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In a recent Memorandum Order, Chief Judge Leonard P. Stark granted in part defendant’s motion to exclude the testimony of plaintiff’s damages expert. MAZ Encryption Technologies LLC v. Blackberry Corporation, C.A. No. 13-304-LPS (D. Del. Aug. 25, 2016). As Judge Stark explained, to calculate “his baseline estimate for damages,” the expert relied on a “previous license agreement involving the patent-in-suit.” Id. at 2. The previous license agreement, however, “was made in the context of settling a litigation dispute, and thus did not reflect the royalty the parties would have reached ‘just before infringement began.’” Id. at 2-3. As Judge Stark explained, “the amount of the previous settlement would need to be increased to arrive at the royalties that would have been agreed to in a hypothetical negotiation.” Id. at 3. The expert attempted to do so by “estimating the discount factor the parties used when negotiating the previous license agreement.” Id. The expert used the equation “Expected Damages= Settlement Value/Likelihood of Liability,” and arrived at his estimate of expected damages “by estimating the likelihood of liability at 40%.” Id. Judge Stark found that the expert’s “likelihood of liability” factor was unreliable:

[The expert’s] estimate for the likelihood of liability was not based on any facts relating to the merits of Plaintiff’s case. The estimate did not consider the nature of the patent-in-suit, the accused products, or either party’s litigation strategy. Instead, the estimate was based on a study that found that “patent holders tend to prevail approximately 40% of the time” in the District of Delaware. The Court agrees with [defendant] that [the expert’s] estimate approach is not reliable as it is not sufficiently tied to the particular facts of this case.

Id. at 3-4.

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In a recent post-trial opinion in this ANDA litigation, Judge Gregory M. Sleet found, inter alia, that (1) all asserted claims of the patents-in-suit are valid; (2) defendant’s proposed products induce infringement of the asserted claims of U.S. Patent No. 8,586,610 (the “’610 Patent”); and (3) defendant’s proposed products do not contributorily infringe the asserted claims the ’610 Patent. Vanda Pharmaceuticals Inc. v. Roxane Laboratories, Inc., C.A. Nos. 13-1973, 14-757-GMS (D. Del. Aug. 25, 2016).

Notably, Judge Sleet found certain claims of the ’610 Patent not invalid for failure to claim patentable subject matter pursuant to § 101. Id. at 16-20. Defendant argued that the ’610 Patent embodies laws of nature that it applies in a way that is routine and conventional. Id. at 17. Specifically, defendant contended that the ’610 Patent was directed to two laws of nature: “(1) that mutations in the CYP2D6 genes can alter enzymatic activity, and (2) that a patient’s CYP2D6 enzymatic activity affects their metabolism of iloperidone.” Id. Although Judge Sleet acknowledged that the ’610 Patent depends on laws of nature, he ultimately concluded that defendant failed to prove “by clear and convincing evidence that the precise test and the discovered results were routine or conventional.” Id. at 18-20. As Judge Sleet observed:

The court finds that while it may have been conventional to investigate for side-effects, Roxane has not proven by clear and convincing evidence that the precise test and the discovered results were routine or conventional. The court finds it persuasive that the dosage step in the ’610 Patent does not apply to all patients, but only a specific patient population based upon their genetic composition. The dosage step requires applying genetic tests in a highly specified way. Moreover, the process of using this genetic test to inform the dosage adjustment recited in the claims was not routine or conventional and amounted to more than a mere instruction to apply a natural relationship. This combination of elements is sufficient to ensure that the claims amount to significantly more than just a natural law.

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In a series of related actions, Judge Richard G. Andrews considered and denied Plaintiff’s Daubert motion to exclude Defendants’ expert as well as Defendants’ Daubert motion to exclude Plaintiff’s expert  Novartis Pharmaceuticals Corporation, et al. v. Breckenridge Pharmaceutical, Inc., C.A. No. 14-1043-RGA (D. Del. Aug. 18, 2016, amended Aug. 25, 2016).

