April 16, 2014

Judge Stark grants motion to transfer to the Northern District of California.

Judge Leonard P. Stark recently transferred a case to the Northern District of California based in part on the plaintiff’s actions and representations made to the Judicial Panel on Multidistrict Litigation. Genetic Technologies Ltd. v. Natera, Inc., C.A. No. 12-1737-LPS (D. Del. Apr. 15, 2014). Specifically, the Court noted that “[b]efore the [JPML], [the plaintiff] contended the Northern District was preferable to Delaware as a venue for centralizing pre-trial litigation.” Id. at 3. The JPML declined consolidating the cases into an MDL, leaving the plaintiff litigating in Delaware, North Carolina, New Jersey, and the Northern District of California. Although Judge Stark found that the plaintiff had rational reasons for wanting to litigate this action in Delaware, the Court found that the plaintiff's representation to the JPML, as well as several other Jumara factors (including, notably, the convenience to the parties of litigating in Northern California, where the defendant's principle place of business is located and which is some 2,500 miles closer to the plaintiff's Australian headquarters than Delaware), weighed in favor of transferring the case. Id. at 2-4.

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April 10, 2014

Judge Stark provides guidance for parties’ post-trial motions

Following the jury’s verdict of no infringement and invalidity in Personalized User Model, L.L.P. v. Google, Inc., C.A. No. 09-525-LPS, on April 7, Judge Leonard P. Stark issued a letter to the parties, having completed review of the parties’ proposals for how the case should proceed, as well as their motions for judgment as a matter of law (“JMOL”).

The Court summarized its “tentative views” related to plaintiff’s motion for JMOL on infringement and no invalidity: it was “inclined to deny” them as it concluded that the jury could reasonably have found non-infringement and invalidity. See id. at 4-6. On the other hand, as to the jury’s verdict of breach of contract by plaintiff, the Court indicated that it was likely to grant JMOL to plaintiffs, based on Delaware statutory law. See id. at 6-8.

In conclusion, the Court advised that the parties should “determine whether they wish to further litigate JMOL issues and/or seek a new trial” and that the parties should meet and confer to “propose as compressed a schedule as possible for the submission of short briefs so the Court can determine in an efficient manner whether to adhere to its inclinations and enter judgment.” Id. at 8. Until these issues were resolved, the Court saw “no basis for the additional proceedings (i.e., a bench hearing on equitable issues and jury trial on damages) requested by defendant.” Id.

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April 8, 2014

Judge Stark Considers Post-Trial Damages and Denies Stay of Execution of Judgment

Judge Stark recently issued his ruling on the issue of post-trial damages following a two-day bench trial. In June 2010, a jury found that the defendant’s products infringed the plaintiffs’ patents and awarded damages in the form of both lost profits and reasonable royalties for the period from March 2002 to December 31, 2009. The Court denied motions for judgment as a matter of law and a motion for a permanent injunction, and on appeal the Federal Circuit affirmed the judgment in all respects. The parties were then unable to agree on the amount of “supplemental damages” owed to the plaintiff for the period of January 1, 2010 to October 15, 2011, when the patents-in-suit expired. The Dow Chem. Co. v. Nova Chems. Corp., et al., C.A. No. 05-737-LPS Slip. Op. at 1-4 (D. Del. Mar. 28, 2014). Following a bench trial to determine the supplemental damages owed, Judge Stark found that the plaintiff was entitled to lost profits and reasonable royalties, accepting the plaintiff’s arguments as well as the plaintiff’s rebuttals to the defendant’s argument. Id. at 4-22. Judge Stark also found, however, that the plaintiff was not entitled to enhanced damages. The plaintiff requested enhanced damages for “willful post-judgment infringement during the sixteen months between when the Court denied [the plaintiff’s] request for a permanent injunction and the expiration of the patents-in-suit.” But as Judge Stark explained, “the grant of [the defendant’s] motion for summary judgment of no willfulness effectively decided this issue” and the “Court is not persuaded it should revisit the question.” Id. at 22.

