Failure to Show Subjective Bad Faith Sinks Request for Attorneys' Fees for Alleged Frivolous Lawsuit

The court denied defendant's motion for attorneys' fees under 35 U.S.C. § 285 following summary judgment based on plaintiff's alleged filing of a frivolous lawsuit. "Unless the request for attorneys’ fees is based on litigation misconduct or inequitable conduct before the PTO, a court should award attorneys’ fees 'only if both (1) the litigation is brought in subjective bad faith, and (2) the litigation is objectively baseless.' . . . Defendant argues that attorneys’ fees should be awarded because Plaintiff filed this frivolous lawsuit. However, Defendant has not provided any evidence of Plaintiff’s subjective bad faith. As such, Defendant has not met its burden to show that this is an exceptional case which merits attorneys’ fees."

Mark Hunter v. Lamps Plus Inc., et. al., 8-10-cv-00298 (CACD December 27, 2010, Order) (Anderson, J.)

Instructions to an Arms Length Business Partner do not Constitute "Control or Direction" for Joint Infringement

In granting defendants' motions for summary judgment of no literal infringement, the court rejected plaintiff's joint infringement theory based on defendants' alleged control of certain third parties. "[E]ven if [plaintiff] had argued and proven that the stored procedures unequivocally 'gain entry' to all records of open orders, and even if [defendants'] vendors undisputedly wrote stored procedures pursuant to instructional guides provided by [defendants], [plaintiff] could not prevail on a joint infringement theory because the issuance of calls to [vendor] databases and the provision of instructions to an arms length business partner do not constitute ''control or direction' over the entire process such that every step is attributable to' [defendants]. In other words, [plaintiff] misconstrues 'the control or direction standard,' which inquires whether 'the law would traditionally hold the accused direct infringer vicariously liable for the acts committed by another party.' But [plaintiff] does not dispute (and has put forth no evidence refuting) [defendants'] showing that their relationships with OMS vendors amount to no more than 'mere "arms-length cooperation"' that 'will not give rise to direct infringement by any party.'"

Liquidnet Holdings, Inc. v. Pulse Trading, Inc, 1-07-cv-06886 (NYSD December 21, 2010, Order) (Scheindlin, J.).

Attorneys' Fees Determination May Render Patent Unenforceable Despite Earlier Dismissal of Inequitable Conduct Claim

Plaintiff's motion to dismiss its own claims with prejudice, and defendant's counterclaims without prejudice, was granted but the court gave defendant leave to move for attorneys' fees under 35 U.S.C. § 285 which could result in a post-dismissal determination of unenforceability. "In [Leviton Mfg Co. v. Shanghai Meihao Elec., Inc., 613 F. Supp. 2d 670 (D. Md. 2009)] . . . the Federal Circuit’s holding did nothing to unsettle the district court’s initial steps of dismissing the patent claims with prejudice and granting the defendant leave to move for fees. . . . Inequitable conduct is one possible theory at issue in the overall § 285 fees context. If it is established, unenforceability 'follows automatically' as a matter of law."

Gordon-Darby Systems, Inc. v. Applus Technologies, Inc., 1-10-cv-01863 (ILND December 23, 2010, Order) (Zagel, J.)

Concurrent Representation of Plaintiff in Patent Suit and Defendant in Reexamination Involving Different Patents Warrants Disqualification

Defendant's motion to disqualify plaintiff's counsel was granted where counsel represented plaintiff in the current dispute and was subsequently retained by defendant in connection with a reexamination proceeding involving different patents and an unrelated indemnity dispute. "Once [plaintiff's counsel] accepted [defendant] as a client, the firm owed [defendant] a duty of loyalty. [Plaintiff's counsel] breached that duty . . . by assisting [plaintiff] in advancing patent infringement claims against [defendant]. Although the consequence of that breach -- per se disqualification -- does negatively impact [plaintiff's counsel's] first client, [plaintiff], allowing [it] to avoid that consequence by simply withdrawing as counsel for [defendant], a secondly acquired but nonetheless fully engaged client, is not the best way to restore confidence in the legal profession. . . . Once a client engages a lawyer, that client must be able to expect undivided loyalty. Even though disqualification is a harsh penalty, allowing a law firm to resolve voluntarily created conflicting loyalties by simply dropping the less favored client undermines this expectation."

Fujitsu Limited v. Belkin International, Inc., et. al., 5-10-cv-03972 (CAND December 22, 2010, Order) (Koh, J.)

False Marking Fine for Christmas Tree Stands Exceeds Selling Price for Certain Units

In calculating a false marking fine upon plaintiffs' motion for default judgment, the court applied a fine that was greater than the selling price of some falsely marked products (Christmas tree stands). "Defendant falsely marked 24,000 articles. The Court notes that the items manufactured vary materially in price from $30.27 per unit to $169.70. Because of this price variation, the Court determines that the $169.70 per unit price should be reduced by fifty percent (50%) and this price ($84.75) will be applied to the 20,400 units sold at prices of $30.27 or $67.70. The Court determines that applying the highest unit price of $84.75 for these substantially lower price units achieves the deterrent goal of § 292’s fine provisions. Using the 'highest point of the price range,' $169.50, for the 3,600 articles amounts to a total fine for these units of $610,200. Applying an $84.75 highest point of the price range to the remaining 20,400 articles amounts to a total fine for them of $1,728,900, for an aggregate fine of $2,339,100."

Polytree (Hong Kong) Co., Ltd., et. al. v. Forests Manufacturing, Ltd., 1-09-cv-03377 (GAND December 20, 2010, Order) (Duffey, J.)

Scrivener's Error in Patent Marking Does Not Preclude Finding of Intent to Deceive

Defendant's motion for Rule 11 sanctions for plaintiffs' filing of a qui tam false marking action was denied despite defendant's arguments that plaintiffs' counsel knew the mismarking was a scrivener's error that could not be corrected due to a lack funds. "[A]lthough Defendant has asserted potentially plausible arguments that he lacked the requisite intent for liability under § 292, these assertions go to the merits of the false marking claim, which the Court is in no position to prejudge as of this early stage of the case. Those arguments do not, by themselves, substantiate a claim that Plaintiffs’ attorneys abused the litigation process by contending that Defendant did in fact possess the requisite intent."

Lundeen, et. al. v. John T. Minemyer, 1-09-cv-03820 (ILND December 17, 2010, Order) (Dow, J.)

Question of Whether to Incur "Substantial Expenses" for Testing and Clinical Trials does not Create Substantial Controversy Sufficient

to Assert Declaratory Relief Claim
Defendant's motion to dismiss plaintiff's declaratory relief claims of noninfringement and invalidity for lack of subject matter jurisdiction was granted because plaintiff's device was still in early development. "[Plaintiff] argues that the present controversy satisfies the immediacy prong of [MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007)] because '[plaintiff] has reached a point where it would incur substantial expenses in conducting bench, animal and clinical testing.' However, in light of Plaintiff’s own allegations that '[p]rior to being introduced for commercial sale, [plaintiff's] medical devices undergo rigorous and intensive laboratory testing, in vitro and in vivo studies, and clinical trials,' and that '[t]ypically, a product may undergo many years of testing and clinical trials . . . before being ready for commercial sale,' it remains uncertain when, if ever, the declaratory plaintiff would engage in potentially infringing activity. While Plaintiff contends that it 'has completed the design of its products,' it has not yet submitted them for approval by the [FDA], which suggests, consistent with its own factual allegations, that it has yet to initiate the 'many years' of testing and clinical trials required prior to commercialization. That Plaintiff has reached a point where it would 'incur substantial expenses' by embarking on bench, animal, and clinical testing is also insufficient to satisfy the immediacy requirement where the potentially infringing activity could still be 'many years' away."

W.L. Gore and Associates Inc. v. GI Dynamics, 3-10-cv-08088 (AZD December 15, 2010, Order) (Snow, J.)

Marking Warranty Cards Within Product Packaging Does Not Support False Marking Claim

In granting plaintiff's motion for summary judgment on defendants' false marking counterclaim, the court determined that plaintiff's warranty cards contained within its product packaging were not "used in advertising" as contemplated by 35 U.S.C. § 292. "Given the plain meaning of 'advertising' and the body of law interpreting 'advertising' in the Lanham context, the Court finds that [plaintiff's] warranty cards are not 'advertising' subject to false marking liability. [Plaintiff's] warranty cards are found inside the packaging; they are invisible until the product is purchased and the packaging opened. And in that regard, they are not used to call something to the attention of the public by way of paid announcement. It would be impossible for them to call attention to the eyewear before the eyewear is purchased."

Oakley, Inc. v. Bugaboos Eyewear Corp., et. al., 3-09-cv-02037 (CASD December 15, 2010, Order) (Sammartino, J.)

Reasonable Royalty Damages not Limited by Defendant's Profits or Selling Price Where Plaintiff Lays Factual Predicate for Price Erosion

The court denied defendants' motion to preclude the testimony of plaintiff's damages expert on the issue of a reasonable royalty even though the expert's royalty exceeded defendant's profits and, in some cases, the selling price of the accused products. "[P]laintiff . . . argues that [its damages expert] was correct not to put a cap on damages because the profits earned by the defendants in the eroded market that they allegedly created should not be used to set the limits on damages. Again, assuming that the information provided to [the expert] [i.e., that 'but for' the infringement prices would have been substantially higher] is supported by proper factual predicates, [the expert's] reliance on this information does not compel the exclusion of 'but for' pricing in the reasonable royalty calculation."

SynQor, Inc. v. Artesyn Technologies, Inc., et. al., 2-07-cv-00497 (TXED December 13, 2010, Order) (Everingham, M.J.)

For Divided Infringement, Proof of Agency Not Required to Establish "Direction and Control"

The court denied in part defendant's motion for summary judgment of noninfringement based on a divided infringement theory even though the third party performing a step of the claimed method was not defendant's agent. "The parties’ dispute turns on the appropriate test for control or direction. . . . [Defendant's payment processing contractor] is clearly not an agent of [defendant]. There is no evidence that [defendant] asked [its contractor] to customize its services in any way. Rather, the evidence shows that [defendant] entered into the standard contract that [its contractor] provides all its customers. . . . Nonetheless, the Federal Circuit has stated that a party cannot avoid infringement, simply by contracting out steps of a patented process to another entity. . . . This suggests that control and direction must be considered from the perspective of the claim limitation that the third party is alleged to satisfy. If [defendant's payment processing contractor] could fulfill its obligation under the contract without satisfying the limitation at issue, [defendant] could be said not to control or direct [its contractor]. However, [plaintiff] has presented evidence that [defendant] contracted [its contractor] to perform the exact steps required by the claims. [Defendant] required [its contractor] to satisfy the limitations at issue and there is no evidence that [its contractor] had the discretion to perform its services in any other manner."

Ronald A Katz Technology Licensing L P v. Ameren Corporation et al, 2-07-cv-04955 (CACD December 3, 2010, Order) (Klausner, J.)

