October 10, 2012

Judge Burke grants motion to stay pending reexamination that was filed prior to court entering scheduling order in the case

Judge Burke recently considered defendant RadioShack’s motion to stay plaintiff Ever Win’s patent infringement litigation pending the USPTO’s reexamination of the patent-in-suit. Ever Win International Corp. v. RadioShack Corp., C.A. No. 11-1104-GMS-CJB (D. Del. Oct. 9, 2012). RadioShack filed its request for reexamination in the PTO, and once granted by the PTO, its motion to stay pending reexamination, while the case was still in its infancy and prior to the Court entering a case scheduling order. In weighing the relevant factors to determine whether a stay was appropriate, Judge Burke concluded that the current status of the litigation “strongly favor[ed] a stay.” Id. at 13. Judge Burke noted that “[t]his Court is more likely to grant stays early in a case because they are more likely to advance judicial efficiency and maximize the likelihood that neither the Court nor the parties expend their assets addressing invalid claims.” Id. at 7. Regarding prejudice, the only aspect of this factor that weighed in Ever Win’s favor was the fact that the reexamination proceedings had just begun, resulting in a lengthy delay of resolution of the litigation. Id. at 10-11. Furthermore, because Ever Win never sought a preliminary injunction, “any prejudice to [Ever Win] that might result from delaying the ultimate resolution of this dispute is not as severe as [Ever Win] contends.” Id. at 13.

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October 9, 2012

Chief Judge Sleet finds plaintiff’s direct, induced, contributory, and willful infringement claims survive Rule 12(b)(6) motions.

Chief Judge Gregory M. Sleet recently denied several motions to dismiss direct, induced, contributory, and willful infringement claims, finding that the plaintiff’s factual allegations were sufficient to survive under Rule 12(b)(6). In re: Bear Creek Techs. Inc. (‘722 Patent Litig.), MDL No. 12-2344 (GMS) (D. Del. Sept. 27, 2012). The Court explained with regard to the direct infringement claims that “the plaintiff’s complaints meet the Form 18 requirements by: invoking jurisdiction under 28 U.S.C. § 1338(a); stating its ownership of the patent-in-suit; alleging that the defendants have infringed the patent by ‘making, selling, and using [the device] embodying the patent’; putting the defendants on notice as to the general scope/nature of their infringement; and demanding an injunction and damages.” Id. at 2 n.5 (alteration in original). The Court rejected the argument that the complaints were insufficient for failure to identify which products were alleged to infringe, and explained that “[i]t is well-established that, ‘[w]hile it is not necessary to identify specific products,’ it is necessary for a complaint at least to ‘mimic Form 18 and identify a general category of products.’” Id. Here, the complaints included allegations regarding the defendants’ “VoIP products, systems[,] or services[,]” and identified certain trade names associated with the accused services. Id. at 3 n.5.

The Court also rejected the defendants’ arguments that plaintiff’s literal and doctrine of equivalents infringement claims were insufficient for failure to meet the pleading requirements of Twombly and Iqbal. Id. The Court explained, “as the Federal Circuit has made clear, direct infringement—and by extension, its doctrine of equivalents cause of action—must simply comply with the Form 18 elements to meet the Twombly pleading standard.” Id. (citing McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1357 (Fed. Cir. 2007).

Next, the Court rejected the defendants’ argument that the plaintiff’s induced and contributory infringement claims were insufficient for failure to identify specific third parties. The Court explained, “identifying third parties who participated in allegedly infringing activities is a proper question for discovery[,]” and found sufficient the plaintiff’s allegations that “defendants have induced ‘one or more certain affiliates, one or more third parties, and plural subscribers . . . each regarding the VoIP Services subject to [the instant] clamis[.]” Id. (citations omitted). The Court further agreed with the plaintiff that it sufficiently plead knowledge by including in its complaints the allegation that it provided each defendant with a copy of the patent-in-suit in March 2011. Id. For the same reason, the Court found that the plaintiff’s complaints “sufficiently plead the required elements of willful infringement” since its willful infringement claims were not asserted until after March 2011.

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October 9, 2012

Judge Andrews construes claims relating to credit/debit/ATM card technology.

