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In Magnetar Technologies Corp., et al. v. Six Flags Theme Parks Inc., et al., C.A. No. 07-127-LPS-MPT (D. Del. July 21, 2015), Chief Magistrate Judge Mary Pat Thynge recommended granting-in-part Defendants’ motion for attorneys’ fees under section 285, but recommended denial of the motion for fees against Plaintiffs’ counsel under 28 U.S.C. § 1927.

The Court concluded that Plaintiffs’ litigation conduct was objectively unreasonable, making the case exceptional, in particular as to the asserted ‘125 patent that was ultimately found invalid by Chief Judge Stark in July 2014.  While the Court rejected a number of Defendants’ arguments regarding the frivolousness of Plaintiffs’ claims, improper motivation for the suit, and objectively unreasonable conduct, see id. at 11-18, the Court agreed that Plaintiffs’ arguments on inventorship for the ‘125 patent were objectively unreasonable — namely, that it was so obvious that an individual not named on the patent was an inventor that the argument he was not was unreasonable.  See id. at 18-21.  The Court also concluded that Plaintiffs’ reliance on its expert was objectively unreasonable because they “knew or should have known their expert’s opinion fell well short of the Daubert standard.”  Id. at 21.  The Court had granted Defendants’ Daubert motion due to the expert’s unreliable methodology, “strongly criticiz[ing] his entire infringement analysis” and had cited “a laundry list of unanswered questions” in the report.  Id. at 22.  The Court’s “criticism demonstrates that [the expert’s] report so lacked any reliable methodology under the Daubert analysis and [Rule 702] that it should have been apparent to plaintiffs.”  Id.

Having found the case exceptional based on inventorship issues and Plaintiffs’ reliance on its expert, the Court then narrowed the attorney fees available to Defendants to “reasonable attorneys’ and costs regarding the ‘125 patent related to incorrect inventorship since July 29, 2011 [when key inventor depositions occurred] and [Plaintiffs’] expert report when issued.”  Id. at 26.  Because Defendants’ current fee request was insufficiently detailed for the Court to determine whether, for example, the rates were reasonable, the Court ordered Defendants to address these issues in any subsequent modification.  See id. at 26-27.

The Court then recommended denial of Defendants’ request for fees against Plaintiffs’ counsel under 28 U.S.C. § 1927.  The current counsel assumed representation after Plaintiffs’ prior counsel had withdrawn in 2008.  Id. at 5. The Court found no direct evidence that the new counsel knew the ‘125 patent was invalid due to incorrect inventorship, and rejected Defendants’ arguments as to unreasonable litigation conduct based.  See id. at 28-30.   Furthermore, the Court rejected the argument that maintaining the suit on the ‘125 patent after Defendants’ counsel sent two letters regarding the weaknesses of the claims rendered counsel liable, where Plaintiffs’ counsel had “promptly” responded to the letters, explained “in detail” why it disagreed with Defendants’ argument, and “expressed a willingness to continue a good faith dialogue.”  Id. at 30.

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Judge Sleet has issued an interesting order regarding the changing landscape of motions to dismiss for lack of personal jurisdiction in patent cases. At issue was whether each defendant satisfied the Delaware long-arm statute by demonstrating an “intent to serve the Delaware market” or “purposefully direct[ing] activities at residents of the forum.” Blackbird Tech LLC v. Sakka’s Stores, Inc., et al., C.A. No. 14-1256-GMS, Or. at 1-2 (D. Del. July 21, 2015). Judge Sleet explained the relevant precedent: “Previously, Delaware courts indicated that ‘[a] non-resident firm’s intent to serve the United States market is sufficient to establish an intent to serve the Delaware market, unless there is evidence that the firm intended to exclude from its marketing and distribution efforts some portion of the country that includes Delaware.’” Id. at 2 (citing Graphics Props. Holdings, Inc. v. ASUS Computer Int’l, No. 13-864-LPS, 2014 WL 4949589, at *3 (D. Del. Sept. 29, 2014). His Honor continued: “The court is not convinced this statement remains good law in the due process context” in light of various recent cases, including the Supreme Court’s proclamation that a plaintiff must prove purposeful availment by showing “‘regular flow or regular course of sales’ in the forum state or ‘something more’ such as special state-related design, advertising, advice, marketing, or anything else.” Id. at 2-3 (quoting J. McIntyre Mach., Ltd. v. Nicastro, 131 S. Ct. 2780, 2792 (2011)).

