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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December 6, 2013

Judge Robinson grants motion for summary judgment of non-infringement.

In a recent memorandum opinion, Judge Sue L. Robinson granted a defendant’s motion for summary judgment of non-infringement under the doctrine of equivalents. Auxilium Pharmaceuticals, Inc. v. Upsher-Smith Laboratories, Inc., Civ. No. 13-148-SLR (D. Del. Dec. 4, 2013). The parties had stipulated previously that the defendant’s pharmaceutical formulation did not literally infringe the plaintiff’s patented methods for treating hypogonadism using a specific formulation of testosterone gel. The claims in the patents in suit focused on cyclic Hsieh enhancers, whereas the defendant’s formulation used Dudley enhancers, which the patentee gave up during prosecution. As the Court explained, “a large number of enhancers were known in the art, many of which the patentees referenced in their specification. The patentees specifically discussed the straight chain Dudley enhancers in the specification and, thereafter, differentiated the cyclic Hsieh enhancers.” Id. at 13. Further, the patentees “argued during prosecution that their invention was not obvious in light of Dudley enhancers . . . .” Id. The Court therefore found that the plaintiff could not recover through the doctrine of equivalents what it surrendered during prosecution. Id. at 13-14.

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December 6, 2013

Judge Robinson denies defendant’s request to claw back documents in ANDA litigation

Judge Sue L. Robinson denied defendant’s request to claw back certain documents that defendant initially produced “without claiming protection from disclosure under either the attorney-client privilege or the work product doctrine.” Pfizer Inc., et al. v. Lupin Pharm., Inc., et al., C.A. No. 12-808-SLR, slip. op. at 1 (D. Del. Dec. 2, 2013). Defendant produced “100 documents related to experiments conducted by scientists in [defendant’s] Intellectual Property Management Group,” and defendant sought to claw back those documents as protected under the attorney-client privilege or the work product doctrine. Id. at 2. Judge Robinson found it clear that these documents were not protected under the attorney-client privilege, as “they were neither created with the knowledge of . . . counsel, nor were they shared with . . . counsel contemporaneously.” Id.

The “harder question,” as Judge Robinson explained, was whether these documents were protected under the work product doctrine, which does not require attorney involvement for document protection. Id. at 3. Judge Robinson recognized that “the documents at issue were generated under the complex administrative paradigm created under the Hatch-Waxman Act,” and that “litigating the validity of patents is contemplated under the statute.” Id. at 3-4. However, Judge Robinson “decline[d] to equate the ordinary course of business of a generic manufacturer (testing compounds in order to develop bioequivalent drugs) with the more specific conduct associated with anticipation of litigation (e.g., testing the compounds of the prior art in order to invalidate a patent), especially where, as here, there [was] no indication that the [defendant] scientists were doing anything other than pursuing general scientific research on [defendant’s] prospective drug(s).” Id. at 4. Judge Robinson therefore found that defendant failed to meet its burden to demonstrate the documents at issue were protected from disclosure and denied defendant's requested claw back. Id.

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December 6, 2013

Judge Schneider determines effective date of Community of Interest doctrine

In a recent Letter Order, Magistrate Judge Joel Schneider resolved the parties’ dispute over the effective date of the Community of Interest (“COI”) doctrine. Evonik Degussa GmbH v. Materia Inc., C.A. No. 09-636-NHL-JS; Evonik Degussa GmbH v. Elevance Renewable Sciences, C.A. No. 10-200-NLH-JS, Letter Order (D. Del. Nov. 21, 2013). Plaintiff (“Evonik”) argued that the COI doctrine did not apply as between defendant (“Materia”) and UNO until May 3, 2007, the date Materia and UNO executed their “Second Amended and Restated Patent License Agreement” (“PLA”). Id. at 1. Materia, on the other hand, argued that the COI doctrine was applicable as early as January 12, 2007, when Materia and UNO signed a term sheet (“Term Sheet”) related to an amended and restated license agreement, or January 1, 2007, the Term Sheet’s effective date. Id.

Judge Schneider found that the COI doctrine’s effective date was not until May 3, 2007, the date that Materia and UNO signed the PLA. Id. at 2. As Judge Schneider explained, the “COI doctrine applies when two or more clients have a ‘common legal interest.’” Id. Judge Schneider highlighted that the Term Sheet specified that Materia and UNO did “not intend to be legally bound, unless and until a definitive License Agreement [had] been executed by both Parties.” Id. Judge Schneider therefore found that during the “negotiation period” between January 12, 2007 and May 3, 2007, Materia and UNO “were acting in their own and not the common best interest.” Id.

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December 6, 2013

Judge Sleet stays HumanEyes patent infringement litigation pending inter partes review of the patents-in-suit

Earlier this week, Chief Judge Gregory M. Sleet granted defendants' motion to stay litigation pending the outcome of inter partes review of the patents-in-suit. HumanEyes Technologies Ltd. v. Sony Corp., C.A. No. 12-398-GMS (D. Del. Dec. 2, 2013). The defendants filed the inter partes petitions five months after termination of a parallel ITC action, and the motion to stay three weeks after the petitions. Id. at 2 n.4. As such, Judge Sleet found no evidence that defendants were seeking an unfair tactical advantage. Moreover, because the parties are not direct competitors and HumanEyes can be adequately compensated for any delay by money damages, Judge Sleet found that plaintiff was unlikely to suffer prejudice due to the stay. Id. Also, because the case was in its early stages and because the Patent Trial and Appeal Board granted defendants' petitions, the inter partes review proceedings will likely simplify issues in the case and "advance the interests of judicial economy." Id. at 2 & n.5.

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December 6, 2013

Judge Stark Stays Related Cases Pending Outcome of Inter Partes Review Proceedings

Judge Stark has issued orders staying two related cases brought by General Electric against Kontera Technologies and Vibrant Media. In May 2013, Judge Stark denied a previous request by Vibrant to stay pending resolution of the inter partes review, which was filed by Vibrant. Since that time, however, the PTAB has instituted an inter partes review of the patents-in-suit based on its preliminary findings that all asserted claims are invalid. General Electric Co. v. Vibrant Media, Inc., C.A. No. 12-526-LPS, Memo. Order at 1 (D. Del. Dec. 4, 2013). As Judge Stark explained, “Regardless of their outcome, the IPR proceedings will simplify this case, as Vibrant will be estopped from contending that certain prior art invalidates the asserted claims and/or some or all of the asserted claims will be invalidated.” Id. Additionally, “[t]he PTAB has scheduled oral argument in the IPR for February 2014, so the delay caused by a stay will likely not be especially lengthy and, therefore, is unlikely to cause GE (which does not practice the patents-in-suit) undue prejudice. While the parties and the Court have invested resources in the litigation, and the litigation has advanced significantly since May, this action is far further away from conclusion than is the IPR.” Id. at 2. On these bases, Judge Stark ordered that the Vibrant action be stayed with the exception of “permit[ing] fact discovery to be completed—reducing any risk of evidentiary staleness that might otherwise be present during the pendency of the stay—but . . . allow[ing] the parties to avoid the expense of expert discovery until after the results of the IPR are known.” Id.

Additionally, Judge Stark seemed to find it persuasive that “in the related action, defendant Kontera Technologies, Inc. has agreed, if these actions are stayed, to be estopped to the same extent as Vibrant is estopped . . . [even though] [t]his was not Kontera’s position when the Court considered Vibrant’s earlier motion.” Id. at 1-2. Accordingly, Judge Stark ordered that the Kontera case as well.

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