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Judge Richard G. Andrews recently considered defendants’ motion to dismiss for lack of standing.  Acceleration Bay LLC v. Activision Blizzard, Inc., et al., Nos. 15-228-RGA, 15-282-RGA, 15-311-RGA (D. Del. Jun. 3, 2016).  Plaintiff claimed it owned the patents-in-suit after purchasing them from Boeing Intellectual Property Licensing Company.  Id. at 2.  Defendants filed the motion to dismiss after acquiring the purchase agreement between plaintiff and Boeing, pursuant to which Boeing assigned “all right, title and interest” to the patents, subject to certain of Boeing’s “pre-existing licenses.”  Id. at 4.  Judge Andrews found that, since Boeing conditioned the assignment on the terms of the licenses Boeing retained, Boeing “did not convey ‘entire patent[s], an undivided part or share of [any] patent, or all rights under the patents[s] in a specified geographical region of the United States.'”  Id. at 5 (quoting Rite-Hite Corp. v. Kelley Co., Inc., 56 F.3d 1538, 1551 (Fed. Cir. 1995)).  Further, Judge Andrews found that the purchase agreement could not convey standing because “Boeing retained the right to sue within its field of use.”  Id. at 6.  “The Federal Circuit has concluded that an exclusive field of use licensee does ‘not hold all substantial rights in the full scope of the … patent,’ and therefore lacks standing.”  Id. at 6-7 (quoting Int’l Gamco, Inc. v. Multimedia Games, Inc., 504 F.3d 1273, 1280 (Fed. Cir. 2007)).  Boeing also retained, among other things, the right to practice the patented methods, which also “weigh[ed] against a finding that Boeing transferred all substantial rights.”  Id. at 7-8 (citing Abbott Labs. v. Diamedix Corp., 47 F.3d 1128, 1132-33 (Fed. Cir. 1995)).

In sum, having found that plaintiff lacked prudential standing, the Court held that the actions must be dismissed unless Boeing was joined as a plaintiff.  Id. at 10.  Judge Andrews gave plaintiff 14 days to join Boeing or the cases would be dismissed.  Id. at 10-11.

Acceleration Bay v. Activision Blizzard, No. 15-228-RGA

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Judge Richard G. Andrews recently rejected the parties’ request to redact a hearing transcript.  ViaTech Techs., Inc. v. Microsoft Corporation, No. 14-1226-RGA (D. Del. Jun. 6, 2016).  Relying on Mosaid Tech Inc. v. LSI Corp, 878 F. Supp. 2d 503 (D. Del. 2012) and Pansy v. Borough of Stroudsburg, 23 F.3d 772, 786 (3d Cir. 1994), Judge Andrews found that the parties did not establish good cause to seal the designated portions of the transcript.  Id. at 1-2.  Judge Andrews noted that the parties did not submit an affidavit or declaration showing “why disclosure of the information might cause a clearly defined serious injury to” the parties.  Id. at 2.  The sole fact that information had been designated as confidential under a protective order was insufficient to establish a “clearly defined and serious injury.”  Id.  Although there is not much interest in the information in the proposed redactions (i.e., discovery issues), “once [such information] is disclosed in a judicial proceedings [sic], it is in the public interest to be able to understand the proceedings before a judge, and redaction of the transcript hinders that public interest.”  Id.  Further, even if the information were “redaction-worthy” they were “significantly broader” than appropriate or necessary.  Id.

ViaTech v. Microsoft, No. 14-1226 (Redaction)

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In Inventor Holdings, LLC v. Bed Bath & Beyond Inc., C.A. No. 14-448-GMS (D. Del. May 31, 2016), Judge Gregory M. Sleet considered defendant’s motion for attorneys’ and experts’ fees and costs pursuant to Section 285. The case had been dismissed based on defendant’s Section 101 motion based on the Alice test. The court granted the motion as to attorneys’ fees and costs, but denied it as to experts’ fees and costs.

