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, 

and 

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

 Defendants. 

Paul J. Andre, Perkins Coie, LLP, of Menlo Park, California, argued for plaintiffappellant Pharmastem Therapeutics, Inc. 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 Philadelphia, Pennsylvania, argued 

for defendants-cross appellants Cryo-Cell International, 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. (formerly 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 was brought by appellant PharmaStem 

Therapeutics, Inc., in the United States District Court for the District of Delaware. 

PharmaStem sued six defendants (four of which are appellees before 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 initially entered an order granting a new trial on 

the issue of infringement of the ’681 patent and JMOL of noninfringement as to the ’553 

patent. Subsequently, however, the court vacated 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 respect 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 grant JMOL on invalidity. We 

affirm the district court’s judgment as to the infringement issues. With respect to the 

counterclaim of invalidity for obviousness, however, we reverse the judgment and direct 

the entry of judgment for the defendants. 

05-1490,-1551 2 
I 

 The two patents in suit recite compositions and methods relating to a medical 

procedure for treating persons with compromised blood and immune systems. The 

treatment is based on the discovery that blood from a newborn infant’s umbilical cord is 

a rich source of a type of stem cells useful 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 “primitive”) cells from which 

specialized (or “mature”) cells derive. Hematopoietic stem cells are stem cells that are 

ultimately responsible for producing the various specialized cells of the blood and 

immune (or “hematopoietic”) system. Hematopoietic stem cells produce progenitor cells 

and more hematopoietic stem cells. The progenitor cells, which are less primitive than 

the stem cells, in turn give rise to the variety of specialized cells that constitute the blood 

and immune system. 

Although hematopoietic stem cells are present in various types of human tissue, 

they are found in unusually high concentration and potency in umbilical cord blood. The 

’681 and ’553 patents describe a process for collecting a newborn infant’s umbilical cord 

blood at the time of birth, testing it for suitability for later use, preserving it through 

cryopreservation, and infusing it into an individual (either the donor or another person, 

preferably one with a closely matched blood type) whose hematopoietic stem cells have 

been destroyed. The object of such transplantations is to effect grafting. A successful 

graft results when the donor’s stem cells migrate into the recipient’s bone marrow, 

05-1490,-1551 3 
resulting in the renewed production of normal, specialized blood 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 viable human neonatal or fetal hematopoietic 

stem cells derived from the blood [and a] cryopreservative.” In reexamination, several 

of the original claims were cancelled. Claim 1 was amended to read as follows: 

 A cryopreserved therapeutic composition comprising viable human 

neonatal or fetal hematopoietic 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 sufficient for cryopreservation of said cells. 

Claim 2, which is dependent on claim 1, was amended to recite 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 cryopreserved for possible later 

use. The defendants represent in their promotional literature 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 members of the infant’s family. 

 In the infringement action brought against 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 4 
 A method for hematopoietic or immune 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 components into a suitable human host, 

such that the hematopoietic stem cells are viable and can proliferate with 

the host. 

Claim 47 is similar except that it refers to the blood components “containing 

hematopoietic stem and progenitor 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 immune reconstitution of a human 

comprising introducing into the human a composition comprising human 

neonatal or fetal hematopoietic stem cells derived from the blood, in which 

the stem cells have been previously cryopreserved. 

II 

 Following the jury’s verdict finding infringement of both patents by all four 

appellants, the district court granted the defendants’ JMOL motions and entered a 

judgment of noninfringement 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 infringed any of the asserted 

claims of either patent in suit. 

 As to infringement of the asserted ’681 patent claims, the district court focused 

on the requirement that the recited compositions contain stem cells “in an amount 

sufficient to effect hematopoietic reconstitution of a human adult.” To prove 

infringement, the court explained, PharmaStem was required to adduce evidence that 

the defendants’ cord blood units contained a sufficient supply of stem cells to effect 

05-1490,-1551 5 
successful reconstitution of an adult. The 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 infringement. The court noted that although Dr. 

Hendrix was “an accomplished stem cell biologist,” she based her infringement opinion 

“entirely on an analysis of the defendants’ marketing materials, without ever considering 

any data regarding the composition of the defendants’ cord blood units.” The court 

explained that Dr. Hendrix was 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’ promotional materials 

“promise stem cells for pediatric and adult transplantation.” In that respect, according to 

the court, “her opinion of infringement 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 “permitting PharmaStem to couch its presentation 

of this evidence in the form of an expert opinion was an error.” 

 The district court then pointed out that the evidence at trial overwhelmingly 

indicated that not all units of cord blood obtained from a single 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 reference to data collected by the defendants that 

at least some of the cord blood samples preserved by the defendants satisfied that 

05-1490,-1551 6 
requirement. Instead, the court noted, PharmaStem adopted the strategy of trying to 

prove, principally through representations made by the defendants in their marketing 

materials and other documents, that all of the preserved cord blood samples infringed. 

As a consequence, the court explained, PharmaStem “presented no evidence to the 

jury from which it could conclude that any specific 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 sufficient 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 court granted the defendants’ 

motions for JMOL because it concluded that PharmaStem had failed to prove that the 

defendants were guilty of contributory infringement, which was PharmaStem’s theory of 

liability. Under the court’s instructions, the 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 required 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 cryopreserved cord blood that 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 affirmative answers to the first 

two questions. With respect to the third question, however, the court held that there 

05-1490,-1551 7 
was no evidence in the record to support the 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 clients, or families, and the defendants 

in turn provide services with respect to the processing and storing of the 

compositions. Although the defendants 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, the 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 selling 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 defendants’ 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 trial showed that there 

were problems associated with the use of other transplant tissues, such as bone 

marrow and adult blood, and that there was “tremendous skepticism in the transplant 

field regarding the use of cord blood as a transplant 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 evidence was sufficient to entitle the jury to 

conclude that “prior to the inventions of the Patents-In-Suit, those in the field of 

hematopoietic reconstitution would not have expected cord blood to be a successful 

transplant tissue.” 

