April 5, 2013

Judge Stark Denies Defendant and Plaintiff’s Motions to Dismiss for Failure to State a Claim

In a recent order, Judge Leonard P. Stark denied both (1) defendant’s motion to dismiss plaintiff’s claims of direct and indirect patent infringement for failure to state a claim and (2) plaintiff’s motion to dismiss defendant’s declaratory judgments of non-infringement and invalidity for failure to state a claim. Cronos Technologies LLC v. Vitamin Shoppe, Inc., C.A. No. 12-444-LPS (D. Del. Mar. 29, 2013). Although plaintiff amended its complaint and defendant amended its answer subsequent to the filing of the motions to dismiss, Judge Stark considered the motions to the extent they were not rendered moot. See id. at 2. Denying defendant’s motion for failure to state a claim, Judge Stark found that plaintiff’s direct infringement claim “satisfi[ed] the requirements of Form 18,” and that plaintiff’s complaint provided facts with respect to “knowledge, intent and direct infringement” to sufficiently plead induced infringement. Id. Defendant argued that plaintiff’s asserted method claims should be dismissed because plaintiff did not allege that a single entity performed all of the elements. Judge Stark found, however, that plaintiff’s patent included “both apparatus and method claims,” and that plaintiff was “not required to identify any specific asserted claim in the Amended Complaint.” Id. Turning to plaintiff’s motion to dismiss, Judge Stark first found that defendant “specifically identif[ied] non-infringing products” in its amended complaint and therefore sufficiently pled its non-infringement declaratory judgment. Id. Moreover, Judge Stark found that defendant sufficiently pled its declaratory judgment for invalidity, including “specific references to prior art, statutes, and legal principles” in its amended complaint. Id.

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April 3, 2013

Judge Robinson Considers Motion to Transfer, Motion to Dismiss Indirect Infringement Claims

In a recent memorandum opinion, Judge Sue Robinson denied patent infringement defendants’ motion to transfer venue but granted the defendants’ motion to dismiss claims of indirect infringement. See Stephenson v. Game Show Network, LLC, C.A. No. 12-614-SLR, Memorandum Opinion at 1 (D. Del. Mar. 27, 2013).

Her decision on the motion to transfer was consistent with her practice in previous cases, including one relied on here, Helicos Biosciences Corp. v. Illumina, Inc., 858 F. Supp. 2d 367 (D. Del. 2012). Judge Robinson observed that a defendant’s state of incorporation—here Delaware—has always been a “predictable, legitimate venue for bringing suit” and that a “plaintiff’s choice of venue should not be lightly disturbed.” Id. at 2 (citations omitted). Accordingly, after considering all of the Third Circuit’s Jumara transfer factors, she found that the defendants had not “tipped the scales of justice in favor of transfer.” Id. at 11.

On the motion to dismiss, Judge Robinson found that a mere corporate relationship between two defendants was not sufficient evidence that one defendant intended the other to infringe and knew that such acts would constitute infringement. Such an allegation of contributory and induced infringement, she found, was insufficient under Rule 8 and should be dismissed. Id. at 12-13.

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April 3, 2013

Judge Andrews Excludes Late-Disclosed Damages Testimony, Grants Summary Judgment of No Damages

Judge Richard Andrews recently granted a patent infringement defendant’s motion for summary judgment of no damages and excluded untimely and prejudicial damages testimony proffered by the plaintiff. See AVM Techs., LLC v. Intel Corp., C.A. No. 10-610-RGA, Order at 1-4 (D. Del. Mar. 29, 2013). The proffered testimony in question was the fourth damages theory offered by the plaintiff since the defendant had moved for summary judgment of no damages. It was also filed almost a month after the initially-scheduled trial date. The witness in question had not been disclosed until recently and the defendant did not have the opportunity to seek discovery into the witness’s theory or develop a response. Id. at 2.

While the plaintiff argued that any prejudice could be cured by allowing additional discovery, Judge Andrews found that this offer “ignore[d] that the only reason trial was not held on its scheduled date was that [plaintiff] had no evidence of damages [so] the trial was cancelled pursuant to [a] Joint Proposed Final Judgment Order.” Accordingly, Just Andrews explained, the plaintiff “should not be put in a better position now, having offered yet another damages theory after trial initially was set to begin.” Id. at 2-3. Additionally, the proffered testimony was “unimportant in that it is insufficient to support a provable damages theory.” And although the exclusion of the proffered testimony would leave the plaintiff with no damages evidence, “this factor is at most neutral, particularly because this situation is of [plaintiff’s] own making.” Id. at 3. Accordingly, Judge Andrews excluded the proffered testimony as untimely and prejudicial, and because plaintiff had “no evidence with which to prove damages,” granted summary judgment of no damages for the defendant. Id. at 3-4.

