Posted On: September 28, 2012

Chief Judge Sleet clarifies effect of term “comprising” in claim construction.

Chief Judge Gregory M. Sleet recently clarified the effect of the term “comprising” in claim construction. See Hollingsworth & Vose Filtration Ltd. v. Delstar Tech., Inc., et al., C.A. No. 10-788-GMS (D. Del. Sept. 25, 2012). This came as part of the Court’s order clarifying its previous claim construction order, in which it construed the following language found in Claim 1 of U.S. Patent No. 6,623,548: “filter material comprising: a blend of polypropylene fibres and dry spun halogen free acrylic fibres” to mean “a mixture of fibres that includes at least polypropylene fibres and dry spun halogen free acrylic fibres. Dry spun halogen free fibres means halogen free acrylic fibres made by a process of dry spinning in which the polymer is formed into fibres by extrusion into a gas such as air and not by extrusion into a liquid coagulation bath.” Id. at 1 n.1; D.I. 50 at 1 (previously discussed here).

The Court clarified its previous construction to address the defendants’ question whether, in Claim 1, “the ‘blend’ is open to the inclusion of other types of unrecited fibres, or whether it is only the ‘filter material’ that can include other types of unrecited fibres.” Id. at 1-2 n.1 (quoting D.I. 53 at 5). The Court clarified that the word “blend,” as used in Claim 1, “is not limited to only polypropylene fibres, dry spun halogen free acrylic fibres, and polyvinyl chloride fibres but, rather, is open to the inclusion of other types of unrecited fibres, including wet spun halogen free acrylic fibres.” Id. at 1. That clarification, however, was not the result of the interplay of the words “comprising” and “blend,” as urged by the plaintiff. The Court explained that “[t]he transition ‘comprising’ generally renders the preceding term (e.g., the ‘filter material’) open-ended, but it has no such effect on subsequently recited claim elements (e.g., the ‘blend’).” Id. at 1-2 n.1 (citing Dippin’ Dots, Inc. v. Mosey, 476 F.3d 1337, 1343 (Fed. Cir. 2007) (previously discussed on Patently-O)). However, the Court agreed with the plaintiff that “like ‘comprising’—the term ‘blend’ itself ordinarily conveys the concept of ‘including, but not limited to.’” Id. at 1-2 n.1. Citing the Federal Circuit’s decision in Mars, Inc. v. H. J. Heinz Co., 377 F.3d 1369 (Fed. Cir. 2004) (recognizing that the term “mixture” is open-ended), the Court found that the defendant’s acknowledgement that “[t]he blend is a mixture of fibres[]” required that the claim term “blend” not be limited to a blend of only the subsequently recited fibres. Id. at 1-2 n.1.

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Posted On: September 27, 2012

Trends in Delaware post-Twombly

Managing editor and co-author of Delaware IP Law Blog, Pilar G. Kraman, is a featured author in the latest issue of Managing IP’s, Intellectual Property Focus. This special “Americas IP Focus 2012” showcases commentary and analysis from IP lawyers throughout the Western Hemisphere, and is distributed to IP Owners and IP lawyers around the world. The publication will also be distributed to attendees of major IP conferences in October including: the AIPLA annual meeting; the LES US & Can annual meeting; and the AIPPI world congress. You can read Pilar’s article below, “Trends in Delaware post-Twombly,” which discusses recent developments in the District of Delaware regarding the sufficiency of pleadings alleging indirect and direct patent infringement.

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Posted On: September 26, 2012

Judge Andrews disqualifies attorneys based on their law firm's representation of plaintiff's parent company nearly twenty years earlier.

Judge Richard G. Anderson recently disqualified the law firm Latham & Watkins as defense counsel in a patent infringement action filed by the subsidiary of a former Latham client. Eon Corp. IP Holdings LLC v. Flo TV Inc., et al., C.A. No. 10-812-RGA (D. Del. Sept. 24, 2012). Latham represented the plaintiff's parent company between 1988 and 1995, but did not represent it in patent prosecution matters, or with regard to any licensing efforts involving the patent at issue. Id. at 3, 7. Instead, Latham represented the plaintiff's parent company in general corporate and regulatory matters. Id. at 3. The Court noted that some of those corporate and regulatory matters related to the same or similar technology at issue in the patent litigation. Id. at 3.

There was no dispute that the two Latham attorneys who had been admitted pro hac vice in the litigation were not at Latham during the firm's prior representation, and it was acknowledged that they were subject to an ethical wall. Id. at 3. Neverthelss, the Court was concerned because, "[s]ome of the invalidity defenses, if pursued, could involve factual inquiry into" the activities of the plaintiff's parent company when it was represented by Latham, "and it is conceivable that the information about related factual matters could have been shared with Latham attorneys." Id. at 7. As a result, the Court found that "the answer to the question, 'might [the plaintiff] have disclosed to Latham confidences which could be relevant to the present action, and detrimental to [the plaintiff] in this action,' is surely yes." Id. at 8.

The Court explained that, "[i]n terms of the conflict [of interest] analysis, it makes no difference that seventeen years have passed since Latham represented [the plaintiff's parent company], when the lawsuit will in part concern events that occurred twenty years ago." Id. The Court acknowledged that the conflict of interest could be viewed as having been ameliorated in various ways: by the passage of time, the imposition of an ethical wall, and the fact that the two attorneys involved in the litigation were not involved in the previous representation. Neverthelss, the Court found that "on balance, considering the rather unusual circumstances of the conflict of interest here, I believe the most appropriate exercise of my discretion is to disqualify Latham and Watkins ... ." Id. at 10.

