August 9, 2013

Judge Robinson denies motion to dismiss indirect infringement claims

Judge Sue L. Robinson recently denied Ricoh Company, Ltd.'s motion to dismiss Telecomm Innovations, LLC's indirect infringement claims. Telecomm Innovations, LLC v. Ricoh Company, Ltd., et al., C.A. No. 12-1277-SLR (D. Del. Aug. 6, 2013) (click here for a discussion of trends in the District of Delaware regarding pleading direct and indirect patent infringement). Plaintiff accused Ricoh's "fax-capable products" of infringement and, in support of its indirect infringement claims alleged that Ricoh provides "technical support and services, as well as detailed explanations, instructions and information as to arrangements, applications and uses, which induce defendants' customers to infringe the '519 patent through use of [the accused products]." Id. at 2. Plaintiff also alleged that Ricoh "specifically intended to induce infringement by its customers and others ... knowing that such acts would cause infringement and/or were willfully blind to the possibility that their inducing acts would cause infringement." Id. (alterations in original) (internal quotations omitted).

Ricoh argued that Plaintiff's indirect infringement claims did not pass muster because Plaintiff had "not pled with sufficient 'factual detail' that there was at least one direct infringer and that defendants knew of and specifically intended to induce infringement." Id. at 5. Judge Robinson noted that Plaintiff was "not required to specifically identify the customers who [were] induced to infringe, as this is a 'proper question for discovery.'" Id. Because Plaintiff pled that Ricoh's customers infringe the patent-in-suit, "the requirement for pleading facts to allow an inference that at least one direct infringer exists ha[d] been met." Id.

Regarding knowledge of the patent-in-suit, Judge Robinson found that Plaintiff's allegations that Ricoh received notice of the patent at least as early as the filing of the Complaint was sufficient to plead knowledge "for purposes of post-complaint relief." Id. at 6. Finally, regarding Ricoh's intent for their customers to infringe, Judge Robinson found that Plaintiff's allegations that Ricoh "provided technical support and instructions to their customers on how to use products in such a way as to infringe the patented invention" was sufficient to plead Ricoh's specific intent to induce patent infringement. Id at 6-8.

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August 9, 2013

Judge Robinson finds that first-filed declaratory judgment action in Delaware should proceed; enjoins prosecution of litigation in other district.

Judge Sue L. Robinson recently granted a declaratory judgment plaintiff’s motion to enjoin a related infringement action filed in another district court. Nexans Inc. v. Belden Inc., Civ. No. 12-1491-SLR (D. Del. Aug. 6, 2013). The plaintiff in the Delaware action, Nexans, filed suit against the defendant, Belden, seeking a declaratory judgment of non-infringement and invalidity of three Belden patents, and asserting an affirmative claim alleging Belden infringed a Nexans patent. Id. at 1. Two days later, Belden filed suit in Indiana alleging Nexans infringed the same three Belden patents, as well as an additional patent not at issue in the Delaware litigation. Id. at 2. Just over a week later, Nexans amended its Delaware complaint to add the “additional patent” to its declaratory judgment action. Id. at 2-3. The result was that both the Delaware and Indiana cases involved allegations regarding the same four Belden patents, although the Nexans patent was at issue only in the Delaware litigation.

Belden moved to dismiss Nexans’ amended claim, arguing that because the additional patent was not the subject of the parties’ broken-down negotiations, there was no case or controversy with respect to it to support declaratory judgment jurisdiction. “According to Belden, the case or controversy with respect to the [additional] patent did not arise until Belden’s filing of the Indiana action . . . .” Id. at 5. The Court rejected that argument, explaining that “it was not the filing of the Indiana action that caused a case or controversy to arise out of the [additional] patent, but the same events that led to the filing of the original complaint that caused the case or controversy.” Id. at 6. That, the Court explained, was because Belden’s warning letter was not specific regarding which patents it believed Nexans infringed, and in subsequent discussions leading up to the filing of Nexans’ declaratory judgment action, the additional patent was mentioned. Id. at 6-7. A case or controversy also arose, the Court explained, because the technology covered by the additional patent was related to one of the patents at issue in Nexans’ original complaint. Id. (“When an actual controversy exists over one patent, it can also cover patents relating to the same technology between the same parties.”). The Court also found Belden’s litigation history with other parties relevant to the case or controversy question: Belden had filed three other suits alleging infringement of the additional patent by parties also alleged to infringe one of the patents at issue in Nexans’ complaint, so the Court found it reasonable for Nexans “to believe that the [additional] patent was related to the controversy between the parties.” Id. at 7. As a result, the Court denied Belden’s motion to dismiss the amended claim, which the Court found related back under Rule 15(c)(1)(B), meaning that the Indiana and first-filed Delaware litigation involved the same four Belden patents. Id. at 7, 8.

