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This week, Judge Sleet issued an order granting a motion for stay pending resolution of a covered business method patent review instituted by the defendants, Bloomberg and Charles Schwab. Quest Licensing Corp. v. Bloomberg L.P., et al., C.A. No. 14-561-GMS, Order at 1-3 (D. Del. Dec. 3, 2014). Judge Sleet applied the statutory test for a stay pending CBM review set out in Section 18 of the America Invents Act, which provides for four factors to be considered. Id. at 2 n.2.

Judge Sleet first found that a stay was likely to simplify the issues and streamline the trial. Despite the different claim construction standards applicable in the District Court and the PTAB, Judge Sleet found that the Court could still consider the PTAB’s determination and the intrinsic evidence relevant to that determination. Judge Sleet also found that simplification of issues generally was likely given the defendants’ argument that the PTAB would not only engage in claim construction but could also potentially cancel or amend claims or “affect the substantive meaning of the claims by prosecution history or otherwise.” Id.

“The second factor, which has the court consider how far the litigation has progressed, likewise favor[ed] a stay” because no discovery had yet occurred, particularly given that the Court had stayed discovery pending the resolution of the motion to stay. Id. Judge Sleet also found that “the conflicting evidence of attempts by the parties to start discovery prior to the court’s Rule 26(f) conference does not constitute dilatory tactics” designed to delay discovery. Id.

Turning to the third factor, potential prejudice from a stay or lack therefore, Judge Sleet found the factor neutral in the stay analysis: “Should the defendants eventually be found to have infringed, Quest can be adequately compensated by money damages for any harm suffered during the PTO proceedings. Further, the CBM review process initiated by Congress is required by law to conclude one year after initiation and only extendable by six months with a showing of good cause. The court recognizes that Quest has an interest in the timely enforcement of its patent rights. Nonetheless, the court also recognizes the reduced time-frame allotted by Congress for CBM review completion. Moreover, Bloomberg and Schwab’s filing of the motion to stay approximately six months after the filing of the first complaint is not considered by the court to be intentionally delayed or dilatory. Since the parties and the court will have a definitive answer from the PTO whether it will grant CBM review five months prior to the scheduled Markman hearing, the court finds this factor neutral. While a delay in proceeding with its case may be somewhat prejudicial to Quest, it is not unduly prejudicial.” Id. at 2-3 n.2.

Finally, Judge Sleet considered whether a stay would reduce the burden of the litigation on the parties and the Court. Actions against several defendants had previously been consolidated into one civil action, yet only two of five total defendants had joined the CBM petition in the PTO. Under these circumstances, the plaintiff argued that the remaining three defendants “will be in a position to trigger separate CBM challenges at any time during the pendency of this litigation or to re-litigate the claims determined by the PTO as a result of the CBM petition.” Id. at 3 n.2. Nevertheless, “the court [found] credible the nonmoving defendants’ assertions that they were uninformed of the Petition prior to the eve of filing by Schwab and Bloomberg and in no way were attempting to ‘game’ the system. Additionally, the defendants note, and the court agrees, that this is an unlikely proposition. Further, § 18(b) does not require the court impose estoppel effect on the nonmoving defendants or consider the lack of stipulated estoppel effect in assessing the four factors. Rather, the court is asked to balance the factors with a ‘thumb on the scale in favor of a stay being granted.’” Id.

Accordingly, Judge Sleet found that the “balance of the four statutory factors weighs in favor of granting a stay pending resolution of the CBM review proceedings.” Id.

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Judge Sue L. Robinson recently granted a defendant’s motion for summary judgment of non-infringement of design patent claims.  Poly-America, L.P. v. API Indus., Inc., Civ. No. 13-693-SLR (D. Del. Nov. 25, 2014).  The decision hinged on the “normal use” of the products at issue – cardboard boxes with perforated openings through which plastic garbage bags can be removed.  As Judge Robinson noted, the Federal Circuit has defined “normal use” as the “period in the articles life, beginning after completion of manufacture or assembly and ending with the ultimate destruction, loss, or disappearance of the article.”  Id. at 4 (quoting In re Webb, 916 F.2d 1553, 1557-58 (Fed. Cir. 1990)).  Because the defendant introduced unrebutted evidence that the “normal use” of its product would include “flattening the box for recycling,” at which time its product’s distinct top flaps, tabs, and slots would be viewed by an ordinary observer, the Court found that summary judgment of non-infringement was required.  Id. at 15 (“Although Poly questioned the frequency with which an ordinary observer would view these features, it was unable to point to any evidence that would contradict API’s contention that the flaps, tabs and slots are visible at the point of disassembly, or that recycling was part of a box’s ‘normal use.’”) (emphasis in original).

