Jury Verdict Archives

Inventions Not Made Under Employment Agreement

by Jenny Chen, Ph.D. | Apr 22, 2021 | Patents, Trade Secrets

Applying a “middle ground” standard of review, the US Court of Appeals for the First Circuit affirmed a district court’s decision denying a company’s request for a declaratory judgment asking a former employee to assign patent rights to the company under the employment and separation agreements, because there were inconsistencies in the jury verdict. Covidien LP; Covidien Holding Inc. v. Brady Esch, Case No. 20-1515 (1st Cir. Apr. 8, 2021) (Gelpi, CDJ.)

During his employment with Covidien, Esch signed employment and separation agreements, which required a duty of confidentiality, an obligation to disclose any invention created during his employment with Covidien or within one year after leaving Covidien, and assignment of such inventions to Covidien. After his termination, Esch founded his own company (Venclose) and filed patent applications that were assigned to Venclose. Covidien sued Esch for breach of confidentiality and breach of obligation to disclose inventions.

At trial, the jury found that Esch breached his duty of confidentiality by publication of the patent applications, but did not breach his obligation to disclose inventions to Covidien under the agreements (question 3 on verdict form). The verdict form also included questions 6-8 concerning whether inventions were made under the agreements, but the jury was not required to answer these questions if the answer to question 3 was negative. After trial, Covidien moved for a declaratory judgment requesting that Esch assign patent rights to Covidien pursuant to the assignment provision of the agreements. The district court denied the motion, finding that the jury verdict questions were “internally inconsistent” and that “the jury’s ‘decisive’ negative answer to Question 3 could only be read as a factual finding that no ‘Inventions’ were made that are encompassed under the Employment Agreement.” Covidien appealed.

The First Circuit agreed with the district court, applying a “middle ground” standard, which is more rigorous than abuse of discretion but less open-ended than de novo review. This standard of review “requires attentively digest[ing] the facts and the district court’s stated reasons.” The Court found that the district court sufficiently addressed the agreements under applicable Massachusetts law and specifically explained the definition of “inventions” and the assignment requirement to the jury. The Court found that Covidien’s request that the jury should answer questions 6-8 regardless of the answer to question 3 was neither “substantively correct” nor “essential to an important issue,” and was an instruction “substantially covered in the charge.” Further, the Court found that the “internally inconsistent” jury verdict, namely that Esch met his disclosure obligation by violating his confidentiality duty via publication of the patent applications, could only be read as a factual finding that there were no inventions encompassed by the agreement. Accordingly, the First Circuit concluded that the district court did not abuse its discretion in denying Covidien’s post-trial declaratory judgment request.

No Appellate Jurisdiction to Review Post-Verdict Appeal of Previously Denied SJ Motion

by Paul Devinsky | Jan 21, 2021 | Trademarks

In a closely watched trademark/counterfeiting case, the US Court of Appeals for the Second Circuit affirmed a judgment for contributory infringement, award of permanent injunction and monetary damage award against a commercial landlord found to have been willfully blind to trademark infringement and counterfeiting occurring on its leased property. Omega SA v. 375 Canal, LLC, Case No. 19-969 (2d Cir. Jan. 6, 2021) (Menashi, J.) (Lohier, J., concurring in part, dissenting in part). The Court also concluded that it could not consider a post-verdict appeal on a legal issue raised in a denied summary judgment motion (i.e., whether the landlord needed to know of a specific vendor involved in the counterfeiting) when the appellant failed to file a timely notice of appeal and did not seek an interlocutory appeal or file a Rule 50 motion for judgment as a matter of law on the issue.

375 Canal LLC is a commercial landlord with properties in Manhattan, including 375 Canal Street. Omega SA is a watch company. Omega sued Canal for contributory trademark infringement, alleging that Canal had continued to lease space at 375 Canal Street to vendors despite knowing that the vendors were selling counterfeit Omega goods. After discovery, Canal moved for summary judgment, contending that Omega did not identify a specific vendor to which Canal continued to lease property despite knowing or having reason to know that the specific vendor was selling counterfeit goods. Omega argued that its primary theory of willful blindness did not require identification of a specific vendor. The district court denied Canal’s motion, agreeing that Omega was not required to identify a specific vendor.

