In Interdigital Communications, Inc., et al. v. ZTE Corporation, et al., C.A. No. 13-009-RGA (D. Del. Apr. 17, 2015), Judge Richard G. Andrews considered Defendants’ request to exclude Plaintiffs’ expert’s testimony with respect to certain statistical conclusions, arguing that the relevant testimony had never provided bases for his conclusions. The Court concluded that “the gist of [the expert’s] testimony was disclosed in his expert reports,” but certain mathematical analysis presented at the Daubert hearing had not been. Id. at 2. Consequently, the expert could “testify about his theory generally, but cannot engage in mathematical analysis unless asked on cross-examination.” Id.
In a recent Order, Judge Richard G. Andrews, pursuant to FRCP 15(a), granted plaintiff’s motion amend its complaint as to claims of induced infringement, but denied the motion to amend as to claims of contributory infringement. TQ Delta, LLC v. 2Wire, Inc., C.A. No. 13-1835-RGA (D. Del. Mar. 26, 2015). First, Judge Andrews found that plaintiff had adequately pled induced infringement, and its claims were therefore not futile. In particular, Judge Andrews explained that plaintiff “properly alleged inducement because it makes specific allegations of directly infringing parties, products and acts.” Id. at 3. Plaintiff alleged that defendant’s products operate in accordance with “specific DSL standards,” and defendant argued that “a standard with a mix of mandatory and optional requirements cannot be used alone to establish infringement.” Id. Judge Andrews found that “whether or not infringement has been established, as opposed to plausibly alleged, is a question for another day.” Id. That is, “[t]he standard’s mix of mandatory and optional requirements does not undercut the plausibility of the direct infringement allegation.” Id. at 3-4. Judge Andrews also found that plaintiff made a plausible showing that defendant knowingly induced infringement and had the specific intent to encourage infringement. Id. at 4-5. Specifically, Judge Andrews noted that “I do not think I need to decide exactly when the allegations rise to the level of knowledge since knowledge is plausibly pled as of the date an earlier complaint[,] names a patent[,] and alleges the Defendant infringed it with a product that complied with a named standard.” Id. at 4. Judge Andrews further noted that “[i]t is more than plausible that after receiving the complaint Defendant would have conducted reasonable investigation to determine the scope of the asserted patents, and that it thereafter intended for its customers to directly infringe the asserted patents.” Id. at 5. Judge Andrews found that plaintiff did not sufficiently plead contributory infringement, where “plaintiff merely states that the products are made for the specific purpose of operating in accordance with the standards, and therefore concludes that they have no substantial noninfringing use.” Id. Judge Andrews explained that “[t]hese conclusory statements are not adequately pled, because, as Defendant argues, the allegations are not plausible given the ‘mandatory/optional features of the standards and the substantial room for implementation-specific customization.’” Id.
Finally, Judge Andrews denied plaintiff’s motion to dismiss defendant’s breach of contract counterclaim. Id. at 6. Plaintiff argued, among other things, that defendant’s “breach of contract counterclaim fails to plead facts to demonstrate that Defendant was entitled to the benefits of Plaintiff’s agreement with ITU, a standards-setting organization.” Id. Judge Andrews found, however, that defendant “has sufficiently alleged that it was a third-party beneficiary of a contract and that Plaintiff failed to negotiate a license in good faith.” Id.
In Tuxis Technologies, LLC v. Amazon.com, Inc. (D. Del. Mar. 25, 2015), Judge Richard G. Andrews granted Amazon’s motion to dismiss for lack of patentable subject matter as to Tuxis’ remaining asserted claims of U.S. Patent No. 6,055,513 (“the ’513 patent”). Judge Andrews had previously granted Amazon’s motion to dismiss with respect to claim 1 of the ’513 patent (discussed here). First, addressing step one of the Alice framework, Judge Andrews found that “the asserted claims of the ‘513 patent are directed to the abstract idea of upselling” and are therefore “directed to patent-ineligible subject matter.” Id. at 5. Turning to step two of the Alice framework, Tuxis argued, for example, that the claims at issue “require establishing communication via the Internet between the user’s computer and the system.” Id. at 7-8. Judge Andrews explained, however, that such communication did not meaningfully limit the claims, noting that “the prohibition against patenting abstract ideas cannot be circumvented by attempting to limit the use of [the idea] to a particular technological environment.” Id. at 8. Judge Andrews further noted “that invocation of the Internet does not add an inventive concept, and that ‘the use of the Internet is not sufficient to save otherwise abstract claims from ineligibility under § 101.’” Id. Contrasting the claims at issue with those from DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014), Judge Andrews found that the instant claims “merely recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet.” Id. Rejecting Tuxis’ other arguments, Judge Andrews found that the remaining asserted claims were directed to unpatentable subject matter and therefore granted Amazon’s motion to dismiss.
