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In a recent Memorandum Opinion, Chief Judge Leonard P. Stark denied defendant Costco Wholesale Corporation’s (“Costco”) motion to dismiss the litigation pursuant to Rule 37(b)(2) for discovery misconduct by plaintiff Robert Bosch LLC (“BLLC”). Robert Bosch LLC v. Alberee Products, Inc., C.A. No. 12-574-LPS (D. Del. Jan. 24, 2017). BLLC failed to comply with the court’s order to produce certain documents by a given deadline following a discovery dispute. See id. at 1-2. BLLC stated reason for not producing the documents is that its parent, Robert Bosch GmbH (“BGmbH”), “refused to search for and produce any documents when BLLC requested BGmbH to do so, even when BLLC’s requests were backed by an order of the Court.” Id. at 2. Costco’s motion pursuant to Rule 37(b)(2) followed. Id. at 3-4.

Denying Costco’s request to dismiss the case, Judge Stark consider the six factors set forth in Poulis v. State Farm Fire & Casualty Co., 747 F.2d 863 (3d Cir. 1984). First, considering BLLC’s responsibility, the Judge Stark noted that “Costco should have been given access to BGmbH-held documents that were responsive to Costco’s requests, regardless of whether such documents were supportive of BLLC’s positions in this litigation. BLLC had effective control over production of such documents.” Id. at 6. On this point, Judge Stark further explained that “[b]ecause BLLC had control over the disputed documents, BLLC is largely responsible for its failure to produce the required documents and the failure to comply with the Court’s . . . Order. Therefore, this first Paulis factor weighs in favor of dismissal.” Id. at 8. Judge Stark also found that Costco was highly prejudiced by BLLC’s misconduct, given that Costco was “deprived of the opportunity to develop its defenses during fact discovery within the necessary context of full production of responsive documents.” Id. at 8. Such prejudice also weighed in favor of dismissal. Id. at 8-9. The Court also found BLLC’s history of dilatoriness in the litigation and willful disobedience of the court’s discovery order to weigh in favor of dismissal. See id. at 9-10.

Ultimately, however, Judge Stark found in this instance that “[l]esser, alternative sanctions are appropriate and will adequately ameliorate the prejudice Costco has suffered.” Id. at 10-11. Indeed, as Judge Stark noted, “[d]ismissal must be a sanction of last, not first, resort.” Id. at 10. Rather than dismissal, Judge Stark required BLLC to pay “Costco’s reasonable attorney’s fees that were caused by BLLC’s discovery misconduct.” Id. at 11. Further, Judge Stark provided that “Costco will be permitted the opportunity to seek further discovery, should it believe any is necessary, in order to ensure that Costco will have received in production all materials and other discovery which it would have obtained had BLLC lived up to its discovery obligations throughout this case.” Finally, Judge Stark ruled that “in connection with submission of the proposed final pretrial order and the final pretrial conference, the Court will consider, if requested by Costco, granting relief in limine to exclude particular late-produced evidence, should Costco be able to persuade the Court that, in light of the totality of applicable considerations, such evidence should be excluded.” Id. at 11.

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In Arcelormittal, et al. v. AK Steel Corporation, C.A. No. 13-685-SLR (D. Del. Jan. 19, 2017), Judge Sue L. Robinson granted Defendant’s motion for summary judgment as to non-infringement based on collateral estoppel. Discovery in the present action was limited to evaluating whether Defendant’s accused products had changed since the verdict in a prior action brought by Plaintiff on another patent, where Defendant prevailed on non-infringement. See id. at 1-2.

Noting that collateral estoppel “may also operate to bar relitigation of common issues in actions involving different bur related patents,” the Court rejected Plaintiff’s arguments regarding how Defendant’s products differed in this case and in the prior action. See id. at 6,7.  The case at bar satisfied the required elements for collateral estoppel to apply, as the prior action involved the same parties, products, conduct, and issues. Id. at 10.

