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Chief Judge Gregory Sleet has denied a declaratory judgment defendant’s motion to dismiss claims related to patents that were the subject of previous litigation between the parties. DJ plaintiff DNP filed its complaint seeking a judgment of noninfringement and invalidity of four patents owned by Natural Alternatives International (“NAI”). Three of the patents had been the subject of an infringement action in 2009, and NAI moved for dismissal as to those three patents, arguing that no justiciable case or controversy existed between the parties. Judge Sleet denied the motion, finding that an actual case or controversy existed with respect to these three patents even though NAI had only asserted a counterclaim of infringement with respect to the one new patent. See DNP Int’l Co. v. Natural Alternatives Int’l, Inc., C.A. No. 11-1283-GMS, Order at 1 n.1 (D. Del. Feb. 27, 2013).

Judge Sleet explained that “Federal Circuit precedent has established that ongoing disputes between the parties concerning related technology may suggest the existence of an actual controversy sufficient to support declaratory judgment jurisdiction.” Id. at 2 n.1 (citing Teva Pharms. USA, Inc. v. Novartis Pharms. Corp., 482 F.3d 1330, 1344 (Fed. Cir. 2007); Vanguard Research, Inc. v. PEAT, Inc., 304 F.3d 1249, 1255 (Fed. Cir. 2002)). He noted that NAI admitted the existence of a dispute with respect to the new patent and that the new patent came from the same family as the three older patents. He found that “[t]he admittedly live controversy surrounding the [new patent] makes it more likely that a similar controversy remains with respect to the Older Patents.” Id.

Judge Sleet also found that the history of patent litigation between the parties “[while] not dispositive . . . can be relevant where the prior conduct makes reasonable an assumption that the defendant will take action with respect to the patent-in-suit.” Id. (citing Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1341 (Fed. Cir. 2008)). NAI’s assurance “that it ‘has no intention of asserting the claims in [the three Older Patents] against DNP or its customers’ . . . does not suffice to remove subject matter jurisdiction,” especially given its “refusal to provide more concrete assurance” in the form of a covenant not to sue. Id. Additionally, an ongoing unfair competition case between the parties, while “provid[ing] less evidence of an ongoing patent dispute, it is certainly related to the earlier infringement contentions in the 2009 Action . . . [and is] indicative of the broader adversarial stance adopted by the parties.” Id.

Judge Sleet found that all of the facts taken together were sufficient for the exercise of declaratory judgment jurisdiction under the requirements of Medimmune v. Genentech, 549 U.S. 118 (2007). Id. at 2-3 n.1. Accordingly, he denied NAI’s motion to dismiss claims related to the three older patents.

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Judge Richard G. Andrews recently considered several motions filed by defendant Intel, including a Daubert motion to exclude plaintiff’s damages expert, a motion in limine to exclude damages testimony of an inventor of the patent in suit, and a motion for summary judgment of no damages. AVM Technologies, LLC v. Intel Corporation, C.A. No. 10-610-RGA (D. Del. Feb. 21, 2013). Judge Andrews granted Intel’s Daubert motion finding that the expert’s proposed testimony, “that a reasonable royalty can be established by one litigation settlement agreement involving a different patent” was not reliable. Id. at 1. Judge Andrews previously decided that the testimony should likely be excluded but wanted to hear testimony from the expert prior to issuing a decision. Id. at 2. After hearing testimony, Judge Andrews found that the expert’s opinion concerning reliance on one settlement agreement, was “not supported by any methodology that explain[ed] why [the agreement] by itself could be the basis for an accurate conclusion about the hypothetical negotiation over the [patent-in-suit].” Id. at 5. Judge Andrews further stated that, “[t]o say that one litigation settlement agreement relating to a different patent and executed five years after the hypothetical negotiation would have taken place . . . is the basis for an opinion is completely speculative without, at a minimum, some analysis of the litigation that led to the settlement.” Id.

Judge Andrews also granted-in-part Intel’s motion in limine to exclude damages testimony of an inventor of the patent-in-suit. Judge Andrews held that the witness could not “testify concerning damages beyond facts and information within his personal knowledge. Thus, [the witness] would not be permitted to testify about anything speculative or hypothetical, including what he would have done in hypothetical negotiations.” Id. at 3. The court excluded most of the witness’ proposed testimony finding that it was “untimely disclosed and [was] unreliable expert testimony.” Id. and 10-14.

The Court previously vacated the trial date in this case “because the Court understood that [plaintiff] did not want to proceed to trial without at least one of the evidentiary bases for a theory of damages in excess of $100,000,000. Id. at 14. However, “in view of Federal Circuit precedent,” the Court did not grant Intel’s summary judgment motion of no damages, but “held it in abeyance pending a further conference with counsel.” Id. at 14-15.

