Inguran, LLC et al v. ABS Global, Inc. et al

Brief in Opposition

W.D. Wis.April 26, 2019

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WISCONSIN INGURAN, LLC d/b/a STGENETICS, XY, LLC, and CYTONOME/ST, LLC, Plaintiffs, v. ABS GLOBAL, INC., GENUS PLC, and PREMIUM GENETICS (UK) LTD, Defendants. Case No. 17-cv-446 DEFENDANTS’ BRIEF IN OPPOSITION TO PLAINTIFFS’ MOTION FOR ENTRY OF PARTIAL FINAL JUDGMENT UNDER RULE 54(b) From its inception, the focus of this seven-patent case-which also included repackaged trade-secret and breach-of-contract claims-has been ABS’s GSS Technology. Through dismissal and summary judgment, three patents and Plaintiffs’ non-patent claims have fallen out of the case, but the factual overlap between the claims that have been resolved and those that remain is extensive. The same GSS Technology is accused throughout, and ABS’s remaining breach-of-contract counterclaim is based on the very same contract that was the subject of ST’s adjudicated breach-of-contract claim. The entry of partial final judgment under Rule 54(b) would thus lead to piecemeal appeals on overlapping issues and a waste of judicial resources. What is more, if the case were to proceed on its current course through trial to final judgment, the issues Plaintiffs now wish to appeal may become moot or irrelevant. For example, the Patent Office is currently assessing the patentability of the ’822 Patent-the patent XY asserted both here and in the District of Colorado-in an inter partes review, with a decision expected within eight months. If the Patent Office determines that the patent is obvious, XY’s appeal of this Court’s written description determination may be moot. And depending on how Case: 3:17-cv-00446-wmc Document #: 278 Filed: 04/26/19 Page 1 of 10 2 the remaining claims in this case are resolved, Plaintiffs might prioritize other issues and thus forgo an appeal of this Court’s summary judgment decisions regarding the ’860 and ’822 Patents-both of which expired just three months after the launch of the GSS Technology-or Plaintiffs’ non-patent claims-which lack “quantifiable damages.” (Dkt. 270 at 25 n.10.) In short, if Plaintiffs’ motion is denied, the Federal Circuit may never need to consider the issues Plaintiffs now seek to appeal. That alone is “just reason” enough to delay entry of final judgment. Interlocutory appeals are the exception, not the rule. Rather than multiplying proceedings by sanctioning an unnecessary appeal, the Court should resolve the remaining summary judgment motions and set whatever claims are left for a one-week trial in the fall of 2019, or as soon as practicable thereafter, so that the parties can focus on competing freely in the market without the cloud of ongoing litigation hanging over ABS or its customers and potential customers. BACKGROUND Plaintiffs filed this case in June 2017. (Dkt. 1.) Plaintiffs’ core allegation was that “ABS’s and Genus’s GSS Technology was derived from confidential ST and XY protocols and uses patented ST technology,” including the seven asserted patents. (Id. at ¶¶ 21-22.) Although Plaintiffs’ patents are alleged to relate to different aspects of the GSS Technology, the same GSS Technology is accused in every single infringement count of the Complaint. (Id. at ¶¶ 26, 32, 38, 44, 50, 55, and 60.) Plaintiffs also asserted breach-of-contract and trade-secret claims based on the alleged disclosure of Plaintiffs’ confidential information in a Premium Genetics patent application, which “described aspects of the GSS Technology.” (Id. at ¶ 20.) In response, ABS asserted several counterclaims, including a claim for breach of the very same 2012 Semen Sorting Agreement that was the subject of Plaintiffs’ own breach claim. Case: 3:17-cv-00446-wmc Document #: 278 Filed: 04/26/19 Page 2 of 10 3 (Compare id. at ¶¶ 78-88, with Dkt. 50 at ¶¶ 68-79.) The dueling breach claims arise from different contractual terms, but they require an understanding