Managing editor and co-author of Delaware IP Law Blog, Pilar G. Kraman, is a featured author in the latest issue of Managing IP’s, Intellectual Property Focus. This special “Americas IP Focus 2012” showcases commentary and analysis from IP lawyers throughout the Western Hemisphere, and is distributed to IP Owners and IP lawyers around the world. The publication will also be distributed to attendees of major IP conferences in October including: the AIPLA annual meeting; the LES US & Can annual meeting; and the AIPPI world congress. You can read Pilar’s article below, “Trends in Delaware post-Twombly,” which discusses recent developments in the District of Delaware regarding the sufficiency of pleadings alleging indirect and direct patent infringement.
Judge Richard G. Anderson recently disqualified the law firm Latham & Watkins as defense counsel in a patent infringement action filed by the subsidiary of a former Latham client. Eon Corp. IP Holdings LLC v. Flo TV Inc., et al., C.A. No. 10-812-RGA (D. Del. Sept. 24, 2012). Latham represented the plaintiff’s parent company between 1988 and 1995, but did not represent it in patent prosecution matters, or with regard to any licensing efforts involving the patent at issue. Id. at 3, 7. Instead, Latham represented the plaintiff’s parent company in general corporate and regulatory matters. Id. at 3. The Court noted that some of those corporate and regulatory matters related to the same or similar technology at issue in the patent litigation. Id. at 3.
There was no dispute that the two Latham attorneys who had been admitted pro hac vice in the litigation were not at Latham during the firm’s prior representation, and it was acknowledged that they were subject to an ethical wall. Id. at 3. Neverthelss, the Court was concerned because, “[s]ome of the invalidity defenses, if pursued, could involve factual inquiry into” the activities of the plaintiff’s parent company when it was represented by Latham, “and it is conceivable that the information about related factual matters could have been shared with Latham attorneys.” Id. at 7. As a result, the Court found that “the answer to the question, ‘might [the plaintiff] have disclosed to Latham confidences which could be relevant to the present action, and detrimental to [the plaintiff] in this action,’ is surely yes.” Id. at 8.
The Court explained that, “[i]n terms of the conflict [of interest] analysis, it makes no difference that seventeen years have passed since Latham represented [the plaintiff’s parent company], when the lawsuit will in part concern events that occurred twenty years ago.” Id. The Court acknowledged that the conflict of interest could be viewed as having been ameliorated in various ways: by the passage of time, the imposition of an ethical wall, and the fact that the two attorneys involved in the litigation were not involved in the previous representation. Neverthelss, the Court found that “on balance, considering the rather unusual circumstances of the conflict of interest here, I believe the most appropriate exercise of my discretion is to disqualify Latham and Watkins … .” Id. at 10.
At plaintiff’s request, Judge Leonard P. Stark recently stayed a patent infringement lawsuit pending the court’s resolution of motions for summary judgment in related cases. St. Clair Intellectual Property Consultants, Inc. v. Motorola Mobility LLC, C.A. No. 11-1305-LPS (D. Del. Sept. 20, 2012). Plaintiff argued that a stay was appropriate because “multiple summary judgment motions, including several seeking to invalidate patents asserted here, [were] pending before this Court in related patent infringement cases.” Id. at 2. Defendant complained that a stay would prejudice it because the defendant had already complied with court ordered deadlines, particularly regarding claim construction, and plaintiff would have additional time “to refine its theories or strategies[.]” Id. at 3. Judge Stark did not think this prejudice rose to the level of undue, but noted that plaintiff’s failure to comply with the court’s scheduling order deadlines could be “most appropriately addressed, if necessary, in the context of Defendant’s recently-filed motion for sanctions.” Id.
In a recent memorandum order, Judge Leonard P. Stark granted Plaintiff British Telecommunications’ (BT’s) motion for leave to file a supplemental complaint for patent infringement against Defendant Google. BT sought to file a supplemental complaint in order to include claims of indirect infringement for events occurring after the filing of its original complaint. More specifically, BT sought to add Google’s newly introduced product, Google Play, and to include indirect infringement claims based on Google’s knowledge of the patents-in-suit since at least the filing of the original complaint. British Telecommunications PLC, v. Google Inc., C.A. No. 11-1249-LPS, at 1 (D. Del. Sep. 20, 2012).
