SoCal IP Law Group

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Monthly Archives: October 2011

SoCal IP Institute :: October 24, 2011 :: Liquidated Damages and Jury Taint in Patent Cases

We will be discussing two patent cases in our weekly SoCal IP Institute meeting on Monday, October 24, 2011. Brief synopses are presented below.

Sanofi-Aventis et al. v. Apotex Inc., Case No. 2011-1048 (Fed Cir. Oct. 18, 2011) (attached). This is the third appeal in a long-running dispute between these two companies regarding the manufacture of a generic of the drug Plavix.  Apotex filed an Abbreviated New Drug Application with the FDA seeking to sell a generic form of Plavix prior to the expiration of U.S. Pat. No. 4, 847,265 owned by Sanofi-Aventis.  In this third appeal, Apotex challenges the award by the district court of prejudgment interest in addition to damages set by a preexisting agreement between the parties.  The agreement, entered into by the parties while Apotex’s application for approval was pending limited “actual damages for any past infringement by Apotex, up to the date on which Apotex is enjoined, will be 50% of Apotex’s net sales . . . .”  It also limited Sanofi’s ability to seek increased damages under 35 U.S.C. 248.  The district court found that this paragraph did not prohibit prejudgment interest which it awarded as $107,930, 857 in addition to $442,209,362 in actual damages as agreed by the parties.

The Federal Circuit reviewed the decision de novo and found that the 50% of Apotex’s net sales was intended to be the entire measure of damages because prejudgment interest is typically considered compensatory damages, one type of “actual damages.”  The court further found that to construe the term otherwise would run contrary to the purpose of the agreement, namely, a liquidated damages provision.

Apotex, for the first time at the damages phase of the underlying litigation, sought to draw a distinction between Apotex Corp. and Apotex, Inc. as to which of its entities undertook the infringing actions.  Neither the district court nor the Federal Circuit found that argument particularly appealing.  The district court’s decision to find them jointly and severally liable was affirmed.  Apotex also sought leave to amend their answer to include a patent misuse defense and a counterclaim for breach of contract at the district court.  Leave was denied.  The Federal Circuit agreed with the denial because the patent misuse defense was futile and because the counterclaim would substantially delay the resolution of the dispute.

Atlantic Research Marketing Sys., Inc. v. Troy et al., Case Nos. 2011-1002, -1003 (Fed. Cir. Oct. 6, 2011 (attached).  Atlantic Research appealed from the grant of summary judgment invalidating claims 31-36 of Atlantic Research’s U.S. Reissue Patent No. 39,465 for failing to meet the written description and best mode requirements. In particular, the specification did not disclose a sleeve for a firearm that attached to only the barrel nut as claimed.  The Federal Circuit found that the district court did not err in invalidating these claims on written description grounds.  Because the asserted claims of the patent were invalid, the Federal Circuit did not reach the best mode issue.

Troy cross-appealed from the district court’s denial of a motion for JMOL re misappropriation of a trade secret, a motion for a mistrial for failure to properly charge the jury and to address a jury taint issue related to external evidence being brought into deliberations and a motion for remittitur.  The Federal Circuit affirmed the denial of JMOL and reversed the jury’s verdict because the district court did not adequately investigate the jury taint issue.  The court failed to reach the remittitur issue because they vacated the jury verdict.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, October 24, 2011 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Amanda Jones by 9 am Monday morning.

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SoCal IP Institute :: October 17, 2011 :: Irreparable Harm in Patent Cases after eBay and Copyright Attorney’s Fee Awards

We will be discussing one patent case and one copyright case  in our weekly SoCal IP Institute meeting on Monday, October 17, 2011. Brief synopses are presented below.

Robert Bosch LLC v. Pylon Mfg. Corp., Case No. 2011-1096 (Fed Cir. Oct. 13, 2011) (attached).  The Federal Circuit addresses the circumstances under which an injunction should be granted in patent cases in a post-eBay world.  After a jury found two Bosch wiper-blade patents valid and infringed by Pylon, Bosch moved for a permanent injunction.  The court denied Bosch’s request finding that Bosch failed to show irreparable harm.

On appeal, the Federal Circuit confirmed that the eBay factors must be considered in the determination of whether to grant an injunction the patent context.  The Federal Circuit pointed out that the lower court had found the presence of other infringers and the “non-core” business of Bosch as factors weighing against the grant of an injunction.  This was legal error.

