Expert Opinion as to Meaning of Claim Term Excluded as Improper Claim Construction ​

The court granted in part plaintiff's motion to exclude the testimony of defendants' noninfringement expert because the expert engaged in claim construction. "In his report, [the expert] opines that the term 'support member,' which is included in claim 6 of the [patent], is synonymous with the term 'plate member'. . . . [His] proposed definition for 'support member' is not based on his technical expertise, but rather, on an interpretation of the language used in claim 6 of the [patent] in light of the language used in the patent's specification. [The expert] thus appears to be offering 'a classic claim construction determination.' The court concludes that because [the expert's] opinion concerning the meaning of 'support member' is an improper attempt at claim construction, it must be excluded. This does not necessarily mean, however, that Defendants are barred from making an argument about the meaning of the term. Should either side believe that additional claim construction is necessary, a party move for leave to present additional claim terms for construction."

Not Dead Yet Manufacturing, Inc. v. Pride Solutions, LLC et al, 1-13-cv-03418 (ILND November 28, 2016, Order) (Pallmeyer, USDJ)

Expert’s Reliance on Forward Citation Analysis Does Not Render Reasonable Royalty Opinion Unreliable​

The court denied plaintiff's motion to exclude the testimony of defendant's damages expert regarding a reasonable royalty on the ground that forward citation analysis was unreliable. "Forward citation analysis is a method of estimating the value of a particular patent based on the number of times the patent is cited by later patents. . . . [T]he forward citation method of analysis has been recognized in the academic literature as reliable since the 1990s. . . . [C]ourts have not rejected forward citation analysis outright. This Court determines that a single academic paper . . . is not sufficient to rebut decades of literature supporting forward citation analysis."

Comcast Cable Communications, LLC et al. v. Sprint Communications Company LP et al, 2-12-cv-00859 (PAED November 21, 2016, Order) (Dubois, SJ)

“Long-Shot” Motion for Attorney Fees Does Not Warrant Rule 11 Sanctions After Octane​

The court denied plaintiff's motion for Rule 11 sanctions for defendant's unsuccessful motion for attorney fees. "[Defendant's] section 285 motion was quite light on support. However, the court finds an award of attorneys’ fees to [plaintiff] as a sanction inappropriate for the following reasons. First, after [Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014)], long-shot section 285 motions appear to be quite common. It would be difficult to sanction [defense] counsel for following the well-trodden road of seeking to extend the law under Octane’s somewhat amorphous equitable factors. Second . . . [plaintiff's] decision to not serve a Rule 11 letter to [defendant] before trial somewhat undermines its persuasiveness as to the section 285 motion because it causes the Rule 11 motion to verge on appearing 'simply an effort to extract some measure of revenge.'. . . It is not plain that awarding [plaintiff] attorneys’ fees would more efficiently deter frivolous section 285 motions better than the attorneys’ fees that [defendant] itself incurred on briefing a fruitless section 285 motion and opposing the Rule 11 motion."

Hach Company v. In-Situ, Inc., 1-13-cv-02201 (COD November 22, 2016, Order) (Shaffer, MJ)

Patent for Reducing Signal Interference on Mobile Devices Not Invalid Under 35 U.S.C. § 101​

The court denied defendants' motion to dismiss on the ground that one of plaintiff’s patents for reducing signal interference on mobile devices encompassed unpatentable subject matter because the asserted claims were not directed toward an abstract idea. "[Defendant] argues that the [patent] is directed to a mathematical equation because its claimed advance over the prior art is the inclusion of a specific set of 16 cyclic shift intervals, which [defendant] deems 'math.'. . . [T]he [patent] claims are directed to a specific improvement in cellular communications, and not an abstract idea or mathematical formula. . . . While the improvement necessarily relies on math because the low signal overload depends on the limited set of cyclic shift intervals, itself derived from mathematical equations and variables dictated by a cell’s size, that reliance does not render it ineligible for a patent. . . . The [patent] does not attempt to claim a mathematical formula. It discloses a method that uses a predefined set of numbers -- itself derived from an equation, but not occurring in the natural environment -- to enable a mobile device to more efficiently synchronize with a base station. This advance entails more than an abstract idea or 'just math.'"

