Friday, July 21, 2017

Denial of Venue Allegations in Answer Preserves Defendant's Venue Challenge​

The court ordered additional briefing on defendant's motion for judgment on the pleadings of improper venue but found that defendant did not waive its venue defense. "Defendant sufficiently contested and preserved its objection to venue in its Answer. Defendant specifically stated in its answer regarding venue: '[Defendant] denies the allegations of paragraph 10 [referring to paragraph in Complaint asserting proper venue] of the Complaint.' The Magistrate Judge also noted a venue dispute in the Initial Case Management Order. . . . Whether certain acts or omissions operate as a waiver of venue accorded by the general venue statutes also waive venue conferred by the special venue statutes may depend upon the policy behind the specific venue provisions, such as the provision fixing the venue of patent-infringement actions. . . . Courts . . . deviate as to what conduct, even when a venue-challenge is initially raised in an answer, amounts to waiver. . . . In the instant case, the Court finds Defendant sufficiently objected to venue in its Answer and that Defendant took no actions thereafter that would constitute waiver."

JPW Industries, Inc. v. Olympia Tools International Inc., 3-16-cv-03153 (TNMD July 19, 2017, Order) (McCalla, USDJ)

Thursday, July 20, 2017

Presence of Third Party Distributor and Regular Product Sales in Forum State are Irrelevant to Determining Regular and Established Place of Business​

Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017), the court granted defendant's motion to transfer plaintiff's patent infringement action from the District of South Carolina to the District of Utah for improper venue because defendant did not have a regular and established place of business in South Carolina. "Where [defendant] was founded [Charleston, South Carolina], the identity of its South Carolina customers, and the volume of its sales to South Carolina customers are not relevant to the § 1400(b) venue analysis. The presence of a third-party distributing [defendant's] products also is irrelevant. . . . [Defendant] has a single, recently hired employee who does not make sales or interact with customers in South Carolina and who maintains no inventory in South Carolina. . . . Indeed, that [defendant] is not even licensed to do business in South Carolina is practically dispositive in determining that [defendant] does not conduct business in South Carolina through a 'permanent and continuous presence.'"

Hand Held Products Inc. d/b/a Honeywell Scanning & Mobility et al v. The Code Corporation, 2-17-cv-00167 (SCD July 18, 2017, Order) (Gergel, USDJ)

Failure to Challenge Venue In First Response to Complaint Did Not Waive Defendant’s Venue Objection​

Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017), the court granted defendant's motion to transfer plaintiff's patent infringement action from the District of South Carolina to the District of Utah for improper venue and found the defendant did not waive venue by failing to contest the issue in its first response to plaintiff's complaint. "Waiver . . . is an equitable doctrine. . . . Even if in a literal sense it may be said that the law on patent venue has not changed since 1957, it is reasonable that litigants believe TC Heartland is a change in the law. . . . If the present matter were at eve of trial . . . this Court would hold the venue challenge waived. But litigation in this matter has just begun. [Plaintiff] will not be prejudiced by litigating this matter for the first time in a proper venue. It would be inequitable to deny [defendant] the opportunity to seek proper venue, where no prejudice results to Plaintiff, simply because [defendant] missed the venue-challenge deadline by 34 days because it reasonably relied on what nearly every litigant thought was binding precedent governing patent litigation venue for the past 27 years."

Hand Held Products Inc. d/b/a Honeywell Scanning & Mobility et al v. The Code Corporation, 2-17-cv-00167 (SCD July 18, 2017, Order) (Gergel, USDJ)

Wednesday, July 19, 2017

Server Bandwidth Allocation Patent Not Invalid Under 35 U.S.C. § 101​

The magistrate judge recommended denying defendant's motion to dismiss on the ground that plaintiff’s bandwith allocation patent encompassed unpatentable subject matter because the asserted claims were not directed toward an abstract idea. "Defendants argue the Asserted Claims cover the abstract idea of slowing a delivery by delaying a portion of the delivery, based, in part, on past deliveries. . . . The Asserted Claims are directed to transmitting related data, such as parts of file, at different effective rates, with the second effective rate always being slower than the first. Considered in that light, the claims’ 'character as a whole' is directed to the manner by which data is transmitted between two computer systems -- which is not a law of nature, a natural phenomena, or an abstract idea. And even if the underlying concept is well-known in unrelated fields, Alice's Step 1 requires the Court to focus on the claimed advance over the prior art; Defendants have not produced evidence on that point."

Preferential Networks IP, LLC v. AT&T Mobility, LLC d/b/a AT&T Mobility et al, 2-16-cv-01374 (TXED July 15, 2017, Order) (Payne, MJ)

Tuesday, July 18, 2017

Previously Waived Venue Objection Cannot be Revived Via Request to Amend Pleading​

Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514 (2017), the court denied defendant's motion to amend its answer to add a venue challenge. "In its original Answer to [plaintiff's] Complaint, [defendant] had stated that it 'does not dispute that venue is proper in this judicial district.'. . . [Defendant] thus waived its venue defense. [Defendant's] Motion for Leave, in effect, is an attempt to circumvent this waiver. However, the Advisory Committee Notes are clear that the defenses listed in Rule 12(b)(2)-(5) 'are of such character that they should not be delayed and brought up for the first time by means of an application to the court to amend the responsive pleading.'. . . Allowing [defendant] to amend its Answer to assert improper venue -- after [defendant] specifically stated that venue was proper in its original answer and failed to amend as a matter of course -- would also be unduly prejudicial to [plaintiff], as it would fundamentally alter the nature of the case."

Realtime Data LLC d/b/a IXO v. Barracuda Networks, Inc., 6-17-cv-00120 (TXED July 14, 2017, Order) (Love, MJ)

Monday, July 17, 2017

Computer Modeling and Electrical System Simulation Patents Invalid Under 35 U.S.C. § 101​

The court granted defendant's motion for summary judgment on invalidity because the asserted claims of plaintiff’s computer modeling and electrical system simulation patents encompassed unpatentable subject matter and found that the claims were directed toward an abstract idea. "Despite their length and number, the asserted claims focus on gathering information, e.g., real-time and predicted data values, and analyzing and updating a model with that information, e.g., comparing the gathered data and evaluating the prediction deviations to update the model. . . . Further, the claims recite the idea as a function or result, rather than a particular way of performing that function or achieving that result. . . . The purported solution offered by the claims to the problem of outdated information is to update the model so that it fits more accurately within the real-world data. There is nothing in the claim to suggest that, once the models have been updated, the computer system will be any more efficient."

Power Analytics Corporation v. Operation Technology, Inc. et al, 8-16-cv-01955 (CACD July 13, 2017, Order) (Kronstadt, USDJ)

Friday, July 14, 2017

Preparation of Consolidated Financial Statements Does Not Demonstrate That Profits of Subsidiary Inexorably Flow to Parent Patentee​

The court granted defendant's motion for summary judgment that plaintiff was not entitled to damages based on its subsidiary's lost profits and rejected plaintiff's inexorable flow argument. "The Federal Circuit has not adopted the 'inexorable flow' theory. . . . The Federal Circuit has 'long recognized that the lost profits must come from the lost sales of a product or service the patentee itself was selling.' Here, [plaintiff's] claim for lost profits includes the lost profits of its wholly owned subsidiary. . . . That [plaintiff] consolidates its financial statements does not demonstrate an inexorable flow of profits from [the subsidiary] to [plaintiff], even if the inexorable flow theory provides a permissible basis to award lost profits."

Select Comfort Corporation v. Tempur Sealy International, Inc., 0-14-cv-00245 (MND July 12, 2017, Order) (Ericksen, USDJ)

Thursday, July 13, 2017

Rule 12 Motion to Dismiss Under 35 U.S.C. § 101 Waives Venue Challenge Despite Purported Reservation of Right to Challenge Venue in Defendant’s Answer​

The magistrate judge recommended denying defendant's motion to dismiss plaintiff's patent infringement action for improper venue and rejected defendant's argument that it preserved its venue challenge in its answer. "[Defendant] argues that it properly preserved its venue defense in its Answer because it denied that venue was proper and further stated: 'to the extent the U.S. Supreme Court decides that 28 U.S.C. § 1400(b) is the exclusive statute for determining venue in patent cases . . ., [defendant] reserves the right to amend its answer and/or seek to dismiss this case based on improper venue.'. . . While exceptions to Rule 12(g)(2)’s timing requirement exist for challenges related to failure to state a claim or lack of subject matter jurisdiction, there are no exceptions to Rule 12(g)(2) for venue. [Defendant] thus waived its improper venue defense by filing its Motion to Dismiss for Failure to State a Claim. . . . [Defendant] could have easily filed its 35 U.S.C. § 101 Motion as a Rule 12(c) Motion for Judgment on the Pleadings after the Supreme Court decision issued and any potential improper venue challenge was resolved. Instead, [defendant] proceeded to argue the merits of the case in bringing its first Motion to Dismiss under Rule 12(b)(6)."

Realtime Data LLC d/b/a IXO v. Carbonite, Inc. et al, 6-17-cv-00121 (TXED July 11, 2017, Order) (Love, MJ)

Wednesday, July 12, 2017

Attorney Fees Award in Exceptional Case Not Limited to Specific Instances of Misconduct​

The court awarded defendant over $1.8 million in attorney fees under 35 U.S.C. § 285 and rejected plaintiff's argument that defendant was not entitled to recover fees for the entire case. "[Plaintiff] ignores this Court’s extensive analysis and review of [plaintiffs] 'wholly inadequate' pre-suit investigation. . . . Indeed, [plaintiff] concedes that its assertion of the contributory infringement claim in its amended complaint was indefensible in light of its admission that [defendant's] accused products had substantial non-infringing issues. [Plaintiff's] attempt to reduce [defendant's] fee claim to one that is anchored to individual abuses of minor portions is inimical to the Court’s consideration of the totality of the circumstances. . . . When an exceptional case finding is supported by the 'totality of the circumstances,' it would be illogical to constrain a fee award to specific instances of misconduct."

In Re: Bill of Lading Transmission and Processing System Patent Litigation, 1-09-md-02050 (OHSD July 10, 2017, Order) (Beckwith, USDJ)

Tuesday, July 11, 2017

Failure to Challenge Venue in Initial Motion to Dismiss Waives Venue Challenge to Amended Complaint​

Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, No. 16-341, 137 S.Ct. 1514 (May 22, 2017), the magistrate judge recommended denying defendant's motion to dismiss plaintiff's patent infringement action for improper venue and found that plaintiff's filing of amended complaint did not excuse defendant's waiver. "[N]o facts regarding venue changed from when [plaintiff] filed its Original Complaint to its Amended Complaint. Further, [defendant] had already proceeded to argue the merits of the case in bringing its first Motion to Dismiss under Rule 12(b)(6). As the Fifth Circuit has noted, '[i]f a defendant proceeds first on the merits, as by a motion to dismiss for failure to state a claim . . . and thereafter attempts to challenge jurisdiction over his person or improper venue, the challenge should fail.'”

