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Johns Hopkins University v. Alcon Laboratories Inc.

United States District Court, D. Delaware

August 29, 2018

ALCON LABORATORIES INC., et al., Defendants.


          STENGEL, J.

         Currently before me are the parties‘ motions in limine. By their nature, these motions help streamline the trial. However, in some cases, the context of trial is necessary to properly evaluate the admissibility of evidence. With that in mind, I would encourage the parties to assert objections at trial regarding motions I have denied, if and when doing so becomes appropriate.

         A. Legal Standard

         Motions in limine allow the court ''to exclude anticipated prejudicial evidence before the evidence is actually offered.'' Luce v. United States, 469 U.S. 38, 41 n.2 (1984). ''The purpose of an in limine motion is to aid the trial process by enabling the Court to rule in advance of trial on the relevance of certain forecasted evidence, as to issues that are definitely set for trial, without lengthy argument at, or interruption of, the trial.'' Palmieri v. Defaria, 88 F.3d 136, 141 (2d Cir. 1996) (internal quotation mark omitted).

         B. JHU Motions in Limine 1-9

         1. Granted as to direct infringement, denied as to reasonable royalties: “Defendants Should Be Precluded From Injecting An Element of 'Harm' Into Either Direct Infringement or Reasonable Royalty Damages”

         JHU moves to preclude Alcon ''from arguing or presenting evidence to suggest that 'harm‘ is an element of either direct infringement or reasonable royalty damages'' because it is not an element for either. (Doc. No. 348, at 1.) JHU argues that such evidence would be irrelevant under Rule 402 and prejudicial and misleading under Rule 403.

         a. Direct Infringement

         The parties note that direct infringement (here, allegedly by the surgeons using Alcon‘s instruments) is an element of induced and contributory infringement, the claims at issue in this case. (Doc. No. 348, at 2; Doc. No. 375, at 3.) JHU provides the following example of Alcon‘s allegedly improper arguments regarding lack of harm to JHU. This is taken from Alcon‘s Statement of Issues of Fact, at Exhibit 3 of the parties‘ pretrial order, under the heading, ''Induced Infringement.''

Whether Alcon‘s affirmative actions after June 23, 2009-as opposed to other factors-actually caused the surgeons to directly infringe each and every element of the '848 patent for each of the Accused Products; and whether JHU has suffered any harm actionable by damages as a consequence of the alleged infringement by surgeons and/or Alcon, and whether such alleged affirmative actions by Alcon has caused JHU any harm that is actionable by damages; is immune from suit because such activity was engaged in pursuant to research and development efforts, and thus falls within the scope of the ''safe harbor'' provisions of 35 U.S.C. § 271(e)(1), see, e.g., Lilly, 496 U.S. 661 (affirming Federal Circuit that the safe harbor applies when seeking pre-marketing approval for a medical device); and/or whether such uses may support JHU‘s damages claim against Alcon in view of 35 U.S.C. § 287(c).

(Doc. No. 288-1, Ex. 3 at 4) (emphasis added).

         JHU argues that ''the direct infringement statute says nothing about harm.'' (Doc. No. 348, at 3) (citing 35 U.S.C. § 271(a)). The statute reads:

Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.

35 U.S.C. § 271(a).

         Alcon responds that JHU opened the door to a discussion of ''harm.'' Justifying this argument, Alcon points to a footnote in JHU‘s motion in limine, which states that ''Alcon‘s willful infringement has harmed JHU'' through lost licensing revenue. (Doc. No. 375, at 1 (citing Doc. No. 348, at 3 n.2).)

         It appears to me that this footnote is merely an aside to JHU‘s argument. Harm is not relevant to a determination of direct infringement (an element of indirect infringement). Therefore, I will grant JHU‘s motion in limine and will preclude Alcon from offering arguments or evidence of harm to prove direct infringement. This ruling only relates to direct infringement-if evidence of harm, or lack thereof, is relevant in other contexts at trial, we will resolve any objections at that time.

         b. Reasonable Royalties

         A party liable for infringement is responsible for the following damages:

Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with the interest and costs as fixed by the court.

35 U.S.C. § 284.

         JHU argues that ''reasonable royalty damages are calculated based on the value of what was taken by the infringer, not the damage suffered by the patentee.'' (Doc. No. 348, at 4 (citing AstraZeneca AB v. Apotex Corp., 782 F.3d 1324, 1334 (Fed. Cir. 2015); Warsaw Orthopedic, Inc. v. NuVasive, Inc., 778 F.3d 1365, 1377 (Fed. Cir. 2015); Aqua Shield v. Inter Pool Cover Team, 774 F.3d 766, 770 (Fed. Cir. 2014)).)