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Posted On: September 25, 2012

Judge Stark stays patent lawsuit pending resolution of summary judgment motions in related cases

At plaintiff's request, Judge Leonard P. Stark recently stayed a patent infringement lawsuit pending the court's resolution of motions for summary judgment in related cases. St. Clair Intellectual Property Consultants, Inc. v. Motorola Mobility LLC, C.A. No. 11-1305-LPS (D. Del. Sept. 20, 2012). Plaintiff argued that a stay was appropriate because "multiple summary judgment motions, including several seeking to invalidate patents asserted here, [were] pending before this Court in related patent infringement cases." Id. at 2. Defendant complained that a stay would prejudice it because the defendant had already complied with court ordered deadlines, particularly regarding claim construction, and plaintiff would have additional time "to refine its theories or strategies[.]" Id. at 3. Judge Stark did not think this prejudice rose to the level of undue, but noted that plaintiff's failure to comply with the court's scheduling order deadlines could be "most appropriately addressed, if necessary, in the context of Defendant's recently-filed motion for sanctions." Id.

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Posted On: September 25, 2012

Judge Stark Grants Leave to File Supplemental Complaint to Include Claims of Indirect Infringement Based on Events Occurring after Filing of the Original Complaint

In a recent memorandum order, Judge Leonard P. Stark granted Plaintiff British Telecommunications’ (BT’s) motion for leave to file a supplemental complaint for patent infringement against Defendant Google. BT sought to file a supplemental complaint in order to include claims of indirect infringement for events occurring after the filing of its original complaint. More specifically, BT sought to add Google’s newly introduced product, Google Play, and to include indirect infringement claims based on Google’s knowledge of the patents-in-suit since at least the filing of the original complaint. British Telecommunications PLC, v. Google Inc., C.A. No. 11-1249-LPS, at 1 (D. Del. Sep. 20, 2012).

Noting that the Third Circuit “has adopted a liberal approach to granting leave to amend,” Judge Stark was “persuaded that the proper course of action is to grant Plaintiffs motion for leave to amend.” Id. at 1-2. He found “no evidence of undue delay, bad faith, or dilatory motive on the part of Plaintiff,” especially where “Plaintiff filed its motion before discovery began, within the time frame for supplementing or amending pleadings as set forth in the Scheduling Order, and within four months of filing its original complaint.” Id. at 2. Accordingly Judge Stark granted BT’s motion for leave to file a supplemental complaint.

This result is in accord with Judge Stark’s prior decisions regarding the knowledge requirement of indirect infringement, and Judge Stark stated as much: “Defendant's argument that the motion is futile because Plaintiff fails to state a plausible claim of indirect infringement is unpersuasive. While Defendant notes that decisions in this District are not uniform as to whether knowledge of a patent may be demonstrated by filing of a complaint, the undersigned judge has expressed the view that, for purposes of indirect infringement occurring after the filing date, ‘an accused infringer is on notice of the patent(s)-in-suit once an initial pleading identifies the patents-in-suit.’” Id. at 2 (citing Softview LLC v. Apple Inc., 2012 WL 3061027, at *7 (D. Del. July 26, 2012)).

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Posted On: September 17, 2012

Judge Robinson Grants Defendants’ Motion to Dismiss Under the Doctrine of Claim Preclusion Where Infringement Allegations Were Previously Asserted Against the Same Defendants and Based on the Same Patent Invalidated in a Prior ANDA Litigation

In Senju Pharmaceutical Co., Ltd., et al. v. Apotex Inc., et al., C.A. No. 11-1171-SLR (D. Del.), Judge Robinson dismissed plaintiffs’ claims of infringement for failure to state a claim where the allegations were asserted against the same defendants and based on the same patent and same ANDA filing that the Court had ruled upon in a prior litigation. Id. at 1. In that prior litigation, plaintiffs filed suit against defendants for infringement of the patent at issue based on defendants’ ANDA filing. Id. at 1. At the conclusion of that case, the Court entered final judgment against plaintiffs, invalidating the asserted claims of the patent at issue as obvious. Id. at 2-3. However, while that prior litigation was still pending, without notifying the Court, plaintiffs initiated and were engaged in reexamination proceedings involving the same patent at issue. Id. at 1. Following the reexamination proceedings, plaintiffs then filed the instant litigation against defendants alleging infringement of those "new" claims of the patent at issue that were “added or amended” during reexam. Id. at 1. In response, defendants moved to dismiss the instant action based on the doctrine of res judicata or claim preclusion. Id. at 6. Specifically, defendants argued that dismissal was proper because “the claims of the current lawsuit are precluded” by the judgment against the plaintiffs in the prior litigation. Id. at 6. The Court agreed. Id. at 6. Citing both Third Circuit and Federal Circuit authority, the Court noted that “[c]laim preclusion bars any new legal claim based on the same cause of action previously asserted” and that “[e]ach patent, not patent claim, gives rise to an independent and distinct legal claim or cause of action.” Id. at 7 (emphasis in original). In its analysis, the Court concluded that in the instant litigation the plaintiffs “are alleging infringement by the same proposed product that was at issue in the first litigation” and that “[plaintiffs] could have asserted the equivalent of the new and amended claims in the first litigation.” Id. at 8-9. The Court held that the “reexamination of the patent-at-issue did not create a new cause of action against the same previous defendant and accused product and reasoned that “[a]llowing this case to go forward would open the door to relitigation of a matter that has already been decided on the merits.” Id. at 11.

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Posted On: September 17, 2012

Judge Robinson: summary judgment of non-infringement based on patent exhaustion.

