Stanford v. Roche Molecular Systems
Analysis Group clients Roche Molecular Systems and Roche Diagnostics successfully defended a patent infringement lawsuit brought by Stanford University over HIV test kits created and sold by Roche. Plaintiff had asserted that the kits infringed one or more claims of three patents-in-suit, and sought reasonable royalty damages.
Roche counsel Pruetz Law Group and Quinn Emanuel Urquhart Oliver & Hedges retained Analysis Group to rebut the reasonable royalty damages estimates proposed by plaintiff’s expert. Managing Principal Jeffrey H. Kinrich – supported by Vice Presidents Michael Beauregard and Andrew Stichman – prepared a rebuttal report detailing errors in the opposing expert’s conclusions, including:
- Suggesting a royalty rate for a single patent-in-suit blood test method, which depended on Roche’s Polymerase Chain Reaction (PCR) process, that was substantially higher than the amount Roche receives from licensing its entire portfolio of PCR-related patents
- Doubling the reasonable royalty rate through a “certainty adjustment” (arguing that successfully litigated patents no longer have doubts regarding their validity, enforceability, or infringement) without establishing that a basis existed for upward adjustment in the Roche case
- Failing to consider relevant reasonable royalty factors, such as plaintiff’s position as a research institution versus a competing pharmaceutical manufacturer
- Ignoring the portion of profits from an accused product that would be allocable to the intellectual property used
- Disregarding pre-litigation negotiations in which plaintiff made arms-length offers to license the patents-in-suit at substantially lower royalty rates
In his analysis, Mr. Kinrich applied the guidelines set forth in Georgia Pacific Corp. v. United States Plywood Corp., and concluded that the reasonable royalty should be based in part on plaintiff’s prior arms-length offers, and substantially reduced from the amount proposed by plaintiff’s expert. The U.S. District Court for the Northern District of California determined the patents asserted to be invalid, and granted summary judgment in favor of Roche.