 As to anticipation, the district court again 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 8 
not 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 defendants’ argument that the ’681 patent 

was invalid for indefiniteness. The court acknowledged that claim 1 of the ’681 patent 

does not specify a particular number of cells or volume of blood that is required to 

infringe. Nonetheless, the court concluded that “the record supports that the ’681 

Patent’s claim language is as precise as the subject matter permits.” 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 portion 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 jury’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 asserted claims is the limitation requiring that 

the claimed composition contain neonatal or fetal hematopoietic stem cells “in an 

amount sufficient to effect hematopoietic reconstitution of a human adult.” PharmaStem 

05-1490,-1551 9 
contends that all of the cord blood samples the defendants have preserved infringe 

claim 1 of the ’681 patent because 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 defendants contend that PharmaStem failed to 

prove that any of their cryopreserved samples satisfy 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 defendants contained enough stem cells to 

reconstitute a human adult. Instead, PharmaStem relied on indirect evidence in the 

form of advertising and other materials generated by the defendants, scientific evidence 

relating to stem cell research in general, testimony from representatives of the 

defendants, and testimony by their own expert witness, Dr. Hendrix. The district court, 

however, concluded that PharmaStem’s evidence did not constitute substantial 

evidence in support of PharmaStem’s theory of infringement. 

A 

The trial court was correct in ruling that the evidence of the defendants’ 

advertising and other materials 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 relatives, including adult relatives. 

To be sure, there is no prohibition against using the admissions of a party, 

whether in the form of marketing materials or otherwise, as evidence in an infringement 

action; such admissions are entitled to weight along with all other evidence of 

05-1490,-1551 10 
infringement. In this case, however, while the defendants’ statements touted the 

possible therapeutic uses the cord blood might have for the child and members of the 

child’s family in the future, none of the statements represented that the stem cells in any 

of the cryopreserved cord blood samples were sufficient in number to effect 

hematopoietic reconstitution of an adult, as is required by claim 1 of the reexamined 

’681 patent. Instead, the defendants’ statements emphasized the potential therapeutic 

usefulness of the cord blood in general and referred to future uses of stored blood in 

adult transplants only as possibilities. 

For example, PharmaStem introduced a statement 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 sibling. Other transplants have occurred for the 

newborn himself, the newborn’s mother, father, 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,” that most have been used for siblings, but 

that in one instance the newborn’s “cord blood stem cells were transplanted to her 

mother to treat chronic myelogenous leukemia.” 

Those statements fall short of proving that any (much less all) of CBR’s cord 

blood samples contained enough stem cells to reconstitute an adult. The first statement 

simply recited that among the 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 statement made any representation whether or 

05-1490,-1551 11 
to what extent the particular transplants had succeeded in reconstituting the adults’ 

hematopoietic systems. Nor did 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 transplantations, the transplant physicians had used two 

units of cord blood, not the one unit obtained 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 adult transplantation. 

PharmaStem introduced similar statements from defendant CorCell, Inc. In 

particular, PharmaStem pointed to a statement in CorCell’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 for siblings, and other family members.” Several other 

statements by CorCell were to the same effect—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 would 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 12 
With respect to defendant Cryo-Cell International, Inc., PharmaStem again 

introduced statements from the company’s website that cord blood is a source of stem 

cells for the child or “possibly” other family 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 statements about possible use for other family 

members, however, do not amount to representations that any single stored unit would 

be sufficient by itself to reconstitute an adult, much less that all of the samples have that 

capacity. 

Similarly, PharmaStem introduced evidence that defendant ViaCell, Inc., had 

advertised that cord blood could be stored “for potential 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 stored cord blood had ever been 

successfully used to effect hematopoietic reconstitution of an adult. 

B 

In addition to the evidence of the defendants’ statements, PharmaStem also 

relied on evidence that each of the defendants tested their cord blood samples before 

cryopreserving them. Like the defendants’ statements, however, that evidence also 

failed to establish that the preserved samples 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 13 
contained more than a minimum volume of blood, 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 cells and could be therapeutically useful. That 

evidence did not show, however, that the testing excluded all samples that lacked the 

capacity to reconstitute an adult, because there was no showing that the defendants 

chose to preserve only those samples that contained sufficient stem cells for adult 

reconstitution, much less that their testing procedures had that effect. Nor did 

PharmaStem argue that the defendants’ tests could 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 the defendants saved cord blood samples when 

the defendants thought the samples might be of some potential 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 PharmaStem contends support its claim 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 CBR and CorCell. Although the paper showed 

that cord blood could have restorative effects 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 unit from a single infant is 

sufficient for adult reconstitution. For that reason, the 2001 paper provided no 

05-1490,-1551 14 
evidentiary basis from which to infer that the particular cord blood samples preserved by 

any of the defendants contained a sufficient quantity of stem cells for adult 

reconstitution. 

A second piece of scientific evidence featured by PharmaStem is a 2003 

publication by the federal Food and Drug Administration reporting that an advisory 

committee studying cord blood transplantations had recommended that physicians be 

permitted to conduct adult transplantations “as long 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 blood would be used in such transplantations. 

In fact, the transplant physician who made the presentation that led to the advisory 

committee’s recommendation explained at trial that his recommendation against limiting 

transplants by age was “[b]ecause we could 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. Moreover, and significantly, neither addresses the critical 

question whether the particular samples preserved by the defendants contained 

sufficient stem cells for that purpose. Those two pieces of scientific evidence therefore 

do not overcome the problem with PharmaStem’s evidence that the district court 

pointed out—that while PharmaStem may have 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 15 
cord blood units stored by the 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 first 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 most cord blood transplants performed 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, PharmaStem points out that each of the 

defendants provided a small number of cord blood units to transplant physicians for use 

in transplantation procedures. The evidence 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 evidence did not distinguish between 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 defendants resulted in the successful reconstitution of the 

hematopoietic system of an adult. Thus, the evidence regarding the transplants 

05-1490,-1551 16 
generally, and the defendants’ experience with transplants in particular, provides no 

basis from which to infer that some or all of the cord blood units preserved by the 

defendants must have contained a sufficient number of stem cells for adult 

reconstitution. For that reason, the district court was correct to hold that the evidence 

was insufficient to support the jury’s verdict 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 liability. Because of the manner in which 

PharmaStem sought to prove infringement, it committed itself to a course that had “allor-nothing” consequences. The district court 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 contention that the district 

court abused its discretion when it determined, following 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 entirely of her quoting from the 

promotional information and other materials in which the defendants described their 

business operations for potential customers and investors, and drawing inferences from 

05-1490,-1551 17 
those materials. The district court did not abuse its discretion in concluding that the jury 

was fully capable of understanding those materials without expert assistance and that 

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 materials that the defendants had in effect 

admitted that all of the cord blood samples that the defendants preserved contained a 

sufficient quantity of stem cells to reconstitute an adult. In particular, Dr. Hendrix 

interpreted the defendants’ statements 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 examine the data obtained 

by the defendants from their testing of the samples; that she did not know how many, if 

any, successful adult transplantations had been done with cord blood samples 

preserved by any of the defendants; 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 sufficient for any purpose.” In sum, Dr. Hendrix 

admitted that a particular company’s decision to store a particular sample did not 

necessarily mean the sample was sufficient to reconstitute an adult. Nonetheless, she 

maintained that “[i]f the cord bloods are being stored, and the companies 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 18 
potential in all of those samples that are stored in frozen 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 directed 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 adult 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 testimony “is premised on 

an assumption that the expert’s opinion will have a reliable basis 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 defendants 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 that 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 individual cryopreserved cord blood samples each contained 

enough stem cells to reconstitute an adult. 

