Posted On: March 29, 2013

Judge Robinson Denies Motion to Sever, Transfer to District of Kansas

Judge Robinson recently denied a patent infringement declaratory judgment defendant’s motion to sever and transfer venue to the District of Kansas. Plaintiff Cox filed a declaratory judgment action in the District of Delaware regarding twelve patents owned by Sprint. Cox filed that action after Sprint had filed infringement suits related to the same twelve patents against Cox and three other defendants in the District of Kansas. In the declaratory judgment suit, Cox also asserted infringement by Sprint of two of its patents, and Sprint answered and asserted counterclaims for infringement of seven additional Sprint patents. Sprint then filed a motion to sever and transfer to the District of Kansas, where Sprint alleged it had previously litigated five of the patents-in-suit and had relevant witnesses and documents. The Judge in Kansas then found that the District of Kansas did not have personal jurisdiction over Cox and that the case should be transferred to Delaware, but the parties did not indicate that this mooted the motion to transfer before the Delaware court. Accordingly, Judge Robinson considered the motion to transfer the Delaware action to Kansas. See Cox Comms. Inc. v. Sprint Comms. Co., C.A. No. 12-487-SLR, Memorandum Order at 1-2 (D. Del. Mar. 27, 2013).

Judge Robinson first found that “exceptional circumstances . . . warrant[ed] departure from the first-to-file rule.” The case, she explained, “is unusual in that the alleged first-filed case, the Kansas litigation, has been transferred to this court. Accordingly, that litigation would be streamlined by having this court also resolve the declaratory judgment claims related to the same patents.” Id. at 4.

Judge Robinson then considered transfer pursuant to § 1404. Relying on her decision in Helicos Biosciences Corp. v. Illumina, Inc., 858 F. Supp. 2d 367 (D. Del. 2012), Judge Robinson observed that a defendant’s state of incorporation—here Delaware—has always been a “predictable, legitimate venue for bringing suit” and that a “plaintiff’s choice of venue should not be lightly disturbed.” Id. at 5 (citations omitted). Accordingly, after considering all of the Third Circuit’s Jumara transfer factors and because “the Kansas litigation has been transferred [to Delaware], the court [found] that the Jumara factors do not weigh in favor of transferring the Cox . . . declaratory judgment claims back to Kansas.” Id. at 6-8. Despite the three other Sprint cases remaining in Kansas, Judge Robinson determined that given “the transfer of [the Cox] case and the Kansas court’s lack of personal jurisdiction over Cox Communications, Sprint [had not] carried its burden of persuading the court, by a preponderance of the evidence, that the Jumara factors favor transfer.” Id. at 9.

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Posted On: March 28, 2013

Judge Andrews claim construction order

In FastVDO LLC v. DXG Tech. USA, Inc., et al., C.A. No. 11-797-RGA (D. Del. Mar. 26, 2013), Judge Richard G. Andrews issued the Court's claim construction order following a Markman hearing on March 22, 2013.

The following terms of U.S. Patent No. RE 40,081 were "construed definitively":

"recursively"
"initial stage"
"MxM block coder"
"transform coder"
"invertible linear transform"/"invertible forward linear transform"
"representable as a cascade, using the steps"
''processing the output coefficients in the decoder into a reconstructed image"
"dyadic"
"orthogonal transform"

Judge Andrews provided "tentative" constructions of the following terms:

"butterfly step" I "±1 butterfly step"
"lifting step"

Judge Andrews held in abeyance the constructions of the following terms:

"rational complext coefficients"
"unitary transform"

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Posted On: March 25, 2013

Chief Judge Sleet grants motions to transfer venue to Eastern District of Michigan

Chief Judge Gregory M. Sleet recently granted defendants’ motions to transfer thirty-eight related patent infringement actions to the Eastern District of Michigan. E.g., Beacon Navigation GmbH v. Crysler Group L.L.C., C.A. No. 11-cv-921-GMS (D. Del. Mar. 20, 2013). The actions involve GPS technology. Id. at 8. Plaintiff, a Swiss company, “filed suit against every major automaker that sells automobiles in the United States.” Id. at 3, 23. Of the fifty-six defendants involved, forty-six filed motions to transfer venue to Michigan. Id. at 1 n.3.

In analyzing the Jumara factors, the Court concluded that only plaintiff’s forum preference weighed against transfer. Id. at 25. Because plaintiff was not a Delaware corporation, this factor was not of paramount consideration, but was accorded “some degree of heightened deference.” Id. at 13. The remaining factors were either neutral or favored transfer, although where the claim arose, defendants’ forum preference, the location of books and records, and the relative administrative difficulties in the two fora only slightly favored transfer. Id. at 14, 18-21, 23. The inconvenience of the fourteen defendants incorporated in Delaware was neutral in the Jumara analysis because these defendants had “submitted to suit in this district,” but as to the defendants not incorporated in Delaware, this factor weighed in favor of transfer. Id. at 17-18.

