November 20, 2009

5 Years Later, Issues Still Linger in the St. Clair v. Fuji Digital Camera Patent Case

Judge Farnan issued an opinion yesterday on a few lingering issues in the Fuji case. This is another St. Clair digital camera patent case; St. Clair received a $3 million dollar jury verdict in 2004 but its execution was stayed until recently due to a dispute over ownership of the patents. St. Clair Intellectual Property Consultants, Inc. v. Fuji Photo Film Co., Ltd., C.A. No. 03-241-JJF at 2 (D. Del. Nov. 19, 2009). The issues included:

  • No new trial due to improper exclusion of evidence: The Court reiterated (for the third time in this action) that it was proper to exclude (1) St. Clair's $25 million verdict in the Sony case and (2) license agreements with other companies that have been sued by St. Clair on these patents, because "the danger of unfair prejudice to Fuji was substantial, particularly in light of the fact that damages and liability were being tried together." Id. at 6.
  • Pre-judgment interest: Fuji disputed the award of pre-judgment interest in light of a pending appeal, and the fact that St. Clair delayed bringing suit; Judge Farnan disagreed, and granted both pre- and post-judgment interest. Id. at 10.
  • Selection of interest rate: Judge Farnan also disagreed with Fuji's argument that the pre- and post-judgment interest rates should be based on the Treasury Bill Rate as opposed to the U.S. Prime Rate. Judge Farnan noted that, although the Court has used both rates at different times in the past, "the Prime Rate provides a better measure of the risk of nonpayment that St. Clair bore," despite Fuji's argument that St. Clair has already "recouped its investment [in the patents] many times over, [and] faces virtually no financial risk with respect to the . . . patents." Id. at 11.
  • Interest calculated on pre-tax damages: The Court determined, based on Judge Robinson's unsuccessful experience with after-tax damage calculations, that the interest rate should be calculated based on pre-tax damages.

St. Clair Intellectual Property Consultants, Inc. v. Fuji Photo Film Co., Ltd., C.A. No. 03-241-JJF at 2 (D. Del. Nov. 19, 2009)

November 19, 2009

Chief Judge Gregory M. Sleet: Preliminary Injunction Denied

A party requesting a preliminary injunction in an infringement case must meet a high burden in showing a likelihood of success on the merits, irreparable harm, a balance of hardships in favor of the moving party and that an injunction is in the public's interest. CNH America LLC v. Kinze Manufacturing, Inc., C.A. No. 08-945-GMS, Memorandum (D. Del. Nov. 13, 2009). In CNH America, the plaintiff failed to establish all four factors. Id. at 2. On the merits, the defendant argued that CNH America failed to disclose certain prior art references that would have rendered the patent invalid and that it breached its duty of candor to the PTO by "remaining silent" about a prior art reference during reexamination and "affirmatively misrepresenting the scope of the prior art." Id. (internal citations omitted). The court found that these assertions "were sufficient to raise a substantial question as to invalidity" and that similar questions exist as to infringement. Id. at 3.

Additionally, the Court found that CNH America's irreparable harm arguments were "largely speculative" and the damages are no more difficult to calculate than in most patent infringement suits. Id. at 3. Finally, this was a case where money damages are appropriate and therefore, an injunction is not in the the public's interest. Id. at 4.

CNH America LLC v. Kinze Manufacturing, Inc., C.A. No. 08-945-GMS, Memorandum (D. Del. Nov. 13, 2009).

November 19, 2009

Chief Judge Gregory M. Sleet: Claims Fail to Meet Twombly Standard

The District Court of Delaware in LG Electronics U.S.A., Inc. v. Whirpool Corporation, found that a "formulaic recitiation of the elements of the Lanham Act and Delaware Deceptive Trade Practices" with the insertion of Whirpool's name is insufficient to meet the pleading requirements set forth in Bell Atlantic Corp. v. Twombly. The party making the claim must assert specific factual allegations, not just legal conclusions. Id. at 2-3.

