Judge Sue L. Robinson recently granted a defendant’s motion for judgment on the pleadings under 35 U.S.C. § 101. Cyberfone Sys., LLC v. Lexmark Int’l, Inc., Civ. No. 14-1489-SLR (D. Del. Oct. 8, 2015). The patent at issue, titled “Data Transaction Assembly Server,” was directed to “a form driven operating system which permits dynamic reconfiguration of the host processor into a virtual machine which supports any of a number of operating system independent data transactions, and more particularly, to a data transaction assembly server which downloads data transactions representative of different applications.” Id. at 1, 13. Judge Robinson found that the purpose of the patent claims—“entering and processing data in response to questions on forms or templates”—was an abstract concept. Id. at 16. The Court further found that “although the problem addressed by the asserted claims is rooted in computer technology, the claimed solution is not disclosed with enough specificity to transform the abstract idea . . . into a patentable application of such, thus risking monopolization of the abstract idea itself.” Id. at 18.
Judge Robinson recently granted a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) for lack of patentable subject matter. Judge Robinson ultimately concluded that “[g]iven the options illustrated in the specification and the broad claim language, the ‘inventive concept’ of the patents-in-suit does not pass muster under § 101. Even if the problem addressed were characterized as Internet-centric, the claimed solution is not described with enough specificity to place meaningful boundaries on the inventive concept.” Parus Holdings, Inc. v. Sallie Mae Bank, et al., C.A. No. 14-1427-SLR, Memo. Op. at 22 (D. Del. Oct. 8, 2015).
Of particular interest in the decision is Her Honor’s summation of the applicable case law: “In reviewing the post-Alice cases such as DDR and Intellectual Ventures, the court is struck by the evolution of the § 101 jurisprudence, from the complete rejection of patentabiliy for computer programs to the almost complete acceptance of such, to the current (apparent) requirements that the patent claims in suit (1) disclose a problem ‘necessarily rooted in computer technology,’ and (2) claim a solution that (a) not only departs from the ‘routine and conventional’ use of the technology, but (b) is sufficiently specific so as to negate the risk of pre-emption. . . . Moreover, it is less than clear how a § 101 inquiry that is focused through the lens of specificity can be harmonized with the roles given to other aspects of the patent law (such as enablement under § 112 and non-obviousness under § 103), especially in light of the Federal Circuit’s past characterization of § 101 as a “coarse” gauge of the suitability of broad subject matter categories for patent protection. Given the evolving state of the law, the § 101 analysis should be, and is, a difficult exercise.” Id. at 11-12.
Her Honor continued, touching on procedural and evidentiary concerns: “The pre-emption concern is generally amenable to review in the context of a motion to dismiss or for judgment on the pleadings. The second requirement, which may well involve issues of fact relating to the state of the art in the technological environment involved, is more appropriately addressed after discovery in the context of a motion for summary judgment. Id. at 13.
Chief Judge Stark recently denied a motion for attorney’s fees under § 285. As listed by the Court, Defendants’ factual basis for seeking fees included that Plaintiff “was ‘on notice’ as to doubts about its ‘standing to sue’ early in the litigation, but made no attempt to demonstrate that it possessed ‘all substantial rights’ in the asserted patents . . . continued litigating after the Court dismissed Plaintiff’s Complaint for lack of standing . . . [and] caused Defendants to incur over three million dollars in ‘attorneys’ fees and costs.’” Clouding IP, LLC v. EMC Corp., et al., C.A. No. 13-1455-LPS, Memo. Or. at 2 (D. Del. Sept. 30, 2015). Judge Stark found that the Plaintiff had presented a good faith reading of the patent purchase documents and that “Plaintiff had a good faith, though ultimately incorrect, belief that it had standing to suethroughout the litigation. In particular, the Court agrees with Plaintiff’s statement that ‘[i]t is illogical to believe that [Plaintiff] would incur the significant tie and expenses associated with patent litigation all the while believing that it lacked standing, especially because a party can challenge standing until the last moments of a case.” Id. at 4. His Honor concluded, “[a]s long as the test for awarding attorney fees turns on whether the case is ‘exceptional,’ the Court is obligated to consider the instant case in comparison to the full panoply of patent cases with which it has been involved, and needs to assess if the instant case is in some meaningful sense ‘uncommon,’ ‘rare,’ or ‘not ordinary.’ Having undertaken this analysis, the Court concludes that nothing about the instant case stands out as ‘exceptional’ in any respect.” Id. at 5. In another decision issued on the same day, Judge Stark granted § 285 fees based on His Honor’s finding that the case “stands out from others” and is exceptions. See Nova Chemicals Corp., et al. v. The Dow Chemical Co., C.A. No. 13-1601-LPS, Memo. Op. (D. Del. Sept. 30, 2015)
In a series of related actions, Chief Judge Leonard P. Stark granted Defendants’ motions to dismiss or for judgment on the pleadings based on Section 101, ruling that all claims of the patent-in-suit, entitled “Method and Apparatus for Conducting or Facilitating a Promotion,” were directed to patent-ineligible subject matter. E.g., Inventor Holdings, LLC v. Gameloft, Inc., C.A. No. 14-1067-LPS (D. Del. Sept. 30, 2015). The patent relates to “a method and apparatus for distributing promotions to potential participants and for allowing the promotion participants to receive benefits associated with the promotions. The claimed methods are generally directed to “facilitating play of a game” on a “mobile device” or “computer-readable medium” in which a user receives an in-game benefit after a locked outcome of the game is unlocked using an unlock code associated with that outcome.” Id. at 1-2 (internal citations and quotation marks omitted).
