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In Masimo Corporation v. Philips Electronics North American Corporation, et al., C.A. Nos. 09-080-LPS-MPT & 11-742-LPS-MPT (Cons.) (D. Del. Apr. 2, 2013), Magistrate Judge Mary Pat Thynge issued a report and recommendation regarding Daubert and summary judgment motions from both parties. The case involves a number of patents related to “pulse oximetry,” which “allows for non-invasive measurement of the oxygen levels in a medical patient’s hemoglobin.” Id. at 1. At the time of the Court’s opinion, seven patents were at issue from the original action filed, plus two patents from a second action filed by plaintiff; six were plaintiff’s patents, and three were defendants’ for which they had counterclaimed infringement. Id. at 4-5.

The motions for summary judgment for which the Court issued recommendations related to infringement, noninfringement, invalidity, and laches. Id. at 6 & n. 22 (noting that the other motions before the Court would be addressed in another opinion). The Court denied the majority of these motions, finding that genuine issues of material fact remained. See, e.g., id. at 17, 23, 58-60, 75, 77, 85, 87, 115-16, 140, 146-47. As to defendant’s motion for summary judgment based on laches with respect to three patents, defendants alleged that a series of negotiations with third parties and with defendants, and lawsuits with third parties, all relating to plaintiff’s technology, put plaintiff on notice as to potential infringement more than six years preceding the filing of the lawsuit with respect to two out of the three patents. See id. at 178-81. While the Court agreed that defendants had established the necessary six-year presumption of laches for these two patents, id. at 189-91, it concluded that plaintiff had presented evidence that rebutted the presumption. First, litigation with another entity over one of the three patents “provid[ed] justification for [plaintiff] not pursuing [defendant] on that patent” while that action was pending. Id. at 193. Second, there was an issue of material fact as to whether negotiations related to the potential infringement of defendants’ technology would have resolved the infringement issues. Id. at 195. In response, defendants argued that they had suffered economic prejudice as a result of plaintiff’s delay in filing because they had expanded their use of the potentially infringing products, but plaintiffs demonstrated “through statements from [defendants’] executives that an earlier lawsuit would not have affected [defendants’] business plans.” Accordingly, issues of material fact were raised “as to whether a nexus exists between [defendants’] economic change an [plaintiff’s] delay. Id. at 198. The Court therefore denied defendants’ motion, finding it unnecessary to address plaintiff’s unclean hands argument. Id.

The Court granted the following motions for summary judgment:

-Defendants’ motion for summary judgment of invalidity, based on the written description requirement, as to two claims of U.S. Patent No. 6,263,222. The Court concluded that plaintiff’s patent did not show that the inventors possessed the claimed subject matter: these claims “speak of a signal processor generically; its specification, however, only describes correlation canceler techniques, and [plaintiff’s expert] admits at the time of the invention only correlation cancellation techniques were known to one skilled in the art. . . . nothing in [the claims] or the specification constitute an adequate description of all signal processors for use in a non-correlation canceler. Therefore, [defendants’] motion for summary judgment on written description is granted.” Id. at 29-30.

-Defendants’ motion for summary judgment of invalidity, based on the written description requirement, as to U.S. Patent No. 6,699,194. Defendants, relying on the specification itself and the testimony of the inventor, argued that the specification in plaintiff’s patent did not disclose certain methods in the claims because it did not “disclose any method of estimating pulse rate from an unclean spectrum” – it only disclosed “classifying clean spectral data.” Id. at 121 (emphasis added). The Court agreed. Id. at 129.

