Judge Sleet recently denied defendant Cree, Inc.'s motion to transfer venue of plaintiff E. Fred Schubert's action to the Middle District of North Carolina. Schubert v. Cree Inc., C.A. No. 12-922-GMS (D. Del. Feb. 14, 2013). Schubert, a resident of New York, filed this action against Cree, a resident of North Carolina, along with two other actions alleging infringement of U.S. Patent No. 6,294,475. Judge Sleet determined that the Jumara factors weighed against transfer. Because Delaware was not Schubert's "home forum," Judge Sleet noted that Schubert's forum selection was not "deserving of 'paramount' consideration." Id. at 5. But, Schubert's forum choice was entitled to "some degree of heightened deference given its underlying rational and legitimate basis -- namely, the desire to litigate in a district approximately halfway between the parties and in which Schubert intends to litigate two related cases." Id. The court determined that defendants's forum preference, where the claim arose and the location of books and records weighed in favor of transfer, but all other factors were either inapplicable or weighed against transfer. Id. at 5-10. Regarding the convenience of the parties, Judge Sleet noted the financial disparity between the parties and concluded that Cree had "far deeper pockets" and was better able to "bear any increased costs." Id. at 6-7. Also, the "practical considerations," factor weighed strongly against transfer considering that two related cases were currently pending in Delaware. Id. at 8-9.
Judge Sleet denies 12(b)(6) motion finding that the Court's prior construction of claims of the patent-in-suit did not result in issue preclusion
Chief Judge Gregory M. Sleet recently considered defendants' motion to dismiss in which the defendants argued that in light of the Court's prior construction of certain claims of the patent-in-suit, defendants' ANDA product could not infringe. Endo Pharms. Inc. v. TWI Pharms., Inc., C.A. No. 12-848-GMS (D. Del. Feb. 11, 2013). Judge Sleet denied the motion determining that, at this early stage of the case, the court could not find plaintiffs' claims "without merit or facially implausible." Id. at 2 n.1. Citing Third Circuit precedent on the issue of collateral estoppel, Judge Sleet noted that it was not clear that the Court would be bound by the prior claim construction when the parties reached a settlement before the court issued a decision. Id. at 2 n.1 (citing Russo v. City of Phila., 459 F. App'x 176, 178-79 (3d Cir. 2012) (outling the four elements of issue preclusion)). The court also determined that even if the court adopted its prior claim construction ruling, "the ANDA product could infringe the [patent-in-suit] under the doctrine of equivalents]; and because the claim limitation at issue was preceed by "consisting essentional of," the possibility existed that the ANDA product "could contain more than one of the Markush group members." Id.
In a recent memorandum opinion, Judge Sue Robinson denied a patent infringement defendant’s motion to transfer venue to the Northern District of Texas. Plaintiff Cradle IP was incorporated in Delaware and headquartered in California, while Defendant Texas Instruments was incorporated in Delaware and headquartered in Texas. See Cradle IP, LLC v. Texas Instruments, Inc., C.A. No. 11-1254-SLR, Memo. Op. at 1-2 (D. Del. Feb. 13, 2013).
Referring to her opinion on a similar motion in Helicos Biosciences Corp. v. Illumina, Inc., 858 F. Supp. 2d 367 (D. Del. 2012) (discussed here), Judge Robinson began with “the premise that a defendant’s state of incorporation has always been ‘a predictable, legitimate venue for bringing suit’ and that ‘a plaintiff, as the injured party, generally ha[s] been ‘accorded [the] privilege of bringing an action where he chooses.’’” Cradle IP, LLC v. Texas Instruments, Inc., Memo. Op. at 2. At the same time, Judge Robinson recognized that “the Federal Circuit expects an analysis of all the Jumara factors in connections with any transfer decision,” and proceeded to address each factor in turn. Id. at 3.
Judge Robinson found that the only factor favoring transfer was the “practical considerations that could make the trial easy, expeditious, or inexpensive,” because “trial in the Northern District of Texas would be easier and less expensive for [Texas Instruments, but it] is not evident that trial in Delaware would be easier and less expensive for Cradle IP.” Id. at 8. Every other factor either weighed against transfer or was neutral (the remaining factors were: choice of forum, where the claims arise, the parties’ relative size, convenience of the witnesses, location of books and records, relative administrative difficulty, local interest in deciding local controversies, enforceability of a judgment, public policies of the fora, and the familiarity of the judge with state law). Ultimately, she found, Texas Instruments did not meet its burden of showing that Cradle IP’s choice of forum should be disturbed. Id. at 5-9.