of the same commercial relationship involving the same parties in the same industry, and they are each so related to the federal claims in the case that they form part of the same case or controversy. See 28 U.S.C. § 1367. This Court’s February 26, 2019 Opinion disposed of several of Plaintiffs’ claims and noted that a further opinion on summary judgment motions was forthcoming. (Dkt. 270 at 1-3.) First, the Court held that the ’860 Patent (relating to “chemically coordinating” fluid environments) was invalid for indefiniteness. (Id. at 4-7, 10-18.) That patent expired on December 31, 2017-three months after the commercial launch of the GSS Technology. Moreover, after Plaintiffs’ damages theory was called into question at the summary judgment hearing, Plaintiffs did not accept the Court’s invitation to provide a rebuttal report that eliminated a concern the Court had identified. (See id. at 4; Dkt. 245 at 39:1-12.) As a result, even if the Federal Circuit were to reverse this Court’s judgment as to indefiniteness, a serious “double recovery” problem would remain with respect to the ’860 Patent. (Dkt. 270 at 22 n.8.) Second, the Court held that the only asserted claim of the ’822 Patent (relating to allegedly “improved sheath and collector systems”) was invalid for lack of written description. (Id. at 7, 19-22.) This patent, too, expired in December 2017 and presents similar damages and double recovery issues that were raised but not corrected. (See id. at 4; Dkt. 245 at 39:1-12.) In addition, the Patent Office has instituted inter partes review of the ’822 Patent, based on its finding that ABS had established a “reasonable likelihood” that it would prevail in proving that the claimed invention would have been obvious. (See Declaration of Steven J. Horowitz, Ex. 1 at 1 (Dec. 10, 2018 Institution Decision).) A final decision from the Patent Office is expected Case: 3:17-cv-00446-wmc Document #: 278 Filed: 04/26/19 Page 3 of 10 4 within eight months. See 37 C.F.R. § 42.100(c) (providing that inter partes review should typically conclude within one year of institution). Third, the Court held that Plaintiffs’ trade-secret and breach-of-contract claims were precluded by the entry of judgment on the same claims in the prior litigation between the parties. (Dkt. 270 at 22-25.) Those claims could have been dismissed on another ground as well: “a lack of quantifiable damages.” (Id. at 25 n.10.) In any event, the fact that Plaintiffs’ damages expert did not even mention ST’s breach-of-contract claim and did not “quantif[y] damages with respect to trade secret misappropriation” raises a substantial question as to whether Plaintiffs would prioritize an appeal of this Court’s preclusion determination if they had to wait until final judgment. (See Dkt. 211 at 7-9.) ARGUMENT In the federal system, “interlocutory appeals-appeals before the end of district court proceedings-are the exception, not the rule.” Johnson v. Jones, 515 U.S. 304, 309 (1995). And with good reason: an interlocutory appeal “risks additional, and unnecessary, appellate court work either when it presents appellate courts with less developed records or when it brings them appeals that, had the trial simply proceeded, would have turned out to be unnecessary.” Id. Rule 54(b) permits a departure from the general rule of finality, but “the bar remains high for a district court to certify appellate review before entry of final judgment because of the potential for harassment and expense that would otherwise accompany a succession of separate appeals and the potential for judicial inefficiency in piecemeal review on an incomplete record.” B.A. v. Bohlmann, No. 09-cv-346, 2010 WL 4065430, at *5 (W.D. Wis. Oct. 15, 2010) (citing Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 374 (1981)). Accordingly, to enter a Rule 54(b) judgment, a district court must conclude that its decision with respect to a subset of claims is final and that there is