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In a recent Letter Order, Magistrate Judge Joel Schneider resolved the parties’ dispute over the effective date of the Community of Interest (“COI”) doctrine. Evonik Degussa GmbH v. Materia Inc., C.A. No. 09-636-NHL-JS; Evonik Degussa GmbH v. Elevance Renewable Sciences, C.A. No. 10-200-NLH-JS, Letter Order (D. Del. Nov. 21, 2013). Plaintiff (“Evonik”) argued that the COI doctrine did not apply as between defendant (“Materia”) and UNO until May 3, 2007, the date Materia and UNO executed their “Second Amended and Restated Patent License Agreement” (“PLA”). Id. at 1. Materia, on the other hand, argued that the COI doctrine was applicable as early as January 12, 2007, when Materia and UNO signed a term sheet (“Term Sheet”) related to an amended and restated license agreement, or January 1, 2007, the Term Sheet’s effective date. Id.

Judge Schneider found that the COI doctrine’s effective date was not until May 3, 2007, the date that Materia and UNO signed the PLA. Id. at 2. As Judge Schneider explained, the “COI doctrine applies when two or more clients have a ‘common legal interest.’” Id. Judge Schneider highlighted that the Term Sheet specified that Materia and UNO did “not intend to be legally bound, unless and until a definitive License Agreement [had] been executed by both Parties.” Id. Judge Schneider therefore found that during the “negotiation period” between January 12, 2007 and May 3, 2007, Materia and UNO “were acting in their own and not the common best interest.” Id.

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Earlier this week, Chief Judge Gregory M. Sleet granted defendants’ motion to stay litigation pending the outcome of inter partes review of the patents-in-suit. HumanEyes Technologies Ltd. v. Sony Corp., C.A. No. 12-398-GMS (D. Del. Dec. 2, 2013). The defendants filed the inter partes petitions five months after termination of a parallel ITC action, and the motion to stay three weeks after the petitions. Id. at 2 n.4. As such, Judge Sleet found no evidence that defendants were seeking an unfair tactical advantage. Moreover, because the parties are not direct competitors and HumanEyes can be adequately compensated for any delay by money damages, Judge Sleet found that plaintiff was unlikely to suffer prejudice due to the stay. Id. Also, because the case was in its early stages and because the Patent Trial and Appeal Board granted defendants’ petitions, the inter partes review proceedings will likely simplify issues in the case and “advance the interests of judicial economy.” Id. at 2 & n.5.

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Judge Stark has issued orders staying two related cases brought by General Electric against Kontera Technologies and Vibrant Media. In May 2013, Judge Stark denied a previous request by Vibrant to stay pending resolution of the inter partes review, which was filed by Vibrant. Since that time, however, the PTAB has instituted an inter partes review of the patents-in-suit based on its preliminary findings that all asserted claims are invalid. General Electric Co. v. Vibrant Media, Inc., C.A. No. 12-526-LPS, Memo. Order at 1 (D. Del. Dec. 4, 2013). As Judge Stark explained, “Regardless of their outcome, the IPR proceedings will simplify this case, as Vibrant will be estopped from contending that certain prior art invalidates the asserted claims and/or some or all of the asserted claims will be invalidated.” Id. Additionally, “[t]he PTAB has scheduled oral argument in the IPR for February 2014, so the delay caused by a stay will likely not be especially lengthy and, therefore, is unlikely to cause GE (which does not practice the patents-in-suit) undue prejudice. While the parties and the Court have invested resources in the litigation, and the litigation has advanced significantly since May, this action is far further away from conclusion than is the IPR.” Id. at 2. On these bases, Judge Stark ordered that the Vibrant action be stayed with the exception of “permit[ing] fact discovery to be completed—reducing any risk of evidentiary staleness that might otherwise be present during the pendency of the stay—but . . . allow[ing] the parties to avoid the expense of expert discovery until after the results of the IPR are known.” Id.

