Jury Returns $1.169 Billion Verdict Against Marvell and Finds Willful Infringement

A jury in the Western District of Pennsylvania returned a verdict in favor of Carnegie Melon University and against Marvell Technology Group, Ltd. and Marvell Semiconductor, Inc. The jury found literal infringement, contributory infringement and induced infringement of Patent Nos. 6,201,839 and 6,438,180. The jury rejected defendants’ anticipation and obviousness defenses and found that the infringement was willful. Total damages were $1,169,140,271 which makes this the third largest damages award in a patent infringement case.

Carnegie Mellon University v. Marvell Technology Group, Ltd., et. al., 2-09-cv-00290 (PAWD December 26, 2012, Order).

Discovery of Licensing Communications Does Not Require “Heightened, More Particularized Showing of Relevance”

The court denied defendants' motion to reconsider its earlier ruling ordering the production of drafts of license agreements and related communications concerning the patents-in-suit. "Defendants argue that the Federal Circuit’s opinion in In re MSTG, 675 F.3d 1337 (Fed. Cir. 2012) requires [plaintiff] to make a heightened showing to get draft licenses and licensing communications. It does not. . . . [T]he Federal Circuit did not hold that 'a party seeking licensing negotiations must make a ‘heightened, more particularized showing of relevance.’' Rather, the Federal Circuit mentioned that one appellate court employs such a standard when confidential mediation communications are sought. The opinion, then, does not change the court’s prior reasoning about the relevance of Defendants’ executed and draft license agreements, or the legal authority underlying that reasoning."

Barnes & Noble Inc. v. LSI Corporation, et. al., 3-11-cv-02709 (CAND December 23, 2012, Order) (Beeler, M.J.).

Summary Judgment of Noninfringement Warrants Injunction Against Parallel Customer Suits

Following its grant of summary judgment of noninfringement, the court granted plaintiffs' motion to enjoin defendant from pursuing infringement claims against plaintiffs' customers, licensees, distributors, users, and suppliers in another forum. "[I]n terms of the first element of injunctive relief of enjoining the lawsuit, enjoining [declaratory judgment defendant] from pursuing lawsuits, either those pending or new lawsuits relating to the [patents-in-suit] and relating to [accused products], since my ruling [granting summary judgment of noninfringement] is currently the ruling, [Kessler v. Eldred, 206 U.S. 285 (1907)] indicates that there is a very strong overwhelming likelihood of success on the merits. . . . In terms of the element of irreparable harm, the Court also finds that element has been met. There are difficulties and uncertainties in quantifying the harm of customers who are being sued for their use of a product, which the entity which sold it to them has been found not to be infringing on the suing parties' patent. And the impact on the good will of those customer lawsuits . . . is uncertain and difficult to quantify. The Kessler case, the Court notes, found that there was in fact a difficulty in quantifying the impact on good will. And the Kessler court also said it would be difficult at law to prove the adequacy of money damages. The Court adopts that rationale here."

SAP AG, et. al. v. Datatern, Inc., 1-11-cv-02648 (NYSD December 19, 2012, Order) (Forrest, J.).

Defense Counsel Disqualified Based on Contact With a Defendant’s “Outside In-House Counsel” Who Previously Represented Plaintiff

The court granted plaintiff's motion to disqualify defense counsel because defense counsel had contact with one defendant’s “outside in-house counsel” who had previously represented plaintiff. “This outcome is unfortunate, because there is not a molecule of evidence that [defense counsel] did anything other than act with integrity and in a manner consistent with the highest traditions of the legal profession. . . . This court is not aware of any case analyzing whether the Vicarious Presumption Rule applies to such a situation. . . . This court concludes that the Vicarious Presumption Rule should be applied here (i.e., that it should be presumed that [defense counsel] has relevant confidential information about [plaintiff].). . . The Attorney [who previously represented plaintiff] served as [one defendant's] outside in-house counsel for intellectual property matters, and the Three Current Cases are high-stakes, complex patent matters. The importance of in-house counsel effectively cooperating, coordinating, and communicating with their company’s attorneys is self-evident. Defendants’ argument that the Attorney 'played a limited role' in the Three Current Cases is unavailing.”

Advanced Messaging Technologies Inc. v. EasyLink Services International Corporation, 2-11-cv-04239 (CACD December 19, 2012, Order) (Pregerson, J.).

No Summary Judgment on Patent Marking Estoppel Doctrine

The court denied defendant's motion for summary judgment that plaintiff was estopped from asserting noninfringement under the patent marking estoppel doctrine. "[T]he Court is disinclined to estop [plaintiff] from claiming noninfringement based on a doctrine that enjoys questionable endorsement, if any, in the Federal Circuit and only sporadic application in the district courts. . . . Of equal concern is the apparent lack of any specific test or clear standard by which courts determine whether the doctrine applies beyond the general proviso that estoppel be imposed only when the defendant’s conduct is such that it would be 'inequitable' to allow it to assert noninfringement. . . . [E]ven if the doctrine remains viable, there is a triable issue of fact as to whether it applies under the circumstances presented here. . . . Conduct such as deliberate mismarking, attempts to benefit from both patent protection and noninfringement in an inconsistent manner, or conduct that creates a risk of consumer confusion or deception would potentially justify estoppel. The Court finds that the current record does not support such a conclusion in this case."

Ce Soir Lingerie Co. Inc. v. Imagine Enterprises LLC, 2-11-cv-07291 (CACD December 18, 2012, Order) (Gee, J.).

Public Interest Weighs Against Permanent Injunction Where Noninfringing Features Predominate Over Infringing Features

The court denied plaintiff's motion for a permanent injunction following a jury trial because the public interest did not favor an injunction. "Though [defendants'] phones do contain infringing features, they contain a far greater number of non-infringing features to which consumers would no longer have access if this Court were to issue an injunction. The public interest does not support removing phones from the market when the infringing components constitute such limited parts of complex, multi-featured products."

Apple Inc. v. Samsung Electronics Co. Ltd., et. al., 5-11-cv-01846 (CAND December 17, 2012, Order) (Koh, J.).

Damages Expert May Testify at Trial Despite “Lack of Experience in Actual Negotiations”

The court denied in part defendant's motion to exclude testimony from plaintiff's damages expert and rejected defendant's argument that she was not qualified due to her lack of real-world experience. "[Plaintiff] was not required to put forth the 'best qualified' witness but only an individual who could meet the minimum standards for expert testimony set out by the Third Circuit. Whether [plaintiff's expert] is the best qualified and most reasonable expert witness vis-à-vis any expert witness put on by [defendant] is a matter for the jury to resolve. . . . In light of the liberal standard for the qualifications of experts enunciated by the Court of Appeals for the Third Circuit, and the Federal Circuit’s approval of the methods used by damages experts to quantify the hypothetical negotiation, it appears that an appropriately credentialed individual on the issue of intellectual property damages may testify at trial as to application of the Georgia-Pacific factors, including the artificial hypothetical negotiation, despite a lack of experience in actual negotiations."

Carnegie Mellon University v. Marvell Technology Group, Ltd., et. al., 2-09-cv-00290 (PAWD December 15, 2012, Order) (Fischer, J.).

No Infringement for Execution of Accused Software Outside U.S. Prior to Importation

The magistrate judge recommended granting defendants' motion for summary judgment that execution of the accused firmware at defendant's manufacturing facilities outside of the U.S. did not infringe plaintiff's digital camera patent. "While [plaintiff] vigorously disputes whether infringement is limited to ‘use,’ and vehemently argues that [defendant] is liable for infringement for importing cameras into the United States that allegedly contain [plaintiff's] patented invention, it does not offer evidence to contest the limited issue on which [defendant] is moving for summary judgment - i.e., that the execution of the [accused] firmware at its manufacturing facilities outside of the United States cannot constitute infringement. The law on this issue supports [defendant's] position."

Image Processing Technologies, LLC v. Canon Inc. et al, 2-10-cv-03867 (NYED December 13, 2012, Order) (Boyle, M.J.).

Pleading Claim of Joint Infringement Requires Factual Support for Direction and Control Element

The court granted defendant's motion to dismiss plaintiff's joint infringement claims for failure to state a claim. "[B]ecause liability for joint infringement clearly requires proof of additional elements, such as control and direction over the other party, arguing that courts permit direct infringement claims when plaintiffs specify only a category of products is not relevant to the sufficiency of a claim of joint infringement. The Court agrees that [plaintiff] has simply stated, without any factual support, that the relationship between [defendant and its service provider] is one in which [defendant] exerts control and direction over the entire process such that every step is attributable to [defendant]. . . . The issue is not whether it is plausible that [defendant] would enter into a contractual relationship with [its service provider] (and possibly other unnamed joint infringers), such that it exerts the control necessary for joint infringement, but rather whether [plaintiff] has sufficiently alleged such a relationship in its Complaint. . . . [Plaintiff] has failed to sufficiently identify which of [defendant's] products are involved in joint infringement, or to adequately allege that [defendant] exerts control and direction over [its service provider] such that the entire patented process can be attributed to [defendant].”

Brandywine Communications Technologies, LLC v. Casio Computer Co. Ltd., et. al., 6-12-cv-00274 (FLMD December 5, 2012, Order) (Honeywell, J.).

“Actual Links” Between Claims Against Separate Defendants Justify Joinder Under Pre-AIA Rules

The court denied defendant's motion to sever and transfer venue of plaintiff's claims. "[T]here are several 'actual links' between the facts underlying each claim of infringement against each Defendant, which links involve accused products comprising commonly sourced parts. . . . [Plaintiff] has shown – and [defendant] has not refuted – that all of the accused products operate the same way relative to the patents (by complying with the [same] standard) and that all of the accused products incorporate technology sourced from the same company. This Court believes that these are precisely the sort of 'actual links' that the Federal Circuit had in mind when it discussed the propriety of joinder in patent cases."

Negotiated Data Solutions, Inc. v. Apple Inc., et. al., 2-11-cv-00390 (TXED December 11, 2012, Order) (Gilstrap, J.).

Limitation on Contingency Fees in Patent Assignment Does Not Undermine Assignee’s Standing

The court denied defendant's motion to dismiss for lack of standing where the patent assignment contained a limitation on attorneys' fee agreements. "[T]he [assignment from the original patent owner to plaintiff's assignor] prohibits [plaintiff's assignor] from retaining outside counsel for infringement suits where such counsel would be entitled to collect contingent fees of more than 20% of damages or other revenues. This provision simply protects [the original owner's] compensation for the assignment of the patent by ensuring that the revenue stream derived from the patent is not depleted by extravagant legal fees, which are not uncommon."

Suffolk Technologies, LLC v. AOL, Inc., et. al., 1-12-cv-00625 (VAED December 7, 2012, Order) (Ellis, J.).

Dismissal for Misjoinder Under AIA Does Not Eviscerate First-Filed Status of Case

The court granted defendants' motion to dismiss plaintiff's declaratory relief action under the first-to-file rule where defendant's earlier filed suit was refiled after being dismissed for joining 45 unrelated defendants in violation of the America Invents Act. "[Plaintiff] argues that [defendant's original] lawsuit was 'legally infirm' from the beginning, and that therefore this is the 'first-filed' lawsuit. . . . I do not think the original California lawsuit was 'legally infirm'. . . . The similarly-situated first named defendant in [defendant's original] lawsuit was allowed to proceed; the other defendants were told (essentially) to refile their lawsuits separately and any such lawsuits would be treated as related cases. In these circumstances, I do not think there is any legal reason not to treat [defendant's] extant suit against [defendant] as the 'first-filed' lawsuit. . . ."

Sony Electronics Inc. v. Digitech Image Technologies LLC, et. al., 1-12-cv-00980 (DED December 7, 2012, Order) (Andrews, J.).

