September 25, 2012

Judge Stark Grants Leave to File Supplemental Complaint to Include Claims of Indirect Infringement Based on Events Occurring after Filing of the Original Complaint

In a recent memorandum order, Judge Leonard P. Stark granted Plaintiff British Telecommunications’ (BT’s) motion for leave to file a supplemental complaint for patent infringement against Defendant Google. BT sought to file a supplemental complaint in order to include claims of indirect infringement for events occurring after the filing of its original complaint. More specifically, BT sought to add Google’s newly introduced product, Google Play, and to include indirect infringement claims based on Google’s knowledge of the patents-in-suit since at least the filing of the original complaint. British Telecommunications PLC, v. Google Inc., C.A. No. 11-1249-LPS, at 1 (D. Del. Sep. 20, 2012).

Noting that the Third Circuit “has adopted a liberal approach to granting leave to amend,” Judge Stark was “persuaded that the proper course of action is to grant Plaintiffs motion for leave to amend.” Id. at 1-2. He found “no evidence of undue delay, bad faith, or dilatory motive on the part of Plaintiff,” especially where “Plaintiff filed its motion before discovery began, within the time frame for supplementing or amending pleadings as set forth in the Scheduling Order, and within four months of filing its original complaint.” Id. at 2. Accordingly Judge Stark granted BT’s motion for leave to file a supplemental complaint.

This result is in accord with Judge Stark’s prior decisions regarding the knowledge requirement of indirect infringement, and Judge Stark stated as much: “Defendant's argument that the motion is futile because Plaintiff fails to state a plausible claim of indirect infringement is unpersuasive. While Defendant notes that decisions in this District are not uniform as to whether knowledge of a patent may be demonstrated by filing of a complaint, the undersigned judge has expressed the view that, for purposes of indirect infringement occurring after the filing date, ‘an accused infringer is on notice of the patent(s)-in-suit once an initial pleading identifies the patents-in-suit.’” Id. at 2 (citing Softview LLC v. Apple Inc., 2012 WL 3061027, at *7 (D. Del. July 26, 2012)).

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September 17, 2012

Judge Robinson Grants Defendants’ Motion to Dismiss Under the Doctrine of Claim Preclusion Where Infringement Allegations Were Previously Asserted Against the Same Defendants and Based on the Same Patent Invalidated in a Prior ANDA Litigation

In Senju Pharmaceutical Co., Ltd., et al. v. Apotex Inc., et al., C.A. No. 11-1171-SLR (D. Del.), Judge Robinson dismissed plaintiffs’ claims of infringement for failure to state a claim where the allegations were asserted against the same defendants and based on the same patent and same ANDA filing that the Court had ruled upon in a prior litigation. Id. at 1. In that prior litigation, plaintiffs filed suit against defendants for infringement of the patent at issue based on defendants’ ANDA filing. Id. at 1. At the conclusion of that case, the Court entered final judgment against plaintiffs, invalidating the asserted claims of the patent at issue as obvious. Id. at 2-3. However, while that prior litigation was still pending, without notifying the Court, plaintiffs initiated and were engaged in reexamination proceedings involving the same patent at issue. Id. at 1. Following the reexamination proceedings, plaintiffs then filed the instant litigation against defendants alleging infringement of those "new" claims of the patent at issue that were “added or amended” during reexam. Id. at 1. In response, defendants moved to dismiss the instant action based on the doctrine of res judicata or claim preclusion. Id. at 6. Specifically, defendants argued that dismissal was proper because “the claims of the current lawsuit are precluded” by the judgment against the plaintiffs in the prior litigation. Id. at 6. The Court agreed. Id. at 6. Citing both Third Circuit and Federal Circuit authority, the Court noted that “[c]laim preclusion bars any new legal claim based on the same cause of action previously asserted” and that “[e]ach patent, not patent claim, gives rise to an independent and distinct legal claim or cause of action.” Id. at 7 (emphasis in original). In its analysis, the Court concluded that in the instant litigation the plaintiffs “are alleging infringement by the same proposed product that was at issue in the first litigation” and that “[plaintiffs] could have asserted the equivalent of the new and amended claims in the first litigation.” Id. at 8-9. The Court held that the “reexamination of the patent-at-issue did not create a new cause of action against the same previous defendant and accused product and reasoned that “[a]llowing this case to go forward would open the door to relitigation of a matter that has already been decided on the merits.” Id. at 11.

