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Laboratories, Inc. v. Camber Pharmaceuticals, Inc.

United States District Court, D. New Jersey

April 12, 2017

ROXANE LABORATORIES, INC., Plaintiff,
v.
CAMBER PHARMACEUTICALS INC. et al., Defendants.

          OPINION & ORDER

          STANLEY R. CHESLER, U.S.D.J.

         This matter comes before the Court on the motion by Defendants Camber Pharmacuticals, Inc. and Invagen Pharmaceuticals, Inc. (collectively, “Defendants”) to declare this an exceptional case, pursuant to 35 U.S.C. § 285 and for attorneys' fees. For the reasons that follow, the motion will be granted.

         This case arises from a patent infringement dispute involving a pharmaceutical, calcium acetate capsules. Plaintiff Roxane Laboratories, Inc. (“Roxane”) owns U.S. Patent No. 8, 563, 032 (the “'032 patent”), directed to a pharmaceutical calcium acetate formulation; Roxane markets a generic calcium acetate capsule product. Defendants are pharmaceutical manufacturers who market competing generic calcium acetate capsule products. To make a long story short, Roxane brought this suit for patent infringement against Defendants and lost. Defendants now move, pursuant to 35 U.S.C. § 285, for a declaration that this is an exceptional case and for an award of their attorneys' fees and costs spent in defending this action.

         The governing statute for attorney's fees in a patent case states that “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285. The Supreme Court has defined an “exceptional” case as “simply one that stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.” Octane Fitness, LLC v. Icon Health & Fitness, 134 S.Ct. 1749, 1756 (2014). “[A] district court may award fees in the rare case in which a party's unreasonable conduct-while not necessarily independently sanctionable-is nonetheless so ‘exceptional' as to justify an award of fees.” Id. at 1757.

         “District courts may determine whether a case is ‘exceptional' in the case-by-case exercise of their discretion, considering the totality of the circumstances.” Id. at 1756; see also Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S.Ct. 1744, 1748 (2014) (“[T]he determination of whether a case is ‘exceptional' under § 285 is a matter of discretion.”). In examining the totality of the circumstances under § 285's fee-shifting framework, courts may consider the following nonexclusive list of factors: “frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.” Octane Fitness, 134 S.Ct. at 1756 n.6 (citation omitted).

         “After determining that a case is exceptional, the district court must determine whether attorney fees are appropriate, ” a decision that is within the discretion of the district court. Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1460 (Fed. Cir. 1998) (citations omitted). The party seeking an award of attorney's fees must show their entitlement by a preponderance of the evidence standard. Octane Fitness, 134 S.Ct. at 1758.

         Defendants contend that Plaintiff's infringement claim was objectively unreasonable and that Roxane pursued the litigation in a manifestly unreasonable manner. Because this Court finds that the case is exceptional based on the objective unreasonableness of Roxane's patent infringement claim, it need not reach Defendants' arguments about Roxane's conduct of the litigation.

         As evidence of objective unreasonableness, Defendants point to a number of statements and decisions made by this Court and by the Federal Circuit over the course of the litigation.

         Defendants first point to the statement made by this Court in its Opinion denying Roxane's motion for a preliminary injunction:

In brief, the key obstacle for Roxane is found in the undisputed facts that claim 1 of the '032 patent requires a “capsule that is size 00 or less, ” while the accused infringing products are capsules that are size “00el.”

         (Opinion and Order of August 6, 2014 at 3-4.) Because capsule sizes are standardized in the pharmaceutical industry, and because size 00el capsules are larger than size 00 capsules, Defendants argue that these undisputed basic facts mandate the conclusion that Roxane had no objectively reasonable factual or legal basis for its patent infringement suit.

         Roxane appealed this Court's preliminary injunction decision to the Federal Circuit, which, on March 12, 2015, affirmed the decision without opinion. Roxane Labs., Inc. v. Camber Pharms., Inc., 596 Fed.Appx. 922 (Fed. Cir. 2015). Defendants argue that the Federal Circuit's decision should have ended Roxane's pursuit of the case, but it did not do so. The litigation proceeded to claim construction.