The Court concluded that plaintiff’s “infringement claims rested on patents whose validity are objectively invalid under current interpretations of [Section 101],” such that “whatever merit [plaintiff’s] claims had at the outset of litigation, by the time of the Alice decision, the business method claims . . . were objectively ineligible under § 101.” Id. at 4-5.

Having found the case to be exceptional based on the above, the Court awarded attorneys’ fees from the time the Alice decision had issued. But the Court declined to award experts’ fees and costs under its inherent authority, finding the award of attorneys’ fees to be “sufficient to achieve the goals envisioned by section 285.” Id. at 7.

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On March 10, 2016, Magistrate Judge Sherry R. Fallon issued a report and recommendation denying plaintiff Intellectual Ventures I LLC’s (“IV”) motion to compel defendant Ricoh Electronics, Inc. (“REI”) to produce certain documents in the possession of Ricoh Company, Ltd. (“RCL”), and to produce 30(b)(6) witnesses to testify regarding certain RCL documents that had been produced. Intellectual Ventures I LLC v. Ricoh Americas Corporation, et al., C.A. No. 13-474-SLR-SRF (D. Del. Mar. 10, 2016) (public version published Mar. 17, 2016). Defendant REI is a U.S. company and wholly owned subsidiary of the other defendant to this action, Ricoh Americas Corp. (“RAC”). RCL is Japanese company that is the parent of RAC, REI, and other Ricoh entities. RCL designs and manufactures the products accused of infringement in this action, and exports them to REI in the U.S., who transfers the accused products to RAC for distribution and sales in the U.S. In September 2014, Judge Robinson dismissed RCL as a party for lack of personal jurisdiction. Following RCL’s dismissal, REI did not provide discovery regarding the design, structure, and operation of the accused products, asserting that those documents were in RCL’s control. REI eventually produced a Technical Assistance Agreement (“TAA”) between RCL and REI, and a number of other RCL documents, but IV still found the production deficient. IV thus moved to compel REI after a motion for issuance of letters rogatory was denied by Japanese authorities. Id. at. 1-2.

Denying IV’s motion to compel document production, Judge Fallon first found that “REI does not have control over the missing documents in RCL’s possession under the terms of the TAA.” Id. at 4. Judge Fallon further explained that “IV . . . failed to establish the existence of an agency relationship between REI and RCL in accordance with Third Circuit precedent.” Id. at 5. Denying the motion to compel the production of a 30(b)(6) witness, Judge Fallon noted that “REI has shown that its ability to prepare witnesses to discuss documents from another corporate entity is substantially limited. Specifically, REI does not design the products, and employees of REI do not have personal knowledge of the technical details set forth in the documents produced by RCL.” Id. at 6. Judge Fallon explained that although “[t]he duty of preparation goes beyond the designee’s personal knowledge and matters in which the designee was personally involved, . . . a corporate subsidiary cannot be expected to acquire all of the knowledge of the parent company and testify on that information in a manner that would effectively result in an end-run around Judge Robinson’s ruling on the motion to dismiss and the denial of the Hague Convention request by the Japanese authorities.” Id.

On May 23, 2016, Judge Robinson concluded that there were no legal errors in Judge Fallon’s analysis and therefore adopted the Report & Recommendation. Intellectual Ventures I LLC v. Ricoh Americas Corporation, et al., C.A. No. 13-474-SLR (D. Del. May 23, 2016). Judge Robinson further explained, however, that “[i]t was not until October 2015 that REI produced [the] Technical Assistance Agreement (“TAA”) between RCL and REI. The TAA was executed in October 2005 and, therefore, was known or should have been known to REI before this litigation commenced (March 2013). The TAA limits the flow of information from RCL to REI in several ways, from the narrow scope of products to the nature of the information provided.” Id. at 2. According to Judge Robinson, pursuant to the TAA, “RCL has agreed to provide only information related to REI’s non-infringement defenses, as opposed to all relevant core technical information.” Id. Judge Robinson continued:

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Judge Mary Pat Thynge recently recommended the Court grant Illumina’s motion to amend its Answer and Counterclaims to assert inequitable conduct.  Cornell University v. Illumina, Inc., No. 10-433-LPS-MPT (D. Del. May 27, 2016).  In its motion, Illumina alleged “the applicants and prosecuting attorney of the [] patents violated their duty of candor to the PTO by filing a false or misleading 37 C.F.R. § 1.131 declaration” during prosecution regarding the applicants reduction to practice of the claimed methods.  Id. at 2.  According to Illumina, absent the false or misleading statement, the patents would not have issued.  Id. at 2-3.

