Delaware IP Law Blog

Chief Judge Sleet recently issued an opinion on a 12(b)(6) motion to dismiss in Mark IV Industries Corp. v. Transcore, L.P., C.A. No. 09-418-GMS (D. Del. Dec. 2, 2009). Defendant Transcore moved to dismiss Mark IV's complaint based mainly on Mark IV's failure to adequately plead its infringement claims under Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), because the complaint "lacks sufficient specificity and factual support." Id. at 4.

Transcore argued that Iqbal overrode previous Federal Circuit precedent holding that a complaint need only cite the asserted patent as a whole, and not each element of the claims of the asserted patent, and that "a plaintiff is not required to plead specifics as to how an allegedly infringing product works." Id. at 5-6. The Court disagreed, and held that the Federal Circuit precedent remains valid after Iqbal, and that complaints that comply with FRCP Form 18 (setting out the structure of an infringement complaint) are still sufficient. Id. at 6-7.

Transcore also included allegations that the complaint was brought in bad faith (the Court found no bad faith), and that the suit was precluded by a prior agreement between the parties that contained a mediation provision. Id. at 7. The Court held that a 12(b)(6) motion to dismiss was not the proper "avenue[] of attack" such a provision, but kindly directed Transcore towards "a Rule 7(a) counterclaim and a motion to compel" instead. Id. at fn. 1.

Mark IV Industries Corp. v. Transcore, L.P., C.A. No. 09-418-GMS (D. Del. Dec. 2, 2009)

A party requesting a preliminary injunction in an infringement case must meet a high burden in showing a likelihood of success on the merits, irreparable harm, a balance of hardships in favor of the moving party and that an injunction is in the public's interest. CNH America LLC v. Kinze Manufacturing, Inc., C.A. No. 08-945-GMS, Memorandum (D. Del. Nov. 13, 2009). In CNH America, the plaintiff failed to establish all four factors. Id. at 2. On the merits, the defendant argued that CNH America failed to disclose certain prior art references that would have rendered the patent invalid and that it breached its duty of candor to the PTO by "remaining silent" about a prior art reference during reexamination and "affirmatively misrepresenting the scope of the prior art." Id. (internal citations omitted). The court found that these assertions "were sufficient to raise a substantial question as to invalidity" and that similar questions exist as to infringement. Id. at 3.

Additionally, the Court found that CNH America's irreparable harm arguments were "largely speculative" and the damages are no more difficult to calculate than in most patent infringement suits. Id. at 3. Finally, this was a case where money damages are appropriate and therefore, an injunction is not in the the public's interest. Id. at 4.

CNH America LLC v. Kinze Manufacturing, Inc., C.A. No. 08-945-GMS, Memorandum (D. Del. Nov. 13, 2009).

The District Court of Delaware in LG Electronics U.S.A., Inc. v. Whirpool Corporation, found that a "formulaic recitiation of the elements of the Lanham Act and Delaware Deceptive Trade Practices" with the insertion of Whirpool's name is insufficient to meet the pleading requirements set forth in Bell Atlantic Corp. v. Twombly. The party making the claim must assert specific factual allegations, not just legal conclusions. Id. at 2-3.

Note: LG Electronics argued that additional factual details supporting its claims were found in its reply brief on the motion to amend. Id. at 2 n.1. The Court, however, declined to consider these facts as the material was not an "integral" part of the complaint. Id. (internal citations omitted).

LG Electronics U.S.A., Inc. v. Whirpool Corporation, C.A. No. 08-234-GMS, Memo. Order (D. Del. Nov. 9, 2009).

In the Court's post-trial decision in In Re Brominidine Patent Litigation, the Court found that the defendants' ANDA products infringed the asserted patents and that defendants failed to prove invalidity. MDL Docket No. 07-md-1866-GMS, Memorandum (D. Del. Oct. 23, 2009). In addition, the Court granted plaintiff's motion for judgment as a matter of law on "numerous prior art references and combinations of references that were not discussed or referred to by any witness at trial." Id. at 42.

In Re Brominidine Patent Litigation, MDL Docket No. 07-md-1866-GMS, Memorandum (D. Del. Oct. 23, 2009).

In Linear Technology Corporation v. Monolithic Power Systems, Inc., C.A. No. 06-476 GMS (D. Del. Nov. 12, 2009) Judge Sleet denied Defendant's JMOL Motion on the issue of obviousness. Id. at 5. Judge Sleet noted that Fed. R. Civ. P. 50(a) requires a JMOL motion to be submitted before the case is turned over to the jury. Id. Then, Fed. R. Civ. P. 50(b) permits the renewal of the JMOL motion after the jury returns a verdict. Id. However, "[a] party dissatisfied with a jury verdict may not prevail on a post-verdict JMOL motion based on grounds not raised in a pre-verdict JMOL motion. By logical extension, when a party fails to file a pre-verdict JMOL altogether, any grounds for JMOL sought by way of a post-verdict motion must be denied." Id. (internal citations omitted).

Linear Technology Corporation v. Monolithic Power Systems, Inc., C.A. No. 06-476 GMS (D. Del. Nov. 12, 2009)

Chief Judge Sleet recently issued a memorandum opinion on a motion to dismiss and transfer in CNH America LLC v. Kinzenbaw, C.A. No. 08-945-GMS (D. Del. Nov. 9, 2009) (mem.), a patent infringement case. Defendants in the case include Kinzenbaw, an Iowa resident, and his Delaware corporation (based in Iowa), Kinze Manufacturing. Id. at 1, 5.

The Court granted the motion to dismiss as to Kinzenbaw the individual, based on lack of personal jurisdiction. Id. at 2-3. Plaintiff had alleged jurisdiction on Kinzenbaw based on corporate veil piercing of his Delaware corporation, because Kinzenbaw failed to uphold many corporate formalities (traditionally a key factor in veil piercing), and because he had the "capacity" to siphon money from the corporation. Id. According to the Court, plaintiff was correct that "[a]lter ego liability and corporate veil piercing theories function to prevent an independent corporation from being used to accomplish injustice or evade the law," but it failed to show any injustice or evasion of the law here. Id. Disregard of formalities is only one factor in a veil piercing analysis, and "capacity" to siphon money is different from actually siphoning money. Id.

Kinze Manufacturing, however, remained in the case. As usual, the Court denied Kinze's motion to transfer, despite Kinze's arguments regarding the location of witnesses and documents. Id. at 3-5.

CNH America LLC v. Kinzenbaw, C.A. No. 08-945-GMS (D. Del. Nov. 9, 2009) (mem.)

Jurisdictional discovery is a valuable tool that can be used to stave off an action's dismissal for a lack of personal jurisdiction. A recent decision by Chief Judge Gregory M. Sleet provides a roadmap for this type of discovery, at least where the formation of a separate Delaware entity comprises the jurisdictional dispute. After deferring decision on the underlying motion, the Court ordered the following discovery:

"(1) [Movant's] role in the formation, investment in, or contribution to any of the Delaware entities [at issue]; and (2) [the alleged alter ego's] corporate structure, as well as [movant's] role within that structure. Such discovery shall include, but is not limited to, all correspondence between [movant] and the State of Delaware Department of State, and all correspondence between [movant] and any State of Delaware registered agents."

Gannett Satellite Information Network Inc. v. Office Media Network Inc., C.A. No. 08-96-GMS (D. Del. Oct. 23, 2009) (Sleet, C.J.).

Claim construction often can be a complex affair - or not. In a recent decision, Chief Judge Gregory M. Sleet construed several terms according to their plain meaning. By doing so, the Court reminded practitioners of the Federal Circuit's admonition that not all claims must be rephrased:

"In some cases, the ordinary meaning of claim language as understood by a person of skill in the art may be readily apparent even to lay judges, and claim construction in such cases involves little more than the application of the widely accepted meaning of commonly understood words."

