January 19, 2012

Judge Stark evaluates adequacy of a prior art patent's incorporation by reference additional material described in another patent

In Sunovion Pharmaceuticals Inc. v. Dey Pharm., L.P., Inc., C.A. No. 06-113-LPS (D. Del. Jan. 18, 2012), Judge Stark recently considered the issue of incorporation by reference in connection with Defendants’ allegation that the patents-in-suit were invalid for anticipation. Defendants contended that the prior art patent's description of additional material in another patent satisfied the requirements for incorporation by reference “because it adequately describe[d] with detailed particularity the specific material incorporated . . . and also clearly indicate[d] where that material [was] found (in the specification of the [other] patent).” Id. at 4. Plaintiff argued that the legal standard was not met “because the prior art patent [was] directed to an entirely different invention that merely refer[ed] to the [other] patent as background, and not as part of the substantive description of the invention.” Id. at 3-4 (internal quotations omitted). Judge Stark decided that, “[a]lthough a close question,” the prior art patent adequately incorporated by reference “the practical utility of the compounds described in the [other] patent[,]” and described them as “an integral aspect of the invention claimed in the [prior art] patent Id. at 4-5.

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January 19, 2012

Judge Andrews Distinguishes Fed. Cir.’s Decision in Link_A_Media, Grants Defendants’ Motions to Transfer on Other Grounds

In Wacoh Co. v. Kionix Inc., C.A. No. 10-617-RGA, Judge Andrews recently granted defendants’ motions to transfer after distinguishing the Fed. Cir.’s decision in In re Link_A_Media Devices Corp. and concluding that the “balance of convenience” factors nonetheless tipped in defendants’ favor. Id. at 13. In Wacoh, the plaintiff, a Japanese corporation with its principal place of business in Japan, brought suit in Delaware against three defendants for patent infringement. Id. at 2. The three defendants were all Delaware corporations with principal places of business in New York (Ithaca), California (Pasadena) and California (Sunnyvale), respectively. Id. at 4-5. After filing answers to the complaint denying plaintiff’s allegations of infringement, the three defendants each filed motions to transfer. Id. at 2. Kionix, the defendant with its principal place of business in New York, filed a motion to sever and transfer the case against it to the Northern District of New York. Id. at 2. The other two defendants, VTI and Invensense, filed a joint motion to transfer the cases against them to the Northern District of California. Id. at 2. Following full briefing and oral argument, the Court granted each of the defendants’ motions. Id. at 4, 13. In applying the Third Circuit’s Jumara factors for analyzing § 1404(a) motions to transfer and considering the Fed. Cir.’s recent decision in Link_A_Media, the Court distinguished the facts of this case from those presented in Link_A_Media. Id. at 13. Specifically, the Court noted that, unlike the plaintiff here, the “Link_A_Media plaintiff had substantial connections to the transferee district (that is, its affiliate and its employees, including the inventors, were located there).” Id. at 13. The Court further noted that the conclusion it would draw from Link_A_Media is that “when a plaintiff sues a defendant in District A and the plaintiff, the defendant, and all potential witnesses and evidence are located in District B, and there is no other valid reason for denying a request for transfer to District B, it is an abuse of discretion not to grant the transfer.” Id. at 12-13. Notwithstanding the distinction between the two cases, the Court nonetheless granted defendants’ motions to transfer on the grounds, at least in part, that the plaintiff in this case was a “non-Delaware corporation with no connection of any kind to Delaware.” Id. at 13. Overall, the Court found that in this case the “balance of convenience tips enough in the defendants’ favor.” Id. at 13. The Court’s decision and analysis in this case is particularly noteworthy because it provides some insight as to how the holding in Link_A_Media might be construed and applied going forward.

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January 17, 2012

Judge Robinson Awards Fees to ANDA Defendant.

