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)