February 2014 Archives

Federal Circuit Reaffirms De Novo Standard of Review for Claim Construction

February 26, 2014

In a long-awaited decision, the Federal Circuit ruled en banc to uphold the the de novo standard for appellate review of claim construction issues, which was previously established in another en banc decision, Cybor Corp. v. FAS Technologies, Inc. 138 F.3d 1448 (Fed. Cir. 1998).

The facts and procedural background of the case presented a prime opportunity for the Federal Circuit to revisit the question of what deference, if any, it should give to a district court's claim constructions. During the district court proceedings, the parties disputed the meaning of "voltage means." As per usual, the district court analyzed the patent's intrinsic evidence relating to the claim term. However, the district court also accepted testimony from expert witnesses and the inventor. After analyzing the different types of evidence, the district court sided with the patentee and ruled that the term should be given its plain meaning, as opposed to a more specific meaning as a means-plus-function term.

Applying the non-deferential Cybor standard of review, a panel from the Federal Circuit reversed the district court's claim construction. The panel held that the term is a means-plus-function term and required disclosure of sufficient corresponding structure in the patent specification. Based on that conclusion, the panel invalidated the claims for indefiniteness. The patentee requested rehearing, arguing that the interpretation of documents is a fundamentally factual exercise and, therefore, a district court's interpretation of patent claims requires some deference on appeal. In this case, the patentee argued that, on a deferential review, the district court would not, or should not, have been reversed. The Federal Circuit undertook rehearing en banc for the purpose of reconsidering the standard of appellate review of claim construction.

In a sharply divided decision, the Federal Circuit confirmed the de novo standard for review of claim construction rulings, whereby the scope of the patent grant is reviewed as a matter of law. In the decision, authored by Judge Newman, the majority held that "[a]fter fifteen years of experience with Cybor, we conclude that the court should retain plenary review of claim construction, thereby providing national uniformity, consistency, and finality to the meaning and scope of patent claims." Moreover, reversal of Cybor would require a departure from stare decisis. That, the majority held, requires Cybor to be "unworkable," or subsequent cases to "undermine its doctrinal underpinnings," or "a considerable body of new experience" that requires a change in law. According to the majority, none of these conditions were met.

In a dissenting opinion, judges O'Malley, Rader, Reyna, and Wallach stated that the majority decision refuses to acknowledge that claim construction, at times, requires a district court to resolve questions of fact. By so doing, the majority opinion puts itself at odds with Rule 52(a)(6) of the Federal Rules of Civil Procedure, which instructs that, on appeal, "findings of fact ... must not be set aside unless clearly erroneous." Moreover, legitimate criticisms and debate over Cybor have been widespread since it issued, and "no reasoned application of stare decisis" supports the majority's conclusion that the Federal Circuit cannot, or should not, reverse Cybor.

District court rulings on claim construction (and appellate review of those rulings) arguably are the most important events in patent litigation. Accordingly, courts, practitioners, and commentators should be eager to see if Lighting Ballast is heard by the Supreme Court. Until then, the Federal Circuit likely will continue to vacate or modify claim construction rulings at a relatively high rate, and the debate over the standard of review likely will continue.

PersonalWeb v. Google: Duty to Preserve Emails Began When Patent Was Acquired

February 26, 2014

PersonalWeb Technologies, LLC ("PersonalWeb") filed a patent infringement action against Google for infringement of its "Truenames" patents. Google filed a motion for sanctions based on a contention that PersonalWeb systematically deleted relevant emails when it reasonably anticipated litigation. PersonalWeb opposed the motion arguing that it had an email retention policy and timely implemented a litigation hold shortly after the filing of the lawsuit against Google.

In working on its analysis of the motion, the court stated that PersonalWeb's duty to preserve evidence arose when litigation became reasonably foreseeable. Google asserted that PersonalWeb anticipated litigation no later than June 2011, before it even acquired the patents-in-suit because there were discussions regarding future litigation against major technology companies during weekly lunch meetings. The court agreed that "PersonalWeb probably acquired the patents with an eye toward litigation. However, it is difficult to say that litigation was reasonably foreseeable before PersonalWeb even acquired the thing which would give it standing to sue."

