In a recent Report and Recommendation, Magistrate Judge Christopher J. Burke recommended that the court grant defendants’ motion for summary judgment regarding damages. Lambda Optical Solutions, LLC v. Alcatel-Lucent USA Inc., C.A. No. 10-487-RGA-CJB (D. Del. Jul. 29, 2015). First, defendants (collectively, “Alcatel”) argued that “Lambda cannot recover pre-suit damages from the date when LOS [, the assignee of the asserted patent,] stopped selling unmarked patented products (February 28, 2007) until the date it gave Alcatel notice of the patent by filing suit in this case (June 4, 2010).” Id. at 5. Considering Alcatel’s argument, Judge Burke was required to address a fairly unsettled question: “whether a patentee that sells unmarked product, but later ceases such sales, becomes a non-producing patentee that may obtain damages under Section 287(a) once sales of the unmarked product cease.” Id. at 7. Judge Burke found that it did not, and therefore recommended that “Lambda is not entitled to damages for the time between when LOS stopped selling unmarked products and the date when Lambda filed suit.” Id. at 13. Judge Burke reasoned this outcome was consistent with the actual language of Section 287(a), and comported with the policies underlying Section 287. See id. at 7-13. For example, Judge Burke noted that “if a patentee-plaintiff were able to return to the more favorable status of a nonproducing patentee simply by halting production of unmarked product, this would not encourage patentees in the first instance ‘to give notice to the public that the article is patented,’ nor would it ‘aid the public to identify whether an article is patented[.]’” Id. at 11. Alcatel also argued that Lambda was not entitled to damages based upon sales of Alcatel’s 1675 LambdaUnite product. Id. at 13. Judge Burke agreed with Alcatel and recommended granting summary judgment in its favor on this issue, finding that the product failed to “selectively provide optical coupling,” as required by the independent claims at issue. Id. at 14.
Judge Gregory M. Sleet recently severed and stayed infringement claims against several banks relating to alleged infringement of mobile banking technology patents pending the resolution of claims against the manufacturer of the banks’ mobile banking applications. Rothschild Mobile Imaging Innovations, LLC v. Mitek Systems, Inc., C.A. No. 14-617-GMS (D. Del. July 31, 2015). As Judge Sleet explained, “the infringement claims against the Bank defendants are peripheral to the claims of infringement against Mitek because the Banks appear to have only been customers of Mitek’s alleged infringing technology.” Id. at 5. The Court added, “[a]djudication of the claims against Mitek will dispose of the claims against the Bank defendants as users of the products [and] [t]he presence of the Bank defendants as parties neither adds nor detracts from [plaintiff’s] patent infringement claim against Mitek.” Id. at 6. The Court found that the balance of factors favored staying the case pending the resolution of the claims against Mitek, and did not favor transferring the case to the Southern District of California, Mitek’s home forum.
In Greatbatch Ltd. v. AVX Corporation, et al., C.A. No. 13-723-LPS (D. Del. July 28, 2015), Chief Judge Leonard P. Stark ordered a mechanism for reduction of asserted claims and prior art before trial. Plaintiff would shortly elect no more than 15 claims, with no per-patent limit. Here the Court adopted Defendants’ proposal over Plaintiff’s proposal for 24 claims. 10 days thereafter, Defendants would narrow prior art references to 20 maximum, with no per-patent limit, as well as identify a maximum of 60 prior art combinations (defined as a combination of two or more references per claim). The parties would not be allowed to modify their elections, as requested by Plaintiff, “solely on the basis of any decisions by the [PTAB] related to any inter partes review . . . petitions involving the asserted claims.” Id. at 2-3.
Further, the Court ordered the parties to adhere to the summary judgment briefing limits in the schedule, which allowed for 40 pages total per party.
In Magnetar Technologies Corp., et al. v. Six Flags Theme Parks Inc., et al., C.A. No. 07-127-LPS-MPT (D. Del. July 21, 2015), Chief Magistrate Judge Mary Pat Thynge recommended granting-in-part Defendants’ motion for attorneys’ fees under section 285, but recommended denial of the motion for fees against Plaintiffs’ counsel under 28 U.S.C. § 1927.
