March 12, 2013

Chief Judge Sleet grants plaintiff’s motion for leave to file amended complaint seeking declaratory relief, grants defendants' motion for jurisdictional discovery, in part

Chief Judge Gregory M. Sleet recently granted plaintiff’s motion for leave to file a first amended complaint, which seeks a “declaratory judgment that eight of . . . defendants’ patents are invalid.” Comba Telecom, Inc. v. Andrew L.L.C. et al., C.A. No. 12-311-GMS, at 1 (D. Del. Mar. 7, 2013). In its motion, plaintiff requested that it be granted leave to include in its amended complaint “additional facts to strength[en] its declaratory judgment jurisdiction claim, such as addressing the preparatory steps it has taken to introduce products in the United States and the defendants’ statements and suits against it in other jurisdictions.” Id. at 1-2. Finding that defendants would not be prejudiced by the amendments nor would the amendments be futile, Judge Sleet granted plaintiff’s motion for leave. Id. at 3.

First, Judge Sleet found that plaintiff’s proposed amendments would not prejudice defendants because the litigation is in its early stages, and defendants would therefore have an opportunity to file motions or to conduct discovery on the issues raised in the amended complaint. Id. at 2-3 n.5. Judge Sleet further noted that plaintiff’s proposed amendments “do not contradict its prior pleadings,” and that defendants may challenge plaintiff’s allegations. Id. at 3 n.5. Turning to futility, Judge Sleet noted that “futility of amendment occurs when the complaint, as amended, does not state a claim upon which relief can be granted, as judged by the Rule 12(b) standard.” Id. In the declaratory judgment context, as Judge Sleet explained, a plaintiff may “demonstrate satisfaction” of the “case or controversy” requirement by showing that “there has been meaningful preparatory conduct that could lead to potentially infringing activity,” and by showing that the “claim is real and has an element of immediacy.” Id. n.5. Judge Sleet found that the proposed amendments included allegations related to “preparatory conduct,” specifically, that plaintiff had “the capacity to produce inventory to sell in the United States,” and was actively “participating in trade shows and soliciting Request for Proposals.” Id. n.5. The proposed amendments also addressed the “real” nature of the claim, as they included the identification of “defendants’ suits against [plaintiff] in China and Brazil as well as the defendants’ June 16, 2011 press release stating that they will protect their patent rights.” Id. n.5. Judge Sleet concluded that “taking the factual allegations in the proposed amended complaint as true, [plaintiff’s] Amended Complaint is not decidedly futile.” Id. n.5.

In view of granting plaintiff’s motion, Judge Sleet denied defendants’ motion to dismiss for lack of jurisdiction as moot. Id. at 3. However, in a subsequent order, Judge Sleet found that "factual issues exist regarding the alleged controversy between the parties" and granted defendants' motion to authorize jurisdictional discovery. Comba Telecom, Inc. v. Andrew L.L.C. et al., C.A. No. 12-311-GMS, at 1 nn.1-2 (D. Del. Mar. 11, 2013). Judge Sleet denied, however, the expansive scope of jurisdictional discovery defendants requested, which included "two depositions, fifteen interrogatories, and twenty-two requests for production." Id. n.1. The permissible scope of jurisdictional discovery would be determined at the scheduling teleconference. Id.

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March 11, 2013

Judge Andrews grants defendant’s motion to disqualify plaintiff’s lead counsel

Judge Richard G. Andrews recently granted defendant’s motion to disqualify plaintiff’s lead counsel because “[the lead counsel] was serving as [defendant’s] opinion counsel at the time [plaintiff] filed” its patent infringement suit against defendant, and “thus creat[ed] an impermissible concurrent conflict of interest.” Parallel Iron, LLC v. Adobe Systems Incorporated, C.A. No. 12-874-RGA, at 1, 7 (D. Del. Mar. 4, 2013). The lead counsel had provided opinion letters with infringement analyses to defendant in three previous engagements, with the findings of its final opinion letters presented during a conference call between the lead counsel and defendant in February 2012. Id. at 1-3. The provision that guided Judge Andrews’s analysis was Model Rule 1.7(a), which states that “‘a lawyer shall not represent a client if the representation involves a concurrent conflict of interest’ absent client consent.” Id. at 4.

