Minnesota Patent Litigation Wrap-Up — Q1 2020

This post continues our summary of substantive orders in patent litigation in the District of Minnesota.

Willis Elec. Co. v. Polygroup Macau Ltd. (BVI), 15-cv-3443 (WMW/KMM), 2020 U.S. Dist. LEXIS 19197, 2020 WL 522441 (D. Minn. Feb. 3, 2020).

Plaintiff Willis Electric ("Willis") sued Polygroup Macau ("Polygroup") initially for the infringement of several patents generally directed to artificial lighted trees. Due to a pending inter partes review (IPR) proceeding, the litigation was stayed. The stay was lifted after the IPR proceedings were resolved, leading Willis to file a second amended complaint adding ten additional counts related to anticompetitive conduct. Defendant Polygroup moved to dismiss these counts arguing that the Court lacks personal jurisdiction over Polygroup, venue in the District of Minnesota is improper, and Willis failed to state a claim on which relief can be granted. Polygroup also argued that some of the claims are time-barred.

First, Judge Wright addressed personal jurisdiction and venue. Willis argued that personal jurisdiction and venue are established pursuant to the Clayton Act (15 U.S.C. § 22) for the antitrust related claims as well as by pendant personal jurisdiction for the remaining unfair competition, false advertising, deceptive trade practices, and common-law business torts. Judge Wright agreed with both premises. First, the Judge found that Polygroup merely selling its products at retail stores in Minnesota demonstrated that Polygroup "transacts business" in Minnesota as required to establish venue and personal jurisdiction under the Clayton Act. Second, the Judge determined that the Court had pendent personal jurisdiction over Willis's other non-patent claims because all claims in the case "ar[o]se out of a common nucleus of operative fact." In doing so, Judge Wright cited alleged statements made by Polygroup encouraging customers to buy its products because Willis's patents were invalid. These alleged statements "relate[d] to Polygroup's manufacture and distribution of allegedly infringing products" were enough to show that Willis's anticompetitive conduct claims arose from the same nucleus of operative fact as Willis's patent infringement claims.

Next, Judge Wright proceeded to deny Polygroup's motion to dismiss a handful of Willis's claims based on them being time-barred. In particular, Judge Wright emphasized that "[w]hether a claim is time-barred by an applicable statute of limitations 'is typically an affirmative defense, which the defendant must plead and prove.'" Judge Wright thoughtfully addressed Willis's statutory state-law claims, Lanham Act claim, and the state-law tort claims individually. And in denying Polygroup's motion to dismiss found that Polygroup either put forth no legal authority to support applying the 2-year Minnesota statute of limitations it argued was applicable to the claims and in one case even if it did apply, it was not appropriate to resolve this issue at the motion to dismiss stage.

Finally, Judge Wright addressed Polygroup's arguments that Willis failed to state a claim on which relief can be warranted. Judge Wright walked through each claim individually finding that all of Willis's claims, except the unfair-competition claim, were properly pled. In granting the motion to dismiss the unfair-competition claim, Judge Wright found that the underlying tort alleged in the complaint — that Polygroup disparaged Willis's patents and products—was duplicative of its allegations in support of other claims. This alone under Minnesota state law was enough to dismiss the unfair competition count as relief could be received under another pled claim.

Grupo Petrotemex, S.A. de C.V. v. Polymetrix AG, No. 16-cv-02401 (SRN/HB), 2020 U.S. Dist. LEXIS 43465, 2020 WL 1227715 (D. Minn. Mar. 13, 2020)

Plaintiffs Grupo Petrotemex, S.A. de C.V. and DAK Americas LLC ("GPT/DAK") sued Defendant Polymetrix AG ("Polymetrix") for patent infringement in July 2016. GPT/DAK contends that Polymetrix waived attorney-client privilege over an opinion of counsel presented in a July 5, 2017 email based on summary disclosures to third-parties and the existence of publicly available documents that reference the summary disclosure.

The Court first addressed whether privilege was waived when the summary of the opinion was shared with Bühler, Polymetrix's parent corporation, which at the time of the disclosure owned 100% of Polymetrix's shares. Specifically, Bühler received the protected summary information in an email from Polymetrix's European patent counsel which incorporated information received in the July 2017 opinion email. Polymetrix argued that Polymetrix and Bühler at that time had a common legal interest as Bühler the sole and total owner of Polymetrix. Magistrate Judge Bowbeer agreed that based on there being a common legal interest at the time of the disclosure to Bühler, Polymetrix did not waive attorney-client privilege.

