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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November 8, 2012

Judge Stark resolves various summary judgment motions, considering such issues as whether plaintiff improperly broadened claim scope during reexamination and intervening rights

Judge Leonard P. Stark recently considered the parties’ pending motions for summary judgment and Daubert motions, denying most of them. Exelis Inc. v. Cellco Partnership (d/b/a Verizon Wireless), et al., C.A. No. 09-190-LPS (D. Del. Nov. 6, 2012). The parties cross moved for summary judgment on the issue of whether Exelis improperly broadened a claim during reexamination and whether Exelis sought reexamination for an improper purpose. Id. at 4. Judge Stark denied both motions without prejudice to renew during post-trial briefing because, while both parties asked the Court to compare “just the scope of the original [claim] term to the reexamined scope of the same term[,]” Judge Stark felt there was uncertainty as to whether the proper comparison should be between “the reexamined claim and ‘each and every claim of the [original] patent.’” Id. at 5 (quoting MPEP § 2258.III.A) (emphasis in original).

Judge Stark granted-in-part Defendants’ partial motion for summary judgment of non-infringement. Id. at 16. One of the bases for Defendants’ motion was that “intervening rights should apply to every claim of the ‘450 patent as a result of claim amendments made during reexamination.” Id. at 17. Exelis argued that intervening rights should not apply to claim 1, but Judge Stark disagreed because, like the other claims, claim 1 was “substantively changed” during reexamination. Id. at 18. Exelis argued that the amendments, “were added only for the sake of clarification[.]” But, for example, Judge Stark noted that “[o]riginal claim 1 . . . did not require a specific ‘origin’ for satellite position data[,]” while amended claim 1 required that the satellite position data be received “from each of the in-view GPS satellites.” Id. at 20 (emphasis omitted). Significantly Plaintiff urged the Examiner that the amended claim was distinguishable from the prior art because of the distinction as to origin of the data and the Examiner referred to this argument as a reason for allowance. Id. at 20-21.

Judge Stark also granted-in-part Exelis’s motion for summary judgment as to Defendants’ affirmative defenses. Id. at 21. Regarding laches, Judge Stark granted Exelis’s motion because the patent was in reexamination for much of the relevant time period. Id. at 22. “[T]he pendency of reexamination is a legitimate excuse for purposes of laches.” Id. Furthermore, because it was undisputed that Defendants knew of the patent during the entire laches period, even though suit wasn’t filed until 2009, Judge Stark found that Defendants failed to articulate “sufficient evidence from which a reasonable factfinder could find prejudice of a kind necessary for Defendants to prevail on their affirmative defense of laches.” Id. at 23.

Judge Stark also denied the parties’ cross-motions for summary judgment of validity/invalidity under 35 U.S.C. § 112 (Id. at 8-16) as well as the parties’ Daubert motions. Id. at 24-

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November 2, 2012

Judge Stark denies Google's motion to stay pending reexamination of the patents-in-suit during which the PTO rejected all asserted claims

Judge Stark recently considered Google's motion to stay pending reexamination of the patents in suit. Google filed its motion after the PTO issued a Final Office Action rejecting all asserted claims U.S. Patent No. 7,685,276, and issued an Action Closing Prosecution finding all asserted claims of U.S. Patent No. 6,981,040 invalid. Personalized User Model, LLP v. Google, Inc., C.A. No. 09-525-LPS (D. Del. Oct. 31, 2012). Judge Stark found that the potential for a stay to simplify issues favored granting a stay, "but only slightly." "Given that all asserted claims of both patents-in-suit stand rejected . . . there is a signficant likelihood that [the case may ultimately be dismissed], resulting in maximum 'simplification' of this litigation by ending it." Id. at 2. However, Judge Stark noted that final conclusion of the reexaminations, with appeals, could last longer than it would take to bring the case to trial, and there were infringement and validity issues that could not be addresssed by reexamination. Id. More significantly, the stage of the litigation strongly disfavored stay. Judge Stark noted that "the fact that Google waited to seek a stay until after the parties, and the Court, had invested substantial resources in this case is a central consideration in the Court's evaluation." Id. at 2-3. Although there was not trial set, claim construction and fact discovery were complete, expert discovery was set to close November 14, 2012 and case dispositive motions were due shortly thereafter. Id. at 3.

