For attorneys who practice in D. Del., Judge Connolly's opinion yesterday in Pharmacyclics LLC v. Alvogen Pine Brook LLC, C.A. No. 19-434-CFC (D. Del. Apr. 30, 2024) is a real page turner, and well worth reading. If you want to avoid spoilers, go read it now! It's attached below, and it's only 11 pages.
Spoilers below:
It's rare for a judge to conclude that either side—let alone both—misled the Court and litigated vexatiously. But that's just what Judge Connolly found here, after the plaintiff moved for fees under 35 U.S.C. § 285.
In holding that the defendants litigated vexatiously, the Court offered two primary examples of their misdeeds. The first relates to unsupportable allegations in post-trial briefing:
There is no question in my mind that [defendant] Alvogen engaged in vexatious conduct in this case. By way of example: In it its posttrial reply brief, Alvogen stated that I should exclude twenty-four of Phannacyclics' proposed factual findings because Phannacyclics had not relied upon those facts in its posttrial answering brief. . . . Alvogen did not identify or describe in its reply brief the challenged factual findings. Instead, it directed me to Exhibit C, which it attached to its reply brief. In Exhibit C, Alvogen again did not identify or describe the challenged factual findings. . . . Instead, it simply listed paragraph numbers from Phannacyclics' proposed findings of fact, . . . thus requiring me to go through Pharmacyclics' filing to identify the challenged proposed factual findings. Once I matched up Alvogen' s Exhibit C with Pharmacyclics' filing, I was able to determine that all twenty-four of Alvogen's objections were unfounded. Most of the objections were also confounding. . . .
Id. at 4-5. The Court noted multiple examples of objected-to facts where the defendants had already admitted, or even stipulated to, essentially the same fact, for example:
Alvogen also objected in its posttrial briefing to Pharmacyclics' statement that "[t]his matter came before the Court for a bench trial on October 13-21, 2020." . . . But we did have a bench trial on October 13 through October 21, 2020! I was at the trial. And so was Alvogen's counsel. Alvogen objected as well to Pharmacyclics' assertion that "Alvogen does not contest jurisdiction or venue"--even though Alvogen has never contested jurisdiction or venue! . . . Alvogen similarly objected to Pharmacyclics' statement that "Alvogen stipulated that, under the Court's claim construction, its ANDA Products infringe the asserted claims of the [#]309, [#]090, and [#]455 Patents," even though Alvogen signed and filed with the Court a stipulation to that effect.
Id. at 5-6. Defendants likewise moved to exclude exhibits that the other side did not "substantively discuss" at trial, but the Court found that the other side had substantively discussed them at trial. It ultimately threatened to impose fees on the defendants if the remaining objections were overruled, and the defendants dropped them:
I was tempted, based on Alvogen' s misrepresentations of the record with respect to these three exhibits to overrule its objections to the remaining twenty-eight challenged exhibits, but I gave Alvogen an alternative: if it wanted to maintain an objection to any of the twenty-eight exhibits, it had to agree up front that if I overruled the objection, Alvogen had to pay Pharmacyclics' legal fees for defending against the objection. Alvogen declined this offer and dropped its objections. In doing so, it saved me and Pharmacyclics from further work, but both Pharmacyclics and I had already spent time and energy (and, in Pharmacyclics' case, money) addressing Alvogen's objections.
Id. at 6-7.
The second example of vexatious conduct related to claim construction. Before the Rule 16 scheduling conference, the Court had already construed certain terms in a related action. Counsel stated on the record that defendants were not going to seek to reconstrue terms—but, according to the Court, they proceeded to do just that:
Another part of Alvogen's vexatious litigation strategy was to require Pharmacyclics (and the Court) to engage in unnecessary claim construction. Alvogen assured me at the Rule 16 scheduling conference that it was "not looking to unnecessarily reconstrue terms or have the Court spend resources to reconstrue terms unnecessarily that ha[d] already been addressed" by me in the Capsule Action. . . . In counsel's words: "If we have the same position as the defendants in the capsule case, we're not going to ask [the Court] to reconstrue those terms." . . . But that is exactly what Alvogen asked me to do for four of the ten claim terms litigated in the Markman hearing in this case. . . .
Alvogen argues that it "was not barred by res judicata from seeking to clarify the meaning of key claim terms" and that it "was incumbent upon [its] counsel to be heard on claim construction and to preserve claim[ ]construction arguments for appeal." D.I. 422 at 7-8. But relitigating the exact arguments I rejected in the Capsule Action is not "seeking clarification," and Alvogen could have preserved any objection to my claim construction in the Capsule Action without demanding Markman briefing and a hearing in this case for issues I had already decided in the Capsule Action. (As it turned out, Alvogen did not challenge my claim construction in its appeal to the Federal Circuit.)
Id. at 7-8.
Based on these examples, the Court concluded that the defendants had litigated vexatiously.
But it went on to examine the plaintiff's conduct in comparison, and concluded that it too had misled the court and litigated vexatiously. The Court described, for example, how plaintiff complained that the defendants' refusal to stipulate to non-infringement had raised its costs—but they hadn't:
For example, [plaintiff] complains in its opening brief filed in support of its fee application that "Alvogen forced [it] to continue litigating infringement of the [#]309, [#]090, and [#]455 Patents until the eve of trial, finally stipulating [to infringement] the day before trial." . . . It says fees are warranted for this conduct because "Alvogen acknowledged [in the stipulation] that it had no basis to contest infringement '[i]n view of the Court's Claim Construction Order,' which had issued over eight months prior,"' and Alvogen's delay in agreeing to the stipulation required Pharmacyclics to serve "needless expert reports ... for which Alvogen did not serve any rebuttal, including for the [#]309, [#]090, and [#]455 Patents." . . . But Pharmacyclics failed to disclose in its brief that nine days after I issued the Claim Construction Order, Alvogen sent Pharmacyclics a proposed draft stipulation in which Alvogen stated that "[i]n view of the Court's Claim Construction Order, and the current posture of the case, [Alvogen] agree[ s] to stipulate to infringement" of the asserted claims of the #309, #090, and #455 patents "so long as those claims are not determined in a final and unappealable decision to be invalid, unpatentable, or unenforceable." . . . Pharmacyclics also failed to mention that it waited nearly three weeks before responding to this proposed stipulation, and that when it did respond, it unreasonably insisted on deleting from the stipulation the phrase "so long as those claims are not determined in a final and unappealable decision to be invalid, unpatentable, or unenforceable." Notwithstanding that unreasonable response, while the parties negotiated about the language of a mutually acceptable stipulation, Alvogen stated in an email to Pharmacyclics on March 11, 2020 that "[Pharmacyclics] know[s] the claims that [Alvogen] [is] willing to stipulate are infringed based on the current claim construction, so there is no reason for Plaintiffs' experts to address those claims in their reports." D.I. 423 at 271 (emphasis added). Thus, any harm from the service of "unnecessary" expert reports by Pharmacyclics was self-inflicted.
Id. at 9-10. The Court ultimately found that both parties had misled the court and litigated vexatiously, and denied fees:
Like Alvogen, Phannacyclics has also been guilty of burdening the Court with misleading argument. . . . Alvogen was a vexatious litigant in this case. Its hands were dirty in this regard. But so were Pharmacyclics'. I will therefore deny Pharmacyclics' request for attorney and expert fees.
Id. at 11. Ouch.
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