The Court denied the motions without prejudice to the parties’ renewing their objections to the expert testimony at trial, and made additional specific observations regarding these motions.  First, as to Defendants’ expert, the Court expected the expert would be able to testify about whether a person of ordinary skill would have been motivated to make a certain decision, explaining that “[s]imply because he could not identify where all his data came from at deposition does not mean he will be unable to do so at trial.”  Id. at 1.  But the Court was “dubious” as to whether Defendants could succeed on certain of their invalidity theories.  Id.  As to Plaintiff’s expert, the Court did not anticipate that he would have to conduct independent studies in order to opine on obviousness to combine.  Id. at 2.  Further, the Court disagreed that the expert misstated the applicable law at his deposition, but “even if he did, that is not a reason to exclude his trial testimony.”  Id. at 2-3.

Novartis Pharmaceuticals Corporation, et al. v. Breckenridge Pharmaceutical, Inc., C.A. No. 14-1043-RGA (D. Del. Aug. 18, 2016, amended Aug. 25, 2016)

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In a recent Memorandum Order, Judge Richard G. Andrews denied without prejudice defendants’ motion to declare the action an exceptional case pursuant to 35 U.S.C. § 285. Sprint Communications Company L.P. v. Comcast Cable Communications, LLC, C.A. No. 12-1013-RGA (D. Del. Aug. 18, 2016). The jury had initially found that defendants infringed certain of plaintiff’s patents, and awarded plaintiff $27.6 million in damages. Id. at 1. Judge Andrews subsequently granted defendants’ motion for judgment as a matter of law and, in the alternative, granted defendants’ motion for a new trial on infringement. Id. at 1-2. Plaintiff appealed, and the appeal is pending.

Judge Andrews denied the motion without prejudice for several reasons:

One, a Federal Circuit decision on the appeal is likely to make the resolution of this motion easier. It is entirely possible that the Federal Circuit could reverse the judgment in this case, thereby mooting the fees motion. It is possible that the Federal Circuit could affirm, and indicate perhaps indirectly through what it writes – that this is a close case. It is also possible that the Federal Circuit could issue a Rule 36 affirmance. A Rule 36 affirmance would be unlikely to be, of much assistance. Overall, deciding the issue in light of the decision on appeal is likely to make the decision easier and better.

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In a recent Report and Recommendation, Magistrate Judge Sherry R. Fallon recommended denying foreign defendants TCL Communication Technology Holdings Limited (“TCL Holdings”) and TCT Mobile Limited’s (“TCT Hong Kong”) motion to dismiss for lack of personal jurisdiction. Godo Kaisha IP Bridge 1 v. TCL Communication Technology  Holdings Limited, C.A. No. 15-634-SLR-SRF (D. Del. Aug. 17, 2016). Judge Fallon found that personal jurisdiction was proper under various sections of the Delaware long-arm statute. First, Judge Fallon found that jurisdiction was proper under subsection (c)(1) because “TCT Hong Kong and TCL Holdings made direct sales of Accused Products to Delaware customers through their respective websites,” and therefore transacted business in Delaware. Id. at 9-10. Judge Fallon also found that section (c)(3) was satisfied because TCT Hong Kong and TCL Holdings caused tortious injury in Delaware, as they caused to be sold through a website or an Amazon storefront accused products to Delaware customers. See id. at 10. Finally, Judge Fallon found that jurisdiction was proper under a “dual jurisdiction” or “stream of commerce” theory, which combines subsections (c)(1) and (c)(4). Under this theory, Judge Fallon concluded that TCL Holdings and TCT Hong Kong “intended to serve the United States market without excluding Delaware, thereby satisfying the first prong of the dual jurisdiction analysis.” Id. at 13. Judge Fallon noted that “[t]he record in the present case establishes TCT Hong Kong’s intent to serve the Delaware market by manufacturing and selling phones, which it actively markets in the United States and distributes through national retailers like Best Buy.” Id. at 12.

