In St. Clair Intellectual Property Consultants, Inc. v. Hewlett-Packard Co., C.A. No. 10-425-LPS (D. Del. Mar. 28, 2012), Judge Stark clarified the pleading standard for an allegation of willful infringement. The defendant moved to strike the plaintiff’s willfulness allegations as insufficiently pled, prompting the plaintiff to move to amend its complaint. Id. at 1. The defendant argued that amendment would be futile because the plaintiff’s proposed amended willfulness allegations still failed to allege both the defendant’s “knowledge of the asserted patents and knowledge of the infringement.” Id. at 4. The Court rejected that argument, and clarified that a willfulness allegation is sufficiently pled if it “plead[s] facts giving rise to ‘at least a showing of objective recklessness’ of the infringement risk.” Id. (citing In re Seagate Technology, LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007)). Finding that the proposed amended complaint sufficiently pled willfulness under Seagate, the Court granted the plaintiff’s motion to amend and denied the defendant’s motion to strike as moot. Id. at 6.
In a recent memorandum opinion, Judge Stark denied a plaintiff’s motion to supplement its expert reports to address new infringement theories, and granted defendants summary judgment of non-infringement. St. Clair Intellectual Property Consultants, Inc. v. Matsushita Elec. Indus. Co., Ltd., et al., C.A. Nos. 04-1436-LPS, 06-404-LPS, 08-371-LPS (D. Del. Mar. 26, 2012). In November 2009, the Court issued a Report and Recommendation construing claims relating to digital camera technology which was consistent with the plaintiff’s proposed construction. The defendants filed objections to the Report and Recommendation, and before a decision was made whether to adopt the Report and Recommendation, the case was stayed pending the resolution of an appeal to the Federal Circuit in a related case where construction of the same claims was to be reviewed de novo. Id. at 4-5.
The Federal Circuit construed the claims consistently with the defendants’ proposals in this case, leading the defendants to move for summary judgment of non-infringement. Id. at 5-6. In response, the plaintiff moved to supplement its expert reports to address why the defendants infringed even under the Federal Circuit’s construction. Id. The Court viewed the plaintiff’s motion to supplement as a motion to add infringement contentions far beyond the deadline under the scheduling order. Id. at 8. Accordingly, the Court considered whether the plaintiff should be permitted to add infringement contentions based on the “good cause” standard of Rule 16. Id. at 9.
The Court concluded that the plaintiff could not show good cause, explaining that the plaintiff “made a tactical decision to not assert its infringement theories under Defendants’ proposed claim constructions … despite the fact that … the PTO applied the Defendants’ construction during the reexamination” in the related case, the plaintiff knew that its preferred construction was being appealed to the Federal Circuit in that related case, and claim construction in this case had not been resolved as of the deadline for expert reports or infringement contentions. Id. at 10. The Court explained, in denying the motion to supplement, “[a] strategic mistake does not equate to a showing of good cause under Rule 16.” Id. at 11. The Court next explained that exclusion of the plaintiffs’ expert reports, although an extreme sanction, was appropriate under Rule 37 and Pennypack because “the fact remains that [the plaintiff] violated the Scheduling Orders when it failed to raise all of its infringement contentions at the appropriate time.” Id. at 13. The Court also emphasized the prejudice to the defendants that would result from allowing the plaintiff to assert new infringement contentions at this stage, a prejudice that could not be cured completely, and that allowing supplementation would significantly prolong the litigation. Finally, and perhaps most critically, the Court noted the lack of a valid explanation for the plaintiff’s failure to timely disclose its infringement contentions. Id. at 13-15.
Because the plaintiff included its new infringement contentions in expert declarations filed in response to the defendant’s motions for summary judgment, the Court had opportunity to consider them. The Court found that the defendants would have been entitled to summary judgment of non-infringement even under the plaintiff’s new theories, lessening the ultimate severity of the Court’s decision. Id. at 23-26.
After a recent bench trial in a Hatch-Waxman infringement suit, the court entered a judgment of infringement with respect to two patents and noninfringement and invalidity with respect to two other patents. The court then denied cross-motions to amend judgment, finding that the parties had not met the high burden of showing a “manifest error of law or fact.” Alcon Research Ltd. v. Barr Laboratories Inc., C.A. No. 09-318-LDD (March 16, 2012) at 2.
