In a recent order, Chief Judge Gregory M. Sleet denied defendants’ motion to dismiss plaintiff’s claims for induced, contributory, and willful infringement for failure to state a claim. Lifescreen Sciences LLC v. C.R. Bard, Inc., C.A. No. 13-129-GMS (D. Del. May 22, 2014). Specifically, Judge Sleet found that plaintiff’s complaint sufficiently pleads induced and contributory infringement, alleging that defendants provide “its Meridian® Vena Cava filter – which is not a staple of commerce that is suitable for substantial non-infringing use – along with promotional and instructional materials to its customers and end-users.” Judge Sleet further explained that plaintiff alleges that defendants’ end-users themselves directly infringe by, inter alia, “using the infringing medical devices.” Further, while Judge Sleet noted that defendants had knowledge of the patents-in-suit at least upon service of the Complaint, plaintiff also alleges that defendants had knowledge prior to the filing on the complaint based on “citation to [the] patents-in-suit as prior art during the prosecution of its own patents in the same field of technology.” Judge Sleet thus concluded that the complaint sufficiently pleads willful infringement, given defendants continued infringing activity despite knowledge and notice of the patents-in-suit. Id. at 2 & n.1
Chief Judge Gregory M. Sleet recently denied motions to transfer to various districts in a series of related actions against Endologix, W.L. Gore, Medtronic, Cook Incorporated, and C.R. Bard. E.g., Lifeport Sciences LLC v. Endologix, Inc, C.A. No. 12-1791-GMS (D. Del. May 22, 2014). “[T]he District of Delaware is uniquely positioned to resolve the related patent infringement actions.” Id. at 3. At least the case against W.L. Gore, a Delaware corporation with a Delaware principal place of business, would have to stay in Delaware , and plaintiff had asserted the most patents against this defendant; there was significant overlap between the patents asserted in this action and the patents asserted in actions involving defendants moving to transfer. Id. at 3 n.2. As a result, transferring some of these cases would “require identical patents to be litigated in two separate courts, which would increase the burden on the judiciary and relevant third-party witnesses. In addition, all the time and cost efficiencies of litigating related actions together, such as coordinating discovery and depositions will be lost, and replaced with the risk of inconsistent claim constructions, duplicative discovery, and duplicative costs.” Id. As a result, the Court denied the motions to transfer in the Endologix, Medtronic, and Cook actions.
The 2014 FBA Annual Luncheon will be held on Wednesday, June 11, 2014, in the Gold Ballroom at the Hotel DuPont. Registration will begin at 11:30, and lunch will begin at noon.
This year’s annual luncheon will honor the tenures of outgoing Chief Judges of the District Court and Bankruptcy Court, Hon. Gregory M. Sleet and Hon. Kevin Gross; as well as the transition to incoming Chief Judges, Leonard P. Stark and Brendan L. Shannon.
The cost of the event is $60 per person for FBA members (or $450 for a reserved table of 8); $50 per person for public-sector FBA members (or $360 for a reserved table of 8); and $75 per person for non-FBA members.
RSVP by June 4, 2014, to Amy Vari, at firstname.lastname@example.org (302-298-0706). You may send checks made payable to the Federal Bar Association to Amy at:
Shaw Keller LLP,
300 Delaware Avenue
Wilmington, DE 19801
We hope to see you there!
Judge Richard G. Andrews recently denied a defendant’s motion for leave to amend its answer to assert invalidity counterclaims. M2M Solutions LLC v. Sierra Wireless America, Inc., et al., C.A. No. 12-30-RGA (D. Del. May 15, 2014). Judge Andrews acknowledged that leave to amend under Rule 15 should be granted “when justice so requires,” but explained that in this case the defendant also had to comply with the scheduling order entered under Rule 16. Here, the defendant did not move to amend until more than 12 months after the scheduling order’s deadline for amended pleadings. The Court found that the defendant “failed to show that the Court’s Scheduling Order could not ‘reasonably be met despite  diligence’ on [defendant’s] behalf.” Id. at 2. The motion was therefore denied pursuant to Rule 16.