No Divided Infringement Where Step Performed by Third Party is Part of Non-Limiting Preamble

The court denied defendant's motion for summary judgment of noninfringement on the basis of divided infringement because the method step allegedly performed by a third party was part of a preamble and therefore not limiting. "[Defendant's] analysis suggests that it does not infringe because another party provides the responsive signals. Here, the claimed methods state that they are 'for use' with remote terminals that provide responsive signals. Thus, the preamble as a whole is not limiting because it merely states the intended purpose of the invention. To infringe [those claims], the accused infringer does not need to provide the responsive signals; it needs to perform steps that operate on those signals in the prescribed manner."

Ronald A Katz Technology Licensing L P v. Consolidated Edison Company of New York Inc et al, 2-07-cv-04958 (CACD December 3, 2010, Order) (Klausner, J.)

Criminal Nature of False Marking Claim and Resulting Public Harm Warrant Denial of Stay

The court denied defendant's motion to stay plaintiff's false marking action pending a final determination by the ITC in an action where defendant was not the respondent. "Even assuming [plaintiff] itself would not be unduly prejudiced or put at a clear tactical disadvantage . . . false marking is a crime. False marking deceives the public, meaning that the interests at stake in such a suit go beyond merely [the parties to this action]; instead, a false marking suit has direct consequences for all consumers. Staying this case will, if [plaintiff's] allegations are correct, result in continued harm to the public, not just [plaintiff], for at least another year." (page 5)

Promethean Inc. v. eInstruction Corporation, 9-10-cv-00106 (TXED November 30, 2010, Order) (Clark, J.)

Plaintiff's Incorporation in EDTX Four Months Before Filing Suit Does Not Compel Transfer of Venue

In denying defendants' motion to transfer venue the court found that plaintiff's incorporation in Texas four months before filing suit did not weigh against transfer. "[S]ince [plaintiff] filed its complaint four months after incorporation, [its] formation in Texas is not 'recent' under Federal Circuit precedent. Further, [plaintiff] has established . . . that two of [its] three principals live in Texas. . . . Therefore, [plaintiff's] connections to Texas will be given some weight. Furthermore, there is no reason to believe [plaintiff] transported documents to Texas to create venue, as Defendants contend. . . . The Court recognizes that [plaintiff] may be in the process of transporting documents from Illinois to Texas. The Court concludes, however, that these documents are not being transported to manipulate venue, but rather to aid in normal business functions, functions that originated in Texas."

NovelPoint Learning LLC v. Leapfrog Enterprises, Inc., et. al., 6-10-cv-00229 (TXED December 6, 2010, Order) (Love, M.J.)

Alleging Post-Expiration Modification of Packaging is Sufficient to Plead False Marking Intent to Deceive

Defendant's motion to dismiss plaintiff's qui tam false marking action for failure to allege intent to deceive was denied where plaintiff alleged defendant changed its packaging several times after the patent-at-issue expired. "[T]he court finds that the packaging change allegations support the pleading of intent to deceive sufficiently to survive a motion to dismiss."

Accord Patents, LLC v. Industrial Revolution, Inc., 1-10-cv-00860 (GAND December 9, 2010, Order) (Pannell, J.)

Butterball Beware! False Marking Plaintiffs Get Creative, Dig Deeper to Support Intent to Deceive Allegations

With intent to deceive at the forefront of false marking cases, plaintiffs are getting quite specific in their pleadings of just how deceptive false marking practices can be:

Plaintiff was deceived into choosing a Butterball Turkey when looking to buy at the grocery store and noticed the added convenience of a lifting device included in the Butterball Turkey packaging.

Plaintiff called BB's consumer affairs on November 29, 2010 at 5:53 pm to inquire about the patent number of the turkey lifter. Plaintiff talked to a BB employee named Jenna who spoke to her supervisor and returned with the answer that they didn't know the patent number but that there was a patent on the turkey lifter. After a few minute conversation Jenna continued to conclude the phone call with "I just don't know the patent number but I do know there is a patent." BB blatantly intended to deceive the plaintiff into believing the false patent mark advertising of a patented turkey lifter was correct.

Plaintiff returned to the store and conversed with fellow shoppers at the turkey freezer and discussed the lifter device. It was apparent that the public is readily deceived, like the Plaintiff was, into thinking no other turkey will be sold with such a device because it is patented.

What are the potential damages for these offenses in the view of the plaintiff?

Upon information and belief, more than 232 million turkeys are consumed in the United States in each year. It's estimated that 46 million of those turkeys are eaten at Thanksgiving,22 million at Christmas and 19 million at Easter. With BB claiming to account for 20 percent of the total turkey production in this country it is likely that at least during the 2010 Thanksgiving period alone, BB sold over 9 million falsely marked turkeys, and thus the damages for which BB are responsible in this action could far exceed $10,000,000.00.

Buyers v. Butterball, LLC, 4-10-cv-00672 (TXED December 7, 2010, Complaint)

Of note, this is the second false marking suit filed against Butterball. In the previously filed Promote Innovation v. Butterball, LLC, filed on Black Friday of this year in the same district, the turkey lifter is again at issue. Apparently though, the plaintiffs in this case asked someone a little more helpful than Jenna. They list the patent for the lifter as 3,784,069.

False Advertisement Through Third Parties May Constitute False Marking, But Facts Must be Pled With Particularity

Defendant's motion to dismiss plaintiff's qui tam false marking action for failing to plead with particularity was granted where plaintiff alleged the websites of defendant's affiliates claimed defendant's product was patented. "Plaintiff alleges that, for advertising purposes, [defendant] provided affiliates with false information that [the accused product] was patented and did so with intent to mislead the public. In other words, [defendant], with ill intent, falsely advertised through third parties that [the accused product] was patented. . . . Although Plaintiff’s theory of liability is not legally defective, he has failed to plead sufficient facts to support it as required under Rule 9(b). Plaintiff does not plead how the alleged fraud operated or any facts regarding [defendant’s] relationship with its so-called affiliates. He does not allege that [defendant] deceived them or exercised control over them. . . . Further, Plaintiff fails to plead the identities of the three affiliate marketers that stated that 'the manufacturer' supplied them with the challenged text. Plaintiff does not even allege that [defendant] is 'the manufacturer' to which these marketers referred."

United States of America, ex. rel., et. al. v. Factor Nutrition Labs, LLC, et. al., 4-10-cv-02529 (CAND December 7, 2010, Order) (Wilken, J.)

All 3G "Licenses-Out and Cross-Licenses" Deemed Discoverable as Potentially Relevant to Industry Practice and Valuation

Plaintiff's motion to compel "Nokia to produce all licensing agreements covering wireless products that comply with third generation ('3G') telecommunication standards known as CDMA and WCDMA" was granted. "[Defendant's] licenses-out and cross-licenses provide information about how the telecommunications industry values CDMA and WCDMA technology and the licensing customs of the industry. While these licenses may be extensive, involve multiple parties and hundreds of patents that make it difficult for an expert to attribute value to the small number of patents-in-suit, that is an argument that goes to the weight that a damages expert may give to a particular license agreement, not whether or not a license agreement is relevant or should be produced."

SPH America, LLC v. Acer, Inc., et. al., 3-09-cv-02535 (CASD December 3, 2010, Order) (Battaglia, M.J.)

Filing Privileged Documents Under Seal and Serving Opposing Parties Waives Privilege

Plaintiff's motion to reclaim privileged documents where it attached privileged documents to a motion filed under seal, and not for in camera review, was denied. "Filing under seal protects the documents from view of the public. On the other hand, filing documents in camera protects the documents from view of the public and also other parties in the case -- only the Court can view the documents. Therefore, filing the documents under seal and serving them on the defendants has the same effect as disclosing documents to a third party and thus waiving the privilege."

First American CoreLogic, Inc. v. Fiserv, Inc., et. al., 2-10-cv-00132 (TXED December 2, 2010, Order) (Ward, J.)

Acts of Inducement may be Inferred from Defendant's Pre-Issuance Conduct

Defendants' motion for summary judgment of noninfringement was granted as to direct infringement, but denied as to induced infringement. "While pre-issuance conduct alone cannot be grounds for induced infringement of the [patent-in-suit], pre-issuance activity may offer evidence sufficient to infer post-issuance activity. Here, Defendants sold their products using a presentation that would have constituted inducement had the patent then been in force. The jury may infer from documented pre-issuance sales techniques that Defendants continued to use these techniques and thus induced infringement after [that] patent issued."

SynQor, Inc. v. Artesyn Technologies, Inc., et. al., 2-07-cv-00497 (TXED December 2, 2010, Order) (Ward, J.)

False Marking Intent to Deceive may be Alleged Generally Under FRCP 9(b), Regardless of the Deceived "Public's" Sophistication

Defendant's motion to dismiss plaintiff's qui tam false marking action for failing to plead intent to deceive with particularity was denied. "[Plaintiff's] allegations of deceptive intent are sufficient under Rule 9(b), given that those allegations need only be alleged generally. [Defendant] argues its alleged scheme to deceive the public 'stands no rational chance of success' because the '"public" comprises [sic] sophisticated pharmaceutical competitors, who [sic], Plaintiff alleges, without a shred of support, might be "discourag[ed] or deter[red] from commercializing competing products."' Defendant’s argument fails. A valid and enforceable patent generates a zone of exclusivity within which prospective competitors, regardless of their sophistication, cannot operate. A company’s false marking of a product line sends a signal to its competitors, both actual and potential, that that line is subject to intellectual-property protection. Such false signals constitute an impediment to competition, even when they are directed at experienced, business-savvy, and knowledgeable rivals. . . . Even if one were convinced that 'sophisticated' competitors would never be dissuaded by false marking, it is quite clear that Congress did not hold that view. The False Marking Statute makes no reference to the proclivity of a particular instance of false marking to negatively affect competition, and does not purport to exempt false markings that would not deter competitors in a given case."

Simonian v. Allergan, Inc., 1-10-cv-02414 (ILND November 30, 2010, Order) (St. Eve, J.)

High Volume of Sales During Holiday Shopping Season Creates Irreparable Injury Sufficient for TRO

Plaintiff's motion for a temporary restraining order precluding defendants from selling certain handbags was granted. "[Plaintiff] has built a significant reputation in the handbag industry for designing and manufacturing snaps for high-end makers of handbags. . . . [Plaintiff] has no control over a customer’s dissatisfaction with the counterfeit snaps and a company’s reputation and goodwill is not easily compensable. [G]iven the high volume of shopping during the holiday season, [plaintiff] stands to suffer an even more significant injury to its reputation as it is likely that many [defendant] handbags, which include the counterfeit snap fasteners, will be purchased in the coming weeks. Accordingly, the Court concludes that the plaintiff has met its burden in proving a threat of irreparable injury."

Romag Fasteners, Inc. v. Fossil, Inc. et al, 3-10-cv-01827 (CTD November 30, 2010, Order) (Droney, J.)

