Defendant Not Barred From Seeking Lump Sum Royalty Damages as Alternative to Ongoing Royalty or Injunction

The court denied plaintiff's motion in limine to preclude defendant from asking the jury to award lump sum damages. "[Plaintiff] contends that [defendant] should be precluded from asking the jury to award damages in the form of a fully paid-up lump sum covering the life of the patents-in-suit because that outcome would preclude [plaintiff] from seeking an injunction or post-verdict ongoing royalties. According to [plaintiff], this would improperly allow the jury to decide equitable issues. Although the Court agrees that a lump-sum award might foreclose additional relief, there is no doubt that a fully paid-up lump sum is an allowable form of damages. . . . The possibility that the jury’s decision may affect [plaintiff's] claim for equitable or injunctive relief is no basis for taking that decision out of the jury’s hands. . . . The solution to [plaintiff's] concern is not to bar [defendant] from seeking a lawful lump sum royalty rate but to prove to the jury that the proper measure of damages in this case is a running royalty."

Open Text SA v. Box, Inc. et al, 3-13-cv-04910 (CAND January 28, 2015, Order) (Donato, J.)

33% Success Rate for §101 Motions to Dismiss

Prior to 2010, §101 invalidity defenses were not asserted at the pleading stage via a Rule 12(b)(6) motion. In 2010, Bilski v. Kappos, 130 S.Ct. 3218 (2010) opened the door for such motions with two being denied and one granted that year. In 2014, district courts considered fifteen §101 motions to dismiss, but denied or partially denied two-thirds. While several courts denied the motions because the claims did not appear to involve unpatentable subject matter, the more common basis for denial was a lack of a fully developed factual record or claim construction.

Click here to view a Motion Success Report for §101 motions to dismiss.
Click on portions of the chart to view the underlying orders.

Financial Product Price Quote Patent Invalid Under Alice

The court granted defendants' motions to dismiss plaintiff's infringement action for lack of patentable subject matter and found the abstract idea in plaintiff's financial product price quote patent was not limited by an inventive concept. "The [patent-in-suit] does precisely what . . . is fatal to many computer-based patents: 'recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet.' The generation of price quotes for financial products is undeniably a pre-Internet concept. . . . [Plaintiff's] contention that it is solely offering an 'improvement' to overcome a purely technical problem is belied by the broad, non-limited claim language. . . . The court's holding is bolstered by [plaintiff's] own repeated use of language concerning 'scalability.'. . . But this is the exact same role computers play in many cases involving abstract, non-patentable ideas."

The Money Suite Company v. 21st Century Insurance and Financial Services Inc., et al, 1-13-cv-00984 (DED January 27, 2015, Order) (Sleet, J.)

Infringement Contentions May Not Qualify Priority Date With “No Later Than”

The court granted defendant's motion to strike plaintiff's infringement contentions regarding an open-ended priority date. "[Plaintiff] asserts that 'each asserted claim of the patents-in-suit [is] entitled to a priority date no later than September 7, 2000.' [Defendant's] concern is that [plaintiff] may use the 'no later than' language to assert a much earlier priority date further down the line in this litigation — as it appears [plaintiff] has done in [related cases]. [Plaintiff] does not address this argument in its opposition, nor did it meaningfully respond to it during oral argument. Accordingly, the language 'no later than' shall be stricken from the AICs without leave to amend. The asserted priority date is September 7, 2000."

Blue Spike, LLC v. Adobe Systems, Inc., 4-14-cv-01647 (CAND January 26, 2015, Order) (Corley, M.J.)

Success Rates for Daubert Motions Challenging Experts’ Methodology

Since 2008, U.S. district courts have ruled on 278 Daubert motions challenging an expert’s methodology in patent infringement cases. The number of orders has increased steadily from 16 in 2008 to 90 in 2014. In 2014, exactly 50% were denied.
Click here to view a Motion Success report for these motions.

