In three separate civil actions filed together and involving a number of defendants, the parties had been scheduled to have a joint Markman hearing on December 5, 2013. Because the parties had “submitted a brief with about twenty-seven (27) disputed terms” however Judge Andrews has ordered that the “Court will hear no more than ten disputed terms at the Markman hearing.” Interdigital Comms. Inc., et al. v. Huawei Techs. Co. Ltd., et al., C.A. No. 13-8-RGA, Order at 2 (D. Del. Nov. 19, 2013). Judge Andrews’ order requires the Defendants to choose eight terms and the Plaintiffs to choose two terms, and requires the parties to submit a letter with the ten terms they decide upon. Id.
Magistrate Judge Mary Pat Thynge recently recommended that defendant First Midwest Bancorp’s (“FMBI”) motion to dismiss be granted in part. Strikeforce Technologies, Inc. v. Phonefactor, Inc., et al., C.A. No. 13-490-RGA-MPT, Report and Recommendation (D. Del. Nov. 13, 2013), amended, Report and Recommendation (Amended) (D. Del. Nov. 14, 2013) (minor corrections to original) (“Amended Report”).
Plaintiff argued that FMBI’s subsidiary, First Midwest Bank, infringed its patent and that FMBI was liable under both alter ego and agency theories. Amended Report at 3. The Court concluded that plaintiff had not sufficiently alleged facts to establish an alter ego theory of liability, but that it had alleged enough facts to support “pure agency liability.” Id. at 7.
As to alter ego, the Court explained that the
allegations regarding the relationship between FMBI and First Midwest Bank establish that the two entities are commingled. FMBI and First Midwest Bank have a nearly identical board of officers and directors; the majority of FMBI’s assets are attributable to First Midwest Bank; both corporations employ the same governance polices [sic] and procedures; both corporations operate from the same location in Illinois. While these allegations meet the first element [of alter ego liability], StrikeForce has not alleged any facts suggesting fraud or injustice in FMBI’s use of the corporate form [i.e., the required second element to establish alter ego liability].
Id. at 8. Plaintiff argued that fraud was not required to be pled under the alter ego theory and that the theory was “muddled, and the cases outside the realm of patent infringement cannot be applied wholesale.” Id. at 9. The Court recognized that, under Third Circuit law, a plaintiff need not prove actual fraud and may allege facts “suggest[ing] fraud or injustice,” but here, plaintiff did not address any factors that suggested “fraud or other similar injustice in the structure of FMBI and First Midwest Bank. Contrary to [plaintiff’s] first argument, fraud or some other similar injustice is a required element for finding alter ego liability.” Id. at 9-10. Plaintiff also “suggest[ed] that if allowed to conduct discovery, it would provide this court all the factors necessary to conduct a meaningful alter ago analysis,” but the Court found that the argument “undermin[ed] the purpose of the well-pled complaint requirement.” Id. at 10.
As to the agency theory, the Court concluded that plaintiff’s allegations “reasonably support the inference that FMBI directed First Midwest Bank’s act of infringement,” citing similar facts quoted above relating to the entities’ relationship to conclude that the allegations “suggest a close connection in the operations of the two companies, making it reasonable to infer FMBI authorized or directed” activities related to plaintiff’s infringement allegations. Id. at 11. The Court also explained that plaintiff need not allege facts supporting fraud or injustice under a “pure agency” theory; it would be required to do so under an “agency akin to an alter ego theory.” Id. at 12.
FMBI also argued that plaintiff did not allege “enough plausible facts to suggest that discovery would uncover sufficient evidence to support either alter ego or agency liability. FMBI urges the court dismiss the claims against it because having a regulated wholly-owned subsidiary should not subject a parent corporation to discovery expenses based on mere allegations of a typical corporate structure.” Id. at 13. While recognizing “the burden of litigation,” the Court concluded that plaintiff’s agency claim was plausible under Rule 12(b)(6) and should not be dismissed. Id. at 13-14.
