April 8, 2014

Judge Stark Considers Post-Trial Damages and Denies Stay of Execution of Judgment

Judge Stark recently issued his ruling on the issue of post-trial damages following a two-day bench trial. In June 2010, a jury found that the defendant’s products infringed the plaintiffs’ patents and awarded damages in the form of both lost profits and reasonable royalties for the period from March 2002 to December 31, 2009. The Court denied motions for judgment as a matter of law and a motion for a permanent injunction, and on appeal the Federal Circuit affirmed the judgment in all respects. The parties were then unable to agree on the amount of “supplemental damages” owed to the plaintiff for the period of January 1, 2010 to October 15, 2011, when the patents-in-suit expired. The Dow Chem. Co. v. Nova Chems. Corp., et al., C.A. No. 05-737-LPS Slip. Op. at 1-4 (D. Del. Mar. 28, 2014). Following a bench trial to determine the supplemental damages owed, Judge Stark found that the plaintiff was entitled to lost profits and reasonable royalties, accepting the plaintiff’s arguments as well as the plaintiff’s rebuttals to the defendant’s argument. Id. at 4-22. Judge Stark also found, however, that the plaintiff was not entitled to enhanced damages. The plaintiff requested enhanced damages for “willful post-judgment infringement during the sixteen months between when the Court denied [the plaintiff’s] request for a permanent injunction and the expiration of the patents-in-suit.” But as Judge Stark explained, “the grant of [the defendant’s] motion for summary judgment of no willfulness effectively decided this issue” and the “Court is not persuaded it should revisit the question.” Id. at 22.

Interestingly, Judge Stark also had to consider whether to stay entry or execution of the judgment until after completion of an ongoing reexamination of the patents-in-suit at the PTO. Although the defendant had already paid damages associated with the jury verdict, it argued that it should, at a minimum, pay the supplemental damages to an escrow account to mitigate the risk that it would be paying damages on patents that could be found invalid. Judge Stark acknowledged that these “arguments implicate potentially difficult questions. If the patents-in-suit are invalid, [the defendant] cannot infringe them, and should not have to pay [the plaintiff] anything further. But as of today the patents-in-suit remain valid . . . and weighing heavily against granting the requested stay, [the defendant] waited until very late in this litigation to initiate the reexaminations and to seek a stay. [The defendant] filed its petitions for reexamination of the patents-in-suit on December 17, 2012, more than seven years after this case was filed and more than two years after the jury’s verdict on infringement and invalidity. Under the circumstances, the Court believes the most appropriate exercise of its discretion is to deny the requested stay.” Id. at 23-24.

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April 8, 2014

Chief Judge Sleet Grants Transfer to Northern District of California

OpenTV, a Delaware corporation with a California principal place of business, sued Netflix, also a Delaware corporation with a California principal place of business, for infringement of patents related to technologies for “over-the-top” delivery of movies, television, and other media via the Internet. Netflix filed a motion to transfer to the Northern District of Delaware, which Chief Judge Sleet granted.

Considering the Third Circuit’s Jumara factors, Judge Sleet found that “[a]lthough the plaintiff’s choice of venue is ordinarily entitled to deference, its preference is ‘entitled to less than the paramount consideration’ when it files suit where it is incorporated but not physically located. Here, OpenTV’s preferred forum is Delaware, where it is incorporated, but Open TV’s principal place of business is in Northern California. Therefore, the court will not accord substantial weight to OpenTV’s choice of Delaware.” This factor, therefore, weighed slightly in favor of transfer to California. OpenTV, Inc. v. Netflix, Inc., C.A. No. 12-1733-GMS, Memo. at 3 (D. Del. Mar. 31, 2014) (citations omitted). Additional facts that weighed in favor of transfer included that the accused products were developed in California, the parties could more easily and cost-effectively litigate in California, and relevant witnesses including the inventors and third party witnesses were in California. Id. at 4-8.

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April 7, 2014

Judge Sleet grants motion to transfer to Eastern District of Michigan

In Cruise Control Technologies LLC v. Chrysler Group LLC, et al., 12-1755-GMS (D. Del. Mar. 31, 2014), Chief Judge Gregory M. Sleet granted defendants’ motion to transfer venue to the Eastern District of Michigan in this multi-defendant litigation. Id. at 3-4. Of the thirteen defendant car companies in the instant litigation, all but one filed motions to transfer or statements consenting to such transfer. Id. at 1-2. As Judge Sleet explained, defendants contend that venue is proper in the Eastern District of Michigan because each defendant has its "headquarters and/or research and development facilities . . . located there.” Id. at 6. Plaintiff did not contest this point, and Judge Sleet therefore turned to the Jumara private interest factors. Id.