The plaintiff also requested jurisdictional discovery. Although Judge Sleet found that there had not been a showing of intent to serve the Delaware market or purposeful availment of Delaware’s laws, the plaintiff’s request for jurisdictional discovery was not “clearly frivolous” in light of the defendants’ acknowledgement “that their accused products have been shipped to Delaware customers.” Id. at 3-4. Accordingly, Judge Sleet allowed the jurisdictional discovery and held the motions to dismiss in abeyance.

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Magistrate Judge Burke recently issued a report and recommendation that recommended denying several patent infringement defendants’ motions to dismiss for lack of patentable subject matter under § 101. Judge Burke first found that claim construction was not necessary in this case to perform the § 101 analysis. Execware, LLC v. BJ’s Wholesale Club, Inc., et al., C.A. No. 14-223-LPS, Report and Recommendation at 8-9 (D. Del. July 15, 2015). His Honor then rejected arguments that § 101 challenges are not amenable to Rule 12 motions. Id. at 10-13.

Judge Burke then compared the exemplary claim 1 of the patent-in-suit to several recent Federal Circuit cases addressing § 101 and found that the claims were not directed to an abstract idea: “[C]laim 1 references a specific ‘claimed solution’ (the use of a query dialog box that has particular features) to an identified problem . . . . [T]his proffered solution is one ‘rooted in computer technology in order to overcome a problem specifically arising in the realm of computer[s.]’” Id. at 19-27 (quoting DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 1257 (Fed. Cir. 2014)).

Finally, Judge Burke also went on to find that the patent-in-suit did not lack an inventive concept, although “[h]aving determined that claim 1 is not directed to an abstract idea under varying formulations of step one of the Alice test, the Court could end its analysis.” Id. at 29. His Honor concluded that “the presence of the query dialog box limitation in [the] patent amounts to the inclusion of an inventive concept, as it is a meaningful limitation on the underlying idea of ‘displaying, classifying, and organizing unspecified information (referred to as text data objects) in an unspecified transaction.’” Id. at 30-31. Judge Burke also rejected arguments to the contrary by defendants, including that “the process could be performed, in at least an analogous fashion, by two people using pen and paper.” “[A]lthough it may be technically correct to say that humans could use a pen and paper to perform a sorting process that is similar in some ways to the process called for by claim 1, it is hard to assert that this would ‘produce the actual effect of the invention.’. . . Moreover, Defendants have not cited any case where the Supreme Court or the Federal Circuit have held that a claim is patent ineligible based solely on the fact that an analogous method could be performed using pen and paper.” Id. at 32-35.

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In March 2013, plaintiffs Bayer Healthcare Pharmaceuticals Inc., Intraserv GmbH & Co. KG, and lntendis GmbH filed this patent infringement case following defendant Glenmark Pharmaceuticals Limited’s filing of an Abbreviated New Drug Application to market a generic azelaic acid hydrogel.  lntendis GmbH, et al. v. Glenmark Pharmaceuticals Limited, et al., C.A. No. 13-421-SLR (D. Del. July 27, 2015).

Plaintiff Bayer is the the holder of the New Drug Application for Finacea® Gel, 15%, indicated for topical treatment of inflammatory papules and pustules of mild to moderate rosacea. Plaintiff lntraserv is the assignee of the patent-in-suit, U.S. Patent No. 6,534,070 titled “Composition with Azelaic Acid.”  Plaintiff Intendis is the exclusive licensee of the ‘070 patent.

Following a bench trial in February 2015, the Court recently issued its Findings of Fact and Conclusions of Law.  Judge Sue L. Robinson found the ‘070 patent valid and infringed by Glenmark’s proposed ANDA product.

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Judge Sue L. Robinson recently considered plaintiff’s renewed motion to dismiss defendant’s counterclaim of inequitable conduct.  Quest Integrity USA, LLC v. Cokebusters USA Inc., C.A. No. 14-1483-SLR (D. Del. July 22, 2015).  Judge Robinson previously denied defendants’ request to transfer to the Southern District of Texas and plaintiff’s motion for a preliminary injunction.

Plaintiff’s motion argued that defendant’s counterclaim did not adequately show “but-for materiality” or “intent to deceive.”  Id. at 7.  As a preliminary matter, in their opposition, defendant argued that because plaintiff attached an exhibit to its motion containing a portion of the prosecution history, plaintiff’s motion to dismiss was converted to a summary judgment motion.  Id. at 2 fn.4.  Judge Robinson disagreed, noting that the prosecution history is a “public record,” and public records can be considered on a motion to dismiss.  Id. 

