Blawgletter®

Federal Circuit Upholds $4.6MM Worth of Patent Prosecution Estoppel

If you wonder what "prosecution history estoppel" in a patent infringement case means, you might check out MarcTec, LLC v. Johnson & Johnson, No. 10-2085 (Fed. Cir. Jan. 3, 2012), in which the court affirmed an award of $4,683,653.03 in fees and expenses to the defendants.

MarcTec alleged infringement by the "Cypher stent" -- "a balloon expandable drug-eluting stent" that aims to help people with coronary artery disease. But, during the prosecution of the patents, MarcTec overcame objections to the applications by saying two key things -- that coating of the device with medicine had to occur as a result of applying heat and that the patent didn't cover -- you guessed it -- stents. The record revealed that the drug on the Cypher stent didn't bond to it as a result of heat. Yet MarcTec insisted that the Cypher stent infringed.

The district court ruled that patent history estoppel barred MarcTec from claiming that the patents covered the Cypher stent. It also deemed the case "exceptional" due to MarcTec's "bad faith" in pressing the claims and awarded Johnson & Johnson and Cordis more than $4.6 million in fees, expert expenses, and other outlays. The court of appeals affirmed.

On the "heat" bonding issue, the panel wrote:

As Cordis correctly argues, MarcTec cannot claim to be ignorant of the references to heat in the claims, the language in the specification discussing the importance of heat to the bonding process, or Dr. Bonutti’s statements to the PTO. Indeed, as we noted in the prior appeal, the doctrine of prosecution history estoppel prevented MarcTec from asserting its construc-tion of the term "bonded." After careful consideration and review of the record, we agree with the district court that MarcTec’s proposed claim construction, which ignored the entirety of the specification and the prosecution history, and thus was unsupported by the intrinsic record, was frivolous and supports a finding of bad faith.

MarcTec, slip op. at 18. On the question of stent v. no stent, the court said:

While it is clear that "[d]efeat of a litigation position, even on summary judgment, does not warrant an auto-matic finding that the suit was objectively baseless," here the record supports the district court’s finding that Marc-Tec pursued objectively baseless infringement claims. . . . The district court found that the "written description and prosecution histories of the patents-in-suit, and other documentary evidence, demonstrate that MarcTec’s patent infringement case was baseless." . . . . The court further found that, because MarcTec disclaimed stents to overcome the prior art, it could not turn around and assert infringement against the Cypher stent. Because the specification and prosecution history clearly refute MarcTec’s proposed claim construction, the district court did not err in finding that MarcTec’s infringement claims were objectively baseless.

Id. at 19 (omitting citations).

State AG Action Can Stay in State Court Despite CAFA, Says Seventh Circuit

The Seventh Circuit split with the Fifth over whether a lawsuit by a state attorney general counts as a "class" or "mass" action that the Class Action Fairness Act [sic] allows defendants to remove to federal from state court. The panel held that CAFA doesn't reach such a "parens patriae" case if the complaint as a whole discloses that the AG brings it not for the gain of private parties but in the state's role as righter of wrongs against the whole people of the state. LG Display Co., Ltd. v. Madigan, No. 11-8017 (7th Cir. Nov. 18, 2011) (affirming remand of Illinois AG's parens patriae action under Land of Lincoln law for conspiracy to fix LCD panel prices).

The court thus parted with the Fifth Circuit, which ruled that any claim that aimed to benefit actual people robbed a parens patriae complaint of its non-class and non-mass valence. Louisiana ex rel. Caldwell v. Allstate Ins. Co., 536 F.3d 418 (5th Cir. 2008).

Who gains and who loses under the Seventh Circuit's ruling? State AGs, of course, win the freedom to file and stay in the state court of their choice. Defendants, for the same reason, take a hit. They'd much rather make all cases that involve the same sort of claims against them run their course in a federal court of their choosing. Class action lawyers might also feel bad. Giving the AGs more sway tends to reduce theirs in the contest to get credit for making the bad guys pay.

Seventh Circuit Okays Remand of MDL Cases After Summary Judgment Rulings

The Judicial Panel on Multidistrict Litigation lives mainly to decide whether to group cases from around the country into big mega-cases for pretrial work -- motions to dismiss, discovery, summary judgment motions -- and, if so, which district judge to send each of the mega-cases to.

