Wednesday, October 31, 2012

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.).

Tuesday, October 30, 2012

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.).

Monday, October 29, 2012

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.).

Friday, October 26, 2012

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.).

Thursday, October 25, 2012

“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.).

Wednesday, October 24, 2012

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.).

Tuesday, October 23, 2012

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.).

Monday, October 22, 2012

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.).

Friday, October 19, 2012

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).

Thursday, October 18, 2012

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.).

Wednesday, October 17, 2012

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.).

Tuesday, October 16, 2012

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.).

Monday, October 15, 2012

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.).

Friday, October 12, 2012

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.).

Thursday, October 11, 2012

“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.).

Wednesday, October 10, 2012

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.).

Tuesday, October 9, 2012

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.).

Friday, October 5, 2012

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.).

Thursday, October 4, 2012

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.).

Wednesday, October 3, 2012

“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.).

Tuesday, October 2, 2012

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.).

Monday, October 1, 2012

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.).