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In Constant Contact Inc. v. Umbanet Inc., C.A. No. 12-1467-GMS (D. Del. Mar. 12, 2014), Chief Judge Gregory M. Sleet granted Umbanet Inc.’s (“Umbanet”) motion to transfer Constant Contact Inc.’s (“Constant Contact”) declaratory judgment action to the District of New Jersey. In September 2012, Umbanet filed an action for patent infringement against one of Constant Contact’s customers, Englewood Wine Merchants (“EWM”) in the District of New Jersey, alleging that EWM infringes U.S. Patent Nos. 7,067,730 and 7,444,374 (collectively, the “patents-in-suit”) via its use of Constant Contact’s e-mail marketing service. Id. at 1. In November 2012, Constant Contact filed an action in the District of Delaware seeking, among other things, a declaratory judgment that the patents-in-suit are invalid and that none of Constant Contact’s customers infringe the patents-in-suit by using Constant Contact’s products. Id. at 1.

First, Judge Sleet determined that the declaratory judgment action could have brought in the District of New Jersey, as “[b]oth Constant Contact’s declaratory judgment suit and Umbanet’s suit against EWM in New Jersey arise out of the use by EWM in New Jersey of Constant Contact’s e-mail marketing products.” Id. at 5. Turning to the Jumara private interest factors, Judge Sleet noted that “Constant Contact’s choice of forum is Delaware, where it is incorporated, but Constant Contact’s principal place of business is in Massachusetts.” Id. at 6. Accordingly, Judge Sleet did not grant Constant Contact’s choice of forum as much deference “as that normally shown a plaintiff’s choice of forum.” Id. Judge Sleet found, on the other hand, that Constant Contact’s choice of New Jersey as a venue was legitimate as “New Jersey is where the use of Constant Contact’s products by EWM that gave rise to the instant suit occurred.” Id. Judge Sleet therefore found that the parties’ forum choice “weigh[ed] slightly in favor of transfer.” Id. Considering whether the claim “arose elsewhere,” Judge Sleet explained that “both the declaratory judgment action currently at issue and Umbanet’s suit against EWM in New Jersey arise out of EWM’s use in New Jersey of Constant Contact’s allegedly infringing products.” Id. Accordingly, Judge Sleet found this factor weighed “strongly” in favor of transfer. Id. at 7.

Judge Sleet also found the convenience of the parties weighed in favor of transfer. Id. at 7-8. Specifically, Judge Sleet noted that Constant Contact had its principal place of business in Massachusetts and Umbanet had its principal place of business in New York. Id. at 7. While Constant Contact argued that New York was only a “short train ride” from Delaware, Judge Sleet explained that “New Jersey is a much shorter train ride from New York.” Id. Further, Umbanet was only a “one-employee operation” while Constant Contact had a market capitalization of approximately $473 million. Id. Judge Sleet thus found that Constant Contact can “much more easily bear the cost of leaving Massachusetts to litigate in New Jersey than Umbanet can bear the cost of venturing from New York to litigate in Delaware.” Id. at 7-8. Judge Sleet found the location of books and records, and the convenience of witnesses to be neutral in the Court’s analysis. Id. at 8.

Turning to the public interest factors, Judge Sleet determined that judicial efficiency favored transfer. Id. at 8-9. Specifically, Judge Sleet found that the New Jersey action involves “the same patents, the same technology, the same prior art, and the same accused product.” Id. at 9. Further, as Judge Sleet explained, “full discovery continues and the claim construction process has commenced and is well underway,” and there is therefore “some efficiency to be achieved in allowing that process to continue without the interruption and potential conflict of a parallel proceeding before this court.” Id. Judge Sleet similarly found that New Jersey’s interest in this matter favors transfer. Id. Specifically, “New Jersey has an interest in this matter because the underlying use by EWM of Constant Contact’s alleged infringing product occurred in New Jersey and is currently being litigated in New Jersey.” Id. Delaware’s interest in the instant matter, as Judge Sleet explained, was “more tenuous.” Id.

