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In the multi-district litigation, In Re: Rembrandt Technologies Patent Litigation, Judge Gregory M. Sleet recently considered defendants’ motion to declare case exceptional and for an award of fees and costs.  In Re: Rembrandt Technologies Patent Litigation, C.A. No. 07-md-1848-GMS (D. Del. Aug. 20, 2015).  Judge Sleet granted the motion and ordered defendants to submit their documentation in support of the requested attorneys’ and experts’ fees, and costs.  In support of the Court’s decision, Judge Sleet found that Rembrandt improperly compensated its fact witnesses, in violation of Model Rule of Professional Conduct 3.4(b) (“A lawyer shall not … offer an inducement to a witness that is prohibited by law.”). Id. at 3 n.4.  In particular, Judge Sleet found that “the fee structure for Rembrandt’s fact witnesses was unreasonable and improperly linked to the outcome of the case, giving rise to a considerable risk of tainted testimony.”  Id.  Judge Sleet also found that “Rembrandt engaged in (or failed to prevent) widespread document spoliation, over a number of years.”  Id.  Last, Judge Sleet found that Rembrandt should have known that it was enforcing fraudulently revived patents.  Id.  Although the fraud was perpetrated by the third-party from which Rembrandt bought the patents, Judge Sleet determined that “Rembrandt had sufficient knowledge to learn of the fraud.”  Id.   In opposition to the motion, Rembrandt denied wrongdoing and “point[ed] the finger at third parties.”  Id.  Judge Sleet disagreed:

Rembrandt must take responsibility for its own massive litigation. If it had only been a single issue, perhaps the court’s view would be different. But the “totality of the circumstances”– the wrongful inducements, the spoliation, and the assertion of fraudulently revived patents — supports [defendants’] characterization of this case as “exceptional” — it “stands out.”

Id. (citing Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1756 (2014).

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In a recent Memorandum Opinion, Judge Gregory M. Sleet considered the parties’ post-trial proposed findings of fact and conclusions of law following a four-day bench trial in this ANDA litigation, and determined that the asserted claims of U.S. Patent No. 6,713,446 (“the ’446 patent”) were invalid as obvious under 35 U.S.C.  § 103. Millenium Pharmaceuticals, Inc. v. Sandoz Inc., et al., C.A. No. 12-1101-GMS (consol.) (D. Del. Aug. 20, 2015). Defendants successfully argued “that the asserted claims are obvious because the ’446 patent claims the inherent result of an obvious process-namely, that freeze-drying bortezomib with mannitol produces an ester.”  Id. at 5. Moreover, Judge Sleet found that plaintiff failed to rebut defendants’ prima facie case of obviousness with secondary considerations.  Specifically, as to “unexpected results,” plaintiff “failed to present any credible evidence at trial about what a skilled artisan would have expected.” Id. at 17. As to “commercial success and long-felt need,” Judge Sleet explained that “[n]o persuasive evidence was provided to show any advantage attributable to the claimed formulation over the other potential formulations available to [plaintiff].” Id. at 18.  Judge Sleet therefore determined that the defendants “have established by clear and convincing evidence that the asserted claims of the ‘446 patent are obvious.” Id. at 5.

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In a recent Memorandum Order, Magistrate Judge Christopher J. Burke granted defendants’ motion to stay pending resolution of defendants’ motion to dismiss, which asserts four patents-in-suit are patent ineligible under 35 U.S.C. § 101. International Business Machines Corp. v. The Priceline Group Inc., C.A. No. 15-137-LPS-CJB (D. Del. Aug. 18, 2015). As to the action’s status, Judge Burke noted that “the matter is in its infancy.” Id. at 2. With regard to “undue prejudice,” Judge Burke explained that “there is no evidence that Defendants are pursuing an inappropriate tactical advantage by filing their motion at this time.” Id. Further, while Judge Burke was not particularly persuaded that plaintiff would be unduly prejudiced because of the “potential effect on its patent licensing efforts,” Judge Burke did acknowledge that “were a stay granted” the “delay in the resolution of the action . . . could be significant enough to work to Plaintiff’s detriment.” Id. As to simplification of the issues for trial, Judge Burke noted that on the one hand, “grant of the Motion to Dismiss might result in significant simplification, were it to resolve the case entirely or do so with regard to a significant number of patents or claims.” Id. On the other hand, as Judge Burke explained, “the likelihood of total or even substantial simplification is tempered by the fact Plaintiff has asserted a significant number of patents and claims.” Id.