Judge Sue Robinson recently granted a defendant summary judgment of non-infringement based on the doctrine of patent exhaustion. Keurig, Inc. v. Sturm Foods, Inc., Civ. No. 10-841-SLR (D. Del. Sept. 13, 2012). The plaintiff in the case, Keurig, is the manufacturer of popular beverage brewers, as well as individual serving cartridges for use in its brewers. Id. at 1. Keurig sued the defendant, Sturm Foods, asserting various patent and non-patent claims, based on the defendant’s manufacture and sale of its “Grove Square” line of individual serving cartridges, the packaging of which indicates that they are “*For use by owners of Keurig coffee makers.” Id. at 3. In one of several competing motions for summary judgment, the defendant argued that the doctrine of patent exhaustion precluded a finding of infringement. The Court agreed, explaining that the “purpose of the patent exhaustion doctrine is to ensure that a patentee surrenders its statutory monopoly after it has received compensation for an article sold that embodies its patent.” Id. at 10. Here, the “article sold” was the patented brewer. The Court distinguished the case from those in which patent exhaustion arises in connection with the sale of an “incomplete” item because, in this case, Keurig “sells a product that completely practices the patent. … There is no need to determine the extent to which the brewers embody the patent when the brewers are sold in a completed form. For this reason, the court agrees with defendant that the two-prong test [under Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008)] is inapplicable; instead, the ‘long standing doctrine’ that an ‘initial authorized sale of a patented item terminates all patent rights to that item’ is applicable. Id. at 9-10 (quoting Quanta, 553 U.S. at 625). With regard to the non-patent claims (including trademark and trade dress infringement, unfair competition, and false advertising), the Court found that genuine issues of material fact exist which precluded entry of summary judgment.

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Posted On: September 14, 2012

Judge Thynge construes claims related to a system for marketing services through prepaid tickets

Magistrate Judge Mary Pat Thynge recently issued a report and recommendation setting forth the court's recommendations for constructions of the disputed claim terms of U.S. Patent No. 7,337,949 entitled System for Marketing Leisure Activity Services Through Prepaid Tickets. Quantum Loyalty Systems, Inc. v. TPG Rewards, Inc., C.A. No. 09-022-RGA-MPT (D. Del. Sept. 11, 2012). The following terms were construed:

"payment mode"
"ticket"
"service"
"service specific payment mode"
"service specific ticket"
"substantially unique identifier"
"initial value"
"representing an initial value to be remitted"
"configured to be valid for incremental quantity of services"
"at any one of a plurality of service providers"
"enabling"
"redeemable"
"payment mode is redeemable at a variable rate"
"enabling a variable rate redemption of the payment mode"
"for a redemption in exchange for a unit use of a desired service"
"at the selected service proivder, debiting a price set by the selected service provider"
"effecting payment/effecting payment at the price debited"
"as opposed to a cash sum"
"absorbing any difference in prices"
"adjusting price of the payment mode"
"verifying an expiration date"

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Posted On: September 13, 2012

Judge Robinson Resolves Common Legal Interest Privilege Discovery Dispute

Last week we reported on Judge Sue Robinson’s opinion denying a motion to dismiss for lack of sufficient standing in MobileMedia Ideas, LLC v. Apple Inc., C.A. No. 10-258-SLR (D. Del. Aug. 16, 2012) (read about that decision here). The case is now moving forward on the merits, and Magistrate Judge Mary Pat Thynge has issued a memorandum order regarding MobileMedia Ideas’ (“MMI”) assertion of the common interest privilege.

As detailed in the previous post, MMI is a patent holding entity for Sony and Nokia. Apple, the defendant in this suit, served third party subpoenas seeking documents from three Nokia entities that had previously been shared between Nokia, Sony, and MMI. Each Nokia entity objected to the subpoenas based on the attorney-client privilege. Apple conceded that the common legal interest privilege might apply to the documents because Sony and Nokia worked together to develop a litigation strategy for MMI. But Apple contested whether each document shared among the parties was shared specifically for the purpose of furthering a joint legal strategy, as is required for the common interest privilege to apply. See MobileMedia Ideas LLC v. Apple Inc., C.A. No. 10-258-SLR/MPT, at 1-10 (D. Del. Sep. 10, 2012).

After considering all of the evidence, Judge Thynge found that the common interest privilege applied to the documents Apple sought: “Apple’s argument that the transfer of the patent prosecution files and [invention disclosure forms (“IDFs”)] to MMI were not to further a joint legal strategy is refuted by the Formation and Operating Agreements which provide the central purpose of MMI was ‘to acquire, develop, administer and manage [i]ntellectual [p]roperty rights’ related to the inventions obtained from the Nokia and Sony entities.” Id. at 12. Also, “since the formation of MMI, Nokia, Sony and their respective wholly owned subsidiaries have provided assistance and cooperation to MMI’s outside attorneys . . . . Such future cooperation, which may involve providing additional materials, does not imply that the original transfer of the patent prosecution files and the IDFs was merely to effectuate transfer of the patents.” Id. at 13. Furthermore, [t]he exchanges by Sony [and] Nokia . . . were made under non-disclosure agreements with the understanding the parties shared a common legal interest. . . . A common legal interest agreement . . . was also executed [and] it acknowledged litigation was contemplated.” Id. at 15-16. Finally, Sony and Nokia “receive a percentage of the recovery from any successful enforcement by MMI of the transferred patents confirming their common interest in MMI prevailing in the present litigation.” Id. at 16.

Judge Thynge therefore concluded that the “language, provisions and tenor of the [various agreements] clearly indicate at the time of their execution, the Nokia and Sony entities anticipated litigation for enforcement of the transferred patents. As evidenced by the various agreements, the purpose of the transfer of the patent prosecution files and the IDFs were part of the joint legal strategy involving the Nokia and Sony entities that began before MMI’s formation and continued thereafter. MMI and the Nokia and Sony entities have operated with the expectation that any shared privilege communications would be confidential and protected from disclosure. The Nokia and Sony entities, as licensees, clearly share a common legal interest in MMI prevailing in this action. That as a result of the Formation Agreement, MMI is now the owner of the patents does not eviscerate or prevent the sharing of a common legal interest with Nokia and Sony.” Id. at 14.

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Posted On: September 13, 2012

Magistrate Judge Fallon's Investiture

The formal investiture of Magistrate Judge Sherry R. Fallon will take place at the District Court on Friday, October 12, 2012 at 3:00 p.m. There is no need to RSVP. Light refreshments will be available immediately following the ceremony in the courtroom lobby area.

See you there!

Posted On: September 13, 2012

Judge Andrews dismisses defendant for lack of personal jurisdiction and grants transfer to District of Maryland.