However, most importantly, the Federal Circuit found clear error in the lower court’s failure to find irreparable harm.  In particular, the Federal Circuit urged the court to consider the fundamental nature of patent rights when making an irreparable harm determination.  From the facts available, the appeals court found that there was clearly irreparable harm to Bosch.  The case was reversed and remanded for entry of Bosch’s requested permanent injunction.

Airframe Sys. Inc. v. L-3 Comm. Corp., Nos. 10-2001; 11-1169 (1st Cir. Sept. 14, 2011 (attached).  Airframe sued L-3 for copyright infringement when it discovered, after years of licensing its ARMS software to L-3, that an L-3 engineer had obtained and altered an older version of the ARMS software for use with newer computers.  In particular, the engineer updated the software (originally created in 1981 and last updated in 1984) to be written in PHP.  Airframe sued based upon the licensed 1984 source code.  However, the only evidence in the record as to the substance of that source code was a later updated 2009 version of the software.  The court found that the comparison was inadequate to establish the contents of the 1984 source code and, thus, any comparison with the L-3 software was irrelevant, absent some basis of reference.  Accordingly L-3’s grant of summary judgment at the district court level was affirmed.

Second, L-3 cross-appealed the district court’s denial of its motion for attorney’s fees.  L-3 contended that the district court failed to adequately consider 1st Circuit precedent that allowed for an award of attorney’s fees for cases that are “objectively, quite weak.”  The 1st Circuit evaluated the lower court’s order and determined that it had adequately considered the relevant Supreme Court precedent and, therefore, affirmed the denial of an award of attorney’s fees.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, October 17, 2011 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Amanda Jones by 9 am Monday morning.

SoCal IP Institute :: October 10, 2011 :: Domain Name Re-Registration as Cybersquatting and Slot Machine Patents

We will be discussing one trademark and one patent case  in our weekly SoCal IP Institute meeting on Monday, October 10, 2011. Brief synopses are presented below.

GoPets v. Hise et al., Case Nos. 08-56110 and -56112 (9th Cir. Sept. 22, 2011) (attached).  The primary question presented by this case is whether in the Anticybersquatting Consumer Protection Act (“ACPA”) at 15 U.S.C. § 1125(d)(1) the term “registration” applies only to the initial registration of the domain name, or whether it also applies to a re-registration of a currently registered domain name by a new registrant. The 9th Circuit held that § 1125(d)(1) did not apply to such re-registration.

In this case, two brothers Edward and Joseph Hise registered the “gopets.com” domain name in 1999.  In 2004, GoPets, Ltd. was formed and became a successful children’s interactive game involving digital “pets.”  Over time, the CEO of GoPets, Ltd. sought several times to purchase the gopets.com domain name from the Hises.  A UDRP action was eventually brought by GoPets, Ltd., which failed.  After that action failed in 2006, the Hises transferred the domain to their corporation, Digital Overture, and registered a series of other “gopets” related domain names.   GoPets, Ltd. then filed a lawsuit in the Central District of California alleging a number of claims including the ACPA claims and a trademark infringement claim for all domains.  The district court found for GoPets, Ltd. in all respects and awarded damages of $1000 for the new domains and $100,000 for the gopets.com domain in addition to ordering the Hises to transfer the domains to GoPets, Ltd.

The 9th Circuit reversed the findings regarding the gopets.com domain name because it was registered before GoPets, Ltd. existed and the re-registration by Digital Overture did not implicate the ACPA.  However, the Hises’ use of the domain to indicate that the site was in any way “official” was likely trademark infringement.  The district court did not award damages for this infringement and, therefore, the case was remanded to consider this issue.  In addition, the registration of the series of other domain names after the 2006 UDRP decision did implicate the ACPA.  As a result, the 9th Circuit affirmed the district court’s decision on those domains.  Similarly, the injunction on the transfer of the gopets.com domain was reversed, but the injunction maintained as to the other domains.  Finally, the 9th Circuit ordered the district court to reconsider the attorney’s fee award in view of the modification of the underlying decision.

IGT v. Bally Gaming Int’l., Inc. et al., Case No. 2010-1364 -1365 (Fed. Cir. Oct. 6, 2011 (attached).  IGT asserted two reissue patents related to a networked system of gaming machines.  The two patents generally relate to a method for causing a slot machine to pay a bonus upon occurrence of a particular event.  Bally was found to infringe.  Bally appealed the summary judgment of infringement as to some claims and IGT cross appealed the decision to deny summary judgment of infringement as to other claims.