As to the merits of the motion, Judge Robinson noted that because the counterclaim was based on nondisclosure of prior art, defendant had to prove by clear and convincing evidence that “the applicant knew of the information, ‘knew that it was material, and made a deliberate decision to withhold it.'”  Id. at 7 (quoting Therasense v. Becton, Dickinson & Co., 649 F.3d 1276, 1290 (Fed. Cir. 2011).  Defendant alleged that the invention claimed in the patent in suit “was not new, was obvious from existing technology, and had been sold before the bar date.”  Id. at 8.  If the PTO had known of the prior art, it would not have issued the patent.  Id.  Judge Robinson, noting that the Court need not decide “the merits of the claim, only whether materiality had been alleged with sufficient particularity[],” found that defendant’s claims passed muster.  Id. at 8-9.  Regarding intent to deceive,  Judge Robinson also found the pleading sufficient because defendant pled adequate evidence of lack of candor with the PTO, from which intent to deceive “is the ‘single most reasonable inference [] to be drawn from the evidence.”  Id. at 10 (quoting Therasense 649 F.3d at 1290).

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After allowing additional discovery and further briefing, Judge Gregory M. Sleet recently granted a Rule 12(b)(1) motion to dismiss a declaratory judgment action seeking to invalidate the defendants’ patents.  Comba Telecom, Inc. v. Andrew LLC, et al., C.A. No. 12-311-GMS (D. Del. July 15, 2015).  The plaintiff argued that the defendants’ patents “present a barrier to [the plaintiff’s] entering the US market” and that the defendants “have taken steps to legally enforce U.S. patents in foreign litigation and by way of public and private threats.” The plaintiff highlighted to examples of such threats: (1) a 2011 press release stating that the defendants would defend their patents from infringement, including specific reference to infringement by the plaintiff; and (2) a letter to a third party manufacturer that, the plaintiff argued, was a “veiled threat” targeting the plaintiff.  The defendants argued that the press release referred to disputes in Brazil and China, not the United States, and denied that the letter to the third party manufacturer was intended as a threat to the plaintiff.  The Court found that the plaintiff’s arguments did not support declaratory judgment jurisdiction, explaining, “[i]mplied threats such as the type alleged by Comba cannot be considered a substantial step toward legal action for patent infringement.”  The Court added that, in any event, the plaintiff had not yet “taken meaningful steps to conduct patent-infringing activity” in the United States, further undercutting the plaintiff’s argument that an actual controversy existed to support declaratory judgment jurisdiction.

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In a recent Order, Judge Gregory M. Sleet granted defendants’ motion for leave to amend its answer to include allegations that the asserted patent is unenforceable due to inequitable conduct. Merck Sharp & Dohme B.V. v. Warner Chilcott Co., LLC, C.A. No. 13-2088-GMS (D. Del. Jul. 10, 2015). As Judge Sleet explained, plaintiff opposed the motion solely on the grounds that “permitting the defendants to include such allegations would be futile.” Id. at 1. Judge Sleet was unpersuaded by plaintiff’s argument, noting that “plaintiff essentially asks the court to evaluate the merits of the defendants’ inequitable conduct accusations, pointing to specific statements in the record and explaining why they do not evidence deception. These arguments are untimely and better suited for the summary judgment stage.” Id. at 2. Judge Sleet found that “the court cannot say that the defendants’ allegations are baseless,” and ultimately concluded that “defendants have adequately alleged the necessary elements of inequitable conduct.” Id.
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In a recent Memorandum Opinion, Judge Sue L. Robinson denied defendants’ motion to transfer venue to the Southern District of Texas. Quest Integrity USA, LLC v. Clean Harbors Industrial Services, Inc., C.A. Nos. 14-1482, 14-1483-SLR (D. Del. Jul. 8, 2015). As Judge Robinson explained, plaintiff “is a limited liability company organized and existing under the laws of the State of Texas and having its principal place of business in Seattle, Washington.” Judge Robinson further explained that “Defendant Clean Harbors is a corporation organized and existing under the laws of the State of Delaware and having its principal place of business in Norwell, Massachusetts,” and “Defendant Cokebusters is a corporation organized and existing under the laws of the State of Delaware and having its principal place of business in Houston, Texas.” Id. at 1-2