Judge Richard G. Andrews recently construed nine claim terms across two patents, U.S. Patent Nos. 8,094,010 and 7,583,197. Plaintiff is asserting these patents in five actions in the District of Delaware, and Judge Andrews’s construction applied to each of these actions. M2M Solutions LLC v. Sierra Wireless America, Inc., C.A. Nos. 12-30, 12-31, 12-32, 12-33, 12-34-RGA (D. Del. Nov. 12, 2013). Judge Andrews construed the following disputed claim terms:
– “permitted caller”
– “coded number”
– “a programmable interface”
– “processing module”
– “monitoring device”
– “wireless communications circuit for communicating through an antenna”
– “monitored technical device”
– “at least one wired or wirelessly attached monitoring device”
– “a wireless communications circuit having an antenna”
Judge Sue. L. Robinson recently considered an early Rule 11 motion filed by several defendants in HBAC Matchmaker Media, Inc. v. CBS Interactive Inc., et al., C.A. Nos. 13-428, 13-430, 13-433, 13-434, 13-435, 13-437, 13-438 (D. Del. Nov. 18, 2013). Prior to filing the motion, defendants wrote plaintiff requesting that it withdraw its claims because the complaints accused websites, whereas the patents-in-suit were directed to “targeted advertising in the context of television and radio.” Id. at 2. At the Rule 16 scheduling conference, Judge Robinson asked the plaintiff to provide the court for in camera review the materials it relied upon in performing its pre-filing investigation. Id. Plaintiff submitted emails prior to the filing date evidencing that plaintiff reviewed press articles on the use of targeting advertising at issue in the claims. Id. at 4. Plaintiff also submitted emails discussing the patents and alleged infringement, claim charts which were the subject of pre-suit emails, and evidence that plaintiff used tools to analyze network traffic between a viewer’s computer and defendants’ servers. Id.
Defendants argued that plaintiff’s “conclusory” assertions that it had a reasonable basis for finding infringement were insufficient because “plaintiff’s purported infringement theory include[d] no code comparison whatsoever” and plaintiff provided no “details regarding [its] infringement analysis or underlying claim construction positions regarding the code comparison and instructions/commands limitations.” Id. at 3-4.
Judge Robinson denied defendants’ motion, declining to “engage in a claim construction exercise” at this early point in the case. Id. at 4. But, Judge Robinson noted that “plaintiff may well be stretching the meaning of two older patents (clearly directed at television and radio),” and cautioned the plaintiff that it would entertain a renewed Rule 11 motion and/or an attorneys’ fees motion under 35 U.S.C. § 285 after discovery and claim construction is completed. Id. at 5. Judge Robinson also stated that the court might permit early claim construction of “dispositive limitations” after the parties exchange “fundamental documents.” Id.
Magistrate Judge Mary Pat Thynge recently recommended a denial of a defendant’s motion to amend its answer to add a counterclaim for inequitable conduct. Pfizer Inc. v. Sandoz Inc., C.A. No. 12-654-GMS/MPT (D. Del. Nov. 4, 2013). As Judge Thynge explained, “[i]n considering whether the grant the motion under Rule 15(a), the court considers . . . undue delay by the movant, unfair prejudice to the nonmovant, improper purpose and futility. The movant, however, must also satisfy the good cause requirement of Rule 16(b) by demonstrating that the amendment could not have been reasonably sought in a timely manner despite diligence.” Id. at 7-8.
With respect to the defendant’s six month delay in filing a motion to amend, Judge Thynge found that the “timing of defendant’s motion . . . strongly suggests the delay is improper. Defendant had the requisite documents in its possession, at the latest, within a few weeks of the deadline to amend pleadings. In addition, defendant delayed four months from the final deposition to file the present motion.” Id. at 10. Accordingly, Judge Thynge found undue delay for purposes of Rule 15(a). Judge Thynge added that there was no good cause for the delay under Rule 16(b), because all that the defendant provided was the “bare assertion” that the record was “tortuous” as justification for its delay. Id. at 10-11. Further, Judge Thynge found that amendment would be futile, because the proposed amended counterclaim did not meet Rule 9(b)’s pleading requirements for inequitable conduct. Finally, addressing the prejudice an amendment would cause the plaintiff, Judge Thynge explained that the prejudice “is the significantly compressed time frame for developing a response to the [inequitable conduct] allegations prior to trial, while defendant used approximately fourteen months to develop its inequitable conduct defense.” Id. at 12.
