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Judge Richard G. Andrews recently considered Apple Inc.’s motion to dismiss Chestnut Hill Sound Inc.’s claims of willful infringement and indirect infringement.  Chestnut Hill Sound Inc. v. Apple Inc., C.A. No. 15-261-RGA (D. Del. Feb. 29, 2016).  Judge Andrews denied the motion as to willfulness allegations based on meetings that took place years before the patents issued because “it is plausible that [Apple] either tracks suggestions of patent infringement, or would be reckless in not doing so.”  But, Judge Andrews did note that Apple may renew the motion if the cases pending before the United States Supreme Court subsequently change the law on willfulness.  Judge Andrews also denied the motion as to inducement claims, but agreed to dismiss Chestnut Hill’s “formulaic” contributory infringement claims.

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Judge Andrews has rejected a challenge to the standing of Plaintiff EMC to sue on two patents. The two patents were originally assigned by their inventors to a company called Data Domain, Inc., which was acquired by EMC in 2009. EMC then reorganized its business in several steps governed by an overarching Reorganization Agreement: “First, Data Domain, Inc. was converted to Data Domain LLC. Second, Data Domain LLC assigned ‘all right, title and interest’ in its intellectual property, including the deduplication patents, to Data Domain Holding, Inc. (‘New Data Domain’). Third, New Data Domain entered a License and Assignment Agreement (‘EIC License Agreement’) with EMC International Company (‘EIC’). Fourth, EIC granted an exclusive sublicense to EMC Information Systems International (‘EISI’). Fifth, New Data Domain transferred ‘all right, title and interest’ in its intellectual property to EMC Corporation. Additionally, EMC Corporation became an authorized reseller of Data Domain products.” EMC Corp., et al. v. Pure Storage, Inc., C.A. No. 13-1985-RGA, Memo. Op. at 2-3 (D. Del. Feb. 29, 2016).

The standing arguments turned on interpretation of the EIC License Agreement between New Data Domain and EIC. According to EMC, The EIC License Agreement granted a limited exclusive license from New Data Domain to EIC but expressly retained the primary right to sue and control litigation, which was subsequently assigned to EMC. According to Defendant Pure Storage, however, the EIC License Agreement, when read in light of the Reorganization Agreement, granted EIC “all substantial rights” in the patents-in-suit, and New Data Domain retained only an ability to “control and direct” infringement litigation on behalf of EIC. Thus, Pure Storage argued, New Data Domain did not retain all substantial rights and did not transfer all substantial rights to EMC. Pure Storage also contended that intrinsic evidence supported its position. Id. at 7-8.

Judge Andrews agreed that the EIC License Agreement and the Reorganization Agreement should be read together and found that the two agreements were not inconsistent or ambiguous. Judge Andrews went on to find that New Data Domain had “retained the primary right to sue for infringement in the EIC License Agreement and subsequently assigned that right to EMC” because: “The EIC License Agreement established that New Data Domain retained the primary right to ‘control and direct the conduct of any actions necessary to prevent or terminate any infringement . . ., including the institution of legal proceedings.’ EIC was granted a secondary right to initiate infringement ‘[i]f New Data Domain fails to take timely action.’ EIC’s right to institute and control infringement litigation is restricted because EIC must submit a written request to take over the conduct and control of infringement litigation and New Data Domain ‘may consent thereto, such consent not to be unreasonably withheld.’” Id. at 9. Important to this finding that New Data Domain had more than mere authority to sue on behalf of EIC was the fact that “New Data Domain could enforce its intellectual property rights without consulting EIC” and that the EIC License Agreement specifically stated that it did not create a principal or agent relationship. Id. at 9-10. Additionally, New Data Domain’s retention of all substantial rights was further supported by the fact that it retained the right to make, use, or sell products embodying the patents at issue and to license the patents outside of its business, which rights later were assigned to EMC. Id. at 11-12. For all of these reasons, the Court held, EMC had standing to sue.

