June 14, 2013

Judge Robinson denies plaintiff's motion to dismiss invalidity counterclaim and motion to strike affirmative defenses and introductory section in defendant's answer

Judge Robinson recently considered a motion to dismiss defendant's counterclaims and to strike certain affirmative defenses related to the invalidity of the patent in suit, as well as certain background information. Joao Bock Transaction Systems, LLC v. Jack Henry & Associates, Inc., C.A. No. 12-1138-SLR (D. Del. June 13, 2013). Judge Robinson denied plaintiff's motion finding that defendant's counterclaims provided sufficient detail to give rise to a plausible claim for relief. Id. at 4-5. Specifically, defendant's answer and counteclaim "include[d] numerous details indicating why Jack Henry believe[d] the '003 patent [was] invalid," such as because the patent in suit was a continuation of a patent determined to be invalid, and because prior art existed prior to a year before the patent application. Id. at 5.

Judge Robinson also denied plaintiff's motion to strike. Regarding defendant's introductory section, Judge Robinson found that the material, including references to prior litigation, had "evidentiary or legal signifcance," and should not be stricken. Id. at 5-6. Judge Robinson declined to strike defendant's affirmative defenses, finding that sufficient supporting facts were present in defendant's responsive pleading. Id. at 6.

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June 11, 2013

Judge Robinson denies film company's motion to transfer to California

In a recent memorandum opinion, Judge Sue L. Robinson denied a defendant’s motion to transfer to the Central District of California litigation involving a patented codec used for encoding video onto Blue-ray discs. FastVDO LLC v. Paramount Pictures Corp., Civ. No. 12-1427-SLR (D. Del. June 4, 2013). The plaintiff was a Florida limited liability company with headquarters in Florida, and was significantly smaller (with significantly less litigation experience) than the defendant, a Delaware corporation with its headquarters in California. Id. at 1, 4. The defendant argued that the allegedly infringing coding was performed by authoring houses operating primarily in California, but the Court disagreed, noting that the authoring houses were headquartered in California, but performed coding in facilities located in Indiana, Pennsylvania, and New York. Id. at 1. As a result, and combined with the fact that Blue-ray discs are sold across the country, the Court found that the alleged infringement did not occur principally in California. Id. at 4. The Court gave little weight to the defendant’s argument that the authoring houses’ documents would be outside the Court’s subpoena power, explaining that since “the authoring houses manufacture the Blue-ray discs at the behest of [defendant], it is unlikely they would refuse any reasonable request to produce information from their business partner in electronic format.” Id. at 5. The Court also found that while trial would be less expensive for the defendant in California, it would be more expensive for the plaintiff than litigating in Delaware. As a result, the Court explained that “[a]lthough Delaware is not the locus of any party’s business activities, it is a neutral forum and no more inconvenient for [defendant] than Florida, the locus of [plaintiff’s] business activities.” Id. at 6. All of this, combined with the fact that 24 other Blue-ray cases filed by the plaintiff were pending in Delaware, convinced the Court that transfer was not warranted. Id. at 7-8.

