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In Masimo Corporation v. Philips Electronics North America Corporation, et al., Magistrate Judge Mary Pat Thynge recently recommended the grant of defendants’ motion for summary judgment as to no willful infringement and the denial of their motion for summary judgment on lost profits damages. C.A. No. 09-80-LPS-MPT (D. Del. June 14, 2013).

The Court recommended the grant of defendants’ motion as to willful infringement with regard to four patents-in-suit. The Court concluded that defendants’ actions had been objectively reasonable because they had “presented legitimate and credible defenses to the infringement claims, as well as presented credible invalidity arguments. As such, [defendants have] ‘demonstrate[d] the lack of an objectively high likelihood that [defendants] took actions constituting infringement of a valid patent.’” Id. at 16 (quoting Black & Decker, Inc. v. Robert Bosch Tool Corp., 260 F. App’x 284, 291 (Fed. Cir. 2008)). For example, with regard to U.S. Patent No. 6,263,222, Judge Thynge had previously recommended adoption of defendants’ claim construction of a key term, and although Judge Stark “ultimately disagreed with the construction,” id., it was clear from these facts that defendants’ reliance on their construction to show noninfringement was reasonable. See id. at 5-6. Additionally, as discussed here, Judge Thynge had previously recommended a partial grant of summary judgment on invalidity as to the same patent. “The partial success of its invalidity defenses lend credibility to the reasonableness of [defendants’] actions which defeats the objective prong of [the Federal Circuit’s test for willful infringement from In re Seagate Tech., LLC, 497 F.2d 1360 (Fed. Cir. 2007)].” Id. at 6-7. With regard to a different patent, the Court concluded that defendants’ invalidity arguments were also reasonable and thus precluded a finding of willful infringement. Id. at 8. Furthermore, the Court had also recently granted summary judgment to defendants on the basis of non-infringement as to this patent. Id. The Court also ruled that summary judgment on willfulness was appropriate, as “this court and the Federal Circuit have held the state of mind of the accused infringer is not relevant” to the objective prong of Seagate. Id. at 12 (internal citations and quotation marks omitted).

The Court recommended denial of defendants’ motion for summary judgment as to lost profits damages, relying on its prior rulings on expert testimony, discussed here. “Having ruled [in that opinion] on all of the challenges to expert testimony, the court has essentially already decided the outcome of the motion for summary judgment on damages. Since the court will allow experts to testify to divisive positions on the [acceptability of a potential non-infringing alternative], as well as permit [plaintiff’s damages expert to present lost profits analysis] at trial,” issues of material fact remained and defendants’ motion should be denied. Id. at 16.

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Chief Judge Sleet recently granted a patent infringement defendant’s motion to dismiss for lack of personal jurisdiction given the defendant’s lack of sufficient contacts with Delaware. See Liqui-Box Corp. v. Scholle Corp., C.A. No. 12-464-GMS, Memorandum Op. at 1 (D. Del. June 17, 2013). The declaratory judgment defendant, Scholle, is a Nevada corporation with headquarters in California. One of the operating subsidiaries of Scholle, Scholle Packaging, is a Nevada corporation with primary operations in Illinois and headquarters in California. Of the two declaratory judgment plaintiffs, Liqui-Box Corp. and Liqui-Box Inc., one is an Ohio incorporated and based corporation and the other is a Delaware corporation with operations primarily in Texas. After Scholle sent a letter to Liqui-Box in Ohio alleging infringement of its patents, Liqui-Box filed a declaratory judgment action in the District of Delaware. The same day, Scholle filed an infringement action against Liqui-Box in the Northern District of Illinois. Id. 2.

Judge Sleet first found that the exercise of jurisdiction under Delaware’s long-arm statute was inappropriate, rejecting arguments that Scholle had sufficient direct contacts with Delaware and that the actions of Scholle’s subsidiary should be attributed to Scholle under an alter ego theory or an agency theory. Id. at 5-11. As part of this analysis, Judge Sleet emphasized that “the relevant inquiry for specific personal jurisdiction purposes is ‘to what extent . . . the defendant patentee purposefully directed such enforcement activities at residents of the forum, and the extent to which the declaratory judgment claim arises out of or relates to those activities.’” Because sales in Delaware were not “‘enforcement activities’ that might allow for specific jurisdiction in the declaratory judgment context,” found that the case did not fall under the specific jurisdiction or general jurisdiction provisions of the long-arm statute. Id.

