Posted On: February 28, 2013

Judge Andrews excludes plaintiff’s damages expert but reserved judgment on defendant’s summary judgment motion of no damages

Judge Richard G. Andrews recently considered several motions filed by defendant Intel, including a Daubert motion to exclude plaintiff’s damages expert, a motion in limine to exclude damages testimony of an inventor of the patent in suit, and a motion for summary judgment of no damages. AVM Technologies, LLC v. Intel Corporation, C.A. No. 10-610-RGA (D. Del. Feb. 21, 2013). Judge Andrews granted Intel’s Daubert motion finding that the expert’s proposed testimony, “that a reasonable royalty can be established by one litigation settlement agreement involving a different patent” was not reliable. Id. at 1. Judge Andrews previously decided that the testimony should likely be excluded but wanted to hear testimony from the expert prior to issuing a decision. Id. at 2. After hearing testimony, Judge Andrews found that the expert’s opinion concerning reliance on one settlement agreement, was “not supported by any methodology that explain[ed] why [the agreement] by itself could be the basis for an accurate conclusion about the hypothetical negotiation over the [patent-in-suit]." Id. at 5. Judge Andrews further stated that, "[t]o say that one litigation settlement agreement relating to a different patent and executed five years after the hypothetical negotiation would have taken place . . . is the basis for an opinion is completely speculative without, at a minimum, some analysis of the litigation that led to the settlement.” Id.

Judge Andrews also granted-in-part Intel’s motion in limine to exclude damages testimony of an inventor of the patent-in-suit. Judge Andrews held that the witness could not “testify concerning damages beyond facts and information within his personal knowledge. Thus, [the witness] would not be permitted to testify about anything speculative or hypothetical, including what he would have done in hypothetical negotiations.” Id. at 3. The court excluded most of the witness’ proposed testimony finding that it was “untimely disclosed and [was] unreliable expert testimony.” Id. and 10-14.

The Court previously vacated the trial date in this case “because the Court understood that [plaintiff] did not want to proceed to trial without at least one of the evidentiary bases for a theory of damages in excess of $100,000,000. Id. at 14. However, “in view of Federal Circuit precedent,” the Court did not grant Intel’s summary judgment motion of no damages, but “held it in abeyance pending a further conference with counsel.” Id. at 14-15.

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Posted On: February 28, 2013

Judge Stark Construes Additional Claim Terms at Defendants’ Request

Judge Leonard Stark has issued a supplemental claim construction order in a patent infringement case filed by Enova Technology against various manufacturers of hard drives and related encryption technologies. See Enova Tech. Corp. v. Initio Corp., C.A. No. 10-04-LPS, Order (D. Del. Feb. 19, 2013). We previously reported on Judge Stark’s original claim construction order. Now with trial approaching, Judge Stark has considered the defendants’ request for additional construction, including construction of several broader claim terms that include within them narrower claim terms previously construed. After construing the terms in question, he cancelled the scheduled claim construction hearing and advised the parties that trial would begin in its place.

Judge Stark construed the following additional terms:
- “main controller”
- “a main controller receiving input from said at least one data stream interceptor and determining whether incoming data would be encrypted, decrypted or passed through based on the received input from said at least one data stream interceptor”
- “SATA protocol stack”

Judge Stark also found that the following additional terms did not require any construction:
- “data stream interceptor”
- “main controller”
- “data generating controller”
- “data storage controller”
- “cipher engine”
- “FIS (Fram Information Structure)”
- “cryptographic engine . . . for encrypting and decrypting at least a subset of data FISes (Frame Information Structures) communicated to or from the SATA protocol stack”
- “the main controller configured to cause . . . the SATA protocol stack to process a Register-Device to Host FIS [without decryption responsive to receiving the Register-Device to Host FIS from the interface of the device]”

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Posted On: February 27, 2013

Judge Andrews denies petition to compel discovery for use in foreign proceedings pursuant to 28 U.S.C. § 1782

Petitioner filed foreign claims in Germany and Luxembourg in January and April 2011, alleging that one of the respondents infringes European Patent No. 1-151-591. Judge Richard G. Andrews recently denied petitioner’s request to compel production of “source code and other core technical documents that underlie Respondents’ telecommunications service system” for use in those foreign patent infringement proceedings. Via Vadis Controlling GmbH v. Skype, Inc., et al., C.A. No. 12-mc-193-RGA, at 1, 5 (D. Del. Feb. 21, 2013).

Judge Andrews found that the Court possessed authority pursuant to 28 U.S.C. § 1782(a) to compel discovery, but nevertheless concluded that “it should not exercise its discretion to grant the petition.” Id. at 3. In denying the petition, Judge Andrews relied on the factors set forth in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004), which inform a district court’s discretion when determining whether to compel production of information for use in a foreign proceeding pursuant to § 1782. See id. at 2-4. First, Judge Andrews noted that “‘when the person from whom discovery is sought is a participant in the foreign proceeding . . . the need for § 1782(a) aid generally is not as apparent as it ordinarily is when evidence is sought from a nonparticipant in the matter arising abroad.’” Id. at 3 (quoting Intel, 542 U.S. at 244). Because at least one respondent was a defendant in the foreign proceedings, this Intel factor weighed against compelling discovery. Id. Weighing further against compelling discovery, Judge Andrews found that “[d]espite their jurisdiction over SkypeS, the foreign courts have not forced SkypeS to produce the requested materials,” and thus granting the petition “would be, in essence, a circumvention of the foreign courts’ rules and enforcement procedures.” Id. at 4. Moreover, Judge Andrews concluded that producing the source code would “intrude on the protective order from . . . prior litigation,” which “specifically prohibits [the respondents’] disclosure of the source code in the proceedings in Germany and Luxembourg.” Id. The only Intel factor Judge Andrews found to weigh in favor of compelling discovery was that “the German court would likely consider the § 1782 materials.” Id. at 2-3. Accordingly, Judge Andrews found that “the overall balance of all the factors” weighed in favor of denying the petition to compel discovery. Id. at 5.

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Posted On: February 26, 2013

Managing IP's U.S. Patent Forum, March 19, 2013 in Washington D.C.

Dear Colleague,

Managing IP, in association with Delaware IP Law Blog, invites you to attend the second annual US Patent Forum March 19, 2013 at the Willard InterContinental in Washington D.C. www.managingip.com/USPatentForum2013

Free for in-house patent counsel, academics and R&D professionals.

One year on from the AIA, we will assess the patent landscape in the United States and look at strategies to achieve maximum value from your patent portfolio.

On the agenda:

• Two keynote addresses by USPTO’s Teresa Stanek Rea and WIPO’s James Pooley
• AIA and NPEs: one year on
• Lessons from Canadian reforms
• Monetization of patents: strategies for deriving maximum value from your patent portfolio
• Life sciences & ITC industries focus
• Doing business in China: how to ensure your patented assets in China are making you money

Speakers:

• James Pooley, deputy director general for innovation and technology, World Intellectual Property Organization
• Teresa Stanek Rea, acting director general, United States Patent & Trademark Office
• Jim Crowne, director of legal affairs, AIPLA
• Paul R Michel, Chief Circuit Judge (retired)
• Vanessa Bailey, IPR litigation, Nokia Siemens Networks
• Richard Rainey, executive counsel and IP litigation, GE
• David L Marcus, VP, deputy general counsel, Comcast Cable Communications
• Joseph G Contrera, patent counsel, Johns Hopkins Technology Transfer
• Andrew Hirsch, general counsel, Fuelcor
• Heather Boussios, senior intellectual property counsel, Emergent BioSolutions
• Henry Hadad, VP, deputy general counsel, IP, Bristol-Myers Squibb Company
• Vaishali Udupa, IP litigation counsel, Hewlett-Packard
• Camille-Remy Bogliolo, lawyer, international legal affairs, European Patent Office
• Raymond Niro, senior partner, Niro Haller & Niro
• Sherry Knowles, principal, Knowles Intellectual Property Strategies

