Delaware IP Law Blog

In a somewhat unusual procedural posture, Defendants moved the district court for attorneys' fees following a stipulated judgment of non-infringement after Judge Farnan issued his Markman Order construing the terms in favor of defendants. Prism Technologies LLC v. Verisign, Inc., C.A. No. 05-214-JJF, Memorandum Opinion (D. Del. Sept. 30, 2008). After the Federal Circuit affirmed Judge Farnan's Markman Order, defendants moved pursuant to 35 U.S.C. 285 to declare this matter an exceptional case and award defendants their attorneys' fees. Though admitting that the plaintiff could have done a "more thorough" pre-suit investigation, the Court found that the claim chart and analysis done by the plaintiff was "adequate to support its claims." Id. at 6. Judge Farnan also found that the plaintiffs' reasonableness in continuing to pursue the litigation was supported by its conduct, particularly its withdrawal of the infringement claims once it knew it could not support its claims under the Court's claim construction. Id. at 8. The Court therefore, found that defendants did not establish that this was an exceptional case.

Prism Technologies LLC v. Verisign, Inc., C.A. No. 05-214-JJF, Memorandum Opinion (D. Del. Sept. 30, 2008).

That willfulness is not properly a part of a Hatch-Waxman case is not a controversial proposition anymore. In a recent opinion, District Judge Joseph J. Farnan Jr. reaffirmed a long line of cases that jettisoned willful infringement allegations grounded solely on ANDA filings.

An interesting aspect of the decision, however, is its procedural posture: defendant chose to employ the the pre-answer motion to strike under FRCP 12(f). By granting this type of "disfavored" motion - especially when defendant had already filed its answer - the Court signaled that the willfulness argument, in a typical ANDA scenario, will no longer succeed in D. Del.

Sepracor Inc. v. Dey L.P., C.A. No. 06-113-JJF (D. Del. Sept. 26, 2008) (Farnan, J.).

Following a plaintiff's jury verdict and post-trial proceedings, including sanctions motions, District Judge Joseph J. Farnan Jr. has entered a final judgment in the St. Clair/Fuji infringement litigation. The Court entered judgment for St. Clair in the amount of $3,003,465.00, with interest and costs.

St. Clair Intellectual Property Consultants Inc. v. Fuji Photo Film Co. Ltd., C.A. No. 03-241-JJF (D. Del. Sept. 25, 2008) (Farnan, J.).

Resolving a charge of inequitable conduct requires a close reading of an often conflicting factual record for clues that evince an intent to deceive. In a post-trial opinion released yesterday, District Judge Joseph J. Farnan Jr. acknowledged that fine evidentiary line by reluctantly refusing to find a patentee defrauded the PTO by summarizing, instead of naming, the controlling prior art.

Although labeling the mode of disclosure suspicious, the Court, based on these findings, ultimately declined to hold the patent-in-suit unenforceable:

"[T]he Court is troubled by the fact that Dr. Eklund possessed known material prior art references but did not disclose the actual references themselves. However, absent a bright line rule by the Federal Circuit that non-disclosure of possessed, material art equates with inequitable conduct, the Court is unwilling to strike a patent in the circumstances of a plausible explanation for that non-disclosure."

This decision underscores the importance of the standard of proof in patent litigation: to demonstrate an inequity clearly and convincingly requires more than arguing that the patentee neglected to choose the optimal vehicle for disclosure.

Power Integrations Inc. v. Fairchild Semiconductor Int'l Inc., C.A. No. 04-1371-JJF (D. Del. Sept. 24, 2008).

Following post-trial decisions on invalidity and evidentiary matters earlier this year, District Judge Joseph J. Farnan Jr. has entered a final judgment in the Boehringer/Mylan Pharmaceuticals ANDA litigation. In its June 2008 decision, the Court held the patent-in-suit infringed but invalid. In negotiating the subsequent final judgment, the parties disputed whether the Court should memorialize its finding of infringement. After the parties submitted competing proposals, the Court, without comment, chose to omit any reference to its infringement finding.

