Monday, December 30, 2013

Counsel’s Ownership Stake in Plaintiff’s Subsidiary Did Not Require Disqualification for Damages Trial

The court denied defendant's motion to disqualify plaintiff's counsel for a new trial on damages based on the lawyer-witness ethics rule where plaintiff's counsel had acquired a 10% stake in plaintiff's subsidiary and the subsidiary's network administrator and paralegal performed work at counsel's direction. "[Plaintiff's counsel's] 10% stake in [plaintiff's subsidiary] is out of line with Connecticut rule of professional conduct 1.8(i). . . . However, the court concludes that this interest, along with other aspects of [counsel's] relationship with [plaintiff's subsidiary], while troubling, do not rise to the level of posing a significant risk of trial taint, especially given that the issue of damages is all that remains to be resolved."

WhitServe LLC v. Computer Packages, Inc. et al, 3-06-cv-01935 (CTD December 26, 2013, Order) (Covello, J.)

Friday, December 27, 2013

Discovery Dispute Typifies "Wasteful Dance Of Two Scorpions Armed With Word Processors"

The court granted in part defendant's motion to compel further interrogatory responses and documents. "Frankly, this motion and [plaintiff's] response typify the wasteful dance of two scorpions armed with word processors, a dance that tends to cast attorneys in disrepute and makes American patent litigation the slowest and most expensive in the world. You folks ought [to] talk cooperatively between yourselves."

Multilayer Stretch Cling Film Holdings, Inc. v. Berry Plastics Corporation, 2-12-cv-02108 (TNWD December 5, 2013, Order) (Young, J.)

Thursday, December 26, 2013

Claim Construction of Patents-in-Suit in Prior Litigation Precludes Further Construction Absent Convincing Argument

The court ordered the parties to submit additional briefing addressing whether claim construction of the patents-in-suit in a prior lawsuit precluded further construction of those claims. "[B]oth [patents-in-suit] were the subject of a previous patent infringement suit brought by [defendant] against [plaintiff] in this Court . . . . In [the prior lawsuit], the Court held a Markman hearing and, thereafter, set forth its construction of the disputed claim terms of the [patents-in-suit]. Neither party challenged the Court's construction of those terms when appealing its summary judgment decisions to the Federal Circuit. . . . [T]he parties now argue that many of those terms are 'disputed' in the present action. However, neither party's brief addresses or explains why issue preclusion (collateral estoppel) does not apply . . . . Instead, they apparently presume that the Court's previous constructions of [the patents-in-suit] are simply open to review. . . . [N]either party has explained to the Court why its original construction of the claim terms should be revisited at all. Such revision requires the assertion of a convincing argument against issue preclusion."

Ball Metal Beverage Container Corporation v. Crown Packaging Technology, Inc. et al, 3-12-cv-00033 (OHSD December 20, 2013, Order) (Rice, J.)

Monday, December 23, 2013

Plaintiff Counsel’s Pre-Litigation Meeting With Defendant No Basis for Disqualification

The court denied defendant's motion to disqualify plaintiff's counsel where counsel held a client representation meeting with defendant four years ago. "While [counsel] may have offered some initial impressions of the legal issues discussed, he was not called upon to formulate a legal strategy for [defendant] and is unlikely to have gained detailed knowledge of the pertinent facts and legal principles at issue in the instant litigation. As a result, the Court finds that [counsel's] relationship with [defendant] is attenuated and will not presume that he acquired confidential information material to the instant litigation."

IPVX Patent Holdings, Inc. v. 8x8, Inc., 4-13-cv-01707 (CAND December 19, 2013, Order) (Westmore, M.J.)

Friday, December 20, 2013

Deliberate Copying and Litigation Misconduct Warrant Treble Damages Award

Following a jury finding of willful infringement, the court granted plaintiff's motion for treble damages. "The Court finds that [the Read Corp. v. Portec, Inc., 970 F.2d 816, 826 (Fed. Cir. 1992)] factors favor the award of treble damages here. . . . As to the first Read factor [deliberate copying] . . . Defendants previously marketed Plaintiffs' patented device, and only began renting the infringing device after their business relationship with Plaintiff went sour. Moreover, Defendants' [accused products] came in the same sizes as Plaintiffs, and Defendants presented no design documents or other credible evidence suggesting that they attempted to design around the [patent-in-suit]. . . . Defendants' conduct during the course of this litigation further supports an award of treble damages. Prior to trial, Defendants were sanctioned multiple times by the magistrate for, inter alia, 'baseless' objections to discovery requests, 'deliberate effort[s]' to 'conceal' the infringing devices, failure to search for and produce relevant documents, false and misleading testimony . . . efforts to obstruct the depositions of third-party witnesses, and improper witness coaching."

Briese Lichttechnik Verttriebs GmbH v. Langton, et al, 1-09-cv-09790 (NYSD December 18, 2013, Order) (Conti, J.)

Thursday, December 19, 2013

Finding the Litigation History of Judges in Patent Cases with Docket Navigator

With a single click, you can search for judges’ profiles in patent cases across all U.S. district courts: the ITC, the PTAB (IPR and CBM petitions), and the Court of Claims. Your results will include the following, with convenient links to the underlying court (or agency) documents:

• All cases asserting infringement of the patent
• All decisions addressing infringement, validity or enforceability of the patent
• All claim constructions by that judge
• All damages awards and injunctions involving patents by that judge

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Pre-Institution Settlement of IPR Precludes Joinder of Petition Time-Barred by 35 U.S.C. § 315(b)

The Board denied the petitioner's motion for leave to file a motion for joinder with a proceeding that settled one business day before the petitioner filed its petition in the instant proceeding. "Normally, a petition for inter partes review filed more than one year after the petitioner (or the petitioner’s real party-in interest or privy) is served with a complaint alleging infringement of the patent is barred. . . However, the one-year time bar does not apply to a request for joinder. . . This is an important consideration here, because [the petitioner] was served with a complaint asserting infringement of the [] patent more than one year before filing its petition. . . Thus, absent joinder of this proceeding with [another IPR], it appears that [the petitioner's] petition would be barred. . . The Board agrees with Patent Owner that [the petitioner] should not have delayed in filing its petition until after it learned of the settlement, allowing the one-year period under 35 U.S.C. § 315(b) to lapse. By doing so, [the petitioner] took a risk that the inter partes review proceeding would terminate prior to a decision on institution . . . We do not find persuasive [the petitioner's] arguments of prejudice. [The petitioner] made a litigation choice, and now must face the consequences. Because [it] delayed its filing, and [the other IPR] has been terminated, the joinder statute’s prerequisite of an instituted review cannot be met. [Petitioner's] request for joinder is, therefore, denied."

Petition for Inter Partes Review by Fifth Third Bank, IPR2014-00244 (PTAB December 17, 2013, Order) (Giannetti, APJ)

Wednesday, December 18, 2013

On-Sale Invalidity Granted “For Purposes Of This Lawsuit Only”

The court granted in part defendant's motion for summary judgment that plaintiff's patent was invalid under the on-sale bar, but only for purposes of the instant lawsuit. "[P]laintiff seeks to amend its infringement contentions to remove its infringement allegations against four of the five products accused of infringing [the patent-in-suit]. . . . [S]hortly before the [early neutral evaluation] session, plaintiff was informed that a predecessor to one of the accused products . . . was on sale more than one year before the filing of the [patent-in-suit], thus exposing the [patent-in-suit] to an invalidity challenge based on 35 U.S.C. § 102(b). Defendants argue that plaintiff seeks to amend its contentions solely to avoid a finding of invalidity. . . . Plaintiff does not dispute that the [predecessor products] are identical in all material respects to the accused [forceps], nor does it dispute that the [predecessor forceps] were on sale more than one year before the [patent-in-suit] was filed. . . . [W]ithout the benefit of a claim construction proceeding, a universal finding of invalidity would be premature. . . . [B]ecause the court has not issued a claim construction order, and thus has not compared the [predecessor forceps], on a limitation-by-limitation basis, to the construed claims of the [patent], the court . . . grants defendants’ summary judgment of invalidity for purposes of this lawsuit only."

Perfect Surgical Techniques, Inc. v. Olympus Surgical & Industrial America Inc., 4-12-cv-05967 (CAND December 16, 2013, Order) (Hamilton, J.)

Tuesday, December 17, 2013

Service Contracts for Infringing Activity May Increase Royalty Rate

The court denied defendant's motion for summary judgment that plaintiff was not entitled to reasonable royalty damages relating to service contracts associated with the accused activities because the service contracts were not a “use made of the invention” as required by 35 U.S.C. § 284. "Plaintiff's expert relied upon the service contract to increase the royalty rate and not to increase the royalty base. . . . [A]s the service contracts are not factored into the royalty base, the Defendants' . . . argument is without merit.

Inventio AG v. Thyssenkrupp Elevator Americas Corporation, et al, 1-08-cv-00874 (DED December 13, 2013, Order) (Andrews, J.)

Monday, December 16, 2013

Finding the Litigation History of Patents with Docket Navigator

Do you ever need to know if a patent has been litigated, and if so, what happened (or is currently happening) in those cases? Now you can! With a single click, search for litigation activity across all U.S. district courts, the ITC, the PTAB (IPR and CBM petitions), and the Court of Claims. Your results will include the following, with convenient links to the underlying court (or agency) documents:
• All cases asserting infringement of the patent
• All decisions addressing infringement, validity or enforceability of the patent
• All claim constructions for the patent
• All damages awards and injunctions involving the patent Watch the following three-minute video tutorial to learn more! http://home.docketnavigator.com/find-specific-patent-litigation-history-using-docket-navigator/


Grant of Ex Parte Reexam Alone Does Not Preclude Willfulness Claim

The court denied defendant's motion for summary judgment of no willful infringement of plaintiff's flush valve patent based on the PTO granting defendant's ex parte reexamination request. "[Defendant] argues that its request was based on a reasonable theory – that [a prior art patent] teaches handles with a larger diameter than the diameter of the plunger, thereby allowing for two different axes of plunger travel. . . . [Defendant] concedes that the USPTO’s grant of a reexamination request is only a 'factor' to consider in determining whether an accused infringer acted in an objectively reckless manner. Given that the asserted [patent] claims survived the reexamination proceedings, this factor does not weigh exclusively in [defendant's] favor and cannot be dispositive as to whether [defendant] acted in an objectively reckless manner."

Sloan Valve Company v. Zurn Industries, Inc., et al, 1-10-cv-00204 (ILND November 20, 2013, Order) (St. Eve, J.)

Friday, December 13, 2013

Future Price Decrease of Infringing Product Warrants Royalty Rate as Percentage of Price, Not Flat Per Unit Rate

The court granted plaintiff's motion for an ongoing royalty, but applied a royalty rate based on the wholesale price instead of a flat per unit royalty. "Whether the ongoing royalty is expressed as a percentage of sales or on a per-unit basis would have no impact on [defendant's] payment to [plaintiff] so long as the price of the [accused video game systems] never changes. The rapid pace of technological advancement - and its effect on prices - counsels the Court that it is highly likely that the price [of the accused video game system] will drop with time. If, as [plaintiff] suggests, the ongoing royalty rate were expressed as a flat dollar amount per unit sold, [plaintiff] would capture an increasingly large proportion of each sale as the price falls, even as the technology's reliance on the infringed patent remains constant. This would result in an unearned windfall for [plaintiff], and, accordingly, the Court prefers an ongoing royalty rate expressed as a percentage of wholesale price."