Judge Thynge found that there was good cause to amend and no undue delay, despite the fact that the deadline to amend pleadings had passed, based on the fact that the underlying facts supporting the amendment were obtained and confirmed during discovery, in particular through deposition testimony.  Id. at 10-13.    The basis for Cornell’s opposition was futility because the proposed amended pleading did not adequately plead inequitable conduct.  Id. at 13.  Judge Thynge disagreed, finding that the inequitable conduct allegations were pled with particularity, “identify[ing] the specific who, what, when, where and how of the material misrepresentation or omission committed before the PT0.”  Id. at 14 (citing Exergen v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1328 (Fed. Cir. 2009).  The “who” identified by Illumina were the specific applicants and prosecution counsel.  Id. at 14.  “What” information was purportedly misrepresented to the PTO was the date of the applicants’ reduction to practice.  Id. at 14-15. The “when” identified was the date of the declaration in question as well as “the actions the PTO took before and after the filing of that declaration.”  Id. at 15.  Illumina identified the declaration as “where” the misrepresentation occurred, and detailed “how” the declaration and purported misrepresentation resulted in the PTO’s issuance of the patents.  Id. at 15-16.

Cornell responded that the proposed pleading failed to plead that the declaration was material and that the persons identified had specific intent to deceive the PTO.  Id. at 16.  Regarding materiality, Cornell pointed to evidence “inconsistent with defendant’s allegations and reading of the [declaration].”  Id. at 18-19.  Judge Thynge determined, however, that at the pleading stage “plaintiffs’ evidence is irrelevant and the court can not address the merits of that evidence.”  Id. at 19.  Judge Thynge concluded, therefore, that Illumina sufficiently alleged that the declaration contained a material false or misleading misrepresentation.  Id.  Regarding intent to deceive, Cornell argued that “there can be no finding of deceptive intent, nor a reasonable inference of deceptive intent because [the applicants] testified they believed the declaration to be true at the time of filing and that [prosecution counsel] also testified he took steps to ensure that the inventors understood what the declaration, and the specific sentence at issue, meant before they signed the declaration.”  Id. at 19-20.  Judge Thynge noted that Cornell’s argument again “relies on assertions of fact requiring the court to address the merits of the evidence[.]”  Id. at 20.  Based on the allegations in the proposed pleading, Judge Thynge determined Illumina adequately pled specific intent.  Id. at 20.

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Judge Richard G. Andrews recently dismissed a plaintiff’s complaint after finding the asserted patent claims invalid under 35 U.S.C. § 101.  Visual Memory LLC v. Nvidia Corp., C.A. No. 15-789-RGA (D. Del. May 27, 2016).  The patent at issue described “a computer system that uses a three-tiered memory hierarchy:  (1) slow, low-cost memory for ‘bulk storage of data,’ (2) medium speed memory for the ‘system’s main memory,’ and (3) expensive, high-speed ‘processor cache memory.’”  The asserted claims, the Court found, “are directed to the abstract idea of categorical data storage.  Humans have categorized data for many years. For instance, a library may have an easily-accessible section for popular novels, while maintaining less accessible storage for less-requested materials.  This is an indisputably well-known practice that humans have always performed.”  Id. at 8 (internal quotation marks omitted).

