Delaware IP Law Blog

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).

It is well established in the District of Delaware that instructing a deponent to withhold a response is rarely permitted. Absent a genuine possibility that privileged information will be disclosed, our district judges are uniform in their disapproval of this deposition tactic. A recent decision by district judge Joseph J. Farnan, Jr., lends further support to this local practice:

"After reading the November 30th deposition transcript and viewing the [deposition] videotape, the Court finds that Defendant's counsel obstructed the questioning of [the witness] by the improper assertion of work product privilege and interposing numerous obections unsupported by the rules of evidence. The Court need not list the errors of Defendant's counsel to demonstrate the conduct of counsel, because the inappropriateness of the objections is plain from a reading of the deposition transcript."

As a sanction, the Court ordered a second deposition to be held at a time and location of plaintiff's choosing, with costs and fees for both depositions paid by defendant.

Promos Technologies Inc. v. Freescale Semiconductor Inc., C.A. No. 06-788-JJF (D. Del. Dec. 20, 2007) (Farnan, J.).

Recently, in the Wyeth v. Impax Laboratories, Inc. case, Judge Farnan construed three separate claim terms: (1) "extended release formulation"; (2) "diminished incidences of nausea and emesis"; and (3) "a method for eliminating the troughs and peaks of drug concentration in a patient's blood plasma." C.A. No. 06-222-JJF, Memo. Op. (D. Del. Dec. 13, 2007). The opinion itself was a straightforward application of the Phillips v. AWH Corp. case whereby the Court looked to the claims, the specification and the prosecution history and did not turn to any extrinsic evidence to aid in its construction. Id. at 3-4.

One interesting section of the opinion was in the construction of the terms "extended release formulation." The plaintiff, Wyeth, was seeking to apply a general definition using the words' ordinary meaning. The defendant, Impax, wanted to import specific ingredients that were listed in the specification as a requirement for it to be an "extended release formulation." Id. at 5-6. The Court found that in light of the patent and the specification the list of ingredients should not be included in the definition of the terms, particularly where in certain dependent claims that were not at issue, the language of the claims did in fact include a list of specific inactive ingredients. Where there was a particular limitation in a dependent claim there arises a presumption that the limitation should not be present in the independent claim. Id. at 6 (citing Phillips v. AWH Corp.).

As a side note - these parties had previously been involved in litigation in another district over the same patents. During that litigation a Markman ruling was issued on two of the same terms that were currently at issue in the new litigation. The earlier Markman ruling had been vacated by the judge in that case when the case settled before trial, however, the defendant directed the District of Delaware court to the approach taken by the earlier court in construing the terms. There is no mention in the opinion of how much weight, if any, this Court gave to the prior Markman ruling since it only needed to rely on the intrinsic record to decide the construction.

As everyone is aware, the Supreme Court in MedImmune Inc. v. Genentech, Inc. announced a new standard for determining whether a case or controversy exists thereby replacing the former "reasonable apprehension of imminent suit test." But how does this new standard effect a situation where there is a covenant not to sue on an original patent where a reissue application is pending? This is one of the questions the Delaware District Court was faced with in Pfizer Inc. v. Ranbaxy Laboratories Ltd., et al., C.A. No. 07-138 (D. Del. Nov. 29, 2007) (Farnan, J.). The Court found that in light of the MedImmune standard there cannot be a "current and concrete" case or controversy between the parties unless a valid and enforceable patent exists. Id. at 8. In this case, one claim of the patent-at-issue had been declared invalid during a prior lawsuit and the covenant not to sue between the parties contained an agreement not to sue on any other claims in the patent. Id. at 8-9. There was no specific language in the covenant not to sue referencing reissue applications, but the Court said the "question of whether a new patent will ever be reissued is speculative, purely hypothetical and unripe for judicial determination" therefore, there can be no subject matter jurisdiction over the claims. Id. at 9.

