Judge Davis Adopts Another Streamlining Tool in Multi-Defendant Patent Litigation: Early Summary Judgment on Damages

As others have observed, Judge Davis and Judge Love of the Eastern District of Texas recently approved early Markman hearings as a streamlining tool in certain multidefendant patent cases. AdjustaCam provides a variation on that theme, allowing early discovery and summary judgment on certain damages issues the resolution of which could "ripen the case for settlement and narrow the accused products." "[Plaintiff] represented that its infringement allegations were relatively simple -- it could determine infringement from visually inspecting the accused products -- and the majority of discovery in the case would focus on damages. . . . Defendants agreed that much of discovery would relate to damages and that a limited, initial damages disclosure would help streamline the case. Defendants also requested the Court consider an early summary judgment motion addressing pre-suit damages and laches. Defendants represented this could ripen the case for settlement and narrow the accused products. . . . While the Patent Rules efficiently govern and manage most cases, the parties in this case have identified and agreed on specific modifications to the Court’s standard schedule that would streamline and potentially lead to an early resolution of the dispute. In this case, the issues of laches and recoverable damages are amenable to an early determination. Therefore, the Court will consider an early summary judgment motion on these issues."

AdjustaCam LLC v. Amazon.com, Inc., et. al., 6-10-cv-00329 (TXED April 27, 2011, Order) (Davis, J.)

$3.8 Billion Reasonable Royalty Opinion Is Not Inadmissible Despite Similarity To $3.8 Billion Lost Profits Opinion Where Hypothetical Negotiations

"Would Have Produced No Mutually Agreed Upon Price Range In Which The Parties Could Have Negotiated"

The court denied defendants' motion to exclude the testimony of plaintiffs' economist as to his $3.8 billion reasonable royalty calculation. "[Plaintiffs' expert] contends that a reasonable royalty in this case is $3.8 billion, the same amount as his estimate of lost profits. Defendants argue that [the expert's] analysis is improper and should be excluded because he has failed to undertake a separate analysis to calculate a reasonable royalty than he used to calculate lost profits. [The expert] testified before this Court that though he reached the same number, his analyses as to lost profits and reasonable royalty were distinct from one another. . . . [Plaintiffs' expert] testified that based on his review of contemporaneous documents and his analysis of the parties’ expectations, the hypothetical negotiation between Plaintiffs as licensors and Defendants as licensees would have produced no mutually agreed upon price range in which the parties could have negotiated. This is consistent with the holdings of several courts that the 'willing licensor/willing licensee' model is 'an inaccurate, and even absurd, characterization when . . . the patentee does not wish to grant a license.'. . . While Defendants will certainly challenge [plaintiffs' expert's] conclusions on cross-examination and to offer their own experts’ contrary testimony on the issue of a reasonable royalty, they have not set forth a persuasive basis in analytical methodology upon which to exclude [his] testimony."

Warner-Lambert Company, et. al. v. Purepac Pharmaceutical, et. al., 2-00-cv-02931 (NJD April 25, 2011, Order) (Hochberg, J.)

Prior to Claim Construction "in a Vacuum," Parties Must Show "the Juice is Worth the Squeeze"

The parties' motions for claim construction were denied. "Far too often, construing claim terms in a vacuum leads to additional disputes about the meaning of the court's construction at summary judgment or to revision when the context of the dispute is revealed. Another problem with unsupported requests for construction is that parties sometimes take a shotgun approach and ask for construction terms in hopes of obtaining a few favorable constructions to use during summary judgment; if the court doesn’t give the constructions the party wanted, then those terms faded from the case. That’s why the parties have to persuade the court that the juice is worth the squeeze."

e2Interactive, Inc., et. al. v. Blackhawk Network, Inc., 3-09-cv-00629 (WIWD April 25, 2011, Order) (Crocker, M.J.)

Voluntary Amendment of Claims During Reexam Waives Right to Appeal or Seek Vacatur of Invalidity Judgment

The court denied plaintiff's motion to vacate an earlier judgment of invalidity even though the claims that the court ruled on had been amended through reexamination following summary judgment. "By voluntarily amending claims 1 and 2 during reexamination, [plaintiff] gave up its right to appeal this Court’s judgment. . . . Defendants’ reexamination request did not compel [plaintiff] to make the strategic decision . . . to amend claims 1 and 2 'to avoid lengthy appeal proceedings.'. . . [Plaintiff], by its own acts, circumvented appellate review of the Court’s judgment. Thus, vacatur is not appropriate."

