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In a recent Order, Judge Gregory M. Sleet granted defendants’ (the “Broadcaster Defendants”) motion to consolidate and stay fourteen related lawsuits. Delaware Radio Technologies, LLC et al. v. Beasley Broadcast Group, Inc., C.A. No. 13-1813-GMS, et al. (D. Del. Jan. 4, 2015). Plaintiffs allege that the Broadcaster Defendants infringe at least one or all of U.S. Patent Nos. 5,506,866, 5,642,379, and 5,475,691 (the “patents-in-suit”), which “relate to the transmission of both digital and analog radio signals using the in-band, on-channel (‘IBOC’) technique, often referred to as HD Radio technology.” Id. at 1. After plaintiffs filed suit against the Broadcaster Defendants, a third party, iBiquity Digital Corporation (“iBiquity”), filed a separate action against plaintiffs seeking a declaratory judgment of invalidity and noninfringement of the patents-in-suit. Id. iBiquity “licenses its software to the Broadcasting Defendants, which, when implemented into broadcasting equipment and systems, allegedly causes infringement of the method claims of the patents-in-suit.” Id.

The Broadcasting Defendants each filed a motion to consolidate and stay the cases pending the resolution of iBiquity’s declaratory judgment action. Judge Sleet ultimately granted that motion, finding all four traditional factors to weigh in favor of stay. Id. at 2 n.2. Judge Sleet first explained that “[a]lthough iBiquity is not itself an alleged direct infringer of the patents-in-suit, its technology is at the core of the Plaintiffs’ infringement contentions,” and the “[a]djudication of iBiquity’s declaratory judgment lawsuit will therefore either eliminate or crystalize the remaining issues for the Broadcast Defendants litigation.” Id. Judge Sleet further explained that “[t]he court can discern no meaningful prejudice to the Plaintiffs, as the information obtained during the course of the iBiquity lawsuit is not wasted; it can be applied-indeed, it is necessary-to the instant consolidated suit.” Id. Judge Sleet also noted that the case “is still in its infancy: no Rule 16 schedule is in place, and no discovery has been taken.” Id.

Judge Sleet explained that while “[b]oth parties extensively discusse[d] the ‘customer suit exception’ in their briefing . . . . the facts at bar do not fit squarely within the exception.” Id. That is, “iBiquity’s software is not itself infringing; it is the implementation of the software into the Broadcast Defendants’ systems that triggers the alleged infringement.” Id. Judge Sleet nevertheless found that the “underlying principles of the customer suit exception” – efficiency and judicial economy – to support the imposition of stay.

 

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In a recent report and recommendation, Magistrate Judge Sherry R. Fallon considered defendants’ motion for summary judgment, which alleged that the patents-in-suit, U.S. Patent Nos. 7,418,409 (“the ’409 patent”) and 8,145,536 (“the ’536 patent”), are invalid because they fail to meet the subject matter eligibility requirements of 35 U.S.C. § 101. Tenon & Groove, LLC et al. v. Plusgrade S.E.C. et al., C.A. No. 12-1118-GMS-SRF (D. Del. Jan. 6, 2015). The ’409 patent discloses “methods for the concurrent optimization of value in various types of transactions between sellers and buyers, with applications in the context of the airline industry,” and the ’536 patent discloses “computerized applications for generating revenue based on conditional options for products, particularly in the context of the airline industry.” Id. at 1-2. Judge Fallon ultimately recommended that the court grant defendants’ motion and dismiss the action. Id. at 16.

Judge Fallon first considered whether the patents-in-suit satisfied the “machine-or-transformation” test. Given that the parties did not dispute the transformation prong, Judge Fallon analyzed only the machine prong of the test. Id. at 8. Judge Fallon concluded that the patents-in-suit did not satisfy the machine-or-transformation test, noting that specifications “themselves reveal that the processes may be performed mentally by a human, expressly stating that the inventions ‘eliminate[] manual, time-consuming processes and replace[] those with an efficient, automatic process.’” Id. at 9. Judge Fallon also noted that the “specifications provide that achieving an optimal upgrade for customers and the airline, which is a primary purpose of the invention, requires the use of human judgment” and that the Federal Circuit has held that the patent statute “does not allow patents on particular systems that depend for their operation on human intelligence alone.” Id. at 10. Moreover, Judge Fallon explained that “[d]ata-gathering steps alone cannot bring a claim into compliance with § 101, because humans have historically gathered and stored data mentally or with pen and paper.” Id. at 10-11.