Diem LLC v. BigCommerce, Inc., 6-17-cv-00186 (TXED July 6, 2017, Order) (Love, MJ)

Failure to Allege Direction or Control or Joint Enterprise in Complaint Precludes Evidence of Joint Infringement at Trial​

The court granted defendant's motion in limine to preclude plaintiff from presenting evidence of joint infringement because plaintiff did not plead that theory in its complaint. "[Defendant] points out that [plaintiff's] complaint does not reference a claim for joint infringement. . . . [Plaintiff] responds that joint infringement is a theory of direct infringement that [defendant] has been aware of since [plaintiff's] infringement conditions, which asserted that [defendant], and its customers, directly infringed the asserted patents. . . . [Plaintiff's] allegations in its complaint do not state a plausible claim for relief under a theory of direct joint infringement. [Plaintiff] has alleged no facts demonstrating that either (1) [defendant] exercises direction or control over its customers’ performance or (2) that [defendant] and its customers form a joint enterprise. . . . Thus, [plaintiff] it should be excluded from offering argument, testimony, or evidence regarding such a claim of infringement."

Evicam International, Inc. v. Enforcement Video, LLC, 4-16-cv-00105 (TXED July 7, 2017, Order) (Mazzant, USDJ)

Monday, July 10, 2017

Walmart's Exceptional Litigation Conduct and Willful Trademark Infringement Warrant Award of $1.5M in Attorney Fees

In a trademark case, the court awarded plaintiff $1,554,028.45 for attorney fees against a retail superstore defendant because defendant's litigation conduct and willful infringement made the case exceptional. "First, there has been an unusual discrepancy in the positions taken by the parties in this matter. As previously noted at summary judgment, [defendant] decided to use the [asserted] mark despite being twice warned by its own attorneys not to do so and despite being aware of [plaintiff's] trademark registration. This fact alone marks this case as unusual and exhibits the discrepancy between the parties' positions in this matter. Despite this holding at summary judgment, [defendant] continued to dispute the willfulness of its infringement in all following stages of litigation. [Defendant] also continually advanced remarkable contentions throughout this litigation, such as the argument that the [asserted] mark was worth 'zero' despite the Court's prior holding that that [defendant's] competing use of the [asserted] mark created a likelihood of confusion and that the mark was commercially strong. This case also presents a particular need for compensation and deterrence."

Variety Stores, Inc. v. Wal-Mart Stores, Inc., 5-14-cv-00217 (NCED 2017-07-06, Order) (Terrence W. Boyle)

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Plaintiff's Pattern of Filing Serial Litigation and Voluntarily Dismissing Cases Involving § 101 Challenge Justifies Award of Attorney Fees​

Following a dismissal and covenant not to sue while defendant's 35 U.S.C. § 101 motion was pending, the court granted defendant's motion for attorney fees under 35 U.S.C. § 285 because plaintiff's litigation tactics were unreasonable. "Although the Court agrees that filing a large number of cases does not necessarily mean Plaintiff litigated in an unreasonable manner, it nevertheless finds troubling that Plaintiff has repeatedly dismissed its own lawsuits to evade a ruling on the merits and yet persists in filing new lawsuits advancing the same claims. Specifically, Plaintiff has filed similar lawsuits (more than 90 for [two patents-in-suit] and more than 400 for [another patent]) against countless defendants. Patent litigation is expensive, so it is unsurprising that the vast majority of accused infringers choose to settle early rather than expend the resources required to show a court that the Patents-in-Suit fail under § 101. When the few challenges do occur, however, they are promptly met with voluntary dismissals with prejudice, as in this case. . . . [T]he Court finds a clear pattern of serial filings with the goal of obtaining quick settlements at a price lower than the cost of litigation and the intent to litigate even when Plaintiff should have realized it had a weak litigation position."

Shipping and Transit, LLC v. Hall Enterprises, Inc., 2-16-cv-06535 (CACD July 5, 2017, Order) (Guilford, USDJ)

Friday, July 7, 2017

Defendants' Ongoing Participation in Litigation Process Waives Venue Objection​

Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017), the magistrate judge recommended denying defendants' motion to dismiss plaintiffs' patent infringement action for improper venue because defendants waived the issue through their litigation conduct. "[N]ot only was Defendants’ venue challenge belatedly made, during the time at which [defendant] repeatedly admitted venue was proper, the Court had conducted lengthy proceedings on Plaintiffs’ motion for a preliminary injunction and granted the preliminary injunction. Throughout those injunction proceedings, [defendant] never once challenged venue. Since that time, the Court has conducted numerous additional proceedings, including claim construction proceedings, contempt proceedings, several discovery related motions, and pretrial motions. [Defendant] consented to all of these proceedings without objecting to venue. Accordingly, even if [defendant's] defense had not been waived under Rule 12, which it has, [its] continuous and consistent conduct in this action constitutes waiver."

Tinnus Enterprises, LLC et al v. Telebrands Corporation et al, 6-15-cv-00551 (TXED July 5, 2017, Order) (Love, MJ)

Defendants' Motion for Judgment on the Pleadings Under 35 U.S.C. § 101 Waives Venue Objection

Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017), the court denied defendants' motion to dismiss plaintiff's patent infringement action for improper venue because defendants waived their initial venue challenge through their litigation activity, particularly by seeking to invalidate the patent-in-suit under 35 U.S.C. § 101. "Defendants denied that venue was proper in this District in their answer. . . . Nevertheless, 'merely filing an initial venue objection does not preclude subsequent waiver of the objection.'. . . Defendants have litigated the consolidated action in this Court for approximately a year, including by serving invalidity contentions, filing two motions to stay, filing a motion for judgment on the pleadings, and participating in claim construction. . . . The Court finds particularly important the fact that Defendants filed a motion for judgment on the pleadings seeking to invalidate the [patent] under 35 U.S.C. § 101. . . . [F]iling a motion for judgment on the pleadings on the issue of invalidity prior to filing a motion to dismiss for improper venue 'constitutes a tacit admission on the part of the movant that the court has personal jurisdiction, that venue is properly laid there, and that the court should dispose of the case on its merits.'"

InfoGation Corp. v. HTC Corporation et al, 3-16-cv-01902 (CASD July 5, 2017, Order) (Huff, USDJ)

Thursday, July 6, 2017

Multimedia Network System Patent Invalid Under 35 U.S.C. § 101​

The court granted defendant's motion to dismiss because the asserted claims of plaintiff’s multimedia network system patent encompassed unpatentable subject matter and found that the claims lacked an inventive concept. "Considered individually, each step in the [patent] is well-understood, routine, and conventional. For instance, it is nothing new for servers and clients to send requests to each other. Similarly, it is not inventive to require authentications to access content. Nor is it any more inventive to incorporate asymmetric/public-key encryption into an authentication system. . . . The only possible 'non-conventional and non-generic arrangement' in the [patent] is the combination of asymmetric encryption with content licenses. But combining those two concepts is not new. Indeed, the [patent] references two earlier patents that both consider combining asymmetric encryption with licenses to enforce usage restrictions."

Digital Media Technologies, Inc. v. Amazon.com, Inc., 4-16-cv-00244 (FLND July 3, 2017, Order) (Walker, USDJ)

Wednesday, July 5, 2017

Broad Venue Discovery Authorized to Determine Existence of Regular and Established Place of Business

​ Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Group Brands, LLC, (2017), the court partially granted plaintiff's motion to compel venue-related discovery as relevant and proportional to the needs of the case. "Defendant must disclose its total product sales in Oregon, with one exception. . . . [I]nformation on its direct internet sales is unlikely to lead to relevant evidence on whether Defendant has a 'regular and established place of business' in Oregon. . . . Defendant must disclose the activities of third-party vendors of Defendant's products, and Defendant's relationships with these vendors, because such information could lead to relevant evidence. . . . [I]nformation on the activities of Defendant's agents, whether the agent is based in Oregon or not, [and] information on professional services in Oregon retained by Defendant could lead to relevant evidence and is proportional to the needs of the case. . . . Defendant must disclose any substantial amount of personal property it owns, leases, or manages in Oregon, including marketing materials, demonstration equipment, and product literature. . . . Defendant's leases of trade show booths or conference spaces could lead to relevant evidence and should be produced. . . . [Phone number and address] listings created by third parties independently of Defendant are not discoverable, but Defendant must disclose any other listings that it directed."

Nike, Inc. v. Skechers USA, Inc., 3-16-cv-00007 (ORD June 30, 2017, Order) (Papak, MJ)

Monday, July 3, 2017

Employing Exclusive Sales Representative Within District Sufficient to Establish Regular and Established Place of Business

Following the Supreme Court's decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017), the court denied defendant's motion to transfer for improper venue and found that defendant had a regular and established place of business in the forum through its employment of a sales representative in the forum. "At the time this case was filed, [defendant's sales representative in the forum] worked exclusively for [defendant] as a sales executive in this District. [The sales representative] had been working full-time for [defendant] from within the Eastern District of Texas for over seven years. [Defendant] paid [him] a salary and maintained [his] compensation plan online through its human resources department, which outlined his territory and assignments. . . . [Defendant] provided [its sales representative] with 'administrative support' from [defendant's] Minnesota office such that [he] could continue working from his office in the Eastern District of Texas. Under this arrangement, [he] contacted and sold products to customers using an 'office' telephone number with an Eastern District of Texas area code. . . . Technology has revolutionized the way businesses operate and the way consumers interact with those businesses. . . . This important shift has been recognized by many courts."

Raytheon Company v. Cray, Inc., 2-15-cv-01554 (TXED June 29, 2017, Order) (Gilstrap, USDJ)

Judge Gilstrap Recognizes Four-Factor Test for Determining Regular and Established Place of Business Under 28 U.S.C. § 1400(b)

In determining whether defendant maintained a regular and established place of business in the forum for purposes of 28 U.S.C. § 1400(b), the court recognized a four-factor approach consisting of physical presence, defendant's representations, benefits received, and targeted interactions. "Since the Supreme Court’s decision in [TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017)], this Court has received a number of motions to dismiss or transfer based on improper venue. It is evident from these motions, and their subsequent briefing, that there is uncertainty among the litigants regarding the scope of the phrase 'regular and established place of business.' . . . [T]his Court now attempts to provide guideposts to point the venue analysis in a single coherent direction. . . . First, the Court considers the extent to which a defendant has a physical presence in the district, including but not limited to property, inventory, infrastructure, or people. At the most basic level, a retail store, warehouse, or other facility in the district weighs strongly in favor of finding a regular and established place of business. However . . . the lack of a physical building in the district is not dispositive. . . . Other forms of physical presence may also help support a finding of a regular and established place of business, such as inventory or property in the district[,] [and] the presence of equipment or infrastructure that is owned (or leased) by a defendant and used to provide services to customers. . . . Additionally, courts have considered the presence of employees in the district when determining whether a defendant has a regular and established place of business. . . . Second, the Court looks at the extent to which a defendant represents, internally or externally, that it has a presence in the district. . . . Third, the Court considers the extent to which a defendant derives benefits from its presence in the district, including but not limited to sales revenue. . . . Finally, the Court looks at the extent to which a defendant interacts in a targeted way with existing or potential customers, consumers, users, or entities within a district, including but not limited to through localized customer support, ongoing contractual relationships, or targeted marketing efforts."

Raytheon Company v. Cray, Inc., 2-15-cv-01554 (TXED June 29, 2017, Order) (Gilstrap, USDJ)

Friday, June 30, 2017

Unpatentability Under 35 U.S.C. § 101 Cannot be Determined Solely From Provisional Application​

The court denied defendants' motion for summary judgment on the ground that plaintiff’s oxygen system patent encompassed unpatentable subject matter because defendants relied on a provisional application to establish that the asserted claims were directed toward an abstract idea. "Much of Defendants’ Motion for Partial Summary Judgment is based upon the incorrect premise that this Court should only look to the provisional patent application to determine abstractness. As a fatal flaw, Defendants point to no legal basis for such a premise, and this Court has not independently identified any such basis. . . . [I]t would seem that Defendants concede that the patent was in fact not issued for an abstract idea but rather for 'a very specific system.'"

