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When does judicial efficiency require the District Court grant a defendant’s motion to transfer venue? Chief Judge Sleet recently ordered transfer to the Northern District of Illinois in a case where parallel litigation was at a more advanced stage than the Delaware case in Motorola Mobility, Inc. v. Apple Inc., C.A. No. 10-cv-867-GMS (D. Del. Jan. 5, 2012). In that case, another infringement action involving the same parties and the same patents had been filed in the Western District of Wisconsin and was later transferred to the Northern District of Illinois. The Northern District of Illinois case had already progressed through substantial discovery and beyond a Markman hearing, and the judge in that matter had already issued a decision construing some of the claim terms. It was scheduled for oral argument in the near future and for trial at least a year before a trial could be held in the Delaware matter. By contrast, the District of Delaware case was in its earliest stages, and related matters involving the Apple, the defendant moving for transfer, were currently stayed and unlikely to proceed during the pendency of the Illinois action.

Considering all of these facts, the court ordered transfer. Applying Supreme Court, Third Circuit, and Federal Circuit precedent, Chief Judge Sleet found that “the balance of interests necessitates the transfer of this action to the Northern District of Illinois.” Id. at 2 n.2. Although “the parties did not concentrate their written submissions or oral arguments on the private interest factors identified [by the Third Circuit] in Jumara,” the court found that these factors favored transfer. Id. In particular, the court observed that because of the parties’ financial means, “considerations of witness convenience, financial constraint, and the location of books and records are not significant issues” and that factor “is often rendered neutral.” Id. Furthermore, the court cited the Federal Circuit’s preference for the jurisdiction in which the action was “first filed,” as expressed in Electronics for Imaging, Inc. v. Coyle, 394 F.3d 1341 (Fed. Cir. 2005), but noted that the public and private interests at play “outweigh the deference afforded to [the plaintiff’s] choice of forum and necessitate[] transfer for reasons of judicial efficiency.” Motorola, at 2 n.2.

Finally, the court considered the defendant, Apple’s, argument that the case should not be tried in Delaware for reasons of forum non conveniens. While the court ordered transfer on other grounds, it warned that this forum non conveniens argument was not persuasive and even “strikes [the court] as disingenuous,” given that Apple itself has filed several patent infringement actions in Delaware and has argued to keep those actions in Delaware. “Consequently, while Apple correctly identified in its Reply that ‘the strongest argument in favor of transfer is judicial efficiency,’ the court urges Apple and other parties to refrain from extending their advocacy to arguments that, as was the case here, appear less than forthright.” Id. (citations omitted).

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In XPRT Ventures, LLC v. eBay, Inc., et al., C.A. No. 10-595-SLR (D. Del. Dec. 30, 2011), Special Master White rejected the Defendants’ arguments in favor of a prosecution bar on the Plaintiff’s Outside Counsel. Id. at 3. Although the Defendants argued that a prosecution bar on the Plaintiff’s Outside Counsel was necessary to protect the Defendants’ confidential and proprietary information, the Special Master agreed with the Plaintiff that the proposed prosecution bar was unreasonable under the circumstances. Specifically, the Special Master found that the proposal, which sought to bar Outside Counsel “from directly or indirectly participating in the preparation or prosecution of a class of patent applications ‘in any way’” was overly broad, especially in light of the “expansive subject areas setting the outer boundaries of the proposed bar, for example, ‘money management,’ ‘advertising and promotion’ and ‘web hosting, or online or mobile commerce.’” Id. at 5. The Special Master found that such a provision effectively could be interpreted “to cover the entire field of commerce in today’s modern age . . . .” Id. at 5-6. Further, the Defendants provided no evidence that the Plaintiff’s Outside Counsel were engaged in competitive decisionmaking for the Plaintiff: Outside Counsel were not involved in any patent prosecutions before the PTO, or with any decisions concerning the Plaintiff’s licensing, pricing, or management of its patent portfolio. Id. at 7-8. Under the circumstances, the Special Master found that the concerns raised by the Defendants would be adequately safeguarded under the Court’s Local Rules and an anticipated stipulated protective order providing that confidential materials would be used only in the present litigation. Id. at 8.