Many of defendants’ arguments for transfer focused on their locations in Michigan; “by and large, the defendants are headquartered, operate facilities, manufacture, and/or sell products in that district.” Id. at 14; see also id. at 10 n.13 (listing defendants’ activities in Michigan). Plaintiff, on the other hand, argued that “defendants’ interest in transferring to the Eastern District of Michigan is purely tactical, obviously based on their belief that they are likely to be favored in the traditional center of the American automotive industry.” Id. at 13 (internal citations and quotation marks omitted). The Court did not accept this argument, at one point noting that “federal courts provide a neutrality that negates [plaintiff’s concerns], particularly in cases such as these, which involve a national controversy.” Id. at 25.

Even though ten defendants had not filed motions to transfer, the Court sua sponte transferred all fifty-six actions to Michigan “because these actions present the court with such extraordinary circumstances.” Id. at 2 & n.4. “[T]he court transfers [the actions of the non-moving defendants] because it is left with no alternative but to do so in its effort to avoid an untenable result with respect to the forty-six defendants that have moved to transfer these actions. . . . It is easy to imagine the spectre of any number of inconsistent rulings and outcomes raising their heads [should the actions of the non-moving parties remain in Delaware].” Id. at 2 n.4. Two actions were administratively closed due to bankruptcy proceedings, but the Court also transferred these actions to Michigan for the same reasons. Id.

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Posted On: March 22, 2013

Judge Stark stays service of expert reports while the Court considers plaintiffs' motion to strike untimely invalidity contentions

Judge Leonard P. Stark recently considered plaintiffs' emergency motion to stay the date for service of plaintiffs' responsive expert reports pending resolution of plaintiffs' motion to strike defendants' untimely invalidity contentions. Avanir Pharms., Inc. v. Actavis South Atlantic LLC, C.A. No. 11-704-LPS (Consol.) (D. Del. Mar. 19, 2013). Judge Stark granted plaintiffs' motion finding that plaintiffs "would be unfairly prejudiced by having to prepare and serve responsive expert reports while their motion to strike is pending, as they would not know whether it is necessary to respond to all of the opinions expressed in Defendants' expert reports." Id. at 3.

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Posted On: March 22, 2013

Judge Robinson rules on summary judgment motions involving patented biological method of producing isobutanol.

Judge Sue L. Robinson recently issued a memorandum opinion granting summary judgment of invalidity for lack of written description and no infringement under the doctrine of equivalents of a patented method of producing isobutanol using genetically-engineered yeast microorganisms aimed at reducing greenhouse gas emissions. Butamax™ Advanced Biofuels LLC v. Gevo, Inc., Civ. No. 11-54-SLR (D. Del. Mar. 19, 2013). Before addressing the merits of several competing summary judgment motions, the Court construed the disputed claims as follows:

“acetohydroxy acid isomeroreductase” was construed to mean “an enzyme known by the EC number 1.1.1.86 that catalyzes the conversion of acetolactate to 2,3-dihydroxyisovalerate and is NADPH-dependent”

“a recombinant yeast microorganism expressing an engineered isobutanol biosynthetic pathway” was construed to mean “a recombinant yeast microorganism that is genetically transformed such that it expresses the five enzymes that form the biosynthetic pathway described hereafter for the production of isobutanol, wherein one or more of those enzymes is recombinantly expressed”

“(pathway step a;…(pathway step b);…,” etc. was construed to mean “the pathway of steps a-e are contiguous steps such that the product of step a is the substrate for step b; the product of step b is the substrate for step c; etc.”

“The microorganism produces isobutanol as a single product” was construed to mean “[t]he microorganism produces isobutanol without substantial amounts of other fermentation products”

Id. at 8-23.

The Court considered, in light of these claim constructions, the parties competing motions for summary judgment on the question of infringement. The Court first explained that the plaintiff’s “evidence of infringement is less than compelling, nonetheless, . . . it [is] sufficient to withstand [the defendant’s] motion for summary judgment, as it raises genuine issues of material fact as to how a person of ordinary skill in the art at the time the invention was made would determine NADH-dependency.” Id. at 39. The Court granted, however, the defendant’s motion for summary judgment of no infringement under the doctrine of equivalents, which asserted that the defendant’s “NADH-dependent enzyme is not equivalent to an NADPH-dependent enzyme.” Id. at 39-40. In light of its claim construction, the Court disagreed with the plaintiff’s position that “the use of NADH as an electron donor is insubstantially different from the use of NADPH.” Id. at 40 (quoting D.I. 648 at 33).

