Opinion
Case No. 98-CV-2359 II (POR)
August 23, 2001
On July 2, 2001, Plaintiff Abbott Laboratories filed a motion to exclude Defendant Syntron Bioresearch, Inc.'s untimely prior art references of validity and untimely issues of inequitable conduct and inventorship. The Court referred the motion to Magistrate Judge Louisa S. Porter on a report and recommendation basis. Syntron filed its opposition on July 11, 2001. On July 16, 2001, Abbott filed a reply. Judge Porter held telephonic oral arguments on July 20, 2Q01.
On August 3, 2001, Judge Porter issued a Report and Recommendation, recommending that the motion to exclude evidence be granted in part and denied in part. On August 10, 2001, both parties submitted objections to the Report and Recommendation and on August 17, 2001, the parties both submitted replies to the objections.
1. Procedural Background
On December 30, 1998, Abbott filed a Complaint alleging patent infringement. On February 22, 1999, Syntron filed an Answer with Counterclaims seeking declaratory judgment that it did not infringe Abbott's patents and that Abbott's patents are invalid and unenforceable. After a case management conference, the Court issued a scheduling order on May 13, 1999. Pursuant to the scheduling order, all fact discovery was to be completed by February 28, 2000, and the final date to conduct depositions of experts was to be April 14, 2000. On March 21, 2000, this Court extended the final date to conduct expert discovery to April 28, 2000.
Summary judgment motions, Markman hearings on the construction of claims and motions for reconsideration were heard between Spring 2000 through Spring 2001. On July 31, 2000, the parties filed their Memoranda of Contentions of Facts and Law. A proposed Pretrial Order was submitted on August 28, 2000.
On May 24, 2001, Syntron filed a Notice of Prior Art pursuant to 35 U.S.C. § 282. On June 7, 2001, the parties submitted a revised Memoranda of Contentions of Facts and Law. A pretrial conference was held on June 22, 2001 and a Pretrial Order was filed on the same day. On June 27, 2001, the Court issued a scheduling order setting trial to begin on September 11, 2001.
On June 25, 2001, the Court issued an Order Referring Issues in Pretrial Order to Magistrate Judge for Report and Recommendation. Specifically, the Court asked Magistrate Judge Porter to address 1) the requirements of whether the prior art should have been disclosed in discovery or expert reports; 2) whether the inventorship issue should have been disclosed in discovery or expert reports; 3) if there was any violation of proper discovery procedures; 4) and if Abbott was prejudiced by the lack of disclosure.
The items in dispute are indicated by asterisks next to the paragraph number in the Pretrial Order.
II. Analysis
A. Prior Art References (paragraphs 36-44 of the Pretrial Order)
Paragraphs 36-44 of the Pretrial Order set forth nine prior art references (Weiss, Schuurs, Guire, Renn, Maggio, Litman I, Neuhäusser) that were not disclosed by Syntron until May 24, 2001, more than a year after discovery had closed.
Between April 28, 2000 (the close of expert discovery) and May 24, 2001, Syntron never filed a supplemental disclosure or response. See Fed.R.Civ.P. 26(e)(1) (2). Syntron argues that Abbott is not prejudiced by the new disclosures because it knew about these references based on previous litigation or prosecution of the patents-in-suit. However, Abbott did not have knowledge that these prior arts would be an issue in this particular case. In addition, there has been no expert discovery conducted on these references.
"The purpose of a discovery cutoff date is to protect the parties from a continuing burden of producing evidence and to assure them adequate time to prepare immediately before trial." Whittaker Corp. v. Execuair Corp., 736 F.2d 1341, 1347 (9th Cir. 1984) (citations omitted). Federal Rules of Civil Procedure 26(e)(1) and (2) establish a duty to supplement or correct discovery. If a party fails to supplement disclosures or responses, the court may issue sanctions pursuant to Fed.R.Civ.P. 37(c)(1):
A party that without substantial justification fails to disclose information required by Rule 26(a) or 26(e)(1), or to amend a prior response to discovery as required by Rule 26(e)(2), is not, unless such failure is harmless, permitted to use as evidence at a trial, at a hearing, or on a motion any witness or information not so disclosed . . .
