Articles Posted in Designated Judges

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In Evonik Degussa GmbH v. Materia Inc., C.A. No. 09-636-NLH/JS (D. Del. June 30, 2014), Judge Noel L. Hillman, sitting by designation, considered plaintiff’s motion for partial summary judgment, arguing that defendant was precluded from raising claims or defenses in this case that had been previously litigated and decided in an interference proceeding before the USPTO.  Plaintiff argued that both claim and issue preclusion applied to issues of priority and validity.

Having first concluded that the PTO’s decision in an interference proceeding can be subject to claim or issue preclusion, id. at 14, the court denied the motion in most respects, largely because the claims at issue in the litigation recited broader subject matter than those at issue in the interference proceeding.  See, e.g., id. at 20-24.  The Court did grant the motion in part and precluded defendant from asserting invalidity under sections 102 and 103 based on issue preclusion.  Plaintiff argued the defendant was precluded from raising these arguments “because it chose not to assert such claims earlier out of self-interest.”  Id. at 30.  Applying case law from Delaware and other districts holding that patent validity is a single issue for purposes of issue preclusion, see id. at 31-32, the Court explained that since defendant “raised a validity challenge in the Interference, and validity is a single issue [for purposes of issue preclusion], [defendant] cannot later assert additional validity challenges under alternative theories of validity.”  Id. at 33.

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Judge Renée Marie Bumb, sitting by designation, recently considered Mylan Rule 60(b) motion and motion to enforce a settlement agreement with Endo, reached minutes before the Court issued its post-trial opinion in favor of Endo. Endo Pharms. Inc. v. Mylan Pharms Inc., C.A. No. 11-717-RMB (D. Del. Apr. 8, 2014 – unsealed June 2, 2014). After the Court issued its opinion in favor of Endo, Mylan filed a letter informing the Court that the parties had reached a settlement “in principle.” Id. at 3. Endo responded denying that the parties had reached an agreement, which prompted Mylan to seek the Court’s intervention and to file a Rule 60(b) motion for relief from the Court’s post-trial opinion and order. Id.

After trial, the Court instructed the parties to meet and confer regarding settlement. The parties did that, resulting in the exchange of a draft settlement and license agreement, exchanged while Mylan awaited final management approval of Endo’s offer. Id. at 12. The parties communicated this to the Court during a status conference held a few days prior to the Court issuing its post-trial opinion and order. Id. at 13. Shortly after the status conference, Mylan received final approval to accept Endo’s offer. Mylan contacted Endo via telephone and formally accept the offer, but 20 minutes later the Court issued its opinion and order. At that time, Endo informed Mylan that “nothing had been reduced to writing, and, in [Endo's] view, they did not have an enforceable agreement.” Id. at 18.

Regarding Mylan’s Rule 60(b) motion, Judge Bumb found that Mylan “established extraordinary circumstances justifying relief from final judgment” because the parties “entered into an oral settlement agreement prior to entry of the Court’s judgment.” Id. at 20. Judge Bumb found that the parties entered into an oral settlement agreement based on the following facts: (1) Endo made a “final” offer of settlement to Mylan, proposing three terms; (2) Endo never withdrew or amended its offer; and (3) Mylan accepted the offer, reciting the three terms, to which Endo responded “that’s great.” Id. at 24. Judge Bumb found that these facts demonstrated an intent to be bound “as it reflects [Endo's] understanding that an agreement had been reached as to the three terms[.]” Id. at 24-25. Endo argued that the oral agreement could not be enforced because the parties intended the agreement to be formalized in a written contract. Id. at 27. Judge Bumb disagreed. “Although the parties clearly intended that a written contract would ultimately be drafted, the record contains no evidence indicating that the parties made a settlement contingent upon the execution of a written agreement.” Id. at 28. The Court also determined that the agreement was enforceable because the three key terms agreed to were the “essential terms” required by the parties, even though other terms had not been completely worked out. Id. at 29-37.

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In Moneycat Ltd. v. PayPayl Inc., C.A. No. 13-1358-MSG (D. Del. May 15, 2014), Judge Mitchell S. Goldberg, sitting by designation, granted defendant’s motion to transfer to the Northern District of California.

As a threshold matter, Judge Goldberg addressed whether the motion was timely. Plaintiff argued it was not because Judge Goldberg’s “Policies and Procedures encourage the parties to make motions for a transfer prior to the Rule 16 scheduling conference, which occurred in this case over two months prior to [defendant] filing its motion to transfer. Second, [plaintiff] contends that transfer at this point—with the case having proceeded through substantial portions of discovery—would delay resolution of its infringement claims, particularly where [defendant] has refused to agree to continue on the same discovery schedule should the case be transferred.” Id. at 4. Even though “motions to transfer ought to be made as early in the proceedings as practicable” and the Court observed that, in light of the parties’ past litigation history, defendants should have been aware of what products would be accused and thus could have brought the transfer motion earlier, see id. at 5-6, the Court allowed the motion, noting that filing early transfer motions was not a hard and fast rule and that the case was still in its early stages. Id. at 6.

