December 23, 2013

Judge Robinson denies motion to dismiss based on covenant not to sue

In Gevo, Inc. v. Butamax Advanced Biofuels LLC, et al., C.A. Nos. 12-301-SLR, 12-448-SLR (D. Del. Dec. 16, 2013), Judge Robinson denied plaintiff’s motion to dismiss Butamax Advanced Biofuel LLC’s (“defendant”) counterclaims of invalidity and non-infringement based on plaintiff’s covenant not to sue. The covenant not to sue provided that plaintiff would not sue “for the use of ‘Accused Technology,’ defined as certain modified recombinant organisms.” Id. at 2. Judge Robinson explained that because plaintiff was willing to dismiss its infringement claims, and only defendant’s counterclaims would remain, the case would transform into a declaratory judgment action. Id. at 3 n.2.

Under the totality of the circumstances, Judge Robinson found an actual controversy between the parties to exist and denied plaintiff’s motion to dismiss, citing to “the pattern of litigation between the parties[,] . . . the unpredictability of the art,” and the defendant’s “desire to use the alleged infringing strains.” Id. at 5. Specifically, Judge Robinson noted that there are “eleven cases pending between the parties,” which are “direct competitors and are in a race to develop bio-isobutanol technology.” Id. at 4. Further, as Judge Robinson explained, “the covenant not to sue casts a cloud over [defendant’s] research efforts,” noting that the parties “already disagree[d] “on how to interpret ‘Accused Technologies’ in the covenant not to sue.” Id. at 4 & n.5.That is, there was disagreement on whether the covenant covered “future commercial strains” with a “different genetic background.” Id. at 4. Judge Robinson additionally noted that defendant stated “that it will likely resume using the alleged infringing strains if the litigation is resolved in its favor.” Id.

While a “justiciable controversy” was found in these “unusual circumstances,” Judge Robinson did not intend the “memorandum to commend [defendant’s] decision to oppose dismissal or the parties’ inability to find a non-litigation oriented means to pursue their technology interests.” Id. at 5 & n.6.

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December 23, 2013

Judge Stark Grants Judgment on the Pleadings Based on Collateral Estoppel

Judge Stark has granted a motion for judgment on the pleadings under Rule 12(c) in a patent infringement case involving patents related to transmitting video signals over telephone lines. The plaintiff, United Access Technologies, filed cases against several defendants in 2011. Two defendants, CenturyLink, Inc. and Qwest Corp., filed motions for judgment on the pleadings and their cases were stayed pending the outcome of those motions. It was undisputed that Plaintiff’s predecessor, a prior owner of the patents-in-suit, had filed a previous suit on the patent-in-suit, that a jury had returned a verdict of non-infringement, and that the District Court and the Federal Circuit had denied a motion for judgment of infringement as a matter of law. The question for the Court, therefore, was whether the current cases should be dismissed based on collateral estoppel. United Access Technologies, LLC v. Centurytel Broadband Services, LLC, et al., C.A. No. 11-339-LPS, Memo. Op. at 1-3 (D. Del. Dec. 20, 2013).

Third Circuit law applied and required that “(1) the identical issue was previously adjudicated; (2) the issue was actually litigated; (3) the previous determination was necessary to the decision; and (4) the party being precluded from relitigating the issue was fully represented in the prior action.” Id. at 3 (quoting Jean Alexander Cosmetics, Inc. v. L’Oreal USA, Inc., 458 F.3d 244, 249 (3d Cir. 2006)). “The Third Circuit has ‘also considered whether the party being precluded had a full and fair opportunity to litigate the issue in question in the prior action, and whether the issue was determined by a final and valid judgment.’” Id. (quoting Jean Alexander, 458 F.3d at 249).

Judge Stark first found that the identical issue of infringement had been adjudicated in the prior suit with the plaintiff’s predecessor. Furthermore, Judge Stark agreed with the defendants that the plaintiff had “waived its opportunity to try to identify meaningful differences between their accused products and those at issue in” the prior litigation. Id. at 3-4. Because the collateral estoppel issue was identified early in the case, the scheduling order had been tailored to require the plaintiff to “specifically identify any features that form the basis for Plaintiff’s allegation that Defendants’ systems are distinguishable from the systems found not to infringe the patents-in-suit in” the prior litigation. In response, the plaintiff distinguished the cases on the basis that the prior judgment had found that the accused system was distinct from any telephone devices. Judge Stark found, however, that this distinction “does nothing to account for the fact that the issue of whether industry standard ADSL infringes the patents-in-suit was litigated, and lost.” “At best, [this argument] would only allow Plaintiff to overcome one of the bases on which it lost in [prior litigation]. Another reason a judgment of non-infringement was entered in that earlier action is that Plaintiff failed to show that industry standard ADSL was within the scope of the patents-in-suit.” This was “fatal to Plaintiffs case, as the Third Circuit ‘follow[s] the traditional view that independently sufficient alternative findings should be given preclusive effect.’” Id. at 3-8 (quoting Jean Alexander, 458 F.3d at 255).