First, Judge Sleet considered the parties’ choice of forum and found this factor to weigh against transfer. Id. at 6-7. Specifically, Judge Sleet explained that “the court declines to strip the plaintiff’s forum choice of the deference due merely because the plaintiff may have been formed primarily to enforce patent rights.” Id. at 7. Judge Sleet therefore found that “although the Defendants’ choice of the Eastern District appears to be a legitimate venue, [plaintiff’s] forum choice controls.” Id. at 7. Next, Judge Sleet addressed “where the claims arose,” and noted that “the crucial inquiry in determining the deeper roots of infringement claims is where the design and development of the accused products occurred.” Id. at 8-9. Judge Sleet explained that all defendants “are either headquartered in the Eastern District of Michigan and/or operate their research and development facilities there.” Id. at 8. Further, defendants’ “accused products and services were designed and developed in the Eastern District of Michigan” and “no design or development related to the accused products occurred in Delaware.” Id. at 8. Judge Sleet therefore found this factor to weigh strongly in favor transfer. Id. at 9.

Addressing the “convenience of the parties,” Judge Sleet noted “[t]he fact that the Defendants possess vast resources . . . does not mean that the court should follow an approach that would unnecessarily waste these resources.” Id. at 10. Judge Sleet further explained that “while the court does not seek to give short shrift to the inconvenience to [plaintiff] of being compelled to litigate outside the forum it has chosen, the court must ‘account for the absolute costs likely to flow from its transfer decision.’” Id. at 10. Judge Sleet thus found this factor to weigh in favor of transfer, given that all of defendants’ “employees involved in the research and design of the accused products or who otherwise possess knowledge relevant to the instant litigation are located in the Eastern District of Michigan.” Id. at 10-11. Judge Sleet similarly found “the witnesses’ convenience” to weigh in favor of transfer, noting that “unavailability of witnesses in this jurisdiction combined with inconvenience to third party witnesses is sufficient to establish that the witnesses' convenience favors transfer.” Id. at 11.

After noting that the location of books and records was neutral in the Court’s analysis, Judge Sleet considered the Jumara public interest factors. Addressing practical considerations, Judge Sleet explained that “this action has significant connections to” the Eastern District of Michigan. Id. at 12. Further, as Judge Sleet pointed out, “even regarding those Defendants who are incorporated in Delaware, the Eastern District of Michigan still has a stronger interest to this litigation because it is where the claims arose and where the employees and known material witnesses are located.” Id. Judge Sleet additionally noted the fact that “all, except one, of the other Defendants are seeking transfer also weighs in favor of transferring the instant actions to the Eastern District of Michigan.” Id. at 13. Judge Sleet also found the administrative difficulty of the two fora to favor transfer, noting that “Delaware courts’ dockets are far more congested on average than those of courts in the Eastern District of Michigan,” and that “Delaware is one of the busiest patent jurisdictions in the nation.” Id. at 13-14.

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April 7, 2014

Chief Judge Sleet denies motions to transfer to the District of Massachusetts

Chief Judge Gregory M. Sleet has denied motions to transfer to the District of Massachussetts in a number of related patent infringement actions. Videoshare, LLC v. Google Inc, et al., C.A. No. 13-990-GMS; Videoshare, LLC v. Viddler, Inc., C.A. No. 13-991-GMS; Videoshare, LLC v. Vimeo, LLC, C.A. No. 13-992-GMS (D. Del. Apr. 1, 2014).

Plaintiff was a Delaware company with its principal place of business in Massachusetts. Each defendant was also a Delaware company with principal places of business in California, Pennsylvania, and New York. Id. at 2.

