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Registration is now open for the 2016 District of Delaware Bench & Bar Conference May 19-20, 2016 at the Chase Center on the Wilmington, Delaware Riverfront.  To register, click here. 

The program will include nationally recognized practitioners and federal judges speaking on cutting edge issues in Bankruptcy, Criminal, and Intellectual Property law.  Confirmed speakers include judges from the United States Court of Appeals for the Third and Federal Circuits; United States Courts for the Districts of Delaware, New Jersey, Eastern and Western Pennsylvania, Eastern and Northern Texas, and California; United States Bankruptcy Court for the Districts of Delaware and Southern New York; as well as nationally respected practitioners from the public and private sectors.  The program will conclude with a panel of former Solicitors General discussing high stakes litigation in federal court.  An updated agenda will available at defba.org in the coming weeks.

We hope to see you in May!

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In Raindance Technologies, Inc. v. 10X Genomics, Inc., C.A. No. 15-152-RGA (D. Del. Mar. 4, 2016), Judge Richard G. Andrews dismissed Plaintiffs’ amended complaint for patent infringement under the heightened pleading standard of Iqbal/Twombly–as opposed to the standard under Rule 84–despite the fact that the amended complaint was filed before December 1, 2015. Judge Andrews granted Plaintiffs leave to replead, explaining that while “Plaintiffs have not plausibly alleged any infringement, . . . Plaintiffs might very well be able to do so, particularly if they have analyzed [Defendant’s] products and not just its website.” Id. at 5. Explaining his application of Iqbal/Twombly, Judge Andrews noted the following:

Effective December 1, 2015, Federal Rule of Civil Procedure 84 and the Appendix of Forms were “abrogated.” Under existing standards, that is, Iqbal and Twombly, it is clear to me that Plaintiffs have not plausibly alleged indirect infringement on Counts I and III (and, I expect, on Counts IV through VII, although in the interest of conserving resources, I am not going to decide that now). Further, I believe that I have discretion whether or not to apply the post-December 1, 2015 direct infringement pleading standard to the amended complaint, and I believe that it would be in the interest of justice to do so. I also note, to foreclose future unnecessary argument, that for indirect infringement, Defendant’s knowledge of the patents is established at least as of the filing of the lawsuit.

Id. at 4-5. More specifically, in dismissing Count I, Judge Andrews noted that “[t]here is nothing in the complaint (at least so far as I can see) that hints at the role of pressure in Defendant’s products,” as required by the claim language. Id. at 3. (emphasis added). As to Count III, Judge Andrews explained that “[i]t is not obvious to me that what Plaintiffs describe is an ‘autocatalytic reaction,’” as stated in the claim language. Id. at 4 (emphasis added). Judge Andrews explained that “[t]he requirements of the next to last element might be met, but involves quite a bit of supposition.” Id.

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These related patent infringement cases have resulted in several opinions by Judge Andrews, including a summary judgment opinion and a Daubert opinion in a related case against Telit. In this opinion, Judge Andrews considered a few issues not already addressed by his Telit opinion.

Considering a challenge to Defendant’s damages expert, Judge Andrews found that the expert had not shown a “basis in fact to associate the royalty rates used in [certain] prior licenses to the particular hypothetical negotiation at issue in [this] case” as required by Uniloc. The expert’s purported basis for comparability of the licenses was his discussions with the Defendant’s technical expert, yet Judge Andrews found that both experts “make almost zero reference to the specific technology involved in either the [asserted] patent or the [purportedly comparable] licenses, aside from the hazy reasoning that they all relate to product features rather than core technology.” Such “loose, vague allegations of technological comparability, without any explanation, are insufficient, and . . . invite the Court to blindly accept the unsubstantiated conclusions of [] experts . . . [which] are nothing more than ipse dixit.” M2M Solutions LLC v. Enfora, Inc., et al., C.A. No. 12-32-RGA, Memo. Op. at 14-19 (D. Del. Mar. 9, 2016).

Judge Andrews provided a further reason for excluding the expert’s testimony: the “analysis virtually ignores the fact that these two licenses resulted from litigation settlements, providing a drastically different backdrop than the hypothetical negotiation involving two willing licensors, as would be the case here.” Characterizing Federal Circuit precedent on the point as “hostile toward using litigation settlement agreements in proving a reasonable royalty, except in limited circumstances,” Judge Andrews pointed out that the “settlement licenses here were not for the patent-in-suit and are only connected to the claimed invention by vague conclusions from Defendants’ experts.” Because the expert “ignore[d] the settlement context altogether and focuse[d] on the fact that the licenses were between Enfora and a non-practicing entity, [u]nder [the expert’s] rationale, any license between Enfora and a non-practicing entity would be economically comparable to a hypothetical negotiation between Enfora and a different non-practicing entity, regardless of the specific technology or whether the licenses resulted from litigation settlements. These unsubstantiated conclusions about economic comparability, lacking in analysis, again provide nothing more than ipse dixit.” Id. at 19-20. Moreover, Judge Andrews rejected the argument that the incomparable licenses could be used only as a “sanity check” rather than as the heart of a damages analysis. Id. at 20. Accordingly, the Court excluded any use of the incomparable licenses.

