July 2011 Archives

Delaware District Court Grants Motion to Transfer Even Though Transferee Court Did Not Have Personal Jurisdiction over the Plaintiff

July 29, 2011

Plaintiff brought suit in the United States District Court for the District of Delaware against defendants asserting declaratory judgment, antitrust, Lanham Act and state tort claims based on two patents co-owned by the defendants. The defendants moved to transfer the case to the United States District Court for the Central District of California, primarily because a related case involving the same patents was in the Central District. The District Court granted the motion to transfer.

In opposing the motion to transfer, the plaintiff argued that the case could not be transferred to the Central District of California because the Central District did not have personal jurisdiction over the plaintiff. In rejecting this contention, the district court noted that Section 1404(a) requires that "the party moving for transfer bear the burden of proving that the action properly could have been brought in the transferee court in the first instance."

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Delaware District Court Stays Patent Lawsuit Pending Reexamination in the Patent and Trademark Office

July 27, 2011

In a recent case in the United States District Court for the District of Delaware, the district court stayed a patent infringement case pending reexamination of the patent in the Patent and Trademark Office ("PTO"). Defendant filed a motion to stay the case in light of an inter partes reexamination of the patent-in-suit that was granted by the PTO, arguing that the reexamination will simplify the issues before the parties and the court because "75% of all reexaminations granted from 1981 through June 30, 2009 have resulted in either the cancellation of all claims or at least some claims." Plaintiff opposed the motion as a "delay tactic," contending that "recent trends in inter partes reexaminations indicate that only 24% of reexaminations result in the cancellation of all patent claims at issue and that inter partes reexamination proceedings can last six to eight years."

First, referring to Fed.R.Civ.P. 26(c) and noting that a district court may impose a stay of discovery on a showing of good cause, the district court stated that "[s]pecifically, a court has broad discretion to stay a case pending reexamination." Second, the district court found that granting a stay would not cause undue prejudice to the plaintiff or allow the defendant to gain a clear tactical advantage.

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Transfer Motion Denied Where Defendants Did Not Show That Case Could Have Been Filed in Proposed Transferee Jurisdiction

July 25, 2011

Defendants moved to transfer a multi-defendant patent infringement case from the Eastern District of Texas to the Eastern District of Michigan. The defendants asserted that transfer was appropriate under 28 U.S.C. §1404(a) due to factors of convenience. The plaintiff opposed the motion on the ground that the defendants had not shown that the case could have originally been filed in the Eastern District of Michigan. The court agreed with the plaintiff and denied the motion to transfer.

The court began its analysis by examining whether the action could have originally been filed in the Eastern District of Michigan. Noting that "[w]ell established authority makes clear that a transferee court must have specific jurisdiction over the defendants in the transferred complaint," the court found that the moving parties had not established that the case could have been brought in Michigan. The court stated that the moving parties had attempted to establish jurisdiction over all the defendants in Michigan by arguing a stream of commerce theory, i.e., that defendants products were sold in the state of Michigan.

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Dismissal of Indirect and Joint Infringement Appropriate Where Plaintiff Failed to Plead Sufficient Facts to Establish Knowledge and Control or Direction

July 22, 2011

Plaintiff filed a patent infringement suit against 17 defendants alleging direct, indirect and joint infringement. The defendants moved to dismiss for failure to state a claim. The district court granted the motions to dismiss the joint infringement and indirect infringement claims, but denied the motions to dismiss the direct infringement claims.

The patent-in-suit discloses a data processing station subscriber unit that delivers interactive or television-quality entertainment and informational content to subscribers. Each of the independent claims include a limitation requiring a plurality of sources of video text and television program channels available from a wireless television program communication network.

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Trial By Ambush Not Tolerated In Texas

July 21, 2011

A Texas Court recently granted a plaintiff's motion to strike the defendant's non-infringement theory based on the defendant's failure to previously disclose it. At trial, the defendant attempted to elicit testimony from the plaintiff's expert witness that the accused website did not infringe, in light of the way it operated. Because the defendant had not previously disclosed this theory of non-infringement at any time before trial, the plaintiff moved to strike this testimony. In granting the plaintiff's motion, the Texas court rejected the defendant's argument that it was not required to disclose its non-infringement theory because the plaintiff bears the burden of proving infringement.

