Judge Richard G. Andrews recently issued an order granting a defendant’s motion to stay pending inter partes reexamination following the PTO’s rejection of all relevant independent claims and issuance of a Right of Appeal Notice. Riverbed Technology Inc. v. Silver Peak Systems Inc., C.A. No. 11-484-RGA (D. Del. Sept. 11, 2013). The plaintiff had indicated that it did not wish to proceed with litigation on the lone asserted patent that was not subject to the reexamination proceeding. As Judge Andrews explained, “[w]ithout going into great detail, simplification favors a stay.” The Court added that while the plaintiff would be prejudiced by a stay because the parties are competitors, the prejudice would not be undue.
In a recent order, Judge Richard G. Andrews granted plaintiff’s Motion for Award of Damages and Attorney’s Fees (“the Motion”) in part and awarded plaintiff damages and costs totaling $58,105. Parallel Networks, LLC v. Outspark, Inc., C.A. No. 13-181-RGA (D. Del. Sept. 10, 2013). Judge Andrews did not award attorney’s fees. Id. Prior to the filing of plaintiff’s Motion, Judge Andrews had entered default judgment against defendant. (D.I. 17.)
In a recent memorandum opinion, Judge Sue L. Robinson denied plaintiff’s motion for reargument pursuant to Local Rule 7.1.5 regarding claim construction and related summary judgment holdings for U.S. Patent No. RE 39,231 (“the ‘231 Patent”). MobileMedia Ideas, LLC v. Apple, Inc., C.A. No. 10-258-SLR-MPT (D. Del. Sept. 5, 2013). Specifically, plaintiff asserted that “given the rules of claim construction, [the court’s] constructions essentially read out the subject matter of asserted dependent claim 2,” and reargument was therefore warranted. Id. at 5. Denying plaintiff’s motion for reargument, Judge Robinson explained that plaintiff “seeks reargument solely on the basis that the court made an error not of reasoning but of apprehension; it asserts that such an error arose when the court construed claim 12 to exclude the subject matter of dependent claim 2.” Id. at 6. Judge Robinson noted that “the court considered the relationship between claims 12 and 2.” Id. Judge Robinson further explained that the “grounds asserted for reargument merely constitute [plaintiff’s] disagreement with the court’s conclusions and rehash [plaintiff’s] claim construction and summary judgment arguments.” Id. Plaintiff did not identify “any change in law, new evidence, or error in apprehension.” Judge Robinson thus denied plaintiff’s motion for reargument regarding the ‘231 Patent. Id.
Judge Robinson then noted that “the court recognizes that its intention may be subject to misinterpretation and, as such, will clarify its summary judgment memorandum opinion and order regarding the ‘231 patent.” Id. Regarding the construction of claim 2, Judge Robinson explained “the limitation ‘to change a volume of the generated alert sound’ [from independent claim 12] is not interchangeable with, or encompassing of, ‘to stop the sound’ [from dependent claim 2]. The specification of the ‘231 patent does not disclose a device with the option of either stopping an alert sound or changing its volume.” Id. at 7. Judge Robinson further noted that “[t]he fact that, on reexamination, the patentee did not follow normal drafting protocol to make the new independent claims inclusive of some of the dependent claims – as opposed to those dependent claims being narrower and in alternative form – is not a problem the court can remedy.” Id. at 8.
We previously reported on Judge Robinson’s decision to preclude an untimely invalidity theory in Vehicle IP v. Werner Enterprises. On the same day as that decision, Judge Robinson also issued rulings on claim construction and summary judgment, including a ruling that the defendant’s motion for summary judgment of invalidity was moot given the court’s preclusion decision. The patent-in-suit relates to methods and systems for automatically determining the fuel taxes owed to various states by a truck owner whose trucks travel on those states’ roads. Judge Robinson first construed the following terms of the patent-in-suit:
– “Determine a tax in response to the distance traveled by the vehicle within the region”
– “Determining the tax in each [of the two] taxing region[s] in response to the predetermined vehicle positions”
– “Position fix[es]”
– “Generating geographic information”
– “Generating a table” / “referencing a table”
Vehicle IP, LLC v. Werner Enterprises, Inc., C.A. No. 10-503-SLR, Memo. Op. at 13-34 (D. Del. Sept. 9, 2013).
