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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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In a recent order, Judge Noel L. Hillman, sitting by designation, ruled on one of defendant Materia’s motions in limine in this long-running litigation. Materia moved to “preclude Evonik from referencing or offering any evidence relating to [a] covenant not to sue or claims already dismissed.” Evonik Degussa GMBH v. Materia, Inc., C.A. No. 09-636 (NLH-JS), Order at 1 (D. Del. Jan. 12, 2017). Judge Hillman denied the motion to the extent it was an attempt to “preclude Evonik from referring to Materia as an infringer of the 50 Materia products addressed in the Court’s summary judgment opinion.” Id. Judge Hillman also found than the motion was partially moot because Evonik had proffered that it would not disclose the covenant not to sue at issue or the Court’s dismissal of a counterclaim based on it, or the fact that inequitable conduct claims and invalidity counterclaims had been dismissed by the parties. Id. However, Judge Hillman granted the motion in limine in part by ordering that “Evonik is barred from introducing in its case-in-chief any evidence regarding [the patent that was the subject of the covenant not to sue] and its assertion and adjudication in this case to support an argument that Materia asserts highly questionable patents against competitors as a tool to compete in the metathesis catalyst industry. However . . . Evonik may seek leave of Court to use such evidence on cross-examination, or any rebuttal case, to demonstrate a witness’s prior inconsistent statement or to assess a witness’s credibility. Stated differently, Evonik may use such evidence as a shield but not a sword.” Id. at 1-2.

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Chief Judge Leonard P. Stark recently considered Kraft’s Daubert motions to exclude the testimony of TC Heartland’s experts.  Kraft Foods Group Brands LLC v. TC Heartland, LLC, No. 14-28-LPS (D. Del. Jan. 12, 2017).  Judge Stark struck the testimony of TC Heartland’s non-infringement expert’s opinions concerning the asserted claims’ packaging limitations because such testimony was inconsistent with the Court’s claim construction order.  Id.at 2-4.  Judge Stark denied, however, Kraft’s motion to exclude the testimony of TC Heartland’s damages expert.  Kraft argued that the expert’s testimony  on the availability and cost of a non-infringing alternative, stemming from unsubstantiated conversations with TC Heartland employees, was not based on “a reliable factual foundation.”  Id. at 4.  Judge Stark disagreed, noting that the employees in question were deposed and available to testify at trial, and that Kraft’s objections were fodder for cross-examination.  Id. at 5.  Kraft also moved to strike the expert’s testimony related to criticism’s of Kraft’s damages expert’s calculations.  Judge Stark denied the motion as to these grounds as well because those issues “go to weight rather than admissibility.”  Id. at 5-6.

Kraft Foods Group Brands LLC v. TC Heartland, LLC, No. 14-28-LPS

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Judge Sue L. Robinson revisited the scope of the statutory estoppel applicable in view of instituted IPR proceedings.  Intellectual Ventures I LLC v. Toshiba Corporation, No. 13-453-SLR (D. Del. Jan. 11, 2017).  Judge Robinson previously held that Toshiba was not estopped from presenting a certain obviousness combination at trial because an IPR was not instituted on that ground.  Judge Robinson revisited this decision following supplemental papers submitted in conjunction with the pretrial conference and concluded that, while the Court’s “first look” at the issue was incomplete, the ultimate decision should remain unchanged.  Id. at 1, 3.  Judge Robinson described the issue at hand as a situation in which “the invalidity ground at issue (the Fuse combination) was never raised in the IPR, but reasonably could have been raised during the IPR[.]”  Id. at 2.   Absent specific guidance from the Federal Circuit as to this specific fact pattern, Judge Robinson described the options facing the Court:

[Plaintiff]’s reasoning leads to the conclusion that the PTAB is meant to be the invalidity arbiter of first resort and, therefore, a company that seeks an IPR must bring to the PTAB’s attention every ground the company has reason to think might be relevant; otherwise, it will be estopped from pursuing that ground in litigation. That outcome appears to be inconsistent with all of the limitations imposed by the PTAB on IPR proceedings (e.g., page limits for petitions, 14 point type, and portrait-view claim charts) and leaves for trial only those references initially rejected by the PTAB. On the flip side of the coin is [Defendant]’s reasoning, which leads to the conclusion that a company can play games between the PTAB (IPR) and the courts (litigation), asserting some references in connection with the IPR but reserving some for litigation.

