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Judge Sue L. Robinson recently granted a defendant’s motion for summary judgment that a patented financial transaction security apparatus was invalid under 35 U.S.C. § 101.   Joao Bock Transaction Sys., LLC v. Jack Henry & Assocs., Inc., Civ. No. 12-1138-SLR (D. Del. Dec. 15, 2014).  The Court described the invention as adding “transaction security by allowing interaction between the central processing computer and a communication device to enable the point-of-sale terminal operator of the card holder to allow or deny a transaction using the communication device over a communications network.”  Id. at 2-3.  The Court agreed with the defendant’s argument that the claims at issue were directed to the abstract idea of, essentially, enabling a bank customer to give a stop payment instruction to a bank on a given check presented for payment, and having the bank honor that instruction by locating the check at issue and not paying it.  See id. at 12-14.

The Court then considered whether the claimed abstract idea was limited by an inventive concept such that “the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.”  Id. at 14 (quoting Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2355 (2014)).  The Court rejected the plaintiff’s argument that “the claims use ‘specific computers’ with bank processing software, making them ‘special purpose computers[,]’” and found, based on the specification, that “[t]he computer components are being employed for basic functions, including storage, transmitting and receiving information . . . .”  Id. at 14-15.  The Court added that “[w]hile the computer components do allow the abstract idea to be performed more quickly, this does not impose a meaningful limit on the scope of the claim.”  Id. at 15.

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In Tessera, Inc. v. Amkor Technology, Inc., C.A. No. 12-852-SLR (D. Del. Dec. 10, 2014), Judge Sue L. Robinson recently denied plaintiff’s motion to vacate, modify, or correct an arbitration award connected with the parties’ ongoing patent infringement dispute.  The parties had previously entered into an agreement that licensed plaintiff’s technology and patents to defendant, and disputes would be settled by arbitration.  Id. at 1-2.  The parties had adjudicated a number of disputes in arbitration relating to royalty payments, in which plaintiff was awarded damages that also included damages based on conduct following the termination of the license agreement.  Defendant unsuccessfully attempted to appeal this award in California state court.  Its motion before this Court to vacate, modify, or correct the arbitration award claimed that the parties had agreed to arbitrate license royalties, but not “patent infringement after the termination of their license”; as a result, the arbitration award’s inclusion of damages based on post-termination conduct was improper, and this Court, not the California state courts, had jurisdiction to review the arbitrator’s award of post-termination damages.  Id. at 5.

The Court disagreed, noting that the agreement’s arbitration clause was broad enough to cover post-termination damages.  Id. at 5.  In addition, the Court chose to abstain from hearing the matter, citing the fact that the license agreement was governed by California law, that the California state courts were already involved in the matter, and that the merits of defendant’s arguments had already been rejected by the California courts.  Id. at 6-7.  Further, defendant had “invoked the jurisdiction of the California courts until it was handed an adverse decision.”  Id. at 7.

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Following remand from the Federal Circuit, Judge Richard G. Andrews affirmed the District Court’s original construction of the term “electrode,” finding it is a “microelectrode having a width of 15 [microns] up to approximately 100 [microns].” Roche Diagnostics Operations, Inc. v. Abbott Diabetes Care, Inc., C.A. No. 07-753-RGA (D. Del. Dec. 5, 2014). Following the Court’s claim construction opinion in the prior district court proceeding, plaintiff moved for reconsideration, advancing a different claim construction theory for the term “electrode” than it had initially advanced. Id. at 1. At the pretrial hearing, Judge Andrews tentatively denied plaintiff’s motion for reconsideration, but nevertheless invited plaintiff to file a brief in opposition to that tentative denial. Id. at 4. Because the opposition brief cited authority and made arguments not previously set forth in any of plaintiff’s other briefing, Judge Andrews found that this was essentially “a second motion for reconsideration.” Id. at 4-5. Judge Andrews denied the motion for reconsideration and entered summary judgment of non-infringement based on the electrode construction. Id. at 5. Plaintiff appealed the summary judgment order based in part on the allegedly erroneous construction of “electrode.” Id. at 1. The Federal Circuit vacated the judgment of non-infringement and remanded to the District Court to “consider the parties’ arguments that pertain to the scope of the term ‘electrode.’”