Tomita Technologies USA, LLC, et al v. Nintendo Co., Ltd., et al, 1-11-cv-04256 (NYSD December 11, 2013, Order) (Rakoff, J.)

Thursday, December 12, 2013

Expert’s Refusal to Disclose Prior Consulting Engagements Bars Access to Confidential Information

The court denied defendant's motion to allow its expert to review plaintiffs' confidential information under the parties' protective order because defendant's expert would not disclose his consulting history. "[Defendant's expert] has refused to produce the names of the companies with which he has consulted during the past six years claiming that he is bound by confidentiality agreements prohibiting such disclosure. . . . The Protective Order was the product of negotiation between the parties. The provision at issue is not ambiguous. . . . If Defendant wishes to disclose Plaintiffs’ confidential information to [its expert], [his] prior consulting history, as required at paragraph 9(g), must be produced to Plaintiffs."

Cadence Pharmaceuticals, Inc., et al v. Fresenius Kabi USA, LLC, 3-13-cv-00139 (CASD December 10, 2013, Order) (Dembin, M.J.)

Wednesday, December 11, 2013

No Late Amendment of Contentions to Correct “Clerical Error”

The court granted defendant's motion to strike plaintiff's "corrected" contentions which added claim charts for more than 70 of defendant's products. "[Plaintiff] has alleged that its initial omission of the 70 [products] was a mere clerical error, and that it 'quickly corrected this clerical error by re–serving the amended contentions.'. . . [F]or [plaintiff] to now assert that its omission of the 70 [products] at issue here was a mere 'clerical error' is entirely incongruous with its numerous prior representations to this Court. The purpose of the hearing [two months ago] was to resolve the final set of accused products. To now allow [plaintiff] to compel financial information related to products which it dropped in relation to that hearing, or otherwise amend its infringement contentions in contravention of P.R. 3–6(b) at this late juncture would prejudice [defendant]."

U.S. Ethernet Innovations, LLC v. Ricoh Americas Corporation, 6-12-cv-00235 (TXED December 5, 2013, Order) (Love, M.J.)

Tuesday, December 10, 2013

Rule 11 No Substitute for Summary Judgment

The court denied without prejudice defendant's motion for Rule 11 sanctions. "[I]t is apparent that the Court would, in fact, need 'to get mired in a conflict over terms' to decide the present motion, which turns on, inter alia, the proper meaning of terms (i.e. 'auxiliary device' and/or 'device presence signal') as well as the scope of the prior art. . . . Distilled to its essence, Defendants' argument is that Rule 11 sanctions are appropriate because Plaintiffs' infringement claims fail on the merits. Recognizing same, the Court finds the present motion to be a transparent effort to secure summary judgment, in the guise of Rule 11 sanctions. . . . A Rule 11 motion for sanctions is not an appropriate substitute for summary judgment proceedings. . . ."

Marlowe Patent Holdings LLC v. Ford Motor Company, 3-11-cv-07044 (NJD December 5, 2013, Order) (Sheridan, J.)

Monday, December 9, 2013

Plaintiff’s President Ordered to Produce Discovery Regarding Prior Representation of Defendant

The court granted in part defendants' motion to compel plaintiff to produce documents regarding its members' prior representation of defendants. "[T]he Court is troubled by the notion of an attorney defending a client against patent infringement allegations and then turning around and forming an entity that sues his former client for infringing a patent involving technology that the attorney is familiar with from that defense. Further, it is undisputed that [plaintiff's president] represented [defendants] in several other cases, making [defendants'] concerns about the knowledge he obtained and his potential ethical issues less attenuated than its concerns regarding third parties. In light of this concern, at the hearing Plaintiff’s counsel, who also represents [plaintiff's president], agreed that Plaintiff and [its president] would provide discovery into [its president's] representation of [defendants]."

Bluestone Innovations, LLC v. LG Electronics, Inc. et al, 3-13-cv-01770 (CAND December 5, 2013, Order) (Laporte, M.J.)

Friday, December 6, 2013

Failure to Apportion Royalty Base to Infringing Features Warrants Exclusion of Expert Report and Testimony

The court granted defendant's motion to exclude the report and testimony of plaintiff's damages expert for failing to apportion defendant's revenue to the two features causing the alleged infringement. "Of course, the smallest salable infringing unit must be the starting point for the royalty base, but the Federal Circuit has not held 'that no further apportionment is ever necessary once the smallest salable unit is determined.'. . . [A]llowing [plaintiff's] expert to use as the royalty base the entire value of [four other features] -- all of which can be used independently without infringing -- while not using the value of [the two] features that actually cause the alleged infringement -- would be a mistake of the same kind as allowing [plaintiff's] expert to use the entire value of [defendant]. . . . As [plaintiff's] own expert . . . has admitted, without [those two allegedly infringing features], the four features used as the royalty base do not infringe."

Rembrandt Social Media, LP v. Facebook, Inc., et. al., 1-13-cv-00158 (VAED December 3, 2013, Order) (Ellis, J.)

Thursday, December 5, 2013

Royalty Rate of 50% of Defendant’s Profits Awarded for Infringement of Prilosec® Patent

Following a bench trial on damages, the court awarded plaintiffs $76 million for defendants' three-year infringement of plaintiffs' Prilosec patent based on a royalty rate of 50% of defendants' profits. "[Plaintiff] would have had no desire . . . at any time[] to issue a license to [defendant]. . . . Since it is necessary, however, to assume that both parties were willing to enter into a license, [plaintiff] has shown through overwhelming evidence that it was in the driver’s seat in the negotiations and would have required [defendant] to pay a hefty portion of its profits for a license. . . . [Plaintiff] would have tried to calculate whether the expected income stream from [defendant's] license would offset lost sales from Prilosec® and the increase in financial support required to keep [plaintiff's new product's] market share stable or to improve it. . . . . While there are no perfect benchmarks for this licensing fee, a 50% licensing fee fits comfortably within the range of negotiations that occurred in connection with the patents-in-suit. . . . Notably, [a nonparty] offered to buy a license from [plaintiff] for 70% of its profits on 40mg omeprazole, for which it would have been the exclusive generic supplier, and 50% of its profits on the 10 and 20mg doses, for which it would have been the sixth generic supplier."

Astrazeneca AB, et al v. Apotex Corporation, et. al., 1-01-cv-09351 (NYSD December 3, 2013, Order) (Cote, J.)

Wednesday, December 4, 2013

Perjury Re Real Party in Interest Warrants Terminating Sanctions

The court granted defendant's motion to strike a declaratory relief plaintiff's pleadings for its repeated failures to provide accurate discovery regarding its participation in reexamination and, thus, whether estoppel applied to its claims. "[Plaintiff's chairman] committed perjury at his deposition. . . . While [plaintiff] has attempted to paint [its chairman's] conduct as the result of ignorance or a breakdown in communication, the evidence of record reflects that [plaintiff] has purposefully thwarted this Court’s discovery Orders. . . . While it is possible that additional discovery and further postponement could alleviate some of the prejudice to [defendant], that is not the standard prescribed by the Third Circuit. [Plaintiff's] assurances that it is now ready, on its own timetable, to comply with its discovery obligations, after blatantly violating numerous discovery orders, is unavailing. [Plaintiff] has willingly made representations that are clearly inaccurate, including counsel’s repeated assurances that [it] did not have any documents relating to the reexamination, and [its chairman's] false deposition testimony regarding the reexamination. . . . [Plaintiff], aware of the significant implications of being found to be a real party in interest to the reexamination of [defendant's] patent, has attempted to thwart its discovery obligations, despite being given numerous opportunities to remedy its deficient responses."

Bortex Industry Company Limited v. Fiber Optic Designs, Inc., 2-12-cv-04228 (PAED December 2, 2013, Order) (Goldberg, J.)

Tuesday, December 3, 2013

Breakdown of R&D Expenses on Patent-Specific Basis Not Required for ITC Domestic Industry

Following an evidentiary hearing, the ALJ found that complainant satisfied the economic prong of the domestic industry requirement as to its image processing patent. "Respondents' requirement that the expenses be allocated down to the amount spent on the actual asserted patent to be unsupported by Commission precedent. Much of the Commission's discussion involving a nexus between the asserted patents and the complainant's activities were directed toward licensing activities. . . . Respondents cite to no requirement or Commission precedent that requires allocation of research and development expenses on a specific article or product be broken down into the amount related to any specific patents. Rather, Commission precedent has held that research and development activities directed toward articles that incorporate the disputed technology is sufficient."

Electronic Imaging Devices, 337-TA-850 (ITC November 4, 2013, Order) (Essex, ALJ)

Monday, December 2, 2013

Settlement Does Not Justify Vacating Interlocutory Claim Construction

The court denied the parties' stipulated motion to vacate the court's claim construction order following their settlement agreement. "[J]udicial decisions are not the property of private litigants, but are 'valuable to the legal community as a whole.' Even if the Claim Construction Order here is not final, other courts may consider it for its persuasive value, particularly when construing the terms of the patents at issue here. Moreover, the Court expended substantial resources in reaching its decisions in the Claim Construction Order. The value of these efforts would be diminished if the order were vacated, increasing the possibility that other courts would be called upon to expend their resources to construe these same terms in the future. . . . Though the parties’ individual settlement expectations may be frustrated by denying the motion, this factor does not weigh heavily in determining whether the request ought to be granted. . . . [P]ermitting parties to vacate interlocutory decisions may discourage earlier settlement and instead incentivize parties to take cases through the entire Markman process, or other non-dispositive rulings, in order to test their positions, knowing they could effectively 'erase' that decision through settlement later. Earlier settlements conserve more of the judiciary’s, and thus the public’s, resources."

Single Touch Interactive, Inc. v. Zoove Corporation, 4-12-cv-00831 (CAND November 26, 2013, Order) (Rogers, J.)

Wednesday, November 27, 2013

Failure to Implement Pre-Suit Litigation Hold Warrants Spoliation Sanctions and Adverse Jury Instruction

The magistrate judge recommended sanctioning defendant with an adverse jury instruction for spoliation and rejected defendant's argument that it did not have to impose a litigation hold until plaintiffs filed suit. "Defendants’ duty to preserve documents arose [a year and a half before plaintiff filed suit] when Plaintiffs notified Defendants of a potential lawsuit against them should they decide to market their alleged infringing product. . . . Plaintiffs show that one of Defendants’ key senior employees . . . indisputably destroyed email communications due to Defendants’ failure to put in place a litigation hold. . . . [Her] communications are especially probative of the claims at issue in this litigation because her current and past employment with Defendants involved the design, development, and testing of the products accused of infringing on the Patents-In-Suit."

Zest IP Holdings, LLC, et. al. v. Implant Direct MFG, LLC, et. al., 3-10-cv-00541 (CASD November 25, 2013, Order) (Gallo, M.J.)

Tuesday, November 26, 2013

Fact Issues as to Validity Preclude Willfulness Claim

The court granted defendant's motion in limine to preclude evidence of willfulness at the jury trial. "The court notes that its order denying summary judgment that the [patent-in-suit] is not anticipated and nonobvious held that there are triable 35 U.S.C. §§ 102 and 103 issues. Because a reasonable jury could find that the [patent] could be found invalid on multiple grounds, a finding of willfulness is precluded. It would be unfairly prejudicial to instruct the jury on willfulness where that issue is not properly before the jury."

Guzik Technical Enterprises, Inc. v. Western Digital Corporation et. al., 5-11-cv-03786 (CAND November 22, 2013, Order) (Grewal, M.J.)

