February 4, 2010

Eduardo C. Robreno: Always Read the Footnotes

Sometimes, the footnotes tell the whole story. In this case, that expression is literally true: district judge Eduardo C. Robreno's recitation of the facts and his analysis are contained within one extraordinary footnote. That analysis, moreover, is significant.

In its decision released Tuesday, the Court delineated the scope of pleading, on information and belief, the "deceptive intent" element of the inequitable-conduct defense. In short, the answer is no:

"Even assuming that the Court adopts a liberal interpretation of the inference of intent to deceive, Defendants present no specific facts showing Plaintiff . . . actually possessed any knowledge with respect to the commercial availability of the Components. Absent some particularized showing regarding this knowledge, the Amended Answer does not satisfy the Rule 9(b) pleading requirement in light of [Federal Circuit precedent]."

Inventio AG v. Thyssenkrupp Elevator Americas Corp., C.A. No. 08-874-ER (D. Del. Feb. 2, 2010) (Robreno, J., sitting by designation).

February 4, 2010

Judge Farnan: Motion to Transfer Denied in ANDA Case

In Pfizer, Inc. v. Sandoz, Inc., C.A. No. 09-742-JJF (D. Del. Jan. 20, 2010), Judge Farnan explained a recent trend among Delaware ANDA plaintiffs: when jurisdiction in Delaware is not a sure thing, ANDA plaintiffs will bring suit in Delaware, and then immediately bring a second suit in another "safe" forum where jurisdiction is assured. Id. at 12. Plaintiffs feel that they must do this because, under the Hatch-Waxman Act, they have only a 45-day window in which to bring suit once they receive notice of an ANDA filing, and the statute is silent on what happens if the suit that they bring within the window is dismissed for lack of jurisdiction. Id. To be avoid that potential problem, plaintiffs have been hedging their bets by bringing two suits. Id.

In this particular case Pfizer, a Delaware corporation with its principal place of business in New York, brought an ANDA suit against Sandoz, Inc., a Colorado corporation with its principal place of business in New Jersey, but also with its primary manufacturing plant located in Colorado. Id. at 3. Pfizer first brought suit in Delaware, and then a day later brought suit in Colorado. Id. Sandoz filed answers and counterclaims for declaratory judgment in both jurisdictions, and brought the present motion to transfer to Colorado. Pfizer responded with a motion in Delaware to enjoin the declaratory judgment action in Colorado. Id.

Luckily for Pfizer, Judge Farnan seemed to understand their concerns as ANDA plaintiffs. After describing the parties' ordinary arguments for and against Pfizer's choice of forum, id. at 4-5, Judge Farnan explained the need, as other courts have noted, for plaintiffs to bring ANDA cases in a "safe" forum in addition to their preferred forum because of the statute's lack of clarity. In light of that need, and because the other factors were each neutral, Judge Farnan held that Pfizer's choice of forum takes precedence, and denied Sandoz's motion to transfer. Id. at 6-16. Judge Farnan reserved decision on Pfizer's motion to enjoin the declaratory judgment action in Colorado, however, pending the Colorado court's resolution of similar motions to transfer. Id. at 16.

Pfizer, Inc. v. Sandoz, Inc., C.A. No. 09-742-JJF (D. Del. Jan. 20, 2010)

February 3, 2010

New opinion from Delaware Court of Chancery on Trade Secret Misappropriation

In a recent case before Vice Chancellor Parsons of the Delaware Court of Chancery, Plaintiff Great American brought claims against Defendant Cherrydale for, among other things, misappropriation of trade secrets. Great American Opportunities, Inc. v. Cherrydale Fundraising, LLC et al., C.A. No. 3718-VCP (Del. Ch. Jan. 29, 2010). The action stemmed from events that occurred around the acquisition of Kathryn Beich, Inc. (“KB”) by Great American. The trade secrets in question involved a list of sales representatives and their contact information; a list of KB sales representatives ranked by volume of sales; order status reports, which listed contact information and the status of KB orders; and other confidential proprietary reports, customer contact and purchasing information. Id. at 11-14. Cherrydale argued that this information did not constitute trade secrets and were not misappropriated because the “information was used solely by independent contractors whose acts cannot be attributed to Cherrydale.” Id. at 45.

Under the Delaware Uniform Trade Secrets Act, the plaintiff must prove: (1) “that a trade secret exists, i.e., the statutory elements—commercial utility arising from secrecy and reasonable steps to maintain secrecy—have been shown;” (2) “that the plaintiff communicated the trade secret;” (3) “that such communication was made pursuant to an express or implied understanding that the secrecy of the matter would be respected;” and “(4) that the trade secret has been used or disclosed improperly to the plaintiff’s detriment.” Id. at 46-47. After weighing the evidence presented at trial, Vice Chancellor Parsons determined that the information at issue were protected trade secrets. Id. at 48-67. However, because Great American failed to prove the amount of actual damages it was entitled to, Vice Chancellor Parsons awarded Great American compensatory damages only for Cherrydale’s unjust enrichment caused by the misappropriation. Id. at 68-78. Cherrydale’s actions were, however, found to be willful and malicious leading Vice Chancellor Parson’s to double the compensatory damages award. Id. at 82.

