Delaware IP Law Blog

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

5/4: Oscient Pharmaceuticals Corp. and Guardian II Acquisition v. Antara Biosciences, Inc. (trademark infringement)
5/4: Abbott Laboratories v. Teva Pharmaceuticals USA, Inc. (patent infringement)
5/4: Samsung Electronics Co. Ltd. v. Renesas Technology Corp. and Renesas Technology America Inc. (patent infringement)

4/26: Alma Laserts, Ltd. and Alma Laserts, Inc. v. Thermage, Inc. (declaratory judgment/patent infringement)
4/27: Voith Paper GmBH & Co.KG v. Johnsonfoils, Inc. (patent infringement)

<%media(20070508-Syngenta Fed cir case 5-4-07.pdf|Syngenta Seeds, Inc. v. Monsanto Co., No. 2006-1203 (Fed. Cir. May 3, 2007) (nonprecedential))%>

Syngenta brought a suit in the District of Delaware alleging that Monsanto infringed three of its patents relating to genetically-modified corn. The district court held two of the patents not infringed as a matter of law. As to the third patent, a jury found the asserted claims infringed but invalid as obvious and lacking an adequate written description. On appeal, the Federal Circuit affirmed Judge Robinson's finding of noninfringement of two patents and affirmed the jury's decision finding the third patent obviousness. The appeals court did not reach the issue of the written description's adequacy because they affirmed the jury's verdict on obviousness grounds.

Although this is a post-KSR decision involving obviousness, the appeals court did not address the teaching/suggestion/motivation test at issue in KSR. Instead, the court found that jury's verdict was supported by substantial evidence without discussing the proper obviousness test. As to Judge Robinson's finding of noninfringement of two of the patents in suit, the appeals court held that Syngenta had waived the theory of claim construction argued to the Federal Circuit by not raising that same construction at the trial court level. Op. at 11.

The Supreme Court handed down its much anticipated decision in KSR Int'l Co. v. Teleflex Inc. yesterday, striking a blow to the Federal Circuit's so-called "teaching, suggestion, or motivation" (TSM) test for obviousness. The Court rejected a rigid formulation of obviousness, holding that "neither the particular motivation nor the avowed purpose of the patentee controls[;] [w]hat matters is the objective reach of the claim." With the subjective TSM test set aside, at least in name, how will KSR affect the District of Delaware?

A look at this district's recent obviousness jurisprudence indicates that, even when applying TSM, objective standards have always controlled.

Within the past several weeks, Chief Judge Robinson issued an opinion denying a jmol motion that sought, on obviousness grounds, to overturn a jury's finding. The Court rejected that assertion, citing testimony that the relevant scientific "community" did not believe the patentee's innovation was feasible. Advanced Cardiovascular Sys. v. Medtronic Vascular, Inc., 98-80-SLR (D. Del. March 29, 2007); see also Boston Sci. Scimed, Inc. v. Cordis Corp., 03-283-SLR (D. Del. June 16, 2006) (Robinson, C.J.) ("The objective evidence of nonobviousness . . . should when present always be considered as an integral part of the analysis.").

Judge Farnan has similarly relied heavily on objective standards when assessing TSM. In a recent decision, the Court rejected a claim of obviousness: "[The expert] failed to demonstrate any motivation for one skilled in the art to combine the references to which he referred, and the Court is persuaded that the ability of one skilled in the art to combine those references would have required undue experimentation." Forest Labs. Inc. v. Ivax Pharms. Inc., 03-891-JJF (D. Del. July 13, 2006) (Farnan, J.)

Perhaps Judge Sleet anticipated best the Supreme Court's emphasis that primary considerations of obviousness extend beyond the elements of TSM:

"Section 103 precludes [ ] hindsight discounting of the value of new combinations by requiring assessment of the invention as a whole. This court has provided further assurance of an "as a whole" assessment of the invention under § 103 by requiring a showing that an artisan of ordinary skill in the art at the time of invention, confronted by the same problems as the inventor and with no knowledge of the claimed invention, would select the various elements from the prior art and combine them in the claimed manner. In other words, the examiner or court must show some suggestion or motivation, before the invention itself, to make the new combination."

Leapfrog Enters. v. Fisher-Price, Inc., 03-927-GMS (D. Del. March 30, 2006) (Sleet, J. (finding obviousness based on the "hypothetical" inventor standard).

Although in each instance the Court applied TSM, its language indicates that the test has always been only one means to the broader end of the invalidity analysis.

Since state-law unfair competition and other tort claims often accompany allegations of patent infringement, the question of whether the state claims are preempted by the patent scheme assumes importance in intellectual-property litigation. Judge Joseph J. Farnan Jr. recently addressed the question of preemption for a variety of tort claims brought in the Knova Software-Inquira patent litigation.

