Judge Richard G. Andrews recently granted in part a motion to dismiss, finding that the complaint’s allegations of contributory infringement, joint infringement, willful infringement and indirect infringement were insufficient under Fed. R. Civ. P. 12(b)(6). MIH International LLC v. Banyan Health Care Products Inc., C.A. No. 13-1330-RGA (D. Del. May 28, 2014). The Court denied the motion to dismiss direct infringement claims on the basis that the complaint complied with Form 18, but encouraged the parties to work together to narrow their dispute, and to exchange documents that might help lead to a quick resolution of the dispute since, the Court inferred, the damages at stake were very low and based on only 6 months of infringement. Based on the low damages at stake, Judge Andrews expressly invited the parties to request early mediation if it would be helpful. Id. n. 1, 2.
In a recent oral order, Judge Leonard P. Stark denied defendants’ motion to sever and stay two related actions with respect to a patent that is currently in reexamination proceedings. Intellectual Ventures I LLC v. Symantec Corp., C.A. No. 10-1067-LPS; Intellectual Ventures I LLC v. Trend Micro Incorporated, et al., C.A. No. 12-1581 (D. Del. June 3, 2014). The Court explained that a stay would not provide “complete” simplification, and this factor only slightly favored a stay since only two out of the four patents are involved in reexamination, and therefore a stay may actually increase the number of trials the Court would eventually preside over. The case was also far along, with discovery closed, trial dates set (by this same order), and both sides having already invested “enormous resources.”
The Court explained that it was also “not persuaded that Defendants are not seeking an unfair tactical advantage, and Defendants have articulated no persuasive grounds for finding they will be prejudiced by proceeding to trial on essentially the schedule they themselves very recently proposed, further disfavoring a stay. Plaintiffs would be prejudiced from a stay, given the possibility of additional trials and the consequent delay in achieving resolution of this litigation.”
Judge Renée Marie Bumb, sitting by designation, recently considered Mylan Rule 60(b) motion and motion to enforce a settlement agreement with Endo, reached minutes before the Court issued its post-trial opinion in favor of Endo. Endo Pharms. Inc. v. Mylan Pharms Inc., C.A. No. 11-717-RMB (D. Del. Apr. 8, 2014 – unsealed June 2, 2014). After the Court issued its opinion in favor of Endo, Mylan filed a letter informing the Court that the parties had reached a settlement “in principle.” Id. at 3. Endo responded denying that the parties had reached an agreement, which prompted Mylan to seek the Court’s intervention and to file a Rule 60(b) motion for relief from the Court’s post-trial opinion and order. Id.
After trial, the Court instructed the parties to meet and confer regarding settlement. The parties did that, resulting in the exchange of a draft settlement and license agreement, exchanged while Mylan awaited final management approval of Endo’s offer. Id. at 12. The parties communicated this to the Court during a status conference held a few days prior to the Court issuing its post-trial opinion and order. Id. at 13. Shortly after the status conference, Mylan received final approval to accept Endo’s offer. Mylan contacted Endo via telephone and formally accept the offer, but 20 minutes later the Court issued its opinion and order. At that time, Endo informed Mylan that “nothing had been reduced to writing, and, in [Endo’s] view, they did not have an enforceable agreement.” Id. at 18.
Regarding Mylan’s Rule 60(b) motion, Judge Bumb found that Mylan “established extraordinary circumstances justifying relief from final judgment” because the parties “entered into an oral settlement agreement prior to entry of the Court’s judgment.” Id. at 20. Judge Bumb found that the parties entered into an oral settlement agreement based on the following facts: (1) Endo made a “final” offer of settlement to Mylan, proposing three terms; (2) Endo never withdrew or amended its offer; and (3) Mylan accepted the offer, reciting the three terms, to which Endo responded “that’s great.” Id. at 24. Judge Bumb found that these facts demonstrated an intent to be bound “as it reflects [Endo’s] understanding that an agreement had been reached as to the three terms[.]” Id. at 24-25. Endo argued that the oral agreement could not be enforced because the parties intended the agreement to be formalized in a written contract. Id. at 27. Judge Bumb disagreed. “Although the parties clearly intended that a written contract would ultimately be drafted, the record contains no evidence indicating that the parties made a settlement contingent upon the execution of a written agreement.” Id. at 28. The Court also determined that the agreement was enforceable because the three key terms agreed to were the “essential terms” required by the parties, even though other terms had not been completely worked out. Id. at 29-37.