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In a recent order, Judge Sue L. Robinson denied plaintiff’s motion to exclude testimony regarding “commercial success of the [defendant’s] accused . . . products and services,” and granted defendant’s motion to strike plaintiff’s untimely infringement theories. Walker Digital, LLC v. Google Inc., et al., C.A. No. 11-309-SLR, at 1, 4-5 (D. Del. Jun. 21, 2013). Addressing plaintiff’s motion to exclude, Judge Robinson found that “the financial data supplied in the supplemental interrogatory is not well beyond or inconsistent with the testimony of [defendant’s] 30(b)(6) witness” that was deposed on financial topics. Id. at 3. Further, as Judge Robinson explained, plaintiff “had ample opportunity to seek the court’s assistance in obtaining financial data earlier, but did not do so.” Id. Additionally, Judge Robinson found that defendant did not act in bad faith. Id. at 4. Judge Robinson found that, on balance, the Pennypack factors weighed against excluding defendant’s financial data. Id.

Turning to defendant’s motion to strike, Judge Robinson noted that in its expert report plaintiff included infringement theories with respect to accused instrumentalities that plaintiff did not address during discovery. See id. at 4-5. Judge Robinson noted that “[g]iven that [defendant] did not disclose these instrumentalities until the close of fact discovery, it is not surprising that these instrumentalities were not vetted by [defendant] and [plaintiff] through the fact discovery process.” Id. at 5. However, as Judge Robinson explained, in its expert report plaintiff “chose to present its infringement contentions in a conclusory fashion and did not provide an infringement chart.” Id. Judge Robinson additionally explained that defendant was not “given the opportunity to participate in the discovery process related” to the newly addressed instrumentalities. Id. Judge Robinson thus granted defendant’s motion to strike. Id.

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Chief Judge Gregory M. Sleet recently denied a defendant’s motion to stay litigation pending inter partes review by the PTO. Davol, Inc. v. Atrium Medical Corp., C.A. No. 12-958-GMS (D. Del. June 17, 2013). The Court found that two of the three stay considerations weighed in favor of granting the motion (issue simplification and stage of litigation). Id. at 9-11. The Court denied the motion to stay, though, finding that the risk of undue prejudice to the plaintiff resulting from a stay outweighed the potential benefits inter partes review could have on the litigation in terms of simplifying the case. Id. at 11-12. As the Court explained, “the PTO proceedings are in their earliest stage and could be expected to last for nearly two years[,]” resulting in a delay in litigation that “risks unnecessarily impairing [plaintiff’s] patent rights[.]” Id. at 4-5. The Court was especially concerned about potential prejudice to the plaintiff given that the parties were direct competitors in a “relatively exclusive market”. Id. at 6. The Court rejected the defendant’s argument that any concern about the competitive position of the plaintiff should be reduced as a result of the plaintiff’s willingness to license its patented technology, explaining that “while eventual money damages might be sufficient to compensate [plaintiff] for lost sales, the prospect of lost market share and price erosion injects an added measure of uncertainty into this action.” Id. at 7.

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In St. Jude Medical, Cardiology Division, Inc., et al. v. Volcano Corp., C.A. No. 12-441-RGA (D. Del. May 30, 2013), Judge Richard G. Andrews recently construed the following disputed claim terms of U.S. Patent No. 6,565,514, entitled “method and system for determining physiological variables”:

-“displaying said graph”
-“detecting continuously at least two physiological variables, arterial pressure (Pa) and distal coronary pressure (Pd), derived from the guidewire-mounted pressure sensor”
-“sensor element”

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Today the Federal Circuit held that the Court has jurisdiction to entertain appeals from determinations on patent infringement liability where damages and/or willfulness issues have yet to be decided due to bifurcation. Robert Bosch, LLC v. Pylon Manufacturing Corp., No. 2011-1363, -1364, at 26-27 (Fed. Cir. June 14. 2013). As discussed here, the Federal Circuit decided sua sponte to grant a rehearing en banc on these issues in August 2012.

The Court explained that this case “does not involve the question of whether the district court has the authority to bifurcate the willfulness and infringement issues. As a general matter, it does.” Id. at 22. It “ma[d]e clear that district courts, in their discretion, may bifurcate willfulness and damages issues from liability issues in any given case.” Id. at 26. The Court did observe, with regard to its holding on bifurcation of liability and damages, that “[m]odern patent damages trials, with their attendant discovery, are notoriously complex and expensive. . . . Given the substantial reversal rate of liability determinations on appeal, the whole expense of a damages trial is often wasted. Accordingly, those policy concerns that motivated Congress to grant jurisdiction over cases that are final except for an accounting [of damages] support our holding today.” Id. at 20.

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The U.S. Supreme Court’s much anticipated decision in Association for Molecular Pathology, et al. v. Myriad Genetics, Inc., et al., 569 U.S. ___, issued June 13, 2013. In short, the Supreme Court analyzed whether an isolated DNA sequence is patent eligible in light of the fundamental principle that laws of nature, natural phenomena, and abstract ideas are not patentable. The Supreme Court held that mere isolation of an otherwise naturally occuring genetic sequence of DNA is not patent eligible but that a non-naturally occuring DNA sequence may be subject matter eligible for patenting, so long as the other conditions for patenting are met (e.g., novelty, non-obviousness, written description).

