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In a recent order, Chief Judge Gregory M. Sleet construed eight disputed claims terms of U.S. Patent No. 7,567,925 (“the ’925 Patent”)., Inc. v. Internet Payment Exchange, Inc., C.A. No. 12-054-GMS-MPT (D. Del. Jul. 30, 2013). The ’925 Patent, entitled “Point of service transaction management for service facilities,” relates to an invention that “enables the collection by credit/debit card payment of customer co-pay and self-pay charges via an integrated point-of-service transaction management system and method.” Judge Sleet construed the following eight disputed terms:

– “computing terminal”
– “computerized transaction database associated with each of the at least one processors for relationally and electronically tracking, within said database and by the single health care service provider, remotely from each of the at least one computing terminal”
– “the tracking correlates to an increased collection rate of at least one of the self-pay payments and the overdue self-pay payments from the at least one customer”
– “registration”
-“batch updated”
– “users of the system are assigned at least one level of access in the administrator”
– “patient service”
– “non patient service”

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In an opinion recently made public, Judge Leonard Stark granted in part and denied in part a motion for a protective order barring discovery of information subject to attorney-client privilege. In this patent infringement action relating to dynamic integrated circuits, a defendant asserted that the plaintiffs had improperly instructed multiple witnesses not to answer questions at depositions on the basis of privilege. After a lengthy meet and confer process and a hearing, Judge Stark instructed the parties to identify the specific privilege assertions being challenged and the plaintiffs to move for a protective order if necessary. Defendant Xilinx identified several privilege assertions that it wished to challenge, and Defendant Altera added four additional documents, described as the “Runway Reports,” which were “created in the ordinary course of business for potential or actual patent acquisitions.” Intellectual Ventures I LLC, et al. v. Altera Corp., et al., C.A. No. 10-1065-LPS, Memo. Op. at 1-2 n.2 (D. Del. July 25, 2013). The plaintiffs then filed a motion asking the Court for a protective order barring additional testimony in response to the disputed deposition questions and production of the identified documents. Id. at 1-2.

Judge Stark denied the motion for protective order with respect to the Runway Reports, but granted the motion in all other respects. Generally, the subject matter at issue was “communications related to the acquisition, due diligence, valuation, and licensing of the patents-in-suit,” which the defendants contended was not privileged “because Plaintiffs’ business model involves such activities.” Id. at 3-4. Patrik Edenholm, who works as a patent “finder” for the plaintiffs, was the first witness at issue. Judge Stark found that the assertions of privilege made during Mr. Edenholm’s deposition were proper because knowledge of the plaintiffs’ patent valuation process “while in this instance tied to business decisions of patent acquisition, may be intertwined with legal analysis, including considerations of claim scope, validity, and licensing power.” Id. at 5-6. The second witness at issue was Ryan Morrison, a transactional attorney who provided the plaintiffs legal advice related to patent acquisitions. The defendants sought information from Mr. Morrison about the contents of reports regarding patent assets under consideration for purchase and his thought processes in providing advice concerning patent due diligence. Judge Stark agreed with the plaintiffs that this information was privileged, stating that Mr. Morrison is an attorney and “to the extent that Mr. Morrison’s work and analyses also include business advice, this does not, under the circumstances, vitiate the attorney-client privilege.” Id. at 6-9. Judge Stark also noted that “[e]ven if Plaintiffs’ assertion of privilege were improper, the Court is not persuaded by [defendant’s] general argument that its inability to obtain discovery on due diligence and valuation is highly relevant to standing as well as to damages.” Id. at 8 n.6.

Judge Stark also reviewed certain privileged documents that had been disclosed to a Mr. Belgard, who was a consultant for the plaintiffs. Because Mr. Belgard was described as “an independent contractor” who had an “arm’s length” relationship with the plaintiffs, he was not “the functional equivalent of an employee” and thus not a “privileged person.” Id. at 9-11. Nevertheless, disclosure of documents to Mr. Belgard did not waive privilege with respect to those documents because he had a “common legal interest . . . in properly acquiring patents.” In adopting this position, Judge Stark rejected the defendant’s “application of the common interest doctrine [as] too narrow” in its position that the common legal interest doctrine applies only to attorneys. Id. at 11-12.