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Judge Andrews recently issued two orders in this case. The first addressed and denied a motion for leave to amend the complaint. Judge Andrews explained that “Plaintiffs proposed amended complaints are boilerplate. Paraphrasing the asserted claim does not suffice. The indirect infringement allegations therefore do not state a claim. As Plaintiff asserts, however, it is early in the case, and if Plaintiff submitted non-boilerplate allegations, it might very well be able to state a claim. It is impossible to say. There would be no prejudice if Plaintiff were able to do so. Thus, the denial is without prejudice should Plaintiff try again within two weeks.” Fo2Go LLC v. Adobe Systems Inc., et al., C.A. No. 15-89-RGA, Or. at 1-2 (D. Del. Feb. 16, 2016).

Additionally, in a separate memorandum opinion, Judge Andrews addressed claim construction issues. The only term in dispute was “server control means for parsing said recipient code from each said message” in representative claim 2 of U.S. Patent No. 7,173,651. Judge Andrews determined that the term was a means-plus-function limitation without corresponding structure and was, therefore, indefinite. In making this finding, Judge Andrews explained that the patentee’s reliance on Williamson v. Citrix Online, LLC, 792 F.3d 1339 (Fed. Cir. 2015) was misplaced because Williamson stands for the proposition that absence of the word “means” gives rise to a presumption that the claim is not a means-plus-function limitation, but Williamson held that the converse presumption, applicable in cases such as this where the limitation uses the term “means,” remains unaffected. Fo2Go LLC v. Adobe Systems Inc., et al., C.A. No. 15-89-RGA, Memo. Op. at 4-5 (D. Del. Feb. 24, 2016). Further, because the specification did not disclose the algorithm programed on a special purpose computer to accomplish the claimed function, there was not adequate disclosed structure. The only portions of the specification that the patentee pointed to were “nothing more than a restatement of the function, as recited in the claim.” Id. at 6-7.

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In Cisco Systems, Inc. v. Sprint Communications Co., L.P., C.A. Nos. 15-431-SLR & 15-432-SLR (D. Del. Feb. 19, 2016), Judge Sue L. Robinson granted Defendant Sprint’s motion to dismiss for lack of subject matter jurisdiction.  Plaintiff Cisco had filed invalidity and non-infringement declaratory judgment clams against Defendant.  Defendant had asserted infringement against Plaintiff’s customers based on the use of Cisco products, and some customers had also made demands on Cisco for indemnification.  Id. at 4-5.  The Court held that these facts were insufficient to establish subject matter jurisdiction.  Plaintiff had not established “a reasonable potential that” suit would be brought against it beyond Defendant’s suits against Cisco customers, as required by the Federal Circuit, and while Plaintiff would have standing to bring suit if it had “an obligation to indemnify their customers,” no standing existed based solely on “customer requests without regard to the merits of such requests” based on Federal Circuit precedent.  Id. at 4-5 (emphasis in original).

Plaintiff also argued that Defendant’s “aggressive litigation strategies and [its] refusal to give assurances that it will not enforce its patents against [Plaintiff]” supported jurisdiction.  Id. at 5.  The Court also rejected this argument; while “the Federal Circuit has recognized that a patentee’s refusal to give assurances that it will not enforce its patent is relevant to the determination [of declaratory judgment standing], the Court . . . subsequently explained that such post-complaint facts cannot create jurisdiction where none existed at the time of filing.  With respect to [Plaintiff’s] aggressive licensing and litigation strategies – even in the face of this court’s invalidating various of Sprint’s patents – the prospect of continued litigation against Cisco customers, without more, is insufficient to pass muster under the current legal regime.”  Id. at 5-6 (internal citations and quotation marks omitted).

In a footnote, the Court also clarified that Federal Circuit law did not require Plaintiff’s complaint to “establish its products meet each element of Sprint’s infringement allegations,” as Sprint had argued.  Id. at 6 n.3.