Monday, November 25, 2013

10-Month Delay Sinks Motion to Transfer

The court denied defendant's motion to transfer venue of plaintiff's infringement action from the Eastern District of Wisconsin to the Northern District of California because the interests of justice did not favor transfer. "[T]he motion to transfer was filed nearly ten months after the case was filed in this District and six months after the scheduling order was issued. . . . It is unclear whether a transferee court would accommodate that schedule. . . . [T]here is no explanation for why the motion to transfer was not brought earlier. If the other forum were truly so convenient, one would expect much swifter action to transfer the case there. . . . Because both convenience and the interests of justice are required in order to transfer a case under [28 U.S.C. § 1404], the motion will be denied."

Circuit Check, Inc. v. QXQ, Inc., 1-12-cv-01211 (WIED November 20, 2013, Order) (Griesbach, J.)

Friday, November 22, 2013

Motion for Attorneys’ Fees is Premature During Appeal of Claim Construction

The court denied without prejudice defendant's motion for attorneys' fees under 35 U.S.C. § 285 until after plaintiff's appeal of claim construction. "The Court concludes that [defendant's] present motion is premature. [Defendant's] fee request could be affected by the outcome of the pending appeal of the Court’s claim construction, and the Court believes it is prudent to await the decision on appeal before ruling on any fees request. Accordingly, the Court denies the present motion without prejudice to [defendant] to bring the motion, if warranted, after the Federal Circuit Court of Appeals issues its decision on the pending appeal of the Court’s claim construction."

Superior Industries, LLC v. Masaba, Inc., 0-10-cv-00764 (MND November 20, 2013, Order) (Frank, J.)

Thursday, November 21, 2013

Patentee May Not Recover Lost Profits of Subsidiary Based on Reduction of Hypothetical Sales Price of Subsidiary

The court granted defendants' motion for summary judgment that plaintiff was not entitled to price erosion damages incurred by its subsidiary because plaintiff did not establish a direct injury. "While [plaintiff's expert] has offered hypotheticals about the potential impact of Defendants' infringement, however, such as the possibility that [plaintiff] would have received a lower price if it had attempted to sell one of its subsidiaries, she has provided no factual basis to support these hypotheticals. . . . [W]ere the Court to find that such hypotheticals are sufficient to establish an independent basis for a parent to recover the lost profits of its subsidiaries it would be creating an exception that would essentially swallow the rule . . . . Every parent of a wholly owned subsidiary . . . could obtain the lost profits of the subsidiary simply by claiming it fully controlled the subsidiary and that dividends could have passed the lost profits upstream had the parent decided dividends should be declared by the subsidiary or that a hypothetical buyer might have paid less for a subsidiary had the parent chosen to sell it. Further, such a holding would also fly in the face of the well-established rule that damages may not be awarded on the basis of harm that is entirely speculative."

Volterra Semiconductor Corporation v. Primarion, Inc., et. al., 3-08-cv-05129 (CAND November 18, 2013, Order) (Spero, M.J.)

Wednesday, November 20, 2013

Early Rule 11 Motion Denied as Premature, But Subject to Renewal

The court denied defendants' motion for Rule 11 sanctions. "Defendants complain that plaintiff has not provided 'details regarding [its] infringement analysis or underlying claim construction positions. . . .' Defendants then urge the court to conclude, prior to claim construction, that plaintiff's 'purported infringement theory includes no 'code comparison' whatsoever and no 'commands' from the user's device or 'instructions' from the ad server that command the user's device to select an advertisement.'. . . The court is not prepared to engage in a claim construction exercise, construing the claim terms . . . at this stage of the proceedings, with no context provided by discovery or a motion practice. . . . [P]laintiff may well be stretching the meaning of two older patents (clearly directed at television and radio), circa 1998-99, to fit current internet streaming video technology. . . . The court cautions plaintiff that it will entertain a renewed Rule 11 motion, if merited, after discovery and a full claim construction record."

HBAC MatchMaker Media Inc. v. CBS Interactive Inc., 1-13-cv-00428 (DED November 18, 2013, Order) (Robinson, J.)

Tuesday, November 19, 2013

Third-Party IPR Warrants Stay, With Scope of Estoppel for “Redundant” Grounds to be Decided

The court granted defendant's motion to stay pending inter partes review initiated by a nonparty, but agreed to hold a separate hearing regarding potential estoppel effects. "[Defendant] asks that the estoppel extend only to those grounds actually raised in the inter partes review, not those that reasonably could have been raised. The Court notes that some of the grounds asserted by [the nonparty] in its petition for inter partes review of the [patent-in-suit] were disallowed because they were 'redundant in light of the grounds on the basis of which an inter partes review is being instituted.' The Court requires additional argument before deciding the extent to which [defendant] will be estopped. . . . [Defendant] should be prepared to discuss any invalidity grounds it would assert that were not asserted by [the nonparty] and that would not be redundant of those actually raised."

e-Watch, Inc. v. Avigilon Corporation, 4-13-cv-00347 (TXSD November 15, 2013, Order) (Atlas, J.)

Monday, November 18, 2013

“Conditional Action” is Unpatentable Abstract Idea

The court granted defendant's motion to dismiss plaintiff's infringement action because plaintiff's method patent for triggering machine events claimed unpatentable subject matter. "The patent describes . . . a method for superimposing prespecified locational, environmental, and contextual controls on user interactions . . . . [T]he Court agrees with the Defendant that the abstract idea at the heart of the claim is the very concept of a conditional action. . . . A conditional action is a basic tool on which a multitude of disciplines rely upon for innovation. As the Defendant points out, '[the concept] informs disciplines ranging from medicine ("Treat a patient with medicine X when he presents with symptom Y.") . . . , economics ("Increase price when customer demand is greater than supply.")[,] to law ("My performance of the contract is excused if you materially breach it.").' The fundamental role that the concept of conditional actions play in numerous disciplines is sufficient to warrant it protection as an abstract idea, because its patenting would 'impede innovation[,] more than it would tend to promote it.' Furthermore, a conditional action is more abstract then other ideas that Federal Circuit and the Supreme Court have previously held to be unpatentable. . . . The Patentee attempts to limit claim 1 of the patent by confining it to a computer environment in which there must be present at least one stationary computer and one mobile computer along with the presence of two human users. . . . [W]hile, the Patentee has divided the world of computers into two halves, stationary and mobile, and required a computer from each half, this limitation does little more than require two general-purpose computers, an act that does nothing to transform a nonpatentable abstract idea into a patentable invention."

UbiComm LLC v. Zappos IP Inc., 1-13-cv-01029 (DED November 13, 2013, Order) (Andrews, J.)

Friday, November 15, 2013

Consideration of Noninfringing Alternatives Does Not Constitute Inappropriate Rate Cap

The court denied plaintiff's motion in limine to preclude the testimony of defendant's damages expert because he capped the range of potential royalty rates. "[Plaintiff] asserts that [defendant's expert's] calculations . . . impermissibly 'establish[] a cap' on the range of potential reasonable royalty rates in the hypothetical negotiation by concluding that [defendant] would not pay a royalty rate higher than the cost associated with forgoing use of the infringing products and instead using available, noninfringing alternatives. . . . [The expert's] proposed testimony does not stem from the mistaken belief that infringement damages must be capped at the cost of using a noninfringing alternative. Instead, he examines the economic circumstances of this particular case, notes the availability of acceptable noninfringing alternatives to [defendant], and concludes that no other factors would compel [defendant] to accept a higher royalty rate during the hypothetical negotiations. Such analysis does not, as [plaintiff] contends, misapply the law on damages."

Kimberly-Clark Worldwide Inc. v. First Quality Products Inc., et. al., 1-09-cv-01685 (PAMD November 13, 2013, Order) (Caldwell, J.)

NPE Patent Data Project

Law Professors Christopher A. Cotropia, Jay P. Kesan, and David L. Schwartz have published a report entitled Patent Assertion Entities (PAEs) Under the Microscope: An Empirical Investigation of Patent Holders as Litigants and have made the underlying data used in the study available to the public at http://npedata.com/ .

“The data reveals a much lower percentage of litigation brought by patent holding companies than other studies, finding no explosion in NPE litigation between 2010 and 2012. Instead, we find that most differences between the years—an increase in the number of patent holding companies and individual inventor suits—is likely explained by a change in the joinder rules adopted in 2011 as part of the America Invents Act.”

Source: http://npedata.com/

Thursday, November 14, 2013

Does the Exclusion of Expert Testimony Preclude Plaintiff's Damages Claim?

Yes. The court granted defendants' motion to preclude plaintiff from seeking lost profits for three of its patents after the court struck the related opinions of its damages expert. "[Plaintiff] claims that it can prove its entitlement to lost profits through a vague combination of other evidence concerning the number of [defendants'] infringing sales. . . . [A]lthough [plaintiff] contends that it previously disclosed a general theory of lost profits damages that does not rely on either expert testimony or the Panduit factors, [plaintiff] did no such thing. . . . To admit a brand new damages theory on the literal eve of trial would be grossly prejudicial to [defendant], which has never had the opportunity to take discovery on or prepare to rebut any lost profits theory other than the one presented in [plaintiff's expert's] Report. . . . Furthermore, there is a high risk that introducing this new theory, the contours of which remain murky even to the Court, will confuse the issues, mislead the jury, and waste time. . . . Nor does [plaintiff] offer any proposals by which to ensure that leaving the jury to its own devices to calculate a lost profits award will not result in a damages award that is wildly speculative or based on factors that have no place in a lost profits calculation."

Apple Inc. v. Samsung Electronics Co. Ltd., et. al., 5-11-cv-01846 (CAND November 12, 2013, Order) (Koh, J.)


No. Following the court's decision to exclude plaintiff's damages expert, the court granted plaintiff's request to call defendant's damages expert during plaintiff's case-in-chief. "[Defendant] has cited no authority to support the proposition that there is a per se rule precluding a party from relying on the testimony of an adverse party’s expert in its case-in-chief. . . . [T]he Court finds that it is appropriate to permit [plaintiff] to call [defendant's expert] in its case-in-chief. . . . [Defendant] contends that it will be 'prevent[ed] . . . from controlling the presentation of its own case' and that there is a risk that '[its expert's] testimony will be taken out of context and misunderstood by the jury.' This argument is unpersuasive. If Plaintiff’s counsel poses improper questions, [defendant] may object. And, to the extent that [defendant] is concerned about responses to proper questions, the result is not materially different than if Plaintiff were to cross-examine [defendant's expert] were he presented first as a defense witness. . . . However . . . [defendant's expert] appropriately assumed infringement in carrying out his damages analysis, and it would be improper for [plaintiff] to use that assumption to bolster its infringement case."

NetAirus Technologies, LLC v. Apple Inc., 2-10-cv-03257 (CACD November 11, 2013, Order) (Kronstadt, J.)

Wednesday, November 13, 2013

In Limine Objection to “Patent Quality Inventor Study” Sustained

The court sustained defendant's objection to a “Patent Quality Inventor Study” submitted by plaintiff which ranked the inventor of the patents-in-suit "as the 'top rated inventor' in the 'wireless' invention category. [Plaintiff] argues that this exhibit is properly offered as a secondary consideration of nonobviousness – specifically, praise by others. The Court notes that the study does not pertain specifically to any of the patents-in-suit, much less the asserted claims. The Court finds that the probative value of the study is minimal, as it lacks the requisite nexus to the claims at issue in this case. . . . Similarly, the potential for unfair prejudice is high. The Court also determines that the study does not fall within the exception set forth in Federal Rule of Evidence 803(17), and that it is primarily offered for its truth, and is therefore hearsay.