In cases involving patent invalidity or infringement notice of prior art references is also governed by 35 U.S.C. § 282, which provides:
In actions involving the validity or infringement of a patent the party asserting invalidity or noninfringement shall give notice in the pleadings or otherwise in writing to the adverse party at least thirty days before the trial, of the country, number, date, and name of the patentee of any patent, the title, date, and page numbers of any publication to be relied upon as anticipation of the patent in suit . . .35 U.S.C.A. § 282 (West Supp. 2000). The Federal Rules of Civil Procedure and § 282 co-exist. ATD Corp. v. Lydall, Inc., 159 F.3d 534, 551 (Fed. Cir. 1998); Eaton Corp. v. Appliance Valves Corp., 190 F.2d 874, 879 (Fed. Cir. 1986). Section 282 sets a minimum period for identification of prior art; however, "when the court has set and the parties have agreed to a discovery period, that procedure necessarily governs that trial." ATD Corp., 159 F.3d at 551 (excluding prior art because defendant presented no reason to justify inclusion of prior art that was presented four months after extended discovery ended and one month before a first rescheduled pretrial conference). The purpose of both the Federal Rules and § 282 is to prevent unfair and prejudicial surprise. Id.
Magistrate Judge Porter found that Syntron failed to present any "substantial justification" for its delay in presenting the prior art references. See Fed.R.Civ.P. 37(c)(1); Scheduling Regulating Discovery and Other Pretrial Proceedings, May 13, 1999. Based on the prejudice suffered by Abbott, Judge Porter recommended that the Court exclude all reference to the nine prior art references in paragraphs 36-44 of the Pretrial Order.
Syntron objects to this portion of the Report and Recommendation. Syntron disagrees with the exclusion of any of the nine references, but focuses its Objection to three prior art references: the Takeda article; the Alfa Laval AB patent; and the Litman I patent. Syntron argues that Abbott is not prejudiced by having to respond to the Takeda and Alfa Laval AB references because it has know about them since 1999 and 1986, respectively, when they were cited against Abbott in its foreign prosecution of these patents. Syntron also argues that Abbott is not prejudiced by having to respond to Litman I because the relevant portions of Litman I are identical to Litman III, which was discussed in the report by Attorney Hoscheit, Syntron's patent law expert. However, Litman III is not disclosed in the Pretrial Order and thus not within scope of trial.
In Syntron's Reply to Abbott's Objections to the Report and Recommendation, Syntron stated that it was willing to forego all the disputed prior art references, including those allowed by Judge Porter, in favor of the introduction of the Takeda, Alfa Laval AB, and Litman I references.
Syntron fails to offer any reason why these prior art references were not disclosed earlier. Syntron states that it disclosed the references as soon as it discovered them in May, 2001, however, all of the references were available to Syntron two years ago, during the discovery phase of this case. In March 2000, Dr. David, Syntron's expert, opined that the `484 and `162 patents are invalid on various grounds and cited five prior art references. Dr. David did not identify Takeda, Litman, or Alfa Laval.
Abbott has not conducted expert discovery on the nine newly disclosed references. Syntron states that Dr. David is available for a deposition at Abbott's convenience. However, leave of court is required to conduct additional depositions at this stage in the litigation. Fed.R.Civ.P. 30(a)(2)(C); Fed.R.Civ.P. 29. The Magistrate Judge concluded that Abbott is prejudiced by the lack of expert discovery and recommended that the nine reference be excluded. The Court ADOPTS the Report and Recommendation and excludes the nine prior art references listed in paragraphs 36-44 of the Pretrial Order.