Judge Andrews concluded that it was reasonable for defendant to believe that an active attorney-client relationship existed between the lead counsel and defendant at the time the lead counsel filed the instant suit, five months after the conference call in February 2012. Id. at 3, 5. Plaintiff argued that the attorney-client relationship was terminated because at the end of the conference call the partner from the lead counsel handling the matter “asked whether anything further was needed from [the lead counsel],” and defendant responded in the negative. Id. at 7. Judge Andrews disagreed, noting that “[s]uch a customary gesture to conclude a conversation is not sufficient to terminate [defendant’s] expectations.” Id. As Judge Andrews explained, “the six year history between [defendant] and [the lead counsel] was sufficient to instill in [defendant] reasonable belief that it would not be sued by [the lead counsel], at least absent some sort of prior notice that [the lead counsel] would no longer be available to serve as [defendant’s] opinion counsel.” Id. at 5. Further, Judge Andrews noted that the lead counsel was aware of the active nature of the litigation for which it provided its final opinions and should have expected that defendant would want updates in view of any developments that would bear on its infringement analyses. See id. Judge Andrews emphasized that “[i]t is the law firm’s responsibility to ensure there are no questions regarding the status of its current client relationships.” Id.

While disqualifying the lead counsel from the litigation at hand, Judge Andrews did not find it necessary to create an “ethical wall” between the lead counsel and co-counsel, because “[t]he complete bar of communications between [the lead counsel] and co-counsel would seriously hamper [the lead counsel’s] ability to litigate on behalf of [plaintiff]” in other ongoing actions. Id. at 8. To this end, Judge Andrews found it significant that there was “no reason to believe that [the lead counsel] operated in bad faith when it sued [defendant].” Id. at 7.

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March 6, 2013

Judge Andrews construes claims of patents relating to elevator modernizing technology

Judge Richard G. Andrews recently issued a claim construction opinion construing plaintiff Inventio AG's patents-in-suit, U.S. Patent No. 6,892,861 and U.S. Patent No. 6,935,465, relating to "elevator modernizing technology." Inventio AG v. ThyssenKrupp Elevator Americas Corp., C.A. No. 08-874-RGA (D. Del. Mar. 6, 2013). This case is on remand from the Federal Circuit after the Federal Circuit reversed the Court's previous claim construction opinion finding the claims indefinite. Id. at 1. Judge Andrews construed the terms "computing unit" and "modernizing device."

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March 5, 2013

Magistrate Judge Thynge recommends denial of defendant’s renewed motion to stay pending inter partes reexamination

In ImageVision.Net, Inc. v. Internet Payment Exchange, Inc., C.A. No. 12-054-GMS-MPT (D. Del. Feb. 25, 2013), Magistrate Judge Thynge issued a report recommending denial of defendant’s renewed motion to stay pending inter partes reexamination. Defendant had previously moved for a stay pending reexamination and in September 2012 Judge Thynge had recommended denial of that motion, discussed here. Chief Judge Sleet adopted that part of the recommendation. Id. at 2. At the time of this first motion to stay, the PTO had not granted the request for reexamination, but it did in December 2012 and "preliminarily rejected" all of the claims of the patent-in-suit. Id. at 2, 10. Defendant then renewed its motion to stay pending the reexamination. Id. Judge Thynge again recommended denial of defendant’s motion. Id. at 16.

