Case 2:20-cv-00337-JRG Document 454 Filed 08/26/22 Page 1 of 16 PageID #: 18797
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`IN THE UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
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`SEAGEN INC.,
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`v.
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`Civil Action No. 2:20-CV-00337-JRG
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`Plaintiff,
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`
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`DAIICHI SANKYO CO., LTD.,
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`Defendant,
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`ASTRAZENECA PHARMACEUTICALS LP,
`and ASTRAZENECA UK LTD,
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`
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`Intervenor-Defendants.
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`MOTION FOR JUDGMENT FOR SUPPLEMENTAL DAMAGES
`AND ONGOING ROYALTIES
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` SF-4796886
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`Case 2:20-cv-00337-JRG Document 454 Filed 08/26/22 Page 2 of 16 PageID #: 18798
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`TABLE OF CONTENTS
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`Page
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`I.
`II.
`III.
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`IV.
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`INTRODUCTION ............................................................................................................. 1
`SUPPLEMENTAL DAMAGES ARE APPROPRIATE ................................................... 1
`THE COURT SHOULD AWARD ONGOING ROYALTIES TO SEAGEN .................. 3
`A.
`An Ongoing Royalty is Appropriate ...................................................................... 3
`B.
`The Royalty Rate for Post-Verdict Supplemental Damages and Ongoing
`Royalty ................................................................................................................... 4
`1.
`Licensing Considerations ........................................................................... 6
`2.
`Economic Considerations .......................................................................... 7
`3.
`Validation of Seagen’s Technology and Strength of Seagen’s
`Claims ........................................................................................................ 9
`CONCLUSION ................................................................................................................ 10
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`-i-
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`Case 2:20-cv-00337-JRG Document 454 Filed 08/26/22 Page 3 of 16 PageID #: 18799
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`TABLE OF AUTHORITIES
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`Page
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`Cases
`
`Amado v. Microsoft Corp.,
`517 F.3d 1353 (Fed. Cir. 2008)..............................................................................................4, 5
`
`Arctic Cat Inc. v. Bombardier Recreational Prod. Inc.,
`876 F.3d 1350 (Fed. Cir. 2017)..................................................................................................5
`
`Boston Sci. Corp. v. Johnson & Johnson,
`No. C 02-00790 SI, 2009 U.S. Dist. LEXIS 35372 (N.D. Cal. Apr. 19, 2009) .........................6
`
`Cioffi v. Google, Inc.,
`Case No. 2:13-cv-103-JRG, slip op. (E.D. Tex. Sep. 12, 2017) ................................................3
`
`Creative Internet Adver. Corp. v. Yahoo! Inc.,
`674 F. Supp. 2d 847 (E.D. Tex. 2009) .......................................................................................5
`
`Erfindergemeinschaft UroPep GbR v. Eli Lilly & Co.,
`No. 2:15-CV-1202-WCB, 2017 WL 3034655 (E.D. Tex. July 18, 2017) .................................3
`
`Genband US LLC v. Metaswitch Networks Corp.,
`No. 2:14-cv-33-JRG, 2018 WL 11357619 (E.D. Tex. Mar. 22, 2018) ......................................5
`
`Georgia-Pacific Corp. v. U.S. Plywood Corp.,
`318 F. Supp. 1116 (S.D.N.Y. 1970)...........................................................................................6
`
`Mondis Tech. Ltd. v. Chimei Innolux Corp.,
`822 F. Supp. 2d 639 (E.D. Tex. 2011) .......................................................................................5
`
`Nat’l Instruments Corp. v. Mathworks, Inc.,
`No. 2:01-cv-11-TJW, 2003 WL 24049230 (E.D. Tex. June 23, 2003) .....................................2
`
`Packet Intelligence LLC v. NetScout Systems, Inc.,
`Case No. 2:16-cv-230-JRG, slip op. (E.D. Tex. Sep. 7, 2018) ..................................................9
`
`Packet Intelligence LLC v. NetScout Systems, Inc.,
`Case No. 2:16-cv-230-JRG, Dkt. 303 (E.D. Tex. Sep. 7, 2018), vacated and
`remanded on other grounds, 965 F.3d 1299 (Fed. Cir. 2020) ...................................................6
`
`Paice LLC v. Toyota Motor Corp.,
`504 F.3d 1293 (Fed. Cir. 2007)..................................................................................................5
`
`Prism Techs. LLC v. Sprint Spectrum L.P.,
`849 F.3d 1360 (Fed. Cir. 2017)..................................................................................................2
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`-ii-
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`Case 2:20-cv-00337-JRG Document 454 Filed 08/26/22 Page 4 of 16 PageID #: 18800
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`TABLE OF CONTENTS
`(continued)
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`Page
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`Soverain Software LLC v. J.C. Penney Corp.,
