April 7, 2010

Judge Robinson: No Misrepresentation to Call Puerto Rican Rum "Havana Club" Rum

Yesterday, Judge Robinson issued an opinion in Pernod Ricard USA LLC v. Bacardi U.S.A., Inc., C.A. No. 06-505-SLR (D. Del. Apr. 5, 2010). Plaintiff Pernod alleged that Bacardi "made false and misleading representations concerning the geographic origin of its 'Havana Club'-branded rum in violation of Section 43(a) of the Lanham Act." Id. at 1. The Court noted the lack of caselaw regarding the meaning of "geographic origin," and that the term is susceptible to two interpretations: place of present production, or place of historical origin / "heritage." In other words, does a "Havana Club" rum have to be presently manufactured in Cuba, or merely manufactured using a Cuban recipe by a company with Cuban roots?

After a brief discussion of the caselaw, the Court avoided the issue, holding that the Bacardi rum is not misleading on either count. It accurately displays "Puerto Rican Rum" or "crafted in Puerto Rico" on both sides of the bottle, id. at 16-19, and the Bacardi company and its rum recipe both have a Cuban heritage. Id. at 19-20. Plaintiffs argued that Bacardi had changed the recipe, negating the Cuban heritage; the Court recognized that there had been minor modifications to the recipe, but that the resulting product was almost identical. Id. at 21. Regarding any minor taste differences in the resulting product, according to the Court, "As the expression goes, 'if it looks like a duck, swims like a duck and quacks like a duck, then it probably is a duck.'" Id. at fn. 23. The Court also twice noted, on pages 20 and 21, that "The First Amendment protects defendant's ability to accurately portray where its rum was historically made - as opposed to claiming that the product is still made there."

Pernod Ricard USA LLC v. Bacardi U.S.A., Inc., C.A. No. 06-505-SLR (D. Del. Apr. 5, 2010)

April 5, 2010

Judge Robinson: Motion for Reconsideration Denied

Last August, we wrote about Judge Robinson's reversal a 2002 inequitable conduct decision in one of the Cordis Corp. v. Boston Scientific cases. Judge Robinson had initially found the two asserted patents invalid for inequitable conduct. Cordis appealed, won on appeal, and then prevailed again on remand. Boston Scientific then filed a motion for reconsideration, and Judge Robinson issued a memorandum opinion on Thursday addressing the motion. Cordis Corp. v. Boston Scientific Corp., C.A. No. 98-197-SLR (D. Del. Mar. 31, 2010)

Boston Scientific asserted that "the Federal Circuit's mandate clearly limited the court's inquiry on remand 'only to supplement and explain its prior findings on deceptive intent and taint," id. at 4, and that the Court "did not address all of the questions posed by the Federal Circuit," id. at 6. The Court disagreed on both counts, essentially holding that if the Federal Circuit had mandated that it review its prior findings, it must also be able to change its prior conclusion; a contrary interpretation would "leave the court in the untenable position of submitting for appellate review a factual record which is starkly inconsistent with the court's previous legal determinations." Id. The Court further held, as far as addressing individual questions, that its analysis did not deviate from the Federal Circuit's mandate.

Boston Scientific further argued that reversal as to one of the two patents was improper, because Cordis had failed to appeal the holding as to that patent. The Court again disagreed, holding that "Irrespective of Cordis' failure to explicitly place the enforceability of the . . . patent at issue [on appeal], the Federal Circuit's mandate directing the court to engage in a factual inquiry regarding deceptive intent - relevant to the enforceability of [both] patents - implicitly does so." Id. at 6-7.

Cordis Corp. v. Boston Scientific Corp., C.A. No. 98-197-SLR (D. Del. Mar. 31, 2010)

April 5, 2010

Magistrate Judge Stark: Opinions on Motion to Compel U.S. Depositions of Foreign Inventors

Magistrate Judge Stark issued several orders and memorandum orders last wednesday in Aerocrine AB v. Apieron, Inc., C. A. No. 08-787-LPS (Mar. 30, 2010), addressing inequitable conduct, stay of the litigation, and discovery issues. We have posts forthcoming on the other orders - this post addresses the discovery-related order.

