Judge Noel L. Hillman of the United States District for the District of New Jersey, sitting by designation, recently granted Materia Inc.’s (“Materia”) motion to dismiss Evonik Degussa GmbH’s (“Evonik”) counterclaims for inequitable conduct. Evonik Degussa GmbH v. Materia, Inc., C.A. No. 09-636-NHL/JS (D. Del. Apr. 6, 2016). The Court had previously granted Evonik’s motion for partial summary judgment that it does not infringe Materia’s U.S. Patent No. 7,622,590 (“the ’590 Patent”). Id. at 1-2. Following the Court’s decision, Materia provided Evonik with a broad covenant not to sue (“CNS”) on the ’590 Patent. The parties agreed that the “the CNS moots Evonik’s counterclaim for invalidity.” Id. at 2. The specific question before the court was “whether following a partial summary judgment determination as to noninfringement, a CNS covering noninfringement, invalidity, and all future claims moots a counterclaim for inequitable conduct.” Id. at 3. After a review of the “evolving case law” on this topic, Judge Hillman concluded that “Materia’s CNS is sufficiently broad to remove any case or controversy regarding the ’590 Patent and therefore Evonik has failed to meet its burden of showing a substantial controversy exists as to the ’590 Patent.” Id. at 7. Judge Hillman agreed with Materia “that for all intents and purposes the CNS ‘kills the ’590 Patent vis-à-vis Evonik.’” Id. Accordingly, Judge Hillman dismissed the inequitable conduct counterclaims.
Judge Sue L. Robinson recently ruled on a number of summary judgment and related pre-trial motions in SRI International, Inc. v. Cisco Systems, Inc., Civ. No. 13-1534-SLR (D. Del. Apr. 11, 2016). Among other rulings, Judge Robinson denied the defendant’s motion for summary judgment of invalidity under 35 U.S.C. § 101, finding that the plaintiff’s patents, which “address the vulnerability of computer networks’ interoperability and sophisticated integration of technology to attack … are … more complex than ‘merely recit[ing] the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet,’ and are better understood as being ‘necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.'” Id. at 12 (quoting DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 1257 (Fed. Cir. 2014)). The Court added that “[t]he claims as an ordered combination (in light of the specification) sufficiently delineate ‘how’ the method is performed to ‘improve the functioning of the computer itself,’ thereby providing an inventive concept.” Id. at 13 (quoting Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S.Ct. 2347, 2354 (2014)).
Also of note, the Court denied the defendant’s motion for summary judgment of anticipation, explaining that “anticipation cannot be based on the multiple layers of supposition created by Cisco to construct its theory of anticipation and still meet the requirement that the claimed limitation be immediately apparent. Although Cisco has attempted to package its anticipation argument in slightly different language than litigants have in prior litigation, teh argument fails as a matter of law.” Id. at 20 (footnotes omitted). The Court denied the defendant’s motion, and sua sponte entered summary judgment of no anticipation. Id.
Judge Sue L. Robinson recently denied defendants’ renewed motion to stay pending reexamination pending since September 14, 2012 and “with no predictable end in sight.” Carrier Corporation v. Goodman Global, Inc., et al., No. 12-930-SLR (D. Del. Apr. 11, 2016). In denying the motion, Judge Robinson noted: “Given that it was defendants’ choice to opt for inter partes reexamination rather than inter partes review (available as of September 17, 2012), I see no reason to revisit my prior decision to conclude the litigation.” Id. at 1. Judge Robinson previously granted defendants’ motion for a new trial because of improper statements made by plaintiff’s counsel during closing argument. For the upcoming new trial, Judge Robinson declined to revisit the Court’s original decision to bifurcate willfulness and damages, noting that “this case is the poster child for bifurcation in terms of the complexity (created by the parties) of the liability issues[.]” Id. at 2.
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In Sunpower Corporation v. PanelClaw, Inc., C.A. No. 12-1633-MPT (D. Del. Apr. 1, 2016), the parties had stipulated to Defendant’s filing of an early motion for summary judgment on limited issues. Id. at 2. To that end, Defendant moved for summary judgment of non-infringement on one patent and invalidity of another patent under Section 112 and/or Section 101. Chief Magistrate Judge Mary Pat Thynge granted the motion as to non-infringement, but denied the motion as to invalidity.