The Court explained that the defendant asserted mirror image invalidity affirmative defenses in a timely manner, and found no reason why the defendant could not have alleged its invalidity counterclaims at that time. Id. As a result, Rule 16 aside, Judge Andrews explained that denial would also be appropriate under Rule 15, because the defendant unduly delayed filing a motion for leave to amend. Id. at 3.
Judge Sue L. Robinson recently issued a claim construction decision for three patents relating to real-time online transactions. Pi-Net Int’l Inc. v. JPMorgan Chase & Co., C.A. No. 12-282-SLR (D. Del. May 14, 2014). The following claim terms appearing in one or more of U.S. Patents No. 8,108,492, 5,987,500, and 8,037,158 were considered by the Court:
“value-added network (VAN) switch.” (found to be indefinite)
“switching.” (found to be indefinite)
“service network.” (found to be indefinite)
“point-of-service application[s]” and “transactional application[s]”
“web application” and “network application”
“said user application”
“back-end transactional application[s],” and “the selected back-end transactional application:”
“a routed transactional data structure that is both complete and non-deferred, in addition to being specific to the point-of-service application:”
“keeping a transaction flow captive:”
“value-added network service provider:”
“value-added network system:”
The Court also construed several means-plus-function claim terms:
“means for switching to a transactional application in response to a user specification from a network application.”
“means for transmitting a transaction request from said transactional application.”
“means for processing said transaction request.”
“computer system executing the back-end transactional application for processing the transaction request in real-time.”
The Court found each of these mean-plus-function claim terms indefinite because the the specification failed to provide sufficient structure or an algorithm to disclose how the function is performed.
In a separate opinion, and as a result of the Court’s rulings on claim construction, the Court granted the defendants’ motion for summary judgment of invalidity for indefiniteness, and also for lack of enablement, and lack of written description.
In Sunpower Corporation v. Panelclaw, Inc., C.A. No. 12-1633-GMS (D. Del. May 16, 2014), Chief Judge Gregory M. Sleet granted defendant’s motion to stay pending inter partes review (“IPR”). Finding that plaintiff would not be unduly prejudiced by a stay, Judge Sleet first explained that any delay in defendant’s IPR filing was not due to defendant’s dilatory intent, but rather the result of plaintiff’s “own delay and settlement discussions.” Id. at 1-2. Specifically, Judge Sleet noted that while defendant had requested from plaintiff what claims it intended to assert via e-mail, plaintiff did not disclose that information until more than five months later with the service of its claim charts. Id. at 2. Judge Sleet further noted that defendant had filed its motion to stay two weeks after its IPR petitions. Id. at 3. Judge Sleet also found that the early stage of the IPR did not necessarily “counsel against granting stay, . . . . since any stay would be lifted by August 2014 if [defendant’s] IPR petitions are not granted.” Id. Notably, Judge Sleet found that the parties are not direct competitors. Id.
Judge Sleet found that the IPR process would likely simplify the issues before the Court. Even though the issues presented in the IPR did not completely overlap with those in the litigation, the case could be “much simplified or ended altogether” if claims were canceled. Id. at 4. Judge Sleet also pointed to the fact that if the claims were amended through the IPR, it would be “preferable to know what those amendments are prior to devoting substantial time and effort to claim construction, summary judgment motions, expert reports, and trial.” Id. at 4. Judge Sleet also noted that the Court could still benefit from the PTAB’s expertise in the event the claims survived the IPR, and that the IPR’s estoppel effect could further simplify matters for the Court. Id. at 4.
Judge Sleet found that the early stage of the litigation also favored stay, noting that there is “no case scheduling order, document production has yet to occur, and no trial date has been set.” Id. at 5.
Following consideration of the parties’ letters and a discovery conference on the issues, Judge Richard G. Andrews ordered that (i) the number of claims plaintiff may assert be limited to eight (8) per patent, and that (ii) defendant submit a proposed order and supporting letter specifying the documents, which are in the possession of a third party, that plaintiff be required to produce. Agincourt Gaming LLC v. Zynga Inc., C.A. No. 11-720-RGA (D. Del. May 14, 2014). The parties’ redacted letters filed on these issues highlight the parties’ disputes. See D.I. 127 (Defendant’s Redacted Opening Letter); D.I. 130 (Plaintiff’s Redacted Responsive Letter).