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April 2, 2013

Judge Robinson denies motion to dismiss or transfer and enjoins second-filed infringement action.

Judge Sue L. Robinson recently denied a defendant’s motion to dismiss a first-filed declaratory judgment action or, in the alternative, to transfer it to the Northern District of New York where a second-filed infringement action was pending. Trustco Bank v. Automated Transactions LLC, Civ. No. 12-613-SLR (D. Del. Mar. 27, 2013). After the parties' licensing negotiations broke down, the plaintiff filed a declaratory judgment action in the District of Delaware, and within about three hours the defendant filed its own affirmative infringement action in the Northern District of New York. Id. at 2. The defendant then moved to dismiss the Delaware action, or in the alternative to transfer it to New York, and the plaintiff moved to enjoin the New York action. Id. at 1.

Judge Robinson explained that “[t]he Federal Circuit prefers ‘to apply in patent cases the general rule whereby the forum of the first-filed case is favored, unless considerations of judicial and litigant economy and the just and effective disposition of disputes, require otherwise.’” Id. at 3 (quoting Genentech, Inc. v. Eli Lilly and Co., 988 F.2d 931, 937 (Fed. Cir. 1993), rev’d on other grounds, Wilton v. Seven Falls Co., 515 U.S. 277 (1995). To that end, the Court explained that the first-to-file rule should only be departed from in situations involving “bad faith, forum shopping, when the second-filed action has developed further than the initial suit, and when the first-filing party instituted suit in one forum in anticipation of the opposing party’s imminent suit in another, less favorable, forum.” Id. at 4.

The defendant first argued that the plaintiff’s bad faith negotiation tactics (alleged delay tactics intended to provide additional time to draft a declaratory judgment complaint) justified departing from the first-to-file rule. The Court rejected that argument, explaining that “[p]reparations for litigation during negotiations are commonplace and the court concludes that there is no evidence of bad faith.” Id. at 7. Further, the Court found that the plaintiff had justifiable reasons for choosing to file its declaratory judgment action in Delaware (including the defendant’s status as a Delaware entity with a history of litigating in Delaware), such that forum shopping was not an issue. Id. Finally, the Court did not view transferring the case to New York as compellingly favorable from a judicial economy standpoint given that the New York action was stayed pending resolution of the motion before the Court, and a related New York action was subject to a motion to transfer to the District of Delaware. Id. at 8.

The Court next considered whether it should exercise its discretion to transfer the action to New York under 28 U.S.C. § 1404(a), upon a consideration of the Jumara factors, and found that transfer was not warranted based on the information provided to the Court. Id. at 8-10. The Court explained that the plaintiff did not satisfy its “burden of overcoming the first-filed rule” or its “burden of persuading the court, by a preponderance of the evidence, that the Jumara factors warrant transfer.” Id. at 11. As a result, the Court denied the defendant’s motion, and granted the plaintiff’s motion to enjoin the New York action. Id.

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April 2, 2013

Judge Stark denies motion to dismiss counterclaims or, in the alternative, for a more definite statement.

Judge Leonard P. Stark recently denied a plaintiff’s motion to dismiss counterclaims for direct, indirect, and willful infringement. Fairchild Semiconductor Corp. v. Power Integrations, Inc., C.A. No. 12-540-LPS (D. Del. Mar. 29, 2013). The Court first considered the plaintiff’s argument that an allegation of infringement by “power supply controllers that include a ‘soft start’ feature and circuit covered by one or more claims of the ’366 patent” failed to sufficiently identify the accused products. Id. at 3-4. Judge Stark explained that “this Court has repeatedly declined to dismiss pleadings that accuse general categories of products[,]” because that is all Form 18 requires. Id. at 3-4. With respect to the specific allegation at issue, the Court explained that the defendant “has expressly identified a general category of products, power supply controllers, and further restricted that category to controllers that include certain features and circuits.” Id. at 4.

