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In a recent memorandum order, Judge Sue L. Robinson found that a plaintiff’s communications with its patent monetization consultant were properly withheld as privileged or work product protected. Walker Digital, LLC v. Google, Inc., Civ. No. 11-309-SLR (D. Del. Feb. 12, 2013). Although the patent monetization consultant clearly “was not retained to provide legal services[,]” id. at 2 n.3, the Court explained that, based on a review of an advisory services agreement and a common interest agreement, “Walker Digital and IPNav do share a common legal interest and, therefore, any Walker Digital communications protected by the attorney-client privilege or work product doctrine do not lose that protection simply because they have been disclosed to IPNav.” Id. at 2.

The Court also granted in part the plaintiff’s motion to compel the production of paper versions of materials previously produced in redacted form. The Court denied the motion to the extent it related to documents with redactions labeled “Redacted – Source Code”, finding that such redactions at least put the plaintiff on notice that the unredacted information could be accessed on the source code computer. Id. at 1 n.1. However, with respect to documents produced with unlabeled redactions, the Court explained that “Google was not justified in simply redacting the information without offering an alternative means of reviewing it. Although Google has now made the unredacted versions available on the source code computer, this effort is too little, too late, for these documents.” As a result, the Court ordered Google to produce paper versions of these documents with source code unredacted. Id. at 2.

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Chief Judge Gregory M. Sleet recently considered defendant’s motion to dismiss in Devicor Medical Products, Inc. v. Biopsy Sciences, LLC, C.A. No 10-1060-GMS (D. Del. Feb. 7, 2013). Defendant moved to dismiss for lack of personal jurisdiction or improper venue “or, in the alternative, [to] transfer under 28 U.S.C. §§ 1404(a) or 1406(a).” Id. at 2. Defendant also contended that plaintiff’s “false marking claims should be dismissed for failure to meet the heightened pleading requirements of Rule 9(b).” Id. Plaintiff filed an alternative motion for jurisdictional discovery. Id. The Court held defendant’s motion in abeyance pending supplemental briefing, and it granted plaintiff’s motion for jurisdictional discovery. Id. at 12.

As to personal jurisdiction, the Court concluded that Delaware’s long-arm statute could be satisfied based on plaintiff’s allegations. “[V]isitors to [defendant’s] Internet homepage were able to click a link [to purchase defendant’s product] . . . and then select ‘United States’ and ‘Delaware’ from separate drop-down menus. After making these selections, the website would provide the visitor with information for [an alleged] Delaware-specific distributor . . . which was located in New Jersey. . . . [Defendant noted] that it [was] not aware of any of its products being marketed, distributed, or sold in Delaware.” Id. at 3 (internal citations and quotation marks omitted). The Court concluded that defendant “might have at least induced infringement in Delaware . . . through its website’s reference to [the distributor],” thereby satisfying Delaware’s long-arm statute, which states that it has personal jurisdiction over a nonresident that “causes tortious injury in the State by an act or omission in this State.” Id. at 9-10.

Turning to the constitutional due process element of personal jurisdiction, the Court explained that the law of the Federal Circuit applied because “the jurisdictional issue is intimately involved with the substance of the patent laws.” Id. at 3 n.3 (internal citations and quotation marks omitted). But “both parties briefed this issue under Third Circuit law. As such, the court will order supplemental briefing [on this issue under Federal Circuit law] as well as limited jurisdictional discovery relating to this point.” Id. at 10-11. It explained that “[i]n the absence of further briefing on the Federal Circuit’s personal jurisdiction standard . . . it is difficult for the court to determine precisely what discoverable facts might be important. The court believes, however, that evidence of sales to Delaware customers is likely to be relevant to this inquiry and will therefore permit discovery on this and related jurisdictional issues.” Id. at 11 n.10.

Because the issue of personal jurisdiction had yet to be resolved, the Court did not reach the issues of improper venue, transfer, or Rule 9(b) pleading sufficiency. Id. at 11-12.