For more details, visit http://www.managingip.com/stub.aspx?stubid=20311

Testimonials:

"Excellent overviews of AIA from those who wrote it, those who will implement it, and those who must live with it" - Graham Douglas, IDDEX (2012)

"Assessments and points of view you won't find any place else" - Jim Farmer, Georgetown University (2012)


You will network with:

Accuray Inc, Americas Bankers Association, Boeing Company, CIENA, Department of Homeland Security, Eldelman, El Cap Ventures, Eli Lilly & Company, Embassy of Canada, Emergent BioSolutions, Ex-Nokia, George Washington University, Google, IC2 Institute - University of Texas, Intel, Intellectual Property Owners Association, INVISTA, IPXI, JDSU Corporation, JLG Industries, Johns Hopkins Technology Transfer, Johns Hopkins University, Magna International, Nestle, Nokia Siemens Networks, Palo Alto Research Center, Panasonic, Personalized Media Communications, Privaris, Sharp, Siemens Enterprise Communications, Supernus Pharmaceuticals, Tredegar Corporation, USPTO, US International Trade Commission, US International Trade Commission, Widener Law School and many more.
________________________________________
EASY WAYS TO REGISTER:
Register online: http://www.euromoneysecure.com/orders/gen/start.asp?cIndex=1731
Email: mfabri@euromoneyplc.com
________________________________________

We look forward to meeting you on March 19.

Kind regards,

James Nurton
Managing editor
www.managingip.com

Pilar Kraman
Managing editor
www.delawareiplaw.com

Continue reading " Managing IP's U.S. Patent Forum, March 19, 2013 in Washington D.C. " »

Posted On: February 25, 2013

Judge Stark criticizes parties for failing to exercise common sense in connection with discovery dispute procedure.

Judge Leonard P. Stark recently issued rulings on a host of discovery disputes and, in the process, criticized the parties for abusing his discovery dispute procedure. Softview LLC v. Apple Inc., et al., Consol. C.A. No. 10-389-LPS (D. Del. Feb. 22, 2013). At issue were letters submitted by the parties in connection with the Court's scheduling of a late afternoon teleconference to resolve various discovery disputes. Specifically, the plaintiff “filed nine separate letters seeking assistance from the Court on more than twenty discovery disputes[,]” and the defendants “filed an additional nine separate letters seeking assistance from the Court on more than ten additional discovery disputes.” Id. at 2 (emphasis in original). All told, including the responsive letters that were filed, Judge Stark explained that the Court received and reviewed a “mass of filings” totaling “36 letters presenting argument on at least 30 discovery disputes.” Id. at 3 (emphasis in original). Judge Stark viewed the volume of material submitted as revealing “that the parties have failed to reasonably communicate with one another or to put forth the expected and required good faith efforts towards resolving discovery disputes.” Id. “[M]ore troubling” to Judge Stark was “that the parties have utterly failed to exercise common sense, inundating the Court with far more than could possibly be addressed during a teleconference that the parties understood (or should have understood) would last only 45 to 60 minutes.” Id.

Continue reading " Judge Stark criticizes parties for failing to exercise common sense in connection with discovery dispute procedure. " »

Posted On: February 23, 2013

Chief Judge Sleet finds plaintiff in contempt and orders payment of defendant’s attorney fees

Chief Judge Sleet recently issued an Order of Judgment in which he found that plaintiff was in contempt of court for failing to comply with the Court’s September 2010 Amended Order (D.I. 31). Huntley, L.L.C. v. Monteray Mushrooms Inc., C.A. No. 08-377-GMS (D. Del. Feb. 14, 2013) (“Order of Judgment”). There the Court ordered plaintiff to pay $27,831.63 in attorney’s fees. For background, see here for the Court’s 2009 memorandum granting defendant’s motion to dismiss.

In May 2012, defendant filed a Motion for Contempt, alleging that plaintiff was in violation of the Court’s 2010 order because it had not made payments toward the balance owed, even though the parties had negotiated a payment plan. (D.I. 35). Defendant requested sanctions in addition to the fees it was due. Id. The Court ordered payment of the $27,831.63 in attorney’s fees. Order of Judgment at 1.

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Posted On: February 21, 2013

Magistrate Judge Burke recommends denial of defendant’s 12(b)(6) motion as to allegations of direct infringement, grant of motion as to allegations of indirect infringement

Magistrate Judge Burke recently issued a Report, recommending that defendant’s motion to dismiss plaintiff’s complaint as to direct infringement be denied but that the motion to dismiss plaintiff’s complaint as to indirect infringement be granted. Pragmatus AV, LLC v. TangoMe, Inc., C.A. No. 11-1092-LPS-CJB (D. Del. Feb. 13, 2013). Judge Burke previously made the same recommendation, and applied substantially similar analysis, in Pragmatus AV, LLC v. Yahoo! Inc., C.A. No. 11-902-LPS-CJB (D. Del. Nov. 13, 2012) (Yahoo), discussed here. This was a related case in which the patents-in-suit included the three at issue in this decision, and the plaintiff made similar allegations in that case as well.

As in Yahoo, plaintiff did not plead joint infringement and the primary question as to direct infringement was whether plaintiff’s allegations could only implicate a theory of joint infringement, and thus should be dismissed. See id. at 8. Here Judge Burke similarly concluded that “Defendant’s arguments as to dismissal [were] premature” because “the challenged claims do not so clearly and explicitly require the work of joint infringers so as to warrant dismissal.” Id. at 19, 14.

As to induced infringement, “Plaintiff assert[ed] that [defendant] ha[d] notice and knowledge of its infringement via a notice letter sent by [Plaintiff].” Id. at 22 (internal citations and quotation marks omitted). Unlike in Yahoo, “this allegation [did] indicate when that notice was provided,” but it still “[did] not allege any facts regarding the substance of that notice.” Id. at 23. Therefore, “[t]he Court [was] left to speculate as to what it was about that notice that could have plausibly provided [defendant] with the requisite knowledge of its users’ infringement.” Id. The allegations regarding the notice also provided the Court with "no basis to infer that Defendant, after receiving the notice, could have specifically intended for its users to continue infringing the patents. The law requires more.” Id. at 24. Finally, as in Yahoo, Judge Burke found that “the mere allegation that [defendant’s products] may be used to infringe is not sufficient to allow a reasonable inference that, inter alia, these services and products have no substantial noninfringing uses." Id. at 26-27. Judge Burke therefore recommended that plaintiff’s complaint as to both induced and contributory infringement be dismissed. Id. at 27.

Continue reading " Magistrate Judge Burke recommends denial of defendant’s 12(b)(6) motion as to allegations of direct infringement, grant of motion as to allegations of indirect infringement " »

Posted On: February 18, 2013

Judge Sleet denies motion to transfer venue to North Carolina

Judge Sleet recently denied defendant Cree, Inc.'s motion to transfer venue of plaintiff E. Fred Schubert's action to the Middle District of North Carolina. Schubert v. Cree Inc., C.A. No. 12-922-GMS (D. Del. Feb. 14, 2013). Schubert, a resident of New York, filed this action against Cree, a resident of North Carolina, along with two other actions alleging infringement of U.S. Patent No. 6,294,475. Judge Sleet determined that the Jumara factors weighed against transfer. Because Delaware was not Schubert's "home forum," Judge Sleet noted that Schubert's forum selection was not "deserving of 'paramount' consideration." Id. at 5. But, Schubert's forum choice was entitled to "some degree of heightened deference given its underlying rational and legitimate basis -- namely, the desire to litigate in a district approximately halfway between the parties and in which Schubert intends to litigate two related cases." Id. The court determined that defendants's forum preference, where the claim arose and the location of books and records weighed in favor of transfer, but all other factors were either inapplicable or weighed against transfer. Id. at 5-10. Regarding the convenience of the parties, Judge Sleet noted the financial disparity between the parties and concluded that Cree had "far deeper pockets" and was better able to "bear any increased costs." Id. at 6-7. Also, the "practical considerations," factor weighed strongly against transfer considering that two related cases were currently pending in Delaware. Id. at 8-9.