To be sure, Dr. Hendrix stated in conclusory terms that she relied for her opinion 

not only on the defendants’ materials, but also on scientific literature, testimony of 

experts, and the depositions of representatives of the defendants. She made clear, 

however, that her opinion was based principally on the assertions by the defendants 

05-1490,-1551 19 
that 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 whether the defendants’ preserved samples 

contained an infringing quantity of stem cells. 

In short, we agree with the trial court that the defendants’ materials did not 

constitute sufficient proof of infringement of the ’681 patent and that those materials did 

not become proof of infringement when Dr. Hendrix read those materials back to the 

jury from the witness stand. There 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 which the defendants’ cord 

blood samples were used in transplant procedures, 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 responsible for collecting and cryopreserving the cord 

blood samples, while transplant physicians unrelated to the defendants thawed the cord 

blood and used it for transplanting. 

In light of the fact that the defendants did not perform all the steps of the 

patented method, PharmaStem based its claim of infringement of the ’553 patent on the 

theory of contributory infringement. The district court instructed the jury on contributory 

05-1490,-1551 20 
infringement 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 order to prove contributory infringement, 

PharmaStem was required to prove, inter alia, (1) that the defendants “sold or offered to 

sell cryopreserved cord blood to a transplanter” 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 are acting in concert or working together to 

complete the process of infringement.” The pertinent special verdict questions 

corresponding to those instructions required the jury to find that “the defendants and the 

transplant physicians are acting in concert or working together to complete the process 

of infringement” of the asserted claims of the ’553 patent (special verdict question 4) 

and that 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 the direct 

infringement” of any of the asserted claims (special verdict question 5). 

PharmaStem’s theory of contributory 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 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” 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 21 
The issue on appeal is whether there was substantial evidence to support the 

jury’s finding, in response to special verdict 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 was sufficient to show that the defendants sold 

a service to families of newborn infants (collection, 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 contributory 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 that the jury’s verdict on 

contributory infringement could not stand, and it therefore granted the defendants’ 

JMOL motions with respect to the ’553 patent. 

 In challenging the district court’s ruling, PharmaStem first argues that the jury 

could properly characterize as a “sale” the transaction in which the defendants obtained 

unprocessed umbilical cord blood, converted it into a therapeutically useful, 

cryopreserved cord blood product, and later provided it to transplant physicians at the 

behest of the client family. While cord blood is certainly a product, the transaction 

between the defendants and their clients is plainly 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 22 
with respect to method patents. The evidence at trial showed that the cord blood 

remained the property of the families throughout 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 needed, the defendants provided 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 defendants 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 identical 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 liberty to 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, PharmaStem 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 section 271(c) is not limited to the sale of a 

product, but extends to the sale of a service. 

05-1490,-1551 23 
PharmaStem’s argument is contrary to both the language and the legislative 

history of section 271(c). The statute provides, in pertinent 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 describes in various different 

ways the items that may be sold for purposes of creating liability for contributory 

infringement, all of the descriptions refer to the sale of a product of some sort; none of 

them refer to the provision of a service. Under the plain language of the statute, a 

person who provides a service 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) for contributory infringement. 

The legislative background of section 271(c) makes clear that the district court 

was correct to construe that statute as confined to its plain terms. Prior to the 1952 

Patent Act, no statute defined contributory infringement. Instead, 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 invention, and “contributory 

infringement,” which was “any other activity where, although not technically making, 

using, or selling, the defendant displayed sufficient culpability 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 make a substantive change in the law of contributory 

infringement, but it divided the judicially created category of contributory infringement 

into two statutory subsections, section 271(b) (inducement of infringement) and section 

271(c) (contributory infringement). The most common type of pre-1952 contributory 

05-1490,-1551 24 
infringement cases were those in which “a seller would sell a component that was not 

covered by the claims of a patent but which had no other use except the claimed 

product or process.” Id. That form of contributory infringement 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 section 271(b) recites “in broad terms that one who aids and 

abets an infringement is likewise an infringer” whereas section 271(c) deals specifically 

with the most common form of contributory infringement and “is much more restricted 

than many proponents of contributory infringement believe should be the case.” S. Rep. 

No. 89-1959, at 8, 28 (1952) (characterizing section 271(c) as applying to “one who 

sells a component part of a patented 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 light 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 customers was a service for compensation. 

The evidence showed that the cord blood the defendants collected and preserved was 

never their property; instead, it remained the property of the families who engaged their 

services. The defendants were never the owners of the blood and thus never “sold” the 

05-1490,-1551 25 
blood to the families when it was needed. The district court therefore properly held that 

the defendants could not be found liable for contributory infringement under section 

271(c).1

There is another reason why the jury’s verdict 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 “to 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 defendants made a sale of either products or services to the 

transplanters. To the contrary, the evidence 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 whether there was infringing conduct sufficient to serve as a 

predicate for a finding of contributory infringement. PharmaStem did not argue before 

the district court, and does not argue here, that liability could be premised on a theory of 

“joint” or “divided” infringement, 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 scope 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 court’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 Loophole 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 presented in a case now pending 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 contributory infringement, 

not under section 271(a) for direct infringement, and PharmaStem has continued to 

press that theory on appeal. We therefore are not presented with the question whether 

the defendants could have been held liable under section 271(a) under a theory of joint 

direct infringement through their activities in conjunction with the transplanters.

05-1490,-1551 26 
there 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 direction from the families. Such a transaction 

does not constitute a “sale” to a transplanter under any definition of the term “sale.” 

Accordingly, the district court properly concluded that the jury’s verdict was legally 

insufficient to establish infringement 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 motions with respect to the ’553 patent. 

