Virginia IP Law : Virginia Intellectual Property Lawyer & Attorney : Troutman Sanders Law Firm : Technology & Patent Litigation

Free-Flow Packaging (FPI) probably felt like it won a victory when Judge Gerald Bruce Lee granted it partial summary judgment in a the declaratory judgment action brought by Pregis Corporation. Pregis Corp. v. Doll, et al., 2010 U.S. Dist. LEXIS 25582 (E.D. Va. March 16, 2010).

Free-Flow’s victory, however, was short-lived. On March 18 -- after twenty-two days of trial and deliberations -- the jury returned a verdict in favor of Pregis on all four of the FPI patents in suit.

FPI and Pregis are direct competitors in the business of making and selling machines used to make air-filled packing cushions (like bubble wrap). Pregis sought a declaratory judgment that it did not infringe four FPI patents and that the patents were invalid.

In his summary judgment opinion, Judge Lee ruled:

• A previous settlement agreement between FPI and a predecessor to Pregis did not preclude FPI from asserting its patents against Pregis; 
• FPI was not entitled to summary judgment of non-infringement because there were issues of fact as to whether the accused devices met every element of the claims; 
• FPI was entitled to summary judgment on Pregis’ claim that FPI improperly introduced new matter in a post-filing amendment in violation of 35 USC §§ 112 and 132; 
• FPI was entitled to summary judgment on Pregis’ claim that a related patent was not prior art to two of the patents in suit; 
• FPI was entitled to summary judgment on Pregis’ claim of double patenting;
• FPI was entitled to summary judgment on Pregis’ assertion of intervening rights because none of the patents-in-suit were reissue patents.

FPI’s victory, however, proved illusory. The jury found that Pregis did not infringe 22 of the 23 asserted claims and that all the asserted claims of three of the four patents at issue, including the one infringed claim, were obvious.  The verdict form can be found here. 

Two other comments on this case:

• First, it is notable that Judge Lee allowed FPI to assert 23 claims at trial and that the case took more than four weeks to try – much longer than almost all civil cases in the Rocket Docket, including patent cases. Is the conventional wisdom that most cases in the EDVA can be tried in a couple of days and any case can be tried in less than two weeks changing? 
• Second, Judge Lee, like some other judges in the Alexandria Division of the EDVA, did not conduct a claim construction proceeding early in the case but rather construed certain claims roughly eight weeks before trial and construed other claims in his summary judgment opinion.

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Your brand that you worked to protect may be in jeopardy.  Under the final rule issued by FDA March 19, 2010, manufacturers may not use a brand name of a nontobacco product as the brand name for a cigarette or smokeless tobacco product unless the brand name was being used by both the tobacco product and nontobacco product sold in the United States on January 1, 1995. 21 CFR 1140.16 (a) This means that if a company started manufacturing a cigarette or smokeless brand after January 1, 1995 and that brand name is also used on a nontobacco product, that brand name will no longer be able to be used on the tobacco product effective June 22, 2010.

There is no limitation in the final rule on the timing of the existence of the nontobacco product with the same name. For instance, it does not matter if the nontobacco product of the same brand name as the cigarette or smokeless brand began to be used after the cigarette or smokeless brand. The FDA prohibition will apply to the cigarette or smokeless brand anyway. Therefore, tobacco manufacturers and brand owners will not have control over the continued use of their own brands--third parties have effectively been given this control by FDA.

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Our colleagues Al Jacobs, Trenton Ward, Jihan Jenkins and Puja Patel have written a detailed analysis of the Federal Circuit's highly anticipated en banc decision in Ariad Pharmaceuticals, Inc. v. Eli Lilly and Co., No. 2008-1248 (Fed. Cir. March 22, 2010), which can be found here.   

In Ariad, "the Federal Circuit reaffirmed that patents must satisfy “two separate description requirements: a ‘written description’ [i] of the invention, and [ii] of the manner and process of making and using [the invention].”   The Federal Circuit’s decision is in line with existing recent precedent, but raises questions about the ability of some inventors, particularly universities and research entities, to obtain patents on early stage research."  To read more, click here.

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In a string of recent cases addressing reasonable royalty damages, the Federal Circuit has put patent litigators and district courts on notice that they “must carefully tie proof of damages to the claimed invention’s footprint in the marketplace.” ResQNet.com, Inc. v. Lansa, Inc., 2010 U.S. App. LEXIS 2453 at *19 (Fed. Cir. Feb. 5, 2010).

First, in Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301 (Fed. Cir. 2009), the Court sharply criticized evidence on damages and overturned an award of a lump sum royalty of $358 million.

Then, in ResQNet.com, decided last month, the Court overturned a district judge’s award of a 12.5% hypothetical royalty as speculative.

Just last week, Judge Rader, sitting in the district court for the Eastern District of Texas, applied Lucent and ResQNet and excluded the opinion of an expert witness for improperly relying on general royalty rates in the software industry rather than existing licenses to the patents-in-suit and improperly applying the “entire market value rule.”  IP Innovation L.L.C. v. Red Hat, Inc., Case No. 2:07-cv-447 (E.D. Tex. March 2, 2010) (Rader, J.).