Noting that the Third Circuit “has adopted a liberal approach to granting leave to amend,” Judge Stark was “persuaded that the proper course of action is to grant Plaintiffs motion for leave to amend.” Id. at 1-2. He found “no evidence of undue delay, bad faith, or dilatory motive on the part of Plaintiff,” especially where “Plaintiff filed its motion before discovery began, within the time frame for supplementing or amending pleadings as set forth in the Scheduling Order, and within four months of filing its original complaint.” Id. at 2. Accordingly Judge Stark granted BT’s motion for leave to file a supplemental complaint.
This result is in accord with Judge Stark’s prior decisions regarding the knowledge requirement of indirect infringement, and Judge Stark stated as much: “Defendant’s argument that the motion is futile because Plaintiff fails to state a plausible claim of indirect infringement is unpersuasive. While Defendant notes that decisions in this District are not uniform as to whether knowledge of a patent may be demonstrated by filing of a complaint, the undersigned judge has expressed the view that, for purposes of indirect infringement occurring after the filing date, ‘an accused infringer is on notice of the patent(s)-in-suit once an initial pleading identifies the patents-in-suit.’” Id. at 2 (citing Softview LLC v. Apple Inc., 2012 WL 3061027, at *7 (D. Del. July 26, 2012)).
In Senju Pharmaceutical Co., Ltd., et al. v. Apotex Inc., et al., C.A. No. 11-1171-SLR (D. Del.), Judge Robinson dismissed plaintiffs’ claims of infringement for failure to state a claim where the allegations were asserted against the same defendants and based on the same patent and same ANDA filing that the Court had ruled upon in a prior litigation. Id. at 1. In that prior litigation, plaintiffs filed suit against defendants for infringement of the patent at issue based on defendants’ ANDA filing. Id. at 1. At the conclusion of that case, the Court entered final judgment against plaintiffs, invalidating the asserted claims of the patent at issue as obvious. Id. at 2-3. However, while that prior litigation was still pending, without notifying the Court, plaintiffs initiated and were engaged in reexamination proceedings involving the same patent at issue. Id. at 1. Following the reexamination proceedings, plaintiffs then filed the instant litigation against defendants alleging infringement of those “new” claims of the patent at issue that were “added or amended” during reexam. Id. at 1. In response, defendants moved to dismiss the instant action based on the doctrine of res judicata or claim preclusion. Id. at 6. Specifically, defendants argued that dismissal was proper because “the claims of the current lawsuit are precluded” by the judgment against the plaintiffs in the prior litigation. Id. at 6. The Court agreed. Id. at 6. Citing both Third Circuit and Federal Circuit authority, the Court noted that “[c]laim preclusion bars any new legal claim based on the same cause of action previously asserted” and that “[e]ach patent, not patent claim, gives rise to an independent and distinct legal claim or cause of action.” Id. at 7 (emphasis in original). In its analysis, the Court concluded that in the instant litigation the plaintiffs “are alleging infringement by the same proposed product that was at issue in the first litigation” and that “[plaintiffs] could have asserted the equivalent of the new and amended claims in the first litigation.” Id. at 8-9. The Court held that the “reexamination of the patent-at-issue did not create a new cause of action against the same previous defendant and accused product and reasoned that “[a]llowing this case to go forward would open the door to relitigation of a matter that has already been decided on the merits.” Id. at 11.
Judge Sue Robinson recently granted a defendant summary judgment of non-infringement based on the doctrine of patent exhaustion. Keurig, Inc. v. Sturm Foods, Inc., Civ. No. 10-841-SLR (D. Del. Sept. 13, 2012). The plaintiff in the case, Keurig, is the manufacturer of popular beverage brewers, as well as individual serving cartridges for use in its brewers. Id. at 1. Keurig sued the defendant, Sturm Foods, asserting various patent and non-patent claims, based on the defendant’s manufacture and sale of its “Grove Square” line of individual serving cartridges, the packaging of which indicates that they are “*For use by owners of Keurig coffee makers.” Id. at 3. In one of several competing motions for summary judgment, the defendant argued that the doctrine of patent exhaustion precluded a finding of infringement. The Court agreed, explaining that the “purpose of the patent exhaustion doctrine is to ensure that a patentee surrenders its statutory monopoly after it has received compensation for an article sold that embodies its patent.” Id. at 10. Here, the “article sold” was the patented brewer. The Court distinguished the case from those in which patent exhaustion arises in connection with the sale of an “incomplete” item because, in this case, Keurig “sells a product that completely practices the patent. … There is no need to determine the extent to which the brewers embody the patent when the brewers are sold in a completed form. For this reason, the court agrees with defendant that the two-prong test [under Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008)] is inapplicable; instead, the ‘long standing doctrine’ that an ‘initial authorized sale of a patented item terminates all patent rights to that item’ is applicable. Id. at 9-10 (quoting Quanta, 553 U.S. at 625). With regard to the non-patent claims (including trademark and trade dress infringement, unfair competition, and false advertising), the Court found that genuine issues of material fact exist which precluded entry of summary judgment.
