November 26, 2012

In denying motion to transfer, Judge Sleet explains the divergence of approaches in Delaware considering motions to transfer under 28 U.S.C. §1404(a)

Chief Judge Gregory M. Sleet recently denied defendant Apple Inc.’s motion to transfer the case to the Northern District of California. Smart Audio Technologies, LLC v. Apple, Inc., C.A. No. 12-134-GMS (Nov. 16, 2012). In its opinion the Court discussed the evolution of its decisions since Jumara was decided, concluding that “judges within this district have made subtle adjustments to the language employed in performing the transfer analysis,” although “the substance of the inquiry has remained constant.” Id. at 3. Specifically, Delaware judges have issued decisions “along two methodological branches . . . the ‘Affymetrix approach’ and the ‘modern approach.’” Id. at 5. Judge Sleet noted that under both approaches, the Court weighs the “balance of convenience” by looking at the Jumara factors and then makes the determination of whether the balance is tipped in favor of transfer. Id. at 6. The approaches differ, however, in how they consider plaintiff’s choice of forum. Under the Affymetrix approach, plaintiff’s choice of forum is “the paramount consideration” and is separated from the weighing of the other Jumara factors. Id. This factor establishes the defendant’s burden, such that the defendant is required “to demonstrate that the interests of justice and convenience weigh strongly in favor of transfer[,]” despite plaintiff’s forum selection. Id. at 7 (emphasis in original). The modern approach, however, “treats the plaintiff’s forum preference as an independent Jumara factor to be considered within the balance of convenience analysis[,] but imposes the same heavy burden on defendant. Id. at 7-8. The modern approach only gives plaintiff’s forum choice increased weight when the plaintiff has chosen to litigate on its home turf or selected the forum for “other rational and legitimate reasons.” Id. at 9. Judge Sleet noted that the differences of the two approaches is not troubling because any difference would fall within the Court’s discretion to decide whether transfer is warranted, and the balance of factors “is a fundamentally case-by-case, fact-specific inquiry.” Id. at 10.

Regarding the case at hand, Plaintiff Smart Audio, a Texas company with a principal place of business in Texas, argued that its forum choice should be given deference because Smart Audio had rational and legitimate reasons for litigating in Delaware. Id. at 12. Judge Sleet noted that while Smart Audio’s forum choice, as a Jumara factor, is entitled to “something more than minimal weight” for having rational reasons to sue in Delaware, its forum choice is not entitled to the substantial deference had Smart Audio sued on its home turf. Id. at 12-13 (citing In re Link_A_Media Devices Corp., 662, F.3d. 1221 (Fed. Cir. 2011)). Judge Sleet then discussed the remaining Jumara factors. Regarding where the claim arose, Judge Sleet concluded that the factor weighed slightly in favor of transfer because “while the infringing products were sold nationwide, at least some of the research and development activities relating to those products occurred in the proposed transferee district.” Id. at 14-15. Likewise, the location of books and records factor weighed slightly in Apple’s favor because “its documents relating to the design and development” of the accused products are located in California. Id. at 17-18. However, certain public interest factors weighed strongly against transfer, such as the existence of related lawsuits in Delaware. The remaining factors were either inapplicable or neutral. The Court ultimately concluded that transfer was not warranted: “Even if the court could say that the balance of convenience tilts somewhat toward transfer, Apple certainly has not shown that the interests of convenience and justice strongly favor its position.” Id. at 21.

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November 21, 2012

Judge Robinson Excludes Patent Claims from Upcoming Trial Because Claims had Substantively Changed During Reexamination

Judge Sue Robinson has issued a memorandum order on a patent infringement defendant’s motion to exclude several claims of the patent-in-suit from consideration at trial. See MobileMedia Ideas, LLC v. Apple Inc., C.A. No. 10-258-SLR (D. Del. Nov. 15, 2012). During the pendency of the case, the PTO conducted an ex parte reexamination of the patent-in-suit and concluded that three claims were patentable as amended. After the PTO had concluded its reexamination, the defendant requested that Judge Robinson exclude the three amended claims from the upcoming trial, which was only a few weeks away and would proceed on the unamended claims. The plaintiff sought inclusion of the three amended claims in the trial, in place of the three original claims. Judge Robinson ultimately ordered that the claims be excluded. Id. at 6.

