Judge Robinson recently denied two patent infringement defendants’ motion for attorneys’ fees under 35 U.S.C. § 285 in a case in which the plaintiff gave the defendants covenants not to sue two days before the summary judgment and claim construction hearing. Under the Supreme Court’s Octane Fitness decision, Her Honor found no evidence that the case was exceptional where the defendants “basically argue[d] that these cases are ‘exceptional’ because they would have prevailed on their various defenses if the cases had not been dismissed.’” Computer Software Protection, LLC v. Adobe Systems Inc., C.A. No. 12-451-SLR, Memo. Or. at 3-5 (D. Del. Mar. 31, 2015). As Judge Robinson explained, “however, none of the defenses posited by defendants are so evident from the record at bar that the court can say with any certainty that defendants not only would have succeeded on the merits, but that the strength of their arguments would have been exceptionally dispositive. Indeed, in a case where settlements were reached with other parties, and the court did not construe the claims, or resolve multiple discovery disputes, or resolve motions to dismiss or for summary judgment, to characterize these circumstances as exceptional is exceptionally presumptuous, as well as inconsistent with the court’s understanding of what justifies the fee-shifting provisions of § 285.” Id. at 5. Judge Robinson also noted that she was “not inclined to address the merits of [the asserted] defenses as though the cases had not been dismissed, a monumental waste of judicial resources in the context of a discretionary paradigm.” Id. at 5 n.5.
In a recent Order, Judge Richard G. Andrews, pursuant to FRCP 15(a), granted plaintiff’s motion amend its complaint as to claims of induced infringement, but denied the motion to amend as to claims of contributory infringement. TQ Delta, LLC v. 2Wire, Inc., C.A. No. 13-1835-RGA (D. Del. Mar. 26, 2015). First, Judge Andrews found that plaintiff had adequately pled induced infringement, and its claims were therefore not futile. In particular, Judge Andrews explained that plaintiff “properly alleged inducement because it makes specific allegations of directly infringing parties, products and acts.” Id. at 3. Plaintiff alleged that defendant’s products operate in accordance with “specific DSL standards,” and defendant argued that “a standard with a mix of mandatory and optional requirements cannot be used alone to establish infringement.” Id. Judge Andrews found that “whether or not infringement has been established, as opposed to plausibly alleged, is a question for another day.” Id. That is, “[t]he standard’s mix of mandatory and optional requirements does not undercut the plausibility of the direct infringement allegation.” Id. at 3-4. Judge Andrews also found that plaintiff made a plausible showing that defendant knowingly induced infringement and had the specific intent to encourage infringement. Id. at 4-5. Specifically, Judge Andrews noted that “I do not think I need to decide exactly when the allegations rise to the level of knowledge since knowledge is plausibly pled as of the date an earlier complaint[,] names a patent[,] and alleges the Defendant infringed it with a product that complied with a named standard.” Id. at 4. Judge Andrews further noted that “[i]t is more than plausible that after receiving the complaint Defendant would have conducted reasonable investigation to determine the scope of the asserted patents, and that it thereafter intended for its customers to directly infringe the asserted patents.” Id. at 5. Judge Andrews found that plaintiff did not sufficiently plead contributory infringement, where “plaintiff merely states that the products are made for the specific purpose of operating in accordance with the standards, and therefore concludes that they have no substantial noninfringing use.” Id. Judge Andrews explained that “[t]hese conclusory statements are not adequately pled, because, as Defendant argues, the allegations are not plausible given the ‘mandatory/optional features of the standards and the substantial room for implementation-specific customization.’” Id.
Finally, Judge Andrews denied plaintiff’s motion to dismiss defendant’s breach of contract counterclaim. Id. at 6. Plaintiff argued, among other things, that defendant’s “breach of contract counterclaim fails to plead facts to demonstrate that Defendant was entitled to the benefits of Plaintiff’s agreement with ITU, a standards-setting organization.” Id. Judge Andrews found, however, that defendant “has sufficiently alleged that it was a third-party beneficiary of a contract and that Plaintiff failed to negotiate a license in good faith.” Id.
In Tuxis Technologies, LLC v. Amazon.com, Inc. (D. Del. Mar. 25, 2015), Judge Richard G. Andrews granted Amazon’s motion to dismiss for lack of patentable subject matter as to Tuxis’ remaining asserted claims of U.S. Patent No. 6,055,513 (“the ’513 patent”). Judge Andrews had previously granted Amazon’s motion to dismiss with respect to claim 1 of the ’513 patent (discussed here). First, addressing step one of the Alice framework, Judge Andrews found that “the asserted claims of the ‘513 patent are directed to the abstract idea of upselling” and are therefore “directed to patent-ineligible subject matter.” Id. at 5. Turning to step two of the Alice framework, Tuxis argued, for example, that the claims at issue “require establishing communication via the Internet between the user’s computer and the system.” Id. at 7-8. Judge Andrews explained, however, that such communication did not meaningfully limit the claims, noting that “the prohibition against patenting abstract ideas cannot be circumvented by attempting to limit the use of [the idea] to a particular technological environment.” Id. at 8. Judge Andrews further noted “that invocation of the Internet does not add an inventive concept, and that ‘the use of the Internet is not sufficient to save otherwise abstract claims from ineligibility under § 101.’” Id. Contrasting the claims at issue with those from DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014), Judge Andrews found that the instant claims “merely recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet.” Id. Rejecting Tuxis’ other arguments, Judge Andrews found that the remaining asserted claims were directed to unpatentable subject matter and therefore granted Amazon’s motion to dismiss.
