Bayer Cropscience Ag v. Dow Agrosciences LLC
680 F. App'x 985
| Fed. Cir. | 2017Background
- Bayer (two subsidiaries of Bayer AG) owns the Leemans patent family (pat gene) and asserted those patents against Dow products that use the pat gene; Dow’s products include Enlist and Widestrike lines.
- A 1992 cross-license (1992 Agreement) between Hoechst (Bayer predecessor) and Lubrizol (Dow predecessor) contained a no-sublicensing restriction and an ICC arbitration clause governed by French law.
- Bayer terminated the 1992 Agreement in 2012 and sued for patent infringement in federal court; the district court stayed the suit pending arbitration.
- An ICC arbitral tribunal (Oct. 2015) found Dow breached the contract and infringed multiple Leemans patent claims, awarded Bayer ~$455.5 million (lost-opportunity contract damages under French law plus U.S. reasonable royalty), and set pre-award and “post-award” interest at 8%.
- The district court confirmed the arbitral award; Dow moved to vacate and separately sought clarification that post-judgment interest after entry of the district-court judgment should run at the federal statutory rate. The court denied the clarification.
- On appeal the Federal Circuit affirmed confirmation of the award but held the district court abused its discretion by denying amendment: post-award interest applies only through the date of the district-court judgment, and post-judgment interest runs thereafter at the federal §1961 rate.
Issues
| Issue | Bayer’s Argument | Dow’s Argument | Held |
|---|---|---|---|
| Whether the arbitral award should be vacated for erroneous resolution of double-patenting | Tribunal correctly applied corporate-separateness; no manifest disregard of law | Tribunal erred: Leemans patents invalid for obviousness-type double patenting over Strauch due to common ownership | Arbitration award affirmed; tribunal’s finding of no common ownership and no manifest disregard was upheld |
| Whether contract damages awarding post-patent-expiration revenues violate Brulotte (post-expiration royalties) | Damages compensate lost licensing revenues under the contract; not barred because award stems from contract breach, not an unlawful post-expiration royalty | Damages effectively require post-expiration payments barred by Brulotte | Rejection of Brulotte challenge; no established law required vacatur under narrow review standards |
| Whether tribunal exceeded powers / manifestly disregarded law on patent validity defenses (written description, enablement) and scope of asserted reissue patent | Tribunal applied relevant precedent (e.g., Plant Genetic Systems) and procedural rules; inclusion of RE’962 was not a “new claim” under ICC rules | Tribunal misapplied law on written description/enablement and improperly included RE’962 after reissue | Denial of vacatur affirmed; challenges amounted to ordinary legal error or forfeiture and did not meet manifest-disregard standard |
| Whether interest after district-court judgment should accrue at tribunal’s post-award rate or federal post-judgment (§1961) rate | Tribunal awarded 8% “post-award” interest; that rate should continue beyond confirmation | Once award is merged into judgment, federal §1961 post-judgment rate presumptively applies unless parties/tribunal clearly expressed contrary intent | Modified: tribunal rate applies only until entry of judgment (Jan 15, 2015); thereafter interest accrues at the §1961 federal post-judgment rate |
Key Cases Cited
- Hall Street Assocs. v. Mattel, 552 U.S. 576 (2008) (limits judicial review of arbitration awards)
- Oxford Health Plans LLC v. Sutter, 569 U.S. 564 (2013) (deferential review of arbitrator’s contract interpretation)
- Brulotte v. Thys Co., 379 U.S. 29 (1964) (post-expiration royalty rule)
- Kimble v. Marvel Entm’t, LLC, 576 U.S. 446 (2015) (declined to overrule Brulotte)
- United Paperworkers Int’l Union v. Misco, 484 U.S. 29 (1987) (arbitrator’s interpretation stands if arguably construing contract)
- Tricon Energy Ltd. v. Vinmar Int’l, Ltd., 718 F.3d 448 (5th Cir. 2013) (federal post-judgment interest presumptively applies to confirmed arbitration awards)
- Fid. Fed. Bank, FSB v. Durga Ma Corp., 387 F.3d 1021 (9th Cir. 2004) (same rule on post-judgment interest)
- Flex-Foot, Inc. v. CRP, Inc., 238 F.3d 1362 (Fed. Cir. 2001) (Fed. Cir. jurisdiction over appeals from confirmation of arbitral awards involving patents)