|
Publications
> BSKB Case Briefs > Vol. 4, No. 11 (1
December 2006)
BSKB Case Briefs
Editors: Marc
S. Weiner, Esq., MaryAnne Armstrong, Ph.D., Esq., and
Nicholas P.
Godici.
Vol. 4, No. 11 (1
December 2006)
In This Issue:
::
States Do Not Waive Their Sovereign
Immunity Rights In all Federal Districts When They File a Patent
Infringement Suit In District Court
::
Juries
can Consider Use of Patent Holder’s Former Employee in Proving Copying
and Discount Non-Infringement Opinions if Information is Intentionally
Withheld From Counsel.
States Do Not Waive Their Sovereign Immunity Rights In all
Federal Districts When They File a Patent Infringement Suit In One
District Court
Tegic Communs. Corp. v. Bd.
of Regents, 2006 U.S. App. LEXIS 20475 (Fed. Cir. 2006)
Issue:
Does a university waive its sovereign immunity in all other federal
districts by filing a suit for patent infringement in one district
court?
Answer:
No, the filing of the action did not establish waiver of sovereign
immunity as to separate actions in other districts.
Facts:
The Board of Regents of the University of Texas System ("the
University") filed suit in the Western District of Texas, charging
forty-eight cellular-telephone companies with infringement of its U.S.
Patent No. 4,674,112 ("the '112 patent"). Tegic Communications
Corporation (“Tegic”) of Washington State sells and licenses software to
39 of the 48 cell phone companies sued by the University. Tegic brought
a declaratory judgment suit against the University in the Western
District of Washington. Tegic sought a declaration that the '112 patent
was invalid and unenforceable. The District Court for the Western
District of Washington dismissed the declaratory judgment action on
the ground that the University enjoys immunity under the Eleventh
Amendment to the United States Constitution and had not waived that
immunity by filing its suit in Texas. Tegic appealed the District Court
decision.
The Tegic Argument: Tegic argues that the University explicitly waived its immunity with
respect to the ‘112 patent when it brought suit for infringement
voluntarily invoking federal jurisdiction.
The University
Argument: The University
argues that waiver is not established solely by the University filing
suit against Tegic's customers/licensees in the Western District of
Texas even when the state acts as a “market participant” in a field
traditionally occupied by private corporations.
Federal Circuit
Reasoning: While waiver in the
litigation context focuses on the litigation act, the waiver must
nonetheless be "clear." Lapides v. Bd. of Regents, 535
U.S. 613, 620 (U.S. 2002). In Clark v. Barnard, 108 U.S. 436,
448 (U.S. 1883), waiver to the "complete determination" of the
litigation was clear from the state's voluntary intervention in that
litigation; in Gardner v. New Jersey, 329 U.S. 565, 574
(U.S. 1947), waiver respecting the "adjudication" of a claim was clear
from the state's filing of that claim; in Lapides, 535 U.S. at
619, waiver as to the resolution of the "case at hand" was clear from
its voluntary removal of that case to a federal court. In
Regents of the Univ. of N.M. v. Knight, 321 F.3d 1111, 1126 (Fed.
Cir. 2003), waiver as to compulsory counterclaims filed by the defending
party "in the same forum" was clear from the state's filing of the suit
in that forum, for the state could "surely anticipate" that such
counterclaims, which would otherwise be forever barred, would be
asserted. Although here the University obviously "made itself a party
to the litigation to the full extent required for its complete
determination,"
Clark,
108 U.S. at 448, it did not thereby voluntarily submit itself
to a new action brought by a different party in a different state and a
different district court. Thus, the dismissal of Tegic’s suit is
affirmed.
The full text of this
opinion is available at
http://www.fedcir.gov/opinions/05-1553.pdf.
Summary supplied by Yen Po Lu. Edited by
Nicholas P. Godici.
Juries can Consider Use of Patent Holder’s
Former Employee in Proving Copying and Discount Non-Infringement
Opinions if Information is Intentionally Withheld From Counsel
LIQUID DYNAMICS CORP. V. VAUGHAN COMPANY, INC., No.
05-1105,-1325,-1366,-1399 (Fed. Cir. June 1, 2006)
Issue 1:
Can the employment of a former employee of a patent holder be used as
evidence in proving willful infringement of one of the patent holder’s
patents?
Answer 1:
Yes.
Issue 2:
Can a noninfringement opinion be discounted if the attorney preparing
the opinion it is not provided all relevant evidence and information?
Answer 2:
Yes.
Facts:
Liquid Dynamics (LD)
owns U.S. Patent No. 5,458,414 (“the ‘414 patent”) claiming a system of
pumps that stir mixtures of solids and liquids in large 1,000,000-gallon
tanks. Vaughan designs and manufactures “chopper pumps”, which are used
to mix solid materials in large tanks. Vaughan claims to have supplied
LD with pumps for many years. Their relationship soured when they bid on
a tank for the city of Augusta, Georgia in competition with LD. LD
claims Vaughan hired an employee recently fired from LD, and used that
employee’s engineering expertise for nozzle layouts in the Augusta bid.
LD claims the employee directly copied the nozzle layouts from
previously made LD drawings. Additionally, after LD contacted Vaughan
regarding possible infringement of the ‘414 patent, Vaughan consulted
with patent counsel to provide an opinion relative to infringement.
Though the counsel rendered an opinion concluding that Vaughan’s pump
system did not infringe the ‘414 patent, LD asserts that Vaughan
intentionally withheld material information from the counsel, and as
such, the opinion should not be relied upon. The District Court found
that Vaughan had willfully infringed the LD patent. Vaughan then
appealed that decision.
Reasoning/Conclusion 1:
Courts consider
several factors when determining whether an infringer has acted in bad
faith and whether damages should be increased. One of these is whether
the infringer deliberately copied the ideas or design of another. Here,
LD presented evidence that Vaughan hired a formed LD employee with
intimate knowledge of the Augusta tank and LD’s system to establish the
nozzle angle of its own system.
Accordingly, the CAFC
held that the jury could have reasonably inferred that Vaughan was
deliberately trying to create the same flow pattern as LD’s system in
violation of the ‘414 patent and therefore upheld the lower court
ruling.
Reasoning/Conclusion 2:
To counter a bad faith
determination, an infringer can present evidence that it relied in good
faith on the advice of competent legal counsel. However, the CAFC notes
that if an opinion is found to be incompetent, a fact finder may
discount its usefulness in determining a party’s good faith. Here, LD
presented flaws in the opinion’s factual basis. LD asserts that patent
counsel was not given the complete analysis of the systems and was even
advised that the parts left out “did not show anything of
significance”.
Accordingly, the CAFC
ruled that a jury could use such a concealment of evidence from the
patent counsel to discount the opinion.
The full text of this
opinion is available at
http://www.ll.georgetown.edu/Federal/judicial/
fed/opinions/05opinions/05-1105.pdf.
Summary supplied by Matthew Aichele.
Edited by
Nicholas P. Godici.
::
|