In a recent decision, Judge Robinson found that although the plaintiffs’ initiation of an ANDA action was not frivolous, its continued prosecution of suit after “agreeing to stipulate” that the defendant did not infringe was “exceptional” and justified an award of attorneys’ fees under § 285. In re: Cyclobenzaprine Hydrochloride Extended-Release Capsule Patent Litig., Civ. No. 09-MD-2118-SLR (D. Del. Jan. 12, 2012). Judge Robinson rejected the defendant’s argument that the initiation of the suit in the first place was frivolous, finding that the plaintiffs’ suit legitimately sought to obtain information about the defendant’s generic formulation that the defendant had refused to provide to the plaintiffs voluntarily, and which the plaintiffs argued should have been (but was not) included in the defendant’s Paragraph IV Notice letters. Id. at 4. However, despite "agree[ing] to stipulate to the fact that [the defendant’s] product, as formulated in its ANDA, did not infringe,” id. at 7, the plaintiffs pressed on. They argued that continued prosecution of the action was the only safeguard against a generic bait-and-switch in which the defendant would secure a final judgment of non-infringement on its current generic formulation (which testimony suggested would never gain FDA approval), benefit from the resulting termination of the 30-month stay, and then reformulate in an infringing manner that would quickly be approved by the FDA. Id. at 5-6. Judge Robinson rejected the plaintiff’s rationale, finding that “[t]he decision to . . . maintain the suit in order to ‘police’ against any possible reformulations by [the defendant] warrants a finding of ‘exceptional’ in light of the FDA’s requirement of re-certification once reformulation occurs.” Id. at 7. “In the event [the defendant] changes its formula, plaintiffs should receive another certification notice and be given the opportunity to file an infringement action based upon the amended formulation.” Id. at 6.

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January 17, 2012

Judge Robinson Denies Motion for New Trial Based on Alleged Error in Not Construing Term

Judge Robinson has denied motions for judgment as a matter of law and for a new trial following jury determinations of validity and non-infringement in McKesson Automation, Inc. v. Swisslog Italia S.p.A., C.A. No. 06-028-SLR (Jan. 12, 2012). In her opinion, Judge Robinson noted that a reasonably jury could have concluded that the accused product did not infringe. Id. at 14. She also found that the defendant’s expert testimony regarding infringement and invalidity was consistent and could not be the basis for a new trial. Id. at 18.

The plaintiff also argued that “the court had a duty to construe [a] term [of the patents-in-suit] and [that] the court’s failure to do so resulted in a miscarriage of justice.” Id. at 14. This argument stemmed from the court’s prior finding that the term at issue need not be construed because the detail provided by the claim sufficiently defines the term and “‘belies any need for further construction.’” Id. at 8. The plaintiff cited the Federal Circuit’s holding in O2 Micro International Limited v. Beyond Innovation Technology Co., 521 F.3d 1351 (Fed. Cir. 2008), for the proposition that where claim construction is improperly placed before the jury, the case must be remanded for a new trial. Judge Robinson rejected this argument for two reasons. “First, the court note[d] that plaintiff’s proposed construction would not have resolved the issue as it is now characterized by the plaintiff.” Id. at 17. “Second, the court emphasize[d], as it did during its [claim construction] opinion, that ‘the specific detail provided by claim 1 defines the precise nature of [the claim term at issue] and belies the need for further construction.’” Id. Judge Robinson further suggested that “even if it was error not to construe the term, it was harmless error since the jury interpreted the term in accordance with the court’s understanding (i.e., the jury did not construe the term in the restrictive fashion advocated by plaintiff).” Id. at 18 n.9. For these reasons, the court found no error requiring a new trial in “declin[ing] to adopt plaintiff’s construction and instead conclud[ing] that the detail in claim one defines the precise nature of the claim.” Id. at 17-18.

