August 2011 Archives

Motion for Ongoing Royalty Denied Where Jury Awarded Lump Sum in Verdict

August 31, 2011

Plaintiff Personal Audio, LLC ("Personal Audio") filed a patent infringement action against Apple, Inc. ("Apple") over two patents, which teach an audio program player that will play a sequence of audio program files and accept commands from the user to skip forward or backward in the sequence. After a jury trial, the jury found that the patents were infringed and awarded damages of $8 million in the form of a lump sum royalty.

After the jury verdict, Personal Audio moved for an award of ongoing royalties pursuant to 35 U.S.C. § 283. The district court denied the motion. The district court found that "the jury's lump sum damages award represents a fully paid up license for all past and future sales of Apple products that incorporate the patented technology. The court finds that the $8 million lump sum awarded by the jury adequately compensates Personal Audio for both past and future infringement, and therefore no ongoing royalty award is necessary."

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Wisconsin Court: Absent Unusual Circumstances, Patent Complaint Must Include Identification of Asserted Claims and Accused Product

August 30, 2011

In a patent case filed in the Western District of Wisconsin, Defendant Digecor, Inc. moved to dismiss plaintiff Hunts Point Ventures, Inc.'s complaint for failing to identify the asserted claims or the accused product. In granting the Defendant's motion, the Court (J. Crabb) reiterated her well established practice of requiring such information in a complaint absent the unusual circumstance where the patent contains only a single claim and the defendant makes only a single product.

Judge Crabb acknowledged that it previously has held that a plaintiff's failure to identify the claims or the accused products "places an undue burden on the defendant, who must wade through all the claims in a patent and determine which claims might apply to its product to give a complete response." Moreover, "if a defendant does not have notice of the asserted claims, it has not notice at all. If it does not know what it is accused of infringing , it cannot possibly prepare a defense." Analogizing patent cases to civil rights cases, the Court succinctly explained that "it is the plaintiff's initial burden to inform the defendant what it did to violate the plaintiff's rights."

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Even After Therasense a Defense of Inequitable Conduct Survives Summary Judgment

August 29, 2011

After the Federal Circuit's decision in Thereasense, Inc. v. Becton, Dickinson and Co., 2011 WL 2028255 (Fed. Cir. 2011), it appeared likely that it would be difficult, if not impossible, to proceed on an inequitable conduct claim. A recent decision from the United States District Court for the District of New Jersey may change that trend.

Schering Corp. ("Schering") filed a complaint alleging that Mylan Pharmaceuticals' ("Mylan") Abbreviated New Drug Application ("ANDA") infringed two of Schering's patents that disclosed different ways to reduce cholesterol levels. Schering filed motions for partial summary judgment, one of which sought to eliminate Mylan's defense of inequitable conduct in light of Thereasense. After granting Schering's motion for summary judgment on the issue of infringement, the district court examined the motion addressing the inequitable conduct defense.

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Terminal Disclaimer Renders Patent Unenforceable

August 26, 2011

Plaintiff, Jan Voda, M.D. ("Dr. Voda"), filed a patent infringement action against Medtronic Inc. ("Medtronic") based on a patent that taught how to use a guide catheter to perform angioplasty of the left coronary artery. After Dr. Voda filed an amended complaint adding an additional patent, Medtronic moved to dismiss the new count based on the new patent pursuant to Fed.R.Civ.P. 12(b)(6) and attached documents that were not referred to in the complaint and that were not central to Dr. Voda's claims. The district court issued an order notifying the parties that it would treat the motion as a motion for summary judgment under Fed.R.Civ.P. 56 and would consider the documents.

Medtronic's motion argued that one of the counts of the amended complaint should be dismissed because the newly added patent was unenforceable in light of the Terminal Disclaimers. The Terminal Disclaimers stated that the '195 patent "shall be enforceable only for and during such period that it" is commonly owned with the '213 patent and another patent (the '625 patent),

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Central District of California Court Holds That The Absence of Pinpoint Citations to Source Code In Plaintiff's Infringement Contentions Does Not Bar Deposition Over Source Code

August 25, 2011

A recent decision from the Central District of California held that a deposition of the author of source code, or similar engineers, cannot be withheld until the producing party, i.e., the party providing the witness, is satisfied that the pinpoint infringement contentions are sufficient. In so holding, the Court indicated that such a determination typically is fact-specific and that given the circumstances in this case the deposition was relevant and not an abuse of the discovery process.

