Delaware IP Law Blog

Special Master Collins J. Seitz, Jr., recently issued a report that made recommendations with respect to whether defendants should be permitted to use information from the litigation at hand in an ex parte reexamination of plaintiff’s two asserted patents that defendants intend to initiate. Inventio AG v. ThyssenKrupp Elevator Ams. Corp. et al., C.A. No. 08-874-RGA (D. Del. Jan. 22, 2013). In the litigation, the Court entered a protective order, which permitted the parties to designate certain information as “Confidential” and other information as “Highly Confidential.” Id. at 2-4. In light of the intended reexamination, defendants filed a motion requesting that the Court “(1) declassify some or all of the information as non-confidential; or (2) modify the Protective Order so that some or all of the information can be submitted to the USPTO under seal in accordance with the procedures of Section 724.02 of the Manual for Patent Examining Procedure (‘MPEP’).” Id. at 2. Pursuant to this motion, the Court addressed 31 disputed categories of information, 30 of which were excerpts from “deposition transcripts of [plaintiff’s] 30(b)(6) witnesses,” and one which was a page that plaintiff argued came “from the prosecution file in the Singapore patent office.” Id.

Special Master Seitz recommended granting defendants’ motion to reclassify as non-confidential 24 of the categories of disputed information. Id. at 15. Despite plaintiff’s designation of this information as “Highly Confidential,” Special Master Seitz found that this information did not fall under any specific category of information permitted to be designated as “Highly Confidential” or “Confidential” pursuant to the Protective Order. Id. at 15. For example, in his analysis, Special Master Seitz frequently found that information from the deposition excerpts did not fall under the categories of “non-public technical information of [plaintiff],” “[n]on-public research,” or “non-public information about [plaintiff's] ‘internal studies, . . . testing and evaluations.’” See id. at 8-15. Moreover, none of the information fell under the “catch-all category” in Paragraph xviii, as plaintiff failed to demonstrate "with any specificity how it would be harmed by the disclosure of [the] information.” Id. at 15.

Special Master Seitz found that the 7 remaining categories of information were appropriately designated as “Highly Confidential,” but he was nevertheless required to address defendants’ alternative request to modify the protective order to use the protected information in the anticipated reexamination. See id. at 8-15. To determine whether to grant the modification, Special Master Seitz considered whether “good cause still exist[ed] for the order,” which in this instance required him to consider the “relevancy of [the disputed] information to the proposed ex parte reexamination.” See id. at 15-16. Special Master Seitz noted that if information submitted under seal is found “material to patentability” during the reexamination, it will be made available to the public. See id. at 5 (citing MPEP § 724.04(c)(D)). It was further explained that an ex parte reexamination is comprised of two distinct phases—the request phase and the substantive review phase. A third party may submit “admissions” of the patent owner during both the request and substantive review phases. See id. at 22 (citing MPEP § 2258(I)(F); 37 C.F.R. § 1.104(c)). Moreover, under the provisions of the newly-enacted AIA, a third party may also submit “statements” during the substantive review phase. See id. at 22 (citing 35 U.S.C. §§ 301, 302).

However, for a third party to submit an “admission,” it must found “in the [patent] file or in a court record.” Id. at 22. Similarly, to qualify as a “statement,” the information must at least “be filed by the patent owner in a proceeding before a Federal court or the [USPTO],” and the patent owner must have “[taken] a position on the scope of any claim of the patent.” Id. at 17 (citing 37 C.F.R. § 1.501(a)(2)). Special Master Seitz reasoned that the information at issue was not “in a court record” because it was not “filed with the court,” and thus the information would likely not qualify as an “admission.” Id. at 22. Similarly, the information at issue was not filed with the Court or USPTO, and the patent owner did not take a position regarding claim scope. Thus, the information would also likely not qualify as a “statement.” Id. Special Master Seitz therefore concluded that “the information at issue would likely not be considered by the USPTO if [defendants] submitted it as part of a request for an ex parte reexamination,” and thus defendants’ “stated need to submit [the] information to the USPTO should be given little weight.” Id. at 24. Moreover, “[e]ven in the unlikely event that this information is deemed material by the USPTO, the importance of this information to the reexamination . . . [would] not outweigh the harm to [plaintiff] caused by public disclosure.” Id. at 26. Special Master Seitz thus recommended that “good cause” still existed for the protective order with regard to the 7 remaining categories of disputed information. See id. at 25-26.