Hesco Bastion Limited v. ACS Holdings USA, LLC, C.A. No. 08-266-GMS (D. Del. Oct. 20, 2009) (Sleet, C.J.).

In an order issued in Grape Technology Group, Inc. v. Jingle Networks, Inc., Chief Judge Sleet pronounced in a footnote that the Court will impose a limit of 10 disputed claim terms per patent for claim construction in all future patent actions. Specifically, he noted:

"Although disinclined to do so in the past, the court - regrettably - will impose a limit of 10 disputed terms per patent for claim construction in this and all future patent actions." Grape Technology Group, Inc. v. Jingle Networks, Inc., C.A. No. 08-408-GMS, Order, at n. 1 (D. Del. October 20, 2009).

Grape Technology Group, Inc. v. Jingle Networks, Inc., C.A. No. 08-408-GMS, Order (D. Del. October 20, 2009).

In Aventis Pharma S.A. v. Hospira, Inc., Judge Sleet construed several terms related to three patents on technology involving taxane (an anti-cancer drug) derivatives. C.A. Nos. 07-721-GMS, 08-496-GMS, Amended Order (D. Del. Oct. 5, 2009).

- "stock solution": The Court construed this term consistent with its plain meaning to mean "a concentrated solution."

- "essentially free or free of ethanol": The Court construed this term to mean "no more than 5% ethanol by volume" for a stock solution" and "the same amount of ethanol as a stock solution with no more than 5% ethanol by volume" for a perfusion.

-"dissolved": The Court gave this term its plain and ordinary meaning.

-"consisting essentially of": The Court construed this common claim term to mean "composed of the listed ingredients and may include other ingredients that do not affect the basic and novel properties of the invention."

-"which contains": The Court foundt his term to be an open ended term which does not exclude additiona ingredients and therefore construed the term mean "comprising."

-"Taxotere": The Court construed this term to mean the chemical compound "docetaxel."

-"capable of being injected without anaphylactic or alcohol intoxication manifestation": The Court construed this term to mean "having reasonable expectation of being injected without causing anaphylactic or alcohol intoxication manifestation."

Aventis Pharma S.A. v. Hospira, Inc., C.A. Nos. 07-721-GMS, 08-496-GMS, Amended Order (D. Del. Oct. 5, 2009).

In a brief Markman order, Chief Judge Sleet construed the following terms:

• "Controlled release pellet formulation," construed to mean "an oral composition formulated to ensure that the active compound is released preferentially at the site of the disease to be treated." Id. at 1-2.


• "A core consisting of a non-pareil seed," construed to mean "the innermost part of the pellet consisting of a non-pareil seed and optionally one or more pharmaceutically acceptable excipients." Id. at 2.


• "A core consisting of ... a seed in which a glucocorticosteroid as defined in this claim is homogenously distributed," construed to mean "the innermost part of the pellet consisting of a non-pareil seed and optionally one or more pharmaceutically acceptable excipients.'" Id. at 2-3.
  
• "A layer surrounding said core," construed to mean "a coating enclosing on all sides said core." Id. at 3. Chief Judge Sleet further defined "coating" as synonymous with "layer" in the context of this claim.


• "About," construed to mean "approximately." Id. at 3. Chief Judge Sleet noted that "[t]he court is mindful that the word 'about' cannot be read out of a claim that cites a numeric range," but held that "any deviation from the recited range must be minimal" in this case due to restrictions in the prosecution history and the specification. Id. at fn. 7.


• "A membrane surrounding both said core and said surrounding layer," construed to mean "a coating enclosing on all sides both said core and the layer surrounding said core." Id. at 4.


• "Crohn's disease in the small intestine as relapse preventing therapy," construed to mean "Crohn’s disease of the small intestine, where treatment is used to maintain symptom control once remission has been achieved." Id. at 4.


• "Controlled release pharmaceutical formulation," construed to mean "an oral composition formulated to ensure that the active compound is released preferentially at the site of the disease to be treated." Id.

AstraZeneca LP v. Mylan Pharmaceuticals Inc., C.A. No. 08-305-GMS (D. Del. Oct. 5, 2009)

08-305_08-453

Chief Judge Gregory M. Sleet recently issued a claim-construction opinion notable for what it did not construe. On review of a magistrate judge's recommendation, the Court rejected the defendants' attempts to argue issues beyond the scope of the Markman proceeding:

"The defendants have also made a number of claim differentiation . . . and other invalidity arguments, though they couched these arguments as claim construction objections. Such validity arguments are not properly resolved at the claim construction stage."

The Court's decision stands as a warning to D. Del. practitioners: aggressive Markman tactics will not succeed in this district. (See also footnote 5 of the Court's opinion.)

Forest Laboratories Inc. v. Cobalt Laboratories Inc., C.A. No. 08-021-GMS-LPS (D. Del. Sept. 21, 2009) (Sleet, C.J.).

Chief Judge Sleet recently decided a case where plaintiff, a law firm that had helped to prosecute a patent, tried to claim an equitable interest in the patent after their client’s alleged failure to pay their fees. Huntley, L.L.C. v. Monterey Mushrooms, Inc., C.A. No. 08-377-GMS, at 1 (D. Del. Sept. 18, 2009). The firm then tried to make an infringement claim against a subsequent assignee based on the firm’s supposed equitable interest. Id. at 3-4. Chief Judge Sleet denied both claims, noting that the firm’s engagement letter said nothing about a potential assignment of the patent or any equitable interest in it. Id. at 7. While the firm had filed a "Notice of Equitable Claim" with the PTO, that filing was “inconsequential” standing alone, as it was signed only by the firm. Id. The court also rejected Huntley's claim of a "grantor's lien" in the patent, pointing out the lack of legal support for "this rather novel proposition." Id. at 7-8. With plaintiff having no interest in the patent, Judge Sleet granted defendant's motion to dismiss for lack of standing. Id. at 8.

Huntley, L.L.C. v. Monterey Mushrooms, Inc., C.A. No. 08-377-GMS (D. Del. Sept. 18, 2009).

More and more frequently, courts are having to deal with concurrent reexamination proceedings in the USPTO while parties are litigating the same patents in the district court forum. In Automotive Technologies Int'l, Inc. v. American Honda Motor Co., et al., certain defendants filed a reexamination on eight of twelve of the patents that plaintiff asserted against them in litigation filed in the District of Delaware and subequently moved to stay the litigation. C.A. Nos. 06-187-GMS, 06-391-GMS, Memo. Order (D. Del. Sept. 15, 2009). This Court granted the motion to stay. Over a year and a half later, the PTO reissued two of the patents-in-suit and reaffirmed certain claims without amendment. Id. at 2. Because of this action at the PTO, the plaintiffs moved the court to lift the stay. The Court denied the motion finding that because "reexamination proceedings are still underway for six of the eight asserted patents" and "all of the claims presently asserted against the defendants stand rejected by the PTO" lifting the stay was not appropriate. Id. at 4. The Court further found that continuing the stay could simplify the issues for trial and conserve both the parties' and the Court's resources. Id. at 4.

Automotive Technologies Int'l, Inc. v. American Honda Motor Co., et al., C.A. Nos. 06-187-GMS, 06-391-GMS, Memo. Order (D. Del. Sept. 15, 2009).

Chief Judge Sleet recently construed the terms of a pharmaceutical patent related to treatment of dysuria. In re: Alfuzosin Hydrochloride Patent Litigation, MDL Docket No. 08-md-1941-GMS, Order (D. Del. May 20, 2009). The following claim terms were construed:

- "dysuria"
- "effective dysuria controlling non-toxic amount of alfuzosine"
- "bladder neck disease"
- "neurological disorder"
- "benign hypertrophy of the prostate of alpha-adrenergic origin"

Specifically, the Court rejected certain proposed constructions where the party asked the Court to "import examples from the specification into the claims" as "contrary to Federal Circuit precedent." Id.

In re: Alfuzosin Hydrochloride Patent Litigation, MDL Docket No. 08-md-1941-GMS, Order (D. Del. May 20, 2009).

