Parties stipulate to drop various claims and defenses all of the time. Sometimes, the parties simply bargain with each other to winnow down the scope of the case for trial. Other times, a defense or claim may be dropped to avoid some especially harsh discovery burden. Sometimes you just hate a patent claim sooo much.
Always there are dangers. For one rule is supreme in the realm of stipulations.
No takebacks.
Such was the lesson this week in Allergan, Inc. v. Mankind Pharma Ltd., C.A. No. 23-272-JFM, D.I. 126 (D. Del. July 24, 2024). The defendant, Mankind, had stipulated to drop all invalidity defenses as to one patent "because it would streamline the case and would allow them to avoid answering discovery requests" and because "the 504 patent had been unsuccessfully challenged in the past and the invalidity theories that remained were weak." Id. at 4.
A bit later Judge Andrews issued is opinion in Allergan USA, Inc. v. MSN Labs. Private Ltd., C.A. No. 19-1727-RGA (D. Del. Sept. 27, 2023), which we covered previously on the blog. TL;DR Judge Andrews held (for the first time in the district) that OTDP applied when the first-filed, and first-issued, patent was the one being invalidated.
All of a sudden, the defendant realized that they might have a real humdinger of a defense and so they moved to "vacate" the earlier stipulation in anticipation of the Federal Circuit affirming the decision in MSN.
Visiting Judge Murphy, however, held that this potential outcome did not justify setting aside a stipulation:
Even if MSN turns out just the way Mankind hopes, that is not an exceptional circumstance. Mankind agreed to “not contest the validity and/or enforceability of any claim of ’504 patent in this action.” When Mankind signed the stipulation and asked the court to enter an order, it was aware that invalidity theories existed that it could have used in defense of Plaintiffs’ claims of infringement. Mankind may have believed those arguments would not have been successful, but it was a tactical decision not to assert them. And even if the MSN decision is affirmed, and the decision ought to be viewed as “new law” so to speak, new theories of invalidity do not alter the position that Mankind was in when it signed the stipulation. Mankind is represented by sophisticated counsel who are well aware, now and at the time the stipulation was entered, that the law controlling invalidity is subject to change. The history of obviousness-type double patenting is a graveyard of patents invalidated by surprising (to me, anyway) judicial decisions. Mankind knowingly gave up all its invalidity defenses — weak ones and strong ones, known ones and unknown ones.
Id. at 4-5 (internal citations omitted).
The Court also noted that fact discovery had closed, and that additional discovery might be necessary given that the defendant had never served invalidity contentions.
It's worth noting that the Court applied the standard set forth in Waldorf v. Shuta, 142 F.3d 601, 616 (3d Cir. 1998), to determine whether the stip should be set aside, as opposed to something like a Pennypack analysis or rule 16(b)'s good cause standard which would have governed if the defendant had simply not served any invalidity contentions rather than stipulating.
It's not obvious which of these standards is the most rigorous -- at least Pennypack and Waldorf seem to tread much of the same ground in their factors -- but its something to keep in mind when deciding how to memorialize agreements of this nature.
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