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Special Master Paul M. Lukoff recently ruled on a dispute “over so-called third party consultants and the impact of their presence on what might otherwise be privileged communications.” Robocast, Inc. v. Apple, Inc., C.A. No. 11-235-RGA; Robocast, Inc. v. Microsoft Corporation, C.A. No. 10-1055-RGA, slip. op. at 2 (D. Del. Jul. 19, 2013). Special Master Lukoff addressed the issue on a document-by-document basis and ordered that some of the documents on plaintiff’s log were to be produced, as the presence of third parties had waived attorney-client privilege. Id. at 13-14.

As a preliminary matter, the Special Master examined, on a document-by-document basis, whether plaintiff complied with FRCP 26(b)(5)(A), which obligates a party claiming privilege to describe the withheld documents with sufficient detail, or whether noncompliance with this rule resulted in waiver. While the Special Master disagreed with plaintiff’s argument that some Delaware cases “stand for the proposition that the privilege proponent must always be given further opportunity, in the face of a Rule 26(b)(5)(A) challenge, to take another stab at an adequate description” (and in this case the plaintiff had already amended its log several times, id. at 3-5) the Special Master found “very few” Rule 26(b)(5)(A) issues in plaintiff’s current log. Id. at 4 n.5.

Turning to the specific issue in dispute, the Special Master observed that there was a “possibly irreconcilable split” between Third Circuit (non-Delaware) district courts as to the proper test for whether a non-employee was the “functional equivalent” of an employee for purposes of attorney-client privilege. Id. at 6-7. Additionally, there was no Third Circuit case “explicitly adopt[ing] the functional equivalent concept in any form.” Id. However, this issue “pose[d] no obstacle” to resolving this dispute because: (i) the Special Master was “comfortable with the notion that some functions of a relatively small company like [plaintiff] might be best or necessarily accomplished through independent contractors and/or non-employee consultants;” (ii) Third Circuit precedent made clear that “there is no discernible bright line to be followed when the privilege is assessed;” and (iii) “even if one adopts and then adheres to one interpretation of the functional equivalent test or the other, each individual document must be reviewed on a case-by-case basis to determine if it was created for the purpose of providing or obtaining legal advice.” Id. at 7 (internal citations omitted).

With these principles in mind, the Special Master examined the duties of various non-employees and discussed how their duties may or may not waive privilege when they were privy to communications. Id. at 7-11. The Special Master further explained that his “rationale for making any such determination [of waiver] will not be founded on [the third party’s] status as an ‘outsider’ or the ‘functional equivalent’ of a [plaintiff] employee, but rather on the individual’s relative position with respect to obtaining legal advice.” Id. at 13.

Special Master Lukoff mapped out his Rule 26(b)(5)(A) and privilege conclusions in a “lengthy chart,” and ordered plaintiff to produce copies of all documents in the log that the Special Master had concluded were not privileged based on waiver. Id. at 13-14.

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In a recent post-trial opinion, Judge Sue L. Robinson considered infringement of U.S. Patent Nos. 6,200,604 (“the ’604 Patent”); 6,974,590 (“the ’590 Patent”); and 8,119,158 (“the ’158 Patent”), and the validity of U.S. Patent No. 8,092,832 (“the ’832 Patent”) and the ’158 Patent in this ANDA litigation. Cephalon Inc. et al. v. Mylan Pharmaceuticals Inc. et al., C.A. No. 11-164-SLR (D. Del. Jul. 22, 2013). Plaintiffs initiated this litigation after defendants filed ANDA No. 202577, which sought to market generic fentanyl citrate buccal tablets, a medication that aids breakthrough cancer pain. Id. at 1-2.

