United States District Court, D. Delaware
COSMO TECHNOLOGIES LIMITED, VALEANT PHARMACEUTICALS INTERNATIONAL, and VALEANT PHARMACEUTICALS LUXEMBOURG S.A.R.L., Plaintiffs,
ACTAVIS LABORATORIES FL, INC., Defendant. COSMO TECHNOLOGIES LIMITED, VALEANT PHARMACEUTICALS INTERNATIONAL, and VALEANT PHARMACEUTICALS LUXEMBOURG S.A.R.L., Plaintiffs,
ALVOGEN PINE BROOK, LLC, Defendant.
HONORABLE LEONARD P. STARK UNITED STATES DISTRICT JUDGE.
Wilmington this 27th day of March, 2019:
before the Court is Defendant Actavis Laboratories Fl,
Inc.'s ("Actavis") Motion for Attorneys'
Fees Pursuant to 35 U.S.C. § 285 (C.A. No. 15-164 D.I.
266) and Defendant Alvogen Pine Brook, LLC's
("Alvogen") Motion Under 35 U.S.C. § 285 for a
Declaration that this Case Is Exceptional and for an Award of
Its Attorneys' Fees (C.A. No. 15-193 D.I. 249). Having
reviewed the parties' briefs and accompanying
declarations and exhibits (C.A. No. 15- 164 D.I. 267, 274,
276; C.A. No. 15-193 D.I. 250, 251, 259, 261), IT IS
HEREBY ORDERED that both motions are GRANTED
IN PART for the reasons stated below.
February 2015, Plaintiffs Cosmo Technologies Limited, Valeant
Pharmaceuticals International, and Valeant Pharmaceuticals
Luxembourg S.A.R.L. (collectively, "Plaintiffs")
sued Actavis for infringement of six patents and sued Alvogen
for infringement of three patents. (D.I. 1; see also
C.A. No. 15-193 D.I. 1) In November 2015, Plaintiffs filed a
First Amended Complaint dropping two patents from suit
against Actavis. (D.I. 48) In May 2016, Plaintiffs filed a
Second Amended Complaint adding one patent against Actavis
and Alvogen (collectively, "Defendants"). (D.I.
118; see also C.A. No. 15-193 D.I. 116) Plaintiffs
maintained infringement allegations against Actavis regarding
over 50 claims in five patents - U.S. Patent Nos. 7, 410, 651
(the '"651 patent"), 8, 293, 273 (the
"'273 patent"), 8, 784, 888 (the '"888
patent"), RE 43, 799 (the '"799 patent"),
and 9, 320, 716 (the '"716 patent") - until two
weeks before trial. (D.I. 214 at 6; D.I. 215 Ex. 17; D.I. 267
at 2-3) Similarly, Plaintiffs maintained infringement
allegations against Alvogen regarding over 35 claims in four
patents - the '651, '888, '799, and '716
patents - in the same period. (D.I. 214 at 10; D.I. 215 Ex.
17; C.A. No. 15-193 D.I. 250 at 2)
the parties' pretrial order dated April 27, 2017,
Defendants expressed concern about Plaintiffs'
unwillingness "to meaningfully reduce the number of
asserted claims on which they will proceed to trial."
(D.I. 215 Ex. 17) Defendants stated that
"Plaintiffs' failure to cooperate" was
"imposing unnecessary trial preparation costs and
unfairly prejudic[ing] Defendants, who remain in the dark
about the true scope of the trial set to begin in several
weeks," prejudice that "will be exacerbated if
Plaintiffs attempt a last minute reduction of claims on the
eve of trial." (D.I. 215 Ex. 17; see also D.I.
