Orange Book Blog

Apotex et al. v. Eon Labs Mfg., No. 01-0482 (E.D.N.Y. 2007)

Apotex and its CEO, Bernard (Barry) C. Sherman, were ordered by a federal district court last week to pay Eon Labs $3.1 million in attorney fees and expenses in a patent case they pursued for years before admitting that their patent was invalid.  In a Memorandum and Order granting Eon’s motion for fees, Judge Avern Cohn of the U.S. District Court for the Eastern District of New York described the case as a "debacle" and the manner in which it was litigated as "reflect[ing] all that is bad in patent litigation."

In the case, Apotex and Sherman sued Eon for infringing U.S. Patent No. 5,798,333 (entitled "Water-Soluble Concentrates Containing Cyclosporin," and naming Dr. Sherman as the sole inventor), alleging that Eon’s cyclosporin drug product infringed the patent.  Both Apotex and Eon (since acquired by Sandoz) are generic drug makers.  The only problem, which Apotex characterized as a "technicality," was that the ‘333 patent was invalid under 35 USC 102(d).

Section 102(d), a relatively obscure provision of the patent statute, states that a patent is invalid if:

the invention was first patented . . . by the applicant or his legal representatives or assigns in a foreign country prior to the date of the application for patent in this country on an application for patent or inventor’s certificate filed more than twelve months before the filing of the application in the United States.

More than a year before Apotex filed the U.S. patent application that led to the ‘333 patent, Apotex filed a patent application on the same invention in New Zealand.  The New Zealand patent then issued before Apotex filed its U.S. patent application.  Amazingly, these facts weren’t discovered until "the morning of the sixth day of a bench trial, following five years of hard fought and sometimes contentions pretrial proceedings."  This is especially surprising because the New Zealand patent was cited by the patent examiner during prosecution and is listed on the face of the ‘333 patent.

Judge Cohn’s opinion is well worth reading–not only for the lessons it contains for patent lawyers, but also because at times it reads like a mystery.  In the end, Judge Cohn concludes that "the record supports a finding of gross negligence and a reckless indifference to the obligations of counsel as to make this case exceptional."  However, Judge Cohn also assigned some blame to Eon, finding that Eon should have discovered sooner that the ‘333 patent was invalid.  Judge Cohn therefore reduced Eon’s award of attorney fees by 30% from the amount requested.

Thanks very much to a helpful reader for letting us know about this interesting case.

RELATED READING:

• 15-Aug-06 New York Times article cited in Judge Cohn’s opinion