         Alcon responds that JHU has put harm at issue by virtue of its own reasonable royalties arguments that put Bausch and Lomb (B&L) at the hypothetical negotiating table. (Doc. No. 375, at 1-2.)

JHU‘s reasonable royalty theory puts B&L at the hypothetical negotiating table, and argues JHU must compensate B&L for 1) converting B&L‘s exclusive license to a non-exclusive one before granting Alcon a license; and 2) the ''direct negative financial impact (i.e., harm) B&L‘s product sales suffer if JHU licensed Alcon. (See Ex. 38, Am. Napper Rep. at 21, 45).


         Further, Alcon responds that as part of its defense to the contributory infringement claim, it should be permitted to ''show that it committed no affirmative act designed to cause JHU any infringement harm.'' (Id. at 3-4.) This consideration is separate from the reasonable royalties issue but nonetheless shows that harm may be relevant to certain aspects of this case.

         Additionally, Alcon argues that ''JHU‘s inability to find any activity beyond Alcon‘s mere product sales that has harmed it or B&L-let alone caused a surgeon to indirectly infringe-is relevant; and independently probative on the question of the reasonableness of JHU‘s royalty demands.'' (Id. at 4 (citing Golden Blount, Inc. v. Robert H. Peterson Co., 438 F.3d 1354, 1372-73 (Fed. Cir. 2006); Eidos Display, LLC v. Chi Mei Innolux Corp., No. 6:11-CV-002010JRG, 2018 WL 1156284, at *9-10 (E.D. Tx. Mar. 5, 2018)).)

         Lastly, Alcon argues that JHU‘s actual harm, or lack thereof, is relevant to indirect and willful infringement theories that ''turn on Alcon‘s actual, specific intent at the time of the alleged infringement.'' (Id.) ''If Alcon never harmed JHU, it is entirely appropriate for a jury to expect that Alcon was not seeking to willfully target JHU by acting like a pirate.'' (Id. (citing Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S.Ct. 1923, 1932 (2016)).) Along the same lines, Alcon argues that harm factors into its equitable estoppel defense because ''JHU‘s lack of harm is why JHU was perfectly content to lie in wait for over ten years (while Alcon invested hundreds of millions in R&D efforts for its vitreoretinal product portfolio) and delay filing suit.'' (Id.)

         Given the above analysis, it would not be proper to exclude evidence of harm as it relates to reasonable royalty at this stage because it may be relevant to various considerations. JHU may object to such evidence at trial if and when it becomes appropriate.

         2. Granted in part and denied in part: “Defendants Should Be Precluded From Introducing Evidence or Arguments about the Morality or Ethics of Patenting Surgical Methods and of Patenting Government-Funded Research”

         JHU moves to preclude evidence and argument ''(1) suggesting it is unethical to patent medical procedures, or (2) suggesting that it is improper or immoral for a nonprofit teaching hospital that receives some government research funding to seek patent protection on its inventions.'' (Doc. No. 348, at 5.)

         a. Morality and Ethics

         JHU moves to exclude the 1995 American Medical Association ''Reports of Council on Ethical and Judicial Affairs'' (AMA report). (Doc. No. 348, at 5; Doc. No. 359, Ex. 4.) The report includes a ''statement that 'the Council believes that it is unethical for physicians to seek, secure or enforce patents on medical procedures.‘'' (Doc. No. 348, at 5.) JHU argues that such evidence should be precluded under Rules 402 and 403 and states that ''[a] viewpoint on the ethics of surgical method patents expressed by an AMA subcommittee and which is contrary to United States patent law expressly allowing such claims is irrelevant to the issues that will be tried to the jury.'' (Id. at 6.)

         Alcon responds that the AMA report should be permitted to rebut JHU‘s ''supposed pure motives; surgeon praise; and adherence to its university mission.'' (Doc. No. 375, at 5.) It notes that after the 1995 AMA report, which was critical of surgical method patents, ''Congress precluded patentees from enforcing such patents at least against surgeons.'' (Id. at 5 (citing 35 U.S.C. § 287(c)(1)).)

         Alcon asserts that ''[b]oth the law and the 1995 AMA Report confirm the anti-patent-enforcement culture by and amongst surgeons.'' (Id. at 5-6.) Therefore, it argues that it should be permitted to ''ask JHU‘s physician experts whether they accept their peers‘ ethical standard [as voiced within the AMA report] . . . or whether their long-term friendships with Dr. de Juan . . . trump those concerns.'' (Id. at 6.)

