The background of the opinion describes the rather complex set of issues:
We describe the facts in the light most favorable to the
party that won the jury verdict (here, the plaintiffs). Marni
Markell Hurwitz (“Ms. Markell”) is an inventor who does
not manufacture her own products but presents her ideas
to companies for them to manufacture and sell. I Did It,
Inc. and its d/b/a entity Nite Glow are the companies
through which Ms. Markell does business. Defendant Central is a distributor and manufacturer of pet and garden
products, including flea and tick products. Defendant Four
Paws, a subsidiary of Central, sells products for cats and
dogs.
In May 2009, Ms. Markell met with the then-president
(Allen Simon) and other representatives of Four Paws to
share her idea for an applicator for the administration of
flea and tick medicine directly to an animal’s skin. At the
beginning of the meeting, Ms. Markell and Mr. Simon entered into a confidentiality agreement governed by New
Jersey law and dated May 5, 2009, with Ms. Markell identified as the “Owner” of the confidential information and
Mr. Simon as president of Four Paws identified as the
“Recipient.”1 J.A. 20,899. Ms. Markell then presented her
idea for the applicator, including drawings and a prototype.
Ms. Markell testified at trial that Mr. Simon and other
representatives of Four Paws were “very excited” by her
presentation. Id. at 14,349. Mr. Simon instructed his assistant to send Ms. Markell’s presentation materials to
Central’s then-head of Life Sciences, Rick Blomquist.
Ms. Markell and Mr. Blomquist discussed Ms. Markell’s
idea and materials in telephone conversations over a period
of approximately five months. On November 18, 2009,
Mr. Blomquist emailed Ms. Markell about a future meeting in Atlanta to discuss Ms. Markell’s applicator idea, but
Mr. Blomquist cancelled the meeting. The parties did not
enter into a licensing agreement for Ms. Markell’s applicator idea.
Meanwhile, Central had pursued a project called Project Speed, which began in spring of 2009 and ultimately
focused on designing a new applicator. There was a kickoff meeting for the project in November 2009 that focused
on “a treatment dispensing system” with long-term focus
on “potential solutions for spot on application.” Id. at
22,940. Mr. Blomquist participated in Project Speed, including by attending a two-day brainstorming session in
February 2010. The project resulted in the selection of a
new applicator design by August 2010.
In parallel with her discussions with defendants,
Ms. Markell had applied for a patent for her applicator
idea. On October 2, 2008, Ms. Markell filed the application
that led to the ’445 patent. The patent application was
published on April 8, 2010, thereby disclosing
Ms. Markell’s applicator to the public. The ’445 patent was
granted on November 15, 2011.
On the misappropriation claim
Defendants first argue that plaintiffs should not have
been allowed to present the misappropriation of idea claim
to the jury as a matter of law because of the economic loss
doctrine. Many courts recognize some form of an economic
loss doctrine. The Restatement (Third) of Torts’s formulation of the economic loss doctrine is that, generally, “there
is no liability in tort for economic loss caused by negligence
in the performance or negotiation of a contract between the
parties.” Restatement (Third) of Torts: Liab. for Econ.
Harm § 3 (Am. L. Inst. 2020).
New Jersey’s version of the economic loss doctrine likewise bars tort recovery under certain circumstances where
the parties have entered into an express contract.
The
scope of the doctrine is unclear, and the Third Circuit has
described the area of law as a “morass.” Gleason v. Norwest
Mortg., Inc., 243 F.3d 130, 144 (3d Cir. 2001), abrogated on
other grounds by Ray Haluch Gravel Co. v. Cent. Pension
Fund of Int’l Union of Operating Engineers & Participating
Emps., 571 U.S. 177 (2014).2
To understand the defendants’ arguments, a brief explanation of the legal basis of a misappropriation of idea
claim is necessary. The leading New Jersey case is Flemming v. Ronson Corporation, 258 A.2d 153 (N.J. Super. Ct.
Law Div. 1969), aff’d, 275 A.2d 759 (N.J. Super. Ct. App.
Div. 1971) (mem.), which recognized that
where a person communicates a novel idea to another with the intention that the latter may use the
idea and compensate him for such use, the other
party is liable for such use and must pay compensation if he actually appropriates the idea and employs it in connection with his own activities.
Id. at 156–57. “A plaintiff is required to establish as a prerequisite to relief that (1) the idea was novel[,] (2) it was
made in confidence, and (3) it was adopted and made use
of.” Id. at 157
We conclude that the New Jersey Supreme Court
would follow the Restatements and not bar the misappropriation of idea claim under the economic loss rule where
there is a confidentiality agreement protecting the idea.
Relating to the publication of a patent application
Defendants further argue that the district court erred
in denying defendants’ Rule 50(b) motion on the misappropriation claim because any purported use of Ms. Markell’s
idea (the third element of a misappropriation of idea claim)
“did not happen until well after that design was disclosed
to the public,” Defs.’ Opening Br. 48, at which point the
idea was no longer protected (discussed further below).
