Articles Posted in Experts

January 16, 2014

Fourth Circuit Affirms Districts Court’s Injunction and Admission of Evidence in False Advertising Case

Richmond, Virginia – PBM Products, LLC (“PBM”) sued Mead Johnson & Company, LLC (“Mead Johnson”) alleging false advertising in violation of the Lanham Act, 15 U.S.C. § 1125(a)(1)(A) and (B), and commercial disparagement. Mead Johnson filed counterclaims against PBM. The district court dismissed the counterclaims and entered an injunction against Mead Johnson. Mead Johnson appealed. The United States Court of Appeals for the Fourth Circuit affirmed.

PBM produces store-brand, “generic,” infant formula. Mead Johnson produces baby formula products under the brand name Enfamil, including a standard formula, a formula with broken-down proteins, and a formula with added rice starch. Both companies use the same supplier for two key nutrients–docosahexaenoic acid (DHA) and arachidonic acid (ARA)–which are important to an infant’s brain and eye development. Mead Johnson calls these nutrients by their brand name “Lipil,” while PBM describes them generically as “lipids.” Both companies use the same level of the lipids. As a result, PBM includes a comparative advertising label on their formula that states, “Compare to Enfamil.”

PBM sued Mead Johnson under the Lanham Act, 15 U.S.C. § 1125(a), alleging that Mead Johnson engaged in false advertising and commercial disparagement when it distributed more than 1.5 million direct-to-consumer mailers that falsely claimed that PBM’s baby formula products were inferior to Mead Johnson’s baby formula products.

Mead Johnson filed counterclaims against PBM alleging breach of contract, defamation, false advertising, and civil contempt. Mead Johnson’s defamation counterclaim was based primarily on a press release issued by PBM CEO Paul Manning declaring that “Mead Johnson Lies About Baby Formula … Again.” Mead Johnson’s false advertising counterclaim alleged that labels on PBM’s products conveyed several implied messages comparing PBM and Mead Johnson’s formulas. Mead Johnson’s breach of contract and civil contempt counterclaims related to prior litigation between the parties.

After a jury found that Mead Johnson had engaged in false advertising, the district court issued an injunction prohibiting Mead Johnson from making similar claims, which enjoined all four advertising claims that Mead Johnson had made, including the express claim that “only Enfamil LIPIL is clinically proven to improve brain and eye development.”

On appeal, Mead Johnson presented three clusters of issues for review by the Fourth Circuit: (1) whether the district court erred in its dismissal of Mead Johnson’s counterclaims; (2) whether the district court abused its discretion in its admission of expert opinion testimony and evidence of prior litigation between the parties; and (3) whether the district court erred or abused its discretion in issuing the injunction.

The dismissals of Mead Johnson’s counterclaims for breach of contract, defamation, false advertising, and civil contempt were all affirmed. The allegedly defamatory statement “Mead Johnson Lies About Baby Formula … Again” was held to be true, as it was found that Mead Johnson had made false statements prior to the publication of PBM’s press release (“Mead Johnson Lies”) and had also made previous false statements about PBM’s baby formula (the “Again” portion of the PBM’s press release). The dismissal of the defamation claim on summary judgment was held to be proper as no false statement had been made.

The Fourth Circuit then upheld the district court’s disposal of Mead Johnson’s Lanham Act counterclaims as a matter of law. Those claims accruing prior to the two-year statute of limitations were affirmed to be time-barred. Claims accruing after that period were affirmed as correctly estopped under the equitable principle of laches.

The Fourth Circuit also held that the district court did not err in granting judgment as a matter of law on Mead Johnson’s Lanham Act counterclaim concerning PBM’s rice starch formula advertisements, holding that the district court had properly concluded that, because the consumer surveys that had been conducted by Mead Johnson had failed to address the allegations in the lawsuit, no relevant evidence had been produced by Mead Johnson on this claim. Moreover, it was held that Mead Johnson had failed to show either falsity of the statements or that any damage was caused by any of the “compare to Enfamil” language that had been used by PBM.

