On February 4, EDVA Senior District Judge Henry Morgan denied defendant LifeCell Corporation's post-trial motion to exclude pre-suit damages based on laches in LifeNet Health's patent infringement suit that we have discussed earlier. LifeNet Health v. LifeCell Corp., Civil Action No. 2:13cv486 (E.D.Va. Feb. 4, 2015), found here.

Background

After an eleven-day jury trial, LifeNet was awarded a lump sum royalty of approximately $35 million for infringement by four LifeCell products, including the Strattice product.

LifeCell asserted laches based on a press release regarding FDA approval of Strattice that was sent to four LifeNet employees, including a named inventor of the patent-in-suit, in June, 2007, just more than six years before LifeNet filed suit. The press release stated that Strattice was a tissue graft made from pigs that "complements the company's AlloDerm tissue repair product, which is derived from human skin" and stated that a full commercial launch of the product would be made in early 2008.

Because laches is an equitable remedy, Judge Morgan ruled, it cannot be considered by the jury, and so the Court ruled on the laches defense pursuant to a motion under Rule 52(c).

Presumption of Laches

LifeCell based its laches defense solely on the argument that LifeNet's delay in filing suit for more than six years after receipt of the press release about FDA approval of Strattice gave rise to a presumption of laches. While a delay of more than six years can give rise to a presumption of laches, the six-year clock does not start to run until a patentee "has actual or constructive knowledge of the defendant's potentially infringing activities." Here, Judge Morgan concluded, no presumption arose.

Actual Knowledge

Judge Morgan found that the press release did not provide actual knowledge of LifeCell's potentially infringing activities for two reasons. First, the release did not contain any details about the aspects of Strattice which were found to infringe. Second, the release compared Strattice to AlloDerm, which was not accused of infringement. "[B]y comparing the product in the press release to a non-infringing product, the only inference from 2007 is that Defendant was releasing a freeze-dried product similar to original AlloDerm which utilized pig skin instead of human skin."

Constructive Knowledge

Judge Morgan's began his analysis of constructive knowledge for purposes of laches by citing I/P Engine v. AOL Inc., 915 F.Supp.2d 736 (E.D.Va. 2012), rev'd on other gnds., 2014 U.S. App. LEXIS 15667 (Fed. Cir. Aug. 15, 2014), which held that if a patentee knows of a product that (i) embodies technology similar to the patented technology and (ii) uses that similar technology to accomplish a similar objective, the patentee has a duty to examine the product more closely to determine infringement. Further, constructive knowledge exists even if the patentee is actually unaware of a defendant's activities, if those activities are prevalent in the inventor's field.

Since sales of Strattice had not yet begun in 2007, however, there was no product for LifeNet to examine. Unlike I/P Engine, where Google described the infringing technology on its blog in words similar to the language the plaintiff used in its complaint, "the press release simply does not have the kind of information that would have placed Plaintiff on such notice that it should have undertaken an investigation." Accepting LifeCell's position would mean that "potentially any time a company announced FDA approval of a product, with only a generic description of the product, that company would be starting the laches clock."

The Take-Away From LifeNet

LifeNet and I/P Engine illustrate the subtle difference between sufficient and insufficient information for purposes of constructive notice. In I/P Engine, the patentee had constructive notice of technology that was "significantly similar" to the patented technology. In LifeNet, by contrast, the patentee had actual notice of a later-accused product more than six years before suit was filed, but notice of the product was not enough. Rather, notice must include some link or similarity to the patented technology. In LifeNet, the notice the patentee received did not provide a reason for further investigation and could even be said to have "taught away" from the patented technology by comparing it to a different type of product. In other words, notice must somehow point the patentee towards the patented technology to impose a duty of further investigation that could lead to a laches defense.

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