The jury found that Canal had contributorily and willfully infringed Omega’s trademarks, and awarded $1.1 million in statutory damages. The district court amended the final judgment to include a permanent injunction prohibiting Canal from infringing and taking other actions with respect to Omega’s marks, even outside of 375 Canal Street. Canal appealed, arguing that the district court erred by not requiring Omega to identify a specific vendor that Canal knew or should have known was infringing Omega’s trademarks. Canal raised this argument by appealing the pre-trial order denying Canal’s motion for summary judgment and the jury instructions.

The Second Circuit dismissed Canal’s appeal of the summary judgment denial and affirmed the jury instructions on the merits. On Canal’s challenge to the summary judgment denial, the Court began with the premise that a party generally cannot appeal an order denying summary judgment after a full trial on the merits because of its interlocutory character, which is not within appellate jurisdiction. The denial of Canal’s summary judgment motion did not qualify for an exception allowing review, such as situations where Congress has provided for review of certain interlocutory decisions, or where the Supreme Court has construed certain denials of summary judgment, such as those on the basis of qualified immunity, as final decisions permitting review. But even if it had qualified, Canal would have been required to file a notice of appeal within [...]

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Federal Circuit Restores Induced Infringement Verdict Against Teva

by April E. Weisbruch | Oct 15, 2020 | Patents

Addressing the issue of whether a generic pharmaceutical company can be found to induce infringement even when all patented uses have been “carved out” of the label (resulting in a so-called “skinny label”), the US Court of Appeals for the Federal Circuit held that circumstantial evidence of inducement was sufficient. The Court relied on evidence that defendant stated its drug was a “complete replacement” for plaintiff’s drug covered by the asserted patent. GlaxoSmithKline LLC et al. v. Teva Pharmaceuticals USA Inc., Case Nos. 18-1976, -2023 (Fed. Cir. Oct. 2, 2020) (Newman, J.) (Prost, C.J., dissenting). The Court reinstated a jury verdict against Teva Pharmaceuticals, ordering it to pay GlaxoSmithKline (GSK) $235 million.

GSK brought suit against Teva in 2014 in response to Teva’s attempt to market a generic form of carvedilol, developed and marketed by GSK under the brand name Coreg®. Coreg® was US Food and Drug Administration (FDA) approved for three separate indications: hypertension, congestive heart failure (CHF), and left ventricular dysfunction following a myocardial infarction (post-MI LVD). After March 2007, however, no GSK Orange-Book-listed patent covered the hypertension or post-MI LVD indications. A reissue patent that issued in January 2008 remained in force for CHF.

In 2002, Teva filed an abbreviated new drug application (ANDA) with the FDA. Before Teva’s carvedilol product was finally approved in September 2007, Teva amended its ANDA and proposed label to “carve out” the CHF indication according to 21 USC § 355(j)(2)(A)(viii)—often referred to as a “section viii carve-out.” Thus, Teva’s carvedilol “skinny label” was only indicated for hypertension and post-MI LVD, neither of which was, at that time, covered by any GSK patent.

After a trial, the jury found that Teva had willfully induced infringement of GSK’s patent and awarded GSK $235 million in damages. The district court then granted Teva’s motion for judgment as a matter of law, concluding that the inducement verdict was not supported by substantial evidence. GSK, the district court reasoned, had failed to prove by a preponderance of the evidence that Teva’s alleged inducement (as opposed to other factors) had actually caused even at least one physician to prescribe generic carvedilol for CHF. GSK appealed.

On appeal, the Federal Circuit overturned the grant of judgment as a matter of law, reasoning that the “intent element” of inducement may be proven through circumstantial evidence. The Court noted that the jury had received evidence of, e.g., “Teva’s promotional materials [referring] to Teva’s carvedilol tablets as AB rated equivalents of the Coreg® tablets,” press releases identifying Teva’s product as “Generic Coreg® Tablets,” Teva’s Monthly Prescribing References, and testimony from GSK’s cardiologist witness that physicians are “completely reliant” on information provided by the generic companies. The majority concluded that this was “ample record evidence . . . to support the jury verdict of inducement.”

Chief Circuit Judge Prost authored a lengthy dissent warning of the broad implications of the majority’s ruling, including contravening the congressional design and intent of the generic approval system, and potentially stifling innovation by giving rise to [...]

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