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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District Court Precludes Admission of Inter Partes Review Proceedings in Front of Jury But Permits Consideration as part of Willfulness Determination

October 22, 2014

In this patent infringement action between Ultratec, Inc. ("Ultratec") and Sorenson Communications, Inc. ("Sorenson"), Sorenson sought to admit evidence of an inter partes review proceeding of the patent-in-suit. Sorenson wanted to admit the evidence to contradict the plaintiff's use of the presumption of validity of the patent.

As explained by the district court, "[a]t the final pretrial conference on October 3, however, defendants expressed their view that, in light of the court's ruling that it would instruct the jury on the presumption of validity and allow plaintiffs' counsel to refer to the presumption during argument, evidence as to the pending inter partes review proceedings is relevant and admissible to rebut the presumption of validity."

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PTAB Requires the Patent Owner to Attend Oral Argument

October 21, 2014

In Butamax Advanced Biofuels, LLC v. Gevo, Inc., the patent owner requested permission to be excused from the oral hearing. The patent owner cited the expense of having counsel prepare for and attend the hearing. Instead, the patent owner preferred to rest on its written response to the petition. The patent owner did not request that the Board cancel the oral hearing, which had been requested only by the petitioner. Having requested the hearing, the Board held that the petitioner had a statutory right to a hearing. The Board also emphasized that a hearing would be helpful to the Board to answer questions it may have regarding the issues presented in the proceeding.

The Board instead raised the possibility of attendance via telephone. The patent owner declined this option again citing the financial burden of preparing for and participating in the hearing. The Board stressed its expectation that "counsel will attend all proceedings which may materially affect [the patent owner's] interests." However, the Board allowed that at the hearing counsel for patent owner could choose to rest on the submitted briefs and not make oral argument. The Board also offered to allow backup counsel to attend the hearing in place of its lead counsel.

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Fujitsu v. Tellabs: The District Court Orders Additional Sanctions for Fujitsu's Continued "Contemptuous Conduct"

October 20, 2014

Following the district court's previous order granting a motion to compel against Fujitsu, and Fujitsu's unsuccessful appeal to the Federal Circuit, the district court ordered sanctions in the form of a civil penalty. As the district court explained, the civil penalty was designed to provide an incentive to motivate the Fujitsu Entities to comply with the district court's orders.

The district court was less than impressed with Fujitsu's response. "After stalling for months following Judge Cole's 7/25/2014 order with meritless objections, overruled by this court on 8/19/2014, and an even more meritless mandamus attempt denied by the Federal Circuit yesterday, Fujitsu's counsel cavalierly concludes 'Fujitsu's Response' with 'Fujitsu expects to have the translations ready for production by Friday, October 10, 2014.'

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The PTAB Warns Attorney That Speaking Objections May Warrant Exclusion of Expert's Testimony

October 17, 2014

In an inter partes review Medtronic Inc. et al. v. Troy R. Norred, M.D., the Petitioner sought guidance from the Board regarding the Patent Owner's objections during the deposition of an expert appearing on behalf of the Patent Owner. According to the Petitioner, the Patent Owner made speaking objections and suggested answer to the witness. For example, petitioner read a representative example of Patent Owner's objection, which began "'Objection, misleading . . .' and then went on to explain at some length that the question was misleading because it asked for a conclusion from the witness based on only a portion of a patent that Patent Owner contends was 'taken out of context.'"

The Board began its analysis by reciting the Patent Trial Practice Guide's instructions regarding the proper method of objecting during a deposition:

Consistent with the policy expressed in Rule 1 of the Federal Rules of Civil Procedure, and corresponding § 42.1(b), unnecessary objections, "speaking" objections, and coaching of witnesses in proceedings before the Board are strictly prohibited. Cross-examination testimony should be a question and answer conversation between the examining lawyer and the witness. The defending lawyer must not act as an intermediary, interpreting questions, deciding which questions the witness should answer, and helping the witness formulate answers while testifying.

* * *

3. An objection must be stated concisely in a nonargumentative and non-suggestive manner. Counsel must not make objections or statements that suggest an answer to a witness. Objections should be limited to a single word or term. Examples of objections that would be properly stated are: "Objection, form"; "Objection, hearsay"; "Objection, relevance"; and "Objection, foundation." Examples of objections that would not be proper are: "Objection, I don't understand the question"; "Objection, vague"; "Objection, take your time answering the question"; and "Objection, look at the document before you answer." An objecting party must give a clear and concise explanation of an objection if requested by the party taking the testimony or the objection is waived.

