Delaware IP Law Blog

District Judge Sue L. Robinson has modified a recent damages order, reported by us last month, that accounted for the award's tax treatment:

"It is apparent from the papers submitted that the appropriate method of calculating prejudgment interest based on after-tax damages is fraught with opportunities for mischief. Indeed, each party has employed a different analysis in computing this aspect of the damages award. Under the circumstances, the court has determined that its attempt to adjust for taxes was ill conceived and, therefore, will adopt Cordis' computation of prejudgment interest, which (according to Medtronic) is consistent with a pre-tax assessment."

Cordis Corp. v. Medtronic Vascular Inc., C.A. No. 97-550-SLR (D. Del. Sept. 30, 2008) (Robinson, J.).

Thanks to Bob Matthews at Latimer Mayberry in Virginia for sending us a recent case similar to Judge Robinson's fees decision, posted below. Just two days before the Delaware decision issued, the Northern District of Ohio reached the same conclusion: "A finding of inequitable conduct regarding the '346 patent, even if made during the fee hearing, would compel a finding that the patent is invalid, notwithstanding that this issue was previously eliminated from the case by Vector's dismissal."

The result? Just as in the Delaware case, a prevailing party could not raise enforceability via a fees motion.

Euclid Chem. Co. v. Vector Corrosion Techs., Inc., C.A. No. 01:05 cv 80 (N.D. Ohio Sept. 24, 2008).

On Friday, District Judge Sue L. Robinson resolved an atypical motion for attorney fees. By its motion, a prevailing defendant sought reimbursement on the ground that plaintiff alleged inequitable conduct rendered the subsequent litigation frivolous. The catch? The Court never actually ruled on the unenforceability issue:

"Given the fact that plaintiff's claims of infringement asserted against defendants have been dismissed with prejudice, defendants are asking me to make a substantive determination as to the validity of a patent, under the guise of a motion for attorney fees, when a court would not otherwise have jurisdiction to do so. I decline to undertake such an analysis."

Novo Nordisk A/S v. Sanofi-Aventis, C.A. No. 05-645-SLR (D. Del. Sept. 26, 2008) (Robinson, J.).

Last week, a jury returned a verdict for Plaintiff Siemens Medical Solutions, USA, Inc. finding that Saint-Gobain Ceramics & Plastics infringed U.S. Patent No. 5,525,905 related to technology used in PET scanners (medical imaging scanners). Although the jury did not find willful infringement, the total compensatory damages awarded were $52.3 million. Siemens Medical Solutions, USA, Inc. v. Saint-Gobain Ceramics & Plastics, C.A. No. 07-190-SLR, Jury Verdict (D. Del. Sept. 25, 2008).

Another plaintiff's verdict in the District of Delaware...

For a copy of the verdict form see here.

District Judge Sue L. Robinson has issued a decision in the long-running Cordis/Medtronic litigation clarifying the standards and procedures surrounding several damages issues common to patent litigation.

In yesterday's memorandum opinion, the Court first addressed pre-judgment interest, holding that the proper measure is the prime rate of interest, rather than the U.S. treasury-bill rate, compounded quarterly. The Court also considered the award's tax treatment, noting that because "taking into account the tax consequences of a damages award best reflects reality," the final interest award should be based on the "after tax amount of damages."

Finally, the Court rejected a request for a new damages trial based on an intervening arbitration decision that recognized the defendant as a licensee. According to the Court, an earlier stipulation of infringement in the litigation precluded such a request: "The Court declines to allow [defendant] out of its agreement based on later, business-related proceedings of which it was not a part."

Cordis Corp. v. Medtronic Vascular Inc., C.A. No. 97-550-SLR (D. Del. Sept. 15, 2008) (Robinson, J.).

In a recent simple, and straightforward opinion, Judge Robinson granted a plaintiff's motion to exclude expert testimony where the expert report relied on knolwedge of work done for a government agency which was not able to be disclosed. Siemens Medical Solutions USA, Inc. v. Saint-Gobain Ceramics & Plastics, Inc., C.A. No. 07-190-SLR, Memo. Order (D. Del. Aug. 20, 2008).

