April 7, 2014

Magistrate Judge Joel Schneider denies defendant's request to disqualify plaintiff's expert for previously working with defense counsel

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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February 5, 2014

Judge Bumb issues post-trial decision finding infringement of one valid patent.

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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January 23, 2014

Magistrate Judge Schneider denies motion for attorneys’ fees without prejudice.

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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December 6, 2013

Judge Schneider determines effective date of Community of Interest doctrine

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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October 15, 2013

Judge Hillman grants motion to drop former patent owners as parties following assignment.

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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October 9, 2013

Judge Hillman Construes Terms of Olefin Methathesis Catalyst Patents

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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February 7, 2013

Magistrate Judge Schneider grants in part, denies in part plaintiff’s request for defendant’s “settlement and licensing documents” for determination of royalty damages

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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November 20, 2012

Magistrate Judge Williams issues order compelling discovery of potentially infringing products made by third parties.

Magistrate Judge Karen M. Williams, of the District of New Jersey, sitting by designation, recently ruled on a dispute regarding the scope of permissible discovery into devices made by third parties. Tessera Inc. v. Sony Electronics, Inc., et al., C.A. No. 10-0838-RMB-KMW (D. Del. Nov. 15, 2012). At issue was alleged infringement of the plaintiff’s patents relating to “semiconductor products where multiple chips are stacked, one on top of another, typically for the purpose of facilitating their use in electronic devices where space is at a premium.” Id. at 2. A dispute arose after the plaintiff served discovery seeking information about accused products not identified in the complaint, or in an initial phase of discovery. Id. at 3. The defendant argued, among other things, that the discovery request improperly sought information not only about its products that incorporated its own infringing chips, but also about its “products that use chips made by third parties.” Id. at 8-9. The court found that because the plaintiff’s complaint alleged infringement based on the defendants’ making, using, selling, offering for sale in, or importing into the United States infringing chips, the plaintiff’s “claims purport to include not only chips manufactured by [the defendants] and products using [the defendant's] chips, but also potentially [the defendant's] products including chips manufactured by other third party companies that allegedly infringe [the] patents.” Id. at 10-11. The court held that the plaintiff’s discovery was permissible under Rule 26, which allows “[p]arties [to] obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense.” Id. at 9, 11. The court also found that Rule 26 permitted the plaintiff to seek discovery not only about products the defendant knew were being made, used, sold, offered for sale in, or imported into the United States, but also about any products the defendant “had reason to believe were being made, used, sold, offered for sale in or imported into the United States.” Id. at 11.

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July 12, 2012

Court denies motion to compel production of expert interview notes, summaries

Magistrate Judge Schneider of the District of New Jersey, sitting by designation, recently issued a letter opinion denying a party's motion to compel the production of notes and summaries prepared by its counsel regarding interviews with expert witnesses. Bayer CropScience AG v. Dow AgroSciences LLC, C.A. No. 10-1045 (RBK/JS) (D. Del. July 6, 2012). Although Dow claimed it was seeking only facts through its discovery request, Judge Schneider found that "the facts included in the documents are inextricably intertwined with the core work product of Bayer's attorneys and they cannot be separated. Bayer's notes are replete with counsel's opinions, impressions, strategy, etc., and the Court finds that it is not feasible or practical to separate the core work product from the remainder of the documents." Id. at 1-2. Judge Schneider added that Bayer would not be required to summarize the facts from its expert interviews in interrogatory answers, citing the Supreme Court's seminal decision in Hickman v. Taylor, 329 U.S. 495, 512-13 (1947). Id. at 2 n.1.

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June 19, 2012

Magistrate Judge Schneider denies motion for leave to amend infringement and invalidity contentions.

Magistrate Judge Schneider of the District of New Jersey recently reminded parties of the appropriate showing that must be made in connection with a motion for leave to amend infringement and invalidity contentions. Bayer CropSciences AG v. Dow AgroSciences LLC, C.A. No. 10-1045 (RMB/JS) (D. Del. June 7, 2012). The Court explained, “the key fact courts should look at to determine whether good cause exists to grant an amendment to a contention is the diligence of the moving party. Diligence has two aspects to it. One is whether the moving party acted diligently to discover that an amendment was appropriate. The second aspect is whether the moving party promptly moved to amend its contentions after it learned an amendment was necessary.” Id. at 3 (citing O2 Micro Intern. Ltd. v. Monolithic Power Systems, Inc., 467 F.3d 1355, 1365-67 (Fed. Cir. 2006)). In denying the motion, the Court explained, “good cause is not established simply because a party desires to respond to an amended contention. Otherwise, there would be a never ending series of amendments.” Id. at 4. In this case, Dow’s motion “did not demonstrate why its latest proposed amendment could not have been asserted earlier or why Bayer’s amendment was not anticipated.” Id.

The Court also rejected Dow’s attempt to amend its contentions through an incorporation by reference of its summary judgment briefs, explaining “[t]he Patent Rules [of the District of New Jersey] incorporated into the Court’s Scheduling Order provides that contentions may only be amended by motion. The mere fact of filing a brief is insufficient to amend a contention.” Id. at 5. Moreover, the Court explained that “Dow has not demonstrated why the contentions in its briefs were not included in its earlier filed contentions.” Id. at 6. Finally, the Court denied Dow’s attempt to add two prior art references “that were both discovered recently,” explaining that Dow’s motion “did not attempt to establish good cause for its failure to previously identify the references.” Id.

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