In a recent Order, Judge Gregory M. Sleet granted a plaintiff’s motion to dismiss counterclaims seeking a declaratory judgment of non-infringement of two patents related to the brand-name drug Aloxi® which the plaintiff did not assert against the defendant and which were the subject of a covenant not to sue. Helsinn Healthcare S.A., et al. v. Cipla Ltd., et al., Consol. C.A. No. 13-688-GMS (D. Del. Jan. 6, 2015). The plaintiff’s motion to dismiss was based on the argument that there did not yet exist a case or controversy warranting adjudication since the defendant’s Paragraph III certification relating to the asserted patent would prevent it from entering the market until at least October 2015 when the asserted patent expires. The Court agreed with the plaintiff, and reasoned that “[i]n the ANDA-litigation context, there is cognizable injury to a generic drug manufacturer when it is ‘restrain[ed from] the free exploitation of non-infringing goods.’” Id. at 3 n.1 (quoting Caraco Pharm. Labs., Ltd. v. Forest Labs., Inc., 527 F.3d 1278, 1292 (Fed. Cir. 2008) (alteration in original)). And “[w]here a generic company accepts the ‘validity, infringement, and enforceability’ of a drug patent, there is no injury giving rise to a case or controversy.” Id. (quoting Janssen Pharm., N.V. v. Apotex, Inc., 540 F.3d 1353, 1361 (Fed. Cir. 2008)). Because filing a Paragraph III certification “serves as recognition of the fact, that the patent is valid and enforceable[,]” id. (quoting Janssen, 540 F.3d at 1358), the Court found that the defendant could not claim it was currently being restrained from exploiting non-infringing goods by the two unasserted patents, as opposed to by its filing of the Paragraph III certification and recognition of the asserted patent’s validity and infringement. Id. The Court left open the possibility that a case or controversy with respect to these unasserted patents could arise upon the expiration of the asserted patent, since at that point potential infringement of the unasserted patents could be the only thing standing in the way of the defendant bringing its generic to market.
Magistrate Judge Burke recently issued a report and recommendation, recommending that a Defendant’s motion to dismiss be granted in part in the basis of lack of subject matter jurisdiction and failure to adequately plead a declaratory judgment claim of indirect non-infringement. The Defendant, patentee Zond, had originally filed a patent infringement action against two TSMC entities in the District of Massachusetts. That case was administratively closed due to pending inter partes review proceedings. Zond later sent an infringement notice letter to TSMC, at which point TSMC commenced this declaratory judgment action against Zond in the District of Delaware. Zond filed a motion to dismiss for lack of subject matter jurisdiction, for failure to state a claim, and pursuant to the Declaratory Judgment Act. TSMC Tech., Inc., et al. v. Zond, LLC, C.A. No. 14-721-LPS-CJB, Report and Recommendation at 1-4 (D. Del. Jan. 8, 2015).
Judge Burke first accepted Zond’s facial challenge to subject matter jurisdiction as to one of the plaintiffs, finding that there was no declaratory judgment jurisdiction as to that particular plaintiff, which was hardly addressed in the complaint. Id. at 6-10. The plaintiff brought its complaint on behalf of three TSMC entities, including one entity (“TTI”) that was not a party to the Massachusetts action and that Zond did not name in its infringmenet notice letter. As Judge Burke explained, “The Complaint contains very few allegations related to TTI. In fact, the only allegation that specifically mentions TTI comes in the paragraph in which Plaintiffs list TTI’s state of incorporation and the location of its place of business. It is also notable that when the Complaint begins to discuss the existence of a legal controversy between certain TSMC entities and Zond, TTI’s name is conspicuously absent from those paragraphs.” Id. at 7. Indeed, Judge Burke found that the “lack of any allegation that Zond has engaged in pre-Complaint communications with TTI, while not dispositive in and of itself, provides strong indication that there is no subject matter jurisdiction here.” Id. at 8.
