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Magistrate Judge Christopher J. Burke recently granted a Daubert motion seeking to exclude portions of a plaintiff’s damages expert opinion.  W.L. Gore & Assocs., Inc. v. C.R. Bard, Inc., et al., C.A. No. 11-515-LPS-CJB (D. Del. Oct. 23, 2015).  The expert had rendered a reasonably royalty opinion based in part on her conclusion that a certain licensed patent was “similar in importance” to the asserted patents subject to the hypothetical license negotiation analysis in the case.  This conclusion was, in turn, based on a conversation the expert had with the plaintiff’s technical expert on infringement.  As Judge Burke explained, “it is clear that [the damages expert] relied exclusively on her conversation with [the technical expert] in reaching a conclusion regarding technological comparability of the Goldfarb patent and the asserted patents[.]”  Id. at 11.  The Court explained that was improper because the technical expert had not, himself, opined as to the technological comparability of the Goldfarb patent and the asserted patents, and therefore, the damages expert “could not simply testify at trial (as she did during her deposition) about what [the technical expert] previously said to her about the topics. . . . In that scenario, [the damages expert] would be simply repeating [the technical expert’s] views on technological comparability without applying her own experience or methodology to those views[.]”  Id. at 13 (emphasis in original).  This, the Court explained, would “amount to the transmission of hearsay to the jury, which is not permissible.”  Id. at 13-14.  While the Court granted the motion, it allowed the plaintiff leave to supplement the technical expert’s report to include an opinion on the technological comparability issue which the damages expert could then rely upon.

UPDATE: In a Memorandum Order dated November 24, 2015, Chief Judge Stark has adopted Judge Burke’s order in all respects. See W.L. Gore & Assocs., Inc. v. C.R. Bard, Inc., et al. C.A. No. 11-515-LPS-CJB, Memo. Or. at 3-4 (D. Del. Nov. 24, 2015).

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Judge Fallon recently considered a renewed motion to dismiss Courtesy Products L.L.C.’s willful infringement claims filed by defendant Hamilton Beach Brands, Inc.; as well as Courtesy Products’ motion to dismiss and strike Hamilton Beach’s inequitable conduct claims.  Courtesy Products L.L.C. v. Hamilton Beach Brands, Inc., C.A. No. 13-2012-SLR-SRF (D. Del. Oct. 20, 2015).

Judge Fallon recommended denial of Hamilton Beach’s motion to dismiss because the Court found that under In re Seagate Tech., LLC, 497 F.3d 1360 (Fed. Cir. 2007), the amended complaint adequately pled objective recklessness.  Id. at 6.  In particular, Judge Fallon found sufficient “[t]he amended allegations regarding the knowledge requirement, combined with allegations that Hamilton Beach directly and/or indirectly infringed the patents-in-suit, and that it intentionally advised third party customers to use the accused products in systems that infringe the patents-in-suit[.]”  Id.  Judge Fallon also found that the amended complaint “sufficiently establish[ed] a link between knowledge and objective recklessness by pleading that, ‘[h]aving executed a license in the year 2009 to practice claims of the [patents-in-suit] for a specific product … and thus being on notice of the [patents-in-suit], Hamilton Beach’s continued activities demonstrate a willful disregard of the [patents-in-suit] and thus constitute willful patent infringement.'”  Id. at 8.

Regarding Hamilton Beach’s inequitable conduct allegations, Judge Fallon found that the allegations passed muster except with respect to the “but-for materiality” standard discussed in Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1291 (Fed. Cir. 2011).  Id. at 12-13.  “Neither the challenged pleading nor Hamilton Beach’s answering brief identifies how the cited misrepresentations in the May 21, 2007 response to the PTO’s office action led to the issuance of the patents-in-suit.”  Id.  Although Judge Fallon recommended the Court grant-in-part Courtesy Products’ motion to dismiss on this basis, Judge Fallon also recommended the Court give Hamilton Beach leave to correct the deficiencies.  Id. at 15.

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Magistrate Judge Christopher J. Burke recently recommended denial of a motion to dismiss pre-suit induced infringement claims, to the extent damages were sought for such pre-suit infringement.  Elm 3DS Innovations, LLC v. SK hynix Inc., et al., C.A. No. 14-1432-LPS-CJB (D. Del. Oct. 16, 2015).  The complaint did not allege direct evidence of pre-suit knowledge of the plaintiff’s ’239 patent, but Judge Burke found that it alleged certain indirect evidence that, taken together, rendered it at least plausible that the defendants did, in fact, have pre-suit knowledge of the ’239 patent.  The complaint alleged that the plaintiff’s president made a presentation to an executive and around 60 of defendants’ engineers in 2000 or 2001 relating to the ’239 patent’s parent, and that the ’239 patent was also well known in the industry and cited by defendants’ competitors in numerous patent applications.  Id. at 4-5.  On balance, Judge Burke found that these allegations “render it at least plausible that [defendants were] aware of the [patent-in-suit] and its claims as of the date of the patent’s issuance.”  Id. at 4.  Judge Burke also found that the complaint “plausibly allege[d] that Defendants knew that their semiconductor chips at issue were in fact incorporated into their customers’ (e.g., global equipment manufacturers like Apple, Microsoft, Samsung and HTC) finished electronic products sold in the United States.”  Id. at 10-11.

