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    Featured Litigation Cases of the Week: June 12, 2019

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    In this post, we take a look at a Court of Appeals verdict that overturned the District Court judgment favoring Cobalt Boats, LLC; and STS Health, LLC fails to prove Xlear, Inc. patents are invalid.

    Court of Appeals verdict that overturned the District Court judgment favoring Cobalt Boats, LLC

    Cobalt Boats, LLC (Cobalt), the manufacturer of leisure boats and patent holder of U.S. 8,375,880 developed a submersible swim step platform attached to the stern of a boat. They have successfully marketed it, since 2013. On January 23, 2015, Cobalt filed a patent infringement complaint (2:15-cv-00021) against two of its industrial competitors Sea Ray Boats, Inc. (Sea Ray) and Brunswick Corporation (Brunswick) in the Court of Virginia Eastern District. Cobalt further requested that the Court issue a permanent injunction and award damages arguing that the fold-out step feature on the Defendants’ Swim Step infringed their '880 patent.

    On December 14, 2016, a Markman hearing was held before District Judge Henry C. Morgan, Jr. to examine the evidence of all parties and find the appropriate meanings of the keywords used in the asserted claims (4 and 5 of the ‘880 patent). The trial was conducted from June 12, 2017 for 8 days before Judge Henry C. Morgan, Jr. On June 21, 2017 the jury declared that claim 4 was literally infringed and claim 5 was infringed under the doctrine of equivalents. Furthermore, the jury awarded royalties of $2,500 per-unit, resulting in a total damage award of $2,690,000 in favor of Cobalt.

    On October 31, 2017, a Clerk's judgment was released in accordance to the Jury verdict in favor of Cobalt. In the post-trial, the enhanced damages for pre and post-verdict sales award was granted by a factor of 1.5, for a total of 1,439 boats, at the royalty rate of $2,500 per-unit, resulting in a total damages award of $5,396,250. The Court also granted Cobalt’s motion for a permanent injunction. The Court further found that the case was exceptional and awarded attorneys’ fees of $2,462,693.05 to Cobalt.

    Unhappy with the judgment, Brunswick filed an appeal against Cobalt (2018-1376) in the Federal Court of Appeals on January 4, 2018. Brunswick argued that claims 4 and 5 state that Cobalt’s swim step was capable of rotating 180 degrees, so Brunswick’s swim step could be considered to have infringed on Cobalt’s swim step only if it was also capable of rotating at least 180 degrees. A trial was conducted and the results established that the maximum rotation of Brunswick’s swim step was between 172 and 179 degrees and that the hinges on their swim step have a “very rigid stop” that prevents any rotation beyond that. As such, Brunswick’s accused swim step was not capable of rotating 180 degrees.

    They further argued that because claims 4 and 5 did not use the word “about”, 180 degrees serves as a precise numerical boundary for the minimum rotation of the step. On May 31, 2019, Circuit Judges DYK, REYNA, and WALLACH, concluded that the Brunswick product did not infringe claims 4 and 5 of the '880 patent; thereby the District Court’s decision was REVERSED and entered non-infringement in favor of Brunswick. That was a 1 degree miss for Cobalt LLC!

    STS Health, LLC fails to prove Xlear, Inc. patents are invalid

    Xlear, Inc. (Xlear) is a leading manufacturer of nostril sprays and tooth care products using natural sweeteners, like xylitol. On July 17, 2013, Xlear became the patent owner of U.S. 6,054,143 and U.S. 6,258,372. In late 2014, Xlear discovered that STS Health, Llc’s (STS) nasal sprays contained xylitol, thereby infringing the method stated in its ‘143 patent. On November, 5, 2014, Xlear filed a patent infringement suit against STS in the Utah District Court.

    In April, 2015, STS filed a motion to dismiss the complaint arguing that the asserted claims of U.S. Patent No. 6,054,143 are invalid under 35 U.S.C. §101, as they fail to recite patent-eligible subject matter. STS argued that XLEAR was describing the naturally occurring product xylitol and then teaching its application by “well-understood, routine, conventional activity previously engaged in by researchers in the field.” Xlear contended that ‘143 patent claim taught a more efficient means for delivery of xylitol/xylose to clean out nasopharynx, thereby reducing infections in humans. After the parties arguments, Judge David Nuffer denied the motion of dismissal after applying the two-step framework laid out by the United States Supreme Court in Alice Corp. Pty. Ltd. v. CLS Bank Int’l. (Alice).

    On February 2017, STS filed a Motion for Summary Judgment of invalidity under 35 U.S.C. § 101 for ineligible subject matter. As evidence, STS cited seven issued patents having priority dates before the ‘143 patent that described the nasal administration of xylitol.

    After hearing the arguments and applying the two-step Alice analysis, on April 2019, Judge David Nuffer released a memorandum and order stating none of the cited seven patents address using xylitol/xylose to clean the nasopharynx. Summary Judgment was denied. In May 2019, the Judge ordered to stay the case for 21 days as requested by defendant to withdraw his attorney.

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