Per Facebook User Damages Theory Excluded as Fatally Flawed

Following an order excluding the report of plaintiff's damages expert, the court denied plaintiff's motion to allow its damages expert to present a "per-user" theory of damages because the theory was fatally flawed. "Where, as here, the accused technologies represent a small improvement to an existing technology, [plaintiff] is only entitled to a royalty based on the incremental value provided by that improvement. . . . Instead, the 'per-user' damages theory (1) calculates the number of people using [defendant's product], (2) multiplies the number of users by the equivalent of one [Dutch] Guilder, and (3) reduces that amount by 80% to account for the fact that the original licenses were for products and not patents. At no point does the 'per-user' damages theory discuss the value of the . . . features that allegedly cause [defendant] to infringe the patents at issue. Thus, the 'per-user' theory is fatally flawed [and] claims damages 'far in excess of the contribution of the claimed invention to the market' and thus claims 'more than the damages adequate to compensate for the infringement.'. . . [Plaintiff's expert's] 'per-user' theory does not take into account the value of the asserted claims by focusing on the asserted features."

Rembrandt Social Media, LP v. Facebook, Inc., et al, 1-13-cv-00158 (VAED May 6, 2014, Order) (Ellis, J.)

Crime-Fraud Exception Precludes Privilege as to Communications Between Litigation and Prosecution Counsel

In connection with defendant's motion for attorneys' fees under 35 U.S.C. § 285 and 28 U.S.C. § 1927, the court granted defendant's motion to compel the production of communications between plaintiff's litigation counsel and plaintiff's prosecution counsel, because the crime-fraud exception deprived plaintiff of any privilege as to the documents. "This court has found, and the Federal Circuit has affirmed, a series of false representations of material fact relating to invention, demonstration, actual reduction to practice, and diligence. . . . [Defendant] has obtained by subpoena from [prosecution counsel] an e-mail exchange between [plaintiff's owner/inventor] and [prosecution counsel] [7 years ago]. The communications clearly reveal [plaintiff's owner's] awareness of false content in a filed declaration and instruct [prosecution counsel] to confer with [litigation counsel] about the matter. This exchange alone warrants the document discovery sought and deprives [plaintiff] of any attorney-client privilege. The fact that [litigation counsel] now state that they were unaware of the [7 year old] communications between [plaintiff's owner] and [prosecution counsel] and contend that [prosecution counsel] did not communicate with them about the false declaration filed with the PTO is not relevant to the question of whether [plaintiff] has an attorney-client privilege. The loss of the privilege depends upon the wrongdoing of the party, not the conduct or knowledge of the lawyers."

Intellect Wireless, Inc. v. HTC Corporation, et al, 1-09-cv-02945 (ILND May 6, 2014, Order) (Hart, J.)

Expert’s Failure to Address Prior Option to License Patents-in-Suit Renders Entire Opinion Unreliable

The court granted defendant's motion to exclude all opinions of plaintiff's damages expert because of his failure to account for defendant's contractual right to license the patents-in-suit for around $2 million. "[Plaintiff's expert] explained that he found the [parties'] agreements to be irrelevant because [defendant] did not actually license the patents-in-suit. . . . His failure even to consider the [parties'] agreements based on his 'sense of fairness' renders his opinion unreliable. . . . Although [the parties'] agreements do not necessarily 'demonstrate[] the upper limit' of [plaintiff's] recovery, '[t]hey clearly ha[ve] a substantial bearing on the reasonable compensation to which [the patentee] was entitled for infringing use of the invention.'. . . . Of crucial importance here is the fact that [defendant] had an offer from [plaintiff] for a license to the patents-in-suit for a maximum of about $2 million. . . . [Plaintiff's expert's] failure even to account for the reality that at one point [plaintiff] was willing to license all of [defendant's] alleged infringement - and obviate this litigation - for a cap of about $2 million, and the absence of any reasonable explanation for why this reality is irrelevant, renders his analysis unreliable."

Intellectual Ventures I LLC et al v. Xilinx Inc., 1-10-cv-01065 (DED April 14, 2014, Order) (Stark, J.)