Applying the Jumara factors, the Court concluded that “only the defendants’ forum preference counseled transfer, and that factor is eclipsed by [plaintiff’s] forum choice, which was afforded a degree of heightened deference.” Id. at 13. The remaining factors either weighed in favor of transfer or were neutral. Of particular interest in the Jumara analysis was the “unusual scenario” presented as to the convenience of the parties: “the parties' respective headquarters are physically located further from their preferred forum than the opposed forum. As such, the court does not need to deeply analyze the associated logistical and operational costs, or the parties’ ability to bear those costs, because the parties are willing to travel a further distance to litigate in their preferred forum. Stated differently, none of the parties can make a colorable argument that it would be ‘inconvenient’ to litigate closer to home.” Id. at 9. The location of the parties’ books and records was also neutral because the “bulk of relevant evidence was not located in either forum.” Id. at 10. Additionally, while the plaintiff had previously sued one of the defendants in Massachusetts regarding the same claimed technology, that case had been dismissed on procedural grounds. Id. at 6. The Court therefore concluded that the potential efficiency of transferring these cases was only marginal as the Massachusetts court did not gain familiarity with the merits of the underlying patented technology. Id. at 6-7, 11.

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April 7, 2014

Magistrate Judge Joel Schneider denies defendant's request to disqualify plaintiff's expert for previously working with defense counsel

Magistrate Judge Joel Schneider, sitting by designation, recently denied defendant Materia, Inc.'s motion to disqualify plaintiff Evonik Degussa DmbH's expert on inequitable conduct issues. Evonik Degussa DmbH v. Materia, Inc., et al., C.A. No. 09-636-NLH-JS (D. Del. Apr. 2, 2014). Materia argued that disqualification was proper because its co-defense counsel, Nixon Peabody, retained the expert in the past "regarding an 'ethics matter.'" Id. at 1. Materia argued that it would be substantially prejudiced because the past engagement would "stymie its effective cross-examination," and that "fundamental fairness" warranted disqualification. Id. at 1-2. Magistrate Judge Schneider disagreed. "[D]isqualification is a drastic measure which should not be imposed except where absolutely necessary." Id. at 2. Disqualification was inappropriate because Materia did not show that it was "objectively reasonable" for it to conclude that it had a confidential relationship with the expert and there was no evidence that any relevant confidential information was relayed to the expert. Id. at 2-3. Further, "policy and fairness" did not warrant disqualification because "[t]here is nothing unfair if Nixon Peabody is requried to cross-examine an expert it previously retained in an entirely unrelated matter." Id. at 4. Evonik, on the other hand, would be prejudiced if its expert is disqualified because Evonik has the "right to qualified experts of its choice." Id.

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April 7, 2014

Judge Robinson issues post-trial opinion, denying JMOL motions and granting motion for a permanent injunction

Judge Sue L. Robinson recently issued a memorandum opinion resolving the parties' post-trial motions in INVISTA North America S.a.r.l. et al. v. M&G USA Corp. et al., C.A. No. 11-1007-SLR-CJB (D. Del. Mar. 31, 2014). Judge Robinson previously resolved several summary judgment motions (discussed here) and motions to strike or preclude evidence (discussed here and here).

The parties proceeded to trial on infringement of one claim and validity of several claims of the patent-in-suit. At the close of evidence, Judge Robinson granted Plaintiffs' JMOL motion as to infringement, and the jury returned a verdict that the patent was valid. Id. at 1. Post-trial the parties filed several motions, including Defendants' JMOL motions on invalidity and non-infringement, Plaintiffs' motion for an injunction. Id. As a preliminary matter, Plaintiffs objected to Defendants renewed JMOL on non-infringement because the jury did not reach a verdict on the issue. Id. at 9 n.4. The court considered Defendants' motion, however, because the parties did not provide "and the court [did not find] any clear direction in the case law that defendants are precluded from renewing the motion." Id. Nevertheless, the court denied Defendants' motion because it saw no basis to "revisit the evidentiary decisions made during the course of trial." Id. at 10. "The court did not arrive at these decisions lightly, indeed, the court entertained both argument and briefing on these issues." Id. Judge Robinson also denied Defendants' JMOL motion as to invalidity, finding that the jury's verdict was supported by substantial evidence. Id. at 23, 25, 29, 33.

Judge Robinson also considered and ultimately granted Plaintiffs' motion for a permanent injunction. Judge Robinson noted that the parties are direct competitors, "offering the only 'high barrier' monolayer polyester barrier resins available in the market[.]" Id. at 36. Plaintiffs argued that that legal remedies would be inadequate compensation of the irreparable injuries they have suffered "'including lost sales and market share, lost market opportunities, loss of research and development activities, a loss of goodwill and reputation in the market, and a forced loss of their patent exclusivity," as each of these harms would be difficult to accurately quantify." Id. at 40. The court agreed finding that this factor, as well as the balance of hardships, favored an injunction. Id. at 40-41.

