Tuesday, September 1, 2015

Plaintiff’s Lack of Standing Warrants Award of Attorney Fees Under Section 285

The court granted defendants' motion for attorney fees under 35 U.S.C. § 285 after a non-practicing entity plaintiff's infringement claims were dismissed for lack of standing. "Although [patent assertion entities] rarely win the lawsuits they bring, that is because they rarely litigate them to judgment. The threat of costly and disruptive litigation is their strongest tool, and it is a potent threat. . . . Exploiting the patent-in-suit in these cases . . . was [plaintiff's] sole reason for being. The only precondition to Plaintiff's fulfilling its singular purpose was its acquisition of title to the [patent-in-suit]. Obtaining ownership of the patent was . . . the only thing Plaintiff absolutely had to accomplish in order to fulfill its destiny. At this simple task it proved an abysmal failure. . . . I have never before had a case on my docket in which the purported owner of the patent-in-suit did not in fact own the patent -- that alone makes this case 'exceptional,' for I have no basis on which to believe that suing on a patent one does not own falls within the bounds of normal litigation behavior. . . . Bluffing is what [plaintiff] did: it bluffed by confidently asserting that it owned the patent, knowing that no one was likely to call its bluff and force it to prove what it knew it could not really prove. That cannot be equated with having an objectively reasonable belief that there was no defect in [plaintiff's] title to the [patent-in-suit]."

Advanced Video Technologies LLC v. HTC Corporation et al, 1-11-cv-06604 (NYSD August 28, 2015, Order) (McMahon, J.)

Monday, August 31, 2015

FRE 408 Does Not Prohibit Evidence of Settlement Offer to Show Lack of Irreparable Harm

The court denied plaintiff's motion for a preliminary injunction to preclude defendant from selling its accused email products and determined that plaintiff failed to establish irreparable harm. "[Plaintiff's] own actions belie its assertion that it requires immediate, equitable relief. . . . [O]utside of the conclusory allegations of its Chief Executive Officer and Founder, [plaintiff] has produced no substantive evidence of loss of revenue, market share, goodwill, shelf space or any of the other factors which combine to prove injuries which cannot be made whole by monetary damages. . . . Evidence presented by the parties which was filed under seal but briefly discussed during oral argument raises ER 408 questions. . . . As highlighted by [defendant], Rule 408 prohibits the use of offers to compromise when offered to prove liability for, invalidity of, or amount of a claim that was disputed as to validity or amount, or to impeach through a prior inconsistent statement or contradiction. [Defendant], however, does not offer the evidence in dispute to establish liability, validity or amount of a claim. Rather, the evidence is presented to establish whether there would be irreparable harm to [plaintiff] which could not be compensable by money damages, not the validity of the claim or amount of the harm."

BitTitan, Inc. v. SkyKick, Inc., 2-15-cv-00754 (WAWD August 27, 2015, Order) (Martinez, J.)

Friday, August 28, 2015

Failure to Show Nexus Between Patented Invention and Alleged Harm Precludes Preliminary Injunction

The court denied plaintiff's motion for a preliminary injunction to preclude defendant from selling its accused semiconductor inspection products because plaintiff failed to establish irreparable harm based on incumbency/vendor lock-in. "[Plaintiff'] argument of irreparable harm without an injunction is focused on 'incumbency' or vendor lock-in—the idea that customers who purchase [the accused product] will be unlikely to switch to a [plaintiff's] product because of the substantial switching costs. . . . [Plaintiff] has failed to proffer any customer based evidence — either directly from a customer or in survey form — indicating that the [patent-in-suit] influences customers’ purchasing decisions or makes the product significantly more desirable. . . . [T]hese systems have numerous features permitting inspection of increasingly smaller components. Because of this complexity, the causal nexus requirement is not easily satisfied. Also cutting against [plaintiff's] causal nexus arguments is the sizable price difference of the [accused] and [plaintiff's] systems [$2.8 million and $4.4 million.]. . . While price always influences purchasing decisions, the sizeable disparity here suggests price difference would play a significant role in the purchase decision."

Rudolph Technologies, Inc v. Camtek Ltd., 0-15-cv-01246 (MND August 26, 2015, Order) (Montgomery, J.)