Infringing Software Capable of Modification “Over the Course of a Weekend” or “Lunch Hour” Warrants Permanent Injunction

The court granted plaintiffs' post-trial motion for a permanent injunction regarding their prepaid gift card patent because plaintiffs established irreparable harm. "[T]his case involves unique circumstances because the accused product is a computer program and method, which by its nature is easily modified to either include or exclude a particular function. [Defendant] was able to remove the infringing portion of the source code over the course of a weekend, perhaps over the course of a lunch hour. It also is clear from the evidence presented at trial that [defendant] has the flexibility to adapt its product almost immediately to meet customer requirements. . . . Given the ease with which [defendant] can modify its product, and the difficulty [plaintiffs] would encounter attempting to detect and establish renewed infringement, the risk to [plaintiffs] is great.”

e2Interactive, Inc., et. al. v. Blackhawk Network, Inc., 3-09-cv-00629 (WIWD December 6, 2012, Order) (Crocker, M.J.).

General Exclusion Order Under Section 337(d)(2)(A) Requires “Circumvention” Not “Pattern of Circumvention”

The Commission issued a general exclusion order directed to infringing lighting control devices despite the ALJ's finding, and the Commission investigating attorney's agreement, that complainant failed to establish that an exclusion order was necessary to prevent the circumvention of the recommended limited exclusion order. "[T]he facts here establish business conditions that suggest circumvention of an LEO may be likely to occur. [Complainant] has submitted evidence showing significant and increasing demand for the infringing products, widespread U.S. marketing and distribution networks with multiple intermediaries, a large number of non-respondent foreign manufacturers/distributors, and frequent name changes for foreign manufacturers/distributers. . . . [Complainant] has also presented evidence that [a respondent in a prior investigation] circumvented a Commission consent order by selling dimmer switches that infringe the [asserted] patent under its own and under a different name. Contrary to the IA's argument, this record evidence is relevant to the Commission's determination of whether a likelihood of circumvention of an LEO exists. . . . [T]he ALJ misstated section 337(d)(2)(A) which only requires 'circumvention,' not a 'pattern of circumvention,' and which may be satisfied. . . by a single company engaged in infringing activities that indicate circumvention. . . ."

Lighting Control Devices Including Dimmer Switches and Parts Thereof (IV), 337-TA-776 (ITC November 7, 2012, Order) (Trade Commission, J.).

Separating Single Component into Two Components That Perform Same Function is “Generally Obvious”

The court granted plaintiffs' motion for summary judgment that defendant's conical crusher patent was invalid as obvious. "[T]he only question is whether separating the seal and piston into two unattached parts would have been obvious to a person having ordinary skill in the art. To ask that question is almost to answer it: it is generally obvious to separate a single component into two components that together perform the same function as the single component. . . . JCI’s decision to put a 'seal portion' between the hydraulic fluid and the 'piston,' as in claims 9 and 10, did not result in a unobvious modification of the prior art."

Metso Minerals Industries Inc., et. al. v. Astec Industries Inc., et. al., 2-10-cv-00951 (WIED December 4, 2012, Order) (Adelman, J.).

Defendant’s “Rush to File Reexamination Requests” Before AIA Reexamination Procedures Became Effective Did Not Prejudice Plaintiff

The court granted defendant's motion to stay pending ex parte reexamination of six patents-in-suit and rejected plaintiff's argument that it would be at a tactical disadvantage because of "Defendant’s initial delay in seeking reexamination, followed by its rush to file reexamination requests before the new and quicker America Invents Act reexamination procedures became effective. . . . Defendant cannot be faulted for failing to seek reexamination before it was served with Plaintiff’s summons and complaint. . . . [E]ven if Defendant was aware of Plaintiff’s active infringement litigation against other parties, such notice created no duty for Defendant, a third party, to seek reexamination. Once sued, Defendant acted promptly by filing six reexamination requests within two months. . . . [T]hat Defendant submitted its requests just days before new reexamination procedures were to be instituted did not constitute an undue prejudice towards Plaintiff."

Robert Bosch Healthcare Systems, Inc. v. Cardiocom, LLC, 5-12-cv-03864 (CAND December 3, 2012, Order) (Davila, J.).

Spoliation by Third Party Warrants Evidentiary Sanctions, But Not Terminating Sanctions

The court denied plaintiff's motion to strike defendant's pleadings as a sanction for production of an altered hard drive from one of defendant's software contractors, but the court granted plaintiff's motion for evidentiary sanctions. "The appropriate remedy in this case is more challenging to determine than in other cases because the spoliator in this case . . . is a non-party, independent contractor for [defendant], and not within the Court’s jurisdiction. Nonetheless, it is [defendant] who benefits from the lack of any adverse creation dates . . . or other negative metadata on any of the CAD files that [plaintiff's] expert might have found, had files not been deleted. . . . There is no jury instruction, however, that can effectively protect the victim of a willful spoliation from the prejudice created by willful deletion of files with the manual running of a Ccleaner program. . . . The Court will not strike [defendant's] affirmative defenses and counterclaims – which is akin to the extreme sanction of a default or dismissal in this patent dispute – for the conduct of a non-party witness only partially under the control of [defendant]. . . . [The contractor] will not be allowed to testify at trial and evidence that originated with him will be excluded. . . . [Defendant] will not be allowed to rely on [its contractor's] deposition testimony for summary judgment purposes or at trial, and [it] will not be allowed to rely on any documents . . . sent from or to [the contractor] that [defendant] has produced."

Pacific Coast Marine Windshields Limited v. Malibu Boats, LLC, et. al., 6-12-cv-00033 (FLMD November 30, 2012, Order) (Baker, M.J.).

Foreign Sales May be Included in Damages Calculations for Infringement of Method Claims Used in Domestic Sales Cycle

The court denied defendants' emergency motion to strike plaintiff's attempt to include sales of accused chips outside of the U.S. in its damages calculations. "Admittedly, there is no case exactly on point. On the other hand, [plaintiff] has put forth sufficient facts to support its theory, albeit novel. [Plaintiff] intends to prove that the alleged infringing method is used during [defendant's] sales cycle, which is performed here in the United States, where both its engineers and customers are located. [Plaintiff] seeks damages for this sales cycle infringement by claiming a reasonable royalty rate on all of the chips that are produced during this sales cycle and purchased based on the result of said cycle. In this Court’s view, one of the simplest ways to determine the value of an infringing use of a patented method during research is to ascertain how many sales were made based on that infringing use."

Carnegie Mellon University v. Marvell Technology Group, Ltd., et. al., 2-09-cv-00290 (PAWD November 29, 2012, Order) (Fischer, J.).

Infringement Contentions No Substitute for Insufficient Complaint

The court granted defendant's motion to dismiss plaintiff's induced and contributory infringement claims for failure to state a claim. "[Plaintiff] argues that dismissal is not warranted because its infringement contentions identify the direct infringement and describe the acts of the alleged indirect infringer that contribute to or are inducing that direct infringement. [Plaintiff], however, does not cite any authority supporting the proposition that the Court may consider its infringement contentions, which are not set forth in the FAC, in deciding whether it has pled cognizable claims for relief. . . . [Plaintiff] has failed to allege any facts plausibly showing that [defendant] knowingly induced any third party to engage in direct infringement of the [patent-in-suit] with the specific intent of encouraging the infringement. . . . Nor has [plaintiff] alleged that the component of the accused. . . products that practices the patented method has no substantial non-infringing uses, or that the component constitutes a material part of the invention."

Emblaze Ltd. v. Apple Inc., 4-11-cv-01079 (CAND November 27, 2012, Order) (Armstrong, J.).

Prior License of Patents-in-Suit Involving Different Technology Excluded From Evidence

The court granted defendants' motion in limine to preclude plaintiff from presenting testimony regarding the value of one of the defendant's licenses with a third party which contained the patents-in-suit but was directed to different technology. "[A] license is not comparable simply because it contains the patents-in-suit. . . . [T]he fact that the accused products were covered by the license is also insufficient to establish comparability; rather, [plaintiff] must show that the. . . license is technologically comparable to license that would have been reached at the hypothetical negotiation. . . . In addition, the Court concludes that any probative value this license might have would be substantially outweighed by the danger of unfair prejudice to [defendant]."

Multimedia Patent Trust v. Apple Inc., et. al., 3-10-cv-02618 (CASD November 20, 2012, Order) (Huff, J.).

Expert’s Reliance on “Nash Bargaining Solution” In Addition to Other Considerations to Calculate Royalty Rate Did Not Render Opinion Unreliable

The court denied defendant's motion to preclude the royalty estimates testimony of plaintiff's damages expert. "[Defendant] alleges that . . . [the expert's] royalty rate analyses are improperly premised on 'arbitrary profit splits,' such as the '25-percent rule' . . . [Plaintiff] counters that his calculations were influenced, appropriately, by the facts of the case, including the competitive environment and [its] policy of exploiting its own patents. . . . [Plaintiff's expert] explained his methodology as based on a combination of real world observation and the Nash bargaining solution. The Nash bargaining solution is a mathematical proof. Although it has been criticized as impenetrable, at least one court has permitted its use 'in addition to, rather than in lieu of' other considerations. . . . The Court agrees with [plaintiff] that [its expert's] analysis is tied to the facts of the case. It will not exclude his testimony on this ground."

Gen-Probe Incorporated v. Becton Dickinson and Company, 3-09-cv-02319 (CASD November 26, 2012, Order) (Benitez, J.).

Defense Counsel’s Prior Representation of Plaintiff for “Junior Prosecution Work” Did Not Require Disqualification

The court denied plaintiff's motion to disqualify defense counsel where one of defendant's attorneys was plaintiff's prior patent prosecution attorney. "[The attorney's] work was confined to junior prosecution work on patents unrelated to those in suit, either by specification or by subject matter. There is no evidence that [he] was involved in any discussions of [plaintiff's] strategies for patent prosecution, claim drafting, or licensing/litigation/monetization of their patents. . . . Even assuming that [he] learned of such general confidences indirectly from more senior attorneys . . . it is not apparent at all how confidential knowledge of [plaintiff's] strategies and plans fifteen years ago could be relevant to any issue in this case, or harmful to [plaintiff] in some other way."

Walker Digital LLC v. AXIS Communications AB, et. al., 1-11-cv-00558 (DED November 21, 2012, Order) (Andrews, J.).

Summary Judgment of Noninfringement Against “Patent Troll” Who Filed “Hundreds of Lawsuits” Did Not Warrant Award of Attorneys’ Fees

The court denied defendant's motion for attorneys' fees under 35 U.S.C. § 285 following summary judgment of noninfringement. "[Defendant] characterizes [plaintiff] and its counsel as 'one of the nation’s leading "patent trolls"' who filed suit against [defendant] knowing there was no conceivable infringement. . . . [Defendant] also argues that [plaintiff] acted in bad faith because it has filed hundreds of lawsuits, it routinely engages in 'shakedown tactics' to obtain settlements, and none of its other cases have proceeded to claim construction proceedings. . . . Although [defendant] objects to [plaintiff's] evidence of pre-suit claim charts, there is still insufficient evidence in the record to establish an 'exceptional case' warranting attorneys’ fees. . . . 'Even if plaintiff's pre-suit investigation was unreasonable, an unreasonable investigation alone does not demonstrate that the ensuing litigation was vexatious, unjustified, or brought in bad faith.' . . . Furthermore, evidence that [plaintiff] has filed suit against many other parties does not, by itself, prove that litigation is unjustified or baseless."

ArrivalStar S.A., et. al. v. Meitek Inc., et. al., 2-12-cv-01225 (CACD November 20, 2012, Order) (Selna, J.).