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September 17, 2012

Judge Robinson: summary judgment of non-infringement based on patent exhaustion.

Judge Sue Robinson recently granted a defendant summary judgment of non-infringement based on the doctrine of patent exhaustion. Keurig, Inc. v. Sturm Foods, Inc., Civ. No. 10-841-SLR (D. Del. Sept. 13, 2012). The plaintiff in the case, Keurig, is the manufacturer of popular beverage brewers, as well as individual serving cartridges for use in its brewers. Id. at 1. Keurig sued the defendant, Sturm Foods, asserting various patent and non-patent claims, based on the defendant’s manufacture and sale of its “Grove Square” line of individual serving cartridges, the packaging of which indicates that they are “*For use by owners of Keurig coffee makers.” Id. at 3. In one of several competing motions for summary judgment, the defendant argued that the doctrine of patent exhaustion precluded a finding of infringement. The Court agreed, explaining that the “purpose of the patent exhaustion doctrine is to ensure that a patentee surrenders its statutory monopoly after it has received compensation for an article sold that embodies its patent.” Id. at 10. Here, the “article sold” was the patented brewer. The Court distinguished the case from those in which patent exhaustion arises in connection with the sale of an “incomplete” item because, in this case, Keurig “sells a product that completely practices the patent. … There is no need to determine the extent to which the brewers embody the patent when the brewers are sold in a completed form. For this reason, the court agrees with defendant that the two-prong test [under Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008)] is inapplicable; instead, the ‘long standing doctrine’ that an ‘initial authorized sale of a patented item terminates all patent rights to that item’ is applicable. Id. at 9-10 (quoting Quanta, 553 U.S. at 625). With regard to the non-patent claims (including trademark and trade dress infringement, unfair competition, and false advertising), the Court found that genuine issues of material fact exist which precluded entry of summary judgment.

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September 14, 2012

Judge Thynge construes claims related to a system for marketing services through prepaid tickets

Magistrate Judge Mary Pat Thynge recently issued a report and recommendation setting forth the court's recommendations for constructions of the disputed claim terms of U.S. Patent No. 7,337,949 entitled System for Marketing Leisure Activity Services Through Prepaid Tickets. Quantum Loyalty Systems, Inc. v. TPG Rewards, Inc., C.A. No. 09-022-RGA-MPT (D. Del. Sept. 11, 2012). The following terms were construed:

"payment mode"
"ticket"
"service"
"service specific payment mode"
"service specific ticket"
"substantially unique identifier"
"initial value"
"representing an initial value to be remitted"
"configured to be valid for incremental quantity of services"
"at any one of a plurality of service providers"
"enabling"
"redeemable"
"payment mode is redeemable at a variable rate"
"enabling a variable rate redemption of the payment mode"
"for a redemption in exchange for a unit use of a desired service"
"at the selected service proivder, debiting a price set by the selected service provider"
"effecting payment/effecting payment at the price debited"
"as opposed to a cash sum"
"absorbing any difference in prices"
"adjusting price of the payment mode"
"verifying an expiration date"

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September 13, 2012

Judge Robinson Resolves Common Legal Interest Privilege Discovery Dispute

Last week we reported on Judge Sue Robinson’s opinion denying a motion to dismiss for lack of sufficient standing in MobileMedia Ideas, LLC v. Apple Inc., C.A. No. 10-258-SLR (D. Del. Aug. 16, 2012) (read about that decision here). The case is now moving forward on the merits, and Magistrate Judge Mary Pat Thynge has issued a memorandum order regarding MobileMedia Ideas’ (“MMI”) assertion of the common interest privilege.

As detailed in the previous post, MMI is a patent holding entity for Sony and Nokia. Apple, the defendant in this suit, served third party subpoenas seeking documents from three Nokia entities that had previously been shared between Nokia, Sony, and MMI. Each Nokia entity objected to the subpoenas based on the attorney-client privilege. Apple conceded that the common legal interest privilege might apply to the documents because Sony and Nokia worked together to develop a litigation strategy for MMI. But Apple contested whether each document shared among the parties was shared specifically for the purpose of furthering a joint legal strategy, as is required for the common interest privilege to apply. See MobileMedia Ideas LLC v. Apple Inc., C.A. No. 10-258-SLR/MPT, at 1-10 (D. Del. Sep. 10, 2012).

