September 2011 Archives

Multiple Defendants Dismissed Based on Improper Joinder

September 30, 2011

In a ruling that is likely to become more and more common after the passage of the America Invents Act, the United States District Court for the Northern District of California dismissed all but one of the defendants in a patent infringement action for improper joinder. In February 2010, the plaintiff filed a patent infringement action against Apple, Dell, HP, Lenovo and Sony for allegedly infringing a patent for dynamic power management of solid-state memories. The plaintiff alleged that each of the defendants sells computers and/or computer systems that infringe the patent-in-suit.

Plaintiff filed a motion seeking leave to amend the complaint to join five additional defendants on the ground that the new defendants' products also allegedly infringe the patent-in-suit. The existing defendants then filed a motion to dismiss the complaint as to all but one of the defendants based on the argument that the defendants were misjoined in the action.

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Inequitable Conduct Claim Survives Motion to Dismiss Because Allegations Permitted a Plausible Inference of Intent to Deceive

September 28, 2011

Plaintiff AlmondNet, Inc. filed a patent infringement action against Microsoft Corporation based on four patents pertaining to Internet advertising. Microsoft filed several affirmative defenses and counterclaims against AlmondNet, including a defense and counterclaim that AlmondNet engaged in inequitable conduct before the PTO by failing to disclose three articles related to Internet advertising and three existing Internet advertising systems. AlmondNet moved to dismiss the inequitable conduct counterclaim and the district court granted the motion with leave to amend to plead inequitable conduct with particularity.

Microsoft subsequently amended its answer and counterclaim and AlmondNet moved to strike the inequitable conduct defense and to dismiss Microsoft's counterclaim for inequitable conduct. The district court determined that Microsoft's amended pleading was sufficient and denied the motion.

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Did Plaintiff's Counsel Violate the Golden Rule Justifying a New Trial? Court Says No Based on a "--"

September 26, 2011

Plaintiff Bruce Saffran, M.D. ("Dr. Saffran") filed a patent infringement case against Johnson & Johnson. After a jury trial, the jury returned a verdict in favor of Dr. Saffran finding that the patent was valid and that Johnson & Johnson had willfully infringed the patent. The jury found damages in the amount of $482 million. After the jury returned its verdict, the district court granted a Fed.R.Civ.P. 50(a) motion, finding no willful infringement. Johnson & Johnson also moved for a new trial under Fed.R.Civ.P. 59.

Johnson & Johnson brought its motion on two separate grounds: (1) the evidence of willful infringement tainted the trial proceedings and (2) counsel for Plaintiff violated the "Golden Rule." With respect to the willful infringement argument, the district court noted that it could only make this determination after the development of a full record and it was not appropriate to dismiss the willful infringement allegations on summary judgment. The district court also ruled that it was not convinced a new trial was warranted because of any alleged prejudice to Johnson & Johnson due to the introduction of the willfulness claims at trial. To reach this conclusion, the district court found that the argument failed because the evidence would have been admissible for induced infringement and that, regardless, the jury was instructed separately regarding the law for each type of claim and the type of evidence that could be considered for that claim. Notably, Johnson & Johnson did not object to the jury instructions on these points.

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TiVo Raises Claims of Inequitable Conduct That Survive Dismissal

September 23, 2011

TiVo filed a patent infringement action against Verizon and Verizon counterclaimed alleging that TiVo infringed six of its patents. TiVo raised inequitable conduct counterclaims against certain of the Verizon patents. Verizon filed a motion to dismiss, which the district court granted under the principles set forth in Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312 (Fed. Cir. 2009), but permitted TiVo to amend its pleading. TiVo amended its pleadings and Verizon renewed its motion to dismiss.

The district court began its analysis by noting that the Federal Circuit's decision in Therasense, Inc. v. Becton, Dickinson and Company, 2011 WL 2028255 (Fed. Cir. May 25, 2011) was decided after the parties had completed their briefing on the motion. Although Therasense changed the standard for proving inequitable conduct, the district court stated that Thereasense did not address the pleading standard because it was decided based on the review of a bench trial. Accordingly, Exergen remains the leading authority on the pleading standard for inequitable conduct. "Exergen held that for 'pleading inequitable conduct in patent cases, Rule 9(b) requires identification of the specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO.'"

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Direct and Indirect Infringement Contentions Survive Motion to Dismiss Where Defendants' Customers Are Identified as Direct Infringers

September 21, 2011

Plaintiff filed a patent infringement action based on patents for wireless communications networks and a system and method for monitoring and controlling remote devices. Defendants moved to dismiss the plaintiff's claims for direct infringement and for inducing and contributory infringement based on the argument that plaintiff failed to identify a specific system or product in its complaint. Defendants also asserted that plaintiff failed to adequately plead indirect infringement because the complaint did not identify the underlying infringing product, the direct infringer, or the alleged infringing claims. One of the defendants also asserted that the indirect infringement contentions should be dismissed because the identification of customers as the direct infringers is insufficient and the plaintiff failed to plead any facts to show that defendants knew of the patent and intended to encourage infringement.