Continue reading "Special Master Seitz recommends denying modification to protective order for 7 categories of information appropriately designated as “Highly Confidential,” but recommends that 24 categories were improperly designated and may be used in reexamination" »

In Apeldyn Corp. v. AU Optronics Corp., et al., C.A. No. 08-568-SLR (D. Del. June 13, 2012), the Special Master recently issued a Report and Recommendation recommending that plaintiff’s motion to modify the protective order to permit plaintiff’s corporate representatives to have access to information designated Attorneys’ Eyes Only be denied. Id. at 1. In the motion, plaintiff sought modification of the protective order to permit two of its corporate representatives access to “CONFIDENTIAL – ATTORNEY’S EYES ONLY” information relating to defendants’ motions for summary judgment of non-infringement. Id. at 3. Plaintiff argued that such access was necessary for, among other reasons, its corporate representatives to: (1) “assist fully in the preparation of the briefs in the appeal of summary judgment”; (2) “manage outside litigation counsel”; and (3) “assist with the case as it progresses.” Id. at 3. The Special Master disagreed. In its analysis, the Special Master cited and applied the 3d Cir.’s decision in Pansy v. Borough of Stroudsburg, 23 F.3d 772, 790 (3d Cir. 1994) for determining whether modification of the protective order was warranted. Id. at 4. In applying the Pansy test, the Special Master concluded that permitting disclosure of defendants’ attorneys’ eyes only information to plaintiff’s corporate representatives would not “promote fairness and efficiency” in this case and was “outweighed” by the injury to the defendants that might result from such disclosure. Id. at 8, 12. The Special Master also concluded that plaintiff’s need for the information and plaintiff's stated reasons for modification of the protective order did not outweigh and were insufficient to overcome the “risk of inadvertent disclosure of Defendants’ Attorneys’ Eyes Only information to third parties which might result in competitive harm to Defendants.” Id. at 16.

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In XPRT Ventures, LLC v. eBay, Inc., et al., C.A. No. 10-595-SLR (D. Del. Mar. 26, 2012), after the completion of discovery and a couple weeks before the deadline for opening claim construction and summary judgment briefs, defendants filed an emergency motion to compel plaintiff to reduce the number of claims asserted in the case from sixty to twenty.  Plaintiff opposed defendants’ motion arguing that, while it can and should reduce the number of claims, defendants’ motion was premature.  Id. at 5. Plaintiff asked that the Court “permit XPRT the time to complete its analysis of the claims and to continue to assert all of the claims that do not contain duplicative issues of infringement or validity.”  Id. at 6.  Special Master White responded with the question, “if not now, then when?  The time has come to present the issues in dispute to the Court in an orderly fashion.”  Id.  Because plaintiff “must know what claims will be pursued before preparing its claim construction brief[,]” Special Master White order plaintiff to disclose no more than 25 asserted claims by noon on the day plaintiff’s opening claim construction brief was due to be filed.  Id.

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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 XPRT Ventures, LLC v. eBay, Inc., et al., C.A. No. 10-595-SLR (D. Del. Nov. 30, 2011), Special Master White granted defendants’ motion to compel plaintiff to provide a complete response to its interrogatory seeking plaintiff’s contentions on conception and reduction to practice for each claim of the patents-in-suit. Plaintiff opposed defendants’ motion arguing that its response was complete, that the interrogatory posed an undue burden, was duplicative of other discovery and imposed an unnecessary expense. Id. at 8. Special Master White disagreed. He found that the response was incomplete because it failed to provide any information concerning due diligence and failed to identify any documents, although requested by the interrogatory. Special Master White noted that plaintiff “may not pick-and-choose which portions of the discovery request that it likes, and then claim that the response is complete.” Id. Special Master White also found that the interrogatory did not pose an undue burden, was not duplicative and did not impose an unnecessary expense. Id. at 9-11. There was no undue burden because it is the plaintiff not the defendant that controls the number of claims asserted in the case. Id at 9. The interrogatory was not duplicative because choosing to serve “written discovery in advance of a deposition is hardly novel; nor is it objectionable for a party to want to know basic facts and receive relevant information and documents before taking a deposition; and it is inappropriate for the responding party to instruct the propounding party to ask the question at a deposition rather than provide a written response.” Id at 10. Last, the interrogatory posed no unnecessary expense because the information sought should be readily available to plaintiff. Id. at 11.

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In Apeldyn Corp. v. AU Optronics Corp., C.A. No. 08-568-SLR (D. Del. Oct. 27, 2011), Special Master Poppiti recently shifted all "of the Special Master's compensation, costs and expenses" associated with certain discovery disputes to defendants AU Optronics Corp. ("AUO") and Chi Mei Optoelectronics Corp. ("CMO"). Special Master Poppiti previously awarded Apeldyn its costs in connection with these disputes, and "Apeldyn requested that the Special Master 'consider allocating costs for [his] services" in connection with [these disputes] 'to reflect' an 'appropriate[] apportion[ment] to AUO and CMO[.]" Id. at 1-2. AUO and CMO did not respond to this request. Id. at 2. Special Master Poppiti then asked Apeldyn to submit a two-page letter explaining its position on "'the way in which AUO and CMO wasted the Special Master's time and resources[,]'" and he ordered AUO and CMO to submit letters in response. Id. Although Apeldyn submitted its letter, neither AUO nor CMO responded. Id. Thus, finding that "the Special Master would not have had to expend time and resources on these matters had AUO and CMO not engaged in . . . inappropriate discovery practices[,]" "and placing significant weight on the lack of opposition to Apeldyn's request by either AUO or CMO," Special Master Poppiti apportioned all "of the Special Master's compensation, costs and expenses" associated with these discovery disputes to AUO and CMO. Id. at 3.

