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Timestamp: 2019-04-20 16:27:11+00:00

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FindACase | Idenix Pharmaceuticals LLC v. Gilead Sciences, Inc.
Idenix Pharmaceuticals LLC v. Gilead Sciences, Inc.
Gilead now renews its motion for judgment as a matter of law ("JMOL") (D.I. 535), which the Court took under advisement during trial and later denied as moot and with the opportunity to renew following entry of judgment (D.I. 533). In its JMOL motion, Gilead urges the Court to set aside the jury's verdict on the basis that Idenix's asserted patent claims are invalid for failure to meet 35 U.S.C. § 112's written description and enablement requirements. Gilead alternatively asks the Court to reduce the jury's damages award as unsupported by the evidence.
The Court addresses each of Gilead's JMOL arguments in turn, beginning with damages and then moving on to validity. For the reasons that follow, the Court finds that, while judgment as a matter of law is improper on damages and written description, the '597 patent is invalid for lack of enablement. Accordingly, the Court will grant in part and deny in part Gilead's motion.
In 2000, Idenix discovered an important modification and filed a provisional patent application at the United States Patent and Trademark Office ("PTO"). (See Provisional application No. 60/206, 585, filed May 23, 2000 (PX311)) Idenix's work addressed the placement of a methyl group (CH3) at the nucleoside's 2' (pronounced "two prime") up position. The application eventually led to, among others, U.S. Patent Nos. 6, 914, 054 ("'054 patent") and the '597 patent.
The Court entered judgment on the verdict. (D.I. 533) Thereafter, both parties filed post-trial motions. Idenix's motion - which is addressed in a separate Opinion (D.I. 587) - sought enhanced damages for Gilead's willful infringement, a higher ongoing royalty than the royalty on which the damages for past infringement were based, an award of attorney fees, and prejudgment interest at the prime rate. (D.I. 538) Gilead's motion, which is addressed here, asks the Court to find the '597 patent invalid for lack of enablement and/or written description. Gilead also contends that Idenix presented a legally insufficient damages case and seeks remittitur to a damages figure of no greater than $380 million. (D.I. 535 at 1) Alternatively, Gilead seeks a new trial.
The Court now turns to the issues raised in Gilead's motion.
Judgment as a matter of law is appropriate if "the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for [a] party" on an issue. Fed.R.Civ.P. 50(a)(1). "Entry of judgment as a matter of law is a sparingly invoked remedy, " one "granted only if, viewing the evidence in the light most favorable to the nonmovant and giving it the advantage of every fair and reasonable inference, there is insufficient evidence from which a jury reasonably could find liability." Marra v. Phila. Hous. Auth., 497 F.3d 286, 300 (3d Cir. 2007) (internal quotation marks omitted).
To prevail on a renewed motion for judgment as a matter of law following a jury trial, the moving party "must show that the jury's findings, presumed or express, are not supported by substantial evidence or, if they were, that the legal conclusions implied [by] the jury's verdict cannot in law be supported by those findings." Pannu v. Iolab Corp., 155 F.3d 1344, 1348 (Fed. Cir. 1998) (internal quotation marks omitted). "'Substantial' evidence is such relevant evidence from the record taken as a whole as might be accepted by a reasonable mind as adequate to support the finding under review." Perkin-Elmer Corp. v. Computervision Corp., 732 F.2d 888, 893 (Fed. Cir. 1984).
In assessing the sufficiency of the evidence, the Court must give the non-moving party, "as [the] verdict winner, the benefit of all logical inferences that could be drawn from the evidence presented, resolve all conflicts in the evidence in his favor, and in general, view the record in the light most favorable to him." Williamson v. Consol Rail Corp., 926 F.2d 1344, 1348 (3d Cir. 1991); see also Perkin-Elmer Corp., 732 F.2d at 893. The Court may not assess the credibility of witnesses nor "substitute its choice for that of the jury between conflicting elements of the evidence." Perkin-Elmer Corp., 732 F.2d at 893. Rather, the Court must determine whether the evidence reasonably supports the jury's verdict. See Dawn Equip. Co. v. Ky. Farms Inc., 140 F.3d 1009, 1014 (Fed. Cir. 1998); Gomez v. Allegheny Health Servs. Inc., 71 F.3d 1079, 1083 (3d Cir. 1995) (describing standard as "whether there is evidence upon which a reasonable jury could properly have found its verdict"); 9B Wright & Miller, Federal Practice & Procedure § 2524 (3d ed. 2008) ("The question is not whether there is literally no evidence supporting the party against whom the motion is directed but whether there is evidence upon which the jury properly could find a verdict for that party.").