On March 24, the jury in Intellectual Ventures v. Motorola Mobility, C.A. No. 11-908-SLR, returned a verdict of direct, contributory, and induced infringement for plaintiff for one of the patents-in-suit. For the patent the jury found not infringed, it also found that this patent was invalid as obvious.
UPDATE: The Court released an additional verdict sheet in this case regarding different patent-in-suit. For this third patent, the jury returned a verdict of direct, contributory, and induced infringement for plaintiff.
Judge Richard G. Andrews recently dismissed plaintiffs’ motion to strike portions of the supplemental expert reports of defendants’ expert because the motion did not comply with the Court’s Local Rule 7.1.1. requiring parties to make a reasonable effort to resolve non-dispositive motions. Interdigital Communications Inc. v. Nokia Corporation, C.A. No. 13-10-RGA (D. Del. Mar. 26, 2015). The Court directed the parties to meet and confer. Id. at 2.
Chief Judge Leonard P. Stark recently decided the parties’ motions to preclude expert testimony in Fairchild Semiconductor Corporation v. Power Integrations, Inc., C.A. No. 12-540-LPS (D. Del. Mar. 20, 2015). Judge Stark granted Power Integrations’ motion as to Fairchild’s claim for damages for alleged inducement because Fairchild’s expert used the wrong date for his hypothetical negotiation. Id. at 2. In particular, Fairchild’s expert failed to consider a 2012 jury verdict in prior litigation between the parties in which the jury found no inducement of the patent-in-suit. Id. However, because both parties’ experts relied on the same incorrect date, Judge Stark gave both sides the opportunity to serve supplemental expert reports to correct the hypothetical negotiation date. Id. at 3.
Judge Stark denied Fairchild’s motion to preclude Power Integrations’ technical expert finding that he did not import new limitations into two claim terms and provided adequate support for his opinion that the patent-in-suit was invalid under 35 U.S.C. § 112. Id. at 3-4. Judge Stark did, however, grant Fairchild’s motion as to Power Integrations’ damages expert. Judge Stark determined that the expert improperly apportioned value between infringing and non-infringing products because he “did not analyze Fairchild’s accused products, relying instead on an apportionment based on [Power Integrations’] products, based on his belief that those products would have a relative value in the marketplace similar to what is exhibited by the Power Integrations products.” Id. at 7 (internal quotation omitted). Judge Stark also determined that the expert used an improper rule of thumb when beginning his analysis with “an assumption that up to 80% of value may be attributable to intellectual property, based on research showing that 80% of a high tech company’s value consists of intangible value, such as intellectual property.” Id. at 8.
Judge Sue Robinson recently ruled in a claim construction order that several patent claims were indefinite under 35 U.S.C. § 112 because the specifications did “not provide guidance as to the type or format of the” structure of means-plus-function claims. Therefore, Her Honor found, the claims failed “to inform, with reasonable certainty, those skilled in the art about the scope of the invention” under the Supreme Court’s Nautilus, Inc. v. Biosig Instruments, Inc. decision. Intellectual Ventures I, LLC, et al. v. Canon Inc., et al., C.A. No. 13-473-SLR, Memo. Or. at 4-34 (D. Del. Mar. 27, 2015). Although Judge Robinson did not find all claims indefinite, her indefiniteness finding applied to a substantial portion of the claim terms in dispute. A representative claim is as follows:
An apparatus, comprising:
a main circuit module;
a connection cable; and
an optical sensor circuit module coupled to the main circuit module through the connection cable, wherein the optical sensor circuit module is configured to:
receive scan control signals from the main circuit module; and
generate timing control signals for extracting an analog image signal in response to the received scan control signals, wherein the received scan control signals do not comprise any timing control signals.
In this claim, Judge Robinson found the specification was lacking guidance regarding both “scan control signals” and “timing control signals” because there is no information “as to the type or format of the signals or what the signals ultimately control. Id. at 4-5.
