Second District Court Declares Qui Tam Provisions of False Marking Statute Unconstitutional

In dismissing plaintiff's false marking action, the court agreed with Unique Prod. Solutions, Ltd. v. Hy-GradeValve, Inc., ___F. Supp. 2d __, (N.D. Ohio Feb. 23, 2011) and concluded that the qui tam provisions of the false marking statute violate the Take Care clause of the U.S. Constitution. "[T]he fact that notice of all pending patent cases is provided to the PTO within one month of filing . . . does not constitute sufficient notice to the Executive Branch. This notice is not expedient enough to provide the United States with sufficient time to protect its interests, and is not directed to the Department of Justice -- the agency responsible for representing the United States’ interests in a false marking suit. . . . While the United States could prevent a section 292(b) relator from voluntarily dismissing the case upon intervention, this requires the Court to order intervention on the United States’ motion in the first instance. Although the Federal Circuit has reversed a district court for refusing to permit intervention in a false marking suit under Rule 24(a)(2), it is not clear to the Court that intervention will or must be ordered in any given case. Moreover . . . a section 292(b) relator could voluntarily dismiss a case before the United States even has the opportunity to seek intervention at all. Thus, despite the external protections available, the United States is not able to effectively exercise even a basic degree of control over a section 292(b) relator’s case."

Rogers v. TriStar Products Inc., 5-11-cv-01111 (PAED June 2, 2011, Order) (Robreno, J.)

Earlier Declaratory Judgment Claim Does Not Dictate Forum for Later Infringement Action Based on the Same Patents and Accused Products

The court denied plaintiff's motion to reinstate a declaratory relief action that it voluntarily dismissed two years earlier in response to defendant's motion to dismiss for lack of subject matter jurisdiction. Defendant's argument that it had "never asserted any claim of any kind against [plaintiff], never threatened it with suit and, indeed, never engaged in any conduct whatsoever directed against it" did not require defendant to return to the instant court to pursue infringement claims against plaintiff two years later. "[Defendant] was not required to file a motion to reinstate a case that was voluntarily dismissed — by [plaintiff] — almost two years earlier when it determined that it was necessary to pursue a patent infringement action against [plaintiff]. Nor was [defendant] required to, as [plaintiff] suggests, inform 'the Clerk of Court that its case was essentially the same facts, patents and law that had been asserted by [plaintiff in the 2009 Action] so that the Clerk could have determined whether the case should have been assigned to [a particular judge]."

ClearCorrect, Inc. v. Align Technology, Inc., 4-09-cv-00470 (TXSD June 2, 2011, Order) (Miller, J.)

Defendant Required to Install Integrated Development Environments on Stand-Alone Computer Used to Review Source Code

The court granted plaintiff's emergency motion to compel compliance with a protective order and require defendant to install integrated development environments (IDEs) on a stand-alone computer used to review defendant's source code. "[Defendant] has loaded its source code on a stand-alone computer for review. [Defendant] has further provided a standard text-editor (Notepad), a source code editor (Notepad ++) and a comparison tool (Beyond Compare) to facilitate [plaintiff's] review of the source code. . . . [Plaintiff] represents that due to the modular nature of source code, the IDEs will allow its experts to follow various jumps between modules contained in separate files -- replicating the behavior of the source code during execution. . . . [Defendant] contends that loading the IDEs on the source code computer will require the installation of additional hardware, third-party software libraries, configuration files and running servers – all at additional cost to [defendant]. . . . The Court finds that installation of the two IDEs is not prejudicial or overly burdensome to [defendant]. . . . Accordingly, the Court hereby grants [plaintiff's] motion without prejudice as to Hyundai requesting a meet and confer and ultimately the Court’s intervention should the installation and operation of these tools require additional costs as enumerated above."

SFA Systems, LLC v. BigMachines, Inc., et. al., 6-10-cv-00300 (TXED May 31, 2011, Order) (Love, M.J.)