The Court then considered several competing motions for summary judgment on the question of validity. The defendant argued that claim 12 (“[t]he recombinant yeast microorganism of claim 1 wherein the said microorganism further comprises inactivated genes thereby reducing yield loss from competing pathways for carbon flow”) and claim 13 (“[t]he recombinant yeast microorganism of claim 12, wherein said inactivated genes reduce pyruvate decarboxylase activity”) were invalid for lack of written description. Id. at 50-51. With regard to claim 12, the Court found that the patent “mentions inactivation of genes only once” and that “[n]one of the cited portions of the specification provide a description to one of skill in the art on how to construct a recombinant yeast microorganism with ‘inactivated genes’ to reduce ‘yield loss from competing pathways.’” Id. at 51, 52. “Although the specification may be interpreted as identifying both the . . . problem and the solution, it does not even begin to describe how to put into practice the solution.” Id. at 52. Similarly, the specification nowhere disclosed “inactivated genes” that “reduce pyruvate decarboxylase activity[,]” and the Court found that claim 13 was also invalid for lack of written description.

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Posted On: March 21, 2013

Judge Andrews Construes Claim Term in Veramyst ANDA Case

Judge Andrews has issued a claim construction opinion in the ANDA dispute between GlaxoSmithKline and Sandoz over GSK’s Veramyst product. The parties disputed construction of only a single term, “at around.” Judge Andrews agreed with Sandoz that the phrase “at around” indicates a well-established margin of error in the context of X-Ray Powder Diffraction, the method indicated by the patents-in-suit for distinguishing various forms of fluticasone furoate. Because the intrinsic and extrinsic evidence supported the view that a separation of .2 degrees is reliably distinguishable, Judge Andrews concluded that Sandoz’s construction requiring a margin of error of only .1 degrees was correct. See Glaxosmithkline Intellectual Prop. Mgmt. Ltd. v. Sandoz, Inc., C.A. No. 11-1284-RGA at 4-7 (D. Del. March 20, 2013).

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Posted On: March 19, 2013

Judge Robinson Considers Motion to Dismiss Claims of Indirect and Willful Infringement

Judge Sue Robinson has partially granted and partially denied a patent infringement defendant’s motion to dismiss claims of indirect and willful infringement. Consistent with her previous holding in Walker Digital, Judge Robinson found that plaintiff’s claims of both induced and contributory infringement based on notice of the patents-in-suit as of the filing date were facially plausible. Accordingly, she denied the motion to dismiss with respect to these claims of indirect infringement. With respect to willful infringement, however, Judge Robinson explained that the lack of pre-suit knowledge of the patents-in-suit was fatal to claims of willful infringement. Therefore, consistent with her past decisions, Judge Robinson granted the defendant’s motion to dismiss with respect to claims of willful infringement. See Netgear Inc. v. Ruckus Wireless Inc., C.A. No. 10-999-SLR, Memo Order at 1-3 (D. Del. Mar. 14, 2013).

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Posted On: March 14, 2013

Judge Robinson issues stay pending Fed. Cir. decision on whether it has jurisdiction over appeals when damages trial remains outstanding

Judge Sue L. Robinson recently stayed, in the interest of judicial economy, its decision on the motion to amend judgment filed by defendant, pending the Federal Circuit's decision in Robert Bosch LLC v. Pylon Manufacturing (see discussion here). Asahi Glass Co., Ltd., v. Guardian Indus. Corp., C.A. No. 09-515-SLR (D. Del. Mar. 11, 2013). "The Federal Circuit is currently considering, en banc, its jurisdiction over appeals from patent infringement liability determinations when a trial on damages has not yet occurred and when willfulness issues remain outstanding." Id. A stay was appropriate because the Federal Circuit's decision would have a "direct impact" on the appealability of this case. Id.

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Posted On: March 13, 2013

Chief Judge Sleet grants motion for leave to amend complaint to cure defective claim and finds that 30 month stay is not terminated by a dismissal without prejudice.

Chief Judge Gregory M. Sleet issued a memorandum order this week granting a plaintiff’s motion for leave to amend its complaint, which the Court previously dismissed without prejudice. Endo Pharmaceuticals Inc. v. Mylan Technologies Inc., et al., C.A. No. 11-220-GMS (D. Del. Mar. 11, 2013). The first claim of the plaintiff’s original complaint alleged that the defendant failed to comply with the notice requirements of the Hatch-Waxman Act, because the plaintiff (which was the recipient of the defendant’s Paragraph IV Notice) was not actually the owner of the patent at issue at the time notice was provided. Id. at 1. The second claim in the original complaint alleged that in the event the Court were to “determine[] now or at a future date that [the defendant] has complied with its obligations under the Hatch-Waxman Act . . . [the defendant] has infringed the ’510 Patent by submitting an ANDA . . . containing a Paragraph IV certification with respect to that patent”. Id. at 2. The Court dismissed the complaint, finding that because the plaintiff acknowledged that it was not the owner of the ’510 patent, it lacked standing to bring its first claim. Id. In turn, the Court was unable to reach the second claim because, “as pled, [it] was conditioned on a determination of” the first claim. Id.