Update:  On March 31, 2016, Chief Judge Leonard P. Stark adopted Magistrate Judge’s Burke’s report and recommendation.

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In a recent Memorandum Order, Chief Judge Leonard P. Stark adopted in part defendants’ objections to Magistrate Judge Burke’s Report and Recommendation (“the Report”) dated July 15, 2015 (discussed here), which recommended that defendants’ motions to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) for failure to claim patentable subject matter under 35 U.S.C. § 101 should be denied. Execware, LLC v. BJ’s Wholesale Club, Inc., C.A. Nos. 14-233, 14-234, 14-235, 14-240-LPS (D. Del. Sept. 30, 2015). Judge Stark explained that defendants’ objections are sustained to the extent “they challenge Judge Burke’s conclusions that claim 1 is not directed to an abstract idea and that claim 1 contains an ‘inventive concept.’” Id. at 3. Judge Stark first disagreed with the Report’s approach of “presum[ing] that the claims are to be construed in the manner most favorable to Plaintiff.” Judge Stark found the approach improper in this particular instance because defendants’ motions could be denied based on constructions “that . . . turn out to be incorrectly less favorable to Defendants than the constructions that will ultimately be adopted after formal claim construction takes place.” Id. at 4-5.

Judge Stark also found that “[c]laim construction is necessary in this case before determinations can be made under either step of the Alice inquiry.” Id. at 6. Judge Stark noted that the Report invoked the “most favorable” standard four times in its “step-1 analysis under Alice.” Id. at 7. Judge Stark thus found “[b]ecause the claim meaning is apparently uncertain enough to turn on multiple uses of this standard, and because the parties were not afforded an opportunity to explain why it may or may not be appropriate to read in limitations from the specification into certain of the steps comprising claim 1, . . . formal claim construction is necessary before deciding whether claim 1 is directed to an abstract idea.” Id. As to the second step of Alice, Judge Stark noted, among other things, that “the Report does not give any reasons why, when this claim term is eventually construed, it will be construed with limitations read into it from the specification.” Id. at 9-10. Judge Stark ultimately denied defendants’ motions to dismiss without prejudice to renew as summary judgment motions after claim construction and discovery have taken place. Id. at 11.

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In Transcend Medical, Inc. v. Glaukos Corp., C.A. No. 13-380 (D. Del. Oct. 9, 2015), Judge C. Darnell Jones, II, writing for Judge Mitchell S. Goldberg, denied Glaukos’ (declaratory judgment-defendant) request to postpone the inequitable conduct trial schedule for November 2, 2015. As Judge Jones explained, the court previously granted Transcend’s (declaratory judgment-plaintiff) motion for summary judgment on non-infringement, denied Glaukos’ motion on the issue of inequitable conduct, and scheduled the inequitable conduct trial. Id. at 1. Glaukos urged that the “inequitable conduct trial be postponed because the infringement ruling resolved the gravamen of the dispute between the parties and a trial on the inequitable conduct issue would be a waste of resources and potentially unnecessary in the event that the infringement ruling is affirmed on appeal.” Id. While the parties agreed that “following summary judgment of non-infringement, courts have the discretion to dismiss any remaining inequitable conduct and invalidity claims without prejudice to allow an appeal of the non-infringement judgment to go forward,” the court found it should not exercise that discretion. Id. at 1-2.

First, Judge Jones pointed to the fact that “parties have expended substantial resources preparing for trial and are close to being prepared to try this case,” and that postponement might “require the parties to prepare for trial a second time.”  Id. at 2. Judge Jones further explained that “the inequitable conduct trial is a bench trial and will not involve a lengthy jury selection process,” and that “there is significant overlap between the parties’ witnesses.” Id. Judge Jones also reasoned that “proceeding to trial on the inequitable conduct claim will serve to provide more clarity regarding the parties’ positions in the event that the infringement ruling is reversed on appeal,” and that “reaching final judgment on all of the claims raised in this case will avoid the potential for piecemeal appellate litigation.” Id.

