June 2014 Archives

After Entry of Judgment, District Court Orders Deposit of Amount of Judgment Plus 20% Interest for One Year in order to Obtain Stay of Execution Pending Appeal

June 30, 2014

Innovention Toys, LLC prevailed in a patent infringement action against MGA Entertainment. After the Court entered a final judgment, the parties agreed that execution of the judgment should be pending resolution of post-judgment motions and appeal but disagreed regarding the amount Defendant MGA should deposit with the district court as security.

MGA argued that it should only deposit the amount of the judgment plus one year of post-judgment interest at 0.10%. Innovention asserted that MGA should deposit the amount of the judgment plus 20%, citing Local Rule 62.2.

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Court Denies Motion to Compel Plaintiff's Expert Testimony Prior to Claim Construction

June 25, 2014

Plaintiff Glas-Weld Systems, Inc., filed a patent infringement and unfair competition action against defendants Michael P. Boyle, dba Surface Dynamix, and Christopher Boyle. Plaintiff moved for partial summary judgment and to supplement the record, and Christopher Boyle moved to compel depositions of plaintiff's expert. The district court stayed the partial summary judgment motion pending the ruling on claim construction and ordered that once the court construes the patent claims, the parties could supplement their briefing in support of and in opposition to the motion for partial summary judgment.

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Court Strikes Errata Sheets to Depositions Where "Clarifications" Materially Altered Testimony

June 23, 2014

Plaintiffs Scott Clare, Neil Long, and Innovative Truck Storage, Inc. filed a patent infringement action against Defendant Chrysler Group, LLC, arguing that Defendant infringed their patent for hidden pick up truck bed storage. Chrysler Group filed a motion to strike Plaintiffs' errata sheets from depositions, arguing that Plaintiffs were attempting to materially alter, through the errata sheets, the witnesses' deposition testimony.

As explained by the district court, Federal Rule of Civil Procedure 30(e) contemplates changing a deposition transcript in "form or substance." Courts have placed different burdens on a party attempting to change a deposition in substance and have different views of Rule 30(e).

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Motion for Leave to File Billing Statements Under Seal Denied Where Billing Descriptions Were Not Protected by the Attorney-Client Privilege

June 18, 2014

Plaintiffs filed a motion to permit them to file an affidavit, along with billing documents, under seal. The affidavit, along with its exhibits, was forty-seven pages in length. In the motion, the Plaintiffs contend that "the fees charged for each attorney as well as information contained in the time entries are confidential and private financial information of Plaintiffs and Plaintiffs' counsel and is not publicly available information." The district court stated that the Plaintiffs did not cite any case law in support of their position.

The district court then examined the relevant local rules. Local Rule 26.2 states: "Except as otherwise provided by statute, rule, or order, all pleadings and other papers of any nature filed with the Court ("Court Records") shall become a part of the public record of this Court." E.D. Tenn. L.R. 26.2(a). In order to seal any part of the record, a party must show good cause. E.D. Tenn. L.R. 26.2(b).

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Infringement Action Dismissed Due to Patent Co-Owner's Refusal to Join

June 16, 2014

In STC.UNM v. Intel Corp., Fed. Cir., No. 2013-1241 (June 6, 2014), The Federal Circuit found that the plaintiff patent owner did not have standing for its infringement claims because one of the four co-owners had not been joined and could not be involuntarily joined.

The asserted patent, U.S. Patent No. 5,705,321 ("Method for Manufacture of Quantum Sized Periodic Structures in Si Materials") issued in 1998 with four named inventors: three employees of the University of New Mexico ("UNM") and the fourth an employee of Sandia Corp. A joint assignment made two years prior to issuance incorrectly identified all four inventors as UNM employees. This was subsequently corrected with an assignment by UNM to Sandi Corp. Before the issuance of the '321 patent, two of the UNM inventors filed another patent, U.S. Patent No. 6,042,998, that incorporated the '321 patent by reference and issued in 2000. During the prosecution of the '998 patent, the PTO rejected the application for double-patenting in view of the '321 patent. UNM filed a terminal disclaimer to overcome the double-patenting rejection, which represented that "any patent granted on this instant application shall be enforceable only for and during such period" that the two patents were commonly owned, and that UNM was "the owner of record of a 100 percent interest." However, Sandia never claimed ownership in the '998 patent.

