Judge Leonard P. Stark recently denied a defendant’s motion to stay pending post-grant review under the AIA’s Transitional Program for Covered Business Method Patents (“CBM Review”). Benefit Funding Systems LLC, et al. v. Advance America, et al., C.A. No. 12-801-LPS (D. Del. June 28, 2013). The Court explained that its denial was discretionary, and made without prejudice to the defendant’s right to seek a stay in the event the PTAB should ultimately grant the petition for CBM Review. Weighing the factors in Section 18(b) of the AIA, the Court found that (i) a stay would probably simplify issues for trial but likely would not eliminate the need for a trial altogether; (ii) although in its early stages, the Court and parties had invested significant resources in the litigation already whereas CBM Review had not yet been granted; (iii) a stay would prejudice the plaintiff, including by making the plaintiff’s licensing efforts more difficult; and (iv) a stay would not substantially reduce the burden of litigation on the parties and the Court. Id. at 3-4. Judge Stark also ordered that the defendant provide substantive responses to discovery requests, explaining that “Defendant’s effort to essentially grant itself a stay by resisting discovery due only to its pending motion for a stay is improper.” Id. at 1. Finally, the Court granted the plaintiff’s motion for leave to amend its complaint to assert claims against one of the defendant’s vendors, through which the defendant offered its allegedly infringing services. The Court explained that the defendant did “not have possession, custody, or control of core technical documents for [the vendor], and has been unable to persuade [the vendor] to produce such documents voluntarily.” Id. at 2.
In a recent memorandum opinion, Magistrate Judge Sherry R. Fallon denied defendant’s motion to transfer venue to the Northern District of California and denied plaintiff’s motion to strike portions of the declaration of William Pringle, who defendant employs as a compliance associate. Agincourt Gaming, LLC v. Zynga, Inc., C.A. No. 11-720-RGA-SRF (D. Del. Jun. 18, 2013) (publicly-available redacted version issued Jun. 27, 2013 (D.I. 62)). Considering defendant’s motion to transfer, Judge Fallon found plaintiff’s forum preference weighed against transfer, “although not as strongly as it would if [plaintiff] had its principal place of business in Delaware.” Id. at 4. On the other hand, Judge Fallon found that defendant’s forum preference, and “to a lesser extent,” the location of books and records, and “practical considerations” favored transfer. See id. As Judge Fallon explained, defendant’s forum preference had a “legitimate basis,” as it maintains its principal place of business in the Northern District of California where “most of its employees are located.” Id. Further, Judge Fallon found that the location of the books and records weighed slightly in favor of transfer because while defendant did not deny “that it [would] produce all relevant records electronically,” plaintiff did “not dispute that most of the relevant documents are located in the Northern District of California.” Id. at 6. Moreover, with respect to practical considerations that could make the trial easy, expeditious, or inexpensive, Judge Fallon noted that “[plaintiff] does not deny the fact that it will be more expensive and less convenient for [defendant] to litigate in Delaware, and does not contend that it would be substantially more convenient and less expensive for [plaintiff] to litigate in Delaware.” Id. at 7. Finding that the other public and private interest factors did “not add much weight to the balancing and are neutral,” Judge Fallon denied defendant’s motion to transfer. Id. at 4, 8.
With respect to the motion to strike, plaintiff first argued that the court should strike Paragraph 7 of William Pringle’s declaration because “he did not select the five employees slated to testify at trial based on his personal knowledge.” Id. Denying plaintiff’s motion, Judge Fallon explained that “[n]othing in the record suggests that Pringle did not have personal knowledge of the responsibilities of the five listed witnesses, their knowledge of the accused products, whether they would testify at trial, and whether they lived in the San Francisco Bay area.” Id. at 9. Further, as Judge Fallon noted, defendant offered “additional evidence” of which employees would testify and their locations in the form of Pringle’s 30(b)(6) deposition. Id. Second, Judge Fallon denied plaintiff’s motion to strike Paragraph 13, in which Pringle stated that he “’ha[s] been informed’ of matters relating to the content of possible trial testimony.” Id. Plaintiff argued this statement constituted inadmissible hearsay, but Judge Fallon found that Paragraph 13 was merely “intended to show that the previously identified . . . employees” of defendant are capable of testifying with respect to relevant topics. Id. Third, plaintiff moved to strike Paragraph 15 of Pringle’s declaration on the grounds that “Pringle lacked knowledge on which to base his assessment at his deposition regarding how burdensome and expensive it would be to litigate in Delaware.” Id. at 10. Denying plaintiff’s motion, Judge Fallon found that Pringle had “personal knowledge, based on the number of games at issue in the suit, that the production of documents could be substantial and costly.” Id.