Judge Stark also rejected the plaintiff’s argument that only the specific ADSL system accused in the previous litigation was at issue and therefore “industry standard” ADSL was not necessary to the decision. Based on the testimony of the expert in the previous litigation, however, Judge Stark found that the “industry standard” ADSL had been at issue and necessary to the prior judgment. Id. at 8-10. Furthermore, it was undisputed that direct infringement had been “actually litigated” previously, and because direct infringement claims were estopped, the plaintiff could not prove its indirect infringement claims, which it asserted had not been actually litigated. Id. at 10. Finally, the plaintiff was “fully represented” in the previous litigation because the plaintiff’s predecessor had “a full and fair opportunity to litigate the issue.” Id. at 10-11.

Finally, Judge Stark rejected the suggestion that the motion was really a summary judgment motion in disguise, emphasizing that the Court relied on the material from the prior litigation “only to show that the identical issue was actually and necessarily litigated, and not for the truth of facts averred in those proceedings.” Id. at 11-12. Accordingly, all of the elements of collateral estoppel were satisfied, and Judge Stark granted the motion for judgment on the pleadings.

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December 20, 2013

Judge Andrews considers motions for summary judgment

In Inventio AG v. Thyssenkrupp Elevator Americas Corporation, et al., C.A. No. 08-874-RGA (D. Del. Dec. 13, 2013), Judge Richard G. Andrews denied defendants’ motion for summary judgment on invalidity and granted-in-part plaintiff’s motion for summary judgment on validity. The two patents-in-suit relate to elevator installation.

Defendants moved the Court to find both patents-in-suit invalid for indefiniteness and for failure to meet the written description requirement. The Court found the patents not invalid under these grounds, and therefore granted plaintiff’s motion for summary judgment with respect to indefiniteness, see id. at 4-8, and lack of written description, see id. at 8-11.

Plaintiff also moved the Court to find that the patents-in-suit complied with the best mode requirement and also argued that the Court did not have subject matter jurisdiction over whether there was a best mode violation regarding the term “advance selector,” which appeared in unasserted claims. The court denied plaintiff’s motion as to best mode generally because a genuine issue of material fact existed as to whether the inventor had developed a best mode. Id. at 11-12. On the other hand, the Court agreed that there was no subject matter jurisdiction over the claims containing “advance selector.” Id. at 12.

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December 17, 2013

Judge Andrews issues post-trial opinion in suit regarding ViiV Healthcare's HIV drugs, finding patent valid and not infringed by Lupin

Today, Judge Richard G. Andrews issued a post-trial opinion in the litigation over ViiV Healthcare's drugs for treating HIV infection, Trizivir and Epzicom. ViiV Healthcare UK Ltd., v. Lupin Ltd., C.A. No. 11-576-RGA (consol.) (D. Del. Dec. 17, 2013). Defendants Lupin and Teva sought FDA approval for generic versions of Trizivir and Epzicom, respectively. After a 4.5 day bench trial, Judge Andrews issued this post-trial opinion finding that defendants failed to prove invalidity and that ViiV failed to prove that Lupin's generic drug infringed the asserted claims of the patent-in-suit, U.S. Patent No. 6,417,191.

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December 16, 2013

Chief Judge Sleet denies motion to dismiss or stay patent interference claim.

