Eastern District of Texas Jury Returns $1.67 Billion Verdict for Centocor Against Abbott

A jury in the Eastern District of Texas returned a verdict of $1.67 billion yesterday, in what some have described as the largest patent-infringement verdict in U.S. history. Abbott's product, Humira, was found to infringe Patent No. 7,070,775. Centocor's competing arthritis drug is Remicade. The jury determined that the '775 patent was infringed and not invalid, and awarded $1,168,466,000 in lost profits and $504,128,000 in reasonable royalty damages.

Centocor, Inc. et al v. Abbott Laboratories, 2-07-cv-00139
(TXED June 29, 2009, Verdict)

Eastern District of Texas Grants Transfer of Venue in 3-Year-Old Consolidated Case

In a case originally filed in July 2006, and later consolidated with a related case involving the same patent, the court granted defendants' motion to transfer venue to the Central District of California because (i) "California [is] the principal place of business of both [plaintiff] and [defendant] . . . [and] [t]his gives the California districts a particularized local interest in this suit no matter the outcome of the case," (ii) "even discounting all Asian witnesses from the 100 mile rule analysis, California is still a more convenient venue for the majority of the identified witnesses involved in this action," and (iii) "the weight of physical and documentary evidence is located within California" and "whether documents may be produced electronically is no longer relevant in the convenience analysis [under the 28 U.S.C. § 1404(a)]." Although plaintiff presented evidence that "the median time to trial is 21.3 months in the Central District of California and 18 months in the Eastern District of Texas," other factors weighed in favor of granting defendants' motion to transfer.

Aten International Co. LTD. v. Belkin Corp., 2-06-cv-00296
(TXED June 25, 2009, Order) (Davis, J.)

Plaintiff Allowed Technical Discovery Concerning Products Not Accused of Infringing in Its Preliminary Infringement Contentions

Plaintiff was entitled to "technical reports, process flows, and recipes sufficient to show the process [defendant] uses to form semiconductor contacts in its processor products" even though plaintiff's preliminary infringement contentions did not accuse defendant's processors of infringing the patent-in-suit. "Some district courts have found that in patent cases, 'the scope of discovery may include products and services reasonably similar to those accused in the preliminary infringement contentions' . . . Here, [plaintiff] contends that it discovered during a recent deposition that [defendant's] processors use the same process for making semiconductor contacts as the accused memory products. Under [plaintiff's] theory, the products are reasonably similar insofar as the processes for forming semiconductor contacts. . . . The Court agrees with [plaintiff] that its failure to specifically accuse the processor products is not dispositive as [defendant] had notice that [plaintiff] accused what is purportedly the same process in a different product."

Advanced Micro Devices Inc. v. Samsung Electronics Co Ltd., 3-08-cv-00986
(CAND June 24, 2009, Order) (Illston, J.)

Contract Conveying the Right to "Possess and Use" the Infringing Device Constitutes an "Offer to Sell"

Defendant's motion to dismiss for failure to state a claim was denied in part. "The amended complaints allege a contract between [a third party] and [defendant], under which the [third party] will possess and use the [product] for five years. Under the facts alleged, [defendant's] contract with [the third party] resembles a license or rental agreement under which possession is transferred for an extended period to a licensee or lessee who will use the product. . . . The facts alleged make the existence of an 'offer to sell' plausible and preclude dismissal."

Transocean Offshore Deepwater Drilling, Inc. v. Stena Drilling Ltd. et al, 4-08-cv-03287
(TXSD June 22, 2009, Memorandum & Opinion) (Rosenthal, J.)

Deposition of Plaintiff's Trial Counsel Permitted Where Counsel Served on Plaintiff's Board and was Involved in Certain Day-to-Day Operations

Plaintiff's motion for a protective order precluding the deposition of trial counsel, who is also on plaintiff's board of directors, was denied. "Defendants have shown, based on testimony of Plaintiff’s officers, that [the witness] has been involved in the day-to-day business of Plaintiff and is therefore likely to have discoverable, non-privileged information. Defendants have shown that such information is likely to be crucial to the preparation of their case."

Datatreasury Corporation v. Wells Fargo & Company et al, 2-06-cv-00072
(TXED June 23, 2009, Order) (Folsom, J.)

Petition for Reexam Alone Does Not Warrant Stay of Litigation

Plaintiff's motion to stay pending ex parte reexamination was denied. "At the present time there is no pending reexamination. What is pending is a request by Plaintiff to the USPTO that it commence reexamination proceedings. Thus, at some time in the future -- be it a week, a month or more from now - there might be a reexamination proceeding. . . . Under the circumstances, the Court will not now, over the Defendants objections, stay this case."

Walter Kiddie Portable Equip., Inc. v. Universal Security Instruments, Inc. et al, 1-08-cv-02202
(MDD June 19, 2009, Order) (Garbis, J.)

