University of Massachusetts v L’Oréal: a patent infringement claim turns into a disaster for global cosmetics behemoth

University of Massachusetts v L'Oréal

1. University of Massachusetts v L’Oréal: the facts

On 23 July 2002, the United States Patent and Trademark Office (‟USPTO”) issued United States (‟US”) patent number 6,423,327, entitled ‟Treatment of Skin with Adenosine or Adenosine Analog” (‟Patent 327”) to inventors James G. Dobson and Michael F. Ethier. While Patent 327 lists Mr Dobson and Mr Ethier as inventors, it sets out that the University of Massachusetts, a public institution of higher education in Massachusetts, is the assignee.

The Patent 327’s application is a continuation of US patent application number 09/672,348, filed on 28 September 2000 – now Patent 327 – which is a continuation of US patent application number 09/179,006, filed on 26 October 1998, now abandoned.

Patent 327 summarises the invention as follows: ‟a method for enhancing the condition of unbroken skin of a mammal (i.e. a human) by reducing one or more of wrinkling, roughness, dryness or laxity of the skin, without increasing dermal cell proliferation, the method comprising topically applying to the skin a composition comprising a concentration of adenosine in an amount effective to enhance the condition of the skin without increasing dermal cell proliferation, wherein the adenosine concentration applied to the dermal cells is 10.sup.-3 M to 10.sup.-7 M”.

On 11 November 2003, the USPTO issued US patent number 6,645,513, also entitled ‟Treatment of skin with adenosine or adenosine analog” (‟Patent 513”), to the same inventors, Mr Dobson and Mr Ethier. University of Massachusetts is also the assignee listed on Patent 513.

Patent 513, which was filed on 28 June 2002, is a continuation of Patent 327 (together, the ‟Patents”). The Patents share the same title, abstract, inventors, specification, assignee, and some of their claims. Indeed, claims 1 and 9 of the Patents are also identical, except for the claimed concentration of adenosine applied to the dermal cells. Specifically, Patent 327 claims an adenosine concentration of 10-4 M to 10-7 M, while Patent 513 claims a concentration of 10-3 M to 10-7 M.

The Patents also share the same exclusive licensee.

Teresian Carmelites Inc. is a Massachusetts’ based religious company, which presents itself as a ‟non-profit Christian monastery dedicated to prayer, contemplation, and service to the poor and marginalised” (‟TC”). TC‘s president and director is Dennis Wyrzykowski, a self-described ‟former monk turned investor – spiritual and entrepreneurial guide – educator”, who seems to have led a rather colourful and secular life so far, in spite of the strict values towards a hermit and monastic life, prescribed by the Roman Catholic mendicant religious order the Carmelites.

I understand that through Mr Dobson’s long-standing relationship with the religious order, TC became aware of the technology covered by the Patents. TC, led by ex-brother Wyrzykowski, who, in addition to a taste for outrageous moustaches, is a business-savvy and pretty pugnacious individual, negotiated a licence and founded Carmel Laboratories, LLC (‟CL”), a wholly-owned for-profit subsidiary of TC, which profits were to be used to support TC’s charitable works.

In their ‟first amended complaint for patent infringement”, filed on 18 August 2017 (the ‟Complaint”), the University of Massachusetts and CL claim that the former is the assignee, and the latter the ‟exclusive licensee”, of the Patents, although it appears that CL may have been dissolved by court order on 30 June 2021.

In the Complaint, the University of Massachusetts and CL (together, the ‟Claimants”) set out that CL is the exclusive licensee of the Patents for all cosmetic applications, and has been since 2008. Using the patented adenosine technology, CL allegedly developed ‟Easeamine”, an anti-aging face cream that it released for sale in 2009.

Further to some research, it appears that the website www.Easeamine.com has now shut down, and that there were several possible allegations of credit card and debit card charge scams, from ‟EASEAMINE CARMEL LABS 508 MA”, over the years.

The Claimants filed a lawsuit, with the US district court in Delaware, against:

  • its US wholly-owned subsidiary, Delaware incorporated, L’Oréal USA, Inc. (‟L’Oréal USA”),

(together, the ‟Defendants”), on 30 June 2017, which was later amended via the Complaint, in August 2017.

