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SANOFI-AVENTIS, SANOFI-SYNTHELABO, INC.,
AND BRISTOL-MYERS SQUIBB SANOFI
PHARMACEUTICALS HOLDING PARTNERSHIP,
APOTEX INC. AND APOTEX CORP.,
Appeal from the United States Court for the Southern
District of New York in Case No. 02-CV-2255, Judge
EVAN R. CHESLER, Cravath, Swaine & Moore, LLP, of
New York, New York, argued for plaintiffs-appellees. With him on the brief were RICHARD J. STARK and DAVID
GREENWALD. Of counsel on the brief were ROBERT L. BAECHTOLD, JOHN D. MURNANE and WILLIAM E.
SOLANDER, of Fitzpatrick, Cella, Harper & Scinto, of New York, New York.
ROBERT B. BREISBLATT, Katten Muchin & Rosenman,
LLP, of Chicago, Illinois, argued for defendants-
appellants. With him on the brief was ERIC C. COHEN. Of
Before NEWMAN, SCHALL, and MOORE, Circuit Judges
Opinion for the court filed by Circuit Judge MOORE.
Apotex Inc. and Apotex Corp. (collectively, Apotex)
appeal the United States District Court for the Southern
District of New York’s award of prejudgment interest to Sanofi-Aventis, Sanofi-Synthelabo, Inc., and Bristol-
Myers Squibb Sanofi Pharmaceuticals Holding Partner-
ship (collectively, Sanofi) and its holding that Apotex Inc. is jointly and severally liable for damages. Sanofi-Aventis
v. Apotex Inc.
, 748 F. Supp. 2d 293 (S.D.N.Y. 2010). Apotex also appeals the district court’s denial of its mo-
tion for leave to file a supplemental answer, affirmative defenses, and counterclaims pleading patent misuse and
breach of contract. J.A. 2.1-2.22. Because the district court erred by awarding prejudgment interest in addition
to Sanofi’s “actual damages” specified in the parties’
settlement agreement, we reverse-in-part. We affirm the district court’s holding that Apotex Inc. is jointly and
severally liable for all damages and its denial of Apotex’s motion for leave to file a supplemental answer, affirma-
This is the third appeal we have heard in this nearly
decade old Hatch-Waxman dispute regarding clopidogrel
bisulfate tablets, sold by Sanofi under the brand name
Plavix®. In the first appeal, we affirmed the district court’s grant of a preliminary injunction. Sanofi-
Synthelabo v. Apotex, Inc.
, 470 F.3d 1368 (Fed. Cir. 2006) (Plavix I
). In the second appeal, we affirmed the district
court’s judgment that the patent-in-suit is not invalid, infringed, and not unenforceable. Sanofi-Synthelabo v.
, 550 F.3d 1075 (Fed. Cir. 2008) (Plavix II
). The facts most relevant to this appeal are set forth as
On November 21, 2001, Apotex Inc., through its U.S.
agent, Apotex Corp., filed an Abbreviated New Drug
Application (ANDA) with the United States Food and Drug Administration (FDA) seeking approval for the sale
of generic clopidogrel bisulfate tablets prior to the expira-tion of U.S. Patent No. 4,847,265 (the ’265 patent). Plavix
, 470 F.3d at 1372-73. The submission included a para-graph IV certification pursuant to 21 U.S.C.
§ 355(j)(2)(A)(vii)(IV) asserting that the ’265 patent is invalid. Id.
at 1373. In response to the submission,
Sanofi filed suit on March 21, 2002, alleging that the filing of the ANDA constituted an act of infringement
under 35 U.S.C. § 271(e)(2). Id.
Although Apotex admit-ted that its proposed generic product would infringe claim
3 of the ’265 patent, Apotex counterclaimed seeking a
declaration that the ’265 patent is invalid and unenforce-able. Id.
Sanofi’s filing of the suit within forty-five days
of receiving notice of Apotex’s paragraph IV certification triggered a thirty-month stay of FDA approval for the
ANDA pursuant to 21 U.S.C. § 355(j)(5)(B)(iii). Id.
The stay expired on May 17, 2005, and on January 20,
2006, the FDA gave Apotex final approval to sell its generic product. Id.
Prior to the FDA’s approval, the
parties initiated settlement negotiations that culminated in a tentative agreement on March 17, 2006 (the March
2006 agreement). Id.
In the March 2006 agreement,
Sanofi granted Apotex a future license under the ’265 patent, which would allow Apotex to begin sale of its
generic product several months before the patent expired.
J.A. 683. Sanofi also expressly agreed, inter alia
, that during the pendency of the license it would not launch an
An authorized generic is a generic drug sold by the
company who markets the brand name drug (or a third party licensee). See Mylan Pharm., Inc. v. U.S. Food &
, 454 F.3d 270, 273 (4th Cir. 2006). Author-ized generics, like other generics, are sold at a reduced
price compared to the brand name drug. Under the provisions of the Hatch-Waxman Act in effect at the time
Apotex filed its ANDA, Apotex was entitled to a 180-day period of exclusivity during which the FDA would not
approve other generic clopidogrel bisulfate products once
Apotex received approval from the FDA. 21 U.S.C. § 355(j)(5)(B)(iv). However, the branded company may still
market an authorized generic during this 180-day exclu-sivity period. Mylan Pharm., Inc.
