United States District Court, Eastern District of Pennsylvania
March 25, 1999
B. BRAUN MEDICAL, INC.
ABBOTT LABORATORIES AND NP MEDICAL, INC.
The opinion of the court was delivered by: O'neill, District Judge.
Braun sued Abbott and NP Medical for infringement of U.S. Patent No.
4,683,916. Defendants denied infringement and alleged that the Braun
patent was invalid. In addition, defendants asserted as affirmative
defenses, they also filed a counterclaim for declaratory judgment of
non-infringement, patent invalidity and non-enforceablilty and for "such
other and further relief as [the Court] deems just and proper."
In November, 1994, a jury found that the Braun Patent was valid but not
infringed and found for defendants on their patent misuse and equtable
Braun prevailed on defendants' implied license defense.
Abbott asserted that it was entitled to damages for Braun's patent
misuse and, by Memorandum and Order of June 30, 1995, the trial court
permitted Abbott to offer evidence of such damages. The court specifically
based this decision on the Declaratory Judgment Act, which gives the
court discretion to grant necessary or proper relief based upon such a
judgment. See B. Braun Med., Inc. v. Abbott Laboratories, 892 F. Supp. 115,
116-17 (E.D.Pa. 1995)
Thereafter, considerable discovery ensued and, after a second jury
trial lasting approximately eight days in November-December, 1995, a jury
found that Abbott was not entitled to any damages for Braun's patent
misuse. The Court denied Abbott's motion for a new trial of the issue.
Braun asserts and Abbott does not deny that the eight-day misuse
damages trial involved thousands of documents and dozens of witnesses as
well as the filing of numerous pre-trial and post-trial papers. Braun
also asserts that it spent approximately $741,000 to defend against the
misuse damages claim. Abbott does not challenge this figure but states
that it is irrelevant.
Braun appealed from the district court's judgment that it had misused
and was equitably estopped from enforcing its patent, and that the
accused devices did not infringe the patent. Abbott cross-appealed
seeking attorney fees and damages for Braun's patent misuse. Apparently,
Abbott did not appeal from the judgment of patent validity or lack of
The Court of Appeals for the Federal Circuit iter alia:
1. Affirmed the district Court's judgment of
2. Reversed the judgment that Braun was equitably
estopped from suing defendants;
3. Affirmed the judgment that Abbott was not
entitled to damages for patent misuse;
4. Affirmed the district court's denial of attorney
With respect to patent misuse, the Court held as follows:
As we have mentioned, the patent misuse doctrine is
an extension of the equitable doctrine of unclean
hands, whereby a court of equity will not lend its
support to enforcement of a patent that has been
misused . . . Patent misuse arose, as an equitable
defense available to the accused infringer, from the
desire "to restrain practices that did not in
themselves violate any law, but that drew
anticompetitive strength from the patent right, and
thus were deemed to be contrary to public policy. . .
." When used successfully, this defense results in
rendering the patent unenforceable until the misuse is
purged. It does not, however, result in an award of
damages to the accused infringer.
The district court held the damages trial based . .
. on Abbott's counterclaim for declaratory judgment.
. . . Relying on 28 U.S.C. § 2202, the district
court held that "the Declaratory Judgment Act allows
monetary damages to be awarded under a declaratory
judgment counterclaim based on patent misuse. . . ."
The Declaratory Judgment Act neither expands a
court's jurisdiction nor creates new substantive
rights. . . .
In order that the court not be unduly limited, the
Act . . . states that once a court properly has
jurisdiction to enter a declaratory judgment, it may
also grant "[f]urther necessary or proper relief. . . ."
This provision . . . was not designed, however, to
allow a declaratory judgment plaintiff to avoid the
requirements imposed by the substantive law as a
predicate to obtaining such relief . . . contrary to
the district court's opinion, monetary damages may not
be awarded "under a declaratory judgment counterclaim
based on patent misuse," because patent misuse simply
renders the patent unenforceable. In other words, the
defense of patent misuse may not be converted to an
affirmative claim for damages simply by restyling it
as a declaratory judgment counterclaim.
B. Braun Med., Inc. v. Abbott Laboratories, 124 F.3d 1419, 1427-28
(Fed.Cir. 1997) (citations omitted).
Abbott filed a bill of costs seeking an award in the amount of
$86,135.44. Thereafter the Clerk taxed costs in the amount of
$77,167.37. The matter is before me on plaintiffs' objections to the
Clerk's taxation of costs.
Braun contends that Abbott is not a prevailing party pursuant to Rule
54(d) which provides that "costs shall be allowed as a matter of course
to the prevailing party unless the court otherwise directs. . . ." Thus
the court has discretion in awarding costs and may deny an award to a
prevailing party; if it does so, it is required to articulate its reasons
for the denial, which is necessary for purposes of appellate review.
On this question the opinion of my colleague, Judge VanArtsdalen, in
Compro-Frink Co. v. Valk Manufacturing Co., 595 F. Supp. 302 (E.D.Pa.
1982) is instructive. In that case Judge VanArtsdalen held that
plaintiffs' patents were valid and enforceable but that the products
manufactured by defendant did not infringe the patents. Judge
VanArtsdalen then asked the question, "realistically, who is the
prevailing party." He observed that each party gained something by the
action, while at the same time being unsuccessful in establishing any
wrongdoing on the part of the other. Defendant was entitled to continue
to manufacture the accused products and plaintiff obtained a judicial
declaration of patent validity; neither was able to establish that the
other was liable for damages. Accordingly he concluded that either there
was no prevailing party or regardless of who was the prevailing party
costs should not be imposed.
Judge VanArtsdalen also held, relying on ADM Corp. v. Speedmaster
Packaging Corp., 525 F.2d 662, 664-65 (3d Cir. 1975), that costs may
properly be denied to a prevailing party where the prevailing party has
unduly extended or complicated resolution of the issues. See also the
recent opinion of my colleague, Judge Katz, in City of Rome, Italy v.
Glanton, 1999 WL 61595 (E.D.Pa. Feb. 3, 1999).
Exercising the discretion conferred upon me by Rule 54, I will vacate
the Clerk's taxation and direct that each party is to bear its own
As in Judge VanArtsdalen's case, both Braun and Abbott won and lost.
Braun secured a declaration of validity of its patent but did not recover
damages. Abbott secured a declaration that its products do not infringe,
leaving Abbott free to make and sell them, but did not recover damages.
In the words of Judge VanArtsdalen: "In the context of this case, in
practical effect, there was no prevailing party and no losing party. The
litigation resulted in a tie."
Moreover, the principles that patent misuse is an unclean hands defense
not giving rise to an action for damages and that the Declaratory
Judgment Act confers no substantive rights are familiar and well
established ones and, with respect, it is surprising (at least to this
writer) that they were not recognized and applied in the Memorandum of
June 30, 1995. Given the Order of that date, Abbott was entitled to
pursue its misuse damages counterclaim but the opinion of the Federal
Circuit makes it clear that Braun should not have been compelled to
defend against it. In these circumstances it would not be just, in my
view, to require Braun to pay the costs taxed by the Clerk.
In sum, whether or not Abbott is a prevailing party, for the reasons
set out above, I exercise my discretion to deny it the requested costs.
Having so ruled, I need not address the remaining objections asserted
AND NOW, this day of March, 1999, the Clerk's taxation of costs is
VACATED. Each party shall bear its own costs.