Perhaps most significantly, Judge Robinson declined Texas Instruments’ invitation to “‘accord little weight [to the plaintiff’s choice of venue] because [Cradle IP’s] recent incorporation in Delaware is an article of litigation’ and . . . ‘simply a litigation vehicle for [Cradle IP’s parent corporation], designed to give it an anchor, however tenuous, to this District.’” Id. at 4. Judge Robinson explained: “many businesses and academic institutions enforce their patent rights through private companies (like Cradle IP); such a business strategy is not nefarious. The court declines to treat such non-practicing entities as anything less than holders of constitutionally protected property rights, those rights having been legitimized by the Patent & Trademark Office.” Id.
Judge Robinson denies defendant’s motion for leave to amend its pleading with inequitable conduct affirmative defense and counterclaim
Judge Sue L. Robinson recently denied defendant’s motion “seeking to amend its answer and counterclaims to include an affirmative defense and counterclaim of inequitable conduct.” Butamax™ Advanced Biofuels LLC v. Gevo, Inc., C.A. No. 11-54-SLR, at 2 (D. Del. Feb. 13, 2013). Because defendant filed its motion three months after the scheduling order’s deadline to amend the pleadings, defendant was required to show “good cause under Rule 16(b) for its delay.” Id. at 4. Judge Robinson found that defendant had shown good cause, as the information relevant to its inequitable conduct defense and counterclaim was not produced until March 29, 2012—one day before the deadline to amend the pleadings—and defendant was required to sift through the large volume of documents produced to confirm with “particularity” its inequitable conduct theory. Id. at 5-6. Judge Robinson further found that plaintiff would not be prejudiced by this amendment, as “[i]nformation regarding its own inequitable conduct lies largely with plaintiff.” Id. at 6.
Despite these findings, Judge Robinson ultimately concluded that defendant failed to plead inequitable conduct with sufficient particularity and defendant’s amendment was therefore futile. Id. at 7-9. When pleading inequitable conduct, as Judge Robinson explained, the heightened pleading standard of Fed. R. Civ. P. 9(b) applies, which requires a party to identify “the specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO.” Id. at 4 (quoting Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1327 (Fed. Cir. 2009)). This standard requires the “knowledge” and the “intent to deceive” elements of inequitable conduct to be attributed to a specific individual. See id. at 7-8. Judge Robinson found that the “relationship between the general knowledge allegedly depicted on internal presentation slides” upon which defendant intended to rely “and the named individuals is too tenuous to show ownership of the knowledge or attribute a specific intent to deceive.” Id. at 9. That the named individuals did not withhold this general knowledge was corroborated by “the availability of such general knowledge in other publications, at least one of which was cited in the patent specifications.” Id. Accordingly, defendant’s motion for leave to amend its pleading was denied. Id.
Chief Judge Gregory M. Sleet recently denied a motion to transfer a case to the District of Massachusetts, where one defendant maintained its headquarters and records, based on an analysis of the Third Circuit's Jumara factors. Schubert v. Osram AG, et al., C.A. No. 12-923-GMS (D. Del. Feb. 14, 2013). In the process, the Court explained that it was less than clear that transfer would be statutorily permitted even if the Jumara factors weighed heavily in favor of transfer. Id. at 3. As Judge Sleet explained, a case may be transferred to “any other district or division where it might have been brought.” Id. at 3 (quoting 28 U.S.C. § 1404(a)). In this case, it was unclear to the Court whether the plaintiff could have brought his case in the District of Massachusetts, since two of the defendants were German entities with no evident operations in Massachusetts. Id. The defendants argued that the District of Massachusetts would have been an appropriate forum because “all defendants consent to jurisdiction in Massachusetts,” but the Court rejected that argument, explaining “the fact that all of the defendants here consent to jurisdiction in Massachusetts is irrelevant” because “the personal jurisdiction requirement cannot be satisfied by a hypothetical waiver.” Id. at 4 (quoting Guzzetti v. Citrix Online Holdings GmbH, No. 12-01152-GMS, 2013 WL 124127, at *3 n.2 (D. Del. Jan. 3, 2012)). Although it was unclear to the Court whether it could transfer the case to the District of Massachusetts under § 1404(a), the Court did not resolve that issue because it found that the Jumara factors weighed against a transfer anyway. Id. at 5.
