Not Your Average Block Party, With(out) Interest

Not Your Average Block Party

Stone Strong, LLC v. Del Zotto Products of Florida, Inc., No. 2011–1156 (Fed. Cir. Oct. 17, 2011) (Judges Dyk, Clevenger, and Reyna) (nonprecedential)

Stone Strong and Del Zotto manufacture pre-cast concrete blocks. Stone Strong sued Del Zotto for infringing its patents directed to making concrete blocks used in constructing retaining walls. Stone Strong’s patents describe a block that has a loop in the top. The loop can be used to lift the block, but it also fits into a slot in the block above it so the blocks are aligned like this:

The district court found that Del Zotto infringed Stone Strong’s patents. It also found, “with little elaboration of its reasoning,” that Stone Strong’s patents were not invalid.

On appeal, the main argument was the meaning of the claim language. Stone Strong argued that the slot on the bottom of the block just had to be bigger than the loop. Del Zotto argued that the slot had to fit tightly enough that the blocks are aligned properly. The court agreed with Del Zotto that the purpose of the patent was to use the loop to align the blocks, as in the figure above.

One interesting thing about this opinion is that the court went ahead and analyzed the patents for obviousness, even though the expert testimony “was conclusory” and the district court didn’t explain its findings. On its own, the court determined that a combination of two pieces of prior art made Stone Strong’s patents obvious. One had the loop inside the alignment mechanism, although the loop was recessed, and the other had an alignment mechanism that looked a lot like the one in Stone Strong’s patent:

 

 

prior art

 

 

The court said that,

Being a simple mechanical invention, there were only a number of possible techniques to avoid interference between the lifting devices and subsequently-placed blocks. In lieu of hiding the lifting device within a recess (as was done in the ’642 patent), it would have been obvious for one of ordinary skill in the art to consider using an exposed lifting device as an alignment mechanism.

(See page 13.) The court concluded that Stone Strong’s patent was invalid for obviousness.

I always find it a little disconcerting when the appeals court seems to do the trial court’s job. Was this really as simple as the court says?

Read the opinion and see if you agree.

A Lack of Interest

Sanofi-Aventis v. Apotex Inc., No. 2011–1048 (Fed. Cir. Oct. 18, 2011) (Judges Newman, Schall, and Moore)

This case has been going on for over a decade, and this is the third appeal to the Federal Circuit. As you can imagine, there’s a lot of background after 10 years. But the issue the court addressed is actually pretty narrow.

Sanofi makes Plavix®, a drug used to prevent blood clots after a heart attack or stroke. Apotex sought FDA approval to make a generic version by filing an Abbreviated New Drug Application (ANDA). Sanofi sued for patent infringement. In 2006, the two sides signed a settlement agreement. The FTC and state attorneys general refused to approve it, so the litigation resumed.

The agreement set Sanofi’s “actual damages” at “50% of Apotex’s net sales.” Apotex was found to infringe Sanofi’s patents, which were found not invalid. So all that was left was to set the damages, and that’s what this dispute is about.

In addition to $442,209,362 in damages (50% of Apotex’s net sales), the district court awarded $107,930,857 in prejudgment interest. (Prejudgment interest is interest calculated from the start of the lawsuit through the judgment. The idea is to make the plaintiff “whole” as of the date of filing the suit.) Apotex argued that the settlement agreement limited damages to the $442 million and excluded prejudgment interest.

The court looked through the contract and agreed with Apotex. It found that the “actual damages” in the settlement agreement were intended to cover all compensation, including interest. The contract didn’t say anything specifically about prejudgment interest, but the court held that the default rule is to have a settlement agreement define the entire recovery value.

Judge Newman dissented on this issue. She felt that the default rule should be that if prejudgment interest isn’t mentioned, the court should assume it isn’t included in the settlement agreement. Prejudgment interest is generally awarded in patent cases, so if parties want to agree to forgo it, they need to say so explicitly.

What do you think? You can read the order (and find out more of the case background) here.

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