Expert’s “Petal-Plucking Exercise” Warrants Exclusion of Comparable Licenses

The court granted defendants' motion to exclude the testimony of plaintiff's damages expert regarding non-comparable licenses. "[The expert's] thinking here is hard to follow. She identifies five documents as the core of the market analysis approach, then disclaims any reliance on them, then says they are nevertheless suggestive of a reasonable royalty range, and then discards that range from use in her final damages number. This 'I like it -- I like it not' petal-plucking exercise is hardly the grist of admissible expert opinion. . . . This testimony bar applies across the board, including any attempt to mention the non-comparable licenses as 'background' evidence. [Plaintiff's] and [its expert's] unwillingness to say that she relied on the licenses -- apparently based on a recognition that they would not qualify as comparable licenses under the Federal Circuit’s precedents -- leaves no room for some sort of soft or 'suggestive' reliance."

Open Text SA v. Box, Inc. et al, 3-13-cv-04910 (CAND January 23, 2015, Order) (Donato, J.)

Patent Employing Mathematical Formula for Real-Time Traffic Tracking Not Invalid Under Alice

The court denied without prejudice plaintiff's motion for a preliminary injunction precluding the sales of defendant's traffic sensor products, but rejected defendant's argument regarding lack of patentable subject matter. "Claiming the [patent-in-suit] is . . . directed at an abstract process generically implemented, [defendant] contends 'a human with no more than a high-school level education can readily accomplish each of the steps taught [by the patent-in-suit] with nothing more than a paper and a pencil.' The Court disagrees, and is unpersuaded [Alice Corporation v. CLS Bank International, 134 S. Ct. 2347 (2014)] is applicable to this case. Merely employing a mathematical formula does not render a claimed method unpatentable where the method improves upon an existing technological process, and the evidence presently before the Court indicates the [patent-in-suit] significantly improved upon existing technological processes for providing dilemma zone protection. Some previous purported solutions, for example, were based upon virtual loops or physical loops buried in the ground, and did not really solve the problem. . . . [Plaintiff] improved upon those solutions by devising a process which by making use of a mathematical formula enables accurate real-time tracking of vehicles as they approach an intersection."

Wavetronix LLC v. Iteris, Inc., 1-14-cv-00970 (TXWD January 22, 2015, Order) (Sparks, J.)

Data Storage and Digital Content Access Patents Not Invalid Under Alice

The magistrate judge recommended denying defendants' motion for summary judgment that plaintiff's data storage and digital content access patents were invalid for lack of patentable subject matter because they addressed unique problems unknown in the pre-internet world. "[T]he patents here do not simply apply a known business practice from the pre-Internet world to computers or the Internet. . . . Piracy of digital content became widespread through means unknown to the pre-Internet world. The patents claim methods and systems designed to prevent such easy and unauthorized reproduction and access while allowing the access to be nearly instantaneous and the storage to be permanent. The patents also address the unique problem of controlling a user’s access to data that the user already possesses by tracking use data and restricting access according to use rules. This sort of access control was also unknown in the pre-Internet era, even though Defendants’ expert opined that the patents can be likened to ordering a DVD over the telephone. . . . [T]he claims solve problems faced by digital content providers in the Internet Era and 'improve the functioning of the computer itself' by providing protection for proprietary digital content."

Smartflash LLC et al v. Apple Inc. et al, 6-13-cv-00447 (TXED January 21, 2015, Order) (Mitchell, M.J.)

Groupware System and Integrated Circuit Design Patents Invalid Under Alice

The court granted defendant's motion for judgment on the pleadings that plaintiff's groupware system patents were invalid for lack of patentable subject matter. "The common specification of the five [patents-in-suit] describes the unremarkable concept of people working together on a project. . . . [T]his concept existed well before the invention of the [patents]. . . . The problem with the asserted claims is that their core concept is inherently abstract, and their implementation, which consists of standard technology like browsers, servers, and networks, has nothing inventive whatsoever about it."

Open Text SA v. Box, Inc. et al, 3-13-cv-04910 (CAND January 20, 2015, Order) (Donato, J.)