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November 1, 2012

Judge Thynge Recommends Award of Attorneys’ Fees as Sanction for Violation of Protective Order

Magistrate Judge Mary Pat Thynge has issued a report and recommendation on a Fed. R. Civ. P. 37 motion regarding a violation of the Court’s Protective Order. Defendant Apple brought the motion against Plaintiff MobileMedia Ideas (“MMI”), alleging that MMI’s expert did not directly review source code on a designated computer as provided in the Protective Order. Rather, Apple alleged, a non-testifying consultant printed Apple’s source code and provided it to MMI’s expert. Apple additionally alleged that a second expert also reviewed a printed copy of source code and made copies of the source code other than for purposes “reasonably necessary” to the preparation of an expert report. Judge Thynge found a violation of the Protective Order, took steps to limit future access to the source code, and allowed the parties to brief the issue of awarding fees and costs. MobileMedia Ideas LLC v. Apple Inc., C.A. No. 10-258-SLR/MPT, at 1-2 (D. Del. Oct. 31, 2012).

Considering the parties’ submissions on a fee award, Judge Thynge called “MMI’s interpretation of the Protective Order . . . dizzying” and determined that reasonable expenses should be awarded for MMI’s violation. She explained that MMI’s argument that its violation had been “substantially justified” depended on defining the term “Receiving Party” in the Protective Order in two different and inconsistent ways: “MMI cannot have two interpretations of Receiving Party—one to argue no violation and another to argue why its violation was substantially justified to avoid the imposition of reasonable expenses. MMI’s approach is ‘heads I win, tails you lose,’ and it is not entitled to switch its argument after the court determined a violation of a discovery order occurred to justify why sanctions should not be imposed.” She concluded, “with the differing applications of ‘Receiving Party’ propounded by MMI, substantially justified has not been met under Rule 37, and reasonable expenses are warranted.” Id. at 5. She therefore recommended the awarding of attorneys’ fees and costs for Apple’s counsel and found that most of the fees requested by Apple were reasonable and allowable under Rule 37.

Update:

On September 16, 2013, Judge Sue L. Robinson adopted Magistrate Judge Thynge's report and recommendation, agreeing with Judge Thynge "that plaintiff's interpretation of the Protective Order is nonsensical." Judge Robinson explained that "[f]or plaintiff to argue that, while it could not print Source Code, its non-testifying expert could, is not a reasonable (perhaps not even a credible) argument in my experience."

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October 31, 2012

Court appoints independent, neutral expert to opine on interpretation of attorney-client privilege under the laws of India

Judge Kent A. Jordan, sitting by designation, recently determined that communications of defendant with Indian in-house counsel employed by defendant were not subject to attorney-client privilege under the laws of India. Shire Development Inc. v. Cadila Healthcare Limited (d/b/a Zydus Cadila), C.A. No. 10-581-KAJ (D. Del. Oct. 19, 2012). To reach this conclusion, Judge Jordan independently appointed a neutral expert on the laws of India, "[b]ecause the parties presented diametrically opposed expert reports on this difficult questions[.]" Id. at 1. Judge Jordan ultimately adopted this expert's conclusions that, "under the laws of India, attorney-client privilege does not attach to communications between a legally trained corporate employee and his employer." Id. at 2.

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October 31, 2012

Magistrate Judge Thynge recommends against transfer of case to Northern District of California where both parties are multi-national Delaware corporations.

Magistrate Judge Mary Pat Thynge recently issued a report recommending the denial of a motion to transfer a case to the Northern District of California based on an evaluation of the considerations outlined by the Third Circuit in Jumara v. State Farm Ins. Co., 55 F.3d 873 (3d Cir. 1995). Trueposition, Inc. v. Polaris Wireless, Inc., C.A. No. 12-646-RGA-MPT (D. Del. Oct. 25, 2012). Judge Thynge recognized that the Federal Circuit’s decision in In re Link_A_Media Devices Corp., 662 F.3d 1221 (Fed. Cir. 2011) (previously discussed here) provided guidance for the Court’s consideration of the Jumara factors, but added that “the decision has not altered the fundamental fact that ‘Section 1404(a) is intended to place discretion in the district court to adjudicate motions to transfer . . . .’” Id. at 3 (quoting Intellectual Ventures I LLC v. Altera Corp., 842 F. Supp. 2d 744, 754 (D. Del. 2012) (previously discussed here)).