Next, Judge Burke granted in part the motion to dismiss declaratory judgment claims of non-infringement on 12(b)(6) grounds. As to direct non-infringement, Judge Burke found that it “is clear from the Complaint that Plaintiffs have identified ‘the same accused products and processes that Zond is accusing in the [First TSMC Massachusetts Action,]’ and it is also clear as to the general categories of products and processes that were at issue there. For these reasons, the instant allegations are sufficient to satisfy Form 18’s low bar.” Id. at 10-13. As to indirect non-infringement, which requires a pleading that meets the requirements of Twombly and Iqbal, however, Judge Burke found that the Plaintiffs had not provided factual allegations that would show a lack of any type of indirect infringement. Id. at 13-16. As the Court described the complaint, “Plaintiffs’ allegations of indirect non-infringement are extremely sparse, to the point of almost being non-existent. . . . Indeed, the counts are so sparse that they do not even recite the wording of the elements of contributory or induced infringement (let alone facts that assertedly demonstrate that these elements have been placed at issue or otherwise cannot be satisfied here).” Id. at 14. “In the end, Plaintiffs are seeking a declaration of indirect non-infringement without identifying ‘allegations by the patentee or other record evidence that establish at least a reasonable potential that such a claim could be brought.’” Id. at 15.
Finally, Zond argued that the Court should decline to exercise jurisdiction because the case had been filed contrary to the purposes of the Declaratory Judgment Act. Judge Burke, however, did not recommend dismissal of the case on this basis for the same reasons explained in his previous report and recommendation on a motion to enjoin and motion to transfer. Id. at 16.
Accordingly, Judge Burke recommended dismissal, without prejudice and with leave to amend, of all claims made by TTI for lack of subject matter jurisdiction and dismissal of all indirect non-infringement claims, but recommended denial of the motion in all other respects. Id. at 17.
In ongoing litigation between Plaintiff Flatworld Interactives and Defendants Samsung and LG, Chief Judge Stark recently ruled on several summary judgment motions, in addition to construing the parties’ disputed claim terms in a separate opinion. Flatworld Interactives LLC v. Samsung Elecs. Co., Ltd., et al., C.A. No. 12-804-LPS, 12-964-LPS, Memo. Op. at 7-16 (D. Del. Dec. 31, 2014).
By their motion for summary judgment of invalidity, the Defendants contended that the patent-in-suit lacked written description because the claims contained a negative limitation that was not disclosed in the specification. As Judge Stark explained, “[u]nder§ 112(a), negative claim limitations are ‘adequately supported when the specification describes a reason to exclude the relevant limitation.’ ‘Such written description support need not rise to the level of disclaimer. In fact, it is possible for the patentee to support both the inclusion and exclusion of the same material.’” Id. at 9 (citations omitted). Judge Stark agreed that there was a negative claim limitation but found a question of fact as to whether the specification discloses that limitation to a person of ordinary skill:
“[T]he specification teaches a person of ordinary skill that once the image is removed from the screen, nothing related to it is left behind. The reason for excluding any representative of the removed image may be discerned from the specification. . . . At least certain of the specific embodiments disclosed, such as the ‘hide-and-go-seek’ function or ‘guessing game’ function, necessitate that not only the image itself but also any representative thereof be completely removed from the screen.”
Id. at 9-10. Judge Stark also granted the Defendants’ motion to strike a declaration filed in support of Plaintiff’s summary judgment motion because His Honor would have denied the motion for summary judgment even without consideration of the declaration. This “decision to strike the declaration [was, however,] without prejudice to Plaintiff’s ability to attempt to rely on [the declarant] at a later point in this case.” Id. at 7.
The Defendants also filed a motion for summary judgment to limit damages. The first issue implicated by this motion was whether the Plaintiff was required to mark embodiments of the patent-in-suit during the time in which the patent was undergoing reissue proceedings in the Patent Office. The parties cited no authority addressing this question, but the Plaintiff argued that marking could not be required because of the potential for false marking if the reissue resulted in no issued claims. Id. at 10-11. Based on 35 U.S.C. § 252, however, Judge Stark explained that “[t]he surrender of the original patent shall take effect upon the issue of the reissued patent. That is, a patent undergoing reissue remains in force during the reissue proceedings, and an accused infringer may be liable for infringing activity occurring during the reissue prosecution.” Id. at 11 (emphasis Court’s). “As a result,” the Court concluded, “§ 287 applied and required marking,” which “comports with the underlying purposes of § 287.” Id. at 11-12.