In it, Magistrate Judge Stark dealt with a motion to compel depositions of various foreign inventors of asserted patents. Defendant Aperion moved to compel Aerocrine to produce each of 8 foreign inventors for depositions in the U.S. The Court granted four of the motions, and denied four. The inventors shared certain characteristics: all of them were co-inventors of a patent in suit, each was a co-founder of Aerocrine, and each had assisted with production. The deciding factor was the degree of control that Aerocrine could assert over the inventors. The Court granted the motion to compel as to the inventors who were either still working for Aerocrine as officers or directors, or who signed patent assignment agreements specifically requiring that they be available testify in relation to these patents.

Aerocrine AB v. Apieron, Inc., C. A. No. 08-787-LPS (Mar. 30, 2010)

April 1, 2010

Judge Stark: Inequitable Conduct Amendment Allowed

Magistrate Judge Stark recently issued a memorandum order in Aerocrine AB v. Apieron Inc., C. A. 08-787-LPS (D. Del. Mar. 30, 2010). The order granted a motion by plaintiff Apieron to amend their complaint to add inequitable conduct allegations, and denied defendant Aerocrine's motion for judgment on Apieron's pleadings alleging inequitable conduct.

The inequitable conduct allegations arose from the deposition of a non-party scientist in the field of the patents. The scientist explained that he had performed research directed to the same subject matter of the patents, and prior to their earliest filing date. The scientist also stated that he had presented his research at a conference attended by the inventors of the asserted patents, and that "it would be 'hard for [him] to imagine' that [one of the inventors] was not aware of his work, because [they] went to meetings together between 1993 and 1999, 'knew each other and talked about [the research].'" Id. at 5. According to the proposed amendment to the complaint, the inventors knew of the research presented at the conference, and the research anticipates every element of at least one (specific) claim of each of the patents. None of the inventors disclosed the research to the patent office.

The Court granted the motion to amend the complaint, because it "was filed less than a month after Apieron took [the scientist's] deposition and became aware of the basis for its allegations of inequitable conduct," and there was no undue prejudice or evidence of bad faith or a dilatory motive in their conduct. The Court also denied Plaintiff's opposing motion for judgment on the pleadings, holding that that these allegations, laid out with detail in the amended complaint, were enough to plead inequitable conduct with particularity as required by the Federal Circuit's Exergen decision. Id. at 22.

Aerocrine AB v. Apieron Inc., C. A. 08-787-LPS (D. Del. Mar. 30, 2010)

March 30, 2010

Judge Sue L. Robinson: Daubert and Renewed Motion for Summary Judgment in Dispute Over ProV1 Golf Balls

On remand from the Federal Circuit for re-trial on the issues of obviousness and anticipation, Judge Robinson denied defendant Acushnet Company’s renewed motion for summary judgment and Daubert motion, she granted in part and denied in part Acushnet Company’s motions in limine and granted plaintiff Callaway Golf Company’s motions in limine. Callaway Golf Company v. Acushnet Company, C. A. No. 06-091-SLR, Memo. Op. (D. Del. Mar. 3, 2010). The technology at issue in this case was Acushnet’s Titlest Pro V1, Pro V1* and Pro V1x golf balls. The Federal Circuit reversed the court’s entry of summary judgment of no anticipation, vacated the obviousness judgment based on irreconcilably inconsistent jury verdicts, and remanded for a new trial.

The court denied defendant’s motion for summary judgment on anticipation finding that the asserted piece of prior art known as the “Nesbitt” patent does not explicitly anticipate plaintiff’s patent. Defendant’s argument was that certain measurements taken on balata balls would “teach a person of skill in the art that a polyurethane cover must invariably have the same Shore D hardness.” The court found that “[a]side from attorney argument, no evidence (let alone Nesbitt) cited by Achushnet makes that causative leap, to wit, that if A equals B, and A equals C, then C equals B.” Id. at 7.

