Absent Specific Reason, Claim Construction Not Necessary to § 101 Analysis

The court granted in part defendant's motion to dismiss plaintiffs' infringement claims for lack of patentable subject matter and rejected plaintiffs' argument that the motion was premature because claim construction had not occurred. "Plaintiffs' arguments throughout the briefing make no mention of how the construction of certain limitations would inform the § 101 analysis. The court concludes that it may proceed on a § 101 analysis, as the parties' arguments are not focused on specific claim limitations, but instead on the broader concepts of the claims and the computer components used."

Intellectual Ventures I LLC et al v. Manufacturers and Traders Trust Company, 1-13-cv-01274 (DED December 18, 2014, Order) (Robinson, J.)

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The court denied without prejudice defendant's motion to dismiss plaintiff's claim for infringement of its seismic array patent for lack of patentable subject matter but rejected plaintiff's argument that the motion was premature. "[Plaintiff] has been unable to identify any relevant factual dispute, and the parties agree that the Court can use [plaintiff's] proposed claim construction for the purposes of this Motion. Given this consensus, the Court is satisfied that it has the full understanding of the basic character of the claimed subject matter required for an eligibility determination. Thus, the Court finds that claim construction is not necessary for the resolution of this Motion."

Fairfield Industries Incorporated v. Wireless Seismic, Inc., 4-14-cv-02972 (TXSD December 23, 2014, Order) (Ellison, J.)

"Significantly Less Memory” Requirement Does Not Transform Portable Device into a Special Purpose Computer

The court granted defendant's motion for summary judgment that plaintiff's electronic document distribution patents were invalid for lack of patentable subject matter because the claims were drawn to an abstract idea and not limited by an inventive concept. "The requirement that the portable device have 'significantly less' memory than the networked device does not transform the portable device into a special purpose computer. . . . Although the court understands plaintiff's argument that the steps of 'transmitting' and 'receiving' may not have been conventional practices in the field of computing at the time of invention, these steps nonetheless do nothing more than recite functions that 'can be achieved by any general purpose computer without special programming.' The court also recognizes that the application of document cataloguing in the realm of portable computing usefully addressed the problem of limited memory space in portable computers. The fact that an abstract idea may be usefully applied, however, is not enough to 'transform an unpatentable principle into a patentable process.'"
Cloud Satchel LLC v. Amazon.com Inc., 1-13-cv-00941 (DED December 18, 2014, Order) (Robinson, J.)

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Three additional patents deemed invalid under Alice

In addition to the decision reported above, three other decisions recently invalidated asserted patent claims under Alice. The asserted claims were directed to (i) the secure management of patient records, (ii) financial transaction alerts, and (iii) internet marketing via “match engine.” To view summaries of all dispositive or potentially dispositive decisions addressing unpatentable subject matter since Alice, click here. If you’d like to be notified of new orders addressing patentable subject matter, follow the link below, then click the “Create Alert” button at the bottom of the page.

“Exceptionally Weak” Infringement Case Justifies Recommendation of $5.5 Million Attorneys’ Fee Award

Following summary judgment of noninfringement based on a sublicense, the magistrate judge recommended awarding defendant nearly $5.5 million in attorneys’ fees under 35 U.S.C. § 285 . "Not only does the [court's] summary judgment decision show that [plaintiff's] arguments were exceptionally weak, but this is also evidenced by the Federal Circuit’s . . . summary affirmance. . . . Another remarkable aspect of [plaintiff's] defeat is that much of [defendant's] best evidence came from the deposition testimony of [plaintiff's] witnesses, not [defendant's] witnesses. . . . If [plaintiff] had conducted a modicum of due diligence before it filed its complaint it would have learned from these witnesses that its case was doomed."

Bayer CropScience AG, et al v. Dow Agrosciences LLC, 1-12-cv-00256 (DED December 22, 2014, Order) (Schneider, M.J.)