, 454 F.3d at 273. The
sale of an authorized generic benefits patients (through lower prices) and the branded company, but harms the
first-to-file generic by introducing generic competition. Id.
Although Bristol-Myers Squibb Company (BMS) is not
a party to this litigation, it is an owner of plaintiff Bristol-Myers Squibb Sanofi Pharmaceuticals Holding Partner-
ship. As a result of orders entered in a previous litigation involving BMS, the March 2006 agreement was subject to
approval by the Federal Trade Commission (FTC) and a consortium of state attorneys general. The FTC objected
to multiple provisions of the March 2006 agreement,
including the provision preventing Sanofi from launching an authorized generic during the period of Apotex’s li-
cense. In view of these objections, Sanofi withdrew the
agreement from administrative review and the parties reinstituted settlement negotiations.
On May 26, 2006, the parties executed a second set-
tlement agreement – the terms of which are partially at issue in this appeal (the May 2006 agreement). Unlike
the March 2006 agreement, Sanofi did not expressly agree in the May 2006 agreement not to launch an authorized
generic during the pendency of Apotex’s license. The BMS executive negotiating the settlement on behalf of
Sanofi, however, orally promised Apotex that Sanofi
would not launch an authorized generic during this time period. On May 30, 2006, BMS presented the May 2006
agreement to the FTC for approval, but failed to disclose the existence of the oral agreement regarding an author-
ized generic. On June 5, 2006, Apotex disclosed the oral agreement to the FTC. In light of Apotex’s disclosure, the
FTC requested a written certification from BMS to con-
firm that BMS had made no oral promise not to launch an authorized generic during the pendency of Apotex’s li-
cense. The BMS executive submitted the certification as requested without disclosing the oral promise. On July
28, 2006, the state attorneys general informed the parties that they would not approve the May 2006 agreement, but
promised to reconsider pending an investigation into the
existence of the oral agreement between the parties.
On July 31, 2006, Apotex declared a regulatory denial
pursuant to its rights under the May 2006 agreement, which provided that “[i]f Regulatory Review has not been
completed by July 31, 2006, either party has the right to declare that there has been a Regulatory Denial [and] . . .
the litigations will be resumed . . . .” J.A. 693. On August 8, 2006, Apotex launched its generic clopidogrel bisulfate
product. Sanofi moved for a preliminary injunction,
which the district court granted on August 31, 2006, Sanofi-Synthelabo v. Apotex Inc.
, 488 F. Supp. 2d 317
(S.D.N.Y 2006), and which we affirmed in Plavix I
. In the few weeks that Apotex marketed its generic product it
The district court held a bench trial regarding liability
between January 22 and February 15, 2007 and on June
19, 2007 issued an opinion holding that the ’265 patent was both not invalid and not unenforceable. Sanofi-
Synthelabo v. Apotex Inc.
, 492 F. Supp. 2d 353 (S.D.N.Y. 2007). Infringement was not an issue at the trial: Apotex
previously admitted that it infringed under § 271(e)(2) because its generic product would infringe claim 3 of the
’265 patent. Additionally, Sanofi never amended its pleadings to specifically allege infringement under §
271(a)-(b) after Apotex began selling its generic product.
The district court bifurcated the issue of damages, which was scheduled for future proceedings pursuant to §
at 397. On December 12, 2008, we affirmed the district court’s decision in Plavix II
During the pendency of the liability trial and appeal,
the government pursued charges against BMS in relation
to its failure to disclose the oral agreement and its later false certification to the FTC. On May 30, 2007, after the
liability trial had ended, but before the district court entered its decision, BMS pleaded guilty to making false
statements to the FTC in violation of 18 U.S.C. § 1001.
J.A. 1826-41. On March 26, 2009, the FTC brought a civil action against BMS, resulting in a consent judgment
wherein BMS admitted it was in violation of its obliga-tions to truthfully disclose all provisions of the May 2006
1 In paragraph 9 of the May 2006 agreement Apotex
consented to personal jurisdiction and venue in the
Southern District of New York for purposes of any action
by Sanofi arising out of a sale by Apotex of its generic
product prior to the effective date of its license.
agreement. BMS agreed to pay a civil penalty of $2,100,000.
On May 22, 2009, during the damages stage of the
litigation, Apotex sought leave to file a supplemental answer, affirmative defenses, and counterclaims. In the
supplemental answer, Apotex alleged that the ’265 patent was unenforceable for patent misuse due to BMS’s failure
to disclose the oral agreement to the FTC and its later false certification to the FTC. Apotex also added a coun-
terclaim for breach of contract, alleging that BMS
breached its duty to use reasonable efforts to secure regulatory approval of the May 2006 agreement.
The district court denied Apotex’s motion on Septem-
ber 3, 2009. J.A. 2.1-2.23. Regarding the patent misuse
claim, the district court determined that the claim was “an ‘unnecessary and inappropriate diversion’ from [the]
action,” J.A. 2.8, that would “expand, complicate and
prolong discovery in [the] action and prolong its ultimate resolution.” Id.
at 2.10. The district court also deter-
mined that given our recent en banc
decision in Princo Corp. v. International Trade Commission
, 616 F.3d 1318
(Fed. Cir. 2010) (en banc), BMS’s actions likely did not constitute patent misuse. Id.
at 2.9. The district court
similarly denied the motion to add the breach of contract counterclaim. In doing so, the district court determined
that Apotex could file the breach of contract suit sepa-rately and that granting the motion “would both delay
disposition of this litigation and . . . prejudice Sanofi by requiring it to address an additional area of discovery.”