Huawei Technologies Co., Ltd. et al v. Samsung Electronics Co., Ltd. et al, 3-16-cv-02787 (CAND November 21, 2016, Order) (Orrick, USDJ)

Expert’s Use of Aspirational Royalty Rates No Basis for Excluding Testimony​

The court denied defendant's motion to exclude the testimony of plaintiff's damages expert as unreliable because it was based on aspirational royalty rates. "[Defendant] argues that [plaintiff's expert] cannot use [the] announced and demanded royalty rates [of a company acquired by defendant] because they are simply [the company's] aspirational rates. This argument attacks the credibility of [the expert's] inputs and conclusions, not his methodology. The Court denies the motion and finds that [defendant] can sufficiently address its concerns through cross-examination."

Core Wireless Licensing S.a.r.l. v. Apple Inc., 5-15-cv-05008 (CAND November 18, 2016, Order) (Cousins, MJ)

Judicial Estoppel Does Not Bar Assertion of Invalidity Defenses Raised but not Instituted in IPR​

The court denied plaintiff's motion to strike defendant's amended invalidity contentions due to judicial estoppel because of statements defendant made in obtaining a stay pending inter partes review. "While the Court appreciates [plaintiff's] frustration at having to litigate certain issues that were presented to the PTAB, particularly defenses on which the PTAB declined to institute review based on [defendant's] failure to establish a likelihood of success or because the asserted prior art combinations were redundant in light of other reviewed combinations, the Court cannot ignore the fact that the Federal Circuit has determined that it is appropriate to do so. . . . While the Court and [plaintiff] may have preferred a greater simplification of issues, the IPR proceedings did reduce the number of prior art references and defenses that [defendant] can now raise. . . . At best, the post IPR viability of [defendant's] §§ 102 and 103 defenses in light of [recent] Federal Circuit’s decisions . . . may impact the Court’s decisions going forward regarding whether matters should be stayed pending IPR. It does not, however, convince the Court that [defendant] should be judicially estopped from raising any defenses in this litigation."

Depomed, Inc. v. Purdue Pharma LP et al, 3-13-cv-00571 (NJD November 4, 2016, Order) (Bongiovanni, MJ)

Plaintiff’s Repeated Litigation Misconduct Warrants 35 U.S.C. § 285 Attorney Fee Award​

The court denied plaintiff's motion to reconsider an earlier order awarding attorney fees under 35 U.S.C. § 285 because the case was exceptional. "[Plaintiff] made arguments that were foreclosed by the Court, and [its] conduct before this and other courts strongly suggests [plaintiff's] goal in filing this action was settlement. Alone, these two observations support the Court’s finding that the case is exceptional. In addition, [plaintiff] failed to file final infringement contentions, failed to communicate with [defendant] even after multiple judges warned [plaintiff] about a possible dismissal for want of prosecution, was uncooperative throughout discovery, and failed to engage in meaningful settlement discussions. The Court, in its sound discretion, finds that the totality of the circumstances renders this case exceptional. The Court certainly has never seen another case like it."

Marshall Feature Recognition, LLC v. Wendy's International, Inc., 1-14-cv-00865 (ILND November 16, 2016, Order) (Coleman, USDJ)

Videophone Mailbox Patent Invalid Under 35 U.S.C. § 101​

The court granted defendant's motion for judgment on the pleadings because the asserted claims of plaintiff’s videophone mailbox patent encompassed unpatentable subject matter and found that the claims were directed toward an abstract idea. "The [patent-in-suit] has two main components: a user station having a videophone and an electronically connected central data center. The videophone is an integrated device that includes a telephone, general purpose computer, a video screen, a memory chip, an interface chip, encoders, and means for inputting transaction information. . . . The broad general definition of a 'videophone' in the patent and the prior art indicates that the thrust of the patent is the interactive mailbox facility system, not the videophone itself. . . . Plaintiff argues that the inclusion of tangible components, alone, saves the patent from being abstract. The Federal Circuit has found, however, a number of claims involving tangible components to be abstract. . . . A comparison of the [patent] claims with prior art reveals that the claims focus on the functionality of conducting a transaction and disclose no more than the abstract idea of conducting transactions using conventional computer components, a telephone and centralized data storage."