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June 7, 2013

Chief Judge Sleet Grants Motion to Stay Pending Inter Partes Reexamination

Chief Judge Sleet has granted a patent infringement defendant’s motion for a stay pending completion of inter partes reexamination of several patents-in-suit. See BodyMedia, Inc. v. Basis Science, Inc., C.A. No. 12-133-GMS, Order at 1-3 (D. Del. June 6, 2013). Judge Sleet first found that a stay would not result in undue prejudice to the plaintiff. The PTO had granted six of the defendant’s seven reexamination requests, thus mooting the plaintiff’s objection that the PTO had not yet acted on the requests. Furthermore, the parties’ competitive relationship did not weigh against granting a stay in light of the fact that the defendant had not yet sold its product and the plaintiff had not sought a preliminary injunction. Finally, Judge Sleet rejected the plaintiff’s allegations of potential prejudice, given that “the potential for litigation delay, by itself, is insufficient to demonstrate that [the plaintiff] will be unacceptably prejudiced” and “the timing of the reexamination and stay requests do not evidence any dilatory motive.” Id. at 3. Judge Sleet also found that the simplification-of-issues-in-question factor favored granting a stay: “[I]f the court were to deny [the defendant’s] request for a stay, it would be adjudicating less than ten percent of [the plaintiff’s] 243 asserted claims. Further, 15 of the 22 claims not covered by the pending reexaminations depend on claims that have been rejected. Thus, while [the plaintiff] is correct that there will be issues for judicial resolution not involved in the inter partes reexamination, the court is convinced that, in view of the foregoing, the reexamination proceedings will simplify the overlapping issues present in the reexamination and that will ultimately be before the court.” Id. Thus, Judge Sleet concluded, “a stay of this action will promote judicial economy and avoiding wasting the parties’ efforts and expense in parallel proceedings.” Id.

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June 4, 2013

Judge Andrews denies defendants' motion to exclude plaintiffs' nine experts in advance of bench trial

Judge Andrews recently considered defendants' motion to exclude plaintiffs' nine experts in advance of a bench trial. VIIV Healthcare UK Ltd. v. Lupin, C.A. No. 11-576-RGA (D. Del. May 30, 2013). In support of their motion, defendants submitted more than "1600 pages of appendices . . . , as well as briefing not only on the merits but on collateral argumetns such as compliance with the local rules and the submission of an expert affidavit." Id. Judge Andrews denied defendants' motion and instructed defendants as to the procedure to renew the objections at trial. Id. at n.1. In doing so, Judge Andrews noted:

While I acknowledge the "gate-keeper" function of a federal trial judge, it is inefficient in the extreme to spend hours trying to figure this out in advance of a bench trial in which the likelihood is that the experts are going to testify in any event. In addition, live testimony and cross-examination, in the context of the issues actually in dispute at trial, are much more likely to result in a correct decision from me about whether an expert is giving appropriate reliable scientific testimony, or using bad data and/or inappropriate methods to reach unreliable conclusions.

Id. at. 1-2.

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June 3, 2013

Magistrate Judge Burke Denies Motion to Stay Pending Resolution of Motion to Transfer

Magistrate Judge Christopher Burke has denied patent infringement defendant Yahoo!’s motion to stay in a case referred to Judge Burke for resolution of all pretrial matters. See Pragmatus AV, LLC v. Yahoo! Inc., C.A. No. 11-908-LPS-CJB, Memorandum Order at 1 (D. Del. May 30, 2013). Plaintiff Pragmatus sued Yahoo! for patent infringement in the District of Delaware in 2011. During 2012, Yahoo! filed a motion to transfer venue to the Northern District of California, and the Court denied the motion. In early 2013, however, Pragmatus filed a separate lawsuit involving two new patents against Yahoo! in the Northern District of California. Yahoo! promptly filed a renewed motion to transfer venue along with a motion to stay the Delaware proceedings pending resolution of its renewed motion to transfer. Id. at 1-2. Judge Burke considered only the motion to stay, leaving resolution of the renewed motion to transfer for another day.

Considering first the status of the litigation, Judge Burke found that the “case is by no means in its early stages.” Not only was the fact discovery deadline approaching, but the Court had “expended significant resources on the matter,” resolving a motion to transfer, a motion to dismiss, and numerous discovery disputes. “Our Court,” Judge Burke explained, “has found that in such circumstances, it is more difficult for a stay to be characterized as promoting the efficient use of judicial resources.” Accordingly, “the stage of this litigation—with some important case events still ahead, but with many having already been completed—weighs slightly against a stay.” Id. at 4-5.

