Posted On: February 27, 2009

Judge Sue L. Robinson: Foreign Participation in the U.S. Market Through Third Party U.S. Licensee Deemed Sufficient to Withstand Motion To Dismiss

Another guest post by our colleage, Pilar Kraman :

On February 20, 2009, Judge Robinson issued an opinion granting in part and denying in part defendant Abbott Laboratories’ motion to dismiss. Ethypharm S.A. France v. Abbott Laboratories, C.A. No. 08-126-SLR, Memo. Op. (D. Del. Feb. 20, 2009). The plaintiff, a French pharmaceutical company, alleges in its complaint that the defendant, a U.S. pharmaceutical company, interfered with plaintiff’s U.S. licensee from marketing and selling plaintiff’s product in the United States. The defendant sought to dismiss all of plaintiff's claims, including antitrust claims under sections 1 and 2 of the Sherman Act; and common law claims for unfair competition, tortious interference with existing or prospective business relations, tortious interference with contract, and restraint of trade.

The Court denied the defendant’s motion to dismiss the plaintiff’s Sherman Act claims. In doing so, the Court answered affirmatively the question “whether a foreign name-brand drug manufacturer, which does not itself market and distribute its product in the United States but does so through an exclusive United States distributor, is entitled to avail itself of the protection of the antitrust laws . . . .” Id. at 6. The Court held that plaintiff’s participation in the U.S. market through its third party U.S. licensee entitles plaintiff to challenge the defendant’s conduct with respect to the plaintiff’s licensee. Moreover, the defendant’s actions related to the plaintiff’s licensee “indicate an intent to harm [the plaintiff], if anyone.” Id. at 10.

Ethypharm S.A. France v. Abbott Laboratories, C.A. No. 08-126-SLR, Memo. Op. (D. Del. Feb. 20, 2009).

Posted On: February 26, 2009

Guest Post - The Interplay of Rule 16 and Rule 26(f) and Timing of the Meet and Confer

In a short minute order, Judge Sleet recently confirmed that the Federal Rules of Civil Procedure permit discovery to begin before the Court sets the Rule 16 conference. Many defendants in recent years have refused to participate in the Rule 26(f) discovery planning conferences on grounds that commencing discovery was not permitted until the Court set the Rule 16 conference, with the net effect of slowing down litigation and extending the ultimate case disposition. Defendants usually have been unswayed by the actual text of the Federal Rules (see, e.g., Rule 37(f) (providing for sanctions if a party refuses to participate in a Rule 26(f) conference) and the Notes of Advisory Committee on 1980 amendments (stating that "New Rule 26(f) imposes a duty on parties to participate in good faith in the framing of a discovery plan by agreement upon the request of any party.")), and available remedies were few. Judge Sleet's minute order expressly confirms that the parties can initiate the discovery planning conference (presumably at a reasonable time and in good faith) without pre-authorization of the Court (stating that neither of Rules 16 or 26, or Local Rule 16.2 "preclude the parties from commencing discovery prior to the court noticing or conducting a scheduling conference").

Author: John W. Shaw chairs YCST's Intellectual Property Litigation Section, and he also practices in the firm's Commercial Litigation Section. Mr. Shaw appears before all state and federal Delaware courts, and he has extensive experience in a wide variety of intellectual property and commercial disputes pending before the United States District Court for the District of Delaware. Mr. Shaw also devotes a portion of his practice to counseling intellectual property owners on trademark, patent, trade secret, and other intellectual property matters.

Mr. Shaw graduated from the Pennsylvania State University with high honors and distinction in 1989, and, after working as an engineer with General Electric, he graduated magna cum laude from the University of Pittsburgh School of Law in 1994. Before joining Young Conaway in 1995, Mr. Shaw clerked for the Honorable Murray M. Schwartz in the United States District Court for the District of Delaware. Mr. Shaw is admitted to practice as a registered patent agent before the United States Patent and Trademark Office.

A copy of the minute order can be found here.

