An appellate court on January 17, 2008 reversed part of a district court ruling in a long-standing patent dispute over hepatitis C virus testing, ruling that the lower court’s injunction barring Abbott Laboratories from selling its test was an abuse of discretion.
The U.S. Court of Appeals for the Federal Circuit upheld many of the district court’s rulings, finding in favor of plaintiff Innogenetics, the three-judge panel reversed and remanded the lower court’s judgment as a matter of law that claim 1 of the patent-in-suit was not anticipated by prior art.
The complicated case began in September 2005, when the innogenetics filed suit against Abbott in the U.S. District Court for the Western District of Wisconsin.
In its suit, Innogenetics claimed that kits sold by Abbott used to detect and classify hepatitis C virus genotypes infringed its patent, U.S. Patent No. 5,846,704. The court later held that the patent was infringed as a matter of law.
On Sept. 1, 2006, a jury found that the '704 patent was valid and seven days later awarded Innogenetics $7 million in damages.
Last January, the court overturned the jury’s finding that Abbott’s infringement had been willful. However, the judge also sustained the original $7 million award, rejected Abbott’s request for a new trial on infringement and validity and imposed the injunction.
Abbott’s appeal followed, along with an emergency plea asking the Federal Circuit to lift the injunction. For its part, Innogenetics appealed the court’s ruling overturning the jury’s willfulness finding.
The Federal Circuit immediately addressed Abbott’s emergency motion on the injunction, and stayed the injunction until it could rule on the matter. But in March, the appellate court reinstated the injunction, only to overturn it yet again 10 months later.
In addition to its appeal of the injunction, Abbott also asked the Federal Circuit to overturn the district court’s claim construction ruling; its judgment as a matter of law that Abbott literally infringed the '704 patent; its evidentiary exclusions of Abbott’s obviousness and anticipation defenses; its judgment as a matter of law that the '704 patent was not anticipated; its ruling summary judgment of no inequitable conduct and its granting of attorneys’ fees to Innogenetics.
Beyond the injunction and anticipation claims, the Federal Circuit affirmed all of the district court’s rulings, denying Abbott’s claims that the court had abused its discretion.
The appellate court also denied Innogenetic’s appeal, affirming the district court’s judgment as a matter of law that Abbott did not willfully infringe the '704 patent.
The Federal Circuit overturned the lower court’s anticipation ruling because it found that the court wrongly ruled that Abbott’s expert Dr. Patterson did not understand the claim construction outlined by the court.
“This determination by the district court, that Dr. Patterson’s testimony was tainted by an inaccurate understanding of the claim term genotyping, is clearly erroneous,” the Federal Circuit said.
“We therefore find improper the district court’s preclusion of Dr. Patterson’s testimony on the basis that he was using a different definition of ‘method of genotyping,’” the appellate court concluded. “Accordingly, we reverse the district court’s entry of JMOL and remand for a new trial on the issue of whether the Resnick patent anticipated claim 1 of the ’704 patent consistent with this opinion.”
As for the injunction, the Federal Circuit found that the damages award already given to Innogenetics by the district court included an “upfront entry fee” of $5.8 million, which “contemplates or is based upon future sales by Abbott in the long term market.”
“When a patentee requests and receives such compensation, it cannot be heard to complain that it will be irreparably harmed by future sales,” the appellate court said. “As a result, the district court’s grant of an injunction prohibiting future sales of Abbott’s genotyping assay kits was an abuse of discretion and must be vacated.”
However, the Federal Circuit remanded that part of the case so the district court could determine the terms of a compulsory license for Abbott moving forward.
Although the appellate court granted Abbott some reprieve from the district court's rulings, the overall sentiment of Thursday's ruling was that the company did not follow the rules of the court and was therefore suffering the consequences.
"This case aptly demonstrates the pitfalls of playing fast and loose with rules of discovery," the Federal Circuit said in a footnote in its ruling. "Conclusory expert reports, eleventh hour disclosures, and attempts to proffer expert testimony without compliance with Rule 26 violate both the rules and principles of discovery, and the obligations lawyers have to the court. Exclusion and forfeiture are appropriate consequences to avoid repeated occurrences of such manipulation of the litigation process."