The Magistrate Judge recommended denying the motion. After discussing the pleading standards under Fed.R.Civ.P. 8(a)(2), the Supreme Court's recent decisions in Twombly (Bell Atl. Corp v. Twombly, 550 U.S. 555-56, 570 (2007))and Iqbal (Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949-50, 1953 (2009)), and Fed.R.Civ.P. 84, Form 18, the court concluded that plaintiff's allegations of direct and indirect infringement were sufficient.

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Another Inequitable Counterclaim Dismissed after Therasense

September 19, 2011

Plaintiff filed a patent infringement action against the defendant alleging that certain of defendant's T-shirt transfer products infringed plaintiff's patent. Defendant filed an answer and counterclaim which accused the plaintiff of inequitable conduct in amending its patent during a reissuance of the patent. Defendant claimed that plaintiff deliberately pursued a broadened reissue patent based on her learning of material faults in the patent after having had an opportunity to analyze defendant's products and technology. Defendant's primary contention was that the amendments made during the reissuance proceeding added new material to the patent.

As the district court wrote, "[a] reissue patent that enlarges the scope of the claims contained in an original patent shall not be granted unless it is applied for within two years of the grant of the original patent." The reissue application for the patent-in-suit was filed more than two years after the issuance of the patent. Plaintiff moved to dismiss the inequitable conduct defense on the grounds that the facts alleged did not support a plausible inference that the plaintiff (1) made an affirmative misrepresentation of material fact or failed to disclose material information to the PTO during the reissue examination and (2) intended to deceive the PTO.

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Court Allows Discovery Directed to Inequitable Conduct Defense Even After the Discovery Cut-Off

September 16, 2011

In a recent ruling from the United States District Court for the Sothern District of California, a Magistrate Judge allowed discovery to take place on an inequitable conduct defense after the discovery cut-off. The defendant propounded document requests a little more than 30 days before the discovery cut-off and plaintiff produced documents in response to those requests the day before the discovery cut-off. On the last day for discovery, defendant took the deposition of the inventor of the patent-in-suit.

Based on information learned during the deposition and documents produced by plaintiff at the close of discovery, defendant contended that the plaintiff made material misrepresentations to the Patent Office to overcome a section 112 rejection. Based on that contention, defendant sought leave to amend its answer, assert an affirmative defense of inequitable conduct and to pursue additional discovery directed toward that defense.

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Hurricane Shooters Defendant Toasts Court's Ruling That Its Section 102(g) Prior Invention Defense Survives Summary Judgment

September 15, 2011

Plaintiff Hurricane Shooters, LLC sought summary judgment of no invalidity on Defendant's defenses of prior inventorship under Section 102(g) and lack of utility under Section 101. The patents-in-suit involve drinking cups for serving mixed drinks in bars and restaurants having a plural chamber that optimizes the mixing of fluids as they are simultaneously poured while minimizing interference with the nose of the drinker.

Defendant's invalidity defense was based on a plural chamber "bomb cup" invented by a competitor. Rejecting Plaintiff's evidence of an earlier date of invention in August 2004 consisting only of the uncorroborated inventor's testimony, Plaintiff's inventors' evidence showed that they invented their plural chamber cup in November of 2004. Defendant, however, presented evidence that its plural chamber cup was invented in October 2004. The Hurricane Shooters court was faced with the issue of whether Defendant's evidence of an earlier invention was sufficient to survive summary judgment.

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Twenty Percent Royalty Rate Appropriate Where Plaintiff Was Highly Unlikely to License Its Patent to Defendant, a Direct Competitor

September 14, 2011

After the district court determined that the plaintiff's patent was infringed and was not invalid based on anticipation or obviousness, the district court held a bench trial on the issue of damages. The district court first analyzed the issue of lost profits. Finding that the plaintiff could not meet several of the Panduit factors because, among other things there were acceptable, non-infringing substitutes in the marketplace during the relevant time period, the district court denied plaintiff's request for lost profits. "As plaintiff has not shown a reasonable probability that it would have made the majority of [defendant's] sales given the existence of non-infringing switchblade divot repair tools on the market, the Court finds plaintiff has not met its burden in this regard."

The district court next analyzed whether the plaintiff was entitled to a reasonable royalty. Plaintiff contended that it was entitled to a 20% royalty on the gross profits of defendant's infringing tools because the patented tools sold by the plaintiff had a high gross profit of 70%, there were few competitors, the tools were an impulse buy because they had a low price, the tools were an effective and low-cost promotional product, they had a unique design and function and the tools were accepted and known in the marketplace. The defendant argued for royalty rate of 5% of net profits.

