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Federal Circuit Affirms $173 Million Award

| Brok S. HumbertJustin J. Gillett

BAYER HEALTHCARE LLC v. BAXALTA INC.

Before Newman, Linn, and Stoll. Appeal from the District of Delaware.

Summary: In upholding a $173 million dollar award, the Federal Circuit permitted a damages expert to present a range of reasonable potential royalty rates and found no Seventh Amendment right to jury trial existed for supplemental damages calculated using the jury’s chosen royalty rate and undisputed infringing sales data.

Bayer sued Baxalta and Nektar Therapeutics alleging willful infringement of a patent directed to human protein production. The district court held as a matter of law that any infringement was not willful. A jury later found that Baxalta infringed asserted claims, that those claims were not invalid for lack of enablement, and that Bayer was entitled to a reasonable royalty of $155 million for infringement occurring during the damages period presented. After trial, the district court awarded Bayer an additional $18 million in supplemental damages for the time between the damages period presented at trial and the date of the district court’s judgment. Baxalta and Bayer moved for judgment as a matter of law or a new trial on the issues of willfulness, infringement, enablement, and damages. The district court denied those motions and the parties appealed.

The Federal Circuit affirmed the district court’s rulings in their entirety. It upheld the district court’s claim constructions, including the district court’s decision not to further construe a term appearing in a construction, finding the district court had issued rulings that resolved the parties’ controversies as to that term. The Federal Circuit held substantial evidence supported the jury’s verdicts regarding infringement and enablement. As to damages, the Federal Circuit upheld the jury’s choice of a reasonable royalty rate, and found no error in permitting Bayer’s damages expert to provide a range of proposed rates, rather than a single proposed rate. The Federal Circuit further upheld the district court’s award of supplemental damages, finding there was no Seventh Amendment right to a jury trial on that award in this case, where the supplemental damages were calculated using the jury’s chosen royalty rate and undisputed actual infringing sales data. Finally, the Federal Circuit affirmed the district court’s ruling as a matter of law of no willful infringement, finding there was insufficient evidence to show that Baxalta’s conduct was wanton, malicious, or in bad faith.

Editor: Paul Stewart