Considering the Jumara factors a whole, Judge Sleet determined that Umbanet met its burden of demonstrating that “the interests of justice and convenience strongly favor stay.” Id. at 10.

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In Graphic Properties Holdings, Inc. v. Toshiba America Information Systems, Inc., et al., C.A. No. 12-213-LPS (D. Del. Mar. 5, 2014), Judge Leonard P. Stark granted stays pending an ITC investigation in three separate actions that plaintiff Graphic Properties Holdings, Inc. (“GPH”) had filed against various defendants: C.A. No. 12-213-LPS (the “Toshiba action”); C.A. 12-214-LPS (the “Vizio action”); C.A. No. 12-210-LPS (the “ASUS action”). In the Toshiba and Vizio actions, GPH was asserting both U.S. Patent Nos. 8,144,158 (the “’158 Patent”) and U.S. Patent No. 6,650,327 (the “’327 Patent”). In the ASUS action, GPH asserted only the ’158 Patent. Id. at 1. Because the products accused of infringing the ’327 Patent appeared to be the same products at issue in the ITC investigation, and because the defendants in the Toshiba and Vizio action moved for stay within 30 days after being named respondents in the ITC action, Judge Stark granted a mandatory stay of the Toshiba and Vizio actions pursuant to 28 U.S.C § 1659(a) with respect to the ’327 Patent. Id. at 2.

Judge Stark also granted discretionary stays in the Toshiba, Vizio, and Asus actions with respect to the ’158 Patent. As Judge Stark explained, “the ‘158 Patent is a continuation of the ‘327 Patent and they share common inventors, specification, and prosecution history. Because of this overlap, claim construction and invalidity issues with respect to one patent will necessarily impact those same issues with respect to the other patent.” Id. at 3. Further, GPH agreed that its “general theory of infringement regarding the ’158 Patent is common” to the district court and ITC Action, and many of the accused products “share critical components.” Id. at 3. Accordingly, Judge Stark found that in granting stay “GPH will not have to engage in duplicative discovery and other pretrial matters.” Id. at 4. Judge Stark similarly found that the discretionary stay would simplify matters for trial, as the Court would “not have to engage in duplicative proceedings regarding the ‘158 Patent that could be held in conjunction with the ‘327 Patent.” Id. In granting the discretionary stay, Judge Stark also noted that no trial date was set and discovery was not complete. Id. at 4-5. Further, as Judge Stark explained, GPH did not market any products covered by the ’158 Patent, and therefore would not be competitively disadvantaged by the stay. Id. at 4.

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There is still time to register for Managing IP’s third annual US Patent Forum on March 25 at the Willard InterContinental, Washington D.C.

** Free for in-house patent counsel, academics and R&D professionals **

Supported by AIPLA and Delaware IP Law Blog, the forum will provide you with:

• a guide to improving your company’s patent application process post-AIA;
• an evaluation of post-grant proceedings;
• an update on litigation planning and forum shopping in Europe; and
• the analysis of the recent standard essential patent (SEP) litigation between Apple and Samsung
Speakers include Judge Sharon Prost of the U.S. Court of Appeals for the Federal Circuit and Lead Judge Michael Tierney of the USPTO Patent Trial and Appeal Board.

See the agenda below for a full list of presenters. Click HERE to register online, or by emailing alicia.sprott@legalmediagroup.com.

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In a recent Order, Judge Sue L. Robinson outlined the scope of a case’s prosecution bar. Versata Software, Inc, et al. v. Callidus Software, Inc., C.A. No. 12-931-SLR (D. Del. Mar. 12, 2014). The Court first pointed to the “growing proliferation of parallel proceedings” before federal courts and the PTO and the fact that “defendants can use any inconsistencies in position a plaintiff might take between the court and administrative proceedings,” but also to the fact that strategic amendment of claims or surrendering of claim scope can implicate competitive decision-making. Id. at 1-2.

