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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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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