January 13, 2013

Judge Robinson finds twelve patents unenforceable in light of unlawful spoliation in Micron Tech., Inc. v. Rambus Inc.

Judge Sue L. Robinson held in a recent post-trial opinion that “Rambus’ spoliation was done in bad faith, that the spoliation prejudiced Micron, and that the appropriate sanction is to declare the patents-in-suit unenforceable against Micron.” Micron Tech., Inc. v. Rambus Inc., C.A. No. 00-792-SLR, at 45-46 (D. Del. Jan. 2, 2013). This case was on remand from the Federal Circuit, which directed Judge Robinson to “reconsider [the] bad faith and prejudice determinations related to Rambus’ spoliation, as well as the appropriate sanction, if any, for Rambus’conduct.” Id. at 21. See here a discussion of the Federal Circuit’s opinion, and here for a discussion of Judge Robinson’s opinion prior to appeal.

Judge Robinson noted that in order to find “bad faith,” the Court must “find that Rambus implemented its document retention policy to disadvantage Micron or other potential defendants.” Id. at 22. Judge Robinson explained that “four categories of facts in this case support a finding of bad faith.” Id. Specifically, these categories were “(1) facts tending to show that Rambus’ document retention policy was adopted as part of a firm litigation plan; (2) facts tending to show that the document retention policy was executed selectively; (3) facts tending to show that Rambus acknowledged the impropriety of the document retention policy; and (4) Rambus’ litigation misconduct.” Id. Judge Robinson delineated the specific facts that fell under each category and concluded that there existed “clear and convincing evidence that Rambus’ spoliation was carried out in bad faith.” Id. at 22-29.

Turning to whether Rambus’ spoliation prejudiced Micron, Judge Robinson noted that “[t]he question of prejudice ‘turns largely’ on whether a spoliating party destroyed evidence in bad faith.” Id. at 29. Because “bad faith [had] been found on Rambus’ part, the burden shift[ed] to Rambus to show lack of prejudice.” Id. at 30. Judge Robinson ultimately held that Rambus did not satisfy its burden, and that “Rambus’ spoliation at least prejudiced Micron’s (1) claims and defenses related to patent misuse and violation of antitrust and unfair competition laws, and (2) defense of inequitable conduct.” Id. Regarding the prejudice to Micron’s inequitable conduct defense, Judge Robinson addressed the prongs of “specific intent” and “materiality” individually. Judge Robinson found that “proving the intent prong of inequitable conduct would undoubtedly be more difficult for Micron given Rambus’ bad faith spoliation,” as “nonpublic documents will be instrumental in showing that the patentee purposely chose not to disclose a known reference to the PTO.” Id. at 36. Similarly, Judge Robinson found that proving the “materiality” prong of inequitable conduct would be more difficult, as Micron was precluded from “possibly obtaining evidence of affirmative acts of egregious conduct, such as perjury, the manufacture of false arguments, or deliberate fraud during prosecution.” Id. at 37. Under Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc), such egregious acts support a finding of materiality. Id. at 37. Furthermore, with regard to both specific intent and materiality, Judge Robinson emphasized that “the fact that no record was made of what documents were destroyed [could] be of no avail to Rambus, the bad faith actor.” Id. at 37 (emphasis added).

Next, Judge Robinson addressed the appropriate sanction to “rectify Rambus’ spoliation.” Id. at 37. Judge Robinson relied on the factors set forth in Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76 (3d Cir. 1994), which include “(1) the degree of fault of the spoliating party; (2) the degree of prejudice to the adverse party; and (3) whether there is a less severe punishment that would avoid substantial unfairness to the adverse party while still serving to deter similar spoliation by others in the future.” Id. at 38. First, Judge Robinson noted that the “degree of fault in Rambus’ spoliation cannot be overstated by the court.” Id. at 39. Judge Robinson explained that even though her finding of “bad faith” spoliation was sufficient to find Rambus at fault, that degree of fault was “compound[ed]” by “Rambus’ purposeful, thorough document destruction, which did not occur just once, but several times in 1999 and 2000.” Id. (emphasis added). Second, Judge Robinson reiterated that “several of Micron’s affirmative defenses [had] been prejudiced by Rambus’ bad faith spoliation.” Id. She reasoned that “[w]hile the precise degree of prejudice cannot be known because Rambus did not keep any record of what was destroyed, Rambus should not easily be able to excuse its misconduct by claiming that the vanished documents were of minimal import.” Id. Moreover, “[t]he wide range and sheer amount of materials destroyed, along with Rambus’ bad faith, [made] it almost certain that the misconduct interfered with the rightful resolution of the case.” Id. at 39-40.