In this instant case, the defendant took the position that until the plaintiff provided sufficient pinpoint citations to the source code, it would not permit the deposition of its principal systems architect over its source code. The defendant expressed its concern that, absent such pinpoint citations, the plaintiff would use the deposition as a "fishing expedition." The plaintiff, on the other hand, argued that it could not supplement its infringement contentions to provide pinpoint citations to the source code until it took the deposition. Both sides supported their positions with expert testimony. Thus, the Court was faced with the proverbial "chicken and egg question."

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Medical Method Claims for Detecting Down Syndrome Is Patentable Under Bilski But Rendered Anticipated and Obvious by the Prior Art

August 24, 2011

In a patent dispute over a method for detecting fetal Down syndrome, the United States District Court for the District of Massachusetts invalidated the patent owner's patent because it was anticipated and obvious. The patent at issue describes screening methods to determine Down syndrome in which physicians estimate the risk of Down syndrome using markers from both the first and second trimesters of a pregnancy. The patent teaches determining the risk for fetal Down syndrome by combining markers from both stages of pregnancy into a single assessment of risk.

According to the district court opinion, after the patent was filed tests that integrate first and second-trimester data into a single calculation of risk were considered to have a higher detection rate than any test that used the data from only one of the trimesters. The testing disclosed by the patent is widely adopted and is licensed to a number of entities with thousands of assessments conducted under theses licenses each year.

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Contempt Motion Granted Where Defendant Offered to Sell Its Infringing Product After Entry of a Permanent Injunction

August 22, 2011

Plaintiffs and defendant manufacture machines that automatically inspect integrated circuits made on semiconductor wafers. Plaintiffs sued defendant for patent infringement and a jury found that the patent was valid and infringed, but did not find that the infringement was willful.

After the jury verdict, the defendant notified its sales force of the verdict and emphasized that the process was not over and that no judgment had been entered. Plaintiffs notified the defendant that it would consider any sales that occurred after the jury verdict evidence of willful infringement. Several months later, the district court denied defendant's post-trial motions and entered judgment for plaintiffs based on the jury verdict. The district court also entered a permanent injunction. Despite the permanent injunction, the defendant continued to sell the infringing product by meeting with potential customers in the United States who planned to use the machine in other parts of the world. The plaintiffs moved for contempt.

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Transfer Motion Denied Even Where Defendants Consent to Jurisdiction in the Proposed Transferee District

August 19, 2011

In a recent case in the United States District Court for the Eastern District of Texas, the court denied defendants' motion to transfer the case to the District of New Jersey. The court's analysis focused primarily on whether the case could have originally been filed in the District of New Jersey. The court began its analysis by noting that 28 U.S.C. § 1404(a) provides that "[f]or convenience of the parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought."

Recognizing that the "first determination to be made under § 1404(a) is whether the claim could have been filed in the judicial district to which transfer is sought," the court stated that the "'critical time' when making this threshold inquiry is the time when the lawsuit was filed." Plaintiff contended that the matter could not have been filed in New Jersey initially because two of the defendants were not subject to personal jurisdiction in New Jersey. Defendants responded that the action could have been filed in New Jersey because the defendants consented to personal jurisdiction in New Jersey and were indemnified by another defendant, which was based in New Jersey.