The Court’s prosecution bar was “an effort to balance” these concerns, namely “a plaintiff’s need for coordination among its counsel” and “a defendant’s appropriate concern over the security of its proprietary information.” Id. at 2. The Court implemented a one-year bar forbidding any person (including attorneys, experts, consultants, and witnesses) who views the highly confidential source code of the defendant from participating in any patent application prosecution or post-grant review proceeding in the technology field of the patents-in-suit. Id. at 3. On the other hand, plaintiff was to designate one or more attorneys on its trial team to consult with counsel involved in administrative proceedings “in order to coordinate coherent and consistent positions in various proceedings.” Id. at 2. However, that person or persons would not review the highly confidential source code of defendant, take part in discussions regarding that source code, read any report regarding the source code, or attend/read depositions where the source code was mentioned. Id. at 2-3. Furthermore, the order obligated counsel of record to notify their firm colleagues and other related persons of the prosecution bar; once any of these people viewed the source code, the prosecution bar would apply to them as well. Id. at 3.

The Court also declined to extend this bar to include documents designated as “highly confidential – attorneys’ eyes only,” “given the liberal use of this designation in litigation.” Id. at 2 n.2. However, it noted that “if there are a small number of individual documents that defendant deems essential to its proprietary technology, the court will review them at defendant’s request.” Id.

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Judge Sue Robinson requires parties who wish to file early summary judgment motions to first seek leave to do so. As Her Honor recently explained, “[e]arly summary judgment motions are disfavored by this court, unless the motion would reduce the scope of trial.” Butamax Advanced Biofuels LLC, et al. v. Gevo, Inc., C.A. No. 12-602-SLR, Memo. at 1 (D. Del. Mar. 12, 2013). Judge Robinson considered such a motion for leave to file an early motion for summary judgment of non-infringement in this Butamax case and denied leave to file the motion.

The defendant’s motion was premised on the construction of a claim term adopted for a different patent in a separate action between the same parties. The Federal Circuit had issued an opinion on construction of the term at issue, although the parties disagreed over the import of that claim construction. The parties also disagreed over whether that claim construction should apply to the same term in the patent-in-suit in the instant action. Id. at 1-2. Furthermore, Judge Robinson explained that “[r]esolution of whether a specific strain infringes will not significantly impact the parties’ discovery practice.” Id. at 2. For these reasons, Her Honor found that the summary judgment motion would not significantly reduce the scope of trial and denied the motion for leave.

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Judge Richard G. Andrews recently denied plaintiff Novartis Pharmaceuticals Corporation’s unopposed motion to seal the transcript of a court conference. Novartis Pharmaceuticals Corporation, et al. v. Actavis South Atlantic LLC, et al., C.A. No. 11-1077-RGA (consol.) (D. Del. Mar. 10, 2014). In the Court’s view, the portions of the transcript that Novartis requested the Court seal, “reflect[ed], at most, that Novartis engages in typical settlement discussions, which everybody in the pharmaceutical industry already must know.” Id. Because Judge Andrews did not find that the disclosure of the information would harm Novartis’s business, Judge Andrews denied the unopposed motion. Id.

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In Robocast, Inc. v. Microsoft Corp., C.A. No. 10-1055-RGA (D. Del. Feb. 25, 2014), Judge Richard G. Andrews granted defendant’s objections related to plaintiff’s request for an adverse inference instruction that the Special Master had previously granted. Judge Andrews concluded that “[w]hile the Special Master’s opinion was logical and well-reasoned, I find that bad faith is required in order for an adverse inference instruction to be appropriate. Because I cannot find that [defendant] acted in bad faith, I will not give an adverse inference instruction.” Id. at 3. In reaching this determination, Judge Andrews relied on a Third Circuit opinion in which the Court held that “where there is no showing that the evidence was destroyed in order to prevent it from being used by the adverse party, a spoliation instruction is improper.” Id. at 3 (quoting US. v. Nelson, 481 F. App’x 40, 42 (3d Cir. 2012)). Judge Andrews therefore concluded that “in order for a spoliation instruction to be proper in this case, there must be a showing that [defendant] destroyed, or was willfully blind to the destruction of, the . . . source code, in order to prevent its use by [plaintiff].” Id. The Special Master, however, had found only that defendant’s failure to preserve evidence was “negligent rather than willful or grossly negligent.” Id.