Declaratory Judgment Defendant Enjoined From Pursuing Infringement Claims In Eastern District of Texas

The court granted a declaratory judgment plaintiff's motion for an injunction of defendant's co-pending claims against plaintiff's customers in the Eastern District of Texas because the balance of hardships favored an injunction. "[Defendant] resides and works in this district.' In addition, all of [its] attorneys are located in. . . the Eastern District of Michigan. . . . Further. . ., the Eastern District of Michigan is in reality the venue of first filing since Defendant originally filed two lawsuits [here] against two of the Texas 'customers.' Defendant then abruptly dismissed them, and shuffled down to [Texas] to sue them there. . . . The Court finds it suspicious at best, why [defendant] filed two cases in Detroit separately -- think two different judge draws -- and then apparently not satisfied with the draws, scooted to Texas, where. . . every judge is hospitable to plaintiffs. . . ."

Finisar Corporation v. Cheetah Omni, LLC, 2-11-cv-15625 (MIED November 19, 2012, Order) (Borman, J.).

Sanctions Order Unsealed Following Jury Verdict

The court granted plaintiff's motion to unseal documents related to a sanctions order that were sealed to avoid tainting the jury. "Although the patent trial has concluded, Defendants assert that the same reasons for denying the prior motion require that the Sanctions Order remain under seal. However, the jury has already returned a verdict in the parties’ patent dispute. Moreover, the antitrust trial, docketed to begin [late next year], is still quite remote, and the opportunity for voir dire examination will serve to eliminate any jurors who may have been prejudiced by the unsealing of the Sanctions Order. The Court concludes that the potential for prejudice in the antitrust matter does not justify maintaining the Sanctions Order under seal."

Monsanto Company, et. al. v. E.I. Dupont De Nemours and Company, et. al., 4-09-cv-00686 (MOED November 16, 2012, Order) (Webber, J.).

Prior License Agreement and Internal Forecast Were Relevant to Type of License Resulting From Hypothetical Negotiation

The court denied plaintiff's motions in limine to exclude one of plaintiff's license agreements and an internal forecast estimating the value of a license for defendant's alleged infringement. "[Plaintiff] focuses its arguments on challenging the values set forth in the [license] and the 2006 forecast, as the figures of a lump sum of $200,000 offered to [the licensee] and its 2006 internal discussions concerning the potential of an annual fee of $2,000,000 are drastically less than their expert’s initial billion dollar opinion as to the value of the patents in this case. . . . The Court finds that the [license] and the 2006 forecast are highly probative of the type of license that [plaintiff] may have sought during those negotiations, i.e., a running royalty versus a lump-sum license. . . . [T]he challenged evidence is highly probative of whether [plaintiff] would have accepted a running royalty or opted for a lump sum during the negotiations."

Carnegie Mellon University v. Marvell Technology Group, Ltd., et. al., 2-09-cv-00290 (PAWD November 7, 2012, Order) (Fischer, J.).

Pre-Suit Settlement Negotiations Admissible to Show No Willfulness, But Not Reasonable Royalty

The court granted in part defendants' motion in limine to exclude evidence regarding the parties' pre-suit license and settlement negotiations. "Where, as here, the negotiations occurred between the parties to the litigation, concerned the subject of the litigation, and are being offered for the purpose of establishing a reasonable royalty (i.e., the 'amount of a disputed claim'), Rule 408(a) bars their admission. Nor do I find persuasive [plaintiff's] contention that the pre-suit negotiations must be admitted because [defendants' expert] considered these negotiations as part of his reasonable royalty analysis. . . . To the extent [plaintiff] seeks to introduce evidence of the parties’ negotiations for the limited purpose of defending against willfulness, Rule 408(b) does not preclude it from doing so and neither will I."

Carpenter Technology Corporation v. Allegheny Technologies Incorporated, et. al., 5-08-cv-02907 (PAED November 14, 2012, Order) (Stengel, J.).

Discovery Abuses Warrant Terminating Sanctions

The court granted defendant's motion for terminating sanctions based on plaintiffs' discovery abuses. "This case is nearly three years old. Plaintiffs have delayed production and/or failed to preserve evidence essential for fair adjudication. Although public policy favors disposition of cases on their merits, doing so here would require re-opening discovery. . . . Further, any sanction short of dismissal, such as excluding Plaintiffs’ evidence regarding the date of conception of the [patent-in-suit], would eliminate any possibility of Plaintiffs succeeding at trial. Moreover, Plaintiffs’ pattern of deception and discovery abuse make it impossible to conduct a trial with any reasonable assurance that the truth will be available."

Caron, et. al. v. Quickutz Inc., 2-09-cv-02600 (AZD November 13, 2012, Order) (Wake, J.).

Violation of RAND Obligation May Constitute Patent Misuse or Unclean Hands

The court denied plaintiff's motion for summary judgment that its video compression patents were not unenforceable for patent misuse or unclean hands based on alleged RAND violations. "[S]everal courts have held that a patentee’s violation of its RAND obligations may in certain circumstances constitute patent misuse. . . . [Plaintiff] argues that [defendants] have failed to provide any evidence showing that the patents-in-suit are essential patents to the H.264 standard and, therefore, are subject to any potential RAND obligations related to that standard. However, a reasonable inference could be drawn that the patents-in-suit are essential to the H.264 standard based on [plaintiff's] assertion that the Defendants infringe the patents-in-suit by practicing that standard. In addition, [defendants] have presented the Court with testimony from one of [plaintiff's experts] stating that [two of the patents-in-suit] are by some criteria essential to the H.264 standard. Accordingly, the Court denies [plaintiff's] motion for summary judgment of [defendants'] affirmative defenses of patent misuse and unclean hands."

Multimedia Patent Trust v. Apple Inc., et. al., 3-10-cv-02618 (CASD November 9, 2012, Order) (Huff, J.).

Attorney Argument Was Not Misrepresentation Sufficient To Support Inequitable Conduct

The court granted with prejudice plaintiff's motions to dismiss defendant's inequitable conduct counterclaim and to strike defendant's inequitable conduct defense because defendant failed to allege a misrepresentation. "[Defendant's] inequitable-conduct contentions appear to be little more than an ineffective attempt to dress up a garden-variety invalidity defense, which [defendant] has already pleaded as its second counterclaim and third affirmative defense." "It is well-settled that an applicant's interpretation of prior art does not amount to misrepresentation unless the misrepresentation constituted genuine misrepresentation of a material fact. . . . [Defendant] concedes that [plaintiff] disclosed the [prior art patent] in its application for the patent-in-suit] to the PTO. Hence, the examiner had the opportunity to review the applicant's interpretation of the [patent-in-suit] before determining whether to accept or deny the [patent-in-suit's] application. . . . [Defendant's] disagreement with the applicant's interpretation of the [prior art] Patent does not convert [plaintiff's] attorney argument into a misrepresentation."

Lakim Industries, Inc. v. Linzer Products Corporation, 2-12-cv-04976 (CACD November 7, 2012, Order) (Wright, J.).

Block-Billing Results in 20% Reduction in Fee Award

The court denied in part defendants' motion for discovery sanctions based on defendants' lack of supporting documentation and description of charges. "[B]lock-billing is rampant in [defendants'] motion. Throughout the declaration, [defendants] lump[] together various tasks by attorneys, separating the hours only by motion. Perhaps all of the hours were well-spent in efficient pursuit of investigating and drafting the motions. Or reveal inefficiencies in the work. Or reflect nothing more than a best guess by [defense] counsel at how many hours they spent compiling three motions amidst the immense size and scope of this case. But the court cannot make that determination from the request as presented because of the inherent ambiguity in block-billing, which is why block-billing is a disfavored format for fee requests. . . . Because it cannot evaluate the reasonableness of the hours, and in light of the evidence that block-billing inflates hours by between 10% and 30%, the court trims 20% from the block-billed hours in [defendants'] request."

Apple Inc. v. Samsung Electronics Co. Ltd., et. al., 5-11-cv-01846 (CAND November 7, 2012, Order) (Grewal, M.J.).

Damages Expert May Consider Entire Price, Profit and Margin of Accused Product Without Showing Entire Market Value Rule Applies

The court denied defendant's motion to exclude reference to the entire price, profit, or margin of the accused chips. "Here there is purported evidence that the patents-in-suit are considered 'must have' technology. [LaserDynamics, Inc. v Quanta Computer, Inc., 694 F.3d 51, (Fed. Cir. 2012)] therefore supports the Court’s Summary Judgment decision that Uniloc does not 'foreclose[e] the use of these figures, and indeed, a number of them are necessary for [plaintiff's expert] to testify coherently on the issue of damages'. . . . Once [plaintiff] enters into evidence its basis for the argument that the patents-in-suit are 'must have' technology and this Court finds such evidence sufficiently reliable, then [plaintiff's expert] can provide her expert analysis. In doing so, [her] testimony shall only refer to total revenue, total profit, or total margin of the accused chips to start her analysis. Thereafter, she may refer to the total number of sales, total apportioned revenue, average price per chip, operating profit per chip, and apportioned profit per chip in making her calculations."

Carnegie Mellon University v. Marvell Technology Group, Ltd., et. al., 2-09-cv-00290 (PAWD November 5, 2012, Order) (Fischer, J.).

Cost of Electronic Discovery Database Not Recoverable

The court rejected defendant's claim for more than $300,000 in costs for its electronic discovery database. "The court is sympathetic to the practical arguments advanced by [defendant]. In modern complex litigation, particularly patent litigation, the maintenance of an electronic database is a practical necessity. . . . Attorneys can no longer reasonably be expected to maintain thousands upon thousands of documents in paper form, and to manually process those documents during litigation. Any law firm that attempted to do so would soon find itself falling far behind its competition, as clients have come to expect the efficiency that modern technological conveniences provide. Unfortunately, however, the law does not always favor efficiency or practicality. . . . [T]his court is constrained by the provisions of 28 U.S.C. § 1920 when determining the costs that may be awarded to a prevailing party, and the Third Circuit has offered a thorough, reasonable, and persuasive interpretation of that statute."

Abbott Point of Care Inc. v. Epocal, Inc., 5-08-cv-00543 (ALND November 5, 2012, Order) (Smith, J.).

Mistake – Even “Costly Mistake” – Does Not Justify Section 285 Attorneys’ Fee Award

The court denied defendant's motion for more than $200,000 in attorneys' fees under 35 U.S.C. § 285 where plaintiff dismissed its case after learning that the patent-in-suit it acquired from its parent company was subject to a terminal disclaimer but was not under common ownership. "The [patent-in-suit] could not stand on its own two feet. It was subject to a terminal disclaimer requiring that it have common ownership with [another] patent in order to be enforceable. . . . [A]bout eighteen months before the start of this litigation, [plaintiff's parent] assigned the [patent-in-suit] to [plaintiff], with [the parent] retaining the [other] patent. . . . [M]istakes, even costly mistakes, happen. It is the simplest explanation of what happened here, and therefore the most likely. Second, there was nothing worthwhile to be gained by splitting the ownership of the patents, and a lot to lose by doing so. Third, the reaction to [defendant's] e-mail [notifying plaintiff of the disclaimer issue] was an extremely prompt 'fold.'. . . While there might be circumstances where the prompt 'fold' could be interpreted as recognition that the 'jig was up,' that is not what it looks like to me here."

Parallel Iron LLC v. EMC Corporation, 1-11-cv-00799 (DED November 2, 2012, Order) (Andrews, J.).

