Articles Posted in Leonard P. Stark, Chief Judge

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Chief Judge Leonard P. Stark recently considered defendants’ motion to dismiss based on lack of prudential standing of plaintiff when it filed the original complaint in 2012.  Intellectual Ventures I LLC v. AT&T Mobility, LLC, et al., C.A. No. 12-193-LPS, 13-1632-LPS, 15-799-LPS, 15-800-LPS (D. Del. Aug. 25, 2016).  Judge Stark previously granted a motion to dismiss for lack of standing because the licensor of the patent-in-suit retained certain rights over the patent.  Id. at 2.  Judge Stark gave plaintiff leave to amend to add the licensor as a plaintiff, but instead, in 2013 plaintiff purchased the patent from the licensor and amended its complaint re-adding the patent.  Id. at 3-4.  The defendants again moved to dismiss because the court already held plaintiff lacked prudential standing to assert the patent and cannot retroactively cure the standing defect by executing a nunc pro tunc agreement.  Judge Stark agreed, finding that after the Federal Circuit’s decision in Alps South, LLC v. Ohio Willow Wood Co., 787 F.3d 1379 (Fed. Cir. 2015) the “post-filing agreement between . . . a patent infringement plaintiff who lacked all substantial rights in the patent on which it was suing at the time it filed suit and . . . the owner of the patent-in-suit, and holder of substantial rights in the patent-in-suit, as of the date of the filing of the suit – cannot retroactively cure the prudential standing defect.”  Id. at 10.

Intellectual Ventures I LLC v. AT&T Mobility, No. 12-193-LPS

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In a recent Memorandum Order, Chief Judge Leonard P. Stark granted in part defendant’s motion to exclude the testimony of plaintiff’s damages expert. MAZ Encryption Technologies LLC v. Blackberry Corporation, C.A. No. 13-304-LPS (D. Del. Aug. 25, 2016). As Judge Stark explained, to calculate “his baseline estimate for damages,” the expert relied on a “previous license agreement involving the patent-in-suit.” Id. at 2. The previous license agreement, however, “was made in the context of settling a litigation dispute, and thus did not reflect the royalty the parties would have reached ‘just before infringement began.’” Id. at 2-3. As Judge Stark explained, “the amount of the previous settlement would need to be increased to arrive at the royalties that would have been agreed to in a hypothetical negotiation.” Id. at 3. The expert attempted to do so by “estimating the discount factor the parties used when negotiating the previous license agreement.” Id. The expert used the equation “Expected Damages= Settlement Value/Likelihood of Liability,” and arrived at his estimate of expected damages “by estimating the likelihood of liability at 40%.” Id. Judge Stark found that the expert’s “likelihood of liability” factor was unreliable:

[The expert’s] estimate for the likelihood of liability was not based on any facts relating to the merits of Plaintiff’s case. The estimate did not consider the nature of the patent-in-suit, the accused products, or either party’s litigation strategy. Instead, the estimate was based on a study that found that “patent holders tend to prevail approximately 40% of the time” in the District of Delaware. The Court agrees with [defendant] that [the expert’s] estimate approach is not reliable as it is not sufficiently tied to the particular facts of this case.

Id. at 3-4.

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In Princeton Digital Image Corporation v. Nordstrom.com LLC, et al., C.A. No. 13-408-LPS (D. Del. Aug. 16, 2016), Chief Judge Leonard P. Stark granted Plaintiff’s motion to set aside the Clerk’s entry of default, but also awarded sanctions to third-party intervenor Adobe for Plaintiff’s failure to answer its complaint in this action.

Defendants in this action are customers of Adobe, and Adobe had successfully moved to intervene in this and related suits due to its customers’ requests for indemnity. Id. at 2. Adobe then filed a complaint in intervention in this and related cases. While Plaintiff answered the complaint and counterclaimed in related suits, it did not do so in this action. Consequently, the Clerk had entered default against Plaintiff. Id. at 2-3.