Id. at 3.  Ultimately, Judge Robinson held that since it is not the Court’s “place to make policy decisions, I am not inclined to change my original decision, with the hopes that any appeal may clarify the issue for future judges in future cases.”  Id.

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In TQ Delta LLC v. Pace PLC, et al., C.A. No. 13-1835-RGA (D. Del. Jan. 5, 2017), Judge Richard G. Andrews recently resolved the parties’ dispute with regard to the use of conflicts counsel for Plaintiff, which had been ordered by the Court in connection with taking certain third-party discovery. Having summarized the few relevant cases on this topic cited by the parties, the Court ordered that conflicts counsel was to be walled off from Plaintiff’s lead counsel, but not its Delaware counsel. Among other parameters, conflicts counsel could receive unredacted filings, discovery served to date, infringement and validity contentions, and Plaintiff’s expert opinions, but conflicts counsel could not receive “any tutorial” from the lead counsel and would not receive any draft discovery directed to the third party. Conflicts counsel could provide discovery from the third party to Delaware counsel, who could then provide the discovery to lead counsel.

The Court ruled that this wall would continue at least through the close of discovery, but may need to be “relaxed at some point before trial,” the details to be determined at a later date. However, any examination of the third party’s witnesses at trial would need to be done by conflicts counsel.

TQ Delta LLC v. Pace PLC, et al., C.A. No. 13-1835-RGA (D. Del. Jan. 5, 2017)

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In three recent Orders, Judge Noel L. Hillman, sitting by designation, ruled on defendant’s (“Materia”) motions in limine. Judge Hillman first denied Materia’s motion in limine regarding plaintiff’s (“Evonik”) expert, ruling that “Evonik’s expert, Dr. Cooper, may be permitted to testify, as may any expert or fact witness from Materia, on the nature and quantity of any inoperable embodiments of a patent claim including ‘NHC’ as construed by the Court.” Evonik Degussa GmbH v. Materia, Inc., C.A. No. 09-636-NHL-JS (D. Del. Jan. 6, 2017).

Next, Judge Hillman granted and denied in part Materia’s motion in limine to exclude “certain argument or evidence based on Materia’s invocation of attorney-client privilege.” Specifically, Judge Hillman ruled that Materia’s motion “is granted in that Evonik is precluded from asking any questions which are reasonably likely to elicit an answer precluded by privilege. The Motion is denied in that Evonik may use a privilege log– in a redacted form so as to preclude any reference to privilege or confidentiality– to prove a fact established by the log.” Evonik Degussa GmbH v. Materia, Inc., C.A. No. 09-636-NHL-JS (D. Del. Jan. 9, 2017).

Finally, Judge Hillman granted Materia’s motion to preclude “Evonik from referencing or introducing at trial evidence related to the underlying substantive issues and allegations of the Boulder litigation . . .  to the extent that Evonik is barred from introducing in its case-in-chief any evidence related to the underlying substantive issues and allegations of the Boulder litigation.”  Judge Hillman noted, however, that “Evonik may seek leave of Court to use such evidence on cross-examination, or any rebuttal case, to demonstrate a witness’s prior inconsistent statement or to assess a witness’s credibility.” Evonik Degussa GmbH v. Materia, Inc., C.A. No. 09-636-NHL-JS (D. Del. Jan. 10, 2017).