         However, Alcon ignores an important point. JHU is not a surgeon, and the law does not protect JHU from surgical method infringement claims. Therefore, Alcon‘s purported use of the AMA report essentially attacks the right-mindedness of the applicable law. With that, I will grant JHU‘s motion to exclude the 1995 AMA report, to the extent it is used to attack the philosophy and principle of patenting surgical methods (as permitted by law).

         Alcon notes a second instance when it may wish to use the AMA report at trial.

Alcon expects Ms. Wyskiel will opine that JHU was harmed because it ''can‘t maximize licensing revenue'' and its partners expect to have patents to protect ''the dollars that they put into developing and marketing products.'' (Ex. 42, Wyskiel Tr. 126:7-127:2 (emphasis added); Ex. 40, JHU Resp. to Interrog. 12 at 8-9). Alcon can rebut this with the 1995 AMA Report, which differentiates between instrument patents and surgical method patents; and states that the former, not the latter, requires significant capital investment.

(Id. at 7 (footnotes omitted).)

         I will not preclude the AMA report from being used in this manner, to rebut a statement. To summarize my conclusion on this issue, Alcon is precluded from using the AMA report as it relates to the principles, ethics, and related considerations underlying whether surgical methods should be patented, but it may use the report for other purposes, such as rebutting a witness‘s factual statement.

         b. Government Funding

         JHU seeks to exclude evidence and argument that JHU‘s research is government funded. As an example of how this issue may arise at trial, JHU notes the deposition of Christy Wyskiel, senior advisor to the university‘s president. (Doc. No. 348, at 5, 7.)

At Ms. Wyskiel‘s deposition, Alcon established that some of JHU‘s research is government funded, and that JHU patents some inventions developed through its research. (Ex. 3 at 14:6-23.) Counsel then asked ''[w]ouldn‘t it be better for society if you just allowed anyone to practice the results of JHU‘s research instead of seeking a patent to exclude others from practicing it?'' (Id. at 14:24-15:2.) While that may be an interesting topic for a philosophical or political discussion, it has nothing to do with the issues the jury will be asked to decide. . . . There is no authority for the proposition that, because the government provides funding to JHU, Alcon is immunized from liability for its willful infringement of JHU‘s patent.

(Id. at 8.)

         Alcon responds that evidence of JHU‘s funding is relevant to damages in this case because JHU ''seeks to boost its royalty by approximately $50 million based in part on the premise that it is a not-for-profit institution, Alcon did not help fund JHU‘s research, and B&L would be given a far lower royalty rate given the value of its early stage funding support of JHU‘s MADLAB (about $1.5 million total over several years).'' (Doc. No. 375, at 7-8.) These potential arguments by JHU, Alcon argues, make it relevant that ''JHU receives over $1 billion in research funding annually (including federal funds) . . . dwarfing the contribution B&L made years ago.'' (Id. at 8.) JHU argues that this evidence of government funding undermines JHU‘s ''poverty pleas.'' (Id. at 8.)

         In their arguments on this motion, the parties address at least two distinct purposes of evidence of federal funding. To the extent that evidence of federal funding addresses a ''philosophical or political discussion'' of whether surgical methods should be patented, it is not permitted. However, at this time, I will not exclude such evidence as it relates to damages.

         3. Denied: “Defendants Retained Expert, Dr. Donald D'Amico, Should Be Precluded From Testifying about the Prior Art Beyond the Disclosure of Paragraph 98 of His Report”

         JHU moves to limit Dr. Donald D‘Amico‘s expert testimony regarding prior art ''to the discussion of the two references found in paragraph 98 of his report.'' (Doc. No. 348, at 12.) Paragraph 98 reads as follows:

This claim covers a method for providing access within an eye using an entry alignment device without pulling back the conjunctiva. This fairly describes the invention as described in the specification, prosecution history, and as distinguished from the prior art methods. Entry alignment devices (e.g., cannulas) were known to provide access within an eye (see, e.g., Machemer 1985), and procedures that did not require pulling back the conjunctiva were known (see, e.g., '363 patent). However, I am not aware of an explicit description of providing access within an eye using an entry alignment device without pulling back the conjunctiva. Therefore, Claim 38 appears to address the differences between the explicit disclosures in the prior art and the claimed method.

(Doc. No. 224, Ex. 24 ¶ 98.)

         JHU argues that limiting Dr. D‘Amico‘s prior art testimony to the confines of this paragraph is appropriate because he is a ''vitreoretinal surgeon'' retained by Alcon to opine on ''infringement and aspects of damages . . . [including] opinions about the smallest saleable patent practicing unit ('SSPPU‘).'' (Doc. No. 348, at 9.) Whereas, Alcon retained a different expert, Dr. Stanley Chang, to opine on invalidity. (Id.)

