Plaintiff's Misrepresentation of Rights to Asserted Patents Justifies Discovery to Support Possible Sanctions

The court partially granted defendant's motion to sanction plaintiff under FRCP 37 and the court's inherent authority because plaintiff misrepresented that it was the owner of three patents-in-suit but in fact lacked standing to sue. "The Court orders [plaintiff's Rule 30(b)(6) witness] to submit to a deposition in Texarkana under the supervision of [the special master] on topics related to [plaintiff's] knowledge of the [license agreements] only recently produced, despite [plaintiff's] false representation to Interrogatory No. 13 directed to license agreements; [plaintiff's] decision to assert the disputed patents despite its lack of standing; [plaintiff's] lack of knowledge of the lack of standing; and all documents that are the subject of [defendant's] pending Motion for an Order Stripping [Plaintiff] of Claimed Privileges and In Camera Review of Documents. The Court denies [defendant's] request for monetary sanctions at this time. . . . [However], [defendant] may re-raise this aspect of the motion following the limited discovery allowed above."

Keith Manufacturing Co. v. Cargo Floor BV, 5-15-cv-00009 (TXED October 27, 2017, Order) (Craven, MJ)

In Determining Venue, Agent's Place of Business Does Not Qualify as Defendant's Place of Business

The court found that venue was improper for plaintiff's patent infringement action and rejected the argument that venue was proper because defendant's agent had a regular and established place of business in the district. However, the court deferred ruling on defendant's motion to dismiss pending plaintiff's response to the court's suggestion to transfer under 28 U.S.C. § 1404(a). "[Plaintiff] does not allege that [defendant] itself has 'a place of business' in this District. Instead, [plaintiff] argues that . . . the place of business for [defendant's] agent . . . is in this District. . . . But, even assuming that [the alleged agent] is [defendant's] agent (as opposed to distributor, supplier, or contractor), the Federal Circuit recently held that '[the place] must be that of the defendant.' Interpreting the statute two-blocks this conclusion. In § 1400(a), Congress permits suits for copyright and trademark infringement to be brought 'in the district in which the defendant or his agent resides or may be found.' In § 1400(b), Congress does not extend the same permission to suits for patent-infringement. If Congress had intended to include the place of a defendant's agent's business, it could certainly have done so. . . . Section 1406(a) is mum about plucking out an offending claim to save another, so I am inclined to dismiss the action. . . . Because [plaintiff] says that dismissal will waste everyone's time, [plaintiff] is directed to advise me . . . whether it consents to transfer under § 1404(a) – or to propose an alternate suggestion consistent with this order."

Newpark Mats & Integrated Services LLC v. Equipotential Matting, LLC et al, 4-17-cv-00304 (ARED October 26, 2017, Order) (Wilson, USDJ)

Pleading Section 271(f) Infringement Claim Requires Identification of Exported Components

The magistrate judge recommended granting defendant's motion to dismiss plaintiffs' patent export infringement claims under 35 U.S.C. §§ 271(f)(1)&(2) for failure to state a claim. "Plaintiffs clearly rely on the asserted presence of unnamed 'first and second components of the system [of the accused product]' that are supplied by Defendant along with 'components of the applicator'; Defendant is then alleged to provide instructions on how to combine these components together in an infringing manner overseas. But in the absence of Plaintiffs providing any hint in the Amended Complaint as to what those first and second components are said to be, the Court could not discern whether it is plausible that the accused products at issue are, in fact, supplied from the United States as separate components. . . . Put differently, Plaintiffs' bald reference to additional 'first and second components' is not much different in effect than if Plaintiffs had simply tracked the language of the statute . . . in making their allegations of export infringement. Plaintiffs have to do more than merely track the statutory language-they have to allege facts that go beyond a formulaic recitation of the elements of their cause of action."

