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.
Judge Sue L. Robinson recently considered Sony Corporation’s motion for attorneys’ fees pursuant to 35 U.S.C. § 285. Apeldyn Corporation v. Sony Corporation, et al., C.A. No. 11-440-SLR (D. Del. Mar. 31, 2016). Judge Robinson previously granted Sony’s motions for summary judgment of non-infringement due to collateral estoppel and invalidity. Sony argued that this case was exceptional and that fees were warranted because “plaintiff pursued objectively unreasonable infringement and validity positions, which were barred by collateral estoppel.” Id. at 4. Judge Robinson noted, however, that defendants opposed an early motion for summary judgment on collateral estoppel. Id. Judge Robinson concluded the case was not exceptional:
The court expended considerable effort in reaching its invalidity determination, including resolving a claim construction dispute for a limitation not construed in the previous litigation. (D. I. 198 at 20) The court is not persuaded that plaintiff was so lacking a good faith belief of validity as to merit awarding exceptional case status under § 285.
Id. at 4-5.
In a recent Memorandum Order, Chief Judge Leonard P. Stark denied foreign defendant API Korea Co., Ltd.’s (“API”) renewed motion to dismiss the second amended complaint for lack of personal jurisdiction. Robert Bosch LLC, v. Alberee Products, Inc., et al., C.A. No. 12-574-LPS (D. Del. Mar. 17, 2016) (public version published Mar. 25, 2016). The Court had previously granted plaintiff’s (“Bosch”) request for jurisdictional discovery with respect to API.
Judge Stark first rejected Bosch’s argument that “jurisdictional discovery . . . revealed evidence that API has an agency relationship” with U.S. defendants Alberee Products, Inc. (“Alberee”) and Saver Automotive Products, Inc. (“Saver”). Id. at 2-5. Accordingly, Judge Stark did not attribute Alberee or Saver’s jurisdictional contacts to API. Id. at 5. Moreover, while Bosch also argued for an “alter ego” relationship, Judge Stark found that Bosch failed to “point to any fraud or inequity which would allow the Court to ‘pierce the corporate veil.’” Id. at 3 n.2.
Judge Stark did, however, find that the Court may exercise dual jurisdiction over API pursuant to Delaware’s long-arm statute. Id. at 6. Specifically, Bosch asserted a theory of “dual, or stream-of-commerce, jurisdiction based on subsections c(1) and c(4) of Delaware’s long-arm statute.” Id. at 5. Judge Stark reasoned that in the “absence of any evidence that API intended to exclude Delaware from the U.S. distribution of the finished wiper blade products containing the API components, the Court finds that API had an intent to serve the Delaware market, and it is undisputed that this cause of action arises from injuries caused by those products.” Id. at 5-6. Judge Stark also found the exercise of jurisdiction over API based on the stream-of-commerce comports with the requirements of Due Process. Id. at 8. Judge Stark explained that “jurisdictional discovery has revealed evidence supporting an inference ‘that the distribution channel formed by [API, Alberee, Saver, and Costco] was intentionally established, and that defendants knew, or reasonably could have foreseen, that a termination point of the channel was [Delaware].’” Id. at 7. As Judge Stark noted, “[t]his goes beyond evidence of mere foreseeability that API’s components would be sold in Delaware. Rather, API had knowledge that its components were used by Alberee in finished products sold to Saver for distribution through nationwide retailers such as Costco.” Id.
