March 27, 2014

Judge Stark grants Juniper Network's motion to dismiss ReefEdge's claims for willful infringement and indirect infringement

Judge Leonard P. Stark recently considered Juniper Network's motion to dimiss ReefEdge Network's claims of willful infringement and its amended claim of inducement. ReefEdge Networks, LLC v. Juniper Networks, Inc., C.A. No. 13-412-LPS (D. Del. Mar. 21, 2014). Prior to filing this motion, Juniper moved to dismiss ReefEdge's original claims of indirect and joint infringement. In response ReefEdge dropped its contributory and joint infringement claims and added a claim for willful infringement. Id. at 1. ReefEdge claimed Juniper knew of the patents-in-suit prior to the filing of the complaint because while Juniper's Deputy General Counsel was employed at Symantec Corporation, she marketed the patents-in-suit to ReefEdge. Id. at 2. After joining Juniper as Deputy Counsel and VP of Intellectual Property, ReefEdge met with Juniper to discuss licensing the same patents. Id.

Judge Stark disagreed with ReefEdge that because Juniper's Deputy Counsel was "responsible for managing all aspects of intellectual property at Juniper," her knowledge could be imputed to Juniper. Id. at 4. Judge Stark noted that ReefEdge did not allege that the Deputy General Counsel "was aware of Juniper's allegedly infringing products, which were on the market for years before [she] joined Juniper." Id. Nor did ReefEdge "'demonstrate a link between the various allegations of knowledge of the patents-in-suit and the allegations that the risks of infringement were either known or were so obvious that they should have been known.'" Id. (quoting MONEC Holding AG v. Motorola Mobility, Inc., 897 F. Supp. 2d 225, 236 (D. Del. 2012).

Regarding inducement, ReefEdge alleged that Juniper induced infringement by advertising and providing technical support services. Id. at 6. Judge Stark noted that "marketing activities are not sufficient to constitute induced infringement unless the marketing activities are coupled with actual knowledge of the patents-in-suit and awareness that the accused products infringe the patent-in-suit." Id. Because ReefEdge did not adequately plead pre-suit knowledge of the patents-in-suit and knowledge that those patents were being infringed, ReefEdge failed to state a claim for inducement prior to the filing of the complaint. Id. Judge Stark did, however, find that ReefEdge adequately pled inducedment based on post-filing knowledge because ReefEdge alleged that Juniper's "marketing activities and instructions to customers to use the accused products in an infringing manner" were ongoing even after Juniper "had actual notice of the alleged infringement by specific accused products as a result of the filing of the original complaint[.]" Id. at 7-8.

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March 26, 2014

Magistrate Judge Fallon recommends denial of motion to transfer to N.D. Cal

Magistrate Judge Sherry R. Fallon recently recommended that a defendant’s motion to transfer to the Northern District of California be denied. Wireless Media Innovations, LLC v. Leapfrog Enterprises, Inc., C.A. No. 13-1545-SLR-SRF, Report and Recommendation (D. Del. Mar. 20, 2014). Plaintiff and defendant were both Delaware corporations. Defendant’s documents, employees and anticipated witnesses were in California. All alleged acts of infringement took place in California, as plaintiff alleged that defendant’s practices at its California distribution center, rather than its nationally-sold products, infringe plaintiff’s system and method patents. D.I. 1 ¶¶ 11-12; Report and Recommendation at 2 n.1

The Court concluded that, on balance, the Jumara factors weighed against transfer, even though several of the individual factors weighed in favor of transfer. Specifically, defendant’s forum choice, where the claims arose, and the convenience of witnesses favored transfer. See id. at 4-5, 6-8. As to the convenience of witnesses, defendant argued that many of its non-party witnesses that would be crucial to its non-infringement positions may be beyond the reach of the Court’s legal process. Id. at 7. Defendant provided declarations from third parties in support of its contentions. Plaintiff argued that these parties could be deposed and that testimony admitted at trial, but the Court noted that “deposition testimony is not a complete substitute for live trial testimony.” Id. at 8. Because defendant’s “assertions cannot be discounted as speculation in light of the declarations proffered,” this factor weighed in favor of transfer. Id.