In a patent infringement case, Chief Judge Sleet recently denied Defendant’s motion to dismiss for lack of personal jurisdiction despite the fact that Defendant (a Georgia corporation with its principal place of business in Georgia) has never had an office in Delaware, is not licensed to conduct business in Delaware and has never had any employees in Delaware. W.L. Gore & Assoc., Inc. v. Label Tech., Inc., No. 08-111-GMS, at 1 (D. Del. May 15, 2009). Judge Sleet determined that Defendant was subject to specific jurisdiction under Delaware’s long-arm statute because Defendant manufactures and sells automobile parts “knowing that its products would be installed into vehicles at Chrysler’s plant in Newark, Delaware.” Id. at 4 Any injury resulting from introducing Defendant’s product into the Delaware market is “sufficient to permit a Delaware court to exercise jurisdiction over [Defendant] under sections 3104 (c)(1) and (c)(4) of title 10 of the Delaware Code” Id. at 6. Although Defendants “contacts” with Delaware was minimal, due process is satisfied because Delaware’s interest in “discouraging injuries that occur within the state, which extends to patent infringement actions[,] is not outweighed by the burden on [Defendant] of litigating this action in Delaware.” Id. at 6-7.

W.L. Gore & Assoc., Inc. v. Label Tech., Inc., No. 08-111-GMS, at 1 (D. Del. May 15, 2009)

Chief Judge Sleet recently granted, in part, plaintiff’s motion to enforce the parties’ settlement agreement to dismiss the case. Rohm and Haas Electronic Materials, LLC v. Honeywell International, Inc., C.A. No. 06-297-GMS, Memo. (D. Del. Apr. 16, 2009). The settlement agreement was the product of much negotiation. Id. at 2-6. Counsel for both parties advised the Court of the agreement and that signed agreements were being exchanged. Id. at 6. Finally, the agreement was memorialized by a joint letter filed with the Court whereby counsel also stated that a stipulation of dismissal would be submitted. Id. Before entering into settlement negotiations, the PTO granted defendant’s request to have plaintiff’s patents reexamined. Id. at 2. Amidst the negotiations for settlement, plaintiff met with the PTO to discuss the pending reexaminations. Subsequently, the PTO sent a copy of the “interview summary” to defendant at the address they had on file. Id. at 4. Defendant’s refusal to honor the settlement agreement stemmed from plaintiff’s interview with the PTO and failure to disclose the interview. Id. at 8. Chief Judge Sleet determined that a final settlement agreement had been reached based on the extensive negotiations, and the communications with the Court that the agreement had been “finalized.” Id. 10-11. The fact that the agreement had not been signed did not mean the agreement was not finalized, the parties conduct was evidence that the agreement was intended to be a final agreement. Moreover, plaintiff had no duty to disclose the PTO interview to defendant because the interview was a “non-event.” Id. at 13-14.

Rohm and Haas Electronic Materials, LLC v. Honeywell International, Inc., C.A. No. 06-297-GMS, Memo. (D. Del. Apr. 16, 2009).

Chief Judge Sleet recently granted defendant Rymed Technologies, Inc.'s motion to dismiss a patent infringement suit, where Rymed had previously filed a declaratory judgment suit against the plaintiff in another district. Vygon v. Rymed Technologies, Inc., C.A. No. 08-172-GMS, Memo. Order (D. Del. March 31, 2009). Specifically, the other district court had already found that the other action was first-filed, that defendant had connections to that other forum and that its connections to Delaware were tenuous. Therefore, Judge Sleet adopted the findings of the Tennessee Court's Order and dismissed the case so as to avoid economic waste and duplicative litigation.

Vygon v. Rymed Technologies, Inc., C.A. No. 08-172-GMS, Memo. Order (D. Del. March 31, 2009).

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.

Faced with proceeding on a lone state-law unfair competition counterclaim, Chief Judge Gregory M. Sleet has sua sponte dismissed the ancillary claim. After rejecting the underlying infringement counts in an earlier decision, the Court declined to hear the supplemental claim:

"[T]he Court finds that Banner's unfair competition claim lacks an independent jurisdictional basis. Further, although [Title 28] gives the court subject matter jurisdiction over an unfair competition claim when it is joined with a substantial and related patent law claim, the court finds persuasive authority that affords it discretion to dismiss supplemental claims when the federal claims are dismissed prior to trial."

This decision illustrates, as in other contexts, the emerging difficulty of pursuing state-law claims in patent cases.

Abbott Labs. v. Banner Pharmacaps Inc., C.A. No. 07-754-GMS (D. Del. Nov. 25, 2008) (Sleet, C.J.).

A defendant cannot complain to have a default judgment set aside where plaintiff would be prejudiced, there is no meritorious defense and their conduct in defaulting was culpable. Amazon.com, Inc. v. Citi Services, Inc., Citi Services, Ltd., Theochari and Smith, C.A. No. 99-543-GMS, Memorandum (D. Del. Nov. 21, 2008). In this case, plaintiff brought suit against the defendants for trademark and copyright infringement, unfair competition and dilution. Id. The defendants moved to dismiss the complaint and prior to the completion of briefing on that issue, defense counsel moved to withdraw. Id. at 2. The court granted the motion to withdraw and ordered the defendants to obtain new counsel and respond to outstanding discovery or expose themselves to the possibility of a default judgment being entered against them. Id. After multiple orders reminding the defendants of their obligation to respond and to attend a conference with the Court, the Court entered default judgment against all defendants including an award of monetary and injunctive damages to the plaintiff. Id. at 3. Over six years later, the individual defendants (Smith and Theochari) moved to set aside the default judgment and order.
The Court declined to set aside the judgment. In his decision, Judge Sleet found that lifting the default judgment would be extremely prejudicial to the plaintiff whose judgment would be at risk and would have to re-litigate its claims. Furthermore, the lapse of over six years would impact the evidence and witnesses available to plaintiff to prove their case and there may be additional issues regarding the statute of limitations among others. Id. at 5. The defendants failed to show a meritorious defense because the Court previously entered an order denying defendants’ motion to dismiss for lack of personal jurisdiction. Id. at 6. Finally, defendants’ “repeated failure to respond to discovery request and the court’s order to secure new counsel” demonstrates their culpability. Id.

Amazon.com, Inc. v. Citi Services, Inc., Citi Services, Ltd., Theochari and Smith, C.A. No. 99-543-GMS, Memorandum (D. Del. Nov. 21, 2008).

Following the Court’s recent denial of Tyco Healthcare Group’s motion for judgment as a matter of law, Judge Sleet provides another blow to the defendant by granting plaintiff Becton Dickinson and Company’s motion for award of damages, prejudgment interest and a permanent injunction and denying the plaintiff’s motion to stay the injunction pending any appeal. Becton Dickinson and Company v. Tyco Healthcare Group LP, C.A. No. 02-1694-GMS, Memo. Order (D. Del. Oct. 29, 2008).

Becton Dickinson obtained an infringement verdict against the defendant in October 2004 along with an award of damages for a reasonable royalty and lost profits. The Court granted defendant’s motion for a new trial on infringement issues but denied their motions with respect to damages. The infringement case was re-tried in November 2007 and the parties entered a stipulation setting forth the manner in which damages should be calculated from January 2004 through the completion of the litigation. Id. at 1, 3. Tyco was again found to infringe plaintiff’s patent and plaintiff moved for an award of damages. In its opposition to plaintiff’s motion, Tyco contended that the lost profit numbers were not accurate based on the failure of plaintiff’s to have the capacity to manufacture the additional sales that were made during the relevant time period. The stipulation did not provide for damages to be effected because of lack of capacity. Judge Sleet refused to set aside the parties’ stipulation and adjust the damages where Tyco could have insisted that a provision be in the stipulation to cover such a situation, and awarded the plaintiff’s request for the reasonable royalty and lost profits damages. Id. at 4.

