In a recent Memorandum Order, Judge Richard G. Andrews granted defendants’ motion to stay pending the resolution of two inter partes reviews. CallWave Commc’ns, LLC v. AT&T Mobility, LLC, et al., C.A. No. 12-1701-RGA (D. Del. Mar. 18, 2015). Although the plaintiff argued that the second instituted inter partes review was procedurally improper and could be dismissed, the Court found that even in such case the first instituted inter partes review likely would simplify the issues in dispute for trial.
In Tenon & Groove, LLC, et al. v. Plusgrade S.E.C., et al., C.A. No. 12-1118-GMS-SRF, Magistrate Judge Fallon previously recommended granting defendants’ motion for summary judgment that the patents-in-suit were invalid under Section 101 as directed to patent-ineligible abstract ideas. Judge Gregory M. Sleet has overruled plaintiffs’ objections to the Report, and granted the motion. Memorandum at 10 (D. Del. Mar. 11, 2015).
In arguing that the patented invention was “an idea but not an abstract idea,” plaintiffs’ objections “attempt[ed] to seize upon the specific language used by the magistrate judge and [defendants]” to point out that their “contradictory articulations of the proper formulation of the abstract idea suggests [sic] the absence of any such ‘abstract’ idea.” Id. at 5 (emphasis in original). The Court disagreed that a “contradiction” existed, and even if there was one, observed that “the use of slightly different words to describe something abstract is [not] proof that it is not abstract.” Id. (emphasis in original). The Court also rejected plaintiffs’ reliance on DDR Holdings here, 773 F.3d 709 (Fed. Cir. 2014), explaining that in that case, “the defendant’s different characterizations of the idea had no bearing on the Federal Circuit’s ultimate ruling that the claims were patent ineligible.” Id. at 5-6.
The Court then accepted the magistrate’s conclusion that the patents also failed to claim an inventive concept. See id. at 7-9. It again rejected plaintiffs’ reliance on DDR Holdings, explaining that the patented invention here did not solve “a problem unique or inherent to computers” as was the case in DDR Holdings. Id. at 8-9. Finally, while it “may have been unnecessary,” the Court found no error in “[t]he magistrate judge’s decision to analyze the machine-or-transformation test apart from the two-step Alice inquiry . . . . Magistrate Judge Fallon’s conclusion that the patents-in-suit failed the machine-or-transformation test comports with her analysis under the two-step Alice framework.” Id. at 9.
In CryoLife, Inc. v. C.R. Bard, Inc. et al., C.A. No. 14-559-SLR (D. Del. Mar. 10, 2015), Plaintiff CryoLife, Inc. (“CryoLife”) filed a declaratory judgment action against Defendants C.R. Bard, Inc. (“Bard”), Davol, Inc. (“Davol”), and Medafor, Inc. (“Medafor”) (collectively, “Defendants”), seeking a declaration that U.S. Patent No. 6,060,461 (“the ’461 patent”) is invalid and not infringed. Defendants moved to dismiss the declaratory judgment for lack of subject matter jurisdiction and failure to state a claim. As to subject matter jurisdiction, Judge Robinson found that there was no “dispute that Medafor is the assignee of the ’461 patent and that Medafor has not granted a written license to Bard or Davol.” Judge Robinson thus explained that “[e]ven though CryoLife argues that Davol is an implied exclusive licensee, it has offered no evidence that Medafor transferred any of its rights to either Bard or Davol.” CryoLife’s identification of certain facts were insufficient to establish that “Medafor could not sue Cryolife for infringement without joining Bard and/or Davol.” Accordingly, Judge Robinson concluded that the court did not have subject matter jurisdiction over Bard and Davol, and granted Defendants’ motion in that regard.
Judge Robinson then addressed Defendants’ motion to dismiss for failure to state a claim. Judge Robinson found that “CryoLife identifie[d] . . . . specific statutory sections regarding invalidity (§§ 102, 103, and/or 112) and provide[d] examples of invalidating prior art.” Further, “Cryolife also allege[d] a lack of written description.” Id. Judge Robinson also explained that “[w]hile the amended complaint does not identify the relevant statutory sections for indirect infringement or use the terms ‘induced infringement’ or ‘contributory infringement,’ Cryolife has pled that there is no direct or indirect infringement.” Judge Robinson therefore denied Defendants’ motion to dismiss for failure to state a claim.
