Delaware IP Law Blog

A defendant cannot complain to have a default judgment set aside where plaintiff would be prejudiced, there is no meritorious defense and their conduct in defaulting was culpable. Amazon.com, Inc. v. Citi Services, Inc., Citi Services, Ltd., Theochari and Smith, C.A. No. 99-543-GMS, Memorandum (D. Del. Nov. 21, 2008). In this case, plaintiff brought suit against the defendants for trademark and copyright infringement, unfair competition and dilution. Id. The defendants moved to dismiss the complaint and prior to the completion of briefing on that issue, defense counsel moved to withdraw. Id. at 2. The court granted the motion to withdraw and ordered the defendants to obtain new counsel and respond to outstanding discovery or expose themselves to the possibility of a default judgment being entered against them. Id. After multiple orders reminding the defendants of their obligation to respond and to attend a conference with the Court, the Court entered default judgment against all defendants including an award of monetary and injunctive damages to the plaintiff. Id. at 3. Over six years later, the individual defendants (Smith and Theochari) moved to set aside the default judgment and order.
The Court declined to set aside the judgment. In his decision, Judge Sleet found that lifting the default judgment would be extremely prejudicial to the plaintiff whose judgment would be at risk and would have to re-litigate its claims. Furthermore, the lapse of over six years would impact the evidence and witnesses available to plaintiff to prove their case and there may be additional issues regarding the statute of limitations among others. Id. at 5. The defendants failed to show a meritorious defense because the Court previously entered an order denying defendants’ motion to dismiss for lack of personal jurisdiction. Id. at 6. Finally, defendants’ “repeated failure to respond to discovery request and the court’s order to secure new counsel” demonstrates their culpability. Id.

Amazon.com, Inc. v. Citi Services, Inc., Citi Services, Ltd., Theochari and Smith, C.A. No. 99-543-GMS, Memorandum (D. Del. Nov. 21, 2008).

Once a patentee files a disclaimer, any cause of action related to an interference proceeding is mooted and therefore the federal court lacks jurisdiction to hear a declaratory judgment dispute. 3V, Inc. v. CIBA Specialty Chemicals Corp., C.A. Nos. 06-593-JJF, 06-629-JJF, 06-672-JJF, Opinion, at 10 (D. Del. Nov. 19, 2008). If a party wishes to continue to address the priority date of the claims or whether a disclaimed patent constitutes prior art, they can assert those claims in any future litigation surrounding potential infringement, but it is not appropriate for the court to address them in the context of an appeal from the Board of Patent Appeals and Interferences once one of the patents involved in the underlying interference has been disclaimed. A priority dispute must exist to establish federal jurisdiction over a Section 291 or Section 146 action and interfering patents are a prerequisite to any priority dispute. Id. at 12.

The court also denied defendant’s motion for leave to discover documents related to the plaintiff’s disclaimer and decision to file the disclaimer. Id. at 14. Defendant sought such documents because, they argued, the plaintiff purposefully withheld their intent to file a disclaimer from the defendant in order to drive up litigation costs and therefore defendant should be entitled to exceptional case damages. Id. at 5. The court found such information to likely constitute work-product or be subject to the attorney-client privilege. Id. at 14-15. Furthermore, the fact that defendant spent money and time engaging in discovery was not sufficient to justify the burden of additional discovery. Id. at 15.

3V, Inc. v. CIBA Specialty Chemicals Corp., C.A. Nos. 06-593-JJF, 06-629-JJF, 06-672-JJF, Opinion (D. Del. Nov. 19, 2008).

What are reasonable attorneys’ fees when a court finds a plaintiff pursued litigation in bad faith as to 29 of 33 claims in a total of 3 patents? That was the question raised by the parties and addressed by Magistrate Judge Thynge in a recent opinion, Microstrategy Inc. v. Crystal Decisions, Inc. d/b/a Business Objects Americas, C.A. No. 03-1124-MPT, Memo. Order (D. Del. Nov. 19, 2008). After the Court awarded defendant’s motion for fees and expenses pursuant to 35 U.S.C. 285, (see earlier blog posting here), the defendant submitted its request for approximately $2 million in fees and expenses and additional fees incurred in submitting the original motion for fees and the submission supporting their fee request. Id. at 3. Plaintiff argued that the only fees that should be awarded are those where the invoices detail that the time was spent specifically on defending the 29 claims that were found invalid and not infringed, and that the block-billed invoices that defendant submitted were therefore inadequate. Id. at 4.

The Court found that “[a]lthough many of the entries do not address a specific patent, they describe conduct and tasks consistent with and necessary in patent litigation.” Id. at 9. Following the District of Maryland’s opinion in Beckman Instruments Inc. v. LKB Produkter AB, 17 U.S.P.Q.2d 1190 (D. Md. 1990), aff’d, 930 F.2d 37 (Fed. Cir. 1991), Magistrate Judge Thynge further held that it was not necessary for the defendant or the Court to determine “precisely what fees and expenses are solely attributable to defending those patent claims made in bad faith.” Id. The legal work performed must be related in some way to the bad faith not that it flow solely from the bad faith or misconduct. Id. at 10.

