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Chief Magistrate Judge Thynge recently issued a report and recommendation finding that a defendant’s Rule 12(b)(6) motion to dismiss should be granted. Judge Thynge first found that she need not take judicial notice of certain exhibits supplied by the defendant. The exhibits, copies of 3G cellular specifications, were relied on by the Plaintiff’s complaint, which alleges infringement based on the defendant’s practice of the 3G standard. Thus, the specifications were integral to the complaint and the plaintiff had actual notice of them. Therefore, judicial notice was not required. Network Managing Solutions, LLC v. AT&T Mobility, LLC, C.A. No. 16-295-RGA-MPT, Report and Recommendation at 10-11 (D. Del. Nov. 9, 2017).

Turning to the sufficiency of the pleading, Judge Thynge found that the plaintiff “alleges sufficient facts to state a plausible claim because, by showing what the standards require, the standards may be compared with the patents to determine whether defendant, in following these standards, infringes.” Id. at 12. The 3G standards on which the plaintiff’s complaint relied, however, were out of date, ranging from 2009 to 2010 and post-dated by many newer releases of each standard. Accordingly, Judge Thynge found that because “there have been substantive changes to the specifications,” the plaintiff “should be granted leave to amend the complaint to indicate the specific standards defendant allegedly practices that result in infringement.” Id. at 12-13.

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Judge Richard G. Andrews recently denied without prejudice a motion to dismiss for lack of patentable subject matter under 35 U.S.C. § 101.  Pacific Biosciences of California, Inc. v. Oxford Nanopore Technologies, Inc., No. 17-275-RGA (D. Del. Nov. 9, 2017).  Judge Andrews decided that, while it may be appropriate in some circumstances to decide such a motion at the pleading stage, “Plaintiff briefed the motion as though it were a summary judgment motion . . . and at argument both sides referred to an understanding of the technology and the state of the art at the time of the invention.”  Id. at 2.  Therefore, “[u]nder the circumstances of this case, and considering the technology of the patent being asserted, [the Court did] not think patent-ineligibility [wa]s something that [the Court could] fairly decide on a motion to dismiss.”  Id.

Pacific Biosciences 17-275

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In Fraunhofer-Gesellschaft Zur Förderung der angewandten Forschung e.V. v. Sirius XM Radio Inc., C.A. No. 17-184-JFB-SRF (D. Del. Oct. 13, 2017), Magistrate Judge Sherry R. Fallon issued a Memorandum Order resolving the parties’ disputes regarding the terms of a protective order relating to source code.  The Court first ruled that Defendant’s definition of source code would be adopted, which included both software-based and hardware-based code. Id. at 2.  The Court concluded that evidence submitted, including expert declarations, established that “the term ‘source code’ encompasses both software-based and hardware-based code.” Id. at 3.  Furthermore, the Court concluded that “[d]efining ‘source code’ to include hardware-based code, including VHDL, is also consistent with this court’s case authorities” and cited other decisions from this District in support. Id.

Several of Defendant’s disputed proposals regarding restrictions on source code production were also adopted “to provide clear guidance and avoid the need to revisit such issues in this case,” specifically: prohibiting recording devices in the source code review room (while requiring a separate “private space” for the reviewers’ use of electronic devices); allowing reviewers to take notes on the source code computer but then request printouts of those notes; and limiting source code printing to 500 pages with the ability to request more later (accepting Plaintiff’s contention that “source code review is not critical to the facts of this case”). See id. at 3-4.

With regard to confidentiality designations for source code, the Court accepted Plaintiff’s proposal that “documents with fewer than 50 contiguous lines of source code may be produced under the ‘Highly Confidential -·Attorneys’ Eyes Only’ designation, while documents with more than 50 contiguous lines of source code may be produced in redacted form under the, ‘Highly Confidential – Attorneys’ Eyes Only’ designation, or in unredacted form under the ‘Highly Confidential – Attorneys’ Eyes Only – Source Code’ designation.” Id. at 5.

