In a recent Order, Judge Richard G. Andrews granted a defendant’s motion to dismiss three indirect infringement counts for failure to plausibly allege the existence of any direct infringers. Acceleration Bay LLC v. Activision Blizzard Inc., C.A. No. 15-228-RGA (D. Del. June 22, 2015). As Judge Andrews explained, “[t]he allegations of direct infringement in the indirect infringement accounts seem designed to obscure what Plaintiff’s theory is rather than to elucidate it.” The Court rejected the argument that the counts should be dismissed, alternatively, for failure to plausibly allege knowledge, explaining that this “seems much ado about nothing” since “were this Defendant’s only argument, all it would result in would be a limitation of the scope of the indirect infringement counts.” The dismissal was without prejudice.
In Bayer Cropscience AG, et al. v. Dow Agrosciences LLC, C.A. No. 12-256-RMG-JS (D. Del. June 18, 2015), Judge Renée Marie Bumb, sitting by designation, made determinations, based on Defendant’s attorney’s “almost entirely unredacted” billing statements, of fees to be charged against Plaintiffs to Defendant under 35 U.S.C. § 285. Defendant requested over $6 million in fees. Plaintiffs requested that Defendant produce completely unredacted records, and requested a reduction in the fees of at least $1.3 million. The Court ultimately reduced the fee award by approximately $170K, id. at 86-87, and rejected Plaintiffs’ request for unredacted records, id. at 86.
Having reviewed each of the contested billing entries (redacted from the public version of this opinion), the Court rejected a number of Plaintiffs’ contentions that bills for various items, including preparation of key declarations, attendance at summary judgment hearings, getting attorneys “up to speed” for an appeal, and substantial document review, were excessive, redundant, or unnecessary and thus unreasonable. See, e.g., id. at 13, 21, 23-24, 31-32, 59-60. The Court also rejected Plaintiffs’ contention as “baseless” that it was unreasonable for Defendant to have hired lead counsel from New York and California where it could have hired lead and local counsel from Delaware, id. at 26, as well as its argument that Defendant should have utilized local counsel at various locations for depositions “in a case of this complexity,” id. at 83. For several issues, the Court observed that it would have been helpful for Plaintiffs to provide it with how much time Plaintiffs’ attorneys had billed to these tasks, for comparison. See, e.g., 31, 76.
For other items, however, the Court did reduce fees. For example, the Court reduced fees involving “seemingly excessive edits to” a summary judgment motion and a motion for fees. Id. at 18, 81-82. “While attorney review and editing are important, the Court has attempted to reasonably adjust the time to address Bayer’s legitimate concerns that it should not have to pay for excessive, multiple attorneys’ reviews.” Id. at 18. The Court further reduced some amounts for legitimate expenses where it concluded, for example, that the number of attorneys who billed to a task or attended a hearing appeared unnecessary. See, e.g., id. at 22-23, 25. Continue reading
In Interdigital, Inc, et al. v. Wistron Corporation, C.A. No. 15-478-LPS (D. Del. June 18, 2015), Chief Judge Leonard P. Stark granted Plaintiffs’ emergency motion to remand the case to Delaware’s Court of Chancery. Plaintiffs had originally filed suit in that court, seeking a TRO and injunctive relief to “prevent Defendants from advancing suit filed in the Intellectual Property Court of Taiwan.” Id. at 1. Defendant filed a Notice of Removal, which brought the matter to the District Court. Id.
The Court concluded that a forum selection clause in a patent licensing agreement between these parties “at least arguably constitute[d] a contractual waiver” of Defendant’s right to remove the action to federal court where Plaintiffs filed suit regarding the agreement in Delaware state court. Id. at 2. The Court rejected the import of Defendant’s “premature contentions about the merits of the parties’ underlying disputes and allusions to notions of “international comity.” Id. at 3. Further, “even assuming (without deciding) that Plaintiffs are exaggerating the prejudice they are suffering from Defendant’s removal of the Chancery action and from Defendant’s initiation of litigation in Taiwan, the Court perceives no reason to exercise whatever discretion it has to keep this matter here rather than remand.” Id.
