"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.)