Posted On: April 28, 2008

New District Court of Delaware Intellectual Property Case Filings

4/18: UCB Inc. and CellTech Manufacturing CA Inc. v. KV Pharmaceutical Co. (patent infringement)
4/24: LG Electronics USA, Inc. and LG Electronics Inc. v. Whirlpool Corporation (patent infringement)
4/25: AstraZeneca AB, Aktiebolaget Hassle, AstraZeneca LP, KBI Inc. and KBI-E Inc. v. Teva Parenteral Medicines Inc., Teva Pharmaceuticals USA Inc. and Teva Pharmaceutical Industries, Ltd. (patent infringement)
4/25: Pfizer Inc., Pfizer Ireland Pharmaceuticals, Warner-Lambert Co., Warner-Lambert Co., LLC and Warner-Lambert Export Ltd. v. Teva Pharmaceuticals USA Inc. (patent infringement)

Posted On: April 25, 2008

No Disqualification for Firm that Assisted Patentholder and Accused Infringer

Modern legal practice sweeps across a broad spectrum of domestic and international business. Before patents are litigated, they are often exchanged, like any other commodity, on the open market. To effectively pursue the acquisition and protection of intellectual property, businesses must engage counsel experienced in both deals and litigation. It is therefore inevitable that one law firm will find itself retained on aspects of each of these steps.

But what happens when a single firm ends up on opposite sides of the acquisition-litigation coin?

According to District of Delaware Judge Joseph J. Farnan Jr., if the two transactions are wholly unrelated, with no possibility of confidential revelation, a motion to disqualify is unfounded.

In the subject litigation, a law firm first represented the infringement plaintiff in its purchase of the IP rights in the accused product. The same firm then found itself representing the defendant in the infringement litigation. Although the potential for conflict is apparent from this arrangement, the Court noted that the differences in the two transactions make this an atypical case:

The present action concerns issues of infringement . . . . It does not implicate the underlying transaction . . . through which Rhthmol® was acquired nor does it involve any of the provisions, warranties or representations contained in the agreements governing the transaction. (Op. at 5)

This reality, coupled with a dearth of evidence that the firm acquired any confidential information about the accused product during the earlier deal, could not, as a matter of law, give rise to an actionable conflict of interest.

Reliant Pharmaceuticals Inc. v. Par Pharmaceuticals Inc., C.A. No. 06-774-JJF (D. Del. April 23, 2008) (Farnan, J.).

Posted On: April 24, 2008

"Reasonable apprehension of suit" test inconsistent with Federal Circuit Precedent

In another District of Delaware decision addressing declaratory judgment jurisdiction post-MedImmune, Judge Farnan found declaratory judgment defendant ON Semiconductor's argument that the "reasonable apprehension of suit" test was not overruled by MedImmune unpersuasive. Samsung Elecs. Co. v. ON Semiconductor Corp., C.A. No. 06-720-JJF, Memo. Op. (D. Del. April 3, 2008). The Court found that recent Federal Circuit case law including Micron Tech., Inc. v. Mosaid Tech., Inc. (opinion here) and SanDisk Corp. v. STMicroelectronics Inc. (opinion here) has made clear that the Supreme Court's decision in MedImmune rejects the reasonable apprehension of suit test. Id. at 9-10.

ON Semiconductor's course of conduct, including letters accusing Samsung of infringement and their analysis of potential infringement by Samsung and Samsung's continued position that the patents are invalid and not infringed during the course of licensing discussions demonstrated evidence of a "substantial controversy" sufficient to warrant jurisdiction over the dispute. Id.at 10. The fact that the licensing negotiations were continuing "is not dispositive with regard to the existence of an actual controversy." Id.

Citing the EMC Corporation decision from the Federal Circuit, ON Semiconductor also argued that even if the Court can exercise declaratory judgment jurisdiction it should dismiss the action because licensing negotiations are still ongoing and their is still the potential for a non-legal resolution. Id.at 12. Judge Farnan declined to dismiss the action, however, stating that the record evidence demonstrated that when Samsung filed the complaint the parties' negotiations were at an impasse and ON had made clear its willingness to pursue other routes for enforcing its legal rights. Id.

Samsung Elecs. Co. v. ON Semiconductor Corp., C.A. No. 06-720-JJF, Memo. Op. (D. Del. Apr. 3, 2008).

Posted On: April 23, 2008

Federal Circuit Affirms D. Del. Chief Judge

The Federal Circuit has affirmed a decision by District of Delaware Chief Judge Gregory M. Sleet. Following a bench trial, the district court held that prosecution history estoppel barred the patentee from asserting the doctrine of equivalents as its infringement theory. The district court also rejected assertions of unforeseeability and tangentiality in the claim-narrowing process, both of which, if proved, would have precluded the estoppel finding.

