A Blog About Intellectual Property Litigation and the District of Delaware


A Slight Detour

Nathan R. Hoeschen, Jan. 23, 2024
Lanham Act

Today's case is a bit outside our normal ambit here at IP/DE, dealing with the patent-adjacent field of false advertising under the Lanham Act. Since you often see such claims brought alongside patent claims, I think its fair game. Also, you're not the boss of me and none of you can stop me.

THE POWER, THE ABSOLUTE POWER!
THE POWER, THE ABSOLUTE POWER! AI-Generated, displayed with permission

Except any judges who may read this, you are frequently the boss of me.

Anyway.

Our case today is one of those where the Lanham Act claims were brought together with the patent infringement claims, in the charmingly named North Atlantic Imports, LLC v. LoCo Crazy Good Cookers, Inc., C.A. No. 23-999-GBW-SRF (D. Del. Jan. 23, 2024). In fact, the claims were oddly intertwined given that one of the alleged false statements was that the defendant stated that its LoCo Crazy (!) grills contained "patented SmartTemp Technology." Apparently, there is no such patent.

Aside from being hilarious, the interesting facet of this opinion was that the Court found that statements about this made-up patent and some other puffery about LoCo Crazy (!!) innovations, might actually induce buyers to make purchasing decisions - at least enough to survive a motion to dismiss:

the complaint contains fact-based allegations featuring Defendant's actual advertisements to show how those ads highlight Defendant's "patented SmartTemp™" technology to sway customers. The complaint further alleges that Plaintiff and Defendant are direct competitors who sell their products at the same stores, including Lowes and Home Depot. (Id at ,r 29) Construing these allegations in the light most favorable to Plaintiff, it is reasonable to infer that customers would consider Defendant's false advertisements material to their purchasing decisions when faced with two similar, directly competing products. Defendant's position that Plaintiff must plead customer reliance at the time of the purchasing decision is supported by post-judgment case law, as opposed to cases addressing a motion to dismiss the pleading.

Id. at 5

Lesson for Crazy LoCo (!!!!) small business owners out there. Try not to make up patents. A good grill sells itself.

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What Does "Prima Facie" Mean, Anyway?

Andrew E. Russell, Jan. 22, 2024
Privilege Crime/Fraud Exception

Crime
David von Diemar, Unsplash

Today Judge Burke unsealed an opinion with a great discussion of what it takes to make a "prima facie" showing, at least as to the crime/fraud exception to attorney-client privilege (that's something you don't see every day).

According to the Court, the rules require it to hold a hearing on the crime/fraud exception, but only if the plaintiff first makes a prima facie showing that the exception applies.

The Court first reviewed plaintiff's evidence, and found that plaintiff had showed that the exception applied. The Court also found, however, that defendant's additional, different evidence that showed that the exception did not apply. On the whole, the Court sided with the defendant, finding that, in light of all of the evidence, the crime/fraud exception does not apply.

But that wasn't the end! The Court still found that it must hold an evidentiary hearing on the crime/fraud exception. Why? Because none of the defendant's additional evidence matters in determining whether plaintiff made a prima facia showing that a hearing must be held. Instead, the Court must ignore the non-movants' evidence and look just at the movant's evidence:

With the Court having said all of the above, the question then becomes: In resolving the instant Motion, what is the Court’s proper role? Is the Court supposed to look only at the evidence put forward by Plaintiffs and determine whether that evidence, standing alone, would make out a prima facie case? Or is it supposed to take into account all of the evidence provided to it, including that submitted by Defendants, in making a decision on the issue at this stage?
In Haines, the Third Circuit explained that the prima facie case inquiry is one where the court asks “[H]as the party seeking discovery presented evidence which, if believed by the factfinder, supports plaintiff’s theory of fraud?” 975 F.2d at 95 . . . . In doing so, the Haines Court cited approvingly to a decision from the United States Court of Appeals for the Fifth Circuit, which explained that “prima facie evidence” in this context is “[evidence] [s]uch as will suffice until contradicted and overcome by other evidence . . . [a] case which has proceeded upon sufficient proof to that stage where it will support [a] finding if evidence to the contrary is disregarded.” Id. . . .
In the Court’s view, these portions of Haines make clear that in determining whether a movant has made out a prima facie case, the Court must only assess the strength of the evidence presented by the movant. . . . Or, to put it differently, the Court’s job at this point is not to take the movant’s evidence and consider it alongside with any contrary evidence put in the record by the non-movant, and then to make a decision as to whether a prima facie showing has been made (or whether a preponderance of the evidence supports Plaintiffs’ claim).