Personalized Media Communications, L.L.C. v. Zynga, Inc., 2-12-cv-00068 (TXED November 8, 2013, Order) (Payne, M.J.)

Tuesday, November 12, 2013

No Attorneys’ Fee Award for Reexamination

The court denied defendant's motion for attorneys' fees under 35 U.S.C. § 285 for fees incurred during reexamination. "[Defendant] initiated the reexamination and obtained a stay of the litigation until the examiner’s final rejection of the claims. At that time, it successfully requested that the stay be lifted before all appeals from the reexamination were exhausted. The Court then construed the claims and granted [defendant's] motion for summary judgment of non-infringement and invalidity. As a result, this is not a case in which the reexamination 'virtually replaced the district court litigation.' [Defendant] is, therefore, not entitled to the . . . fees attributable solely or primarily to the reexamination."

Kim Laube & Company, Inc., et. al. v. Wahl Clipper Corporation, et. al., 2-09-cv-00914 (CACD November 6, 2013, Order) (Kronstadt, J.)

Friday, November 8, 2013

No Lost Profits For Violation of Protective Order

The court denied defendants' motion for contempt for plaintiff's violation of a protective order, and denied defendant's request for lost profits resulting from such violation, but instead granted an award of attorneys' fees under Rule 37. "[Plaintiff's] violation of the Protective Order, while not contempt, is still sanctionable under Federal Rule of Civil Procedure 37 . . . . The defendants argue that the Court should order [plaintiff] to reimburse the defendants $573,149 for lost profits from sales to four distributors that were allegedly 'destroyed' as a result of [plaintiff's] letters. . . . The only evidence proffered by the defendants is [defendant's CFO's] bald assertion; there are no declarations or communications from the distributors reflecting that the letters from [plaintiff] had any impact on the distributors, much less that the letters caused them to cancel the purchase orders. [The CFO's] unsupported assertion is an insufficient evidentiary basis for the monetary remedies the defendants seek."

LifeScan Scotland, Ltd. v. Shasta Technologies, LLC et. al., 3-11-cv-04494 (CAND November 6, 2013, Order) (Orrick, J.)

Thursday, November 7, 2013

Ownership Dispute Undermines Common Interest Privilege

The court granted in part defendant's motion to compel the production of documents withheld as privileged. "Plaintiffs maintain that communications between [an individual plaintiff and his brother] pertaining to litigation strategy or advice of counsel fall squarely within the Common Interest Doctrine and are privileged. Plaintiffs predicate this assertion on their argument that [the individual plaintiff and his brother] have a common interest in the prosecution of the infringement of the patent at issue. . . . [I]t appears that [the individual plaintiff and his brother] are adverse to each other. They are currently engaged in litigation in [another action] over ownership of [a] closely allied . . . patent which embraces claims similar to those in the immediate case. Direct communications between [the individual plaintiff and his brother] pertaining to rights and title to the [patents in both actions] or litigation strategy in the case presently before this Court would also be subject to disclosure. [Plaintiffs] are obviously not engaged in a joint strategy for the prosecution of this case. They are clearly at loggerheads and simply do not share a common interest."

Porto Technology, Co., Ltd. et. al. v. Cellco Partnership d/b/a Verizon Wireless et. al., 3-13-cv-00265 (VAED November 5, 2013, Order) (Hudson, J.)

Wednesday, November 6, 2013

No Privilege for “Litigation Funding Agreement”

The court granted defendants' motion to compel the production of a litigation funding agreement and rejected plaintiff's claim that the agreement was privileged. "[Plaintiff] maintains that ownership of the [patent-in-suit] and who is funding the instant litigation are not relevant issues in the case, and that turning over the litigation funding agreement would not lead to the discovery of relevant evidence. [Plaintiff] also believes that the litigation agreement is privileged material. . . . This Court finds that the litigation funding agreement is relevant and is not privileged, and [plaintiff] is ordered to produce it. . . ."

Cobra International v. BCNY International, et. al., 0-05-cv-61225 (FLSD November 4, 2013, Order) (Matthewman, M.J.)


No Privilege for Communications with “Astrologist”

The court granted in part plaintiff's motion to compel discovery regarding defendant's consulting astrologist and rejected defendant's claim of privilege. "[D]efendant cites no authority for the proposition that astrology constitutes a religion or belief system to which a privilege could attach. . . . [Defendant's founder's] consultations with [an astrologer] about the astrological wisdom of using certain attorneys, or about taking litigation or business actions on certain dates, is not the type of communication to which a religious privilege would attach. . . . Defendant offers no evidence that [the astrologer] was 'hired,' or the scope of any purported 'consulting' arrangement. And, if there really was some consulting arrangement for the purposes of this litigation, defendant fails to explain why it allowed the emails to be produced and [its founder] to be questioned about this communications with [the astrologer]."

Trading Technologies International, Inc. v. CQG, et. al., 1-05-cv-04811 (ILND November 4, 2013, Order) (Schenkier, J.)

Tuesday, November 5, 2013

“Hourly Rates, Total Hours, and Total Fees” May Not Be Submitted Under Seal

The court denied without prejudice defendant's motion to file under seal declarations in support of its motion for attorneys' fees. "The Court is unable to hold that good cause exists on the submitted papers. The Application provides only a perfunctory assertion that [the exhibits] contain 'proprietary business information for both [defendant] and [its counsel] and reflect the relationship and communication between attorneys and client.' [Defendant] does not discuss in any detail why the invoices and summary chart should not be revealed to the public, nor why any danger cannot be mitigated by redacting confidential information or privileged communications. District courts in this circuit have refused to seal documents relating to the hourly rates, total hours, and total fees paid to attorneys. . . . The Court notes that it has granted [a co-defendant’s] Application to File Under Seal . . . [That] Application sought only to seal detailed records of attorneys’ actions in the matter, while leaving public summaries showing hourly rates and total hours. [The co-defendant] convincingly argued that good cause exists to protect the detailed information because review of those records may provide insight into how [the co-defendant] pursues patent litigation. [Movant] may wish to proceed in the same manner.

SmartMetric Inc. v. MasterCard International Incorporated, et. al., 2-11-cv-07126 (CACD November 1, 2013, Order) (Fitzgerald, J.)

Monday, November 4, 2013

Licensing Practices Not Protected from Discovery by Attorney-Client Privilege

The court granted in part plaintiff's motion to compel the production of licensing documents defendant withheld as privileged. "Plaintiff requests 'All Documents Relating To [defendant’s] corporate licensing policy or procedures.” “Defendant claims its licensing practices are developed by attorneys and are therefore protected by attorney-client privilege. Plaintiff’s RFP is overbroad insofar as it relates to defendant’s generic licensing practices not specifically related to plaintiff’s location technology. However, the attorney-client privilege doctrine only protects 'confidential communications between lawyer and client made to facilitate legal services for the client.' It is questionable whether licensing practices are developed to facilitate legal services. Defendant shall produce documents that reflect its licensing practices or procedures relative to location technology."

Skyhook Wireless, Inc. v. Google, Inc., 1-10-cv-11571 (MAD October 31, 2013, Order) (Zobel, J.)

Friday, November 1, 2013

Discovery of cffDNA Not Patentable

The court granted plaintiff's motion for summary judgment that defendant's pre-natal testing patent contained ineligible subject matter and rejected defendant's argument that the patent claimed the use of DNA and not the DNA itself. "[Defendant] argues that the claims are patentable because although cffDNA is not patentable, the use of cffDNA is patent eligible. The Court disagrees. The Supreme Court has never stated that any use of a natural phenomenon is patentable. . . . It is only an innovative or inventive use of a natural phenomenon that is afforded patent protection. . . . [B]ased on the undisputed facts before the Court, the only inventive part of the patent is that the conventional techniques of DNA detection known at the time of the invention are applied to paternally inherited cffDNA as opposed to other types of DNA. Thus, the only inventive concept contained in the patent is the discovery of cffDNA, which is not patentable."

Ariosa Diagnostics, Inc. v. Sequenom, Inc., 3-11-cv-06391 (CAND October 30, 2013, Order) (Illston, J.)

Thursday, October 31, 2013

Consent Judgment Should Not Make Findings as to Contested Issues in Related Proceedings

The magistrate judge recommended that plaintiff's consent motion for judgment and a permanent injunction be denied without prejudice where plaintiff had pending lawsuits involving the same patent-in-suit. "The proposed judgment is troubling in that it asks the Court to 'confirm' certain stipulations between the parties regarding invalidity, enforceability, and infringement of the [patent-in-suit]. [Plaintiff] is correct that the parties are free to agree to resolve such issues as between themselves and that the stipulations would not be binding on anyone other than [the parties to this action]. . . . The problem with the proposed judgment’s wording, however, is that it does not just state that the parties agree that the [patent] is valid, enforceable and infringed by [a nonparty's] Accused Products but that the Court 'confirms' such findings. While the parties are free to agree on these issues, the District Court should not make actual findings as to issues that have not been litigated and are hotly contested in other related proceedings."

Trustees of Boston University v. Vyrian, Inc., 1-13-cv-11963 (MAD October 29, 2013, Order) (Boal, M.J.)

Wednesday, October 30, 2013

Damages Expert May Consider Litigation Outcome Statistics

The court denied defendant's motion to exclude the opinion of plaintiff's damages expert to the extent it was based on patent litigation outcome statistics. "The expert's] opinions concerning patent litigation outcomes are admissible. . . . [Defendant] contends that [the expert] 'discloses these statements so that [plaintiff] can wave them around at trial in an attempt to persuade the jury to find comfort in determining liability and awarding a large damages number.' [Plaintiff] responds that the studies support [the expert's] opinion that a hypothetical negotiation, which assumes that the patent is valid and infringed, supports a higher royalty than negotiations before such a finding. The data concerning litigation outcomes is sufficiently tied to the issue of how real-world licenses should be understood in the hypothetical negotiation context. [Defendant] has not shown that the opinion is unreliable, or that the potential for prejudice outweighs its probative value."

NetAirus Technologies, LLC v. Apple Inc., 2-10-cv-03257 (CACD October 23, 2013, Order) (Kronstadt, J.).

Tuesday, October 29, 2013

Giving App Away for Free May Constitute Infringing Sale

The court denied without prejudice defendants' motion for summary judgment of no contributory infringement of plaintiff's mobile device application patents. "[Defendant] moved for entry of judgment as a matter of law . . . on the ground that it 'provides its mobile applications as well as access to its mobile website free of charge' making it impossible for [it] to violate 35 U.S.C. § 271(c). . . . Because there are currently material facts in dispute on this key question of whether or not [defendant] receives consideration from its customers in exchange for the Apps and website, the motion must be denied. . . . [Plaintiff] cites to various exhibits that purportedly demonstrate that [defendant] provides the Apps to its customers in exchange for consideration, such as fees and access to deposited funds, and requirements that customers have accounts and enter into contracts. . . . [T]he fact that [defendant] might, in some situations, give the Apps away for free does not mean that [it] cannot, in other situations, be selling the Apps within the meaning of § 271(c). These are all legal issues that require the benefit of full discovery and thorough briefing based on a universe of known facts."

Maxim Integrated Products, Inc., Patent Litigation, 2-12-mc-00244 (PAWD October 25, 2013, Order) (Conti, J.)

