No Ruling on Divided Infringement Until After Claim Construction

The magistrate judge recommended denying defendants' renewed motion to dismiss plaintiff's infringement claims for failure to state a claim because of divided infringement. "The Court dismissed Defendants’ earlier filed motion as premature. . . . Yet another court faced with a similar motion declined to construe the patent claim to determine whether the claim required an allegation of joint infringement, reasoning that the proper time to address claim construction was not on a motion to dismiss. Here, the case is in essentially the same procedural posture as before -- no claim construction ruling has issued and, therefore, dismissal is premature."

H-W Technology, L.C. v. Apple Inc., et. al., 3-11-cv-00651 (TXND May 28, 2013, Order) (Ramirez, M.J.).

Intent Requirement Precludes Inequitable Conduct “In All But The Rarest Cases”

Following a bench trial, the court found that plaintiff did not engage in inequitable conduct to obtain its wind turbine patent because defendant failed to establish that plaintiff's employees deliberately withheld prior art and prior uses from the PTO. "This finding is made with some reluctance, as the Court finds the prior art is material -- a fact which [plaintiff] may have considered -- but there is insufficient evidence to conclusively prove that [plaintiff] deliberately deceived the PTO. . . . A patent applicant can know the art is material, not present it to the PTO, and still avoid a charge of inequitable conduct. This third requirement of 'deliberateness' creates a hurdle that is unlikely to be jumped in all but the rarest cases. Here, [plaintiff] submitted just one piece of prior art, omitting the entire state of the wind industry at the time. . . . By omitting the entire state of the U.S. wind industry, [plaintiff] led the Patent Office to believe that its invention was the first to successfully ride through zero voltage events; yet there is insufficient proof this was a deliberate effort to deceive."

General Electric Company v. Mitsubishi Heavy Industries Ltd., et. al., 3-10-cv-00276 (TXND May 28, 2013, Order) (Furgeson, J.).

Disclosure of Confidential Information to Plaintiff’s Outside “Licensing Agents” Prohibited

The court granted defendant's motion to prohibit plaintiff's licensing agents from having access to defendant's confidential information. "[Plaintiff's] contention that 'it is a small company with only a handful of employees and has no in-house counsel or patent litigation specialist,' does not justify distributing all of [defendant's] 'Confidential' information to non-parties. . . . [Plaintiff] brought this action against [defendant]; [plaintiff's] apparent lack of internal resources to effectively pursue this action does not mean that [defendant's] confidential information should be exposed to non-parties."

EPL Holdings, LLC v. Apple Inc., 3-12-cv-04306 (CAND May 20, 2013, Order) (Corley, M.J.).

Question of When Foreign Patent Owner May be Entitled to Lost Profits Certified for Interlocutory Appeal

The court certified for interlocutory appeal its order granting defendants' motion for summary judgment that a Japanese plaintiff could not recover lost profits damages because plaintiff did not have any U.S. sales. "The court finds that [questions of whether foreign patent owners may seek lost profits based on sales of subsidiaries or payments via “transfer pricing mechanism designed to comply with the Internal Revenue Code, 26 U.S.C. § 482”] are controlling questions of law that are pivotal to the ultimate termination of this litigation. The court further finds that there is substantial ground for difference of opinion as to the application of Federal Circuit precedent to the specific, yet common, facts of this case. On the discrete issue of lost profits damages, there is a need for additional precedent for purposes of offering guidance to foreign patent owners — and district courts — regarding the circumstances, if any, under which a foreign patent owner that does not sell any products in the U.S. market can nevertheless collect as damages the lost profits of its wholly-owned U.S. subsidiary, specifically when the foreign patent owner sells component parts of the patented device to its wholly-owned U.S. subsidiary for sale of the patented device in the U.S. market."

Fujitsu Network Communications Inc., et. al. v. Tellabs, Inc., et. al., 1-09-cv-04530 (ILND May 23, 2013, Order) (Holderman, J.).