With regard to the Jumara factors, the defendant emphasized that the plaintiff’s choice of forum should be given little weight because the plaintiff lacked any meaningful connection to Delaware—having no offices or employees in the state. The Court disagreed, explaining, “even if Delaware is not considered [the plaintiff’s] home turf, ‘[n]onetheless [its] incorporation in Delaware represents a rational and legitimate reason to choose to litigate in the state,’ by opting ‘to avail [itself] of the rights, benefits, and obligations that Delaware law affords.’” Id. at 6-7 (footnotes omitted). As a result, the Court explained that the plaintiff’s “choice of Delaware as its preferred forum is entitled to, at minimum, significant deference.” Id. at 7 (quoting Intellectual Ventures, 842 F. Supp. 2d at 754). Although the defendant provided legitimate reasons it preferred to litigate in the Northern District of California—which was the location of its headquarters, product development, almost all employees, all documents, and potential third party witnesses—the Court explained, “Defendant’s choice weighs in favor of transfer, however this factor is not provided the same weight as plaintiff’s preference.” Id.

The Court also explained, with regard to whether the Northern District of California was more convenient for the parties than the District of Delaware, that “[u]nless the defendant is truly regional in character – that is, it operates essentially exclusively in a region that does not include Delaware – transfer is often inappropriate.” Id. at 9 (internal quotation marks omitted). Here, the Court noted that both parties were multi-national corporations with worldwide business activities and interests. Id. at 10. Because neither party convincingly made the case that it would be inconvenienced in either the District of Delaware or the Northern District of California, the Court explained that “incorporation in Delaware tips the balance under this part of the convenience analysis. Given that both parties were incorporated in Delaware, they had both willingly submitted to suit there, which weighs in favor of keeping the litigation in Delaware.” Id. (internal quotation marks omitted).

As for the convenience of potential witnesses, including third party witnesses, the Court noted that only the defendant made a case that its preferred forum was more convenient, as the plaintiff failed to identify any witness who might be unavailable in the Northern District of California. Id. at 12. However, the Court noted that “[t]his factor … warrants limited weight since unavailability and lack of cooperation by non-party witnesses are not presumed.” Id. at 12-13 (citing Ivoclar Vivident AG v. 3M Co., No. 11-1183-GMS-SRF (D. Del. June 22, 2012) (“The practical impact of this factor is limited by the fact that few civil cases proceed to trial, and at trial, few fact witnesses testify live.”)). The Court viewed similarly the location of relevant books and records, explaining that although they were mostly located in the Northern District of California, there was no indication that it would be unduly burdensome to bring them to the District of Delaware, if needed, in light of technological advances. Id. at 14.

Finally, the Court explained that none of the public interest factors weighed in favor of transfer, and one factor especially weighed in favor of keeping the case in the District of Delaware. Citing a Federal Circuit decision, the Court explained that the public policy of the fora weighed in favor of keeping the litigation in the District of Delaware “[g]iven that both parties were incorporated in Delaware, [and] they had both willingly submitted to suit” in Delaware. Id. at 17 (quoting Micron Technology, Inc. v. Rambus, Inc. 645 F.3d 1311, 1332 (Fed. Cir. 2011). On balance, Magistrate Judge Thynge found that transfer was not appropriate in this case, and recommended that the Court deny the defendant’s motion because the “defendant has failed to satisfy its burden of showing that the Jumara factors weigh strongly in favor of transfer.” Id. at 18 (citing Shutte v. Armco Steel Corp., 431 F.2d 22, 25 (Fed. Cir. 1970) (“[U]nless the balance of convenience of the parties is strongly in favor of defendant, the plaintiff’s choice of forum should prevail.”)).

