On Friday, Magistrate Judge Stark's claim construction came down on another set of patent infringement cases by St. Clair Intellectual Property Consultants based on their digital camera patents. St. Clair Intellectual Property Consultants, Inc. v. Matsushita Electronic Industrial Co., LTD., 04-1436-LPS (D. Del. Nov. 13, 2009). This case is the latest in a series of cases by St. Clair Intellectual Property Consultants against various companies for infringement of these digital camera patents. Interestingly, this is the third time that these patent claims have been construed by the District of Delaware (the first two cases were before Judge Farnan). While Judge Stark noted that Judge Farnan's constructions in the first two cases were not necessarily binding against these defendants, the court's analysis led it to follow Judge Farnan's interpretation of each claim anyway. The majority of the claims were construed in favor of St. Clair's proposed interpretations. From the looks of this holding (and the fact that everything seems to have a camera these days), I would suspect that the District of Delaware will continue to see cases brought by St. Clair.
A special master in the District of Delaware recently recommended against the imposition of sanctions for a party's failure to timely produce expert-discovery materials. In the decision, issued by Special Master Vincent J. Poppiti, the special master considered and rejected a motion to exclude the evidence - certain product testing materials created by Chipworks - on the ground that the receiving party had the ability, and failed, to cure any claimed prejudice:
"Honeywell was served with Dr. Schlam's Expert Report on September 15, 2009, and was therefore aware of the Chipworks testing as of that date. Although Honeywell inquired whether a Chipworks representative would testify at trial, Honeywell ignored Defendants' offers to make a Chipworks representative available for deposition . . . . [Instead,] Honeywell chose to wait until October 14, 2009 to file the instant motion - a full two weeks after receipt of the [untimely Chipworks materials relied on by Dr. Schlam]."
Because the untimely Chipworks testing materials were already known to Honeywell, according to the special master, the two-week delay erased any potential for prejudice.
Chief Judge Sleet recently issued a memorandum opinion on a motion to dismiss and transfer in CNH America LLC v. Kinzenbaw, C.A. No. 08-945-GMS (D. Del. Nov. 9, 2009) (mem.), a patent infringement case. Defendants in the case include Kinzenbaw, an Iowa resident, and his Delaware corporation (based in Iowa), Kinze Manufacturing. Id. at 1, 5.
The Court granted the motion to dismiss as to Kinzenbaw the individual, based on lack of personal jurisdiction. Id. at 2-3. Plaintiff had alleged jurisdiction on Kinzenbaw based on corporate veil piercing of his Delaware corporation, because Kinzenbaw failed to uphold many corporate formalities (traditionally a key factor in veil piercing), and because he had the "capacity" to siphon money from the corporation. Id. According to the Court, plaintiff was correct that "[a]lter ego liability and corporate veil piercing theories function to prevent an independent corporation from being used to accomplish injustice or evade the law," but it failed to show any injustice or evasion of the law here. Id. Disregard of formalities is only one factor in a veil piercing analysis, and "capacity" to siphon money is different from actually siphoning money. Id.
Kinze Manufacturing, however, remained in the case. As usual, the Court denied Kinze's motion to transfer, despite Kinze's arguments regarding the location of witnesses and documents. Id. at 3-5.
In Arendi Holding Ltd. v. Microsoft Corp., C.A. No. 09-119-JJF (D. Del. Oct. 27, 2009) (mem.), Judge Farnan denied a motion to bifurcate a patent infringement action. In denying defendants' (Microsoft and Dell) motion, the court stated that bifurcation
w[ould] not promote the efficient adjudication of the parties' dispute. In the Court's view, the history of these parties, the number of infringement allegations, the disposition of the prior case between the parties in the Rhode Island court (where bifurcation was ordered), the expedited schedule, and the lack of a wilfulness allegation, all counsel toward a unitary procedure for this case. The Court is unable to ascertain any undue prejudice that would or could result from such an approach to resolving the present claims.
Id. at 3.