Looking first at the arguments of Alcon Research, the court rejected the contention that it should not have made findings that neither party’s experts requested. This position, the court explained, was incorrect because a District Court has discretion to make findings of fact relevant to its decision and it “would not act prudently by merely parroting the position of one expert or another, especially when [it has] concerns about those experts.” Id. at 3. The court also refused to amend findings that it found were supported by the facts and rejected arguments that were not advanced at trial, as a motion to amend findings does not allow a party a “second bite at the apple.” Id. at 4-7.
The court then turned to the arguments of ANDA product manufacturer Barr Laboratories. Barr argued that, although Alcon had never actively litigated two patents during the course of the trial, Alcon also had not dismissed those patents from its complaint. The court had denied judgment as a matter of law of noninfringement on these two patents at the close of Alcon’s case because Alcon had never placed them at issue. Barr argued then and on its motion to amend the judgment that because the patents had never been formally dismissed, it needed a judgment of noninfringement in order to launch its generic. Despite the “cursory manner” in which the issue was raised at trial, the court reached the merits of the motion and determined that under Tol-O-Matic Inc. v. Proma Produkt-Und Marketing Gesellschaft m.b.H., 945 F.2d 1546 (Fed. Cir. 1991) and 800 Adept, Inc. v. Murex Sec., Ltd., 539 F.3d 1354 (Fed. Cir. 2008), it had been correct to deny Barr’s motion for judgment of noninfringement. Under these cases, the court found, “a complaint alone cannot support a judgment on claims not actually placed in issue at trial.” Rather, a counterclaim or declaratory judgment claim is necessary to keep “the involved patent claims ‘at issue’ and give the patentee fair notice that he must introduce evidence of infringement at trial or risk an adverse judgment.” Id. at 13-19.
Judge Andrews recently issued a claim construction opinion in Shire LLC’s case against Teva Pharmaceuticals regarding a generic form of the pediatric ADHD drug Intuniv. Shire LLC v. Teva Pharmaceuticals USA Inc., C.A. No. 10-329-RGA (March 22, 2012). Judge Andrews construed the following terms of the three patents-in-suit:
- “without inducing excessive sedation”
- “readministering the dose at an interval required to obtain a desired level and duration of behavioral inhibition”
- “non-pH dependent sustained release agent”
- “pH dependent agent that increases the rate of release of said at least one pharmaceutically active agent from the tablet at a pH in excess of 5.5”
- “enteric agent”
- “agent that increases the solubility of said at least one pharmaceutically active agent at a pH of greater than 5.5”
- “agent that maintains an acidic microenvironment in the composition”
- “reducing the likelihood of side effects associated with the administration of guanfacine”
In AstraZeneca UK Limited, et al. v. Watson Laboratories, Inc., C.A. No. 10-915-LPS (D. Del. Mar. 13, 2012), Judge Stark recently granted Watson Laboratories, Inc.’s and EGIS Pharmaceuticals PLC’s motions to dismiss AstraZeneca’s claims of infringement of its ‘618 and ‘152 Patents under Section 271(e)(2). In a previous suit brought by AstraZeneca against different generic drug manufacturers, the Federal Circuit affirmed the district court’s dismissal of similar claims because the defendants “had not sought FDA approval for the method of use indications covered by the ‘618 and ‘152 patents.” Id. at 6. Judge Stark found that Watson had done the same thing here, i.e., “filed a Section 505(b)(2)(B) Statement certifying that it is not seeking FDA approval for the indications covered by the ‘618 and ‘152 patents.” Id.
Judge Stark also granted EGIS’s motion to dismiss AstraZeneca’s declaratory judgment claims that EGIS will induce infringement of the patents-in-suit upon FDA approval of Watson’s NDA. Id. at 10. Judge Stark found that the there was no substantial controversy of sufficient reality to warrant a declaratory judgment. Specifically, the “potentially infringing subject,” i.e., Watson’s proposed NDA label, “has not remained substantially fixed over time.” Id. at 11. Thus, “Watson’s label . . . does not provide the basis for a justiciable Article III controversy of sufficient ‘reality.’” Id.
In Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., et al., C.A. No. 08-309-LPS (D. Del. Mar. 13, 2012), Judge Stark construed the following claim terms of the patents-in-suit:
“a feedback circuit coupled to receive a feedback signal”
“a control circuit coupled to generate a control signal in response to an output of the comparator and in response to an output of the feedback circuit”
“an oscillator for generating a signal having a switching frequency, the oscillator having a control input for varying the switching frequency”
“a controller to generate the switching signal in response to a first feedback signal associated with a voltage control loop and a second feedback signal associated with a current control loop in the primary-side of the transformer”
Judge Stark also denied plaintiff’s motion for summary judgment of infringement and defendants’ motions for summary judgment of non-infringement and invalidity because the Court concluded that there were genuine issues of material fact as to each motion.