Great American Opportunities, Inc. v. Cherrydale Fundraising, LLC et al., C.A. No. 3718-VCP (Del. Ch. Jan. 29, 2010)

February 3, 2010

Judge Joseph J. Farnan, Jr.: Expert Testimony Allowed Under Liberal Third Circuit Standard

Following the Third Circuit's "liberal" approach to the admission of expert testimony, the Court found that the defendant's trade secret expert was qualified to testify regarding the electrochemistry field. Roche Diagnostics Operations, Inc. v. LifeScan Inc., C.A. No. 07-753-JJF, Memo. Order (D. Del. Jan. 29, 2010). Specifically, the Court held that the proffered expert's "education, academic endeavors, and publications demonstrate a substantial level of expertise." Id. at 2. Plaintiff argued that the expert had no prior experience or skills in the technical area at issue and therefore was unqualified to testify as to defendant's trade secret misappropriation counterclaims. Id. at 1.

In the same case, a jury recently found for plaintiffs on defendant's breach of contract and unfair competition counterclaims. See verdict sheet here.

Roche Diagnostics Operations, Inc. v. LifeScan Inc., C.A. No. 07-753-JJF, Memo. Order (D. Del. Jan. 29, 2010).

January 31, 2010

Judge Joseph J. Farnan, Jr.: Addressing Motions to Amend

Judge Farnan recently addressed motions to amend in two related cases.

In WebXchange Inc. v. Dell, Inc. and WebXchange Inc. v. FedEx Corporation, the defendants sought to amend their answers (after the amendment deadline) to "add flesh" to their inequitable conduct affirmative defenses and counterclaims. C.A. No. 08-132-JJF, Memo. Op. (D. Del. Jan. 20, 2010); C.A. No. 08-133-JJF, Memo. Op. (D. Del. Jan. 20, 2010). The court granted defendants' motions to amend finding that the amendments could not have been made prior to the pleading deadline, "despite [their] diligence." Id. at 5. Furthermore, the court found that the amendments were not futile because factual determinations regarding the the extent of the inventor's knowledge of certain documents and whether they were intentionally withheld from the PTO are "not appropriate at this stage of the litigation." Id. at 9. The amendments also do not prejudice plaintiff because the amendments relate to two earlier theories alleged by defendants in their earlier amended answers, no Markman hearing has been held, no trial date has been set and the close of expert and fact discovery are set off the Markman order. Id. at 9.

WebXChange Inc. v. Dell, Inc., C.A. No. 08-132-JJF, Memo. Op. (D. Del. Jan. 20, 2010).

WebXChange Inc. v. FedEx Corporation, C.A. No. 08-133-JJF, Memo. Op. (D. Del. Jan. 20, 2010).

January 29, 2010

Judge Robinson: Interpretation of In Re Seagate

In Cordis Corporation v. Boston Scientific Corporation, C.A. No. 03-27-SLR (D. Del. Jan. 28, 2010), Judge Robinson had an opportunity to lay out her views on In re Seagate Techonology, LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc). In Re Seagate held that "to establish willful infringement, a patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent. . . . If this threshold objective standard is satisfied, the patentee must also demonstrate that this objectively-defined risk (determined by the record developed in the infringement proceeding) was either known or so obvious that it should have been known to the accused infringer." Id. at 2, quoting Seagate.

Judge Robinson expressed her view that this holding allows consideration only of pre-litigation evidence, excluding things like prior court decisions:

It cannot be emphasized enough that the litigation process is a complicated one, comprising multiple steps and moved forward by multiple decisions, ranging from resolving a discovery dispute to a case-dispositive motion. Consequently, I am very uncomfortable with characterizing administrative and court decisions as "objective evidence" for presentation to a jury. As recognized by counsel, a jury is going to give such evidence great weight, even when the procedural and substantive bases for most such decisions will not be apparent to the jury. This strikes me either as the kind of evidence better suited for review by a court' or as eliciting the kind of hindsight review that is so strenuously discouraged in other aspects of patent law. See KSR Intern. Co, v. Teleflex Inc., 550 U.S. 398, 421 (2007). Therefore, consistent with the reasoning of the Seagate decision as a whole (and its emphasis on prelitigation conduct), generally only evidence regarding the prelitigation landscape of the dispute will be admitted.
Id. at 3-4. Further, even pre-litigation evidence remains subject to the Rule 403 standard. Id. at 5. Based on those rules, Judge Robinson excluded various evidence from the damages portion of the case, including a prior preliminary judgment decision, the outcome of other prior litigation, and statements issued during re-examination proceedings. Id. at 4-5.