In the Complaint, the Claimants allege that:

  • the Defendants use the technology patented under the Patents, without having secured any licence or assignment of rights from the Claimants;
  • the Defendants have been aware of the Claimants’ adenosine technology and the Patents since at least 2002, as evidenced by the numerous references to the Patents, set out in the Defendants’ (failed) US patent application number 10/701,495 entitled ‟Method for softening lines and relaxing the skin with adenosine and adenosine analogues” (which was rejected), and then set out in the Defendants’ (granted) US patent applications number 9,018,177 and 9,023,826 and 9,072,919 and 9,107,853;
  • in fall of 2003, an agent of the Defendants contacted Mr Dobson to discuss the Patents but failed to secure a licence to the Patents from him;
  • nonetheless, after speaking with Mr Dobson, and in full knowledge of the technology exclusively licenced to CL, the Defendants began creating, marketing and selling cosmetic products using the patented adenosine technology, in particular for L’Oréal’s brands Biotherm, the Body Shop, Carita, Decleor, Garnier, Giorgio Armani, Helena Rubinstein, Kiehl’s, L’Oréal Paris, La Roche-Posay, Lancôme, Maybelline, Roger&Gallet, Shu Uemura, Vichy and Yves Saint-Laurent (together, the ‟Accused Adenosine Products”);
  • such Accused Adenosine Products are sold, in particular in Delaware, by L’Oréal USA;
  • due to public focus on the Accused Adenosine Products, projected sales of the CL’s Easeamine did not materialise, resulting in lost revenues to CL and, ultimately, to TC;
  • TC’s plummeting funds left it unable to pay the monastery’s mortgage, and to lapse payments on obligations it undertook to finance the launch of Easeamine. TC was forced to sell off certain properties it owned to prevent foreclosure on the monastery, and was unable to maintain health insurance for its members. The monastery was unable to use the projected Easeamine profits to fund its charitable works, and
  • in March 2015, Mr Wyrzykowski, president of TC and CL, sent a letter to Jean-Paul Agon, CEO of L’Oréal, stating his belief that the Accused Adenosine Products infringe the Patents, and affirming that CL is the exclusive licensee of the Patents but no out-of-court settlement was reached by the Claimants and the Defendants.

In the Complaint, it is set out that the Claimants sue the Defendants for:

  • infringement of Patent 327;
  • infringement of Patent 513;
  • willful and deliberate infringement of the Patents, entitling the Claimants to increased damages and to attorney’s fees and costs incurred in prosecuting the action as well as prejudgment and post-judgment interest, and
  • a permanent injunction enjoining the Defendants from further infringing the Patents.

2. University of Massachusetts v L’Oréal: procedural history

As mentioned above, the Claimants filed their legal action against the Defendants on 30 June 2017, asserting causes of action for the alleged infringements of the Patents.

On 4 August 2017, L’Oréal USA filed a motion to dismiss the Claimants’ original complaint.

The Claimants subsequently filed the Complaint on 18 August 2017.

In response, L’Oréal USA filed a motion to dismiss the Complaint on 23 August 2017, alleging that the causes of action failed to state a claim.

L’Oréal followed suit on 16 October 2017, filing a motion to dismiss for lack of personal jurisdiction and failure to state a claim upon which relief can be granted.

The US district court for the district of Delaware, in its judgment handed down by Sherry R. Fallon US magistrate judge, on 13 November 2018, decided to:

  • deny L’Oréal’s and L’Oréal USA’s motions to dismiss the Claimants’ causes of action for direct infringement of the Patents, under the allegations of failure to state a claim, finding that the Claimants had properly pled direct infringement, knowledge and intent, in the Complaint;
  • deny L’Oréal’s and L’Oréal USA’s motions to dismiss the Claimants’ causes of action for induced infringement of the Patents, finding instead that the Claimants had properly pled induced infringement, in the Complaint, in particular by demonstrating that the Defendants had induced customers to use the patented method;
  • deny L’Oréal’s and L’Oréal USA’s motions to dismiss the Claimants’ causes of action for contributory infringement of the Patents, under the allegations of failure to state a claim, finding that the Claimants had properly pled contributory infringement in the Complaint, in particular by pleading that the Accused Adenosine Products have no substantial non-infringing use;
  • deny L’Oréal’s and L’Oréal USA’s motions to dismiss the Claimants’ causes of action for wilful infringement of the Patents, under the allegations of failure to state a claim, finding that the Claimants had properly pled wilful infringement, knowledge, wilfulness and intent, in the Complaint, and
  • grant L’Oréal’s motion to dismiss the Claimants’ cause of action for lack of personal jurisdiction of the Delaware court over French company L’Oréal, without permitting the Claimants to conduct jurisdictional discovery.