Boehringer Ingelheim Int'l GMBH v. Barr Labs. et al., C.A. No. 05-700-JJF (D. Del. Sept. 18, 2008) (Farnan, J.).

Parties to litigation, and particularly high stakes patent litigation, spend a lot of time and money discovering facts that may prove their case or defense. Judge Farnan in a recent opinion has made clear, however, that there are limits to what a party can obtain under the rules. Purdue Pharma Products, L.P. v. Par Pharmaceuticals, Inc., C.A. No. 07-255-JJF, Memo. Order (D. Del. Aug. 26, 2008).

The Court in Purdue Pharma, granted a third party's motion to quash a subpoena which sought documents related to an opposition to the European counterpart of the patent-in-suit and documents related to the knowledge a non-party foreign individual that was working on similar technology. In deciding to grant the motion, the Court found that the foreign patents and printed publications sought from the subpoenaed party are available without the defendants burdening the courts, the parties or foreign individuals. Id. at 5. The information related to a foreign individual's potential "knowledge or use" of the patented product is not prior art and is "too peripherally relevant to the matter at issue to justify issuing a letter request under the Hague Convention." Id.

Lesson learned: Parties seeking to burden both the district courts, foreign tribunals and foreign individuals in the quest for documents and testimony should be able to demonstrate that the information is sufficiently relevant to the litigation to "justify the burden and expense." Id. at 6.

For a copy of the opinion see here.

We recently reported on an invalidity decision by District Judge Joseph J. Farnan Jr. that declined to give effect to a so-called terminal disclaimer. Earlier this week, the Court followed that post-trial opinion with a decision resolving the parties' evidentiary disputes. Among those disputes? The admissibility of the same disclaimer.

In its opinion, the Court noted that plaintiffs sought to introduce the disclaimer after the close of evidence. Although it acknowledged "concern" over the timeliness of the filing, the Court nonetheless allowed the document into evidence. As part of the patent-in-suit's prosecution history, the disclaimer became on filing an "admissible supplementation of an already identified trial exhibit."

As a result, the Court concluded, the "issue of timeliness is more appropriately addressed in the context of the disclaimer's effectiveness, rather than its admissibility."

Boehringer Ingelheim Int'l GMBH v. Barr Labs. Inc., C.A. No. 05-700-JJF (D. Del. July 15, 2008) (Farnan, J.).

Judge Farnan recently construed the terms below for claims related to technology used to "optimize the rate at which data can be transmitted across communication channels." CIF Licensing, LLC v. Agere Systems, Inc., C.A. No. 07-170-JJF, Memo. Op. (D. Del. July 10, 2008):

-"receiver"
-"line probing processor"
-"selector"
-"for selecting one of the plurality of frequency bands"
-"for selecting one of the plurality of bit rates"
-"constellation"
-"constellation switching"
-"can be"
-"frame selector"
-"zero insertion unit"
-"signal constellation selector/mapper"
-"operably coupled"

Judge Farnan further found that the preambles of certain claims were limiting under the recent Federal Circuit decision Symantec Corp. v. Computer Assocs. Int'l Inc., 522 F.3d 1279 (Fed. Cir. 2008).

A copy of the opinion can be found here.

Last week's ANDA win by a generic-drug manufacturer in the District of Delaware is notable for many reasons, chief among them the Court's double patenting analysis. See IP Law360 (subscription). But Judge Farnan's opinion is also notable for its discussion of an obscure term-extension device, the Section 253 terminal disclaimer.

After recounting the underlying family of applications, and the concomitant risk of double patenting, the Court addressed -- and rejected -- the patentee's assertion that its partial disclaimer of the patent-in-suit's remaining term mooted an invalidity finding. By doing so, the Court highlighted the importance of timing when filing a terminal disclaimer.

The Court began by noting the "dual problem" in the litigation: that the disclaimer was filed near the conclusion of trial and after the expiration of the earlier patent. Looking to the limited Federal Circuit precedent, the Court concluded that a "terminal disclaimer may overcome a nonstatutory double patenting rejection only if the earlier patent has not yet expired."