Continue reading " Judge Sleet denies motion to transfer venue to North Carolina " »

Posted On: February 18, 2013

Judge Sleet denies 12(b)(6) motion finding that the Court's prior construction of claims of the patent-in-suit did not result in issue preclusion

Chief Judge Gregory M. Sleet recently considered defendants' motion to dismiss in which the defendants argued that in light of the Court's prior construction of certain claims of the patent-in-suit, defendants' ANDA product could not infringe. Endo Pharms. Inc. v. TWI Pharms., Inc., C.A. No. 12-848-GMS (D. Del. Feb. 11, 2013). Judge Sleet denied the motion determining that, at this early stage of the case, the court could not find plaintiffs' claims "without merit or facially implausible." Id. at 2 n.1. Citing Third Circuit precedent on the issue of collateral estoppel, Judge Sleet noted that it was not clear that the Court would be bound by the prior claim construction when the parties reached a settlement before the court issued a decision. Id. at 2 n.1 (citing Russo v. City of Phila., 459 F. App'x 176, 178-79 (3d Cir. 2012) (outling the four elements of issue preclusion)). The court also determined that even if the court adopted its prior claim construction ruling, "the ANDA product could infringe the [patent-in-suit] under the doctrine of equivalents]; and because the claim limitation at issue was preceed by "consisting essentional of," the possibility existed that the ANDA product "could contain more than one of the Markush group members." Id.

Continue reading " Judge Sleet denies 12(b)(6) motion finding that the Court's prior construction of claims of the patent-in-suit did not result in issue preclusion " »

Posted On: February 18, 2013

Judge Robinson Denies Motion to Transfer to the Northern District of Texas

In a recent memorandum opinion, Judge Sue Robinson denied a patent infringement defendant’s motion to transfer venue to the Northern District of Texas. Plaintiff Cradle IP was incorporated in Delaware and headquartered in California, while Defendant Texas Instruments was incorporated in Delaware and headquartered in Texas. See Cradle IP, LLC v. Texas Instruments, Inc., C.A. No. 11-1254-SLR, Memo. Op. at 1-2 (D. Del. Feb. 13, 2013).

Referring to her opinion on a similar motion in Helicos Biosciences Corp. v. Illumina, Inc., 858 F. Supp. 2d 367 (D. Del. 2012) (discussed here), Judge Robinson began with “the premise that a defendant’s state of incorporation has always been ‘a predictable, legitimate venue for bringing suit’ and that ‘a plaintiff, as the injured party, generally ha[s] been ‘accorded [the] privilege of bringing an action where he chooses.’’” Cradle IP, LLC v. Texas Instruments, Inc., Memo. Op. at 2. At the same time, Judge Robinson recognized that “the Federal Circuit expects an analysis of all the Jumara factors in connections with any transfer decision,” and proceeded to address each factor in turn. Id. at 3.

Judge Robinson found that the only factor favoring transfer was the “practical considerations that could make the trial easy, expeditious, or inexpensive,” because “trial in the Northern District of Texas would be easier and less expensive for [Texas Instruments, but it] is not evident that trial in Delaware would be easier and less expensive for Cradle IP.” Id. at 8. Every other factor either weighed against transfer or was neutral (the remaining factors were: choice of forum, where the claims arise, the parties’ relative size, convenience of the witnesses, location of books and records, relative administrative difficulty, local interest in deciding local controversies, enforceability of a judgment, public policies of the fora, and the familiarity of the judge with state law). Ultimately, she found, Texas Instruments did not meet its burden of showing that Cradle IP’s choice of forum should be disturbed. Id. at 5-9.

Perhaps most significantly, Judge Robinson declined Texas Instruments’ invitation to “‘accord[] little weight [to the plaintiff’s choice of venue] because [Cradle IP’s] recent incorporation in Delaware is an article of litigation’ and . . . ‘simply a litigation vehicle for [Cradle IP’s parent corporation], designed to give it an anchor, however tenuous, to this District.’” Id. at 4. Judge Robinson explained: “many businesses and academic institutions enforce their patent rights through private companies (like Cradle IP); such a business strategy is not nefarious. The court declines to treat such non-practicing entities as anything less than holders of constitutionally protected property rights, those rights having been legitimized by the Patent & Trademark Office.” Id.

Continue reading " Judge Robinson Denies Motion to Transfer to the Northern District of Texas " »

Posted On: February 18, 2013

Judge Robinson denies defendant’s motion for leave to amend its pleading with inequitable conduct affirmative defense and counterclaim

Judge Sue L. Robinson recently denied defendant’s motion “seeking to amend its answer and counterclaims to include an affirmative defense and counterclaim of inequitable conduct.” Butamax™ Advanced Biofuels LLC v. Gevo, Inc., C.A. No. 11-54-SLR, at 2 (D. Del. Feb. 13, 2013). Because defendant filed its motion three months after the scheduling order’s deadline to amend the pleadings, defendant was required to show “good cause under Rule 16(b) for its delay.” Id. at 4. Judge Robinson found that defendant had shown good cause, as the information relevant to its inequitable conduct defense and counterclaim was not produced until March 29, 2012—one day before the deadline to amend the pleadings—and defendant was required to sift through the large volume of documents produced to confirm with “particularity” its inequitable conduct theory. Id. at 5-6. Judge Robinson further found that plaintiff would not be prejudiced by this amendment, as “[i]nformation regarding its own inequitable conduct lies largely with plaintiff.” Id. at 6.

Despite these findings, Judge Robinson ultimately concluded that defendant failed to plead inequitable conduct with sufficient particularity and defendant’s amendment was therefore futile. Id. at 7-9. When pleading inequitable conduct, as Judge Robinson explained, the heightened pleading standard of Fed. R. Civ. P. 9(b) applies, which requires a party to identify “the specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO.” Id. at 4 (quoting Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1327 (Fed. Cir. 2009)). This standard requires the “knowledge” and the “intent to deceive” elements of inequitable conduct to be attributed to a specific individual. See id. at 7-8. Judge Robinson found that the “relationship between the general knowledge allegedly depicted on internal presentation slides” upon which defendant intended to rely “and the named individuals is too tenuous to show ownership of the knowledge or attribute a specific intent to deceive.” Id. at 9. That the named individuals did not withhold this general knowledge was corroborated by “the availability of such general knowledge in other publications, at least one of which was cited in the patent specifications.” Id. Accordingly, defendant’s motion for leave to amend its pleading was denied. Id.

Continue reading " Judge Robinson denies defendant’s motion for leave to amend its pleading with inequitable conduct affirmative defense and counterclaim " »

Posted On: February 18, 2013

Chief Judge Sleet denies motion to transfer to the District of Massachusetts.

Chief Judge Gregory M. Sleet recently denied a motion to transfer a case to the District of Massachusetts, where one defendant maintained its headquarters and records, based on an analysis of the Third Circuit's Jumara factors. Schubert v. Osram AG, et al., C.A. No. 12-923-GMS (D. Del. Feb. 14, 2013). In the process, the Court explained that it was less than clear that transfer would be statutorily permitted even if the Jumara factors weighed heavily in favor of transfer. Id. at 3. As Judge Sleet explained, a case may be transferred to “any other district or division where it might have been brought.” Id. at 3 (quoting 28 U.S.C. § 1404(a)). In this case, it was unclear to the Court whether the plaintiff could have brought his case in the District of Massachusetts, since two of the defendants were German entities with no evident operations in Massachusetts. Id. The defendants argued that the District of Massachusetts would have been an appropriate forum because “all defendants consent to jurisdiction in Massachusetts,” but the Court rejected that argument, explaining “the fact that all of the defendants here consent to jurisdiction in Massachusetts is irrelevant” because “the personal jurisdiction requirement cannot be satisfied by a hypothetical waiver.” Id. at 4 (quoting Guzzetti v. Citrix Online Holdings GmbH, No. 12-01152-GMS, 2013 WL 124127, at *3 n.2 (D. Del. Jan. 3, 2012)). Although it was unclear to the Court whether it could transfer the case to the District of Massachusetts under § 1404(a), the Court did not resolve that issue because it found that the Jumara factors weighed against a transfer anyway. Id. at 5.