         JHU also seeks to exclude the information stated in paragraph 106[1] of Dr. D‘Amico‘s report. Importantly, as JHU points out, Judge Fallon‘s Report & Recommendation (Doc. No. 294), which I adopted in its entirety (Doc. No. 339), explicitly excludes paragraph 106. (Doc. No. 294, at 23.) Judge Fallon‘s opinion stated: ''The court‘s recommendation therefore excludes Dr. D‘Amico‘s opinion on the ultimate invalidity issue at paragraph 106 of his expert report and his corresponding deposition testimony, but does not extend to Dr. D‘Amico‘s opinion on the smallest salable unit for purposes of the infringement analysis.'' (Id.)

         In this motion, JHU seemingly seeks to both confirm Judge Fallon‘s ruling regarding paragraph 106 and to narrow the terms of that ruling, by limiting it to paragraph 98. In JHU‘s own words, it requests that I interpret Judge Fallon‘s ruling to mean that Dr. D‘Amico cannot ''stray beyond the discussion found in paragraph 98 of his report, block-quoted above, which is a subset of Dr. D‘Amico‘s infringement analysis and has nothing to do with validity.'' (Doc. No. 348, at 10.) JHU argues that if Dr. D‘Amico offered testimony regarding prior art beyond the scope of paragraph 98, ''[s]uch testimony would go beyond the scope of Dr. D‘Amico‘s expert report in violation of Fed.R.Civ.P. 26(a)(2), be unhelpful to the trier of fact under FRE 702 because the testimony would be divorced from the relevant law of invalidity, irrelevant under FRE 402 for the same reason, and excludable under FRE 403 because any probative value would be substantially outweighed by the danger of unfair prejudice to JHU.'' (Id. at 11.)

         Alcon confirms that ''Dr. D‘Amico will not opine on the ultimate conclusion of invalidity.'' (Doc. No. 375, at 10.) However, Alcon argues that ''Dr. D‘Amico should be permitted to testify about the history of vitreoretinal surgery, the state of the art before the patent was filed and the prior art references which relate to those opinions, as disclosed in his report.'' (Id.) These opinions, Alcon argues, relate to reasonable royalty, because they shed light on the smallest salable patent practicing unit, the advantages of the patented property over old methods, and the value of the patented invention over nonpatented alternatives. (Id. (citing Georgia Pacific Corp. v. U.S. Plywood Corp., 318 F.Supp. 1116, 1120 (S.D.N.Y. 1970) (listing reasonable royalty factors)).)

         While Alcon acknowledges that Dr. D‘Amico cannot testify outside the bounds set forth by Judge Fallon, it points out that Dr. D‘Amico‘s relevant testimony goes beyond paragraph 98. Alcon cites paragraph 94 of Dr. D‘Amico‘s expert report as an example:

I have been asked to determine what I understand is called the ''smallest saleable patent-practicing unit, '' which I understand is the product(s) sold by Alcon that embodies the ''patented feature'' of the Asserted Claims (I understand that no device is technically claimed by the '848 patent-only methods). To do this, I considered the language and scope of the Asserted Claims, the specification, the prosecution history, the improvements the Asserted Claims purportedly made over the prior art methods, among other things. The smallest saleable patent-practicing units, which embody the patented feature of allowing access within an eye without pulling back the conjunctiva and without using sutures to seal the wound, are Alcon‘s cannula system.

(Doc. No. 224, Ex. 24 ¶ 94.)

         I will deny JHU‘s motion in limine to limit Dr. D‘Amico‘s prior art testimony to paragraph 98 of his expert report. In general, I would hesitate to define restricted testimony by a paragraph number rather than a category of subject matter. And furthermore, I find that the Judge Fallon‘s report sufficiently resolves this issue. Judge Fallon very clearly stated that Dr. D‘Amico may not testify regarding the ''ultimate conclusion of invalidity'' but may testify regarding ''the smallest salable unit for purposes of the infringement analysis.'' (Doc. No. 294, at 23.) Beyond that, objections should be made at trial.

         4. Denied: “Defendants Should Be Precluded From Presenting Evidence or Argument that JHU's Election to Pursue Method Claims During Prosecution Prevents JHU From Recovering a Reasonable Royalty”

         In this motion, JHU seems to make two distinct requests for exclusion-one general and one specific. In its general request, JHU argues that Alcon should be precluded from offering evidence or arguing that ''because JHU‘s patent claims are directed to methods of use, JHU cannot recover a reasonable royalty for Alcon‘s indirect infringement.'' (Doc. No. 348, at 13.) In other words, JHU argues that I should ''preclude Alcon from contending that it cannot infringe method claims because that argument is legally wrong and will mislead the jury.'' (Id.)