On remand, Acushnet renewed its Daubert motion to exclude the expert testimony of plaintiffs’ damages expert, Brian Napper. Defendant moved to disqualify Mr. Napper for (1) failing to create the “but for” world of lost profits starting at the first date of infringement; and (2) failing to account for what players using the infringing balls would play with in the absence of that ball (the so-called “premium market”). Specifically, Acushnet argued that the expert did not include in his analysis what defendant would have offered at the first date of infringement if the Pro V1 ball was not available, how the market would have responded to that offering or what the market would have looked like if they withdrew the Pro V1 in 2003. Id. at 12. Judge Robinson stated that “[t]o credibly demonstrate that Acushnet would have had viable, non-infringing alternatives to offer in 2001 – as well as to predict how the market would have responded to these alternatives by 2003 – is an exercise that may be appropriate, but certainly is not one that is mandatory in light of its speculative nature.” Id. at 13. The court further found the reasoning in Mr. Napper’s report to be grounded on “real world facts, and therefore, acceptable.” Id. “For any economic hypothesis to account for all variables is not possible, let alone required.” Id. (emphasis in original).
Defendant also argued that the expert calculated lost profits on sales by companies that do not own the patents-in-suit. In response, the court held that “where the profits of a wholly-owned subsidiary flow up to the parent, inclusion of such profits is appropriate.” Id.

The court granted defendant’s motion to exclude evidence of defendant’s new Pro V1 balls, which defendant offered as a non-infringing alternative, and therefore, defendant argued was relevant to commercial success and damages. The court found this evidence lacks foundation since it was not vetted through discovery and therefore the use of such evidence would be unduly prejudicial to plaintiff. Id. at 13 n.14.

Frequently, parties dispute how far a plaintiff can go in “bolstering” the validity its own patents. Plaintiff in this case, agreed that it would not reference the fact that three PTO examiners considered the patents-in-suit. The court further held that plaintiff should not make any reference to the on-going reexam of the patents-in-suit and that plaintiff cannot speculate as to the extent to which prior art that was before the PTO was actually considered. Id. at 14.

Callaway Golf Company v. Acushnet Company, C. A. No. 06-091-SLR, Memo. Op. (D. Del. Mar. 3, 2010).

March 26, 2010

Magistrate Judge Mary Pat Thynge: Pending Equitable Defenses Preclude Final-Judgment Certification

Magistrate Judge Mary Pat Thynge recently resolved a thorny question of finality for purposes of appeal. Faced with a situation in which a jury had returned verdicts of noninfringement and "non-invalidity," but equitable defenses remained outstanding, the Court denied the underlying request for Rule 54(b) certification:

"[I]n both of those cases [cited to support certification], the courts had already decided infringement, validity, and enforceability. This court has not ruled on Amazon's equitable defenses, so Amazon's declaratory judgment claims of noninfringement and invalidity will not be considered 'final.' " (emphasis in original)

Just in case there was any doubt, the Court emphasized that "[e]ven assuming arguendo that Amazon can gin up an argument that its claims are indeed 'final,' its pending equitable defenses, at a minimum, give this court just reason to delay" certification. As a result, the outstanding enforceability issues precluded, as a matter of law, immediate Rule 54(b) relief.

Cordance Corp. v. Amazon.com Inc., C.A. No. 06-491-MPT (D. Del. March 19, 2010) (Thynge, M.J.).

March 25, 2010

Magistrate Judge Stark Addresses the Meaning of "Actual Notice" for § 154

Earlier this week, in Arendi Holding Ltd., v. Microsoft Corp., C.A. No. 09-119-JJF-LPS (D. Del. Mar. 22, 2010), Magistrate Judge Stark issued a Report and Recommendation that Judge Farnan grant Microsoft's motion for summary judgment on Arendi's claims for provisional damages under 35 U.S.C. § 154(d). Section 154 allows a patentee to pursue "provisional" damages for the period before the patent is actually granted, reaching back to the date on which the application was published. Id. at 10-12. It requires, however, that the accused infringer had "actual notice of the published patent application." Id. at 11; 35 U.S.C. § 154(d).

The question is: what does "actual notice" mean? Magistrate Judge Stark determined that the statute focuses on the accused infringer, not the patent applicant, and so the notice need not have come from the patent applicant. Id. at 14. Further, the accused infringer need only have had actual notice of "the published patent application," rather than specific notice of infringement. Id. at 14-15. The statute does, however, require actual notice, not constructive notice, and that is what decided the issue here..

Under the facts before the Court, Microsoft received notice solely as part of a 7,000 page document production in another case. Magistrate Judge Stark found that to be insufficient:

[A] single-page Notice of Publication dropped into nearly 7,000 pages of document production is analogous to a published application being available in a database but not expressly drawn to the attention of the alleged infringer. The authors of the legislative history did not intend for § 154( d)' s actual notice requirement to be deemed satisfied by mere availability of a patent application in a public database.
Id. at 19. Thus, he recommended that Microsoft's motion for summary judgment on § 154 issues be granted. Id.