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In Quantum Loyalty Systems, Inc. v. TPG Rewards, Inc., C.A. No. 09-22-SLR-MPT (D. Del. Dec. 22, 2011), Judge Thynge recently considered plaintiff’s request that the court, in addition to damages and willfulness, bifurcate consideration of certain of defendant’s counterclaims. Specifically, plaintiff asked that the court “sever, dismiss, bifurcate or transfer” the following counterclaims because they were unrelated to the factual and legal issues surrounding plaintiff’s claim of infringement of the patent in suit:

– Count II: Declaration of Invalidity and Noninfringement of U.S. Patent No. 7,156,294 (“the ‘294 patent”);
– Count III: Declaration of Invalidity and Noninfringement of U.S. Patent No. 7,066,383 (“the ‘383 patent);
– Count IV: Attempted Monopolization;
– Count V: False Advertising under Section 43(a) of the Lanham Act;
– Count VI: Deceptive Trade Practices under Delaware Law;
– Count VII: Tortious Interference with Prospective Business Relations;
– Count VIII: Breach of Settlement Agreement;
– Count IX: Cybersquatting under the Anticybersquatting Consumer Protection Act (15 U.S.C. § 1125(d)(1));
– Count X: False Designation of Origin under the Lanham Act (15 U.S.C. § 1125(a)); and
– Count XI: Delaware Common Law Unfair Competition.

Id. at 4.

Defendant argued that the counterclaims were appropriate because “the issues for all of the claims, defenses, and counterclaims are substantially intertwined.” Id. Judge Thynge ultimately agreed. Regarding defendant’s antitrust counterclaim, plaintiff argued, among other things, that bifurcation was appropriate because the court has already bifurcated damages and “much of the anticipated antitrust discovery will focus on damages and other economic factors and involve discovery matter unrelated to the patent case.” Id. at 7. Judge Thynge disagreed. “[T]he invalidity and unenforceability of the [patent in suit] is, in part, the basis of [defendant’s] antitrust claims as well as, two of its affirmative defenses to [plaintiff’s] infringement claim. Therefore, bifurcation here . . . would likely result in substantial duplication of evidence, and the presentation thereof, in two separate cases.” Id. at 9.

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Magistrate Judge Burke recently considered a motion to consolidate two pending patent cases in Eastman Chem. Co. v. Alphapet Inc., C.A. No. 09-971-LPS-CJB (Dec. 29, 2011). Finding for the defendant and ordering consolidation, Magistrate Judge Burke noted that “there are numerous common questions of law and fact between the 971 action and the 702 action.” Id. at 6.

For example, the court found that both actions “involve patents that cover similar technology relating to polyesters, and . . . [t]his court has frequently ordered consolidation where the technology at issue in the separate actions appeared to be similarly related.” Id. As part of this finding, the court observed that all five of the patents asserted in the two actions belong to one USPTO class, and that three of them belong to the same subclass. “Moreover, the two matters involve related technologies that were allegedly utilized at a single [defendant] facility . . . . This will likely result in other commonalities of fact and law.” Id. at 7. The court also found that “there are likely to be a number of efficiencies that result from consolidation.” These included “significant overlap of parties between the two actions,” and the efficiency of “coordinat[ing] deposition testimony and document discovery issues.” Id. at 8-9.

The court next concluded that consolidation would not significantly delay resolution of the actions. The two cases had progressed beyond infringement allegations and non-infringement and invalidity counterclaims. But no scheduling order had yet been entered in one of the actions, and no responses to discovery requests had yet been served. Although the plaintiff objected to consolidation based in part on its proposed schedule in one action, the court found that the “proposed schedule for the 702 action is not dramatically different from the schedule currently in place in the 971 action.” Therefore, “[w]hile it may be (though it is not certain) that some aspects of discovery on the patent claims in the 702 action could move more quickly than they might if that case were consolidated with the 971 action, the overlapping nature of discovery applicable to both cases means that efficiency will best be aided by consolidation.” Id. at 14. Given each of these considerations, Magistrate Judge Burke found that “the relationship between the cases and the efficiencies that would be gained by combining these cases into a single action weighs strongly in favor of consolidation.” Id. at 16.