Judge Burke acknowledged that in this instance, “whether a stay is warranted presents a close question for the Court,” and ultimately determined that stay was warranted, in part. Id. at 2-3. That is, Judge Burke determined that “in light of the parties’ respective showings,” the parties should complete initial disclosures prior to postponing further discovery pending resolution of the motion to dismiss.  Id. at 3.

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Judge Gregory M. Sleet recently granted a defendant’s motion for judgment on the pleadings of invalidity under § 101.  Inventor Holdings, LLC v. Bed Bath & Beyond Inc., C.A. No. 14-448-GMS (D. Del. Aug. 21, 2015).  The plaintiff’s patent claimed a “method and system for processing payments for remotely purchased goods,” which the defendant argued was invalid “because the claims at issue embody the abstract idea of paying for remote orders at local retailers.”  Id. at 2-3.  Judge Sleet agreed, explaining that “[t]he claims simply tell a practitioner that a remote merchant can direct a customer to pay for goods at a third-party, local merchant that has agreed to accept payments for the remotely-ordered goods and to tell the remote merchant when the customer has paid for the goods so that the remote merchant can then ship the goods—nothing more.”  Id. at 8.  The Court therefore found that the patent claimed an abstract idea – a “conventional business practice” – and lacked any inventive concept.

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Magistrate Judge Christopher J. Burke recently denied a motion to transfer a case to the Northern District of California.  Elm 3DS Innovations LLC v. SK Hynix Inc., et al., C.A. No. 14-1432-LPS-CJB (D. Del. Aug. 20, 2015).  The plaintiff was a Delaware limited liability company with operations in Carmel, California and the defendants were a Korean corporation with a principal place of business in Korea along with three of its subsidiaries: two California corporations (one with a principal place of business in San Jose and the other with a principal place of business in Eugene, Oregon) and a Delaware corporation with a principal place of business in San Jose.  Acknowledging that the motion presented a “close case” for transfer, Judge Burke ultimately decided that the balance of the Third Circuit’s Jumara factors favored keeping the case in Delaware.  The plaintiff had filed, on the same day as this action, two other infringement actions relating to most of the same patents.  Although a number of the Jumara factors were found to weigh in favor of transferring the case, Judge Burke explained that, ultimately, “a  ‘most important factor is the avoidance of duplicative litigation:  [a]djudicating almost identical issues in separate fora would waste judicial resources.’”  Id. at 27 (quoting In re Amendt, 169 F. App’x 93, 96 (3d Cir. 2006)).  “That concern is especially acute here, with the prospect of two districts being required to handle very similar cases involving 12 or more patents at the same time.”  Id.

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Judge Andrews recently denied, without prejudice to renew, defendant’s motion to preclude plaintiff’s expert testimony.  Sanofi-Aventis U.S. LLC v. Eli Lilly and Company, C.A. No. 14-113-RGA (D. Del. Aug. 18, 2015).  Judge Andrews noted that because the upcoming trial is a bench trial, “[l]ive testimony and cross-examination are much more likely to result in a correct decision from me about whether the experts are giving appropriate scientific testimony[.]”  Id. at 1.  Judge Andrews instructed defendant to make an appropriate objection at trial to preserve its Daubert challenge.  Id. at 1-2.