224 at 10, 14) At the May 5 pretrial conference, the Court
ordered Plaintiffs to identify by May 8 a maximum of two
claims per patent against each defendant, which "will be
claims that the defendants have a right to assume are the
ones that the plaintiffs in good faith really do intend to go
to trial on." (D.I. 224 at 16-17) The Court further
advised the parties: "I encourage you to narrow [the
case] further after next Wednesday [May 10] in a reasonable
way which would probably involve keeping each other in the
loop and making sure no one is crying foul, that oh, you
dropped this at the last minute." (Id. at 17)
Pursuant to the Court's order, on May 8, Plaintiffs
dropped the '716 patent and asserted one claim of each of
the patents remaining against each defendant (i.e., four
claims asserted against Actavis and three claims asserted
against Alvogen). (See D.I. 221 at 1) Yet nine days
later, on May 17 at 7:45 p.m., just two business days before
trial and without any warning to Defendants (or the Court),
Plaintiffs also dropped the '799 and '651 patents.
(See D.I. 223 at 1) In light of Plaintiffs'
"last-minute without-warning decision to drop two
patents," the Court reduced the parties' trial
presentation time in a manner requested by Defendants.
(See D.I. 225)
bench trial commenced on May 22. Plaintiffs pursued
infringement of the '888 patent against both defendants
and the '273 patent against Actavis only. Following the
close of Plaintiffs' case-in-chief, Defendants moved for
judgment as a matter of law ("JMOL") under Federal
Rule of Civil Procedure 52(c) on non-infringement, which the
Court granted. (D.I. 243 ("Tr.") at 332) The Court
later issued an opinion explaining further the basis for its
bench ruling during trial. (D.I. 249) On January 14, 2019,
the Court of Appeals for the Federal Circuit summarily
affirmed this Court's entry of judgment for Defendants
and against Plaintiffs. (D.I. 281)
"exceptional" patent cases, a Court may award
"reasonable attorney fees" to the "prevailing
party." 35 U.S.C. § 285. A case is
"exceptional" under § 285 if it is
"simply one that stands out from others with respect to
the substantive strength of a party's litigating position
(considering both the governing law and the facts of the
case) or the unreasonable manner in which the case was
litigated." Octane Fitness, LLC v. ICON Health &
Fitness, Inc., 134 S.Ct. 1749, 1756 (2014). Ultimately,
the Court must make a discretionary decision based on the
totality of circumstances, which may include factors such as
"frivolousness, motivation, objective unreasonableness
(both in the factual and legal components of the case) and
the need in particular circumstances to advance
considerations of compensation and deterrence."
Id. at 1756 & n.6. A party moving for
attorneys' fees must demonstrate, by a preponderance of
the evidence, that a case is "exceptional."
Id. at 1758.
There is no dispute that Actavis and Alvogen are prevailing
parties. Therefore, the issue presented here is whether this
case is exceptional.
Neither Defendant contends that this case should be deemed
exceptional from its inception. Instead, they seek an order
that Plaintiffs pay Defendants' fees incurred from June
and July 2016, when Defendants produced to Plaintiffs samples
of Defendants' proposed generic drug products.
(See D.I. 267 at 1 n.l; C.A. No. 15-193 D.I. 250 at
14) The Federal Circuit has affirmed decisions of District
Courts to deem cases exceptional from a particular date and
to award attorneys fees from (and only from) such date.
See, e.g., Cartner v. Alamo Grp., Inc., 561
Fed.Appx. 958, 969-70 (Fed. Cir. 2014). Weighing the totality
of facts and circumstances, the Court finds that this case is
exceptional within the meaning of Section 285 and that an
award of Defendants' reasonable attorneys' fees
incurred since the pretrial conference is appropriate for
purposes of compensation and deterrence.
There is no question that this case stands out from others.
