Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_05-cv-01938/USCOURTS-cand-3_05-cv-01938-20/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

CHIRON CORPORATION,

Plaintiff,

 v.

SOURCECF INC., SOURCECF CLINICAL

RESEARCH & DEVELOPMENT, L.L.C.,

MAXOR NATIONAL PHARMACY

SERVICES CORPORATION d/b/a IV

SOLUTIONS, FOUNDATION CARE L.L.C.,

and PHARMACEUTICAL SPECIALTIES,

INC.,

Defendants. /

No. C 05-01938 WHA

ORDER DENYING MOTION 

FOR ATTORNEY’S FEES 

AND VACATING HEARING

INTRODUCTION

In this patent-infringement action, wherein a judgment of non-infringement has been

entered after a bench trial, defendants now move for an award of attorney’s fees pursuant to

35 U.S.C. 285. Because this order finds that this was not an exceptional case, the motion is

DENIED.

STATEMENT

The procedural and factual history of this action has been discussed thoroughly in prior

orders and will not be repeated in similar detail here. Briefly, plaintiff Chiron Corporation is

the owner of United States Patent No. 6,890,907 (“the ’907 patent”). The ’907 patent

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purportedly disclosed a method of treating lung infections, namely using certain concentrations

of liquid tobramycin with high-efficiency nebulizers, for patients suffering from cystic fibrosis.

Plaintiff commenced this action on May 10, 2005. Plaintiffs alleged that defendants

SourceCF, Inc., SourceCF Clinical Research & Development, L.L.C., Maxor National

Pharmacy Services Corporation (IV Solutions), Foundation Care L.L.C., and Pharmaceutical

Specialities, Inc. infringed, induced infringement of and/or contributorily infringed the ’907

patent by (1) selling a product called the eFlow inhaler and (2) instructing doctors and CF

victims how to use it.

At the time of the issuance of the ’907 patent, it was uncontested that the compounding

pharmacists were dispensing concentrations of tobramycin of 100 mg/ml for use in the eFlow

device. The parties entered into settlement negotiations almost immediately after the filing of

this lawsuit, with defendants essentially conceding that such a concentration of tobramycin fell

within the claims of the ’907 patent. Shortly after these negotiations, the pharmacy defendants

stopped filling prescriptions for concentrations of 100 mg/ml. On December 1, 2005, upon the

stipulated motion of the parties, this Court granted plaintiff a permanent injunction barring

defendants from dispensing concentrations of tobramycin between 60 and 200 mg/ml for use in

the eFlow device. By that time, the pharmacy defendants had shifted to dispensing

concentrations of 40 mg/ml and 50 mg/ml tobramycin for use in the eFlow device pursuant to

physicians’ orders.

Chiron then contended that even concentrations of 50 mg/ml or less violated the patent. 

An issue remaining for trial, therefore, was whether concentrations of 50 mg/ml or less

infringed the ’907 patent. Given the narrow scope of the dispute, the Court agreed to advance

the trial date. To make this workable for the Court’s calendar, the parties agreed to narrow the

issues for trial. Likewise, plaintiff dropped its claims for money damages.

A bench trial commenced on April 17, 2006, limited to the infringement issue. On

May 16, 2006, this Court issued findings of fact and conclusions of law, ruling that defendants

were not liable for infringement under either a theory of literal infringement or infringement by

the doctrine of equivalents. Defendants now request attorney’s fees totaling $667,522.75.

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ANALYSIS

Pursuant to 35 U.S.C. 285, “[t]he court in exceptional cases may award reasonable

attorney fees to the prevailing party.” The determination of whether a case is exceptional and,

thus, eligible for an award of attorney’s fees is a two-step process. The district court must first

determine whether the case is exceptional, a question of fact reviewed for clear error. If the

case is exceptional, then the district court must then decide whether an award is appropriate. 

The latter determination is reviewed for abuse of discretion. Cybor Corp. v. Fas Techs., 138

F.3d 1448, 1460 (Fed. Cir. 1998) (en banc).

The party seeking the award of fees must establish that the case is exceptional by clear

and convincing evidence. A case may be exceptional where there has been inappropriate

conduct such as willful infringement; fraud or inequitable conduct in procuring the patent;

litigation misconduct; vexatious or unjustified or otherwise bad faith pursuit of objectively

baseless claims; violations of FRCP 11; or similarly unprofessional behavior. Brooks

Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F.3d 1378, 1381 (Fed. Cir. 2005).

