360 F.3d 1295 (Fed. Cir. 2004), 03-1184, Q-Pharma, Inc. v. Andrew Jergens Co.

Docket Nº:03-1184.
Citation:360 F.3d 1295
Party Name:70 U.S.P.Q.2d 1001 Q-PHARMA, INC., Plaintiff-Appellee, v. The ANDREW JERGENS COMPANY, Defendant-Appellant.
Case Date:March 08, 2004
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit

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360 F.3d 1295 (Fed. Cir. 2004)

70 U.S.P.Q.2d 1001

Q-PHARMA, INC., Plaintiff-Appellee,


The ANDREW JERGENS COMPANY, Defendant-Appellant.

No. 03-1184.

United States Court of Appeals, Federal Circuit

March 8, 2004

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[Copyrighted Material Omitted]

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Stuart R. Dunwoody, Davis Wright Tremaine LLP, of Seattle, WA, argued for plaintiff-appellee. With him on the brief was William R. Sherman.

Steven B. Kelber, Piper Rudnick, LLP, of Washington, DC, argued for defendant-appellant. With him on the brief were Jerold I. Schneider and Raymond Millien.

Before LOURIE, Circuit Judge, ARCHER, Senior Circuit Judge, and CLEVENGER, Circuit Judge.

LOURIE, Circuit Judge.

The Andrew Jergens Company appeals from the decision of the United States District Court for the Western District of Washington denying its motion for Rule 11 sanctions against Q-Pharma, Inc. Q-Pharma, Inc. v. Andrew Jergens Corp., No. C01-1312P (W.D.Wash. Sept. 10, 2002) (" Rule 11 Order"). Jergens also appeals from the district court's decision denying attorney fees under 35 U.S.C. § 285 and granting summary judgment to Q-Pharma on Jergens' antitrust counterclaim. Q-Pharma, Inc. v. Andrew Jergens Corp., No. C01-1312P (W.D.Wash. Nov. 18, 2002) (" Attorney Fee Order"). For the reasons stated below, we affirm.


Q-Pharma owns U.S. Patent 4,654,373, which is directed to a method for therapeutically treating damaged tissue by topically administering a composition containing Coenzyme Q sub10 ("CoQ sub10 "). The sole independent claim of the '373 patent reads as follows:

A method of therapeutically treating impaired or damaged tissue in humans and animals which comprises topically administering to such tissue a composition comprising as the principal active ingredient a therapeutically effective amount of Coenzyme Q sub10 (2,3-dimethoxy-5-methyl-6-decaprenyl-benzoquinone) in admixture with a pharmaceutically acceptable carrier.

'373 patent, col. 8, ll. 21-27 (emphases added). Dependent claims 2 and 3 recite methods in which the compositions administered contain 0.1-10% CoQ sub10 by weight and 0.0001-0.1% CoQ sub10 by weight, respectively. Id., col. 8, ll. 28-33.

Jergens markets and sells a product known as Curél TM Age Defying Therapeutic Moisturizing Lotion with Coenzyme Q sub10 (the "Curél TM CoQ sub10 lotion"). In its advertising, Jergens states that its age-defying lotion, "which now contains the natural power of Q10, helps reveal visibly healthier skin." Jergens' advertising for that product also claims that CoQ sub10 "defends against the signs of aging to keep skin looking younger, smoother and more vital"; "helps support our skin's natural ability to restore itself, reducing visible signs of aging"; and "helps to restore skin's natural elasticity." In addition, the label on the Curél TM CoQ sub10 lotion prominently displays the term "Q sub10 " and touts the benefits of CoQ sub10, in marked contrast to the labels on Jergens' other therapeutic moisturizing lotions, which do not contain CoQ sub10 .

