21 Apr 2017 in Newsletter
Before Suing, Know Thyself
By: Califf Cooper
In Bayer Cropscience AG, et al. v. Dow Agrosciences LLC, the Federal Circuit recently affirmed a district court’s award of $5.9M in attorney’s fees under 35 U.S.C. § 285 finding the case qualified as an “exceptional case.”
The underlying case concerned a license for Bayer’s soybean seeds that were genetically modified to resist weed killers. Bayer initially licensed the soybean patents to MS Technologies LLC (“MS”) who then licensed them to Dow. Bayer sued Dow alleging that MS did not have the right to sublicense the patents. The District Court of Delaware disagreed.
The district court held that Bayer failed to conduct a diligent presuit investigation. As the litigation progressed at the district court level, Bayer’s allegations became weaker with each piece of evidence. Upon the agreement’s execution, Bayer had emails congratulating MS on acquiring its soybean patents saying “[W]e are convinced that in your capable hands these ‘products’ will find their true worth in the market.” A Bayer executive even testified that “it seems incongruous that we would sell an asset to somebody, receive remuneration for the sale, and then somehow prevent the acquirer from making use of the asset he just acquired.” The district court also took issue with Bayer’s strategy of moving for a preliminary injunction against Dow amidst targeted discovery on the dispositive contract dispute finding that the preliminary injunction motion “was frivolous and unnecessarily increased the costs of litigation.” Judge Bumb remarked that “had Bayer done any due diligence” in its presuit investigation it would have known that the case “should never have been filed.”
The Federal Circuit agreed and affirmed the finding that the case was exceptional applying the rationale set out by the Supreme Court in Octane Fitness.
In practice, this case illustrates the need to investigate the facts that you will be relying on to prove up your case. Before filing a lawsuit, it is essential that plaintiffs and their counsel perform the necessary investigation, including interviews with knowledgeable employees and document review, with more than just the plaintiff’s case in mind. Plaintiffs and their counsel should also put themselves in the shoes of the defendant and turn over the necessary stones to uncover whatever pitfalls or bad facts may exist. A thorough investigation will allow the plaintiff to determine the strength of their case and ultimately whether the case is worth pursuing. Under Rule 11, due diligence before a case is filed is required so that counsel has a reasonable basis to bring suit.