In a memorandum and order published last Friday in the Janssen v. Celltrion litigation pending in the federal district court in Massachusetts, Judge Mark L. Wolf provided “guidance” that the Biologics Price Competition and Innovation Act (BPCIA) does not limit an innovator’s remedy to a reasonable royalty unless a biosimilar applicant initiates and follows all steps of the “patent dance.”
As the order explains, the parties had “requested the court’s guidance on the appropriate measure of damages” if Janssen were to prevail on its infringement claims. In addition to addressing questions regarding the availability of lost profits under general principles of patent damages law, Judge Wolf addressed the impact on damages if defendants’ pending motion for lack of standing were granted and the case was refiled. According to the defendants, remedies in a new suit would be limited to a reasonable royalty pursuant to 35 U.S.C. § 271(e)(6), which applies to BPCIA law suits brought more than 30 days after the completion of the statutory “patent dance.” Janssen responded that the statutory limitation on remedies did not apply because the defendants had not completed the statutory “patent dance” procedures.
Judge Wolf ruled that “35 U.S.C. § 271(e)(6) will not limit Janssen's damages to a reasonable royalty” if “the pending cases are dismissed without prejudice for lack of standing.” He reasoned that a biosimilar applicant “must comply with each step of the BPCIA in order to limit the patentee to a reasonable royalty if it does not sue within 30 days of the end of that process.” “On the present record,” Judge Wolf found, “a reasonable fact-finder could not conclude” the defendants had engaged in the pre-suit “good-faith negotiations” required by the BPCIA. For that reason, the statutory limitation on remedies did not apply.
In the March 3, 2017 order, Judge Wolf also provided guidance on two other damages-related issues. First, he ruled that “[t]he fact that Celltrion produces [its Remicade biosimilar] Inflectra abroad would not prevent Janssen from recovering lost profits relating to sales of Inflectra in the United States if those sales could not have been made without the production and sale of the infringing media powders in the United States.” Second, he ruled that an analysis of whether Celltrion could have “used a non-infringing media powder to produce Inflectra … must determine whether, starting on the date of the first infringement, Celltrion could have switched to using a non-infringing alternative.”