Shortly after the dismissal, the plaintiff moved to amend its complaint to restate its second claim to correct a “technical defect in pleading.” Id. The defendant countered that the “technical defect” was not an “inadvertent error,” but instead was an intentional “strategy to extend the statutory 30 month stay . . . instead of bringing a claim for infringement.” Id. at 4 (quoting D.I. 21 at 1, 3). The defendant argued further that the plaintiff had ample time to amend its complaint in response to the motion to dismiss but chose not to do so until the complaint was dismissed. In the defendant’s view, the plaintiff’s failure to promptly amend its complaint was “the result of undue delay and dilatory conduct.” Id. (quoting D.I. 21 at 3).

The Court disagreed with the defendant. Because the plaintiff had a good faith basis to believe that its original complaint would not be dismissed, and because the plaintiff filed its motion for leave to amend within fourteen days of the complaint’s dismissal, the Court was “unable to discern any dilatory motive and concludes that the delay was not so excessive as to be unreasonable.” Id. at 5-6. The Court also rejected the defendant’s argument that it would be unduly prejudiced if an amended complaint were permitted to be filed, explaining that the defendant “was clearly put on notice of [the plaintiff’s] infringement claim” by the original complaint, “and the amendment does not substantially change the underlying theory of the case.” Id. at 6.

The Court also rejected the defendant’s argument that the plaintiff’s amended infringement claim should not relate back to the date of the original complaint (which was filed within 45 days of the Paragraph IV Notice). The Court explained that although the original infringement claim was defective, there was no dispute that it was "brought" within 45 days of the Paragraph IV Notice, which was all that the statute required to trigger a 30 month stay. Id. at 9. The Court further found that its dismissal of the complaint had not terminated the 30 month stay once it was triggered, because “if Congress had wished the thirty month stay to be extinguished upon a dismissal without prejudice, it would have said as much.” Id. at 10.

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Posted On: March 13, 2013

Judge Andrews rules on Daubert motions on plaintiff’s experts and grants-in-part defendant’s motions for partial summary judgment

In a series of recent decisions in XpertUniverse, Inc. v. Cisco Systems, Inc., C.A. No. 09-157-RGA (D. Del.) (“XpertUniverse”), Judge Richard G. Andrews considered defendant’s Daubert motions related to two of plaintiff’s experts and its motions for partial summary judgment.

As to the admissibility of plaintiff’s expert’s testimony, the Court assessed the “trilogy of restrictions on expert testimony: qualification, reliability and fit.” XpertUniverse (D. Del. Mar. 7, 2013), at 1 (internal citation omitted). The expert’s qualification was not contested. Id. As to fit, while defendant’s “witnesses are going to testify that some of the materials [the expert would rely on] describe features that did not make it into the actual accused . . . products,” to the Court, “[i]t certainly seem[ed] to be theoretically possible for an expert to determine product features based on documentation. Whether Dr. Nourbakhsh,” plaintiff’s expert, “worked from the right materials, what those materials show, and what features are in the products are more factual questions for the jury than Daubert issues for the Court.” Id. at 3. As to reliability, the Court examined whether the expert could “testify about what ‘functionalities’ customers use in the absence of any direct knowledge.” Id. at 2. Plaintiff primarily asserted induced and/or contributory infringement and it was crucial to establish whether, and how, defendant’s customers utilized “optional functionalities” in order to show direct infringement. Id. at 3. The Court concluded that the evidence on which the expert relied to conclude that customers used such features was “exceedingly thin,” and the expert’s conclusion was also “beyond his expertise and knowledge, and therefore in the realm of speculation.” Id. at 4, 5. Therefore the Court excluded the expert’s conclusion “about direct infringement by [defendant’s] customers.” Id. at 5. Finally, also related to reliability, the Court concluded that the expert’s opinions with regard to secondary considerations of non-obviousness based on commercial success, failure of others, copying, praise, and industry acceptance went “beyond his computer science and call center expertise” and were inadmissible. Id. at 6. On the other hand, the expert was “clearly qualified to offer an opinion” on long-felt need and this testimony was admissible. Id.

Because the Court concluded that this expert may not opine as to customers’ direct infringement and may only opine on long-felt need as to secondary considerations of non-obviousness, it also granted in part defendant’s motion for partial summary judgment as to indirect infringement by some of its products. XpertUniverse (D. Del. Mar. 8, 2013). Plaintiff’s “only basis for demonstrating indirect infringement is Dr. Nourbakhsh’s opinion that [defendant’s customers] will use the methodology recited by the [asserted] method claims,” and this testimony was unreliable. Id. at 17 (internal citations and quotation marks omitted). Defendants had also moved for summary judgment on plaintiff’s non-patent claims based on rescission, fraud, breach of contract, misappropriation of trade secrets, and trademark infringement, and the Court granted these motions in part. Id. at 23-24.