Beyond the statutory arguments, the Court also expressed concern about the patentee's delay in seeking the disclaimer:

[E]xtensive delay in filing a document which may ultimately moot a double patenting issue can have harsh effects on the judicial system as a whole resulting in gamesmanship during trial, and/or a waste of the Court's and the parties' resources. (Op. at 22-23 n.8)

Having filed the disclaimer after the earlier patent's expiration, the Court concluded that the patentee could not invoke Section 253's safe harbor provisions in its efforts to escape a finding of invalidity.

Boehringer Ingelheim Int'l GMBH v. Barr Labs. Inc., C.A. No. 05-700-JJF (D. Del. June 26, 2008) (Farnan, J.).

This morning's edition of IP Law360 (subscription) features an informative article on judges' pet peeves in patent litigation. Featured in the piece are two D. Del. judges: Chief Judge Sleet and Judge Farnan.

Of note are the judges' comments on summary judgment motions and the use of experts. On the issue of summary judgment, Chief Judge Sleet noted that:

Generally in these cases, both parties have experts who are ready, willing, and able to come to court and dispute the facts. It can be a significant waste of time and money to bring a summary judgment motion.

Judge Farnan agreed: "The problem is, if I'm a lawyer for a generic and I'm attacking a patent and I think it is obvious because of a combination of two prior pharmaceutical products, there's almost always going to be a dispute of facts."

On the topic of experts, Judge Farnan cautioned litigants against expert overkill:

I pretty much let [litigants] try the case they want, but I talk to them in the pretrial conference about the value [experts] offer. I have to write an opinion, and they want that opinion yesterday. So I tell them, 'the more you put into that trial record, the more I have to consider and address.'

Patent litigation is an aggressive, competitive field of law. The judges' comments today add valuable perspective - that of the decision maker - to how best to champion the causes of our clients.

Can earlier litigation on the same patent and in the same court justify a departure from the well-worn first-filed rule? According to District Judge Joseph J. Farnan Jr., it does not. The DJ plaintiff, who had earlier been sued in the Eastern District of Texas, argued against transfer there based on prior Delaware litigation involving the same patent.

The Court rejected this argument, holding that the earlier case did not constitute a "special circumstance" justifying a departure from the first-filed rule. Because that litigation involved a different Delaware judge, the Court could not be "substantially more familiar" with the patent-in-suit than the Texas district court. With no other aspects of the dispute favoring litigation in Delaware, the Court transferred the case.

Comcast Cable Communications LLC v. USA Video Tech. Corp., C.A. No. 06-407-JJF (D. Del. April 29, 2008) (Farnan, J.).

District of Delaware Judge Joseph J. Farnan Jr. recently weighed in on a patent-related document subpoena dispute, touching on professional conduct in so-called "rocket docket" litigation. By ordering an evidentiary hearing, the Court reminded the parties (and the reader) of its inherent supervisory power over litigants:

In the Court's experience, lawyering in fast paced, high stakes litigation can sometimes wander from the professional standards expected. . . . In order to resolve the legal issues presented by the petition and the professional issues presented by the briefing, the Court will conduct an evidentiary hearing.

To reinforce its point, the Court ordered that even if the "subpoena issues are fully resolved, the hearing must still go forward to resolve the professional issues." Patent litigators take note: in this district, allegations of unprofessionalism will be fully vetted.

Digacomm LLC v. Vehicle Safety & Compliance LLC, C.A. No. 08-MC-063-JJF (D. Del. April 29, 2008) (Farnan, J.).