`899 F. Supp. 2d 574 (E.D. Tex. 2012) .......................................................................................4
`
`Summit 6, LLC v. Samsung Elecs. Co.,
`802 F.3d 1283 (Fed. Cir. 2015)..................................................................................................3
`
`Telcordia Techs., Inc. v. Cisco Sys., Inc.,
`612 F.3d 1365 (Fed. Cir. 2010)..................................................................................................3
`
`Whitserve, LLC v. Computer Packages, Inc.,
`694 F.3d 10 (Fed. Cir. 2012)......................................................................................................3
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`XY, LLC v. Trans Ova Genetics,
`890 F.3d 1282 (Fed. Cir. 2018)..............................................................................................4, 5
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`Statutes
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`35 U.S.C. § 283 ................................................................................................................................2
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`-iii-
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`Case 2:20-cv-00337-JRG Document 454 Filed 08/26/22 Page 5 of 16 PageID #: 18801
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`I.
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`INTRODUCTION
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`The jury found that DSC willfully infringed Seagen’s ’039 patent and awarded
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`$41.82 million in damages for DSC’s past infringement. (Dkt. 369 at 7.) $41.82 million was the
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`amount that Seagen’s damages expert, Carrie Distler, calculated as a reasonable royalty based on
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`an 8% rate applied to DSI’s net sales of Enhertu in the United States between October 20, 2020,
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`and March 31, 2022 of $522.752 million. (Distler Decl. Ex. 1, Trial Tr. (April 7, 2022) (“Distler
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`Tr.”) at 145:13–20; 182:4–11.) Defendants’ damages expert, Christine Meyer, did not challenge
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`Ms. Distler’s royalty base or her methodology for calculating damages based on multiplying the
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`base by a royalty rate; Dr. Meyer contested only the rate. (Distler Decl. Ex. 1, Trial Tr. (April 7,
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`2022) (“Meyer Tr.”) at 286:13–19.)
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`Seagen now requests that the Court award: (1) supplemental damages for U.S. sales of
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`Enhertu between April 1, 2022 and the entry of judgment; and (2) an ongoing royalty for
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`U.S. sales of Enhertu between the entry of judgment and the expiration of the ’039 patent on
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`November 5, 2024. DSI’s net sales of Enhertu in the United States are the appropriate base for
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`both supplemental damages and an ongoing royalty. For supplemental damages from April 1,
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`2022, to the April 8 jury verdict, Seagen seeks the 8% royalty rate used by the jury. For
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`supplemental damages after the jury verdict on April 8, 2022, and for the ongoing royalty,
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`Seagen seeks an increase from the jury’s royalty rate of 8% to 10–12% applied to DSI’s U.S. net
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`sales of Enhertu after the April 8, 2022 verdict, based on a renewed hypothetical negotiation
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`taking into account the shift in bargaining position between the parties.
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`II.
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`SUPPLEMENTAL DAMAGES ARE APPROPRIATE
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`At trial, the jury heard evidence relating to U.S. sales of Enhertu between October 20,
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`2020, when the ’039 patent issued, and March 31, 2022, the latest date for which DSC produced
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`DSI’s U.S. net sales projections for Enhertu. (Distler Decl. Ex. 1, Distler Tr. at 181:18–23.)
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`There is no question that the jury applied Ms. Distler’s 8% royalty rate to the royalty base of
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`DSI’s U.S. net sales of Enhertu to arrive at its damages award, as the dollar figure matches her
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`calculation exactly. (Declaration of Carrie L. Distler (“Distler Decl.”) ¶ 6.) The jury’s verdict,
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`however, does not account for sales of Enhertu after March 31, 2022. Seagen, therefore, should
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`be compensated for U.S. sales between April 1, 2022 and the entry of final judgment as a “failure
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`to award such damages would grant an infringer a windfall by enabling it to infringe without
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`compensating a patentee . . . .” Nat’l Instruments Corp. v. Mathworks, Inc., No. 2:01-cv-11-
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`TJW, 2003 WL 24049230, at *4 (E.D. Tex. June 23, 2003).