Arendi Holding Ltd., v. Microsoft Corp., C.A. No. 09-119-JJF-LPS (D. Del. Mar. 22, 2010)

March 24, 2010

Judge Thynge: Failure to meet and confer adequately under Local Rule 7.1.1. may result in denial of motion to compel

In this patent infringement action, defendant Philips moved to compel plaintiff Masimo to provide answers to certain interrogatories and document requests. Masimo Corporation v. Philips Electronics North America Corporation, et al., C.A. No. 09-80-JJF-MPT (D. Del. Mar. 23, 2010). The court had previously decided to bifurcate and stay discovery related to Philips’ antitrust counterclaims. Philips argued that its discovery requests implicated both patent and antitrust issues and, therefore, Masimo should be compelled to respond. Id. at 2-3. Judge Thynge determined that, although the parties met and conferred as required under Local Rule 7.1.1 to discuss Masimo’s objections to Philips' discovery requests, no evidence indicated “that the parties discussed whether or to what extent Philips’ discovery requests related to overlapping patent and antitrust claims, or Masimo’s resultant discovery obligations.” Id. at 3-4. Thus, Judge Thynge denied Philips’ motion to compel and ordered the parties to confer on the issues because “it was unclear to the court whether Philips made the requisite effort to reach an agreement with Masimo . . . .” Id. at 4.

Masimo Corporation v. Philips Electronics North America Corporation, et al., C.A. No. 09-80-JJF-MPT (D. Del. Mar. 23, 2010)

March 24, 2010

Judge Sue L. Robinson: Disqualification Order Not Final for Purposes of Immediate Appeal

Gauging "finality" for purposes of appeal can be tricky. Add to that inquiry the disqualification of a party's counsel, and the complexity only increases. District judge Sue L. Robinson shed light on the intersection of these two topics in a recent decision on a motion for reconsideration.

The Court earlier disqualified Apeldyn's counsel due to a conflict of interest. Apeldyn then sought reconsideration, or, alternatively, permission to appeal. The Court declined to reopen its earlier decision and, notably, foreclosed two opportunities for immediate appellate review.

On certifying an interlocutory appeal, the Court noted that "a reversal here . . . would leave the underlying substantive claims between the parties undisturbed" and that Apeldyn had failed to identify a "controlling question of law as to which there is a substantial ground for difference of opinion." As a result, resolving the disqualification issue now could not "materially advance the ultimate termination of the litigation" and thus could not give rise to interlocutory relief.

On certifying a final judgment, the Court similarly rejected the notion that disqualification presented an issue ripe for appeal: "The resolution of a collateral issue, such as the disqualification of counsel, cannot properly be considered a 'final judgment' with respect to an assertion of patent infringement."

With this decision, we can add disqualification of counsel to the collateral-order lexicon.

Apeldyn Corp. v. Samsung Electronics Co. Ltd., C.A. No. 08-568-SLR (D. Del. Mar. 12, 2010) (Robinson, J.).

March 23, 2010

Chief Judge Gregory M. Sleet: Jury Verdict

On March 11, 2010, a jury returned its verdict in LG Electronics U.S.A., Inc. v. Whirlpool Corporation finding that defendant Whirlpool did not literally infringe the asserted claims of LG's patent and that the patent was not invalid based on obviousness. C.A. No. 08-234-GMS, Verdict Form (D. Del. Mar. 11, 2010).

The same jury returned a verdict finding that plaintff and counterclaim defendant LG's side-by-side refrigerator product does infringe four of the 5 claims of the first Whirlpool patent-in-suit. On the other hand, the jury held that LG's French door refrigerator product does not infringe those same claims either literally or under the doctrine of equivalents. No willful infringement was found and the jury further found that the assert patent was not invalid based on written description, anticipation or obviousness. The jury awarded Whirlpool $1,786,925 in damages.

As to the second Whirlpool patent-in-suit, the jury found that LG infringed the asserted claims but that the patent was invalid based on anticipation. (The jury did not find the patent invalid based on obviousness.)

LG Electronics U.S.A., Inc. v. Whirlpool Corporation , C.A. No. 08-234-GMS, Verdict Form (D. Del. Mar. 11, 2010).