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The court granted defendant's motion for summary judgment that plaintiff's integrated circuit patents were invalid for lack of patentable subject matter and rejected plaintiff's argument that the patents contained an inventive concept. "[I]n an effort to demonstrate the requisite 'inventive concept,' [plaintiff] first points to the lack of any reference to the claimed methods in the prior art. [Plaintiff's] reliance on a lack of prior art is misplaced, however. . . . Similarly unavailing is [plaintiff's] argument that the asserted claims do not 'pose a risk of preemption,' as logic synthesis can be performed 'without using assignment conditions.'. . . [T]he asserted claims do preempt a building block of human ingenuity, a mental process, albeit a specific one. . . . The fact that previously a designer would not have followed the exact same thought process does not change the analysis. A method primarily designed for use by a computer is, almost by definition, going to differ from the manner in which a natural person thinks through a problem."

Synopsys, Inc. v. Mentor Graphics Corporation, 3-12-cv-06467 (CAND January 20, 2015, Order) (Chesney, J.)

CAD/CAM Data Importation Patents Invalid Under Alice

The court granted defendant's motion for summary judgment that plaintiff's CAD/CAM data importation patents were invalid for lack of patentable subject matter and found that the claims were directed to the abstract idea of mapping without an inventive concept. "[A]n inventive concept is, among other things, a new idea that solves a recognized problem in a particular field of endeavor. . . . Moreover, the inventive concepts in [earlier decisions] each involved an innovation that allowed a user of the invention to achieve a better result, rather than a result that was achieved more quickly due to the replacement of direct human activity with a computer. . . . Without a disclosure of how the invention does what it does, neither the specification nor the claim identifies an inventive concept. Rather, the patent merely recites the use of a generic computer to perform generic computer operations, and that is not enough to establish an inventive concept."

East Coast Sheet Metal Fabricating Corp. d/b/a EastCoast CAD/CAM v. Autodesk, Inc., 1-12-cv-00517 (NHD January 15, 2015, Order) (McCafferty, J.)

80% Success Rate for Summary Judgment of Invalidity on § 101 Issues in 2015

Since the beginning of the year, district courts have ruled on 5 motions for summary judgment of invalidity on § 101 issues. Four were granted, resulting in an 80% success rate. In 2011, the success rate was 37.5%. To view success rates over time, check out Docket Navigator’s new Motion Success report here.

“Difficult Burden” for Inequitable Conduct Justifies Second Deposition of Prosecution Counsel

The court granted defendants' motion to compel a second deposition of plaintiff's original patent counsel and produce documents withheld as work product because of defendants' difficult burden under Therasense. "[Counsel] already has been deposed, but his deposition took place before the court entered its orders addressing work product issues and the defendants’ entitlement to discovery surrounding their inequitable conduct claims. . . . [W]ork product objections to questions asked [counsel] and requests for the production of documents have unfairly limited [defendants'] discovery of information that may be critical to their inequitable conduct theories. . . . Given the especially difficult burden imposed under Therasense, Inc. v. Becton, Dickinson and Co., 649 F.3d 1276 (Fed. Cir. 2011), and in light of the information the defendants have presented to date surrounding their inequitable conduct theories, the court finds it reasonable to permit the defendants to take a second deposition of [counsel] and to require him to produce documents originally withheld solely on work product grounds."

ICM, Inc. v. GS Cleantech Corporation et al, 1-10-cv-08000 (INSD January 15, 2015, Order) (Lynch, M.J.)

Daimler Does Not Preclude General Jurisdiction Based on Compliance With Delaware’s Business Registration Requirement

Reaching a different conclusion than Judge Sleet, Judge Stark denied defendants' motion to dismiss plaintiff's ANDA infringement action against a parent defendant for lack of personal jurisdiction and rejected the argument that Daimler AG v. Bauman, 134 S. Ct. 746 (2014) precluded the court's the exercise of general jurisdiction over this, "and likely all," ANDA suits. "While Daimler altered the analysis with respect to general jurisdiction - and the Court agrees with [defendant] that this Court cannot exercise general personal jurisdiction over either of the [defendants] on the basis that they are 'at home' in Delaware - Daimler does not change the fact that [the subsidiary defendant] consented to this Court's exercise of personal jurisdiction when it registered to do business and appointed an agent for service of process in the State of Delaware. . . . With respect to [the parent defendant], the Court lacks general jurisdiction, as [it] is neither 'at home' nor registered to do business in Delaware. However, Plaintiffs allege but have not proven a non-frivolous claim that [the parent] used [the subsidiary] as its agent in connection with the ANDA filing giving rise to this litigation. Therefore, the Court will permit Plaintiffs to take jurisdictional discovery of [the parent's] relationship with [the subsidiary] and with the ANDA filing at issue in this case. . . . The undersigned Judge is aware, of course, that a fellow member of this Court has reached a contrary conclusion on this point. . . . Judge Sleet's rejection of consent as a basis for general jurisdiction over [defendant] is well-reasoned and may well be the correct view. Nevertheless, for the reasons explained in this Opinion, the undersigned Judge has reached a different conclusion."