HVLPO2, LLC v. Oxygen Frog, LLC et al, 4-16-cv-00336 (FLND June 27, 2017, Order) (Walker, USDJ)

Thursday, June 29, 2017

TC Heartland Does Not Qualify as Intervening Change of Law Excusing Waiver of § 1400(b) Venue Challenge​

Following the recent Supreme Court decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017), the court denied defendant's motion to dismiss or transfer plaintiff's patent infringement action for improper venue two months before trial because TC Heartland was not an intervening change in law. "[Defendant's] argument . . . appears to be that following the decision in [VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990)] in 1990 up until the Supreme Court decided TC Heartland in May of 2017, the highest authority available had deemed [Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957)] overridden by congressional action, and accordingly the Supreme Court’s reaffirming of Fourco constituted a change of law. . . . [E]xcept where congressional abrogation of a Supreme Court decision is express, 'only [the Supreme] Court may overrule one of its precedents' -- whether through its own opinion or recognition of congressional override -- and until that occurs, Fourco is and still was the law. . . . The intervening twenty-seven years may have created reliance on VE Holding by litigants, including [defendant], but that 'does not change the harsh reality' that a party could have 'ultimately succeeded in convincing the Supreme Court to reaffirm Fourco, just as the petitioner in TC Heartland did.'”

iLife Technologies, Inc. v. Nintendo of America, Inc., 3-13-cv-04987 (TXND June 27, 2017, Order) (Lynn, USDJ)

Wednesday, June 28, 2017

Failure to Challenge Venue Prior to TC Heartland Does Not Waive Venue Objection​

Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, No. 16-341 (May 22, 2017), the court granted defendants' motion to modify their pending motion to dismiss under Rule 12(b)(6) to add a ground of improper venue and found there was no waiver by failing to raise the issue in their original motion. "[Plaintiff] contends an argument for an improper venue was available to Defendants, and has been since 1957 when the Supreme Court announced [Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957)]. A defendant waives the defense of improper venue if it was available but the defendant omitted it from its responsive pleading or from a motion made before its responsive pleading. . . . TC Heartland abrogated approximately 27 years of patent law precedent. . . . For the first time in 27 years, a defendant may argue credibly that venue is improper in a judicial district where it is subject to a court’s personal jurisdiction but where it is not incorporated and has no regular and established place of business. Defendants could not have reasonably anticipated this sea change, and so did not waive the defense of improper venue by omitting it from their initial pleading and motions."

Westech Aerosol Corporation v. 3M Company et al, 3-17-cv-05067 (WAWD June 21, 2017, Order) (Leighton, USDJ)

Tuesday, June 27, 2017

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Defendant’s Authorization to Conduct Business in Texas, Listing Texas Distributors on Website, and Selling Products in Texas Insufficient to Establish Texas Venue​

Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S.Ct. 1514 (2017), the court granted defendants' motion to dismiss plaintiff's patent infringement action for improper venue because plaintiff failed to present sufficient evidence that defendants had a regular and established place of business in the forum. "'The fact that [defendants] are authorized to do business in Texas is not controlling and will not establish the [§ 1400(b)] requirement.' Nor does defendants' website allowing viewers to access a list of San Antonio/Austin distributors provide venue under the patent infringement statute. Finally, the fact that defendants sell their activity trackers to distributors in Texas Western will not establish venue. . . . Therefore, the kind and degree of defendants’ contacts do not support a finding that defendants have a permanent and continuous presence which shows a regular and established place of business in the Western District of Texas."

LoganTree v. Garmin International, Inc. et al, 5-17-cv-00098 (TXWD June 22, 2017, Order) (Biery, USDJ)

Monday, June 26, 2017

Assignment Requiring Plaintiff to Pay Transferor 100% of Gross Proceeds From Litigation Does Not Deprive Plaintiff of Standing

The court denied defendant's motion to dismiss plaintiff's patent infringement action for lack of standing because plaintiff obtained substantial rights to the patents-in-suit through its assignment from the prior owner even though it had to surrender 100% of litigation and licensing proceeds to the prior owner. "[Plaintiff's] Agreement is nearly identical to the [prior owner's] Agreement. The only difference is that the transferee must pay 100% of the gross proceeds from litigation and licensing to the transferor, rather than 50% in the [prior owner's] Agreement. Again, this is compensation for the transfer that does not reserve any control for the assignor over the Asserted Patents or their use. . . . Defendant argues that Plaintiff has no economic interest because he must surrender the gross proceeds from the litigation to [the prior owner]. However, this does not diminish Plaintiff’s rights to the Asserted Patents for the purpose of standing. Any infringement of Plaintiff’s exclusive right to make and sell the patented products would still cause Plaintiff to suffer a justiciable injury, regardless of whether he retains any damages awarded for that injury."

Agarwal v. Buchanan d/b/a Jeff Buchanan Tree Services d/b/a Buchanan Industries d/b/a Wood Chipper Safety Shield, 2-17-cv-02182 (CACD June 22, 2017, Order) (O'Connell, USDJ)

Friday, June 23, 2017

Eve of Trial Supplement to Damages Expert Report Justifies Monetary Sanctions Award​

The court sanctioned plaintiffs for producing an unsolicited addendum to their damages expert report which required defendants to file a motion to strike. "The Court has now three times granted Defendants’ Daubert Motions on the issue of [the expert's] estimation of indirect sales in the United States to prove damages for indirect infringement. . . . Given that the Court’s orders have been entirely clear and [plaintiff] has provided no justifiable explanation for why [the expert] impermissibly supplemented his report without leave of Court on the eve of trial, thereby forcing [defendants] to file the instant emergency motion, the Court finds that fees for the motion are appropriately awarded to [defendants]."

Eidos Display, LLC et al v. AU Optronics Corporation et al, 6-11-cv-00201 (TXED June 21, 2017, Order) (Love, MJ)

Thursday, June 22, 2017

Failure to Timely Challenge Venue Before TC Heartland Waives Challenge Despite Reservation of Rights​

The court denied defendants' motion to transfer venue based on the recent Supreme Court decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017), because defendants waived their objection to venue. "[N]either [defendant] affirmatively sought dismissal or transfer because of the lack of 'resid[ence]' or the lack of a 'regular and established place of business' under § 1400(b) as interpreted by [Fourco Glass Co. v. Transmirra Prod. Corp., 353 U.S. 222], until . . . less than two months from trial. . . .The Court need not reach Defendants’ argument that a change in law constitutes an exception to waiver under Rule 12(h)(1)(A) because the Supreme Court’s decision in TC Heartland does not qualify. . . . 'TC Heartland does not qualify for the intervening law exception to waiver because it merely affirms the viability of Fourco.' [One defendant] argues that Defendants 'each expressly reserved their rights to challenge venue in the event TC Heartland changed the law,' but a defendant cannot state that it does not dispute venue while reserving the ability to later contest it. To conclude otherwise would undermine the purpose of Rule 12(g) and (h) to promote efficiency and finality."

Elbit Systems Land and C4I Ltd. et al v. Hughes Network Systems LLC et al, 2-15-cv-00037 (TXED June 20, 2017, Order) (Payne, MJ)

Wednesday, June 21, 2017

Representative Infringement Contentions Stricken Without Leave to Amend For Failure to Show Common Characteristics​

The court granted plaintiff's motion to strike defendants' infringement contentions based on representative accused products as insufficient. "[T]he patent owners have not adequately shown that their purportedly representative claims in fact share the same critical characteristics as other accused products. . . . [T]he patent owners will be strictly limited to accusing products that truly fit the theories described in their infringement contentions. The patent owners do not have leave to amend to add explanations about how the charted accused products are representative of other accused products. Nor do they have leave to amend to chart additional 'representative' products."

Comcast Cable Communications, LLC v. OpenTV, Inc. et al, 3-16-cv-06180 (CAND June 19, 2017, Order) (Alsup, USDJ)

Tuesday, June 20, 2017

Nature of NPE Plaintiff’s Business Does Not Waive Privilege as to Patent Valuation Analysis​

The court denied defendant's motion to compel the production of documents and rejected defendant's argument that plaintiff's non-practicing entity status precluded it from asserting privilege over ongoing business valuations of the patents-in-suit. "[Defendant] asserts that [plaintiff] cannot assert privilege over these documents due to the nature of its business: [plaintiff] only acquires and then licenses or litigates patents, so the information relates only to a business purpose. But the nature of [plaintiff's] business should neither preclude it, as a general matter, from asserting attorney-client privilege nor automatically shield all of its patent-related documents."

Polaris Innovations Limited v. Kingston Technology Company, Inc., 8-16-cv-00300 (CACD June 16, 2017, Order) (Oliver, MJ)

Monday, June 19, 2017

Collection of Working Group Papers Qualifies as a Single Prior Art Reference​

The court denied plaintiff's motion to strike portions of defendants' invalidity contentions concerning their assertion that a set of working group papers qualified as a single prior art reference, but ordered defendants to provide more specific invalidity contentions. "Plaintiff contends that this reference contains twenty-three documents that are not a 'prior art instrumentality.' . . . Defendants argue that the close relationship of the documents is demonstrated in that they are all seeking to solve the same technical problem, they are submitted using the same common format and numbering for the 3GPP working group, they were submitted by members of the group for a common purpose, and they were developed within a relatively small time frame. . . . [A]s a general matter, a network, or network solution/procedure, can constitute a single prior art reference and may include associated references that describe that network and/or solution. The fact that a network could constitute a single prior art instrumentality particularly makes sense where the allegations of infringement read onto specific network procedures as they do here. . . . While the Court finds that Defendants will be allowed to use these documents as a single reference, the Court finds that Defendants shall supplement their contentions to specifically identify the who, what, why, when, and where of the solution they seek to sufficiently put Plaintiff on notice."

Iridescent Networks, Inc. v. AT&T Inc. et al, 6-16-cv-01003 (TXED June 15, 2017, Order) (Love, MJ)

Friday, June 16, 2017

Economic Prejudice From 8 Years of Product Sales Supports Equitable Estoppel of Infringement Claim​

The court granted in part defendants' motion for summary judgment and found that plaintiff's claims for one of its boot design patents was barred by equitable estoppel because defendants suffered economic prejudice from plaintiff's misleading conduct. "In their [response] to [plaintiff's cease and desist letter], Defendants offered to completely cease selling the [accused] boot and to pay $1,500 to [plaintiff], which was based on profits from selling 240 [accused] boots. Had [plaintiff] accepted the offer, this would have been the extent of Defendants’ loss (or at least something close to it). Now, six years later, Defendants have sold over 750,000 knit boots, a substantial portion of which form the basis of [plaintiff's] damages claim. . . . [H]ad [plaintiff] accepted Defendants’ offer to cease selling the product [8 years ago], the time and money Defendants subsequently invested in the [accused] boot could have been spent on other products or business ventures."

