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Texas Judge Orders Stratagene to Post $12.2M Supersedeas Bond; Rejects 'Protective Measures'

This story originally appeared in Biocommerce Week, a newsletter that has been discontinued.
 
The Texas judge overseeing a patent infringement case filed by Invitrogen against Stratagene last week ordered Stratagene to post a supersedeas bond of $12.2 million to secure a portion of the $16.2 million judgment awarded to Invitrogen on Oct. 31, 2006.
 
The amount required by the court is slightly more than the $11.5 million requested by Stratagene and is far less than the roughly $22.4 million Invitrogen believes it is due when other legal costs and interest are factored into the total damages. The court also rejected a set of ‘protective measures’ that Invitrogen had requested if the bond amount did not cover the full amount of awarded damages.
 
In the Oct. 31 decision, Judge Sam Sparks of the US District Court for the Western District of Texas ruled that Stratagene had willfully infringed Invitrogen’s US Patent No. 4,981,797, which covers a process for developing competent cell products. He ordered Stratagene to pay damages of $16.2 million, not including attorneys’ fees, costs, and prejudgment and post-judgment interest (see BioCommerce Week 11/1/2006).
 
The supersedeas bond will be used to secure a portion of the damages award while Stratagene appeals the judgment against it.
 
Last month, Stratagene said in a filing with the court that posting a bond in the full amount of the judgment would “impose an undue financial burden,” and called the litigation with Invitrogen “potentially bankrupting.” While the firm proposed a bond amount of $11.5 million, it asked the court to consider reducing the amount to $8.85 million, which it said was roughly half of its tangible net worth (see BioCommerce Week 12/13/2006)
 
According to Invitrogen’s filing last month, the full amount of the expected judgment, including pre- and post-judgment interest and attorneys’ fees, is $22,417,573.06. It said that the bond Stratagene requested should not be approved because it will leave nearly 50 percent of the court’s award unsecured.
 
But Stratagene countered that its “net worth, as it applies to a supersedeas bond and not its valuation for the marketplace, is approximately $17.7 [million], making the total expected judgment of approximately $22 million higher than Stratagene’s estimated net worth.”
 
Last week, Judge Sparks required Stratagene to post a supersedeas bond in the amount of $12,170,850.28. The amount includes $2,143,617.98 in attorneys’ fees and costs for Invitrogen, as well as $1,430,320.30 in prejudgment and post-judgment interest.
 

“The additional protective measures Invitrogen seeks are not necessary or appropriate in this case, and the measures could actually do more harm to Stratagene’s ability to do business and Invitrogen’s ultimate ability to collect its full judgment award.”

Invitrogen also had requested that if the court ordered a bond amount less than the judgment, it should include three provisions, including ordering Stratagene to provide Invitrogen with a deed of trust in any real property owned by the firm or a letter of credit and execution of a stock escrow agreement for sufficient shares of Stratagene stock to secure the collectibility of the remaining portion of the award. Among the other provisions was a request that Stratagene be ordered not to pay any dividends.
 
Stratagene said these conditions suggested by Invitrogen are “onerous at best and highly invasive and inappropriate at worst.” It said such provisions would put the firm in the “wholly untenable position of providing private financial and sales information to both a competitor and a party against whom they are currently litigating.”
 
Judge Sparks agreed. “The additional protective measures Invitrogen seeks are not necessary or appropriate in this case, and the measures could actually do more harm to Stratagene’s ability to do business and Invitrogen’s ultimate ability to collect its full judgment award,” he wrote in rejecting Invitrogen’s request.

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