First, on remand, Judge Andrews requested that the parties address “( 1) whether [plaintiff’s] motion for reconsideration was procedurally appropriate, and (2) if so, whether Defendants waived any procedural objections to [plaintiff’s] new claim construction argument by not addressing them on appeal to the Federal Circuit.” Id. at 6. Considering these issues, Judge Andrews found that the motion for reconsideration “was properly denied on procedural grounds,” especially given that plaintiff raised not only an “argument it did not make, but an argument that is contrary to the argument it did make.” Id. at 8. Accordingly, “on that basis alone,” Judge Andrews adopted the District Court’s original construction of the term “electrode.” Id. at 8.

Nevertheless, consistent with the Federal Circuit’s decision, Judge Andrews addressed the merits of plaintiff’s argument with respect to the construction of the term “electrode.” Id. at 8-15. Judge Andrews considered the concept of “non-planar diffusion,” whether certain examples constituted unclaimed embodiments, whether a particular claim was enabled, and new extrinsic evidence presented by plaintiff. Id. at 10-15. Considering all these points, Judge Andrews affirmed the District Court’s original construction of the term “electrode.” Id. at 15.

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Today, the District of Delaware and Delaware Chapter of the Federal Bar Association announced a call for applications for the 2015 Federal Trial Practice Seminar.  As a 2013 graduate of the program, I highly recommend submitting an application.   Participation is open to members and non-members of the FBA.  See the below message from the FBA and attached flyer for more information.

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Dear FBA Members,

The United States District Court for the District of Delaware and the Delaware Chapter of the Federal Bar Association (“FBA”) are pleased to announce the 2015 Federal Trial Practice Seminar.

The Seminar is an instructional trial practice program designed for lawyers who have less than 10 years of experience as a practicing attorney, but who have an interest in regularly litigating in the District Court.  Applicants who are admitted to the Seminar will participate in instructional sessions on topics including Opening Statements, Closing Statements, Direct Examination, Cross Examination, Motions In Limine and Courtroom Presentation and Demeanor.

The Seminar sessions, to be held in April, May and June 2015, will involve both: (1) instruction from nationally-recognized speakers who have frequently litigated in the District Court and (2) hands-on training sessions, including a mock-trial-style format, in which the participants will apply what they have learned from the speakers.  These weekly sessions will also be attended by Judges of the District Court and a group of program mentors, all of whom have extensive trial practice experience in the District Court.  Seminar participants will also obtain Continuing Legal Education credit (including Ethics-related credit) and will have additional opportunities to interact with the District Court judges, the speakers and the program mentors outside of these sessions.  There is no cost to participate in the Seminar, which is open to both members and non-members of the FBA.  A complete Seminar description is attached to this e-mail.  Additional information about the seminar can be found on the District Court’s website , including a video which describes the program and the experience of the participants.  The video can also be viewed at the following link.

Those interested in applying for the Seminar should submit a resume and a letter of interest by January 9, 2015 to The Honorable Christopher J. Burke. Applications should be sent by e-mail at: FTPS2015@ded.uscourts.gov.  Any questions can be directed to the Seminar co-coordinators, Kelly Farnan (Farnan@RLF.com) or Susan Coletti (coletti@fr.com).

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This week, Judge Sleet issued an order granting a motion for stay pending resolution of a covered business method patent review instituted by the defendants, Bloomberg and Charles Schwab. Quest Licensing Corp. v. Bloomberg L.P., et al., C.A. No. 14-561-GMS, Order at 1-3 (D. Del. Dec. 3, 2014). Judge Sleet applied the statutory test for a stay pending CBM review set out in Section 18 of the America Invents Act, which provides for four factors to be considered. Id. at 2 n.2.

Judge Sleet first found that a stay was likely to simplify the issues and streamline the trial. Despite the different claim construction standards applicable in the District Court and the PTAB, Judge Sleet found that the Court could still consider the PTAB’s determination and the intrinsic evidence relevant to that determination. Judge Sleet also found that simplification of issues generally was likely given the defendants’ argument that the PTAB would not only engage in claim construction but could also potentially cancel or amend claims or “affect the substantive meaning of the claims by prosecution history or otherwise.” Id.