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After previously dismissing plaintiffs’ original allegations of willful infringement, Judge Fallon recently granted plaintiffs’ motion for leave to file an amended complaint to add claims of willful infringement.  Intellectual Ventures I LLC, et al. v. Toshiba Corporation, at al., C.A. No. 13-453-SLR-SRF (D. Del. Aug. 17, 2015).  Despite the passage of eight months between the original dismissal and the motion to amend, Judge Fallon found no undue delay or prejudice.  Judge Fallon noted that the motion was filed within the deadline set in the scheduling order for amending pleadings and that the case is still in its early stages.  Id. at 3.  Judge Fallon also found that the proposed amendment was not futile because the complaint “provide[s] sufficient details to show that the patents-in-suit were called to defendants’ attention”; and “contains allegations that defendants disregarded the risk of infringement by continuing to disseminate the allegedly infringing products after receiving notice of the patents[.]”  Id. at 6-7.

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In Kraft Foods Group Brands LLC v. TC Heartland, LLC d/b/a Heartland Food Products Group, et al., C.A. No. 14-28-LPS (D. Del. Aug. 13, 2015), Magistrate Judge Christopher J. Burke recommended denial of Defendants’ motion to dismiss for lack of personal jurisdiction, as well as their motion to transfer venue to the Southern District of Indiana.  One Defendant was an Indiana LLC with headquarters in Indiana, was not registered to do business in Delaware, had no offices or any other local presence there, and had no supply contracts in Delaware.  The entity did ship orders of the accused products directly to Delaware via “contracts with ‘two national accounts’ that are headquartered outside of Delaware.”  Id. at 2.  The other Defendant was an Indiana corporation and it was disputed as to whether it was still doing business.  Id. at 2-3.

As to personal jurisdiction, Defendants contended that, under the Due Process Clause, there was no specific jurisdiction under the stream-of-commerce theory, under the above facts and where approximately 2% of the accused products were shipped for sale in Delaware.  Id. at 5-6, 8.  Defendants argued that while they were aware of these shipments to Delaware, the shipments “were ‘initiated’ by their customers – not by them.”  Id. at 8.  The Court distinguished the Supreme Court and Federal Circuit cases Defendants relied on, see id. at 8-9, and concluded that Plaintiff had established a prima facie case of stream-of-commerce specific jurisdiction, finding that “Defendants themselves knowingly and intentionally shipped a significant number of products directly to Delaware.  As such, they ‘purposefully avail[ed themselves] of the privilege of conducting activities within [Delaware].”  Id. at 9-10 (edits in original).

Defendants also presented “a novel jurisdictional theory” regarding the other 98% of sales of the accused products.  They contended that Plaintiff could not seek redress for those sales outside Delaware, as each act of patent infringement is a separate cause of action and thus Delaware did not have jurisdiction over the non-Delaware sales.  See id. at 10.  The Court rejected this theory, and affirmed that this Court could assert jurisdiction over out-of-state infringement activities.  Id. at 12-14.  Accordingly, the Court recommended that the motion to dismiss be denied.

As to transfer, Defendants moved under both 28 U.S.C. §§ 1406(a) (based on improper venue) and 1404(a) (based on Jumara factors).  As to Section 1406, they pointed to changes in the general venue statute, 28 U.S.C. § 1391, to contend that a “major change” in the law regarding venue had occurred, and that “venue in a patent action is now appropriate only in a defendant’s state of incorporation, or ‘where the defendant has committed acts of infringement and has a regular and established place of business.’”  Id. at 15.  The Court had allowed additional briefing on this question, id. at 3, and now rejected Defendants’ arguments, see id. at 18-20, and recommended denial of the motion to transfer under Section 1406.

Defendants had addressd the grounds for transfer under Section 1404(a) and the Jumara factors “in a cursory fashion.”  Id. at 21.  The Court found that Defendants’ forum preference, where the claim arose, and convenience of the parties weighed in favor of transfer, albeit only slightly as to convenience of the parties.  All other factors weighed in favor of transfer or were neutral, often because the parties had simply not addressed the factor in briefing.  See id. at 27-28.  The Court concluded that “a balancing of the Jumara factors produces a result that is not ‘strongly in favor of’ transfer,” and accordingly recommended denial of the motion.  Id. at 29.