With the case then proceeding only against L’Oréal USA, the district court ruled on a dispute about the proper construction of one limitation of the claim that is representative for present purposes (Claim Construction Order, University of Massachusetts v. L’Oréal USA, Inc., No. 1:17-cv-00868 (D. Del. Apr. 9, 2020), ECF No. 114). Relying on the construction, the district court subsequently held another limitation of the claim indefinite (University of Massachusetts v. L’Oréal USA, Inc., 534 F. Supp. 3d 349 (D. Del. 2021) Summary Judgment Opinion). On that basis, the court entered into a final judgment of invalidity of the asserted claims, against the Claimants.

The Claimants timely appealed the judgment of the US district court for the district of Delaware, to the US court of appeals for the federal circuit, challenging both the indefiniteness and personal-jurisdiction rulings.

The US court of appeals for the federal circuit, in its judgment handed down by Colm F. Connolly US chief judge, on 13 June 2022, decided to:

  • reject the district court’s claim construction, on which the indefiniteness ruling depends, as understood by both parties on appeal;
  • vacate the indefiniteness ruling because the claim construction was rejected;
  • remand for further proceedings;
  • conclude that the Claimants were entitled to jurisdictional discovery, and
  • vacate the dismissal of L’Oréal.

3. What on earth was – is – L’Oréal thinking?

L’Oréal has obviously played the card of the titan against the midget, so far, ignoring the Claimants’ cease-and-desist letter, as well as every possible attempt made by the Claimants to settle the dispute out of court.

L’Oréal has then proceeded onto implementing bullying strategies to dismiss the case, again and again, for futile reasons (lack of personal jurisdiction, claim construction, indefiniteness). These tactics worked with the first degree court and judge, but were rejected by the more enlightened and grounded appeals’ judge.

In the meantime, while muddying the waters, L’Oréal attempted to diverge everyone’s attention from the real legal issue at stake here, which is that it is very plausible that they have violently, wilfully and repeatedly breached the Patents, as well as all the contractual and intellectual property rights of the Claimants.

Since such breaches have been going on for around 10 years, with the sales of the Accused Adenosine Products by L’Oréal around the world, the amount of damages due to the Claimants may reach stratospherical heights.

Also, since the appeal judgment confirmed that the Claimants are entitled to jurisdictional discovery, L’Oréal is now going to be constrained to disclose ALL confidential documents, data, know-how requested by the Claimants, to the Claimants and the courts, within the course of the discovery process, irrespective of the fact that L’Oréal is a French company and that both France and the USA are parties to the Hague Convention of 18 March 1970 which sets out provisions for the communication of evidence in the scope of foreign court proceedings.

In other words, L’Oréal is screwed.

Its only plausible and sensible option is to settle with the Claimants, in order to do some damage control, and attempt to preserve the remainder of its reputation, as well as its wallet. Such settlement must be confidential, for L’Oréal to mitigate this PR disaster and alleviate its image as a vulture and bully, which had no qualms in squeezing to death a then Roman Catholic group focusing on supporting the poor and most fragile members of society, in order to sell even more litres of creams and potions to unsuspicious members of the public.

It is obvious that the Claimants are open to discussions, in order to licence the Patents to L’Oréal, even more so now that CL has been wound up on the grounds of bankruptcy, and that TC is facing extremely serious financial difficulties after the debacle of the launch of their Easeamine products.

However, it is up to L’Oréal to make a serious offer, by offering the right price, to buy the (possibly permanent and irreversible) rights to the Patents, as well as the silence of the Claimants, via a confidential – and preferably out of court – settlement agreement.

Good luck, Yannick Chalme, ex-group general counsel at L’Oréal: you magistrally fucked up this case, so far, but it is never too late to right a wrong, stop acting like a bully, and think like a real legal strategist, no matter how easy it seems to slaughter the lamb facing you.

Crefovi’s live webinar: University of Massachusetts v L’Oréal – patent infringement case analysis – 24 August 2022

 

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