The Court then turned to the Jumara factors. Plaintiff is based in Israel, does not have a U.S. business presence, and has no apparent ties to Delaware. Under these facts, plaintiff’s forum choice was “not entitled to significant deference.” Id. at 7. The Court also observed that “there is reason to believe that [plaintiff] will have to send resources to the West Coast on occasion no matter where this case is tried, because much of the evidence and many of the witnesses in this case are in California,” the principal place of business of defendant. Id. Therefore, the Court “accord[ed] [plaintiff’s] choice of forum less deference than would otherwise be appropriate.” Id. at 8.

Defendant’s forum choice, where the claim arose, the convenience of the parties, the convenience of witnesses, and the location of books and records all weighed in favor of transfer, a key fact being that defendant’s activities regarding the accused services, records, and witnesses were largely in California or likely to be. See id. at 9, 10, 12. However, these factors only slightly favored transfer except for the convenience of the parties and the location of books and records. Id. at 15. As to the convenience of the parties, the Court noted differences in case law regarding the weight to afford the fact that a defendant is a Delaware corporation, which was the case here. Id. at 10-11. The Court followed the “decisions by considering [defendant’s] incorporation as weighing slightly in favor of denying transfer, but . . . decline[d] to give it significant weight. Overall, because neither party has a significant physical connection to Delaware, [the Court found] the convenience of the parties factor to weigh in favor of transfer” Id. at 11.

As to the public interest Jumara factors, all were neutral save practical considerations, which weighed in favor of transfer, the Court again citing the fact that the bulk of witnesses and evidence were in California. Id. at 13.

“Balancing these factors,” the Court concluded that defendant had “met its burden to justify transferring this action to the Northern District of California.” Id. at 15.

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Magistrate Judge Joel Schneider, sitting by designation, recently denied defendant Materia, Inc.’s motion to disqualify plaintiff Evonik Degussa DmbH’s expert on inequitable conduct issues. Evonik Degussa DmbH v. Materia, Inc., et al., C.A. No. 09-636-NLH-JS (D. Del. Apr. 2, 2014). Materia argued that disqualification was proper because its co-defense counsel, Nixon Peabody, retained the expert in the past “regarding an ‘ethics matter.’” Id. at 1. Materia argued that it would be substantially prejudiced because the past engagement would “stymie its effective cross-examination,” and that “fundamental fairness” warranted disqualification. Id. at 1-2. Magistrate Judge Schneider disagreed. “[D]isqualification is a drastic measure which should not be imposed except where absolutely necessary.” Id. at 2. Disqualification was inappropriate because Materia did not show that it was “objectively reasonable” for it to conclude that it had a confidential relationship with the expert and there was no evidence that any relevant confidential information was relayed to the expert. Id. at 2-3. Further, “policy and fairness” did not warrant disqualification because “[t]here is nothing unfair if Nixon Peabody is requried to cross-examine an expert it previously retained in an entirely unrelated matter.” Id. at 4. Evonik, on the other hand, would be prejudiced if its expert is disqualified because Evonik has the “right to qualified experts of its choice.” Id.

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In a recent post-trial decision, Judge Renee Marie Bumb of the District of New Jersey, sitting by designation, considered the validity of Endo’s patented drug for the treatment of migraines. Endo Pharmaceuticals Inc. v. Mylan Pharmaceuticals Inc., Civ. No. 11-717 (RMB/KW) (D. Del. Jan. 28, 2014). Mylan previously had conceded that it infringed under the Court’s claim construction, with which Mylan disagreed. Accordingly, the trial focused on whether Endo’s patent was invalid as obvious, as anticipated, for lack of written description, or for failure to enable. The Court found no basis to find the patent invalid, and entered judgment in favor of Endo. During trial, Endo filed a terminal disclaimer relating to two other asserted patents, and unequivocally represented to the Court that it was abandoning its infringement claims with respect to those two patents. The Court found that Endo’s strategic decision had the effect of waiving those claims, and held that Endo is judicially estopped from asserting those patents against the defendant in the future.