Judge Robinson explained that reexamined claims must be “legally identical to their original counterpart . . . [meaning] ‘without substantive change.’” Id. at 4 (citing Laitram Corp. (Laitram II), 163 F.3d 1342, 1346 (Fed. Cir. 1998)). Essentially, “the scope of the claims [must be] identical.” Id. She pointed out that the amendments to the claims at issue “incorporate limitations from other claims of the [patent-in-suit] . . . [but] the combination of elements in amended claim 1 did not exist in a single claim prior to the issuance of the reexamination certificate” and experts had not had the opportunity to address the combination of elements in one claim. Id. at 4-5. Accordingly, Judge Robinson found that the claim at issue and claims dependent on it had substantively changed during reexamination and that “proceeding with the reexamined claims at this stage may open the door to new infringement theories and opinions at trial that have not been vetted through discovery.” Id. at 5-6. Additionally, the defendant would be “unduly prejudiced . . . [because it had] framed its invalidity defenses for the [patent-in-suit] in light of the original claims.” Id. at 6. Accordingly, Judge Robinson excluded the amended claims from trial.

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November 21, 2012

Judge Andrews Issues Claim Construction Opinion Related to Anti-HIV Pharmaceuticals

Judge Richard Andrews recently construed eight disputed claim terms of U.S. Patent No. 6,417,191, which relates to “therapeutic combinations of anti-HIV drug compounds.” Viiv Healthcare UK Ltd. v. Lupin Ltd., C.A. No. 11-576-RGA (D. Del. Nov. 16, 2012); Viiv Healthcare UK Ltd. v. Teva Pharmaceuticals USA, Inc., C.A. No. 11-688-RGA (D. Del. Nov. 16, 2012). Judge Andrews construed the following terms:

• “animal”
• “physiologically functional derivative”
• “symptoms or effects of an HIV infection”
• “a single combined formulation”

Id. at 2-3, 13-15.

Judge Andrews also construed the following terms, which each presented similar issues:

• “(1S, 4R)-cis-4-[2-amino-6-(cyclopropylamino)-9H-purin-9-y1]-2-cyclopentene-1-methanol or a physiologically functional derivative thereof and (2R, cis)-4-amino-1-(2-hydroxymethyl-1,3-oxathiolan-5-yl)-(1H)-pyrimidin-2-one or a physiologically functional derivative thereof”
• “combination”
• “pharmaceutical formulation”/“formulation”
• “therapeutically effective amount”

Id. at 3-12.

For these terms, defendants argued that the ’191 patent specification and prosecution history indicated that “synergism” was an “essential element of the claimed drug combination” and that the patentee “disavowed” non-synergistic combinations. Id. at 5. In response, plaintiffs argued that “synergism” was not an essential element but was an “unexpected result” emphasized to overcome obviousness rejections. Id. at 5-6. The appropriate constructions depended on whether “synergism” limited the scope of the claim terms. See id. at 5.

Despite the patentee’s emphasis on synergy in the title and invention description, Judge Andrews found that the ’191 specification did not “evince[] ‘manifest statements of exclusion or restriction’ giving rise to clear and unmistakable disclaimer.” Id. at 6-9. Among other reasons, he noted that disclaimer “typically occurs through a patentee’s differentiation of prior art.” But in this case, the patentee “at no point . . . criticize[d] a prior art for lacking synergism and then distinguish[ed] [its] drug combination for its synergistic aspect.” Id. at 7-8. Synergism was discussed as an “unexpected result,” not a “component or property of the combination itself.” Id. at 8.

