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Invitrogen Files for Triple Damages in Ongoing Cell Products Patent Suit Against Stratagene

Invitrogen is continuing to seek enhanced damages in a patent infringement case against Stratagene, arguing in court documents earlier this month “that Stratagene earned huge profits from its many years of infringement, and did so willfully.”
The Invitrogen memorandum was in response to Stratagene’s filing late last month in opposition of Invitrogen’s request for enhanced damages and prejudgment interest. They are the latest in a suit filed by Invitrogen in 2001, and if the court rules in Invitrogen’s favor, Stratagene could face damages of more than $17 million.
In July, a Texas jury determined that Invitrogen's US Patent 4,981,797, which involves a process for developing competent cell products, is valid and that Stratagene infringed that patent by making and selling its competent E. coli cell products (see BioCommerce Week 7/26/2006).
The jury awarded Invitrogen a 15-percent royalty rate on sales between 1997 and 2004 for a total of $7.8 million in damages, some of which would not be subject to enhancement. Invitrogen had sought $32 million in damages based on a lost-profits argument, Stratagene said at the time. Two weeks after the jury’s verdict, Invitrogen filed a motion asking the court to triple the amount of damages, $4.76 million, that it believes are subject to enhancement.
According to that filing, “Invitrogen [also] is entitled to an award of prejudgment interest … and the jury’s finding of willful infringement justifies a finding that this case is ‘exceptional.’”
In its late August response in opposition, Stratagene said that the motion should be denied because Invitrogen failed to provide evidence that the case is “exceptional,” under legal standards — “particularly in light of Stratagene’s good faith reliance on its opinions of counsel, the closeness of the issues in this case, and the lack of any litigation misconduct by Stratagene.”
The firm asserts in the filing that “at no time did Invitrogen … ever send a cease and desist letter to Stratagene. Rather, they simply ‘put Stratagene on notice’ of the ‘797 patent in connection with licensing discussions that the parties were having regarding several patents.”
The firm added that Invitrogen ignored the fact that Life Technologies, which it acquired in 2000, “was aware of Stratagene’s allegedly infringing activities by August 30, 1994 when it tested Stratagene’s products. Yet … Invitrogen waited to file this suit until March 12, 2001, more than six years after the testing of Stratagene’s products. Accordingly, Stratagene’s actions prior to 2001 cannot weigh in favor of enhancement because, without any charge of infringement and Stratagene’s belief that the patent was invalid and/or that it would obtain a license, there was simply no reason for Stratagene to change its [cell products’] processes during that time.”
Invitrogen, in its answer to Stratagene’s opposition, said, “Stratagene argues that its ‘good faith reliance’ on counsel’s opinion weighs against enhancement. This argument is merely an impermissible request that the court ignore the jury’s finding.”
It added, “Invitrogen had to prove by clear and convincing evidence that Stratagene ‘had no reasonable basis for reaching a good faith conclusion that [it was not infringing]. The jury so found and Stratagene does not get a ‘second bite at the apple.’”
According to Invitrogen, Stratagene used an infringing process to make the cells from the end of 1992 until several years after Invitrogen filed the suit in 2001. “Given these facts, it is simply illogical for Stratagene to argue that its ‘actions prior to 2001’ cannot weigh in favor of enhancement,” Invitrogen asserted. “Indeed, Stratagene’s concealment of its infringement weighs in favor of enhanced damages.”

“Stratagene argues that its ‘good faith reliance’ on counsel’s opinion weighs against enhancement. This argument is merely an impermissible request that the court ignore the jury’s finding.”

Seeking a Settlement?
An Invitrogen spokesman said this week that the firm had “nothing to add at this moment” regarding the case and declined to say whether the firm was interested in settling with Stratagene.
Stratagene would not comment on potential settlement talks either, but CFO Steve Martin told BioCommerce Week via e-mail, “Stratagene has and will continue to be interested in the settlement of business disputes where the terms are commercially reasonable.”
He added, “Given that the matter remains before the Texas court and the company is awaiting oral arguments and then the judge’s ruling, it would be inappropriate to comment further.”
Stratagene Chairman and CEO Joe Sorge said during the firm’s second-quarter conference call last month, “There is certainly the possibility for an appeal” in the Invitrogen case, (see BioCommerce Week 8/9/2006). “The judge made several decisions prior to sending the jury out to deliberate, and those decisions are potentially appealable.
“We’re waiting to see what happens with the ultimate damage award,” said Sorge. “The jury based the damage on a 15-percent royalty rate, yet the evidence introduced at trial was either lost profits, which would have been very large damages, or a 5-percent royalty rate. So, there’s really no support for the 15-percent royalty rate on the record or in the evidence. We are going to ask the judge to adjust the award to 5 percent,” he said.
However, Sorge noted, “The judge has a lot of latitude in Texas to do what he feels is right, so there’s no guarantee that he’ll lower the amount. There’s also a possibility that he can increase it.”
Martin this week confirmed that Stratagene had not yet filed an appeal in the case.

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