-Defendants’ motion for summary judgment of noninfringement of U.S. Patent No. 7,215,984. The Court concluded that some of plaintiff’s expert’s statements on the issue were inconsistent with her other testimony, and plaintiff “should not be able to create a question of fact to defeat summary judgment via [its expert’s] new declaration if it contradicts her prior testimony.” Id. at 69 & n.322.
-Plaintiff’s motion for summary judgment of noninfringement of U.S. Patent No. 6,122,535 (“the ‘535 patent”). First, while the Court did not grant plaintiff’s motion as to literal infringement “in light of the manner in which the parties’ presented their arguments,” id. at 199, it concluded that defendants were precluded from relying on the doctrine of equivalents. Plaintiff demonstrated that: (i) defendants’ infringement contentions would eliminate an element of claim 1, id. at 155; (ii) the way in which defendants had distinguished its patent from prior art during prosecution demonstrated prosecution history estoppel, id. at 156, 158; and (iii) the ‘535 patent contained disclosed but unclaimed embodiments, id. at 162. Second, the Court granted plaintiff’s motion as to direct infringement because defendants had not shown that every step of method claim 1 of the ‘535 patent had actually been performed; “that [plaintiff’s] products may be capable of performing the claimed method is not enough.” Id. at 167 (emphasis added). As a result, plaintiff was neither a direct nor indirect infringer. Id. at 165-66.

As to plaintiff’s Daubert motion, plaintiff argued defendants’ expert on infringement and validity with respect to U.S. Patent No. 6,725,074 (“the ‘074 patent”) was not qualified to opine on “fuzzy logic,” which was a central aspect of the ‘074 patent. Id. at 90 & n.424. This expert had no formal education or training in fuzzy logic, but defendants argued that because he was “qualified as an expert in the field of digital signal processing, source code and medical devices, and this field includes the technology disclosed in the ‘074 patent, namely, the use of uncertain and fuzzy logic software applications in medical devices,” he possessed “at least ordinary skill in the art” such that he could “provide helpful testimony on how software using uncertain and fuzzy logic works within the devices at issue.” Id. at 91 (internal citations and quotation marks omitted). The Court agreed and denied plaintiff’s motion. Id. at 91-92. In doing so, the Court distinguished case law in which an expert was unqualified because that expert did not have knowledge about the relevant field of technology, had “other significant deficiencies,” and had not properly addressed the issue of a person of ordinary skill in the art. Id. at 93-94. Here, defendants’ expert’s qualifications, in light of plaintiff’s own description of a person of ordinary skill in the art, was appropriate. Id. at 94-95.

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Judge Richard G. Andrews recently granted a motion to dismiss for lack of personal jurisdiction. M2M Solutions LLC v. Simcom Wireless Solutions Co., Ltd., et al., C.A. No. 12-034-RGA (D. Del. Apr. 1, 2013). The motion was filed by one of four defendants in the case—a Florida limited liability company with places of business located in Florida and Illinois. Id. at 1. The Court explained that it was undisputed that the defendant had no physical presence, employees, or third-party distributors in Delaware. Id. Nor was there any evidence that any single one of the defendant’s accused products ever entered Delaware. Id.

The plaintiff argued that the defendant was subject to personal jurisdiction based on its website, and on its relationship with customers who maintained retail stores in Delaware. More specifically, the plaintiff noted that the defendant’s website was accessible in Delaware, provided a toll-free phone number, and included references to the defendant being a “global” company with aspirations to increase activities throughout North America. Id. at 1-2. The Court recognized that the defendant’s website contained “public expressions of intent to serve the entirety of North America along with a toll-free phone number[,]” but found that because individuals accessing the website from Delaware could not place an order directly through the website, it was more of a passive website under the test laid out in Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F. Supp. 119 (W.D. Pa. 1997). Id. at 6 n.3. As a result, the Court found that the defendant’s passive website could not support a finding of personal jurisdiction over the defendant.

The Court next rejected the argument that the defendant was subject to personal jurisdiction based on its relationship with customers with Delaware retail stores. Id. at 7. The Court acknowledged that “[i]t is a tenable theory under the Delaware long-arm statute that [the defendant] may be subject to personal jurisdiction for placing infringing products in the ‘stream of commerce[,]” but in this case the Court found the evidence supporting that theory to be “completely speculative” given that there was no allegation that even a single product had entered Delaware. Id. (“It would seem that an absolute minimum requirement of the ‘stream of commerce’ test is the allegation that an infringing product has actually entered the market of the forum state.”). The Court concluded by explaining: “there is zero evidence that any [of the defendant’s] products have entered the Delaware market, let alone evidence suggesting a ‘regular and anticipated’ flow of products into the state.” Id. at 9. As a result, the Court denied the plaintiff’s request for jurisdictional discovery, and granted the defendant’s motion to dismiss. Id.

