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Texas Court Awards Invitrogen Triple Damages in Patent Suit Against Stratagene; Appeal Planned

A US District Court for the Western District of Texas has awarded Invitrogen $16.2 million in damages in a patent infringement case against Stratagene, tripling an earlier award from a jury.
 
The court’s ruling was the second time in the past year that Stratagene was ordered to pay triple damages for willful patent infringement. The firm appealed the $15.9 million in damages that had been awarded to Third Wave Technologies last year, and said this week that it would appeal the verdict and damages awarded to Invitrogen.
 
Stratagene also said that it would challenge the validity of Invitrogen’s patent that is at the center of the litigation.
 
In a decision filed this week by the Texas court, Judge Sam Sparks ruled that Stratagene had willfully infringed Invitrogen’s US Patent No. 4,981,797. 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, “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.
 
“Stratagene also failed to take any remedial action during the period of infringement despite having available an acceptable noninfringing substitute. The duration of Stratagene’s misconduct was quite long, as Stratagene admitted it began using the infringing process by the end of 1992 on nearly all of its cell lines,” according to the court document.
 
The willful infringement only applies to the period between May 23, 1997, and November 2, 2001, according to court documents, and thus was the only part of the award subject to trebling.
 
In July, the Texas jury found that Stratagene had infringed the patent at issue and awarded Invitrogen roughly $7.9 million in damages. Two weeks later Invitrogen filed for triple damages, citing willful infringement and asserting that “Stratagene’s concealment of its infringement weighs in favor of enhanced damages.” (see BioCommerce Week 9/20/2006).
 
In finding willful infringement, the court tripled a portion of the previously awarded damages and increased the amount to a total of $16.2 million. The court also ruled that Stratagene must pay pre-judgment interest on the damage award and deemed the case “exceptional,” thereby awarding reasonable attorneys’ fees to Invitrogen in an amount to be determined.
 
Stratagene had argued that Invitrogen did not offer clear and convincing evidence that the case was exceptional, but the court disagreed. “It was clear from the evidence at trial that Stratagene spent a minimal amount of time consulting with counsel, that counsel’s analysis was cursory at best, and that Stratagene had the objective of continuing to use the infringing process which was earning them very high profits,” the judge wrote.
 
Stratagene said that it believes the facts of the case and the law do not support the jury’s verdict or the damages that have been awarded to Invitrogen, and as a result it intends to appeal the decision. “Stratagene will be challenging the finding of the validity of the patent, the appropriateness of the damages determined by the jury, the trebling of a portion of the amount by the court, and the award of attorney’s fees,” the firm said in a statement.
 
Stratagene said that it currently has approximately $16.6 million in unrestricted cash, and a $9 million revolving line of credit in place with a zero balance currently outstanding.
 
Second Time in Two Years
 
The awarding of triple damages by the court is the second time in two years that Stratagene has been found guilty of willful infringement. The other judgment came last December, when a US District Court for the Western District of Wisconsin awarded Third Wave $15.9 million in damages, tripling an earlier award from a jury (see BioCommerce Week 12/22/2005).
 

“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.”

Stratagene subsequently appealed the award, and this past summer had asked a US District Court for the District of Delaware to stay its countersuit against Third Wave as the parties continued settlement talks. But, those talks have not yet led to a settlement.
 
The firm also has been engaged in settlement talks with Applera, which has an ongoing suit against Stratagene for infringing certain thermal cycler patents (see BioCommerce Week 7/12/2006). According to recent court documents, those discussions are ongoing.
 
Stratagene is the last remaining defendant in a suit filed by Applera and partner Roche Molecular Systems on Nov. 9, 2004, against Stratagene, Bio-Rad Laboratories, and MJ Research — which Bio-Rad subsequently acquired — alleging infringement of Applera's US Patent No. 6,814,934. Earlier this year, Applera and Roche settled with Bio-Rad and MJ (see BioCommerce Week 2/15/2006).
 
Amid its legal difficulties, Stratagene received a $34.1 million royalty payment during last year’s fourth quarter from Cambridge Antibody Technology to satisfy certain patent owners' interests in CAT's collaboration with Abbott Laboratories to develop rheumatoid arthritis drug Humira (see BioCommerce Week 3/8/2006).
 
In mid-day trade on Wednesday, Stratagene shares were down 8.5 percent at $6.25.

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