The appellate court then addressed Mead Johnson’s contention that the district court erred by admitting (1) expert survey evidence and (2) evidence of prior Lanham Act litigation between the parties. These decisions were reviewed for abuse of discretion.

Mead Johnson had argued that the survey evidence offered by PBM should be excluded as the consumers involved in the survey did not exactly match the “universe” of consumers appropriate to this litigation. The district court was not convinced. It noted that “while Mead Johnson has pointed out numerous ways in which it would have conducted [the] survey differently, its arguments do not demonstrate that the methods used were not of the type considered reliable by experts . . . .” The district court concluded that the possibility that the survey had targeted the wrong universe went to the weight to be accorded to the survey, not to its admissibility. The appellate court cited a Seventh Circuit case, AHP Subsidiary Holding Co. v. Stuart Hale Co., which noted that “[w]hile there will be occasions when the proffered survey is so flawed as to be completely unhelpful to the trier of fact and therefore inadmissible, such situations will be rare” and affirmed the district court’s conclusion “without difficulty.”

Mead Johnson also had also asserted that the district court had erred in admitting evidence of the 2001 and 2002 Lanham Act lawsuits filed by PBM, contending that the evidence was irrelevant and more prejudicial than probative. The Fourth Circuit found that the history of prior litigation was both relevant and that its probative value was not substantially outweighed by any danger of unfair prejudice. Moreover, in upholding the trial court’s ruling, the appellate court opined that a district court’s decision to admit evidence over an objection based on the potential for unfair prejudice “will not be overturned except under the most extraordinary circumstances, where [the district court’s] discretion has been plainly abused.”

The Fourth Circuit then turned to Mead Johnson’s contention that the injunction issued by the district court had been improper. Mead Johnson argued that the injunction was improper for two reasons. First, it asserted that PBM failed to establish any risk of recurrence of the violation. Second, it argued that the scope of the injunction was too broad, as it prohibited conduct that PBM had not proved at trial and that it was beyond the harm PBM sought to redress.

The appellate court was not persuaded. At trial, the jury had returned a verdict in favor of PBM on its false advertising claim and had awarded PBM $13.5 million in damages. In such a case, where a violation has been established and the party seeking the injunction has made a showing that such an injunction is proper, section 1116(a) of the Lanham Act vests district courts with the “power to grant injunctions, according to the principles of equity and upon such terms as the court may deem reasonable, to … prevent a violation under [§ 1125(a) of the Lanham Act].” The Fourth Circuit held that a showing sufficient to support the district court’s injunction had been made and upheld the lower court’s ruling. The appellate court further indicated that the injunction was proper as, “PBM cannot fairly compete with Mead Johnson unless and until Mead Johnson stops infecting the marketplace with misleading advertising.”

Finally, Mead Johnson argued that, because the general jury verdict did not specify which of the four statements in the mailer the jury found to be false and/or misleading, the district court’s injunction must be limited only to the mailer or other advertisements not colorably different from the mailer. The Fourth Circuit rejected the narrow construction suggested by Mead Johnson. It noted again that, inter alia, Mead Johnson’s claim that it was the “only clinically proven” formula had been found to be misleading by the district court. It concluded that because the district court’s interpretation of the jury verdict was plausible in light of the record viewed in its entirety, the factual findings upon which it based the scope of its injunction could not as a matter of law be clearly erroneous. Consequently, the scope of the injunction also was affirmed.

Practice Tip #1: These parties are familiar combatants on the Lanham Act battlefield. For example, in 2001, Mead Johnson distributed brochures and tear-off notepads to patients in pediatricians’ offices stating that store-brand formula did not have sufficient calcium or folic acid. PBM sued and obtained a restraining order prohibiting Mead Johnson from making similar statements. The parties settled that dispute. Then, in 2002, Mead Johnson distributed a chart to physicians stating that store-brand formula did not contain beneficial nucleotides. PBM sued and, again, the parties settled.