Acorda Therapeutics Inc. et al v. Mylan Inc. et al, 1-14-cv-00935 (DED January 14, 2015, Order) (Stark, J.)

Anonymous Loan Shopping Patents Invalid Under Alice

The court granted defendant's motion for summary judgment that plaintiff's anonymous loan shopping patents were invalid for lack of patentable subject matter. "[T]he claims are directed to the idea of allowing users to assess their borrowing ability without revealing their identities to the lenders until they wish to do so. . . . [T]he Court agrees that the claims lack an 'inventive' concept sufficient to transform that abstract idea into a patentable invention. . . . Nothing in the [patent’s] claims 'purport[s] to improve the functioning of the computer itself.' They do not 'effect an improvement in any other technology or technical field.'. . . Nor do the claims solve a challenge particular to the internet. . . . Nor are the claims adequately tied to 'particular machines.'"

Mortgage Grader, Inc. v. Costco Wholesale Corporation et al, 8-13-cv-00043 (CACD January 12, 2015, Order) (Guilford, J.)

Other Grounds for § 1927 Sanctions Against Counsel

Over the years, courts have levied 28 U.S.C. § 1927 sanctions against counsel in patent cases for several different types of conduct, including: misleading discovery, overzealous motion practice, pursuing claims known to be baseless, making factual representations without knowledge of their accuracy, and failing to correct false statements or testimony.
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Plaintiff's Counsel Jointly Liable for Attorneys’ Fees and Costs Under § 1927 Due to Inferred Knowledge of Inventor's False Statements

The court granted in part defendants' motion to sanction plaintiff's counsel under 28 U.S.C § 1927 after counsel failed to produce discovery regarding the inventor's multiple false statements about his reduction to practice of the invention. "After it clearly appeared that [the inventor] knew of his false statements, it was ruled that no attorney-client privilege prevented discovery of all facts and documents relating to the trial of inequitable conduct. Nevertheless [plaintiff's counsel] has not produced all of the documents sought, claiming relevancy as to some and that some documents are in the possession of [plaintiff]. [Defendant] is correct that these reasons are insufficient and warrant a conclusion that the withheld documents would support [its] position. . . . Relying on the adverse inference to be drawn from [counsel's] failure to disclose documents, it is found that [counsel] was aware of the false statements prior to the filing of the present lawsuit. Therefore, [counsel] is liable for all reasonable attorney fees and expenses incurred by [defendants], not just those incurred after [a post-filing] email from [the inventor] to [plaintiffs' counsel]. The false presentation of [the inventor's] activity and knowledge justifies making [counsel] jointly and severally liable with [plaintiff] for attorney fees and costs."

Intellect Wireless, Inc. v. HTC Corporation, et al, 1-09-cv-02945 (ILND January 8, 2015, Order) (Hart, J.)

Defendant’s False Representation as to Use of Source Code Triggers Crime-Fraud Exception Requiring Production of Privileged Communications

The court granted in part plaintiff's motion to compel the production of privileged documents under the crime-fraud exception to determine whether source code asserted as a defense to plaintiff's infringement claims was fabricated. "[Plaintiff] seeks discovery of a wide variety of documents and communications in an effort to determine if [defendant] fabricated [the source code] and falsely represented that it was created in the normal course of product development. . . . The Court has already found by a preponderance of the evidence that [defendant] falsely claimed that (1) [certain source code] was the current operating source code for [defendant's] commercially sold products; (2) [the source code] provided a complete defense to [plaintiff's] infringement challenges; and (3) [defendant] had produced all the source code. This is just the type of fraud that opens up all communications related to [that source code] to discovery. . . . [Defendant] claimed that it created that source code in the normal course of product development. But that claim is naturally called into question by the fraudulent way that [defendant] portrayed [the source code] as a complete defense. . . . [T]he Court will compel [defendant] to produce all communications and documents that mention or relate to [that source code]. This includes not only communications between [defendant] and its counsel, but also material that counsel prepared, as . . . even work product is discoverable under this exception."