Non-Practicing Plaintiff May Not Obtain Discovery Concerning Future Products Under "Accelerated Market Entry" Damages Theory

The court denied plaintiff's motion to compel the production of highly confidential information concerning defendant's future products that were still under development and would not be sold until after the patent-in-suit expired and rejected plaintiff's argument that such information was relevant to its "accelerated market entry" damages theory. "'Accelerated market entry' ('AME') is a recognized theory of damages . . . [that] compensat[es] for lost sales after the patent’s expiration based on defendant’s entry into 'the market at a level accelerated by its earlier infringement.' . . . Defendant argues that AME does not apply in this case because Plaintiff does not manufacture or sell products and cannot recover lost profits. . . . Plaintiff argues that there are very few AME cases at all, and while it is true that they involve patentees who manufacture their own product, there is no reason why the theory should not apply equally to patentees who license their products and collect royalties from third party manufacturers. While it is true that infringing sales could decrease the post-expiration sales and profits of those third party manufacturers, the patentee’s damages could only be the corresponding decrease in royalty from those decreased third party sales. The law is clear, however, that royalties are not paid after expiration of a patent. Accordingly, the Court sees no basis for a post-expiration claim of lost royalties, whether based on AME or otherwise."

STC.UNM v. Intel Corporation, 1-10-cv-01077 (NMD May 31, 2011, Order) (Schneider, M.J.)

False Marking: "The Court does not need to be notified every time a judge makes a decision in one of those cases"

"The issue involved in this case is now pending before hundreds of judges in the federal court system. The Court does not need to be notified every time a judge makes a decision in one of those cases, especially if such decisions represent no "change in the law" binding on this Court. See Local Rule 7.1 (c) & (g). The Court is well able to do its own research as needed, and filling this case's record with non-binding cases will simply clutter the file. Accordingly, the Court STRIKES the notice of supplemental authority (Doc. 58) and ORDERS that henceforward notice of supplemental authority may be filed in this case without leave of court, but only if it is authority binding on this Court or is a decision by a United States Court of Appeals."

Mudge v. Scotts Miracle-Gro Company, 3-10-cv-00402 (ILSD March 31, 2011 Order) (Gilbert, J.)

Insurance Claims Processing Patents Declared Invalid Under Bilski

Defendant's motion for summary judgment of invalidity of plaintiffs' insurance claim processing patents was granted under Bilski v. Kappos, 130 S. Ct. 3218 (2010). "[Defendant] contends that the claims of the [patents-in-suit] contain abstract ideas and fail the machine or transformation test. . . . because their claims require only aspects of a general purpose computer. Moreover, [defendant] contends that the transfer of data regarding insurance cases from one electronic file to another does not transform physical objects to another state or thing. According to [defendant], all of the claims reflect field of use restrictions or insignificant post-solution activity and, therefore, constitute unpatentable abstract ideas under § 101. . . . This court previously determined that the [patents-in-suit] fail to satisfy the machine or transformation test. . . . Using the court's previous machine or transformation determination as an 'important clue' in the analysis, the court must now determine whether the claims as a whole convey an unpatentable, abstract idea. . . . [T]he [patents-in-suit] are directed to abstract and, therefore, unpatentable, methods and systems for generating file notes and tasks to be performed for insurance claims. The patents are directed to concepts for organizing data rather than to specific devices or systems, and limiting the claims to the insurance industry does not specify the claims sufficiently to allow for their survival."

Accenture Global Services GmbH, et. al. v. Guidewire Software Inc., 1-07-cv-00826 (DED May 31, 2011, Order) (Robinson, J.)

Consistency of Inventor's Testimony Negates Intent to Deceive Necessary for Inequitable Conduct Under Therasense

Following a jury trial, the court determined that plaintiff's patents were not unenforceable for inequitable conduct under Therasense, Inc. v. Becton, No. 2008-1511, at 18 (Fed. Cir. May 25, 2011), because defendants failed to establish intent to deceive. "[The first named inventor of the patents-in-suit] consistently testified in deposition and at trial that he believed there was nothing like his invention prior to September 1998 and that he also believed that no one had even recognized the problem that his invention was designed to solve. . . . [The inventor] was at no time inconsistent regarding the sincerity of his belief that there was no material prior art -- i.e., that he had uncovered a breakthrough invention. Considering [the inventor's] testimony in light of the evidence as a whole, the court concludes that specific intent to deceive is not the single most reasonable inference that must be drawn from the evidence."

Ameranth, Inc. v. Menusoft Systems Corporation, et. al., 2-07-cv-00271 (TXED May 26, 2011, Order) (Everingham, M.J.)