On the other hand, Plaintiff’s choice of forum weighed against transfer, as did the convenience of the parties because defendant was the larger company, had chosen to incorporate in Delaware, and had previously sued and been sued in Delaware. See id. at 4-6. The remaining factors were neutral or only weighed slightly in favor of transfer. See id. at 9-10. The Court explained that “[i]n similar cases involving factors that weigh both for and against transfer, this court has declined to elevate a defendant's convenience over the choice of a neutral forum selected by both parties as the situs of their incorporation.” Id. at 10.

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March 25, 2014

Jury Finds No Infringement by Google, Invalidates Personalized User Model Patents

In the longstanding patent and contract action between Personalized User Model and Google, a jury returned a verdict last week. The verdict form shows that the jury found no literal infringement by any Google product of any asserted claim and that the jury found both anticipation and obviousness for each asserted claim. In addition, the jury sided with Google on breach of contract claims, finding that the statute of limitations for the claim was tolled, that Google had acquired the right to assert the breach of contract claim, that Google had proven the breach of contract claim, and that the California Labor Code did not exempt the breach of contract.

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March 25, 2014

Judge Robinson issues new patent scheduling order

On Monday, March 24, Judge Sue L. Robinson published a new form scheduling order on the District of Delaware web site for patent cases, as well as a new order governing the scheduling of patent Rule 16 conferences. These changes are in response to feedback from the Patent Study Group (discussed here ).

Changes include: no requirement that damages/willfulness are bifurcated from liability; additional initial disclosures related to damages models and sales figures; a new set deadline for the Court to issue a claim construction order; Markman and summary judgment hearings are no longer combined; papers must be electronically filed by 8:00 PM EST to be timely; and additional issues, including all discovery disputes, will be referred to a Magistrate Judge.

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March 25, 2014

Chief Judge Sleet Grants Motion to Transfer Case against Zynga to Northern District of California Based in Part on Subpoena Power over Third Party Witnesses

Plaintiff Segan is a New York limited liability company with a principal place of business in New York. Segan sued Zynga for infringement of its patent related to online games, accusing popular Zynga games such as Cafe World, CityVille, Empires & Allies, FarmVille, FishVille, FrontierVille, Mafia Wars, PetVille, Treasure Isle, YoVille and Zynga Poker. Zynga is a Delaware corporation with a principal place of business in San Francisco. Zynga moved to transfer the case to the Northern District of California. Segan LLC v. Zynga Inc., C.A. No. 11-670-GMS, Memo at 1-2 (D. Del. Mar. 19, 2014).

Third party witnesses ended up playing a large role in the transfer analysis. Segan identified three potential third-party witnesses: the co-inventor and the two prosecuting attorneys. Judge Sleet explained that these individuals did not affect the Court’s transfer analysis because “they are not Segan’s employees, and they are not third-party witnesses that reside within the subpoena power of either the District of Delaware or the Northern District of California.” Id. at 5 n.1. By contrast, Zynga identified several relevant third party witnesses who were not within the District of Delaware’s subpoena power but could be compelled by subpoena to testify in the Northern District of California. Because Zynga’s identified third party witnesses were “important to resolving infringement,” could be compelled to testify in California, and could more conveniently testify in California because they were headquartered there, Judge Sleet found that this factor strongly favored a transfer to the Northern District of California. Id. at 6-7.

Weighing the other factors set forth by the Third Circuit in Jumara v. State Fram Ins. Co., 55 F.3d 873 (3d Cir. 1995), Chief Judge Sleet determined that the interests weighed in favor of transfer. Although both parties chose “traditional and legitimate” venues, Judge Sleet acknowledged that “plaintiffs have historically been accorded the privilege of choosing their preferred venue,” so this factor weighed slightly against transfer. Id. at 3-4. Similarly, the convenience to each party of its chosen venue was given some weight, but was ultimately neutral. Id. at 5-6. Judge Sleet also found that the accused products had a closer connection to California through Zynga’s San Francisco headquarters and that the relevant books and records were located in California. Each of these factors weighed somewhat in favor of transfer. Id. at 4-7. Finally, practical considerations also favored transfer because “none of the parties have a presence in Delaware; the majority of the evidence, witnesses, and nonparty companies are located in the Northern District of California; and transfer would reduce the expense and disruption to Zynga’s and the nonparty companies’ business operations.” Id. at 7-8.