In MyKey Technology Inc. v. CPR Tools Inc., et al., C.A. No. 11-443-RGA (D. Del. Sept. 10, 2012), Judge Richard G. Andrews granted a motion to dismiss filed by defendant Intelligent Computer Solutions, Inc. (“ICS”), on the grounds of lack of personal jurisdiction, and also granted a motion to transfer venue to the District of Maryland filed by plaintiff MyKey Technology, Inc. (“MyKey”).

Judge Andrews granted ICS’s motion to dismiss for lack of personal jurisdiction after permitting jurisdictional discovery to clarify the issue. ICS is not incorporated in Delaware, and MyKey itself conceded that there was “no general jurisdiction over [ICS].” Alternatively, MyKey argued that because ICS had a website that would permit Delawareans to purchase the infringing products, ICS had “offered to sell the infringing products to Delawareans,” and thus specific jurisdiction was present. Judge Andrews, however, relied on AFTG-TG, LLC v. Nuvoton Tech. Corp., No. 2011-1306, 2011-1307, 2012 U.S. App. LEXIS 18030 (Fed. Cir. Aug. 24, 2012), to find that the existence of such a website was insufficient to satisfy the requirements of specific jurisdiction. See Nuvoton Tech. Corp., 2012 U.S. App. LEXIS 18030, at *4 (noting specific jurisdiction requires defendant to “purposefully direct[] activities at the forum’s residents”). Judge Andrews also found that other indicia of specific jurisdiction were lacking, as there was no evidence that the infringing products had ever been sold in or shipped to Delaware. Lacking general and specific jurisdiction, Judge Andrews granted the motion to dismiss, leaving two defendants—CPR Tools, Inc. and Logicube, Inc.—in this patent infringement suit.

In addition to granting the motion to dismiss, Judge Andrews granted MyKey’s motion to transfer venue from the District of Delaware to the District of Maryland pursuant to 28 U.S.C. § 1404(a). Section 1404(a) grants a district court the ability to “transfer any civil action to any other district or division where it might have been brought.” Moreover, the District of Delaware typically conducts a detailed analysis of the private and public interest factors set forth in Jumara v. State Farm Ins. Co., 55 F.3d 873 (3d Cir. 1995) to assess whether efficiency and expense considerations warrant transfer. See Jumara, 55 F.3d at 879; see also Mosaid Technologies, Inc. v. Sony Ericsson Mobile Communications (USA) Inc., C.A. No. 11-598-SLR (D. Del. Aug. 16, 2012) (analyzing a motion to transfer under Jumara factors). Under the § 1404(a)/Jumara framework, the movant has the burden of establishing the propriety of transfer. Jumara, 55 F.3d at 879.

ICS had been the only defendant that was opposed to the transfer. However, as discussed above, Judge Andrews dismissed ICS from the suit, rendering its opposition moot. Because the remaining defendants did not contest the transfer, Judge Andrews found that MyKey had sustained its burden to establish the propriety of the transfer despite “rather sparse” allegations with regard to personal jurisdiction in Maryland. Moreover, in light of the lack of contention, it was unnecessary for Judge Andrews to conduct a detailed Jumara analysis. Judge Andrews determined that transfer was appropriate because it “appear[ed] that this [was] a civil action that could have been brought in the District of Maryland.”

At one point in the order, Judge Andrews noted that with the recent amendment to 28 U.S.C. § 1404(a), a district court can transfer a suit “to any district or division to which all parties have consented.” § 1404(a). However, due to the effective date of the amendment, it did not apply to the instant matter.

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Posted On: September 12, 2012

Judge Robinson Dismisses Infringement Claims Based on Patents Invalidated in Prior ANDA Litigation Under Doctrine of Collateral Estoppel, Denies Request to Stay Pending Appeal to Fed. Cir.

In Cephalon, Inc., et al. v. Impax Labs., Inc., C.A. No. 11-1152-SLR (D. Del.), Judge Robinson recently granted defendant-generic drug manufacturer’s motion to dismiss infringement claims based on patents asserted by plaintiffs that had previously been invalidated in prior ANDA litigation. Id. at 1. In this case, plaintiffs filed suit against defendant alleging infringement of four patents-in-suit arising out of defendant’s ANDA for a generic version of a drug used to treat pain in cancer patients. Id. at 1. In response to the complaint, defendant moved to dismiss claims for infringement based on two of the patents-in-suit on the grounds that the two patents had been addressed by the Court in previous ANDA litigation, and the Court found both patents invalid for lack of enablement. Id. at 1-2. Specifically, in the motion to dismiss, defendant argued that under the doctrine of collateral estoppel there was no reason to litigate any issues involving the two invalidated patents because “validity was actually litigated in the [prior ANDA] litigation, culminating with a final judgment of invalidity against plaintiffs.” Id. at 2. The Court agreed. Id. at 4. Citing the U.S. Supreme Court’s decision in Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundations, 402 U.S. 313 (1971), the Federal Circuit’s decision in Abbott Labs. v. Andrx Pharma, Inc., 473 F.3d 1196, 1203 (Fed. Cir. 2007), and the Third Circuit’s decision in Jean Alexander Cosmetics, Inc. v. L’Oreal USA, Inc., 458 F.3d 244, 249 (3d Cir. 2006), the Court held that “collateral estoppel applies to bar the re-litigation of the invalid . . . patents.” Id. at 4. In addition to granting defendant’s motion to dismiss, the Court denied plaintiffs’ request to stay the instant litigation pending the Federal Circuit’s review of the Court’s decision in the prior ANDA litigation on appeal. Id. at 5. In denying that request, the Court noted that briefing in the appeal had only recently been completed, and that if the request were granted, the Court could not resolve the present dispute within the 30-month ANDA stay deadline. Id. at 5.

