Eastern District of Texas Federal Court Practice

Order Awarding Damages for Post-Verdict Sales

Cummins-Allison Corp. v. SBM Co., Ltd., --- F.Supp.2d ----, 2009 WL 3855958 (E.D.Tex. Nov 13, 2009) (NO. CIV.A. 9:07CV196)
Judge: Ron Clark
Holding: Order re: Damages for Post-verdict Sales of Infringing Products
This order arose in the context of sales made after the date of the verdict for the plaintiff and before the date the court entering an injunction to prevent future infringing conduct.
In this case, pursuant to notice given to the parties well before trial, the jury was asked to determine future damages, and arrived at a royalty rate of $400.00 per infringing unit sold. Judge Clark concluded that there was substantial evidence to support this finding. In accordance with 35 U.S.C. § 284, and after considering the Seagate factors, Judge Clark determined that Defendants' post-verdict sales were willful and thus enhanced the jury's award to $500.00 per infringing unit sold.
Judge Clark's order is a very helpful analysis of the law - constantly evolving though it may be - on the issue of future damages in patent cases.

Motion to Transfer Granted as to California Defendants - Denied as to New Texas Defendants

Balthaser Online, Inc. v. Network Solutions LLC et al., 2:08cv00430 (E.D. Tex. 2009)

Judge: David Folsom

Holding: Motion to Transfer Venue GRANTED in part.

One of the interesting things about the recent venue cases out of the Federal Circuit (TS Tech, Telular, VW IV and Genentech) is seeing how they affect cases that were in the pipeline when the law changed.  In this case, the California plaintiff had sued a raft of defendants, most from California.  Then after TS Tech indicated that cases should be transferred where all the defendants are clustered in (or near) the proposed transferee forum, the plaintiff added several tee-ninecy defendants in the Eastern District of Texas.  (yes, that's a word around here, and it's the best one to describe the defendants because in this case, size really does matter.  Wonder if there's a West headnote for that?). 

What makes makes this case notable, in addition to the fact that it allows readers to see whether the additional defendants added in this case change the outcome, is that it occurred after a full hearing on the motion, so readers can, as Judge Folsom did, review the transcript and cite to statements by the parties in support of their arguments in response to the court's questions.  Thus there was no question why the new defendants were added - just what the effect would be.

Judge Folsom's order first copncludes that transfer is required as to the original defendants, noting that the plaintiff and most of the defendants were located the ND Cal, and what non-ND defendants there were were insufficient to show that continuing the case in Texas was the way he should go.  But Judge Folsom agreed that a transfer to California would be extremely inconvenient for the small Texas defendants the plaintiff had added.  Two had appeared pro se only, one had not appeared, and one opposed the transfer for convenience reasons.  Judge Folsom concluded that the issues as between the California and the Texas defendants were different enough that they need not be litigated together, thus the motion was denied as to the newly added Texas defendants.

New SBPS offices in Marshall featured in Marshall News Messenger

This morning's front page story in the Marshall News Messenger was about some local attorney named Michael Smith, who has bought two historic old storefronts downtown next to his grandfather's old store and is in the process of restoring them for new office space for his firm Siebman, Burg, Phillips & Smith, LLP, and for use by visiting attorneys. 

The occasion for the article was the removal of the aluminum facade Tuesday to expose the original 1897 (or older) storefront.  The article is a good one (especially the part where the Kariels call me a "young man") and I've reproduced the photos from it below. 

Inequitable Conduct and Prosecution Laches Claims Rejected in Bench Trial in Centocor v. Abbott

Centocor Ortho Biotech, Inc. v. Abbott Laboratories, 2009 WL 3734119(E.D.Tex. Nov 04, 2009) (NO. 2:07-CV-139-TJW)
Judge: T. John Ward
Holding: Patent in Suit Not Unenforceable Due to Inequitable Conduct and Prosecution Laches (or invalid as indefinite)

As readers will recall, this is the case where Centocor obtained a large infringement verdict against defendant Abbott Laboratories in late June of this year.  Judge Ward previously set aside the jury's finding of willful infringement but otherwise denied Abbott's motions for judgment as a matter of law.  Now he addressed Abbott's inequitable conduct and prosecution laches claims, via the customary bench trial about five weeks after the jury verdict, as well as going back over some ground as far as indefiniteness.

First, after detailing the argument, the responses, the applicable law, and explaining what he found, Judge Ward concluded that Abbott had not satisfied its burden of proving that Centocor made material misrepresentations or omissions during prosecution of the ′775 patent family or deceptive intent by clear and convincing evidence, thus inequitable conduct could not be found in this case.

As far as prosecution laches, Judge Ward similarly found that Abbott had not met its burden of proving that there was any unreasonable delay by Centocor in the prosecution of the applications in the ′775 patent family.

