February 28, 2014

Judge Fallon recommends denial of plaintiffs’ motion to stay pending inter partes review

In Nexans Inc. et al. v. Belden Inc. et al., C.A. No. 12-1491-SLR-SRF (D. Del. Feb. 19, 2014), Magistrate Judge Sherry R. Fallon issued a report recommending the denial of plaintiffs’ motion to stay pending the PTO’s inter partes review ("IPR") determination regarding the validity of United States Patent Nos. 6,074,503; 7,135,641; 7,977,575; and 7,663,061. Id. at 1. In the instant action (“the Delaware action”), plaintiffs have requested a declaratory judgment of invalidity and noninfringement of the patents under IPR, and are asserting an additional patent. Id. at 2. Shortly after the Delaware action was originally filed, the defendants initiated an additional, parallel action in the Southern District of Indiana for patent infringement against plaintiffs. Id. at 3. Each of plaintiffs IPR petitions were granted and are anticipated to be completed by May 2014. Id. at 3, 1 n.1.

Judge Fallon explained that “Plaintiffs did not wait for the litigation to move forward or for expenses to accrue before petitioning for IPR,” which weighed slightly in favor of stay. Id. at 5. Further, “[n]o substantive litigation took place while the parties awaited the court’s decision on the motions to dismiss,” and “fact discovery remains open and the trial is scheduled for December 2015.” Id.

Judge Fallon, however, was persuaded by defendants’ argument that plaintiffs may be “attempting to gain an improper tactical advantage by filing first to secure a Delaware forum, opposing litigation in Indiana and then seeking a stay of the litigation altogether in favor of IPRs.” Id. at 5. Further, Judge Fallon found the status of the IPR proceedings to disfavor stay, given the “substantial amount of time before the close of discovery and the short window of time before the PTO issues its decision in the IPRs.” Id. at 6. Judge Fallon similarly explained that while the IPR could simplify the issues for trial, “[r]eceiving a determination from the PTO early in the discovery phase of the pending case weighs against a stay. The parties will have nearly a year remaining to tailor further proceedings based on the outcome of the IPRs, without disruption to the present scheduling order.” Id. at 7. Judge Fallon additionally noted that the IPR proceedings are scheduled to conclude by May 2014, and the fact discovery deadline is not until December 2015, which weighed against stay. Id. at 8. On balance, Judge Fallon concluded that stay was not warranted and denied plaintiffs’ motion.

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February 21, 2014

Judge Andrews Construes Terms of Mobile Device Patents and Finds Prior ITC Claim Construction Persuasive

Judge Andrews recently issued his construction of dispute claim terms in the patent infringement action filed by plaintiff Openwave Systems, Inc., which is now known as Unwired Planet. Openwave Systems, Inc. v. Apple Inc., et al., C.A. No. 11-765-RGA, Memo. Op. at 1 (D. Del. Feb. 19, 2014). At issue were three claim terms appearing across three patents that were construed as a group: “mobile device,” “wireless mobile telephone,” and “two way communication device.” The only dispute in construing these terms was whether the patentee had disclaimed mobile devices containing “computer modules” as the defendant contended. In a previous ITC investigation, the ALJ had agreed with the defendants that there was such a disclaimer. Judge Andrews explained that this decision, while not binding, was persuasive, and His Honor construed the terms in the same manner as the ALJ. Id. at 2-3. In adopting this construction, Judge Andrews noted that it did not read out a preferred embodiment of the invention, id. at 4, and that it relied only on a disavowal of claim scope that was clear and unambiguous, id. at 4-6.

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February 21, 2014

Magistrate Judge Burke recommends granting, without prejudice, defendant’s motion to dismiss induced infringement claim.

In a recent report and recommendation, Magistrate Judge Christopher J. Burke recommended that a motion to dismiss the plaintiffs’ allegations of induced infringement be granted. Versata Software, Inc., et al. v. Could9 Analytics, Inc., C.A. No. 12-925-LPS (D. Del. Feb. 18, 2014). Judge Stark had previously dismissed, without prejudice, the plaintiffs’ allegations of indirect infringement in an amended complaint, finding that “[a]ll that is alleged with respect to specific intent to induce the end user is really just legal conclusion and conclusory factual assertions, essentially tracking the statute.” Id. at 2. The plaintiffs then amended their claims in the Second Amended Complaint, and the defendant again moved to dismiss, at which point Judge Stark referred the motion to Magistrate Judge Burke.