This implicitly reaffirms that bifurcation in a patent case is not a given, although Judge Farnan has, in some other cases, allowed bifurcation on the basis of litigation inefficiencies. Judge Robinson, on the other hand, recently stated that "I have determined that bifurcation is appropriate, if not necessary, in all but exceptional patent cases," and has appeared to adhere to that rule so far. The Dutch Branch of Streamserve Development AB v. Exstream Software, LLC, C.A. No. 08-343-SLR (D. Del. Aug. 26, 2009) (mem.).
As noted in a post from August of this year (see here), Judge Robinson has instituted a bifurcation procedure in her cases where she conducts separate trials for liability and damages/willfulness. As part of this procedure, damages discovery is stayed except for discovery necessary to support the ADR process, to determine how valuable the patent is, and as it relates to secondary considerations of non-obviousness (i.e., commercial success). In Teles AG Informationstechnolgien v. Quintum Technologies, LLC, a dispute arose over the proper scope of commercial success discovery in a case where damages discovery has been stayed. C.A. Nos. 06-197-SLR-LPS, 09-72-SLR-LPS, 09-232-SLR-LPS, Order Regarding Discovery, at 2 (D. Del. Oct. 30, 2009). This dispute was referred to Magistrate Judge Stark for resolution. Id. at 3.
Judge Stark refused to order the production of invoice level detail on sales from any product with the accused feature, finding that aggregrate, general sales information on accused products (for which plaintiff provided infringement contentions) is sufficient. Id. at 6. Specifically, Judge Stark noted that the financial data "should be limited to the products [plaintiff] has actually accused as part of its infringement contentions...." Id. (internal citations omitted) (empahsis added). The Court also found that "internal and external evidence regarding market share" with respect to the accused products and internal marketing materials should be produced. Id. at 8.
Plaintiff had requested documents for a time frame beginning three years prior to introduction of the allegedly infringing feature through the present day. The Court found that this time frame was too broad and should begin the year before the accused feature was introduced through the first two years it was available in the marketplace. Id. at 7.
Judge Robinson recently granted defendant Parallel Networks' motion to sever and transfer third-party defendant Microsoft's declaratory judgment action to the Eastern District of Texas. Judge Robinson cited the judicial vacancy in Delaware and the "undeniable" facts pointing to the Eastern District of Texas as an appropriate venue when holding that "[a]lthough I continue to be amazed by the energy and resources expended on motions to transfer and believe that the way this litigation has unfolded would warrant jurisdiction in Delaware . . . I conclude that Microsoft's declaratory judgment action should be severed and transferred to the Eastern District of Texas." Quinstreet, Inc. v. Parallel Networks, LLC, C.A. No. 06-495-SLR (D. Del. Nov. 3, 2009).
A recent sanctions order issued by Magistrate Judge Mary Pat Thynge reaffirms a basic discovery principle: the 30(b)(6) witness must be prepared, regardless of the size and resources of the entity for whom the witness speaks.
In yesterday's order, the Court awarded $15,000 in fees and costs to the deposing party, in part to compensate for the second deposition necessitated by the ill-prepared witness. By doing so, the Court noted, but ultimately ignored, the proffering entity's small size:
"[W]hat is also abundantly clear[ ] is that plaintiffs are two small corporations with essentially three people at the helm, whose division of responsibility at times is blurred and not clearly defined . . . . To some extent, plaintiffs are slightly a cut above a 'mom and pop' operation. . . . However, that does not excuse representing an individual . . . as being proficient and knowledgeable to testify on numerous topics, when her acquaintance with certain areas was very limited or non-existent."
Judge Farnan recently dismissed Microsoft’s declaratory judgment complaint, involving Microsoft’s MapPoint and Virtual Earth services, against WebXchange because no case or controversy existed sufficient to confer subject matter jurisdiction. Microsoft Corporation v. Webxchange, Inc., C.A. 09-484-JJF (D. Del. Oct. 30, 2009). Microsoft had previously filed a complaint against WebXchange in the Northern District of California which was also dismissed for lack of subject matter jurisdiction. Id. at 2-3. Granting WebXchange’s motion to dismiss, Judge Farnan reasoned that: (1) “Microsoft does not allege even one instance of WebXchange accusing infringement based on the use of Virtual Earth[,]” id. at 7; (2) “no controversy exists by virtue of WebXchange’s infringement suits against Microsoft customers who use MapPoint[,]” id. at 8; (3) “the alleged damage caused by [WebXchange’s cases against Microsoft customers] to Microsoft’s relations with its customers, . . . does not create a controversy between the parties[;] id. at 10, and (4) “WebXchange’s failure to covenant not to sue Microsoft does not create an actual controversy by itself.” Id.