The May 2006 agreement set Sanofi’s “actual dam-
ages” as “50% of Apotex’s net sales.” J.A. 693. On De-
cember 18, 2009, Sanofi moved for summary judgment on the issue of damages. On October 9, 2010, the district
court granted Sanofi’s motion for summary judgment and ordered Apotex to pay $442,209,362 in damages (50% of
Apotex’s net sales) and an additional $107,930,857 in
prejudgment interest. J.A. 17. In awarding prejudg-ment interest, the district court rejected Apotex’s argu-
ments that the May 2006 agreement precluded such an award. Sanofi-Aventis
, 748 F. Supp. 2d at 296-97. The
district court also rejected Apotex’s arguments that pre-judgment interest was not available as a remedy pursu-
ant to 35 U.S.C. § 271(e)(4)(c). Id.
The district court further held that Apotex Inc. and Apotex Corp. were
jointly and severally liable for the damages. Id.
at 295. Apotex appeals and we have jurisdiction pursuant to 28
On appeal, Apotex argues that the district court erred
by: 1) granting Sanofi prejudgment interest in addition to
the damages specified in the May 2006 agreement; 2) awarding the interest at the prime rate; 3) holding Apotex
Inc. jointly and severally liable for Sanofi’s damages; and
4) denying Apotex’s motion for leave to file a supplemen-tal answer, affirmative defenses, and counterclaims
pleading patent misuse and breach of contract.
We review a district court’s grant of prejudgment in-
terest for an abuse of discretion. Electro Scientific Indus.
v. Gen. Scanning Inc.
, 247 F.3d 1341, 1349 (Fed. Cir. 2001). “A district court abuses its discretion when its
decision is based on clearly erroneous findings of fact, is based on erroneous interpretations of the law, or is clearly
2 The district court calculated prejudgment interest
at the average annual prime rate, compounded quarterly
from August 19, 2006 until October 19, 2010. J.A. 17.
unreasonable, arbitrary or fanciful.” Cybor Corp. v. FAS Techs., Inc.
, 138 F.3d 1448, 1460 (Fed. Cir. 1998) (en
The parties dispute whether paragraph 14(ii) of the
May 2006 agreement limits Sanofi’s recovery of damages. Paragraph 14 states that if regulatory denial occurs the
litigation between the parties will resume and:
If the litigation results in a judgment that the ’265 patent is not invalid or unenforceable, Sanofi
agrees that its actual damages for any past in-fringement by Apotex, up to the date on which Apo-
tex is enjoined, will be 50% of Apotex’s net sales of clopidogrel products
. . . . Sanofi further agrees
that it will not seek increased damages under 35 U.S.C. § 284.
The district court held that paragraph 14(ii) did not
bar the award of prejudgment interest. Sanofi-Aventis
748 F. Supp. 2d at 296-97. The district court reasoned that for acts of infringement under 35 U.S.C. § 271(e)(2)
courts may award “damages or other monetary relief” pursuant to 35 U.S.C. § 271(e)(4)(C) after there has been
a commercial importation or sale of the generic drug. Id.
The district court determined that such damages are
defined by 35 U.S.C. § 284, under which “[d]amages and interest are distinct categories of recovery.” Id.
Because the May 2006 agreement only “explicitly limits
” the district court determined that it did not prevent an additional award of “interest
on those dam-ages” pursuant to § 284. Id.
at 297. The district court
concluded that “[i]n the absence of any agreement to the
contrary, the general rule awarding interest on damages in patent infringement actions remains unaltered.” Id.
Apotex contends that the district court abused its dis-
cretion by awarding prejudgment interest in addition to
the amount of “actual damages” specified in the May 2006
agreement. Apotex argues that the May 2006 agreement, when read as a whole, shows that Sanofi contractually
limited its full recovery to 50% of Apotex’s net sales. Apotex contends when the parties contemplated a sepa-
rate interest payment the May 2006 agreement expressly provided for it. Apotex points to paragraph 10 of the
agreement, which defines the amount Sanofi will reim-
burse Apotex for Apotex’s investment in inventory:
Sanofi will reimburse Apotex for Apotex’s stock of
clopidogrel bisulfate bulk and finished goods . . . for a price not to exceed $40 million, which Apotex
represents and warrants is its actual, fully loaded cost for that inventory, as evidenced by documents
Apotex will provide. That sum will be payable
within 30 days after Regulatory Clearance . . . with interest from the date of execution of this
agreement at an annual interest rate of 6.5%, com-pounded monthly
Sanofi argues that the district court did not abuse its
discretion by awarding prejudgment interest. Sanofi contends that because the agreement is silent regarding
prejudgment interest, the district court correctly applied
the general rule that “prejudgment interest should ordi-narily be awarded.” Gen. Motors Corp. v. Devex Corp.