After considering all of the evidence, Judge Thynge found that the common interest privilege applied to the documents Apple sought: “Apple’s argument that the transfer of the patent prosecution files and [invention disclosure forms (“IDFs”)] to MMI were not to further a joint legal strategy is refuted by the Formation and Operating Agreements which provide the central purpose of MMI was ‘to acquire, develop, administer and manage [i]ntellectual [p]roperty rights’ related to the inventions obtained from the Nokia and Sony entities.” Id. at 12. Also, “since the formation of MMI, Nokia, Sony and their respective wholly owned subsidiaries have provided assistance and cooperation to MMI’s outside attorneys . . . . Such future cooperation, which may involve providing additional materials, does not imply that the original transfer of the patent prosecution files and the IDFs was merely to effectuate transfer of the patents.” Id. at 13. Furthermore, [t]he exchanges by Sony [and] Nokia . . . were made under non-disclosure agreements with the understanding the parties shared a common legal interest. . . . A common legal interest agreement . . . was also executed [and] it acknowledged litigation was contemplated.” Id. at 15-16. Finally, Sony and Nokia “receive a percentage of the recovery from any successful enforcement by MMI of the transferred patents confirming their common interest in MMI prevailing in the present litigation.” Id. at 16.

Judge Thynge therefore concluded that the “language, provisions and tenor of the [various agreements] clearly indicate at the time of their execution, the Nokia and Sony entities anticipated litigation for enforcement of the transferred patents. As evidenced by the various agreements, the purpose of the transfer of the patent prosecution files and the IDFs were part of the joint legal strategy involving the Nokia and Sony entities that began before MMI’s formation and continued thereafter. MMI and the Nokia and Sony entities have operated with the expectation that any shared privilege communications would be confidential and protected from disclosure. The Nokia and Sony entities, as licensees, clearly share a common legal interest in MMI prevailing in this action. That as a result of the Formation Agreement, MMI is now the owner of the patents does not eviscerate or prevent the sharing of a common legal interest with Nokia and Sony.” Id. at 14.

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September 13, 2012

Magistrate Judge Fallon's Investiture

The formal investiture of Magistrate Judge Sherry R. Fallon will take place at the District Court on Friday, October 12, 2012 at 3:00 p.m. There is no need to RSVP. Light refreshments will be available immediately following the ceremony in the courtroom lobby area.

See you there!

September 13, 2012

Judge Andrews dismisses defendant for lack of personal jurisdiction and grants transfer to District of Maryland.

In MyKey Technology Inc. v. CPR Tools Inc., et al., C.A. No. 11-443-RGA (D. Del. Sept. 10, 2012), Judge Richard G. Andrews granted a motion to dismiss filed by defendant Intelligent Computer Solutions, Inc. (“ICS”), on the grounds of lack of personal jurisdiction, and also granted a motion to transfer venue to the District of Maryland filed by plaintiff MyKey Technology, Inc. (“MyKey”).

Judge Andrews granted ICS’s motion to dismiss for lack of personal jurisdiction after permitting jurisdictional discovery to clarify the issue. ICS is not incorporated in Delaware, and MyKey itself conceded that there was “no general jurisdiction over [ICS].” Alternatively, MyKey argued that because ICS had a website that would permit Delawareans to purchase the infringing products, ICS had “offered to sell the infringing products to Delawareans,” and thus specific jurisdiction was present. Judge Andrews, however, relied on AFTG-TG, LLC v. Nuvoton Tech. Corp., No. 2011-1306, 2011-1307, 2012 U.S. App. LEXIS 18030 (Fed. Cir. Aug. 24, 2012), to find that the existence of such a website was insufficient to satisfy the requirements of specific jurisdiction. See Nuvoton Tech. Corp., 2012 U.S. App. LEXIS 18030, at *4 (noting specific jurisdiction requires defendant to “purposefully direct[] activities at the forum’s residents”). Judge Andrews also found that other indicia of specific jurisdiction were lacking, as there was no evidence that the infringing products had ever been sold in or shipped to Delaware. Lacking general and specific jurisdiction, Judge Andrews granted the motion to dismiss, leaving two defendants—CPR Tools, Inc. and Logicube, Inc.—in this patent infringement suit.