Judge Andrews rejected the plaintiff’s argument that its patent claims should survive the § 101 inquiry in light of the Federal Circuit’s recent Enfish decision, explaining: “Enfish is . . . best understood as a case which cautions against oversimplification during step one of Mayo/Alice, rather than a case which exempts from § 101 scrutiny all patents which purport to improve the functioning of a computer.”  Id. at 9.  In Enfish, the Court explained, the patent claims were directed to “a specific type of data structure designed to improve the way a computer stores and retrieves data in memory.”  Id.  Here, on the other hand, there was no “specific type of data structure” analog – instead, the patent claims were directed to the “broad concept” of “categorical data storage” on a computer.  Id. at 10.  Turning to the second Alice prong, Judge Andrews explained that “[t]he claims here are ‘recited too broadly and generically to be considered sufficiently specific and meaningful applications of their underlying abstract ideas.’”  Id. at 14.  While the patent claims described “the idea of categorical data storage as implemented on a computer, the claimed computer functionality can only be described as generic or conventional.”  Id.

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Magistrate Judge Christopher J. Burke recently issued a Report and Recommendation granting-in-part defendant’s Rule 12(b)(6) motion that plaintiff’s patents are invalid under 35 U.S.C. § 101.  Yodlee, Inc. v. Plaid Technologies Inc., No. 14-1445-LPS (D. Del. May 23, 2015).  Judge Burke previously denied defendant’s motion to stay pending resolution of this motion.  The Court issued its claim construction in this case in January.  Judge Burke noted that claim construction was particularly helpful here because of the “breadth” of defendant’s motion:

At the time that the Motion was filed, Plaid was seeking the dismissal of all 162 claims of all seven patents-in-suit. That kind of a request, in a case with this many patents and claims at issue, sought a huge early investment of judicial resources-resources that might need to be re-invested at the summary judgment stage (if, for example, the Rule 12 Motion was not well taken as to some or all patents-in-suit). In the Court’s view, under the weight of that request, the best practicable path was to first obtain the District Court’s decision on claim construction before rendering a decision on the instant Motion-thus narrowing the scope of possible outstanding legal issues that might be relevant to Plaid’s Section 101 affirmative defenses.

Id. at 5.

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In Invista North America S.A.R.L., et al, v. M&G USA Corporation, et al., C.A. No. 11-1007-SLR (D. Del. May 13, 2016), Judge Sue L. Robinson denied Plaintiffs’ motion for reconsideration of the “amount and manner of payment of the royalty rate to be paid by defendants,” id. at 2, which the Court had placed into escrow when it had also stayed enforcement of an injunction against Defendants pending final resolution of any appeals from the PTO’s final rejection of all claims of the patent-in-suit. The Court’s royalty rate had been based on an “agreement reached by the parties at the damages phase of the case . . . [r]ather than litigate damages, the parties agreed on a lump sum payment for past infringement . . . [m]athematically, defendants paid plaintiffs one (1) cent per pound” of accused product Id. at 2. Neither the Court nor the parties had “engage[d] in a more extensive reasonable royalty analysis,” and the Court declined to do so now and “embrace plaintiffs’ late presentation for immediate implementation” where Plaintiffs’ proposed rate would increase the rate to four cents per pound. Id. at 2-3.

The Court also clarified that its royalty award had not been “the final word on damages related to future infringement.” Id. at 3 (emphasis added). Instead, “if the validity of the [patent-in-suit] were preserved, the parties would either resolve the issue of future damages by settlement or by litigation.” Id. Until that time, the amount of money determined by the one cent per pound royalty rate would continue to be placed into escrow. Id.

Invista North America S.A.R.L., et al, v. M&G USA Corporation, et al., C.A. No. 11-1007-SLR (D. Del. May 13, 2016)