The Court concluded that Plaintiffs’ litigation conduct was objectively unreasonable, making the case exceptional, in particular as to the asserted ‘125 patent that was ultimately found invalid by Chief Judge Stark in July 2014. While the Court rejected a number of Defendants’ arguments regarding the frivolousness of Plaintiffs’ claims, improper motivation for the suit, and objectively unreasonable conduct, see id. at 11-18, the Court agreed that Plaintiffs’ arguments on inventorship for the ‘125 patent were objectively unreasonable — namely, that it was so obvious that an individual not named on the patent was an inventor that the argument he was not was unreasonable. See id. at 18-21. The Court also concluded that Plaintiffs’ reliance on its expert was objectively unreasonable because they “knew or should have known their expert’s opinion fell well short of the Daubert standard.” Id. at 21. The Court had granted Defendants’ Daubert motion due to the expert’s unreliable methodology, “strongly criticiz[ing] his entire infringement analysis” and had cited “a laundry list of unanswered questions” in the report. Id. at 22. The Court’s “criticism demonstrates that [the expert’s] report so lacked any reliable methodology under the Daubert analysis and [Rule 702] that it should have been apparent to plaintiffs.” Id.
Having found the case exceptional based on inventorship issues and Plaintiffs’ reliance on its expert, the Court then narrowed the attorney fees available to Defendants to “reasonable attorneys’ and costs regarding the ‘125 patent related to incorrect inventorship since July 29, 2011 [when key inventor depositions occurred] and [Plaintiffs’] expert report when issued.” Id. at 26. Because Defendants’ current fee request was insufficiently detailed for the Court to determine whether, for example, the rates were reasonable, the Court ordered Defendants to address these issues in any subsequent modification. See id. at 26-27.
The Court then recommended denial of Defendants’ request for fees against Plaintiffs’ counsel under 28 U.S.C. § 1927. The current counsel assumed representation after Plaintiffs’ prior counsel had withdrawn in 2008. Id. at 5. The Court found no direct evidence that the new counsel knew the ‘125 patent was invalid due to incorrect inventorship, and rejected Defendants’ arguments as to unreasonable litigation conduct based. See id. at 28-30. Furthermore, the Court rejected the argument that maintaining the suit on the ‘125 patent after Defendants’ counsel sent two letters regarding the weaknesses of the claims rendered counsel liable, where Plaintiffs’ counsel had “promptly” responded to the letters, explained “in detail” why it disagreed with Defendants’ argument, and “expressed a willingness to continue a good faith dialogue.” Id. at 30.
Update: On September 30, 2015, having considered Plaintiffs’ objections to the Report and Recommendation and Defendants’ subsequent response, Chief Judge Stark returned the issue of attorney fees to Magistrate Judge Thynge for additional findings. See Magnetar Technologies Corp., et al. v. Six Flags Theme Parks Inc., et al., C.A. No. 07-127-LPS-MPT (D. Del. Sept. 30, 2015). In a footnote, the Court also highlighted the need to comply with the Court’s rules regarding page limits for responses to Report and Recommendation objections (10 pages) and the requirement to file redacted public versions of sealed filings. Id. at n.1.
Judge Sleet has issued an interesting order regarding the changing landscape of motions to dismiss for lack of personal jurisdiction in patent cases. At issue was whether each defendant satisfied the Delaware long-arm statute by demonstrating an “intent to serve the Delaware market” or “purposefully direct[ing] activities at residents of the forum.” Blackbird Tech LLC v. Sakka’s Stores, Inc., et al., C.A. No. 14-1256-GMS, Or. at 1-2 (D. Del. July 21, 2015). Judge Sleet explained the relevant precedent: “Previously, Delaware courts indicated that ‘[a] non-resident firm’s intent to serve the United States market is sufficient to establish an intent to serve the Delaware market, unless there is evidence that the firm intended to exclude from its marketing and distribution efforts some portion of the country that includes Delaware.’” Id. at 2 (citing Graphics Props. Holdings, Inc. v. ASUS Computer Int’l, No. 13-864-LPS, 2014 WL 4949589, at *3 (D. Del. Sept. 29, 2014). His Honor continued: “The court is not convinced this statement remains good law in the due process context” in light of various recent cases, including the Supreme Court’s proclamation that a plaintiff must prove purposeful availment by showing “‘regular flow or regular course of sales’ in the forum state or ‘something more’ such as special state-related design, advertising, advice, marketing, or anything else.” Id. at 2-3 (quoting J. McIntyre Mach., Ltd. v. Nicastro, 131 S. Ct. 2780, 2792 (2011)).
