Articles Posted in Designated Judges

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Judge Kearney, sitting by designation from the Eastern District of Pennsylvania, recently considered declaratory judgment-defendant Nuseed Americas Inc.’s motion to dismiss for lack of subject matter jurisdiction.  BASF Plant Science LP v. Nuseed Americas Inc., No. 17-421 (D. Del. Aug. 17, 2017).  The motion presented the issue of the scope of authority given to agents authorized by a patent owner to negotiate terms of a license agreement with a potential infringer.  Id. at 1.  In other words:

When, as here, we address an apparent impetuous impasse in patent license negotiations between a potential infringer and a company negotiating on the patent owner’s behalf, we must scrutinize whether there is a real and immediate threat of a patent infringement action by the named defendant against the potential infringer.  If not, we lack subject matter jurisdiction and must enter the accompanying Order dismissing the declaratory judgment action against the agent defendant mindful the potential infringer may seek a declaration from a court with personal jurisdiction over the patent owner or another party with the legal right to sue it for infringement.

Id.  Judge Kearney determined that dismissal was warranted because BASF sued the agent with whom it was negotiating, but did not join the patent owners.  Id. at 8-10.  “We appreciate BASF’s immediate attempt to seek declaratory relief against the agent with whom it negotiated. But the agent presented no real and imminent threat of suing BASF for patent infringement.”  Id. at 10.

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In Prowire LLC v. Apple, Inc., C.A. No. 17-223-MAK (D. Del. Aug. 9, 2017), Judge Mark A. Kearney denied Defendant’s motion to dismiss based on allegedly insufficient allegations of infringement as well as is motion to dismiss for improper venue, where Defendant argued that Plaintiff had not shown it has  “regular and established place of business” in Delaware.

In finding Plaintiff’s complaint sufficient, the Court was guided by case law from this District holding that a complaint must provide sufficient information to allow the court to “determine plausibility and [] defendant to respond to the complaint,” rejected the premise that the complaint must always be detailed, and declined to reach the question of whether a complaint must plead infringement of every element/limitation of a patent’s claim. Id. at 4-5.  The Court also rejected Defendant’s argument that it should disregard allegations made “on information and belief.” Id. at 6-7.

As to venue, the Court’s opinion focused on the argument that Defendant had no regular and established place of business in Delaware. Defendant did “not dispute [Plaintiff’s] allegation it has a retail store in Delaware, it argues one retail store is not enough to establish a ‘permanent and continuous presence.’ We disagree; [Defendant’s] retail store is a permanent and continuous presence where it sells the alleged infringing technology to consumers on a daily basis. [Defendant] does not meet its burden of showing it does not have ‘a regular and established place of business’ in this District.” Id. at 9.

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Judge Hillman, sitting by designation, recently considered plaintiff Evonik Degussa GmbH’s motion for permanent injunction filed following a jury trial after which the jury found in favor of Evonik and awarded damages for past infringement.  Evonik Degussa GmbH v. Materia, Inc., No. 09-636-NLH-JS (Aug. 9, 2017).  Judge Hillman found that, on balance, the four eBay factors supported an injunction, based on facts including:

  • Defendant Materia and Evonik “are direct and primary competitors” for “olefin metathesis catalysts” in the “pharmceutical, oleochemical, fine chemical, and polymer industries.”  Id. at 3, 6.
  • Evonik has never licensed the patented technology to its competitors.  Id. at 3, 6.
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In a recent order, Judge Noel L. Hillman, sitting by designation, ruled on one of defendant Materia’s motions in limine in this long-running litigation. Materia moved to “preclude Evonik from referencing or offering any evidence relating to [a] covenant not to sue or claims already dismissed.” Evonik Degussa GMBH v. Materia, Inc., C.A. No. 09-636 (NLH-JS), Order at 1 (D. Del. Jan. 12, 2017). Judge Hillman denied the motion to the extent it was an attempt to “preclude Evonik from referring to Materia as an infringer of the 50 Materia products addressed in the Court’s summary judgment opinion.” Id. Judge Hillman also found than the motion was partially moot because Evonik had proffered that it would not disclose the covenant not to sue at issue or the Court’s dismissal of a counterclaim based on it, or the fact that inequitable conduct claims and invalidity counterclaims had been dismissed by the parties. Id. However, Judge Hillman granted the motion in limine in part by ordering that “Evonik is barred from introducing in its case-in-chief any evidence regarding [the patent that was the subject of the covenant not to sue] and its assertion and adjudication in this case to support an argument that Materia asserts highly questionable patents against competitors as a tool to compete in the metathesis catalyst industry. However . . . Evonik may seek leave of Court to use such evidence on cross-examination, or any rebuttal case, to demonstrate a witness’s prior inconsistent statement or to assess a witness’s credibility. Stated differently, Evonik may use such evidence as a shield but not a sword.” Id. at 1-2.