In EON Corp. IP Holdings, LLC v. Flo TV Inc., et al., C.A. No. 10-812-RGA (D. Del. May 27, 2014), Judge Richard G. Andrews denied defendant FLO TV Inc.’s (“FLO TV”) motion for attorney’s fees, which followed the Court’s grant of summary judgment in favor of defendants based on the court finding eight computer-implemented means-plus-function terms in asserted U.S. Patent No. 5,663,757 (“the ’757 Patent”) indefinite. Id. at 1-2.
Judge Andrews first discussed the Supreme Court’s recent decisions finding the Federal Circuit’s test for attorney’s fees under 35 U.S.C. § 285 too rigid. As Judge Andrews explained, the Supreme Court defines an “exceptional case” under § 285 as “simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.” (citing Octane Fitness, LLC v. ICON Health & Fitness, 134 S. Ct. 1749 (2014) and Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744 (2014)) (emphasis added). Judge Andrews further explained that the Supreme Court’s more flexible standard permits district court judges to exercise their discretion on case-by-case basis and to consider the totality of the circumstances when considering an award of attorney’s fees. Judge Andrews found that neither definition of an “exceptional case” set forth by the Supreme Court was satisfied. Id. at 2-3.
Specifically, Judge Andrews found that EON did not litigate the case unreasonably. Id. at 4. According to Judge Andrews, the “main thrust of FLO TV’s argument appears to be that EON should have dropped the case, or entered into a settlement, because the potential recovery from FLO TV would be dwarfed by the costs of litigation.” Id. Judge Andrews had outlined in detail how plaintiff EON Corp. IP Holdings, LLC’s (“EON”) prospect of “obtaining a large monetary judgment from FLO TV steadily declined as the case progressed.” Id. at 1-2. Nevertheless, Judge Andrews found FLO TV’s argument to fail for at least two reasons. First, arguments by both sides “regarding the size of the potential recovery [were] speculative and [could not] form the basis for an award of attorney’s fees,” given that liability and damages were bifurcated, and no discovery had been conducted with respect to damages. Id. at 4. Second, Judge Andrews noted that the Court is “unaware of any de minimis exception for infringement.” Id. That is, “[i]t cannot be the case that a plaintiff may be subjected to monetary sanctions for failing to drop a case against a defendant if the cost of litigation exceeds the potential recovery.” Id. Judge Andrews did leave open the possibility, however, that “a party’s approach to settlement [may be] so unreasonable as to justify an ‘exceptional’ finding.” Id.
While it did not appear that FLO TV made any arguments to this end, Judge Andrews also noted that “[t]he substantive strength of EON’s case was not so conspicuously deficient as to justify the award of attorney’s fees.” Id. at 3. As Judge Andrews explained, the case “turned on a complex and evolving area of law-the construction of computer-implemented means-plus-function terms,” and that the decision “was not an easy one.” Id. In this regard, Judge Andrews noted that the Court “heard oral argument, scheduled a supplemental evidentiary hearing, and ordered post-trial briefing on the issue.” Id. Additionally, the fact that EON is appealing the Court’s decision to the Federal Circuit suggested to Judge Andrews that EON “maintains faith in the strength of its position.” Id.
In Pregis Innovative Packing Inc. v. Sealed Air Corp., C.A. No. 13-1084-LPS (D. Del. May 28, 2014), Judge Leonard P. Stark construed the disputed term “consisting essentially of” in U.S. Reissue Patent No. 38,745 and U.S. Patent No. 6,607,803 to mean “consisting of the structure, material, or acts that are recited in a claim, together with any other structure, material, or acts whose inclusion does not materially affect the basic and novel properties of the invention defined in the claim.”