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`The supplemental damages period includes a pre-verdict period between April 1 and
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`April 8, 2022, and a post-verdict period from April 9 through July 19, 2022, the date of the final
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`judgment. Seagen asks the Court to award supplemental damages for April 1 to April 8, 2022, at
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`the rate of 8% applied to DSI’s U.S. net sales of Enhertu. Had DSC provided DSI’s updated
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`U.S. sales figures through the jury verdict, Seagen would have sought damages for these pre-
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`verdict sales as part of the jury award using the same analysis as pre-verdict sales through
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`March 31, 2022. The Court should order DSC to provide an accounting of DSI’s net sales of
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`Enhertu in the United States from April 1, 2022, to the date of entry of judgment, which is
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`necessary to arrive at the amount of supplemental damages due.
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`For post-verdict U.S. sales of Enhertu from April 9 through July 19 (the entry of final
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`judgment), Seagen asks the Court to award supplemental damages at a rate equal to the increased
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`ongoing royalty rate of 10–12%, applied to DSI’s U.S. sales of Enhertu as justified below, as this
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`portion of the supplemental damages would have accrued after the renewed hypothetical
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`negotiation. See infra Section III.B.
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`III. THE COURT SHOULD AWARD ONGOING ROYALTIES TO SEAGEN.
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`A.
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`An Ongoing Royalty is Appropriate
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`Under 35 U.S.C. § 283, a court may “award ‘an ongoing royalty for patent infringement
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`in lieu of an injunction’ barring the infringing conduct.” Prism Techs. LLC v. Sprint Spectrum
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`L.P., 849 F.3d 1360, 1377 (Fed. Cir. 2017) (quoting Paice LLC v. Toyota Motor Corp., 504 F.3d
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`1293, 1314 (Fed. Cir. 2007)). An ongoing royalty is an equitable form of relief. See Paice, 504
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`F.3d at 1313 n.13. It is appropriate where, as here, the jury awarded damages for past
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`infringement in the form of a reasonable royalty rather than a lump sum award and no injunction
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`has issued.1 See Telcordia Techs., Inc. v. Cisco Sys., Inc., 612 F.3d 1365, 1379 (Fed. Cir. 2010)
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`(“An award of an ongoing royalty is appropriate because the record supports the district court’s
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`finding that [the plaintiff] has not been compensated for [the defendant’s] continuing
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`infringement.”); Cioffi v. Google, Inc., Case No. 2:13-cv-103-JRG, slip op. at 5 (E.D. Tex. Sep.
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`12, 2017) (awarding ongoing royalty where jury award was a reasonable royalty for past
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`infringement); cf. Summit 6, LLC v. Samsung Elecs. Co., 802 F.3d 1283, 1300-01 (Fed. Cir.
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`2015) (denying ongoing royalty “because the jury award compensated [the plaintiff] for both
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`past and future infringement through the life of the patent.”). Granting Seagen an ongoing
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`royalty avoids serial litigation. See Erfindergemeinschaft UroPep GbR v. Eli Lilly & Co., No.
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`2:15-CV-1202-WCB, 2017 WL 3034655, at *2 (E.D. Tex. July 18, 2017).
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`Where the jury has not expressly indicated the form of its reasonable royalty award, the
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`form of the award may be inferred based on the arguments and evidence presented to the jury
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`during trial, the district court’s instructions to the jury, and the verdict form itself. See
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`Whitserve, LLC v. Comput. Packages, Inc., 694 F.3d 10, 35 (Fed. Cir. 2012) (analyzing the
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`1 In its complaint, Seagen sought a running royalty in lieu of an injunction. (Dkt. 1.)
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`evidence at trial and rejecting the argument that the jury awarded a paid-up license). Here, the
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`jury awarded $41.82 million to compensate Seagen “for its damages for infringement from
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`October 20, 2020 through March 31, 2022.” (Dkt. 369 at 7.) There is no question that the jury
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`adopted Ms. Distler’s 8% royalty rate applied to the royalty base of DSI’s U.S. net sales of
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`Enhertu through March 31, 2022 to arrive at its damages award, as the dollar figure matches her
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`8% calculation exactly and the parties’ experts agreed on the royalty base and the methodology
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`of multiplying the agreed-on base by the rate. (Distler Decl. ¶ 6.)