A foreign corporation manufactures in a foreign country products alleged to infringe a U.S. Patent. They provide modules to original equipment manufacturers here in the U.S. who then incorporate them into products sold to consumers through retailers across the country and on the Internet. The foreign corporation also owns directly and indirectly subsidiaries which are Delaware corporations. Are these contacts with Delaware enough to establish personal jurisdiction over the foreign corporation? Judge Farnan recently answered that question in the affirmative in his decision denying a motion to dismiss filed by defendants in LG.Philips LCD Co., Ltd. v. Chi Mei Optoelectronics, Corp., et al., C.A. Nos. 06-726-JJF, 07-357-JJF, Memo. Op. (D. Del. Apr. 29, 2008).

Jurisdiction under the Delaware Long-Arm Statute was proper because the foreign corporation, Chi Mei Optoelectronics, "acted in consort" with the original equipment manufacturers here in the United States to place products containing the allegedly infringing modules into a national distribution network which ultimately allowed some products to be sold in Delaware. Id. at 12. The fact that there was a "middle man" through which the defendant sold its product did not protect it from the possibility of being subject to jurisdiction of the Delaware court. Id. Furthermore, the plaintiff, LG.Philips provided "sufficient evidence" of revenues from sales of the accused products in Delaware. Id. The Court noted and "found instructive" the defendant's failure to provide any evidence rebutting the "factual presumption that a portion of [their] large revenues from the United States market are the result of products incorporating its ... module sold in Delaware..." Id.

Jurisdiction also comports with Due Process, because given the defendant's contract with its original equipment manufacturers (and one major one in particular), the substantial quantities of modules it ships to the U.S. to be incorporated into end products and sold in retail stores here, and the size of its business, Judge Farnan found it "far from a stretch to conclude" that the modules would end up in Delaware. Id. at 14.

For a copy of the opinion click here.

Modern legal practice sweeps across a broad spectrum of domestic and international business. Before patents are litigated, they are often exchanged, like any other commodity, on the open market. To effectively pursue the acquisition and protection of intellectual property, businesses must engage counsel experienced in both deals and litigation. It is therefore inevitable that one law firm will find itself retained on aspects of each of these steps.

But what happens when a single firm ends up on opposite sides of the acquisition-litigation coin?

According to District of Delaware Judge Joseph J. Farnan Jr., if the two transactions are wholly unrelated, with no possibility of confidential revelation, a motion to disqualify is unfounded.

In the subject litigation, a law firm first represented the infringement plaintiff in its purchase of the IP rights in the accused product. The same firm then found itself representing the defendant in the infringement litigation. Although the potential for conflict is apparent from this arrangement, the Court noted that the differences in the two transactions make this an atypical case:

The present action concerns issues of infringement . . . . It does not implicate the underlying transaction . . . through which Rhthmol® was acquired nor does it involve any of the provisions, warranties or representations contained in the agreements governing the transaction. (Op. at 5)

This reality, coupled with a dearth of evidence that the firm acquired any confidential information about the accused product during the earlier deal, could not, as a matter of law, give rise to an actionable conflict of interest.

Reliant Pharmaceuticals Inc. v. Par Pharmaceuticals Inc., C.A. No. 06-774-JJF (D. Del. April 23, 2008) (Farnan, J.).

In another District of Delaware decision addressing declaratory judgment jurisdiction post-MedImmune, Judge Farnan found declaratory judgment defendant ON Semiconductor's argument that the "reasonable apprehension of suit" test was not overruled by MedImmune unpersuasive. Samsung Elecs. Co. v. ON Semiconductor Corp., C.A. No. 06-720-JJF, Memo. Op. (D. Del. April 3, 2008). The Court found that recent Federal Circuit case law including Micron Tech., Inc. v. Mosaid Tech., Inc. (opinion here) and SanDisk Corp. v. STMicroelectronics Inc. (opinion here) has made clear that the Supreme Court's decision in MedImmune rejects the reasonable apprehension of suit test. Id. at 9-10.

ON Semiconductor's course of conduct, including letters accusing Samsung of infringement and their analysis of potential infringement by Samsung and Samsung's continued position that the patents are invalid and not infringed during the course of licensing discussions demonstrated evidence of a "substantial controversy" sufficient to warrant jurisdiction over the dispute. Id.at 10. The fact that the licensing negotiations were continuing "is not dispositive with regard to the existence of an actual controversy." Id.

