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Thermolife International LLC v. GNC Corp.

United States Court of Appeals, Federal Circuit

May 1, 2019

THERMOLIFE INTERNATIONAL LLC, BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY, Plaintiffs-Appellants
v.
GNC CORPORATION, GENERAL NUTRITION CENTERS, INC., GENERAL NUTRITION CORPORATION, Defendants HI-TECH PHARMACEUTICALS, INC., VITAL PHARMACEUTICALS, INC, Defendants-Appellees

          Appeals from the United States District Court for the Southern District of California in Nos. 3:13-cv-00651-JLS-MDD, 3:13-cv-00830-JLS-MDD, 3:13-cv-01015-JLS-MDD, Judge Janis L. Sammartino.

          Robert J. Gajarsa, Latham & Watkins LLP, Washington, DC, argued for plaintiff-appellant ThermoLife International LLC. Also represented by Gabriel Bell; Gregory Blain Collins, Eric Hull, Cara Molly Louise Rogers, Kercsmar & Feltus PLLC, Scottsdale, AZ.

          William P. Atkins, Pillsbury Winthrop Shaw Pittman LLP, McLean, VA, argued for plaintiff-appellant Board of Trustees of the Leland Stanford Junior University. Also represented by Benjamin Lee Kiersz.

          Robert F. Parsley, Miller & Martin PLLC, Chattanooga, TN, argued for defendant-appellee Hi-Tech Pharmaceuticals, Inc. Also represented by David M. Barnes.

          Francis DiGiovanni, Drinker Biddle & Reath LLP, Wilmington, DE, argued for defendant-appellee Vital Pharmaceuticals, Inc. Also represented by Michael Curt Lambert, Thatcher Rahmeier; Marc Kesten, Vital Pharmaceuticals, Inc., Parkland, FL.

          Before Taranto, Bryson, and Stoll, Circuit Judges.

          Taranto, Circuit Judge.

         ThermoLife International, LLC exclusively licensed four patents from the Board of Trustees of the Leland Stanford Junior University. It filed infringement suits, asserting selected claims of four patents, against numerous defendants, including Hi-Tech Pharmaceuticals, Inc. and Vital Pharmaceuticals, Inc. After Stanford became a co-plaintiff of ThermoLife's, a bench trial was held involving Hi-Tech, Vital, and a trio of companies from the GNC family as defendants (all other defendants having settled). The district court held all asserted claims invalid. That ruling ended the cases on the merits and is not at issue here.

         Before us is the court's later grant of Hi-Tech's and Vital's motions for attorney's fees under 35 U.S.C. § 285, which authorizes an award of fees to a prevailing party (like Hi-Tech and Vital) in "exceptional" cases. The district court found the cases exceptional, but not based on an assessment of the validity position taken by plaintiffs ThermoLife and Stanford or how they litigated validity. Rather, the court relied on its conclusion that plaintiffs were unjustified in alleging infringement in the first place, having failed to do an adequate pre-filing investigation.

         ThermoLife and Stanford appeal the district court's award of fees, challenging the determination that these were "exceptional" cases, not the amounts the court awarded after finding the cases exceptional. We recognize that these are unusual cases in that the basis for the fee award had nothing to do with the only issues litigated to reach the judgment on the merits: Infringement had not been adjudicated in reaching the final judgment, and even discovery on infringement had been postponed early in the proceedings so that validity could be litigated first. Nevertheless, we see no abuse of discretion in the district court's determination of exceptionality based on plaintiffs' inadequate pre-suit investigation of infringement in these and related cases. We therefore affirm.

         I

         A

         Stanford owns U.S. Patent Nos. 5, 891, 459, 6, 117, 872, 6, 646, 006, and 7, 452, 916, which claim methods and compositions involving the amino acids arginine and lysine, to be ingested to enhance vascular function and physical performance. See, e.g., '459 patent, Abstract. The '459 patent, the '916 patent, and the relevant claims of the '006 patent share a priority date of June 11, 1993, and expired on June 11, 2013. The '872 patent has a priority date of June 23, 1998, and expired on June 23, 2018. All asserted claims of the '459, '872, and '916 patents are method claims, whereas all asserted claims of the '006 patent are composition claims.

         Claim 1 of the '459 patent, the only claim of that patent asserted against Hi-Tech and Vital, includes a requirement of efficacy in producing physiological results. It recites:

1. A method of improving vascular NO activity of the vascular system of a human host by enhancing endothelial NO, said method comprising:
administering orally as a dietary supplement to said host in accordance with a predetermined regimen a prophylactic dose in an amount sufficient to enhance endogenous endothelial NO, L-arginine or L-arginine hydrochloride, as other than a natural food source and in the absence of other amino acids and polypeptides as other tha[n] dietary supplements, to enhance the level of endogenous NO in the vascular system.

Id., col. 26, lines 39-49 (emphasis added). As originally filed, claim 1 included L-arginine and all physiologically acceptable salts thereof, but it was amended during prosecution to exclude salts other than L-arginine hydrochloride.

         Claim 1 of the '872 patent requires particular amounts of identified amino acids. It reads:

1. A method for enhancing physical performance of a mammal prior to said physical performance, said method comprising:
administering to said mammal prior to said physical performance as the active ingredient an amino acid composition consisting of at least one amino acid selected [from] the group consisting of arginine and lysine of at least about 60 mg/kg/day within 24 h of said physical performance.

'872 patent, col. 11, line 55, through col. 12, line 6 (emphasis added).[1] Claims 4 and 5 depend on claim 1 and thus also require at least about 60 mg/kg/day of arginine or ly-sine. Id., col. 12, lines 11-16. Claims 7, 8, and 12 all require "at least about 2 g per day" of arginine or lysine. Id., col. 12, lines 19-31, 45-51. Claim 10 depends on claim 7 and additionally requires "about 2 to 12 g per day" of arginine or lysine. Id., col. 12, lines 34-36.