With regard to the Jumara factors, Judge Sleet explained that the issue was a close one, but that the defendants failed to carry their “burden to demonstrate that the balance of convenience strongly favors transfer” even though, the Court acknowledged, “Massachusetts may well present a more convenient venue for this litigation . . . .” Id. at 14 (emphasis in original). The Court rejected the argument that the plaintiff’s choice of forum was entitled to little weight because he was not a Delaware resident, explaining that because he had rational and legitimate reasons to choose Delaware, his choice still "is given significant weight in the convenience analysis.” Id. at 7. Further, while accepting that the defendants (two of which were Delaware corporations) preferred litigating in the District of Massacusetts, the Court explained that they faced an “uphill battle in contending that Delaware represents an inconvenient forum” because “the court has recognized that a defendant incorporated in Delaware should generally not be heard to argue that litigating in this district is inconvenient.” Id. at 9. The Court also believed that the existence of related, co-pending lawsuits in Delaware weighed against transfer, explaining that “[t]he time invested by the court in a case is one . . . [public interest factor], and [plaintiff] rightly notes that keeping this action in Delaware, along with the two related cases, will likely allow the court to develop some degree of familiarity with the ‘475 Patent, the underlying technology, and the relevant industry[,]” which weighs against transferring the case. Id. at 12.
Judge Burke holds plaintiff’s patent invalid as obvious, but denies defendant’s inequitable conduct claim in ANDA litigation
In September 2010, plaintiff Bristol-Myers Squibb Company (“BMS”) commenced this ANDA litigation against defendant Teva Pharmaceuticals in response to Teva’s filing of Abbreviated New Drug Application No. 202122, which sought “approval to market a generic version of Baraclude.” BMS markets Baraclude to treat adults with certain types of “chronic hepatitis B virus infections.” The Orange Book lists U.S. Patent No. 5,206,244 (the “'244 Patent”) “in connection with BMS’s Baraclude Product,” and BMS sought to enforce claim 8 of that patent, which “covers the chemical compound entecavir.” However, in a recent post-trial opinion, Magistrate Judge Christopher J. Burke held that claim 8 of the '244 Patent is invalid as obvious under 35 U.S.C. § 103. Bristol-Myers Squibb Company v. Teva Pharmaceuticals USA, Inc., C.A. No. 10-805-CJB, at 1-4 (D. Del. Feb. 11, 2013).
In reaching his obviousness determination, Judge Burke first relied on a two-prong test specific to chemical compounds and found that Teva met its burden in proving a prima facie case of obviousness. See id. at 88, 131. Addressing the test’s first prong, Judge Burke concluded that Teva proved by clear and convincing evidence that a “chemist” of ordinary skill in the art would have selected 2'-CDG—a compound similar to entecavir—as a “lead compound” at the alleged time of invention. Id. at 112. Judge Burke explained that a “lead compound” is a prior art compound that “would be most promising to modify in order to improve upon [that compound’s activity] and obtain a compound with better activity.” Id. at 91 (quoting Takeda Chem. Indus., Ltd. v. Alphapharm Pty., Ltd., 492 F.3d 1350, 1357 (Fed. Cir. 2007)) (internal quotation marks omitted). Judge Burke’s conclusion that a chemist of ordinary skill in the art would have chosen 2'-CDG as a lead compound was supported by the following findings: (1) By the late 1980s, carbocyclic analogs, a class of compounds to which 2'-CDG belongs, had “generated excitement” among researchers, including researchers from BMS; (2) 2'-CDG and entecavir were structurally similar; (3) 2'-CDG had demonstrated “positive attributes,” including high potency and good activity in certain applications; (4) Researchers during the relevant time period “were actually treating and using 2'-CDG as a lead compound.” See id. at 94-112.