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Judge Robinson recently considered cross-motions for summary judgment on the validity of U.S. Patent Nos. 7,062,749 and 7,603,674 pursuant to 35 U.S.C. § 101.  YYZ, LLC v. Hewlett-Packard Company, et al., C.A. Nos. 13-136-SLR, 13-579-SLR, 13-581-SLR (D. Del. Oct. 8, 2015).  The patents disclose a “computer-based apparatus and systems for measuring, monitoring, tracking and simulating enterprise [or business] communications and processes in an asynchronous messaging environment.”  Id. at 13-14 (internal quotation omitted) (alteration in original).

Providing examples for each asserted claim, defendants argued “that the “asserted claims of the patents-in-suit are directed to the abstract idea of collecting and saving information relating to a business process – a well-known, routine, and fundamental business practice.”  Id. at 15.  In response, Plaintiff contended that the technologies of the patents are “very specific” and the invention directed to a “very specific” technological environment.  Id.  The Court disagreed, finding that the claims essentially recite a method for sending a copy of information to a central repository and storing the copied information, which is an abstract idea.  Id. at 15-16.  Judge Robinson also found that although “the asserted claims of the patents-in-suit operate in an asynchronous message-based communications environment and fix problems only existing in asynchronous environments[,]” this limitation was insufficient to “pass muster under the § 101 paradigm.”  Id. at 17.  More specifically, Judge Robinson held that:

To broadly claim a method of accomplishing routine functions requires more than just an “apply it” directive, even in a specific technical environment such as the one at bar. A component that “can be configured” to perform the claimed function is neither sufficiently described nor sufficiently innovative to transform the inventive concept at bar into patent-eligible subject matter.

Id. at 19.

Note that in coming to this conclusion, Judge Robinson considered extrinsic evidence, namely an expert declaration submitted by plaintiff, because such evidence was “helpful in terms of understanding the state of the art at the time of the patents-in-suit, and whether the problem to which the patent was directed is solved using computer technology in unconventional ways.”  Id. at 16.

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Judge Sue L. Robinson recently granted a defendant’s motion for judgment on the pleadings under 35 U.S.C. § 101.  Cyberfone Sys., LLC v. Lexmark Int’l, Inc., Civ. No. 14-1489-SLR (D. Del. Oct. 8, 2015).  The patent at issue, titled “Data Transaction Assembly Server,” was directed to “a form driven operating system which permits dynamic reconfiguration of the host processor into a virtual machine which supports any of a number of operating system independent data transactions, and more particularly, to a data transaction assembly server which downloads data transactions representative of different applications.”  Id. at 1, 13.  Judge Robinson found that the purpose of the patent claims—“entering and processing data in response to questions on forms or templates”—was an abstract concept.  Id. at 16.  The Court further found that “although the problem addressed by the asserted claims is rooted in computer technology, the claimed solution is not disclosed with enough specificity to transform the abstract idea . . . into a patentable application of such, thus risking monopolization of the abstract idea itself.”  Id. at 18.

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Judge Robinson recently granted a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) for lack of patentable subject matter. Judge Robinson ultimately concluded that “[g]iven the options illustrated in the specification and the broad claim language, the ‘inventive concept’ of the patents-in-suit does not pass muster under § 101. Even if the problem addressed were characterized as Internet-centric, the claimed solution is not described with enough specificity to place meaningful boundaries on the inventive concept.” Parus Holdings, Inc. v. Sallie Mae Bank, et al., C.A. No. 14-1427-SLR, Memo. Op. at 22 (D. Del. Oct. 8, 2015).

Of particular interest in the decision is Her Honor’s summation of the applicable case law: “In reviewing the post-Alice cases such as DDR and Intellectual Ventures, the court is struck by the evolution of the § 101 jurisprudence, from the complete rejection of patentabiliy for computer programs to the almost complete acceptance of such, to the current (apparent) requirements that the patent claims in suit (1) disclose a problem ‘necessarily rooted in computer technology,’ and (2) claim a solution that (a) not only departs from the ‘routine and conventional’ use of the technology, but (b) is sufficiently specific so as to negate the risk of pre-emption. . . . Moreover, it is less than clear how a § 101 inquiry that is focused through the lens of specificity can be harmonized with the roles given to other aspects of the patent law (such as enablement under § 112 and non-obviousness under § 103), especially in light of the Federal Circuit’s past characterization of § 101 as a “coarse” gauge of the suitability of broad subject matter categories for patent protection. Given the evolving state of the law, the § 101 analysis should be, and is, a difficult exercise.” Id. at 11-12.

Her Honor continued, touching on procedural and evidentiary concerns: “The pre-emption concern is generally amenable to review in the context of a motion to dismiss or for judgment on the pleadings. The second requirement, which may well involve issues of fact relating to the state of the art in the technological environment involved, is more appropriately addressed after discovery in the context of a motion for summary judgment. Id. at 13.