In sum, Judge Sleet determined that the motion to transfer should be granted: “Considering the Jumara factors as a whole, the court believes that Zynga has met its burden of demonstrating that the interests of justice and convenience strongly favor transfer. Notably, only Segan’s forum preference weighs against transfer, and that preference was not afforded maximum deference in this case. On the other hand, several factors counsel transfer: the location where the claim arose; the location of relevant books and records; and practical considerations that might make trial easier and less expensive. Additionally, the convenience of witness factor strongly favors transfer because the Northern District of California can exercise subpoena power over most of the nonparty witnesses, but Delaware cannot. Therefore, the court grants Zynga’s motion to transfer.” Id. at 9.

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March 20, 2014

Magistrate Judge Burke recommends denial of indirect and willful infringement claims.

Magistrate Judge Christopher J. Burke recently recommended the dismissal of a plaintiff’s induced infringement and willful infringement claims, with leave to amend. McRO, Inc. v. Rockstar Games, Inc., C.A. No. 12-1513-LPS-CJB; v. Take-Two Interactive Software, Inc., C.A. No. 12-1517-LPS-CJB; v. 2K Games, Inc., C.A. No. 12-1519-LPS-CJB (D. Del. Mar. 17, 2014). With respect to indirect infringement, the Court found that the allegations of direct infringement by unidentified “game developers” was sufficient, but that the allegation that the defendants had knowledge that these game developers were using the patented methods to create the games developed for defendants was insufficient. Judge Burke found that the indirect infringement claim really was “little more than a rephrasing of a portion of the language of Claim 1 of the ‘576 patent and ‘278 patent[.]” “It is really not much different from a bland statement that an entity has taken some unspecified action to practice a ‘method claimed’ in the patents-in-suit. Just as important, the complaints do not really contain any further more specific, concrete factual allegations as to what particular type of actions the developers have actually taken, or what kind of development they have actually engaged in, that are plausibly asserted to amount to the use of the claimed methods.” Id. at 11. As a result, the complaint failed to allege post-suit knowledge of infringing conduct by the game developers that could support an induced infringement claim.

Judge Burke recommended denial of the defendant’s motion to dismiss direct infringement claims, explaining that “Form 18 does not require a plaintiff to list specific accused products, nor to specify what functionality infringed, or any facts that show how [the defendant] performs even one step of a claimed method.” Id. at 7 (internal quotation marks omitted). However, because the allegations “do not plead sufficient specific factual matter about what Defendants or others were actually doing in order to plausibly indicate that, at any point, Defendants were or should have been aware that they were committing patent infringement[,]” Judge Burke recommended denial of the willful infringement claims.

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March 20, 2014

Judge Robinson finds that second phase of trial on indirect infringement is unnecessary

Judge Sue L. Robinson recently found that the second phase of a trial, which was to address indirect infringement allegations, was no longer necessary in light of the parties’ understood agreement that if the jury returned a verdict finding direct infringement, the parties would settle the matter. Juniper Networks, Inc. v. Palo Alto Networks, Inc., Civ. No. 11-1258-SLR (D. Del. Mar. 6, 2014). The trial had been bifurcated into a direct infringement phase and an indirect infringement phase as a result of the parties' contentious litigation history and in an effort to avoid “the admission of evidence that is totally irrelevant to the question of direct infringement based on the ‘knowledge’ and ‘intent’ prongs of the induced infringement standard.” In its order bifurcating the trial, the Court explained that if the plaintiff did not prevail in the direct infringement phase, the indirect infringement phase would not be necessary. The plaintiff disagreed, “specifically pointing to an alternate defense of divided infringement theory posited by [the defendant] in its interrogatory responses and the explanation provided by the Federal Circuit in [Akamai Tech., Inc. v. Limelight Networks, Inc., 692 F.3d 1301, 1308 (Fed. Cir. 2012)], to wit, that a party may be found liable for induced infringement even in the absence of direct infringement ‘where the infringing conduct is split among more than one other entity.’”

