United States District Court, S.D. New York
August 9, 2004.
In re OMEPRAZOLE PATENT LITIGATION.
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
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 Clerk is directed to file Astra's Bill of Costs.