Purposeful Copying did not Establish Willfulness

The court denied plaintiff's motion for judgment as a matter of law that defendant willfully infringed its electronic device design patent. "[T]he jury found that, as a subjective matter, [defendant] did not willfully infringe the [patent-in-suit]. . . . Moreover, [plaintiff] has failed to cite any evidence of actual knowledge of infringement on [defendant's] part. Instead, [plaintiff] relies on evidence that [defendant] purposely imitated [its] designs. Evidence of copying, however, is not evidence of infringement or knowledge thereof. . . . [Defendant] may have believed that any elements of [plaintiff's] designs that it was copying were not protected by the limited scope of the [patent]."

Apple Inc. v. Samsung Electronics Co. Ltd., et. al., 5-11-cv-01846 (CAND January 29, 2013, Order) (Koh, J.).

Local Counsel Conflict Not Imputed to Trial Counsel

The court denied a motion to disqualify plaintiff's national trial counsel due to plaintiff's retention of local counsel who had previously served as patent counsel for defendant's supplier. "[T]he Court readily sees the appearance of a conflict of interest sufficient to support [local counsel's] withdrawal from the representation of [plaintiff] in this action, as has occurred. The instant motion, however, seeks for the Court to impute the conflicts of [local counsel] to another law firm, based on the assumption that confidential information must have been transmitted by [local counsel] to [trial counsel]. In view of the declaration of [local] counsel expressly denying transmittal of any such information, that assumption is ill-founded."

Brandywine Communications Technologies, LLC v. Centurylink, Inc., et. al., 6-12-cv-00286 (FLMD January 28, 2013, Order) (Baker, M.J.).

Judge Posner Excludes Reasonable Royalty Calculation Based on “At Risk Profits” Instead of Cost of Noninfringing Substitute

The court granted in part defendant's motion to exclude testimony from plaintiffs' damages expert to the extent such testimony was based on the calculation of defendant’s “at risk” profits. "[Defendant] would not have paid a royalty higher than the cost to it of switching to a noninfringing substitute . . . or otherwise reworking its manufacturing process to avoid making the infringing [product]. . . . Maybe there’s no perfect substitute for the patented invention (or something quite like it). . . . But even if there is no perfect substitute, this by itself would not allow the estimation of a reasonable royalty. For that royalty would depend on the cost, in higher production costs and loss of business to competitors, of the best imperfect substitute; and [plaintiffs' expert] offered no evidence about either cost. In fact she based her calculation of a maximum reasonable royalty not on costs, but on the maximum profits of [defendant] that she deemed at risk if [it] didn’t get a license from [plaintiff]. . . . She has not used a reasonable methodology to calculate the plaintiffs’ damages by reference to [two licenses from settlements], or profits at risk, or to assess the cost of noninfringing alternatives. [One of plaintiff's nonexclusive licenses], however, remains a possible basis for estimating a reasonable royalty for a license to [defendant]. She may testify to that, and also to general principles of patent damages."

Brandeis University, et. al. v. East Side Ovens, Inc., et. al., 1-12-cv-01508 (ILND January 18, 2013, Order) (Posner, C.J.).

Related Litigation Between Co-Defendants Warrants Severance

The court granted defendant's motion to sever it from plaintiff's infringement action because of the relationship between the defendants. "[The two defendants] are more than competitor co-defendants — they are also adversaries in another lawsuit involving similar technologies and patents as the present suit. [The co-defendant] also has pending patent applications claiming priority to patents asserted against [the moving defendant] in the [other] Suit. This creates a very real threat that [the co-defendant] will (even unintentionally) use confidential information obtained from [the moving defendant] in [this] Suit during prosecution of its pending applications. There is also a threat that [the co-defendant] will use confidential. . . information obtained in [this] Suit against it in the [other] Suit. This conflict puts [the moving defendant] between Scylla and Charybdis."

TracBeam, L.L.C. v. AT&T Inc., et. al., 6-11-cv-00096 (TXED January 23, 2013, Order) (Davis, J.).