Settlement Communications Leading to Litigation-Induced Licenses may be Discoverable to Establish Admissibility of License Agreements

The court granted defendants' motion to compel the production of settlement communications leading to litigation-induced license agreements because the communications would help determine the admissibility of the license agreements. "Although other courts in this District are split on whether litigation induced settlement agreements are admissible at trial, this Court takes a case-by-case approach to the issue. Whether the settlement agreements are admissible will likely depend on whether they are an accurate reflection of the inventions’ value. In this case, the settlement communications are likely to be key in determining whether the settlement agreements accurately reflect the inventions’ value or were strongly influenced by a desire to avoid or end full litigation. Defendants have demonstrated that, even within the same type of industry, different companies have settled for vastly different amounts. Companies with higher internet sales revenues have settled for less than companies with much lower internet sales revenues. Thus, the settlement amounts do not seem to be correlated to the companies’ potential damages exposure. Additionally, some companies have had secondary agreements that have required them to pay less than the original settlement amount. The settlement communications will likely explain these inconsistencies."

Clear With Computers, LLC v. Hyundai Motor America, Inc., 6-09-cv-00479 (TXED November 29, 2010, Order) (Davis, J.)

False Marking Affirmative Defenses -- Laches & Unclean Hands Are In, Advice Of Counsel Is Out

The court granted plaintiff's motion to amend its answer to defendant's false marking claim to include laches and unclean hands defenses and rejected defendant's argument that equitable defenses may not be invoked against the government and therefore cannot be invoked against a defendant who stands in the government's shoes. "The Ninth Circuit considered an identical argument in the context of the Clean Air Act and disagreed. . . . Thus, the Court finds that laches and the equitable defense of unclean hands are suitable affirmative defenses against a citizen suit brought under § 292." However, the court denied plaintiff's motion to amend to assert an advice of counsel affirmative defense. "[T]he Federal Circuit [in Pequignot v. Solo Cup Co., 608 F.3d 1356 (Fed. Cir. 2010)] considered advice of counsel not as an affirmative defense, but as part of the 'intent to deceive' analysis. [Plaintiff] notes that the 'advice of counsel defense' contains the word 'defense.' But appending the word 'defense' to a phrase does not an affirmative defense make."

Oakley, Inc. v. Ryders Eyewear, 3-09-cv-02037 (CASD November 23, 2010, Order) (Sammartino, J.)

"Simple User Involvement" With Software is Not Sufficient to Trigger Divided Infringement

In granting plaintiff's motion for summary judgment of infringement the court rejected defendant's argument that it did not infringe a method claim because the step of "supplying digital data representing each of a plurality of source data streams from a plurality of users" could only be performed by the end user and not defendant. "Defendants are unable to make a divided infringement argument because it is the software that performs all necessary steps of the patent. A user is necessarily involved at least at some point in most computer method patents; simple involvement, however, is not enough to give rise to divided infringement. For example, even the famous Amazon.com 1-click patent has a limitation requiring a 'response to only a single action being performed.' The user necessarily is the one who performs this 'single action' after going to the web page and searching for the item. If simple user involvement were enough to give rise to divided infringement, few, if any, software patents could be infringed."

Kenexa BrassRing Inc. v. Taleo Corporation, 1-07-cv-00521 (DED November 18, 2010, Order) (Robinson, J.)

Intent to Deceive Element of False Marking Claim Cannot be Inferred from:

Failure to Pay Maintenance Fees and Later Revision of Product Packaging
The magistrate judge recommended dismissing plaintiff's qui tam false marking action for failure to plead intent to deceive with particularity. "Plaintiff herein seeks to establish the element of intent to deceive by imputing knowledge of the expiration of the [patent-in-suit] on Defendants based on Defendants' alleged sophistication as a company, their experience and knowledge with patents and intellectual property and Defendants' alleged familiarity with the [patent] application specifically. . . . Plaintiff also alleges that Defendants paid the maintenance fees on the [patent-in-suit] until 2000 when such payments were discontinued. . . . [and that the products at issue] are marked with a 2009 copyright, indicating that Defendants 'contemplated, reviewed, authored, created, and approved the contents of the packaging/labels for the [products at issue], and purposefully chose to mark [the products] with the expired patents.'. . . Plaintiff has failed to adequately set forth the element of 'intent to deceive the public' required by 35 U.S.C. § 292."

Herengracht Group LLC v. Intelligent Products Inc. et al., 1-10-cv-21785 (FLSD November 17, 2010, Report & Recommendations) (Turnoff, M.J.)

Length of Time Since Patent Expired
Defendant's motion to dismiss plaintiffs' qui tam false marking action for failing to plead with particularity was granted. "[Plaintiffs argue] in their brief in opposition to the motion to dismiss that the length of time that [the patent-in-suit] was expired is sufficient to show that [defendant] intended to deceive the public. We disagree. The length of [defendant's] alleged conduct alone does not show that [it] intended to deceive the public. [Plaintiffs] cannot rest on their single conclusory allegation regarding intent to deceive to satisfy the pleading requirements of Rule 9(b)."

United States of America, et. al. v. William Bounds, Ltd., 2-10-cv-00420 (PAWD November 17, 2010, Memorandum & Order) (Lancaster, J.)

Defendant's Settlement Agreements in Cases Involving Similar Patents are not Discoverable

Plaintiff's motion to compel the production of defendant's settlement agreement in another case was denied. "Although [plaintiff] argues that the [patent] in the Texas case is 'directly relevant' to the . . . patents at issue in this case, I find that [plaintiff] has only shown that the [other] patent is one of a myriad of patents owned by [defendant] relating to prosthetic products that use a gel and substrate liner issued by Bruce G. Kania. . . . I note the strong federal policy supporting the confidentiality of settlement agreements, and the fact that information concerning [defendant's] knowledge of its liner patents and their validity is accessible by [plaintiff] via other discovery means."

ALPS South, LLC v. The Ohio Willow Wood Co., 8-08-cv-01893 (FLMD November 19, 2010, Order) (Pizzo, J.)

Summary Judgment of Noninfringement Granted as to Method Claims Involving Steps Performed Only Outside the U.S.

Defendants' motion for summary judgment of noninfringement of plaintiff's wireless device management patent was granted in part as to method claims involving steps performed only by a server in Canada. "Plaintiff concedes that the Method Claims 'are not infringed to the extent that any step of any of these method claims occurs only outside the United States, e.g., at [defendants'] network operations center located outside the United States.' Plaintiff clarifies, however, that its infringement claims are not based on Defendants’ activities in Canada, but rather by Defendants’ alleged performance of 'each of the recited method steps within the United States.'. . . Accordingly, the Court grants Defendants’ . . . Motion and orders that [the asserted method claims] of the [patent-in-suit] are not infringed to the extent any step of these method claims occurs only at Defendants’ NOC located outside of the United States."

Mformation Technologies, Inc. v. Research in Motion Limited, et. al., 5-08-cv-04990 (CAND November 18, 2010, Order) (Ware, J.)

No Willful Infringement as to Patents Issued After Filing of Infringement Suit

The court granted defendant's motion for judgment as a matter of law of no willful infringement of plaintiff's aircraft data transmission patents as to four of the seven patents-at-issue despite the jury's verdict to the contrary. "[W]hile the infringement proceeding revealed that [defendant] acted despite an objectively high likelihood that its actions constituted infringement of a valid patent, there is no evidence to support a finding that [defendant] was subjectively aware of this objectively defined risk at the time the [four] patents were issued and added to the present litigation."

Harris Corp. v. Federal Express Corp., 6-07-cv-01819 (FLMD November 17, 2010, Order) (Antoon, J.)

Plaintiff's Control of Ex Parte Reexamination Schedule Negates Prejudice from Stay

In granting defendant's motion to stay pending reexamination, the court rejected plaintiff's argument that a stay would prejudice plaintiff's rights in that it would delay resolution of the litigation. "[T]his is an ex parte application by Defendant, which means that the Defendant is not permitted to have any further input. The deadlines are all in the control of the Plaintiffs. They are not required to take the maximum time to file the necessary documents or appeals. Any undue delay in the reexamination will not be caused by Defendants."

Tablemax IP Holdings, Inc. et al v. Shuffle Master, Inc., 2-09-cv-01519 (NVD November 16, 2010, Order) (Hunt, J.)

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Defendants' Statements Challenging Validity of Asserted Patents Undermine Equitable Estoppel Defense

In denying defendants' motion for summary judgment on the issue of equitable estoppel, the court found that "[g]enuine issues of material fact exist as to whether [defendants] actually relied on [plaintiff's] action (or inaction), or whether they relied on a belief that the [patents-in-suit] were invalid." Plaintiff offered evidence of several letters drafted by defendants that questioned the validity of the patents. "Defendants characterize these statements as a mere 'initial reaction of [defendant's] business people . . . including their predictable questioning of patent validity and alleged infringement.' . . . Perhaps, but Defendants’ argument is effectively an invitation for the Court to resolve a genuine issue of material fact at the summary judgment stage. Doing so would be inappropriate and premature, particularly given the fact that all reasonable inferences tilt in [plaintiff's] favor."

Lautzenhiser Technologies, LLC v. Sunrise Medical HHG, Inc., et. al., 4-07-cv-00084 (INSD November 8, 2010, Entry on Cross-Motions for Summary Judgment) (Pratt, J.)

Marking With Conditional Language Does Not Negate Inference of Intent to Deceive

The court denied defendant's motion to dismiss plaintiff's qui tam false marking action and rejected defendant's argument that marking with the conditional phrase "[X products] are covered by one or more of the following U.S. patents: [#A, #B, #C, #D] and other patents pending," negated an inference of intent to deceive. "Defendant argues that the listing of an expired patent in conjunction with 'at least one nonexpired patent' does not support an inference of an intent to deceive. According to Defendant the conditional language used in its markings defeats any allegation of purposeful intent to deceive the public. Defendant’s argument lacks merit. That Defendant chose to couch its markings in conditional language does not negate the fact that some of the patents listed in the markings were expired. Further, Defendant’s use of conditional language could have the effect of deceiving members of the public into believing that the products were covered by all the patents listed in the markings."

Hollander v. Etymotic Research, Inc., 2-10-cv-00526 (PAED November 1, 2010, Memorandum and/or Opinion) (Tucker, J.)

Amendment of Claims During Reexam Warrants Stay of Litigation Even Among Direct Competitors

Defendants' renewed motion to stay pending ex parte reexamination was granted because plaintiff amended all of its independent claims during the reexamination proceeding and added new claims in response to the PTO's initial rejection. "[T]he PTO issued an Initial Office Action rejecting all of the [patent-in-suit's] claims in [defendant's] ex parte reexamination. In response, [plaintiff] did not attempt to distinguish the prior art over the original claims; instead, it amended all of the independent claims and added three new claims. . . . Given [plaintiff's] decision to amend its claims in response to the PTO’s Initial Office Action, the [patent-in-suit's] reexamination will result in amended claims with different scope and limitations than the claims currently at issue. . . . Thus, [plaintiff's] substantive claim amendments during reexamination strongly favor staying this litigation. . . Generally, the prejudice of staying [plaintiff's] claims against its direct competitors weighs heavily against a stay; however, [plaintiff's] decision to submit substantive claim amendments during the [patent-in-suit’s] reexamination neutralizes this prejudice. [Plaintiff] is not prejudiced by a stay of patent claims that it is attempting to change."

Southwire Co. v. Encore Wire Corp. et al., 6-09-cv-00289 (TXED November 10, 2010, Order) (Davis, J.)