Additionally, Judge Stark seemed to find it persuasive that “in the related action, defendant Kontera Technologies, Inc. has agreed, if these actions are stayed, to be estopped to the same extent as Vibrant is estopped . . . [even though] [t]his was not Kontera’s position when the Court considered Vibrant’s earlier motion.” Id. at 1-2. Accordingly, Judge Stark ordered that the Kontera case as well.

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Chief Judge Sleet recently issued his constructions of disputed claim terms in a patent related to “jousting toy” spinning tops. The patent is being asserted against Lego.
Judge Sleet construed the following terms:
– “stable footing on said playing surface to maintain said body section in an upright position without the use of centrifugal force”
– “[first playing component configured to] kinetically engage and form a scoring connection with a second playing component”
– “hooked arm connecting to said wire frame hoop”
– “means for rotating said body section”
– “means for carrying said body section above a playing surface”
– “means for providing a stable footing on said playing surface to maintain said body section in an upright position without the use of centrifugal force”
– “means for kinetically engaging said first playing component with a second jousting element to form a scoring connection”
Battle Toys, LLC v. Lego Systems, Inc., C.A. No. 12-928-GMS, Order at 1-10 (D. Del. Dec. 2, 2013).

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The District of Delaware has announced the creation of a Patent Study Group focused on exploring “issues relating to the practice of patent litigation, with a particular emphasis on the handling of such cases in the District of Delaware.” The Court’s announcement was posted on its website and reads as follows:

Court Announces Patent Study Group

The United States District Court for the District of Delaware is pleased to announce the creation of a Patent Study Group. The goal of the Patent Study Group is to explore issues relating to the practice of patent litigation, with a particular emphasis on the handling of such cases in the District of Delaware. In recent years, more patent cases have been filed in the District of Delaware than in almost all of the other federal trial courts across the country. The size of Delaware’s patent docket, and the experience of the District’s bench and bar, create a unique opportunity for identifying potential “best practices” for the management of these complex cases. Over the coming months, the Patent Study Group will solicit input from practitioners who regularly appear in the District of Delaware (in-state and out-of-state counsel), in-house counsel, and others with an interest in understanding and improving the practice of patent litigation.

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In Gammino v. American Telephone and Telegraph Company, et al., C.A. No. 12-666-LPS (D. Del. Nov. 22, 2013), Judge Leonard P. Stark granted plaintiff’s motion for leave to file an amended complaint. Having granted this motion, the Court also denied as moot motions to dismiss direct and/or willful infringement claims contained in the original complaint. However, the Court still “offer[ed] . . . guidance as to the adequacy of the pleadings contained in the Amended Complaint.” Id. at 6.

One defendant opposed plaintiff’s motion for leave to amend, arguing that amendment was futile because the requested claims were barred by claim preclusion. Plaintiff’s proposed amendment added additional defendants and allegations related to direct and willful infringement. Id. at 2. Defendant argued that because plaintiff had previously dismissed indirect infringement claims against all defendants with prejudice, and “because Plaintiff’s claim for direct infringement is asserted against the same defendant on the same alleged facts, the adjudication on the merits of the claim for indirect infringement must also bar Plaintiff’s claim for direct infringement.” Id. at 3-4. The Court disagreed because the dismissal of the indirect claims occurred in the instant action and had not resulted in a final judgment; for res judicata to apply, “an adjudication on the merits must have occurred in a previous proceeding and resulted in a final judgment.” Id. at 4. Furthermore, the dismissed causes of action arose under a different section of the patent laws than the direct claims. Id.

Because the Court granted plaintiff’s motion for leave to amend, its Amended Complaint was now the operative complaint. Therefore, the Court denied as moot other defendants’ motions to dismiss direct and/or willful infringement claims contained in the original complaint. Id. at 6. But, “in light of the length of time that this action has already been pending, and in hopes that yet another round of motions to dismiss may be avoided,” the Court “offer[ed] . . . guidance as to the adequacy of the pleadings contained in the Amended Complaint.” Id. at 6. The Court examined plaintiff’s allegations and observed that its direct and willful infringement allegations appeared to be adequate under the applicable standards. Id. at 7-8.