In its analysis, the Court also rejected certain of Plaintiff’s arguments regarding alleged concessions made by Defendant during appeal arguments, as the Court had listened to the argument before the Federal Circuit and disagreed that any concession had occurred. Id. at 8 n.8. The Court also rejected Plaintiffs’ arguments that it should receive discovery “as to whether defendant directs or controls the performance of the hot stampers or is in a joint enterprise” such that divided infringement may be implicated, because the claims at bar were not method claims and, furthermore, it appeared that this was discovery Plaintiffs should have taken in the prior action. Id. at 9 & n.9. The Court reached a similar conclusion as to Plaintiff’s arguments that additional discovery was needed as to indirect infringement, as Plaintiffs had already litigated these issues in the prior action. Id. at 9-10.

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Judge Gregory M. Sleet, recently granted defendants’ motion for summary judgment of non-infringement based on upon the Court’s construction of the limitation “changing [price] information.”  Quest Licensing Corporation v. Bloomberg L.P., No. 14-561-GMS (D. Del. Jan. 19, 2017).  Defendants argued that summary judgment was appropriate because “defendants’ accused systems do not receive or supply ‘only data that has changed’ as required by all of the asserted claims of the patent-in-suit.”  Id. at 3.  Judge Sleet agreed.  The Court previously construed the term “changing information” to mean “only [price] data that has changed,” and it was undisputed that the accused systems receive and supply information that “always includes non-changing information such as the stock symbol.”  Id. at 5-6.  Judge Sleet was not persuaded that the Court should revisit its claim construction ruling.  Id. at 6.

Quest Licensing Corporation v. Bloomberg L.P., No. 14-561-GMS

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In Collabo Innovations, Inc. v. Omnivision Technologies, Inc., C.A. No. 16-197-SLR-SRF (D. Del. Jan. 25, 2017), Magistrate Judge Sherry R. Fallon considered Defendant’s motion to transfer to the Northern District of California as well as its motion to dismiss indirect infringement claims based on an alleged lack of pre-suit knowledge.

The Court denied the motion to transfer. Both parties were Delaware corporations with principal places of business in California, and Plaintiff had no facilities in Delaware. Id. at 1. Because Delaware was not Plaintiff’s “home turf,” the Court awarded Plaintiff’s forum choice “increased weight in the Jumara analysis but less than the ‘substantial’ or ‘paramount’ weight” it would be given had [Plaintiff] filed suit in its home forum.” Id. at 8. Because Defendant manufactured, sold, and used the accused products nationwide, and because it was also “a large Delaware corporation with resources to litigate in this district,” where the claim arose was neutral and the convenience of the parties weighed against transfer. Id. at 9-10. As to the public interest factors, the Court found that practical considerations weighed slightly against transfer where Plaintiff had filed a related action against another party in Delaware but where Defendant argued that “a trial in Delaware will be more expensive and difficult due to travel considerations and expenses, including costs of local counsel.” Id. at 12-13. In sum, Defendant had “not shown that the Jumara factors as a whole weigh strongly in favor transfer. Only [Defendant’s] forum preference weighs in favor of transfer, and that preference does not warrant maximum deference. On the other hand, the remaining factors are neutral or weigh in favor of [Plaintiff].” . . . The court recognizes that it may be more expensive and inconvenient for [Defendant] to litigate in Delaware instead of California. However, under the circumstances, the court ‘decline[s] to elevate the convenience of one party over the other,’ as ‘discovery is a local event and trial is a limited event.’ . . . Delaware imposes no ‘unique or unexpected burden’ on [Defendant], such that transfer is warranted in the interests of justice.” Id. at 14-15 (citations omitted).

The Court then recommended that the motion to dismiss be granted in part, as to any possible allegations of pre-filing conduct. Acknowledging that “[t]he case law in this district is divided on the issue of whether pre-suit knowledge is required to sufficiently state a claim for indirect infringement,” Id. at 17, the Court adopted the “more recent line of cases” holding that “the filing of a complaint is sufficient to provide knowledge of the patents-in-suit for purposes of stating a claim for indirect infringement occurring after the filing date.” Id. Here, Plaintiff had limited its cause of action for indirect infringement to conduct following the filing of the complaint. Id. at 18. “In keeping with the most recent decisions of this court,” therefore, the “post-filing date knowledge of the patents-in-suit is sufficient to state a claim for indirect infringement occurring after service of the complaint. In view of the foregoing authority,” the Court recommended that the motion be granted-in-part “to the extent that [Plaintiff’s] amended complaint could be construed to assert causes of action for indirect infringement based on pre-filing conduct.” Id.

