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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March 27, 2014

Judge Stark denies motion to stay pending resolution of CBM review.

Judge Stark recently denied a plaintiff’s motion to stay pending the resolution of CBM review. Securebuy, LLC v. Cardinal Commerce Corp., C.A. No. 13-1792-LPS (D. Del. Mar. 21, 2014). The Court found that each of the factors (whether a stay would simplify issues; whether discovery is complete and a trial date set; whether a stay would unduly prejudice the non-moving party; and whether a stay would reduce the burden on the Court and parties) weighed against granting a stay. In this case, the petition for CBM review had not yet even been granted, and the Court found that CBM review would not involve all invalidity issues before the Court (or infringement), discovery was under way and trial scheduled to be held within 5 months, and a stay would prejudice the defendant without reducing the burdens on either the Court or the defendant. Accordingly, the Court denied the motion to stay.

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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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