Apparent False Statement Reviving Abandoned Patent Application Warrants Production of Privileged Documents Concerning Revival

The court granted in part defendant's motion to compel the production of privileged documents under the crime-fraud exception concerning revival of an abandoned application that led to the patent-in-suit. "[D]efendant . . . argues that the applicants committed fraud in reviving [the patent application]. [A]n applicant may revive an abandoned application where the abandonment and delay in revival were unintentional. [Defendant] maintains that both the abandonment of the [application] and at least part of the delay in seeking revival were intentional. . . . [Defendant] has met its burden with respect to the delay in revival. . . . [An] email indicates that [the applicant] itself informed [a third party] that it had not paid the Issue Fee. This admission permits the reasonable inference that [the applicant] knew by December 1999 that the [patent] Application had been abandoned, which would render false the applicants' February 2002 representation that '[t]he entire delay in filing the required reply . . . was unintentional.' The court believes the necessary inference here rises above 'mere speculation.'. . . Given the apparent falsity of the applicants' representation to the PTO and their demonstrated knowledge that 37 C.F.R. § 1.137(b) required the entire delay to be unintentional, an inference of intent is not only reasonable but effectively required here."

Shelbyzyme LLC v. Genzyme Corporation, 1-09-cv-00768 (DED May 22, 2013, Order) (Sleet, J.).

“Hyper-Aggressive” Settlement Posturing No Basis for Attorneys’ Fee Award

The court denied defendant's motion for sanctions under 28 U.S.C. § 1927 based on plaintiff's settlement strategy which included a settlement demand 90 times more than plaintiff's expert's damages estimate. "[T]he court struggles to understand plaintiff‘s tactic of increasing its damages demands and pursuing a very aggressive negotiation posture after a largely adverse claims construction by the court. . . . [B]ecause the law does not place any obligation on parties to settle their cases, the court is not prepared to sanction plaintiff for, effectively, declining to enter into serious settlement discussions at that point. Reality is sanction enough: defendants called plaintiff‘s bluff and plaintiff will receive nothing from this litigation except a lot of bills to pay. Similarly, the court will not sanction plaintiff‘s counsel. Hyper-aggressive settlement posturing is not, strictly speaking, a behavior that 'multiplies the proceedings' – it merely prevents the proceedings from coming to an early end."

NorthMobileTech LLC v. Simon Property Group, Inc., 3-11-cv-00287 (WIWD May 21, 2013, Order) (Conley, J.).

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The court denied defendant's motion for attorneys' fees under 35 U.S.C. § 285 based on plaintiff's settlement conduct. "[Defendant] points to [plaintiff's] settlement conduct, specifically that [plaintiff] settled early with several defendants for amounts that [defendant] asserts reflect [plaintiff's] goal of obtaining nuisance settlements. . . . [Plaintiff's] settlement pattern raises some eyebrows but because its positions were not entirely baseless, its attempts to settle claims early in the litigation for costs lower than the amounts of a defense are not sufficient, alone, to find subjective bad faith."

Site Update Solutions LLC v. Accor North America Inc., et. al., 5-11-cv-03306 (CAND May 21, 2013, Order) (Grewal, M.J.).

Failure to Disclose Parent Patent Lawsuits Insufficient for Inequitable Conduct Claim

The court granted defendant's motion to dismiss plaintiff's inequitable conduct claims that were based on a failure to disclose prior parent patent lawsuits. "[Plaintiff's complaint] alleges that '[t]he district court [in the [parent] litigation] construed terms in the [parent] Patent that are also present in the [patents-in-suit].' [Plaintiff's] Third Amended Complaint includes no explanation, however, of which terms in the [parent] Patent the court construed, or of how the court’s construction of those terms relates to the PTO’s decision to issue the [patents-in-suit]. That omission is fatal in light of [Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312 (Fed. Cir. 2009)]'s requirement that the pleadings 'explain both ‘why’ the withheld information is material and . . . ‘how’ an examiner would have used this information in assessing the patentability of the claims.’”

CoStar Realty Information, Inc. v. CIVIX-DDI, LLC, 1-12-cv-04968 (ILND May 15, 2013, Order) (Holderman, J.).

Prosecution Bar does not Extend to Inter Partes Review Except as to Amendment of Claims

The court granted in part plaintiff's motion to allow two of its litigation attorneys to participate in the inter partes review of the patents-in-suit. "[Plaintiff] asserts that the inter partes proceeding will not implicate competitive decisionmaking . . . and asserting there is only a 'minor opportunity to amend' the claims. . . . The inter partes proceeding affords opportunities to amend the claims that are more flexible than implied by [plaintiff]. [Plaintiff] has not established that [the two attorneys] will not be involved in competitive decisionmaking. . . . However, the purpose of this particular AIA reform was to 'convert[ ] inter partes reexamination from an examinational to an adjudicative proceeding.'. . . Depriving [plaintiff] of the specialized representation of [the attorneys] in the inter partes review would force them to rely on counsel in that process who lack litigation skills. While [plaintiff] has not shown that counsels' participation would not potentially implicate competitive decisionmaking, [defendant's] concern regarding inadvertent use of confidential information is insufficient to overcome the potential harm to [plaintiff]." Prolitec, Inc. v. ScentAir Technologies, Inc., 2-12-cv-00483 (WIED May 17, 2013, Order) (Randa, J.).