In denying the motion to transfer, Judge Robinson first explained that because “‘convenience’ is separately considered in the transfer analysis, the court declines to elevate defendants’ choice of venue over the choice of the plaintiff.” Id. at 4. Judge Robinson found that “plaintiffs have historically been accorded the privilege of choosing their preferred venue for pursuing their claims remains a significant factor.” Id. Further, as Judge Robinson noted, “Defendants admit to engaging in infringing conduct in Delaware,” and “[t]hat fact negates the argument that the alleged infringement is focused in the Texas Gulf Coast region.” Id. Judge Robinson went on to observe that “[a]s is usual in these cases, the convenience factors do not weigh in favor of transfer because discovery is a local event and trial is a limited event.” Id. at 8. Additionally, as Judge Robinson explained, “[a]lthough Delaware is not the locus of any party’s business activities, it is a neutral forum.” Id. Judge Robinson thus concluded that transfer was not warranted in the interests of justice. Id.

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Judge Richard G. Andrews recently granted in part a defendant’s motion to dismiss for failure to claim patent-eligible subject matter under § 101.  Pragmatus Telecom, LLC v. Genesys Telecomm. Labs., Inc., C.A. No. 14-26-RGA (D. Del. July 9, 2015).  At issue were four patents sharing a common specification relating to “controlling communication between customers and organizations using certain computer systems.”  As Judge Andrews explained, the “specification demonstrates that the claims [of the purportedly representative ‘314 Patent] are directed to the abstract idea of connecting customers to call centers.”  Id. at 11.  In describing the claims, the Court drew an analogy to a customer calling a business and identifying himself, then dialing certain numbers to be transferred either to “help” or an “operator” or to leave a voicemail.  Id. at 12-13.  Judge Andrews explained, “[t]o allow such a claim would preempt the fundamental concept of customers communicating with businesses, and more specifically customers communicating with call center agents.”  Id. at 14.  The Court added, “the claim does not contain an inventive concept to transform the abstract idea into patent-eligible subject matter.”  Id.  The defendant sought to also invalidate the three other patents, based on the invalidation of the purportedly representative ‘314 Patent, but Judge Andrews explained, “the Court will only deal with the patent eligibility of the claims of the ‘314 Patent.  If Defendants wish to challenge the other patents under § 101, they must actually provide analysis for this position.”  Id. at 9.

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In late 2013, Chief Judge Stark granted a motion to stay this case pending an inter partes review by the PTO based, in part, on the argument that the stay would not exceed 18 months, given the statutory deadlines for IPRs, and the defendant’s withdrawal of its prior opposition after the IPR was instituted. Zoll Medical Corp. v. Respironics, Inc., C.A. No. 12-1778-LPS, Memo. Or. at 1-2 (D. Del. July 8, 2015). Recently, the PTO confirmed patentability of eight claims of the patent-in-suit, with one claim having been cancelled in the IPR. Plaintiff Zoll sought to lift the stay of this litigation and Defendant Respironics opposed, arguing that it would appeal the finding of patentability to the Federal Circuit. Id.

As Judge Stark explained, “[u]nderstandably, Zoll now wishes to proceed with the litigation it filed more than 2 ½ years ago . . . . The proper exercise of the Court’s discretion under these circumstances is to lift the stay and proceed with the litigation, just as the parties (and the Court) envisioned at the time the unopposed motion to stay was granted. The IPR proceeding is complete and the stay has been in place nearly 19 months. Respironics has pointed to no new, unforeseeable events to cause the Court to depart from the path that was set when the stay was imposed. As Zoll puts it, ‘Having taken its shot in the USPTO and failed, Respironics should not be able to preclude Zoll from pursuing its claims in this court for an indeterminate period of time.’” Id. at 2.

Respironics’ appeal to the Federal Circuit was not a persuasive reason to keep the stay in place: “The pendency of an appeal from the IPR, and the possibility that the Federal Circuit may reverse the PTO (and thereby simplify this litigation by, presumably, making it disappear), is not, in and of itself, a sufficient basis to make the patentee here continue to wait to enforce patent rights that it currently holds.” “Had Respironics initially been seeking a stay that would extend to the period during which any appeal from the IPR would be pending, it is likely Zoll would have continued to oppose the motion, and the Court’s calculus might very well have differed too.” Id. at 2-3.

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