Similarly, despite the patentee’s consistent emphasis on synergism in its correspondence with the PTO, Judge Andrews found that “clear and unmistakable” disclaimer in the prosecution history was absent. Id. at 9-12. He noted that “[c]lassic prosecution disclaimer occurs when an applicant escapes rejection for anticipation through narrowing statements to the examiner differentiating the application from the prior art.” Id. at 11. The patentee in this case, however, never narrowed its claims to avoid an anticipation rejection. Id. Rather, the patentee used “synergism” to overcome obviousness rejections by arguing that “the combined use of the drug compounds [was] not . . . expected to be as effective as proven.” Id. at 12. Judge Andrews did note that “[h]ad the patentee proved the existence of synergistic effects (and thus non-obviousness) via responses that altered the chemical or physical characteristics of the drug combination itself, those responses would arguably limit the scope of the claims, as the invention itself would have been re-characterized.” Id. at 12.

Because the patentee did not disavow non-synergistic combinations in the specification or prosecution history, the claim terms were not limited to synergistic combinations and Judge Andrews gave them their “plain and ordinary meaning[s].” Id. at 3-12.

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November 20, 2012

Judge Andrews denies motion to transfer venue where both parties were incorporated in Delaware

Judge Richard G. Andrews recently denied defendant’s motion to transfer venue to the Northern District of California in this patent infringement action. Round Rock Research, LLC v. Dell, Inc., C.A. No. 11-976-RGA (D. Del. Nov. 15, 2012). Plaintiff was a Delaware corporation with its principal place of business in New York. Defendant was also a Delaware corporation with its principal place of business in Texas. Id. at 3. Judge Andrews found that defendant’s forum preference favored transfer because it had business operations in the Northern District of California, but concluded that all other Jumara factors were either neutral, inapplicable, or only “marginally” favored transfer. Id. at 5-6. As to the public policies of the fora, the Court observed that while Delaware’s public policy favors litigation of business disputes there, “this factor significantly overlaps with why Plaintiff would have chosen Delaware as a venue in the first place” and it afforded this factor no additional weight. Id. at 7.

The Court also considered the fact that plaintiff had sued other computer manufacturers in Delaware and at least one of the patents in this case is asserted in pending litigation in the Northern District of California. Id. at 8. While the Court found this “a legitimate concern” especially if the Court “already had some experience with the patents,” it concluded that this factor was neutral because the cases were in their early stages and judges in California were “in about the same situation.” Id.

Judge Andrews considered and distinguished In re Link_A_Media Devices Corp., 662 F.3d 1221 (Fed. Cir. 2011), in which the Federal Circuit ordered transfer when only one party was a Delaware corporation and both parties were “effectively” principally based in the proposed transferee district. Here, both parties were Delaware corporations and neither corporation was principally based in the proposed transferee district. Id.

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November 20, 2012

Magistrate Judge Williams issues order compelling discovery of potentially infringing products made by third parties.

Magistrate Judge Karen M. Williams, of the District of New Jersey, sitting by designation, recently ruled on a dispute regarding the scope of permissible discovery into devices made by third parties. Tessera Inc. v. Sony Electronics, Inc., et al., C.A. No. 10-0838-RMB-KMW (D. Del. Nov. 15, 2012). At issue was alleged infringement of the plaintiff’s patents relating to “semiconductor products where multiple chips are stacked, one on top of another, typically for the purpose of facilitating their use in electronic devices where space is at a premium.” Id. at 2. A dispute arose after the plaintiff served discovery seeking information about accused products not identified in the complaint, or in an initial phase of discovery. Id. at 3. The defendant argued, among other things, that the discovery request improperly sought information not only about its products that incorporated its own infringing chips, but also about its “products that use chips made by third parties.” Id. at 8-9. The court found that because the plaintiff’s complaint alleged infringement based on the defendants’ making, using, selling, offering for sale in, or importing into the United States infringing chips, the plaintiff’s “claims purport to include not only chips manufactured by [the defendants] and products using [the defendant's] chips, but also potentially [the defendant's] products including chips manufactured by other third party companies that allegedly infringe [the] patents.” Id. at 10-11. The court held that the plaintiff’s discovery was permissible under Rule 26, which allows “[p]arties [to] obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense.” Id. at 9, 11. The court also found that Rule 26 permitted the plaintiff to seek discovery not only about products the defendant knew were being made, used, sold, offered for sale in, or imported into the United States, but also about any products the defendant “had reason to believe were being made, used, sold, offered for sale in or imported into the United States.” Id. at 11.