Damages Calculation Based on Profits from Sales Made with Accused Gift Cards not Improper

The court denied defendant's motion to exclude the testimony of plaintiff's damages expert as to profits attributable to sales of accused gift cards. "According to [defendant], [plaintiff's damages expert] attributes all profits from purchases made with [the accused gift cards] to the cards themselves, without accounting for profits from sales that would have accrued even without the [accused gift] card, and [the expert] attributed all profits from sales involving gift cards to [defendant's] gift card program generally rather than allocating profits from the purported inventive feature of the asserted patent claims. . . . [Plaintiff] asserts [its expert] . . . isolates the incremental profit based upon a comparison of systems with and without the patented feature. . . . The Court has reviewed [the expert's] opinion and his asserted bases for it and concludes he utilizes the proper methodology set forth in Georgia-Pacific Corp. v. U.S. Plywood Corp., 318F.Supp. 1116 (S.D. N.Y. 1970). [Plaintiff's expert] relies on the evidence relating to [defendant] and includes an analysis of the incremental profits [defendant] receives from the infringing gift card systems compared to the non-infringing alternatives."

Alexsam, Inc. v. Best Buy Stores, L.P., et. al., 2-13-cv-00002 (TXED May 15, 2013, Order) (Craven, M.J.).

Inadvertent Production of Counsel’s Analysis Acknowledging Weakness of Infringement Claim did not Justify § 1927 Sanctions

The court denied defendants' motion for sanctions under 28 U.S.C. § 1927 after plaintiff inadvertently produced a document regarding the weakness of its claim. "[28 U.S.C. § 1927] allows sanctions when an attorney has pursued a claim that is without plausible legal or factual basis, or has pursued a case that a 'reasonably careful attorney' would have known to be unsound. But we also have no basis upon which to find that plaintiff’s claims are 'entirely without support.'. . . We do acknowledge, however, that there is a claim that can be made when a party seeks not to obtain a judgment but to 'obtain a competitive advantage independent of the outcome of the case by piling litigation costs on a competitor': abuse of process, which is a tort suit. . . . [A]t this point in the litigation this single document acknowledging the weakness of a legal claim does not support a finding that plaintiff brought a frivolous claim ‘in order to obtain an advantage unrelated to obtaining a favorable judgment.’”

Peerless Industries, Inc. v. Crimson AV, LLC, 1-11-cv-01768 (ILND May 14, 2013, Order) (Cox, M.J.).

Prior Litigation and Reexamination of Related Patent Create Substantial Controversy Supporting Declaratory Judgment Claim

The court denied defendant's motion to dismiss plaintiff's declaratory relief action for lack of subject matter jurisdiction. "[Defendant] has already initiated a patent infringement action against [plaintiff] in the Northern District of Ohio based on [plaintiff's] alleged infringement of [a similar] Patent [and] after the Ohio Litigation was stayed as a result of a reexamination of [that] Patent, [defendant] stated publically on at least two occasions that it intends to resume its vigorous prosecution against [plaintiff] when that stay is lifted. . . . [T]he [similar patent] and [the patent-in-suit] share the same specification, pertain to the same subject matter and technology, and are otherwise 'very closely related.'. . . [B]ased on the totality of the circumstances, [plaintiff] has established the existence of an actual case or controversy. . . .”

Medidata Solutions, Inc. v. DATATRAK International, Inc., 2-12-cv-04748 (NJD May 13, 2013, Order) (Martini, J.).

Stay Prior to Institution of Inter Partes Review Denied

The court denied without prejudice defendant's motion to stay pending inter partes review. "[I]t seems clear that a stay of a patent infringement action is not warranted when based on nothing more than the fact that a petition for inter partes review was filed in the USPTO. All in all, a petition can be pending before the USPTO for up to six months before the agency decides to 'initiate' an inter partes review. . . . The patent owner should be able, if it desires, to prosecute its claims, to take discovery, and to set its litigation positions, at least until such a time as the USPTO takes an interest in reviewing the challenged claims. . . . [A] stay of these proceedings would also, quite frankly, disadvantage Defendant because then this Court would be unable to prevent through pretrial case management a 'shifting sands' litigation strategy by the patent owner." Automatic Manufacturing Systems, Inc. v. Primera Technology, Inc., 6-12-cv-01727 (FLMD May 13, 2013, Order) (Dalton, J.).

