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In Cirrex Systems LLC v. Verizon Services Corp., et al, C.A. No. 13-921-GMS (D. Del. Oct. 1, 2014), Judge Gregory M. Sleet recently granted defendants’ motion to stay the case, which was brought by a non-practicing entity, pending inter partes review.

The Court had previously advised on a July 2014 teleconference that it may grant defendants’ request for a stay.  Id. at 1 n.1.  During that conference, plaintiff had argued that a stay may impede its access to third-party discovery.  However, the Court now found the prejudice to plaintiff to be neutral here, where plaintiff “may seek to recoup its damages and, as a non-practicing entity, may seek adequate redress for potential ongoing infringement during the length of the stay.”  Id. at 2 n.1.  The Court further concluded that the PTO proceedings would likely aid in simplifying the case, even if the PTO does not find any claims invalid.  Id.  Finally, the stage of the case favored a stay, as the case was still in its early phases, with fact discovery closing in January 2015 and trial set for February 2016.

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In Comcast IP Holdings I LLC v. Sprint Communications Company LP, et al., C.A. No. 12-205-RGA (D. Del. Sept. 29, 2014), Judge Richard G. Andrews concluded that plaintiff’s damages expert had not adequately apportioned damages and thus the analysis was not admissible.

Defendants had filed a motion in limine seeking to exclude profits and or/revenues relating to the accused products, arguing that plaintiff’s damages expert had violated the entire market value rule because the products also contained unpatented features.  Plaintiff argued its expert had, in fact, apportioned revenues between the patented and unpatented technology in the products.  The Court had requested further submissions on this issue, including a proffer of this expert’s testimony.  Id. at 1.

The Court found the expert’s proffer insufficient.  The expert had identified three different functionalities of the accused products and noted that only one was “substantially implicated by the asserted patents,” but there was no indication that she had performed a “‘numerical calculation’ to arrive at a percentage to apply to the profits.  Apportionment does not seem possible without a numerical calculation. There is no evident apportionment in the proffer,” nor in the expert’s deposition or report. Id. at 2.

On the other hand, the Court recognized that its request for additional submissions had focused on whether the entire market value rule had been violated, and that, if it had specifically asked for more detail on apportionment, the subsequent submissions may have been different.  Therefore, the Court allowed plaintiff to submit a proffer “with some detail as to how much of the revenues and/or profits it apportioned to the patented technology, and what the basis for that apportionment is.”  Id.

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In a series of related actions, Chief Judge Leonard P. Stark recently construed over twenty disputed terms across six patents, finding several terms to be indefinite.  Graphics Properties Holdings, Inc. v. Asus Computer International, Inc., C. A. No. 12-210-LPS and related actions (D. Del. Sept. 29, 2014).

The Court found that the following means-plus-function terms were indefinite:

“instruction decode means responsive to each two parcel item for determining in one clock cycle whether the two parcel item is a single two parcel instruction having a bit length of 2n bits or two one parcel instructions, each having a bit length of n bits,” id. at 10-14;

“instruction issue means responsive to the instruction decode means for issuing each two parcel instruction for execution during said one clock cycle, and for issuing one then the other of the two one parcel instructions for execution in sequence during said one clock cycle and the next succeeding clock cycle,” id. at 16-17 (noting also that the Court was persuaded by the determination of an ITC judge that this term was indefinite, at n. 8).

