Pro Tip: If the District Court Asks if You Have Objections, Raise Your Objections

In Flexuspine, Inc. v. Globus Medical, Inc., [2017-1188, 2017-1189] (January 19, 2018), the Federal Circuit affirmed the district court’s decisions denying Globus’s Rule 59(e) motion, denying as moot its Rule 50(b) motion, and granting summary judgment of noninfringement.

Globus complained that the court did not decide the validity of Flexuspine’s patent. but over a month before trial the parties submitted a joint proposed pre-trial order along with proposed jury instructions and verdict forms from each party. Flexuspine’s proposed verdict form included a “stop instruction” which conditioned the submission of invalidity on an affirmative finding of infringement, while Globus’s proposed verdict form did not.  On the second
day of trial, the parties submitted proposed joint final jury instructions but competing verdict forms. Again, Flexuspine’s amended proposed verdict form continued to include the same stop instruction, while Globus’s amended
proposed verdict form did not condition the invalidity question on an infringement finding.

The court finalized the jury instructions, and the district court afforded the parties an opportunity to object to the final jury instructions and
verdict form on the record. The district court went page-by-page through
the final instructions and the verdict form asking the parties if they had any objections. Neither party objected.

The jury returned the verdict form, indicating that the patent was invalid, but the district court determined that the jury had not filled out the verdict form correctly. The district court instructed the jury to retire again with a blank verdict form, review the verdict form, and return a verdict consistent with both questions asked and the district court’s written instructions on the verdict
form. The court then asked, “[d]oes either party object to the Court having sent the jury back to re-execute the verdict form consistent with each instruction included therein?” In response, neither party lodged a formal objection. Globus stated, “[y]our Honor, I was not present at the charge conference but I—as I understand it, or as I thought I understood it, a jury could still be allowed to
pass on the validity of patents even in the absence of a finding of infringement.” The court responded that it had reviewed the verdict form with the parties and
no formal objection had been made at the on-the-record charge conference.
Shortly thereafter, the jury returned a verdict in accordance with the district court’s instructions. This verdict found the claims not to be infringed and left the
other questions unanswered.  It was at this point, after the jury returned its final verdict without answering the validity or damages questions, that Globus lodged its first formal objection.

Globus filed a Rule 59(e) motion requesting that the judgment be amended to
include the jury’s invalidity verdict, and a Rule 50(b) motion for judgment as a matter of law on invalidity, both of which the district court denied.  The Federal Circuit declined to disturb the district court’s proper exercise of its discretion.  The Federal Circuit noted that Globus did not object to the verdict form, and the extent that there was any conflict between the verdict form and jury instructions, the district court clearly instructed the jury on which
instructions should control when it asked the jury to retire again with a blank verdict form and return a verdict consistent with both the questions asked and the stop instructions on the verdict form.

A Patent Case is Not Final and Appealable Until It’s All Over but the Counting

In Halo Electronics, Inc. v. Pulse Elecctronics, Inc., [2016-2006](May 26, 2017), the Federal Circuit dismissed Pulse’s appeal from the district court’s decision awarding prejudgment interest because it lacked jurisdiction.

The Federal Circuit said that the Order that Pulse appealed from could not be a final order because the district court never resolved the parties’ dispute regarding the date from which to begin calculating prejudgment
interest or set the amount of prejudgment interest to be awarded to Halo.  As a result, there is no final decision because the district court has not “determine[d], or specif[ied] the means for determining the amount” of prejudgment interest.

Supreme Courts Reaffirms Fourco, and Limits Where Corporations Can Be Sued for Patent Infringement

In TC Heartland LLC v. Kraft Foods Group Brands LLC, [16–341] (May 22, 2017), the Supreme Court reversed the Federal Circuit and held that for purposes of the patent venue statute (28 U.S.C. 1400(b)), a corporation only resides where it is incorporated.

The Supreme Court looked back to its to its 1957 decision in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 226 (1957), where it concluded that for purposes of §1400(b) a domestic corporation “resides” only in its State of incorporation.  At the time, the Supreme Court rejected the argument that the broader definition of corporate “residence” in the general venue statute (28 U. S. C. §1391(c)) applied.

The Court noted that §1400(b) has not been amended since Fourco, although §1391(c) has been amended.  While one amendment stated that §1391(c) applies “for all venue purposes,” another amendment qualified “[e]xcept as otherwise provided by law.”  The Supreme Court concluded that the amendments to §1391 did not modify the meaning of §1400(b) as interpreted by Fourco, and held that a domestic corporation “resides” only inits State of incorporation for purposes of the patent venue statute.

This will certainly impact patent litigation in the Eastern District of Texas, because most patent defendants are not incorporated in Texas, and many do not have a “regular and established place of business” there.

This is probably a good thing.  It has been estimated that at much as 40% of patent cases are filed in the Eastern District of Texas, and that is not healthy for the patent system.  It is probably not a good thing for Marshall, Texas, which has enjoyed a patent litigation bonanza for many years.


“Unfamiliarity” with Federal Court Practice Not Enough to Avoid Default

In United Construction Products, Inc., v. Tile Tech, Inc., [2016-1392] (December 15, 2016), the Federal Circuit affirmed default judgment against Tile Tech on claims of patent infringement and unfair competition because of its counsel near complete failure to provide discovery.

After cataloging Tile Tech numerous discovery failures, and considering the Malone factors:

  1. The Public’s Interest in Expeditious Resolution of
  2. The Court’s Need to Manage Its Docket
  3. The Risk of Prejudice to the Other Party
  4. The Public Policy Favoring the Disposition of Cases on
    Their Merits
  5. The Availability of Less Drastic Sanctions (i.e., Alternatives
    to Dismissal)

the Federal Circuit found that entry of default was not an abuse of discretion.  Tile Tech tried to undo the default by arguing that its conduct was not willful or in bad faith, noting that the district court found that “while
defense counsel perhaps handled the case unreasonably, this [c]ourt does not attribute that to bad faith, but instead a complete lack of preparation.”  However, the Federal Circuit said that willfulness and bad faith were not the only justifications for entering default, which also include “fault.” While Tile Tech has argued that its trial attorney had “unfamiliarity” with federal court practice, it has not offered any evidence to suggest that its dilatory actions were outside of its attorney’s control.