Sanofi argues that it is inconsequential that interest
is expressly included in paragraph 10 of the May 2006 agreement, but not in paragraph 14. Sanofi contends that
absent the contractual language, Apotex would have no statutory right to the interest in connection with reim-
bursements for inventory specified in paragraph 10. In contrast, Sanofi contends that under § 284 it has a statu-
tory right to prejudgment interest that it did not need to
Because the interpretation of a settlement agreement
is not an issue unique to patent law, we apply the law of the appropriate regional circuit. Novamedix, Ltd. v. NDM
, 166 F.3d 1177, 1180 (Fed. Cir. 1999). The Second Circuit reviews the district court’s interpreta-
tion of a settlement agreement de novo
. Hatalmud v. Spellings
, 505 F.3d 139, 145 (2d Cir. 2007).
The parties appear to agree that New York contract
law governs the interpretation of the May 2006 agree-
Appellants’ Br. 50-51 (citing New York con-tract law); Appellees’ Br. 22 (citing New York contract
law). Under New York law a court may interpret a con-tract as a matter of law without resorting to extrinsic
evidence if the contract is straightforward and unambigu-
ous. Postlewaite v. McGraw-Hill, Inc.
, 411 F.3d 63, 67 (2d Cir. 2005). Even where a contractual term is ambiguous,
if the intention of the parties is clear from the four cor-ners of the agreement, interpretation of the contract is a
matter of law, and the court may appropriately rule on summary judgment. See id.
The parties’ dispute hinges on whether paragraph
14(ii) of the May 2006 agreement allows for the imposi-
tion of prejudgment interest in addition to “actual dam-
ages,” or whether the “actual damages” award is the full measure of Sanofi’s damages. After reviewing the May
2006 agreement, we conclude that the parties intended that the phrase “actual damages” include all damages
necessary to compensate Sanofi for Apotex’s infringement. Because prejudgment interest is a form of compensatory
damages, the district court erred by awarding additional prejudgment interest pursuant to 35 U.S.C. § 284.
Courts have long held that prejudgment interest is a
form of compensatory relief. “No matter what area of law is considered, prejudgment interest, when awarded, is
part of a successful plaintiff’s complete compensation.” Transmatic, Inc. v. Gulton Indus.
, 180 F.3d 1343, 1347-48
(Fed. Cir. 1999); see also Oiness v. Walgreen Co.
, 88 F.3d 1025, 1033 (Fed. Cir. 1996) (“Prejudgment interest has no
punitive, but only compensatory, purposes. Interest compensates the patent owner for the use of its money
between the date of injury and the date of judgment.”). The Supreme Court explained the policy behind awarding
prejudgment interest under the patent laws:
An award of interest
from the time that the roy-alty payments would have been received merely
serves to make the patent owner whole, since his damages consist
not only of the value of the roy-
alty payments but also of the forgone use of the money
between the time of infringement and the
Gen. Motors Corp.
, 461 U.S. at 655-56 (emphasis added).
The May 2006 agreement supports this interpretation
of “actual damages.” By allowing Sanofi “actual damages”
but expressly excluding increased damages under the Patent Act, paragraph 14(ii) indicates that the parties
intended to account for all
potential damages at issue:
Sanofi agrees that its actual damages for any past
infringement by Apotex, up to the date on which Apotex is enjoined, will be 50% of Apotex’s net
sales . . . . Sanofi further agrees that it will not
seek increased damages under 35 U.S.C. § 284.
J.A. 693. Increased damages under § 284 are not com-pensatory in nature but punitive. See, e.g.
, Sensonic, Inc.
v. Aerosonic Corp.
, 81 F.3d 1566, 1574 (Fed. Cir. 1996). Thus, the natural reading of paragraph 14(ii) is that
Sanofi was entitled to collect 50% of Apotex’s net sales as its “actual damages” (i.e.
compensatory damages), but
could not collect any “increased damages” (i.e.
punitive damages). As the Supreme Court’s decision in General
makes clear, the patentee’s damages consist not only of traditional valuations of patent damages such
as a reasonable royalty or the patentee’s lost profits, but
Moreover, in a separate section of the agreement,
paragraph 10, the parties expressly stated that prejudg-ment interest should be awarded and the agreement
specifically set forth how to calculate such interest. J.A. 691 (“That sum will be payable . . . with interest from the
date of execution of this agreement at an annual interest rate of 6.5%, compounded monthly.”). We conclude that
the May 2006 agreement, taken as a whole, indicates that
when the parties agreed upon the amount of “actual damages” they intended this to be the compensatory
damages necessary to compensate Sanofi for Apotex’s infringement. We interpret the words “actual damages”
in this contract
to be the full measure of all compensatory damages (including prejudgment interest).
Indeed, to construe “actual damages” not to already
include prejudgment interest would lead to a result counter to the general purpose of the agreement. Postle-
, 411 F.3d at 67 (“Contracts must be read as a whole, and if possible, courts must interpret them to effect the
general purpose of the contract.”). By agreeing to a sim-ple formula to quantify Sanofi’s “actual damages” in
paragraph 14(ii), the parties avoided litigating a poten-tially complex issue. Such certainty is beneficial to both
parties. Apotex benefited by knowing the exact amount of its potential liability. Sanofi benefited because it could fix
damages without having to resort to further litigation,
including complex and potentially lengthy discovery. These benefits disappear, however, if prejudgment inter-
est is not included in “actual damages” since – as demon-strated here – the parties must engage in further
litigation over an additional large liability.