Cordis Corporation v. Boston Scientific Corporation, C.A. No. 03-27-SLR (D. Del. Jan. 28, 2010)

January 29, 2010

Sue L. Robinson: ANDA Filer Succeeds in Prosecution Laches Defense

District judge Sue L. Robinson this week issued a rare win to a party asserting a laches defense. According to the Court, eleven patent applications and ten abandonements, among others, adequately demonstrated the patent-in-suit's unenforceability:

"Taken in the totality, this case involves eleven patent applications, ten abandonements, and no substantive prosecution for a decade. CRCT's primary justification for delay, that neither Examiner Ford nor Examiner Richter would have allowed the applications at issue absent human data, is not objectively reasonable in view of the fact that CRCT never attempted to traverse the rejections (thereby either validating its position or obtaining allowance of its claims). CRCT's delay, therefore, cannot 'be explained by reference to [ ] legitimate considerations and/or expectations.' . . . CRCT introduced no contemporaneous evidence substantiating its position or establishing that CRCT sought to develop the technology prior to the Schering license. CRCT only engaged the PTO once it had a profit motive to do so."

With these delays, the ANDA filer established the abuse of the patent system necessary to a successful prosecution-laches defense.

Cancer Research Technology v. Barr Labs. Inc., C.A. No. 07-457-SLR (D. Del. Jan. 26, 2010) (Op. Part II).

January 27, 2010

Chief Judge Sleet: Claim Construction Order

In Grape Technology Group, Inc., et al. v. Jingle Networks, Inc., C.A. No. 08-408-GMS (D. Del. Jan. 25, 2010), Chief Judge Sleet recently construed the following terms of the patents at issue:

“affiliated with a customer command … issued from a customer telephonic device”
related to a customer command transmitted from a telephone

“generating a data field”
construed to have its plain and ordinary meaning

“the enhanced directory service sought by the customer”
service supplemental to standard telephone number directory assistance to be provided to the calling party

“ordered as a function of”
construed to have its plain and ordinary meaning

“establishing a communication”
enabling the exchange of signals

“event record”
one or more data fields used to memorialize an aspect of an information assistance call for purposes of billing

“during the communication” and “during the communications connection”
while the signals are enabled to be exchanged

“interface to receive signals to establish a communication”
hardware, software, or a combination thereof that accepts incoming information assistance requests

any individual or business entity whose information is stored for retrieval by the communication assistance system

“information corresponding to a plurality of subscribers” and “information corresponding to subscribers” and “information corresponding to each of said subscribers”
data associated with subscribers

“a subscriber information other than the subscriber information requested by said requester”
construed to have its plain and ordinary meaning

“telephone switch”
construed to have its plain and ordinary meaning

“a first database”
construed to have its plain and ordinary meaning

“closing prompt message”
a message provided to a calling party upon completion of the information assistance call but prior to connecting the subscriber

“select(ing) a closing prompt code from a plurality of available closing prompt codes” and “selects said closing prompt code from any one of said available closing prompt codes” and “selection of said closing prompt code by said closing prompt module is from any one of said available closing prompt codes . . . relating to a subscriber information other than the subscriber information requested by said requester”
construed to have its plain and ordinary meaning

“available closing prompt codes”
construed to have its plain and ordinary meaning

“desired closing prompt message”
a closing prompt message identified by a specific closing prompt code

“available closing prompt messages”
construed to have its plain and ordinary meaning

Grape Technology Group, Inc., et al. v. Jingle Networks, Inc., C.A. No. 08-408-GMS (D. Del. Jan. 25, 2010)

January 27, 2010

Federal Circuit upholds Judge Robinson’s decision that Teva's ANDA product does not infringe Takeda's patent

The Federal Circuit has affirmed, without discussion, Judge Robinson’s decision in Takeda Pharma. Co. Ltd. v. Teva Pharma. USA Inc., C.A. No. 07-331-SLR (D. Del. Nov. 9, 2009) (Robinson, J.), that Takeda failed to prove that Teva’s ANDA products infringe Takeda’s patent.

In her opinion, Judge Robinson had emphasized the importance of a patentee's conduct during prosecution for later claims of infringement. In the underlying action, the patentee alleged that defendant's ANDA product, which covered an oral tablet that dissolved without water, contained distinct disintegrating and swelling agents, as required by the patent. The Court disagreed, resting its conclusion of non-infringement in part on the patentee's own disavowal of the purportedly infringing disintegrating agent.

January 27, 2010

Joseph J. Farnan: No Fees for Successful Discovery Motion

Despite granting the relief sought in a discovery motion, district judge Joseph J. Farnan Jr. has issued a decision declining to award the movant its fees and costs. In the underlying motion, WebXchange sought to compel 30(b)(6) testimony from FedEx about the company's shipping practices. According to FedEx, the topic - an infringement contention - had been untimely disclosed. Observing the absence of prejudice, the Court refused to limit the deposition, and allowed the testimony. Notably, however, the Court rejected a corresponding request for fees and costs:

"The Court concludes that an award of damages and costs is not justified in this situation. Although Plaintiff was successful in its [motion], Defendants were substantially justified in taking the position of opposition based upon the legitimate dispute on whether 'Shipping' has been listed as an infringement contention."

In this case, the "legitimate" discovery dispute precluded the otherwise available Rule 37 sanctions.

WebXchange Inc. v. FedEx Corp., C.A. No. 08-133-JJF (D. Del. Jan. 20, 2010) (Farnan, J.).