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`At a minimum, this Court should award Seagen an ongoing royalty rate of 8% applied to
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`DSI’s U.S. net sales of Enhertu. See XY, LLC v. Trans Ova Genetics, L.C., 890 F.3d 1282, 1298
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`(Fed. Cir. 2018) (vacating and remanding district court award of ongoing royalty at a rate lower
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`than the jury’s implied rate where “the district court identified no economic factors that would
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`justify the imposition of rates that were lower than the jury’s.”). For reasons explained below,
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`however, the circumstances justify increasing the ongoing royalty.
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`B.
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`The Royalty Rate for Post-Verdict Supplemental Damages and Ongoing
`Royalty
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`For DSC’s infringing sales after the jury verdict on April 8, Seagen requests that the
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`Court award an increased royalty rate for both supplemental damages through entry of judgment
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`(see supra Section II) and for the ongoing royalty after entry of judgment. The circumstances
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`warrant an increased royalty rate of no less than 10–12% for the post-verdict period, representing
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`a 25–50% increase of the jury’s damages award.
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`The starting point of the post-verdict hypothetical negotiation would be the jury’s
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`verdict—an implied royalty rate of 8%. (Distler Decl. ¶ 8.) Rates for supplemental damages or
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`an ongoing royalty should equal or exceed the royalty rate awarded by a jury. See Amado v.
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`Microsoft Corp., 517 F.3d 1353, 1362 n.2 (Fed. Cir. 2008) (ongoing royalty rate “should fall
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`Case 2:20-cv-00337-JRG Document 454 Filed 08/26/22 Page 9 of 16 PageID #: 18805
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`somewhere between the $0.04 amount the jury found to be an appropriate pre-verdict reasonable
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`royalty and the $2.00 amount Amado was willing to accept in exchange for a license.”); see also
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`XY, LLC, 890 F.3d at 1297 (“When patent claims are held to be not invalid and infringed, this
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`amounts to a substantial shift in the bargaining position of the parties.”) (quotation omitted);
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`Soverain Software LLC v. J.C. Penney Corp., 899 F. Supp. 2d 574, 589 (E.D. Tex. 2012),
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`reversed on other grounds by 778 F.3d 1311 (Fed. Cir. 2015) (“The jury’s implied royalty rate
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`provides a starting point for determining the ongoing post-judgment royalty rate.”). Because
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`“[t]here is a fundamental difference . . . between a reasonable royalty for pre-verdict
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`infringement and damages for post-verdict infringement,” Amado, 517 F.3d at 1361, “[t]he
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`Federal Circuit has instructed that post-verdict infringement should typically entail a higher
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`royalty rate than the reasonable royalty found at trial.” Creative Internet Adver. Corp. v. Yahoo!
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`Inc., 674 F. Supp. 2d 847, 861 (E.D. Tex. 2009) (citing Amado, 517 F.3d at 1362 n.2); see also
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`Paice, 504 F.3d at 1317 (Rader, J., concurring) (“[P]re-suit and post-judgment acts of
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`infringement are distinct, and may warrant different royalty rates given the change in the parties’
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`legal relationship and other factors.”).
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`In determining whether to increase the royalty rate to be applied post-verdict, a court
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`examines the change in circumstances from the hypothetical negotiation underlying the jury’s
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`damages award and the nature and scope of the defendant’s conduct. See, e.g., Mondis Tech.
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`Ltd. v. Chimei Innolux Corp., 822 F. Supp. 2d 639, 646–53 (E.D. Tex. 2011). A court may base
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`the post-verdict royalty on a hypothetical negotiation using the Georgia–Pacific or other factors,
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`typically focusing on any changed circumstances affecting the parties’ bargaining position and
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`the hypothetical negotiation. See Arctic Cat Inc. v. Bombardier Recreational Prods. Inc.,
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`876 F.3d 1350, 1370 (Fed. Cir. 2017); Genband US LLC v. Metaswitch Networks Corp., C.A.
