In a recent Order, Judge Gregory M. Sleet ruled that a plaintiff/assignee lacked standing to assert privilege over communications between its assignor and the assignor’s counsel, explaining that the assignment of a patent, on its own, does not result in the assignee “inheriting” the assignor’s attorney-client privilege with respect to the prosecution of the patent. Green Mountain Glass, LLC v. Saint-Gobain Containers, Inc., C.A. No. 14-392-GMS (D. Del. Jan. 14, 2015). Rather, Judge Sleet explained, the privilege analysis depends on a close review of the facts to determine whether the assignment resulted in a “transfer of control of the business and the continuation of the business under new management,” as opposed to simply the transfer of an asset. Id. at 2 n.1 (quoting SimpleAir, Inc. v. Microsoft Corp., 2013 WL 4574594, at *2 (E.D. Tex. Aug. 27, 2013)). In this case, the Court found that the assignor and assignee entities “were certainly not strangers to one another,” but saw “no relationship that would support a transfer of privilege.” The Court acknowledged that “a planned stock-for-stock merger” could support a showing that “a continuous relationship existed between” the assignor and the assignee, but noted that in this case “the anticipated merger did not occur.” Id. at 2 n.1. As a result, the Court viewed the assignment as a mere transfer of assets, with no transfer of privilege.
Chief Judge Stark recently denied a plaintiff’s Rule 60 motion to set aside a jury verdict. Power Integrations, Inc. v. Fairchild Semiconductor Int’l Inc., et al., C.A. No. 08-309-LPS (D. Del. Jan. 13, 2015). Judge Stark found the motion was untimely, coming more than 30 months after the verdict and 19 months after the Court’s rulings on post-trial motions. Further, the Court found that the plaintiff had not identified any new evidence that existed at trial but were not discoverable at that time. Rather, the Court explained the motion was based on evidence which came into existence after trial through events occurring in a related case and reexamination.
Chief Judge Leonard P. Stark recently considered a motion dismiss plaintiff’s ANDA infringement action for lack of personal jurisdiction, applying the recent Supreme Court decision Daimler AG v. Bauman, 134 S. Ct. 746 (2014). Acorda Therapeutics, Inc. v. Mylan Pharms. Inc., C.A. No. 14-935-LPS (D. Del. Jan. 14, 2015). Judge Stark agreed that Daimler “altered the analysis with respect to general jurisdiction[,]” but unlike the recent decision by Judge Sleet, found that “Mylan Pharma consented to this Court’s exercise of personal jurisdiction when it registered to do business and appointed an agent for service of process in the State of Delaware.” Id. at 1. Regarding Mylan Pharma’s co-defendant and corporate parent, Mylan Inc., while it is not registered to do business in Delaware, Plaintiffs allege “a non-frivolous claim that Mylan Inc. used Mylan Pharma as its agent in connection with the ANDA filing giving rise to this litigation.” Id. at 2. Therefore, as to Mylan Inc., jurisdictional discovery was warranted.
Judge Andrews recently denied Plaintiffs’ motion to modify a protective order in order to permit Plaintiffs to use expert reports from the District Court litigation (that had already proceeded to trial) in inter partes review proceedings pending before the Patent Trial and Appeal Board. Novartis Pharms. Corp. v. Noven Pharms., Inc., C.A. No. 13-527-RGA (D. Del. Jan. 9, 2015). Plaintiffs argued that good cause existed to modify the protective order so that Plaintiffs could demonstrate inconsistencies in the expert’s opinions. Judge Andrews disagreed finding that Plaintiffs:
had motivation to demonstrate inconsistencies in the opinions of [the expert] in the trial held before me, and, based on the citations in Plaintiffs letter, did so, or, at least, tried to do so. I do not understand, given the representation that the trial transcript can be used in the IPR, and that [the expert] will soon be deposed and can presumably be further questioned about whether anything he said at trial is inconsistent with his current invalidity analysis (which, I gather, has not changed), why his infringement report is necessary for justice to be had.