But what happens when the "transferee" judge finishes the pretrial work? Does she make rulings (partial final judgments under Rule 54(b)) that would allow all the cases to go up on appeal to the same court of appeals at the same time? Or does she simply send the cases that survived summary judgment back to the "transferor" courts in other court of appeals circuits and let the appeals from the ones that died a pretrial death go to a different court of appeals?

The Seventh Circuit held that the issue could've gone either way and that, because the transferee judge and the MDL Panel therefore had discretion on which way to go, Their Honors wouldn't second-guess their decision to remand. FedEx Ground Package Sys., Inc. v. U.S. Judicial Panel on Multidistrict Litig., No. 11-2438 (7th Cir. Nov. 17, 2011).

The case, by the way, concerned claims by FedEx delivery people that FedEx wrongfully failed to treat them as employees instead of independent contractors under applicable state law.

Mock Trial -- Dare You NOT Do It?

Blawgletter's firm handles much of our work on a contingent fee basis. That means we share risk with our clients -- and earn no fee if we don't help our clients get a good result.

What counts as a good result will vary from case to case. It often involves a money inflow, sometimes not having to pay. In some instances, a particular outcome -- winning a motion to dismiss, to compel arbitration, for class certification, for preliminary injunction, and so on -- defines success.

Why do we mention the risk-sharing? Mainly because our firm has a rule that, before trying any case in which we have a contingent fee on the line, we must MOCK TRY it. That should tell you how much we believe in the usefulness of the mock trial.

But what good, you may ask, does the mock trial do? Do the results predict the real outcome? How could they? Cramming weeks of opening statements and witnesses and argument and PowerPoints and blow-ups and expert opinions and juror notebooks and sidebars and so forth into TWO OR THREE HOURS -- how could that possibly tell you anything worthwhile?

Okay. Listen up. We don't want to have to repeat this.

Mock trying the case forces you -- the lawyer and the client -- to prepare. It makes you think about the other side's strengths -- especially if you compel your lead trial counsel to play the other side's lead (in her or his own style, of course). And it fast-forwards your client to the main event, which he or she may have an unrealistic Hollywood-y image of.

Does the outcome predict actual results? Heck no -- by which we mean in the particulars. Mock juries often differ widely in their damages awards. That goes double for punitive damages. But the direction of their verdict -- you win, or the other side does, big time -- has a fair degree of reliability.

Third, the process reveals the One Fact. The One Fact that the lawyers know Has Importance. But that nobody realizes -- until the mock trial -- the Whole Case Turns On.

So mock try your cases. Spend your own money doing it, if you work on a contingent fee. Clients should insist on jury research. You'll like the results. 

MDL Panel Boots Half of Transfer Requests

The U.S. Panel on Multidistrict Litigation has already finished its work from the January 21st session in New Orleans.

See the results:

Granting Transfer

S.D. Fla.

In re Enfamil LIPIL Mktg. & Sales Prac. Litig., MDL No. 2222 

N.D. Ga.

In re Camp Lejeune, North Carolina Water Contamination Litig., MDL No. 2218

N.D. Ill.

In re Discover Card Payment Protection Plan Mktg. & Sales Prac. Litig., MDL No. 2217

D. Mass.

In re Prudential Ins. Co. of Am. SGLI/VGLI Contract Litig., MDL No. 2208

S.D. Miss.

In re Regions Bank ATM Fee Notice Litig., MDL No. 2202

E.D.N.Y.

In re Gaceau VitaminWater Mktg. & Sales Prac. Litig. (No. II), MDL No. 2215

In re Am. Express Anti-Steering Rules Antitrust Litig. (No. II), MDL No. 2221

S.D.N.Y.

In re Commodity Exchange, Inc., Silver Futures & Options Trading Litig., MDL No. 2213

N. D. Ohio

In re Kaba Simplex Locks Mktg. & Sales Prac. Litig., No. 2220

Denying Transfer

In re Property Assessed Clean Energy (PACE) Programs Litig., MDL No. 2203

In re Schneider Nat'l Carriers, Inc., Wage & Hour Empl. Prac. Litig., MDL No. 2204

In re Webloyalty.com, Inc., Mktg. & Sales Prac. Litig (No. II), MDL No. 2206

In re Hungarian Holocaust Litig., MDL No. 2207

In re Equinox Fitness Wage & Hour Empl. Prac. Litig., MDL No. 2209

In re Abbott Labs., Inc., Similac Prod. Liab. Litig., MDL No. 2211

In re Student-Athlete Name & Likeness Litig., MDL No. 2212

In re Crystal Poole IRS Summons Litig., MDL No. 2216

In re Boehringer Ingelheim Pharm., Inc., Fair Labor Standards Act (FLSA) Litig., MDL No. 2219

Blawgletter wonders whether the fact that the Panel rejected motions to centralize cases in fully half of the MDL matters -- nine out of 18 -- made for quicker decisions.  We doubt it.  But we do think the denials fit with a trend we've spotted with this newish Panel.  