Expert’s Use of Noninfringing Off-Label Sales in Lost Profits Analysis Precluded

The court granted defendant's motion to exclude the testimony of plaintiff's damages expert regarding lost profits testimony that included all sales of the accused drug product, including off-label use. "[E]ven where related actions by defendants may have cost a plaintiff a sale, only those leading to or qualifying as actual infringement can give rise to lost profits. . . . According to [plaintiff], all sales of [the accused drug product] should factor into a lost-profits analysis, even where only 66 percent of those sales resulted in infringement. Its stated reasons are that all such sales were made after [defendant] had marketed the drug in a way that promoted an infringing use and that [defendant] was legally prohibited from marketing it in any other way. . . . Presumably, on [plaintiff's] logic, the result would be the same even if only 10 percent of [the accused product sales] had actually resulted in infringement. . . . Absent some limiting principle, [plaintiff] would demand damages on 100 percent of sales even in those cases. . . . [T]here is no other coherent place at which to limit [plaintiff's] lost-profits damages than at the point of actual infringement."

Abbott Biotechnology Ltd. et al v. Centocor Ortho Biotech, Inc., 4-09-cv-40089 (MAD December 19, 2014, Order) (Saylor, J.)

Counsel’s Role in Preparing Expert Report Bars Expert’s Testimony

The court granted plaintiff's motion to exclude testimony from a defense invalidity expert who did not draft his own report. "The problems with [the expert's] testimony stem from the fact that he did not draft his own report; defense counsel drafted it for him. The Court finds that practice to be a remarkable breach of ethics and protocol, which defense counsel brazenly attempted to justify at oral argument. . . . He may indeed be competent to provide testimony in support of the invalidity defenses in this case. But he has surrendered his role to defense counsel, and that is not how the adversary process works. . . . [The expert] devoted less than 30 hours developing his opinions about the case, nearly half of which was spent at or traveling to the law office of [defense] attorneys. . . . Because [the expert] did not furnish a report that even approximated his original work in this case, and he could not apply the facts of the case to the principles upon which an obviousness opinion necessarily is based, he cannot testify as an expert in this case."

Numatics, Incorporated v. Balluff, Inc. et al, 2-13-cv-11049 (MIED December 16, 2014, Order) (Lawson, J.)

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How have other courts addressed counsel’s role in preparing expert reports?

In the decision report above, Judge Lawson states that counsel’s role in preparing expert reports “generally is limited to ensuring that Rule 26’s formal requirements are satisfied.” Further, “[d]etermining whether counsel crosses the line separating permissible assistance from improper participation in the expert’s report writing calls for ‘a fact-specific inquiry.’”

For Docket Navigator subscribers, if you'd like to view decisions by other courts addressing this issue, click here. If you’d like to be notified of new orders addressing this issue, follow the link and click “Create Alert” at the bottom of the page.

Personal Jurisdiction Premised on Sending Paragraph IV Letter Certified for Appeal

The court granted in part defendant's motion to certify for interlocutory appeal an earlier order denying defendant's motion to dismiss plaintiff's ANDA action for lack of personal jurisdiction, but found defendant's proposed question too narrow. "The court is not familiar with any other judicial decision analyzing person jurisdiction in 'Hatch-Waxman litigation,' in the wake of the Supreme Court's ruling in Daimler AG v. Bauman, 134 S. Ct. 746 (2014). The court agrees with [defendant] that this is a controlling (and novel) question of law for which there is substantial ground for difference of opinion. . . . [G]iven the volume of Hatch-Waxman cases pending in this district, the court is of the view that interlocutory appellate review will provide necessary guidance as to whether these cases are properly before the court. . . . The court considers [defendant's certification] question to be an oversimplification of its holding [and] will therefore certify [its] request for interlocutory appeal . . . without further limitation."

AstraZeneca AB v. Aurobinda Pharma, Ltd. et al, 1-14-cv-00664 (DED December 17, 2014, Order) (Sleet, J.)

