Prejudice Archives

Prejudice

Go Home: No “Prevailing Party” Status After Voluntary Dismissal Without Prejudice

by Kavya Rallabhandi | Aug 15, 2024 | Copyrights

The US Court of Appeals for the Eleventh Circuit affirmed a district court’s ruling that a copyright holder’s voluntary dismissal of its claims did not render the defendant a prevailing party entitled to attorneys’ fees under the Copyright Act. Affordable Aerial Photography, Inc. v. Prop. Matters USA, LLC, Case No. 23-12563 (11th Cir. July 30, 2024) (Wilson, Grant, Lagoa, JJ.)

Affordable Aerial Photography (AAP) filed suit against Property Matters and Home Junction over alleged copyright infringement of a 2010 photograph titled “Presidential Place Front Aerial 2010 AAP,” which provides an aerial view of a residential condominium complex. AAP owns all real estate photos and related products (slide shows, virtual tours, stock photography) of Robert Stevens and licenses them for limited use by customers, such as luxury real estate companies. Property Matters is a real estate brokerage, and Home Junction is a real estate marketing solutions and services provider that designed and maintained Property Matters’ website.

The work was posted with copyright management information and registered with the Copyright Office in April 2018. During or before April 2017, the work appeared on Property Matters’ website without authorization, but AAP did not discover the alleged infringement until February 2022. After AAP filed suit, Property Matters filed a motion to dismiss arguing (in relevant part) that 17 U.S.C. § 507(b) sets a three-year statute of limitations from when the claim accrued (i.e., April 2017) to bring civil action and, therefore, AAP’s suit was untimely by more than two years. The district court denied the motion without prejudice. AAP then filed a notice of voluntary dismissal without prejudice under Rule 41(a)(1)(A)(i) with respect to its action against Property Matters and filed a joint notice of settlement with Home Junction soon after, which closed the case.

Property Matters then moved for attorneys’ fees under 17 U.S.C. § 505, asserting that “the court may also award a reasonable attorney’s fee to the prevailing party as part of the costs.” AAP argued that Property Matters was not the prevailing party because the voluntary dismissal was without prejudice and the limitations period had not yet expired. The district court found that the voluntary dismissal did not materially alter the legal relationship between the parties. The district court applied the “discovery rule” to conclude that AAP’s copyright infringement claim did not accrue until it discovered the alleged infringement in February 2022 and therefore AAP was not time-barred from raising its copyright infringement claim in a separate suit against Property Matters through February 2025. Property Matters appealed.

Reviewing the legal question on appeal de novo, the Eleventh Circuit affirmed. The Court reasoned that a defendant is not the prevailing party when a plaintiff’s action is voluntarily dismissed without prejudice under Rule 41(a)(1)(A)(i). This is true regardless of whether a statute of limitations has expired. The Court explained that a defendant does not attain prevailing party status merely because, as a practical matter, a plaintiff is unlikely or unable to refile its claims. Instead, the district court itself must act to reject [...]

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Bursting the Bubble on Prosecution Delays

by Christopher M. Bruno | Jan 26, 2023 | Patents

Addressing a case where a patent owner filed hundreds of applications as part of a strategy to maintain extraordinarily lengthy patent coverage, the US Court of Appeals for the Federal Circuit affirmed a district court’s determination that the patent owner had engaged in a calculated and unreasonable scheme to delay patent issuance. Personalized Media Comms., LLC v. Apple Inc., Case No. 21-2275 (Fed. Cir. Jan. 7, 2023) (Reyna, Chen, JJ.) (Stark, J., dissenting).

The Uruguay Round Agreements Act and General Agreement on Tariff and Trade (GATT) amended the US patent term to 20 years from the effective filing date, instead of 17 years from the issue date. GATT took effect on June 8, 1995. In the months leading up to GATT’s enactment, some would-be patentees seeded patent applications with tremendous disclosures to anchor future applications and obtain the longer pre-GATT term. Practitioners referred to this time period as the GATT bubble. Personalized Media Communications (PMC) submitted 328 GATT bubble applications, from which PMC sought somewhere between 6,000 and 20,000 patent claims. The term of these patents would be 17 years from their issue date instead of 20 years from their priority date.