Because the litigations were mirror images with respect to Belden’s patents, Nexans sought to enjoin the Indiana litigation under the first-filed rule. Belden argued several exceptions to the first-filed rule existed, such that the Delaware litigation should be dismissed in favor of the Indiana case. Specifically, Belden argued that Nexans’ declaratory judgment action was anticipatory (or, in the alternative, was filed in bad faith during settlement negotiations) and was the result of forum shopping. The Court disagreed, finding that Nexans’ suit, filed 19 days after the parties’ Standstill Agreement expired and at a time when settlement negotiations had broken down, could not be considered anticipatory or in bad faith. Id. at 11. The Court also found that alleged forum-shopping was no reason to depart from the first-filed rule, explaining that it would not "characterize a plaintiff’s choice of venue as ‘forum shopping’ when, by essentially moving to transfer venue, a defendant is doing the same thing – choosing a venue that it believes to be more favorable to its claims for whatever reason.” Id. at 12. Finally, the Court was not convinced that any other considerations weighed in favor of departing from the first-filed rule, and explained that it made more sense to litigate in Delaware because “dismissal of the declaratory judgment claims in favor of the Indiana action would still leave Nexans’ affirmative claim for infringement of its patent in the instant action and require the parties to litigate in two separate courts.” Id. at 13. The Court therefore granted Nexans’ motion to enjoin the prosecution of the Indiana action. Id. at 13-14.

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August 6, 2013

Special Master Lukoff issues supplemental decision regarding privilege log dispute

Having recently issued a decision relating to plaintiff’s privilege log on July 19, discussed here (“the July 19 decision”), Special Master Paul M. Lukoff issued a second Opinion and Order “devoted to two additional issues, as well as a continuation” of the issues in the July 19 decision. Robocast, Inc. v. Apple, Inc., C.A. No. 11-235-RGA; Robocast, Inc. v. Microsoft Corporation, C.A. No. 10-1055-RGA, slip. op. at 2 (D. Del. Jul. 30, 2013).

Special Master Lukoff first assessed which communications of a Canadian lawyer (Pozner) who functioned as plaintiff's Director of Business Development were protected by the attorney-client privilege. Judge Andrews had previously ruled that these documents were not privileged and ordered them produced, and plaintiff continued to withhold some of them. Id. at 1. But the Special Master concluded that, before Judge Andrews, the parties had not briefed the specific question now before him: whether plaintiff could still claim privilege where Pozner specifically functioned as a “conduit or adjunct to lawyers.” Id. at 2-3. Special Master Lukoff concluded that most of Pozner’s communications with attorneys were privileged as he was “actively engaged in securing, and integral to the consideration by [plaintiff] of, of legal advice.” Id. at 3-4. But where Pozner communicated with non-lawyers without outside counsel being party to these communications, “there was greater opportunity to find that his involvement, having already lost any patina of protection in terms of attorney-client privilege” due to Judge Andrew’s decision, “was for business rather than legal reasons.” Id. at 4.

Defendant also argued that there were more than 1,000 log entries that were inadequate under Rule 26(b)(5)(A) and their documents should be produced. Generally Special Master Lukoff found that plaintiff’s descriptions were sufficient as he “had no reason to doubt plaintiff’s counsels’ representation . . . they they’ve described as well as they can documents which they’re certain came from an outside law firm, but whose metadata . . . provided no further insights as to which firm and which attorney within that firm was the originator.” Id. at 4. Special Master Lukoff then conducted the same “item-by-item determination” present in the July 19 decision, as to whether the presence of third parties on these additional log entries waived privilege. See id. at 5-7.