Deckers Outdoor Corporation v. Romeo and Juliette, Inc. et al, 2-15-cv-02812 (CACD June 13, 2017, Order) (Wright, USDJ)

Thursday, June 15, 2017

Email Monitoring and Tracking Patents Not Invalid Under 35 U.S.C. § 101 at Pleading Stage​

The court denied defendant's motion to dismiss on the ground that plaintiff’s email monitoring and tracking patents encompassed unpatentable subject matter because the asserted claims were not directed toward an abstract idea. "[Defendant's] abstract idea challenge is without merit as there is no credible argument that a patent on a system and methods for 'monitoring website activity' claims a longstanding commercial practice. The functionalities claimed in the patents were not imaginable before the Internet. Even after email came into use, the functionality claimed in the patents did not exist until plaintiff’s invention solved the technical problems associated with how email normally worked. . . . [T]he patents-in-suit overcame the problem of finding out whether a user opened an email or clicked on a link within the email. Those are problems confined to the Internet, and the patents provide Internet-based solutions."

InsideSales.com v. SalesLoft, 2-16-cv-00859 (UTD June 13, 2017, Order) (Kimball, SJ)

Wednesday, June 14, 2017

Shipping Products and Communicating with Customers Do Not Establish Regular and Established Place of Business in Forum State Sufficient to Support Venue​

Following the Supreme Court ruling in TC Heartland, the court granted defendants' motions to transfer plaintiff's patent infringement action from the Southern District of Ohio to the Southern District of Texas because plaintiff failed to establish that defendants committed the acts of infringement in the forum or had a regular and established place of business there. "The unsupported allegations of plaintiff's complaint that defendants sold and/or offered for sale accused product to a company in this judicial district are insufficient to establish that defendants committed acts of infringement in this district for purposes of venue under § 1400(b). . . . [P]laintiff has not provided any evidence to establish that defendants employ local representatives or store any product in this district. The fact that defendants may communicate by email or telephone with customers in the Southern District of Ohio or ship product from Texas to customers in this district does not establish that defendants have a permanent and continuous presence here. . . . Likewise, the allegation that defendants 'may have physically visited .. . or otherwise been in this district for business' is not sufficient because even if true, such visits do not establish a permanent and continuous presence."

Stuebing Automatic Machine Company v. Gavronsky d/b/a Matamoros Machine Shop et al, 1-16-cv-00576 (OHSD June 12, 2017, Order) (Litkovitz, MJ)

Tuesday, June 13, 2017

“Non-Infringing Alternative” Means Alternative that is Non-Infringing, Not Alternative That Could be Successfully Sued for Infringement​

The court overruled defendants' objection to the magistrate judge's recommendation to deny defendants' motion for summary judgment that plaintiffs were not entitled to lost profits damages because no infringing alternatives existed in the but-for world. "Defendants insist that the but-for world to which comparisons must be made in order to assess [plaintiffs'] claim for lost profits damages is a world in which non-party manufacturers of generic carvedilol would have existed, and from which direct infringers (i.e., physicians) would have obtained carvedilol. . . . The undisputed evidence is that Defendants' generic carvedilol is interchangeable with the generic carvedilol of the non-party manufacturers; therefore, the generic carvedilol of these non-party manufacturers is an infringing alternative - and not a noninfringing alternative. These non-parties' products, thus, would not exist in the but-for world, which must be constructed to include 'likely outcomes with infringement factored out of the economic picture.'. . . That there is no evidence that the non-party generic manufacturers could be held liable for induced infringement, while Defendants are charged only with induced infringement, does not alter this conclusion. The issue for the lost profits calculation is whether the product is non-infringing, not whether the alternative supplier has been, or could be, successfully sued for infringement."

GlaxoSmithKline LLC et al v. Glenmark Generics Inc., USA, 1-14-cv-00877 (DED June 9, 2017, Order) (Stark, USDJ)

Monday, June 12, 2017

Expert's Reasonable Royalty Analysis Based on Comparable Licenses Not Unreliable for Failing to Apportion

​ The court denied plaintiff's motion to exclude as unreliable the testimony of one of defendant's damages experts regarding his opinion that $6.16 billion was a reasonable royalty as to six patents-in-suit on the ground he failed to apportion between patented and unpatented technologies. "[Defendant] argues that the Federal Circuit has approved the methodology of calculating a reasonable royalty rate based on comparable licensing negotiations without performing a separate apportionment analysis on the smallest saleable unit. In comparing the licenses here, [the expert] showed that . . . the licensed patents had 'extraordinarily similar technology' to the technology of the patents being asserted here. [The expert] also identified indicia of economic comparability between the comparable license agreements and the hypothetical licenses involved here, as well as any effect of alleged differences between them. . . . [His] method is consistent with the Federal Circuit's approved methodology for valuing asserted patents based on comparable licenses. . . . Whether the prior license agreements [he] relied on are sufficiently comparable to support his proposed reasonable royalty is a factual issue best addressed by examination, including cross-examination, at trial."

Intel Corporation v. Future Link Systems LLC, 1-14-cv-00377 (DED June 8, 2017, Order) (Stark, USDJ)

Friday, June 9, 2017

TC Heartland is Not Intervening Law That Excuses Waiver of Venue Challenge​

The court denied defendants' motion to transfer venue due to waiver and rejected defendant's argument that the Supreme Court's recent ruling in TC Heartland qualified as an intervening change in law excusing such waiver. "Based on the Supreme Court's holding in [TC Heartland LLC v. Kraft Foods Grp. Brands LLC, No. 16-341 (U.S. May 22, 2017)], Fourco has continued to be binding law since it was decided in 1957, and thus, it has been available to every defendant since 1957. Accordingly, the Court finds that TC Heartland does not qualify for the intervening law exception to waiver because it merely affirms the viability of [Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957)]. [Defendant's] assumption that Fourco was no longer good law was reasonable but wrong, and it cannot be excused from its waiver by saying there was a change in the law. . . . ' Because the Supreme Court did not change the law, retroactivity is also not at issue, and the Court does not address Defendant's arguments regarding retroactivity."

Cobalt Boats, LLC v. Sea Ray Boats, Inc. et al, 2-15-cv-00021 (VAED June 7, 2017, Order) (Morgan, SJ)

Thursday, June 8, 2017

Improved Bargaining Position for Ongoing Royalty Does Not Support Trebling of Jury’s Implied Per Unit Royalty Rate ​

Following a jury verdict of $234 million, the court granted in part plaintiff's motion for an ongoing royalty and awarded a royalty at the same rate proposed by plaintiff's damages expert at trial. "[Plaintiff] seeks an ongoing royalty of three times the implied jury’s per unit rate but provided little justification for this figure. . . . [Defendant's] proposal that the court simply award the rate awarded by the jury for the past infringing sales is a non-starter. . . . Relying on [its] expert . . . [plaintiff] sought a royalty rate of $2.74 per unit, which the jury discounted, presumably because the jury found [plaintiff's] bargaining position during the hypothetical negotiation was not as strong as it maintained. In light of [plaintiff's] improved bargaining position after the jury’s finding of infringement and validity, the court finds that the $2.74 rate is fair and reasonable."

Wisconsin Alumni Research Foundation v. Apple Inc., 3-14-cv-00062 (WIWD June 6, 2017, Order) (Conley, USDJ)

Wednesday, June 7, 2017

Attorney Fees Award Not Limited to Expenses Caused by Litigation Misconduct Where Plaintiff’s Objectively Weak Positions Permeated the Entire Case​

Following remand, the court awarded defendants over $700,000 in attorney fees under 35 U.S.C. § 285 and rejected plaintiff's argument that fees should be limited to those incurred because of its litigation misconduct. "Plaintiff’s suggestion that any fees awarded in this case must 'only compensate for the extra legal expense caused by the litigation misconduct' is unpersuasive. . . . This Court found that the case was exceptional because Plaintiff’s efforts to manufacture venue, the use of a privileged email, and because of the overall weakness of the merits of Plaintiff’s positions taken at the [PTO]. It was not only Plaintiff’s conduct throughout the litigation, but also the objective weakness of Plaintiff’s proposed constructions before the [PTAB]. . . . Plaintiff’s misconduct permeated throughout the entirety of this matter. From the start of this litigation until the motion for attorney’s fees, Plaintiff’s conduct has stood out from the usual case. Accordingly, Defendants are entitled to their full fee as calculated by the lodestar method."

Large Audience Display Systems, LLC v. Tennman Productions, LLC, et al, 2-11-cv-03398 (CACD June 2, 2017, Order) (Real, USDJ)

IPR Estoppel Applies to Competitors' Product Manuals​

The court granted plaintiff's motion in limine to preclude defendants from asserting invalidity grounds based on competitors' product manuals because the manuals were reasonably available through searching and therefore could have been raised as grounds for unpatentability in defendant's earlier petition for inter partes review. "Defendants assert that manuals for prior art products are not estopped because they were not reasonably available through searching. Plaintiff counters that Defendants' executives knew about the competitor that had the products at issue, and Plaintiff argues that Defendants' position is disingenuous. This issue is a credibility issue because the manuals are undoubtedly printed publications, and Defendants' awareness of the manuals is the only question affecting whether these references are estopped. The Court does not believe that Defendants were unaware of a larger competitor's product lines, and thus, the Court finds that the [product] manuals were reasonably available through searching."

Cobalt Boats, LLC v. Sea Ray Boats, Inc. et al, 2-15-cv-00021 (VAED June 5, 2017, Order) (Morgan, SJ)

Tuesday, June 6, 2017

Parties Ordered to Brief Propriety and Effect of Alleging Resident “Doe” Defendant Following TC Heartland​

The court ordered additional briefing on defendant's motions to dismiss or transfer plaintiff's patent infringement complaint in light of the Supreme Court's recent ruling in TC Heartland and plaintiff's allegations against a resident John Doe defendant. "Plaintiff and [defendant] shall rebrief the issue of transferring this action in the wake of the intervening changes in governing law and Plaintiff's subsequent allegations against Defendant John Doe in the Amended Complaint [including] [w]hether a transfer of this action under 28 U.S.C. § 1404(a) is warranted after the United States Supreme Court's holding in TC Heartland, LLC v. Kraft Foods Group Brands, LLC, No. 16-341 (U.S. May 22, 2017), and after the addition of the John Doe Defendant [;][and] [w]hether Plaintiff had a good faith basis for pleading John Doe's residence in Paragraph 9 of the Amended Complaint."

Symbology Innovations, LLC v. Lego Systems, Inc., 2-17-cv-00086 (VAED June 2, 2017, Order) (Allen, USDJ)

Monday, June 5, 2017

Aggressive Litigation Tactics Creating Needlessly Repetitive, Irrelevant or Frivolous Work Warrants $8 Million Attorney Fees Award

Following a jury verdict of willful infringement, the court granted plaintiff's motion for attorney fees under 35 U.S.C. § 285 because defendant's litigation tactics were exceptional. "There can be no doubt from even a cursory review of the record that [defendant] pursued litigation about as aggressively as the court has seen in its judicial experience. . . . [Defendant] maintained its reliance on nineteen invalidity theories to the eve of trial, and then at trial presented only a single defense of anticipation and a single claim of invalidity under § 112. . . . [Defendant] asserted many more defenses through the summary judgment exercise, causing [plaintiff] to expend its resources on responding to such motions, all of which were denied. . . . [T]he court understands the need for flexibility in terms of allowing attorneys to vigorously pursue the best interests of their clients; as a consequence, the court has rarely awarded fees pursuant to § 285. However, [defendant's] litigation strategies in the case at bar created a substantial amount of work for both [plaintiff] and the court, much of which work was needlessly repetitive or irrelevant or frivolous. Of course, the fact that the jury found that [defendant's] infringement was willful is yet another factor to be considered."