Judge Richard G. Andrews recently construed several claim terms relating to credit/debit/ATM card technology. Serverside Group Ltd., et al. v. Dimpledough, Inc., et al., C.A. No. 11-559-RGA (D. Del. Oct. 2, 2012). The Court first construed the term “financial transaction card” to mean “a transaction card (e.g., credit card, debit card, ATM card, or similar card), but not a prepaid bearer card.” Id. at 1. The Court found that the term “financial transaction card,” used in the preambles as a claim limitation to overcome prior art, was “essential to understanding the claim body; without the term, the claims could include a system for placing personalized images on any card material, not just financial transaction cards as is clearly intended in every claim and the specification.” Id. Based on its construction of “financial transaction card,” the Court found that no construction was needed for the claim term “financial transaction card production equipment.” Id. at 2.

The term “financial record of the remote customer that personalized the image” was construed to mean “record of financial information of the customer that personalized the image,” and the term “one way code” was construed to mean “a hash value created from customer information.” Id. at 2-3.

The Court also construed several means plus function terms:

“image processing means for providing an image, produced based on said instructions for manipulation, for application to the financial transaction card” was construed to have the function of “providing an image, based on instructions for manipulation, for application to the financial transaction card” and the associated structure of “an image processor (see, e.g., back end software 110 and image manipulation emulator 256).” Id. at 3.

“means for embedding the customer identifier in the personalized image” was construed to have a function of “embedding the customer identifier in the personalized image” and the structure “a back end server (such as server 1103 or 1203) that embeds the customer identifier in the personalized image, for example by embedding the identifier in a bar code, machine readable code, or metadata.” Id.

“computer program means for presenting to a remote customer the remote user interface / computer program means for presenting to a remote customer a user interface / computer program means for presenting to a remote user interface” were construed to have the function of “presenting to a remote customer or remote user a user interface” and the structure “a user interface (see, e.g., front end software 105 and Figs. 3-10).” Id. at 3-4.

“image instruction means for receiving instructions for manipulation of an image file” was construed to have the function of “receiving instructions for manipulation of an image file” and the structure “an image compilation server coupled to a communications link (see, e.g., image compilation server 108).” Id. at 4.

The Court added that its construction of these means plus function terms was “without prejudice to Defendants’ ability to argue the claims as construed are indefinite, with an expert witness who can aid the factfinder in understanding, inter alia, the claimed function and what one of ordinary skill would require to implement it.” Id. at 5.

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October 5, 2012

Judge Thynge Denies Plaintiff’s Motion for Leave to File Motion for Partial Summary Judgment of Infringement Based on Proposed Preliminary Claim Construction at Preliminary Injunction Stage

In Neology, Inc. v. Federal Signal Corporation, et al., C.A. No. 11-672-LPS-MPT (D. Del), Magistrate Judge Thynge recently denied plaintiff’s motion for leave to file a motion for partial summary judgment of infringement based on a preliminary claim construction proposed in connection with plaintiff’s earlier motion for preliminary injunction. Id. at 1. In this case, plaintiff filed suit against defendants alleging infringement of six patents-in-suit. Id. at 1. Plaintiff then filed a motion for preliminary injunction. Judge Thynge subsequently issued a Report and Recommendation denying plaintiff’s motion for preliminary injunction, but agreeing, at least in part, with plaintiff’s proposed preliminary claim construction. Id. at 1. The Report and Recommendation was later adopted by Judge Stark. Id. at 1. And, based on that ruling and the proposed claim construction that was agreed to in part in connection with denial of the preliminary injunction, plaintiff moved for leave to file a motion for partial of infringement regarding two of the six patents-in-suit. Id. at 1-2. Plaintiff argued that “no additional evidence or argument merits reconsideration of construction of those claims [that were agreed to]” and stressed that allowing the partial summary judgment motion would “narrow[] the claims and issues . . . for further discovery and trial.” Id. at 2. The Court disagreed. Citing Federal Circuit authority, the Court noted that “[a]lthough [it] did adopt plaintiff’s proposed construction as to certain terms for the purpose of the preliminary injunction, ‘a conclusion of law such as claim construction is subject to change upon the development of the record after a district court’s decision on a motion for preliminary injunction.’” Id. at 4. The Court further noted that the “standard employed at the preliminary injunction stage is far less stringent than what a plaintiff must prove at trial” and that “as a result of the limited effect of claim construction during the preliminary injunction stage, [it] doubts the alleged time and resource savings benefits advanced by plaintiff.” Id. at 4-5.

