Last month, Judge Williams granted a permanent injunction in Natera Inc. v. ArcherDX, Inc., C.A. No. 20-125-GBW (D. Del. Nov. 21, 2023). The Court unsealed the opinion on Friday, and I thought there were enough interesting things about it to warrant a short post.
The Court granted the injunction only in part, and permitted the defendant to continue using the personalized cancer monitoring product, referred to as "PCM," for "ongoing clinical trials, for updating old studies undergoing peer review, and for limited quality control." The parties also agreed that the injunction should exclude use …
Many years ago, before Andrew made me put a picture in EVERY TURTLE-CURSED POST, I wrote a post about the very easiest Daubert motion to win. As a brief refresher, it turned out to be a motion to exclude a damages experts reliance on a jury verdict point as the starting point for a hypothetical negotiation. Both Judge Andrews and Judge Burke were particularly firm on the issue, coming just short of setting a bright-line rule:
A jury verdict does not represent evidence from which a hypothetical negotiation can be reliably determined. A jury verdict represents the considered judgment of twelve (or maybe fewer) random non-experts as to what a hypothetical negotiation would have resulted in for the patent(s) …
Judge Connolly issued a post-trial opinion in a false advertising case this week that contained another interesting bit of damages arcana under the Lanham Act.
The trial in CareDx, Inc. v. Natera, Inc., C.A. No. 19-662 (D. Del. July 17, 2023), seemed to go great for the plaintiff with the jury finding 9/10 of the defendant's advertisements were false and awarding $21.2 Million in compensatory damages and $23.7 Million in punitive damages. As we say in Delaware, "that's a lotta crabs"*
It all went tails up in post-trial briefing however, when the defendant moved for JMOL of no damages. The court began by summarizing the elements of a Lanham Act claim in the Third Circuit
1) that the defendant has made false or misleading statements as to his own product [or another's]; 2) that there is actual deception or at least a tendency to deceive a substantial portion of the intended audience; 3) that the deception is material in that it is likely to influence 3 purchasing decisions; 4) that the advertised goods traveled in interstate commerce; and 5) that there is a likelihood of injury to the plaintiff in terms of declining sales, loss of good will, etc.
CareDX, at 3-4 (emphasis added) (quoting Pernod Ricard USA, LLC v. Bacardi U.S.A., Inc., 653 F.3d 241,248 (3d Cir. 2011))
The highlighted factor is the interesting one. You see, actual deception is ...
The defendant moved to stay the second trial because nearly all of the patents at issue had been found invalid—or were in danger of being found invalid—during a pending re-exam proceeding. The parties finished briefing, but the Court has not yet ruled or heard oral argument on the motion to stay. …
We try to keep it light here at IP/DE, but sometimes I actually learn something and I feel sort of obliged to pass it on. You know, some real dark arts stuff that I wouldn't have known if I didn't have to read absolutely everything written in the district for this blog.
Today's bit of lore today is about damages, and a split amongst district courts that visiting Judge Bryson has taken a stand on. Can a corporate parent can claim lost profits that would have initially accrued to its subsidiary?
The trite answer to this is "no." The Federal Circuit has squarely held that "a patentee may not claim, as its own damages, the lost profits of a related company." Warsaw Orthopedic, Inc. v. NuVasive, Inc., 778 F.3d 1365, 1375 (Fed. Cir. 2015). However, as Judge Bryson pointed out in his opinion in Kaneka Corp v. Designs For Health, Inc., C.A. No. 21-209 (D. Del. Mar. 3, 2023) (Mem. Op. & Order), several courts have held that lost profits of a subsidiary can still be claimed if they flow "inexorably" from the subsidiary to the parent.
Judge Bryson agreed, stating
To be sure, the Federal Circuit has not expressly recognized that lost profits can be awarded when those profits flow inexorably from a subsidiary to the patentee . . . I find the weight of district court authority on that point to be ...
It seems like people arealwaysmessingup with patent damages experts. There are just a lot of ways to get tripped up on damages, and—obviously—big incentives to take risks to drive damages numbers up or down.
We had another example of that on Monday, when visiting Judge McCalla granted a Daubert motion and excluded testimony from an expert who applied a later date for the start of infringing sales for the royalty calculation, and an earlier date for the hypothetical negotiation. The expert apparently used a December 2014 date for his royalty calculation:
Wonderland argues that neither Evenflo nor Mr. Peterson presented evidence of any manufacture or testing that occurred at the dates that Mr. Peterson suggested. . . . Wonderland supports its assertion by pointing to sections of Mr. Peterson’s report and deposition in which Mr. Peterson . . . uses December 2014 and not an earlier date as the starting point for calculating royalty damages based on his hypothetical rate. . . .
But the expert used an earlier date for the reasonably royalty calculation, arguing that the earlier date is when the infringement actually began:
When using a hypothetical negotiation to assess damages, “the date of the hypothetical negotiation is the date that the infringement began.” . . . Mr. Peterson asserts that a date falling between December 2013 and April 2, 2014 “more naturally aligns with the actual date of first infringement.” . . .
But the Court found that the party had failed to put forth evidence of the earlier date, and ...
It's not often that there's a consequence to objecting to an exhibit in the pretrial order. The common wisdom is that it's better to be safe than sorry, so pretty much every exhibit gets some sort of objection—at least at the PTO stage. Of course, many of these objections are abandoned come trial following a series of interminable meet and confers between the least senior members of each trial team. The system works.
Usually. Sometimes, one objection too many can cost you $6,000,000.
A Common Problem Made Worse By COVID
As often happens in cases between competitors, the defendants in Sunoco Partners Marketing Terminals L.P. v. Powder Springs Logistics, LLC, (yes, we're talking about this one …
If the other side is giving you spotty details on damages during Rule 26 initial disclosures, we may have a case for you. Judge Williams hasn’t issued opinions from the bench yet, but this Special Master opinion from last year challenges the “we’ll wait for expert reports” excuse with respect to damages contentions.
In TQ Delta, LLC v. DISH Network Corp., C.A. 15-614-RGA (D. Del. Oct. 2021), defendants sought to compel plaintiff to supplement its initial disclosures and contentions on damages, and Judge Williams granted the motion.
Rule 26(a)(1)(A)(iii) Computation of Damages
Rule 26(a)(1)(A)(iii), requires “a computation of each category of damages claimed by the disclosing party . . . .” Plaintiff said …
Judge Andrews issued an opinion earlier this month regarding a permanent injunction in Wonderland Switzerland AG v. Evenflo Company, Inc., C.A. No. 18-1990-RGA (D. Del. July 5, 2022). Plaintiff in that case prevailed at a four-day bench trial in 2021, with a damages award of $343,680 (they sought $845,528, according to the draft PTO).
Plaintiff now moved for a preliminary injunction. The Court had held after trial, as part of its Georgia Pacific reasonable royalty analysis, that the parties were "direct competitors":
First, I previously held that "the parties are direct competitors in the industry of the patented invention." . . . Specifically, the parties do not dispute that Graco and Defendant directly compete in the car seat market. (See D.I. 195 at 2 (Defendant agreeing, " There is no dispute that Evenflo directly competes with Graco, Wonderland's customer in a large market for all-in-one car seats.")). Additionally, Plaintiff is the exclusive manufacturer of car seats sold by Graco in the United States. . . . Thus, if Graco loses a sale of a car seat, Plaintiff also loses a sale.
Judge Andrews rejected an apparent attempt to backtrack and argue that the parties were not competitors, in part because ...
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