In Invista North America S.A.R.L., et al. v. M&G USA Corporation, et al., C.A. No. 11-1007-SLR-CJB (D. Del. June 25, 2013), Judge Sue L. Robinson considered three motions related to the parties’ discovery.
Plaintiffs moved to strike portions of defendants’ expert’s reply report and this expert’s references to and reliance upon certain experimental data. Plaintiffs argued that parts of the report were untimely because they addressed topics beyond secondary considerations, but the Court concluded that “although not labeled as such, [the sections] at issue were submitted in response to arguments in [plaintiffs’ expert’s] rebuttal report that [defendants’ expert’s] report was incomplete for failing to specifically cite support for his opinions. Thus, viewed as a supplement, those . . . pages were timely filed and appropriately clarified [defendants’ expert’s] opening report. They included only subject matter that was originally disclosed in the opening report and presented no new or changed opinions.” Id. at 5. Even if there had been some prejudice, it was “curable” by plaintiffs, and this reply report was “of high importance to [defendants].” Id. Therefore, the Court denied the motion with respect to this argument. As to the experimental data on which this expert relied, the Court similarly found that “the extreme sanction of” exclusion was not warranted, but noted that defendants could not withhold data from these experiments even if their expert only relied on selected portions of the data. See id. at 6-7. Defendants were ordered to produce such data. The Court did grant plaintiff’s motion to the extent that this expert’s declaration contained “previously undisclosed theories of invalidity,” and the Court listed the relevant parts of the opinion to be struck. Id. at 7-8.
Defendants moved to exclude plaintiffs’ expert’s testimony regarding infringement and secondary considerations of non-obviousness. Regarding the infringement opinion, defendants argued that the testimony was not reliable because the expert did not perform any testing. The Court denied this motion, explaining that “[t]esting is not required to support an infringement opinion” and concluding that the expert’s analysis was reliable. Id. at 9. Regarding the secondary considerations opinion, the Court concluded that the expert, a polymer chemist with over 30 years of experience in the polymer industry, was qualified under “the liberal standard for ‘specialized knowledge’” under Rule 702. Id. at 10. As a result, defendants’ motion was denied.
Finally, plaintiffs moved to strike defendant’s summary declaration and supplemental interrogatory response regarding defendants’ core documents, arguing that they were untimely and “set forth a new non-infringement defense that [defendants’] core technical documents do not reflect the composition of the [accused products].” Id. at 10. This non-infringement defense had been raised for the first time in summary judgment briefing. Although defendants argued that certain of its discovery responses and depositions had put plaintiffs on notice of this issue, the Court found that this defense was “new and untimely” as it “alter[ed] the entire infringement and non-infringement landscape that was developed and vetted during fact and expert discovery. . . . [Defendants were] aware of [plaintiffs’] infringement theories and even confirmed to the court that its own non-infringement theories were premised on its proposed claim construction, not the sufficiency of the core technical documents. At best, [defendants] stood by silently as [plaintiffs] relied on the core technical documents . . . . At worst, [defendants] purposefully disregarded the scheduling order and engaged in trial by ambush with its eleventh-hour defense. Either way, to allow [defendants’] belated new non-infringement theory would substantially prejudice [plaintiffs]” and would be “almost impossible” to cure at this stage of the case. Id. at 12. As a result, the Court granted plaintiffs’ motion to strike the supplemental declaration and interrogatory responses underlying this new defense. Id. at 13.
In Fifth Market, Inc. v. CME Group, Inc., et al., C.A. No. 08-520-GMS (D. Del. June 19, 2013), Chief Judge Gregory M. Sleet considered motions related to a stay the Court had issued in May 2011 following defendants’ filing of a request for ex parte reexamination of one patent (“the ‘419 Patent”) and the filing of a draft request for inter partes reexamination of a different patent (“the ‘387 Patent”). Id. at 1-2.