The Court next considered whether the defendant sufficiently pled "that [the plaintiff] had knowledge of the patents-in-suit prior to [the defendant] filing its counterclaims[.]” Id. at 7. The Court explained that "service of a complaint constitute[s] sufficient notice for an inducement claim based on post-filing conduct." Id. at 6. Accordingly, the motion was denied to the extent it targeted post-filing conduct by the plaintiff. Id. The Court reached the same result with respect to the plaintiff’s argument that “specific intent to induce infringement” was not adequately pled, explaining that the defendant “satisfied the pleading requirements for induced infringement [of all asserted patents] based on post-filing conduct.” Id. at 8. The Court noted that the allegations were more specific with respect to the ’366 patent, and rejected the plaintiff's suggestion that those allegations were insufficient because they were pled “on information and belief,” explaining “[v]iewing a complaint in the ‘light most favorable to plaintiff’ may ‘include[] facts alleged on information and belief.’” Id. at 8 n.9 (quoting Frederick Hart & Co. v. Recordgraph Corp., 169 F.2d 580, 581 (3d Cir. 1948) (internal quotation marks omitted)). Finally, the Court rejected the plaintiff’s suggestion that the inducement counterclaims should be dismissed for failure to identify specifically a direct infringer, explaining “a plaintiff need not identify a specific direct infringer if it pleads facts sufficient to allow an inference that at least one direct infringer exists.” Id. at 6 (quoting In re Bill of Lading, 681 F.3d 1323, 1336 (Fed. Cir. 2012)).

Judge Stark also denied the plaintiff’s alternative request that the defendant be ordered to provide a more definite statement under Rule 12(e), explaining “[t]he Court has determined that [the defendant’s] counterclaims provide sufficient notice of the infringement allegations [and] are not ‘so vague and ambiguous’ that [the plaintiff] cannot frame a responsive pleading.” Id. at 9-10.

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April 2, 2013

Judge Stark issues opinions on post-trial motions in latest dispute between Power Integrations and Fairchild Semiconductor

Judge Stark recently considered the parties’ post-trial motions following a jury trial in the long-standing dispute between Power Integrations and Fairchild Semiconductor. Power Integrations, Inc. v. Fairchild Semiconductor International Inc., et al., C.A. No. 08-309-LPS (D. Del. Mar. 29, 2013). The case involved infringement allegations by both the plaintiff and the defendants involving a total of six patents related to DC output power supplies or power converters. Regarding Power‘s U.S. Patent No. 6,249,876, the jury found that Fairchild infringed, literally and under the doctrine of equivalents, induced infringement and that the asserted claims were valid. Id. at 2. Regarding U.S. Patent No. 6,107,851, “the jury found in favor of Power and against Fairchild with respect to literal infringement, indirect infringement, and validity of the only asserted claim, claim 18.” Id. Regarding the remaining two patents asserted by Power, U.S. Patent Nos. 7,110,270 and 7,834,605, the jury found that the patent’s claims were valid, but not infringed. Id. Regarding the patents asserted by Fairchild, the jury found that Power infringed U.S. Patent No. 7,259,972 under the doctrine of equivalents, that Power did not infringe U.S. Patent No. 7,352,595, and that both patents were valid. Id. (See the verdict form here).

The parties filed various motions for judgment as a matter of law as to invalidity and non-infringement, as well as motions for a new trial. The Court denied all but one post-trial motion. In that motion, Power moved for judgment as a matter of law that Fairchild directly infringed and induced infringement of its ‘605 patent, or for a new trial. Id. at 13. Judge Stark granted Power's JMOL motion as to direct infringement because “Fairchild admitted that it did ‘not present[] evidence of a defense with regard to direct infringement.’ In the absence of such evidence, no reasonable jury could have returned a verdict on this issue in Fairchild’s favor.” Id. (internal citation omitted). Judge Stark denied, however, Power’s motion regarding the inducement verdict, which Power argued was “the result of Fairchild’s improper trial tactics[,]” because the Court’s “curative instruction was sufficient to eliminate unfair prejudice.” Id. at 14.

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April 1, 2013

Judge Stark Grants Sanctions for Party’s Failure to Abide by Scheduling Order

Judge Leonard Stark recently granted a patent infringement defendant’s motion for sanctions for violations of the Court’s scheduling order. Due to the specific facts of the case, however, Judge Stark denied the requested relief of dismissal of the case. Instead, he ordered the plaintiff to pay defendant’s costs in bringing the motion for sanctions and struck the plaintiff’s request for prejudgment interest. See St. Clair Intellectual Prop. Consultants, Inc. v. Motorola Mobility LLC, C.A. No. 11-1305-LPS, Memorandum Opinion at 1 (D. Del. Mar. 29, 2013).