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`Case 2:20-cv-00337-JRG Document 454 Filed 08/26/22 Page 10 of 16 PageID #: 18806
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`No. 2:14-cv-33-JRG, 2018 WL 11357619, at *19 (E.D. Tex. Mar. 22, 2018).
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`Here, changed circumstances warrant increasing the royalty rate. “The requirement to
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`focus on changed circumstances is particularly important when, as in this case, an ongoing
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`royalty effectively serves as a replacement for whatever reasonable royalty a later jury would
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`have calculated in a suit to compensate the patentee for future infringement.” XY, LLC, 890 F.3d
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`at 1297. The focus of the inquiry centers on Seagen’s improved bargaining position and other
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`changed economic factors. Id. at 1298. The Georgia-Pacific framework recognizes that
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`increased competition places upward pressure on the royalty rate to reflect, for example, the
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`comparatively greater injury that results from licensing a competitor. See Georgia-Pacific Corp.
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`v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970) (factors 8 & 15); see also
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`Boston Sci. Corp. v. Johnson & Johnson, No. 02-cv-00790-SI, 2009 WL 975424, at *7 (N.D.
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`Cal. Apr. 19, 2009) (“a patent owner is more likely to extract a greater royalty from a direct
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`competitor in order to account for lost sales and profits.”). This Court has previously determined
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`that where a jury found willful infringement and awarded damages based on a reasonable
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`royalty, it was appropriate to “assume that the jury’s finding would have strengthened the
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`plaintiff’s bargaining position had the parties negotiated a license after the jury verdict.” Packet
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`Intel. LLC v. NetScout Sys., Inc., Case No. 2:16-cv-230-JRG, Dkt. 303, slip op. at 7 (E.D. Tex.
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`Sep. 7, 2018), vacated and remanded on other grounds, 965 F.3d 1299 (Fed. Cir. 2020)
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`(quotation omitted). A post-verdict hypothetical negotiation would have affected several
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`Georgia-Pacific factors that warrant increasing the royalty rate.
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`1.
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`Licensing Considerations
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`The starting position of the parties in a post-verdict hypothetical negotiation would be the
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`8% implied rate found by the jury. In addition to the findings of willful infringement and
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`validity, the jury’s award rejected the applicability of the license agreements bearing
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`Case 2:20-cv-00337-JRG Document 454 Filed 08/26/22 Page 11 of 16 PageID #: 18807
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`royalty rates that DSC’s expert witnesses opined were comparable. (Distler Decl. ¶ 10.) Rather,
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`in choosing to adopt the highest rate provided—8%—the jury’s award indicates that the
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` agreement is the most comparable. For good reason. Given the number of similarities
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`between DSC in the pre-verdict hypothetical negotiation and
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` in negotiating the
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` Agreement, the
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` Agreement more closely reflects a real-world outcome for a
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`negotiation for
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`. (Distler Decl. ¶ 10.) As Ms. Distler opined,
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` and thus the
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`negotiation range in the pre-verdict hypothetical negotiation ranged from 5% to
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`. (Id.)
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`Unlike in the pre-verdict hypothetical negotiation, in the post-verdict hypothetical negotiation,
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`DSC would no longer be a willing licensee, but an adjudged infringer negotiating with Seagen
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`for rights to continue to use Seagen’s property in Enhertu. (Id.) Seagen would recognize its gain
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`in bargaining power and look to the higher end of the royalty rate range that reflected its benefit
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`in net present value from the
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` Agreement. (Id.)
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`In a post-verdict hypothetical negotiation, Seagen would also be aware of the
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`consequences of a royalty rate precedent for an adjudged infringer that did not reflect Seagen’s
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`value it derived from
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`—the most comparable agreement. (Distler Decl. ¶ 11.) From a
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`business policy perspective, Seagen would be concerned about creating a licensing policy or
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`precedent that would suggest adjudged infringers receive lower royalties than willing licensees
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`that seek rights to Seagen’s property and negotiate terms before infringement. (Id.) These
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`factors together put upward pressure on the jury’s implied rate of 8%.
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`2.