Note: LG Electronics argued that additional factual details supporting its claims were found in its reply brief on the motion to amend. Id. at 2 n.1. The Court, however, declined to consider these facts as the material was not an "integral" part of the complaint. Id. (internal citations omitted).

LG Electronics U.S.A., Inc. v. Whirpool Corporation, C.A. No. 08-234-GMS, Memo. Order (D. Del. Nov. 9, 2009).

November 18, 2009

Judge Sue L. Robinson: Inequitable Conduct Claim "Passes Muster" Under Exergen

In yet another decision addressing the sufficiency of pleading inequitable conduct, the Court found under the new standard set forth in the Exergen case that defendant Cisco's amended claims "pass muster under this rigorous standard" and granted defendant's motion for leave to amend. Cisco Systems, Inc. v. Teles AG Informationstechnologien, C.A. Nos. 09-232-SLR, 09-072-SLR, Memo. Order (D. Del. Oct. 16, 2009). A copy of the amended answer
and its Exhibit A is attached here.

Cisco Systems, Inc. v. Teles AG Informationstechnologien, C.A. Nos. 09-232-SLR, 09-072-SLR, Memo. Order (D. Del. Oct. 16, 2009).


November 18, 2009

Chief Judge Gregory M. Sleet: Rule 52(c) Motion Granted for Prior Art References Not Raised at Trial

In the Court's post-trial decision in In Re Brominidine Patent Litigation, the Court found that the defendants' ANDA products infringed the asserted patents and that defendants failed to prove invalidity. MDL Docket No. 07-md-1866-GMS, Memorandum (D. Del. Oct. 23, 2009). In addition, the Court granted plaintiff's motion for judgment as a matter of law on "numerous prior art references and combinations of references that were not discussed or referred to by any witness at trial." Id. at 42.

In Re Brominidine Patent Litigation, MDL Docket No. 07-md-1866-GMS, Memorandum (D. Del. Oct. 23, 2009).


November 18, 2009

Sue L. Robinson: The Double-Edged Sword of Prosecution

In a recent post-trial opinion, district judge Sue L. Robinson 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:

"Even if plaintiffs could convincingly show that lactose caused the disintegration of StarLac, the patentee's disavowal of lactose in order to distinguish [the prior art] during prosecution clearly shows that lactose cannot be a disintegrating agent within the meaning of the [patent-in-suit]."

The smoking gun evidence? "[During prosecution,] [t]he patentee chose to distinguish its invention from [the prior art] by arguing that the reference failed to teach 'disintegrating agents . . . . Therefore, if lactose is not a disintegrating agent with respect to the [prior art], it would be improper to characterize it as such in the ANDA products."

Takeda Pharma. Co. Ltd. v. Teva Pharma. USA Inc., C.A. No. 07-331-SLR (D. Del. Nov. 9, 2009) (Robinson, J.).

November 17, 2009

Judge Sleet: Post-verdict JMOL must be denied where the party does not file the JMOL pre-verdict

In Linear Technology Corporation v. Monolithic Power Systems, Inc., C.A. No. 06-476 GMS (D. Del. Nov. 12, 2009) Judge Sleet denied Defendant's JMOL Motion on the issue of obviousness. Id. at 5. Judge Sleet noted that Fed. R. Civ. P. 50(a) requires a JMOL motion to be submitted before the case is turned over to the jury. Id. Then, Fed. R. Civ. P. 50(b) permits the renewal of the JMOL motion after the jury returns a verdict. Id. However, "[a] party dissatisfied with a jury verdict may not prevail on a post-verdict JMOL motion based on grounds not raised in a pre-verdict JMOL motion. By logical extension, when a party fails to file a pre-verdict JMOL altogether, any grounds for JMOL sought by way of a post-verdict motion must be denied." Id. (internal citations omitted).

