Plexxikon Inc. v. Novartis Pharmaceuticals Corporation

Background

Plexxikon accused Novartis’s melanoma drug, Tafinlar, of infringing two Plexxikon patents for kinase inhibitors. The opinion addressed two motions concerning damages evidence from Plexxikon’s expert, Dr. Gregory K. Leonard, and his reasonable-royalty calculations. A reasonable royalty is the minimum damages measure available for patent infringement under 35 U.S.C. § 284 when supported by the evidence.

Leonard’s initial report calculated a royalty rate based on a hypothetical negotiation in October 2016 and limited his analysis to the period from October 2016 through the end of 2018. He calculated a royalty-rate range of 6.26% to 12.52% and estimated damages through 2018 at $23.5 million to $47 million. His First Supplemental Report used actual 2018 sales data and updated the estimate to $23.6 million to $47.2 million.

After Novartis indicated that it would seek to exclude post-2018 damages evidence, Plexxikon obtained 2019 sales data and served Leonard’s Second Supplemental Report in October 2019. That report applied the earlier royalty-rate range to damages through August 2019, estimating $31.8 million to $63.6 million. It stated, without a detailed explanation, that the earlier royalty rates remained reasonable for 2019.

Motion to Strike

Novartis argued that the Second Supplemental Report presented a new damages theory rather than merely updating calculations with new sales data. Plexxikon argued that the report was a proper supplement under Federal Rule of Civil Procedure 26(e).

The court agreed with Novartis. It found that Leonard’s original damages model expressly considered economic conditions only through 2018 and recognized that competition and other market factors could change afterward. Applying the same royalty rate to 2019 therefore expanded the model rather than simply correcting or updating it.

The court also found that the late report was not substantially justified or harmless under Federal Rule of Civil Procedure 37(c)(1). Expert discovery had closed, and Novartis had little time to depose Leonard about the new opinions or prepare a response from its own damages expert. The court did not find bad faith, but concluded that the timing and lack of explanation prejudiced Novartis.

The court granted in part and denied in part the motion to strike. It struck Leonard’s Second Supplemental Expert Report, but did not exclude all other possible evidence supporting damages after 2018.

Motion in Limine No. 5

Novartis also sought to prevent Plexxikon from presenting evidence about damages for periods before October 2016 or after December 2018. The court agreed that Leonard could not testify about a royalty rate or damages amount for any period after 2018 because those opinions were outside the scope of his timely expert disclosures.

The court rejected Novartis’s broader argument that Plexxikon had waived its right to seek post-2018 damages or to present other evidence about them. The court explained that expert testimony is not required for a damages award and that Plexxikon’s damages contentions sought at least a reasonable royalty. The court declined to predict what other evidence Plexxikon might offer.

The court therefore granted in part and denied in part Motion in Limine No. 5. At trial, Plexxikon could not rely on Leonard’s Second Supplemental Report, and Leonard’s testimony was limited to the scope of his initial and First Supplemental Reports. Leonard could not testify about a reasonable royalty rate applicable after 2018.

Disposition

The court granted in part and denied in part both Novartis’s motion to strike and Motion in Limine No. 5. It also set a telephonic case-management conference for June 25, 2021, to discuss logistics for the upcoming trial. Judge Haywood S. Gilliam, Jr. signed the order.