Federal Rule of Civil Procedure 59(a) provides in pertinent part, "[t]he court may, on motion, grant a new trial on all or some of the issues - and to any party - as follows:... after a jury trial, for any reason for which a new trial has heretofore been granted in an action at law in federal court." New trials are commonly granted where "the jury's verdict is against the clear weight of the evidence, and a new trial must be granted to prevent a miscarriage of justice, " where "newly-discovered evidence exists that would likely alter the outcome of the trial, " where "improper conduct by an attorney or the court unfairly influenced the verdict, " or where the jury's verdict was "facially inconsistent." Zarow-Smith v. N.J. Transit Rail Operations, 953 F.Supp. 581, 584-85 (D.N.J. 1997) (internal citations omitted).
The decision to grant or deny a new trial is committed to the sound discretion of the district court. See Allied Chem. Corp. v. Daiflon, Inc., 449 U.S. 33, 36 (1980); Olefins Trading, Inc. v. Han Yang Chem Corp., 9 F.3d 282, 289 (3d Cir. 1993) (reviewing "district court's grant or denial of a new trial motion" under "abuse of discretion" standard). Although the standard for granting a new trial is less rigorous than the standard for granting judgment as a matter of law -in that the Court need not view the evidence in the light most favorable to the verdict winner -ordinarily a new trial should only be granted "where a miscarriage of justice would result if the verdict were to stand, " the verdict "cries out to be overturned, " or the verdict "shocks [the] conscience." Williamson, 926 F.2d at 1352-53.
With respect to damages, Gilead requests judgment as a matter of law, remittitur of the jury's damage award - to an amount not to exceed $380 million, which was the figure Gilead's expert, Dr. Putnam, testified was the maximum fully-paid-up royalty for the life of the patent that Gilead could owe Idenix - or a new trial. Gilead contends that Idenix's damages presentation was fatally deficient in two respects. First, Idenix's damages expert, Andrew Carter, failed to establish that the patent license agreements on which he relied were sufficiently comparable. Second, Carter and Idenix's damages case violated the Entire Market Value Rule ("EMVR"). The Court disagrees with Gilead.
Under 35 U.S.C. § 284, patentees are entitled to damages "adequate to compensate for the infringement, but in no event less than a reasonable royalty." Under the "hypothetical negotiation" approach to calculating a reasonable royalty, the finder of fact "attempts to ascertain the royalty upon which the parties would have agreed had they successfully negotiated an agreement just before infringement began." Asetek Danmark A/S v. CMI USA Inc., 852 F.3d 1352, 1362 (Fed. Cir. 2017). For purposes of this calculation, the negotiating parties are assumed to carry a mutual understanding that the asserted patent is valid and infringed. See Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1325 (Fed. Cir. 2009).
In litigating this issue, parties often point to "[t]he rates paid by the licensee for the use of other patents comparable to the patent in suit." Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F.Supp. 1116, 1120 (S.D.N.Y. 1970). The "licenses relied upon" must be "sufficiently comparable to the hypothetical license at issue." Lucent, 580 F.3d at 1325. The comparability analysis must account for relevant "technological and economic differences." Wordtech Sys., Inc. v. Integrated Networks Solutions, Inc., 609 F.3d 1308, 1320 (Fed. Cir. 2010) (internal quotation marks and citation omitted). "[A]lleging a loose or vague comparability between different technologies or licenses does not suffice." LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51, 79 (Fed. Cir. 2012).
To prevail on its JMOL, Gilead must show that the jury's damages award "is, in view of all of the evidence ... so outrageously high ... as to be unsupportable as an estimation of a reasonable royalty." Spectralytics, Inc. v. Cordis Corp., 649 F.3d 1336, 1345 (Fed. Cir. 2011). In evaluating Gilead's motion, the Court must remain mindful that "a reasonable royalty analysis necessarily involves an element of approximation and uncertainty." Ironworks Patents, LLC v, Apple, Inc., 255 F.Supp.3d 513, 528 (D. Del. 2017) (internal quotation marks omitted).
In sum, comparability issues do not provide a basis for granting Gilead any relief.
Infringement damages must '"separate or apportion the defendant's profits and the patentee's damages between the patented feature and the unpatented features.'" LaserDynamics, 694 F.3d at 67 (quoting Garretson v. Clark, 111 U.S. 120, 121 (1884)). For that reason, reasonable royalties must generally "be based not on the entire product, but instead on the smallest salable patent-practicing unit." Id. (internal quotation marks omitted). The Entire Market Value Rule ("EMVR") allows for an exception to this general requirement when the patentee shows that "the patented feature drives the demand for an entire multi-component product, " in which case the patentee may obtain damages "as a percentage of revenues or profits attributable to the entire product." Id.