no “just reason for delay” in Case: 3:17-cv-00446-wmc Document #: 278 Filed: 04/26/19 Page 4 of 10 5 the entry of judgment. Spraytex, Inc. v. DJS&T, 96 F.3d 1377, 1379 (Fed. Cir. 1996). In making this assessment, district courts must evaluate “the interrelationship of the claims so as to prevent piecemeal appeals in cases which should be reviewed only as single units.” Curtiss-Wright Corp. v. Gen. Elec. Co., 446 U.S. 1, 10 (1980). Here, the claims that have been resolved and those that remain substantially overlap, and if the case were to run its course to final judgment, many of the issues Plaintiffs currently wish to appeal may turn out not to matter. There is thus ample “just reason” to delay the entry of final judgment. Plaintiffs’ motion should be denied, and the remaining issues in the case should be set for trial so that the entire dispute can reach a prompt and efficient resolution. See Fed. R. Civ. P. 1. I. Entry of Partial Final Judgment Would Lead to Unnecessary, Piecemeal Appeals. Just reason exists to delay the entry of final judgment under Rule 54(b). Should the Court enter partial final judgment as to the dismissed claims, the Federal Circuit would face separate appeals involving the same accused GSS Technology and the same factual background, arising from the same case. Plaintiffs argue that the remaining claims are “unrelated” to the claims for which Plaintiffs seek certification of appeal and that there is no legal or factual overlap between these sets of claims (Dkt. 272 at 7-9), but this is plainly not so. Plaintiffs accuse Defendants’ GSS Technology of infringing XY patents for which they seek certification under Rule 54(b) and the Cytonome patents that remain in the case. All of the patents and all of the claims require familiarity with the same basic technology in the same broader industry. Indeed, this Court has decided that even the remanded patent from the parties’ prior litigation should be tried together with the rest of this case. As the Court put it, the various claims involve the same “basic technology” and “historical background,” and the “efficiencies” in combining the claims in a single proceeding “under Rule 1 are astounding.” (Dkt. 245 at 159:24-160:5.) Case: 3:17-cv-00446-wmc Document #: 278 Filed: 04/26/19 Page 5 of 10 6 Contrary to Plaintiffs’ argument, courts do not “routinely” grant Rule 54(b) certification as to dismissed patents when related patents remain in the case. (Dkt. 272 at 7.) The cases Plaintiffs cite in fact show the exceptional circumstances that warrant departure from the general final judgment rule. In both WiAV Sols. LLC v. Motorola, Inc., No. 09-cv-447, 2010 U.S. Dist. LEXIS 21508 (E.D. Va. Mar. 8, 2010), and Medeva Pharma Suisse A.G. v. Par Pharm., Inc., 430 F. App’x 878 (Fed. Cir. 2011), the claims certified for appeal under Rule 54(b) were dismissed for lack of standing, and the district courts in each case noted that the standing issues were factually and legally dissimilar from the remaining issues in the cases-standing does not turn on the technology at issue at all. See WiAV, 2010 U.S. Dist. LEXIS 21508 at *8-9; Medeva Pharma Suisse A.G. v. Par Pharm., Inc., No. 10-cv-4008, 2011 WL 13147213, at *1 (D.N.J. May 16, 2011). And in the 25-year-old case of U.S. Gypsum Co. v. Nat’l Gypsum Co., No. 89- cv-7533, 1994 WL 501994 (N.D. Ill. Sept. 12, 1994), the parties agreed that there was no just reason for delay. Id. at *13. In contrast, all of the claims at issue here require an understanding of the relevant industry, history between the parties, and underlying technology, and ABS does not agree that an immediate appeal is appropriate.1 The factual overlap that Plaintiffs attempt to minimize is particularly striking with respect to the parties’ dueling breach-of-contract claims. Both sides seek to enforce obligations under the same contract governing the same commercial relationship. It makes no sense to separate such claims into distinct