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April 7, 2014

Jury returns infringement verdict in Silver Peak Systems, Inc. v. Riverbed Technology, Inc.

On April 1, 2014, a jury returned a verdict in Silver Peak Systems, Inc. v. Riverbed Technology, Inc., C.A. No. 11-484-RGA-CJB (D. Del.), finding that Riverbed Technology, Inc. (“Riverbed”) infringed certain claims of U.S. Patent Nos. 7,945,736 (the “’736 Patent”) and 7,948,921 (the “’921 Patent”) asserted by Silver Peak Systems, Inc. Specifically, the jury found that Riverbed directly infringed claims 1, 2, 8, 9, 10, and 17 of the ’736 Patent under the doctrine of equivalents, and that Riverbed contributorily infringed those same claims. Further, the jury found that Riverbed induced infringement of claim 1 of the ’921 Patent.

The jury also found that claim 1 of the ’921 patent was not anticipated.

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April 1, 2014

Judge Stark adopts Magistrate Judge’s Burke’s Recommendation to Deny Transfer to N.D. Cal

Judge Leonard P. Stark recently adopted Magistrate Judge Christopher J. Burke’s recommendation from earlier this month, in which Judge Burke recommended denial of a defendant’s motion to transfer to the Northern District of California. MAZ Encryption Technologies LLC v. Hewlett-Packard Company, C.A. No. 13-306-LPS, Report and Recommendation (D. Del. Mar. 6, 2014), adopted, Order (D. Del. Mar. 28, 2014).

Plaintiff was a small Delaware corporation that claimed to have no revenue. Report and Recommendation at 3. It had also brought nine other cases in Delaware; seven involved one or both of same patents-in-suit, and two others involved a related patent. Id. at 2. Defendant was a large Delaware corporation with its principal place of business, and much of its operations, in California. Additionally, the designers of the accused products, while no longer employed with defendant, resided in California. Id. at 4.

As to plaintiff’s forum preference, defendant argued that this factor should be given less or no weight because plaintiff’s “minimal ties to Delaware were manufactured in an apparent attempt to manipulate the venue laws.” Id. at 9 (internal quotation marks omitted). Judge Burke recognized that “the record clearly suggests a connection between Plaintiff’s formation as a Delaware LLC, the assignment of the patents to Plaintiff and the filing of the instant suit in this Court, all of which occurred in relatively short order,” id., and that “[t]here are clearly certain circumstances in which a plaintiff’s connection to a forum and its choice to file suit there evidence an improper motive,” id. at 10. But Judge Burke observed that it may be difficult to differentiate between a formation that is an “appropriate kind of business or litigation decision” and one that is essentially “venue manipulation.” Id. at 11-12. Judge Burke did not have to make this determination here, however, because plaintiff’s forum choice was legitimate for another reason: it brought suit in Delaware to assure personal jurisdiction over defendant, a Delaware corporation. Id. at 12. Therefore, this factor weighed against transfer.

The other factors weighing against transfer were the convenience of the parties and practical considerations. The convenience of the parties only weighed slightly against transfer; while plaintiff’s small size and financial condition, as compared to that of defendant, may have meant that it would suffer greater hardship if forced to litigate in California, Judge Burke gave this minimal weight because there was little detailed information available about plaintiff’s finances, “and the reality [is] that Plaintiff’s members can and have initiated litigation here and in other courts.” Id. at 18. More significantly, the number of pending related cases in Delaware and their level of overlap with the patents-in-suit in this case weighed against transfer. See id. at 23-25.

All other factors weighed in favor of transfer (defendant’s forum preference, where the claim arose, convenience of witnesses, and books and records - although the last two only slightly) or were neutral. Judge Burke explained that “[u]ltimately, with the factors in equipoise, Defendant has not bet its burden to show that the balance of convenience of the parties is strongly in its favor.” Id. at 28. Therefore, Judge Burke recommended that the motion to transfer be denied.

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April 1, 2014

Judge Stark rules on various post-trial motions

In Depuy Synthes Products, LLC v. Globus Medical, Inc., C.A. No. 11-652-LPS (D. Del. Mar. 25, 2014), Judge Leonard P. Stark decided several post-trial motions, denying the parties’ motions for attorneys’ fees, denying plaintiff’s motion for a permanent injunction and destruction of infringing products, granting in part plaintiff’s motion for an accounting and determination of an ongoing royalty rate, and granting plaintiff’s motion for prejudgment and postjudgemnt interest. Judge Stark’s decision followed a ten-day jury trial where the jury found plaintiff’s asserted patents valid and infringed. Id. at 1.