Thursday, August 27, 2015

Physician’s Instructions Constitute Direction and Control of Patients for Determining Divided Infringement Under Akamai

Following a second bench trial, the court found that the defendant drug manufacturers induced infringement of plaintiff's chemotherapy drug patent because all steps of the claimed methods could be attributed to physicians. "[T]he factual circumstances are sufficiently analogous to those in [Akamai Technologies, Inc. v. Limelight Networks, Inc., No. 2009-1372, 2015 WL 4760450 (Fed. Cir. Aug. 13, 2015) (en banc) (per curiam)] to support a finding of direct infringement by physicians under § 271(a), and thus inducement of infringement by Defendants under § 271(b). . . . Although the parties present extensive arguments as to whether [the physician's instructions] constitutes the physician 'administering' the folic acid, whether or not this satisfies the definition of 'administer' is not relevant. What is relevant is whether the physician sufficiently directs or controls the acts of the patients in such a manner as to condition participation in an activity or receipt of a benefit—in this case, treatment with pemetrexed in the manner that reduces toxicities—upon the performance of a step of the patented method and establishes the manner and timing of the performance. Defendants argue that there is no way of knowing whether the patient will or will not actually take the folic acid, thus the physician lacks 'control or direction' over this step of the patented process. . . . The Court cannot base a finding of non-infringement upon the mere possibility that some patients might not follow their physician’s instructions and instead must look to the ANDA Products’ labeling to determine, if all the patented steps are followed, whether it would infringe the Asserted Claims."

Eli Lilly and Company v. Teva Parenteral Medicines, Inc., et al, 1-10-cv-01376 (INSD August 25, 2015, Order) (Pratt, J.)

Wednesday, August 26, 2015

Promotional Games Patent Invalid Under 35 U.S.C. § 101

The court granted defendant's motion to dismiss because the asserted claims of plaintiff’s promotional games patent encompassed unpatentable subject matter and found that the claims were directed toward an abstract idea. "[T]he court finds that the concept of promotional games -- 'random drawing sweepstakes, instant win packaging, lotteries, collect & win and match & win contests' -- is an abstract idea. Though perhaps some would dispute whether such games are a 'fundamental' economic principle, there can be little doubt that they qualify as a 'longstanding commercial practice' and a 'method of organizing human activity.'. . . Promotional games are marketing tools. Though a precise definition of 'abstract idea' is deliberately elusive, in the court's view, these tools fit squarely within any understanding of the category."

Everglades Game Technologies, LLC v GSN Games, Inc. et al, 1-14-cv-00641 (DED August 21, 2015, Order) (Sleet, J.)

Tuesday, August 25, 2015

Limited Liability Company Not Required to Identify Sole Member as Real Party in Interest in IPR Petition

The Board denied the patent owner's motion to terminate the proceeding based on a failure to name the petitioner limited liability company's sole member as a real party in interest. "[T]here is a rebuttable presumption that a petitioner’s identification of real parties in interest is accurate. However, when a patent owner provides sufficient rebuttal evidence that reasonably brings into question the accuracy of the petitioner’s identification, the ultimate burden of proof remains with the petitioner to establish that it has complied with the statutory requirement of 35 U.S.C. § 312(a)(2) . . . We . . . determine that [the sole member of the petitioner LLC] was not a RPI in this proceeding at the time Petitioner filed its Petition. In general, 'rarely will one fact, standing alone, be determinative' of the RPI issue. . . . [N]o evidence before us indicates that [the member company] is accused of infringing Patent Owner’s patent. . . . [Petitioner] contributed funds towards this proceeding, but not [the member company] . . . [The member company] is the sole member of [the petitioner]. In that sense, [the member company] exercises control over [the petitioner] generally. . . . [However] Patent Owner has only provided evidence of theoretical control, by way of corporate structure, but has not provided sufficient evidence that [the member company] had any actual control over [the petitioner's] participation in this proceeding. . . .[The member company] and [petitioner] share the same officers, but Patent Owner has not provided sufficient evidence that persuades us that the officers had the ability to, or in fact did, blur the lines between their respective roles in the organizations."