Therefore, defendant was entitled to $2,249,387.22 in fees and costs less the overhead costs charged. Id. at 11. The Court awarded an additional $138,399.02 for fees and costs related to the fee application and related briefing. Id. at 13.

As a procedural note, this case was a fee petition after an award of summary judgment and not after a full trial on the merits.

Microstrategy Inc. v. Crystal Decisions, Inc. d/b/a Business Objects Americas, C.A. No. 03-1124-MPT, Memo. Order (D. Del. Nov. 19, 2008).

10/30: Sequenom Inc. v. Ibis Biosciences (patent infringement)
10/31: Belden Technologies Inc. v. LS Corp., LS Cable Ltd., LS Cable America, Inc., Superior Essex Inc., Superior Essex Communications LP (patent infringement)
11/4: Purdue Pharma Products LP, Napp Pharmaceutical Group Ltd., Ortho-McNeil-Janssen Pharmaceuticals Inc. v. Impax Laboratories, Inc. (patent infringement)
11/5: LG Electronics, Inc. v. ASKO Appliances Inc., ASKO Cylinda AB, ASKO Appliances Holding AB, Antonio Merioni Spa, Daewoo Electronics Corp. (patent infringement)
11/6: Rembrandt Technologies LP v. Fox Television Stations, Inc. and MyNetworkTV Inc. (patent infringement)
11/12: Synthes (USA) v. Spinal Kinetics Inc. (patent infringement)
11/17: Ameranth, Inc. v. Marc D. Kessman, TeknoWidgets, LLC (misappropriation of trade secrets)
11/17: Media Technologies Licensing LLC v. Printroom, Inc. (patent infringement)
11/19: Eli Lilly and Company and The Trustees of Princeton University v. Teva Parenteral Medicines, Inc. (patent infringement)

The Federal Circuit has affirmed a liability determination by District of Delaware Judge Sue L. Robinson. In the underlying litigation, the district court rejected all parties' claims: the patentee failed to demonstrate infringement, and the defendants came up short in their invalidity and unenforceability cases. Without discussion, the Federal Circuit agreed.

Takeda Pharma. Co. Ltd. v. Teva Pharma. USA Inc., No. 2008-1314 (Fed. Cir. Nov. 7, 2008) (per curiam).

Also see the district court decision: Takeda Pharma. Co. Ltd. v. Teva Pharma. USA Inc., C.A. No. 06-033-SLR (D. Del. Mar. 31, 2008) (Robinson, J.).

For those contemplating the introduction of an adverse expert's deposition testimony, District of Delaware Judge Sue L. Robinson has issued a roadmap. In its memorandum order, the Court adopted, by reference to another Delaware court, the following theory of expert testimony:

[T]he fact that a party has control over whether or not to introduce the expert and [the] testimony supported by him, and the fact that a party has the right to choose the expert in the first place, certainly adds credence to the theory that an agency relationship exists between the expert and his supporting party. Given that dynamic, it is unclear why a statement made by an expert in the course of his testifying on behalf of a party, which is adverse to that party, should not be admissible against that party.

Although as a result "there are no absolute evidentiary obstacles" to the use of these expert depositions at trial, the Court cautioned that other barriers remain. As enumerated in the decision, included among these are a variety of considerations under FRE 403 and 802.

Teva Pharma. USA Inc. v. Abbott Labs., C.A. No. 02-1512-SLR (D. Del. Nov. 5, 2008) (Robinson, J.).

Just a short note that our thoughts and prayers are with our fellow blogger at the 271 Patent Blog, Peter Zura, and his family during this time of recovery.

Following the Court’s recent denial of Tyco Healthcare Group’s motion for judgment as a matter of law, Judge Sleet provides another blow to the defendant by granting plaintiff Becton Dickinson and Company’s motion for award of damages, prejudgment interest and a permanent injunction and denying the plaintiff’s motion to stay the injunction pending any appeal. Becton Dickinson and Company v. Tyco Healthcare Group LP, C.A. No. 02-1694-GMS, Memo. Order (D. Del. Oct. 29, 2008).