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Court Finds that Rule 26 Disclosure and Computation of Damages Insufficient Where Party Failed to Explain How It Calculated Damage Number

February 24, 2014

Orbit Irrigation Products ("Orbit") filed a patent infringement action against Sunhills International ("Sunhills"). After the completion of certain discovery, Sunhills filed a motion to compel. Sunhills contended that Orbit had failed to provide a computation of damages as required by Federal Rule of Civil Procedure 26 and failed to produce its documents related to its damages. As a result, Sunhills asked the district Court to bar Orbit from introducing any evidence related to damages beyond that already produced.

In its disclosure and in discovery, Orbit claimed that it suffered $19 million in damages. The court explained that "[o]n its face Rule 26 requires Orbit to provide Sunhills both with a computation of each category of damages it claims and with the non-privileged documents on which it bases those calculations. Orbit asserted a fixed number for damages suffered from price compression ($19 million) as compared to the lack of any concrete number offered for reputational damages. Sunhills has a right to know from the outset how Orbit reached that number. Such disclosure does not prevent a party from changing theories as the case proceeds."

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Notice of Appeal Untimely Where Attorneys Claimed That Notice Through Electronic Filing System Did Not Start Time for Appeal

February 20, 2014

After trial and the denial of post-trial motions, AT&T Operations, Inc. ("AT&T") filed motion to extend the time to file a notice of appeal pursuant to Federal Rule of Appellate Procedure 4(a). AT&T argued that the e-mail notice of electronic filings (NEF's) that defense counsel received did not provide them with "notice" that Defendants' substantive post-trial motions had been resolved. To make this argument, AT&T noted that the e-mail notifications defense counsel received only contained language regarding the district court's grant of their motions for leave to file sealed documents, but failed to mention the denial of their substantive post-trial motions, which was provided in the same orders. Nonetheless, the district court noted that AT&T did, however, receive e-mail notifications that the Court had entered an order on Plaintiff's bill of costs and had denied Defendants' motion for new trial and JMOL on invalidity which were not sealed pleadings.

AT&T also argued that the docket entries for the orders at issue were modified two days later to reflect the denial of the substantive post-trial motions, but no new electronic notices were sent by the district court's electronic case filing (ECF) system to reflect these amended docket entries. Accordingly, AT&T contended that based on the NEFs they received, counsel believed the motions for JMOL and new trial on damages and non-infringement had not been disposed of and remained pending before the Court. As a result, AT&T claimed that it "did not receive sufficient notice of the substance of the orders entered justifies reopening the time to file an appeal."

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Does the Filing on an IPR Negate the Intent Element for an Indirect Patent Infringement Action? One District Court Says No.

February 18, 2014

Clouding IP ("Clouding") filed a patent infringement action against Rackspace, which alleged direct, indirect, and willful infringement of the patents-in-suit. The district court granted defendant Rackspace's motion to dismiss with respect to indirect infringement, but also granted Clouding leave to amend its complaint. In that ruling, the district court found that Clouding had adequately plead the knowledge requirement for induced infringement, but the district court dismissed Clouding's claims because the First Amended Complaint "failed to plead facts from which the Court [could] infer intent."

Clouding filed a second amended complaint, which again alleged claims for inducing infringement. Rackspace moved to dismiss the indirect infringement claims. Rackspace's motion presented a narrow issue as to whether Clouding failed to sufficiently plead the element of intent for its inducement claims.

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District Court Refuses to Vacate Sanctions Ruling for Spoliation after Settlement

February 12, 2014

Digital-Vending Services International, LLC ("Digital-Vending") filed a patent infringement action against The University of Phoenix, Inc. and Apollo Group, Inc. ("Defendants"). During the course of the litigation, the Magistrate Judge granted Defendants' motion for sanctions for Digital-Vending's spoliation.