The parties’ dispute stemmed from a motion to stay filed by plaintiff St. Clair during the claim construction process. After filing its motion to stay but before the Court granted that motion, St. Clair failed to provide infringement contentions and failed to file an opening claim construction brief on the dates required for each by the Court’s scheduling order. Defendant Motorola continued to comply with scheduling order deadlines while the motion to stay was pending and brought a motion for sanctions for St. Clair’s omissions, seeking an order dismissing the case or prohibiting St. Clair from supporting its claims of infringement. Id. at 1-2.

Judge Stark considered the factors set forth by the Third Circuit in Poulis v. State Farm Fire & Cas. Co., 747 F.2d 863, 868 (3d Cir. 1984) for determining whether dismissal of a case is an appropriate sanction. Ultimately, he found that the balance of these factors—the extent of the party’s personal responsibility, prejudice to the adversary caused by failure to meet the scheduling order, history of dilatoriness, willfulness or bad faith, effectiveness of sanctions other than dismissal, and meritoriousness of the claim or defense—favored the imposition of sanctions. Id. at 3-8. “By relying on its motion to stay as a purported basis not to participate in litigation St. Clair chose to initiate—and in which it remained subject to a Scheduling Order—St. Clair essentially engaged in improper self-help, acting as if it had already obtained the relief it had at that point merely requested of the Court.” Id. at 6. Nevertheless, Judge Stark found that “less extreme sanctions” than dismissal were warranted, concluding “that imposing fees and costs incurred in bringing this motion for sanctions and striking St. Clair’s requests for prejudgment interest are appropriate sanctions . . . [because] [n]o party may unilaterally rewrite the Court’s Scheduling Order.” Id. at 3-8. Judge Stark also found that “Plaintiff’s citation to Local Rule 16.4 is unavailing [because] [t]hat rule requires the filing of a request for extension of deadlines prior to the expiration of the deadline.” Id. at 6 n.3.

In the process, Judge Stark noted that there was no “valid excuse for not talking and trying to resolve disputes” between the parties related to the joint claim chart, the motion to stay, and the motion for sanctions. “While [the motion for sanctions] is arguably dispositive because the relief sought includes dismissal, it would have been far preferable [for the parties] to have met and conferred. . . . The Court is unconvinced that the parties could not have worked out their conflicts over how the other side was proceeding if only they had made more of an effort to communicate.” Id. at 5-6, 6 n.2.

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March 29, 2013

Judge Robinson Denies Motion to Sever, Transfer to District of Kansas

Judge Robinson recently denied a patent infringement declaratory judgment defendant’s motion to sever and transfer venue to the District of Kansas. Plaintiff Cox filed a declaratory judgment action in the District of Delaware regarding twelve patents owned by Sprint. Cox filed that action after Sprint had filed infringement suits related to the same twelve patents against Cox and three other defendants in the District of Kansas. In the declaratory judgment suit, Cox also asserted infringement by Sprint of two of its patents, and Sprint answered and asserted counterclaims for infringement of seven additional Sprint patents. Sprint then filed a motion to sever and transfer to the District of Kansas, where Sprint alleged it had previously litigated five of the patents-in-suit and had relevant witnesses and documents. The Judge in Kansas then found that the District of Kansas did not have personal jurisdiction over Cox and that the case should be transferred to Delaware, but the parties did not indicate that this mooted the motion to transfer before the Delaware court. Accordingly, Judge Robinson considered the motion to transfer the Delaware action to Kansas. See Cox Comms. Inc. v. Sprint Comms. Co., C.A. No. 12-487-SLR, Memorandum Order at 1-2 (D. Del. Mar. 27, 2013).

Judge Robinson first found that “exceptional circumstances . . . warrant[ed] departure from the first-to-file rule.” The case, she explained, “is unusual in that the alleged first-filed case, the Kansas litigation, has been transferred to this court. Accordingly, that litigation would be streamlined by having this court also resolve the declaratory judgment claims related to the same patents.” Id. at 4.

