Although a plaintiff may seek to dismiss its claims of infringement without prejudice after providing a covenant not to sue, the Court has discretion to impose a dismissal with prejudice, depending on the terms of the covenant and other factors.
In that vein, the plaintiff in a patent infringement suit pending before Judge Andrews argued "that the Court should dismiss its infringement claims without prejudice because the covenant it has provided to [defendant] CSL prevents their reassertion." Judge Andrews rejected this "paradoxical" argument, finding that the advanced stage of the litigation in particular weighed heavily against a dismissal without prejudice.
The Court's analysis hinged on the application of four factors: (1) the expenses of duplicative litigation; (2) the expenses incurred by CSL in preparing for the instant litigation; (3) the stage to which this case has progressed; and (4) Bioverativ's diligence in moving to dismiss.
The Court focused on the third and fourth factors, finding that the case had been pending for two and a half years when the plaintiff first proposed dropping the patent subject to the covenant, in early 2020. Presently, the parties have completed discovery and summary judgment submissions, and "the case is ready for trial."
Regarding plaintiff's diligence, Judge Andrews explained:
While it appears that the parties have attempted to agree on a covenant since February 2020, Bioverativ offers no explanation as to why it decided to withdraw the '903 Patent only once the case was ready for trial. It is true, as Bioverativ argues, that the removal of the '903 Patent would "conserve judicial and party resources." . . . Yet it appears unlikely that judicial economy is the reason Bioverativ moved to dismiss the '903 Patent, when it initially raised the issue in a motion to add three additional patents to this case.
The Judge concluded that the four factors weighed "heavily" in favor of a dismissal of plaintiff's infringement claims with prejudice.
Separately, Judge Andrews found that the Court lacked jurisdiction over defendants' declaratory judgment counterclaims in view of the covenant. CSL argued the covenant was insufficient to dispose of its counterclaims because it did not cover plaintiff Bioverativ's parent company Sanofi and because it did not cover a sufficiently broad scope of CSL products.
Judge Andrews first explained that the covenant, as an encumbrance on the "right to use" the patent, would run with the patent. Thus, he concluded, even if the plaintiff's parent company Sanofi obtained rights to sue on the covenanted patent, the defendant would be protected:
CSL has not cited to any authority explaining why the covenant's protection would not attach if Sanofi subsequently attempted to pursue an infringement claim.
Finally, Judge Andrews noted that the scope of the covenant, while it did not cover certain activities that defendant "hypothesized" it might engage in, defendant "stop[ped] short of asserting that it has any plans to conduct these activities or has plans to engage in research involving the claimed genus."
Thus, CSL's declaratory judgment counterclaims regarding the covenanted patent were dismissed without prejudice.
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