In addition to granting the motion to dismiss, Judge Andrews granted MyKey’s motion to transfer venue from the District of Delaware to the District of Maryland pursuant to 28 U.S.C. § 1404(a). Section 1404(a) grants a district court the ability to “transfer any civil action to any other district or division where it might have been brought.” Moreover, the District of Delaware typically conducts a detailed analysis of the private and public interest factors set forth in Jumara v. State Farm Ins. Co., 55 F.3d 873 (3d Cir. 1995) to assess whether efficiency and expense considerations warrant transfer. See Jumara, 55 F.3d at 879; see also Mosaid Technologies, Inc. v. Sony Ericsson Mobile Communications (USA) Inc., C.A. No. 11-598-SLR (D. Del. Aug. 16, 2012) (analyzing a motion to transfer under Jumara factors). Under the § 1404(a)/Jumara framework, the movant has the burden of establishing the propriety of transfer. Jumara, 55 F.3d at 879.

ICS had been the only defendant that was opposed to the transfer. However, as discussed above, Judge Andrews dismissed ICS from the suit, rendering its opposition moot. Because the remaining defendants did not contest the transfer, Judge Andrews found that MyKey had sustained its burden to establish the propriety of the transfer despite “rather sparse” allegations with regard to personal jurisdiction in Maryland. Moreover, in light of the lack of contention, it was unnecessary for Judge Andrews to conduct a detailed Jumara analysis. Judge Andrews determined that transfer was appropriate because it “appear[ed] that this [was] a civil action that could have been brought in the District of Maryland.”

At one point in the order, Judge Andrews noted that with the recent amendment to 28 U.S.C. § 1404(a), a district court can transfer a suit “to any district or division to which all parties have consented.” § 1404(a). However, due to the effective date of the amendment, it did not apply to the instant matter.

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September 12, 2012

Judge Robinson Dismisses Infringement Claims Based on Patents Invalidated in Prior ANDA Litigation Under Doctrine of Collateral Estoppel, Denies Request to Stay Pending Appeal to Fed. Cir.

In Cephalon, Inc., et al. v. Impax Labs., Inc., C.A. No. 11-1152-SLR (D. Del.), Judge Robinson recently granted defendant-generic drug manufacturer’s motion to dismiss infringement claims based on patents asserted by plaintiffs that had previously been invalidated in prior ANDA litigation. Id. at 1. In this case, plaintiffs filed suit against defendant alleging infringement of four patents-in-suit arising out of defendant’s ANDA for a generic version of a drug used to treat pain in cancer patients. Id. at 1. In response to the complaint, defendant moved to dismiss claims for infringement based on two of the patents-in-suit on the grounds that the two patents had been addressed by the Court in previous ANDA litigation, and the Court found both patents invalid for lack of enablement. Id. at 1-2. Specifically, in the motion to dismiss, defendant argued that under the doctrine of collateral estoppel there was no reason to litigate any issues involving the two invalidated patents because “validity was actually litigated in the [prior ANDA] litigation, culminating with a final judgment of invalidity against plaintiffs.” Id. at 2. The Court agreed. Id. at 4. Citing the U.S. Supreme Court’s decision in Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundations, 402 U.S. 313 (1971), the Federal Circuit’s decision in Abbott Labs. v. Andrx Pharma, Inc., 473 F.3d 1196, 1203 (Fed. Cir. 2007), and the Third Circuit’s decision in Jean Alexander Cosmetics, Inc. v. L’Oreal USA, Inc., 458 F.3d 244, 249 (3d Cir. 2006), the Court held that “collateral estoppel applies to bar the re-litigation of the invalid . . . patents.” Id. at 4. In addition to granting defendant’s motion to dismiss, the Court denied plaintiffs’ request to stay the instant litigation pending the Federal Circuit’s review of the Court’s decision in the prior ANDA litigation on appeal. Id. at 5. In denying that request, the Court noted that briefing in the appeal had only recently been completed, and that if the request were granted, the Court could not resolve the present dispute within the 30-month ANDA stay deadline. Id. at 5.

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September 12, 2012

Judge Robinson Dismisses Declaratory Judgment Action for Noninfringement and Invalidity Under the First-Filed Rule

