Delaware IP Law Blog

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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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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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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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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The Court recently denied, without prejudice, a defendant’s motion for leave to file an amended answer, and in the process addressed the appropriate standard for pleading inequitable conduct in light of the Federal Circuit’s opinion in Therasense, Inc. v. Becton, Dickinson and Co., 649 F.3d 1276 (Fed. Cir. 2011). Bayer Cropscience AG v. Dow Agrosciences LLC, C.A. No. 10-1045 (RMB/JS) (D. Del. Apr. 12, 2012). In Bayer Cropscience, the defendant sought to amend its answer to add an inequitable conduct counterclaim and related affirmative defense. The plaintiff opposed the proposed amendment, arguing that the amendment was futile because it failed to allege facts upon which the “single most reasonable inference” to draw was that the inventor specifically intended to deceive the PTO. Id. at 9-10. The Court, citing then-Magistrate Judge Burke’s recent report and recommendation in Wyeth Holdings Corp. v. Sandoz, Inc., C.A. No. 09-955-LPS-CJB (D. Del. Feb. 3, 2012) (adopted by Judge Stark on March 1, 2012), explained that Therasense “discussed the evidentiary standard to be used at trial … [and] did not evaluate the sufficiency of the parties’ pleadings.” Id. at 10. Accordingly, the Court explained that the appropriate standard was not the “single most reasonable inference” standard articulated in Therasense, but instead was whether, under Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312 (Fed. Cir. 2009), the defendant "pled sufficient facts from which a reasonable inference can be drawn that material information was not given to the PTO because [the plaintiff] specifically intended to deceive the PTO.” Id. at 10-11.

The Court found that it could not reasonably infer from the facts alleged in the proposed amended answer "that [the inventor] had a specific intent to deceive the PTO simply because he did not reveal one aspect of the results published in his 1995 article.” The Court added, “[t]his is especially true since [the defendant] does not allege that [the inventor] had any role or involvement in the prosecution of the ‘401 patent … [or that the inventor] had a direct personal stake in the outcome of the prosecution.” Id. at 11-12. Further, the defendant’s argument that the inventor specifically intended to deceive the PTO was “at odds with the objective fact that [the inventor] published the allegedly incriminating information...” in a paper while the ‘401 patent was being prosecuted: “The Court agrees with [the plaintiff’s] argument that ‘[the defendant] offers no reasonable explanation for why [the inventor] would tell the whole world in a later publication something he didn’t want the PTO to know.’” Id. at 12.

Although the Court found Exergen, and not Therasense, to be the appropriate pleading standard for inequitable conduct, it explained that Therasense was nevertheless relevant because it rejected the former “sliding scale” analysis under which intent could be inferred based upon a showing that material information was withheld, or under which withheld information could be inferred to be material where an intent to deceive was sufficiently alleged. Id. at 7, 12-13 (citing Therasense, 649 F.3d at 1290-91).

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In Tessera, Inc. v. Sony Electronics Inc., et al., C.A. No. 10-838-RMB (D. Del. Mar. 30, 2012), Judge Bumb, sitting by designation, denied defendant Renesas motion to transfer to the Northern District of California distinguishing the Federal Circuit's decision in In re Link A Media. Renesas, a Japanese corporation with its principal place of business in Japan, argued that Link A Media supported transfer. Id. at 9 n.4. Judge Bumb disagreed noting that in Link A Media the Federal Circuit "found that the District Court had placed undue weight on the plaintiff's choice of forum where the plaintiff filed suit in Delaware and the only meaningful connection with Delaware was the defendant's incorporation in Delaware. Here, in contrast, . . . the deference afforded Plaintiff's choice of forum is appropriately grounded in Plaintiff's own incorporation in Delaware." Id. (emphasis in original) (internal citations omitted).

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In Neev v. Abbot Medical Optics, Inc., C.A. No. 09-146-RBK (D. Del. Mar. 26, 2012), the plaintiff was the owner and inventor of a patent encompassing a laser used in LASIK corrective vision surgery.  He brought suit against the defendant for its sale of a product used in LASIK, and the defendant asserted invalidity and noninfringement counterclaims.  After holding a Markman hearing, the Court adopted several claim constructions the parties had agreed upon and construed the following terms itself:

• “operating the source and manipulating the beam parameters”
• “manipulating beam parameters”
• “manipulating parameters of the beam”
• “adjusting characteristics of the electromagnetic radiation beam”
• “varying at least one of the following beam parameters”
• “interaction energy transients”
• “preparing the target region of the target material by spatially or temporally varying at least one of an absorption characteristic of the material or a scattering characteristic of the material at the target region”
• “operating the source at a pulse repetition rate greater than 0.1 pulses per second until a target volume in the target region has been modified”
• “allowing interaction energy transients caused by the electromagnetic pulses to substantially decay so that material modification is effected”
• “allow interaction energy transients caused by the pulsed electromagnetic radiation beam to decay sufficiently such that the material can be modified”
• “cumulative residual thermal energy left in the material by a pulse train”
• “controlled, variable rate material modification”
• “highly controllable, variable rate material removal”
• “target material”
• “target region”
• “material removal by a continuously emitting, continuous wave (CW) beam of electromagnetic radiation”
• “continuously emitted electromagnetic radiation”
• “redistributing the beam in time and space to form at least one modified beam comprising a plurality of pulses”
• “plasma”

The Court adopted the defendant’s construction of “target region” and “target material,” but adopted the plaintiff’s construction of all other terms.  The Court also denied the defendant’s motion to strike parts of the plaintiff’s opening Markman brief, finding that the sections in question, which explained the state of the known research in the field as well as the plaintiff’s state of mind at the time of the plaintiff’s invention, were relevant and were not hearsay.