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October 3, 2012

Judge Stark Denies Motion to Strike Affirmative Defenses of Patent Misuse and Assertion of Invalid Patent Claims

In a recent memorandum opinion, Judge Stark denied an ANDA plaintiff’s motion to strike two of the defendant’s affirmative defenses. The plaintiff filed a complaint for patent infringement in response to the defendant’s filing of an Abbreviated New Drug Application, and the defendant asserted counterclaims. The defendant contended that it had provided the plaintiff with a paragraph IV notification before the suit was filed, and therefore, the plaintiff’s infringement suit constituted patent misuse. The defendant also contended that the plaintiff was barred from recovering costs under 35 U.S.C. § 288 because claims of the patents-in-suit were invalid and the plaintiff did not enter a disclaimer of these invalid claims with the PTO before commencing their suit. The plaintiff moved to strike both affirmative defenses, and Judge Stark denied the motion as to the first defense because there were disputed questions of fact and as to the second defense because there were disputed questions of law. Cadence Pharmaceutical, Inc. v. Paddock Laboratories, Inc., C.A. No. 11-733-LPS, at 1-7 (D. Del. Oct. 1, 2012).

Judge Stark first agreed with the “majority of the District Courts within the Third Circuit that have . . . determined that the heightened pleading requirements of Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), do not apply to the pleading of affirmative defenses.” “The Court agrees with these authorities,” he stated, “[t]herefore, Plaintiffs’ contention that Defendants’ affirmative defenses are not pled in a manner that would satisfy Twombly and Iqbal is unavailing.” Id. at 2-3. Further considering the sufficiency of the pleading of counterclaims, Judge Stark rejected the plaintiff’s argument that “an affirmative defense of patent misuse must be pled with particularity to satisfy Federal Rule of Civil Procedure 9(b ).” Judge Stark found that “[i]t is unclear from the pleadings whether the defense sounds in fraud and this Court is unaware of any cases that hold that patent misuse claims inherently sound in fraud.” Id. at 5 n.2.

Judge Stark then turned to the defendant’s contention that it had provided plaintiff with a paragraph IV notification before the suit was filed, explaining how the patents-in-suit were not infringed by the proposed ANDA product and were invalid or unenforceable, and that the plaintiff had therefore engaged in patent misuse by filing a baseless complaint with no reasonable basis for doing so that “impermissibly broadened the physical or temporal scope of the patent grant with anticompetitive effect.” Id. at 3-5. Judge Stark refused to strike this defense, finding that “[a]lthough Defendants have not nearly proven the purported facts on which their patent misuse defense is based (and may never do so), neither does the Court perceive any clear deficiency in the pleading that would justify the relief of striking the affirmative defense and removing it from this case.” Id. at 5.

Judge Stark also refused to strike the defendant’s affirmative defense under § 288. The defendant contended that § 288 barred the plaintiff from recovering costs because the plaintiff did not enter a disclaimer of invalid claims at the PTO prior to commencement of the suit. Judge Stark pointed out that there had been “no finding that any claim of the patents-in-suit is either invalid or unenforceable . . . [and] Plaintiffs cite persuasive authority, in the form of non-precedential decisions from the Federal Circuit and this District, to the effect that§ 288 applies only when patent litigation is commenced after a determination of invalidity.” Id. at 5-6. Although this authority was not precedential, especially in the sense that “there is no such thing as ‘the law of the district,’” id. at 6 n.3, the Federal Circuit has generally agreed with this conclusion, stating that “the argument essentially relied on here by Defendants ‘borders on the ridiculous.’” Id. at 6 (citing Bradford Co. v. Jefferson Smurjit Corp., 2001 WL 35738792, at *7 (Fed. Cir. Oct. 31, 2001)). Nevertheless, because the defendant cited to “arguably inconsistent authority from the Supreme Court and the Third Circuit, among others, construing the predecessor statute to § 288, [a] motion to strike [was] not the appropriate vehicle to resolve this disputed question of law,” and Judge Stark denied the motion. Id. at 6-7.