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In the declaratory judgment action Tabletop Media, LLC v. AMI Entertainment Network, LLC, C.A. No. 16-1121-RGA-MPT (D. Del. Oct. 10, 2017), Chief Magistrate Judge Mary Pat Thynge recommended that Defendant’s motion to dismiss for lack of subject matter jurisdiction, due to a lack of case or controversy, be denied.  The Court pointed to the following facts in support of its conclusion that an actual case or controversy existed:

Here, [Defendant] AMI asserted its rights under the ‘091 patent and alleged [Plaintiff] Tabletop’s Ziosk had features that were covered by the patent. In addition, AMI requested a response within 10 days. In its response, Tabletop insisted the patent was not relevant to its Ziosk product, but AMI continued to assert the patent’s relevance and requested that its patent lawyer be included in a meeting between the parties. Just as in [Hewlett-Packard v. Acceleron, LLC , 587 F.3d 1358 (Fed. Cir. 2009)], AMI affirmatively contacted Tabletop asserting its patent rights, Tabletop disagreed, and AMI continued to claim that the patent was relevant to Tabletop’s Ziosk. Thus, there is an actual case and controversy because the two parties have opposing legal interests that are redressable by a court decision.

Id. at 11. The Court further noted that a declaratory plaintiff need not cut of licensing discussions before seeking a declaration of its rights, id. at 12; here, the parties had continued discussions after Tabletop filed this suit and AMI had not threatened any litigation but also had not assured it would not sue for infringement.  Finally, the Court observed that exercising its discretion to dismiss the declaratory judgment suit would be inappropriate here, as “[t]his is the type of situation the Declaratory Judgment Act was designed to address. The parties have an adverse legal interest, and, the adverse legal interest is ‘fairly traceable’ to AMI’s conduct.” Id. at 13.

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Magistrate Judge Burke recently issued an interesting memorandum order addressing requests for admission and the parties’ disputed objections to those requests. Judge Burke first addressed several RFAs seeking “admissions regarding features of certain chemical structures from the prior art, namely whether those structures read on certain limitations found in the claims at issue.” Integra Lifesciences Corp., et al. v. Hyperbranch Medical Tech., Inc., C.A. No. 15-819-LPS-CJB, Memo. Or. at 2 (D. Del. Sept. 27, 2017). Plaintiffs objected to these RFAs as improperly directed to legal conclusions, but Judge Burke found that this objection was not justified. Judge Burke explained that although “[t]his Court has explained that RFAs that ‘seek legal conclusions are not allowed,’ . . . [w]hether a prior art reference anticipates the claim limitations of a patentee’s invention is a question of fact . . . [and obviousness] is a question of law, but it is based on underlying factual determinations as to matters including the differences between the claims and the prior art.” Id. at 2-4. Thus, the RFAs at issue “seek admission as to whether certain chemical structures from asserted prior art include particular features found in the relevant claim language. To be sure, such admissions could indeed ultimately be used to help prove up an ultimate legal issue in the case, but that does not change the fact that they themselves are directed to factual questions.” Id. at 4-5. Judge Burke further determined that it was possible for Plaintiffs to provide a substantive response to several of the disputed RFAs because the RFAs were sufficiently clear, and for the RFAs on which the Court could not determine a response was possible, the Defendant has the remedy of seeking reasonable expenses incurred in proving a matter that Plaintiffs refused to admit. Id. at 5-8, 11-12. Similarly, Judge Burke ordered a response to RFAs asking Plaintiffs to admit they were “aware” of off-label uses, overruling Plaintiffs’ objection, advanced only in their letter-briefs, that the word “aware” is ambiguous. Id. at 9-11.

For other RFAs, however, Judge Burke denied the motion to compel a response because he agreed with Plaintiffs’ objection that the RFA sought admission of multiple facts rather than a singular fact than can be admitted or denied. Id. at 8, 12-13. Finally, Judge Burke granted Defendant’s motion to compel responses to RFAs regarding “former customers” of Plaintiffs because the RFAs were not overly vague, incomplete, or directed to multiple facts to be admitted or denied. Id. at 13-16.