Judge Stark did, however, order production of the Runway Reports, which he found to be insufficiently supported by the plaintiffs’ “conclusory statement that the Runway Reports contain ‘attorney notes, attorney-client communications, and work product information.’” Judge Stark explained that “[t]he Court specifically ordered the parties to communicate so that neither party would waste time or effort briefing unchallenged privilege assertions. The Court concludes, regrettably, that the parties have failed to adequately communicate with each other to ensure that all parties were sufficiently apprised of all of the ripe privilege issues . . . While both sides are to blame for the lack of communication, the Court concludes that Plaintiffs were on sufficient notice that the Runway Reports were being put at issue . . . [and] have not met their burden of establishing privilege with respect to the Runway Reports.” Id. at 12-14.

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In a recent memorandum opinion, Judge Richard G. Andrews overruled defendant’s objections and affirmed Magistrate Judge Sherry R. Fallon’s decision denying defendant’s motion to transfer venue to the Northern District of California. Agincourt Gaming, LLC v. Zynga, Inc., C.A. No. 11-720-RGA (D. Del. Jul 29, 2013) (Magistrate Judge Fallon’s decision previously discussed here). As a threshold matter, Judge Andrews concluded that “a motion to transfer is not a dispositive motion for purposes of [28 U.S.C.] § 636(b)(1),” and he “proceed[ed] to review the Magistrate Judge’s decision under the deferential standard of review of § 636(b)(1)(A).” Id. at 3.

Judge Andrews found that while “[i]t may be that more of the factors favored transfer than not, . . . the Magistrate Judge did not abuse her discretion in reaching a reasoned conclusion that all of the factors favoring transfer, taken as a whole, were insufficient to outweigh the deference owed under Third Circuit precedent to Plaintiffs choice of forum.” Id. at 3. As Judge Andrews explained, the Magistrate Judge gave considerable weight to Plaintiff’s choice of forum, which was reasonable given that both Plaintiff and Defendant are Delaware corporations.” Id.

Judge Andrews also addressed other findings of Magistrate Judge Fallon that defendant contested. For example, Judge Andrews found that defendant agreed during oral argument that it sells its products nationally, and thus it could not complain that Magistrate Judge Fallon concluded the “where the claims arose” factor was neutral. Id. at 4. Judge Andrews also affirmed Magistrate Judge Fallon’s finding with respect to the convenience of the parties, noting that the financial burden to defendant of litigating in Delaware would be relatively modest, but, on the other hand, defendant and its employees may be “called away from work.” Id. Judge Andrews further noted that “only non-party witnesses matter” under Third Circuit law with respect to the convenience of the witnesses, and he thus concluded that Magistrate Judge Fallon’s conclusion regarding that factor was not clearly erroneous. Id. at 4-5.

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Judge Richard G. Andrews construed the following claim terms of U.S. Patent Nos. 7,945,736; 7,948,921; and 7,630,295 that cover technology related to dynamic load management of network memory, automatic network optimization, and network device continuity:

“data packet”
“communications interface configured to process the signal to activate and deactivate the link”
Riverbed Technology, Inc. v. Silver Peak Sys., Inc., C.A. No. 11-484-RGA (D. Del. July 30, 2013)

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In Gevo, Inc. v. Butamax Advanced Biofuels LLC, et al., C.A. No. 13-576-SLR (D. Del. Jul. 26, 2013), Judge Sue L. Robinson recently considered several motions for summary judgment, construed disputed claim terms and ruled on a motion to exclude expert testimony.

The Court construed the following terms of U.S. Patent Nos. 8,017,375 (“the ‘375 patent”) and 8,017,376 (“the ‘376 patent”), which relate to the production of biomass-derived biofuels:

a ketol-acid reductoisomerase, id. at 6-7;
an a-ketoisovalerate decarboxylase from Lactococcus lactis, id. at 7;
wherein said recombinant yeast microorganism has reduced endogenous PDC activity as compared to the corresponding yeast microorganism that has not been engineered to have reduced endogenous PDC activity, id.;
is further engineered or selected to grow on glucose independently of C2-compounds at a growth rate substantially equivalent to the growth rate of the corresponding yeast microorganism that has not been engineered to have reduced endogenous PDC activity, id. at 8;
activator of ferrous transport (Aft) proteins, id. at 10;
which increase the dehydratase activity of DHAD, id.;
wherein said ketol-acid reductoisomerase is an NADH-dependant ketol-acid reductoisomerase, id. at 10-11; and
a constitutively active Aft protein, id. at 11.

