PTAB Gives Guidance Regarding What Constitutes A Printed Publication

November 21, 2014

In an IPR petition filed by petitioner C&D Zodiac, Inc., the petitioner sought review of patent owner, B/E Aerospace, Inc.'s U.S. Patent No. 8,590,838, directed to space-saving aircraft enclosures, including lavatories, closets, and galleys. The petition challenged the validity of claims under Section 102 and 103 based on, among other things, a publication entitled McDonnell Douglas DC-10 Customer Configuration Summary (Oct. 1978) referred to as an "Orange Book," presumably because of its orange cover.

The Board granted the petition based on multiple grounds, including the obviousness of the claims in view of a prior art patent to Betts and the Orange Book. Critical to the Board's holding was its determination that the Orange Book satisfied the printed publication requirement for prior art purposes.

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Daubert Challenge to Damage Expert Denied Where Contested Matters Were for Cross-Examination and Not Proper for Exclusion

November 19, 2014

In this patent infringement action, Apple challenged the opinions of the plaintiff's damage expert on several bases, including the determination of a royalty rate based on the price of third-party applications.

First, Apple contended that the expert's, Mr. Bratic's, "analysis is deficient and unreliable because MTEL's technical expert categorically stated that he never evaluated any third party apps." The district court rejected this challenge as the technical expert, Dr. Nettleton, asserted that he did, in fact, have conversations with Mr. Bratic over the course of "two, possibly three, phone calls in fact." The district court also stated that "Apple's complaint that Mr. Bratic is merely 'parroting conclusions' also fails, as even Apple acknowledges that Mr. Bratic 'must ... rely on a technical expert to support his opinion concerning the functionality of the selected third-party apps' since he is not himself a technical expert." Although the district court was sensitive to the "credibility concerns" raised by Apple, it stated that cross-examination was "the ideal vehicle with which to address such concerns."

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Motion to Reconsider Claim Construction Order on Indefiniteness after Nautilus Denied Where District Court Found Term Definite

November 17, 2014

Defendant Stealth Cam, LLC ("Stealth Cam") requested that the district court reconsider its Claim Construction Order holding that the term "extending parallel" was not indefinite.

The district court first noted that under the local rules a party must show "compelling circumstances" to obtain permission to file a motion to reconsider, D. Minn. L.R. 7.1(j), and that a motion to reconsider should not be employed to relitigate old issues, but rather to "afford an opportunity for relief in extraordinary circumstances." Dale & Selby Superette & Deli v. U.S. Dept. of Agric., 838 F. Supp. 1346, 1348 (D. Minn. 1993).

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Motorola: Inventor's Ex-Spouse's Co-Owns the Patent-in-Suit

November 13, 2014

In the matter pending in the Western District of Texas, Katrinecz, et al. v. Motorola Mobility LLC, Motorola moved to dismiss the complaint for lack of subject matter jurisdiction. In its complaint, the plaintiffs alleged that Motorola infringed U.S. Patent No. 7,284,872 entitled "Low power, low cost illuminated keyboards and keypads." The '872 patent lists Plaintiffs Katrinecz and Byrd as the inventors. In April 1997, the plaintiffs conceived of a keyboard invention and during the summer of 1997 they developed prototypes. In October 1997, they engaged attorneys and filed their first patent application for the invention on August 26, 1998.

During this time, on August 11, 1998, Katrinecz and his spouse executed a Marital Settlement Agreement dissolving their nine-year marriage. The Florida State court rendered a Final Judgment Dissolving Marriage on September 17, 1998. Motorola contended that the invention of the '872 patent was developed during the marriage and thus should be considered personal property subject to equitable distribution upon dissolution of the marriage. Motorola further asserted that "when a marital settlement agreement fails to address personal property, that property is co-owned by both spouses by operation of law upon entry of final judgment dissolving the marriage." Consequently, because the Agreement did not expressly address the disposition of the rights to the invention, Motorola argued that the rights became co-owned by the inventor and his ex-spouse upon entry of the final judgment on September 17, 1998. Because the ex-spouse co-owned the patent when it issued and because she was not a party to the action, the court lacks subject matter jurisdiction and must dismiss the case.

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Defendant Ordered to Provide Access to Licensee Websites

November 12, 2014

BNB Health Grades, Inc. ("Health Grades") filed a patent infringement action against MDx Medical, Inc., d/b/a Vitals.com ("MDx"). During the litigation, Health Grades identified licensing agreements and associated systems that it contended could support additional contentions relating to Health Grades' claim for indirect infringement." After MDx declined to produce the additional information, Health Grades filed a motion to compel.

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Apple Motion to Stay Litigation Pending an IPR Is Denied by the District Court for the Northern District of California

November 11, 2014

In the matter pending in the Northern District of California, Aylus Networks, Inc. v. Apple, Inc., Apple moved to stay the litigation pending inter partes review of the patent-in-suit. On October 9, 2013, plaintiff Aylus Networks filed suit against Apple for infringement of U.S. Patent No. RE44,414. On September 29, 2014, Apple filed two petitions for inter partes review of the '414 patent. On September 30, 2014, Apple filed the instant stay motion.

