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Judge Sue L. Robinson recently issued a claim construction order in a case alleging infringement of four data storage device patents.  Round Rock Research, LLC v. Sandisk Corp., Civ. No. 12-569-SLR (D. Del. July 21, 2014).  The following claim terms were construed:

  • “control means for generating control signals for controlling operations of the system”
  • “default parameter means coupled to the data storage unit for outputting default parameter data rather than the control parameter data in response to a first control signal from the control means”
  • “control data word”
  • “memory block”
  • “an unused control address”
  • “y-cycles” / “y-clock cycles”
  • “determining usage associated with a logical address” / “to determine usage data of a logical address”

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Judge Sleet recently considered and granted two motions directed to the pleadings of a patent infringement case: a plaintiff’s motion to dismiss counterclaims of invalidity and a defendant’s motion for leave to amend its answer in order to add counterclaims of inequitable conduct. EMC Corp., et al. v. Zerto, Inc., C.A. No. 12-956-GMS, Memo. at 1 (D. Del. July 31, 2014).

Addressing first the plaintiff’s motion to dismiss counterclaims of invalidity, Judge Sleet followed Judge Robinson’s reasoning in Senju Pharmaceutical v. Apotex, finding that the pleading standards of Twombly and Iqbal apply to counterclaims of invalidity, despite the lower pleading standard for infringement set forth in Form 18. Like Judge Robinson, Judge Sleet found that “the fact that Form 18 (rather than Twombly and Iqbal) remains the standard for pleading [direct] infringement claims is an insufficient justification for deviating from Twombly and Iqbal for pleading other causes of action.” Id. at 2-3. Accordingly, Judge Sleet granted the motion to dismiss the defendant’s counterclaims.

Turning next to the defendant’s motion for leave to amend its answer to add counterclaims of inequitable conduct, Judge Sleet explained that the motion was timely pursuant to the case scheduling order and that the plaintiff had not alleged that it would cause undue prejudice. Accordingly, the question for the Court to resolve was whether the two proposed counterclaims of inequitable conduct would be futile. The defendant sought to add two counterclaims of unenforceability due to inequitable conduct. Id. at 4-6. The first counterclaim alleged that specific “attorneys violated their duty of candor and good faith by intentionally making misrepresentations to the PTO concerning the prior art status of a reference [the defendant] submitted in connection with its petition for IPR.” This allegation “set forth sufficient facts from which the court may reasonably infer that the identified . . . attorneys made statements and withheld information with the intent to deceive the PTO.” Accordingly, the Court “decline[d] to dismiss [the] counterclaim at this early stage.” Id. at 6.

The second inequitable conduct counterclaim alleged that the plaintiff “filed patent applications for an ‘invention’ that was merely a combination of two existing prior art products and failed to provide the PTO with enough detail about either product to allow it to determine whether the combination was inventive.” Id. Judge Sleet found that the proposed counterclaim identified “specific individuals alleged to have violated their duties of candor and good faith,” “alleged prior art products, the relevant claim limitations, and how/why the prior art would have been material to claim limitations.” Id. Furthermore, it “set forth sufficient facts from which the court may reasonably infer that the identified individuals withheld the prior art information with the intent to deceive the PTO.” Id. at 6-7. Accordingly, the counterclaims satisfied both Rule 9(b) and Exergen, and Judge Sleet granted the defendant leave to amend.

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Judge Leonard P. Stark recently dismissed Clouding IP’s claims against numerous defendants finding that Clouding IP lacked standing.  Clouding IP, LLC v. Google Inc., et al., C.A No. 12-639-LPS, 12-641-LPS, 12-675-LPS, 13-1338-LPS, 13-1341-LPS, 13-1342-LPS, 13-1453-LPS, 13-1454-LPS, 13-1455-LPS, 13-1456-LPS, 13-1458-LPS (July 28, 2014).  The patent assignment agreement at issue covered “the purported sale to Clouding of all title, rights, and interest in the patents, subject to provisions by which Symantec retained particular rights in the patents.”  Id. at 1-2.  Judge Stark found that Clouding did not have “prudential standing,” however, finding that:

The transfer of “all rights, title, and interest” in the patents identified in the Agreement was made “subject to the terms of this Agreement including the License set forth in Section 4.5.  Under the Agreement, . . . Clouding encumbered its right to sell or assign the patents, grant an exclusive license, indulge infringement, allow the patent to lapse, and dictate the terms of licenses. Thus, based on the clear language of the transfer provisions, Symantec did not convey any entire patent, an undivided part or share of any entire patent, or all rights under any patent in a specified geographical region of the United States. Consequently, Clouding does not hold formal legal title.”

