Enzo Biochem, Inc. et al v. Applera Corp. et al
ORDER; Plaintiffs' Motion 525 for an Award of Pre- and Post-Judgment Interest is GRANTED with modification as to the rate of prejudgment interest. The Clerk is directed to amend the judgment to reflect an award of prejudgment interest in the amount of $12,428,728 for a total award of $61,016,228. Post-judgment interest shall be awarded on the total judgment of $61,016,228 from November 7, 2012 until the judgment is satisfied. Signed by Judge Janet Bond Arterton on 1/3/2014. (Morril, Gregory)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
ENZO BIOCHEM, INC., ENZO LIFE SCIENCES,
INC., and YALE UNIVERSITY,
APPLERA CORP. and TROPIX, INC.,
Civil No. 3:04cv929 (JBA)
January 3, 2014
RULING ON PLAINTIFFS’ MOTION FOR AN AWARD
OF PRE- AND POST-JUDGMENT INTEREST
On November 1, 2012, following a seven-day trial, the jury returned a verdict
finding that Defendants Applera Corp. and Tropix, Inc. (collectively “ABI”) were liable to
Plaintiffs (collectively “Enzo”) for damages resulting from ABI’s infringement of U.S.
Patent No. 5,449,767 (the ‘767 Patent) by ABI’s manufacture, use, or sale of their reagent
products. The jury rejected ABI’s invalidity defenses of lack of written description, lack
of enablement, and anticipation, and issued two advisory findings that (1) Enzo had not
unreasonably delayed in filing suit, and (2) ABI was not materially prejudiced by any
delay in filing this lawsuit. The jury awarded Enzo $48,587,500 in reasonable royalty
damages.1 (See Jury Verdict [Doc. # 476].)
Enzo now moves [Doc. # 525] for pre- and post-judgment interest. For the
reasons that follow, Plaintiffs’ motion is granted with modification as to the rate of
The underlying facts of this case are described in greater detail in the Court’s
Ruling [Doc. # 523] on Post-Trial Motions (“Post-Trial Ruling”).
In patent cases, prejudgment interest on damages is awarded pursuant to 35
U.S.C. § 284, which provides that:
Upon finding for the claimant the court shall award the claimant damages
adequate to compensate for the infringement, but in no event less than a
reasonable royalty for the use made of the invention by the infringer,
together with interest and costs as fixed by the court.
“The standard governing the award of prejudgment interest under § 284 should
be consistent with Congress’ overriding purpose of affording patent owners complete
Gen. Motors Corp. v. Devex Corp., 461 U.S. 648, 655 (1983).
Prejudgment interest is awarded not for “punitive, but only compensatory, purposes” and
“compensates the patent owner for the use of its money between the date of injury and
the date of judgment,” Oiness v. Walgreen Co., 88 F.3d 1025, 1033 (Fed. Cir. 1996), “to
ensure that the patent owner is placed in as good a position as he would have been in had
the infringer entered into a reasonable royalty agreement,” Gen. Motors Corp., 461 U.S. at
Consistent with this purpose, “prejudgment interest should ordinarily be awarded
absent some justification for withholding such an award.” Id. at 657. “[I]t may be
appropriate to limit prejudgment interest, or perhaps even deny it altogether, where the
patent owner has been responsible for undue delay in prosecuting the lawsuit.” Id.
However, “the withholding of prejudgment interest based on delay is the exception, not
the rule.” Lummus Indus., Inc. v. D.M. & E. Corp., 862 F.2d 267, 275 (Fed. Cir. 1988).