Monday, October 28, 2013

Pressing Tactical Advantage Instead of Workable Solution a “Mistake”

The court denied defendant's motion to strike two expert reports that were served after the deadline. "These two reports were due with the opening round of reports. . . . Plaintiff made a mistake. There is no evidence of bad faith. When the matter was brought to Plaintiff’s attention (which Defendant did not seem to be in any hurry to do . . . ) Plaintiff . . . appeared to respond appropriately to Defendant's complaint in seeking to understand what was necessary to alleviate any prejudice to Defendant. . . . Defendant appears, however, to have understood that it had gained a tactical advantage, and, instead of working with Plaintiff to come up with a workable plan, decided to press home its advantage with the instant motion. In my opinion, that approach was a mistake. I am not going to strike the experts' reports, and I do not intend to continue the trial."

Warner Chilcott Company LLC v. Zydus Pharmaceuticals (USA) Inc. et. al., 1-11-cv-01105 (DED October 24, 2013, Order) (Andrews, J.)

Friday, October 25, 2013

Survey of Customer Usage of Accused Products Excluded as Unreliable

The court granted defendant's motion to exclude the testimony of plaintiff's expert as to a survey "regarding consumer use of the accused . . . products." "[The expert's] survey was not constructed in a reliable manner. . . . There was no effort made in connection with [this] survey to shield participants from study goals. The survey did not take measures to adjust for response rates to balance the gender of respondents. . . . It is fundamentally flawed methodology to have asked prospective purchasers many of the questions posed that required present use of the [accused product]. . . . A survey that generates answers from respondents who have no basis to provide them is not one conducted according to accepted principles. Further, those questions, and others, e.g., 'If you had to pay extra for Wi-Fi access to your [accused phone product] to connect to Wi-Fi networks would you pay the extra amount?,' seek to value features that go beyond those circumscribed by the asserted claims."

NetAirus Technologies, LLC v. Apple Inc., 2-10-cv-03257 (CACD October 23, 2013, Order) (Kronstadt, J.)

Thursday, October 24, 2013

Denial of Motion to Amend Infringement Contentions Precludes Later Suit Addressing Additional Products

The court granted defendant's motion to dismiss plaintiff's second infringement action as a collateral attack on the court's earlier denial of a motion to amend plaintiff's infringement contentions. "[This action] represents a collateral attack on the Court’s order in [the prior action] notwithstanding the order’s silence on the question of whether [plaintiff] would be permitted to accuse the models at issue in a subsequent action. If [this action] were allowed to proceed, the Court would have to consolidate [these actions] in the interest of judicial economy, as both actions involve the same patents and the same accused conduct. If consolidation occurred, then the Court’s order excluding the products at issue from [the prior action] would be negated, and essentially reversed. . . . [Plaintiff's] prejudice arguments are unpersuasive, because [its] current inability to enforce its property rights with respect to the models at issue is the direct result of its own lack of diligence . . . Permitting [plaintiff] to get a second bite at the apple by allowing this action to proceed would contravene the preclusion principles discussed above and would undermine the spirit and purpose of the Patent Local Rules."

Icon-IP Pty Ltd. v. Specialized Bicycle Components, Inc., 3-13-cv-03677 (CAND October 22, 2013, Order) (Tigar, J.)

Wednesday, October 23, 2013

Eleventh Hour Covenant Not To Sue Does Not Avoid Adverse Determinations or Fee Award

The court denied plaintiffs' motion to dismiss all patent claims and counterclaims following a jury trial, bench trial, the Federal Circuit's affirmance of a reexamination which invalidated the patent-in-suit, and plaintiffs' proposed covenants not to sue. "Plaintiffs acknowledge, as they must, that the reexamination is 'not technically "final’' until the USPTO issues the reexamination certificate. . . . [T]here has been no relevant change to the legal status of the [patent-in-suit]. Therefore, the status of the reexamination does not provide a basis to dismiss any portion of this case. . . . Plaintiffs’ covenants not to sue, issued after adverse rulings of invalidity and noninfringement, and after a bench trial determined that the [patent] is unenforceable for inequitable conduct, come far too late to avoid entry of judgment on those issues. . . . [C]ovenants not to sue do not allow parties to escape the consequences of their litigation choices, and specifically, do not provide a means of voiding adverse findings and precluding attorney fee awards. . . . Even if the reexamination were final, and even if Plaintiffs’ covenant not to sue had come prior to the Court’s determinations regarding infringement and invalidity, the Court would still have jurisdiction under 35 U.S.C. § 285 to determine inequitable conduct and make a fee award."

Kim Laube & Company, Inc., et. al. v. Wahl Clipper Corporation, et. al., 2-09-cv-00914 (CACD October 17, 2013, Order) (Kronstadt, J.)

Tuesday, October 22, 2013

25% Enhancement For Ongoing Royalty

Following a jury verdict of $7,500 per device, the court granted in part plaintiff's motion for an ongoing royalty of $9,375 per device. "Although [defendant] argues that it is far along in the process to design around [plaintiff's] patent, and that [defendant] will retrofit any infringing units sold after [the date of the clerk's judgment] with such noninfringing technology, [defendant] acknowledges that its design around work did not commence until after the jury returned its verdict of validity and infringement and [it] is still speculating as to when such design around will be complete as well as whether it will be acceptable to [its] customers. . . . In contrast . . . [plaintiff] offers a compelling argument that after the jury's verdict, any post-infringing sales to third parties were/are made with a substantially diminished belief that such sales are permissible non-infringing sales. . . . [H]aving considered both parties' arguments as to changed circumstances . . . the Court finds that an ongoing royalty 25% higher than that found by the jury is appropriate in this case."

Morpho Detection, Inc. v. Smiths Detection, Inc., 2-11-cv-00498 (VAED October 17, 2013, Order) (Davis, J.)

Monday, October 21, 2013

Specification Requiring 3,000+ Hours of Experimentation Does Not Enable Claims

The court granted defendant's motion for summary judgment of invalidity as to plaintiff's online analytical processing cube ("OLAP") patents for lack of enablement. "Relying on [the inventor's] own representations, [defendant] calculates that he spent between 3,159 and 4,212 hours just to reduce the disparate databases limitations to practice. [Defendant] argues that this amount of experimentation is undue, representing between one and a half and two years of labor. . . . Working at an aggressive pace of fifty hours a week during fifty weeks of a year still only amounts to 2,500 hours of work during that period, far below the minimum of 3,159 hour of work that [the inventor] concedes having spent experimenting to enable the disparate databases features. A more reasonable pace of forty hours a week for fifty weeks of the year would result in 2,000 hours of work during the year. At that pace, [the inventor's] own calculations lead to the conclusion that enabling the disparate databases features would require a person of ordinary skill in the art to experiment for eighteen to twenty-five months to enable the features. This extended period of experimentation weighs heavily in favor of a finding of invalidity. . . . Overall, the [In re Wands, 858 F.2d 731,737 (Fed. Cir. 1988)] factors weigh heavily in favor of invalidity due to lack of enablement."

Vasudevan Software, Inc. v. MicroStrategy, Inc., 3-11-cv-06637 (CAND October 17, 2013, Order) (Seeborg, J.)

Friday, October 18, 2013

Claim Involving “Transfer of Money” Qualifies as “Financial Service” Required for CBM Review

The Board denied the petition for CBM review, but determined that the challenged patent satisfied the “financial product or service” requirement for CBM review. "Claim 1 of the [challenged patent] is directed to . . . the electronic sale of digital audio. Claim 1 recites 'transferring money electronically via a telecommunication line to the first party . . . from the second party.' The electronic transfer of money is a financial activity, and allowing such a transfer amounts to providing a financial service. . . . [C]ontrary to Patent Owner’s view . . . the legislative history indicates that the phrase 'financial product or service' is not limited to the products or services of the 'financial services industry' and is to be interpreted broadly. . . . Although claim 1 . . . does not relate to a financial services business, it does recite the electronic movement of money between financially distinct entities, which is an activity that is financial in nature."

Petition for Covered Business Method Patent Review by Apple Inc., CBM2013-00019 (PTAB October 8, 2013, Order) (Arbes, APJ)

Thursday, October 17, 2013

Claim Construction Prior to Summary Judgment Denied as Inefficient

The court denied plaintiff's motion for an early claim construction hearing and technology tutorial. "Plaintiff’s request is consistent with this court’s past practice of construing claims in advance of summary judgment. Given the inefficiencies of that practice, the court now considers requests to construe claims alongside any summary judgment motions. The court made this change after repeatedly expending significant resources construing myriad claims, most of which proved immaterial to the core issues of infringement or invalidity. . . . the possibility that claims construction may narrow the issues for summary judgment is true for virtually all patent cases, and is not a legitimate basis for treating this case differently. . . . While the court might consider an early claims construction when both parties agreed that the construction of a few key terms would meaningfully advance the case in some material way (e.g., eliminate the necessity of a further liability determination), no such stipulation or showing has been made here."

Wildcat Licensing WI, LLC v. Johnson Controls, Inc., 3-13-cv-00328 (WIWD October 15, 2013, Order) (Conley, J.)

Wednesday, October 16, 2013

Withdrawal of FRAND Defense Precludes Use of FRAND in Hypothetical Negotiation

In ruling on the parties' motions in limine, the court clarified that defendants could not assert FRAND as a non-affirmative or business defense after voluntarily withdrawing FRAND counterclaims and affirmative defenses before trial. "Defendants have voluntarily elected to drop their counterclaims and affirmative defenses as to the issue of FRAND. Nonetheless, the parties continue to dispute the impact of such, namely whether Defendants may continue to assert FRAND as a non-affirmative defense in their reasonable royalty analysis or as a 'business' defense in the hypothetical negotiation scenario in response to Plaintiff’s evidence on damages. . . . Defendants have the affirmative burden of proof in this regard and FRAND is not a purely defensive response to Plaintiff’s damages case. . . . [T]he issue of FRAND is an affirmative defense which, in light of Defendants having voluntarily dropped their counterclaims and affirmative defenses as to FRAND, is now out of this case for all purposes."

WI-LAN Inc. v. HTC Corporation, et. al., 2-11-cv-00068 (TXED October 11, 2013, Order) (Gilstrap, J.)

Tuesday, October 15, 2013

Limiting Prior Art References to One Per Patent Claim Was Clear Error

The court granted defendant's motion to reconsider an earlier order limiting defendant to 20 prior art references where plaintiff was allowed to assert 18 claims. "The court concludes that it committed clear error in its [prior] order and that the results of the order may result in manifest injustice. . . . [I]in attempting to navigate through the parties’ briefs and the Federal Circuit Advisory Council’s proposed order, this court erred and increased the number of [plaintiff's] asserted claims beyond what the parties requested and beyond what is reasonable and manageable for trial. . . . [Defendant] has made a persuasive argument that if the court’s order stands, and [defendant] is limited to . . . 20 references to respond to 18 claims to be asserted before trial, this will have the effect of limiting [defendant] to one reference per claim. . . . The number of prior art references that [defendant] will be allowed to raise as part of its invalidity defense is a function of the number of claims that [plaintiff] will be allowed to assert against [defendant]. . . . [Defendant] may rely on 5 references per independent claim and 8 references per dependent claim before trial."

Unwired Planet, LLC v. Google, Inc., 3-12-cv-00504 (NVD October 10, 2013, Order) (Cooke, M.J.)