Trial began on May 22, 2017 - and ended upon conclusion of
Plaintiffs' case-in-chief, as Defendants prevailed on
their Rule 52(c) motion. This is a truly rare occurrence (and
nearly-unprecedented for the undersigned
strength of Plaintiffs' litigating positions also favors
finding the case exceptional. With respect to the '888
patent, which was asserted against both Defendants,
Plaintiffs were required to prove at trial that the accused
products had "macroscopically homogenous
composition," which the Court had construed as "a
composition of uniform structure throughout, as observed by
the naked eye." (D.I. 267 at 15) As noted in the
Court's order on the JMOL, the Court adopted
Plaintiffs' proposed construction - one which requires
observation by a particular test (i.e., with the naked eye).
(Tr. at 334) Nevertheless, Plaintiffs presented no evidence
of anyone examining Defendants' sample tablets with her
naked eye. (Id. at 334, 337) In fact, Plaintiffs
never even bothered to provide samples of the products (which
they had) to Dr. Davis, their primary infringement expert, at
any time throughout the course of the
litigation. (Id. at 335) Nor have Plaintiffs
ever provided any explanation for why they did not give Dr.
Davis the samples and insist that he give an opinion on
"macroscopically homogenous composition" by
applying the test their own proposed claim construction
required: observation by the naked eye. (See D.I.
249 at 15 (Court stating that Plaintiffs' reasons for not
conducting "naked eye" test "are entirely
unexplained on the record"); Tr. at 293)) The Court can
only conclude that Plaintiffs' failure to attempt the
test required by their own claim construction - especially a
test that requires nothing more than giving their expert
samples and asking him to look at them - is objectively
unreasonable and confirms the substantive weakness of
Plaintiffs' claims of infringement of the '888 and
respect to the '273 patent, which was asserted against
Actavis only, Plaintiffs were required to prove that the
accused product contained stearic acid. (Id. at 338)
For unexplained reasons, Plaintiffs failed to have their
expert test the samples of the accused product for the
presence of stearic acid, testing which was indisputably
feasible; instead, Plaintiffs' experts did a variety of
other tests on them. (Id. at 297-98, 339-40)
Plaintiffs' failure to perform the necessary test,
combined with the fact that Actavis repeatedly told
Plaintiffs (from even before the lawsuit was filed) that its
product did not contain stearic acid, was objectively
unreasonable and confirms the substantive weakness in
Plaintiffs' infringement position.
manner in which Plaintiffs litigated this case after the
pretrial conference further supports the Court's finding
that this is an exceptional case. Despite Defendants'
pleas in the April 27 proposed pretrial order to narrow the
asserted claims in order to reduce prejudice to Defendants in
the form of unnecessary trial preparation and cost (D.I. 215
Ex. 117), Plaintiffs maintained their assertion of at least
35 patent claims against each Defendant until two weeks
before trial. Then, when ordered to reduce their asserted
claims, and warned against reducing their claims further
thereafter without providing advance notice to Defendants,
Plaintiffs undertook a "last-minute without-warning
decision to drop two patents:" just two business days
before trial, they reduced their case to only two claims (one
each in the '888 and '273 patents) for trial against
Actavis and one claim (claim 6 of the '888 patent) for
trial against Alvogen. (See D.I. 225) While parties
should certainly "abandon positions or claims when it
appears they are unlikely to prove fruitful," St.
Clair Intellectual Prop. Consultants, Inc. v. Toshiba
Corp., 2015 WL 7451158, at *3 (D. Del. Nov. 23, 2015),
the timing and circumstances in which Plaintiffs did so was
unreasonable, prejudicial to Defendants,  and reflective of
the substantive weakness of Plaintiffs'
interests of deterrence also support the Court's
conclusion. The Court is not
finding that this case should not have been brought, nor that
Plaintiffs should have refrained from litigating it
vigorously. However, the decisions Plaintiffs made about how
to litigate this case (including what tests to conduct and
not conduct, and when and what claims to drop and not drop)
resulted in a situation where, by the time of final trial
preparation, this case came to "stand out from the
rest," in a manner making it exceptional under §
285. After the May 5, 2017 pretrial conference, the totality
of circumstances warrants requiring Plaintiffs to pay the