Finally, the Court denied Plaintiffs’ requests for fees and costs, finding remand to be the most appropriate and effective remedy. Id. at 4.
In a recent Memorandum Order, Chief Judge Leonard P. Stark denied defendants’ (the “Moving Defendants”) motion to stay the litigation pending inter partes review (“IPR) of U.S. Patent No. 8,466,795 without prejudice. Pragmatus Mobile, LLC v. Amazon.com, Inc., C.A. Nos. 14-436, 14-440-LPS (D. Del. June 17, 2015). Judge Stark noted that “[t]he PTAB has not instituted the IPR petition” but “[g]iven the filing date, the PTAB is statutorily required to decide whether to institute the IPR petition by October 22, 2015.” Id. at 2.
Applying the first of three traditional factors the court considers when deciding whether to stay litigation pending IPR, Judge Stark found that “Moving Defendants’ delay in petitioning for IPR could create at least some tactical disadvantage for Plaintiff Pragmatus Mobile, LLC (‘Plaintiff’) and a stay may unduly prejudice Plaintiff.” Id. More specifically, Judge Stark observed that “[w]hile Plaintiff’s status as a nonpracticing entity reduces the prejudice it would suffer from a stay . . . , there remains a potential for undue prejudice.” Id. Moreover, Judge Stark found that “the timing of Moving Defendants’ filing suggests they may be seeking a tactical advantage, given they were aware of the prior art asserted in their IPR petition many months before filing the petition just three days before the statutory deadline.” Id.
Judge Stark also found the second traditional factor (whether stay would simplify the issues in question and trial in the case) to disfavor stay at the time of deciding the motion. Judge Stark explained that “[g]enerally, the ‘simplification’ issue does not cut in favor of granting a stay prior to the time the PTAB decides whether to grant the petition for inter partes review.” Id. 2-3. Judge Stark noted, however, that “Moving Defendants may renew their Motion if and when their petition is instituted, and the simplification factor may be evaluated differently at that time.” Id. at 3.
Judge Stark finally found the third factor (whether discovery is complete and whether a trial date has been set) to weigh against granting stay. Judge Stark observed that “a trial date has been set for September 12, 2016 (around the same time as the IPR petition may be finally decided) and the parties have substantially completed document production, exchanged invalidity and infringement contentions, and commenced claim construction briefing in preparation for a Markman hearing scheduled for August.” Id. Judge Stark further noted that “[f]inal infringement contentions are due in late October, shortly after the PTAB’s deadline for deciding whether to institute the petition.” Id.
Chief Judge Leonard P. Stark recently denied a motion to stay pending inter partes review filed by Netflix. Copy Protection LLC v. Netflix, Inc., C.A. No. 14-365-LPS (D. Del. June 17, 2015). As the Court explained, the PTAB had not yet instituted the inter partes review, and was not required by statute to make a decision on whether or not to do so until October 2015. Further, based on the statutory timeline, a final decision from the PTAB would be expected around the same time as trial in this case—October 2016. Therefore, the Court found that the balance of factors weighed against staying the case at this time, but explained that Netflix could renew its motion if and when inter partes review is instituted by the PTAB.
In adidas AG and adidas America, Inc. v. Under Armour, Inc. and MapMyFitness, Inc., C.A. No. 14-130-GMS (D. Del. June 15, 2015), Judge Gregory M. Sleet dismissed co-plaintiff adidas America, which had been added as a plaintiff in a first amended complaint, for lack of standing.
Adidas AG is a German company and the “undisputed legal owner of each of the asserted patents in this suit,” while addidas America, its American subsidiary, was alleged to be an exclusive licensee of the asserted patents within the United States. The Court summarized a “complex series of contracts between adidas AG and its various subsidiaries” through which Plaintiffs claimed they had standing to sue. See id. at 2-3.