B. New Applications (paragraphs 45-56 of the Pretrial Order)
Paragraphs 45-56 of the Pretrial Order list sixteen different prior art references, alone or in combination, as invalidating the patents-in-suit. As discussed above, the nine new prior art references are excluded from trial. Abbott argues that five other prior art references (Deutsche II, Brown, Litman II, Bauman, Kelton) mentioned in paragraphs 45-56 should also be excluded. Abbott contends that these references were not properly identified in discovery and that it will be prejudiced if Syntron is allowed to raise these reference at trial. In opposition, Syntron contends that these issues are not new applications but were included in Syntron's original Memorandum of Contentions of Facts and Law filed on July 31, 2000 and in the previous Pretrial Order filed in August 2000. It further argues that prior art reference, like any other piece of evidence, once admitted, is admissible for any purpose for which it is relevant.
Judge Porter recommended that the five prior art references not be excluded. Judge Porter found that the Brown and Deutsche II patents were listed as prior art references in Syntron's responses to interrogatories and the Deutsche II, Brown, and Kelton patents were stipulated to as prior art in the Pretrial Order filed June 22, 2001. Judge Porter concluded that "[a]lthough the patents were not specifically mentioned as `invalidating prior art,' Abbott had notice that these prior art references may be used to invalidate the patents-in-issue." Report and Recommendation at 7. Judge Porter also found that the combinations of Tom, Deutsche (I or II), Bauman, Grubb, Giegel and Glad were in the proposed Pretrial Order dated August 21, 2000. Judge Porter concluded that although Abbott may suffer prejudice by allowing these references, the prejudice was created by Abbott's failure to file a motion either to exclude or re-open discovery a year ago.
Abbott objects to this recommendation. Abbott argues that the five references and new uses of previously identified prior art should be excluded because Syntron did not identify them as invalidating prior art during the scheduled discovery period. Specifically, Abbott argues that Dr. David never opined that any of the five references (Deutsche II, Litman II, Kelton, Bauman, Brown) invalidated the asserted claims of the patents-in-suit. Abbott further contends that: (1) Syntron failed to identify three of the references in response to its interrogatory requesting identification of prior art; (2) Mr. Hoscheit, Syntron's patent law expert, stated that Syntron was not relying on Bauman as an invalidating reference; and (3) neither Dr. David nor Mr. Hoscheit ever opined on the Brown reference.
Abbott contends that the Report and Recommendation allowing the five references is based on three misconceptions of the facts. Abbott first asserts that just because it stipulated that the references are prior art does not mean that it admits they can be asserted at trial. Abbott specifically reserved this objection in the Pretrial Order. See Pretrial Order at p. 7, ¶ 2 ("[b]y admitting [the references] are prior art to the patents-in-suit, Abbott does not admit that Syntron may assert them at trial because it has not previously identified them as invalidating art"). Second, Abbott contends that although Rule 26 is not incorporated by name in the Scheduling Order, its substance is incorporated. See Scheduling Order ("Opinions and reasons for opinions not disclosed during depositions or in reports are subject to exclusion absent substantial justification"). Finally, Abbott asserts that it was improper for Syntron to raise the new applications and combinations or prior art in the July 31, 2000 Memorandum of Contentions of Fact and Law. Abbott contends that it preserved its objection to the new applications and combinations in the original proposed Pretrial Order. See Pretrial Order, August 2000, p. 13, ¶ 35.
Syntron replies that the five references Abbott contests were not referred to the Magistrate Judge for a report and recommendation. Syntron points out that these five references were listed in the Pretrial Order as stipulated facts. Syntron contends that Abbott has known about these references for a year and has failed to object or cite authority for its position that previously disclosed references can not be used in new combinations. Syntron claims that any alleged prejudice suffered by Abbott could be cured with a supplemental deposition of Dr. David. Syntron states that it is not seeking to depose Abbott's expert, Dr. Harlow, about these references.
The Court ADOPTS the Report and Recommendation and will not exclude the five references from trial. Abbott had notice that these references were prior art to the patents-in-suit and will not be prejudiced having to defend against them to an extent which would require excluding them from trial. However, the Court reserves the right to limit testimony about the five references in accordance with the Federal Rules of Evidence during the course of the trial.