         As both parties acknowledge, this issue has already been addressed by Judge Fallon in her report. Judge Fallon found that Alcon did not directly infringe but found that ''[i]t is well-established that medical device and drug manufacturers may be liable for inducing or contributing to a medical practitioner‘s direct infringement of a patented method.'' (Doc. No. 294, at 24-26, 28.)

         On this point, I have nothing further to add. Judge Fallon thoroughly articulated the claims that remain at issue in this case and the law relevant to her analysis, and the parties must proceed accordingly.

         Moving on to JHU‘s more specific request, JHU moves under Rules 402 and 403 to prohibit Alcon from making arguments and introducing evidence related to a patent application that JHU pursued separately from the ‘848 patent. (Doc. No. 348, at 14, 16.) JHU filed this separate patent application, which JHU refers to as the ''Divisional Application, '' to cover surgical tools, but it later ''discontinued prosecution'' of the application. (Id.)

         Alcon argues that evidence of the Divisional Application is relevant and would help the jury apportion damages because JHU‘s expert measures damages by product sales (i.e., sales of surgical tools)-and JHU never obtained a patent on tools. (Doc. No. 375, at 14-15.) ''Evidence that JHU failed to secure claims for instruments makes it more likely than not, and is highly probative evidence, that at least some portion of Alcon‘s instruments are attributable to unpatented features the ‘848 patent doesn‘t cover.'' (Id. at 15.)

         Further, Alcon argues that evidence of the Divisional Application may be relevant on cross-examination of JHU‘s damages expert, Brian Napper, if he incorrectly asserts that the claims at issue ''directly cover both methods and products.'' (Id. at 15.) Evidence of the Divisional Application ''directly rebuts his core assumption, and thus is a ripe topic for cross-examination.'' (Id.) Further, JHU argues, ''[e]ven assuming some infringement occurs, because JHU lacks a product claim, it is not entitled to a reasonable royalty on all product sales.'' (Id at 17 (citing Cardiac Pacemakers, Inc. v. St. Jude Med., Inc., 576 F.3d 1348, 1358-59 (Fed. Cir. 2009)).)

         Given the above discussion, I agree with Alcon that the Divisional Application may be relevant to the discussion of damages and helpful to a jury, and I will accordingly deny this motion in limine.

         5. Denied: “Defendants Should Be Precluded From Making Any Arguments About the Importance of Alleged Substantial Non-Infringing Uses”

         JHU seeks to preclude Alcon ''from making arguments or eliciting testimony about the 'importance‘ of alleged non-infringing uses of the accused products, '' under Rules 402 and 403. (Doc. No. 348, at 17.)

         Pursuant to 35 U.S.C. § 271(c), which establishes liability for contributory infringement, JHU must show that Alcon‘s accused surgical tools are ''not a staple article or commodity of commerce suitable for substantial noninfringing use.'' In this motion in limine, JHU argues that the ''importance'' of a surgical tool‘s use is irrelevant to, and could easily be confused with, the legal standard-―substantial noninfringing use.'' (Doc. No. 348, at 17-19.)

         Specifically, JHU takes issue with Alcon‘s characterization of ''vit-buckle'' eye surgery, which Alcon argues is a ''substantial noninfringing use.'' JHU argues:

During fact and expert discovery, JHU adduced evidence that the accused products are used nearly exclusively to perform the patented method. Alcon has attempted to rebut that evidence by showing that the accused products have a non-infringing use-an eye surgery referred to as a ''vit-buckle.'' Alcon‘s retained expert opined that, because vit-buckle procedures are ''important '' when used to treat retinal detachment patients, that use is a substantial non-infringing use (D.I. 224 at Ex. 20, Aug. 22, 2017 Ryan Rpt. ¶ 71.)

(Doc. No. 348, at 17-18.)

         In JHU‘s argument that the surgery‘s ''importance'' is irrelevant, JHU seems to define importance as the surgery‘s impact on an individual patient. Importantly, in her summary judgment opinion, Judge Fallon defined ''substantial noninfringing use'' as

any use that is ''not unusual, far-fetched, illusory, impractical, occasional, aberrant, or experimental.'' Vita-Mix Corp. v. Basic Holding, Inc., 581 F.3d 1317, 1327 (Fed. Cir. 2009). Relevant considerations in assessing whether an asserted non-infringing use is substantial include the frequency of the non-infringing use, its practicality, the ...

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