Evidence Concerning Hurricane’s Impact on Plaintiff’s Business Was Not Inadmissible

The court denied defendants' motion to exclude references to Hurricane Katrina and its effect on plaintiff's business operations. "Defendants argue that if the Court permits testimony and evidence regarding Hurricane Katrina, it is highly likely that the jury will base its decision on something other than the established propositions in this case – that is, that the jury will be swayed by an alleged kinship with a small, hometown business that suffered as a result of the storm. . . . The Court finds that testimony and evidence regarding Hurricane Katrina is both relevant and not unfairly prejudicial. The storm’s effects are inextricably intertwined with Plaintiff’s history as a company. Furthermore, such testimony and evidence is relevant to Plaintiff’s damages claim and its argument that [its product's] commercial success is an objective indicator of nonobviousness. Finally, more than seven years have passed since Hurricane Katrina made landfall . . . thereby diminishing any risk of prejudice to Defendants from the introduction of such highly relevant and probative testimony and evidence."

Innovention Toys, LLC v. MGA Entertainment, Inc., et. al., 2-07-cv-06510 (LAED November 1, 2012, Order) (Morgan, J.).

Patentee’s Obligation to License on FRAND Terms Did Not Preclude ITC Exclusion Order

Following an evidentiary hearing, the ALJ found that complainants' mobile communications patents were not unenforceable and rejected respondent's argument that complainants' FRAND obligations to ETSI precluded them from seeking an exclusion order. "[I]f the ITC were precluded from performing its mandate as set forth in the authorizing statute, an infringing party could, by making unrealistic counter-offers to the patent holder, while claiming that such counter-offers more accurately reflect FRAND than the offers proposed by the patent holder, hold up or frustrate Section 337 investigations. . . . [T]he evidence does not support [respondent's] allegation that [complainants] failed to offer [respondent] licenses to [complainants'] declared-essential patents on FRAND terms. . . . Remarkably . . . [respondent] has not shown that, as a member to ETSI, it never availed itself to the [mediation] process and procedures of the ETSI. . . ."

Electronic Devices, Including Wireless Communication Devices, Portable Music and Data Processing Devices, and Tablet Computers, 337-TA-794 (ITC October 3, 2012, Order) (Gildea, ALJ).

$200,000 in eDiscovery Costs Not Recoverable

The court excluded more than $200,000 in defendants' requested costs for in-house and vendor processing of electronic discovery. "The line between utility and the parties’ convenience is not bright, particularly given evolving technology. . . . A third tension about imposing costs under Rule 54(d) is that e-discovery is expensive. It provides an opportunity for lawyers, consultants, and vendors to inflate the need or the cost of e-discovery. . . . The court is sympathetic to [defendants'] argument that the processing was necessary to produce the discovery and that the only way to 'copy' and produce usable electronic data is to hire a vendor, capture users’ emails and files, and process, review, and produce them. But given ESI processing costs that exceed $200,000, the case law, the recent Supreme Court decision [in Taniguchi v. Kan Pacific Saipan, 132 S. Ct. 1997 (2012)], and the lack of a discussion about the costs in the ESI agreement, the court declines to award the processing costs."

Plantronics, Inc. v. Aliph, Inc., et. al., 3-09-cv-01714 (CAND October 23, 2012, Order) (Beeler, M.J.).

Potential Delay in Resolving Reexam Due to America Invents Act Does Not Warrant Denial of Stay Pending Reexam

The court granted defendants' motion to stay pending inter partes reexamination and rejected plaintiff's argument that the influx of reexamination requests due to the America Invents Act caused plaintiff undue prejudice. "[Plaintiff] argues that the recent influx of requests for reexamination at the PTO will cause extraordinary delay. The [AIA] amended the inter partes reexamination process for all requests filed after September 15, 2012. Because of this deadline, the PTO received an unusually large volume of reexamination requests in September 2012. At oral argument, [plaintiff] argued that this high volume of requests will cause the PTO’s reexaminations of the [patents-in-suit] to extend to 7 to 10 years. However, the actual effect of the Act on the PTO’s reexamination process remains to be seen. . . . Given the uncertainty of the PTO’s future workload, [plaintiff] has not provided persuasive evidence that the reexaminations of the [patents] will be pending for nearly a decade. On the other hand, [defendant] promptly requested the reexaminations after the dispute between the parties emerged, and [it] has not engaged in improper litigation tactics that might otherwise warrant declining a request for a stay."

Polaris Industries, Inc. v. BRP US Inc., et. al., 0-12-cv-01405 (MND October 29, 2012, Order) (Montgomery, J.).

Prior Art Statement Must Explain How Each Prior Art Combination Renders a Claim Obvious

The court granted in part plaintiff's motion to strike defendant's prior art statement and barred defendant from relying on any combination of prior art to assert its obviousness defense without a detailed explanation of how the combination invalidates the claims. "If [defendant] intends to rely upon all 1406 possible combinations, then it must individually list each combination and explain in detail how each combination renders one or more of [plaintiff's] claims obvious. The potential length of a prior art statement does not excuse non-compliance with this Court’s Order. . . . While [defendant] identifies legitimate potential reasons to combine, it does not actually include these reasons in any explanation of a specific combination. Instead, [it] simply listed broad reasons to combine that could be used in a §103 defense and then claimed that all of these reasons apply to all 1406 or more potential combinations. Like [defendant's] method of listing potential combinations, this tactic does not comply with the spirit or intent of this Court’s Order."

AGA Medical Corp. v. W.L. Gore & Associates, Inc., 0-10-cv-03734 (MND October 26, 2012, Order) (Mayeron, M.J.).

Expert’s Use of “Supercharged 50% Version of the 25% Rule of Thumb Rule” Did Not Render Royalty Rate Opinion Unreasonable

The court denied defendants' motion in limine to exclude plaintiff's damages expert's determination of a 10-15% royalty rate. "[Defendant] argues [plaintiff's expert] improperly arrived at a 10-15% royalty rate by dividing the profit margins of [plaintiff] and [defendant] in half and using the resulting figures as the upper and lower limits for the rate. [Defendant] contends this is a 'supercharged' 50% version of the '25% rule of thumb' rule rejected by the Federal Circuit. . . . Because [plaintiff's expert] used the [Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970)] factors to determine his reasonable royalty rate range of 10-15%, rather than a version of the unreliable 25% rule, the Court will not exclude [his] royalty rate analysis."

Halo Electronics, Inc. v. Bel Fuse Inc., et. al., 2-07-cv-00331 (NVD October 25, 2012, Order) (Pro, J.).

Discovery Delay Resulting in Automatic Data Loss Warrants Adverse Jury Instruction

The court granted in part plaintiff's motion for an adverse jury instruction because defendant's dilatory discovery resulted in lost evidence. "[Defendant's] argument that nonparty Flash updates and changes the configuration files is without merit. Even if these files are purged in the normal course of business, [defendant] had a duty to preserve files concerning its own data network and compression servers, place a litigation hold on such files, and produce them [for the last 18 months]. . . . Although the Court is not concluding that [defendant's] log and configuration files were 'destroyed with a culpable state of mind,' [defendant] nonetheless skirted its discovery obligations, delaying in producing explicitly requested files despite a duty to preserve and produce. Participation in such discovery abuse is indicative of insincere intent and gamesmanship.”

Realtime Data, LLC d/b/a IXO v. MetroPCS Texas, LLC, et. al., 6-10-cv-00493 (TXED October 23, 2012, Order) (Love, M.J.).

“Ex Ante, Multilateral Negotiation” Methodology for Determining RAND Terms Not Inherently Unreliable Despite Lack of Peer Review and Publication

The court denied defendants' motion to exclude plaintiff's three RAND experts who used an ex ante, multilateral negotiation analysis instead of a bilateral analysis. "[T]he court can find no instance where a prior court has been called upon to make a determination of a reasonable royalty rate for a block of standard essential patents held out by the patent holder for licensing on RAND terms. . . . [Plaintiff's] proposed framework seeks to address this concern by contemplating a negotiation (for determining a RAND rate) at a time just prior to adoption of the standard, thereby eliminating excess value added to the patents through the adoption of the standard. Indeed, this ex ante interpretation of a RAND royalty rate has been endorsed by numerous publications and the Federal Trade Commission. . . . [A]s [plaintiff's] counsel admitted at oral argument, an ex ante negotiation may not fully, or at all, address [defendants'] ex post promise that it license its standard essential patents on RAND terms. Such discrepancies between the methodology and the circumstances of the present case can be addressed at trial through cross examination."

Microsoft Corporation v. Motorola Inc., et. al., 2-10-cv-01823 (WAWD October 22, 2012, Order) (Robart, J.).

Recently Formed Plaintiff’s Choice of Venue Not Entitled to Deference

The magistrate judge recommended granting defendants' motion to transfer venue of plaintiff's infringement action from the Middle District of Florida to the District of Oregon and found that plaintiff's choice of forum was not entitled to considerable deference. "[N]either the Plaintiff company nor the facts underlying its patent infringement claims appear to have any meaningful connection to this District. While Plaintiff is a Florida corporation with its principal place of business now physically located in the Middle District of Florida, the facts and circumstances underlying this patent suit appear to have no other significant connection or relationship with this District apart from the fact that the Defendants sell their products in the State. . . . [Plaintiff] was incorporated in Tampa, Florida. . . only shortly before suit was filed. . . . . The inventor. . . continues to reside in England. . . . [A]part from the fact that [defendants] do business in the State of Florida, there appears no other connection between the allegations of patent infringement and this District."

Evans Design Dynamics, LLC v. Nike, Inc., et. al., 8-12-cv-00493 (FLMD October 22, 2012, Order) (McCoun, M.J.).

Hatch-Waxman Liability May Apply to Entities Involved in ANDA Preparation

The court converted defendant's motion to dismiss to a motion for summary judgment and rejected defendant's argument that it could not be liable because another entity submitted the ANDA at issue. "[Defendant] contends that only one entity can 'submit' the ANDA to the FDA and thus incur [35 U.S.C. § 271(e)(2)] liability and that said entity must be the named applicant. The statute’s text does not define the term, 'submit,' and neither the Federal Circuit nor the Supreme Court has construed the term in this context. . . . [Defendant] has been more than actively involved in the submission; it has taken every relevant action except the final formalities. In these circumstances, to find [another defendant] but not [the moving defendant] has 'submit[ted]' the ANDA pursuant to section 271(e)(2) would be to elevate form over substance."

Purdue Pharma L.P., et. al. v. Varam, Inc., et. al., 1-10-cv-06038 (NYSD October 19, 2012, Order) (Stein, J.).

Plaintiff’s Delay in Enforcing Patent Rights Against Competitor Warrants Stay Pending Reexam

The court granted defendants' motion to stay pending a second reexamination and rejected plaintiff's claim of undue prejudice because the parties were competitors. "Plaintiff waited over one and a half years since the Patent emerged from reexamination. . . before commencing this infringement action. Plaintiff also chose not to include Defendants in [another suit involving the same patent], which was filed over a year before this suit. Second, Plaintiff decided not to seek a preliminary injunction against Defendants in this action, which tends to suggest that Plaintiff would not be unduly prejudiced by staying this litigation. Third, Plaintiff admits that it offered Defendants a license to the Patent before filing this suit."

Phil-Insul Corp. v. Airlite Plastics, Inc., et. al., 8-12-cv-00151 (NED October 18, 2012, Order) (Gossett, M.J.).

Excessive Number of Alleged Prior Art References Warrants “Biweekly Declarations” Detailing Efforts to Reduce Number of References

The ALJ denied complainants' motion to strike respondents' notice of prior art containing 1,818 references where complainants were asserting more than 100 claims over 4 patents. "Nonetheless, the [ALJ] is concerned about the number of prior art references noticed, just as he was concerned about the number of asserted patent claims. . . . [Respondents] should be mindful of needlessly consuming the time, energy, and resources of complainants, as well as that of the administrative law judge. Thus, respondents are ordered to file biweekly declarations detailing their efforts to reduce the number of references listed in their notice of prior art."