With regard to the Jumara factors, Judge Sleet explained that the issue was a close one, but that the defendants failed to carry their “burden to demonstrate that the balance of convenience strongly favors transfer” even though, the Court acknowledged, “Massachusetts may well present a more convenient venue for this litigation . . . .” Id. at 14 (emphasis in original). The Court rejected the argument that the plaintiff’s choice of forum was entitled to little weight because he was not a Delaware resident, explaining that because he had rational and legitimate reasons to choose Delaware, his choice still "is given significant weight in the convenience analysis.” Id. at 7. Further, while accepting that the defendants (two of which were Delaware corporations) preferred litigating in the District of Massacusetts, the Court explained that they faced an “uphill battle in contending that Delaware represents an inconvenient forum” because “the court has recognized that a defendant incorporated in Delaware should generally not be heard to argue that litigating in this district is inconvenient.” Id. at 9. The Court also believed that the existence of related, co-pending lawsuits in Delaware weighed against transfer, explaining that “[t]he time invested by the court in a case is one . . . [public interest factor], and [plaintiff] rightly notes that keeping this action in Delaware, along with the two related cases, will likely allow the court to develop some degree of familiarity with the ‘475 Patent, the underlying technology, and the relevant industry[,]” which weighs against transferring the case. Id. at 12.

Continue reading " Chief Judge Sleet denies motion to transfer to the District of Massachusetts. " »

Posted On: February 15, 2013

Judge Burke holds plaintiff’s patent invalid as obvious, but denies defendant’s inequitable conduct claim in ANDA litigation

In September 2010, plaintiff Bristol-Myers Squibb Company (“BMS”) commenced this ANDA litigation against defendant Teva Pharmaceuticals in response to Teva’s filing of Abbreviated New Drug Application No. 202122, which sought “approval to market a generic version of Baraclude.” BMS markets Baraclude to treat adults with certain types of “chronic hepatitis B virus infections.” The Orange Book lists U.S. Patent No. 5,206,244 (the “'244 Patent”) “in connection with BMS’s Baraclude Product,” and BMS sought to enforce claim 8 of that patent, which “covers the chemical compound entecavir.” However, in a recent post-trial opinion, Magistrate Judge Christopher J. Burke held that claim 8 of the '244 Patent is invalid as obvious under 35 U.S.C. § 103. Bristol-Myers Squibb Company v. Teva Pharmaceuticals USA, Inc., C.A. No. 10-805-CJB, at 1-4 (D. Del. Feb. 11, 2013).

In reaching his obviousness determination, Judge Burke first relied on a two-prong test specific to chemical compounds and found that Teva met its burden in proving a prima facie case of obviousness. See id. at 88, 131. Addressing the test’s first prong, Judge Burke concluded that Teva proved by clear and convincing evidence that a “chemist” of ordinary skill in the art would have selected 2'-CDG—a compound similar to entecavir—as a “lead compound” at the alleged time of invention. Id. at 112. Judge Burke explained that a “lead compound” is a prior art compound that “would be most promising to modify in order to improve upon [that compound’s activity] and obtain a compound with better activity.” Id. at 91 (quoting Takeda Chem. Indus., Ltd. v. Alphapharm Pty., Ltd., 492 F.3d 1350, 1357 (Fed. Cir. 2007)) (internal quotation marks omitted). Judge Burke’s conclusion that a chemist of ordinary skill in the art would have chosen 2'-CDG as a lead compound was supported by the following findings: (1) By the late 1980s, carbocyclic analogs, a class of compounds to which 2'-CDG belongs, had “generated excitement” among researchers, including researchers from BMS; (2) 2'-CDG and entecavir were structurally similar; (3) 2'-CDG had demonstrated “positive attributes,” including high potency and good activity in certain applications; (4) Researchers during the relevant time period “were actually treating and using 2'-CDG as a lead compound.” See id. at 94-112.

Turning to the second prong of the prima facie obviousness test, Judge Burke concluded that Teva demonstrated by clear and convincing evidence that the “ordinary medicinal chemist, having selected 2'-CDG as a lead compound, would have had reason to and been motivated” to alter 2'-CDG to create entecavir, and that chemist would have “reasonably expect[ed] to be successful in synthesizing [that] new compound.” Id. at 126, 131. Addressing the “reason” or “motivation” to create entecavir, Judge Burke explained that the chemist of ordinary skill in the art would have been motivated to make “small, conservative changes” to the “2 prime or 5 prime positions” of 2'-CDG, and one of the most conservative changes would have been the “addition of a carbon.” Id. at 119. Such changes were reflected in entecavir’s structure, which was essentially 2'-CDG with a “carbon” added to the “5 prime position.” See id. at 98. With respect to the “reasonable expectation of success,” Judge Burke found the structural similarity between 2'-CDG and entecavir significant, as it is “well-settled that structurally similar compounds ‘often have similar properties.’” Id. at 127 (quoting Takeda, 492 F.3d at 1356). Judge Burke also cited expert testimony that explained that all the “tools” necessary to synthesize entecavir were “in the literature.” Id. at 130.

After concluding that Teva established a prima facie case of obviousness, Judge Burke considered “objective indicia of nonobviousness.” Id. at 131. The evidence with respect to objective considerations, as Judge Burke explained, “was mixed.” Id. at 152-53. However, as Judge Burke’s decision reflects, secondary objective indicia of nonobviousness do not necessarily control the obviousness conclusion. See id. Judge Burke ultimately concluded that “in light of the significant force of Teva’s prima facie case” in addition to the fact that the “PTO was not able to consider certain material prior art references regarding 2'-CDG during prosecution of the patent,” Teva had “demonstrated by clear and convincing evidence that claim 8 of the '244 Patent is invalid as obvious under Section 103.” Id. at 153.

Teva also claimed inequitable conduct, arguing that a named inventor on the '244 Patent and two prosecuting attorneys intentionally failed to disclose 2'-CDG to the PTO despite their awareness of the similarity between entecavir and 2'-CDG. Id. at 155. Judge Burke held, however, that Teva failed to demonstrate this claim by clear and convincing evidence. Id. at 171. Judge Burke explained that it was “reasonable, if not more reasonable, to infer that these men had made a determination that the most important feature of entecavir was the addition of an exocyclic methylene group . . . and that because they were focused on that feature, they went on to cite prior art to the PTO that referred to compounds containing that type of substitution.” Id. at 170. Judge Burke further explained that with regard to at least the two prosecuting attorneys, it was “just as reasonable, if not more reasonable, to infer that another reason why they did not cite these references was because the references had not been brought to their attention by the inventors, and these men would have had little reason to have identified the prior art as relevant on their own.” Id.

Continue reading " Judge Burke holds plaintiff’s patent invalid as obvious, but denies defendant’s inequitable conduct claim in ANDA litigation " »

Posted On: February 15, 2013

Judge Robinson issues protective order covering documents exchanged with plaintiff’s patent monetization consultant; orders defendant to produce paper copies of improperly redacted documents containing source code.