Finally, the Court considered the admissibility of the testimony of plaintiff’s damages expert, Mr. Bratic. XpertUniverse (D. Del. Mar. 11, 2013). It noted that “Bratic’s opinions necessarily evolved after the Court’s [decision on the motions for partial summary judgment],” therefore it “address[ed] Bratic’s opinions as it understands them based on Bratic’s testimony on March 8, 2013.” Id. at 2. As to the patent infringement claims, the expert “opin[ed] that based on a hypothetical negotiation between [plaintiff and defendant] as of the earliest patent infringement, [defendant] would have paid [plaintiff] a lump sum of $32.4 million in exchange for a license to the two patents in suit. Bratic opine[d] that [defendant] would have paid [plaintiff] 50% of the $65 million he believes” a third party invested to develop a product that “Bratic opine[d] is a proxy for [plaintiff’s] technology.” Id. at 4.

“The primary basis for decision is the opinion’s faulty basis for recommending a lump sum” as opposed to a running royalty based on ongoing sales or usage. Id. at 5. The Court noted that “the parties at the hypothetical negotiation would be aware that [plaintiff] never sold a single product and [defendant’s] sales have totaled less than $1 million. Bratic’s numerous methodological flaws are thrown into sharp relief by his conclusion: $32 million in a lump sum royalty on $937,000 in sales of accused products simply makes no sense.” Id. at 6. Addressing the specifics of these flaws, the Court first noted that the “only explanation” for the lump sum payment was “the vision selling strategy implemented by [defendant] and the significant convoyed sales generated from the sale of Accused Products. Bratic’s sole basis for quantifying this [strategy] and convoyed sales” was testimony that the Court had “determined lack[ed] foundation.” Id. (internal citations and quotation marks omitted). Second, the expert “also [did] not provide any logical link between these grounds” and his quantification of the lump sum. Id. Therefore, the expert’s “opinion that the parties would have realized that the appropriate royalty structure for rights to the patents in suit would have been a lump sum royalty is not based on sufficient data or information.” Additionally, the expert’s $65 million estimation of the amount the third party invested in the relevant product was also “based on insufficient information.” Id. As a result, the Court concluded that this expert could not “opine . . . that a hypothetical negotiation between the parties would have concluded in a lump sum of $32.5 million.” Id. at 10.

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Posted On: March 13, 2013

Judge Robinson Grants Fees for Plaintiff’s Post-Trial Inequitable Conduct Briefing

Judge Sue Robinson has ordered a patent infringement defendant to reimburse plaintiff’s attorney fees of $23,658 in connection with plaintiff having to respond to defendant’s post-trial briefing on inequitable conduct. See Asahi Glass Co. v. Guardian Indus. Corp., C.A. No. 09-515-SLR, Memorandum Order at 1 (D. Del. Mar. 11, 2013). Judge Robinson previously found that defendant’s theories of inequitable conduct “were either devoid of merit or procedurally barred” and ordered defendant to pay plaintiffs’ reasonable costs in preparing and filing their responsive brief on inequitable conduct. The parties were, however, unable to agree on the amount of plaintiffs’ fees for which defendant was responsible. Id. at 1-2.

Judge Robinson found that a “detailed and reliable reconstruction of time spent” was acceptable to support the request for 20 hours of partner attorney time on the responsive brief. She also found that because only 30.2 hours of associate time were evidenced by client invoices and there was no similar reconstruction of time, only 30.2 hours were allowable as costs, not the 40 requested by plaintiffs. Id. at 4-7. Finally, Judge Robinson found that both the amount of time spent on the brief and the hourly rates charged were reasonable in light of the length of the briefing in question, the importance and high stakes of the issue being briefed, and the prevailing market rates for intellectual property attorneys. Id. at 7-8. Because the defendant demonstrated no sufficient justification for reducing the award, Judge Robinson granted the requested partner, associate, and paralegal fees.

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Posted On: March 12, 2013

Chief Judge Sleet transfers case to Northern District of California.