Posted On: February 25, 2009

Chief Judge Gregory M. Sleet - Stay Pending Reexam GRANTED

Guest Post by Pilar Kraman:

Although recent cases in the District of Delaware have involved the denial of motions to stay pending reexamination, on February 24, 2009, Judge Sleet granted the defendants’ Motion to Stay Pending Inter Partes Reexamination. Wall Corp. v. BondDesk Group L.L.C., C.A. No. 07-844-GMS, Order (D. Del. Feb. 24, 2009). The Court noted that the only factor weighing against granting the stay was the delay caused by the reexamination. However, the Court found that “this delay does not, by itself, amount to undue prejudice.” Factors weighing in favor of the stay included: (1) the filing of the motion early in the case, and (2) that the defendant would be “estopped from making the same invalidity arguments that it makes to the PTO . . . in this case, because the reexamination is inter partes.” Id. at 2.

Wall Corp. v. BondDesk Group L.L.C., C.A. No. 07-844-GMS, Order (D. Del. Feb. 24, 2009).

Posted On: February 24, 2009

Sue L. Robinson: Convenience Transfer Warranted by Operations "Regional" in Scope

In the District of Delaware, parties with nationwide operations are often unsuccessful in seeking transfers out of the jurisdiction. This is especially true when Delaware corporations are involved. But a decision today by district judge Sue L. Robinson reminds litigants that the scope of operations can also favor a convenience transfer:

"Generally, I do not grant transfer motions unless there is a first-filed case in another district . . . or the defendant is truly a regional enterprise. Under the circumstances at bar, I find that defendant . . . is more akin to a regional enterprise than a national player. Therefore, I find it is appropriate to transfer the above captioned case to the Northern District of California, for the convenience of parties and witnesses and in the interest of justice."

The Court's focus on the movant's regional nature is consistant with another recent transfer decision, reported by us in August 2008.

Synthes USA LLC v. Spinal Kinetics Inc., C.A. No. 08-838-SLR (D. Del. Feb. 24, 2009) (Robinson, J.).

Posted On: February 23, 2009

Judge Sue L. Robinson: Form 18 Complies with post-Twombly Pleading Standard for Infringement Case

A great area of discussion since the Supreme Court's decision in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) has been whether the bare bones pleading requirements typically seen in a patent infringement complaint would be sufficient or whether more detail would be required. The District of Delaware, following Federal Circuit precedent, has confirmed that a complaint alleging infringement based on Fed. R. Civ. P. Form 18 (2006) will be sufficient to survive a motion to dismiss. S.O.I.TEC Silicon On Insulator Technologies, S.A. v. MEMC Electronic Materials, Inc., C.A. No. 08-292-SLR, Memo. Order (D. Del. Feb. 20, 2009). The Court found that a plaintiff does not need to specify particular products or manufacturing details nor does a plaintiff need to set forth specific factual allegations in support of a claim for willful infringement. Id. at 3-4.

S.O.I.TEC Silicon On Insulator Technologies, S.A. v. MEMC Electronic Materials, Inc., C.A. No. 08-292-SLR, Memo. Order (D. Del. Feb. 20, 2009).

Posted On: February 23, 2009

Mary Pat Thynge: Confirming Deposition Discovery Warrants Addition of Late Inequitable-Conduct Claim

In managing litigation, trial judges are often called on to enforce the structure of the case while simultaneously preserving the fluidity of the parties' claims. These competing goals take form in the rules governing scheduling orders and the amendment of pleadings, respectively. In a recent decision, Magistrate Judge Mary Pat Thynge resolved a meritorious, but untimely, motion to amend by reference to these competing policies.

Because the information forming the new inequitable-conduct allegations did not fully come to light until after several depositions, the Court granted the motion to amend:

"[T]he court finds that Amazon is pleading new legal theories based on additional information which was recently provided and confirmed through the depositions of the inventors. Although Cordance maintains that Amazon possessed the documents which form the basis of its inequitable conduct pleadings for more than a year, in light of the 'pleading with particularity requirement of Rule 9(b),' it was appropriate for Amazon to confirm the factual allegations through discovery."