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E.D. Texas court grants stay of litigation pending an IPR based, in part, on patent owner's failure to timely respond to the stay motion

October 16, 2014

In Norman IP Holdings v. TP-Link Technologies, Co., et al., the Defendants moved to stay the litigation pending completion of an inter partes review involving the patents-in-suit. The plaintiff did not respond to the motion. Thereafter, the court granted the motion and stayed the litigation pending completion of the IPR involving claim 6 of the '597 Patent.

Plaintiff's complaint alleges ADTRAN infringes U.S. Patent Nos. 5,502,689 (the "'689 Patent"), 5,530,597 (the "'597 Patent"), and 5,592,555 (the "'555 Patent"). Specifically, the plaintiff asserts claims 5 and 6 of the '689 Patent, claims 1-6, 10, and 11 of the '597 Patent, and claims 10, 12, and 51 of the '555 Patent against ADTRAN, the sole remaining defendant at the time the court decided the stay motion. The court noted that there have been 10 petitions for post-grant review of the three patents asserted by Norman. A total of 33 separate claims from the asserted patents have been canceled in the four proceedings that have been completed. The remaining six proceedings were pending at the time of the filing. In concurrent litigation, Norman alleged Nissan North America, Inc. ("Nissan") infringes the same asserted claims of the '689 and '597 patents. Nissan filed a petition for IPR as to claim 6 of the '597 patent and claims 5 and 6 of the '689 patent. On September 23, 2014 PTAB granted Nissan's petition for IPR as to the asserted claims in the '689 and '597 patents. During the October 7, 2014 hearing ADTRAN agreed, if the court granted a stay of the present litigation, "to be estopped as to invalidity contentions raised and adjudicated in the [Nissan] IPR proceedings."

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Fujitsu v. Tellabs: Fujitsu Appeal's Decision on Motion to Compel and, After It Loses on Appeal, District Court Orders a Civil Penalty Which Doubles Each Day Documents Are Not Produced

October 15, 2014

In this patent infringement action, the district court granted a motion to compel filed by Tellabs against Fujitsu. Fujitsu then filed a petition for a writ of mandamus with the Federal Circuit to overturn the decision of the district court.

The Federal Circuit promptly denied the writ of mandamus as Fujitsu had to establish a "clear and indisputable" right to relief and that it "lack[ed] adequate alternative means to obtain the relief" that it sought. Cheney v. U.S. Dist. Court, 542 U.S. 367, 380-81 (2004) (internal citations omitted).

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Inducing Infringement Claim Dismissed on Sua Sponte Order Where Alleged Infringer Did Not Perform All Method Steps and Did Not Exercise Direction and Control

October 13, 2014

In this patent infringement action, the district court issued a sua sponte order requiring plaintiff to show why its inducing infringement claims should not be dismissed as a matter of law. After addressing the United States Supreme Court's recent decision in Limelight, the district court noted that no single party performed all of the steps of the method in the patent-in-suit.

As noted by the district court, "[e]ach of the method claims presented by the '835 and '740 patents specifies that some method steps are to be performed by the 'assisted user,' while other steps are to be performed 'at the relay.' Conceding that no single party actually performs every step of the claimed methods, plaintiffs seek to establish that defendants' customers (the 'assisted users') direct and control defendants in performing those steps to be performed 'at the relay' such that the performance of all of the steps of the method can be attributed to the assisted users."

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The PTAB finds that the petitioner did not show that a patent claiming internet-based transactions is not a technological invention and denied CBM review on that basis

October 9, 2014

In GSI Commerce Solutions, Inc. v. Lakshmi Arunachalam, GSI filed a petition seeking covered business method patent review of U.S. Patent No. 8,346,894 relating to "facilat[ing] real-time two-way transactions, as opposed to deferred transactions, e.g., e-mail." CBM2014-00101. The Petitioner filed its petition seeking invalidity based on lack of written description, lack of enablement, indefiniteness and obviousness. On October 7, 2014, the Board denied the CBM review finding that the petitioner failed to establish that the claimed inventions were not technological inventions under 37 C.F.R. § 42.301(a). Notably, the Board's decision was made without any briefing from the patent owner on this issue, who elected not to file a preliminary response.