ALJ Rejects “Deceptive Similarity” Requirement for Design Patent Infringement

Following an evidentiary hearing, the ALJ found that Samsung infringed one of Apple’s phone design patents, and rejected Samsung’s argument that Apple was required to show "deceptive similarity." "I do not find deceptive similarity to be a prerequisite to a finding of infringement, but merely a consequence, or result, of the designs being substantially the same. . . . [T]he sole test for design patent infringement is whether the claimed design is 'substantially the same' as the accused design in the eye of the ordinary observer, giving such attention as a purchaser usually gives. . . . I have kept it in mind that a purchaser of the kind of devices at issue in this investigation will pay significant attention to what they are buying."

Electronic Digital Media Devices and Components Thereof, 337-TA-796 (ITC December 27, 2012, Order) (Pender, ALJ).

Inequitable Conduct Pleading Based on “Burying” Prior Art Dismissed

The court granted in part plaintiff's motion to dismiss defendant's inequitable conduct counterclaims to the extent the claims were based on the allegation that plaintiff "buried" the PTO examiner. "[Defendant] alleges that [plaintiff] 'buried' the PTO examiner 'with hundreds of references so as to distract his attention from highly relevant references.'. . . [I]t is likely that a patentee provides copious references to the PTO in order to ensure that he is not subject to inequitable conduct charges for failing to disclose a reference, not as an act of deliberate deception. . . . Because specific intent to deceive is not the only or single most reasonable inference to be drawn from the disclosure of voluminous references to the PTO, [defendant's] pleading of the 'burying' theory fails as a matter of law."

Parker Vision, Inc. v. Qualcomm Incorporated, 3-11-cv-00719 (FLMD January 22, 2013, Order) (Dalton, J.).

Verdict Form Containing Conflicting Entries Warrants New Damages Trial

The court granted defendants' motion for a new trial on damages and vacated the jury's award which contained conflicting entries for lost profits ($49.3 million), reasonable royalty damages ($1.9 million), and total damages ($1.9 million). "Although [plaintiff] produced sufficient evidence such that [defendant] is not entitled to JMOL on the lost profits issue, the jury’s response to the verdict form raises significant questions about whether the jury in fact awarded Brocade lost profits damages. . . . [T]he court highlights that it cannot construe a theory supported by the evidence that would allow [plaintiff] to collect a lost profits award when the jury failed to address that amount in its 'Total Damages' entry. . . . Because the court can only speculate on the jury's conflicting entries, and in light of the potential for injustice and the problematic reasonable royalty evidence, a new trial on patent damages is warranted."

Brocade Communications Systems, Inc., et. al. v. A10 Networks, Inc., et. al., 5-10-cv-03428 (CAND January 18, 2013, Order) (Grewal, M.J.).

Plaintiff’s Former In-House Lawyer Disqualified From Representing Defendant

The court granted plaintiff's emergency motion to disqualify defense counsel who had previously served as plaintiff's in-house patent attorney and performed work that was substantially related to the current infringement action. "During [counsel's] time as in-house counsel for [plaintiff], he was heavily involved in [plaintiff's] patents. . . . It is clear that [counsel] participated in [plaintiff's] efforts to protect its intellectual property, including its patents. . . . The court finds that [counsel's] former position as in-house counsel for [plaintiff] and his work performed on patents specifically, are not only 'similar or related' to the instant patent infringement action, but that [he] actually dealt with one of the [patents-in-suit]."

SHFL entertainment, Inc. v. DigiDeal Corporation, 2-12-cv-01782 (NVD January 16, 2013, Order) (Ferenbach, M.J.).

Numerous Motions to Transfer Venue Granted in GeoTag Cases

The court granted defendants' motion to sever and transfer venue from the Eastern District of Texas to the Northern District of Texas and rejected plaintiff's argument that practical problems weighed against transfer. "This litigation involves over 100 cases against in excess of 400 defendants. Although [plaintiff] asserts the [same] patent in each case, none of the cases involve related defendants or overlapping products or services. [Plaintiff] argues that having a single court familiar with the facts and legal issues would produce significant gains in judicial economy. The Court disagrees. . . . [Plaintiff] has not pointed to any 'common issues' that would not be present in all infringement cases (i.e. claim construction). . . . The Court will not permit the existence of separately filed cases to sway its transfer analysis. Otherwise, a plaintiff could manipulate venue by serially filling cases within a single district."

