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Bayer Seeks Attorney Fees After $155M Hemophilia Drug IP Verdict

March 1, 2019 | Posted in : Fee Entitlement, Fee Jurisprudence, Fee Request

A recent Law 360 story by Taylor Arluck, “Bayer Seeks Fee After $155M Hemophilia Drug IP Verdict,” reports that Bayer pushed a Delaware federal court Friday to have a Takeda Pharmaceutical unit cover its legal costs on top of its $155 million jury verdict for patent infringement of a hemophilia treatment, arguing the case was "exceptional" because of its opponent's "refusal" to follow court instructions.  Bayer Healthcare LLC said Baxalta Inc.’s bad behavior before and during a six-day trial that ended on Feb. 4 — which included willfully disobeying a Delaware federal judge's claim construction order and disclosing a hemophilia drug's profitability in bad faith — met the definition of "exceptional" under federal law.  Under U.S.C. Section 285, a case can be deemed "exceptional," and thus eligible for an attorney fees award, and Bayer argued that it fit the bill because Baxalta engaged in "unreasonable behavior."

Bayer argued Baxalta's "unwillingness to play by the rules" and repeated and flagrant refusal to abide by U.S. District Judge Richard G. Andrews' instructions satisfied the requirements.  "Baxalta's pattern of conduct includes its repeated refusal to abide by the court's claim constructions, bad faith in executing discovery obligations, assertion of frivolous defenses at trial, attempts to mislead the jury, and repeated behavior that undermined the orderly progress of the litigation and trial," Bayer said in its motion for attorneys' fees.

The jury in the trial, which began on Jan. 28, deliberated for more than five hours before returning a verdict entirely in Bayer's favor.  According to the verdict form, the four patent claims in the suit are neither obvious nor invalid for lack of enablement.  Bayer deserved 17.78 percent of an $873 million royalty base, leading to the $155 million figure, the jury said.  Those royalties are for sales between June 2016 and November 2018.

U.S. Patent Number 9,364,520 covers an improved way to treat hemophilia patients. Hemophiliacs have a deficiency of a blood-clotting protein called Factor VIII.  In December, Judge Andrews called out the Takeda unit for not following his claim construction order.  Baxalta later had experts advance arguments at trial that allegedly flouted the ruling.

"Baxalta's disregard for the court's claim construction is itself evidence of unreasonable litigation conduct that warrants an exceptional case finding," Bayer said.  "This ongoing pattern of disobedience of the markman order and the fact that the court had to then issue numerous other orders telling Baxalta not to do so establishes this case as exceptional."  Bayer also pointed to a January finding by Judge Andrews that Baxalta engaged in "bad faith" by belatedly and improperly disclosing information about the profitability of its flagship hemophilia treatment Adynovate.

"Rather than stand by its own documents created in the regular course of business and the testimony of its own financial witness, Baxalta served post hoc financials designed to deflate the damages award to which Bayer was entitled," Bayer said.  "The suspicious origin of the late-disclosed financials exemplifies the unreasonable measures that Baxalta took in litigating this case."  Bayer also said Baxalta tried to mislead the jury and present a frivolous defense at trial by falsely claiming it derived the '520 patent from Nektar Therapeutics, with whom it had a partnership in 2003 to develop the treatment.  Bayer ended the partnership a year later and pursued its own research.

The case is Bayer Healthcare LLC v. Baxalta Inc. et al., case number 1:16-cv-01122, in the U.S. District Court for the District of Delaware.