Articles Posted in Sherry R. Fallon, Magistrate Judge

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In Boston Scientific Corporation, et al. v. Edwards Lifesciences Corporation, C.A. No. 16-275-SLR-SRF (D. Del. Feb. 28, 2017), Magistrate Judge Sherry R. Fallon granted defendant and counterclaim/third-party plaintiff (collectively, “Edwards”)’s motion for leave to amend their answer to add a prior use defense pursuant to 35 U.S.C. § 273.

Evaluating the proposed amendment under Rule 15, the Court concluded that the proposed affirmative defense was “factually sufficient” for this stage of the proceedings, where Plaintiffs had not pointed to any authority requiring a heightened pleading standard for affirmative defenses – rather, affirmative defenses are not held to the same pleading standard as claims or counterclaims. Id. at 3-4.  The Court also held that the new defense would not cause undue delay where the motion was filed prior to the case’s deadline for amendment of pleadings and where the case was in its early stages, with fact discovery closing in spring 2017. Id. at 4.  As to prejudice, although Plaintiffs “claim[] that [they] did not anticipate the addition of Edwards’ prior use defense when [they] negotiated the discovery limits in the scheduling order, [Plaintiffs] acknowledged the possibility of an amended answer by stipulating to the deadline for amended pleadings in the scheduling order at the time of discovery negotiations.” Id. at 5.

However, “[t]o the extent [Plaintiffs] would be prejudiced by the need to obtain additional discovery directed to the prior use defense, a limited grant of additional discovery [was] warranted.” Id. Accordingly, the Court granted Plaintiffs’ request for an increase in their limits on discovery requests and an extension to serve new document requests, but did not provide Plaintiffs with the full requested increase, as “[i]n view of the unused requests available to [Plaintiffs] under the scheduling order . . . the number of additional requests sought by [Plaintiffs] is unnecessary.” Id. at 6.

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In Collabo Innovations, Inc. v. Omnivision Technologies, Inc., C.A. No. 16-197-SLR-SRF (D. Del. Jan. 25, 2017), Magistrate Judge Sherry R. Fallon considered Defendant’s motion to transfer to the Northern District of California as well as its motion to dismiss indirect infringement claims based on an alleged lack of pre-suit knowledge.

The Court denied the motion to transfer. Both parties were Delaware corporations with principal places of business in California, and Plaintiff had no facilities in Delaware. Id. at 1. Because Delaware was not Plaintiff’s “home turf,” the Court awarded Plaintiff’s forum choice “increased weight in the Jumara analysis but less than the ‘substantial’ or ‘paramount’ weight” it would be given had [Plaintiff] filed suit in its home forum.” Id. at 8. Because Defendant manufactured, sold, and used the accused products nationwide, and because it was also “a large Delaware corporation with resources to litigate in this district,” where the claim arose was neutral and the convenience of the parties weighed against transfer. Id. at 9-10. As to the public interest factors, the Court found that practical considerations weighed slightly against transfer where Plaintiff had filed a related action against another party in Delaware but where Defendant argued that “a trial in Delaware will be more expensive and difficult due to travel considerations and expenses, including costs of local counsel.” Id. at 12-13. In sum, Defendant had “not shown that the Jumara factors as a whole weigh strongly in favor transfer. Only [Defendant’s] forum preference weighs in favor of transfer, and that preference does not warrant maximum deference. On the other hand, the remaining factors are neutral or weigh in favor of [Plaintiff].” . . . The court recognizes that it may be more expensive and inconvenient for [Defendant] to litigate in Delaware instead of California. However, under the circumstances, the court ‘decline[s] to elevate the convenience of one party over the other,’ as ‘discovery is a local event and trial is a limited event.’ . . . Delaware imposes no ‘unique or unexpected burden’ on [Defendant], such that transfer is warranted in the interests of justice.” Id. at 14-15 (citations omitted).