Citing the EMC Corporation decision from the Federal Circuit, ON Semiconductor also argued that even if the Court can exercise declaratory judgment jurisdiction it should dismiss the action because licensing negotiations are still ongoing and their is still the potential for a non-legal resolution. Id.at 12. Judge Farnan declined to dismiss the action, however, stating that the record evidence demonstrated that when Samsung filed the complaint the parties' negotiations were at an impasse and ON had made clear its willingness to pursue other routes for enforcing its legal rights. Id.

Samsung Elecs. Co. v. ON Semiconductor Corp., C.A. No. 06-720-JJF, Memo. Op. (D. Del. Apr. 3, 2008).

Continuing a long tradition of interpreting Delaware's long-arm statute broadly, Judge Joseph J. Farnan Jr. recently rejected an attempt by an Illinois company, Emulgen, to escape jurisdiction in Delaware. In the underlying infringement suit, Emulgen contended, among others, that its miniscule revenues from Delaware sales and its lack of knowledge that Delaware customers would receive its marketing emails could not confer personal jurisdiction. The Court rejected these assertions out of hand:

In a recent opinion, Judge Joseph J. Farnan Jr. had the opportunity to reflect on the reach of the Supreme Court's KSR decision. In its post-trial opinion on the issue of invalidity, the Court examined a claim of obviousness in light of the high court's mandate:

The distinction between an assignee and licensee is crucial to determining whether a party has standing to sue for infringement. Whether through ownership or assignment, those parties that hold all substantial rights to a patent - and those who hold all exclusionary rights but not all substantial rights - generally enjoy the ability to enforce the patent. A "bare" licensee, on the other hand, possesses no right of enforcement. But what happens when a patentee conveys, as part of a non-exclusive license, the exclusive right to sue a particular entity, but otherwise retains title to the patent? Who is the proper party: the non-exclusive licensee that holds the right to sue, or the patentee that has contracted away the ability to bring suit? According to district judge Joseph J. Farnan, neither has standing to sue.

In the underlying litigation, the Court addressed the question whether the rights conveyed "elevated [the transferee's] status from that of a bare licensee to the second category of plaintiffs, those who hold exclusionary rights and interests created by the patent statutes, but not all substantial rights to the patent such that a law suit may be maintained with the presence of the patent owner." Because the license limited the transferee's right to sue - it could only pursue a single entity, the defendant - and imposed other restrictions, the patentee failed to "provide [the transferee] with a sufficient cloak to cover its status as a bare, nonexclusive licensee."

Having struck down this "hunting license," the Court then held that the patentee itself failed to establish standing to bring suit by contracting away the right to sue: "That [the licensee] lacks standing to take advantage of that right does not mean that [the patentee] regains it." In other words, the parties' chosen "contractual division" of the patent rights defeated their standing, leaving no party available to enforce the patent.

Fairchild Semiconductor Corp. v. Power Integrations Inc., C.A. No. 07-187-JJF (D. Del. Dec. 20, 2007) (Farnan, J.).

In a recent opinion, Delaware district judge Joseph J. Farnan Jr. reaffirmed the necessity of confirming expert witnesses' availability for pretrial discovery and trial. In the underlying litigation, defendant sought to delay expert reports and depositions on the basis of unavailability. Under normal circumstances, the Court might be inclined to work around outside schedules. But here, only thirty days before a "long scheduled" and firm trial date, defendant argued for delay in producing expert reports and taking expert depositions. Given the timing of defendant's request, the Court refused to accede:

"[T]he Court finds that the assertion that any expert witness is 'unavailable' to the parties in the thirty day period prior to a long scheduled trial is untenable and an issue for the witness's proponent, not the pre-trial schedule."

Nice Systems Inc. v. Witness Systems Inc., C.A. No. 06-311-JJF (D. Del. Dec. 14, 2007) (Farnan, J.) (order attached to claim construction opinion).