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In a series of related actions, Judge Richard G. Andrews denied Defendants’ motion to exclude portions of the opinion of Plaintiff’s damages expert, following oral argument and a Daubert hearing on the matter. Delaware Display Group LLC, et al. v. Lenovo Group Ltd., et al., C.A. No. 13-2108-RGA (D. Del. Jan. 18, 2017). Defendants argued that the expert failed to properly apportion between patented and unpatented features, that he improperly assigned 100% of his incremental profit to the licensor, and that his royalty rate was improper because it was for a portfolio license where only two patents were asserted in the case. Id. at 6.

As to apportionment, the Court was satisfied from the expert’s testimony at the Daubert hearing that his methodology for apportionment was reliable, “extensively analyz[ing] the patented features and [taking] out what he believed were unpatented features,” and Defendants’ expert’s approach to apportionment did not appear to be “substantially different.” Id. The Court reached the same conclusion as to the expert’s incremental profit methodology, finding it “logical,” not applying an improper “rule of thumb,” and apparently consistent with the approach of the expert of one Defendant. Id. Finally, the expert’s portfolio license methodology was sufficiently reliable. “His belief that during the hypothetical negotiation, one could get a license to both patents without there being royalty stacking, is logical. (Tr. 60:23-61:21, 103:6-104:7). His approach is consistent with that of [one of the Defendant’s experts]. There is no impermissible royalty stacking.” Id. at 6-7.

Having concluded that Defendants’ concerns with the expert went to the weight, rather than admissibility, of the testimony, the Court denied the Daubert motion.

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In a recent Order, Judge Richard G. Andrews denied plaintiff’s motions seeking to lift the stays in a number of related cases and for leave to file an amended complaint. Arunachalam v. Citizens Financial Group Inc., C.A. Nos. 12-355, 13-1812, 14-91, 14-373-RGA (D. Del. Jan. 12, 2017). Judge Andrews explained that “[b] y the proposed amended complaint, Plaintiff seeks to assert patent 7,340,506 against each Defendant.” Id. at 1. Judge Andrews noted that a CBM trial was instituted on U.S. Patent No. 7,340,506 on November 15, 2016. Id.

Denying plaintiff’s motion to lift the stay and motion for leave to file an amended complaint, Judge Andrews observed:

Maintaining the stay while the PTAB decides the validity challenges raised in the CBM trial of the ‘506 claims represents the proper balancing of the four statutory factors that the court must consider. Since Plaintiff’s other asserted patents have been invalidated, the ‘506 patent is the only patent really at issue in these cases. Resolution of its validity before the PTAB (and Federal Circuit, if there is an appeal) will simplify the issues in the case, and reduce the burden of litigation on the parties and on the court. There have been no proceedings in this case on the ‘506 patent. Thus, three of the four factors clearly favor maintaining the stay. The fourth factor is not so clear based on the present record, but even assuming it favors Plaintiff, the balancing of the factors overall is clearly in favor of maintaining the stay.

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In a recent Memorandum Order, Chief Judge Leonard P. Stark denied defendants’ (“Heartland”) request to stay the litigation pending the Supreme Court’s decision regarding the construction of the patent venue statute, 28 U.S.C. § 1400(b). Kraft Foods Group Brands LLC v. TC Heartland, LLC, C.A. No. 14-28-LPS (D. Del. Jan. 12, 2017). The Supreme Court granted Heartland’s petition for a writ of certiorari on the issue on December 14, 2016. Id. at 2 (citing _ U.S._, 2016 WL 4944616 (2016)). Defendants specifically requested that the court stay all case-dispositive matters, but not stay non-dispositive matters, which include a pending discovery dispute. Id. at 3-4.

Denying defendants’ requested stay, Judge Stark observed:

By separate orders that will also be entered today, I have decided all pending motions, including motions for summary judgment (which I have denied in almost all respects), motions to exclude expert evidence (one denied and one granted), and a motion to amend Heartland’s inequitable conduct allegations (which I have granted). The parties and the Court did a great deal of work briefing, arguing, and deciding these motions, and the Court could have issued its decisions at any time after the August 30, 2016 hearing, well before Heartland (after the Court’s express inquiry) finally asked for a (partial) stay on December 20. Even if the result of the Supreme Court’s decision is a determination that this case must be transferred to another District, the case will still need to be tried. I have presided over the case since its inception. The directive of Federal Rule of Civil Procedure 1, that I “administer[]” this case (like all others) with a goal of “secur[ing] [its] just, speedy, and inexpensive determination,” is far better served by me deciding the ripe motions rather than leaving numerous loose threads for (potentially) a judge in another District to have to untangle.