Visual Interactive Phone Concepts, Inc. v. United States Cellular Corporation, 1-11-cv-05289 (ILND November 15, 2016, Order) (Hart, USDJ)

Patent for Securing a Server by Filtering Unauthorized Communications Not Ineligible at Pleading Stage ​

The court denied defendant's motion to dismiss on the ground that plaintiff’s patent for securing a server by filtering unauthorized communications encompassed unpatentable subject matter because defendant did not establish that the asserted claims lacked an inventive concept. "[T]he [patent’s] claims describe 'how its particular arrangement of elements is a technical improvement over prior art ways of filtering such content.'. . . Despite the protection that firewalls and routers provide against low level protocols, service provider networks remain susceptible to unauthorized communications from specific application protocols. To remedy this, the [patent] implements a filter between the client and server that identifies and eliminates unauthorized requests. The [patent] tracks authorized or unauthorized requests by maintaining a protocol database 'which may be continuously updated on an ongoing, real-time basis and which more accurately reflects the set of allowable actions.'. . . When combining Claims 1, 15, 25, and 26, along with the related dependent claims, and construing these in favor of [plaintiff] as required at this stage in the litigation, the Court finds that the [patent] 'recite[s] a specific, discrete implementation of the abstract idea of filtering content.'"

F5 Networks, Inc. v. Radware, Inc., 2-16-cv-00480 (WAWD November 14, 2016, Order) (Jones, USDJ)

Video Content Distribution Patents Invalid Under 35 U.S.C. § 101​

The court granted defendant's motion to dismiss because the asserted claims of plaintiff’s video content distribution patents encompassed unpatentable subject matter and found that the claims were directed toward an abstract idea. "[Plaintiff] argues that, like [Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016)], the claims improve computer functionality. But that is not the case. Here, claim one of both the patents covers a method of receiving video data, limited to a certain length and frame rate, from a camera, operated by a user, transcoding the video data, and transferring the video data for distribution. In short the claims each cover the process of automatically transcoding user recorded video files to a predetermined format that is suitable for a television broadcast or publication on the internet. The Federal Circuit has repeatedly found similar claims directed toward gathering, processing, and outputting information are abstract. . . . [T]hese claims do not improve the functioning of the computer itself, they facilitate uploading video into a certain format, a process that was previously possible without the patents at issue. Thus the claims merely facilitate uploading video."

Youtoo Technologies LLC v. Twitter Inc., 3-16-cv-00764 (TXND November 10, 2016, Order) (Godbey, USDJ)

Procedural Conduct Previously Sanctioned is No Basis for Award of Attorney Fees

Following a stipulation of infringement and a bench trial on damages, the court denied plaintiffs' motion for attorney fees under 35 U.S.C. § 285 because the totality of the circumstances were not exceptional. "With the exception of the single patent infringement claim at issue in this Order, all of Plaintiffs’ claims were dismissed on the merits. The conduct for which Defendants were sanctioned related to procedural issues before this Court. Defendants have already received sanctions sufficient for the purpose of deterrence of future similar conduct. Once the legal issues were narrowed for trial by the Court, Defendants conceded liability and agreed to the entry of an award for damages against them. Looking at the allegations as a whole and the totality of the circumstances in this case, there is nothing that makes this matter any more exceptional than other patent cases involving similar conduct."