Chief Judge Sleet recently denied a motion to dismiss, or in the alternative to stay, a patent interference claim relating to oral contraceptives. Bayer Intellectual Property GmbH, et al. v. Warner Chilcott Co., LLC, et al., C.A. No. 12-1032-GMS (D. Del. Dec. 9, 2013). The defendant in the case, Warner Chilcott, argued that the Court lacked subject matter jurisdiction over the claim because the plaintiff, Bayer, failed to allege a priority dispute. The Court, though, found that Warner Chilcott “fundamentally misconstrue[d] the prerequisites to an interference action under § 291.” Id. at 5. As the Court explained, section 291 subject matter jurisdiction does not require allegations of a priority dispute. Instead, section 291 subject matter jurisdiction requires allegations of interfering patents: “Under any construction of § 291, it is impossible to conceive how it could be any clearer that interference between patents is a sine qua non of an action under § 291.” Id. (quoting Albert v. Kevex Corp., 729 F.2d 757, 760 (Fed. Cir. 1984)). The Court also disagreed with Warner Chilcott’s argument that Bayer failed to allege a priority dispute, since the operative complaint alleged that Bayer’s ‘940 patent was prior art to Warner Chilcott’s ‘984 patent, and prayed for a declaration that the inventors of Bayer’s patent were the first inventors of the subject matter covered by the two patents. Id. at 6.

The Court also denied Warner Chilcott’s motion in the alternative for a stay of the interference claim. The Court found that the “simplification of issues” factor weighed “heavily” against a stay because the New Jersey litigation, where Warner Chilcott was litigating against generic manufacturers, did not involve Bayer. As a result, the New Jersey “litigation cannot bind Bayer if Warner Chilcott’s ‘984 patent is found valid in light of Bayer’s ‘940 patent.” Id. at 7. The Court found that the other factors did not counterbalance the extent to which the “simplification of issues” factor weighed against a stay. Id. at 7-8.

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December 16, 2013

Magistrate Judge Burke Recommends Transfer of Venue for Video Game Cases

Magistrate Judge Burke recently issued a report and recommendation recommending that four related cases be transferred to the Central District of California. The parties to the cases are involved in computer graphics and video game software, and the patents-in-suit relate to lip-synchronization for animated computer graphics characters used in video games. The defendants in four of thirteen related cases moved to transfer to the Central District of California, and the plaintiff opposed and asked in the alternative for jurisdictional discovery. Both the plaintiff and all four defendants are incorporated in Delaware but have primary places of business in California. Additionally, the plaintiff has sixteen similar cases pending in the Central District of California, all of which were filed shortly after the Delaware actions. McRO, Inc., d/b/a Planet Blue v. Activision Blizzard, Inc., et al., C.A. No. 12-1508-LPS-CJB, Report and Recommendation at 2-5 (D. Del. Dec. 13, 2013).

Judge Burke considered the factors articulated by the Third Circuit in Jumara v. State Farm Ins. Co., 55 F.3d 873 (3d Cir. 1995) and ultimately found that a transfer was warranted. Judge Burke found that only the plaintiff’s choice of forum weighed against transfer. Weighing in favor of transfer to varying degrees were the following factors: the defendants’ forum preference, whether the claim arose elsewhere, convenience of the parties, convenience of the witnesses, location of books and records, and administrative difficulties in getting the case to trial. Neutral factors included: enforceability of judgment, Practical considerations that could make the trial easy, expeditious, or inexpensive, local interests in deciding local controversies at home, and public policy of the fora. Id. at 7-30. Thus, the Court found that “the balance of convenience is strongly in [defendants'] favor” and recommended that the motion to transfer be granted and the request for jurisdictional discovery be denied. Id. at 30-33. Judge Burke recognized that “[t]he issue is not free from doubt, and the Court recognizes the significance of the parties’ choice of Delaware as their State of incorporation and the fact that there are related cases pending here. However, those connections do not sufficiently counterbalance the substantial ties between the Central District and these cases, as is reflected in the number of Jumara factors weighing in favor of transfer.” Id. at 31.

Judge Burke’s Report and Recommendation included an interesting discussion of the plaintiff’s “home turf” as it relates to the plaintiff’s choice of forum factor. Ultimately, Judge Burke determined that the Court “will not and need not resolve this question, as a determination as to whether Delaware is McRo’s ‘home turf,’ in and of itself, has no independent significance regarding the overall Jumara balance of convenience analysis, nor to the analysis as to this first Jumara private interest factor. The cases from this Court originally referencing a plaintiffs ‘home turf’ in the transfer context explained that the burden of proof for a defendant seeking transfer ‘is no less where plaintiff is litigating away from its home turf.’ That is, regardless of whether this District is or is not a plaintiff’s ‘home turf,’ the same overarching standard set out by the Third Circuit for considering a transfer motion applies—the defendant must show that the balance of convenience is strongly in its favor in order to justify a transfer of venue. Nor is reference to a plaintiffs "home turf" in this context meant to suggest that if a plaintiff is (or is not) suing on its ‘home turf,’ then as to the first Jumara private interest factor, a plaintiffs choice of forum should automatically be given any set amount of weight. Instead, such a reference is really nothing more than a short-hand way of noting that, when a court balances the relative convenience of different fora as part of a transfer analysis, the ‘the weaker the connection between the forum and either the plaintiff or the lawsuit, the greater the ability of a defendant to show sufficient inconvenience to warrant transfer.’” Id. at 8 n.8 (citations omitted).