Confluent Surgical, Inc. et al v. HyperBranch Medical Technology, Inc., 1-17-cv-00688 (DED October 25, 2017, Order) (Burke, MJ)

Asserted Claim of Improved Visual Perception Processor Patent Invalid Under 35 U.S.C. § 101

The court granted defendant's motion for summary judgment that the asserted claim of plaintiff’s visual perception processing patent encompassed unpatentable subject matter and found that the claim was directed toward an abstract idea. "Claim 29 is directed to an 'improved method' of analyzing parameters related to an event detected by an electronic device by generating a histogram while automatically updating the classification criteria. . . . [Plaintiff] summarily concludes that automatically updating the classification criteria of a histogram while the histogram is being calculated is not an abstract idea. . . . [Plaintiff] does not explain, and the [patent] does not describe, how the 'automatically updating' limitation is an improvement to computer capabilities. The claimed method of generating a histogram, even a histogram where the classification criteria are automatically updated, recites a purely conventional computer implementation of a mathematical formula. The use of 'electronic device' and 'classification memory' are not 'specific, claimed features' that allow for an improvement to computer functionality."

Image Processing Technologies, LLC v. Samsung Electronics Co., Ltd. et al, 2-16-cv-00505 (TXED October 24, 2017, Order) (Gilstrap, USDJ)

Damages Expert Testimony Based on Venue-Specific Statistics Excluded

The court granted in part defendants' motion to exclude the testimony of plaintiff's damages expert regarding a per-port royalty because his "Three-Step Risk Assessment Methodology" relied on venue-related statistics. "Defendants also condemn [the expert's] use of the 'various statistics regarding uncertainty' specific to patent litigation in the Eastern District of Texas. . . . Plaintiff contends that [his] use of venue-specific statistics is proper because all of the relevant settlements occurred in this District. Utilization of venue-specific statistics regarding uncertainty to adjust royalty rates is improper because the hypothetical negotiation assumes that the patent is valid and infringed. There should be no discussion of venue or win-loss statistics in a reasonable royalty calculation because venue plays no part in the hypothetical negotiation."

Network-1 Security Solutions, Inc. v. Alcatel-Lucent USA Inc., et al, 6-11-cv-00492 (TXED October 23, 2017, Order) (Mitchell, MJ)

New Damages Trial Ordered on $399 Million Design Patent Award

Following remand of a $399 million jury award, the court ordered a new trial on design patent damages because its original jury instructions caused prejudicial error. "[A] properly instructed jury may have found that the relevant article of manufacture for each of the design patents was something less than the entire phone. [Plaintiff's] argument that [defendant's] failure to actually identify a smaller article of manufacture at trial would have precluded the jury from finding any article of manufacture other than the entire phone is not persuasive. Had the Court agreed to give some version of Proposed Jury Instruction 42.1, [defendant] could have identified a smaller article of manufacture in its closing argument."

Apple Inc. v. Samsung Electronics Co. Ltd., et al, 5-11-cv-01846 (CAND October 22, 2017, Order) (Koh, USDJ)

TC Heartland Does Not Apply to Cases Filed Before January 6, 2012

The magistrate judge recommended denying one defendant's renewed motion to dismiss or transfer for improper venue because TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017) applied only to cases filed after the effective date of the December 7, 2011 amendment to 28 U.S.C. §1391 and the moving defendant's was filed prior to that date. "Because TC Heartland was commenced in January 2014, only the 2011 amendments to §1391 were directly involved in that case. Nowhere did TC Heartland take issue with [VE Holding Corp. v. Johnson Gas Appliance Corp., 917 F. 2d 1574 (Fed. Cir. 1990)]'s analysis of the 1988 amendments to § 1391. . . . In any event, regardless of what the Supreme Court might have decided about the 1988 amendments' effect on [Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957)] had the question been presented to it, that question was not before the Court in TC Heartland, and was therefore not decided. Accordingly, VE Holding's treatment of the 1988 amendments remains unaffected by TC Heartland, and since [movant] was sued while the 1988 amendments were in effect, there is no reason to revisit [the court's] previous denial of its motion to dismiss."

Steuben Foods, Inc. v. Shibuya Hoppmann Corporation and HP Hood LLC, 1-10-cv-00781 (NYWD October 19, 2017, Order) (McCarthy, MJ)

Venue Challenge Inappropriate in Determining Futility of Amended Complaint

The court granted plaintiff's motion to amend its patent infringement complaint to add defendant's parent company as a new defendant because the claim was not futile due to a venue challenge. "Futility exists when the amended complaint 'fail[s] to state a claim upon which relief could be granted.' . . . Defendant argues venue is improper thereby making Plaintiff’s amendment futile. . . . [F]utility is not dependent upon venue considerations. As such, the Court finds this is neither the time nor the place to make such arguments. Accordingly, an analysis addressing such assertions at this time is inappropriate."