The PTO issued a reexamination certificate for the ‘419 Patent in February 2013 and granted inter partes reexamination of the ‘387 Patent in September 2012. The Court explained that “[t]hese developments principally affect the court’s assessment of the undue prejudice factor, as [plaintiff] complains of the defendants’ ‘excessive delay’ in seeking reexamination of the ‘387 Patent and the resulting delay of this litigation.” Id. at 3 n.1. The timing of defendants’ inter partes reexamination request and its intent to file a request for post-grant review of the ‘419 Patent as a covered business method patent “indicate that they have adopted a strategy of raising piecemeal PTO challenges to [plaintiff’s] patents,” which was “impermissibly tactical.” Id. (internal quotation marks omitted). The status of the reexamination and the fact that the defendants had not yet filed their request for post-grant review also “concern[ed] the court” in terms of potential delay. Id. Finally, “[w]hile the final ‘relationship between the parties’ sub-factor [of the undue prejudice analysis] remains both unchanged and untroubling given [plaintiff’s] status as a non-practicing entity, the defendants’ timing and the status of the ‘387 reexamination-as well as the planned ‘419 CBM review-suggest that the broader undue prejudice factor now favors lifting the stay. The defendants appear to have sought an inappropriate tactical advantage, and denial of this motion would expose [plaintiff’s] suit to the various evidentiary risks associated with prolonged stays.” Id. (internal citations omitted). As a result, the Court granted the plaintiff’s motion to lift the stay.
In the context of plaintiff’s motion to lift the stay, defendants had moved to strike plaintiff’s reply brief or, in the alternative, for leave to file a sur-reply, which they had filed along with this motion. The Court agreed with defendants that the plaintiff had violated Local Rule 7.1.3(c)(2) when it had “include[ed] [in its reply] a discussion of the stay factors entirely ignored in its opening brief.” Id. at 4 n.2. But the Court “exercise[d] its discretion and grant[ed] the defendants’ alternative motion to file a surreply rather than strike [plaintiff’s] reply brief. While [the] opening brief was deficient, the defendants have acknowledged that the three traditional ‘stay factors’ are well known, and they were able to address them in their own answering brief. Moreover, any prejudice that might have resulted from [plaintiff’s] improper reply is remedied by the court’s consideration of the defendants’ sur-reply.” Id. (internal citations omitted).
In Shelbyzyme, LLC v. Genzyme Corporation, C.A. No. 09-768-GMS, Chief Judge Gregory M. Sleet had previously granted in part defendant’s request for the production of plaintiff’s privileged documents under the crime fraud exception, as detailed here. Here the Court considered plaintiff’s motion for reconsideration, and denied it. Slip op. at 1 (D. Del. June 25, 2013).
Plaintiff argued that “the court erred in drawing the inference that patent applicant knew of the abandonment [of a relevant application] by December 1999 and thus was mistaken in its subsequent finding on the ‘intent to deceive’ prong” of fraud. Id. at 3. Plaintiff argued that the Court’s finding was “predicated upon a misreading of” an email from a licensee to the related patent family to defendant, in which the licensee had explained that the application in question would become abandoned if the applicant did not pay a base issue fee. Id. at 5 n.3 (quoting the email in full). The plaintiff “now claims that [the prosecuting attorney and patent counsel] was the source of the information that the issue fee had not been paid.” Id. at 6. However, “the court continues to believe that the most reasonable interpretation of [this] email is that [the applicant] was the source of [the licensee’s] knowledge that the issue fee had not been paid and that [the licensee] conveyed that knowledge to [defendant]. A close examination of the message supports this view,” and, quoting passages from the email, the Court mapped out how the prosecuting attorney’s statement that the fee had not been paid was “conditional” and indicated that he was “unaware as to whether [the applicant] actually had paid the fee.” Id. The Court also noted that “the alternative interpretations presented in [plaintiff’s] Motion for Reconsideration suffer from serious flaws.” Id. at 7.