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In a recent memorandum opinion, Judge Leonard P. Stark granted a motion for summary judgment that pre-2004 versions of Microsoft Windows do not infringe various patents asserted by the plaintiff. St. Clair Intellectual Property Consultants, Inc. v. Acer, Inc., et al., Consol. C.A. No. 09-354-LPS (D. Del. Mar. 29, 2013). The plaintiff had neither responded to interrogatories relating to pre-2004 Windows, nor provided the defendants with contentions on how pre-2004 Windows infringe. Id. at 4. Further, the plaintiff provided no competing expert testimony in response to the defendants’ expert, who opined that pre-2004 versions of Windows do not infringe. Id. at 5. Because the plaintiff carried the burden of proving infringement, and it “failed to present any evidence of infringement related to pre-2004 versions of Windows[,]” the Court granted the motion for summary judgment of non-infringement, and found further that pre-2004 versions of Windows could appropriately be considered non-infringing alternatives. Id. at 5-6 (emphasis in original).

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Judge Robinson recently issued a discovery order in the ongoing patent infringement dispute between Mobilemedia Ideas and Apple. Plaintiff Mobilemedia Ideas filed a request for “‘discovery necessary to allow the parties to be prepared to try the damages case’ as soon as possible after the court’s decision on the parties’ post-trial motions.” Judge Robinson denied the request, stating “[t]he court is not inclined to change its standard practice of bifurcating damages until the issue of liability has been decided by the Federal Circuit, until such time (if ever) the Federal Circuit requires the court to abandon said practice.” See Mobilemedia Ideas LLC v. Apple Inc., C.A. No. 10-258-SLR, Order at 1 (D. Del. Apr. 2, 2013).

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Recently, Judge Leonard P. Stark issued decisions with respect to defendants’ motion to dismiss plaintiff’s claims of willful patent infringement pursuant to Federal Rules of Civil Procedure 12(b)(6) and 41(a)(1). St. Clair Intellectual Property Consultants, Inc. v. Samsung Electronics Co. Ltd. et al., C.A. No. 12-69-LPS (D. Del. Mar. 29, 2013). First, with respect to the briefing on the matter, Judge Stark granted plaintiff’s motion to file a sur-reply in opposition to defendants’ motion to dismiss. (D.I. 21.). Judge Stark noted that a court “may grant leave to file a sur-reply if it responds to new evidence, facts, or arguments.” Id. at 2. Defendants’ reply in support of its motion to dismiss, as Judge Stark explained, contained “newly-cited evidence,” including a complaint filed in the District of Delaware, a previously uncited Eighth Circuit case, and details regarding an entity from a prior, related lawsuit. Id. Granting plaintiff’s motion, Judge Stark explained that plaintiff’s sur-reply “will allow the Court to more fully and fairly evaluate Defendants’ pending motion to dismiss.” Id. at 3. Moreover, “Plaintiff’s sur-reply is relatively short, challenges Defendant’s interpretation and application of [the Eighth Circuit case], and explains Plaintiff’s view of the newly presented evidence.” Id. Judge Stark thus considered the sur-reply in reaching his decision on the merits of defendants’ motion. See id.