"Unreasonable," "Excessive," and Wasteful Litigation Tactics do not Warrant Award of Attorneys' Fees

Defendant's motion for attorneys' fees under 28 U.S.C. § 1927 following summary judgment was denied. "While plaintiff’s conduct at times may have seemed unreasonable, 'carelessly, negligently, or unreasonably multiplying the proceedings is not enough.' Throughout the course of this litigation both counsel have been warned by the Court that unprofessional and unreasonable conduct will not be tolerated."

Allstar Tire & Wheel, Inc. v. Wheel Pros, Inc., et. al., 8-08-cv-00563 (CACD November 9, 2010, Civil Minutes) (Stotler, J.)

The court denied defendant's motion for attorneys' fees under 35 U.S.C. § 285. "Plaintiffs requested what appears to be excessive discovery, failed to compromise on minor litigation activities, unreasonably submitted two expert reports without prior designation in contravention of the Court’s scheduling order, and filed a motion for preliminary injunction two years after the product they sought to enjoin had been introduced to the market and then withdrew the motion only after [defendant] filed its response in opposition. As a result of this behavior, [defendant] was required to expend significant time and money on this action that could have been avoided or mitigated. Nevertheless, the Court cannot find by clear and convincing evidence that standing alone plaintiffs’ litigation tactics were exceptional."

Mintz, et al v. Dietz and Watson Inc. et al., 3-05-cv-01470 (CASD November 9, 2010, Order) (Lorenz, J.)

Patent Claim for "Optimization" of Database is Invalid as Indefinite

Defendant's motion for summary judgment of invalidity was granted because the only asserted claim included the term "optimization" which was insolubly ambiguous. "[B]ecause optimization necessarily involves tradeoffs, a database that is demonstrably inferior to the original data source with respect to the most important characteristics would still be superior with respect to some characteristic and therefore 'optimized.' A competitor would have no way to know whether a process for transforming a data source into a new database led to 'optimization' and would be subject to an infringement suit if the patent holder could locate a single characteristic of the database that is superior to that of the data source."

Data Retrieval Technology LLC et al. v. Sybase, Inc. et al., 3-08-cv-05481 (CAND November 8, 2010, Claim Construction Order) (Walker, J.)

Internet Radio Services do not Infringe Method Claims Requiring Performance of Steps by Different Parties not under Common Control

The court granted defendants' motion for summary judgment of noninfringement because the asserted method claims of plaintiff's internet radio patent required the performance of steps by different actors who were not under common direction or control. "[E]very asserted independent method claim requires that some steps of the method are performed at the server arrangement, while other steps must be performed at the user’s computer. Here, the 'server arrangements' are provided by Defendants, while the accused 'user computing arrangement' - the personal computers used by end-users . . . are not provided by any of the Defendants. . . . [B]ecause the claims require multiple actors to meet the limitations of the accused claims and because there is no dispute that the parties involved do not control or direct each others’ actions or their computers, Defendants are entitled to summary judgment of no infringement on this basis as well."

Zamora Radio, LLC v. Last.FM, Ltd., et. al., 1-09-cv-20940 (FLSD November 5, 2010, Order) (Torres, M.J.)

Plaintiff's "Recent, Ephemeral" Presence in EDTX did not Warrant Retention of Venue Where the Public and Private Convenience Factors Favored Transfer

Defendants' motion to transfer venue was granted where the private and public factors favored transfer. "[Plaintiff] allegedly moved its office to a residential apartment complex in Frisco less than three weeks before this suit was filed. Although [plaintiff] has a long term presence in Texas, its presence in this district 'appears to be recent, ephemeral, and an artifact of litigation.'. . . [One defendant's] headquarters are located in the Northern District of California, and nearly all of [its] relevant documents and employees with knowledge of the accused products can be found in that district. Likewise, the vast majority of [the other defendant's] witnesses and evidence are located in Oregon, which is much closer to the Northern District of California than the Eastern District of Texas. Although [plaintiff] contends that all of its documents are located in this district, the Federal Circuit has indicated that the majority of physical evidence is provided by the accused infringers."

Affinity Labs of Texas, LLC v. Nike, Inc. et al., 2-10-cv-00054 (TXED November 4, 2010, Order) (Everingham, M.J.)

Is Pleading Intent to Deceive upon "Information and Belief" Sufficient to State a Claim for False Marking?

Yes -- Defendant's motion to dismiss plaintiff's qui tam false marking action for failure to state a claim was denied. "[Defendant] challenges the adequacy of the complaint, in part, based on its recurrent use of 'upon information and belief.' Relator’s allegations do not fail on account of their use of these qualifiers. . . . [N]othing in either [Bell Atl. Corp. v. Twombly [550 U.S. 544, 555 (2007)] or [Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009)] suggests that pleading based upon 'information and belief' is necessarily deficient. The Court therefore concludes that pleading in this manner is not categorically improper, especially when information lies uniquely within the control of the defendant."

Simonian v. Blistex, Inc., 1-10-cv-01201 (ILND November 3, 2010, Order) (St. Eve, J.)

No -- Defendants' motion to dismiss plaintiff's amended qui tam false marking claim for failure to state a claim was granted. "Plaintiff has lengthened its conclusory statements, but still fails to allege any facts or information that support its 'beliefs.' For example, Plaintiff alleges on 'information and belief' that Defendants 'engaged in a strategy of marking patents on their products for the purpose of deceiving the public' and 'purposefully allowed their products to bear the irrelevant patents.' These statements do not give any basis for Plaintiff’s belief that Defendants were employing a strategy or purposefully allowing irrelevant patents. . . . Plaintiff’s statement of facts alleges details which explain why it believes Defendants’ products are mismarked, but contains no information supporting the belief that Defendants were acting with an intent to deceive. Further factual detail is needed to survive a motion to dismiss under Rule 9(b)."

Shizzle Pop, LLC v. Aviva Sports, Inc. et al., 2-10-cv-02574 (CACD November 3, 2010, Order) (Klausner, J.)

Judgment of Nonobviousness does not Collaterally Estop Later Assertion of Anticipation Defense Involving the Same Patents and Prior Art

Plaintiff's motion for summary judgment to preclude defendant from challenging the validity of two patents-in-suit based on prior art asserted in a related case was granted as to obviousness but not anticipation. "'While it is commonly understood that prior art references that anticipate a claim will usually render that claim obvious, it is not necessarily true that a verdict of nonobviousness forecloses anticipation. The tests for anticipation and obviousness are different.'. . . The [jury in the earlier case] was not asked to render a verdict with respect to [defendant's] anticipation defense; nor was this Court asked to reach such a judgment. Therefore, [defendant's] anticipation defenses were not 'actually litigated' and issue preclusion does not apply."

Power Integrations Inc. v. Fairchild Semiconductor International Inc., et. al., 1-08-cv-00309 (DED October 21, 2010, Opinion) (Stark, J.)

Inherent Property of Earlier-Made CRESTOR® Formulations Invalidate Later-Issued Teva Patent

Defendant's motion for summary judgment of invalidity due to prior invention was granted. "[T]he Federal Circuit has recognized that a prior inventor need not always have appreciated every feature recited in a patent claim in order to have conceived of or reduced to practice the claimed invention. . . . In view of the fact that the earlier-made CRESTOR® product formulations have been shown to meet all limitations of the asserted [patent] claims (by virtue of [defendant's] limited concession of infringement), [plaintiff's] discovery that crospovidone contributes to the stability of the formulations resembles the sort of scientific explanation for a prior art composition’s functioning that the Federal Circuit has found to be an inherent property of the prior art in other cases. The discovery of this inherent property does not make the pharmaceutical compositions claimed by [plaintiff] -- which [defendant] undisputedly made first -- new."

Teva Pharmaceutical Indus. Ltd. v. Astrazeneca Pharmaceuticals LP, et. al., 2-08-cv-04786 (PAED October 20, 2010, Memorandum and/or Opinion) (Yohn, J.)

Failure to Mitigate Damages Defense "is not Inappropriate" in Patent Infringement Case

The court denied plaintiff's renewed motion for judgment on the pleadings as to defendants' defense of failure to mitigate. "Plaintiff argues that failure to mitigate damages is not a defense in a patent infringement case because it cannot find any case law discussing this defense in the context of patent infringement and certain treatises on patent law do not discuss it. Plaintiff also argues that this 'makes sense because . . . a patent holder has no recourse when faced with an infringer but to seek a license and, if one is declined to sue for infringement.' The Court finds these arguments are without merit. . . . Here, Plaintiff is the injured party seeking compensatory damages for the alleged patent infringement. In determining compensatory damages for patent infringement under 35 U.S.C. § 284, the focus is on compensating the patentee or the plaintiff for this injury. . . . Thus, it is entirely appropriate for a defendant to assert a defense of failure to mitigate damages when considering what amount of compensation is appropriate for Plaintiff, the injured party in this action. Such a defense may rarely be relevant in a patent infringement case, but it is not inappropriate."

IMX, Inc. v. E-Loan, Inc. et al., 1-09-cv-20965 (FLSD November 1, 2010, Order) (Martinez, J.).

Courts Take Aim at Nonspecific Inequitable Conduct Pleadings

Plaintiff's motion to dismiss plaintiff's inequitable conduct counterclaim was granted and defendant was ordered to file a counterclaim that complied with the pleading requirements of FRCP 9(b). "[Defendant], inter alia, has not sufficiently identified the individuals involved or the information withheld and why it was material, nor has it alleged sufficient facts to support [plaintiff's] deceptive intent."

Teva Women's Health, Inc. v. Lupin, Ltd. et al., 2-10-cv-00080 (NJD October 27, 2010, Order) (Hochberg, J.).

Defendant's motion to dismiss plaintiff's claim of inequitable conduct for failing to plead with particularity was granted. "[Plaintiff's] pleading fails to 'identify which claims, and which limitations in those claims, the withheld references are relevant to.' [Plaintiff's] pleading also does not 'identify the particular claim limitations, or combination of claim limitations, that are supposedly absent from the information of the record,' which are 'necessary to explain both "why" the withheld information is material and not cumulative, and "how" an examiner would have used this information in assessing the patentability of the claims.'"

TiVo Inc. v. Verizon Communications, Inc., 2-09-cv-00257 (TXED October 28, 2010, Order) (Folsom, J.).

"Greed" and Overreaching Forfeit Sanctions Award

Plaintiff's motion to sanction defense counsel for failing to appear at a case management conference was denied. "Ordinarily, reasonable expenses incurred as a result of a party’s noncompliance with rules would have been granted. Plaintiff’s counsel, however, has grossly overreached in his request for sanctions by asking for over four thousand dollars. It cannot be justified and is not justified. As a result of this greed, no sanctions will be awarded."

Goodman Ball, Inc., et. al. v. Mach II Aviation, Inc., et. al., 3-10-cv-01249 (CAND October 27, 2010, Order) (Alsup, J.)