SRI International Inc. v. Cisco Systems Inc., 1-13-cv-01534 (DED June 1, 2017, Order) (Robinson, USDJ)

Defendant’s Litigation Conduct, Market Position, Disdain for Plaintiff, and Weak Defenses Justify Enhanced Damages Award of $23 Million​

Following a jury verdict of willful infringement, the court granted plaintiff's motion for enhanced damages and doubled the jury award of $23.6 million. "[S]ome enhancement is appropriate given [defendant's] litigation conduct, its status as the world's largest networking company, its apparent disdain for [plaintiff] and its business model, and the fact that [defendant] lost on all issues during summary judgment and trial, despite its formidable efforts to the contrary. Even assuming for purposes of the record that [defendant] has undertaken some post-trial remedial actions, the court concludes that a doubling of the damages award is appropriate."

SRI International Inc. v. Cisco Systems Inc., 1-13-cv-01534 (DED June 1, 2017, Order) (Robinson, USDJ)

Friday, June 2, 2017

IPR Estoppel Warrants Exclusion of Patents and Printed Publications Except to Establish Dates of Public Use or Sale of Systems​

The court granted plaintiff's motion in limine to preclude invalidity arguments based on certain patents and printed publications due to IPR estoppel, but denied the motion as to prior art systems. "While [defendant] will be permitted to present its defense of invalidity based on [two prior art] systems, [defendant] will be limited to using any documents that qualify as patents or printed publications solely for the purpose of establishing the date on which the [two prior art] systems were in public use or on sale. [The motion is] denied as to [plaintiff's] argument that [defendant] is estopped from asserting the [two prior art] systems as prior art."

Biscotti Inc. v. Microsoft Corporation, 2-13-cv-01015 (TXED May 30, 2017, Order) (Payne, MJ)

Thursday, June 1, 2017

IPR Institution Decision Addressing Priority Date Entitled To No Deference​

The court denied defendant's motion for summary judgment that a patent-in-suit was not entitled to the filing date of the provisional application on the ground that the application did not disclose certain limitations as determined by the PTAB. "[Defendant] contends that the Court should apply substantial deference to the findings of the [PTAB], which at one point concluded that the provisional application did not disclose the offset band limitations and therefore the priority date of the [patent-in-suit] was its filing date. . . . [N]either party is appealing or directly challenging through some other statutory mechanism a decision by the PTAB. Therefore the cases cited by [defendant] do not require the Court to defer to the PTAB's findings. Further, the PTAB made this finding regarding the [patent] priority date in an order setting out its decision on a request by [defendant] to institute inter partes review. . . . The Federal Circuit has indicated that even the PTAB itself is not bound by findings it makes in decisions to institute inter partes review. . . . [Plaintiff] has now provided the Court with an expert declaration that impacts the determination of the priority date. The Court therefore declines to defer to the PTAB's preliminary determination on this issue."

Riddell, Inc. v. Kranos Corporation d/b/a Schutt Sports, 1-16-cv-04496 (ILND May 30, 2017, Order) (Kennelly, USDJ)

Wednesday, May 31, 2017

Expert’s Reliance on Confidential Information From Other Cases Undermines Request for Additional Source Code​

The court denied without prejudice plaintiff's motion to compel the production of additional source code because of a potential protective order violation by its expert. "[Plaintiff] disclosed that the testifying expert was able to identify the purported incompleteness because he had previously been given access to the source code when working in other cases as an expert witness, apparently for parties adverse to [defendant]. In that other litigation, there were presumably protective orders and/or agreements in place limiting use in other cases of information obtained about [defendant's] confidential information, just as the protective order in this case imposes such limitations. The testifying expert’s reliance on confidential information of [defendant's] obtained in other cases therefore presents several questions requiring further elucidation. . . ."

Valencell, Inc. v. Fitbit, Inc., 5-16-cv-00002 (NCED May 29, 2017, Order) (Gates, MJ)

Tuesday, May 30, 2017

How Many Petitions for Inter Partes Review Have Less Than All Challenged Claims Granted?

With the recent grant of certiori in SAS Institute Inc. v. Lee, 16-969, the Supreme Court will answer the question:
"Does 35 U.S.C. § 318(a), which provides that the Patent Trial and Appeal Board in an inter partes review 'shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner,' require that Board to issue a final written decision as to every claim challenged by the petitioner, or does it allow that Board to issue a final written decision with respect to the patentability of only some of the patent claims challenged by the petitioner, as the Federal Circuit held?"
With Docket Navigator's Motion Success charts, you can create statistics in real-time, 24/7 that show the number of petitions for IPR that had all challenged claims granted, all challenged claims denied, and some claims granted or denied. In the following Motion Sucess chart, the red portions of the chart are petitions that had all challenged claims denied IPR, the green portion had all claims granted, and the gray "partial" portions had some claims granted, and some claims denied IPR:

Success Rates of PTAB Institutions of IPR

As a percentage of total decisions, partial institutions have decreased each year since the AIA was enacted. Denials of all challenged claims (the red portions of the chart) are at an all-time high as a percentage of total institution decisions for each year.

Failure to Account for Economic Differences Between Standards-Essential License and Hypothetical License Warrants Exclusion of Expert Testimony​

The court granted plaintiff's motion to exclude the testimony of defendant's damages expert regarding two prior licenses that the parties entered into under the HDMI standard as unreliable for failing to address the economic differences between the licenses and the hypothetical license-in-suit. "[Plaintiff] highlights the fact that [defendant] concedes that the HDMI standards setting organization 'imposes a patent non-assertion covenant and reserves the right to establish royalty fees.' While the Court declines to determine whether or not the HDMI licenses are subject to RAND obligations, the Court is persuaded that the economic differences between the HDMI licenses and the hypothetical license in suit (due to the fact that the HDMI licenses are standard-essential) are such that [defendant's expert] should have accounted for them. Failure to do so warrants exclusion."

Biscotti Inc. v. Microsoft Corporation, 2-13-cv-01015 (TXED May 25, 2017, Order) (Payne, MJ)

Friday, May 26, 2017

Failure to Disclose § 101 Defense in EDTX Initial Disclosures May Not Constitute Waiver​

The court denied plaintiff's motion to strike portions of the report of defendant's invalidity expert that included a previously undisclosed theory of unpatentability under 35 U.S.C. § 101, but reserved ruling on whether defendant waived that defense until trial. "[U]nlike some other districts’ Patent Rules, this district’s Patent Rules do not require a party to disclose an invalidity ground related to subject matter ineligibility under § 101. And because [the expert's] report does not identify any new factual basis for [defendant's] § 101 theory, no discovery violation has occurred. . . . Having said that, it is not clear why [plaintiff] has moved to 'strike' a portion of an expert report related to § 101 when both sides agree that invalidity under § 101 is not a jury issue. . . . Nor is it clear how [defendant] intends to raise its new § 101 invalidity theory when the time for filing motions for summary judgment has passed. If [defendant] intends to raise the theory for the first time during the JMOL phase of the case, the Court will address any waiver argument at that time."

Biscotti Inc. v. Microsoft Corporation, 2-13-cv-01015 (TXED May 24, 2017, Order) (Payne, MJ)

Thursday, May 25, 2017

Multi-Level Encryption Patents Not Invalid Under 35 U.S.C. § 101

​ The court denied defendant's motion for summary judgment on the ground that plaintiff’s encryption patents encompassed unpatentable subject matter because the asserted claims were not directed toward an abstract idea. "Plaintiff has adequately pleaded in this case that the patents create a solution to a computer-centric problem which is not addressed by the prior art. Despite Defendant's assertions, the claims are not reducible to putting a sealed envelope (single-level encryption) into a second sealed envelope (multi-level encryption) for extra security. Rather, the claims provide a specific solution to implementing the multiple levels of nested security through the 'object oriented key manager.' They offer a solution to a problem, multiple users in multiple locations accessing information at different security levels from a central repository, which would not exist but for the ubiquity of computer technology."

TecSec, Incorporated v. International Business Machines Corporation, et al, 1-10-cv-00115 (VAED May 23, 2017, Order) (O'Grady, USDJ)

Post-TC Heartland Venue Question Raised Sua Sponte​

Following the recent Supreme Court decision in TC Heartland, the court sua sponte ordered the parties to brief whether venue of plaintiffs' patent infringement action was proper. "In light of the recent United State Supreme Court case, TC Heartland LLC.v Kraft Foods Group Brands LLC (May 22, 2017), the parties are directed to brief whether venue is proper in this district. . . . The hearing set [in two weeks on defendant's motion for summary judgment of invalidity] is vacated and will be reset, if necessary, after resolution of the venue question."

Columbia Insurance Co. et al v. Integrated Stealth Technology Inc., 3-16-cv-03091 (ILCD May 23, 2017, Order) (Myerscough, USDJ)

Wednesday, May 24, 2017

Expert Testimony That Defendant Evaded and Avoided Taxes Excluded as Prejudicial ​

The court granted defendant's motion to strike the opinions of plaintiff's damages expert that defendant engaged in tax evasion and avoidance as unduly prejudicial under FRE 403. "[Plaintiff's expert] has offered opinions that [defendant] 'has structured its organization and business operations in an effort to attempt to avoid U.S. income taxes and reduce the contribution it makes to the U.S. Treasury.'. . . [Plaintiff] argues that [defendant's] taxation strategy rebuts [its] position that its sales occur outside of the United States. . . . The motivation of [defendant's] business model is not the issue. Plaintiff is free to discuss the way [defendant] conducts its business without getting into the tax consequences of those actions. The Court finds that any slight probative value of discussing [defendant's] taxation strategy at trial would be substantially outweighed by unfair prejudice to [defendant]."

Godo Kaisha IP Bridge 1 v. Broadcom Limited et al, 2-16-cv-00134 (TXED May 19, 2017, Order) (Payne, MJ)

Tuesday, May 23, 2017

Patents Claiming Method for Parking Violation Enforcement Via Self-Release Booting System Invalid Under 35 U.S.C. § 101​

The court granted plaintiffs' motion to dismiss because the asserted claims of defendant's parking enforcement patents encompassed unpatentable subject matter and found that the claims were directed toward an abstract idea. "[T]he [asserted patents] generally describe a method of parking violation enforcement via a self-release booting system which enables the person responsible for a vehicle to remove an immobilizing boot without waiting for an enforcement company or municipal employee to arrive on the scene. . . . [T]he [patents] are directed to the abstract idea of expediting the vehicle immobilization process via self-service. . . . [W]hile the . . . patent claims feature other, specific limitations and requirements, such as the use of RFID receivers and the need for a 'remote computer system' or PDA to identify vehicles and communicate their scofflaw status to a centralized host system, none are directed to a technological improvement in how each component works, or in how the use of each component promotes a technological advance. . . . The streamlining of a tedious process may be a welcome improvement, but it is, at its heart, an abstract one: a way of more efficiently 'organizing human activity.'"

