The First Circuit last month upheld a previous ruling by U.S. District Judge Michael A. Ponsor in March 2014 ordering Biolitec to pay a $75 million judgment to AngioDynamics Inc. in connection with claims that Biolitec failed to shield it from patent infringement claims related to varicose vein treatments after they struck a distribution deal.
The appellate court remanded the case back to district court in order to determine a cap for contempt sanctions levied against Biolitec for agreeing in 2013 to merge with an Austrian company in defiance of the court’s injunction and an outstanding arrest warrant for Biolitec President Wolfgang Neuberger. At the time of the First Circuit’s ruling, the contempt fines had ballooned to $160 million.
In an order dated April 22 but filed with the court Friday, Judge Ponsor set the contempt fine at $70 million.
“As the First Circuit’s decision suggests, even the most egregious contemnor should not be subject to an infinitely escalating fine amount,” the judge wrote in the order. “The amount of $70 million provides a reasonable penalty to coerce defendants’ compliance with the court’s order — if any penalty can.”
In a separate order Wednesday, Judge Ponsor ordered Biolitec to file a status report by May 11 in light of an April 20 notice informing the court several Biolitec affiliates had recently filed for Chapter 7 bankruptcy protection.
Wednesday’s orders are the latest in a long-running dispute stretching back to 2009, when AngioDynamics filed suit against Biolitec for allegedly failing to indemnify it in two patent infringement suits over a laser treatment for varicose veins that Biolitec licensed to the company. The complaint accused Biolitec of violating its supply and distribution agreement with the medical device manufacturer by refusing to compensate it for litigation costs that arose in 2004 and 2005.
In September 2012, the court ordered Biolitec Inc. to hand over $16.5 million, plus prejudgment interest, to AngioDynamics for failing to protect the company from lawsuits involving the laser treatment. But in January 2013, with the $23 million final judgment unpaid, Biolitec Inc. filed for bankruptcy. The judgment was tripled under Massachusetts law to reach the eventual $75 million against Biolitec Inc.’s German parent.
Biolitec suffered the default judgment after the Austrian merger, which was forbidden by the court because American judgments are not enforceable in Austria. Despite a pending appeal of the injunction, Biolitec completed the merger anyway, prompting Judge Ponsor to authorize coercive fines against Biolitec and the arrest warrant against Neuberger.
The First Circuit largely upheld the rulings in March, noting that the fines had reached $160 million, and called the defendants guilty of “outrageous misconduct.”
Earlier this month, AngioDynamics urged Judge Ponsor to sanction Biolitec for its CEO’s repeated refusal to show up for depositions.
Representatives for the parties did not immediately respond to requests for comment Friday.
AngioDynamics is represented by William E. Reynolds of Bond Schoeneck & King PLLC.
Biolitec AG is represented by Edward Griffith of the Griffith Firm and Michael K. Callan of Doherty Wallace Pillsbury & Murphy PC.
The case is AngioDynamics Inc. v. Biolitec AG et al., case number 3:09-cv-30181, in the U.S. District Court for the District of Massachusetts.
--Additional reporting by Michael Lipkin, Alex Lawson, Jeff Overley and Kat Greene. Editing by Philip Shea.