GeoTag Inc. v. Aromatique Inc., et. al., 2-10-cv-00570 (TXED January 14, 2013, Order) (Schneider, J.).

Rule 11 Sanctions Imposed Upon Counsel Where Counsel Took Responsibility for Conducting Pre-Filing Investigation

The magistrate judge recommended that Rule 11 sanctions be imposed only against plaintiff's counsel and not against plaintiff. "[A]s a matter of law, any monetary sanctions arising from [plaintiff's] frivolous patent law claims can only be imposed on [plaintiff's] attorneys, and not on [plaintiff] itself. . . . In contrast to the frivolous legal claims, [plaintiff] and its counsel could potentially share the responsibility for failing to conduct an adequate pre-filing investigation. . . . [T]he record does not suggest that [plaintiff] was responsible for the inadequacies in the pre-filing investigation in this case. [Plaintiff] claims that it relied on the advice of counsel in deciding to bring suit, and counsel for [plaintiff] appear to take responsibility for conducting a pre-filing investigation into the patent-infringement claims. . . . I see no sanctionable conduct by [plaintiff] for following the legal advice of counsel in regards to the pre-filing investigation."

Source Vagabond Systems, Ltd. v. Hydrapak, Inc., 1-11-cv-05379 (NYSD January 11, 2013, Order) (Cott, M.J.).

Breaking Into Defendant’s Server to Steal Source Code Did Not Justify Attorneys’ Fees

The court denied defendants' motion for attorneys' fees under 35 U.S.C. § 285 following reexamination that cancelled the patent-in-suit because plaintiff's act of breaking into defendant’s server to acquire source code did not result in a bad faith claim of infringement. "Defendants present evidence that Plaintiff has engaged in unscrupulous business practices, but they do not meet their burden of showing by clear and convincing evidence that the present litigation was brought in subjective bad faith. . . . [T]he fact that Plaintiff broke into [defendant's] server and stole its source code does not show that the present litigation was brought in subjective bad faith. . . . Defendants do not allege that Plaintiff orchestrated the break-in to lay the groundwork for a baseless suit. In fact, Plaintiff's behavior, while despicable and possibly in violation of the Computer Fraud and Abuse Act, is consistent with that of a company that sincerely believes its intellectual property is being infringed."

Direct Route LLC v. OnOffline Inc., et. al., 2-09-cv-01509 (WAWD January 10, 2013, Order) (Pechman, J.).

Competitor’s Infringement of Server Load Balancing Patent Satisfies “Causal Nexus” Standard for Permanent Injunction

The court granted plaintiff's post-trial motion for a permanent injunction regarding its global server load balancing patents because there was a clear causal nexus between plaintiff's loss of exclusivity and defendant's infringement. "Some have suggested that [recent Federal Circuit decisions] herald the death, or at least the wounding, of the permanent injunction in patent cases involving hardware or software products with hundreds or thousands of components. One standard in particular – the 'causal nexus' standard – bears the brunt of this discussion. . . . [W]hatever the 'trend' of permanent injunctions in such cases, the Federal Circuit has made clear that injunctions can and should continue to issue upon the assembly and presentation of an appropriate record. . . . In the Federal Circuit’s most recent decisions regarding permanent injunctions, there is a curious absence of references to the causal nexus standard. . . . The court must confess to doubt that the causal nexus as articulated in [Apple Inc. v. Samsung Elecs. Co., Ltd., 695 F.3d 1370 (Fed. Cir. 2012)] should be required for all irreparable harms offered in support of a request for a permanent injunction. Whatever its ultimate merit where the particular irreparable harm claimed is a loss of sales, that strict standard appears to move into the irreparable harm analysis a consideration better suited for the equitable factors of balance of hardships and public interest. The court does not however have to decide this broader question here, because [plaintiff] has proven a sufficient nexus between the established infringement and irreparable harm from the loss of its exclusive right to practice its patents."

