The Federal Circuit has affirmed Bayer’s patent infringement victory related to Baxalta’s biologic product, Adynovate. Bayer Healthcare LLC v. Baxalta Inc., No. 2019-2418, 2021 WL 771700 (Fed. Cir. Mar. 1, 2021). At the district court, the jury found the claims of Bayer’s U.S. Patent No. 9,364,520 (“the ’520 patent”) enabled and infringed, and awarded a reasonable royalty of 17.78%. The appeal raised a variety of issues, including infringement, enablement, damages, and willfulness. The Federal Circuit affirmed the results of the lower court on all issues.
The ’520 patent is directed to recombinant forms of human factor VIII, a protein useful in the treatment of hemophilia A. The recombinant forms at issue involve a more specific PEGylation of the protein’s B-domain as compared to the random modifications in the prior art. The accused product, Adynovate, is a human factor VIII protein with PEGylated amine sites, such as lysine.
The question of enablement of the ’520 patent raised an interesting factual scenario. Baxalta challenged the ’520 patent’s enablement of amine or lysine PEGylation because the specification only provided detailed instructions for practicing the claimed invention using cysteine PEGylation. In response, Bayer relied on expert testimony to demonstrate that other modifications, such as lysine PEGylation, would have been known at the time of the invention, and the accumulated knowledge of 150 years of protein chemistry would allow one in the field to understand how some amino acids would be more or less amenable to modification. Despite contrary testimony from Baxalta’s expert, the Federal Circuit held that substantial evidence supported the jury’s verdict. Baxalta had also challenged the district court’s reliance on the knowledge of a person of ordinary skill as a substitute for the lack of disclosure in the specification. Both the district court and Federal Circuit rejected this challenge, noting that a specification does not need to disclose each embodiment to enable the full scope of the claims.
On the issues of damages and the reasonable royalty rate evidence presented at trial, the Federal Circuit found no abuse of discretion in allowing Bayer’s expert testimony on the reasonable royalty rate. Prior to trial, the district court excluded part of Bayer’s expert testimony on the hypothetical negotiation to determine a reasonable royalty rate. The district court found that using the midpoint of the bargaining range as a reasonable royalty rate was not tied to the facts of the case, but allowed the expert to testify on his proposed bargaining range of 5.1% to 42.4%. Ultimately, the jury determined a reasonable royalty rate of 17.78%. The Federal Circuit found support in the expert report to allow the expert’s discussion of the proposed bargaining range, and noted that Baxalta had the opportunity to fully cross-examine the expert on his theories. Furthermore, the expert provided ample guidance for the jury to determine the royalty rate, including discussion of the hypothetical negotiation and the Georgia-Pacific factors. Therefore, the jury could evaluate his opinions and adopt a rate within the proposed range, as it did.
Baxalta challenged several of the district court’s claim constructions, but the Federal Circuit found adequate support for them. The court recognized that several of the arguments presented close questions, but the statements in the prosecution history and specification did not rise to the levels of disclaiming certain types of PEGylation as Baxalta had sought.
Similarly, the Federal Circuit found substantial evidence to support the jury’s finding that Adynovate met the claim limitations in its infringement analysis. In particular, the court noted Baxalta’s letter representing to the U.S. Food and Drug Administration that Adynovate includes a controlled and targeted chemical addition of PEG conjugates to the human factor VIII B-Domain. Combined with supporting expert testimony from Bayer’s expert, there was adequate support for the jury’s determination of infringement.
Additional Issues Raised
The Federal Circuit affirmed the district court’s judgment as to issues raised by the parties regarding supplemental damages and willful infringement. The district court’s award of supplemental damages was within the court’s discretion and did not constitute an impermissible additur. Because the jury had determined the royalty rate, applying that rate to the undisputed actual infringing sales base was an appropriate method for the court to award supplemental damages. Finally, the Federal Circuit agreed that awareness of the ’520 patent was insufficient for a finding of willful infringement, and Bayer failed to present sufficient evidence of the necessary state of mind. The evidence only showed knowledge of the patents and Baxalta’s direct infringement, but it did not rise to the level of deliberate or intentional infringement required.