The Court first concluded that certain disputed terms could be given their plain and ordinary meaning, and thus the Court could decide patentability at this stage without further claim construction resolution. See id. at 13-16. The Court also clarified that a clear and convincing evidence burden of proof did not apply to Defendants’ motions as there were no disputed material facts to resolve. Id. at 12 n.6.
Under the first prong of the Supreme Court’s Mayo/Alice test, the Court concluded that the patent was directed to an abstract idea because its claims did not “solve a problem specific to mobile devices,” and were similar to the claims at issue in, “for example, Bilski and Alice, which were directed to abstract ideas that could be implemented using generic computer technology.” Id. at 17 (emphasis in original). The Court also agreed with Defendants that the claims were directed to an abstract concept because they were directed to a “fundamental economic practice,” in other words “the economic strategy and abstract idea of ‘providing an ‘unlock code’ in exchange for a qualifying activity for an ‘outcome’ to reveal the [intra-game] benefit of the locked outcome.” Id. at 17-18 (alterations in original).
Finally, the Court concluded under the second Mayo/Alice step that the claims did not include a sufficient inventive concept. The claims were “implemented using generic mobile device technology” and this was insufficient to “impose meaningful limits on the scope of those claims.” Id. at 20-21. Further, while Plaintiff argued that the claims met the machine-or-transformation test because of their “use of a ‘mobile device’ in connection with the other claim limitations,” the Court observed that “many exemplary embodiments in the specification indicate that the mobile device is not integral to the performance of the claimed method,” thus “neither the claims nor the specification . . . recite any machine that plays a ‘significant part in permitted the claimed method to be performs.’” Id. at 22-23 (emphasis in original) (internal citations omitted). Further, the claims “tie[d] up use of the underlying ideas of the [patent],” id. at 23, and these claims were not analogous to the claims found patent-eligible in DDR Holdings because they “do recite standard use of a conventional mobile phone in a normal, expected manner,” id. at 24 (emphasis in original).
Accordingly, the Court concluded that the claims of the patent-in-suit were directed to patent-ineligible subject matter, and granted Defendants’ motions to dismiss or for judgment on the pleadings. Id. at 25.
Judge Christopher J. Burke recently recommended the Court grant-in-part defendants’ 12(b)(6) motion to dismiss for lack of subject matter jurisdiction under 35 U.S.C. § 101. Versata Software, Inc., et al. v. Netbrain Techs., Inc., et al., C.A. Nos. 13-676-LPS-CJB, C.A. Nos. 13-678-LPS (D. Del. Sept. 30, 2015). Plaintiffs asserted five patents against defendants: U.S. Patents Nos. 6,834,282; 6,907,414; 7,363,593; 7,426,481; and 7,082,454. For four of the five asserted patents, containing collectively 201 claims, defendants asserted that all claims were directed to unpatentable subject matter. Id. at 9. But, because defendants only “meaningful[ly] addressed a few of the claims, Judge Burke declined to “make a final determination” for the other claims to which defendants gave “negligible attention.”
In short, defendants argued, and the Court agreed, that the claims were directed to the abstract ideas of: “representing data in a hierarchy” (id. at 14-15); “taking data that is not stored in a hierarchy and putting it in hierarchical form before presenting it to a user” (id. at 29); “displaying data organized in hierarchical form” (id. at 35); “searching data using features and product numbers” (id. at 41); and “providing access to a file by determining if the file exists in a storage system (cache), returning the file to the requester if the file exists, and if not, creating, storing, and sending the requested file” (id.at 47-48).
