Posted On: November 24, 2009

Judge Joseph J. Farnan, Jr.: Motion to Transfer DENIED Despite Similar Cases Pending in Illinois

Despite similar cases pending in the Northern District of Illinois, Judge Farnan declined to transfer the case out of Delaware. Stored Value Solutions, Inc. v. Card Activation Technologies, Inc., C.A. No. 09-495-JJF, Memo. Op. (D. Del. Nov. 20, 2009). The Court found that the co-pending cases in Illinois are distributed among five different judges and therefore transferring the case to Illinois would not "increase efficiency over what it is currently." Id. at 8. The fact that a proposed claim construction decision existed, also did not change the Court's opinion "because the construction was not adopted and related to different parties." Id. at 8-9.

Stored Value Solutions, Inc. v. Card Activation Technologies, Inc., C.A. No. 09-495-JJF, Memo. Op. (D. Del. Nov. 20, 2009).


Posted On: November 20, 2009

5 Years Later, Issues Still Linger in the St. Clair v. Fuji Digital Camera Patent Case

Judge Farnan issued an opinion yesterday on a few lingering issues in the Fuji case. This is another St. Clair digital camera patent case; St. Clair received a $3 million dollar jury verdict in 2004 but its execution was stayed until recently due to a dispute over ownership of the patents. St. Clair Intellectual Property Consultants, Inc. v. Fuji Photo Film Co., Ltd., C.A. No. 03-241-JJF at 2 (D. Del. Nov. 19, 2009). The issues included:

  • No new trial due to improper exclusion of evidence: The Court reiterated (for the third time in this action) that it was proper to exclude (1) St. Clair's $25 million verdict in the Sony case and (2) license agreements with other companies that have been sued by St. Clair on these patents, because "the danger of unfair prejudice to Fuji was substantial, particularly in light of the fact that damages and liability were being tried together." Id. at 6.
  • Pre-judgment interest: Fuji disputed the award of pre-judgment interest in light of a pending appeal, and the fact that St. Clair delayed bringing suit; Judge Farnan disagreed, and granted both pre- and post-judgment interest. Id. at 10.
  • Selection of interest rate: Judge Farnan also disagreed with Fuji's argument that the pre- and post-judgment interest rates should be based on the Treasury Bill Rate as opposed to the U.S. Prime Rate. Judge Farnan noted that, although the Court has used both rates at different times in the past, "the Prime Rate provides a better measure of the risk of nonpayment that St. Clair bore," despite Fuji's argument that St. Clair has already "recouped its investment [in the patents] many times over, [and] faces virtually no financial risk with respect to the . . . patents." Id. at 11.
  • Interest calculated on pre-tax damages: The Court determined, based on Judge Robinson's unsuccessful experience with after-tax damage calculations, that the interest rate should be calculated based on pre-tax damages.

St. Clair Intellectual Property Consultants, Inc. v. Fuji Photo Film Co., Ltd., C.A. No. 03-241-JJF at 2 (D. Del. Nov. 19, 2009)

Posted On: November 19, 2009

Chief Judge Gregory M. Sleet: Preliminary Injunction Denied

A party requesting a preliminary injunction in an infringement case must meet a high burden in showing a likelihood of success on the merits, irreparable harm, a balance of hardships in favor of the moving party and that an injunction is in the public's interest. CNH America LLC v. Kinze Manufacturing, Inc., C.A. No. 08-945-GMS, Memorandum (D. Del. Nov. 13, 2009). In CNH America, the plaintiff failed to establish all four factors. Id. at 2. On the merits, the defendant argued that CNH America failed to disclose certain prior art references that would have rendered the patent invalid and that it breached its duty of candor to the PTO by "remaining silent" about a prior art reference during reexamination and "affirmatively misrepresenting the scope of the prior art." Id. (internal citations omitted). The court found that these assertions "were sufficient to raise a substantial question as to invalidity" and that similar questions exist as to infringement. Id. at 3.