The defendant argued that the Second Amended Complaint’s induced infringement allegations still failed to “allege facts plausibly showing that the defendant had knowledge that the alleged direct infringer’s acts constituted infringement.” Id. at 4. More specifically, the defendant argued that the plaintiff failed to allege how end users using the accused products were infringing. Id. Judge Burke explained that “while a plaintiff need not provide a detailed, step-by-step description of the alleged infringement in the complaint, this Court has required some identification of how it is that use of the accused product infringes the patent, in order to plausibly assert that the indirect infringer knew that the downstream use of its products constitutes patent infringement.” Id. at 6 (emphasis in original).

The induced infringement allegations at issue were that the defendant “actively induces . . . the infringement of the [patents-in-suit] by customers that use [the defendant’s] Infringing Products,” and that the defendant “sells the infringing products with the intent that its customers use those products in an infringing manner.” Id. at 8. Judge Burke found the allegations deficient, explaining that “[t]hese allegations do not do the job of plausibly asserting Defendant’s knowledge that the end users’ acts constituted infringement of the patents-in-suit, as Plaintiffs have simply identified the accused products and generically alleged that their use somehow infringes the asserted patents.” Id. However, Judge Burke recommended that the allegations be dismissed, without prejudice, to permit the plaintiff to file a third amended complaint. Id. at 8-9.

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February 21, 2014

Breaking News: Federal Circuit Affirms Cybor’s De Novo Review of Claim Construction

The Federal Circuit has issued its highly-anticipated decision in Lighting Ballast Control LLC v. Philips Electronics North America Corp., 2012-1014 (Fed. Cir. Feb. 21, 2014). The en banc decision of Chief Judge Rader and Judges Newman, Lourie, Dyk, Prost, Moore, O’Malley, Reyna, Wallach, and Taranto holds that the de novo standard of review should continue to apply to claim construction issues. As the Court summarized:

"[W]e apply the principles of stare decisis, and confirm the Cybor standard of de novo review of claim construction, whereby the scope of the patent grant is reviewed as a matter of law. After fifteen years of experience with Cybor, we conclude that the court should retain plenary review of claim construction, thereby providing national uniformity, consistency, and finality to the meaning and scope of patent claims. The totality of experience has confirmed that Cybor is an effective implementation of Markman II, and that the criteria for departure from stare decisis are not met."

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February 19, 2014

Judge Robinson grants plaintiff's motion to stay pending reexamination

Judge Sue L. Robinson recently considered plaintiff's motion to stay pending reexamination. Gevo, Inc. v. Butamax Advanced Biofuels LLC, et al., C.A. No. 12-301-SLR (D. Del. Feb. 18, 2014). The parties were competitors in the development of "isobutanol technology." Id. at 2. While the litigation was pending Butamax initiated a reexamination of the patent in suit. After conducting discovery, plaintiff provided defendant Butamax with a covenant not to sue "for the use of 'Accused Technology,' defined as certain modified recombinant microorganisms." Id. at 3. Butamax refused to dismiss its counterclaims, however, and the Court denied a motion to dismiss the claims, based in part "on the cloud cast over Butamax's research and development efforts from an unclear covenant not to sue." Id. Judge Robinson determined that in light of the pending reexamination, in which the PTO initially rejected all claims of the patent-in-suit, and the fact that fact discovery and claim construction was complete, a stay would be appropriate:

The parties are preparing for trial in about six months, however, rejection of the patent by the PTO would moot Butamax's counterclaims of invalidity (the only remaining claims to be litigated). Having considered the arguments put forth by both parties, and considering the time and expense of litigation, the court grants Gevo's motion to stay the case only until the PTO issues the Right to Appeal Notice. At that time, the parties will have 60 days to resurrect the litigation if they so desire.

Id.

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February 19, 2014

Judge Burke recommends denial of motions to dismiss direct infringement allegations

Magistrate Judge Christopher J. Burke recently considered motions to dismiss for failure to state a claim filed by defendants in three of eight related cases brought by Custom Media Technologies. Custom Media Technologies LLC v. Charter Communications, Inc., et al., C.A. Nos. 13-1420-LPS-CJB , 13-1425-LPS-CJB, 13-1426-LPS-CJB (D. Del. Feb. 10, 2014). Defendants moved to dismiss Charter's claims of direct infringement, arguing that Claim 1 of the patent-in-suit relates to "'customizing and distributing presentations for user sites[,]' and not to 'DVR technology [accused of infringement], which allows television viewers to watch and record television programming.'" Id. at 4. Although Charter's pleading was only required to meet the minimal requirements of Form 18, defendants argued that the Federal Rules, including Form 18, was not satisified, equating the situation at hand to a "a plaintiff stat[ing] that its patent covered an electric motor and that the defendent infringed because he sells cakes." Id. at 5. Judge Burke disagreed. "Plaintiff has accused a general category of products and services (here, 'DVR devices and DVR service' provided to cable television customers) of infringement. No more specificity . . . is required by Form 18." Id. Moreover, Form 18 only requires a "basic description" of the patentee's invention, "so long as there is a plausible basis to believe that the nature of what the patent covers might be infringed by the accused products." Id. Although Charter's allegations were "admittedly sparse," they were plausible. "[T]he Court cannot say that it is implausible, for example, that Defendants' DVR devices and services work in conjunction with thei cable television services to perform the steps of the method in Claim 1[.]" Id. at 6.