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Chief Judge Stark recently denied a motion for attorney’s fees under § 285. As listed by the Court, Defendants’ factual basis for seeking fees included that Plaintiff “was ‘on notice’ as to doubts about its ‘standing to sue’ early in the litigation, but made no attempt to demonstrate that it possessed ‘all substantial rights’ in the asserted patents . . . continued litigating after the Court dismissed Plaintiff’s Complaint for lack of standing . . . [and] caused Defendants to incur over three million dollars in ‘attorneys’ fees and costs.’” Clouding IP, LLC v. EMC Corp., et al., C.A. No. 13-1455-LPS, Memo. Or. at 2 (D. Del. Sept. 30, 2015). Judge Stark found that the Plaintiff had presented a good faith reading of the patent purchase documents and that “Plaintiff had a good faith, though ultimately incorrect, belief that it had standing to suethroughout the litigation. In particular, the Court agrees with Plaintiff’s statement that ‘[i]t is illogical to believe that [Plaintiff] would incur the significant tie and expenses associated with patent litigation all the while believing that it lacked standing, especially because a party can challenge standing until the last moments of a case.” Id. at 4. His Honor concluded, “[a]s long as the test for awarding attorney fees turns on whether the case is ‘exceptional,’ the Court is obligated to consider the instant case in comparison to the full panoply of patent cases with which it has been involved, and needs to assess if the instant case is in some meaningful sense ‘uncommon,’ ‘rare,’ or ‘not ordinary.’ Having undertaken this analysis, the Court concludes that nothing about the instant case stands out as ‘exceptional’ in any respect.” Id. at 5. In another decision issued on the same day, Judge Stark granted § 285 fees based on His Honor’s finding that the case “stands out from others” and is exceptions. See Nova Chemicals Corp., et al. v. The Dow Chemical Co., C.A. No. 13-1601-LPS, Memo. Op. (D. Del. Sept. 30, 2015)

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In a series of related actions, Chief Judge Leonard P. Stark granted Defendants’ motions to dismiss or for judgment on the pleadings based on Section 101, ruling that all claims of the patent-in-suit, entitled “Method and Apparatus for Conducting or Facilitating a Promotion,” were directed to patent-ineligible subject matter. E.g., Inventor Holdings, LLC v. Gameloft, Inc., C.A. No. 14-1067-LPS (D. Del. Sept. 30, 2015).  The patent relates to “a method and apparatus for distributing promotions to potential participants and for allowing the promotion participants to receive benefits associated with the promotions. The claimed methods are generally directed to “facilitating play of a game” on a “mobile device” or “computer-readable medium” in which a user receives an in-game benefit after a locked outcome of the game is unlocked using an unlock code associated with that outcome.” Id. at 1-2 (internal citations and quotation marks omitted).

The Court first concluded that certain disputed terms could be given their plain and ordinary meaning, and thus the Court could decide patentability at this stage without further claim construction resolution. See id. at 13-16. The Court also clarified that a clear and convincing evidence burden of proof did not apply to Defendants’ motions as there were no disputed material facts to resolve. Id. at 12 n.6.

Under the first prong of the ­Supreme Court’s Mayo/Alice test, the Court concluded that the patent was directed to an abstract idea because its claims did not “solve a problem specific to mobile devices,” and were similar to the claims at issue in, “for example, Bilski and Alice, which were directed to abstract ideas that could be implemented using generic computer technology.” Id. at 17 (emphasis in original). The Court also agreed with Defendants that the claims were directed to an abstract concept because they were directed to a “fundamental economic practice,” in other words “the economic strategy and abstract idea of ‘providing an ‘unlock code’ in exchange for a qualifying activity for an ‘outcome’ to reveal the [intra-game] benefit of the locked outcome.” Id. at 17-18 (alterations in original).

Finally, the Court concluded under the second Mayo/Alice step that the claims did not include a sufficient inventive concept. The claims were “implemented using generic mobile device technology” and this was insufficient to “impose meaningful limits on the scope of those claims.” Id. at 20-21. Further, while Plaintiff argued that the claims met the machine-or-transformation test because of their “use of a ‘mobile device’ in connection with the other claim limitations,” the Court observed that “many exemplary embodiments in the specification indicate that the mobile device is not integral to the performance of the claimed method,” thus “neither the claims nor the specification . . . recite any machine that plays a ‘significant part in permitted the claimed method to be performs.’” Id. at 22-23 (emphasis in original) (internal citations omitted). Further, the claims “tie[d] up use of the underlying ideas of the [patent],” id. at 23, and these claims were not analogous to the claims found patent-eligible in DDR Holdings because they “do recite standard use of a conventional mobile phone in a normal, expected manner,” id. at 24 (emphasis in original).

Accordingly, the Court concluded that the claims of the patent-in-suit were directed to patent-ineligible subject matter, and granted Defendants’ motions to dismiss or for judgment on the pleadings. Id. at 25.

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