Finally, the court considered the potential for jury confusion if the actions were to be consolidated for trial and pointed out that consolidation under Rule 42(a) “does not foreclose the possibility of separate trials.” Id. Noting that decisions regarding trial would ultimately be left to Judge Stark, Magistrate Judge Burke ordered consolidation of the cases for pretrial purposes only.

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In Intermec Technologies Corp. v. Palm Inc., C.A. No. 07-272-SLR, Judge Robinson denied the plaintiff’s motion for reconsideration of a prior decision granting in part defendant’s motion for summary judgment. Id. at 11. Regarding the prior decision at issue, the defendant filed a motion for summary judgment of no invalidity and infringement of two patents-in-suit. Id. at 2. Conversely, the plaintiff filed a corresponding cross-motion for summary judgment of noninfringement and invalidity of the same. Id. at 2. In deciding the parties’ competing motions for summary judgment, on the issue of invalidity, the Court ruled in favor of the defendant. Id. at 1-2. In its summary judgment decision, the Court rejected the plaintiff’s anticipation, indefiniteness, non-enablement and lack of written description arguments and held that the asserted claims of the patents-in-suit were not invalid. Id. at 2-3. As a result, the plaintiff subsequently moved for reconsideration of that decision, arguing that, among other things, it was “necessary to ‘correct errors of law and fact and to prevent manifest injustice,’” and that the Court “did not apply the proper standard . . . in granting [defendant] summary judgment.” Id. at 4. The Court, however, denied the plaintiff’s motion for reconsideration, finding that the motion was without merit. In denying the motion, the Court noted that the plaintiff: (1) did not point to “a change in the controlling law or any newly discovered evidence”; (2) had not shown “a need to correct a clear error of law or prevent manifest injustice”; and (3) had not “demonstrated that the court patently misunderstood a party, . . . made a decision outside the adversarial issues presented to the court by the parties, or . . . made an error of apprehension.” Id. at 11. The Court further noted that the plaintiff’s motion for reconsideration sought to only reargue the same issues and evidence that were before the Court in the prior summary judgment decision, and that the plaintiff’s “chief complaint” was essentially that the Court did not weigh the facts of record as plaintiff would have wanted, and, as such, is “insufficient to meet the motion for reconsideration standard.” Id. at 11. This decision further exemplifies the point that the standard for obtaining relief on a motion for reconsideration is, indeed, “difficult for a plaintiff [or defendant] to meet.” Id. at 3.

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In Helicos Biosciences Corp. v. Pacific Biosciences of California, et al., Civ. No. 10-735-SLR (D. Del. Dec. 22, 2011), discussed previously here, Judge Robinson denied a defendant’s motion to sever or stay the litigation against it in a situation where the defendant argued that, unlike its co-defendant, it never had (and never would) commercialize the technology accused of infringement, and where there existed no allegation that its activities or products overlapped with its co-defendant to satisfy the “common transaction” requirement of FRCP 20(a). Id. at 1-2. Instead, the defendant argued, the allegations against it were based solely on non-commercial presentations made by its employees at biotech conferences. Id. at 2. The Court found that an issue of fact existed as to whether presentations made by the defendant’s employees amounted to “offers for sale” and whether the defendant’s research, if infringing, constituted permissible experimental use. Id. at 4. Further, because the defendant’s accused technology “shares fundamental elements in common with” the other defendant’s accused product (which was undisputed during briefing), the Court found that joinder was appropriate. Id. Specifically, the Court credited the plaintiff’s undisputed assertion that the defendants’ technologies were similar in that both rely on “detecting labeled nucleotides as a polymerase, [using] four nucleotides with distinct fluorescent labels and optical detection zones limited to the immediate vicinity of the polymerase.” Id. Finally, the Court rejected the argument that severance was appropriate because the co-defendants were direct competitors, finding that the agreed upon protective order and prosecution bar were adequate safeguards of confidential information and, moreover, that inadvertant disclosure likely would not result in substantial harm given the defendant’s assertion that it did not plan to commercialize its technology. Id. at 5.