Judge Richard G. Andrews recently dismissed plaintiffs’ motion to strike portions of the supplemental expert reports of defendants’ expert because the motion did not comply with the Court’s Local Rule 7.1.1. requiring parties to make a reasonable effort to resolve non-dispositive motions. Interdigital Communications Inc. v. Nokia Corporation, C.A. No. 13-10-RGA (D. Del. Mar. 26, 2015). The Court directed the parties to meet and confer. Id. at 2.
As previously reported, Judge Richard Andrews granted a motion for attorney fees in a patent infringement case under the Court’s inherent powers due to the plaintiff’s initiation of the suit without a good-faith belief that the accused products implemented the patented technology. Following supplemental briefing on the amount of attorney fees to be awarded, Judge Andrews has issued another opinion outlining the amount of fees that are owed. Parallel Iron LLC v. NetApp, Inc., C.A. No. 12-769-RGA, Memo. Op. at 16 (D. Del. Mar. 25, 2015).
Judge Andrews first rejected the plaintiff’s contention that the “lodestar” approach typically used to calculate attorney fees subject to a fee-shifting statute is not appropriate when fees are granted under the Court’s inherent powers. Id. at 6-7. Judge Andrews then rejected the argument that fees should be limited to the work associated with the plaintiff’s unsupported infringement contention because “Plaintiff was . . . sanctioned both for filing the suit and for its litigation tactics throughout. The entire period that Plaintiff accused pNFS instrumentalities is therefore the appropriate period for which to award fees.” Id. at 7-9. Furthermore, Judge Andrews found that defense counsel had not “performed unnecessary, frontloaded work . . . [because] responsible attorneys would not stand around and wait for months once their client has been accused of infringement and then rush to perform all their work once they get more specific information. It is reasonable to begin investigating and preparing a defense once an infringement suit has been brought.” Id. Judge Andrews also rejected arguments that evidence of settlement was used in violation of F.R.E. 408 and that the defendant was not entitled to fees incurred in connection with bringing a fee motion. Id. at 10-12.
Judge Andrews then found that the request for fees for hours worked was reasonable despite the fact that the hours were worked under a fixed fee arrangement. Judge Andrews’ only disagreement with the fees calculated by the defendant’s counsel was the hourly rate used. His Honor explained that under the “forum rule,” the hourly rate used should be that of intellectual property attorneys in Delaware rather than in New York City. Id. at 12-14. Finally, Judge Andrews refused to grant an injunction to prevent the plaintiff from dissipating assets and found that discovery into the plaintiffs finances was premature because judgment had not yet been entered, so allowing discovery would render Rule 69(a)(2), governing discovery from a judgment creditor, superfluous. Id. at 14-16.
Judge Andrews recently granted a Rule 12(b)(6) motion to dismiss for lack of patentable subject matter under 35 U.S.C. § 101 and Alice Corp. Priceplay.com, Inc. v. AOL Advertising, Inc., C.A. No. 14-92-RGA, Memo. Op. at 10 (D. Del. Mar. 18, 2015). Under the first step of the Alice analysis, His Honor found that the patents-in-suit were directed to the abstract idea of “a sales transaction,” a “fundamental economic practice long prevalent in our system of commerce.” Id. at 5-6. “[The plaintiff] argues that the claimed invention cannot be directed to patent-ineligible subject matter when ‘hundreds of e-commerce models have been commercialized and developed’ in recent years. . . . [but t]here are many products and services that are commercially available that are not directed to patent-eligible subject matter. Therefore, the examples provided by [the plaintiff] have little impact on the patentability of the claimed subject matter. . . . Performing a sales transaction over the Internet, or in conjunction with an auction and a competitive activity, does not make the concept any more ‘concrete.’” Id.
The Court then found that the patents-in-suit lacked an inventive concept. The plaintiff argued that “the ‘novel combination of a buyer’s participation in both an auction and a ‘competitive’ or ‘intermediary’ activity is distinct from any of the systems for conducting e-commerce,’ and thus makes the subject matter patent-eligible.” Id. at 7. But Judge Andrews explained that “the addition of an auction and a competitive activity to a sales transaction is nothing more than the addition of ‘well-understood, routine, conventional activity.’” Further, “the Internet is not essential to perform the claimed functions. Reliance on an intermediary activity to determine price has been a practice in sale negotiations throughout history, long before the existence of the Internet or computers.” Id. at 7-8.
After the motion was briefed, Judge Andrews ordered the plaintiff to submit proposed claim constructions to determine if construction would impact the motion. During oral argument on the motion, the parties agreed that the proposed construction did not affect any argument regarding the motion. Id. at 1.
In a recent Memorandum Order, Judge Richard G. Andrews granted defendants’ motion to stay pending the resolution of two inter partes reviews. CallWave Commc’ns, LLC v. AT&T Mobility, LLC, et al., C.A. No. 12-1701-RGA (D. Del. Mar. 18, 2015). Although the plaintiff argued that the second instituted inter partes review was procedurally improper and could be dismissed, the Court found that even in such case the first instituted inter partes review likely would simplify the issues in dispute for trial.