The Court granted one defendant’s motion for summary judgment of non-infringement as to the ‘376 patent and as to certain claims of the ‘375 patent, finding the doctrine of equivalents inapplicable. See id. at 17-27. Plaintiff also did not argue that defendant literally infringed the ‘375 patent and conceded that fact with respect to the ‘376 patent. Id. at 23, 27.

The Court also granted the same defendant’s motion for summary judgment as to the invalidity of the ‘375 patent. Defendant argued lack of both written description and enablement. This patent claimed the creation of significantly higher yields of the patented invention than the yields the inventor had actually obtained. Id. at 32. The Court concluded that the patent was invalid for lack of written description because “persons skilled in art would [not] recognize in the patent’s disclosure a description of the higher yields of the claimed invention.” Id. at 33. “The parties’ experts agree that the technology at issue is both complex and unpredictable. . . . The specification provides no detail on how to practice claim 1 to achieve higher yields.” Id. The patent was also invalid for lack of enablement, for similar reasons. See id. at 36.

The Court did not grant either parties’ motions for summary judgment on the validity/invalidity of the ‘376 patent, finding that there were issues of material fact as to whether the patent was invalid for lack of enablement, specifically issues “bearing on the disclosures and the amount of experimentation required to practice the full scope of the claims.” Id. at 38.

Defendant also argued that the ‘376 patent was anticipated by defendant’s International Patent Application. The Court did not address the substance of this argument because issues of material fact remained as to whether the inventors of the ‘376 patent conceived and reduced their invention to practice before the priority date of the International Patent Application. Id. at 43-44. The Court did note that “if [this application] is found to be anticipatory, [plaintiff] is precluded from making substantive arguments against anticipation as it did not do so herein.” Id. at 44 n.29.

Finally, both defendants moved to exclude the testimony of plaintiff’s expert. The Court denied this Daubert motion because defendants’ “arguments that [the expert] did not independently conduct experiments as part of his analysis do not preclude his testimony or opinions.” Id. at 44.

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Magistrate Judge Christopher J. Burke recently issued an order resolving several discovery disputes and reminding litigants that a party opposing discovery on the basis of alleged undue burden typically must do more than simply argue that it will be burdened. E.I. du Pont de Nemours and Co. v. Heraeus Precious Metals North Am. Conshohocken LLC, C.A. No. 11-773-SLR-CJB (D. Del. July 26, 2013). Although Judge Burke found that information regarding the plaintiff’s conductive pastes used for non-photovoltaic applications was relevant to the defendant’s invalidity defenses, the Court did not order production of all such information, because “the burden for [the plaintiff] to produce ‘potentially thousands of records’ regarding ‘at least 1,500 products’ (nearly all of which are non-photovoltaic products) spanning ‘multiple years’ outweighs its likely benefit to [the defendant].” Id. at 2. The Court made this ruling even though the plaintiff failed to provide affidavits or other evidence to support its undue burden argument, which the Court noted would have been preferable. Id. at 2 n.1. Notably, though, the Court explained that the requested information was not truly needed by the defendant in light of admissions made by the plaintiff. Id. at 2-3 n.2.

Judge Burke next considered whether pre-2003 information in an electronic database was inaccessible under Rule 26(b)(2)(B). Here, because the plaintiff did not support its “inaccessibility” argument with an affidavit or other evidence, the Court could “not conclude that the data here is inaccessible.” Id. at 4. Similarly, the plaintiff argued that it would be unduly burdened by an order requiring that it produce batch-by-batch quality control data from pre-2006 testing, but the Court found that the argument was “brief,” “not particularly specific,” and moreover did “not provide the Court with enough detail regarding the likely time, cost or effort associated with the proposed search, sufficient to conclude that the request is unduly burdensome . . . .” Id. at 4 n.5. On the final issue, the Court ordered that [the plaintiff] identify certain ingredients in its pre-2006 conductive pastes, explaining that the plaintiff made “no attempt to specifically combat the relevance of this data, nor to make concrete the burden it would face in responding to this portion of the request.” Id. at 5.