Judge Burke next considered whether a stay would simplify issues in the case. Yahoo! argued that a stay or transfer would simplify issues and promote judicial efficiency by preventing duplication of effort between the Delaware and California courts. As Pragmatus argued and Judge Burke agreed, however, this argument for simplification was purely speculative in that “a stay would only prevent duplicative litigation if this Court were to (1) later grant the renewed Motion to Transfer; and then (2) this action and the California Action were consolidated for discovery and trial in the Northern District of California; and (3) that consolidation occurred in such a manner as to reduce or eliminate the prospect for the type of duplicative discovery that Yahoo! is concerned about among the two actions.” Judge Burke continued, “if one or more of those eventualities do not later occur . . . the proposed stay will likely result in complication, not simplification—it will have frozen the progress of this case as discovery nears its end, without much or any resulting efficiency benefit to this Court or the Northern District of California. . . . A stay at this precise point in the litigation, even pending decision on the renewed Motion to Transfer, would complicate the orderly proceeding of the completion of the discovery period, which is otherwise currently in full swing as this very motion awaits resolution.” Therefore, “[i]n light of the speculative nature of the prospect for simplification . . . the Court [found] that this factor weighed against a stay.” Id. at 5-7.

Finally, Judge Burke considered the possibility of prejudice to either party and found that, although there was some possibility of prejudice, it did not meaningfully favor either granting or denying a stay. Thus, all three factors relevant to the stay analysis either weighed against granting a stay, or were neutral, and Judge Burke denied the motion to stay. Id. at 7-10.

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June 3, 2013

Judge Andrews construes claim terms of patent for three cases

Judge Richard G. Andrews recently issued a claim construction Order relating to three cases that had been consolidated for Markman purposes. Power Management Solutions, LLC v. Intel Corporation, et al., C.A. No. 11-743-RGA; Power Management Solutions LLC v. Advanced Micro Devices, Inc., C.A. No. 12-426-RGA-CJB; Power Management Solutions, LLC v. NVIDIA Corporation, C.A. No. 12-427-RGA (D. Del. May 30, 2013). The patent-in-suit is U.S. Patent No. 5,504,909, entitled “Power management apparatus collocated on the same integrated circuit as the functional unit that it manages.”

Judge Andrews construed the following disputed terms for all three cases:

-“internal” and “external”

-“internal functional circuit”

-“external functional circuit”

-“externally generated”

-“second externally generated electrical signal”

-“internal functional circuit function”

-“allowing submicrosecond recovery of internal functional circuit function upon the assertion of the second externally generated electrical signal”

Judge Andrews also construed the following terms specifically for Power Management Solutions, LLC v. Advanced Micro Devices, Inc., C.A. No. 12-426-RGA-CJB:

-“first electrical signals”

-“electrical power is controllably passed from an external power supply through the power gating means to the internal functional circuit”

-“one or more first electrical signals are controllably passed between an external functional circuit and the internal functional circuit via the switching means”

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June 3, 2013

Judge Sleet orders production of documents related to revival of patent application under crime-fraud exception

In Shelbyzyme, LLC v. Genzyme Corporation, C.A. No. 09-768-GMS (D. Del. May 22, 2013), Chief Judge Gregory M. Sleet issued an Order granting in part defendant’s request for production of documents under the crime-fraud exception. Defendant alleged that the patent applicants had committed fraud in reviving a patent application because the abandonment and/or delay in revival was intentional, but the applicants had represented to the PTO that the abandonment and delay were unintentional. Id. at 2 n.1.