Magistrate Judge Mary Pat Thynge recently issued a report and recommendation setting forth the court’s recommendations for constructions of the disputed claim terms of U.S. Patent No. 7,337,949 entitled System for Marketing Leisure Activity Services Through Prepaid Tickets. Quantum Loyalty Systems, Inc. v. TPG Rewards, Inc., C.A. No. 09-022-RGA-MPT (D. Del. Sept. 11, 2012). The following terms were construed:
“service specific payment mode”
“service specific ticket”
“substantially unique identifier”
“representing an initial value to be remitted”
“configured to be valid for incremental quantity of services”
“at any one of a plurality of service providers”
“payment mode is redeemable at a variable rate”
“enabling a variable rate redemption of the payment mode”
“for a redemption in exchange for a unit use of a desired service”
“at the selected service proivder, debiting a price set by the selected service provider”
“effecting payment/effecting payment at the price debited”
“as opposed to a cash sum”
“absorbing any difference in prices”
“adjusting price of the payment mode”
“verifying an expiration date”
Last week we reported on Judge Sue Robinson’s opinion denying a motion to dismiss for lack of sufficient standing in MobileMedia Ideas, LLC v. Apple Inc., C.A. No. 10-258-SLR (D. Del. Aug. 16, 2012) (read about that decision here). The case is now moving forward on the merits, and Magistrate Judge Mary Pat Thynge has issued a memorandum order regarding MobileMedia Ideas’ (“MMI”) assertion of the common interest privilege.
As detailed in the previous post, MMI is a patent holding entity for Sony and Nokia. Apple, the defendant in this suit, served third party subpoenas seeking documents from three Nokia entities that had previously been shared between Nokia, Sony, and MMI. Each Nokia entity objected to the subpoenas based on the attorney-client privilege. Apple conceded that the common legal interest privilege might apply to the documents because Sony and Nokia worked together to develop a litigation strategy for MMI. But Apple contested whether each document shared among the parties was shared specifically for the purpose of furthering a joint legal strategy, as is required for the common interest privilege to apply. See MobileMedia Ideas LLC v. Apple Inc., C.A. No. 10-258-SLR/MPT, at 1-10 (D. Del. Sep. 10, 2012).
After considering all of the evidence, Judge Thynge found that the common interest privilege applied to the documents Apple sought: “Apple’s argument that the transfer of the patent prosecution files and [invention disclosure forms (“IDFs”)] to MMI were not to further a joint legal strategy is refuted by the Formation and Operating Agreements which provide the central purpose of MMI was ‘to acquire, develop, administer and manage [i]ntellectual [p]roperty rights’ related to the inventions obtained from the Nokia and Sony entities.” Id. at 12. Also, “since the formation of MMI, Nokia, Sony and their respective wholly owned subsidiaries have provided assistance and cooperation to MMI’s outside attorneys . . . . Such future cooperation, which may involve providing additional materials, does not imply that the original transfer of the patent prosecution files and the IDFs was merely to effectuate transfer of the patents.” Id. at 13. Furthermore, [t]he exchanges by Sony [and] Nokia . . . were made under non-disclosure agreements with the understanding the parties shared a common legal interest. . . . A common legal interest agreement . . . was also executed [and] it acknowledged litigation was contemplated.” Id. at 15-16. Finally, Sony and Nokia “receive a percentage of the recovery from any successful enforcement by MMI of the transferred patents confirming their common interest in MMI prevailing in the present litigation.” Id. at 16.