Judge Stark ultimately denied defendants’ motion to dismiss. (D.I. 22.). Defendants argued that plaintiff failed to state a claim because its claim was barred by Rule 41(a)(1). See id. at 4. Under Rule 41(a)(1)(B), “[i]f the plaintiff files a second notice of dismissal pursuant to Rule 41(a)(1), the Court must dismiss an action based on or including the same claim with prejudice.” Id. at 3. In December 2011, the current plaintiff filed a complaint against Samsung Electronics USA (“SE USA”) claiming SE USA willfully infringed plaintiff’s six patents as the result of sales and distribution of products containing the Android operating system. Id. at 1. In January 2012, that suit was voluntarily dismissed. The same day it dismissed that suit, plaintiff filed a second complaint against Samsung Electronics America, Inc. (“SEA”) and Samsung Telecommunications America, LLC (“STA”) for willful infringement of the same six patents as the result of the same type of sales and distribution. Id. Later that month, that second suit was voluntarily dismissed. Id. On the same day of the second dismissal, plaintiff filed a third suit—the suit at hand—against Samsung Electronics Co. Ltd. (“SEC”), SEA, and STA. Id. at 1-2. Once again, the plaintiff has sued for willful infringement of the same six patents based on the same type of sales and distribution. Id. at 2.

The issue before the Court, therefore, was whether the first two dismissals mandated dismissal of the third suit. Plaintiff first argued that the “two dismissal rule” was inapplicable because in the first suit SE USA was a “defunct corporation which could not sue or be sued.” Id. at 4. Judge Stark rejected this argument, explaining that “Federal Rule of Civil Procedure 3 states that an action commences upon the filing of the complaint.” Id. at 5. However, as Judge Stark explained, in order for the “two dismissal rule” to apply, the defendants must share some close relationship: they must be “the same, substantially the same, or in privity with each other,” or they must be “sufficiently interrelated so that they share the same legal rights.” Id. at 5-6. Judge Stark found that defendants failed to show by a preponderance of the evidence that such a close relationship existed. Id. at 7. Defendants had presented some evidence, particularly that “SE USA’s incorporator shares the same address as Samsung’s regional headquarters,” and that the incorporator “served as general counsel of SEA.” Id. at 6-7. Judge Stark found, however, that this relationship between SE USA and the subsequent defendants “is only through a single person” and “establishes no more than a tenuous relationship.” Id. at 7. Moreover, defendants failed to demonstrate “SE USA had the same, similar, or any legal interest in the subject matter of the three litigations, i.e., the Android operating system.” Id. at 7. Judge Stark therefore denied defendants’ motion to dismiss. Id. at 8.

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In a recent order, Judge Leonard P. Stark denied both (1) defendant’s motion to dismiss plaintiff’s claims of direct and indirect patent infringement for failure to state a claim and (2) plaintiff’s motion to dismiss defendant’s declaratory judgments of non-infringement and invalidity for failure to state a claim. Cronos Technologies LLC v. Vitamin Shoppe, Inc., C.A. No. 12-444-LPS (D. Del. Mar. 29, 2013). Although plaintiff amended its complaint and defendant amended its answer subsequent to the filing of the motions to dismiss, Judge Stark considered the motions to the extent they were not rendered moot. See id. at 2. Denying defendant’s motion for failure to state a claim, Judge Stark found that plaintiff’s direct infringement claim “satisfi[ed] the requirements of Form 18,” and that plaintiff’s complaint provided facts with respect to “knowledge, intent and direct infringement” to sufficiently plead induced infringement. Id. Defendant argued that plaintiff’s asserted method claims should be dismissed because plaintiff did not allege that a single entity performed all of the elements. Judge Stark found, however, that plaintiff’s patent included “both apparatus and method claims,” and that plaintiff was “not required to identify any specific asserted claim in the Amended Complaint.” Id. Turning to plaintiff’s motion to dismiss, Judge Stark first found that defendant “specifically identif[ied] non-infringing products” in its amended complaint and therefore sufficiently pled its non-infringement declaratory judgment. Id. Moreover, Judge Stark found that defendant sufficiently pled its declaratory judgment for invalidity, including “specific references to prior art, statutes, and legal principles” in its amended complaint. Id.

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In a recent memorandum opinion, Judge Sue Robinson denied patent infringement defendants’ motion to transfer venue but granted the defendants’ motion to dismiss claims of indirect infringement. See Stephenson v. Game Show Network, LLC, C.A. No. 12-614-SLR, Memorandum Opinion at 1 (D. Del. Mar. 27, 2013).