Fleming v. Escort, Inc., et al, 1-12-cv-00066 (IDD January 9, 2015, Order) (Winmill, J.)

Claims Directed to Achieving “Optimal Upgrade” for Airline Customers Invalid Under Alice

The magistrate judge recommended granting defendant's motion for summary judgment that plaintiff's value optimization patents were invalid for lack of patentable subject matter and found that the claims were directed to an abstract idea without an inventive concept. "The concept of using a computer to "optimize revenue generation based on interactions between air carriers and their customers based on their relative perception of value regarding certain product enhancement options that are based on and dictated by unknown future events," has no concrete or tangible form. . . . Although certain dependent claims restrict the field of use to the airline industry, this limitation is insufficient to establish patent eligibility under § 101. . . . An airline's capacity to track variables, including the preferences of multiple passengers, flight availability, and the perceived value for an upgrade option, is not an inventive concept. Like the risk hedging in Bilski, and the concept of intermediated settlement in Alice, the concept of using a computer to optimize negotiations between an airline and its customer, to each obtain the best economic results given certain conditions, is 'a fundamental economic practice long prevalent in our system of commerce.'"

Tenon & Groove LLC et al v. Plusgrade SEC et al, 1-12-cv-01118 (DED January 6, 2015, Order) (Fallon, M.J.)

Assignor Estoppel Defense No Basis For Denying Stay Pending IPR

The court granted defendant's motion to stay pending its petition for inter partes review and rejected plaintiff's assignor estoppel argument. "[Plaintiff] argues that it will be tactically disadvantaged by a stay because it will be unable to promptly take discovery on and litigate its defense that 'an assignor and parties in privity with the assignor are estopped or barred from asserting invalidity defenses.'. . . [Plaintiff] argues that it will be tactically disadvantaged if the case is stayed in favor of IPR because it will be prevented from litigating its assignor estoppel theory in this case first, and it will be unable to develop a record on the issue of assignor estoppel to present to the Federal Circuit or the Supreme Court on review of any unfavorable PTAB decision following the IPR in light of the limited discovery allowed in IPR proceedings. . . . [Plaintiff] cannot reasonably claim to be 'tactically disadvantaged' in this litigation by a statutory framework which limits the issues authorized by Congress to be raised in IPR proceedings or the discovery allowed to be taken in such proceedings."

Roche Molecular Systems, Inc. v. Cepheid, 3-14-cv-03228 (CAND January 7, 2015, Order) (Laporte, M.J.)

“Nearly Incomprehensible” Pleading Insufficient to State Inequitable Conduct Claim

The court granted plaintiffs' motion to dismiss defendants' inequitable conduct claims. "[Defendants'] recitation of facts makes for impenetrable reading. The allegations of inequitable conduct are about two and one-half times the length of a principal opening brief in the courts of appeals [14,000 words]. It does not appear that there was any effort made to tell a comprehensible story. [Defendants'] attorneys, apparently aware that the inequitable conduct allegations are nearly incomprehensible, try to rehabilitate the pleading with a mixture of underlining and the use of bold, italic, and bold italic fonts. It is as if [defendant] has dumped a pile of garbage in front of me, saying that there is a golden ring in the garbage, while directing my attention to various flashing colored lights, the point of which is unexplained."

Unimed Pharmaceuticals LLC et al v. Perrigo Company et al, 1-13-cv-00236 (DED January 6, 2015, Order) (Andrews, J.)