Judge Andrews recently granted a request by patent infringement defendants to allow additional claim construction briefs and argument regarding certain terms of a patent-in-suit after a jury trial finding the patent valid and infringed. Interdigital Commc’ns, Inc., et al .v. ZTE Corp., et al., C.A. Nos. 13-09-RGA, 13-10-RGA, Memo. Op. at 3-4 (D. Del. Mar. 6, 2015). Among the terms argued was a term that Judge Andrews had previously construed, adopting the construction proposed by the defendants. Post-trial, however, the defendants argued that construction was confusing and “opened the door for Plaintiffs’ expert . . . to make claim construction arguments to the jury at the . . . trial.” Id. at 9. The plaintiffs argued that their expert’s construction was the correct construction and that the defendants should not be permitted to relitigate claim construction when the defendants’ construction was adopted originally. Id. at 9-10.
At the trial, the defendants objected to the expert’s testimony, and the Court sustained the objection and struck the testimony. Judge Andrews also noted, in his claim construction opinion, that such testimony by the expert is improper and could be sanctionable. Id. at 9-10. Post-trial, however, Judge Andrews adopted the plaintiffs’ construction, noting that “Defendants’ argument that this interpretation is objectionable because the Court struck Dr. Cooklev’s testimony at the ZTE trial misunderstands the Court’s ruling. The testimony was improper because Dr. Cooklev was arguing a question of law to the jury. It was not that the substance of the argument was necessarily objectionable, it was that the argument was being made at all.” Id. at 11-12.
In Immersion Corporation v. HTC Corporation, et al., C.A. No. 12-259-RGA (D. Del. Feb. 24, 2015), Judge Richard G. Andrews granted-in-part defendants’ Daubert motion to exclude plaintiff’s damages expert, excluding the testimony regarding lost profits but allowing testimony regarding a reasonable royalty.
As to reasonable royalty, the expert chiefly relied on a prior settlement agreement between plaintiff and another party that covered the same patents-in-suit for accused devices with the same operating system; the settling party and current defendants also had “comparable market shares.” Id. at 4. Defendants argued that the expert’s calculation was flawed as it rested “on the premise that the patents-in-suit are the most valuable in the [settlement] portfolio,” and also that the expert had “cherry-picked” this particular license agreement as having the highest royalty rate among several other licenses. Id. at 4. But the Court concluded that reliance on this particularl agreement was reasonable, and Defendants’ criticisms went to weight rather than admissibility. Id. at 5-6.
As to lost profits, Defendants moved to exclude, as speculative and failing to show demand for the patented product, this expert’s theory that was “based on a license agreement that the parties negotiated for several years, but ultimately did not enter into. The agreement would have licensed the patents-in-suit, as well as [software of Plaintiff not covered by the patents] . . . [the expert] reasoned that ‘but for’ Defendants’ infringement, Defendants would have entered into the agreement they had been negotiating. He therefore calculated lost profits by applying that rate to [Defendants’] sales.” Id. at 6 (citations omitted). The Court concluded that this theory was “based on a faulty legal premise” and thus excluded it. The expert had not attempted to show any functional relationship between the patented products and this software, such that Plaintiff would be entitled to recover from lost sales of unpatented components sold with a patented product. Id. at 8-9.
Furthermore, the lost profits testimony was “inconsistent with the premise of the lost profits analysis.” Id. at 9. While the traditional lost profits framework is “based on an analysis where the hypothetical world is one in which the infringing sales did not occur” and, “[s]ince the sales did not occur, the infringement had been ‘factored out,'” the expert’s theory assumed Defendants had licensed the patents. Plaintiff’s counsel admitted that there was no case accepting this theory, although the Court observed there was also no case rejecting it either. Id. at 9 & n.7. The Court ultimately concluded that this theory “[went] too far,” as it would allow a patentee to seek damages representing “the right to exploit,” rather than simply the recognized “right to exclude.” Id. at 9-10 (citing hypothetical where whatever profits Defendants would have made from the licensed software, as well as the profits of other parties licensing the patents in light of Defendants’ own use of them, would be recoverable).
In a recent order, Judge Richard G. Andrews denied a motion seeking permission to use confidential discovery information obtained in the district court litigation before the PTAB in an inter partes review proceeding. Callwave Commc’ns LLC v. AT&T Mobility LLC, et al., C.A. Nos. 12-1701-RGA, 12-1702-RGA, 12-1703-RGA (D. Del. Feb. 19, 2015). As Judge Andrews explained, “my view is that discovery before the PTAB is an issue for the PTAB. Any confidentiality issues, if discovery is permitted, can be resolved at the same time by the PTAB.”