In a recent decision, Judge Richard G. Andrews granted a motion to dismiss on the grounds that the asserted patent claimed an abstract idea that was ineligible for patent protection under 35 U.S.C. § 101. Ubicomm, LLC v. Zappos IP, Inc., C.A. No. 13-1029-RGA (D. Del. Nov. 13, 2013). As Judge Andrews explained, “[a]t the motion to dismiss stage a patent claim can be found directed towards patent ineligible subject matter if the ‘only plausible reading of the patent must be that there is clear and convincing evidence of ineligibility.’” Id. at 3 (quoting Ultramercial, Inc. v. Hulu, LLC, 722 F.3d 1335, 1339 (Fed. Cir. 2013) (emphasis in original)). Here, between the time the defendant moved to dismiss and oral argument on the motion, the plaintiff submitted its proposed claim constructions at the Court’s request. Id. at 13 n.6. Based on the plaintiff’s own construction of the only independent claim at issue, the Court found that “the abstract idea at the heart of the claim is the very concept of a conditional action.” Id. at 6.
The Court explained that “[t]he fundamental role that the concept of conditional actions play in numerous disciplines is sufficient to warrant it protection as an abstract idea, because its patenting would impede innovation[,] more than it would tend to promote it.” Id. (internal quotation marks omitted). To support its decision, the Court added that the Supreme Court and Federal Circuit both have found ideas less abstract than a conditional action to be ineligible for patent protection. Id. at 7 (referring to hedging in Bilski v. Kappos, 130 S. Ct. 3218 (2010) and processing information through a clearinghouse in Dealertrack, Inc. v. Huber, 674 F.3d 1315 (Fed. Cir. 2012)). The Court then considered whether the rest of the claim included limitations that narrow it so as to avoid covering the full abstract idea, but found no such sufficient limitations. Id. at 7-8. The Court found instead that the limitations “are not more than the incorporation of a generic computer into the claim, which is not sufficient to make an abstract idea patentable.” Id. at 9.
Judge Leonard Stark recently issued an interesting memorandum order on assertions of attorney-client privilege with respect to documents that evidence a possible breach of a confidentiality agreement. Plaintiffs Galderma Labs and Supernus Pharmaceuticals withheld certain documents from production and listed them on a privilege log. Defendants Amneal Pharmaceuticals sought to have Judge Stark compel the production of the documents in question. Judge Stark reviewed the documents in question in camera and granted the request to compel with respect to some documents, but denied it with respect to others. Galderma Labs. Inc., et al. v. Amneal Pharmas., LLC, et al., C.A. No. 11-1106-LPS, Memo. Order at 1 (D. Del. Nov. 8, 2013).
Judge Stark ordered the production of documents related to Defendants’ unclean hands and breach of contract claims. Each of these documents included one or more of the following items: (1) “litigation counsel communicating with prosecution counsel about prosecution activity” despite the fact that litigation counsel was prohibits from doing so by a defendants’ offer of confidential access and the Court’s protective order, (2) references to “prior communications between litigation counsel and prosecution counsel,” and (3) “litigation counsel being copied on communications among prosecution counsel and the client.” These items in the documents at issue made the documents relevant to Defendants’ determination of whether the offer of confidential information or the protective order was breached. Therefore, Judge Stark found that litigation counsel’s declaration denying any use of Defendants’ confidential information in patent prosecution was sufficient to waive the attorney-client privilege. Id. at 1-3.