Panel members now seem more skeptical about the desirability in general of centralization.  Perhaps it reflects their collective concern that section 1407 transfers tend to favor certain kinds of outcomes or certain types of parties or lawyers.  As Chairman Heyburn noted in March 2010, the Panel has undertaken a study whether "centralization decisions may have the (unintended) tendency of benefitting certain groups of lawyers over others".  We'd guess that the Panel felt a need to test that hypothesis because, well, their honors already tended to believe it.

Or maybe parties and lawyers have just started filing weaker centralization motions.  

What do you think?

JPML Heads to Duke for Short Docket on Nov. 18

Seven hopefuls for pre-trial transfer will hit the argument calendar for the U.S. Judicial Panel on Multidistrict Litigation this Thursday at the Duke University School of Law in Durham, North Carolina. 

The Panel plans to hear lawyers explain why their respective groups of cases should -- or shouldn't -- go to a single federal judge so that she or he can get them ready for trial and then send them back from whence they came for the actual trials.

The docket lists these matters for live hearing November 18:

MDL No. 2195, In re Credit Card Payment Protection Plan Mktg. and Sales Practices Litig.

MDL No. 2196, In re Polyurethane Foam Antitrust Litig.

MDL No. 2197, In re Dupuy Orthopedics, Inc., ASR Hip Implant Products Liability Litig.

MDL No. 2198, In re Toyota Motor Corp. Priud HID Headlamp Products Liability Litig.

MDL No. 2199, In re POM Wonderful, LLC, Mktg. and Sales Practices Litig.

MDL No. 2200, Armodafinil Patent Litig.

MDL No. 2201, In re Transocean Ltd. Securities Litig.

BP Securities Cases Land in Houston

British Petroleum now faces a two-front litigation war.

Yesterday, the Judicial Panel on Multidistrict Litigation sent to the U.S. district court in New Orleans dozens of cases alleging personal injury, wrongful death, property damage, and other economic loss resulting from the Deepwater Horizon oil spill.  In re Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico on April 21, 2010, MDL No. 2179 (J.P.M.L. Aug. 10, 2010)

Later in the day, the Panel posted an order transferring securities law cases against BP to Houston.  These assert that BP breached an "alleged duty . . . to recognize and disclose the likelihood that a calamity such as this might occur."  In re BP p.l.c. Securities Litigation, MDL No. 2185, slip op. at 2 (J.P.M.L. Aug. 10, 2010).

The Panel explained why it chose to divide the tort cases from the securities cases, noting that "the typical benefits of common discovery would likely be few", that the tort "claims alone will require, in all probability, the [New Orleans] transferee judge's undivided attention", and that combining the tort and securities cases "would likely create an unwieldy and ultimately counterproductive litigation vehicle."  Id. at 2-3.

The Panel also stated its intention to send a shareholder derivative action to Houston "in a forthcoming conditional transfer order" and to require parties to cases asserting claims under the Employee Retirement Income Security Act "to show cause why those actions should not be included in this MDL."  Id. at 3.

U.S. District Judge Keith P. Ellison will handle MDL No. 2185.  Judge Ellison was born in New Orleans, won a Rhodes Scholarship, and graduated from Harvard College and Yale Law School.  Scary smart.

Panel Sends BP Oil Spill Cases to New Orleans

Today the Judicial Panel on Multidistrict Litigation ordered centralization of cases relating to the oil spill into the Gulf of Mexico from the offshore rig Deepwater Horizon to the Eastern District of Louisiana in New Orleans.  U.S. District Judge Carl J. Barbier will oversee the sprawling MDL proceedings.

The Panel's order provides:

IN RE: OIL SPILL BY THE OIL RIG “DEEPWATER HORIZON”

IN THE GULF OF MEXICO, ON APRIL 20, 2010

MDL No. 2179

TRANSFER ORDER

Before the entire Panel:

Before the Panel are four motions that collectively encompass 77 actions: 31 actions in the Eastern District of Louisiana, 23 actions in the Southern District of Alabama, ten actions in the Northern District of Florida, eight actions in the Southern District of Mississippi, two actions in the Western District of Louisiana, two actions in the Southern District of Texas, and one action in the Northern District of Alabama, as listed on Schedule A.