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After a recent bench trial in a Hatch-Waxman infringement suit, the court entered a judgment of infringement with respect to two patents and noninfringement and invalidity with respect to two other patents.  The court then denied cross-motions to amend judgment, finding that the parties had not met the high burden of showing a “manifest error of law or fact.”  Alcon Research Ltd. v. Barr Laboratories Inc., C.A. No. 09-318-LDD (March 16, 2012) at 2.
Looking first at the arguments of Alcon Research, the court rejected the contention that it should not have made findings that neither party’s experts requested.  This position, the court explained, was incorrect because a District Court has discretion to make findings of fact relevant to its decision and it “would not act prudently by merely parroting the position of one expert or another, especially when [it has] concerns about those experts.”  Id. at 3.  The court also refused to amend findings that it found were supported by the facts and rejected arguments that were not advanced at trial, as a motion to amend findings does not allow a party a “second bite at the apple.”  Id. at 4-7.
The court then turned to the arguments of ANDA product manufacturer Barr Laboratories.  Barr argued that, although Alcon had never actively litigated two patents during the course of the trial, Alcon also had not dismissed those patents from its complaint.  The court had denied judgment as a matter of law of noninfringement on these two patents at the close of Alcon’s case because Alcon had never placed them at issue.  Barr argued then and on its motion to amend the judgment that because the patents had never been formally dismissed, it needed a judgment of noninfringement in order to launch its generic.  Despite the “cursory manner” in which the issue was raised at trial, the court reached the merits of the motion and determined that under Tol-O-Matic Inc. v. Proma Produkt-Und Marketing Gesellschaft m.b.H., 945 F.2d 1546 (Fed. Cir. 1991) and 800 Adept, Inc. v. Murex Sec., Ltd., 539 F.3d 1354 (Fed. Cir. 2008), it had been correct to deny Barr’s motion for judgment of noninfringement.  Under these cases, the court found, “a complaint alone cannot support a judgment on claims not actually placed in issue at trial.”  Rather, a counterclaim or declaratory judgment claim is necessary to keep “the involved patent claims ‘at issue’ and give[] the patentee fair notice that he must introduce evidence of infringement at trial or risk an adverse judgment.”  Id. at 13-19.

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In a recent opinion, Chief Judge Simandle of the District of New Jersey, sitting by designation pursuant to 28 U.S.C. § 292(b), held in connection with a motion to dismiss a declaratory judgment action for lack of subject matter jurisdiction that discovery requests in a case between the parties in another forum created an actual controversy. W.L. Gore & Assocs., Inc. v. AGA Medical Corp., C.A. No. 11-539 (JBS-KMW) (D. Del. Mar. 13, 2012). AGA filed suit against Gore in the District of Minnesota alleging that Gore’s occluder device for treating heart defects infringed the ‘738 patent. In that action, AGA sought discovery relating to a new Gore occluder device that was not accused in the Minnesota action. Id. at 5. Gore responded by filing a declaratory judgment action in the District of Delaware seeking a declaration that its new occluder device did not infringe the ‘738 patent, or the related ‘552 patent. Id. at 6. The Court found, with respect to the ‘738 patent, that “a substantial controversy existed at the time the action was commenced” because AGA served a discovery request in the Minnesota action relating to Gore’s new device and expressly told the Minnesota court that the discovery was justified because AGA might need to amend its complaint to include a claim based on the new device. Id. at 16. However, the Court held it lacked subject matter jurisdiction with respect to the '552 patent because it was not at issue in the Minnesota action and was not the subject of AGA's discovery requests there. Id. at 15-16. Finally, the Court found it could not exercise personal jurisdiction over AGA because its Delaware sales amounted to less than 0.5% of its total sales, and it otherwise lacked continuous contacts with Delaware. Id. at 22. The Court rejected Gore's argument that AGA was subject to specific personal jurisdiction in Delaware because it filed suit against Gore, a Delaware corporation, in Minnesota. The Court distinguished the situation before it from others where, for example, the patentee sends cease and desist letters into the forum state satisfying the forum’s long-arm statute. Here, in contrast, AGA did nothing to enforce its patent against Gore "in Delaware." Id. at 24. As an alternative to dismissal under Rule 12(b)(2), the Court transferred the case to the District of Minnesota, AGA’s home state where the parties were litigating over the same patent. Id. at 25.

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In Bayer CropScience AG v. Dow Agrosciences LLC, C.A. No. 10-1045 (RBK-JS) (D. Del. Mar. 1, 2012), defendant asked the court to compel plaintiff to supplement its responses to defendant’s requests for admission.  Defendant argued that plaintiff’s responses were inappropriate because plaintiff “substituted its own definitions for those [defendant] supplied.”  Id.  Plaintiff responded that it simply qualified its responses and that the definitions were “misleading and vague[.]”  Id.  The requests at issue address monooxygenase enzymes and dioxygenase enzymes.  Id.  The court held that plaintiff did not have to further respond to defendant’s requests until after the Court issues its claim construction ruling because the court’s construction of those terms are, “[i]f not the most important issue in the case, . . . undoubtedly a central issue in the litigation.”  Id. at 2. 

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