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Magistrate Judge Mary Pat Thynge recently issued a report recommending the denial of Amazon.com’s and its subsidiaries’ motions to dismiss claims relating to mobile applications used to read barcodes. Hand Held Prods., Inc. v. Amazon.com, Inc., et al., C.A. No. 12-768-RGA-MPT (D. Del. Feb. 6, 2012). The defendants moved to dismiss the claims as falling short of the requirements imposed by Form 18, as well as the Twombly/Iqbal plausibility standard, id. at 3-4, and further argued that because their applications do not “selectively capture” barcodes, and instead only “capture and decode barcode information,” they could not be found liable for indirect infringement. Id. at 2.

After quickly disposing of the defendants’ argument that the direct infringement claims were insufficient, id. at 9-11, the Court explained that the complaint stated a plausible claim that each defendant also induced infringement based on their encouragement of customers to download and use infringing barcode-reading applications. Id. at 11-14. The Court added that the complaint stated a plausible claim of contributory infringement by alleging that each defendant “sells or offer to sell a mobile application that is a material part of the ‘088 patent[,]”which, assuming the truth of all well-pled allegations, has no substantial noninfringing use. Id. at 14-15.

Finally, the Court recommended the denial of the defendants’ motion to dismiss the plaintiff’s willfulness claim, finding that “[s]ufficient facts are alleged to infer Defendants knew there was an objectively high likelihood that their continued actions would constitute infringement.” Id. at 16.

In conclusion, the Court emphasized that the defendants’ motion to dismiss appeared, in reality, to be an attempt to “surreptitiously have the court conduct claim construction as part of its analysis under Rule 12(b)(6).” Id. at 16-17. The Court would not do this, of course, and explained that “[t]he analysis required is not to resolve disputed facts, nor decide the merits; rather, the examination is limited to testing the sufficiency of the complaint.” Id. at 17.

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Judge Sue L. Robinson recently granted-in-part Senju’s motion for partial dismissal of Apotex’s counterclaims and to strike certain affirmative defenses. Senju Pharm. Co., Ltd. v. Apotex, Inc., C.A. No. 12-159-SLR (D. Del. Feb. 6, 2013). Senju moved to dismiss Apotex’s invalidity counterclaims arguing that that they were deficient because they did not recite factual support and were therefore not in compliance with Fed. R. Civ. P. 8. Id. at 6. In response, Apotex argued that “its invalidity defense is not subject to the heightened pleading standard of Twombly and Iqbal; complies with with Fed. R. Civ. P. Form 18; is pled with same level of detail as Senju’s infringement complaint; and will become more detailed as the lawsuit progresses.” Id. at 6-7. Granting Senju’s motion, Judge Robinson noted that the courts that have declined to apply Twombly and Iqbal to invalidity counterclaims have reasoned that doing so would render those court’s local patent rules “superfluous” and would be inequitable to defendants because it would impose a higher pleading burden than Form 18 requires for plaintiffs. Id. at 7. Judge Robinson found this reasoning unpersuasive, however, because the District of Delaware has not adopted local patent rules. Id. at 8. Furthermore, “Form 18 still requires that some factual underpinning be presented, [and] the fact that Form 18 . . . remains the standard for pleading infringement claims is an insufficient justification for deviating from Twombly and Iqbal for pleading other causes of action. Id. Judge Robinson did not, however, strike Apotex’s invalidity affirmative defenses because they provided fair notice as required by Fed. R. Civ. P. 8(c). “Due to the differences between Rules 8(a) and 8(c) in text and purpose, [] Twombly and Iqbal do not apply to affirmative defenses, which need not be plausible to survive.” Id. at 9-10 (citing Internet Media Corp. v. Hearst Newspapers, LLC, Civ. No. 10-690, 2012 WL 3867165, at *3 (D. Del. Sept. 6, 2012) (internal quotations omitted) (alteration in original).