“Communications that otherwise would be shielded by the attorney-client privilege or the work product doctrine forfeit such protection when they are made in furtherance of a fraud or crime.” Id. The Court concluded that defendant had not established a prima facie case for fraud as to the abandonment because its arguments were speculative. Id. However, defendant had established a prima facie case for fraud as to the delay in revival, in alleging that the applicants “knew at least as early as December 1999 that the Issue Fee had not been paid; [the prosecuting attorney] had received the Notice of Abandonment . . . in January 2000; and [the applicants] knew at least by early 2000 that the [patent application] had been abandoned.” Id. (internal quotation marks omitted). Communications in 1999 between the applicants and other individuals regarding the fact that the application’s Issue Fee had not been paid, and that failure to pay would result in abandonment, “permit[ted] the reasonable inference that [the applicants] knew . . . that the [application] had been abandoned.” Id. The Court also concluded that “[g]iven the apparent falsity of the applicants’ representation to the PTO and their demonstrated knowledge that 37 C.F.R. § 1.137(b) required the entire delay to be unintentional, an inference of intent [to deceive] is not only reasonable but effectively required here.” Id. While it would be necessary for defendant to show “clear evidence of deceptive intent,” “there is no reason that ‘clear evidence’ cannot take the form of a well-supported inference.” Id. at 3 n.1. Finally, although the PTO may have been aware that it sent the Notice of Allowance and Notice of Abandonment to the applicants, “it could not independently determine what the applicants themselves knew,” and therefore the alleged misrepresentations to the PTO established reliance and causation. Id.

The Court ordered plaintiff to produce the requested documents only within a limited time period (November 2001 – February 2001) and that related to the revival of the patent application. “Given the narrow basis articulated above for the court’s invocation of the crime-fraud exception,” the Court concluded that the only communications made in furtherance of the fraud were those relating to the revival of the patent application, and not “the otherwise protected communications made leading up to the July 1999 response to Office Action or the October 1999 Issue Fee due date.” Id. at 3 n.2.

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June 3, 2013

Judge Burke recommends granting plaintiff’s motion to substitute, granting defendant’s motion to transfer, denying parties’ motions to dismiss in ANDA litigation

Recently, in Abbott Laboratories v. Roxane Laboratories, Inc., C.A. No. 12-457-RGA-CJB (D. Del. May 28, 2013), Magistrate Judge Christopher J. Burke issued a report and recommendation with respect to four motions pending before the Court in this ANDA litigation, providing the following recommendations: (1) granting Abbott Laboratories’ (“Abbott”) motion to substitute AbbVie, Inc. (“AbbVie”) as plaintiff in the action; (2) denying Roxane Laboratories, Inc.’s (“Roxane”) motion to dismiss Abbott’s complaint for lack of subject matter jurisdiction; (3) granting Roxane’s motion to transfer venue to the U.S. District Court for the Southern District of Ohio; (4) denying Abbott’s motion to dismiss “all claims and counterclaims related to the two asserted patents without prejudice” as moot. Id. at 1.

In October 2011, Abbott had announced that it would be undergoing a significant reorganization. Id. at 2. Pursuant to the reorganization, Abbott split into two publicly traded companies, one which focuses on developing pharmaceuticals and another which focuses on developing “diversified medical products.” Id. AbbVie is the pharmaceutical-focused company and is a Delaware corporation. Id. The medical product company retained the Abbott name and is an Illinois corporation. Id. Abbott’s headquarters are in Abbott Park, Illinois. Id.

On April 10, 2012, following an amendment to its ANDA, Roxane filed suit in the Southern District of Ohio seeking a declaratory judgment that Abbott’s U.S. Patent Nos. 7,148,359 and 7,364,752 are invalid and/or not infringed. Id. at 4. That same day, Abbott filed suit in the District of Delaware alleging infringement of the patents in the Ohio action in addition to U.S. Patent No. 5,648,497. Id. On April 11, 2012, Abbott filed an amended complaint asserting additional infringement claims with respect to U.S. Patent Nos. 6,037,157 and 6,703,40. Id. In view of its reorganization, Abbott assigned all its Delaware patents-in-suit to AbbVie on August 1, 2012. Id. at 5. Then, on August 29, 2012, Roxane filed it motion to dismiss with its motion to transfer pending. Id. at 5-6. That same day, following Roxane’s filing, Abbott filed its motion to substitute. Id. at 6.