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Chief Judge Leonard P. Stark’s recent claim construction opinion in E.g., Kraft Foods Brands LLC v. TC Heartland, LLC d/b/a/ Heartland Food Products Group, et al., C.A. No. 14-028-LPS (D. Del. Mar. 7, 2016) includes consideration of the an indefiniteness dispute which the Court ultimately concluded could not be resolved on the present record. The dispute centered on the meaning of “otherwise identical” in the term “to provide the concentrate with at least about 5 times more acid than an otherwise identical non-buffered concentrate having the same pH.” Defendant argued the term was indefinite, while Plaintiff argued the term should be given its plain and ordinary meaning. See id. at 9-11. The Court concluded that Defendant had not met “the heavy burden it has taken on in seeking to invalidate the claims” as indefinite, but it was also not clear which alternative constructions presented by the parties were correct. Id. at 13. Accordingly, the Court required additional input from the parties to resolve the issue, and indicated that it may be helpful to hear “hear directly from experts as to how a POSA would” understand the terms at issue. Id. at 13. The Court indicated it would direct the parties to propose what additional proceedings that would allow for resolution. Id. at 14.

In the same opinion, the Court also concluded that a preamble was limiting, as the prosecution history demonstrated that the patentee “had relied on the features recited in the preamble to overcome an obviousness rejection.” Id. at 22.

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In a series of related actions brought by the Plaintiffs, Judge Richard G. Andrews considered Defendants’ motion to compel compliance with subpoenas issued to a third party and former owner of the patents, and Plaintiffs’ motion to amend the complaint to add willfulness allegations. E.g., Delaware Display Group LLC, et al. v. Lenovo Group Ltd., et al., C.A. No. 13-2108-RGA (D. Del. Feb. 23, 2016).

As to the motion to compel, Defendants sought “discovery of teardown reports [i.e., “technical analysis on products supplied by” one party to another” created by [the former owner of the patents] after a March 25, 2013 consulting agreement, unredacted royalty reports . . . and email communications [between Plaintiffs and other third parties regarding the teardown work ].’”  Id. at 3-4. Plaintiffs and the non-party opposed the motion, but the Court had previously concluded that all the documents were in the possession of Plaintiffs, and thus the only issue was whether Plaintiffs were obligated to produce the documents. Id. at 4.

The Court granted the motion to compel in part, after running through a number of questions as to the potentially privileged or protected nature of the documents. As to the “teardown reports,” prepared by the former owner pursuant to an agreement with another non-party, they were neither attorney work product nor protected as non-testifying expert discovery, as the reports were prepared by and for non-parties. See id. at 6-9. They were also not protected by a common interest privilege, as the Court found no common interest between the parties to the agreement, noting that “Plaintiffs argue that [those parties] share the same interest in obtaining strong and enforceable patents,” but “Plaintiffs’ logic would find that any seller with rights to royalty payments is engaged in a common legal cause with its buyer. Id. at 11-12 (citations and quotations omitted). Accordingly, the Court granted the motion to compel as to the teardown reports. Similarly, the email communications regarding the teardown work were also not privileged. Id. at 15-16. However, the Court did not order production of the teardown emails, as Defendants had failed to comply with a prior discovery order. Therefore the motion to compel was denied to the extent it sought to compel production of the teardown emails “without complying with the procedures outlined” in that discovery order. Id. at 16.

As to the unredacted royalty reports, the Court rejected Plaintiffs’ argument that these documents contained information about their non-testifying experts. Further, Plaintiffs tried to argue the documents’ disclosure of “attorney’s fees paid in conjunction with licensing and litigating the patents-in-suit against other companies,” while not privileged, was irrelevant and highly sensitive. Id. at 13-14. While the Court was “skeptical” as to the relevance of these documents and recognized their sensitivity, it ordered production, noting that the case’s protective order only allowed withholding of production based on a privilege or immunity and that “in the absence of such an assertion of protection . . . a party may not redact information it unilaterally deems sensitive, embarrassing, or irrelevant. If Plaintiffs feel the Protective Order was inadequate, they could have moved to modify it.” Id. at 14-15.