Practice Tip #2: The Lanham Act prohibits the “false or misleading description of fact, or false or misleading representation of fact, which … in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities.” 15 U.S.C.A. § 1125(a)(1)(B).

Practice Tip #3: In the Seventh Circuit, as with other federal circuits, “[A] court may find on its own that a statement is literally false, but, absent a literal falsehood, may find that a statement is impliedly misleading only if presented with evidence of actual consumer deception.” Abbott Labs. v. Mead Johnson & Co., 971 F.2d 6, 14 (7th Cir. 1992).

Practice Tip #4: Before an injunction may issue, the party seeking the injunction must demonstrate that (1) it has suffered an irreparable injury; (2) remedies available at law are inadequate; (3) the balance of the hardships favors the party seeking the injunction; and (4) the public interest would not be disserved by the injunction. eBay, Inc. v. MercExchange, 547 U.S. 388, 391 (2006).

February 15, 2013

Southern District of Indiana Grants in Part Plaintiff’s Daubert Motion to Preclude Expert Testimony Regarding Damages

By Overhauser Law Offices, LLC

Indianapolis, IN – Boston Scientific Corporation (“Boston Scientific”) of Natik, Massachusetts, was granted three of its four requests to exclude Defendant’s expert testimony in its declaratory judgment suit against Mirowski Family Ventures, LLC (“Mirowski”) of Bethesda, Maryland.

The litigation surrounding the Boston Scientific/Guidant Corp. (“Guidant”) / Mirowski / St. Jude Medical, Inc. (“St. Jude”) matter began in the Southern District of Indiana (and also in Delaware) as a patent infringement suit regarding an implantable cardioverter defibrillator. It was appealed to the Federal Circuit, reversed and returned to the Southern District of Indiana. It was later appealed again to the Federal Circuit. The second ruling of the Federal Circuit was then appealed to the U.S. Supreme Court, which declined to hear the case. The matter was finally settled and the case dismissed but a subsequent dispute regarding the settlement resulted in the commencement of the current litigation.

In 1996, patent attorneys for Guidant (Boston Scientific’s predecessor) sued St. Jude for infringement of, inter alia, Mirowski’s Patent No. 4,407,288 (“the ‘288 patent”) which had been issued by the U.S. Patent Office, and for which Guidant had an exclusive license. Mirowski was added as a Plaintiff in 2001. That same year, a jury found that St. Jude had infringed the ‘288 patent that had been licensed to Guidant and jointly awarded Guidant and Mirowski $140 million in damages.

The court disagreed with the jury’s conclusions and, in 2002, entered a judgment as a matter of law for St. Jude on most issues, including finding both the ‘288 patent and another of Mirowski’s patents invalid. It granted a new trial on many of the issues on which St. Jude had not prevailed. The court also sanctioned Guidant $300,000 for misconduct relating to a Guidant expert witness.

Mirowski and Guidant appealed. Guidant also ceased royalty payments to Mirowski, as the agreement for royalties was limited to only those devices that were covered by a valid, unexpired patent. The Federal Circuit reversed the district court’s determination of invalidity of the ‘288 patent and remanded the case for further proceedings.

In 2010, Boston Scientific (which had acquired Guidant in 2006), Mirowski and St. Jude entered into a stipulation of dismissal and the case was closed. Boston Scientific paid Mirowski approximately $5.3 million and later slightly less than $1.4 million, the latter amount covering an error in the calculation of the earlier payment.

Mirowski objected to the amount of the royalty payments, contending that more was due. Mirowski also argued that Boston Scientific breached the parties’ agreement when it settled portions of its claims with St. Jude without Mirowski’s knowledge and approval.