While many divergent views are forming on the impact this decision will have on the biotech industry, its impact on patent litigation in Delaware is broadly predictable. In appropriate circumstances, new patent validity challenges can be anticipated against DNA sequence claims asserted in this District and new litigation may flow from the entry of several new competitors expected to offer genentic tests for various diagnostics, some of which will undoubtedly be the subject of a patent controversy within Delaware’s jurisdiction.

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Judge Robinson recently considered a motion to dismiss defendant’s counterclaims and to strike certain affirmative defenses related to the invalidity of the patent in suit, as well as certain background information. Joao Bock Transaction Systems, LLC v. Jack Henry & Associates, Inc., C.A. No. 12-1138-SLR (D. Del. June 13, 2013). Judge Robinson denied plaintiff’s motion finding that defendant’s counterclaims provided sufficient detail to give rise to a plausible claim for relief. Id. at 4-5. Specifically, defendant’s answer and counteclaim “include[d] numerous details indicating why Jack Henry believe[d] the ‘003 patent [was] invalid,” such as because the patent in suit was a continuation of a patent determined to be invalid, and because prior art existed prior to a year before the patent application. Id. at 5.

Judge Robinson also denied plaintiff’s motion to strike. Regarding defendant’s introductory section, Judge Robinson found that the material, including references to prior litigation, had “evidentiary or legal signifcance,” and should not be stricken. Id. at 5-6. Judge Robinson declined to strike defendant’s affirmative defenses, finding that sufficient supporting facts were present in defendant’s responsive pleading. Id. at 6.

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In a recent memorandum opinion, Judge Sue L. Robinson denied a defendant’s motion to transfer to the Central District of California litigation involving a patented codec used for encoding video onto Blue-ray discs. FastVDO LLC v. Paramount Pictures Corp., Civ. No. 12-1427-SLR (D. Del. June 4, 2013). The plaintiff was a Florida limited liability company with headquarters in Florida, and was significantly smaller (with significantly less litigation experience) than the defendant, a Delaware corporation with its headquarters in California. Id. at 1, 4. The defendant argued that the allegedly infringing coding was performed by authoring houses operating primarily in California, but the Court disagreed, noting that the authoring houses were headquartered in California, but performed coding in facilities located in Indiana, Pennsylvania, and New York. Id. at 1. As a result, and combined with the fact that Blue-ray discs are sold across the country, the Court found that the alleged infringement did not occur principally in California. Id. at 4. The Court gave little weight to the defendant’s argument that the authoring houses’ documents would be outside the Court’s subpoena power, explaining that since “the authoring houses manufacture the Blue-ray discs at the behest of [defendant], it is unlikely they would refuse any reasonable request to produce information from their business partner in electronic format.” Id. at 5. The Court also found that while trial would be less expensive for the defendant in California, it would be more expensive for the plaintiff than litigating in Delaware. As a result, the Court explained that “[a]lthough Delaware is not the locus of any party’s business activities, it is a neutral forum and no more inconvenient for [defendant] than Florida, the locus of [plaintiff’s] business activities.” Id. at 6. All of this, combined with the fact that 24 other Blue-ray cases filed by the plaintiff were pending in Delaware, convinced the Court that transfer was not warranted. Id. at 7-8.

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Chief Judge Sleet has granted a patent infringement defendant’s motion for a stay pending completion of inter partes reexamination of several patents-in-suit. See BodyMedia, Inc. v. Basis Science, Inc., C.A. No. 12-133-GMS, Order at 1-3 (D. Del. June 6, 2013). Judge Sleet first found that a stay would not result in undue prejudice to the plaintiff. The PTO had granted six of the defendant’s seven reexamination requests, thus mooting the plaintiff’s objection that the PTO had not yet acted on the requests. Furthermore, the parties’ competitive relationship did not weigh against granting a stay in light of the fact that the defendant had not yet sold its product and the plaintiff had not sought a preliminary injunction. Finally, Judge Sleet rejected the plaintiff’s allegations of potential prejudice, given that “the potential for litigation delay, by itself, is insufficient to demonstrate that [the plaintiff] will be unacceptably prejudiced” and “the timing of the reexamination and stay requests do not evidence any dilatory motive.” Id. at 3. Judge Sleet also found that the simplification-of-issues-in-question factor favored granting a stay: “[I]f the court were to deny [the defendant’s] request for a stay, it would be adjudicating less than ten percent of [the plaintiff’s] 243 asserted claims. Further, 15 of the 22 claims not covered by the pending reexaminations depend on claims that have been rejected. Thus, while [the plaintiff] is correct that there will be issues for judicial resolution not involved in the inter partes reexamination, the court is convinced that, in view of the foregoing, the reexamination proceedings will simplify the overlapping issues present in the reexamination and that will ultimately be before the court.” Id. Thus, Judge Sleet concluded, “a stay of this action will promote judicial economy and avoiding wasting the parties’ efforts and expense in parallel proceedings.” Id.

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