Finally, as to Plaintiffs’ motion for leave to amend, the Court denied it as unduly delayed, where it was filed on the last day of fact discovery and two years after filing the Complaint. The Court rejected Plaintiffs’ argument that the motion was timely because the parties had previously agreed to a deadline for filing motions to amend to plead willfulness, explaining that while timeliness under a scheduling order is “certainly relevant,” it is not dispositive, citing Third Circuit law on the definition of undue delay as placing an unwarranted burden on the court or when plaintiff has had previous opportunities to amend. Here, “Plaintiffs have already amended the complaint once in [several of the related] actions. Plaintiffs provide no explanation for why they did not seek leave earlier or why the allegations of willfulness were not included in earlier amendments. Plaintiffs’ only ‘reason[] for not amending sooner’ appears to be that the scheduling order’s deadline had not yet elapsed. Given that this motion was filed on the last possible day, which was also the date that fact discovery was scheduled to close, and the delay in filing appears to have been an intentional effort to wait until the last moment, that does not suffice,” and the motion was denied. Id. at 20.

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In a recent Order, Judge Richard G. Andrews denied Plaintiffs’ request to file a motion for summary judgment of infringement in an ANDA action. Impax Laboratories Inc., et al. v. Lannett Holdings Inc., et al., C.A. No. 14-984-RGA (D. Del. Feb. 29, 2016).

In opposition to Plaintiffs’ request, Defendants argued that “Plaintiffs’ response to Defendants’ discovery is barely started.” Judge Andrews found, however, that while that may be true, the issue for infringement is “(1) construction of the claims, which has already been done, and (2) comparison of the claims with the accused ANDA product.” (internal citation omitted). Judge Andrews thus found that “Plaintiffs’ allegedly deficient discovery responses seem to be a makeweight argument.”

However, Defendants also asserted that there is a “genuine factual dispute over the composition of the accused ANDA product.” Judge Andrews found that expert reports, “which will not be finished until late May at the earliest, will be necessary to decide whether there is, or is not, a dispute, and, if there is, what the evidence will show about who has the better argument.” Judge Andrews was thus “dubious about how helpful a summary judgment motion might be.” Judge Andrews also noted that “the schedule for this case really does not have sufficient time built into it for orderly summary judgment practice.” Judge Andrews thus concluded that “I do not believe that summary judgment practice would be efficient or productive,” and ultimately denied Plaintiffs’ request.

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In a recent Memorandum Opinion, Judge Richard G. Andrews granted both (i) defendant’s motion to exclude the testimony of plaintiff’s damages experts Mr. Herman “Whitey” Bluestein and Mr. Richard Bero, and (ii) plaintiff’s motion to exclude the opinion of Mr. Charles Donohoe on a running royalty rate. M2M Solutions LLC v. Motorola Solutions, Inc., et al., C.A. No. 12-33-RGA (D. Del. Feb. 25, 2016). Judge Andrews first concluded that Mr. Bluestein’s testimony must be excluded for “three principal reasons”: “1) I do not think that Mr. Bluestein is qualified as an expert to render technical conclusions about the advantageous characteristics of the patented technology, 2) the Beacham Report[] [surveys] are completely unrelated to M2M device technology and any allegedly infringing features of the accused products, and 3) the only link between the Beacham Reports and the patented technology is provided solely by Mr. Bluestein’s say-so.” Id. at 5-6. As to the first reason, Judge Andrews explained that “while Mr. Bluestein may have considerable experience in the industry generally, he does not have the expertise (and he does not rely on others who do) to carefully tie his methodology (or, indeed, any methodology) to the ’010 patent’s footprint in the marketplace, especially when only providing vague platitudes about what that footprint is.” Id. at 7. As to the second reason, Judge Andrews explained that “[t]he Beacham Reports do not discuss M2M device technology at all, let alone provide any sort of discussion about particular security features of M2M devices.” Id. at 8. Finally, as to the third reason, Judge Andrews noted that “the linchpin of Mr. Bluestein’s damages theory-that Beacham Report survey respondents who indicated a preference for using internal resources to manage their M2M products use the patented technology-is unsupported by anything other than Mr. Bluestein’s say-so.” Id. at 9. And because Mr. Bluestein’s opinion provided the foundation for Mr. Bero’s reasonable royalty analysis, Judge Andrews also excluded Mr. Bero’s damages testimony. Id. at 13.

Judge Andrews also determined that the opinion of plaintiff’s expert, Mr. Donohoe, regarding a running royalty rate should be excluded. Judge Andrews found that Mr. Donohoe’s opinion “improperly relies on licenses that are not economically comparable to the ’010 patent.” Id. at 16. Specifically, “Mr. Donohoe has failed to show how . . . two large, worldwide, standard-essential, FRAND patent portfolios are economically comparable to a license that the parties would have negotiated for a single asserted patent.” Id. at 15. Judge Andrews explained that “[t]he negotiations surrounding the Company A and Company B portfolio licenses were undoubtedly ‘radically different’ than the hypothetical negotiation that would have occurred between the parties for a license to a single patent.” Id. at 16.