Furthermore, Judge Andrews found defendant’s confidentiality concerns to be legitimate and not worth the risk considering Plaintiffs’ “minimal” need for using the expert reports in the IPR.
In a recent Order, Judge Gregory M. Sleet granted a plaintiff’s motion to dismiss counterclaims seeking a declaratory judgment of non-infringement of two patents related to the brand-name drug Aloxi® which the plaintiff did not assert against the defendant and which were the subject of a covenant not to sue. Helsinn Healthcare S.A., et al. v. Cipla Ltd., et al., Consol. C.A. No. 13-688-GMS (D. Del. Jan. 6, 2015). The plaintiff’s motion to dismiss was based on the argument that there did not yet exist a case or controversy warranting adjudication since the defendant’s Paragraph III certification relating to the asserted patent would prevent it from entering the market until at least October 2015 when the asserted patent expires. The Court agreed with the plaintiff, and reasoned that “[i]n the ANDA-litigation context, there is cognizable injury to a generic drug manufacturer when it is ‘restrain[ed from] the free exploitation of non-infringing goods.’” Id. at 3 n.1 (quoting Caraco Pharm. Labs., Ltd. v. Forest Labs., Inc., 527 F.3d 1278, 1292 (Fed. Cir. 2008) (alteration in original)). And “[w]here a generic company accepts the ‘validity, infringement, and enforceability’ of a drug patent, there is no injury giving rise to a case or controversy.” Id. (quoting Janssen Pharm., N.V. v. Apotex, Inc., 540 F.3d 1353, 1361 (Fed. Cir. 2008)). Because filing a Paragraph III certification “serves as recognition of the fact, that the patent is valid and enforceable[,]” id. (quoting Janssen, 540 F.3d at 1358), the Court found that the defendant could not claim it was currently being restrained from exploiting non-infringing goods by the two unasserted patents, as opposed to by its filing of the Paragraph III certification and recognition of the asserted patent’s validity and infringement. Id. The Court left open the possibility that a case or controversy with respect to these unasserted patents could arise upon the expiration of the asserted patent, since at that point potential infringement of the unasserted patents could be the only thing standing in the way of the defendant bringing its generic to market.
Magistrate Judge Burke recently issued a report and recommendation, recommending that a Defendant’s motion to dismiss be granted in part in the basis of lack of subject matter jurisdiction and failure to adequately plead a declaratory judgment claim of indirect non-infringement. The Defendant, patentee Zond, had originally filed a patent infringement action against two TSMC entities in the District of Massachusetts. That case was administratively closed due to pending inter partes review proceedings. Zond later sent an infringement notice letter to TSMC, at which point TSMC commenced this declaratory judgment action against Zond in the District of Delaware. Zond filed a motion to dismiss for lack of subject matter jurisdiction, for failure to state a claim, and pursuant to the Declaratory Judgment Act. TSMC Tech., Inc., et al. v. Zond, LLC, C.A. No. 14-721-LPS-CJB, Report and Recommendation at 1-4 (D. Del. Jan. 8, 2015).
Judge Burke first accepted Zond’s facial challenge to subject matter jurisdiction as to one of the plaintiffs, finding that there was no declaratory judgment jurisdiction as to that particular plaintiff, which was hardly addressed in the complaint. Id. at 6-10. The plaintiff brought its complaint on behalf of three TSMC entities, including one entity (“TTI”) that was not a party to the Massachusetts action and that Zond did not name in its infringmenet notice letter. As Judge Burke explained, “The Complaint contains very few allegations related to TTI. In fact, the only allegation that specifically mentions TTI comes in the paragraph in which Plaintiffs list TTI’s state of incorporation and the location of its place of business. It is also notable that when the Complaint begins to discuss the existence of a legal controversy between certain TSMC entities and Zond, TTI’s name is conspicuously absent from those paragraphs.” Id. at 7. Indeed, Judge Burke found that the “lack of any allegation that Zond has engaged in pre-Complaint communications with TTI, while not dispositive in and of itself, provides strong indication that there is no subject matter jurisdiction here.” Id. at 8.