ABI argues that Enzo should be denied prejudgment interest because—as it
contended in its motion for summary judgment, at trial, and in its post-trial motions—
Enzo delayed filing this lawsuit for more than seven years after it was aware of its
potential claims. (Defs.’ Opp’n [Doc. # 528] at 3.) ABI again cites (1) a 1995 letter that
Dr. Elazar Rabbani, CEO of Enzo Biochem, sent to Dr. Michael Hunkapiller, who was
then ABI’s chief scientific officer, in which Dr. Rabbani contended that ABI should
compensate it for “past infringement” (Mar. 30, 1995 Ltr. from Rabbani to Hunkapiller
[DTX 127] at 004); (2) testimony from Dr. Hunkapiller that he “hung up” on a call with
Dr. Rabbani in August 1997, ending the parties’ negotiations over potential infringement
claims by Enzo (Tr. Vol. V at 969); and (3) evidence that Enzo knew or should have
known of ABI’s infringement because the structures of its products were publicly
available by 1997 (Post-Trial Ruling at 42).
Analyzing this evidence post-trial, the Court concluded: “Though the issue of
unreasonable delay is a close one, the Court finds there is insufficient evidence to show
that it is more likely than not that Enzo knew of ABI’s infringing activities as to the ‘767
patent, and chose to unreasonably and unjustifiably delay in filing suit.” (Id. at 44.) The
Court noted that “ABI’s own actions in its negotiations with Enzo were less than fully
forthright” and “Dr. Hunkapiller’s casual dismissal of any infringement discussions likely
made it more difficult for Enzo to figure out how ABI’s products compared specifically to
the ‘767 patent.” (Id. at 45.) Further, the Court found that there was “simply insufficient
evidence to support a finding that ABI suffered economic prejudice as a result of” Enzo’s
delay in filing this lawsuit, and that there was no indication that ABI “would have acted
differently if Enzo had sued ABI earlier.” (Id. at 46–47.)
As Enzo correctly notes, the Court’s prior rejection of ABI’s laches defense does
not preclude the Court from denying Enzo prejudgment interest on the basis of an
unreasonable delay. See Church & Dwight Co., Inc. v. Abbott Labs., No. 05-2142 (GEB)
(LHG), 2009 WL 2230941, at *7 (D.N.J. 2009) (“[T]his Court’s Laches Opinion does not
prevent Abbott from arguing that C & D unduly delayed in filing suit.”). However,
Defendants offer no persuasive grounds for the Court to reconsider its conclusion that
ABI did not suffer economic prejudice as a result of any delay by Enzo in filing this
lawsuit. See id. at *8 (“Abbott simply reiterated its previous arguments in support of the
application of the doctrine of laches. In light of the foregoing as well as the fact the award
of prejudgment interest is the rule and not the exception, the Court concludes that C & D
is entitled to prejudgment interest.” (internal citations omitted)). Defendants’ current
claim that a payment of prejudgment “interest itself is such a prejudice” (Defs.’ Opp’n at
4), is best accommodated by the Court’s determination of the appropriate rate of
prejudgment interest to impose.
Given the absence of prejudice to ABI and the Supreme Court’s mandate that
prejudgment interest should “ordinarily be awarded” to restore infringement victims to
the same position that they would have been in absent infringement, see Gen. Motors
Corp., 461 U.S. at 655, the Court concludes that an award of prejudgment interest is
The Appropriate Rate of Prejudgment Interest
“The rate of prejudgment interest and whether it should be compounded or
uncompounded are matters left largely to the discretion of the district court.” Bio–Rad
Labs., Inc. v. Nicolet Instrument Corp., 807 F.2d 964, 969 (Fed. Cir. 1986). District courts
have exercised this broad discretion to award prejudgment interest at rates ranging from
the Treasury Bill rate, see, e.g., Cornell Univ. v. Hewlett-Packard Co., No. 01-cv-1974, 2009
WL 1405208, at *3 (N.D.N.Y. May 15, 2009) (Rader, Fed. Cir. C.J.) (“[T]he T-Bill rate has
been accepted and employed by many courts in patent cases as a reasonable method of
placing a patent owner in a position equivalent to where it would have been had there
been no infringement.”) (citing cases), to “at or above the prime rate,” Uniroyal, Inc. v.