Judge Stark, however, did not order production of documents withheld by Plaintiffs that related to Defendants’ inequitable conduct claim. After in camera review, Judge Stark explained that Defendants had not “made a prima facie showing of the applicability of the crime-fraud exception . . . [nor did] the Court find that the testimony of prosecution counsel constitutes a waiver of privilege.” Id. at 3-4.
In Medicines Company Inc. v. Hospira Inc., C.A. No. 09-750-RGA (D. Del. Nov. 1, 2013), Judge Richard G. Andrews denied defendant’s motion to seal selected portions of the trial transcript and exhibits that related to “the price the Defendant paid for bivalirudin.” Order at 1. While this was “the sort of information that the Court would consider protecting from disclosure,” the potential harm of disclosure to defendant was unclear because its entry into the bivalirudin market was “speculative” and the information was “not current.” Id. The Court further explained that “[h]ad a request to seal been made contemporaneously, it would be a close question. The issue could have been avoided. Among other things, the price was irrelevant to any issue in the case. There was, however, no timely objection. . . . and that argues against redaction. The fact that it is a judicial record – a trial transcript – that Defendant seeks to redact also argues against redaction.” Id.
Judge Sue L. Robinson recently considered plaintiff’s request to strike three supplemental expert reports, and with respect to one report, plaintiff’s alternative request for “follow-up” discovery. Aeritas, LLC v. United Alaska Air Grp., Inc., C.A. No. 11-967-SLR (D. Del. Oct. 25, 2013). With respect to the report for which plaintiff made the alternative request, Judge Robinson denied both plaintiff’s request to strike and the alternative request for follow-up discovery. Id. at 2. Judge Robinson found that plaintiff already had an opportunity to pursue related discovery, noting that “defendants timely shared with plaintiff the information they obtained through their discovery efforts.” Id. Judge Robinson further explained that “without any real indication that plaintiff’s proposed follow-up discovery will yield any substantive results, the court finds the prospect of prejudice too speculative to justify re-opening discovery at this stage of the proceedings.” Id. Judge Robinson also denied plaintiff’s request to strike a different report, noting that it was responsive to another expert’s report. Id. Judge Robinson, however, granted plaintiff’s request to strike one expert’s supplemental report, explaining that it was “nothing more than an effort to rectify his opening report by more clearly articulating his opinions, something he should have done in the first instance.” Id.
Judge Leonard P. Stark recently dismissed two complaints filed by a plaintiff alleging that defendants’ respectively filed ANDA’s infringe U.S. Patent No. 8,148,356. Cumberland Pharm. Inc. v. Innopharma, Inc., C.A. No. 12-618-LPS (D. Del. Nov. 1, 2013); Cumberland Pharm. Inc. v. Sagent Agila LLC, et al., C.A. No. 12-825-LPS (D. Del. Nov. 1, 2013). Judge Stark dismissed the complaints in each action for failure to state claim on the same grounds. That is, Judge Stark found that plaintiff’s asserted claims covered only compositions “free from a chelating agent,” despite the complaints’ allegations that defendants’ products contained EDTA, a chelating agent. Innopharma, C.A. No. 12-618-LPS, at 2-3; Sagent Agila LLC, C.A. No. 12-825-LPS, at 2-3. The “free from a chelating agent” limitation appeared explicitly in the asserted claims and was discussed in the complaints. See Innopharma, C.A. No. 12-618-LPS, at 3-4; Sagent Agila LLC, C.A. No. 12-825-LPS, at 3-4. While plaintiff argued, among other things, that dismissing the complaints would require a premature claim construction, Judge Stark found that no claim construction was necessary “to determine that ‘free from a chelating agent’ means that a claimed composition may not include a chelating agent.” Innopharma, C.A. No. 12-618-LPS, at 3-4; Sagent Agila LLC, C.A. No. 12-825-LPS, at 2-4. Judge Stark also noted that the doctrine of equivalents would be inapplicable in either case, as a “finding of infringement would vitiate the ‘free from a chelating agent’ claim limitation.” Innopharma, C.A. No. 12-618-LPS, at 3-4; Sagent Agila LLC, C.A. No. 12-825-LPS, at 2-4.