Linear Technology Corporation v. Monolithic Power Systems, Inc., C.A. No. 06-476 GMS (D. Del. Nov. 12, 2009)

November 16, 2009

Magistrate Judge Stark Follows Judge Farnan's Prior Claim Construction in St. Clair Digital Camera Cases

On Friday, Magistrate Judge Stark's claim construction came down on another set of patent infringement cases by St. Clair Intellectual Property Consultants based on their digital camera patents. St. Clair Intellectual Property Consultants, Inc. v. Matsushita Electronic Industrial Co., LTD., 04-1436-LPS (D. Del. Nov. 13, 2009). This case is the latest in a series of cases by St. Clair Intellectual Property Consultants against various companies for infringement of these digital camera patents. Interestingly, this is the third time that these patent claims have been construed by the District of Delaware (the first two cases were before Judge Farnan). While Judge Stark noted that Judge Farnan's constructions in the first two cases were not necessarily binding against these defendants, the court's analysis led it to follow Judge Farnan's interpretation of each claim anyway. The majority of the claims were construed in favor of St. Clair's proposed interpretations. From the looks of this holding (and the fact that everything seems to have a camera these days), I would suspect that the District of Delaware will continue to see cases brought by St. Clair.

St. Clair Intellectual Property Consultants, Inc. v. Matsushita Electronic Industrial Co., LTD., 04-1436-LPS (D. Del. Nov. 13, 2009)

November 11, 2009

D. Del. Special Master: No Prejudice, and Therefore No Sanction, for Untimely Produced Expert Discovery

A special master in the District of Delaware recently recommended against the imposition of sanctions for a party's failure to timely produce expert-discovery materials. In the decision, issued by Special Master Vincent J. Poppiti, the special master considered and rejected a motion to exclude the evidence - certain product testing materials created by Chipworks - on the ground that the receiving party had the ability, and failed, to cure any claimed prejudice:

"Honeywell was served with Dr. Schlam's Expert Report on September 15, 2009, and was therefore aware of the Chipworks testing as of that date. Although Honeywell inquired whether a Chipworks representative would testify at trial, Honeywell ignored Defendants' offers to make a Chipworks representative available for deposition . . . . [Instead,] Honeywell chose to wait until October 14, 2009 to file the instant motion - a full two weeks after receipt of the [untimely Chipworks materials relied on by Dr. Schlam]."

Because the untimely Chipworks testing materials were already known to Honeywell, according to the special master, the two-week delay erased any potential for prejudice.

Honeywell Int'l Inc. v. Apple Computer Inc., C.A. No. 04-1337-JJF (D. Del. Nov. 3, 2009) (Poppiti, S.M.).

November 10, 2009

Judge Sleet: No Corporate Veil Piercing Without Allegations of Injustice

Chief Judge Sleet recently issued a memorandum opinion on a motion to dismiss and transfer in CNH America LLC v. Kinzenbaw, C.A. No. 08-945-GMS (D. Del. Nov. 9, 2009) (mem.), a patent infringement case. Defendants in the case include Kinzenbaw, an Iowa resident, and his Delaware corporation (based in Iowa), Kinze Manufacturing. Id. at 1, 5.

The Court granted the motion to dismiss as to Kinzenbaw the individual, based on lack of personal jurisdiction. Id. at 2-3. Plaintiff had alleged jurisdiction on Kinzenbaw based on corporate veil piercing of his Delaware corporation, because Kinzenbaw failed to uphold many corporate formalities (traditionally a key factor in veil piercing), and because he had the "capacity" to siphon money from the corporation. Id. According to the Court, plaintiff was correct that "[a]lter ego liability and corporate veil piercing theories function to prevent an independent corporation from being used to accomplish injustice or evade the law," but it failed to show any injustice or evasion of the law here. Id. Disregard of formalities is only one factor in a veil piercing analysis, and "capacity" to siphon money is different from actually siphoning money. Id.

Kinze Manufacturing, however, remained in the case. As usual, the Court denied Kinze's motion to transfer, despite Kinze's arguments regarding the location of witnesses and documents. Id. at 3-5.

CNH America LLC v. Kinzenbaw, C.A. No. 08-945-GMS (D. Del. Nov. 9, 2009) (mem.)