A constant theme in opinions resolving disputes over discovery is fairness and this opinion was no exception. Judge Robinson stated that her analysis need only "start and end" with the "fundamental principle of fairness." Id. at 2. The expert in this case was employed by a government agency and prohibited from producing his work product. His expert report in the litigation, however, relied on his recollection of some of this government work. The court found that the expert cannot rely on the recollection of this work product where the work product itself is otherwise shielded from discovery. Id.

For a copy of the opinion see here.

In another example of the difficulty of obtaining summary judgment in Delaware, district judge Sue L. Robinson has refused to invalidate a network-security patent on the grounds of anticipation and obviousness. By doing so, the Court also highlighted the importance of presenting one's case on summary judgment.

Examining the allegedly anticipating prior art, the Court concluded that "arguabl[e]" differences of scale created an "unclear" record. In a footnote, the Court then equated this lack of clarity with a failure to satisfy the controlling clear-and-convincing standard of review. As a result, the Court declined "to find through a motion practice" that the prior art anticipated the patent-in-suit. For substantially the same reasons, the Court also rejected the obviousness contention.

The import of the decision? When arguing (or defending) invalidity, an essential part of the litigation strategy includes mitigating (or creating) doubts in the Court's mind about the prior art.

SRI Int'l Inc. v. Internet Security Systems, C.A. No. 04-1199-SLR (D. Del. Aug. 21, 2008) (Robinson, J.).

In an unusual outcome in the District of Delaware, a transfer motion has been granted. In a recent opinion, district judge Sue L. Robinson found that two affiliated defendant-companies, both located in Arizona, had overcome the strong presumption in favor of a plaintiff's choice of forum. The winning argument? Defendants' statement that, with only twelve employees and officers, litigating in Delaware potentially could result in the firms' failure:

"According to defendants, the absence of these officers and/or employees from their employment would be incredibly damaging to [its] nascent business operations and could possibly result in the business losing substantial revenue and/or failing. . . . In sum, defendants present themselves as small, regional businesses; weighing the convenience of the parties under the circumstances of record, the court agrees that maintaining the litigation in Delaware presents significant hardships to defendants."

Defendants often unsuccessfully assert inconvenience based on a lack of employees or records located in Delaware. This case is a rare example of the circumstances in which hardship stemming from location alone drives the transfer analysis.

L'Athene Inc. v. EarthSpring LLC, C.A. No. 08-114-SLR (D. Del. Aug. 7, 2008) (Robinson, J.).

Infringement actions often provoke a raft of counterclaims that assert non-patent theories, including business-competition torts. When a party pursues these unfair competition claims, however, the plaintiff retains some doctrinal immunity from suit. And, according to District of Delaware Judge Sue L. Robinson, this immunity extends to a party that relies on a "weak" but untested patent

In a recent post-trial decision, the Court assessed a defendant's unfair competition counterclaims in light of the so-called Noerr-Pennington doctrine, a judicially created immunity that bars application of the antitrust laws to those who petition the government for redress. The patentee, a generic manufacturer, had acquired a patent of questionable validity on the subject drug as a hedge against other competitors in the generic market. After initiating the underlying litigation, defendant responded with unfair competition, tortious interference, and antitrust counterclaims.

Analyzing the patentee's claims of immunity from suit, the Court criticized the business motives that led to the acquisition of the weak patent:

"The inference to be drawn from this chronology is that, instead of directing its efforts to launching a generic, [patentee] obtained and relied upon an admittedly 'weak' patent for protection from other generic competition."

Noting that even a questionable patent "enjoys a presumption of validity," however, the Court held that the infringement litigation could not be characterized as a sham suit. The Court highlighted the fact that no tribunal had invalidated the patent:

"The validity of the '183 patent has not be adjudicated by any court (or the USPTO on reexamination). This court has no occasion to judge the merits of [defendant's] invalidity arguments, and declines to issue a finding that [the patentee] 'should have known' of its patent's invalidity absent such findings."

The lesson? Until an objective basis exists for invalidity - i.e., a court or agency ruling - the infringement plaintiff will enjoy Noerr-Pennington immunity.