In August 2001, Q-Pharma filed suit against Jergens in the United States District

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Court for the Western District of Washington, alleging that Jergens' sale of the Curél TM CoQ sub10 lotion infringed the '373 patent. Jergens counterclaimed for declaratory judgments of noninfringement, invalidity, and unenforceability of the '373 patent and for damages for violation of the antitrust laws. During the course of discovery, Q-Pharma repeatedly demanded from Jergens information regarding the contents of the Curél TM CoQ sub10 lotion. Jergens refused to comply with those requests but, in response to Q-Pharma's motion to compel, filed a motion for summary judgment of noninfringement in which it revealed that the accused product contained no more than 0.00005% CoQ sub10 by weight. Upon learning that information, Q-Pharma elected to abandon its suit. In May 2002, Q-Pharma sought a voluntary dismissal with prejudice and agreed not to sue Jergens in the future for infringement due to the sale of the Curél TM CoQ sub10 lotion. The court subsequently dismissed with prejudice Q-Pharma's infringement claim and Jergens' noninfringement, invalidity, and unenforceability counterclaims, leaving only Jergens' antitrust counterclaim unresolved.

In September 2002, the district court denied Jergens' motion for sanctions against Q-Pharma under Rule 11 of the Federal Rules of Civil Procedure ("Rule 11"). The court first found that Q-Pharma had made a sufficient pre-filing inquiry to determine whether the accused product infringed. Specifically, the court noted that, although Q-Pharma did not conduct a chemical analysis of Jergens' Curél TM CoQ sub10 lotion before filing suit, its attorneys performed a claim construction analysis and then relied on Jergens' advertising statements, which suggested that the Curél TM CoQ sub10 lotion contained a "therapeutically effective amount" of CoQ sub10 . Rule 11 Order, slip op. at 4. Moreover, the court rejected Jergens' argument that Q-Pharma was on notice of the patent's invalidity prior to filing suit, finding that, although the patent's validity had been challenged in the past, several companies had taken licenses under the patent. Id. at 5. Finally, the court found that Jergens' Rule 11 motion was untimely under Rule 11's "safe harbor" provision, Fed.R.Civ.P. 11(c)(1)(A), because it was filed after Q-Pharma had voluntarily withdrawn its claim and therefore provided Q-Pharma with no opportunity to cure the challenged conduct. Rule 11 Order, slip op. at 5-6.

In November 2002, the district court denied Jergens' motion for attorney fees under 35 U.S.C. § 285, finding that Jergens had failed to prove by clear and convincing evidence that the case was exceptional. More particularly, the court determined that Q-Pharma's pre-filing infringement investigation, while not ideal, did not rise to the level of bad faith litigation or gross negligence required for an award of attorney fees under § 285. Attorney Fee Order, slip op. at 9. The court also found that, because it had successfully licensed the '373 patent to more than ten companies, Q-Pharma had reason to believe that its patent was valid when it filed suit. Id. at 10-11. The court thus determined that the case was not exceptional and declined to award attorney fees.

In the same order, the district court also granted summary judgment to Q-Pharma on Jergens' antitrust counterclaim on the ground that Q-Pharma did not violate the antitrust laws by enforcing its patent. Applying the test set forth in Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 508 U.S. 49, 113 S.Ct. 1920, 123 L.Ed.2d 611 (1993), the court determined that Q-Pharma's infringement lawsuit was not a mere "sham" to cover an attempt to interfere with Jergens' business relationships. Attorney Fee Order, slip op. at 11-12. Rather, the court

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determined as a matter of law that Q-Pharma's decision to proceed with the lawsuit was not "objectively baseless" in light of Q-Pharma's reasonable interpretation of the claim language and prosecution history as well as Jergens' advertising touting the therapeutic effects of CoQ sub10 in the accused product. Id. at 13. In addition, the court denied Jergens' motion for a continuance under Federal Rule of Civil Procedure 56(f) ("Rule 56(f)"), noting that more discovery would only lead to evidence of Q-Pharma's subjective intent, which became moot once the court found that Q-Pharma's actions were not objectively baseless, and therefore would not preclude summary judgment. Id. at 15. Finally, the court denied Jergens' motion for reconsideration of the court's refusal to compel Q-Pharma to produce attorney-client privileged documents, finding that Q-Pharma had not waived privilege and that the privileged information was not "vital to [Jergens'] defense." Id. at 15-16. Having thus granted summary judgment to Q-Pharma and denied Jergens' discovery-related motions, the court dismissed Jergens' antitrust counterclaim.

Jergens timely appealed to this court. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).


In deciding issues not unique to our exclusive jurisdiction, we apply the law of the regional circuit in which the district court sits. See Midwest Indus., Inc. v. Karavan Trailers Inc., 175 F.3d 1356, 1359 (Fed.Cir. 1999) (en banc in...

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