Noting that the machine-or-transformation test is not dispositive, Judge Fallon next “examine[d] more generally the abstract nature of the claims” and applied the test set forth in Alice Corp. Pty. Ltd v. CLS Bank Int’l, 134 S. Ct. 2347 (2014). Considering the first step of the Alice framework, Judge Fallon found that the ’409 and ’536 patents “are directed to the unpatentable fundamental concept of using a computer to facilitate negotiations between an airline and its customer that results in a contract for a product upgrade.” Id. at 12. Judge Fallon explained that “[a]lthough certain dependent claims restrict the field of use to the airline industry, this limitation is insufficient to establish patent eligibility under § 101.” Id. at 13.

Turning to the second step of the Alice framework, Judge Fallon considered whether the patents-in-suit “embody inventive concepts” despite being directed to an abstract idea. Judge Fallon concluded that “[a]n airline’s capacity to track variables, including the preferences of multiple passengers, flight availability, and the perceived value for an upgrade option, is not an inventive concept.” Id. at 14. Judge Fallon explained that like “the risk hedging in Bilski, and the concept of intermediated settlement in Alice, the concept of using a computer to optimize negotiations between an airline and its customer, to each obtain the best economic results given certain conditions, is ‘a fundamental economic practice long prevalent in our system of commerce.’” Id. As Judge Fallon noted, “the claimed concept is not directed to any specific device or system, nor is it limited to a concrete application.” Id. Judge Fallon additionally explained that “the claims recite only a general purpose computer performing ‘purely conventional’ functions.” Id. at 15.

 

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Chief Judge Leonard P. Stark recently issued a Memorandum Order on several of the parties various motions in limine filed in advance of an upcoming pretrial conference on January 9.  Intellectual Ventures I LLC v. Symantec Corporation, C.A. No. 10-1067-LPS (D. Del. Jan. 6, 2015).  Judge Stark granted plaintiff’s motions to preclude any evidence from defendant disparaging plaintiff’s business model and practices (such as referring to plaintiff as a “patent troll”), or disparaging the United States Patent and Trademark Office.  Id. at 1, 2.  Judge Stark also granted plaintiff’s motion to preclude reference to reexamination proceedings of the patent-in-suit because any probative value is outweighed by the risk of unfair prejudice and jury confusion.  Id. at 1-2.  Judge Stark granted defendant’s motion to preclude evidence of pre-suit knowledge of the patent-in-suit because “[n]o claims of willful infringement, indirect infringement, or copying will be the subject of the forthcoming trial.”  Id. at 3.

Plaintiff also requested that the Court order defendant to limit the number of prior art references, obviousness combinations, and witnesses it will present at trial.  Judge Stark denied the request noting that the parties can “make their own decisions as to how to make the best and most effective use of the limited, albeit sufficient, amount of time they will be given for their presentations at trial, which they are reminded will be no more than 20-24 hours per side.”  Id. at 3-4.

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Magistrate Judge Joel Schneider of the District of New Jersey, sitting by designation and referral, recently recommended that a defendant who was granted summary judgment of noninfringement based on a sublicense be awarded a “substantial sum” – more than $5,462,889 – in attorneys’ fees under 35 U.S.C. § 285.  Bayer CropScience AG v. Dow Agrosciences LLC, Civ. No. 12-246 (RMB/JS) (D. Del. Dec. 22, 2014).  Judge Schneider found that in light of the sublicense at issue, Bayer’s case was “exceptionally meritless and Bayer knew or should have known this before it filed its complaint.  In addition, as the litigation progressed and it became apparent that Bayer’s case was going nowhere, Bayer insisted on forging ahead while it unsuccessfully searched for a theory to defeat Dow’s license or contract defense.  The better and prudent course of action would have been to abandon the action.”  Id. at 9-10.  According to Judge Schneider, the weakness of Bayer’s claims was also demonstrated by the Federal Circuit’s summary affirmance, a procedure used “only when the appellant/petitioner has utterly failed to raise any issues in the appeal that require an opinion to be written in support of the court’s judgment of affirmance.”  Id. at 14 (quoting Fed. Cir. R. 36).  Finally, Judge Schneider noted that “[a]nother remarkable aspect of Bayer’s defeat is that much of Dow’s best evidence came from the deposition testimony of Bayer’s witnesses, not Dow’s witnesses. . . . If Bayer had conducted a modicum of due diligence before it filed its complaint it would have learned from these witnesses that its case was doomed.”  Id. at 14-15.