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Judge Leonard Stark has issued a supplemental claim construction order in a patent infringement case filed by Enova Technology against various manufacturers of hard drives and related encryption technologies. See Enova Tech. Corp. v. Initio Corp., C.A. No. 10-04-LPS, Order (D. Del. Feb. 19, 2013). We previously reported on Judge Stark’s original claim construction order. Now with trial approaching, Judge Stark has considered the defendants’ request for additional construction, including construction of several broader claim terms that include within them narrower claim terms previously construed. After construing the terms in question, he cancelled the scheduled claim construction hearing and advised the parties that trial would begin in its place.

Judge Stark construed the following additional terms:
– “main controller”
– “a main controller receiving input from said at least one data stream interceptor and determining whether incoming data would be encrypted, decrypted or passed through based on the received input from said at least one data stream interceptor”
– “SATA protocol stack”
Judge Stark also found that the following additional terms did not require any construction:
– “data stream interceptor”
– “main controller”
– “data generating controller”
– “data storage controller”
– “cipher engine”
– “FIS (Fram Information Structure)”
– “cryptographic engine . . . for encrypting and decrypting at least a subset of data FISes (Frame Information Structures) communicated to or from the SATA protocol stack”
– “the main controller configured to cause . . . the SATA protocol stack to process a Register-Device to Host FIS [without decryption responsive to receiving the Register-Device to Host FIS from the interface of the device]”

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Petitioner filed foreign claims in Germany and Luxembourg in January and April 2011, alleging that one of the respondents infringes European Patent No. 1-151-591. Judge Richard G. Andrews recently denied petitioner’s request to compel production of “source code and other core technical documents that underlie Respondents’ telecommunications service system” for use in those foreign patent infringement proceedings. Via Vadis Controlling GmbH v. Skype, Inc., et al., C.A. No. 12-mc-193-RGA, at 1, 5 (D. Del. Feb. 21, 2013).

Judge Andrews found that the Court possessed authority pursuant to 28 U.S.C. § 1782(a) to compel discovery, but nevertheless concluded that “it should not exercise its discretion to grant the petition.” Id. at 3. In denying the petition, Judge Andrews relied on the factors set forth in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004), which inform a district court’s discretion when determining whether to compel production of information for use in a foreign proceeding pursuant to § 1782. See id. at 2-4. First, Judge Andrews noted that “‘when the person from whom discovery is sought is a participant in the foreign proceeding . . . the need for § 1782(a) aid generally is not as apparent as it ordinarily is when evidence is sought from a nonparticipant in the matter arising abroad.’” Id. at 3 (quoting Intel, 542 U.S. at 244). Because at least one respondent was a defendant in the foreign proceedings, this Intel factor weighed against compelling discovery. Id. Weighing further against compelling discovery, Judge Andrews found that “[d]espite their jurisdiction over SkypeS, the foreign courts have not forced SkypeS to produce the requested materials,” and thus granting the petition “would be, in essence, a circumvention of the foreign courts’ rules and enforcement procedures.” Id. at 4. Moreover, Judge Andrews concluded that producing the source code would “intrude on the protective order from . . . prior litigation,” which “specifically prohibits [the respondents’] disclosure of the source code in the proceedings in Germany and Luxembourg.” Id. The only Intel factor Judge Andrews found to weigh in favor of compelling discovery was that “the German court would likely consider the § 1782 materials.” Id. at 2-3. Accordingly, Judge Andrews found that “the overall balance of all the factors” weighed in favor of denying the petition to compel discovery. Id. at 5.

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Dear Colleague,
Managing IP, in association with Delaware IP Law Blog, invites you to attend the second annual US Patent Forum March 19, 2013 at the Willard InterContinental in Washington D.C. www.managingip.com/USPatentForum2013
Free for in-house patent counsel, academics and R&D professionals.

One year on from the AIA, we will assess the patent landscape in the United States and look at strategies to achieve maximum value from your patent portfolio.