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August 2, 2013

Judge Stark finds claims of patent invalid under 35 U.S.C. § 101, grants motion for judgment on the pleadings

In buySAFE, Inc. v. Google, Inc., C.A. No. 11-1282-LPS (D. Del. Jul. 29, 2013), Judge Leonard P. Stark recently granted defendant’s motion for judgment on the pleadings under Rule 12(c), concluding that the asserted claims of the patent-in-suit, U.S. Patent No. 7,644,019 (“the ‘019 Patent”), were not eligible for patent protection under 35 U.S.C. § 101.

The '019 Patent relates to providing a guaranty service for online transactions. One of the two independent claims was a process claim, and the second independent claim required a “machine readable medium” capable of performing the process of the first claim. Id. at 1. Defendant argued that the asserted claims of the ‘019 Patent failed to meet Section 101’s subject matter eligibility requirements because they were an abstract idea. Id. at 3. The Court first addressed whether the claims were “tied to a particular machine or apparatus,” as directed by the “machine-or transformation” test. Id. at 4 (quoting Bilski v. Kappos, 130 S. Ct. 3218, 3225 (2010)). The Court concluded that they were not because the claims were capable of being performed without a computer, and “[a] method that can be performed entirely in the human mind is an abstract idea and is not eligible for patent protection.” Id. at 5 (citing Cybersource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1375 (Fed. Cir. 2011)).

The Court rejected all of plaintiff’s arguments for validity. First, the fact that the patent was “limited to online transactions” did not save it; in Cybersource, “the patent was also limited to online transactions – ‘a method for verifying the validity of a credit card transaction over the Internet’ - yet the Federal Circuit found the patent invalid under Section 101.” Id. (quoting Cybersource, 654 F.3d at 1370). Second, while plaintiff argued that the patent’s process could not be done mentally, the Court explained that “[m]erely using a computer to perform more efficiently what could otherwise be accomplished manually does not confer patent-eligibility.” Id. at 6. Third, a patent did not become patent-eligible by “explicitly reciting a ‘computer’ in each independent claim,” and these “claims [did] not provide any details as to how the computer is involved in the claimed process, or describe the significance of the computer to that process. In fact, the patent's process would be performed exactly the same way by a person and by a computer.” Id. at 6. Finally, the “temporal limitation” of the claims did not save their validity because “[t]he temporal limitation is not dependent on any specific programming, nor is it tied to any particular machine.” Id. at 7.

The parties had completed briefing last year and plaintiff had relied on the panel opinion in CLS Bank International v. Alice Corp. Pty Ltd., 685 F.3d 1341 (Fed. Cir. 2012), in which the Federal Circuit “reason[ed] that a claim that is drawn to a specific way of doing something with a computer is likely to be patent eligible whereas a claim to nothing more than the idea of doing that thing on a computer may not.” Id. at 7 (internal citations and quotation marks omitted). In May 2013 the Court ordered the parties to submit supplemental briefing on the effect of the en banc decision in this case, 717 F.3d 1269 (Fed. Cir. 2013), as that decision vacated and reversed the panel opinion. Id. at 1, 7. The en banc decision “reiterated the principle that simply appending generic computer functionality to lend speed or efficiency to the performance of an otherwise abstract concept does not meaningfully limit claim scope for purposes of patent eligibility.” Id. at 7-8 (internal citations and quotation marks omitted). The Court explained that “even under the reasoning of the CLS panel decision, the Court would have found the claims patent-ineligible because Plaintiff has not shown that the ‘019 patent claims are directed to any specific way of using a computer to guarantee a safe transaction. Rather, as described above, the claims are directed to a method that just happens to be performed by a computer. Under the now governing en banc decision in CLS, Defendant's argument for patent-ineligibility is even stronger.” Id. at 8.