Additionally, the Court found that CNH America's irreparable harm arguments were "largely speculative" and the damages are no more difficult to calculate than in most patent infringement suits. Id. at 3. Finally, this was a case where money damages are appropriate and therefore, an injunction is not in the the public's interest. Id. at 4.

CNH America LLC v. Kinze Manufacturing, Inc., C.A. No. 08-945-GMS, Memorandum (D. Del. Nov. 13, 2009).

Posted On: November 19, 2009

Chief Judge Gregory M. Sleet: Claims Fail to Meet Twombly Standard

The District Court of Delaware in LG Electronics U.S.A., Inc. v. Whirpool Corporation, found that a "formulaic recitiation of the elements of the Lanham Act and Delaware Deceptive Trade Practices" with the insertion of Whirpool's name is insufficient to meet the pleading requirements set forth in Bell Atlantic Corp. v. Twombly. The party making the claim must assert specific factual allegations, not just legal conclusions. Id. at 2-3.

Note: LG Electronics argued that additional factual details supporting its claims were found in its reply brief on the motion to amend. Id. at 2 n.1. The Court, however, declined to consider these facts as the material was not an "integral" part of the complaint. Id. (internal citations omitted).

LG Electronics U.S.A., Inc. v. Whirpool Corporation, C.A. No. 08-234-GMS, Memo. Order (D. Del. Nov. 9, 2009).

Posted On: November 18, 2009

Judge Sue L. Robinson: Inequitable Conduct Claim "Passes Muster" Under Exergen

In yet another decision addressing the sufficiency of pleading inequitable conduct, the Court found under the new standard set forth in the Exergen case that defendant Cisco's amended claims "pass muster under this rigorous standard" and granted defendant's motion for leave to amend. Cisco Systems, Inc. v. Teles AG Informationstechnologien, C.A. Nos. 09-232-SLR, 09-072-SLR, Memo. Order (D. Del. Oct. 16, 2009). A copy of the amended answer
and its Exhibit A is attached here.

Cisco Systems, Inc. v. Teles AG Informationstechnologien, C.A. Nos. 09-232-SLR, 09-072-SLR, Memo. Order (D. Del. Oct. 16, 2009).


Posted On: November 18, 2009

Chief Judge Gregory M. Sleet: Rule 52(c) Motion Granted for Prior Art References Not Raised at Trial

In the Court's post-trial decision in In Re Brominidine Patent Litigation, the Court found that the defendants' ANDA products infringed the asserted patents and that defendants failed to prove invalidity. MDL Docket No. 07-md-1866-GMS, Memorandum (D. Del. Oct. 23, 2009). In addition, the Court granted plaintiff's motion for judgment as a matter of law on "numerous prior art references and combinations of references that were not discussed or referred to by any witness at trial." Id. at 42.

In Re Brominidine Patent Litigation, MDL Docket No. 07-md-1866-GMS, Memorandum (D. Del. Oct. 23, 2009).


Posted On: November 18, 2009

Sue L. Robinson: The Double-Edged Sword of Prosecution

In a recent post-trial opinion, district judge Sue L. Robinson emphasized the importance of a patentee's conduct during prosecution for later claims of infringement. In the underlying action, the patentee alleged that defendant's ANDA product, which covered an oral tablet that dissolved without water, contained distinct disintegrating and swelling agents, as required by the patent.

The Court disagreed, resting its conclusion of non-infringement in part on the patentee's own disavowal of the purportedly infringing disintegrating agent:

"Even if plaintiffs could convincingly show that lactose caused the disintegration of StarLac, the patentee's disavowal of lactose in order to distinguish [the prior art] during prosecution clearly shows that lactose cannot be a disintegrating agent within the meaning of the [patent-in-suit]."

The smoking gun evidence? "[During prosecution,] [t]he patentee chose to distinguish its invention from [the prior art] by arguing that the reference failed to teach 'disintegrating agents . . . . Therefore, if lactose is not a disintegrating agent with respect to the [prior art], it would be improper to characterize it as such in the ANDA products."

Takeda Pharma. Co. Ltd. v. Teva Pharma. USA Inc., C.A. No. 07-331-SLR (D. Del. Nov. 9, 2009) (Robinson, J.).