Because the case was filed after the America Invents Act ("AIA") was enacted, Judge Thynge first observed that “no mandatory stay [is] required under the AIA for grants of inter partes reexaminations, and the traditional three-part test to determine whether a stay is appropriate still applies. Nevertheless, the present analysis must address new events that have occurred since the original denial of defendant’s motion to stay, specifically the grant of the inter partes reexamination, and the effect of the new AIA standard on the application of the factors regarding a stay. ” Id. at 6-7. The AIA altered the standard for the grant of inter partes reexamination from requiring “the Director to find a substantial new question of patentability affecting any claim” to requiring a determination that there is “a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.” Id. at 4 (internal citations and quotation marks omitted).

Turning to the three-part test, Judge Thynge first concluded that the status of the litigation did not favor a stay. Id. at 9. While the case was in its early phases, “the parties here [were] well into discovery, and significant deadlines [were] scheduled in the coming months.” Id. at 8-9. Additionally, the reexamination proceedings were at an early stage. Id. at 9. These factors all weighed against granting a stay. Id. As to simplification of issues, Judge Thynge concluded that “simplification weigh[ed] more strongly in favor of a stay” than when defendant filed its first motion. Id. at 10. “Moreover, reexamination was granted under the new heightened standard of the AIA, which means defendant is reasonably likely to prevail on invalidity. . . . Reexamination [would therefore] serve to simplify certain issues regarding validity. Further, because of the new standard, and since all claims of the [patent-in-suit] are found invalid on anticipation and obviousness, it may be more likely amendments to the claims of the patent will occur as a result of reexamination.” Id. at 10-11.

Finally, Judge Thynge concluded that plaintiff would be unduly prejudiced if a stay was granted, which was the “most substantial and important issue.” Id. at 11. Regarding the impact of the stage of the reexamination proceedings on the prejudice analysis, defendant argued that “the PTO is statutorily mandated to handle inter partes reexamination proceedings expeditiously and with special dispatch.” Id. at 14 (internal citations and quotation marks omitted). But Judge Thynge observed that “[i]n light of the recent passage of the AIA, it is unclear how such requirements will affect the time frame of the reexamination process.” Id. Therefore, as the reexamination process was in its early stages, this factor did not favor a stay. Id. As in the previous recommendation, Judge Thynge observed that the plaintiff and defendant were direct competitors and that this “weigh[ed] heavily against granting a stay.” Id. at 15-16.

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March 2, 2013

Judge Sleet Denies Motion to Dismiss Declaratory Judgment Action on Previously-Litigated Patents

Chief Judge Gregory Sleet has denied a declaratory judgment defendant’s motion to dismiss claims related to patents that were the subject of previous litigation between the parties. DJ plaintiff DNP filed its complaint seeking a judgment of noninfringement and invalidity of four patents owned by Natural Alternatives International (“NAI”). Three of the patents had been the subject of an infringement action in 2009, and NAI moved for dismissal as to those three patents, arguing that no justiciable case or controversy existed between the parties. Judge Sleet denied the motion, finding that an actual case or controversy existed with respect to these three patents even though NAI had only asserted a counterclaim of infringement with respect to the one new patent. See DNP Int’l Co. v. Natural Alternatives Int’l, Inc., C.A. No. 11-1283-GMS, Order at 1 n.1 (D. Del. Feb. 27, 2013).

Judge Sleet explained that “Federal Circuit precedent has established that ongoing disputes between the parties concerning related technology may suggest the existence of an actual controversy sufficient to support declaratory judgment jurisdiction.” Id. at 2 n.1 (citing Teva Pharms. USA, Inc. v. Novartis Pharms. Corp., 482 F.3d 1330, 1344 (Fed. Cir. 2007); Vanguard Research, Inc. v. PEAT, Inc., 304 F.3d 1249, 1255 (Fed. Cir. 2002)). He noted that NAI admitted the existence of a dispute with respect to the new patent and that the new patent came from the same family as the three older patents. He found that “[t]he admittedly live controversy surrounding the [new patent] makes it more likely that a similar controversy remains with respect to the Older Patents.” Id.