By referencing the timing of the discovery, and the concomitant need for particularized detail in this instance, the Court adopted the fluidity goal at the expense of its structural counterpart. In making this determination, however, the Court did not lose sight of the institutional value of adhering to scheduling orders: the inequitable-conduct defense will likely be tried apart from the other issues in the case.

Cordance Corp. v. Inc., C.A. No. 06-497-MPT (D. Del. Feb. 18, 2009) (Thynge, M.J.).

Posted On: February 20, 2009

Guest Post - Magistrate Judge Stark: Discovery Behavior Not Exemplary But Not Bad Faith

The following post was graciously written by one of our fellow associates, Pilar Kraman.

On February 17, 2009, Magistrate Judge Stark granted defendant Hewlett-Packard’s Motion for Leave to Amend Answer and Affirmative Defenses. St. Clair Intellectual Property Consultants, Inc. v. Samsung Electronics Co., Ltd., C.A. No. 04-1436-JJF-LPS (D. Del. Feb. 17, 2009). The defendant sought to amend its answer to assert a license defense based upon a license agreement between the defendant and a third party. The plaintiff, St. Clair, argued that the Motion should be denied because the license agreement was covered by two discovery requests directed to the defendant by the plaintiff.

The Court was troubled by the defendant’s apparent failure to disclose the document. However, the Court noted that defendant’s discovery conduct, while not “exemplary,” did not rise “to the level of bad faith[.]” Moreover, the Court concluded that the plaintiff would not suffer undue prejudice due to the relative early stage of the case.

Author: Pilar Kraman is an associate in Young Conaway’s Intellectual Property Litigation and Commercial Litigation Sections. She focuses her practice primarily on patent litigation, trade secret and complex corporate and commercial litigation matters in the United States District Court for the District of Delaware and the Delaware Court of Chancery. During law school, Ms. Kraman served as a member of the University of Pittsburgh Journal of Technology Law & Policy, and completed an externship for the Honorable Henry duPont Ridgely of the Supreme Court of Delaware. Prior to law school, Ms. Kraman worked primarily in the social science research field. Most recently, she worked as a research analyst for the Council of State Governments where she studied issues and trends impacting state governments and proposed policy options.

St. Clair Intellectual Property Consultants, Inc. v. Samsung Electronics Co., Ltd., C.A. No. 04-1436-JJF-LPS (D. Del. Feb. 17, 2009).

Posted On: February 19, 2009

New District of Delaware Intellectual Property Case Filings

1/27: Vianix Delaware LLC v. Nuance Communications Inc. (copyright infringement)
1/29: Tales AG Informationstechnologien v. Cisco Systems, Inc. (patent infringement)
1/30: Cephalon Inc. and CIMA Labs Inc. v. Barr Pharmaceuticals, Inc., Barr Pharmaceuticals, LLC and Barr Laboratories, Inc. (patent infringement)
2/3: Masimo Corporation v. Philips Electronics North America Corporation, Philips Medizin Systeme Boblingen Gmbh (patent infringement)
2/10: Stena Rederi AB v. AAA Shipping No. 1 LLC (patent infringement)
2/12: Garden of Life Inc. v. Natrascience LLC (trademark infringement)
2/13: Picsel (Research) Ltd. and Piscel Technologies Ltd. v. Apple Inc. (patent infringement)
2/18: Milennium Pharmaceuticals Inc. and Schering Corporation v. Teva Parenteral Medicines Inc., Teva Pharmaceuticals USA, Inc. and Teva Pharmaceutical Industries Ltd. (patent infringement)

Posted On: February 19, 2009

Judge Joseph J. Farnan, Jr.: New Jury Verdict - CIF Licensing, LLC v. Agere Systems, Inc.