Internet Search Using "Less-Than-Mainstream Search Engine" Did Not Show That Prior Art Publication Was "Readily Available Public

Information" And Therefore Not "Newly Discovered Evidence" Under FRCP 60

In denying defendant's motion for relief from judgment of infringement on the basis of newly discovered evidence, the court concluded that a prior art publication was not in defendant's possession at the time of trial or could not have been discovered with reasonable diligence. "[I]t is not apparent that the [new prior art] publication was readily available to the public such that [defendant] could have discovered it upon a diligent search of the internet. In opposition to [defendant's] motion, [plaintiff] attaches the results of an internet search it performed, which contains a link to the [new prior art] publication. [Plaintiff], however, performed its search on a less-than-mainstream search engine, using search terms contained in the title of the publication rather than terms that were relevant and in dispute in this case. The search revealed 56,400 results, and the [new prior art] publication was on the page containing results 91-100. [Defendant] used the same terms to conduct a search on Google, and the Sprague article did not appear among the first 100 results. [Plaintiff], itself, was not aware of the [new prior art] publication until after the start of trial. Therefore, the [new prior art] publication was not readily available to the public and constitutes newly discovered evidence within the meaning of Rule 60(b)(2)."

Presidio Components Inc. v. American Technical Ceramics Corp., 3-08-cv-00335 (CASD October 26, 2010, Order) (Gonzalez, J.)

Termination of Patentee's Status as Business Entity does not Eliminate Capacity to Assert Patent Infringement in Federal Court

The magistrate judge recommended denying defendants' motion to dismiss plaintiff's infringement claims for lack of subject matter jurisdiction on the basis that plaintiff's "status as a limited partnership [had been] terminated by the Texas Secretary of State." "It is true that both capacity to sue and legal existence are prerequisite to a party’s ability to bring and maintain a lawsuit. But contrary to the Defendants’ argument, [plaintiff] has not been stripped of its legal existence by the Involuntary Termination or by Texas statute. The Involuntary Termination only notices the forfeiture of [plaintiff’s] right to transact business in Texas and terminates its certificate of formation. . . . Nowhere does Texas law strip legal existence from a limited partnership that has forfeited its right to transact business within the state. In fact, Texas law provides that '[t]he forfeiture of the right to transact business in [Texas] does not . . . prevent the limited partnership from defending an action, suit, or proceeding' . . . [B]ecause [plaintiff] is permitted to be sued and defend itself, it must have legal existence. Because [plaintiff] has legal existence under Texas law and capacity to sue under Federal Rule of Civil Procedure 17(b)(3)(A), it may maintain this lawsuit for patent infringement in the District Court."

NorthPoint Technology, LTD. v. DIRECTV, Inc., et al., 1-09-cv-00506 (TXWD October 25, 2010, Report & Recommendations) (Pitman, M.J.).

Convenience of False Marking Plaintiff "in the Business of Litigation" Given Little Weight in Venue Dispute

In granting defendant's motion to transfer venue of plaintiff's qui tam false marking action, the court found that the convenience of the parties favored defendant. "[Plaintiff] manufactures and produces nothing. It is in the business of litigation, therefore, requiring [plaintiff] to pursue this action in New Jersey would have little, if any, disruptive effect on its business. The Court rejects [plaintiff's] contention that [defendant's] physical and financial condition dictates that it must bear the burden of traveling to a foreign jurisdiction to defend this lawsuit. As set forth above, [plaintiff] exists for the sole purpose of capitalizing on the holding of Forest Group v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 2009), which changed the manner in which damages were calculated against a company with a mass produced product containing an alleged false marking. Any discrepancy with regard to relative size and financial condition, therefore, is of no moment."

United States of America, ex rel. et. al. v. T.F.H. Publications, Inc., 2-10-cv-00437 (PAWD October 20, 2010, Memorandum Opinion) (Cercone, J.)

Failure to Object to Prior Art Evidence at Summary Judgment Bars Objection at Trial

Plaintiff's motion in limine to exclude physical examples of allegedly unauthenticated prior art was denied. Defendant's "Statement of Uncontroverted Facts and Conclusions of Law" filed in support of summary judgment claimed that the item in dispute was prior art and plaintiff's "Statement of Genuine Issues of Material Fact" did not dispute that contention. "In opposing summary judgment, [plaintiff] chose not to dispute that these two items were prior art, opting instead to argue that [they] were not 'invalidating prior art.'. . . [Plaintiff] cannot now be heard to argue that there is a dispute over those items’ status as prior art."

Accentra, Inc. et al v. Staples, Inc., 2-07-cv-05862 (CACD October 21, 2010, Order) (Collins, J.)

Court's Ruling that LCD Television Claims are Method of Use and not Method of Manufacture Under Section 271(g) Impacts Numerous

Related Customer Lawsuits and Warrants Certification for Interlocutory Appeal

The court granted defendants' alternative motion to certify for interlocutory appeal its order denying defendants' motion for judgment on the pleadings. "The Court's [previous order] addresses a clear question of law that is controlling both in the instant action and in [numerous related cases]. . . . Significantly, [plaintiff's] theory of liability as to the [customer] defendants is based solely on § 271 (b) and § 271 (g). [Defendant] vigorously contends that [plaintiff] asserts method of use claims, as opposed to method of manufacturing claims, and that such method of use claims are outside the scope of 35 U.S.C. § 271(g). If [defendants'] argument is correct, then such a ruling would be case dispositive-both in this action and the many related [customer] cases. Indeed, it is the significance that the Court's . . . order has to such a large number of related actions that weighs most heavily in favor of certifying the case for petition for interlocutory appeal."

Anvik Corporation v. Sharp Corporation, et. al., 7-07-cv-00825 (NYSD October 20, 2010, Order) (Preska, J.).

Is the Western District of Wisconsin “fast” for Patent Litigation Cases?

In denying a defendant’s motion to transfer venue, Judge Stephen L. Crocker (WIWD) acknowledged it was a close call, but stated:

"Plaintiffs specifically chose the Western District [of Wisconsin] because of its speed to trial, observing that it has become commonplace for patent holders with no connection to this district to file lawsuits here because this court is so fast and tends to keep such cases rather than foist them onto other courts. . . . This is all the more true in a case between direct competitors in a dynamic market where the dispute involves a recent patent. . . . Even though [defendant] had a legitimate reason to wait for a decision on its motion to disqualify before moving to transfer, this delay still militates against transfer because it is dead time against any calendar that could have been set by a Northern District [of California] Court." e2Interactive, Inc. et al v. Blackhawk Network, Inc., 3-09-cv-00629 (WIWD October 6, 2010, Opinion and Order)

The chart below illustrates the average number of days from case filing to scheduled trial date, with each phase of litigation highlighted by the average number of days scheduled in 14 of the court’s pre-trial conference orders.

U.S. Sides with False Marking Defendants and Urges Strict Compliance with Fraud Pleading Requirements -by Jim Lennon

The United States filed an amicus brief on Wednesday (October 20th), supporting the petition of false marking defendant, BP Lubricants, to obtain a writ of mandamus compelling dismissal of the suit filed by Thomas Simonian in the North District of Illinois. The positions in this brief are somewhat surprising because the United States interests are generally aligned with false marking qui tam relators. After all, the government splits any award obtained with the relator.

It appears, however, that the United States is finally acknowledging publicly that the trend of suits under 35 USC 292 has gone too far, given the rash of thinly pled false marking claims that have come to dominate the landscape since the Federal Circuit’s decision in Forest Group v. Bon Tool, at the end of last year.

Earlier this year the United States supported Stauffer, the false marking relator that convinced the Federal Circuit to reverse the dismissal of his suit against Brooks Brothers on the question of standing based the allegations of harm. The United States favored a stay of litigation in San Francisco Technologies v Adobe, et al., in the Northern District of California this spring to await the Federal Circuit’s decision in Stauffer.

Now the Federal Circuit has line up squarely against Simonian in this matter. “The position of the United States is that, consistent with other cases "sounding in fraud," False Marking cases should be subject to the pleading requirements of Rule 9(b).” The United States goes on to explain that while intent to deceive may be averred generally, pleadings must still “allege sufficient underlying facts from which a court may reasonably infer that a party acted with the requisite state of mind." In this vein, the United States rejects the attempt by Simonian to obtain this inference by merely pleading that a defendant is a "sophisticated company" which "knows, or should know" that the patent at issue had expired. It argues that these types of allegations are insufficient to satisfy Rule 9(b)'s pleading standard, even if relaxed.

United States’ brief strikes a tone that will resonate with most false marking defendants and may foreshadow the clarification of the high standard for pleading false marking that these defendants have been asserting in countless Rule 12(b)(6) motions over the last year.

-Jim Lennon is patent attorney with Womble Carlyle Sandridge & Rice, PLLC, in Wilmington, Delaware.

False Marking Complaint Alleging Defendant had "No Reasonable Basis to Believe" Its Products were Patented Sufficiently Pled Intent to Deceive

Defendants' motion to dismiss plaintiff's qui tam false marking action for failure to plead intent to deceive with particularity was denied. "The complaint . . . alleges that defendants were advertising [their] products as patented on June 11, 2010 and that defendants’ products are neither patented, nor do they have a patent pending. Additionally, with respect to intent, plaintiff alleges that defendants acted intentionally because they have no reasonable basis to believe that [their] products are patented and because they attempted to gain a profit by confusing and misleading customers through claims of '17 years, long-standing success.'. . . The court . . . finds that plaintiff’s allegations regarding intent meet the general allegation requirement under Rule 9(b)."

Hallstrom v. Aqua Flora, Inc. et al., 2-10-cv-01459 (CAED October 15, 2010, Order) (Damrell, J.)

Prosecution Counsel's Knowledge of Related Litigation and Timing of Disclosure Justify Inference of Intent to Deceive at Summary Judgment

The court denied plaintiff's motion for summary judgment of no inequitable conduct in light of evidence that plaintiff failed to disclose information concerning the litigation of a related patent. "[Plaintiff's counsel] had actual knowledge of the [related litigation] as he was involved in both proceedings. The timing of events suggests that the course of action in the [patent-in-suit] prosecution was guided by the unfolding of events in the [related] litigation. The [related] litigation and [related] reissue proceedings were disclosed only after the [patent-in-suit] issued. The foregoing circumstances justify an inference of an intent to deceive at this stage."

Soitec Silicon On Insulator Technologies SA et al v. MEMC Electronic Materials Inc., 1-08-cv-00292 (DED October 13, 2010, Memorandum Opinion) (Robinson, J.)

Compliance With Court Order Requiring Election of Claims Does Not Bar Later Assertion of Non-Elected Claims

The court granted in part plaintiff's motion to sever and stay non-elected claims and rejected defendant's argument that "Plaintiff waived any right to seek severance because Plaintiff did not challenge the requirement in the Court’s scheduling order that Plaintiff elect a limited number of claims." "The Court’s limitation on the number of asserted claims is necessary for effective and efficient management of the . . . case. . . . If the patentee wins, infringement of a single claim can support an award of damages, so the patentee generally need not then pursue nonelected claims. If the patentee loses, then the likelihood of any subsequent litigation is low because the patentee presumably elected the claims that 'they believe are most likely to be infringed.' If Defendants’ estoppel arguments were accepted, however, enforcement of the Court’s claim election requirement would foreclose Plaintiff’s rights as to all non-elected claims without ever reaching the merits of those claims. Finding no clear support from the Court of Appeals for either the Fifth Circuit or the Federal Circuit for Defendants’ position, this Court rejects it. This conclusion is necessary to avoid what would appear on its face to be a significant due process violation."