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In anticipation for the trial in this case that is set to begin this week in Personalized User Model, L.L.P. v. Google, Inc., C.A. No. 09-525-LPS, on March 6 Judge Leonard P. Stark ruled on various pre-trial issues.

First, the Court adopted defendant’s proposed order of proof, which permitted “each party to reply to the other side’s rebuttal on any issue for which a party bears the burden of proof.” Id. at 1. The trial will proceed in four phases. See id. at 1-2. As a result, the Court also denied plaintiff’s request for one of its witnesses to provide the full scope of his testimony in a single phase. Id. at 2.

Second, the Court granted plaintiff’s motion to preclude defendant from referring to recent changes in the accused technology. Defendant intended to use this information as evidence that the patents-in-suit lacked commercial success, but it appeared to the Court that plaintiff had not had the opportunity to determine whether these changes impacted infringement in discovery, plus plaintiff “could have reasonably believed that evidence of such changes [that occurred after the close of fact discovery] would not be admissible.” Id. at 2-3. Because this ruling “may put certain witnesses in an awkward position, in which potentially they may have to testify in a manner that is not fully truthful in order not to reveal to the jury recent changes in the Accused Technologies,” the Court also required counsel to ask precise questions and it would also provide a specific jury instruction about this issue. Id. at 3.

Finally, the Court denied plaintiff’s motion regarding the statute of limitations applicable to defendant’s breach of contract defense and counterclaim. The Court found that the motion was “in essence, an untimely motion for summary judgment, and not merely a motion seeking clarification of the governing law.” Id. at 4.

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On February 28, the jury in Inventio AG v. Thyssenkrupp Elevator Corporation, C.A. No. 08-874-RGA returned a verdict. The jury found that defendant had infringed the asserted claims of U.S. Patent No. 6,835,465 and calculated damages to be $40,320. However, the jury also found that the asserted claims were invalid as obvious. The jury found that defendant had not met its burden to show that these claims were incalid for failing to meet the best mode requirement.

As to U.S. Patent No. 6,892,861, the jury found that defendant did not infringe the asserted claims, and that the asserted claims were also invalid as obvious. The jury also found this patent invalid for failing to meet the best mode requirement.

Finally, the jury found that both patents-in-suit had not named the correct inventors.

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Magistrate Judge Christopher J. Burke recently recommended the dismissal of a plaintiff’s induced infringement claims. Trans Video Electronics, Ltd. v. Netflix, Inc., C.A. No. 12-1743-LPS (D. Del. Mar. 4, 2014). Judge Burke first found that the plaintiff failed to adequately allege pre-suit knowledge of the asserted patent. Specifically, the plaintiff’s allegation that the defendant “has had knowledge of the ‘936 patent as of July 1, 2011[,]” without factual support, was found to be conclusory and was therefore disregarded in the context of the motion to dismiss. Judge Burke also found that the complaint failed to adequately allege direct infringement by the defendant’s customers. Judge Burke explained that “the Complaint is silent even as to what it is that the customers are alleged to have actually done that is asserted to amount to the ‘use’ of” an infringing method. Instead, the complaint alleged only that the customers “use a method for distributing information to various locations in a digital network,” which simply “parrots [a portion] of the preamble of claim 9 of the ‘936 patent . . . it does not give any hint as to how the customers’ actions are said to relate to the content of the method-at-issue.” Finally, and relatedly, Judge Burke explained that the plaintiff’s allegation that the defendant specifically encouraged its customers to infringe through “instructions” on the defendant’s website (which were not recited in or attached to the complaint) was insufficient: “[i]n light of the lack of facts pled linking up any ‘instructions’ with conduct plausibly asserted to amount to direct infringement, the allegations as to this element, then, are insufficient as well.”

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