Judge Sleet also found that the history of patent litigation between the parties “[while] not dispositive . . . can be relevant where the prior conduct makes reasonable an assumption that the defendant will take action with respect to the patent-in-suit.” Id. (citing Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1341 (Fed. Cir. 2008)). NAI’s assurance “that it ‘has no intention of asserting the claims in [the three Older Patents] against DNP or its customers’ . . . does not suffice to remove subject matter jurisdiction,” especially given its “refusal to provide more concrete assurance” in the form of a covenant not to sue. Id. Additionally, an ongoing unfair competition case between the parties, while “provid[ing] less evidence of an ongoing patent dispute, it is certainly related to the earlier infringement contentions in the 2009 Action . . . [and is] indicative of the broader adversarial stance adopted by the parties.” Id.

Judge Sleet found that all of the facts taken together were sufficient for the exercise of declaratory judgment jurisdiction under the requirements of Medimmune v. Genentech, 549 U.S. 118 (2007). Id. at 2-3 n.1. Accordingly, he denied NAI’s motion to dismiss claims related to the three older patents.

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February 28, 2013

Judge Andrews excludes plaintiff’s damages expert but reserved judgment on defendant’s summary judgment motion of no damages

Judge Richard G. Andrews recently considered several motions filed by defendant Intel, including a Daubert motion to exclude plaintiff’s damages expert, a motion in limine to exclude damages testimony of an inventor of the patent in suit, and a motion for summary judgment of no damages. AVM Technologies, LLC v. Intel Corporation, C.A. No. 10-610-RGA (D. Del. Feb. 21, 2013). Judge Andrews granted Intel’s Daubert motion finding that the expert’s proposed testimony, “that a reasonable royalty can be established by one litigation settlement agreement involving a different patent” was not reliable. Id. at 1. Judge Andrews previously decided that the testimony should likely be excluded but wanted to hear testimony from the expert prior to issuing a decision. Id. at 2. After hearing testimony, Judge Andrews found that the expert’s opinion concerning reliance on one settlement agreement, was “not supported by any methodology that explain[ed] why [the agreement] by itself could be the basis for an accurate conclusion about the hypothetical negotiation over the [patent-in-suit]." Id. at 5. Judge Andrews further stated that, "[t]o say that one litigation settlement agreement relating to a different patent and executed five years after the hypothetical negotiation would have taken place . . . is the basis for an opinion is completely speculative without, at a minimum, some analysis of the litigation that led to the settlement.” Id.

Judge Andrews also granted-in-part Intel’s motion in limine to exclude damages testimony of an inventor of the patent-in-suit. Judge Andrews held that the witness could not “testify concerning damages beyond facts and information within his personal knowledge. Thus, [the witness] would not be permitted to testify about anything speculative or hypothetical, including what he would have done in hypothetical negotiations.” Id. at 3. The court excluded most of the witness’ proposed testimony finding that it was “untimely disclosed and [was] unreliable expert testimony.” Id. and 10-14.

The Court previously vacated the trial date in this case “because the Court understood that [plaintiff] did not want to proceed to trial without at least one of the evidentiary bases for a theory of damages in excess of $100,000,000. Id. at 14. However, “in view of Federal Circuit precedent,” the Court did not grant Intel’s summary judgment motion of no damages, but “held it in abeyance pending a further conference with counsel.” Id. at 14-15.

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February 28, 2013

Judge Stark Construes Additional Claim Terms at Defendants’ Request

Judge Leonard Stark has issued a supplemental claim construction order in a patent infringement case filed by Enova Technology against various manufacturers of hard drives and related encryption technologies. See Enova Tech. Corp. v. Initio Corp., C.A. No. 10-04-LPS, Order (D. Del. Feb. 19, 2013). We previously reported on Judge Stark’s original claim construction order. Now with trial approaching, Judge Stark has considered the defendants’ request for additional construction, including construction of several broader claim terms that include within them narrower claim terms previously construed. After construing the terms in question, he cancelled the scheduled claim construction hearing and advised the parties that trial would begin in its place.