Judge Stark further found that there was no constructive notice of the patent-in-suit because the Plaintiff’s failure to mark the single embodiment of the patent-in-suit was not de minimis. The de minimis exception applies to “for example, failure by mistake to mark a few articles in hundreds of thousands made and sold” and for a “patentee whose compliance with the marking statute is nearly perfect.” Id. at 13 (citations omitted) (emphasis Court’s). Importantly, the pertinent comparison is between the number of marked and unmarked embodiments made, offered, sold, or imported by the patentee, not a comparison between the patentee’s and the accused infringers’ embodiments.” Id. at 14 (emphasis Court’s).
Finally, Judge Stark found that the evidence demonstrated that the Plaintiff did not provide actual notice to the Defendants. The Plaintiff’s only evidence of actual notice was a letter allegedly sent to the Defendants notifying them of the reissue proceedings of the patent-in-suit and inviting them to submit relevant prior art. “The letter does not mention infringement, or even a specific product. The letter cannot be read to constitute the required affirmative communication of a ‘specific charge of infringement’ by a ‘specific accused product.’ At bottom, the letter failed to provide actual notice.” Id. at 14-15.
Accordingly, the Court granted the summary judgment motion to limit damages: “[N]o reasonable juror could conclude that Plaintiff provided Defendants actual notice. In combination with the Court’s determinations that the notice obligation was not excused by the pendency of the reissue proceedings, and that Plaintiff also failed to provide Defendants constructive notice, the result is that Defendants’ motion for summary judgment to limit damages based on Plaintiff’s failure to mark must be granted. Plaintiff may only recover, at most, damages accruing after the date the complaint was filed in the respective actions against Samsung and LG.” Id. at 16.
In a recent Order, Judge Gregory M. Sleet granted defendants’ (the “Broadcaster Defendants”) motion to consolidate and stay fourteen related lawsuits. Delaware Radio Technologies, LLC et al. v. Beasley Broadcast Group, Inc., C.A. No. 13-1813-GMS, et al. (D. Del. Jan. 4, 2015). Plaintiffs allege that the Broadcaster Defendants infringe at least one or all of U.S. Patent Nos. 5,506,866, 5,642,379, and 5,475,691 (the “patents-in-suit”), which “relate to the transmission of both digital and analog radio signals using the in-band, on-channel (‘IBOC’) technique, often referred to as HD Radio technology.” Id. at 1. After plaintiffs filed suit against the Broadcaster Defendants, a third party, iBiquity Digital Corporation (“iBiquity”), filed a separate action against plaintiffs seeking a declaratory judgment of invalidity and noninfringement of the patents-in-suit. Id. iBiquity “licenses its software to the Broadcasting Defendants, which, when implemented into broadcasting equipment and systems, allegedly causes infringement of the method claims of the patents-in-suit.” Id.
The Broadcasting Defendants each filed a motion to consolidate and stay the cases pending the resolution of iBiquity’s declaratory judgment action. Judge Sleet ultimately granted that motion, finding all four traditional factors to weigh in favor of stay. Id. at 2 n.2. Judge Sleet first explained that “[a]lthough iBiquity is not itself an alleged direct infringer of the patents-in-suit, its technology is at the core of the Plaintiffs’ infringement contentions,” and the “[a]djudication of iBiquity’s declaratory judgment lawsuit will therefore either eliminate or crystalize the remaining issues for the Broadcast Defendants litigation.” Id. Judge Sleet further explained that “[t]he court can discern no meaningful prejudice to the Plaintiffs, as the information obtained during the course of the iBiquity lawsuit is not wasted; it can be applied-indeed, it is necessary-to the instant consolidated suit.” Id. Judge Sleet also noted that the case “is still in its infancy: no Rule 16 schedule is in place, and no discovery has been taken.” Id.