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`Economic Considerations
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`Enhertu is increasingly profitable and commercially successful. Since trial, Enhertu has
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`received three additional FDA approvals and has demonstrated strong potential in other HER2
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`Case 2:20-cv-00337-JRG Document 454 Filed 08/26/22 Page 12 of 16 PageID #: 18808
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`cancers. First, Enhertu was approved for use with HER2-positive metastatic breast cancer
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`patients treated with one prior anti-HER2-based regimen (i.e., it has been approved in the
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`“second line”) on May 5, 2022. (Distler Decl. ¶ 15.) Second line approval opens up a larger
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`pool of potential patients and unlocks an additional $100 million milestone payment to DSC
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`from AstraZeneca. (Id.) Second, on August 6, 2022, Enhertu became the first approved therapy
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`for patients with newly identified HER2-low breast cancer. (Id. ¶ 16.) Approximately 287,000
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`new cases of breast cancer are diagnosed in the United States each year, and it is estimated that
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`nearly 50% of these patients are considered either HER2-low or part of the addressable patient
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`population for Enhertu. (Id.) Third, on August 12, 2022, ENHERTU was approved for the
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`treatment of adult patients with unresectable or metastatic non-small cell lung cancer (“NSCLC”)
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`whose tumors have activating HER2 (ERBB2) mutations. (Id. ¶ 18.) The approval for NSCLC
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`also unlocks an additional $125 million milestone payment to DSC from AstraZeneca. (Id.)
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`These additional approvals mean that Enhertu is even more valuable to DSC than in the original
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`hypothetical negotiation, and thus Seagen has greater bargaining power over DSC in negotiating
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`a license to the ’039 patent under at least Georgia-Pacific Factor 8 (“the established profitability
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`of the product made under the patent; its commercial success; and its current popularity”). (Id.
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`¶¶ 13–19.)
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`Competition between Seagen and DSC has continued to increase since the date of the
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`original hypothetical negotiation. With Enhertu’s post-verdict approval in the second line,
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`Seagen is facing additional competition for its Tukysa therapy, which also has second line
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`approval. (Distler Decl. ¶¶ 20–27.) Tukysa may further face increased competition following
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`Enhertu’s post-verdict clinical trial results showing its preliminary efficacy in patients with
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`active brain metastasis—a patient population for which Tukysa has demonstrated efficacy and
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`Case 2:20-cv-00337-JRG Document 454 Filed 08/26/22 Page 13 of 16 PageID #: 18809
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`FDA approval. (Id. ¶¶ 24–25.)
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`. (Distler Decl. ¶ 27; Id. Ex. 1, Distler Tr. at 165:2–166:4.) Thus, with increasing and
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`future competition against Enhertu, the competitive landscape between Seagen and DSC would
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`allow Seagen to demand a higher royalty rate from DSC for its continued infringement. See
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`Georgia-Pacific, 318 F. Supp. 1116 at 1120, Factor 5 (“The commercial relationship between the
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`licensor and licensee, such as, whether they are competitors in the same territory in the same line
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`of business; or whether they are inventor and promoter.”). Although the jury heard evidence
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`regarding Seagen’s agreement with
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`, they did not hear evidence that
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`.
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`From an economic perspective, the additional approvals Enhertu has gained since the
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`verdict and the increased competition between Seagen and DSC would put upward pressure on
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`the jury’s implied rate of 8%. (Distler Decl. ¶ 13.)
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`3.
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`Validation of Seagen’s Technology and Strength of Seagen’s Claims
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`In the post-verdict hypothetical negotiation, the acknowledgement of the significance of
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`Seagen’s ADC linker technology embodied in the ’039 patent to Enhertu would be known to
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`both Seagen and DSC. As compared with Kadcyla, DSC identified its linker and payload as a
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`potential differentiator, and that distinction has led to Enhertu being FDA approved in the second
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`line in May 2022 and recognized by the NCCN guidelines preferred over Kadcyla. (Distler
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`Decl. ¶ 28.) Not only has Seagen’s ADC linker technology embodied in the ’039 patent been
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`validated as superior to Kadcyla based on Enhertu’s updated guidelines and additional FDA
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`approvals, but also by the jury’s verdict that established the patent’s validity and infringement by
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`DSC. (Distler Decl. ¶ 29.)
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`After the jury verdict, Seagen further successfully prevented the institution of DSC and
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`Case 2:20-cv-00337-JRG Document 454 Filed 08/26/22 Page 14 of 16 PageID #: 18810
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`AstraZeneca’s PGR proceedings. (Dkt. 430-1.) This adds to Seagen’s bargaining position by
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`virtue of increased confidence in the ’039 patent’s validity. See Packet Intelligence, No. 2:16-
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`cv-230-JRG, slip op. at 7 (considering plaintiff’s track record of successfully asserting patent,
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`including successfully preventing institution of IPR proceedings, in determining ongoing
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`royalty).