In two related actions, Interdigital Communications, Inc., et al. v. ZTE Corp., et al., C.A. No. 13-009-RGA; Interdigital Communications, Inc., et al. v. Nokia Corp., et al., C.A. No. 13-0010-RGA (D. Del. May 29, 2014), Judge Richard G. Andrews recently construed a disputed term within U.S. Patent No. 7,286,847. This Order is a continuation of the Court’s prior claim construction opinion in these cases; following that opinion, the parties requested construction of “circuit” and “[re-]synchroniz[ed/ing] to the/a pilot signal.”
The Court construed “circuit,” but reserved judgment on “[re-]synchroniz[ed/ing] to the/a pilot signal.”
In a recent oral order, Judge Leonard P. Stark made a number of rulings relating to plaintiff’s motion for a preliminary injunction and the hearing on the motion. M/A-Com Technology Solutions Holdings, Inc. v. Laird Technologies, Inc., C.A. No. 14-181-LPS (D. Del. May 28, 2014). The Court denied the defendant’s requests to postpone and to take depositions prior to the hearing, explaining that “the circumstances giving rise to the preliminary injunction motion justify maintaining the case on the present schedule.” The Court also denied the defendant’s motion to strike supplemental declarations and arguments from plaintiff’s reply. “The Court is further persuaded that Plaintiff’s reply brief properly responded to Defendant’s answering brief, that Plaintiff could not anticipate all of the arguments Defendant would make in its answering brief, and Plaintiff is entitled to use evidence obtained during discovery to support its preliminary injunction motion.” The Court did grant defendant’s request to file a sur-reply brief in response.
Judge Richard G. Andrews recently dismissed declaratory judgment FRAND counterclaims in two related actions against ZTE and Nokia for lack of subject matter jurisdiction. Interdigital Communications, Inc., et al. v. ZTE Corp., et al., C.A. No. 13-009-RGA; Interdigital Communications, Inc., et al. v. Nokia Corp., et al., C.A. No. 13-0010-RGA (D. Del. May 28, 2014).
Both defendants had previously participated in licensing negotiations with plaintiff, but the negotiations had broken down or were delayed. The FRAND (fair, reasonable, and non-discretionary terms) declaratory judgment counterclaims in both cases requested a finding that plaintiff did not offer a FRAND rate to the defendants during these negotiations, and also asked the Court to determine a FRAND rate. Nokia’s counterclaims also requested a determination of FRAND license terms. Id. at 3.
Plaintiff moved to dismiss both sets of counterclaims, arguing that their adjudication would be of no practical help or utility, and for that reason, the Court lacked subject matter jurisdiction. Specifically, “if the Court were to determine a FRAND rate for the hundreds of patents brought before it as part of the declaratory judgment action, there would remain disputes about whether particular patents are or are not essential. Furthermore, [plaintiff] argues that neither Nokia nor ZTE have made firm commitments to sign a license based on what the Court determines would be a FRAND rate, but instead have only ‘averred in their counterclaims that their willingness to pay under a license is contingent on findings of validity, essentiality, and infringement of [plaintiff’s] patents.’” Id. at 4-5 (citations omitted). Defendants countered that determination of a FRAND rate would, in fact, be useful, noting that Third Circuit precedent does not require a declaratory judgment to resolve all issues for there to be subject matter jurisdiction. They also argued that the Court’s determination would “alleviat[ e] the uncertainty, insecurity, and controversy between the parties with respect to [plaintiff’s] right to a FRAND royalty.” Id. at 5. ZTE also argued that it was “committed” to accepting a license at a determined FRAND rate, regardless of finding on infringement or validity. Id. at 5-6.
However, the Court was “far from convinced that the trial that would be necessitated by the declaratory judgment would serve any useful purpose.” Id. at 6. First, it was unclear how the Court could enforce its determined FRAND rate; instead, the rate would only “give a data point from which the parties could continue negotiations.” Id. at 6. Second, determining this rate would not necessarily lead to a patent license because there were other license issues to negotiate between the parties, any of which could hold up resolution. Id. at 6. The Court also found that it was “highly dubious” that it could determine a FRAND rate efficiently, “considering that there are 500 or so possibly relevant patents.” Id. Therefore, finding a FRAND rate would have little utility and serve little to no useful purpose.” Id.