Customized Advertising Patent Invalid Under Alice

The court granted defendant's motion for summary judgment that plaintiff's customizable advertising patent was invalid for lack of patentable subject matter. "[T]he specification . . . makes clear that a primary potential use of the system is to allow advertisers to direct customized ads to individuals. . . . "[Defendant's] characterization of this patent as embodying only an 'abstract idea' is accurate. The concept of gathering information about one’s intended market and attempting to customize the information then provided is as old as the saying, 'know your audience.'. . . The idea is abstract, and no limitations exist in the claims to provide an 'inventive concept' sufficient to transform that idea into patent-eligible subject matter. Indeed, the claim language itself does not even expressly call for the use of computers or the internet."

OpenTV Inc. v. Netflix Inc., 3-14-cv-01525 (CAND December 16, 2014, Order) (Seeborg, J.)

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How have other courts ruled on patentable subject matter after Alice?

Since Alice was decided last June, U.S. district courts have issued 31 dispositive or potentially dispositive decisions addressing patentable subject matter. To view those decisions, click here.

If you’d like to be notified of new orders addressing patentable subject matter, follow this link (same as above) and click the “Create Alert” button at the bottom of the results page.
(For Docket Navigator customers only.)

Financial Transaction Security Patent Invalid Under Alice

The court granted defendant's motion for summary judgment that plaintiff's financial transaction security patent was invalid for lack of patentable subject matter because the claims were not limited by an inventive concept. "[P]laintiff argues that the claims use 'specific computers' with bank processing software, making them 'special purpose computers.' . . . Plaintiff admits that the applicant did not invent the computer components or the banking software. For example, claim 30 utilizes a memory to store a limitation or restriction, a communication device to transmit, a receiver to receive, and a processing device to process information and generate a signal containing information. While plaintiff objects to the characterization of these components as generic, the addition of well known data processing software does not transform these components into a 'special purpose computer.'. . . While the computer components do allow the abstract idea to be performed more quickly, this does not impose a meaningful limit on the scope of the claim."

Joao Bock Transaction Systems LLC v. Jack Henry & Associates Inc., 1-12-cv-01138 (DED December 15, 2014, Order) (Robinson, J.)

Defendant Sanctioned $10,000 for "First Option" Rule 11 Motion

The court sua sponte sanctioned defendant $10,000 for its unsuccessful early motion for Rule 11 sanctions. "The Court looks with particular skepticism on sanctions motions brought immediately after joining issue and well before any type of discovery has taken place. . . . [U]nder the guise of being an abused party, the Defendant ultimately abused the Court through the excessive filing of 10 briefs and 1,700 pages through which the Court had to wade, only to conclude that neither motion was well-founded. For this reason, and as a means of cautioning future litigants against ill-conceived decisions to immediately move for sanctions as a 'first option,' the Court uses its inherent authority to tax a portion of the costs of responding to and defending [defendant's] motion against the Defendants."

Syneron Medical Ltd. v. Viora Ltd. et al, 2-14-cv-00639 (TXED December 12, 2014, Order) (Gilstrap, J.)

Contentious and Unprofessional Discovery Conduct Risks Attorney Ban and Close of Discovery for that Side

The court denied without prejudice the parties' discovery motions and warned counsel that attorneys who did not behave professionally would be banned from discovery and that discovery for that side could be closed altogether. "The court . . . chastised both sides for the contentiousness and unprofessionalism that has marred discovery in this case, particularly the depositions. Both sides are at fault and the attorneys for both sides must change their behavior significantly and immediately. . . . This is particularly important during depositions: no repetitive questioning, no badgering witnesses, no speaking objections, 100% Marquess of Queensbury Rules. . . . [I]n any further discovery concern flagged for the court, the court will ban from any further participation in discovery the offending attorney, regardless where that attorney fits into the hierarchy. The court is the sole judge of what constitutes offending conduct and its threshold in this case now is particularly low. The court further warned that if it then finds a second incident of offensive discovery conduct on either side, the court will completely close discovery for that side. This is not an idle threat, it is a just order under Rule 37(b)(2)(A) and every lawyer involved in this lawsuit must read this order and abide by it."

US Water Services, Inc. v. Novozymes A/S et al, 3-13-cv-00864 (WIWD December 11, 2014, Order) (Crocker, M.J.)