Id. at 11.  In particular, under the Agreement, Symantec retained the right to “make, use, sell offer to sell, and import the claimed inventions in all the patents”; the right to sublicense to its customers; and, most importantly, the right to bring suit.  Id. at 14-15. Judge Stark also determined that the Agreement included a “restraint on alienation” imposed on Clouding in which Clouding may not, under certain scenarios, make an assignment of the patents to another party without Symantec’s consent.  Id. at 17.  Accordingly, since Symantec did not transfer formal legal title to Clouding such that Clouding would qualify as the “effective” patentee, Clouding lacked standing to sue for infringement of the patents-in-suit.  Id. at 20.

 

UPDATE November 18, 2014:  Clouding IP moved for reargument of Judge Stark’s July 28 decision to dismiss its cases for lack of standing.  Clouding IP, LLC v. AT&T Mobility LLC, et al., C.A No. 13-1342-LPS, 13-1454-LPS, 13-1455-LPS, 13-1458-LPS (D. Del. Nov. 17, 2014). Clouding IP asked the Court to reconsider its decision “in order to grant Clouding IP relief it never previously sought: a change to try to fix its jurisdictional defect in prudential standing.”  Id. at 1.  Judge Stark denied Clouding IP’s motion declining to “provide Plaintiff with what amounts to a ‘do over’ after all the time the parties and Court devoted to analyzing the facts and circumstances that Plaintiff was (to all appearances) content to have the Court evaluate.”  Id. at 2.  

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In Pragmatus Telecom LLC v. Newegg Inc., C.A. No. 12-1533-RGA (D. Del. July 25, 2014), Judge Richard G. Andrews denied defendant’s motion for attorney’s fees and costs, which defendant filed following plaintiff’s unopposed motion to dismiss pursuant to Fed. R. Civ. P. 41(a)(2). Judge Andrews explained that attorney’s fees may be awarded only to a “prevailing party” pursuant to 35 U.S.C. § 285, and that under Supreme Court and Federal Circuit precedent, a party must “win a dispute within the case in favor of it that materially alters the legal relationship between the parties at the time of the judgment” to be considered a “prevailing party.” Id. at 4.

Judge Andrews concluded that defendant could not be considered the prevailing party, and therefore denied its motion for attorney’s fees under § 285: “I have made no finding regarding any substantive issue in the case. I have not construed any terms, resolved a contested motion to dismiss, or resolved any motions for summary judgment. Discovery was ongoing when the case was dismissed. Furthermore, unlike in Highway Equip., where there was no reason given for the motion to dismiss, here the unopposed motion to dismiss states that it is a result of a licensing agreement with Moxie Software, Inc. and LivePerson, Inc., the two companies that provide the live chat software to [defendant].” Id. at 5. Judge Andrews went on to note that “[i]f there were a prevailing party, it would seem that it would more likely be [plaintiff], as [plaintiff] filed suit because it believed that its patent was infringed, and as a result, in part because of the suit, [plaintiff] was able to negotiate a license covering potential infringement of its asserted patent.” Id. at 6. Given that defendant could not be considered a “prevailing party” Judge Andrews also denied defendant’s motion for costs, as a requirement of both Fed. R. Civ. P. 54(d)(1) and Local Rule 54.1(a)(1) is that for a party to be awarded costs, it must be a “prevailing party.” Id. at 8.

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In Motivation Innovations LLC v. Ulta Salon Cosmetics & Fragrance Inc., Civ. No. 11-615-SLR (D. Del. July 22, 2014), Judge Sue L. Robinson considered defendant’s motions for summary judgment of invalidity, non-infringement, and a Daubert motion to preclude plaintiff’s expert.

Having construed the means-plus-function claims in its order issued on the same day, the Court denied the motion for summary judgment of invalidity as to indefiniteness. Id. at 3-4. The Court also found that defendant had not shown that the claims were anticipated; its argument did not refer to expert testimony and was “superficial.” Id. at 4.

As to the Daubert motion, defendant pointed to the expert’s “lack of formal education,” but the Court pointed out that this expert had 38 years of experience in the relevant field and concluded that the expert was sufficiently qualified.  Id. at 8. The Court did exclude this expert’s testimony to the extent it was incompatible with the Court’s construction. Id. At 10. Examining the expert’s non-excluded testimony as to infringement and in light of the Court’s construction, the Court disagreed with the expert’s infringement analysis and granted motion for summary judgment on the basis of no literal infringement.  Id. at 11, 13.   The Court also granted the motion as to non-infringement under the doctrine of equivalents. Id. at 16.