Idenix counters that the EMVR does not apply in cases where, as here, the accused products are pharmaceuticals "covered in full by the claim" and the "active ingredient... provides the claimed therapeutic benefit." (D.I. 554 at 23) For this proposition, Idenix cites to AstraZeneca AB v. Apotex Corp., 782 F.3d 1324 (Fed. Cir. 2015). AstraZeneca involved a branded pharmaceutical patentee's suit against a generic competitor. The patent on the drug's active ingredient had expired, but the plaintiff still held "formulation patents claim[ing] three key elements - the drug core, the enteric coating, and the subcoating, " which encompassed the "complete omeprazole product" accused of infringement. Id. at 1338. The generic manufacturer defendant argued that, unless the active ingredient was excluded from the damages calculation, the EMVR would be violated. The Federal Circuit declined to apply the EMVR because "the [asserted] patents cover the infringing product as a whole, not a single component of a multi-component product." Id. It further concluded that, because the "formulation ... created a new, commercially viable omeprazole drug ... previously unknown in the art and ... novel in its own right, " the district court did not err in declining to "exclude the value of the active ingredient when calculating damages." Id. at 1340.
In response, Gilead correctly observes (see D.I. 565 at 9) that AstraZeneca explicitly refused to adopt a rule making the EMVR "per se inapplicable in the pharmaceutical context, " AstraZeneca, 782 F.3d at 1337-38, and it further notes that the facts in this case are very different from those relating to the infringing generic product in AstraZeneca. Nevertheless, the Court agrees with Idenix that under the circumstances presented in this case, the EMVR does not apply, a conclusion that is supported by AstraZeneca. Here, there is substantial evidence to support the jury's implicit findings that the '597 patent covers sofosbuvir (which, at trial, was undisputed) and that "there is no unpatented or non-infringing feature in the [accused] product[s], " as their active ingredient is sofosbuvir. Id.
Gilead further contends that Carter's analysis was legally flawed because it failed to "apportion his base to account for the relative value of 2' methyl up, " Idenix's contribution to the accused products, "in comparison to 2' fluoro down and the prodrug, " which were Gilead's contributions. (D.I. 565 at 10) Gilead is correct that, even now that the Court has found that the EMVR does not apply, AstraZeneca still requires a "related inquiry" if the asserted claims "recite both conventional elements and unconventional elements." AstraZeneca, 782 F.3d at 1337. In particular, one must "account for the relative value of the patentee's invention in comparison to the value of the conventional elements recited in the claim, standing alone." Id.
... [W]ith respect to damages and the Entire Market Value Rule, the Court finds that plaintiffs' expert [Carter] gives a reasonable reliable opinion that fits and is consistent with the law, including that for use of the medication to treat an ailment, the smallest saleable unit may be the pill with the patented active ingredient. The patented feature may not, under the circumstances, be segregated out and that the patented feature may be found to drive demand. Really on all of these points, the plaintiffs' expert expresses an opinion that is consistent with the law and is based on inferences that may reasonably be drawn in plaintiffs' favor on the evidence.
Gilead argues that the Court's pre-trial decision relied on representations made by Idenix but subsequently broken at trial. In Gilead's telling, Idenix made "a promise" to establish at trial that the '597 patent's "cover[age of] the active metabolite ... was the basis of customer demand" (D.I. 536 at 21), something Idenix never proved. But, even assuming that Gilead's portrayal of the pre-trial litigation is correct, the failure to fulfill that "promise" does not mean the Court should grant the relief Gilead now seeks, because Carter did not ask the jury to award damages based on the EMVR. (See Carter Tr. at 792-95) An unfulfilled promise that does not also render an expert's analysis deficient, which at most is what occurred here, is not a meritorious basis for JMOL, remittitur, or a new trial.
Gilead's motion with respect to damages will be denied.
Section 112 sets out separate requirements for written description and enablement. See Ariad Pharm., Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1344 (Fed. Cir. 2010) (holding that written description and enablement requirements are separate). Still, these requirements "often rise and fall together." Id. at 1352.
Gilead challenges the jury's finding that the '597 patent sufficiently described and enabled its claimed subject matter. With respect to written description, which is a factual issue, the Court finds that there was substantial evidence to support the jury's conclusion that clear and convincing evidence does not support a finding of lack of written description. Just as the Court twice declined to grant Gilead summary judgment on lack of written description, so, too, does the Court again conclude that this was an issue on which a factfinder could have found for either side. With respect to enablement, which presents a question of law, the Court concludes, as a matter of law, that no reasonable factfinder could find anything other than that the '597 patent is not enabled. This being the Court's first occasion to evaluate whether any genuine disputes of material fact preclude resolution of the enablement issue as a matter of law, the Court concludes - based on the trial record - that no such disputes exist.

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