In its opinion, the Court reiterated the long held liberal discovery policies in the Eastern District of Texas: "[t]he Eastern District of Texas is well known for it liberal discovery policies and its high expectations that the parties and their counsel be forthcoming in their discovery obligations. Under the Court's Discovery Order, requests for production are not required; parties are expected to produce all relevant documents without formal requests for production. These policies promote efficient dispute resolution and avoid trial by ambush."

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Motion to Dismiss Denied Under Bilski Where Plaintiff Contended That a Computer Programmed in a Particular Way Was the Invention Itself

July 20, 2011

Plaintiff's complaint alleged a single count for patent infringement, which asserted that the defendant infringes its patent through the use of an online dating website. The particular feature accused is called "QuickMatch," which notifies two users who demonstrate mutual interest in each other. The patent is directed to a computerized method of notifying individuals of reciprocal interest that offers confidentiality and anonymity. The method described in the patent provides for confidentiality by allowing only the computer system to be aware of each user's expressed interests until the computer determines that there is mutual interest.

The defendant moved to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. The defendant based its argument on the United States Supreme Court's recent decision in Bilski v. Kappos, 130 S.Ct. 3218 (2010). The defendant argued that the subject matter of the patent is an abstract idea not eligible for patent protection, asserting that the invention is the idea of having an intermediary determine whether two people (or other entities) may be interested in one another and, if so, introducing the two. Defendant also argued that the patent preempts a broad range of human activity including match-making, headhunting and silent auctions.

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Damage Experts' Opinions Excluded Where Experts Did Not Establish Link Between License and the Patent-In-Suit

July 18, 2011

In a recent decision from the United States District Court for the Eastern District of Texas, the court granted in pat and denied in part plaintiff's motion to exclude the expert testimony of defendants' damage experts. Plaintiff argued that the opinions of defendants' experts were unreliable and used flawed methodologies because they failed to establish that the license agreement upon which their analyses were based were comparable to the technology of the patent-in-suit.

With respect to defendants' first expert, the district court noted that the expert had not attempted to establish a link between the technology underlying the first license and the technology underlying plaintiff's patent. But the court noted that the expert testified he had relied upon the defendants' technical expert to learn than that the technology in the first license agreement is more important, in the opinion of the technical expert, than the technology covered by plaintiff's patent. The court found that this testimony and reliance was sufficient to provide a link between the technology underlying the first license and that underlying plaintiff's patent and, accordingly, denied that part of the motion.

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First-Filed Declaratory Judgment Action Dismissed in California Where Florida Court Was Already Familiar with Patents-in-Suit

July 15, 2011

Plaintiff filed a declaratory judgment action in California seeking to invalidate defendant's patents and for a declaration that it did not infringe the patents. The defendant responded by filing a patent infringement lawsuit in Florida in the same court where it had previously filed and litigated a patent infringement matter on three of the four patents at issue in California against an unrelated party. In ruling on defendant's motion to dismiss the declaratory judgment action, the district court sided with the defendant and dismissed the declaratory judgment action in California even though it was filed before the patent infringement action.

The defendant was a resident of Florida, who owned a patent portfolio pertaining to Ground Data Link ("GDL") technology that collects flight performance data from aircraft and transmits that information wirelessly to ground-based systems. Defendant had licensed its technology to various companies and also had engaged in prior litigation over its patents in Florida, including proceeding through claim construction and obtaining a jury verdict of infringement of its valid patents.

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Review Your Assignment Agreements Now -- United States Supreme Court Re-Affirms that Inventors Own Their Inventions

July 13, 2011

In a much anticipated decision, the United States Supreme Court confirmed that, absent a valid assignment agreement, inventors own their invention -- even if federal funding was used to support the research efforts. The decision in Leland Stanford Junior Univeristy v. Roche Molecular Systems, Inc. held that under the Patent Act an inventors owns his or her invention in the first instance and only a valid and binding assignment agreement is effective to transfer ownership from the inventor.