Shoes by Firebug LLC v. Stride Rite Children's Group, LLC, 4-16-cv-00899 (TXED October 18, 2017, Order) (Mazzant, USDJ)

Commercial Success of Restasis Does Not Support Finding of Non-Obviousness Because Blocking Patents Suppressed Competition

Following a bench trial, the court found that plaintiff's ophthalmic drug patents were invalid as obvious and found that plaintiff's evidence of commercial success and long-felt need were insufficient secondary considerations of nonobviousness to overcome the court's obviousness determination because of plaintiff's blocking patents. "The problem with [plaintiff's] evidence of both commercial success and long-felt need is that [its] patents have long blocked others from entering the space in the market that is now occupied by [its product]. [Plaintiff] has enjoyed patent protection for the topical administration of cyclosporin to the eye since obtaining rights under [an earlier] patent [24 years ago]. . . . [B]ased principally on the presence of the blocking patents that suppressed any competition in cyclosporin/glyceride emulsion formulations, the Court concludes that the objective consideration evidence does not significantly support a finding of non-obviousness."

Allergan, Inc. v. Teva Pharmaceuticals USA, Inc. et al, 2-15-cv-01455 (TXED October 16, 2017, Order) (Bryson, CJ)

Post-Verdict Ongoing Infringement Justifies Enhanced Damages Despite Interim PTAB Decision of Unpatentability

Following a jury trial, appeal, and retrial, the court granted in part plaintiff's motion for enhanced damages and enhanced the jury's verdict by 50% because defendant's lack of a good faith belief of noninfringement, lack of closeness of the case, defendant's size, and its litigation conduct favored enhancement. "[Defendant's] decision to continue infringing was unreasonably risky, despite any interim decisions in proceedings before the Patent Office. . . . [T]he post-grant proceedings on [plaintiff's] patents have not resulted in cancellation of the asserted claims, as appeals of those proceedings are still ongoing. Further, though [defendant] claims that the PTAB’s final written decisions 'confirm' [its] belief in the invalidity of the asserted patents, these decisions were issued long after [defendant's] decision to continue infringing despite an adverse jury verdict. . . . [Defendant's] size and financial condition . . . also favors enhancement, as it is undisputed that [defendant] is one of the largest and most financially successful companies in the world. . . . [Defendant] repeatedly sought either to stay the litigation pending post-grant proceedings or to inject evidence of the proceedings into the trial, even after receiving adverse rulings from the Court and even after few, if any, relevant facts had changed since its last request, and despite the fact that invalidity was no longer in the case."

VirnetX Inc. v. Cisco Systems, Inc., et al, 6-10-cv-00417 (TXED September 29, 2017, Order) (Schroeder, USDJ)

Concern That Automatic Stay of FDA Approval Incentivizes Frivolous ANDA Cases Does Not Justify Award of Attorney Fees as Deterrent

Following summary judgment of noninfringement, the court denied defendants' motion for attorney fees under 35 U.S.C. § 285 and rejected defendants' argument that deterrence was necessary to protect other generic drug manufacturers. "[Defendant] contends that an exceptionality finding is warranted to deter future litigants from behaving like [plaintiff], especially in the context of the Hatch-Waxman Act, with its purpose (among others) to foster timely entry of generic drugs to the market. [Defendant] suggests that due to the statutory, automatic 30-month stay of FDA approval of an ANDA that is triggered by the filing of litigation, the Court should be alert to the incentives branded drug companies like [plaintiff] have to file frivolous cases, and should perhaps be more willing to find an ANDA case exceptional within the meaning of § 285. While these concerns may merit substantial weight in some other case, here they do not, as [plaintiff's] litigation position was not frivolous, and as the market here already included generic competitors at the time this suit was filed."