Listing Patent in Orange Book Alone Does Not Create Justiciable Controversy as to ANDA Holder

In granting a third-party defendant's motion to dismiss for lack of subject matter jurisdiction, the court found "Filing a patent in the Orange Book signals that a person who is not licensed to manufacture, use, or sell the patented item but does so may be subject to an infringement suit. But only the patentee or its exclusive licensee has standing to sue for infringement. It is the fact that the ANDA holder is exposed to suit by the patent holder or exclusive licensee, not the mere act of listing a patent in the Orange Book, that gives rise to a justiciable controversy. Thus, [the third-party plaintiff's] broad claims that the [third-party defendant's New Drug Application] and the listing of the [patent-in-suit] adversely affected its ability to market [its product] do not give rise to a justiciable controversy."

Galderma Laboratories, LP et al v. Paddock Laboratories Inc., 4-09-cv-00002
(TXND June 18, 2009, Order) (Means, J.)

Transfer of Venue Granted Despite Transferee Court's Lack of Personal Jurisdiction Over Plaintiff

"The Court finds that, as matter of law, a transferee forum need not have personal jurisdiction over a plaintiff in order for transfer to be appropriate under § 1404(a). . . . 28 U.S.C. § 1404(a) is only concerned with whether the action could have been brought by the plaintiff in the proposed transferee forum. Here, regardless of whether the [transferee forum] would have personal jurisdiction over Plaintiffs if they were sued there, Plaintiffs could originally have brought this action in that District. . . . Plaintiffs have not cited, and the Court has not found, any cases indicating that personal jurisdiction over a plaintiff in the transferee forum is required before an action can be transferred."

Morrow v. Vertical Doors Inc., 2-09-cv-00256
(AZD June 17, 2009, Order) (Campbell, J.)

Transfer of Venue Denied Where Defendants Not Subject to Jurisdiction in Proposed Transferee Forum

In denying defendants' motion to transfer venue for convenience, the court concluded that defendants failed to establish that the exercise of personal jurisdiction in the transferee forum would be proper. "[Defendant's] 'payment' of a single lease, filing of a corporate tax return, and employing eight people does not constitute 'continuous and systematic' contacts with [the transferee forum]." Moreover, "[defendant] cannot base its 'general jurisdiction' arguments on the [contacts in the transferee forum] held by other companies. Thus, the fact that [defendant] owns or does business with companies with contacts in [the transferee forum] (such as [other defendants]) does not allow it to rely on those contacts for jurisdictional purposes."

Chirife v. St. Jude Medical, Inc., 6-08-cv-00480
(TXED June 16, 2009, Memorandum Opinion & Order) (Davis, J.)

Damages Award Not Limited by Infringer's Net Profits

On remand, the court granted plaintiff's motion for judgment and increased its damages award from $279,225 (based upon defendants' actual profits) to $2,792,250 (based upon a reasonable royalty). "Reassessing the damages . . . the Court recognizes that 'there is no rule that a royalty be no higher than the infringer’s net profit margin.' Moreover, a rule capping the reasonable royalty amount at the level of the infringer’s profits would have the effect of 'insur[ing] the infringer against losses in those situations where actual profits are less than the royalty level that would have been freely negotiated prior to the infringement.'"

Heeling Sports Ltd. v. U S Furong Intl Inc. et al, 2-06-cv-07624
(CACD June 15, 2009, Order) (Cooper, J.)

Defendant Granted Leave to Amend Invalidity Contentions Despite Lack of Diligence

The court granted defendant's motion to amend its invalidity contentions to address three additional prior art references where (i) "[t]he court has not issued a Claim Construction Order and all deadlines in this case are stayed pending resolution of the inventorship and obviousness issues in this case," (ii) "[t]he prior art references are important to Defendant’s invalidity defense," (iii) "[w]hile Defendant could have been more diligent in asserting [one of the new prior art references] . . . the lack of diligence in asserting the [prior art reference] does not outweigh the other factors which favor amendment."

The Ohio Willow Wood Company v. Thermo-Ply, Inc., 9-07-cv-00274
(TXED June 10, 2009, Order) (Clark, J.)

Court with First-Filed Case Should not Transfer Venue Until Court with Second-Filed Case Rules on Pending Venue Motion

The court sustained defendants' objections to the magistrate's order recommending that this action be transferred to a forum where a second-filed case involving the same patents was pending. "[I]f the second-filed court finds a 'likelihood of substantial overlap,' the second-filed court should transfer its case to the first-filed court. . . . Because the [second-filed] action has not matured to a final ruling on the venue transfer motion now pending there, [that] court has not yet made a final determination of whether a likelihood of substantial overlap exists between the [two actions]. The [other] court should have an opportunity to decide this issue independent of any action of this Court regarding venue. . . . Having not been presented with a [formal] motion to transfer [this case] to the [other forum], this Court sustains Defendants’ objections as to the portion of the . . . Report and Recommendation that recommends transferring [this] action."

