July 10, 2012

Judge Andrews Considers Motions to Dismiss, Sever

Judge Andrews has issued orders on motions to dismiss and sever in IPLearn, LLC v. BeeLine Acquisition Corp., C.A. No. 11-825-RGA (D. Del. July 2, 2012). As in other recent orders, Judge Andrews found that compliance with Form 18 is all that is needed to state a claim of direct infringement, citing In re Bill of Lading Transmission and Processing System Patent Litigation, 2012 WL 2044605 (Fed. Cir. June 7, 2012). He further found that the “plaintiff names specific products, and thus more than meets the requirements of Form 18.” Id. at 2. Judge Andrews also stated that the “allegations [were] insufficient to state a claim for indirect infringement” because there was “no allegation stating that [the defendant’s] customers directly infringe.” Id.

With regard to contributory infringement and induced infringement, Judge Andrews found that the allegations were “wholly devoid of any identifiable factual information.” In considering the requirement of knowledge of the patent, however, Judge Andrews noted: “I think that an allegation that a defendant was served with a complaint alleging patent infringement sufficiently alleges a factual basis that, beginning with the date that the complaint was served, the defendant knew of the patent. It does not provide any basis for knowledge predating such service.” Id. at 3 n.4.

Judge Andrews also granted motions to sever based on the Federal Circuit’s recent decision in In re EMC Corp., 677 F.3d 1351 (Fed. Cir. 2012). As Judge Andrews explained, “The Federal Circuit’s standard is that defendants should not be ‘joined under Rule 20’s transaction-or-occurrence test unless the facts underlying the claim of infringement asserted against each defendant share an aggregate of operative facts.’ Further, ‘joinder is not appropriate where different products or processes are involved.’ And, ‘independently developed products using differently sourced parts are not part of the same transaction, even if they are otherwise coincidentally identical.’” IPLearn, at 2 (citations omitted). Because there were no allegations in the complaint of any connection between the moving defendants or their products and any other defendant, Judge Andrews granted severance.

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July 9, 2012

Judge Andrews Applies Recent Appellate Decisions to Motions to Dismiss

Judge Andrews recently considered the motions of several defendants to dismiss claims of direct infringement, indirect infringement, and willfulness in HSM Portfolio LLC v. Fujitsu Ltd., C.A. No. 11-770-RGA (D. Del. July 3, 2012). Applying the Federal Circuit’s recent decision in In re Bill of Lading Transmission and Processing System Patent Litigation, 2012 WL 2044605, *7 (Fed. Cir. June 7, 2012), Judge Andrews denied motions to dismiss claims of direct infringement, because the “minimal allegations set forth in the counts against each of the defendants . . . are all that are required to satisfy Form 18 and to state a claim of direct infringement.” HSM Portfolio, at 2.

Judge Andrews dismissed claims of indirect infringement, however, finding that the allegations were “insufficient to state a claim for indirect infringement [because] . . . [a]mong other things, there are no allegations of direct infringement accompanying the allegations of indirect infringement.” Id. at 2. Considering the Supreme Court’s recent decision in Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060 (2011), Judge Andrews further stated: “There is no allegation that the defendant knew about the existence of the patent-in-suit. . . . Stating that the defendant was on notice of a patent as of a certain date is insufficient to provide a factual basis for alleging knowledge” that the acts the defendant induced or contributed to constitute patent infringement. HSM Portfolio at 3.

On willfulness, Judge Andrews stated that a claim of willfulness “may be alleged generally, but that there must be facts alleged that are sufficient to show that the plaintiff has a plausible claim for relief.” Id. (internal quotations omitted). In this case, Judge Andrews found, there was no factual support for the allegations of willfulness.

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July 9, 2012

Judge Robinson grants motion to maintain status quo ante pending appeal of order denying preliminary injunction.

