Federal Court Rules on Patent Damages Timeline in Mallinckrodt-Airgas Nitric Oxide Therapy Dispute
Key Insights
A Delaware federal judge ruled that the hypothetical negotiation date for patent damages in the Mallinckrodt v. Airgas (search) case should be November 2023, when Airgas launched its competing product, rather than November 2022 when the ANDA was filed.
The dispute centers on patents covering INOmax and DSIR Plus delivery systems, which provide nitric oxide therapy for treating hypoxic respiratory failure (search) in neonates and children.
The court's timing decision impacts potential damages calculations and establishes that licensing negotiations should be tied to actual product launch rather than ANDA filing dates.
A Delaware federal judge has issued a significant ruling on patent damages timing in the ongoing dispute between Mallinckrodt and Airgas (search) over nitric oxide therapy products, establishing November 2023 as the hypothetical negotiation date for calculating reasonable royalty damages rather than the earlier date proposed by Mallinckrodt.
The case involves Mallinckrodt's patents covering INOmax and its delivery system DSIR Plus, which administer inhaled nitric oxide gas in hospital settings to neonates and children suffering from hypoxic respiratory failure (search). Airgas (search) developed competing products called Ulspira (search) and Ulspira TS (search), leading to the patent infringement lawsuit filed by Mallinckrodt in November 2022.
Court Rejects Earlier Damages Timeline
Judge Richard Andrews rejected Mallinckrodt's argument that the hypothetical negotiation date should be November 2022, when Airgas (search) amended its ANDA application to include paragraph IV certifications for patents listed in the FDA's Orange Book for INOmax products. Instead, the court ruled that November 2023—when Airgas actually launched its competing Ulspira (search) product—represents the appropriate hypothetical negotiation date.
The judge explained that the hypothetical negotiation framework assumes a "willing licensor-willing licensee" scenario and "attempts to ascertain the royalty upon which the parties would have agreed had they successfully negotiated an agreement just before infringement began." The court noted that this approach contemplates negotiations when an infringer actually needs a license for its product launch.
"An ANDA holder does not need a license to file its ANDA, even if that ANDA is found to infringe," Judge Andrews wrote. "But the ANDA holder would need a license to launch the infringing product."
Patent Validity and Infringement Rulings
The court addressed multiple summary judgment motions regarding patent validity and infringement. For patents related to the '6794 and '795 patents, the court denied Mallinckrodt's motion for summary judgment on obviousness, finding genuine disputes of material fact relating to claim scope and "gas data" limitations.
However, regarding asserted claims of the '9794 and '118 patents, the court granted summary judgment in favor of Mallinckrodt. Airgas (search)'s expert had acknowledged that Mallinckrodt's prior art delivery devices did not contain the "determining an actual concentration" element but argued it would have been obvious to modify those devices. The court found no dispute that the source code was not publicly available and that without knowledge of the problem, there would have been no motivation to fix it.
Infringement Analysis
On infringement issues, the court denied Airgas (search)'s motion for summary judgment regarding claim 7 of the '795 patent. Although Airgas argued its Ulspira TS (search) device did not perform the claimed "verify[ing] ... the gas concentration" limitation, the court found that even if "Ulspira TS can produce a false positive, that does not preclude the possibility that Ulspira TS can produce a true positive."
Similarly, the court denied Airgas (search)'s motion regarding the '046 patent, finding that the claims did not require the measured gas concentration to be delivered to a patient.
Expert Testimony Limitations
The court made several rulings on expert testimony admissibility. Mallinckrodt's damages expert's "Scenario 1" testimony was excluded because it failed to properly apportion value to infringing features and did not consider incremental value added by the patented invention. The court also excluded testimony that attempted to "pass off lost profits as a reasonable royalty without the required lost profits analysis."
For Airgas (search)'s damages expert, the court allowed testimony regarding non-infringing alternatives, including opinions about competitor Praxair (search)'s iNO and delivery products, finding that any methodological issues could be explored through cross-examination.
Regulatory Expert Testimony
The court excluded certain FDA regulatory law expert testimony from both sides, finding that once Mallinckrodt's damages expert's Scenario 1 opinion was excluded, the supporting regulatory testimony became irrelevant.
The patents in suit include U.S. Patent Nos. 8,776,794, 8,776,795, 9,279,794, 9,919,118, and 10,773,046, with four of these patents listed in the FDA's Orange Book. Airgas (search) received FDA approval for its ANDA in July 2023, and the case will now proceed to address remaining issues including the ultimate calculation of reasonable royalty damages.