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November 19, 2012

Judge Sleet denies motion to stay pending inter partes reexamination

Judge Sleet recently adopted in part and overruled in part the Magistrate Judge's Report and Recommendation recommending denial of defendant's motion to stay pending reexamination. ImageVision.net, Inc. v. Internet Payment Exchange, Inc., C.A. No. 12-054-GMS-MPT (D. Del. Nov. 15, 2012).

While the case was in its early stages, defendant filed an inter partes reexamination request with the PTO and then moved the court to stay pending the reexamination. Id. at 1. At that time, the PTO had yet to decide whether to grant the reexamination. Id. Judge Thynge ultimately recommended that the Court deny the motion because “the scope of the issues to be resolved during litigation substantially exceeds the scope of the issues that can be resolved during the reexamination proceedings,” (R&R at 6-8), because the status of the reexamination would prejudice the plaintiff, and because the parties were direct competitors. R&R at 10-12.

While Judge Sleet adopted Judge Thynge's ultimate recommendation, Judge Sleet did not accept Judge Thynge's conclusion that the "simplification of issues before the court" factor disfavored granting the stay. Mem. at 2, n.2. Regarding that factor, Judge Sleet agreed that even if the PTO granted reexamination many issues would remain that the PTO could not address, such as infringement, damages and equitable defenses. Id. at 7. However, Judge Sleet disagreed that this factor disfavored a stay because "a stay could yield some measure of issue simplification." Id. In fact, Judge Sleet noted that "w]hile the 'issue simplification' factor is sometimes neutral, the court is aware of no decision from Delaware concluding that this factor weighed against a proposed stay. . . . The only conceivable scenario in which the 'issue simplificaiton' factor might weigh against a stay would arise where the reexamination process somehow was likely to complicate the litigation, and that is certainly not the case here. Id. at 7-8, n.5.

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November 19, 2012

Judge Andrews dismisses complaint for failure to adequately identify an accused product or service

Judge Richard G. Andrews recently granted defendants' motion to dismiss plaintiff's complaint alleging that defendants' "product or service implementing Hadoop Distributed File System" infringed plaintiff's patents-in-suit. Parallel Iron LLC v. Accenture Inc., C.A. No. 12-917-RGA (D. Del. Nov. 9, 2012). Judge Andrews noted that while "[i]t is true that extremely minimal allegations . . . are all that are required to satisfy Form 18 and to state a claim of direct infringement[,]" plaintiff's complaint could not "possibly be a sufficient description inasmuch as it identifies no product or service that [defendant] sells, uses, etc." Id. at 1-2. Therefore, Judge Andrews dismissed plaintiff's complaint without prejudice. Click here for a recent discussion of trends in the District of Delaware regarding the sufficiency of pleadings alleging indirect and direct patent infringement.

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November 16, 2012

Judge Andrews construes claim terms relating to compound used to treat enlarged prostate.

Judge Richard G. Andrews recently issued an opinion construing claim terms relating to dutasteride, a compound claimed by the plaintiff’s ‘427, ‘467, and ‘976 patents. GlaxoSmithKline LLC v. Anchen Pharmaceuticals, Inc., et al., C.A. No. 11-046-RGA (D. Del. Nov. 15, 2012). As the Court explained, dutasteride is a compound used to inhibit the conversion of testosterone to dihydrotestosterone—a compound that can cause enlargement of the prostate. Id. at 2. The parties disagreed on the proper construction of two claim terms.