Following the filing of CryoLife’s declaratory judgment action, Medafor filed a counterclaim for infringement and moved for a preliminary injunction. Finding Medafor to have carried its burden, Judge Robinson granted Medafor’s motion for a preliminary injunction. The patent at issue—the ’461 patent—is titled “Topically Applied Clotting Material.” In 2006, Medafor received FDA approval for ARISTA®, an “innovative hemostatic power that is used to control bleeding when conventional methods are ineffective.” On the other hand, CryoLife was “seeking FDA approval to market PerClot for surgical indications (‘PerClot Surgical’) and received FDA approval of its lnvestigational Drug Exemption application on March 27, 2014.”
Addressing the claim limitations at issue, Judge Robinson concluded that “Medafor’s constructions are consistent with the specification” and that “CryoLife has offered no non-infringement arguments using Medafor’s constructions.” Judge Robinson therefore concluded Medafor showed “a likelihood of success on infringement.” Judge Robinson was unpersuaded by CryoLife’s invalidity arguments, explaining that “CryoLife argues, without expert testimony or declarations, that certain prior art anticipates or, in combination, renders the asserted claims obvious. CryoLife supports its anticipation and obviousness arguments with reference to a table
of invalidity contentions and the barest of attorney argument.” Judge Robinson also found that Medafor carried its burden demonstrating the remaining prerequisites for a preliminary injunction, explaining that “[t]here is sufficient record evidence that Cryolife’s PerClot product is in direct competition with Medafor’s Arista product and that these products are targeted to the same customers and hospitals.” According to Judge Robinson, Medafor made “persuasive arguments for the loss of its customer base and damage to its goodwill.”
Judge Andrews recently granted a request by patent infringement defendants to allow additional claim construction briefs and argument regarding certain terms of a patent-in-suit after a jury trial finding the patent valid and infringed. Interdigital Commc’ns, Inc., et al .v. ZTE Corp., et al., C.A. Nos. 13-09-RGA, 13-10-RGA, Memo. Op. at 3-4 (D. Del. Mar. 6, 2015). Among the terms argued was a term that Judge Andrews had previously construed, adopting the construction proposed by the defendants. Post-trial, however, the defendants argued that construction was confusing and “opened the door for Plaintiffs’ expert . . . to make claim construction arguments to the jury at the . . . trial.” Id. at 9. The plaintiffs argued that their expert’s construction was the correct construction and that the defendants should not be permitted to relitigate claim construction when the defendants’ construction was adopted originally. Id. at 9-10.
At the trial, the defendants objected to the expert’s testimony, and the Court sustained the objection and struck the testimony. Judge Andrews also noted, in his claim construction opinion, that such testimony by the expert is improper and could be sanctionable. Id. at 9-10. Post-trial, however, Judge Andrews adopted the plaintiffs’ construction, noting that “Defendants’ argument that this interpretation is objectionable because the Court struck Dr. Cooklev’s testimony at the ZTE trial misunderstands the Court’s ruling. The testimony was improper because Dr. Cooklev was arguing a question of law to the jury. It was not that the substance of the argument was necessarily objectionable, it was that the argument was being made at all.” Id. at 11-12.
In Williamson v. Google Inc., C.A. No. 14-216-GMS (D. Del. Mar. 2, 2015), Judge Gregory M. Sleet granted Google’s motion to transfer to the Northern District of California. Judge Sleet noted that “Williamson is not at home in Delaware, and therefore his choice is ‘entitled to less deference.’” Id. at 2. On the other hand, as Judge Sleet noted, Google “has legitimate reasons for seeking to litigate” in the Northern District of California, as its principal place of business is in Mountain View, California. According to Judge Sleet, Google’s choice was therefore entitled to “some—but not overriding—deference.” Id. at 2-3. Further, considering Google’s logistics and the fact that Williamson would be required to travel in any case, Judge Sleet found the Northern District of California to be “more convenient” to the parties. Id. at 3. Considering “where the claims arose,” Judge Sleet explained that “Google designed and developed the accused AdSense product in Mountain View; Google continues to develop and market AdSense from that location. Therefore the infringement claims have ‘deeper roots’ in the Northern District of California than in the District of Delaware.” Addressing non-party witnesses, Judge Sleet noted that Google argued “its invalidity contentions may rely on testimony from founders or inventors at . . . companies . . . who would not be subject to Delaware’s subpoena power.” Id. at 5. On balance, Judge Sleet found that the Jumara factors as a whole weighed in favor of transfer.