PartsRiver, Inc. v. Shopzilla, Inc., et. al., 4-09-cv-00811 (CAND April 21, 2011, Order) (Wilken, J.)

Infringement Warrants Permanent Injunction But With 15-Month "Sunset Provision" to Allow Defendant Time To Introduce Noninfringing Product

The court granted plaintiffs' motion for a permanent injunction, but imposed a 15-month "sunset provision" to "allow [defendant] time to introduce a new, noninfringing . . . product prior to any injunction taking effect." "There is little reason to believe that additional [competition from the accused product that defendant] will be phasing out . . . under the auspices of a Court-imposed permanent injunction, will expand to such an extent as to impose substantial, irreparable harm to [plaintiffs]. . . . [However,] [i]f the Court were to immediately and entirely exclude [defendant's accused product] from the market, medical professionals who are currently using [the] device would be required to stop doing so. . . . [Defendants'] reputation would also be harmed to a degree disproportionate to the infringement found by the jury. What would appear to many to be an urgent, 'recall-like' decree from this Court is simply not warranted under the circumstances presented here. . . . Additionally, it must be noted that nearly every aspect of this case has presented what can only fairly be described as close calls. The jury's 'split' verdict, in the Court's view, reflects the close nature of this case."

B. Braun Melsungen AG, et. al. v. Terumo Medical Corporation, et. al., 1-09-cv-00347 (DED April 21, 2011, Order) (Stark, J.)

Compliance With FRCP Form 18 States a Claim of Patent Infringement Regardless of Twombly and Iqbal

The court denied defendants' motion to dismiss for failure to state a claim where plaintiff's complaint was modeled on FRCP Form 18. "[T]he operative question is whether a pleading that closely tracks Form 18 states sufficient facts to survive a motion to dismiss under [Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)], despite its presentation of little more than threadbare recitals of the elements of a cause of action for direct infringement. . . . It is difficult to reconcile the pleading standards set forth in Twombly and [Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009)] with the legally conclusive form of pleading found in Form 18. However, the Court agrees with the post-Twombly holding in [McZeal v. Sprint Nextel Corp., 501 F.3d 1354 (Fed. Cir. 2007)] that a litigant who complies with the provisions of Form 18 has sufficiently stated a claim for direct infringement as contemplated by Rule 12(b)(6). . . .Since the Federal Rules state that compliance with the forms is sufficient, and the Supreme Court's decisions in Twombly and Iqbal could not have amended the Federal Rules, a complaint alleging literal infringement that tracks Form 18 is sufficient to withstand a motion to dismiss under Rule 12(b)(6)."

W.L. Gore & Associates, Inc., et. al. v. Medtronic, Inc., et. al., 2-10-cv-00441 (VAED April 20, 2011, Order) (Davis, J.)

Think It’s Hard to Transfer Venue out of the Eastern District of Texas? Try Transferring out of Delaware.

Ever hear that transferring a patent infringement case out of Judge Ward’s court in the Eastern District of Texas is nearly impossible? Truth is, he’s granted more motions to transfer venue for convenience than any other district court judge in the past three years.

Judges that ruled on 10 or more motions to transfer venue for convenience since January 1, 2008













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False Statements in Pro Hac Vice Application Warrant Monetary Sanction and Notification of State Bar

The court sanctioned one of plaintiff's attorneys $5,000, ordered him to file a copy of the court's order with the state bar, and barred him from filing pro hac vice applications for 3 years without Executive Committee permission where his pro hac vice application did not include information regarding a prior suspension and contempt of court finding. "[Counsel] did not himself make any false submissions to the Court [in his pro hac vice application]. But that does not absolve him from responsibility. . . . As an experienced attorney who, it appears, has practiced and filed pro hac vice applications in a number of districts, it had to have been readily apparent to [him] that he would need to submit a pro hac vice application before participating in the case in this district following transfer. . . . It defies explanation that [he] failed to look at the pro hac vice application [filed on his behalf by another lawyer] once he was on notice that it had been filed without his express authorization. . . . [He] ought to have stepped up to the plate and accepted some level of responsibility in his own affidavit. He did not do so."

