Failure to Implement Pre-Suit Litigation Hold Warrants Spoliation Sanctions and Adverse Jury Instruction

The magistrate judge recommended sanctioning defendant with an adverse jury instruction for spoliation and rejected defendant's argument that it did not have to impose a litigation hold until plaintiffs filed suit. "Defendants’ duty to preserve documents arose [a year and a half before plaintiff filed suit] when Plaintiffs notified Defendants of a potential lawsuit against them should they decide to market their alleged infringing product. . . . Plaintiffs show that one of Defendants’ key senior employees . . . indisputably destroyed email communications due to Defendants’ failure to put in place a litigation hold. . . . [Her] communications are especially probative of the claims at issue in this litigation because her current and past employment with Defendants involved the design, development, and testing of the products accused of infringing on the Patents-In-Suit."

Zest IP Holdings, LLC, et. al. v. Implant Direct MFG, LLC, et. al., 3-10-cv-00541 (CASD November 25, 2013, Order) (Gallo, M.J.)

Fact Issues as to Validity Preclude Willfulness Claim

The court granted defendant's motion in limine to preclude evidence of willfulness at the jury trial. "The court notes that its order denying summary judgment that the [patent-in-suit] is not anticipated and nonobvious held that there are triable 35 U.S.C. §§ 102 and 103 issues. Because a reasonable jury could find that the [patent] could be found invalid on multiple grounds, a finding of willfulness is precluded. It would be unfairly prejudicial to instruct the jury on willfulness where that issue is not properly before the jury."

Guzik Technical Enterprises, Inc. v. Western Digital Corporation et. al., 5-11-cv-03786 (CAND November 22, 2013, Order) (Grewal, M.J.)

10-Month Delay Sinks Motion to Transfer

The court denied defendant's motion to transfer venue of plaintiff's infringement action from the Eastern District of Wisconsin to the Northern District of California because the interests of justice did not favor transfer. "[T]he motion to transfer was filed nearly ten months after the case was filed in this District and six months after the scheduling order was issued. . . . It is unclear whether a transferee court would accommodate that schedule. . . . [T]here is no explanation for why the motion to transfer was not brought earlier. If the other forum were truly so convenient, one would expect much swifter action to transfer the case there. . . . Because both convenience and the interests of justice are required in order to transfer a case under [28 U.S.C. § 1404], the motion will be denied."

Circuit Check, Inc. v. QXQ, Inc., 1-12-cv-01211 (WIED November 20, 2013, Order) (Griesbach, J.)

Motion for Attorneys’ Fees is Premature During Appeal of Claim Construction

The court denied without prejudice defendant's motion for attorneys' fees under 35 U.S.C. § 285 until after plaintiff's appeal of claim construction. "The Court concludes that [defendant's] present motion is premature. [Defendant's] fee request could be affected by the outcome of the pending appeal of the Court’s claim construction, and the Court believes it is prudent to await the decision on appeal before ruling on any fees request. Accordingly, the Court denies the present motion without prejudice to [defendant] to bring the motion, if warranted, after the Federal Circuit Court of Appeals issues its decision on the pending appeal of the Court’s claim construction."

Superior Industries, LLC v. Masaba, Inc., 0-10-cv-00764 (MND November 20, 2013, Order) (Frank, J.)

Patentee May Not Recover Lost Profits of Subsidiary Based on Reduction of Hypothetical Sales Price of Subsidiary

The court granted defendants' motion for summary judgment that plaintiff was not entitled to price erosion damages incurred by its subsidiary because plaintiff did not establish a direct injury. "While [plaintiff's expert] has offered hypotheticals about the potential impact of Defendants' infringement, however, such as the possibility that [plaintiff] would have received a lower price if it had attempted to sell one of its subsidiaries, she has provided no factual basis to support these hypotheticals. . . . [W]ere the Court to find that such hypotheticals are sufficient to establish an independent basis for a parent to recover the lost profits of its subsidiaries it would be creating an exception that would essentially swallow the rule . . . . Every parent of a wholly owned subsidiary . . . could obtain the lost profits of the subsidiary simply by claiming it fully controlled the subsidiary and that dividends could have passed the lost profits upstream had the parent decided dividends should be declared by the subsidiary or that a hypothetical buyer might have paid less for a subsidiary had the parent chosen to sell it. Further, such a holding would also fly in the face of the well-established rule that damages may not be awarded on the basis of harm that is entirely speculative."

Volterra Semiconductor Corporation v. Primarion, Inc., et. al., 3-08-cv-05129 (CAND November 18, 2013, Order) (Spero, M.J.)

Early Rule 11 Motion Denied as Premature, But Subject to Renewal

The court denied defendants' motion for Rule 11 sanctions. "Defendants complain that plaintiff has not provided 'details regarding [its] infringement analysis or underlying claim construction positions. . . .' Defendants then urge the court to conclude, prior to claim construction, that plaintiff's 'purported infringement theory includes no 'code comparison' whatsoever and no 'commands' from the user's device or 'instructions' from the ad server that command the user's device to select an advertisement.'. . . The court is not prepared to engage in a claim construction exercise, construing the claim terms . . . at this stage of the proceedings, with no context provided by discovery or a motion practice. . . . [P]laintiff may well be stretching the meaning of two older patents (clearly directed at television and radio), circa 1998-99, to fit current internet streaming video technology. . . . The court cautions plaintiff that it will entertain a renewed Rule 11 motion, if merited, after discovery and a full claim construction record."

HBAC MatchMaker Media Inc. v. CBS Interactive Inc., 1-13-cv-00428 (DED November 18, 2013, Order) (Robinson, J.)

Third-Party IPR Warrants Stay, With Scope of Estoppel for “Redundant” Grounds to be Decided

The court granted defendant's motion to stay pending inter partes review initiated by a nonparty, but agreed to hold a separate hearing regarding potential estoppel effects. "[Defendant] asks that the estoppel extend only to those grounds actually raised in the inter partes review, not those that reasonably could have been raised. The Court notes that some of the grounds asserted by [the nonparty] in its petition for inter partes review of the [patent-in-suit] were disallowed because they were 'redundant in light of the grounds on the basis of which an inter partes review is being instituted.' The Court requires additional argument before deciding the extent to which [defendant] will be estopped. . . . [Defendant] should be prepared to discuss any invalidity grounds it would assert that were not asserted by [the nonparty] and that would not be redundant of those actually raised."

e-Watch, Inc. v. Avigilon Corporation, 4-13-cv-00347 (TXSD November 15, 2013, Order) (Atlas, J.)