September 2016 Archives

District Court Holds that Document Retention and Destruction Policies Are Privileged under Court's Default Discovery Standard

September 29, 2016

In this patent infringement action, the plaintiff sought production of the defendant's document retention and document destruction policies. The defendant asserted that the request sought information protected by work product and attorney-client privilege. The plaintiff argued that the documents were merely corporate policies that could not be privileged.

The district court analyzed the issue by reviewing the court's Default Discovery Standards and concluded that these policies are protected under those standards.

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District Court Declines to Vacate Ruling That Patent Is Invalid for Covering Unpatentable Abstract Ideas after the Parties Settled the Case with an Appeal to the Federal Circuit Pending

September 27, 2016

The Plaintiffs filed a patent infringement action against the defendant, Netskope, accusing Netskope of infringing U.S. Patent Number 7,305,707 (the "707 Patent"). Netskope filed a motion for judgment on the pleadings, which the district court granted finding that the asserted claims for the 707 Patent were unpatentable abstract ideas. The district court subsequently entered judgment in favor of Netskope, invalidating the '707 Patent.

After the Plaintiffs filed an appeal with the Federal Circuit, the parties settled the case and the Federal Circuit remanded the case back to the district court. The Plaintiffs then filed an unopposed motion to vacate the district court's judgment invalidating the '707 Patent.

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Plaintiff Granted Dismissal Based on Covenant Not to Sue Even With Motion to Dismiss for Lack of Patentable Subject Matter Pending

September 22, 2016

The plaintiff, Shipping and Transit, LLC ("Plaintiff"), filed a patent infringement action against Defendant Neptune Cigars, Inc. ("Defendant"), for infringement of U.S. Patent Nos. 6,415,207 ("the '207 Patent") and 6,763,299 ("the '299 Patent"). The Defendant filed a motion to dismiss on the ground that the patents are directed to ineligible subject matter under 35 U.S.C. § 101.

Instead of opposing the motion to dismiss on the merits, the Plaintiff issued a covenant not to sue to the defendant. The Plaintiff then argued that the covenant not to sue removed any actual controversy between the parties and that the case should be dismissed based on a lack of subject matter jurisdiction.

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District Court Excludes Damage Expert's Opinion Based On Faulty Royalty Calculation

September 20, 2016

In this patent infringement action between Finjan and Sophos, the district court had previously granted a motion to exclude Finjan's damage expert. The district court explained that the expert's, Layne-Farrar, "method of applying a royalty rate to an apportioned base for each patent and adding the resulting royalties was not reliable because under her apportionment method she had attributed the full value of certain features of Sophos's products to multiple patents and so had counted the value of these features multiple times."

The district court concluded that this methodology "functioned to inflate Layne-Farrar's royalty base and her final damages calculation." Nonetheless, the district court permitted the expert to submit a supplemental report. Sophos then moved to exclude the supplemental report as well.

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District Court Denies Request to Preclude Defendant from Sharing Confidential Information of Plaintiff with PTAB as part of Inter Partes Review

September 15, 2016

In this patent infringement action between Ultratec and CaptionCall, CaptionCall filed a motion for relief from the stipulated protective order in order to use confidential commercial information from Ultratec (the plaintiffs) in an inter partes review of Ultratec's patent. CaptionCall wanted to use the information to rebut Ultratec's contention that secondary considerations support the validity of the patent.

Ultratec opposed the motion and contended that confidential information presented to the PTAB would necessarily be disclosed to the public if the PTAB bases its decision on that information.

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District Court Stays Litigation Pending Inter Partes Review ("IPR") over Defendant's Objection That Summary Judgment Motion Should be Determined First

September 13, 2016

After the Patent Trial and Appellate Board ("PTAB") instituted inter partes review ("IPR") of all asserted claims in three of the Patents-in-Suit and with the PTAB's decision on FMC's petition for IPR of the fourth challenged patent pending, the district court received briefs on whether the case should be stayed pending the IPRs.