         Claim 1 of the '916 patent includes both efficacy and amount requirements for L-arginine or any physiologically acceptable salt (not just the hydrochloride salt). It reads:

1. A method of enhancing nitric oxide production comprising orally administering to a human host in need thereof a composition comprising L-arginine or a physiologically acceptable salt thereof, wherein (i) said composition includes an amount of L-arginine or its physiologically acceptable salt sufficient to increase the level of nitric oxide production in said human host and (ii) said composition is a dietary or food supplement or a pharmaceutical composition in a form suitable for oral administration selected from the group consisting of a pill, a powder, a liquid, and a capsule, wherein said administering provides a daily amount ranging from 1 to 12 grams of L-arginine or its physiologically acceptable salt and wherein the composition further comprises at least one additional compound associated with production of nitric oxide other than L-arginine or a physiologically acceptable salt thereof.

'916 patent, col. 26, lines 38-53 (emphases added). Claim 2, another independent claim, and claim 6, which depends on claim 2, likewise require both "an amount of L-arginine or its physiologically acceptable salt sufficient to increase the level of nitric oxide production" and "a daily amount ranging from 1 to 12 grams of L-arginine or its physiologically acceptable salt." See id., col. 26, lines 54-67; id., col. 28, lines 6-8.

         Standing apart from the other asserted claims are three claims of the '006 patent, which claim compositions comprising L-arginine and any physiologically acceptable salt but do not include either amount or efficacy requirements. Claim 3 reads:

3. A composition comprising L-arginine or a physiologically acceptable salt thereof and at least one additional compound associated with production of nitric oxide other than L-arginine or a physiologically acceptable salt thereof, said composition excluding other amino acids which are not precursors of nitric oxide, wherein said composition is in a form suitable for oral administration selected from the group consisting of a pill, a powder, a liquid, and a capsule.

'006 patent, col. 27, lines 40-47 (emphasis added). Claim 5, another independent claim, and claim 14, which depends on claim 5, similarly do not, on their face, contain any amount or efficacy limitations. See id., col. 27, lines 52-61; id., col. 28, lines 20-22.

         B

         Stanford originally granted exclusive licenses to the '459, '872, '006, and '916 patents to Cooke Pharma, Inc., which eventually became Unither Pharma, Inc. In 2002 and 2003, Unither and Stanford filed several infringement suits involving some of those patents in the Northern District of California. One of those cases resulted in a November 2005 district court decision that construed "amount sufficient" in the '459 patent to mean "an amount typically administered to a subset of mammalian organisms for the purpose of the administration." Unither Pharma, Inc. v. Daily Wellness Co., No. 02-cv-05284, 2005 WL 6220096, at *10 (N.D. Cal. Nov. 30, 2005). Unither terminated its license with Stanford in September 2012.

         Some months later, in February 2013, Stanford exclusively licensed the four patents to ThermoLife. From March 19, 2013, to December 11, 2013, ThermoLife filed a total of eighty-one infringement suits, including suits against Hi-Tech and Vital, in the Southern District of California. Although separate suits were filed, see 35 U.S.C. § 299 (broadly requiring separate filings), the district court, beginning in August 2013, consolidated the cases before it for pre-trial purposes. Eventually, in January 2015, Stanford was added as a plaintiff, through the filing of an amended complaint against all defendants, to resolve a dispute about ThermoLife's standing to proceed alone.

         ThermoLife alleged that Hi-Tech and Vital each directly infringed the four patents-for the composition claims, by making or selling the accused products, and for the method claims, by administering the accused products to end users-and also indirectly infringed, by inducing or contributing to end users' directly infringing use of the accused products. ThermoLife pointed to Hi-Tech's and Vital's labels and advertisements in support of its allegations. ThermoLife sought damages, including enhanced damages, and injunctive relief. The January 2015 amended complaint is similar.

         Pursuant to applicable local rules for patent cases, ThermoLife notified the defendants of specific infringement contentions shortly after the suits were filed. In its December 12, 2013 amended infringement contentions, ThermoLife identified specific Hi-Tech products and the corresponding allegedly infringed patent claims: Anavar ('459 patent-claim 1); NO Overload ('459 patent-claim 1; '872 patent-claims 1, 4, 5, 7, 8, 10, 12; '916 patent-claims 1, 2, 6); Zencore Plus ('459 patent-claim 1; '006 patent- claims 3, 5); Mesomorph (APS Nutrition) ('006 patent- claim 3); SizeMatters (HealthSource) ('459 patent-claim 1; '006 patent-claims 3, 5, 14); and StaminaRx ('459 patent-claim 1; '006 patent-claims 3, 5, 14). The same day, ThermoLife made more limited allegations against Vital products: AEX NO ('872 patent-claim 12; '916 patent- claims 1, 2, 6); and NO Shotgun V3, NO Shotgun MHF-1, and NO Synthesize ('459 patent-claim 1).

         By January 2014, with dozens of cases before it, the district court had set a schedule in which discovery was to begin for claim construction, invalidity, unenforceability, and standing-but not for infringement. In March 2014, the parties filed a joint report stating that they had agreed to "phased discovery": "discovery should be coordinated and initially limited to issues concerning standing, claim construction, patent invalidity and/or unenforceability." J.A. 215. "If necessary," the report added, "discovery should then proceed as issues unique to each Defendant and each case, namely[, ] infringement and damages." Id. The report explained that "[t]his will facilitate the fair and efficient conduct of discovery and dispositive motion practice in this matter, and will ...


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