Friday, August 18, 2017

Wireless Messaging Patent Not Invalid Under 35 U.S.C. § 101​

Following a jury trial, the court denied defendant's renewed motion for judgment as a matter of law on the ground that plaintiff’s messaging patent encompassed unpatentable subject matter because the asserted claims were not directed toward an abstract idea. "The Court concludes that the asserted claims in the [patent] are not directed to an abstract idea, but that they instead implement a specific improvement in cellular networking. . . . [At trial, plaintiff's expert] testified that [the manual process of call switching] formerly performed by the switchboard operator 'is now being done by computers.'. . . [The expert's] testimony at trial was merely an analogy to assist the jury in understanding a complex process. It does not disturb the Court’s previous conclusion that the [patent] 'can only be performed on a computer.'. . . [T]he claims of the [patent] 'set out a method for achieving a specific goal -- obtaining information about a wireless terminal with a dynamic network address -- by applying the abstract idea of matching identifiers to retrieve information in the cellular network.' [Recent Federal Circuit decisions] do not affect that ruling."

Comcast Cable Communications, LLC et al. v. Sprint Communications Company LP et al, 2-12-cv-00859 (PAED August 16, 2017, Order) (Dubois, SJ)

Thursday, August 17, 2017

Failure to Provide Examiner With Copy of PTAB Decision Does Not Establish Inequitable Conduct​

The magistrate judge recommended granting plaintiffs' motion for summary judgment that their patents were not unenforceable for inequitable conduct or unclean hands because the failure to submit a copy of a disclosed PGR institution decision was not material. "Defendants’ position practically assumes there is some requirement to submit relevant PTAB decisions to the Examiner during prosecution. But Defendants do not cite any authority for this kind of requirement. Regardless, knowing that the Examiner was indeed aware of the decision, Defendants’ position assumes that Examiner is somehow incapable of finding the PTAB’s PGR Institution Decision on his own (otherwise the patentee’s duty of candor would have been discharged by informing the Examiner). . . . It would be difficult to understand how the USPTO could not obtain the necessary publicly available documents from its own administrative agency when needed."

Tinnus Enterprises, LLC et al v. Telebrands Corporation, 6-16-cv-00033 (TXED August 15, 2017, Order) (Love, MJ)

Wednesday, August 16, 2017

TC Heartland Applies to Unincorporated Associations, Such as LLCs​

The court transferred plaintiff's patent infringement action for improper venue and rejected plaintiff's argument that TC Heartland did not apply to limited liability companies like defendant. "The Supreme Court explicitly limited its analysis in [TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017)]: 'we confine our analysis to the proper venue for corporations' and reserved the applicability of its holding to unincorporated entities. . . . Unincorporated associations, such as limited liability companies, are generally treated like corporations for purposes of venue, whereby the 'residence' is the association’s principle place of business. Now that the Supreme Court has reinforced that 'residence' for corporate defendants in a patent infringement case is limited to the state of incorporation, [plaintiff] is hard-pressed to present a reason why unincorporated associations should be treated differently."

Maxchief Investments Limited v. Plastic Development Group, LLC (TWP2), 3-16-cv-00063 (TNED August 14, 2017, Order) (Phillips, USDJ)

Court-Appointed Expert Required to Determine Scope of IPR Estoppel​

The court ordered the parties to choose an expert to help determine whether defendant reasonably could have raised certain prior art in its petition for inter partes review. "In its [prior] opinion, the Court did not resolve whether [defendant] reasonably could have raised three prior art references in its IPR petition. The Court orders the parties to confer and choose an agreed, independent, court-appointed expert to offer an opinion on whether a skilled searcher conducting a diligent search reasonably would have discovered these references. The parties will split the cost of the expert evenly."

Oil-Dri Corporation of America v. Nestle Purina Petcare Company, 1-15-cv-01067 (ILND August 14, 2017, Order) (St. Eve, USDJ)

Tuesday, August 15, 2017

Offering Products for Sale Online Does Not Create a Regular and Established Place of Business​

The court granted defendants' motion to dismiss plaintiff's patent infringement action for improper venue because defendants did not have a regular and established place of business in the forum. "At the time of this action's filing, [one defendant] was a sole proprietorship operated by [another defendant], a Texas resident, and the three individual Defendants are each residents of Texas. There is no evidence that any of the Defendants reside in Virginia. Additionally, the fact that [the sole proprietorship defendant] has made its product available online through [an online marketplace] is not sufficient to create a regular and established place of business for the purposes of the patent venue statute."

Glasser v. Barboza et al, 1-17-cv-00322 (VAED August 11, 2017, Order) (Hilton, SJ)

Monday, August 14, 2017

Single Retail Store Sufficient to Create Regular and Established Place of Business​

The court denied defendant's motion to dismiss plaintiff's patent infringement action for improper venue because defendant failed to establish that it did not have a regular and established place of business in the forum. "[Defendant] does not dispute [plaintiff's] allegation it has a retail store in Delaware, it argues one retail store is not enough to establish a 'permanent and continuous presence.' We disagree; [defendant's] retail store is a permanent and continuous presence where it sells the alleged infringing technology to consumers on a daily basis. [Defendant] does not meet its burden of showing it does not have 'a regular and established place of business' in this District."

Prowire LLC v. Apple Inc., 1-17-cv-00223 (DED August 9, 2017, Order) (Kearney, USDJ)

Friday, August 11, 2017

Attendance at CES​ and Single Product Sale Do Not Create Regular and Established Place of Business in Nevada​

The court granted defendant's alternative motion to transfer plaintiff's patent infringement action to the District of Delaware because defendant did not have a regular and established place of business in the District of Nevada. "Plaintiff argues that based on Defendant’s attendances at the CES conferences, as well as one alleged infringing product sale to a Nevada resident, the Court has specific personal jurisdiction over [defendant], and therefore venue is proper in the District of Nevada. The Court disagrees that, under the patent venue statute, the alleged conduct is sufficient to make venue in Nevada appropriate. Additionally, [defendant] does not have a 'regular and established place of business' in Nevada. [Defendant's] only offices in the U.S. are in California. [Defendant] does not have any offices, employees, or land in Nevada."

Percept Technologies, Inc. v. Fove, Inc., 2-15-cv-02387 (NVD August 8, 2017, Order) (Boulware, II, USDJ)

Thursday, August 10, 2017

$30 Million Judgment Set Aside Due to Federal Circuit's Invalidation of Patent Under 35 U.S.C. § 101 in Separate Case​

The court granted defendant's motion for relief from a $30 million judgment because the Federal Circuit invalidated the patent in another case under 35 U.S.C. § 101. "The patent claims at issue in the [other] case which were invalidated by the Federal Circuit were and are the same claims at issue here. . . . Given that the Federal Circuit has conclusively adjudged the patent claims, which provide the very basis for [plaintiff's] $30 million judgment, to be invalid; the Court finds no just reason why such a judgment ought to stand when the claims 'are predicated on a nullity' and unenforceable to the rest of the world."

Prism Technologies, LLC v. Sprint Spectrum, LP, 8-12-cv-00123 (NED August 8, 2017, Order) (Strom, USDJ)

Wednesday, August 9, 2017

Personal Residence of CEO Does Not Establish Corporate Defendant’s Regular and Established Place of Business

​ The court granted defendant's motion to dismiss plaintiff's patent infringement action for improper venue because a CEO's residence was insufficient to establish defendant had a regular and established place of business in the forum. "[Defendant] asserts that it does not engage in business operations, own or lease office space, or maintain a public presence in this State, much less this District. . . . The gravamen of [plaintiff's] venue-based arguments appears to be that the mere presence of a high-level employee of a corporate defendant within a particular judicial district is sufficient to satisfy the rigors of Section 1400(b). Case law and common sense dictates that it is not, and [plaintiff] cites to no authority, either binding or persuasive, suggesting otherwise."

Prolacta Bioscience, Inc. v. Ni-Q, LLC et al, 2-17-cv-04071 (CACD August 7, 2017, Order) (Otero, USDJ)

Tuesday, August 8, 2017

Patents for Diagnosing Cardiovascular Disease Invalid Under 35 U.S.C. § 101

After the Federal Circuit found the parent patent to the patents-in-suit invalid, the court granted defendant's motion to dismiss because the asserted claims of plaintiffs’ cardiovascular disease diagnosis patent encompassed unpatentable subject matter and found that the claims were directed toward a law of nature. "According to plaintiffs . . . because the [patents] merely claim a laboratory method of 'detecting' [myeloperoxidase] activity, as opposed to a diagnostic method, they are not directed to patent ineligible subject matter. Plaintiffs' argument is overly superficial. . . . It is not a general laboratory technique for detecting MPO levels. Because the method is directed at detecting the correlation that is the natural law, rather than MPO levels generally, it is clear that the method is directed to the natural law. Accepting plaintiffs' argument to the contrary would permit artful drafters to recast any diagnostic patent as a laboratory method patent, frustrating the purpose of the natural law exception."

The Cleveland Clinic Foundation et al v. True Health Diagnostics LLC, 1-17-cv-00198 (VAED August 4, 2017, Order) (Brinkema, USDJ)

Patent for Diagnosing Neurotransmission Disorder Invalid Under 35 U.S.C. § 101

The court granted defendant's renewed motion to dismiss because the asserted claims of plaintiffs' neurotransmission disorder diagnosis patent encompassed unpatentable subject matter and found that the claims were directed toward a law of nature. "Contrary to Plaintiffs' argument, the [patent] is not a composition patent directed at the creation of the [laboratory-created molecule]. Rather, the patent is directed at a method for the diagnosis of a disease. Although the patented method uses man-made [laboratory-created molecules], the use of a man-made complex does not transform the subject matter of the patent. The focus of the claims of the invention is the interaction of the [laboratory-created molecule] and the bodily fluid, an interaction which is naturally occurring. . . . Counter to Plaintiffs' argument, because the patent focuses on this natural occurrence, it is directed to a patent-ineligible concept."

Athena Diagnostics, Inc. v. Mayo Collaborative Services d/b/a Mayo Medical Laboratories et al, 1-15-cv-40075 (MAD August 4, 2017, Order) (Talwani, USDJ)

Monday, August 7, 2017

Failure to Challenge Venue in First-Filed Motion to Dismiss Does Not Waive Venue If Defendant Supplements the Motion Prior to Decision​

Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017), the court denied defendant's motion to dismiss plaintiff's patent infringement action for improper venue but rejected plaintiff's argument regarding waiver because defendant's motion to dismiss under Rule 12(b)(6) remained pending. "There is authority supporting both sides of the waiver issue. But the Court need not choose a side, because [defendant's] original motion to dismiss is still pending. . . . [A] party that files a Rule 12(b) motion and fails to raise the issue of improper venue can avoid waiving that issue if the party supplements its motion 'before the . . . court [takes] up the matter.' To the extent that 'prompt' amendment is a requirement to avoid waiver, the Court finds that [defendant's] filing of a motion raising improper venue within a month of the Supreme Court’s decision in TC Heartland is sufficiently prompt as this case has not progressed past the pleading stage."