Interestingly, Judge Stark also had to consider whether to stay entry or execution of the judgment until after completion of an ongoing reexamination of the patents-in-suit at the PTO. Although the defendant had already paid damages associated with the jury verdict, it argued that it should, at a minimum, pay the supplemental damages to an escrow account to mitigate the risk that it would be paying damages on patents that could be found invalid. Judge Stark acknowledged that these “arguments implicate potentially difficult questions. If the patents-in-suit are invalid, [the defendant] cannot infringe them, and should not have to pay [the plaintiff] anything further. But as of today the patents-in-suit remain valid . . . and weighing heavily against granting the requested stay, [the defendant] waited until very late in this litigation to initiate the reexaminations and to seek a stay. [The defendant] filed its petitions for reexamination of the patents-in-suit on December 17, 2012, more than seven years after this case was filed and more than two years after the jury’s verdict on infringement and invalidity. Under the circumstances, the Court believes the most appropriate exercise of its discretion is to deny the requested stay.” Id. at 23-24.

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April 1, 2014

Judge Stark adopts Magistrate Judge’s Burke’s Recommendation to Deny Transfer to N.D. Cal

Judge Leonard P. Stark recently adopted Magistrate Judge Christopher J. Burke’s recommendation from earlier this month, in which Judge Burke recommended denial of a defendant’s motion to transfer to the Northern District of California. MAZ Encryption Technologies LLC v. Hewlett-Packard Company, C.A. No. 13-306-LPS, Report and Recommendation (D. Del. Mar. 6, 2014), adopted, Order (D. Del. Mar. 28, 2014).

Plaintiff was a small Delaware corporation that claimed to have no revenue. Report and Recommendation at 3. It had also brought nine other cases in Delaware; seven involved one or both of same patents-in-suit, and two others involved a related patent. Id. at 2. Defendant was a large Delaware corporation with its principal place of business, and much of its operations, in California. Additionally, the designers of the accused products, while no longer employed with defendant, resided in California. Id. at 4.

As to plaintiff’s forum preference, defendant argued that this factor should be given less or no weight because plaintiff’s “minimal ties to Delaware were manufactured in an apparent attempt to manipulate the venue laws.” Id. at 9 (internal quotation marks omitted). Judge Burke recognized that “the record clearly suggests a connection between Plaintiff’s formation as a Delaware LLC, the assignment of the patents to Plaintiff and the filing of the instant suit in this Court, all of which occurred in relatively short order,” id., and that “[t]here are clearly certain circumstances in which a plaintiff’s connection to a forum and its choice to file suit there evidence an improper motive,” id. at 10. But Judge Burke observed that it may be difficult to differentiate between a formation that is an “appropriate kind of business or litigation decision” and one that is essentially “venue manipulation.” Id. at 11-12. Judge Burke did not have to make this determination here, however, because plaintiff’s forum choice was legitimate for another reason: it brought suit in Delaware to assure personal jurisdiction over defendant, a Delaware corporation. Id. at 12. Therefore, this factor weighed against transfer.

The other factors weighing against transfer were the convenience of the parties and practical considerations. The convenience of the parties only weighed slightly against transfer; while plaintiff’s small size and financial condition, as compared to that of defendant, may have meant that it would suffer greater hardship if forced to litigate in California, Judge Burke gave this minimal weight because there was little detailed information available about plaintiff’s finances, “and the reality [is] that Plaintiff’s members can and have initiated litigation here and in other courts.” Id. at 18. More significantly, the number of pending related cases in Delaware and their level of overlap with the patents-in-suit in this case weighed against transfer. See id. at 23-25.

All other factors weighed in favor of transfer (defendant’s forum preference, where the claim arose, convenience of witnesses, and books and records - although the last two only slightly) or were neutral. Judge Burke explained that “[u]ltimately, with the factors in equipoise, Defendant has not bet its burden to show that the balance of convenience of the parties is strongly in its favor.” Id. at 28. Therefore, Judge Burke recommended that the motion to transfer be denied.

