The District of Delaware’s revised Local Rules for civil cases will take effect August 1, 2016. A copy of the revised Local Rules is linked below.
Judge Andrews recently issued a decision denying a motion for Rule 11 sanctions finding that the defendants had waited too long to seek sanctions. Rule 11 contains several procedural requirements that must be met in addition to the showing that sanctions are warranted. In this case, the defendants observed the 21-day “safe harbor” of Rule 11(c)(2). But Rule 11, as interpreted by the Third Circuit, also requires that Rule 11 motions be served on the opposing party “promptly . . . before the entry of a final judgment and ‘[w]here appropriate, . . . at an earlier time—as soon as practicable after discovery of the Rule 11 violation.” Dragon Intellectual Property, LLC v. AT&T Services, Inc., et al., C.A. No. 13-2061-RGA, Memo. at 6 (D. Del. July 12, 2016) (internal quotations omitted).
In this case, the defendants argued that Rule 11 requires only “substantial compliance,” which was met by way of a letter the defendants sent to plaintiff in September 2014, expressing an intention to seek Rule 11 sanctions if plaintiffs did not dismiss the case. Defendants did not actually serve and file a Rule 11 motion, however, until November and December 2015, following a favorable Markman order and the withdrawal of plaintiff’s counsel, and a few months before judgment was entered in their favor. Thus, Judge Andrews determined that only the service of the actual motion met the requirements of Rule 11 and that the motion was untimely. Id. at 6-7. “Defendants waited for over a year, and until after the Court issued its Markman decision, to serve the Rule 11 motions. Therefore, Defendants did not serve their motions ‘as soon as practicable after discovery of the Rule 11 violation.’ There is simply no reason why the Rule 11 motions could not have been served earlier.” Id. at 8.
Additionally, because the plaintiff’s case failed based on a “failure to recognize an obvious prosecution history disclaimer,” Judge Andrews found that “it would be improper to award monetary sanctions against Plaintiff for conduct which relates entirely to legal issues” based on Rule 11(c)(5). That subsection of Rule 11 states that the court “must not impose a monetary sanction . . . against a represented party for violating” the requirement that an “attorney or unrepresented party . . . certify that claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law.” Id. at 8-9.
In a recent Report and Recommendation, Magistrate Judge Christopher J. Burke recommended granting defendants’ motions to dismiss certain of plaintiff’s claims pursuant to Rule 12(b)(6). Varian Medical System, Inc. v. Elekta AB, et al., C.A. No. 15-871-LPS (D. Del. Jul. 12, 2016). One group of defendants (the “U.S. Defendants”) sought dismissal of plaintiff’s claims for induced, contributory, and willful infringement. The other group of Defendants (the “Foreign Defendants”) sought dismissal of plaintiff’s claims for induced and contributory infringement. Id. at 1. The complaint named only one exemplary accused product–the Gamma Knife Icon–a radiation treatment device that defendants manufactured, marketed, and sold in the U.S. since 1987. Id. at 1-2.
Recommending dismissal of plaintiff’s claims for indirect infringement, Judge Burke first found that plaintiff failed to allege facts that would “plausibly suggest that a third party has directly infringed” the asserted patent-in-suit. Judge Burke explained that while “the Complaint does . . . make it clear who the general group of possible direct infringers are said to be,” it does not “adequately allege that any third party actually used the accused device.” Id. at 8-9. Next, Judge Burke noted that the “allegations are also defective because . . . even if the third party ‘customers and potential customers’ used the product[,] . . . the Complaint does not sufficiently articulate how this use of the product can be said to constitute infringement of at least claim 1 of the patent-in-suit.” Id. at 9-10.