LML Patent Corp. v. JP Morgan Chase & Co. et al, 2-08-cv-00448 (TXED October 12, 2010, Order) (Folsom, J.)

Allegations of Knowledge and Materiality are Sufficient to Infer Intent to Deceive

Plaintiff's motion to dismiss defendant's inequitable conduct defense for failure to state a claim was denied. "The allegation that [plaintiff's patent attorney] knew of highly material information that he failed to disclose to the PTO is sufficient to support a reasonable inference of intent to deceive. Additionally, [defendant] alleges that [plaintiff's patent attorney] made several arguments concerning patentability that he could not have made had he disclosed the prior art and prosecutions. These allegations are also sufficient to support a reasonable inference of intent to deceive the PTO."

Innovative Biometric Technology, LLC v. Lenovo (United States), Inc. et al., 9-09-cv-81046 (FLSD October 12, 2010, Order) (Ryskamp, J.)

False Marking Case Transferred to Defendant's Home Forum, the Location of Evidence on Which "Liability Hinges"

Defendant's motion to transfer venue of plaintiff's qui tam false marking action was granted. "The sale of falsely marked products is one component of this lawsuit. Evidence regarding [defendant's] decision to 'mark[] upon, or affix[] to, or use[] in advertising in connection with any unpatented article the word 'patent' or any word or number importing the same is patented, for the purpose of deceiving the public,' however, is where liability hinges, and [defendant] made these decisions in Memphis. For these reasons, Plaintiff’s choice of forum receives less deference and the location of material events factor weighs in favor of transfer. . . . The Western District of Tennessee is the site of material events in the lawsuit and the location where most, if not all, of the evidence relevant to the lawsuit is located."

Simonian v. Hunter Fan Co., 1-10-cv-01212 (ILND October 7, 2010, Memorandum Opinion & Order)(St. Eve, J.)

Defendant's Agreement to Temporarily Discontinue Infringing Conduct Warrants Grant of Stay Pending Reexamination

Defendant's motion to stay pending inter partes reexamination was granted. "Turning to undue prejudice, the Court finds [plaintiff's] complaints substantially mitigated by [defendant's] agreement to 'no longer make, use, offer to sell, sell, import or distribute any [of the allegedly infringing] products in the United States, until the earlier of: (a) the date on which the [Patent] Examiner issues a Right of Appeal Notice . . . In the pending Reexamination, or (b) . . . 3 years away, a period longer than the average time between the filing of a reexamination request and issuance of a reexamination certificate.'"

TDY Industries Inc. v. Ingersoll Cutting Tool Co., 2-10-cv-00790 (PAWD October 7, 2010, Order) (Bissoon, M.J.)

Technical Expert may not Testify as to Conception Date

Plaintiffs' motion in limine to preclude testimony by defendants' technical expert regarding the date of conception was denied in part. "[Defendants' expert] may testify regarding the evolution of [plaintiffs'] patent applications’ description of the invention. . . . He may not, however, speculate in light of this evolution as to when the idea for the latter use actually was first conceived."

Bone Care International LLC et al v. Pentech Pharmaceuticals, Inc., 1-08-cv-01083 (ILND October 1, 2010 Memorandum Opinion & Order) (Dow, J.)

Product Capable of Infringing Use did not Infringe Absent Proof of Specific Instances of Such Use

The court granted defendant's motion for summary judgment that its gift card did not infringe plaintiff's patent which claimed a method of performing anonymous online purchases. "[Plaintiff] has not adduced any evidence of direct infringement, such as evidence that gift card recipients actually have used the phrases on defendants’ gift cards to make purchases. This is important because, as the Court of Appeals for the Federal Circuit recently instructed, '[u]nless the claim language only requires the capacity to perform a particular claim element . . . it is not enough to simply show that a product is capable of infringement; the patent owner must show evidence of specific instances of direct infringement.'. . . [Plaintiff's] only evidence of infringement is testimony from its expert that the accused gift cards can be used in an infringing manner, not that gift card recipients used or were aware that they could use the accused cards in this way."

PrivaCash, Inc. v. American Express Co. et al., 3-09-cv-00391 (WIWD October 5, 2010, Order) (Crocker, M.J.)

Manufacturer of Electronic Voting Systems did not Infringe Method Claims Requiring Action by End User Voters

The court granted in part defendant's motion for summary judgment of noninfringement as to claims reciting a method of voting that included steps that could only be performed by the end user voters. "The terms of the claims themselves indicate that a voter performs [certain steps]. In fact, these claims specifically state that the steps are to be performed 'by the voter.' . . . The only evidence in the record directly indicating that [defendant] controls the voters’ actions is the instruction the Accused Systems provide the voters regarding use of the Accused Systems. However, in [Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008)] the Federal Circuit determined that instructing users on the use of an online auction method constituted insufficient evidence of control to establish any theory of infringement. Moreover, [plaintiff] has identified no legal theory under which [defendant] might be held vicariously liable for the actions of the voters."

Voter Verified, Inc. v. Election Systems & Software, Inc., 6-09-cv-01969 (FLMD September 29, 2010, Order) (Fawsett, J.)

Software Providers do not Infringe Method Claims Requiring Action by End Users

Defendants who provided website services and software for use with cell phones were granted summary judgment of noninfringement because plaintiff could not establish joint infringement as to certain method claims requiring actions by end users. "Defendants argue that because they have no control or power of direction over end-users, the relationship between end-users and Defendants is arms-length at most, and that end-users (and not the Defendants) are responsible for performing at least some of the claims in the Patent. The Court agrees. First, the 'originating user sending a paging signal' element of the claims is performed by the end-users, and no evidence has been presented that Defendants controlled or directed the end-users in their performance of this activity. Second, the 'designating a page receiving country' element requires user conduct (either by the originating user or the receiving user), and Defendants do not control the users in their performance of this element."

Technology Patents LLC v. Deutsche Telekom AG et al., 8-07-cv-03012 (MDD September 29, 2010, Memorandum Opinion) (Williams, J.)

Judge Davis Questions Whether Litigating Venue Disputes is in Clients' Best Interest

In granting defendants' motion to transfer venue, the court questioned whether the expense of litigating venue is generally in the clients' best interests. "Motions to transfer in patent cases have become almost common place. Often, defendants merely seek to move the litigation to their home district under the assumption that since the plaintiff chose the forum where the case was filed, it cannot be a 'good' venue for the defendant. The transfer issue becomes almost a separate litigation within the case, with discovery being taken and hundreds of thousands of dollars being spent to litigate the issue. Each side seeks to identify every possible witness and document in the United States that might support their position, the vast majority of whom will not be deposed, called to testify, or offered at trial. The Court has serious questions over whether such a fight is in a client’s best interest."

ON Semiconductor Corp. et al v. Hynix Semiconductor Inc et al., 6-09-cv-00390 (TXED September 30, 2010, Memorandum Opinion & Order) (Davis, J.)

Unmanned Office in Eastern District of Texas does not Impact Venue Analysis

In denying defendants' motions to transfer venue, the court gave no weight to plaintiff's office in the local venue. "While [plaintiff] does have an office in Tyler, Texas where its documents are kept, the Court gives no weight to this fact as it appears that the documents are kept there solely to influence the Court’s venue analysis. There is no indication in the briefing that [plaintiff] has employees at this office or conducts business from this office."

EMG Technology, LLC v. Apple, Inc., 6-08-cv-00447 (TXED September 28, 2010, Memorandum Opinion & Order) (Davis, J.)

ANDAs for Generic Yasmin® do not Infringe Bayer Patent

The court granted defendant generic drug manufacturers' motion for judgment on the pleadings that their ANDAs did not infringe the patent-in-suit because the patent did not "claim a use for [plaintiff's name-brand oral contraceptive, Yasmin®] that has been approved by the FDA." While plaintiff's patent claimed "a simultaneous gestagenic, anti-androgenic, and anti-aldosterone effect," FDA approval of plaintiff's drug was for "the prevention of pregnancy in women who elect to use an oral contraceptive." Because defendants' ANDAs sought approval for use as an oral contraceptive and not the use claimed by the patent-in-suit, defendants were entitled to judgment on the pleadings of noninfringement. "Nothing in the proposed labels submitted in connection with Defendants’ ANDA filings indicates that they seek FDA approval to market their generic drugs for the . . . patented use. To the contrary, Defendants’ proposed labeling addresses only an indication for oral contraception."

Bayer Schering Pharma AG et al v. Sandoz, Inc. et al., 1-08-cv-03710 (NYSD September 28, 2010, Memorandum Opinion & Order) (Gardephe, J.)

Datatreasury Awarded Enhanced Damages of $26 Million but Denied Attorneys' Fees

The court granted plaintiff's motion for enhanced damages following the jury's finding of willful infringement and increased damages by $26 million, a 100% increase, based on the following Read Corp. v. Portec, Inc., 970 F.2d 816 (Fed. Cir. 1992), factors: (1) "some circumstantial evidence of copying"; (2) one defendant "has about $54 billion to its name" and owns the other defendant; and (3) "Defendants infringed to achieve some undetermined cost savings." However, the court denied plaintiff's motion to declare the case exceptional warranting an award of attorneys' fees. "Defendants have put forth some evidence of good faith beliefs of invalidity and noninfringement. Moreover, this case has been hard-fought, and the joint infringement theory on which Plaintiff succeeded in the Phase I trial only emerged after years of litigation."

Datatreasury Corp. v. Wells Fargo & Co. et al., 2-06-cv-00072 (TXED September 27, 2010, Order) (Folsom, J.)

Tardy Claw Back Request Waives Privilege

The court granted defendant's motion to compel the production of allegedly privileged documents that were inadvertently produced. "[Plaintiff's employee] was deposed and asked questions about [the privileged documents] in the presence of [plaintiff's] counsel. During a [later] deposition on June 18, 2010, the deponent was asked questions about [another privileged document]. [Other privileged documents] were used in a [later] deposition . . . Two hours after [that deposition], [plaintiff] sent its claw back demand and requested the return of all the Group B documents. [Plaintiff] did not attempt to claw back [the privileged documents] until over eight months after [the first deposition]. Because [plaintiff] did not promptly seek return of these documents after it learned of their disclosure, any privilege attaching to [the documents] has been waived."

Zapmedia Services, Inc. v. Apple, Inc., 2-08-cv-00104 (TXED September 24, 2010, Order) (Everingham, M.J.)

General Allegations of Deceptive Intent Fail to State a Claim for False Marking

The court granted defendant's motion to dismiss plaintiff's qui tam false marking action for failing to meet the heightened pleading standard of Rule 9(b) with respect to intent to deceive. Allegations that defendant "did not have, and could not have had, a reasonable belief that its [products-at issue] were properly marked," "is a patent-sophisticated company," "knew, or should have known, that many of the patents marked on its [products] do not cover the products on which they are marked," and "marked [its products]. . . with knowledge that the claims of this patent do not cover one or more of the products on which this patent is marked" were insufficient.

Josephs v. Federal-Mogul Corp., 2-10-cv-10617 (MIED September 23, 2010, Opinion & Order) (Cox. J.)