Brocade Communications Systems, Inc., et. al. v. A10 Networks, Inc., et. al., 5-10-cv-03428 (CAND January 10, 2013, Order) (Grewal, M.J.).

Defendant’s Failure to Produce Documents from “Coordinated” Third Party Warrants Sanctions

The court granted plaintiff's renewed motion for monetary sanctions for defendants' repeated failure to provide documents in the possession of a third party under common control and in “close coordination” with defendant. “Because of the control or ‘close coordination’ between the two companies, defendants were required to produce the requested information.” "This marks the third motion plaintiff has filed relating to essentially the same set of documents. . . . [I]t was only after the recent 30(b)(6) deposition of [the third party under common control with defendant] that it became clear that defendant did not conduct a reasonable investigation regarding [the third party’s] document production or [the third party’s] document retention for purposes of this litigation. . . . Defendants cannot place the burden of compliance on an outside vendor and have no knowledge, or claim no control, over the process. Defendants must produce all responsive documents, even if those documents are held by [the third-party], because we have already determined that the separation of the two companies 'cannot be used as a screen to disguise the coordinated nature' of their business."

Peerless Industries, Inc. v. Crimson AV, LLC, 1-11-cv-01768 (ILND January 8, 2013, Order) (Cox, M.J.).

No Substantial Controversy for Declaratory Judgment Action Filed Simultaneously With Issuance of Patent

The court granted defendants' motion to dismiss plaintiff's declaratory relief action for lack of subject matter jurisdiction because plaintiff filed its lawsuit before defendants could have taken any action to enforce their patent rights. "Regardless of the precise sequence of events, or what filing date the complaint should be given, it is clear that [plaintiff] filed this action no later than virtually simultaneously with issuance of the patent. There is no indication that [defendant] did, or even could have, issued some implied or express enforcement threat so closely upon issuance of the patent such that it could be said to have taken any affirmative act to enforce its patent rights prior to the time the complaint was filed."

Danisco US, Inc. v. Novozymes A/S, et. al., 3-12-cv-04502 (CAND January 8, 2013, Order) (Seeborg, J.).

Enforcement of Subpoena for Google Source Code Approved

The ALJ granted complainant's motion to certify a request for judicial enforcement of deposition and document/source code subpoenas served upon a nonparty. "[T]he [ALJ] has entered a Protective Order and an Addendum. . . which already protect Nonparty's confidential business information and highly confidential source code. Nonparty's claim that it has withheld the requested discovery on the basis of insufficient protections is particularly unpersuasive here in light of Nonparty's failure to take action on its own behalf to timely quash or limit the subpoenas served on it or to seasonably seek some form of protective order itself upon receiving the subpoenas. . . . [T]he requested discovery appears to be sought for an appropriate purpose, is relevant, and appears reasonable in scope."

Consumer Electronics, Including Mobile Phones and Tablets, 337-TA-839 (ITC January 6, 2013, Order) (Gildea, ALJ).

Expert’s Application of Outdated Test for Design Patent Infringement Warrants Exclusion of Testimony

The court granted in part plaintiff's motion to exclude defendant's infringement and invalidity expert because the expert used the points of novelty test for design patent infringement that had been eliminated by the Federal Circuit. "[Defendant] concedes that [its expert] 'misstated part of the legal standard,' but argues that he actually applied the points of novelty test after applying the ordinary observer test, thus it was an additional basis for his opinion and can be ignored. . . . [Defendant's] argument that [its expert] considered a few 'novel features' as just a part of his analysis is not well taken, given the statement in his Rebuttal Report that he applied the 'points of novelty' test. . . . Because [his] opinion on infringement and invalidity are based on the 'points of novelty' test. . . which the Federal Circuit squarely rejected as a separate test [four years ago], [his] opinions in this respect are not appropriate and must be excluded."

Pacific Coast Marine Windshields Limited v. Malibu Boats, LLC, et. al., 6-12-cv-00033 (FLMD January 4, 2013, Order) (Baker, M.J.).

