U.S. District Court Judge Colm Connolly’s October 14 opinion in Inari Medical, Inc. v. Inquis Medical, Inc., has received attention on both Bloomberg Law and Law360, and I thought I should say a few words about it myself. (For those who are not familiar with him, Judge Connolly sits in the District of Delaware. He is probably best known in patent circles for his standing orders, requiring parties to provide information concerning litigation financing arrangements. According to the Law360 article, moreover, he is “the nation’s third-busiest judge for patent litigation.”) His decision in Inari addresses two questions that have divided the federal district courts, and that the Federal Circuit has yet to take up. Both involve what I have sometimes referred to as the “timing” question.
“The first issue is whether the complaint filed in a lawsuit can provide the required knowledge for claims asserted in the lawsuit of post-suit indirect infringement and demands for willfulness-based enhanced damages”; or whether, instead, such knowledge must exist prior to suit. As Judge Connolly notes, some judges (including Judge Connolly himself in at least one previous decision, as well as Judge Alsup in the Sonos v. Google litigation) have held that knowledge must precede the filing of the lawsuit. Others, including the District of Delaware’s Magistrate Judge Christopher Burke, have held that, while knowledge must exist prior to the filing of the lawsuit, judges should permit the patentee to amend its suit to allege willful infringement if the infringement continues after service. And some—including Federal Circuit Judge Bryson, sitting by designation in the District of Delaware, and Judge Alan Albright) don’t even require an amendment. On this issue, Judge Connolly sticks to his guns, reasoning that the plaintiff could file a second suit if the defendant continues infringing after service of the complaint. This would be preferable, in his view, because it “avoid[s] thorny privilege and attorney work product issues that arise when a defendant relies on the opinions of its trial counsel to form its own opinion about whether it infringes the asserted patents”; in addition, “[t]he results of the first suit and estoppel doctrines would likely reduce substantially the scope of the second suit.” Judge Connolly also isn’t persuaded by the plaintiff’s argument that his ruling is undesirable, insofar as it might induce more plaintiffs to send pre-suit notices of infringement, which in turn will enable accused infringers to file actions for declaratory judgments in the latter’s preferred venues; in the court’s view, this consequence appears neither unfair nor unwise.
“The second issue is whether a district court has the authority to address in the context of resolving a Rule 12(b)(6) motion a request by the defendant to preclude the plaintiff from pursuing enhanced damages under § 284 based on the plaintiff’s failure to plead adequately a claim of willful infringement.” On this issue, Judge Connolly had previously held that the answer was yes, but he has now reconsidered, writing that “Regardless of whether a demand for enhanced damages under § 284 is based on willful conduct or on behavior that is wanton, malicious, deliberate, consciously wrongful, flagrant, done in bad faith, or characteristic of a pirate, such a demand is not a claim that can be dismissed pursuant to Rule 12(b)(6),” because enhanced damages are a remedy, not a claim upon which relief may be granted. “Thus, assuming the complaint sufficiently alleges a claim of patent infringement, a plaintiff preserves its rights to seek enhanced damages for that infringement under § 284 with a simple demand for such damages in the complaint.” As a practical matter, this would mean that if the plaintiff doesn’t have the factual basis for alleging pre-suit willful (or whatever) infringement in the complaint, but gains such information through discovery, it can elicit those facts at trial and request a finding of willfulness. (It would have to amend its complaint to assert a claim for induced infringement, however, if it acquires facts it didn’t previously have that would support that type of claim going forward.) Given the first holding above, however, in a given lawsuit willfulness cannot be based on the knowledge of the patent that the defendant gained solely from the filing of the complaint (though the latter might enable the plaintiff to file a second lawsuit seeking enhanced damages for post-complaint continuation of infringing conduct). The Bloomberg article suggests that this second holding could make it more difficult for parties to settle, since it increases the potential range of damages that could be awarded at trial, but also notes that some questions of potential entitlement to enhanced damages might be resolved post-discovery on a motion for summary judgment even if not on a motion to dismiss.
Based on these holdings, the judge granted the defendant’s motion to dismiss a claim of induced infringement without prejudice and with leave to amend, and denied the motion to dismiss the “claim” for enhanced damages.
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