The Court construed the claim term “solvate thereof” in the ‘467 and ‘976 patents to mean “a complex formed by dutasteride with a solvent in which dutasteride is reacted or from which it is precipitated or crystallized.” Id. at 4. With respect to the ‘427 patent, the same term was construed to mean “a complex formed by a compound of formula (I) (as defined in claim 1) with a solvent in which that compound is reacted or from which it is precipitated or crystallized.” Id. These constructions adopted the proposals made by the plaintiff, which the Court found to be consistent with the patentee's definition of "solvate" in the specification--a definition that, the Court explained, trumped the defendants’ extrinsic evidence suggesting that a different construction was appropriate. Id. at 8.

The Court next construed the claim term “pharmaceutically acceptable” as used in all three patents to mean “suitable for use when administered to the recipient thereof as a pharmaceutical.” Id. The Court adopted neither the plaintiff’s nor the defendants’ proposed constructions of this term, and instead fashioned its own construction based on its reading of the claims and specification. Id. at 10.

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November 16, 2012

Magistrate Judge Burke recommends plaintiff’s claims for direct infringement should survive 12(b)(6) motion, but claims for inducement and contributory infringement should be dismissed.

Magistrate Judge Burke recently issued a Report, recommending that defendant Yahoo!’s motion to dismiss plaintiff’s claims of direct infringement of five patents be denied but Yahoo!’s motion to dismiss plaintiff’s claims of induced and contributory infringement of those same five patents be granted. Pragmatus AV, LLC v. Yahoo! Inc., C.A. No. 11-902-LPS-CJB (D. Del. Nov. 13, 2012).

Addressing the sufficiency of plaintiff’s claims of direct infringement, Judge Burke first distinguished the different levels of factual detail necessary for a plaintiff to overcome a motion to dismiss for undivided and joint infringement. Judge Burke explained that for an undivided infringement claim, the plaintiff must plead the level of detail required by Form 18 of the Appendix of Forms to the Federal Rules of Civil Procedure. Id. at 5-7. However, if plaintiff’s claim relies on a theory of joint infringement, the plaintiff must fulfill the requirements of Rule 18 and must further plead “facts sufficient to allow a reasonable inference that one party exercises the requisite ‘direction or control,’ such that performance of every step [of the claim] is attributable to the controlling party.” Id. at 7 (quoting Eon Corp. IP Holdings LLC v. FLO TV Inc., 802 F. Supp. 2d 527, 534-35 (D. Del. 2011)).

Defendant first argued that all of plaintiff’s asserted claims, which involved methods, could not possibly be performed by defendant alone, and required a second, joint infringer. Thus, according to defendant, plaintiff must have been relying on a theory of joint infringement. Defendant argued that because plaintiff did not plead factual allegations with regard to its exercise of control over a joint infringer, the direct infringement claims should be dismissed. Id. at 9.

In response, Plaintiff argued that it was not relying on a theory of joint infringement. Id. Thus, the parties’ disagreement essentially boiled down to “whether the claims at issue [could] plausibly be read to allow for one person or entity [to perform] all of the steps of [the] claimed method.” Id. at 10. Judge Burke noted that this type of disagreement “tend[s] to devolve into a dispute about what certain claim terms can and cannot mean.” Id. Judge Burke found, however, that conducting claim construction on a motion to dismiss would be going beyond the court’s “traditional gatekeeping role in reviewing such a motion.” Id. at 13. Judge Burke therefore found that “[t]o the extent that a defendant asserts that a direct infringement claim should be dismissed because the claim terms-at-issue require joint infringement—and the resolution of that question depends in any meaningful way on the construction of those claim terms—the motion should typically be denied as premature.” Id. Judge Burke did find, however, that there may be “certain (perhaps rare) cases where the facts of record at the pleading stage will so clearly and explicitly indicate that an ‘undivided’ claim of direct infringement cannot stand” that granting a motion to dismiss will be appropriate. Id. at 14. Because none of the claims at issue “clearly and explicitly” required a second, joint infringer, and because all of those claims met the requirements of Form 18, Judge Burke recommended that defendant’s motion to dismiss with regard to the claims of direct infringement be denied.