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February 18, 2014

Judge Stark Denies Motion to Dismiss State Law Claims Related to Patent Ownership Dispute, Grants Dismissal of Declaratory Judgment Counterclaim

Judge Stark recently considered two interesting motions to dismiss claims and counterclaims. The motions were filed in a case concerning whether certain patents were part of a business transaction several years ago and whether S3 Graphics or ATI Technologies now owns those patents. Each party sought declaratory judgment that it was the rightful owner of the disputed patents, and S3 Graphics asserted state law tort claims of slander of title, conversion, and unfair competition. S3 Graphics Co., Ltd. v. ATI Techs. ULC, et al., C.A. No. 11-1298-LPS, Memo. Order at 1-3 (D. Del. Feb. 11, 2014).

ATI moved to dismiss S3 Graphics’ state law tort claims as preempted by federal patent law and barred by the Noerr-Pennington doctrine. Judge Stark found that the state law claims were not preempted because “[n]o conflicts exist between federal patent law and anything contained in S3G’s state law claims” because the state law claims do “not seek imposition of liability upon AMD/ATI for improperly publicizing patents they own, but instead alleges that these Defendants have falsely and in bad faith ‘laid claim to patents they do not own, or hold any other interest in.’” Id. at 3-4. Judge Stark continued, “[n]or are S3G Ltd.’s state law tort claims barred by the Noerr-Pennington doctrine” because of Walker Process fraud. Under the Walker Process fraud doctrine, ATI Technologies would not be immune from state law liability arising from assertion of patent rights under Noerr-Pennington if ATI Technologies engaged in “knowing and willful fraud” in the procurement of a patent. Judge Stark found that “S3G Ltd. adequately alleges each of the elements of the Walker Process fraud to application of Noerr-Pennington immunity, making Defendant’s reliance on that immunity unavailing as a basis for dismissing S3G Ltd.’s state law tort claims.” Id. at 5-6. Judge Stark, therefore, denied the motion to dismiss.

S3 Graphics also moved to dismiss for lack of declaratory judgment jurisdiction over ATI Technologies’ counterclaim. Because the counterclaim sought a declaratory judgment that S3 Graphics “lacks any ownership interest in the Disputed Patents” and S3 Graphics had “not asserted any ownership interest in the patents and admits that it lacks any ownership interest in the patents,” Judge Stark found that there was no actual controversy sufficient to warrant a declaratory judgment. Id. at 7. Accordingly, Judge Stark granted the motion to dismiss the declaratory judgment counterclaim.

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February 18, 2014

Magistrate Judge Thynge Excludes Infringement Expert as Ipse Dixit without Sufficient Analysis

Among the flurry of pre-trial activity recently in the Magnetar Technologies case, which involves patents directed toward magnetic braking systems used in amusement park rides, was a report and recommendation by Magistrate Judge Thynge in which she granted a motion to exclude the plaintiffs’ infringement expert, Mark Hanlon. Magnetar Techs. Corp., et al. v. Six Flags Theme Parks, Inc., et al., C.A. No. 07-127-LPS-MPT, Report and Recommendation at 1 (D. Del. Feb. 7, 2014).

The defendants first contended in their motion that Mr. Hanlon lacked any specialized knowledge to support his expert opinions because he had not identified any experience with the technology of the patents-in-suit and had admitted multiple times during his deposition that he was not an expert. According to the defendants, Mr. Hanlon’s knowledge was “only general in nature” and that plaintiffs could not explain how Mr. Hanlon’s various work experiences qualified him as an expert in the technology of the patents-in-suit. The plaintiffs responded that the specific knowledge defendants would require – the design of magnetic arrays and the theory of magnetic brakes – was not necessary because Mr. Hanlon had experience as an expert in the “design and structure of amusement park rides” and “the mounting of magnetic brakes.” Id. at 2-4. Judge Thynge found that Mr. Hanlon had “the necessary skill and knowledge as evidenced from his previously described past work experience, his curriculum vitae, his educational background, and his previous involvement in eight magnet eddy braking projects,” which gave him “the qualifications to testify about magnetic brakes, and is capable of identifying the components of a magnetic brake assembly.” Id. at 10-11. Mr. Hanlon was not qualified, however, to testify as to the “theory of operation or the design of magnetic brakes.” Id. at 11.