As to the issue regarding the number of asserted claims, plaintiff had initially asserted fifty-five (55) claims across three patents. (D.I. 127 at 2.) Defendant claimed that plaintiff had represented that it did not intend to present all of those 55 claims to the jury. (D.I. 127 at 2.) Plaintiff agreed that it would consider dropping certain claims depending on the number of claim terms defendant identified for construction. (D.I. 127 at 3; D.I. 130 at 3.) Defendant identified 40 terms for construction, but plaintiff found many of the identified terms were non-technical, and therefore had no “intrinsic basis for specialized definition.” (D.I. 130 at 3.) Plaintiff thereafter requested that defendant pick twenty (20) of the (40) identified terms, and further asserted it would “elect claims to get to 10.” (D.I. 130 at 3.)
At that point, the parties reached an impasse. Defendant requested that the Court order plaintiff to narrow the number of claims to “5 per patent” before the “parties expend resources on claim construction for claims that will be dropped.” (D.I. 127 at 3.) Following the discovery conference, Judge Andrews granted defendant’s request in part, ordering that plaintiff may elect “no more than eight claims from each of the asserted patents.” (D.I. 125). Judge Andrews did note in the Court’s Order, however, that “[u]pon a showing of diligence, and with due consideration for prejudice, Plaintiff may request to alter the election of claims.” Order at 1.
The discovery issue addressed whether plaintiff would be required to produce documents in the possession of a third party, Bally Gaming, Inc. (“Bally”), from whom plaintiff acquired a portion of its multi-patent family. (See D.I. 127 at 1-2; D.I. 130 at 1-2.) On this issue, the parties’ dispute centered around whether plaintiff had “control” over Bally—that is, the legal right to obtain the documents required on demand—based on the Patent Sale Agreement (“PSA”) plaintiff and Bally entered into. (See D.I. 127 at 1-2; D.I. 130 at 1-2.) Defendant asserted that plaintiff’s reliance on a “restrictive definition” of the term “Documents” found in the PSA was improper. (D.I. 127 at 2.) Following the discovery conference, Judge Andrews provided a very specific order:
“The Defendant should submit a proposed order that specifies what the Plaintiff should be ordered to produce. The Defendant should consider the proposed order as an ‘all-or-nothing’ request. If the Court decides it is overbroad, the Court may well deny it in its entirety just for that reason. The Defendant should also submit a separate letter that explains, in as much detail as is necessary, why it wants the information and how it is related to any of the disputed issues in the case.”
Order at 1. Judge Andrews also gave plaintiff and defendant an opportunity to submit responsive and reply letters on the issue, respectively. (D.I. 125.)
Chief Judge Sleet has granted a stay of litigation pending Inter Partes Review of the patents-in-suit in the U.S. Patent and Trademark Office in a case in which the PTAB has not yet decided whether to grant the IPR petitions. Judge Sleet first concluded that the plaintiff is unlikely to suffer undue prejudice as a result of the stay. The defendants filed their IPR petitions well within the one-year timeframe required by statute and the “timing of the request for stay suggests no dilatory motive” because it was filed less than two weeks after the IPR petitions. It was also persuasive to Judge Sleet that the plaintiff was a non-practicing entity, which “by its own admission, does not compete with the defendants.” Canatelo LLC v. Axis Comms. AB, et al., C.A. No. 13-1227-GMS, Order at 2 n.2 (D. Del. May 14, 2014).
Judge Sleet next concluded that the issues before the court will be simplified should the Patent Trial and Appeal Board grant the defendants inter partes review. In this regard, His Honor considered “statistics [that] indicate that it is very likely the PTAB will grant the IPR petitions.” Ultimately, “Should the PTAB deem the patents-in-suit unpatentable or narrow their scope, the court’s resources will be conserved by expending fewer resources on claim construction or avoiding the claim construction process altogether. Should the claims survive the IPR process, the court will still benefit from the PTAB’s expertise.” Id. at 2 n.3.
