Coherus Biosciences, Inc. v. Amgen Inc.

COHERUS BIOSCIENCES, INC., Plaintiff, v. AMGEN INC., Defendant.

Civil Action No. 19-139-RGA

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

June 11, 2020

MEMORANDUM OPINION

I. INTRODUCTION

Presently before the court post-judgment¹ in this patent infringement action is a motion to declare this case exceptional under 35 U.S.C. § 285, filed by defendant Amgen Inc. ("Amgen"). (D.I. 55)² Plaintiff Coherus Biosciences, Inc. ("Coherus") opposes the motion. (D.I. 61) For the following reasons, Amgen's motion is DENIED.

II. BACKGROUND

Coherus initiated the present litigation against Amgen on January 24, 2019, asserting causes of action for infringement of three Coherus patents: U.S. Patent Nos. 10,155,039 ("the '039 patent"), 10,159,732 ("the '732 patent"), and 10,159,733 ("the '733 patent"). (D.I. 1) On March 5, 2019, Coherus amended its complaint to add a cause of action for infringement of U.S. Patent No. 10,207,000 ("the '000 patent;" collectively with the '039, '732, and '733 patents, the "patents-in-suit"). (D.I. 7) The patents-in-suit relate to "stable aqueous compositionscomprising adalimumab as the active ingredient and other components as inactive ingredients." (D.I. 7 at ¶¶ 9, 11, 13, 15)

The amended complaint alleges that Amgen's AMGEVITA® product infringes the patents-in-suit. (D.I. 7 at ¶¶ 25-65) AMGEVITA® is a biosimilar adalimumab composition used to treat inflammatory diseases, including rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis, axial spondyloarthritis, plaque psoriasis, Crohn's disease, and ulcerative colitis. (Id. at ¶¶ 18, 23) Amgen answered the amended complaint on April 18, 2019, representing that its commercial AMGEVITA® product contains adalimumab as the active ingredient and uses excipients including "glacial acetic acid, sucrose, polysorbate 80, and water for injection," with "sodium hydroxide . . . used for pH adjustment." (D.I. 18 at ¶ 23) The amended complaint states that Amgen manufactured AMGEVITA® in the United States for sale in Europe beginning in October 2018. (D.I. 7 at ¶¶ 19-22)

On May 3, 2019, Amgen sent a letter to Coherus representing that Coherus' success on its infringement allegations will only serve to prove Amgen's prior use defense under 35 U.S.C. § 273. (D.I. 57, Ex. A) The letter identifies the filing of Provisional Application No. 61/698,138 on September 7, 2012 as the earliest application related to the patents-in-suit and, based on this filing date, an earliest effective filing date of September 7, 2011 is assumed.³ (Id. at 2) Attached to Amgen's letter were three internal, non-public documents, the first of which shows commercial use of Amgen's AMGEVITA® product no later than May 6, 2011. (Id.) On May 8, 2019, Coherus asked Amgen to produce the full application submitted by Amgen to the European Medicines Agency ("EMA") for AMGEVITA®, noting an apparent discrepancybetween the formulation described in the internal documents attached to the May 3, 2019 letter and the commercial AMGEVITA® formulation. (D.I. 57, Ex. B)

On May 16, 2019, Amgen produced a portion of the EMA application for AMGEVITA® that allegedly showed the commercial formulation of AMGEVITA® was the same as the internal formulation identified in the EMA application and used no later than May 6, 2011. (D.I. 57, Ex. C) In the accompanying letter, Amgen represented that neither the internal formulation nor the commercial AMGEVITA® formulation includes mannitol, citrate and phosphate buffers, or sodium chloride. (Id., Ex. C at 2)

Coherus responded by letter on May 28, 2019, suggesting that there may be differences between the formulation identified in Amgen's internal documents and the formulation accused of infringement. (D.I. 57, Ex. D) In particular, Coherus observed that the commercial AMGEVITA® formulation contained glacial acetic acid and sodium hydroxide, which were not identified as components of the internal formulation. (Id., Ex. D at 3) Coherus explained that Amgen could not prevail on a prior use defense based on a formulation different from the one accused of infringement. (Id., Ex. D at 4)

Amgen responded in a June 5, 2019 letter, representing there was no substantive difference between the formulations. (D.I. 57, Ex. E) Specifically, Amgen indicated that glacial acetic acid was the source of the acetate buffer in both the internal and commercial formulations of AMGEVITA&reg. (Id., Ex. E at 1) Amgen also represented that sodium hydroxide was a component of its formulation prior to September 7, 2011 which was the source of the sodium counter ions used to formulate the acetate buffer. (Id., Ex. E at 1-2) Amgen's June 5, 2019 letter attached the table of contents for the EMA application and encouraged Coherus to confirm the representations made in the letter with Dr. Mark Manning, a named inventor of the patents-in-suit. (Id.) However, the June 5, 2019 letter did not include documentary support for the representations made therein. (Id.)