Defendants offered both facial and factual challenges to adidas America’s standing. Id. at 4. The Court rejected Defendants’ facial challenge based on allegedly contradictory assertions in the amended complaint: first, that adidas AG owned “all right, title, and interest in and to” the patents (emphasis in original), and second that adidas America was the exclusive licensee in the United States. The Court agreed with Plaintiffs that “alleging that adidas AG owns all ‘right, title, and interest’ in the patents does not make it impossible for adidas America to have an exclusive license to use some of those rights. Under the ‘more generous standard of review associated with’ a facial attack, the Plaintiffs’ amended complaint” was sufficient. Id. at 6 (emphasis in original).
However, the Court then concluded that Plaintiffs had not made a showing that the patents-in-suit were actually the subject of the contractual agreements between the different entities. See id. at 6-8. The patents that were the subject of the agreements were not identified by number, instead by their commercial embodiments. Id. at 6. Instead, Plaintiffs simply made the unsupported (and disputed) assertion that the asserted patents were tied to an embodiment Plaintiffs claimed in briefing was their competitor product to the accused products. Id. This was insufficient to carry Plaintiffs’ burden that subject matter jurisdiction existed. Id. at 7.
Notwithstanding this lack of proof, the Court concluded that one agreement “definitively” resolved that adidas America lacked standing. This agreement “explicitly terminated the effectiveness of the previous [agreements],” and appointed two entities, one of them being adidas America, as the exclusive distributors for Plaintiffs’ products in the U.S. Id. at 8. Therefore, adidas America did not hold the exclusive right to sell the products. As a result, this co-plaintiff lacked standing to sue, even with the patent owner joined, because it lacked any exclusionary rights to the patents-in-suit.
The Court also denied Plaintiffs’ motion to apply German and Dutch law to the interpretation of the contracts at issue, finding that, “in light of its more narrow ruling,” it was unnecessary to address the parties’ additional arguments “concerning the proper interpretation” of the agreements at issue, “which likely would have required the application of foreign law.” Id. at 9 n.4.
Judge Sue L. Robinson recently denied plaintiff Quest Integrity USA, LLC’s (“Quest”) motions for preliminary injunction against defendants Clean Harbors Industrial Services, Inc. and Cokebusters USA Inc. (collectively, the “Defendants”). Quest Integrity USA, LLC v. Clean Harbors Industrial Services, Inc., C.A. Nos. 14-1482, 14-1483-SLR (D. Del. June 12, 2015). The patent-in-suit, U.S. Patent No. 7,542,874 (the “’874 patent”) was directed to a system for inspecting furnace tubes of petroleum refineries. Id. at 2-7.
Addressing the motions, Judge Robinson first considered Quest’s likelihood of success on the merits, and found that Quest had made a prima facie showing of infringement by both Defendants. Id. at 9-11. Turning to the issue of validity, however, Judge Robinson explained that “[v]alidity challenges during preliminary injunction proceedings can be successful, that is, they may raise substantial questions of invalidity, on evidence that would not suffice to support a judgment of invalidity at trial.” Id. at 8. Judge Robinson found that a “substantial question of invalidity” was raised based on a prior art reference (a final report prepared by Quest for Orion Norco Refining explaining its process), and thus Quest could not demonstrate a likelihood of success on the merits. Id. at 11-16. In reaching this determination, Judge Robinson explained that “[t]he court is required to construe the patent consistently for purposes of its infringement and invalidity analyses,” and that the “broad scope of the ‘874 patent . . . encompasses the Norco Report.” Id. at 13-14.
Judge Robinson then went on to find that “[e]ven if Quest had demonstrated a likelihood of success on the merits, . . . Quest has not carried its burden to clearly establish irreparable harm.” Id. at 16. Specifically, Judge Robinson explained that “Quest has not even attempted to analyze the relative importance of patented versus non-patented features and has tacitly conceded that several of [its] initially raised factors cannot be demonstrated.” Id. at 17-18. Further, Judge Robinson was not persuaded that Quest had “demonstrated that defendants pose a threat of irreparable harm if allowed to compete, given the size of the market, the large number of refineries, and the fact that the parties have been competing for years.” Id. at 18.