PMC asserted that Apple’s FairPlay digital rights management software infringed a patent covering a decryption method and won a jury verdict of $330 million. After the verdict, the district court held a bench trial and ultimately found that the patent was unenforceable because of prosecution laches, a doctrine that bars the assertion of patents where the patentee caused unreasonable delay in obtaining the patent, to the detriment of the accused infringer. PMC appealed.

The Federal Circuit affirmed. First, it examined whether the district court had properly concluded that PMC unreasonably delayed. Based on a wide swath of record evidence, all three panel members—Judges Reyna, Chen and Stark—agreed that, like the patentee in Hyatt v. Hirschfeld, PMC had engaged in an intentional scheme to delay patent issuance and extend its monopoly. PMC tried to distinguish its case from Hyatt by arguing that it had developed, with the US Patent & Trademark Office, a consolidation procedure to prioritize review of certain applications. The Court concluded that the structure of the agreement still unreasonably drew out resolution of PMC’s applications, however. The Court also approved of the district court’s reasoning based on the number of applications filed and the introduction of new (albeit narrowing) elements to the claims 16 years after the priority date.

Turning to prejudice, the Federal Circuit concluded that the district court did not act improperly in determining that the delay and improper conduct continued to harm Apple up through the filing of suit in 2015. The Court found that the patent had issued based on a pending claim that PMC did not disclose during PMC-Apple license negotiations and which PMC could quickly get granted and assert against Apple.

Judge Stark dissented, stating that he would conclude that the prejudice Apple faced did not happen during the period in which PMC unreasonably delayed issuance. Judge [...]

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And the Band Played On: Reviewing Rule 54(b) Partial Summary Judgment Based on Who Did What to Whom and When

by Paul Devinsky | Oct 6, 2022 | Trade Secrets

In a case where the cast of characters on both sides of the v. evolved during the lead-up to the litigation as the litigants negotiated third-party deals and formed new entities, the US Court of Appeals for the First Circuit (characterizing the matter as the “entrepreneurial equivalent of musical chairs”) affirmed a dismissal of a trade secret claim against a foreign defendant but not against the related US entity, and found that the case qualified under Rule 54(b) for the “narrow exception” to the finality rule. Amyndas Pharmaceutical, SA v. Zealand Pharma A/S, Case No. 21-1781 (1st Cir. Sept. 2, 2022) (Barron, Selya, Kayatta, JJ.)

Amyndas is a Greek company with a US affiliate. It is a biotechnology firm that researches and develops therapeutics targeting a part of the immune system known as the complement system. One area of Amyndas’s research deals with “complement inhibitors.”

Amyndas’s research yielded compstatin, a peptide that selectively inhibits the C3 protein (which plays a role in activating the complement system). Amyndas also developed a related peptide (AMY-101) that targets that protein. Amyndas owns trade secrets and confidential information related to this work.

Zealand Pharma, a Danish biotechnology firm, contacted Amyndas about a potential partnership for the development of complement-related therapeutics. The firms entered into a confidential disclosure agreement (CDA) regarding information-sharing “for the purposes of evaluating a possible business/services relationship between the parties and their respective Affiliates.” Amyndas started giving Zealand Pharma access to confidential information (including confidential information about AMY-101). The firms also entered into a second CDA—with added protections—for “the evaluation or formation of a possible business and/or services and/or collaborative relationship.”

Both CDAs included an identical “Governing Law” provision stipulating that the CDAs would “be interpreted and governed by the laws of the country (applicable state) in which the defendant resides” and a forum-selection clause stipulating that “any dispute arising out of th[e CDA] shall be settled in the first instance by the venue of the defendant.”