Posted On: November 17, 2009

Judge Sleet: Post-verdict JMOL must be denied where the party does not file the JMOL pre-verdict

In Linear Technology Corporation v. Monolithic Power Systems, Inc., C.A. No. 06-476 GMS (D. Del. Nov. 12, 2009) Judge Sleet denied Defendant's JMOL Motion on the issue of obviousness. Id. at 5. Judge Sleet noted that Fed. R. Civ. P. 50(a) requires a JMOL motion to be submitted before the case is turned over to the jury. Id. Then, Fed. R. Civ. P. 50(b) permits the renewal of the JMOL motion after the jury returns a verdict. Id. However, "[a] party dissatisfied with a jury verdict may not prevail on a post-verdict JMOL motion based on grounds not raised in a pre-verdict JMOL motion. By logical extension, when a party fails to file a pre-verdict JMOL altogether, any grounds for JMOL sought by way of a post-verdict motion must be denied." Id. (internal citations omitted).

Linear Technology Corporation v. Monolithic Power Systems, Inc., C.A. No. 06-476 GMS (D. Del. Nov. 12, 2009)

Posted On: November 16, 2009

Magistrate Judge Stark Follows Judge Farnan's Prior Claim Construction in St. Clair Digital Camera Cases

On Friday, Magistrate Judge Stark's claim construction came down on another set of patent infringement cases by St. Clair Intellectual Property Consultants based on their digital camera patents. St. Clair Intellectual Property Consultants, Inc. v. Matsushita Electronic Industrial Co., LTD., 04-1436-LPS (D. Del. Nov. 13, 2009). This case is the latest in a series of cases by St. Clair Intellectual Property Consultants against various companies for infringement of these digital camera patents. Interestingly, this is the third time that these patent claims have been construed by the District of Delaware (the first two cases were before Judge Farnan). While Judge Stark noted that Judge Farnan's constructions in the first two cases were not necessarily binding against these defendants, the court's analysis led it to follow Judge Farnan's interpretation of each claim anyway. The majority of the claims were construed in favor of St. Clair's proposed interpretations. From the looks of this holding (and the fact that everything seems to have a camera these days), I would suspect that the District of Delaware will continue to see cases brought by St. Clair.

St. Clair Intellectual Property Consultants, Inc. v. Matsushita Electronic Industrial Co., LTD., 04-1436-LPS (D. Del. Nov. 13, 2009)

Posted On: November 11, 2009

D. Del. Special Master: No Prejudice, and Therefore No Sanction, for Untimely Produced Expert Discovery

A special master in the District of Delaware recently recommended against the imposition of sanctions for a party's failure to timely produce expert-discovery materials. In the decision, issued by Special Master Vincent J. Poppiti, the special master considered and rejected a motion to exclude the evidence - certain product testing materials created by Chipworks - on the ground that the receiving party had the ability, and failed, to cure any claimed prejudice:

"Honeywell was served with Dr. Schlam's Expert Report on September 15, 2009, and was therefore aware of the Chipworks testing as of that date. Although Honeywell inquired whether a Chipworks representative would testify at trial, Honeywell ignored Defendants' offers to make a Chipworks representative available for deposition . . . . [Instead,] Honeywell chose to wait until October 14, 2009 to file the instant motion - a full two weeks after receipt of the [untimely Chipworks materials relied on by Dr. Schlam]."

Because the untimely Chipworks testing materials were already known to Honeywell, according to the special master, the two-week delay erased any potential for prejudice.

Honeywell Int'l Inc. v. Apple Computer Inc., C.A. No. 04-1337-JJF (D. Del. Nov. 3, 2009) (Poppiti, S.M.).

Posted On: November 10, 2009

Judge Sleet: No Corporate Veil Piercing Without Allegations of Injustice

Chief Judge Sleet recently issued a memorandum opinion on a motion to dismiss and transfer in CNH America LLC v. Kinzenbaw, C.A. No. 08-945-GMS (D. Del. Nov. 9, 2009) (mem.), a patent infringement case. Defendants in the case include Kinzenbaw, an Iowa resident, and his Delaware corporation (based in Iowa), Kinze Manufacturing. Id. at 1, 5.