Judge Robinson recently granted a Rule 62(c) motion to maintain the status quo ante pending the appeal of an order denying a preliminary injunction. Butamax Advanced Biofuels LLC v. Gevo, Inc., C.A. No. 11-54-SLR (D. Del. July 6, 2012). The Court considered four factors in deciding whether to grant the motion, and added that the factors need not be given equal weight: “(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.” Id. at 2 (citing Hilton v. Braunskill, 481 U.S. 770, 776 (1987); Standard Havens Prods., Inc. v. Gencor Indus., Inc., 897 F.2d 511, 512 (5th Cir. 1990)). Although the Court previously found that a preliminary injunction was not warranted because the plaintiff was unlikely to succeed on its infringement claim in light of the Court’s construction of certain claim terms, (see June 19, 2002 memorandum opinion), Judge Robinson explained that “the court readily acknowledges that the Federal Circuit could disagree with the court’s construction of these [terms] and, consequently, its ultimate conclusions.” Id. at 3. Further, the Court explained, “if the Federal Circuit reverses and finds the ‘899 patent valid and infringed, plaintiff will suffer irreparable harm…” Id. at 4. In addressing the equities, the Court considered that the defendant had argued previously that an injunction was unnecessary because “the parties were not head to head competitors in the automotive fuel blending industry.” Id. at 5 (internal quotation marks omitted). Under the circumstances, the Court explained, “it does not strike the court as inequitable to require defendant to restrict its business efforts pending appeal consistent with its representations in this litigation.” Id. at 5. The Court granted the plaintiff’s motion, “conditioned on plaintiff’s seeking … an expedited appeal … and posting a bond with the court.” Id. at 6 (emphasis in original).

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July 9, 2012

Judge Andrews denies motion to dismiss direct infringement claim.

Judge Andrews recently issued a memorandum order denying a motion to dismiss direct infringement claims relating to a patent for “Multi-User On-Line Real-Time Virtual Social Networks Based upon Communities of Interest for Entertainment, Information or E-Commerce Purposes.” Real Time Social Inventions LLC v. CMI Marketing Inc., C.A. No. 12-182-RGA (D. Del. June 29, 2012). Although the Court noted that the allegations of direct infringement were “sparse”, it explained that “[n]o more is required.” Id. (citing In re Bill of Lading Transmission and Processing Sys. Patent Litig., 2012 WL 2044605 (Fed. Cir. June 7, 2012) (“whether [a complaint] adequately pleads direct infringement is to be measured by the specificity required by Form 18.”)). In response to the defendants’ alternative request for “early claim construction that should resolve this case without the need to spend any resources on fact discovery”, (Reply Br., D.I. 12), Judge Andrews indicated that early claim construction could be discussed at the Rule 16 conference after the defendants filed answers to the complaint.

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July 5, 2012

Judge Andrews grants defendant's motion to dismiss plaintiff's first amended complaint and denies plaintiff's motion to amend its complaint a second time

In IPLearn LLC v. K12 Inc., C.A. No. 11-1026-RGA (D. Del. July 2, 2012), Judge Andrews recently granted defendant's motion to dismiss the indirect infringement claims of plaintiff's first amended complaint and denied plaintiff's motion to file a second amended complaint. Judge Andrews found that plaintiff's amended complaint contained no allegations that defendant's customers directly infringed the patents, nor did it adequately plead defendant's knowledge of the patents-in-suit. Id. at 2. Regarding knowledge, Judge Andrews noted that "each count alleges that, 'K12 knew or should have known of the [patent-in-suit] prior to the filing of this action because [Plaintiffs] patents directly related to the [patent-in-suit], and which share identical or identical-in-part specifications with the [patent-insuit], are referenced by, or were referenced during the prosecution of, K12's own patents and patent applications.' The factual support offered in the latter part of the sentence comes close to making an allegation of 'should have known' plausible; they do not make an allegation of actual knowledge plausible." Id. (alteration in original).

Judge Andrews also dismissed plaintiff's willfulness allegations, finding that "[a]t most, the factual allegations plausibly support the conclusion that both the Plaintiff and K12 had patents in the same field." Id. at 3.

