Shifting Positions on Claim Construction Warrants Award of Attorneys' Fees for Additional Claim Construction Briefing

Where defendant changed its position regarding the construction of a term after two preliminary claim construction statements, the court ordered sua sponte that defendant pay plaintiff's attorneys' fees for briefing responding to the proposed new construction. "How to construe this phrase is a difficult question on which the Court could benefit from further briefing. Because [defendant's] misbehavior has made this additional briefing necessary, [defendant] should pay for it."

Northbook Digital LLC v. Vendio Services, Inc., 0-07-cv-02250 (MND December 28, 2009, Order) (Schiltz, J.)

Failure to Allege Time Period of Infringement Warrants Dismissal of Infringement Claim

The magistrate judge recommended granting defendants' motion to dismiss for failure to state a claim. "[Plaintiff] claims that defendants’ [product] infringes the patent-in-suit without alleging any facts as to when the infringement began or whether it has continued to this day. Against this, defendants show that they have not offered [the accused product] since 2002 – more than one year before the earliest filling date of the [patent-in-suit]. . . . Because proof that the [accused] product infringes the [patent-in-suit] would also prove that the product anticipates under 35 U.S.C. § 102(b), this court recommends granting defendants’ motion to dismiss."

Quantum Loyalty Systems Inc. et al. v. TPG Rewards Inc., 1-09-cv-00022 (DED December 23, 2009, Report & Recommendation) (Thynge, M.J.)

Patent Law Trumps Federal Rules of Evidence as to Admissibility of Expert Testimony

The court granted plaintiffs motion for a new trial on the issue of infringement and validity as to certain asserted patent claims because the jury was not instructed properly concerning unsupported expert testimony. The expert testimony in question "failed to identify any art that rendered [the claims at issue] obvious, to point out where any of the claims’ limitations are disclosed in the prior art, or to show how the prior art references in combination would make the claim obvious to a person of skill in the art at the relevant time." While such testimony complied with Rule 705 of the Federal Rules of Evidence, it did not comply with Koito Manufacturing Co., Ltd. v. Turn-Key-Tech, LLC, 381 F.3d 1142, 1149 (Fed Cir. 2004). "[The expert] was a qualified expert who testified that [the claims at issue] were obvious (the ultimate issue). True, he did not provide any basis for his opinion, but he was not then required to under Rule 705. What is more . . . [plaintiff] made no objection whatsoever to his opinion testimony on the ultimate issue of obviousness. One naturally would think (and as a teacher of evidence I certainly thought) this would be enough to bear the burden of going forward and to carry [defendant] to the jury [on the issue of obviousness]. Koito and the cases cited therein, however, make clear that, on the issues of anticipation, obviousness, and doctrine of equivalents, the unsupported opinion even of a qualified expert is simply not 'substantial evidence' adequate to support a jury verdict on those issues. . . . It never occurred to me that patent law trumped the Federal Rules of Evidence on the issue of obviousness. Now, recognizing my error, it is clear that the jury’s verdict cannot stand."

Newriver, Inc., v. Newkirk Products, Inc., 1-06-cv-12146 (MAD December 16, 2009, Order) (Young, J.)

Defendant Sanctioned for Fabricating Prior Art

Plaintiff's motion for sanctions against a defendant who fabricated prior art and "committed fraud on the court" was granted in part. The court did not strike defendant's claims and defenses, but instead struck all evidence concerning the fraudulent information. "[Defendant's expert and president of the company] fabricated a fake [product], and falsely identified it both as the 'commercial embodiment' of [another patent], and as 'prior art' to the [patent-in-suit]. Defendant also presented Plaintiff with photographs of the fake [product], and provided Plaintiff with a video and photographs of the testing of the fake [product], in what appears to have been an effort to deceive Plaintiff and this Court into believing that the fake [product] existed before the effective date of the [patent-in-suit]. . . . Moreover, it is not possible to conclude that these statements and representations were made in error because the evidence suggests that Defendant attempted to avoid answering questions about the fabricated evidence and did nothing to correct the obviously false statements."

Furminator, Inc. v. Kim Laube & Co., 4-08-cv-00367 (MOED December 21, 2009, Memorandum & Order) (Webber, J.)

Miscalculation of Deadline Due to Intervening Holiday Does Not Excuse Late Filing

Defendants' motion for attorneys' fees under Section 285 was stricken as untimely because defendants filed the motion one day late and failed to establish excusable neglect for their delay. "Defendants argue that their delay was due to a miscalculation given the intervening Thanksgiving holiday and the fact that the Court's Order did not state that the dismissal was 'with prejudice' . . . Defendants' miscalculation does not constitute excusable neglect. Furthermore, to the extent that Defendants were unclear about whether the Court's Order dismissing the case for lack of subject matter jurisdiction constituted a dismissal with prejudice, Defendants could have moved for clarification."

