August 2014 Archives

In an IPR Proceeding With Several Listed Petitioners, The Petitioners Must Speak With A Single Voice

August 27, 2014

In IPR2014-00954, the Patent Trial and Appeals Board ("PTAB") (A.P.J.s Petravick, Deshpande, and Clements) issued a decision regarding the proper identification of lead and backup counsel listed in the powers of attorneys in cases involving multiple parties constituting a single Petitioner. The Board explained:

According to 37 C.F.R. § 42.2, "Petitioner" means "the party filing a petition requesting that a trial be instituted." In circumstances not involving a motion for joinder or consolidation of separate proceedings, for each "petition" there is but a single party filing the petition, no matter how many companies are listed as petitioner or petitioners and how many companies are identified as real parties-in-interest. Thus, before the Board, the separate companies constitute and stand in the shoes of a single "Petitioner." Because the eleven companies constitute, collectively, a single party, they must speak with a single voice, both in writing and oral representation.

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Court Denies Summary Judgment Motion as Premature Prior to Markman Hearing

August 27, 2014

Pipeline Technologies Inc. ("Pipeline") filed a patent infringement action against Telog Instruments Inc. ("Telog"). Telog filed a motion for summary judgment, seeking summary judgment on the ground that the disputed claims of U.S. Patent 7,219,553 ('553 patent) are invalid for indefiniteness under 35 U.S.C. § 112(b).

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UGG: Default Judgment and Treble Damages Entered Against Defendant Where Defendant Failed to Participate in Discovery

August 26, 2014

Plaintiff Deckers Outdoor Corporation ("Plaintiff") alleged that Defendants Superstar International, Inc. and Sai Liu ("Defendants") produce, advertise, and sell products that infringe Plaintiff's design patents for UGG boots. The district court previously ruled that default judgment was appropriate, considering both the procedural requirements of Federal Rule of Civil Procedure 55(b) and the factors laid out in Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). In the previous order, the district court left open what relief Plaintiff could recover.

The district court then addressed whether the Plaintiff should be entitled to treble damages. As explained by the district court, "[u]nder 35 U.S.C. § 284 ("Section 284"), when a Court finds that a patent has been infringed, 'the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court.' One way damages may be measured under Section 284 is by the patentee's lost profits. Lucent Technologies, Inc. v. Gateway, Inc., 580 F.3d 1301, 1324 (Fed. Cir. 2009). The burden of proving damages is on the patentee. Id."

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District Court Grants Motion to Reconsider Summary Judgment Motion after Supreme Court's Decision in Limelight v. Akamai

August 20, 2014

In this patent infringement action, FedEx moved for reconsideration after the district court had denied its motion for summary judgment regarding the plaintiff's claim for inducing patent infringement. FedEx moved for reconsideration based on the Supreme Court's recent decision in Limelight Networks, Inc. v. Akamai Technologies, Inc., 134 S. Ct. 2111 (2014).

The district court first analyzed whether the motion to reconsider was procedurally proper. "Under Local Rule 7-18, a motion for reconsideration may be made on the following grounds only:

(a) a material difference in fact or law from that presented to the Court before such decision that in the exercise of reasonable diligence could not have been known to the party moving for reconsideration at the time of such decision, or (b) the emergence of new material facts or a change of law occurring after the time of such decision, or (c) a manifest showing of a failure to consider material facts presented to the Court before such decision. No motion for reconsideration shall in any manner repeat any oral or written argument made in support of or in opposition to the original motion."

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Motion to Stay Pending Inter Partes Review Denied Where Plaintiff Had Prevailed in Previous Inter Partes Review

August 18, 2014

In this patent infringement case, Plaintiff, CTP Innovations, LLC ("CTP") sued V.G. Reed and Sons, Inc. ("Reed") to stop Reed's alleged infringement of two United States patents, which pertain to systems and methods of providing publishing and printing services by a communication network involving computer to plate technology.

Reed moved for a stay of the action pending a determination of an inter partes review ("IPR") before the Patent Trial and Appeal Board (the "PTAB"). In the motion, Reed asserted "that the stay is appropriate because the PTAB's resolution of invalidity issues regarding the two patents will simplify the instant action and no party will be prejudiced by the stay.

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Court Excludes Plaintiff's Experts Where Experts Failed to Comply with Rule 26 Disclosures

August 13, 2014

In this patent infringement action, the defendants, Hangzhou Langhong Technology Co., Ltd. and Langhong Technology USA Inc., moved to exclude the testimony of plaintiff's experts on infringement and damages. The district court had previously issued a scheduling order setting March 26, 2014 as the deadline for the parties to designate their experts and to make the disclosures required by Rule 26(a)(2) of the Federal Rules of Civil Procedure.