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In three recent Orders, Judge Noel L. Hillman, sitting by designation, ruled on defendant’s (“Materia”) motions in limine. Judge Hillman first denied Materia’s motion in limine regarding plaintiff’s (“Evonik”) expert, ruling that “Evonik’s expert, Dr. Cooper, may be permitted to testify, as may any expert or fact witness from Materia, on the nature and quantity of any inoperable embodiments of a patent claim including ‘NHC’ as construed by the Court.” Evonik Degussa GmbH v. Materia, Inc., C.A. No. 09-636-NHL-JS (D. Del. Jan. 6, 2017).

Next, Judge Hillman granted and denied in part Materia’s motion in limine to exclude “certain argument or evidence based on Materia’s invocation of attorney-client privilege.” Specifically, Judge Hillman ruled that Materia’s motion “is granted in that Evonik is precluded from asking any questions which are reasonably likely to elicit an answer precluded by privilege. The Motion is denied in that Evonik may use a privilege log– in a redacted form so as to preclude any reference to privilege or confidentiality– to prove a fact established by the log.” Evonik Degussa GmbH v. Materia, Inc., C.A. No. 09-636-NHL-JS (D. Del. Jan. 9, 2017).

Finally, Judge Hillman granted Materia’s motion to preclude “Evonik from referencing or introducing at trial evidence related to the underlying substantive issues and allegations of the Boulder litigation . . .  to the extent that Evonik is barred from introducing in its case-in-chief any evidence related to the underlying substantive issues and allegations of the Boulder litigation.”  Judge Hillman noted, however, that “Evonik may seek leave of Court to use such evidence on cross-examination, or any rebuttal case, to demonstrate a witness’s prior inconsistent statement or to assess a witness’s credibility.” Evonik Degussa GmbH v. Materia, Inc., C.A. No. 09-636-NHL-JS (D. Del. Jan. 10, 2017).

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In a recent Opinion, Judge Noel L. Hillman, sitting by designation, affirmed the May 20, 2016 Order of Magistrate Judge Joel Schneider, in which he sanctioned defendant for “belatedly producing one particular email and other documents.” Evonik Degussa GmbH v. Materia, Inc., C.A. No. 08-636-NLH-JS (D. Del. Dec. 14, 2016). Judge Schneider found that defendant “should have, on more than one occasion, reviewed its production for completeness, and did not.” Id. at 3. Accordingly, Judge Schneider awarded plaintiff “attorneys fees it incurred due to the late production and allowed [plaintiff] additional discovery. Id.

Judge Schneider, however, rejected plaintiff’s assertions that defendant or its attorneys “acted in faith.” Id. at 2. Plaintiff contested Judge Schneider’s finding regarding the “serious of [defendant’s failure]” to procedure certain documents, and argued that the sanction Judge Schneider “imposed was too lenient.” Id. Specifically, plaintiff argued that Judge Schneider should have ruled that: (a) “the belatedly produced documents could not be used by [defendant] at trial,” and (b) plaintiff “is entitled to an adverse inference jury instruction.” Id. at 3.