Defendant based its non-infringement defense on the PTAB’s construction of a certain term during the inter partes review. As this patent was expired, the PTAB did not adopt the broadest reasonable construction, instead applying a standard of review similar to that of district courts. Id. at 9-10. The Court found the PTAB’s construction “well-reasoned and persuasive” and adopted it, see id. at 13-14, and then concluded that Defendant’s accused products did not infringe one of the asserted patents, rejecting Plaintiff’s position that it was too early in the case to determine infringement where Defendant’s evidence of non-infringement was taken from Plaintiff’s own infringement contentions. See id. at 15.
Defendant also argued that the second patent-in-suit was invalid as indefinite, citing “certain statements and conclusion the PTAB made [regarding anticipation] in its  IPR decision, and the testimony of [Plaintiff’s] expert . . . as part of that IPR.” Id. at 17. But the Court agreed that Defendant had not met its burden based on the current record, noting that it was not bound by the PTAB’s discussion and that another district court had successfully construed the portion of the claim that Defendant argued was indefinite. Id. at 19-20. As to Defendant’s enablement, written description and/or inoperability, the Court concluded that its “conclusory” attorney arguments were insufficient. See id. at 24-25.
In Research Frontiers Incorporated v. E Ink Corporation, et al., C.A. No. 13-1231-LPS (D. Del. Mar. 31, 2016), Magistrate Judge Christopher J. Burke recommended that Defendants’ early motion for partial summary judgment be denied. Defendants argued the asserted claims were anticipated and further contended that Plaintiff’s “own statements regarding [the alleged anticipatory reference], which appear in one of [Plaintiff’s] own European patents, prevent [Plaintiff] from raising a genuine issue of material fact regarding anticipation[.]” Id. at 8. Specifically, Defendants argued that Plaintiff was precluded from arguing that this reference (“the Tada reference”) was not enabling. See id. at 14.
The Court first rejected that the statements by Plaintiff “amount[ed] to a clear concession . . . that Tada is enabling.” Id. at 13-14. While the statements did “contain unqualified language about what Tada ‘explicitly discloses,’” id. at 15, after reviewing the statements in context – namely, within a “well-developed record of the prosecution” of another patent, the Court concluded that the statements were not necessarily equivalent to an admission that the reference was enabling. See id. at 15-17.
The Court then substantively evaluated whether this reference was enabled such that it could anticipate the asserted claims, but found issues of material fact to remain on this point. Among other things, the Court observed that it was “given pause at the prospect of granting Defendants’ Motion, in significant part because their positions as to enablement are supported by no proffered expert testimony. Instead, they consist of arguments made by Defendants’ attorneys (albeit arguments that cite case law or to portions of the record). With subject matter as complex as that at issue here, it is difficult for the Court, at the summary judgment stage, to recommend that the stated opinion of [Plaintiff’s] expert (that the reference it nonenabling) be overridden based on the argument of a lawyer (who concludes otherwise.” Id. at 23-24 (emphasis in original).
Judge Christopher J. Burke recently considered defendants’ motion to stay pending IPR of plaintiffs’ patent claiming a “Method for Producing a Drill Assistance Device for a Tooth Implant.” Sirona Dental Systems GmbH, et al. v. Dental Wings Inc., et al., C.A. No. 14-460-LPS-CJB, C.A. No. 14-540-LPS-CJB, C.A. No. 15-278-LPS-CJB (D. Del. Mar. 22, 2016). In granting the motion, Judge Burke reviewed the three factors related to whether a stay is appropriate. Regarding simplification of the issues, Judge Burke noted that significant simplification was possible because the PTAB granted the IPR petitions with respect to all of the claims of the patent-in-suit. Id. at 9. If any claims remain following PTAB review, the statutory estoppel requirement would greatly narrow the invalidity issues before this Court. Id. at 10. Regarding case status, Judge Burke noted that similar motions to stay in this District have been granted where, like here, the case is in its early stages. Id. at 13-14. Finally, with regard to prejudice to the non-moving party, Judge Burke noted that because defendants filed the IPR petitions before the statutory deadline, it would be “hard for the Court to conclude” that doing so “speaks to sharp practice.” Id. at 16. Judge Burke noted, however, that it was more concerning that defendants waited six months to seek a stay. Id. But, defendants did move for stay within a month of the PTAB’s decision to institute review, and “[t]he Court has recently noted that it has ‘become less and less sure about the merit of granting a stay in favor of an IPR proceeding, when the PTAB has not even weighed in on whether to institute review.'” Id. Judge Burke also noted that the status of the IPR proceedings weighed in favor of stay because the PTAB will issue written decisions well before this case was scheduled for trial. Id. at 19. In all, the requisite factors weighed in favor of stay, despite the fact that plaintiffs could face some competitive injury.