Having applied the machine-or-transformation test, the Court then “examined more generally the abstract nature of the claims” as directed by the Supreme Court. Id. at 8 (citing Cybersource, 654 F.3d at 1371). It concluded that the ‘019 Patent was directed to “an abstract . . . process,” pointing out that “[t]he claimed concept is not directed to any specific device or system, is not limited to a concrete application, and is not limited to any specific industry. Allowing Plaintiff to patent the general concept of performance guaranties would effectively grant a monopoly over an abstract idea.” Id. at 8-9.

The Court also issued a claim construction opinion on the same day in this case, but that opinion had no impact on the Rule 12(c) motion. Id. at 1 n.1.

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August 2, 2013

Judge Stark construes claims relating to once-daily formulations of tetracyclines.

Judge Leonard P. Stark recently issued a claim construction order relating to two patents claiming once-daily formulations of tetracyclines. Galderma Laboratories Inc., et al. v. Amneal Phamaceuticals, LLC, et al., C.A. No. 11-1106-LPS (D. Del. July 30, 2013). The following claim terms were construed by the Court:

“steady state blood levels of doxycycline of a minimum of 0.1 μg/ml and a maximum of 1.0 μg/ml”

“steady state blood levels of the doxycycline of between 0.3 μg/ml to 0.8 μg/ml”



“coated with at least one enteric polymer”

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August 2, 2013

Judge Sleet issues claim construction order

In a recent order, Chief Judge Gregory M. Sleet construed eight disputed claims terms of U.S. Patent No. 7,567,925 (“the ’925 Patent”)., Inc. v. Internet Payment Exchange, Inc., C.A. No. 12-054-GMS-MPT (D. Del. Jul. 30, 2013). The ’925 Patent, entitled “Point of service transaction management for service facilities,” relates to an invention that “enables the collection by credit/debit card payment of customer co-pay and self-pay charges via an integrated point-of-service transaction management system and method.” Judge Sleet construed the following eight disputed terms:

- “computing terminal”

- “computerized transaction database associated with each of the at least one processors for relationally and electronically tracking, within said database and by the single health care service provider, remotely from each of the at least one computing terminal”

- “the tracking correlates to an increased collection rate of at least one of the self-pay payments and the overdue self-pay payments from the at least one customer”

- “registration”

-“batch updated”

- “users of the system are assigned at least one level of access in the administrator”

- “patient service”

- “non patient service"

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August 2, 2013

Judge Stark Releases Opinion on Privilege Assertions Regarding Mixed Legal and Business Advice Contained in Documents and at Depositions

In an opinion recently made public, Judge Leonard Stark granted in part and denied in part a motion for a protective order barring discovery of information subject to attorney-client privilege. In this patent infringement action relating to dynamic integrated circuits, a defendant asserted that the plaintiffs had improperly instructed multiple witnesses not to answer questions at depositions on the basis of privilege. After a lengthy meet and confer process and a hearing, Judge Stark instructed the parties to identify the specific privilege assertions being challenged and the plaintiffs to move for a protective order if necessary. Defendant Xilinx identified several privilege assertions that it wished to challenge, and Defendant Altera added four additional documents, described as the “Runway Reports,” which were “created in the ordinary course of business for potential or actual patent acquisitions.” Intellectual Ventures I LLC, et al. v. Altera Corp., et al., C.A. No. 10-1065-LPS, Memo. Op. at 1-2 n.2 (D. Del. July 25, 2013). The plaintiffs then filed a motion asking the Court for a protective order barring additional testimony in response to the disputed deposition questions and production of the identified documents. Id. at 1-2.