Data Structure for Linking Data is Abstract Idea

The court granted defendants' motion for summary judgment that plaintiff's network document management patents were invalid for lack of patentable subject matter and found that the claims were drawn to an abstract idea. "[Plaintiff] argues that [the claims at issue in Alice Corp. Pty. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014), and buySAFE, Inc. v. Google, Inc., 765 F.3d. 1350, 1355 (Fed. Cir. 2014)] are fundamentally different from [the patents-in-suit], which 'narrowly claim a specific type of data structure for linking data' . . . namely the 'link relationships' and 'link directories' in which link relationships are stored separately from a document object and relate documents objects to one another. . . . [Plaintiff] relies upon a narrow interpretation of the term 'abstract idea.' Abstract ideas are not limited to 'fundamental truths,' 'fundamental economic practices,' or 'basic tools of scientific and technological work.'. . . Allowing users to generate relationships between document objects and storing those relationships separately from the document objects simply describes the abstract idea of creating, storing and using relationships between objects. As defendants illustrate at length, the concept of establishing and using relationships between documents is a common, age-old practice. Courts have found similar 'commonplace and time-honored practices' to be abstract ideas."

Bascom Research, LLC v. Facebook, Inc., 3-12-cv-06293 (CAND January 5, 2015, Order) (Illston, J.)

Cancelled Independent Claim Must Be Considered in Determining § 101 Patentability of Dependent Claim

The court denied defendants' motion for summary judgment that plaintiff's casino patents were invalid for lack of patentable subject matter because defendants failed to consider independent and dependent claim terms as a whole. "The question . . . is whether the additional system elements of claim 1, considered as a whole together with the material of the dependent claims, are sufficient to transform the dependent claims into patent-eligible subject matter. But because Defendants incorrectly argue that the Court should ignore the elements of the cancelled independent claims, Defendants have not accounted for either (1) the majority of the elements of the challenged claims, or (2) the claims as a whole. . . . [I]t is . . . possible that the computer system elements combine to provide a sufficient 'inventive concept' beyond the abstract idea. This is a motion for summary judgment. . . . This burden of production is especially high here, where the movant is seeking to have patent claims invalidated. . . . Defendants provide no analysis for the majority of the elements of the challenged claims, instead relying only on USPTO reexamination proceedings unrelated to 35 U.S.C. § 101 to argue that those elements are not patent-eligible."

Ameranth, Inc. v. Genesis Gaming Solutions, Inc. et al, 8-11-cv-00189 (CACD January 2, 2015, Order) (Guilford, J.)

Defendant’s Failure To Appeal In Lieu Of Redesign Does Not Justify Attorneys’ Fee Award

The court denied plaintiff's motion for attorneys’ fees under 35 U.S.C. § 285 following summary judgment, a damages trial, and an appeal. "It was . . . objectively reasonable for [defendant] to defend the litigation on the grounds that it believed those patents to be invalid, particularly given the crowded field of patents for snowplows and snowplow attachments. Indeed, [defendant's] claims of invalidity with respect to [one patent-in-suit] survived summary judgment and went to trial. . . . The mere fact that [defendant] chose not to appeal the infringement findings with respect to those two patents, electing instead to redesign its assembly, is not enough to render this case 'exceptional.'"

Douglas Dynamics, LLC v. Buyers Products Company, 3-09-cv-00261 (WIWD December 31, 2014, Order) (Conley, J.)

Settlement Privilege Does Not Apply to Past Licenses

The court granted in part plaintiff's motion to compel further damages discovery. "Plaintiff seeks discovery of information relating to seven licenses, two of which have been relied upon by Defendants’ damages expert for the purpose of calculating a reasonable royalty. . . . [T]he Federal Circuit [has] discussed the Sixth Circuit’s ruling . . . adopting a settlement privilege but declined to adopt such a privilege for patent litigation. . . . In light of the foregoing Plaintiff’s request for discovery is not barred by a settlement privilege nor is there a heightened standard for discovery of documents relating to settlement negotiations. . . . Although certain communications relative to settlement negotiations may be attorney-client communications and/or attorney work-product, at this juncture the Court cannot assume that all of the settlement communications pertaining to Defendants’ licenses are protected by attorney-client privilege and/or attorney work-product. Indeed, that would seem unlikely since communications between the parties to the licenses, or between the parties’ representatives, would not be privileged. . . . The fact that Defendants are relying on only some of the six licenses does not negate the relevance of the license agreements not relied upon by Defendants."

01 Communique Laboratory, Inc. v. Citrix Systems, Inc., 1-06-cv-00253 (OHND December 29, 2014, Order) (Burke, M.J.)