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January 13, 2012

Twombly/Iqbal Not Applicable to Affirmative Defenses, Some Counterclaims

Sitting by designation, Judge Bumb recently considered a motion to strike several affirmative defenses and counterclaims. In Bayer CropScience AG v. Dow Agrosciences LLC, C.A. No. 10-1045-RMB/JS (Dec. 30, 2011), plaintiff Bayer CropScience brought an infringement action against Dow Agrosciences, and Dow raised various affirmative defenses and counterclaims. In considering Bayer’s motion to strike some of Dow’s affirmative defenses and counterclaims, the court was faced with the issue of what pleading standard applied. With respect to the affirmative defenses, Judge Bumb stated: “While the Third Circuit has not yet opined as to whether Twombly/Iqbal is applicable to affirmative defenses, this Court agrees with those courts that have found Twombly/Iqbal inapplicable to affirmative defenses.” Id. at 3. Therefore, the court “review[ed] Defendant’s affirmative defenses only for sufficiency and for compliance with Rule 9(b).” Id. at 4. Under this standard, the motion to dismiss the defense of equitable estoppel was granted, but the motion to dismiss the defense of patent misuse was denied. Id. at 7-11.

Turning to the question of counterclaims, Judge Bumb noted that while counterclaims normally are subject to the rigors of Twombly/Iqbal, “[i]n the patent context . . . some courts have, whether expressly or implicitly, declined to apply the rigors of Twombly/Iqbal to defendants asserting invalidity counterclaims.” Id. at 5. Although the case at hand involved a counterclaim of unenforceability rather than invalidity, the court stated that “the same logic that led other courts to conclude that invalidity counterclaims were not subject to the heightened pleading under Twombly/Iqbal leads this Court to the same conclusion with respect to patent unenforceability counterclaims.” Id. at 7. Applying this standard to defendant’s counterclaim for a declaratory judgment of unenforceability, the court dismissed the counterclaim to the extent that it was based on equitable estoppel, but refused to dismiss the patent misuse or prosecution history estoppel aspects of the counterclaim. Id. at 11-13.

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January 13, 2012

Recent post-trial opinion evaluates the sufficiency of evidence of level of skill in the art

In Grape Technology Group, Inc. v. Jingle Networks, Inc., C.A. No. 08-408-GMS (D. Del. January 9, 2012), following a jury verdict of no infringement and validity, Judge Robinson recently decided the parties’ post-trial motions. When denying defendant’s JMOL motion as to the validity of the patents-in-suit, Judge Robinson rejected defendant’s argument that the asserted claims of one patent-in-suit were invalid because it would have been obvious to one of skill in the art to combine two prior art references. Id. at 17. Because defendant failed to present any evidence regarding the level of skill of the art, the court was unable to determine said level of skill, nor was the jury verdict against the weight of evidence. Id. at 19-20.

Jingle had argued that “its expert, Dr. Forys referenced a person ‘in the industry’ when discussing the prior art, and that that testimony is sufficient evidence to establish the level of ordinary skill in the art.” Id. at 18, n.11. Judge Robinson disagreed. “Dr. Forys’s brief, and unsupported, ‘reference’ of a person in the industry hardly creates any evidence that the ordinary level of skill in the art is ‘an individual working in the telecommunications industry,’ as [defendant] claims.” Id. Judge Robinson also pointed out that the expert’s report “inconsistently defined the level of skill in the art as a ‘B.S. degree in Electrical or Computer Engineering or equivalent training as well as 3-5 years of experience in the fields of call center architecture and their components especially involving directory assistance as well as marketing and advertising.’” Id.

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January 11, 2012

Motion to Transfer Venue Granted where Necessitated by Interests of Judicial Efficiency

When does judicial efficiency require the District Court grant a defendant’s motion to transfer venue? Chief Judge Sleet recently ordered transfer to the Northern District of Illinois in a case where parallel litigation was at a more advanced stage than the Delaware case in Motorola Mobility, Inc. v. Apple Inc., C.A. No. 10-cv-867-GMS (D. Del. Jan. 5, 2012). In that case, another infringement action involving the same parties and the same patents had been filed in the Western District of Wisconsin and was later transferred to the Northern District of Illinois. The Northern District of Illinois case had already progressed through substantial discovery and beyond a Markman hearing, and the judge in that matter had already issued a decision construing some of the claim terms. It was scheduled for oral argument in the near future and for trial at least a year before a trial could be held in the Delaware matter. By contrast, the District of Delaware case was in its earliest stages, and related matters involving the Apple, the defendant moving for transfer, were currently stayed and unlikely to proceed during the pendency of the Illinois action.