SP Plus Corporation v. IPT, LLC, 2-16-cv-02474 (LAED May 19, 2017, Order) (Feldman, USDJ)

Monday, May 22, 2017

Sales of Broadcom Semiconductor Chips May Have Occurred Within the U.S. Despite Being "Ordered, Manufactured, Shipped, Billed, and Delivered to Buyers Abroad"​

The magistrate judge recommended denying defendant's motion for summary judgment that sales of its accused semiconductor products did not occur within the United States even though the products were "ordered, manufactured, shipped, billed, and delivered to buyers abroad." "[Defendant] designs and develops semiconductor chips domestically, but outsources the task of fabricating them to foundries in Asia. . . . [S]ummary judgment is proper only if the movant can demonstrate that, after viewing all facts in favor of non-movant, no reasonable juror could find that no substantial activities of a sales transaction occurred inside the United States. . . . A reasonable jury could find that many substantial activities relating to sales transactions occurred within the United States based on at least the fact that: . . . [T]he overwhelming majority of Defendants’ design, development, marketing and sales activities occur in the United States. . . . [Agreements] entered into in the United States govern the terms of purchase orders entered into outside the United States . . . Purchase orders entered into overseas may be processed and maintained by [defendant's[ domestic sales team . . . U.S. sales teams provide support to Defendants’ U.S. customers, and [defendant] categorizes its sales information and activity for internal purposes based on the location of end customers. . . . Defendants track sales commissions for sales of products made overseas as if they were domestic sales. . . . [Defendant uses products manufactured overseas to] determine sales force compensation."

Godo Kaisha IP Bridge 1 v. Broadcom Limited et al, 2-16-cv-00134 (TXED May 18, 2017, Order) (Payne, MJ)

Friday, May 19, 2017

Expert’s Failure to Provide Report Should be Addressed as Discovery Dispute, not Daubert Motion​

The court denied plaintiffs' motion to strike the expert disclosure of a defendant's employee because plaintiffs did not attempt to resolve the issue as a discovery matter. "While [defendant's vice President of Engineering] certainly appears to have direct and personal knowledge of some of the facts in the case, the opinions offered in his Disclosure fall in the realm of expert opinions subject to Rule 26(a)(2)(B). . . . Despite being aware of possible Rule 26 violations [3 months ago], Plaintiffs do not appear to have made any effort to obtain a written report through conference with Defendants or by bringing the matter to [the magistrate judge]. Instead, they waited nearly five weeks to file their Motion and raise these issues for the first time. Had they timely raised the issue when they learned of it at deposition -- and before the close of discovery [2 1/2 months ago] -- they might have been able to obtain an expert report and conduct additional investigation or depositions. Plaintiffs may not delay in challenging a Rule 26 violation and then seek the most extreme of sanctions in a Daubert motion filed after the proper time for challenging discovery violations has expired."

Rossi et al v. Darden et al, 1-16-cv-21199 (FLSD May 17, 2017, Order) (Altonaga, USDJ)

Thursday, May 18, 2017

Patentee May Not Modify Conception Date Disclosed in Infringement Contentions With Supplemental Interrogatory Response​

The court granted defendant's motion to strike plaintiff's supplemental interrogatory response and precluded plaintiff from asserting a conception date at trial earlier than the date disclosed in its preliminary infringement contentions. "[Plaintiff] had to disclose a specific date of conception and produce documentary evidence of that conception date in its Patent Local Rule disclosures. . . . [A]lthough [plaintiff] may have disclosed its proposed conception date in time for [defendant] to conduct discovery, that does not cure any prejudice resulting from [plaintiff's] failure to follow the local rules that 'require patent holders to ‘crystallize their theories of the case early in the litigation’ . . . . This poses a minimal burden for a patent holder, who should already know the conception date of a patented invention prior to commencing litigation.'. . . To the extent that [plaintiff] altered its conception date and evidence based on discovery, it had to amend its Rule 3 disclosures to include those changes. Because [plaintiff] did not do so, it cannot argue an earlier conception date than [its originally disclosed date], with respect to [defendant's] prior art."

Femto Sec Tech, Inc. v. Alcon LenSx, Inc., 8-15-cv-00624 (CACD May 16, 2017, Order) (Selna, USDJ)

Wednesday, May 17, 2017

Post-IPR Estoppel Does Not Apply to New Invalidity Theories​

The court granted plaintiff's motion to clarify an earlier order concerning the meaning of "ground for invalidity" for purposes of post-IPR estoppel under 35 U.S.C. § 315(e), but deferred ruling on whether defendant was estopped from asserting a specific theory on invalidity. "[Plaintiff] essentially asks the court to explain what a 'ground for invalidity' is. . . . [T]he defendant is not locked into the precise argument made in its IPR petition. But if the new theory relies on different, uncited portions of the prior art, attacks different claim limitations, or relies on substantially different claim constructions, then the new theory is tantamount to a new invalidity ground, and the court will treat it like a non-petitioned ground subject to estoppel. . . . At this point in the case, I cannot tell who, if anyone, is playing fast and loose with the meaning of [a claim term]. But it hardly seems fair to restrict [defendant] to the claim construction used in the IPR, if [plaintiff] is free to re-tool its infringement case with new claim constructions, as [plaintiff] suggests that it is free to do. I will defer a decision on whether these principles would estop [defendant] from contending that claim 6 is anticipated by Keeler under the alternative interpretation of [the claim term]. The parties are free to argue the § 315(e) estoppel issue at summary judgment."

Douglas Dynamics, LLC v. Meyer Products LLC, 3-14-cv-00886 (WIWD May 15, 2017, Order) (Peterson, USDJ)

Tuesday, May 16, 2017

Apple Ordered to Produce Discovery Regarding Unreleased Products and Prototypes

​ The ALJ granted complainant's motion to compel respondent to produce documents regarding unreleased products and prototypes expected to be imported before the conclusion of the evidentiary hearing. "The Commission routinely grants discovery with respect to future products. [Respondent] contends that it should be the exception to this rule, as [it] 'takes significant measures in an effort to maintain absolute secrecy over the details of its unreleased products under development.' As the undersigned has previously noted, however, [respondent] is not unique in wanting to preserve the confidentiality of its unannounced products. Additionally, a party is not permitted to unilaterally withhold discovery due to confidentiality concerns. The proper procedure for addressing such concerns is through a motion for a protective order. Notably, [respondent] has not made such a motion here."

Electronic Devices, Including Mobile Phones, Tablet Computers, and Components Thereof, 337-TA-1038 (ITC May 11, 2017, Order) (Bullock, ALJ)

Monday, May 15, 2017

IPR Estoppel Applies to “Subsets” of Prior Art Groups That the Petitioner Raised or Could have Raised During IPR​

The magistrate judge recommended partially granting plaintiff's motion for summary judgment that IPR estoppel barred defendant from asserting certain "subsets" of prior art groups previously asserted as unpatentability grounds in the IPR. "[T]he PTAB instituted IPR . . . under § 103(a) based on the combination of Kenoyer, Briere, and Hurley. [Defendant] should be estopped from asserting Kenoyer and Briere as a basis for obviousness at trial because [defendant] raised or could have raised this combination during IPR proceedings. Similarly, [defendant] should be estopped from asserting Kenoyer alone . . . because Kenoyer is a subset of Kenoyer, Briere, and Hurley. This portion of the recommendation, however, extends only to subsets of invalidity grounds that [defendant] raised or reasonably could have raised during IPR proceedings."

Biscotti Inc. v. Microsoft Corporation, 2-13-cv-01015 (TXED May 11, 2017, Order) (Payne, MJ)

IPR Estoppel Applies to Non-Instituted Grounds Included in a Petition Unless the Decision Not to Institute was Purely Procedural​

The magistrate judge recommended partially granting plaintiff's motion for summary judgment that IPR estoppel barred defendant from asserting certain prior art references and rejected the argument that IPR estoppel applied only to defenses raised after IPR institution. "The Court recommends adopting the narrow view of [Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir. 2016), cert. denied, (U.S. Oct. 31, 2016)] and [HP Inc. v. MPHJ Technology Inv., LLC, 817 F.3d 1339 (Fed. Cir. 2016)]. Namely, the Court reads Shaw and HP to exempt an IPR petitioner from § 315(e)'s estoppel provision only if the PTAB precludes the petitioner from raising a ground during the IPR proceeding for purely procedural reasons, such as redundancy. . . . Section 315(e) estops [defendant] from asserting at trial: (1) grounds for which the PTAB instituted IPR and determined those grounds to be insufficient to establish unpatentability after a trial on the merits; (2) grounds included in a petition but determined by the PTAB to not establish a reasonable likelihood of unpatentability (in other words, administrative review on the merits of a ground); and (3) grounds not included in a petition that a 'skilled searcher conducting a diligent search reasonably could have been expected to discover.' . . . [Defendant] is not estopped from asserting grounds included in a petition but which the PTAB found redundant or declined to institute review for another procedural reason."

Biscotti Inc. v. Microsoft Corporation, 2-13-cv-01015 (TXED May 11, 2017, Order) (Payne, MJ)

Friday, May 12, 2017

Plaintiff’s Failure to Dismiss in Light of Unrebutted Evidence of Noninfringement Warrants Rule 11 Sanctions​

The magistrate judge recommended Rule 11 sanctions against plaintiff for costs and fees incurred after defendant filed a motion to dismiss with declarations showing it "does not make, sell, offer to sell, or import any of the accused [products]." "[W]hile it is not clear that [plaintiff] undertook a proper investigation before filing suit against [defendant], [plaintiff's] conduct became objectively unreasonable at the filing of their opposition to [defendant's] Motion to Dismiss. . . . While [plaintiff] admits the question of liability was unclear at the time of filing, this relationship became abundantly clear at the filing of [defendant's] Motion to Dismiss with supporting declarations. . . . Tellingly, [plaintiff] decided shortly after the filing of its response to file suit against [defendant's licensee] [two months ago], but did not dismiss its claims against [defendant]. . . . [Plaintiff] did not reach out or file a stipulation of dismissal upon receipt and review of [defendant's] Motion and only attempted to file such a dismissal after it knew the Court was considering sanctions. . . . [T]his filing by [plaintiff] was simply too late to absolve [it] of its unreasonable conduct in pursuing opposition to [defendant's] Motion. . . . Instead, [plaintiff] continued to pursue its claims at the expense of the Court and the parties. The Court finds that this conduct warrants sanctions under Rule 11."

Blue Spike, LLC v. Caterpillar Inc. et al, 6-16-cv-01361 (TXED May 10, 2017, Order) (Love, MJ)

Thursday, May 11, 2017

Patentee's Infringement Claim Against Customers Creates Substantial Controversy With Manufacturer​

The court denied defendant's motion to dismiss plaintiffs' declaratory relief action and rejected defendant's argument that its lawsuit against plaintiffs' customer was insufficient to create an actual controversy with plaintiffs. "[Defendant's] litigation against [plaintiffs' customer] was an affirmative act by [defendant] to enforce its patent rights against alleged infringement by [plaintiffs'] Tree. . . . Its claim charts referred only to [plaintiffs'] trees and explained how [defendant] believed [plaintiffs'] trees met each and every claim of [defendant's] patents. . . . [Defendant] argues that a lawsuit against a manufacturer’s customer is not sufficient for Article III standing. . . . As [defendant] admits, its claims against [the customer] were based solely on its selling [plaintiffs'] Trees, something [a plaintiff] itself did. Unlike [other cases cited by defendant], [defendant's] infringement claims against [the customer], based on its sales of [plaintiffs'] trees, necessarily demonstrate a case or controversy with [plaintiffs]."