Judge Robinson then considered cross motions for summary judgment of infringement and noninfringement of two asserted claims. Whether Judge Robinson could grant summary judgment for these claims turned on whether the accused system calculated taxes owed “without the need for any human intervention.” Because the “court’s construction differ[ed] from both parties’ proposed constructions and, given the complexity of the accused system, the court [could not] determine at the summary judgment stage” that this was the way the accused system operated. With respect to several other claims, however, Judge Robinson found that there was sufficient factual information to determine that the accused system did not “directly use predetermined vehicle position information.” She therefore granted summary judgment of noninfringement with respect to those claims. Id. at 40-44.
In Vehicle IP LLC v. Werner Enterprises Inc., 10-cv-503-SLR (D. Del. Sept. 9, 2013), Judge Robinson granted plaintiff’s motion in limine to preclude defendant’s evidence of invalidity regarding alleged use of the accused system before the priority date of the asserted patent. Despite disclosing the prior use of the accused system on an early list of potential prior art references and including some elements of the theory in final interrogatory responses, Judge Robinson found that defendant “consciously disavowed this theory by removing it from its March 25, 2013 final invalidity contentions,” which lead plaintiff to “complete fact discovery under the premise that [defendant] would not be asserting any theory of invalidity based on the [alleged prior-use of the accused system].” Defendant’s revival attempt through an expert report, “substantially devoted to the [prior-use] theory,” served less than two months after service of the final invalidity contentions, was unavailing.
Judge Robinson also alluded to her prior order limiting the number of prior art references or combinations that could be asserted per claim in the final invalidity contentions. Defendant challenged whether the prior-use system should be considered a “reference” for purposes of the limiting order and final contentions because the prior-use system is only applicable to the case if it’s later use as the accused system is deemed to infringe. This too was unavailing.
Practitioners should note that Judge Robinson’s orders limiting the number of invalidity references are intended to apply to all prior art evidence, including non-publication prior art such as prior-use evidence. This ruling should also serve as a cautionary reminder to practitioners to serve thorough and complete “final” contentions before the close of fact discovery or risk preclusion.
Judge Christopher J. Burke recently issued a report and recommendation on defendant Philips’ motion to dismiss plaintiff Advanced Optical Tracking’s (“AOT”) induced infringement claims. Advanced Optical Tracking, LLC v. Koninklijke Philips N.V., et al, C.A. No. 12-1292-LPS-CJB (D. Del. Sept. 9, 2013). In deciding the motion, Judge Burke noted that in order to survive a motion to dismiss an induced infringement claim, “a patentee must plead facts ‘plausibly showing that [the alleged infringer] specifically intended [a third party] to infringe the patents-in-suit and knew that the [third party’s] acts constituted infringement.'” Id. at 4 (quoting In re Bill of Lading Transmission & Processing Sys. Patent Litig., 681 F.3d 1323, 1339 (Fed. Cir. 2012)) (alteration in original). Philips argued that AOT’s allegations failed to adequately plead pre-filing knowledge of the patent-in-suit, knowledge of the alleged inducement, or facts to satisify the intent requirement for an induced infringement claim. Id. Judge Burke disagreed.
Contrary to Philips’ contentions, AOT’ s allegations of pre-suit knowledge are accompanied by basic factual content meant to bolster the claim. Here, the [Complaint] identifies September 19, 2012 notice letters that are asserted to have provided Defendants with knowledge of the inducement claims, and explains how that notification was allegedly sent to Defendants. Additionally, AOT’s allegations indicate that these letters not only identified the patent-in-suit and the induced infringement claim, but that they also identified the accused products at issue, the alleged direct infringers (Defendants’ suppliers, distributors, and resellers)/ how the alleged direct infringers were alleged to have infringed the patent (i.e., through the manufacture, use, sale and offer for sale of the accused products) and certain exemplary actions by which Defendants were asserted to have acted to induce infringement (i.e., by “entering into, performing, and requiring performance under manufacturing, supply, and distribution agreements” with those suppliers, distributors, and resellers).
Id. at 6.
Regarding intent, Judge Burke found that AOT’s allegations, “while not robust,” were sufficiently pled. Id. at 8. The Complaint contended that “Defendants, with knowledge that the accused products infringed the patent-in-suit, continued to require performance of contractual agreements entered into with their suppliers, distributors and resellers-agreements mandating that those entities manufacture, supply and distribute the accused products.” Id. at 9. Philips argued that the Complaint did not set forth additional facts, such as the content of the agreements or the nature of the relationship between Defendants and the third parties. Id. Judge Burke found, however, that the AOT was not required to “rule out all possible non-infringing eventualities; it need simply assert enough facts to provide Defendants with fair notice of facially plausible claims.” Id.