Before addressing infringement and validity, Judge Robinson was required to construe two disputed claim terms. “Providing a solid oral dosage form” was given its ordinary meaning, and “pH adjusting substance is not a component of said effervescent material” was construed to mean “pH adjusting substance is in addition to the components of said effervescent agent.” Id. at 13-18. Turning to the infringement of the asserted claims of the ’590 and ’604 Patents, Judge Robinson noted that the “only limitation of the asserted claims . . . that [defendants] argue[] is not met by the ANDA product ‘is at least one [salival activated] effervescent agent in an amount sufficient to increase absorption.’” Id. at 20. Judge Robinson ultimately determined that plaintiffs demonstrated that defendants’ ANDA practiced “each and every requirement of the disputed limitations.” Id. at 38. Further, there was no “genuine dispute of material fact that [defendants] will encourage use through its product labeling and sale of its generic tablets and is aware that the label presents infringement problems.” Id. at 37. Moreover, because “[t]he only authorized use for the ANDA products would infringe” the asserted claims, there was “no substantial noninfringing use.” Id. at 38. Judge Robinson thus concluded that defendants indirectly infringed the asserted claims of the ’590 and ’604 Patents through induced infringement and contributory infringement. Id. Next, Judge Robinson considered infringement of the ’158 Patent, noting that “[t]he only dispute for infringement is whether the ANDA products meet the limitation ‘wherein said pH adjusting substance is not a component of said effervescent material.’” Id. Defendants did “not offer any noninfringement defense under the court’s construction” of that limitation, and Judge Robinson concluded that defendants directly and indirectly infringed the ’158 Patent. Id. at 39-40.

Judge Robinson next considered whether the ’604 Patent anticipated certain asserted claims of the ’92,832 and ’158 Patents. Judge Robinson noted that those claims required dosages between 100 and 800 mcg of fentanyl free base. Id. at 43. Defendants’ expert argued that a “person of ordinary skill in the art would understand a ‘pharmaceutically effective amount’ taught by the ’604 Patent includes fentanyl free base in the range of 100 to 800 mcg,” because a person of ordinary skill in the art would have would have looked at “Actiq®, an FDA-approved product and recognized that its range of fentanyl, 200-1600 mcg, was pharmaceutically effective.” Id. at 43-44. Judge Robinson noted, however, that “extrinsic evidence of anticipation ‘must make clear that the missing descriptive matter is necessarily present in the thing described in the reference.’” Id. at 44. As Judge Robinson explained, Actiq® was “not mentioned in the ’604 patent or incorporated therein.” Id. Because Judge Robinson found that the “’604 patent does not disclose the claimed amounts of fentanyl, the [’92,832 and ’158 Patents] are not invalid for anticipation.” Id. at 43.
Judge Robinson also considered whether the asserted claims of the ’92,832 and ’158 Patents were obvious “in view of the ’604 patent in combination with the Actiq® brochure and the Handbook.” Id. at 45. Judge Robinson noted that defendants’ expert did “not offer an opinion that one of ordinary skill in the art, absent the benefit of . . . internal observations and documents, would have had any reasons to suspect stability issues, and therefore, be motivated to solve such issues. He cannot rely on the problems that the inventors ‘unexpected[ly]’ ran into in order to support a person of ordinary skill’s motivation to combine.” Id. at 51. Because defendants did not provide sufficient evidence of motivation to use “SSG, alone or combination with mannitol,” defendants failed to carry its burden of showing obviousness. Id. at 53. Judge Robinson additionally assessed secondary considerations of nonobviousness. Judge Robinson found “unexpected results . . . sufficiently supported by [plaintiffs’] testing,” which weighed in favor of nonobviousness. Id. at 53-56. On the other hand, Judge Robinson found that considerations of commercial success, praise, failure of others, and long-felt need did not weigh in favor of a finding of nonobviousness. Id. at 56-61. However, on balance, Judge Robinson concluded that defendants failed to demonstrate by clear and convincing evidence that the asserted claims of the ’92,832 and ’158 Patents were obvious in light of the prior art references. Id. at 61.

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Judge Stark recently considered AT&T’s motion to dismiss United Access Technologies, LLC’s amended complaint based on laches. United Access Technologies, LLC v. AT&T Corp., et al., C.A. No. 11-338-LPS (D. Del. Jul. 26, 2013). AT&T argued that laches barred plaintiff’s claims because “with full knowledge of AT&T’ s relevant activities, Plaintiff sat on its patent rights for nearly nine years without attempting to enforce them against AT&T.” Id. at 1-2. Plaintiff’s predecessor had previously sued AT&T in 2002 for infringement of several of the same patents-in-suit, but, after voluntarily dismissing the suit plaintiff waited nine years (and until after the patents expired) to file suit again. Id. at 2. Plaintiff responded that, among other things, “its alleged delay [was] not apparent from the face of the Amended Complaint, and therefore the laches defense is not amenable to resolution on a motion to dismiss. Id. Judge Stark agreed. “‘[A] ruling on the defendant’s defense of laches would necessarily involve a fact-intensive analysis and balancing of equities that would require the Court to consider matters outside the pleadings that are in dispute.’ Discovery will be required before the laches defense can be fairly evaluated.” Id. (quoting Lennon v. Seaman, 63 F. Supp. 2d 428, 439 (S.D.N.Y. 1999)).