Rudkin-Wiley Corp., 939 F.2d 1540, 1545 (Fed. Cir. 1991) (citing cases).
Enzo contends that “the after-tax debt rate for ABI” compounded semi-annually
“appropriately compensates Enzo for the default risk that it has borne, without providing
Enzo a windfall gain based on the compounding of the royalty income that Enzo
otherwise would have remitted as income taxes.” (Pls.’ Mot. [Doc. # 525] at 7 (citing Bell
Decl. [Doc. # 526] ¶ 2).) ABI asserts that “[t]he standard practice in patent cases is to
award pre-judgment-interest at the Treasury-bill rate using annual compounding, which
is the same rate that is required by statute for post-judgment interest.” (Defs.’ Opp’n at
7.) Under Enzo’s method it would receive $25,612,118 in prejudgment interest, whereas
under ABI’s method, Enzo would receive $12,428,728.
Contrary to Defendants’ assertion that the “standard practice” is to award
prejudgment interest at the Treasury Bill rate, the Federal Circuit has explicitly rejected
any purported “rule” that the prevailing party in a patent case must make an “affirmative
demonstration” of entitlement to prejudgment interest at a rate higher than the Treasury
Bill rate. Studiengesellschaft Kohle, m.b.H. v. Dart Indus., Inc., 862 F.2d 1564, 1579–80
(Fed. Cir. 1988). In so holding, the Federal Circuit emphasized that there was no default
rule for prejudgment interest and that district courts have substantial discretion to
determine the appropriate rate. See id. at 1580 (“Simply put, the question of the rate at
which such an award should be made is a matter left to the sound discretion of the trier of
The Court is “guided by the purpose of prejudgment interest, which is ‘to ensure
that the patent owner is placed in as good a position as he would have been had the
infringer entered into a reasonable royalty agreement.’” Bio-Rad Labs., Inc., 807 F.2d at
969 (quoting Gen. Motors Corp., 461 U.S. at 655). Prejudgment interest is awarded for
compensatory and not punitive purposes, see Oiness., 88 F.3d at 1033, and thus “the
merits of the infringer’s challenges to the patent are immaterial in determining the
amount of prejudgment interest,” Bio-Rad Labs., Inc., 807 F.2d at 969.
As a general matter, interest is awarded to “compensate [the lender] for the
opportunity costs of the loan, the risk of inflation, and the . . . risk of default.” Till v. SCS
Credit Corp., 541 U.S. 465, 479 (2004). The Treasury Bill Rate is the “risk-free” interest
rate charged on loans made to the United States government. See Applera Corp. v. MJ
Research Inc., No. 3:98cv1201 (JBA), 2005 WL 2084319, at *2 (D. Conn. Aug. 29, 2005).
In contrast, the national prime rate “reflects the financial market’s estimate of the amount
a commercial bank should charge a creditworthy commercial borrower,” Till v. SCS
Chief Judge Rader’s ruling in Cornell Univ. does not suggest otherwise.
Defendants selectively quote from it and assert that “prejudgment interest should be
calculated using the average, one-year T-bill rate, compounded annually.” (Defs.’ Opp’n
at 7 (quoting Cornell Univ., 2009 WL 1405208, at *3).) The omitted portion of the quoted
sentence, however, makes clear that Chief Judge Rader did not assert that as a general
proposition the Treasury Bill rate should be favored in all cases, but rather was addressing
only the case before him. See Cornell Univ., 2009 WL 1405208, at *3 (“After careful
consideration of the parties’ arguments, this court finds that prejudgment interest should
be calculated using the average, one-year T-bill rate, compounded annually.”).
Credit Corp., 541 U.S. 465, 479 (2004), i.e., a bank’s largest and best customers with the
lowest risk of default, see Applera Corp, 2005 WL 2084319, at *2.
The rate advocated for by Enzo, ABI’s after-tax debt rate, attempts to put Enzo
into the position it would have been in had it entered into a royalty agreement with ABI
in 1998 and then agreed to provide financing to ABI in the form of delayed royalty
payments up until the date of judgment.