UPDATE:  Judge Renee Marie Bumb adopted the report and recommendation of Magistrate Judge Schneider in a March 13, 2015 opinion.  Judge Bumb found counsel’s billing rates to be reasonable, id. at 31 n.12, but reserved judgment on an appropriate amount of attorneys fees to be awarded due to the heavily redacted nature of the fee application.  The Court explained that a plaintiff “is entitled to appraise the reasonableness of the amount of fees requested by [defendant] including the nature and extent of the work done by [defense] counsel on various phases of the case, so that it may present to the court any legitimate challenges to [defendant’s] claim.”  Id. at 29.  While Judge Bumb found “that [plaintiff] could have done more before Judge Schneider in terms of articulating why it could not access the reasonableness of [defendant’s] fees, the Court will hold further oral argument on and reserve decision on this objection.  (Alternatively, [defendant] may wish to turn over revised redacted billing statements in the interim, which may obviate the need for oral argument.)”  Id. at 30-31.

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In Intellectual Ventures I LLC, et al. v. Canon Inc., et al., C.A. No. 13-473-SLR (D. Del. Dec. 16 2014), Judge Sue L. Robinson limited the number of patents to be presented at the Markman hearing. Judge Robinson explained that the Court was presented with “65 disputed terms from 95 claims in 11 patents,” and that the Court’s resources were not “substantial enough to warrant a claim construction decision to issue on all 11 patents on or before January 27, 2015.” Judge Robinson therefore ordered the plaintiffs to select the six patents and related limitations they would like to present at the December 22, 2014 Markman hearing. Judge Robinson did note that the Court would “discuss with the parties at that time the disposition of the remaining patents in terms of the case schedule.”

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In a memorandum opinion, Judge Sue L. Robinson granted and denied in part defendants’ motion to dismiss plaintiffs’ claims of infringement of U.S. Patent Nos. 7,664,701 (“the ’701 patent:), 8,083,137 (“the ’137 patent”), 7,603,382 (“the ’382 patent”), and 7,260,587 (“the ’587 patent”) based on the failure of those patents to recite patentable subject matter pursuant to 35 U.S.C. § 101. Intellectual Ventures I LLC et al. v. Manufacturers and Traders Trust Company, C.A. No. 13-1274-SLR (D. Del. Dec. 18, 2014).

First, Judge Robinson determined that the Court “may proceed on a § 101 analysis” without a claim construction, “as the parties’ arguments are not focused on specific claim limitations, but instead on the broader concepts of the claims and the computer components used.” Id. at 9-10.

Judge Robinson then relied on the two-step framework set forth in Alice Corp. Ply. Ltd. v. CLS Bank Int’l, 134 S.Ct. 2347(2014) to assess the subject matter eligibility of each of the asserted patents. Starting with the ’137 Patent, Judge Robinson noted that it disclosed “a system and method which allows consumer users to establish self-imposed limits on the user’s spending (borrowing) such that when the limit is reached the consuming user is notified,” which Judge Robinson determined to be a “longstanding and fundamental practice, utilized in personal and business finances” under the first prong of Alice. Id. at 11-12. Turning to Alice’s second prong, Judge Robinson found that plaintiffs’ arguments failed, given that an “abstract idea implemented on a computer [that] allows for more or faster monitoring of accounts is not the crux of the patentability analysis.” Id. at 13. Judge Robinson further noted that “[t]he computer and components (central processor) described in the specification are generic. The database is also generic; the specification does not describe a ‘specially programmed database,’ but a database used to store data.” Id. at 14. Judge Robinson further explained that the recitation of a “means for storing,” a “means for presenting transaction summary data,” and a “means for listing,” did not change the analysis, “as only generic computers and components are disclosed in the specification.” Id. at 15. Judge Robinson thus found the ’137 patent invalid for lack of patentable subject matter. Id. at 15-16.

Addressing the ’832 patent, Judge Robinson noted that it is directed to “a system for selectively tailoring information delivered to an Internet user depending upon the particular needs of the user.” Id. at 16. Judge Robinson explained that “[i]nstead of working in a ‘normal, expected manner,’ the ’382 patent describes an idea and solution for customized web page content, [and] thus, ‘the claimed solution is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.’” Id. at 18. Judge Robinson therefore found that the ’832 patent recites patentable subject matter.