Finally, Judge Burke also noted “a split of authority in the courts as to whether a motion to transfer venue should be treated as a dispositive or non-dispositive motion.” Therefore “[i]n an abundance of caution, the Court [titled its opinion] as a ‘Report and Recommendation.’” Id. at 2 n.2.

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December 13, 2013

Judge Robinson clarifies decision that invalidated patent

In Arcelormittal France, et al. v. AK Steel Corporation, et al., C.A. Nos. 10-050, 13-685-SLR and Arcelormittal France, et al. v. Severstal Dearborn, LLC, et al., C.A. No. 13-686-SLR (D. Del. Dec. 5, 2013) (“Clarification Opinion”), Judge Sue L. Robinson clarified that the Court’s prior opinion granting defendants’ motion for summary judgment in C.A. No. 10-050 (“Summary Judgment Opinion”) did invalidate plaintiff’s entire reissue patent as violative of 35 U.S.C. § 251(d).

“In response to the court’s request that the parties identify any issues pertaining to [C.A. No. 10-050-SLR]’s related cases, [plaintiff sought] to clarify the court’s invalidity ruling, specifically asking whether the court invalidated the entire reissued patent or whether [dependent] claims 24 and 25 remain valid.” Clarification Opinion at 1. On summary judgment, defendants had argued that claims 1-23 of the reissue patent were invalid as violative of Section 251(d), but not claims 24 and 25. See Summary Judgment Opinion at 9. However, the Court confirmed that the entire patent was invalid, explaining that allowing these two claims to stand would “end-run the consequences of violating 35 U.S.C. § 251(d).” Clarification Opinion at 2. “If dependent claims 24 and 25 are not invalidated, [plaintiff] would have successfully accomplished, through the addition of claims, what the Federal Circuit prohibited in [Quantum Corp. v. Rodime, PLC, 65 F.3d 1577 (Fed. Cir. 1995), on which the Court relied in its Summary Judgment Opinion], i.e., retaining the original scope of its claims. As a matter of policy, such a consequence would encourage applicants to circumvent unfavorable litigation outcomes, thereby burdening both the PTO and the courts with competing administrative and judicial submissions.” Id.

Because the Court had found the entire patent invalid, and C.A. No. 10-050-SLR’s related actions (Nos. 13-685 and 13-686) involved infringement of claims 24 and 25, the Court would also enter judgment for defendants in those actions. Id. at 2 n.4.

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December 10, 2013

Supreme Court reiterates that a forum-selection clause should be “given controlling weight in all but the most exceptional cases.”

In Atlantic Marine Const. Co., Inc. v. U.S. Dist. Court for Western Dist. of Texas, 571 U. S. _ (2013), 2013 WL 6231157 (December 3, 2013), the Supreme Court not only reiterated that a valid forum selection clause must be given controlling weight, with rare exception - when considering a transfer motion under a 1404 analysis - but unamimously held that the analysis in those rare exceptions may give no weight to plaintiff's choice of forum and may only consider counterveiling public-interest factors. "When parties agree to a forum-selection clause, they waive the right to challenge the preselected forum as inconvenient or less convenient for themselves or their witnesses, or for their pursuit of the litigation. A court accordingly must deem the private-interest factors to weigh entirely in favor of the preselected forum."

Recognizing the applicability of Atlantic Marine to a forum selection clause in a patent license, yesterday the Supreme Court vacated and remanded a Federal Circuit decision refusing to enforce a forum-selection clause in an EDTX patent suit that, by the agreement, should have been filed in New York. See Broadcom Corporation v. USDC ED TX, et al., case number 12-1475.