After the matter settled, Digital-Vending and the Defendants filed a consent motion to vacate the Magistrate Judge's opinion and order granting Defendants' motion for sanctions for spoliation. As part of the consent motion, the parties informed the court that the Defendants had withdrawn their motion for sanction and that Digital-Vending and the Defendants had settled the case. The parties also informed the court that as part of the settlement Defendants had agree to join the consent motion and that Digital-Vending had dismissed its appeal to the Federal Circuit with prejudice.

The court then proceeded to reject the consent motion, finding that it was inappropriate and the court would not hide Digital-Vending discovery abuse. "The Court will not agree to hide the discovery abuse of the plaintiff in this case by withdrawing the October 3, 2013" order.

Digital-Vending Services International, LLC v. The University of Phoenix, Inc., Case No. 2:09-cv-55 (AWA/TEM) (E.D. Va. Feb. 5, 2014)

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 Stan Gibson at 310.201.3548 or SGibson@jmbm.com.

Summary Judgment Motion Denied Where Expert's Opinion Established a Triable Issue of Fact on Infringement

February 10, 2014

Geotag, Inc ("Geotag") filed a patent infringement action against Frontier Communications Corp. ("Frontier"). Frontier filed a motion for summary judgment of non-infringement, arguing that no triable issue of material fact exists as to whether their accused products practice the limitations of U.S. Patent No. 5,930,474 ("the '474 Patent") requiring topical organization of a database and topical searches.

The '474 Patent, titled "Internet Organizer for Accessing Geographically and Topically Diverse Information," was issued on July 27, 1999 and it claims a method, system, and apparatus for searching information both topically and geographically, wherein information relevant to one geographical area is "dynamically replicated" into a database relevant to another geographical area. As explained by the district court, "[t]he accused instrumentalities in this case are web sites or mobile applications involving geographical data. With few exceptions, these fall into four broad categories: (a) online "yellow pages"-type sites that are designed to help consumers locate businesses near a geographical area; (b) store-locator functionalities on the web sites of brick-and-mortar retailers; (c) mobile store locator "apps"; and (d) job locator sites that help potential applicants find nearby employment."

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Infinite Data v. Amazon: Lawsuit Against Customer Defendants Stayed if Customers Agree to be Bound by Findings of Invalidity in Lawsuit Against Manufacturer

February 5, 2014

Infinite Data filed twenty-one patent infringement actions against a number of companies, including Amazon.com. Mellanox Technologies sued Infinite Data for a declaratory judgment that its technology does not infringe Infinite Data's patent and that the patent is invalid. Mellanox also alleged that it had received indemnification requests from "many" of the twenty-one defendants because many of them are users and/or customers of Mellanox's technology.

All twenty-one defendants filed motions to stay, arguing that each of them use Mellanox's technology, and that the Court should exercise its discretion to stay their cases while the Mellanox case proceeds. To begin its analysis, the district court noted the standard for a stay: "(1) whether granting the stay will simplify the issues for trial; (2) whether discovery is complete and a trial date is set; and (3) whether granting a stay would cause the non-moving party to suffer undue prejudice from any delay, or a clear tactical disadvantage. See, e.g., Vehicle IP LLC v. Wal-Mart Stores, Inc., 2010 WL 4823393, *1 (D.Del. 2010)."

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Apple v. Samsung Sanction Decision: the Bark Is Worse Than the Bite as Apple and Nokia Overreach in Their Request for Sanctions

February 3, 2014

To resolve Apple and Nokia's request for sanctions against Samsung from Samsung's violation of a protective order, the court ordered written discovery and depositions to determine the extent of the violation. After discovery and several hearing, the court began its analysis by noting that "[a] junior associate missing one redaction among many in an expert report is not exactly a historical event in the annals of big-ticket patent litigation. Even if regrettable, these things can happen, and almost certainly do happen each and every day. But when such an inadvertent mistake is permitted to go unchecked, unaddressed, and propagated hundreds and hundreds of times by conscious - and indeed strategic - choices by that associate's firm and client alike, more significant and blameworthy flaws are revealed."

The court then addressed three separate questions. "First, has its protective order been violated? Second, if the protective order has been violated, does the court have the authority to issue sanctions for those violations? Finally, if the court has the authority to issue sanctions, what factors should it consider in determining whether sanctions are warranted?"

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