Tuesday, January 24, 2012

Dow prevails in CAFC appeal brought by Nova Chemicals

The appellants were represented by DONALD R. DUNNER, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, of Washington, DC. The bottom line, written by Judge Prost: Because we see no error in the district court’s standing and invalidity analyses, and because substantial evidence supports the jury’s infringement finding, we affirm. Appellants lose.

At issue in the appeal:

Nova makes three main arguments on appeal. First, it argues that Dow lacks standing to enforce the patents in suit. Second, it argues that the patents in suit are invalid for indefiniteness and lack of an adequate written description. Third, it argues that the jury’s verdict of infringement is not supported by substantial evidence.

Of the standing issue:

Effective on January 1, 2002, however, Dow and its holding company, Dow Global Technologies, Inc. (“DGTI”) entered into a “Contribution Agreement” (or “the agreement”) according to which a large share of Dow’s intellectual property rights was transferred to DGTI. Apparently, the Contribution Agreement was intended to generate certain tax benefits for Dow. Nova argues that the patents in suit were among the intellectual property rights that were transferred to DGTI under the Contribution Agreement. As a result, according to Nova, Dow does not have stand ing to enforce the patents in suit. Cf. Arachnid, Inc. v. Merit Indus., Inc., 939 F.2d 1574, 1579 (Fed. Cir. 1991).

One notes that Dow prevailed on this issue because of the lack of evidence that the asserted patents had been transferred to DGTI:

After holding a bench trial, the district court determined that the patents in suit were never transferred to DGTI. In particular, the court found that the Contribution Agreement was unambiguous in that it incorporated a document—entitled Schedule A—that contained a list of all the patents that were transferred to DGTI. The court heard and credited testimony from a Dow employee who was in charge of preparing and maintaining Schedule A, and she corroborated Dow’s assertion that the patents in suit never appeared in Schedule A. Based on these findings, the court found that Dow had met its burden of establishing the ownership of the patents in suit. And, because the court found that the clear terms of the agreement controlled, it declined to evaluate the extrinsic evidence that Nova suggested defeated Dow’s standing. The court accordingly denied Nova’s request to dismiss the suit for lack of standing. For the reasons set forth below, we agree with the district court’s determinations.

The dissent by Judge Reyna began:

This patent infringement case involves a substantial question of standing based on an agreement relating to the ownership of the patents-in-suit. In order to achieve certain tax and business benefits, Dow transferred essentially its entire patent portfolio to its holding company pursuant to an agreement entered into in 2002. Dow sued Nova in 2005 for infringement of the patents-in-suit, which were ostensibly transferred to Dow’s holding company under the 2002 agreement. The 2002 agreement and related documents, however, were not produced in litigation by Dow until July 2009, well after discovery had closed. After reviewing the documents, Nova moved to dismiss the case on grounds that Dow lacked standing because it was not the owner of the patents-in-suit when the lawsuit was initiated. The district court opted not to have a hearing on the standing issue until after a jury trial and verdict on the merits of the infringement and invalidity claims. Ultimately, the district court found that the patents-in-suit had never been transferred by Dow to its holding company via the 2002 agreement and, concluding that Dow therefore had standing, entered final judgment on the verdict against Nova.
Because I conclude that the 2002 agreement in fact did transfer the patents-in-suit to Dow’s holding company, and that standing did not exist at the time the complaint was filed, I would reverse the district court and dismiss the case without prejudice. I would not reach the underlying merits of the judgment that the asserted claims of the patents-in-suit were valid and infringed. I respectfully dissent.


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