“The second factor, which has the court consider how far the litigation has progressed, likewise favor[ed] a stay” because no discovery had yet occurred, particularly given that the Court had stayed discovery pending the resolution of the motion to stay. Id. Judge Sleet also found that “the conflicting evidence of attempts by the parties to start discovery prior to the court’s Rule 26(f) conference does not constitute dilatory tactics” designed to delay discovery. Id.

Turning to the third factor, potential prejudice from a stay or lack therefore, Judge Sleet found the factor neutral in the stay analysis: “Should the defendants eventually be found to have infringed, Quest can be adequately compensated by money damages for any harm suffered during the PTO proceedings. Further, the CBM review process initiated by Congress is required by law to conclude one year after initiation and only extendable by six months with a showing of good cause. The court recognizes that Quest has an interest in the timely enforcement of its patent rights. Nonetheless, the court also recognizes the reduced time-frame allotted by Congress for CBM review completion. Moreover, Bloomberg and Schwab’s filing of the motion to stay approximately six months after the filing of the first complaint is not considered by the court to be intentionally delayed or dilatory. Since the parties and the court will have a definitive answer from the PTO whether it will grant CBM review five months prior to the scheduled Markman hearing, the court finds this factor neutral. While a delay in proceeding with its case may be somewhat prejudicial to Quest, it is not unduly prejudicial.” Id. at 2-3 n.2.

Finally, Judge Sleet considered whether a stay would reduce the burden of the litigation on the parties and the Court. Actions against several defendants had previously been consolidated into one civil action, yet only two of five total defendants had joined the CBM petition in the PTO. Under these circumstances, the plaintiff argued that the remaining three defendants “will be in a position to trigger separate CBM challenges at any time during the pendency of this litigation or to re-litigate the claims determined by the PTO as a result of the CBM petition.” Id. at 3 n.2. Nevertheless, “the court [found] credible the nonmoving defendants’ assertions that they were uninformed of the Petition prior to the eve of filing by Schwab and Bloomberg and in no way were attempting to ‘game’ the system. Additionally, the defendants note, and the court agrees, that this is an unlikely proposition. Further, § 18(b) does not require the court impose estoppel effect on the nonmoving defendants or consider the lack of stipulated estoppel effect in assessing the four factors. Rather, the court is asked to balance the factors with a ‘thumb on the scale in favor of a stay being granted.’” Id.

Accordingly, Judge Sleet found that the “balance of the four statutory factors weighs in favor of granting a stay pending resolution of the CBM review proceedings.” Id.

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Judge Sue L. Robinson recently granted a defendant’s motion for summary judgment of non-infringement of design patent claims.  Poly-America, L.P. v. API Indus., Inc., Civ. No. 13-693-SLR (D. Del. Nov. 25, 2014).  The decision hinged on the “normal use” of the products at issue – cardboard boxes with perforated openings through which plastic garbage bags can be removed.  As Judge Robinson noted, the Federal Circuit has defined “normal use” as the “period in the articles life, beginning after completion of manufacture or assembly and ending with the ultimate destruction, loss, or disappearance of the article.”  Id. at 4 (quoting In re Webb, 916 F.2d 1553, 1557-58 (Fed. Cir. 1990)).  Because the defendant introduced unrebutted evidence that the “normal use” of its product would include “flattening the box for recycling,” at which time its product’s distinct top flaps, tabs, and slots would be viewed by an ordinary observer, the Court found that summary judgment of non-infringement was required.  Id. at 15 (“Although Poly questioned the frequency with which an ordinary observer would view these features, it was unable to point to any evidence that would contradict API’s contention that the flaps, tabs and slots are visible at the point of disassembly, or that recycling was part of a box’s ‘normal use.’”) (emphasis in original).