Contrary Construction in Reexamination No Basis for Reconsideration of Court’s Claim Construction

Following an ex parte reexamination of the patent-in-suit, the court denied plaintiff's motion to reconsider claim construction and vacate a related summary judgment order. "Although [plaintiff] concedes that its proposed course of action would result in disrupting litigation which has relied, for eight years, on the 2006 Markman Ruling, it nevertheless contends that 'reconsideration would promote judicial economy and efficiency' because 'reversal [of the 2006 Markman Ruling] is likely.' The Court disagrees. . . . [P]ut simply, the PTO Ruling is not binding on this Court, nor is it binding on the Federal Circuit. . . . [Plaintiff] has repeatedly sought -- and has been repeatedly denied -- reconsideration of the 2006 Markman Ruling based on the contrary construction in [another case involving the same patent]. The fact that the PTO Ruling is apparently consistent with [that other case] does not alter the Court's conclusion about whether reconsideration is warranted, nor does it undermine the soundness of the 2006 Markman Ruling."

Enzo Biochem, Inc., et al v. Molecular Probes, 1-03-cv-03816 (NYSD December 10, 2014, Order) (Sullivan, J.)

Delay Seeking Summary Judgment Under Alice Waives Right to Pretrial Determination

The court denied defendant's motion to join a motion for summary judgment by a defendant in a related case addressing lack of patentable subject matter. "Rather than asking to join [the other defendant's] section 101 motion, [movant] made a tactical decision to sit on the sideline while [the other defendant] argued the [Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014)] issue to the Court. . . . Because new Federal Circuit decisions are clarifying the scope of Alice at a rapid rate, the Court plans to hold off on deciding [the other defendant's] motion until closer to [the trial in that case in three months] in order to benefit from any additional appellate guidance. Of course, if the Court ends up granting [the other defendant's] motion, that would render the patent invalid, a ruling from which [movant] would also eventually benefit. . . . By not timely joining the [the other defendant's] motion, [movant] gave up that right to a pretrial ruling even though it can still assert the defense at trial."

RLIS, Inc. v. Cerner Corporation, 3-12-cv-00209 (TXSD December 9, 2014, Order) (Costa, J.)

Over-designation of Documents as Confidential Warrants Discovery Sanctions

The court granted in part plaintiff's motion to sanction defendants for abusing the parties' protective order by designation more than 90% of their production as "outside attorneys' eyes only." "Defendants have produced 226,834 documents totaling 862,280 pages. . . . About 90% of the production has been designated OAEO, and the rest is undesignated. As a result, nearly everything Defendants have produced in discovery is off-limits not only to Plaintiff and Plaintiff’s in-house counsel, but also to the specific corporate officers designated for access to Confidential documents. . . . 90% is an absurd number — made all the more absurd by Defendants’ failure to designate a single document as Confidential but not OAEO. The Court finds that Defendants acted in bad faith by indiscriminately designating nearly their entire production of documents as OAEO."

HealthTrio, LLC v. Aetna, Inc. et al, 1-12-cv-03229 (COD December 5, 2014, Order) (Watanabe, M.J.)

Attorneys’ Fee Motion Filed 55 Days After Mandate Untimely

Following plaintiff's unsuccessful appeal of a stipulated judgment prompted by the court's claim construction, the magistrate judge recommended denying defendant's motion for attorneys’ fees as untimely. "Plaintiff argues that final judgment occurred . . . when the Court docketed the mandate. Defendant filed its motion for attorneys’ fees fifty-five (55) days later. . . . [Rule 54's fourteen-day deadline] does not apply in cases where fees deal with judgments from the Court of Appeals. . . . '[I]n the absence of a statutory or rule-based deadline . . . a general rule of diligence should govern.' Yet, the [Seventh Circuit] also noted 'anything within 30 days shows reasonable diligence.' This Court agrees, especially because the procedure is 'complicated and application of the Federal Rules is unclear.' Defendant did not provide any explanation for why it took fifty-five days to file its motion for attorneys’ fees. The Court finds that fifty-five days is not reasonably diligent. Accordingly, the Court finds that Defendant’s motion is untimely and should be denied."