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Oracle and Google Edge Closer to Trial and the District Court Denies Google's Objection to Pool of Jurors

September 12, 2011

As the battle between Oracle and Google approaches nearer to trial, the United States District Court for the Northern District of California has denied Google's objection to the selection of the pool of jurors who will hear the trial. The district court previously notified Oracle and Google that the district court intended to pre-clear a large number of potential jurors for a multi-month criminal trial and that it intended to use this same pool of potential jurors for the trial between Oracle and Google in the event the criminal trial was postponed. Oracle did not object to the procedure. Google did.

In its objection, Google argued that many potential jurors who would normally be available to serve on a three week trial would have significant personal or professional commitments that would prevent them from serving in a much longer criminal trial. As a result, Google reasoned that the pool cleared for the much longer criminal trial would be less diverse and less representative than a group specifically cleared for a shorter three week trial. In Google's words, "[t]o maximize the size and diversity of the venire, enhance the [quality] of the jury-selection process, and increase the likelihood that the jury eventually selected will provide the parties with a fair cross section of the community, Google respectfully requests that the Court not use the pre-clearance process."

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Failing to Produce Documents and False Declarations Lead to Monetary Sanctions and Evidentiary Sanctions Precluding Defendants from Contradicting Plaintiffs' Experts on Issues of Infringement, Sales and Profits

September 9, 2011

Plaintiffs filed a lawsuit for patent infringement, unfair competition and breach of fiduciary duty against several defendants, including AIM Sports. Plaintiffs design, develop and distribute firearm related tools, accessories and sporting optics. Defendants and plaintiffs had a business relationship that permitted Defendants to access trade secret information that belonged to the plaintiffs, including trade secrets regarding manufacturing, product development and plaintiffs' patented products. After the plaintiffs sued defendants for patent infringement and settled the lawsuit, plaintiffs discovered that defendants had formed a new company that continued to infringe the patent and violated the settlement agreement.

After both parties filed motions to compel the production of documents, the Magistrate Judge granted both motions in part and denied both motions in part. Plaintiffs' motion with respect to two of the requests was denied because the defendants represented in declarations signed under penalty of perjury that they had no responsive documents. Plaintiffs then conducted fact witness depositions and alleged, after conducting these depositions, that defendants had withheld responsive documents and that declarations filed with the district court were false. At this point, the Magistrate Judge granted plaintiffs' motion, ordered the production of the responsive documents and ordered defendants to file new declarations. When the defendants failed to produce the financial and design documents sought and filed no new declarations, the plaintiffs moved for monetary sanctions and evidentiary sanctions.

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Motion to Compel Granted Over Defendant's Request to Limit Scope of Search for Electronically Stored Information Because Search and Review Would Cost $1 Million

September 7, 2011

In this patent infringement suit, the parties were unable to agree upon a written Electronically Stored Information ("ESI") protocol. Before the protocol was executed, the district court ordered the parties to comply with all scheduling orders and production deadliness regardless of whether they had agreed upon a final written agreement regarding the search and production of ESI. The parties subsequently disagreed over the scope of the document production and whether the document production was deficient.

After the district court intervened in the process of finalizing the written ESI protocol, the parties finally executed a written ESI protocol. A dispute then arose between the parties over the production of ESI according to the protocol and the plaintiff moved to compel.

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Another Inequitable Conduct Defense Bites the Dust after Thereasense

September 5, 2011

Abaxis, Inc. ("Abaxis") filed a patent infringement action against Cepheid asserting that Cepheid infringed four of Abaxis' patents. In its answer, Cepheid asserted a defense of inequitable conduct and Abaxis moved to dismiss the defense. The United States District Court for the Northern District of California granted the motion.

In support of the inequitable conduct defense, Cepheid alleged that the patent prosecutor knowingly and intentionally failed to disclose to the United States Patent and Trademark Office ("PTO") material prior art during the prosecution of the patents. Cepheid also explained that the undisclosed prior art anticipated and/or rendered the patents obvious and, therefore, the patents would not have issued had the prior art been before the PTO. Cepheid also alleged that the patent prosecutor made statements to the PTO during the patent prosecution to distinguish prior art cited by the by the PTO that were knowingly false in light of the information withheld from the PTO and "but for" these statements and the withholding of the material prior art the patents would not have issued.

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Avoiding Means-Plus-Function in the Up and Down World of Elevators

September 2, 2011

Mean-plus-function limitations in patent claims require special construction and can result in narrow patent claims that may not be beneficial to patent owners. As a result, many potential infringers will try to take advantage by claiming that certain terms in patent claims are in reality means-plus-function claims. The determination of whether certain terms in a patent are means-plus-function claims can have an important impact on the validity of the patent.

The Federal Circuit's recent decision in a case involving patents pertaining to elevator systems highlights the importance of whether a claim limitation is considered a means-plus-function term. In Inventio AG v. Thyssenkrupp Elevator Americas Corp., Case No. 2010-1525 (Fed. Cir. June 15, 2011), this distinction played a key role.

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