Judge Fallon also found that exercising jurisdiction over the TCL Holdings and TCT Hong Kong comported with due process. Judge Fallon explained that evidence showed “TCL Holdings and TCT Hong Kong purposefully availed themselves of the privilege of conducting business in Delaware by introducing their products in the United States market with the knowledge that some of those products would end up in Delaware and they should anticipate being sued in Delaware.” Id. at 16.

Godo Kaisha IP Bridge 1 v. TCL Communication Technology Holdings Limited, C.A. No. 15-634-SLR-SRF (D. Del. Aug. 17, 2016).

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Judge Richard G. Andrews recently decided motions in limine in advance of an August 26 pretrial conference in Impax Laboratories Inc., et al., v. Lannett Holdings Inc., et al., No. 14-984-RGA (D. Del. Aug. 24, 2016).  Judge Andrews excluded one of defendants’ witnesses after finding he was inadequately disclosed and “[d]efendants ma[d]e no meaningful proffer of what [the witness] might say.”  Id. at 1-2.   As to another witness, Judge Andrews did not exclude him, but ordered the defendants make him available for deposition prior to trial.  Id. at 2.  Judge Andrews also precluded the parties’ experts from testifying as to the plain and ordinary meaning of the preambles of the claims, which the Court previously found limiting but did not construe.  Id. at 2-3.

Impax Laboratories Inc. v. Lannett Holdings Inc., No. 14-984-RGA

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Judge Sue L. Robinson recently issued an order holding that, absent the parties’ consensual resolution to the dispute over the sufficiency of defendants’ production, the Court will “use an adverse inference jury instruction regarding infringement[.]” Intellectual Ventures I LLC v. Ricoh Americas Corporation, et al., No. 13-474-SLR-SRF (D. Del. Aug. 17, 2016).  Judge Robinson previously expressed concern that defendants were attempting to use affirmative evidence from its non-party parent, yet prevented discovery by plaintiff of other evidence.  Here, Judge Robinson concluded that the court could not assess whether defendants’ document production was sufficient because apparently defendants’ parent “made its own determinations as to what documents were relevant, without regard either to plaintiff’s document requests or any feedback from the defendant.”  Id. at 2.  Judge Robinson noted that “it is not generally up to the accused infringer (or its parent) to determine in the first instance what information is sufficient to prove (or not) infringement and, therefore, the court cannot say with any degree of confidence that document production from [defendants’ parent] has been adequate or complete[.]”  Id. at 3.  While Judge Robinson indicated the Court would use an adverse inference, the Court would not grant summary judgment of infringement.  Id.

Intellectual Ventures I LLC v. Ricoh Americas Corporation, No. 13-474-SLR

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In Princeton Digital Image Corporation v. LLC, et al., C.A. No. 13-408-LPS (D. Del. Aug. 16, 2016), Chief Judge Leonard P. Stark granted Plaintiff’s motion to set aside the Clerk’s entry of default, but also awarded sanctions to third-party intervenor Adobe for Plaintiff’s failure to answer its complaint in this action.

Defendants in this action are customers of Adobe, and Adobe had successfully moved to intervene in this and related suits due to its customers’ requests for indemnity. Id. at 2. Adobe then filed a complaint in intervention in this and related cases. While Plaintiff answered the complaint and counterclaimed in related suits, it did not do so in this action. Consequently, the Clerk had entered default against Plaintiff. Id. at 2-3.

The Court granted Plaintiff’s motion to set aside the entry of default, but required Plaintiff to “only assert[] defenses that are identical to those asserted in the Related Suits,” except that Plaintiff was prohibited from asserting a counterclaim that had already been dismissed in the related actions. Id. at 4. The Court explained that “[g]iven the identicality of the claims and defenses in this case and the claims and defenses in the Related Suits, there are no significant concerns of inefficiency or prejudice that would warrant deciding the issues in this case in Adobe’s favor based solely on [Plaintiff’s] default.” Id. at 4-5.