IGT accused Bally of infringing based upon its “Power Rewards” and “Power Winners” promotions in which players of a particular machine can be rewarded for continued play at that machine, for example, with monetary rewards or in which rewards are generated randomly at a machine after a certain amount of time has elapsed.  The district court determined that the “Power Rewards” and “Power Winners” promotions infringed some of the claims the two patents and did not infringe others.

Bally’s appeal was based upon an assertion that the district court’s claim construction was erroneous.  The Federal Circuit, however, agreed with each of the district court’s constructions.  IGT’s cross appeal primarily focused on the construction of a “command” or “message” at the district court with which the Federal Circuit also agreed.  Accordingly, the decision was affirmed in all respects.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, October 10, 2011 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Amanda Jones by 9 am Monday morning.

SoCal IP Institute :: October 3, 2011 :: Subject Matter Jurisdiction and the Final Judgment Rule

We will be discussing a case regarding the requirements for a case or controversy and another case regarding the effect of a stay as to the final judgment rule in our weekly SoCal IP Institute meeting on Monday, October 3, 2011. Brief synopses are presented below.

Powertech Technology, Inc. v. Tessera Inc., Case No. 2010-1489 (Fed. Cir. September 30, 2011) (attached).  Powertech Technology filed a declaratory judgment action of invalidity and noninfringement against Tessera in the Northern District of California.  Other suits between the parties were previously filed in the ITC and in the Eastern District of Texas.  In short, Tessera believed that Powertech, a Taiwanese semiconductor sub-contractor took part in a process that allegedly infringed a Tessera patent.  Powertech was a licensee of the Tessera patent, but its customers, some in the U.S., were not.  Powertech sought a declaratory judgment that its products did not infringe the patent and that the patent was invalid.  Tessera sought dismissal of the declaratory judgment action for lack of subject matter jurisdiction.  Tessera argued that the license between Powertech and Tessera required Powertech to pay a license for “technology” regardless of the validity or invalidity of the patent.  In addition, Tessera argued that Powertech was a licensee and, therefore, its products could not infringe.  Accordingly, under Tessara’s argument, there was no case or controversy to dispute.  The district court agreed and in addition stated sua sponte that the appropriate venue to hear the case, if a controversy existed, would be the then-pending Texas case.

On appeal, the Federal Circuit disagreed with each of the district court’s determinations.  First, the court pointed to MedImmune as standing for the proposition that a current licensee’s dispute regarding the license is a case or controversy sufficient to grant the district court subject matter jurisdiction.  Second, the court analyzed the license between the parties to a sufficient degree to determine that the only non-expired patent remaining under the license was the one for which Powertech sought declaratory judgment.  Even accepting Tessera’s argument that the license covered “technology,” the license would effectively expire upon the invalidity of the at-issue patent.  Finally, as to the appropriateness of the venue, the license itself had a venue-selection clause that stated disputes arising under the license should be resolved in “California.”  Accordingly, the Federal Circuit reversed in all respects.

Spread Spectrum Screening, LLC v. Eastman Kodak Co., Case No. 2011-1019 (Fed. Cir. September 26, 2011 (attached).  Spread Spectrum Screening LLC filed suit in the Northern District of Illinois against Eastman Kodak Company and four of Kodak’s customers alleging infringement of U.S. Patent No. 5,689,623. The district court granted Kodak’s motion to: (1) sever the claims against it from those against the other defendants; (2) stay the action against the Kodak Customers in Illinois; and (3) transfer the case against Kodak to the Western District of New York. The district court primarily granted the motion because Kodak’s clients were only added to the action in order to maintain venue.  S3 appealed from the portion of the order granting Kodak’s motion to stay the case against the Kodak Customers pending the outcome of its action against Kodak in New York.

S3 argued that the Federal Circuit had jurisdiction to hear the case on three bases.  First, S3 argued that the stay was an appealable final order.  Second, S3 argued that jurisdiction was proper under the customer suit exception and the first to file rule.  Finally, S3 argued that the stay was effectively an injunction against S3 from proceeding against the customer defendants.  The Federal Circuit disagreed with all arguments and dismissed the appeal as from a non-final judgment.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, October 3, 2011 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Amanda Jones by 9 am Monday morning.