The district court analyzed the issued by nothing that it had authority to stay the case pending IPRs based on a three factor test. See, e.g., Procter & Gamble Co. v. Kraft Foods Global, Inc., 549 F.3d 842, 848-49 (Fed. Cir. 2008) (citing 35 U.S.C. § 318). "District courts typically analyze stays under a three-factor test: (i) whether a stay would unduly prejudice or present a clear tactical disadvantage to the non-moving party; (ii) whether a stay will simplify the issues in question and trial of the case; and (iii) whether discovery is complete and whether a trial date has been set." Murata Mach. USA v. Daifuku Co., Ltd., __ F.3d __, 2016 WL 4073320, *3 (Fed. Cir. Aug. 1, 2016).

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District Court Precludes Damage Expert from Using a Settlement Agreement to Derive a Reasonable Royalty Calculation Where Expert Employed a Likelihood of Liability Estimate Based Solely on a Study That Patent Holders Prevail Approximately 40 Percent

September 8, 2016

MAX Encryption Technologies ("MAZ") filed a patent infringement action against Blackberry for patent entitled "Method of Transparent Encryption and Decryption for an Electronic Document Management System," U.S. Patent No. 6,185,681 (the "'681 patent"). As the case progressed toward trial, Blackberry filed a motion to exclude the testimony of MAZ' damages expert, Chase Perry.

As explained by the district court, "[i]n reaching his baseline estimate for damages, Mr. Perry relied on a previous license agreement involving the patent-in-suit. The previous license agreement, however, was made in the context of settling a litigation dispute, and thus did not reflect the royalty the parties would have reached 'just before infringement began.' Therefore, the damages amount arrived at in the settlement agreement had to be translated into a damages number that the same parties would have arrived at just before infringement began had they, instead, assumed that the patent was infringed and valid. This implies that the amount of the previous settlement would need to be increased to arrive at the royalties that would have been agreed to in a hypothetical negotiation.'

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District Court Orders Production of Source Code in Searchable Format

September 6, 2016

The plaintiff, [24]7 Customer, Inc. ("[24]/7"), filed a lawsuit against Defendant LivePerson, Inc. ("LivePerson") alleging that LivePerson infringed several patents pertaining to a customer engagement software platform. After the lawsuit was filed, the parties entered into a stipulated protective order in which the parties agreed that "[a]ny source code produced in discovery shall be made available for inspection, in a format allowing it to be reasonably reviewed and searched, during normal business hours or at other mutually agreed times, at an office of the Producing Party's Counsel or another mutually agreed upon location."

Furthermore, the Protective Order provided that "[a]ll source code shall be made available by the Producing Party to the Receiving Party's Outside Counsel of Record and/or experts on a secured computer in a secured room without Internet access or network access to other computers, as necessary and appropriate to prevent and protect against any unauthorized copying, transmission, removal or other transfer of any source code outside or away from the computer on which the source code is provided for inspection (the "Source Code Computer" in the "Source Code Review Room").

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Grecia v. McDonald's: District Court Grants Motion to Dismiss Where McDonald's Could Not "Use" System for Patent Infringement Claim Because Credit Card Companies Controlled the Entire System

September 1, 2016

The plaintiff, Grecia, alleged that McDonald's infringe certain claims of U.S. Patent No. 8,533,860 ("the '860 patent") and of U.S. Patent No. 8,402,555 ("the '555 patent") through its use of the "tokenization systems" of several credit card companies.

As explained by the district court, Grecia alleged that McDonald's uses the claimed systems when a McDonald's customer purchases a McDonald's food item with a credit card, the credit card company's server acts as a receipt module by receiving the primary account number ("PAN") assigned to the credit card. The credit card company's authentication module authenticates the PAN with the issuer of the credit card. Then the credit card company's connection module establishes a connection between the credit card company's payment processor and its token service provider. A token is data that serves as a surrogate for the PAN.) The payment processor then acts as a request module and requests from the token service provider the token associated with the PAN. The payment processor then acts as the second receipt module by receiving the token.) The credit card company then writes the token to the token vault, or branding module, so that when the same credit card is used for subsequent McDonald's purchases, the token associated with the PAN is available to be cross-referenced.

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