The Court also concluded that the term “high information content” was indefinite because there was no guidance in the intrinsic record as to what information content would be “high.”  Id. at 36-37.  The Court pointed out that the Supreme Court’s recent opinion on indefiniteness, Nautilus, Inc. v. Biosig Instruments, Inc., 134 S. Ct. 2120 (2014), “did not disturb the Federal Circuit’s prior holding that when a word of degree is used, the district court must determine whether the patent’s specification provides some standard for measuring that degree.”  Id. at 37 (citation and alterations omitted).  Here, the patent did not: it only indicated that “‘textual information’ and ‘graphic images’ may be high information content,” but a person of ordinary skill in the art “would be unable to separate textual information and graphic images that contain merely ‘information content’ from text and images that contain ‘high information content.’”  Id.  However, the Court concluded that the term “high resolution” was not indefinite, as defendants argued.  Defendants had, in fact, explained in their alternate construction how a person of ordinary skill in the art would have understood this term, and the intrinsic record supported this alternate construction.  Id. at 35-36.  The Court also rejected defendants’ argument that “large area” was indefinite, id. at 29-30, again finding that the intrinsic record provided a concrete definition for the term where it “provid[ed] a lower limit for what a ‘large area’ means”.  Id. at 30.

The Court also found a preamble term, “hardwired supercomputer,” to be limiting, as the patentee had used this term during prosecution to distinguish prior art.  Id. at 7-8.

The Court also construed the following terms:
“hardwired”
“instruction fetch means for providing an instruction stream of two parcel items in sequence, wherein each two parcel item has a bit length of 2n”
“one clock cycle”/”said one clock cycle”
“rasterization circuit”
“rasterization process which operates on a … floating point format”
“frame buffer”
“color values”
“per-fragment operations”
“logic”
“geometry processor”
“scan converter”
“optical compensation film”
“air gap”
“wide aspect ratio”
“digital computer system,” “information originating source”
“gamma profile”
“gray scale resolution”/”grayscale resolution”
“software controller”
“adjustment circuit”
“gamma value”
“backlight control signal”
“graphics controller”

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Judge Sleet recently granted Nintendo’s motion to transfer to the Western District of Washington in a case filed against Nintendo by Slovak-Republic-based Ithaca Development. Ithaca Ventures k.s. v. Nintendo of Am. Inc., C.A. No. 13-824-GMS, Memo. Op. at 14 (D. Del. Sept. 25, 2014). Judge Sleet first “agree[d] with Nintendo that Ithaca’s forum choice should not be afforded maximum deference. Even though Ithaca Development is organized under Delaware law, its principal place of business being in Texas diminishes the plaintiffs’ argument that it is at home in Delaware. And Ithaca Development’s organization under Delaware law mere weeks before filing this lawsuit further undermines its position, suggesting to the court that its organization here was motivated significantly by the instant litigation.” Id. at 4. In light of these facts, Judge Sleet concluded that “Ithaca’s forum selection is entitled to some degree of heightened deference, but not to ‘paramount consideration.’” Id. at 4-5.

Among the other factors considered in a transfer analysis, Nintendo’s forum preference clearly favored transfer. Id. at 5. The location where the claims “arose” favored transfer slightly because Nintendo marketed and developed the accused products in Washington, although they were designed and manufactured in Japan. Id. at 5-6. The convenience of the parties also weighed in favor of transfer because Nintendo had an office in Washington where several witnesses worked or could work and Ithaca, by contrast, had no contacts with Delaware. Id. at 6-8. Additionally, Nintendo established that the convenience of witnesses factor favored transfer by showing that it expected a third party witness to have relevant testimony and that the witness was within the subpoena power of the Western District of Washington. Id. at 8-9. Further, the location of Nintendo’s books and records in Washington also favored transfer. Id. at 9-10. Finally, the “congestion” of the District of Delaware’s docket, as compared to the Western District of Washington, weighed slightly in favor of transfer. Id. at 11-12. The remainder of the Third Circuit’s Jumara factors were neutral. Id. at 11-14.

In sum, Judge Sleet explained: “Considering the Jumara factors as a whole, the court concludes that the defendants have met their burden of demonstrating that the interests of justice and convenience strongly favor transfer. Only Ithaca’s forum preference weighs against transfer and, as the court explained above, that preference does not warrant maximum deference in this case. Ithaca’s attempt to manufacture venue by organizing in Delaware just before filing suit mitigates the weight of its choice of forum. In contrast, several factors counsel in favor of transfer.” Id. at 14. Judge Sleet also denied a Rule 11 motion filed by Nintendo as moot in light of the transfer, indicating that the Western District of Washington was the correct venue for the Rule 11 motion once Judge Sleet had found transfer was justified. Id. at 15 n.4.