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October 3, 2012

Judge Stark finds that court has personal jurisdiction over Comcast in Delaware

Judge Leonard P. Stark recently denied Comcast's motion to dismiss for lack of jurisidiction. DN Lookup Technologies LLC v. Comcast Corporation, et al., C.A. No. 11-1181-LPS (D. Del. Oct. 1, 2012). In determining whether personal jurisdiction exists, the court first looks to Delaware's long arm statute, 10 Del. C. § 3104(c), and then determines whether asserting personal jurisdiction would violate due process. Id. at 5-6. Plaintiff argued that the court had specific jurisdiction under Delaware's long arm because "Comcast provide[d] infringing services in Delaware" and because "Comcast enjoy[ed] substantial revenues from its subsidiaries[.]" Id. at 7. Comcast argued that it" [did] not own, operate, sell, market, offer to sell, or otherwise provide any cable produces or services in Delaware." Judge Stark found otherwise, however. For example, a press release on the comcast.com website notified the public of Comcast's launch of WiFi in northern Delaware and additional hotspots in and around Wilmington, Delaware. Id. at 7-8. In addition, "the Comcast Agreement for Residential Services entered in to by Wilmington, Delaware customers directs customers to resolve problems by contact ing Comcast." Id. at 8. In addition, Judge Stark found that plaintiff made out a prima facie case that defendant Comcast Cable Communications LLC ("CCCL") was the agent of Comcast when providing accused services in Delaware. Id. at 8. Among other things, Comcast held "itself out to the public as being principally involved in the development, management and operation of cable systems and in the delivery of programming content." Id. Comcast also "enjoy[ed] substantial revenues from CCCL, its wholly-owned subsidiary[, and] divert[ed] free cash flow from its subsidiaries, including CCCL, to distribute dividends to its own shareholders." Id. at 8-9. Judge Stark also determined that due process was satisfied for the aforementioned reasons. Id. at 10-11.

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September 28, 2012

Chief Judge Sleet clarifies effect of term “comprising” in claim construction.

Chief Judge Gregory M. Sleet recently clarified the effect of the term “comprising” in claim construction. See Hollingsworth & Vose Filtration Ltd. v. Delstar Tech., Inc., et al., C.A. No. 10-788-GMS (D. Del. Sept. 25, 2012). This came as part of the Court’s order clarifying its previous claim construction order, in which it construed the following language found in Claim 1 of U.S. Patent No. 6,623,548: “filter material comprising: a blend of polypropylene fibres and dry spun halogen free acrylic fibres” to mean “a mixture of fibres that includes at least polypropylene fibres and dry spun halogen free acrylic fibres. Dry spun halogen free fibres means halogen free acrylic fibres made by a process of dry spinning in which the polymer is formed into fibres by extrusion into a gas such as air and not by extrusion into a liquid coagulation bath.” Id. at 1 n.1; D.I. 50 at 1 (previously discussed here).

The Court clarified its previous construction to address the defendants’ question whether, in Claim 1, “the ‘blend’ is open to the inclusion of other types of unrecited fibres, or whether it is only the ‘filter material’ that can include other types of unrecited fibres.” Id. at 1-2 n.1 (quoting D.I. 53 at 5). The Court clarified that the word “blend,” as used in Claim 1, “is not limited to only polypropylene fibres, dry spun halogen free acrylic fibres, and polyvinyl chloride fibres but, rather, is open to the inclusion of other types of unrecited fibres, including wet spun halogen free acrylic fibres.” Id. at 1. That clarification, however, was not the result of the interplay of the words “comprising” and “blend,” as urged by the plaintiff. The Court explained that “[t]he transition ‘comprising’ generally renders the preceding term (e.g., the ‘filter material’) open-ended, but it has no such effect on subsequently recited claim elements (e.g., the ‘blend’).” Id. at 1-2 n.1 (citing Dippin’ Dots, Inc. v. Mosey, 476 F.3d 1337, 1343 (Fed. Cir. 2007) (previously discussed on Patently-O)). However, the Court agreed with the plaintiff that “like ‘comprising’—the term ‘blend’ itself ordinarily conveys the concept of ‘including, but not limited to.’” Id. at 1-2 n.1. Citing the Federal Circuit’s decision in Mars, Inc. v. H. J. Heinz Co., 377 F.3d 1369 (Fed. Cir. 2004) (recognizing that the term “mixture” is open-ended), the Court found that the defendant’s acknowledgement that “[t]he blend is a mixture of fibres[]” required that the claim term “blend” not be limited to a blend of only the subsequently recited fibres. Id. at 1-2 n.1.