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April 1, 2014

Judge Stark rules on various post-trial motions

In Depuy Synthes Products, LLC v. Globus Medical, Inc., C.A. No. 11-652-LPS (D. Del. Mar. 25, 2014), Judge Leonard P. Stark decided several post-trial motions, denying the parties’ motions for attorneys’ fees, denying plaintiff’s motion for a permanent injunction and destruction of infringing products, granting in part plaintiff’s motion for an accounting and determination of an ongoing royalty rate, and granting plaintiff’s motion for prejudgment and postjudgemnt interest. Judge Stark’s decision followed a ten-day jury trial where the jury found plaintiff’s asserted patents valid and infringed. Id. at 1.

Denying plaintiff’s motion for attorneys’ fees, Judge Stark concluded that defendant’s conduct was not “exceptional” as to justify the award of fees under 35 U.S.C. § 285. Id. at 8. Judge Stark explained, for example, that many of defendant’s positions that plaintiff argued were “baseless” were the same positions that the Court addressed during the Pretrial Conference. Id. at 7. At the Pretrial Conference, however, the Court found defendant’s positions on “claim construction, noninfringement and invalidity positions . . . to be not unreasonable.” Id. at 6-7. Further, addressing plaintiff’s assertion that defendant made representations at trial “that contradicted the Court’s prior rulings or [defendant’s] earlier representations to the Court,” Judge Stark explained that “much of what [plaintiff] complains about was already dealt with at trial, the Court already provided adequate relief, and these events do not make this case ‘exceptional.’” Id. at 7-8. Judge Stark additionally noted that defendant “properly places its comments within the context of a legally and factually complex trial in which the Court was required to construe claim terms as late as during the trial’s final days.” Id. at 7-8. Turning to defendant’s motion for attorneys’ fees, Judge Stark addressed defendant’s assertion that plaintiff “maintained its willfulness allegation even after . . . it became clear that [the allegation] lacked any merit.” Id. at 8. Despite the fact that the Court had made statements during Pretrial Conference that defendant’s noninfringement positions were “not unreasonable,” and that defendant’s pre-suit and post-suit conduct was not “objectively unreasonable,” Judge Stark nevertheless found that plaintiff did not act in bad faith. Id. at 8-9. Judge Stark explained that “the Court’s determination that [plaintiff] could not prevail on its willful infringement claim does not logically lead to the conclusion that [defendant] . . . should receive attorneys’ fees.” Id. at 9.

Denying plaintiff’s motion for a permanent injunction and destruction of infringing products, Judge Stark explained that plaintiff failed to demonstrate that remedies at law were inadequate to compensate it for injuries. Id. at 10. While plaintiff maintained that its patented products operated as “door openers” to other products, the Court already addressed and denied such an argument on plaintiff’s motion for a preliminary injunction following the trial. See id. at 9-10. Judge Stark denied the instant motion despite the fact that plaintiff made “persuasive arguments regarding some of the other permanent injunction factors, particularly regarding the balance of hardships between [plaintiff] and [defendant] and the public interest.” Id. at 10.

With respect to its motion for an accounting and determination of an ongoing royalty rate, plaintiff sought “additional damages to account for infringing sales that were not part of the royalty base that the parties presented to the jury,” and argued that for post-verdict sales, an ongoing royalty rate of 25% should apply. Id. at 11. While Judge Stark noted that there “is a fundamental difference . . . between a reasonable royalty for pre-verdict infringement and damages for post-verdict infringement ,” he found plaintiff’s 25% rate to be too high. See id. at 13-15. Judge Stark rather adopted a rate of 18% for post-verdict sales, which was based “on the Court’s conclusion that [plaintiff] is entitled to some elevated ongoing royalty rate as a result of the post-verdict changes [in] bargaining positions.” Id. at 14 & n.8. Judge Stark also found that defendant “shall be required to provide [plaintiff] with records sufficient to identify infringing sales within 15 days after the close of the calendar quarter in which those sales were made.” Id. at 15. Finally, based on the fact that plaintiff presented “some evidence that the prime rate is appropriate,” Judge found that prejudgment “interest should be calculated using the prime rate, compounded quarterly.” Id. at 17.

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April 1, 2014

Judge Stark grants motion for summary judgment of invalidity for obviousness.