In support of its argument, plaintiff asserted that “Judge Schneider ‘converted” [plaintiff’s] spoliation motion into a discovery motion under Rule 37, and then [asserted] that Rule 37 requires– as opposed to permits– the Court to preclude [defendant] from relying on the belatedly-produced documents at trial.” Id. at 3-4. Judge Hillman disagreed, explaining that Judge Schneider rejected plaintiff’s “spoliation argument because spoliation requires a finding of bad faith, and then very clearly imposed sanctions pursuant to Fed. R. Civ. P. 26, not Fed. R. Civ. P. 37.” Id. at 4. Plaintiff also reasserted the arguments it presented to Judge Schneider that defendant’s conduct “evidences bad faith.” Id. Judge Hillman found that “Judge Schneider addressed this argument, considered all of the record evidence, and concluded that there was insufficient evidence to support [plaintiff’s] ‘conspiracy theory.’” Id. Judge Hillman found that Judge Schneider’s findings were not clearly erroneous in this regard, and affirmed the court’s Order regarding sanctions.

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Following a five-day trial in May 2016 in ART+COM Innovationpool GmbH v. Google Inc., C.A. No. 14-217-TBD (D. Del. Sept. 9, 2016), after which the jury returned a verdict of non-infringement and invalidity of the asserted patent, Judge Timothy B. Dyk, sitting by designation, considered (1) Plaintiff’s motion for relief from judgment under Rule 60(b); (2) Plaintiff’s motions for post-trial relief; and (3) Defendant’s renewed motion for judgment as a matter of law as to Section 101 invalidity.

The Court denied the Rule 60(b) motion. Plaintiff argued that the Court should have excluded the testimony of a fact witness who Defendant had retained as a consultant. The Court observed that case law “establish[ed] that a party can enter into agreements with fact witnesses that compensate those witnesses for consulting work and not trial testimony.” 60(b) Decision at 5. The Court concluded that this was the case here where there was no evidence that Defendant had compensated the witness for his testimony or that the consulting fees impacted the testimony, nor was the witness’s fee unreasonably high, even though the fee was five times more than his salary, in light of his expertise and the complexity of the case. Id. at 6-7. In light of Plaintiff’s opportunity to depose and fully cross-examine the witness, the Court also concluded that the consulting agreement had not prejudiced Plaintiff. Id. at 8-9.

The Court also denied Plaintiff’s motions for post-trial relief. Plaintiff had moved for judgment as a matter of law as to infringement and as to no invalidity, both of which the Court denied. See Post-Trial Relief Decision at 4-21. For example, as to invalidity based on a particular reference, the Court disagreed with Plaintiff that “the public must be able to ascertain the individual elements of an invention for [this particular reference] to constitute a public use.” Id. at 16. Rather, “[t]he critical inquiry is whether the invention is used without restriction of any kind.” Id. at 17. Here, the reference “was publicly demonstrated at two technical conferences, to attendees with knowledge in the art, without restriction or effort to maintain confidentiality,” and these acts were sufficient to constitute public use.” Id. at 18-19.

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Judge Noel L. Hillman of the United States District for the District of New Jersey, sitting by designation, recently granted Materia Inc.’s (“Materia”) motion to dismiss Evonik Degussa GmbH’s (“Evonik”) counterclaims for inequitable conduct. Evonik Degussa GmbH v. Materia, Inc., C.A. No. 09-636-NHL/JS (D. Del. Apr. 6, 2016). The Court had previously granted Evonik’s motion for partial summary judgment that it does not infringe Materia’s U.S. Patent No. 7,622,590 (“the ’590 Patent”). Id. at 1-2. Following the Court’s decision, Materia provided Evonik with a broad covenant not to sue (“CNS”) on the ’590 Patent. The parties agreed that the “the CNS moots Evonik’s counterclaim for invalidity.” Id. at 2. The specific question before the court was “whether following a partial summary judgment determination as to noninfringement, a CNS covering noninfringement, invalidity, and all future claims moots a counterclaim for inequitable conduct.” Id. at 3. After a review of the “evolving case law” on this topic, Judge Hillman concluded that “Materia’s CNS is sufficiently broad to remove any case or controversy regarding the ’590 Patent and therefore Evonik has failed to meet its burden of showing a substantial controversy exists as to the ’590 Patent.” Id. at 7. Judge Hillman agreed with Materia “that for all intents and purposes the CNS ‘kills the ’590 Patent vis-à-vis Evonik.’” Id. Accordingly, Judge Hillman dismissed the inequitable conduct counterclaims.

