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.)

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.).

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.)

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.)

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.)

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.)

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.)

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.)

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.)

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)

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.)

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.)

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.)

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.)

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.)

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.)

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.)

“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.)

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.)

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.)

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.)

“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.)