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In Enzo Life Sciences, Inc. v. Adipogen Corporation, C.A. No. 11-88-RGA (D. Del. Nov. 20, 2013), Judge Richard G. Andrews granted defendants’ motion to disqualify plaintiff’s counsel. An attorney that had previously worked on the case for defendants was now a named partner of plaintiff’s new counsel. Id. at 3.

It was clear that the named partner was disqualified; the Court considered whether the conflicted attorney’s firm had complied with ABA Model Rule of Professional Conduct 1.10(a)(2), which outlines what steps a firm can take to avoid a conflict being imputed to it. The Court concluded that the firm had not established an effective screen and had not shown that no part of the fee for this action would be apportioned to the conflicted attorney. Id. at 6.

As to the adequacy of the screen, several factors weighed in favor of disqualification. The Court cited the conflicted attorney’s past involvement in the defendants’ representation, which included drafting confidential mediation statements and signing various discovery documents. Id. at 7-8. While this attorney did not have a “pivotal role” in the case while working for defendants, and while he “may now have a ‘limited recollection’ of this case, at the time he was working on the case he surely was aware of the defense strategies.” Id. at 8. Furthermore, he had been an attorney of record for defendants and now his name appeared on firm correspondence, which created “a constant appearance of a continuing imputed conflict.” Id. Finally, the small size of this firm detracted from the efficacy of a screen. Id. at 9.

While the firm had implemented a screen in a timely fashion, the screen also lacked “key aspects.” Id. First, while it prohibited firm members from talking about the case with the conflicted attorney, it lacked a “prohibition regarding discussing the matter in the presence of [this attorney], or in locations from which [he] could still hear the conversations.” Id. This was a particularly important issue for a small firm. Second, the screen had no enforcement mechanism as it provided “no warning to employees as to what would occur if the screen were not followed.” Id.

As to the fee issue, “no evidence was provided to the Court to assess whether [plaintiff’s counsel’s firm] has sufficient funds, considering the firm’s small size, to satisfy the firm’s partner share agreement without any of the funds from this case being used to pay [the conflicted attorney’s] share. While the court is mindful that [the attorney’s] partnership share would not fluctuate based upon the success of their client, because of the nature of a small firm it is likely that his actual pay would be affected.” Id. at 11.

Finally, the Court concluded that a balancing of the equities favored disqualification, emphasizing that the “strong interest in preserving the integrity of the judicial system” was particularly strong here, where the potential for use of confidential information would be in the same matter. “This court must protect against even the appearance of impropriety.” Id. at 12-13.

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In a recent memorandum order, Judge Richard G. Andrews granted defendants’ motion to preclude plaintiff’s assertion of willful infringement. Inventio AG v. Thyssenkrupp Elevator Americas Corp., C.A. No. 08-874-RGA (D. Del. Nov. 20, 2013). First, Judge Andrews found that the complaint did not contain any factual assertions related to willfulness, noting that “[t]he words ‘wilfull,’ ‘willfully,’ ‘objectively unreasonable,’ ‘knowledge of the patent,’ or any similar construct, do not appear in the Complaint.” Id. at 1. While plaintiff argued that its request for a “declaration that this is an exceptional case pursuant to 35 U.S.C. § 285” put defendants on notice of its willfulness claim, Judge Andrews found that a “demand for relief is not a factual assertion.” Id. Second, Judge Andrews found that plaintiff should not be permitted to amend its complaint to assert wilfull infringement, noting that the deadline to amend the pleading was “nearly a year ago,” and that plaintiff had not shown the diligence required by the good cause standard under Fed. R. Civ. P. 16. Id. at 1-2.