Chief Magistrate Judge Mary Pat Thynge recently issued a report recommending the denial of a plaintiff’s motion which sought to accelerate an appeal of the Court’s ruling that Claims 113 and 114 of U.S. Patent No. 7,783,299 are invalid. TruePostition, Inc. v. Polaris Wireless, Inc., C.A. No. 12-646-RGA-MPT (D. Del. Mar. 3, 2015). Claims 113 and 114 previously had been found indefinite after a Markman hearing, but the parties were still litigating factual issues relating to a third claim, Claim 98. With respect to Rule 54(b) certification, Judge Thynge explained, “the three asserted claims must be viewed as part of a single action for relief based on infringement. Claims 113 and 114 have been resolved; Claim 98 has not. As a result, the single right of action for relief based on infringement of the ‘299 Patent is not final within the meaning of Rule 54(b).” Id. at 8. With respect to voluntary dismissal without prejudice under Rule 41(a)(2) of the remaining Claim 98 infringement claim, Magistrate Judge Thynge viewed such a dismissal as unwarranted given that the parties already had expended significant amounts of their time, and the Court’s time, on issues relating to the Claim 98. Id. at 13-14. As a result, the plaintiff’s motion was denied.
In the wake of two recent decisions regarding whether Delaware has jurisdiction over Mylan Pharmaceuticals, Inc. in ANDA litigation (Acorda Therapeutics, Inc. and AstraZeneca AB), Magistrate Judge Christopher J. Burke concluded that it did, and thus recommended that Mylan’s motion to dismiss for lack of personal jurisdiction be denied. Forest Laboratories, Inc., et al. v. Amneal Pharmaceuticals LLC, et al., C.A. No. 14-508-LPS (D. Del. Feb. 26, 2015).
Similar to Judge Stark’s recent decision in Acorda, Judge Burke concluded that Mylan had consented to Delaware jurisdiction by registering to do business there – an argument also offered by plaintiffs in the Acorda and AstraZeneca cases.
Judge Burke recognized that the recent Acorda and AstraZeneca decisions came to opposite conclusions on this issue, and engaged in a fullsome analysis of whether compliance with state registration statute can be basis for finding consent to personal jurisdiction, both before the Supreme Court’s Daimler decision and in light of this decision. See id. at 7-32. Having done so, and having “address[ed] various points made” in both the Acorda and AstraZeneca opinions, Judge Burke concluded that Mylan had consented to jurisdiction in Delaware. Id. at 32.
As a matter of procedure, Judge Burke also observed in a footnote that His Honor did not consider additional notices of supplemental authority the parties had filed, as they went “well beyond citing supplemental authority, and instead include extensive argument akin to what would be found in a brief,” in violation of Local Rule 7.1.2(b) that prohibits such supplemental argument. Id. at 2 n.1.
Judge Sleet recently considered two patent infringement defendants’ motions to dismiss for failure to state a claim and lack of subject matter jurisdiction as well as motions to stay pending inter partes review. His Honor denied the motions to dismiss, explaining that “[Defendants] ask too much of [plaintiff] at this stage, and would require that [plaintiff] identify each claim element that is practiced by the accused products. The burden of pleading is not so high.” Message Notification Technologies LLC v. Microsoft Corp., et al., C.A. Nos. 13-1881-GMS, 13-1883-GMS, Order at 2-3 n.3 (D. Del. Feb. 23, 2015). Furthermore, the operative complaints were filed prior to the Supreme Court’s decision in Limelight Networks, Inc. v. Akamai Technologies, Inc., so although “it appears several of [plaintiff’s] statements rested on the assumption that ‘divided infringement’ was a viable route to liability[, defendants] will have the opportunity to test [plaintiff’s] allegations through summary judgment, but only after [plaintiff] is allowed discovery.” Id. Judge Sleet also rejected the subject matter jurisdiction argument, finding that the plaintiff adequately plead ownership of the patent-in-suit and thus had standing. Id.
However, Judge Sleet granted defendants’ motions to stay due to a lack of undue prejudice, potential simplification of issues, and the stage of the case: “It is true that [defendant] filed its petition seeking IPR review on the eve of its one-year deadline. . . . Although this delay would typically suggest prejudice or tactical advantage, in this case, the court has not yet entered a schedule.” Id. at 3 n.4. Furthermore, because the PTAB institutes review in the majority of IPR petitions, Judge Sleet did “not consider the fact that the [PTAB] has not yet decided to institute review of Microsoft’s petition to be of great moment,” and the plaintiff “is a non-practicing entity, without competing products, thus minimizing the risk of harm.” Id. Finally, the defendant that filed the IPR “is statutorily estopped from re-litigating issues decided by the PTAB, and [the non-IPR defendant] has stipulated to be similarly estopped. Thus, there is no danger of duplicative litigation.” Id.