Friday, October 11, 2013

Examiner’s Track Record on Appeal Favors Stay of Litigation

The court granted defendant's renewed motion to stay pending inter partes reexamination because the undue prejudice to plaintiff was now outweighed by the potential simplification of issues. "[T]he principal factor weighing in favor of staying this action is that the USPTO has now rejected all claims of the [patent-in-suit] as obvious not once, but twice. The second rejection -- on multiple, independent grounds -- materially impacts the likelihood that the USPTO will ultimately invalidate the [patent]. Plaintiff must overcome seven separate grounds for rejection set forth by the Examiner in this case, who the Court notes has at least 12 years of experience at the USPTO, has experience handling inter partes reexaminations such as this one, and has never been reversed on appeal. . . . The Court weighs this significant risk of prejudice and expenditure of resources against the fact that [plaintiff] only seeks money damages in this action -- not injunctive relief -- and has already been granted the ability to take the trial depositions of any elderly inventors in the interim." Baseball Quick, LLC v. MLB Advanced Media. L.P., et. al., 1-11-cv-01735 (NYSD October 9, 2013, Order) (Forrest, J.)

Thursday, October 10, 2013

Summary Judgment of Noninfringement Premature Prior to Close of Discovery

The court denied as premature under FRCP 56(d) plaintiff's motion for summary judgment that its accused products, other than three representative products in defendant's infringement contentions, did not infringe defendant's computer memory patents. "[Defendant] is entitled to avail itself of the remainder of the discovery period, and of expert discovery, prior to responding to such a motion. That [defendant] has not previously moved to compel further discovery from [plaintiff] is irrelevant, because [defendant] may still do so, several discovery requests remain outstanding, and [plaintiff] remains under the obligation to supplement its discovery. Moreover, expert discovery, which has not yet begun, will likely bear on the question of representativeness and will include substantial discovery relevant to [defendant's] infringement contentions. Until discovery is closed, the Court cannot enter judgment against [defendant] for failure to marshal evidence that is still subject to ongoing discovery."

ASUS Computer International v. Round Rock Research, LLC, 3-12-cv-02099 (CAND October 8, 2013, Order) (Tigar, J.)

Wednesday, October 9, 2013

Online Sales Within District Via Amazon.com Justifies Venue

The court denied defendant's motion to dismiss for improper venue. "[T]he Court accepts plaintiff’s unrebutted allegation that defendant made over $6,000 worth of sales of the infringing product through its online store hosted by Amazon.com. On the Amazon.com storefront, customers could purchase the allegedly infringing products and have them shipped to them. Construing these undisputed facts in a light most favorable to plaintiff, defendant made sales of the accused devices and shipped them to this district. The fact that the sales were made through a storefront on Amazon.com, rather than the defendant’s own website, makes little difference. . . . The Court thus finds that in maintaining its Amazon.com storefront, defendant actively directed its sales activities to this district."

Fusionbrands, Inc. v. Suburban Bowery of Suffern, Inc., 1-12-cv-00229 (GAND September 26, 2013, Order) (Carnes, J.)

Tuesday, October 8, 2013

Submission of Low Resolution Photographs of Prior Art Evidences Intent to Deceive PTO

The court granted summary judgment on defendant's inequitable conduct defense because plaintiff's counsel disclosed a low-resolution image of a prior art product and failed to disclose a high-resolution image or the actual product to the PTO. "[Plaintiff's counsel] had a telephone interview with the PTO examiner, after which he filed the Amended Application which distinguished the Application from the [prior art] Reference on the basis of non-abutment of the cascade hooks of the hangers portrayed in the [prior art] Reference. It is also undisputed that the top and bottom surfaces of the cascade hook members of the [prior art] Hangers do in fact abut when nested, and that [counsel] had [the prior art] Hangers in his possession at the time he spoke to the PTO examiner. . . . Even after the PTO examiner had determined that the [prior art] Reference constituted prior art, and [counsel] had led the examiner to an incorrect conclusion about the [prior art] Hangers and amended the Application to turn on that incorrect conclusion, [counsel] did not disclose either the physical [prior art] Hangers or the high-resolution photographs of the [prior art] Hangers (both far clearer demonstrations of how the hanger worked than the thumbnail images in the [prior art] Reference). He now claims that he did not do so because he did not know that they were prior art. [Counsel] selectively withheld the most relevant information from the PTO examiner, which is indicative of a clear intent to deceive."

Worldwide Home Products, Inc. v. Time, Inc., et. al., 1-11-cv-03633 (NYSD September 30, 2013, Order) (Swain, J.)

Monday, October 7, 2013

“Patent Troll” Accusation Does Not Justify Award of Attorneys’ Fees

Following summary judgment of invalidity, the court denied defendant's motion for $4.9 million in attorneys' fees and rejected defendant's argument that the award was justified because plaintiff was a "patent troll." "[Defendant], suggesting that [plaintiff] is a patent troll is poorly taken, and seriously damages its credibility. . . . As [plaintiff] says in its response,'[t]his recitation is only provided for the purposes of evoking an emotional response,' and to prejudice the Court against [plaintiff]. . . . [Plaintiff] is the assignee of the inventor of the [patent-in-suit]. In three of the four infringement cases brought by [plaintiff] in this district, after long and contentious proceedings, three of the defendants took a license. There is nothing in [plaintiff's] conduct in any of the four cases that was unduly aggressive or opportunistic. [Plaintiff] made out a credible case for infringement which was never adjudicated, and put up a credible case in defending validity."

Chrimar Systems, Inc. v. Foundry Networks, Inc., 2-06-cv-13936 (MIED October 3, 2013, Order) (Cohn, J.)

Friday, October 4, 2013

Disclosure of Apple’s Confidential Licensing Information Warrants Additional Discovery into Possible Protective Order Violation

The court ordered additional discovery and briefing on plaintiff's motion for sanctions to address allegations that defense counsel violated a protective order by disclosing plaintiff's confidential licensing information to defendant's employees. "Time and again in competitor patent cases, parties resist producing confidential information to their adversaries’ lawyers. They fear, among other things, that the lawyers will insufficiently shield the information from the competitors that they represent. Yet time and again, the court assuages these fears with assurances that a protective order will keep the information out of the competitors’ hands. A casual observer might reasonably wonder what magic a protective order works that allows outside counsel access to confidential information to advance the case without countenancing untoward uses by the client. The answer is not a magical one at all: confidential information remains confidential because counsel and clients alike follow court orders. If parties breach this basic rule, the court’s assurances become meaningless. There is reason to believe the rule has been breached in the present case. . . . During the massive fact discovery in this case . . . [plaintiff] produced copies of a number of its patent license agreements, including a June 2011 license between [plaintiff] and Nokia. . . . [Defendant's] outside counsel sent [defendant] a draft expert report . . . that should have been fully redacted of that information before it was sent. However, intentionally or inadvertently, it was not. The report as distributed included key terms of [four of plaintiff's] license agreements. . . . The information was then sent, over several different occasions, to over fifty [of defendant's] employees, including high-ranking licensing executives." The court ordered defendant to produce several categories of relevant documents and up to seven witnesses for deposition to determine the facts surrounding the disclosure. Apple Inc. v. Samsung Electronics Co. Ltd., et. al., 5-11-cv-01846 (CAND October 2, 2013, Order) (Grewal, M.J.)

Thursday, October 3, 2013

Government Shutdown Prompts Sua Sponte Stay

The court sua sponte stayed four related cases due to a government shutdown. "[I]n light of the recent lapse in appropriation for the Federal Trade Commission, and given the fact that the FTC is an integral party to this litigation, it is ordered that the above-captioned cases are temporarily placed in suspense and stayed. There shall be no litigation activity or settlement discussions with Magistrate Judge Strawbridge until further order of the Court. Once Congress has appropriated funds for the FTC, the Court will remove the case from suspense, and will consider whether any amendment to the Court’s . . . Pretrial Scheduling Order is appropriate."

Apotex, Inc. v. Cephalon, Inc. et. al., 2-06-cv-02768 (PAED October 1, 2013, Order) (Goldberg, J.)

Wednesday, October 2, 2013

Nebraska AG Enjoined from Enforcing Cease & Desist Order Precluding Counsel’s Enforcement Activities

The court granted plaintiff's motion for a preliminary injunction precluding the Nebraska Attorney General from enforcing a cease and desist order prohibiting plaintiff's counsel from initiating further enforcement activities. "The court is deeply concerned about the ability of the Attorney General to issue cease and desist orders, prior to the conclusion of the investigation, prior to any negative findings, prior to any hearings, and prior to permitting submission of documents and evidence by [plaintiff's counsel's] firm. . . . The inability of [plaintiff's counsel] to submit such letters to businesses in Nebraska clearly infringes on the First Amendment rights of [plaintiff] to be represented by the counsel of their choice. . . . The public has a right to protection from scams and unfair trade practices. However, [plaintiff's] constitutional right to hire counsel of its choosing to pursue investigations and lawsuits against infringers is clearly impeded by the cease and desist order. . . . If, however, at some point during the investigation evidence supports a claim of bad faith, the Attorney General is free to revisit this preliminary injunction with the court."

Activision TV, Inc. v. Pinnacle Bancorp, Inc., 8-13-cv-00215 (NED September 30, 2013, Order) (Bataillon, J.)

Tuesday, October 1, 2013

“Slightly More Convenient” Does Not Justify Transfer of Venue

The court denied defendant's motion to transfer venue from the Eastern District of Texas to the Northern District of Illinois because most factors were neutral or only slightly favored transfer. "When viewed holistically, this is a very close case. The proposed venue is as convenient as -- if not slightly more convenient than -- the Eastern District of Texas. But slightly more convenient does not rise to the level required under section 1404(a). . . . This case does not present a scenario where [plaintiff] filed a lawsuit in a venue devoid of any real connection to the case. Instead, [plaintiff] filed this lawsuit in its home venue, the Eastern District of Texas. Based on the balance of factors, it would not be 'clearly more convenient' to transfer this case to the Northern District of Illinois."

Blue Calypso, Inc. v. Groupon, Inc., 6-12-cv-00486 (TXED September 27, 2013, Order) (Schneider, J.)

Monday, September 30, 2013

“Overreaching” Expert Report Stricken With no Opportunity to Amend

The court granted defendant's motion to strike the report of plaintiff's damages expert for improperly relying on the entire market value rule and denied plaintiff the opportunity to submit an amended report. "Over the course of many years and more than a dozen patent trials, the undersigned judge has concluded that giving a second bite simply encourages overreaching on the first bite (by both sides). . . . [T]he trial date is only four days away and the parties and the Court have built their calendars around that date. To start over with a new royalty analysis would impose prejudice on the defense as well and disrupt the Court’s calendar, which is burdened with other trials set far into the future. Possibly, plaintiff can cobble together a royalty case based on other disclosed witnesses and evidence. Possibly not. If not, it is a problem clearly of plaintiff’s own overreaching and it will not be allowed a second bite at the apple."

Network Protection Sciences, LLC v. Juniper Networks, Inc., et. al., 3-12-cv-01106 (CAND September 26, 2013, Order) (Alsup, J.)

Friday, September 27, 2013

Representative Claim Charts Deemed Insufficient Absent Proof That Charted Products are Representative

The court granted defendant's motion to compel further infringement contentions because plaintiff failed to show that claim charts for 7 accused products were representative of all 101 accused products. "[Defendant] argues that [plaintiff's] representative claim charts are insufficient because they identify the allegedly infringing features of only 7 of the 101 products accused of infringement, and fail to explain why these 7 products are representative. . . . [Plaintiff] has failed to show how the seven claim charts are representative of the Accused Instrumentalities as a whole. In its infringement contentions, it merely states its belief that these products are infringing, without providing any support for its belief. . . . While the Court is sensitive to [plaintiff's] concerns about the expense of reverse engineering over 100 products, it must provide more evidence to show that these products are representative."