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In Lambda Optical Solutions, LLC v. Alcatel-Lucent USA Inc., et al., C.A. No. 10-487-RGA-CJB (D. Del. Aug. 7, 2015), Magistrate Judge Christopher J. Burke recommended denial of a counterclaim-defendant’s motion for summary judgment.  All other motions before the Court had been mooted by stipulation or the Court’s prior recommendation that summary be granted in favor of the plaintiff/counterclaim defendants.  See id. at 5, 7.

The Court first rejected the counterclaim-defendant’s lack of personal jurisdiction arguments as the issue had previously been adjudicated in the case.  Id. at 5-6.  Further, the Court concluded that issues of material fact remained regarding an inequitable conduct counterclaim, where the counterclaim-defendant, a named inventor, claimed he did not participate in the prosecution of the patent, but, the Court pointed out, the inventor still had a duty of candor and good faith to the patent office, he had signed a declaration to that effect, and the counterclaim-plaintiffs had produced evidence supporting their contention that the inventor had failed to disclose certain prior art.  Id. at 6 & n.2.

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In a recent Memorandum Opinion Judge Richard G. Andrews denied defendants’ motion for judgment as a matter of law on non-infringement and damages, and motion for a new a trial. Comcast IP Holdings I, LLC v.  Sprint Communication Co., C.A. No. 12-205-RGA (D. Del. Aug. 10, 2015). As to the motion for JMOL, defendants’ first argued that “the jury’s verdict rendered three terms in the three asserted claims of the ‘008 patent superfluous, ‘call destination,’ ‘identifier of a second party,’ and ‘second party.’”  Id. at 5. Judge Andrews found, however, that there was substantial evidence to support the jury’s determination that each of these limitations was met. See id. at 5-10.  Judge Andrews also found that sufficient evidence “was offered for a jury to determine that the accused [technology] infringed the asserted claims of the ‘916 and ‘046 patent.”  Id. at 10. As to these patents, Judge Andrews observed that there was sufficient evidence “to find that the ‘parsing’ limitation has been met, particularly when considering [plaintiff’s expert’s] testimony.” Id. at 11. As to the damages award, Judge Andrews explained that plaintiff’s expert’s analysis “was not a ‘black box’ as Defendants argue, nor did she provide ‘no explanation’ for how she reached her figures.” Id. at 13. Judge Andrews observed that “Defendants are correct that [the expert] did not offer a mathematical formula for her result,” but “[t]hat does not mean that her opinion was not based on a sound methodology. The hypothetical negotiation to determine a reasonable royalty can involve some approximation.” Id. at 14. Judge Andrews further noted that “[t]he lack of a mathematical formula, when there is other analysis, cannot, alone, be grounds for excluding [the expert’s] methodology.” Id. at 14. Judge Andrews also denied defendants’ motion for a new trial, unpersuaded by defendants’ arguments as to the weight of the evidence and that plaintiff’s experts exceeded the scope of their reports. Id. at 16-17.

As to plaintiff’s motion for post-trial relief, Judge Andrews granted plaintiff nearly $1.7 dollars in prejudgment interest. Id. at 20.  The parties disagreed about whether prejudgment interest should be assessed from the time of the hypothetical negotiation in late 2006 or whether it should be calculated from the time of first infringement of each patent until judgment.” Id. at 18. Considering that each of the three asserted patents was found infringed, Judge Andrews determined that “the measure of damages must be from the time of the hypothetical negotiation to trial for all the asserted patents.” Id. at 18. Moreover, Judge Andrews found that “that the appropriate interest rate is the prime rate, compounded quarterly.” Id. at 20. Judge Andrews also granted post-judgment interest. Id. Judge Andrews finally found that plaintiff is entitled to an ongoing royalty, and granted plaintiff’ request for mediation to that end.  Id. at 21-22. Continue reading

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