In agreement with Judge Robinson’s recent order in Cordis Corp. v. Medtronic Vascular Inc., C.A. No. 97-550-SLR, Order (D. Del. Sept. 15, 2008) (see post here), Judge Sleet found the applicable rate to be the prime rate, compounded quarterly as that rate “best represents the cost of borrowing money.” Id. at 5 (internal citations omitted).

Finally, in what has become a rare occurrence since the Federal Circuit’s decision in eBay, Inc. v. MercExchange, L.L.C., the Court granted plaintiff’s request for a permanent injunction. The parties in this case, are direct competitors, plaintiff established it lost 40% market share during the period of infringement, and although defendant’s business relationships may be harmed by the injunction “that is the risk Tyco took when it placed a potentially infringing product on the market and continued to make sales of that product.” Id. at 8.

And now a public service announcement…The Court in this matter denied the defendant’s request for a stay of the injunction pending their appeal where the request was only mentioned “in passing” and they failed to address all of the factors relevant to the analysis in its brief. Id. at 9-10. So make sure if you are going to move for some form of relief that you address all of the relevant factors required for the court to analyze your request.

Becton Dickinson and Company v. Tyco Healthcare Group LP, C.A. No. 02-1694-GMS, Memo. Order (D. Del. Oct. 29, 2008).

Becton Dickinson and Company won a jury verdict back in 2004 against Tyco Healthcare Group, but the Court granted defendant's post-trial motion and allowed the infringement case to be re-tried. Following the retrial in November 2007, Tyco Healthcare Group LP was again found liable and subsequently moved for judgment as a matter of law pursuant to Fed. R. Civ. P. 50(b) arguing that the jury’s finding was not supported by the evidence. Becton Dickinson and Company v. Tyco Healthcare Group LP, C.A. No. 02-1694-GMS, Memo. (D. Del. Oct. 17, 2008). The Court denied defendant’s motion. Id. Of note, the Court agreed that the direct evidence of infringement proffered by the plaintiff was not sufficient to support an infringement verdict. Id. at 6-7 n.2. That being said, however, the Court in denying the motion, relied on Federal Circuit precedent which holds “[T]here is no requirement that direct evidence be introduced,” and the circumstantial evidence presented by plaintiff’s fact and expert witnesses was sufficient to support the verdict. Id. at 6.

Becton Dickinson and Company v. Tyco Healthcare Group LP, C.A. No. 02-1694-GMS, Memo. (D. Del. Oct. 17, 2008).

District court litigation, reexamination, and agency adjudication are only some of the pitfalls that accompany the life of a patent. When proceeding simultaneously, these procedural avenues only increase the risk of contradictory rulings, especially in the area of claim construction. Perhaps sensing this risk, District of Delaware Chief Judge Gregory M. Sleet has, in a recent decision, refused to consider a PTO claim construction on the ground that reexamination is ongoing.

In the underlying post-trial litigation, the patentee had obtained a favorable claim construction from the Court. The infringement defendant then sought reexamination in the PTO, and ultimately won a different claim construction. Based on this development, defendant sought a new trial. The Court declined, noting that defendant's motion was simply a request for reconsideration of the Court's claim construction:

"Insofar as Tyco's most recent bite at the apple raises the patent examiner's recent final office action construing the [claim in issue], this information is not ripe for consideration. As Tyco aptly notes in its brief, '[t]he reexamination procedure is not necessarily over, as [the patentee] has the right to appeal.' Thus, the prosecution history remains incomplete and the court, therefore, denies Tyco's newest motion for reconsideration of its claim construction ruling."

Becton Dickinson & Co. v. Tyco Healthcare Group LP, C.A. No. 02-1694-GMS (D. Del. Sept. 11, 2008) (Sleet, C.J.).

It is well-established that plaintiff's choice of forum will be a strong consideration in deciding a motion to transfer. Judge Sleet in denying the defendants' motion to transfer in the case Acuity Brands, Inc. v. Cooper Industries, Inc., again stressed the importance of plaintiff's choice of forum -- particularly where both parties are Delaware corporations and inconvenience is the only argument for transfer. C.A. No. 07-444-GMS, Memorandum (D. Del. July 31, 2008).

Defendants argued that their only tie to Delaware was the fact that they were incorporated here and that the case law provides for transfer where that is the only link to the forum. Id. at 3. The Court found the cases relied on by defendants distinguishable, however, since in those cases there was also simultaneous litigation proceeding in the transfer district, and there is no such parallel litigation here. Id. at 4.

In a continuing trend in D. Del. transfer opinions, the Jumara factors related to location of witnesses and documents are becoming less important to the analysis. The Court has held that party-witnesses such as employees "are presumed willing to testify at trial" and therefore are not part of the analysis. Id. at 5. And even in the case of third-party witnesses, "a flight to Delaware is not an onerous task warranting transfer." Id. Finally, in this age of electronic discovery, the location of documents becomes almost irrelevant. Id.

For a copy of the opinion see here.

In the past month, two juries have come back from deliberations with verdicts in favor of the plaintiff patent-holder. On June 13, 2008, in the Elan Pharmaceuticals Inc. v. Abraxis Bioscience Inc. case, the jury found that Abraxis's Abraxane breast cancer drug infringed two of Elan's patents and that these patents were valid and enforceable. The jury did not find willful infringement. Elan was awarded $55,230,000 in damages based on a 6% reasonable royalty rate for an approximately 3 1/2 year period.

See a copy of the verdict form here.

On July 1, 2008, in the Linear Technology Corporation v. Monolithic Power Systems, Inc. case, the jury again came back with a verdict for the plaintiff. In this case involving semiconductor technology, the jury found that the defendant infringed the plaintiff's patent and that the patent was valid. The parties had previously stipulated to nominal damages in the event that the jury found infringement.

See a copy of the verdict form here.

The question that arises is whether these verdicts are further examples that the District of Delaware is a "plaintiff/patent holder-friendly" forum or whether there is no clear trend in verdicts in this district. Keep watching for a future post analyzing the trend in jury verdicts in this district...

As patent litigation grows more complex, splitting jury trials into separate liability and damages phases has become increasingly commonplace. As grounds for bifurcating proceedings, courts often cite the need to avoid jury confusion and the interests of promoting judicial economy. But, as a recent decision by Chief Judge Gregory M. Sleet demonstrates, the bifurcation inquiry remains a fact-specific exercise, and is far from automatic.

On the topic of judicial economy, the Court noted that the damages phase of trial would consume “perhaps one day of a ten-day trial.” Balanced against the “time and judicial resources required to hold two separate trials,” the Court held that carving out the short damages presentation would lead to “duplicative” proceedings.

The Court also rejected the jury confusion point: “Through reasoned and considered presentation, the attorneys for each side may clarify and compartmentalize issues for the jury.” Indeed, the Court implied that parties’ should give juries more credit: “[T]his court regularly tries complex cases before juries and has found juries well able to keep separate issues separate, particularly with the aid of considered and cogent presentations by counsel.”

The message to litigators? Bifurcation is not always warranted. And, more importantly, keep it short and sweet.

Deutscher Tennis Bund v. ATP Tour Inc., C.A. No. 07-178-GMS (D. Del. June 23, 2008) (Sleet, C.J.).

As the pace of invention (and litigation) has increased over the past several decades, so has the pressure for companies to design around their competitors’ patents. The freedom to develop non-infringing alternatives to protected products fosters both competition and innovation, two crucial aspects of the modern patent system. But what happens when two companies settle an infringement suit, only to have the alleged infringer immediately come to market with a different product utilizing the same technology?

According to District of Delaware Chief Judge Gregory M. Sleet, it is for the jury to decide whether the design around breached the parties’ settlement agreement. In the underlying litigation, defendant agreed to forego selling the disputed voltage regulator or “any other” products incorporating plaintiff’s circuitry. After defendant began marketing its design around, plaintiff brought an action seeking to enforce the settlement agreement.