The U.S. Defendants further contended that the complaint “lacks plausible allegations that they had pre-suit knowledge” of the patent-in-suit (the “’919 patent”), and Judge Burke agreed. One of the Foreign Defendants–Elekta AB–had discussed the ’919 patent before the USPTO, which demonstrated its knowledge of the ’919 patent. Id. at 11-12. In addition, Elekta AB is related to the U.S. Defendants: “U.S. Defendant Elekta Holdings U.S. is a wholly-owned subsidiary of Elekta AB, and U.S. Defendant Elekta, Inc. is, in turn, a wholly-owned subsidiary of Elekta Holdings U.S.” Id. at 12. Nevertheless, as Judge Burke explained, “knowledge of a patent by a parent corporation is not necessarily imputed to [its] subsidiar[ies].” Id. at 12. While plaintiff also tried to argue that knowledge of the patent should be imputed to the U.S. Defendants based on their “close-knit relationship” with Elekta AB, Judge Burke was unpersuaded given that the facts supporting this argument were not alleged in the complaint. Id. at 13-15.
In a recent Report and Recommendation, Magistrate Judge Christopher J. Burke recommended that the court grant defendant’s (“Gilead”) motion to dismiss for lack of subject matter jurisdiction. Idenix Pharmaceuticals LLC, et al. v. Gilead Pharmasset LLC, C.A. No. 15-416-LPS-CJB (D. Del. Jul. 5, 2016). Plaintiffs (“Idenix”) filed this action pursuant to 35 U.S.C. § 146, seeking review of certain decisions of the United States Patent and Trademark Office (“PTO”) in Interference No. 105,981 (the “’981 Interference”), which involved Idenix’s U.S. Patent No. 7,608,600 (the “’600 patent”) and Gilead’s U.S. Patent Application Serial No. 11/845,218. Id. at 1-2.
Judge Burke recommended that the Court dismiss Idenix’s complaint in view of the Federal Circuit’s decision in Biogen MA, Inc. v. Japanese Cancer Research, 785 F.3d 648 (Fed. Cir. 2015). Id. at 2, 4. Biogen, which issued a few weeks before Idenix filed its complaint, found that “the [Leahy-Smith America Invents Act] eliminated district courts’ subject matter jurisdiction under pre-AIA [Section] 146 to review decisions in interference proceedings declared after September 15, 2012.” Id. at 2. According to Biogen, “parties seeking review of a decision in an interference proceeding declared after September 15, 2012 must file an appeal with the Federal Circuit pursuant to 35 U.S.C. § 141.” Id. In addition, after Idenix filed its complaint, the Federal Circuit denied en banc review of the Biogen decision, and the Supreme Court denied Biogen MA, Inc.’ s petition for a writ of certiorari. Id. at 4.
The ‘981 Interference was declared after September 15, 2012, and Judge Burke thus found that the court lacked subject matter jurisdiction to review the Interference. Id. at 4. In addition, Judge Burke denied Idenix’s alternative request that the court transfer this action to the Federal Circuit (rather than dismiss it), and only transfer the action after the court resolved a related action, which involved review of a related interference over which the court had subject matter jurisdiction. Id. at 3-6. Denying this alternative request, Judge Burke explained that “Idenix has already brought a separate appeal in the Federal Circuit from the same PTO decision” regarding the ‘981 Interference. Id. at 5. Agreeing with Gilead, Judge Burke noted that “there [was] no reason to send the Federal Circuit a second appeal challenging the exact same decision.” Id. at 5. Judge Burke additionally found that waiting to transfer “would appear to run counter to the wishes of the Federal Circuit,” which had already denied Idenix’s motion to stay the related appeal. Id. at 5-6.
In Idexx Laboratories, Inc., et al. v. Charles River Laboratories, Inc., et al., C.A. No. 15-668-RGA (D. Del. July 1, 2016), Judge Richard G. Andrews denied Defendants’ motion to dismiss due to lack of patentable subject matter under Section 101. The patents-in-suit “are all directed to ” method of determining a presence or absence of an infectious disease in a population of rodents through the use of blood samples placed on collection cards,” and the parties had agreed on a representative claim. Id. at 2, 6 (internal quotation marks omitted). The Court concluded that the steps of that claim “are directed to the abstract idea of collecting, analyzing, and reporting results. This well-known abstract idea is not meaningfully different from those found abstract in numerous other cases.” Id. at 7. Looking to recent Federal Circuit case law , the Court further explained that “[t]his case, unlike Enfish, presents a ‘close call about how to characterize what the claims are directed to.’ . . . the representative claim at issue here is not ‘unambiguously’ directed to a specific improvement.  Instead, the abstract idea predominates each step of the claim. Thus, while the claim may implement the abstract idea in a specific and novel way, the ‘character [of the claims] as a whole is directed to excluded subject matter.’  Therefore, I ‘defer . . . consideration of the specific claim limitations’ narrowing effect for step two.'” Id. at 9 (quoting BASCOM Global Internet Servs., Inc. v. AT&T Mobility LLC, 2016 WL 3514158, at *5 (Fed. Cir. June 27, 2016); Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1346 (Fed. Cir. 2015).