Braintree Labs. Inc. v. Schwarz Pharma Inc., C.A. No. 03-477-SLR (D. Del. July 31, 2008) (Robinson, J.).

In what Judge Robinson believed to be a first impression issue before her, she recently denied a motion to transfer where "neither the parties nor the patents" were identical. Cisco Systems Inc. v. GPNE Corp., C.A. No. 06-671-SLR, Memo. Order, at 5 (D. Del. Apr. 17, 2008). Defendant, GPNE, moved to transfer this declaratory judgment litigation to the Eastern District of Texas where they had earlier filed two patent infringement lawsuits. The first lawsuit in Texas was filed against one set of defendants and settled early on in the litigation. The second lawsuit was filed against another group of defendants and remains pending only against one defendant, and involves only one of the patents-in-suit that was asserted in the Delaware litigation but involved different technology. Id. at 2. (Neither Texas lawsuit involved the declaratory judgment plaintiffs who filed suit in Delaware.)

GPNE argued that once the Eastern District of Texas obtained "possession of the subject matter" of the dispute, the later-filed litigation should be subject to transfer under the "first-filed" rule. Id. Judge Robinson stated that she found "remarkable the assertion that a court obtains 'possession of a subject matter' of a patent as soon as a single case involving that patent is filed in that jurisdiction" and therefore denied the motion to transfer. Id. at 5.

A note for all those who may draft a motion to transfer before Judge Robinson in the future…"absent a truly regional defendant or critical witnesses that cannot be compelled to attend trial, Delaware (especially for a Delaware corporation…) is at least as convenient as any other forum."

For a copy of the opinion click here.

In weighing a patent licensee's standing to sue for infringement, Courts often look to whether the license is exclusive and conveys all substantial rights, including the privilege to sue. But what happens when the license in question apportions the litigation right between licensor and licensee? According to District of Delaware Judge Sue L. Robinson, the licensee alone has no standing to bring suit.

The contract in question required the licensee to notify the licensor of any third-party infringement. If the licensor did not file suit within ninety days, then the licensee would be free to initiate its own action against the third party. Therein lies the problem:

In a recent memorandum order, District Judge Sue L. Robinson summarily rejected a request to jettison a party's inequitable conduct defense. Recognizing that "arguments made to the PTO can form the basis for inequitable conduct defenses under certain circumstances," the court denied a motion to dismiss without prejudice to renew.

At least at the motion to dismiss stage, the defendant's claim that attorney argument made to the examiner involved intentional falsehoods about a material reference must stand.

Elan Corp. v. Teva Pharma. USA Inc., C.A. No. 07-552-SLR (D. Del. March 7, 2008) (Robinson, J.).

In the ongoing battle between Boston Scientific Corporation, Johnson & Johnson Inc. and Cordis Corporation, the District of Delaware recently handed BSC a victory, allowing it to proceed in four declaratory judgment actions each seeking a judgment on invalidity on one of four patents related to drug-eluting coronary stent technology. Boston Scientific Corporation v. Johnson & Johnson Inc. and Cordis Corporation, C.A. Nos. 07-333-SLR, 07-348-SLR, 07-409-SLR, 07-765-SLR, Memo. Op. (D. Del. Jan. 24, 2008). BSC manufactures a private-labeled version of a stent manufactured by Abbott Laboratories. There are four lawsuits currently pending in the District of New Jersey where Johnson & Johnson asserts infringement of the same four patents at issue in the Delaware litigation, however, the defendant in those cases is Abbott Laboratories.

Johnson & Johnson moved to dismiss all four actions for failure to allege imminent harm necessary for declaratory judgment jurisdiction and also moved to transfer the four cases to the District of New Jersey where its earlier-filed cases are pending.

