March 2012 Archives

Apple v. Motorola: Judge Posner Issues an Order Requesting Claim Construction That Are Written in Language That Is Intelligible to Jurors

March 30, 2012

In the ongoing struggle between Apple and Motorola over claims of patent infringement in just one of many battles that is taking place across the country over smart phones, both parties proposed claim constructions that were not particularly well-written for lay jurors.

After reviewing the claim construction briefs and stating that the briefs "well written and helpful," the district court, Judge Posner, stated that he had a concern regarding the proposed claim constructions.

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Oracle v. Google: The Battle Over Android Continues as Google Seeks to Exclude Oracle's Damage Expert for the Third Time

March 28, 2012

The district court had previously stricken certain parts of Oracle's damage expert report on two separate occasions. First, the district court struck Oracle's expert report for failing to apportion the value of the asserted claims and instead using the total value of Java and Android in calculating damages. Second, the district court partially excluded Oracle's expert's revised report for using a flawed apportionment methodology. In the new report, Oracle's expert set forth a new apportionment theory, which Google moved to strike again.

The district court summarized the third report as follows: " First, Dr. Cockburn starts with Sun's February 2006 demand of $99 million to defendant Google Inc. Second, he upwardly adjusts by $557 million to account for lost convoyed sales Sun projected to make through its licensing partnership with Google. Third, he adds $28 million by removing a revenue-sharing cap, resulting in a subtotal of $684 million. This is the pie he then apportions between the intellectual property in suit and the intellectual property not in suit. Fourth, he allocates part of this number to the patents and copyrights in suit, using two alternative methodologies -- the so-called "group and value" and "independent significance" approaches (Rpt ¶¶ 37-68). Based on these alternative apportionment methodologies, reasonable royalties for patents and copyrights in suit, through the end of 2011, are (1) between $70 and $224 million under the group-and-value approach, and (2) at least $171 million under the independent-significance approach. Fifth, he downwardly adjusts for extraterritorial infringement, failure to mark, and non-accused devices. With all the downward adjustments subtracted, Dr. Cockburn calculates patent damages to be between $18 and $57 million, and a copyright lost license fee to be between $35 and $112 million."

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Motion to Sever and Stay Denied Where Customer Defendants Could Not Satisfy Customer Suit Exception Factors

March 26, 2012

Cambrian Science ("Cambrian") filed a second amended complaint that alleged patent infringement of U.S. Patent No. 6,777,312 (the "'312 Patent"). The second amended complaint alleged infringement against several defendants, certain of which were labeled by the district court as "Customer Defendants." As to the Customer Defendants, Cambrian asserted that they infringed the '312 Patent directly by making, using, selling or offering to sell certain systems. The second amended complaint also alleged claims for contributing and inducing infringement.

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After Finding of Direct Infringement on Summary Judgment, Court Concludes that Defendant's Infringement Was Not Willful But Denies Defenses of Laches and Equitable Estoppel

March 23, 2012

On summary judgment, the district court determined that the defendants directly infringed all patents at issue in the lawsuit. The district court subsequently conduct a bench trial on issues of willfulness and on defendants' equitable defenses, particularly whether the defenses of laches and equitable estoppel provided a defense to the finding of direct infringement.

The district court first focused on the issue of willful infringement and stated the two-prong test for willfulness. "To establish willful infringement, a patentee must satisfy a two-pronged test. In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007). First, the patentee must "show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent." Id. In analyzing this prong, "[t]he state of mind of the accused infringer is not relevant." Id. Second, and only after "[the objective prong] is satisfied, the patentee must demonstrate that this objectively-defined risk (determined by the record developed in the infringement proceeding) was either known or so obvious that it should have been known to the accused infringer." Id."

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Will Mayo v. Prometheus Be the Basis for the Invalidation of Broad Patent Claims and the Renegotiation of Royalties? Implications for Myriad gene case.

March 22, 2012

In Mayo v. Prometheus, the U.S. Supreme Court held that claims directed to a diagnostic method were unpatentable, not simply because the subject matter of the claims was not novel or obvious, but rather because the subject matter covered by the claims was the mere application of the laws of nature - the discovery of facts of nature - and therefore not patentable on a more fundamental basis under Section 101 of the Patent Act.

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Common Legal Interest Doctrine Saves Privileged Documents from Production Where Parties Contemplated an Acquisition of Patents

March 21, 2012

Plaintiff moved to compel the production of documents that were listed on the defendants' privilege logs. The district court explained the disputed documents as follows: "The disputed documents at issue were either authored by Ablation Frontiers, Inc.'s ("AFI") outside counsel for AFI, or Medtronic's outside counsel for Medtronic. The documents were subsequently turned over to each respective party by the other during Medtronic's negotiations to acquire all of AFI's products and related intellectual property."