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Posted On: September 12, 2012

Judge Robinson Dismisses Declaratory Judgment Action for Noninfringement and Invalidity Under the First-Filed Rule

In Elpida Memory, Inc., et al. v. Intellectual Ventures I, LLC, et al., C.A. No. 11-623-SLR (D. Del.), Judge Robinson granted defendants’ motion to dismiss plaintiffs’ declaratory judgment action under the first-filed rule. Id. at 5. On July 11, 2011, defendants originally filed suit for patent infringement against plaintiffs and several other Dynamic Random Access Memory (DRAM) circuit manufacturers and their customers in the Western District of Washington. Id. at 1-2. On July 12, 2012, defendants also filed a complaint with the ITC alleging that certain of plaintiffs’ products infringed the same three patents-in-suit asserted against plaintiffs in the Western District of Washington action. Id. at 2. Two days later, on July 14, 2011, plaintiffs filed the instant declaratory judgment action against defendants in the District of Delaware for noninfringement and invalidity of the same three patents asserted against plaintiffs in the District of Washington and the ITC. Id. at 2. In response, defendants moved to dismiss or, in the alternative, transfer the Delaware declaratory judgment action based upon the first-filed Washington action. Id. at 2. The Court granted defendants’ motion. Id. at 5. In its reasoning, the Court noted that there is no dispute that “the Washington action encompasses all of the patents and parties at issue in this case, and is the first-filed action as between it and the instant case.” Id. at 4. The Court also noted that the “record does not demonstrate, nor does [plaintiff] contend, that any exceptions to the first-filed rule apply” and that to find otherwise would “eviscerate the first-filed rule as it is currently understood.” Id. at 4.

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Posted On: September 11, 2012

Judge Thynge Grants in Part Motion to Compel and Imposes Sanctions Against Plaintiffs for Spoliation of Documents

In Magnetar Technologies Corp., et al. v. Six Flags Theme Park Inc., et al., C.A. No. 07-127-LPS-MPT (D. Del.), Magistrate Judge Thynge recently issued a Memorandum Order granting in part defendants’ motion to compel production of documents, and imposing sanctions against plaintiffs for spoliation of evidence as a result of the destruction of certain other documents. Id. at 37. In the motion, defendants sought to compel the production of documents (that plaintiffs claimed were protected from discovery and inadvertently produced) on the grounds that by producing the documents to defendants, plaintiffs had waived any claims of attorney-client privilege or work product over the documents. Id. at 8. Defendants further argued that the documents were not shielded from discovery by any joint client privilege, and even if the documents were somehow protected, plaintiffs should nonetheless be ordered to produce them under the crime-fraud exception and as a sanction against the plaintiffs for the spoliation of other evidence and documents in this case. Id. at 8-9. Specifically, on the issue of spoliation, defendants alleged that during the course of discovery “more than seven hundred boxes of documents were destroyed” at the behest of two of the plaintiffs. Id. at 3. In opposition to the motion, along with arguing that the documents at issue were inadvertently and unintentionally produced, plaintiffs argued that the attorney-client privilege, work-product doctrine and the joint client privilege applied to protect the documents from discovery, and that none of these applicable privileges or immunities had been waived by any of the defendants. Id. at 10-11. Plaintiffs also disputed defendants' allegations of spoliation, arguing that to the extent any documents were destroyed, those documents were not destroyed intentionally and at the time were under the control of a third party (and not under the defendants’ control). Id. at 10. In granting the motion to compel in part, Judge Thynge concluded that although the attorney-client privilege may have arguably been waived with respect to perhaps one of the plaintiffs, both the work-product doctrine and the joint client privilege still applied to the contested documents and had not been waived. Id. at 23-25. Judge Thynge noted that the “work product protection is not automatically waived through a client’s (or former client’s) production of documents since that protection is invoked by the attorney.” Id. at 24. Judge Thynge also noted that the existence of an agreement between the plaintiffs to retain “common counsel” and the inclusion of each of the plaintiffs on certain privileged communications indicated that a joint client relationship existed among the plaintiffs, warranting protection under the joint client privilege. Id. at 26. Judge Thynge held that the crime-fraud exception did not apply because there was no evidence that plaintiffs had engaged in a crime or fraud or that defendants’ counsel’s services were utilized in order to plan or perpetrate any such crime or fraud. Id. at 31.

On the issue of spoliation, Judge Thynge found in favor of defendants, holding that plaintiffs had failed to satisfy their preservation obligations and that such failure was a "serious matter worthy of sanction." Id. at 32, 34. Specifically, the Court found that the “destruction of documents in the [third party] warehouse, which was under the control of [one of the plaintiffs], and occurred after the commencement of litigation" constitutes "spoliation.” Id. at 32. In addition, the Court noted that although the plaintiffs “may not have actively obstructed the discovery of evidence, they neglected their duty to preserve evidence, and should have been aware of [the third party’s] document retention policy for approximately six years before this action was filed.” Id. at 32. As a sanction for plaintiffs’ spoliation, the Court ordered the production of certain documents or portions of documents sought by defendants and the attorney-client privilege “lost” with respect to those documents or portions of documents. Id. at 35-36.

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Posted On: September 10, 2012

Defendant’s Unclean Hands Defense, Pled in Response to Plaintiffs’ Amended Complaint, Untimely Under Rules 15 and 16

Chief Judge Gregory M. Sleet recently struck defendant’s unclean hands defense in its Answer as improper under FRCP Rule 15(d) and untimely under Rules 15(a) and 16(b). Sirona Dental Systems, Inc., et al. v. Dental Imaging Technologies Corp., C.A. No. 10-288-GMS (D. Del. Sept. 10, 2012).

The parties had agreed to permit plaintiffs to file a Fourth Amended Complaint nearly nine months after the deadline to amend pleadings. Id. at 1. This Amended Complaint contained no substantive changes; it only added the current defendant and removed others as a result of a series of mergers and an agreement between the parties, and substituted the reissues of two of the patents-in-suit for the original patents. Id. at 2. In response, defendant filed its Answer which raised an affirmative defense of unclean hands for the first time. Id. Plaintiffs moved to strike the defense arguing that it was not a proper response under FRCP Rule 15(a) and, even if “viewed instead as a stand-alone amended pleading” under Rule 16(b), would still fail to meet the requirements of this Rule. Id. at 3.