Lit v. Zazzle, Inc., 1-16-cv-07054 (ILND August 3, 2017, Order) (Durkin, USDJ)

Friday, August 4, 2017

PTAB Dicta Does Not Trigger IPR Estoppel​

The court denied plaintiff's motion to exclude invalidity contentions on the ground that inter partes review estoppel precluded defendant from asserting two individual references after the PTAB instituted review on the combination of those references. "[T]he PTAB explicitly considered in its final written decision whether a subset of the instituted grounds was properly before it, and determined that it was not. . . . Though the PTAB then noted in dicta that '[e]ven if we were to consider [one reference] alone, we find that [reference] does not render the challenged claims obvious,' it is clear the PTAB did not believe any subset of the instituted grounds were properly before it. Given the PTAB’s explicit statements of what was 'properly part of [the IPR]' and what was not, the Court concludes that . . . only the instituted ground (obviousness based on the combination of [the two references]) gives rise to estoppel . . . ."

Oil-Dri Corporation of America v. Nestle Purina Petcare Company, 1-15-cv-01067 (ILND August 2, 2017, Order) (St. Eve, USDJ)

Thursday, August 3, 2017

Seattle's Collective Bargaining Ordinance Immune from Sherman § 1 Challenge by Uber, Lyft, et al

The court granted defendant City of Seattle's motion to dismiss plaintiffs' Sherman § 1 claims because Seattle was protected by state action immunity. The court first found that Seattle's ordinance was clearly articulated as a state policy. "The statute [from which the ordinance derives its authority] specifically states that 'it is the intent of the legislature to permit political subdivisions of the state to regulate for hire transportation services without liability under federal antitrust laws.' . . . The Ordinance, by its terms, is an attempt to exercise the authority granted by [this and similar] state statutes to ensure safe and reliable for-hire and taxicab transportation services within the City of Seattle. . . . The statutes on which the City relies clearly delegate authority for regulating the for-hire transportation industry to local government units and authorize them to use anticompetitive means in furtherance of the goals of safety, reliability, and stability. The state 'affirmatively contemplated' that municipalities would displace competition in the for-hire transportation market, a situation which satisfies the 'clearly articulated and affirmatively expressed' requirement for state immunity."

Chamber of Commerce of the United States of America v. City of Seattle et al, 2-17-cv-00370 (WAWD 2017-08-01, Order) (Robert S. Lasnik)

The above decision was reported in Docket Navigator's new Antitrust Docket Report.  Get yours free today at https://compass.docketnavigator.com/request-access.

Lack of Physical Presence Alone Does Not Establish Lack of Regular and Established Place of Business​

Following the Supreme Court's decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514 (2017), the magistrate judge recommended denying defendant's motion to dismiss plaintiff's patent infringement action for improper venue because defendant did not establish that it did not have a regular and established place of business in the forum. "[Defendant's] underlying affidavit to support this assertion simply states, '[Defendant] does not directly or indirectly own business, sales, or distribution locations or other physical facilities in the Eastern District of Texas.' But lack of physical presence in the District is insufficient to establish improper venue. . . . By solely making statements regarding physical facilities in the District, [defendant] fails to set forth sufficient facts to support its argument that it lacks a regular and established place of business in the District."

Realtime Data LLC d/b/a IXO v. Exinda Inc., 6-17-cv-00124 (TXED August 1, 2017, Order) (Love, MJ)

Wednesday, August 2, 2017

Significant Disparity in Valuation of Complex Case Justifies "Bellwether" Trial on Subset of Asserted Patent Claims​

The court scheduled a "bellwether" trial on ten claims from three of defendant's patents due to the complexity of the case and the discrepancy in the parties' valuation of suit. "More than a dozen patents are asserted in this highly complex, highly contentious litigation. . . . [Defendant] contends that it is entitled to approximately $10 billion in reasonable royalties, while [plaintiff] counters that (assuming it is found to infringe valid patents, which it denies) it is liable only for around $10 million, a disparity of about 1000 times. . . . A three-patent liability and damages trial will have the virtue of giving the parties a near-term opportunity to obtain certainty -- in this Court, and then on appeal -- as to the value of a substantial subset of their disputes. . . . Whether this case will ever be amenable to settlement is an open question, but the Court believes that obtaining clarity on the value of one-third (even a non-representative one-third, if that is what it is) of the case is at least as likely to promote settlement as would an advisory damages verdict on the entirety of the case."

Intel Corporation v. Future Link Systems LLC, 1-14-cv-00377 (DED July 31, 2017, Order) (Stark, USDJ)

Tuesday, August 1, 2017

Failure to Challenge Venue Before TC Heartland Does Not Waive Venue Objection​

Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017), the court granted defendants' motions to transfer for improper venue and rejected plaintiffs' arguments that defendants waived their defense. "Federal Circuit precedent clearly foreclosed the venue defense. It would be inequitable to expect Movants to have objected to venue, especially where the Supreme Court had already denied certiorari on the exact question in [VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990)] itself. . . . Both reconsideration of certiorari and reconsideration of merits rulings are, strictly speaking, possibilities, so arguments directed to those results are, strictly speaking, available. But in fairness, neither possibility is great enough upon which to base a finding of waiver where circuit precedent forecloses an argument, particularly in cases such as this one where the relevant circuit is the only one with jurisdiction over the issue, such that even the possibility of a future circuit split does not exist."

CG Technology Development, LLC et al v. FanDuel, Inc., 2-16-cv-00801 (NVD July 27, 2017, Order) (Jones, USDJ)

Monday, July 31, 2017

Patents for Audio and Video Telecommunications Over a Hybrid Secured Network Not Invalid Under 35 U.S.C. § 101​

The court denied defendants' motion to dismiss on the ground that plaintiff’s patents for audio and video telecommunications over a hybrid secured network encompassed unpatentable subject matter because the asserted claims were not directed toward an abstract idea. "[Plaintiff's] claims involve an unconventional technological solution (mixing media over hybrid networks) to a technological problem (transporting audio and video data together over low bit-rate networks). The solution includes the use of generic components. . . . However, the claims' limitations necessarily work together to operate in an unconventional manner to provide an inventive system and process to improve the collaboration of audio and video telecommunications. Therefore, the court concludes that [plaintiff's] claims direct a 'combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself.'"

Meetrix IP, LLC v. Citrix Systems, Inc., et al, 1-16-cv-01033 (TXWD July 27, 2017, Order) (Yeakel, USDJ)

Friday, July 28, 2017

Prejudice Irrelevant to Waiver of Venue Analysis Under TC Heartland​

Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017), the court denied defendant's motion for judgment on the pleadings that venue was improper and rejected defendant's argument that there was no waiver because plaintiff was not prejudiced. "[Defendant] contends that 'waiver typically requires a showing of prejudice to the other party' and that '[plaintiff] will not be prejudiced by a change in venue given the substantial amount of work that remains' to be done in this case. . . . Courts have found prejudice to be a relevant consideration in determining whether waiver by implication has occurred, but [defendant] cites no apposite caselaw holding that prejudice is relevant to waiver under the express terms of Rule 12. The Court therefore declines to consider whether [plaintiff] would suffer prejudice from a transfer of venue in this case."

Mantissa Coporation v. Ondot Systems, Inc. et al, 4-15-cv-01133 (TXSD July 26, 2017, Order) (Palermo, MJ)

Defendant’s Counterclaim Asserting Venue in Forum Court Does Not Waive Objection to Venue​

Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514 (2017), the court granted defendant's motion to dismiss plaintiff's patent infringement action for improper venue and found that defendant did not waive its venue defense through its counterclaim. "[Plaintiff's] argument that [defendant] waived its improper venue defense by virtue of its Counterclaim is unpersuasive. [Defendant's] Counterclaim states, '[b]ased solely on [plaintiff's] filing of this action, venue is proper, though not necessarily convenient, in this District pursuant to at least 28 U.S.C. §§ 1391 and 1400.'. . . As long as [defendant] otherwise preserved its improper venue defense, its counterclaims -- directed at [plaintiff's] conduct and connections with the forum -- do not create a waiver."

Blue Spike, LLC v. Contixo Inc. et al, 6-16-cv-01220 (TXED July 26, 2017, Order) (Love, MJ)

Thursday, July 27, 2017

Plaintiffs Have No Obligation to Plead Specific Facts Supporting Venue​

The magistrate judge recommended denying defendant's motion to dismiss plaintiff's patent infringement action for improper venue and rejected defendant's argument that plaintiff's venue allegations were insufficient. "With the burden of establishing improper venue on the defendant, the plaintiff is under no obligation to plead specific facts supporting venue in the complaint. . . . [Defendant's] principal argument -- that [plaintiff's] venue allegations should be more detailed, 'to give Apple a fair and true opportunity to respond to these allegations' -- is therefore without merit. . . . [D]etailed factual venue allegations (as opposed to citation of the venue statute relied upon) are not required, and [defendant] has not submitted a single affidavit or item of evidence establishing that venue is improper."

Soverain IP, LLC v. Apple Inc., 2-17-cv-00207 (TXED July 25, 2017, Order) (Payne, MJ)

Wednesday, July 26, 2017

Defendant Did Not Waive Venue Objection by Failing to Contest Venue Prior to TC Heartland​

Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017), the court granted defendant's motion to amend its answer to contest venue and rejected plaintiff's argument that TC Heartland was not an intervening change of law that excused defendant's waiver of its objection to venue. "[Plaintiff] argues, and several district courts have found, that the defense of improper venue has always been available because other patent defendants would have 'ultimately succeeded in convincing the Supreme Court to reaffirm [Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957)], just as the petitioner in TC Heartland did.' But this would have taken some convincing, and until TC Heartland, no defendant succeeded in doing so in the 27 years following [VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (1990)]. To suggest that the defense of improper venue has always been available, and that TC Heartland did not effect a change in the law 'because it merely affirms the viability of Fourco[,]' ignores the significant impact of VE Holding and the patent bar’s reliance on the case for nearly three decades."

OptoLum Incorporated v. Cree, Inc., 2-16-cv-03828 (AZD July 24, 2017, Order) (Rayes, USDJ)

Tuesday, July 25, 2017

Defendant’s Repeated Discovery Abuse and Delay Tactics Warrant Terminating Sanctions, Treble Damages, Attorney Fees and Permanent Injunction

​ The court granted plaintiff's motion for terminating sanctions, including treble damages, attorney fees, and an injunction, for defendant's repeated disregard of court orders. "[Defendant] refused to produce documents relevant to the design, manufacture, and sale of the allegedly infringing products. . . . Defendant failed to produce documents reflecting sales of the allegedly infringing products, and produced a single page summary of sales along with heavily redacted invoices that made it impossible for [plaintiff] to identify customers. . . . [Defendant's] corporate representative failed to appear at the scheduled deposition. . . . In addition to the flagrant discovery abuse and contemptuous behavior exhibited by [defendant], the Plaintiff details in their Motion for Sanctions the numerous attempts by [defendant] to derail this litigation by repeatedly attempting to stay the proceedings, and by filing a last minute emergency motion for a protective order. . . . The undersigned agrees with [the magistrate judge's] assessment of the Defendant’s intentional obstructionist behavior. . . . The Court finds that Defendant . . . engaged in the above-described misconduct with the subjective intent to abuse the judicial process. . . . The Court finds the imposition of these sanctions to be necessary to adequately punish [defendant] for its wanton and repetitive disregard of this Court’s orders and as a consequence of its willful abuse of the discovery process. The imposition of lesser sanctions would underrepresent the seriousness of the offensive conduct."