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This week, the jury returned a verdict for the plaintiff in this case.  Masimo Corporation v. Philips Electronics North America Corporation, et al., C.A. No. 09-80-LPS (D. Del. Oct. 1, 2014).  The jury found plaintiff’s patents not invalid as anticipated, obvious, for lack of written description, not enabled, and indefinite.  Furthermore, the jury found that a certain product was not an acceptable non-infringing substitute.  Defendants had previously conceded infringement.  The jury awarded plaintiff $466,744,783 in damages for infringement.

Defendants had one remaining asserted patent against plaintiff.  The jury also found that plaintiff had not literally or indirectly infringed this patent.

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Today, the District of Delaware issued a Standing Order revising the Court’s Administrative Procedures Governing Filing and Service by Electronic Means, setting a new filing and service deadline of 6:00 p.m. ET for all documents other than initial pleadings.  Effective October 16, 2014, section (F) of the Court’s Administrative Procedures will be revised as follows:

(F) Deadlines

Filing documents electronically does not in any way alter any filing deadlines. Aside from initial pleadings, all electronic transmissions of documents (including, but not limited to, motions, briefs, appendices, and discovery responses) must be completed by 6:00 p.m. Eastern Time, in order to be considered timely filed and served that day. All electronic transmissions of initial pleadings must be completed prior to midnight Eastern Time, in order to be considered timely filed that day. When CM/ECF calculates a deadline, it will include intermediate weekends and holidays as prescribed in Fed.R.Civ. P. 6. CM/ECF will also add 3 calendar days for mailing as prescribed in section (E)(5) of these procedures.

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Chief Judge Leonard P. Stark recently considered Defendants motion to dismiss Robert Bosch LLC’s patent infringement claims for lack of personal jurisdiction.  Robert Bosch LLC v. Alberee Products, Inc., et al., C.A. No. 12-574-LPS (D. Del. Sept. 29, 2014).  Two of the three Defendants are Maryland corporations and the third, API, is a Korean corporation.  Id. at 1.  In its complaint, Bosch alleged that API manufactures windshield wiper blade components in Korea and sells them to companies in the United States, including the Maryland Defendants.  Id. at 3.   Bosch further alleged that the Defendants then worked together from Maryland to assemble the wiper blades to market and sell in the United States.  Id.  Plaintiff pointed to no evidence that Defendants have offices, employees, bank accounts, or property in Delaware; travel to or manufacture anything in Delaware; or otherwise have transacted business or directly sold products in Delaware.  Id. at 4.

Bosch did not allege jurisdiction under any one prong of Delaware’s long arm statute, 10 Del. C. § 3104, but that jurisdiction existed “under a ‘dual jurisdiction’ or ‘stream of commerce’ theory.  Id. at 7.  The concept of dual jurisdiction relates to the situation in which a defendant has sufficient general contacts with Delaware and the plaintiff’s claims arise from those contacts.  Id. at 7-8 (citing LaNuova D & B, S.p.A. v. Bowe Co., 513 A.2d 764 (Del. 1986); Wright v. Am. Home Products Corp., 768 A.2d 518 (Del. Super. 2000); Boone v. Oy Partek Ab, 724 A.2d 1150 (Del. Super. 1997)).  Applying the LaNuova, Wright and Boone cases, this Court has held that “‘[t]he dual jurisdiction concept arises from at least partial satisfaction of subsections (1) and (4) of the Delaware long-arm statute . . . . Dual jurisdiction may be established when a manufacturer has sufficient general contacts with Delaware and the plaintiffs’ claims arise out of those contacts.”‘  Id. at 8 (quoting Belden Techs., Inc. v. LS Corp., 829 F. Supp. 2d 260, 267 (D. Del. 2010)).  Jurisdiction would exist if a defendant intended to serve the Delaware market, resulting in a product entering the market; and the plaintiff’s claim arose from injuries caused by this product.  Id. at 8-9.  Judge Stark noted that another Judge in this District recently concluded that the Delaware Supreme Court would not likely “embrace” the theory of dual jurisdiction, Id. at 9., but Judge Stark disagreed finding that “[t]he Delaware Supreme Court has had several opportunities to reject the dual jurisdiction theory but has refrained from doing so.”  Id. at 10-11.

