June 2013 Archives

SFA Systems v. Amazon: SFA Permitted to Amend Infringement Contentions Where Amendment Would Streamline Discovery and Prejudice to Amazon Would Be Minimal

June 26, 2013

SFA Systems ("SFA") filed a patent infringement action against Amazon and twenty-six other defendants in 2011. SFA subsequently timely served its infringement contentions pursuant to the local rules in the Eastern District of Texas. After receiving discovery from Amazon, SFA requested that Amazon supplement its discovery responses to produce documents relating to the Kindle Fire and the Amazon Mobile application. Amazon declined to do so on the basis that the Kindle Fire and the Amazon Mobile app were not accused in the infringement contentions. After several attempts to meet and confer, SFA sought to amend its infringement contentions.

As explained by the district court, the local Patent Rule 3-6 sets forth the procedures for amending infringement contentions. This rule provides that infringement contentions. "shall be deemed to be...final contentions." Patent Rule 3-69a). When a party seeks to amend or supplement its invalidity contentions and considers four factors in ruling on motions for leave to do so: (1) the explanation for the party's failure to meet the deadline; (2) the importance of the thing that would be excluded; (3) the potential prejudice in allowing the thing that would be excluded; and (4) the availability of a continuance to cure such prejudice. Global Sessions LP, 2012 WL 1903903, at *2 (citing S & W Enters., L.L.C. v. Southtrust Bank of Ala., NA, 315 F.3d 533, 536 (5th Cir. 2003)).

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Motion to Enhance Ongoing Royalty Granted Based on Strength of Jury Verdict

June 24, 2013

After Syntrix Biosystems, Inc. ("Syntrix") filed a patent infringement action against Illumina, Inc. ("Illumina"), a jury returned a verdict against Illumina for patent infringement and awarded a reasonable royalty of 6%. Syntrix subsequently filed a motion for an ongoing royalty in the amount of 9% instead of seeking a permanent injunction.

The district court fist explained that after a jury verdict of infringement, a district court may award an ongoing royalty for continued patent infringement. See Paice LLC v. Toyota Motor Corp., 504 F.3d 1293, 1315 (Fed. Cir. 2007). The parties should ordinarily be given an opportunity to negotiate a license regarding future use of the patented invention, but if they are unable to reach agreement, the district court can "step in to assess a reasonable royalty in light of the ongoing infringement." Id.

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Motion to Stay Pending Inter Partes Review Denied Where the Claim Construction Hearing Had Already Occurred

June 19, 2013

Defendant Omron Oilfield & Marine, Inc. ("Omron") filed a motion to stay pending an Inter Partes Review that it initiated against Plaintiff's National Oilwell Varco, L.P.'s ("NOV") patent-in-suit. The patent-in-suit, U.S. Patent No. 5,474,142 (the '142 patent), is directed to automatic drilling.

As the district court explained, "[o]n May 3, 2013, Omron opened up a second front in its legal battle with NOV, by filing a petition for inter partes review with the United States Patent Office. This review process, a relative novelty, is before a panel of three administrative patent judges, as part of the Patent Trial and Appeal Board (PTAB). 35 U.S. C §§6, 316(c). NOV has three months, from the date of Omron's PTAB petition, to file a response, 37 C.F.R. § 42.107(b), and the PTAB in turn has three months after that to determine whether an inter partes review will proceed, 35 U.S.C. § 314(b). In other words, it will likely be five months before the Court or the parties even know if an inter partes review will actually occur here. If the PTAB grants review, by statute it must render a final determination within one year. Id. § 316(a)(11). The one-year period can be extended for a further sixth months upon a showing of good cause. Id. As such, there is a possibility the entire inter partes review process would take nearly two years. Even assuming the parties and the PTAB move expeditiously, the stay Omron seeks could easily last many months or a year, at least."

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Motion to Enforce Settlement Agreement Denied Where Agreement Was Reached as to the Amount of the Settlement But Party Struck Through Two Other Material Terms

June 17, 2013

Graco Childrens Products Inc. ("Graco") filed a patent infringement action against Kids II, Inc. ("Kids II"). During discovery, Graco and Kids II agreed to discuss terms to settle the dispute. As part of that process, Graco's in-house counsel sent an email to Kids II's in-house counsel, with a settlement proposal calling for a two-year mutual non-solicitation provision and a purchase by Kids II of the family of patents-in-suit with a non-exclusive license back to Graco for $1,150,000 or, in place of an outright purchase of the patents, a full settlement of the pending claims for $750,000. The offer was contingent on the execution of a mutually agreeable settlement agreement and was to expire on March 15, 2013.

On March, 19, 2013, Kids II's in house counsel set forth a counterproposal, offering $750,000 for, among other things, the purchase of the patents previously identified by Graco and a mutual two-year moratorium on employee solicitation. Graco responded by seeking clarification on whether Graco would be granted a right to practice the patents and the parties then attempted to reach an agreement on the amount for the settlement.

