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Stratagene Files Appeal, Supersedeas Bond in Invitrogen Case; Court Rejects Renewed Motion

In the latest development in the ongoing litigation between Stratagene and Invitrogen, Stratagene last week filed a notice of appeal, a supersedeas bond, and a renewed motion to have an Invitrogen patent at the center of the case declared invalid.
 
The requests come a few weeks after the US District Court for the Western District of Texas awarded Invitrogen $16.2 million in damages in a patent infringement case against Stratagene, tripling an earlier award from a jury. Last week, the court granted an emergency stay on execution of the judgment until Dec. 8, while the parties try to agree on an amount for the bond Stratagene must post.
 
The court, however, denied Stratagene’s renewed ‘Rule 50’ motions, which sought to have Invitrogen’s patent declared invalid for failing to disclose the best mode of invention or for lack of enablement, or a judgment that Invitrogen’s patent claims are “anticipated and/or obvious.”
 
Judge Sam Sparks, who has presided over the case, wrote in his decision that Stratagene’s motions “are all overruled and denied once again for the same reasons they have been overruled and denied since made. All of the arguments by Stratagene’s counsel can be summed up in one sentence: ‘The defendant does not agree with the jury’s verdict.’”
 
In a decision filed on October 31, Sparks ruled that Stratagene had willfully infringed Invitrogen’s US Patent No. 4,981,797 (see BioCommerce Week 11/1/2006). The patent covers a process for developing competent cell products, which the jury and judge agreed that Stratagene infringed by making and selling its competent E. coli cell products during the years 1997 to 2004.
 
According to the court’s judgment at the time, “The court finds an award of treble damages is appropriate given the totality of the circumstances in this case. In accordance with the jury’s verdict, the court finds Stratagene did not have a good faith belief that the patent was invalid or not infringed.”
 
The judgment marked the second time in a year that Stratagene was found to have willfully infringed another party’s patent and was ordered to pay triple damages. The firm has appealed the $15.9 million in damages that had been awarded to Third Wave Technologies late last year (see BioCommerce Week 12/22/2005).
 
Last week, Stratagene notified the Texas court that it has appealed the judgment and all preceding decisions in the Invitrogen case to the US Court of Appeals for the Federal Circuit.
 
Determining the Bond Amount
 
Amid the appeal, Stratagene also filed a supersedeas bond in the amount of $11,496,912, with Travelers Casualty and Surety Company of America as surety for the bond.
 
A supersedeas bond is filed when a party against whom a money judgment is entered seeks a stay of execution on the judgment as it appeals the decision. In a Nov. 15 filing, Stratagene asked the Texas court to issue a temporary stay of execution until the court approved Stratagene’s proposed bond amount of $11,496,912 — which falls significantly short of the court’s award to Invitrogen of $16.2 million.
 

“It is vital for Stratagene to be able to retain the remaining $5 million in cash resources so that it can remain solvent and satisfy its current and pre-existing financial obligations, including employee salaries and other operational costs.”

According to court documents, Stratagene and Invitrogen agreed on an amount of prejudgment interest, but they did not reach an agreement on the amount of attorneys’ fees and costs that should be covered by the bond.
 
In determining the amount of the supersedeas bond, Stratagene said that it had “included in the amount of the jury’s award of compensatory damages (a reasonable royalty based on a 15 percent royalty rate), plus an amount to cover the estimate of attorneys’ fees ($2,600,000) and costs ($300,000), even though Stratagene maintains that Invitrogen is not entitled to attorneys’ fees in excess of $613,092.60.” Relying on previous case law, Stratagene said that it had not included the roughly $8.7 million in enhanced damages in its bond amount because those damages are punitive, not compensatory, and therefore are not required to be included in the bond amount.
 
Stratagene also requested that the court alternatively reduce the amount of the bond to an amount that represents 50 percent of Stratagene’s net worth, which the company said totaled approximately $17.7 million as of Sept. 30. Since the proposed bond is more than 50 percent of that amount, Stratagene asked the court to consider reducing the amount of the bond to $8.85 million.
 
The firm said in its filing that an amount more than the requested $11.5 million “would unduly burden it financially, and may put Stratagene’s current creditors, including Invitrogen, at risk.” Stratagene said that a bond in that amount would leave the firm with approximately $5 million in available cash to fund operating activities.
 
“It is vital for Stratagene to be able to retain the remaining $5 million in cash resources so that it can remain solvent and satisfy its current and pre-existing financial obligations, including employee salaries and other operational costs,” the firm said in the filing. “It is also vital that Stratagene retain that $5 million in capital so that it can continue operating and ultimately satisfy the current judgment of this court, should that judgment be affirmed on appeal.”
 
Judge Sparks granted the temporary stay of execution of the judgment until noon on Dec. 8, “to allow Invitrogen to respond to these pleadings.”

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