On summary judgment, the Court declined the invitation to draw the boundaries of the design around, noting that competing expert opinions precluded an early disposition:

Although a close question, the court’s conclusion is supported by the parties’ experts’ opinions, which – not surprisingly – are diametrically opposed. . . . Thus, there appears to be a classic battle of the experts on the issue of whether the [design around] contains the ZX circuitry . . . . (slip op. at 11)

This factual issue, in turn, prevented the Court from determining whether plaintiff could enforce the settlement agreement against the disputed product. Practitioners take note: As a first litigation step, the jury must decide the composition of the design around.

Linear Tech. Corp. v. Monolithic Power Sys. Inc., C.A. No. 06-476-GMS (D. Del. May 23, 2008) (Sleet, C.J.).

Civil contempt. Not an issue that comes up frequently in patent litigation, but something the District of Delaware has shown it will take very seriously. The Court in Fisher-Price, Inc. v. Safety 1st, Inc., found that even inadvertent or insignificant sales of an infringing product will not excuse a violation of a court-ordered injunctive order. C.A. No. 01-051-GMS, Memorandum, at 5-6 (D. Del. May 5, 2008). Furthermore, when an injunctive order requires a party to "make every reasonable effort possible" to retrieve infringing products from retail shelves, the Court found that hiring another company to retrieve the products did constitute "reasonable effort", however, inconsistent behavior with different retailers and delayed retrieval efforts will not constitute "reasonable effort". Id. at 6-7.

See a copy of the opinion here.

This morning's edition of IP Law360 (subscription) features an informative article on judges' pet peeves in patent litigation. Featured in the piece are two D. Del. judges: Chief Judge Sleet and Judge Farnan.

Of note are the judges' comments on summary judgment motions and the use of experts. On the issue of summary judgment, Chief Judge Sleet noted that:

Generally in these cases, both parties have experts who are ready, willing, and able to come to court and dispute the facts. It can be a significant waste of time and money to bring a summary judgment motion.

Judge Farnan agreed: "The problem is, if I'm a lawyer for a generic and I'm attacking a patent and I think it is obvious because of a combination of two prior pharmaceutical products, there's almost always going to be a dispute of facts."

On the topic of experts, Judge Farnan cautioned litigants against expert overkill:

I pretty much let [litigants] try the case they want, but I talk to them in the pretrial conference about the value [experts] offer. I have to write an opinion, and they want that opinion yesterday. So I tell them, 'the more you put into that trial record, the more I have to consider and address.'

Patent litigation is an aggressive, competitive field of law. The judges' comments today add valuable perspective - that of the decision maker - to how best to champion the causes of our clients.

One avenue to obtaining personal jurisdiction over a non-resident defendant is to assert the familiar "stream of commerce" theory of long-arm jurisdiction: the foreign party purposefully shipped the accused product through established distribution channels, thereby causing injury in the forum. But does the jurisdictional calculus change when the defendant is a patent holding company, operating solely through its subsidiaries? According to District of Delaware Chief Judge Gregory M. Sleet, it does not.

In a recent decision, the Court rejected the claim that a Danish holding company with no connections to Delaware can escape litigation in this district. By collaborating with its subsidiaries on the design, production, and distribution of the accused product, the holding company can properly be said to have directed its activities to the state.

"[The holding company] acted in consort with its subsidiaries to place the accused products in the stream of commerce; it knew that the accused products foreseeably would be sold in the United States and Delaware; and [its] conduct and connections with the forum state were such that it should reasonably have anticipated being brought to court here."

Notably, the Court accepted, as evidence of foreseeability, a subsidiary's website listing of a Delaware vendor selling the accused products. For purposes of personal jurisdiction, at least, a holding company now cannot hide behind the activities of its subordinate entities.

Energy Transportation Group, Inc. v. William Demant Holding A/S, C.A. No. 05-422-GMS (D. Del. Jan. 4, 2008) (Sleet, C.J.).

After the Federal Circuit released its Seagate decision, Patently-O asked a fair question: "What role, if any, is there for the thick, formal opinions explaining in detail why a particular patent is invalid, unenforceable, and/or not infringed?"

A recent decision by District of Delaware Chief Judge Gregory M. Sleet goes a long way in answering that question in this district. In its January 4th order, the Court stated that while Seagate "does effect a change in the standard for willfulness . . . it does not inform the totality of circumstances analysis for the objective recklessness standard . . . ." Therefore, "nothing in Seagate forbids a jury to consider whether a defendant obtained advice of counsel as part of the totality of the circumstances in determining willfulness."

As a result, the Court allowed the evidence of defendants' failure to obtain advice of counsel.

Energy Transportation Group Inc. v. William Demant Holding A/S, C.A. No. 05-422-GMS (D. Del. Jan. 4, 2008) (Sleet, C.J.).

One day before the Eastern District of Virginia grappled with the PTO's rulemaking authority under 35 U.S.C. § 120, Chief Judge Gregory M. Sleet issued another decision addressing the contours of later-filed applications. In its October 30th decision on invalidity, the Court rejected the assertion that one of several patents in suit could not claim the priority date of a 1988 parent application.

The underlying invention — a food product comprising a mixture of microorganism-based lipids and food material — disclosed a limitation that, according to the Court, matched the written description of the parent application. That the claim in issue and the specification did not mirror one another, however, is not dispositive for purposes of determining priority:

"[T]he court notes that whether a disclosure is limited or broad is of no moment in a written description analysis [under Section 120], as the only requirement of section 112 is for an applicant to provide a description that 'reasonably conveys' to one skilled in the art that the inventor was in possession of what is claimed as of the filing date sought."

While the fate of the PTO's campaign against unlimited filings remains unsettled, the Court here reminded us that the substance behind the later-filed application is secure.

<%media(20071102-Martek.pdf|Martek Biocsciences Corp. v. Nutrinova Inc., C.A. No. 03-896-GMS (D. Del. Oct. 30, 2007) (Sleet, J.).)%>

Martek Biocsciences Corp. v. Nutrinova Inc., C.A. No. 03-896-GMS (D. Del. Oct. 30, 2007) (Sleet, J.)

Following Federal Circuit precedent, Chief Judge G. Sleet recently found that non-merits based dismissal of a patent claim in one action does not preclude the plaintiff from bringing that same claim in a subsequent infringement action. Abbott Diabetes Care, Inc. v. Dexcom, Inc., C.A. No. 06-514-GMS (D. Del. Sept. 30, 2007). Abbott previously filed an amended complaint in an earlier action between the same parties looking to add three more patents to that lawsuit. Dexcom filed, and the Court granted, a motion to strike this amended complaint for failure to comply with the requirements of Fed. R. Civ. P. 15(d). Abbott then brought a new action alleging infringement of those three patents and Dexcom again moved to strike. The Court found that because its earlier decision did not reach the merits of those patent claims each of those patent claims now raises a distinct cause of action and therefore is not duplicative of the complaint in the earlier action. Id. at 6. The Court did, however, consolidate this new case with the earlier filed litigation as the technologies at issue in each case are similar, the same device is accused of infringement in both cases and Abbott admitted in papers filed in the earlier litigation that any new case would likely be consolidated with the prior litigation. Finally, the Court agreed to stay the case pending reexamination of all patents-in-suit (including the ones in the prior litigation) where the Rule 16 scheduling conference had not yet occurred, no scheduling order was in place and no discovery had begun. The stay would further simplify issues for trial. Id. at 8-9.

Of particular note regarding the local rules… Both parties filed additional letters after complete briefing on the pending motions. The Court disregarded these letters in making its ruling as failing to comply with D. Del. LR 7.1.2(b) which only allows the filing of additional papers where there is a need to cite subsequent authorities. Id. at 2 n.1.

The so-called "first-filed rule" of jurisdiction provides that, subject to a variety of exceptions, the first court to receive a cause of action should resolve the litigation to the exclusion of the second. According to a recent decision by Chief Judge Gregory M. Sleet, a necessary adjunct to this principle is that the second court need not delve into matters that are peculiarly within the first tribunal's purview.