In reaching its decision to deny CBM review, the Board rejected the petitioner's argument that the '894 patent does not recite a technological invention because "claim 2 recites only known technologies, such as a processor, a machine readable storage device, a signal, an application, a network, the Web, an object, and a data structure." The petitioner further argued that the '894 patent recites a combination of structures that achieve normal, expected and predictable results by "allowing a user to complete from a Web application the types of transactions he or she can already perform in person."

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Motion to Strike Expert Testimony Denied Even Though Expert Had Never Used Product and Examined Only Selected Pieces of Source Code

October 8, 2014

In this patent infringement action, the defendant moved to exclude portions of the plaintiff's (Dr. Bambos') expert testimony. Defendant argued that Dr. Bambos lacks familiarity with the infringing products, relied too heavily on someone else to provide him with relevant segments of source code to review, and used the district court's claim construction to determine how the products work.

In analyzing the motion, the district court noted that "Dr. Bambos never used the allegedly infringing products, but his expert opinion was based on 'thousands of pages of technical manuals, source code, and depositions transcripts.' (D.I. 221 at p.1) (See D.I. 221-4 at 3-6; D.I. 221-3 at 2-5). Rule 702 requires that expert testimony be based on "sufficient facts or data." Dr. Bambos need not use the product if, as here, he has familiarized himself with it in other ways. Reviewing source code and other materials can be sufficient."

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PTAB - Ford is not barred from challenging a patent on a hybrid vehicle based on the unproven assertion that it breached an agreement not to challenge the patent

October 7, 2014

In Ford Motor Company v. Paice LLC & The Abell Foundation, Inc., Ford filed a petition seeking inter partes review of U.S. Patent No. 8,214,097 relating to a hybrid vehicle having, among other things, both an internal combustion engine and an electric motor. IPR2014-00570. On September 30, 2014, the Board instituted a trial on the '097 patent, finding that Ford's petition demonstrated that there was a reasonable likelihood that it would prevail in showing unpatentability of claims 30-33, 35, 36 and 39 of the '097 patent. The Board denied review (on both anticipation and obviousness grounds) as to claim 38, which requires that the battery supply power to the electric motor "at a peak of at least 500 volts under peak load conditions."

In reaching its decision to institute a trial, the Board rejected Paice's argument that Ford is barred or estopped under 37 C.F.R. § 42.104(a) from requesting an inter partes review due to an alleged breach of an arbitration agreement between the parties. "According to Paice, the arbitration agreement includes 'unambiguous terms' that purportedly limit Ford's ability to 'challenge the claims of the '097 patent.'" Paice argues that Ford is in breach of those terms and therefore failed to demonstrate that it had the requisite standing to file the instant petition.

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Court Denies Motion to Compel Deposition Testimony on Overly Broad 30(b)(6) Topics and on "Contention" Topics

October 6, 2014

In this patent infringement action brought by Trustees of Boston University ("BU"), BU alleged that defendants infringed U.S. Patent No. 5,686,738 (the "'738 Patent"), which centers on light emitting diodes ("LEDs") and the technology behind them. BU moved for an order compelling defendant Epistar Corporation ("Epistar") to designate new Rule 30(b)(6) deponents on certain deposition topics.

As explained by the court, Rule 30(b)(6) requires the noticing party to describe the topics of examination with "reasonable particularity." Fed. R. Civ. P. 30(b)(6). If the noticing party does not describe the topics with sufficient particularity or if the topics are overly broad, the responding party is subject to an impossible task. McBride v. Medicalodges, Inc., 250 F.R.D. 581, 584 (D. Kansas 2008). To avoid liability, the noticed party must designate persons knowledgeable in the areas of inquiry listed in the notice. Id. Accordingly, if the noticed party cannot identify the outer limits of the topics noticed, compliant designation is not feasible. Id.; see also Newman v. Borders, Inc., 257 F.R.D. 1, 3 (D.D.C. 2009).

