Free Order - District Court of Delaware - Delaware

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1 Case 1:04-cv-01335-Gl\/IS Document 60 Filed 02/17/2005 Page 1 of 4
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E ` ORE TH J I CIAL PANEL ON M UL T IDIS TRI C T LI T I GA T I ON
INRE PHARMASTEM THERAPEUTICS, INC., PATENTLITIGATION
1 BEFORE WM T ERRELL HODGES, CHAIRAIAM JOHN F. KEENAM D.
LOWELL JENSEM I FREDERICK MOTZ, ROBERT L. MILLER, JR.,
KATHR YN H VRA TIL AND DA VID R. HANSEN, J UDGES OF THE
PANEL
0 TRANSFER ORDER
This litigation currently consists of the six actions listed on the attached Schedule A and
pending in six districts as follows: one action each in the Central and Northern Districts of
California, the District of Delaware, the Middle District of Florida, the District of Massachusetts,
and the Eastern District of Pennsylvania} The six actions all arise from efforts by PharmaStem
Therapeutics, Inc. (Pharma) to enforce patents relating to the collection and storage of a newborn’s
umbilical cord blood and/or placenta for future therapeutic uses. The five actions pending outside
the District of Delaware are patent infringement actions brought by Pharma, and the Delaware action 4
is an unfair competition action brought against Pharma that is predicated in large part upon Pharma’s
allegedly illicit patent enforcement efforts. Now before the Panel is a motion, pursuant to 28 U.S.C.
§ 1407, brought by four cord blood collection companies and fifteen health care providers or
facilities which are defendants in the various patent infringement actions (three of the four cord
blood collection company movants are also the plaintiffs in the District of Delaware unfair
competition action). Opposed to transfer are Pharma and two additional third-party defendants
named in various actions: i) Pharma’s chief executive (sued in the Northern District of California,
the Middle District of Florida, and the Eastern District of Pennsylvania actions); and ii) Pharma
licensee Stembanc, Inc., which is sued as a third-party defendant in the Northern District of
California action. If the Panel orders centralization over two of these three parties’ objections, then
i) Pharma would favor centralization of the MDL—l66O actions in, in order of preference, the
Northern District of California, the Central District of California, any other of the three districts
where it has sued for patent infringement, or, lastly, the District of Delaware (but with assignment
to a judge other than the judge to whom the constituent Delaware action is now assigned); and ii)
‘The Section 1407 motion as tiled before the Panel included an additional action pending in the District
of Delaware, P/mrmaStem Therapeutics, Inc. v. ViczCe/Z, Inc., etal., C.A. No. 1:02-148. Trial has occurred
in this action and an appeal from the judgment entered in the action has been taken to the United States Court
of Appeals for the Federal Circuit. Accordingly, the question of Section 1407 transfer for coordinated or
consolidated pretrial proceedings with respect to this action is now moot. Should subsequent developments
result in the return ofthe action for additional pretrial proceedings to the Delaware district (the court selected
as the transferee district for this docket), the action may be considered as a potential tag-along action in
accordance with Panel and local court rules. See Rule 7.5, R.P.J.P.M.L., 199 F.R.D. 425, 436 (2001).