The Court granted the motion to dismiss as to Kinzenbaw the individual, based on lack of personal jurisdiction. Id. at 2-3. Plaintiff had alleged jurisdiction on Kinzenbaw based on corporate veil piercing of his Delaware corporation, because Kinzenbaw failed to uphold many corporate formalities (traditionally a key factor in veil piercing), and because he had the "capacity" to siphon money from the corporation. Id. According to the Court, plaintiff was correct that "[a]lter ego liability and corporate veil piercing theories function to prevent an independent corporation from being used to accomplish injustice or evade the law," but it failed to show any injustice or evasion of the law here. Id. Disregard of formalities is only one factor in a veil piercing analysis, and "capacity" to siphon money is different from actually siphoning money. Id.

Kinze Manufacturing, however, remained in the case. As usual, the Court denied Kinze's motion to transfer, despite Kinze's arguments regarding the location of witnesses and documents. Id. at 3-5.

CNH America LLC v. Kinzenbaw, C.A. No. 08-945-GMS (D. Del. Nov. 9, 2009) (mem.)

Posted On: November 9, 2009

Judge Joseph J. Farnan: Bifurcation denied

In Arendi Holding Ltd. v. Microsoft Corp., C.A. No. 09-119-JJF (D. Del. Oct. 27, 2009) (mem.), Judge Farnan denied a motion to bifurcate a patent infringement action. In denying defendants' (Microsoft and Dell) motion, the court stated that bifurcation

w[ould] not promote the efficient adjudication of the parties' dispute. In the Court's view, the history of these parties, the number of infringement allegations, the disposition of the prior case between the parties in the Rhode Island court (where bifurcation was ordered), the expedited schedule, and the lack of a wilfulness allegation, all counsel toward a unitary procedure for this case. The Court is unable to ascertain any undue prejudice that would or could result from such an approach to resolving the present claims.

Id. at 3.

This implicitly reaffirms that bifurcation in a patent case is not a given, although Judge Farnan has, in some other cases, allowed bifurcation on the basis of litigation inefficiencies. Judge Robinson, on the other hand, recently stated that "I have determined that bifurcation is appropriate, if not necessary, in all but exceptional patent cases," and has appeared to adhere to that rule so far. The Dutch Branch of Streamserve Development AB v. Exstream Software, LLC, C.A. No. 08-343-SLR (D. Del. Aug. 26, 2009) (mem.).

Arendi Holding Ltd. v. Microsoft Corp., C.A. No. 09-119-JJF (D. Del. Oct. 27, 2009) (mem.)

Posted On: November 5, 2009

Magistrate Judge Leonard P. Stark: Appropriate Scope of Damages Discovery on Commercial Success Where Damages Case is Bifurcated

As noted in a post from August of this year (see here), Judge Robinson has instituted a bifurcation procedure in her cases where she conducts separate trials for liability and damages/willfulness. As part of this procedure, damages discovery is stayed except for discovery necessary to support the ADR process, to determine how valuable the patent is, and as it relates to secondary considerations of non-obviousness (i.e., commercial success). In Teles AG Informationstechnolgien v. Quintum Technologies, LLC, a dispute arose over the proper scope of commercial success discovery in a case where damages discovery has been stayed. C.A. Nos. 06-197-SLR-LPS, 09-72-SLR-LPS, 09-232-SLR-LPS, Order Regarding Discovery, at 2 (D. Del. Oct. 30, 2009). This dispute was referred to Magistrate Judge Stark for resolution. Id. at 3.

Judge Stark refused to order the production of invoice level detail on sales from any product with the accused feature, finding that aggregrate, general sales information on accused products (for which plaintiff provided infringement contentions) is sufficient. Id. at 6. Specifically, Judge Stark noted that the financial data "should be limited to the products [plaintiff] has actually accused as part of its infringement contentions...." Id. (internal citations omitted) (empahsis added). The Court also found that "internal and external evidence regarding market share" with respect to the accused products and internal marketing materials should be produced. Id. at 8.