The Irrevocable Trust of Anthony J. Antonious v. Tour Edge Golf Manufacturing, Inc., 1-10-cv-05552 (ILND April 17, 2011, Order) (Kennelly, J.)

Repeated Discovery Violations Warrants Terminating Sanctions

Plaintiffs' motion to strike a defendant's answer and enter a default judgment for failure to comply with discovery obligations was granted. "This Court gave [defendant] numerous opportunities to provide the requested documents, yet it chose to produce incomplete responses. . . . [Defendant] and [its counsel] affirmatively misled Plaintiffs -- and more importantly, this Court -- as to the production of documents and compliance with Court orders. . . . By failing to provide the discovery as ordered, [defendant] has prevented Plaintiffs from pursuing their claims and delayed this litigation for nearly seven years. . . . [T]he Court notes that it has considered less severe sanctions. Specifically, the Court considered levying a fine against [defendant] and its counsel for the repeated misconduct. Given the procedural posture of this case, however, nothing short of default judgment would be sufficient. This matter has been pending [for 8 years] and [defendant] has taken every opportunity to delay these proceedings. Moreover at this point, any discovery provided by [defendant] cannot be trusted as a complete response. Plaintiffs demonstrated numerous inconsistencies between discovery previously provided by [defendant] and documents obtained by Plaintiffs through other means. Additionally, [defendant's] own acts and testimony revealed that discovery provided by it is unreliable and incredible. Time after time [defendant] has ignored the Court’s orders. Thus, the severe sanction of default is warranted."

Ocean Innovations, Inc., et. al. v. Quarterberth, Inc., et. al., 1-03-cv-00913 (OHND April 18, 2011, Order) (Adams, J.)

Marking Article Made Using Patented Method With Method Patent's Number Does Not Constitute False Marking

Defendant's motion to dismiss plaintiff's qui tam false marking case for failure to state a claim was granted. "[M]arking an article made via a patented method with the patent number of the method patent does not constitute false marking merely because the public cannot immediately tell whether the number refers to a method patent instead of an apparatus patent. Section 292 of Title 35 has never been construed to go so far. . . . Section 287(b)(4)(c), moreover, would seem to bless the very marking scheme challenged here."

San Francisco Technology Inc. v. Elkay Plastics Company, Inc., 3-11-cv-00291 (CAND April 15, 2011, Order) (Alsup, J.)

Twombly and Iqbal Do Not Apply to Affirmative Defenses

In granting in part plaintiff's motion to dismiss defendant's affirmative defenses for failure to state a claim, the court concluded that Bell Atlantic Corporation v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) do not apply to affirmative defenses. "In light of the differences between Rules 8(a) and 8(c) in text and purpose, the Court concludes that Twombly and Iqbal do not apply to affirmative defenses. An affirmative defense need not be plausible to survive; it must merely provide fair notice of the issue involved. . . . [T]he requisite notice is provided where the affirmative defense in question alerts the adversary to the existence of the issue for trial. Providing knowledge that the issue exists, not precisely how the issue is implicated under the facts of a given case, is the purpose of requiring averments of affirmative defenses. Thus, the Court will only strike defenses challenged on sufficiency grounds if they do not meet this low standard."

Tyco Fire Products, LP v. Victaulic Company, 5-10-cv-04645 (PAED April 13, 2011, Order) (Robreno, J.)

References to Patents in Website's "Terms of Use" and Online Product Manuals Do Not Constitute False Marking