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Judge Andrews recently entered an order denying a final judgment under Rule 54(b) relating to His Honor’s finding of lack of patentable subject matter. Judge Andrews agreed “with Defendant’s argument that Plaintiff’s ‘litigation approach is the definition of piecemeal’” because the Section 101 finding applied to only one out of seven patents-in-suit. As Judge Andrews explained, “Plaintiff says there is nothing to be gained by not allowing Plaintiff an appeal now, but that is not so. Most patent cases, like most other cases, settle. In all likelihood, if there is no appeal now, the Federal Circuit will never have to hear an appeal from this case. Piecemeal appeals tax the resources of the courts of appeals. To me, that is sufficient reason not to enter a Rule 54(b) judgment in this case.” Sound View Innovations, LLC v. Facebook, Inc., C.A. No. 16-116-RGA, Order at 1-2 (D. Del. Jan. 17, 2017).

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Magistrate Judge Christopher J. Burke recently recommended granting-in-part and denying-in-part a motion to dismiss invalidity and non-infringement counterclaims.  Princeton Digital Image Corp. v. Konami Digital Entertainment Inc., C.A. No. 12-1461-LPS-CJB (D. Del. Jan. 19, 2017).  Judge Burke recommended denial of the motion to dismiss the invalidity counterclaim based on a theory of estoppel resulting from two IPR proceedings because neither IPR proceeding “resulted in a ‘final written decision’ as to the validity of” the claims at issue.  Judge Burke recommended granting the motion to dismiss the non-infringement counterclaim, with leave to amend, finding that the counterclaim contained “no facts of any kind, let alone sufficient facts to make out a plausible claim” under Twombly/Iqbal.

UPDATE:  On March 30, 2017, Judge Stark adopted, over objection, Magistrate Judge Burke’s report and recommendation that the motion to dismiss should be denied.  Judge Stark agreed that the defendants are not estopped from asserting invalidity of claims that were not the subject of both an instituted IPR and a final written decision.

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In Kraft Foods Group Brands LLC v. TC Heartland, LLC d/b/a Heartland Food Products Group, et al., C.A. No. 14-28-LPS (D. Del. Jan. 12, 2017), Chief Judge Leonard P. Stark ruled on Defendants’ motion for summary judgment as to invalidity, as well as their uncontested motion for summary judgment for failure to mark. Defendants argued that two patents-in-suit (the ’557 and ’472 patents) were invalid as obvious, and also that the ’557 patent was invalid as under Section 112’s written description and enablement requirements and because it violated the statutory prohibition against double-patenting.

As to obviousness, the Court concluded that genuine disputes of material fact existed as to both patents, and denied summary judgment. See id. at 3, 5-6. Similarly, as to written description and enablement arguments on the ’557 patent, genuine disputes of material fact existed here, and the Court denied summary judgment. See id. at 4. The Court also disagreed with Plaintiff’s argument that Defendants waived a non-enablement defense because they had not been raised in invalidity contentions and expert reports, but permitted Plaintiff to propose a schedule for taking “additional, limited discovery” into that defense if needed. Id. at 3 n.3.

As to statutory double patenting, Defendants argued that “the April 2010 provisional applications, whose contents were fully incorporated in another [Plaintiff] patent, are invalidating prior art under § 102(e).  In response, [Plaintiff] accuse[d] [Defendants] of impermissibly ‘cloak[ing]’ an undisclosed anticipation defense under the guise of double patenting.” Id. at 4. The Court agreed with Plaintiff that Defendants had not “articulated either the type of double-patenting it alleges or how the law applies to the facts of this case.” Id.  To the extent Defendants advocated a “a species-genus anticipation defense, the record . . . would support a reasonable finding that there is not clear and convincing evidence of invalidity.” Id. at 5. Furthermore, the Court was not persuaded by Defendants that the filing of a terminal disclaimer was irrelevant to this question. Id.

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