Judge Ward also ruled on Abbott's claim that the patent was invalid as indefinite.  He noted that he had already rejected this argument in his Markman order, and now "again finds that Abbott has not shown by clear and convincing evidence that those skilled in the art would not understand the bounds of the claims or that the claims are 'insolubly ambiguous.'"

By my reading that's a wrap on the proceedings at the district court level, and the parties will now move to the Federal Circuit round.

The Audacity of the US Patent & Trademark Office

This was the title of the talk at the IP seminar at CAIL in Plano today by U.S. PTO Deputy Director Sharon R. Barner, riffing on President Obama's book The Audacity of Hope.  Director Barner talked about her office's efforts to listen to stakeholders in the office and to try to produce a better product.  I tried to take some notes during her talk to give readers an idea of the issues Director Barner talked about.

One issue she is emphasizing is speed, both on initial office actions and on average pendency overall, which means getting the backlog of pending applications down.  She went over the current times, and the reasons why those times create problems for applicants.  There is a management review in process, and she mentioned the need for IT infrastructure improvements at the PTO and some additional use of online filing procedures to achieve some additional efficiencies.

The pre-first action communication pilot program was discussed - it is improving the success of first action allowances by some 600%.

A new initiative announced last week was discussed - a backlog reduction pilot project which allows you to get what sounded to me like a "fast pass" for one application if you drop a pending application. 

The Patent Prosecution Highway (PPH) was also discussed and its successes detailed.

The Peer Reviewed Prior Art program was mentioned - it is being looked at but no definite decision yet - jury is still out on it.

She spoke on the need for patent reform legislation, but her only comment was that the final legislation needed to reflect the right balance as well as provide it with the funding necessary.  The funding and fee structure issue was the most important issue she said, when pressed for specifics.  (No one asked what the second most important issue was).

She opened the program up for questions and there were a number.  They included questions on fee structure, and non-U.S. attorneys filing patent applications.  One questioner asked where they could find tips on what practices by applicants that hinder the application, and Ms. Barner referred them to the website, which she noted was being overhauled to make it more user-friendly.

Thermapure - setting the stage for the retrial

Thermapure v. Water Out Drying. Corp., 2:06cv453 (E.D. Tex. Nov. 13, 2009)

Judge: Chad Everingham

Holding: Motion for New Trial GRANTED in part

As readers will know, this case is the asterisk in this year's trial statistics.  Judge Everingham tried this case with a Marshall jury in March, and on March 20, 2009, the jury returned a partial verdict, finding that defendant Water Out induced infringement of claim 6 of the ’812 patent and that the ’812 patent was not invalid. But the jury failed to reach a verdict on the issue of damages.

Plaintiff Thermapure asked that the court render partial judgment on infringement and validity, issue a permanent injunction on the jury’s infringement finding, and limit any new trial to the issue of damages.  Defendant Water Out argued that the court should order a new trial on all issues, including infringement, validity, and damages, and that Thermapure was not entitled to a permanent injunction.

Judge Everingham reviewed the law on what you do after partially hung juries in patent cases, and concluded that the plaintiff was entitled to partial judgment of infringement, and validity.  Accordingly, he limited the grant of new trial to damages only, starting with jury selection on March 1, 2010.  He carried the request for injunction with the case.

More details on Retractable Technologies v. Becton Dickinson jury verdict

Three days ago I noted that a Marshall jury in Judge Folsom's court just returned a verdict in the Retractable Technologies v. Becton Dickinson case, 2:07-CV-250.  It found the patent infringed, not invalid, and damages of $5 million.

I had a chance to review the verdict and docket today and noticed a few other facts of interest.  First of all, the jury found all asserted claims of the patent infringed, but declined to find the infringement willful in light of the court's instructions.  Judge Folsom did allow willfulness to be heard by the jury, as opposed to, for example, Judge Everingham's recent decision in Crane v. Sandenvendo to grant summary judgment as to the willfulness claims at the pretrial conference (but consistent with Judge Everingham's decision to deny summary judgment on willfulness claims the very next day in Abstrax v. Dell).  But the jury declined to find willful under the facts of the case nonetheless.

But that "clear and convincing evidence" standard cuts both ways, as the jury also declined to find for the defendant on its invalidity defenses of anticipation, obviousness, or lack of written description.

Most intriguing of all, however, was a statement I ran across in a motion to strike the plaintiff's economic testimony at the end of trial to the effect that the plaintiff's expert had testified that an appropriate lump sum royalty would be $74.6 million, which was some fifteen times the $5 million awarded by the Marshall jury.  Now, I do not know what the plaintiff asked the jury for, or what the defendant argued an appropriate royalty was if infringement was found, or even what the sales of what the allegedly infringing products were, but I am sure interested now, since the jury's award was a fraction of the number the defendant was seeking to strike.  But, again, I can't speculate that that number is what the plaintiff actually sought, so it's too early to characterize this as a defense win on damages.  But the possibility is there - hopefully more facts will come in light soon.