Judge Robinson then considered transfer pursuant to § 1404. Relying on her decision in Helicos Biosciences Corp. v. Illumina, Inc., 858 F. Supp. 2d 367 (D. Del. 2012), Judge Robinson observed that a defendant’s state of incorporation—here Delaware—has always been a “predictable, legitimate venue for bringing suit” and that a “plaintiff’s choice of venue should not be lightly disturbed.” Id. at 5 (citations omitted). Accordingly, after considering all of the Third Circuit’s Jumara transfer factors and because “the Kansas litigation has been transferred [to Delaware], the court [found] that the Jumara factors do not weigh in favor of transferring the Cox . . . declaratory judgment claims back to Kansas.” Id. at 6-8. Despite the three other Sprint cases remaining in Kansas, Judge Robinson determined that given “the transfer of [the Cox] case and the Kansas court’s lack of personal jurisdiction over Cox Communications, Sprint [had not] carried its burden of persuading the court, by a preponderance of the evidence, that the Jumara factors favor transfer.” Id. at 9.

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March 28, 2013

Judge Andrews claim construction order

In FastVDO LLC v. DXG Tech. USA, Inc., et al., C.A. No. 11-797-RGA (D. Del. Mar. 26, 2013), Judge Richard G. Andrews issued the Court's claim construction order following a Markman hearing on March 22, 2013.

The following terms of U.S. Patent No. RE 40,081 were "construed definitively":

"recursively"
"initial stage"
"MxM block coder"
"transform coder"
"invertible linear transform"/"invertible forward linear transform"
"representable as a cascade, using the steps"
''processing the output coefficients in the decoder into a reconstructed image"
"dyadic"
"orthogonal transform"

Judge Andrews provided "tentative" constructions of the following terms:

"butterfly step" I "±1 butterfly step"
"lifting step"

Judge Andrews held in abeyance the constructions of the following terms:

"rational complext coefficients"
"unitary transform"

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March 25, 2013

Chief Judge Sleet grants motions to transfer venue to Eastern District of Michigan

Chief Judge Gregory M. Sleet recently granted defendants’ motions to transfer thirty-eight related patent infringement actions to the Eastern District of Michigan. E.g., Beacon Navigation GmbH v. Crysler Group L.L.C., C.A. No. 11-cv-921-GMS (D. Del. Mar. 20, 2013). The actions involve GPS technology. Id. at 8. Plaintiff, a Swiss company, “filed suit against every major automaker that sells automobiles in the United States.” Id. at 3, 23. Of the fifty-six defendants involved, forty-six filed motions to transfer venue to Michigan. Id. at 1 n.3.

In analyzing the Jumara factors, the Court concluded that only plaintiff’s forum preference weighed against transfer. Id. at 25. Because plaintiff was not a Delaware corporation, this factor was not of paramount consideration, but was accorded “some degree of heightened deference.” Id. at 13. The remaining factors were either neutral or favored transfer, although where the claim arose, defendants’ forum preference, the location of books and records, and the relative administrative difficulties in the two fora only slightly favored transfer. Id. at 14, 18-21, 23. The inconvenience of the fourteen defendants incorporated in Delaware was neutral in the Jumara analysis because these defendants had “submitted to suit in this district,” but as to the defendants not incorporated in Delaware, this factor weighed in favor of transfer. Id. at 17-18.

Many of defendants’ arguments for transfer focused on their locations in Michigan; “by and large, the defendants are headquartered, operate facilities, manufacture, and/or sell products in that district.” Id. at 14; see also id. at 10 n.13 (listing defendants’ activities in Michigan). Plaintiff, on the other hand, argued that “defendants’ interest in transferring to the Eastern District of Michigan is purely tactical, obviously based on their belief that they are likely to be favored in the traditional center of the American automotive industry.” Id. at 13 (internal citations and quotation marks omitted). The Court did not accept this argument, at one point noting that “federal courts provide a neutrality that negates [plaintiff’s concerns], particularly in cases such as these, which involve a national controversy.” Id. at 25.

Even though ten defendants had not filed motions to transfer, the Court sua sponte transferred all fifty-six actions to Michigan “because these actions present the court with such extraordinary circumstances.” Id. at 2 & n.4. “[T]he court transfers [the actions of the non-moving defendants] because it is left with no alternative but to do so in its effort to avoid an untenable result with respect to the forty-six defendants that have moved to transfer these actions. . . . It is easy to imagine the spectre of any number of inconsistent rulings and outcomes raising their heads [should the actions of the non-moving parties remain in Delaware].” Id. at 2 n.4. Two actions were administratively closed due to bankruptcy proceedings, but the Court also transferred these actions to Michigan for the same reasons. Id.

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