Loops, LLC, et al v. Phoenix Trading, Inc., et al, 2-08-cv-01064 (WAWD November 9, 2016, Order) (Martinez, USDJ)

Customer’s Benefit From Using Software Does Not Create Direction and Control Needed to Support Divided Infringement Claim​

The court granted defendant's motion for summary judgment that it did not infringe plaintiff's object tracking patent and rejected plaintiff's divided infringement argument. "[T]he Court is not convinced that [plaintiff's] theory as to how [defendant] conditions a customer’s participation in the accused system rises to the level of 'directs or controls.' [Plaintiff] contends that a customer’s use of the system is conditioned on the customer performing the defining steps because '[defendant] does not provide the full benefit of the accused fleet-tracking services unless customers enter the requisite data.' If that was sufficient to establish divided infringement under § 271(a), then the Supreme Court’s [Limelight Networks, Inc. v. Akamai Techs., Inc., 134 S. Ct. 2111 (2014)] decision would have little meaning. It will always be true that a user’s benefit from using software will increase as the user explores additional functionality. That is not what the Federal Circuit meant by 'conditions participation.' [Plaintiff's] theory stands in stark contrast to the circumstances considered by the Federal Circuit in [Akamai Techs., Inc. v. Limelight Networks, Inc., 797 F.3d 1020 (Fed. Cir. 2015)], in which the accused infringer required customers to sign a standard form contract that delineated which claimed steps the customers 'must perform.' Although the Federal Circuit acknowledged that 'other factual scenarios may arise which warrant attributing others’ performance of method steps to a single actor,' [plaintiff] has not shown this to be such a scenario."

PerdiemCo, LLC. v. IndusTrack LLC, 2-15-cv-00727 (TXED November 8, 2016, Order) (Gilstrap, USDJ)

Lack of Full Statutory Estoppel Warrants Denial of Stay Pending Third Party IPR​

The court denied defendant's motion to stay pending inter partes review initiated by third parties in one of plaintiff's other actions because the lack of potential simplification of issues and undue prejudice did not favor a stay. "In this case, the [PTO] has not instituted review on all of the asserted claims nor have defendants agreed to be bound by the estoppel provisions of 35 U.S.C. § 315 as would the petitioner. . . . [T]he limited estoppel proposed by Defendants may not actually simplify the issues at all. . . . [U]nder the limited estoppel proposed here, Defendants could raise new obvious combinations using old prior art the PTO considered, provided at least one new (perhaps inane) reference not previously considered by the PTO is used to meet one claim element. This would not simplify the case; rather, it very well might complicate the case, by precipitating a dispute as to whether such a combination fell within the carefully worded limited estoppel, i.e., whether such combination fell within 'a specific ground(s) upon which those IPRs were instituted.'. . . [A] full statutory estoppel would avoid such disputes, but, as some have called it, 'estoppel light' would not. The absence of a full statutory estoppel not only increases the ability of litigants to 'game the system' and devise an unfair second bite at the apple, it also has the potential to increase rather than reduce the complexity of the validity issues that may come before the Court."

Intellectual Ventures II LLC v. Kemper Corporation et al, 6-16-cv-00081 (TXED November 7, 2016, Order) (Gilstrap, USDJ)

Plaintiff’s Arguments in IPR Warrant Additional Claim Construction Briefing in Related District Court Case​

The court granted defendant's motion for a second round of claim construction briefing because of positions plaintiff advanced in other litigation and inter partes review. "A fundamental dispute exist as to the proper construction of the 'dynamically updating' phrases from the [patents-in-suit]. . . . [In an earlier Markman hearing] Plaintiff argued for the plain and ordinary meanings of the terms. . . . During the subsequent IPR proceedings, Plaintiff arguably represented that the prior art submitted by Defendant did not meet the claim limitation because the prior art taught manually updating search results. Defendant contends that Plaintiff, having made these arguments before the PTAB, cannot now accuse products of infringing these claims where the 'dynamically updating . . .' step is allegedly performed only after user intervention. . . . There is good cause to depart from the default deadlines and obligations of the Patent Local Rules because resolving the targeted number of fundamental disputes described above will assist the fact finder in ruling on the patent infringement claims, help the parties tailor discovery to the scope of claims, and allow experts to render more precise opinions."