Pfizer further moved to dismiss certain of Ranbaxy's counterclaims on the basis of res judicata. These same parties had been involved in prior litigation over the same patent where the defendant, Ranbaxy, challenged the validity of the patent-in-suit. The defendant conceded that it was aware the prior art it now wants to assert against Pfizer but argued that it did not have all the facts related to the data. The Court held that Ranbaxy was required to raise all invalidity defenses during the earlier litigation and because they were informed about the data during that litigation they could not raise it now. If they felt that there was not enough time to analyze the data they should have sought an extension of trial in that Court, but will not be able to raise the invalidity claim now. Id. at 13-14. Furthermore, the Court stated that a change in the law does not alter the res judicata effect of a judgment and therefore refused to recognize an exception to the rule based on KSR/Teleflex. Id. at 15

On Friday, a Delaware jury refused to return a finding of invalidity on several Power Integrations patents. The special verdict allows an earlier jury award of $35 million to stand.

Power Integrations Inc. v. Fairchild Semiconductor Inc., C.A. No. 04-1371 (D. Del.) (Farnan, J.).

In a recent decision on remand from the Federal Circuit, District of Delaware Judge Farnan considered whether, as part of an anticipation inquiry, an earlier patent enabled one skilled in the underlying art to practice the procedure claimed in the patent in suit. Answering no, the Court added new context to the continuing dialogue in the courts about settling the meaning of the phrase "ordinary skill in the art."

The prior art patent in this drug case embraced "hundreds to thousands" of compounds that could be used to treat a variety of medical conditions. The patent in suit, by contrast, claimed a specific compound - riluzole - for the treatment of one condition - ALS. Although the prior art mentioned riluzole, it did so only for the purposes of synthesizing other compounds or to exclude it altogether. The Court therefore concluded that, amidst the disclosure of so many other compounds and conditions, the prior art patent failed to put one skilled in the treatment of ALS "in possession" of the claimed invention in the patent in suit. The Court also held that, as a matter of law, the experimentation necessary to uncover the riluzole-ALS link would be too great. Accordingly, the prior art patent could not be enabling for anticipation purposes.

Many topics in patent law require courts and litigants to decipher the meaning of "ordinary skill." If anything, the term has assumed added significance since the Supreme Court's obviousness decision in KSR. A bright line to take from the present case: one of ordinary skill would not think to practice a particular invention without some transparent and undisguised prompting from the prior art in question. Only one of extraordinary skill in the art would do that.

Impax Labs. Inc. v. Aventis Pharma. Inc., C.A. No. 02-581-JJF (D. Del. July 19, 2007) (Farnan, J.).

Federal Rule of Civil Procedure 8(c) catalogues a list of affirmative defenses that an answering party must plead. The rule also requires, without elaboration, that the party assert "any other matter constituting an avoidance or affirmative defense." In patent litigation, one defense to a charge of willful infringement is the so-called "advice of counsel" defense. The question, then, is whether this defense must be pleaded affirmatively. The answer, according to a recent decision by district judge Joseph J. Farnan, Jr., is "no."

Responding to a discovery dispute in the underlying infringement litigation, the Court acknowledged the downside to holding that, at least in the willful infringement context, the advice-of-counsel defense falls within the ambit of Rule 8(c). In particular, the Court cautioned that a party's reliance on the advice of counsel is only one factor in evaluating willfulness and that "treating advice of counsel as an affirmative defense . . . risks weakening and/or shifting the burden of proof to the accused infringer," an outcome contrary to established Federal Circuit precedent.

According to the Court, a genuine affirmative defense "rais[es] new facts and arguments that, if true, will defeat the plaintiff's . . . claim, even if all allegations in the complaint are true." By contrast, a defense that simply "negates some element of plaintiff's prima facie case" falls outside the scope of Rule 8(c).

Weighing these standards, the Court held that the defense of advice of counsel "does not entail admitting the allegations of the plaintiff's complaint and does not alone overcome a plaintiff's claim of willful infringment." Thus:

"[A]dvice of counsel is only an 'affirmative defense' in the sense that it must be introduced into the litigation by the accused infringer in mitigation of a claim of willfulness; it is not a 'true' or 'mandatory' affirmative defense under Rule 8(c) that must be pled in the answer."

In the continuing dialogue over how and when to preserve the accused infringer's attorney-client privilege while also recognizing that party's ability to maintain a defense, this decision helps shed light on the still evolving contours of the willfulness defense.

LG.Philips LCD Co. Ltd. v. Tatung Co., C.A. No. 04-343-JJF (July 13, 2007) (Farnan, J.).