Digest of Astrazeneca AB v. Apotex Corp., No. 2014-1221 (Fed. Cir. Apr. 7, 2015) (precedential). On appeal from S.D.N.Y. Before O’Malley, Clevenger, and Bryson.

Procedural Posture: Accused infringer Apotex Corp. appealed from a judgment of the District Court awarding damages to patentee Astrazeneca (“Astra”) on a reasonable royalty theory of recovery. CAFC affirmed in part, reversed in part, and remanded.

  • Damages – Reasonable royalty: CAFC found that the District Court did not err in concluding that, in a hypothetical negotiation, Astra and Apotex would have agreed upon a royalty rate of 50 percent of Apotex’s profits from the sale of its infringing omeprazole product between 2003 and 2007. First, CAFC held that the District Court did not overcompensate Astra because the benefits to Apotex and the costs to Astra of a license to the patents would have been considerable, Apotex would have faced substantial hurdles in bringing a non-infringing alternative to market, and pertinent settlement agreements between Astra and other manufacturers justified the rate Apotex owed. Second, CAFC found that while the entire market value rule was not applicable to this case, the relative accounting of the conventional elements of the claim to the unconventional elements was still required for the reasonable royalty analysis. The CAFC held that Astra’s formulation created a new, commercially viable omeprazole drug and there was thus no reason to exclude the value of the active ingredient when calculating damages. Third, CAFC held that the District Court did not err by refusing to discount the value of Astra’s patents based on the existence of non-infringing alternatives.However, the CAFC held that the period during which damages are to be measured under § 284 may not include the post-expiration pediatric exclusivity period, and held that it was thus error for the District Court to award damages for that period. The CAFC remanded to the District Court for a recalculation of damages on this basis.