In the Every Penny Counts litigation, which IPLaw360 (subscription) has treated elsewhere, the Delaware court found that uncertainty surrounding the availability of personal jurisidiction in the initial Florida court cannot constitute a reason for filing a parallel action in Delaware. Instead, the resolution of that question rests solely with the Florida court.

The Court continued: "With the institution of a separate action in this court, [plaintiff] essentially asks this court to substitute its judgment for that of the first-filed Florida court on the scope of the Florida court's jurisdiction." As a result, the Court transferred the second-filed action to Florida.

Bank of America, N.A. v. S.I.P. Assets LLC & Every Penny Counts Inc., C.A. No. 07-159-GMS (D. Del. Sept. 11, 2007) (Sleet, C.J.).

Illinois Tool Works Inc. v. Frito-Lay N.A., Inc., C.A. No. 06-54 GMS (D. Del. July 9, 2007).

Illinois Tool Works (ITW) appealed the decision of the Board of Patent Appeals and Interferences to the Delaware district court pursuant to 35 U.S.C. § 146. The interference was between the Jurgoven patent (assigned to Frito-Lay), an application submitted by Jurgoven, and an application by Ramsey (assigned to ITW). The subject matter of the patent/applications and the two counts of the interference was a zippered flexible food product package that is pinch-grip openable, and the method of opening and closing the package. The Board found in favor of Frito-Lay, awarding it priority of invention because ITW had derived its invention from the Jurgoven patent. The Board declined to rule on the patentability of the Jurgoven patent "because ITW did not file a timely preliminary motion on the issue." Op. at 3.

The issue before the Court was whether the Court should consider the patentability of the Jurgoven patent even though the issue was not raised at the proper time before the Board. ITW did not raise the patentability issue in the early phases of the interference, instead waiting until its briefing before the Board to raise the issue. Frito-Lay argued that this amounted to a waiver of the patentability issue by ITW such that the patentability issue was not properly before the Court. The Court disagreed. The Court held that although ITW did not raise the patentability issue through the proper procedural vehicle before the Board (a preliminary motion), "the record clearly demonstrates that ITW raised the issue with the Board during the judgment motion phase of the interference and insisted that it be resolved during the interference." Op. at 5. Thus, the Court ruled that the patentability issue is properly before the Court, but only as to the prior art argued before the Board – ITW may not raise new patentability arguments at this time. Op. at 8.

Talecris Biotherapeutics, Inc. v. Baxter Int'l Inc., C.A. No. 05-349 GMS (D. Del. June 18, 2007).

Talecris sued Baxter for patent infringement, and Baxter counterclaimed for a declaratory judgment of noninfringement and invalidity. In this opinion, Judge Sleet denied Baxter's motion for summary judgment that the patent at issue is invalid for indefiniteness and granted (sua sponte) summary judgment that the patent is not indefinite.

Baxter asserted that three separate claim terms were indefinite: 1) "acceptable level suitable for intravenous administration," 2) "increased level of anticomplement activity," and 3) "then incubating the solution of step a"/"the increased anticomplement activity of the solution." Op. at 4. However, most of the opinion focused on the first claim term, which included the phrase "acceptable level." With regard to this first claim term, the court held that "the record reflects that the phrase has meaning to those of ordinary skill in the art, albeit the determination of that meaning may depend on a number of variables, and the ultimate determination of acceptability may be temporally distant from the time in which the inventive steps of the claim are performed." Op. at 8. Baxter's arguments as to the other claim terms were dismissed by the court as a rehashing of claim construction arguments. Op. at 9.

Despite Talecris' arguments in its briefs that disputes of material fact existed so as to preclude summary judgment, the Court found no genuine issues of material fact existed. Thus, even though Talecris did not cross-move for summary judgment in its favor on the issue of indefiniteness, the Court, sua sponte, granted summary judgment in its favor, removing the indefiniteness issue from the trial to come.

The Judicial Panel on Multidistrict Litigation (MDL) has ordered fifteen related patent cases consolidated and transferred to the District of Delaware. Judge Gregory M. Sleet, who had presided over several of the pending cases, will now hear the consolidated action, which involves nine patents related to high-speed internet and "related" services. See Docket, 07-md-1848-GMS (filed June 21, 2007).

By ordering the transfer and consolidation, the MDL rejected the assertion that unique questions of fact predominate over any commonalities: "Transfer under [28 U.S.C] Section 1407 does not require a complete identity or even a majority of common factual or legal issues as a prerequisite to transfer." Indeed, the MDL expressly commented on the benefits of trying the cases in Delaware: "[W]e are assigning this litigation to a seasoned jurist in a readily accessible district with the capacity to handle this litigation."

Read the order here: In re Rembrandt Technologies LP Patent Litigation, No. 1848 (J.P.M.L. June 18, 2007) (Hodges, J.).

Does an attorney have any duties to disclose or for that matter not take a case where they previously represented the parent corporation of an adverse party in prior unrelated litigation?

The District of Delaware recently had on opportunity to opine as to whether such conduct violates Rule 1.9 of the Model Rules of Professional Conduct. In Talecris Biotherapeutics, Inc. v. Baxter International, Inc., C.A. No. 05-349-GMS, Memorandum (D. Del. June 14, 2007), the plaintiff moved to disqualify defendant and counterclaim plaintiff's counsel. This particular attorney had previously represented a parent company of the counterclaim defendant in a previous action fourteen years ago that surrounded infringement claims of a non-asserted patent and product. Id. at 2. The patent that was litigated in the prior litigation, however, has been asserted as prior art rendering the plaintiff's patent invalid. The attorney was only a third-year associate at the time and was a member of a four person trial team. Id.

The Court found that the motion should be denied as the attorney's conduct did not violate Rule 1.9. Rule 1.9 prevents a lawyer from "taking a position adverse to a former client in the same or related matter unless the former client consents after consultation." Id. at 3. The Court considered three factors in determining whether the matters were "substantially related" and therefore the representation would be in violation of Rule 1.9: "(1) the nature and scope of the prior representation; (2) the nature and scope of the current representation; and, (3) during the prior representation, the possibility that the client disclosed confidences to his attorney which could be relevant to the current action and detrimental to the former client in the course of the current litigation." Id. at 4.

The particular attorney in this case, was only a third-year associate during the prior representation and only interacted with the former client during the early stages of discovery in litigation that occurred 15 years ago and lasted only 6 months. Id. at 5. The Court admitted, that the fact that the defendants are now asserting the patent that was at issue in the prior litigation as prior art to the patent at issue in the current litigation does raise some overlap. Id. However, it also noted that this patent appears to have been disclosed during the prosecution of the patent at issue and appears on the face of that patent. Therefore, the Court found it not reasonable to infer that the defendant's current reliance on this prior art patent was as a result of confidential information the attorney received during that prior litigation.

The motion was thus denied as the "substantive relationship between the two litigations is tenuous." Id. at 7.

In a footnote, the Court stated that "the prudent course of action would have been" for the attorney to have provided notice to her client of the potential conflict and request a waiver as soon as identifying them as a potentially adverse party. Id. at 7 n.3.

Therefore, when in doubt, disclose and get a waiver so as to protect yourself from being in violation of the Model Rules.

Merck & Co. v. Apotex, Inc., C.A. No. 06-230 (GMS) (D. Del. May 21, 2007).

Judge Sleet granted Merck's motion to dismiss this case for lack of subject matter jurisdiction after Merck comprehensively covenanted not to sue Apotex over its generic version of Fosamax, despite the alleged jurisdictional "gaming" of the Hatch-Waxman Act's "triggering events" by Merck. This opinion addresses an important issue in ANDA litigation, so I will break down this opinion in more detail than usual.