Judge Sue L. Robinson recently ruled on a motion to stay with respect to defendants’ patent misuse and antitrust counterclaims. Intellectual Ventures I LLC v. Toshiba Corporation, et al., Civ. A. No. 13-453-SLR (D. Del. Mar. 20, 2015). Judge Robinson explained that, in most cases, “patent misuse defenses and antitrust counterclaims are related to, and co-extensive with, the scope of the patent litigation in whcih they are asserted.” Id. at 3. In such cases, it makes sense “to stay consideration of such defenses and counterclaims, as they are based in large measure on the efficacy of the patent litigation itself . . . .” Id. The defendants argued that their counterclaims were different than the typical case, because the patent misuse and antitrust counterclaims were not focused simply on the asserted patents, but instead on the plaintiff’s “3,700+” patent portfolio. Id. Judge Robinson agreed to a point, and ordered that the counterclaims were stayed to the extent they involve validity of the plaintiff’s patent portfolio. But to the extent the antitrust counterclaims related to “numerosity and value (i.e., presuming validity) of [the plaintiff’s] patent portfolio and [the plaintiff’s] allegedly improper leveraging of such, I agree that a stay is not warranted, as there are no overlapping issues with [the plaintiff’s] case.” Id. at 4. Judge Robinson ruled that such counterclaims could proceed, but on a bifurcated schedule.
As previously reported, Judge Richard Andrews granted a motion for attorney fees in a patent infringement case under the Court’s inherent powers due to the plaintiff’s initiation of the suit without a good-faith belief that the accused products implemented the patented technology. Following supplemental briefing on the amount of attorney fees to be awarded, Judge Andrews has issued another opinion outlining the amount of fees that are owed. Parallel Iron LLC v. NetApp, Inc., C.A. No. 12-769-RGA, Memo. Op. at 16 (D. Del. Mar. 25, 2015).
Judge Andrews first rejected the plaintiff’s contention that the “lodestar” approach typically used to calculate attorney fees subject to a fee-shifting statute is not appropriate when fees are granted under the Court’s inherent powers. Id. at 6-7. Judge Andrews then rejected the argument that fees should be limited to the work associated with the plaintiff’s unsupported infringement contention because “Plaintiff was . . . sanctioned both for filing the suit and for its litigation tactics throughout. The entire period that Plaintiff accused pNFS instrumentalities is therefore the appropriate period for which to award fees.” Id. at 7-9. Furthermore, Judge Andrews found that defense counsel had not “performed unnecessary, frontloaded work . . . [because] responsible attorneys would not stand around and wait for months once their client has been accused of infringement and then rush to perform all their work once they get more specific information. It is reasonable to begin investigating and preparing a defense once an infringement suit has been brought.” Id. Judge Andrews also rejected arguments that evidence of settlement was used in violation of F.R.E. 408 and that the defendant was not entitled to fees incurred in connection with bringing a fee motion. Id. at 10-12.
Judge Andrews then found that the request for fees for hours worked was reasonable despite the fact that the hours were worked under a fixed fee arrangement. Judge Andrews’ only disagreement with the fees calculated by the defendant’s counsel was the hourly rate used. His Honor explained that under the “forum rule,” the hourly rate used should be that of intellectual property attorneys in Delaware rather than in New York City. Id. at 12-14. Finally, Judge Andrews refused to grant an injunction to prevent the plaintiff from dissipating assets and found that discovery into the plaintiffs finances was premature because judgment had not yet been entered, so allowing discovery would render Rule 69(a)(2), governing discovery from a judgment creditor, superfluous. Id. at 14-16.
Judge Andrews recently granted a Rule 12(b)(6) motion to dismiss for lack of patentable subject matter under 35 U.S.C. § 101 and Alice Corp. Priceplay.com, Inc. v. AOL Advertising, Inc., C.A. No. 14-92-RGA, Memo. Op. at 10 (D. Del. Mar. 18, 2015). Under the first step of the Alice analysis, His Honor found that the patents-in-suit were directed to the abstract idea of “a sales transaction,” a “fundamental economic practice long prevalent in our system of commerce.” Id. at 5-6. “[The plaintiff] argues that the claimed invention cannot be directed to patent-ineligible subject matter when ‘hundreds of e-commerce models have been commercialized and developed’ in recent years. . . . [but t]here are many products and services that are commercially available that are not directed to patent-eligible subject matter. Therefore, the examples provided by [the plaintiff] have little impact on the patentability of the claimed subject matter. . . . Performing a sales transaction over the Internet, or in conjunction with an auction and a competitive activity, does not make the concept any more ‘concrete.’” Id.
The Court then found that the patents-in-suit lacked an inventive concept. The plaintiff argued that “the ‘novel combination of a buyer’s participation in both an auction and a ‘competitive’ or ‘intermediary’ activity is distinct from any of the systems for conducting e-commerce,’ and thus makes the subject matter patent-eligible.” Id. at 7. But Judge Andrews explained that “the addition of an auction and a competitive activity to a sales transaction is nothing more than the addition of ‘well-understood, routine, conventional activity.’” Further, “the Internet is not essential to perform the claimed functions. Reliance on an intermediary activity to determine price has been a practice in sale negotiations throughout history, long before the existence of the Internet or computers.” Id. at 7-8.
After the motion was briefed, Judge Andrews ordered the plaintiff to submit proposed claim constructions to determine if construction would impact the motion. During oral argument on the motion, the parties agreed that the proposed construction did not affect any argument regarding the motion. Id. at 1.