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In Graphics Properties Holdings, Inc. v. Google, Inc., C.A. No. 12-1394-LPS; v. Lenovo Holdings Company, Inc., et al., C.A. No. 12-1397-LPS (D. Del. Nov. 20, 2014), Chief Judge Leonard P. Stark granted the defendants’ motion for leave to amend their answer to add an inequitable conduct defense, finding that the proposed amendment was not futile.  Id. at 2.

Defendants alleged that plaintiff withheld a Federal Circuit order during prosecution, which affirmed a construction of a term of a patent to which the patent-in-suit was a continuation.  Id. at 2-3.  Defendants further alleged that, had the PTO been aware of this order, it would not have permitted issuance of the patent-in-suit due to lack of written description or because this patent could not claim priority to the previously issued patent.  Id. at 3.  The Court concluded that the amendment was not futile.  While plaintiff had disclosed the District Court’s order regarding this term, and “[w]hile Plaintiff contends this alleged non-disclosure is not material, as the Federal Circuit Order is merely cumulative of the District Court Order, Defendants have articulated a plausible theory to the contrary.  The Amended Answer alleges that the Federal Circuit Order is material because it contained adverse statements not contained in the District Court Order” regarding what the patent’s specification did not cover.  Id. at 4.

Although the Court granted defendants’ motion, it declined to apply a recent decision on which defendants had relied.  Defendants argued that the Court’s recent decision in Masimo Corp. v. Philips Electronic North America Corp. stood for the proposition that an intentional failure to disclose a claim construction ruling inconsistent with the applicant’s position was indicative of inequitable conduct.  The Court declined to extend the holding of this case beyond the “particular circumstances” present there, but also found it “unnecessary to resolve the parties’ dispute as to just how much Masimo helps Defendants here.”  Id. at 5.

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In a recent Order, Judge Gregory M. Sleet granted defendants’ motion to dismiss pursuant to Rule 12(b)(1). Amarin Pharmaceuticals Ireland Ltd. v. Omthera Pharmaceuticals, Inc., C.A. No. 14-791-GMS (D. Del. Nov. 14, 2014). Plaintiff sought a declaratory judgment that defendants’ Epanova™ product infringes U.S. Patent No. 8,663,663 (the “’663 patent”), but Judge Sleet concluded the declaratory judgment action was not ripe for judicial review.

Judge Sleet first explained that while “FDA approval of Epanova™ does provide some amount of support” for plaintiff’s position on the existence of a justiciable controversy, “it is not dispositive.” Id. at 2 n.1. Judge Sleet also found that “defendants’ advanced marketing of the accused product is insufficient to meet [plaintiff’s] burden in this specific instance.” Id. The claims of the ’663 patent at issue were only method claims. Id. Judge Sleet agreed with defendants’ argument that the “method claims ‘turn on physiological responses that have not occurred, in patients that do not yet exist, operating under the care of unidentified doctors, who have not yet prescribed a drug that is not yet on the market’ and cannot, therefore, provide the requisite immediacy” to support the exercise of declaratory judgment jurisdiction. Id. at 2-3 n.1. Judge Sleet additionally noted that “[w]hile it is possible that Epanova™ could enter the market within the ‘timeframe of this lawsuit’ the court does not find that assertion sufficient to prove launch of the product is imminent.” Id. at 3 n.1.

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Judge Andrews recently overruled objections to a report and recommendation on claim construction issued by Chief Magistrate Judge Thynge, previously discussed hereHand Held Prods., Inc. v. Amazon.com, et al., C.A. No. 12-768-RGA-MPT (D. Del. Nov. 5, 2014).  Judge Andrews noted with respect to one objection that the Supreme Court’s decision (issued between claim construction briefing and Judge Andrews’ consideration of Judge Thynge’s recommendations) in Nautilus, Inc. v. Biosig Instruments, Inc., 134 S. Ct. 2120 (2014) changed the legal standard for showing indefiniteness.  The defendant argued that Judge Thynge erroneously applied the former “insolubly ambiguous” standard, but Judge Andrews disagreed and found that Judge Thynge correctly applied the standard enunciated in Nautilus.  Id. at 8.  Judge Andrews also rejected the defendant’s argument that Nautilus “eliminated the requirement that the party challenging the validity of a patent must prove invalidity by clear and convincing evidence.”  Id.  The Court explained that it “does not interpret the new standard to have any effect on the presumption of validity or to eliminate or change the evidentiary burden of proof.  In fact, the Supreme Court expressly discussed the presumption and burden of proof and made no mention of changing or eliminating either.”  Id. at 8-9 (citing Nautilus, 134 S. Ct. at 2030 n.10).