Plaintiff had requested documents for a time frame beginning three years prior to introduction of the allegedly infringing feature through the present day. The Court found that this time frame was too broad and should begin the year before the accused feature was introduced through the first two years it was available in the marketplace. Id. at 7.

Teles AG Informationstechnolgien v. Quintum Technologies, LLC, C.A. Nos. 06-197-SLR-LPS, 09-72-SLR-LPS, 09-232-SLR-LPS, Order Regarding Discovery, at 2 (D. Del. Oct. 30, 2009).


Posted On: November 5, 2009

Judge Sue L. Robinson: Motion to Transfer GRANTED

Judge Robinson recently granted defendant Parallel Networks' motion to sever and transfer third-party defendant Microsoft's declaratory judgment action to the Eastern District of Texas. Judge Robinson cited the judicial vacancy in Delaware and the "undeniable" facts pointing to the Eastern District of Texas as an appropriate venue when holding that "[a]lthough I continue to be amazed by the energy and resources expended on motions to transfer and believe that the way this litigation has unfolded would warrant jurisdiction in Delaware . . . I conclude that Microsoft's declaratory judgment action should be severed and transferred to the Eastern District of Texas." Quinstreet, Inc. v. Parallel Networks, LLC, C.A. No. 06-495-SLR (D. Del. Nov. 3, 2009).

Quinstreet, Inc. v. Parallel Networks, LLC, C.A. No. 06-495-SLR (D. Del. Nov. 3, 2009)

Posted On: November 5, 2009

Mary Pat Thynge: Prepare Your 30(b)(6) Witness or Face Sanctions

A recent sanctions order issued by Magistrate Judge Mary Pat Thynge reaffirms a basic discovery principle: the 30(b)(6) witness must be prepared, regardless of the size and resources of the entity for whom the witness speaks.

In yesterday's order, the Court awarded $15,000 in fees and costs to the deposing party, in part to compensate for the second deposition necessitated by the ill-prepared witness. By doing so, the Court noted, but ultimately ignored, the proffering entity's small size:

"[W]hat is also abundantly clear[ ] is that plaintiffs are two small corporations with essentially three people at the helm, whose division of responsibility at times is blurred and not clearly defined . . . . To some extent, plaintiffs are slightly a cut above a 'mom and pop' operation. . . . However, that does not excuse representing an individual . . . as being proficient and knowledgeable to testify on numerous topics, when her acquaintance with certain areas was very limited or non-existent."

Innovative Patents L.L.C. v. Brain-Pad Inc., C.A. No. 07-680-MPT (D. Del. Nov. 4, 2009) (Thynge, M.J.).

Posted On: November 2, 2009

Judge Farnan: Motion to dismiss declaratory judgment complaint for lack of subject matter jurisdiction GRANTED

Judge Farnan recently dismissed Microsoft’s declaratory judgment complaint, involving Microsoft’s MapPoint and Virtual Earth services, against WebXchange because no case or controversy existed sufficient to confer subject matter jurisdiction. Microsoft Corporation v. Webxchange, Inc., C.A. 09-484-JJF (D. Del. Oct. 30, 2009). Microsoft had previously filed a complaint against WebXchange in the Northern District of California which was also dismissed for lack of subject matter jurisdiction. Id. at 2-3. Granting WebXchange’s motion to dismiss, Judge Farnan reasoned that: (1) “Microsoft does not allege even one instance of WebXchange accusing infringement based on the use of Virtual Earth[,]” id. at 7; (2) “no controversy exists by virtue of WebXchange’s infringement suits against Microsoft customers who use MapPoint[,]” id. at 8; (3) “the alleged damage caused by [WebXchange’s cases against Microsoft customers] to Microsoft’s relations with its customers, . . . does not create a controversy between the parties[;] id. at 10, and (4) “WebXchange’s failure to covenant not to sue Microsoft does not create an actual controversy by itself.” Id.

Microsoft Corporation v. Webxchange, Inc., C.A. 09-484-JJF (D. Del. Oct. 30, 2009)