Next, Judge Burke granted in part the motion to dismiss declaratory judgment claims of non-infringement on 12(b)(6) grounds. As to direct non-infringement, Judge Burke found that it “is clear from the Complaint that Plaintiffs have identified ‘the same accused products and processes that Zond is accusing in the [First TSMC Massachusetts Action,]’ and it is also clear as to the general categories of products and processes that were at issue there. For these reasons, the instant allegations are sufficient to satisfy Form 18’s low bar.” Id. at 10-13. As to indirect non-infringement, which requires a pleading that meets the requirements of Twombly and Iqbal, however, Judge Burke found that the Plaintiffs had not provided factual allegations that would show a lack of any type of indirect infringement. Id. at 13-16. As the Court described the complaint, “Plaintiffs’ allegations of indirect non-infringement are extremely sparse, to the point of almost being non-existent. . . . Indeed, the counts are so sparse that they do not even recite the wording of the elements of contributory or induced infringement (let alone facts that assertedly demonstrate that these elements have been placed at issue or otherwise cannot be satisfied here).” Id. at 14. “In the end, Plaintiffs are seeking a declaration of indirect non-infringement without identifying ‘allegations by the patentee or other record evidence that establish at least a reasonable potential that such a claim could be brought.’” Id. at 15.
Finally, Zond argued that the Court should decline to exercise jurisdiction because the case had been filed contrary to the purposes of the Declaratory Judgment Act. Judge Burke, however, did not recommend dismissal of the case on this basis for the same reasons explained in his previous report and recommendation on a motion to enjoin and motion to transfer. Id. at 16.
Accordingly, Judge Burke recommended dismissal, without prejudice and with leave to amend, of all claims made by TTI for lack of subject matter jurisdiction and dismissal of all indirect non-infringement claims, but recommended denial of the motion in all other respects. Id. at 17.
In ongoing litigation between Plaintiff Flatworld Interactives and Defendants Samsung and LG, Chief Judge Stark recently ruled on several summary judgment motions, in addition to construing the parties’ disputed claim terms in a separate opinion. Flatworld Interactives LLC v. Samsung Elecs. Co., Ltd., et al., C.A. No. 12-804-LPS, 12-964-LPS, Memo. Op. at 7-16 (D. Del. Dec. 31, 2014).
By their motion for summary judgment of invalidity, the Defendants contended that the patent-in-suit lacked written description because the claims contained a negative limitation that was not disclosed in the specification. As Judge Stark explained, “[u]nder§ 112(a), negative claim limitations are ‘adequately supported when the specification describes a reason to exclude the relevant limitation.’ ‘Such written description support need not rise to the level of disclaimer. In fact, it is possible for the patentee to support both the inclusion and exclusion of the same material.’” Id. at 9 (citations omitted). Judge Stark agreed that there was a negative claim limitation but found a question of fact as to whether the specification discloses that limitation to a person of ordinary skill:
“[T]he specification teaches a person of ordinary skill that once the image is removed from the screen, nothing related to it is left behind. The reason for excluding any representative of the removed image may be discerned from the specification. . . . At least certain of the specific embodiments disclosed, such as the ‘hide-and-go-seek’ function or ‘guessing game’ function, necessitate that not only the image itself but also any representative thereof be completely removed from the screen.”
Id. at 9-10. Judge Stark also granted the Defendants’ motion to strike a declaration filed in support of Plaintiff’s summary judgment motion because His Honor would have denied the motion for summary judgment even without consideration of the declaration. This “decision to strike the declaration [was, however,] without prejudice to Plaintiff’s ability to attempt to rely on [the declarant] at a later point in this case.” Id. at 7.
The Defendants also filed a motion for summary judgment to limit damages. The first issue implicated by this motion was whether the Plaintiff was required to mark embodiments of the patent-in-suit during the time in which the patent was undergoing reissue proceedings in the Patent Office. The parties cited no authority addressing this question, but the Plaintiff argued that marking could not be required because of the potential for false marking if the reissue resulted in no issued claims. Id. at 10-11. Based on 35 U.S.C. § 252, however, Judge Stark explained that “[t]he surrender of the original patent shall take effect upon the issue of the reissued patent. That is, a patent undergoing reissue remains in force during the reissue proceedings, and an accused infringer may be liable for infringing activity occurring during the reissue prosecution.” Id. at 11 (emphasis Court’s). “As a result,” the Court concluded, “§ 287 applied and required marking,” which “comports with the underlying purposes of § 287.” Id. at 11-12.
