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February was a very good month for our defense side trial practice: 

Defense victory for pharmacy benefit manager

On February 10, 2022, QE won a jury trial victory for Express Scripts in a case brought by CareZone Pharmacies in the U.S. District Court for the Northern District of California seeking over $1 billion in damages based on claims for defamation, Lanham Act violations, trade libel, tortious interference and violations of Any Willing Provider Laws. The CareZone Pharmacies had been admitted to Express Scripts’ retail pharmacy network based on representations that they were retail pharmacies. At trial, Express Scripts presented evidence that the pharmacies were mailing 85-95% of their prescriptions out-of-state, including to 20 states where they were not yet licensed and were receiving prescriptions almost exclusively from patients using a CareZone app. The CareZone Pharmacies claimed to be retail – not mail order – pharmacies because all prescriptions were picked up by the patients’ “agent,” Parliament Delivery, LLC, a company owned by CareZone Inc., and mailed to patients’ homes. 

Express Scripts ultimately terminated the CareZone Pharmacies from its network. At trial, Express Scripts showed the jury evidence that CareZone responded to the termination by launching a website falsely attacking Express Scripts, sending tens of thousands of emails to Express Scripts’ leadership and board members, Cigna leadership (which was in the process of buying Express Scripts at the time), and federal and state regulators claiming that Express Scripts was denying 85 million people access to health care in order to protect its own mail order pharmacy business. After Express Scripts publicly responded to these accusations, CareZone filed numerous state and federal lawsuits, the most significant of which was the $1 billion lawsuit in the ND Cal. In the end, after a seven day trial, the jury deliberated for less than four hours and returned a verdict finding against the CareZone Pharmacies on all of their claims. 

Defense victory for insurance company

On February 22, 2022, QE secured a unanimous jury verdict in favor of two business units of AIG, in a coverage dispute filed by Conduent State Healthcare in Delaware state court seeking tens of millions of dollars in damages. Conduent was seeking indemnification for a settlement that Conduent had made to resolve previous litigation with the State of Texas. At trial, the QE team proved by clear and convincing evidence that Conduent had insisted as part of its settlement with the State of Texas that (1) the settled lawsuit, which had always asserted a single claim for Medicaid Fraud, which was not covered, be amended to add two new claims for breach of contract and negligence that Conduent believed would trigger coverage and (2) the settlement payment be characterized as a settlement of these new claims rather than the Medicaid Fraud claim. The jury concluded that Conduent had committed insurance fraud, breached its policy obligations, and settled the Texas litigation in a bad faith attempt to manufacture insurance coverage that it was not entitled to. The jury’s verdict means that AIG owes Conduent no coverage for the settlement as a result of Conduent’s fraud and improper conduct. 

Defense victory for MIT and Harvard on CRISPR claims of Nobel Prize winners

On February 28, 2022, a QE team obtained a trial victory in an interference proceeding before the Patent Trial and Appeal Board establishing that QE client the Broad Institute, a research group from the Massachusetts Institute of Technology and Harvard University, was the first to invent the breakthrough CRISPR-Cas9 gene-editing technology in human, animal and plant cells and the rightful holders of patents for it. The CRISPR-Cas9 technology provides the ability to precisely target DNA, such as to cleave and edit the genome of living cells, and holds enormous potential to accelerate life science research, improve biotechnology, and diagnose and treat human disease. The importance of this breakthrough technology cannot be overstated. 

An interference proceeding is an adversarial proceeding before a panel of three Administrative Patent Judges that occurs when two parties file patent applications and are allowed claims for the same or substantially the same invention. The panel decides which party invented the subject matter first and therefore which party is entitled to ownership of patents with claims to the subject matter. In this case, a team of scientists from the University of California at Berkeley and the University of Vienna had also filed patent applications claiming to own the CRISPR-Cas9 gene-editing technology. Those scientists had recently won the Nobel Prize for their discoveries relating to CRISPR technology. Nevertheless, the three-judge panel squarely rejected the claims of the UC Berkeley and University of Vienna Nobel Prize-winning team that they were the first to invent the technology and confirmed that Broad’s patents were properly issued. 

Written by:

John B. Quinn