In a recent opinion, Chief Judge Simandle of the District of New Jersey, sitting by designation pursuant to 28 U.S.C. § 292(b), held in connection with a motion to dismiss a declaratory judgment action for lack of subject matter jurisdiction that discovery requests in a case between the parties in another forum created an actual controversy. W.L. Gore & Assocs., Inc. v. AGA Medical Corp., C.A. No. 11-539 (JBS-KMW) (D. Del. Mar. 13, 2012). AGA filed suit against Gore in the District of Minnesota alleging that Gore’s occluder device for treating heart defects infringed the ‘738 patent. In that action, AGA sought discovery relating to a new Gore occluder device that was not accused in the Minnesota action. Id. at 5. Gore responded by filing a declaratory judgment action in the District of Delaware seeking a declaration that its new occluder device did not infringe the ‘738 patent, or the related ‘552 patent. Id. at 6. The Court found, with respect to the ‘738 patent, that “a substantial controversy existed at the time the action was commenced” because AGA served a discovery request in the Minnesota action relating to Gore’s new device and expressly told the Minnesota court that the discovery was justified because AGA might need to amend its complaint to include a claim based on the new device. Id. at 16. However, the Court held it lacked subject matter jurisdiction with respect to the ‘552 patent because it was not at issue in the Minnesota action and was not the subject of AGA’s discovery requests there. Id. at 15-16. Finally, the Court found it could not exercise personal jurisdiction over AGA because its Delaware sales amounted to less than 0.5% of its total sales, and it otherwise lacked continuous contacts with Delaware. Id. at 22. The Court rejected Gore’s argument that AGA was subject to specific personal jurisdiction in Delaware because it filed suit against Gore, a Delaware corporation, in Minnesota. The Court distinguished the situation before it from others where, for example, the patentee sends cease and desist letters into the forum state satisfying the forum’s long-arm statute. Here, in contrast, AGA did nothing to enforce its patent against Gore “in Delaware.” Id. at 24. As an alternative to dismissal under Rule 12(b)(2), the Court transferred the case to the District of Minnesota, AGA’s home state where the parties were litigating over the same patent. Id. at 25.
In Boston Scientific Corp. v. Cordis Corp., C.A. No. 10-315-SLR, Judge Robinson recently denied defendant’s renewed motion for judgment as a matter of law regarding lost profits damages and granted plaintiffs’ motion for enhanced damages — ultimately doubling the jury’s award. Id. at 37. Following the Court’s grant of summary judgment of infringement in favor of plaintiffs in a patent dispute involving cardiovascular stents, the Court held a jury trial on willfulness and damages. Id. at 3-4. Following that trial, the jury awarded plaintiffs nearly $18.5 million in lost profits damages and $1.0 million in reasonable royalties based on defendant’s infringement. Id. at 4. In post-trial submissions, defendant filed a renewed motion for judgment as a matter of law challenging the jury’s award of lost profits damages. Id. at 7. Defendant argued that the award was not supported by “substantial evidence” because, among other things, plaintiffs had not proven that the defendant’s infringing product was the “but-for cause” of the decline in plaintiffs’ sales. Id. at 7. The Court disagreed. Id. at 25. The Court found that the jury’s award of lost profits was, indeed, supported by sufficient evidence. Id. at 25. Specifically, in its analysis, the Court concluded that there was sufficient evidence to support that a “specific market” existed for defendant’s infringing product and that the demand for defendant’s infringing product and plaintiffs’ product was “interchangeable.” Id. at 23. The Court further concluded that sufficient evidence was presented that, for example, the “doctors’ demand” for defendant’s infringing product would have transferred to plaintiffs’ product in the absence of defendant’s infringing product. Id. at 23.
In addition to denying defendant’s renewed motion for judgment as a matter of law, the Court concluded that, although the case was not necessarily an exceptional one under 35 U.S.C. § 285, plaintiffs were nonetheless entitled to an award of enhanced damages under § 284 and that doubling the jury’s award was “reasonable under the circumstances.” Id. at 36. The Court determined that there existed “clear and convincing evidence that [defendant’s] conduct [was] sufficiently culpable to justify enhanced damages.” Id. at 36. The Court noted that the “Read factors” favoring enhancement included: (1) the extent to which defendant was aware of and investigated the scope of the patent-in-suit, (2) defendant’s litigation conduct, (3) defendant’s financial condition, (4) defendant’s motivation for harm, (5) the non-closeness of the case, and (6) the lack of remedial action on the part of the defendant. Id. at 36. The Court also noted that none of the Read factors specifically weighed against enhancement. Id. at 36.
