Judge Burke recently considered plaintiffs’ motion to enjoin defendant from maintaining a later-filed action in the District of Massachusetts and defendant’s motion to transfer to that jurisdiction. TSMC Tech., Inc., et al., v. Zond, LLC, C.A. No. 14-721-LPS-CJB (D. Del. Dec. 19, 2014). In July 2013, Defendant filed several actions in the District of Massachusetts alleging infringement of seven patents that are different than, but related to, the patents-in-suit. Id. at 1. In June 2014, Plaintiffs filed the instant case seeking a declaratory judgment that they do not infringe that patents-in-suit. Id. at 5. The next day, defendant filed a complaint in the District of Massachusetts alleging infringement of the same patents. Id. Judge Burke acknowledged that the first-filed rule clearly applied to plaintiffs’ motion to enjoin, therefore resolution of the dispute focused on whether an exception to the rule applied. Id. at 13. Judge Burke found that no exception was applicable based on the facts presented here. For example, Judge Burke found that because the parties had been engaged in escalating IP disputes and the fact that “both sides were taking tough, but fair steps in order to fully protect their rights[,]” the filing of the instant case could not be viewed as a”sound reason that would make it unjust or inefficient to continue the first-filed action.” Id. at 18 (quotations omitted). Judge Burke also found the “forum shopping” exception to the first-filed rule inapplicable because, among other things, Plaintiffs had “a legitimate, oft-recognized reason” to file suit in Delaware. (i.e., choosing to file suit in defendant’s state of incorporation) Id. 18-24. Regarding defendant’s motion to transfer, Judge Burke found that the Jumara factors largely weighed against transfer, therefore denial of defendant’s motion would be appropriate. Id. at 24-37.
In Avid Technology, Inc. v. Harmonic Inc., C. A. No. 11-1040-GMS (D. Del. Dec. 17, 2014), Judge Gregory M. Sleet denied plainitff’s renewed motion for judgment as a matter of law or, alternatively, for a new trial, following the jury’s verdict of noninfringement and no invalidity in this case. The Court first rejected plaintiff’s argument that the jury had been “misinformed about the proper definition of ‘independent storage units,'” noting that post-trial briefing was not an “apropriate context for [plaintiff] to reiterate its dissatisfaction with the court’s rulings” on what information about the construction was ultimately provided to the jury. Id. at 4-5. The Court similarly rejected plaintiff’s arguments that the verdict of noninfringement was not supported by substantial evidence. See id. at 5-8. Finally, the Court denied the alternative request for a new trial as plaintiff made no other arguments in support of this request. Id. at 8.
At the summary judgment stage of an ongoing patent infringement action, Judge Richard G. Andrews has found a patent related to “a computer-aided learning system” invalid under 35 U.S.C. § 101 for claiming ineligible subject matter. The patent at issue, U.S. Patent No. 6,688,888, as described in its abstract and quoted by Judge Andrews, covered:
A computer-aided learning method and apparatus based on a super-recommendation generator, which is configured to assess a user’s or a student’s understanding in a subject, reward the user who has reached one or more milestones in the subject, further the user’s understanding in the subject through relationship learning, reinforce the user’s understanding in the subject through reviews, and restrict the user from enjoying entertainment materials under certain condition, with the entertainment materials requiring a device to fulfill its entertainment purpose. The generator does not have to be configured to perform all of the above functions.
IpLearn, LLC v. K12 Inc., C.A. No. 11-1026-RGA, Memo. Op. at 3 (D. Del. Dec. 17, 2014).
Judge Andrews explained that the novelty of the invention at issue was the use of computers. Examining the patent specification, His Honor observed: “Three things are noteworthy about this passage. First, the educational practices were described as being ‘decades’ old. Second, the educational testing practices that the inventors considered to be desirable were all well-known, as evidenced by the inventors’ description of the undesirable practices as being ‘typical’ and ‘usual.’ Implicit in the inventors’ recitation is that the better practices were known, but rarely used. Third, the solution is described as ‘[add] computers.’” Id. at 9.