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Special Master B. Wilson Redfearn recently considered plaintiff’s motion to compel a defendant’s response to its Interrogatories 1 and 10, which requested the following:

Interrogatory 1: Identify and describe in detail your expectations of sales and actual sales of the Relevant Products or Relevant Services and mobile devices.

Interrogatory 10: Describe all communications between you and any mobile network operator (e.g., Sprint, U.S. Cellular) regarding the sale or potential sale of Relevant Products.

EON Corp. IP Holdings, LLC v. Flo TV Inc., et al., C.A. No. 10-812-RGA (D. Del. Jul. 23, 2013) (emphasis added). As Special Master Redfearn explained, “the case has been bifurcated,” but plaintiff argued that the “information sought through these interrogatories is relevant to the infringement issues because it is probative of commercial success, a secondary consideration of nonobviousness.” Id. at 1. Defendant, on the other hand, argued that before it is required to respond, plaintiff must “first show a specific nexus between the commercial success of the product and the alleged infringing features.” Id. at 3. Special Master Redfearn disagreed with defendant’s contention and found that plaintiff “is allowed to propound discovery for the purpose of developing factual information which could assist in showing that its invention is valid, i.e., it can propound discovery which it reasonably believes will permit it to argue at trial that there was commercial success, which supports its position on nonobviousness (rebutting the invalidity contentions).” Id. at 4.

Nevertheless, Special Master Redfearn found that the scope of Interrogatory 1 should be narrowed. Specifically, Special Master Redfearn explained that defendant “must furnish actual sales information concerning its ‘Relevant Products,’” but “its response can be limited to (1) sales which involve products using the accused features; and (2) products which were sold within thirty-six months after they were put on the market.” Id.

Further, Special Master Redfearn concluded that Interrogatory 10 should be denied as “ambiguous and overbroad.” Id. at 5. He explained that “[i]n order for an interrogatory (or interrogatories) of this nature to be properly formed for a company the size of [defendant], with a national and international sales force, the Plaintiff would have to set out the type of communications to which it refers; narrow the persons (or at least the internal entities) from whom the information is being sought; and set out the relevant time period.” Id. at 4-5. The Special Master noted that “[e]ven then, there could well be valid objections on the basis of relevancy.” Id. at 5.

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Plaintiff buySAFE filed a patent infringement action against Google on buySAFE’s U.S. Patent No. 7,644,019. The patent-in-suit relates to providing a guaranty service for online transactions, and buySAFE alleged that it covers a Google service called “Trusted Stores” by which Google provides consumers with information about quality online shopping experiences. The parties agreed that early claim construction would likely streamline the case and, accordingly, stayed discovery until after claim construction. The claim construction disputes were limited to two terms. BuySafe, Inc. v. Google Inc., C.A. No. 11-1282-LPS, Memorandum Opinion at 1-4 (D. Del. July 29, 2013).

Judge Stark first construed plaintiff’s proposed term, “transaction performance guaranty,” and defendant’s proposed term, “guaranty.” Finding that the issues for both terms were identical, Judge Stark adopted Plaintiff’s proposed construction for both. Id. at 5-7. On the second term at issue, “underwriting,” Judge Stark adopted a construction that the parties agreed to during oral argument at the Markman hearing and further found that the term was not indefinite. Id. at 7-9.

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In a recent memorandum opinion, Judge Leonard P. Stark construed thirteen disputed claim terms across U.S. Patent Nos. 5,885,270 (“the ’270 Patent) and 5,885,272 (“the ’272 Patent”). Walker Digital, LLC v. Google Inc., C.A. No. 11-318-LPS (D. Del. Jul. 25, 2013). As Judge Stark explained, “the patents-in-suit – issued on the same date, listing the same named inventors, and sharing substantially identical specifications – relate to establishing anonymous communications.” Id. at 1. Judge Stark construed the following disputed terms:
-“cryptographic operation,” as it appears in claim 3 of the ‘272 Patent.

– “cryptographic key,” as it appears in claim 3 of the ‘272 Patent.

– “authenticating authorship,” as it appears in claim 2 of the ‘272 Patent.

– “said [___],”as it appears in all asserted claims of the ‘270 Patent and ‘272 Patent.