The background of this docket is well known. On April 20, 2010, an explosion and fire destroyed the Deepwater Horizon offshore drilling rig approximately 130 miles southeast of New Orleans and approximately 50 miles from the Mississippi River delta. The explosion killed eleven of the 126 workers on the rig, which eventually sank in approximately 5,000 feet of water. Through mid-July, crude oil gushed from the site in unprecedented amounts. Although the leaking well is now capped, the spill’s effects are widespread, with oil reported to have come ashore in Louisiana, Mississippi, Alabama, Florida, and, most recently, Texas. Its full impact on the lives and livelihoods of tens of thousands of Americans, especially those living in or near the Gulf of Mexico, is as yet undetermined.

I.

Plaintiffs in the Eastern District of Louisiana Cooper and Rodrigue actions have separately moved, pursuant to 28 U.S.C. § 1407, to centralize these actions in the Eastern District of Louisiana, while plaintiff in the Eastern District of Louisiana Nova Affiliated action and common defendant BP Exploration & Production Inc. (BP) have separately moved for centralization in the Southern District of Texas.

Dozens of parties submitted responses to the four motions. Almost all responding parties support centralization. Responding defendants all favor centralization in the Southern District of Texas, whereas the positions of responding plaintiffs are more varied with respect to an appropriate transferee district. While many plaintiffs support centralization in the Eastern District of Louisiana, other plaintiffs argue in favor of selection of the Northern District of Alabama, the Southern District of Alabama, the Middle District of Florida, the Northern District of Florida, the Southern District of Florida, the Western District of Louisiana, the Southern District of Mississippi, the District of South Carolina, or the Southern District of Texas. In addition, a small number of other plaintiffs variously argue in favor of other approaches:  that the Panel centralize the docket in the Eastern District of Louisiana, but assign it to Judge Shira Ann Scheindlin of the Southern District of New York, who would then sit in the Eastern District of Louisiana by designation; that the Panel divide the docket among three districts; or that the Panel appoint a judge from one of the Florida districts to “ride circuit” among the various involved localities.

Some responding plaintiffs, while supporting centralization generally, argue against including any of the relatively few personal injury/wrongful death actions in an MDL that might be comprised largely of putative class actions seeking recovery for property damage and other economic losses. Of the 77 constituent actions, two are wrongful death actions (Eastern District of Louisiana Roshto and Jones) and one is a personal injury action (Eastern District of Louisiana Williams). Plaintiffs in Roshto and Williams submitted briefs supporting inclusion of the personal injury/wrongful death actions in centralized proceedings, as did responding defendants, but plaintiff in Jones opposes such inclusion.

A few responding parties oppose centralization altogether. They essentially argue that the involved actions are all subject to dismissal for failure to comply with the Oil Pollution Act’s (OPA) presentment requirement, see 33 U.S.C. § 2713; and that, in any event, because the OPA is a strict liability statute, the only issue in dispute (at least as to the BP defendants) is the amount of damages to which each claimant is entitled, which, they argue, requires an inherently individualized inquiry and is thus inappropriate for MDL treatment. These parties argue that, at the very least, the Panel should carve out the OPA claims from centralized proceedings.

The briefing and oral argument have contributed greatly to the Panel’s deliberations. This is a reminder that although the Panel tries to reach its decisions in a timely fashion, it does so only after affording the parties sufficient time to present their views, both through written submissions, and, in the case of motions seeking the creation of new MDLs, through oral argument. Even in the face of catastrophic circumstances such as these, little is to be gained from hasty decision-making.

II.

The actions before the Panel indisputably share factual issues concerning the cause (or causes) of the Deepwater Horizon explosion/fire and the role, if any, that each defendant played in it.  Centralization under Section 1407 will eliminate duplicative discovery, prevent inconsistent pretrial rulings, including rulings on class certification and other issues, and conserve the resources of the parties, their counsel, and the judiciary. Centralization may also facilitate closer coordination with Kenneth Feinberg’s administration of the BP compensation fund. In all these respects, centralization will serve the convenience of the parties and witnesses and promote the more just and efficient conduct of these cases, taken as a whole.