Judge Thynge therefore concluded that the “language, provisions and tenor of the [various agreements] clearly indicate at the time of their execution, the Nokia and Sony entities anticipated litigation for enforcement of the transferred patents. As evidenced by the various agreements, the purpose of the transfer of the patent prosecution files and the IDFs were part of the joint legal strategy involving the Nokia and Sony entities that began before MMI’s formation and continued thereafter. MMI and the Nokia and Sony entities have operated with the expectation that any shared privilege communications would be confidential and protected from disclosure. The Nokia and Sony entities, as licensees, clearly share a common legal interest in MMI prevailing in this action. That as a result of the Formation Agreement, MMI is now the owner of the patents does not eviscerate or prevent the sharing of a common legal interest with Nokia and Sony.” Id. at 14.
The formal investiture of Magistrate Judge Sherry R. Fallon will take place at the District Court on Friday, October 12, 2012 at 3:00 p.m. There is no need to RSVP. Light refreshments will be available immediately following the ceremony in the courtroom lobby area.
See you there!
In MyKey Technology Inc. v. CPR Tools Inc., et al., C.A. No. 11-443-RGA (D. Del. Sept. 10, 2012), Judge Richard G. Andrews granted a motion to dismiss filed by defendant Intelligent Computer Solutions, Inc. (“ICS”), on the grounds of lack of personal jurisdiction, and also granted a motion to transfer venue to the District of Maryland filed by plaintiff MyKey Technology, Inc. (“MyKey”).
Judge Andrews granted ICS’s motion to dismiss for lack of personal jurisdiction after permitting jurisdictional discovery to clarify the issue. ICS is not incorporated in Delaware, and MyKey itself conceded that there was “no general jurisdiction over [ICS].” Alternatively, MyKey argued that because ICS had a website that would permit Delawareans to purchase the infringing products, ICS had “offered to sell the infringing products to Delawareans,” and thus specific jurisdiction was present. Judge Andrews, however, relied on AFTG-TG, LLC v. Nuvoton Tech. Corp., No. 2011-1306, 2011-1307, 2012 U.S. App. LEXIS 18030 (Fed. Cir. Aug. 24, 2012), to find that the existence of such a website was insufficient to satisfy the requirements of specific jurisdiction. See Nuvoton Tech. Corp., 2012 U.S. App. LEXIS 18030, at *4 (noting specific jurisdiction requires defendant to “purposefully direct activities at the forum’s residents”). Judge Andrews also found that other indicia of specific jurisdiction were lacking, as there was no evidence that the infringing products had ever been sold in or shipped to Delaware. Lacking general and specific jurisdiction, Judge Andrews granted the motion to dismiss, leaving two defendants—CPR Tools, Inc. and Logicube, Inc.—in this patent infringement suit.
In addition to granting the motion to dismiss, Judge Andrews granted MyKey’s motion to transfer venue from the District of Delaware to the District of Maryland pursuant to 28 U.S.C. § 1404(a). Section 1404(a) grants a district court the ability to “transfer any civil action to any other district or division where it might have been brought.” Moreover, the District of Delaware typically conducts a detailed analysis of the private and public interest factors set forth in Jumara v. State Farm Ins. Co., 55 F.3d 873 (3d Cir. 1995) to assess whether efficiency and expense considerations warrant transfer. See Jumara, 55 F.3d at 879; see also Mosaid Technologies, Inc. v. Sony Ericsson Mobile Communications (USA) Inc., C.A. No. 11-598-SLR (D. Del. Aug. 16, 2012) (analyzing a motion to transfer under Jumara factors). Under the § 1404(a)/Jumara framework, the movant has the burden of establishing the propriety of transfer. Jumara, 55 F.3d at 879.
ICS had been the only defendant that was opposed to the transfer. However, as discussed above, Judge Andrews dismissed ICS from the suit, rendering its opposition moot. Because the remaining defendants did not contest the transfer, Judge Andrews found that MyKey had sustained its burden to establish the propriety of the transfer despite “rather sparse” allegations with regard to personal jurisdiction in Maryland. Moreover, in light of the lack of contention, it was unnecessary for Judge Andrews to conduct a detailed Jumara analysis. Judge Andrews determined that transfer was appropriate because it “appear[ed] that this [was] a civil action that could have been brought in the District of Maryland.”
At one point in the order, Judge Andrews noted that with the recent amendment to 28 U.S.C. § 1404(a), a district court can transfer a suit “to any district or division to which all parties have consented.” § 1404(a). However, due to the effective date of the amendment, it did not apply to the instant matter.