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October 26, 2012

Jury verdicts of no infringement and invalidity of St. Jude’s patents in St. Jude v. Volcano Corp. C.A. No. 10-631-RGA

On October 19th, 2012, the jury returned a verdict in St. Jude Medical v. Volcano Corp., C.A. No. 10-631-RGA (D. Del.). The case involved patents related to technology for diagnosis of heart disease. The jury unanimously found that St. Jude failed to prove that Volcano infringed St. Jude’s patents (U.S. Patent Nos. 6,112,598 and 6,248,083). The jury also found that claims 1, 2 and 10 of St. Jude’s patents were invalid as anticipated and obvious (U.S. Patent Nos. 5,938,624 and 6,196,980).

On October 25, 2012, after a second trial on Volcano’s counterclaims, the jury returned a verdict that Volcano had failed to prove that St. Jude literally infringed one of its patents (U.S. Patent No. 5,178,159) and that St. Jude infringed three of its patents under the doctrine of equivalents (U.S. Patent Nos. 5,178,159, 5,797,856, and 6,976,965).

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October 24, 2012

The court again distinguishes Link A Media reiterating that, even if operating in another jurisdiction, Delaware may be "home turf" for Delaware corporation

Chief Judge Gregory M. Sleet recently denied defendant’s motion to transfer venue of this patent infringement action to the District of Massachusetts. AIP Acquisition LLC v. iBasis, Inc., C.A. No. 12-616-GMS (D. Del. Oct. 19, 2012). Plaintiff was a Delaware LLC with its principal place of business in Fort Lee, New Jersey, and defendant was a Delaware corporation with its principal place of business in Burlington, Massachusetts. Judge Sleet noted that in this case, plaintiff’s forum choice is afforded substantial deference because Delaware is plaintiff’s home forum (unlike in In re Link_A_Media, 662 F.3d 1221 (Fed. Cir. 2011)). Defendant had argued that plaintiff is based in New Jersey, and so its choice of forum was entitled to less weight, but Judge Sleet was unconvinced because “a corporate entity’s state of incorporation is part of its ‘home turf[.]’” Id. at 4. Judge Sleet also considered the “practical considerations” that related litigation involving plaintiff and the same patents was currently pending before the court and that “[p]ermitting the two cases to proceed in the same court could minimize costs to the judicial system as a whole, by requiring that only one court become familiar with the relevant technology.” Id. at 9. The court denied the motion because, although some private interest factors favored transfer (specifically defendant’s forum preference, where the claims arose, and where the relevant books and records were located), all other factors were either neutral or weighed “decidedly” against transfer. Id. at 10.

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October 23, 2012

Judge Andrews grants defendants’ motion for leave to add intervening rights defense, but denies motion with respect to other inconsequential amendments.

A recent decision by Judge Richard G. Andrews shows that courts need not provide parties with leave to amend pleadings where the proposed amendments are inconsequential. LG Electronics, Inc. v. Asko Appliances, Inc., et al., C.A. No. 08-828-RGA (D. Del. Oct. 17, 2012). The defendants’ motion sought leave to “pare[] down their inequitable conduct claims, clarif[y] their antitrust counterclaims, and add[] a defense of intervening rights.” Id. at 1. The Court denied the motion with respect to the first two proposed amendments (deleting over 100 paragraphs relating to inequitable conduct and “refram[ing]” antitrust issues). Id. The Court explained that “narrowing of the inequitable conduct issues can be achieved by stipulation or other understanding among the parties,” and the proposed antitrust amendments “do not add new theories, factual disputes or issues to the case.” Id. The Court explained, “[j]ustice does not require providing leave to make these inconsequential amendments.” Id. (citing Fed. R. Civ. P. 15(a)(2)).