The decision let stand the Federal Circuit's ruling that Stanford University did not obtain the patent rights from one of its research scientists when it used an assignment agreement stating that the research scientist "agrees to assign" all of his future inventions. Rather, Roche obtained the rights in a subsequent agreement because it used the language "do hereby assign." The Federal Circuit has now held on a number of occasions that the language "agree to assign" is a mere promise to assign in the future and requires a subsequent act, while the language "do hereby assign" is effective immediately upon the creation of the future invention without any additional act on the part of the assignee.

The Supreme Court held that the Bayh-Dole act for funding did not change this result as it did not contain any language to trump the Patent Act, which makes clear that an inventor owns the invention unless there is a valid assignment to the contrary. The Supreme Court noted that the Federal Circuit's decision on the distinction between "agree to assign" and "do hereby assign" was not before it as Stanford University did not file its cert petition on that basis. Accordingly, the Supreme Court did not address this issue and let stand the Federal Circuit's decision, although it did leave open the possibility of addressing this issue in the future.

As a result, the Federal Circuit's decision on "agree to assign" stands and companies should immediately review their assignment agreements to determine if they have used the "agree to assign" language. If the "agree to assign" language was used in the past it should be changed immediately to the more favored "do hereby assign" and action should be taken immediately to remedy the problems that may have been created from the "agree to assign" language. Otherwise, the company may lose inventions that it believed it owned.

Please click on the link for a more detailed discussion of the Roche case.

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The authors of www.PatentLawyerBlog.com are patent litigation lawyers at Jeffer Mangels Butler & Mitchell LLP. We represent inventors, patent owners and technology companies in patent licensing and litigation. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.

Patent Infringement Action Dismissed for Lack of Personal Jurisdiction Where Patent Infringement Claims Did Not Arise Out of Negotiations for a License

July 11, 2011

The plaintiff filed a patent infringement action against the defendant in the Northern District of Illinois after licensing negotiations fell apart. Defendant, a Delaware corporation, with its principal place of business in Michigan moved to dismiss for lack of personal jurisdiction or, in the alternative, to transfer. The district court granted defendant's motion to dismiss, finding that it lacked personal jurisdiction over the defendant, but it permitted plaintiff to amend the complaint.

The plaintiff, operating out of Illinois, owned four patents pertaining to laser-etching technology, which is used to etch patterns and effects onto a wide range of materials, including fabrics and leather. Defendant sold leather for use in automotive interiors for distribution throughout the United States, including in the district. The parties had worked together since 2004, with the goal of selling leather etched with plaintiff's technology to automotive companies. In 2009, the plaintiff sent defendant some samples on a new etching which the plaintiff alleged defendant converted for its own use and sold to an automotive company. Ultimately, the parties began to negotiate a license to resolve these issues, among others. As part of these negotiations, the parties exchanged e-mails and negotiated by telephone as well. When the negotiations ceased, the plaintiff filed suit for patent infringement, breach of a non-disclosure agreement, and trade secret misappropriation, among other claims. The defendant moved to dismiss or transfer venue.

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Motion to Compel Granted Where Infringement Contentions Were Inadequate to Put Defendant on Notice of Infringement

July 8, 2011

In a recent case from the United States District Court for the Northern District of California, the district court granted a defendant's motion to compel an interrogatory response where the infringement contentions were inadequate to put the defendant on notice of the alleged infringement. The infringement contentions relied on a number of screenshot that referred to a specific configuration file. The defendant argued that the screenshots alone failed to explain how the products as depicted allegedly met the limitations of the asserted claims and that the citations to the documents accompanying the infringement contentions also did not supply the missing information.

The defendant served an interrogatory seeking the missing information. The plaintiff refused to respond to any portion of the interrogatory, asserting that its amended infringement contentions contained screenshots that showed the products at each stage of the infringing processes and that the claim charts also contained a detailed narrative and citations to show the infringing processes. The defendant disagreed, arguing that neither the screenshots nor the narrative disclosed the particular configurations of the accused products and were meaningless without an understanding of the custom configuration of the accused products that were used to produce the screenshots.