Reckitt Benckiser LLC v. Aurobindo Pharma Limited et al, 1-14-cv-01203 (DED October 16, 2017, Order) (Stark, USDJ)

Litigation Counsel's Involvement in Subpoena-Based Survey Renders Results Unreliable

The court granted defendant's motion to exclude the testimony of plaintiff's expert regarding his subpoena-based survey of 170 customers because counsel's involvement in the survey rendered the results unreliable. "Defendants argue that [plaintiff's counsel] essentially urged [survey] respondents to provide quick estimates rather than thoughtful investigations, thus rendering the survey inadmissible. . . . By emphasizing the quickly approaching litigation deadlines, the law firm implicitly encouraged at least [one customer] to produce any figure as a response, which seriously undermines the integrity of the received responses. . . . [T]he law firm’s correspondence with respondents regarding the scope of the question and the need for quick responses indicates the law firm’s ability to influence the survey results, which Plaintiff has admitted is improper. Because of the extensive attorney involvement here, the survey is unreliable and should thus be excluded."

Network-1 Security Solutions, Inc. v. Alcatel-Lucent USA Inc., et al, 6-11-cv-00492 (TXED October 13, 2017, Order) (Mitchell, MJ)

Evidence That Patents Survived 20 Reexamination and IPR Proceedings Excluded Under FRE 403

The court granted defendant's motion in limine to exclude evidence under FRE 403 that the patents-in-suit survived 20 reexaminations and inter partes review proceedings. "Because of the effect of IPR estoppel, the IPRs necessarily covered different prior art than will be used at trial. Whether that prior art was sufficient to invalidate the patents, as a general proposition, is irrelevant to the specific prior art at issue here. For that reason, admitting evidence of the IPRs is likely to mislead the jury into believing that because the patents-in-suit have survived many attacks, they must be valid against the present attacks. . . . Moreover, to the extent that IPR estoppel does not apply, such as for references petitioned but not instituted, there is no reason to show the jury that IPR was not instituted because the Federal Circuit has instructed that it does not matter the reason for the decision not to institute IPR."

Milwaukee Electric Tool Corporation et al v. Snap-On Incorporated, 2-14-cv-01296 (WIED October 12, 2017, Order) (Stadtmueller, USDJ)

Plaintiff's Failure to Conduct Due Diligence as to Standing Justifies Award of Attorney Fees Under § 285

Following a dismissal for lack of standing, the court granted defendants' motion for attorney fees under 35 U.S.C. § 285 because plaintiff's litigation tactics were unreasonable. "[Plaintiff] brought this lawsuit without performing sufficient due diligence as to whether it had standing. It is clear from the pleadings that, from the outset, [plaintiff] was aware of the root of its standing issues. . . . Despite naming [the patent owner] as a co-plaintiff in the Complaint -- in essence, an admission that [the owner] was a necessary party -- [the owner's] signature or any identification of its counsel are conspicuously absent from the Complaint. . . . [Plaintiff's] litigation conduct makes this case exceptional because it insisted on maintaining this lawsuit even when faced with mounting evidence that it lacked standing. . . . [A]lthough the Court is not convinced that it rises to the level of intentional misrepresentation, [plaintiff] at least obfuscated the fact that there were potential problems with its standing."

Max Sound Corporation et al v. Google Inc. et al, 5-14-cv-04412 (CAND October 11, 2017, Order) (Davila, USDJ)

Colloquial Reference to Facility Location Does not Establish "Physical Presence by Estoppel"

The court granted defendant's alternative motion to transfer for improper venue and rejected plaintiff's request to transfer its action from the Middle District of Tennessee to the Western District of Tennessee because defendant did not have a physical presence in that forum. "Plaintiff does not allege any physical presence by the Defendant in the Western District, and concedes that Defendant’s 'Memphis' facility is located in Mississippi. . . . Plaintiff also alleges that Defendant has previously stated that they maintain a 'Memphis' facility and that Defendant cannot now deny those representations. The correspondence that Plaintiff relies on, however, uses 'Memphis' as a colloquial reference to the facility’s location, rather than a representation that the facility is located in Memphis. Accordingly, Plaintiff’s 'physical presence by estoppel' argument fails to compensate for the factual shortcomings reflected in the record."