In Endeavor Meshtech, Inc. v. Aclara Technologies LLC, C.A. No. 13-1618-GMS (D. Del. Feb. 25, 2015), Judge Gregory M. Sleet granted defendant’s (“Aclara”) motion to transfer to the Eastern District of Missouri. Judge Sleet found that Aclara satisfied its burden of showing that the relevant Jumara factors strongly support transfer. Only plaintiff’s (“Endeavor”) forum preference weighed against transfer, and, as the Judge Sleet explained, that preference did not warrant maximum deference in this case because of Endeavor’s minimal connection to the District of Delaware. See id. at 3-5. The remaining factors weighed strongly in favor of transfer or, at least, are neutral. For example, Judge Sleet found the factor of “whether the claims arose elsewhere” to slightly favor transfer, given that Aclara markets the accused products from its Missouri headquarters. See id. at 6. Additionally, even though Aclara’s operations were split between Missouri and Texas, Judge Sleet nevertheless found the “convenience of the parties” factor to favor transfer, noting that “the Eastern District of Missouri is certainly more convenient for Aclara.” Judge Sleet explained that it is “unwise and unfair ‘to subject all parties to an inconvenient forum when a forum exists that would significantly reduce the burden of at least one of the parties.’” Id. at 7-8 (emphasis added). Judge Sleet also found the “location of books and records factor” to weigh slightly in favor of transfer, even though some evidence may derive from Aclara’s Texas facility. See id. at 8-9. On balance, in the interests of convenience and justice, Judge Sleet found that transfer was warranted.
In Immersion Corporation v. HTC Corporation, et al., C.A. No. 12-259-RGA (D. Del. Feb. 24, 2015), Judge Richard G. Andrews granted-in-part defendants’ Daubert motion to exclude plaintiff’s damages expert, excluding the testimony regarding lost profits but allowing testimony regarding a reasonable royalty.
As to reasonable royalty, the expert chiefly relied on a prior settlement agreement between plaintiff and another party that covered the same patents-in-suit for accused devices with the same operating system; the settling party and current defendants also had “comparable market shares.” Id. at 4. Defendants argued that the expert’s calculation was flawed as it rested “on the premise that the patents-in-suit are the most valuable in the [settlement] portfolio,” and also that the expert had “cherry-picked” this particular license agreement as having the highest royalty rate among several other licenses. Id. at 4. But the Court concluded that reliance on this particularl agreement was reasonable, and Defendants’ criticisms went to weight rather than admissibility. Id. at 5-6.
As to lost profits, Defendants moved to exclude, as speculative and failing to show demand for the patented product, this expert’s theory that was “based on a license agreement that the parties negotiated for several years, but ultimately did not enter into. The agreement would have licensed the patents-in-suit, as well as [software of Plaintiff not covered by the patents] . . . [the expert] reasoned that ‘but for’ Defendants’ infringement, Defendants would have entered into the agreement they had been negotiating. He therefore calculated lost profits by applying that rate to [Defendants’] sales.” Id. at 6 (citations omitted). The Court concluded that this theory was “based on a faulty legal premise” and thus excluded it. The expert had not attempted to show any functional relationship between the patented products and this software, such that Plaintiff would be entitled to recover from lost sales of unpatented components sold with a patented product. Id. at 8-9.
Furthermore, the lost profits testimony was “inconsistent with the premise of the lost profits analysis.” Id. at 9. While the traditional lost profits framework is “based on an analysis where the hypothetical world is one in which the infringing sales did not occur” and, “[s]ince the sales did not occur, the infringement had been ‘factored out,'” the expert’s theory assumed Defendants had licensed the patents. Plaintiff’s counsel admitted that there was no case accepting this theory, although the Court observed there was also no case rejecting it either. Id. at 9 & n.7. The Court ultimately concluded that this theory “[went] too far,” as it would allow a patentee to seek damages representing “the right to exploit,” rather than simply the recognized “right to exclude.” Id. at 9-10 (citing hypothetical where whatever profits Defendants would have made from the licensed software, as well as the profits of other parties licensing the patents in light of Defendants’ own use of them, would be recoverable).