Judge Stark denied the motion for protective order with respect to the Runway Reports, but granted the motion in all other respects. Generally, the subject matter at issue was “communications related to the acquisition, due diligence, valuation, and licensing of the patents-in-suit,” which the defendants contended was not privileged “because Plaintiffs’ business model involves such activities.” Id. at 3-4. Patrik Edenholm, who works as a patent “finder” for the plaintiffs, was the first witness at issue. Judge Stark found that the assertions of privilege made during Mr. Edenholm’s deposition were proper because knowledge of the plaintiffs’ patent valuation process “while in this instance tied to business decisions of patent acquisition, may be intertwined with legal analysis, including considerations of claim scope, validity, and licensing power.” Id. at 5-6. The second witness at issue was Ryan Morrison, a transactional attorney who provided the plaintiffs legal advice related to patent acquisitions. The defendants sought information from Mr. Morrison about the contents of reports regarding patent assets under consideration for purchase and his thought processes in providing advice concerning patent due diligence. Judge Stark agreed with the plaintiffs that this information was privileged, stating that Mr. Morrison is an attorney and “to the extent that Mr. Morrison’s work and analyses also include business advice, this does not, under the circumstances, vitiate the attorney-client privilege.” Id. at 6-9. Judge Stark also noted that “[e]ven if Plaintiffs’ assertion of privilege were improper, the Court is not persuaded by [defendant’s] general argument that its inability to obtain discovery on due diligence and valuation is highly relevant to standing as well as to damages.” Id. at 8 n.6.

Judge Stark also reviewed certain privileged documents that had been disclosed to a Mr. Belgard, who was a consultant for the plaintiffs. Because Mr. Belgard was described as “an independent contractor” who had an “arm’s length” relationship with the plaintiffs, he was not “the functional equivalent of an employee” and thus not a “privileged person.” Id. at 9-11. Nevertheless, disclosure of documents to Mr. Belgard did not waive privilege with respect to those documents because he had a “common legal interest . . . in properly acquiring patents.” In adopting this position, Judge Stark rejected the defendant’s “application of the common interest doctrine [as] too narrow” in its position that the common legal interest doctrine applies only to attorneys. Id. at 11-12.

Judge Stark did, however, order production of the Runway Reports, which he found to be insufficiently supported by the plaintiffs’ “conclusory statement that the Runway Reports contain ‘attorney notes, attorney-client communications, and work product information.’” Judge Stark explained that “[t]he Court specifically ordered the parties to communicate so that neither party would waste time or effort briefing unchallenged privilege assertions. The Court concludes, regrettably, that the parties have failed to adequately communicate with each other to ensure that all parties were sufficiently apprised of all of the ripe privilege issues . . . While both sides are to blame for the lack of communication, the Court concludes that Plaintiffs were on sufficient notice that the Runway Reports were being put at issue . . . [and] have not met their burden of establishing privilege with respect to the Runway Reports.” Id. at 12-14.

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August 2, 2013

Judge Andrews affirms Magistrate Judge Fallon’s decision denying motion to transfer

In a recent memorandum opinion, Judge Richard G. Andrews overruled defendant’s objections and affirmed Magistrate Judge Sherry R. Fallon’s decision denying defendant’s motion to transfer venue to the Northern District of California. Agincourt Gaming, LLC v. Zynga, Inc., C.A. No. 11-720-RGA (D. Del. Jul 29, 2013) (Magistrate Judge Fallon's decision previously discussed here). As a threshold matter, Judge Andrews concluded that “a motion to transfer is not a dispositive motion for purposes of [28 U.S.C.] § 636(b)(1),” and he “proceed[ed] to review the Magistrate Judge’s decision under the deferential standard of review of § 636(b)(1)(A).” Id. at 3.

Judge Andrews found that while “[i]t may be that more of the factors favored transfer than not, . . . the Magistrate Judge did not abuse her discretion in reaching a reasoned conclusion that all of the factors favoring transfer, taken as a whole, were insufficient to outweigh the deference owed under Third Circuit precedent to Plaintiffs choice of forum.” Id. at 3. As Judge Andrews explained, the Magistrate Judge gave considerable weight to Plaintiff’s choice of forum, which was reasonable given that both Plaintiff and Defendant are Delaware corporations.” Id.

Judge Andrews also addressed other findings of Magistrate Judge Fallon that defendant contested. For example, Judge Andrews found that defendant agreed during oral argument that it sells its products nationally, and thus it could not complain that Magistrate Judge Fallon concluded the “where the claims arose” factor was neutral. Id. at 4. Judge Andrews also affirmed Magistrate Judge Fallon’s finding with respect to the convenience of the parties, noting that the financial burden to defendant of litigating in Delaware would be relatively modest, but, on the other hand, defendant and its employees may be “called away from work.” Id. Judge Andrews further noted that “only non-party witnesses matter” under Third Circuit law with respect to the convenience of the witnesses, and he thus concluded that Magistrate Judge Fallon’s conclusion regarding that factor was not clearly erroneous. Id. at 4-5.