Judge Burke first addressed Abbott’s motion to substitute AbbVie, and Roxane’s motion to dismiss for lack of subject matter jurisdiction, as both motions implicated the issue of “how . . . Abbott’s assignment of the patents-in-suit to AbbVie impact this litigation.” Id. at 6. Judge Burke explained “it is undisputed that when the original Complaint was filed, Abbott was the owner of the patents-in-suit and that it had standing to sue.” Id. at 10. Abbott argued that “pursuant to [Fed. R. Civ. P. 25(c)], its motion to substitute AbbVie as plaintiff in this action ‘was timely and the correct mechanism for bringing AbbVie into the case in Abbott’s stead.’” Id. at 12. On the other hand, Roxane argued that the “standing issue should be judged at the moment there is a challenge to subject matter jurisdiction.” Id. It was thus Roxane’s position that because Abbott “relinquish[ed] its rights to the patent during the pendency of the litigation,” the dispute became moot and there was “no justiciable dispute between Abbott and Roxane [such that the Amended Complaint]” must be dismissed. Id. at 11-12.

First, Judge Burke found that the timing of Abbott’ motion to substitute was not dispositive, and that Abbott’s filing of its motion “mere hours after the filing of Roxane’s Motion to Dismiss . . . militates that the case be dismissed.” Id. at 19. Specifically, Judge Burke explained that “‘[i]n circumstances where dismissal for lack of initial standing is not required, the Supreme Court [has] held that jurisdictional defects can be cured before judgment,’” and that “the temporary loss of standing during patent litigation can be cured before judgment.” Id. at 19. Second, Judge Burke found that “Rule 25(c) may be used to cure a lack of standing incurred after the filing of the complaint as long as the claims survived assignment.” Id. at 25. In light of these findings, Judge Burke recommended that Abbott’s motion to substitute be granted and Roxane’s related motion to dismiss be denied. Id. at 25-26.

With respect to its motion to transfer, Roxane argued that transfer was warranted pursuant to the first-filed rule because “the Ohio Action was filed prior the Delaware Action, and because the Ohio Action involved the same parties and subject matter as the Delaware Action.” Id. at 27. Judge Burke explained that “the first-filed rule is meant to identify cases that, if not mirror images of each other, are so indistinguishable that, in essence, they can be said to arise from the ‘same set of facts.’” Id. at 31. Judge Burke found that “although there will be significant commonalities of fact and law among the two suits, the subject matter of the suits are different enough to render the first-filed rule inapplicable.” Id. at 28. As Judge Burke explained, not only were there three patents in the Delaware action that were not asserted in the Ohio action, there also existed substantive differences among those patents, including differences in subject matter, inventors, and the scope of potentially invalidating prior art. Id. at 28-31.

Despite Judge Burke's recommendation that first-filed rule did not apply, he was nevertheless required to address whether the case should be transferred pursuant to the traditional 28 U.S.C. § 1404(a) analysis. Id. at 32. Judge Burke found that “this is a case where Delaware has no ties to Abbott or Roxane, while the proposed transferee forum not only has ties to both parties and to the underlying dispute, but is also the forum in which litigation regarding the same ANDA is already ongoing.” Id. at 52. Judge Burke further noted that “[a]lthough Abbott’s choice of forum is entitled to considerable deference . . . the balance of the Jumara factors weigh strongly in favor of transfer.” Id. at 53. Accordingly, Judge Burke ultimately recommended that the Court transfer the Delaware action to the Southern District of Ohio, and that the Court deny Abbott’s motion to dismiss as moot in view of that transfer recommendation. Id. at 52-53.