Turning to the second prong of the prima facie obviousness test, Judge Burke concluded that Teva demonstrated by clear and convincing evidence that the “ordinary medicinal chemist, having selected 2'-CDG as a lead compound, would have had reason to and been motivated” to alter 2'-CDG to create entecavir, and that chemist would have “reasonably expect[ed] to be successful in synthesizing [that] new compound.” Id. at 126, 131. Addressing the “reason” or “motivation” to create entecavir, Judge Burke explained that the chemist of ordinary skill in the art would have been motivated to make “small, conservative changes” to the “2 prime or 5 prime positions” of 2'-CDG, and one of the most conservative changes would have been the “addition of a carbon.” Id. at 119. Such changes were reflected in entecavir’s structure, which was essentially 2'-CDG with a “carbon” added to the “5 prime position.” See id. at 98. With respect to the “reasonable expectation of success,” Judge Burke found the structural similarity between 2'-CDG and entecavir significant, as it is “well-settled that structurally similar compounds ‘often have similar properties.’” Id. at 127 (quoting Takeda, 492 F.3d at 1356). Judge Burke also cited expert testimony that explained that all the “tools” necessary to synthesize entecavir were “in the literature.” Id. at 130.
After concluding that Teva established a prima facie case of obviousness, Judge Burke considered “objective indicia of nonobviousness.” Id. at 131. The evidence with respect to objective considerations, as Judge Burke explained, “was mixed.” Id. at 152-53. However, as Judge Burke’s decision reflects, secondary objective indicia of nonobviousness do not necessarily control the obviousness conclusion. See id. Judge Burke ultimately concluded that “in light of the significant force of Teva’s prima facie case” in addition to the fact that the “PTO was not able to consider certain material prior art references regarding 2'-CDG during prosecution of the patent,” Teva had “demonstrated by clear and convincing evidence that claim 8 of the '244 Patent is invalid as obvious under Section 103.” Id. at 153.
Teva also claimed inequitable conduct, arguing that a named inventor on the '244 Patent and two prosecuting attorneys intentionally failed to disclose 2'-CDG to the PTO despite their awareness of the similarity between entecavir and 2'-CDG. Id. at 155. Judge Burke held, however, that Teva failed to demonstrate this claim by clear and convincing evidence. Id. at 171. Judge Burke explained that it was “reasonable, if not more reasonable, to infer that these men had made a determination that the most important feature of entecavir was the addition of an exocyclic methylene group . . . and that because they were focused on that feature, they went on to cite prior art to the PTO that referred to compounds containing that type of substitution.” Id. at 170. Judge Burke further explained that with regard to at least the two prosecuting attorneys, it was “just as reasonable, if not more reasonable, to infer that another reason why they did not cite these references was because the references had not been brought to their attention by the inventors, and these men would have had little reason to have identified the prior art as relevant on their own.” Id.
Judge Robinson issues protective order covering documents exchanged with plaintiff’s patent monetization consultant; orders defendant to produce paper copies of improperly redacted documents containing source code.
In a recent memorandum order, Judge Sue L. Robinson found that a plaintiff’s communications with its patent monetization consultant were properly withheld as privileged or work product protected. Walker Digital, LLC v. Google, Inc., Civ. No. 11-309-SLR (D. Del. Feb. 12, 2013). Although the patent monetization consultant clearly “was not retained to provide legal services[,]” id. at 2 n.3, the Court explained that, based on a review of an advisory services agreement and a common interest agreement, “Walker Digital and IPNav do share a common legal interest and, therefore, any Walker Digital communications protected by the attorney-client privilege or work product doctrine do not lose that protection simply because they have been disclosed to IPNav.” Id. at 2.
The Court also granted in part the plaintiff’s motion to compel the production of paper versions of materials previously produced in redacted form. The Court denied the motion to the extent it related to documents with redactions labeled “Redacted – Source Code”, finding that such redactions at least put the plaintiff on notice that the unredacted information could be accessed on the source code computer. Id. at 1 n.1. However, with respect to documents produced with unlabeled redactions, the Court explained that “Google was not justified in simply redacting the information without offering an alternative means of reviewing it. Although Google has now made the unredacted versions available on the source code computer, this effort is too little, too late, for these documents.” As a result, the Court ordered Google to produce paper versions of these documents with source code unredacted. Id. at 2.
