December 2011 Archives

Multidistrict Panel Transfers Patent Cases Pending in District Courts in Texas and Delaware to the District of Maryland Even Though No Cases Were Pending in Maryland

December 30, 2011

Defendants in two Eastern District of Texas actions moved to centralize their cases in the District of Delaware or in another transferee forum. Three actions involving the same plaintiff and patent were already pending in the District of Delaware. Two of the defendants in the Delaware actions supported the motion to transfer and centralize, while the other defendants in the Delaware actions did not oppose the motion. The patent holder opposed centralization and, alternatively, suggested selecting the Eastern District of Texas as the transferee forum.

The panel found that the five actions involved common questions of fact and that centralization would serve the convenience of the parties and witness and promote the just and efficient conduct of the litigation. To support this conclusion, the panel noted that all five actions involve factual question regarding the infringement and/or validity of a single patent that relates to basic web presentation technologies, such as "previews" that pop up when a mouse rolls over certain site features. The panel found that "[c]entralization will eliminate duplicative discovery, prevent inconsistent pretrial rulings (particularly on claim construction issues), and conserve the resources of the parties, their counsel and the judiciary."

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Paying for Reduction to Practice of an Invention Does Not Make One a Co-Inventor of the Invention

December 28, 2011

Defendant was the sole named inventor of the patent in suit. Plaintiff brought a claim for inventorship, alleging that he was the co-inventor of the patent. The parties cross moved for summary judgment and for sanctions.

The defendant and plaintiff maintained a business relationship for approximately 15 years, with plaintiff agreeing to pay the defendant $5000 in consulting fees in connection with the plaintiff's idea for a video product to be used in automobile marketing. Defendant would act as a consultant and advise the plaintiff how to build the system. Defendant in fact designed the system, hired one or more computer programmers and had the system built.

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Multidistrict Panel Denies Transfer in Patent Infringement Action Involving Multiple Defendants and Patents in Different District Courts

December 26, 2011

Plaintiffs asserted patents relating to computer-based messaging products and services against numerous defendants, including Facebook, LinkedIn, E*Trade and Verizon in two different district courts. The patents at issue named Charles Bobo as an inventor and one of the earlier patents in the Bobo family of patents was asserted in six of the actions pending in the Central District of California. Five later-issued patents in the Bobo family were asserted in actions in the Eastern District of Texas.

The panel considered whether centralization in one district would serve the convenience of the parties and witnesses or further the just and efficient conduct of the litigation. Many of the defendants supported centralization, while Verizon opposed centralization. The plaintiffs opposed the motion to centralize the cases.

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L.L. Bean Wins Motion to Sever and Transfer Where Plaintiff's "Lame" Response That All Accused Products Were Similar Is Insufficient to Establish Proper Joinder

December 23, 2011

Pinpoint filed a patent infringement action in the Northern District of Illinois against L.L. Bean, Orbitz, Groupon and Hotwire for allegedly infringing three patents pertaining to accessing data using customer profiles. L.L. Bean filed a motion to sever and transfer to the District of Maine. The district court granted the motion and transferred the case against L.L. Bean to Maine.

The first step in the district court's analysis was to analyze whether L.L. was misjoined in the action. Focusing on Fed.R.Civ.P. 20(a)(2), and in particular the requirement that "any right to relief is asserted against [the defendants] jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences," the district court found that joinder was not proper. "As L.L. Bean points out, defendants are unrelated companies that have nothing in common except Pinpoint's allegation that they have infringed the same three patents." Referring to Pinpoint's response as "lame," the district court found that the argument that all of the accused products are extremely similar to be insufficient to satisfy the first prong of Fed.R.Civ.P. 20(a)(2). "The defendants' operations of unrelated websites does not establish a common transaction or occurrence.

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Anonymous Letter Enough to Establish Jurisdiction for Declaratory Judgment Action

December 21, 2011

Plaintiff filed a declaratory judgment action of non-infringement after it received a letter from IP Navigation Group ("IP Nav"). The letter invited the plaintiff to engage in a licensing discussion regarding the patent or patent of IP Nav's client, which remained anonymous. After filing the declaratory judgment, the plaintiff sought and was granted permission by the district court to serve a subpoena on IP asking IP Nav to identify the anonymous patent holder along with the patent numbers for the patents referenced in the letter.

IP Nav then filed a motion to quash the subpoena in the United States District Court for the Eastern District of Texas, arguing that the subpoena was invalid for lack of subject matter jurisdiction. The district court in Texas issued an order finding that IP Nav had raised "substantial questions" regarding the district court's jurisdiction but determined it was appropriate for the district court in Wisconsin where the action was pending to determine that issue.

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Multidistrict Litigation: The Future of Multi-Defendant Cases After the America Invents Act?

