A Determined Judge

Submitted by patentadmin on Mon, 08/01/2011 - 21:11

When we consider the likely outcome of a trial, we generally focus on the decision of a jury or an appellate court. Well, sometimes the opinion of the trial judge is all that really matters. Transocean Offshore Deepwater Drilling Inc. v. Maersk Contractors USA, Inc.

Transocean is the owner of two patents directed to an offshore drilling assembly which allows for the simultaneous drilling and performance of auxiliary activities on a single well. Transocean actively enforces these patents.

Maersk is the U.S. subsidiary of A.P. MollerMaersk A/S, a foreign corporation. Maersk A/S contracted with Keppel FELS Limited, also a foreign corporation, to build a DSS-21 Ultra Deepwater Development Semisubmersible drilling rig. At this time, Transocean was busily enforcing the aforesaid patents against a third party, Global Santa Fe Drilling Co. Out of concern as to the outcome of this litigation, the construction contract permitted Maersk to modify the rig as necessary to avoid infringement. At approximately the same time that its parent was negotiating this construction contract, Maersk entered into a contract with Statoil Gulf of Mexico, LLC involving the use of the DSS-21 rig to perform certain offshore drilling services.

Despite the precautions taken by Maersk A/S, Transocean took the position that the DSS-21 rig infringed its patents. Transocean sued Maersk, contending that Maersk A/S, the parent corporation, had acted in behalf of its subsidiary, enabling Maersk to contract with Statoil to supply the services of the DSS-21.

The district court judge sided with Maersk, granting a summary judgment that the patents-in-suit were invalid due to obviousness and, predictably, Transocean appealed. The C.A.F.C. agreed that the references taught all of the limitations of the asserted patent claims, but opined that the references alone were insufficient, as a matter of law, to establish obviousness because Transocean had presented “significant objective evidence of nonobviousness.” Specifically, the appellate judges pointed to Transocean’s evidence of industry skepticism, industry praise for Transocean’s commercial embodiment of the patented inventions, commercial success and copying by others, including Maersk A/S. They remanded the case to the district court for trial.

A jury, which considered each of the factors presented by Transocean in support of its nonobviousness argument, found the patents valid and infringed. The jury awarded Transocean $15M in damages, based on testimony that this sum would constitute a reasonable license fee. The district court judge, however, was having none of it. Neither intimidated by the C.A.F.C. opinion, nor swayed by the jury decision, he entered judgment as a matter of law in favor of Maersk. “It is the Court’s opinion, even in light of the jury’s findings concerning the secondary consideration [of nonobviousness], that Transocean’s invention merely combines familiar and known elements that do no more than yield predictable results.”

What about the “significant objective evidence of nonobviousness” that had so impressed the C.A.F.C.? “It is the Court’s opinion that the evidence presented is insufficient, as a matter of law, to overcome Maersk prima facie case of obviousness. While the jury had specifically found that the patented invention had enjoyed “commercial success,” the district court judge disagreed. “Transocean’s sale of its technology is due primarily to various litigation, those sales do not support the argument for commercial success as the sales are not a result of a free market.” He dealt similarly with the evidence of “long felt but unsatisfied need,” holding that this need had, in fact, been satisfied by the same prior art which rendered the invention obvious. Finally, the court found that there was no evidence of “unexpected and superior results” or “industry praise” associated with the patented inventions. “Transocean’s [benefit] claims are unsupported by independent data beyond the representation found in Transocean’s patents and promotional literature.” As a parting shot, the Court added, “the evidence failed to establish a nexus to the claimed invention.”

In returning its $15M verdict, the jury had held that the specifications of the patents-in-suit were “enabling,” meaning that they enabled one of “ordinary skill in the art” to practice the patented invention “without undue experimentation,” Not so, held the district court judge, without further explanation.

Not content with finding the patents invalid, the Court went on to also find them not infringed. Noting that the contract for the construction of the DSS-21 anticipated that resolution of the Global Santa Fe litigation would be determinative of the final design, the drilling rig which was offered for sale, or sold, was not infringing. “An offer to enter into a contract that includes language that avoids infringement cannot constitute an infringing act.” True, the drilling rig as actually built might infringe the patents-in-suit, but while “using an infringing device to perform a drilling agreement may constitute a violation of [the patent law], that claim was not made by Transocean.” Oops!

Having thus found the patents-in-suit to be both invalid and not infringed, the Court concluded that even if the patents were valid and infringed, “an award of a ‘reasonable royalty’ may be unconscionable because the harm may be de minimis.” Identifying the “true question” as “what is the economic impact, if any, to Transocean,” the Court held that there was no evidence of actual harm. “The alleged ‘infringer’ did not practice the claimed invention in the United States. And, there is no evidence that Transocean was required to lower its price…to compete with Maersk for the Statoil contract. It appears, therefore, that in this instance, ‘price erosion; may be the proper measure of damages. Nevertheless, there is no evidence of price erosion.”

So, the folks at Transocean lost their patents and they go home empty handed.

The Lesson To Be Learned – if the trial court judge is determined, he can overrule both the jury and the appellate court; keep this in mind next time you’re in court.

Submitted by Anonymous (not verified) on Mon, 08/15/2011 - 14:49

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In other words, don't irritate the judge.

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