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Judge Andrews recently considered defendants’ motion for leave to file an amended answer to add an inequitable conduct defense.  Unimed Pharms., LLC, et al., v. Perrigo Co., et al., C.A. No. 13-236-RGA (D. Del. July 23, 2014).  The proposed amended answer essentially alleged that the inventors and attorneys made inconsistent statements to the PTO during prosecution and to the Court during litigation.  Id. at 2.  Judge Andrews evaluated the allegedly inconsistent statements and found that they merely reflect different conclusions resulting from the application of different legal standards, but, in any event, defendants failed to demonstrate that the statements “support a reasonable inference by any particular individual of specific intent to deceive.”  Id.  Judge Andrews noted that “[e]ven if the inventors and/or applicants were aware of these ‘inconsistent’ statements, I do not find it plausible that they would recognize that the statements were inconsistent, and knowing that, intentionally fail to point them out, with intent to deceive the PTO.”  Id.  Judge Andrews also noted that while the amended answer painted “a detailed picture of the alleged inequitable conduct, . . . length (about 55,000 words) is not a substitute for clarity.”  Id.

 

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Judge Robinson recently ordered Amazon.com to submit “relevant time sheets supporting its request for attorney fees for [certain] categories of fees.” Technology Innovations, LLC v. Amazon.com, Inc., C.A. No. 11-690-SLR, Memo. Or. at 1 (D. Del. July 23, 2014). We have previously covered the Court’s decision that Technology Innovations (TI) had asserted a claim construction that was not “objectively reasonable” and should pay reasonable attorney fees to Amazon. Judge Robinson ordered Amazon to submit an accounting of its reasonable attorney fees, and additional briefing followed. As Judge Robinson explained, “having determined that attorney fees should be awarded to Amazon for TI’s pursuit of the ‘407 patent, it remains my obligation to confirm that Amazon expended a reasonable amount of time in defending against the ‘407 patent.” Id. at 4.

Judge Robinson then concluded that although there are “difficulties associated with segregating ‘precisely all of the fees and expenses [Amazon] incurred in defending itself against’ the ‘407 patent as opposed to the ‘965 patent,” it was “impossible . . . to discern whether the fees requested are reasonable based on the record presented.” Id. Her Honor therefore ordered Amazon to supplement its submission to include time sheets for work performed by Amazon’s counsel. Id. at 4-5.

These additional submissions were necessary in order to determine which fees were “attributable to the delay in reaching the critical claim construction exercise under [Judge Robinson’s] old scheduling regime and should not be attributed to TI.” Such “‘blended’ litigation efforts vis a vis both patents at issue” were not compensable due to the difficulty in account for them. Id. at 4. Instead, “the only fees appropriately compensable under the sanction are those fees denoted by Amazon as “‘407 specific” . . . and those attributed by Amazon to the ‘407 claim construction exercise.” Id. at 5.

Judge Robinson also denied Amazon’s request to hold TI and TI’s counsel jointly and severally liable for fees. Her Honor explained that she had “never intimated that any sanctions should be imposed against counsel” and “such matters are best left for resolution between a party and its
counsel, unless there is a showing of bad faith on the part of counsel.” Id. at 4-5.

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In Helios Software, LLC, et al. v. SpectorSoft Corp., C.A. No. 12-081-LPS (D. Del. July 18, 2014), Chief Judge Leonard P. Stark addressed plaintiffs’ motion to exclude the testimony of defendant’s expert, Christian B. Hicks, based on discussions that Mr. Hicks had with an employee of defendant that was the Director of Quality Assurance, Scott Bartel. Plaintiffs argued that because of defendant’s “failure to identify Mr. Bartel in its Rule 26 disclosure, and Mr. Hicks’ subsequent reliance on conversations with Mr. Bartel, the Court should exclude the relevant portions of Mr. Hicks’ testimony.” Id. at 2. As Judge Stark noted, the parties met and conferred in an attempt to resolve the dispute, and defendant proposed producing Mr. Bartel for a “3-hour video conference or telephone deposition.” Id. Defendant’s proposal, however, included a number of conditions, including, among other things (i) that the deposition occur at defendant’s office in Vero Beach, Florida where Mr. Bartel works, or at another location in Vero Beach; (ii) “that the deposition be conducted by video conference or telephone” unless plaintiffs advanced the costs and fees for an in-person deposition; (iii) “that the topics of Bartel’s questioning be limited to the subject matter of his discussion with Hicks, and that the deposition could be suspended if Plaintiffs asked questions beyond the scope of such topics and refused to withdraw the questions”; and (iv) that plaintiffs withdraw their motion to exclude. Id. at 3.