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Chief Judge Leonard P. Stark recently considered the parties motions for summary judgment and motions to exclude expert testimony in Vehicle IP, LLC v. AT&T Mobility LLC, et al., No. 09-1007-LPS (D. Del. Dec. 30, 2016).  Judge Stark denied all the motions except one: defendants’ motion for summary judgment of no willful infringement.  Plaintiff’s willfulness allegations were supported by testimony from one of the inventors of the patent-in-suit who later worked on developing an accused product.  Id. at 17.  Judge Stark held that such evidence was not enough because “a party’s pre-suit knowledge of a patent is not sufficient, by itself, to find ‘willful misconduct’ of the type that may warrant an award of enhanced damages.”  Id. (citing Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923, 1936 (Breyer, J., concurring)).  Judge Stark noted that the type of evidence absent from the record that may support a claim of willful infringement, other than pre-suit knowledge of the patent-in-suit, would include evidence that the inventor in question or defendant “intentionally relied on [the inventor’s] alleged prior knowledge of the patent in developing its products [or that the inventor] was hired because of his knowledge of the [] patent.”  Id.(internal quotations omitted).  Because no reasonable jury could find willful infringement, the Court granted defendants’ motion.

Vehicle IP, LLC v. AT&T Mobility LLC, No. 09-1007-LPS (D. Del. Dec. 30, 2016)

 

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In IOENGINE, LLC v. Interactive Media Corp. d/b/a/ Kanguru Solutions, C.A. No. 14-1571-GMS, Judge Gregory M. Sleet denied Defendant’s motion for summary judgment of invalidity and non-infringement of the independent claims of the patent-in-suit (U.S. Patent No. 8,539,047), based on the contention that the patent was directed to patent-ineligible subject matter. Defendant argued the claims were directed to the abstract idea of “providing communication with computing devices.” The Court disagreed, finding the claims analogous to those held to not be abstract ideas in McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299 (Fed. Cir. 2016), as they recited “a specific arrangement of components and a very specific implementation and structure of the executable program code.” Id. at 2 n.2 (citing McRo). The claims were also distinguishable from those in Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709 (Fed. Cir. 2014) as they defined “a tangible portable device with an unconventional hardware configuration that is able to run specific program code to provide the claimed functionality.” Id. “More important, the court agrees, as [Plaintiff] maintains, that the Independent Claims of the ‘047 patent are directed to a “specific asserted improvement in computer capabilities,” not to an abstract idea “for which computers are invoked merely as a tool,” citing the specification as support. Id. Having concluded the claims were not directed the abstract ideas, the Court did not reach step two of the Alice test.

IOENGINE, LLC v. Interactive Media Corp. d/b/a/ Kanguru Solutions, C.A. No. 14-1571-GMS (D. Del. Jan. 4, 2017)

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In a recent Memorandum, Judge Gregory M. Sleet denied defendant Imation Corp.’s (“Imation”) motion to dismiss plaintiff IOENGINE, LLC’s (“IOENGINE”) complaint for lack of standing pursuant to Federal Rules of Civil Procedure 12(c) and 12(b)(1). The inventor of the patent-in-suit, United States Patent No. 8,539,047 (“the ’047 patent”), purported to assign the ’047 patent to IOENGINE LLC on October 7, 2014, but IOENGINE LLC’s Certificate of Formation was not filed with the office of the Secretary of State of Delaware until October 8, 2014. Id. at 2. Imation argued that IOENGINE LLC “did not exist at the time of the proferred assignment and therefore could not have received any rights” in the ’047 patent.” Id. at 5. The court agreed that “IOENGINE did not formally exist and could not, as a de jure entity, have obtained ownership of the ’047 patent on October 7, 2014.” Id. at 7.

The court ultimately recognized, however, that IOENGINE was a de facto LLC at the time of the patent assignment on October 7, 2015, and therefore concluded that IOENGINE has standing to bring suit. Id. at 10. Specifically, the court looked to the Delaware “common law-doctrine of de facto incorporation.” Id. at 8. The court could not find “any principled reason to conclude that a limited liability company would or should be treated differently from a corporation when considering the de facto formation of one or the other.” Id. When considering de facto formation, the court focused on facts demonstrating “a good faith, bona fide attempt to comply with the statutory requirements of formation of a limited liability company.” Id. at 10. For example, on October 7, 2014, the formation documents for IOENGINE were finalized, executed, and notarized, and its Delaware registered agent was designated. Id. at 9. The court therefore found that IOENGINE was a de facto LLC on October 7, 2014, and denied Imation’s motion to dismiss. Id. at 10.

IOENGINE LLC v. Imation Corp., C.A. No. 14-1571, 14-1572-GMS (D. Del. Jan. 4, 2017).

 

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