TASER International, Inc. v. PhaZZer Electronics, Inc. et al, 6-16-cv-00366 (FLMD July 21, 2017, Order) (Byron, USDJ)

Monday, July 24, 2017

Defendant Precluded From Offering Deposition of Terminated Expert

​ The court granted plaintiff's motion in limine to preclude defendants from presenting the testimony by deposition of an expert whom they fired because it was unduly prejudicial. "'[D]epriving [plaintiff] of a key opportunity to challenge [the expert's] credibility' would be unfairly prejudicial . . . including [the expert's] role as an employee and then consultant to [defendants], his numerous instances testifying . . . and representations made as to the termination of his relationship with [defendants]. . . . Regardless of whether [defendants] may fairly be viewed as having 'procured' [his] absence, the Court agrees with [plaintiff] that 'it would be unfair to permit [defendants] to secure [the expert's] self-serving testimony . . . and thereafter fire him so that [defendants] can play his deposition to the jury and avoid the specter of his live testimony.' While [plaintiff] took extensive deposition testimony from [the expert] (evidently running to four days), [plaintiff] has had no opportunity to question him regarding his termination, and [defendants'] position would leave [plaintiff] with no fair opportunity to allow the jury to evaluate [his] credibility."

Greatbatch Ltd. v. AVX Corporation et al, 1-13-cv-00723 (DED July 20, 2017, Order) (Stark, USDJ)

Friday, July 21, 2017

Denial of Venue Allegations in Answer Preserves Defendant's Venue Challenge​

The court ordered additional briefing on defendant's motion for judgment on the pleadings of improper venue but found that defendant did not waive its venue defense. "Defendant sufficiently contested and preserved its objection to venue in its Answer. Defendant specifically stated in its answer regarding venue: '[Defendant] denies the allegations of paragraph 10 [referring to paragraph in Complaint asserting proper venue] of the Complaint.' The Magistrate Judge also noted a venue dispute in the Initial Case Management Order. . . . Whether certain acts or omissions operate as a waiver of venue accorded by the general venue statutes also waive venue conferred by the special venue statutes may depend upon the policy behind the specific venue provisions, such as the provision fixing the venue of patent-infringement actions. . . . Courts . . . deviate as to what conduct, even when a venue-challenge is initially raised in an answer, amounts to waiver. . . . In the instant case, the Court finds Defendant sufficiently objected to venue in its Answer and that Defendant took no actions thereafter that would constitute waiver."

JPW Industries, Inc. v. Olympia Tools International Inc., 3-16-cv-03153 (TNMD July 19, 2017, Order) (McCalla, USDJ)

Thursday, July 20, 2017

Presence of Third Party Distributor and Regular Product Sales in Forum State are Irrelevant to Determining Regular and Established Place of Business​

Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017), the court granted defendant's motion to transfer plaintiff's patent infringement action from the District of South Carolina to the District of Utah for improper venue because defendant did not have a regular and established place of business in South Carolina. "Where [defendant] was founded [Charleston, South Carolina], the identity of its South Carolina customers, and the volume of its sales to South Carolina customers are not relevant to the § 1400(b) venue analysis. The presence of a third-party distributing [defendant's] products also is irrelevant. . . . [Defendant] has a single, recently hired employee who does not make sales or interact with customers in South Carolina and who maintains no inventory in South Carolina. . . . Indeed, that [defendant] is not even licensed to do business in South Carolina is practically dispositive in determining that [defendant] does not conduct business in South Carolina through a 'permanent and continuous presence.'"

Hand Held Products Inc. d/b/a Honeywell Scanning & Mobility et al v. The Code Corporation, 2-17-cv-00167 (SCD July 18, 2017, Order) (Gergel, USDJ)

Failure to Challenge Venue In First Response to Complaint Did Not Waive Defendant’s Venue Objection​

Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017), the court granted defendant's motion to transfer plaintiff's patent infringement action from the District of South Carolina to the District of Utah for improper venue and found the defendant did not waive venue by failing to contest the issue in its first response to plaintiff's complaint. "Waiver . . . is an equitable doctrine. . . . Even if in a literal sense it may be said that the law on patent venue has not changed since 1957, it is reasonable that litigants believe TC Heartland is a change in the law. . . . If the present matter were at eve of trial . . . this Court would hold the venue challenge waived. But litigation in this matter has just begun. [Plaintiff] will not be prejudiced by litigating this matter for the first time in a proper venue. It would be inequitable to deny [defendant] the opportunity to seek proper venue, where no prejudice results to Plaintiff, simply because [defendant] missed the venue-challenge deadline by 34 days because it reasonably relied on what nearly every litigant thought was binding precedent governing patent litigation venue for the past 27 years."

Hand Held Products Inc. d/b/a Honeywell Scanning & Mobility et al v. The Code Corporation, 2-17-cv-00167 (SCD July 18, 2017, Order) (Gergel, USDJ)

Wednesday, July 19, 2017

Server Bandwidth Allocation Patent Not Invalid Under 35 U.S.C. § 101​

The magistrate judge recommended denying defendant's motion to dismiss on the ground that plaintiff’s bandwith allocation patent encompassed unpatentable subject matter because the asserted claims were not directed toward an abstract idea. "Defendants argue the Asserted Claims cover the abstract idea of slowing a delivery by delaying a portion of the delivery, based, in part, on past deliveries. . . . The Asserted Claims are directed to transmitting related data, such as parts of file, at different effective rates, with the second effective rate always being slower than the first. Considered in that light, the claims’ 'character as a whole' is directed to the manner by which data is transmitted between two computer systems -- which is not a law of nature, a natural phenomena, or an abstract idea. And even if the underlying concept is well-known in unrelated fields, Alice's Step 1 requires the Court to focus on the claimed advance over the prior art; Defendants have not produced evidence on that point."

Preferential Networks IP, LLC v. AT&T Mobility, LLC d/b/a AT&T Mobility et al, 2-16-cv-01374 (TXED July 15, 2017, Order) (Payne, MJ)

Tuesday, July 18, 2017

Previously Waived Venue Objection Cannot be Revived Via Request to Amend Pleading​

Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514 (2017), the court denied defendant's motion to amend its answer to add a venue challenge. "In its original Answer to [plaintiff's] Complaint, [defendant] had stated that it 'does not dispute that venue is proper in this judicial district.'. . . [Defendant] thus waived its venue defense. [Defendant's] Motion for Leave, in effect, is an attempt to circumvent this waiver. However, the Advisory Committee Notes are clear that the defenses listed in Rule 12(b)(2)-(5) 'are of such character that they should not be delayed and brought up for the first time by means of an application to the court to amend the responsive pleading.'. . . Allowing [defendant] to amend its Answer to assert improper venue -- after [defendant] specifically stated that venue was proper in its original answer and failed to amend as a matter of course -- would also be unduly prejudicial to [plaintiff], as it would fundamentally alter the nature of the case."

Realtime Data LLC d/b/a IXO v. Barracuda Networks, Inc., 6-17-cv-00120 (TXED July 14, 2017, Order) (Love, MJ)

Monday, July 17, 2017

Computer Modeling and Electrical System Simulation Patents Invalid Under 35 U.S.C. § 101​

The court granted defendant's motion for summary judgment on invalidity because the asserted claims of plaintiff’s computer modeling and electrical system simulation patents encompassed unpatentable subject matter and found that the claims were directed toward an abstract idea. "Despite their length and number, the asserted claims focus on gathering information, e.g., real-time and predicted data values, and analyzing and updating a model with that information, e.g., comparing the gathered data and evaluating the prediction deviations to update the model. . . . Further, the claims recite the idea as a function or result, rather than a particular way of performing that function or achieving that result. . . . The purported solution offered by the claims to the problem of outdated information is to update the model so that it fits more accurately within the real-world data. There is nothing in the claim to suggest that, once the models have been updated, the computer system will be any more efficient."

Power Analytics Corporation v. Operation Technology, Inc. et al, 8-16-cv-01955 (CACD July 13, 2017, Order) (Kronstadt, USDJ)

Friday, July 14, 2017

Preparation of Consolidated Financial Statements Does Not Demonstrate That Profits of Subsidiary Inexorably Flow to Parent Patentee​

The court granted defendant's motion for summary judgment that plaintiff was not entitled to damages based on its subsidiary's lost profits and rejected plaintiff's inexorable flow argument. "The Federal Circuit has not adopted the 'inexorable flow' theory. . . . The Federal Circuit has 'long recognized that the lost profits must come from the lost sales of a product or service the patentee itself was selling.' Here, [plaintiff's] claim for lost profits includes the lost profits of its wholly owned subsidiary. . . . That [plaintiff] consolidates its financial statements does not demonstrate an inexorable flow of profits from [the subsidiary] to [plaintiff], even if the inexorable flow theory provides a permissible basis to award lost profits."

Select Comfort Corporation v. Tempur Sealy International, Inc., 0-14-cv-00245 (MND July 12, 2017, Order) (Ericksen, USDJ)

Thursday, July 13, 2017

Rule 12 Motion to Dismiss Under 35 U.S.C. § 101 Waives Venue Challenge Despite Purported Reservation of Right to Challenge Venue in Defendant’s Answer​

The magistrate judge recommended denying defendant's motion to dismiss plaintiff's patent infringement action for improper venue and rejected defendant's argument that it preserved its venue challenge in its answer. "[Defendant] argues that it properly preserved its venue defense in its Answer because it denied that venue was proper and further stated: 'to the extent the U.S. Supreme Court decides that 28 U.S.C. § 1400(b) is the exclusive statute for determining venue in patent cases . . ., [defendant] reserves the right to amend its answer and/or seek to dismiss this case based on improper venue.'. . . While exceptions to Rule 12(g)(2)’s timing requirement exist for challenges related to failure to state a claim or lack of subject matter jurisdiction, there are no exceptions to Rule 12(g)(2) for venue. [Defendant] thus waived its improper venue defense by filing its Motion to Dismiss for Failure to State a Claim. . . . [Defendant] could have easily filed its 35 U.S.C. § 101 Motion as a Rule 12(c) Motion for Judgment on the Pleadings after the Supreme Court decision issued and any potential improper venue challenge was resolved. Instead, [defendant] proceeded to argue the merits of the case in bringing its first Motion to Dismiss under Rule 12(b)(6)."

Realtime Data LLC d/b/a IXO v. Carbonite, Inc. et al, 6-17-cv-00121 (TXED July 11, 2017, Order) (Love, MJ)

Wednesday, July 12, 2017

Attorney Fees Award in Exceptional Case Not Limited to Specific Instances of Misconduct​

The court awarded defendant over $1.8 million in attorney fees under 35 U.S.C. § 285 and rejected plaintiff's argument that defendant was not entitled to recover fees for the entire case. "[Plaintiff] ignores this Court’s extensive analysis and review of [plaintiffs] 'wholly inadequate' pre-suit investigation. . . . Indeed, [plaintiff] concedes that its assertion of the contributory infringement claim in its amended complaint was indefensible in light of its admission that [defendant's] accused products had substantial non-infringing issues. [Plaintiff's] attempt to reduce [defendant's] fee claim to one that is anchored to individual abuses of minor portions is inimical to the Court’s consideration of the totality of the circumstances. . . . When an exceptional case finding is supported by the 'totality of the circumstances,' it would be illogical to constrain a fee award to specific instances of misconduct."

