Delaware IP Law Blog

In one of his last acts as a district judge, now-Third Circuit Judge Kent A. Jordan last week issued a post-trial damages opinion in the Novozymes v. Genencor litigation. In its decision, the Court touched on a range of subjects, including questions of standing, willfulness, and permanent injunctive relief.

Subsidiary Standing. The Court recognized that, in the absence of direct evidence of an exclusive relationship, an otherwise nonexclusive licensee might have standing to pursue an infringement action. But where, as here, the license agreement contained a covenant not to sue and a grant of a "non-exclusive" license, the written agreement trumped any collateral evidence of an exclusive relationship.

Willful Infringement. The Court also found that Defendant Genencor willfully infringed Novozymes's patent by continuing to sell its competing product after receiving notice of allowance of Novozymes's claims.

"[N]ot only did Genencor continue to manufacture and sell Spezyme Ethyl, it also applied for its own patent claiming what appears to be, in essence, the same technology. Taken together, Genencor's behavior suggests that it deliberately continued to infringe Novozymes's claims on technology that Genencor itself believed was patentable." (slip op. at 31)

Genencor's decision to wait to pull its product from the market until after a decision in the first phase of trial also weighed on the Court's willfulness finding: "Genencor failed to exercise due care when it chose to continue making and selling the accused product until the end of the liability phase of this trial." (slip op. at 32)

Permanent Injunctive Relief. The Court also found that, because the parties are direct competitors, permanent injunctive relief is warranted.

"[T]he statutory right to exclude represents a benefit that, under these circumstances, cannot be equated by an award of cash. These are head-to-head competitors, and Novozymes has a right, granted by Congress, not to assist its rival with the use of proprietary technology." (slip op. at 37)

Interestingly, the Court noted that this legal-remedy analysis would apply regardless of whether Novozymes was awarded a reasonable royalty or lost profits.

<%media(20070221-05-160a.pdf|Novozymes A/S v. Genencor Int'l Inc.)%>, C.A. No. 05-160-KAJ (D. Del. Feb. 16, 2007) (Jordan, J.).

2/12: Purdue Pharma L.P, The P.F. Laboratories, Inc. and Purdue Pharmaceuticals L.P. v. KV Pharmaceutical Company (Patent Infringement)
2/12: Sandata Technologies, Inc. v. First Data Government Solutions, Inc. (Patent Infringement)
2/14: The Nemours Foundation v. Citroen Wolf Communications, Inc., and National Association of Pediatric Practitioners (Trademark infringement and supplemental state law claims)

This was the question before Magistrate Judge Thynge in Inline's Motion for Summary Judgment that the defendants' conduct is an infringing "use" as defined by the statute. <%media(20070202-Inline AOL 02-272 2-1-07.pdf|Inline Connection Corp. v. AOL Time Warner Inc.)%>, C.A. Nos. 02-272, 02-477, Memo. Order (D. Del. Feb. 1, 2007) (Thynge, M.J.). The defendants argued that because they do not provide all the components of the claimed system they do not "use" the invention and therefore cannot infringe the patent-at-issue. The Court found that use only requires that the infringer: excercise control over the system and obtain beneficial use of the system. Id. at 2. Here the defendants provide hardware, instructions and customer support which constitute use under the statute. Id. at 4. "The fact that they do not own all the component parts of the system does not matter." Id. Therefore, to directly infringe a claim for a system, a party does not need to directly use each component of that system.

In a follow-up opinion in the Inline-AOL Litigation, Magistrate Judge Thynge has held that an expert's enablement analysis that concerns only the accused infringing product must be excluded as unreliable. AOL's invalidity expert analyzed the accused ADSL system (an end-to-end digital transmission network), rather than the claimed invention, which encompasses a larger transmission system. Responding to Inline's motion to exclude, AOL argued that the expert applied an appropriate methodology to its enablement inquiry, since the narrower ADSL system fell within the full scope of the broader claims in issue.

The Court rejected this assertion, noting that rather than being an argument of "semantics," as AOL countered, Inline properly identified the expert's faulty analysis:

"At no time did [the expert] evaluate whether the patents would enable one of skill in the art to make or use the claimed invention without undue experimentation." (slip op. at 9) (emphasis in original)

By failing to consider the claimed invention, the expert's opinion on enablement was unreliable as a matter of law and therefore inadmissible.

<%media(20070130-Inline - Enablement.pdf|Inline Connection Corp. v. AOL Time Warner Inc., C.A. No. 02-272-MPT (D. Del. Jan. 29, 2007) (Thynge, M.J.).)%>

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)%>.

