Encryption Patent Not Invalid for Claiming Unpatentable Subject Matter

The court denied defendant's motion for summary judgment that plaintiff's data transmission patent was invalid for lack of patentable subject matter and found that the invention did not fail the machine-or-transformation test. "Typically, transforming data from one form to another does not qualify as the kind of transformation that the Supreme Court . . . regarded as an important indicator of patent eligibility. In the case of an invention in the field of encryption, however, the entire object of the invention is to transform data from one form into another that will be recognizable by the intended recipient but secure against decryption by unintended recipients. In that setting, it does not make sense to say that the transformation of data from one form to another cannot qualify as a patent-eligible invention, because that is what the field of cryptology is all about. . . . [A]lthough the invention in this case does not result in the physical transformation of matter . . . it involves a specific system for modifying data that has equally concrete and valuable effects in the field of electronic communications."

TQP Development, LLC v. Intuit, Inc., 2-12-cv-00180 (TXED February 19, 2014, Order) (Bryson, C.J.)

Federal Circuit Dissent Precludes Finding of Willfulness

The court granted defendant's motion for summary judgment that it did not willfully infringe plaintiff's patent because, on interlocutory appeal, a dissenting Federal Circuit judge opined that plaintiff's patent was invalid. "[I]n this case [a Circuit Judge] . . . dissented from the Federal Circuit's panel decision that upheld this Court's ruling as to the validity of the [patent-in-suit] -- in his view 'all of the claimed elements . . . were present in the prior art' . . . and 'the claimed invention is nothing more than a repetition of steps already known in the art' . . . [Plaintiff's] counsel misses the mark entirely in arguing that [defendants] 'did not and could not rely on either of these post-litigation factors when it began infringing the [patent-in-suit] -- the relevant point in time for determining its willfulness.' That is of course nonsense, for the key issue in the analysis is not the time sequence but rather the fact that the dissenting opinion conclusively establishes that [defendants'] non-willfulness argument cannot be viewed as objectively reckless."

Celsis In Vitro, Inc. v. CellzDirect, Inc., et al, 1-10-cv-04053 (ILND February 13, 2014, Order) (Shadur, J.)

35 U.S.C. § 315(b) IPR Time Bar Not Limited to Concurrent Litigation

The Board denied the petitioner's request for rehearing of an earlier decision not to institute inter partes review because "the Petition . . . was not filed timely within the statutory period of 35 U.S.C. § 315(b)." The petitioner previously argued that the petition was timely because "a petition within one year of 'any complaint' . . . nullifies the effect of the earlier . . . complaint." On rehearing, the petitioner "present[ed] selected segments from the legislative history to buttress its argument that the statute only applies to concurrent litigation . . . . Petitioner also asserts, for the first time, that the statute 'is plainly ambiguous.' . . . Contrary to Petitioner’s new argument, even if Congress intended to reduce issues in district courts, this does not overcome the plain meaning involved in Congress’s carefully balanced statutory scheme that applies the time bar to 'a complaint.' . . . Although Congress intended to create a cost-efficient alternative to district court litigation, it does not follow that the time bar only applies to concurrent litigation."

Petition for Inter Partes Review by Apple Inc., IPR2013-00348 (PTAB February 12, 2014, Order) (Easthom, APJ)

Plaintiff's Obligation to Preserve Evidence Arose Upon Acquisition of Asserted Patent

The court awarded monetary sanctions for plaintiff's instruction to employees to delete certain emails before filing suit and failure to implement a litigation hold until after filing suit because plaintiff's duty to preserve information arose when it acquired the patents-in-suit. "The Court agrees that [plaintiff] probably acquired the patents with an eye toward litigation. However, it is difficult to say that litigation was reasonably foreseeable before [plaintiff] even acquired the thing which would give it standing to sue. Thus, since [its] acquisition of the patents was a condition precedent to its ability to even initiate the litigation, the Court thinks it was likewise a condition precedent to [plaintiff's] duty to preserve evidence."

PersonalWeb Technologies LLC v. Google, Inc. et al., 5-13-cv-01317 (CAND February 13, 2014, Order) (Lloyd, M.J.)

Ethical Screen Avoids Imputed Conflict

The court denied defendant's motion to disqualify plaintiff's counsel. Although two attorneys at plaintiff's firm previously represented defendant in a patent suit, plaintiff's counsel sufficiently screened those two attorneys. "Pursuant to the screen, which the Court finds was timely implemented three days after [plaintiff's firm] was formed, [the two attorneys] have been isolated from any participation in the current matter, including a written agreement that the two attorneys would avoid any communication with other [firm] personnel relating to the [current] matter. All [plaintiff's] lawyers have been notified of the screening and are continuously notified on a monthly basis that the screen is still in effect. Additionally, several mandatory security measures (i.e. password protection) have been put into place. . . . Therefore, even if the Court were to find there was a conflict under ABA Model Rule 1.9, the Court would find [counsel's] screening protocol sufficient as a means of avoiding imputing any such conflict to the entire firm."

Adaptix, Inc. v. Dell Inc. et al., 6-13-cv-00437 (TXED February 12, 2014, Order) (Craven, M.J.)

Lack of Analysis Renders Expert Opinions Unreliable

The magistrate judge recommended granting defendants' motion to strike the report of plaintiffs' infringement expert because his opinions were unreliable. "[Plaintiffs' expert] purportedly addresses how each accused product infringes [the patents-in-suit]. His conclusion, however, fails to provide any analysis of how infringement was determined, and merely contains conclusory statements. . . . [He] merely states the claim limitations followed by general references to several documents and [a deposition]. Nowhere does [he] explain why the documents or deposition are relevant to the technology involved or to [the patent], how they show why claim 3 of the [patent] covers the accused product, or how they demonstrate or provide the required analysis of the claim elements to the accused product. . . . [E]ven if the court assumes the documents and deposition referenced by [plaintiffs' expert] contain the necessary analysis, it is not the court's role (nor the opposition's responsibility) to comb through these documents, extrapolate the necessary information, analyze it, and hobble together an expert opinion based on assumptions of what the expert felt was significant."

Magnetar Technologies Corp, et al. v. Six Flags Theme Park Inc., et al., 1-07-cv-00127 (DED February 7, 2014, Order) (Thynge, M.J.)

Expert’s Reliance on Umbrella License Did Not Warrant Exclusion of Opinion

The court denied plaintiff's motion to exclude defendant's expert because of his reliance on an umbrella license between plaintiff and its sister company. "The umbrella license that this motion revolves around is a license between [plaintiff] and . . . [one of plaintiff's] sister companies. The license covers all of [plaintiff's] U.S. intellectual property, 'including all patents, Know-how, Designs, Domain Names and Trademarks . . .' Because of the license, '[plaintiff's sister company] pays [a] license fee to [plaintiff] based on essentially all of [plaintiff's] sales and revenue in the U.S., not merely its sales of destination dispatch overlay.' Furthermore, the license includes the patents-in-suit. . . . [Defendant's expert] at least minimally connects the license in question to the patents-in-suit and rather than simply extract a royalty rate from the previous license, uses the license as only a single component of his entire analysis."

Inventio AG v. Thyssenkrupp Elevator Americas Corporation, et al., 1-08-cv-00874 (DED February 6, 2014, Order) (Andrews, J.)