JPW Industries, Inc. v. Olympia Tools International Inc., 3-16-cv-03153 (TNMD October 10, 2017, Order) (McCalla, USDJ)

Evidence of More Than 1,000 Pre-Litigation Licenses May Show Established Licensing Program, Obviating Need for Individualized Comparability Analysis and Apportionment

The court denied in part defendant's motion in limine to preclude plaintiffs from presenting evidence of more than 1,000 pre-litigation licenses under the MPEG standards because the number of third party licenses was relevant under FRE 401 to issues other than infringement. "[E]vidence of plaintiffs' licenses with third parties, including the number of licenses, is relevant to damages, validity, willfulness, and in responding to claims that plaintiffs are litigious. . . . [E]vidence of plaintiffs' third-party licenses, including the number of such licenses, is relevant to the issue of damages as it relates to the issue of general acquiescence and an established royalty. . . . [I]f plaintiffs can show an established licensing program, a separate comparability analysis for each license entered into pursuant to that program is not necessary and concerns regarding apportioning value to account only for the value of the patents-in-suit will be an issue for the jury. . . . [Defendant's] attacks on the comparability of the 1,000 plus third-party licenses, including that the licenses cover patents other than the patents-in-suit and that [defendant's] circumstances differ from the third-party licensees, go to the weight to be accorded the evidence, not its admissibility."

Audio MPEG, Inc. et al v. Dell, Inc., et al, 2-15-cv-00073 (VAED October 6, 2017, Order) (Krask, MJ)

Undeveloped Expert Report Calls For Deposition Before Production of Opposing Report

The court denied plaintiffs' motion to strike the report of defendants' expert for including a previously undisclosed obviousness theory because defendants' contentions sufficiently supported the expert report, but allowed plaintiffs to take the expert's deposition before producing their own expert's report. "[Defendants' invalidity contentions] disclose every item of prior art that renders the asserted claims obvious utilized by [the expert] in his report as well as the combinations of prior art used. They also provide an explanation of how a POSA would have been motivated to start with the exemplary compounds identified in [two sets of prior art references] to arrive at the linagliptin molecule at issue here. While Defendants could have included additional information in their invalidity contentions, the Court finds that said contentions provide a sufficient outline to support the more detailed narrative provided in [the expert's] report. . . . Nevertheless, the Court is sensitive to Plaintiffs’ apprehension that given the general nature of certain of [defendants' expert's] opinions, their expert would be hard-pressed to respond to same. Indeed . . . [the expert] does not identify what would be synthesized, what would be run through [a drug discovery process not disclosed in the invalidity contentions], what the hits would be, what the lead compound would be, how analogs would be created from the lead compound or how the analogs would be modified to reach linagliptin. Plaintiffs are concerned that given the lack of certain details not only would their expert have difficulty responding to same, but [the expert] may at some point in the future attempt to fill in the gaps. The Court finds that these are reasonable concerns. As such, while not usually the case, the Court shall permit Plaintiffs to depose [him] before producing their expert report."

Boehringer Ingelheim Pharmaceuticals, Inc. et al v. HEC Pharm Group et al, 3-15-cv-05982 (NJD October 5, 2017, Order) (Bongiovanni, MJ)

Failure to Correct Examiner’s Misunderstanding of Prior Art No Grounds for Inequitable Conduct Defense

The court granted plaintiff's motion to strike as insufficient defendant's inequitable conduct defense based on plaintiff's failure to correct an examiner's misunderstanding of a prior art reference. "[Defendant] argues that although disclosure of prior art is usually enough to avoid a charge of inequitable conduct, when the patent examiner made clear that he misunderstood the scope of [a reference's] disclosure, the prosecuting attorney had a duty to respond to the examiner's confusion by pointing out that [the reference] inherently disclosed the pulse width limitation. Although this argument is not unreasonable, it goes against the great weight of the case law. . . . [E]ven if there could be a factual scenario where an inventor commits inequitable conduct by failing to clear up a misunderstanding of prior art held by a patent examiner that the patent examiner could have recognized on his own, the specific facts alleged here by [defendant] would not rise to the level of inequitable conduct."