Judge Robinson also dismissed Apotex’s inequitable conduct counterclaims and related affirmative defenses, with leave to amend, for failing to adequately plead those claims with the particularity required by Exergen and Therasense. Id. at 14-15. Under Exergen, Apotex was required to plead “the specific who, what when, where and how of the material misrepresentation or omission committed before the PTO.” Id. Judge Robinson found that Apotex adequately pled the “how” (“misleading the PTO regarding evidence of obviousness, secondary considerations, and the scope of the patent’s written description) and the “where” (“materials omitted in submissions to the PTO and teachings of the written description”). Id. at 15. Although Judge Robinson found that the “given the volume of materials” submitted during reexamination, the withheld documents were withheld with knowledge and intent to deceive the PTO, Apotex did not adequately plead “who” deceived the PTO. Id. at 15-16. Judge Robinson determined that Apotex’s allegations of “who” were akin to the language found to be deficient in Exergen, i.e., “Exergen, its agents and/or attorneys.” Id. at 16. Apotex’s reference to “general entities” and “the inventors” in its claims would not permit the court “to reasonably infer that any specific individual both knew of the invalidating information and had a specific intent to deceive the PTO.” Id. at 16-17. See also XpertUniverse, Inc. v. Cisco Sys., Inc., 868 F. Supp. 2d 376, 379-83 (D. Del. 2012).

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On June 20, 2012, plaintiff Market-Alerts Pty. Ltd. filed six lawsuits, each alleging that multiple defendants infringe U.S. Patent No. 7,941,357, which “addresses a method of informing users of stock market events.” Defendants from the 12-780, 12-781, 12-782, and 12-783 actions moved the Court to stay litigation “pending post-grant review pursuant to § 18(b) of the AIA,” and Chief Judge Sleet granted that motion in a recent opinion. Market-Alerts Pty. Ltd. v. Bloomberg Finance L.P., et al., C.A. No. 12-780-GMS, at 4, 4 n.3, 18 (D. Del. Feb. 5, 2013). Judge Sleet also ordered that the two other related actions, 12-784 and 12-785, be stayed despite the fact that defendants from those actions did not join the motion to stay. Id. at 18.

Prior to filing the motion to stay, several defendants petitioned for post-grant review of plaintiff’s asserted patent under 35 U.S.C. § 321 and § 18 of the AIA, which provides authority “to reexamine the validity of covered business method patents (‘CBM review’).” Id. at 4-5. In his opinion, Judge Sleet relied on § 18(b), which sets forth the factors that the Court must consider when determining whether to stay litigation during the pendency of the post-grant review proceedings. Id. at 6. As Judge Sleet explained, the § 18(b) test “closely resembles” the test to assess a “motion to stay pending inter partes or ex parte reexamination.” Id. However, § 18(b) additionally considers “whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court.” Id. at 6 (quoting 35 U.S.C. § 18(b)(1)).

Judge Sleet found that, under § 18(b), staying the actions was appropriate because there was a reasonable chance that the petition would be granted and that one or more of the claims could be invalidated. See id. at 9-12. In addition, a stay was appropriate because the cases were in their “earliest possible stage.” Id. at 13. Judge Sleet did consider the fact that the CBM review was in its early stages, weighing against a stay, but Judge Sleet found that “the potential for excessive prejudice [was] reduced by the fact that the parties do not directly compete with each other, and there is no evidence of dilatory motive on the part of the defendants.” Id. at 16. In order to “reduce the burden of litigation on the parties and on the court” if the Court were to stay only 4 of the 6 related cases, Judge Sleet stayed all 6 related actions, as “an exercise of [the Court’s] discretion and in the interests of judicial and litigant economy.” Id. at 17.