V 

 The jury returned verdicts in favor of PharmaStem on the defendants’ 

counterclaims challenging the validity of the two patents in suit. In its opinion on the 

defendants’ JMOL motions, the district court held that the jury’s verdicts on the validity 

issues were supported by substantial evidence. In their cross-appeal, the defendants 

contest the portions of the trial court’s judgment 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 defendants’ motion for JMOL on the issue of 

obviousness, it is not necessary for us to address the defendants’ arguments with 

respect to the issues of indefiniteness and anticipation. 

A 

Obviousness is a legal conclusion 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 invention was made to a person of ordinary 

05-1490,-1551 27 
skill in the art to which [the subject matter of 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. Deutschland KG v. C.H. Patrick Co., 464 F.3d 

1356, 1360 (Fed. Cir. 2006). Underpinning 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 commercial 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). Under Third Circuit law, which in 

this case dictates the standard for reviewing 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 the 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 substantial 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 the two patents in suit are invalid for obviousness 

based on a combination of several prior art references. In such a case, the burden falls 

on the patent challenger to show by clear and convincing evidence that a person of 

ordinary skill in the art would have had reason to attempt to make the composition or 

05-1490,-1551 28 
device, or carry out the claimed 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 first part of that test is plainly satisfied 

here. The idea of using cryopreserved 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—articles by Ende and Knudtzon—

suggest using cord blood for that purpose. Two others—an article by Koike and a 

doctoral dissertation by Vidal—suggest cryopreservation and storage of the cord blood 

until needed. Accordingly, this is not a case 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 the prior art would have given rise to a 

reasonable expectation of success in creating the process claimed in the ’553 patent 

and the composition claimed in the ’681 patent. In addressing that question, the parties 

focus on whether the inventors 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 testimony by PharmaStem’s expert, Dr. Irwin 

05-1490,-1551 29 
Bernstein. In testimony cited by the court, 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 did not believe blood would be 

suitable as a transplant tissue; and that researchers in his group were 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 relies principally on Dr. Bernstein’s testimony 

to support its argument that the asserted claims 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 assertion that it was not known 

that cord blood contained stem cells, combined with his testimony regarding problems 

05-1490,-1551 30 
with transplant tissues used prior to the ’681 and ’553 patents, shows that those in the 

field of hematopoietic reconstitution “would not have expected cord blood to be a 

successful transplant tissue.” 

The cornerstone of Dr. Bernstein’s testimony at trial was that none of the prior art 

showed that cord blood contains stem cells. According to Dr. Bernstein, the presence 

of stem cells in cord blood was not conclusively established before the mouse studies 

described in the joint specification and the 1988 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 though some of the references referred to stem cells as being 

present in cord blood, Dr. Bernstein took the position that those statements in the prior 

art references reflected flawed nomenclature and that the most the data underlying the 

prior art references showed was 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 stem cells, as opposed to the less primitive 

progenitor cells, are present in cord blood until the patentees performed the mouse 

experiments reported in the joint specification. 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 31 
results obtained with transplantations of adult blood “it had to take a leap of thinking that 

cord blood was different.” 

The joint specification, however, tells a different story. There, the inventors 

acknowledged that it was previously known that the properties 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 concentrations than in adult blood. Citing a number of 

references, the inventors stated the following: 

A human hematopoietic colony-forming cell with the ability to 

generate progenitors for secondary colonies has been identified in human 

umbilical cord blood. In addition, hematopoietic stem cells have been 

demonstrated in human umbilical cord blood, by colony formation, to occur 

at a much higher level than that found in the adult. The presence of 

circulating hematopoietic progenitor cells in human fetal blood has also 

been shown. Human fetal and neonatal blood has been reported to 

contain megakaryocyte and burst erythroblast 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 (citations omitted); ’553 patent, col. 4, ll. 21–42 (citations 

omitted). 

That excerpt from the specification cannot be squared with Dr. Bernstein’s 

characterization of the prior art. 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 that “hematopoietic stem cells have been 

demonstrated in human umbilical cord blood.” Moreover, the inventors noted that the 

prior art references showed that the concentration of stem cells in cord blood was “at a 

much higher level than in the adult.” Nor can those statements in the specification be 

dismissed as reflecting a careless use of the term “hematopoietic stem cell,” i.e., the 

use of that term when the inventors meant to refer to progenitor cells. That is made 

05-1490,-1551 32 
clear by context, as the sentence that immediately follows the reference to 

“hematopoietic stem cells” states that “the presence of hematopoietic progenitor 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 specification that the prior art disclosed stem cells in cord blood. 

Admissions in the specification regarding the 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 prior art, and thus “the jury was 

not free to disregard [that matter]” 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 unreasonable. At trial, the 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 substantial numbers of progenitor cells in cord 

blood—roughly equivalent to the number of such cells in bone marrow—it was 

05-1490,-1551 33 
appropriate for the authors of the prior art references to infer the presence of stem cells 

in cord blood, even though positive proof of their presence was 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 the colonies in question as containing stem 

cells. A 1974 article by Knudtzon similarly noted that an “increased concentration of 

hemopoietic stem cells has been found in the blood of mouse embryos when compared 

to the concentration after birth.” Knudtzon also conducted tests on human umbilical 

cord blood, determining that the concentration of in vitro colony-forming cells in cord 

blood is likewise much greater than in human adult blood and that the concentration is 

comparable to the concentration in bone marrow tissue. Knudtzon concluded that “the 

finding of an increased concentration of colony-forming cells in human cord blood 

comparable in number with human bone marrow cultures indicates that cord blood 

might be used as a source of hemopoietic stem cells for the restoration of bone marrow 

function in humans.” Two years later, a case study by Ende reported a transfusion of 

45 milliliters of human cord blood into a human patient, which 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 noted 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 hematopoietic system is in a state of physiologic 

05-1490,-1551 34 
proliferation, 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 that 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 dissertation by Vidal concluded, based on various 

studies, that “cord blood contains sufficient hematopoietic stem cells to effect a 

transplant,” that “cord blood can be used for this purpose,” and that “cryopreserved cord 

blood banks might exist.” 

That collection of prior art shows (1) that bone marrow transplants can result in 

hematopoietic reconstitution; (2) that cord blood, like bone marrow but unlike adult 

blood, contains large numbers of progenitor cells; and (3) that the high concentration of 

primitive progenitor cells in cord blood suggests that in humans, as in mice, the cells 

responsible for hematopoiesis migrate 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 infer the presence of high 

concentrations of stem cells in cord blood, even though the prior art studies did not offer 

conclusive proof of their presence. 