How specific must the allegations be in a counterclaim for inequitable conduct or affirmative defense of patent misuse to withstand a motion to strike? That was the issue recently before Judge Robinson in the <%media(20070127-Medpointe 2.pdf|Medpointe, Inc. v. Apotex Inc.)%> matter. C.A. 06-164, Memorandum Order (D. Del. Jan. 26, 2007) (Robinson, J.). It is well-established that inequitable conduct and patent misuse must be pled with particularity. The Court held that in order to be so pled, the allegation must "' specify the time, place and content of any alleged misrepresentations made to the PTO or otherwise 'give the defendant [d] notice of the precise misconduct alleged."" Id. (internal citations omitted). Because the defendants identified the misrepresentation and "the basis for asserting knowledge on the part of the applicants� there is nothing vague about 'time, place or content' vis a vis [the inequitable conduct allegation]" and therefore the Court denied the motion to strike.

Where the inventor of the patent-in-suit is a German citizen, former employee of the plaintiff's predecessor and assigned all rights in the invention to his former employee, can he be subject to an "American-style" deposition? As with all things legal, it depends. Or so Judge Robinson recently held in the <%media(20070127-Medpointe 1.pdf|Medpointe Healthcare, Inc. v. Apotex Inc. )%> case. C.A. 06-164, Memorandum Order (D. Del. Jan. 26, 2007) (Robinson, J.).

The defendants in this case were seeking the deposition of a named inventor on the patent-in-suit and German citizen. The inventor was a former employee of an early predecessor company of the plaintiff. Crucial to the Court's decision was the language in the assignment of the inventor's rights to his former employee. The assignment required the inventor to: "�testify in any legal proceedings�" and "�do everything necessary to aid [his former employer] their successors and assigns, to obtain and enforce proper protection for said invention in the United States�" Id. at 2. (Note: the inventor had agreed to be deposed under the Hague Convention.) The Court held that this assignment only required the inventor to "testify in any legal proceedings" only on behalf of his former employer and "only generally obligates" him to "do everything necessary or desirable to aid" the former employer's successors and assigns (such as the plaintiff here). Id. If the assignment had required him to testify in any legal proceeding on behalf of his former employer or their successors or assigns the outcome likely would have been different. The type of broad language at issue here will not require a non-party to participate in an American-style deposition, and therefore the inventor must be deposed under German law via the Hague Convention process.

Also see Chief Judge Robinson's opinion on the issue of patent misuse <%media(4/20070516-Apotex.pdf|here)%>.

When calculating reasonable-royalty damages, the "hypothetical license negotiation" assumes prominence in the factfinder's decisionmaking process. But what happens when a party to an infringement action seeks to introduce evidence of real negotiations to prove a reasonable royalty? According to Magistrate Judge Thynge, when those failed talks are part of settlement discussions, the numbers are inadmissible.

The Court reaffirmed the vitality of FRE 408 in patent cases by holding that the policy of encouraging "freely negotiated" settlements outweighs the obvious probative value that licensing negotiations have on a damages calculation:

"[D]efendants' argument for admission as providing a 'reality check' is directly contrary to FRE 408[,] which bars evidence when it is offered to prove the validity, invalidity or amount of a disputed claim."

According to the Court, the only significance of the data was its "effect to validate [the party's] assessment of the amount in dispute" - exactly what FRE 408 prohibits.

Interestingly, the Court implied that a potential exception exists: where an expert incorporates the underlying settlement data into his or her damages analysis, the rule may no longer apply.

<%media(20070127-Inline.pdf|Inline Connection Corp. v. AOL Time Warner Inc., C.A. No. 02-272-MPT (D. Del. Jan. 23, 2007) (Thynge, M.J.).)%>

Two statements of note in a recent decision by Judge Jordan (<%media(20070124-Rocep - 05-141[1].pdf|Rocep Lusol Holdings Ltd. v. Permatex, Inc.)%>, C.A. No. 05-141 (D. Del. Jan. 19, 2007) (Jordan, J.):

- An inventor's testimony regarding the meaning of a piece of prior art will be given little or no consideration (as with claim construction) since the testimony is often self-serving. Id. at 12 n.5.

- Disclosing an element of a claim as an alternative embodiment in a piece of prior art rather than as the primary embodiment of the claim will not make a reference non-anticipating. Id. at 12 n.6.

The Court went on to grant the defendants' motion for summary judgment that the patent was invalid based on a PCT application filed by the inventor of the patent-in-suit.

1/16: Purdue Pharma L.P., The P.F. Laboratories, Inc. and Purdue Pharmaceuticals L.P. v. KV Pharmaceutical Company and Actavis Totowa LLC (patent infringement)

1/17: MPEG LA, L.L.C. v. ODS Optical Disc Service, Inc. (f/k/a ODS Business Services, Inc.); and ODS Business Services, Ltd. (declaratory judgment; Lanham Act)

1/18: Nesscap Co., Ltd. and Nesscap, Inc. v. Maxwell Technologies, Inc. (patent infringement)

1/19: Syngenta Biotechnology, Inc., Garwood Seed Co., Golden Seed Co., L.L.C., and Thorp Seed. Co. v. DeKalb Genetics Corp. and Monsanto Co. (declaratory judgment; patent non-infringement)