Delaware IP Law Blog

The ascendency of patent litigation over the past few decades — in Delaware and elsewhere — neatly tracks the United States's broader shift to an information economy and the increasing value that companies place on intellectual property. As with other areas of the law (e.g., securities), a spike in litigation often provokes a congressional response. In the realm of patents, witness the Patent Reform Act of 2007, which this and other blogs have been monitoring.

For the latest on this legislation, Patently O reported yesterday a comprehensive update, with links to primary sources, commentary, and lobbying players.

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.

To download a copy of the new proposed Rules, <%media(20070410-PublicNotice-LocalRules_040207.pdf|click here)%>.

4/2: Fairchild Semiconductor Corp. et al. v. Power Integrations, Inc. (transfer of patent infringement case from E.D. Tex.)
4/3: Siemens Medical Solutions USA, Inc. v. Saint-Gobain Ceramics & Plastics, Inc. (patent infringement)
4/4: Third Point, LLC v. Tripoint Asset Management, LP and Tripoint Holdings LLC (trademark infringement - false designation of origin and unfair competition)
4/5: Bayer Healthcare AG and Bayer Pharmaceuticals Corp. v. Teva Pharmaceuticals USA, Inc. (patent infringement)

Delaware district judge Joseph J. Farnan Jr. recently issued a comprehensive claim construction opinion involving the Verisign computer-access security system. Of note is the Court's analysis of the means-plus-function and step-plus-function construction rules under 35 U.S.C. � 112, � 6.

For one claim, the Court noted that the patentee chose to employ the means-plus-function rules by using the phrase "clearinghouse means." Thus, "a consequence of [this] choice is that [the] scope of the means-plus-function limitation is limited to the corresponding structure described in the specification and equivalents thereof." (slip op. at 34).

Interestingly, the Court then declined to apply Paragraph 6 to the identical phrase as used in a subsequent claim. The Court distinguished between means-plus and step-plus claim elements, and noted that the simple presence of the term "means" or "step" (as opposed to "steps for") does not automatically signal the applicability of Paragraph 6. Examining the claim as a whole — "a method of controlling access . . . comprising the steps of [the clearinghouse means]" — the Court rejected plaintiff's argument that the means- or step-plus analysis applied. Instead, the term "clearinghouse means" was "little more than an overzealous use of the word means." (slip op. at 37).

This opinion is a reminder that parties should not slice their claim construction arguments too thin — context, and not the import of words in isolation, will ultimately control.

<%media(20070406-Verisign.pdf|Prism Techs. LLC v. Verisign Inc., C.A. No. 05-214-JJF (April 2, 2007) (Farnan, J.).)%>

What would you do if you discovered that in prosecuting a patent application, your client failed to disclose a relevant piece of prior art during an earlier prosecution of a related application? One way to avoid the potential inequitable conduct is to fully disclose the art in the current application. But while making this disclosure, according to the Federal Circuit, take care not to misrepresent the prior art in the process.

In a recent opinion, the Federal Circuit affirmed former Delaware district judge Kent A. Jordan's finding of inequitable conduct under similar circumstances. After discovering the omission in the earlier prosecution, plaintiff's outside counsel sought to cure by submitting several declarations and supporting exhibits to the PTO. Unfortunately, one declarant stated that the system under consideration, involving automated financial trading under several so-called "new rules," did not encompass those rules. On finding that the system did in fact incorporate those rules, the district court entered a judgment of unenforceability due to inequitable conduct.

On appeal, the Federal Circuit noted the incongruity of plaintiff's "cure":

"The applicants submitted the declarations at issue in an apparent attempt to purge possible inequitable conduct in the '733 application and to disclose the Super System in the '526 application. Instead of being candid, Paul's declaration disingenuously states that the Super System did not include new rules."

The fact that the statement was made in a declaration assumed importance in both courts' intent-to-deceive analysis: "[T]he affirmative act of submitting an affidavit must be construed as being intended to be relied upon."

Perhaps what is most interesting is left untouched by the Court of Appeals: whether, had the declarant been truthful, the declarations and exhibits disclosing the prior art would eliminate the specter of inequitable conduct regardless of the conduct on the earlier, related application.

<%media(20070404-ESPEED1.pdf|eSpeed Inc. v. Brokertec USA LLC, C.A. No. 03-612-KAJ (Feb. 22, 2006) (Jordan, J.))%> [District Court Opinion]
<%media(20070404-ESPEED2.pdf|eSpeed Inc. v. Brokertec USA LLC, 2006-1385 (Fed. Cir. March 20, 2007))%> [Federal Circuit Opinion]

ExxonMobil Oil Corp. v. Hyundai Mobis, Co., Ltd.; Mobis America, Inc.; Mobis Parts America, LLC; Mobis Parts Detroit, LLC; and Mobis Alabama, LLC (trademark infringement)

In another post-eBay permanent injunction opinion, the Court denied to enter a permanent injunction where the plaintiffs failed to set forth specific reasons why damages in the form of monetary compensation would not suffice and where they did not provide the Court with any details as to what injury it would incur as a result of not receiving a permanent injunction against the defendant. <%media(20070402-Praxair - 03-1158-SLR.pdf|Praxair, Inc. v. ATMI, Inc.)%>, C.A. No. 03-1158 (D. Del. Mar. 27, 2007) (Robinson, J.). The plaintiffs received a jury verdict in their favor finding all asserted patent claims infringed and not invalid. They later sought a permanent injunction to enjoin the use of all infringing products by defendants' customers and a mandatory recall of all infringing products to which it still had title and a voluntary recall on those products where titled had passed. Id. at 4. The products made by the plaintiffs and defendants were in "direct and head-to-head competition" and are the only two of their type on the market. Id. at 3-4. The Court acknowledged that the "quantum of evidence required [to demonstrate the need for a permanent injunction] is relatively unclear," however, the Court still found that the plaintiffs had not met their burden under eBay to be entitled to such a broad scope of relief. The plaintiffs "generally" argued that without an injunction they would lose market share, profits and goodwill but they did not provide or even describe any "specific sales or market data to assist the court" and they did not identify what market share, revenues or customers they have lost to the defendant. Id. at 6. Furthermore, both parties cited to evidence that the products are not critical to either one's "overall corporate success." Id. at 7. The Court therefore denied the injunction but stated that the plaintiffs may renew their motion for injunctive relief after appellate review of the jury verdict. Id.

<%media(20070330-Oracle 06-414 3-26-07.pdf|Oracle Corp. v. Epicrealm Licensing, LP, 06-414-SLR (lead case) (D. Del. March 26, 2007).)%>

The Court denied defendant's motion to transfer venue to E.D. Texas and to consolidate. In 2005, Epicrealm filed three infringement actions in Texas against numerous defendants involving the same patents implicated in this Delaware action. Epicrealm, a patent holding company based in Richardson, Texas but incorporated in Delaware, argued that transferring these two Delaware actions to Texas would save time, money, and judicial resources. In addition, Epicrealm alleged that five nonparty, Texas resident witnesses would be unavailable to testify in Delaware. Oracle, a Delaware entity, is not a party to the Texas litigation. In denying the motion to transfer venue, the Court noted that �it is appropriate for Delaware courts to resolve this dispute between two of its corporate citizens.� Op. at 8. As to Epicrealm�s argument that witnesses could not be compelled to testify live, the Court noted that �much of the testimony presented at trial these days is presented via recorded depositions."