Judge Sleet explained that while “[b]oth parties extensively discusse[d] the ‘customer suit exception’ in their briefing . . . . the facts at bar do not fit squarely within the exception.” Id. That is, “iBiquity’s software is not itself infringing; it is the implementation of the software into the Broadcast Defendants’ systems that triggers the alleged infringement.” Id. Judge Sleet nevertheless found that the “underlying principles of the customer suit exception” – efficiency and judicial economy – to support the imposition of stay.
In a recent report and recommendation, Magistrate Judge Sherry R. Fallon considered defendants’ motion for summary judgment, which alleged that the patents-in-suit, U.S. Patent Nos. 7,418,409 (“the ’409 patent”) and 8,145,536 (“the ’536 patent”), are invalid because they fail to meet the subject matter eligibility requirements of 35 U.S.C. § 101. Tenon & Groove, LLC et al. v. Plusgrade S.E.C. et al., C.A. No. 12-1118-GMS-SRF (D. Del. Jan. 6, 2015). The ’409 patent discloses “methods for the concurrent optimization of value in various types of transactions between sellers and buyers, with applications in the context of the airline industry,” and the ’536 patent discloses “computerized applications for generating revenue based on conditional options for products, particularly in the context of the airline industry.” Id. at 1-2. Judge Fallon ultimately recommended that the court grant defendants’ motion and dismiss the action. Id. at 16.
Judge Fallon first considered whether the patents-in-suit satisfied the “machine-or-transformation” test. Given that the parties did not dispute the transformation prong, Judge Fallon analyzed only the machine prong of the test. Id. at 8. Judge Fallon concluded that the patents-in-suit did not satisfy the machine-or-transformation test, noting that specifications “themselves reveal that the processes may be performed mentally by a human, expressly stating that the inventions ‘eliminate manual, time-consuming processes and replace those with an efficient, automatic process.’” Id. at 9. Judge Fallon also noted that the “specifications provide that achieving an optimal upgrade for customers and the airline, which is a primary purpose of the invention, requires the use of human judgment” and that the Federal Circuit has held that the patent statute “does not allow patents on particular systems that depend for their operation on human intelligence alone.” Id. at 10. Moreover, Judge Fallon explained that “[d]ata-gathering steps alone cannot bring a claim into compliance with § 101, because humans have historically gathered and stored data mentally or with pen and paper.” Id. at 10-11.
Noting that the machine-or-transformation test is not dispositive, Judge Fallon next “examine[d] more generally the abstract nature of the claims” and applied the test set forth in Alice Corp. Pty. Ltd v. CLS Bank Int’l, 134 S. Ct. 2347 (2014). Considering the first step of the Alice framework, Judge Fallon found that the ’409 and ’536 patents “are directed to the unpatentable fundamental concept of using a computer to facilitate negotiations between an airline and its customer that results in a contract for a product upgrade.” Id. at 12. Judge Fallon explained that “[a]lthough certain dependent claims restrict the field of use to the airline industry, this limitation is insufficient to establish patent eligibility under § 101.” Id. at 13.
Turning to the second step of the Alice framework, Judge Fallon considered whether the patents-in-suit “embody inventive concepts” despite being directed to an abstract idea. Judge Fallon concluded that “[a]n airline’s capacity to track variables, including the preferences of multiple passengers, flight availability, and the perceived value for an upgrade option, is not an inventive concept.” Id. at 14. Judge Fallon explained that like “the risk hedging in Bilski, and the concept of intermediated settlement in Alice, the concept of using a computer to optimize negotiations between an airline and its customer, to each obtain the best economic results given certain conditions, is ‘a fundamental economic practice long prevalent in our system of commerce.’” Id. As Judge Fallon noted, “the claimed concept is not directed to any specific device or system, nor is it limited to a concrete application.” Id. Judge Fallon additionally explained that “the claims recite only a general purpose computer performing ‘purely conventional’ functions.” Id. at 15.