The Court granted Plaintiff’s motion to set aside the entry of default, but required Plaintiff to “only assert[] defenses that are identical to those asserted in the Related Suits,” except that Plaintiff was prohibited from asserting a counterclaim that had already been dismissed in the related actions. Id. at 4. The Court explained that “[g]iven the identicality of the claims and defenses in this case and the claims and defenses in the Related Suits, there are no significant concerns of inefficiency or prejudice that would warrant deciding the issues in this case in Adobe’s favor based solely on [Plaintiff’s] default.” Id. at 4-5.

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In Chief Judge Leonard P. Stark’s Markman opinion in a series of related actions brought by Plaintiffs Intellectual Ventures I and II, the Court concluded that several disputed terms were indefinite, and further concluded that several terms appearing in the preambles of the claims were limiting. E.g., Intellectual Ventures I LLC v. AT&T Mobility, et al., C.A. No. 13-1668-LPS (D. Del. Aug. 12, 2016).

The Court concluded that the term “optimize” in the larger phrase “allocating means for allocating resources to said IP flow … so as to optimize end user application IP QoS requirements of said software application” was indefinite because the specification “indicate[d] that QoS is subjective and that QoS can vary from user to user based on individual preferences. . . . This subjective, user-based understanding would make it difficult, if not impossible for a POSA to ascertain, with reasonable certainty, whether the claim limitation is satisfies by any particular embodiment. Id. at 20-21. The Court also agreed with Defendants that “terms of degree” used in another patent rendered the claims indefinite, as a POSA “would not understand the terms ‘large’ and ‘small’ with ‘reasonable certainty,’” and the Court found the testimony of Defendant’s expert persuasive on this point. Id. at 34-35 (citations omitted).

As to terms in the preambles, the Court concluded that the term “frequency hopping” in a preamble was limiting where the preamble was relied on to distinguish the invention from the prior art. Plaintiff had done so during an inter partes review proceeding and, furthermore, this term appeared “in the patent’s title and throughout the specification. The term is needed to ‘give life, meaning and vitality to the claim.’” Id. at 10. As to a different term appearing in another patent (“application aware resource allocator at the MAC laywer / application-aware media access control (MAC) layer”), again the Court concluded the term was limiting in a preamble where the patentee relied on the term during prosecution to distinguish over prior art. Id. at 16.

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Judge Stark recently considered Heartland’s motion to compel discovery on the subject of why Kraft and its agents failed to disclose the Ackilli reference to the PTO during prosecution of one of the patents-in-suit.  Kraft Food Group Brands, LLC v. TC Heartland, LLC, et al., No. 14-028-LPS-CJB (D. Del. July 25, 2016).  Judge Stark granted the motion, finding that Kraft intentionally waived attorney-client privilege when it responded to Heartland’s interrogatory, asking for facts of certain individuals’ awareness of the Ackilli reference and why he or she did not disclose the reference to the PTO, with information about what “what a single Kraft patent attorney [Ms. Mitchell] knew about Ackilli and why she did not disclose the application to the Patent Office.”  Id. at 1-3.  Judge Stark ordered the parties to submit additional briefs on the scope of such waiver as to other individuals:

given that Kraft has indicated that it may defend itself against Heartland’s inequitable conduct allegations by arguing that Kraft or its agents were unaware that Ackilli should have been disclosed, Kraft’s decision to put in the record evidence to support this view constitutes waiver of information about other individuals who may have had a different perspective.

Id. at 3.

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Judge Leonard P. Stark recently issued a memorandum order addressing a number of privilege log disputes.  Idenix Pharmaceuticals, Inc. v. Gilead Sciences, Inc., C.A. No. 13-1987-LPS (D. Del. July 20, 2016) (and related cases, C.A. No. 14-109-LPS and C.A. No. 14-846-LPS).  Among other rulings, Judge Stark found the following:

(1) a communication between a non-lawyer employee and another non-lawyer employee who was the “liaison with patent attorneys” was properly withheld as privileged.  Id. at 5.

(2) an email between non-lawyers that discussed the terms for engaging patent prosecution counsel was not privileged.  Id. at 5-6.

(3) a “scientific document” attached to a privileged email was not privileged.  Id. at 6-7.