In two recently issued rulings and recommendations, Special Master B. Wilson Redfearn considered defendant motions to strike portions of the plaintiff’s expert reports. In the first ruling, the Special Master considered whether to strike portions of an expert report analyzing alleged infringement by defendants Sprint and Simplexity based on their marketing of Apple products—products which the Special Master previously had “specifically stated . . . were not a part of this case.” Eon Corp. IP Holdings, LLC v. Flo TV Inc., et al., C.A. No. 10-182 (RGA) (D. Del. Aug. 28, 2013). In his ruling, the Special Master explained “[f]or the third time: The [Apple] products identified in the Fourth Supplement of Accused Products are not a part of this case. Those products were untimely identified and, if they had been allowed, it would have compromised not only document production but fact discovery as well as the dates and deadlines set out in the agreed Amended Scheduling Order.” Id. at 4 (the Fourth Supplement of Accused Products had been served on February 22, 2013, only 6 days before the document production deadline under the Amended Scheduling Order). Although the plaintiff argued that its earlier disclosures had included references to the Apple products, the Special Master found that the earlier disclosures included “no more than passing references” to them, and did not provide the claim-by-claim contentions necessary to put Sprint and Simplexity on notice that they were accused of infringement based on Apple products. Id. at 4-5.
The Special Master opted not to strike the offending portions of the plaintiff’s expert report, though. Citing a Western District of Pennsylvania decision, and Rule 12(f), the Special Master explained that a court is only permitted to strike matters from the pleadings, and “[a]n expert report is not a pleading.” Id. at 6 (citing Wonderland Nurserygoods Co., Ltd. v. Thorley Indus., LLC, 2013 WL 2471801 (W.D. Pa. June 7, 2013)). Instead, the Special Master explained, Rule 37(b)(2)(A)(ii) allows a court to enter “an order prohibiting a party from introducing designated matters into evidence.” Id. at 6. The Special Master therefore ruled that, subject to the trial judge’s discretion, “any expert opinion or suggested testimony that assumes or attempts to prove that the Apple wireless devices infringe the ‘757 patent should not be allowed.” Id.
In the second ruling, the Special Master considered a motion filed by defendant Qualcomm to strike portions of the plaintiff’s expert report which stated that Qualcomm’s accused product satisfies the “Radio Wave Transmission and Reception Means” and “Monitoring Means” claims of the patent-at-issue, two claims which were not included in the plaintiff’s infringement contentions. Eon Corp. IP Holdings, LLC v. Flo TV Inc., et al., C.A. No. 10-182(RGA) (D. Del. Sept. 5, 2013). Again citing Wonderland Nursery Goods, the Special Master explained that “a motion to strike parts of a report is not the appropriate method to address this issue. I am therefore treating this as a motion to exclude the evidence at trial.” Id. at 1 n.1.
In this case, the plaintiff responded both in its answering brief and at a hearing before the Special Master that it was not asserting infringement of the “Radio Wave Transmission and Reception Means” claim. On that basis, the Special Master found that there was no need to take action to strike or exclude the portions of the opinion at this stage of the litigation, and instead explained that “the issue can be addressed to the trial judge through an appropriate objection” if and when it is raised at trial. Id. at 2-3. With respect to the “Monitoring Means” claim, the Special Master found that the plaintiff’s expert was entitled to set out his opinion on this claim in response to Qualcomm’s claim construction positions. Based on the relatively early stage of the litigation, the Special Master found that Qualcomm would not be prejudiced by being required now to provide rebuttal expert testimony on the issue. Id. at 3-4.
In a recent Report and Recommendation, Magistrate Judge Sherry R. Fallon found that plaintiff’s amended complaint, asserting U.S. Patent No. 6,587,441 (“the ‘441 Patent”), should be dismissed for lack of subject matter jurisdiction. Mayfair Wireless LLC v. Celico Partnership et al., 11-772-SLR-SRF (D. Del. Aug. 30, 2013). Defendants argued there existed “three breaks in the chain of title of the ‘441 patent” before its alleged assignment to plaintiff. Id. at 6. The named inventors of the ’441 Patent allegedly assigned the patent application to their employer, Gooitech, Inc. (“Gooitech”). Id. at 2. The Hinsdale Bank & Trust Company (“Hinsdale”) eventually “foreclosed on Gooitech’s assets, including the application for the ’441 patent,” and purchased those assets at a UCC sale in Illinois in 2000. Id. at 2-3. Hinsdale purportedly sold its rights in the ’441 patent application to Sierra Strategic Consulting (“Sierra”) pursuant to a bill of sale in 2001. Id. at 3. The bill of sale did not specifically mention the patent application, but referred more generally to “intellectual property rights that Hinsdale acquired from Gooitech.” Id. Sierra assigned its rights to 3P Networks Inc., which “allegedly transferred rights, title and interest in the ‘441 patent application” to Technology Alternatives, Inc. (“Technology Alternatives”). Id. Technology Alternatives, the patentee, eventually became a subsidiary of TechAlt, Inc. (“TechAlt”). Id. at 4. Service by Design, Ltd. (“SBD”) entered into a security agreement with TechAlt, and SBD purchased TechAlt’s assets (including the purported interest in ’441 application) after TechAlt defaulted on its obligations. Id. at 4. After subsequent assignments, the current plaintiff was allegedly assigned the rights to the ’441 Patent. Id. at 4-5.