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September 27, 2012

Trends in Delaware post-Twombly

Managing editor and co-author of Delaware IP Law Blog, Pilar G. Kraman, is a featured author in the latest issue of Managing IP’s, Intellectual Property Focus. This special “Americas IP Focus 2012” showcases commentary and analysis from IP lawyers throughout the Western Hemisphere, and is distributed to IP Owners and IP lawyers around the world. The publication will also be distributed to attendees of major IP conferences in October including: the AIPLA annual meeting; the LES US & Can annual meeting; and the AIPPI world congress. You can read Pilar’s article below, “Trends in Delaware post-Twombly,” which discusses recent developments in the District of Delaware regarding the sufficiency of pleadings alleging indirect and direct patent infringement.

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September 26, 2012

Judge Andrews disqualifies attorneys based on their law firm's representation of plaintiff's parent company nearly twenty years earlier.

Judge Richard G. Anderson recently disqualified the law firm Latham & Watkins as defense counsel in a patent infringement action filed by the subsidiary of a former Latham client. Eon Corp. IP Holdings LLC v. Flo TV Inc., et al., C.A. No. 10-812-RGA (D. Del. Sept. 24, 2012). Latham represented the plaintiff's parent company between 1988 and 1995, but did not represent it in patent prosecution matters, or with regard to any licensing efforts involving the patent at issue. Id. at 3, 7. Instead, Latham represented the plaintiff's parent company in general corporate and regulatory matters. Id. at 3. The Court noted that some of those corporate and regulatory matters related to the same or similar technology at issue in the patent litigation. Id. at 3.

There was no dispute that the two Latham attorneys who had been admitted pro hac vice in the litigation were not at Latham during the firm's prior representation, and it was acknowledged that they were subject to an ethical wall. Id. at 3. Neverthelss, the Court was concerned because, "[s]ome of the invalidity defenses, if pursued, could involve factual inquiry into" the activities of the plaintiff's parent company when it was represented by Latham, "and it is conceivable that the information about related factual matters could have been shared with Latham attorneys." Id. at 7. As a result, the Court found that "the answer to the question, 'might [the plaintiff] have disclosed to Latham confidences which could be relevant to the present action, and detrimental to [the plaintiff] in this action,' is surely yes." Id. at 8.

The Court explained that, "[i]n terms of the conflict [of interest] analysis, it makes no difference that seventeen years have passed since Latham represented [the plaintiff's parent company], when the lawsuit will in part concern events that occurred twenty years ago." Id. The Court acknowledged that the conflict of interest could be viewed as having been ameliorated in various ways: by the passage of time, the imposition of an ethical wall, and the fact that the two attorneys involved in the litigation were not involved in the previous representation. Neverthelss, the Court found that "on balance, considering the rather unusual circumstances of the conflict of interest here, I believe the most appropriate exercise of my discretion is to disqualify Latham and Watkins ... ." Id. at 10.

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September 25, 2012

Judge Stark stays patent lawsuit pending resolution of summary judgment motions in related cases

At plaintiff's request, Judge Leonard P. Stark recently stayed a patent infringement lawsuit pending the court's resolution of motions for summary judgment in related cases. St. Clair Intellectual Property Consultants, Inc. v. Motorola Mobility LLC, C.A. No. 11-1305-LPS (D. Del. Sept. 20, 2012). Plaintiff argued that a stay was appropriate because "multiple summary judgment motions, including several seeking to invalidate patents asserted here, [were] pending before this Court in related patent infringement cases." Id. at 2. Defendant complained that a stay would prejudice it because the defendant had already complied with court ordered deadlines, particularly regarding claim construction, and plaintiff would have additional time "to refine its theories or strategies[.]" Id. at 3. Judge Stark did not think this prejudice rose to the level of undue, but noted that plaintiff's failure to comply with the court's scheduling order deadlines could be "most appropriately addressed, if necessary, in the context of Defendant's recently-filed motion for sanctions." Id.

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