(4) a non-lawyer employee’s email to other non-lawyer employees expressing views on a competitor’s patent was not privileged.  Id. at 9.

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Chief Judge Leonard P. Stark recently considered the parties’ stipulation requesting the Court vacate its Claim Construction OpinionForest Laboratories, Inc., et al. v. Teva Pharmaceuticals USA, Inc., et al., Nos. 14-121-LPS, 14-686-LPS (D. Del. May 25, 2016).  The Court held a 4-day bench trial in February 2016 and the 30-month stay of FDA approval for Defendant’s ANDA ended on June 21, 2016.  Id. at 1.  Judge Stark found that the “public interest in the orderly operation of the federal judicial system” weighed against vacatur, particularly considering that the Court’s Opinion held terms of several of the patents-in-suit indefinite and plaintiffs are asserting the patents in other litigation.  Id. at 3-4.  Vacating the Opinion would be “at the expense of the interests of other parties in other litigation and the Court itself.”  Id. at 4.

Forest Laboratories v. Teva Pharmaceuticals, No. 14-121-LPS

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In a recent Memorandum Order, Chief Judge Leonard P. Stark granted in part defendants’ (“AVX”) renewed motion for reconsideration of the Court’s January 5, 2016 rulings, which granted the following relief to plaintiff (“Greatbatch”): “(1) allowed Greatbatch to conduct post-trial discovery, (2) ordered AVX to produce a privilege log for all lngenio documents after trial, (3) vacated the Court’s prior grant of summary judgment of no willful infringement of [U.S. Patent No. 6,888,715 (“’715 patent”)], and (4) granted summary judgment that the Ingenio products infringe the ’715 patent.” Id. at 14-15. Greatbatch Ltd. v. AVX Corp., C.A. No 13-723-LPS (D. Del. Apr. 18, 2016) (public version published April 22, 2016). As Judge Stark explained, “[t]he relief granted in the Court’s January 5 Rulings was motivated in large part by (1) AVX’s late production of core technical documents less than two weeks before trial (AVX’s ‘December 29 Production’) and (2) AVX’s misrepresentation to the Court at the pretrial conference, which AVX later attempted to correct, in part, by way of AVX’s December 29 Production.” Id. at 15. Judge Stark also noted that “[c]rucially, the relief the Court granted in its January 5 Rulings was also the product of AVX’s repeated late production of core technical documents and the fact that just days remained before trial was scheduled to begin.” Id.

Judge Stark denied AVX’s renewed motion for reconsideration with respect to issues (1)-(3) listed above. Judge Stark did, however, grant AVX’s renewed motion for reconsideration with respect to the fourth issue, the court’s grant of summary judgment that the Ingenio products infringe the ’715 patent. See id. at 20. Judge Stark explained that upon consideration of the relevant factors the “appropriate sanction is not the dispositive sanction of summarily deciding the ’715 infringement issue against AVX.” Id. at 23. Rather, “the lesser sanction of depriving AVX of the opportunity to try damages and validity with respect to the ’715 patent at the same trial at which infringement of the ’715 patent is at issue, and instructing the jury determining damages to assume infringement of the ’715, more appropriately balances the multiple, competing interests implicated by a difficult situation of AVX’s making.” Id. Judge Stark further explained that “[t]he degree of prejudice that would have resulted to Greatbatch were it not for the relief granted would have been great. Yet the remedy the Court has arrived at adequately ameliorated that prejudice, by not requiring Greatbatch to divert its trial preparation as a result of AVX’s December 29 Production and by permitting Greatbatch to proceed to prove its damages case concerning the ’715 patent based on an assumption of infringement.” Id. at 24. Judge Stark concluded that “[o]n the whole, the Court regards this result as a less severe punishment than was imposed in connection with the January 5 Rulings but one that nonetheless avoids substantial unfairness to Greatbatch while serving to deter conduct similar to AVX’s by others in the future.” Id.

Judge Stark finally denied AVX’s request to reopen discovery with respect to damages. See id. at 25.