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`*
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`*
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`*
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`As a result of the jury’s finding that DSC willfully infringed the ’039 patent and the
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`changed circumstances since the verdict, the bargaining position of the parties has shifted further
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`in favor of Seagen since the pre-verdict hypothetical negotiation. Seagen would have a stronger
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`bargaining position than DSC and would look to
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`—as the appropriate benchmark for royalties payable through
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`the remaining life of the ’039 patent. Given the considerable upward pressure of the changed
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`circumstances and the jury’s validation of the
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` agreement as a benchmark, the Court
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`should award Seagen an ongoing royalty of 10–12%.
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`IV. CONCLUSION
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`For these reasons, the Court should order DSC to account for its sales of Enhertu in the
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`United States from April 1 through the date of judgment, and to pay supplemental damages and
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`an ongoing royalty at the following rates for sales through the date of judgment, further increased
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`by the same amount that the Court finds appropriate to increase the jury’s damages award:
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`Period of Infringing Sales
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`April 1, 2022 – April 8, 2022 (Pre-verdict)
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`Royalty Rate
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`8%
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`April 9, 2022 – July 19, 2022 (Verdict through judgment)
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`10–12%
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`July 20, 2022 – November 5, 2024 (Judgment through expiration)
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`10–12%
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`Case 2:20-cv-00337-JRG Document 454 Filed 08/26/22 Page 15 of 16 PageID #: 18811
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`Dated: August 16, 2022
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` SF-4796886
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`By: /s/ Matthew A. Chivvis
`Michael A. Jacobs
`MJacobs@mofo.com
`Matthew A. Chivvis
`MChivvis@mofo.com
`MORRISON & FOERSTER LLP
`425 Market Street
`San Francisco, CA 94105
`Telephone: 415.268.7000
`Facsimile: 415.268.7522
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`Bryan Wilson
`BWilson@mofo.com
`MORRISON & FOERSTER LLP
`755 Page Mill Road
`Palo Alto, California 94304-1018
`Telephone: 650.813.5600
`Facsimile: 650.494.0792
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`Melissa R. Smith
`Texas State Bar No. 24001351
`melissa@gillamsmithlaw.com
`GILLAM & SMITH, LLP
`303 South Washington Avenue
`Marshall, Texas 75670
`Telephone: 903.934.8450
`Facsimile: 903.934.9257
`Of Counsel:
`T. John Ward, Jr.
`Texas State Bar No. 00794818
`jw@wsfirm.com
`Wesley Hill
`Texas State Bar No. 24032294
`wh@wsfirm.com
`Charles Everingham IV
`Texas State Bar No. 00787447
`ce@wsfirm.com
`Andrea L. Fair
`Texas State Bar No. 24078488
`andrea@wsfirm.com
`WARD, SMITH & HILL, PLLC
`1507 Bill Owens Parkway
`Longview, Texas 75604
`Telephone: 903.757.6400
`Facsimile: 903.757.2323
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`Attorneys for Plaintiff Seagen Inc.
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`Case 2:20-cv-00337-JRG Document 454 Filed 08/26/22 Page 16 of 16 PageID #: 18812
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`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that counsel of record who are deemed to have
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`consented to electronic services are being served with a copy of this document via the Court’s
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`CM/ECF system per Local Rule CV-5(a)(3) on this the 16th day of August, 2022.
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`/s/ Melissa R. Smith
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`CERTIFICATE OF CONFERENCE
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`Pursuant to Local Rule CV-7(h), Seagen counsel Matthew Chivvis and Wesley Hill met
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`and conferred with counsel for Defendants DSC and AstraZeneca, including Preston K. Ratliff
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`II, Daron Dacus, Jennifer Ainsworth, and David Berl regarding a schedule for Seagen’s post-trial
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`motions, including its intention to file a motion for judgment for supplemental damages and
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`ongoing royalty on April 22, 2022. Defendants opposed the entry of a schedule, but did not
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`provide a position on the present motion.
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`/s/ Melissa R. Smith
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