In a recent memorandum opinion, Chief Judge Gregory M. Sleet transferred a case to the Northern District of California, although the plaintiffs could not clearly have filed suit in that district in the first place. ChriMar Systems, Inc., et al. v. Cisco Systems, Inc., et al., C.A. No. 11-1050-GMS (D. Del. Mar. 6, 2013). The Court noted that 28 U.S.C. § 1404(a) provides that an action can be transferred to “any other district or division where it might have been brought[,]” id. at 5, as “measured from the time the action was commenced . . . .” Id. at 6 n.3. In this case, the plaintiffs were Michigan and Texas entities, and one of the original defendants was a Delaware corporation headquartered in New Jersey, which could not clearly have been sued by the plaintiffs in the Northern District of California. Id. at 6 n.3. That Delaware/New Jersey defendant settled with the plaintiffs and was dismissed from the case before the motion to transfer was filed. Id. at 2. As the Court explained, “an exception to the general timing rule . . . exists and ‘the action may . . . be transferred if the defendants as to whom venue in the transferee district would have been improper have settled or been dismissed from the action when the transfer motion is made.’” Id. at 6 n.3 (quoting 17 James Wm. Moore et al., Moore’s Federal Practice § 111.12[4][b] (3d ed. 2012)). Because all three remaining defendants maintained their principal places of business within the Northern District of California, the Court found that transfer to that district would be permissible under § 1404(a). Id. at 6.

The Court next considered whether transfer to the Northern District of California would be appropriate based on the Third Circuit’s Jumara factors. The Court noted that the plaintiffs' choice of forum in Delaware was entitled to “increased weight . . . but less than the ‘substantial’ or ‘paramount’ weight to which it would be entitled had [they] filed suit in [their] home forum.” Id. at 8. However, the Court found that the rest of the Jumara factors were neutral or weighed in favor of transfer, most notably because: (a) the remaining defendants maintained principal places of business in the Northern District of California, id. at 9; (b) the plaintiffs “will be forced to bear travel costs no matter the court’s decision, but proceeding in California will likely spare the defendants significant expense[,]” id. at 10; and (c) the defendant provided information about third party witnesses who would not be subject to a trial subpoena issued by the District of Delaware. Id. at 11. The Court explained, "[w]hile the first factor - the plaintiffs' forum preference - pulls against transfer and is given increased weight here [because two of the remaining defendants were Delaware corporations], all the remaining Jumara considerations recommend transfer or have no effect on the court's analysis." Id. at 14.

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Posted On: March 12, 2013

Chief Judge Sleet grants plaintiff’s motion for leave to file amended complaint seeking declaratory relief, grants defendants' motion for jurisdictional discovery, in part

Chief Judge Gregory M. Sleet recently granted plaintiff’s motion for leave to file a first amended complaint, which seeks a “declaratory judgment that eight of . . . defendants’ patents are invalid.” Comba Telecom, Inc. v. Andrew L.L.C. et al., C.A. No. 12-311-GMS, at 1 (D. Del. Mar. 7, 2013). In its motion, plaintiff requested that it be granted leave to include in its amended complaint “additional facts to strength[en] its declaratory judgment jurisdiction claim, such as addressing the preparatory steps it has taken to introduce products in the United States and the defendants’ statements and suits against it in other jurisdictions.” Id. at 1-2. Finding that defendants would not be prejudiced by the amendments nor would the amendments be futile, Judge Sleet granted plaintiff’s motion for leave. Id. at 3.

First, Judge Sleet found that plaintiff’s proposed amendments would not prejudice defendants because the litigation is in its early stages, and defendants would therefore have an opportunity to file motions or to conduct discovery on the issues raised in the amended complaint. Id. at 2-3 n.5. Judge Sleet further noted that plaintiff’s proposed amendments “do not contradict its prior pleadings,” and that defendants may challenge plaintiff’s allegations. Id. at 3 n.5. Turning to futility, Judge Sleet noted that “futility of amendment occurs when the complaint, as amended, does not state a claim upon which relief can be granted, as judged by the Rule 12(b) standard.” Id. In the declaratory judgment context, as Judge Sleet explained, a plaintiff may “demonstrate satisfaction” of the “case or controversy” requirement by showing that “there has been meaningful preparatory conduct that could lead to potentially infringing activity,” and by showing that the “claim is real and has an element of immediacy.” Id. n.5. Judge Sleet found that the proposed amendments included allegations related to “preparatory conduct,” specifically, that plaintiff had “the capacity to produce inventory to sell in the United States,” and was actively “participating in trade shows and soliciting Request for Proposals.” Id. n.5. The proposed amendments also addressed the “real” nature of the claim, as they included the identification of “defendants’ suits against [plaintiff] in China and Brazil as well as the defendants’ June 16, 2011 press release stating that they will protect their patent rights.” Id. n.5. Judge Sleet concluded that “taking the factual allegations in the proposed amended complaint as true, [plaintiff’s] Amended Complaint is not decidedly futile.” Id. n.5.

In view of granting plaintiff’s motion, Judge Sleet denied defendants’ motion to dismiss for lack of jurisdiction as moot. Id. at 3. However, in a subsequent order, Judge Sleet found that "factual issues exist regarding the alleged controversy between the parties" and granted defendants' motion to authorize jurisdictional discovery. Comba Telecom, Inc. v. Andrew L.L.C. et al., C.A. No. 12-311-GMS, at 1 nn.1-2 (D. Del. Mar. 11, 2013). Judge Sleet denied, however, the expansive scope of jurisdictional discovery defendants requested, which included "two depositions, fifteen interrogatories, and twenty-two requests for production." Id. n.1. The permissible scope of jurisdictional discovery would be determined at the scheduling teleconference. Id.