In Re: Bill of Lading Transmission and Processing System Patent Litigation, 1-09-md-02050 (OHSD July 10, 2017, Order) (Beckwith, USDJ)

Tuesday, July 11, 2017

Failure to Challenge Venue in Initial Motion to Dismiss Waives Venue Challenge to Amended Complaint​

Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, No. 16-341, 137 S.Ct. 1514 (May 22, 2017), the magistrate judge recommended denying defendant's motion to dismiss plaintiff's patent infringement action for improper venue and found that plaintiff's filing of amended complaint did not excuse defendant's waiver. "[N]o facts regarding venue changed from when [plaintiff] filed its Original Complaint to its Amended Complaint. Further, [defendant] had already proceeded to argue the merits of the case in bringing its first Motion to Dismiss under Rule 12(b)(6). As the Fifth Circuit has noted, '[i]f a defendant proceeds first on the merits, as by a motion to dismiss for failure to state a claim . . . and thereafter attempts to challenge jurisdiction over his person or improper venue, the challenge should fail.'”

Diem LLC v. BigCommerce, Inc., 6-17-cv-00186 (TXED July 6, 2017, Order) (Love, MJ)

Failure to Allege Direction or Control or Joint Enterprise in Complaint Precludes Evidence of Joint Infringement at Trial​

The court granted defendant's motion in limine to preclude plaintiff from presenting evidence of joint infringement because plaintiff did not plead that theory in its complaint. "[Defendant] points out that [plaintiff's] complaint does not reference a claim for joint infringement. . . . [Plaintiff] responds that joint infringement is a theory of direct infringement that [defendant] has been aware of since [plaintiff's] infringement conditions, which asserted that [defendant], and its customers, directly infringed the asserted patents. . . . [Plaintiff's] allegations in its complaint do not state a plausible claim for relief under a theory of direct joint infringement. [Plaintiff] has alleged no facts demonstrating that either (1) [defendant] exercises direction or control over its customers’ performance or (2) that [defendant] and its customers form a joint enterprise. . . . Thus, [plaintiff] it should be excluded from offering argument, testimony, or evidence regarding such a claim of infringement."

Evicam International, Inc. v. Enforcement Video, LLC, 4-16-cv-00105 (TXED July 7, 2017, Order) (Mazzant, USDJ)

Monday, July 10, 2017

Walmart's Exceptional Litigation Conduct and Willful Trademark Infringement Warrant Award of $1.5M in Attorney Fees

In a trademark case, the court awarded plaintiff $1,554,028.45 for attorney fees against a retail superstore defendant because defendant's litigation conduct and willful infringement made the case exceptional. "First, there has been an unusual discrepancy in the positions taken by the parties in this matter. As previously noted at summary judgment, [defendant] decided to use the [asserted] mark despite being twice warned by its own attorneys not to do so and despite being aware of [plaintiff's] trademark registration. This fact alone marks this case as unusual and exhibits the discrepancy between the parties' positions in this matter. Despite this holding at summary judgment, [defendant] continued to dispute the willfulness of its infringement in all following stages of litigation. [Defendant] also continually advanced remarkable contentions throughout this litigation, such as the argument that the [asserted] mark was worth 'zero' despite the Court's prior holding that that [defendant's] competing use of the [asserted] mark created a likelihood of confusion and that the mark was commercially strong. This case also presents a particular need for compensation and deterrence."

Variety Stores, Inc. v. Wal-Mart Stores, Inc., 5-14-cv-00217 (NCED 2017-07-06, Order) (Terrence W. Boyle)

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Plaintiff's Pattern of Filing Serial Litigation and Voluntarily Dismissing Cases Involving § 101 Challenge Justifies Award of Attorney Fees​

Following a dismissal and covenant not to sue while defendant's 35 U.S.C. § 101 motion was pending, the court granted defendant's motion for attorney fees under 35 U.S.C. § 285 because plaintiff's litigation tactics were unreasonable. "Although the Court agrees that filing a large number of cases does not necessarily mean Plaintiff litigated in an unreasonable manner, it nevertheless finds troubling that Plaintiff has repeatedly dismissed its own lawsuits to evade a ruling on the merits and yet persists in filing new lawsuits advancing the same claims. Specifically, Plaintiff has filed similar lawsuits (more than 90 for [two patents-in-suit] and more than 400 for [another patent]) against countless defendants. Patent litigation is expensive, so it is unsurprising that the vast majority of accused infringers choose to settle early rather than expend the resources required to show a court that the Patents-in-Suit fail under § 101. When the few challenges do occur, however, they are promptly met with voluntary dismissals with prejudice, as in this case. . . . [T]he Court finds a clear pattern of serial filings with the goal of obtaining quick settlements at a price lower than the cost of litigation and the intent to litigate even when Plaintiff should have realized it had a weak litigation position."

Shipping and Transit, LLC v. Hall Enterprises, Inc., 2-16-cv-06535 (CACD July 5, 2017, Order) (Guilford, USDJ)

Friday, July 7, 2017

Defendants' Ongoing Participation in Litigation Process Waives Venue Objection​

Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017), the magistrate judge recommended denying defendants' motion to dismiss plaintiffs' patent infringement action for improper venue because defendants waived the issue through their litigation conduct. "[N]ot only was Defendants’ venue challenge belatedly made, during the time at which [defendant] repeatedly admitted venue was proper, the Court had conducted lengthy proceedings on Plaintiffs’ motion for a preliminary injunction and granted the preliminary injunction. Throughout those injunction proceedings, [defendant] never once challenged venue. Since that time, the Court has conducted numerous additional proceedings, including claim construction proceedings, contempt proceedings, several discovery related motions, and pretrial motions. [Defendant] consented to all of these proceedings without objecting to venue. Accordingly, even if [defendant's] defense had not been waived under Rule 12, which it has, [its] continuous and consistent conduct in this action constitutes waiver."

Tinnus Enterprises, LLC et al v. Telebrands Corporation et al, 6-15-cv-00551 (TXED July 5, 2017, Order) (Love, MJ)

Defendants' Motion for Judgment on the Pleadings Under 35 U.S.C. § 101 Waives Venue Objection

Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017), the court denied defendants' motion to dismiss plaintiff's patent infringement action for improper venue because defendants waived their initial venue challenge through their litigation activity, particularly by seeking to invalidate the patent-in-suit under 35 U.S.C. § 101. "Defendants denied that venue was proper in this District in their answer. . . . Nevertheless, 'merely filing an initial venue objection does not preclude subsequent waiver of the objection.'. . . Defendants have litigated the consolidated action in this Court for approximately a year, including by serving invalidity contentions, filing two motions to stay, filing a motion for judgment on the pleadings, and participating in claim construction. . . . The Court finds particularly important the fact that Defendants filed a motion for judgment on the pleadings seeking to invalidate the [patent] under 35 U.S.C. § 101. . . . [F]iling a motion for judgment on the pleadings on the issue of invalidity prior to filing a motion to dismiss for improper venue 'constitutes a tacit admission on the part of the movant that the court has personal jurisdiction, that venue is properly laid there, and that the court should dispose of the case on its merits.'"

InfoGation Corp. v. HTC Corporation et al, 3-16-cv-01902 (CASD July 5, 2017, Order) (Huff, USDJ)

Thursday, July 6, 2017

Multimedia Network System Patent Invalid Under 35 U.S.C. § 101​

The court granted defendant's motion to dismiss because the asserted claims of plaintiff’s multimedia network system patent encompassed unpatentable subject matter and found that the claims lacked an inventive concept. "Considered individually, each step in the [patent] is well-understood, routine, and conventional. For instance, it is nothing new for servers and clients to send requests to each other. Similarly, it is not inventive to require authentications to access content. Nor is it any more inventive to incorporate asymmetric/public-key encryption into an authentication system. . . . The only possible 'non-conventional and non-generic arrangement' in the [patent] is the combination of asymmetric encryption with content licenses. But combining those two concepts is not new. Indeed, the [patent] references two earlier patents that both consider combining asymmetric encryption with licenses to enforce usage restrictions."

Digital Media Technologies, Inc. v. Amazon.com, Inc., 4-16-cv-00244 (FLND July 3, 2017, Order) (Walker, USDJ)

Wednesday, July 5, 2017

Broad Venue Discovery Authorized to Determine Existence of Regular and Established Place of Business

​ Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Group Brands, LLC, (2017), the court partially granted plaintiff's motion to compel venue-related discovery as relevant and proportional to the needs of the case. "Defendant must disclose its total product sales in Oregon, with one exception. . . . [I]nformation on its direct internet sales is unlikely to lead to relevant evidence on whether Defendant has a 'regular and established place of business' in Oregon. . . . Defendant must disclose the activities of third-party vendors of Defendant's products, and Defendant's relationships with these vendors, because such information could lead to relevant evidence. . . . [I]nformation on the activities of Defendant's agents, whether the agent is based in Oregon or not, [and] information on professional services in Oregon retained by Defendant could lead to relevant evidence and is proportional to the needs of the case. . . . Defendant must disclose any substantial amount of personal property it owns, leases, or manages in Oregon, including marketing materials, demonstration equipment, and product literature. . . . Defendant's leases of trade show booths or conference spaces could lead to relevant evidence and should be produced. . . . [Phone number and address] listings created by third parties independently of Defendant are not discoverable, but Defendant must disclose any other listings that it directed."

Nike, Inc. v. Skechers USA, Inc., 3-16-cv-00007 (ORD June 30, 2017, Order) (Papak, MJ)

Monday, July 3, 2017

Employing Exclusive Sales Representative Within District Sufficient to Establish Regular and Established Place of Business

Following the Supreme Court's decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017), the court denied defendant's motion to transfer for improper venue and found that defendant had a regular and established place of business in the forum through its employment of a sales representative in the forum. "At the time this case was filed, [defendant's sales representative in the forum] worked exclusively for [defendant] as a sales executive in this District. [The sales representative] had been working full-time for [defendant] from within the Eastern District of Texas for over seven years. [Defendant] paid [him] a salary and maintained [his] compensation plan online through its human resources department, which outlined his territory and assignments. . . . [Defendant] provided [its sales representative] with 'administrative support' from [defendant's] Minnesota office such that [he] could continue working from his office in the Eastern District of Texas. Under this arrangement, [he] contacted and sold products to customers using an 'office' telephone number with an Eastern District of Texas area code. . . . Technology has revolutionized the way businesses operate and the way consumers interact with those businesses. . . . This important shift has been recognized by many courts."

Raytheon Company v. Cray, Inc., 2-15-cv-01554 (TXED June 29, 2017, Order) (Gilstrap, USDJ)

Judge Gilstrap Recognizes Four-Factor Test for Determining Regular and Established Place of Business Under 28 U.S.C. § 1400(b)

In determining whether defendant maintained a regular and established place of business in the forum for purposes of 28 U.S.C. § 1400(b), the court recognized a four-factor approach consisting of physical presence, defendant's representations, benefits received, and targeted interactions. "Since the Supreme Court’s decision in [TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017)], this Court has received a number of motions to dismiss or transfer based on improper venue. It is evident from these motions, and their subsequent briefing, that there is uncertainty among the litigants regarding the scope of the phrase 'regular and established place of business.' . . . [T]his Court now attempts to provide guideposts to point the venue analysis in a single coherent direction. . . . First, the Court considers the extent to which a defendant has a physical presence in the district, including but not limited to property, inventory, infrastructure, or people. At the most basic level, a retail store, warehouse, or other facility in the district weighs strongly in favor of finding a regular and established place of business. However . . . the lack of a physical building in the district is not dispositive. . . . Other forms of physical presence may also help support a finding of a regular and established place of business, such as inventory or property in the district[,] [and] the presence of equipment or infrastructure that is owned (or leased) by a defendant and used to provide services to customers. . . . Additionally, courts have considered the presence of employees in the district when determining whether a defendant has a regular and established place of business. . . . Second, the Court looks at the extent to which a defendant represents, internally or externally, that it has a presence in the district. . . . Third, the Court considers the extent to which a defendant derives benefits from its presence in the district, including but not limited to sales revenue. . . . Finally, the Court looks at the extent to which a defendant interacts in a targeted way with existing or potential customers, consumers, users, or entities within a district, including but not limited to through localized customer support, ongoing contractual relationships, or targeted marketing efforts."