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In Graphics Properties Holdings, Inc. v. Google, Inc., C.A. No. 12-1394-LPS; v. Lenovo Holdings Company, Inc., et al., C.A. No. 12-1397-LPS (D. Del. Nov. 20, 2014), Chief Judge Leonard P. Stark granted the defendants’ motion for leave to amend their answer to add an inequitable conduct defense, finding that the proposed amendment was not futile.  Id. at 2.

Defendants alleged that plaintiff withheld a Federal Circuit order during prosecution, which affirmed a construction of a term of a patent to which the patent-in-suit was a continuation.  Id. at 2-3.  Defendants further alleged that, had the PTO been aware of this order, it would not have permitted issuance of the patent-in-suit due to lack of written description or because this patent could not claim priority to the previously issued patent.  Id. at 3.  The Court concluded that the amendment was not futile.  While plaintiff had disclosed the District Court’s order regarding this term, and “[w]hile Plaintiff contends this alleged non-disclosure is not material, as the Federal Circuit Order is merely cumulative of the District Court Order, Defendants have articulated a plausible theory to the contrary.  The Amended Answer alleges that the Federal Circuit Order is material because it contained adverse statements not contained in the District Court Order” regarding what the patent’s specification did not cover.  Id. at 4.

Although the Court granted defendants’ motion, it declined to apply a recent decision on which defendants had relied.  Defendants argued that the Court’s recent decision in Masimo Corp. v. Philips Electronic North America Corp. stood for the proposition that an intentional failure to disclose a claim construction ruling inconsistent with the applicant’s position was indicative of inequitable conduct.  The Court declined to extend the holding of this case beyond the “particular circumstances” present there, but also found it “unnecessary to resolve the parties’ dispute as to just how much Masimo helps Defendants here.”  Id. at 5.

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In a recent Order, Judge Gregory M. Sleet granted defendants’ motion to dismiss pursuant to Rule 12(b)(1). Amarin Pharmaceuticals Ireland Ltd. v. Omthera Pharmaceuticals, Inc., C.A. No. 14-791-GMS (D. Del. Nov. 14, 2014). Plaintiff sought a declaratory judgment that defendants’ Epanova™ product infringes U.S. Patent No. 8,663,663 (the “’663 patent”), but Judge Sleet concluded the declaratory judgment action was not ripe for judicial review.

Judge Sleet first explained that while “FDA approval of Epanova™ does provide some amount of support” for plaintiff’s position on the existence of a justiciable controversy, “it is not dispositive.” Id. at 2 n.1. Judge Sleet also found that “defendants’ advanced marketing of the accused product is insufficient to meet [plaintiff’s] burden in this specific instance.” Id. The claims of the ’663 patent at issue were only method claims. Id. Judge Sleet agreed with defendants’ argument that the “method claims ‘turn on physiological responses that have not occurred, in patients that do not yet exist, operating under the care of unidentified doctors, who have not yet prescribed a drug that is not yet on the market’ and cannot, therefore, provide the requisite immediacy” to support the exercise of declaratory judgment jurisdiction. Id. at 2-3 n.1. Judge Sleet additionally noted that “[w]hile it is possible that Epanova™ could enter the market within the ‘timeframe of this lawsuit’ the court does not find that assertion sufficient to prove launch of the product is imminent.” Id. at 3 n.1.