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Summary Judgment on Indefiniteness Denied Where Claims Reciting Term of "Engine for" Was Not a Means-Plus-Function Term

July 6, 2011

Defendant contended that several claims of a patent were indefinite under 35 U.S.C. §112, ¶2. The defendant argued that the term "engine for" should be construed under §112, ¶6 because engine is only discussed in functional terms. The defendant also argued that the term "engine for" did not connote sufficient structure because it does not have a well understood meaning in the art. The district court disagreed with both points and denied the motion for summary judgment.

The patent in the case involved the creation of a web-based database application that used a data dictionary. The patent teaches that the data dictionary eliminates the need for a programmer or web-developer, which reduces the cost and time associated with creating a web-based data application. Certain claims of the patent recited "an engine for" performing various tasks, such as "determining and storing" or "building and/or updating and/or running an application." The defendant contended that the "engine for" limitations were indefinite and should be construed as means-plus-function claims. It also contended that the "engine for" terms did not recite particular algorithms that performed the functions and were therefore indefinite.

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Merely Stating That Testing of Potentially Infringing Products Is Expensive Is Not Good Cause To Amend Infringement Contentions Under Northern District of California's Patent Rules

July 5, 2011

Recently, a Court in the Central District of California, applying the Patent Rules from the Northern District of California, held that the plaintiff failed to demonstrate the requisite good cause to amend its infringement contentions to add additional accused products. In particular, Plaintiff Kruse Technology Partnership ("Kruse") sought to add new engines to its infringement contentions based on its recent testing of the engines. In denying Kruse's motion for leave to amend its infringement contentions, the Court took issue with Kruse for failing to explain why it had not tested the accused engines before it filed its infringement contentions. In doing so, the Court held that "[m]erely stating the tests are expensive is insufficient," particularly where Kruse was able to later acquire and test the engines at issue. The Court also noted that Kruse never did disclose the cost of the testing. The Court further rejected Kruse's argument that any disruptions caused by its amended contentions were contemplated by the Patent Rules. The Court found that, while the Patent Rules allow for disruptions caused by timely amending infringement contentions, the disruptions resulting from Kruse's proposed amendments were not contemplated because Kruse was not diligent in discovering the engines it now seeks to add, and thus its amendments were not justified. The Court found that Kruse's failure to move to compel discovery on these engines was further evidence of Kruse's lack of diligence.

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Inequitable Conduct Defense Dismissed for Failure to Plead Sufficient Facts

July 4, 2011

In this case, the defendant asserted a defense of inequitable conduct on the grounds that the inventors of the patent-in-suit were aware of prior art when they prosecuted the patent but failed to disclose that prior art.. On a motion to dismiss the inequitable conduct defense, the United States District Court for the Eastern District of Virginia held that the defendant had plead insufficient factual allegations to support an inequitable conduct defense.

The plaintiff asserted that the defendant had failed to sufficiently plead inequitable conduct because it had not plead that material prior art was withheld, sufficient knowledge of the prior art, and that such prior art was withheld with an intent to deceive the Patent and Trademark Office ("PTO"). The district court started its analysis by noting that inequitable conduct is akin to a claim for fraud and therefore must meet the particularity requirements of Federal Rule of Civil Procedure 9(b) ("In alleging fraud or mistake, a party must sate with particularity the circumstances constituting fraud or mistake.").

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Plaintiff's Expert Precluded from Testifying on Entire Market Value Rule Where Basis for Consumer Demand Was Not Shown

July 1, 2011

In a recent decision from the United States District Court for the Southern District of New York, the district court granted defendant's motion in limine to exclude plaintiff's damage expert's testimony based on the entire market value rule. The district court held that the plaintiff's expert's testimony ran afoul of the Federal Circuit's decision in Lucent Technologies v. Gateway, Inc., 580 F.3d 1301, 1336 (Fed. Cir. 2009).

The district court began its analysis by noting in Lucent that "the Federal Circuit announced that its jurisprudence on the entire market value rule--pursuant to which a patentee assesses damages based on the entire market value of the accused product--was quite clear. For the entire market value rule to apply, the patentee must prove that, 'the patent related feature is the basis for customer demand.'" The district court also noted that in a more recent decision, Uniloc USA, Inc. v. Microsoft, 632 F.3d 1292 (Fed. Cir. 2011), the Federal Circuit "warned against the danger of admitting consideration of the entire market value of the accused product where the patented component does not create the basis for customer demand."

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