The one exception to this trend is the December, 2009 decision in i4i L.P. v. Microsoft Corp., 589 F.3d 1246 (Fed. Cir. 2009), in which the Court did not conduct the type of searching review of the evidence that characterizes Lucent and ResQNet. i4i, however, involved only the appeal of a motion to exclude an expert’s testimony because the defendant failed to make a pre-verdict motion for judgment as a matter of law (JMOL) challenging the sufficiency of the evidence of damages. A district court’s decision on a motion to exclude evidence is reviewed under a deferential abuse of discretion standard, and the Court expressly stated that it addressed only the reliability of the expert’s methodology, not his conclusions. The Court also stated that the result may have been different if the defendant had made a timely motion for JMOL and appeared to draw a distinction between the admissibility of an expert opinion and whether that opinion provided a sufficient basis for a damage award.

A full analysis of the opinions is beyond the scope of a blog post, but the cases contain several high-level lessons for patent litigators, including:

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As we blogged here, Judge Payne recently dismissed claims relating to seven of the nine patents asserted by WiAV Solutions against multiple defendants (including Nokia, Motorola and Palm) because the plaintiff did not have the exclusive right to license the patents. The Court  has now certified WiAV’s appeal of that decision to the Federal Circuit.  WiAV Solutions LLC v. Motorola, Inc. et al., 2010 U.S. Dist. LEXIS 21508 (E.D. Va. March 9, 2010).

In his opinion, Judge Payne rejected the defendants’ argument that the appeal should not be certified because most of the accused products are alleged to infringe both the dismissed patents and the two remaining patents.  The judge also rejected the argument that certification of the appeal could result in a “two-trial scenario” that may subject the defendants to “double jeopardy on damages.” Judge Payne noted that the appeal would only involve the discrete issue of standing and that delaying certification could also result in two trials if the Federal Circuit overturns the standing decision after trial on the remaining patents.

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Yesterday, the United States District Court for the Western District of Virginia formally adopted local rules for the first time, effective April 8, 2010.  A copy is available here. 

None of the local rules are directed only at IP cases.  But litigants seeking to protect their intellectual property while in litigation in the Western District will certainly want to take note of Local Rule 9, which now sets forth details (with brief commentary on the governing Fourth Circuit case law) regarding how documents may be filed under seal. 

IP litigants also will need to be cognizant of Local Rule 54, which provides that, unless otherwise provided by statute, rule, or court order, a motion seeking an award of attorney's fees must be filed within 14 days of entry of judgment, and that noncompliance with that deadline may be deemed a waiver.

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Sen. Patrick Leahy announced last Thursday that agreement had been reached by a bipartisan group of Senators on a compromise bill providing for patent reform. The full text of the bill can be found here.

Undoubtedly, the blogosphere and legal publications will shortly become saturated with analysis of the compromise bill and speculation about its chances for passage.  Last April, we blogged about a relatively minor provision of the bill -- the provisions addressing venue.  As patent litigators in Virignia, we have a particular interest in venue, because the venue provisions of the bill will direcly affect the volume of patent cases filed here.

The compromise version of the bill includes the same provisions discussed in our earlier post, which can be found here. Here are the highlights (all of which are discussed in detail in the earlier post):

• the legislation provides that a district court shall transfer a case upon finding that a transferee forum is clearly more convenient. (Sec. 8 of the bill, page 72).
   
• the legislation establishes a pilot program in six U.S. District Courts that provides $5 million a year for education of judges and hiring of patent law clerks. (Sec. 16 of the bill, pages 92-93). 
   
• the legislation changes venue for civil actions appealing decisions by the BPAI relating to patent rejections and interferences, civil actions appealing decisions of the PTO relating to patent term adjustments, civil actions appealing decisions of the TTAB relating to registrations of a trademark, and civil actions appealing suspensions or exclusions from practice before the PTO from the District Court in Washington to the Eastern District of Virginia. (Sec. 8 of the bill, pages 72-73).

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In the PBM Products v. Mead Johnson baby formula case (E.D. Va. case no. 3:09-cv-00269) followed on this blog (see prior posts here, here, and here), on Tuesday, Chief Judge James R. Spencer issued two opinions that resolve several post trial motions and offer useful pointers and reminders about expert witnesses and requests for enhanced damages and attorney's fees.

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On February 25, a jury found in favor of the patentee, CompX International, in the case of Humanscale Corp. v. CompX International, et al., Case No. 3:09cv86 (E.D. Va.), and awarded $19 million dollars in past damages and a reasonable royalty of 6% of future sales of infringing products. The jury’s verdict can be found here.

The patents-at-issue, U.S. Patent Nos. 5,037,054 and 5,257,767, cover adjustable platforms for computer keyboards. After an eight-day jury trial before Chief Judge Spencer in the Richmond Division of the EDVA, the jury found that Humanscale’s accused keyboards infringed three claims of the ‘054 patent and two claims of the ‘767 patent. The jury also found that the patents were valid and rejected Humanscale’s on-sale bar and laches defenses.
 

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