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.).