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Interwoven v. Vertical Computer Systems: Motion to Stay Pending Reexamination Denied Where Alleged Infringer Filed Declaratory Judgment Action to Initiate Litigation and Then Participated in Litigation Through the Markman Hearing

March 19, 2012

Interwoven moved to stay all proceedings pending the outcome of an ex parte reexamination of the two patents-in-suit. Interwoven asserted that a stay was warranted because the defendant appeared unprepared to litigate and a reexamination would likely modify the issues in the case, with no undue burden to the defendant. The defendant, Vertical, opposed the motion, arguing that a stay would impose an unreasonable delay and that the stay request was a dilatory tactic that would prejudice the defendant, as the alleged infringement would continue while the stay was in effect.

Vertical had filed a patent infringement action against Microsoft Corporation in the Eastern District of Texas. After it settled with Microsoft, Vertical told Interwoven that it believed Interwoven was infringing its patents. After negotiations failed, Interwoven filed the declaratory judgment action in the Northern District of California. During the litigation, the parties began discovery, briefed claim construction issues and participated in the Markman hearing. The district court then issued its claim construction ruling, which largely rejected Interwoven's positions. Interwoven then filed its ex parte request for reexamination and moved to stay the litigation that it had initiated.

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Apple Invalidates Two Claims of NetAirus' Patent But Faces Trial on Two Others: NetAirus v. Apple

March 16, 2012

Plaintiff NetAirus Technologies ("NetAirus") contended that Apple was infringing U.S. Patent No, 7,103,380 (the "'380 Patent"), which pertains to a method in which a handset device communicates wirelessly over both local area networks and wide area networks. NetAirus claimed that the iPhone 3G and later models infringed the '380 Patent by switching between a cellular data network and local Wi-Fi hotspots. Apple moved for summary judgment contending that the '380 Patent was invalid.

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Request for Sanctions for Spoliation Denied Where Plaintiff Failed to Bring the Spoliation Issue to the Court's Attention for Four Months and Waited Until the Eve of Trial

March 14, 2012

Plaintiff Schering Corp. ("Schering") filed a patent infringement action against Apotex Inc. ("Apotex"). Schering brought a motion contending that Apotex spoliated relevant evidence. The motion was based on the omission of allegedly relevant evidence from Apotex' expert report. The expert report was served in October 2011 and Schering notified Apotex of the alleged spoliation a few days after the report was served. Apotex responded to the letter and stated that it had no other additional information to provide because the expert did not save the slides that he analyzed.

Schering did not bring the alleged spoliation to the court's attention for several months. The court found that this delay was significant and that Schering had not adequately explained the delay. "Schering fails to adequately explain why it waited for months, and until the eve of trial, to bring this alleged spoliation to the attention of the Court."

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Robocast v. Apple/Microsoft: Transfer Motion Denied Where Plaintiff's Choice of Forum Was Given Deference and the Relative Size and Strength of the Parties Weighed Against Transfer

March 12, 2012

In two separate actions, Robocast sued Apple and Microsoft for patent infringement. Apple responded by filing a motion to transfer and Microsoft subsequently filed a similar motion to transfer. Both complaints are centered on U.S. Patent No. 7,155,451 (the "'451 Patent"), which is directed toward an "Automated Browsing System for Publishers and Users on Networks Serving Internet and Remote Devices," which was invented by the president of Robocast. Robocast accused AppleTV, Front Row, iTunes, Bing and Windows Vista of infringing the patent.

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Tactical Decision to Exclude Royalty Rate from Expert Report Causes Court to Preclude Defendant from Arguing Royalty Rate to the Jury

March 9, 2012

In this patent infringement action, the defendant, Varian Medical Systems, provided an expert report on damages that did not state a royalty rate for the accused products. The district court termed this a tactical decision. "By the way of background, Defendant Varian made the tactical decision to have its expert not state any royalty rate for the sales ..."

Varian subsequently filed objections to the district court's final jury instructions with respect to damages and sought to clarify the jury instructions so that it could argue to the jury reasonable royalties may consist of the sale of one component but there should be no royalty on the sale revenue of the combination of various components. "Alternatively, Varian seeks to argue to the jury that 'if the jury is to award any royalty on the revenue from the Clinac or Trilogy that royalty should be small given, that Varian contributed to the combination.'"

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Federal Circuit Confirms That Method of Deferring Taxes Is Not Patentable

March 8, 2012

Defendant American Master Lease LLC ("AML") appealed the decision of Judge Guilford of the Central District of California holding that all claims of U.S. Patent No. 6, 292,788 were invalid for failing to meet the subject matter eligibility requirements of Section 101 of the Patent Statute. The Federal Circuit (in a panel consisting of Circuit Judges Prost, Schall and Moore) affirmed the invalidity of the claims based on the district court's pre-In re Bilski application of the machine or transformation test.