UCP International Co., Ltd. et al v. Balsam Brands Inc. et al, 3-16-cv-07255 (CAND May 9, 2017, Order) (Orrick, USDJ)

Wednesday, May 10, 2017

Recent Jury Verdict Subject to Post-Trial Motions and Appeal Not a Reliable Data Point for Damages Expert Opinion

The court denied plaintiff's motion to supplement its damages expert's report to address a recent $9.1 million jury verdict against a consolidated defendant because that judgment was not yet final and a reliable data point. "[T]o date, the Court has yet to enter final judgment in the [consolidated] case. [Plaintiff] and [the consolidated] are currently participating in post-trial motion practice in accordance with the Court’s Order setting the post-trial briefing schedule. . . . [U]ntil a final judgment exists and motions under Rules 50(b) and 59 have been considered, the jury’s verdict is not fixed and remains subject to multiple avenues of attack. It further goes (almost without saying) that after this lengthy process results in a final judgment entered by this Court, the resulting judgment is then subject to appeal. In short, the verdict in the [consolidated] case is a long way from being an established and reliable data point that could properly be urged by [plaintiff] in its upcoming trial against [these defendants]."

Saint Lawrence Communications, LLC v. ZTE Corporation et al, 2-15-cv-00349 (TXED May 8, 2017, Order) (Gilstrap, USDJ)

Tuesday, May 9, 2017

Defendant May Not Rely on Component of Previously Disclosed Prior Art Reference as a Separate Invalidating Reference

​ The court granted plaintiff's motion to preclude defendant from presenting evidence that a component of a previously disclosed prior art reference invalidated the patent-in-suit because of the undue prejudice to plaintiff. "While [defendant] may argue that [previously disclosed reference] anticipates the patent-in-suit, it does not follow that [defendant] can argue that [the component] alone anticipates or renders obvious the patent-in-suit even though [the component] is a component of [the previously disclosed reference]. [Defendant] should have specifically disclosed in its invalidity contentions its intention to argue that [the component] alone anticipates or renders obvious the patent-in-suit. . . . There is substantial prejudice to Plaintiff from [defendant's] late disclosure because [plaintiff's] expert has not assessed [the component] as potentially invalidating art and [plaintiff] is prevented fact discovery or deposing [defendant's] expert on this issue."

EI du Pont de Nemours and Company v. Unifrax I LLC, 1-14-cv-01250 (DED May 5, 2017, Order) (Andrews, USDJ)

Monday, May 8, 2017

Patent for Efficiently Monitoring and Transmitting Patient Data Not Invalid Under 35 U.S.C. § 101​

The court denied defendant's motion for judgment on the pleadings that plaintiffs’ patent for efficiently monitoring and transmitting patient data encompassed unpatentable subject matter because the asserted claims did not lack an inventive concept. "Claim 9 does not introduce the concept of remote patient monitoring, but it purports to improve upon prior art in the mobile cardiac elemetry field by taking advantage of 'a communications device which selectively establishes a communications link between the remote monitoring unit and the central unit.' In so doing, Claim 9 purports to 'adopt[] a new data transfer architecture with improved selectivity of data transmission but retention of the data accumulation capability to build the patient history and also the emergency capability to assist the patient on an urgent basis when needed.' . . . Claim 9 purports to improve upon the previous technology, which did not allow for selectivity in determining the data set that would be transmitted to the central unit. . . . [T]he patent is 'more than a drafting effort to monopolize the [abstract idea].' Therefore, when read as an ordered combination, the court cannot determine as a matter of law that Claim 9 lacks an inventive concept."

CardioNet, LLC et al v. InfoBionic, Inc., 1-15-cv-11803 (MAD May 4, 2017, Order) (Talwani, USDJ)

Friday, May 5, 2017

3D Camera Exposure Patent Invalid Under 35 U.S.C. § 101​

The court granted defendant's motion to dismiss because the asserted claims of plaintiff’s 3D camera exposure patent encompassed unpatentable subject matter. "A patent claim that recites a solution to a problem but not the means of achieving it is not drawn to patent-eligible subject matter. It is drawn to an abstraction. . . . Claim 1 of the [patent] is this kind of claim. The claim's preamble recites the technological context of the invention and its end goal; the first element restates the technological context; and the second element restates the end goal. The method of optimizing exposure on a structured-light 3D camera – the how that's nominally the subject of the claimed invention – is absent. . . . Describing the function of the prior-art cameras situates the claimed invention in the technological environment in which it operates, but it doesn't explain the invention itself. . . . By all appearances . . . the only effect of the word 'using' is to disclose the starting point of a method the claim doesn't explain: 'Using' two images, you get an optimal exposure. 'Using' certain inputs, you get a certain result. This is not enough to make claim 1 concrete. A claim cannot recite inputs and end result, then claim everything in between."

SungKyunKwan University, Research and Business Foundation v. LMI Technologies USA Inc., 3-16-cv-06966 (CAND May 3, 2017, Order) (Chhabria, USDJ)

Thursday, May 4, 2017

No Exclusion of Expert’s Infringement Theory Plausibly Supported by Vague Infringement Contentions

The court denied defendant's motion to strike portions of the report of plaintiff's technical expert that contained previously undisclosed infringement theories. "[Plaintiff] has pointed to words, sentences, and figures in its contentions that support [its expert's] theories. Although in context, [plaintiff's] contentions may have led [defendant] to assume that [plaintiff] was identifying a particular aspect of the [accused] product, [defendant] did not seek assurances that this was actually the case. . . . It was incumbent on [defendant] to seek clarification, through written discovery, the meet and confer process, or motion practice, on any infringement contention that was slightly vague or unclear, particularly as the case progressed. Plaintiff has raised plausible arguments that its contentions support [the expert's] infringement opinions. . . . The fact that [defendant] had a full opportunity to respond to [the expert's] theories, both through expert report and deposition, also weighs against exclusion of his opinions."

Realtime Data LLC d/b/a IXO v. Actian Corporation et al, 6-15-cv-00463 (TXED April 17, 2017, Order) (Love, MJ)

Wednesday, May 3, 2017

Expert Testimony Concerning Litigation Funding Agreement Excluded as Irrelevant to Hypothetical Negotiation

​ The court granted plaintiff's motion to exclude the testimony of defendant's damages expert regarding litigation funding agreements as irrelevant to the hypothetical negotiation analysis. "These agreements are not patent licensing agreements and are not otherwise relevant to the hypothetical negotiation between the parties. The best that can be said about litigation funding agreements is that they are informed gambling on the outcome of litigation. They are so far removed from the hypothetical negotiation that they have no relevance. I further note that if they were determined to have some marginal relevance, that I would exclude them under Rule 403 as their probative value is more than substantially outweighed by the danger of unfair prejudice to [plaintiff] and of confusing the issues, as their introduction would just invite a sideshow on the economics of patent litigation."

AVM Technologies LLC v. Intel Corporation, 1-15-cv-00033 (DED May 1, 2017, Order) (Andrews, USDJ)

Tuesday, May 2, 2017

Domestically Controlled Foreign Breeding Activities Do Not Infringe Plant Patent​

The court granted defendant's motion for summary judgment of noninfringement of plaintiff's strawberry plant patents as to defendant’s breeding activities conducted in Spain. "[Defendant] imports into the United States the seeds developed from the breeding activities in Spain. [Defendant] germinates and grows these seeds alongside [plaintiff]-patented plants . . . 'as a point of comparison,' to evaluate the performance of the seedlings it is developing. . . . [Plaintiff] argues that the 'situs of infringement' is actually domestic because control over the breeding activities was exercised in the United States and [defendant] receives the benefit of its infringing use here. But the control-and-benefit test on which [plaintiff] relies applies to system patents. . . . [Plaintiff] has provided no justification or case law to support the application of [the control-and-benefit test discussed in NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282, 1316-17 (Fed. Cir. 2005)] to the plant patents at issue in this case. The more logical 'situs of infringement' is Spain, the location 'where the offending act is committed.'"

The Regents of the University of California v. California Berry Cultivars, LLC, et al, 3-16-cv-02477 (CAND April 27, 2017, Order) (Chhabria, USDJ)

Monday, May 1, 2017

IPR Request and Post-Institution Fees Not Recoverable as Costs in Related District Court Case​

Following inter partes review that invalidated plaintiff's patent, the court denied defendant's motion to tax $23,000 in IPR request and post-institution fees as costs. "Defendant has raised an issue of first impression in this Court. But courts from two other circuits have considered this issue and declined to tax fees paid for the PTAB review . . . . [Defendant] urges the Court to adopt a broad reading of 'the Clerk' . . . because litigation 'shifts to that venue' and the IPR is a 'substitute for the district court proceeding.' The Court disagrees that the litigation 'shifted' to PTAB; PTAB merely determined the validity of [plaintiff's] patent, and this Court remained the adjudicator of the infringement suit. . . . PPG Indus., Inc. v. Celanese Polymer Specialties Co., 840 F.2d 1565, 1569 (Fed. Cir. 1988) is inapposite because the court was speaking only to the awarding of attorney fees [under] 35 U.S.C. § 285 . . . . That does not solve the problem that no statute authorizes a court to tax filing fees paid to the PTO. [Defendant] argues that it would be absurd if 'attorney fees within a substitute forum may be available, but the costs of transferring to that (more efficient) substitute forum are unreachable.' But the purported absurdity would hold for all the other deniable costs under 28 USC § 1920, and [defendant] has not made a case for why the IPR filing fee should be given special consideration."

Hockeyline, Inc. v. STATS LLC, 1-13-cv-01446 (NYSD April 27, 2017, Order) (McMahon, USDJ)

Friday, April 28, 2017

No Modification of Injunction Against Direct Competitor to Allow Infringing Sales for Orders Placed Before Trial

​ The court denied defendant's motion to modify a permanent judgment to allow it to fulfill orders of infringing products that were placed long before trial. "[T]he evidence at trial indicated that [the parties] are the only two suppliers of two-wire APS systems. The Court thus finds that modifying the injunction will cause [plaintiff] irreparable harm. . . . [T]he Court cannot help but observe that the Court’s permanent injunction did not arrive suddenly or without warning, thus diminishing the persuasiveness of [defendant's] public-interest argument. [The Court] found that the [accused] device was infringing and granted partial summary judgment nearly three years ago, the jury verdict rejecting [defendant's] invalidity and unenforceability defenses was handed down almost ten months ago, and [plaintiff] moved for a permanent injunction over seven months ago."

Polara Engineering, Inc. v. Campbell Company, 8-13-cv-00007 (CACD April 26, 2017, Order) (McCormick, MJ)

Thursday, April 27, 2017

Gaps in Expert’s Market Analysis Warrant Summary Judgment on Plaintiff’s Lost Profits Claim

The court granted defendants' motion for summary judgment that plaintiff was not entitled to lost profits damages because plaintiff failed to provide an adequate market share analysis. "Defendants first argue that [plaintiff] did not undertake a meaningful market analysis that would support a lost profits calculation. The Court agrees. . . . There are multiple layers of guesswork in [plaintiff's expert's] analysis. . . . [The expert] makes no effort to account for other competitors, but claims [plaintiff] would have made all of [defendant's] accused sales for the six identified products. . . . Also, to claim lost profits from the customer defendants, [plaintiff] needed to analyze other competitor products in the overall KVM switch market in the United States (not just the OEM market). An accounting needs to be made for these gaps in 'but for' causation."