proceedings with multiple appeals. See, e.g., Citgo Petroleum Corp. v. Ranger Enters., Inc., No. 07-cv-0657, 2009 WL 602010, at *3 (W.D. Wis. Mar. 9, 2009) 1 In a footnote, Plaintiffs also cite Sun Pharmaceutical Industries, Ltd. v. Eli Lilly & Co., 611 F.3d 1381 (Fed. Cir. 2010), and Sears, Roebuck & Co. v. Mackey, 351 U.S. 427 (1956). Sun was a Hatch-Waxman case in which the district court entered judgment of invalidity as to one of two patents that blocked generic entry, and the court specifically found that the dismissed patent should be appealed immediately because the remaining patent would soon expire. See Sun Pharm. Indus., Ltd. v. Eli Lilly & Co., 2009 WL 3497797, at *2 (E.D. Mich. Oct. 29, 2009). And in Sears, the Rule 54(b) judgment did not include any patent infringement claims. See 351 U.S. at 430-31. Case: 3:17-cv-00446-wmc Document #: 278 Filed: 04/26/19 Page 6 of 10 7 (denying 54(b) motion: “Although defendant’s brand damage claim does not overlap factually with defendant’s fuel supply claim or plaintiff’s re-branding claim, all the claims deal with the parties’ obligations under the franchise agreement”). Plaintiffs rely heavily on a recent decision from the District of Colorado in which Judge Martinez encouraged XY to request a Rule 54(b) judgment as to the ’822 Patent in this case. (Dkt. 272 at 2.) But Judge Martinez did not mention (and may not have been aware) that the ’822 Patent may soon be invalidated on other grounds, rendering any appeal of this Court’s written description determination moot. As noted, the ’822 Patent is the subject of ongoing inter partes review proceedings, and the Patent Office has already found that ABS is likely to prevail in establishing that the claimed invention would have been obvious. Thus, if this case is permitted to run its course, Plaintiffs’ argument that this Court erred in resolving Plaintiffs’ claim for infringement of the ’822 Patent may not actually matter. See Abelesz v. Erste Grp. Bank AG, 695 F.3d 655, 661-62 (7th Cir. 2012) (identifying benefits of final judgment rule: “until a case is over, litigants do not know whether an individual error actually matters, and appellate courts usually benefit from having an entire record in front of them”). Although no similar decision is anticipated that would render Plaintiffs’ other adjudicated claims jurisdictionally moot, issues that may appear to justify an appeal now may turn out not to matter in the broader context of the dispute. See id. As noted, the ’860 Patent (like the ’822 Patent) expired shortly after ABS’s commercial launch of the GSS Technology, and Plaintiffs have not even attempted to provide a properly cabined theory of damages that focuses on the fluid media that ABS adopted after the discovery of an employee’s misuse of Plaintiffs’ information. And Plaintiffs have altogether failed to disclose quantifiable damages for their trade-secret and breach-of-contract claims. Plaintiffs’ own conduct confirms that the adjudicated Case: 3:17-cv-00446-wmc Document #: 278 Filed: 04/26/19 Page 7 of 10 8 claims might not be ones that Plaintiffs would ultimately appeal after a final resolution of all claims in this action-if they decided to appeal at all. Moreover, the advanced stage of this litigation counsels against certifying the dismissed claims for immediate appeal. Courts have frequently cited to the amount of resources already expended in preparation for trial and the lack of significant delay as reasons to deny a request for certification under Rule 54(b). See L-3 Commc’ns Corp. v. Sony Corp., No. 10-cv-734, 2013 U.S. Dist. LEXIS 200323, at *3 (D. Del. Oct. 04, 2013) (relying on the fact that “[m]ost of the [trial] preparation has already occurred” in denying a Rule 54(b) motion); Takeda Pharm. Co. v. Handa Pharm., LLC, No. 11-cv-840, 2013 U.S. Dist. LEXIS 62557, at *7 (N.D. Cal. Apr. 30, 2013) (noting that trial was approximately one month away and that because other