The court granted defendant's motion for summary judgment of no false marking and rejected plaintiff's argument that wristwatch manuals were "unpatented articles" because "without the manual, the product is practically useless." "[Plaintiff] cites no authority in support of this position, nor can the Court identify any legal basis upon which to conclude that a patent mark on an instruction manual constitutes a patent mark on an 'unpatented article' within the meaning of § 292. . . . Though packaged together, the manuals and watches are not affixed to one another. [Plaintiff's] claims thus also fail under the 'affixed to” language of § 292. . . . The statute is not intended to create a treasure hunt for relators scouring department store shelves or corporate websites for obscure references to expired patents; it prohibits readily visible marks -- on products themselves, affixed to products, or used in advertising in connection with products -- falsely indicating that an unpatented article enjoys patent protection." Moreover, "[n]otwithstanding their mandatory language, the 'Terms of Use' are not advertising, nor are their references to the [patents] used in advertising. These pages unambiguously demonstrate that users need not access the 'Terms of Use' to purchase a watch from [defendant's] web site. Indeed, the link [defendant] provides to its 'Terms of Use' from a typical product page is at the very bottom of the page footer, in the smallest font on the page. . . . The Court therefore concludes that the patent numbers in the 'Terms of Use' are not false marking 'in advertising,' as they are not found 'in a medium or through a channel designed to promote the unpatented product to consumers.'"

Hollander v. Timex Group USA, Inc., 2-10-cv-00429 (PAED April 13, 2011, Order) (Schiller, J.)

Doctrine of Equivalents Claim Barred Due to Insufficient Infringement Contentions Despite Use of Broad "Catch-All" Phrase

The court granted defendants' motion for summary judgment of noninfringement under the doctrine of equivalents because plaintiff failed to comply with Patent Local Rule 3-1(c). In doing so, the court rejected plaintiff's argument that a catch-all phrase in its infringement contentions ("[Plaintiff] asserts that the Accused Instrumentalities all function in the same or substantially similar manner and include the same or substantially similar components") put defendant on notice of a doctrine of equivalents claim. "[Plaintiff] contends that this catch-all statement preserved its claims based on the doctrine of equivalents. Courts in this district, however, have strictly applied Patent Local Rule 3-1(e). . . . [Plaintiff] relies on a blanket statement, asserting substantial similarities as to the instrumentalities, but failing to link those similarities to particular claims or limitations within the [patent-in-suit]. . . . Accordingly, [plaintiff's] reliance on the doctrine of equivalents is barred."

Optimumpath LLC v. Belkin International Inc., et. al., 4-09-cv-01398 (CAND April 12, 2011, Order) (Wilken, J.)

Infringement Claims Against "Different Accused Products" Should be Asserted in Separate Lawsuits

The court granted defendants' motion to dismiss for misjoinder where plaintiff sued three unrelated companies with unrelated products for infringement of plaintiff's patent. "[N]o conspiracy, joint action, or common transaction or occurrence by or involving the defendants is alleged. Thus, Plaintiff’s claims should have been prosecuted in three separate lawsuits against each named defendant. . . . [T]he Court will dismiss without prejudice all but the first-named defendant . . . from this action. By dismissing rather than severing, the Court will remedy any potential prejudice to [the other two defendants] by allowing them to prepare their own defense rather than requiring them to attempt to jointly defend this action which involves very different accused products. . . . It will also remedy any prejudice to the Court by requiring Plaintiff to pay the filing fees Plaintiff would have paid if it had complied with Rule 20(a)(2). Finally, dismissal will remedy the burden resulting from one judge presiding over a single action that consists of three separate and distinct cases."

Man Machine Interface Technologies, LLC v. Funai Corporation, Inc., et. al., 2-10-cv-08629 (CACD April 7, 2011, Order) (Walter, J.)

Failure to Allege Who Withheld Information From PTO Sinks Inequitable Conduct Counterclaims

The court granted plaintiff's motion to dismiss defendant's inequitable conduct counterclaim for failure to plead with particularity. "Counterclaim I fails to specifically identify who knowingly and purposefully withheld the allegedly material information regarding the prior art. Instead, [defendant] alleges that the inequitable conduct was committed by [plaintiff] generally. . . . This factual deficiency is 'fatal under Rule 9(b).'"

minSURG International, Inc. v. Nuvasive, Inc., et. al., 8-10-cv-01589 (FLMD April 7, 2011, Order) (Covington, J.)

Plaintiff's motion to dismiss defendant's inequitable conduct counterclaim for failure to plead with particularity was granted. "Counterclaim V fails to specifically identify who knowingly and purposefully withheld the fact that the specification constituted new matter. This factual deficiency is 'fatal under Rule 9(b).'"

minSURG International, Inc. v. Nuvasive, Inc., et. al., 8-10-cv-01589 (FLMD April 7, 2011, Order) (Covington, J.)