Judge Andrews first found that the patent claims were directed to the abstract idea of “instruction, evaluation, and review.” Id. at 9-12. The asserted claims, he observed, “follow several steps directed at the abstract idea of instruction, evaluation, and review. More specifically, the steps are an abstraction, addressed to fundamental human behavior related to instruction, which is apparent when the steps are summarized without their generic references to computers and networks: 1) accessing a learner’s test results, 2) analyzing those test results, 3) providing guidance on weaknesses, 4) generating a report on two or more subjects to be shared with others, 5) considering the learner’s preferences, 6) allowing access to areas of a subject on the Internet, 7) providing an identifier for a learner, 8) storing the learner’s materials, and 9) allowing a search of those materials. None of these steps taken individually, or taken collectively, is sufficiently concrete. As a whole, they represent an abstract idea of conventional everyday teaching that happens in schools across the country. While there are limitations, they do not save the claims from being directed at an abstract idea.” Id. at 11. Judge Andrews continued: “the ‘888 patent’s Background section begins, ‘[t]he present invention relates generally to learning and more particularly to using a computer to enhance learning.’ Such subject matter seems precisely the building blocks of ingenuity the Supreme Court in Alice Corp. was so concerned about inhibiting. Instructing students, evaluating those students, and providing methods to review their progress are concepts that have probably existed as long as there has been formal education.” Id. at 11 (internal citations omitted).
Judge Andrews then turned to whether the “method outlined in the patent is sufficiently transformative of the abstract idea to make it patent eligible.” Id. at 11-14. Although the asserted claims did contain limitations, Judge Andrews found that “none are sufficient to ensure that the claims amount to ‘significantly more’ than patenting the abstract idea of instruction, evaluation, and review. Nor do they possess inventive concepts to transform the abstract idea.” For example, “[g]enerating learning materials, allowing diagnostic testing, and allowing a learner to search an area for material on the learner’s weaknesses are not meaningful limitations.” Id. at 12.
Judge Andrews used the following hypothetical to illustrate his point:
An elementary student is taught multiplication tables. She takes a test, and her results are graded (or “accessed”) by her teacher. The teacher analyzes the student’s test results against a grading rubric to determine the student’s weaknesses. The teacher provides guidance to the student about her weaknesses. The teacher puts together a progress report on the student’s multiplication tables, highlighting the student’s most recent test, perhaps identifying weaknesses with multiples of 6 and 11. This progress report is shared with others, perhaps in a parent-teacher conference. The teacher takes into consideration the student’s preference for math games over timed pop quizzes. The student is allowed to access flash cards (“materials”) on her weak multiples, which are kept in a file cabinet in her classroom. Using the student’s first and last name as an identifier, the teacher stores the student’s materials in a file. Her parents can also request to see her file by telling the teacher her name. This is the kind of hypothetical that could happen every day in elementary schools in this country. Allowing the claims at issue would simply inhibit fundamental educational instruction and the building blocks of human ingenuity. The fact that computers, networks, the Internet, computer readable medium, or computer program code figure into [the] claims . . . and the dependent claims, does not save them. . . . As a thought experiment, if these generic terms are excised, the claims preempt the most fundamental aspects of educational instruction with teachers and testing.
Id. at 13.
Judge Andrews also provided a few interesting indications of what information he found useful to his section 101 analysis, noting that it “is clear that a number of district courts are grappling with section 101 issues after Alice Corp. v. CLS Bank International, 134 S. Ct. 2347 (2014). With the exception of Ultramercial, Inc. v. Hulu, LLC, 2014 WL 5904902 (Fed. Cir. Nov. 14, 2014), however, the Court found most of this additional authority [from district courts and the Federal Circuit] not entirely relevant or on-point.” Id. at 2 n.1.
Judge Andrews also noted: “In a recent concurrence [in Ultramercial], Judge Mayer wrote that section 101 eligibility is a ‘threshold question,’ ‘the primal inquiry, one that must be addressed at the outset of litigation,’ explaining that the determination ‘bears some of the hallmarks of a jurisdictional inquiry.’ The Court is not certain whether Judge Mayer’s opinion is a correct statement of the law for all cases but believes it is instructive in this case. IpLearn has asserted that K12 must provide evidence to support the contention that the claims at issue are abstract ideas. Because section 101 determinations are questions of law, and a threshold inquiry, and because every judge and lawyer has firsthand experience with instructional methods, this Court does not believe it necessary that K12 proffer evidence that the type of instruction and testing outlined in the claims is time-honored.” Id. at 8 n.6 (citations omitted).
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.
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.
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.
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.
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 (email@example.com).
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.
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).
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.