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PTAB - Trulia and Zillow possible merger is not a sufficient basis for extending the 12 month period to complete the trial

October 2, 2014

In Trulia, Inc. v. Zillow, Inc., Trulia filed a petition seeking covered business method review of U.S. Patent No. 7,970,674 relating to automatically determining a current value for a real estate property. CBM2013-00056. On March 10, the Board instituted a trial on the '674 patent and set a hearing date of November 19, 2014. On July 28, 2014, the Parties publicly announced a merger, which is expected to close sometime in 2015. However, the merger is currently pending review by the FTC, whose review is dictated by the Hart-Scott-Rodino Antitrust Improvements Act under 15 U.S.C. § 18(a). Under this section the initial waiting period expired on September 3, 2014.

In light of the merger, on August 18, the parties filed a joint motion to request to extend the dates by one year, but no less than six months in view of the FTC's review and expected approval of the merger. The PTAB asked the parties to supplement their motion after the expiration of the initial waiting period. On September 3, the FTC extended the waiting period in a second request for information regarding the merger. On September 12, the parties filed a supplemental notice to provide additional information requested by the Board, including whether the extent to which the parties are bound by the merger agreement and an explanation regarding why the parties are unable to settle this proceeding in an agreement that takes into account the likelihood of FTC approval. Following the Parties' submission, the Board denied both a 1-year extension and an extension of six months.

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Laches Defense Denied Where Texas Instruments Failed to Produce Products that Demonstrated Notice During Discovery and Texas Instruments Failed to Make Showing of Economic Prejudice

October 1, 2014

At the end of trial, the Defendant, Texas Instruments Incorporated's ("TI"), pursued its equitable defense of laches, the only remaining issue left in this patent infringement case. The district court conduced an evidentiary hearing on laches at which the district court heard the live testimony of five witnesses and also accepted deposition designations, prior trial testimony, and exhibits to consider separate from the live testimony.

As explained by the district court, "[t]he equitable defense of laches may be available where the plaintiff unreasonably delayed filing its infringement suit. See A.C. Aukerman Co. v. R.L. ChaidesConstr. Co., 960 F.2d 1020, 1032 (Fed. Cir. 1992) (en banc). The defense is applicable where the accused infringer proves two things: (1) 'the plaintiff delayed filing suit for an unreasonable and inexcusable length of time from the time the plaintiff knew or reasonably should have known of its claim against the defendant,' and (2) the defendant suffered material prejudice as a result of the delay Id. at 1032. The defendant must prove delay and prejudice by a preponderance of the evidence. Id. at 1045."

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The PTAB rejects Microsoft's attempt to institute an IPR proceeding almost 7 years after being served with a complaint involving the patent-at-issue

September 30, 2014

In Microsoft Corporation v. Virnetx Inc., Microsoft filed a petition seeking inter partes review of U.S. Patent No. 7,188,180 ("the '180 patent") on May 19, 2014. The '180 patent was asserted in a complaint for VirnetX Inc. v. Microsoft Corp., Case No. 6:07-cv-00080 (E.D. Tex. filed April 5, 2007) ("the 2007 complaint"), and a complaint for VirnetX Inc. v. Microsoft Corp., Case No. 6:10-cv-00094 (E.D. Tex. filed March 17, 2010) ("the 2010 complaint"). The '180 Patent also is involved in VirnetX Inc. v. Microsoft Corp., Docket No. 6:13-cv-00351 (E.D. Tex.) ("the 2013 complaint") as well as other pending litigation, two inter partes reexaminations (one concluded and one pending), and a second, concurrently filed inter partes review.

The issue before the Board was whether Section 315(b)'s one year time limitation to file a petition after being served with a complaint barred Petitioner's IPR in light of the 2007 and 2010 complaints or whether the time should run from the service of the 2013 complaint:

Petitioner was served with a complaint alleging infringement of the '180 patent on three occasions. The first complaint (i.e., the 2007 complaint) was served on April 5, 2007, and the second complaint (i.e., the 2010 complaint) was served on March 17, 2010. The 2007 complaint and the 2010 complaint were both served more than one year prior to the date on which the Petitioner filed the present Petition requesting inter partes review (February 4, 2014). The third complaint (i.e., the 2013 complaint) was served less than one year prior to the date on which the Petitioner filed the present Petition requesting inter partes review...As described above, 35 U.S.C. § 315(b) states that an inter partes review may not be instituted if the petition is filed more than one year after the date of service on Petitioner of a complaint alleging infringement of the patent.

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