Sale of Software Containing Disabled Infringing Functionality Is Not An Act of Direct Infringement

The court denied in part plaintiff's motion for summary judgment of infringement of its graphics cutting patents where defendant disabled, but did not remove, an infringing search function in its software but a user could change a program's configuration files to reenable that search function. "[T]he question is whether the claims read on a device that contains source code for searching, even if that code has been disabled. . . . Nothing in [plaintiff's] apparatus claims suggests that a device that contains disabled source code for searching is within the scope of the claims. The claims are not drafted in terms of software components but in terms of the actual function of the apparatus. . . . When the code for searching is disabled, the device does not perform [plaintiff's] methods, and thus sales of the device with the code for searching disabled is not direct infringement."

Mikkelsen Graphic Engineering Inc. v. Zund America Inc., et. al., 2-07-cv-00391 (WIED April 7, 2011, Order) (Adelman, J.)

False Marking Claim Defeated At Summary Judgment -- Employee Mistakes Do Not Constitute False Marking

The court granted defendants' motion for summary judgment of no false marking where defendants presented evidence that "[they have] over 1,000 [SKU's], that each SKU generally has its product’s applicable patent number marked on the back of the product packaging, that many of the product packages were created with older packages as templates, and that [defendants'] counsel . . . has been in poor health and not readily available for consultation. . . . [T]he false markings made by [defendants] appear to be nothing more than mistakes made by employees. . . . Assuming arguendo, that [plaintiff] met its burden that [defendants] had knowledge of the false marking on its products, [defendants'] incorrect patent markings against its own economic interest would weigh against a finding of intent to deceive the public."

Bow Jax Inc. v. Sims Vibration Laboratory Inc., et. al., 2-09-cv-00047 (WAED April 6, 2011, Order) (Peterson, J.)

Abusive Deposition Conduct Warrants $79,000 Discovery Sanction

Defendant's motion for discovery sanctions due to abusive deposition conduct was granted in part and the court awarded $79,167 in attorneys' fees and expenses. With respect to counsels' hourly rates the court observed: "[Defendant's] counsel is from a national law firm and is charging national rates. Plaintiff’s counsel is also from a national law firm, but Plaintiff declines to reveal information about the firm’s Denver rates. . . . I do not understand why Plaintiff’s counsel did not simply tell me what their rates are. I can only assume . . . that counsel did not disclose this information ([which] is obviously readily available) because to do so would not support their argument." With respect to hours billed, the court explained: "This is a heavily (and, at times it appears to me, bitterly) disputed case, and the number of discovery disputes with which I have had to be involved far exceed the norm in my experience. As [defendant] points out, with perhaps a third of a billion dollars in damages being claimed by Plaintiff, and in light of the battles already fought in this case, I can hardly fault [defense] counsel for meticulously preparing for every litigation event in anticipation of another fight and, of course, the significant end game. In light of these considerations, I do not view the fee petition as generally excessive."

BIAX Corporation v. NVIDIA Corporation, et. al., 1-09-cv-01257 (COD April 5, 2011, Order) (Hegarty, M.J.)

$625 Million Verdict Against Apple Set Aside Because Sale of Accused Computer Software Does Not Establish Direct Infringement of Method Claims

The court set aside the jury's finding of infringement and $625 million damages award because plaintiff failed to prove infringement of its asserted method claims by the sale of computers containing software capable of performing the steps of the patented method. "Mirror Worlds' reliance on Apple’s sales of computers that contain the accused Mac OS X 10.4-6 software does not prove direct infringement. The law is clear that the sale or offer for sale is insufficient to prove direct infringement of a method claim. Mirror Worlds attempts to skirt this precedent by alleging that Apple specifically offered the accused methods for sale—citing Apple’s marketing materials and user manuals, which highlight some of the steps required by the method claims. However marketed, Apple’s computer sales containing the accused Mac OS X software do not constitute direct infringement of the method claims without the requisite evidence showing Apple actually performed the claimed steps."

Mirror Worlds, LLC v. Apple, Inc., 6-08-cv-00088 (TXED April 4, 2011, Order) (Davis, J.).

