Analysis: Ventria on ITC win barring rHSA products

Last month, October 2022, the US International Trade Commission ( ITC) affirmed an administrative law judge’s (ALJ’s) finding that products containing recombinant human serum albumins (rHSAs) made by a Chinese company infringe a patent belonging to  Ventria Bioscience.

In its opinion made public on October 11, the Commission banned  Wuhan Healthgen Biotechnology from importing its rHSA products to the US, unless it can prove they are “pure” enough—that is, they must contain more than 2% aggregated albumin.

But counsel for Ventria argues that this would be a “challenge” for Healthgen, since this would mean the Chinese manufacturer admitting that its products were not as pure as it has claimed.

Yet both parties view the outcome as a victory. Indeed, a spokesperson from Finnegan, which represented Healthgen in the case, said: “This is an important victory for Healthgen and customers of rHSA products, who have generally viewed Healthgen’s product as superior to Ventria’s.

“Ventria apparently felt threatened by Healthgen’s superior product, and decided to bring various legal actions and make spurious allegations against Healthgen rather than competing in the marketplace.”

Meanwhile, Ventria said in a statement that the outcome was a “win for American innovation and American manufacturing”.

“​Ventria Bioscience is pleased the ITC found Wuhan Healthgen in violation of US trade law,” the company said.

“The ITC affirmed the validity of the ’951 patent, affirmed that Ventria satisfies the domestic-industry requirement, and has excluded Wuhan Healthgen’s infringing products from the US market (in addition to imposing orders against Healthgen’s distributors for concealing the Chinese origin of these products).

“Regarding the ITC’s finding that one Wuhan Healthgen product does not infringe, that was specifically based on the conclusion that such product is “very impure”—hardly a victory for Wuhan Healthgen, and a result that should concern users of Healthgen’s rHSA.”

Plant-derived proteins

The patent in dispute (US patent number 10,618,951) covers plant-derived rHSAs and related products expressed by genetically engineered rice, developed by Ventria.

The rice seeds produce either human serum albumin, contained in blood, or lactoferrin, an iron-binding protein found, for example, in human milk. The albumins, or proteins, are extracted for use in the therapeutic and medical fields.

Healthgen was found to have used the proteins in its rHSA products, sold under the brand name  OsrHSA, which it imported to the US from China. Healthgen’s OsrHSA is supplied as ‘medium-grade’ and ‘culture-grade’ powder; and a ‘clinical-grade’ powder and liquid.

While the Commission affirmed the majority of the ALJ’s findings, it overturned one—that Healthgen’s medium-grade (cell culture) products infringe, stating that they were “very impure”.

While Healthgen’s legal representatives declined an interview with LSIPR, we interviewed two of Ventria’s legal counsel about the case.

Lead counsel for Ventria,  Beau Jackson, is a partner at Husch Blackwell in Kansas City, and leads the firm’s Section 337 practice. He works closely with  Crissa Cook, a patent attorney at Hovey Williams in Kansas and external IP counsel for Ventria.

What is your response to the outcome?

Beau Jackson: “We consider this a complete victory, because if Healthgen wanted to sell products that contain more than 2% aggregates, that would be outside the scope of the patent. The patent says what the patent says.

“The take-home point is Healthgen is found in violation of section 337 and their products are excluded from the US market, unless they can prove to US Customs that the products to be imported contain above 2% aggregates.

“And by making that representation, they're basically telling the market that their products are not as pure as they have been saying they are.

“Are Healthgen going to accurately market their products as impure (for example, having over 2% aggregates) in order to get them through US Customs? Either their products have below 2% aggregates and can’t be imported/sold, or they have above 2% aggregates and must be marketed as impure. Healthgen can’t have it both ways.”

What hurdles did you need to overcome at the ITC?

BJ: “We had to run the table to get a victory. The ITC could have said: ‘no, we disagree with the judge, the patent's invalid’—they didn't do that. They could have said ‘no, Healthgen's  products don't infringe at all’—but they said that this one clearly does.

“They could have held that Ventria doesn't qualify as an ITC domestic industry, but they agreed with the judge and said Ventria (an entirely US-operated company) meets the domestic industry requirement.

“Even though Ventria has proven a violation of Section 337, they could have argued that the public interest factors outweigh the need for a remedy. In other words, the US market or scientific community really needs this Healthgen product, otherwise people will be harmed—but they said ‘no, the exclusionary remedy for Healthgen’s patent infringement is not outweighed by any such public interest concerns’.