Audiovisual Components, 337-TA-837 (ITC October 4, 2012, Order) (Shaw, ALJ).

Inventor Was Not Diligent in Reducing Invention to Practice by Prioritizing Other Work Ahead of Patent Application

The court granted defendants' motion for summary judgment that plaintiffs' DNA sequencing patent was invalid as obvious based on a prior art patent application filed two months before the application for the patent-in-suit, and the court rejected the inventor's claim that he was diligent during that two-month delay. "[Defendant] argues persuasively that the implications of [the inventor's] busy professional life are quite different: by prioritizing other work over the. . . patent application, particularly his contract work for [a third party], [the inventor] did not act diligently, but instead voluntarily set aside his own work in favor of someone else’s, outside of the bounds of his normal professional obligations. . . . [The inventor's] own invention was at the bottom of his priority list, and. . . that cannot support a finding of diligence."

Illumina Inc., et. al. v. Complete Genomics Inc., 3-10-cv-05542 (CAND October 16, 2012, Order) (Laporte, M.J.).

Willfulness Determination Should Await Jury’s Assessment of Reasonableness

The court denied defendant's motion for summary judgment that it did not willfully infringe plaintiff's board game patent. "When, as in this case, a party defends against a charge of willful infringement by pointing to a 'reasonable' defense that turns on a disputed question of fact or a mixed question of law and fact, the trial court may 'allow the jury to determine the underlying facts relevant to the defense in the first instance.'. . . [Other] courts have concluded that the best course of action is to reserve [In re Seagate Tech., 497 F.3d 1360 (Fed. Cir. 2007)]'s first, objective prong until the parties make a full presentation of the evidence, subject to cross-examination, on the record and the jury has been given an opportunity to resolve any necessary fact finding."

Innovention Toys, LLC v. MGA Entertainment, Inc., et. al., 2-07-cv-06510 (LAED October 15, 2012, Order) (Morgan, J.).

Counsel’s Past Representation of Parent Warrants Disqualification in Litigation Involving Subsidiary

The court granted defendant's motion to disqualify plaintiff's newly substituted counsel and rejected plaintiff's argument that its counsel represented a company other than defendant. "[Plaintiff's counsel] has provided records which indicate that all correspondence was directed to [defendant's parent]. It is undisputed that [the parent] is merely a holdings company and that its subsidiaries are the operating companies. . . . It is evident that the work [counsel] performed at the behest of [the parent] was, in fact, related to [defendant's] technology and, specifically, to the technology at issue in this litigation. . . . Perhaps even more significant is that the inventors of the technology at issue in this litigation were also technically employed by [the parent] even though it is undisputed that the technology belongs to [defendant]. . . . Finally, the Court finds it interesting that many of [counsel's] bills were paid, not by [the parent], but by [another subsidiary]. The fact that the invoices were paid by yet another, separate entity, and the fact that [counsel] did not object to receiving payment in this manner, further supports the conclusion that [the parent] was not [counsel's] true client."

Synchronoss Technologies, Inc. v. Asurion Mobile Applications, Inc., 3-11-cv-05811 (NJD October 11, 2012, Order) (Bongiovanni, M.J.).

Counsel’s Access to Former Client’s “Confidential Litigation Strategies” is Insufficient for Disqualification

The court denied defendant's motion to disqualify three attorneys representing plaintiff even though those three attorneys previously represented defendant in patent matters while at another law firm because there was not a reasonable probability that the attorneys had access to confidential information that could be used to defendant's disadvantage. "[T]his confidential information factor is a closer call. . . . [Defendant] cannot carry its burden by simply stating that [the attorneys] have knowledge of [its] 'practices and procedures.'. . . An allegation that [the attorneys] were made aware of [defendant's] confidential litigation strategies is insufficient to sustain the confidential information disqualification burden. Every attorney who represents a corporate client would be made privy to 'litigation strategy.' If the Court were to disqualify the [plaintiff's counsel] based on the facts alleged here, disqualification could almost always be supported under the confidential information prong."

E-Contact Technologies, LLC v. Apple Inc., et. al., 1-11-cv-00426 (TXED September 26, 2012, Order) (Giblin, M.J.).

No Disqualification of Expert Who Met With Opposing Counsel Before Being Retained

The court denied plaintiff's emergency motion to disqualify an expert who had met with plaintiff regarding this same case, discussed hypothetical arguments regarding claim interpretation with plaintiff's counsel, and then was hired by defendant a week later. "[A]fter [plaintiff's counsel]. . . explained [plaintiff's] position about how the claims should be interpreted . . . [the expert] proposed an argument [defendant] might make in response. [The expert] recalls that [counsel] did not want to discuss the subject any further and did not respond with anything of substance. [Plaintiff's counsel] recalls that she responded in a substantive fashion as to how [plaintiff] would address this hypothetical. . . . [T]he hypothetical posed by [the expert] and [counsel's] unsolicited response thereto do not constitute confidential information sufficient to disqualify [the expert] from consulting for [defendant]. . . . [T]he nature of the relationship and of the information allegedly disclosed instantly is much too abbreviated to warrant such a drastic sanction."

Butamax (TM) Advanced Biofuels LLC v. Gevo Inc., 1-11-cv-00054 (DED October 10, 2012, Order) (Robinson, J.).

“Contingent” Infringement Contentions Prohibited

The court granted in part defendant's motion to strike plaintiff's amended infringement contentions because plaintiff's claim chart did not comply with the patent local rule for specificity. "Plaintiff repeatedly attempts to hedge its bets. For each of these limitations, Plaintiff first articulates a theory of infringement (e.g., the infringing portion of the accused product involves [[ ]]), then tries to cover its bases by articulating a second theory that is wholly contingent on the position that might be taken by Defendant (e.g.,. if Defendant argues that there are [[ ]], then the infringing portion of the accused product involves [[ ]]). . . . Plaintiff’s 'contingent' formulation obfuscates the exact substance of Plaintiff's allegations and does not 'crystallize [Plaintiff's] theories of the case,' as Rule 3-1 commands."

Infineon Technologies AG v. Volterra Semiconductor Corporation, 3-11-cv-06239 (CAND October 9, 2012, Order) (Ryu, M.J.).

Failure to Identify Litigation Counsel’s Opinions on Privilege Log Waives Privilege

The court granted plaintiff's motion to compel defense counsel's opinions regarding the patent-in-suit from seven and eight years ago. "[Plaintiff] propounded discovery requests encompassing [defense counsel's] opinions. . . . [Defendant] raised the attorney-client privilege and work-product protection in response to [plaintiff's] requests for production that would have encompassed [its counsel's] opinions. However, [defendant] did so without specificity. . . . By not including [its counsel's] opinions in its privilege log, [defendant] has waived the privilege."

Nordock Inc. v. Systems Inc., 2-11-cv-00118 (WIED October 5, 2012, Order) (Randa, J.).

Manufacturer’s Indemnity of Retailers Does Not Obviate Plaintiff’s Right to Proceed Against Retailers

The court denied a group of retailer-defendants' motion to stay plaintiff's infringement action against them pending the outcome of plaintiff's claims against a manufacturer who agreed to indemnify those defendants. "[The manufacturer-defendant's] agreement to indemnify the Retailers does not obviate the need for a final judgment against the Retailers, if the jury returns a verdict in [plaintiff's] favor regarding patent validity and damages. . . . [Plaintiff] has no standing to enforce the indemnity agreement between [the manufacturer-defendant] and the Retailers and is not required to rely on that agreement rather than its right to proceed directly against the Retailers. Consequently, the Court rejects the Retailers’ argument that their participation at the trial is 'peripheral.'"

Innovention Toys, LLC v. MGA Entertainment, Inc., et. al., 2-07-cv-06510 (LAED October 4, 2012, Order) (Morgan, J.).

Kickstarter Posting Alone Was Insufficient to Support Exercise of State-Specific Personal Jurisdiction

The court granted plaintiff's motion for jurisdictional discovery while a group of individual defendants' motions to dismiss for lack of personal jurisdiction and improper venue were pending. "Plaintiff noted. . . that the individual Defendants personally recorded a Kickstarter advertising message in which they disclosed their names and position as students at the University of Washington. . . . However, their personal efforts for the online Kickstarter campaign seem most analogous to advertising in a national trade publication, which. . . does not give rise to state-specific jurisdiction where appellants could not show that an appellee-defendant had 'targeted' the state in question. . . . [W]hile it has not yet met its prima facie burden, Plaintiff has demonstrated that it may supplement its jurisdictional allegations as to the individual Defendants through discovery."

Robinson v. Bartlow, et. al., 3-12-cv-00024 (VAWD October 3, 2012, Order) (Moon, J.).

Invalidity Opinion Creates Fact Issue as to Specific Intent Needed for Indirect Infringement

The court denied plaintiff's motion for summary judgment of induced and contributory infringement because defendant had obtained an opinion letter indicating that one of plaintiff's automated nucleic acid-based targeting patents was invalid as obvious. "[Defendant] argues that this opinion letter and subsequent legal opinions obtained are sufficient to create a triable issue of fact on whether [it] had the requisite specific intent to encourage another’s infringement. . . . The parties acknowledge the Federal Circuit has not addressed this issue. . . . Rather than find that the opinion letter is entirely excluded from considerations of infringement or that it is dispositive in favor of [defendant], the Court finds the opinion letter is sufficient to create a triable issue of fact."

Gen-Probe Incorporated v. Becton Dickinson and Company, 3-09-cv-02319 (CASD September 28, 2012, Order) (Benitez, J.).

“Same Transaction” Required for Joinder Under 35 U.S.C. § 299 Does Not Encompass Separate Transactions Within a “Commerce Stream"

The court sua sponte severed two distributor-defendants from plaintiffs' infringement action because they were improperly joined with manufacturer-defendants under 35 U.S.C. § 299. "Plaintiffs . . . fail to allege that each of these Defendants was involved in the same transaction or series of transactions. Plaintiffs allege that [one defendant] 'developed and commercialized the [accused] products' . . . which it licensed to [a manufacturer-defendant] for manufacture and sale. [The manufacturer-defendant] in turn authorized [the distributor-defendants] as its distributors for the [accused] products. Even assuming that each Defendant was infringing on the same products, the only related transactions between these entities are those transactions within the commerce stream. But these transactions within the commerce stream do not constitute the same transaction or series of transactions. . . . [The distributor-defendants'] liability arises from its sale (or offer for sale) of the [accused] products to an end-user. This is entirely different from [the manufacturer-defendant's] liability, which arises from its sale (or offer for sale) of its [accused] product to [a distributor-defendant]."

Mednovus, Inc. v. QinetiQ Limited, et. al., 2-12-cv-03487 (CACD October 1, 2012, Order) (Wright, J.).

Common Ownership Required to Maintain Enforceability of Patent Subject to Terminal Disclaimer Means Ownership by Same Entity, not Same Corporate Family

The court granted defendants' motion to dismiss plaintiff's infringement claim for failure to state a claim because the asserted patent had been the subject of a terminal disclaimer but plaintiff did not own the prior patent. "The parties agree with binding Federal Circuit precedent that holds that if the ownership of a disclaimed patent is separated from the prior patent, the disclaimed patent is not enforceable. . . . Plaintiff’s argument that both the [patent-in-suit], owned by Plaintiff . . . and the [prior patent], owned by [a different entity], are owned by Acacia by virtue of its 100% ownership of [plaintiff] and [the other entity] goes against a 'basic tenet of American corporate law . . . that the corporation and its shareholders are distinct entities. . . . A corporate parent which owns the shares of a subsidiary does not, for that reason alone, own or have legal title to the assets of the subsidiary.'"