The Court began by reciting the applicable law, particularly in cases such as this one where the motion to stay was sought before the PTAB instituted any proceedings against the patent-in-suit:

Courts have inherent power to manage their dockets and stay proceedings, including the authority to order a stay pending conclusion of a PTO reexamination." Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988) (citations omitted). However, a "court is under no obligation to delay its own proceedings" where parallel litigation is pending before the PTAB. See Robert Bosch Healthcare Systems, Inc. v. Cardiocom, LLC, C-14-1575 EMC, 2014 WL 3107447 at *2 (N.D. Cal. Jul. 3, 2014). This is especially true when the Patent Office has yet to decide whether to institute IPR proceedings. See, e.g., VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1315-16 (Fed. Cir. 2014) (noting that the case for a stay is "stronger after post-grant review has been instituted"); Loyalty Conversion Sys. Corp. v. American Airlines, Inc., 13-CV-665, 2014 WL 3736514 at *1-2 (E.D. Tx. Jul. 29, 2014) (Bryson, J.) (noting that the "majority of courts . . . have denied stay requests when the PTAB has not yet acted on the petition for review").

In determining whether to stay this litigation, the Court considers three factors: "(1) whether discovery is complete and whether a trial date has been set; (2) whether a stay will simplify the issues in question and trial of the case; and (3) whether a stay would unduly prejudice or present a clear tactical disadvantage to the non-moving party." Robert Bosch, 2014 WL 3107447 at *3 (citation omitted).

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Production of Billing Statements from Law Firm Denied Even Though Deponent Could Not Recall Details of Why Information Was Not Disclosed to PTO

November 10, 2014

The defendants in this patent infringement action sought the production of certain billing statements of the law firm representing CleanTech. The defendants argued that the billing statements were discoverable based on their inequitable conduct defense because a witness was unable to recall why certain information was not disclosed to the Patent and Trademark Office ("PTO") during his deposition. Defendants asserted that the billing statements could supply the information the deponent was not able to recall.

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District Court Precludes Deposition of In-House Counsel Who Acted as Part of Trial Team Even Though Counsel Had Relevant, Non-Privileged Conversations Regarding Indemnity

November 5, 2014

After plaintiff, McAirlaids, requested the deposition of one of Kimberly-Clark's ("K-C") in-house litigation counsel, K-C filed a motion for a protective order pursuant to Fed. R. Civ. P. 26(c) to preclude the deposition of its in-house counsel, Vicki Margolis ("Margolis"), who is an active member of its trial team. Counsel for McAirlaids requested the deposition of Margolis largely because she sent and received indemnification correspondence with K-C's manufacturer, Beijing Beishute ("BB"), which McAirlaids asserted was highly relevant to the case.

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PTAB: Claims for Method of Authenticating a Website are Patentable under Alice and Section 101

November 4, 2014

In a CBM petition filed by petitioners PNC Bank, U.S. Bank, and Bancorp, the petitioners sought review of U.S. Patent No. 7,631,191, which claims a method of authenticating a web page. The petition challenged the validity of claims under Section 101, 103 and 112.

After finding that the '191 patent was a covered business method patent, the Board turned to the challenge under Section 101. Reciting the well-known categories of patentable subject matter under Section 101, including "process, machine, method of manufacture, or composition of matter," the Board further explained that "[t]here are, however, three limited, judicially-created exceptions to the broad categories of patent-eligible subject in § 101: laws of nature; natural phenomena; and abstract ideas. Mayo Collaborative Servs. V. Prometheus Labs., Inc., 132 S. Ct. 1289, 1293 (2012)." Citing Bilski v. Kappos, 130 S. Ct. 3218, 3222, the Board explained that this test for patent-eligible under § 101 is "not amenable to bright-line categorical rules."

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District Court Denies Motion to File Amended Complaint to Add Direct Infringement Claim

November 3, 2014

Plaintiff Kaneka Corporation ("Plaintiff") filed a patent infringement against SKC Kolon PI, Inc. ("SKPI" or "Defendant") and SKC, Inc. ("SKC America"). After the district court issued a scheduling order setting, among other things, a final day to amend pleadings, the Plaintiff moved for leave to amend its first amended complaint on the final day and the district court granted leave to amend, permitting the Plaintiff to file a second amended complaint. The parties subsequently filed cross motions for summary judgment.

While the summary judgment motions were pending, Plaintiff filed another motion for leave to amend the operative complaint. Although Plaintiff's first amended complaint stated claims of direct infringement against Defendant SKPI, the second amended complaint omitted those claims. In its motion for leave, Plaintiff contended it inadvertently deleted those claims and moved for leave to amend to reinsert them.

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Reliance on the Same Prior Art Dooms Medtronic's Attempt to Correct its Previously Rejected IPR Petition

October 31, 2014

In IPR proceeding involving Medtronic, Inc. v. NuVasive. Inc., the petitioner, Medtronic, file a petition seeking review of U.S. Patent No. 8,361,156 relating to a spinal implant and methods of spinal fusion using the implant. The petition was Medtronic's third IPR petition challenging the validity of claims in the '156 patent. One of the two earlier petitions was granted while the other was denied. According to Medtronic, the instant petition "remedies the deficiencies of the [earlier denied] petition, and also adds new arguments and evidence as to the length disclosure of [prior art publication to Frey]."

