Continuing its federal-practitioner CLE series, the Delaware chapter of the Federal Bar Association hosted an engaging and challenging program on legal ethics this afternoon in Wilmington. Following a luncheon at the Hotel du Pont with the district judges, the event began with an interactive (read: Socratic) presentation by two experts in the field: Susan Martyn, a professor at the University of Toledo College of Law, and Lawrence J. Fox, a partner with Drinker Biddle & Reath, LLP, in Philadelphia. The afternoon concluded with a roundtable discussion of ethics in the District of Delaware led by district judge Joseph J. Farnan Jr., district judge Sue L. Robinson, and magistrate judge Leonard P. Stark.
Our thanks to Susan, Larry, and the Court for putting together a successful and enjoyable FBA event.
Last week, District Judge Sue L. Robinson rejected a party's attempt to stave off a timely motion to amend on the grounds of futility:
"I generally reject such futility arguments if they present substantive disputes, either of the law or of the facts. In other words, if matters are pleaded consistent with Rules 8 and 9(b) of the Federal Rules of Civil Procedure, the substantive merits of allegations made in either an amended complaint or an amended answer should be tested through a substantive motion (pursuant to, e.g., Rules 12(b)(6) or 56), not a procedural one."
In the underlying litigation, the defendant's government-use defense "clearly presents issues of fact and law" that are not appropriate for resolution "in this procedural posture."
Under the PTO's patent-examining manual, applicants "have a duty to bring to the attention of the Office any material prior art or other information cited or brought to their attention in any related foreign application." According to yesterday's decision by district judge Sue L. Robinson, however, this duty is tempered by the materiality standard:
"The question remains, how material is a declaration disclosed in foreign patent proceedings, where neither the declarant nor the testing has not been vetted through the discovery process and where the declaration was not ultimately sufficient to invalidate the European counterpart?"
Answering in the negative, the Court found that "such a declaration is not material and, therefore, irrelevant . . . ."
On February 20, 2009, Judge Robinson issued an opinion granting in part and denying in part defendant Abbott Laboratories’ motion to dismiss. Ethypharm S.A. France v. Abbott Laboratories, C.A. No. 08-126-SLR, Memo. Op. (D. Del. Feb. 20, 2009). The plaintiff, a French pharmaceutical company, alleges in its complaint that the defendant, a U.S. pharmaceutical company, interfered with plaintiff’s U.S. licensee from marketing and selling plaintiff’s product in the United States. The defendant sought to dismiss all of plaintiff's claims, including antitrust claims under sections 1 and 2 of the Sherman Act; and common law claims for unfair competition, tortious interference with existing or prospective business relations, tortious interference with contract, and restraint of trade.
The Court denied the defendant’s motion to dismiss the plaintiff’s Sherman Act claims. In doing so, the Court answered affirmatively the question “whether a foreign name-brand drug manufacturer, which does not itself market and distribute its product in the United States but does so through an exclusive United States distributor, is entitled to avail itself of the protection of the antitrust laws . . . .” Id. at 6. The Court held that plaintiff’s participation in the U.S. market through its third party U.S. licensee entitles plaintiff to challenge the defendant’s conduct with respect to the plaintiff’s licensee. Moreover, the defendant’s actions related to the plaintiff’s licensee “indicate an intent to harm [the plaintiff], if anyone.” Id. at 10.
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.
Although recent cases in the District of Delaware have involved the denial of motions to stay pending reexamination, on February 24, 2009, Judge Sleet granted the defendants’ Motion to Stay Pending Inter Partes Reexamination. Wall Corp. v. BondDesk Group L.L.C., C.A. No. 07-844-GMS, Order (D. Del. Feb. 24, 2009). The Court noted that the only factor weighing against granting the stay was the delay caused by the reexamination. However, the Court found that “this delay does not, by itself, amount to undue prejudice.” Factors weighing in favor of the stay included: (1) the filing of the motion early in the case, and (2) that the defendant would be “estopped from making the same invalidity arguments that it makes to the PTO . . . in this case, because the reexamination is inter partes.” Id. at 2.
