On March 1, 2021, the United States Court of Appeals for the Federal Circuit upheld a US$182 million judgment in favor of Sidley client Bayer HealthCare against Baxalta’s blockbuster hemophilia drug Adynovate. Bayer had sued Baxalta for patent infringement in the District of Delaware. On appeal was the Delaware jury’s verdict finding the patent valid and infringed and awarding Bayer damages. In a sweeping 37-page opinion, the Federal Circuit found for Bayer by affirming the district court’s judgments of infringement, enablement, damages, and supplemental damages. The damages award that was affirmed ranks among the 10 largest patent verdicts in Delaware in the past decade, and constitutes the largest biotech patent verdict in that court. After the trial in 2019, the case was awarded the “Patent Impact Case of the Year” by LMG Life Sciences.
This Federal Circuit opinion gives specific guidance regarding pharmaceutical biotech patent cases, with broader claim construction and damages implications, for five reasons. First, this case involved what the Federal Circuit described as “close” questions on the meaning of the patent terms in view of the law on disclaimer of claim scope. The Sidley team used the patent record itself, the district court’s careful analysis of the terms, and Baxalta’s own trial statements about the issue to defend the district court’s ruling. Second, the Sidley team was able to very effectively use Baxalta’s own detailed product testing and reports in its FDA submissions to establish infringement. Third, the Federal Circuit actually relied on the evidentiary record the Sidley team established through the direct and cross-examination of experts and inventors at trial to overcome Baxalta’s assertion that the patent was not enabled. Fourth, the Federal Circuit specified that a damages expert may provide a range of royalty rates to the jury, and is not required to provide a single rate. The Sidley team allowed the jury to determine damages within a predetermined range. Fifth, the Federal Circuit held that pre-verdict supplemental damages, using the royalty rate found by the jury, do not violate any Seventh Amendment right to a jury trial.
This Federal Circuit win follows a 2019 jury verdict win in the district court in Delaware. After a six-day trial involving 18 witnesses, the jury found in favor of Bayer across the board. It found all asserted claims of Bayer’s U.S. Patent No. 9,364,520, covering a pegylated Factor VIII biologic for the treatment of hemophilia, both infringed and valid and rejected multiple defenses raised by Baxalta. The jury then awarded Bayer more than US$155 million for the prior infringing manufacture and sale of Baxalta’s hemophilia drug, Adynovate, applying a royalty rate of about 18% of net sales. The judge subsequently ordered Baxalta to pay an additional US$27 million in supplemental damages and interest.
Still pending at the district court is Bayer’s motion for ongoing future royalties of about 18% for the life of the patent.
Jim Badke, Sona De, and Ching-Lee Fukuda (all New York) led the team representing Bayer on appeal, which also included Paul Zegger, Josh Fougere, Ryan Morris (all Washington, D.C.), Sue Wang, Saurabh Prabhakar (both San Francisco), and Alyssa Dolan (New York).