HowLink Global LLC v. Centris Information Systems, LLC et al, 4-11-cv-00071 (TXED December 5, 2014, Order) (Mazzant, M.J.)

Kilpatrick FOIA Request Sheds Light on SAWS

According to Tech Columnist Alyssa Bereznak, Kilpatrick Townsend & Stockton recently obtained a 50-page document via FOIA that reveals information concerning the PTO’s Sensitive Application Warning System (SAWS). According to Bereznak:

Any application that is categorized in SAWS . . . is placed in a special type of patent purgatory. SAWS-marked patents must be approved by anywhere from three to nine people and can be delayed for years. There is no official channel to notify an applicant once her patent is placed in the system, and the Patent Office has denied requests to divulge what applications are on the SAWS list.

Read the entire article with links to the FOIA produced documents here.

Attorneys’ Fees Awarded for Misrepresentation of Terminal Disclaimer and Other Litigation Mistakes

Following summary judgment of invalidity, the court granted defendant's motion for attorneys’ fees and non-taxable costs under 35 U.S.C § 285 because of plaintiff' litigation tactics. "[Plaintiff's counsel] blindly adopted and filed a complaint drafted (but not filed) by another firm, . . . misrepresented that a terminal disclaimer had been filed when no such terminal disclaimer existed, demanded $977.3 million in reasonable royalties, ignored [defendant's] repeated warnings about . . . obviousness-type double patenting, . . . waited nearly a year into the lawsuit to finally admit that no terminal disclaimer had been filed, and sandbagged [defendant] at the tutorial by introducing a new, untimely 'distinction' based on phrases not appearing in the asserted patent. . . . [Plaintiff's] validity position was unsupported by the record, especially given that no terminal disclaimer was ever filed (a fact it should have known before the lawsuit was filed) and its expert witness only opined that the asserted claim was 'different and broader' than the claims in the earlier [patent]. . . . Considering the totality of circumstances, this order finds that this action was litigated in a wholly unreasonable manner and it stands out from the others with respect to the substantive strength of [plaintiff's] litigation position. This is an exceptional case."

Logic Devices Incorporated v. Apple, Inc., 3-13-cv-02943 (CAND December 4, 2014, Order) (Alsup, J.)

Quarter-Hour Billing Increment Justifies 20% Reduction in Fee Award

The court partially granted plaintiffs' motion for sanctions but reduced the award by 20% to account for overbilling attributable to quarter-hour billing increments. "Defendants claim that Plaintiffs’ practice of billing in quarter-hour increments artificially inflates their hours, and that courts in the Ninth Circuit have criticized that practice for its tendency to cause excessive billing. . . . Plaintiffs’ quarter-hour billing practice, in general, likely resulted in some requests for excessive hours. For instance, Plaintiffs seek reimbursement for discussions and meetings with co-counsel, drafting an email to co-counsel, participating in conference calls with co-counsel, and attending a client conference. These activities . . . likely took only a fraction of the time billed."

Zest IP Holdings, LLC, et al v. Implant Direct MFG, LLC, et al, 3-10-cv-00541 (CASD December 3, 2014, Order) (Curiel, J.)

Evidence of Plaintiff’s Attempt to Retain Defendant’s Damages Expert Precluded

The court granted plaintiff's motion in limine to preclude any reference to plaintiff's attempt to retain defendant's expert. "Unbeknownst to [plaintiff], Defendants retained . . . [their] expert to evaluate and analyze damages relating to [plaintiff's] infringement claims. . . . [Plaintiff] subsequently contacted [that expert] regarding the possibility of serving as a damages expert in this lawsuit, and [he] informed [plaintiff] that he had a conflict. . . . Defendants argue that [the expert's] experience and reputation are important factors that a jury will consider in deciding whether to accept his conclusions, and thus [the expert's] prior experience with [plaintiff's] counsel is probative of his credibility as a witness, and should be considered by the jury. . . . The fact that [plaintiff] attempted to retain [defendant's expert] as a damages expert before retaining [its own expert] is not relevant to any claims or defenses. The possibility of misleading and confusing the jury and wasting the Court’s time outweighs any probative value of [plaintiff's'] initial attempt to retain [defendant's expert]."

mophie inc v. Dharmesh Shah et al, 8-13-cv-01321 (CACD December 2, 2014, Order) (Gee, J.)