Counsel’s Failure to Advise Court of IPR Breached “General Duty of Candor and Good Faith”

The court denied plaintiff's motion to reconsider the court's prior invalidity finding because of the PTAB's different findings during inter partes reexamination and determined that the parties' breached their duty of candor by failing to inform the court of the pending IPR for six months. "By failing to advise this Court of the existence of the IPR proceedings, [the parties] in effect had two bites at the apple regarding the validity of the disputed claims. Moreover, they deprived this Court of the opportunity to inquire of the parties and decide for itself whether to await a ruling from the PTAB on that issue. . . . However, in light of the undeveloped state of the law on this relatively new PTO review procedure, this Court's admonition of all counsel involved in this case falls short of a formal reprimand of any of the individual lawyers. That said, the issuance of this Opinion is more than sufficient to place all patent practitioners on notice that future failures to disclose to the Court any concurrent inter partes review proceedings will be met with far sharper consequences."

Virginia Innovation Sciences, Inc. v. Samsung Electronics Co., Ltd., et al, 2-12-cv-00548 (VAED May 2, 2014, Order) (Davis, J.)

Jury Instructions Rejected in “Over-Litigated” Case

The court ordered the parties to resubmit jury instructions after finding that they were over-litigating the case and warned that arguments in chambers may be charged against trial time. "The parties’ continual expansion of the remaining issues in dispute retroactively waste the substantial resources the Court has committed to resolving the multitude of disputes the parties have presented. Good, experienced jury trial lawyers know their job is to bring order out of chaos, and simplicity out of complexity. . . . This case is being over-litigated, particularly considering the amount involved. . . . [J]ury instructions are not the place to frame a party’s view of the case or argue it to the jury. That is what opening statements and closing arguments are for. The Court orders the parties to materially reduce the number of jury instruction disputes. . . . To assure a more effective presentation of the case to the jury, the Court may decide to charge time it spends resolving arguments in chambers against the time allotted to the parties for the trial."

Universal Electronics Inc. v. Universal Remote Control Inc., 8-12-cv-00329 (CACD May 1, 2014, Order) (Guilford, J.)

Digital Data Sets Are “Articles” for Purposes of Section 337 ITC Investigations

The Commission affirmed the ALJ's finding that respondents' digital data sets electronically transmitted to the U.S. constituted an article of importation. "[Complainant's] infringement claims concern respondents' digital datasets and treatment plans representing the initial, intermediate, and final positions of patients' teeth for use in fabricating dental appliances for orthodontic treatment of individual patients. The Commission therefore must determine whether the phrase 'importation ... of articles' as used in Section 337(a)(1)(B) encompasses these digital data sets that are electronically transmitted into the United States. . . .'Articles' is not explicitly defined within Section 337. . . . [T]he Commission finds that the intended meaning of 'articles' encompasses such items as are bought and sold in commerce and that are imported into the United States, regardless of the mode of importation. . . . [T]he meaning of 'articles' is intended to encompass imported items of commerce as to which a finding of infringement of a patent, trademark, copyright or protected hull design may be sustained (provided that all other requirements of the statute are met). . . . [T]he fact that Customs enforces exclusion orders issued by the Commission by excluding from entry physical goods passing through U.S. ports does not limit our understanding of the scope of 'articles.'"

Digital Models, Digital Data, and Treatment Plans for Use in Making Incremental Dental Positioning Adjustment Appliances, the Appliances Made Therefrom, and Methods of Making the Same, 337-TA-833 (ITC April 9, 2014, Order)

Pending Motion for Attorneys’ Fees Requires Additional Briefing to Address Highmark and Octane Fitness

The court ordered the parties to submit supplemental simultaneous briefing regarding defendants' motion for attorneys' fees following the recent Supreme Court decisions in Highmark Inc. v. Allcare Health Management System, Inc., No. 12-1163 (Apr. 29, 2014) and Octane Fitness, LLC v. Icon Health & Fitness, Inc., No. 12-1184 (Apr. 29, 2014).

Home Gambling Network, Inc., et al v. Chris Piche, et al, 2-05-cv-00610 (NVD April 29, 2014, Order) (Ezra, J.)