On the agenda:

• Two keynote addresses by USPTO’s Teresa Stanek Rea and WIPO’s James Pooley
• AIA and NPEs: one year on
• Lessons from Canadian reforms
• Monetization of patents: strategies for deriving maximum value from your patent portfolio
• Life sciences & ITC industries focus
• Doing business in China: how to ensure your patented assets in China are making you money
Speakers:
• James Pooley, deputy director general for innovation and technology, World Intellectual Property Organization
• Teresa Stanek Rea, acting director general, United States Patent & Trademark Office
• Jim Crowne, director of legal affairs, AIPLA
• Paul R Michel, Chief Circuit Judge (retired)
• Vanessa Bailey, IPR litigation, Nokia Siemens Networks
• Richard Rainey, executive counsel and IP litigation, GE
• David L Marcus, VP, deputy general counsel, Comcast Cable Communications
• Joseph G Contrera, patent counsel, Johns Hopkins Technology Transfer
• Andrew Hirsch, general counsel, Fuelcor
• Heather Boussios, senior intellectual property counsel, Emergent BioSolutions
• Henry Hadad, VP, deputy general counsel, IP, Bristol-Myers Squibb Company
• Vaishali Udupa, IP litigation counsel, Hewlett-Packard
• Camille-Remy Bogliolo, lawyer, international legal affairs, European Patent Office
• Raymond Niro, senior partner, Niro Haller & Niro
• Sherry Knowles, principal, Knowles Intellectual Property Strategies
For more details, visit http://www.managingip.com/stub.aspx?stubid=20311

Testimonials:

“Excellent overviews of AIA from those who wrote it, those who will implement it, and those who must live with it” – Graham Douglas, IDDEX (2012)

“Assessments and points of view you won’t find any place else” – Jim Farmer, Georgetown University (2012)

You will network with:

Accuray Inc, Americas Bankers Association, Boeing Company, CIENA, Department of Homeland Security, Eldelman, El Cap Ventures, Eli Lilly & Company, Embassy of Canada, Emergent BioSolutions, Ex-Nokia, George Washington University, Google, IC2 Institute – University of Texas, Intel, Intellectual Property Owners Association, INVISTA, IPXI, JDSU Corporation, JLG Industries, Johns Hopkins Technology Transfer, Johns Hopkins University, Magna International, Nestle, Nokia Siemens Networks, Palo Alto Research Center, Panasonic, Personalized Media Communications, Privaris, Sharp, Siemens Enterprise Communications, Supernus Pharmaceuticals, Tredegar Corporation, USPTO, US International Trade Commission, US International Trade Commission, Widener Law School and many more.
________________________________________
EASY WAYS TO REGISTER:
Register online: http://www.euromoneysecure.com/orders/gen/start.asp?cIndex=1731
Email: mfabri@euromoneyplc.com
________________________________________
We look forward to meeting you on March 19.

Kind regards,
James Nurton
Managing editor
www.managingip.com
Pilar Kraman
Managing editor
www.delawareiplaw.com

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Judge Leonard P. Stark recently issued rulings on a host of discovery disputes and, in the process, criticized the parties for abusing his discovery dispute procedure. Softview LLC v. Apple Inc., et al., Consol. C.A. No. 10-389-LPS (D. Del. Feb. 22, 2013). At issue were letters submitted by the parties in connection with the Court’s scheduling of a late afternoon teleconference to resolve various discovery disputes. Specifically, the plaintiff “filed nine separate letters seeking assistance from the Court on more than twenty discovery disputes[,]” and the defendants “filed an additional nine separate letters seeking assistance from the Court on more than ten additional discovery disputes.” Id. at 2 (emphasis in original). All told, including the responsive letters that were filed, Judge Stark explained that the Court received and reviewed a “mass of filings” totaling “36 letters presenting argument on at least 30 discovery disputes.” Id. at 3 (emphasis in original). Judge Stark viewed the volume of material submitted as revealing “that the parties have failed to reasonably communicate with one another or to put forth the expected and required good faith efforts towards resolving discovery disputes.” Id. “[M]ore troubling” to Judge Stark was “that the parties have utterly failed to exercise common sense, inundating the Court with far more than could possibly be addressed during a teleconference that the parties understood (or should have understood) would last only 45 to 60 minutes.” Id.

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Chief Judge Sleet recently issued an Order of Judgment in which he found that plaintiff was in contempt of court for failing to comply with the Court’s September 2010 Amended Order (D.I. 31). Huntley, L.L.C. v. Monteray Mushrooms Inc., C.A. No. 08-377-GMS (D. Del. Feb. 14, 2013) (“Order of Judgment”). There the Court ordered plaintiff to pay $27,831.63 in attorney’s fees. For background, see here for the Court’s 2009 memorandum granting defendant’s motion to dismiss.

In May 2012, defendant filed a Motion for Contempt, alleging that plaintiff was in violation of the Court’s 2010 order because it had not made payments toward the balance owed, even though the parties had negotiated a payment plan. (D.I. 35). Defendant requested sanctions in addition to the fees it was due. Id. The Court ordered payment of the $27,831.63 in attorney’s fees. Order of Judgment at 1.