Raytheon Company v. Cray, Inc., 2-15-cv-01554 (TXED June 29, 2017, Order) (Gilstrap, USDJ)

Friday, June 30, 2017

Unpatentability Under 35 U.S.C. § 101 Cannot be Determined Solely From Provisional Application​

The court denied defendants' motion for summary judgment on the ground that plaintiff’s oxygen system patent encompassed unpatentable subject matter because defendants relied on a provisional application to establish that the asserted claims were directed toward an abstract idea. "Much of Defendants’ Motion for Partial Summary Judgment is based upon the incorrect premise that this Court should only look to the provisional patent application to determine abstractness. As a fatal flaw, Defendants point to no legal basis for such a premise, and this Court has not independently identified any such basis. . . . [I]t would seem that Defendants concede that the patent was in fact not issued for an abstract idea but rather for 'a very specific system.'"

HVLPO2, LLC v. Oxygen Frog, LLC et al, 4-16-cv-00336 (FLND June 27, 2017, Order) (Walker, USDJ)

Thursday, June 29, 2017

TC Heartland Does Not Qualify as Intervening Change of Law Excusing Waiver of § 1400(b) Venue Challenge​

Following the recent Supreme Court decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017), the court denied defendant's motion to dismiss or transfer plaintiff's patent infringement action for improper venue two months before trial because TC Heartland was not an intervening change in law. "[Defendant's] argument . . . appears to be that following the decision in [VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990)] in 1990 up until the Supreme Court decided TC Heartland in May of 2017, the highest authority available had deemed [Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957)] overridden by congressional action, and accordingly the Supreme Court’s reaffirming of Fourco constituted a change of law. . . . [E]xcept where congressional abrogation of a Supreme Court decision is express, 'only [the Supreme] Court may overrule one of its precedents' -- whether through its own opinion or recognition of congressional override -- and until that occurs, Fourco is and still was the law. . . . The intervening twenty-seven years may have created reliance on VE Holding by litigants, including [defendant], but that 'does not change the harsh reality' that a party could have 'ultimately succeeded in convincing the Supreme Court to reaffirm Fourco, just as the petitioner in TC Heartland did.'”

iLife Technologies, Inc. v. Nintendo of America, Inc., 3-13-cv-04987 (TXND June 27, 2017, Order) (Lynn, USDJ)

Wednesday, June 28, 2017

Failure to Challenge Venue Prior to TC Heartland Does Not Waive Venue Objection​

Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, No. 16-341 (May 22, 2017), the court granted defendants' motion to modify their pending motion to dismiss under Rule 12(b)(6) to add a ground of improper venue and found there was no waiver by failing to raise the issue in their original motion. "[Plaintiff] contends an argument for an improper venue was available to Defendants, and has been since 1957 when the Supreme Court announced [Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957)]. A defendant waives the defense of improper venue if it was available but the defendant omitted it from its responsive pleading or from a motion made before its responsive pleading. . . . TC Heartland abrogated approximately 27 years of patent law precedent. . . . For the first time in 27 years, a defendant may argue credibly that venue is improper in a judicial district where it is subject to a court’s personal jurisdiction but where it is not incorporated and has no regular and established place of business. Defendants could not have reasonably anticipated this sea change, and so did not waive the defense of improper venue by omitting it from their initial pleading and motions."

Westech Aerosol Corporation v. 3M Company et al, 3-17-cv-05067 (WAWD June 21, 2017, Order) (Leighton, USDJ)

Tuesday, June 27, 2017

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Defendant’s Authorization to Conduct Business in Texas, Listing Texas Distributors on Website, and Selling Products in Texas Insufficient to Establish Texas Venue​

Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S.Ct. 1514 (2017), the court granted defendants' motion to dismiss plaintiff's patent infringement action for improper venue because plaintiff failed to present sufficient evidence that defendants had a regular and established place of business in the forum. "'The fact that [defendants] are authorized to do business in Texas is not controlling and will not establish the [§ 1400(b)] requirement.' Nor does defendants' website allowing viewers to access a list of San Antonio/Austin distributors provide venue under the patent infringement statute. Finally, the fact that defendants sell their activity trackers to distributors in Texas Western will not establish venue. . . . Therefore, the kind and degree of defendants’ contacts do not support a finding that defendants have a permanent and continuous presence which shows a regular and established place of business in the Western District of Texas."

LoganTree v. Garmin International, Inc. et al, 5-17-cv-00098 (TXWD June 22, 2017, Order) (Biery, USDJ)

Monday, June 26, 2017

Assignment Requiring Plaintiff to Pay Transferor 100% of Gross Proceeds From Litigation Does Not Deprive Plaintiff of Standing

The court denied defendant's motion to dismiss plaintiff's patent infringement action for lack of standing because plaintiff obtained substantial rights to the patents-in-suit through its assignment from the prior owner even though it had to surrender 100% of litigation and licensing proceeds to the prior owner. "[Plaintiff's] Agreement is nearly identical to the [prior owner's] Agreement. The only difference is that the transferee must pay 100% of the gross proceeds from litigation and licensing to the transferor, rather than 50% in the [prior owner's] Agreement. Again, this is compensation for the transfer that does not reserve any control for the assignor over the Asserted Patents or their use. . . . Defendant argues that Plaintiff has no economic interest because he must surrender the gross proceeds from the litigation to [the prior owner]. However, this does not diminish Plaintiff’s rights to the Asserted Patents for the purpose of standing. Any infringement of Plaintiff’s exclusive right to make and sell the patented products would still cause Plaintiff to suffer a justiciable injury, regardless of whether he retains any damages awarded for that injury."

Agarwal v. Buchanan d/b/a Jeff Buchanan Tree Services d/b/a Buchanan Industries d/b/a Wood Chipper Safety Shield, 2-17-cv-02182 (CACD June 22, 2017, Order) (O'Connell, USDJ)

Friday, June 23, 2017

Eve of Trial Supplement to Damages Expert Report Justifies Monetary Sanctions Award​

The court sanctioned plaintiffs for producing an unsolicited addendum to their damages expert report which required defendants to file a motion to strike. "The Court has now three times granted Defendants’ Daubert Motions on the issue of [the expert's] estimation of indirect sales in the United States to prove damages for indirect infringement. . . . Given that the Court’s orders have been entirely clear and [plaintiff] has provided no justifiable explanation for why [the expert] impermissibly supplemented his report without leave of Court on the eve of trial, thereby forcing [defendants] to file the instant emergency motion, the Court finds that fees for the motion are appropriately awarded to [defendants]."

Eidos Display, LLC et al v. AU Optronics Corporation et al, 6-11-cv-00201 (TXED June 21, 2017, Order) (Love, MJ)

Thursday, June 22, 2017

Failure to Timely Challenge Venue Before TC Heartland Waives Challenge Despite Reservation of Rights​

The court denied defendants' motion to transfer venue based on the recent Supreme Court decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017), because defendants waived their objection to venue. "[N]either [defendant] affirmatively sought dismissal or transfer because of the lack of 'resid[ence]' or the lack of a 'regular and established place of business' under § 1400(b) as interpreted by [Fourco Glass Co. v. Transmirra Prod. Corp., 353 U.S. 222], until . . . less than two months from trial. . . .The Court need not reach Defendants’ argument that a change in law constitutes an exception to waiver under Rule 12(h)(1)(A) because the Supreme Court’s decision in TC Heartland does not qualify. . . . 'TC Heartland does not qualify for the intervening law exception to waiver because it merely affirms the viability of Fourco.' [One defendant] argues that Defendants 'each expressly reserved their rights to challenge venue in the event TC Heartland changed the law,' but a defendant cannot state that it does not dispute venue while reserving the ability to later contest it. To conclude otherwise would undermine the purpose of Rule 12(g) and (h) to promote efficiency and finality."

Elbit Systems Land and C4I Ltd. et al v. Hughes Network Systems LLC et al, 2-15-cv-00037 (TXED June 20, 2017, Order) (Payne, MJ)

Wednesday, June 21, 2017

Representative Infringement Contentions Stricken Without Leave to Amend For Failure to Show Common Characteristics​

The court granted plaintiff's motion to strike defendants' infringement contentions based on representative accused products as insufficient. "[T]he patent owners have not adequately shown that their purportedly representative claims in fact share the same critical characteristics as other accused products. . . . [T]he patent owners will be strictly limited to accusing products that truly fit the theories described in their infringement contentions. The patent owners do not have leave to amend to add explanations about how the charted accused products are representative of other accused products. Nor do they have leave to amend to chart additional 'representative' products."

Comcast Cable Communications, LLC v. OpenTV, Inc. et al, 3-16-cv-06180 (CAND June 19, 2017, Order) (Alsup, USDJ)

Tuesday, June 20, 2017

Nature of NPE Plaintiff’s Business Does Not Waive Privilege as to Patent Valuation Analysis​

The court denied defendant's motion to compel the production of documents and rejected defendant's argument that plaintiff's non-practicing entity status precluded it from asserting privilege over ongoing business valuations of the patents-in-suit. "[Defendant] asserts that [plaintiff] cannot assert privilege over these documents due to the nature of its business: [plaintiff] only acquires and then licenses or litigates patents, so the information relates only to a business purpose. But the nature of [plaintiff's] business should neither preclude it, as a general matter, from asserting attorney-client privilege nor automatically shield all of its patent-related documents."

Polaris Innovations Limited v. Kingston Technology Company, Inc., 8-16-cv-00300 (CACD June 16, 2017, Order) (Oliver, MJ)

Monday, June 19, 2017

Collection of Working Group Papers Qualifies as a Single Prior Art Reference​

The court denied plaintiff's motion to strike portions of defendants' invalidity contentions concerning their assertion that a set of working group papers qualified as a single prior art reference, but ordered defendants to provide more specific invalidity contentions. "Plaintiff contends that this reference contains twenty-three documents that are not a 'prior art instrumentality.' . . . Defendants argue that the close relationship of the documents is demonstrated in that they are all seeking to solve the same technical problem, they are submitted using the same common format and numbering for the 3GPP working group, they were submitted by members of the group for a common purpose, and they were developed within a relatively small time frame. . . . [A]s a general matter, a network, or network solution/procedure, can constitute a single prior art reference and may include associated references that describe that network and/or solution. The fact that a network could constitute a single prior art instrumentality particularly makes sense where the allegations of infringement read onto specific network procedures as they do here. . . . While the Court finds that Defendants will be allowed to use these documents as a single reference, the Court finds that Defendants shall supplement their contentions to specifically identify the who, what, why, when, and where of the solution they seek to sufficiently put Plaintiff on notice."