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Judge Gregory M. Sleet recently construed the claim term “physiologically required amounts” following a four-day bench trial on infringement of plaintiff’s U.S. Patent No. 5,989,581.  Merck Sharp & Dohme B.V. v. Warner Chilcott Company, LLC, C.A. No. 13-2088-GMS (D. Del. Feb. 25, 2016).  During the trial, Judge Sleet determined that the parties disputed the meaning of the term and it was appropriate for the Court to resolve the dispute.  Judge Sleet ordered post-trial claim construction briefing and subsequently issued an order construing the term to mean “the amounts of the progestogenic compound and the estrogenic compound required by the body to achieve the full therapeutic effect.”

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In a recent memorandum order, Judge Richard G. Andrews denied a plaintiff’s motion to substitute into the case an individual in place of a corporate plaintiff whose patents were invalidated at trial.  Pi-Net Int’l Inc. v. JPMorgan Chase & Co., C.A. No. 12-282-RGA (D. Del. Feb. 22, 2016).  Judge Andrews explained the patents at issue were transferred to the individual post-trial.  The Court denied the motion, explaining:

There are no equities or interests that support allowing Dr. Arunachalam to continue to litigate the case.  She used the corporate form to bring the lawsuit.  The corporation lost.  Dr. Arunchalam pro se has a history of ignoring the Court’s rules, and, indeed, to her detriment, has ignored the Court of Appeals’ rules also.  Dr. Arunachalam repetitively files motions that no lawyer would file, such as the motions to recuse just about every single judge who is assigned to her cases.  Dr. Arunachalam’s motion in this case states nothing about whether she would accept the litigation liabilities that Pi-Net might have incurred.  (There is a pending section 285 motion.)

The Court proceeded to deny the defendants’ motion for attorneys’ fees, finding that the number of theories upon which the defendant proved invalidity was not a basis to find the case exceptional.  The Court also found no evidence that Dr. Arunachala knew the patents were invalid, or held an unreasonable belief in their validity.  Finally, Judge Andrews noted that the plaintiff’s settlement demand that was 100 times larger than the amount for which the plaintiff was settling similar cases was an indication of bad faith litigation, but was not itself determinative.

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Following an appeal from the Federal Circuit, Judge Richard G. Andrews recently denied defendant’s motion for attorneys’ fees and granted defendant’s (“Newegg”) motion for costs in Pragmatus Telecom LLC v. Newegg, Inc., C.A. No. 12-1533-RGA (D. Del. Feb. 18, 2015). As to the motion for attorneys’ fees, Judge Andrews was required to determine whether the case was “exceptional” under 35 U.S.C. § 285. To that end, Judge Andrews first considered whether the case was litigated by plaintiff (“Pragmatus”) in an “unreasonable manner.” Id. at 3-7. Judge Andrews explained that “the core of Newegg’s motion revolves around its argument that this lawsuit was brought ‘for the sole purpose of extracting a nuisance settlement rather than resolving a meritorious claim.’” Id. at 6. Judge Andrews found, however, that “[w]hile Newegg criticizes Pragmatus for bringing suit against customers who use the live chat technology, rather than the suppliers who make and sell the technology, I cannot find this case exceptional simply because Plaintiff did something that is expressly allowed and contemplated by the Patent Act.” Id. Moreover, Judge Andrews noted that “[u]nlike in Monolithic Power or Eon-Net, Newegg does not persuasively point to any recurring patterns in Pragmatus’ litigation conduct, nor to any other aggravating factors-such as false testimony, destruction of evidence, or offensive conduct-that led those courts to find litigation misconduct.” Id. Next, Judge Andrews considered the “substantive strength” of Pragmatus’ litigation position. Id. at 7-10. Among other things, Judge Andrews found that “what is relevant to the present motion is that Newegg’s barebones non-infringement arguments do not come close to demonstrating that Pragmatus’ claims were exceptionally meritless.” Id. at 8. Judge Andrews thus denied Newegg’s motion for attorneys’ fees.

Turning to the motion for costs, Judge Andrews explained that “[t]he Federal Circuit’s decision dictates that Newegg is a prevailing party.” Id. at 10. Finding that “Pragmatus has not set forth any persuasive reason justifying a denial of costs,” Judge Andrews referred the proper calculation of costs to the Clerk of Court. Id.