We also conclude that it makes sense to include the personal injury/wrongful death actions in the MDL. These actions do overlap factually with the other actions in this docket, and, indeed, plaintiffs in two of the three constituent personal injury/wrongful death actions specifically argue in favor of such inclusion, as do responding defendants. While these actions will require some amount of individualized discovery, in other respects they overlap with those that pursue only economic damage claims. The transferee judge has broad discretion to employ any number of pretrial techniques – such as establishing separate discovery and/or motion tracks – to address any differences among the cases and efficiently manage the various aspects of this litigation. See, e.g., In re Lehman Brothers Holdings, Inc., Securities & Employee Retirement Income Security Act (ERISA) Litigation, 598 F.Supp.2d 1362, 1364 (J.P.M.L. 2009).

Similarly, we do not find any strong reasons for separate treatment of claims brought under the OPA. In our judgment, carving out the OPA claims would only complicate matters, and denying centralization altogether is not a viable option. To the extent that non-compliance with the OPA’s presentment requirement becomes an issue, failure to include OPA claims in centralized proceedings would raise the prospect of multiple inconsistent rulings on that issue. See In re: National Arbitration Forum Antitrust Litigation, 682 F.Supp.2d 1343, 1345 (J.P.M.L. 2010).

Finally, the limitation proceeding brought by certain Transocean entities and currently pending in the Southern District of Texas is a potential tag-along action in this docket, and will be included on a forthcoming conditional transfer order (CTO). Although our preliminary assessment is that the action should be included in the centralized proceedings, we do not prejudge the matter.  Once the CTO issues, the parties are free to object to the action’s transfer. See Rule 7.4, R.P.J.P.M.L., 199 F.R.D. at 435-36.

III.

The parties have advanced sound reasons for a large number of possible transferee districts and judges. Upon careful consideration, however, we have settled upon the Eastern District of Louisiana as the most appropriate district for this litigation. Without discounting the spill’s effects on other states, if there is a geographic and psychological “center of gravity” in this docket, then the Eastern District of Louisiana is closest to it. Considering all of the applicable factors, we have asked Judge Carl J. Barbier to serve as transferee judge. He has had a distinguished career as an attorney and now as a jurist. Moreover, during his twelve years on the bench, Judge Barbier has gained considerable MDL experience, and has been already actively managing dozens of cases in this docket. We have every confidence that he is well prepared to handle a litigation of this magnitude.

Some parties have expressed concern that recusals among Eastern District of Louisiana judges unduly limit our choices, and that even Judge Barbier may be subject to recusal.  Notwithstanding these concerns, the Panel is quite comfortable with its choice. Judge Barbier is an exceptional jurist, who would be a wise selection for this assignment even had those other judges in the district been available. Moreover, the Fifth Circuit recently denied the petition of certain defendants for a writ of mandamus directing Judge Barbier to recuse himself.

Other parties have made the related suggestion that certain suggested transferee districts (including the Eastern District of Louisiana and the Southern District of Texas) might not present a level playing field for all parties and that we should search elsewhere for a “neutral” judge. With all due respect, we disagree with the premise of this argument. When federal judges assume the bench, all take an oath to administer justice in a fair and impartial manner to all parties equally. See 28 U.S.C. § 453. That oath applies just as much to a multidistrict litigation involving hundreds (or thousands) of actions and scores of parties as it does to a single civil action between one plaintiff and one defendant. Our experience is that transferee judges impartially carry out their duties and make tough decisions time and time again, and that they uniformly do so without engaging in any location specific favoritism.

In selecting Judge Barbier, we also decline the suggestion that, given the litigation’s scope and complexity, we should assign the docket to multiple transferee judges. Our experience teaches that most, if not all, multidistrict proceedings do not require the oversight of more than one able and energetic jurist, provided that he or she has the time and resources to handle the assignment.  Moreover, Judge Barbier has at his disposal all the many assets of the Eastern District of Louisiana, which include magistrate judges and a clerk’s office accustomed to handling large MDLs. Judge Barbier may also choose to employ special masters and other case administration tools to facilitate certain aspects of the litigation. Manual for Complex Litigation, Fourth §§ 11.52, 11.53 (2004).

IT IS THEREFORE ORDERED that, pursuant to 28 U.S.C. § 1407, the actions listed on Schedule A and pending outside the Eastern District of Louisiana are transferred to the Eastern District of Louisiana and, with the consent of that court, assigned to the Honorable Carl J. Barbier for coordinated or consolidated pretrial proceedings with the actions pending in that district and listed on Schedule A.

Blawgletter did see it coming.