On May 31, 2011, Boston Scientific filed suit against Mirowski, seeking declarations of non-infringement, satisfaction of royalty obligation, and no breach of contract regarding both the Indiana and the Delaware litigation. See a previous post discussing the commencement of this suit here. [NB: The Plaintiff listed in that complaint, Cardiac Pacemakers, Inc., is now a wholly-owned subsidiary of Boston Scientific.]

In the current matter, in a motion in limine pursuant to the suit for declaratory judgment, Boston Scientific asked the court to exclude certain testimony regarding damages by Mirowski’s expert witness, Dr. Mohan Rao. After discussing a substantial list of his credentials, the court found Dr. Rao to be qualified to testify as an expert. The court also found the data on which Dr. Rao relied to be sufficient. The court then addressed Boston Scientific’s objections to Dr. Rao’s opinions in the areas of relevancy and methodology under the standard set forth in Daubert.

Dr. Rao summarized his opinions in four points: 1) his opinion regarding baseline royalties, 2) his opinion about the expected damages in the Delaware litigation, 3) his settlement valuations of the Indiana and Delaware litigations and 4) his unjust enrichment analysis. The court excluded the first, third and fourth opinions.

The court excluded the first opinion regarding baseline royalties as irrelevant. Through Dr. Rao, Mirowski argued that a baseline level of damages should be established that reflected the royalty that it would have received had Boston Scientific sought Mirowski’s consent before proceeding with the lawsuit, stating that such consent would not have been forthcoming. The court excluded this opinion, as it had already held that, pursuant to an agreement between the parties, Boston Scientific had no duty to obtain Mirowski’s consent to litigate. To the contrary, under the licensing agreement, Boston Scientific was obligated to sue St. Jude and similar infringers unless Boston Scientific and Mirowski agreed that a lawsuit should not be brought. Because Boston Scientific had an unfettered right to sue under the licensing agreement, Mirowski could not prove a factual predicate – that Boston Scientific had acted improperly by failing to obtain consent to sue – of its baseline-royalties argument. As such, the argument was impossible to win and the testimony was excluded as irrelevant.

The court excluded Dr. Rao’s third opinion, regarding the settlement valuations of the Indiana and Delaware litigations, as inconsistent with his own stated methodology of calculating an estimated settlement value. Dr. Rao had explained his methodology as consisting of two parts: the range of damages that the Plaintiff would accept at settlement and the range that the Defendant would offer. The estimated settlement value, then, would be within the overlap of those two ranges. However, in calculating his estimated settlement value, the court found that Dr. Rao appeared to have considered only the Plaintiff’s point of view. Because Dr. Rao failed to apply the methodology he described, this opinion was held to be inadmissible.

The court excluded the fourth opinion, regarding unjust enrichment, as demonstrating a fundamental misunderstanding of the doctrine. Specifically, Dr. Rao seemed to believe that a finding of unjust enrichment would result in a payment that would be split approximately evenly between Boston Scientific and Mirowski. He stated, “Mirowski would only get a portion of the proceeds on whatever it is that Boston Scientific was enriched, unjust or otherwise…Boston Scientific’s unjust enrichment would be roughly twice what the expected proceeds would be to Mirowski.” Holding that this testimony evinced a lack of understanding of the doctrine of unjust enrichment, the contractual relationship of the parties, and the parties’ positions at the time the settlement occurred, the court held the fourth opinion to be inadmissible.

The court denied one of the four motions to exclude, allowing in Dr. Rao’s testimony as to “expected damages” (the second opinion). Boston Scientific had characterized the testimony as “irrelevant, confusing, and a waste of time” and argued that, on the issues to which this testimony pertained, Mirowski could not meet its burden of proof. The court found that this issue could have been properly raised on a motion for summary judgment (but had not been) but was not properly excluded on Daubert grounds.

Practice Tip #1: Raising an argument when one of the factual predicates to that argument has already been settled by the court in favor of your opponent is not likely to be a winning strategy. To prevent such an error, it is useful to ensure that you have thoroughly considered each element of each of your claims.