Judge Burke also determined that the “patent claims do not require anything beyond the use of generic and conventional computer hardware and software[,]” therefore not providing an inventive concept. Id. at 20. See also 30-31, 36-37, 43, 50.
In Vanda Pharmaceuticals Inc. v. Inventia Healthcare PVT. Ltd., C.A. No. 15-632-GMS (D. Del. Sept. 22, 2015), Judge Gregory M. Sleet denied Defendant’s motion to dismiss due to lack of personal jurisdiction, as well as its motion to transfer the case to the Northern District of West Virginia in the alternative.
In finding that the Court had personal jurisdiction over this ANDA defendant, the Court cited its prior holding in AstraZeneca that “the act of filing an ANDA application that potentially infringes the patent of a Delaware entity provides sufficient minimum contacts with the State of Delaware under a specific jurisdiction analysis.” Id. at 2. The Court’s exercise of jurisdiction also did not violate the Due Process Clause, as Plaintiff “would be substantially burdened if forced to bring a lawsuit against any ANDA filer challenging the [patent-in-suit] in the location selected by the defendant.” Id. at 3 (citing AstraZeneca). “Thus, considerations of fair play and substantial justice also justify the exercise of jurisdiction.” Id.
As to Defendant’s alternative motion to transfer the case, the Court concluded that the Jumara factors did not favor transfer. Only Defendant’s forum choice weighed in favor of transfer, while questions of convenience all weighed against it: “[w]hile neither entity maintains a principal place of business in Delaware, Vanda is already involved in litigation regarding [the patent-in-suit] in this district. As a result, the witnesses are available here. [Defendant] fails to demonstrate that the Northern District of Western Virginia is a more convenient location.” Id. at 4. Plaintiff’s forum choice was neutral here, where it had brought suits both in this District and in the transferee district; as a result, “the ‘first-filed’ rule [that would favor this District] does not apply where the plaintiff brought identical suits to both districts.” Id. at 4.
The Court further found that the Jumara public interest factors weighed against transfer. Local interests were neutral in a patent infringement action, but “practical considerations weigh[ed] heavily against transfer” because Plaintiff had filed a related case in the District involving the same patent and drug. Id. “Thus, it would be easier, quicker, and less expensive to hear both cases here. Moreover, resolution of the issues relating to [the patent-in-suit] in a single district would promote judicial economy and avoid the possibility of inconsistent outcomes.” Id.
As a result, the Court denied the motion to discuss for lack of personal jurisdiction or to transfer in the alternative.
In a recent Memorandum Order, Judge Richard G. Andrews drew a distinction between the “ability to access” documents and “control of” documents in denying a motion to compel. TQ Delta LLC v. Pace PLC, et al., C.A. No. 13-1835-RGA (D. Del. Sept. 28, 2015). Judge Andrews explained that the defendants and Broadcom (the entity with actual control of the documents at issue) are “unrelated, independent corporations” and explained that NDAs between Broadcom and the defendants “appear to keep all legal rights to the specifications and documents with Broadcom.” Judge Andrews added, “I think there is a difference between having the present ability to access the items and having control of the items. Plaintiff’s request is denied.”
Judge Gregory M. Sleet recently granted defendants’ motion to stay pending inter partes review of four patents-in-suit (U.S Patent Nos. 6,487,200, 6,993,353, 7,907,714, and 8,855,147). AT&T Intellectual Property I, L.P., et al. v. Cox Communications, Inc., et al., C.A. No. 14-1106-GMS (D. Del. Sept. 24, 2015). Plaintiffs objected to the proposed stay because defendants would not be prejudiced absent a stay, whereas plaintiffs would suffer prejudice since the parties are direct competitors. Id. at 2. Moreover, the fact that the parties were in the middle of discovery and that the IPR petitions covered only four of the nine patents-in-suit weighed against stay. Id. Judge Sleet disagreed. Defendants “requested review of more than half the claims asserted in this case” and “[t]he results of the IPR may affect not only validity of the asserted claims, but also their scope.” Id.at 3 n.4. Therefore, the IPRs will simplify issues in this litigation. Moreover, Judge Sleet found that the stage of the case did not weigh against a stay because trial was not scheduled until October 2016. Id.