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On December 2, the Federal Circuit issued an order granting a writ of mandamus in a District of Delaware case, In re Link_A_Media Devices Corp., Misc. Doc. No. 990 (Fed. Cir. Dec. 2, 2011). Recently, however, the parties, who had settled the case prior to the Federal Circuit’s decision, moved to withdraw or dismiss the petition for mandamus and withdraw or vacate the court’s order granting the writ. The parties filed their settlement agreement with the District Court on December 2, but did not formally notify the Federal Circuit until December 5, when they filed the motion to withdraw. Although “Marvell states that it informed an unidentified individual in [the Federal Circuit’s] clerk office by telephone on December 1 about the settlement,” the court found that “it was counsel’s duty to formally inform this court in writing of the agreement.” In re Link_A_Media Devices Corp., Misc. Doc. No. 990 at 2 (Fed. Cir. Dec. 16, 2011). Therefore, the Federal Circuit found that “granting a motion to vacate our order is neither required nor a proper use of the judicial system.” Id. “Because the district court dismissed the complaint due to settlement, it need not transfer that dismissed complaint. However, consistent with our sister courts, we conclude that we should not vacate our order after the matter was decided.” Id. at 2-3.

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In November, Judge Robinson issued a claim construction order and summary judgment opinions in Apeldyn Corp. v. AU Optronics Corp., C.A. No. 08-568-SLR (D. Del. Nov. 15, 2011). Since then, Judge Robinson has considered motions for reargument from each side and this week issued an opinion and amended order in Apeldyn Corp. v. AU Optronics Corp., C.A. No. 08-568-SLR (D. Del. Dec. 19, 2011). Noting that the standard for obtaining relief on motions for reconsideration “is difficult to meet,” the court nevertheless granted one motion, denied another, and clarified its claim construction order.

Judge Robinson had previously granted summary judgment of noninfringement to CMO, and “[a]t the pretrial conference, Apeldyn argued that the court erred in granting summary judgment of noninfringement . . . [based on the fact that] ‘Apeldyn [did] not cite any evidence in opposition to CMO’s motion.’” Id. at 1. Judge Robison gave Apeldyn a chance to submit a “letter directing the court to any such evidence properly cited in its responsive brief.” Id. Apeldyn submitted citations to its expert’s report and other evidence that was either not in the record or was not adduced by Apeldyn. Apeldyn also submitted a motion for reargument. Although Judge Robinson noted that “CMO objects to Apeldyn’s expansion of the record,” she noted that “the court must ultimately address more of [the expert’s] report than that which was cited in Apeldyn’s opposition brief in order to fully articulate Apeldyn’s infringement position and, ultimately, the sufficiency of [the] noninfringement proffer.” Id. at 5. Having determined that she would look at the expert report, Judge Robison found the report “insufficient to pass muster.” Because the report did not “provide the limitation-by-limitation discussion of equivalence contemplated by the Federal Circuit, the court denie[d] Apeldyn’s motion and [did] not amend its grant of summary judgment of noninfringement with respect to CMO.” Id. at 9.

Judge Robinson had also previously denied AUO’s motions for summary judgment of noninfringement “because AUO did not support its noninfringement arguments with an expert’s opinion.” Id. Judge Robinson granted reargument, however, because there was “no dispute as to how the accused products operate.” Because Apeldyn’s expert’s “proffer with respect to AUO parallels that for CMO . . . the judgment must be amended to prevent manifest injustice to AUO by allowing Apeldyn to go forward to a jury trial on legally insufficient evidence.” Id. at 10. As with CMO, “[b]ecause [Apeldyn’s expert] did not provide particularized testimony describing his doctrine of equivalents theory on a limitation-by-limitation basis, and provided only conclusory opinions with respect to the function-way-result test, the court grants AUO’s motion for reargument and will enter judgment of noninfringement with respect to AUO.” Id. at 12.