Finjan, Inc. v. Symantec Corporation, 3-14-cv-02998 (CAND November 4, 2016, Order) (Gilliam, USDJ)

Cloud Computing Management Patent Directed to Abstract Idea​

The magistrate judge recommended denying without prejudice defendants' motion to dismiss on the ground that plaintiff’s cloud computing management patent encompassed unpatentable subject matter, but found that the claims were directed toward an abstract idea. "[T]he Court determines that 'setting up and managing a cloud computing environment' is in fact an abstract idea. That concept -- without more -- appears to implicate an idea that is 'devoid of a concrete or tangible application[,]' or 'untethered from real-world application.' Nor has Plaintiff . . . sufficiently explained why considering the idea to encompass a 'cloud' environment would, on its face, necessarily conjure to mind sufficiently concrete structure or applications that would take the concept out of the realm of an abstract idea."

Kaavo Inc. v. Amazon.com, Inc. et al, 1-15-cv-00638 (DED November 3, 2016, Order) (Burke, MJ)

Defendant’s Conduct During Pre-Litigation Licensing Negotiations Warrants Enhanced Damages Award​

Following a jury verdict of willful infringement, the court partially granted plaintiff's motion for enhanced damages because of defendant's knowledge of the patent and license negotiation tactics. "[T]he Court is persuaded that [plaintiff] is entitled to enhanced damages toward the lower end of that spectrum. It is undisputed that [defendant] had detailed knowledge of the patents-in-suit long before the filing of this lawsuit. . . . [T]he Court makes note of with the manner in which [defendant] abruptly terminated licensing negotiations. After a long series of meetings between the parties . . . [defendant] invited [plaintiff's] representatives to Korea one last time and indicated that it would be making a monetary offer for a license. Rather than make an offer or engage in serious, good faith negotiations, [defendant] delivered a terse one-page presentation stating that a lawsuit at that time between the parties was 'preferable' to a license. . . . This should have been done by email. [Defendant's] conduct in making [plaintiff] send representatives to Korea to be handed a one-page document like this is clearly within totality of the circumstances which the Court should properly consider."

Core Wireless Licensing SARL v. LG Electronics, Inc. et al, 2-14-cv-00912 (TXED November 2, 2016, Order) (Gilstrap, USDJ)

Assertion of Privilege for Communications With In-House Counsel Requires Proof That Communications Qualify as Legal Advice​

The court granted in part plaintiff's motion for an order allowing it to use documents at trial over which defendant claimed privilege. "[W]ith regards to certain emails, [defendant] did not identify to the court, through its privilege log or otherwise, the employer of, or status as an attorney for [defendant] of, all of the individuals who made, or received copies of, these communications. [Defendant] did not show that the underlying facts in those emails or the emails themselves concerned a subject matter on which attorney’s advice was sought by [defendant]. To the extent that these may be communications among [defendant's] employees that were authorized to act on the legal advice — which is not clear to the court — [defendant] has not demonstrated that these communications qualify as legal advice rather than more generally relate to business decisions concerning finances or sales of products, etc. In today’s corporate environment, in-house legal counsel is often asked for input on and provides advice related to business decisions. Therefore, while [a recipient] may be an attorney, [defendant] has not met its burden to prove that these communications are privileged."

Barry v. Medtronic, Inc., 1-14-cv-00104 (TXED October 31, 2016, Order) (Clark, USDJ)

PTAB Analytics Indicate Record Highs for Bio/Pharma IPR/PGR Institution Rates

The U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB) offers a few avenues through which any person or entity can challenge the validity of an issued U.S. patent. Two of these processes are known as inter partes review (IPR) and post grant review (PGR). These two methods allow people other than the patent owner who have not previously challenged the validity of a patent through filing of a civil action in U.S. district court to seek review of a patent on a charge of invalidity.

Once a motion to challenge a patent’s validity through an IPR or PGR process is filed, the administrative judges at the PTAB decide whether to institute the review. If institution of the IPR or PGR is denied, then the legal matter is closed and the interested party filing for PTAB review must find another way to challenge the patent’s validity.