ECB USA, Inc. v. Savencia, S.A., C.A. No. 19-731-GBW-CJB (D. Del. January 4, 2024).

Fascinating! It's always enlightening when the Court parses the meaning of a term like "prima facie" this closely. I have to wonder if this logic could apply in other contexts, such as a prima facie showing of authenticity at trial.

I'm definitely making a mental note to refer back to this next time I need to make a prima facie showing of something—although we'll have to see if the opinion ends up being cabined exclusively to the crime-fraud exception.

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Watch What You Agree to! Court Holds Plaintiff to Agreement in Scheduling Order That "Hypothetically Allows Defendant to Propose Millions of [Invalidity] Theories"

Andrew E. Russell, Jan. 19, 2024
Scheduling Order Case Narrowing

Watch out for what may be in that draft scheduling order...
Watch out for what may be in that draft scheduling order... AI Generated, displayed with permission

In International Business Machines Corporation v. Zynga Inc., C.A. No. 22-590-GBW (D. Del.), the parties agreed in the scheduling order to a rather vague set of case narrowing provisions:

On November 30, 2023, Plaintiff shall perform a first narrowing of the number of asserted claims. On December 7, 2023, Defendant shall perform a first narrowing of the number of asserted invalidity references.
. . . On February 28, 2024, Plaintiff shall perform a second narrowing of the number of asserted claims. On March 5, 2024, Defendant shall perform a second narrowing of the number of asserted invalidity …
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The Pedant's Curse

Nathan R. Hoeschen, Jan. 18, 2024
Reconsideration

It will come as no surprise to our readers that I was an insufferable know-it-all as a child (not anymore though, no-sir-ee). My parents were thus inclined to send me away to visit my grandparents for a couple weeks each summer. The idea was that I would tire myself out and be less bothersome when I returned.

It was a pretty cool place all told, and I wiled away many an hour catching snakes and throwing rocks at things. There wasn't much to do when it got dark, however, except to read over the mountain of old Readers' Digests.

(Eds. note -- what a weird concept "it's a magazine for people who read! Next lets get cooking on that food …

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No, You Can't Do That—Court Rejects Attempt to Offer Expert Testimony Regarding Strength of Own Prior Defenses

Andrew E. Russell, Jan. 17, 2024
Expert Witness Expert Testimony

"What do you mean, attorney argument! This is unbiased expert testimony about how awesome our positions are." Braydon Anderson, Unsplash

Well, this is a new one for me. In Wirtgen America, Inc. v. Caterpillar, Inc., C.A. No. 17-770-JDW-MPT (D. Del. Jan. 16, 2024), the plaintiff had previously brought an action in the ITC against the defendant, and won—achieving an exclusion order that stood up (in part) on appeal.

Now, in a District of Delaware action on the same patents, plaintiff argues willfulness based in part on the previous ITC ruling. Defendant tried to offer an expert who would testify about how great its defenses were at the ITC:

Caterpillar offers Mr. Bartkowski to opine on how …
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Gig Economy Privilege

Nathan R. Hoeschen, Jan. 16, 2024
Privilege

The privileges of working in the gig economy are too numerous to recount here. There's the freedom to set your own hours, the joy of being constantly rated on how cheerful (yet obsequious) you appear, and avoiding all of the complicated headaches that go with having health insurance and a retirement plan.