Sanofi argues that the district court correctly con-
cluded that it did not need to preserve the right to pre-
judgment interest, because there is a statutory right to interest under 35 U.S.C. § 284. Both parties also make
numerous arguments regarding whether the award of prejudgment interest is appropriate in a § 271(e)(2)
infringement action based on their interpretation of the term “damages” in 35 U.S.C. §§ 271(e)(4)(C) and 284.
While interesting, these arguments neither illuminate nor
resolve the issue before us – the meaning of “actual dam-ages” in the May 2006 agreement. The agreed upon
“actual damages” are a creature of contract and not of the Patent Act. By entering into the May 2006 agreement,
the parties decided that the agreement itself – not § 271(e)(4)(C) or § 284 – would govern the appropriate
measure of damages from Apotex’s infringement.
As the district court correctly noted, “[i]n the absence
of any agreement to the contrary, the general rule award-
ing interest on damages in patent infringement actions remains unaltered.” Sanofi-Aventis
, 748 F. Supp. 2d at
297. Such an agreement exists here. To the extent the parties intended “actual damages” to mean only a reason-
able royalty they would have expressly chosen such language as they did in regard to “increased damages.”
J.A. 693 (“Sanofi further agrees that it will not seek
increased damages under 35 U.S.C. § 284.”). By failing to do so, the parties manifested a clear intent to have the
settlement agreement define the full scope of Sanofi’s potential recovery.
The law strongly favors the settlement of all litiga-
tion, including patent disputes. See, e.g.
, Hemstreet v. Spiegel, Inc.
, 851 F.2d 348, 350 (Fed. Cir. 1988). By agreeing to a formula to calculate Sanofi’s “actual dam-
ages” in the May 2006 agreement, Sanofi gave up any
right to supplement its recovery with additional prejudg-ment interest. Because the district court erred in its
interpretation of the May 2006 agreement, we reverse the district court’s award of interest pursuant to 35 U.S.C.
After Apotex engaged in the commercial sale of its ge-
neric product, Sanofi never amended its complaint to
allege either direct infringement under 35 U.S.C. § 271(a) or induced infringement under 35 U.S.C. § 271(b). In-
stead, Sanofi only alleged that Apotex infringed pursuant
to 35 U.S.C. § 271(e)(2) – the infringement provision of the Hatch-Waxman Act. Infringement under § 271(e)(2)
“is a hypothetical case that asks the factfinder to deter-mine whether the drug that will be sold upon approval of
3 The dissent argues that Bank of New York v.
Amoco Oil Co.
, 35 F.3d 643 (2d Cir. 1994), requires us to
award prejudgment interest in this case. In Bank of New
, however, the settlement agreement at issue was
ambiguous and the court found no clear indication of the
parties’ intent within the agreement. Bank of New York
35 F.3d at 662. In contrast, in this case the parties’
intention to include prejudgment interest in “actual
damages” is clear from the four corners of the contract.
, 411 F.3d at 67.
4 Because the district court erred in awarding pre-
judgment interest, we need not address Apotex’s argu-
ments that the district court also erred by awarding
the ANDA will infringe the asserted patent.” In re Bri-monidine Patent Litig.
, 643 F.3d 1366, 1377 (Fed. Cir.
2011). Section 271(e)(4) sets out “the only remedies which may be granted by a court for an act of infringement
[under § 271(e)(2).]” Relevant here, the statute sets forth that damages are only available in specific instances,
[D]amages or other monetary relief may be awarded against an infringer only if there has
been commercial manufacture, use, offer to sell, or sale within the United States or importation into
the United States of an approved drug . . . .
Apotex does not argue that Apotex Inc. is not “an in-
fringer” under § 271(e)(2). However, during the damages phase of the lawsuit, Apotex argued for the first time that
Apotex Inc. is not liable for damages, because it never engaged in the “commercial manufacture, use, offer to
sell, or sale within the United States or importation into the United States of an approved drug,” as required by
§ 271(e)(4)(C). Instead, Apotex argued that Apotex Corp.
alone imported the drug and made all commercial sales in the United States. Although Apotex Inc. conceded that it
manufactured the drug in Canada, Apotex nevertheless argues that Sanofi failed to present any evidence showing
that Apotex Inc.’s actions took place in the United States. As a result, Apotex Inc. claims that it cannot be held
liable for infringement under § 271(e)(4)(C).
The district court determined that the May 2006
agreement governed the damages at issue, and that both
Apotex Inc. and Apotex Corp. were parties to the agree-ment. Sanofi-Aventis
, 748 F. Supp. 2d at 295. The dis-
trict court also noted that Apotex waited until the damages phase of the trial, after the trial on liability
already concluded, “to draw a distinction for these pur-poses between Apotex Inc. and Apotex Corp., and to
assert for the first time a defense to Apotex Inc.’s liability
We agree with the district court that the May 2006
agreement governs liability in this case and need not address Apotex’s statutory arguments. As discussed
above, the clear purpose of paragraph 14(ii) of the May 2006 agreement was to define Sanofi’s compensatory
damages from Apotex’s infringement. The May 2006 agreement broadly defines “Apotex” to include “Apotex
Inc. and Apotex Corp., collectively and individually, and
including any entity now or hereafter owned or controlled by any of them.” J.A. 690. Dr. Barry Sherman, the
Chairman and CEO of Apotex Inc., signed the agreement on behalf of both Apotex Inc. and Apotex Corp. J.A. 694.