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TC Heartland LLC v. Kraft Food Group Brands LLC has created more questions about venue than it answered (although it obviously answered a very important one), and one significant new question is, what constitutes a “regular and established place of business” under 28 U.S.C. § 1400(b). Chief Judge Stark recently attempted to answer that question in his September 11, 2007 decisions in Boston Scientific Corp. v. Cook Group Inc. and Bristol-Myers Squibb Co. v. Mylan Pharmaceuticals Inc. Only days later, the Federal Circuit issued its decision in In re Cray, restricting the meaning of “regular and established place of business.” This post briefly analyzes the state of Judge Stark’s concept of “regular and established place of business” in the wake of In re Cray.

In Boston Scientific Corp., Judge Stark, among other things, described the application of “regular and established place of business” as a “fact-intensive inquiry focused on whether the defendant does its business in this District through a permanent and continuous presence here.” He explained that a formal office or store is not required to meet this test, but a physical presence is needed. He then identified factors that would not, at least alone, rise to the level of a permanent and continuous presence. They are: (1) doing business in Delaware or being registered to do business in Delaware; (2) maintaining a website accessible in Delaware for online sales; (3) shipping goods to unaffiliated individuals or third-party entities in Delaware; (4) making sales in Delaware; (5) employing a sales representative who occasionally works in Delaware; and (6) previously employing a sales representative who lived in Delaware, but had no responsibility of sales in Delaware.  See Boston Scientific Corp. v. Cook Group Inc.

In his other venue decision of the same date, Bristol-Myers Squibb Co., Judge Stark considered connections between the defendant and Delaware in deciding that he could not conclude without further information that the defendant did not have a regular and established place of business in Delaware. Those factors include: (1) the defendant is part of a family of more than 50 companies, of which more than 40 reside in Delaware; (2) the defendant does business and makes sales in Delaware; (3) the defendant is in the business of provoking patent infringement lawsuits as part of the process of bringing its products to market; (4) the defendant has appeared in more the 100 patent infringement cases in Delaware in the last ten years; (5) the cases are not “run-of-the-mill” litigation and may or may not be of material significance to defendant’s overall business; (6) the defendant has obtained the right to do business in Delaware including for pharmaceutical manufacturing, distribution and sales; (7) the defendant is licensed as a “Pharmacy-Wholesale” and “Distributor/Manufacturer CSR,” allowing it to distribute and manufacture controlled substances within Delaware; and (8) the defendant targets some Delaware physicians.

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Following a jury trial in E.I. Dupont de Nemours and Company v. Unifrax I LLC, C.A. No. 14-1250-RGA, in which Defendant’s product was found to infringe the asserted patent, Judge Richard G. Andrews ruled on: (1) Defendant’s renewed motions for judgment as a matter of law and request for a new trial; and (2) Plaintiff’s Motion for a Permanent Injunction, Supplemental Damages and Interest (D. Del. Sept. 12, 2017).

The Court denied Defendant’s motions. As to JMOL, the Court found that there was sufficient evidence to support the jury’s findings on infringement and no invalidity. Notably, the Court rejected Defendant’s attempt to make a new claim construction argument not presented in its Markman briefing, noting that it has “numerous opportunities to raise this specific issue prior to trial,” including during summary judgment, and had waived the argument. Id. at 3-4.  The Court also rejected the request for a new trial for the same reasons that the JMOL motion was denied.  The Court also rejected Defendant’s arguments that certain of Plaintiff’s cross-examination mislead the jury, and disagreed that the jury had been improperly instructed on conception. Id. at 5-6.