The Court did not find the proposed addition of an intervening rights defense to be inconsequential, though, and granted leave to make that amendment. Id. at 2. The Court found that the defendants timely sought to add an intervening rights defense after the plaintiff was granted leave to amend its infringement contentions regarding claims that were altered by reexamination. Id. The Court explained, “[w]hile the intervening rights defense will require technical and legal analyses of the extent to which the reexamined claims have changed, Defendants assert their defense is germane to the as-yet-unscheduled damages portion of the case, and not to the pending liability phase.” Id. Based on that limitation, the Court found that the defendants could add an intervening rights defense without unduly burdening or prejudicing the plaintiffs or the Court. Id.

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October 22, 2012

Magistrate Judge Burke Recommends Denial of Transfer Motion

Magistrate Judge Christopher Burke has issued a report in patent litigation between patent-holding company Pragmatus and internet giant Yahoo!, recommending that Yahoo’s motion to transfer venue to the Northern District of California be denied. See Pragmatus AV, LLC v. Yahoo! Inc., C.A. No. 11-902-LPS-CJB (D. Del. Oct. 15, 2012). Judge Burke wrote a lengthy opinion analyzing the various public and private interest factors of Jumara v. State Farm Ins. Co., 55 F.3d 873 (3d Cir. 1995) in great depth and explaining how those factors are typically applied in the District of Delaware. Ultimately, Judge Burke found that two factors weighed against transfer, four favored transfer, and six were neutral: “[T]he plaintiff’s choice of forum and practical considerations weigh against transfer. The defendant’s forum preference and whether the claim arose elsewhere weigh in favor of transfer. Two other factors—the convenience of the witnesses and the location of books and records—also weigh in favor of transfer, though only slightly, and not sufficiently to make a material impact on the Court’s decision.”

In reaching this conclusion, Judge Burke clarified several disputes among the parties as to the proper application of transfer precedent in the District of Delaware. He first stated that the Federal Circuit in In re Link_A_Media Devices Corp., 662 F.3d 1221 (Fed. Cir. 2011) “noted that a party’s state of incorporation is not one of the factors listed in Section 1404 or in Jumara, and stated that it would be inappropriate for a court to place ‘heavy reliance’ on this fact, such that it became ‘dispositive’ in the venue transfer analysis.” Nevertheless, he noted, “nothing in Link _A_ Media suggests that a defendant’s place of incorporation is irrelevant to the transfer analysis.” Rather, “in many circumstances, the Federal Circuit has found that the location of a defendant’s incorporation in a forum can be a fact supporting the conclusion that a lawsuit is properly venued in that same forum.” Next Judge Burke considered Yahoo!’s suggestion that when considering the availability of witnesses factor, “it is sufficient for purposes of venue transfer analysis if the witness is not subject to a court’s subpoena power.” He explained that the precedent relied on for this proposition in turn relied on precedent “where the Court intently considered whether there was evidence that the non-party witnesses at issue would actually be unavailable for trial.” He therefore concluded that “to automatically consider a witness unavailable, simply because they reside outside of this District’s subpoena power, would render the inquiry required by this factor unduly wooden.” Rather, a court must consider whether there is evidence that witnesses would actually be unavailable for trial. Finally, in considering the court congestion factor, Judge Burke noted that “for the first time in years, this Court now has a full bench of four U.S. District Judges (and, for the first time ever, three U.S. Magistrate Judges). In light of that . . . [he was] not persuaded by [the] argument that difficulties relating to court congestion favor transfer.”

Based on these and other factors, Judge Burke concluded that while “the issue is a close one . . . Yahoo! has not demonstrated that the balance of convenience of the parties tips strongly in its favor, as is required by Third Circuit precedent.” He refuted Yahoo!’s suggestion that “‘there isn’t a strong showing’ required of defendants in order to obtain a transfer of venue,” stating instead that Third Circuit and District precedent requires “that a defendant bear the ‘heavy burden’ to show that the balance of convenience tips ‘strongly in favor’ of transfer.” Yahoo! did not meet that burden in this case in part because Pragmatus “brought suit . . . in a district that is very near to its place of business and to the location of its employees, a district where it had a legitimate basis to file the litigation (in light of the fact, among other things, that Yahoo! is itself incorporated here), and where the same Court is overseeing myriad other litigation matters involving the patents-in-suit.” Accordingly, Judge Burke recommended denial of the motion to transfer.

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