Third, Judge Robinson considered sanctions less severe than holding the patents-in-suit unenforceable and found them “inappropriate for the unique circumstance of this case.” Id. at 40-46. In reaching her conclusion, Judge Robinson noted that “Rambus’ destruction of evidence was of the worst type: intentional, widespread, advantage-seeking, and concealed.” Id. at 44 (emphasis added). Judge Robinson explained that “[a]ttorney fees, monetary sanctions, and adverse jury instructions will not restore Micron to the same position in which it would have been absent Rambus’ unlawful spoliation, and an evidentiary sanction would likely result in the same substantive outcome but in a less efficient manner.” Id. at 45. Judge Robinson further explained that “[a]ny lesser sanction would, in effect, reward Rambus for the gamble it took by spoliating and tempt others to do the same.” Id. at 45. Judge Robinson concluded that the appropriate sanction was “to hold the patents-in-suit unenforceable against Micron,” given the “nature and degree of Rambus’ wrongdoing.” Id. at 45-46.

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January 13, 2013

Judge Sleet grants defendants’ motion to transfer to Northern District of California

Chief Judge Gregory M. Sleet recently granted defendants’ joint motion to transfer venue to the Northern District of California in this patent infringement action. Linex Technologies, Inc. v. Hewlett-Packard Company, et al., C.A. No. 11-400-GMS (D. Del. Jan. 7, 2013). Plaintiff was a Delaware corporation “with small offices in Florida, New Jersey, Massachusetts, and Texas.” Id. at 2. One defendant was a California corporation, the remaining four were Delaware corporations, and all five had their principal places of business in the Northern District of California. Id.

Plaintiff’s forum preference was entitled “to at least somewhat heightened deference” because it had filed the action in its state of incorporation, which was “part of its home turf.” Id. at 5 (internal quotation marks omitted). However, the forum preference received “something less than . . . paramount consideration” because the plaintiff had filed its action in a district in which it was not physically located. Id. at 5 (citing, inter alia, In re Link_A_Media Devices Corp., 662 F.3d 1221, 1223 (Fed. Cir. 2011)).

All other Jumara factors weighed in favor of transfer or were neutral. The physical location of the defendants and relevant evidence in California influenced the Court’s analysis of several factors. The Court acknowledged that key witnesses and books and records were in or near the Northern District of California in its conclusion that these two factors weighed in favor of transfer, albeit only “slightly” for books and records. Id. at 9-11. The “practical considerations” within Jumara’s public interest factors weighed in favor of transfer “[f]or largely the same reasons that the court found the [books and records and convenience of witnesses] factors to weigh in favor of transfer.” Id. at 12.

As to the convenience of the parties, while “not all defendants have chosen to incorporate in Delaware, and the court is cognizant of In re Link_A_Media's general warning to avoid weighing a defendant’s state of incorporation too heavily in the transfer analysis,” here “the decisions of [four defendants] to incorporate in Delaware do suggest that the inconvenience of litigating here is somewhat less than the court would ordinarily presume it to be. As such, the court [found] that this factor [was] neutral.” Id. at 8-9.

On the other hand, these “same underlying facts [i.e., the physical location of the defendants in California] in its assessment of [the] ‘practical considerations’ factor” favored transfer: “[a]s a matter of form, the fact that [all but one of the defendants were] incorporated in Delaware did affect the private interest, party convenience analysis. The public interest factor at issue here, however, calls for the court to examine practical considerations rather than ones of form, and there is little reason to believe a California-based firm actually reduces its costs of litigating in this district merely by incorporating in Delaware. Put simply, the concern that prevented the court from concluding that the ‘convenience of the parties’ factor favored transfer is inapplicable here, and the court believes that the parties’ aggregate litigation costs will be reduced by litigating in California.” Id. at 12.

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January 7, 2013

Judge Andrews reserves final decision on defendant’s Daubert motion to exclude plaintiff’s damages expert until live testimony hearing before trial

Judge Richard G. Andrews recently issued a memorandum opinion addressing defendant’s motion to exclude the live testimony of plaintiff’s expert, whom plaintiff offered to opine on the damages related to defendant’s alleged infringement of U.S. Patent No. 5,859,547 (“the ‘547 patent”), entitled “Dynamic Logic Circuit.” AVM Technologies, LLC v. Intel Corporation, C.A. No. 10-610-RGA, slip. op. (D. Del. Jan. 4, 2013). Judge Andrews concluded that “[w]hile I am thus of the opinion that [plaintiff’s expert’s] testimony about damages should be entirely excluded, I also believe that my final decision on the matter would be better informed if I heard live testimony, subject to cross-examination, from [plaintiff’s expert], before the beginning of trial.” Id. at 7.