Information Protection and Authentication of Texas, LLC v. Symantec Corp., 2-08-cv-00484
(TXED June 9, 2009, Order) (Folsom, J.)

Relief from Permanent Injunction Denied Where the Enjoined Party had Ample Warning of Injunction and Claimed to have Noninfringing Alternatives

The court rejected plaintiff's requests to stay a permanent injunction pending appeal or for a six-month transition period, but the court allowed a ten-day period to disseminate the injunction order. "[Plaintiff] professed to have non-infringing alternatives available and has had notice of the possibility that a permanent injunction would be imposed for at least three months. . . (and should have had notice of the possibility at least since the jury’s verdict [almost four months ago], and probably for years, during the pendency of this litigation). Under these circumstances, the burdens of implementing those non-infringing alternatives after a finding of infringement properly rest on [plaintiff]."

Transamerica Life Ins. Co. v. Lincoln National Life Ins. Co., 1-06-cv-00110
(IAND June 8, 2009, Memorandum Opinion & Order) (Bennett, J.)

Judicial Economy Warrants Vacating Judgment and Verdict as a Condition of Settlement Despite Intervenor's Interest in Preclusive Effect

The parties' stipulated motion to vacate judgment and allow entry of a consent judgment was granted. "[T]his Court has little difficulty concluding the equities at issue in the Motion to Vacate strongly favor allowing the settlement between [the parties] to proceed on condition that the jury’s findings in favor of [defendant] as to the [patent-at-issue] claims are vacated even if doing so is at the expense of the . . . Intervenors’ ability to argue in the case brought against them by [the same plaintiff] that the jury’s advisory finding in [this case] should be given preclusive effect. . . . On balance, the cost to the Court, the public, and the parties of undoing the proposed settlement and forcing the parties and the Court to proceed with post-trial motions and subsequent appeals on a host of issues far exceeds the cost associated with the . . . Intervenors’ defense of [plaintiff's] patent claims without the benefit of a preclusive sword as to only one issue."

CollegeNET, Inc. v. Xap Corp., 3-03-cv-01229
(ORD June 8, 2009, Opinion & Order) (Brown, J.).

"Trolling Time is Over" -- Following Inspection of Source Code "Patentee Must Fish or Cut Bait with Respect to Its Specific Theory of Infringement."

Defendant's motion for a more definite statement was granted in part. "The bottom line is that, after a plaintiff-patentee has had a reasonable opportunity to review the source code for the defendant’s accused software product, the patentee’s time for trolling the proverbial waters for a theory of infringement comes to an end, and the patentee must fish or cut bait with respect to its specific theory of infringement by providing PICs to the defendant that clearly identify and explain how the source code for the accused product infringes upon specific claims for the patent-in-suit. For [plaintiff], trolling time is over."

Diagnostic Systems Corp. v. Symantec Corp. et al, 8-06-cv-01211
(CACD June 5, 2009, Memorandum & Order) (Nakazato, MJ)

Bilksi and Quanta Warrant Amendment of Pleadings to Assert New Defenses

Defendant was permitted to amend its pleadings eight years into the litigation where the bases for defendant's newly asserted defenses were the recent decisions of In re Bilski, 545 F.3d 943, 959–60 (Fed. Cir. 2008) and Quanta Computer, Inc. v. LG Elecs., Inc., 128 S. Ct. 2109, 2120–22 (2008).

Bilski: "The long-term impact of Bilski is yet unknown, in particular as a petition for certiorari was filed on January 28, 2009 and has since been granted. However, at this juncture the Court takes Bilski as prescribing the only test for validity of patent-eligible process claims and accordingly [defendant] should be permitted to add the defense of invalidity of the patents under the Bilski machine-or-transformation test."

Quanta: "The Supreme Court in Quanta reversed the Federal Circuit to hold that the doctrine of patent exhaustion applies to method patents and that when a license authorizes the sale of components that 'substantially embody the patents in suit,' that sale exhausts the patents. . . . [Defendant] rightly brings this case to the Plaintiff’s attention as well as that of the Court as Quanta expresses a new ruling on method patents, and method patents are presently before the Court."

Research Corp v. Microsoft Corp., 4-01-cv-00658
(AZD June 5, 2009, Order) (Clive, J.).

Market Dominance Does Not Negate Harm From Continued Infringement

In granting plaintiff's motion for a permanent injunction, the court rejected defendant's argument that "[plaintiff] has always held a majority share in the market [at issue], even after the introduction of the [defendant's product], thus suggesting that the continued presence of [defendant's product] would cause no harm. That argument is unpersuasive, however, because the continued presence of the [product] would undeniably continue to take up market share that would otherwise belong to [plaintiff] and would continue to deprive [plaintiff] of profits." "[Plaintiff's] injury stems, in fact, from the loss of its 'right to exclude competitors from infringing the patent.' Money damages cannot compensate for [plaintiff's] inability to assert that right."