Email Link Corp. v. Treasure Island, LLC et al, 2-11-cv-01433 (NVD September 25, 2012, Order) (Reed, J.).

Patents Claiming Systems and Methods for Electronic Sale of Fixed-Income Assets Deemed Invalid for Failure to Claim Patentable Subject Matter

The court granted plaintiff's motion for summary judgment that defendant's patents related to the electronic sale of fixed-income assets were invalid for failing to claim patent-eligible subject matter. "The patents are directed at 'systems and methods that allow for the electronic sale of a component of a fixed income asset' . . . Defendant emphasizes that the method recites neither 'a mathematical formula' nor a 'fundamental economic practice,' and stresses the method's use of computer components. But a review of the substance of the claim demonstrates that, at its core, the claim is directed toward computer components that are used simply to facilitate the computation of various equations. As this Court previously stated, the use of the machine must be more than 'incidental use . . . to perform [a] mental process.'"

Federal Home Loan Mortgage Corporation v. Graff/Ross Holdings LLP, 1-10-cv-01948 (DCD September 27, 2012, Order) (Leon, J.).

Hourly Rates of $675-775 Deemed Unreasonable for Discovery Disputes

The court denied in part defendant's motion for discovery sanctions and found counsel's hourly rates of $675-$775 to be unreasonable. "This Court is not aware of any case before it where an attorney has sought that high an hourly rate for an ordinary discovery dispute. Based upon the evidence presented by the Defendant, including the Economic Survey performed by the American Intellectual Property Law Association, a more appropriate rate. . . is $475.00 [and] $325.00 per hour, which appear to be the median rates for partners and associates in the Los Angeles area performing intellectual property litigation."

Etagz, Inc. v. Quiksilver, Inc., 8-10-cv-00300 (CACD September 26, 2012, Order) (Goldman, M.J.).

Alleging “Selective Disclosure” of Prior Art Reference is Sufficient to Plead Intent to Deceive Element of Inequitable Conduct Claim

The court denied plaintiff's motion to dismiss defendants' inequitable conduct counterclaims for failure to plead with particularity. "[A]lthough the Court agrees that the specific theory underlying the intent to deceive element could have been more fleshed out in Defendants’ pleading, the Court finds that Defendants have alleged sufficient facts from which a reasonable juror could infer that [the inventor] acted with the requisite state of mind. . . . Defendants’ brief in opposition to Plaintiff’s motion to dismiss elaborates on the theory underlying the intent to deceive element by stating that [the inventor's] selective disclosure of structures discussed in his own article, while withholding the entirety of the article itself (which included a discussion of the Tanaka Patent) could lead a reasonable juror to infer that [he] acted with the requisite state of mind. Having carefully considered this argument, in conjunction with the factual allegations set forth in Defendants’ pleading, this Court agrees."

Industrial Technology Research Institute v. LG Corporation, et. al., 2-12-cv-00929 (NJD September 25, 2012, Order) (Linares, J.).

Defense Counsel Disqualified Based on Seventeen-Year-Old Prior Representation

The court granted plaintiff's motion to disqualify counsel for one defendant where defense counsel's firm represented plaintiff's predecessor 17 years ago. "Some of the invalidity defenses, if pursued, could involve factual inquiry into [plaintiff's] activities in the relevant time period, and it is conceivable that information about related factual matters could have been shared with [attorneys at the firm being disqualified]. . . . [I]t makes no difference that seventeen years have passed since [defense counsel's firm] represented [plaintiff's predecessor], when the lawsuit will in part concern events that occurred twenty years ago."

EON Corp. IP Holdings LLC v. FLO TV Incorporated, et. al., 1-10-cv-00812 (DED September 24, 2012, Order) (Andrews, J.).

35 U.S.C. §285 Permits Attorneys’ Fee Award for Post-Settlement Conduct “Intertwined” with Patent Issues

The court granted plaintiff's motion for attorneys' fees under 35 U.S.C. § 285 for enforcement of the parties' settlement agreement. "[E]ven assuming [defendant's] breach was inadvertent, [defendant] nonetheless infringed [plaintiff's] patent by continuing to sell the infringing product. Considering [defendant's] unreasonable conduct throughout settlement negotiations and in the post-settlement dispute, along with the clear continued infringement of [plaintiff's] patent in violation of both the permanent injunction and the settlement agreement, the Court finds the post-settlement issues asserted by [plaintiff] are so 'intertwined with patent issues' that the attorneys' fees provision of 35 U.S.C. § 285 applies."

Fitness IQ, LLC v. TV Products USA, Inc., 3-10-cv-02584 (CASD September 14, 2012, Order) (McCurine, M.J.).

Failure to Dismiss Case After Unfavorable Claim Construction Rendered Case Exceptional Warranting Attorneys’ Fees

Following summary judgment, the magistrate judge recommended granting in part defendant's motion for attorneys' fees under 35 U.S.C. § 285. The magistrate judge determined that the case became exceptional when plaintiff refused to dismiss its action following the Markman hearing. "The undersigned finds that the most compelling argument against [plaintiff] is its failure to oppose [defendant's] motion for summary judgment with any expert declaration. . . . Without an expert of its own, [plaintiff] could not prevail on summary judgment. This supports [defendant's] argument that [plaintiff] prolonged the litigation in bad faith after receiving the claims construction ruling."

Spectros Corp. v. Thermo Fisher Scientific, Inc., 4-09-cv-01996 (CAND September 17, 2012, Order) (Vadas, M.J.).

Timeshare Trading Patent Invalid for Failure to Claim Patentable Subject Matter Under Bilski

The court granted defendant's motion to dismiss plaintiff's infringement action for failure to state a claim where the patent-in-suit for trading timeshare properties over a network did not cover patentable subject matter. "[T]he computer components in independent claim 1 do not play a significant part in permitting the method to be performed. A computer is required only for performing basic, high-level tasks like crediting and debiting accounts, and notifying property management. . . . [These steps] are indistinguishable from the tasks that a human would perform manually, which was how the vacation timeshare industry functioned for nearly 30 years before the [patent-in-suit] was filed. . . . Adding the words 'apply it to a computer' cannot transform an abstract idea into a patentable claim, yet Plaintiff’s bare recitations of a computer and a database attempt to do just that."

Vacation Exchange, LLC v. Wyndham Exchange and Rentals, Inc., et. al., 2-12-cv-04229 (CACD September 18, 2012, Order) (Klausner, J.).

Claim Preclusion Bars Second Lawsuit Asserting Newly Issued Reexamination Claims Against Previously Accused Products

The court granted defendants' motion to dismiss plaintiffs' infringement action based on claim preclusion because newly issued claims from reexamination of the patent-in-suit did not create a new cause of action against the previously sued defendants and previously accused products. "Plaintiffs argue in this regard that they could not have asserted new reexamined claims 12-16 and amended claim 6 of the [patent-in-suit] in the first litigation because the claims were not in existence at the time. While literally true, plaintiffs' argument is flawed because they could have asserted the equivalent of the new and amended claims in the first litigation. In other words, plaintiffs were free to construe the patent more narrowly than they did. . . . The cases that plaintiffs rely on . . . are inapplicable because of the difference between reissue and reexamination."

Senju Pharmaceutical Co. Ltd., et. al. v. Apotex Inc., et. al., 1-11-cv-01171 (DED September 17, 2012, Order) (Robinson, J.).

Preliminary Injunction Prohibiting Sale of Galaxy Tab Survives Despite Jury Verdict of Noninfringement

The court denied without prejudice defendant's motion to dissolve a preliminary injunction precluding the sale of defendant's Galaxy Tab 10.1 tablet computer even though a jury returned a verdict finding no infringement of the patent that was the basis for the preliminary judgment. Defendant's interlocutory appeal of the injunction deprived the court of jurisdiction and the court had not yet issued a final judgment that would automatically dissolve the preliminary injunction. "First, notwithstanding [defendant's] characterization of [an earlier judgment] as 'final' in its opening brief, the parties now agree that because the [earlier judgment] referred simply to the jury verdict and did not resolve all substantive remedies, including [plaintiff's] requests for injunctive relief and enhanced damages, the judgment is not 'final' for purposes of appeal. Accordingly, the [earlier judgment] is not a final judgment as would automatically dissolve the . . . Preliminary Injunction. . . . Second, the parties agree that [defendant's] pending appeal of the. . . Preliminary Injunction deprives the Court of jurisdiction to dissolve the injunction until and unless the Federal Circuit returns jurisdiction to this Court. . . . Because the Court lacks jurisdiction to grant [defendant's] motion, the motion to dissolve must be denied."

Apple Inc. v. Samsung Electronics Co. Ltd., et. al., 5-11-cv-01846 (CAND September 17, 2012, Order) (Koh, J.).

Cease & Desist Letter Lacking Charge of Infringement did not Create Substantial Controversy Sufficient for Declaratory Relief Claim

The court granted defendants' motion to dismiss plaintiffs' declaratory relief action for lack of an actual case or controversy after defendant's letters asked plaintiff to refrain from encouraging the use of the patent-in-suit's methods and also mentioned the law regarding induced infringement. "None of the letters references [plaintiff's product] and none suggests that [it]. . . infringes the [patent-in-suit]. Rather, the conduct identified by the three letters relates to [plaintiff's] presentations and publications. Thus, to the extent that [plaintiff] is in apprehension of a lawsuit based upon the sale or use of [its product], the Court does not have jurisdiction under the declaratory judgment act."

Unisense Fertilitech A/S, et. al. v. Auxogyn, Inc., et. al., 4-11-cv-05065 (CAND September 14, 2012, Order) (Rogers, J.).

$50 Million Verdict Overturned Because Plaintiff Failed to Prove Infringing Products Were Made or Imported Into the United States

The court granted defendants' renewed motion for judgment as a matter of law of noninfringement under 35 U.S.C. § 271(a) and overturned the jury's $50 million verdict because plaintiff failed to present evidence that all of the accused kits were made or imported into the U.S. "With respect to § 271(a), plaintiff relies entirely on [defendant's employee's] testimony. However, she admitted she did not know where all the kits were made. And. . . she admitted she did not know whether foreign orders came through the United States. Accordingly, even if the jury were to ignore all the evidence that many of the accused products are not made in or imported into the United States, it could not find reasonably from [her] testimony that all of defendants’ sales infringed under § 271(a). . . . In addition, because plaintiff did not seek a new trial on damages in the event the court reached this conclusion, that issue is waived."

Promega Corporation, et. al. v. Life Technologies Corporation, 3-10-cv-00281 (WIWD September 13, 2012, Order) (Crabb, J.).

Should a Challenge to a Patent’s Validity Based on Claiming Unpatentable Subject Matter (i.e., Bilski) be Addressed at the Pleading Stage?

Yes.
The court granted defendant's motion to dismiss plaintiff's infringement claim for failure to state a claim where the court determined plaintiff's automatic pricing patent covered ineligible subject matter despite plaintiff's argument the issue was premature. "Plaintiff argues that it is premature to consider Defendant’s eligibility challenges to the patent because the Court has yet to construe any of the claim elements. . . . However, Plaintiff fails to explain how claims construction would materially impact the [35 U.S.C. § 101] analysis in the instant case. . . . [The Federal Circuit] confirmed that it 'has never set forth a bright line rule requiring district courts to construe claims before determining subject matter eligibility'. . . ."

OIP Technologies, Inc. v. Amazon.com, Inc., 3-12-cv-01233 (CAND September 11, 2012, Order) (Chen, J.).