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Posted On: March 11, 2013

Judge Andrews grants defendant’s motion to disqualify plaintiff’s lead counsel

Judge Richard G. Andrews recently granted defendant’s motion to disqualify plaintiff’s lead counsel because “[the lead counsel] was serving as [defendant’s] opinion counsel at the time [plaintiff] filed” its patent infringement suit against defendant, and “thus creat[ed] an impermissible concurrent conflict of interest.” Parallel Iron, LLC v. Adobe Systems Incorporated, C.A. No. 12-874-RGA, at 1, 7 (D. Del. Mar. 4, 2013). The lead counsel had provided opinion letters with infringement analyses to defendant in three previous engagements, with the findings of its final opinion letters presented during a conference call between the lead counsel and defendant in February 2012. Id. at 1-3. The provision that guided Judge Andrews’s analysis was Model Rule 1.7(a), which states that “‘a lawyer shall not represent a client if the representation involves a concurrent conflict of interest’ absent client consent.” Id. at 4.

Judge Andrews concluded that it was reasonable for defendant to believe that an active attorney-client relationship existed between the lead counsel and defendant at the time the lead counsel filed the instant suit, five months after the conference call in February 2012. Id. at 3, 5. Plaintiff argued that the attorney-client relationship was terminated because at the end of the conference call the partner from the lead counsel handling the matter “asked whether anything further was needed from [the lead counsel],” and defendant responded in the negative. Id. at 7. Judge Andrews disagreed, noting that “[s]uch a customary gesture to conclude a conversation is not sufficient to terminate [defendant’s] expectations.” Id. As Judge Andrews explained, “the six year history between [defendant] and [the lead counsel] was sufficient to instill in [defendant] reasonable belief that it would not be sued by [the lead counsel], at least absent some sort of prior notice that [the lead counsel] would no longer be available to serve as [defendant’s] opinion counsel.” Id. at 5. Further, Judge Andrews noted that the lead counsel was aware of the active nature of the litigation for which it provided its final opinions and should have expected that defendant would want updates in view of any developments that would bear on its infringement analyses. See id. Judge Andrews emphasized that “[i]t is the law firm’s responsibility to ensure there are no questions regarding the status of its current client relationships.” Id.

While disqualifying the lead counsel from the litigation at hand, Judge Andrews did not find it necessary to create an “ethical wall” between the lead counsel and co-counsel, because “[t]he complete bar of communications between [the lead counsel] and co-counsel would seriously hamper [the lead counsel’s] ability to litigate on behalf of [plaintiff]” in other ongoing actions. Id. at 8. To this end, Judge Andrews found it significant that there was “no reason to believe that [the lead counsel] operated in bad faith when it sued [defendant].” Id. at 7.

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Posted On: March 6, 2013

Judge Andrews construes claims of patents relating to elevator modernizing technology

Judge Richard G. Andrews recently issued a claim construction opinion construing plaintiff Inventio AG's patents-in-suit, U.S. Patent No. 6,892,861 and U.S. Patent No. 6,935,465, relating to "elevator modernizing technology." Inventio AG v. ThyssenKrupp Elevator Americas Corp., C.A. No. 08-874-RGA (D. Del. Mar. 6, 2013). This case is on remand from the Federal Circuit after the Federal Circuit reversed the Court's previous claim construction opinion finding the claims indefinite. Id. at 1. Judge Andrews construed the terms "computing unit" and "modernizing device."

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Posted On: March 5, 2013

Magistrate Judge Thynge recommends denial of defendant’s renewed 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. Feb. 25, 2013), Magistrate Judge Thynge issued a report recommending denial of defendant’s renewed motion to stay pending inter partes reexamination. Defendant had previously moved for a stay pending reexamination and in September 2012 Judge Thynge had recommended denial of that motion, discussed here. Chief Judge Sleet adopted that part of the recommendation. Id. at 2. At the time of this first motion to stay, the PTO had not granted the request for reexamination, but it did in December 2012 and "preliminarily rejected" all of the claims of the patent-in-suit. Id. at 2, 10. Defendant then renewed its motion to stay pending the reexamination. Id. Judge Thynge again recommended denial of defendant’s motion. Id. at 16.

Because the case was filed after the America Invents Act ("AIA") was enacted, Judge Thynge first observed that “no mandatory stay [is] required under the AIA for grants of inter partes reexaminations, and the traditional three-part test to determine whether a stay is appropriate still applies. Nevertheless, the present analysis must address new events that have occurred since the original denial of defendant’s motion to stay, specifically the grant of the inter partes reexamination, and the effect of the new AIA standard on the application of the factors regarding a stay. ” Id. at 6-7. The AIA altered the standard for the grant of inter partes reexamination from requiring “the Director to find a substantial new question of patentability affecting any claim” to requiring a determination that there is “a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.” Id. at 4 (internal citations and quotation marks omitted).