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In Walker Digital, LLC v. Google, Inc., C.A. No. 11-318-LPS (D. Del. Apr. 12, 2016), Chief Judge Leonard P. Stark considered Defendant’s Motion for Review Taxation of Costs, where it had requested over $80K but had been awarded less than $3K by the Clerk of Court.  Chief Judge Stark granted the motion, finding the award of costs for depositions, a technology tutorial, conversion to TIFF images in production, and obtaining hearing transcripts to be an appropriate exercise of the Court’s discretion.

As a threshold matter, the Court interpreted Local Rule 54.1 as allowing such a motion by the prevailing party in a case.  Plaintiff argued it was procedurally improper as Defendant was not “the opposing party” to receiving costs, but the Court explained that Defendant “is the aggreived party with respect to the portion of the Clerk’s taxation decision to which [Defendant] has filed its motion.  In this context, then, [Defendant] is ‘the opposing party’ with respect to the Clerk’s decision – even though [Defendant] is not, of course, ‘the opposing party’ with respect to [its] own Bill of Costs.”  Id. at 5.

Also included in the decision is Chief Judge Stark’s discussion of the importance of Markman technology tutorials.  Plaintiff had argued that Defendant’s costs related to the creation of its  technology tutorial were not appropriate because Defendant had not identified how the tutorials had aided the Court.  But Chief Judge Stark, in awarding the costs, observed that “[i]n almost every patent case, the undersigned judge requires the submission of technology tutorials as they aid this Court in understanding the technological context in which particular claim construction disputes must be resolved. In every case in which technology tutorials are ordered and submitted, the Court relies on them, just as it relies on the parties’ claim construction briefing.”  Id. at 10.

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Chief Judge Leonard P. Stark recently denied a motion for sanctions under 35 U.S.C. § 285 in a series of cases presenting a “difficult, close call.”  Princeton Digital Image Corp. v. Office Depot Inc., C.A. No. 13-239-LPS (D. Del. Mar. 28, 2016) (and related cases).  Although the Court denied the motion, it found a number of factors weighed in favor of finding the case to be “exceptional” for purposes of § 285, while others weighed against such a finding or were neutral.  As Judge Stark explained:

The Court makes this finding not due to the lack of merit to PDIC’s case, nor due to bad faith litigation.  Instead, these cases “stand out from the rest” due to a combination of: an adequate but far from ideal pre-suit investigation, conducted with haste due to decreasing damages availability based on an expired, but seemingly strong and broad, patent; somewhat careless, dilatory litigation conduct by the patentee; an attempt by the patentee to shift some substantial portion of the costs of identifying the line between licensed and non-licensed conduct to Defendants and Adobe; intervention, permitted by the Court, by an aggressive intervenor, despite PDIC’s repeated (though at times hard-to-believe) protestations that PDIC had no intent to accuse any licensed conduct of infringement; PDIC’s unexplained delay in dismissing at least one of the above-captioned cases; and PDIC’s failure to carefully, consistently, and thoroughly respond to Adobe’s reasonable inquiries as well the Court’s questions.  The overall balance, therefore, leads the Court to find that these cases are “exceptional.”

However, the Court decided that under the circumstances the “appropriate exercise of its discretion” was “not to award attorney fees.”  In part that was based on the aggressive intervenor, Adobe, itself causing increased attorney fees.  Additionally, Judge Stark explained, “[w]ith respect to considerations of deterrence, although PDIC could have done more to advance the litigation much more efficiently, there is no singular category of conduct that rises to a level that would warrant deterrence by way of an award of attorney fees.  There is no evidence of bad faith or otherwise sanctionable conduct.”  The Court added, “[i]n many ways, PDIC’s somewhat careless and dilatory conduct was a result of the unique circumstances of these cases, involving an aggressive third-party intervenor, two motions for sanctions before the case even got to the discovery phase, and a flurry of motion practice based on wholly-undeveloped theories of license interpretation and patent infringement.  Id. at 41 (emphasis in original).  For the same reasons, the Court found that Rule 11 sanctions were not warranted, and the lack of bad faith precluded an award of sanctions under 28 U.S.C. § 1927.

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