---

No.
The court denied without prejudice defendant's motion to dismiss plaintiff's infringement action for failure to state a claim due to lack of patentable subject matter. "[Defendant] argues that the patents-in-suit do not claim patent eligible subject matter and are thus, invalid under 35 U.S.C. § 101. . . . The Federal Circuit has held that claim construction is an important first step in any § 101 analysis. The Court agrees that claim construction briefing, along with supporting evidence, may be necessary to determine whether the patents-in-suit contain patent-eligible subject matter. Accordingly, the Court denies Defendant’s Motion to Dismiss without prejudice."

Phoenix Licensing, LLC, et. al. v. Aetna Inc., et. al., 2-11-cv-00285 (TXED September 12, 2012, Order) (Gilstrap, J.).

Invalidation of Patent on Reexamination Warrants Relief from Judgment of Infringement, Including Injunction and Monetary Award

The magistrate judge recommended granting defendants' renewed motion for relief from judgment where the PTO invalidated the sole claim of the patent-in-suit during reexamination. "Defendants are entitled to the relief they seek under Rule 60(b)(5) and (6), as it would be inequitable and unjust to let stand, let alone enforce, an injunction and an unexecuted money judgment predicated on a patent claim found to be invalid and cancelled. . . . Because the District Court litigation was premised upon the presumed validity of a claim later found to have been void from its inception, the PTO's decision constitutes a material change in operative facts warranting equitable relief."

Flexiteek Americas, Inc., et. al. v. Plasteak, Inc., et. al., 0-08-cv-60996 (FLSD September 10, 2012, Order) (Seltzer, M.J.).

Claim Term “Sufficiently Rigid” was not Insolubly Ambiguous and did not Render Claim Indefinite

Following claim construction the court denied defendants' motion for summary judgment that plaintiff's patty molding patent was indefinite. "[Plaintiff's expert] explains that a person of ordinary skill in the art would understand that the term 'sufficiently rigid' is satisfied if the angular strut can transfer the forces applied to it by the reciprocating forces of the movement of the mold plate without failing. . . . Because the designer will make a determination of the required dimension of the strut based on the 'worst-case scenario,' a person of ordinary skill in the art can make a ready calculation of the bounds of the claim. . . . Therefore, based on the factual determination set out by [plaintiff's expert], I find that the evidence does not support a conclusion that the terms are '‘not amenable to construction’ or ‘insolubly ambiguous’' and invalid for indefiniteness."

Formax Inc. v. Alkar-RapidPak-MP Equipment Inc., et. al., 1-11-cv-00298 (WIED September 10, 2012, Order) (Griesbach, J.).

“Evolving” Laws at Time of Infringement Preclude Finding of Willful Infringement and Award of Enhanced Damages or Attorneys’ Fees

The court denied plaintiff's motion for enhanced damages and attorneys' fees even though the jury had found that defendant willfully infringed plaintiff's seed patent. "[T]here are unique factors present in this and similar 'seed saving' cases which are not fully reflected in the [Read Corp. v. Portec, Inc., 970 F.2d 816 (Fed. Cir. 1992)] factors. The court will endeavor to discuss some of those factors now. First and foremost, the court finds. . . that the legal and historical context in which the infringements in this case arose renders them far less egregious than if the same infringements were to occur today. . . . At the time he committed the infringement in this case, it is not unreasonable that [defendant] would have thought that the still-evolving laws regarding seed saving practices could be interpreted in a manner favorable to him or that [plaintiff] might be pressured to enforce those laws in a less uncompromising manner. . . . The court can also not ignore the extremely heavy personal toll which this litigation has taken on [defendant]. . . . [He] has already paid an enormous financial and personal toll for the mistakes which he has made, and the court finds the argument that he has not already been 'taught a lesson' to be highly suspect."

Monsanto Company v. Scruggs, et. al., 3-00-cv-00161 (MSND September 7, 2012, Order) (Mills, J.).

Defendant Sanctioned for Document Dump has “Chutzpa” to Blame Plaintiff for Reviewing Documents too Slowly

The court awarded plaintiff discovery sanctions and rejected defendant's objection that plaintiff reviewed defendant's document production too slowly. "[Defendant] produced [44,000] pages of documents that this Court previously found constituted a 'document dump.' When [defendant] objected that it could not understand why [plaintiff] thought the documents were non-responsive, [plaintiff] created the 1,300 [page] spreadsheet detailing why it believed the documents were non-responsive. Now, [defendant] is essentially complaining that [plaintiff] took too much time to figure out why [defendant's] production was, in fact, a document dump. [Defendant's] argument can only be characterized as sheer 'chutzpah.'. . . ‘The “classic definition” of chutzpa [is:] “that quality enshrined in a man who, having killed his mother and father, throws himself on the mercy of the court because he is an orphan.”’”

Aviva Sports, Inc. v. Fingerhut Direct Marketing, Inc., et. al., 0-09-cv-01091 (MND September 6, 2012, Order) (Mayeron, M.J.).

First-to-File Rule Trumps Forum Selection Clause

The court granted defendant's motion to transfer venue of plaintiff's infringement action under the first-to-file rule and rejected plaintiff's argument that a forum selection clause in the parties' license agreement precluded such transfer. "[Plaintiff] argues that the presence of the clause defeats the ordinary application of the first-filed rule and that '[c]ourts do not apply the 'first to file' concept where the first-filed action is filed in a forum other than the parties' chosen forum.' [Plaintiff] has failed, however, to provide any controlling authority for this proposition. Indeed, this court has previously observed that forum selection clauses are not enforced when they violate a strong public policy of the forum and that such public policy concerns are actually implicated in the first-filed context. . . . If both the present case and the Texas action go forward, the potential for 'conflicting results, confusion, expense, and waste of judicial resources' would undermine judicial efficiency. Given these public policy concerns, the court will not enforce the Delaware forum selection clause of the License Agreement, and it will not preclude the application of the first-filed doctrine."

Mitek Systems, Inc. v. United Services Automobile Association, 1-12-cv-00462 (DED August 30, 2012, Order) (Sleet, J.).

NPE’s Choice of Forum Given Little Weight in Venue Challenge

The court granted defendant's motion to transfer plaintiff's infringement action from the Eastern District of Virginia to the Northern District of Illinois and did not afford great weight to the non-practicing entity plaintiff's choice of forum. "[Plaintiff] alleges. . . that in 2003 [it] made the Eastern District of Virginia its principal place of business. . . . [Defendant] has provided the Court with a copy of complaints filed [in other actions] in which [plaintiff] alleges its principal place of business is in Chicago, Illinois. . . . [W]hen confronted with this documentation, [plaintiff] conceded to the Court that it was not actually until 'sometime after 2006' that [its] principal place of business was changed from Illinois to Virginia, although counsel could not tell the Court exactly when that transition occurred. . . . [B]ecause this district lacks significant contacts with the claim, Plaintiff's choice of forum will not be given great weight."

CIVIX-DDI, LLC v. Loopnet, Inc., 2-12-cv-00002 (VAED August 30, 2012, Order) (Davis, J.).

Alleging Infringement by “At Least” Certain Products was “Deliberately Vague” and Failed to State a Claim of Infringement

The court granted defendants' motion to dismiss plaintiff's direct infringement claims for failure to state a claim. "[I]t is far from obvious from the Complaint that [two products] are the sole products at issue, given [plaintiff's] continued use of the ‘at least' qualifier before every mention of one of the two specific products. It is also unclear from the Complaint that [plaintiff] gave the Defendants any notice of infringement; to the contrary, the Complaint asserts that infringement has been occurring since 'at least as of the date of filing' of this Complaint. Such deliberately vague language provides absolutely no context for the Defendants and cannot constitute notice to the Defendants of the conduct they are alleged to have committed."

Radiation Stabilization Solutions LLC v. Varian Medical Systems, Inc., et. al., 1-11-cv-07701 (ILND August 28, 2012, Order) (Kendall, J.).

District Court Grant of Ongoing Royalty Precludes Finding of Section 337 Violation by ITC

The ALJ granted respondents' motion for summary determination of no violation of Section 337 because respondents were authorized to import and sell the accused products pursuant to a district court order involving the same parties where complainant had been granted an ongoing royalty against respondents. "[T]he ALJ finds the statutory basis, legal theory, and characteristics of the ongoing royalty as well as the specific facts of this case compel the conclusion that the ongoing royalty is a license that allows [respondents] to continue to import the accused products. . . . [A]n ongoing royalty should be viewed as a license for the adjudged infringer to use the patented inventions such that there is no longer any violation of the patentee's patent rights."

Video Displays and Products Using and Containing Same, 337-TA-828 (ITC August 27, 2012, Order) (Essex, ALJ).

Conclusory Allegations Insufficient to Plead Invalidity Counterclaim

The court granted plaintiff's motion to dismiss defendant's invalidity counterclaim for failure to state a claim. "I must apply the general guidance from [Ashcroft v. Iqbal, 556 U.S. 662 (2009)] and [Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007)] when evaluating defendant’s counterclaim for invalidity. Defendant’s claim of invalidity provides no allegations that would suggest why plaintiff’s patent may be unenforceable. Instead, defendant relies on the bare assertion that the claims are unenforceable for one or more unspecified reasons. As I have explained in a previous case, such conclusory assertions do not satisfy Rule 8 or the standards set forth in Twombly and Iqbal."

Wisconsin Technology Venture Group, LLC v. FatWallet, Inc., 3-12-cv-00326 (WIWD August 29, 2012, Order) (Crabb, J.).

“Abbreviated” Description of Spectral Region Did Not Create Discontinuity Sufficient to Render Patent Indefinite

Following an evidentiary hearing, the ALJ found that complainant's LED patent was not invalid as indefinite. "[T]here is nothing in the intrinsic record to support [respondents'] contention that 'a spectral region consisting of ultraviolet, blue, and green' is discontinuous. . . . One of ordinary skill in the art, when reading the [patent's] specification, would understand that the inventors chose to use an abbreviated set of color names to describe the radiation spectrum ranging from ultraviolet to green, and would not find the claim term. . . to be 'insolubly ambiguous.'"

Light-Emitting Diodes and Products Containing Same, 337-TA-784 (ITC August 10, 2012, Order) (Shaw, ALJ).

Extra-Judicial Wi-Fi “Sniffing” to Determine Device Configurations Did Not Violate Wiretap Act

The court approved plaintiff's motion for a protocol allowing it to engage in Wi-Fi "sniffing" at defendants' hotels, coffee shops, restaurants, supermarkets, etc., to determine what devices and configurations were being used, even though the parties disputed whether plaintiff's modified “sniffing” violated the Wiretap Act by intercepting the contents of the users' communications. "[E]ven assuming that [plaintiff's] proposed protocol intercepts Wi-Fi communications, [its] proposed protocol falls into the exception to the Wiretap Act allowing a person 'to intercept or access an electronic communication made through an electronic communication system that is configured so that such electronic communication is readily accessible to the general public.'. . . With a packet capture adapter and the software, along with a basic laptop computer, any member of the general public within range of an unencrypted Wi-Fi network can begin intercepting communications sent on that network. . . . The public’s lack of awareness of the ease with which unencrypted Wi-Fi communications can be intercepted by a third party is, however, irrelevant to a determination of whether those communications are 'readily available to the general public.'"

Innovatio IP Ventures, LLC, Patent Litigation, 1-11-cv-09308 (ILND August 22, 2012, Order) (Holderman, J.).