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June 3, 2013

Judge Stark grants-in-part defendants' motions to dismiss Clouding IP LLC's infringement claims

Judge Stark recently considered defendants' various motions to dismiss Clouding IP LLC's allegations of infringement filed in three related and coordinated cases. Clouding IP, LLC v. Amazon.com, Inc., et al., C.A. Nos. 12-641-LPS, 12-642-LPS, 12-675-LPS (D. Del. May 24, 2013). First, the Court denied defendant Oracle's motion to dismiss Clouding's direct infringement claims because the claims were sufficient under the Federal Rule's Form 18. Id. at 3-4. The claims identified "a description of the accused Oracle products . . . [and] also identified at least one accused product or product category[.]" Id. at 4. The Court rejected Oracle's argument that Form 18 also required Clouding "to specify what functionality infringed, or any facts that show how [Oracle] performs even one step of a claimed method." Id. (internal quotation omitted) (alteration in original).

All defendants moved to dismiss Clouding's inducement claims because the claims did not adequately plead knowledge of the asserted patents prior to filing the complaint, and failed to plead specific intent to induce infringement. Id. at 5. Clouding argued that its inducement claims were limited to post-filing conduct, thus pre-filing knowledge was not required; and argued that intent was established by Defendants' continued infringement despite knowledge of the complaint. Id. at 5-6. Judge Stark granted defendants motion, however, because Clouding's argument "only holds true . . . if the complaint contains
sufficient facts to support an inference that Defendants specifically intended or encouraged others to directly infringe. No such facts are found in Clouding's [complaints] nd, as a result, Clouding cannot rely on Defendants' continued infringement to support an induced infringement claim." Id. at 6.

All defendants also moved to dismiss Clouding's claims of willful infringement based on Clouding's failure to allege pre-filing knowledge of the asserted patents, and because Clouding had not sought a preliminary injunction for any post-filing conduct. Id. at 6-7. Judge Stark denied defendants' motions. Regarding pre-filing knowledge, Clouding argued that because it amended its original complaints to add willful infringement claims, "the time between the filing of the original complaint and the filing of the amended complaint should be deemed 'pre-filing' conduct under Seagate." Id. at 7. (referring to In re Seagate Tech., LLC, 497 F.3d 1360 (Fed. Cir. 2007)). Judge Stark agreed. "For purposes of pleading willful infringement, there appears to be little practical difference between a precomplaint notice letter informing a defendant about a patentee's allegation of infringement and a subsequently-superceded original complaint formally alleging infringement." Id. Regarding Clouding's failure to seek a preliminary injunction, Judge Stark noted that there is no per se requirement that a plaintiff file for a preliminary injunction before raising a willful infringement claim, and Clouding's claims were not based solely on post-filing conduct since the claims were based at least in part on conduct predating the "operative amended complaint." Id. at 8.

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May 30, 2013

Judge Andrews construes claims relating to online auctions.

Judge Richard G. Andrews recently construed several claims in U.S. Patent No. 7,801,802, “Method, system and computer program product for facilitating an auction behavior and automatic bidding in an auction.” Walker Digital, LLC v. Google, Inc., et al., C.A. No. 11-311-RGA (D. Del. May 22, 2013). The Court adopted the parties’ agreed upon the construction of the following terms, as follows:

“bid” agreed to mean “an offer from or on behalf of a bidder that includes an offered price for the good or service being auctioned”

“the highest bid in the auction is not from the bidder” agreed to mean “the highest offer received for the item is not from the bidder”

“determin[ing] that the rule is satisfied; determin[ing] that the highest bid in the auction is not from the bidder; and plac[ing] the bid” agreed to require that “‘determining’ steps must be performed before ‘placing’ step.”

The Court construed the disputed claims as follows:

“auction” construed to mean “a public or private sale in which goods or services of a seller may be sold to a bidder through a bidding process. An auction consists of one sale.”

“bid generator” construed to mean “a computer program or part of a computer program that bids for a bidder in amounts above the initial price or another bidder’s bid.”

The Court declined to construe three claims, finding that the defendants failed to overcome the strong presumption that claims that do not use the word “means” are not means-plus-function claims.

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