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Judge Richard G. Andrews recently ruled on a protective order dispute relating to the level of access granted to in-house counsel for a plaintiff whose business model was designed to avoid the hiring of lead outside trial counsel.  Blackbird Tech LLC d/b/a Blackbird Technologies v. Service Lighting and Electrical Supplies, Inc. d/b/a et al., C.A. Nos. 15-53-RGA, 15-56-RGA, 15-57-RGA, 15-58-RGA, 15-59-RGA, 15-60-RGA, 15-61-RGA, 15-62-RGA, 15-63-RGA (D. Del. May 18, 2016).  In its own words, the plaintiff “is not designed, from a financial standpoint, to litigate through outside counsel. . . . Accordingly, aside from local counsel, Blackbird intends to litigate these cases entirely through its in-house lawyers.” Id. at 7.  To date, three in-house lawyers had been admitted pro hac vice, two of whom Judge Andrews found were competitive decision makers (the President/CEO and a Vice President and Head of Litigation).  Id.  The plaintiff argued that these individuals should be permitted to access confidential information in the case because, “without such information, Blackbird would be prevented from pursuing these cases within its low-cost litigation business model, which will make continued litigation of these cases extremely difficult.”  Id. at 9 (internal quotation marks omitted).

Judge Andrews explained that “[w]hen attorneys serve the dual role of competitive decisionmakers and litigation counsel, . . . courts must consider both of those roles and cannot simply ignore the competitive decisionmaker aspect.  For this reason, I cannot approve Blackbird’s request for carte blanche access . . . without affording stronger protections for Defendants.  Id. at 16-17.  Here, because there was “a concrete, particularized risk of inadvertent disclosure and misuse here.  To give Blackbird’s competitive decisionmakers access to Defendants’ confidential technical and financial information would raise the specter of prosecuting or acquiring patents that read on Defendants’ products.”  Id. at 12.  Accordingly, Judge Andrews explained, “if the threat of future litigation is taken off the table, there is significantly less likelihood of harm to Defendants.”  Id. at 13.  The Court therefore ordered the parties to submit a proposed protective order that included a prosecution bar and a covenant not to sue Defendants on any patents acquired by the plaintiff in the relevant technology during the course of this litigation and for one year after its conclusion.  Id. at 15-16.

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In a recent Memorandum Opinion, Judge Sue L. Robinson granted defendant’s motion to dismiss pursuant to Rule 12(b)(6) for lack of patentable subject matter under 35 U.S.C. § 101. Device Enhancement LLC v., Inc., C.A. No. 15-762-SLR (D. Del. May 17, 2016). Judge Robinson explained that “[i]n trying to sort through the various iterations of the § 101 standard, the court looks to” DDR Holdings and Federal Circuit’s recent decision in Enfish, LLC v. Microsoft Corp., 2016 WL 2756255 (Fed. Cir. May 12, 2016) “as the benchmark in software and computer cases.” The patent-in-suit, U.S. Patent No. 7,747,683 (“the ‘683 patent”) “relates to a method and system for allowing a user of a terminal device to remotely operate upgraded and/or advanced applications without the need for upgrading the client side application or computational resources.” Id. at 13. Under the § 101 analysis, Judge Robinson described the claimed method in further detail as follows:

The claimed method, then, generally provides for the installation of a generic client-side application on the terminal device and the installation of a corresponding remote application on the server (which handles most of the graphical processing). The server exchanges data with the terminal device. Tasks are split between the client-side application and the remote application, albeit without further guidance from the patent. The processed content is then transmitted and the client-side application renders the content and responds to messages.

Id. at 18-19. Judge Robinson explained that the fact “[t]hat the method at bar may be described as the abstract idea of division of labor does not provide the answer to step one of the Alice inquiry as, ‘[a]t some level, all inventions . . . embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.’” Id. at 17. Rather, Judge Robinson observed that “[t]he question such a broad disclosure poses is whether the patent – although computer-centric – would pre-empt substantially all uses of the underlying ideas at issue, that is, using distributed architecture to increase the capabilities of individual devices by using remote resources.” Id. at 19. Considering this question, Judge Robinson found that “[a]lthough, at this time, the degree of specificity required to pass muster under pre-emption is not at the micro-level (e.g., source code), the disclosures of the ‘683 patent are at the macro-level, that is, the patented method uses computerized devices (of any type) in conventional ways (installation of applications, data exchange, and data processing) without delineating any particular way of putting the ideas into practice.” Id.

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