Hold it together Hoeschen, if you cry on the job again its back in the chokey
Hold it together Hoeschen, if you cry on the job again its back in the chokey AI-Generated, displayed with permission

Well I have even more good news for you! Judge McCalla held just last week that at least some of you also enjoy the attorney-client privilege.

The defendant in Torvent LLC v. Techtronic Industries Co., Ltd. C.A. No. 21-853-JPM, D.I. 208 (D. Del. Jan. 11, 2024) was a startup with only a token staff of actual employees. In lieu of a permanent staff, they retained a large number of contractors for "various accounting and secretarial functions" and "consultants relat[ing] to licensing and damages issues." Id. at 6.

The dispute here arose because the defendant claimed privilege over a few thousand communications with these contractors. The plaintiff argued that these communications were not privileged because these were with third parties, rather than employees. The parties agreed that many of these contractors were functionally identical to employees. They disputed whether communications with these "functional equivalents" are entitled to the same privilege protections as actual employees.

Judge McCalla held that ...

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Heads Up: Chief Judge Connolly Limits Party to Three Exemptions to Personal Electronics Order

Andrew E. Russell, Jan. 12, 2024
Personal Electronics

Broken Phone
Greg Rosenke, Unsplash

Last year, the District of Delaware implemented a policy prohibiting most people who do not have a bar card from using personal electronics to the courthouse.

Notably, as of this month, Delaware phased out physical bar cards in favor of a printable version. I've had no trouble getting in with the printed bar card, so far, but I've heard secondhand that others may have had issues.

But what happens when out-of-town attorneys don't have a bar card at all, and need to use their personal electronics during the hearing? They must file a motion (or stipulation) and ask for an exemption from the rule.

So far, the Court has generally been willing to grant exceptions to …

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Bad Faith and Good Cheer

Nathan R. Hoeschen, Jan. 11, 2024
Fees Fee Awards

A motion for attorneys' fees is a tough row to hoe. The shoddiest AI lawyer could pull together 8 paragraphs of quotes from the Supreme Court, the Federal Circuit, Blackstone, and Hammurabi's code, warning that fees are an extreme sanction to be used only sparingly, lest their mysterious power be depleted.

And he works for peanuts!
And he works for peanuts! AI-Generated, displayed with permission

As Judge Williams' opinion in BearBox LLC v. Lancium LLC, C.A. No. 21-534-GBW (D. Del. Jan 9, 2024) shows, you can even lose a motion for fees if the Court previously held the other party acted in bad faith.

The opinion in Bearbox, contains a healthy recitation of losses by the plaintiff at various stages of the case, culminating in an unsuccessful trial on the merits. Its' not worth rehashing the whole thing for our purposes—

(Eds. note - what is our purpose? sound off in the comments, but know in advance that I will not read anything by a philosopher or anyone else with a fuller beard than I possess)

—but the big takeaway is that the defendant's failure to win the case at summary judgment effectively scuttled any argument that the plaintiffs' claims were objectively baseless and unreasonable:

Moreover, while the Court adopted Defendants' proposed claim constructions, the Court denied Defendants' motion for summary judgement because the Court found that there existed genuine issues of material fact regarding who conceived of the '433 patent's subject matter. Thus, Plaintiffs' decision to continue litigating the sole inventorship claim after receiving the Court's claim constructions was not sufficiently unreasonable to warrant a finding that this case is exceptional . . .
The Court, in denying Defendants' motion for summary judgement, rejected Defendants' argument that no reasonable juror could find that Mr. Storms was the sole inventor of the '433 patent. Thus, even considering the '632 patent application, Plaintiffs' position that Mr. Storms was the sole inventor of the '433 patent was not meritless.

Id. at 4, 6-7 (internal citations omitted).

The one issue where they seemed to get some traction was in a successful motion to strike filed earlier in the case. The plaintiff had apparently served a new expert report, without leave, in order to conform their expert's opinion to a the Court's claim construction. Defendants successfully moved to strike the report. In its decision, the Court applied the Pennypack factors and actually found that the plaintiffs' actions indicated bad faith.