Facts

Merck owns nine Orange Book patents for Fosamax. Apotex filed an ANDA seeking to make a generic version of Fosamax, certifying to the FDA that Merck's patents were invalid, unenforceable, and/or not infringed by its generic. Apotex informed Merck of its ANDA, and Merck filed suit under the Hatch-Waxman Act for infringement in April 2006. Apotex counterclaimed for a declaratory judgment of invalidity and noninfringement. In August 2006, Merck granted Apotex a comprehensive covenant not to sue and then moved to dismiss the case for lack of subject matter jurisdiction.

The Heart of the Problem - Gamesmanship

Essentially, the brand-name drug companies have found a loophole in the interaction between the Hatch-Waxman Act and the federal courts that delays generic manufacturers' entry into the marketplace. The Hatch-Waxman Act provides that a patentee may sue an ANDA applicant that submits an application with a paragraph IV certification (that the brand name drug's patent(s) is invalid/unenforceable/not infringed) for infringement. If the brand name manufacturer files suit within 45 days of receiving notice of the application, then a 30-month stay of the generic application's approval is invoked. The 30-month stay can only be lifted by an earlier decision in a patent infringement case or by Court order to shorten or lengthen the stay. The loophole goes like this: 1) generic files application, 2) brand name files suit for infringement within 45 days, invoking the 30-month stay, 3) the brand name covenants not to sue the generic, depriving the district court of jurisdiction, and 4) the infringement case is dismissed, but the 30-month stay remains because no "triggering event" has occurred. The advantage to the brand name manufacturer is a potentially longer period of exclusivity than if the district court had found in favor of the generic manufacturer on the merits.

Judge Sleet notes quite strongly that the practical realities of this system unnecessarily strain the court system. Op. at 10, fn. 4.

The Court's Hands Are Tied

The Court analyzed the continued existence of an actual case or controversy under the Federal Circuit's recent decision in Teva v. Novartis, which announced the end of the "reasonable apprehension of suit" test, ushering in a broader "actual controversy" inquiry dictated by the Supreme Court's MedImmune decision. The Court found that "Apotex's advancement of this case against Merck [after Merck's covenant not to sue] becomes merely a means to an end, where the desired "end" is a triggering event but the means to that end, the litigation itself, is not sanctioned under the current legal framework." Op. at 8. Thus, the Court held that Merck's covenant not to sue deprived it of jurisdiction over Apotex's declaratory judgment counterclaims under Super Sack and dismissed the suit.

Antitrust Implications?

Apotex argued to the Court that "Merck's actions of filing suit, covenanting not to sue, and moving to dismiss for lack of jurisdiction, are an unlawfully anticompetitive and monopolistic scheme to delay entry by Apotex and other generic filers into the market…." Op. at 13. Ultimately, the Court found that while Apotex may suffer a business disadvantage from Merck's use of the Hatch-Waxman scheme, this disadvantage is not actionable as an antitrust violation because it is sanctioned and contemplated by the Hatch-Waxman Act. Op. at 18. As such, the Court denied Apotex's motion to amend its complaint to add antitrust claims as futile.

Conclusion

Just when everyone thought that Teva v. Novartis would make it easier for generic manufacturers to maintain suits against patentees, the brand name manufacturers come up with a new tactic. Looking forward, it will be interesting to see how the FDA and Congress deal with this loophole. Considering the amount of money on the line, I'm sure the Federal Circuit will also get a chance to opine on this case.

Yesterday, in the District of Delaware a jury found in favor of plaintiff, Telcordia Tech. Inc. and against defendant, CISCO Systems, Inc. More details as they become available…

Update: Read the jury verdict form here

On Tuesday, Delaware district judge Gregory M. Sleet issued a one-page order granting a voluntary dismissal in the Merck-Apotex ANDA litigation. After Apotex filed an ANDA application, Merck brought an infringement action. Apotex responded with a declaratory-judgment counterclaim. Merck then decided it no longer wanted to pursue the action and granted Apotex a covenant not to sue.

Thereafter, Merck filed a motion to voluntarily dismiss, claiming that the covenant removed the Court's subject matter jurisdiction concerning both the infringement claim and counterclaim. As reported by IPLaw360 (subscription), Defendant Apotex opposed Merck's motion, contending that dismissal of the case would remove a "triggering event" under the Hatch-Waxman Act and therefore would delay Apotex's entry into the market. The Court, which said it would issue a full decision at a later date, apparently rejected this argument and sided with Merck on jurisdictional grounds.

It will be interesting to see how the Court analyzes the jurisdictional argument in the upcoming opinion, especially in light of Apotex's contention that Merck is allegedly manipulating the Hatch-Waxman process. Stay tuned.

<%media(20070413-Merck.pdf|Merck & Co. v. Apotex Inc., C.A. No. 06-230-GMS (D. Del. April 10, 2007) (Sleet, J.).)%>

On 3/29/07, Judge Sleet posted new guidelines for formatting and filing briefs in cases pending before His Honor. The guidelines require that 2 copies of all briefing on motions and letter briefs requesting relief (excluding appendices, declarations, affidavits and exhibits) be filed with the court. A party cannot file a brief that exceeds the page limits set forth by the court or the local rules until they have court approval to do so. All briefs and memoranda need to be double-spaced, with 1 inch margins, left justification, and Times New Roman 12 pt. font. Any copies of briefs, memoranda, and/or appendices that are filed with the Court, need to be firmly bound (preferably spiral) at the left margin. These guidelines can also be found on the District of Delaware website.

Over the past day, Judge Sleet has been issuing orders in all his cases requiring that the parties submit a joint appendix in conjunction with their Markman briefing that contains all intrinsic and extrinsic evidence relied on by the parties to support their respective constructions. The appendix is due at the time the parties file their answering briefs. A sample table of contents as found on Judge Sleet's website can be found <%media(20070130-Sleet Sample_Joint_Appendix.pdf|here)%>.

<%media(20061227-Automotive technologies 06-187.pdf|Automotive Technologies Int�l, Inc. v. Am. Honda Motor Co., C.A. No. 06-187-GMS (D. Del. Dec. 21, 2006). )%>

The Court denied defendants� motions to transfer the action to the Eastern District of Michigan. Analyzing the situation under the public and private interest factors enumerated by the Third Circuit in Jumara, Judge Sleet found ATI�s reasons for bringing suit in Delaware (at least one defendant incorporated in DE, no more convenient forum, and a faster docket than E.D. Mich.) to be �rational and legitimate.� Op. at 3. As to docket speed, the Court noted that the District of Delaware appears to have a lower percentage of cases over three years old than the Eastern District of Michigan. Op. at 4 n.2.

In a recent non-IP opinion by Judge Sleet, there are a few comments worth taking heed of for future cases you may have before this Court. See Donald M. Durkin Contracting, Inc. v. City of Newark, C.A. No. 04-163, 2006 U.S. Dist. LEXIS 85372 (D. Del. Nov. 27, 2006) (Sleet, J.).

At the close of trial in this case, Judge Sleet directed the parties to submit a stipulated post-trial briefing schedule. Instead of filing such a stipulation the defendant, City of Newark, filed a letter asking the court to make a notation on the docket noting the transcript availability. The Court noted, "For counsel's edification, it is inappropriate and ill-advised to ask the court to expend its limited resources making administrative notations on the docket for the convenience of the parties." Id. at *1.

Instead of filing a form skeletal post-trial motion within the 10 day period prescribed by the Federal Rules, the City filed a two line motion to stay execution of the judgment citing no authority or reasoning for relief and two additional motions that contained 84 pages of argument and exhibits without any citations to the trial transcripts. The Court noted that there is a procedure whereby skeletal motions can be filed during the prescribed period and yet the parties can present well-thought out briefing that cites to the official transcript and record. Of particular note, in dicta, Judge Sleet stated "[T]his court regularly presides over patent litigation, tried by lawyers who regularly appear in federal court. In these cases, the court typically observes that the parties order daily transcripts, which allow them to timely file post-trial motions and coherently argued briefs therewith." Id. at 3 n.2. So a word to the wise, make sure your post-trial briefing includes citations to the transcript and is not simply a recitation of counsel's recollection of the trial.