Plaintiff also “reference[d] a June 2, 2013 declaration [of the prosecuting attorney] in support of its position that [the attorney] was the source of [the licensee’s] knowledge that the issue fee had not been paid.” Id. at 9. The Court disregarded this declaration, explaining that “a motion for reconsideration should not be used ‘as a means to argue new facts or issues that inexcusably were not presented to the court in the matter previously decided.’ Here, [plaintiff] failed to present an equivalent to this . . . declaration in support of its initial [letter brief], making consideration of the above-quoted statement improper.” Id. at 10 (quoting Brambles USA v. Blocker, 735 F. Supp. 1239, 1240 (D. Del. 1990)). “The remaining evidence offered by [plaintiff] to challenge the court’s reading of the [email],” including testimony from various parties regarding this email and the source of information as to whether the issue fee had been paid, “[was] unpersuasive,” as it “[told] the court little about the actual source of [the] information.” Id.
Finally, plaintiff “[took] issue with the court’s characterization of a declaration attached to the Petition for Revival, which the court referenced in its discussion of the ‘reliance’ element” of fraud. Id. at 3. “While the court recognizes that its prior characterization of the [this declaration] may have oversimplified matters, conflating [the declarant’s] own knowledge with that of the applicants, it does not believe that any error resulted in its conclusion as to the reliance issue” because its prior characterization was “not required to reach [its] conclusion” that the PTO had reasonably relied on the alleged misrepresentations in the Petition for Revival. Id. at 13.
Judge Stark has denied a motion to dismiss claims of willful infringement from an amended patent infringement complaint. The plaintiff had previously filed and the Court granted a motion to amend its complaint to include a claim of willful infringement based on longstanding knowledge of a patent-in-suit. The defendant then moved to dismiss this newly-added claim under Rule 12(b)(6). See Cloud Farm Associates, L. P. v. Volkswagen Group of Am., Inc., C.A. No. 10-502-LPS, Memorandum Op. at 1-2 (D. Del. July 2, 2013). Judge Stark explained that he had “already addressed the sufficiency of [the plaintiff’s] pleading.” Id. at 3. “The Court considered and rejected [the] argument” that amendment of the complaint was “futile because it would not survive a motion to dismiss.” Id. Because the plaintiff “provides no reason for the Court to reconsider this conclusion,” and its motion “merely repackages its opposition to the earlier motion to amend,” the motion presented “neither an appropriate nor necessary occasion to delve further into . . . potentially competing lines of authority.” Id. at 3-4. Accordingly, Judge Stark denied the motion to dismiss.
Chief Judge Sleet recently granted a motion to transfer in a patent infringement case involving software for managing collision insurance claims. See Audatex N. Am., Inc. v. Mitchell Int’l, Inc., C.A. No. 12-139-GMS, Memorandum Op. at 1 (D. Del. June 28, 2013). Both the plaintiff and defendant are Delaware corporations with principal places of business in San Diego, California. Accordingly, it was clear that the case could have originally been brought in the Southern District of California. Id. at 2-3. Finding that the Third Circuit’s Jumara factors favored transfer on balance, Judge Sleet granted the defendant’s motion to transfer.
Judge Sleet explained that the plaintiff’s choice “to litigate in the forum where it is incorporated, rather than the forum where its principal place of business is located . . . is entitled to less deference than it would typically receive. Consequently, [the plaintiff’s choice of forum] factor weighs against transfer and is accorded heightened, but not maximum, deference as an individual Jumara factor.” Id. at 5-6. Furthermore, although the question of “whether the claim arose elsewhere” is often neutral in patent infringement actions, “because the patent infringement claims arise from infringing products that were designed and manufactured in a single, discrete location, this factor weighs slightly in favor of transfer.” Id. at 6-7. Several other factors, including the convenience of the parties and practical considerations that could make the trial expeditious or inexpensive, also favored transfer, and only the plaintiff’s choice of forum weighed against transfer. Judge Sleet, therefore, concluded that the defendants “met their burden of demonstrating that the interests of justice and convenience strongly favor transfer.” Id. at 17.