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In Carrier Corporation v. Goodman Global, Inc., C.A. No. 12-930-SLR (D. Del. Feb. 22, 2016), Judge Sue L. Robinson recently considered post-trial motions filed following a jury trial at which the jury returned a verdict for Carrier.  Judge Robinson’s decisions prior to trial on summary judgment, claim construction, and motions in limine can be accessed here, here, and here.  Judge Robinson denied  in part and granted in part Goodman’s motion for judgment as a matter of law and, in the alternative, for a new trial.  Goodman argued that a new trial was warranted because “Carrier made improper arguments to the jury concerning indemnity, presented a moving target of ‘copying,’ and compared invalidating a patent to the termination of parental rights.”  Id. at 31-32.

Regarding indemnification, Carrier’s counsel argued during closing that Goodman knew of the infringement but “tried to put the exposure on Emerson” based on an indemnity clause in the contract between Emerson and Goodman.  Id. at 33-34.  Judge Robinson noted that Federal Rule of Evidence 411 states that evidence of whether or not a person is insured against liability is not admissible to prove negligence or wrongful behavior.  Id. at 34.  The indemnification issue “came up in connection with the use of a standard purchase order unrelated to the issues of patents or infringement.”  Id. at 35.  A new trial as to indirect infringement was warranted because Carrier’s counsel “exploited” the standard purchase order evidence during closing argument.  Id.

Regarding copying and the appropriate burden of proof, Carrier’s counsel told the jury during opening statements that that this was a case about two companies, “[one], and innovator, and one an imitator.”  Id. at 35.  Subsequently, at sidebar, the parties agreed to take the issue of copying out of the case, but at closing Carrier’s counsel reiterated the copying evidence and tied it to its claims of infringement.  Id. at 36.  Carrier’s counsel also compared the standard of proof for invalidating a patent to that for terminating a person’s parental rights.  Id. After a sidebar, Judge Robinson read a curative instruction to disregard any description of burden of proof other than as set forth in the jury instructions and that copying was not at issue.  Id. at 37.  Judge Robinson determined, however, that despite the curative instruction a new trial was warranted because “the trial record was complex enough and, more significantly, balanced enough to make any gratuitous argument sufficient to tip the balance for the wrong reason.”  Id.

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Magistrate Judge Christopher J. Burke recently resolved several discovery disputes raised by both sides in Integra LifeSciences Corp., et al. v. HyperBranch Medical Technology, Inc., C.A. No. 15-819-LPS-CJB (D. Del. Feb. 12, 2016).  Judge Burke ordered defendant to produce five samples of each accused product sold or offered for sale, as “[t]he samples are indisputably relevant to the claims and defenses in the matter.”  Id. at ¶ 1.  Judge Burke also ordered Plaintiffs to obtain and produce certain documents that “remain[ed]” with third-party Medtronic.  Id. at ¶ 2.  Judge Burke found that the documents were “under the ‘control’ of at least certain Plaintiffs for purposes of Federal Rule of Civil Procedure 34(a)” because Plaintiffs have the contractual right to the documents pursuant to a Stock Purchase Agreement.  Id. at ¶¶ 2-3.  Finally, Judge Burke ordered Plaintiffs to supplement their response to Defendant’s interrogatory which “requested, inter alia, that as to claim 6 of [the patent-in-suit], Plaintiffs identify the priority date of claim 6, and ‘provide all of the factual and legal bases for that contention, and identify all documents and evidence [Plaintiffs] claim supports that contention.'”  Id. at ¶ 5 (last alteration in original).  Judge Burke agreed with Defendant that Plaintiffs’ response was “clearly deficient” demonstrated by the fact they provided a “more full explanation” in their discovery dispute letter.  Id.