The Court held that defendant’s Answer was “best understood not as a required response to an amended pleading under Rule 15(a)(3) but as a discretionary response to a supplemental pleading, governed by Rule 15(d).” Id. at 4-5 (internal quotation marks omitted). While responses under Rule 15(a) are permitted as a matter of course, a court has the discretion to permit or disallow responses under 15(d). Id. at 5-6. Here, the Court disallowed the unclean hands defense because “[t]he filing of a supplemental complaint containing purely ministerial changes should not permit an opposing party to raise a novel affirmative defense more than nine months after a scheduling order deadline.” Id. at 7.

Because it concluded that Rule 15(a) was inapplicable, the Court did not apply or interpret Rule 15(a)(3), which governs the timing of a required responsive pleading. Judge Sleet did comment, however, that plaintiffs’ argument that the scope of 15(a)(3) pleadings “should be limited to reflect the breadth of the changes in the initial pleading” had merit because to view otherwise might “throw the door open to entirely new claims and defenses each time a ministerial amendment was made to a pleading.” Id. at 4 & n.3.

Judge Sleet also considered whether defendant’s Answer would satisfy Rule 16(b) which permits a party to amend its pleading after the court ordered deadline, only for good cause and with the Court’s consent. Id. at 8. Although defendant did not obtain leave of court to amend its Answer, defendant argued that it had good cause for delay because (i) plaintiffs provided “inconsistent information with regard to the facts relevant to the unclean hands issue” and (ii) defendant had no obligation to investigate this defense earlier because it assumed plaintiffs would adhere to a relevant license agreement. Id. at 9. Judge Sleet disagreed, noting that it was not until after the scheduling order deadline passed that plaintiffs provided “inconsistent information” and thus defendant could have raised the defense by the deadline. Id. In addition, defendant could not justify its delay when it was “presented with evidence of potential bad deeds” and did not perform a “diligent investigation upon receipt of such evidence.” Id. at 10. To hold otherwise “would open the door to untimely defenses and claims whenever they are based on some form of misbehavior.” Id.

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Posted On: September 10, 2012

Judge Stark: Patentees should expect that stipulating to stay one action pending reexamination will be an important factor in the Court’s decision whether to grant a stay in a related action

In a recent memorandum order, Judge Stark granted a defendant’s motion to stay pending reexamination, finding that each relevant factor favored a stay. Smarter Agent, LLC v. MobileRealtyApps.com, LLC, C.A. No. 11-915-LPS (D. Del. Sept. 5, 2012). First, the Court noted that the potential for simplification of issues through the reexamination was substantial, because “[a]ll the claims involved in this lawsuit currently stand rejected in the reexaminations. If this remains the outcome, this litigation will be terminated.” Id. at 3. Next, although the case had been filed almost eleven months earlier, the Court noted that “essentially nothing has happened in this case beyond the briefing of the instant motion to stay.” On the other hand, “[t]he reexaminations have been pending for over two years and are significantly farther along than the litigation.” Id. at 4. Finally, the Court was not persuaded by the plaintiff’s claims of undue prejudice, “particularly in light of Plaintiff’s agreement to stay the two related actions[]” asserting the same patents against other defendants. Id. at 5. In a footnote, the Court explained that it “recognizes that a patentee has no obligation to agree to stay litigation against a particular defendant or all defendants just because it has previously agreed to stay litigation against other defendants. But such a patentee should expect that the stay of one related action will be an important consideration if the Court must later decide whether to stay another related action.” Id. at 7 n.2.

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Posted On: September 10, 2012

Judge Stark: non-infringement finding in favor of one ANDA defendant has collateral estoppel effect in a separate action against another defendant.

In a recent memorandum order, Judge Stark granted Amneal Pharmaceuticals’ motion for partial judgment on the pleadings of non-infringement, finding that a non-infringement ruling against Galderma Laboratories in a separate action had collateral estoppel effect. Galderma Laboratories Inc. v. Amneal Pharmaceuticals, LLC, C.A. No. 11-1106-LPS (D. Del. Sept. 7, 2012). In the separate action, the Court found that Mylan Pharmaceuticals’ proposed generic product “containing 40 mg doxycycline administered once daily does not infringe [Galderma’s] patents, because such products do not contain the required ‘sub-antibacterial amounts’ of doxycycline but, rather, significantly inhibit the growth of microorganisms.” Id. at 1-2. Amneal, whose proposed product also contained 40 mg of doxycycline, to be administered once daily, argued that the Court’s non-infringement ruling against Galderma in that separate action had collateral estoppel in the instant case. The Court agreed, explaining “in order to prevail against Amneal on its claim for infringement …, Galderma would have to prevail on the ‘identical’ issue it previously litigated – and lost – in the Mylan action.” Id. at 4. That issue was “whether a product containing 40 mg of doxycycline, administered once daily, infringes [Galderma’s] patents.” Id. In rejecting several arguments by Galderma why collateral estoppel was not appropriate in this case, the Court explained that “the Court’s finding of non-infringement of [Galderma’s] patents in the Mylan Action was in no meaningful sense tied to anything unique about Mylan’s proposed product.” Id. at 7.

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Posted On: September 10, 2012

Judge Robinson dismisses defendant's counterclaim for failure to adequate plead invalidity

Judge Sue L. Robinson recently granted plaintiff's motion to dismiss defendant's invalidity counterclaim but denied plaintiff's motion to strike the corresponding affirmative defense. Internet Media Corporation v. Hearst Newspapers, LLC, C.A. No. 10-690-SLR (D. Del. Sept. 6, 2012). Defendant pled that the patent-in-suit was invalid "for failing to comply with one or more of the requirements for patentability set forth in Title 35 of the U.S. Code, including, but not limited to, §§ 101, 102, 103 and 112." Id. at 2. Noting that, since Twombly and Iqbal, it is clear that a "counterclaim must set forth sufficient facts to give rise to a plausible claim for relief[,]" Judge Robinson held that defendant's counterclaim did not contain "such requisite facts" and granted plaintiff's motion to dismiss, with leave to amend. Id. at 3-4. However, because an affirmative defense "must merely provide fair notice of the issue involved[,]" Judge Robinson denied plaintiff's motion as to defendant's affirmative defense of invalidity. Id. at 5.