In a recent memorandum order, Judge Sue L. Robinson found that a plaintiff’s communications with its patent monetization consultant were properly withheld as privileged or work product protected. Walker Digital, LLC v. Google, Inc., Civ. No. 11-309-SLR (D. Del. Feb. 12, 2013). Although the patent monetization consultant clearly “was not retained to provide legal services[,]” id. at 2 n.3, the Court explained that, based on a review of an advisory services agreement and a common interest agreement, “Walker Digital and IPNav do share a common legal interest and, therefore, any Walker Digital communications protected by the attorney-client privilege or work product doctrine do not lose that protection simply because they have been disclosed to IPNav.” Id. at 2.

The Court also granted in part the plaintiff’s motion to compel the production of paper versions of materials previously produced in redacted form. The Court denied the motion to the extent it related to documents with redactions labeled “Redacted – Source Code”, finding that such redactions at least put the plaintiff on notice that the unredacted information could be accessed on the source code computer. Id. at 1 n.1. However, with respect to documents produced with unlabeled redactions, the Court explained that “Google was not justified in simply redacting the information without offering an alternative means of reviewing it. Although Google has now made the unredacted versions available on the source code computer, this effort is too little, too late, for these documents.” As a result, the Court ordered Google to produce paper versions of these documents with source code unredacted. Id. at 2.

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Posted On: February 13, 2013

Judge Sleet holds defendant’s motion to dismiss in abeyance pending supplemental briefing and jurisdictional discovery

Chief Judge Gregory M. Sleet recently considered defendant’s motion to dismiss in Devicor Medical Products, Inc. v. Biopsy Sciences, LLC, C.A. No 10-1060-GMS (D. Del. Feb. 7, 2013). Defendant moved to dismiss for lack of personal jurisdiction or improper venue “or, in the alternative, [to] transfer under 28 U.S.C. §§ 1404(a) or 1406(a).” Id. at 2. Defendant also contended that plaintiff’s “false marking claims should be dismissed for failure to meet the heightened pleading requirements of Rule 9(b).” Id. Plaintiff filed an alternative motion for jurisdictional discovery. Id. The Court held defendant’s motion in abeyance pending supplemental briefing, and it granted plaintiff’s motion for jurisdictional discovery. Id. at 12.

As to personal jurisdiction, the Court concluded that Delaware’s long-arm statute could be satisfied based on plaintiff’s allegations. “[V]isitors to [defendant’s] Internet homepage were able to click a link [to purchase defendant’s product] . . . and then select ‘United States’ and ‘Delaware’ from separate drop-down menus. After making these selections, the website would provide the visitor with information for [an alleged] Delaware-specific distributor . . . which was located in New Jersey. . . . [Defendant noted] that it [was] not aware of any of its products being marketed, distributed, or sold in Delaware.” Id. at 3 (internal citations and quotation marks omitted). The Court concluded that defendant “might have at least induced infringement in Delaware . . . through its website’s reference to [the distributor],” thereby satisfying Delaware’s long-arm statute, which states that it has personal jurisdiction over a nonresident that “causes tortious injury in the State by an act or omission in this State.” Id. at 9-10.

Turning to the constitutional due process element of personal jurisdiction, the Court explained that the law of the Federal Circuit applied because “the jurisdictional issue is intimately involved with the substance of the patent laws.” Id. at 3 n.3 (internal citations and quotation marks omitted). But “both parties briefed this issue under Third Circuit law. As such, the court will order supplemental briefing [on this issue under Federal Circuit law] as well as limited jurisdictional discovery relating to this point.” Id. at 10-11. It explained that “[i]n the absence of further briefing on the Federal Circuit’s personal jurisdiction standard . . . it is difficult for the court to determine precisely what discoverable facts might be important. The court believes, however, that evidence of sales to Delaware customers is likely to be relevant to this inquiry and will therefore permit discovery on this and related jurisdictional issues.” Id. at 11 n.10.

Because the issue of personal jurisdiction had yet to be resolved, the Court did not reach the issues of improper venue, transfer, or Rule 9(b) pleading sufficiency. Id. at 11-12.

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Posted On: February 12, 2013

Magistrate Judge Thynge recommends denial of motion to dismiss which effectively sought early claim construction.

Magistrate Judge Mary Pat Thynge recently issued a report recommending the denial of Amazon.com’s and its subsidiaries’ motions to dismiss claims relating to mobile applications used to read barcodes. Hand Held Prods., Inc. v. Amazon.com, Inc., et al., C.A. No. 12-768-RGA-MPT (D. Del. Feb. 6, 2012). The defendants moved to dismiss the claims as falling short of the requirements imposed by Form 18, as well as the Twombly/Iqbal plausibility standard, id. at 3-4, and further argued that because their applications do not “selectively capture” barcodes, and instead only “capture and decode barcode information,” they could not be found liable for indirect infringement. Id. at 2.

After quickly disposing of the defendants’ argument that the direct infringement claims were insufficient, id. at 9-11, the Court explained that the complaint stated a plausible claim that each defendant also induced infringement based on their encouragement of customers to download and use infringing barcode-reading applications. Id. at 11-14. The Court added that the complaint stated a plausible claim of contributory infringement by alleging that each defendant “sells or offer to sell a mobile application that is a material part of the ‘088 patent[,]”which, assuming the truth of all well-pled allegations, has no substantial noninfringing use. Id. at 14-15.

Finally, the Court recommended the denial of the defendants’ motion to dismiss the plaintiff’s willfulness claim, finding that “[s]ufficient facts are alleged to infer Defendants knew there was an objectively high likelihood that their continued actions would constitute infringement.” Id. at 16.

In conclusion, the Court emphasized that the defendants’ motion to dismiss appeared, in reality, to be an attempt to “surreptitiously have the court conduct claim construction as part of its analysis under Rule 12(b)(6).” Id. at 16-17. The Court would not do this, of course, and explained that “[t]he analysis required is not to resolve disputed facts, nor decide the merits; rather, the examination is limited to testing the sufficiency of the complaint.” Id. at 17.

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Posted On: February 12, 2013

Judge Robinson dismisses invalidity counterclaims for failing to comply with Twombly and Iqbal and inequitable counterclaims for failing to meet the Exergen standard

Judge Sue L. Robinson recently granted-in-part Senju’s motion for partial dismissal of Apotex’s counterclaims and to strike certain affirmative defenses. Senju Pharm. Co., Ltd. v. Apotex, Inc., C.A. No. 12-159-SLR (D. Del. Feb. 6, 2013). Senju moved to dismiss Apotex's invalidity counterclaims arguing that that they were deficient because they did not recite factual support and were therefore not in compliance with Fed. R. Civ. P. 8. Id. at 6. In response, Apotex argued that “its invalidity defense is not subject to the heightened pleading standard of Twombly and Iqbal; complies with with Fed. R. Civ. P. Form 18; is pled with same level of detail as Senju’s infringement complaint; and will become more detailed as the lawsuit progresses.” Id. at 6-7. Granting Senju’s motion, Judge Robinson noted that the courts that have declined to apply Twombly and Iqbal to invalidity counterclaims have reasoned that doing so would render those court’s local patent rules “superfluous” and would be inequitable to defendants because it would impose a higher pleading burden than Form 18 requires for plaintiffs. Id. at 7. Judge Robinson found this reasoning unpersuasive, however, because the District of Delaware has not adopted local patent rules. Id. at 8. Furthermore, “Form 18 still requires that some factual underpinning be presented, [and] the fact that Form 18 . . . remains the standard for pleading infringement claims is an insufficient justification for deviating from Twombly and Iqbal for pleading other causes of action. Id. Judge Robinson did not, however, strike Apotex’s invalidity affirmative defenses because they provided fair notice as required by Fed. R. Civ. P. 8(c). “Due to the differences between Rules 8(a) and 8(c) in text and purpose, [] Twombly and Iqbal do not apply to affirmative defenses, which need not be plausible to survive.” Id. at 9-10 (citing Internet Media Corp. v. Hearst Newspapers, LLC, Civ. No. 10-690, 2012 WL 3867165, at *3 (D. Del. Sept. 6, 2012) (internal quotations omitted) (alteration in original).