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July 3, 2012

Judge Burke declines to modify Court's form langage in scheduling order regarding location of corporate depositions

In Invensas Corporation v. Renesas Electronics Corporation, C.A. No. 11-448-GMS-CJB (D. Del. June 27, 2012), Judge Burke recently considered defendant's request to modify the general default standard in the Court's scheduling order regarding the location of depositions of party representatives in Delaware, unless the Court makes an exception. Id. at 1-2. The form scheduling order for Judges Stark, Andrews, Burke and Fallon contain the following language regarding the location of depositions:

"Any party or representative (officer, director, or managing agent) of a party filing a civil action in this district court must ordinarily be required, upon request, to submit to a deposition at a place designated within this district. Exceptions to this general rule may be made by order of the Court. A defendant who becomes a counterclaimant, cross-claimant, or third-party plaintiff shall be considered as having filed an action in this Court for the purpose of this provision." Id. at 1-2.

When submitting the scheduling order, the parties disputed whether the default provision should apply and Judge Burke permitted supplemental briefing on the issue. Defendant, whose principal place of business is in Japan, asked the Court to eliminate this standard language and instead require corporate depositions take place at the party's principal place of business (i.e., Japan). Id. at 2. Judge Burke declined to modify the Court's form language in the scheduling order, finding that defendant "ma[de] the general assertion that it would be burdensome for its employees to travel to the United States for corporate depositions, but ha[d] not made a particularlize showing as to how this would be the case." Id. at 6. Defendant's request was "non-specific and premature" because, "[a]t this early stage of the case, topics for corporate depositions have not been noticed, nor have specific witnesses . . . been identified[,]" such that the court could know the impact travelling to the United States would have on one or more witnesses. Id.

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July 3, 2012

Judge Sleet Refuses to Alter Discovery Sanctions

In a multidistrict patent infringement case concerning plaintiff Cephalon’s armodafinil drug, Chief Judge Sleet entered an order, precluding Cephalon from relying upon any secondary considerations of non-obviousness due to Cephalon’s late production of documents. Judge Sleet, however, left Cephalon with the opportunity to later argue that it could rely on certain documents if they had been timely produced and would not prejudice the defendants. Cephalon subsequently filed a motion to narrow Judge Sleet’s order to allow reliance on “non-commercial” secondary considerations. In re Armodafinil Patent Litigation, C.A. No. 10-md-2200-GMS, at 1 (D. Del. June 26, 2012).

Cephalon argued that the defendants would not be prejudiced by allowing it to rely on the secondary considerations of copying and long-felt-need because all documents it sought to rely on were timely identified. The Court found, however, that the defendants were prejudiced by having been denied the opportunity to conduct full discovery on issues raised by late-produced documents. Because “[o]bviousness is determined in light of all the circumstances surrounding the alleged invention . . . even if Cephalon timely-produced some documents related to some secondary considerations, the defendants remain prejudiced because the late-produced documents may contain relevant information that the defendants could have relied upon to rebut the timely-produced materials.” Id. at 2 n.3. “It would be inherently unfair,” Judge Sleet wrote, “to give Cephalon the unfair advantage of being able to rely upon cherry-picked secondary considerations of long-felt need and copying, while those documents potentially unfavorable to its position remain buried within its late production to the defendants.” Id.

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July 3, 2012

Judge Andrews denies motion for attorneys’ fees, finding no showing of subjective bad faith.