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Posted On: September 7, 2012

Judge Thynge Recommends Denial of Stay Pending Reexamination

Magistrate Judge Thynge has issued a report and recommendation considering the defendant’s motion to stay pending inter partes reexamination in ImageVision.Net, Inc. v. Internet Payment Exchange, Inc., C.A. No. 12-054-GMS-MPT (D. Del. Sep. 4, 2012). Considering each of the three factors for issuing a stay, Judge Thynge concluded that the motion should be denied.

Judge Thynge first considered whether the timing and status of the litigation and the reexamination weighs against a stay. She noted the defendant’s argument that “the legally relevant inquiry considers not whether discovery has commenced, but rather whether discovery is complete and a trial date set.” She then found that the status of the litigation favored a stay because “[a]lthough initial discovery has begun and a scheduling order issued, ‘this case is still in its infancy, and the record is relatively sparse.’ No trial date has been set and discovery is not scheduled to be completed until July 19, 2013. [Plaintiff] does not demonstrate how the facts of this case weigh against a stay despite the obvious lack of significant discovery activity. As a result, the status of the litigation favors a stay.” Id. at 5-6.

Judge Thynge next considered whether a stay would simplify the issues in question and trial of the case. She pointed out that “[s]hould the PTO grant defendant’s reexamination request, many issues outside the purview of the reexamination would remain to be tried.” Finding that “the scope of the issues to be resolved during litigation substantially exceeds the scope of the issues that can be resolved during the reexamination proceedings,” Judge Thynge determined that this factor disfavored a stay. Id. at 6-8.

Finally, Judge Thynge considered whether a stay would unduly prejudice or present a clear tactical disadvantage to the non-moving party. In this regard, she first noted that “[a]lthough competition between two parties is not dispositive, ‘the relationship between the parties is ‘[o]f particular importance’ because ‘[c]ourts are generally reluctant to stay proceedings where the parties are direct competitors.’” Accordingly, “[t]he element of direct competition strongly favor[ed] denying [the] motion for a stay.” Id. at 8-10. Judge Thynge next found that a stay “would prejudice [the plaintiff] particularly” because the reexamination had only recently been filed and “this litigation would likely be completed far in advance of a decision on the last appeal in the reexamination proceeding.” Therefore, the “prejudice to plaintiff resulting from the status of the reexamination proceedings disfavors granting a stay.” Id. at 10. Because the parties in the case were direct competitors and the reexamination was in its earliest stages, Judge Thynge found that the prejudice factor favored a stay and concluded: “Weighing all considerations, the interests in proceeding with the litigation outweigh any basis for a stay in this action.” Id. at 12.

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Posted On: September 7, 2012

Judge Robinson Grants Summary Judgment of Invalidity

Judge Robinson recently considered cross motions for summary judgment of invalidity, infringement, and non-infringement in ongoing litigation over patents covering methods for analyzing cellular, biological samples. Focusing on the lighting system required by the patents-in-suit, Judge Robinson first engaged in the claim construction necessary to decide the dispute. She then denied all of the pending motions except for the defendant’s motion for summary judgment of invalidity based on inadequate written description. See Helicos Biosciences Corp. v. Illumina, Inc., C.A. No. 10-735-SLR, at 27 (D. Del. Aug. 28, 2012).

The defendant, Illumina contended that the asserted claims were invalid for lack of an adequate written description, lack of enablement, and anticipated and/or rendered obvious in view of the prior art. The parties also disputed whether any accused product infringed any of the asserted claims. In order to resolve summary judgment motion on these issues, however, Judge Robinson needed to engage in claim construction. In the parties’ briefing, Illumina proffered constructions for two terms, while the plaintiff, Helicos, did not propose any constructions, arguing that the plain meaning should apply to both terms at issue. While Judge Robinson considered Illumina’s constructions unduly narrow, she also disagreed with Helicos that no construction was required, stating that “a lay jury requires context for such unfamiliar technical language.” Id. at 13. She therefore crafted her own constructions for the two disputed terms and proceeded to consider the summary judgment motions based on these constructions.

With respect to lack of written description and lack of enablement, Judge Robinson concluded that summary judgment of invalidity should be granted: “Illumina has demonstrated, by clear and convincing evidence, that the written description requirement has not been met. Although the parties seem to agree on the ordinary meaning of the word “focus” (to wit, “to make an image sharper”), the complete limitation is in dispute . . . . The court has been unable to reconcile the language chosen by the inventor to describe his invention and the science at issue. Given this hobson’s choice, the court finds the ‘109 patent invalid for lack of written description and enters judgment in favor of Illumina.” Id. at 22-23.

Judge Robinson did not rule on several remaining issues of invalidity because they “hinge[d] on a central issue” that had not been addressed in the parties’ briefing. Id. at 23-24. Similarly, Judge Robinson found that “the record does not sufficiently address infringement under the court’s nowadopted construction. . . . Because the court takes up claim construction and summary judgment simultaneously, and neither party advocated for the construction ultimately adopted by the court, the parties’ summary judgment arguments are not framed in [the proper terms].” Id. at 25-26. Accordingly, Judge Robinson ordered further briefing on infringement and claim construction and denied the balance of the pending motions.

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Posted On: September 6, 2012

Chief Judge Sleet Rules on Correction of Inventorship Action

In a recently-decided case, two plaintiffs filed a correction of inventorship action seeking to add themselves as inventors of several patents assigned to defendant Zimmer, Inc. Chief Judge Sleet held a bench trial and concluded that the plaintiffs were not inventors of the patents-in-suit. See Scott v. Zimmer, Inc., C.A. No. 10-772-GMS (D. Del. Aug. 27, 2012).