Judge Stark then turned to whether the Defendants here are subject to jurisdiction under the “dual jurisdiction” theory.  Based on Bosch’s allegations, the only question was “whether any or all of Defendants’ actions in placing wiper blades or wiper blade components into the stream of commerce – where those wiper blades and/or wiper blade components end up allegedly causing injury in Delaware (through the sale of the Goodyear Assurance product at Costco) – are sufficient to satisfy the dual jurisdiction theory.”  Id. at 12.  Regarding the Maryland Defendants, Judge Stark found that because they sell the accused wiper blades to nationwide reseller Costco, with locations in Delaware, Defendants “presumptively intend[] to target the Delaware market.”  Id. at 16.  This intent resulted in the introduction of the accused blades in Delaware, and Bosch’s claims arose from injuries caused by those blades.  Id.  Judge Stark also found that a finding of personal jurisdiction comported with Due Process.  Id. at 16-17.  Regarding API, the Korean Defendant, Judge Stark determined that Bosch did not point to any evidence of an agency relationship between API and the Maryland Defendants, nor did Bosch satisfy the requirements of the dual jurisdiction theory.  Id. at 19-20.  Judge Stark did, however, grant Bosch leave to conduct jurisdictional discovery focused on “the relationship among API [and the Maryland Defendants], and the distribution and sale of the accused products in Delaware and throughout the United States.”  Id. at 21-23.

 

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Judge Gregory M. Sleet recently granted a defendant’s motion for attorneys’ fees, finding that the totality of the circumstances warranted characterizing the case as exceptional under 35 U.S.C. § 285 and Octane FitnessSummit Data Sys., LLC v. EMC Corp., et al., C.A. No. 10-749-GMS (D. Del. Sept. 25, 2014).  The plaintiff, Summit, had alleged induced infringement against the sole remaining defendant, NetApp, whose end-user customers were alleged to directly infringe by using NetApp products with Microsoft software.  However, just months prior to filing its complaint, Summit had licensed the asserted patents (indirectly, through a patent aggregator) to Microsoft, meaning that no end-user could directly infringe the asserted patents.  Summit did not disclose the existence of this license agreement until more than a year and a half after filing suit, and soon thereafter agreed to dismiss the lawsuit.

As the Court explained, Summit “forfeited its right to pursue [its induced infringement theory] against NetApp when it entered into the Licensing Agreement . . ., which provided Microsoft with a license to the asserted patents.”  Id. at 6.  The Court rejected Summit’s arguments that NetApp carried the burden of proving a license or patent exhaustion defense, and that Summit could reasonably assume NetApp induced infringement through some other, non-Microsoft-based configuration:  “For over two years, Summit proceeded on an infringement theory that rested on Microsoft’s software being a necessary component.  Summit cannot rely on reasonable assumptions and guesses that NetApp infringes the asserted patents in one way or another.  And NetApp need not establish an affirmative defense when Summit’s sole theory of infringement was unfounded.”  Id. at 7.