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In a recent Order, Magistrate Judge Joel Schneider of the District of New Jersey, sitting by designation, denied a defendant’s motion for attorneys’ fees, filed after the defendant prevailed on summary judgment and the plaintiff noticed its appeal. Bayer CropScience AG, et al., v. Dow AgroSciences LLC, C.A. No. 12-256 (RMB/JS) (D. Del. Jan. 10, 2014). Given that the plaintiff’s appeal of the summary judgment order was pending, the Court recognized it could either rule on the defendant’s motion for fees, defer ruling until after the appeal, or deny the motion without prejudice to refile at a later date. It viewed the first option as inefficient in light of the U.S. Supreme Court’s anticipated June 2014 decision in Icon Health & Fitness, Inc. v. Octane Fitness, a decision the Court anticipated would help “define and clarify the standard the Court must use to decide whether this is an exceptional case.” The Court also “[saw] no benefit to indefinitely delaying a ruling on [the plaintiff’s] motion” pending the resolution of the appeal, because such a potentially lengthy delay could result in faded memories about the issues addressed in the motion, especially if any of the attorneys involved left their current law firms. The Court decided, therefore, that the best option was to deny the motion without prejudice to the defendant’s re-filing it within 20 days of the Supreme Court’s issuance of its opinion in Octane Fitness.

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In a recent Letter Order, Magistrate Judge Joel Schneider resolved the parties’ dispute over the effective date of the Community of Interest (“COI”) doctrine. Evonik Degussa GmbH v. Materia Inc., C.A. No. 09-636-NHL-JS; Evonik Degussa GmbH v. Elevance Renewable Sciences, C.A. No. 10-200-NLH-JS, Letter Order (D. Del. Nov. 21, 2013). Plaintiff (“Evonik”) argued that the COI doctrine did not apply as between defendant (“Materia”) and UNO until May 3, 2007, the date Materia and UNO executed their “Second Amended and Restated Patent License Agreement” (“PLA”). Id. at 1. Materia, on the other hand, argued that the COI doctrine was applicable as early as January 12, 2007, when Materia and UNO signed a term sheet (“Term Sheet”) related to an amended and restated license agreement, or January 1, 2007, the Term Sheet’s effective date. Id.

Judge Schneider found that the COI doctrine’s effective date was not until May 3, 2007, the date that Materia and UNO signed the PLA. Id. at 2. As Judge Schneider explained, the “COI doctrine applies when two or more clients have a ‘common legal interest.’” Id. Judge Schneider highlighted that the Term Sheet specified that Materia and UNO did “not intend to be legally bound, unless and until a definitive License Agreement [had] been executed by both Parties.” Id. Judge Schneider therefore found that during the “negotiation period” between January 12, 2007 and May 3, 2007, Materia and UNO “were acting in their own and not the common best interest.” Id.

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Judge Noel L. Hillman of the United States District Court for the District of New Jersey, sitting by designation, recently granted a motion to drop two parties from the litigation pursuant to Rule 21. Evonik Degussa GmbH v. Materia Inc., et al., C.A. Nos. 09-636 (NLH/JS), 10-200 (NLH/JS) (D. Del. Sept. 30, 2013). The two parties previously were owners of the asserted patent, but during the course of the litigation assigned their rights, title, and interest in the patent to Materia Inc. They subsequently moved pursuant to Rule 21 to be dropped as parties, and the plaintiff opposed the motion.

Although the case did not present misjoinder or nonjoinder in the traditional sense, the Court explained that federal courts “agree that [Rule 21] may apply even in the absence of misjoinder or nonjoinder.” Id. at 4 (quoting Joseph v. Baxter Int’l Inc., 614 F. Supp. 2d 868, 874 (N.D. Oh. 2009) (quoting 4A Matthew Bender, Moore’s Federal Practice § 21.05 (2d ed.))). The Court added that “[a]t least one federal court has held that a party’s assignment of its interest in the patent-in-suit to another party nullifies its status as an indispensable party, and the assigning party is therefore dismissable from suit pursuant to Rule 21.” Id. at 5 (citing Biovail Labs., Inc. v. TorPharm, Inc., 2002 WL 31687610, at *2 (N.D. Ill. Nov. 26, 2002)). Here, the Court found that the two moving defendants, UNOF and UNORTF, had completely assigned their rights and responsibilities in the asserted patent to another party already in the litigation—Materia Inc. “[I]t is clear that UNOF and UNORTF no longer have a stake in the underlying infringement suit between Evonik and Materia. . . . As such, UNOF and UNORTF no longer maintain a sufficient interest in this case to justify their continuing presence. Therefore, since they are no longer indispensable or necessary parties to this dispute, their dismissal from suit is appropriate under these circumstances.” Id. at 6-7.