Becton Dickinson obtained an infringement verdict against the defendant in October 2004 along with an award of damages for a reasonable royalty and lost profits. The Court granted defendant’s motion for a new trial on infringement issues but denied their motions with respect to damages. The infringement case was re-tried in November 2007 and the parties entered a stipulation setting forth the manner in which damages should be calculated from January 2004 through the completion of the litigation. Id. at 1, 3. Tyco was again found to infringe plaintiff’s patent and plaintiff moved for an award of damages. In its opposition to plaintiff’s motion, Tyco contended that the lost profit numbers were not accurate based on the failure of plaintiff’s to have the capacity to manufacture the additional sales that were made during the relevant time period. The stipulation did not provide for damages to be effected because of lack of capacity. Judge Sleet refused to set aside the parties’ stipulation and adjust the damages where Tyco could have insisted that a provision be in the stipulation to cover such a situation, and awarded the plaintiff’s request for the reasonable royalty and lost profits damages. Id. at 4.

In agreement with Judge Robinson’s recent order in Cordis Corp. v. Medtronic Vascular Inc., C.A. No. 97-550-SLR, Order (D. Del. Sept. 15, 2008) (see post here), Judge Sleet found the applicable rate to be the prime rate, compounded quarterly as that rate “best represents the cost of borrowing money.” Id. at 5 (internal citations omitted).

Finally, in what has become a rare occurrence since the Federal Circuit’s decision in eBay, Inc. v. MercExchange, L.L.C., the Court granted plaintiff’s request for a permanent injunction. The parties in this case, are direct competitors, plaintiff established it lost 40% market share during the period of infringement, and although defendant’s business relationships may be harmed by the injunction “that is the risk Tyco took when it placed a potentially infringing product on the market and continued to make sales of that product.” Id. at 8.

And now a public service announcement…The Court in this matter denied the defendant’s request for a stay of the injunction pending their appeal where the request was only mentioned “in passing” and they failed to address all of the factors relevant to the analysis in its brief. Id. at 9-10. So make sure if you are going to move for some form of relief that you address all of the relevant factors required for the court to analyze your request.

Becton Dickinson and Company v. Tyco Healthcare Group LP, C.A. No. 02-1694-GMS, Memo. Order (D. Del. Oct. 29, 2008).

Becton Dickinson and Company won a jury verdict back in 2004 against Tyco Healthcare Group, but the Court granted defendant's post-trial motion and allowed the infringement case to be re-tried. Following the retrial in November 2007, Tyco Healthcare Group LP was again found liable and subsequently moved for judgment as a matter of law pursuant to Fed. R. Civ. P. 50(b) arguing that the jury’s finding was not supported by the evidence. Becton Dickinson and Company v. Tyco Healthcare Group LP, C.A. No. 02-1694-GMS, Memo. (D. Del. Oct. 17, 2008). The Court denied defendant’s motion. Id. Of note, the Court agreed that the direct evidence of infringement proffered by the plaintiff was not sufficient to support an infringement verdict. Id. at 6-7 n.2. That being said, however, the Court in denying the motion, relied on Federal Circuit precedent which holds “[T]here is no requirement that direct evidence be introduced,” and the circumstantial evidence presented by plaintiff’s fact and expert witnesses was sufficient to support the verdict. Id. at 6.

Becton Dickinson and Company v. Tyco Healthcare Group LP, C.A. No. 02-1694-GMS, Memo. (D. Del. Oct. 17, 2008).

10/8: Autocell Laboratories, Inc. v. Cisco Systems, Inc. (patent infringement)
10/10: Redbox Automated Retail LLC v. Universal Studios Home Entertainment LLC, Universal City Studios LLLP, Universal City Studios Production LLLP and Focus Features LLC (copyright misuse and antitrust)
10/14: Fairchild Semiconductor Corp. and System General Corp. v. Power Integrations Inc. (patent infringement)
10/14: Dyson Inc. v. Bissell Homecare Inc. (declaratory judgment action for non-infringement)
10/17: Cordis Corp. v. Boston Scientific Corporation and Boston Scientific Scimed, Inc. (patent infringement)
10/20: Endo Pharmaceuticals Inc. and Penwest Pharmaceuticals Co. v. Barr Laboratories Inc. (patent infringement)
10/21: Aerocrine AB and Aerocrine Inc. v. Apieron Inc. (patent infringement)
10/23: Watson Laboratories Inc. v. Barr Laboratories Inc. and Barr Pharmaceuticals Inc. (patent infringement)
10/23: NMT Medical Inc. and Lloyd A. Marks v. W.L. Gore & Associates Inc. (patent infringement)
10/24: Courtsey Products LLC v. Royal Cup Inc. (patent infringement)
10/27: Emi April Music Inc., Monica's Reluctance to LOB, Hunglikeyora Musica, WB Music Corp. and Naughty Music v. Lobby House Inc. and Kenneth Caudill (copyright infringement)
10/28: DVDPlay Inc. v. Coinstar E-Payment Services Inc. and Video Vending New York Inc. (patent infringement)
10/29: Cephalon Inc. and CIMA Labs, Inc. v. Barr Pharmaceuticals, Inc. and Barr Laboratories Inc. (patent infringement)