Tesco Corporation v. National Oilwell Varco, L.P. et al. (“NOV”)


Docket No. 2015-1041

NEWMAN(D), O’MALLEY, CHEN
October 30, 2015

Brief Summary: Attorneys’ appeal regarding DC finding of bad faith dismissed as FC panel found “no on-going case or controversy” because the Tesco-NOV settlement makes it unnecessary for it to decide whether the sanctions order against Tesco can “be considered a formal reprimand against the Attorneys so as to provide them with standing”.

Summary: Tesco and its attorneys (“the Attorneys”) appealed from USDC SD TX dismissal of “Tesco’s patent infringement suit with prejudice pursuant to the court’s inherent authority to sanction.” Here, the Attorneys “contend that, despite the settlement, the harm to their reputation from the district court’s opinion justifies our continued jurisdiction over the appeal.” The dispute centers on Tesco’s failure to provide NOV with “an original, legible version” of a brochure that NOV argued showed the claimed invention during discovery. Tesco could not produce an original of the brochure and the DC “sanctioned Tesco by reversing the burden of proof on validity, and setting the burden to be a preponderance of the evidence.” The jury ultimately concluded NOV infringed some of the patent claims, found some claims invalid, and found the brochure not to be enabling. The DC then issued an order for post-trial discovery on the brochure. NOV then filed “post-trial summary judgment motions” of invalidity based on the brochure; one was granted for obviousness. NOV also sought attorney’s fees under § 285. During a hearing, the court asked one of the Attorneys “if he currently believed that the brochure disclosed the invention, and [he] admitted that it did” but also maintained he been told “during trial that the brochure did not”. The DC also “expressed concerns that Tesco may have brought suit without doing the necessary due diligenece to find a brochure that could have been invalidating.” The DC ultimately “found that the representation to the court during trial justified a finding of bad faith” and the parties settled, which the Attorneys argue “carved out [their] right to continue to pursue this appeal.” The FC panel concluded “there is no on-going case or controversy” because the settlement makes it unnecessary for it to decide whether the sanctions order against Tesco can “be considered a formal reprimand against the Attorneys so as to provide them with standing” (although Precision Specialty Metals (FC 2003) and Nisus (FC 2007) require a formal sanction or repriment to justify jurisdiction). Judge Newman’s dissent argued the Attorneys “are surely entitled to an appeal (or remand to the district court, as alternatively requested)” to try and “clear their name”.

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