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Judge Andrews recently overruled objections to a report and recommendation on claim construction issued by Chief Magistrate Judge Thynge, previously discussed hereHand Held Prods., Inc. v. Amazon.com, et al., C.A. No. 12-768-RGA-MPT (D. Del. Nov. 5, 2014).  Judge Andrews noted with respect to one objection that the Supreme Court’s decision (issued between claim construction briefing and Judge Andrews’ consideration of Judge Thynge’s recommendations) in Nautilus, Inc. v. Biosig Instruments, Inc., 134 S. Ct. 2120 (2014) changed the legal standard for showing indefiniteness.  The defendant argued that Judge Thynge erroneously applied the former “insolubly ambiguous” standard, but Judge Andrews disagreed and found that Judge Thynge correctly applied the standard enunciated in Nautilus.  Id. at 8.  Judge Andrews also rejected the defendant’s argument that Nautilus “eliminated the requirement that the party challenging the validity of a patent must prove invalidity by clear and convincing evidence.”  Id.  The Court explained that it “does not interpret the new standard to have any effect on the presumption of validity or to eliminate or change the evidentiary burden of proof.  In fact, the Supreme Court expressly discussed the presumption and burden of proof and made no mention of changing or eliminating either.”  Id. at 8-9 (citing Nautilus, 134 S. Ct. at 2030 n.10).

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In a recent opinion, Judge Gregory M. Sleet denied defendant Mylan Pharmaceutical, Inc.’s (“Mylan”) motion to dismiss plaintiff AstraZeneca AB’s (“AstraZeneca”) ANDA action for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2).  AstraZeneca AB v. Mylan Pharmaceuticals, Inc., C.A. No. 14-696-GMS (D. Del. Nov. 5, 2014).  AstraZeneca alleged that the Court maintained jurisdiction over Mylan because (i) Mylan “consented to jurisdiction in Delaware”; (ii) Mylan is “subject to specific jurisdiction in Delaware”; and (iii) Mylan is “subject to general jurisdiction in Delaware.” Id. at 5. Judge Sleet concluded that the Court maintained jurisdiction over Mylan only on the grounds that Mylan is subject to specific jurisdiction in Delaware.

First, Judge Sleet determined that AstraZeneca failed to demonstrate that Mylan “is properly subject to general jurisdiction in Delaware.”  Rejecting jurisdiction on this ground, Judge Sleet explained that “AstraZeneca notes only that Mylan is registered to do business in Delaware and has a broad network of third-party contacts within the state,” and that “[u]pholding jurisdiction on these allegations alone would permit the ‘exercise of general jurisdiction in every [s]tate.’” Id. at 7. Judge Sleet also noted that “Mylan’s litigation history in Delaware fail[ed] to rise to [a] level” that would subject Mylan to general jurisdiction.  Id. at 8.

Next, Judge Sleet rejected AstraZeneca’s argument that Mylan “consented to be subject to Delaware’s general jurisdiction by registering to do business in the state and by appointing a registered agent to accept service of process.” Id. at 8.  First acknowledging there “is a circuit split as to whether this type of ‘statutory consent’ is an adequate basis on which to ground a finding of personal jurisdiction,” Judge Sleet ultimately concluded that “Mylan’s compliance with Delaware’s registration statutes-mandatory for doing business within the state-cannot constitute consent to jurisdiction.” Id. at 9-11. In reaching this determination, Judge Sleet relied on the Supreme Court’s decision in Daimler AG v. Bauman, 134 S. Ct. 746, 761 (2014), which held that “‘continuous and systematic contacts’ alone are insufficient to establish general jurisdiction,”  and thus rejected “the idea that a company could be haled into court merely for ‘doing business’ in a state.” Id. at 11. Judge Sleet additionally noted that “[f]inding mere compliance with such statutes sufficient to satisfy jurisdiction would expose companies with a national presence (such as Mylan) to suit all over the country, a result specifically at odds with Daimler.” Id.