The Court added that “Summit’s practice of extracting settlements worth a fraction of what the case would cost to litigate supports a finding of exceptionality.”  Id.  In this case, Summit had settled with a number of other co-defendants for amounts ranging from $60,000 to $170,000.  Id. at 3.  The Court explained that the “Federal Circuit has looked to ‘nuisance value settlements’ to determine whether a case is exceptional.”  Id. at 8 (quoting Eon-Net LP v. Flagstar Bancorp, 653 F.2d 1314, 1327-28 (Fed. Cir. 2011)).  In light of this, and the license issue, the Court found that the totality of the circumstances supported a finding that the case was exceptional.

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In a recent Memorandum Order, Chief Judge Leonard P. Stark denied plaintiffs’ motion for judgment on the pleadings regarding defendant’s patent-misuse defense, and also denied plaintiffs’ motion for leave to file a motion for summary judgment on the same defense. Intellectual Ventures I LLC v. Symantec Corp., C.A. No. 13-440-LPS (D. Del. Sept. 24, 2014).

First, given that defendant raised patent misuse as an affirmative defense rather than a claim or counterclaim, Judge Stark determined that plaintiffs’ motion for judgment on the pleadings should be treated as motion to strike under Fed. R. Civ. P. 12(f), rather than a motion pursuant to Fed. R. Civ. P. 12(c) as plaintiffs had contended. Id. at 2-3. Judge Stark noted that “[a] majority of the District Courts within the Third Circuit that have addressed the issue have determined that the pleading requirements of Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), do not apply to the pleading of affirmative defenses.” Id. at 2. Defendant alleged that plaintiffs engaged in patent misuse by “tying the ‘wanted’ patents-in-suit with a large and undisclosed number of ‘unwanted’ patents,” collecting royalties from invalid patents, and “creating and maintaining an unlawful monopoly.” Id. at 6-9. Because Judge Stark could rely only on the pleadings, and because defendant’s affirmative defense required “additional information” or otherwise implicated “legal and factual” questions that the Court could not resolve at this stage of the case, plaintiffs’ motion to strike was denied. Id.

Turning to plaintiff’s motion for leave to file a motion for summary judgment on the patent misuse defense, Judge Stark noted that plaintiffs’ motion focused on defendant “tying the patents-in-suit to irrelevant and unwanted patents in package licenses.” Id. at 9. Judge Stark explained that because there was a “factual dispute as to whether [plaintiffs] improperly tied licensing the patents-in-suit in this case with unrelated patents, this issue does not appear to be amenable to resolution on summary judgment.” Id. at 8-9. Further, citing to the Court’s scheduling order setting the date for case-dispositive motions, Judge Stark noted that “[m]ore importantly, the Court perceives no persuasive reason to permit a motion for summary judgment on this one issue at this time.” Id. at 9.

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In Intellectual Ventures I LLC, et al. v. AT&T Mobility LLC, et al., C.A. No. 13-1668-LPS and its related actions (D. Del. Sept. 24, 2014), Chief Judge Leonard P. Stark denied defendants’ motions to dismiss with respect to willful infringement and lack of standing, but denied the latter without prejudice.

As to willfulness (directed to only one of the related defendants), plaintiffs alleged that this defendant had knowledge of certain patents-in-suit once it brought these patents to the attention of the examiner during the prosecution of its own patents.  Id. at 4.  Furthermore, the complaint alleged willful blindness: that the defendant ignored the risks of patent infringement as a matter of corporate policy as it had no policy in place to obtain rights from patent holders.  Id. at 5.  The Court found that these allegations were sufficient to survive dismissal.  Id.

As to standing, the Court denied this motion as “[t]he parties have not provided the Court with a copy of the full agreement transferring patent rights to [plaintiffs].”  Id. at 6.  In light of the Court’s recent opinion in Clouding IP, LLC v. Google Inc., it highlighted “the importance of examining the full agreement when assessing whether a plaintiff has been transferred ‘all substantial rights’ in a patent.”  Id. at 5-6.  Therefore the Court denied the motion without prejudice; defendants could move again if the parties provided the “complete assignment agreements and amendments.”  Id. at 6.

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