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Emblaze v. Apple: Court Orders Parties to Meet and Confer Over Motion to Compel After Emblaze Fails to Justify How Apple's Search Terms Were Unduly Burdensome

June 12, 2013

In this patent infringement action, Apple moved to compel production from Emblaze based on search terms that Apple provided. Emblaze opposed the motion, arguing that it had produced all responsive documents, that Apple's requests were overbroad and that using Apple's search terms would be unduly burdensome.

The court began its opinion by noting that "[w]hen decrying the burden imposed by the document demands of an adversary, parties would be wise to follow Hemmingway's advice to 'show the readers everything, tell them nothing.' Unfortunately, in the patent infringement case, [Emblaze] appears to have ignored Papa's guidance."

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Foreign Parent Could Not Seek Lost Profits Based on Sales Lost By Its United States Subsidiary

June 10, 2013

After Fujitsu Limited ("Fujitsu") filed a patent infringement action against Tellabs, Inc. ("Tellabs"), Tellabs filed a motion for summary judgment on the issue of lost profits. As explained by the district court, Fujitsu Limited, a Japanese corporation, is the sole owner of two United States patents that Fujitsu Limited asserted in the litigation, U.S. Patent No. 5,521,737 ("137 Patent") and U.S. Patent No. 5,526,163 ("163 Patent"). Although Fujitsu Limited owns the patents, which relate to telecommunications systems, Fujitsu Limited does not sell any telecommunications systems in the United States. Sales of Fujitsu Limited's patented telecommunications systems in the United States are made by a non-exclusive licensee, its wholly-owned United States subsidiary FNC, which is a California corporation and headquartered in Richmond, Texas.

Tellabs contended in its motion "that (1) Fujitsu Limited is not entitled to damages in the form of the lost profits because it sells no products in the United States and (2) Fujitsu Limited cannot claim the lost profits of its North American subsidiary and non-exclusive licensee, Fujitsu Network Communications, Inc." The district court explained that Fujitsu Limited sought to recover the profits that were allegedly lost by its domestic subsidiary, FNC, due to Tellabs' sales of the allegedly infringing systems pursuant to the 2005 Verizon and 2006 Quest contracts that Tellabs obtained.

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Motion to Intervene Denied After Jury Verdict of Patent Infringement Where Third Party Had Notice of Case and Could have Intervened Sooner

June 5, 2013

After a jury determined that certain defendants induced infringement of the plaintiff's patents by, among other things, selling unregulated and semi-regulated bus converters to third parties, such as Cisco, Cisco moved to intervene into the case. The district court explained that "[t]he jury found that Cisco, among others, was a direct infringer whose products incorporating Defendants' bus converters directly infringed SynQor's patents when they were sold in the United States. Judge Ward entered a Permanent Injunction and awarded supplemental damages for Defendants' continued sale of bus converters through January 24, 2011."

Cisco sought to intervene as a matter of right pursuant to Federal Rules of Civil Procedure 24(a). Cisco asserted that it purchased intermediate bus converters ("IBCs") from the Defendants that are the subject of the damages and, as a result,. Cisco sought to intervene for two reasons:

• "Cisco has agreed with certain defendants to assume liability for damages that may be awarded in this case, giving Cisco a significant interest in ensuring the damages awarded to SynQor are accurately calculated and not inflated; and

• Cisco has the most relevant and important evidence regarding the number of IBC shipments for which SynQor is entitled to a royalty."

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Apple's Motion to Dismiss Based on Invalidity and "Divided Infringement" Denied as Premature Because Court Had Not Yet Ruled on Claim Construction

June 3, 2013

H-W Technology, L.C. ("H-W") filed a patent infringement action against Apple and several other defendants including Amazon and Buy.com. H-W alleged that it had ownership of U.S. Patent No. 7,525,955, entitled "Internet Protocol (IP) Phone with Search and Advertising Capability" (the '955 patent). The 955 patent is directed to systems and methods of using a multi-convergence device, including phones commonly referred to as smartphones, which are able to converge voice and data within a single terminal, and which allow users of such devices via domain specific applications to receive information and offers from merchants and to complete a transaction with one of said merchants without having to generate a phone call.

The Defendants argued that claims 1 and 17 of the patent were indefinite and invalid under 35 U.S.C. § 112, paragraph 2, for combining two statutory classes of invention within a single claim. The defendants also asserted that claim construction was not necessary to rule on the motion to dismiss because H-W had not included any argument in its claim construction briefs regarding the subject-matter class covered by the claim language at issue. H-W asserted that the validity of its patent claims had to be considered on summary judgment context, with the benefit of claim construction and expert discovery, and not on a motion to dismiss.

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