Atlantic Marine settles a circuit split in authority. In the Third Circuit, guidelines for the applicability of a forum selection clause were established by Jumara v. State Farm Ins. Co., 55 F.3d 873, 883 (3d Cir.1995). Atlantic Marine, revises Jumara's guidance. It appears now that a forum selection clause is entitled to more than the "substantial consideration" - called for by Jumara - in a 1404 transfer analysis. It further appears that one may no longer rely on Jumara's reasoning that a forum selection clause is but "one facet of the convenience-of-the-parties consideration." Private-interest factors, as noted above, must now "weigh entirely in favor of the preselected forum."

December 9, 2013

Special Master Lukoff grants Apple’s motion to strike Robocast’s supplemental expert report on damages

Special Master Lukoff recently considered the latest of several motions regarding expert discovery in Robocast, Inc. v. Apple, Inc., C.A. No. 11-235-RGA (D. Del. Dec. 4, 2013) (previous decisions discussed here and here). Apple moved to strike the supplemental expert report of Robocast’s damages expert, Mr. Hoffman. The expert’s original report was based in part on the opinions of another expert who had analyzed user surveys. Id. at 1. Subsequently, plaintiff withdrew this expert’s opinions, leaving Hoffman’s report “with a gap in the foundation of his own opinions.” Id. Robocast, however, did not seek the Court’s permission to issue a supplemental expert report that was untimely.

Special Master Lukoff noted that “[i]n an assessment of a relatively grey area, plaintiffs having Mr. Hoffman generate a supplemental report could be generously classified as an effort to comply with its FRCP 26(e) obligation to supplement discovery under appropriate circumstances.” Id. at 2. In this case, however, Special Master Lukoff determined that after plaintiff notified Apple that it was voluntarily withdrawing the opinions upon which Mr. Hoffman predicated a portion of his damages projection, there was no obligation to supplement the Hoffman report under Rule 26(e) “since it was crystal clear to Apple what had happened and what the loss of the [other expert’s] opinions would mean.” Id. at 3. Instead, Special Master Lukoff found that Robocast used the opportunity to add a new theory to Mr. Hoffman’s opinions that could have been contained in his original report. Id. As such, Apple’s motion was granted and Robocast’s supplemental Hoffman report was stricken.

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December 7, 2013

Special Master White issues discovery rulings.

Special Master David White recently issued a ruling granting in part and denying in part a motion to compel. Frontier Communications Corp. v. Google Inc., C.A. No. 10-545-GMS (D. Del. Dec. 6, 2013).

Special Master White first found the defendant’s identification of only two individuals who have “participated in the design, development, testing, implementation, marketing, sales, or distribution of the Accused Systems/Services” to be a deficient response to an interrogatory seeking the identification of “all persons … who have participated in ….” The Special Master agreed with the defendant that the interrogatory seeking the identifies of “all” such individuals was overbroad, but found that “the interests of both parties may be respected by requiring Google to identify those individuals who are most knowledgeable about or primarily responsible for each of the activities set forth in the Interrogatory ….” The defendant had referred the plaintiff to the defendant’s document production as a source from which the plaintiff could identify the identities of the individuals sought by the interrogatory, but the Special Master rejected that approach, since the plaintiff could not, simply by reference to the document production, “locate and identify [the relevant individuals] as readily as” the defendant could.

The parties also disputed what the appropriate number of record custodians should be searched by the defendant, with the plaintiff identifying 60 such individuals, and the defendant willing to search only 7. The Special Master found that the Default Standard was triggered by the parties’ disagreement, meaning that the defendant was required to search 10 custodians. He added, though, that “[i]n the event that Frontier is able to provide particularized information which demonstrates the need for an expanded search, the Court will consider such supplemental application, and Google’s response thereto, consistent with the standards set forth in the Federal Rules.”

Next, the Special Master endorsed the defendant’s preference for Boolean searches, but found that its proposed searches were too narrow. He ordered, as a result, that the defendant broaden its searches. Further, the plaintiff was permitted, consistent with the Default Standard, to provide the defendant with 10 additional search terms beyond the broadened Boolean searches proposed by the defendant.

The Special Master then considered a dispute over the production of the defendant’s source code. The plaintiff moved to compel the production of all of the source code of the Accused System, while the defendant’s position was that it should only be required to produce the source code related to the alleged infringement. Special Master White found that the parties had negotiated sufficient safeguards for access to source code in their protective order such that the defendant’s interest in safeguarding its source code would be protected. Accordingly, he ordered that the defendant make its source code available for review consistent with the protective order.

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