patents still survived with the same accused products, the Federal Circuit would “be required to familiarize itself with the same technologies and products in separate actions”). And in Intellectual Ventures II LLC v. JP Morgan Chase & Co., No. 13-cv-3777, Dkt. 527 (S.D.N.Y. Oct. 14, 2015) (Horowitz Decl., Ex. 2), the court denied a Rule 54(b) motion late in the litigation even though (1) another district court had dismissed related patents, and (2) one common patent was asserted in both cases. Id. In denying the motion, the court stated that “[t]he Court of Appeals will be benefited by a full record of the entire case, rather than burdened by sequential appeals, and not much time will pass between now and then.” Id. This is not the kind of exceptional case that warrants interlocutory review. In light of the strong federal policy against “piecemeal appeals,” the Court should deny Plaintiffs’ motion. See Curtiss-Wright, 446 U.S. at 10. II. The Court Should Set Any Remaining Claims for Trial. In its February 26, 2019 Opinion, the Court noted that it had struck the April 1, 2019 trial date in light of (1) the pending inter partes review proceedings regarding two of the Cytonome Case: 3:17-cv-00446-wmc Document #: 278 Filed: 04/26/19 Page 8 of 10 9 patents and (2) ABS’s pending request for rehearing of the Seventh Circuit’s decision in ABS I. (Dkt. 270 at 1-3.) Both of those issues have now been resolved: the Seventh Circuit denied ABS’s rehearing petition; the PTAB found all challenged claims of the ’912 Patent to be unpatentable; and the PTAB found some, but not all, of the challenged claims of the ’161 Patent unpatentable. (See Dkt. 271; Dkt. 275; Dkt. 277.) The inter partes review decisions, along with this Court’s forthcoming additional opinion on summary judgment, will substantially narrow the issues for trial. At most, the trial should address (1) any Cytonome claims (and relevant ABS defenses/counterclaims) that remain after summary judgment has been granted to “defendants on most (but not all) of plaintiffs’ theories of infringement” (plus damages, if necessary) (Dkt. 270 at 1-2); (2) ABS’s counterclaims for breach of contract (plus damages, if necessary); and (3) the validity of the remanded ’987 Patent from ABS I. Defendants anticipate that such a case would fit within a one-week jury trial, with a possible separate trial to the Court on ABS’s inequitable conduct claim. Defendants are interested in resolving the parties’ entire dispute promptly so that they can be free from the cloud of ongoing litigation. Defendants thus request that the remainder of the case be set for trial in the fall of this year, or as soon as practicable thereafter. To allow time to tailor their pre-trial filings to the issues that will be tried, Defendants request that trial be set for no sooner than 3 months after the Court resolves the remaining summary judgment motions. Case: 3:17-cv-00446-wmc Document #: 278 Filed: 04/26/19 Page 9 of 10 10 CONCLUSION The Court should find that just reason for delay exists, deny Plaintiffs’ motion for partial final judgment, and set the remaining claims for trial in the fall, or as soon as practicable thereafter. Dated: April 26, 2019 Respectfully submitted, /s/ Michael J. Modl Michael J. Modl AXLEY BRYNELSON, L.L.P. Manchester Place, Suite 200 2 E. Mifflin Street Madison, Wisconsin 53703 Telephone: (608) 257-5661 mmodl@axley.com Thomas D. Rein Stephanie P. Koh Steven J. Horowitz Bryan C. Mulder SIDLEY AUSTIN LLP One South Dearborn Chicago, Illinois 60603 Telephone: (312) 853-7000 trein@sidley.com skoh@sidley.com shorowitz@sidley.com bmulder@sidley.com Paul J. Zegger Fitz B. Collings SIDLEY AUSTIN LLP 1501 K Street, N.W. Washington, DC 20005 Telephone: (202) 736-8000 fcollings@sidley.com pzegger@sidley.com Counsel for Defendants/Counterclaim-Plaintiffs ABS Global, Inc., Genus plc, and Premium Genetics (UK) Ltd Case: 3:17-cv-00446-wmc Document #: 278 Filed: 04/26/19 Page 10 of 10