Juniper Networks, Inc. v. Graphon Corp. et al., 1-09-cv-00287 (VAED December 18, 2009, Order) (Lee, J.)

Use of Consulting Expert's Report in Infringement Contentions does not Waive Privilege as to Report

Attaching portions of a report by plaintiff's non-testifying consulting expert to plaintiff's infringement contentions did not waive any privilege applicable to the expert's report. "Contrary to defendants' assertions, plaintiff is not relying on the 'analyses, data, and conclusions' of [its non-testifying expert] as evidence to support its infringement contentions and proposed claim construction. The purpose of preliminary infringement contentions is to provide notice of the accusing party's specific theories of infringement. A contention, no matter how detailed, is not evidence."

Fast Memory Erase LLC v. Spansion Inc et al., 3-08-cv-00977 (TXND December 16, 2009, Memorandum Order) (Kaplan, M.J.)

Judge's Past Experience With Patents and Technology Support Transfer of Venue

In granting defendants' motion to transfer, the court found that "considering the eleven years of experience that the Delaware court, and specifically Chief Judge Sleet, has with the patents and associated technical issues involved in this case, this Court concludes that efficiencies will exist in the management of the case in Delaware."

Telcordia Technologies, Inc. v. Tellabs, Inc., 2-09-cv-02089 (NJD December 16, 2009, Opinion) (Greenaway, J.)

Ashcroft and Twombly Do Not Require That Complaint Allege "How" Accused Products Infringe

Defendant's motion to dismiss for failure to state a claim was denied. "[Defendant] seeks to have [plaintiff], in its Amended Complaint, specifically describe how its products practice the claimed methods or systems. This is not the proper pleading standard even after [Ashcroft v. Iqbal 129 S.Ct. 1937 (2009)] and [Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955 (2007)]. The Federal Circuit has found that a complaint contains enough detail when it 'alleges ownership of the asserted patent, names each individual defendant, cites the patent that is allegedly infringed, describes the means by which the defendants allegedly infringe, and points to the specific sections of the patent law invoked.'"

WIAV Networks, LLC v. 3Com Corp. et al., 5-09-cv-00101 (TXED December 15, 2009, Order) (Folsom, J.)

Plaintiff's Failure to Perform Pre-Suit Investigation Including "Essential Testing" Supports Award of Attorneys' Fees

Defendants' motion for a finding that the case was exceptional warranting an award of attorneys' fees was granted. "[Plaintiff] failed to make a proper pre-suit investigation. [Plaintiff's] allegation of infringement was based on nothing more than the 'structure' of the [accused products] and their supposed product labels, and on 'information and belief' that certain steps 'were' or 'may have been' performed. This is insufficient to support a claim of infringement, both in light of [plaintiff's] burden of showing the precise manufacturing methods that were used, and in light of [plaintiff's] admission that the existence of the heat treating step essential to nearly every asserted claim could only be established through test results that [plaintiff] never obtained."

International Intellectual Management Corporation v. Lee Yunn Enterprises, Inc. (U.S.A.) et al., 2-08-cv-07587 (CACD December 14, 2009, Order) (Real, J.)

3D Computer Graphics Patents Deemed Invalid Under In re Bilski

Patents "directed to improving 3D computer graphics 'through provision of an improved method for performing visibility calculations'" were invalid under In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc), cert. granted, --- U.S. ---, 129 S.Ct. 2735 (2009) because they failed to claim patentable subject matter. "[Plaintiff] concedes that its patent claims are not transformative, but nevertheless argues that they are tied to a particular machine; to wit, a computer. . . . The claim language clearly states that these claims are drawn to mathematical calculations and algorithms for calculating whether certain surfaces are visible or invisible in 3D computer graphics. This is exemplified by the language of the claims, which specify a sequence of calculations that involve 'identifying,' 'comparing,' 'determining,' and 'ignoring' data. Though the calculations may be 'performed on a computer,' they are not tied to any particular computer. For these reasons, the claims of the [patents-in-suit] fail to pass muster under the Bilski machine implementation test for patentability under 35 U.S.C. § 101."

Fuzzysharp Technologies Inc. v. 3DLabs Inc. Ltd., 4-07-cv-05948 (CAND December 11, 2009, Order) (Armstrong, J.)