Bluestone Innovations Texas LLC v. Epistar Corp., et. al., 3-12-cv-00059 (CAND September 25, 2013, Order) (Illston, J.)

Thursday, September 26, 2013

Tardy Request for Profitability Discovery Via 30(b)(6) Deposition Denied

The court denied defendants' motion to compel plaintiff to produce a 30(b)(6) witness for deposition regarding profitability and license agreements. "Defendants contend that profitability is relevant to commercial success, which is a secondary indication of obviousness. . . . While the Court agrees that profitability is at least marginally relevant to the commercial success analysis in the present case, discovery of such information through Rule 30(b)(6) deposition testimony would be unduly burdensome at this stage of the case. Defendants allowed more than a year to elapse prior to filing the present application. Moreover, Defendants did not seek such information in written discovery, further compounding the burden on [plaintiff]."

Warner Chilcott Company, LLC v. Mylan Inc., et. al., 3-11-cv-06844 (NJD September 24, 2013, Order) (Arpert, M.J.)

Wednesday, September 25, 2013

Remittitur Denied and JMOL of Willfulness Granted on $1.17 Billion Verdict

Following a $1.169 billion jury verdict, the court denied defendant’s motion for new trial or remittitur and granted plaintiff’s motion for a finding of willful infringement. "The evidence at trial clearly and convincingly shows that [defendant] had knowledge of the patents-in-suit at the time of infringement by [11 years ago] and that the very people who designed the Accused Technology knew of the patents. . . . Despite knowing about the patents-in-suit . . . [defendant] made little effort to determine whether it was infringing these patents. [Defendant's engineers] all state that they decided not to read the patent claims, even though email correspondence indicates that both were aware that [plaintiff's employee] had patented his algorithm. If believed, this behavior is a clear sign they disregarded a high likelihood of infringement. . . . [Defendant] is in its current predicament because it deliberately undertook a series of strategic risks. It took the risk of incorporating technology into its products that it knew might have been covered by [plaintiff's] Patents. . . . Its trial team took the risk of taking this case to trial, despite repeated efforts to mediate this case, and knowing full well the size of the possible award. . . . Now, [defendant] looks to the courts to relieve it from the damages award it faces from taking those risks. . . . [I]t is the undersigned’s impression as a Judge and former trial lawyer that [defendant's] bad facts and even worse litigation strategy were fatal to its cause. . . . [Plaintiff] presented three extremely qualified and competent experts, each of whom did an excellent job explaining their opinions and pointing the jury to the factual proof underlying their opinions. On the other hand, [defendant] focused on attacking [plaintiff's] witnesses instead of presenting a cohesive defense based on its witnesses.”

Carnegie Mellon University v. Marvell Technology Group, Ltd., et. al., 2-09-cv-00290 (PAWD September 23, 2013, Order) (Fischer, J.)

Tuesday, September 24, 2013

Withdrawing Claims Does Not Divest Court of Jurisdiction to Grant Summary Judgment of Noninfringement

The court granted defendant's motion for summary judgment of noninfringement as to plaintiff's on-line services patents where plaintiff dropped the asserted claims of that patent. "[Plaintiff] earlier dropped the asserted claims of the [previously asserted patent] and now provides no theories of infringement related to [that patent]. Thus, [plaintiff] cannot meet its evidentiary burden. [Plaintiff] argues that the Court cannot grant summary judgment over unasserted claims because the Court does not have jurisdiction over claims that have been voluntarily withdrawn. The parties have failed to come to an agreement regarding a stipulation of dismissal of the [patent-in-suit's] claims, so the Court believes it still has jurisdiction over claims relating to this patent. As there is no evidence to support a finding of infringement of the [patent], the Court will grant summary judgment of non-infringement."

Personalized User Model LLP v. Google Inc., 1-09-cv-00525 (DED September 20, 2013, Order) (Stark, M.J.)

Monday, September 23, 2013

Nebraska AG’s Cease & Desist Order Does Not Preclude Counsel from Representing Plaintiff in Federal Litigation

The court granted in part plaintiff's motion for a preliminary injunction to prevent defense counsel from enforcing a cease and desist order issued by the Nebraska Attorney General prohibiting plaintiff's counsel "from initiating new patent infringement enforcement efforts within the State of Nebraska." "During the hearing, the Court questioned counsel for the Nebraska Attorney General. Counsel conceded that this court has complete and exclusive jurisdiction over patent cases. He further conceded that the cease and desist order is not intended to keep [plaintiff's counsel] from representing [plaintiff] in this case or a case in any other jurisdiction. He also agreed that [plaintiff's counsel] can pursue any of the prospective infringers that have already been identified and can file suit against any newly identified potential infringers. Counsel for the Nebraska Attorney General stated that the cease and desist order only prohibits [plaintiff's counsel] from sending out letters to potential new infringers. With these concessions, the Court will rule that [plaintiff's counsel] can file an appearance in this case or any other federal cases without running the risk of violating the State of Nebraska Attorney General’s cease and desist order. Further, [plaintiff's counsel] may proceed to prosecute their cases, including all discovery, as it would in any other lawsuit." The court stated that a later order would address "whether this court has jurisdiction to determine the constitutionality of the cease and desist order."

Activision TV, Inc. v. Pinnacle Bancorp, Inc., 8-13-cv-00215 (NED September 19, 2013, Order) (Bataillon, J.)

Friday, September 20, 2013

Despite Non-Public Nature of Operating Room, Surgical Procedure May Qualify as Public Use

The court denied plaintiff's motion for summary judgment that its nerve stimulation patents were not invalid due to public use under 35 U.S.C. § 102(b) based on surgical procedures. "[Defendant] admits that 'medical procedures' are 'inherently non-public.' As a matter of common sense, an operating room is not in the 'public domain' and freely accessible, unlike the hospital itself. But the fact that an actor practices a method alleged to be an invalidating prior use within the confines of an operating room does not necessarily mean the method was not 'accessible to the public.'. . . [A]lthough there is no evidence that non-hospital staff or patients knew of or observed the rapid pacing, [defendant] may be able to show by clear and convincing evidence that the procedures were publicly accessible and not limited by an obligation of confidentiality to the cardiologists. [Plaintiff] does not prove that these individuals were under any obligation of confidentiality, whether implied, express, or ethically imposed."

Medtronic Inc. v. Edwards Lifesciences Corporation, et. al., 8-12-cv-00327 (CACD September 17, 2013, Order) (Selna, J.)

Thursday, September 19, 2013

No Judicial Estoppel From Concession That Accused Device Would be Patentable Over Asserted Claims

The court denied defendant's motion for summary judgment that plaintiff was judicially estopped from asserting infringement based on statements about the patent-in-suit during prosecution of another patent. "[Plaintiff] conceded that a presterilized, disposable sampling device would be patentable notwithstanding the [patent-in-suit], but not that such a device necessarily would avoid infringement of the [patent]. The Federal Circuit has recognized - odd or rare as the circumstance may be - that a device may be patentable over prior art without avoiding infringement as a matter of law. [Plaintiff] thus has not taken mutually exclusive positions and is not estopped from arguing that the [accused] device infringes the [patent]."

EMD Millipore Corporation, et al. v. AllPure Technologies, Inc., 1-11-cv-10221 (MAD September 17, 2013, Order) (Woodlock, J.)

Wednesday, September 18, 2013

Inequitable Conduct Claim Based on Violation of Protective Order Requires Pleading with Specificity

The court granted plaintiff's motion to dismiss defendant's unenforceability counterclaim based on alleged violations of protective orders in two previous actions between the parties. "It is not clear from [defendant's] pleadings whether it seeks relief under the doctrine of inequitable conduct for actions perpetrated by [plaintiff] against the PTO or for fraud perpetrated by [plaintiff] against [defendant]. Either way, the gravamen of [defendant's] allegations remains the same: that [plaintiff's counsel] performed strategic prosecution activities after receiving [defendant's] highly confidential information, in direct violation of the protective orders in the First and Second Actions. . . . [T]o render [plaintiff's] patents unenforceable, [defendant] . . . must identify the specific who, what, when, where, and how of the alleged violations of the protective order. . . . [Defendant's] pleadings do not include sufficient facts to establish how [plaintiff's counsel] allegedly violated the protective orders or the details of his violations. . . . By alleging that [he] conducted patent prosecution for [plaintiff] and that he subsequently gained access to [defendant's] confidential discovery materials as litigation counsel, [defendant's] pleading lays out some of the necessary preconditions for a violation of the protective orders. But without additional, specific facts demonstrating that such a violation did occur, [defendant's] pleadings do not satisfy the particularity requirements of Rule 9(b)."

MaxLinear, Inc. v. Silicon Laboratories Inc., 3-13-cv-01164 (CASD September 16, 2013, Order) (Huff, J.)

Monday, September 16, 2013

In Determining Venue and Personal Jurisdiction, Defendant “Cannot Target the U.S. Wireless Market Without Targeting the Eastern District of Texas."

The court denied a Taiwanese defendant's motion to dismiss plaintiff's infringement action for improper venue. "The question of personal jurisdiction in the context of venue is limited to the judicial district where the suit was brought. Therefore, a plaintiff must demonstrate that the defendant has sufficient minimum contacts with the district where the suit was brought to show venue was proper. . . . [Plaintiff] has demonstrated that [defendant] placed its products into the stream of commerce with knowledge and intent that they would be sold in the Eastern District of Texas. [Defendant] describes itself as 'one of the world’s leading IC providers.'. . . Within the United States, Texas is the second most populous state. The Eastern District of Texas includes two of the ten most populated counties in Texas and several counties within the Eastern District form portions of two of the ten largest metropolitan areas in the United States. Thus, [defendant] cannot target the U.S. wireless market without targeting the Eastern District of Texas."

Commonwealth Scientific and Industrial Research Organisation v. MediaTek Inc. et. al., 6-12-cv-00578 (TXED September 12, 2013, Order) (Davis, J.).

Friday, September 13, 2013

Occasional Preference for Patented Feature Not Sufficient to Invoke Entire Market Value Rule

The court granted defendants' motion for remittitur and gave plaintiff the option of reducing the damages award from $491,046 to $21,625 or proceeding with a new damages trial. Plaintiff's lost profits evidence was based solely on the entire market value rule which was unsupported by the evidence, and the reasonable royalty evidence supported only the lower amount. "[Plaintiff] did not present adequate evidence at trial showing that any customer decided to purchase a longwall power distribution system in the first place for the purpose of obtaining the patented draw-out tray technology. At most, [plaintiff's] evidence showed that some customers already in the market for longwall power distribution systems chose to purchase systems containing draw-out trays over systems not containing draw-out trays. [Plaintiff's damages expert], testified that he was unaware of any customer that already owned a working longwall power system without a draw-out tray and chose to replace it with a new system containing a draw-out tray in order to obtain the patented technology. Instead, [the expert] confirmed that customers first chose to buy a longwall power distribution system, and then chose whether the system would include the patented device. This kind of evidence is insufficient to invoke the entire market value rule. . . . [The expert's] only calculation regarding lost profits was based on the entire market value rule. . . . Because [plaintiff's damages expert] failed to provide any calculation of lost profits based on sales of the infringing . . . devices alone, the maximum award supported by the evidence was a reasonable royalty based on [his] proposed royalty rate of 4.325%. Applying that royalty rate to the defendants’ sales of 25 . . . devices at $20,000 per device, the highest reasonable royalty award supported by the evidence is $21,625."