December 19, 2011

The plaintiff filed multiple patent infringement actions against seven different defendants in many different district courts. The plaintiff moved to centralize the patent litigation in the Eastern District of Texas where there were seven actions pending in five separate districts. The responding defendants all opposed centralization. Based on the briefing before the panel and after a hearing, the panel held that the actions involved common questions of fact and that centralization of the actions would serve the convenience of the parties and witnesses. The panel also found that centralization would promote the just and efficient conduct of the litigation. However, the panel determined that centralization was more appropriate in the Western District of Oklahoma (where one case was pending) rather than the Eastern District of Texas (where three cases were pending).

All seven actions concerned questions regarding the infringement and/or the invalidity of three patents pertaining to "smart meters" that are used to measure energy consumption and to collect those measurements over a wireless communication network. In each action, the plaintiff alleged that the defendant, each of whom are utility companies, use infringing meters covered by the patents. As a result, the panel determined that "[c]entralization will eliminate duplicative discovery, prevent inconsistent pretrial rulings (particularly on claim construction issues), and conserve the resources of the parties, their counsel and the judiciary."

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Google Again Moves to Strike Part of Oracle's Damage Claim in the Battle over Android

December 16, 2011

Google filed a motion to strike the revised damages expert report submitted by Oracle in their continuing battle over Android. In the second expert report, Oracle's expert "estimated damages, from 2007 through 2011, to be $201.8 million for patent infringement, $823.9 million in unjust enrichment for copyright infringement (not deducting for expenses or apportionment), and $136.2 million in lost profits or $102.6 million in lost licensing fees for copyright infringement." For the patent infringement matter, Oracle's expert calculated damages using a hypothetical negotiation method beginning with a $100 million starting value that was based on real-world negotiations between the parties in 2006, then adjusted downward for patent apportionment, then adjusted upward for lost revenue that was expected from the licensing agreement.

Google moved to exclude the patent damages, among others, arguing that the damages cannot be based on a hypothetical lost license fee because Sun (Oracle's predecessor) would never have licensed an incompatible version of Java to Google. The district court disagreed. The district court found that Oracle's expert had "a non-speculative factual basis to value a license for an incompatible version of Java." The district court found this appropriate because the analysis started with the real-world negotiations between Sun and Google for a compatible Java, and then adjusting that amount up to compensate for the incompatibility. "The amount of the upward adjustment was based on Sun's own revenue projections for the value of compatibility. Dr. Cockburn's calculation was based on real-world facts and not incurably speculative. Google fights the hypothetical by ignoring the legal requirement for a hypothetical negotiation that the licensing agreement must be reached as the result of a hypothetical meeting between the parties."

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Implied Waiver of Attorney-Client Privilege Extends to Trial Counsel Who Consulted with Patent Prosecutor

December 14, 2011

Plaintiffs filed a patent infringement action against National Semiconductor Corporation alleging that National Semiconductor's WEBENCH tools infringed plaintiff's' patent. National Semiconductor filed an amended answer and counterclaim asserting, among other things, that plaintiffs patent was invalid due to inequitable conduct based on plaintiffs' failure to disclose material information about WEBENCH and other third-party tools to the Patent and Trademark Office ("PTO") during prosecution of the patent-in-suit.

National Semiconductor filed a motion to compel after, as it alleged, plaintiffs disclosed only certain privileged information that it considered helpful to its position during the deposition of individuals involved in the prosecution of the patent. Two of the inventors testified that they understood and complied with the duty of candor and one of the inventors testified that he relied on the advice of counsel. In addition, one of the prosecutors testified that he acted in good faith before the PTO. Other than disclosing this information, plaintiffs instructed the witnesses not to answer based on the attorney-client privilege, including, for example, whether one of the inventors provided patent counsel with documents such as prior art references.

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Hot Potato: Case Is Transferred from Florida to California and Then Back to Florida

December 12, 2011

Plaintiff filed a patent infringement action in the Middle District of Florida. Defendants filed a motion to transfer the case to the Eastern District of California. Defendants emphasized in its transfer motion that the Eastern District of California was clearly more convenient than the Middle District of Florida. Ten months after the motion was filed, the Middle District of Florida concluded that the Eastern District of California was indeed a more convenient forum and therefore transfer was appropriate. "The Middle District of Florida emphasized that the transfer was necessary to promote the interests of justice, because the alleged acts of infringement and the uncontested evidence of record demonstrates that the vast majority of the activities relating to the alleged infringement took place and around the Eastern District of California."

When the case arrived in the Eastern District of California, Plaintiff filed a motion to re-transfer the case back to the Middle District of Florida. Although the parties did not argue in the Middle District of Florida that the Eastern District of California lacked personal jurisdiction over certain of the defendants, the plaintiff now moved to retransfer the case because the Eastern District of California did not have personal jurisdiction over two of the defendants.