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Judge Andrews recently granted a motion filed by several defendants under Rule 12(c) seeking to invalidate the patents-in-suit as ineligible under 35 U.S.C. § 101. The Court found that two of the patents-in-suit “are directed to the abstract idea of (1) sending information, (2) directing the sent information, (3) monitoring receipt of the sent information, and (4) accumulating records about receipt of the sent information.” Two-Way Media Ltd. v. Comcast Cable Communications, LLC, et al., C.A. No. 14-1006-RGA, Memo. Op. at 8-10 (D. Del. Aug. 15, 2016). Judge Andrews further explained that there was no “inventive concept” sufficient to rescue this abstract idea because, although the specifications pointed to a specific system architecture as the innovation in question, “[n]one of the claims . . . recite or refer to anything that could be described as an architecture.” Id. at 10-11. Two other patents-in-suit were similarly deficient. Id. at 12-15.

Judge Andrews’ decision involved two interesting procedural points that movants may wish to note. First, the patentee argued that the “motion is premature because claim construction is necessary to determine patent eligibility under § 101” but Judge Andrews issued an order requiring the patentee to identify “the claim terms it contends need construction and . . . its proposed constructions.” The Defendants argued that those constructions did not alter the § 101 analysis and Judge Andrews adopted the constructions for purposes of the motion. Id. at 5-6.

Second, the patentee argued that the Court should consider materials from prior proceedings before the PTO and in other litigations, which arguably “demonstrate[] how [its] invention[s] solved specific technical problems and added significant inventive concepts over the prior art.” But Judge Andrews found the materials in question “irrelevant to the § 101 motion for judgment on the pleadings [because] [n]one of the materials addresses a § 101 challenge to claims of the asserted patents” but rather the “novelty and nonobviousness of the claims under§§ 102 and 103, [which] does not bear on whether the claims are directed to patent-eligible subject matter under § 101, [as well as the] history of conception of the invention and commercial embodiments of the invention. Id. at 7.

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In Chief Judge Leonard P. Stark’s Markman opinion in a series of related actions brought by Plaintiffs Intellectual Ventures I and II, the Court concluded that several disputed terms were indefinite, and further concluded that several terms appearing in the preambles of the claims were limiting. E.g., Intellectual Ventures I LLC v. AT&T Mobility, et al., C.A. No. 13-1668-LPS (D. Del. Aug. 12, 2016).

The Court concluded that the term “optimize” in the larger phrase “allocating means for allocating resources to said IP flow … so as to optimize end user application IP QoS requirements of said software application” was indefinite because the specification “indicate[d] that QoS is subjective and that QoS can vary from user to user based on individual preferences. . . . This subjective, user-based understanding would make it difficult, if not impossible for a POSA to ascertain, with reasonable certainty, whether the claim limitation is satisfies by any particular embodiment. Id. at 20-21. The Court also agreed with Defendants that “terms of degree” used in another patent rendered the claims indefinite, as a POSA “would not understand the terms ‘large’ and ‘small’ with ‘reasonable certainty,’” and the Court found the testimony of Defendant’s expert persuasive on this point. Id. at 34-35 (citations omitted).

As to terms in the preambles, the Court concluded that the term “frequency hopping” in a preamble was limiting where the preamble was relied on to distinguish the invention from the prior art. Plaintiff had done so during an inter partes review proceeding and, furthermore, this term appeared “in the patent’s title and throughout the specification. The term is needed to ‘give life, meaning and vitality to the claim.’” Id. at 10. As to a different term appearing in another patent (“application aware resource allocator at the MAC laywer / application-aware media access control (MAC) layer”), again the Court concluded the term was limiting in a preamble where the patentee relied on the term during prosecution to distinguish over prior art. Id. at 16.

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