A jury recently returned a verdict in the battle between Leader Technologies, Inc. and Facebook. By its verdict, the jury found that Facebook literally infringed Leader’s ’761 patent. But the jury also found that Facebook demonstrated the invalidity of the patent-in-suit, both on the grounds of prior public use and the on-sale bar.
In one of his last acts as a judicial officer, now-retired district judge Joseph J. Farnan Jr. issued a decision resolving a contractual ambiguity of major proportions. The underlying IP transfer agreement called for the conveyance of “patent rights” between the counterparties listed on “Schedule A.” The only problem was that Schedule A never existed; instead the parties drafted a “Schedule B – Patent Rights.”
As a result, Defendants in the infringement litigation claimed that, in the absence of Schedule A, the patents-in-suit were transferred automatically. The result? Plaintiff did not have standing to enforce its rights to the patents-in-suit.
The Court rejected this assertion out of hand, in part because a paralegal who created Schedule B testified that she meant to call it Schedule A:
“While the Court understands Defendants’ concerns with Schedule B, the Court is persuaded . . . that Schedule B was, in fact, intended to be Schedule A and was used by the parties as Schedule A. In making this determination, the Court credits the testimony of Kate Maxwell and finds that Schedule B was mistitled and was intended to be Schedule A. [This] testimony concerning the creation of the document and its storage as a computer file supports its authenticity.”
Notable for litigators is the procedure followed to cure the ambiguity and establish the document’s authenticity: have the preparer testify to the error and the use of the document.
After a jury trial returned a verdict in favor of plaintiff, Judge Farnan recently presided over a bench trial on the issue of plaintiff’s standing. The Dow Chemical Company v. Nova Chemicals Corporation (Canada), et al., C.A. 05-737-JJF (D. Del. July 30, 2010). Plaintiff and its subsidiary entered into an agreement to transfer certain patent rights from plaintiff to the subsidiary. The issue before Judge Farnan was whether this agreement transferred ownership of the patents-in-suit such that plaintiff no longer had standing. Id. at 3. Judge Farnan concluded that plaintiff was the legal owner of the patents at all relevant times throughout the litigation. Id. at 6. Patents were transferred under the agreement once they were listed on a Schedule A to the agreement. Id. Defendants argued that the patents were transferred because there was no Schedule A to the agreement. Id. at 7. However, plaintiff presented evidence that a document entitled “Schedule B Supplement – Patent Rights” was intended to be Schedule A and reference to Schedule B was a typographical error. Id.
District judge Joseph J. Farnan Jr. recently issued a strongly worded decision on willfulness, one that all litigators – and in-house counsel – should heed. The Court initially ordered a retrial on willfulness following the Federal Circuit’s Seagate decision. In its subsequent post-trial decision, the Court made clear its thoughts on reverse engineering:
“Faced with this failed attempt [at a design-around] and despite its knowledge of the ’075 patent and its importance to the industry, Fairchild chose the option that presented the most objectively high risk of infringement, namely to continue the development of its product by copying, through reverse engineering, the methods and features claimed in the patent.”
The Court characterized such behavior concerning the ’075 patent and the other patents-in-suit as “industrial stalking” and “blatant copying.” The result, even with evidence of post-litigation opinions of counsel, was a textbook willfulness finding.
Judge Farnan recently denied plaintiff’s motion for a preliminary injunction related to handheld mobile computers. Symbol Technologies, Inc. v. Janam Technologies LLC, C.A. No. 08-340-JJF (D. Del. July 20, 2010). Judge Farnan found that plaintiff had shown a likelihood of success on the merits that two of plaintiff’s patents-at-issue were infringed. Id. at 16-17, 29. However, Judge Farnan also found that defendant “raised a substantial question” whether claims of the patents were invalid and plaintiff failed to prove that the defense lacked “substantial merit or [was] reasonably likely to fail.” Id. at 22; see also id. at 28, 33.