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Magistrate Judge Christopher J. Burke recently denied defendant’s motion to “bifurcate the issue of liability for patent infringement from issues relating to damages and to whether any infringement was willful, such that damages and willfulness would be tried, if necessary, separate from and after the liability trial in the case.” SenoRx, Inc. v. Hologic Inc., C.A. No. 12-173-LPS-CJB, at 2 (D. Del. Jan. 30, 2013). Addressing the parties’ disagreement with regard to how common bifurcations are in patent cases, Judge Burke noted that “[t]he Court will approach an analysis of whether bifurcation is appropriate on a case-by-case basis, without resort to a general presumption.” Id. at 3.

Turning to whether bifurcation would prevent or cause “prejudice” to either party, Judge Burke found that defendant did not demonstrate that any prejudice it might face in producing sensitive documents to plaintiff, an alleged “hard-fought competitor[],” would outweigh “the harm [plaintiff] would face in seeing its case split in two.” Id. at 5-6.

Addressing the efficiency of bifurcation, Judge Burke found that defendant failed to demonstrate that “judicial resources would be best conserved by two separate trials.” Id. at 8. Defendant argued that “substantial overlap” would not exist between the evidence presented at the two trials. Id. at 6. Judge Burke, however, explained that “some real overlap” would be “inevitable,” as it would likely be “necessary to set out certain core testimony about the relevant products and industry in both the liability and damages trials.” Id. at 6-7. Furthermore, “at least some evidence regarding the commercial success of the products-at-issue, relevant to a determination of obviousness under 35 U.S.C. § 103, [would] overlap with evidence necessary to assess damages.” Id. at 7. Judge Burke further noted that “the evidentiary overlap regarding liability and willfulness issues” would be “[e]ven more significant.” Id. Defendant additionally argued that the outcome of the earlier, separate infringement suit could render the second suit unnecessary or facilitate a settlement. Id. Judge Burke, however, found that “these outcomes, while possible, are entirely speculative at this stage.” Id.

Next, Judge Burke considered “whether bifurcation would enhance juror comprehension” of the issues to be presented at trial, which would involve technologies addressing “medical device engineering, brachytherapy and radiation therapy.” Id. at 8. Judge Burke agreed with defendant that the suit’s “subject matter is complex” and would “pose a challenge for a jury.” Id. at 9. Judge Burke explained, however, that “patent cases often implicate difficult subject matter that may be unfamiliar to most jurors,” and “[t]he subject matter relating to the patents-in-suit [did] not strike the Court as significantly more complex than that confronted by juries in this District in many patent cases.” Id. Judge Burke further found that “other factors that might exacerbate the level of complexity involved in a patent case are not present.” Id. at 9-10. Specifically, the suit involved only two patents, only 20 claims were being asserted, the discovery produced to date had not been significant, and only one plaintiff and defendant were involved. Id. at 10.

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Magistrate Judge Schneider of the District of New Jersey, sitting by designation, recently issued an order granting in part and denying in part plaintiff’s application for the production of documents related to defendant’s licensing agreements. Sciele Pharma, Inc., et al. v. Lupin, Ltd., et al., C.A. No. 09-37-RBK-JS (D. Del. Jan. 28, 2013) (redacted version). The patents-in-suit in this infringement action relate to the treatment of diabetes. Id. at 8. Plaintiff requested five categories of “‘settlement and licensing documents’” for the purpose of assessing royalty damages; the details of one of these categories were redacted from the order. Id. at 1-2.

The focus of the Court’s analysis was on whether the patents in the requested agreements were “comparable” to the patents-in-suit, a relevant factor in examining a reasonable royalty calculation. Id. at 2-3. The Court first concluded that differences between the patents involved in the redacted category and the patents-in-suit did not affect whether these agreements were discoverable, but instead “[went] to their weight and admissibility;” because discovery is “a broader standard than admissibility,” the Court ordered production of these agreements. Id. at 6-7. The Court also granted plaintiff’s request as to agreements concerning biguanides, which is “in the class of compounds that includes metformin, the active ingredient” in plaintiff’s patented drug. Id. at 7-8. Plaintiff had sufficiently demonstrated comparability because the scope of discovery, “including determining whether a requested agreement is comparable, is interpreted broadly.” Id. at 8.