In its affirming opinion, the CAFC agreed with the district court's conclusion that, on the issue of foreseeability, endorsing one of the parties' experts over the other "was not close." Quoting the Supreme Court, the appellate court reminded its readers of the discretion vested in trial judges:

[W]hen a trial judge's finding is based on his decision to credit the testimony of one of two or more witnesses, each of whom has told a coherent and facially plausible story that is not contradicted by extrinsic evidence, that finding, if not internally inconsistent, can virtually never be clear error. (Op. at 16)

This makes sense: It is the jurist that presides at trial, and not the appellate judge, that is the frontline decision maker. With the CAFC coming under fire in recent years for its alleged meddling with the work of the trial judges, this opinion, at least, demonstrates the value this circuit court places on credibility determinations - and the work of the district courts.

Honeywell Int'l Inc. v. Hamilton Sundstrand Corp., No. 2006-1602 (Fed. Cir. April 18, 2008) (Rader, J.).

Posted On: April 23, 2008

D. Del. Magistrate Finds Prima Facie Case for Jurisdictional Discovery

When faced with a credible claim of lack of personal jurisdiction, a court has two options: dismiss the action or order jurisdictional discovery. In a recent stream-of-commerce decision, Magistrate Judge Leonard P. Stark opted for the latter.

In the underyling litigation, the aggrieved manufacturer insisted that it had no knowledge that its accused products would enter Delaware. Rejecting this line of reasoning, the Court found that delivery to the United States could satisfy the stream-of-commerce test:

Any evidence that Defendants use [a distributor] to deliver the accused chips to the United States, from which they might enter Delaware, may constitute evidence supporting a finding of intent to serve the Delaware market. (Op. at 20 n.7)

According to the Court, the fact that the defendant "tout[ed] its established distribution channels in the U.S., as well as its close relationships with end users . . . throughout this country," justified further discovery.

Like the Internet-access personal jurisdiction cases, this decision expands on a common theme in the District of Delaware: if you serve the United States markets, you serve Delaware's as well.

Power Integrations Inc. v. BCD Semiconductor Corp., C.A. No. 07-633-JJF-LPS (D. Del. April 11, 2008) (Stark, M.J.).

Posted On: April 21, 2008

Different parties, different patents — transfer justified?

In what Judge Robinson believed to be a first impression issue before her, she recently denied a motion to transfer where "neither the parties nor the patents" were identical. Cisco Systems Inc. v. GPNE Corp., C.A. No. 06-671-SLR, Memo. Order, at 5 (D. Del. Apr. 17, 2008). Defendant, GPNE, moved to transfer this declaratory judgment litigation to the Eastern District of Texas where they had earlier filed two patent infringement lawsuits. The first lawsuit in Texas was filed against one set of defendants and settled early on in the litigation. The second lawsuit was filed against another group of defendants and remains pending only against one defendant, and involves only one of the patents-in-suit that was asserted in the Delaware litigation but involved different technology. Id. at 2. (Neither Texas lawsuit involved the declaratory judgment plaintiffs who filed suit in Delaware.)

GPNE argued that once the Eastern District of Texas obtained "possession of the subject matter" of the dispute, the later-filed litigation should be subject to transfer under the "first-filed" rule. Id. Judge Robinson stated that she found "remarkable the assertion that a court obtains 'possession of a subject matter' of a patent as soon as a single case involving that patent is filed in that jurisdiction" and therefore denied the motion to transfer. Id. at 5.

A note for all those who may draft a motion to transfer before Judge Robinson in the future…"absent a truly regional defendant or critical witnesses that cannot be compelled to attend trial, Delaware (especially for a Delaware corporation…) is at least as convenient as any other forum."

For a copy of the opinion click here.

Posted On: April 18, 2008

New District Court of Delaware Intellectual Property Case Filings

4/10: Sepracor Inc. , UCB SA and UCB Inc. v. Synthon Pharmaceuticals Inc., Synthon Holding BV, Synthon B.V. and Synthon Laboratories, Inc. (patent infringement)
4/14: Luv N Care Ltd. v. Bamed AG (patent infringement - transferred from Eastern District of Texas)
4/16: Playtex Products Inc. v. Fruit of the Earth Inc. (patent infringement)

Posted On: April 16, 2008

Goodbye to Chad Stover

Last week the Delaware IP Law Blog said goodbye to one of its co-founders, Chad Stover. Chad has left to pursue opportunities at another firm. We wish him the best in his new (still IP-focused) endeavors. We also thank him for his dedication and hard work over the past several years in getting the Delaware IP Law Blog to where it is today.