Additionally, in the parties’ Stipulated Statement of Facts in the Joint Pre-Trial Order, Apotex admitted that “the
acts of Apotex Corp. with respect to the subject matter of
this action were done at the direction of, with the authori-zation of and with the cooperation, participation and
assistance of Apotex Inc.” J.A. 2498. Thus, the only logical reading of the May 2006 agreement is that both
Apotex Inc. and Apotex Corp. agreed to be jointly and severally liable for Sanofi’s “actual damages.” Therefore,
we affirm the district court’s determination that Apotex
Inc. is jointly and severally liable for Sanofi’s damages.
Although a “court should freely give leave [to amend]
when justice so requires,” Fed. R. Civ. P. 15(a), in the Second Circuit “it is within the sound discretion of the
district court to grant or deny leave to amend.” Green v.
, 585 F.3d 97, 104 (2d Cir. 2009). The Second Circuit reviews the denial of a motion to amend the
pleadings for an abuse of discretion. Id.
A district court abuses its discretion if it bases its ruling on an erroneous
view of the law or a clearly erroneous assessment of the evidence. Id.
A district court should grant leave to
amend “[i]n the absence of any apparent or declared reason – such as undue delay, bad faith or dilatory motive
on the part of the movant, repeated failure to cure defi-
ciencies by amendments previously allowed, undue preju-dice to the opposing party by virtue of allowance of the
amendment, [or] futility of amendment . . . .” See Foman v. Davis
, 371 U.S. 178, 182 (1962); see also McCarthy v.
Dun & Broadstreet Corp.
, 482 F.3d 184, 200 (2d Cir. 2007) (“A district court has discretion to deny leave for good
reason, including futility, bad faith, undue delay, or undue prejudice to the opposing party.”). To the extent
the district court bases the denial of leave to amend upon a legal interpretation, the Second Circuit reviews the
denial de novo
. Spiegel v. Schulmann
, 604 F.3d 72, 78 (2d Cir. 2010).
Apotex argues that the district court abused its dis-
cretion by denying Apotex’s leave to amend to add an affirmative defense of patent misuse and a counterclaim
Apotex’s allegations regarding patent misuse arise en-
tirely from BMS’s conduct surrounding its failure to disclose the existence of the oral agreement regarding an
authorized generic to the FTC and the consortium of state
attorneys general. Apotex contends that under both Federal law and the FTC’s prior judgments, BMS had a
duty to inform the FTC of its oral promise not to launch an authorized generic. Apotex argues that BMS’s failure
to disclose the oral agreement, despite this affirmative duty to disclose, rises to the level of patent misuse that
rendered the ’265 patent unenforceable during the entire
The district court properly rejected Apotex’s patent
misuse defense as futile. See Acito v. IMCERA Grp., Inc.
47 F.3d 47, 55 (2d Cir. 1995) (“One good reason to deny leave to amend is when such leave would be futile.”). In
, 616 F.3d at 1328, we held “that the key inquiry under the patent misuse doctrine is whether . . . the
patentee has impermissibly broadened the physical or
temporal scope of the patent grant and has done so in a manner that has anticompetitive effects.” BMS’s failure
to disclose the oral side deal with Apotex, and its false certification to the FTC regarding the same, in no way
broadened the scope of the ’265 patent grant. Although it is perhaps plausible that the scope of the ’265 patent
grant could have been broadened if the FTC failed to
discover BMS’s nefarious conduct, such a hypothetical is irrelevant here – the FTC quickly discovered the existence
of the oral agreement and BMS’s false certification prior to either the FTC or the state attorneys general giving
Apotex contends that our decision in Qualcomm Inc.
v. Broadcom Corp.
, 548 F.3d 1004, 1021-22 n.8 (Fed. Cir. 2008), supports its argument that a patent may be held
unenforceable for the failure to comply with a statutory
obligation to disclose information relating to a patent license and settlement agreement. Qualcomm
however, a case regarding patent misuse, but instead concerns whether a patentee waived its rights to enforce
its patents due to its failure to disclose their existence to a standard-setting organization. Id.
at 1008. Qualcomm
therefore, provides no basis for distinguishing our later en banc decision in Princo
. As we expressly held in Princo
“the defense of patent misuse is not available to a pre-sumptive infringer simply because a patentee engages in
some kind of wrongful commercial conduct, even conduct
that may have anticompetitive effects.” 616 F.3d at 1329.
As reprehensible as BMS’s actions may be, they do not constitute patent misuse: “Where the patentee has not
leveraged its patent beyond the scope of rights grant by
the Patent Act, misuse has not been found.” Id.
Next we turn to the district court’s decision to deny
Apotex’s motion to add a counterclaim for breach of con-tract. Apotex’s counterclaim alleges that Sanofi breached
the May 2006 agreement by failing to disclose the oral side agreement to the FTC. Specifically, Apotex contends
that BMS’s failure to disclose the oral agreement breached paragraph 13 of the May 2006 agreement’s
requirement that both parties “use reasonable efforts” to
obtain FTC approval. The district court denied Apotex’s motion to add the counterclaim, determining that “it
would both delay disposition of this litigation and . . . prejudice Sanofi by requiring it to address an additional
area of discovery.” J.A. 2.11. Apotex contends that the district court abused its discretion because the judge
could have reopened discovery into the contract claim.