In the ANDA case Sepracor Inc. v. Dey L.P. and Dey, Inc., C.A. 06-113-JJF (D. Del. July 15, 2010), Judge Farnan granted plaintiff’s motion to amend its complaint to add claims for damages after defendants began selling their generic product and to add defendants’ parent companies as parties. Although the original claims were ready for trial Judge Farnan granted plaintiffs’ request to add the parent companies because the parent companies were involved in the sale and distribution of the generic product in question. Id. at 5. Moreover, any further discovery that may be necessary would not unduly prejudice the defendants because the discovery would be limited to only the sale and distribution of the product. Id. Judge Farnan also denied defendants request to bifurcate damages from liability because the limited discovery would not cause any undue delays and there would be no danger of confusion for the jury. Id. at 7.
Plaintiff filed a motion to dismiss a copyright infringement action over audio compression technology. Vianix LLC v. Nuance Communications, Inc., C.A. No. 09-348-JJF, Memo. Op. (D. Del. July 20, 2010). Defendant argued that plaintiff failed to state a claim upon which relief can be granted because plaintiff “has not identified the specific original works” that form the basis of their claims and because it has not “identified specific acts” that are actionable as infringement. Id. at 3. The court found that plaintiff’s complaint “sufficiently pleads which specific original works are the subject of its copyright claims” because it identifies the accused works as “four computer programs, in the form of source code, embodying the MASC Technology” and lists the four copyright registrations, in addition to alleging that plaintiff provided a number of the accused works to the defendant in “object code” and that there were seven specific products since 2005 that incorporate the accused works. Id. at 7-8. The court further found that plaintiff alleged specific acts of infringement when it alleged that defendant’s “making and storing  ‘archived copies of its own products, including versions that contain Vianix’ including the Subject Works” were acts of infringement. Id. at 9.
Discovery disputes over the production of source code often involve thorny issues of confidentiality. But sometimes those disputes are more basic, such as when a party outright refuses to produce certain code. In a recent decision, district judge Joseph J. Farnan Jr. addressed this type of dispute, and came down in favor of production.
On the underlying motion to compel, Imagine argued that it had no obligation to produce source code relating to its future products (as opposed to current products) because “of the likelihood that the products will change before they are released” and because movant BigBand “is not entitled to any damages from the future products.”
The Court dismissed this contention, noting that Rule 26′s relevancy standard is broad enough to encompass BigBand’s discovery request: “[S]ource code of Imagine’s future products is discoverable because it is reasonably likely to lead to evidence relevant to BigBand’s infringement claim.”
Also see the Court’s related decision on a motion to amend and motion to dismiss.
On Tuesday, Judge Farnan granted a default judgment in a patent infringement case against Medical Skin Therapy Research, Inc. (“MSTR”). Tristrata Technologies filed suit againt MSTR on October 17, 2006 – three years, nine months, and thirteen days before the entry of default judgment. In that time, MSTR appears to have made no response at all to the Court, despite correspondence with Tristata showing that it was aware of the suit. The Court granted a default judgment, but did not grant Tristrata’s requested $687,000 in damages plus attorney’s fees. Instead, it ordered Tristrata to submit an itemized statement of damages and the basis for the damages, so that MSTR will have an opportunity to respond.
On Tuesday, Judge Farnan issued an opinion in Enhanced Security Research, LLC v. Juniper Networks, Inc., C.A. No. 09-871-JJF (D. Del. July 20, 2010), dismissing Plaintiff’s claims for lack of standing.
The question was whether the plaintiff held enough of the rights under the patent to allow it to bring a claim at all. The patent-in-suit had been transferred several times, and was subject to a 2007 “Purchase Agreement” in which Plaintiff had sold several exclusive rights under the patent to a third party, but had retained title. The Federal Circuit requires that a plaintiff or plaintiffs hold “all substantial rights” to a patent in order to bring a claim. Id. at 7-8.
Here, the Court determined that Plaintiff had transferred “all substantial rights” to the third party, including the exclusive right, as stated in the contract, to “initiate, maintain, manage, resolve, conclude and settle all arrangements and activities in connection with any and all licensing or litigation or enforcement efforts and/or Proceedings . . . relating to any of [Plaintiff]‘s rights in and to any of the Patents.” Id. at 8-9. Because the third party possessed “all substantial rights” relating to the patent, Plaintiff could not bring an action without the involvement of that party. Id. at 9-11. Thus, the Court granted Defendant’s Motion to Dismiss.