Judge Andrews first addressed defendant’s argument that plaintiff’s expert’s opinion was unreliable because his “calculation of a reasonable royalty rate violates the entire market value rule because he made no effort to apportion the percentage of [defendant’s] accused revenues that is attributable to the ‘547 patent.” Id. at 3. Judge Andrews noted that “the general rule is that royalties will be based on the ‘smallest salable patent practicing unit.’” Id. at 4 (quoting LaserDynamics v. Quanta Comp., Inc., 694 F.3d 51, 67 (Fed. Cir. 2012)) (internal quotation marks omitted). However, under the “entire market value rule” exception, “[t]he patentee may rely on the entire market value of the accused product if the patentee demonstrates that the patented feature creates the ‘basis for customer demand’ or ‘substantially create[s] the value of the component parts.’” Id. at 4 (quoting Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1318 (Fed. Cir. 2011)) (internal quotation marks omitted). Consistent with its expert’s position, plaintiff argued that royalties should be based on the sales of microprocessors because those were the “smallest saleable patent-practicing unit.” See id. at 5. Judge Andrews found, however, that “[t]he use of a saleable unit that is greater than the patented feature is going to introduce Uniloc error.” Id. Judge Andrews further explained, “I gather that dynamic logic circuit(s) may be an important part of a microprocessor. It is completely unclear to me how many other important parts there are, although my sense is that there are many.” Id. at 6 (emphasis added). Thus, “[a]ssuming for the sake of argument that dynamic logic circuits are the single most important part of [defendant’s] microprocessors, it is still a long haul to conclude that they ‘drive demand’ for the entire microprocessor.” Id. Judge Andrews ultimately concluded that plaintiff’s expert’s report “provides little, if any, basis for allowing his testimony” regarding a reasonable royalty rate. Id.

Judge Andrews then addressed defendant’s argument that plaintiff’s expert’s use of four license agreements to estimate damages was unreliable. Judge Andrews noted that plaintiff must “show that the prior licenses are truly comparable to the license that the parties would have negotiated for the asserted patent before introducing this evidence to the jury.” Id. Judge Andrews found that the use of these licenses was unreliable in certain respects. For instance, this is a “single patent case,” but “three of the four license agreements” relied on gave plaintiff “a license to entire patent portfolios that included dozens of patents.” Id. at 7. Further, plaintiff’s expert’s report “does not indicate that he performed any analysis to compare the benefits and value of the technology covered by this agreement, and he conceded as much at his deposition.” Id.

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January 7, 2013

Judge Andrews strikes ten summary judgment briefs, invites defendant to file one combined summary judgment brief with 40 page limit.

Judge Richard G. Andrews recently issued an order, sua sponte, striking 10 of 11 summary judgment briefs filed by a defendant, finding that the anticipated volume of the briefing related to summary judgment motions was excessive. The lone brief that was not struck was unopposed. XpertUniverse Inc. v. Cisco Systems Inc., C.A. No. 09-157-RGA (D. Del. Jan. 2, 2013). Judge Andrews estimated that the Court would need to review and consider 600 or more pages of briefing in connection with the 11 summary judgment briefs, 3 Daubert motions, and one motion for “terminating sanctions”, and noted that this volume of briefing would not be accepted by any other District Court judge. Judge Andrews explained, “Chief Judge Sleet does not allow summary judgment briefing absent an approval process. Judge Robinson would allow a maximum of 200 pages total of briefing in connection with these motions. Judge Stark would allow a maximum of 100 pages of total briefing.” Id. at 1-2. Finding that the volume of briefing in the instant case would be excessive if permitted to go forward, Judge Andrews struck 10 of the summary judgment briefs, as well as answering briefs that had been filed, adding “[t]he Defendant may choose to pursue such of these ten motions as it wishes, but must submit only one brief of no more than 40 pages . . . Plaintiff may respond with a no more than 40 page brief . . . and Defendant may reply with a no more than 20 page brief . . . .” Id. at 2.