Considering all of these facts, the court ordered transfer. Applying Supreme Court, Third Circuit, and Federal Circuit precedent, Chief Judge Sleet found that “the balance of interests necessitates the transfer of this action to the Northern District of Illinois.” Id. at 2 n.2. Although “the parties did not concentrate their written submissions or oral arguments on the private interest factors identified [by the Third Circuit] in Jumara,” the court found that these factors favored transfer. Id. In particular, the court observed that because of the parties’ financial means, “considerations of witness convenience, financial constraint, and the location of books and records are not significant issues” and that factor “is often rendered neutral.” Id. Furthermore, the court cited the Federal Circuit’s preference for the jurisdiction in which the action was “first filed,” as expressed in Electronics for Imaging, Inc. v. Coyle, 394 F.3d 1341 (Fed. Cir. 2005), but noted that the public and private interests at play “outweigh the deference afforded to [the plaintiff’s] choice of forum and necessitate[] transfer for reasons of judicial efficiency.” Motorola, at 2 n.2.

Finally, the court considered the defendant, Apple’s, argument that the case should not be tried in Delaware for reasons of forum non conveniens. While the court ordered transfer on other grounds, it warned that this forum non conveniens argument was not persuasive and even “strikes [the court] as disingenuous,” given that Apple itself has filed several patent infringement actions in Delaware and has argued to keep those actions in Delaware. “Consequently, while Apple correctly identified in its Reply that ‘the strongest argument in favor of transfer is judicial efficiency,’ the court urges Apple and other parties to refrain from extending their advocacy to arguments that, as was the case here, appear less than forthright.” Id. (citations omitted).

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January 10, 2012

Special Master Rejects Imposition of Prosecution Bar on Outside Litigation Counsel

In XPRT Ventures, LLC v. eBay, Inc., et al., C.A. No. 10-595-SLR (D. Del. Dec. 30, 2011), Special Master White rejected the Defendants’ arguments in favor of a prosecution bar on the Plaintiff’s Outside Counsel. Id. at 3. Although the Defendants argued that a prosecution bar on the Plaintiff’s Outside Counsel was necessary to protect the Defendants’ confidential and proprietary information, the Special Master agreed with the Plaintiff that the proposed prosecution bar was unreasonable under the circumstances. Specifically, the Special Master found that the proposal, which sought to bar Outside Counsel “from directly or indirectly participating in the preparation or prosecution of a class of patent applications ‘in any way’” was overly broad, especially in light of the “expansive subject areas setting the outer boundaries of the proposed bar, for example, ‘money management,’ ‘advertising and promotion’ and ‘web hosting, or online or mobile commerce.’” Id. at 5. The Special Master found that such a provision effectively could be interpreted “to cover the entire field of commerce in today’s modern age . . . .” Id. at 5-6. Further, the Defendants provided no evidence that the Plaintiff’s Outside Counsel were engaged in competitive decisionmaking for the Plaintiff: Outside Counsel were not involved in any patent prosecutions before the PTO, or with any decisions concerning the Plaintiff’s licensing, pricing, or management of its patent portfolio. Id. at 7-8. Under the circumstances, the Special Master found that the concerns raised by the Defendants would be adequately safeguarded under the Court’s Local Rules and an anticipated stipulated protective order providing that confidential materials would be used only in the present litigation. Id. at 8.

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January 9, 2012

Bifurcation of damages and willfulness does not support plaintiff's request to bifurfacte defendant's counterclaims

In Quantum Loyalty Systems, Inc. v. TPG Rewards, Inc., C.A. No. 09-22-SLR-MPT (D. Del. Dec. 22, 2011), Judge Thynge recently considered plaintiff’s request that the court, in addition to damages and willfulness, bifurcate consideration of certain of defendant’s counterclaims. Specifically, plaintiff asked that the court “sever, dismiss, bifurcate or transfer” the following counterclaims because they were unrelated to the factual and legal issues surrounding plaintiff’s claim of infringement of the patent in suit:

- Count II: Declaration of Invalidity and Noninfringement of U.S. Patent No. 7,156,294 (“the ‘294 patent”);
- Count III: Declaration of Invalidity and Noninfringement of U.S. Patent No. 7,066,383 (“the ‘383 patent);
- Count IV: Attempted Monopolization;
- Count V: False Advertising under Section 43(a) of the Lanham Act;
- Count VI: Deceptive Trade Practices under Delaware Law;
- Count VII: Tortious Interference with Prospective Business Relations;
- Count VIII: Breach of Settlement Agreement;
- Count IX: Cybersquatting under the Anticybersquatting Consumer Protection Act (15 U.S.C. § 1125(d)(1));
- Count X: False Designation of Origin under the Lanham Act (15 U.S.C. § 1125(a)); and
- Count XI: Delaware Common Law Unfair Competition.

Id. at 4.

Defendant argued that the counterclaims were appropriate because “the issues for all of the claims, defenses, and counterclaims are substantially intertwined.” Id. Judge Thynge ultimately agreed. Regarding defendant's antitrust counterclaim, plaintiff argued, among other things, that bifurcation was appropriate because the court has already bifurcated damages and “much of the anticipated antitrust discovery will focus on damages and other economic factors and involve discovery matter unrelated to the patent case.” Id. at 7. Judge Thynge disagreed. “[T]he invalidity and unenforceability of the [patent in suit] is, in part, the basis of [defendant’s] antitrust claims as well as, two of its affirmative defenses to [plaintiff’s] infringement claim. Therefore, bifurcation here . . . would likely result in substantial duplication of evidence, and the presentation thereof, in two separate cases.” Id. at 9.

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January 5, 2012

Magistrate Judge Burke: Motion to Consolidate Granted

Magistrate Judge Burke recently considered a motion to consolidate two pending patent cases in Eastman Chem. Co. v. Alphapet Inc., C.A. No. 09-971-LPS-CJB (Dec. 29, 2011). Finding for the defendant and ordering consolidation, Magistrate Judge Burke noted that “there are numerous common questions of law and fact between the 971 action and the 702 action.” Id. at 6.

For example, the court found that both actions “involve patents that cover similar technology relating to polyesters, and . . . [t]his court has frequently ordered consolidation where the technology at issue in the separate actions appeared to be similarly related.” Id. As part of this finding, the court observed that all five of the patents asserted in the two actions belong to one USPTO class, and that three of them belong to the same subclass. “Moreover, the two matters involve related technologies that were allegedly utilized at a single [defendant] facility . . . . This will likely result in other commonalities of fact and law.” Id. at 7. The court also found that “there are likely to be a number of efficiencies that result from consolidation.” These included “significant overlap of parties between the two actions,” and the efficiency of “coordinat[ing] deposition testimony and document discovery issues.” Id. at 8-9.

The court next concluded that consolidation would not significantly delay resolution of the actions. The two cases had progressed beyond infringement allegations and non-infringement and invalidity counterclaims. But no scheduling order had yet been entered in one of the actions, and no responses to discovery requests had yet been served. Although the plaintiff objected to consolidation based in part on its proposed schedule in one action, the court found that the “proposed schedule for the 702 action is not dramatically different from the schedule currently in place in the 971 action.” Therefore, “[w]hile it may be (though it is not certain) that some aspects of discovery on the patent claims in the 702 action could move more quickly than they might if that case were consolidated with the 971 action, the overlapping nature of discovery applicable to both cases means that efficiency will best be aided by consolidation.” Id. at 14. Given each of these considerations, Magistrate Judge Burke found that “the relationship between the cases and the efficiencies that would be gained by combining these cases into a single action weighs strongly in favor of consolidation.” Id. at 16.

Finally, the court considered the potential for jury confusion if the actions were to be consolidated for trial and pointed out that consolidation under Rule 42(a) “does not foreclose the possibility of separate trials.” Id. Noting that decisions regarding trial would ultimately be left to Judge Stark, Magistrate Judge Burke ordered consolidation of the cases for pretrial purposes only.

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