Zealand Pharma also began its own research program focused on complement therapeutics. It did not inform Amyndas of this initiative. Although negotiations continued, the firms ultimately decided not to collaborate. Amyndas later terminated its information-sharing relationship with Zealand Pharma.

Zealand Pharma later formed Zealand US, a Delaware corporation. Without Amyndas’s knowledge or consent, Zealand Pharma also filed two European patent applications for compstatin analogues and later an international patent application designating the United States and claiming priority to the earlier EU applications.

After the international applications were published, Amyndas learned that they described “compstatin analogues that are capable of binding to C3 protein and inhibiting complement activation,” which had been the focus of Amyndas’s research and a subject of Amyndas’s confidential information-sharing with Zealand Pharma.

The other defendant, Alexion, is an established player in the complement therapeutics field and a proprietor of Soliris, a complement inhibitor that targets a protein in the complement system. Soliris is approved by the US Food and Drug Administration (FDA) and previously was the only FDA-approved and clinically available [...]

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Apportionment Unnecessary When Royalty Is Based on Comparable License

by April E. Weisbruch | Dec 3, 2020 | Patents

Rejecting a defendant’s request for a new trial on a variety of grounds, the US Court of Appeals for the Federal Circuit affirmed a damages award and explained that apportionment was unnecessary because a sufficiently comparable license was used to determine the appropriate royalty. Vectura Ltd. v. GlaxoSmithKline LLC et al., Case No. 20-1054 (Fed. Cir. Nov. 19, 2020) (Prost, C.J.)

Vectura owns a patent directed to the production of composite active particles for use in pulmonary administration, such as in dry-powder inhalers. Vectura filed a lawsuit against GlaxoSmithKline (GSK) alleging infringement of the patent by GSK’s Ellipta-brand inhalers. At trial, a jury found the patent valid and infringed, and awarded $90 million in damages. After GSK’s motion for judgment as a matter of law (JMOL) on infringement was denied, GSK appealed.

The Federal Circuit affirmed, rejecting all of GSK’s arguments. The Court rejected GSK’s argument that, based on a claim construction issue, it was entitled to JMOL of non-infringement. The asserted claims of the patent related to “composite active particles” made up of particulate additive material (magnesium stearate) on the surface of a particle of active material, used to promote the dispersion of these particles (in, e.g., inhalers). GSK argued that there was no substantial evidence of improved dispersion because Vectura’s scientific test was technically defective. The Court concluded that this test “generally supported” Vectura’s view and that, in any event, Vectura had provided other evidence—including GSK’s own documents—that the accused inhalers demonstrated improved dispersion.

The Federal Circuit also rejected GSK’s argument that the district court had erroneously construed the claim term “composite active particles” to mean “[a] single particulate entit[y/ies] made up of a particle of active material to which one or more particles of additive material are fixed such that the active and additive particles do not separate in the airstream.” GSK argued that this term required use of the “high energy milling” process referred to in the specification of the patent, but the Federal Circuit disagreed, stating that “[a]lthough the [asserted] patent contains a few statements suggesting that its high-energy milling is required . . . those statements are outweighed by the numerous statements indicating that high-energy milling is merely a preferred process.”

The Federal Circuit further rejected GSK’s argument that Vectura’s damages theory was deficient. Vectura’s damages theory was based on a 2010 license between the parties relating to highly comparable technology. GSK argued that Vectura’s damages theory simply adopted the royalty rate from this prior license wholesale and failed to “show that the patented . . . mixtures drove consumer demand for the accused inhalers before presenting a damages theory based on the entire market value of the accused inhalers.” The Court noted that the case presented a “rather unusual circumstance” in that, while apportionment is ordinarily required where an entire-market-value royalty base is inappropriate, “when a sufficiently comparable license is used as the basis for determining the appropriate royalty, further apportionment may not necessarily be required.” The Court concluded that this was “one [...]

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