BPCIA Precludes Declaratory Relief Claim of Invalidity by Biosimilar Drug Applicant

The court granted defendant's motion to dismiss plaintiff's declaratory relief action because of the statutory dispute resolution under the Biologics Price Competition and Innovation Act. "Even if the Court were to find that [plaintiff] had engaged in sufficient meaningful preparation to market [its drug] and that the threat of injury was sufficiently demonstrable, the Court would still exercise its discretion to decline to hear this case in light of the existence of the BPCIA statutory framework for the resolution of patent disputes in the licensing of biosimilars. . . . The BPCIA purposefully keys its dispute resolution procedures to the occurrence of certain events on the path to FDA approval. [Plaintiff] has failed to show why this carefully crafted and well-timed procedure should be avoided here."

Celltrion Healthcare Co., Ltd. et al v. The Kennedy Trust for Rheumatology Research, 1-14-cv-02256 (NYSD December 1, 2014, Order) (Crotty, J.)

Arbitration Agreement Enforceable by Nonparty Defendant

The court granted defendant's motion to compel arbitration and dismiss plaintiff's infringement action and rejected the argument that defendant could not seek arbitration because it was not a party to the arbitration agreement. "[A]lthough [defendant] did not sign the License Agreement, it has 'consented to arbitrate' by seeking arbitration in the pending case. The Second Circuit has recognized that a defendant who was not a party to the original arbitration agreement has 'created a separate binding agreement to arbitrate' the dispute 'by consenting to arbitration.'. . . A non-signatory 'seeking to compel a signatory to arbitrate a dispute' can do so through 'the principle of equitable estoppel" . . . [T]he issues that [defendant] seeks to arbitrate and that Plaintiff seeks to litigate are intertwined with the License Agreement. . . . Because the parties' disputes arise directly out of and are closely related to the License Agreement, Plaintiff 'should be estopped from denying an obligation to arbitrate a similar dispute with the adversary which is not a party to the arbitration agreement.'"

Kastner v. Vanbestco Scandanavia, AB et al, 5-14-cv-00141 (VTD November 25, 2014, Order) (Reiss, J.)

Expert’s Failure to Apportion Damages Requires New Trial

The court granted in part defendant's motion to reconsider an earlier order denying defendant's motion for new trial and granted a new trial on damages. "[Defendant] has shown good cause for reconsideration on the issue of damages, given the Federal Circuit’s recent clarification of the law with respect to the calculation of a reasonable royalty. See Virnetx, Inc. v. Cisco Sys., Inc., 767 F.3d 1308 (Fed. Cir. 2014) . . . [Plaintiff's damages expert] was obligated to apportion the royalty solely to the patented features. [Plaintiff's expert] expressly acknowledged his royalty calculation did not include such apportionment. . . . [Plaintiff's] argument that VirnetX does not require apportionment where the expert calculates a royalty based on the 'expected harm' to the patentee overlooks the Federal Circuit’s clear directive therein that '[n]o matter what the form of the royalty, a patentee must take care to seek only those damages attributable to the infringing features" . . . Without the requisite apportionment, the jury lacked sufficient evidence on which to base its damages award, and, consequently, a new trial on the issue of damages is appropriate."
Power Integrations, Inc. v. Fairchild Semiconductor International, Inc., et al, 3-09-cv-05235 (CAND November 25, 2014, Order) (Chesney, J.)

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When do district courts grant new trials on damages?

Since 2008, district courts have granted or partially granted motions for new trial on damages only eight times. In three of the cases the winning party was given the choice between remittitur or a new trial. One case was largely procedural, involving a remand from the Federal Circuit. The others focus on a lack of evidence supporting the verdict, a change in the law, or flawed expert analysis. To view the eight orders click here.