The Court denied plaintiff’s requests for agreements “concerning the treatment of diabetes” and “[o]ther extended release pharmaceutical characteristics” because they were “overbroad” and plaintiff had not shown that they were comparable. Id. at 8-9. But “a combination of [these two] requests [was] sufficiently comparable to be discoverable. [Defendant] will be Ordered to produce licensing agreements for other drugs for the treatment of diabetes that also have extended release pharmaceutical characteristics.” Id. at 9.

Having determined that defendant should produce some license agreements, the Court then analyzed whether it must also produce “communications concerning or associated with these agreements including negotiations, forecasts and analysis,” noting that such documents are generally “less probative and more prejudicial than the licenses themselves.” Id. at 9-10 (internal quotation marks omitted). The Court ordered production of such documents related to the redacted category based on its “similar[ity] to the issues in this case,” but denied the request as to all other categories, noting that their “minimal relevancy is outweighed by the cost, burden, prejudice and distraction the documents will generate.” Id. at 10-11.

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Judge Leonard Stark recently considered several motions in limine in advance of an upcoming jury trial on patent infringement and bench trial on inequitable conduct. See Enova Tech. Corp. v. Initio Corp., C.A. No. 10-04-LPS, Order at 1-3 (D. Del. Jan. 31, 2013). Judge Stark first considered plaintiff’s motion to exclude evidence or argument regarding “foreign patent proceedings, disputes, prosecution, or enforcement involving [plaintiff’s] foreign patent rights.” He granted the motion with respect to the upcoming jury trial, finding that the evidence was irrelevant and prohibited by Rule 403, but denied the motion with respect to the bench trial on inequitable conduct. Id. at 1.

Judge Stark also denied the following motions:
– Plaintiff’s motion to exclude defendants’ expert testimony regarding “the value of [plaintiff’s] patented technology and the value and availability of non-infringing alternatives,” which he found to be an untimely Daubert motion to exclude relevant evidence. Id. at 1-2.
– Plaintiff’s motion to exclude evidence of licenses that were allegedly incomparable to a hypothetical license of the patents-in-suit. Id. at 2.
– Defendant’s motion to exclude any mention of a settlement between plaintiff and another defendant under Rules 408 and 403. Id.

Judge Stark granted the following motions:
– Plaintiff’s motion to “exclude testimony and argument inconsistent with the Court’s claim construction,” which all parties agreed should not be permitted. Id.
– Defendant’s motion to exclude evidence of pre-suit knowledge of the patents-in-suit, where such evidence was inadmissible hearsay and properly excludable under Rule 403. Id.
– Defendant’s motion to exclude evidence of lost sales or price erosion, where plaintiff was not seeking damages under either theory, and so long as defendant did not “open the door to such evidence.” Id. at 2-3.

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Judge Richard Andrews recently considered a motion for leave to file an amended and supplemental answer and counterclaim that would set out various invalidity, inequitable conduct, and other defenses and claims that the defendant wanted to add after obtaining discovery from the plaintiff. See Inventio AG v. Thyssenkrupp Elevator Ams. Corp., C.A. No. 08-874-RGA, Order at 1-2 (D. Del. Jan. 29, 2013). Judge Andrews granted the motion with respect to invalidity defenses that were previously pleaded with less specificity and failure to mark and best mode claims that could be raised without prejudice to further proceedings. With respect to inequitable conduct, however, Judge Andrews found the question to be somewhat more complicated and allowed some claims but denied others. Id.