Petition for Inter Partes Review by Jiawei Technology (USA) Ltd., IPR2014-00936 (PTAB August 21, 2015, Order) (Saindon, APJ)

Monday, August 24, 2015

Motions to Stay District Court Cases Pending Post-Grant Proceedings

Stays pending reexamination of a patent have always been an important consideration in the patent litigation process. In recent years, the America Invents Act created new proceedings, including inter partes review (IPR), covered business method review (CBM) and post-grant review (PGR) for challenging patents within the Patent and Trademark Office (PTO). Decided by the newly-constituted Patent Trial and Appeal Board (PTAB), the speed of these new proceedings, the initial success rates of challenges, and new estoppel rules all changed the calculus that district courts apply in deciding whether to stay litigation pending completion of a PTO proceeding. As a result, requests for litigation stays have become more common, and the number of stays granted by district courts has increased.

Judges exercise broad discretion, not only in deciding whether to grant or deny a stay, but also in determining the nature of a stay, such as whether the stay will apply to the entire case or whether the stay will remain in place indefinitely or for a fixed time. Since a litigation stay can have a significant impact on the outcome of the litigation, making more informed, data-driven decisions has become more important than ever. Docket Navigator recently completed a study of district court decisions on contested motions to stay pending reexamination, IPR and CBM proceedings in the PTO from January 1, 2008 to July 31, 2015. The results of that study are reflected in this report.

NUMBER OF DECISIONS ON MOTIONS TO STAY PENDING REEXAM, IPR and CBM

The overall number of decisions on motions to stay has been steadily climbing since 2011, with the most dramatic increase in between 2013 (with 351 decisions) and 2014 (with 443 decisions). That trend is expected to continue this year, but to a slightly lesser degree.

Stays Pending Reexam, IPR, & CBM (grey segments represent projected data through 12/31/2015, extrapolated from actual data from 1/1/2015 through 7/31/2015)

STAYS BY DISTRICT

The Northern District of California (CAND), the Eastern District of Texas (TXED), and the District of Delaware (DED) all decided a similar number of motions to stay. CAND decided the most overall, and had the highest grant rate, 57%. TXED is the opposite, with only 25% granted and over 67% denied. Delaware granted 55%, denied 38%, and partially granted 7%.

Stays Pending PTAB Proceeding by Court (September 2012-July 2015)

LENGTH AND SCOPE

While the length and scope of stays vary, most stays apply to the entire case and remain in place until the PTAB proceedings have concluded. 92% of stays apply to the entire proceeding, while only 8% apply to specific patent claims or products. 93% of stays apply until the PTAB proceeding is completed while only 7% end at a specific date or event.

Scope and length of stays pending PTAB proceeding (June 2014 - June 2015)

STAGE OF PTAB PROCEEDING

What impact does the stage of the PTAB proceeding have on whether a stay is granted or denied? Most stays were requested when the IPR was at one of two stages: (i) after a petition was filed with the PTAB, but before the PTAB rendered an institution decision (post-filing, pre-institution), and (ii) after the PTAB rendered an institution decision but before the PTAB issued a final written decision (post-institution, pre-FWD). In the first category, the stay decision was almost evenly split: 43% granted, 48% denied, 9% partially granted and denied. Many motions denied at this stage were denied without prejudice to refiling after the institution decision. In the second category, the success rates of motions to stay increased to 64%, with 25% denied, and 11% partially granted and denied. In many post-institution instances where the motion to stay was denied, the court’s reasoning was that the district court case was too far advanced to warrant a stay.

Impact of stage of PTAB proceeding on success of motion (June 2014 - June 2015)

SUCCESS RATE BY JUDGE

Although each case is unique, the data reflects variances in outcomes of motions to stay based on the judge deciding the motion. For example, Judge Sleet has a very high grant rate, but Judge Mitchell and Judge Gilstrap have very high denial rates. Please note: a very limited set of judicial decisions are available due to the relatively narrow time period involved. As with all statistical properties, use caution when extrapolating from such small data sets.

Success rate of motions to stay by judge (September 2012-July 2015)

CONCLUSION

The number of motions for stays is on a steady upward trend. A motion filed after the PTAB has instituted IPR is more likely to succeed than one where the petition has only been filed. But a post-filing motion to stay still has a good chance of being granted. As always, different judges have different inclinations when it comes to granting or denying these motions. The likelihood of getting an entire case stayed is very high, as is the likelihood of having a case stayed until the IPR has concluded.

Though there are obvious fluctuations between individual courts and judges, the overall trend shows that these motions are and will continue to be an important part of the litigation process.