Iridescent Networks, Inc. v. AT&T Inc. et al, 6-16-cv-01003 (TXED June 15, 2017, Order) (Love, MJ)

Friday, June 16, 2017

Economic Prejudice From 8 Years of Product Sales Supports Equitable Estoppel of Infringement Claim​

The court granted in part defendants' motion for summary judgment and found that plaintiff's claims for one of its boot design patents was barred by equitable estoppel because defendants suffered economic prejudice from plaintiff's misleading conduct. "In their [response] to [plaintiff's cease and desist letter], Defendants offered to completely cease selling the [accused] boot and to pay $1,500 to [plaintiff], which was based on profits from selling 240 [accused] boots. Had [plaintiff] accepted the offer, this would have been the extent of Defendants’ loss (or at least something close to it). Now, six years later, Defendants have sold over 750,000 knit boots, a substantial portion of which form the basis of [plaintiff's] damages claim. . . . [H]ad [plaintiff] accepted Defendants’ offer to cease selling the product [8 years ago], the time and money Defendants subsequently invested in the [accused] boot could have been spent on other products or business ventures."

Deckers Outdoor Corporation v. Romeo and Juliette, Inc. et al, 2-15-cv-02812 (CACD June 13, 2017, Order) (Wright, USDJ)

Thursday, June 15, 2017

Email Monitoring and Tracking Patents Not Invalid Under 35 U.S.C. § 101 at Pleading Stage​

The court denied defendant's motion to dismiss on the ground that plaintiff’s email monitoring and tracking patents encompassed unpatentable subject matter because the asserted claims were not directed toward an abstract idea. "[Defendant's] abstract idea challenge is without merit as there is no credible argument that a patent on a system and methods for 'monitoring website activity' claims a longstanding commercial practice. The functionalities claimed in the patents were not imaginable before the Internet. Even after email came into use, the functionality claimed in the patents did not exist until plaintiff’s invention solved the technical problems associated with how email normally worked. . . . [T]he patents-in-suit overcame the problem of finding out whether a user opened an email or clicked on a link within the email. Those are problems confined to the Internet, and the patents provide Internet-based solutions."

InsideSales.com v. SalesLoft, 2-16-cv-00859 (UTD June 13, 2017, Order) (Kimball, SJ)

Wednesday, June 14, 2017

Shipping Products and Communicating with Customers Do Not Establish Regular and Established Place of Business in Forum State Sufficient to Support Venue​

Following the Supreme Court ruling in TC Heartland, the court granted defendants' motions to transfer plaintiff's patent infringement action from the Southern District of Ohio to the Southern District of Texas because plaintiff failed to establish that defendants committed the acts of infringement in the forum or had a regular and established place of business there. "The unsupported allegations of plaintiff's complaint that defendants sold and/or offered for sale accused product to a company in this judicial district are insufficient to establish that defendants committed acts of infringement in this district for purposes of venue under § 1400(b). . . . [P]laintiff has not provided any evidence to establish that defendants employ local representatives or store any product in this district. The fact that defendants may communicate by email or telephone with customers in the Southern District of Ohio or ship product from Texas to customers in this district does not establish that defendants have a permanent and continuous presence here. . . . Likewise, the allegation that defendants 'may have physically visited .. . or otherwise been in this district for business' is not sufficient because even if true, such visits do not establish a permanent and continuous presence."

Stuebing Automatic Machine Company v. Gavronsky d/b/a Matamoros Machine Shop et al, 1-16-cv-00576 (OHSD June 12, 2017, Order) (Litkovitz, MJ)

Tuesday, June 13, 2017

“Non-Infringing Alternative” Means Alternative that is Non-Infringing, Not Alternative That Could be Successfully Sued for Infringement​

The court overruled defendants' objection to the magistrate judge's recommendation to deny defendants' motion for summary judgment that plaintiffs were not entitled to lost profits damages because no infringing alternatives existed in the but-for world. "Defendants insist that the but-for world to which comparisons must be made in order to assess [plaintiffs'] claim for lost profits damages is a world in which non-party manufacturers of generic carvedilol would have existed, and from which direct infringers (i.e., physicians) would have obtained carvedilol. . . . The undisputed evidence is that Defendants' generic carvedilol is interchangeable with the generic carvedilol of the non-party manufacturers; therefore, the generic carvedilol of these non-party manufacturers is an infringing alternative - and not a noninfringing alternative. These non-parties' products, thus, would not exist in the but-for world, which must be constructed to include 'likely outcomes with infringement factored out of the economic picture.'. . . That there is no evidence that the non-party generic manufacturers could be held liable for induced infringement, while Defendants are charged only with induced infringement, does not alter this conclusion. The issue for the lost profits calculation is whether the product is non-infringing, not whether the alternative supplier has been, or could be, successfully sued for infringement."

GlaxoSmithKline LLC et al v. Glenmark Generics Inc., USA, 1-14-cv-00877 (DED June 9, 2017, Order) (Stark, USDJ)

Monday, June 12, 2017

Expert's Reasonable Royalty Analysis Based on Comparable Licenses Not Unreliable for Failing to Apportion

​ The court denied plaintiff's motion to exclude as unreliable the testimony of one of defendant's damages experts regarding his opinion that $6.16 billion was a reasonable royalty as to six patents-in-suit on the ground he failed to apportion between patented and unpatented technologies. "[Defendant] argues that the Federal Circuit has approved the methodology of calculating a reasonable royalty rate based on comparable licensing negotiations without performing a separate apportionment analysis on the smallest saleable unit. In comparing the licenses here, [the expert] showed that . . . the licensed patents had 'extraordinarily similar technology' to the technology of the patents being asserted here. [The expert] also identified indicia of economic comparability between the comparable license agreements and the hypothetical licenses involved here, as well as any effect of alleged differences between them. . . . [His] method is consistent with the Federal Circuit's approved methodology for valuing asserted patents based on comparable licenses. . . . Whether the prior license agreements [he] relied on are sufficiently comparable to support his proposed reasonable royalty is a factual issue best addressed by examination, including cross-examination, at trial."

Intel Corporation v. Future Link Systems LLC, 1-14-cv-00377 (DED June 8, 2017, Order) (Stark, USDJ)

Friday, June 9, 2017

TC Heartland is Not Intervening Law That Excuses Waiver of Venue Challenge​

The court denied defendants' motion to transfer venue due to waiver and rejected defendant's argument that the Supreme Court's recent ruling in TC Heartland qualified as an intervening change in law excusing such waiver. "Based on the Supreme Court's holding in [TC Heartland LLC v. Kraft Foods Grp. Brands LLC, No. 16-341 (U.S. May 22, 2017)], Fourco has continued to be binding law since it was decided in 1957, and thus, it has been available to every defendant since 1957. Accordingly, the Court finds that TC Heartland does not qualify for the intervening law exception to waiver because it merely affirms the viability of [Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957)]. [Defendant's] assumption that Fourco was no longer good law was reasonable but wrong, and it cannot be excused from its waiver by saying there was a change in the law. . . . ' Because the Supreme Court did not change the law, retroactivity is also not at issue, and the Court does not address Defendant's arguments regarding retroactivity."

Cobalt Boats, LLC v. Sea Ray Boats, Inc. et al, 2-15-cv-00021 (VAED June 7, 2017, Order) (Morgan, SJ)

Thursday, June 8, 2017

Improved Bargaining Position for Ongoing Royalty Does Not Support Trebling of Jury’s Implied Per Unit Royalty Rate ​

Following a jury verdict of $234 million, the court granted in part plaintiff's motion for an ongoing royalty and awarded a royalty at the same rate proposed by plaintiff's damages expert at trial. "[Plaintiff] seeks an ongoing royalty of three times the implied jury’s per unit rate but provided little justification for this figure. . . . [Defendant's] proposal that the court simply award the rate awarded by the jury for the past infringing sales is a non-starter. . . . Relying on [its] expert . . . [plaintiff] sought a royalty rate of $2.74 per unit, which the jury discounted, presumably because the jury found [plaintiff's] bargaining position during the hypothetical negotiation was not as strong as it maintained. In light of [plaintiff's] improved bargaining position after the jury’s finding of infringement and validity, the court finds that the $2.74 rate is fair and reasonable."

Wisconsin Alumni Research Foundation v. Apple Inc., 3-14-cv-00062 (WIWD June 6, 2017, Order) (Conley, USDJ)

Wednesday, June 7, 2017

Attorney Fees Award Not Limited to Expenses Caused by Litigation Misconduct Where Plaintiff’s Objectively Weak Positions Permeated the Entire Case​

Following remand, the court awarded defendants over $700,000 in attorney fees under 35 U.S.C. § 285 and rejected plaintiff's argument that fees should be limited to those incurred because of its litigation misconduct. "Plaintiff’s suggestion that any fees awarded in this case must 'only compensate for the extra legal expense caused by the litigation misconduct' is unpersuasive. . . . This Court found that the case was exceptional because Plaintiff’s efforts to manufacture venue, the use of a privileged email, and because of the overall weakness of the merits of Plaintiff’s positions taken at the [PTO]. It was not only Plaintiff’s conduct throughout the litigation, but also the objective weakness of Plaintiff’s proposed constructions before the [PTAB]. . . . Plaintiff’s misconduct permeated throughout the entirety of this matter. From the start of this litigation until the motion for attorney’s fees, Plaintiff’s conduct has stood out from the usual case. Accordingly, Defendants are entitled to their full fee as calculated by the lodestar method."

Large Audience Display Systems, LLC v. Tennman Productions, LLC, et al, 2-11-cv-03398 (CACD June 2, 2017, Order) (Real, USDJ)

IPR Estoppel Applies to Competitors' Product Manuals​

The court granted plaintiff's motion in limine to preclude defendants from asserting invalidity grounds based on competitors' product manuals because the manuals were reasonably available through searching and therefore could have been raised as grounds for unpatentability in defendant's earlier petition for inter partes review. "Defendants assert that manuals for prior art products are not estopped because they were not reasonably available through searching. Plaintiff counters that Defendants' executives knew about the competitor that had the products at issue, and Plaintiff argues that Defendants' position is disingenuous. This issue is a credibility issue because the manuals are undoubtedly printed publications, and Defendants' awareness of the manuals is the only question affecting whether these references are estopped. The Court does not believe that Defendants were unaware of a larger competitor's product lines, and thus, the Court finds that the [product] manuals were reasonably available through searching."

Cobalt Boats, LLC v. Sea Ray Boats, Inc. et al, 2-15-cv-00021 (VAED June 5, 2017, Order) (Morgan, SJ)

Tuesday, June 6, 2017

Parties Ordered to Brief Propriety and Effect of Alleging Resident “Doe” Defendant Following TC Heartland​

The court ordered additional briefing on defendant's motions to dismiss or transfer plaintiff's patent infringement complaint in light of the Supreme Court's recent ruling in TC Heartland and plaintiff's allegations against a resident John Doe defendant. "Plaintiff and [defendant] shall rebrief the issue of transferring this action in the wake of the intervening changes in governing law and Plaintiff's subsequent allegations against Defendant John Doe in the Amended Complaint [including] [w]hether a transfer of this action under 28 U.S.C. § 1404(a) is warranted after the United States Supreme Court's holding in TC Heartland, LLC v. Kraft Foods Group Brands, LLC, No. 16-341 (U.S. May 22, 2017), and after the addition of the John Doe Defendant [;][and] [w]hether Plaintiff had a good faith basis for pleading John Doe's residence in Paragraph 9 of the Amended Complaint."