Haemonetics Corp. v. Baxter Healthcare Corp. et al., 1-05-cv-12572
(MAD June 1, 2009, Memorandum & Order) (Gorton, J.).

Strategic Advocacy is not Gamesmanship

In granting defendant's belated motion to amend its pleadings, the court rejected plaintiff's claims of gamesmanship. "While certainly [defendant's] attorneys have considered the strategic implications of adding the [asserted] patent to the case and found those implications to favor [defendant], that alone is not reason to deny leave. All attorneys consider the strategic implications of which defenses or claims to assert. Doing so is not gamesmanship. Gamesmanship occurs when a party delays in asserting defenses or claims with the intent or hope that the delay will prejudice the other side. Given that the amendment was sought only three weeks after the deadline had passed and while the case was in its very early stages, the Court does not find that gamesmanship played a part in the delay."

Mirror Worlds, LLC v. Apple, Inc., 6-08-cv-00088
(TXED June 2, 2009, Memorandum Opinion & Order) (Davis, J.)

Defendant Entitled to Summary Judgment on Unclean Hands Defense Where Plaintiff Threatened Suit Before Acquiring Patent Rights, Falsifying Assignments

The court granted defendant's motion for summary judgment that plaintiff was barred from asserting infringement of the patent-in-suit due to unclean hands because "[Plaintiff] did not own any rights in the [asserted] patent until . . . a few weeks before filing suit . . . [yet] despite not having been assigned any rights in the patent, [plaintiff] began writing letters [several years earlier] to several companies claiming those companies had infringed [plaintiff's] patent and threatening litigation . . .[and] [plaintiff] filed with the PTO fraudulent, back-dated assignments . . ."

Intamin Ltd v. Magnetar Technologies Corp et al., 8-04-cv-00511
(CACD May 22, 2009, Order) (Feess, J.)

EchoStar Held in Contempt for Failure to Comply with Permanent Injunction

"[T]his Court finds EchoStar in contempt of its permanent injunction. EchoStar’s modified software is not more than colorably different from the products adjudged to infringe; furthermore, EchoStar’s products continue to infringe TiVo’s patent. . . . The harm caused to TiVo by EchoStar’s contempt is substantial. EchoStar has gained millions of customers since this Court’s injunction issued, customers that are now potentially unreachable by TiVo. As this Court has noted in the past, 'loss of market share and of customer base as a result of infringement cause severe injury,' and 'every day of Defendant’s infringement affects Plaintiff’s business.' Although EchoStar requests that this Court stay its injunction further, this Court declines to do so. EchoStar has escaped this Court’s injunction for over two years and further delay will be manifestly unjust to TiVo and cause TiVo substantial harm."

TiVo Inc. v. Echostar Comm, et al, 2-04-cv-00001
(TXED June 2, 2009, Memorandum Opinion) (Folsom, J.)

Rule 11 Sanctions Not Warranted Where Plaintiff's Position Was "Arguable" and Alleged Litigation Misconduct Could be Addressed in a Discovery Motion

Defendants' motion for Rule 11 sanctions was denied where the court found that plaintiff's position on standing was "at least arguable. . . . Defendants also base their request for Rule 11 sanctions on their allegation that Plaintiff did not produce [a license] Agreement until nearly a year after the litigation commenced. We view this as a claim of discovery abuse, and it should have been raised before the Magistrate Judge."

Alfred E. Mann Foundation For Scientific Research v. Cochlear Corp., 2-07-cv-08108
(CACD May 29, 2009, Memorandum & Order) (King, J.)

Patent Claiming Enclosure Weighing "Less Than Ten Pounds" was not Invalid for Failure to Enable a Weightless Enclosure

Patent claiming an enclosure weighing "less than ten pounds" did not require enablement of a weightless enclosure. "The question is not whether [the asserted claim] enables a weightless . . . system but, as the Federal Circuit suggests in [AK Steel Corp. v. Sollac, 344 F.3d 1234, 1244 (Fed. Cir. 2003)], whether the hypothetical person of ordinary skill in the art would be able to make an ultrasound system weighing between ten pounds and a reasonable lower limit. In this case, there is an inherent limit to the possible range: a weightless ultrasound machine is not within the reasonable range of possible embodiments. Although plaintiff argues that the inventors of the [asserted] patent should have been required to supply a lower limit, the enablement requirement is not this strict."

General Electric Co. v. Sonosite, Inc., 3-08-cv-00298
(WIWD May 26, 2009. Order) (Crabb, J.)