The Court found that J&J's Jekyll & Hyde jurisdictional argument was not enough to warrant dismissal of the actions. In the District of New Jersey actions, J&J accuses Abbott Laboratories' stent product (identical to that of BSC) of infringing the same patents-in-suit despite the fact that Abbott's product was pending launch in 2008 and was only pending FDA approval. In moving to dismiss the Delaware actions, J&J argued that there could not be declaratory judgment jurisdiction because BSC is not currently marketing or selling the stent (although it has announced its intention to start selling in 2008) and is still awaiting FDA approval. Judge Robinson stated that J&J "can not have it both ways" and therefore denied their motions to dismiss

The Court further denied J&J's motions to transfer the cases to the District of New Jersey where its four earlier filed cases against Abbott are pending. The Court found so, even though the actions pending in the D. N.J. involve the same patents, the same accused products and the same legal issues. Judge Robinson acknowledged that BSC need not have been a party to the earlier filed litigation for the "first-filed" rule to apply, however, in its discretion the prejudice to BSC should the action be transferred was too great. The New Jersey court has yet to set a trial date where the Delaware cases have a trial date and schedule in place so BSC will be able to proceed without delay on its claims. Judge Robinson found J&J's argument on the risk of inconsistent rulings on the legal issues to be "entirely speculative" at this time and therefore not persuasive for transfer. Applying the remainder of the Jumara factors, the Court found that the cases should remain in Delaware.

And the battle rages on…

An accused device infringes under the doctrine of equivalents when, among others, the alleged equivalent represents an "insubstantial" change from the claim language. Uncertainty arises, however, when the equivalent is itself patented. Would a finding of equivalence amount to a declaration that the patent covering the accused device is invalid? Perhaps to avoid this outcome, the Federal Circuit has held that a finding of equivalency in this scenario is "considerably more difficult to make out," albeit not necessarily foreclosed.

In a recent opinion, district judge Sue L. Robinson faced, and declined to wade into, this separate patentability issue in the preliminary-injunction context. Acknowledging that the equivalent's patented status is evidence that it was "previously unknown and/or non-obvious," and that customers in the field accepted the interchangeability of the compounds in issue, the Court nonetheless rejected the notion that plaintiff could show a likelihood of success on the merits.

According to the Court, defendant has a "strong argument" that, as a matter of law, the equivalent is both novel and substantially different from the asserted invention. "To the extent that 'known interchangeability' can coexist with separate patentability, plaintiff's burden on its preliminary injunction motion is a heightened one."

Perhaps the result would be different had this been an actual finding on the merits?

Siemens Medical Solutions USA Inc. v. Saint-Gobain Ceramics & Plastics Inc., C.A. No. 07-190-SLR (D. Del. Jan. 8, 2008) (Robinson, J.).

Microsoft Corp. v. Alcatel Bus. Sys., C.A. No. 07-090 (D. Del. Dec. 18, 2007).

This case dealt with a violation of Model Rule of Professional Conduct 4.2 by two attorneys from a prominent national firm. The attorneys purchased, on the open market, an Alcatel Communications System that contained certain features at issue in the patent litigation. The system was installed at the attorneys' Washington D.C. offices, and one of the technicians working on the installation identified himself as an employee of Alcatel-Lucent, one of the originally-named defendants in the case. The employee helped install the system, trained the attorneys on how to use the system, and engaged in ongoing conversations with the attorneys about the administration, use, and configuration of the system. The Court noted that the employee was one of only a limited number of engineers at Alcatel with the experience and training to install the system.

As part of the "broad inquiry" into obviousness mandated by the Supreme Court in KSR v. Teleflex, commentators have speculated over the continuing viability of so-called "secondary considerations." Some commentators predict that such considerations are now "elevated in importance." Others question the rubric's continuing relevance, specifically pointing to the Federal Circuit's treatment of a case out of this district.

Given these doctrinal fluctuations, discerning the best proofs for an invalidity case may now be more difficult. One recent decision by Delaware district judge Sue L. Robinson, however, sheds light on one route to proving the secondary consideration of commercial success: news articles.

In its December 4th order, the Court held that a defendant's praise for the accused products, embodied in news articles, can be admitted as admissions of a party so long as the statements "relat[e] to the commercial success of the accused products." Other articles that simply mention the accused product, on the other hand, are inadmissible: it is the party's own statement of praise, not the existence of public information about the products, that controls the evidentiary inquiry.

Callaway Golf Co. v. Acushnet Co., C.A. No. 06-091-SLR (D. Del. Dec. 4, 2007) (Robinson, J.).