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In Draeger Medical Systems, Inc. v. My Health, Inc., C.A. No. 15-248-SLR (D. Del. Mar. 3, 2016), Judge Sue L. Robinson denied Defendant’s motion to dismiss for lack of subject matter jurisdiction, in a declaratory judgment action for non-infringement and invalidity. Defendant, through a third party, had contacted Plaintiff regarding alleged infringement of its patent, and in that communication had informed Plaintiff of Defendant’s efforts to enforce its patent through other litigations, included a claim chart detailing how Plaintiff infringed the Defendant’s patent, and reserved Defendant’s rights to sue and seek damages. Plaintiff had not responded to the letter before filing this action. Defendant argued that there was no subject matter jurisdiction because the foregoing was insufficient to establish an actual case or controversy.

The Court disagreed, holding that the foregoing facts were sufficient based on “the Federal Circuit’s seminal case on this issue [Sandisk, where the Federal Circuit found] jurisdiction where defendant provided a ‘thorough infringement analysis’ prepared by legal experts, stated that plaintiff’s conduct infringed its patents, and claimed that plaintiff would need to pay a royalty for its infringing product.” Id. at 5. The fact that Defendant had informed Plaintiff of prior enforcement of its IP rights also supported a finding of jurisdiction. It was not enough that Defendant’s letter had indicated it was interested in resolution “without litigation.” Id. at 5-6. And, here, “[u]nder the totality of these circumstances, it does not weigh against jurisdiction that [Plaintiff] did not engage in licensing negotiations before initiating a lawsuit or [Defendant] remains interested in a negotiated resolution.” Id. at 6.

Accordingly, the Court denied the motion to dismiss.

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Magistrate Judge Burke recently issued a memorandum order resolving certain discovery disputes in a patent infringement case between Plaintiff GSK and Defendant Teva. There were two main categories of discovery in dispute. First, the parties disputed whether Teva should produce market analyses and sales forecasts as well as business analyses of Teva’s decision to switch from a Paragraph IV certification to a Section viii carve-out for its generic product. Judge Burke accepted GSK’s argument that the information was relevant to induced infringement and to other issues such as objective indicia of non-obviousness, despite Teva’s contention that such documents were irrelevant because “inducement of infringement . . . does not lie when the acts of inducement occurred before there existed a patent to be infringed.” Glaxosmithkline LLC, et al. v. Teva Pharmaceuticals USA, Inc., C.A. No. 14-878-LPS-CJB, Memo. Or. at 1-2 (D. Del. Mar. 3, 2016). Teva also argued that this discovery stretched back in time farther than six years prior to the complaint and were therefore not subject to discovery under the Delaware Default Standard for Discovery absent a showing of good cause. Judge Burke explained that “if the possible existence of some other relevant, non-produced documents was always enough to demonstrate good cause to abandon the Default Standard’s requirements, the Standard would be worth little.” Thus, due to the potential burden of an expansive search, Judge Burke found that good cause had been shown only for a targeted search of the two custodians most likely to have relevant documents dating back to 2007 and ordered the parties to confer about the parameters of that search. Id. at 3-4. Judge Burke also granted GSK’s request that Teva respond to an interrogatory seeking the facts and circumstances regarding its decision to substitute a Section viii carve-out for its Paragraph IV certification. Id. at 5-6.

Second, GSK also sought Teva’s internal analyses regarding manufacturing decisions and patent enforcement. Judge Burke found that these requests “even more clear[ly] . . . could amount to a fishing expedition.” GSK’s proffered explanation of the relevance of this discovery did not adequately counter the “burden the requested searches would impose upon Teva with the potential for little reward.” However, because GSK suggested that it could craft a narrower search, Judge Burked order the parties to confer regarding the potential for such a narrower approach. Id. at 4-5.

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In a series of related actions, Judge Gregory M. Sleet denied the plaintiff’s motion to lift a stay that had been implemented pending inter parties review, where now the PTAB had issued final decisions that were pending appeal to the Federal Circuit. E.g., Safe Storage LLC v. Dell Inc., C.A. No. 12-1624-GMS (D. Del. Mar. 11, 2016). Applying the same legal principles as had been applied to the original grant of the stay, the Court concluded that no relevant factors weighed in favor of lifting the stay. The plaintiff was a non-practicing entity and thus would not suffer a competitive disadvantage. “Statistically, the Federal Circuit likely will rule on the appeals by the end of this year,” and further, its final decision “will simplify the issues for trial, as the Federal Circuit may reverse the PTAB on some or all of the claims. Finally the early stage of litigation favors entering a stay.”  Id. at 1 n.1.

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