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Judge Leonard Stark recently issued a claim construction opinion for patents relating generally to programmable logic devices and clock management for dynamic integrated circuits. Plaintiff Intellectual Ventures brought suit against several circuit companies, and after settlement with several defendants, only Altera and Xilinx remain. The Court held a Markman hearing in May, and Judge Stark has now construed the following terms, adopting the plaintiffs’ proposals for all but three terms for which he adopted a modified versions of the defendants’ proposals:
– “application specific field programmable gate array (‘ASFPGA’)”
– “fixed functional unit(s)”
– “bus interface(s)”
– “peripheral component interconnect”
– “application specific integrated circuit (‘ASIC’)”
– “during normal operation of the ASIC”
– “complements”
– “configured to”
– “individually programmable”
– “reconfigurable processor core”
– “whole processor unit(s)”
– “a controller having a plurality of clock outputs each coupled to a respective clock input of one of the whole processor units, wherein the controller is configured to independently vary a clock frequency of each whole processor unit”
– “each module having a defined function”
– “power-down” and “power-up”
Intellectual Ventures I LLC, et al. v. Altera Corp., et al., C.A. No. 10-1065-LPS, Memorandum Opinion at 4-22 (D. Del. July 26, 2013).

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In a recent claim construction opinion, Judge Richard G. Andrews construed the following terms of U.S. Patent Nos. 7,945, 736 B2, 7,948,921 B1, and 7,630,295 B2:

“configure(d),” id. at 1-3;
“data packet,” id. at 3-6; and
“communications interface configured to process the signal to activate and deactivate the link,” id. at 6-7.

Riverbed Technology, Inc. v. Silver Peak Systems, Inc., C.A. No. 11-484-RGA (D. Del. Jul. 23, 2013).

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Judge Robinson recently considered a motion for leave to file a second amended complaint filed by plaintiffs in Novartis Vaccines and Diagnostics, Inc., et al. v. Medimmune, LLC, et al., C.A. No. 11-84-SLPR (D. Del. July 22, 2013). Plaintiffs previously filed a first amended complaint, and then a supplemental complaint adding Novartis Pharma AG, exclusive licensee of the patent-in-suit, as a co-plaintiff. Id. at 1. Over six months later, when defendant Alexion raised a concern that the amended complaint included “an erroneous assertion that both [plaintiffs] were alleging infringement by Alexion[,]” plaintiffs proposed amending the complaint a second time to clarify the allegations of infringement by Alexion and remove claims against MedImmune, who had previously settled with plaintiffs. Id. at 3. Defendant Biogen refused to consent to the proposed amendment. Id. at 3-4.

Judge Robinson analyzed whether plaintiffs had good cause, under Fed. R. Civ. P. 16(b), for delaying nine months after the deadline to amend pleadings to file its motion to amend. Id. at 5. Judge Robinson found that the delay was not of plaintiffs’ making because defendants did not raise the issue with its interpretation of the infringement claims in the supplemental complaint until over six months after the deadline. Id. After the concern was raised, Plaintiffs behaved diligently, making “three separate proposed revisions” and engaging in several meet and confer sessions with defendants. Id. at 5-6.

Judge Robinson then considered the factors to determine whether leave to amend should be given:

(1) whether the amendment has been unduly delayed; (2) whether the amendment would unfairly prejudice the non-moving party; (3) whether the amendment is brought for some improper purpose; and (4) whether the amendment is futile.

Id. at 6 (citing Foman v. Davis, 371 U.S. 178, 182 (1962)).