(See Bell Decl. ¶ 2.)
This interest rate
compensates Enzo for the delay in receiving its payments, and the risk it bore that ABI
would not be able to make such payments. See Tyco Healthcare Grp. LP v. Ethicon EndoSurgery, Inc., 936 F. Supp. 2d 30, 78 (D. Conn. 2013) (The award of “damages in a patent
infringement action . . . . is based on what a ‘hypothetical negotiation’ between the
patentee and the infringer would yield.”). By contrast, the Treasury Bill rate seeks to
compensate Enzo for the lost opportunity to obtain a return on the investment of royalty
payments that it should have been receiving from ABI since 1998. (See Defs.’ Opp’n at 8.)
Considering the justification for awarding prejudgment interest, the Court is
persuaded that it is appropriate to award prejudgment interest at the Treasury Bill rate for
two reasons. First, although there is no default rule favoring any particular prejudgment
interest rate, Enzo has not set forth any evidence that the use of the higher prime rate is
necessary to adequately compensate it for the delayed royalty payments. Courts have
found that the Treasury Bill rate provides inadequate compensation where there is
evidence that the patent holder was forced to borrow money at a higher interest rate or
evidence that with timely royalty payments, it could have obtained a better return on its
investment than the Treasury Bill rate. See, e.g., Tomita Technologies USA, LLC v.
Nintendo Co., Ltd., No. 11cv4256 (JSR), 2013 WL 4101251, at *10 (S.D.N.Y. Aug. 14,
2013) (“Because Tomita fails to suggest that it borrowed money during the infringement
period and therefore should be compensated at the higher prime rate, the Court hereby
awards prejudgment interest at the Treasury Bill rate.”); Mars, Inc. v. Coin Acceptors, Inc.,
513 F. Supp. 2d 128, 136 (D.N.J. 2007) (citing cases) (“[S]ome courts, including the
Federal Circuit, have applied the sensible approach that the T–Bill rate should be used as
a baseline investment rate, absent evidence that the patent holder is entitled to a better
rate, either because it had to borrow at a higher rate to cover the lost funds, or because it
would have invested at a better rate.”).
Second, although the Court concluded that Enzo’s delay in bringing this suit did
not bar it from recovery due to laches and now concludes that it does not preclude the
awarding of prejudgment interest, it is appropriate for the Court to consider this delay to
ensure that it does not result in Enzo receiving excessive compensation. Notably, the
Court found the laches issue to be “a close one” and discussed written correspondence
from Enzo seeking compensation for past infringement as early as 1995. (Post-Trial
Ruling at 44). The jury verdict indicates that the jury credited the testimony of Dr.
Rabbani over Dr. Hunkapiller, and the Court’s post-trial ruling rejecting ABI’s defense
reflects the fact that Defendants failed to meet their burden of proof on this issue. See id.
at 47 (“Here, the Court concludes that there is simply insufficient evidence to support a
finding that ABI suffered economic prejudice as a result of the delayed 2004 lawsuit.”).
Nevertheless, as the Court acknowledged in its Post-Trial Ruling, the rejection of
the laches defense was not necessarily inconsistent with a finding that Enzo unreasonably
delayed filing this action. The Court noted that “[m]ost importantly . . . even if the delay
were to be found unreasonable, ABI has failed to prove the ‘material prejudice’ prong
required for a laches defense.” (Id. at 46.) Reviewing the record in this prejudgment
interest context, the Court finds that the circumstances do not warrant the interest rate
Plaintiff seeks. While ABI may not have suffered prejudice as a result of this delay, it does
not necessarily follow that Enzo should now be financially rewarded for it, and as the
Supreme Court has recognized, such delay is grounds for limiting prejudgment interest.
See Gen. Motors Corp., 461 U.S. at 657.