Yesterday, in Elm 3DS Innovations, LLC v. Samsung Electronics Co., Ltd., et al., C.A. No. 14-1430-LPS-CJB (D. Del. Sept. 29, 2015), Magistrate Judge Christopher J. Burke recommended denial of Defendants’ motion to dismiss induced infringement claims to the extent Plaintiff was seeking pre-suit infringement damages. Plaintiff had only alleged pre-suit induced infringement of one of the patents-in-suit (the ‘239 patent). Plaintiff’s operative complaint cited no direct evidence that Defendants had reviewed or cited to the ‘239 patent before the suit, but did contain circumstantial evidence. See id. at 4-5. In finding that the complaint had sufficiently alleged pre-suit knowledge of this patent, the Court concluded that its allegations “suggest[ed] that . . . Defendants had some fairly detailed, specific discussions about the ‘239 patent’s parent – and went on to cite other patens from the same patent family thereafter. . . . [T]hese facts at least help make it seem more plausible that Defendants did in fact have actual knowledge of the ‘239 patent.” Id. at 5 (emphasis in original). “Plaintiff’s allegations that the’239 patent is well known and frequently referenced in the semiconductor industry, and that it has been frequently cited by Defendants’ competitors . . . over the last many years” supported the same conclusion: [t]hese pleaded facts are relevant . . . because if true . . . they render it more likely that Defendants . . . may have been similarly aware of the ‘239 patent’s existence and its contents.” Id. at 5-6.
Even though these two categories of allegations “may not have been sufficient” by themselves, and did not “make pre-suit knowledge probable” when taken together, “considered as a whole, they render it a least plausible that Defendants were aware of the ‘239 patent and its claims prior to suit,” which was sufficient to withstand a motion to dismiss. Id. at 6-7 (emphasis in original).
Defendants also argued that Plaintiff had failed to adequately plead their knowledge of their customers’ infringement. The Court also rejected this argument. The complaint had set out “how or why these products infringement at least [one claim],” Plaintiff had plausibly alleged knowledge of the ‘239 patent (as discussed above) and that Defendants would have been able to understand the content and scope of its specifications and claims. Id. at 7-8 (emphasis in original). Further, Plaintiff has plausibly alleged that Defendants knew its semiconductor chips were incorporated into its customers’ finished products imported and sold in the U.S. Id. at 8. Taken together, these facts plausibly alleged Defendants’ knowledge of its customers’ infringement. Id. at 9.
Finally, Defendants argued that Plaintiff had insufficiently pled specific intent to infringe. The Court also rejected this position, explaining that the complaint alleged Defendants’ “encourage[ment]” for their customers to incorporate Defendants’ products into finished products, “all after having sufficiently described what it is about Defendants’ semiconductor chips that is said to render them infringing apparatuses in the first place, and why Defendants had knowledge that those chips infringed. This is sufficient to plead specific intent.” Id. at 9.
In Greatbatch Ltd., v. AVX Corp., C.A. No. 13-723-LPS (D. Del. Sept. 22, 2015), Chief Judge Leonard P. Stark (i) denied defendants’ motion to strike plaintiff’s “Percolation Network” theory of infringement; and (ii) denied plaintiff’s motion to strike defendants’ newly disclosed prior art references. As to defendants’ motion to strike plaintiff’s infringement theory, Judge Stark found that “whatever prejudice Defendants may have suffered (or will suffer) from Plaintiff[’s] . . . ‘percolation network’ theory of infringement is outweighed by other factors, including the importance of the information Defendants seek to strike.” Id. at 2. Judge Stark explained that defendants themselves acknowledged that the theory “is the entirety of the [plaintiff’s] infringement case for the ’779 patent.” Judge Stark also noted that plaintiff’s expert “in effect disclosed the . . . theory in his opening expert report,” and therefore defendants “failed to show that they were unfairly surprised or meaningfully prejudiced.” Id. Judge Stark also found it “notabl[e]” that defendants’ “expert opined on a percolation network theory of infringement in his responsive expert report and Defendants had an opportunity to depose Plaintiff’s experts regarding this theory.” Id. Judge Stark also found the other three Pennypack factors to weigh in plaintiff’s favor, and thus denied defendants’ motion to strike. Id.
Denying plaintiff’s motion to strike defendants’ newly disclosed prior art references, Judge Stark first found that plaintiff “has not specifically articulated what unfair prejudice it may suffer if Defendants’ allegedly late disclosure of prior art references and combinations is not stricken.” Id. at 3. Second, Judge Stark explained that “whatever prejudice Plaintiff may have suffered (or will suffer) is outweighed by other factors, including the importance of the information Plaintiff seeks to strike.” Id. Lastly, the court noted that it did not find “willful deception or flagrant disregard of any court order. To the contrary, the Court intended – by issuing its Order of July 28, 2015 – that Defendants would finally identify their invalidity contentions by August, 17, 2015, and this is exactly what Defendants did.” Id. (internal citation omitted).