The Court then recommended that the motion to dismiss be granted in part, as to any possible allegations of pre-filing conduct. Acknowledging that “[t]he case law in this district is divided on the issue of whether pre-suit knowledge is required to sufficiently state a claim for indirect infringement,” Id. at 17, the Court adopted the “more recent line of cases” holding that “the filing of a complaint is sufficient to provide knowledge of the patents-in-suit for purposes of stating a claim for indirect infringement occurring after the filing date.” Id. Here, Plaintiff had limited its cause of action for indirect infringement to conduct following the filing of the complaint. Id. at 18. “In keeping with the most recent decisions of this court,” therefore, the “post-filing date knowledge of the patents-in-suit is sufficient to state a claim for indirect infringement occurring after service of the complaint. In view of the foregoing authority,” the Court recommended that the motion be granted-in-part “to the extent that [Plaintiff’s] amended complaint could be construed to assert causes of action for indirect infringement based on pre-filing conduct.” Id.

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In Boston Scientific Corp., et al. v. Edwards Lifesciences Corp., et al., C.A. No. 16-275-SLR-SRF (D. Del. Dec. 27, 2016), Magistrate Judge Sherry R. Fallon denied Defendants’ request to include in the protective order an objection procedure for disclosure of confidential material to non-U.S. counsel in counterpart litigation. The Court concluded that the following provision would reveal counsel’s work product because it would reveal which documents were “important to Plaintiffs”: “Prior to disclosure of Protected Material to Designated Foreign Counsel, the Party seeking disclosure shall provide written notice to the Producing Party identifying (i) the names of the Designated Foreign Counsel and (ii) the specific Protected Material sought to be disclosed to the Designated Foreign Counsel.” Id. at 2.

Defendants argued that the provision was necessary to provide a mechanism by which disclosure of sensitive documents could be objected to, and maintained that “foreign counsel access is unnecessary for coordinating litigation strategy.” Id. at 3. It further argued that the provision was “modeled after a provision in [another case’s] protective order.” Id. However, the Court observed that “the [other order’s] provision upon which [the proposed provision] is modeled relates to the use of documents in foreign actions. Whereas, in the present case, there is no pending request to use the documents in foreign litigation. Plaintiffs previously agreed that the documents would not be used in any foreign litigation. Therefore, the addition of [the provision] is unnecessary.” Id. (emphasis in original).

Boston Scientific Corp., et al. v. Edwards Lifesciences Corp., et al., C.A. No. 16-275-SLR-SRF (D. Del. Dec. 27, 2016)

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Magistrate Judge Sherry R. Fallon recently considered plaintiff’s motion to compel defendant to supplement its document production and responses to certain interrogatories.  Regarding production of core technical documents, Plaintiff requested certain categories of documents, including:

(1) requirement and in-house technical specifications; (2) design documents; (3) scope of work documents and schedules; (4) vendor specifications; (5) complete functional programming guides; (6) testing documents; (7) deployment documents; (8) maintenance documents; (9) internal user guides; (10) system integration documents; (11) engineer training documents; (12) system architecture documents, and (13) complete architectural design documents.

Novanta Corporation v. Iradion Laser, Inc., No. 15-1033-SLR-SRF (D. Del. Sept. 16, 2016).  Defendant argued that it complied with the requirements of the Scheduling Order and that the categories of documents identified by plaintiff does not exist.  Id. at 4.

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In a recent Report and Recommendation, Magistrate Judge Sherry R. Fallon recommended denying foreign defendants TCL Communication Technology Holdings Limited (“TCL Holdings”) and TCT Mobile Limited’s (“TCT Hong Kong”) motion to dismiss for lack of personal jurisdiction. Godo Kaisha IP Bridge 1 v. TCL Communication Technology  Holdings Limited, C.A. No. 15-634-SLR-SRF (D. Del. Aug. 17, 2016). Judge Fallon found that personal jurisdiction was proper under various sections of the Delaware long-arm statute. First, Judge Fallon found that jurisdiction was proper under subsection (c)(1) because “TCT Hong Kong and TCL Holdings made direct sales of Accused Products to Delaware customers through their respective websites,” and therefore transacted business in Delaware. Id. at 9-10. Judge Fallon also found that section (c)(3) was satisfied because TCT Hong Kong and TCL Holdings caused tortious injury in Delaware, as they caused to be sold through a website or an Amazon storefront accused products to Delaware customers. See id. at 10. Finally, Judge Fallon found that jurisdiction was proper under a “dual jurisdiction” or “stream of commerce” theory, which combines subsections (c)(1) and (c)(4). Under this theory, Judge Fallon concluded that TCL Holdings and TCT Hong Kong “intended to serve the United States market without excluding Delaware, thereby satisfying the first prong of the dual jurisdiction analysis.” Id. at 13. Judge Fallon noted that “[t]he record in the present case establishes TCT Hong Kong’s intent to serve the Delaware market by manufacturing and selling phones, which it actively markets in the United States and distributes through national retailers like Best Buy.” Id. at 12.