Turning then to step 2 of Alice, the Court recognized that some of the patent-eligible elements of the claim did recite no more than known and conventional activity, such as use of blood collection cards. Id. at 10. But an inventive concept still existed when the claims were “examined as an ordered combination of limitations:” “a specific, novel, implementation of the abstract idea of collecting, analyzing, and reporting.” Id. at 10-11. Further, “[t]he advances over the prior art [were] clear.” Id. at 11. While Defendant pointed to specific prior art that allegedly disclosed the relevant limitations, the Court explained that “[w]hile the§ 101 inventive concept analysis is facilitated by considerations analogous to those of §§ 102 and 103, it is not a substitute for those statutory requirements. . . .[the reference’s] teachings, though possibly relevant to a § 103 determination, fail to demonstrate the lack of an inventive concept.” Id. at 12 (internal citations and quotation marks omitted).
In a case involving misappropriation of trade secrets and confidential information, copyright, and Lanham Act false designation of origin and unfair competition claims, Judge Sue L. Robinson denied Plaintiff’s motion for a preliminary injunction. Adtile Technologies Inc. v. Perion Network Ltd., et al, C.A. No. 15-1193-SLR (D. Del. June 23, 2016). Plaintiff develops “mobile ‘Motion Ads,’” i.e. motion-activated advertisements, and had previously entered into a licensing agreement related to such technology with one of the Defendants, but the parties had terminated the agreement over disputes regarding the Defendant’s use of Plaintiff’s technology and Plaintiff’s alleged refusal to provide Motion Ads under the agreement.
The Court concluded that the Plaintiff had not demonstrated a likelihood of success as to any of its claims. Plaintiff’s “trade secrets and confidential information are not sufficiently delineated from what is either publically available . . . or discernable from the Motion Ads . . . . That [Plaintiff] included, without attribution, [certain allegedly copyrighted and trademarked images] in two ads provided to [one Defendant] as deliverables under the License Agreement weakens [Plaintiff’s] copyright and trademark infringement arguments. The court concludes that [Plaintiff] has not shown likelihood of success on the merits.” Id. at 13.
The Court then found that the other eBay factors were largely neutral. As to irreparable harm, while Plaintiff claimed that it was “losing the opportunity to develop its client base,” the Court also observed that “the parties were able to quantify the value of [Plaintiff’s] technology and product” through their license agreement. Id. at 14. Further, the Court could not “delineate on the record at bar what, if any, trade secrets and confidential information [Plaintiff] possesses, which cuts against injunctive relief.” Id. As to balance of hardships, while Plaintiff could lose “significant revenue, a stellar reputation as a technology innovator, and substantial market share,” Defendants “stand to lose substantial contracts and relationships if enjoined. Such a disruption would also cause harm to third parties, which have contracted with [one of the Defendants].” Id. at 15. As to public interest, while the public would have an interest in protecting trade secrets, confidentiality agreements, and copyrighted property, because Plaintiff had not shown a likelihood of success on its causes of action, certain of the information at issue was publicly available, and Plaintiff was “not the only company involved in the making of motion-activated ads, yet it seeks to . . . wholly eliminate one of its competitors,” this factor was also neutral. Id. at 15.
In a recent Order, Judge Gregory M. Sleet denied defendants’ (“Google”) motion to amend the answer, which sought leave to include an implied license affirmative defense. VideoShare, LLC v. Google, Inc. and YouTube, LLC, C.A. No. 13-990-GMS (D. Del. June 23, 2016).