Apple Strikes Back

In late October, Nokia sued Apple for alleged infringement of ten patents related to mobile phone technology. Last Friday, Apple filed its answer, defenses, and counterclaim, containing the usual denials and defenses and the claim that "to the extent [Nokia's patents] are construed by the court as essential . . . Nokia is obligated by commitments it made to Standards Setting Organizations . . . to license those patents on Fair, Reasonable, and Non-Discriminatory . . . terms." Apple also filed a counterclaim asserting that Nokia infringes thirteen Apple patents. In an introductory statement, Apple states that Nokia's suit is an "attempt by Nokia to leverage patents previously pledged to industry standards [and] an effort to free ride on the commercial success of Apple's innovative iPhone while avoiding liability for copying the iPhone and infringing Apple's patents."

Nokia Corporation v. Apple Inc., 1-09-cv-00791 (DED December 11, 2009) (Apple Inc.'s Answer, Defenses, and Counterclaims)

Yahoo! to Pay 23% Ongoing Royalty for Future Infringement

In determining an ongoing royalty rate for defendant's post-verdict infringement through a "colorable variation" of the adjudicated product, the court imposed plaintiff's proposed rate of 23% where the jury had based its damages on a rate of 20%. "The Federal Circuit has instructed that post-verdict infringement should typically entail a higher royalty rate than the reasonable royalty found at trial. [T]he Court adopts a methodology that recognizes the effect of a jury verdict on the parties’ bargaining position as they enter into a hypothetical negotiation."

Creative Internet Advertising Corp. v. Yahoo! Inc. et al., 6-07-cv-00354 (TXED December 9, 2009, Memorandum & Opinion) (Love, M.J.)

In re TS Tech, In re Genentech, and In re Volkswagen Do Not Provide "New Grounds" for Transfer of Venue

Defendant's motion to transfer venue for convenience was denied. In an earlier case, the court denied defendant's motion to transfer venue and in connection with a subsequent dismissal without prejudice the parties agreed that venue would be in the Eastern District of Texas unless there were "new grounds" for transfer. In the instant case, the court rejected defendant's argument that In re Volkswagen of America, Inc., 545 F.3d 304 (5th Cir. 2008), In re TS Tech USA Corp., 551 F.3d 1315 (Fed. Cir. 2008), and In re Genentech, 566 F.3d 1338 (Fed. Cir. 2009) provided "new grounds" for transfer. "Although the new cases clarified the standard for obtaining a venue transfer, these cases continue to apply the same public and private interest factors in evaluating § 1404(a) transfer motions. Indeed, the Federal Circuit has stated that it was applying well settled Fifth Circuit law."

Financial Sytems Tech. (Intellectual Property) Pty. Ltd. et al. v. Oracle Corp., 2-08-cv-00371 (TXED December 8, 2009, Memorandum Opinion & Order) (Everingham, M.J.).

Assignment Executed by Incorrect Entity Nevertheless Conveyed "Substantial Rights" to Patent Sufficient to Vest Plaintiff with Standing

Defendant's motion to dismiss for lack of standing was denied notwithstanding an error in the assignment of the patent rights -- "the correct officer signed the . . . Assignment on behalf of the incorrect entity" -- that was not corrected until after suit was filed. "[T]he correct officer who signed the . . . Assignment, who was at the time an officer of [two companies], signed the assignment on behalf of the wrong entity, thereby creating a clerical error in the . . . Assignment. . . . The Court finds that [plaintiff] did have enforceable rights to the patents-in-suit when it brought this lawsuit. The Court finds that this ownership vested [plaintiff] with constitutional standing to bring this lawsuit."

Southwest Efuel Network, L.L.C. v. Transaction Tracking Technologies, Inc., 2-07-cv-00311
(TXED December 7, 2009, Memorandum Opinion & Order) (Ward, J.)

Determination Of Commercial Offer For On-Sale Bar Does Not Include Course of Dealing or Industry Practice

The court granted Honeywell's motion for summary judgment of invalidity based on the on-sale bar. In doing so, the court rejected Honeywell's argument that its Proposal submitted in response to Boeing's Request for Proposal was not a commercial offer even though it "express[ed] firm and definite commitments regarding, among other things, price and delivery [terms]." "Honeywell contends that this detailed proposal was not an offer, based on the 'longstanding business relationship between Honeywell and Boeing, as well as the industry custom and norm in the context of the proposal phase of a complex, developmental project' . . . In the Court's view, however, the fact that further negotiations might arise, or even be expected, does not preclude the . . . Proposal from being an invalidating offer where, as here, the . . . Proposal contained the essential terms of an offer and Honeywell manifested its intent to make an offer to Boeing."

Honeywell Intl Inc., et al. v. Audiovox Corp., et al.,
1-04-cv-01337 (DED December 4, 2009, Memorandum Opinion) (Farnan, J.)