Judge Andrews recently considered whether to award attorneys’ fees under 35 U.S.C. § 285 to a defendant in a case where “the overall picture that is presented is that the Plaintiff’s strategy was to file suits against a large number of defendants, and, due to the huge expenses inherent in patent litigation, force nuisance value settlements.” Commonwealth Research Group LLC v. Lattice Semiconductor Corp., C.A. No. 11-655-RGA (D. Del. June 28, 2012). The defendant argued that the case was "exceptional" due to the plaintiff’s insufficient pre-suit investigation, as well as the plaintiff's delay in dismissing the suit, which resulted in the defendant unnecessarily expending time and resources on claim construction. Id. Although the plaintiff also prepared a claim construction brief, the Court “charitably described” it as “a very modest effort.” Id. at 2. In considering the plaintiff’s pre-suit investigation, the Court noted that a detailed infringement analysis had been conducted by the plaintiff, but the plaintiff had not reverse engineered the defendant’s product even though the product, itself, was inexpensive to purchase. Id. at 4, 6. The Court explained, “I am not sure whether such reverse engineering would have made [plaintiff’s] suit any more or less meritorious in its eyes. I do not think that doing reverse engineering is required, even if, as [the defendant] asserts, its product could have easily been purchased for $100.” Id. at 6 (footnote omitted). With regard to the defendant’s claim construction efforts, the Court found that the plaintiff acted “fairly promptly” to dismiss the case upon learning of the defendant’s strong indefiniteness positions, but that the case was not promptly dismissed at least partially because the defendant was seeking from the plaintiff compensation for its defense costs. Id. at 4. Overall, the Court explained, “I do not find that [the defendant] has shown, by either of its arguments, ‘subjective bad faith,’ and I will deny [the defendant’s] motion.” Id. at 6.

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June 29, 2012

Judge Andrews grants motions to dismiss claims of indirect infringement and willfulness

In IPVenture Inc. v. Lenovo Group Limited, et al., C.A. No. 11-588-RGA (D. Del. June 29, 2012), Judge Andrews recently dismissed plaintiff's claims of indirect infringement and willfulness. Citing the Federal Circuit's recent decision in In re Bill of Lading (write up on this opinion by Dennis Crouch at Patently-O), Judge Andrews found that plaintiff's "minimal allegations" of direct infringement were all that was required to satisfy Form 18. Id. at 3. Plaintiff's indirect infringement allegations, however, did not pass muster. For example, "there [was] no allegation that defendant knew about the existence of the '599 patent"; and there was no factual support to infer that defendant knew any induced acts constituted patent infringement. Id. Regarding willfulness, although general allegations may suffice, plaintiff pled no facts describing events occurring after the patent issued. Id. at 3-4. "At most, the factual allegations plausibly support the conclusion that both the Plaintiff and Dell had patents in the thermal power and management field[.]" Id. at 4. For similar reasons, Judge Andrews dismissed plaintiff's claims of indirect infringement and willfulness for most of the remaining defendants.

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June 29, 2012

Judge Andrews dismisses inequitable conduct counterclaims

In a recent memorandum opinion, Judge Andrews considered the sufficiency of a defendant's defensive pleadings, and most notably dismissed inequitable conduct counterclaims for failure to sufficiently plead the “who” and “when” of the alleged misconduct. XpertUniverse, Inc. v. Cisco Systems, Inc., C.A. No. 09-157-RGA (D. Del. June 19, 2012). The Court explained, “[i]n order to adequately plead inequitable conduct, the claimant must ‘recite[] facts from which the court may reasonably infer that a specific individual both knew of invalidating information that was withheld from the PTO and withheld that information with a specific intent to deceive the PTO.’” Id. at 4 (quoting Delano Farms Co. v. Ca. Table Grape Comm’n, 655 F.3d 1337, 1350 (Fed. Cir. 2011)). Cisco’s allegations included repeated references to one individual, Zelkin, whom Cisco labeled “an officer or employee of XU during prosecution”. Id. at 4. Each reference to this officer or employee was further qualified by the inclusion of the language “or one or more of the other individuals listed as an inventor”. Id. at 4-6. The Court explained, “Cisco’s allegations that Zelkin was an XU ‘officer or employee’ and that he ‘knew or should have known’ of the prior sales and prior art fall short of concretely alleging that he actually knew of the invalidating information.” Id. at 6. Further, the Court added, “[t]hese scant allegations are further diluted by the qualifiers that either Zelkin, or ‘one or more’ of the other inventors, knew about the prior sales and art and their materiality – affording the possibility that Zelkin, the only specific individual named, did not know about them at all.” Id. Cisco was given seven days to amend its pleadings to the extent possible to sufficiently allege inequitable conduct. Id. at 14.

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