Intentional Interference with Prospective Economic Relationships and Unfair Competition. One aspect of the traditional test of preemption involves whether a party's state-law claim contains an element in addition to those necessary to establish infringement. The Court here, however, was faced with a damages-based claim: Plaintiff Knova contended that because it pleaded damages recoverable solely under the state law claim, it properly alleged an element divorced from the infringement counts. Rejecting this assertion, the Court reaffirmed that the preemption test "focus[es] on the conduct of the defendant, not remedies that may be available to plaintiffs." Accordingly, the Court found that the patent act preempted Knova's interference and unfair competition claims.

Unjust Enrichment. Addressing a rare unjust enrichment count, the Court declined to find a preemptive effect until discovery closed. Knova argued that defendant's allegedly infringing sale of bundled software services conferred an "incremental benefit" on defendant compensable apart from the infringement. But the Court could not discern from the complaint whether Knova simply sought a "patent-like remedy for making, using, or selling a patented product." In the face of this uncertainty, the Court allowed the unjust enrichment claim to proceed without prejudice to raise the question of preemption after completing discovery on the other claims.

<%media(20070430-Knova.pdf|Knova Software Inc. v. Inquira Inc., C.A. No. 06-381-JJF (D. Del. April 27, 2007) (Farnan, J.).)%>

A reader posted an interesting comment on Patently-O today about the Federal Circuit's recent grant of an "emergency stay" of the permanent injunction that issued in the Vonage-Verizon litigation:

After all the bad press over refusing the stay in the Blackberry case and letting the Virginia judge force a greater than half billion dollar settlement over patents the PTO may now find unpatentable, the CAFC could not afford to put Vontage out of business, or Congress might have put them out of business.

For the entire entry, click here.

<%media(20070425-IMX - 4-24-07.pdf|IMX, Inc. v. Lendingtree, LLC, C.A. No. 03-1067-SLR (D. Del. Apr. 25, 2007). )%>

IMX filed a motion for reconsideration of the Court's previous denial of a permanent injunction pending appeal. As grounds for reconsideration, IMX cited an attempted post-verdict workaround by Lendingtree and design work that preceded the workaround as "ongoing, infringing conduct." Op. at 2. The Court saw the use of this new evidence as grounds for reconsideration as "nonsensical" because a workaround implies that Lendingtree has found a noninfringing alternative rather than a new infringing method. More likely, IMX used this "new evidence" as a way to make its assertion of new case law (a series of district court opinions according to the opinion) to the Court more palatable. Nonetheless, the Court examined the cases cited by IMX and distinguished them on their facts. Of particular concern to the Court was IMX's lack of evidence that either it or the public would be harmed without an injunction pending appeal. Id. at 3-4. Due to Lendingtree's admission that they continued infringing conduct until September of 2006, some nine months after the jury's verdict against Lendingtree, the Court ordered that Lendingtree produce an accounting of their continued infringement to the Court so that the Court may modify the damages award.

Interestingly, this issue of stays pending appeal was dealt with in summary fashion by the Federal Circuit yesterday in the Verizon v. Vonage patent dispute over VoIP internet telephony. The Eastern District of Virginia had granted Verizon's request for an injunction barring Vonage from signing up new customers during the pendency of Vonage's appeal to the Federal Circuit. Vonage argued to the Federal Circuit that the status quo could only be preserved by allowing Vonage to sign up new customers during the appeal. In addition, Vonage noted that district courts are overturned on their claim constructions about 40% of the time (I've seen higher numbers, but 40% is reasonable). Since Vonage was arguing on appeal that the claim construction was incorrect, and, statistically, it had a 40% chance of winning, Vonage asserted the unfairness of permanently damaging its business where it had decent odds of winning on appeal. The Federal Circuit issued a permanent stay of the injunction pending appeal of the claim construction.

Chad�s Editorial Take:

Both of these decisions raise interesting questions about the fairness of entering judgment against adjudged infringers before the Federal Circuit has had the final say on claim construction. Here�s my take: as long as the Federal Circuit (and the Supreme Court by not overturning them) insists on a de novo standard of review for patent claim construction, it makes little sense to grant injunctions pending appeal against accused infringers at the district court level. I know that this stance could hurt patentees that have rightfully prevailed, but the posting of bond could help alleviate this concern. As in the criminal context, I think it is more important to protect the adjudged infringer that ultimately may be found innocent than it is to reward the patentee with immediate gratification for prevailing at the district court level. Ultimately, I think the de novo standard of review must be changed because the district courts are clearly in a better position to construe the patent�s claims than an appeals court working with only a paper record. Until that happens, however, the reality will remain that your success at the Federal Circuit on claim construction is determined as much by the composition of the panel as by the arguments made by the parties on appeal.

One party to a settlement agreement lists the document on a privilege log in subsequent litigation between the signatories and a third-party plaintiff. The other party to the settlement, a co-defendant in the subsequent litigation, fails to log the agreement. Plaintiff realizes the discrepancy and argues that any privilege that may have attached to the document has been waived.

What is the answer? Read pages 5-6 of <%media(20070420-Sedona.pdf|Block Drug Co. v. Sedona Labs. Inc.)%>, C.A. No. 06-350-*** (D. Del. April 19, 2007) (Thynge, M.J.) to find out.

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.