Finally, Judge Sleet explained that the case is at a very early stage, thus weighing in favor of a stay: “Staying a case in its early stages advances judicial efficiency and prevents the court and the parties from expending resources on claims that may be rendered invalid. Here, the parties have yet to conduct any discovery and no scheduling order has been entered.” Id. at 2 n.4.
In Pragmatus AV, LLC v. Yahoo! Inc., C.A. No. 11-902-LPS-CJB (D. Del. May 15, 2014), Magistrate Judge Christopher J. Burke issued a Report and Recommendation relating to the construction of sixteen disputed terms across five patents: U.S. Patent Nos. 5,689,641; 6,237,025; 6,351,762; 5,854,893; 7,185,054; and 5,896,500. The patents in suit “relate to the field of distributed multimedia collaboration. Specifically, the Asserted Patents disclose systems and methods for utilizing hardware, software and communications technologies ‘to produce a multimedia collaboration system that greatly facilitates distributed collaboration, in part by replicating the benefits of face-to-face collaboration.’” Id. at 2.
Judge Burke construed the following terms:
“a first and second set of potential participants”
“active states” / “active teleconference”
“addresses of video display devices”
“controlling communications connections”
“displayed in two sets”
“managing a video conference”
“quick dial list”
“on hold”/“hold state”
“tracking the audio and video capabilities associated with each workstation”
“video display device”
In Moneycat Ltd. v. PayPayl Inc., C.A. No. 13-1358-MSG (D. Del. May 15, 2014), Judge Mitchell S. Goldberg, sitting by designation, granted defendant’s motion to transfer to the Northern District of California.
As a threshold matter, Judge Goldberg addressed whether the motion was timely. Plaintiff argued it was not because Judge Goldberg’s “Policies and Procedures encourage the parties to make motions for a transfer prior to the Rule 16 scheduling conference, which occurred in this case over two months prior to [defendant] filing its motion to transfer. Second, [plaintiff] contends that transfer at this point—with the case having proceeded through substantial portions of discovery—would delay resolution of its infringement claims, particularly where [defendant] has refused to agree to continue on the same discovery schedule should the case be transferred.” Id. at 4. Even though “motions to transfer ought to be made as early in the proceedings as practicable” and the Court observed that, in light of the parties’ past litigation history, defendants should have been aware of what products would be accused and thus could have brought the transfer motion earlier, see id. at 5-6, the Court allowed the motion, noting that filing early transfer motions was not a hard and fast rule and that the case was still in its early stages. Id. at 6.
The Court then turned to the Jumara factors. Plaintiff is based in Israel, does not have a U.S. business presence, and has no apparent ties to Delaware. Under these facts, plaintiff’s forum choice was “not entitled to significant deference.” Id. at 7. The Court also observed that “there is reason to believe that [plaintiff] will have to send resources to the West Coast on occasion no matter where this case is tried, because much of the evidence and many of the witnesses in this case are in California,” the principal place of business of defendant. Id. Therefore, the Court “accord[ed] [plaintiff’s] choice of forum less deference than would otherwise be appropriate.” Id. at 8.
Defendant’s forum choice, where the claim arose, the convenience of the parties, the convenience of witnesses, and the location of books and records all weighed in favor of transfer, a key fact being that defendant’s activities regarding the accused services, records, and witnesses were largely in California or likely to be. See id. at 9, 10, 12. However, these factors only slightly favored transfer except for the convenience of the parties and the location of books and records. Id. at 15. As to the convenience of the parties, the Court noted differences in case law regarding the weight to afford the fact that a defendant is a Delaware corporation, which was the case here. Id. at 10-11. The Court followed the “decisions by considering [defendant’s] incorporation as weighing slightly in favor of denying transfer, but . . . decline[d] to give it significant weight. Overall, because neither party has a significant physical connection to Delaware, [the Court found] the convenience of the parties factor to weigh in favor of transfer” Id. at 11.
As to the public interest Jumara factors, all were neutral save practical considerations, which weighed in favor of transfer, the Court again citing the fact that the bulk of witnesses and evidence were in California. Id. at 13.
“Balancing these factors,” the Court concluded that defendant had “met its burden to justify transferring this action to the Northern District of California.” Id. at 15.