Judge Stark further found that there was no constructive notice of the patent-in-suit because the Plaintiff’s failure to mark the single embodiment of the patent-in-suit was not de minimis. The de minimis exception applies to “for example, failure by mistake to mark a few articles in hundreds of thousands made and sold” and for a “patentee whose compliance with the marking statute is nearly perfect.” Id. at 13 (citations omitted) (emphasis Court’s). Importantly, the pertinent comparison is between the number of marked and unmarked embodiments made, offered, sold, or imported by the patentee, not a comparison between the patentee’s and the accused infringers’ embodiments.” Id. at 14 (emphasis Court’s).
Finally, Judge Stark found that the evidence demonstrated that the Plaintiff did not provide actual notice to the Defendants. The Plaintiff’s only evidence of actual notice was a letter allegedly sent to the Defendants notifying them of the reissue proceedings of the patent-in-suit and inviting them to submit relevant prior art. “The letter does not mention infringement, or even a specific product. The letter cannot be read to constitute the required affirmative communication of a ‘specific charge of infringement’ by a ‘specific accused product.’ At bottom, the letter failed to provide actual notice.” Id. at 14-15.
Accordingly, the Court granted the summary judgment motion to limit damages: “[N]o reasonable juror could conclude that Plaintiff provided Defendants actual notice. In combination with the Court’s determinations that the notice obligation was not excused by the pendency of the reissue proceedings, and that Plaintiff also failed to provide Defendants constructive notice, the result is that Defendants’ motion for summary judgment to limit damages based on Plaintiff’s failure to mark must be granted. Plaintiff may only recover, at most, damages accruing after the date the complaint was filed in the respective actions against Samsung and LG.” Id. at 16.
In a recent Order, Judge Gregory M. Sleet granted defendants’ (the “Broadcaster Defendants”) motion to consolidate and stay fourteen related lawsuits. Delaware Radio Technologies, LLC et al. v. Beasley Broadcast Group, Inc., C.A. No. 13-1813-GMS, et al. (D. Del. Jan. 4, 2015). Plaintiffs allege that the Broadcaster Defendants infringe at least one or all of U.S. Patent Nos. 5,506,866, 5,642,379, and 5,475,691 (the “patents-in-suit”), which “relate to the transmission of both digital and analog radio signals using the in-band, on-channel (‘IBOC’) technique, often referred to as HD Radio technology.” Id. at 1. After plaintiffs filed suit against the Broadcaster Defendants, a third party, iBiquity Digital Corporation (“iBiquity”), filed a separate action against plaintiffs seeking a declaratory judgment of invalidity and noninfringement of the patents-in-suit. Id. iBiquity “licenses its software to the Broadcasting Defendants, which, when implemented into broadcasting equipment and systems, allegedly causes infringement of the method claims of the patents-in-suit.” Id.
The Broadcasting Defendants each filed a motion to consolidate and stay the cases pending the resolution of iBiquity’s declaratory judgment action. Judge Sleet ultimately granted that motion, finding all four traditional factors to weigh in favor of stay. Id. at 2 n.2. Judge Sleet first explained that “[a]lthough iBiquity is not itself an alleged direct infringer of the patents-in-suit, its technology is at the core of the Plaintiffs’ infringement contentions,” and the “[a]djudication of iBiquity’s declaratory judgment lawsuit will therefore either eliminate or crystalize the remaining issues for the Broadcast Defendants litigation.” Id. Judge Sleet further explained that “[t]he court can discern no meaningful prejudice to the Plaintiffs, as the information obtained during the course of the iBiquity lawsuit is not wasted; it can be applied-indeed, it is necessary-to the instant consolidated suit.” Id. Judge Sleet also noted that the case “is still in its infancy: no Rule 16 schedule is in place, and no discovery has been taken.” Id.