Plaintiff's Choice of Forum for False Marking Claims Given Little Weight Where Plaintiff was Formed Specifically to Pursue Litigation

In granting defendant's motion to transfer venue of plaintiff's qui tam false marking action, the court rejected plaintiff's arguments that convenience factors favored retaining jurisdiction. "[I]t is clear that [plaintiff] anticipated that a motion to transfer these types of cases would be filed. As a result, [plaintiff] created a litigation strategy to bolster its argument that the matter should remain in Ohio. However, its primary arguments revolve around expert witnesses, largely irrelevant fact witnesses, and its own choice of forum. As [plaintiff] was created for the express purpose of pursuing litigation and is largely comprised of local attorneys, the weight given to its litigation strategy is minimal. This Court will not permit the system to be gamed."

Unique Product Solutions, Ltd. v. Otis Products, Inc., 5-10-cv-01471 (OHND September 22, 2010, Order) (Adams, J.)

May a Patent Law Expert Opine as to the Materiality of Undisclosed Information?

YES -- The court granted, in part, plaintiff's motion to strike defendant's inequitable conduct expert. "[The expert's] actual opinions are on matters within his expertise as a patent examiner and former Commissioner of the USPTO. [The expert] provides testimony as to why [the inventor's] alleged conduct before the USPTO would be important to a reasonable examiner, a key issue in the determination of inequitable conduct. . . . [The expert] will not be permitted to testify about [the inventor's] intent and should limit his testimony on the following issues to that which is necessary to understand his opinions: USPTO policies and procedures, the rules and procedural requirements governing the filing and prosecution of patent applications in the USPTO and the grant of U.S. patents by the USPTO, the duty of candor and good faith and disclosure that those substantively involved in the preparation and prosecution of a patent application owe to the USPTO, and the requirements for establishing equitable conduct."

Phillip M. Adams & Associates, L.L.C. v. Lenovo International, et. al., 1-05-cv-00064 (UTD September 21, 2010, Memorandum Decision & Order) (Stewart, J.)

NO -- Plaintiffs' motion to strike the report of defendants' inequitable conduct expert was granted "except to the extent that it explains the PTO's practices and procedures." "The law of this district is clear that experts in patent cases may not opine on whether a party engaged in inequitable conduct, discuss whether certain information was material to a pending patent application, or otherwise provide legal conclusions on 'substantive issues of patent law.' Similarly, in this district parties are generally not permitted to explain patent prosecution histories through expert testimony."

Brigham and Women's Hospital Inc. et al v. Teva Pharmaceuticals USA Inc. et al., 1-08-cv-00464 (DED September 21, 2010 Memorandum) (Bartle, J.)

Draft Opinion Letter Sinks Induced Infringement Claim

Defendants' motions for summary judgment of no induced infringement were granted because defendants reasonably relied on a draft opinion letter of noninfringement and therefore could not have possessed the requisite intent to induce infringement. "[Counsel] testified at his deposition that he never finalized the draft because [defendant and plaintiff's] predecessor-in-interest came to the conclusion that there was no infringement issue. . . . Beyond their arguments that the Opinion is not a competent opinion letter, [plaintiff] has not presented any other evidence tending to indicate that either [defendant] specifically and knowingly intended to cause direct infringement. Thus, without more, [plaintiff] has failed to show there is a genuine issue of material fact as to whether [the defendants] possessed the specific intent to induce infringement."

Goss International Americas, Inc. v. Graphic Management Associates, Inc., 1-05-cv-05622 (ILND September 14, 2010, Memorandum Opinion & Order) (Kendall, J.)

Domestic Use Of Foreign Product Manufactured Using Patented Method Is Not An Act Of Infringement

The court granted defendant's post-trial motion for judgment as a matter of law that certain method claims were not infringed because one or more steps were performed outside the United States. "The asserted claims relate to a method of manufacture and not to an accelerometer or other apparatus which measures a characteristic of motion. The accused process is, therefore, the process employed to manufacture the digital seismic units ('DSUs'). . . . A sale of a product made by a patented process does not itself infringe the patent; it is the unauthorized use of the process that infringes the patent. . . . It is undisputed that the DSUs are manufactured in France by [defendant]. . . . [Further], to the extent that some of the steps of the accused method are performed in the United States, there is no evidence that the entire process is practiced in the United States, which is required by § 271(a)."

Input/Output, Inc. et al v. Sercel, Inc., 5-06-cv-00236 (TXED September 16, 2010, Order) (Folsom, J.)

Domestic Offer for Foreign Sale is not an Act of Infringement

Applying Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors USA, Inc., --- F.3d ---- (Fed. Cir. 2010), the court granted defendant's motion for judgment as matter of law that plaintiff was not entitled to lost profits for foreign sales arising out of domestic offers for sale and the judge reduced the damages award by $5.421 million. "[I]t is undisputed that the devices implicated by [defendant's] motion were manufactured, sold, and delivered abroad while the offers for those devices were made in the U.S. . . . [T]here is no dispute that the devices were manufactured in Europe and distributed exclusively to Venezuela, Brazil, and Canada without touching U.S. soil. . . . [T]he jury should not have considered those offers for sale as part of its determination of infringement and damages."

Input/Output, Inc. et al v. Sercel, Inc., 5-06-cv-00236 (TXED September 16, 2010, Order) (Folsom, J.)

False Marking Statistics

The chart below lists all plaintiffs that have filed a minimum of 10 False Marking cases. For a full listing of these cases as well as articles discussing them, please see Gray on Claims.

The charts were created by Docket Navigator® and will be updated regularly. Docket Navigator® tracks every patent case in every district court in the United States every day and publishes a daily summary of events in the Docket Report. To learn more or sign up for a free trial, go to www.docketnavigator.com.

Defendant Cannot Willfully Infringe Claims That Did Not Issue Until After Suit Was Filed

The court granted defendant's motion for summary judgment of no willful infringement. "[T]he bases upon which the Court has found that [the accused product] may infringe [plaintiff's] patents result from the construction given to claim terms which were affected by the prosecution history of the [reissue] patent, and/or relate to changes and additions made to the [original] patent in that reissue. . . . [Plaintiff] filed its Complaint prior to the reissue of the [original] patent. That reissue contains 16 new claims not present in the [original] patent. [Defendant] could not have willfully infringed upon these claims, which did not issue until after this suit was filed."

Advanced Fiber Technologies (AFT) Trust v. J & L Fiber Services, Inc., 1-07-cv-01191 (NYND September 13, 2010, Memorandum-Decision) (Kahn, J.)

Expert may Testify as to Technical Aspects of Direction and Control but not as to Ultimate Legal Conclusion

Plaintiff's motion in limine to limit expert testimony on direction and control was granted in part. "Defendants’ expert’s testimony regarding 'direction and control' has a valid connection to the pertinent inquiry of joint infringement and has a sufficiently reliable factual basis. . . . The ultimate legal conclusions regarding direction and control, however, are not a proper subject of testimony by a technical expert. A technical expert’s testimony on direction and control, if any, should be limited to the ability of the alleged 'mastermind,' from a technical standpoint, to control another party’s systems, actions, or performance."

Datatreasury Corp. v. Wells Fargo & Co. et al., 2-06-cv-00072 (TXED September 13, 2010, Order) (Folsom, J.)

Plaintiff's Failure to Seek Preliminary Injunction Sinks Willfulness Claim as to Post-Filing Conduct

The magistrate judge recommended granting defendant's motion to dismiss plaintiff's willfulness claim for failure to state a claim as to post-filing activities. "Although there are situations where post-filing willful infringement can be alleged without the plaintiff first seeking a preliminary injunction, the procedure for seeking a preliminary injunction tests the reasonableness of a defendant’s non-infringement and invalidity theories at the time that the defendant is relying upon those theories. . . . In the present action, [defendant] is unfairly prejudiced by Plaintiff’s attempt to claim post-filing willful infringement without first seeking a preliminary injunction. Even assuming [In re Seagate Tech., LLC, 497 F.3d 1360 (Fed. Cir. 2007)] may be dicta on this point, the undersigned concludes it accurately reflects the general rule in the Federal Circuit. No extenuating circumstances have been alleged in this case that would justify a departure from that rule. Accordingly, the undersigned recommends that [defendant's] motion to dismiss the portion of Plaintiff’s complaint alleging post-filing willful infringement be granted, and the claim for willful infringement should be dismissed without prejudice."

WebMap Technologies LLC v. City Accommodations Network, Inc. a/k/a U. S. Travel Group, and d/b/a Riverwalk Hotel Map and d/b/a Airport Hotel Guide, and d/b/a Austin Hotel Map et al., 2-09-cv-00343 (TXED September 10, 2010, Report & Recommendations) (Everingham, M.J.)

Statements Made in Prior Litigation do not Trigger Recapture Rule

In denying defendant's motion for summary judgment of invalidity of plaintiff's reissue patent based on the recapture rule, the court rejected defendant's argument that statements made during prior litigation concerning the original patent constituted a surrender of claims. "Acceptance of this argument would require an extension of the current law governing the recapture rule. . . . The public is entitled to rely upon the patent’s public record, as set forth in the claims, specifications, and file history to determine the patent’s scope. However, the public is not entitled to rely on any other extrinsic evidence, including trial testimony to find evidence of surrender. To hold otherwise could encourage inventors to seek out obscure statements or other evidence of surrender and would place some knowing members of the public in a more advantageous position than others who were not privy to the same evidence."

Bendix Commercial Vehicle Systems LLC, et al v. Haldex Brake Products Corp., 1-09-cv-00176 (OHND September 10, 2010, Memorandum Opinion & Order) (Nugent, J.)

Inequitable Conduct Pleading Must Allege How Examiner Would Have Used Undisclosed Information

The magistrate judge recommended granting plaintiff's motion to dismiss defendant's inequitable conduct defense. "[Defendant's] inequitable conduct allegations do not satisfy the 'how' and 'why' requirements of [Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312 (Fed. Cir. 2009)] because they do not allege facts sufficient to show specifically why [the inventor's] alleged misstatements were material and how the examiner would have used the information in assessing the patentability of the claims of [one of the patents-in-suit]."

SynQor, Inc. v. Artesyn Technologies, Inc. et al., 2-07-cv-00497 (TXED September 9, 2010, Report & Recommendations) (Everingham, M.J.)

Failure to Mark Not Attributed to Licensor Where Licensee's Rights Arise From "License That Contains an Apparently Unlimited Covenant not to Sue"

Defendants' motion for summary judgment to limit damages for plaintiff's licensee's failure to comply with the marking requirement was denied. "Defendants’ argument on marking requires the court to determine the scope to be accorded the 'for or under' language of § 287(a) when there is a restrictive express license that contains an apparently unlimited covenant not to sue. Neither party has submitted case law directly addressing this issue, which is apparently one of first impression. . . . To focus solely on one phrase of the covenant would render the rest of the language surplusage. Thus . . . the [licensee's] sales of computers containing the allegedly infringing chips cannot be imputed to Plaintiff for purposes of the marking statute."

Phillip M. Adams & Associates, L.L.C. v. Lenovo International, et. al., 1-05-cv-00064 (UTD September 8, 2010, Memorandum Decision and Order) (Stewart, J.)

