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August 9, 2004.


The opinion of the court was delivered by: BARBARA JONES, District Judge



Astra moved for costs incurred during Phases I and III of this case to be taxed against Defendants Genpharm, Andrx and Cheminor. At issue is whether Astra was the prevailing party in this litigation and whether it is entitled to costs.

  Astra argues that it was the prevailing party because it obtained a judgment whereby Defendants are enjoined from marketing their generic omeprazole products through 2007. In opposition, Defendants argue that because they succeeded in invalidating some of Astra's patents, they should all be considered prevailing parties, or, in the alternative, that no party should be considered prevailing. Defendants also argue that if the Court finds that Astra was the prevailing party, the Court nonetheless should decline to award Astra costs. The Court disagrees with Defendants' arguments, and finds that Astra is the prevailing party and is entitled to costs.


  Pursuant to Federal Rule of Civil Procedure 54, "costs other than attorneys' fees shall be allowed as of course to the prevailing party." Fed.R.Civ.P. 54(d)(1).*fn1 "[A] plaintiff `prevails' when actual relief on the merits of his claim materially alters the legal relationship between the parties by modifying the defendant's behavior in a way that directly benefits the plaintiff." Id. at 111-112; see also Former Employees of Motorola Ceramics Prods. v. United States, 336 F.3d 1360, 1364 (Fed. Cir. 2003).*fn2

  Ascertaining which party prevailed requires the Court to "look at the substance of the litigation to determine whether an applicant has substantially prevailed in its position, and not merely the technical disposition of the case or motion. In effect, substance should prevail over form." Schultz v. United States, 918 F.2d 164, 166 (Fed. Cir. 1990) (quoting Devine v. Sutermeister, 733 F.2d 892, 898 (Fed. Cir. 1984) (emphasis in original)). A party does not necessarily have to succeed on the central issue in the litigation in order to be considered prevailing so long as the party "succeed[s] in any significant issue in the litigation which achieves some benefit the parties sought in bringing." Farrar v. Hobby, 506 U.S. 103, 109 (1992); see also Gentry Gallery v. Berkline Corp., 134 F.3d 1473, 1480 (Fed. Cir. 1998).

  Looking at this litigation as a whole, it is clear to the Court that Astra is the prevailing party because its successes on its affirmative claims far outweigh any gains Defendants made on their counterclaims. First, the most significant remedy resulting from this Hatch Waxman Act case was the injunction preventing Defendants from marketing their generic omeprazole product through 2007. This injunction clearly modified Defendants' behavior in a way that directly benefits Astra.*fn3 See Farrar, 506 U.S. at 111-12. In addition, although a Court need not focus on which party won as to the central issue in a case, here, the finding that the Defendants infringed two of Astra's patents and that they were entitled to an injunction was an overwhelming victory for Astra; one that leads inexorably to the conclusion that Astra was the prevailing party in this litigation. Cf. Warner Bros., Inc. v. Dae Rim Trading, Inc., 677 F. Supp. 740, 771 (S.D.N.Y. 1988) (analyzing which party prevailed on the "main issue" in the case, where both parties claimed they were the prevailing party).

  Despite this outcome, Defendants argue that they too should be considered prevailing parties because of their successes in invalidating Astra's H. pylori patents. In support of their position, Defendants cite Manildra Milling Corp. v. Ogilvie Mills, Inc., 76 F.3d 1178, 1183 (Fed. Cir. 1996) for the proposition that "as a matter of law, a party who has a competitor's patent declared invalid meets the definition of `prevailing party.'" This holding, however, is more limited than the Defendants' construction of it. In Manildra, the competitor argued that merely invalidating a patent, without a money judgment or award of even nominal damages, was insufficient as a matter of law to qualify a party to be a `prevailing party.' Accordingly, Manildra merely holds that obtaining a declaration that a competitor's patent is invalid is sufficient to be considered a prevailing party. Manildra's holding cannot be read to mean that a party automatically must be considered prevailing under Rule 54(d) so long as he has one of his competitor's patents invalidated, regardless of all other factors in the case. Indeed, the Federal Circuit has never held that a defendant that invalidates a patent is the prevailing party when other patents are successfully asserted against it.

  In this case, the H. pylori patents that were invalidated were of much less significance than the formulation patents that Astra successfully asserted against the Defendants. First, it is undisputed that the vast majority of trial days were spent on the formulation patents. Second, throughout the course of the litigation, the Defendants themselves recognized and commented on the relative insignificance of the H. pylori patents. See, e.g., Astra Ex. E at 7 (Cheminor stating that "the vast percentage of recorded sales of Prilosec are for uses not covered by the [H. pylori] patents."); Astra Ex. F at 1-2 (Genpharm stating that the uses approved by the FDA covered by the H. pylori patents are "applicable for only a small percentage of prescriptions," and are "peripheral at best"); Astra Ex. G at 5 (Andrx's expert testifying that "the vast majority of omeprazole capsules" are used in ways not covered by the H. pylori patents, and that these other uses are "exceptionally important"). Defendants cannot now credibly argue the importance of these patents.*fn4

  Authority from outside the Federal Circuit supports the theory that where a plaintiff's victory substantially outweighs the defendants' victory, the plaintiff is considered the prevailing party as that term is used in Rule 54(d)(1). See, e.g., Hillside Enters. v. Carlisle Corp., 69 F.3d 1410, 1416 (8th Cir. 1995); Roberts v. Madigan, 921 F.2d 1047, 1058 (10th Cir. 1990); E.I. du Pont de Nemours & Co. v. Monsanto Corp., 42 U.S.P.Q.2d 1152, 1153 (D. Del. 1997) (finding plaintiff the prevailing party because its victory "far outweigh[ed]" the defendant's victory). "[A] successful counterclaimant generally will be considered the prevailing party when plaintiff fails to recover or is awarded less than defendant receives on the counterclaim." 10 Wright, Miller & Kane, Federal Practice and Procedure § 2667; see also Goldman v. Burch, 780 F. Supp. 1441, 1445-1446 (S.D.N.Y. 1992) (same).

  Accordingly, the Court finds Astra to be the prevailing party in the case and entitled to costs.*fn5 This holding does not end the issue of taxing costs, however. Even if a court finds a party to prevail within the meaning of Rule 54(d), it nonetheless retains "broad discretion as to how much to award." Manildra Milling, 76 F.3d at 1183. Although the Court believes that Astra is entitled to most, if not all, of the costs incurred in Phases I and III of the litigation, the Court will consider all objections raised by Defendants.

  The Court has received Defendants objections to Astra's Bill of Costs, and directs Astra to respond to thee objections on or before August 23, 2004. The Judgment ...

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