Her decision on the motion to transfer was consistent with her practice in previous cases, including one relied on here, Helicos Biosciences Corp. v. Illumina, Inc., 858 F. Supp. 2d 367 (D. Del. 2012). Judge Robinson observed that a defendant’s state of incorporation—here Delaware—has always been a “predictable, legitimate venue for bringing suit” and that a “plaintiff’s choice of venue should not be lightly disturbed.” Id. at 2 (citations omitted). Accordingly, after considering all of the Third Circuit’s Jumara transfer factors, she found that the defendants had not “tipped the scales of justice in favor of transfer.” Id. at 11.

On the motion to dismiss, Judge Robinson found that a mere corporate relationship between two defendants was not sufficient evidence that one defendant intended the other to infringe and knew that such acts would constitute infringement. Such an allegation of contributory and induced infringement, she found, was insufficient under Rule 8 and should be dismissed. Id. at 12-13.

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Judge Richard Andrews recently granted a patent infringement defendant’s motion for summary judgment of no damages and excluded untimely and prejudicial damages testimony proffered by the plaintiff. See AVM Techs., LLC v. Intel Corp., C.A. No. 10-610-RGA, Order at 1-4 (D. Del. Mar. 29, 2013). The proffered testimony in question was the fourth damages theory offered by the plaintiff since the defendant had moved for summary judgment of no damages. It was also filed almost a month after the initially-scheduled trial date. The witness in question had not been disclosed until recently and the defendant did not have the opportunity to seek discovery into the witness’s theory or develop a response. Id. at 2.

While the plaintiff argued that any prejudice could be cured by allowing additional discovery, Judge Andrews found that this offer “ignore[d] that the only reason trial was not held on its scheduled date was that [plaintiff] had no evidence of damages [so] the trial was cancelled pursuant to [a] Joint Proposed Final Judgment Order.” Accordingly, Just Andrews explained, the plaintiff “should not be put in a better position now, having offered yet another damages theory after trial initially was set to begin.” Id. at 2-3. Additionally, the proffered testimony was “unimportant in that it is insufficient to support a provable damages theory.” And although the exclusion of the proffered testimony would leave the plaintiff with no damages evidence, “this factor is at most neutral, particularly because this situation is of [plaintiff’s] own making.” Id. at 3. Accordingly, Judge Andrews excluded the proffered testimony as untimely and prejudicial, and because plaintiff had “no evidence with which to prove damages,” granted summary judgment of no damages for the defendant. Id. at 3-4.

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Judge Sue L. Robinson recently denied a defendant’s motion to dismiss a first-filed declaratory judgment action or, in the alternative, to transfer it to the Northern District of New York where a second-filed infringement action was pending. Trustco Bank v. Automated Transactions LLC, Civ. No. 12-613-SLR (D. Del. Mar. 27, 2013). After the parties’ licensing negotiations broke down, the plaintiff filed a declaratory judgment action in the District of Delaware, and within about three hours the defendant filed its own affirmative infringement action in the Northern District of New York. Id. at 2. The defendant then moved to dismiss the Delaware action, or in the alternative to transfer it to New York, and the plaintiff moved to enjoin the New York action. Id. at 1.

Judge Robinson explained that “[t]he Federal Circuit prefers ‘to apply in patent cases the general rule whereby the forum of the first-filed case is favored, unless considerations of judicial and litigant economy and the just and effective disposition of disputes, require otherwise.’” Id. at 3 (quoting Genentech, Inc. v. Eli Lilly and Co., 988 F.2d 931, 937 (Fed. Cir. 1993), rev’d on other grounds, Wilton v. Seven Falls Co., 515 U.S. 277 (1995). To that end, the Court explained that the first-to-file rule should only be departed from in situations involving “bad faith, forum shopping, when the second-filed action has developed further than the initial suit, and when the first-filing party instituted suit in one forum in anticipation of the opposing party’s imminent suit in another, less favorable, forum.” Id. at 4.