Next, the Court addressed whether Bühler sharing that summary opinion with another party, Sanlian, while in negotiations for Sanlian to purchase Polymetrix amounted to a waiver. Polymetrix did not dispute that Sanlian received protected information, but argued that Bühler cannot waive privilege on behalf of Polymetrix. Magistrate Bowbeer agreed stating that "the decision to disclose the opinion to Sanlian was made by Bühler, for Bühler's benefit in its negotiations with Sanlian — negotiations in which Polymetrix played no part — and that Polymetrix did not even know about the disclosure let alone consent to it." Thus the Court held Polymetrix did not explicitly waive attorney-client privilege as to the July 2017 email.

Magistrate Judge Bowbeer also refused to recognize any implied waived by Polymetrix based on its failure to take action after it heard of the disclosure to Sanlian and the publishing of such information in a public forum. Here, the Court focused on when Polymetrix learned of the improper disclosure of the July 2017 email. For example, Magistrate Judge Bowbeer noted that Polymetrix did not learn of any inappropriate disclosure to Sanlian until December 2018, after Sanlian purchased 80% of Polymetrix's shares. "That is, by the time Polymetrix knew the email had been transmitted to Sanlian in the first place, the two companies were unquestionably united by a common legal interest." Thus, Magistrate Judge Bowbeer opined that there would be no reason for Polymetrix to attempt to claw back the email from Sanlian once the parties were in a common interest relationship. As to the disclosure of protected information in a public forum, again Magistrate Judge Bowbeer recognized that Polymetrix was not aware that the information was disclosed to the public until it had already been published and available online for several months. And the Court recognized that there was nothing Polymetrix could have done to "un-publish" the information.

Finally, Magistrate Judge Bowbeer rejected GPT/DAK's argument that Polymetrix's now unprotected summary statement would waive privilege to the entire July 2017 opinion email based on "fairness." Distinguishing the cases GPT/DAK relied on, the Court noted there was no waiver of privilege here by Polymetrix, so "it need not consider what additional information should, in fairness, be revealed." Judge Bowbeer did recognize that the Court's opinion would likely change should Polymetrix attempt to rely on the July 2017 opinion email in the litigation or another public forum.

Snyders Heart Valve LLC v. St. Jude Medical, No. 18-2030 (JRT/DTS), 2020 U.S. Dist. LEXIS 51698 (D. Minn. Mar. 25, 2020)

In October 2016, Plaintiff Snyders Heart Valve LLC ("Snyders") sued St. Jude Medical and related entities ("St. Jude") for the infringement of two patents in the Eastern District of Texas. In this suit, the parties disputed the meaning of 22 claim terms of the asserted patents. And in October 2017, the Eastern District of Texas court held a claim construction hearing and issued an order construing the claim terms. Based on the claim construction order, the parties stipulated to the non-infringement of some claims. Further relying on the Eastern District of Texas court's claim construction, St. Jude served its invalidity contentions in October 2017, identifying only seventeen prior patents and eight printed publications. Just a few days later, St. Jude filed two IPR petitions raising anticipation and obviousness challenges against one of the asserted patents. The pending litigation was then transferred to the District of Minnesota, where the Court addressed (1) whether it may reconsider the Eastern District of Texas court's claim construction of disputed terms and (2) whether St. Jude is estopped from asserting anticipation and obviousness defenses under 35 U.S.C. § 315(e)(2).

First, Chief Judge Tunheim found that it is only appropriate to reconsider the Eastern District of Texas's prior claim construction rulings to (1) account for new evidence in the record (such as an IPR decision), or (2) correct prior constructions that are "clearly erroneous." Here, Judge Tunheim refused to alter the Eastern District of Texas's prior claim constructions without any "new evidence" being presented. However, the Court found the IPR decision itself was "new evidence." This persuaded the Court to adopt the PTAB's construction, or constructions commensurate with the PTAB's opinion, for terms that the Eastern District of Texas court construed as having their "plain meaning."

On the issue of IPR estoppel, Judge Tunheim granted Snyders's partial motion for summary judgment on St. Jude's anticipation and obviousness defenses because St. Jude could have reasonably raised the prior art patents and printed publications in IPR. The Court found that St. Jude filed its invalidity contentions in this case prior to filing the IPR petitions. Thus, "there is no question then that St. Jude had actual knowledge of the parent and written publications prior to its IRP (sic) petitions." Yet St. Jude did not raise these prior art references in its IPR petitions. Based on this fact, Judge Tunheim expressly rejected that Shaw Industries Group, Inc. v. Automate Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir. 2016) governed the analysis in this case because Shaw did not discuss IPR estoppel on the basis of unpetitioned grounds at issue here.

Authors: Brianna Chamberlin and Joseph Herriges