Electro-Mechanical Corporation v. Power Distribution Products, Inc., et. al., 1-11-cv-00071 (VAWD September 10, 2013, Order) (Jones, J.).

Thursday, September 12, 2013

Manufacturer’s Price Quote Triggers On-Sale Bar

The court granted defendant's motion for summary judgment that plaintiff's baking rack patent was invalid because a price quote from a prospective manufacturer to plaintiff’s predecessor prior to the critical date triggered the on-sale bar. "[The quote] was based upon specific renderings of a proposed product and provided exact pricing. It included a location of manufacturing, a timeline therefor, a reject rate, and a carve-out allowing the manufacturer to alter the pricing if the production information supplied by [plaintiff's predecessor] were to change. Again, while additional details needed to be worked out, such a specific pricing estimate manifests that the manufacturer was willing to enter into a bargain on the offered terms. . . . Moreover, the fact that such an offer comes from a supplier, rather than the entity that later secures the patent, is irrelevant. . . . [T]he manufacturer offered to produce a specific number of trays for [plaintiff] (which it already had design specifications for), and provided a price for doing so on a specific production schedule. . . . [T]here was no impediment that could have prevented [the predecessor] from accepting the terms of the manufacturer’s offer."

Orbis Corporation v. Rehrig Pacific Company, 2-12-cv-01073 (WIED September 10, 2013, Order) (Stadtmueller, J.).

Wednesday, September 11, 2013

“Abuse of Patent System” Renders Patent Unenforceable Regardless of Materiality

Following a bench trial, the court found that plaintiff's drug manufacturing process patent was unenforceable for inequitable conduct and determined that plaintiff's conduct was so egregious a finding of materiality was unnecessary. "[T]his case is one of those exceptional cases where . . . a finding of materiality is not necessary. . . . Despite having test results that contradicted his statements, [plaintiff's founder/inventor] made affirmative misrepresentations to the PTO with respect to the nature of the prior art and the [accused] tablet that had been sold in the United States for years before [he] purportedly invented his process. In fact, as [plaintiff's] own expert testified, [the inventor's] process merely requires the addition of more water to [another] Patent's process. But [he] declined to share this information with the Examiner. Nor did [he] disclose that he had filed a second patent application regarding the stability of moexipril. He also kept from the PTO the '560 PCT, which was cited in the second moexipril application and was the basis for the Examiner's rejection of the second application. . . . [T]he misconduct in this case extended beyond misrepresentations to the patent Examiner and constitutes an abuse of the patent system itself. The practice of targeting a competitor's existing and widely available product and seeking to obtain a patent for the purpose of suing that competitor through a pattern of lies and deception should not be rewarded."

Apotex, Inc., et. al. v. UCB, Inc., et. al., 0-12-cv-60706 (FLSD September 6, 2013, Order) (Middlebrooks, J.).

Tuesday, September 10, 2013

Lump-Sum Royalty Opinion Not Excluded as “Ruse to Avoid the Entire Market Value Rule“

The court denied plaintiff's motion to exclude the report of defendants' damages expert and rejected the argument that the expert's lump-sum royalty opinion was “a ruse to avoid the entire market value rule.” “The heart of [plaintiff's] complaint is that, in calculating the value the lump sum, [defendant's expert] returns to the entire revenue of its accused mobile phones for his estimate even as he acknowledges there is no evidence that any of claimed inventions is the basis of demand for the phones. . . . With little to guide its analysis beyond the single sentence in [LaserDynamics, Inc. v. Quanta, Inc., 694 F.3d 51 (Fed. Cir. 2012)], the court is not persuaded that [the expert's] analysis is so methodologically flawed that it must be kept from the jury. Here's why. Lump sums are one species of the broader genus of reasonable royalties, running royalties being another. Depending on the certainty of the market opportunity, the cash constraints of the licensee, the licensor’s appetite for risk and superior insight into the utility of the patented invention, the parties’ competitive posture, and undoubtedly other factors, a lump sum structure might better reflect what the hypothetical negotiation would produce. Especially where, as here . . . the patentee itself consistently and regularly negotiated lump sum payments with its licensees, there is even more reason to believe that the parties would have agreed to a lump sum to allow the licensee to infringe. . . . According to [defendants' expert], here [defendant] and its licensees regularly estimated the anticipated revenue of the entire licensed product in arriving at a bottom line number. Given this record, the court cannot say [his] estimate is so unreliable as to violate the norms of Fed. R. Evid. 702.”

HTC Corporation et al v. Technology Properties Limited et al, 5-08-cv-00882 (CAND September 6, 2013, Order) (Grewal, M.J.).

Monday, September 9, 2013

Counsel’s Explanation of NPE Business Model to Jury Not Improper

The court denied defendant's motion for a new trial and rejected its argument that plaintiff's counsel engaged in improper conduct that confused the jury in a trial that bifurcated liability from damages. "[Defendant] avers that [plaintiff's] counsel improperly referred to alleged damages 'throughout trial.' . . . [Defendant] submits that [plaintiff]'s closing argument . . . violated the court's bifurcation of liability and damages and invited jury confusion.. . . The court does not find that [plaintiff's] alleged misstatements were directed at the issue of damages. Rather, they were used to explain what [plaintiff] does as a non-practicing entity. [Plaintiff's] desire to note that patents can be used to recover investment costs was understandable in light of [defendant's] statements to the jury that it has thousands of patents and that '[defendant] and other good companies . . . develop information, develop technology, get together and exchange it in [patent] pools. . . .' The court does not find that [plaintiff's] closing argument resulted in a miscarriage of justice that would warrant a new trial."

MobileMedia Ideas LLC v. Apple Inc., 1-10-cv-00258 (DED September 5, 2013, Order) (Robinson, J.).

Friday, September 6, 2013

Stay Pending Inter Partes Review Granted Despite Earlier Denial of Stay Pending Reexamination

The court granted defendants' motions to stay pending inter partes review where the court had denied a stay pending reexamination the year before and had found that the stage of the case weighed against a stay. "In the Court's [decision last year] denying a stay, the Court noted that the early stage of litigation and lengthy process of reexamination weighed against a stay. The inputs and result of this comparison are different now: while the case has substantially progressed, the inter partes review promises to be a more expeditious process than reexamination and appears to be relatively close to completion. . . . [B]y the time case-dispositive motions are filed, the inter partes review is likely to be over. . . . [T]he Court believes, under the circumstances, it is appropriate to allow the inter partes review a reasonable period to conclude before launching the parties into the expense of expert discovery."

SoftView LLC v. Apple Inc., et. al., 1-10-cv-00389 (DED September 4, 2013, Order) (Stark, J.).

Thursday, September 5, 2013

Apportionment of Attorneys’ Fees Approved Where Plaintiff Prevailed on 2 of 11 Patents

The court awarded plaintiff attorneys' fees under 35 U.S.C. § 285 and found plaintiff's apportionment of fees based on the number of patents asserted at trial compared with the number of patents asserted during phases of the case to be reasonable. "The case was divided into three temporal phases based on the maximum number of patents at issue during each phase. The first phase was from filing . . . when as many as 11 patents were asserted. Because [plaintiff] ultimately prevailed on only the two patents asserted at trial, it limited its fee request to 2/11ths (18.2%) of the fees incurred during this phase. The second phase was . . . when no more than 7 patents were at issue. Thus it sought only 2/7ths (28.6%) of the fees incurred during this second phase. Finally, the last phase ran from . . . when [plaintiff] had limited the case to the two patents asserted at trial. For this last phase, PACT requested 2/2ds (100%) of the fees incurred. . . . The discount of the requested fees based on the number of patents asserted at any given time likely underestimates the time spent on the patents that were ultimately presented to the jury, since it is very likely that throughout each phase of the case more time was spent on the strongest claims. . . . Accordingly, the Court will accept the hours sought by [plaintiff]."

Pact XPP Technologies, AG v. Xilinx, Inc., et. al., 2-07-cv-00563 (TXED September 3, 2013, Order) (Payne, M.J.).

Wednesday, September 4, 2013

Defendant’s Strategy to Hasten Plaintiff’s Bankruptcy by Refusing to License Strongly Favors Enhanced Damages

Following a jury verdict of willful infringement, the court granted plaintiff's motion for enhanced damages. Defendant's knowledge of plaintiff's patents and motivation to infringe weighed strongly in favor of enhancement. "Despite having knowledge of [plaintiff's] patent protection, [defendant] has failed to present any evidence that it investigated the scope of [plaintiff's] asserted patents and formed a good-faith belief that the patents are invalid or not infringed. [Defendant's] clearly expressed interest in acquiring [plaintiff's] patents suggests, at a minimum, that [defendant] did not have substantial concerns that the asserted patents are invalid. . . . At around the same time that [plaintiff] and [defendant] began having discussions, [defendant] became concerned that its main competitor . . . was building up a patent portfolio in the area of coarse-grained array technology, such as [plaintiff's]. [The competitor] was building its portfolio by purchasing failed companies that had desirable patent portfolios. [Defendant] became concerned that it may miss out on the 'patent grab' in a developing area that could be the 'future of computation.' [Defendant] identified small, innovative companies with patents related to this area of technology. [Defendant] surmised that these companies would likely fail for commercial reasons unrelated to their merits of their technology, and that their failure may present an opportunity to acquire valuable patent rights. [Plaintiff] was one of the companies identified as a potential target, and [defendant] noted that it appeared that [plaintiff] had a strong portfolio. . . . [T]he evidence suggests that the real reason for [defendant's] decision to not license [plaintiff's] designs was that [defendant] already had its own superior implementation of [plaintiff's] patented technology, and was not worried that [plaintiff], a much smaller company, would pose much of a risk to [defendant]. . . . [Defendant] hoped that by not engaging with [plaintiff], that it would hasten [plaintiff's] descent into bankruptcy. . . . The foregoing evidence weighs strongly in favor of enhanced damages."

Pact XPP Technologies, AG v. Xilinx, Inc., et. al., 2-07-cv-00563 (TXED August 30, 2013, Order) (Payne, M.J.).

Tuesday, September 3, 2013

Institution of Reexam Instead of IPR Does Not Suggest Dilatory Motive

The court granted defendant's motion to stay pending ex parte reexamination and rejected plaintiff's claim of undue prejudice based on defendant's choice of ex parte reexamination instead of the new inter partes procedure. "According to Plaintiff, the Defendants' motion to stay is 'a tactical move to push [it] to settle this dispute.' Plaintiff, however, has failed to show that Defendants requested ex parte reexamination or filed the instant motion for the purpose of delaying this action. . . . Defendants are legally entitled to invoke the reexamination process. The fact that Defendants have done so does not in and of itself suggest a dilatory motive. . . . Moreover, there is no evidence before the Court demonstrating that the new inter partes review process is actually 'quicker' than the ex parte reexamination process. . . . While the new inter partes review process is normally required to be completed not later than a year after the PTO notices the institution of a review, see id., the statutory scheme contemplates that the review process (filing date to certificate issue date) may take up to 24 months to complete before any appeal is filed."

Internet Patents Corporation v. eBags, Inc. et al, 4-12-cv-03385 (CAND August 28, 2013, Order) (Armstrong, J.).