Judge Sleet went through the patents-in-suit, claim by claim, and found that the plaintiffs had not contributed novel elements to any of the claims at issue. “To be an inventor, one must contribute to the conception of the invention. . . . Thus, plaintiffs must show that they each individually made a ‘contribution to the claimed invention that is not insignificant in quality, when that contribution is measured against the dimension of the full invention, and [did] more than merely explain to the real inventors well-known concepts and/or the current state of the art.’” Id. at 5-6 (citations omitted). In each instance, however, the plaintiffs’ testimony that they had been involved in the conception of novel elements was completely uncorroborated, and “plaintiffs’ testimony regarding their own inventorship claim ‘is regarded with skepticism’ and ‘cannot, standing alone, rise to the level of clear and convincing proof.’” Id. at 6 (citations omitted). Furthermore, the documentary evidence and testimony of other inventors largely contradicted any suggestion that the plaintiffs had helped conceive of the inventive elements. Therefore, the court concluded that “the plaintiffs [had] not met their burden of establishing, by a clear and convincing evidence, a specific contribution made by them to the conception of a novel element of a patent claim, and that they [had] not corroborated their testimony.” Id. at 16.

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Posted On: September 6, 2012

Judge Robinson Denies Motion to Dismiss for Lack of Standing

Last month, Judge Robinson issued an opinion considering the standing required to file a patent infringement suit. In MobileMedia Ideas, LLC v. Apple Inc., C.A. No. 10-258-SLR (D. Del. Aug. 16, 2012), the plaintiff, MobileMedia Ideas (“MMI”), filed suit against Apple for infringement of sixteen patents. Apples filed a motion to dismiss on the ground that MMI lacked subject matter standing. Judge Robinson ultimately denied Apple’s motion to dismiss, finding that MMI had sufficient standing.

At issue was whether MMI could sue on its own or whether it needed to also joint its three licensees. The licensees were former owners of the patents-in-suit who had entered into an assignment and license-back agreement with MMI. Each licensee also partially owned MMI. “Typically,” Judge Robinson noted, “courts are presented with the situation where an exclusive licensee sues an alleged infringer, and it must be determined whether the licensee has standing. [Here] the court is presented with the rather unique, converse scenario ‘in which the patent owner seeks to bring suit, requiring [the court] to determine whether the patent owner transferred away sufficient rights to divest it of any right to sue.’” Id. at 12 (citations omitted).

“[T]o have constitutional standing, a party’s interests in the patents must ‘include sufficient exclusionary rights such that [it] suffers an injury in fact from infringing activities. If [it] holds all substantial rights, it can sue in its name alone. If [it] holds less than all substantial rights but sufficient exclusionary rights that it suffers injury in fact, it can sue as a co-party.’” Id. at 10. Proceeding to examine the transfer of patent rights between MMI and its licensees, Judge Robinson found that one licensee “was delegated the ‘responsibility’ to bring suit, [but] the ‘right’ to sue lies with MMI, [and] [t]he right to sue is of paramount importance in the ‘substantial rights’ analysis.” Id. at 13. She noted that the licensees had assigned MMI “‘the entire right, title and interest in the patents-in-suit,’ . . . [a] transfer of [which] is well known to mean a full assignment of the patent.” Id. at 14. MMI also had other rights “for which the associated enforcement ‘responsibilities’ have been delegated to [a licensee]. MMI has the right to receive patent royalties, for example . . . irrespective of the fact that MMI later allocates its profits to the owners.” Id. Furthermore, “‘the fact that a patent owner has retained a right to a portion of the proceeds of the commercial exploitation of [a] patent . . . does not necessarily defeat what would otherwise be a transfer of all substantial rights in the patent.’” Id. (citations omitted). Finally, “‘[t]he right to dispose of an asset is an important incident of ownership, and such a restriction on that right is a strong indicator’ that not all substantial rights under the patent have been transferred.” Because unanimous approval of all three licensees/owners was required for MMI to sell a patent, this indicated that MMI, not any individual licensee, owned the substantial rights of the patent. Id. (citations omitted).

“In conclusion,” Judge Robinson explained that while the licensees “have retained (or have been granted back) certain rights in the patents-in-suit, the court does not deem such rights ‘substantial’ vis a vis those held by MMI. There is no indication that . . . nonexclusive licensees of MMI holding no legal title to the patents-in-suit, have constitutional standing to sue.” Id. at 15. Accordingly, she found that MMI had standing to sue and denied the motion to dismiss.

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Posted On: September 5, 2012

Judge Sleet transfers case to Texas where first-filed declaratory judgment action pending

Judge Gregory M. Sleet recently considered defendant's motion to dismiss, or alternatively to transfer, the pending patent infringement action to Texas where defendant had first-filed a declaratory judgment action involving the same parties and same five patents. Mitek Systems Inc. v. United Services Automobile Association, C.A. No. 12-462 (D. Del. Aug. 30, 2012). Both actions involved various state law claims, such as, breach of contract. Id. at 2. Judge Sleet first determined that the first-filed rule applied, finding that the same patents were at issue in both actions and that the cases involved the same parties. Id. at 3. Even though both cases involve separate state law claims, "it [wa]s clear that the focus of each case [wa]s the intellectual property rights" related to the agreement between the parties. Id. at 4 (internal quotations omitted). Judge Sleet next determined that no exception to the first-filed doctrine applied, such as the forum selection clause of the license agreement at issue in the later-filed action. Id. Judge Sleet held that enforcing the forum selection clause "would violate Delaware's public policies promoting judicial efficiency and comity served by the first-filed rule." Id. at 5 (internal quotations omitted). Last, Judge Sleet determined that transfer was appropriate, finding that all but one Jumara factor was either neutral or favored transfer. Id. at 8-15.

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