Judge Sleet did find, however, that AstraZeneca demonstrated that Mylan is subject to specific jurisdiction in Delaware.  Judge Sleet first noted that “specific jurisdiction has historically been disfavored by courts as a basis to exercise jurisdiction over generic drug company defendants in ANDA cases.” Id. at 12.  Judge Sleet explained that “ANDA litigation is unlike other patent infringement litigation: The injury is abstract, making it difficult to point to a location out of which the injury ‘arises’ for jurisdictional purposes.” Id. at 14.  Nevertheless, Judge Sleet ultimately concluded that Mylan was subject to personal jurisdiction in Delaware, reasoning that “Mylan’s contact with Delaware is not illusory . . . . Mylan sent its paragraph IV certification to AstraZeneca U.S. in Delaware, thus triggering the forty-five-day countdown for AstraZeneca to file a lawsuit-a ‘real act with actual consequences.’” Id. at 15. Judge Sleet also found that “Mylan cannot plausibly argue that it could not ‘reasonably anticipate being haled into court’ in Delaware when patent litigation is an integral part of a generic drug company’s business.” Id.

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In EMC Corp., et al. v. Pure Storage, Inc., C.A. No. 13-1985-RGA (D. Del. Nov. 5, 2014), Judge Richard G. Andrews recently struck affirmative defenses of inequitable conduct and unclean hands against prosecuting attorneys of one of the patents-in-suit, but denied plaintiffs’ motion to strike these defenses against the inventors of this patent.  Defendant alleged that the patent’s inventors and two prosecuting attorneys failed to disclose a certain prior art patent to the PTO with the intent to deceive.  The focus of plaintiffs’ motion was on what defendant had alleged with respect to intent to deceive.

The Court first held that the prosecuting attorneys’ appointment of power of attorney for the prosecution of the patent (along with five other lawyers) was insufficient to show their “substantial[] involve[ment]” in the prosecution of that patent, nor was this fact sufficient to adequately plead an intent to deceive by these individuals.  Id. at 3.

However, as to the patent’s inventors, the Court denied the motion to strike these defenses, finding that the allegations were sufficient.  Defendant had alleged that the inventors of the patent not disclosed to the PTO were colleagues of the inventors of the patent-in-suit and that both “sets of inventors worked on the same family of products at the same company.”  Id. at 4.  Furthermore, defendant also alleged that the patent-in-suit’s inventors were familiar with and cited other works by at least one of the prior art patent’s inventors.  Id. As a result, the Court granted the motion to strike in part and denied it in part.

In the Order, the Court also clarified that the legal standard for intent to deceive at the pleading stage was governed by Exergen Corp. v. Wal-Mart Stores, Inc., 575 F. 3d 1213 (Fed. Cir. 2009) rather than the higher standard articulated at a bench trial in Therasense, Inc. v. Becton, Dickinson Co., 649 F.3d 1276 (Fed. Cir. 2011).  Plaintiff had cited Therasense for the legal standard.   Id. at 2 n.2.

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As previously reported here, Judge Andrews granted a motion for attorneys’ fees and costs under Section 285 and the Supreme Court’s Octane Fitness decision. Judge Andrews ordered the parties to make further submissions of “supporting documentation necessary to justify their fees as well as a brief explanation of those documents.” Having received those submissions from the parties, Judge Andrews determined last week that the defendants were entitled to a substantial portion of the fees they sought. Chalumeau Power Sys. LLC v. Alcatel-Lucent USA Inc., et al., C.A. No. 11-1175-RGA, Memo. Or. at 1-4 (D. Del. Nov. 6, 2014). Under the Lodestar approach, Judge Andrews determined that the “forum rate” for the case “must be governed by the rate for Delaware intellectual property attorneys” and that the “limited exception to the forum rule cannot apply because a number of Delaware attorneys can, and do, capably litigate patent matters.” Id. at 3.

Judge Andrews therefore concluded that “attorneys’ fees and expenses should be governed by the prevailing Delaware market rates for patent litigation” and that the calculation should not be adjusted up or down because these prevailing market rates reflect the “specialized skill that patent litigators possess, as argued by Defendants.” Id. His Honor was “not convinced that Defendants have demonstrated that there is an exceptional circumstance with respect to the result obtained or the amount involved” sufficient to justify an adjustment, nor should the rates “be adjusted downward simply because Defendants did not win on a dispositive motion or at trial.” Id. at 3-4. Finally, Judge Andrews rejected the plaintiff’s argument that fees prior to the Court’s granting of Defendants’ motion to amend to assert a licensing defense were unnecessary: “Because the licensing agreement predates the litigation, and this Court determined the licensing defense was not untimely, it is not clear why the recovery should exclude fees and expenses from before [the Court’s determination]. Defendants had to litigate the case until they learned of the licensing defense. It makes no sense (and perhaps that is why the argument is limited to a footnote) to say that defending the case was not reasonably necessary.” Id. at 4.