Because Google filed its motion to amend more than two months after the scheduling order’s deadline to amend the pleadings, Google was required to show good cause pursuant to Fed. R. Civ. P. 16(b)(4). Judge Sleet found that Google failed to meet this burden:
The basis of Google’s implied license defense is VideoShare’s June 21, 2013 covenant not to sue for infringement of U.S. Patent No. 7,987,492. Nonetheless, Google failed to include the implied license defense in its pleadings for a year and a half after VideoShare entered the covenant not to sue. Google has made no attempt to explain its delay in presenting this defense. Google does not contend that it lacked sufficient information to meet the amendment deadline, or that it discovered new information that could not be timely pled. Therefore, Google has not demonstrated why its amended defense could not have been sought in a timely manner.
Magistrate Judge Thynge has issued a Report and Recommendation addressing whether there is an actual case or controversy within the meaning of the Declaratory Judgment Act over a suit in which the plaintiff seeks judgment of a defendant’s willful infringement based on the defendant’s filing of a New Drug Application with the FDA. Both the plaintiff and the defendant in this case filed NDAs with the FDA and neither party’s NDA has been approved. The parties in the case are also parties to an interference in the PTO in which the defendant is the senior party. Clarus Therapeutics, Inc. v. Lipocine Inc., C.A. No. 15-1004-RGA-MPT, Report and Recommendation at 1-5 (D. Del. June 23, 2016).
Given these facts, Judge Thynge found “significant, concrete steps to conduct infringing activity” as well as ripeness for judicial resolution: “Defendant not only has a working product, but also has an NDA before the FDA for review. Additionally, plaintiff notes defendant’s market research, hiring of new sales and marketing personnel, saving for manufacture of commercial quantities of its product, manufacture of launch supplies, and anticipation of the manufacturing agreements. Defendant contends the prerequisite FDA approval for commercialization and entry into the market is uncertain and, if approval is eventually given, commercial launch will not be immediate. While this may be accurate, defendant’s conduct is still indicative of meaningful preparation for the making, launch, and use of [its drug product] that satisfies the immediacy requirement for declaratory judgment jurisdiction.” Id. at 8-11.
Moreover, “the PTAB’s decision in the upcoming Interference will not determine the issue of infringement central to plaintiff’s complaint. Due to the lack of further factual development needed and the PTAB’s inability to hear plaintiff’s infringement claim in the forthcoming Interference, the issue is fit for judicial decision.” Id. at 11. Judge Thynge therefore recommended that the defendant’s motion to dismiss be denied.
Judge Sleet recently denied motions to dismiss and bifurcate counterclaims of inequitable conduct and antitrust violations. In response to the plaintiffs’ complaint for patent infringement, the defendant in this case filed an answer that included ten counterclaims. The plaintiff then moved to dismiss or bifurcate counts IX and X of the counterclaims, which were for inequitable conduct and Sherman Act violations. Judge Sleet found, however, that the plaintiff was “improperly seek[ing] to disprove [defendant’s] factual assertions. The court does not analyze the factual disputes raised by [plaintiff], but examines the sufficiency and plausibility of [defendant’s] claims.” F’real Foods, LLC, et al. v. Hamilton Beach Brands, Inc., et al., C.A. No. 16-41-GMS, Order at 2 n.1 (D. Del. June 13, 2016). Specifically, the inequitable conduct claims were adequately plead because the included the “specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO” as required by Exergen Corp. v. Wal-Mart Stores, Inc. and the antitrust violation was adequately plead based on the alleged inequitable conduct and baselessness of the litigation. Id.
Chief Judge Leonard P. Stark recently considered the parties’ stipulation requesting the Court vacate its Claim Construction Opinion. Forest Laboratories, Inc., et al. v. Teva Pharmaceuticals USA, Inc., et al., Nos. 14-121-LPS, 14-686-LPS (D. Del. May 25, 2016). The Court held a 4-day bench trial in February 2016 and the 30-month stay of FDA approval for Defendant’s ANDA ended on June 21, 2016. Id. at 1. Judge Stark found that the “public interest in the orderly operation of the federal judicial system” weighed against vacatur, particularly considering that the Court’s Opinion held terms of several of the patents-in-suit indefinite and plaintiffs are asserting the patents in other litigation. Id. at 3-4. Vacating the Opinion would be “at the expense of the interests of other parties in other litigation and the Court itself.” Id. at 4.