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In a recent opinion, Judge Gregory M. Sleet denied defendant Mylan Pharmaceutical, Inc.’s (“Mylan”) motion to dismiss plaintiff AstraZeneca AB’s (“AstraZeneca”) ANDA action for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2).  AstraZeneca AB v. Mylan Pharmaceuticals, Inc., C.A. No. 14-696-GMS (D. Del. Nov. 5, 2014).  AstraZeneca alleged that the Court maintained jurisdiction over Mylan because (i) Mylan “consented to jurisdiction in Delaware”; (ii) Mylan is “subject to specific jurisdiction in Delaware”; and (iii) Mylan is “subject to general jurisdiction in Delaware.” Id. at 5. Judge Sleet concluded that the Court maintained jurisdiction over Mylan only on the grounds that Mylan is subject to specific jurisdiction in Delaware.

First, Judge Sleet determined that AstraZeneca failed to demonstrate that Mylan “is properly subject to general jurisdiction in Delaware.”  Rejecting jurisdiction on this ground, Judge Sleet explained that “AstraZeneca notes only that Mylan is registered to do business in Delaware and has a broad network of third-party contacts within the state,” and that “[u]pholding jurisdiction on these allegations alone would permit the ‘exercise of general jurisdiction in every [s]tate.’” Id. at 7. Judge Sleet also noted that “Mylan’s litigation history in Delaware fail[ed] to rise to [a] level” that would subject Mylan to general jurisdiction.  Id. at 8.

Next, Judge Sleet rejected AstraZeneca’s argument that Mylan “consented to be subject to Delaware’s general jurisdiction by registering to do business in the state and by appointing a registered agent to accept service of process.” Id. at 8.  First acknowledging there “is a circuit split as to whether this type of ‘statutory consent’ is an adequate basis on which to ground a finding of personal jurisdiction,” Judge Sleet ultimately concluded that “Mylan’s compliance with Delaware’s registration statutes-mandatory for doing business within the state-cannot constitute consent to jurisdiction.” Id. at 9-11. In reaching this determination, Judge Sleet relied on the Supreme Court’s decision in Daimler AG v. Bauman, 134 S. Ct. 746, 761 (2014), which held that “‘continuous and systematic contacts’ alone are insufficient to establish general jurisdiction,”  and thus rejected “the idea that a company could be haled into court merely for ‘doing business’ in a state.” Id. at 11. Judge Sleet additionally noted that “[f]inding mere compliance with such statutes sufficient to satisfy jurisdiction would expose companies with a national presence (such as Mylan) to suit all over the country, a result specifically at odds with Daimler.” Id.

Judge Sleet did find, however, that AstraZeneca demonstrated that Mylan is subject to specific jurisdiction in Delaware.  Judge Sleet first noted that “specific jurisdiction has historically been disfavored by courts as a basis to exercise jurisdiction over generic drug company defendants in ANDA cases.” Id. at 12.  Judge Sleet explained that “ANDA litigation is unlike other patent infringement litigation: The injury is abstract, making it difficult to point to a location out of which the injury ‘arises’ for jurisdictional purposes.” Id. at 14.  Nevertheless, Judge Sleet ultimately concluded that Mylan was subject to personal jurisdiction in Delaware, reasoning that “Mylan’s contact with Delaware is not illusory . . . . Mylan sent its paragraph IV certification to AstraZeneca U.S. in Delaware, thus triggering the forty-five-day countdown for AstraZeneca to file a lawsuit-a ‘real act with actual consequences.’” Id. at 15. Judge Sleet also found that “Mylan cannot plausibly argue that it could not ‘reasonably anticipate being haled into court’ in Delaware when patent litigation is an integral part of a generic drug company’s business.” Id.

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