The only factor at issue was defendant Biogen’s claim that plaintiffs’ allegation of willful infringement and request for treble damages was futile. Id. Judge Robinson noted that “allegations of willfulness and requesting treble damages have appeared in all three of the complaints filed in this action.” Id. at 3 n.1. Regardless, Judge Robinson found that plaintiffs’ claims were not fuitle after analyzing the claims under In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007). Specifically, plaintiffs provided evidence that Biogen knew about the alleged infringement at least two months prior to plaintiffs’ filing of the suit. Id. at 7. Judge Robinson rejected Biogen’s argument that plaintiffs’ willfulness claims were barred because Novartis Pharma did not become the exclusive licensee of the patent-in-suit until 18 months after the filing of the suit. Id. 7. Judge Robinson noted that “courts have upheld willfulness claims based on conduct occurring before a plaintiff had standing to sue. Id. at 7-8.

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In a recent memorandum order, Judge Sue L. Robinson denied defendants’ request to preclude plaintiffs “from presenting testimony or evidence relating to [defendants’] prior product ActiTUF.” Invista North America S.A.R.L. et al. v. M&G USA Corp. et al., C.A. No. 11-1007-SLR-CJB (D. Del. Jul. 16, 2013). Defendants argued that “ActiTUF is a plastics product with an iron-based system, rather than the cobalt-based system allegedly developed by [plaintiffs],” and thus “testimony or evidence relating to ActiTUF is not relevant to the issues at trial and will likely confuse a jury.” Id. at 1. Plaintiffs, on the other hand, argued that “ActiTUF is relevant to at least the state of the art at the time of the invention and secondary considerations.” Id. Specifically, plaintiffs asserted that they would “present evidence at trial regarding how the inventors of its claimed inventions looked to improve on the problems with ActiTUF’s iron-based system.” Id. at 2. Ultimately denying defendants’ request, Judge Robinson found that, “although ActiTUF is not an accused product in this litigation, testimony or evidence relating to it is relevant to the state of the art at the time of the invention and secondary considerations.” Id. She also noted that “[s]uch evidence would not likely confuse a jury because there is no dispute that ActiTUF uses a different approach and is not covered by the patents at issue.” Id.

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Special Master B. Wilson Redfearn recently issued rulings and recommendations on issues relating to the parties’ protective order. Eon Corp. IP Holdings, LLC v. FLO TV Inc., et al., C.A. No. 10-812 (RGA) (D. Del. July 10, 2013). First considered was the defendants’ argument that the prosecution bar be extended to include reexamination and resissue proceedings to guard against the “significant risk of plaintiff’s inadvertent use of defendants’ confidential information” absent such an extension. Id. at 2. Special Master Redfearn denied the requested extension, noting that the defendants failed to “substantiate any actual risk that might be incurred.” Id. He explained that in the context of reexamination, the “[d]efendants’ confidential information is basically irrelevant to” the determination of patentability over specific prior art.” Id. (quoting Xerox Corp. v. Google, Inc., 270 F.R.D. 182, 184 (D. Del. 2010)). Special Master Redfearn recommended, therefore, that the defendants’ request be denied for failure to satisfy their burden of demonstrating that the proposed extension of the prosecution bar was necessary. Id.
Special Master Redfearn also denied the defendants’ request that the defendants’ respective in-house counsel be permitted access to settlement materials between the plaintiff and settling defendants. The defendants sought in-house counsel access to “settlement and licensing information,” which Special Master Redfearn viewed as seeking “the specifics, and particularly the amounts, of the settlements with the dismissed defendants, as well as the monetary terms of the licenses, should such exist.” Id. at 3 n.4. Special Master Redfearn explained, “[t]his is not a situation where specific damages and/or settlement details in one case would affect the damages in other cases. Essentially each cause of action stands on its own and, as such, is subject to independent appraisal.” Id. at 4. Based on that, as well as the fact that the issue of damages was bifurcated and the defendants in any event failed to provide any legal support for their request, Special Master Redfearn recommended denial of the request. Id.