As explained by the district court, Rule 26(a)(2) requires that the expert's report must contain, inter alia, a complete statement of all opinions the witness will express and the basis and reasons for them. Fed. R. Civ. P. 26(a)(2)(B)(i). The district court then found that "[t]he report prepared by Rogers provides virtually none of the information required by Rule 26(a)(2)(B)(i). Plaintiff's response to the motion asserts as an excuse for noncompliance lack of sufficient discovery before Rogers prepared his report for him to have the information he would need to comply with the requirements of Rule 26(a)(2)(B). After a thorough review of the material provided by the parties, the court is not persuaded that plaintiff's excuse for noncompliance with the scheduling order as to Rogers has merit. Plaintiff had ample time before Rogers prepared and submitted his report for the collection of whatever information it needed for Rogers to provide the information in his report required by Rule 26(a)(2)(B)(i)."

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Motion to Stay Enforcement of Judgment Denied Where Defendant Was Found to be a Willful Infringer and Offered Inadequate Security

August 11, 2014

On May 16, 2014, the district court entered Judgment on a jury verdict in favor of Plaintiff Global Traffic Technologies, LLC ("GTT") in the amount of $5,052,118, enhanced damages in the amount of $2,526,059, and prejudgment interest in the amount of $923,965, plus $1,384.14 for each day after October 31, 2013. Defendants Morgan and KME requested that the district court stay execution of judgment and waive the supersedeas bond requirement. Defendant STC requested that the district court stay execution of judgment with an authorized bond of $100,000, together with pending patent applications in the field of traffic signal preemption.

As the district court explained, "[a]n appellant may obtain a stay of execution of judgment pending appeal when an appellant posts a supersedeas bond, "in the full amount of the judgment plus interests, costs, and damages for delay." Fed.R.Civ. P. 62(d); Corporate Comm'n of the Mille Lacs Band of Ojibwe Indians v. Money Ctrs. of Am., Inc., No. 12-1015, 2013 U.S. Dist. LEXIS 176796, at *2 (D. Minn. Dec. 17, 2013) (citing New Access Commc'ns LLC v. Qwest Corp., 378 F. Supp. 2d 1135, 1138 (D. Minn. 2005) (Tunheim, J.)). The Court maintains the discretion, however, to waive the bond requirement and stay enforcement of the judgment without a bond."

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Revenue-Driven Licensing Activities Fail to Satisfy Domestic Industry Requirement for ITC Action

August 7, 2014

The ALJ terminated the ITC investigation upon granting respondent's motion for summary judgment for lack of domestic industry, finding that the complainant's (a licensing entity) patent-related activities were solely revenue-driven rather than production driven. Optical Disc Drives, Components Thereof, and Products Containing the Same, 337-TA-897 (ITC July 30, 2014, Order) (Lord, ALJ). This distinction was key to the ALJ's ruling.
To satisfy the so-called "economic prong" of the domestic industry requirement under 19 U.S.C. § 1337(a)(3), a complainant must show that an industry in the United States exists with respect to the articles protected by the asserted patent in the form of:

(A) significant investment in plant and equipment;
(B) significant employment of labor or capital; or
(C) substantial investment in its exploitation, including engineering, research and development, or licensing.

The legal question at issue was "whether a licensing entity whose patent-related activities are purely revenue driven can choose to prove the existence of a domestic industry under subsections (A) and (B) of section 337(a)(3), avoiding the requirements of subsection (C)." The ALJ answered in the negative, holding that it would be contrary to the statute and case law to allow a purely revenue-driven licensing entity to avoid the requirements of subsections (A) and (B), by asserting a domestic industry under subsection (C).

The ALJ explained the well-established law that where licenses are directed to development or production using patented technology, a licensor can establish a domestic industry by showing the significant expenditures of its licensees under subsections (A) and (B). Citing Certain Variable Speed Wind Turbines and Components Thereof, Inv. No. 337-TA-376, Remand Comm'n Op., 1998 WL 35465896 (Feb. 2, 1998). However, in the absence of production-driven licensing, the case law under subsection (C) requires evidence of a revenue-driven licensing entity's own patent-related activities and expenditures. See, e.g., Certain Multimedia Display & Navigation Devices and Systems, Components Thereof & Prods. Containing the Same ("Certain Multimedia Display"), Inv. No. 337-TA-694, Corrected Comm'n Op. (Aug. 8, 2011).