The district court determined that “there [was] ample record evidence from which the jury could rationally conclude
that defendants made use of [Ms. Markell’s] idea, and that
they did so before the publication of plaintiffs’ patent application.” J.A. 21–22
As the district court summarized, there was evidence
at trial showing that, before the patent application become
public, Ms. Markell had presented her applicator idea to
Four Paws’ then-president and vice president, who reacted
with enthusiasm; that Four Paws’ president had
Ms. Markell’s presentation materials sent to Central’s Rick
Blomquist; that Mr. Blomquist had received the materials
and talked with Ms. Markell about them over the telephone; that Mr. Blomquist was involved with Central’s
project to develop the accused products, Project Speed, and
called himself a “champion and facilitator” for Central on
the project, id. at 20,981; and that defendants’ efforts to
improve delivery methods for their tick and flea products
“did not bear fruit until 2009 into 2010—temporally, after
[Ms.] Markell left her materials with [Mr.] Simon and they
were sent to [Mr.] Blomquist,” id. at 22–23.
We conclude that there is ample evidence from which a
jury reasonably could find liability, and the district did not
err in denying judgment as a matter of law on this ground.
Of affirmative defenses
Defendants would only bear the burden of proof if headstart damages were an affirmative defense. Courts have
recognized that defenses that are denials of “matters that
must be proven by [the plaintiff] at trial” are distinct from
“affirmative defenses upon which [the defendant] has the
burden of proof.” See 5 Charles Alan Wright et al., Federal
Practice and Procedure § 1278 (3d ed. 2021) (quoting Dynasty Apparel Indus. Inc. v. Rentz, 206 F.R.D. 603, 607 (S.D.
Ohio 2002)) (alterations in original); see also id. § 1270 (denials or negative defenses are distinct from affirmative defenses). Determination of head start damages was part of
plaintiffs’ burden of proof, not an affirmative defense as to
which defendants would bear the burden of proof. See, e.g.,
Reichert v. Vegholm, 840 A.2d 942, 945 (N.J. Super. Ct.
App. Div. 2004) (“[T]he general rule is that ‘the burden of
proof that the tortious conduct of the defendant has caused
the harm to the plaintiff is upon the plaintiff.’”) (quoting
Restatement (Second) of Torts, § 433B(1) (Am. L. Inst.
1965))
Although it was plaintiffs’ burden to prove damages
arising from the misappropriation of Ms. Markell’s idea,13
plaintiffs made no effort to tie their damages case to the
advantage defendants would have received from a head
start resulting from the misappropriation. The time period
of the sales plaintiffs relied on to establish disgorgement of
defendants’ profits was from March 22, 2012, after defendants’ accused products launched (almost two years after Ms. Markell’s idea became public in April 2010), through
May 31, 2018, more than eight years after Ms. Markell’s
idea became public. There is no showing that this lengthy
period was an appropriate measure of a head-start period.
Plaintiffs indeed concede in their briefing that neither
party in this case “presented evidence and argument at
trial regarding ‘head start’ calculations.” Pls.’ Br. 46. Nevertheless, plaintiffs suggest that “[t]he jury’s $11 million
dollar figure might well have been calculated by taking
Central’s total profit and adjusting downward to account
for the head-start period.” Id. at 48. Here, plaintiffs provided no evidence of a head-start period, and “it may not be
presumed that the jury found facts on which there is no
evidence.” Newell Cos. v. Kenney Mfg. Co., 864 F.2d 757,
767–68 (Fed. Cir. 1988).
We conclude that, as a matter of law, plaintiffs are limited to head-start damages and did not provide evidence
that would support the damages award of over $11 million.
We reverse the district court’s denial of defendants’ motion
for a new damages trial, vacate the jury award of damages
for misappropriation, and remand for a new trial of damages for misappropriation, which damages must be attributable to the head-start period
Patent infringement
Lastly, we address plaintiffs’ cross-appeal of the district court’s judgment of non-infringement of claim 1 of the
’445 patent as a matter of law. Claim 1 requires that the
chamber of the claimed applicator’s base be made of rubber. See ’445 patent, col. 9 ll. 35–42. The district court
determined that plaintiffs had disavowed plastic from the
scope of the claim. Plaintiffs contend that there was no
disavowal or, in the alternative, that the scope of the disavowal was not as to all plastics
“[W]hen the patentee unequivocally and unambiguously disavows a certain meaning to obtain a patent, the
doctrine of prosecution history disclaimer narrows the
meaning of the claim consistent with the scope of the claim
surrendered.” Biogen Idec, Inc. v. GlaxoSmithKline LLC,
713 F.3d 1090, 1095 (Fed. Cir. 2013). Here, the district
court’s interpretation of the prosecution history involves
only intrinsic evidence (and we find the plaintiffs’ extrinsic
evidence irrelevant). See Phillips v. AWH Corp., 415 F.3d
1303, 1317 (Fed. Cir. 2005) (en banc). The district court’s
determination of disclaimer is therefore subject to de novo
review. See Teva Pharms. USA, Inc. v. Sandoz, Inc., 574
U.S. 318, 331 (2015).
We agree with the district court that plaintiffs disavowed plastic in restricting the “flexible deformable material” of the applicator base’s chamber to rubber. As
submitted to the Patent and Trademark Office, original independent claim 1 claimed “[a] direct delivery applicator
for delivering a solution to an animal’s skin,” and original
claim 3 claimed, as relevant here, “[a] direct delivery applicator as recited by claim 1, wherein said chamber of said
applicator base is composed of a flexible deformable material so that said chamber can be squeezed.” J.A. 1537–38
(emphasis added). Original claims 1 and 3 were rejected
by the examiner as obvious over U.S. Patent No. 7,000,618
(“Dovergne”) and U.S. Patent No. 5,183,006 (“Robinson”).
Dovergne disclosed an applicator base with a chamber
made of “a flexible deformable material.” J.A. 1494.