Judge Sleet holds defendant’s motion to dismiss in abeyance pending supplemental briefing and jurisdictional discovery
Chief Judge Gregory M. Sleet recently considered defendant’s motion to dismiss in Devicor Medical Products, Inc. v. Biopsy Sciences, LLC, C.A. No 10-1060-GMS (D. Del. Feb. 7, 2013). Defendant moved to dismiss for lack of personal jurisdiction or improper venue “or, in the alternative, [to] transfer under 28 U.S.C. §§ 1404(a) or 1406(a).” Id. at 2. Defendant also contended that plaintiff’s “false marking claims should be dismissed for failure to meet the heightened pleading requirements of Rule 9(b).” Id. Plaintiff filed an alternative motion for jurisdictional discovery. Id. The Court held defendant’s motion in abeyance pending supplemental briefing, and it granted plaintiff’s motion for jurisdictional discovery. Id. at 12.
As to personal jurisdiction, the Court concluded that Delaware’s long-arm statute could be satisfied based on plaintiff’s allegations. “[V]isitors to [defendant’s] Internet homepage were able to click a link [to purchase defendant’s product] . . . and then select ‘United States’ and ‘Delaware’ from separate drop-down menus. After making these selections, the website would provide the visitor with information for [an alleged] Delaware-specific distributor . . . which was located in New Jersey. . . . [Defendant noted] that it [was] not aware of any of its products being marketed, distributed, or sold in Delaware.” Id. at 3 (internal citations and quotation marks omitted). The Court concluded that defendant “might have at least induced infringement in Delaware . . . through its website’s reference to [the distributor],” thereby satisfying Delaware’s long-arm statute, which states that it has personal jurisdiction over a nonresident that “causes tortious injury in the State by an act or omission in this State.” Id. at 9-10.
Turning to the constitutional due process element of personal jurisdiction, the Court explained that the law of the Federal Circuit applied because “the jurisdictional issue is intimately involved with the substance of the patent laws.” Id. at 3 n.3 (internal citations and quotation marks omitted). But “both parties briefed this issue under Third Circuit law. As such, the court will order supplemental briefing [on this issue under Federal Circuit law] as well as limited jurisdictional discovery relating to this point.” Id. at 10-11. It explained that “[i]n the absence of further briefing on the Federal Circuit’s personal jurisdiction standard . . . it is difficult for the court to determine precisely what discoverable facts might be important. The court believes, however, that evidence of sales to Delaware customers is likely to be relevant to this inquiry and will therefore permit discovery on this and related jurisdictional issues.” Id. at 11 n.10.
Because the issue of personal jurisdiction had yet to be resolved, the Court did not reach the issues of improper venue, transfer, or Rule 9(b) pleading sufficiency. Id. at 11-12.
Magistrate Judge Thynge recommends denial of motion to dismiss which effectively sought early claim construction.
Magistrate Judge Mary Pat Thynge recently issued a report recommending the denial of Amazon.com’s and its subsidiaries’ motions to dismiss claims relating to mobile applications used to read barcodes. Hand Held Prods., Inc. v. Amazon.com, Inc., et al., C.A. No. 12-768-RGA-MPT (D. Del. Feb. 6, 2012). The defendants moved to dismiss the claims as falling short of the requirements imposed by Form 18, as well as the Twombly/Iqbal plausibility standard, id. at 3-4, and further argued that because their applications do not “selectively capture” barcodes, and instead only “capture and decode barcode information,” they could not be found liable for indirect infringement. Id. at 2.
After quickly disposing of the defendants’ argument that the direct infringement claims were insufficient, id. at 9-11, the Court explained that the complaint stated a plausible claim that each defendant also induced infringement based on their encouragement of customers to download and use infringing barcode-reading applications. Id. at 11-14. The Court added that the complaint stated a plausible claim of contributory infringement by alleging that each defendant “sells or offer to sell a mobile application that is a material part of the ‘088 patent[,]”which, assuming the truth of all well-pled allegations, has no substantial noninfringing use. Id. at 14-15.
