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.

4/18: UCB Inc. and CellTech Manufacturing CA Inc. v. KV Pharmaceutical Co. (patent infringement)
4/24: LG Electronics USA, Inc. and LG Electronics Inc. v. Whirlpool Corporation (patent infringement)
4/25: AstraZeneca AB, Aktiebolaget Hassle, AstraZeneca LP, KBI Inc. and KBI-E Inc. v. Teva Parenteral Medicines Inc., Teva Pharmaceuticals USA Inc. and Teva Pharmaceutical Industries, Ltd. (patent infringement)
4/25: Pfizer Inc., Pfizer Ireland Pharmaceuticals, Warner-Lambert Co., Warner-Lambert Co., LLC and Warner-Lambert Export Ltd. v. Teva Pharmaceuticals USA Inc. (patent infringement)

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).

The Federal Circuit has affirmed a decision by District of Delaware Chief Judge Gregory M. Sleet.  Following a bench trial, the district court held that prosecution history estoppel barred the patentee from asserting the doctrine of equivalents as its infringement theory.  The district court also rejected assertions of unforeseeability and tangentiality in the claim-narrowing process, both of which, if proved, would have precluded the estoppel finding.

In its affirming opinion, the CAFC agreed with the district court’s conclusion that, on the issue of foreseeability, endorsing one of the parties’ experts over the other “was not close.”  Quoting the Supreme Court, the appellate court reminded its readers of the discretion vested in trial judges:

[W]hen a trial judge’s finding is based on his decision to credit the testimony of one of two or more witnesses, each of whom has told a coherent and facially plausible story that is not contradicted by extrinsic evidence, that finding, if not internally inconsistent, can virtually never be clear error. (Op. at 16)

This makes sense: It is the jurist that presides at trial, and not the appellate judge, that is the frontline decision maker.  With the CAFC coming under fire in recent years for its alleged meddling with the work of the trial judges, this opinion, at least, demonstrates the value this circuit court places on credibility determinations - and the work of the district courts.

Honeywell Int’l Inc. v. Hamilton Sundstrand Corp., No. 2006-1602 (Fed. Cir. April 18, 2008) (Rader, J.).

When faced with a credible claim of lack of personal jurisdiction, a court has two options: dismiss the action or order jurisdictional discovery.  In a recent stream-of-commerce decision,  Magistrate Judge Leonard P. Stark opted for the latter.

In the underyling litigation, the aggrieved manufacturer insisted that it had no knowledge that its accused products would enter Delaware.  Rejecting this line of reasoning, the Court found that delivery to the United States could satisfy the stream-of-commerce test:

Any evidence that Defendants use [a distributor] to deliver the accused chips to the United States, from which they might enter Delaware, may constitute evidence supporting a finding of intent to serve the Delaware market.  (Op. at 20 n.7)

According to the Court, the fact that the defendant “tout[ed] its established distribution channels in the U.S., as well as its close relationships with end users . . . throughout this country,” justified further discovery.

Like the Internet-access personal jurisdiction cases, this decision expands on a common theme in the District of Delaware: if you serve the United States markets, you serve Delaware’s as well.

Power Integrations Inc. v. BCD Semiconductor Corp., C.A. No. 07-633-JJF-LPS (D. Del. April 11, 2008) (Stark, M.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.

4/10: Sepracor Inc. , UCB SA and UCB Inc. v. Synthon Pharmaceuticals Inc., Synthon Holding BV, Synthon B.V. and Synthon Laboratories, Inc. (patent infringement)
4/14: Luv N Care Ltd. v. Bamed AG (patent infringement - transferred from Eastern District of Texas)
4/16: Playtex Products Inc. v. Fruit of the Earth Inc. (patent infringement)