Future Link is a patent owner and a declaratory judgment defendant in this case. In 2013, Future Link sent demand letters regarding nine patents to Dell, HP, and other computer manufacturers. The demand letters implicated various CPUs and other components manufactured by Intel. Intel, therefore, filed a declaratory judgment action seeking judgment of invalidity and that Intel’s components do not infringe Future Link’s patents and that its customers do not infringe Future Link’s patents directly or indirectly by using the Intel-provided components. Intel Corp. v. Future Link Systems, LLC, C.A. No. 14-377-LPS, Report and Recommendation at 2-3 (D. Del. Mar. 31, 2016). Following resolution of an earlier motion to dismiss for lack of jurisdiction and Intel’s filing of an amended complaint, Future Link again moved to dismiss several of Intel’s claims. The previous motion to dismiss “concerned the existence of subject matter jurisdiction over Intel’s requests for non-infringement declarations regarding Intel’s own products, [which were] no longer an issue here . . . [because] Future Link filed counterclaims of infringement against Intel regarding the Future Link patents . . . . Thus, there is now no dispute that jurisdiction exists with respect to the question of Intel’s infringement of the 17 patents-in-suit.” Id. at 10.
Instead, Magistrate Judge Burke explained, “the crux of the dispute presented by Future Link’s Second and Third Motions is whether the Court has subject matter jurisdiction to issue declarations regarding the infringement of Intel’s customers’ products which include accused Intel components.” Id. This question, in turn, depended on whether Intel adequately alleged an obligation to indemnify its customers for infringement. For those customers (aside from Dell and HP) for whom Intel did not allege an indemnification obligation, Judge Burke was “not persuaded that even if the District Court must adjudicate Intel’s indirect infringement of the asserted patents, an actual controversy exists with respect to the direct infringement of all of Intel’s innumerable and largely unidentified customers whose products incorporate and use the Intel products at issue.” Id. at 12. Judge Burke continued: “Intel’s theory here-that Future Link’s allegations of direct infringement by Intel’s customers, a predicate to Future Link’s claims of indirect infringement against Intel, effectively create declaratory judgment jurisdiction as to all of Intel’ s unnamed customers’ products that use or incorporate any accused Intel product-is belied by well-settled law. One way to see that this is so is to recognize that the Declaratory Judgment Act requires Intel to show that a ‘substantial controversy’ exists ‘of sufficient immediacy and reality to warrant issuance of a declaratory judgment.’ And yet Intel’s declaratory judgment claims – to the extent they seek to sweep in a declaration that all of its customers do not infringe the patents-in-suit due to their ‘incorporation or use’ of any Intel accused product – lack any real ‘immediacy and reality.’ That is because indirect infringement claims do not require showings of direct infringement by each and every one of the third party direct infringers in question.” Id. at 15.
Regarding Dell and HP, however, Judge Burke found jurisdiction based on “Intel’s agreements with Dell and HP, attached as exhibits to Intel’s [amended complaint, which] state that Intel will indemnify Dell and HP as to two sets of patent claims: (1) claims that an Intel product ‘when used alone and not together with or in combination with any other product’ infringes a patent; and (2) certain claims that Intel products in combination with each other or in combination with other devices infringe a patent, so long as certain conditions are met.” Id. at 26. “[O]ne can see that the allegations in the Future Link demand letters are broad enough to plausibly fall within the ambit of the types of claims for which Intel has agreed to indemnify Dell and HP (both as to claims that certain Intel hardware products infringe when used alone, or that certain Intel products infringe when used in combination with other products). To the extent that Future Link asserts that more than this is required, it asks too much of Intel.” Id. at 30.
In this case, Judge Robinson had previously granted a motion for summary judgment of invalidity and non-infringement based on Section 101, which the plaintiff unsuccessfully appealed to the Federal Circuit. Judge Robinson has now found that the plaintiff’s litigation tactics were unreasonable and not excused by the shifting jurisprudence of Section 101. Joao Bock Transaction Systems, LLC v. Jack Henry & Associates, Inc., Memo. Or. at 6-7 C.A. No. 12-1138-SLR (D. Del. Mar. 31, 2016). Her Honor explained that “[t]he posture of this case stands out from other cases,” including the plaintiff’s motion to dismiss counterclaims that “included numerous details supporting its belief [of] invalidity” (id. at 3-4); plaintiff’s claim construction positions, which included new definitions for certain claim language which were provided for the first time during claim amendment before the PTO and “were added for litigation purposes” (id. at 6); and plaintiff’s infringement claim charts which “accused 65 products of infringing 36 claims,” which plaintiff narrowed only to “representative” products following the Court’s order to narrow, and which continued to undergo revisions and additions (id. at 4-5).