Symbology Innovations, LLC v. Lego Systems, Inc., 2-17-cv-00086 (VAED June 2, 2017, Order) (Allen, USDJ)

Monday, June 5, 2017

Aggressive Litigation Tactics Creating Needlessly Repetitive, Irrelevant or Frivolous Work Warrants $8 Million Attorney Fees Award

Following a jury verdict of willful infringement, the court granted plaintiff's motion for attorney fees under 35 U.S.C. § 285 because defendant's litigation tactics were exceptional. "There can be no doubt from even a cursory review of the record that [defendant] pursued litigation about as aggressively as the court has seen in its judicial experience. . . . [Defendant] maintained its reliance on nineteen invalidity theories to the eve of trial, and then at trial presented only a single defense of anticipation and a single claim of invalidity under § 112. . . . [Defendant] asserted many more defenses through the summary judgment exercise, causing [plaintiff] to expend its resources on responding to such motions, all of which were denied. . . . [T]he court understands the need for flexibility in terms of allowing attorneys to vigorously pursue the best interests of their clients; as a consequence, the court has rarely awarded fees pursuant to § 285. However, [defendant's] litigation strategies in the case at bar created a substantial amount of work for both [plaintiff] and the court, much of which work was needlessly repetitive or irrelevant or frivolous. Of course, the fact that the jury found that [defendant's] infringement was willful is yet another factor to be considered."

SRI International Inc. v. Cisco Systems Inc., 1-13-cv-01534 (DED June 1, 2017, Order) (Robinson, USDJ)

Defendant’s Litigation Conduct, Market Position, Disdain for Plaintiff, and Weak Defenses Justify Enhanced Damages Award of $23 Million​

Following a jury verdict of willful infringement, the court granted plaintiff's motion for enhanced damages and doubled the jury award of $23.6 million. "[S]ome enhancement is appropriate given [defendant's] litigation conduct, its status as the world's largest networking company, its apparent disdain for [plaintiff] and its business model, and the fact that [defendant] lost on all issues during summary judgment and trial, despite its formidable efforts to the contrary. Even assuming for purposes of the record that [defendant] has undertaken some post-trial remedial actions, the court concludes that a doubling of the damages award is appropriate."

SRI International Inc. v. Cisco Systems Inc., 1-13-cv-01534 (DED June 1, 2017, Order) (Robinson, USDJ)

Friday, June 2, 2017

IPR Estoppel Warrants Exclusion of Patents and Printed Publications Except to Establish Dates of Public Use or Sale of Systems​

The court granted plaintiff's motion in limine to preclude invalidity arguments based on certain patents and printed publications due to IPR estoppel, but denied the motion as to prior art systems. "While [defendant] will be permitted to present its defense of invalidity based on [two prior art] systems, [defendant] will be limited to using any documents that qualify as patents or printed publications solely for the purpose of establishing the date on which the [two prior art] systems were in public use or on sale. [The motion is] denied as to [plaintiff's] argument that [defendant] is estopped from asserting the [two prior art] systems as prior art."

Biscotti Inc. v. Microsoft Corporation, 2-13-cv-01015 (TXED May 30, 2017, Order) (Payne, MJ)

Thursday, June 1, 2017

IPR Institution Decision Addressing Priority Date Entitled To No Deference​

The court denied defendant's motion for summary judgment that a patent-in-suit was not entitled to the filing date of the provisional application on the ground that the application did not disclose certain limitations as determined by the PTAB. "[Defendant] contends that the Court should apply substantial deference to the findings of the [PTAB], which at one point concluded that the provisional application did not disclose the offset band limitations and therefore the priority date of the [patent-in-suit] was its filing date. . . . [N]either party is appealing or directly challenging through some other statutory mechanism a decision by the PTAB. Therefore the cases cited by [defendant] do not require the Court to defer to the PTAB's findings. Further, the PTAB made this finding regarding the [patent] priority date in an order setting out its decision on a request by [defendant] to institute inter partes review. . . . The Federal Circuit has indicated that even the PTAB itself is not bound by findings it makes in decisions to institute inter partes review. . . . [Plaintiff] has now provided the Court with an expert declaration that impacts the determination of the priority date. The Court therefore declines to defer to the PTAB's preliminary determination on this issue."

Riddell, Inc. v. Kranos Corporation d/b/a Schutt Sports, 1-16-cv-04496 (ILND May 30, 2017, Order) (Kennelly, USDJ)

Wednesday, May 31, 2017

Expert’s Reliance on Confidential Information From Other Cases Undermines Request for Additional Source Code​

The court denied without prejudice plaintiff's motion to compel the production of additional source code because of a potential protective order violation by its expert. "[Plaintiff] disclosed that the testifying expert was able to identify the purported incompleteness because he had previously been given access to the source code when working in other cases as an expert witness, apparently for parties adverse to [defendant]. In that other litigation, there were presumably protective orders and/or agreements in place limiting use in other cases of information obtained about [defendant's] confidential information, just as the protective order in this case imposes such limitations. The testifying expert’s reliance on confidential information of [defendant's] obtained in other cases therefore presents several questions requiring further elucidation. . . ."

Valencell, Inc. v. Fitbit, Inc., 5-16-cv-00002 (NCED May 29, 2017, Order) (Gates, MJ)

Tuesday, May 30, 2017

How Many Petitions for Inter Partes Review Have Less Than All Challenged Claims Granted?

With the recent grant of certiori in SAS Institute Inc. v. Lee, 16-969, the Supreme Court will answer the question:
"Does 35 U.S.C. § 318(a), which provides that the Patent Trial and Appeal Board in an inter partes review 'shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner,' require that Board to issue a final written decision as to every claim challenged by the petitioner, or does it allow that Board to issue a final written decision with respect to the patentability of only some of the patent claims challenged by the petitioner, as the Federal Circuit held?"
With Docket Navigator's Motion Success charts, you can create statistics in real-time, 24/7 that show the number of petitions for IPR that had all challenged claims granted, all challenged claims denied, and some claims granted or denied. In the following Motion Sucess chart, the red portions of the chart are petitions that had all challenged claims denied IPR, the green portion had all claims granted, and the gray "partial" portions had some claims granted, and some claims denied IPR:

Success Rates of PTAB Institutions of IPR

As a percentage of total decisions, partial institutions have decreased each year since the AIA was enacted. Denials of all challenged claims (the red portions of the chart) are at an all-time high as a percentage of total institution decisions for each year.

Failure to Account for Economic Differences Between Standards-Essential License and Hypothetical License Warrants Exclusion of Expert Testimony​

The court granted plaintiff's motion to exclude the testimony of defendant's damages expert regarding two prior licenses that the parties entered into under the HDMI standard as unreliable for failing to address the economic differences between the licenses and the hypothetical license-in-suit. "[Plaintiff] highlights the fact that [defendant] concedes that the HDMI standards setting organization 'imposes a patent non-assertion covenant and reserves the right to establish royalty fees.' While the Court declines to determine whether or not the HDMI licenses are subject to RAND obligations, the Court is persuaded that the economic differences between the HDMI licenses and the hypothetical license in suit (due to the fact that the HDMI licenses are standard-essential) are such that [defendant's expert] should have accounted for them. Failure to do so warrants exclusion."

Biscotti Inc. v. Microsoft Corporation, 2-13-cv-01015 (TXED May 25, 2017, Order) (Payne, MJ)

Friday, May 26, 2017

Failure to Disclose § 101 Defense in EDTX Initial Disclosures May Not Constitute Waiver​

The court denied plaintiff's motion to strike portions of the report of defendant's invalidity expert that included a previously undisclosed theory of unpatentability under 35 U.S.C. § 101, but reserved ruling on whether defendant waived that defense until trial. "[U]nlike some other districts’ Patent Rules, this district’s Patent Rules do not require a party to disclose an invalidity ground related to subject matter ineligibility under § 101. And because [the expert's] report does not identify any new factual basis for [defendant's] § 101 theory, no discovery violation has occurred. . . . Having said that, it is not clear why [plaintiff] has moved to 'strike' a portion of an expert report related to § 101 when both sides agree that invalidity under § 101 is not a jury issue. . . . Nor is it clear how [defendant] intends to raise its new § 101 invalidity theory when the time for filing motions for summary judgment has passed. If [defendant] intends to raise the theory for the first time during the JMOL phase of the case, the Court will address any waiver argument at that time."

Biscotti Inc. v. Microsoft Corporation, 2-13-cv-01015 (TXED May 24, 2017, Order) (Payne, MJ)

Thursday, May 25, 2017

Multi-Level Encryption Patents Not Invalid Under 35 U.S.C. § 101

​ The court denied defendant's motion for summary judgment on the ground that plaintiff’s encryption patents encompassed unpatentable subject matter because the asserted claims were not directed toward an abstract idea. "Plaintiff has adequately pleaded in this case that the patents create a solution to a computer-centric problem which is not addressed by the prior art. Despite Defendant's assertions, the claims are not reducible to putting a sealed envelope (single-level encryption) into a second sealed envelope (multi-level encryption) for extra security. Rather, the claims provide a specific solution to implementing the multiple levels of nested security through the 'object oriented key manager.' They offer a solution to a problem, multiple users in multiple locations accessing information at different security levels from a central repository, which would not exist but for the ubiquity of computer technology."

TecSec, Incorporated v. International Business Machines Corporation, et al, 1-10-cv-00115 (VAED May 23, 2017, Order) (O'Grady, USDJ)

Post-TC Heartland Venue Question Raised Sua Sponte​

Following the recent Supreme Court decision in TC Heartland, the court sua sponte ordered the parties to brief whether venue of plaintiffs' patent infringement action was proper. "In light of the recent United State Supreme Court case, TC Heartland LLC.v Kraft Foods Group Brands LLC (May 22, 2017), the parties are directed to brief whether venue is proper in this district. . . . The hearing set [in two weeks on defendant's motion for summary judgment of invalidity] is vacated and will be reset, if necessary, after resolution of the venue question."

Columbia Insurance Co. et al v. Integrated Stealth Technology Inc., 3-16-cv-03091 (ILCD May 23, 2017, Order) (Myerscough, USDJ)

Wednesday, May 24, 2017

Expert Testimony That Defendant Evaded and Avoided Taxes Excluded as Prejudicial ​

The court granted defendant's motion to strike the opinions of plaintiff's damages expert that defendant engaged in tax evasion and avoidance as unduly prejudicial under FRE 403. "[Plaintiff's expert] has offered opinions that [defendant] 'has structured its organization and business operations in an effort to attempt to avoid U.S. income taxes and reduce the contribution it makes to the U.S. Treasury.'. . . [Plaintiff] argues that [defendant's] taxation strategy rebuts [its] position that its sales occur outside of the United States. . . . The motivation of [defendant's] business model is not the issue. Plaintiff is free to discuss the way [defendant] conducts its business without getting into the tax consequences of those actions. The Court finds that any slight probative value of discussing [defendant's] taxation strategy at trial would be substantially outweighed by unfair prejudice to [defendant]."