Denying plaintiff’s motion for attorneys’ fees, Judge Stark concluded that defendant’s conduct was not “exceptional” as to justify the award of fees under 35 U.S.C. § 285. Id. at 8. Judge Stark explained, for example, that many of defendant’s positions that plaintiff argued were “baseless” were the same positions that the Court addressed during the Pretrial Conference. Id. at 7. At the Pretrial Conference, however, the Court found defendant’s positions on “claim construction, noninfringement and invalidity positions . . . to be not unreasonable.” Id. at 6-7. Further, addressing plaintiff’s assertion that defendant made representations at trial “that contradicted the Court’s prior rulings or [defendant’s] earlier representations to the Court,” Judge Stark explained that “much of what [plaintiff] complains about was already dealt with at trial, the Court already provided adequate relief, and these events do not make this case ‘exceptional.’” Id. at 7-8. Judge Stark additionally noted that defendant “properly places its comments within the context of a legally and factually complex trial in which the Court was required to construe claim terms as late as during the trial’s final days.” Id. at 7-8. Turning to defendant’s motion for attorneys’ fees, Judge Stark addressed defendant’s assertion that plaintiff “maintained its willfulness allegation even after . . . it became clear that [the allegation] lacked any merit.” Id. at 8. Despite the fact that the Court had made statements during Pretrial Conference that defendant’s noninfringement positions were “not unreasonable,” and that defendant’s pre-suit and post-suit conduct was not “objectively unreasonable,” Judge Stark nevertheless found that plaintiff did not act in bad faith. Id. at 8-9. Judge Stark explained that “the Court’s determination that [plaintiff] could not prevail on its willful infringement claim does not logically lead to the conclusion that [defendant] . . . should receive attorneys’ fees.” Id. at 9.

Denying plaintiff’s motion for a permanent injunction and destruction of infringing products, Judge Stark explained that plaintiff failed to demonstrate that remedies at law were inadequate to compensate it for injuries. Id. at 10. While plaintiff maintained that its patented products operated as “door openers” to other products, the Court already addressed and denied such an argument on plaintiff’s motion for a preliminary injunction following the trial. See id. at 9-10. Judge Stark denied the instant motion despite the fact that plaintiff made “persuasive arguments regarding some of the other permanent injunction factors, particularly regarding the balance of hardships between [plaintiff] and [defendant] and the public interest.” Id. at 10.

With respect to its motion for an accounting and determination of an ongoing royalty rate, plaintiff sought “additional damages to account for infringing sales that were not part of the royalty base that the parties presented to the jury,” and argued that for post-verdict sales, an ongoing royalty rate of 25% should apply. Id. at 11. While Judge Stark noted that there “is a fundamental difference . . . between a reasonable royalty for pre-verdict infringement and damages for post-verdict infringement ,” he found plaintiff’s 25% rate to be too high. See id. at 13-15. Judge Stark rather adopted a rate of 18% for post-verdict sales, which was based “on the Court’s conclusion that [plaintiff] is entitled to some elevated ongoing royalty rate as a result of the post-verdict changes [in] bargaining positions.” Id. at 14 & n.8. Judge Stark also found that defendant “shall be required to provide [plaintiff] with records sufficient to identify infringing sales within 15 days after the close of the calendar quarter in which those sales were made.” Id. at 15. Finally, based on the fact that plaintiff presented “some evidence that the prime rate is appropriate,” Judge found that prejudgment “interest should be calculated using the prime rate, compounded quarterly.” Id. at 17.

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April 1, 2014

Judge Stark grants motion for summary judgment of invalidity for obviousness.

Judge Leonard P. Stark recently granted a motion for summary judgment of invalidity for obviousness filed by several generic defendants in an ANDA suit involving methods for treating or preventing osteoporosis through dosing of risedronate. Warner Chilcott Company, LLC v. Teva Pharmaceuticals USA, Inc., et al., C.A. No. 08-627-LPS (D. Del. Mar. 28, 2014). Judge Stark cited two related litigations in the District of New Jersey where similar patented methods and the same prior art were considered, and concluded that “Defendants have presented clear and convincing evidence that the prior art demonstrates that high doses of risedronate are safe and effective.” Id. at 11. The Court also found that the secondary consideration of simultaneous invention supported invalidating the patents as obvious. Id. at 13.

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