C 

Given that the jury was legally required to find that that those of skill in the art 

would believe that cord blood contained hematopoietic stem cells, the question before 

us is whether a reasonable jury could nonetheless have found the invention 

05-1490,-1551 35 
nonobvious. We conclude a reasonable jury could not have done so. While the 

inventors may have proved conclusively what was strongly suspected before—that 

umbilical cord blood is capable of hematopoietic reconstitution—and 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, 

the mouse experiments and the conclusions drawn from them were not inventive in 

nature. Instead, the inventors merely used routine 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 contribution, but it does not give rise to a patentable 

invention. See KSR, 127 S. Ct. at 1732 (“Granting patent protection to advances that 

would occur in the ordinary course 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 compound must be verified through testing does 

not mean that the compound satisfies the test for patentability “since the expectation of 

success need only be reasonable, not absolute”); In re Merck & Co., 800 F.2d 1091, 

1097 (Fed. Cir. 1986) (“Obviousness does not require 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 whether the expectation of success from a 

particular line of inquiry is great enough to render a resulting invention obvious. The 

court noted that obviousness “does not require absolute predictability of success. 

Indeed, for many inventions that seem quite obvious, there is no absolute predictability 

of success until the invention is reduced to practice.” 853 F.2d at 903. On the other 

05-1490,-1551 36 
hand, the court explained, an invention would not be invalid for obviousness if the 

inventor would have been motivated “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 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,” nor is it one in which the prior art “gave only general guidance as to the 

particular form of the invention or how to achieve it.” O’Farrell, 853 F.2d at 903. The 

prior art suggested cryopreserving cord blood from a single infant and transplanting that 

blood into a patient to achieve hematopoietic reconstitution. 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 objective or that there were problems to be 

solved in implementing the prior art suggestion that were not adumbrated in the prior 

art. To the contrary, the joint specification indicates that each step of the 

cryopreservation and transplantation procedure had been spelled out in the prior art. 

PharmaStem does not claim that 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 37 
to the defendants’ obviousness challenge, PharmaStem focuses entirely on the 

purported novelty of its proof that 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 hematopoietic reconstitution to try the procedure 

on humans. As we have explained, however, providing proof sufficient to justify 

conducting in vivo procedures on humans, while useful, is not a test of patentability. 

The evidence at trial demonstrated that the patentees did not invent a new procedure or 

a new composition; instead, they simply provided experimental proof that the cord blood 

could be used to effect hematopoietic reconstitution of mice and, by extrapolation, could 

be expected to work in humans as well. 

D 

In addition to its reliance on Dr. Bernstein’s testimony about the prior art 

references, PharmaStem invokes various secondary 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, including statements by the defendants and their 

representatives. Defendant ViaCord’s business plan praised the inventors as 

“trailblazers,” and a founder of defendant Cryo-Cell wrote to the inventors’ company and 

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 the blood from the umbilical cord for 

restoring hematopoietic [sic] through marrow transplants.” 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 transplantable hematopoietic stem cells, although he 

05-1490,-1551 38 
disclaimed those statements at trial on the ground that he had subsequently determined 

that it was incorrect to give the inventors credit for conceiving the invention. The 

problem with that evidence is that there was no indication that the praise for the 

inventors’ work was based on any inventive contribution they made, as opposed to their 

proof, through laboratory work, that fetal blood contains large numbers of stem cells. As 

noted, the former is a basis for patentability; 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 members of his research group were previously aware of the 

prior art references that laid the groundwork for the inventors’ experiments. Dr. 

Bernstein stated that his surprise at the successful use of cord blood was based on the 

poor results obtained with transplants 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 those 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 application for the ’681 patent and shortly before the filing of the 

application for the ’553 patent. As a result, the 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 results of that transplant. At the time of the application for 

05-1490,-1551 39 
the ’553 patent, all that was known and disclosed about the 1988 transplant was that it 

had been attempted. 

Moreover, although it is true, as PharmaStem argued, that physicians began 

performing human transplants only after the inventors conducted their mouse 

experiments, the evidence at trial showed that physicians were 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 valuable source of hematopoietic stem cells; the mouse studies 

merely provided supporting evidence for that conclusion, evidence that the transplant 

physicians regarded as sufficient to justify trying the procedure on a human child. 

E 

Finally, PharmaStem argues that the jury’s verdict is supported 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 deference 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 the reexamination certificate for the ’681 patent 

summarized her analysis of the prior art by stating that none of the cited references 

“addresses the presence of hematopoietic stem cells in umbilical cord or placental 

05-1490,-1551 40 
blood, that these cells may successfully be cryopreserved, or that, as a collection from a 

single human at birth, these cells may comprise an amount that is sufficient to effect 

hematopoietic reconstitution of a human adult.” That explanation is flawed for three 

reasons. First, as we have explained, the prior art references and the admissions in the 

specification address the presence 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 cryopreserved without substantial losses in the 

population of progenitor cells; the inventors contributed nothing more with respect to 

cryopreservation, as their mouse experiments 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 their own cord blood samples. 

The specification explains that, because of the inability to determine the number 

of stem cells present in a particular composition, researchers and transplanters use 

surrogate assays from which they can infer that stem cells are present and in roughly 

what numbers. One of the surrogate 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 inventors 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 41 
44–68. Thus, the inventors reported that prior art studies 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 million progenitor cells 

[CFU-GM].” ’681 patent, col. 13, ll. 49–54. The inventors’ assays of cord blood 

samples, confirmed by prior art studies, showed that 50 milliliters of cord blood would 

contain up to more than 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 hematopoietic reconstitution of 

an adult was simply the result of a comparison 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 standards 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 jury to reach the opposite 

conclusion. We therefore reverse the denial of JMOL on that issue and remand to the 

district court for entry of judgment in the defendants’ favor. 

VI 

 This was a closely contested case both 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 resolved each of the issues that the parties have 

raised and we have addressed on appeal, with the sole exception 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 judgment on the cross-appeal with respect to the 

05-1490,-1551 42 
05-1490,-1551 43 

issue of obviousness. As to that issue, we reverse and remand to the district court for 

entry of judgment in the defendants’ favor. 