Magistrate Judge Fallon first addressed whether “any alleged breaks in the chain of title occurring prior to the issuance of the ‘441 patent are irrelevant.” Id. at 6 (emphasis added). Magistrate Judge Fallon concluded that “[d]efendants have overcome the presumption” that the patentee, Technology Alternatives, “properly held legal title at the time the patent issued.” Id. at 8. Judge Fallon explained that “four of the six Named Inventors did not have written assignments on file with the PTO indicating their intention to transfer their ownership interests, in contravention of 35 U.S.C. § 261 and 37 C.F.R. § 3.81(a).” Id. Moreover, “[t]he request for issuance of the patent to Technology Alternatives is likewise missing from the PTO’s records.” Id. In light of these findings, Judge Fallon went on to “asses each alleged break in the chain of title, including those occurring prior to the issuance of the ‘441 patent.” Id. at 9.
With respect to the bill of sale between Gooitech and Hinsdale, Magistrate Judge Fallon found that “[t]he evidence . . . insufficient to support Mayfair’s contention that Hinsdale properly foreclosed on its interest in Gooitech’s property pursuant to the terms of its security agreement.” Id. at 12. Magistrate Judge Fallon noted that the “unsigned notice of public sale issued by Hinsdale on August 9, 2000 fails to list the collateral to be sold.” Id. Moreover, the “subsequent March 31, 2001 bill of sale between Hinsdale and Sierra . . . does not specify that the ‘441 patent application was among those intellectual property rights [noted in the agreement].” Id. at 12-13. Magistrate Judge Fallon thus declined “to assume the rights to the application for the ‘441 patent were included in the foreclosure sale,” and thus found a break in the chain of title. Id. at 13-14.
Next, Magistrate Judge Fallon considered the whether there was a break in the chain of title “between 3P Networks and Technology Alternatives because no written assignment regarding the transfer is on file with the PTO.” Id. at 14. Magistrate Judge Fallon found, however, that “the notice of assignment between 3P Networks and Technology Alternatives sufficiently sets forth an intent to transfer ownership rights in the ‘441 patent to qualify as an assignment for purposes of 35 U.S.C. § 261.” Id. at 15.
Magistrate Judge Fallon also considered, inter alia, whether the “absence of an assignment from Technology Alternatives to TechAlt” created a break in the chain of title. Id. at 17. While the parties agreed there was no formal assignment, Magistrate Judge Fallon still had to address whether “Technology Alternatives consented to TechAlt’s pledge of the ‘441 patent to SBD as collateral in the November 19, 2004 security agreement, whether such consent is valid, and whether an indirect transfer of the ‘441 patent to SBD would cure any defect.” Id. at 18. Magistrate Judge Fallon explained that “[e]ven if the court were to assume that state law permits Technology Alternatives to consent to TechAlt’s inclusion of the ‘441 patent as security, the Illinois UCC provisions are preempted by § 261 of the Patent Act because Technology Alternatives and TechAlt never executed a written assignment.” Id. at 19. Accordingly, Magistrate Judge Fallon could not “overlook the absence of a written assignment between Technology Alternatives and TechAlt,” and found another break in the chain of title. Id. at 20.
In light of the two breaks in the chain of title, Magistrate Judge Fallon recommended that the court grant defendants’ motion to dismiss for lack of subject matter jurisdiction. Id. at 24.
In MobileMedia Ideas, LLC v. Apple, Inc., C.A. No. 10-258-SLR-MPT (D. Del. Sept. 5, 2013), Judge Sue L. Robinson granted defendant’s renewed motion for judgment as a matter of law with respect to invalidity and non-infringement of one patent-in-suit and with respect to invalidity of one claim of another patent-in-suit, and denied the motion in all other respects.