Third, Judge Andrews found that plaintiff “proffered no evidence from which pre-filing willful infringement could be found.” Id. at 2. Specifically, Judge Andrews found that the “hazy testimony” plaintiff cited was insufficient to establish that defendants had pre-suit knowledge of the asserted patents. Id. at 3. Further, while plaintiff argued that defendants saw that “Schindler’s elevator repair operations,” were marked with five patents, Judge Andrews explained, among other things, that none of those patents were asserted in the instant litigation, and that it did not appear that defendants copied any patented aspects of the marked Schindler product. Id. at 3 & n.3.

Fourth, Judge Andrews found that plaintiff failed to set forth a sufficient to basis to pursue a post-filing willfulness claim. Id. at 3. Plaintiff argued that a post-filing claim was justified because “it did not know Defendants were engaged in any post-filing infringement until receiving discovery.” Id. at 4. Judge Andrews found, however, that such argument made “no sense,” in part because plaintiff’s complaint indicated there was post-filing infringement. Id. Moreover, as Judge Andrews explained, “[i]t seems hard to believe that Plaintiff, having learned that its competitor was infringing its patents by renovation projects that would take some period of time to complete, did not know (without the need for discovery) that the infringement was, as it alleged, continuing.” Id. at 5

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Judge Sue L. Robinson recently considered various motions for summary judgment, motions to strike and exclude testimony, and issued claim constructions of the terms of the patents-in-suit (Patent Nos. 6,874,049, 6,708,259, and 6,647,450). Cradle IP, LLC v. Texas Instruments, Inc., C.A. No. 11-1254 (D. Del. Nov. 20, 2013).

Before analyzing the eight motions before the Court, Judge Robinson noted that to determine summary judgment the court must confirm “the parties have cited evidence in support of their arguments”; and that “the evidence demonstrates the proposition for which it is cited.” Id. at 11-12. In that respect, Judge Robinson noted that the “the parties could not have been less helpful to the court.” The specific issues with the parties’ record cites included:

[T]he parties (and their experts) cited to documents by their Bates-stamp numbers, with no indicia of their location in the record. Even when the parties were kind enough to locate the document in question by an exhibit number, it was often difficult to discern which of the volumes containing identical exhibit numbers was actually referenced. To add insult to injury, the parties organized the appendices so that the exhibits were not necessarily included in numerical order because, e.g., one exhibit had to be sealed. In sum, it was a rare occurrence that a brief cited evidence by an exhibit number that was clearly identified by the appendix in which it resided.

Id. at 12.

Turning to the motions to strike and exclude expert testimony, Judge Robinson granted Texas Instrument’s motion striking “new theories” from Cradle IP’s expert’s declarations. Id. at 13. “As far as the court can tell, the declaration is longer than his two expert reports combined, and primarily cites to itself as authority.” Id. Judge Robinson also granted Texas Instrument’s motion to strike that related to a third party declaration not vetted in discovery. Id. Judge Robinson denied the remaining motions to strike that related to supplemental expert reports. Id. at 14. “[T]he court has neither the time nor the resources – nor even the record – to recreate the parties’ tortuous litigation strategies insofar as determining whether plaintiff had cause to file a supplemental report in the first instance and whether it ventured into new theories which demanded a response by defendant in the second instance.” Id. Judge Robinson also denied Texas Instrument’s motion to exclude Cradle IP’s expert on secondary considerations, finding that Texas Instrument’s complaints went to the weight of the evidence. Id. Judge Robinson did, however, grant Cradle IP’s motion to strike an expert declaration because it contained disclosures that had not been vetted through discovery. Id.