Posted On: April 16, 2008

District Court of Delaware Grants Business Objects America its Attorneys' Fees and Expenses in Defending a Patent Suit

Last year, the Federal Circuit affirmed former District of Delaware Judge Kent A. Jordan's decision in Microstrategy Inc. v. Crystal Decisions, Inc. d/b/a Business Objects Americas which granted partial summary judgment in favor of Business Objects America on invalidity of two of Microstrategy's patents and summary judgment as to non-infringement of a third Microstrategy patent. (See earlier Delaware IP Law Blog posting, June 27, 2007.) Business Objects subsequently filed a motion for its attorney fees and expenses pursuant to 35 U.S.C. Section 285 and the Court granted this motion, in part, on March 25, 2008. Microstrategy Inc. v. Crystal Decisions, Inc. d/b/a Business Objects Americas, C.A. No. 03-1124-MPT, Memo. Op. (D. Del. March 25, 2008). Magistrate Thynge stressed over and over again in her opinion that Microstrategy's "failure to produce" any evidence contrary to Business Objects' evidence as to anticipation on one patent-in-suit was critical to the finding of fees. Id. at 6-7. The Court stated that Microstrategy was "clearly aware" of the prior art and the fact that it would make any claim of infringement unjustified and yet "failed to reassess the merit of its claims". Id. at 8. These two things together established the "manifestly unreasonable" conduct necessary for a finding of fees. Id. at 8.

As to a second patent that was asserted in the litigation, the Magistrate found that Microstrategy presented a "reasonable basis" to continue litigating certain claims but their continued pursuit of the remaining asserted claims was in bad faith. Id. at 10.

Finally, on the third patent-in-suit, Business Objects argued that Microstrategy had no reasonable basis to allege infringement of certain claims of that patent. Id. at 11. After Business Objects directed Microstrategy to an error in its expert report, the expert submitted a supplemental report with a new theory of infringement. This new theory contradicted its representations to the PTO during reexamination of the patent-in-suit. Id. at 11-12. The Court found that this new theory, in addition to Microstrategy's failure to provide an explanation of its expert's mistake and the timing of its reassessment of the claims, "calls into questions its motives and whether it, in fact, continued this action in good faith." Id. at 12. Such conduct ultimately supported a finding of bad faith.

Based on the facts, the Court found that by March 2005, it was unreasonable for Microstrategy to continue its pursuit of certain claims and therefore the Court limited Business Objects to its fees and expenses after that date. Id. at 12. Despite Microstrategy's arguments that Business Objects failed to show any "gross injustice," Magistrate Thynge stated that "forcing an alleged infringer to defend against apparent baseless claims" was the "gross injustice." Id. at 13.

Of note for future attorneys' fee applications in the District of Delaware, Magistrate Thynge found the fees reasonable based on the following evidence: billing rate and amount of hours charged by each attorney, the level of experience of each attorney, description of each attorney's activities during a period, expense statements and a comparative analysis of its rates and the AIPLA cost survey (see AIPLA website for more information). Id.

For a copy of the opinion click here.

Posted On: April 16, 2008

Pleading Inequitable Conduct in the District of Delaware

Judicial analysis of inequitable conduct often appears at an advanced stage of litigation: at summary judgment, in post-trial briefing, or, increasingly, following an auxiliary phase of trial. But how do inequitable conduct claims fair at the opposite end of the litigation spectrum, at the pleading stage? From a litigator's perspective, what does it take to avoid dismissal on sufficiency-of-the-pleadings grounds?

District of Delaware Magistrate Judge Mary Pat Thynge recently addressed this issue in the context of a motion to amend. Holding that FRCP 9's particularity requirement does not extend to allegations of how the withheld information is material to the prosecution of the patent-in-suit, the Court reaffirmed the contours of Rule 9 in Delaware:

In this jurisdiction, the standard for Rule 9(b), in light of Rule 8, is not as severe or as specific as [plaintiff] suggests . . . . [T]o meet the requirements of Rule 9(b), [defendant] need only disclose the relevant material information and the acts of the alleged fraud to apprise [plaintiff] of what is being alleged in a manner sufficient to permit responsive pleadings.

In other words, the particularity rule captures only those facts indispensable to eventually demonstrating materiality and deliberate intent. With this data in the litigation, and with the parties on notice of the claim's boundaries, the Court is equipped to conduct the later-stage analysis of whether materiality and intent have actually been established.

Venetec Int'l Inc. v. Nexus Medical LLC, C.A. No. 07-057-MPT (D. Del. March 28, 2008) (Thynge, M.J.).

Posted On: April 11, 2008

New District of Delaware Intellectual Property Case Filings

4/4: Procter & Gamble Co. v. Teva Pharmaceuticals USA, Inc. (patent infringement)
4/4: JPMorgan Chase & Co., JPMorgan Chase Bank, N.A., JPMorgan Chase Electronic Financial Services, Inc. v. Affiliated Computer Services Inc., ACS State & Local Solutions, Inc. (patent infringement)
4/8: CRS LLC v. Reflexive Entertainment Inc. (patent infringement)