The case file also indicates that inequitable conduct was pleaded and is to be heard by Judge Folsom at a later date, so the story on this case - even at the trial court level prior to entry of judgment - is not finished yet.

Comic Relief from the "Law School" Front

I think most weblog readers know that I am the updating editor for O'Connor's Federal Rules * Civil Trials, put out by Jones McClure Publishing in Houston.  I got a call today from a person - allegedly a law student - with some questions about the book that I just had to pass along.  I get these occasionally, but never one this entertaining.  (The number's not from Texas, so thank goodness this is not a student at a local law school).

First of all, the caller identified herself as a law student with a question about the book and asked my paralegal if she had ever read the federal rules because they just did not make sense to her.  (Can't really blame her, although in light of the 2007 style revisions, I bet Bryan Garner's feelings would be hurt).  The question - I found out when I called her back - was whether I knew of a commentary on the federal rules that was more readable than O'Connor's because - get this - her profesor was giving a test on something and it was open book and they could use O'Connor's, and she wanted something that was better than our commentaries for use in an exam.  Because, first of all, the professor already knew O'Connor's, so she wanted something different so it wouldn't look like she was copying from it.  (You're thinking the same thing I am, aren't you?).  So I told her I didn't know of anything else that would be better to read to help her draft her "original" - and certainly untainted by O'Connor's - answer.  (I couldn't help but remember when I was in Practice Court at Baylor and we weren't even allowed to bring the book to class.  Judge O'Connor was pleased beyond words to have been banned at Baylor.  I attributed it to the centerfold with the deadlines for motions for new trial and yes, that is what would have made Professor Muldrow the maddest).

But also, she didn't think the commentaries were very useful because, like, there wasn't a section on every subsection of the rule.  So, like where there's Rule 12(b)(6)(a)(1)(ii), there's, like, not a specific section on that subsection, see?  So what does she do when the professor asks about what that section is and the book doesn't have a commentary on it?  Well, I told her that the secret weapon in every really skilled attorney's arsenal is ... wait for it ... to actually read the rule itself.  Don't start with the commentary or a case - just read the rule and tell the professor what it means.  It's a pretty good bet that courts won't have interpreted the rule or statute to mean the opposite of what it says.  But see Thermtron; but really see Tedford.

Well, that didn't make her happy - she said her worst nightmare was not writing down the right subsection of the rule, and what does she do about that?  Does she just have to memorize the rules?  I confirmed once again that this is an open book text, so just look at the number next to the section she's discussing and write that down carefully.  (I swear, I am not making this up - I am not even exaggerating).

She then asked me what the difference is between 28 USC 1331 and 28 USC 1332 because well, they just look the same to her.  I thought maybe I was remembering them wrong, so I looked them up, and yes, 1331 is one sentence long, and 1332 is, well, about three dozen paragraphs.  I am not making this up - that's what she said.  So I mentioned the little size discrepancy.  No response.  (In fairness, I'll bet she meant 1391(a) and (b), because those little buggers are pretty nearly identical.  She didn't say she had the sections wrong when I brought it up, but that makes a lot more sense than what she said.  And around here you get used to figuring out when a jury's request for def's exhibit 63 is really a request for plaintiff's 36).

But back to the call.  She then asked what she does when the professor asks a question - what should she look at?  Well, maybe an open book exam is not easy enough, I tell myself, so I try to think creatively, and suggest that she ask the professor if she can add to the open-book an option to "phone a friend" like on Who Wants to Be a Millionaire, and she could just give me a call.  (I swear on my not-yet-dead mother's grave I said this, and I have a witness - my legal assistant Pam who's howling in the next office as all this is going on).  She doesn't even figure out I'm joking, and thinks about it some more and after a few more questions says thank you for your time and we hang up.

Some days this job is just too much fun.

Patent verdict

A Marshall jury in Judge Folsom's court just returned a verdict in the Retractable Technologies v. Becton Dickinson case, 2:07-CV-250.  Patent infringed, not invalid, and damages of $5 million.

47th Annual Conference on Intellectual Property Law - Institute for Law & Technology

Spending today and tomorrow in Plano at the annual conference on IP law put on by the Institute for Law & Technology at the Center for American & International Law in Plano.

This morning's session is focused on patent litigation, and is chaired by Bruce Sostek.  First up was Hilda Galvan on proceedings at the ITC, then SBPS' Clyde Siebman on venue developments in 2009.  Bob Chiaviello gave a "state of the union" on patent enforcement, and currently at the podium (metaphorically) is Ted Stevenson on patent damages, focusing on the entire market value rule.  After Ted we'll hear from Brett Johnson on Markman practice and a federal judges panel with Judges Folsom and Ward from the Eastern District of Texas and Judge Lynn from the Northern District.  (Note: as Judge Folsom was in trial, Judge Everingham filled in for him).

This afternoon's sessions focus on trademark and copyright issues, then tomorrow's will be devoted to patent prosecution and technology, licensing and IP rights.