Turning to the three-part test, Judge Thynge first concluded that the status of the litigation did not favor a stay. Id. at 9. While the case was in its early phases, “the parties here [were] well into discovery, and significant deadlines [were] scheduled in the coming months.” Id. at 8-9. Additionally, the reexamination proceedings were at an early stage. Id. at 9. These factors all weighed against granting a stay. Id. As to simplification of issues, Judge Thynge concluded that “simplification weigh[ed] more strongly in favor of a stay” than when defendant filed its first motion. Id. at 10. “Moreover, reexamination was granted under the new heightened standard of the AIA, which means defendant is reasonably likely to prevail on invalidity. . . . Reexamination [would therefore] serve to simplify certain issues regarding validity. Further, because of the new standard, and since all claims of the [patent-in-suit] are found invalid on anticipation and obviousness, it may be more likely amendments to the claims of the patent will occur as a result of reexamination.” Id. at 10-11.

Finally, Judge Thynge concluded that plaintiff would be unduly prejudiced if a stay was granted, which was the “most substantial and important issue.” Id. at 11. Regarding the impact of the stage of the reexamination proceedings on the prejudice analysis, defendant argued that “the PTO is statutorily mandated to handle inter partes reexamination proceedings expeditiously and with special dispatch.” Id. at 14 (internal citations and quotation marks omitted). But Judge Thynge observed that “[i]n light of the recent passage of the AIA, it is unclear how such requirements will affect the time frame of the reexamination process.” Id. Therefore, as the reexamination process was in its early stages, this factor did not favor a stay. Id. As in the previous recommendation, Judge Thynge observed that the plaintiff and defendant were direct competitors and that this “weigh[ed] heavily against granting a stay.” Id. at 15-16.

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Posted On: March 2, 2013

Judge Sleet Denies Motion to Dismiss Declaratory Judgment Action on Previously-Litigated Patents

Chief Judge Gregory Sleet has denied a declaratory judgment defendant’s motion to dismiss claims related to patents that were the subject of previous litigation between the parties. DJ plaintiff DNP filed its complaint seeking a judgment of noninfringement and invalidity of four patents owned by Natural Alternatives International (“NAI”). Three of the patents had been the subject of an infringement action in 2009, and NAI moved for dismissal as to those three patents, arguing that no justiciable case or controversy existed between the parties. Judge Sleet denied the motion, finding that an actual case or controversy existed with respect to these three patents even though NAI had only asserted a counterclaim of infringement with respect to the one new patent. See DNP Int’l Co. v. Natural Alternatives Int’l, Inc., C.A. No. 11-1283-GMS, Order at 1 n.1 (D. Del. Feb. 27, 2013).

Judge Sleet explained that “Federal Circuit precedent has established that ongoing disputes between the parties concerning related technology may suggest the existence of an actual controversy sufficient to support declaratory judgment jurisdiction.” Id. at 2 n.1 (citing Teva Pharms. USA, Inc. v. Novartis Pharms. Corp., 482 F.3d 1330, 1344 (Fed. Cir. 2007); Vanguard Research, Inc. v. PEAT, Inc., 304 F.3d 1249, 1255 (Fed. Cir. 2002)). He noted that NAI admitted the existence of a dispute with respect to the new patent and that the new patent came from the same family as the three older patents. He found that “[t]he admittedly live controversy surrounding the [new patent] makes it more likely that a similar controversy remains with respect to the Older Patents.” Id.

Judge Sleet also found that the history of patent litigation between the parties “[while] not dispositive . . . can be relevant where the prior conduct makes reasonable an assumption that the defendant will take action with respect to the patent-in-suit.” Id. (citing Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1341 (Fed. Cir. 2008)). NAI’s assurance “that it ‘has no intention of asserting the claims in [the three Older Patents] against DNP or its customers’ . . . does not suffice to remove subject matter jurisdiction,” especially given its “refusal to provide more concrete assurance” in the form of a covenant not to sue. Id. Additionally, an ongoing unfair competition case between the parties, while “provid[ing] less evidence of an ongoing patent dispute, it is certainly related to the earlier infringement contentions in the 2009 Action . . . [and is] indicative of the broader adversarial stance adopted by the parties.” Id.

Judge Sleet found that all of the facts taken together were sufficient for the exercise of declaratory judgment jurisdiction under the requirements of Medimmune v. Genentech, 549 U.S. 118 (2007). Id. at 2-3 n.1. Accordingly, he denied NAI’s motion to dismiss claims related to the three older patents.

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