In a recent memorandum opinion, Judge Leonard P. Stark denied defendant’s motion to dismiss plaintiff’s complaint for lack of personal jurisdictional and improper venue, and denied defendant’s alternative motion to transfer venue to the Northern District of California. Graphic Properties Holdings Inc. v. Asus Computer International, Inc., C.A. No. 12-210-LPS (D. Del. Jun. 28, 2013). Plaintiff, a Delaware corporation with its principal place of business in New York, is asserting three patents, U.S. Patent Nos. 5,896,119 (“the ‘119 patent”), 6,816,145 (“the ‘145 patent”), and 8,144,158 (“the ‘158 patent”). Id. at 1-2. Moreover, plaintiff is asserting one or more of those three patents in at least eleven other ongoing actions in the District of Delaware. Id. at 1. Defendant is a California corporation with its headquarters in the Northern District of California. Id. at 2. Defendant “does not have employees, documents or places of business in Delaware,” and “none of [its] accused products were designed or manufactured in Delaware.” Id.
Defendant contested personal jurisdiction and venue only with respect to plaintiff’s asserted claims related to the ’119 patent; with respect to claims under the ’145 and ’158 patents, defendant had submitted to the Court’s jurisdiction. Id. at 5. Denying defendant’s motion to dismiss for lack of personal jurisdiction, Judge Stark explained why “jurisdiction is proper at least” under 10 Del C. § 3104(c)(3) based on “use” of the accused product in Delaware. Id. at 6. Specifically, § 3104(c)(3) permits the exercise of personal jurisdiction when a defendant “causes tortious injury in [Delaware] by an act or omission in [Delaware].” Id. As Judge Stark noted, defendant admitted that “in two instances an individual in Delaware returned a broken VH-242 monitor to [defendant], and [defendant] provided that individual with a replacement monitor in satisfaction of a warranty agreement.” Id. Judge Stark thus found that “[a]t a minimum,” plaintiff’s “indirect infringement claim . . . ‘arises from’ use of the accused products in Delaware by individuals who received the product from [defendant].” Id. at 7. Moreover, as Judge Stark explained, “[t]he direct infringement claim is likewise directly related to the delivery of the accused products to Delaware.” Id. Finally, Judge Stark found that the assertion of personal jurisdiction would comport with Due Process. In support of that finding, he noted that defendant “knowingly and intentionally shipped the accused products to two separate customers in Delaware” to satisfy its warranty. Id. Judge Stark also found the exercise of personal jurisdiction “fair and reasonable” based predominantly on defendant’s litigation with respect to the ’145 and ’158 patents that is moving forward in Delaware and the fact that the ’119 patent is being asserted in several other concurrent Delaware lawsuits. Id. at 8. Moreover, because the parties agreed that the “outcome of the venue issue should be the same as the outcome of the personal jurisdiction question,” Judge Stark denied defendant’s motion to dismiss for improper venue. Id. at 9.
Denying defendant’s alternative motion to transfer venue to the Northern District of California, Judge Stark found that “plaintiff’s choice of forum, practical considerations, administrative difficulty, and public policy” weighed against transfer. Id. at 16. Regarding plaintiff’s choice of forum, Judge Stark noted that “[t]he Court agrees with those cases that include a corporate entity’s state of incorporation as part of its home turf.” Id. at 10. Judge Stark thus found that plaintiff’s choice of forum was “entitled to ‘paramount consideration,’ or, at a minimum, ‘significant deference.’” Id. With respect to practical considerations, Judge Stark explained that plaintiff has “at least 11 other cases pending in Delaware, each of which involves one or more of the asserted patents,” and this factor therefore weighed “heavily” against transfer. Id. at 14. Relatedly, addressing administrative difficulties, Judge Stark noted that “[t]ransferring this case to California would only add to the workload of that Court without meaningfully reducing the workload of this one.” Id. at 15.
On the other hand, Judge Stark found that “defendant’s preferred forum, location of operative events, convenience to witnesses, and location of relevant evidence” weighed in favor of transfer, and that the remainder of the factors were neutral. Id. at 16. “Evaluating the factors as a whole, and according each factor its appropriate weight under the circumstances presented,” Judge Stark determined that defendant failed to demonstrate that “the balance of the convenience factors and interests of justice weigh strongly in favor of transfer.” Id.