Judge Leonard P. Stark recently granted a motion for summary judgment of invalidity for obviousness filed by several generic defendants in an ANDA suit involving methods for treating or preventing osteoporosis through dosing of risedronate. Warner Chilcott Company, LLC v. Teva Pharmaceuticals USA, Inc., et al., C.A. No. 08-627-LPS (D. Del. Mar. 28, 2014). Judge Stark cited two related litigations in the District of New Jersey where similar patented methods and the same prior art were considered, and concluded that “Defendants have presented clear and convincing evidence that the prior art demonstrates that high doses of risedronate are safe and effective.” Id. at 11. The Court also found that the secondary consideration of simultaneous invention supported invalidating the patents as obvious. Id. at 13.

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March 27, 2014

Judge Stark denies motion to stay pending resolution of CBM review.

Judge Stark recently denied a plaintiff’s motion to stay pending the resolution of CBM review. Securebuy, LLC v. Cardinal Commerce Corp., C.A. No. 13-1792-LPS (D. Del. Mar. 21, 2014). The Court found that each of the factors (whether a stay would simplify issues; whether discovery is complete and a trial date set; whether a stay would unduly prejudice the non-moving party; and whether a stay would reduce the burden on the Court and parties) weighed against granting a stay. In this case, the petition for CBM review had not yet even been granted, and the Court found that CBM review would not involve all invalidity issues before the Court (or infringement), discovery was under way and trial scheduled to be held within 5 months, and a stay would prejudice the defendant without reducing the burdens on either the Court or the defendant. Accordingly, the Court denied the motion to stay.

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March 27, 2014

Judge Stark grants Juniper Network's motion to dismiss ReefEdge's claims for willful infringement and indirect infringement

Judge Leonard P. Stark recently considered Juniper Network's motion to dimiss ReefEdge Network's claims of willful infringement and its amended claim of inducement. ReefEdge Networks, LLC v. Juniper Networks, Inc., C.A. No. 13-412-LPS (D. Del. Mar. 21, 2014). Prior to filing this motion, Juniper moved to dismiss ReefEdge's original claims of indirect and joint infringement. In response ReefEdge dropped its contributory and joint infringement claims and added a claim for willful infringement. Id. at 1. ReefEdge claimed Juniper knew of the patents-in-suit prior to the filing of the complaint because while Juniper's Deputy General Counsel was employed at Symantec Corporation, she marketed the patents-in-suit to ReefEdge. Id. at 2. After joining Juniper as Deputy Counsel and VP of Intellectual Property, ReefEdge met with Juniper to discuss licensing the same patents. Id.

Judge Stark disagreed with ReefEdge that because Juniper's Deputy Counsel was "responsible for managing all aspects of intellectual property at Juniper," her knowledge could be imputed to Juniper. Id. at 4. Judge Stark noted that ReefEdge did not allege that the Deputy General Counsel "was aware of Juniper's allegedly infringing products, which were on the market for years before [she] joined Juniper." Id. Nor did ReefEdge "'demonstrate a link between the various allegations of knowledge of the patents-in-suit and the allegations that the risks of infringement were either known or were so obvious that they should have been known.'" Id. (quoting MONEC Holding AG v. Motorola Mobility, Inc., 897 F. Supp. 2d 225, 236 (D. Del. 2012).

Regarding inducement, ReefEdge alleged that Juniper induced infringement by advertising and providing technical support services. Id. at 6. Judge Stark noted that "marketing activities are not sufficient to constitute induced infringement unless the marketing activities are coupled with actual knowledge of the patents-in-suit and awareness that the accused products infringe the patent-in-suit." Id. Because ReefEdge did not adequately plead pre-suit knowledge of the patents-in-suit and knowledge that those patents were being infringed, ReefEdge failed to state a claim for inducement prior to the filing of the complaint. Id. Judge Stark did, however, find that ReefEdge adequately pled inducedment based on post-filing knowledge because ReefEdge alleged that Juniper's "marketing activities and instructions to customers to use the accused products in an infringing manner" were ongoing even after Juniper "had actual notice of the alleged infringement by specific accused products as a result of the filing of the original complaint[.]" Id. at 7-8.