Godo Kaisha IP Bridge 1 v. Broadcom Limited et al, 2-16-cv-00134 (TXED May 19, 2017, Order) (Payne, MJ)

Tuesday, May 23, 2017

Patents Claiming Method for Parking Violation Enforcement Via Self-Release Booting System Invalid Under 35 U.S.C. § 101​

The court granted plaintiffs' motion to dismiss because the asserted claims of defendant's parking enforcement patents encompassed unpatentable subject matter and found that the claims were directed toward an abstract idea. "[T]he [asserted patents] generally describe a method of parking violation enforcement via a self-release booting system which enables the person responsible for a vehicle to remove an immobilizing boot without waiting for an enforcement company or municipal employee to arrive on the scene. . . . [T]he [patents] are directed to the abstract idea of expediting the vehicle immobilization process via self-service. . . . [W]hile the . . . patent claims feature other, specific limitations and requirements, such as the use of RFID receivers and the need for a 'remote computer system' or PDA to identify vehicles and communicate their scofflaw status to a centralized host system, none are directed to a technological improvement in how each component works, or in how the use of each component promotes a technological advance. . . . The streamlining of a tedious process may be a welcome improvement, but it is, at its heart, an abstract one: a way of more efficiently 'organizing human activity.'"

SP Plus Corporation v. IPT, LLC, 2-16-cv-02474 (LAED May 19, 2017, Order) (Feldman, USDJ)

Monday, May 22, 2017

Sales of Broadcom Semiconductor Chips May Have Occurred Within the U.S. Despite Being "Ordered, Manufactured, Shipped, Billed, and Delivered to Buyers Abroad"​

The magistrate judge recommended denying defendant's motion for summary judgment that sales of its accused semiconductor products did not occur within the United States even though the products were "ordered, manufactured, shipped, billed, and delivered to buyers abroad." "[Defendant] designs and develops semiconductor chips domestically, but outsources the task of fabricating them to foundries in Asia. . . . [S]ummary judgment is proper only if the movant can demonstrate that, after viewing all facts in favor of non-movant, no reasonable juror could find that no substantial activities of a sales transaction occurred inside the United States. . . . A reasonable jury could find that many substantial activities relating to sales transactions occurred within the United States based on at least the fact that: . . . [T]he overwhelming majority of Defendants’ design, development, marketing and sales activities occur in the United States. . . . [Agreements] entered into in the United States govern the terms of purchase orders entered into outside the United States . . . Purchase orders entered into overseas may be processed and maintained by [defendant's[ domestic sales team . . . U.S. sales teams provide support to Defendants’ U.S. customers, and [defendant] categorizes its sales information and activity for internal purposes based on the location of end customers. . . . Defendants track sales commissions for sales of products made overseas as if they were domestic sales. . . . [Defendant uses products manufactured overseas to] determine sales force compensation."

Godo Kaisha IP Bridge 1 v. Broadcom Limited et al, 2-16-cv-00134 (TXED May 18, 2017, Order) (Payne, MJ)

Friday, May 19, 2017

Expert’s Failure to Provide Report Should be Addressed as Discovery Dispute, not Daubert Motion​

The court denied plaintiffs' motion to strike the expert disclosure of a defendant's employee because plaintiffs did not attempt to resolve the issue as a discovery matter. "While [defendant's vice President of Engineering] certainly appears to have direct and personal knowledge of some of the facts in the case, the opinions offered in his Disclosure fall in the realm of expert opinions subject to Rule 26(a)(2)(B). . . . Despite being aware of possible Rule 26 violations [3 months ago], Plaintiffs do not appear to have made any effort to obtain a written report through conference with Defendants or by bringing the matter to [the magistrate judge]. Instead, they waited nearly five weeks to file their Motion and raise these issues for the first time. Had they timely raised the issue when they learned of it at deposition -- and before the close of discovery [2 1/2 months ago] -- they might have been able to obtain an expert report and conduct additional investigation or depositions. Plaintiffs may not delay in challenging a Rule 26 violation and then seek the most extreme of sanctions in a Daubert motion filed after the proper time for challenging discovery violations has expired."

Rossi et al v. Darden et al, 1-16-cv-21199 (FLSD May 17, 2017, Order) (Altonaga, USDJ)

Thursday, May 18, 2017

Patentee May Not Modify Conception Date Disclosed in Infringement Contentions With Supplemental Interrogatory Response​

The court granted defendant's motion to strike plaintiff's supplemental interrogatory response and precluded plaintiff from asserting a conception date at trial earlier than the date disclosed in its preliminary infringement contentions. "[Plaintiff] had to disclose a specific date of conception and produce documentary evidence of that conception date in its Patent Local Rule disclosures. . . . [A]lthough [plaintiff] may have disclosed its proposed conception date in time for [defendant] to conduct discovery, that does not cure any prejudice resulting from [plaintiff's] failure to follow the local rules that 'require patent holders to ‘crystallize their theories of the case early in the litigation’ . . . . This poses a minimal burden for a patent holder, who should already know the conception date of a patented invention prior to commencing litigation.'. . . To the extent that [plaintiff] altered its conception date and evidence based on discovery, it had to amend its Rule 3 disclosures to include those changes. Because [plaintiff] did not do so, it cannot argue an earlier conception date than [its originally disclosed date], with respect to [defendant's] prior art."

Femto Sec Tech, Inc. v. Alcon LenSx, Inc., 8-15-cv-00624 (CACD May 16, 2017, Order) (Selna, USDJ)

Wednesday, May 17, 2017

Post-IPR Estoppel Does Not Apply to New Invalidity Theories​

The court granted plaintiff's motion to clarify an earlier order concerning the meaning of "ground for invalidity" for purposes of post-IPR estoppel under 35 U.S.C. § 315(e), but deferred ruling on whether defendant was estopped from asserting a specific theory on invalidity. "[Plaintiff] essentially asks the court to explain what a 'ground for invalidity' is. . . . [T]he defendant is not locked into the precise argument made in its IPR petition. But if the new theory relies on different, uncited portions of the prior art, attacks different claim limitations, or relies on substantially different claim constructions, then the new theory is tantamount to a new invalidity ground, and the court will treat it like a non-petitioned ground subject to estoppel. . . . At this point in the case, I cannot tell who, if anyone, is playing fast and loose with the meaning of [a claim term]. But it hardly seems fair to restrict [defendant] to the claim construction used in the IPR, if [plaintiff] is free to re-tool its infringement case with new claim constructions, as [plaintiff] suggests that it is free to do. I will defer a decision on whether these principles would estop [defendant] from contending that claim 6 is anticipated by Keeler under the alternative interpretation of [the claim term]. The parties are free to argue the § 315(e) estoppel issue at summary judgment."

Douglas Dynamics, LLC v. Meyer Products LLC, 3-14-cv-00886 (WIWD May 15, 2017, Order) (Peterson, USDJ)

Tuesday, May 16, 2017

Apple Ordered to Produce Discovery Regarding Unreleased Products and Prototypes

​ The ALJ granted complainant's motion to compel respondent to produce documents regarding unreleased products and prototypes expected to be imported before the conclusion of the evidentiary hearing. "The Commission routinely grants discovery with respect to future products. [Respondent] contends that it should be the exception to this rule, as [it] 'takes significant measures in an effort to maintain absolute secrecy over the details of its unreleased products under development.' As the undersigned has previously noted, however, [respondent] is not unique in wanting to preserve the confidentiality of its unannounced products. Additionally, a party is not permitted to unilaterally withhold discovery due to confidentiality concerns. The proper procedure for addressing such concerns is through a motion for a protective order. Notably, [respondent] has not made such a motion here."

Electronic Devices, Including Mobile Phones, Tablet Computers, and Components Thereof, 337-TA-1038 (ITC May 11, 2017, Order) (Bullock, ALJ)

Monday, May 15, 2017

IPR Estoppel Applies to “Subsets” of Prior Art Groups That the Petitioner Raised or Could have Raised During IPR​

The magistrate judge recommended partially granting plaintiff's motion for summary judgment that IPR estoppel barred defendant from asserting certain "subsets" of prior art groups previously asserted as unpatentability grounds in the IPR. "[T]he PTAB instituted IPR . . . under § 103(a) based on the combination of Kenoyer, Briere, and Hurley. [Defendant] should be estopped from asserting Kenoyer and Briere as a basis for obviousness at trial because [defendant] raised or could have raised this combination during IPR proceedings. Similarly, [defendant] should be estopped from asserting Kenoyer alone . . . because Kenoyer is a subset of Kenoyer, Briere, and Hurley. This portion of the recommendation, however, extends only to subsets of invalidity grounds that [defendant] raised or reasonably could have raised during IPR proceedings."

Biscotti Inc. v. Microsoft Corporation, 2-13-cv-01015 (TXED May 11, 2017, Order) (Payne, MJ)

IPR Estoppel Applies to Non-Instituted Grounds Included in a Petition Unless the Decision Not to Institute was Purely Procedural​

The magistrate judge recommended partially granting plaintiff's motion for summary judgment that IPR estoppel barred defendant from asserting certain prior art references and rejected the argument that IPR estoppel applied only to defenses raised after IPR institution. "The Court recommends adopting the narrow view of [Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir. 2016), cert. denied, (U.S. Oct. 31, 2016)] and [HP Inc. v. MPHJ Technology Inv., LLC, 817 F.3d 1339 (Fed. Cir. 2016)]. Namely, the Court reads Shaw and HP to exempt an IPR petitioner from § 315(e)'s estoppel provision only if the PTAB precludes the petitioner from raising a ground during the IPR proceeding for purely procedural reasons, such as redundancy. . . . Section 315(e) estops [defendant] from asserting at trial: (1) grounds for which the PTAB instituted IPR and determined those grounds to be insufficient to establish unpatentability after a trial on the merits; (2) grounds included in a petition but determined by the PTAB to not establish a reasonable likelihood of unpatentability (in other words, administrative review on the merits of a ground); and (3) grounds not included in a petition that a 'skilled searcher conducting a diligent search reasonably could have been expected to discover.' . . . [Defendant] is not estopped from asserting grounds included in a petition but which the PTAB found redundant or declined to institute review for another procedural reason."

Biscotti Inc. v. Microsoft Corporation, 2-13-cv-01015 (TXED May 11, 2017, Order) (Payne, MJ)

Friday, May 12, 2017

Plaintiff’s Failure to Dismiss in Light of Unrebutted Evidence of Noninfringement Warrants Rule 11 Sanctions​

The magistrate judge recommended Rule 11 sanctions against plaintiff for costs and fees incurred after defendant filed a motion to dismiss with declarations showing it "does not make, sell, offer to sell, or import any of the accused [products]." "[W]hile it is not clear that [plaintiff] undertook a proper investigation before filing suit against [defendant], [plaintiff's] conduct became objectively unreasonable at the filing of their opposition to [defendant's] Motion to Dismiss. . . . While [plaintiff] admits the question of liability was unclear at the time of filing, this relationship became abundantly clear at the filing of [defendant's] Motion to Dismiss with supporting declarations. . . . Tellingly, [plaintiff] decided shortly after the filing of its response to file suit against [defendant's licensee] [two months ago], but did not dismiss its claims against [defendant]. . . . [Plaintiff] did not reach out or file a stipulation of dismissal upon receipt and review of [defendant's] Motion and only attempted to file such a dismissal after it knew the Court was considering sanctions. . . . [T]his filing by [plaintiff] was simply too late to absolve [it] of its unreasonable conduct in pursuing opposition to [defendant's] Motion. . . . Instead, [plaintiff] continued to pursue its claims at the expense of the Court and the parties. The Court finds that this conduct warrants sanctions under Rule 11."

Blue Spike, LLC v. Caterpillar Inc. et al, 6-16-cv-01361 (TXED May 10, 2017, Order) (Love, MJ)