Considering the Pennypack factors, Judge Stark concluded that, on balance, defendant’s failure to disclose Mr. Bartel was harmless, and therefore denied plaintiffs’ motion to exclude. Id. at 3-4. However, contrary to a number of the conditions of defendant’s proposal, Judge Stark ordered that defendant shall make “Mr. Bartel available for a three (3) hour deposition on the subject matter that he discussed with Mr. Hicks as well as testing at SpectorSoft, to be conducted at a mutually convenient location, with each party bearing its own costs.” Id. at 4.

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Judge Richard G. Andrews recently considered Sprint’s motion for summary judgment that Comcast’s U.S. Patent No. 6,873,694 is invalid under 35 U.S.C. § 101 for lack of patentable subject matter.  Comcast IP Holdings I, LLC v. Sprint Communications Company L.P., et al., C.A. No. 12-205-RGA (D. Del. July 16, 2014).  The  only asserted claim at issue was claim 21, which claimed:

A telephony network optimization method, comprising:

receiving a request from an application to provide to the application service on a
telephony network; and

determining whether a telephony parameter associated with the request requires
acceptance of a user prompt to provide to the application access to the telephony
network.

Id. at 4.  Judge Andrews agreed with Sprint that “Claim 21 is ‘drawn to the abstract, and fundamental, idea of a conditional decision.'”  Id. at 5. Judge Andrews rejected Comcast’s argument that “‘[t]he claims do not simply recite making a conditional decision, but are narrowly directed to overcoming a specific problem of telephony networks by using telephony parameters to optimize bandwidth allocation on such networks.'”  Id.

Judge Andrews next determined whether the claim contained sufficient limitations restricting the otherwise abstract idea to a particular application.  Id. at 7.  Comcast argued that the claim contained such restrictions because claim 21 is “confin[ed] to the field of telephony.”  Id. at 8.  Judge Andrews disagreed:

Claim 21 merely covers the application of what has for a long time been conducted solely in the mind to modern, computerized, telephony networks. For instance, rather than an “application” requesting “service,” we can think of a “person” requesting a “telephone call.” The “person” makes a request through a telephone operator. The operator then looks to a “telephony parameter” associated with that request. Let us assume that the parameter is whether the call is “collect” or whether it is a standard call. Ifthe call is a standard call, the operator puts it through without a user prompt.2 I f the call is collect, the operator “determines” that the recipient will be asked to accept the charges. The operator has “determined” whether a “request” requires “acceptance of a user prompt.” The only difference is the identity of the requester. Here, the generic references to a telephony network and an application are not sufficient to render the claim patentable.

Id. at 9.

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Chief Judge Leonard P. Stark recently granted a plaintiff’s motion to strike an amended answer and counterclaim, and awarded the plaintiff costs and expenses associated with presenting the motion.  Helios Software, LLC, et al. v. Spectorsoft Corp., C.A. No. 12-081-LPS (D. Del. July 18, 2014).  As the Court explained, it had previously granted the defendant leave to file an amended answer to add a counterclaim asserting inequitable conduct.  That order allowed the defendant to file an amended answer “in substantially the form it has proposed.”  The defendant then filed an amended answer and counterclaim that was “significantly different from the Amended Answer it had proposed to the Court.”  The defendant admitted it violated the Court’s order, and asked the Court to modify that order.  As Chief Judge Stark explained:

The Court is troubled that Defendant intentionally violated the Court’s Order and then asked the Court to modify its decision instead of seeking the Court’s permission before filing its modified pleading.  Defendant could and should have reached out to the Court in the seven-day period that the Court gave Defendant to file its Amended Answer and should have sought leave to file its newly amended pleading.  Because Plaintiffs had to bear the unnecessary cost of filing this motion as a result of Defendant’s conduct, the Court will charge Defendant with Plaintiffs’ reasonable costs and expenses incurred in presenting this motion.

The Court granted the defendant leave to file an amended version of its amended answer and counterclaim, however, in a form that mostly removed the plaintiff’s highly confidential and privileged information contained in its stricken pleading.

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