Second, the defendants requested the Mr. Hanlon’s infringement opinion be excluded because it was “completely unsupported and ungrounded in fact” because it failed to “identify how any accused ride meets the limitations of any asserted claim.” The plaintiffs responded that Mr. Hanlon’s analysis was adequately based on data, principles, specific identified documents, and his own personal knowledge and experience. Id. at 4-5. Here, Judge Thynge found broadly that Mr. Hanlon’s opinion “lack[ed] the proper grounds for his conclusions, because it [was] void of the necessary analysis for comparing each element of the claim to the accused product.” Id. at 11. Judge Thynge explained that Mr. Hanlon’s opinions generally simply “state[ed] the claim limitations followed by general references to several documents and [a] deposition . . . . Nowhere does Hanlon explain why the documents or deposition are relevant to the technology involved or to [the asserted claims], how they show why [the asserted claims] cover[] the accused product, or how they demonstrate or provide the required analysis of the claim elements to the accused product.” Id. at 16. Judge Thynge concluded: “Ipse dixit is defined as ‘something asserted but not proved,’ which exemplifies Hanlon’s expert report. Hanlon only provides data and a conclusion, with the chasm between not bridged by any analysis. Without an explanation for his reliance on and the relevance of the cited documents, the court cannot find any good grounds for his conclusions. Therefore, Hanlon’s expert report is stricken.” Id. at 22.

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February 17, 2014

Judge Andrews issues claim construction related to computer-aided learning technology

Judge Richard G. Andrews recently construed several disputed claim terms across the following patents: U.S. Patent Nos. 6,126,448, 6,213,780, 6,685,478, 6,398,556, 6,688,888, and U.S. Patent No. RE 38,432, which each generally relate to computer-aided learning systems, methods, and/or apparatuses. IpLearn, LLC v. Kenexa Corporation et al., C.A. Nos. 11-825, 11-876, 11-1026-RGA (D. Del. Feb. 10, 2014). Specifically, Judge Andrews construed the disputed claim terms as follows:

- "company documents" means "documents in the possession of the company."

- "institute user pays to access materials regarding the at least one learning user" / "pays to access materials" means "pays a fee to access personal material regarding the at least one learning user."

- "ascertaining materials for a learning user to learn" means "identifying and selecting a set of learning materials for a learning user."

- "the user" means “either a learning user or an institute user.”

-"dialogue session" means "a duration of time for the users to communicate in a dialogue environment."

- "retrieving/retrieved/retrieves" / "generating/generated/generates" means "retrieving by the system" / "generated by the system."

- "user/users" means "student/students."

- "line-item " means "a subdivision of a subject."

- "inference engine" means "hardware, software, or some mix of hardware and software, that accesses relationship rules to determine a student's level of understanding in a subject or line item."

- "relationship rules" means "rules that define the relationship between or among areas of
a subject."

- "reviews " means "review of the summarized learning materials."

- "learnt line-item" means "a line-item for which the student has achieved a preset level in learning that line item."

- "learnt line-item selection rules" / "line-item selection rules" means "rules that govern which [learnt] line-item is selected by the computer."


Judge Andrews also found the following terms should be given their plain and ordinary meanings:

-"searching at least some of the documents" / "at least some of the documents are searched."
-"recommendation.''
- "summarized learning materials."

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February 17, 2014

Judge Andrews denies motion for summary judgment of no unenforceability for inequitable conduct

Judge Richard G. Andrews recently denied a defendant’s motion for summary judgment of no unenforceability for inequitable conduct. St. Jude Medical, et al. v. Volcano Corporation, C.A. No. 10-631-RGA (D. Del. Feb. 12, 2014). Defendant had requested summary judgment either because there were no disputed material facts, or alternatively, because “even if there is a disputed material fact . . . [defendant] states that [even if inequitable conduct occurred] as a matter of law the patent-in-suit, as a ‘great-grandchild’ of the 'tainted’ patent is too distantly related to be rendered unenforceable.” Id. at 1.

While the Court found the alternative argument “novel[],” it concluded that “it would be better framed if [the Court] decided whether there actually was any underlying inequitable conduct.” Id. The Court observed that while it had “seen the inventor testify twice before,” it “would like to see him testify on the matters framed by this motion, since [the] judgment on his credibility is likely to be dispositive, and [the Court could not] make a credibility determination on a summary judgment motion.” Id.

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