Sale of Software Does Not Establish Direction or Control of Customer Sufficient to Support Direct Infringement Claim

The court granted defendant's motion to dismiss plaintiff's claims for direct infringement based on defendant's vicarious liability for its customers. "[A]n allegation that Defendant provides the software and that customers install the software when they use the [accused] system does not allege that customers are contractually obligated to use the software, nor does it allege that Defendant otherwise maintains control over the software’s operation. . . . Because direct infringement is a strict liability offense, while indirect infringement requires a mens rea showing, it is important for courts to distinguish circumstances in which an alleged infringer merely gives a third party the tools with which to infringe (indirect infringement) from those circumstances in which the alleged infringer directly infringes through itself and its agents (direct infringement). 'Under [plaintiff's] proposed approach, a patentee would rarely, if ever, need to bring a claim for indirect infringement.’”

Joao Control and Monitoring Systems of California LLC v. Sling Media, Inc., et. al., 3-11-cv-06277 (CAND August 7, 2012, Order) (Chen, J.).

Cross-Licenses and Outbound Agreements Concerning Accused Technology Deemed Discoverable

The court granted plaintiff's motion to compel the production of defendant's outbound licenses and cross-licenses in connection with the accused technology. "District court decisions in this Circuit both before and after [Lucent Technologies, Inc. v. Gateway, Inc., 580 F.3d 1301 (Fed. Cir. 2009)] and [ResQNet v. Lansa, Inc., 594 F.3d 860 (Fed. Cir. 2010)] have considered cross-licenses relevant for discovery purposes, noting the different legal standards for discoverability and admissibility. Thus, [defendant's] assertion that cross-license and outbound agreements involve different technologies and markedly different structures from the hypothetical license relevant here does not preclude discovery even if those agreements are inadmissible at trial."

Richard A. Williamson v. Citrix Online LLC, et. al., 2-11-cv-02409 (CACD August 3, 2012, Order) (McDermott, M.J.).

History of Early Settlement Weighs Against Transfer to MDL Panel

The MDL panel denied plaintiff's motion to transfer six actions involving its genetic testing patent to the MDL based in part on plaintiff's litigation and licensing history. "The patent’s litigation history suggests that most actions that have been filed in the past several years have not required significant judicial attention. [Plaintiff] has filed at least nine actions over the course of the past nine years against at least 24 defendants, and only one case has proceeded to claim construction. Recently, an action filed in the Western District of Texas against seven defendants was resolved in a little over a year. . . . Further, [plaintiff] has a fairly extensive licensing history, reportedly issuing licenses for the technology to over 60 entities."

Genetic Technologies Limited v. Bristol-Myers Squibb Company, 1-12-cv-00394 (DED August 3, 2012, Order) (MDL Panel).

Twombly and Iqbal Do Not Require Disregard Of Allegations Based On “Information and Belief”

The court denied in part defendant's motion to dismiss for failure to state a claim based on plaintiff's use of the phrase, "information and belief." "Defendant mischaracterizes plaintiff’s burden to plead facts under [Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007)] and [Ashcroft v. Iqbal, 556 U.S. 662 (2009)]. The mere fact that a plaintiff uses the language 'information and belief' does not make an allegation conclusory but, instead, the Court must consider the content of the allegation itself. . . . The Court will consider the substance of plaintiff’s allegations, rather than their form, in determining if plaintiff has stated a valid patent infringement claim, and the Court will not automatically disregard allegations based on 'information and belief.'”

ArCzar, LLC v. Navico, Inc., 4-11-cv-00805 (OKND August 2, 2012, Order) (Eagan, J.).

Pro Se Prosecution No Defense to Application of Prosecution History Estoppel

The court granted plaintiff's motion for summary judgment of no infringement under the doctrine of equivalents of defendant's tuner patent. Prosecution history estoppel precluded application of the doctrine of equivalents even though the inventor prosecuted his application pro se and, defendant argued, did not understand the effect of his amendments. "The horizontal and vertical range limitations were originally included as dependent claims; in response to prior art objections, [the inventor] added a new revised independent claim that included those limitations, and cancelled the broader independent claim he had originally proposed. . . . [Defendant] cites no authority for the proposition that a patentee acting pro se can escape estoppel where others could not, and the court declines to adopt such a broad rule in the absence of controlling precedent."

Maury Microwave, Inc. v. Focus Microwaves, Inc., 2-10-cv-03902 (CACD July 30, 2012, Order) (Morrow, J.).

Pattern of Filing Infringement Suits and Offering to Settle for Less Than Defense Costs Did Not Render Case Exceptional Warranting Attorneys’ Fees

The court denied defendant's motion for attorneys' fees under 35 U.S.C. § 285 following summary judgment and rejected defendant's argument that the litigation was unjustified. "[Defendant] argues that bad faith is apparent based on the pattern of suits against many defendants followed by settlement demands that were below the cost of a typical defense. . . . The fact that the patent has been enforced against several other entities that settled does not place this in . . .[the] realm of the behavior [addressed in Eon-Net LP v. Flagstar Bancorp, 653 F.3d 1314, 1327 (Fed. Cir. 2011)]. The court there found that it was not bad faith for a patentee to 'vigorously enforce its patent rights or offer standard licensing terms.' However, in light of already finding that the claim construction position taken by the patentee was objectively baseless, the court found that by offering to settle for orders of magnitude less than litigation defense costs, bad faith could be inferred. Here the disparity between the settlement offer and fees being sought is smaller, and the Court is not presented with the same extensive alternate grounds to find the case exceptional. Perhaps, in light of an extremely objectively baseless position, these facts could support bad faith under Eon-Net. However, as detailed below, the Court finds the position was not objectively baseless."

Network Signatures Inc. v. State Farm Mutual Automobile Insurance Company, 8-11-cv-00982 (CACD July 30, 2012, Order) (Selna, J.).

“Hypothetical” or “Theoretical” Infringement Unproven in “Real-World Implementation” Insufficient to Support Infringement of Method Claim

The court granted in part defendant's motion for summary judgment of noninfringement of plaintiff's encryption patent where an accused encryption protocol only theoretically infringed. "[E]ven if the Plaintiff could produce evidence to demonstrate that TKIP, in certain random implementations, would result in blocks of uniform equal length, that capability alone would not be sufficient for a finding of infringement, at least as to the methods claims. . . . [T]he question is whether [defendant] can be held liable because [its encryption protocol] may hypothetically result in identical length blocks, although the Plaintiff has been unable to demonstrate at this stage of the litigation that real-world implementations of the protocol can infringe. . . . [Defendant] has not provided evidence that [its encryption ] is incapable of resulting in equal block length, only that it is 'theoretical' and presumably, highly unlikely. Nevertheless, the Defendant has shown that the evidence fails to establish a material issue of fact essential to the patentee’s case. . . . This is not to say that in every instance of patent infringement, the patentee must necessarily demonstrate specific instances of infringement. What the Court finds here is that [plaintiff] has failed to even satisfy the minimal burden that [defendant's encryption] is in reality capable of meeting the 'blocks' limitation. Thus, [plaintiff] has failed to establish a genuine issue of material fact regarding literal infringement with regard to [defendant's encryption]."

Paone v. Microsoft Corporation, 2-07-cv-02973 (NYED July 30, 2012, Order) (Spatt, J.).