“They could have said that Healthgen is not undercutting Ventria on price, therefore no bond is necessary. But they said ‘no, we agree with the judge—Healthgen is clearly undercutting Ventria on price and there needs to be a bond during this presidential review period’.”

Is the distinction between clinical-grade and medium-grade products significant?

BJ: “What the Commission states in its opinion is the most important point. It says that to allow any importation of a Wuhan healthgen rHSA, there has to be a certification with testing data, using a methodology found acceptable by the Commission, that demonstrates the products to be imported do not have less than 2% aggregated albumin, ‘regardless of whether the imports are labelled as medium grade, or culture grade’. The 2% limitation is in the patent anyway.

“Now the burden is on Healthgen or its customers: if they want to import or sell this product in the US, they are going to have to prove that it has above 2% aggregated albumin. And that basically means that it’s an impure product.

“It doesn't matter if it's called clinical grade, or medium grade—there is a violation of Section 337 against Wuhan Healthgen for its infringement of this patent.”

Crissa Cook: “What the products are called is not really the point. They can call something medium grade, but if it's less than 2% aggregate, it still infringes. The Commission clearly says that it doesn't matter what you call it, the name is irrelevant. It's more a matter of the characteristics of the product that's being imported.

“The ALJ’s conclusion, weighing the evidence, was notwithstanding some of the test data that shows certain products don't have these purity levels.”

What is your view of how the ITC analysed the evidence?

CC: “The Commission didn't give as much weight to Healthgen’s certificates of analysis. Instead, they looked at the actual testing that had been done and said, some of this testing shows that these medium grade products are ‘very impure’.

“So that's been an important nuance in this case, and it's something we're going to be dealing with going forward when it comes to enforcement of the exclusion order. Because, again, if Healthgen is holding that their products have certain characteristics and the practicality of testing everything that comes in through import to verify whether it does or doesn't have these characteristics, creates a challenge for Healthgen.”

BJ: “So that’s why we don't really think of it in terms of victory on clinical grade, loss on medium grade—Healthgen is in violation of American trade law because it has been selling products that infringe the patent.

“Ventria's clinical-grade product,  Optibumin, can be used in in-vitro fertilisation and other really important contexts where performance and safety have to be guaranteed. Healthgen has a similar product, in both liquid and powder form, in the sense that it clearly has below 2% aggregates.

“If you read the public versions of the public interest arguments, Healthgen claimed that they're the only ones who have a recombinant albumin being used in a clinical context or being used in a drug.

“In fact, the opposite is actually true. It's Ventria’s  Exbumin product which is used in Merck’s (known as MSD outside the US) Ebola vaccine, and Ventria is very proud of that, whereas there’s no evidence that Healthgen’s rHSA has been used in any active drug.”

What happens next regarding Ventria’s strategy and positioning within the market?

BJ: “While we cannot disclose any legal strategy in terms of next steps, we remain proactive. We will be policing the exclusion order closely to ensure that Healthgen's products are rightly excluded from the US market.

“Biotechnology is obviously an increasingly important industry. And as Crissa mentioned, the ability to express recombinant proteins from things like transgenic rice seeds solves a lot of challenges within this sector of biotech. Ventria is the undisputed pioneer of that novel technology.

“But unfortunately, ever since it developed that technology, it's been fighting off misappropriation, infringement, unfair pricing, etc. There's literally people in jail in the US over this [a reference to two cases in 2018 involving  two Chinese nationals, and a  Chinese scientist, both convicted of trade secrets theft relating to Ventria’s patented technology].

“And, it's unfortunate when innovative companies have to fight not just one or two infringing and unlawful competitors, but they're almost fighting an entire country, given the Chinese government’s desire to dominate biotechnology.”

What does the outcome mean for SMEs in this field?

CC: “Ventria is a small company, so for it to have to take on the mantle of dealing with this, in addition to its day-to-day research, is challenging—they just want to research, develop and sell products. And they don't have an entire department devoted to legal issues, so this is not how they want to spend their time.”

BJ: “Absolutely. They don't want to spend their time with Crissa and me, they want to spend their time in the laboratory producing these important products.

“Look at all the letters that were filed in the case, from senators, Congress, governors, trade groups, bioscience groups. That probably illustrates the point we're trying to make in terms of how this case fits into the larger narrative. Most ITC cases don't generate that type of attention.”