Turning to the summary judgment motions, Judge Robinson granted-in-part Texas Instrument’s motions for summary judgment of non-infringement and denied its motion for summary judgment of invalidity. Regarding the ‘049 patent, Judge Robinson granted Texas Instrument’s motion that “that Cradle has not shown that Tl has made, used, sold, or offered to sell the ‘entire patented invention’ or that any of its customers have employed the ‘entire patented invention in the required configuration set forth in the apparatus claims.'” Id. at 22-23. Judge Robinson found that there was “no evidence to show that Tl or its customers used the apparatus in combined mode. To the contrary, the only evidence provided shows that the software needed for the apparatus to operate in combined mode was not even developed.” Id. at 24. Judge Robinson also granted Texas Instrument’s motion as to the method claim 6, that Cradle IP “failed to provide evidence to show that either TI or its customers have actually performed ‘all of the steps of the claimed method.'” Id. at 25. Regarding the ‘259 patent, Judge Robinson granted Texas Instrument’s motion that Cradle IP provided no evidence of direct infringement of the method claims, finding that “at best” Cradle IP has shown that the products are capable of operating in an infringing manner, rather than evidence of use. Id. at 31. Regarding the ‘450 patent, Judge Robinson granted Texas Instrument’s motion. The Court found that “Cradle fail[ed] to identify evidence to support a finding of a genuine issue of material fact, instead pointing only to a conclusory opinion, unsupported by evidence, in [its expert’s] declaration.” Id. at 40.

Judge Robinson also construed the following claim terms of the patents-in-suit:

“A system bus that allows only one bus transaction in any one clock cycle”
“Any processor requesting access to the shared resource”
“The shared resource is available/unavailable for access”
“The shared resource has just been made available for
access”
“cell”
“Idle Memory Transfer Controller”
“Command FIFO”
“Split transaction global bus”
“Acknowledgment of command receipt”
“Releasing the split transaction global bus”

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Judge Richard G. Andrews recently ruled on several post-trial motions in XpertUniverse, Inc. v. Cisco Systems, Inc., C.A. No. 09-157-RGA (D. Del. Nov. 20, 2013). The Court first denied the defendant’s motion for judgment as a matter of law on infringement, finding that the defendant failed to show that there was insufficient evidence from which the jury could find infringement and support its damages award. The Court also found that the evidence at trial supported the jury’s finding of no invalidity based on the on-sale bar. Next, the Court denied the defendant’s motion for an order that the patents were unenforceable due to inequitable conduct, explaining that the defendant failed to show clear and convincing evidence to support a finding that the plaintiff specifically intended to defraud the PTO.

The Court next addressed the plaintiff’s post-trial motions to alter or amend the judgment, for supplemental damages and an accounting of sales of a new product version, for pre- and post-judgment interest under 35 U.S.C. § 284 and 28 U.S.C. § 1961, and for a permanent injunction or, alternatively, ongoing royalties. Judge Andrews explained that “[a] party seeking to include a new product version in post-verdict relief must prove that the new version is not more than colorably different from the product found to infringe, and that the newly accused product actually infringes.” Id. at 24. The Court found that the new version appeared to be more than colorably different than the accused product, and decided that rather than conducting an evidentiary hearing on whether the new version infringed, it would deny the motion without prejudice to the plaintiff’s filing a new patent infringement suit with respect to the new version . Id. at 25. The Court then granted the motion for pre- judgment interest at the prime rate, compounded quarterly, and post-judgment interest pursuant to 28 U.S.C. § 1961.

The Court denied the plaintiff’s motion for a permanent injunction, finding that the plaintiff failed to show a likelihood of irreparable harm, because the harm alleged had already occurred, and was not prospective harm that could be prevented by an injunction. Id. at 28-29. Further, the plaintiff failed to show that money damages would not compensate it for the alleged harm, or that the balance of harms or public interest favored granting a permanent injunction. Id. at 30-31. With respect to the plaintiff’s alternative request for ongoing royalties, the Court explained that one of the accused products was no longer being sold, and only a new version of the other, which was not shown to infringe, was being sold. The Court therefore denied the request for ongoing royalties. Id. at 31-32. Finally, the Court found no basis to award attorneys’ fees under 35 U.S.C. § 285. Id. at 32-33.

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