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Supreme Court's Indefiniteness Ruling Has Immediate Impact at ITC

June 16, 2014

After a hearing in an Investigation occurred between February 24 and March 7, 2014 and with the parties having submitted their opening post-hearing briefs on March 21, 2014 and their reply post-hearing briefs on March 28, 2014, the Administrative Law Judge determined that supplemental briefing was necessary after the Supreme Court's decision in Nautilus v. Biosig.

Noting that the final initial determination on violation in the Investigation was currently due to be issued no later than June 20, 2013, the Administrative Law Judge pointed out that "among the material issues involved in this investigation is whether certain claims of the asserted patents are indefinite under 35 U.S.0 § 112."

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Golden Bridge v. Apple: No Third Bite at the Apple as Damage Expert Excluded After Two Failed Reports and Where Trial Was Already Underway

June 11, 2014

Two weeks earlier, the court excluded the expert opinion and testimony of Plaintiff Golden Bridge Technology's ("GBT") damages expert. Nonetheless, the court gave GBT one week to submit a new report based on a new theory. After GBT met its deadline, Apple moved to exclude the second report as well.

As explained by the court, "Apple's motion points out several of the significant flaws in Schulze's current report: (1) Schulze improperly and sub silencio allocated the entire value of Apple's portfolio licenses with Ericsson and Nokia to a tiny subset of a subset of a subset of a subset of the patents and standards in those portfolios; (2) Schulze improperly tripled the per-unit rate that Apple would have paid to GBT based on purely academic articles; (3) Schulze improperly failed to compare the patent-in-suit's technical merits to those of other standards essential patents and (4) Schulze improperly failed to allocate any value to the non-license terms of the Ericsson and Nokia agreements."

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Motion to Compel Settlement Agreements Denied Where Document Requests Only Requested License Agreements

June 9, 2014

Echostar Satellite L.L.C. ("Echostar") moved to compel the production of settlement agreements from the plaintiff. Several issues arose on the motion, including whether the Magistrate Judge had jurisdiction to grant the motion even though the discovery cutoff date had passed, whether a party has an obligation to supplement its prior production with documents that were not created until after the discovery cutoff, and whether the settlement agreements were responsive to the prior document requests.

Turning to the first issue, the court found that it had jurisdiction because of an extension due to a mediation date. "Ordinarily, any motion concerning discovery must be filed sufficiently in advances of the discovery cutoff to allow any production to be completed prior to the cutoff date. Here, however, the parties had obtained an extension of the mediation date from the District Judge in order to allow the instant motion to be decided before the mediation. The Court concludes that, given the foregoing, it has jurisdiction to entertain the instant motion."

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Potential Inventor Declarations Excluded for Claim Construction Where Specific Inventors and Their Proposed Testimony Were Not Identified

June 4, 2014

In this patent infringement action, a dispute arose over whether the defendant B/E Aerospace could rely on declarations from one or more of the inventors of the asserted patent in support of its claim construction position. As explained by the district court, "[i]n the Joint Claim Construction Statement ("Joint Statement," ECF No. 45) filed on May 9, 2014, Plaintiff MAG Aerospace Industries, Inc. ("Plaintiff") and Defendant B/E Aerospace, Inc. ("Defendant") dispute whether, in its claim construction briefing, Defendant may rely on declaration evidence from one or more of the individuals named as inventors on U.S. Patent Nos. 6,353,942; 6,536,054; and 6,536,055 (the "Asserted Patents").

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Supreme Court Sets Forth New Standard for Indefiniteness, Requiring Greater Precision in Claim Terms than the Standard Long Used by Federal Circuit

June 3, 2014

For over a decade, to show that a claim term is invalid as indefinite under 35 U.S.C. §112, ¶2, the Federal Circuit has required that such terms be "not amenable to construction" or "insolubly ambiguous." The Supreme Court in Nautilus, Inc. v. Biosig Instruments, Inc. has rejected that standard on the grounds that it tolerates too much imprecision. Under the new standard, a claim term is indefinite if it, instead, fails to define "the scope of the invention with reasonable certainty."

