Feeble § 101 litigation position results in significant award of fees and costs

The District Court of Delaware recently confirmed an award of $9.15 million in attorney’s fees and costs to defendant Elysium Health, Inc. (Elysium), resulting from what it determined to be insubstantial litigation positions taken by plaintiffs ChromaDex, Inc. and Trustees of Dartmouth College (jointly, the plaintiffs, or ChromaDex and Dartmouth, respectively) in a patent litigation lawsuit.

Below, we look at the key details.

Background

The case began when plaintiffs asserted two patents against Elysium: US Patent Nos. 8,197,807 and 8,383,086 (together, the patents). The patents claimed dietary supplements containing an isolated form of vitamin B3, known as nicotinamide riboside (NR), which is naturally present in cow’s milk in a non-isolated form.

At the Markman hearing, plaintiffs agreed that “isolated [NR]” means “[NR] that is separated or substantially free from at least some other components associated with a source of [NR].” Elysium moved for summary judgment of unpatentability under § 101 for both asserted patents. It argued that, under the Supreme Court’s decision in Association for Molecular Pathology v. Myriad Genetics, Inc. (Myriad), the act of isolating a naturally occurring substance does not render the associated claims patent eligible.

Plaintiffs argued that the use of isolated NR required the NR to be stable and bioavailable to provide a therapeutic effect. The court noted that plaintiffs’ only citation to Myriad was “the confusing – if not misleading – proposition” that isolation was not relevant to patent eligibility because no changes ensued in the isolation process. The court rejected plaintiffs’ interpretation of Myriad, chastising plaintiffs for ignoring the “crystal clear” holding of Myriad: that isolating a naturally occurring substance, without changing the chemistry of the substance, is unpatentable under § 101.

The court granted summary judgment of unpatentability and the Federal Circuit unanimously affirmed.

The court grants Elysium’s § 285 motion

After succeeding at both the District Court and Federal Circuit, Elysium sought an award of attorney’s fees under 35 USC § 285. The court agreed that this was an exceptional case, thus warranting such an award. In so finding, it highlighted that plaintiffs’ litigation position was “so lacking in substance” as to stand out from the many other § 101 challenges heard in the past five years. The court noted that plaintiffs did not even attempt to distinguish their claims from those at issue in Myriad. In addition, the court called out the plaintiffs’ “wily” litigation tactics, including misrepresenting the case’s full procedural history when responding to the fees motion.

Elysium originally requested $8.86 million in fees and costs. Plaintiffs objected to the inclusion of attorney’s fees accrued before claim construction, the inclusion of fees not yet paid to counsel, and the inclusion of expert witness fees. The court held that pre-Markman attorney’s fees were appropriately included because plaintiffs stipulated to the construction of “isolated NR” adopted at Markman, and even plaintiffs’ original proposed construction would have resulted in a finding of unpatentability and grant of summary judgment.

Further, the court held that fees incurred but not yet paid could be included in the fee award and ordered Elysium to produce fee arrangements with its counsel as a prerequisite to recouping such fees. Finally, the court agreed that Elysium could not recover expert witness fees because Elysium failed to initially request them.

In a subsequent joint motion, the parties agreed on the total amount of fees and costs to be awarded: $9.15 million with post-judgment interest at the rate of 5.02 percent to be awarded, pursuant to 28 USC § 1961, until the amount is paid. While Dartmouth protested that the award of fees and costs should be entered only against ChromaDex, the court rejected this argument, finding both plaintiffs jointly and severally liable for all fees and costs awarded.

Avoiding dubious § 101 arguments: Takeaways

As the court noted, plaintiffs failed to adequately confront controlling Supreme Court precedent when making arguments that the asserted patents were patentable. While the state of § 101 case law can be confusing and inconsistent, practitioners are encouraged to address seminal US Supreme Court § 101 cases, such as Myriad, that could potentially undercut their arguments. Failure to do so may result in an exceptional case finding and an award of attorney’s fees.

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