Federal Circuit’s Per Curiam Affirmance of Noninfringement Finding Does Not Support Award of Attorneys’ Fees

The magistrate judge recommended denying defendant's motion for attorneys' fees under 35 U.S.C. § 285 following plaintiff's unsuccessful appeal of summary judgment of noninfringement. "[Defendant] makes much of the Federal Circuit's per curiam affirmance without opinion six days after the oral argument. Without more, the Court declines to interpret the summary affirmance as a silent statement by the Federal Circuit that [plaintiff's] infringement theory was objectively baseless. . . . This is especially true where, as here, the Federal Circuit held oral argument on the appeal."

Wi-Lan Inc. v. LG Electronics, Inc., et. al., 1-10-cv-00432 (NYSD May 10, 2013, Order) (Peck, M.J.).

“Bone Crushing” Burden of Excessive Infringement Claims Justifies Late Amendment of Invalidity Contentions

The court granted defendant's motion to amend its invalidity contentions to add three new prior art references following claim construction. "Earlier in this action, [plaintiff] imposed upon [defendant] a bone-crushing burden of conducting a prior art search for more than fifty patent claims. This was an unreasonable burden for [plaintiff] to place on its adversary, especially since [it] should have been more selective in choosing claims to assert. . . . [Defendant] has acted reasonably and will be permitted to amend in light of (1) the huge number of claims previously asserted by [plaintiff], (2) the fact that [defendant] seeks to add only three references to a reference list that originally included over fifty, and (3) the fact that [defendant] promptly communicated its intent to update its invalidity contentions to [plaintiff] upon completion of the new prior art search."

Network Protection Sciences, LLC v. Juniper Networks, Inc., et. al., 3-12-cv-01106 (CAND May 9, 2013, Order) (Alsup, J.).

Nonfinal Invalidity Findings by PTO Cannot Provide Basis for Attorneys’ Fee Award

The court denied defendants' motion for attorneys' fees under 35 U.S.C. § 285 following summary judgment of invalidity and found that the PTO's finding of anticipation could not serve as the basis for a Section 285 award. "[A]s to the invalidity findings by the PTO, although the Court found them persuasive in reaching its own independent conclusion as to invalidity, those conclusions were not the final word on validity from the PTO and cannot provide a basis for finding this case exceptional under section 285."

Implicit Networks, Inc. v. F5 Networks, Inc., 3-10-cv-03365 (CAND May 8, 2013, Order) (Illston, J.).

Litigation Counsel With Access to Source Code Permitted Limited Role in Reexamination

The court granted in part defendant's motion for a patent prosecution bar in the protective order. "[P]laintiff has persuaded the court that her litigation counsel may access [confidential source code and documents] and still participate in reexamination proceedings before the [PTO], albeit in a limited way. . . . Especially where, as here, reexamination or review proceedings are really nothing more than an extension of the litigation in the district court, there is even less of a reason to impose a total ban of the kind [defendant] seeks. It would be one thing if the two matters were truly independent of one another. But if the PTO and district court are just two fronts in the same battle, allowing a limited role for a patentee's litigation counsel while prohibiting counsel from crafting or amending claims is reasonable."

John v. Lattice Semiconductor Corp, 5-12-cv-04384 (CAND May 7, 2013, Order) (Grewal, M.J.).

AIA Joinder Rule does not Prohibit MDL Centralization

The court denied defendants' motion to sever plaintiff's infringement claims against them from pretrial consolidation in an MDL case and rejected their argument that 35 U.S.C. § 299 had been violated. "Section 299’s prohibition on joinder of unrelated defendants based on common acts of infringement does not obviate a transferee court’s discretionary ability to order pretrial consolidation in multidistrict litigation. . . . The coordination that [defendants] advocate would thwart the court’s ability to manage the present litigation by transforming each case into an individual action circumventing the uniform rulings and judicial efficiency that the [Judicial Panel for Multidistrict Litigation] intended when creating MDL 2371. [Defendants] can also present any unique facts surrounding their alleged infringement after remand."

Unified Messaging Solutions, LLC v. United Online, Inc., et. al., 1-13-cv-00343 (ILND May 3, 2013, Order) (Lefkow, J.).