The Court disagreed with the plaintiff's view that even if the jury returned a verdict of no direct infringement, an indirect infringement phase would still be appropriate in this case, explaining that the defendant “stipulated to the fact that both it and its customers have used each of the accused products and features [and] [n]either of the experts opined on the theory of divided infringement in either their expert reports or at trial.” Accordingly, the Court saw no reason to proceed with a trial on indirect infringement in the event the defendant prevailed in the direct infringement phase.

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March 19, 2014

Judge Sleet grants motion to transfer declaratory judgment action

In Constant Contact Inc. v. Umbanet Inc., C.A. No. 12-1467-GMS (D. Del. Mar. 12, 2014), Chief Judge Gregory M. Sleet granted Umbanet Inc.’s (“Umbanet”) motion to transfer Constant Contact Inc.’s (“Constant Contact”) declaratory judgment action to the District of New Jersey. In September 2012, Umbanet filed an action for patent infringement against one of Constant Contact’s customers, Englewood Wine Merchants (“EWM”) in the District of New Jersey, alleging that EWM infringes U.S. Patent Nos. 7,067,730 and 7,444,374 (collectively, the “patents-in-suit”) via its use of Constant Contact’s e-mail marketing service. Id. at 1. In November 2012, Constant Contact filed an action in the District of Delaware seeking, among other things, a declaratory judgment that the patents-in-suit are invalid and that none of Constant Contact’s customers infringe the patents-in-suit by using Constant Contact’s products. Id. at 1.

First, Judge Sleet determined that the declaratory judgment action could have brought in the District of New Jersey, as “[b]oth Constant Contact's declaratory judgment suit and Umbanet's suit against EWM in New Jersey arise out of the use by EWM in New Jersey of Constant Contact's e-mail marketing products.” Id. at 5. Turning to the Jumara private interest factors, Judge Sleet noted that “Constant Contact's choice of forum is Delaware, where it is incorporated, but Constant Contact's principal place of business is in Massachusetts.” Id. at 6. Accordingly, Judge Sleet did not grant Constant Contact’s choice of forum as much deference “as that normally shown a plaintiff's choice of forum.” Id. Judge Sleet found, on the other hand, that Constant Contact’s choice of New Jersey as a venue was legitimate as “New Jersey is where the use of Constant Contact's products by EWM that gave rise to the instant suit occurred.” Id. Judge Sleet therefore found that the parties’ forum choice “weigh[ed] slightly in favor of transfer.” Id. Considering whether the claim “arose elsewhere,” Judge Sleet explained that “both the declaratory judgment action currently at issue and Umbanet's suit against EWM in New Jersey arise out of EWM's use in New Jersey of Constant Contact's allegedly infringing products.” Id. Accordingly, Judge Sleet found this factor weighed “strongly” in favor of transfer. Id. at 7.

Judge Sleet also found the convenience of the parties weighed in favor of transfer. Id. at 7-8. Specifically, Judge Sleet noted that Constant Contact had its principal place of business in Massachusetts and Umbanet had its principal place of business in New York. Id. at 7. While Constant Contact argued that New York was only a “short train ride” from Delaware, Judge Sleet explained that “New Jersey is a much shorter train ride from New York.” Id. Further, Umbanet was only a “one-employee operation” while Constant Contact had a market capitalization of approximately $473 million. Id. Judge Sleet thus found that Constant Contact can “much more easily bear the cost of leaving Massachusetts to litigate in New Jersey than Umbanet can bear the cost of venturing from New York to litigate in Delaware.” Id. at 7-8. Judge Sleet found the location of books and records, and the convenience of witnesses to be neutral in the Court’s analysis. Id. at 8.