ATEN International Co., Ltd. v. Uniclass Technology Co., Ltd. et al, 2-15-cv-04424 (CACD April 24, 2017, Order) (Guilford, USDJ)

Wednesday, April 26, 2017

Meritless Claim for Declaration of ANDA Infringement by Possible Future Drug Formulation Justifies Award of Attorney Fees under 35 U.S.C. § 285​

The court granted defendants' motion for attorney fees under 35 U.S.C. § 285 because plaintiffs' infringement claim against defendant's operative ANDA and plaintiff's claim for a declaration of infringement by possible future products were baseless. "While Plaintiffs repeatedly argued that it only alleged current patent infringement to trigger Hatch-Waxman review of 'the product that Defendant . . . will likely market if its ANDA receives final FDA approval,' the Court found that [plaintiff's] legal theory was completely unsupported by case law and ignored the existing legal safeguards against Defendants’ potential future infringing conduct. . . . [Plaintiffs] failed to allege that Defendants were engaged in any specific activities to alter their drug formulation to infringe the patents-in-suit and even acknowledged in briefing that the focus of the case was to determine through discovery how [plaintiffs] intended to proceed through the FDA approval process. Ultimately, the absence of credible allegations or evidence that [plaintiffs] would face immediate, irreparable harm absent declaratory relief, caused the Court to conclude the declaratory judgment counts were 'not ripe for adjudication.'"

Par Pharmaceutical, Inc. et al v. Luitpold Pharmaceuticals, Inc. et al, 2-16-cv-02290 (NJD April 24, 2017, Order) (Walls, USDJ)

Tuesday, April 25, 2017

Proportionality of Electronic Document Request is Best Achieved With Search Terms, Not Designated Custodians​

The court granted defendants' motion to compel the production of emails "from seventeen named inventors of the fourteen asserted patents and licensing executives involved in the parties’ FRAND negotiations" and rejected plaintiff's argument that the requests were not proportional and should be limited to certain document custodians. "As other courts have explained in complex cases such as this, [plaintiff's] proposed limitations on e-discovery or the number of email custodians is not typically warranted. The emails from the inventors and licensing executives appear to at least meet the 'reasonably calculated' standard articulated in Rule 26(b)(1). [Plaintiff's] proportionality argument is not persuasive because [defendant] provides adequate limitations on the discovery by requiring particular search terms."

Huawei Technologies Co. Ltd v. T-Mobile US, Inc. et al, 2-16-cv-00052 (TXED April 21, 2017, Order) (Payne, MJ)

Monday, April 24, 2017

Human Tissue Remodeling Patent Claiming “Application and Synthetization of Natural Law Into a Concrete Process” Not Invalid Under 35 U.S.C. § 101​

The court denied defendant's motion to dismiss on the ground that plaintiff’s human tissue remodeling patent encompassed unpatentable subject matter because the asserted claims were not directed toward a natural law or phenomenon. "Defendants first argue that claim 51 is directed to unpatentable subject matter because it is covers a law of nature: namely, 'the natural phenomenon that heat denatures collagen and causes remodeling – i.e., tightening, or any change in the structure – of the heated tissue.'. . . [H]ere the Court is presented with a method patent comprising concrete steps, premised upon a discovery of natural law rendering the relevant subject matter amenable to certain processes. . . . The [patent-in-suit] stands in stark contrast to those patents which the Federal Circuit has invalidated as directed to a natural law or natural phenomenon. In those cases, the patents typically encompass the pure observation or identification of the natural law at issue. . . . In this case, however . . . [the patent] claims the application and synthetization of a natural law into a concrete process, which builds upon the subject matter’s capability of undergoing the process."

Viveve, Inc. v. ThermiGen, LLC et al, 2-16-cv-01189 (TXED April 20, 2017, Order) (Gilstrap, USDJ)

Friday, April 21, 2017

Top Law Firms by Number of Accusations in 2016

What is a Patent Accusation?

A Patent Accusation is a more granular way to measure the volume of litigation activity than counting the number of cases or litigants. As used in this report, the term means a request for relief in a U.S. district court, the ITC or the PTAB (AIA proceedings), the resolution of which could determine if a patent has been infringed or the patent’s validity or enforceability.
For example, a civil case with one plaintiff asserting one patent against one defendant would involve one patent accusation, whereas a case with one plaintiff asserting 5 patents against 10 defendants would result in 50 infringement accusation. Multiple claims involving the same parties and patents (e.g., a claim of infringement and a declaratory judgment counterclaim of invalidity or unenforceability) are counted as a single accusation. In a PTAB proceeding, each challenge to the patentability of a patent would create one patent accusation.


Sale of Software and Separate Plug-In Capable of Infringing When Combined Does Not Constitute Direct Infringement​

The court granted defendant's motion for summary judgment that it did not directly infringe plaintiff's dynamic web page generation patent. "[Plaintiff] contends that [defendant] infringed the asserted claims by storing (separately and in different locations) [its] Server software and ARR plug-in on its severs and by selling [the] Server software to customers while also making its optional ARR plug-in available for download. That infringement theory is problematic in light of the Supreme Court's decision in Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 526-29 (1972). . . . The Court . . . explained that a patent 'does not cover the manufacture or sale of separate elements capable of being, but never actually, associated to form the invention.' But contrary to the decision in Deepsouth, [plaintiff] argues that [defendant] directly infringed the asserted claims even though, under this theory, [defendant] did not assemble the software components into the accused product."

Parallel Networks Licensing LLC v. Microsoft Corporation, 1-13-cv-02073 (DED April 10, 2017, Order) (Jordan, CJ)

Thursday, April 20, 2017

Until Shaw is Limited or Reconsidered, IPR Estoppel Does Not Apply to Non-Instituted Invalidity Grounds Asserted in Petition​

Following inter partes review of the patent-in-suit, the court denied plaintiff's motion to preclude defendant from contesting validity under 35 U.S.C. § 315(e) with respect to invalidity grounds that were asserted in the IPR petition but not instituted. "[Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir.), cert. denied, 137 S. Ct. 374 (2016)] makes the Federal Circuit’s view of whether § 315(e) estoppel applies to non-instituted grounds crystal clear. So until Shaw is limited or reconsidered, this court will not apply § 315(e)(2) estoppel to non-instituted grounds. . . . For the record, this court is not persuaded by Shaw’s interpretation of the term 'during' in § 315(e). Shaw does not adequately consider the history and purpose of the statutory language, and it does not satisfactorily reconcile the narrow interpretation of 'during' with the broader language 'reasonably could have raised.' What are the grounds that the petitioner 'reasonably could have raised' if the petitioner is limited to raising them after review is instituted, when the opportunity to assert new grounds is exceedingly limited? The more reasonable interpretation is that 'during that inter partes review' includes not only the instituted review itself but also the petition process."

Douglas Dynamics, LLC v. Meyer Products LLC, 3-14-cv-00886 (WIWD April 18, 2017, Order) (Peterson, USDJ)

Wednesday, April 19, 2017

Discovery Concerning Plaintiff’s Investor Funding, R&D Costs, and IPO Valuation Not Proportional to Needs of Case​

The court denied without prejudice defendant's motion to compel further interrogatory responses regarding investor funding, initial public offerings, and research and development costs because the discovery was not proportional to the needs of the case. "While it is conceivable that the documents sought by each of these production requests could contain information relevant to one or more issues in this case, the record does not presently show that they are likely to do so. At the same time, the production sought by each production request is extensive, the burden on [plaintiff] of making the production significant, and the intrusion into [plaintiff's] operations entailed by the production substantial."

Valencell, Inc. v. Apple Inc., 5-16-cv-00001 (NCED April 17, 2017, Order) (Gates, MJ)

Tuesday, April 18, 2017

Claim Construction Appropriate at Pleading Stage Where Patent Provides Explicit Definition​

The court denied defendant's motion to dismiss plaintiff's direct patent infringement claim on the ground that plaintiff's claim was based on an implausible interpretation of its patent, but rejected plaintiff's argument that claim construction of its DNA microarray patent was premature. "[T]he Court concludes that it may properly construe a claim term at the pleading stage in certain circumstances. The purpose of a 12(b)(6) motion is, after all, to determine whether a plaintiff states a legally cognizable claim for relief. . . . Defendant’s argument is premised on what is perhaps one of the most appropriate exercises of claim construction at the pleading stage: a claim of lexicography; that is, that the [patent] itself allegedly provides an explicit definition of parameter 'a.'. . . The Court finds that there is merit to both parties’ arguments and thus the Court cannot say at this stage that Defendant’s construction is correct as a matter of law."

The Scripps Research Institute v. Illumina, Inc., 3-16-cv-00661 (CASD April 14, 2017, Order) (Sammartino, USDJ)

Monday, April 17, 2017

Challenge to Printed Publication Status of Prior Art Reference Does Not Justify Late Disclosure of New Reference​

The court granted plaintiff's motion to strike a previously undisclosed prior art publication from defendant's invalidity contentions and rejected defendant's argument that the reference was necessary to address plaintiff's challenge to another reference. "[W]hile it is true that the printed publication argument was raised only in response to [defendant's] motion for summary judgment of anticipation, [defendant] should not have been caught entirely unawares by [plaintiff's] printed publication defense to [defendant's] reliance on the [originally disclosed] reference as anticipating prior art. Given the obscurity of the [original] reference, it is not surprising that [plaintiff] would raise an issue as to whether the [original] publication was sufficiently in the public domain to qualify as prior art. . . . Nothing prevented [defendant] from citing both [the original] and the [new] reference in its original invalidity contentions. . . . [I]t would be highly prejudicial to [plaintiff] for [defendant] to be allowed to use the [new] reference after having raised it for the first time only a few weeks before trial and after the close of discovery."

Erfindergemeinschaft UroPep GbR v. Eli Lilly and Company et al, 2-15-cv-01202 (TXED April 13, 2017, Order) (Bryson, CJ)

Friday, April 14, 2017

Defendant’s Multiplication of Proceedings No Basis for Reducing Attorney Fees Award for Plaintiff’s Exceptionally Weak Claims

​ The court granted in part defendant's requested attorney fees under 35 U.S.C. § 285 and rejected plaintiffs' objection that the fees should be reduced on the ground that defendant unreasonably multiplied the proceedings. "In the Court’s [prior] Order, it found that [defendant] engaged in some activity that prolonged the litigation, including 'unreasonably' refusing to designate representative products. . . . Where a plaintiff’s case is exceptionally weak on the merits, as here, rather than because of litigation misconduct, this rule counsels full fee shifting from the time the case became exceptionally weak on the merits. The entire case from that point on is exceptional and the extra legal effort required to counteract the lawsuit includes the entirety of a vigorous defense. In the context of this case, [defendant] did not exceed that limitation."

Technology Properties Limited, LLC v. Canon, Inc. et al, 4-14-cv-03640 (CAND April 12, 2017, Order) (Wilken, USDJ)

Thursday, April 13, 2017

Production of Non-Public, Unaccused Products Not Proportional to the Needs of the Case​

The court denied plaintiff's motion to compel defendant to produce non-public unaccused products for testing because the discovery was disproportional to the needs of the case. "In light of the Court's determination that certain asserted claims are indefinite for reasons related to (among other things) the type of testing [plaintiff] seeks to perform, and for other reasons (including documents already produced to [plaintiff] and that the unaccused products are still in development and their design(s) could change in ways material to the patent claims), the Court finds that the requested production for testing is not proportional to the needs of the case."

American Axle & Manufacturing, Inc. v. Neapco Holdings LLC et al, 1-15-cv-01168 (DED April 11, 2017, Order) (Stark, USDJ)