Defendants highlight six examples of purported misconduct in an attempt to establish

that this case is exceptional. This order finds that defendants have failed to demonstrate by

clear and convincing evidence that any of the alleged conduct makes this case exceptional. This

order thus concludes that defendants’ motion fails at the first step of the analysis.

First, defendants contend that Chiron committed misconduct by inflating its damages

claim and then withdrawing the damages claim prior to trial. Defendants have not shown,

however, that Chiron “inflated” its estimate of damages. Rather, the parties’ experts simply

disagreed as to the calculation of damages in this action. Such commonplace disagreements

between paid experts do not per se constitute litigation misconduct. Likewise, it was not

misconduct for Chiron to drop its damages claim prior to trial. Litigation proceeds more

expeditiously when the parties agree to narrow the scope of issues. This was particularly true in

this action, given that the trial was set on an expedited schedule. It was a benefit to both parties

to try the case limited to the remedy of injunctive relief before the Court rather than before a

jury. Accordingly, the Federal Circuit has held that a losing party’s elimination of issues does

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not render a case exceptional under Section 285. See Beckman Instruments, Inc. v. LKB

Produkter AB, 892 F.2d 1547, 1553 (Fed. Cir. 1989).

Second, Chiron committed no misconduct by seeking an award at trial for purported

willful infringement. Chiron presented evidence and argument, ultimately unpersuasive, that

defendants attempted to create equivalent formulations of tobramycin to a formulation conceded

by defendants to be infringing. The fact that Chiron was incorrect as to the equivalence of

concentrations of 100 mg/ml and 50 mg/ml does not make the argument so baseless as to fall to

the level of exceptional misconduct.

Third, defendants maintain that Chiron perpetrated misconduct by arguing that

defendants were liable for contributory infringement on a “non-staple of commerce” theory. 

Chiron initially argued that the eFlow device served as nothing more than an device aimed at

infringing the ’907 patent. Defendants persuasively argued at the final pre-trial conference that

the eFlow device had significant other uses such that it constituted a “staple of commerce.” 

Chiron conceded this point at the pre-trial conference. Such a concession is evidence of good

faith rather than misconduct. Again, the narrowing of issues by the losing party does not satisfy

Section 285. Beckman, 892 F.2d at 1553.

Fourth, defendants argue that Chiron should have never alleged many of its claims,

given that many of Chiron’s claims whittled away during the course of litigation. Chiron was

well within reason to assert a broader range of claims and then narrow them in good faith as

discovery and motion practice progressed. Again, especially given the expedited trial date

requested by defendants, Chiron did a favor to both parties and the Court by narrowing the

scope of the issues for trial. This narrowing does not suggest that Chiron lacked a reasonable

belief in the possibility of the success of their claims from the outset. Beckman, 892 F.2d at

1553.

Fifth, defendants claim that Chiron had no reasonable basis to contest the application of

estoppel to Chiron’s doctrine-of-equivalents argument. This Court ultimately found that the

incorporation of a prior-art reference into the ’907 patent disclaimed the scope of equivalents

sought by Chiron. Chiron, however, presented good faith support, in the form of legal and

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factual argument, for its contention that the incorporation of the prior-art patent did not disclaim

any equivalents. Although the Court did not agree with Chiron’s position, it nevertheless failed

to fall to the level of misconduct on Chiron’s part.

Sixth, defendants argue that Chiron committed misconduct by maintaining that

concentrations of 50 mg/ml or 40 mg/ml of tobramycin literally infringed the ’907 patent. This

Court found on at least two occasions, in the injunction order and in a pre-trial order regarding

the parties’ motions in limine, that Chiron had presented enough evidence to proceed to trial on

its theory of literal infringement. After carefully evaluating all of the relevant evidence, noninfringement was found. Simply losing after trial, however, does not make a case exceptional

for purposes of Section 285, particularly where a party’s claims have survived attack prior to

trial. See, e.g., Sulzer v. Textil, A.G. v. Picanol N.V., 358 F.3d 1356, 1370 (Fed. Cir. 2004).

CONCLUSION

For the foregoing reasons, defendants’ motion for attorney’s fees is DENIED. Finding no

further argument necessary, hearing on this motion is hereby VACATED.

IT IS SO ORDERED.

Dated: June 16, 2006 

WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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