Nevro Corp. v. Boston Scientific Corporation et al, 3-16-cv-06830 (CAND October 4, 2017, Order) (Chhabria, USDJ)

Preliminary Injunction Requires Connection Between Alleged Infringement and Alleged Harm

The court denied defendants' motion for a preliminary injunction to preclude the sales of plaintiffs' advanced energy vessel sealing instruments because defendants failed to establish irreparable harm. "Because . . . it is far from 'clear' on the present record that there is any connection between [plaintiffs'] alleged infringement and the harms [defendants] cite[] – the Court need not consider whether those harms are, in fact, irreparable. [Defendants'] nexus argument rests on two related assumptions: that the [plaintiffs' previous device] failed commercially because it did not provide reliable vessel sealing; and that [the accused device] remedied the supposed sealing problem by incorporating stop members disclosed in the [patent-in-suit]. Neither assumption is borne out by the record. . . . Moreover, the weight of evidence before the Court suggests various factors besides the patented stop members are responsible for the [accused device's] early success. Accordingly, [defendants have] not shown irreparable harm resulting from the alleged infringement."

Ethicon Endo-Surgery, Inc. et al v. Covidien LP et al, 1-16-cv-12556 (MAD October 2, 2017, Order) (Sorokin, MJ)

Patent Claims for Identifying a Caller With A Single Telephone Number Invalid Under 35 U.S.C. § 101

The court granted plaintiff's motion for judgment on the pleadings because the asserted claims of defendant's telephone system patents encompassed unpatentable subject matter and found that the claims for identifying a caller with a single telephone number were directed toward an abstract idea. "Essentially, the claim is directed to storing data in a database, looking up data from that database in response to the initiation of a phone call, and inserting at least a portion of that data in the already-existing caller ID field. . . . Although the solution employed by the asserted claims may utilize conventional telephony components, the problem of being unable to reach a particular individual is a practical, human unavailability problem, not a technological one."

BroadSoft, Inc. v. CallWave Communications, LLC, 1-13-cv-00711 (DED October 1, 2017, Order) (Andrews, USDJ)

Failure to Conduct Some Aspects of Presuit Investigation Alone Does Not Warrant Award of Attorney Fees under § 285

Following an inter partes review that found all asserted claims of the patents-in-suit unpatentable or invalid, the court denied defendant's motion for attorney fees under 35 U.S.C. § 285 on the ground that plaintiff failed to conduct an adequate pre-filing investigation. "[Plaintiff] fails to state that it investigated its claims in any fashion before filing suit. . . . [Plaintiff] also does not deny that it never attempted to contact [defendant] before filing suit to confirm whether [defendant] was using the accused devices or systems. These factors suggest that [plaintiff] failed in some aspects of its pre-filing investigation. However, even if the Court were to determine that there was not an adequate pre-suit investigation, [defendant] has not cited -- and the Court is not aware of -- any decision awarding attorney fees solely on the basis of a failure to conduct an adequate pre-filing investigation. . . . [T]he failure to conduct some aspects of a pre-suit investigation alone does not warrant an award of attorney fees under Section 285."

Intellectual Ventures II LLC v. Commerce Bancshares, Inc. et al, 2-13-cv-04160 (MOWD September 29, 2017, Order) (Laughrey, USDJ)

Application Preference Configuration Patent Invalid Under 35 U.S.C. § 101

The court granted defendants' motion to dismiss because the asserted claims of plaintiff’s application configuration patent encompassed unpatentable subject matter and found that the claims were directed toward an abstract idea. "The [patent-in-suit] is directed to obtaining user and administrator sets of configuration preferences for applications and then executing the applications using both sets of obtained preferences. . . . The [challenged] claims . . . involve computers but do nothing to improve their functionality. The claims employ off-the-shelf computer components without modification. The Court has already held that the kind of benefits they provide -- 'increased efficiency' or 'reduced costs' -- are not technological benefits. . . . [T]he claims of the [patent] are overly vague in that they recite 'executing the application program using the obtained user set and the obtained administrator set [of preferences],' without claiming any 'particular way of programming or designing the software' to facilitate execution of the program according to the claim. . . . [T]he claims of the [patent] are directed to the abstract idea of 'providing two-tiered customization' in a client-server environment."

Uniloc USA, Inc. et al v. ADP, LLC, 2-16-cv-00741 (TXED September 28, 2017, Order) (Schroeder, USDJ)