Chief Judge Leonard P. Stark recently issued a Memorandum Order on several of the parties various motions in limine filed in advance of an upcoming pretrial conference on January 9. Intellectual Ventures I LLC v. Symantec Corporation, C.A. No. 10-1067-LPS (D. Del. Jan. 6, 2015). Judge Stark granted plaintiff’s motions to preclude any evidence from defendant disparaging plaintiff’s business model and practices (such as referring to plaintiff as a “patent troll”), or disparaging the United States Patent and Trademark Office. Id. at 1, 2. Judge Stark also granted plaintiff’s motion to preclude reference to reexamination proceedings of the patent-in-suit because any probative value is outweighed by the risk of unfair prejudice and jury confusion. Id. at 1-2. Judge Stark granted defendant’s motion to preclude evidence of pre-suit knowledge of the patent-in-suit because “[n]o claims of willful infringement, indirect infringement, or copying will be the subject of the forthcoming trial.” Id. at 3.
Plaintiff also requested that the Court order defendant to limit the number of prior art references, obviousness combinations, and witnesses it will present at trial. Judge Stark denied the request noting that the parties can “make their own decisions as to how to make the best and most effective use of the limited, albeit sufficient, amount of time they will be given for their presentations at trial, which they are reminded will be no more than 20-24 hours per side.” Id. at 3-4.
Magistrate Judge Joel Schneider of the District of New Jersey, sitting by designation and referral, recently recommended that a defendant who was granted summary judgment of noninfringement based on a sublicense be awarded a “substantial sum” – more than $5,462,889 – in attorneys’ fees under 35 U.S.C. § 285. Bayer CropScience AG v. Dow Agrosciences LLC, Civ. No. 12-246 (RMB/JS) (D. Del. Dec. 22, 2014). Judge Schneider found that in light of the sublicense at issue, Bayer’s case was “exceptionally meritless and Bayer knew or should have known this before it filed its complaint. In addition, as the litigation progressed and it became apparent that Bayer’s case was going nowhere, Bayer insisted on forging ahead while it unsuccessfully searched for a theory to defeat Dow’s license or contract defense. The better and prudent course of action would have been to abandon the action.” Id. at 9-10. According to Judge Schneider, the weakness of Bayer’s claims was also demonstrated by the Federal Circuit’s summary affirmance, a procedure used “only when the appellant/petitioner has utterly failed to raise any issues in the appeal that require an opinion to be written in support of the court’s judgment of affirmance.” Id. at 14 (quoting Fed. Cir. R. 36). Finally, Judge Schneider noted that “[a]nother remarkable aspect of Bayer’s defeat is that much of Dow’s best evidence came from the deposition testimony of Bayer’s witnesses, not Dow’s witnesses. . . . If Bayer had conducted a modicum of due diligence before it filed its complaint it would have learned from these witnesses that its case was doomed.” Id. at 14-15.
UPDATE: Judge Renee Marie Bumb adopted the report and recommendation of Magistrate Judge Schneider in a March 13, 2015 opinion. Judge Bumb found counsel’s billing rates to be reasonable, id. at 31 n.12, but reserved judgment on an appropriate amount of attorneys fees to be awarded due to the heavily redacted nature of the fee application. The Court explained that a plaintiff “is entitled to appraise the reasonableness of the amount of fees requested by [defendant] including the nature and extent of the work done by [defense] counsel on various phases of the case, so that it may present to the court any legitimate challenges to [defendant’s] claim.” Id. at 29. While Judge Bumb found “that [plaintiff] could have done more before Judge Schneider in terms of articulating why it could not access the reasonableness of [defendant’s] fees, the Court will hold further oral argument on and reserve decision on this objection. (Alternatively, [defendant] may wish to turn over revised redacted billing statements in the interim, which may obviate the need for oral argument.)” Id. at 30-31.
In Intellectual Ventures I LLC, et al. v. Canon Inc., et al., C.A. No. 13-473-SLR (D. Del. Dec. 16 2014), Judge Sue L. Robinson limited the number of patents to be presented at the Markman hearing. Judge Robinson explained that the Court was presented with “65 disputed terms from 95 claims in 11 patents,” and that the Court’s resources were not “substantial enough to warrant a claim construction decision to issue on all 11 patents on or before January 27, 2015.” Judge Robinson therefore ordered the plaintiffs to select the six patents and related limitations they would like to present at the December 22, 2014 Markman hearing. Judge Robinson did note that the Court would “discuss with the parties at that time the disposition of the remaining patents in terms of the case schedule.”