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January 3, 2013

Judge Stark construes claims of patents relating to data encryption and decryption technology

Judge Leonard P. Stark recently construed six of seven disputed claim terms of U.S. Patent Nos. 7,136,995 and 7,900,057, entitled “Cryptographic Device” and “Cryptographic Serial ATA Apparatus and Method,” respectively. Enova Technology Corporation v. Initio Corporation, et al., C.A. No. 10-04-LPS (D. Del. Dec. 28, 2012). The following terms were construed:

-“encrypted” (and variations, including “encryption,” “encrypt,” “encrypting”)
-“passed through”
-“a data stream interceptor that distinguishes between command/control and data signal transfers”
-“transparently”
-“host”
-“said SATA protocol stack is operatively coupled to a USB (Universal Serial Bus) interface via a SATA-to-USB protocol translator”

The Court concluded that “cryptographic Serial ATA (SATA) apparatus” was not a claim limitation because it appeared in the preamble of claim 1 and did not "breath life" into dependent claims 13-15, as argued by Defendants. Id. at 9. Therefore, no construction was required. Id.

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December 27, 2012

Jury finds all asserted claims invalid, no infringement by any defendant.

After an eleven day trial before Chief Judge Gregory M. Sleet, a jury recently returned a defense verdict in litigation involving computer security products. Finjan, Inc. v. Symantec Corp., et al., C.A. No. 10-593 (GMS) (D. Del. Dec. 20, 2012). The jury found that none of the three defendants literally infringed the patents asserted against them, and that every asserted claim of those patents was invalid in any event as both anticipated and obvious.

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December 26, 2012

Judge Stark grants defendant’s motion for trial on exhaustion defense, denies motion as to laches and license defenses

In CIF Licensing, LLC d/b/a GE Licensing v. Agere Systems LLC, C.A. No. 07-170-LPS (D. Del. Dec. 3, 2012), Judge Leonard P. Stark decided several post-trial motions. This patent infringement action had been assigned to and tried before Judge Joseph J. Farnan, Jr.; upon his retirement the case was transferred to Judge Stark. Id. at 1.

Among the numerous post-trial motions that Judge Stark considered was Defendant’s motion for a trial on the remaining defenses of laches, patent license, and patent exhaustion. Id. at 4-5. Judge Stark granted the motion for a new trial on the exhaustion defense and denied the motion as to laches and license, relying largely on Judge Farnan’s pre- and post-trial orders.

Judge Stark denied Defendant’s request for a trial on the laches and license defenses because Judge Farnan had “already ruled” on the merits of these defenses and because Judge Stark agreed with Judge Farnan’s conclusions. Id. at 5, 7. Following oral argument on cross-motions for summary judgment, Judge Farnan had ruled the laches defense to be “‘without merit’” and had “‘tentatively rule[d]’” the license defense to be “‘amenable to disposition on summary judgment’” as well. Id. at 3. He had added that the license defense was “‘inapplicable to the infringement claims at issue.’” Id. Defendant was not permitted to present evidence on any of its defenses to the jury but Judge Farnan “indicated that Defendant would be permitted to renew the motions at the conclusion of the case.” Id. at 3. The jury returned a verdict, discussed here, of invalidity as to three out of the four patents-in-suit and willful infringement as to the remaining patent. Id. at 2. In his written post-trial order, Judge Farnan granted Plaintiff’s motions for summary judgment that its claims were not barred by laches and that Defendant was not licensed to the patents-in-suit, observing that he had decided both defenses were “‘without merit’” at oral argument. Id. at 3-4.

On the other hand, Judge Stark granted Defendant’s motion for a trial on the exhaustion defense because it had “received relatively little attention” at oral argument, and “[n]either at the conclusion of the Oral Argument nor in any subsequent oral or written order did Judge Farnan describe the exhaustion defense as having ‘no merit.’” Id. at 9. While Judge Farnan's post-trial order had denied defendant's motion for summary judgment of non-infringement due to patent exhaustion, Judge Stark observed that “Judge Farnan expressly granted [Defendant] ‘leave to renew [its motion] in the form of a post-trial motion.’” Id. Judge Stark additionally noted that “a trial [was] necessary to resolve [Defendant’s] exhaustion defense” because there were several significant factual disputes between the parties on this issue. Id. at 9-10.

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December 20, 2012

Judge Robinson Grants Defendants’ Motion for Leave to Amend Answers in ANDA Litigation

Judge Sue Robinson recently granted defendants’ motion for leave to amend their answers to add the affirmative defense of intervening rights in a consolidated ANDA litigation action. See Senju Pharmaceutical Co., et al. v. Lupin Limited, et al., C.A. No. 11-271-SLR (consolidated), Slip Op. (D. Del. Dec. 14, 2012). Plaintiffs’ original complaint alleged infringement of U.S. Patent Nos. 6,333,045 and 5,880,283. Id. at 2. Prior to this motion, “plaintiffs further amended their complaint to allege infringement of [U.S. Patent No. 6,333,045] as reexamined by defendants’ ANDA No. 202-653 and also by defendants’ ANDA No. 202-709.” Id. at 2-3. Defendants subsequently “answered the amended complaints and counterclaimed to each.” Id. at 3. Approximately nine months after plaintiffs answered defendants’ counterclaims, defendants moved for leave to further amend their answers with an affirmative defense of intervening rights. Id.