Nevertheless, in ruling on the § 285 motion, Judge Williams found that this act of bad faith was not enough to make the case exceptional:

Accordingly, even though the Court found Plaintiffs' timing indicative of bad faith, the Court finds that, in this instance, Plaintiffs' desire to supplement Dr. McClellan's expert report to ensure consistency with the Court's claim construction order did not render this an exceptional case.

Id. at 5.

So take heart, those have shown bad faith. You may yet find yourselves sufficiently redeemed to avoid fees.

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In Response to Objection That Discovery Dispute is Premature, Judge Burke Orders Parties to Meet-and-Confer for a Set Number of Hours, and Explains How to Meet-and-Confer

Andrew E. Russell, Jan. 10, 2024
Discovery Disputes Discovery Dispute

"Counsel, go stand in the corner until you figure out what 'collegiality' means." Mag Pole, Unsplash

Several District of Delaware judges have discovery dispute procedures that require parties to first file a letter stating that the parties have met and conferred but are unable to resolve some disputes, and list the disputes.

This usually works out well, but a few issues can occasionally come up with this procedure. For example:

  1. One party refuses to meet-and-confer, forcing the other side to file solo.
  2. The parties have met and conferred to death, but one party refuses to sign the the joint letter anyway (or just refuses to respond), solely for the purpose of delay.
  3. One or more parties jump the gun, …
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ANDA 'Nother Thing . . .

Nathan R. Hoeschen, Jan. 9, 2024
ANDA Motion to Dismiss

As defenses go, there's few better than "I don't infringe." Unfortunately, it's quite difficult to prove at the motion to dismiss stage. It is, after all, the rare complaint that contains the dark seed of its own demise on this front.

mmm . . . dark seeds
mmm . . . dark seeds AI-Generated, displayed with permission

You might think that a motion to dismiss based on non-infringement would be a little bit easier in the ANDA context. After all, you have this giant document listing everything in your product and what it does. You would be wrong.

Such was the lesson of Judge Fallon's opinion in Allergan, Inc. v. Mankind Pharma Ltd., C.A. No. 23-272 (D. Del. Dec. 21, 2023), unsealed last week. The patent there required (amongst dozens of assorted buffers, reagents, uppers, downers, and excipients) a phosphate buffer. The defendant responded by pointing out that none of the 3.2 trillion ingredients listed in their ANDA contained any phosphorus.

(Eds. Note—for the liberal arts majors amongst you, phosphorous is a pretty big part of anything "phosphate")

They thus moved for judgment on the pleadings of no literal infringement, reasoning that the ANDA controlled the infringement inquiry. Judge Fallon denied the motion however, holding that it was possible future evidence might contradict the ANDA:

Mankind Pharma insists that the ANDA specification controls the infringement inquiry. However, the case law cited by Mankind Pharma in support of this proposition explains that the infringement inquiry is based not only on the ANDA filing, but also on "other materials submitted by the accused infringer to the FDA, and other evidence provided by the parties." The Federal Circuit explained "[i]t is ... possible, at least in theory, that other evidence may directly contradict the clear representations of the ANDA and create a dispute of material fact[,]" even if "[s]uch circumstances [are] unlikely to arise in practice[.]" Consistent with this recitation of the applicable standard, each case cited by Mankind Pharma was decided on a fully developed record, either on summary judgment or following a bench trial.

Allergan, Inc. v. Mankind Pharma Ltd., C.A. No. 23-272, at 5-6 (D. Del. Dec. 21, 2023) (internal citations omitted).

This case follows several similar decisions in the district, Novartis Pharmaceuticals Corp. v. Alembic Pharms. Ltd, C.A. No. 22-1395-RGA, 2023 WL 6387975, at *5 (D. Del. Sept. 29, 2023) and InfoRLife SA v. Sun Pharm. Ind. Ltd, C.A. No. 21-1740-WCB, D.I. 153 at 4-5 (D. Del. Nov. 21, 2022), which the opinion discusses at some length. Neither of those cases however were quite as factually stark as the one presented here, where the claims clearly require phosphorus, and the ANDA includes . . . no phosphorus.

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