C. Inequitable Conduct Defense (paragraphs 60, 62-65, 66 of the Pretrial Order)
1. Paragraphs 60 and 62
Paragraphs 60 and 62 of the Pretrial Order make general allegations of inequitable conduct by Abbott. Abbott argues that the inequitable conduct issue was never raised in pleadings or discovery. Furthermore, it claims that the inequitable conduct claim was not based on Abbott's conduct but that of the "applicants." Abbott states that although it assisted in the prosecution of the patents, the inventors took primary responsibility in the prosecution. Lastly, Abbott contends that it will be prejudiced because this issue was not raised in expert reports.
Magistrate Judge Porter determined that Syntron raised the "inequitable conduct" issue when it filed its answer with counterclaims. Syntron's Sixth Affirmative Defense states "Abbott is estopped from asserting that Syntron has infringed the 484 patent or the 162 patent by reason of actions taken and statements made by the applicant to the Patent Office during prosecution of the application which led to the 484 and 162 patents." This statement is broad as it relates to Abbott's conduct. in the Seventh Affirmative Defense, Syntron alleges inequitable conduct by the "applicant." Therefore, inequitable conduct, in paragraphs 60 and 62 with regards to both patents-in-issue, was alleged early in the litigation, inequitable conduct was also raised in interrogatories.
The Court also notes that the inequitable conduct issue was raised in the prior pretrial order filed August 21, 2000. Abbott had notice of these issues since last year and at no time contacted the Court to re-open discovery on these issues. By virtue of the answer with affirmative defenses and reference to same in interrogatory answers, Abbott had notice and full opportunity to explore the issue during the scheduled discovery time. Judge Porter concluded that the inequitable conduct issue was raised in discovery and recommended that the issue not be excluded. The Court ADOPTS the Recommendation with respect to the general allegations of inequitable conduct found in paragraphs 60 and 62 of the Pretrial Order.
However, Judge Porter also recommended if expert testimony is required on this issue of inequitable conduct, then the issue should be excluded based on prejudice against Abbott. It appears from Syntron's papers that the only specific inequitable conduct issues are those listed in paragraphs 63-66.
At oral argument, Syntron stated that expert testimony would be helpful, but it would not be required, while Abbott asserted that expert testimony is needed. At no time did Syntron's expert, in reports or during deposition testimony, raise the specific issue of inequitable conduct.
2. Paragraphs 63-65
Paragraphs 63-65 set forth inequitable conduct allegations for failure to disclose certain reference to the patent examiner and or the PTO during prosecution of the `484 or `162 patents. Paragraph 63 discusses inequitable conduct as it relates to the newly disclosed prior art. As set forth above, these references are excluded from trial. Consequently, the allegations in paragraph 63 are excluded from trial.
In paragraphs 64 and 65, Syntron alleges an inequitable conduct defense based on Abbott's failure to point out the asserted patentable novelty over Deutsche I, Bauman, Grubb, Giegel, Litman II, Tom, or Hochstrasser.
Abbott argues that Syntron will need to support its inequitable conduce defenses with expert testimony. Abbott relies on Life Technologies, Inc. v. Clontech Lab., Inc., 224 F.3d 1320, 1325 (Fed. Cir. 2000), for its assertion that expert testimony is required on the issue of materiality in the inequitable conduct inquiry. In Life Technologies, the Federal Circuit explained what "material" means in the context of an inequitable conduct challenge:
Information is material when there is a substantial likelihood that a reasonable Examiner would have considered the information important in deciding whether to allow the application to issue as a patent. Because patentability is assessed from the perspective of the hypothetical person of ordinary skill in the art, information regarding the subjective motivations of inventors is not material.Life Technologies, 224 F.3d at 1325 (citations omitted). The Life Technologies Court did not state that expert testimony was need to prove materiality. However, an expert is needed to voice the understanding of a hypothetical person of ordinary skill in the art.