 Each party shall bear its own costs 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 verdicts of validity, and validity 

was confirmed in three reexaminations 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 trial 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 with universal acclaim and widespread utilization, 

including the founding of many commercial enterprises, 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 these inventions by selection and inference, 

with perfect hindsight of the discoveries. The evidence at trial was that 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 predecessor Biocyte, Inc., founded by the 

inventors. The record contains many publications reporting the work of these inventors, 

and the evidence was undisputed that they were the first to achieve the transplantation of 

umbilical cord stem cells for reconstitution of the human hematopoietic system. Although 

my colleagues manage to reconstruct this extensive scientific effort as simple routine that is 

obvious to judges, the processes of discovery in complex science make it particularly 

necessary to view the achievement in the context 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 great 
05-1490, -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 for 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 court so as to invalidate these patents. The 

"prior art" selected by my colleagues spans many years of scientific interest and effort, yet 

the ultimate discovery of the presence of stem cells along with or instead of progenitor 

cells, the successful preservation of these cells, the extensive experimentation with 

transplantation into animal models and ultimately 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 knowledge 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 scientific advance is legally established in 

order to serve the public interest in having the benefit of such advance through economic 

enterprise. 

My colleagues ignore not only the scientific experts who testified at the trial, but also 

the PTO examiners who conducted the three reexaminations. In Dickinson v. Zurko, 527 

U.S. 150 (1999) this court was reminded of its obligation to give appropriate deference to 

agency expertise, including that of the PTO. The references that are analyzed by the panel 
05-1490, -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 these 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 the jury verdict, I respectfully dissent. I 

must also dissent from the rejection of the jury verdict of infringement, for the district court 

applied a new and incorrect evidentiary standard 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 raised 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 the verdicts for the plaintiff 

on the issues of inventorship, inequitable conduct, and antitrust violation. My colleagues 

reverse the jury verdict of unobviousness, and decline to reach the verdicts upholding 

validity on the issues of anticipation and indefiniteness. The district court sustained each of 

these verdicts. These issues were also raised 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 remains alive (barring other changes) when it 
05-1490, -1551 5 

comes to us. The Federal Circuit's determination that the patents were not infringed is 

subject to review in this Court, and if we reverse 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 the 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 the reexaminations. In this context 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 anticipated 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 ordinary 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.2d 
05-1490, -1551 6 

1471, 1479 (Fed. Cir. 1986) ("anticipation requires that each and every element of the 

claimed invention be disclosed in a prior art reference. In addition, the prior art reference 

must be enabling, thus placing the allegedly disclosed matter in the possession of the 

public.") 

The reference on which the defendants rely for anticipation is an article by Kenichi 

Koike entitled "Cryopreservation of Pluripotent and Committed Hemopoietic Progenitor 

Cells from Human Bone Marrow and Cord Blood," 25 Acta Paediatrica Japonica 275 

(1983). Koike describes the preservation, by freezing in liquid nitrogen, of pluripotent and 

progenitor cells of bone marrow and umbilical cord blood, and shows that these cells retain 

much of their progenitor activity upon thawing. Koike does not mention stem cells, and 

states that "hematopoietic progenitor cells, especially pluripotent progenitor cells are the 

most important to repopulate 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 Koike 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 claims, including for the '681 claims the 
05-1490, -1551 7 

limitations to therapeutic compositions and the requirements that the cryopreserved cord 

blood units contain sufficient stem cells to reconstitute an adult. These aspects were 

extensively probed at the trial, and witnesses explained the various claim limitations and 

the prior art. 

The district court, on post-trial motions, held that 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 testified (on cross-examination) that 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 their 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 skill in the field of the invention would discern 

every element of the invention in the allegedly anticipating reference, and know how to 

carry it out based on the state of knowledge 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 allegedly anticipatory disclosures cited as prior art 

are not enabled"). There was substantial evidence that Koike did not establish that there 

were stem cells in umbilical cord blood nor teach 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 demonstrated 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 functional 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 multipotent progenitor cells can be identified 

through colony-forming unit-granulocyte, erythrocyte, monocyte/macrophage, 

megakaryocyte (CFU-GEMM) relatively differentiated 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 determining 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 witnesses at trial testified, that the Koike 

reference is directed to progenitor cells, not stem cells. The reexamination record was in 

evidence, wherein the 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 Issue Reexamination Certificate at 4 (Jan. 11, 2000). The examiner 

observed that Koike did not mention stem cells and did not show or enable transplantation 

to an adult, and that although Koike postulated that cord blood may be a source of 
05-1490, -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 presence 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 Ficoli-Hypaque fraction of umbilical cord 

blood assayed for the presence of progenitor 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 examiner, 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 prior 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 there. However, as 

discussed in Turbo Care Div. Of Demag Delaval Turbomachinery Corp. v. General Electric 

Co., 264 F.3d 1111, 1119 (Fed. Cir. 2001), "[i]n order for 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, Koike does not show the claim limitations to 

therapeutic compositions or that the cryopreserved blood units must be from a single 

human or that stem cells must 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 to 
05-1490, -1551 10 

routinely fill these omissions, and reinforce the examiner's statement that "the presence of 

progenitors (differentiated stem cells) is not predictive of the presence 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 reference 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 doctrine of inherency, if an element is not 

expressly disclosed in a prior art reference, the reference will still be deemed to anticipate a 

subsequent claim if the missing element '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 complex, a bare suggestion or hope that requires 

significant experimentation for 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 reference described all of the '681 patent claim 

limitations, explicitly or inherently. The panel should review this issue in the interest of 

finality, and rule that the verdict that anticipation of the '681 claimed invention had not been 

established was supported by substantial evidence, and was properly sustained by the 

district court. 

The '553 claims are directed to method steps, 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 introduce cord blood into a human, which is 

a necessary limitation of the '553 Patent. The defendants claim that Koike's 

suggestion that introducing the stem cells into a human host should be done 

is a sufficiently enabling disclosure to warrant a finding of anticipation. Even 

so, the record contains substantial evidence 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 surrogate assays of over one hundred cord 

blood units, and the '553 patent includes details of the transplantation of cryopreserved 

fetal cord stem cells to reconstitute the blood of a five-year-old child who was suffering from 

Fanconi's Anemia; in contrast with the absence of any such information in the Koike 

reference. The district court held that there was substantial evidence whereby a 

reasonable jury could have found that the Koike reference did not anticipate the '553 

claims. I agree. The panel should review and resolve this issue, which was fully appealed, 

in the interest of finality. 