Judge Robinson also dismissed Apotex’s inequitable conduct counterclaims and related affirmative defenses, with leave to amend, for failing to adequately plead those claims with the particularity required by Exergen and Therasense. Id. at 14-15. Under Exergen, Apotex was required to plead “the specific who, what when, where and how of the material misrepresentation or omission committed before the PTO.” Id. Judge Robinson found that Apotex adequately pled the “how” (“misleading the PTO regarding evidence of obviousness, secondary considerations, and the scope of the patent’s written description) and the “where” (“materials omitted in submissions to the PTO and teachings of the written description”). Id. at 15. Although Judge Robinson found that the “given the volume of materials” submitted during reexamination, the withheld documents were withheld with knowledge and intent to deceive the PTO, Apotex did not adequately plead “who” deceived the PTO. Id. at 15-16. Judge Robinson determined that Apotex’s allegations of “who” were akin to the language found to be deficient in Exergen, i.e., “Exergen, its agents and/or attorneys.” Id. at 16. Apotex’s reference to “general entities” and “the inventors” in its claims would not permit the court “to reasonably infer that any specific individual both knew of the invalidating information and had a specific intent to deceive the PTO.” Id. at 16-17. See also XpertUniverse, Inc. v. Cisco Sys., Inc., 868 F. Supp. 2d 376, 379-83 (D. Del. 2012).

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Posted On: February 12, 2013

Judge Sleet grants defendants’ motion to stay litigation pending post-grant review and orders stay for defendants that did not join motion

On June 20, 2012, plaintiff Market-Alerts Pty. Ltd. filed six lawsuits, each alleging that multiple defendants infringe U.S. Patent No. 7,941,357, which “addresses a method of informing users of stock market events.” Defendants from the 12-780, 12-781, 12-782, and 12-783 actions moved the Court to stay litigation “pending post-grant review pursuant to § 18(b) of the AIA,” and Chief Judge Sleet granted that motion in a recent opinion. Market-Alerts Pty. Ltd. v. Bloomberg Finance L.P., et al., C.A. No. 12-780-GMS, at 4, 4 n.3, 18 (D. Del. Feb. 5, 2013). Judge Sleet also ordered that the two other related actions, 12-784 and 12-785, be stayed despite the fact that defendants from those actions did not join the motion to stay. Id. at 18.

Prior to filing the motion to stay, several defendants petitioned for post-grant review of plaintiff’s asserted patent under 35 U.S.C. § 321 and § 18 of the AIA, which provides authority “to reexamine the validity of covered business method patents (‘CBM review’).” Id. at 4-5. In his opinion, Judge Sleet relied on § 18(b), which sets forth the factors that the Court must consider when determining whether to stay litigation during the pendency of the post-grant review proceedings. Id. at 6. As Judge Sleet explained, the § 18(b) test “closely resembles” the test to assess a “motion to stay pending inter partes or ex parte reexamination.” Id. However, § 18(b) additionally considers “whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court.” Id. at 6 (quoting 35 U.S.C. § 18(b)(1)).

Judge Sleet found that, under § 18(b), staying the actions was appropriate because there was a reasonable chance that the petition would be granted and that one or more of the claims could be invalidated. See id. at 9-12. In addition, a stay was appropriate because the cases were in their “earliest possible stage.” Id. at 13. Judge Sleet did consider the fact that the CBM review was in its early stages, weighing against a stay, but Judge Sleet found that “the potential for excessive prejudice [was] reduced by the fact that the parties do not directly compete with each other, and there is no evidence of dilatory motive on the part of the defendants.” Id. at 16. In order to “reduce the burden of litigation on the parties and on the court” if the Court were to stay only 4 of the 6 related cases, Judge Sleet stayed all 6 related actions, as “an exercise of [the Court’s] discretion and in the interests of judicial and litigant economy.” Id. at 17.

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Posted On: February 10, 2013

Judge Burke Denies Defendant’s Motion to Bifurcate Liability From Damages and Willfulness

Magistrate Judge Christopher J. Burke recently denied defendant’s motion to “bifurcate the issue of liability for patent infringement from issues relating to damages and to whether any infringement was willful, such that damages and willfulness would be tried, if necessary, separate from and after the liability trial in the case.” SenoRx, Inc. v. Hologic Inc., C.A. No. 12-173-LPS-CJB, at 2 (D. Del. Jan. 30, 2013). Addressing the parties’ disagreement with regard to how common bifurcations are in patent cases, Judge Burke noted that “[t]he Court will approach an analysis of whether bifurcation is appropriate on a case-by-case basis, without resort to a general presumption.” Id. at 3.

Turning to whether bifurcation would prevent or cause “prejudice” to either party, Judge Burke found that defendant did not demonstrate that any prejudice it might face in producing sensitive documents to plaintiff, an alleged “hard-fought competitor[],” would outweigh “the harm [plaintiff] would face in seeing its case split in two.” Id. at 5-6.

Addressing the efficiency of bifurcation, Judge Burke found that defendant failed to demonstrate that “judicial resources would be best conserved by two separate trials.” Id. at 8. Defendant argued that “substantial overlap” would not exist between the evidence presented at the two trials. Id. at 6. Judge Burke, however, explained that “some real overlap” would be “inevitable,” as it would likely be “necessary to set out certain core testimony about the relevant products and industry in both the liability and damages trials.” Id. at 6-7. Furthermore, “at least some evidence regarding the commercial success of the products-at-issue, relevant to a determination of obviousness under 35 U.S.C. § 103, [would] overlap with evidence necessary to assess damages.” Id. at 7. Judge Burke further noted that “the evidentiary overlap regarding liability and willfulness issues” would be “[e]ven more significant.” Id. Defendant additionally argued that the outcome of the earlier, separate infringement suit could render the second suit unnecessary or facilitate a settlement. Id. Judge Burke, however, found that “these outcomes, while possible, are entirely speculative at this stage.” Id.

Next, Judge Burke considered “whether bifurcation would enhance juror comprehension” of the issues to be presented at trial, which would involve technologies addressing “medical device engineering, brachytherapy and radiation therapy.” Id. at 8. Judge Burke agreed with defendant that the suit’s “subject matter is complex” and would “pose a challenge for a jury.” Id. at 9. Judge Burke explained, however, that “patent cases often implicate difficult subject matter that may be unfamiliar to most jurors,” and “[t]he subject matter relating to the patents-in-suit [did] not strike the Court as significantly more complex than that confronted by juries in this District in many patent cases.” Id. Judge Burke further found that “other factors that might exacerbate the level of complexity involved in a patent case are not present.” Id. at 9-10. Specifically, the suit involved only two patents, only 20 claims were being asserted, the discovery produced to date had not been significant, and only one plaintiff and defendant were involved. Id. at 10.

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Posted On: February 7, 2013

Magistrate Judge Schneider grants in part, denies in part plaintiff’s request for defendant’s “settlement and licensing documents” for determination of royalty damages

Magistrate Judge Schneider of the District of New Jersey, sitting by designation, recently issued an order granting in part and denying in part plaintiff’s application for the production of documents related to defendant’s licensing agreements. Sciele Pharma, Inc., et al. v. Lupin, Ltd., et al., C.A. No. 09-37-RBK-JS (D. Del. Jan. 28, 2013) (redacted version). The patents-in-suit in this infringement action relate to the treatment of diabetes. Id. at 8. Plaintiff requested five categories of “‘settlement and licensing documents’” for the purpose of assessing royalty damages; the details of one of these categories were redacted from the order. Id. at 1-2.