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Motion to Compel Financial Records for Products Shipped Outside of the United States Denied Where Such Sales Did Not Fall within Section 271 of the Patent Act

December 9, 2011

Internet Machines LLC ("iMac") filed a patent infringement action against Alienware Corporation and PLX Technology, Inc. ("PLX") and several other defendants alleging infringement of two patents pertaining to PCI Express switches. With respect to PLX, iMac moved to compel the production of various sales documentation for all sales of the accused products regardless of whether the products shipped to the United States. PLX produced a sales summary and underlying documents for all PCI Express switches shipped to the United States. PLX declined to produce any additional documentation relating to those switches shipped to international markets.

The primary disagreement centered on whether PCI Express switches which were not shipped to the United States qualify as a "sale" under 35 U.S.C. ยง 271. iMac contended that all sales, whether shipped domestically or internationally, are still accepted by PLX in its Sunnyvale, California office and therefore count as domestic sales and are relevant for calculating damages.

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Complaint Survives Motion to Dismiss Based on Facts Outside the Complaint

December 8, 2011

In a patent case filed in the Eastern District of Wisconsin by Illinois Tool Works ("ITW") against Elektromanufaktur Zangenstein Hanauer GmbH & Co. KGaA ("EMZ"), EMZ moved to dismiss for failure to state a claim under Rule 12(b)(6) as well as for lack of personal jurisdiction under Rule 12(b)(2). EMZ alternatively moved for a more definite statement under Rule 12(e).

EMZ's motion to dismiss for failure to state a claim rested on its assertion that ITW's failure to identify an accused product in the complaint rendered ITW's infringement claims ambiguous and conclusory. Specifically, EMZ argued that "the complaint's reference to unspecified and generically-labeled 'latching mechanisms' as the allegedly infringing product is not sufficient to provide EMZ fair or adequate notice as to what ITW's claim of infringement is and the grounds upon which it rests." In response, ITW argued that the complaint was sufficient because it alleged that the infringing products "are latching mechanisms for washing machines sold to manufacturers, such as Whirlpool, that EMZ knew were bound for the United States."

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Permanent Injunction Granted Against Verizon's Video on Demand Service Even Though Plaintiff Was Not a Direct Competitor

December 7, 2011

After ActiveVideo Networks, Inc. ("ActiveVideo") prevailed on a patent infringement action against Verizon Communications, Inc. ("Verizon") before a jury, ActiveVideo moved for a permanent injunction. ActiveVideo moved to enjoin Verizon's further use of Verizon's Video on Demand ("VOD") services offered through its FiOS system. Verizon opposed the motion and also asked for a "sunset" provision in the event the district court deemed an injunction appropriate. Verizon also asked the district court to stay any injunction pending appeal.

After reviewing the requirements of a permanent injunction in a patent infringement matter with particular reference to the Supreme Court's decision in eBay, Inc. v. MercExchange, L.L.C. , 547 U.S. 388 (2006), the district court turned to analyzing the traditional four-factor test for determining whether an injunction was appropriate in this case.

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New Trial on Damages Ordered Where Expert's Reliance on 25% Rule Was Inappropriate in Light of Uniloc and Availability of Non-Infringing Substitute Was Not Considered

December 5, 2011

Spine Solutions, Inc. ("SSI") sued Medtronic Sofamor Danek ("Medtronic") for patent infringement alleging that three of Medtronic's artificial disc implants infringed an SSI patent. The case proceeded to trial and the jury awarded $5.7 million in lost profits and an 18 percent royalty on the other infringing sales. The jury also determined that the infringement was willful.

Following the jury verdict, the district court doubled the damages and awarded attorneys' fees against Medtronic. The district court also entered a permanent injunction. On appeal, the Federal Circuit reversed the decision in part, vacated in part and affirmed in part. With respect to the finding of lost profits, the Federal Circuit determined that lost profits were unavailable due to lack of standing. It also reversed a finding of the district court that one of the Medtronic products (the O-Mav) infringed the patent-in-suit and directed that the district court enter a finding of non-infringement with respect to that product. The Federal Circuit also reversed the willfulness finding and the injunction due to certain extraterritorial restrictions in the injunction. On remand, the Federal Circuit directed that, among other things, the district court determine the proper reasonable royalty to which SSI might be entitled on the infringing sales for which the jury awarded lost profits.

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Apple Seeks Order Preventing Samsung's Attorney from Participating in Further Depositions on Charges That Attorney Did Not Practice with Honesty, Care and Decorum

December 2, 2011

In the ongoing action between Apple and Samsung, Apple filed a motion for a protective order seeking to prohibit one of Samsung's attorneys from participating in any further depositions. Alternatively, Apple sought an order restricting the attorney from engaging in particularly abusive deposition acts, including belligerent and insulting treatment of witnesses, repeated interruptions, unilaterally terminating a deposition, uncivil treatment of opposing counsel, engaging in lengthy colloquy on the record, among other things.

Samsung objected to the order and denied that any in appropriate conduct had occurred at all Samsung also noted that Apple's witnesses were Apple's patent lawyers and agents who are accustomed to the adversarial process.

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