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March 18, 2014

Judge Stark grants mandatory and discretionary stays pending an ITC investigation

In Graphic Properties Holdings, Inc. v. Toshiba America Information Systems, Inc., et al., C.A. No. 12-213-LPS (D. Del. Mar. 5, 2014), Judge Leonard P. Stark granted stays pending an ITC investigation in three separate actions that plaintiff Graphic Properties Holdings, Inc. (“GPH”) had filed against various defendants: C.A. No. 12-213-LPS (the “Toshiba action”); C.A. 12-214-LPS (the “Vizio action”); C.A. No. 12-210-LPS (the “ASUS action”). In the Toshiba and Vizio actions, GPH was asserting both U.S. Patent Nos. 8,144,158 (the "’158 Patent”) and U.S. Patent No. 6,650,327 (the “’327 Patent"). In the ASUS action, GPH asserted only the ’158 Patent. Id. at 1. Because the products accused of infringing the ’327 Patent appeared to be the same products at issue in the ITC investigation, and because the defendants in the Toshiba and Vizio action moved for stay within 30 days after being named respondents in the ITC action, Judge Stark granted a mandatory stay of the Toshiba and Vizio actions pursuant to 28 U.S.C § 1659(a) with respect to the ’327 Patent. Id. at 2.

Judge Stark also granted discretionary stays in the Toshiba, Vizio, and Asus actions with respect to the ’158 Patent. As Judge Stark explained, “the '158 Patent is a continuation of the '327 Patent and they share common inventors, specification, and prosecution history. Because of this overlap, claim construction and invalidity issues with respect to one patent will necessarily impact those same issues with respect to the other patent.” Id. at 3. Further, GPH agreed that its “general theory of infringement regarding the ’158 Patent is common” to the district court and ITC Action, and many of the accused products “share critical components.” Id. at 3. Accordingly, Judge Stark found that in granting stay “GPH will not have to engage in duplicative discovery and other pretrial matters.” Id. at 4. Judge Stark similarly found that the discretionary stay would simplify matters for trial, as the Court would "not have to engage in duplicative proceedings regarding the '158 Patent that could be held in conjunction with the '327 Patent.” Id. In granting the discretionary stay, Judge Stark also noted that no trial date was set and discovery was not complete. Id. at 4-5. Further, as Judge Stark explained, GPH did not market any products covered by the ’158 Patent, and therefore would not be competitively disadvantaged by the stay. Id. at 4.

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March 9, 2014

Judge Stark considers pre-trial proposals and motions

In anticipation for the trial in this case that is set to begin this week in Personalized User Model, L.L.P. v. Google, Inc., C.A. No. 09-525-LPS, on March 6 Judge Leonard P. Stark ruled on various pre-trial issues.

First, the Court adopted defendant’s proposed order of proof, which permitted “each party to reply to the other side’s rebuttal on any issue for which a party bears the burden of proof.” Id. at 1. The trial will proceed in four phases. See id. at 1-2. As a result, the Court also denied plaintiff’s request for one of its witnesses to provide the full scope of his testimony in a single phase. Id. at 2.

Second, the Court granted plaintiff’s motion to preclude defendant from referring to recent changes in the accused technology. Defendant intended to use this information as evidence that the patents-in-suit lacked commercial success, but it appeared to the Court that plaintiff had not had the opportunity to determine whether these changes impacted infringement in discovery, plus plaintiff “could have reasonably believed that evidence of such changes [that occurred after the close of fact discovery] would not be admissible.” Id. at 2-3. Because this ruling “may put certain witnesses in an awkward position, in which potentially they may have to testify in a manner that is not fully truthful in order not to reveal to the jury recent changes in the Accused Technologies,” the Court also required counsel to ask precise questions and it would also provide a specific jury instruction about this issue. Id. at 3.

Finally, the Court denied plaintiff’s motion regarding the statute of limitations applicable to defendant’s breach of contract defense and counterclaim. The Court found that the motion was “in essence, an untimely motion for summary judgment, and not merely a motion seeking clarification of the governing law.” Id. at 4.

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