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The Federal Circuit's Therasense Decision Is Having Its Intended Effect Of Reigning In Inequitable Conduct Claims

August 18, 2011

The Federal Circuit's en banc decision in Therasense v. Becton, Dickinson & Co., is having its intended effect of reigning in inequitable conduct claims. In a recent decision, Judge Otero of the United States District Court for the Central District of California granted summary judgment of no unenforceability on defendant's inequitable conduct claim. Plaintiff U.S. Rubber Recycling, Inc. filed suit alleging, among other things, that Defendant Ecore International, Inc. fraudulently procured and wrongfully enforced its patent relating to rubber acoustical underlayment (insulating material for use with floor tile) in order to monopolize the market for such products. Specifically, the Plaintiff asserted that, "during the prosecution of the [patent], Defendant intentionally failed to disclose to the PTO material prior art that showed the claimed invention had been sold in the United States and described in printed publications more than one year prior to the [patent] application." In its summary judgment motion, the Defendant alleges "that the issuance of the reissue patent demonstrates that the alleged prior art are not material as a matter of law" and that the "Plaintiff cannot raise an issue of genuine fact that the Defendant failed to disclose any reference with bad intent."

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Sanctions Granted for Repeated Discovery Misconduct and Attorneys' Fees Awarded for Counsel's Fabricated E-Mail

August 17, 2011

Plaintiff brought a patent infringement action alleging direct infringement of a single patent. The defendant, a corporation, sought an extension of time to respond to the complaint through a request from its CEO. Because corporations cannot represented themselves and must instead be represented by a licensed attorney, the district court denied the requested extension and ordered the defendant to answer within 30 days. A few months later, the CEO of the defendant filed an extension request in order to complete a re-examination of the plaintiff's patent even though there was no re-examination request pending before the Patent and Trademark Office. The defendant still had not filed an answer to the complaint.

In response, the plaintiff requested that the district court enter a default judgment against the defendant and to set a hearing to determine the appropriate amount of damages to be awarded to the plaintiff and whether a permanent injunction should issue. More than a week later, the defendant, through an attorney, filed an answer to the complaint. Plaintiff moved to strike the answer because the defendant had failed to seek leave of court to files its late answer. The district court denied plaintiff's motion and permitted the defendant to answer the complaint.

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Plaintiff's Discovery Misconduct Leads To Award of $800,000 in Attorneys' Fees

August 15, 2011

In a patent infringement action, the district court granted defendants' motion for summary judgment based on the on sale bar and dismissed plaintiff's claims with prejudice. Defendants then requested that the district court find the case exceptional due plaintiff's litigation misconduct. Based on that misconduct, the district court found that the case was exceptional. Defendants then moved for an award of $800,000 in attorneys' fees.

The district court noted under 35 U.S.C. § 285, it may in exceptional cases award reasonable attorneys' fees to the prevailing party. To do so, the court must first determine that there is clear and convincing evidence that the case is exceptional and then the court must exercise its discretion in determining whether an award of fees is justified. The district court also noted that "[l]itigation misconduct and unprofessional behavior may suffice, by themselves, to make a case exceptional under § 285" but "[i]n cases deemed exceptional only on the basis of litigation misconduct, however, the amount of the award must bear some relation to the extension of the misconduct."

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Delaware District Court Denies Production of Documents Pertaining to Third-Party Licensing Company Holding That the Documents Are Protected by the Common Interest Privilege

August 12, 2011

Xerox Corporation ("Xerox") filed a patent infringement action against Google and Yahoo! in the United States District Court for the District of Delaware. After construing certain terms of the patent-in-suit as part of a claim construction proceeding, the district court resolved a discovery dispute between the parties over the production of communications between Xerox and a third-party licensing company, IPValue. Google and Yahoo! sought production of documents that Xerox exchanged with IPValue and which Xerox had listed on its privilege log based on a common interest privilege.

Google and Yahoo! contended that the documents could not be protected by the common interest privilege because the relationship between Xerox and IPValue is purely commercial. Xerox disagreed contending that both it and IPValue retain attorneys to perform legal analyses on issues relating to patent rights and because Xerox and IP Value have a joint objective of successfully asserting the Xerox intellectual property rights, which requires close cooperation between the companies. IPValue is a patent licensing company that works with other companies to help monetize their patent portfolios. Prior to the litigation, Xerox and IPValue had entered into agreements designating IPValue as Xerox's worldwide agent for intellectual property licensing.

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Another Motion to Transfer Denied in Delaware Even Where Plaintiff, Defendant and Witnesses Are Located in California

August 10, 2011

It is fast becoming clear that it is very difficult to transfer a patent infringement case out of the United States District Court for the District of Delaware when the defendant is incorporated in Delaware. In this case, Netgear sued Ruckus Wireless for patent infringement in the District of Delaware. Ruckus is a Delaware corporation with its principal of business in California. Netgear is also a Delaware corporation with its principal place of business in California.