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Stembanc expressly requests that the Panel sever and simultaneously remand to the Northern District
of California the claims asserted against it in the Northern District of California action (if this request
is denied, then Stembanc would support selection of the Northern District of California or the
Northern District of Ohio as transferee district).
On the basis of the papers filed and hearing session held, the Panel finds that the actions in
this litigation involve common questions of fact and that centralization in the District of Delaware
will serve the convenience of the parties and witnesses and promote the just and efficient conduct
of the litigation. At issue in each of the patent infringement actions brought by Pharma are Pharma
patents that relate to compositions and methods for the preservation of stem cells derived from
human umbilical cord blood. The sixth MDL-1660 action presents claims arising from allegations
of patent misuse of the same patents and also raises issues similar to those that have been filed in
counterclaims in several of the other MDL-1660 actions. All actions can thus be expected to share
factual and legal questions conceming such matters as the technology underlying the patents, prior
art, claim construction and issues of infringement involving the patents. Centralization under
Section 1407 is necessary in order to eliminate duplicative discovery, prevent inconsistent pretrial
rulings, and conserve the resources ofthe parties, their counsel and the judiciary.
Parties opposing the motion before the Panel have argued, inter alia, that Section1407 transfer
should be denied because i) transfer would retard the progress of an earlier patent infringement action
brought by Pharma in the District of Delaware (supra, note 1) that had been pending since 2002, had
been the subject of one trial (whose verdicts were partially set aside pursuant to post-trial motions),
and is now on appeal; ii) alternatives to 1407 transfer were available to address any common discovery
matters and to prevent inconsistent pretrial rulings; and/or iii) transfer would be unduly burdensome
or otherwise prejudicial. We are not persuaded by these contentions. While we applaud every
cooperative effort undertaken by parties to any litigation, we observe that transfer under Section 1407
has the benefit of placing all actions in this docket before a single judge who can structure pretrial
proceedings to consider all parties’ legitimate discovery needs while ensuring that common parties and
witnesses are not subjected to discovery demands which duplicate activity that has already occurred
or is occurring in other actions. Furthermore, by choosing to centralize this litigation in the District
of Delaware and to assign it to the judge before whom Pharma’s 2002 Delaware infringement action
was brought, we will be placing these actions before a transfereejudge i) who is already familiar with
many ofthe technological and legal issues posed by these actions, and ii) who will have the flexibility
to structure any pretrial proceedings in the six current MDL- l 660 actions with any pretrial proceedings
that may later present themselves in the 2002 Delaware action (upon resolution of pending appeals),
so that any common matters may be addressed jointly while still ensuring that any matters unique to
the 2002 action or the six centralized MDL-1660 actions may proceed on their own separate tracks.
In seeking severance and remand of the third-party claims asserted against it, Stembanc argues
that the uniqueness and/or simplicity of those claims renders their inclusion in MDL- 1 660 unnecessary
or inadvisable. We are not persuaded by these contentions on the basis of the record now before us.
As Section 1407 proceedings evolve in the transferee district, Stembanc may at some point wish to
renew its arguments and to approach the transferee judge for a suggestion of remand. We note that
whenever the transferee judge deems remand of any claims or actions appropriate, procedures are

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available whereby this may be accomplished with a minimum of delay. See Rule 7.6, R.P.J.P.M.L.,
199 F.R.D. at 436-38.
IT IS THEHFORE ORDERED that, pursuant to 28 U.S.C. §1407, the actions listed on the
attached Schedule A and pending outside the District of Delaware are transferred to the District of
Delaware and, with the consent of that court, assigned to the Honorable Gregory M. Sleet for
coordinated or consolidated pretrial proceedings with the action pending in that district and listed on
Schedule A.
FOR THE PANEL:
Wm. Terrell Hodges
Chairman

SCHEDULE A ` g
MDL—1660 -— ln re PharmaStem Therapeutics, Inc., Patent Litigation
Central District of California
PharmaStem Therapeutics v. CureS0urce, Inc., et al., C.A. No. 8:04-921
Northern District of California
PharmaStem Therapeutics, Inc. v. Cord Blood Registry, Inc., et al., C.A. No. 3:04-3072
District of Delaware
ViaCell, Inc., et al. v. PharmaStern Therapeutics, Inc., C.A. No. 1:04-1335%
Middle District of Florida i
PharmaStem Therapeutics, Inc. v. Crjyo-Cell International, Inc., et al.,
C.A. No. 8:04-1740
District of Massachusetts
PharmaStem Therapeutics, Inc. v. ViaCell, Inc., et al., C.A. N0. 1:04-11673
Eastern District of Pennsylvania
PharmaStem Therapeutics, Inc. v. C0rCell, Inc., et al., C.A. No. 2:04-3561