The claims at issue relate to an investment tool to enable property owners to buy and sell property without incurring tax liability pursuant to 26 U.S.C. § 1031 ("1031 Exchange"). All claims in the '788 patent are method claims, with claim 1 being representative:

1. A method of creating a real estate investment instrument adapted for performing tax-deferred exchanges comprising:

aggregating real property to form a real estate portfolio;

encumbering the property in the real estate portfolio with a master agreement; and

creating a plurality of deedshares by dividing title in the real estate portfolio into a plurality of tenant-in-common deeds of at least one predetermined denomination, each of the plurality of deedshares subject to a provision in the master agreement for reaggregating the plurality of tenant-in-common deeds after a specified interval.

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Something New under the Sun: The Patent Reform Act of 2011 represents the first major overhaul of patent law since 1952

March 8, 2012

After passing Congress with bipartisan support, the Leahy-Smith America Invents Act, also known as the Patent Reform Act,1 was signed by President Barack Obama on September 16, 2011. The new law significantly reforms the way inventors protect their inventions and advances the harmonization of global patent laws, but until many details of implementation are settled, the costs of patent litigation may not decrease.

This article, written by Rod Berman, was first published by the Los Angeles Lawyer, The Magazine of the Los Angeles County Bar Association, and is reprinted with permission. Copyright 2012.

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Affirmative Defense for Invalidity Dismissed Where Affirmative Defenses Were Plead in the Disjunctive and Did Not Put Plaintiff on Proper Notice

March 7, 2012

Plaintiff, Ferring B.V., filed a patent infringement action against Watson Laboratory, Inc. ("Watson Labs") for tranexamic acid tablets sold under the trademark Lysteda. Watson Labs applied to the FDA for permission to manufacture and sell generic tranexamic acid tablets. Watson Labs filed a counterclaim and answer, including an assertion that the patent-in-suit was invalid. Ferring moved to dismiss the counterclaims for invalidity and to strike invalidity as an affirmative defense.

The district court began its analysis by noting that "[a]s a matter of both fairness and efficiency, it seems improper to permit a defendant to force a plaintiff to choose between ambush at trial and needless preparation for a myriad of potential affirmative defenses consistent with a single broad affirmative defense in the answer. The purpose behind the contemporary reading of Rule 8(a) is to prevent a plaintiff from extorting a settlement from a defendant through the prospect of an expensive, detracted discovery process predicated on threadbare claims that would be seen to be legally insufficient if the circumstances of the alleged wrongdoing were even read, much less put to proof."

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Direct Infringement Action Against Time Warner and DirecTV Dismissed Where Plaintiff Failed to Plead Sufficient Allegations of Infringement

March 5, 2012

K Tech Telecommunications ("K Tech") filed patent infringement actions against Time Warner and DirecTV. DirecTV and Time Warner moved to dismiss the patent infringement complaint for failure to state a claim or, in the alternative, for a more definite statement. K Tech owns several patents that are directed toward particular ways of updating certain channel information associated with certain digital television signals.

As explained by the district court, "[a]ccording to Plaintiff, full-power television stations identify individual television programs carried by a digital television signal transmitted over the air using a major channel number, a minor channel number, and/or a carrier frequency. Plaintiff's patents explain that when a television translator facility receives a broadcast, translates it to a new frequency, and rebroadcast it, so-called Program and System Information ("PSIP") data associated with the transmission, including channel number and carrier frequency, might not be updated. Plaintiff's patented inventions enable a television translator facility to update the PSIP table with proper channel and carrier frequency information."

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Covenant Not to Sue Contains an Implied License Barring Infringement Claims and Cannot Be Revoked After Reliance

March 2, 2012

The parties, ICOS Vision Systems and Scanner Technologies, have been involved in patent litigation against one another for over ten years. The patents at issue concern technology used to inspect electronic packaging and one of the patents involved the use of ball grid arrays that provide a method of securing the electrical connections between the microchip and circuit board. Scanner owns a patent pertaining to a method of calibrating and inspecting ball grid arrays. With respect to this patent, the district court bifurcated liability and damages and permitted ICOS to file a single summary judgment motion as to whether ICOS had an implied license through legal estoppel and whether the patent was unenforceable due to laches.

With respect to the implied license issue, the district court discussed the prior litigation between the parties in which Scanner had sued ICOS for patent infringement based on eight patents. After extensive litigation, including a trip to the Federal Circuit, the parties engaged in settlement negotiations that ultimately led to Scanner providing a covenant not to sue on these eight patents. The covenant not to sue provided that Scanner would not sue ICOS for infringement based on the methods or products previously or currently made, used or offered for sale in the United States or imported into the United States. Scanner subsequently attempt to revoke the covenant not to sue when ICOS proceeded with its declaratory judgment claim and the district court found that the covenant not to sue did not deprive it of subject matter jurisdiction to hear the declaratory judgment claim.

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