Emergency Stay Pending Reexam Rejected Because Action Closing Prosecution Was Not Final

The court denied defendant's emergency motion to stay pending an inter partes reexamination where the PTO issued an Action Closing Prosecution that rejected all claims of the patent-in-suit. "The Court believes that 'final' does not always have its plain and ordinary meaning at the USPTO. . . . An Action Closing Prosecution is far from a 'final' rejection. Here it is apparent that the reexamination proceedings in this matter are still very far from complete and the final outcome at the USPTO is at least several years away. It is hard for this Court to understand [defendant's] possible justification for asserting this Motion to be an 'emergency' when confronted with the practical realities of practice before the USPTO. . . ."

Portal Technologies v. Yahoo! Inc., 2-11-cv-00440 (TXED January 3, 2013, Order) (Gilstrap, J.).

Spoliation Renders Rambus DRAM Patents Unenforceable . . . Again

On remand after the Court of Appeals vacated the district judge's choice of sanction, the court again sanctioned defendant for spoliation of discovery documents and declared its DRAM patents-in-suit unenforceable. "[T]he deterrent effect of fees and costs or monetary sanctions would be insufficient; the temptation to destroy unfavorable evidence at the outset of high stakes litigation would overshadow the prospect of being sanctioned with paying fees and costs or other monetary sanctions. . . . The deterrent effect of an adverse jury instruction is 'limited in scope' because of the uncertainty as to whether a jury would draw an inference against the spoliator. . . . [An evidentiary sanction] would not be an appropriate remedial measure here because the nature of [defendant's] spoliation has made it impossible to know 'the precise contours of the destroyed materials.'. . . [T]he only appropriate sanction is to hold the patents-in-suit unenforceable against [plaintiff]. [Defendant's] destruction of evidence was of the worst type: intentional, widespread, advantage-seeking, and concealed. . . . Any lesser sanction would, in effect, reward [defendant] for the gamble it took by spoliating and tempt others to do the same."

Micron Technology v. Rambus Inc., 1-00-cv-00792 (DED January 2, 2013, Order) (Robinson, J.).

No privilege for “business decision about whether and when to unleash . . . patent attorney”

The court granted defendant's motion to compel plaintiff to produce four emails regarding the timing of an infringement claim, rejected plaintiff's claim of privilege, and awarded sanctions. "According to [plaintiff], notwithstanding the facts that no attorney was involved in the discussion, no attorney had provided any input, and in fact, no attorney even had been contacted yet, the discussion still is privileged, apparently because the non-lawyers are talking about talking to their lawyer. This is an alarmingly simplistic view of the privilege. . . . Four senior managers making a business decision about whether and when to unleash their patent attorney (plus a report that the call was made and a message left) doesn’t cut it. . . . Four executives agreeing that they will try to cast a cloud over [a manufacturer's] new launch by getting the patent attorneys involved is not attorney work product."

Out RAGE LLC v. New Archery Products Corporation, 3-11-cv-00701 (WIWD December 28, 2012, Order) (Crocker, M.J.).

Mischaracterization and Misapplication of Statute Did Not Warrant Award of Attorneys’ Fees

The court denied defendant's motion for attorneys' fees under 35 U.S.C. § 285 after the PTO and BPAI rejected the claims of the patent-in-suit as invalid because plaintiffs did not engage in litigation misconduct by mischaracterizing and misapplying a statute. "[T]he Court is deeply concerned that Plaintiffs, whether inadvertently or not, both misquoted the statute and erred in applying it to the factual situation of this case. Plaintiffs apologized and admitted their mistake. Plaintiffs also point to [another case] to illustrate that their mischaracterization is not utterly devoid of legal basis. . . . In light of Plaintiffs' reliance on the case law on the topic, the Court concludes that this one instance of mischaracterization, while troubling, is not enough to render the case exceptional."

E-Z-GO, et. al. v. Club Car, Inc., 1-09-cv-00119 (GASD December 27, 2012, Order) (Hall, J.).