Special Report: Analysis of CBM Standing Decisions

CBM review is available only to a party charged with infringement of a CBM patent. To qualify, the patent must be directed to a financial product or service but not a technological invention. Of the 213 CBM proceedings in which the PTAB addressed these issues, 191 (90%) resulted in a finding that the challenged patent satisfied both requirements. Only 6 (2.8%) resulted in a finding that the challenged patent was directed to a technological invention.

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Patent for "Delivering Selectable Media Content and Subsequently Playing the Selected Content on a Portable Device" Invalid Under 35 U.S.C. § 101

The magistrate judge recommended granting defendants' motion for judgment on the pleadings that plaintiff's portable device media delivery patent was invalid for lack of patentable subject matter and found that the claims were directed toward an abstract idea. "Contrary to [plaintiff's] position, the Supreme Court did not 'delimit the precise contours of the "abstract ideas" category' in [Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 134 S. Ct. 2347 (2014)] and instead left the lower courts to develop the category on a case-by-case basis. [Plaintiff's] interpretation of the law is overly narrow, and the distinction [it] attempts to make between 'business methods involving fundamental economic practices' and 'longstanding practices' boils down to semantics. . . . The Court finds that delivering selectable media content and subsequently playing the selected content on a portable device is a longstanding commercial practice and is therefore abstract."

Affinity Labs of Texas, LLC v. Amazon.com, Inc. et al, 6-15-cv-00029 (TXWD June 12, 2015, Order) (Manske, M.J.)

Expert's Violation of Prosecution Bar Warrants Exclusion of Testimony

The court partially granted defendants' motion to enforce a prosecution bar against plaintiff's expert who prosecuted a patent involving the relevant technology after receiving defendants' confidential information. The court ordered the expert to return all confidential information and excluded the expert's testimony but did not impose sanctions against plaintiff or plaintiff's counsel. "[Plaintiff's expert] must return any [defendant] designated information and may not use that information for any purpose. In addition, any testimony from [plaintiff's expert] is excluded from this action. . . . [Defendant] points out the difficulty in separating out confidential information in testimony, and the unreasonable lack of trust such a violation fosters. . . . While there is no doubt [plaintiff] will be challenged by the exclusion of any [the expert's] testimony, this is a challenge of its own making, and in any event, [plaintiff] can still retain another expert. . . . [Plaintiff's expert's] failure to comply with the protective order may not have been substantially justified, but the court cannot say that [plaintiff] or its counsel should be held to account for it. Under such circumstances, an award of expenses would not be just."

Avago Technologies Fiber IP (Singapore) PTE. Ltd. v. IPtronics Inc., et al, 5-10-cv-02863 (CAND June 11, 2015, Order) (Grewal, M.J.)

IPR Challenging 3 of 22 Asserted Claims Justifies Stay of Entire Case

The court granted defendant's motion to stay a recently transferred case pending inter partes review and rejected plaintiff's argument that defendant was hijacking the litigation because only 2 of 11 patents-in-suit and 3 of the 22 claims were subject to review. "The patents-in-suit come from three patent families, and . . . there is a 'similarity of inventive disclosure' in the patents, which all 'share similar specifications,' and all of the asserted claims share the same 'key inventive aspect.'. . . As a result of the significant overlap among the patents-in-suit, and between the claim elements of the claims under review in the IPRs and those found in each of the remaining 19 claims, the Court agrees with [defendant] that the IPRs are likely to simplify the issues in this case, regardless of the specific outcomes of the IPRs. Conversely, denying a stay entirely, or granting a stay only as to those patents and claims under IPR, could result in costly inefficiencies for the parties and the Court by introducing a need for certain portions of discovery and motion practice to be redone after the completion of the IPRs."

ACQIS, LLC v. EMC Corporation, 1-14-cv-13560 (MAD June 10, 2015, Order) (Burroughs, J.)

Rapid Creation of New Business Entities Justifies General Exclusion Order

The ALJ recommended that a general exclusion order be issued following a violation of section 337 by defaulting/non-participating respondents' toner cartridges. "Not only would a GEO prevent circumvention of an exclusion order limited to the infringing products of specifically named entities, but the evidence also demonstrates that there is a pattern of violation of section 337 such that it is difficult to identify the source of infringing products. . . . [F]oreign aftermarket toner cartridge manufacturers have the capacity to replicate their operations in the form of a new business in a matter of months. . . . [I]n approximately two months' time, [personnel from a respondent who was terminated through a consent order] (a) left [the terminated respondent], (b) created a toner cartridge manufacturing facility in Jiangxi, China, which could reportedly produce about 300,000 toner cartridges per month, (c) created a global sales and marketing center in Sanxiang, Zhongshan (China), and (d) created a U.S. importer and distributor for [a new group of respondents'] toner-cartridges. . . . The rapid creation of [a new group of respondents] demonstrates how quickly a new business can spring to life and carry on the same infringing activities as a company named in a limited exclusion order, and is an example of how key management personnel of a named company could circumvent an exclusion order limited to the products of that company by leaving to start a new company."

Toner Cartridges and Components Thereof, 337-TA-918 (ITC June 8, 2015, Order) (Shaw, ALJ)

No Modification of Order Limiting Number of Asserted Claims Due to Plaintiff’s Failure to Cooperate

The court denied plaintiff's motion to modify the court's order limiting the number of asserted claims because of plaintiff's previous lack of cooperation. "[Plaintiff's] request that the Court modify its prior decision relating to reduction of asserted claims is denied, given Defendants' representations that [plaintiff] refused previously to consider any proposal to reduce the number of asserted claims and [plaintiff's] failure to propose any reasonable alternative prior to the Court making its determination."

Intellectual Ventures II LLC v. AT&T Mobility LLC et al, 1-13-cv-01631 (DED June 8, 2015, Order) (Stark, J.)

Order Awarding Attorney Fees Triggers Collateral Estoppel Even Though Amount of Fees Remains Undetermined

Following a jury trial finding plaintiff lacked standing to assert the patents-in-suit in a related case, and a finding in that case that defendant was entitled to an award of attorney fees, the court granted defendant's motion for attorneys' fees in the instant case. "'[T]o be "final" for [issue preclusion] purposes, a decision need not possess "finality" in the sense of 28 U.S.C. § 1291,' which establishes the jurisdiction of the courts of appeals over final decisions of the district courts. Rather, "the proper query . . . is whether the court’s decision on the issue as to which preclusion is sought is final." . . . Here, [the other] court found, in a reasoned opinion, that the case is 'exceptional' and granted the defendants’ motions for attorney’s fees pursuant to 35 U.S.C § 285. . . . Because the only issue left unresolved is the amount of reasonable attorney’s fees that the defendants incurred, the [other] court’s determinations that the case is exceptional under § 285 and that fees are warranted are sufficiently firm to be accorded conclusive affect. . . . [T]hat Plaintiff might appeal the [other] court’s decision does not affect whether collateral estoppel applies."

Alzheimer's Institute of America v. Elan Corporation PLC, et al, 3-10-cv-00482 (CAND June 5, 2015, Order) (Laporte, M.J.)