Judge Robinson noted that leave to amend “shall be freely given when justice so requires.” Id. at 3 (quoting Foman v. Davis, 371 U.S. 178, 182 (1962) (quoting Fed. R. Civ. P. 15(a))). Judge Robinson then explained that under the doctrine of intervening rights, “an infringer who was engaged in allegedly infringing activities (or ‘substantial preparation was made by the infringer’ to do so) before a reexamination certificate issued may continue to infringe said claims, if the court determines that the reexamined claims are broader in scope than the original claims, and to the extent and under such terms as the court deems equitable. . . .” Id. at 4. Thus, “the doctrine of intervening rights is a defense to infringing activity occurring after reexamination.” Id.

Plaintiffs argued that defendants’ amendment would be “futile, apparently because defendants have not conceded that they have engaged in infringing activity.” Id. Judge Robinson disagreed, and noted that “at this stage of the proceedings, defendants need not so concede, but may advance the defense of intervening rights based on plaintiffs’ allegation that ‘[d]efendants have made, and will continue to make, substantial preparation in the United States to manufacture, sell, offer to sell, and/or use within the United States, and/or import into the United States the [d]efendants’ gatifloxacin ophthalmic solution which is the subject of ANDA’ No. 202-653 and No. 202-709.” Id. 4-5. Further, defendants “contend that each ANDA sets forth preparation steps sufficient to allow the proposed affirmative defense.” Id. at 5. Thus, in light of the fact that defendants demonstrated that there is “at least some evidence to support an affirmative defense of intervening rights,” Judge Robinson granted defendants’ motion for leave to amend their answers. Id.

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December 20, 2012

Judge Andrews issues revised claim constructions of patents-in-suit directed to use of electronic television guides

Upon motion for clarification of the Court's June 22, 2012 claim construction opinion, Judge Andrews recently issued revised constructions of two terms of the patents in suit. United Video Properties, Inc., et al. v. Amazon.com, Inc., et al., C.A. No. 11-003-RGA (D. Del. Dec. 14, 2012). Judge Andrews revised its constructions of the terms "electronic television program guide" and "interactive program guide" in order to make clear that the terms "require the respective applications to provide current and forward-looking program schedule and channel information -- i.e., information concerning what programs are currently airing and when programs will air in the future, and on what channel." Id. at 1. The Court also clarified that the term "displaying" as used in the '268 patent relates to "television and not other forms of 'overlaying' on a screen such as when a program 'window' on a computer screen is overlaid on top of a user's desktop and other program windows." Id. at 2.

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December 19, 2012

Judge Stark Construes Claim Terms of Virus and Spam-Prevention Patents

Judge Stark recently engaged in extensive claim construction of disputed claim terms of four patents related to systems for protecting against computer viruses and spam emails. See Intellectual Ventures I LLC v. Check Point Software Techs. Ltd., et al., C.A. No. 10-1067-LPS, Slip Op. (D. Del. Dec. 12, 2012). The terms the Court construed in this multi-defendant case were:

- “data file(s)”
- “determining . . . whether each received content identifier matches a characteristic of other identifiers”
- “file content identifier”/“file content ID”/“digital content identifier”/“digital content ID”
- “digital content identifier created using a mathematical algorithm unique to the message content”
- “file content identifier generator agent(s)”
- “an indication of the characteristic”/“identify the existence or absence of said characteristic”/“indicating the presence or absence of a characteristic”
- “characterizing the files on the server system based on said digital content identifiers received relative to other digital identifiers collected in the database”
- “database of business rules”/“business rules”
- “[combines/combining] the [email message/data object] with a new distribution list . . . and a rule history . . .”
- “an organizational hierarchy of a business, the hierarchy including a plurality of roles, each role associated with a user”
- “persistently storing,” “primary message store . . . for receiving an non-persistently storing e-mail messages,” and “secondary message store . . . for receiving therefrom, and persistently storing an e-mail message”
- “automatically reviewing the [email message/data object] after a specified time interval to determine an action to be applied”
- “rule engine”
- “routing a call between a calling party and a called party of a telephone network”
- “within the telephone network”
- “identification code”
- “converting . . . from an executable format to a non-executable format”
- “forwarding the non-executable format”
- “retains an appearance, human readability, and semantic content of the e-mail message”
- “deactivating the hypertext link”

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