In Personalized User Model LLP v. Google, Inc., C.A. No. 09-525-JJF (D. Del. Oct. 27, 2009), Judge Farnan issued an opinion on a motion by defendant Google to transfer a pending patent infringement suit to the Norther District of California (its home state) under 28 U.S.C. § 1404(a).
The opinion implicitly criticized the current state of Third Circuit law on § 1404(a) motions to transfer. According to the Court, "1404(a) is not complicated," and lays out three "simple, straightforward principles." Id. at 2. But "[i]n the Third Circuit, district courts are required to analyze and weigh a set of eleven (11) private/public factors." Id. The Court analyzed each of the 11 factors, listing in four pages of tables each party's arguments and the Court's conclusions. The Court ultimately denied the motion to transfer under the 11 factors, noting that "[i]nterestingly, the Court would reach the same conclusion by applying the three principles of Section 1404(a) without the enhanced analysis required by the eleven private/public factors of the case law." Id. at 7-8.
As it has in the past, the Court rejected arguments regarding the location of witnesses and documents. Id. at 4, 6. Among the Court's findings on each of the 11 factors, the Court noted that "[t]here are no significant public efficiency" or "public policy" differences between the District of Delaware and the Northern District of California, and that "[p]atent cases are national cases and seldom open to a local interest analysis." Id. at 6-7. The Court made no indication that it plans to start granting motions to transfer any time soon; when a patent plaintiff files a case in Delaware, it stays in Delaware.
Eastern District of Pennsylvania Judge Eduardo C. Robreno, sitting by designation, recently issued a memorandum opinion addressing discovery issues in Inventio AG v. Thyssenkrupp Elevator Americas Corporation et al., C.A. No. 08-874-ECR (D. Del. Oct. 8, 2009). Defendant moved to compel production of two categories of documents: letters and deposition transcripts from plaintiff's pending S.D.N.Y infringement case on a related patent, and "all nonprivileged documents contained in [plaintiff's] internal patent prosecution files with respect to the patents-in-suit." Id. at 1-2.
As to the first request, Judge Robreno determined that the documents from the S.D.N.Y. suit, although mostly relevant, were covered under a stipulated protective order and that "this Court is without authority to alter the Protective Ordered entered by another court by ordering production of any documents within [its] scope." Id. at 18. The court did, however, order plaintiff to identify the protected documents in a privilege log and, after the court determines which documents are relevant, to return before the judge in the S.D.N.Y. action and seek relief from the protective order as to those documents. Id. at 18-19.
As to the second request, seeking all of the plaintiff's internal patent prosecution documents, Judge Robreno held that the only ground under which plaintiff could withhold the documents is privilege, and that privilege must be claimed on a document-by-document basis rather than plaintiff's "blanket statement" that all internal patent prosecution documents are non-discoverable. Id. at 20.
Judge Robreno also included an interesting explanation of the scope of discovery under Rule 26. He analogized the types of information discoverable under Rule 26 to "three concentric circles," because parties must disclose first "information integral to the litigation . . . without the necessity of a discovery request," FRCP 26(a), then "nonprivileged information that is 'relevant to any party's claim or defense' upon a request," FRCP 26(b)(1), and finally "broader discovery of 'any matter relevant to the subject matter involved in the action,' where such information is likely to lead to the discovery of admissible evidence and the party making the discovery request can establish 'good cause' to support the request." Id. at 7-9 (hyperlink added). As far as I can tell from a brief Lexis search, this apt analogy is unique to this memorandum opinion.
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