Turning to the sufficiency of plaintiff’s claims of indirect infringement, Judge Burke noted that “in order for an inducement claim to survive a motion to dismiss, the complaint must contain facts ‘plausibly showing that [the alleged indirect infringer] specifically intended [the direct infringers] to infringe [the patent-at-issue] and knew that the [direct infringer’s] acts constituted infringement.’” Id. at 24-25 (quoting In re Bill of Lading Transmission and Processing Sys. Patent Litig., 681 F.3d 1323, 1339 (Fed. Cir. 2012)). Despite plaintiff’s allegations that it provided “written notice of infringement” to Yahoo!, Judge Burke recommended a finding that plaintiff’s inducement claims were insufficient because they provided “no indication of when that notice was provided” and set forth no factual detail “regarding the substance of that notice.” Id. at 27.

Moving on to the contributory infringement claim, Judge Burke noted that to overcome a motion to dismiss, a plaintiff must “provide facts that allow a reasonable inference that all elements of a contributory infringement cause of action are plausible.” Id. at 29 (citing Bill of Lading, 681 F.3d at 1337). Such elements include the infringer’s knowledge that “the combination for which its components were especially made was both patented and infringing and that [the] components have no substantial non-infringing uses.” Id. (quoting Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1320 (Fed. Cir. 2009)). Judge Burke found that plaintiff failed to “reference these legal elements” and provided “no detail that would flesh out the factual underpinnings supporting such elements.” Id. at 30. Although plaintiff alleged that Yahoo! Messenger “may be used to infringe,” Judge Burke found such an allegation insufficient to support a reasonable inference that Yahoo! Messenger has “no substantial nonfringing uses.” Id. at 30-31. Judge Burke therefore recommended that the claims for contributory infringement be dismissed. Id. at 31.

UPDATED: On May 24, 2013, after de novo review of the issues presented, Judge Andrews overruled objections to Judge Burke's report and adopted the report and recommendation.

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November 9, 2012

Judge Andrews denies motion for attorneys’ fees in meritless suit.

Judge Richard G. Andrews recently denied a defendant’s motion for attorneys’ fees under 35 U.S.C. § 285, finding no evidence of subjective bad faith on the part of the plaintiff. Parallel Iron LLC v. Adknowledge Inc., et al., C.A. No. 11-799-RGA (D. Del. Nov. 2, 2012). The plaintiff’s case, the Court explained, was meritless because the patent at issue was unenforceable as a result of a terminal disclaimer requiring that it have common ownership with another patent that the plaintiff did not own. The plaintiff's parent company (through what the Court characterized as a costly mistake) had assigned to the plaintiff only the patent at issue, and not that other related patent. Id. at 2, 4. When the plaintiff learned of this flaw in its case, it promptly dismissed its claims against all defendants. Id. at 2.

One of the defendants, EMC Corporation, moved for attorneys’ fees. The Court explained that an award of fees under § 285 requires a showing by clear and convincing evidence that “(1) the litigation [was] brought in subjective bad faith, and (2) the litigation [was] objectively baseless.” Id. at 3 (quoting Old Reliable Wholesale, Inc. v. Cornell Corp., 635 F.3d 539, 543-44 (Fed. Cir. 2011)); see also Forest Labs., Inc. v. Abbott Labs., 339 F.3d 1324, 1327 (Fed. Cir. 2003)). The plaintiff submitted declarations that the Court accepted as showing that the plaintiff believed (until it was informed to the contrary by one of the defendants) that it “possessed all necessary intellectual property rights for its suit.” Id. The Court explained, “[w]hile I am quite convinced that the litigation was, or became, objectively baseless, the question of subjective bad faith is much less obvious.” Id. at 3-4 (footnote omitted). “While I agree with EMC that Parallel Iron should have known that it needed both patents to bring (or to continue to prosecute) the suit, the evidence does not persuade me that Parallel Iron consciously knew that it did not have them both.” Id. at 4. Finding no evidence of subjective bad faith on the part of the plaintiff, and believing the most likely explanation was that the plaintiff was guilty of a costly and careless mistake, the Court denied the defendant’s motion for attorneys’ fees. Id.

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