In a recent memorandum, Judge Sue L. Robinson denied without prejudice the defendants’ motions to dismiss for failure to state a claim in nine related cases. Network Congestion Solutions, LLC v. AT&T Inc., et al., Civ. Nos. 14-894-SLR, 14-895-SLR, 14-896-SLR, 14-897-SLR, 14-898-SLR, 14-899-SLR, 14-901-SLR, 14-902-SLR, 14-903-SLR, and 14-904-SLR (D. Del. June 4, 2015). The complaints asserted infringement of a method claim by “accused ‘network congestion management practices’ . . . used by defendants internally to provide better service to their customers.” Id. at 4. Judge Robinson explained, “[a] rational query is whether there is any way for a patent holder, such as plaintiff, to present—in a complaint—the kind of factual detail defendants suggest is required under the Iqbal/Twombly standard. Drawing on my judicial experience and common sense, I would say ‘no.’” Id. Judge Robinson added, “if the practices identified by plaintiff operate through defendants’ proprietary software, then it is reasonable to conclude that the notice requirements have been met, based on the quantity and quality of publicly available information. To follow defendants’ reasoning would deny an entire class of patent holders the opportunity to even get before a court to test a strength of their intellectual property rights through discovery, let alone to enforce such rights. Id. at 4-5. The Court noted that the plaintiff provided more information about its allegations in its opposition to the motion to dismiss, and denied the motions to dismiss without prejudice to renew if the plaintiff failed to amend its complaints to incorporate that additional information.
Judge Gregory M. Sleet recently granted defendants’ motion to stay litigation filed by IMS Health Incorporated pending the PTAB’s resolution of the covered business method patent review. IMS Health Incorporated v. Symphony Health Solutions Corporation, C.A. No. 13-2071-GMS (D. Del. May 29, 2015). Defendants filed petitions to institute a covered business method (“CBM”) review of the patents in suit. At the time of Defendants’ motion to stay, the Patent Trial and Appeal Board (“PTAB”) instituted review of one patent and the remaining petition was under consideration. Judge Sleet stayed the litigation as to the first petition and temporarily stayed the litigation pending the PTAB’s decision regarding institution of CBM review of the remaining patents in suit.
In StrikeForce Technologies, Inc. v. PhoneFactor, Inc., C.A. No. 13-490-RGA-MPT (D. Del. May 26, 2015), Magistrate Judge Mary P. Thynge recommended denying plaintiff’s (“StrikeForce”) motion to amend its complaint to add allegations of infringement against Microsoft Corporation (“Microsoft”) pursuant to Fed. R. Civ. P. 15(a). StrikeForce acknowledged that “it was aware Microsoft acquired [defendant] PhoneFactor as its wholly-owned subsidiary in October 2012,” but argued that “it was only shortly before filing its motion to amend its complaint and join Microsoft that it became apparent PhoneFactor is not operating as an independent entity, purportedly necessitating the filing of that motion.” Id. at 3.
In reaching the recommendation to deny StrikeForce’s motion, Judge Thynge first concluded that StrikeForce’s “delay in seeking to join Microsoft was undue and its explanation for that delay insufficient to support granting its motion.” Id. at 10. Judge Thynge observed that “[d]espite StrikeForce giving Microsoft actual notice of the ‘599 patent, its belief that Microsoft was one of its ‘largest infringers,’ and Microsoft’s public announcement of its ‘phone based two factor authentication,’ StrikeForce did not name Microsoft as a defendant.” Id. at 7. Judge Thynge also noted that “StrikeForce waited almost twenty-two months after its CEO commented that Microsoft was ‘one of our largest infringers’ and almost nineteen months after filing its initial complaint, and after the Markman hearing was held, to seek to sue Microsoft for infringement in this case.”
In recommending denial of the motion, Judge Thynge also found that “StrikeForce’s ability to separately bring suit against Microsoft, as well as the disruption and delay of the schedule in the instant suit at this stage of the proceeding by the addition of Microsoft, would prejudice PhoneFactor and disrupt the orderly continuation of this case under the current scheduling order.” Id. at 12. Judge Thynge found it notable that StrikeForce “filed its motion to amend after the claim construction hearing had taken place.” Id.