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Consent Decree Stipulating to Validity Does Not Foreclose Invalidity Defense in Future Actions

April 03, 2002

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Last Month at the Federal Circuit - May 2002

Judges: Dyk (author), Clevenger, and Gajarsa

In Ecolab Inc. v. Paraclipse, Inc., No. 01-1204 (Fed. Cir. Apr. 3, 2002), the Federal Circuit affirmedin- part and vacated-in-part a district court’s denial of JMOL on two issues of noninfringement, remanding for a new trial, and reversed the district court’s decision that the Defendant waived its right to assert invalidity defenses as a consequence of an earlier consent judgment.

Ecolab Inc. (“Ecolab”) sued Paraclipse, Inc. (“Paraclipse”) for infringement of U.S. Patent No. 5,365,690 (“the ’690 patent”) in the United States District Court for the District of Nebraska. The ’690 patent, commercially implemented as the StealthTM trap, relates to lighted insect traps used to trap flies in restaurants, hospitals, and other sensitive areas where traditional means of insect control are undesirable. Paraclipse manufactures and sells a competing insect trap, the Insect Inn IV trap (“Insect IV”), and was sued by Ecolab previously in the same court because of an earlier product, the Insect Inn II trap (“Insect II”).

Concerning the jury verdict of noninfringement, the Federal Circuit found that the jury instructions were partially flawed and that the error was prejudicial. Ecolab at trial, however, failed to contest the jury instructions and/or propose alternative instructions for the Court’s consideration. Thus, the Court considered whether Ecolab’s failure to object to the instructions constituted waiver under Fed. R. Civ. P. 51 or whether its objection at the Markman hearing was sufficient to preserve the issue for appeal under the Rule’s futility exception.

At the Markman hearing, Ecolab fully briefed its position concerning the proper construction of certain terms in the claims. Thus, on appeal, Ecolab argued that it would have been futile for it to have objected to the jury instructions or to have proposed conflicting jury instructions because the instructions were consistent with the Markman order. Because the Federal Circuit found that there was no error in this portion of the jury instructions, however, it determined that there was no need to finally dispose of the futility issue.

The Federal Circuit also ruled that the consent judgment, which resolved the previous litigation between the parties, did not bar Paraclipse from asserting invalidity of the ’690 patent. In the earlier consent decree, Paraclipse had agreed to the validity and enforceability of the ’690 patent. The Court concluded that such a generic statement only precludes future assertions of invalidity if the accused products in both suits are essentially the same.

Thus, the Court compared Paraclipse’s earlier product, Insect II, which prompted the consent decree, with its now-accused infringing product, Insect IV, to determine if the two were essentially the same. Finding several differences between Paraclipse’s devices, the Court determined that they were not essentially the same, and, therefore, Paraclipse should be allowed to challenge the validity of the ’690 patent at the new trial.