Ruckus moved to transfer the case to the Northern District of California based on the arguments that both it and Netgear have their headquarters and primary places of business in the Northern District, nearly all key events, parties, documents and third party witnesses are in the Northern District, there are already two patent infringement lawsuits involving related technologies pending between the parties in the Northern District and there is significant court congestion in Delaware.

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Retirement of Texas Judges Leads to Transfer Out of Texas

August 9, 2011

In a patent case brought by Plaintiff Rembrandt Vision Technologies, L.P. ("Rembrandt") against Defendant Johnson & Johnson Vision Care, Inc. ("J&J") in the Eastern District of Texas, J&J moved to transfer the case to the United States District Court for the Middle District of Florida. Central to the Judge Ward's grant of J&J's motion was the fact that he and Magistrate Judge Everingham soon would be retiring effective October 1, 2011, which -- along with the balance of private and public interest factors -- resulted in the transferee venue being "clearly more convenient than the venue chosen by [Rembrandt]."

Initially, the district court noted that Rembrandt is a New Jersey limited liability partnership with offices in Pennsylvania and no facilities in Texas. The district court also noted that the inventors of the patent-in-suit have no connection to Texas, but own a house in the Middle District of Florida. The district court pointed out that the only connection that Rembrandt had to the Eastern District of Texas was the pending lawsuit and other lawsuits it had filed there. On the other hand, the district court countered that J&J had been involved in litigation in the Middle District of Florida involving the same accused products, J&J was a Florida corporation with its headquarters in Jacksonville, Florida, and that it employed over 1200 people to manufacture the accused product in its Florida facility.

After concluding that the threshold determination that Rembrandt's claim could have been brought in the Middle District of Florida, the district court turned to Rembrandt's argument that judicial economy weighed against transfer. Rembrandt argued that judicial economy weighted against transfer because of the district court's experience with the patent-in-suit and also because J&J waited 17 months to file its transfer motion. Judge Ward stated that "[b]ecause both the undersigned and Magistrate Judge Everingham are retiring from the bench on October 1, 2011, these issues do not weigh as heavily, with respect to judicial economy, as they may have otherwise." Judge Ward further explained that "[w]ith respect to the Court's familiarity and experience with the patents-in-suit, due to the approaching retirement of both the undersigned and Magistrate Judge Everingham, there will no longer be a judge in the Marshall Division with familiarity of this case."

The district court also concluded that the 17 month delay in filing the transfer motion was "not commendable," but also was "not sufficient for this Court to keep the case in the Eastern District of Texas." The Court found that "[t]he timing of the undersigned's announcement of retirement is important in considering [J&J]'s delay" because J&J filed its motion only three months after "the undersigned informed President Barrack Obama, via a letter on September 29, 2010, that the undersigned would be retiring effective October 1, 2011." Thus, as a practical matter, the district court explained that the announcement may not have reached the parties for a couple of weeks or months. Judge Ward concluded that "it is reasonable that [J&J] may have decided to file the motion to transfer venue only after learning of the undersigned's retirement."

In analyzing the private and public interest factors, the district court concluded that private interest factors of "the relative ease of access to sources of proof and the availability of compulsory process to secure the attendance of witnesses weight [sic] slightly in favor of transfer, and the cost of attendance for willing witnesses and local interest weigh in favor of transfer [and that] no [private interest] factors weigh against transfer and all other [public interest] factors are neutral." Accordingly, the district court granted J&J's motion to transfer venue to the United States District Court of the Middle District of Florida.

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While venue transfer motions have become more frequent and successful in the Eastern District of Texas, it is likely that the district court's consideration of its own retirement as weighing in favor of transfer is limited to the unique facts of this case, and perhaps a limited number of similarly situated cases pending before Judge Ward.