Judge Fallon also found that exercising jurisdiction over the TCL Holdings and TCT Hong Kong comported with due process. Judge Fallon explained that evidence showed “TCL Holdings and TCT Hong Kong purposefully availed themselves of the privilege of conducting business in Delaware by introducing their products in the United States market with the knowledge that some of those products would end up in Delaware and they should anticipate being sued in Delaware.” Id. at 16.

Godo Kaisha IP Bridge 1 v. TCL Communication Technology Holdings Limited, C.A. No. 15-634-SLR-SRF (D. Del. Aug. 17, 2016).

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In a recent Report and Recommendation, Magistrate Judge Sherry R. Fallon recommended that the court deny defendant Baker Hughes, Incorporated’s (“Baker”) motion to transfer venue to the Southern District of Texas pursuant to 28 U.S.C. § 1404(a). Smith International, Inc. v. Baker Hughes Incorporated, C.A. No. 16-56-SLR-SRF (D. Del. Aug. 10, 2016). Judge Fallon concluded that “Baker has not shown that the Jumara factors as a whole weigh strongly in favor transfer.” Id. at 12. Judge Fallon explained that “[o]nly Baker’s forum preference weighs in favor of transfer, and that preference does not warrant maximum deference. On the other hand, the remaining factors are neutral or weigh in favor of [plaintiff] Smith.” Id. Further, “in the present action, [plaintiff] Smith chose a legitimate forum because Delaware is the state of incorporation of both parties.” Id. While Judge Fallon “recognize[d] that it may be more expensive and inconvenient for Baker to litigate in Delaware instead of Texas,” the court declined “to elevate the convenience of one party over the other,’ as ‘discovery is a local event and trial is a limited event.’” Id. at 13. Judge Fallon found that “Delaware imposes no ‘unique or unexpected burden’ on Baker, such that transfer is warranted in the interests of justice.” Id.

Smith Int’l, Inc. v. Baker Hughes Inc., No. 16-56-SLR-SRF (D. Del. Aug. 10, 2016).

UPDATE: Judge Robinson recently overruled objections to Judge Fallon’s Report & Recommendation and affirmed the denial of Baker’s motion to transfer.

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In a recent Report and Recommendation, Magistrate Judge Sherry R. Fallon recommend that the court deny defendant’s motion to transfer to the District of Minnesota pursuant to 28 U.S.C. § 1404(a). Husqvarna AB et al. v. The Toro Company, C.A. No. 15-856-SLR-SRF (D. Del. Aug. 11, 2016). Judge Fallon found that “[o]nly [defendant’s] forum preference for its ‘home district’ and the limitations of some [of defendant’s] witnesses to appear in person for trial weigh in favor of transfer.” Id. at 16. Judge Fallon explained that “[i]n the present action, [plaintiffs] chose a legitimate forum, [defendant’s] state of incorporation.” Id. While Judge Fallon recognized “that it may be more expensive and inconvenient for [defendant] to litigate in Delaware than in Minnesota,” Judge Fallon declined “to elevate the convenience of one party over the other,’ as ‘discovery is a local event and trial is a limited event.’” Id. Judge Fallon concluded that “Delaware imposes no ‘unique or unexpected burden’ on [defendant], such that transfer is warranted in the interests of justice.” Id. According to Judge Fallon, defendant failed to show that the Jumara factors a whole weigh in favor of transfer, and therefore recommended that the court deny defendant’s motion.