Turning to the public interest factors, Judge Sleet determined that judicial efficiency favored transfer. Id. at 8-9. Specifically, Judge Sleet found that the New Jersey action involves “the same patents, the same technology, the same prior art, and the same accused product.” Id. at 9. Further, as Judge Sleet explained, “full discovery continues and the claim construction process has commenced and is well underway,” and there is therefore “some efficiency to be achieved in allowing that process to continue without the interruption and potential conflict of a parallel proceeding before this court.” Id. Judge Sleet similarly found that New Jersey’s interest in this matter favors transfer. Id. Specifically, “New Jersey has an interest in this matter because the underlying use by EWM of Constant Contact's alleged infringing product occurred in New Jersey and is currently being litigated in New Jersey.” Id. Delaware’s interest in the instant matter, as Judge Sleet explained, was “more tenuous.” Id.

Considering the Jumara factors a whole, Judge Sleet determined that Umbanet met its burden of demonstrating that “the interests of justice and convenience strongly favor stay.” Id. at 10.

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March 18, 2014

Judge Stark grants mandatory and discretionary stays pending an ITC investigation

In Graphic Properties Holdings, Inc. v. Toshiba America Information Systems, Inc., et al., C.A. No. 12-213-LPS (D. Del. Mar. 5, 2014), Judge Leonard P. Stark granted stays pending an ITC investigation in three separate actions that plaintiff Graphic Properties Holdings, Inc. (“GPH”) had filed against various defendants: C.A. No. 12-213-LPS (the “Toshiba action”); C.A. 12-214-LPS (the “Vizio action”); C.A. No. 12-210-LPS (the “ASUS action”). In the Toshiba and Vizio actions, GPH was asserting both U.S. Patent Nos. 8,144,158 (the "’158 Patent”) and U.S. Patent No. 6,650,327 (the “’327 Patent"). In the ASUS action, GPH asserted only the ’158 Patent. Id. at 1. Because the products accused of infringing the ’327 Patent appeared to be the same products at issue in the ITC investigation, and because the defendants in the Toshiba and Vizio action moved for stay within 30 days after being named respondents in the ITC action, Judge Stark granted a mandatory stay of the Toshiba and Vizio actions pursuant to 28 U.S.C § 1659(a) with respect to the ’327 Patent. Id. at 2.

Judge Stark also granted discretionary stays in the Toshiba, Vizio, and Asus actions with respect to the ’158 Patent. As Judge Stark explained, “the '158 Patent is a continuation of the '327 Patent and they share common inventors, specification, and prosecution history. Because of this overlap, claim construction and invalidity issues with respect to one patent will necessarily impact those same issues with respect to the other patent.” Id. at 3. Further, GPH agreed that its “general theory of infringement regarding the ’158 Patent is common” to the district court and ITC Action, and many of the accused products “share critical components.” Id. at 3. Accordingly, Judge Stark found that in granting stay “GPH will not have to engage in duplicative discovery and other pretrial matters.” Id. at 4. Judge Stark similarly found that the discretionary stay would simplify matters for trial, as the Court would "not have to engage in duplicative proceedings regarding the '158 Patent that could be held in conjunction with the '327 Patent.” Id. In granting the discretionary stay, Judge Stark also noted that no trial date was set and discovery was not complete. Id. at 4-5. Further, as Judge Stark explained, GPH did not market any products covered by the ’158 Patent, and therefore would not be competitively disadvantaged by the stay. Id. at 4.

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March 18, 2014

Last Chance to Register: Managing IP US Patent Forum March 25, 2014 in Washington, D.C.

There is still time to register for Managing IP's third annual US Patent Forum on March 25 at the Willard InterContinental, Washington D.C.

** Free for in-house patent counsel, academics and R&D professionals **

Supported by AIPLA and Delaware IP Law Blog, the forum will provide you with:

• a guide to improving your company’s patent application process post-AIA;
• an evaluation of post-grant proceedings;
• an update on litigation planning and forum shopping in Europe; and
• the analysis of the recent standard essential patent (SEP) litigation between Apple and Samsung

Speakers include Judge Sharon Prost of the U.S. Court of Appeals for the Federal Circuit and Lead Judge Michael Tierney of the USPTO Patent Trial and Appeal Board.

See the agenda below for a full list of presenters. Click HERE to register online, or by emailing alicia.sprott@legalmediagroup.com.

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