The plaintiff also requested jurisdictional discovery. Although Judge Sleet found that there had not been a showing of intent to serve the Delaware market or purposeful availment of Delaware’s laws, the plaintiff’s request for jurisdictional discovery was not “clearly frivolous” in light of the defendants’ acknowledgement “that their accused products have been shipped to Delaware customers.” Id. at 3-4. Accordingly, Judge Sleet allowed the jurisdictional discovery and held the motions to dismiss in abeyance.
Magistrate Judge Burke recently issued a report and recommendation that recommended denying several patent infringement defendants’ motions to dismiss for lack of patentable subject matter under § 101. Judge Burke first found that claim construction was not necessary in this case to perform the § 101 analysis. Execware, LLC v. BJ’s Wholesale Club, Inc., et al., C.A. No. 14-223-LPS, Report and Recommendation at 8-9 (D. Del. July 15, 2015). His Honor then rejected arguments that § 101 challenges are not amenable to Rule 12 motions. Id. at 10-13.
Judge Burke then compared the exemplary claim 1 of the patent-in-suit to several recent Federal Circuit cases addressing § 101 and found that the claims were not directed to an abstract idea: “[C]laim 1 references a specific ‘claimed solution’ (the use of a query dialog box that has particular features) to an identified problem . . . . [T]his proffered solution is one ‘rooted in computer technology in order to overcome a problem specifically arising in the realm of computer[s.]’” Id. at 19-27 (quoting DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 1257 (Fed. Cir. 2014)).
Finally, Judge Burke also went on to find that the patent-in-suit did not lack an inventive concept, although “[h]aving determined that claim 1 is not directed to an abstract idea under varying formulations of step one of the Alice test, the Court could end its analysis.” Id. at 29. His Honor concluded that “the presence of the query dialog box limitation in [the] patent amounts to the inclusion of an inventive concept, as it is a meaningful limitation on the underlying idea of ‘displaying, classifying, and organizing unspecified information (referred to as text data objects) in an unspecified transaction.’” Id. at 30-31. Judge Burke also rejected arguments to the contrary by defendants, including that “the process could be performed, in at least an analogous fashion, by two people using pen and paper.” “[A]lthough it may be technically correct to say that humans could use a pen and paper to perform a sorting process that is similar in some ways to the process called for by claim 1, it is hard to assert that this would ‘produce the actual effect of the invention.’. . . Moreover, Defendants have not cited any case where the Supreme Court or the Federal Circuit have held that a claim is patent ineligible based solely on the fact that an analogous method could be performed using pen and paper.” Id. at 32-35.
In March 2013, plaintiffs Bayer Healthcare Pharmaceuticals Inc., Intraserv GmbH & Co. KG, and lntendis GmbH filed this patent infringement case following defendant Glenmark Pharmaceuticals Limited’s filing of an Abbreviated New Drug Application to market a generic azelaic acid hydrogel. lntendis GmbH, et al. v. Glenmark Pharmaceuticals Limited, et al., C.A. No. 13-421-SLR (D. Del. July 27, 2015).
Plaintiff Bayer is the the holder of the New Drug Application for Finacea® Gel, 15%, indicated for topical treatment of inflammatory papules and pustules of mild to moderate rosacea. Plaintiff lntraserv is the assignee of the patent-in-suit, U.S. Patent No. 6,534,070 titled “Composition with Azelaic Acid.” Plaintiff Intendis is the exclusive licensee of the ‘070 patent.
Following a bench trial in February 2015, the Court recently issued its Findings of Fact and Conclusions of Law. Judge Sue L. Robinson found the ‘070 patent valid and infringed by Glenmark’s proposed ANDA product.
Judge Sue L. Robinson recently considered plaintiff’s renewed motion to dismiss defendant’s counterclaim of inequitable conduct. Quest Integrity USA, LLC v. Cokebusters USA Inc., C.A. No. 14-1483-SLR (D. Del. July 22, 2015). Judge Robinson previously denied defendants’ request to transfer to the Southern District of Texas and plaintiff’s motion for a preliminary injunction.
Plaintiff’s motion argued that defendant’s counterclaim did not adequately show “but-for materiality” or “intent to deceive.” Id. at 7. As a preliminary matter, in their opposition, defendant argued that because plaintiff attached an exhibit to its motion containing a portion of the prosecution history, plaintiff’s motion to dismiss was converted to a summary judgment motion. Id. at 2 fn.4. Judge Robinson disagreed, noting that the prosecution history is a “public record,” and public records can be considered on a motion to dismiss. Id.