The Court made note of the inappropriate behavior of the litigants during this case including: "inappropriate telephone calls to chambers, untimely filing of issue-dispositive motions, improper filing of the pre-trial order, untimely submission of completely deficient jury instructions and verdict forms, and discovery abuses that led to motions for sanctions on the eve of, and during trial�", and that such behavior has "created an unacceptable diversion of the court's resources." Id. at 4.

Finally, the Court stated that in light of all this "inappropriate behavior" the Court was faced with an ex parte oral request from the City to vacate a prior order. In response, Judge Sleet stated "[F]or counsel's edification, it is wholly inappropriate to present what should be a formal motion for reconsideration via an ex parte telephone call to chambers." Id.

Take home message�do not disregard court orders or instructions and make sure when litigating in this District to behave civilly and professionally, following all Local and Federal Rules.

Judge Gregory M. Sleet signed a <%media(20061102-(2224701_1)_STIPULATION of Dismissal Stipulation and Order of Dismissal With Prejudice by NetRatings Inc., Coremetrics Inc.. (Keller, Karen).PDF|stipulation of dismissal )%> today that was filed by NetRatings, Inc. and Coremetrics, Inc. dismissing all legal claims with prejudice. The settlement agreement provides Coremetrics, Inc. worldwide rights under all of NetRatings, Inc.'s patents. A copy of the NetRating's press release from October 3, 2006 is attached <%media(20061102-NTRT_Oct3_2006_corp.pdf|here)%>. (C.A. No. 05-314-GMS) Young Conaway Stargatt and Taylor, LLP (Wilmington, DE) and Drier LLP (New York, NY) represented NetRatings, Inc. in the lawsuit and Ashby & Geddes (Wilmington, DE) and Heller Ehrman LLP (Menlo Park, CA)represented Coremetrics, Inc.

The District Court, in a rare occurrence, granted a motion to transfer to the Eastern District of Wisconsin. <%media(20061027-Alloc v. Unilin (03-253-GMS).pdf|Alloc, Inc. v. Unilin Decor N.V., C.A. Nos. 03-253, 05-857 (D. Del. Oct. 26, 2006) (Sleet, J.))%>.

The Court seemed persuaded to transfer these cases because related litigation was already pending in Wisconsin between the same parties and involving the same patents. Discovery in that litigation had already begun and the litigation was well underway.

Although related litigation does not always buy your ticket to transfer, in this case (along with the fact that there was very little connection to Delaware other than some of the parties' incorporation here) it seemed enough.

A jury handed down its verdict today in the case of Power Integrations, Inc. v. Fairchild Semiconductor Int'l Inc. (C.A. No. 04-1371) finding that the defendant willfully infringed U.S. Patent Nos. 6,249,876, 6,107,851, 6,229,366 and 4,811,075. Plaintiff was awarded lost profit and reasonable royalty damages in the amount of $33,981,781.00.

May a company threatening an infringement action avoid a declaratory judgment action against it by sending ameliorative correspondence after the d.j. action is filed? That was the question a Delaware judge recently rejected in Positec USA Inc. v. Milwaukee Electric Tool Corp.), C.A. No. 05-890 (D. Del. Sept. 25, 2006) (Sleet, J.).

After Milwaukee sent letters to Positec USA and its foreign counterpart indicating that it would commence a patent infringement action against any manufacturers and importers, Positec filed a declaratory judgment action. Milwaukee then sent a letter explaining that the earlier correspondence "was only intended to initiate a dialogue in the hopes of reaching an amicable global business resolution."

Judge Sleet found that the letter came too late to mitigate an apprehension of suit: "The court finds that Milwaukee's attempt, after the commencement of litigation of this lawsuit, to backpedal and 'explain' the real intention of its prior letters belies its assertion that it did not threaten litigation against Positec USA." Slip op. at 6 n.1. That Milwaukee sent the letter to the sister corporation - and not Positec USA - was equally unavailing: Milwaukee's original identification of manufacturers and importers sufficiently threatened litigation to all potential infringement defendants.

The lesson? Be prepared to follow through with your threats.

Positec USA Inc. v. Milwaukee Electric Tool Corp.), C.A. No. 05-890 (D. Del. Sept. 25, 2006) (Sleet, J.)

In a decision further defining what constitutes "reasonable apprehension of suit" sufficient to confer jurisdiction under the Declaratory Judgment Act, 28 U.S.C. 2201(a), the District Court held that the combination of the company's history of filing lawsuits not directly related to the patents-in-suit, a lawsuit brought by the declaratory judgment defendant against a former employee for trade secret misappropriation and statements made by the company during a quarterly earnings conference were not sufficient to create a reasonable apprehension of suit. Angiodynamics, Inc. v. Diomed Holdings, Inc., C.A. No. 06-02 (D. Del. Sept. 7, 2006) (Sleet, J.).

The Court followed the two-part test set forth in the Federal Circuit opinion Goodyear Tire & Rubber Co. v. Relasomers, Inc., 824 F.2d 953 (Fed. Cir. 1987) which requires: "(1) an explicit threat or other action by the patentee which creates a reasonable apprehension on the part of the declaratory judgment plaintiff that it will face an infringement suit; and (2) present activity by the declaratory judgment plaintiff which could constitute infringement, or concrete steps taken by the declaratory judgment plaintiff with the intent to conduct such activity." Angiodynamics, at 4. There was no dispute among the parties that the second requirement was satisfied. The Court then analyzed whether Angiodynamics met its burden of demonstrating under the totality of the circumstances a "reasonable apprehension of imminent suit." Id. First, the Court noted that although it is relevant to the analysis, previously filed lawsuits by the declaratory judgment defendant on patents other than the patent-in-suit, do not cause reasonable apprehension of suit. Judge Sleet then goes on to distinguish two Federal Circuit cases (Vanguard Research, Inc. v. PEAT, Inc. and Goodyear Tire & Rubber Co. v. Relasomers, Inc.) which held that prior lawsuits for trade secret misappropriation can create reasonable apprehension of suit. In both the Federal Circuit cases the lawsuits were filed against the declaratory judgment plaintiff, whereas here, the misappropriation actions were filed against a former employee of the declaratory judgment defendant. Finally, a statement made by the declaratory judgment defendant during a quarterly earnings call that the plaintiff's products are "embraced by" the patents-in-suit falls within those terms that the Federal Circuit has found insufficient to create a reasonable apprehension of suit.

Hopefully, this case will clarify for potential declaratory judgment plaintiffs just what does create a "reasonable apprehension of suit" if not by any other way than by telling us what does NOT constitute reasonable apprehension.

Angiodynamics, Inc. v. Diomed Holdings, Inc., C.A. No. 06-02 (D. Del. Sept. 7, 2006) (Sleet, J.)

In Becton Dickinson and Co. v. Tyco Healthcare Group LP, the Court again demonstrated the difficulty of being successful raising an inequitable conduct defense. After a jury finding of willful infringement and validity, the Court held a bench trial on Tyco's inequitable conduct defense. Tyco's defense was grounded in the argument that Becton Dickinson failed to disclose prior art references that effect, not an asserted claim of the patent, but instead an element of an independent claim that was not asserted during the infringement trial. Tyco further alleged that the inventors improperly represented to the PTO that they were the original inventors of every element of the claimed invention. The Court following the criteria set forth in the Federal Circuit decision FMC Corp. v. Manitowoc Co., Inc., 835 F.2d 1411 (Fed. Cir. 1987) found that the prior art was not material because it was cumulative of art that was already before the Examiner and that there was no evidence of an intent to deceive the Patent Office.

Becton Dickinson and Co v. Tyco Healthcare Group LP, C.A. No. 02-1694 (D. Del. Sept. 25, 2006) (Sleet, J.).