The focus of the Court’s analysis was on whether the patents in the requested agreements were “comparable” to the patents-in-suit, a relevant factor in examining a reasonable royalty calculation. Id. at 2-3. The Court first concluded that differences between the patents involved in the redacted category and the patents-in-suit did not affect whether these agreements were discoverable, but instead “[went] to their weight and admissibility;” because discovery is “a broader standard than admissibility,” the Court ordered production of these agreements. Id. at 6-7. The Court also granted plaintiff’s request as to agreements concerning biguanides, which is “in the class of compounds that includes metformin, the active ingredient” in plaintiff’s patented drug. Id. at 7-8. Plaintiff had sufficiently demonstrated comparability because the scope of discovery, “including determining whether a requested agreement is comparable, is interpreted broadly.” Id. at 8.

The Court denied plaintiff’s requests for agreements “concerning the treatment of diabetes” and “[o]ther extended release pharmaceutical characteristics” because they were “overbroad” and plaintiff had not shown that they were comparable. Id. at 8-9. But “a combination of [these two] requests [was] sufficiently comparable to be discoverable. [Defendant] will be Ordered to produce licensing agreements for other drugs for the treatment of diabetes that also have extended release pharmaceutical characteristics.” Id. at 9.

Having determined that defendant should produce some license agreements, the Court then analyzed whether it must also produce “communications concerning or associated with these agreements including negotiations, forecasts and analysis,” noting that such documents are generally “less probative and more prejudicial than the licenses themselves.” Id. at 9-10 (internal quotation marks omitted). The Court ordered production of such documents related to the redacted category based on its “similar[ity] to the issues in this case,” but denied the request as to all other categories, noting that their “minimal relevancy is outweighed by the cost, burden, prejudice and distraction the documents will generate.” Id. at 10-11.

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Posted On: February 7, 2013

Judge Stark Considers Motions in Limine in Anticipation of Jury Trial and Bench Trial

Judge Leonard Stark recently considered several motions in limine in advance of an upcoming jury trial on patent infringement and bench trial on inequitable conduct. See Enova Tech. Corp. v. Initio Corp., C.A. No. 10-04-LPS, Order at 1-3 (D. Del. Jan. 31, 2013). Judge Stark first considered plaintiff’s motion to exclude evidence or argument regarding “foreign patent proceedings, disputes, prosecution, or enforcement involving [plaintiff’s] foreign patent rights.” He granted the motion with respect to the upcoming jury trial, finding that the evidence was irrelevant and prohibited by Rule 403, but denied the motion with respect to the bench trial on inequitable conduct. Id. at 1.

Judge Stark also denied the following motions:
- Plaintiff’s motion to exclude defendants’ expert testimony regarding “the value of [plaintiff’s] patented technology and the value and availability of non-infringing alternatives,” which he found to be an untimely Daubert motion to exclude relevant evidence. Id. at 1-2.
- Plaintiff’s motion to exclude evidence of licenses that were allegedly incomparable to a hypothetical license of the patents-in-suit. Id. at 2.
- Defendant’s motion to exclude any mention of a settlement between plaintiff and another defendant under Rules 408 and 403. Id.

Judge Stark granted the following motions:
- Plaintiff’s motion to “exclude testimony and argument inconsistent with the Court’s claim construction,” which all parties agreed should not be permitted. Id.
- Defendant’s motion to exclude evidence of pre-suit knowledge of the patents-in-suit, where such evidence was inadmissible hearsay and properly excludable under Rule 403. Id.
- Defendant’s motion to exclude evidence of lost sales or price erosion, where plaintiff was not seeking damages under either theory, and so long as defendant did not “open the door to such evidence.” Id. at 2-3.

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Posted On: February 7, 2013

Judge Andrews Grants in Part, Denies in Part Motion for Leave to File Amended and Supplemental Answer and Counterclaim

Judge Richard Andrews recently considered a motion for leave to file an amended and supplemental answer and counterclaim that would set out various invalidity, inequitable conduct, and other defenses and claims that the defendant wanted to add after obtaining discovery from the plaintiff. See Inventio AG v. Thyssenkrupp Elevator Ams. Corp., C.A. No. 08-874-RGA, Order at 1-2 (D. Del. Jan. 29, 2013). Judge Andrews granted the motion with respect to invalidity defenses that were previously pleaded with less specificity and failure to mark and best mode claims that could be raised without prejudice to further proceedings. With respect to inequitable conduct, however, Judge Andrews found the question to be somewhat more complicated and allowed some claims but denied others. Id.

Judge Andrews focused on the specificity with which a claim was alleged in the proposed amended and supplemental complaint. He found that inequitable conduct claims related to prior art “are the sort that are easily made, recycling the obviousness defenses as inequitable conduct defenses.” Id. at 2. Accordingly, he found that the defendant had not met its burden by claims such as accusations that the inventor “cited prior art to the PTO but did not separately cite the prior art contained within the cited prior art.” Id. Similarly, Judge Andrews denied one best mode claim because it did not make specific allegations but allowed another best mode claim that made “very specific allegations of what the inventor knew about the best mode . . . intent to deceive, materiality, and a reason why the inventor wanted to deceive the PTO.” Id.

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Posted On: February 5, 2013

Chief Judge Sleet stays case pending reexamination where related patent already rejected on reexamination and no direct competition between plaintiff and defendants demonstrated.

Chief Judge Gregory M. Sleet recently granted a motion to stay pending reexamination in a case involving a patent entitled “Fuel Composition for a Diesel Engine.” Neste Oil Oyj v. Dynamic Fuels, LLC, et al., C.A. No. 12-662-GMS (D. Del. Jan. 31, 2013). The Court’s balancing of the relevant factors was swayed by several considerations. First, the Court found unconvincing the plaintiff’s argument that, because the defendants are direct competitors, a stay of potentially several years would be unduly prejudicial because plaintiffs could lose market share and goodwill. The Court explained that the plaintiff offered no evidence that the defendants are in fact direct competitors in the relevant market, and that lack of evidence was consistent with the plaintiff’s decision not to move for preliminary injunctive relief. Id. at 5-6. Second, the PTO already had rejected all claims of a related patent on reexamination, and the PTO’s first office action relating to the patent-in-suit adopted the same grounds for rejection of all claims of the patent-in-suit. Id. at 9. The Court found that this weighed in favor of the conclusion that the reexamination of the patent-in-suit ultimately would simplify the issues in this case. Id. at 9-10. Finally, the case was in its earliest stages, and a scheduling order had yet to be entered. Id. at 10.

More specifically, the Court explained that where the parties are direct competitors, “there is a reasonable chance that delay in adjudicating the alleged infringement will have outsized consequences to the party asserting infringement has occurred, including the potential for loss of market share and an erosion of goodwill.” Id. at 4 (quoting SenoRx, Inc. v. Hologic, Inc., No. 12-173-LPS-CJB (D. Del. Jan. 11, 2013)) (previously discussed here). The Court found unconvincing, though, the plaintiff’s argument that the defendants are its direct competitors, and that it would therefore be unduly prejudiced by a stay, in part because the plaintiff chose not to move for a preliminary injunction when it filed suit. Id. at 5. The Court explained, “the defendants have correctly noted that the only proof of direct competition . . . offered by [plaintiff] is wholly unsupported attorney argument.” Id. (internal quotations omitted). That, combined with the facts that the plaintiff did not seek a preliminary injunction and the relevant market was comprised of a large number of firms, weighed in favor of a finding that the plaintiff would not be unduly prejudiced by a stay. Id. at 5-6.

The Court next explained that a stay pending reexamination likely would result in issue simplification because the PTO already rejected all claims of a related patent which shared the same specification as the patent-in-suit, and “the reasoning underlying the PTO’s cancellation” of the related patent “will also apply to the [patent-in-suit].” Id. at 9. This result, the Court explained, was made more likely by the PTO’s first office action, which “adopt[ed] . . . all four . . . proposed grounds for rejection and . . . reject[ed] . . . all twenty patent claims.” Id. As the Court explained, “the likelihood of claim cancellation . . . is at least distantly signaled by a preliminary PTO action.” Id. at 9 n.4.