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August 1, 2013

Judge Andrews construes terms of patents related to computer networking

Judge Richard G. Andrews construed the following claim terms of U.S. Patent Nos. 7,945,736; 7,948,921; and 7,630,295 that cover technology related to dynamic load management of network memory, automatic network optimization, and network device continuity:

"data packet"
"communications interface configured to process the signal to activate and deactivate the link"

Riverbed Technology, Inc. v. Silver Peak Sys., Inc., C.A. No. 11-484-RGA (D. Del. July 30, 2013)

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July 31, 2013

Judge Robinson considers various motions and construes claim terms

In Gevo, Inc. v. Butamax Advanced Biofuels LLC, et al., C.A. No. 13-576-SLR (D. Del. Jul. 26, 2013), Judge Sue L. Robinson recently considered several motions for summary judgment, construed disputed claim terms and ruled on a motion to exclude expert testimony.

The Court construed the following terms of U.S. Patent Nos. 8,017,375 (“the ‘375 patent”) and 8,017,376 (“the ‘376 patent”), which relate to the production of biomass-derived biofuels:

a ketol-acid reductoisomerase, id. at 6-7;

an a-ketoisovalerate decarboxylase from Lactococcus lactis, id. at 7;

wherein said recombinant yeast microorganism has reduced endogenous PDC activity as compared to the corresponding yeast microorganism that has not been engineered to have reduced endogenous PDC activity, id.;

is further engineered or selected to grow on glucose independently of C2-compounds at a growth rate substantially equivalent to the growth rate of the corresponding yeast microorganism that has not been engineered to have reduced endogenous PDC activity, id. at 8;

activator of ferrous transport (Aft) proteins, id. at 10;

which increase the dehydratase activity of DHAD, id.;

wherein said ketol-acid reductoisomerase is an NADH-dependant ketol-acid reductoisomerase, id. at 10-11; and

a constitutively active Aft protein, id. at 11.

The Court granted one defendant’s motion for summary judgment of non-infringement as to the ‘376 patent and as to certain claims of the ‘375 patent, finding the doctrine of equivalents inapplicable. See id. at 17-27. Plaintiff also did not argue that defendant literally infringed the ‘375 patent and conceded that fact with respect to the ‘376 patent. Id. at 23, 27.

The Court also granted the same defendant’s motion for summary judgment as to the invalidity of the ‘375 patent. Defendant argued lack of both written description and enablement. This patent claimed the creation of significantly higher yields of the patented invention than the yields the inventor had actually obtained. Id. at 32. The Court concluded that the patent was invalid for lack of written description because “persons skilled in art would [not] recognize in the patent’s disclosure a description of the higher yields of the claimed invention.” Id. at 33. “The parties’ experts agree that the technology at issue is both complex and unpredictable. . . . The specification provides no detail on how to practice claim 1 to achieve higher yields.” Id. The patent was also invalid for lack of enablement, for similar reasons. See id. at 36.

The Court did not grant either parties’ motions for summary judgment on the validity/invalidity of the ‘376 patent, finding that there were issues of material fact as to whether the patent was invalid for lack of enablement, specifically issues “bearing on the disclosures and the amount of experimentation required to practice the full scope of the claims.” Id. at 38.

Defendant also argued that the ‘376 patent was anticipated by defendant’s International Patent Application. The Court did not address the substance of this argument because issues of material fact remained as to whether the inventors of the ‘376 patent conceived and reduced their invention to practice before the priority date of the International Patent Application. Id. at 43-44. The Court did note that “if [this application] is found to be anticipatory, [plaintiff] is precluded from making substantive arguments against anticipation as it did not do so herein.” Id. at 44 n.29.

Finally, both defendants moved to exclude the testimony of plaintiff’s expert. The Court denied this Daubert motion because defendants’ “arguments that [the expert] did not independently conduct experiments as part of his analysis do not preclude his testimony or opinions.” Id. at 44.

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