In a separate opinion addressing Plaintiff’s motion, the Court granted a permanent injunction. Irreparable harm existed where Plaintiff had shown a causal connection between Defendant’s sales and harm to Plaintiff, and where Plaintiff and Defendant were the only competitors in the relevant market: “Defendant’s predecessor . . . product was dissatisfactory to Boeing. There is evidence that the predecessor product would not have qualified under Boeing’s new specification. Defendant’s . . . product uses Plaintiffs patented flame barrier laminate design to qualify for this specification and compete in this market. Defendant is Plaintiffs only competitor in Boeing’s flame barrier laminate market. Plaintiff projected that its Nomex XF would have sales of $32 million in 2013 to 2015. Defendant’s presence in the market directly reduced Plaintiffs sales.” Id. at 3.  Money damages were inadequate where Plaintiff “would be forced to compete against a rival gaining market share with Plaintiff’s technology” and where Plaintiff never agreed to royalty payments to license its technology, and similarly, the balance of hardships weighed in Plaintiff’s favor where the absence of an injunction would require Plaintiff to compete against its patented invention. Id. at 4.  Finally, the Court ruled an injunction would not harm the public interest.  “Defendant argue[d] that an injunction would harm the public interest because the public is better off with a multiple-supplier market for products affecting public safety,” but the Court was persuaded by Plaintiff’s evidence that no such public safety concern was present and the Court “was not concerned with Plaintiff’s ability to supply its product.”  Further, “copies of patented inventions have the effect of inhibiting innovation and incentive. Guarding against such copies could foster the development of more technologies aimed at enhancing public safety.” Id. at 5 (citations and internal quotation marks omitted).

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Magistrate Judge Christopher J. Burke recently denied a motion to stay pending the resolution of inter partes review of certain claims of one patent-in-suit.  Triplay, Inc. v. WhatsApp Inc., C.A. No. 13-1703-LPS-CJB (D. Del. Sept. 18, 2017).  Judge Burke explained that the IPR, including any appeals, would likely be resolved before any significant events were were likely to occur in the litigation (which did not yet have a case schedule), a factor weighing against a stay.  Second, while the lack of a case schedule usually means that a case is in its early stages – a factor weighing in favor of a stay – in this case the litigation was nearly four years old, and the lack of a case schedule was due to an early claim construction of certain claims for purposes of a pending motion to dismiss under section 101.  Because the case was not, practically speaking, in its early stages, Judge Burke found “no compelling reason to further stall the entirety of this case to allow for the Federal Circuit to review the PTAB’s decisions relating to only some claims of a single patent-in-suit.”

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Judge Richard G. Andrews recently considered plaintiff Acceleration Bay LLC’s various discovery motions. Acceleration Bay LLC v. Activision Blizzard, Inc., et al., No. 16-453-RGA, No. 16-454-RGA, No. 16-455-RGA (Sept. 7, 2017). Regarding defendants’ interrogatory responses, Judge Andrews declined to order defendants to supplement specific interrogatories, in part due to plaintiff’s conclusory or vague theories.  For example, plaintiff sought supplementation of interrogatories seeking non-infringing alternatives, and non-infringement theories.  Id. at 3, 4.  Defendants argued that supplementation was not warranted, in part “due to the vagueness of Plaintiff’s infringement contentions and because Plaintiff has the burden of proving the lack of non-infringement alternatives.”  Id. Judge Andrews agreed.  Id. at 3, 4.  Plaintiff also sought supplementation regarding defendants’ damages theories.  Again, defendants argued that their response was reasonable in light of plaintiff’s “conclusory” damage claim.  Id.  Again, Judge Andrews agreed.  Id. at 4.

Acceleration Bay LLC v. Activision Blizzard, Inc., No. 16-453-RGA (Sept. 7, 2017)

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In a series of related actions brought by Acceleration Bay LLC, Judge Richard G. Andrews denied Defendants’ motion to dismiss due to allegedly patent-ineligible subject matter of three asserted patents. Acceleration Bay LLC v. Activision Blizzard, Inc., C.A. No. 16-453-RGA (D. Del. Aug. 29, 2017).  The claims at issue related to a “broadcast channel for a subset of [] computers of an underlying network.” Id. at 2.  The Court concluded that the claims were not directed to an abstract idea, rather “an innovative network structure for the distribution of data as the number of participants in a computer network is scaled.” Id. at 6.  The Court rejected Defendants’ analogy to the claims as “the schoolyard game of ‘telephone,’” as analogy did not “present the same communication scaling issues as those that arise in computer networks.” Id. at 7. The Court instead analogized the claims at issue to those in the Enfish case as requiring “a specific type of communication structure designed to improve the way computers communicate as participants scale.” Id.

Acceleration Bay LLC v. Activision Blizzard, Inc., C.A. No. 16-453-RGA (D. Del. Aug. 29, 2017)

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