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In Apeldyn Corp. v. AU Optronics Corp., C.A. No. 08-568-SLR (D. Del. Aug. 29, 2011), Special Master Poppiti recently recommended that plaintiff's requested sanctions award be reduced from $89,747.54 to $47,241.54. Id. at 1. In determining the adequacy of documentation of Apeldyn's fees associated with responding to an untimely expert report, the Special Master first noted that although "the descriptor 'worked on' [in attorney timekeeping records] is vague in and of itself, as it fails to convey to the reader the precise task being performed by the timekeeper[,]" the declarations at issue included "[a]mple description of specific tasks[.]" Id. at 14. The Special Master did, however, exclude from the lodestar calculation as inadequately documented all of the hours that "group[ed] together duplicative and non-duplicative tasks[.]" Id. at 16. The Special Master further excluded from the lodestar calculation (1) excessive hours in connection with responding to the untimely expert report in light of the fact "that approximately 70% of the [responsive report] is duplicative--in most instances word-for-word--of [the expert's] earlier reports[,]" and (2) the hours of an attorney whose "role, it seem[ed], was to provide backup support" because the tasks he performed were "entirely duplicative of work already done by [other attorneys]." Id. at 17-19.

Next, addressing Apeldyn's fees in connection with bringing the sanctions motion, Special Master Poppiti stated that the motion "did not involve complex issues of law, and Apeldyn did not cite any case law in its letter briefs, indicating that intensive legal research was not done." Id. at 21. Thus, "[g]iven the straightforward issues involved, the brevity of the letter briefs, and the absence of case law in the briefs," the Special Master excluded all excessive hours from the lodestar calculation. Id. at 21-22.

Finally, Special Master Poppiti stated that "Apeldyn is not entitled to receive reimbursement for fees or costs incurred in connection with preparing the June 27 Bill of Costs" because "Apeldyn did not request such fees in its first submittal on June 27, 2011" and therefore "Apeldyn . . . waived any opportunity it once might have had to seek reimbursement for such fees." Id. at 24. Further, Apeldyn's "June 27 Bill of Costs lacked sufficient documentation[,]" and thus "it would be unfair to reward Apeldyn for preparing what the Special Master concluded to be a deficient submittal." Id. at 24-25.

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Last week, Special Master David A. White issued an opinion on a number of discovery issues relating to a motion to compel in XPRT Ventures, LLC. v. eBay, Inc., C.A. No. 10-595-SLR (D. Del. June 15, 2011). The motion sought to expand the scope of document discovery by increasing the applicable time period and number of custodians. Special Master White granted the motion in part, based on the potential relevance of the evidence, but refused to order document production from individuals not employed by the defendants. Id. at 26-27. Documents of former employees that are still in the possession, custody or control of the defendants, however, are subject to discovery. Id. at 30.

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Defendant APP Pharmaceuticals moved to compel the de-designation of information redacted in its motion for leave to file an amended answer and counterclaims of unenforceability and unclean hands. The Medicines Company v. Teva Parenteral Medicines, et al., C.A. No. 09-750-ER, Special Master Order (D. Del. June 30, 2011). Special Master Poppiti granted the motion and held that the disputed redactions were not covered by the "Highly Confidential" or "Confidential" provisions of the case protective order. Id. at 12 and 15. Plaintiff argued that the information was properly redacted because it was "information or data derived from Highly Confidential information." Id. at 12. Although this clause "would certainly encompass a direct quote (or a paraphrase of a direct quote)" from a highly confidential document, "that protection does not extend to general allegations, legal arguments, and factual assertions that do not in any way reveal any such information." Id. at 12-13.

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In Apeldyn Corp. v. AU Optronics Corp., C.A. No. 08-568-SLR (D. Del. May 25, 2011), Special Master Poppiti recently addressed a party's failure to disclose five prior art references until it filed an expert report four days after the opening expert report deadline. Id. at 6. Although Special Master Poppiti found that the failure to timely disclose these prior art references was neither "substantially justified" nor "harmless" as required by Fed. R. Civ. P. 37(c)(1), he stated that, absent a showing of bad faith, the appropriate sanction was not a striking of the untimely expert report. Id. at 6-13. Rather, the Special Master found that the appropriate sanction was an award of the costs and fees that the plaintiff would incur in responding to the late-filed expert report, along with the costs and fees incurred in bringing the motion to strike. Id. at 13.

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