– “identity”/ “identity of said first party”/ “identity of said second party,” as it appears in all asserted claims of the ‘270 Patent.

– “anonymous party,” as it appears in all asserted claims of the ‘270 Patent.

– “party data,” as it appears in all asserted claims of the ‘270 Patent and ‘272 Patent.

– “party rule,” as it appears in all asserted claims of the ‘270 patent and ‘272 Patent.

– “rule for releasing said identity of said … party,” as it appears in all asserted claims of the ‘270 Patent, and “rule for releasing said [first/second party] data,” as it appears in all asserted claims of the ‘270 Patent and ‘272 Patent.

– “releasing/release said second party data pursuant to said second party rule,” as it appears in all asserted claims of the ‘272 Patent.

– “exchanging said first and second data, except said identifies of said first and second parties, between said first and second parties” / “exchange said first and second data, except said identities, between said first and second parties” as it appears in all asserted claims of the ‘270 Patent.

– “after said exchanging step” / “after said exchanging operation,” as it appears in all asserted claims of the ‘270 Patent.

– “receiving/receive a request from said second party for said first party information data; releasing/release said second party data pursuant to said second party rule; determining/determine, based on said second party data, whether said at least one first party rule has been satisfied; and if said at least one first party rule has been satisfied, providing/provide, to said second party, said first party information data for which said at least one first party rule has been satisfied,” as it appears in all asserted claims of the ‘272 Patent.

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Special Master Paul M. Lukoff recently ruled on a dispute “over so-called third party consultants and the impact of their presence on what might otherwise be privileged communications.” Robocast, Inc. v. Apple, Inc., C.A. No. 11-235-RGA; Robocast, Inc. v. Microsoft Corporation, C.A. No. 10-1055-RGA, slip. op. at 2 (D. Del. Jul. 19, 2013). Special Master Lukoff addressed the issue on a document-by-document basis and ordered that some of the documents on plaintiff’s log were to be produced, as the presence of third parties had waived attorney-client privilege. Id. at 13-14.

As a preliminary matter, the Special Master examined, on a document-by-document basis, whether plaintiff complied with FRCP 26(b)(5)(A), which obligates a party claiming privilege to describe the withheld documents with sufficient detail, or whether noncompliance with this rule resulted in waiver. While the Special Master disagreed with plaintiff’s argument that some Delaware cases “stand for the proposition that the privilege proponent must always be given further opportunity, in the face of a Rule 26(b)(5)(A) challenge, to take another stab at an adequate description” (and in this case the plaintiff had already amended its log several times, id. at 3-5) the Special Master found “very few” Rule 26(b)(5)(A) issues in plaintiff’s current log. Id. at 4 n.5.

Turning to the specific issue in dispute, the Special Master observed that there was a “possibly irreconcilable split” between Third Circuit (non-Delaware) district courts as to the proper test for whether a non-employee was the “functional equivalent” of an employee for purposes of attorney-client privilege. Id. at 6-7. Additionally, there was no Third Circuit case “explicitly adopt[ing] the functional equivalent concept in any form.” Id. However, this issue “pose[d] no obstacle” to resolving this dispute because: (i) the Special Master was “comfortable with the notion that some functions of a relatively small company like [plaintiff] might be best or necessarily accomplished through independent contractors and/or non-employee consultants;” (ii) Third Circuit precedent made clear that “there is no discernible bright line to be followed when the privilege is assessed;” and (iii) “even if one adopts and then adheres to one interpretation of the functional equivalent test or the other, each individual document must be reviewed on a case-by-case basis to determine if it was created for the purpose of providing or obtaining legal advice.” Id. at 7 (internal citations omitted).

With these principles in mind, the Special Master examined the duties of various non-employees and discussed how their duties may or may not waive privilege when they were privy to communications. Id. at 7-11. The Special Master further explained that his “rationale for making any such determination [of waiver] will not be founded on [the third party’s] status as an ‘outsider’ or the ‘functional equivalent’ of a [plaintiff] employee, but rather on the individual’s relative position with respect to obtaining legal advice.” Id. at 13.

Special Master Lukoff mapped out his Rule 26(b)(5)(A) and privilege conclusions in a “lengthy chart,” and ordered plaintiff to produce copies of all documents in the log that the Special Master had concluded were not privileged based on waiver. Id. at 13-14.

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