Abbott Labs Ordered to Pay $175 Million Pre-judgment Interest

What’s $175,641,661 among friends?  Apparently not much, at least insofar as news media are concerned, although it is admittedly unfair to use the word “friends” in the same sentence as $175,641,661.  In reality, it is hard to characterize Abbott Laboratories as being a “friend” of who they must pay that exorbitant sum to, but I guess is does certainly pale in comparison to the $1,672,594,000 in actual damages Abbott lost to Centorcor Ortho Biotech and New York University on June 29, 2009 as a result being found to infringe U.S. Patent No. 7,070,775 with respect to its sale of the popular arthritis drug Humira. I guess when you lose a paltry $175.6 million, which relates only to the pre-judgment interest, that is chump change or maybe just completely inconsequential given the record loss of $1.67 billion. At some point the numbers get silly enough that our eyes glaze over and we lose interest.  Nevertheless, as the case moves forward it will undoubtedly take on characteristics of a heavyweight title fight, perhaps even Ali-Frazier or Balboa-Creed proportions!

In any event, this pre-judgment interest Order, which was handed down on Friday, December 18, 2009, came to my attention through Docket Report, an informative daily summary of patent litigation events. I was trying to write about this all day yesterday, but with news of the USPTO announcing they would consider the Appeals Rules anew, and Microsoft getting re-slapped with a Word permanent injunction, I didn’t get around to it. Then when I set out to write this article today I was surprised that not more had been made of the Order, and on a cursory review only found one article from Business Week that mentioned it at all, and that article was primarily about Abbott reaching a deal on Humira with the University of Iowa, which will now allow them to focus on the appeal of the now $1.848 billion loss to Centorcor and NYU.

Writing that last sentence made me chuckle, I have to admit. As it stands at the moment Abbott has lost $1.848, but the district court announced in the pre-judgment interest Order that the plaintiffs were the prevailing party (what an understatement) and as such costs will be awarded to them. On top of that, post-judgment interest will be awarded and to bring this case to a conclusion the district court opened a new Docket Number relative to post-verdict causes of action. The plaintiffs are required to file an appropriate complaint in the new case, within ten days of the order. And Abbott will need to file an answer, as well as quarterly reports beginning on February 1, 2010, identifying the number of units sold with regard to all of Defendants’ products found to infringe the ‘775 patent. And they just now can turn attention to this matter to the fullest extent since they have wrapped up a deal with the University of Iowa? My goodness, with this amount of money on the line as a stockholder I would have hoped that they were focused on this case for some time, but at least since June 29, 2009!

Adelle Infante, a spokeswoman for Abbott:

We can now move forward to the appeals process, since we believe this verdict is out of step with the law, the facts and the scope of prior patent damage awards. The trial court’s judgment represents solely the end of the first round. Abbott remains confident that we will prevail on appeal.

There is no doubt that an appeal is coming, and there is no doubt that this quote was taken from the spokesperson manual titled Things to Say When Your Company Has Lost Huge. I am not sure that I would characterize this lose as the end of the first round. To get to a $1.848 billion and counting liability there necessarily has been losses in round after round. To follow with the boxing analogies, this battle so far has been completely one-sided. But will this fight be like Larry Holmes vs. Randall Tex Cobb, in which Holmes beat on Cobb for 15 rounds, winning a unanimous decision and having won all 15 rounds on 2 of the 3 judges scorecards (where Holmes is played by Centorcor and NYU, of course)? Or will this fight be like Billy Conn vs. Joe Louis, where Billy Conn out maneuvered Joe Louis for 12 rounds, winning on points and well on his way to becoming the first light heavyweight champion to win the heavyweight championship. In that fight Conn, an Irishman looking for a knockout, went toe to toe with Joe Louis in the 13th round and managed to get himself knocked out. Conn later joked that Louis could have let him have the championship, to which Louis joked back that Conn “had the title for twelve rounds and you couldn’t hold on to it.”

Boxing analogies are really quite descriptive of what goes on in a patent infringement litigation. The loser at trial always has a punchers chance to end it all at the Federal Circuit, which is one of the great tragedies of patent litigation over the last decade or so. There is always the potential of a reversal on appeal in any trial, but increasingly over time the Federal Circuit has shown great willingness to show absolutely no deference to district court judges, which means if the case is going to settle it better settle before trial because once there is a trial and certainly once there is a decision, parties get entrenched and figure they have come this far they might as well roll the dice at the Federal Circuit and hope for the best, which does happen at an alarming rate.

Last spring when I spoke the Thomas Jefferson Law School symposium on Alternative Dispute Resolution they played a video interview with Chief Judge Paul Michel, who during the interview talked about the Federal Circuit, and specifically himself, potentially getting it very wrong when they decided claim construction done by the district court deserves no deference. He talked about perhaps a sliding scale being appropriate, where if the district court did a thorough job and showed their work (as in a mathematical proof) some deference should be given, perhaps even great deference, at least compared with naked rulings on claim construction.

Yes, the Federal Circuit seems to be stewing in their own juices to a certain point. I watched with great amusement when Michel was writing to Congress about how interlocutory appeals should not be in any patent reform legislation. If you ask me that is one of the few things that Congress was getting 100% right with patent reform legislative drafts. If the Federal Circuit wants to do whatever they want and second guess district courts then they should embrace interlocutory appeals. That way litigants can get greater certainty more quickly. Rather than engage in epic battles akin to Ali vs. Frazier (see Fight of the Century, Ali-Frazier II, Thilla in Manilla, or even Balboa vs. Creed, the Federal Circuit should either allow district courts to come to greater finality or they should simply get involved themselves before needless sums are wasted, only to be re-wasted on re-trial after an appeal.

Admittedly, recently it seems like the Federal Circuit is coming to their senses a bit and taking care of more and more on appeal rather then forcing generational patent litigation, but maybe I am just selectively noticing. Just yesterday they seemed to wrap up the Microsoft case with a nice bow, at least insofar as i4i Technologies is concerned. Nevertheless, with $1.848 billion on the line and growing, it seems that whatever the Federal Circuit does won’t end this battle. There will no doubt be a motion to rehear en banc, and an appeal to the Supreme Court. With so much money on the line I have to think that the Supreme Court would be receptive to the case, because we all know they like high profile cases and take large dollar litigations with some frequency to review and elaborate upon issues of excessive damages. That being the case, like in Bilski, the Federal Circuit may well try and figure out what the Supreme Court would do, which will likely lead to a nonsensical decision, that increases the likelihood of cert. being granted.

For pundits like me, I have a feeling this Abbott patent litigation will be the gift that keeps giving for quite some time.