Also on June 5, 2019, Coherus retained Dr. Ralph Tarantino as a pharmaceutical formulation expert consultant. (D.I. 63 at ¶¶ 2-5) After reviewing the communications and the four documents produced by Amgen, Dr. Tarantino indicated he could not confirm the commercial AMGEVITA® formulation was the same as the formulation described in the internal documents. (D.I. 63 at ¶¶ 6-9) Accordingly, Coherus sent a letter to Amgen on July 2, 2019 requesting the production of certain sections of the EMA application and other documents identified by Dr. Tarantino as potentially relevant to Amgen's prior use defense. (D.I. 57, Ex. H; D.I. 63 at ¶ 10) On July 15, 2019, Amgen represented that it would produce additional documents once a protective order was in place. (D.I. 57, Ex. I)

Thereafter, the parties stipulated to extend the time to apply for a protective order and raised a discovery dispute regarding the scope of the protective order. (D.I. 21; D.I. 24; D.I. 27) The protective order was ultimately entered on September 4, 2019, and Dr. Tarantino agreed to the terms of the protective order on September 5, 2019. (D.I. 39; D.I. 62, Ex. E; D.I. 63 at ¶ 12) Amgen produced some core technical documents regarding the formulation of AMGEVITA® on August 16, 2019 to outside counsel only, prior to the entry of the protective order. (D.I. 57, Ex. J; D.I. 62, Ex. L) Dr. Tarantino was not able to review those documents until September 20, 2019, after the expiration of the period for Amgen to object to the disclosure of its confidential information to Dr. Tarantino. (D.I. 63 at ¶ 13; D.I. 62, Ex. L) Following his review of the documents, Dr. Tarantino informed Coherus' outside counsel on September 27, 2019 that he believed Amgen had likely developed the commercial AMGEVITA® formulation prior to September 7, 2011. (Id. at ¶¶ 14-15)

On October 17, 2019, Coherus informed Amgen that it intended to dismiss the lawsuit. (D.I. 57, Ex. N; D.I. 62, Ex. F) The parties filed a stipulation to dismiss the action with prejudice pursuant to Rule 41(a)(1)(A)(ii) on November 25, 2019. (D.I. 52) The court entered an order dismissing the case with prejudice on November 26, 2019. (D.I. 53) On December 9, 2019, Amgen filed the instant motion for attorneys' fees and costs pursuant to 35 U.S.C. § 285, estimating that it incurred attorneys' fees in the amount of $900,000 for the period between June 5, 2019, when Amgen informed Coherus by letter that its position was meritless, and October 17, 2019, when Coherus agreed to dismiss the case. (D.I. 56 at 15-16; D.I. 57 at ¶ 18) Amgen also estimates it is owed an additional $75,000 in attorneys' fees for briefing on the instant motion. (D.I. 56 at 16)

III. LEGAL STANDARD

Section 285 provides that "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party." 35 U.S.C. § 285. The Supreme Court has defined "an 'exceptional' case [as] simply one that stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated." Octane Fitness LLC v. Icon Health & Fitness, Inc., 572 U.S. 545, 554 (2014). When considering whether a case is exceptional, district courts are to exercise their discretion on a case-by-case basis, considering the totality of the circumstances. Id. Relevant factors for consideration include "frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence." Id. at 554 n.6 (internal quotation marks omitted). Cases which may merit an award of attorney fees include "the rare case in which a party's unreasonable conduct—while notnecessarily independently sanctionable—is nonetheless so 'exceptional' as to justify an award of fees" or "a case presenting either subjective bad faith or exceptionally meritless claims." Id. at 546. A movant must establish its entitlement to attorneys' fees under Section 285 by a preponderance of the evidence. Id. at 557.

IV. ANALYSIS

Coherus does not dispute Amgen's position that Amgen is the prevailing party following Coherus' dismissal with prejudice of its patent infringement claims.⁴ See Highway Equip. Co., Inc. v. FECO, Ltd., 469 F.3d 1027, 1036 (Fed. Cir. 2006) ("[T]he dismissal with prejudice . . . has the necessary judicial imprimatur to constitute a judicially sanctioned change in the legal relationship of the parties, such that the district court properly could entertain [the defendant's] fee claim under 35 U.S.C. § 285."). Thus, the only issue is whether the case is exceptional. The court must evaluate the totality of the circumstances to determine whether this case warrants exceptional status under Section 285.

A. Good-Faith Basis for Litigation After June 5, 2019

In support of its motion to declare the case exceptional, Amgen alleges that Coherus demonstrated bad...