Following a seven-day jury trial in 2012, the jury found direct infringement and validity of the three patents-in-suit. Id. at 1. Defendant renewed its motion for judgment as a matter of law that the asserted claims of the three patents-in-suit were invalid and not infringed. Id. The three patents-in-suit (the ’075, ‘068, and ‘078 patents) “relate to a variety of technologies in information processing, computing, and mobile phones.” Id. at 3.
As to the ‘075 patent, entitled “Method and Apparatus for Incoming Call Rejection,” the Court found that its asserted claims were invalid. There was no dispute that two prior art references disclosed the limitations of the asserted claims, but the parties disputed whether there was sufficient motivation to combine them. Id. at 18. The Court concluded that the plaintiff’s expert had “only offered conclusory testimony” to rebut defendant’s evidence and testimony that a person of ordinary skill would have found it obvious to combine these references. Id. at 19. “In addition, [plaintiff’s] infringement theory conflicts with [its invalidity expert’s] opinion.” See id. at 20-21. Therefore, the Court concluded that “even if the jury had resolved all disputed facts in [plaintiff’s] favor, the evidence could not support a finding” of validity. Id. at 22. As to infringement, the Court also granted defendant’s motion because plaintiff had not presented sufficient evidence to support its infringement theory. See id. at 22-27.
As to the ‘068 patent, entitled “Communication Terminal Device and Method for Controlling a Connecting State of a Call into a Desired Connection State upon a Predetermined Operation by a User,” the Court found one asserted claim valid (Claim 23) and the other asserted claim invalid (Claim 24). Defendant’s anticipation arguments as to Claim 23 were grounded in “an untimely claim construction argument,” and the plaintiff’s expert testimony had provided sufficient support for the jury’s finding of validity. Id. at 35. But for Claim 24, unlike for Claim 23, the parties had identified a relevant “pre-trial dispute in their joint claim construction chart . . . [therefore] the court has a duty to resolve [the dispute].” Id. at 36. The Court went on to clarify the construction of a relevant term, id. at 37, and concluded that the jury’s verdict of validity of Claim 24 was “inconsistent” with the Court’s construction of the term. Id. at 38. As to infringement of the ‘068 patent, the Court denied defendant’s motion. See id. at 38-45. The Court also denied the motion as to infringement and validity of the ‘078 patent, entitled “Device for Personal Communication, Data Collection and Data Processing, and a Circuit Card.” See id. at 47-56.
Finally, the Court denied defendant’s motion for a new trial in the alternative. See id. at 56-62. Defendant argued, inter alia, that plaintiff’s statements at closing arguments that companies from whom it obtained patents “decide to invest in patents to recover research and development costs” were directed to damages and therefore improper as damages had been bifurcated. Id. at 57. The Court concluded that the statements were not directed to damages, but Instead were “used to explain what [plaintiff] does as a non-practicing entity”, and were therefore not improper. Id. at 57-58.
In Softview LLC v. Apple Inc., et al., C.A. Nos. 12-989-LPS & 10-389-LPS (Cons.) (D. Del. Sept. 4, 2013), Judge Leonard P. Stark has ordered a stay, pending inter partes review, until March 31, 2014. While the Court had previously denied defendants’ motion to stay in July 2012, it concluded that circumstances had changed such that a stay was now warranted.
As to prejudice to the plaintiff, while the Court “continue[d] to have . . . concerns” regarding prejudice and the potential tactical advantage for defendants, “subsequent case developments make them less of a problem. In particular, fact discovery is now complete, at least somewhat mitigating the risk of evidentiary staleness. Also, given that [plaintiff] is a non-practicing entity and not seeking injunctive relief, the limited delay . . . should not severely prejudice [plaintiff].” Id. at 2-3.
A stay pending inter partes review would also likely simplify issues for trial. Whereas at the time of the previous request for a stay only some of the asserted claims stood rejected, now the PTAB had granted inter partes review with respect to all asserted claims. Id. at 3.
Finally, while the early stage of the case and the “lengthy process of reexamination” had been factors in the Court’s 2012 denial of a stay, the case had since moved forward “substantially” (the Court, for example, issued a claim construction opinion on the same day as this Order) and “the inter partes review promises to be a more expeditious process than reexamaination and appears to be relatively close to completion.” Id. at 3. Absent a stay, the parties were scheduled to complete expert discovery and file case-dispositive motions by the end of March 2014, but the PTAB was required to issue a final determination by that time unless there was an extension for good cause. Id. at 4. “[U]nder the circumstances, [the Court believed that] it is appropriate to allow the inter partes review a reasonable period to conclude before launching the parties into the expense of expert discovery.” Id.