Based on this conduct, Judge Robinson found that “Plaintiff cannot complain that defendant’s resistance to the idea of representative products is the reason for the discovery burden, when plaintiff refused to narrow the scope of its infringement allegations for over a year and significant discovery was performed before plaintiff suggested this approach. Moreover, for the same reasons, plaintiff’s burden of reviewing the discovery on the allegedly infringing products was one of its own making. Plaintiff’s claim construction positions . . . and its lack of a coherent infringement theory (evidenced by its shifting infringement positions) contributed greatly to the discovery burden. . . . While each individual action by plaintiff may not have been ‘exceptionally’ unreasonable, the totality of the circumstances of the present action are indicative of the type of ‘exceptional case’ that justifies an award of fees. That defendant’s motion for invalidity was granted on the § 101 issue does not negate the ‘exceptional’ nature of the case, when the record indicates that plaintiff pursued litigation so inefficiently as to be objectively unreasonable and burdensome for defendant and the court.” Id. at 6-7.
Moreover, Judge Robinson rejected the “contention that defendant may only be compensated for its expenses related to the § 101 issue. As plaintiff has conceded, that area of law was at the time (and even today) evolving. Judicial economy (not defendant) is responsible for the court’s decision not to reach additional issues once defendant succeeded on this issue at the summary judgment phase. . . . Taking into account that patent cases are complex and patent litigation is an expensive proposition, nevertheless, the court will award attorney fees of $1,000,000 to account for the fact that plaintiff’s ever changing litigation strategies (including its claim construction positions) created a tortuous path to resolution.” Id. at 8-9. Judge Robinson denied, however, a motion for additional fees, finding that plaintiff’s appeal to the Federal Circuit “was reasonable and not exceptional.” Id. at 9 n.14.
Chief Judge Leonard P. Stark recently denied a motion for sanctions under 35 U.S.C. § 285 in a series of cases presenting a “difficult, close call.” Princeton Digital Image Corp. v. Office Depot Inc., C.A. No. 13-239-LPS (D. Del. Mar. 28, 2016) (and related cases). Although the Court denied the motion, it found a number of factors weighed in favor of finding the case to be “exceptional” for purposes of § 285, while others weighed against such a finding or were neutral. As Judge Stark explained:
The Court makes this finding not due to the lack of merit to PDIC’s case, nor due to bad faith litigation. Instead, these cases “stand out from the rest” due to a combination of: an adequate but far from ideal pre-suit investigation, conducted with haste due to decreasing damages availability based on an expired, but seemingly strong and broad, patent; somewhat careless, dilatory litigation conduct by the patentee; an attempt by the patentee to shift some substantial portion of the costs of identifying the line between licensed and non-licensed conduct to Defendants and Adobe; intervention, permitted by the Court, by an aggressive intervenor, despite PDIC’s repeated (though at times hard-to-believe) protestations that PDIC had no intent to accuse any licensed conduct of infringement; PDIC’s unexplained delay in dismissing at least one of the above-captioned cases; and PDIC’s failure to carefully, consistently, and thoroughly respond to Adobe’s reasonable inquiries as well the Court’s questions. The overall balance, therefore, leads the Court to find that these cases are “exceptional.”
However, the Court decided that under the circumstances the “appropriate exercise of its discretion” was “not to award attorney fees.” In part that was based on the aggressive intervenor, Adobe, itself causing increased attorney fees. Additionally, Judge Stark explained, “[w]ith respect to considerations of deterrence, although PDIC could have done more to advance the litigation much more efficiently, there is no singular category of conduct that rises to a level that would warrant deterrence by way of an award of attorney fees. There is no evidence of bad faith or otherwise sanctionable conduct.” The Court added, “[i]n many ways, PDIC’s somewhat careless and dilatory conduct was a result of the unique circumstances of these cases, involving an aggressive third-party intervenor, two motions for sanctions before the case even got to the discovery phase, and a flurry of motion practice based on wholly-undeveloped theories of license interpretation and patent infringement. Id. at 41 (emphasis in original). For the same reasons, the Court found that Rule 11 sanctions were not warranted, and the lack of bad faith precluded an award of sanctions under 28 U.S.C. § 1927.