Rembrandt Vision Technologies, L.P. v. Johnson & Johnson Vision Care, Inc., Case No. 09-CV-200 (E.D. Texas July 19, 2011)

The authors of www.PatentLawyerBlog.com are patent trial 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 Greg Cordrey at 949.623.7236 or GCordrey@jmbm.com.

Court Orders Production of Sales Evaluation Files for Products Accused of Infringement

August 8, 2011

In a patent infringement action between Kimberly-Clark ("K-C") and First Quality Baby Products ("First Quality") pending in the United States District Court for the Eastern District of Wisconsin, K-C filed a motion to compel First Quality to produce sales evaluation files relating to products accused of infringement. K-C asserted that the files were necessary because they might lead to admissible evidence regarding damage claims for a reasonable royalty and for lost profits due to price erosion. First Quality admitted in a deposition that the sales evaluation files contain information that is used in setting prices.

In analyzing whether the files should be produced, the district court began by stating that "[i]n calculating a reasonable royalty courts consider, among other things, the 'infringer's anticipated profit from the use of the patented invention.'" The district court found that First Quality's sales evaluation files contain contribution margin analysis, which is a profitability measure used by First Quality to set prices. As a result, the district court noted that "it logically follows that First Quality's sales evaluation files should be produced as they may aid in any calculation of reasonable royalties."

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Failure to Mark with Patent Numbers Limits Pre-Suit Filing Damages

August 5, 2011

In a recent case from the United States District Court for the Eastern District of Virginia, the district court granted defendants' motion to limit damages for failure to mark for all but one of the patents-in-suit. Pursuant to 35 U.S.C. §287(a), a patentee must either mark a patented product or provide actual notice of infringement in order to recover damages. Section 287 can be satisfied either by constructive notice, accomplished by marking a product or packaging with the applicable patent number, or actual notice, such as sending a cease and desist letter or providing the alleged infringer with actual notice of infringement through another affirmative act.

Defendants filed a motion for judgment as a matter of law asserting that the plaintiff had failed to introduce sufficient evidence to support a finding that it was entitled to recover pre-suit damages because it failed to comply with the marking requirements of Section 287. Plaintiff argued that Section 287 did not apply because the defendants were aware of the patents and, therefore, had actual knowledge regardless of plaintiff's failure to mark. The plaintiff also argued that with respect to one of the patents Section 287 did not apply because the plaintiff was only asserting method claims and not apparatus claims.

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Motion for Partial Summary Judgment of Invalidity Denied Where Means-Plus-Function Limitations Were Definite

August 3, 2011

The United States District Court for the Central District of California denied a motion for partial summary judgment finding that certain means-plus-function limitations were sufficiently definite to survive a challenge to the patent's validity. The plaintiff filed a patent infringement action against the defendant over a patent that relates to a computer mouse with a roller element for scrolling in computer application programs. The defendant argued that the patent was invalid because the patent includes means-plus-function limitations that do not identify corresponding structure in the specification.

In analyzing the definiteness of the means-plus-function limitations, the district court noted that construction of such a limitation is a two step process involving first determining the function of the term and second connecting that function to sufficient structure. The district court also stated that "[w]hen a function is implemented in software, identification of a general purpose computer, microchip, or software program will not suffice as description of its structure."

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Google CEO Ordered to Testify in Patent Dispute with Oracle

August 1, 2011

In the ongoing patent battle between Google and Oracle over aspects of the Android operating system, Oracle filed a motion seeking to take four additional depositions, including Google CEO, Larry Page. Each of these depositions would be over the ten deposition limit established by Fed.R.Civ.P. 30. Google opposed the request on the ground that these depositions would not only be over the ten deposition limit but also that Oracle was seeking "apex" depositions from the highest level of executives at Google. The court sided with Oracle.

With respect to Mr. Page's deposition, the court noted that "Rule 30 of the Federal Rules of Civil Procedure requires a party wishing to take more than ten depositions without consent of other parties to obtain leave from the Court to proceed." The court also noted Fed.R.Civ.P. 26(b)'s requirement that "[w]hen evaluating a party's request to expand discovery limitations, the court must ensure that the discovery sought is 'relevant to[the] party's claim[s] or defense[s]' and not unreasonably cumulative, duplicative, or burdensome."

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