Indefiniteness

A similar obligation applies to the cross-appeal of validity on the ground of 

indefiniteness. The matter was fully presented 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 measurement of stem cell content 
05-1490, -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 know if they were 

infringing the claims. PharmaStem's position is that surrogate animal tests, as shown in its 

patents, adequately measure stem cell content. PharmaStem points out that the 

defendants all test the cord blood before placing 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 clear 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 stem 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 cell biologist, that the patents provide "ample 

information to determine the amount of cord blood needed for transplant in adults and 

children, and that the scientific community has in fact performed 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," implementing the purpose of claims to identify what has been 

invented and found patentable, so that "one skilled in the art 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 claims read in light of the specification 

reasonably apprise those skilled in the art 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 more precise than the knowledge in the field permits. See

Hybritech Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1385 (Fed. Cir. 1986) ("'if the 

claims, read in light of the specification, reasonably apprise those skilled in the art both of 

the utilization and scope of the invention, 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 (Fed. 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 formidable 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 defendants 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 the science or technology to which it is directed is 

incompletely developed or understood, requires that it be described and claimed in terms 

adequate to communicate, to persons experienced in the field of the invention, what has 
05-1490, -1551 14 

been discovered. The '681 patent states that "any of numerous 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 multipotential stem cells with self-renewal 

capacity can be measured by counting the 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 CFU-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 reconstitution in human patients, can be relied 

on as an indicator of the potential for successful hematopoietic reconstitution 

(Spitzer, G., et al., 1980, Blood 55(2): 317-323; Douay et al., 1986, Exp. 

Hematol. 14:358-365). By standardizing published 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 2-425x104, with faster recovery 

noted using greater than 10x104 CFU-GM. 

Col. 50, line 64 to col. 51, line 8. The expert testimony at trial explained this and other 

descriptive text, whereby a reasonable jury could have concluded that the assays described 

in the patent serve to ascertain whether sufficient 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 recognized that the "existence of an 

inescapable area of uncertainty is not sufficient justification for denying 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 patents 
05-1490, -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, that: "Given that there is no 

determinate or determinable minimum amount of cord blood for therapeutic usefulness in 

humans, the record supports that the '681 claim language is as precise as the subject 

matter permits." PharmaStem, 2004 WL 2898061 at *5 (citing Hybritech, supra). As the 

district court ruled, there was substantial evidence whereby the jury could have found that 

the claims of the '681 and '553 patents would be understood by persons 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 achievement. Even the defendants' expert witness 

acknowledged that before the work of these inventors "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 uses present knowledge of the inventors' 

success to find that it was obvious all along. 

When trial is to a jury, the court instructs 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 support the jury's express or 
05-1490, -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 determine 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 clear and convincing evidence; 

factual inferences are drawn and credibility determinations are accepted in favor of the 

verdict winner.") The question is whether the jury's verdict is sustainable on the evidence 

presented, not whether we could have or would have gone the other way on the evidence 

presented. 

The jury answered "NO" to the question whether the '681 and '553 claimed 

inventions "would have been obvious to a person of ordinary skill in the field of the 

invention." Responding to the defendants' challenge to the verdict, PharmaStem points to 

the evidence of the extensive research in this field of science -- much of which is set forth in 

the patent specifications -- and to the specific claim limitations. The broadest composition 

claim (the '681 patent) is as follows: 

1. A cryopreserved therapeutic composition comprising: 

viable human neonatal or fetal hematopoietic 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 sufficient for cryopreservation of 

said cells. 
05-1490, -1551 17 

This claim was the subject of two reexaminations, one preceding this litigation, the second 

completed during the past year. For the first reexamination, the examiner'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 effect hematopoietic reconstitution 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 cord 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 "transplantation," it is 

clear that such treatment did not result in hematopoietic reconstitution. 

Further, since no HLA typing was performed, and multiple infusions were 

performed, one of ordinary skill in the art would have taken the disclosure of 

Ende to be equivalent to blood transfusions and would have had no 

expectation that the hematopoietic reconstitution of a human adult could have 

been performed. As a transfusion composition, one of ordinary skill would 

have had no motivation to cryopreserve the cord blood, since whole blood for 

transfusion is not frozen, but stored st 4"

C and Ende further points out that 

any hospital with a maternity ward would provide sufficient aliquots of fresh 

cord blood. 

Notice of Intent to Issue 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 acknowledged 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 suggestions of the prior art 

references as to the therapeutic uses of umbilical cord blood (whether 

cryopreserved or not) as a course of hematopoietic stem cells a situation of 

"obvious to try," which fails to provide a prima facie finding of obviousness . . 

. . 

Id. at 4. 
05-1490, -1551 18 

For the second reexamination, 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 accomplished. 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 results 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 blood, that provided 

the necessary teaching to enable the obtaining of effective hematopoietic 

reconstituting dosages in children (extrapolatable 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 instantly claimed invention. 

Reexamination -- Reasons for Patentability/Confirmation (Dec. 29, 2006). No error has 

been shown in this analysis, which warrants deference 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 whether it is "arbitrary" or "capricious," 

or, if bound up with a record-based factual conclusion, 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 scientists 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 skepticism and surprise at the 

inventors' achievement. The reaction of scientific peers after the achievement 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 treatment of the invention 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 was in evidence, including their founding of 

Biocyte and spawning of the industry of collecting 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 researchers in this field and have published 

many related articles. Biocyte's time, energies, and financial resources have 

been spent doing much education and development 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 hindsight with objective determination 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 obviousness, 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 counseled 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 resist the temptation to read into the prior art 

the teachings of the invention in issue," cited in KSR v. Teleflex, 127 S. Ct. at 1734. 
05-1490, -1551 20 

PharmaStem's expert, Dr. Bernstein, testified that no prior 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 mistaken understanding concerning 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. Bernstein had explained at the trial 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 did 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 the prior art" which is then "binding on the 

patentee for purposes of a later inquiry into obviousness." Maj. op. at 42. This is not a 

simple issue, but the jury could reasonably have concluded, as did the district court, that 

the prior art did not show that there were stem cells in cord blood, and that one of ordinary 

skill in this field would not have had a reasonable 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 describe as the "more 

difficult question [of] whether the prior art would have given rise to a reasonable expectation 

of success in creating the [claimed 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 there was reason to seek a cure for destroyed 

blood cells, and that scientists have been seeking such a cure for a long time, including 
05-1490, -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 remedy 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 advances 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 invention 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 scientists not only established the presence of stem cells, but also 

enabled their development for preservation and hematopoietic reconstitution. 