On February 17, 2009, a Delaware jury returned a verdict in the case of CIF Licensing, LLC, d/b/a/ GE Licensing v. Agere Systems, Inc., C.A. No. 07-170-JJF. The patents-in-suit, U.S. Patent Nos. 5,048,054, 5,428,641, 5,446,758 and 6,198,776, involve technology related to modems. The jury returned an infringement verdict against defendant on all four patents. For the '641 and '776 patents the jury found defendant Agere's infringement to be willful. The jury also found three of the patents invalid. The '054 and '758 patents were found invalid as they were anticipated by prior art. The '054, '758 and '776 patents were also found invalid as obvious in light of the prior art. The jury awarded damages to the plaintiff in the amount of $7.6 million (based on a 13.5% royalty rate for hardware modems and 4.5% royalty rate for software modems). A copy of the public version of the verdict form can be found below.

CIF Licensing, LLC, d/b/a/ GE Licensing v. Agere Systems, Inc., C.A. No. 07-170-JJF, Verdict Form (D. Del. Feb. 17, 2009).

Posted On: February 16, 2009

Joseph J. Farnan: “Comprising” Rule Inapplicable When Use Limited to Specification

Last week, district judge Joseph J. Farnan Jr. issued a Markman decision addressing the claims of a skin-care-product patent. Notable among the Court’s analysis is its discussion of the term “comprising” in the context of the specification. The Court considered, and rejected, defendants’ argument that, because the specification details that the invention comprises an “absorption enhancing material,” the claim at issue must also be defined to include an “absorption enhancer”:

“The Court is aware of no cases, and Defendants do not cite any, standing for the proposition that the term ‘comprising,’ when used in the specification, means ‘the listed ingredients are required.’”

According to the Court, the specification describes a number of components that no party contends are properly part of the claim’s scope. As a result, “the specification – including its passages that use the word ‘comprise’ – simply does not provide a clear and consistent basis upon which to limit the claims.”

Laboratory Skin Care Inc. v. Limited Brands Inc., C.A. No. 06-601-JJF (D. Del. Feb. 11, 2009).

Posted On: February 6, 2009

Joseph J. Farnan: Secondary ANDA Filer Demonstrates DJ Jurisdiction After Primary Delays Entry into Market

In an effort to curb collusive extensions of the 180-day exclusivity period between brand drug manufacturers and primary ANDA filers, Congress extended declaratory-judgment jurisdiction to secondary ANDA filers under the 2003 amendments to the Hatch-Waxman Act. Before, delayed-entry settlement agreements often blocked secondary filers from going to market. Now, however, secondary filers can hasten their entry if, among other statutory devices, the primary filer fails to take its generic to market within 75 days after a court judgment of invalidity or non-infringement.

But what happens when a brand manufacturer, after independently settling with the primary filer, offers the secondary filer a covenant not to sue on the very patent that forms the basis for the secondary filer's declaratory-judgment action (and hence the secondary filer's only potential means of early entry to the market)?

In a lucid opinion, district judge Joseph J. Farnan Jr. addressed this question by referencing the competing goals of Hatch-Waxman: "balanc[ing] the need for pharmaceutical innovation with the need for generic drug competition." At the outset, the Court acknowledged that, by accepting jurisdiction, a later judgment for the secondary filer would eliminate the primary's exclusivity period:

"[B]ecause of the settlement agreement between [the primary filer] and Sepracor, [the primary] may not go to market until August 2012. If, more than 254 days prior to this, [the secondary] were to attain a court judgment of non-infringement or invalidity of Sepracor's Orange Book patents, [the primary's] exclusivity period would be completed entirely before [the primary] could go to market."

Allowing jurisdiction, in other words, would frustrate the exclusivity incentive to challenge brand patents. The competing goal of resolving patent disputes in a timely fashion, however, ultimately took precedence:

"[A] signficant aspect of this [statutory goal structure] is to encourage the early resolution of patent disputes when subsequent Paragraph IV ANDA filers are blocked by a first generic applicant's 180-day exclusivity."

Although not explicitly stated, the Court's decision touches on equitable principles. Implicit in the Court's analysis is the delayed-entry settlement executed by the primary filer. By voluntarily waiting to launch its generic, the primary undermined its standing to claim the salutary benefits of exclusivity. Rather than reward the primary in this situation, the Court chose the route that actually fulfilled one of the statutory goals. In these circumstances, at least when declaratory-judgment jurisdiction is at stake, it appears that the secondary filer has the edge.