Delay Attributable to Withdrawn Challenge to Jurisdiction does not Warrant Extension of 30-Month Stay of FDA Approval

The court denied plaintiff's motion to extend the statutory 30-month stay of FDA approval, rejecting plaintiff's suggestion that defendant's unsuccessful and later withdrawn motion to dismiss for lack of personal jurisdiction "unreasonably prolonged the litigation." "While [a defendant's] motion to dismiss was pending for three months before its withdrawal, [plaintiff] has offered no evidence that the mere submission of this motion -- or the limited jurisdictional discovery that the parties conducted -- caused any significant delay in these proceedings. [Plaintiff] has not sought to expedite this litigation."

Bayer Schering Pharma AG et al. v. Sandoz, Inc. et al., 1-08-cv-03710 (NYSD September 2, 2010, Memorandum Opinion & Order) (Gardephe, J.)

Location of Court -- Not Counsel's Office -- Determines Reasonableness of Billing Rates

Defendants' motion for sanctions for plaintiff's failure to comply with case deadlines and obligations was granted in part, but the amount of fees awarded as a sanction was reduced because counsel's rates were unreasonably high in light of the court's location. "[T]he court notes that several of the [defense] attorneys, especially [one] rate of $755/hour, bill at a rate above the median according to the 2009 Report of the Economic Survey submitted by [defendants], and that rates in Seattle’s category are significantly lower than rates in Washington, D.C.’s category. . . . [T]he court will thus discount the rates billed by [defendants] attorneys by 35% to approximate rates that would be reasonable in Seattle’s legal market."

Gardner v. Toyota Motor Corp. et al., 2-08-cv-00632 (WAWD September 1, 2010, Order) (Jones, J.)

Drug Label May Provide Evidence of Intent to Induce Infringement Even Though Required by the FDA

In granting plaintiff's motion for summary judgment of infringement of its drug patent, the court rejected defendants' argument that "the fact that the FDA required them to use the particular product labels they have proposed negates any finding of specific intent [to induce infringement]. . . . A thief who assaults a man because it was the only possible way to get his wallet from him does not lack specific intent to assault because, under the circumstances, it was a necessary means to accomplish his ultimate goal of robbery. The argument that the thief was just doing what the circumstances required him to do to achieve other ultimate ends does not effectively negate finding specific intent to assault."

Hoffmann-La Roche Inc. v. Genpharm Inc. et al., 2-07-cv-04661 (NJD September 2, 2010, Amended Opinion) (Chesler, J.)

Illinois Courts Grapple With Pleading Standard for Intent to Deceive Element of False Marking Claims

Defendants' motion to dismiss plaintiff's qui tam false marking action for failure to state a claim was granted. "[T]his Court aligns itself with those courts that have applied Fed. R. Civ. P. 9(b) standards to Section 292(b) complaints. That statute invalidates false patent marking 'for the purpose of deceiving the public' -- a quintessential claim of fraud, with its tightened standard of pleading. . . . So the 'information and belief' allegation of intent to deceive now set out in [plaintiff's complaint] does not cut it, particularly when [plaintiff] attempts to rely on a nine-year-old statement on behalf of [one of the defendants] in an FTC proceeding that referred to its having been represented by a lawyer who was a 'well-known expert. . . in the [relevant] industry'. . . ."

McNamara v. Natural Organics, Inc. et al., 1-10-cv-03544 (ILND September 1, 2010, Memorandum Order) (Shadur, J.)

Defendant's motion to dismiss plaintiff's qui tam false marking action for failure to state a claim was denied. "Plaintiff’s complaint alleges that [defendant] 'is a sophisticated company' with 'years of experience applying for, obtaining, and litigating patents.' Plaintiff further alleges that [defendant] has 'in-house attorneys who regularly litigate or oversee litigation of patent infringement cases and who regularly prosecute or oversee patent prosecution.' Plaintiff alleges that . . . [defendant] intentionally included the expired patent on the products for the purpose of deceiving the public. Whether or not the particularity pleading requirement of Federal Rule of Civil Procedure 9(b) applies in this case . . . the Court concludes that plaintiff’s allegations are sufficient at this stage to state a claim."

Simonian v. Irwin Industrial Tool Company, 1-10-cv-01260 (ILND August 27, 2010, Order) (Lindberg, J.)

Defendants' motion to dismiss plaintiff's qui tam false marking action for failure to state a claim was denied. "[D]efendants' argument that Rule 9(b) requires that intent be pleaded with particularity is lacking in merit; the Rule expressly provides that 'intent, knowledge, and other conditions of a person's mind may be alleged generally.'"

Luka v. Revlon, Inc. et al., 1-10-cv-02509 (ILND September 1, 2010, Minute Entry) (Kennelly, J.)

Bilski Renders Claim for Method of "Computing a Price to Sell Fixed Income Assets and Generating a Financial Analysis" Invalid

The magistrate judge recommended granting defendant's motion for summary judgment of invalidity (filed as a motion to dismiss for failure to state a claim) because the asserted patent did not claim patentable subject matter. "[The asserted claim] is not drawn to patentable subject matter because it recites nothing more than an abstract idea on a general purpose computer -- i.e., computing a price for the sale of a fixed income asset and generating a financial analysis output. . . . [A]ttempting to limit the abstract idea of computing a price for the sale of a fixed income asset to a general purpose computer -- i.e., limiting it to a particular technological field -- will not bestow patentability on the claim. While [Bilski v. Kappos, 130 S. Ct. 3218 (2010)] held that the [machine-or-transformation] test is not an exclusive test for determining whether a claim contains patentable subject matter, it 'is a useful and important clue, an investigative tool, for determining whether some claimed inventions are [patentable] processes under § 101.'. . . [The claim in plaintiff's patent] is not tied to 'a particular machine' because the recited machines do not provide 'meaningful limits' on the process. Thus, failure to meet the machine-prong of the MOT test weighs in favor of the undersigned’s conclusion that [the claim] is attempting to patent an abstract idea."

Graff/Ross Holdings LLP v. Federal Home Loan Mortgage Corp., 1-07-cv-00796 (DCD August 27, 2010, Report & Recommendation) (Kay, M.J.)

Proof that Accused Device "Could be Modified to Infringe" is Insufficient to Support Finding of Infringement

Plaintiff's motion for summary adjudication of infringement of its speech recognition patents was denied. "[Plaintiff] argues that it is not necessary for the [accused] platform to actually perform [voice activity detection (VAD)] to infringe. [Plaintiff] argues that the [accused] platform merely needs to be capable of performing VAD in order for the Court to find infringement. . . . Further precedent of the Federal Circuit states that a finding 'that a device is capable of being modified to operate in an infringing manner is not sufficient, by itself to support a finding of infringement.' Telemac Cellular Corp. v. Topp Telecom, Inc., 247 F.3d 1316, 1330 (Fed. Cir. 2001). A finding that the [accused] platform could be modified to infringe is not sufficient to support a finding of infringement. The Court therefore need not reach the issue of the ease or difficulty of modifying the [accused] platform. The law does not support the proposition that a device that is capable of operating differently or capable of being modified is infringing."

Phoenix Solutions, Inc. v. West Interactive Corp., 2-09-cv-08156 (CACD August 25, 2010, Summary Judgment Order) (Pfaelzer, J.)

Should False Marking Claims be Stayed Pending a Decision in Stauffer? Depends on the Court

Defendant's motion to stay plaintiff's qui tam false marking case pending the Federal Circuit's resolution of Stauffer v. Brooks Brothers, Inc., Nos. 2009-1428, 2009-1430, 2009-1453, was denied. "[Plaintiff's] standing to bring a qui tam action under the FCA does not appear to be in serious dispute. . . . The Court finds that the plain language of the FCA provides for qui tam actions whether or not the qui tam plaintiff has personally sustained an injury-in-fact. . . . Plaintiff has alleged that the injuries prohibited by the FCA have occurred and it is unclear why their status as a non-competitor would affect their qui tam standing."

Patent Compliance Group Inc v. North States Industries Inc., 3-10-cv-00405 (TXND August 27, 2010, Order) (Furgeson, J.).

Defendants' motion to stay pending the Federal Circuit's resolution of Stauffer v. Brooks Brothers, Inc., Nos. 2009-1428, 2009-1430, 2b09-1453, was granted. "It is undisputed that the precise issue that is now before this Court - whether a private party has Article III standing to bring a false marking claim under § 292 of the Patent Act when that private party has suffered no injury - is now before the Federal Circuit in Stauffer. . . . [Plaintiff] has failed to articulate any prejudice that it will suffer if the case is stayed. Significantly, [plaintiff] does not allege any injury to itself or any other entity resulting from Defendants' conduct."

Accord Patents, LLC v. Gravity Defyer Corporation et al., 1-10-cv-00642 (GAND August 27, 2010, Order) (Batten, J.)

In False Marking Cases, When a Judge Closes a Door, Somewhere She Opens A Window

Although a few False Marking cases have recently been dismissed for failure to plead facts supporting intent to deceive, some plaintiffs have undoubtedly noticed a small window of hope in those same orders. Judge Robinson stated in Brinkmeier v. BIC Corporation et al., 1-09-cv-00860 (DED August 25, 2010, Memorandum Opinion) that the “plaintiff has provided no indication there was litigation on any of these patents that would imply a working knowledge of the patents, conscious knowledge of the scope and expiration date." This leaves a false marking plaintiff to wonder if there IS some indication of prior litigation, is that enough to sufficiently state facts from which one can infer intent?

A handful of the currently pending False Marking cases involve allegations of prior litigation. At least eleven false marking complaints state that one or more patents at issue have been found invalid or unenforceable. While four of those have either settled or been voluntarily dismissed, seven remain. The plaintiffs that might benefit are Promote Innovation, LLC, Atico International USA, Inc., and oddly enough, Brinkmeier (Brinkmeier v. Exergen Corporation).

Failure to Plead Facts Supporting Intent to Deceive Sinks More False Marking Cases

Defendants' motion to dismiss plaintiff's false marking claims was granted because plaintiff failed to sufficiently plead intent to deceive. "[I]n [another of the court's cases] the allegations were that defendant had continued marking a nationally known product of which this Court could take judicial notice with two expired patents, one of which was alleged to have expired a number of years ago. Defendant was alleged to have decades of experience applying for and prosecuting patents. Thus, I found that plaintiff sufficiently alleged intent. Plaintiff [in this case] makes similar conclusory allegations with regard to intent here but without the specific facts noted above. In this case, I find that the complaint does not sufficiently state facts from which I can infer intent."

Simonian v. Global Instruments, Ltd. et al., 1-10-cv-01293 (ILND August 26, 2010, Order) (Bucklo, J.)

Defendant's motion to dismiss plaintiff's false marking action for failure to state a claim was granted. "To the extent that plaintiff is arguing that [defendant] had knowledge that the patents were expired because the packaging of these products was updated following patent expiration, this argument fails to prove [defendant] had intent to deceive the public. . . . Also, plaintiff has provided no indication there was litigation on any of these patents that would imply a working knowledge of the patents, conscious knowledge of the scope and expiration date."

Brinkmeier v. BIC Corporation et al., 1-09-cv-00860 (DED August 25, 2010, Memorandum Opinion) (Robinson, J.)