The patent at issue, assigned to Biosig Instruments, Inc. ("Biosig"), involves a heart-rate monitor used with exercise equipment. Prior heart-rate monitors, the patent asserts, were often inaccurate in measuring the electrical signals accompanying each heartbeat (electrocardiograph or ECG signals) because of the presence of other electrical signals (electromyogram or EMG signals) generated by the user's skeletal muscles. The invention claims to improve on prior art by detecting and processing ECG signals in a way that filters out the EMG interference.

Claim 1 of the patent, which contains the limitations critical to the case, recites a "heart rate monitor for use by a user in association with exercise apparatus and/or exercise procedures." The claim comprises, among other elements, a cylindrical bar with a "live" electrode and a "common" electrode "mounted . . . in spaced relationship with each other." Biosig filed the underlying patent infringement suit, alleging that Nautilus, Inc. ("Nautilus") infringed on its patented claims by selling exercise machines containing Biosig's patented technology.

After conducting a claim construction hearing, the district court granted Nautilus's motion for summary judgment on the ground that the claim term "in spaced relationship with each other" failed the definiteness requirement. The Federal Circuit reversed and remanded, concluding that a patent claim passes the §112, ¶2 threshold so long as the claim is "amenable to construction," and the claim, as construed, is not "insolubly ambiguous." Under that standard, the court determined, the '753 patent survived indefiniteness review.

The Supreme Court disagreed and rejected the Federal Circuit's test for indefiniteness. According to the Supreme Court, a proper reading of §112, ¶2 requires that a patent be held invalid for indefiniteness if its claims, read in light of the patent's specification and prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention.

The Court began its analysis by setting forth the aspects of the §112, ¶2 inquiry on which all parties agreed. The parties agreed that definiteness is to be evaluated from the perspective of a person skilled in the relevant art, that claims are to be read in light of the patent's specification and prosecution history, and that definiteness is to be measured as of the time of the patent application.

The parties disagreed, however, as to how much imprecision §112, ¶2 tolerates. That issue, the Court admitted, is a delicate one. According to the Court, the definiteness requirement must take into account the inherent limitations of language. On the one hand, some modicum of uncertainty is the "price of ensuring the appropriate incentives for innovation." On the other hand, a patent must be precise enough to afford clear notice of what is claimed, thereby apprising the public of what is still open to them in a manner that avoids a "zone of uncertainty which enterprise and experimentation may enter only at the risk of infringement claims." In the Court's view, the standard adopted by the Court mandates clarity, while recognizing that absolute precision is unattainable.

The Federal Circuit's standard, on the other hand, lacks the precision §112, ¶2 demands. To tolerate imprecision just short of that rendering a claim "insolubly ambiguous" would diminish the definiteness requirement's public-notice function and foster the innovation-discouraging "zone of uncertainty." More specifically, the expressions "insolubly ambiguous" and "amenable to construction," which permeate the Federal Circuit's recent decisions concerning §112, ¶2, can leave courts and the patent bar at sea without a reliable compass. While some of the Federal Circuit's fuller explications of the term "insolubly ambiguous" may come closer to tracking the statutory prescription, the Court held that it must set forth the correct standard to ensure that the Federal Circuit's test is at least "probative of the essential inquiry."

Supreme Court Changes the Rules for Induced Infringement

June 3, 2014

In the long-awaited decision in Limelight Networks, Inc. v. Akamai Techs., Inc., the Supreme Court once again reversed the Federal Circuit. This time, the Court's reversal involved the issue of indirect infringement. Specifically, the Court held that an accused infringer cannot be liable for inducing infringement under §271(b) where no one has directly infringed under §271(a) or any other statutory provision.