Syntron's expert, Dr. David, has opined that Grubb, Deutsche I, Tom, Hochstrasser, and Giegel patents, and Glad article invalidate the patents-in-suit. In addition, Mr. Hoscheit has opined that the patentee breached its duty of candor to the Patent Office by failing to submit Hochstrasser and Litman III to the Patent Office. While they didn't render an opinion specifically addressing inequitable conduct, the testimony of Dr. David and Mr. Hoscheit establishes the materiality of most of these references relevant to Syntron's inequitable conduct defense. Potentially invalidating references are material and there is a substantial likelihood that a reasonable Examiner would have considered the information important in decided whether to allow the application to issue as a patent. However, it does not appear that any showing of materiality has been made with respect to the Bauman and Litman II references.
At this time, the Court ADOPTS the Report and Recommendation. The Court will not exclude Syntron's inequitable conduce defense from trial, however, Syntron must make a proper showing of materiality before the evidence can be admitted. Based on the scope of the expert reports, the Court does not see how Syntron can raise the Bauman or Litman II references. Nevertheless, the Court reserves final judgment for trial when the Court is in a better position to evaluate the issue.
3. Paragraph 66
Paragraph 66 alleges inequitable conduct based on concealing the correct inventorship from the PTO with deceptive intent. For the reasons set forth in Section D below, the Court will not exclude this defense from trial but the necessary evidentiary proof must be made before evidence of inequitable conduct based on inventorship will be presented to the jury.
D. Inventorship (paragraph 69 of the Pretrial Order)
Abbott contends that Syntron failed to properly raise the inventorship issue as an affirmative defense, failed to disclose any evidence of alleged incorrect inventorship during discovery and failed to identify the allegedly correct inventors or facts supporting that contention. Abbott also argues that it will be prejudiced since there was no expert testimony about inventorship. In opposition, Syntron argues that it has continually preserved the inventorship issue in its pleadings and in discovery. Moreover, Syntron argues that Abbott has known about the inventorship issue for at least six years when it was brought up as a defense in another lawsuit. Also, Syntron learned about the inventorship issue through Abbott when Abbott produced a memorandum by Dr. Brian Lee about why he should have been named as a co-inventor during deposition in another lawsuit. However, both parties stated that expert testimony was not conducted on this issue.
The Report and Recommendation concludes that the inventorship issue was adequately disclosed during discovery and recommended that it not be excluded. However, Judge Porter did note that if expert testimony was required on the issue then the Court recommends that the issue be excluded based upon prejudice against Abbott.
Abbott argues that expert testimony is required for Syntron to meet its burden to prove inventorship issues by clear and convincing evidence. See Environ Prods. v. Furon Co., 215 F.3d 1261, 1265 (Fed. Cir. 2000) (a party challenging patent validity for omission of an inventor must present clear and convincing evidence that the omitted individual actually invented the claimed invention). Abbott relies on Acromed Corp. v. Sofamor Danek Group, Inc., 253 F.3d 1371, 1378-1381 (Fed. Cir. 2001) to support its contention that expert testimony is required. While the Acromed Court makes clear that Syntron has the burden of proving that the omitted co-inventor's contribution was more than just the normal contributions of one of ordinary skill in the art, the case does not hold that this evidence must be presented through expert testimony. TheAcromed Court noted that the defendant "could have countered this by producing testimony at trial concerning what would or would not be obvious to one ordinarily skilled in the art . . . [the defendant] never did."Acromed, 253 F.3d at 1380.
Syntron has not offered expert testimony on the inventorship issue. However, Abbott has failed to present any case law that establishes that expert testimony is required. The Court is unclear how Syntron will meet its burden to prove the inventorship issues it raises by clear and convincing evidence, however, the Court will not exclude the issue at this time. The Court ADOPTS the Report and Recommendation. However, the Court reserves final judgment on the inventorship issue until trial.
III. Conclusion
For the reasons set forth above, the Court ADOPTS the Report and Recommendation RE: Plaintiffs Motion to Exclude Evidence. The recently disclosed prior art references found in paragraphs 56 of the pretrial order are excluded without prejudice. The remaining prior art references are not excluded. Inequitable conduct and inventorship issues are not excluded at this time but will be limited at trial if Syntron fails to meet its evidentiary burden.
IT IS SO ORDERED.