Apple Overturns Willfulness Verdict in Post-Trial Motions

Defendant's motion for judgment as a matter of law regarding willful infringement related to a $19 million verdict was granted despite the jury's finding that defendant's infringement was willful. "Although [defendant's] invalidity and noninfringement arguments were unsuccessful, these defenses were strong enough to preclude a finding of objective recklessness. . . . [Defendant] presented a good faith argument that the [patent-in-suit] was invalid as anticipated. . . . Although the jury rejected this defense, the issue was, viewed objectively, sufficiently close to preclude a finding of willful infringement."

OPTi, Inc. v. Apple, Inc., 2-07-cv-00021
(TXED December 3, 2009, Memorandum Opinion & Order) (Everingham, M.J.)

Defendants' Website, Marketing Activities, and Single $29.95 Sale of Accused Service Warrant Exercise of Personal Jurisdiction

"Defendants have sold at least one allegedly infringing product, provided two samples of the allegedly infringing product free of charge, maintain an ongoing license with at least one district member, have contacted members to solicit business, maintain an internet website accessible by district members, and conduct Internet advertising accessible by district members. . . . The cause of action for patent infringement is alleged to arise out of these activities. . . . Any burden on Defendants in having to litigate this case in Texas is not sufficiently compelling to outweigh Plaintiffs' and Texas's interest in adjudicating this case in Texas."

Absolute Software, Inc. et al v. World Computer Security Corporation et al.,
1-09-cv-00142 (TXWD December 2, 2009, Order) (Yeakel, J.)

Howrey Disqualified From Representing Boston Scientific In New Jersey, But Not Delaware

The court granted plaintiff's motion to disqualify Howrey as defense counsel even though another court denied a parallel motion in a case involving the same parties and counsel. "Judge Robinson held that even though there was a violation of Rule 1.7 of the American Bar Association’s Model Rules of Professional Conduct (“Rule 1.7"), disqualification of Howry as counsel for [defendant] was not appropriate because Howry’s ethical screen was a sufficient measure to deal with the violation in the District of Delaware." Applying New Jersey law, the court held that a violation of the rule required disqualification. "Given the violation of Rule 1.7, this Court finds that disqualification is appropriate here. The Court therefore need not engage in an analysis of whether [plaintiff's] alleged 'obfuscatory' conduct in causing the conflict of interest justifies disqualification."

Wyeth et al. v. Abbott Laboratories et al., 3-08-cv-00230
(NJD December 1, 2009, Letter Order) (Bongiovanni, M.J.)

Late Amendment of Contentions: Denied as to New Patent, Granted as to New Prior Art

Plaintiff's motion for leave to serve amended infringement contentions, asserting infringement of an additional patent, was denied because defendant made its source code available a month before plaintiff's supplemental contentions were due and plaintiff waited more than four months after that date to seek leave to amend its infringement contentions. "[Plaintiff] has not shown that its delay in adding [a] Patent was reasonable based on the amount of time it had to inspect [defendant's] source code." However, defendant's motion for leave to supplement its invalidity contentions was granted. "[T]he Court notes that the addition of prior art references post Markman do not have the same implications as the addition of an entirely new patent. Any potential prejudice that [plaintiff] may suffer as a result of [defendant] amending its invalidity contentions would likely arise in connection with the [upcoming] discovery deadline. This potential prejudice can easily be cured with an appropriate continuance of the discovery deadline if needed."

Sybase, Inc. v. Vertica Systems, Inc., 6-08-cv-0024
(TXED November 30, 2009, Memorandum Opinion & Order) (Davis, J.)

Divided Infringement: Outsourcing Accused System Warrants a Finding of Noninfringement as to Both System and Method Claims

Defendant's "natural language interactive voice response system" did not infringe the asserted system and method claims of plaintiff's speech recognition patents because defendant outsourced its voice response system to a vendor who "without input from [defendant], [was] responsible for choosing, configuring, and operating the architecture, hardware, and speech recognition software relating to the [voice response system]." "[Plaintiff] reasons that DirecTV put the system into service because (i) DirecTV owns the telephone number required to access the system, (2) the system is designed to serve DirecTV's customers, (3) the system accesses DirecTV's backend accounting system for customer data and movie titles, and (4) DirecTV owns a website. . . . But even if such facts were true, as a matter of law they are unrelated to putting the claimed technology into service. DirecTV does not control any of the hardware or software associated with [the vendor's] accused platform or claimed in [plaintiff's] patents and thus cannot put the claimed invention into service."

Phoenix Solutions, Inc. v. The Directv Group, Inc.,
2-08-cv-00984 (CACD November 23, 2009) (Pfaelzer, J.)