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In St. Clair Intellectual Property Consultants, Inc. v. Toshiba Corp., et al., C.A. No. 09-354-KAJ (D. Del. Nov. 23, 2015), Judge Kent A. Jordan denied Defendants’ motion for fees and costs under Section 285 and 28 U.S.C. § 1927. The Court explained that “[w]hile it is true that [Plaintiff] did not present a strong case, and that is position appeared to be weaker in light of certain rulings in limine and at trial, the case for infringement was not so weak as to be ‘exceptional’ . . . nor does the record support a finding that the actions of its attorneys . . . were taken in bad faith.” Id. at 1.

Defendants claimed that Plaintiff did not have sufficient proof of infringement. When its technical expert’s opinion was limited by the Court, Plaintiff had “attempted, improperly, to enter additional, unauthenticated Toshiba schematics into the record using its damages expert . . . [the Court] rejected that maneuver, and [the gap in Plaintiff’s case] remained.” Id. at 6. But the Court observed that, while difficult, “a victory was not impossible” as the technical expert could still testify generally and could have persuaded the jury of infringement, thus there was “a straight-faced basis for arguing for a finding of infringement.” See id. at 6-7. The Court similarly rejected Defendants’ contention that a key limitation was missing from the accused products, as the Court had previously rejected Defendants’ position on this issue. See id. at 7.

Defendants also pointed to Plaintiff’s “behavior before the court,” specifically that it had “shifted litigation positions . . . to avoid summary judgment,” and “presented false royalty calculations.” Id. at 4, 7. Judge Jordan, having been “present for the latter portions of pretrial proceedings and the trial itself,” saw no “evidence of the bad motives [Defendants have] ascribed to [Plaintiff].” Id. at 7. “Royalty calculations, especially in cases with variable and sometimes overlapping infringement theories against large suites of products, may be expected to have a degree of imperfection. That [Defendants] found and successfully exploited such imperfections . . . does not mean that [Plaintiff] was a bad actor. In the same vein, [Defendants’] success in forcing [Plaintiff] to change positions in the course of litigation does not make this case exceptional. Parties should abandon positions or claims when it appears they are unlikely to prove fruitful. . . . [The Court has] no desire to encourage parties to hold on to and litigate discredited positions out of a fear that abandoning them will result in an attorneys fee award[.]”

The Court denied the motion as to 28 U.S.C. § 1927 under the same bases as its Section 285 denial. See id. at 9.

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In Transcend Medical, Inc. v. Glaukos Corp., C.A. No. 13-380 (D. Del. Oct. 9, 2015), Judge C. Darnell Jones, II, writing for Judge Mitchell S. Goldberg, denied Glaukos’ (declaratory judgment-defendant) request to postpone the inequitable conduct trial schedule for November 2, 2015. As Judge Jones explained, the court previously granted Transcend’s (declaratory judgment-plaintiff) motion for summary judgment on non-infringement, denied Glaukos’ motion on the issue of inequitable conduct, and scheduled the inequitable conduct trial. Id. at 1. Glaukos urged that the “inequitable conduct trial be postponed because the infringement ruling resolved the gravamen of the dispute between the parties and a trial on the inequitable conduct issue would be a waste of resources and potentially unnecessary in the event that the infringement ruling is affirmed on appeal.” Id. While the parties agreed that “following summary judgment of non-infringement, courts have the discretion to dismiss any remaining inequitable conduct and invalidity claims without prejudice to allow an appeal of the non-infringement judgment to go forward,” the court found it should not exercise that discretion. Id. at 1-2.

First, Judge Jones pointed to the fact that “parties have expended substantial resources preparing for trial and are close to being prepared to try this case,” and that postponement might “require the parties to prepare for trial a second time.”  Id. at 2. Judge Jones further explained that “the inequitable conduct trial is a bench trial and will not involve a lengthy jury selection process,” and that “there is significant overlap between the parties’ witnesses.” Id. Judge Jones also reasoned that “proceeding to trial on the inequitable conduct claim will serve to provide more clarity regarding the parties’ positions in the event that the infringement ruling is reversed on appeal,” and that “reaching final judgment on all of the claims raised in this case will avoid the potential for piecemeal appellate litigation.” Id.

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