In the District of Delaware, parties with nationwide operations are often unsuccessful in seeking transfers out of the jurisdiction. This is especially true when Delaware corporations are involved. But a decision today by district judge Sue L. Robinson reminds litigants that the scope of operations can also favor a convenience transfer:
"Generally, I do not grant transfer motions unless there is a first-filed case in another district . . . or the defendant is truly a regional enterprise. Under the circumstances at bar, I find that defendant . . . is more akin to a regional enterprise than a national player. Therefore, I find it is appropriate to transfer the above captioned case to the Northern District of California, for the convenience of parties and witnesses and in the interest of justice."
A great area of discussion since the Supreme Court's decision in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) has been whether the bare bones pleading requirements typically seen in a patent infringement complaint would be sufficient or whether more detail would be required. The District of Delaware, following Federal Circuit precedent, has confirmed that a complaint alleging infringement based on Fed. R. Civ. P. Form 18 (2006) will be sufficient to survive a motion to dismiss. S.O.I.TEC Silicon On Insulator Technologies, S.A. v. MEMC Electronic Materials, Inc., C.A. No. 08-292-SLR, Memo. Order (D. Del. Feb. 20, 2009). The Court found that a plaintiff does not need to specify particular products or manufacturing details nor does a plaintiff need to set forth specific factual allegations in support of a claim for willful infringement. Id. at 3-4.
In managing litigation, trial judges are often called on to enforce the structure of the case while simultaneously preserving the fluidity of the parties' claims. These competing goals take form in the rules governing scheduling orders and the amendment of pleadings, respectively. In a recent decision, Magistrate Judge Mary Pat Thynge resolved a meritorious, but untimely, motion to amend by reference to these competing policies.
Because the information forming the new inequitable-conduct allegations did not fully come to light until after several depositions, the Court granted the motion to amend:
"[T]he court finds that Amazon is pleading new legal theories based on additional information which was recently provided and confirmed through the depositions of the inventors. Although Cordance maintains that Amazon possessed the documents which form the basis of its inequitable conduct pleadings for more than a year, in light of the 'pleading with particularity requirement of Rule 9(b),' it was appropriate for Amazon to confirm the factual allegations through discovery."
By referencing the timing of the discovery, and the concomitant need for particularized detail in this instance, the Court adopted the fluidity goal at the expense of its structural counterpart. In making this determination, however, the Court did not lose sight of the institutional value of adhering to scheduling orders: the inequitable-conduct defense will likely be tried apart from the other issues in the case.
The following post was graciously written by one of our fellow associates, Pilar Kraman.
On February 17, 2009, Magistrate Judge Stark granted defendant Hewlett-Packard’s Motion for Leave to Amend Answer and Affirmative Defenses. St. Clair Intellectual Property Consultants, Inc. v. Samsung Electronics Co., Ltd., C.A. No. 04-1436-JJF-LPS (D. Del. Feb. 17, 2009). The defendant sought to amend its answer to assert a license defense based upon a license agreement between the defendant and a third party. The plaintiff, St. Clair, argued that the Motion should be denied because the license agreement was covered by two discovery requests directed to the defendant by the plaintiff.
The Court was troubled by the defendant’s apparent failure to disclose the document. However, the Court noted that defendant’s discovery conduct, while not “exemplary,” did not rise “to the level of bad faith[.]” Moreover, the Court concluded that the plaintiff would not suffer undue prejudice due to the relative early stage of the case.
Author: Pilar Kraman is an associate in Young Conaway’s Intellectual Property Litigation and Commercial Litigation Sections. She focuses her practice primarily on patent litigation, trade secret and complex corporate and commercial litigation matters in the United States District Court for the District of Delaware and the Delaware Court of Chancery. During law school, Ms. Kraman served as a member of the University of Pittsburgh Journal of Technology Law & Policy, and completed an externship for the Honorable Henry duPont Ridgely of the Supreme Court of Delaware. Prior to law school, Ms. Kraman worked primarily in the social science research field. Most recently, she worked as a research analyst for the Council of State Governments where she studied issues and trends impacting state governments and proposed policy options.
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