Apotex notes that seventeen months passed between the time Apotex moved for leave to amend and the district
court granted summary judgment on the issue of dam-ages.
A court may deny a motion to amend where it would
“significantly delay the resolution of the dispute.” Block
v. First Blood Assocs.
, 988 F.2d 344, 350 (2d Cir. 1993). When the district court denied Apotex’s motion, the
litigation had spanned nearly eight years. In fact, a full trial and appeal on the issue of liability for the patent
claims had already occurred. See Gussack Realty Co. v.
, 224 F.3d 85, 94 (2d Cir. 2000) (“Generally, introducing new claims for liability on the last day of trial
will prejudice the defendant.”). Therefore, we cannot say that the district court abused its discretion when it de-
termined that adding the counterclaim would delay the
resolution of the underlying patent dispute. Furthermore, the denial in no way prejudiced Apotex who has brought a
claim against Sanofi for breach of contract in Florida state
court. See Apotex Inc. v. Sanofi-Aventis
, Civ. A. No. CACE11001243 (Fla. Broward County Ct. 2011).
For the forgoing reasons we reverse the district
court’s grant of prejudgment interest, we affirm its hold-
ing that Apotex Inc. is jointly and severally liable for all
damages, and affirm its denial of Apotex’s motion for leave to file a supplemental answer, affirmative defenses,
SANOFI-AVENTIS, SANOFI-SYNTHELABO, INC.,
AND BRISTOL-MYERS SQUIBB SANOFI
PHARMACEUTICALS HOLDING PARTNERSHIP,
APOTEX, INC. AND APOTEX CORP.,
Appeal from the United States Court for the Southern
District of New York in Case No. 02-CV-2255, Judge Sidney
NEWMAN, Circuit Judge
, dissenting in part.
I respectfully dissent from Part I of the court’s opinion,
which reverses the district court’s award of prejudgment
interest on the agreed conditional damages. The May 2006
Agreement did not alter the general rule that prejudgment
interest is awarded on damages for patent infringement.
The general rule does not depend on whether damages are
measured by the amount of lost profits, or as a royalty on
infringing sales, or, as here, an agreed percentage of sales.
Thus, to make the injured party whole, interest is paid on
the monetary loss. The district court correctly so recog-
nized. The district court, applying Supreme Court and
Federal Circuit precedent, has not been shown to have
The Court explained in General Motors Corp. v. Devex
, 461 U.S. 648, 654 (1983), that “prejudgment interest
should ordinarily be awarded where necessary to afford the
plaintiff full compensation for the infringement.” Federal
Circuit precedent has been faithful to this rule, recognizing
that the award of prejudgment interest on patent damages is the rule, not the exception. See, e.g.
, Ecolab, Inc. v. FMC Corp.
, 569 F.3d 1335, 1353 (Fed. Cir. 2009) (“When a pat-
entee asserts a patent claim that is held to be valid and
infringed, prejudgment interest is generally awarded.”); Crystal Semiconductor Corp. v. Tritech Microelectronics Int’l
, 246 F.3d 1336, 1346 (Fed. Cir. 2001) (“the discretion of
the district court in denying prejudgment interest is limited to specific circumstances”); Lummus Indus., Inc. v. D.M. & E. Corp.
, 862 F.2d 267, 275 (Fed. Cir. 1988) (“It is clear from General Motors
that the withholding of prejudgment inter-
est based on delay is the exception, not the rule . . . .”); Gyromat Corp. v. Champion Spark Plug Co.
, 735 F.2d 549,
555 (Fed. Cir. 1984) (“the Court’s repeated statements that
prejudgment interest ‘should ordinarily be awarded’ indi-
cates that that is the governing principle the Court enunci-ated”); Paper Converting Mach. Co. v. Magna-Graphics Corp.
, 745 F.2d 11, 23 (Fed. Cir. 1984) (“Prejudgment inter-est should ordinarily
be awarded absent some justification for withholding such an award, Leinoff v. Louis Milona & Sons, Inc.
, 726 F.2d 734, 743 (Fed. Cir. 1984); it is to com-
pensate for the delay a patentee experiences in obtaining
money he would have received sooner if no infringement had occurred, Central Soya Co. v. Geo. A. Hormel & Co.
The district court observed that “[w]hile the Settlement
Agreement explicitly limits damages
, it does not in any way restrict an award of interest
on those damages.” Sanofi-Aventis v. Apotex Inc.
, 748 F. Supp. 2d 293, 297 (S.D.N.Y.