As to the merits of the motion, Judge Robinson noted that because the counterclaim was based on nondisclosure of prior art, defendant had to prove by clear and convincing evidence that “the applicant knew of the information, ‘knew that it was material, and made a deliberate decision to withhold it.'” Id. at 7 (quoting Therasense v. Becton, Dickinson & Co., 649 F.3d 1276, 1290 (Fed. Cir. 2011). Defendant alleged that the invention claimed in the patent in suit “was not new, was obvious from existing technology, and had been sold before the bar date.” Id. at 8. If the PTO had known of the prior art, it would not have issued the patent. Id. Judge Robinson, noting that the Court need not decide “the merits of the claim, only whether materiality had been alleged with sufficient particularity,” found that defendant’s claims passed muster. Id. at 8-9. Regarding intent to deceive, Judge Robinson also found the pleading sufficient because defendant pled adequate evidence of lack of candor with the PTO, from which intent to deceive “is the ‘single most reasonable inference  to be drawn from the evidence.” Id. at 10 (quoting Therasense, 649 F.3d at 1290).
In a recent Report and Recommendation, Magistrate Judge Mary P. Thynge found the court should deny plaintiff’s motion to dismiss and strike defendant’s counterclaim and affirmative defense of inequitable conduct. Andrulis Pharmaceuticals Corp. v. Celgene Corp., C.A. No. 13-1644-RGA (D. Del. Jul. 16, 2015). Defendant averred that an inventor and prosecution attorney of the asserted patent engaged in inequitable conduct when they submitted a “December 27, 1999 Response to the PTO, which omitted . . . substantive conclusions of [a] 1996 NYU interim report, and purported to show the ‘enhanced’ effect of thalidomide and carboplatin” for cancer treatment. Id. at 5.
Denying plaintiff’s motion, Judge Thynge first found that defendant pled inequitable conduct with particularity, explaining that defendant provided “the specific who, what, when, where and how” of the material omission. Specifically, Judge Thynge explained that defendant identified that the inventor and prosecuting attorney omitted substantive conclusions from the 1996 NYU interim report from its response to the PTO on December 27, 1999 (i.e., “who,” “what,” “when,” and “where”). Further, Judge Thynge found that defendant identified “how a reasonable examiner would have used the information allegedly concealed”: to determine that the claimed combination “did not have [an] enhanced effect relative to the effect of [carboplatin] alone.” Id. at 8-9 (emphasis added).
Judge Thynge next concluded that defendant sufficiently alleged underlying facts from which the court could infer but-for materiality, explaining that defendant pointed to: (i) “the conclusion by the researchers that the response rate for the combination was similar to the administration of carboplatin alone”; and (ii) the fact that “plaintiff [omitted] that conclusion and represent[ed] that the interim results instead showed an enhanced effect, on which the examiner relied in deciding to issue [the asserted patent].” Id. at 10. Judge Thynge also found that defendant sufficiently alleged that “plaintiff knew of and withheld material information with a specific intent to deceive the PTO.” Id. at 11. Judge Thynge pointed to several facts defendant relied on as evidence of plaintiff’s intent to deceive: “the interim conclusions were not submitted to the examiner, the conclusions found a similar, rather than enhanced, response rate, and plaintiff argued the interim data showed an enhanced effect.” Id.
After allowing additional discovery and further briefing, Judge Gregory M. Sleet recently granted a Rule 12(b)(1) motion to dismiss a declaratory judgment action seeking to invalidate the defendants’ patents. Comba Telecom, Inc. v. Andrew LLC, et al., C.A. No. 12-311-GMS (D. Del. July 15, 2015). The plaintiff argued that the defendants’ patents “present a barrier to [the plaintiff’s] entering the US market” and that the defendants “have taken steps to legally enforce U.S. patents in foreign litigation and by way of public and private threats.” The plaintiff highlighted to examples of such threats: (1) a 2011 press release stating that the defendants would defend their patents from infringement, including specific reference to infringement by the plaintiff; and (2) a letter to a third party manufacturer that, the plaintiff argued, was a “veiled threat” targeting the plaintiff. The defendants argued that the press release referred to disputes in Brazil and China, not the United States, and denied that the letter to the third party manufacturer was intended as a threat to the plaintiff. The Court found that the plaintiff’s arguments did not support declaratory judgment jurisdiction, explaining, “[i]mplied threats such as the type alleged by Comba cannot be considered a substantial step toward legal action for patent infringement.” The Court added that, in any event, the plaintiff had not yet “taken meaningful steps to conduct patent-infringing activity” in the United States, further undercutting the plaintiff’s argument that an actual controversy existed to support declaratory judgment jurisdiction.