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Judge Andrews recently issued a memorandum order ruling on the Defendants’ motion to exclude testimony of Plaintiffs’ damages expert in MiiCs & Partners, Inc., et al. v. Funai Electric Co., Ltd., et al., C.A. No. 14-804-RGA, Memo. Or. (D. Del. Dec. 7, 2017). The Defendants lodged several challenges to the Plaintiffs’ expert’s opinion. First, Judge Andrews found that, for one patent-in-suit, the expert’s use of a “5% to 10% cost-savings benefit” provided by the Plaintiffs’ technical expert “demonstrates that he properly apportioned damages and profits between the patented and unpatented features.” Id. at 4-5. For a second patent-in-suit, however, Judge Andrews found “no basis for concluding that he apportioned between the patented and unpatented features” because the “only place where [the expert] appears to consider the profit attributable to the inventions, as distinguished from unpatented features, is in his discussion of Georgia-Pacific Factor 13 . . . [which] lacks any meaningful analysis or attempt to quantify the portion of realizable profit that should be attributed to the patented feature of the smallest salable unit.” Id. at 6.

Moreover, the Defendants argued, and Judge Andrews agreed, that an unaccepted offer to license a portfolio of over 360 patents was not a reliable starting point for the hypothetical negotiation as to one patent-in-suit because it was only an offer, it was not a comparable number of patents, its timing suggested that it was litigation-influenced, and it involved different parties. Id. at 7-8.

Finally, Judge Andrews rejected the use of a “composite royalty rate,” which the Defendants characterized as “appl[ying] a royalty base that includes units accused under any asserted patent to a royalty rate with contributions from every asserted patent.” Id. at 10. This approach, Judge Andrews found, “assigns to each accused product the same per-unit royalty regardless of how many patents that product is accused of infringing.” Id. at 11. Judge Andrews also rejected several other arguments for excluding other portions of the proffered expert testimony.

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On August 24, 2017, in Ferring Pharmaceuticals, Inc. v. Teva Pharmaceuticals USA, Inc., Civ. No. 17-435-RGA, Judge Richard G. Andrews ruled that it would be inappropriate to add plaintiff’s Global Head of IP as an in-house designee under the protective order, finding that such person was a competitive decision maker.  See previous Order here.  On December 11, 2017, however, Judge Andrews changed course, granting plaintiff’s motion for reconsideration and allowing plaintiff’s designee access to Defendant’s ANDA and ANDA-related material.   Judge Andrews found that this was a close question, but credited the designee’s declaration and the fact that a “two-year post-litigation bar from relevant prosecution activities (including supervisory responsibility for those activities) ma[de] the risk of inadvertent disclosure acceptably low, while at the same time allowing [the designee] to do his job of ‘overseeing and managing this litigation.'”

Ferring Pharms Inc. v. Teva Pharms USA, Inc., No. 17-435-RGA (D. Del. Dec. 11, 2017)

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In Sonos, Inc. v. D&M Holdings Inc. d/b/a The D+M Group, et al., C.A. No. 14-1330-WCB (D. Del. Dec. 7, 2017) (Apportionment Order), Judge William C. Bryson denied Plaintiff’s motion for leave to submit a second supplemental report from its damages expert because the supplemental report failed to conduct a proper apportionment analysis.  The Court had previously excluded the expert’s first report due to a failure to apportion and because it therefore violated the entire market value rule. Apportionment Order at 1.  The supplemental report looked to the least expensive accused product for a revised and reduced royalty base, in order to “to “account[] for additional, non-patented features and componentry associated with higher priced products.” Id. at 2 (quoting report).  The Court concluded that the method still calculated the royalty based on the entire market value of the product where the least expensive accused product still contained features not covered by the patents. Id. at 3. The Court observed that “it appears that the [expert] regarded the effective reduction in the accused revenue resulting from that calculation as constituting apportionment because it reflects a reduction in the amount that he previously cited. While an apportionment would certainly produce a reduction, that does not mean that a reduction necessarily constitutes apportionment. Nothing in [the] report reflects an apportionment directed to the role of the patented features in driving demand for the product.” Id. at 3-4.

While the Court would therefore not permit Plaintiff to offer a royalty rate premised on the entire market value rule, the Court did permit Plaintiff to accept Defendants’ proposal for a reasonable royalty at trial. Id. at 4.

In a separate opinion issued December 8, 2017, Judge Bryson also excluded certain of Plaintiff’s proposed secondary considerations evidence of praise as hearsay (“Exhibits Order”). See Exhibits Order at 4-10.  While the Court would permit evidence of industry praise, the Court excluded praise that included factual statements about the products that went beyond assertions of opinion.  For example, statements that a product was “mind blowing” were admissible, but following statements that the product was the first of its kind to perform a function was a factual assertion offered for the truth of the matter asserted, and thus excludable hearsay. Id. at 6-7.  Furthermore, some exhibits addressed praise of features of the product that were outside the scope of the asserted claims. Id. at 7-8.  The Court also took Rule 403 into consideration and concluded that the prejudicial effect of such evidence outweighed its probative value. Id. at 8-9.The Court also ordered such statements redacted from exhibits that contained admissible evidence of praise.  Finally, the Court ruled that “out-of-court statements by third-party declarants that [Defendants] or others copied [Plaintiff] are inadmissible hearsay.” Id. at 10.

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Judge Andrews recently issued an order denying defendant’s motion to strike 60 pages of briefing on three Daubert motions.  B. Braun Melsungen AG v. Becton, Dickinson and Company, No. 16-411-RGA (D. Del. Dec. 5, 2017).  Judge Andrews denied the motion because, even though he wished “Plaintiffs had exercised some judgment about which Daubert issues were worth pursuing,” there is no rule preventing Plaintiffs from filing 60 pages of briefing.  Judge Andrews added, however, that Defendants can take heart in the fact that “excessive briefing of Daubert issues is usually a sign of weakness, not of strength.”  Id. at 1.

B.Braun 16-411

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In a recent memorandum order, Judge Richard G. Andrews granted a motion for summary judgment after requesting at oral argument supplemental briefing on the proper construction of one claim limitation.  MiiCs & Partners, Inc. v. Funai Electric Co., Ltd., C.A. No. 14-804-RGA (D. Del. Dec. 1, 2017).  Judge Andrews explained that the parties’ briefing made clear that “the issue here boils down to one of claim construction,” and the Court therefore requested supplemental briefing on whether the limitation “said liquid crystal layer being divided into a plurality of regions having different orientation of liquid crystal for one of said pixel electrodes” was drawn to capability/function (which would be required for a finding of infringement), or if instead it was structural.  The Court found that “the disputed limitation is not properly understood as drawn to capability[,]” and summary judgment of non-infringement was therefore warranted.

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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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