Judge Robinson also clarified her claim construction order, stating that the “court’s understanding of the technology of the ‘382 patent, as articulated at the pretrial conference, may not have been most clearly conveyed in the claim construction order.” Id. at 3-4. She issued a separate amended memorandum order clarifying the construction of the terms at issue consistent with this understanding.

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In Eastman Chemical Co. v. Alphapet Inc., et al., C.A. No. 09-971-LPS-CJB, Judge Burke denied plaintiff’s motion to substitute two parties, but ruled that the two proposed parties be joined as plaintiffs in the action. Id. at 1. On the one hand, the original plaintiff argued that because it had sold “certain assets and technology” to the two parties it was seeking to be substituted for, including assigning the patents-in-suit to at least one of those parties, it should be dismissed from the lawsuit and that the two new parties should substituted in its place as the named plaintiffs. Id. at 2. On the other hand, in opposition to plaintiff’s motion for substitution, the defendants argued that the original plaintiff should not be dismissed because it “failed to provide sufficient evidence that all of the intellectual property, agreements, and other assets at issue had been transferred to the proposed new plaintiffs” and that, if anything, the appropriate course of action is to “join the two proposed plaintiffs rather than substitute them” for the plaintiff. Id. at 3. The Court agreed. The Court found that while the plaintiff had shown that “certain” of its relevant interests had been transferred to the proposed plaintiffs, the plaintiff had failed to offer sufficient evidence demonstrating that “all” of its interests relating to the litigation had been transferred. Id. at 7. The Court further found that, as a practical matter, joinder of the two new plaintiffs to the action (rather than substitution) would better facilitate the conduct of the litigation, and that the case is likely to proceed more efficiently if the original plaintiff remained a party. Id. at 10-11. The Court noted that while it did “not doubt that [the plaintiff] would fully comply with its discovery obligations under Rule 45 if [the proposed plaintiffs] were substituted for it in this action . . . such an outcome would likely add a significant layer of complication that would slow the progress of the case.” Id. at 11 (citation and internal quotations omitted). In addition, the Court noted that “Rule 25(c) does not explicitly provide for substitution or joinder on a claim-by-claim basis” and that the two proposed plaintiffs were being joined as parties to the entire action. Id. at 13.

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In Helicos Biosciences Corp. v. Pacific Biosciences of California, et al., Civ. No. 10-735-SLR (D. Del. Dec. 16, 2011), Judge Robinson denied a motion to stay litigation pending the outcome of inter partes reexamination proceedings. Id. at 5. Judge Robinson first explained that the status of the litigation was neutral to the Court’s decision—discovery was initiated in March 2011, and was slated to be completed, including expert discovery, by April 2012. Id. at 3. Next, Judge Robinson noted that the “simplification of litigation” factor weighed against granting a stay, because “there is not a complete overlap between those issues to be resolved upon reexamination . . . and the issues to be tried in the case . . .,” especially since the litigation included one patent that was not involved in the reexamination. Id. at 4. Finally, considering potential prejudice resulting from granting a stay, Judge Robinson found that both the timing of the motion to stay (filed approximately eight months after litigation began, three months after the requests for reexamination were filed, and between two weeks and one month after the requests for reexaminations were granted) and the status of the reexaminations (prosecutions of 3 of 4 patents had not yet closed) weighed against granting a stay. Id. at 4-5. Finally, Judge Robinson considered the relationship of the parties, and found that although the Court was not making definitive findings on the issue, the Court was satisfied at this juncture that “Helicos is a market participant . . . such that this factor generally disfavors a stay.” Id. at 6. Judge Robinson noted that the Court’s ruling likely would be different if the same facts were presented in the future: “The Leahy-Smith Act (H.R. 1249) . . . requires courts to automatically stay litigation filed after a petition for reexamination. H.R. 1249 is not yet controlling. While the reexamination was filed after the litigation in this case, the court would likely stay the case if it were subject to the new legislation.” Id. at 3 n.2.

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