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In International Business Machines Corporation v. The Priceline Group, et al., C.A. No. 15-137-LPS-CJB (D. Del. Feb. 16, 2016), Judge Christopher J. Burke recommended that Defendants’ motion to dismiss due to lack of patent-eligible subject matter be denied. Defendants argued the asserted claims were directed to patent-ineligible abstract ideas.

The Court examined the subject matter eligibility of each of the four patents-in-suit in turn.  The Court concluded that the first patent was not directed to an abstract idea.   “Defendants contend that the claims of the ‘601 patent “attempt to monopolize an abstract idea[,]” which they articulate as “keeping track of prior communications during a conversation between computers.”” Id. at 14. But the Court agreed “with Plaintiff that Defendants’ articulation does not capture the true character of the ‘601 patent’s invention,” Id. at 14. One issue with Defendants’ position was that they focused “not on the words of the patent; instead, Defendants focused largely on allegations in Plaintiffs Complaint” in a way that improperly broadened what the idea of the patent’s claims were. Id. at 14.  “The ‘innovation over the prior art’ described in the patent’s specification . . . is not simply ‘keeping track of prior communications during a conversation between computers.’  Instead, it is to a new way of accomplishing that-an assertedly better method than existed in the prior art.” Id at 16 (emphasis in original).  “In sum, the heart of the invention is more particular than simply ‘keeping track of communications’ amongst computers-it is the specific concept of recursively embedding state in continuations, in order to keep track of that content. By oversimplifying (and thus misidentifying) the basic character [the] patent, Defendants have failed to meet their burden of demonstrating that the claim is directed to an abstract idea.” Id. at 20.

The Court recommended denial of the motion without prejudice with respect to this patent on the grounds that it was premature, rather than conclude the patent could not be drawn to an abstract idea as a matter of law, explaining that the Court had relied on Plaintiff’s proposed claim construction in its analysis and that those constructions could end up being disputed and not adopted. Id. at 21.

Even though it was unnecessary to consider the second prong of Alice, the Court then did so “for the sake of completeness,” and concluded that “it is plausible that the ‘recursively embedding’ limitation amounts to a concrete application of the asserted abstract idea. A morenrobust record would also be needed on the subjects of preemption and innovation, which could impact the subject matter eligibility of the claim.” Id. at 22-23.

The second patent “describe[d] an invention meant to improve upon then-current single-sign-on (‘SSO’) technology.” Id. at 30. The Court concluded that the patent was not directed to an abstract idea, again concluding that Defendants’ articulation of what the patent covered was overbroad. And, again, the Court recommended denial without prejudice and then engaged in Alice’s second step for the sake of completeness, agreeing that “it is plausible that the claim contains an inventive concept sufficient to withstand Defendants’ Motion.” Id. at 38-39.

The third and fourth patents, which are related with similar specifications and were considered together, are directed at “enabl[ing] a user to navigate easily through multiple applications in an interactive service” and “provid[ing] a method for presenting relevant advertising to a user of an interactive service without distracting the user or disrupting the user’s session.” Id. at 45-46. Here, the Court concluded that “[t]he heart of these inventions are as Defendants have described them-generating partitioned screen displays for users from information stored at the user’s computer.” Id. at 48. And the Court agreed with Defendants that these patents were directed at abstract ideas: “the concepts of locally storing information and resources at a user’s computer and presenting a partitioned display are abstractions ‘devoid of a concrete or tangible application.’ People have been locally storing information and presenting displays of information with or without computer-based help for years. (See, e.g., D.I. 19 at 21 (Defendants describing an individual creating a copy of a document that is also stored in a file room to avoid having to visit the file room each time she needs to use the document)). These concepts are comparable to other similar concepts that have been deemed to be abstract in recent cases.” Id. at 48 (citations omitted). However, the Court then concluded that Defendants had not met their burden of demonstrating that these patents were devoid of inventive concepts under Alice’s second prong.

Accordingly, the Court recommended denial of the motion as to all four patents-in-suit.

UPDATE: On March 30, 2016, Chief Judge Leonard P. Stark adopted Judge Burke’s Report and Recommendation in full.

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