Finally, the Court recommended the denial of the defendants’ motion to dismiss the plaintiff’s willfulness claim, finding that “[s]ufficient facts are alleged to infer Defendants knew there was an objectively high likelihood that their continued actions would constitute infringement.” Id. at 16.
In conclusion, the Court emphasized that the defendants’ motion to dismiss appeared, in reality, to be an attempt to “surreptitiously have the court conduct claim construction as part of its analysis under Rule 12(b)(6).” Id. at 16-17. The Court would not do this, of course, and explained that “[t]he analysis required is not to resolve disputed facts, nor decide the merits; rather, the examination is limited to testing the sufficiency of the complaint.” Id. at 17.
Judge Robinson dismisses invalidity counterclaims for failing to comply with Twombly and Iqbal and inequitable counterclaims for failing to meet the Exergen standard
Judge Sue L. Robinson recently granted-in-part Senju’s motion for partial dismissal of Apotex’s counterclaims and to strike certain affirmative defenses. Senju Pharm. Co., Ltd. v. Apotex, Inc., C.A. No. 12-159-SLR (D. Del. Feb. 6, 2013). Senju moved to dismiss Apotex's invalidity counterclaims arguing that that they were deficient because they did not recite factual support and were therefore not in compliance with Fed. R. Civ. P. 8. Id. at 6. In response, Apotex argued that “its invalidity defense is not subject to the heightened pleading standard of Twombly and Iqbal; complies with with Fed. R. Civ. P. Form 18; is pled with same level of detail as Senju’s infringement complaint; and will become more detailed as the lawsuit progresses.” Id. at 6-7. Granting Senju’s motion, Judge Robinson noted that the courts that have declined to apply Twombly and Iqbal to invalidity counterclaims have reasoned that doing so would render those court’s local patent rules “superfluous” and would be inequitable to defendants because it would impose a higher pleading burden than Form 18 requires for plaintiffs. Id. at 7. Judge Robinson found this reasoning unpersuasive, however, because the District of Delaware has not adopted local patent rules. Id. at 8. Furthermore, “Form 18 still requires that some factual underpinning be presented, [and] the fact that Form 18 . . . remains the standard for pleading infringement claims is an insufficient justification for deviating from Twombly and Iqbal for pleading other causes of action. Id. Judge Robinson did not, however, strike Apotex’s invalidity affirmative defenses because they provided fair notice as required by Fed. R. Civ. P. 8(c). “Due to the differences between Rules 8(a) and 8(c) in text and purpose,  Twombly and Iqbal do not apply to affirmative defenses, which need not be plausible to survive.” Id. at 9-10 (citing Internet Media Corp. v. Hearst Newspapers, LLC, Civ. No. 10-690, 2012 WL 3867165, at *3 (D. Del. Sept. 6, 2012) (internal quotations omitted) (alteration in original).
Judge Robinson also dismissed Apotex’s inequitable conduct counterclaims and related affirmative defenses, with leave to amend, for failing to adequately plead those claims with the particularity required by Exergen and Therasense. Id. at 14-15. Under Exergen, Apotex was required to plead “the specific who, what when, where and how of the material misrepresentation or omission committed before the PTO.” Id. Judge Robinson found that Apotex adequately pled the “how” (“misleading the PTO regarding evidence of obviousness, secondary considerations, and the scope of the patent’s written description) and the “where” (“materials omitted in submissions to the PTO and teachings of the written description”). Id. at 15. Although Judge Robinson found that the “given the volume of materials” submitted during reexamination, the withheld documents were withheld with knowledge and intent to deceive the PTO, Apotex did not adequately plead “who” deceived the PTO. Id. at 15-16. Judge Robinson determined that Apotex’s allegations of “who” were akin to the language found to be deficient in Exergen, i.e., “Exergen, its agents and/or attorneys.” Id. at 16. Apotex’s reference to “general entities” and “the inventors” in its claims would not permit the court “to reasonably infer that any specific individual both knew of the invalidating information and had a specific intent to deceive the PTO.” Id. at 16-17. See also XpertUniverse, Inc. v. Cisco Sys., Inc., 868 F. Supp. 2d 376, 379-83 (D. Del. 2012).