The court's approach reflects misperception of the scientific process as well as the 

patent purpose. Scientific methodology usually starts with a hypothesis based on what is 

already known; the record shows that several 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 there 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, those in the field of hematopoietic 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' achievement 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 verdict, even if APA deference were not required 

to the three PTO reexaminations, 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, the evidence before the jury and all reasonable 

inferences therefrom must be viewed in the light that is favorable to the verdict, without 

substituting the court's view of the 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 reviewing the record, we must draw all 

reasonable inferences in favor of the prevailing party, and not make credibility 

determinations or substitute our view of the conflicting 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 events does not support reversal of the verdict. 
05-1490, -1551 23 

My colleagues appear to hold that infringement cannot be found because the 

cryopreserved cord blood "relates only as possibilities" for "future use in adult transplants." 

Indeed, this entire system is designed for possible future needs of the infant itself or family 

members. The defendants' testimony was uniformly to the effect that this "possibility" was 

the purpose of their preservation service (the record also describes a case in which the 

cord blood was used to treat the mother's existing disease). The evidence was that most 

but not all of the cryopreserved cord blood that has been transplanted was to children, with 

about ten percent transplanted to adults. 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 PharmaStem had not proved infringement because 

PharmaStem did not separately analyze the stem cell content of each 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 jury was not instructed that such evidence was inadequate and 

inadmissible -- as the district court ruled post-trial. On the evidence presented, this is not a 

sound basis for rejecting the jury's verdict. The tardy rejection of the testimony of 

PharmaStem's expert witness, Dr. Hendrix, 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 or her 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 scientific 
05-1490, -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 concerning the defendants' 

marketing statements that they test and preserve cord and neonatal blood for possible 

future child and adult use -- testimony that the district court criticized because it did not 

require scientific expertise. Whatever the virtue of that criticism, it is clear that the district 

court's (and my colleagues') exclusion of the entire testimony of this eminent scientist on 

this ground is not what the Daubert ruling is about. 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 statements. Presentation of expert testimony was 

in compliance with the general rule 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 testimony did not cross the boundaries of 

admissibility. 

The '681 Patent

The district court granted JMOL of noninfringement of the '681 patent on the ground 

that PharmaStem had not proved that 100% of the defendants' preserved cord and 

neonatal blood contained sufficient stem cells to reconstitute an adult. The district court 

reasoned that since PharmaStem took the litigation position 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 preserved blood contained sufficient stem cells 
05-1490, -1551 25 

to provide adult reconstitution, by analyzing 100% of the preserved blood. As I have 

mentioned, PharmaStem complains that this criterion differed from that 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 tested by each defendant 

before being placed into cryogenic storage; every defendant so testified. It was not 

disputed that retesting of every unit could use up a significant amount of the precious 

preserved blood. No defendant asserted that it routinely cryogenically preserved cord 

blood that did not contain sufficient stem cells to be potentially useful for hematopoetic 

reconstitution. A reasonable jury could have considered this evidence to find that each 

element of the claims was met. Instead, my colleagues simply rule that without testing of 

the stored units there can be no liability at all. That evidentiary theory was not presented 

to the jury; it is too late to criticize as legally inadequate the testimony that was based on 

the defendants' own representations 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 for 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 tested to see if it contains a sufficient amount 

of stem cells to have "a good probability of being useful in the clinical setting." In evidence 

were CBR's website statements that "transplants have occurred 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 severe acute and chronic GVHD [Graft vs. Host 

Disease]." 

The President of defendant CorCell testified that "what our marketing materials state 

[is] that it may be used to treat the donor or siblings or potentially parents," and that 

although only one CorCell stored cord blood unit had thus far been transplanted, that 

transplant was to an adult. There was testimony 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 preserved if its stem cell content is determined 

to be unsuitable for possible future use. The jury was shown CorCell's representation to 

investors that "a recent study of twenty-five (25) patients, 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 that CorCell defines potential recipients of 

the stored stem cells as "the family 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 collected sample, and that its standard procedure 

states: "A minimum total NC count of 3.0 x 108

 is required to proceed with processing." A 
05-1490, -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 content of the blood they 

cryopreserved, other than to state that for the few cases where their analysis at collection 

showed weak stem cell content they would consult with the infant's family before accepting 

and freezing the blood. The jury heard the defendants' testimony and unqualified 

representations concerning their screening of every stored sample of cord blood for stem 

cell content, and that they did not distinguish 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 points out that it was neither necessary 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 liable for directly infringing PharmaStem's 

patents if you find that PharmaStem has proven 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 the 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 infringement, for the jury was 

not told that the defendants' analyses of stem cell content could not provide evidence of 

stem cell content. 
05-1490, -1551 28 

When there is substantial evidence in support of the jury's verdict, it is irrelevant 

whether the appellate court would have preferred 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 necessary for PharmaStem to analyze, or provide 

detailed analysis results, for the individual blood units in order to find infringement. My 

colleagues commit the same error, reweighing the evidence to reach their preferred result, 

rather than considering whether substantial evidence as presented at the trial supports the 

verdict that was reached by the jury. 

The '553 Patent 

It was agreed at trial that the claims of the '553 patent are not infringed until the step 

of transplanting the stem cells takes place. Since relatively few transplants of stored blood 

had been done, the royalties awarded 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 evidence that each step of the claimed invention is performed 

by the defendants followed by a transplant surgeon. Referring to claim 13, the defendants 

isolate the umbilical cord and placental blood containing 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 fetal 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 working 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 blood has no substantial 

noninfringing use? 

YES X NO 

Question No. 4: Direct Infringement

Has PharmaStem proven by a 

preponderance of the evidence that defendants 

and the transplant physicians are acting in 

concert or working together 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 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 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 service, 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 the defendants sell (rent) their blood-storage 

facilities to the donor's family, and that the defendants 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 patent, and no objection was raised to the verdict 

questions. We are not told whether the legal theory of sale or rent was aired 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 States or imports 

into the United States a component 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 substantial 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 infringement 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.") PharmaStem is correct that the 

issue to which this evidence applies relates to damages, not infringement, and points to the 

small amount of damages awarded for infringement 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 steps 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 the jury could have found was met by the facts and relationships 

of this case. On the instructions to the jury, the verdict of liability for contributory or joint 

infringement of the '553 patent is supported by substantial 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.