By Donald Zuhn --
The Federal Circuit today affirmed-in-part and vacated-in-part an order by the District Court for the Northern District of West Virginia awarding $1,011,712 in costs to Plaintiff-Appellee Daiichi Pharmaceutical Co., and remanded to the District Court for an apportionment determination of the awarded costs.
Daiichi owns U.S. Patent No. 5,053,407, which relates to levofloxacin, an antibiotic that Daiichi markets under the trade name Levaquin®. Seeking approval to market a generic version of levofloxacin, Defendants-Appellants Mylan Laboratories Inc. and Mylan Pharmaceuticals Inc. filed an Abbreviated New Drug Application (ANDA) with the FDA.
In response to Mylan's ANDA filing, Daiichi filed suit for infringement of the '407 patent. Mylan countered that the '407 patent was invalid and unenforceable. The District Court, however, determined that Mylan failed to establish invalidity or unenforceability by clear and convincing evidence, and these determinations were later affirmed on appeal.
As the prevailing party, Daiichi submitted a bill of costs to the District Court, seeking approximately $2.2 million from Mylan. Mylan objected on a number of grounds, and argued for an apportionment of costs based on the fact that a portion of the discovery in the instant case had been conducted jointly with a separate levofloxacin-related action against Teva Pharmaceuticals, Inc. in the District Court for the District of New Jersey. While the West Virginia District Court reduced Daiichi's requested costs by approximately 40%, the Court nonetheless rejected Mylan's argument that discovery costs should be apportioned between the instant case and the New Jersey case. (Ortho-McNeil Pharmaceutical, Inc. and Johnson & Johnson Pharmaceutical Research and Development, LLC, which licensed the '407 patent from Daiichi and were co-plaintiffs with Daiichi, reached a settlement with Mylan on costs, and therefore, were not parties to the appeal).
On appeal, Mylan again argued for apportionment of costs between the two cases. In support of its argument, Mylan noted that for Daiichi's convenience, the depositions of Daiichi's witnesses in the two cases were taken jointly by Mylan and Teva, with attorneys for both Mylan and Teva present, and with the captions of both cases on the transcripts. In addition, Mylan argued that because Teva agreed not to appeal the New Jersey District Court's grant of summary judgment of no inequitable conduct in exchange for Daiichi's agreement not to seek costs in that case, Daiichi received half of the shared discovery costs -- in the form of Teva's agreement to forgo appeal -- when it settled with Teva. Thus, Mylan contended that the shared discovery costs should be reduced by 50% to prevent a double recovery of those costs.
In vacating the portion of the West Virginia District Court's order awarding costs for the shared discovery (the rest of the awarded costs were affirmed), the Federal Circuit observed that the general rule in multiparty proceedings before a single judge is that the district court has discretion to apportion payment of jointly-incurred costs among the losing parties or to invoke the default rule that the losing parties are jointly and severally liable for costs. The Federal Circuit also noted, however, that whether the costs are apportioned or awarded jointly and severally, the prevailing party may only receive one satisfaction of costs. While the joint discovery in the instant case was conducted in multiple cases in different districts, the Federal Circuit still found that there was a risk of impermissible double recovery. In addition, even though the New Jersey District Court did not make an actual award of costs in the Teva case, the Federal Circuit stated that:
We see no basis for treating a settlement situation differently. Here it is apparent that Daiichi has in effect already recovered some amount of costs through its settlement agreement with Teva. Although Teva did not actually pay costs to Daiichi in cash . . . Daiichi agreed not to seek actual payment of costs as consideration for Teva foregoing its appeal. Having recovered the value of those costs in the form of the foregone appeal, Daiichi cannot now recover more than its total entitlement by obtaining those same costs again from Mylan.
As a result, the Federal Circuit vacated the judgment of the West Virginia District Court with regard to the portion of the award of costs related to jointly taken depositions, and remanded to the District Court to apportion the disputed deposition costs.
Comments