Claim Construction Resource

Docket Navigator has a searchable dictionary of over 35,000 claim terms. It covers claim construction at all stages of litigation including, for example, preliminary injunctions, summary judgment, JMOLs, and of course claim construction orders.

It also includes free links to the underlying court documents, docket sheets and other useful resources. Some sample claim term searches found in the Docket Navigator Tour are:

How has the claim term “real time” been construed?

Has any claim of patent number 5,615,342 been construed?

Has Judge Stark ever construed the term "storage device"?

Docket Navigator is in closed beta through 2011 but attorneys, patent agents and other professionals involved in patent prosecution or litigation may request free access during the beta at https://www.docketnavigator.com/create/user.

Infringement Expert Must Analyze Every Asserted Claim Limitation Even If Opposing Discovery Responses Indicate Certain Limitations Are Not Disputed

The court granted plaintiff's motion to exclude the testimony of defendants' infringement expert because the expert failed to address each limitation of the asserted claims. "Defendants' argument that they need only address elements identified in plaintiff's response to its interrogatories or in [plaintiff's expert's] non-infringement report is inapposite as it does not address the issue at bar, whether [defendants' expert's] testimony lacks sufficient foundation. [Defendants' expert's] report fails to demonstrate that [he] considered each limitation of each asserted claim in comparison to each accused product before rendering his infringement opinions. . . . There is no way to determine if 'every limitation set forth in a claim is found in an accused product, exactly,' without accounting for each limitation."

Medtronic Inc. v. Boston Scientific Corporation, et. al., 1-07-cv-00823 (DED March 30, 2011, Order) (Robinson, J.)

Judge Ward Affirms $482,000,000 Damages Award, But Overturns Willfulness Finding

The court denied defendants' motion for judgment as a matter of law that the jury's verdict of $482,000,000 (based on a royalty rate of 5.6%) was not supported by the evidence. "A reasonable jury could determine, based on [the] evidence, that the 1% royalty was not a good baseline in this case because [plaintiff] will not be being paid research fees and to manufacture the coating for the stents. . . . The fact that the Plaintiff was asking for 7% and the Defendants were asking for 0.7% and the jury found approximately 5.6% does not mean such a finding was not supported by substantial evidence." . . . However, the court granted defendants' motion for judgment as a matter of law that there was no willful infringement where there was no objectively high likelihood that their actions constituted infringement. "[A]lthough that fact does not automatically immunize an accused infringer from a finding of willfulness, the record developed in this case shows that Defendants presented objectively reasonable and substantial defenses to infringement and validity. Further, the fact that certain facts were not presented to the jury, such as the close issue of claim construction, does not preclude the court to consider them in its determination, as a matter of law, whether the first prong of [In re Seagate Tech. LLC, 497 F.3d 1360 (Fed. Cir. 2007)] is met. In this case, the issue of claim construction was close and Defendants‘ proposed interpretation for the claims, although eventually not adopted, was reasonable and based upon the specification and prosecution history of the [patent-in-suit]."

Saffran, M.D., Ph.D., v. Johnson & Johnson, et. al., 2-07-cv-00451 (TXED March 31, 2011, Order) (Ward, J.)

Permanent Injunction Requires Specific Evidence of Irreparable Injury

Plaintiff's motion for a permanent injunction based on defendant's post-verdict willful infringement was denied. "[W]ith respect to the first factor of irreparable injury, the plaintiff argues that '[i]nfringement causes irreparable injury because patent protection has a limited term[;]' 'direct competition by an infringer causes further irreparable injury[;]' and '[i]rreparable injury is especially acute for self-made inventors.' The defendant responds . . . that a petitioner 'must prove irreparable harm with specific evidence' and that the plaintiff has offered 'no evidence that [it has] lost any market share, customers or profits, or suffered any loss of brand name recognition.'" . . . [T]here can be no per se finding of irreparable harm. Because the plaintiff fails to provide sufficient evidence of [irreparable injury], the motion for permanent injunction is denied."

WhitServe LLC v. Computer Packages, Inc., et. al., 3-06-cv-01935 (CTD March 30, 2011, Order) (Covello, J.)