Dey LP v. Sepracor Inc., C.A. No. 08-372-JJF (D. Del. Jan. 30, 2009) (Farnan, J.).

Posted On: February 4, 2009

New District of Delaware Intellectual Property Filings

1/26: Proctor & Gamble Company and Hoffman-La Roche, Inc. v. Sun Pharma Global Inc. (patent infringement)
1/26: Pylon Manufacturing Corp. v. Jamak Fabrication-Tex LLC (patent infringement)
1/27: Vianix Delaware LLC v. Nuance Communications Inc. (patent infringement)
1/29: Teles AG Informationstechnologien v. Cisco Systems Inc. (patent infringement)
1/30: Cephalon Inc. and CIMA Labs Inc. v. Barr Pharmaceuticals Inc., Barr Pharmaceuticals, LLC and Barr Laboratories Inc. (patent infringement)

Posted On: February 3, 2009

Sue L. Robinson: Inventorship Claim on Chemical Patent Rejected

A recent decision by district judge Sue L. Robinson wades into the sometimes murky waters of inventorship. In the underlying litigation, Vanderbilt sought to add several of its professors as inventors to a chemical-compound patent held by ICOS. The requisite test, however, sets a high bar. Not only must plaintiffs demonstrate inventorship by clear and convincing evidence, but they must also navigate, as defined by the Federal Circuit, the "line between actual contributions to conception and the remaining, more prosaic contributions to the inventive process that do not render the contributor a co-inventor . . . ."

According to the Court, Vanderbilt failed to show an "actual contribution," and thus did not meet the clear and convincing standard. By doing so, the Court illustrated, at least in chemical cases, how best to draw the inventorship line:

"Ultimately, [. . . precedent] precludes the result plaintiff seeks: namely, that the contribution of a molecular scaffold in the context of one molecule . . . renders the disclosing party or parties inventors of a different family of molecules containing the same scaffold . . . . The chemical arts have frequently been characterized by the courts as 'unpredictable.' Minor modifications to a compound may drastically alter its properties and effectiveness; when isolated, particular portions of a molecule are likely to exhibit different chemical properties. For these reasons, the Federal Circuit has indicated that inventorship must be measured in terms of the complete chemical structure claimed as compared to its functional components, just as the validity and the scope of claims to chemical compounds are measured in terms of the complete chemical structure (and very close structural equivalents). The court declines to expand the reach of 35 U.S.C. 116 in the manner espoused by plaintiff."

Vanderbilt University v. ICOS Corp., C.A. No. 05-506-SLR (D. Del. Jan. 27, 2009) (Robinson, J.).

Posted On: February 3, 2009

Magistrate Judge Leonard P. Stark: No Stay for Pending Litigation Against Infringer

A pending appeal in the Federal Circuit between the same parties and involving the same patents is not enough to warrant a stay in pending litigation between the same parties and same patents in the district court. St. Clair Intellectual Property Consultants, Inc. v. Fujifilm Holdings Corp., C.A. No. 08-373-JJF-LPS, Memo. Op. (D. Del. Jan. 27, 2009). The defendant seeking the appeal was found to infringe the plaintiff's patents by a jury and the plaintiff brought the new action to seek damages for the defendant's infringement from the time of the earlier judgment to the present. The Court found that the fact that the defendant was already found to be an infringer and the prejudice to the plaintiff in delaying the action was too great to warrant a stay. Id. at 5. Further, the Court found that the damages issues will remain disputed regardless of the outcome of the appeal. Id. at 6. Finally, because this plaintiff has multiple suits against many defendants (including this one) that are currently coordinated for discovery and pretrial purposes, it would be inefficient for the Court to stay this one action. Id. at 6.

St. Clair Intellectual Property Consultants, Inc. v. Fujifilm Holdings Corp., C.A. No. 08-373-JJF-LPS, Memo. Op. (D. Del. Jan. 27, 2009).