By way of background, Akamai Technologies, Inc., ("Akamai") is the exclusive licensee of a patent that claims a method of delivering electronic data using a content delivery network ("CDN"). Limelight Networks, Inc., ("Limelight") also operates a CDN and carries out several of the claimed steps in the patent. But, its customers, rather than Limelight itself, perform a claimed step of the patent known as "tagging."

Under Federal Circuit case law, most recently refined in Miniauction, Inc. v. Thomson Corp., liability for direct infringement of a method patent requires performance of all steps to be attributable to a single party. The District Court concluded that Limelight could not have directly infringed the patent at issue because performance of the "tagging" step could not be attributed to Limelight. In an en banc decision, the Federal Circuit reversed, holding that a defendant who performed some steps of a method patent and encouraged others to perform the rest could be liable for inducement of infringement even if no single entity was liable for direct infringement.

The Supreme Court disagreed. The Court began its analysis by setting forth what it called "a simple truth"--liability for inducement must be predicated on direct infringement. The court then held that, assuming the Federal Circuit's holding in Miniauction is correct, Akamai's claimed method has not been infringed because the performance of all of its steps is not attributable to any one person. And because direct infringement has not occurred, there can be no inducement of infringement under §271(b).

In the Court's view, the Federal Circuit's view would deprive §271(b) of ascertainable standards and require the courts to develop two parallel bodies of infringement law: one for direct infringement and another for indirect infringement. Further, the Court's reading of §271(b) was reinforced by §271(f)(1), which, in the Court's opinion, illustrates that Congress knows how to impose inducement liability predicated on noninfringing conduct when it wishes to do so.

In rejecting Akamai's arguments, the Court held that although a would-be infringer could evade liability by dividing performance of a method patent's steps with another whose conduct cannot be attributed to the defendant, that merely would be a result of the Federal Circuit's interpretation of §271(a). Moreover, a desire to avoid this consequence does not justify fundamentally altering the rules of inducement liability expressly required by the text of the Patent Act.

The Court concluded its decision by expressly stating a point that was obviously implied in its analysis: it will not determine whether the rule in Miniauction is correct. That is because the question presented here is clearly focused on §271(b) and presupposes that Limelight has not committed direct infringement under §271(a). The Court did say, however, that the Federal Circuit is free to revisit the Miniauction rule on remand.

Whether the Federal Circuit will now change its holding in Miniauction is the subject of debate. While many in the patent bar believe it should be reversed, those that do not think it will be (at least not any time soon) can rely on a few points for support. First, several Federal Circuit judges, including Judges Linn, Dyk, Prost, O'Malley, and Plager, have arguably endorsed the Miniauction holding in various opinions they have authored or joined over the years. Second, the rule in Miniauction and other, similar decisions has stood for several years without any real hint by Congress that it disapproves of the rule or plans to change it.

In the meantime, what seems certain is that litigants will have to consider the Court's ruling when developing, or attacking, infringement theories. Also, patentees likely will want to consider the ruling when drafting claims that may involve direct infringement by more than one actor.

District Court in Delaware Denies Motions to Transfer Where Transfer Would Require Litigation in Multiple Districts

June 2, 2014

In these patent infringement actions, the defendants moved to transfer to three different district courts. As explained by the district court, "[t]here are currently six pending actions in the District of Delaware involving LifePort, LifeScreen, or both. All of the infringement cases involve technology pertaining to the field of minimally invasive vascular repair and many of the actions share overlapping patents-in-suit, which will require claim construction. LifePort has asserted the most patents against the defendant W.L Gore & Associates, Inc. ("Gore"), which must be litigated in this district because Gore is a Delaware corporation with its principal place of business in Newark, Delaware. Five of the patents asserted against Gore overlap with the defendant Endologix, Inc. ("Endologix"). LifePort has also asserted another patent against Gore that overlaps with the defendants Medtronic, Inc. and Medtronic Vascular, Inc. (collectively, "Medtronic"). Similarly, LifeScreen has asserted a patent against C.R. Bard, Inc. and Bard Peripheral Vascular, Inc. (collectively, "Bard"), and Cook Incorporated and Cook Medical Incorporated (collectively, "Cook"), but Bard has not sought transfer."

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