Chief Judge Leonard P. Stark recently considered and denied Sunovion Pharmaceuticals’ motion to dismiss Cipla’s claims for indirect and willful infringement. Cipla Ltd. v. Sunovion Pharmaceuticals Inc., C.A. No. 15-424-LPS (D. Del. Mar. 30, 2016). Regarding inducement, Judge Stark concluded that the complaint sufficiently stated a claim because it alleged facts giving rise to a reasonable inference that users of the accused product directly infringe the patent in suit, and that defendant’s induced third parties to infringe by alleging defendant sells the accused product who it reasonably infers will use the product. Id. at 3-4. Further, the complaint alleges that defendant “knew or should have known that its actions would induce actual infringement.” Id. at 4. “Because the patented compound is (allegedly) the only active ingredient in [the accused product], one can reasonably infer that any use of [the product] will constitute infringement.” Id. Regarding contributory infringement, Judge Stark concluded the complaint passed muster because it adequately alleged that defendant sold a product practicing the patent, that the product has no substantial non-infringing uses, and that defendant knew its product would infringe. Judge Stark also concluded that plaintiff’s willfulness allegations were sufficient because the complaint alleged that defendant had knowledge of the patent in suit and manufactures a product that contains the patented compound. Id. at 6.
Chief Judge Leonard P. Stark recently denied defendants’ motion to stay pending ex parte reexamination of the patent-in-suit. Cronos Technologies, LLC v. Expedia, Inc., et al., C.A. No. 13-1538-LPS, 13-1541-LPS, 13-1544-LPS (D. Del. Mar. 21, 2016). In doing so, Judge Stark addressed the factors relevant to whether a stay is warranted. As to whether a stay would simplify issues, Judge Stark noted that this factor was neutral because, although all asserted claims were before the PTO, there was not complete overlap between the invalidity issues addressed by this Court and those by the PTO. Id. at 2. Regarding timing, Judge Stark noted that this factor weighed against a stay because the reexamination was at its early stages while trial was set in this Court for August 2016. Id.at 3. Last, regarding any delay in requesting reexamination, Judge Stark noted that plaintiff’s status as a non-practicing entity reduced prejudice it might suffer from a stay, but because defendants will not be estopped from raising the same invalidity defenses raised during reexamination, a stay may give them “‘two bites at the apple'[.]” Id. at 4.
Judge Sue L. Robinson recently considered and denied Ricoh Americas Corporation’s motion for judgment on the pleadings that Intellectual Ventures I LLC’s image scanning method patent is invalid under 35 U.S.C. § 101. Intellectual Ventures I LLC v. Ricoh Americas Corporation, et al., C.A. No. 13-474-SLR (D. Del. Mar. 22, 2016). Ricoh argued that the patent “‘simply claims an unpatentable mathematical formula used in a generic prior art scanner,’ which formula can be performed mentally or with a pen and paper.” Id. at 14. Judge Robinson disagreed, noting that the asserted claim does not claim a mathematical formula or method to implement such a formula. Id. Therefore, Judge Robinson concluded that the claimed invention was not directed to an abstract idea. For “completeness” Judge Robinson analyzed step 2 of the Alice framework, i.e., whether the claims recite a known business practice merely implemented using computer technology. Id. at 5. Judge Robinson analyzed the claim language and concluded that it described with “sufficient specificity” how the claimed method operates the scanner, “thereby disclosing an ‘inventive concept.'” Id. at 15.
In Network Congestion Solutions, LLC v. United States Cellular Coporation, C.A. No. 14-903-SLR; v. Wideopenwest Finance, LLC, C.A. No. 14-904-SLR (D. Del. Mar. 22, 2016), Judge Sue L. Robinson denied defendants’ motions to dismiss for lack of patenable subject matter.
The patent-in-suit generally related to systems and methods for alleviating congestion in a communication network. See id. at 14-15. The Court first concluded that the claims were not directed to an abstract idea, finding the claims analogous to those held valid in DDR Holdings as “necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.” Id. at 16 (quoting DDR Holdings). “That defendants are able to come up with a human equivalent of ‘resource control management’ does not render the claims at bar similar to methods that ‘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. The Court also concluded that the claims had an inventive concept: “[a]lthough defendants argue that the environment and devices are well known in the prior art and cannot provide an inventive concept, the claim as a whole (the equipment recited and steps claimed) provides the requisite degree of specificity. Moreover, the claims are directed to a solution for a problem that arises in the computer context. This specificity also suffices to alleviate concerns of pre-emption.” Id.