Husqvarna AB et al. v. The Toro Company, C.A. No. 15-856-SLR-SRF (D. Del. Aug. 11, 2016).

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On March 10, 2016, Magistrate Judge Sherry R. Fallon issued a report and recommendation denying plaintiff Intellectual Ventures I LLC’s (“IV”) motion to compel defendant Ricoh Electronics, Inc. (“REI”) to produce certain documents in the possession of Ricoh Company, Ltd. (“RCL”), and to produce 30(b)(6) witnesses to testify regarding certain RCL documents that had been produced. Intellectual Ventures I LLC v. Ricoh Americas Corporation, et al., C.A. No. 13-474-SLR-SRF (D. Del. Mar. 10, 2016) (public version published Mar. 17, 2016). Defendant REI is a U.S. company and wholly owned subsidiary of the other defendant to this action, Ricoh Americas Corp. (“RAC”). RCL is Japanese company that is the parent of RAC, REI, and other Ricoh entities. RCL designs and manufactures the products accused of infringement in this action, and exports them to REI in the U.S., who transfers the accused products to RAC for distribution and sales in the U.S. In September 2014, Judge Robinson dismissed RCL as a party for lack of personal jurisdiction. Following RCL’s dismissal, REI did not provide discovery regarding the design, structure, and operation of the accused products, asserting that those documents were in RCL’s control. REI eventually produced a Technical Assistance Agreement (“TAA”) between RCL and REI, and a number of other RCL documents, but IV still found the production deficient. IV thus moved to compel REI after a motion for issuance of letters rogatory was denied by Japanese authorities. Id. at. 1-2.

Denying IV’s motion to compel document production, Judge Fallon first found that “REI does not have control over the missing documents in RCL’s possession under the terms of the TAA.” Id. at 4. Judge Fallon further explained that “IV . . . failed to establish the existence of an agency relationship between REI and RCL in accordance with Third Circuit precedent.” Id. at 5. Denying the motion to compel the production of a 30(b)(6) witness, Judge Fallon noted that “REI has shown that its ability to prepare witnesses to discuss documents from another corporate entity is substantially limited. Specifically, REI does not design the products, and employees of REI do not have personal knowledge of the technical details set forth in the documents produced by RCL.” Id. at 6. Judge Fallon explained that although “[t]he duty of preparation goes beyond the designee’s personal knowledge and matters in which the designee was personally involved, . . . a corporate subsidiary cannot be expected to acquire all of the knowledge of the parent company and testify on that information in a manner that would effectively result in an end-run around Judge Robinson’s ruling on the motion to dismiss and the denial of the Hague Convention request by the Japanese authorities.” Id.

On May 23, 2016, Judge Robinson concluded that there were no legal errors in Judge Fallon’s analysis and therefore adopted the Report & Recommendation. Intellectual Ventures I LLC v. Ricoh Americas Corporation, et al., C.A. No. 13-474-SLR (D. Del. May 23, 2016). Judge Robinson further explained, however, that “[i]t was not until October 2015 that REI produced [the] Technical Assistance Agreement (“TAA”) between RCL and REI. The TAA was executed in October 2005 and, therefore, was known or should have been known to REI before this litigation commenced (March 2013). The TAA limits the flow of information from RCL to REI in several ways, from the narrow scope of products to the nature of the information provided.” Id. at 2. According to Judge Robinson, pursuant to the TAA, “RCL has agreed to provide only information related to REI’s non-infringement defenses, as opposed to all relevant core technical information.” Id. Judge Robinson continued:

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In a recent Report and Recommendation, Magistrate Judge Sherry R. Fallon recommended that the Court dismiss plaintiff’s (“Evolved Wireless”) willful infringement claims and claims for pre-complaint inducement and contributory infringement pursuant to FRCP 12(b)(6). Evolved Wireless, LLC v. Samsung Electronics Co., Ltd., C.A. No. 15-545-SLR-SRF (D. Del. Mar. 15, 2016). Judge Fallon first addressed defendants’ (“Samsung”) pre-suit knowledge of the five patents-in-suit. Judge Fallon found, among other things, that Evolved Wireless’s allegations in the complaint regarding a May 4, 2015 FRAND licensing letter were insufficient to establish that Samsung had pre-suit knowledge of the patents-in-suit. Judge Fallon explained that the letter included “a list of eighty-five U.S. and foreign patents and applications, [and stated] that ‘the use of one or more patent claims in the portfolio is required to practice or otherwise comply with LTE standards or technical specifications.’” Id. at 6. The letter failed to “identify the patents-in-suit in this action from the list of eighty-five patents and patent applications.” Id. Judge Fallon also noted that “[t]he complaint in the instant case contains no allegations that the patents-in-suit are well-known in the industry.” Id. at 7. Judge Fallon thus concluded that Evolved Wireless failed to plead that Samsung had pre-suit knowledge of the patents-in-suit. Id. at 8.

Judge Fallon next found that Evolved Wireless failed to sufficiently plead the “objective recklessness” prong of the willful infringement standard. Judge Fallon explained that “Samsung’s refusal to enter into a licensing agreement with Evolved Wireless in response to a letter that did not accuse Samsung of infringement, did not identify any allegedly infringing products made by Samsung, and did not specifically identify the patents-in-suit from the appendix of eighty-five patents and patent applications does not demonstrate that Samsung was objectively reckless in continuing to manufacture, market, and sell the LTE devices.” Id. at 10. Judge Fallon thus recommended that the Court dismiss Evolved Wireless’s willful infringement allegations.

Next, Judge Fallon also recommended that the Court dismiss Evolved Wireless’s pre-complaint induced and contributory infringement claims. As noted, Judge Fallon had found that “Evolved Wireless . . . failed to sufficiently plead that Samsung had knowledge of the patents-in-suit and the infringement allegations prior to the filing of this action.” Id. at 12. As to the intent element, Judge Fallon added that “[b]ecause the complaint fails to sufficiently allege that Samsung understood the infringing nature of the asserted conduct prior to commencement of the suit, Evolved Wireless has not adequately pleaded that Samsung specifically intended that its customers would infringe the patents-in-suit.” Id. at 13.

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Magistrate Judge Sherry R. Fallon recently denied without prejudice a foreign defendant’s motion to dismiss for lack of personal jurisdiction.  Sony Corp. v. Pace PLC, et al., Civ. No. 15-288-SLR (D. Del. Feb. 12, 2016).  It was undisputed that the defendant, a United Kingdom corporation with its principal place of business in England, designed allegedly infringing digital cable and satellite television set-top box models, but that those models were manufactured by third parties outside the United States and shipped to ports outside of Delaware by the defendant’s subsidiary—a Delaware limited liability company with its principal place of business in Florida.  It was also undisputed that the defendant transferred title to allegedly infringing products outside of Delaware, and that the subsidiary sold the products to national cable providers including Comcast and DirecTV, which have Delaware customers.

The plaintiff argued that personal jurisdiction could be maintained over the foreign defendant under a “dual jurisdiction” or “steam of commerce” theory, which “implicates both subsections (c)(1) and (c)(4) of the Delaware long-arm statute. . . . Specifically, Sony argues that Pace Americas offers for sale the accused set-top boxes to cable and satellite service providers who Pace knew or should have known were reselling or providing those devices to customers in Delaware, demonstrating an intent to serve the United States market at large via its subsidiary.”  Judge Fallon acknowledge a split among the Court regarding whether the Delaware Supreme Court would recognize this theory of personal jurisdiction, but proceeded to analyze the theory on the basis that the Delaware Supreme Court had not yet overruled application of the theory.  Ultimately, while Judge Fallon found no evidence that the foreign defendant intended to exclude Delaware from its distribution in the United States, the plaintiff “failed to allege facts sufficient to satisfy the second prong of the analysis because there is no evidence on the record that the Accused Products were actually sold in Delaware.”  On that basis, Judge Fallon recommended denying the motion to dismiss, without prejudice, and allowing limited jurisdictional discovery on sales to Delaware customers that would satisfy the second prong of the analysis.

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