Noninfringing Sales May Determine Infringement Damages

The court denied defendants' motion for summary judgment of no damages for sales that defendant argued did not infringe. "Generally put, [defendant's] position is that because its sales – whether to [a licensed third party] or of the extraterritorial variety – are non-infringing, [plaintiff] may not recover damages based on those sales. [Defendant] relies heavily on Mirror Worlds, LLC v. Apple, Inc., 784 F.Supp.2d 703 (E.D. Tex. 2011) . . . The Court does not read Mirror Worlds as [defendant] would have it. . . . First, such a restrictive reading is contradictory to Federal Circuit precedent, which does not require a reasonable royalty to be tied only to use of the patented method (i.e., infringement). Further, one of the simplest ways to determine the value of an infringing use of a patented method during research is to ascertain how many sales were made based on that infringing use. . . . Second,. . . [defendant] has also conceded that its infringing use is the but-for cause of [its] sales. Thus, [plaintiff] has demonstrated that [defendant] infringes [its] Patents and that infringement is directly related to [defendant's] sales. This evidence was lacking in the Mirror Worlds case."

Carnegie Mellon University v. Marvell Technology Group, Ltd., et. al., 2-09-cv-00290 (PAWD August 24, 2012, Order) (Fischer, J.).

Apple Obtains $1 Billion Verdict Against Samsung

After a four-week trial and three days of deliberation, a jury in the Northern District of California returned a verdict last Friday afternoon in favor of Apple and against Samsung. Highlights include:

•  Samsung infringed six Apple patents (three utility, three design).
• Apple’s patents were not invalid.
• In most cases, Samsung’s infringement was willful.
• Samsung found liable for trade dress infringement but not for breach of contract or antitrust claims.
• Apple’s damages for patent infringement and trade dress dilution combined was $1,049,343,540. (Apple sought damages of $2.5 to 2.75 billion.)
• Apple did not infringe six Samsung patents. (Samsung sought $421 million for alleged infringement.)
• None of Samsung’s five patents were invalid, but two were unenforceable due to exhaustion.
• Hearing on permanent injunction is currently set for September 20, 2012 but is subject to change.

Apple Inc. v. Samsung Electronics Co. Ltd., et. al., 5-11-cv-01846 (CAND August 24, 2012, Verdict).

History of Aggressive Patent Enforcement Supports Declaratory Judgment Claim

The court denied defendant's motion to dismiss plaintiff's declaratory relief action for lack of subject matter jurisdiction because of defendant's statements on its website and history of aggressively enforcing the patent-in-suit. "[Defendant's] patent enforcement record before [plaintiff's] declaratory filing date contributed to the creation of a justiciable controversy. Its record after the filing date confirms its continued existence. . . . Both before and after [defendant] warned [plaintiff] and its customers on its website, [plaintiff] watched [defendant embark on a sue-settle-warn-repeat cycle."

General Electric Company v. NeuroGrafix, et. al., 2-12-cv-04586 (CACD August 16, 2012, Order) (Pfaelzer, J.).

Samsung Avoids Adverse Jury Instruction for Spoliation of Evidence

The court granted defendants' motion for relief from the magistrate judge's order denying as untimely defendant's motion for a mirror spoliation adverse inference instruction against plaintiff. However, the court granted the parties' request to forego identical adverse instructions against both sides. "To this Court’s knowledge, under Federal Rule of Civil Procedure 51(a)(1), a party’s request for a jury instruction is timely if made '[a]t the close of the evidence or at any earlier reasonable time that the court orders.' Thus, [defendants'] motion appears to be timely. . . . By failing to do as little as issue a litigation hold notice to any employees for eight months after its preservation duty arose, and by further delaying issuance of litigation hold notices to several key custodians, the Court finds that [plaintiff] acted with not just simple negligence but rather conscious disregard of its duty to preserve. . . . Accordingly, in light of the foregoing, the Court grants [defendant’s] motion for a mirror adverse inference instruction against [plaintiff]. . . . However, the parties indicated at the . . . hearing that if the Court decided to issue identical adverse inference instructions against both parties, they prefer that neither adverse inference instruction be given. Accordingly, the Court will not give either jury instruction."

Apple Inc. v. Samsung Electronics Co. Ltd., et. al., 5-11-cv-01846 (CAND August 21, 2012, Order) (Koh, J.).

Transaction Entry System Patent Held Invalid for Failure to Claim Patentable Subject Matter

The court granted defendants' early summary judgment motion and found that plaintiff's transaction entry system patent was invalid for failing to claim patentable subject matter. "[T]he court finds that the abstract nature of plaintiff's patent is plainly apparent. The patent, broken down into its component parts, recites steps by which data is obtained, sorted and stored. These steps represent nothing more than a disembodied concept of data sorting and storage and, therefore, the court finds the abstract nature of this patented process to be manifestly apparent. . . . [T]he use of a telephone to capture data does not make the abstract concepts of sorting and storing data somehow patent-eligible. To the extent that a machine is also involved in the sorting or organizing step (step two), that . . . machine is just a general purpose computing device being asked to do some unspecified sorting function. Claiming a generic 'computer-aided' sorting process is insufficient under the machine prong of the [machine-or-transformation test]. Essentially plaintiff has claimed nothing more than the idea of sorting via machine."

CyberFone Systems LLC v. Cellco Partnership, et. al., 1-11-cv-00827 (DED August 16, 2012, Order) (Robinson, J.).

Evidence of Reexamination Not Relevant For Jury Trial On Infringement

The court granted defendant's motion in limine to exclude references to the presumption of patent validity, a prior administrative determination of patentability, and defendant's rejected reexamination request. "The court will explain the burden of proof on invalidity. The reexamination results are not relevant evidence."

Smith & Nephew, Inc. v. Interlace Medical, Inc., 1-10-cv-10951 (MAD August 17, 2012, Order) (Zobel, J.).

Seven Month Delay Investigating Infringement Allegations Followed by “Infinitesimal Change” to Accused Product Support Enhanced Damages and Attorneys’ Fees

The court granted plaintiff's motion for treble enhanced damages after the jury found willful infringement and the court found that all nine Read Corp. v. Portec, Inc., 970 F.2d 816 (Fed. Cir. 1992), factors favored such an award. "[E]ven after being sued in this case, [defendant] waited approximately seven months to determine if its products infringed the [patent-in-suit]. After learning that is products did infringe the [patent], [defendant] made an 'infinitesimal' change in an apparent attempt to stop future infringement. There was no evidence how [defendant] concluded this change was sufficient to prevent future infringement and, in fact, it was unclear whether the change was even made to all of [its] systems. . . . [Defendant] learned it was infringing in 2007 but did not disclose that until 2011. Between 2007 and 2011, [it] vigorously argued that no evidence existed which would establish infringement. Moreover, [defendant] did not alert its customers to the alleged changes in its systems meant to prevent future infringement and there were no meaningful changes to its system manuals reflecting that the operations had been altered."

Integrated Technology Corporation v. Rudolph Technologies, Inc., et al., 2-06-cv-02182 (AZD July 23, 2012, Order) (Silver, J.).

Under Therasense, Failure to Disclose Non-Enabling Reference was not Material Misrepresentation Sufficient to Support Inequitable Conduct Defense

On remand, the court reversed its pre-Therasense finding of inequitable conduct and determined that plaintiff's database patent was not unenforceable under Therasense v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011) where plaintiff identified a prior art system in its IDS but did not produce a brochure regarding that system to the PTO. "The [prior art] System that is the subject of the [undisclosed] Brochure represents a significant body of programming effort that, under Federal Circuit standards, could not be enabled by a mere bullet-point brochure. . . . Since the [brochure] lacked enablement, it could not have stopped the PTO from granting the [patent-in-suit's] claims had it been disclosed. Accordingly, under the appropriate Therasense 'but-for' test, the [brochure] is not material, and [defendant's] inequitable conduct defense fails."

Golden Hour Data Systems, Inc. v. emsCharts, Inc., et. al., 2-06-cv-00381 (TXED August 15, 2012, Order) (Gilstrap, J.).

Appointment of Lead Defendant to “Brief and Argue” Claim Construction on Behalf of All Consolidated Defendants does not Violate Due Process

The court overruled defendant's objections to the court's scheduling order, which required appointment of a "lead defendant for briefing and argument" of claim construction, and rejected defendant's claim that the order violated due process. "[Defendant] claims it is improper to require an unrelated defendant to argue claim construction on [its] behalf. . . . The Court’s procedure mimics the accepted procedure of assigning lead parties in complex cases, such as in multidistrict litigation and class action suits. . . . The lead defendant in effect acts as the liaison for all the defendants during the Markman procedure. Although the lead defendant is the responsible party, it serves in a representative capacity on behalf of all defendants for common issues. Accordingly, the Court is unpersuaded that its procedure deprives [defendant] of any constitutional right."

GeoTag Inc. v. Circle K Stores, Inc., 2-11-cv-00405 (TXED August 14, 2012, Order) (Schneider, J.).

Multi-Defendant Case Severed Per AIA (§ 299), But Consolidated for Pre-Trial With Venue Issues Delayed Until After Claim Construction.

After granting defendants' motion to sever and consolidating the cases for pre-trial purposes, the court issued an order retaining all cases through the claim construction phase, even if pending motions to transfer were or would be granted. "This serves two important purposes. First, it conserves judicial resources by requiring only one district court to address the underlying disputed claim terms. . . . Second, this case management approach ensures that the related patent cases proceed initially on a consistent claim construction, thus avoiding inconsistent rulings. However, this case management approach should not be perceived as an invitation to file motions to transfer venue. . . . This Court currently has approximately forty pending motions to transfer venue. If the average cost of discovery and briefing for each of these transfer motions is only $300,000, then approximately $12 million is being spent by the parties on an issue that does not move the ball down the field, but only seeks a new field upon which to play."

Norman IP Holdings, LLC v. Lexmark International, Inc., et. al., 6-11-cv-00495 (TXED August 10, 2012, Order) (Davis, J.).

Losing Plaintiff’s Failure to Perform Pre-Filing Investigation Supports Award of Attorneys’ Fees

The court granted defendant's motion for attorneys' fees under 35 U.S.C. § 285 following the dismissal of plaintiff's second amended complaint. "Regarding pre-filing investigation, Plaintiff concedes in opposition to the Motion for Sanctions that 'Plaintiff has not alleged that Defendant provides user input devices because such information is not available publicly so there is no basis to make such a statement as to that specific fact.' Plaintiff therefore acknowledges that there was no good faith basis to assert this claim against Defendant and that the lawsuit was filed with the knowledge that Plaintiff could not allege a required part of the patent claims. Thus, the litigation was objectively baseless. . . . Nevertheless, Plaintiff continued to prosecute this case, resulting in briefing on two separate Motions to Dismiss and a frivolous Motion for Reconsideration."

Lyda v. Fremantlemedia North America, 1-10-cv-04773 (NYSD August 9, 2012, Order) (Batts, J.).

Online Shopping Cart did not Implicate Divided Infringement Because Web Pages Contained Embedded Programming and did not Require a User to Download or Install Software

The court denied defendants' post-trial motion for judgment as a matter of law that the accused online shopping cart system did not infringe plaintiff's internet commerce patents. The court rejected defendant's divided infringement argument that the patented system required two computers and defendants' only put into service one such computer. "Defendants argue that they. . . do not use the claimed system because the claims require a buyer computer (client-side) and a shopping cart computer (server-side). . . . Here, unlike [Centillion Data Systems, LLC v. Qwest Communications International, Inc., 631 F.3d 1279 (Fed. Cir. 2011)], Defendants do not require their customers to download and install software so that the buyer computer is able to interact with the shopping cart computer as required by the claims. Rather, the delivery of Defendants’ web page itself provides the programming required by the claims; the user is not required to install anything. Thus, Defendants’ web server, by delivering web pages containing embedded programming, puts the system as a whole into service so that Defendants may benefit from the system. Accordingly, Defendants use the system under § 271(a) by putting the system into service, i.e., controlling the system as a whole and deriving benefit from it."

Soverain Software LLC v. J.C. Penney Corporation, Inc., et. al., 6-09-cv-00274 (TXED August 9, 2012, Order) (Davis, J.).