As to the additional request for the Court to determine whether plaintiff had offered a FRAND rate, the Court also concluded this exercise had “little to no useful purpose.” Id. at 6-7. Once a FRAND rate was determined, “the Court would need to determine whether such offer was actually made. Similar to the determination of the FRAND rate itself, the only purpose of this would be to alter the current negotiating power between the parties.” Id. at 7. Furthermore, “any impact that this determination would have on the patents-in-suit is encompassed within the multitude of affirmative defenses that both Nokia and ZTE assert.” Id. The asserted defenses that addressed FRAND issues included patent misuse, breach of contract, unclean hands, and the existence of an express or implied license. Id. at 7 n.2.
As a result, the Court granted plaintiff’s motion to dismiss the FRAND counterclaims for lack of subject matter jurisdiction.
In Viiv Healthcare Company, et al. v. Mylan Inc., et al., C.A. No. 12-1065-RGA (D. Del. May 23, 2014), plaintiffs requested leave to submit the testimony of two of its 30(b)(6) witnesses by deposition in lieu of live trial testimony. Both witnesses resided more than 100 miles from the location of trial, although counsel did acknowledge that, should their request be denied, it would be possible to bring the witnesses to testify live. Id. at 2.
Under these circumstances, the Court denied plaintiffs’ request. First the Court noted that “[a]side from showing that the witnesses reside more than 100 miles from the location of the trial, Plaintiffs have failed to demonstrate why they have been unable to procure the witness’s presence for live testimony at trial. Parties are not required to take active steps to procure witnesses who would otherwise not be within 100 miles of the location of the trial. . . . However, this failure to procure may be taken into account when courts exercise their discretion regarding whether to admit the deposition testimony.” Id. at 2.
Additionally, even if the witnesses were unavailable under FRCP 32(a)(4)(B), the Court expressed concerns about admitted 30(b)(6) deposition testimony’s conflict with the rules of evidence. The Court explained that “[w]here Rule 30(b)(6) testimony is sought to be admitted at trial in lieu of live testimony pursuant to Rule 32(a)(4), it may be in conflict with both Rule 32(a)(I)(B) and Federal Rule of Evidence 602” and a Court must weigh the purposes of Rule 30(b)(6) against “the real dangers of admitted testimony based on hearsay.” Id. at 3 (citations omitted). Here, one witness’s testimony had relied at least in part on another employee’s knowledge, and thus “there is a substantial question about the reliability of his testimony.” Id. at 4. The other witness’s “testimony was also taken pursuant to 30(b)(6), and because there has been no evidence regarding the extent of his personal knowledge, there are similar issues of reliability.” Id. The Court distinguished the present case from cases in which 30(b)(6) deposition testimony was allowed because these were party-witnesses and the “actual scope of either” witness’s personal knowledge had not been established. See id. at 3-4.
Finally, the Court noted that plaintiffs could renew their request at trial when the court “may have more context to evaluate the request.” Id. at 4-5.
In a recent case, plaintiff moved for voluntary dismissal shortly after the defendant filed its answer. Arunachalam v. Fulton Financial Corp., C.A. No. 13-1333-RGA (D. Del. May 28, 2014). Defendants refused to stipulate to dismissal, arguing that because plaintiff surrendered standing after the litigation was initiated, dismissal should be conditioned on payment of the fees defendant incurred in defending against the complaint. Id. at 1. Judge Andrews granted plaintiff’s motion without an award of fees. Judge Andrews noted that it did not approve of plaintiff’s conduct “in not dismissing the lawsuit once she surrendered standing to bring it” (id. at 1 n.1); but fees were not appropriate because dismissal was sought shortly after defendants answered the complaint, and the fees would likely have been incurred even if plaintiff voluntarily dismissed the suit when the patents were transferred in November 2013. Id. at 1-2. Moreover, a new lawsuit with a plaintiff who has standing had been filed and the expenses will not be “redundantly incurred” in the new suit. Id. at 2.