Judge Stark construed the following additional terms:
- “main controller”
- “a main controller receiving input from said at least one data stream interceptor and determining whether incoming data would be encrypted, decrypted or passed through based on the received input from said at least one data stream interceptor”
- “SATA protocol stack”

Judge Stark also found that the following additional terms did not require any construction:
- “data stream interceptor”
- “main controller”
- “data generating controller”
- “data storage controller”
- “cipher engine”
- “FIS (Fram Information Structure)”
- “cryptographic engine . . . for encrypting and decrypting at least a subset of data FISes (Frame Information Structures) communicated to or from the SATA protocol stack”
- “the main controller configured to cause . . . the SATA protocol stack to process a Register-Device to Host FIS [without decryption responsive to receiving the Register-Device to Host FIS from the interface of the device]”

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February 27, 2013

Judge Andrews denies petition to compel discovery for use in foreign proceedings pursuant to 28 U.S.C. § 1782

Petitioner filed foreign claims in Germany and Luxembourg in January and April 2011, alleging that one of the respondents infringes European Patent No. 1-151-591. Judge Richard G. Andrews recently denied petitioner’s request to compel production of “source code and other core technical documents that underlie Respondents’ telecommunications service system” for use in those foreign patent infringement proceedings. Via Vadis Controlling GmbH v. Skype, Inc., et al., C.A. No. 12-mc-193-RGA, at 1, 5 (D. Del. Feb. 21, 2013).

Judge Andrews found that the Court possessed authority pursuant to 28 U.S.C. § 1782(a) to compel discovery, but nevertheless concluded that “it should not exercise its discretion to grant the petition.” Id. at 3. In denying the petition, Judge Andrews relied on the factors set forth in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004), which inform a district court’s discretion when determining whether to compel production of information for use in a foreign proceeding pursuant to § 1782. See id. at 2-4. First, Judge Andrews noted that “‘when the person from whom discovery is sought is a participant in the foreign proceeding . . . the need for § 1782(a) aid generally is not as apparent as it ordinarily is when evidence is sought from a nonparticipant in the matter arising abroad.’” Id. at 3 (quoting Intel, 542 U.S. at 244). Because at least one respondent was a defendant in the foreign proceedings, this Intel factor weighed against compelling discovery. Id. Weighing further against compelling discovery, Judge Andrews found that “[d]espite their jurisdiction over SkypeS, the foreign courts have not forced SkypeS to produce the requested materials,” and thus granting the petition “would be, in essence, a circumvention of the foreign courts’ rules and enforcement procedures.” Id. at 4. Moreover, Judge Andrews concluded that producing the source code would “intrude on the protective order from . . . prior litigation,” which “specifically prohibits [the respondents’] disclosure of the source code in the proceedings in Germany and Luxembourg.” Id. The only Intel factor Judge Andrews found to weigh in favor of compelling discovery was that “the German court would likely consider the § 1782 materials.” Id. at 2-3. Accordingly, Judge Andrews found that “the overall balance of all the factors” weighed in favor of denying the petition to compel discovery. Id. at 5.

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February 26, 2013

Managing IP's U.S. Patent Forum, March 19, 2013 in Washington D.C.

Dear Colleague,

Managing IP, in association with Delaware IP Law Blog, invites you to attend the second annual US Patent Forum March 19, 2013 at the Willard InterContinental in Washington D.C. www.managingip.com/USPatentForum2013

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

One year on from the AIA, we will assess the patent landscape in the United States and look at strategies to achieve maximum value from your patent portfolio.