         Defendants next point a statement this Court made in its claim construction decision. After reviewing the undisputed basic facts noted above, and observing that the evidence of record showed that the pharmaceutical industry has clear standard capsule sizes, the Court stated: “Roxane has made a concerted effort to inject confusion into this fairly simple and straightforward matter.” (Opinion and Order of July 15, 2015 at 4.) Defendants contend that this clearly let Roxane know that it had made no progress toward demonstrating a factual or legal basis for its patent infringement claim.

         Roxane's principle argument for patent infringement was that the claim term “size 00” meant a “family” of capsule sizes, which included the size “00el” capsules used by Defendants. This Court first expressed its skepticism about the reasonableness of this position in a footnote in the preliminary injunction decision: “At the outset, the Court wonders about the use of the ‘family' metaphor here. Are there really capsule size families that make up the capsule size community?” (Opinion and Order of August 6, 2014 at 4 n.1.) At that point, the record did not contain any evidence which supported the theory that either the pharmaceutical industry or the inventors employed a concept of capsule size families. Then, in the claim construction decision, this Court carefully examined the intrinsic evidence and found no support for the capsule size family theory. On appeal, the Federal Circuit scrutinized this Court's claim construction analysis and agreed with it. Roxane Labs., Inc. v. Camber Pharms. Inc., 666 Fed.Appx. 899, *16 (Fed. Cir. Nov. 17, 2016).

         Defendants contend that this evidence demonstrates that Roxane had no objectively reasonable basis to support its claim of patent infringement.

         In opposition, Roxane relies on three points: 1) Roxane's claim construction position had merit; 2) this Court's denial of summary judgment pending claim construction shows that Roxane's position was not objectively unreasonable; and 3) Roxane's offer to stipulate to non-infringement after claim construction demonstrates good faith.

As to the merit of its claim construction position, Roxane states:
As an initial matter, Roxane's claim construction positions had merit. Roxane's fundamental position was that capsule size is a technical term of art, whose ordinary meaning encompasses elongated and non-elongated versions. Roxane anchored its proposed construction in the intrinsic evidence, and explained why it did not show an intent by the patentees to use a different meaning, let alone the requisite clear and unmistakable intent that the law requires. As additional evidence of the ordinary meaning, Roxane relied on extensive extrinsic evidence, whose implications Defendants and their experts disputed. Roxane continually developed the evidence and ultimately submitted a final claim construction proposal to the Court.

(Pl.'s Br. 2.) This is not an accurate account of the litigation. It is correct that Roxane's fundamental claim construction position was that the ordinary meaning of “size 00” was “the capsule size family consisting of size 00 and size 00el.” (See Pl.'s PI Br. 12 (“Such a capsule is by its own designation part of the size “00” family, and is therefore a pharmaceutically acceptable capsule that is size 00 or less.”)). Roxane anchored its proposed construction in the extrinsic evidence, not the intrinsic evidence.[1] While it did address the intrinsic evidence in its PI reply brief, its arguments were meritless. While Roxane may have developed the record after the preliminary injunction hearing by finding the PTAB hearing transcript, Roxane never developed any stronger or better arguments based on the intrinsic evidence.

         Conspicuously absent from Roxane's opposition to this motion is any example of a claim construction argument based on the intrinsic evidence that had arguable merit. Roxane now asserts that its position had merit, but provides no support for that. Roxane has not, at any point in this litigation, made a colorable argument that the intrinsic evidence supports its theory that the ordinary meaning of “size 00” is “the capsule size family consisting of size 00 and size 00el.” As will be discussed further below, the pursuit of a patent infringement claim based on such a weak position is extraordinary.

         Roxane next argues that this Court's denial of summary judgment pending claim construction shows that Roxane's position was not objectively unreasonable. The facts about the denial of summary judgment are as follows. On October 24, 2014, Defendants moved for partial summary judgment of non-infringement. Fundamental to Defendants' motion was the argument that district courts have considerable discretion as to the procedure for claim construction, and the request that this Court construe the “size 00” claim term in deciding the motion for partial summary judgment. (Defs.' Br. 11, Docket Entry No. 137.) Roxane then wrote a letter in which it argued that the motion was premature, as it was premised on the completion of “formal claim construction proceedings.” (Docket ...


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