patent is supported by substant ial evidence, and should be sustained. From the court's departure from the procedures of appellate review of jury verdicts, and from the flawed law that is propounded, I must, respectfully, dissent.