The defendant first argued that the plaintiff’s bad faith negotiation tactics (alleged delay tactics intended to provide additional time to draft a declaratory judgment complaint) justified departing from the first-to-file rule. The Court rejected that argument, explaining that “[p]reparations for litigation during negotiations are commonplace and the court concludes that there is no evidence of bad faith.” Id. at 7. Further, the Court found that the plaintiff had justifiable reasons for choosing to file its declaratory judgment action in Delaware (including the defendant’s status as a Delaware entity with a history of litigating in Delaware), such that forum shopping was not an issue. Id. Finally, the Court did not view transferring the case to New York as compellingly favorable from a judicial economy standpoint given that the New York action was stayed pending resolution of the motion before the Court, and a related New York action was subject to a motion to transfer to the District of Delaware. Id. at 8.

The Court next considered whether it should exercise its discretion to transfer the action to New York under 28 U.S.C. § 1404(a), upon a consideration of the Jumara factors, and found that transfer was not warranted based on the information provided to the Court. Id. at 8-10. The Court explained that the plaintiff did not satisfy its “burden of overcoming the first-filed rule” or its “burden of persuading the court, by a preponderance of the evidence, that the Jumara factors warrant transfer.” Id. at 11. As a result, the Court denied the defendant’s motion, and granted the plaintiff’s motion to enjoin the New York action. Id.

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Judge Leonard P. Stark recently denied a plaintiff’s motion to dismiss counterclaims for direct, indirect, and willful infringement. Fairchild Semiconductor Corp. v. Power Integrations, Inc., C.A. No. 12-540-LPS (D. Del. Mar. 29, 2013). The Court first considered the plaintiff’s argument that an allegation of infringement by “power supply controllers that include a ‘soft start’ feature and circuit covered by one or more claims of the ’366 patent” failed to sufficiently identify the accused products. Id. at 3-4. Judge Stark explained that “this Court has repeatedly declined to dismiss pleadings that accuse general categories of products[,]” because that is all Form 18 requires. Id. at 3-4. With respect to the specific allegation at issue, the Court explained that the defendant “has expressly identified a general category of products, power supply controllers, and further restricted that category to controllers that include certain features and circuits.” Id. at 4.

The Court next considered whether the defendant sufficiently pled “that [the plaintiff] had knowledge of the patents-in-suit prior to [the defendant] filing its counterclaims[.]” Id. at 7. The Court explained that “service of a complaint constitute[s] sufficient notice for an inducement claim based on post-filing conduct.” Id. at 6. Accordingly, the motion was denied to the extent it targeted post-filing conduct by the plaintiff. Id. The Court reached the same result with respect to the plaintiff’s argument that “specific intent to induce infringement” was not adequately pled, explaining that the defendant “satisfied the pleading requirements for induced infringement [of all asserted patents] based on post-filing conduct.” Id. at 8. The Court noted that the allegations were more specific with respect to the ’366 patent, and rejected the plaintiff’s suggestion that those allegations were insufficient because they were pled “on information and belief,” explaining “[v]iewing a complaint in the ‘light most favorable to plaintiff’ may ‘include[] facts alleged on information and belief.’” Id. at 8 n.9 (quoting Frederick Hart & Co. v. Recordgraph Corp., 169 F.2d 580, 581 (3d Cir. 1948) (internal quotation marks omitted)). Finally, the Court rejected the plaintiff’s suggestion that the inducement counterclaims should be dismissed for failure to identify specifically a direct infringer, explaining “a plaintiff need not identify a specific direct infringer if it pleads facts sufficient to allow an inference that at least one direct infringer exists.” Id. at 6 (quoting In re Bill of Lading, 681 F.3d 1323, 1336 (Fed. Cir. 2012)).

Judge Stark also denied the plaintiff’s alternative request that the defendant be ordered to provide a more definite statement under Rule 12(e), explaining “[t]he Court has determined that [the defendant’s] counterclaims provide sufficient notice of the infringement allegations [and] are not ‘so vague and ambiguous’ that [the plaintiff] cannot frame a responsive pleading.” Id. at 9-10.

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