The rate of institution for IPRs and PGRs filed against patents in the pharmaceutical and biotech sectors is on the rise recently, according to statistics pulled from Docket Navigator’s data analytics services. Of the 231 combined IPR and PGR petitions filed against such patents during 2015, a total of 92, or 39.8 percent, were denied institution by the PTAB. Thus far in 2016, the PTAB has denied institution on only 34.3 percent of the 254 IPRs and PGRs filed this year against drug and biotech patents. This means that the percentage of review processes which are granted either in full or in part by the PTAB is increasing.

Meanwhile, institution denial rates for all other patent classifications has remained very steady over nearly two years. Through most of 2016, the rate at which IPR and PGR petitions on other patents are denied institution by the PTAB is 33.2 percent. This is very close to the same percentage of such petitions being denied institution in 2015, when 450 petitions of a total 1,349 IPR and PGR petitions were denied institution by the PTAB. It bears noting that the percentage of IPRs and PGRs which are granted institution has risen from 37.6 percent in 2015 up to 42.3 percent thus far through 2016, which means that the percentage of petitions which are only partially granted has dropped from 29 percent in 2015 down to 24.3 through most of 2016.

Overall, 2016 looks like it will see fewer IPR and PGR instituted decisions at the PTAB than last year. By the end of 2016, it’s estimated that a total of 1,266 IPR and PGR institution decisions will be filed, lower than the 1,349 such decisions filed through 2015. So while the percentage of petitions granted full institution by the PTAB is up in 2016, the total amount of institutions is down.

If the current trend continues, 2016 may be the first year where the number of petitions filed in the PTAB decreases from the previous year. Docket Navigator estimates that there will be 1,716 total petitions (IPR, PGR, and Covered Business Method Reviews) filed in 2016, compared with 1,798 that were filed in 2015.

Accurate data analytics can give both patent owners and legal teams a better idea of the challenges which are unique to a certain sector of technology. Docket Navigator delivers such analytics which can be helpful to those who need help navigating patent challenges at PTAB.

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Charts made using Docket Navigator's data.
This guest post was written by Steve Brachmann.

Wireless Communications Patents Not Ineligible Under 35 U.S.C. § 101​

The court denied defendants' motion for judgment on the pleadings on the ground that plaintiff’s wireless communications patents encompassed unpatentable subject matter because the claims were not directed toward abstract mathematical algorithms. "Claims 'improv[ing] the functioning of [a] computer' or 'improving an existing technological process' are patent-eligible even if they rely on a mathematical algorithm. . . . The [two] patents describe problems and solutions firmly rooted in technology used for wireless communications. Specifically, [one] patent explains that the number of code sequences available in the prior art to maintain orthogonality was 'limited.'. . . Similarly, the [other] patent describes several problems in the prior art with transmitting preamble sequences over a random access channel. Specifically, prior art systems used a preamble of fixed length, limiting flexibility under different cell sizes. . . . Because the [two] patents are directed to technological improvements resolving specific problems in a wireless communications system, the court finds that they claim patent-eligible subject matter under § 101."

Evolved Wireless, LLC v. Apple Inc., 1-15-cv-00542 (DED October 31, 2016, Order) (Robinson, USDJ)

Willfulness Claim May be Based on Advanced Notice of Imminent Patent Issuance​

The court denied defendant's motion to dismiss plaintiff's claims for willful infringement and enhanced damages because plaintiff filed suit on the day its patent-in-suit issued. "In its complaint, [plaintiff] alleges several instances in which [defendant] had 'advance notice' of [the patent's] issuance. . . . Furthermore, the fact that these same parties are currently involved in litigation involving the alleged infringement of another . . . patent relating to the same application could conceivably contribute to a finding of willfulness. Taking [plaintiff's] allegations as true, the Court cannot say that it is implausible that [defendant] had knowledge of the patent at the time that the alleged infringement began and [plaintiff] filed suit. . . . Unlike a mere patent application, a Notice of Allowance, and particularly an Issue Notification, are strong indications that the patent will issue."

Malibu Boats, LLC v. MasterCraft Boat Company LLC (TV1), 3-16-cv-00082 (TNED October 28, 2016, Order) (Varlan, USDJ)