The Court rejected the plaintiff’s argument that it would be prejudiced in two ways if the parties were dropped. First, the Court disagreed that dropping the parties would result in the plaintiff being unable to obtain certain information during discovery. The Court noted that discovery had been ongoing for more than a year, and in any event the plaintiff would still be able to discover material from the dropped parties by way of subpoenas or, more likely, through Materia, whose assignment agreement indicated that Materia would be responsible for and comply with discovery requests relating to the dropped parties. Id. at 8. Second, the Court rejected the argument that dropping the two parties would prejudice the plaintiff’s ability to recover attorneys’ fees, explaining that the argument was entirely speculative at this point since the plaintif had not yet prevailed in the litigation. Id. at 10. Moreover, the assignment agreement indicated that Materia would be responsible for any attorneys’ fees award related to the dropped parties’ conduct in the litigation. Id. at 11. Although the plaintiff appears to have argued that this assurance was illusory because Materia might enter Chapter 11 bankruptcy, the Court explained that it could not “keep UNOF and UNORTF tethered as parties solely for the purpose of affording their adversary leeway in deciding how to obtain a speculative award for attorneys’ fees . . . .” Id. at 12. “Absent some indication of fraud or bad faith, a party’s filing for bankruptcy cannot serve as a legitimate reason to avoid the legal consequences of an otherwise properly executed assignment agreement. The Court also reminded the plaintiff that Materia had not yet entered bankruptcy, and there was no evidence in the record that it definitely would do so.

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Judge Hillman, sitting by designation from the District of New Jersey, has issued a Markman opinion in the patent dispute between Evonik Degussa GmbH and Materia Inc. The case involves two patents assigned to plaintiff Evonik, which are asserted against Materia, and a third patent assigned to third party plaintiff the University of New Orleans Foundation, which is asserted against Evonik. All three patents claim catalysts that facilitate olefin methathesis reactions. Evonik Degussa GmbH v. Materia Inc., et al., C.A. No. 09-636, at 1-9 (D. Del. Sept. 30, 2013). The Court construed the following terms of the patents-in-suit:
- “N-heterocyclic Carbene”
- “And”
- “Aryl”
The Court also adopted the parties’ agreed-upon construction of the term “Neutral Electron Donor.” Id. at 9-59.

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Magistrate Judge Schneider of the District of New Jersey, sitting by designation, recently issued an order granting in part and denying in part plaintiff’s application for the production of documents related to defendant’s licensing agreements. Sciele Pharma, Inc., et al. v. Lupin, Ltd., et al., C.A. No. 09-37-RBK-JS (D. Del. Jan. 28, 2013) (redacted version). The patents-in-suit in this infringement action relate to the treatment of diabetes. Id. at 8. Plaintiff requested five categories of “‘settlement and licensing documents’” for the purpose of assessing royalty damages; the details of one of these categories were redacted from the order. Id. at 1-2.

The focus of the Court’s analysis was on whether the patents in the requested agreements were “comparable” to the patents-in-suit, a relevant factor in examining a reasonable royalty calculation. Id. at 2-3. The Court first concluded that differences between the patents involved in the redacted category and the patents-in-suit did not affect whether these agreements were discoverable, but instead “[went] to their weight and admissibility;” because discovery is “a broader standard than admissibility,” the Court ordered production of these agreements. Id. at 6-7. The Court also granted plaintiff’s request as to agreements concerning biguanides, which is “in the class of compounds that includes metformin, the active ingredient” in plaintiff’s patented drug. Id. at 7-8. Plaintiff had sufficiently demonstrated comparability because the scope of discovery, “including determining whether a requested agreement is comparable, is interpreted broadly.” Id. at 8.

The Court denied plaintiff’s requests for agreements “concerning the treatment of diabetes” and “[o]ther extended release pharmaceutical characteristics” because they were “overbroad” and plaintiff had not shown that they were comparable. Id. at 8-9. But “a combination of [these two] requests [was] sufficiently comparable to be discoverable. [Defendant] will be Ordered to produce licensing agreements for other drugs for the treatment of diabetes that also have extended release pharmaceutical characteristics.” Id. at 9.

Having determined that defendant should produce some license agreements, the Court then analyzed whether it must also produce “communications concerning or associated with these agreements including negotiations, forecasts and analysis,” noting that such documents are generally “less probative and more prejudicial than the licenses themselves.” Id. at 9-10 (internal quotation marks omitted). The Court ordered production of such documents related to the redacted category based on its “similar[ity] to the issues in this case,” but denied the request as to all other categories, noting that their “minimal relevancy is outweighed by the cost, burden, prejudice and distraction the documents will generate.” Id. at 10-11.

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