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Magistrate Judge Burke recently issued a Report, recommending that defendant’s motion to dismiss plaintiff’s complaint as to direct infringement be denied but that the motion to dismiss plaintiff’s complaint as to indirect infringement be granted. Pragmatus AV, LLC v. TangoMe, Inc., C.A. No. 11-1092-LPS-CJB (D. Del. Feb. 13, 2013). Judge Burke previously made the same recommendation, and applied substantially similar analysis, in Pragmatus AV, LLC v. Yahoo! Inc., C.A. No. 11-902-LPS-CJB (D. Del. Nov. 13, 2012) (Yahoo), discussed here. This was a related case in which the patents-in-suit included the three at issue in this decision, and the plaintiff made similar allegations in that case as well.

As in Yahoo, plaintiff did not plead joint infringement and the primary question as to direct infringement was whether plaintiff’s allegations could only implicate a theory of joint infringement, and thus should be dismissed. See id. at 8. Here Judge Burke similarly concluded that “Defendant’s arguments as to dismissal [were] premature” because “the challenged claims do not so clearly and explicitly require the work of joint infringers so as to warrant dismissal.” Id. at 19, 14.

As to induced infringement, “Plaintiff assert[ed] that [defendant] ha[d] notice and knowledge of its infringement via a notice letter sent by [Plaintiff].” Id. at 22 (internal citations and quotation marks omitted). Unlike in Yahoo, “this allegation [did] indicate when that notice was provided,” but it still “[did] not allege any facts regarding the substance of that notice.” Id. at 23. Therefore, “[t]he Court [was] left to speculate as to what it was about that notice that could have plausibly provided [defendant] with the requisite knowledge of its users’ infringement.” Id. The allegations regarding the notice also provided the Court with “no basis to infer that Defendant, after receiving the notice, could have specifically intended for its users to continue infringing the patents. The law requires more.” Id. at 24. Finally, as in Yahoo, Judge Burke found that “the mere allegation that [defendant’s products] may be used to infringe is not sufficient to allow a reasonable inference that, inter alia, these services and products have no substantial noninfringing uses.” Id. at 26-27. Judge Burke therefore recommended that plaintiff’s complaint as to both induced and contributory infringement be dismissed. Id. at 27.

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Judge Sleet recently denied defendant Cree, Inc.’s motion to transfer venue of plaintiff E. Fred Schubert’s action to the Middle District of North Carolina. Schubert v. Cree Inc., C.A. No. 12-922-GMS (D. Del. Feb. 14, 2013). Schubert, a resident of New York, filed this action against Cree, a resident of North Carolina, along with two other actions alleging infringement of U.S. Patent No. 6,294,475. Judge Sleet determined that the Jumara factors weighed against transfer. Because Delaware was not Schubert’s “home forum,” Judge Sleet noted that Schubert’s forum selection was not “deserving of ‘paramount’ consideration.” Id. at 5. But, Schubert’s forum choice was entitled to “some degree of heightened deference given its underlying rational and legitimate basis — namely, the desire to litigate in a district approximately halfway between the parties and in which Schubert intends to litigate two related cases.” Id. The court determined that defendants’s forum preference, where the claim arose and the location of books and records weighed in favor of transfer, but all other factors were either inapplicable or weighed against transfer. Id. at 5-10. Regarding the convenience of the parties, Judge Sleet noted the financial disparity between the parties and concluded that Cree had “far deeper pockets” and was better able to “bear any increased costs.” Id. at 6-7. Also, the “practical considerations,” factor weighed strongly against transfer considering that two related cases were currently pending in Delaware. Id. at 8-9.

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Chief Judge Gregory M. Sleet recently considered defendants’ motion to dismiss in which the defendants argued that in light of the Court’s prior construction of certain claims of the patent-in-suit, defendants’ ANDA product could not infringe. Endo Pharms. Inc. v. TWI Pharms., Inc., C.A. No. 12-848-GMS (D. Del. Feb. 11, 2013). Judge Sleet denied the motion determining that, at this early stage of the case, the court could not find plaintiffs’ claims “without merit or facially implausible.” Id. at 2 n.1. Citing Third Circuit precedent on the issue of collateral estoppel, Judge Sleet noted that it was not clear that the Court would be bound by the prior claim construction when the parties reached a settlement before the court issued a decision. Id. at 2 n.1 (citing Russo v. City of Phila., 459 F. App’x 176, 178-79 (3d Cir. 2012) (outling the four elements of issue preclusion)). The court also determined that even if the court adopted its prior claim construction ruling, “the ANDA product could infringe the [patent-in-suit] under the doctrine of equivalents]; and because the claim limitation at issue was preceed by “consisting essentional of,” the possibility existed that the ANDA product “could contain more than one of the Markush group members.” Id.

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