Judge Sleet explained that while “[b]oth parties extensively discusse[d] the ‘customer suit exception’ in their briefing . . . . the facts at bar do not fit squarely within the exception.” Id. That is, “iBiquity’s software is not itself infringing; it is the implementation of the software into the Broadcast Defendants’ systems that triggers the alleged infringement.” Id. Judge Sleet nevertheless found that the “underlying principles of the customer suit exception” – efficiency and judicial economy – to support the imposition of stay.
In a recent report and recommendation, Magistrate Judge Sherry R. Fallon considered defendants’ motion for summary judgment, which alleged that the patents-in-suit, U.S. Patent Nos. 7,418,409 (“the ’409 patent”) and 8,145,536 (“the ’536 patent”), are invalid because they fail to meet the subject matter eligibility requirements of 35 U.S.C. § 101. Tenon & Groove, LLC et al. v. Plusgrade S.E.C. et al., C.A. No. 12-1118-GMS-SRF (D. Del. Jan. 6, 2015). The ’409 patent discloses “methods for the concurrent optimization of value in various types of transactions between sellers and buyers, with applications in the context of the airline industry,” and the ’536 patent discloses “computerized applications for generating revenue based on conditional options for products, particularly in the context of the airline industry.” Id. at 1-2. Judge Fallon ultimately recommended that the court grant defendants’ motion and dismiss the action. Id. at 16.
Judge Fallon first considered whether the patents-in-suit satisfied the “machine-or-transformation” test. Given that the parties did not dispute the transformation prong, Judge Fallon analyzed only the machine prong of the test. Id. at 8. Judge Fallon concluded that the patents-in-suit did not satisfy the machine-or-transformation test, noting that specifications “themselves reveal that the processes may be performed mentally by a human, expressly stating that the inventions ‘eliminate manual, time-consuming processes and replace those with an efficient, automatic process.’” Id. at 9. Judge Fallon also noted that the “specifications provide that achieving an optimal upgrade for customers and the airline, which is a primary purpose of the invention, requires the use of human judgment” and that the Federal Circuit has held that the patent statute “does not allow patents on particular systems that depend for their operation on human intelligence alone.” Id. at 10. Moreover, Judge Fallon explained that “[d]ata-gathering steps alone cannot bring a claim into compliance with § 101, because humans have historically gathered and stored data mentally or with pen and paper.” Id. at 10-11.
Noting that the machine-or-transformation test is not dispositive, Judge Fallon next “examine[d] more generally the abstract nature of the claims” and applied the test set forth in Alice Corp. Pty. Ltd v. CLS Bank Int’l, 134 S. Ct. 2347 (2014). Considering the first step of the Alice framework, Judge Fallon found that the ’409 and ’536 patents “are directed to the unpatentable fundamental concept of using a computer to facilitate negotiations between an airline and its customer that results in a contract for a product upgrade.” Id. at 12. Judge Fallon explained that “[a]lthough certain dependent claims restrict the field of use to the airline industry, this limitation is insufficient to establish patent eligibility under § 101.” Id. at 13.
Turning to the second step of the Alice framework, Judge Fallon considered whether the patents-in-suit “embody inventive concepts” despite being directed to an abstract idea. Judge Fallon concluded that “[a]n airline’s capacity to track variables, including the preferences of multiple passengers, flight availability, and the perceived value for an upgrade option, is not an inventive concept.” Id. at 14. Judge Fallon explained that like “the risk hedging in Bilski, and the concept of intermediated settlement in Alice, the concept of using a computer to optimize negotiations between an airline and its customer, to each obtain the best economic results given certain conditions, is ‘a fundamental economic practice long prevalent in our system of commerce.’” Id. As Judge Fallon noted, “the claimed concept is not directed to any specific device or system, nor is it limited to a concrete application.” Id. Judge Fallon additionally explained that “the claims recite only a general purpose computer performing ‘purely conventional’ functions.” Id. at 15.