In its preliminary response, the patent owner argued that the petition "is essentially a duplicate of its previously denied petition." As summarized below, the Board agreed with the patent owner and denied Medtronic's third challenge to the validity of claims of the '156 patent based on "the same or substantially the same prior art or arguments" presented in the earlier, denied petition.

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District Court Denies Daubert Motion Based on VirnetX as Exceeding the District Court's Role as Gatekeeper

October 29, 2014

In this patent infringement action, Adobe filed a Daubert motion seeking to exclude the plaintiff's damage expert largely based on VirnetX, Inc. v. Cisco Sys., Inc., 2014 WL 4548722 (Fed. Cir. Sept. 16, 2014). As explained by the district court, "Adobe does not seriously challenge Mr. Yurkerwich's qualifications as an economist. Nor does it question the fundamental approach he has taken in arriving at an estimation of the value of the royalties lost to EveryScape as a result of the alleged infringement. The "hypothetical willing buyer-willing seller" model is a standard economic tool that has been used by economists and appraisers for decades in determining the estimated value of lost economic opportunities."

Instead, Adobe challenged that "Mr. Yurkerwich has overvalued the revenue and royalty base apportionable to Vanishing Point by considering Vanishing Point as a whole rather than segregating the incremental value added to Photoshop by the accused Clone Brush (which EveryScape claims as its proprietary invention). Adobe relies specifically on VirnetX, Inc. v. Cisco Sys., Inc., 2014 WL 4548722, at *15-18 (Fed. Cir. Sep. 16, 2014), which holds that a damages expert must attempt to apportion value specifically to the infringing features of the contested product."

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Controlling, or Having the Ability to Control, the Preparation of a Petition Leads to a Finding that the Non-Party Is a Real Party-In-Interest and that the Petition is Time Barred

October 28, 2014

In IPR proceeding First Data Corporation v. Cardsoft (Assignment for the Benefit of Creditors), LLC, the petitioner, First Data Corporation, attempted to file a petition on April 30, 2014 seeking review of U.S. Patent No. 6,934,945 assigned to Cardsoft (Assignment for the Benefit of Creditors), LLC. On May 20, 2014, the petitioner filed a corrected petition to address certain formatting issues, but, in doing so, also served the petition on the patent owner of record at the address listed in the USPTO PAIR records rather than the patent owner's corporate address, the address where the original petition was served. On August 7, 2014, the patent owner filed its preliminary response, raising the defense that the petition was time barred under Section 315(b) because the real party in interest, VeriFone, was served with a complaint more than one year before the May 20, 2014 filing of the petition.

In 2008, the patent owner has sued VeriFone alleging infringement of the '945 patent. On June 8, 2012, a jury determined that VeriFone infringed the '945 patent and that the patent was valid. That decision was appealed to the Federal Circuit.

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District Court Grants Motion to Compel Internal Counsel Communications of Plaintiff That Did Not Pertain to Litigation

October 27, 2014

Dell moved to compel the production of certain internal counsel communications at the plaintiff, MLR. MLR had refused to produce the documents, claiming work product protection.

As explained by the district court, "[i]n the circumstances presented here, which are the result of MLR's choices, the established policies underlying the work product doctrine require that the phrase 'in anticipation of litigation' in Fed. R. Civ. P. 26(b)(3)(A) be limited, with respect to non-opinion material, to material generated solely with respect to MLR's relationship with a particular potential licensee/defendant beginning at the time that potential licensee/defendant is identified. Other or more general relationship to litigation will render the material presumptively business-related and not protected."

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The PTAB Authorizes the Patent Owner to File Its Motion for Leave to Take Discovery of General Electric on Possible Privity with a Customer-Defendant

October 23, 2014

In General Electric Co. v. Transdata, Inc., the patent owner requested authorization to file a motion for leave to take discovery of petitioner General Electric regarding whether GE is in privity with a defendant in litigation with the patent owner. Should the patent owner prevail and prove that GE is in privity with its customer, then the patent owner asserts that an inter partes review cannot be instituted because of the time limitations under 35 U.S.C. § 315(b), presumably because GE's customer was served with a complaint more than one year before the petitioner filed the instant IPR petition.

The patent owner seeks the production of the following information:

(1) an indemnification agreement between Petitioner and [customer] that was claimed to be entered into around December 30, 2011; (2) any other indemnification agreements between Petitioner and [customer] regarding the Oklahoma litigation; (3) communications regarding these indemnification agreements; (4) retention agreements between Petitioner, [customer], and counsel for Petitioner and [customer] in the Oklahoma litigation; (5) the amounts of legal bills paid by Petitioner for its defense of the Oklahoma litigation; and (6) indemnification agreements between Petitioner and other defendants in the Oklahoma litigation.

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