Stay Pending Inter Partes Review Denied

The court denied defendant's motion to stay pending inter partes review in part because the court’s need to control its own docket weighed against a stay. "The three-factor analysis . . . while important, does not capture every relevant consideration. . . . The Court is concerned that allowing the progress of its docket to depend on the status of proceedings elsewhere can interfere with its obligation 'to secure the just, speedy, and inexpensive determination of every action.' 'If litigation were stayed every time a claim in suit undergoes reexamination, federal infringement actions would be dogged by fits and starts. Federal court calendars should not be hijacked in this manner.'"

Universal Electronics Inc. v. Universal Remote Control Inc., 8-12-cv-00329 (CACD May 2, 2013, Order) (Guilford, J.).

Stay Pending Reexam Denied for “Litigation Armageddon”

The court denied defendants' motion to stay pending ex parte and inter partes reexamination of the four patents-in-suit because the potential for simplification did not favor a stay. "Reexamination will not markedly simplify the issues in this case. It may slightly alter them but it will not simplify them. . . . [T]he whole concept of 'simplification of the issues' is somewhat imaginary here given the nature of the dispute and the vigor with which the parties have pursued it in three different forums around the world. This case is a clash that involves allegations of unfair competition and espionage presented through the prism of a patent-focused dispute. While the USPTO rejecting some claims could theoretically narrow the scope of the patents in dispute, the reality (based on what the Court has seen thus far) is that this litigation [is] armageddon."

Nippon Steel & Sumitomo Metal Corporation v. POSCO, et. al., 2-12-cv-02429 (NJD May 2, 2013, Order) (Falk, M.J.).

Patent Assignment’s Silence as to Past Damages Precludes Pre-Assignment Damages Regardless of Subjective Intent

The court granted defendants' motion to limit plaintiff's damages to the time period after plaintiff was assigned the patent-in-suit because plaintiff's assignment did not give it the right to sue for past infringement. "[T]he assignment is completely silent as to whether Plaintiff acquired a right to sue for infringement that occurred prior to the date of the assignment. . . . Although Plaintiff claims that [the prior owner] subjectively intended to convey rights to Plaintiff to sue for past infringement, Plaintiff points to no language in the contract supporting such intent. . . . Plaintiff further contends that because [the owner] agreed to testify in all legal proceedings in the assignment, he must have intended to allow Plaintiff to sue for past infringement. However, the contractual language makes clear that the basic purpose for his agreeing to testify is to effectuate the rights granted in the assignment, which are not retroactive. The language cannot be reasonably interpreted in the manner that Plaintiff suggests."

Nano-Second Technology Co. Ltd. v. Dynaflex International, 2-10-cv-09176 (CACD May 1, 2013, Order) (Lew, J.).

Defendant’s Failure to Pursue Counterclaims did not Warrant Attorneys’ Fee Award

The court denied plaintiffs' motion for attorneys' fees under 35 U.S.C. § 285. "[P]laintiffs make much of the fact that [defendant] asserted (compulsory) counterclaims of infringement . . . but then failed to submit infringement contentions on that patent by the Court-imposed deadline and failed to voluntarily withdraw those claims when asked to do so by [plaintiffs]. While [defendant] may not have cloaked itself in glory in its pursuit of [its] Patent claims, its conduct appears entirely consistent with an aggressive, but good faith, litigation strategy."

SAP AG, et. al. v. Datatern, Inc., 1-11-cv-02648 (NYSD April 30, 2013, Order) (Forrest, J.).

Former Spouse’s Marital Property Rights Undercut Plaintiff’s Standing

The court granted defendant's motion to dismiss plaintiff's infringement action for lack of standing because plaintiff's ex-wife who had legal title to the patent-in-suit was not a party to the action. "[S]ince the Patent was issued to the Plaintiff while he was married . . . the Patent was presumably a marital asset, under Florida law, prior to the issuance of the Divorce Settlement. The Divorce Settlement merely reinforced that presumption by subjecting the Patent to equitable distribution and awarding [plaintiff's ex-wife] a 60% interest in any proceeds from the Patent. . . . Since the Divorce Settlement reinforces [her] ownership interest in the Patent, the Complaint must be dismissed because [she] has not been made a party to the suit."

Taylor v. Taylor Made Plastics, Inc., 8-12-cv-00746 (FLMD April 29, 2013, Order) (Kovachevich, J.).