In a memorandum opinion, Judge Sue L. Robinson granted and denied in part defendants’ motion to dismiss plaintiffs’ claims of infringement of U.S. Patent Nos. 7,664,701 (“the ’701 patent:), 8,083,137 (“the ’137 patent”), 7,603,382 (“the ’382 patent”), and 7,260,587 (“the ’587 patent”) based on the failure of those patents to recite patentable subject matter pursuant to 35 U.S.C. § 101. Intellectual Ventures I LLC et al. v. Manufacturers and Traders Trust Company, C.A. No. 13-1274-SLR (D. Del. Dec. 18, 2014).
First, Judge Robinson determined that the Court “may proceed on a § 101 analysis” without a claim construction, “as the parties’ arguments are not focused on specific claim limitations, but instead on the broader concepts of the claims and the computer components used.” Id. at 9-10.
Judge Robinson then relied on the two-step framework set forth in Alice Corp. Ply. Ltd. v. CLS Bank Int’l, 134 S.Ct. 2347(2014) to assess the subject matter eligibility of each of the asserted patents. Starting with the ’137 Patent, Judge Robinson noted that it disclosed “a system and method which allows consumer users to establish self-imposed limits on the user’s spending (borrowing) such that when the limit is reached the consuming user is notified,” which Judge Robinson determined to be a “longstanding and fundamental practice, utilized in personal and business finances” under the first prong of Alice. Id. at 11-12. Turning to Alice’s second prong, Judge Robinson found that plaintiffs’ arguments failed, given that an “abstract idea implemented on a computer [that] allows for more or faster monitoring of accounts is not the crux of the patentability analysis.” Id. at 13. Judge Robinson further noted that “[t]he computer and components (central processor) described in the specification are generic. The database is also generic; the specification does not describe a ‘specially programmed database,’ but a database used to store data.” Id. at 14. Judge Robinson further explained that the recitation of a “means for storing,” a “means for presenting transaction summary data,” and a “means for listing,” did not change the analysis, “as only generic computers and components are disclosed in the specification.” Id. at 15. Judge Robinson thus found the ’137 patent invalid for lack of patentable subject matter. Id. at 15-16.
Addressing the ’832 patent, Judge Robinson noted that it is directed to “a system for selectively tailoring information delivered to an Internet user depending upon the particular needs of the user.” Id. at 16. Judge Robinson explained that “[i]nstead of working in a ‘normal, expected manner,’ the ’382 patent describes an idea and solution for customized web page content, [and] thus, ‘the claimed solution is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.’” Id. at 18. Judge Robinson therefore found that the ’832 patent recites patentable subject matter.
Turning to the ’587 patent, Judge Robinson noted that it disclosed “a method, system and apparatus for automatically organizing a large number of images that may be obtained from a variety of different sources,” which was found to be “akin to a computerized photo album, a routine and conventional idea” under the first prong of Alice. Id. at 20. As to the second prong, Judge Robinson found that “[t]he claims do no more than ‘computerize’ a known idea for organizing images” and therefore concluded that the ’587 patent was invalid for lack of patentable subject matter. Id. at 21-22.
As to the ’701 patent, Judge Robinson noted that the patent’s central idea is directed to “providing a user with aliases to use in conducting transactions,” which was found to be an “abstract idea” under Alice’s first prong, given that “[t]he use of aliases to maintain privacy in financial transactions is not limited to Internet transactions.” Id. at 22-23. Pursuant to the second prong, Judge Robinson noted that “in order to pass muster under § 101, it is no longer sufficient to use the Internet through generic computer components to achieve a useful result.” Judge Robinson determined that the ’701 patent fell under such a category, and thus found the ’701 patent was invalid for failure to recite patentable subject matter. Id. at 25-26.