2010). Paragraph 14 of the Settlement Agreement states
the way damages shall be measured, and does not mention
that such damages shall be free of the routine award of
interest. The district court correctly interpreted the con-
tract, applying New York contract law and precedent, and
held that “[i]n the absence of any agreement to the contrary,
the general rule awarding interest on damages in patent infringement actions remains unaltered.” Sanofi-Aventis
, 748 F. Supp. 2d at 297 (citing
35 U.S.C. §284; Gen. Motors
The panel majority proposes that the contract’s silence
on prejudgment interest means that the parties intended
and agreed, by their silence, to forgo such interest. But as the Court confirmed in General Motors
, the background rule
is that prejudgment interest is awarded on damages for patent infringement, as required by statute. See
on Contracts §26.1 (“The critical concept is that parties
apply the background rule if their contract is silent. Assum-
ing that the rule is defeasible, and may be changed by
agreement, the parties have the choice of saying nothing
and keeping it, or affirmatively modifying or displacing it.”).
If the parties had intended to prevent the award of in-
terest they would have done so explicitly, for the award of interest is the statutory rule, not the exception. Gen. Mo-tors
, 461 U.S. at 657 (“[P]rejudgment interest should be
awarded under §284 absent some justification for withhold-
ing such an award.”). Section 284 requires “damages ade-
quate to compensate for the infringement . . . together with
interest and costs . . . .” 35 U.S.C. §284.
The panel majority incorrectly states that interest is in-
cluded in the “actual damages” measured as a percentage of
sales. “Actual damages” and “prejudgment interest” are
separate categories, as the district court correctly observed. Sanofi-Aventis
, 748 F. Supp. 2d at 297 (“Damages and
interest are distinct categories of recovery.”). Prejudgment
interest is awarded on actual damages in order to treat the injured party fairly. In Beatrice Foods Co. v. New England Printing & Lithographing Co.
, 923 F.2d 1576, 1580 (Fed.
Cir. 1991), the court explained that “prejudgment interest
can only be applied to the primary or actual damage portion
and not to the punitive or enhanced portion,” and that
“prejudgment interest is designed ‘to compensate for the
delay a patentee experiences in obtaining money he would
have received sooner if no infringement occurred,’ while ‘on
the other hand, damages are trebled as punishment,’” citing Paper Converting
, 745 F.2d at 23. See also Gen. Motors
U.S. at 655-56 (“An award of interest from the time that the
royalty payments would have been received merely serves to
make the patent owner whole, since his damages consist not
only of the value of the royalty payments but also of the
forgone use of the money between the time of infringement and the date of the judgment.”); Roton Barrier, Inc. v. Stanley Works
, 79 F.3d 1112, 1128 (Fed. Cir. 1996) (award-
ing actual damages plus prejudgment interest on the actual
damages). The parties’ agreement that punitive damages
would not be sought was not an agreement to forgo the
standard award of interest on the actual damages.
This court must interpret the Settlement Agreement in
accordance with the intent of the parties, as required by the law of New York. See, e.g.
, Greenfield v. Philles Records, Inc.
, 780 N.E.2d 166, 170 (N.Y. 2002) (“The fundamental,
neutral precept of contract interpretation is that agree-
ments are construed in accord with the parties’ intent.”); Snug Harbor Square Venture v. Never Home Laundry, Inc.
675 N.Y.S.2d 365, 366 (App. Div. 1998) (“In construing a
contract, the document must be read as a whole to deter-
mine the parties’ purpose and intent, giving a practical
interpretation to the language employed so that the parties’
reasonable expectations are realized.”). Under New York
law, “[w]here one interpretation is broader than another,
courts should not apply the broader interpretation absent a clear manifestation of intent.” Bank of New York v. Amoco Oil Co.
, 35 F.3d 643, 662 (2nd Cir. 1994). In Bank of New York
the parties had agreed to limit “any recovery of dam-
ages” to no more than $550,000 and did not discuss pre-
judgment interest in the agreement, and the Second Circuit
upheld the award of prejudgment interest such that the
total amount exceeded $550,000, explaining that:
[R]easonable business people could not know with
precision how the inclusion of prejudgment interest
should affect the level of the cap on damages. After
all, neither party could know with precision when
final judgment would be rendered . . . . Absent a
clear intent to include prejudgment interest within
the meaning of “damages,” we think that reasonable
businesspeople faced with uncertainty over how
much prejudgment interest there would be would
exclude prejudgment interest from the meaning of
35 F.3d at 662. The Second Circuit’s reasoning is applicable
here; the New York district court correctly applied New
York law. In contrast, this court’s decision is contrary to
New York law, for the panel majority interprets the Settle-
ment Agreement, by its silence concerning interest, as
opting out of the general rule that interest is awarded
despite the lack of any “clear manifestation of intent” to
Awarding prejudgment interest is not “a result counter
to the general purpose of the agreement,” as the panel
majority argues. Maj. Op. at 13. The purpose of the Agree-
ment is to state the measure of damages as a specified
percentage of sales. That the parties, in a different section
of the Agreement dealing with purchase of inventory, ex-
pressly provided for payment of interest on those purchases,
does not support the panel majority’s theory, for prejudg-
ment interest on sale of inventory is not the established
rule, as is prejudgment interest on infringement damages.
The district court correctly ruled that “the fact that the parties agreed on an interest rate for one obligation (see
Settlement Agreement ¶ 10), but not for damages, does not
vitiate Sanofi’s statutory right pursuant to section 284 to prejudgment interest.” Sanofi-Aventis
, 748 F. Supp. 2d at
My colleagues err in reading the contract’s silence on in-
terest for infringement as meaning that the parties in-
tended and agreed to forgo the interest to which the
patentee is entitled by statute and precedent. I must,
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