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Psn Illinois, LLC v. Abbott Laboratories

October 31, 2012

PSN ILLINOIS, LLC, PLAINTIFF,
v.
ABBOTT LABORATORIES, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Samuel Der-yeghiayan, District Judge

MEMORANDUM OPINION

This matter is before the court on the parties' motions in limine. For the reasons stated below, the motions are granted in part and denied in part.

BACKGROUND

Plaintiff PSN Illinois, LLC (PSN) alleges that Defendant Abbott Laboratories and Defendant Abbott Bioresearch Center, Inc. (collectively referred to as "Abbott") are infringing three U.S. Patents assigned to PSN: U.S. Patent No. 5,585,476, U.S. Patent No. 5,856,443, and U.S. Patent No. 6,518,414. Specifically, PSN alleges that Abbott infringes, directly and/or indirectly on PSN's patents relating to certain protein receptors. A receptor is a way to communicate with a cell in the body of a living organism. Receptors are used in drug development to determine the effects of a drug on the human body because of their ability to communicate with drug compounds. The patents at issue in this case relate to the S1P2 protein receptor. PSN alleges that Abbott infringes PSN's patents through its use of S1P2 receptors in developing Abbott drug candidates ABT-924, ABT-413 and ABT-459, and in reducing to practice inventions recited in at least three of Abbott's published U.S. Patent applications. PSN includes in its complaint claims alleging that Abbott is infringing three of PSN's patents directly and indirectly, and that the infringement is willful. Abbot has filed counterclaims, contending that PSN's patents are invalid and seeking a declaratory judgment stating that Abbott does not infringe PSN's patents.

On January 28, 2011, a Joint Stipulation on Claim Construction was entered. Subsequently, on February 23, 2011, Abbott filed a motion for summary judgment asserting that its alleged infringing activities were protected by the Safe Harbor provision of 35 U.S.C. § 271(e)(1), that PSN's settlement and license agreements with third parties exhausted their rights in the patents at issue, and that PSN failed to comply with the notice requirements of 35 U.S.C. § 287(a). The prior judge in this case held: (1) that Abbott's alleged infringing activities did not fall within the Safe Harbor provision of 35 U.S.C. § 271(e)(1); (2) that PSN's patent rights in the S1P technology that Abbott purchased from DiscoveRx and GenScript had been exhausted, and, with respect to any use prior to April 29, 2010, PSN's patent rights that Abbott purchased from Applied BioSystems and Invitrogen had been exhausted; (3) that the exhaustion doctrine did not pertain to Abbott's cloning or expressing S1P2 receptors; and (4) that PSN's failure to comply with the marking statute precluded recovery of damages for infringing activities that occurred during the period of February 14, 2008 to September 22, 2009. On March 30, 2012, this case was reassigned to the undersigned judge and the parties subsequently filed the instant motions in limine.

DISCUSSION

I. PSN's Motions in Limine

PSN moves: (1) to bar Abbott from raising certain affirmative defenses at trial, (2) to preclude Abbott from mentioning at trial that it has abandoned its S1P drug program, (3) to preclude Abbott from discussing its licensing practices at trial, (4) to bar opinions of Abbott's damages expert, Dr. Mohan Rao (Rao), relating to non-infringing alternatives, and (5) to exclude certain prior art references.

A. PSN Motion In Limine Number 1

PSN argues in PSN Motion In Limine Number 1 that two of Abbott's non-infringement affirmative defenses should be stricken due to unfair prejudice to PSN. PSN contends that Rao indicates in his expert report that Abbott could have avoided infringement of PSN's pertinent U.S. Patents by using PSN's S1P technology overseas or by using an alternative smooth muscle cell technology. PSN argues that the two defenses should be stricken, contending that Abbott's representative, presented in discovery pursuant to Federal Rule of Civil Procedure 30(b)(6), refused to testify about the two defenses during discovery, and that Abbott failed to identify the two defenses in a timely manner. (PSN Mot. 1, 1). A review of the record shows that Rao discussed the non-infringing alternatives as part of his analysis of what would be reasonable royalty damages. The alternatives were not discussed by Rao to support affirmative defenses, and Abbott does not indicate it intends to pursue such defenses at trial. In addition, Abbott admits in its response that it "has not claimed (nor could it)" that the possible use of S1P technology overseas or the possible use of smooth muscle cells are defenses to liability. (Ans. PSN Mot. 1, 5). Finally, PSN has not shown that it has been prejudiced by Abbott's late disclosure of its non-infringing alternatives. Rao's report was disclosed before the close of expert discovery and PSN had an opportunity to depose Rao and to develop its own rebuttal case. Therefore, PSN Motion In Limine Number 1 is denied.

B. PSN Motion In Limine Number 2

PSN argues in PSN Motion In Limine Number 2 that Abbott should be barred from mentioning at trial that it has abandoned its S1P drug program because, according to PSN, such evidence would be irrelevant and unduly prejudicial to PSN. In this case PSN is seeking to recover damages for what would have been a reasonable royalty paid by Abbott to use PSN's S1P technology. The Federal Circuit has recognized that post-infringement evidence can be relevant for the purposes of calculating what would have been a reasonable royalty. See, e.g. Lucent Technologies, Inc. v. Gateway, Inc., 580 F.3d 1301, 1333 (Fed. Cir. 2009)(stating that the Court's "case law affirms the availability of post-infringement evidence as probative in certain circumstances"). Evidence that can generally be considered for a reasonable royalty analysis includes: post-infringement sales forecasts, actual profit margins, and use of an allegedly infringing device by infringers. See, e.g., id. at 1333 (stating that "neither precedent nor economic logic requires [the Court] to ignore information about how often a patented invention has been used by infringers"). PSN argues if the jury learns that Abbott abandoned its drug program, it could mislead the jury as to the value of the patents. PSN argues that although Abbott has now shut down its S1P program, nothing would prevent Abbott from restarting the program at any time. However, PSN will be able to make such an argument to the jury at trial. PSN has not shown that evidence relating to Abbott's abandonment of its S1P drug program would be unduly prejudicial. In addition, such evidence could, in part, be relevant to assessing what would have been a reasonable royalty. The amount of weight given to the evidence will be for the jury to decide. Therefore, PSN Motion In Limine Number 2 is denied.

C. PSN Motion In Limine Number 3

PSN argues in PSN Motion In Limine Number 3 that Abbott should be barred from arguing at trial that it does not enter into research tool licenses, and barred from challenging at trial PSN's valuation of PSN's patents by reference to Abbott licenses not produced by Abbott in this case prior to January 20, 2011, or by reference to Abbott licensing experience. PSN contends that such a prohibition is consistent with a joint stipulation entered in this case. Abbott ...


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