Additionally, the Court can consider Enzo’s litigation tactics that collectively
contributed to the delay in reaching judgment in this case, including its failed assertion of
infringement against ABI on five other patents.3 See 800 Adept, Inc. v. Murex Sec., Ltd.,
505 F. Supp. 2d 1327, 1334–35 (M.D. Fla. 2007), aff’d in part & rev’d in part on other
grounds, 539 F.3d 1354 (Fed. Cir. 2008) (“The delay in the instant case might not have
been an intentional litigation tactic, but it nonetheless prolonged resolution of the
underlying business dispute.” (footnote omitted)). Such conduct combined with Enzo’s
delay in filing this suit collectively contributed to a prolonged period of prejudgment
infringement, and the Court concludes that it is appropriate to limit the recovery that
Enzo will receive as a result of such self-inflicted delay. See Crystal Semiconductor Corp.
v. TriTech Microelectronics Int’l, Inc., 246 F.3d 1336, 1362 (Fed. Cir. 2001) (“Crystal’s two
Enzo asserted infringement claims based on six patents in 2004. The Court
granted judgment to ABI regarding three patents on the grounds of noninfringement (the
‘830 and ‘373 patents) and invalidity (the ‘928 patent). (See Doc. ## 248, 251, 247, 261.)
The Federal Circuit affirmed the Court’s judgments as to the ‘830 and ‘928 patents, and
Enzo did not appeal the judgment as to the ‘373 patent. Enzo dropped its claims as to the
‘955 and ‘824 patents. Although the Court initially invalidated Enzo’s claim regarding the
sixth patent (‘767), the Federal Circuit reversed the dismissal for indefiniteness, and the
‘767 patent issues were presented to the jury. According to Defendants, the ‘767 patent
stands rejected by the Patent Office as invalid over Bauman prior art. (Defs.’ Opp’n at 5.)
year delay in initiating the present suit caused the damages owed . . . to escalate.”).
Accordingly, prejudgment interest will be awarded using the same interest rate set by 28
U.S.C. § 1961 for post-judgment interest: the one-year Treasury Bill rates for the relevant
time period, compounded annually, resulting in interest of $12,428,728. (See Napper
Decl. Ex. D [Doc. # 529-4].) The Federal Circuit has held that a district court does not
abuse its “substantial discretion . . . to determine the interest rate in patent infringement
cases” by awarding prejudgment interest at the same rate set by statute for post-judgment
interest. Datascope Corp. v. SMEC, Inc., 879 F.2d 820, 829 (Fed. Cir. 1989) (internal
quotation marks omitted) (“[W]e are unconvinced here that the Treasury bill rate of
section 1961 fails to ‘adequately compensate’ Datascope.”).
Post-judgment interest is mandatory and is “calculated from the date of the entry
of the judgment, at a rate equal to the weekly average 1-year constant maturity Treasury
yield, as published by the Board of Governors of the Federal Reserve System, for the
calendar week preceding the date of the judgment.” 28 U.S.C. § 1961(a). It is computed
daily to the date of payment and compounded annually.
Id. § 1961(b).
acknowledges that post-judgment interest should be awarded on the jury’s $48,587,500
verdict and on any prejudgment interest awarded by the Court. (Defs.’ Opp’n at 11.)
Accordingly, post-judgment interest is awarded beginning November 7, 2012 on
$61,016,228, which represents the damages award together with prejudgment interest,
until the judgment is satisfied.
For the foregoing reasons, Plaintiffs’ Motion [Doc. # 525] for an Award of Pre-
and Post-Judgment Interest is GRANTED with modification as to the rate of
prejudgment interest. The Clerk is directed to amend the judgment to reflect an award of
prejudgment interest in the amount of $12,428,728 for a total award of $61,016,228.
Post-judgment interest shall be awarded on the total judgment of $61,016,228 from
November 7, 2012 until the judgment is satisfied.
IT IS SO ORDERED.
Janet Bond Arterton, U.S.D.J.
Dated at New Haven, Connecticut this 3rd day of January, 2014.
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