Turning to the ’587 patent, Judge Robinson noted that it disclosed “a method, system and apparatus for automatically organizing a large number of images that may be obtained from a variety of different sources,” which was found to be “akin to a computerized photo album, a routine and conventional idea” under the first prong of Alice. Id. at 20. As to the second prong, Judge Robinson found that “[t]he claims do no more than ‘computerize’ a known idea for organizing images” and therefore concluded that the ’587 patent was invalid for lack of patentable subject matter. Id. at 21-22.

As to the ’701 patent, Judge Robinson noted that the patent’s central idea is directed to “providing a user with aliases to use in conducting transactions,” which was found to be an “abstract idea” under Alice’s first prong, given that “[t]he use of aliases to maintain privacy in financial transactions is not limited to Internet transactions.” Id. at 22-23. Pursuant to the second prong, Judge Robinson noted that “in order to pass muster under § 101, it is no longer sufficient to use the Internet through generic computer components to achieve a useful result.” Judge Robinson determined that the ’701 patent fell under such a category, and thus found the ’701 patent was invalid for failure to recite patentable subject matter. Id. at 25-26.

 

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In two opinions filed last week, Chief Judge Leonard P. Stark denied defendant’s motions for summary judgment of invalidity, non-infringement, and no standing in Transcenic, Inc. v. Google, Inc., C.A. No. 11-582-LPS (D. Del. Dec. 22, 2014) (“Standing Opinion” and “Invalidity/Noninfringement Opinion”).

As to invalidity and noninfringement, the motions largely constituted a “’battle of the experts that is not amenable to resolution prior to the presentation of evidence, including testimony,” Invalidity/Noninfringement Opinion at 3, and that genuine issues of material fact remained.

As to standing, the Court concluded that no valid assignment contract existed between the inventor and his employer (an alleged assignee), and even if there was one, the assignment obligation would not cover the patent-in-suit. Standing Opinion at 5-6. “[B]ecause [defendant] only present[ed] evidence regarding the relatedness of the patent-in-suit to [the business of the entity that later acquired the inventor’s employer], no reasonable juror could find that [the inventor’s] invention was related to the business of [the employer].” Id. at 6. As a result, defendant’s arguments as to lack of standing failed, and the Court granted plaintiff’s motion for summary judgment regarding the standing defense. Id.

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Judge Gregory M. Sleet recently certified for interlocutory appeal a question relating to where ANDA filers are subject to specific personal jurisdiction.  AstraZeneca AB v. Aurobindo Pharma Ltd., et al., Consol. C.A. No. 14-664-GMS (D. Del. Dec. 17, 2014).  Judge Sleet had previously denied Mylan’s motion to dismiss on personal jurisdiction grounds in an opinion discussed here, but agreed with Mylan that the question of where an ANDA filer is subject to specific personal jurisdiction, in light of the Supreme Court’s decision in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), is a controlling and novel question of law for which there is a substantial ground for difference of opinion.  The Court added that “given the volume of Hatch-Waxman cases pending in this district, the court is of the view that interlocutory appellate review will provide necessary guidance as to whether these cases are properly before the court.”

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Judge Sue Robinson has invalidated U.S. Patent Nos. 5,862,321 and 6,144,997, which relate to digital file identification and had been asserted against Amazon and Barnes & Noble, as claiming abstract ideas under Section 101 and Alice Corp. Cloud Stachel, LLC v. Amazon.com, Inc., et al., C.A. No. 13-941-SLR, 13-942-SLR, Memo. Op. at 19 (D. Del. Dec. 18, 2014).

The patents claimed a system for transferring location information for documents, allowing users to access files without being limited by the memory available on the device they are using. Judge Robinson held that this was an abstract idea, accepting the defendants’ characterization of the claimed inventions as similar to cataloging documents to aid retrieval of the documents, which had existed for “[n]early two millennia.” Id. at 13-14. Turning to whether there were sufficient limitations on the abstract idea, Judge Robinson found that there were not, accepting the defendants’ argument that any limitation present was essentially a conventional computer component or process that operates similarly to a book of call numbers in a library. Id. at 14-18. Accordingly, Judge Robinson concluded that “[a]llowing the asserted claims to survive would curb any innovation related to computerized cataloguing of documents to facilitate their retrieval from storage, which would monopolize the ‘abstract idea.’” Id. at 18.

Judge Robinson also explained that a claim construction decision was not necessary for her finding of Section 101 invalidity, because she would have reached the same conclusion even if she had adopted all of the plaintiff’s proposed constructions. Id. at 1 n.2.

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