Judge Stark recently granted defendants’ motion for summary judgment of laches in the long-standing suit filed by St. Clair for infringement of patents related to power savings and management. St. Clair Intellectual Property Managment Consultants, Inc. v. Acer, Inc., et al., C.A. No. 09-354-LPS (consol.) (D. Del. July 2, 2013). “A laches defense requires a showing by a preponderance of evidence that (a) the patentee’s delay in bringing suit was unreasonable and inexcusable, and (b) the alleged infringer suffered material prejudice attributable to the delay.” Id. at 4 (quotations omitted). And, a presumption of laches arises if the patentee had actual or constructive knowledge of alleged infringing activity for six or more years before filing suit. Id. Defendants’ argued, and Judge Stark agreed, that there was such a presumption here because St. Clair had constructive knowledge of “activities infringing the Fung patents” no later than October 2002, but did not file suit until May 15, 2009. Id. Specifically, Judge Stark found that:
The evidence presented by Defendants establishes that St. Clair, [its co-owner, and the patents’ inventor], were aware of the existence of products embodying “technology similar to that for which [the patentee] holds a patent and [which] uses that similar technology to accomplish a similar objective.” By its failure to act, despite this knowledge, St. Clair “shirk[ ed]” its “duty to examine the product or device more closely to ascertain whether it infringes … on peril of triggering the laches period and perhaps ultimately losing [its] right to
recover damages for the infringement.”
Id. at 6. (quoting Crown Packaging Tech. , Inc. v. Rexam Beverage Can Co., 679 F. Supp. 2d 512, 520 n.42 (D. Del. 2010).
To rebut the presumtion of laches, St. Clair argued that the trigger date for laches was the date of the first accused infringement, which was August 2004, and that the pre-2004 accused products were immaterial “because a new laches period began as a result of design changes implemented in the newer accused infringing products.” Id. at 7. Judge Stark rejected this argument because “St. Clair cannot avoid a laches defense by narrowing its infringement contentions, especially given that in 2002 St. Clair conducted an analysis of pre-2004 products.” Id. at 8.
Judge Stark also granted-in-part St. Clair’s motion for summary judgment dismissing certain bases for Defendants’ inequitable conduct defenses. Id. at 8. Defendants’ defenses were based on the named inventor misrepresenting that he was the sole inventor, the withholding of material prior art during prosecution, and the applicant’s misrepresenting its entitlement to small entity status. Id. Judge Stark granted St. Clair’s motion as to one prior art reference that was allegedly withheld during prosecution. Id. at 11. Specifically, Judge Stark found that Defendants’ failed to establish that the applicant or its attorneys knew of the specific reference or intentionally withheld it from the PTO. Id. Judge Stark also found that Defendants failed to raise a triable issue of fact as to the applicant’s intent to deceive the PTO regarding small entity status. Id. at 12-13.
Magistrate Judge Mary Pat Thynge recently issued a report and recommendation addressing cross-motions for summary judgment, as well as the plaintiff’s motion to strike portions of the defendant’s reply brief in support of its summary judgment motion. Cornell Univ., et al. v. Illumina, Inc., C.A. No. 10-433-LPS-MPT (D. Del. June 25, 2013). Judge Thynge agreed with the plaintiff that the defendant’s “reply brief relie[d] on inadmissible evidence from the parties’ settlement negotiations[,]” and granted the motion to strike such evidence from the reply brief. Id. at 5. Although the defendant argued that the plaintiff’s own motion and opening brief opened the door to such evidence, Judge Thynge explained, “[e]ven if plaintiffs ‘opened the door,’ that door should remain closed where plaintiffs’ references to the settlement agreement were inappropriate, and neither parties’ evidence would be admissible.” Id. at 6. Judge Thynge agreed in part with the plaintiff’s additional argument that portions of the defendant’s reply brief should be stricken because they raised new arguments and facts not appearing in the defendant’s opening brief. Id. at 9-15.
Judge Thynge then considered the parties’ cross-motions for summary judgment. Construing a settlement agreement under California law, as well as issues of successor liability under Delaware corporate law, the Court agreed with the defendant that two of the plaintiffs, Life Technologies and Applied Biosystems, were bound by a covenant not to sue entered into by the defendant and Applera Corporation, because they were “affiliates” or “successors” of Applera under the agreement. Id. at 26. But the Court agreed with plaintiff Cornell University’s argument that it was not bound by the covenant not to sue because it was not an affiliate or successor of the settling party, which the defendant did not contest in briefing. Id. at 26.