One party files an infringement action at 12:01 a.m. in New Jersey. Also at 12:01 a.m., the infringement defendant, precluded from lodging its Delaware declaratory-judgment action by a local rule requiring paper filing of complaints, files instead a motion to consolidate the forthcoming declaratory-judgment action with an earlier-filed action. Under the first-filed rule, which action came first, New Jersey or Delaware?

According to Delaware district judge Sue L. Robinson, the question is moot, as the infringement plaintiff's choice of forum should prevail:

"Even if J&J's 12:01 a.m. filing of the first New Jersey action were to be considered the functional equivalent of Abbott's 8:30 a.m. filing of the 07-259 action in this district (and the court declines to find a 'dead heat' in this instance), the winner of this race to the court house is the true plaintiff, not the declaratory judgment plaintiff, as this court respects the choices made by plaintiffs in choosing this state as a forum and must, therefore, respect their choice of a different forum."

In this case — an action "replete with inferences of forum shopping by both parties" — the orchestrated late-night maneuvering came to naught.

Abbott Labs. v. Johnson and Johnson Inc., C.A. Nos. 06-613, 07-259 (D. Del. November 28, 2007) (Robinson, J.).

Can a dispute resolution provision in a contract between two parties that states that "any dispute arising out of or relating to patents" shall be resolved through negotiations and mediation and should mediation fail to reach a result, either party may institute legal proceedings "but only in the United States District Court of Delaware, and no other" prohibit a party from filing a request for inter partes reexamination? The Court recently answered yes, despite a finding by the USPTO that such a provision is contrary to public policy and therefore the request for reexamination should be honored.

In Callaway Golf Company v. Acushnet Company, C.A. No. 06-091-SLR, Memo. Opinion (D. Del. Nov. 20, 2007), the defendant had entered into a prior settlement agreement with plaintiff's predecessor-in-interest to resolve certain patent claims. Id. at 3. This agreement contained the language described above. Following two attempts at resolving their dispute via mediation, the defendant filed an inter partes reexamination request for each patent at issue in the lawsuit and then plaintiff subsequently filed the instant lawsuit. Callaway Golf moved for summary judgment for breach of contract and Acushnet moved for summary judgment of no breach of contract.

As a threshold matter, the Court found that because the plaintiff, Callaway was a "successor" as defined by the Agreement and further because the parties had previously engaged in two mediations as required by the Agreement that both parties are bound to the terms of that contract. Id. at 24-25.

Callaway, in addition to its summary judgment motion had also filed a petition with the USPTO to vacate the reexamination that was filed by Acushnet based on the provisions in the Agreement. The PTO dismissed the petition for many reasons including that there was no authority for private parties to abrogate the PTO's statutory jurisdiction and that such a provision would be contrary to public policy. Id. at 26. Judge Robinson held that the Court "owes no deference to the PTO's interpretation of the legal effect of the Agreement or, more generally, the legality of a provision that purports to prevent parties from filing inter partes reexaminations' the PTO was clearly within its jurisdiction to dismiss plaintiff's request to halt the proceedings. It does not follow, however, that defendant was not in breach when it filed its inter partes reexamination request in the first instance." Id.

Ultimately, the Court found that because reexamination was not listed as a possible procedure for resolution of a dispute between the parties (only mediation and litigation in the D. Del. were), it is precluded as a possible remedy for any dispute involving the patents-at-issue. Id. at 27. The Court compares such a provision as "akin to a forum selection clause" as it does not effect either party's interest in adjudicating the validity of the patent it just requires them to do so before a Court instead of the PTO. Id. at 28. Finally, the Court finds that such a holding is not against public policy since: (1) the public is not a party to the Agreement and (2) any third party can still challenge the validity of the patents through a request for reexamination. Id. at 29.

An expert witness represents in his expert report that he/she "personally directed" testing and that he/she "prepared and tested" the product when in fact the testing was actually done by personnel of the defendant — what happens with the evidence? Based on a recent ruling by Judge Robinson in Callaway Golf Company v. Acushnet Company, C.A. No. 06-091-SLR, Memo. Order (D. Del. Nov. 20, 2007), such evidence should be excluded.

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