In Quantum Loyalty Systems, Inc., et al. v. TPG Rewards, Inc., C.A. No. 09-022-SLR/MPT (D. Del. Mar. 6, 2012), Magistrate Judge Thynge resolved a discovery dispute relating to a defendant’s contention interrogatory seeking claim charts showing why the defendant’s older, unaccused products would not infringe the patent at issue. The defendant’s interrogatory sought “for the 1993 product . . . a claim chart countering [the defendant’s] chart explaining why this product is not prior art[,]” and “regarding the 2002 product . . . a claim chart showing why it does not meet the limitations of the claims being asserted against the later [2008 product]” (the defendant asserted that the 2002 product was the same as the 2008 product in relevant part, and therefore if the accused 2008 product were found to infringe, the 2002 product would be invalidating prior art). Id. at 4. The plaintiff objected to the interrogatory, asserting that it was a “veiled effort to require [the plaintiff’s] counsel to divulge its work product” and “since [the plaintiff] does not accuse either product of infringement, the interrogatory does not seek relevant evidence . . .” Id. at 3. The Court distinguished the situation from a case relied upon by the plaintiff, explaining that the defendant “is not seeking a comparison between the claim terms at issue with unaccused products of the patentee; rather [the defendant] is requesting discovery from [the plaintiff] related to its invalidity defense . . .” Id. at 5. The Court added, “seeking why the 1993 and 2002 products are not prior art [is] neither a unique nor unusual discovery request.” Accordingly, the Court ordered that the plaintiff respond to the interrogatory and provide the requested claim charts. Id. at 5-6.
As a supporter of the event, Delaware IP Law Blog invites you to attend the US Patent Reform Forum on March 27th in Washington D.C.
** Limited complimentary places left **
New speaker additions at the forum include Douglas Graham, executive director of IDDEX. Douglas is a fervent IP expert and author of books and many articles on Intellectual Assets. He also has had three patents granted and has two further patents pending. Douglas will be giving insight into the ways in which SME’s will be affected by the reforms, confronting an issue which often doesn’t see much coverage but which will affect many business owners and their counsel.
You will also be hearing from Teresa Stanek Rea, deputy under secretary of commerce for intellectual property and deputy director of the USPTO. Teresa will be giving the rule making overview and delivering perspective of the USPTO in a discussion which is to be chaired by the AIPLA’s Todd Dickinson.
The forum’s exciting finale will consist of a debate between Daniel McCurdy and Raymond P. Niro who will be discussing the contentious topic of NPEs or Patent Trolls. Going head to head and engaging directly with this matter from opposing perspectives, these charismatic speakers will provide a unique opportunity to hear from both sides of the fence in the wake of the AIA.
Dan McCurdy, CEO of PatentFreedom, is devoted to the protection of companies against NPEs. His conviction in this defence against the trolls passionate and Dan plays a key role in collating and sharing relevant intelligence with the ‘operating companies’ which he strives to defend.
Conversely, Raymond Niro is known to some as an ‘Original Troll’. Raymond is devoted with equal fervour to the advancement of the NPE cause and can speak with charm and eloquence on the controversial stance which he takes. Together these men will offer a unique opportunity to scrutinise the issues at stake allowing time for audience participation and discussion with the floor also. This is an opportunity not to be missed.
Other speakers include:
• David Kappos, undersecretary of commerce for intellectual property and director, USPTO
• Judge Paul Michel
• Gary Griswold, president and chief intellectual property counsel, 3M Innovative Properties Company and former chairman, 21st Century Patent Reform
• Bob Stoll, former commissioner, USPTO and partner, Drinker Biddle & Reath
• Robert Armitage, senior VP and general counsel, Eli Lilly
• Steven Wood, patent licensing associate, Brookhaven National Laboratory
• Phil Johnson, chief intellectual property counsel, Johnson & Johnson
• Sherry Knowles, principle, Knowles Intellectual Property Strategies
• David T. Beck, Patent Attorney, JDS Uniphase Corporation
• F. Scott Kieff, professor of law, George Washington University
• Brent Bellows, Knowles Intellectual Property Strategies
• Steven I. Weisburd, partner, Dickstein Shapiro
• Gene Quinn, president & founder, IPWatchdog, Inc
For more information about the agenda, please see the brochure here: http://www.managingip.com/pdfs/USPatentForum.pdf.
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We look forward to meeting you on March 27th.