Judge Andrews focused on the specificity with which a claim was alleged in the proposed amended and supplemental complaint. He found that inequitable conduct claims related to prior art “are the sort that are easily made, recycling the obviousness defenses as inequitable conduct defenses.” Id. at 2. Accordingly, he found that the defendant had not met its burden by claims such as accusations that the inventor “cited prior art to the PTO but did not separately cite the prior art contained within the cited prior art.” Id. Similarly, Judge Andrews denied one best mode claim because it did not make specific allegations but allowed another best mode claim that made “very specific allegations of what the inventor knew about the best mode . . . intent to deceive, materiality, and a reason why the inventor wanted to deceive the PTO.” Id.

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Chief Judge Gregory M. Sleet recently granted a motion to stay pending reexamination in a case involving a patent entitled “Fuel Composition for a Diesel Engine.” Neste Oil Oyj v. Dynamic Fuels, LLC, et al., C.A. No. 12-662-GMS (D. Del. Jan. 31, 2013). The Court’s balancing of the relevant factors was swayed by several considerations. First, the Court found unconvincing the plaintiff’s argument that, because the defendants are direct competitors, a stay of potentially several years would be unduly prejudicial because plaintiffs could lose market share and goodwill. The Court explained that the plaintiff offered no evidence that the defendants are in fact direct competitors in the relevant market, and that lack of evidence was consistent with the plaintiff’s decision not to move for preliminary injunctive relief. Id. at 5-6. Second, the PTO already had rejected all claims of a related patent on reexamination, and the PTO’s first office action relating to the patent-in-suit adopted the same grounds for rejection of all claims of the patent-in-suit. Id. at 9. The Court found that this weighed in favor of the conclusion that the reexamination of the patent-in-suit ultimately would simplify the issues in this case. Id. at 9-10. Finally, the case was in its earliest stages, and a scheduling order had yet to be entered. Id. at 10.

More specifically, the Court explained that where the parties are direct competitors, “there is a reasonable chance that delay in adjudicating the alleged infringement will have outsized consequences to the party asserting infringement has occurred, including the potential for loss of market share and an erosion of goodwill.” Id. at 4 (quoting SenoRx, Inc. v. Hologic, Inc., No. 12-173-LPS-CJB (D. Del. Jan. 11, 2013)) (previously discussed here). The Court found unconvincing, though, the plaintiff’s argument that the defendants are its direct competitors, and that it would therefore be unduly prejudiced by a stay, in part because the plaintiff chose not to move for a preliminary injunction when it filed suit. Id. at 5. The Court explained, “the defendants have correctly noted that the only proof of direct competition . . . offered by [plaintiff] is wholly unsupported attorney argument.” Id. (internal quotations omitted). That, combined with the facts that the plaintiff did not seek a preliminary injunction and the relevant market was comprised of a large number of firms, weighed in favor of a finding that the plaintiff would not be unduly prejudiced by a stay. Id. at 5-6.

The Court next explained that a stay pending reexamination likely would result in issue simplification because the PTO already rejected all claims of a related patent which shared the same specification as the patent-in-suit, and “the reasoning underlying the PTO’s cancellation” of the related patent “will also apply to the [patent-in-suit].” Id. at 9. This result, the Court explained, was made more likely by the PTO’s first office action, which “adopt[ed] . . . all four . . . proposed grounds for rejection and . . . reject[ed] . . . all twenty patent claims.” Id. As the Court explained, “the likelihood of claim cancellation . . . is at least distantly signaled by a preliminary PTO action.” Id. at 9 n.4.

Finally, the Court explained that two “undue prejudice” arguments frequently made by plaintiffs opposing stays pending reexamination were insignificant in the Court’s analysis in this case. Id. at 6 n.3. The Court was not significantly moved by concerns about “stale evidence, faded memories, unavailable witnesses, and lost documents” because the plaintiff provided the Court with no information about how a stay would actually threaten the availability of particular evidence or witnesses. Id. at 6. The Court also rejected the plaintiff’s argument that reexamination “represents an inadequate forum for [an] invalidity dispute.” Id.

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