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Judge Richard G. Andrews recently denied-in-part plaintiff CallWave Communications, LLC’s motion for leave to amend its complaints against defendants in a series of related cases.  CallWave Communications, LLC v. AT&T Inc., et al., C.A. Nos. 12-1701-RGA, 12-1702-RGA, 12-1704-RGA (D. Del. Nov. 5, 2014).  Previously, Judge Andrews granted Defendants’ motion to dismiss CallWave’s willfulness and indirect infringement claims.  In its motion to amend, CallWave sought to remove the portions of its complaints no longer relevant in light of Judge Andrews’ previous order, but also sought to add new factual allegations.  Id. at 3.  Judge Andrews granted CallWave’s motion to permit it to remove allegations related to willfulness and indirect infringement, but denied the motion as to the new factual allegations because the proposed amendments would be futile.  Id.  The proposed amendments related to a meeting between CallWave and defendant Google that, according to CallWave, would be relevant to Google’s pre-suit knowledge of the patents-in-suit.  Id. at 4.  Judge Andrews found that the new allegations “serve no purpose.”  Because the only claims “successfully pled” by CallWave relate to direct infringement, the new allegations relate to no existing claim and cannot “form the basis for CallWave successfully re-plead[ing] willful infringement against Google at some point in the future.”  Id.  

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In a recent Memorandum Opinion, Chief Judge Leonard P. Stark granted defendants’ motion to dismiss with respect to claim 1 of U.S. Patent No. 5,612,179 (“the ’179 patent”), after finding that claim to be directed toward a natural phenomenon, a category of unpatentable subject matter. Genetic Techs. Ltd. v. Bristol-Myers Squibb Co., C.A. No. 12-394-LPS (D. Del. Oct. 30, 2014). Judge Stark denied defendants’ motion to dismiss without prejudice to renew as the remaining asserted claims of the ’179 patent and the asserted claims of the other patent-in-suit, U.S. Patent No. 5,851,762 (“the ‘762 patent”).

While acknowledging that it was not precedential at the time of the Court’s decision, Judge Stark was nevertheless persuaded by the Federal Circuit’s decision in Ultramercial, Inc. v. Hulu, LLC, 722 F.3d 1335 (Fed. Cir. 2013), which stated that “to grant dismissal of a patent infringement suit at the pleading stage for lack of patentable subject matter, ‘the only plausible reading of the patent must be that there is clear and convincing evidence of ineligibility.’” Id. at 6-7. Claim 1 of the ’179 patent was directed to a method of “amplifying and analyzing correlations between different regions of DNA sequence.” Id. at 10. Relying on the two-step framework set forth in Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012), Judge Stark first determined that claim 1 recites a natural phenomenon, explaining that a “correlation that preexists in the human body is an unpatentable phenomenon.” Id. at 11. Next, Judge Stark considered whether there existed “additional steps in the claim . . . sufficient to satisfy patent eligibility.” Judge Stark found that the claim’s additional steps did not give rise to an “inventive concept” as to satisfy patent eligibility:

The asserted claim recites a series of steps to manifest the natural law – that is, to detect the natural correlations between coding and noncoding sequences. The added steps used to discern these correlations consist only of routine and conventional techniques. The patent specification states this outright, making this one of the (perhaps rare) occasions in which further factual development and claim construction are not necessary and invalidity can properly be determined at the 12(b)(6) stage.

 Id. at 13. Judge Stark therefore concluded that “the only plausible reading of claim 1 of the ’179 patent is that its additional steps, which consist only of routine and conventional techniques, fail to give rise to an ‘inventive concept,’ such that when, taken as a whole, the claim does not provide meaningful limitations that restrict the natural correlation to an application.” Id. at 14. Given the parties’ limited analysis in their briefing and during oral argument, Judge Stark stated that “the Court will require additional assistance from the parties to apply the foregoing analysis to the ’762 patent (and to the remaining claims of the ‘179 patent as well).” Id. at 20.

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