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Chief Judge Gregory M. Sleet recently granted several defendants’ motions to stay pending inter partes reexamination in a Multidistrict Litigation (“MDL”) transferred to the District of Delaware in May 2012. In re: Bear Creek Technologies Inc. (‘722 Patent Litigation), MDL No. 12-md-2344-GMS (D. Del. Jul. 17, 2013). The plaintiff had sued defendants for patent infringement related to voice-over internet protocol products in the Eastern District of Virginia in February 2011. Id. at 2. All defendants save one had been severed for misjoinder in August 2011. Id. Around that same time, a non-party to the current MDL, Cicso, had also filed a request for inter partes reexamination of the patent-in-suit. Id. at 4. All defendants, both those who had moved to stay and those who did not oppose these motions, had agreed to be bound by the results of this reexamination if the Court stayed the litigation. Id. at 4 & n.2.

The Court concluded that the relevant factors favored the grant of a stay. Not only had the PTO preliminarily rejected all claims of the patent-in-suit, but this reexamination “also raises questions as to the effective priority date for the Patent, the determination of which could impact issues of validity and obviousness.” Id. at 6-7 n.8. The Court therefore concluded that the reexamination could simplify issues for trial and that “the court and the parties’ time and resources could be wasted” absent a stay. Id. at 7 n.8. It further noted that it was “unpersuaded by [plaintiff’s] contention that the asserted claims will be confirmed in reexamination because they have not been cancelled in two prior ex parte reexaminations.” Id.

Most of the MDL cases were in the early phases of litigation, and this fact also favored a stay. Id. The Court also stayed two actions that had progressed further. One was into claim construction and early discovery but was still “sufficiently early to be a neutral factor in the stay analysis.” Id. (internal quotation marks omitted). The other was “significantly further along” but the Court still stayed this action. Prior to the MDL transfer, the parties were well into fact and expert discovery and had participated in a Markman hearing, but this action had been stayed pending the MDL determination and “as a result, a Markman construction was not issued.” Id. Additional discovery was likely to take place “due to the ‘passage of time’ since the initial discovery, the pending Markman construction, . . . [defendant’s] modifications and updates to its telecommunications network,” and also because the parties could supplement discovery following the Court’s issuance of a Markman decision. Id. “In view of these factors and the MDL coordination of these cases, the court concludes that [this action] should be stayed along with the other actions.” Id.

Finally, the Court disagreed with plaintiff’s arguments that it would be prejudiced. Plaintiff argued that “the defendants will benefit from the inter partes reexamination in that Cisco can ‘audition’ the invalidity arguments the defendants would present at trial and learn which are successful.” Id. But the defendants’ agreement to be bound by this reexamination meant that they would be “estopped from challenging the validity of the [patent-in-suit] as obvious . . . based on the combinations of prior art presented by Cisco.” Id. “Despite [Plaintiff’s] assertion that this estoppel is too limited and does not protect its interests, the court finds the defendants’ estoppel sufficient to guard against prejudice.” Id. (internal citations omitted). The Court also disagreed that the reexamination would cause unnecessary and unfair delay. “[T]he examiner responsible for the reexamination is already familiar with the [patent] family, having previously examined the patent-in-suit and its parent . . . . Moreover, this examiner had previously decided the priority date issue that is raised in the . . . reexamination by virtue of the [parent patent] examination.” Id. at 8 n.8. Finally, the plaintiff was a non-practicing entity that could be adequately compensated by money damages. Id.

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The Federal Circuit Advisory Council announced today its adoption of a Model Order Limiting Excess Patent Claims and Prior Art. The Council offered the Model Order “to aid trial courts in the exercise of their discretion in crafting orders tailored to the facts and circumstances of each case.” In adopting the Order, the Council considered several key issues, such as:

What. What should be limited—number of claims, number of prior art references, number of invalidity theories, number of terms for claim construction, number of accused products, or some combination?

Timing. When should the limits on asserted claims and prior art references
take effect? Should the limits be applied only once, or should a phased
approach gradually narrowing the scope of the case be followed? How
should the need for discovery be balanced against the value of early
streamlining?

Limitations. How should limits be formulated? Should the limits on
number of claims apply per case or per patent? How should the limits be
adjusted based on the variety of case-specific factors that courts have
considered? How can the due process rights of litigants be protected?

Effect. What effect does the judgment have on non-elected patent claims
and prior art references?

The Council concluded that “default numerical limits on the number of asserted patent claims and prior art references are workable.” And, a “phased implementation” of numerical limits would “balance the need for discovery against the benefits of early streamlining.”

The Model Order is attached below.

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