In Elpida Memory, Inc., et al. v. Intellectual Ventures I, LLC, et al., C.A. No. 11-623-SLR (D. Del.), Judge Robinson granted defendants’ motion to dismiss plaintiffs’ declaratory judgment action under the first-filed rule. Id. at 5. On July 11, 2011, defendants originally filed suit for patent infringement against plaintiffs and several other Dynamic Random Access Memory (DRAM) circuit manufacturers and their customers in the Western District of Washington. Id. at 1-2. On July 12, 2012, defendants also filed a complaint with the ITC alleging that certain of plaintiffs’ products infringed the same three patents-in-suit asserted against plaintiffs in the Western District of Washington action. Id. at 2. Two days later, on July 14, 2011, plaintiffs filed the instant declaratory judgment action against defendants in the District of Delaware for noninfringement and invalidity of the same three patents asserted against plaintiffs in the District of Washington and the ITC. Id. at 2. In response, defendants moved to dismiss or, in the alternative, transfer the Delaware declaratory judgment action based upon the first-filed Washington action. Id. at 2. The Court granted defendants’ motion. Id. at 5. In its reasoning, the Court noted that there is no dispute that “the Washington action encompasses all of the patents and parties at issue in this case, and is the first-filed action as between it and the instant case.” Id. at 4. The Court also noted that the “record does not demonstrate, nor does [plaintiff] contend, that any exceptions to the first-filed rule apply” and that to find otherwise would “eviscerate the first-filed rule as it is currently understood.” Id. at 4.

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September 11, 2012

Judge Thynge Grants in Part Motion to Compel and Imposes Sanctions Against Plaintiffs for Spoliation of Documents

In Magnetar Technologies Corp., et al. v. Six Flags Theme Park Inc., et al., C.A. No. 07-127-LPS-MPT (D. Del.), Magistrate Judge Thynge recently issued a Memorandum Order granting in part defendants’ motion to compel production of documents, and imposing sanctions against plaintiffs for spoliation of evidence as a result of the destruction of certain other documents. Id. at 37. In the motion, defendants sought to compel the production of documents (that plaintiffs claimed were protected from discovery and inadvertently produced) on the grounds that by producing the documents to defendants, plaintiffs had waived any claims of attorney-client privilege or work product over the documents. Id. at 8. Defendants further argued that the documents were not shielded from discovery by any joint client privilege, and even if the documents were somehow protected, plaintiffs should nonetheless be ordered to produce them under the crime-fraud exception and as a sanction against the plaintiffs for the spoliation of other evidence and documents in this case. Id. at 8-9. Specifically, on the issue of spoliation, defendants alleged that during the course of discovery “more than seven hundred boxes of documents were destroyed” at the behest of two of the plaintiffs. Id. at 3. In opposition to the motion, along with arguing that the documents at issue were inadvertently and unintentionally produced, plaintiffs argued that the attorney-client privilege, work-product doctrine and the joint client privilege applied to protect the documents from discovery, and that none of these applicable privileges or immunities had been waived by any of the defendants. Id. at 10-11. Plaintiffs also disputed defendants' allegations of spoliation, arguing that to the extent any documents were destroyed, those documents were not destroyed intentionally and at the time were under the control of a third party (and not under the defendants’ control). Id. at 10. In granting the motion to compel in part, Judge Thynge concluded that although the attorney-client privilege may have arguably been waived with respect to perhaps one of the plaintiffs, both the work-product doctrine and the joint client privilege still applied to the contested documents and had not been waived. Id. at 23-25. Judge Thynge noted that the “work product protection is not automatically waived through a client’s (or former client’s) production of documents since that protection is invoked by the attorney.” Id. at 24. Judge Thynge also noted that the existence of an agreement between the plaintiffs to retain “common counsel” and the inclusion of each of the plaintiffs on certain privileged communications indicated that a joint client relationship existed among the plaintiffs, warranting protection under the joint client privilege. Id. at 26. Judge Thynge held that the crime-fraud exception did not apply because there was no evidence that plaintiffs had engaged in a crime or fraud or that defendants’ counsel’s services were utilized in order to plan or perpetrate any such crime or fraud. Id. at 31.

On the issue of spoliation, Judge Thynge found in favor of defendants, holding that plaintiffs had failed to satisfy their preservation obligations and that such failure was a "serious matter worthy of sanction." Id. at 32, 34. Specifically, the Court found that the “destruction of documents in the [third party] warehouse, which was under the control of [one of the plaintiffs], and occurred after the commencement of litigation" constitutes "spoliation.” Id. at 32. In addition, the Court noted that although the plaintiffs “may not have actively obstructed the discovery of evidence, they neglected their duty to preserve evidence, and should have been aware of [the third party’s] document retention policy for approximately six years before this action was filed.” Id. at 32. As a sanction for plaintiffs’ spoliation, the Court ordered the production of certain documents or portions of documents sought by defendants and the attorney-client privilege “lost” with respect to those documents or portions of documents. Id. at 35-36.

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