The ALJ identified two lines of case authority that applied to complainant's establishment of the economic prong of domestic industry: Schaper Manufacturing Co. v. Int'l Trade Comm'n, 717 F.2d 1368 (Fed. Cir. 1983) and Certain Multimedia Display. The Schaper line of cases find domestic industry under subsections (A) and (B) where licensees engage in domestic activities under licenses that relate to development or production of patented articles, whereas Certain Multimedia Display construed subsection (C) to require an entity whose only relationship to the patent is revenue driven to prove substantial qualifying expenditures of its own to establish a domestic industry. See, e.g., Certain Multimedia Display, Corrected Comm'n Op. at 25 (finding no domestic industry based, in part, on the lack of "industry-creating, production-driven licensing activity that Congress meant to encourage").

On summary judgment, the ALJ found no issue of genuine fact relating to complainant Optical Devices' failure to satisfy this economic prong of domestic industry. In its complaint, Optical Devices relied exclusively on its agreements with various licensees, namely Sony Corporation, Sharp Corporation, and Sharp Electronics Corporation, to establish a domestic industry. The ALJ found that these licenses were not directed at "the development or production of patented goods," but rather, were focused on efforts to monetize patents by demanding that companies already manufacturing products enter into license agreements with Optical Devices. Such monetization activities have been classified by the ITC as "revenue-driven." Citing Certain Multimedia Display, Corrected Comm'n Op. at 25 n.20.

Having failed to present evidence of production-driven licensing activities pursuant to Schaper (i.e., production generated by its licensees by virtue of the licensing), the ALJ found that Optical Devices also failed to prove any expenditures of its own relating to the asserted patents pursuant to Certain Multimedia Display.

Accordingly, the ALJ held that the Investigation could not proceed.

District Court Denies Preliminary Injunction Where Plaintiffs Could Not Show Irreparable Harm Because Defendant Is Large and Well Established Company

August 6, 2014

Plaintiff Hill-Rom Company, Inc. ("Hill-Rom") filed a motion for a preliminary injunction against General Electric Company ("GE"). The district court began its discussion by noting that "[t]he Federal Circuit has said that preliminary injunctions are a "drastic and extraordinary remedy" that should not routinely be used. Nat'l Steel Car. Ltd. v. Canadian Pac. Rv., Ltd., 357 F.3d 1319, 1324 (Fed. Cir. 2004). There are four factors to consider when determining whether to grant a preliminary injunction in a patent infringement case: 1) likelihood of success on the merits; 2) irreparable harm; 3) the balance of hardships; and 4) the public interest. Celsis In Vitro. Inc. v. CellzDirect. Inc., 664 F.3d 922, 926 (Fed. Cir. 2012)."

The district court then focused on the irreparable harm factor. "The most salient of the factors in the present case is the second, concerning irreparable harm. The Court FINDS that the Plaintiffs have not made a sufficient showing that., without a preliminary injunction, they will suffer irreparable harm. General Electric Company ("GE") is a very large and well established corporation; any harm that Hill-Rom may suffer from GE manufacturing and selling its AgileTrac Hand Hygiene System ("AgileTrac'') can be quantified and the Plaintiffs will be able to be made whole. There is no question that the Plaintiffs will be able to collect on a judgment, should they win one.

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Motion to Set Aside Default Where Defendant Waited Too Long to Obtain New Counsel

August 4, 2014

Plaintiff Fleet Engineers, Inc. ("Fleet") develops, manufactures, and sells after-market products for the trucking industry. Defendant Tarun Surti, the president of Mudguard Technologies, LLC ("Mudguard"), owns a mud flap patent on which this lawsuit is focused. Fleet filed a complaint which asserted three claims: (1) a request for a declaratory judgment of non-infringement, (2) a request for a declaratory judgment of patent invalidity, and (3) tortious interference with a business relationship. Defendants answered the complaint and filed three counterclaims: (1) patent infringement, (2) breach of contract, and (3) misappropriation of trade secrets.

After the Court held a claim construction hearing, counsel for the defendants requested leave to withdraw from the lawsuit. On September 24, 2013, the Court granted the motion and ordered the defendants to retain new counsel within 30 days. Defendants requested an extension until December 20. On October 25, 2013, this Court gave Defendants an additional 28 days to find new counsel, extending the deadline to November 25, 2013. On November 22, Defendants again requested additional time to hire counsel, which the district court granted but warned Defendants that if counsel did not enter an appearance by December 20, default would enter against Mudguard.

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