Finally, the Court explained that two “undue prejudice” arguments frequently made by plaintiffs opposing stays pending reexamination were insignificant in the Court’s analysis in this case. Id. at 6 n.3. The Court was not significantly moved by concerns about “stale evidence, faded memories, unavailable witnesses, and lost documents” because the plaintiff provided the Court with no information about how a stay would actually threaten the availability of particular evidence or witnesses. Id. at 6. The Court also rejected the plaintiff’s argument that reexamination “represents an inadequate forum for [an] invalidity dispute.” Id.

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Posted On: February 4, 2013

Special Master Seitz recommends denying modification to protective order for 7 categories of information appropriately designated as “Highly Confidential,” but recommends that 24 categories were improperly designated and may be used in reexamination

Special Master Collins J. Seitz, Jr., recently issued a report that made recommendations with respect to whether defendants should be permitted to use information from the litigation at hand in an ex parte reexamination of plaintiff’s two asserted patents that defendants intend to initiate. Inventio AG v. ThyssenKrupp Elevator Ams. Corp. et al., C.A. No. 08-874-RGA (D. Del. Jan. 22, 2013). In the litigation, the Court entered a protective order, which permitted the parties to designate certain information as “Confidential” and other information as “Highly Confidential.” Id. at 2-4. In light of the intended reexamination, defendants filed a motion requesting that the Court “(1) declassify some or all of the information as non-confidential; or (2) modify the Protective Order so that some or all of the information can be submitted to the USPTO under seal in accordance with the procedures of Section 724.02 of the Manual for Patent Examining Procedure (‘MPEP’).” Id. at 2. Pursuant to this motion, the Court addressed 31 disputed categories of information, 30 of which were excerpts from “deposition transcripts of [plaintiff’s] 30(b)(6) witnesses,” and one which was a page that plaintiff argued came “from the prosecution file in the Singapore patent office.” Id.

Special Master Seitz recommended granting defendants’ motion to reclassify as non-confidential 24 of the categories of disputed information. Id. at 15. Despite plaintiff’s designation of this information as “Highly Confidential,” Special Master Seitz found that this information did not fall under any specific category of information permitted to be designated as “Highly Confidential” or “Confidential” pursuant to the Protective Order. Id. at 15. For example, in his analysis, Special Master Seitz frequently found that information from the deposition excerpts did not fall under the categories of “non-public technical information of [plaintiff],” “[n]on-public research,” or “non-public information about [plaintiff's] ‘internal studies, . . . testing and evaluations.’” See id. at 8-15. Moreover, none of the information fell under the “catch-all category” in Paragraph xviii, as plaintiff failed to demonstrate "with any specificity how it would be harmed by the disclosure of [the] information.” Id. at 15.

Special Master Seitz found that the 7 remaining categories of information were appropriately designated as “Highly Confidential,” but he was nevertheless required to address defendants’ alternative request to modify the protective order to use the protected information in the anticipated reexamination. See id. at 8-15. To determine whether to grant the modification, Special Master Seitz considered whether “good cause still exist[ed] for the order,” which in this instance required him to consider the “relevancy of [the disputed] information to the proposed ex parte reexamination.” See id. at 15-16. Special Master Seitz noted that if information submitted under seal is found “material to patentability” during the reexamination, it will be made available to the public. See id. at 5 (citing MPEP § 724.04(c)(D)). It was further explained that an ex parte reexamination is comprised of two distinct phases—the request phase and the substantive review phase. A third party may submit “admissions” of the patent owner during both the request and substantive review phases. See id. at 22 (citing MPEP § 2258(I)(F); 37 C.F.R. § 1.104(c)). Moreover, under the provisions of the newly-enacted AIA, a third party may also submit “statements” during the substantive review phase. See id. at 22 (citing 35 U.S.C. §§ 301, 302).

However, for a third party to submit an “admission,” it must found “in the [patent] file or in a court record.” Id. at 22. Similarly, to qualify as a “statement,” the information must at least “be filed by the patent owner in a proceeding before a Federal court or the [USPTO],” and the patent owner must have “[taken] a position on the scope of any claim of the patent.” Id. at 17 (citing 37 C.F.R. § 1.501(a)(2)). Special Master Seitz reasoned that the information at issue was not “in a court record” because it was not “filed with the court,” and thus the information would likely not qualify as an “admission.” Id. at 22. Similarly, the information at issue was not filed with the Court or USPTO, and the patent owner did not take a position regarding claim scope. Thus, the information would also likely not qualify as a “statement.” Id. Special Master Seitz therefore concluded that “the information at issue would likely not be considered by the USPTO if [defendants] submitted it as part of a request for an ex parte reexamination,” and thus defendants’ “stated need to submit [the] information to the USPTO should be given little weight.” Id. at 24. Moreover, “[e]ven in the unlikely event that this information is deemed material by the USPTO, the importance of this information to the reexamination . . . [would] not outweigh the harm to [plaintiff] caused by public disclosure.” Id. at 26. Special Master Seitz thus recommended that “good cause” still existed for the protective order with regard to the 7 remaining categories of disputed information. See id. at 25-26.

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Posted On: February 3, 2013

Judge Sleet denies motion to lift stay pending reexamination after PTO granted second reexamination request

In a recent Order, Chief Judge Gregory M. Sleet denied plaintiff’s motion to lift a stay pending reexamination that the Court had granted in September 2012. Walker Digital, LLC v. Canon U.S.A., Inc., et al., C.A. No. 11-326-GMS, at 1 (D. Del. Jan. 28, 2013). Since the Court had granted the stay, the USPTO had completed its reexamination and had rejected twenty-seven out of the twenty-nine original claims of the patent-in-suit. Id. at 1, 2 n.1. Two weeks later it granted a second request for reexamination of the two remaining claims. Id. at 1. The Court examined the traditional factors in determining whether a stay was appropriate “with an eye toward any . . . changed circumstances since it ordered the initial stay.” Id. at 2 n.1. It concluded that “[c]ircumstances have not changed so drastically as to have altered the court’s earlier disposition.” Id. at 1 n.2.

Only undue prejudice was of “increased concern” to the Court. Id. at 2 n.1. The Court concluded that factors relating to the second reexamination “will subject [plaintiff] to some added measure of prejudice.” Id. at 3 n.1. “The PTO's second reexamination was made necessary, at least in part, by [defendant's] failure to include certain prior art in its initial reexamination request. The court, however, has recognized the difficulty a party faces in compiling an exhaustive catalogue of prior art and balancing its duty to file a prompt reexamination request with its desire to submit all relevant prior art to the PTO . . . Here, [defendant's] piecemeal reexamination efforts certainly raise the specter of unjust delay, but, at this time, the court will not infer that the defendants sought an inappropriate tactical advantage - the delay might just as easily represent the sort of innocent failure that one would expect to result from the balancing discussed above.” Id. at 3 n.1. Additionally, “[t]he status of the reexamination proceeding also [gave] the court pause in considering the prejudice factor” because “it [was] reasonable to presume that the [second reexamination] might last into 2015.” Id.

However, these increased concerns about prejudice “remain[ed] outweighed within the larger stay analysis. Should new developments arise, another motion to lift the stay may be warranted, but the court must deny [plaintiff’s] present motion.” Id. at 4 n.1.

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Posted On: February 1, 2013

Motion for leave to file second amended complaint denied due to delay resulting from adding a new defendant that was an Indian corporation

Judge Richard G. Andrews recently denied plaintiff's motion for leave to file a second amended complaint that would add two additional defendants, one of which was an Indian corporation with a principal place of business in India. Howard Foundation Holdings Ltd. v. Int'l Vitamin Corp., C.A. No. 12-35-RGA (D. Del. Jan. 28, 2013). Although the motion was timely, Judge Andrews noted that the claim construction process had already begun and a claim cosntruction hearing was scheduled for April. Granting the motion would "necessitate a lengthy postponement in the case[,]" and Plaintiff can separately sue the two proposed defendants.

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