On the agenda:

• Two keynote addresses by USPTO’s Teresa Stanek Rea and WIPO’s James Pooley
• AIA and NPEs: one year on
• Lessons from Canadian reforms
• Monetization of patents: strategies for deriving maximum value from your patent portfolio
• Life sciences & ITC industries focus
• Doing business in China: how to ensure your patented assets in China are making you money

Speakers:

• James Pooley, deputy director general for innovation and technology, World Intellectual Property Organization
• Teresa Stanek Rea, acting director general, United States Patent & Trademark Office
• Jim Crowne, director of legal affairs, AIPLA
• Paul R Michel, Chief Circuit Judge (retired)
• Vanessa Bailey, IPR litigation, Nokia Siemens Networks
• Richard Rainey, executive counsel and IP litigation, GE
• David L Marcus, VP, deputy general counsel, Comcast Cable Communications
• Joseph G Contrera, patent counsel, Johns Hopkins Technology Transfer
• Andrew Hirsch, general counsel, Fuelcor
• Heather Boussios, senior intellectual property counsel, Emergent BioSolutions
• Henry Hadad, VP, deputy general counsel, IP, Bristol-Myers Squibb Company
• Vaishali Udupa, IP litigation counsel, Hewlett-Packard
• Camille-Remy Bogliolo, lawyer, international legal affairs, European Patent Office
• Raymond Niro, senior partner, Niro Haller & Niro
• Sherry Knowles, principal, Knowles Intellectual Property Strategies

For more details, visit http://www.managingip.com/stub.aspx?stubid=20311

Testimonials:

"Excellent overviews of AIA from those who wrote it, those who will implement it, and those who must live with it" - Graham Douglas, IDDEX (2012)

"Assessments and points of view you won't find any place else" - Jim Farmer, Georgetown University (2012)


You will network with:

Accuray Inc, Americas Bankers Association, Boeing Company, CIENA, Department of Homeland Security, Eldelman, El Cap Ventures, Eli Lilly & Company, Embassy of Canada, Emergent BioSolutions, Ex-Nokia, George Washington University, Google, IC2 Institute - University of Texas, Intel, Intellectual Property Owners Association, INVISTA, IPXI, JDSU Corporation, JLG Industries, Johns Hopkins Technology Transfer, Johns Hopkins University, Magna International, Nestle, Nokia Siemens Networks, Palo Alto Research Center, Panasonic, Personalized Media Communications, Privaris, Sharp, Siemens Enterprise Communications, Supernus Pharmaceuticals, Tredegar Corporation, USPTO, US International Trade Commission, US International Trade Commission, Widener Law School and many more.
________________________________________
EASY WAYS TO REGISTER:
Register online: http://www.euromoneysecure.com/orders/gen/start.asp?cIndex=1731
Email: mfabri@euromoneyplc.com
________________________________________

We look forward to meeting you on March 19.

Kind regards,

James Nurton
Managing editor
www.managingip.com

Pilar Kraman
Managing editor
www.delawareiplaw.com

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February 25, 2013

Judge Stark criticizes parties for failing to exercise common sense in connection with discovery dispute procedure.

Judge Leonard P. Stark recently issued rulings on a host of discovery disputes and, in the process, criticized the parties for abusing his discovery dispute procedure. Softview LLC v. Apple Inc., et al., Consol. C.A. No. 10-389-LPS (D. Del. Feb. 22, 2013). At issue were letters submitted by the parties in connection with the Court's scheduling of a late afternoon teleconference to resolve various discovery disputes. Specifically, the plaintiff “filed nine separate letters seeking assistance from the Court on more than twenty discovery disputes[,]” and the defendants “filed an additional nine separate letters seeking assistance from the Court on more than ten additional discovery disputes.” Id. at 2 (emphasis in original). All told, including the responsive letters that were filed, Judge Stark explained that the Court received and reviewed a “mass of filings” totaling “36 letters presenting argument on at least 30 discovery disputes.” Id. at 3 (emphasis in original). Judge Stark viewed the volume of material submitted as revealing “that the parties have failed to reasonably communicate with one another or to put forth the expected and required good faith efforts towards resolving discovery disputes.” Id. “[M]ore troubling” to Judge Stark was “that the parties have utterly failed to exercise common sense, inundating the Court with far more than could possibly be addressed during a teleconference that the parties understood (or should have understood) would last only 45 to 60 minutes.” Id.

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