Practice Tip #2: On the surface, the errors with opinions three and four seem easy to avoid: 1) make sure your expert follows his own stated methodologies and 2) make sure your expert is well versed – and conversant at deposition – in all elements of each legal claim at issue.

March 23, 2012

Northern District Denies Motion to Strike Expert’s Survey Regarding Likelihood of Confusion in Trademark Infringement Case of Dwyer Instruments v. Sensocon Inc

By Overhauser Law Offices, LLC

South Bend, IN – Judge Theresa Springmann of the Northern District of Indiana has denied a motion to strike the report of an expert who conducted an internet survey regarding the likelihood of confusion created by a trademark infringement defendant.

In January 2009, trademark attorneys for Dwyer Instruments of Michigan City, Indiana had filed a trademark infringement lawsuit in the Northern District of Indiana alleging that Sensocon, Inc. and Tony E. Kohl of Highland City, Florida infringed Dwyer’s federally registered trademarks that are placed on Dwyer’s pressure gauge lens covers by placing confusingly similar marks on Sensocon’s own products. The complaint also made claims of trade dress infringement, unfair competition, false designation of origin, counterfeiting, false designation of origin and copyright infringement.

The parties filed cross-motions for summary judgment, and Sensocon filed a motion to strike the report of Dwyer’s expert who had performed a survey on the likelihood of confusing that is created by the alleged trademark infringement. The Court denied the motion to strike, applying the standards for admission of expert evidence under Federal Rule 702 and Daubert v. Merrell Dow Pharmaceutical, Inc., 509 U.S. 579 (1993) and its progeny. The Court noted that similar surveys are routinely admitted into evidence in trademark infringement cases. The court quoted a Seventh Circuit case, stating “[w]hile there will be occasions when the proffered survey is so flawed as to be completely unhelpful to the trier of fact and therefore inadmissible, . . . such situations will be rare.” AHP Subsidiary Holding Co. v. Stuart Hale Co., 1 F.3d 611, 618 (7th Cir. 1993).

Practice Tip: The Court noted that Sensocon could still attack the expert’s report by calling its methods into question and asking the court to grant little weight to the report. The court also granted Sensocon permission to file a report of its own expert to rebut Dwyer’s expert.

May 2, 2011

Court Refuses to Strike Expert’s Report in Patent Infringement Case

By Overhauser Law Offices, LLC

Indianapolis, Indiana – In a patent infringement case, Judge Jane Magnus-Stinson of the Southern District of Indiana has denied defendants’ request to strike the report of an expert that the plaintiff had attached to a brief. The expert’s report contained a “readily-available summary of the infringement allegations.” The defendants had cited Federal Rule of Civil Procedure 12(f) as grounds to strike the expert’s report. The court in its order, however, noted that the Rule cited only applied to pleadings, not briefs, and therefore, was inapplicable. Furthermore, the court noted that the plaintiff had submitted the report for a limited purpose and “The Court will, therefore, only consider the report for that limited purpose, and only to the extent authorized by Federal Circuit precedent.”

This is a patent infringement case involving industrial wood veneer technology. The patent litigation attorneys of Overhauser Law Offices, the publisher of this site, represent Capital Machine Company in this litigation. The Indiana Intellectual Property Law and News Blog has previously blogged about the case. There are six patents at issue, all of which have been issued by the US Patent Office:

5,562,137 Method and Apparatus for Retaining a Flitch for Cutting

5,694,995 Method and Apparatus for Preparing a Flitch for Cutting

5,701,938 Method and Apparatus for Retaining a Flitch for Cutting

5,819,828 Method and Apparatus for Preparing a Flitch for Cutting

5,678,619 Method and Apparatus for Cutting Veneer from a Tapered Flitch

7,395,843 Method and Apparatus for Retaining a Flitch for Cutting

The Case No. is 1:09-cv-00702-JMS-DML, and the Order is below.
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