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In this patent infringement action between Guardant and Foundation Medicine (“Foundation”), Foundation moved to exclude the testimony of Guardant’s damage expert, Dr. Becker, on reasonable royalty damages.  In his opinion, Dr. Becker applied on an apportionment factor of 50% in that he asserted the patents contributed at least 50% of the value of the Foundation accused products.  To support this opinion, Dr. Becker relied on a discussion with Dr. Cooper, Guardant’s infringement expert.

Foundation argued that the portions of Dr. Becker’s and Dr. Cooper’s testimony regarding reasonable royalty damages should be excluded because they failed to properly apportion damages to only the patented features of the accused products.  The district court explained that “the central dispute here is whether the 50% apportionment value chosen by Dr. Becker (Guardant’s damages expert) is sufficiently supported by the content of his discussion with Dr. Cooper (Guardant’s infringement expert)—a discussion that provided the exclusive basis for Dr. Becker’s apportionment figure.”  Foundation argued that there was no proper support as Dr. Cooper’s opinions regarding the 50% apportionment value are without “explanation or methodology[.]” Continue reading

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Plaintiff DivX, LLC (“DivX”) filed patent infringement actions against Netflix and Hulu asserting that both companies infringed various patents. Both defendants filed motion to stay their cases pending inter partes review (“IPR”) proceedings before the Patent Trial and Appeal Board (“PTAB”).

As explained by the district court, starting in October 2019, Defendants began filing IPRs of certain claims of the asserted patents before the PTAB. Defendants filed the majority of their IPR petitions between February and March 2020. The deadline for Defendants to file their IPR petitions passed in mid-March 2020, before Plaintiff’s deadline to reduce the number of asserted claims in this case.

After the filing of all of the IPRs, but before the PTAB had decided whether or not to issue review, the Defendants moved to stay the proceedings. Continue reading

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Blurring the Lines: When AI Creates Art Is It Copyrightable?

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Stan Gibson

In October of 2018, Christie’s sold the work Portrait of Edmond de Belamy for $432,500. None of this, including the price, would be notable if not for the claimed artist. The claimed artist was not a person but an algorithm, bearing its creator’s signature:

AI-Signature-300x46

Obvious, a Paris-based collective, created the work using what is known as Generative Adversarial Networks, or “GANs.” Creating works using GANs requires inputting thousands of images as well as developing and making adjustments to the algorithm.

The sale, which garnered attention and outrage alike, served as a flashpoint in the discussion of artificial intelligence and art. As Ian Bogost of The Atlantic wrote, “[t]he image was created by an algorithm the artists didn’t write, trained on an ‘Old Masters’ image set they also didn’t create.”

In the aftermath of this sale, Sotheby’s followed suit with the sale of Mario Klingemann’s Memories of Passerby I (2018) in March of 2019. The work, which sold online for roughly $42,000, uses multiple GANs trained on thousands of portraits from the 17th to 19th century to generate an infinite stream of real-time portraits for the viewer. Klingemann refers to the neural networks used to create an endless stream of new images as “the brushes that I’ve learned to use.” Memories of Passerby I may not have generated the same buzz as Portrait of Edmond de Belamy, but it raises many of the same questions.

Although the use of technology to create art is nothing new, GANs, and similar neural network software, increasingly blur the lines when it comes to creation, authorship and ownership. The use of technology such as GANs to create art results in works that are not authored by individuals in the traditional sense. The question then becomes, are these works copyrightable under U.S. Copyright laws, and if so, to whom does the copyright belong? Continue reading

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Upcoming Webinar: COVID-19 and the Case for Force Majeure in California

Join us as two California business trial lawyers present “COVID-19 and the Case for Force Majeure in California”

The webinar will take place on Wednesday, May 27 at 10:00 AM – 11:00 AM Pacific Time. Register now.

Businesses throughout California are suffering the crippling economic consequences triggered by the COVID-19 pandemic. Looking for relief, many have been stymied by force majeure (so-called “Act of God”) clauses. Our speakers will discuss how to determine if you have a legitimate claim, and explore critical questions about force majeure in California, including:

  • What is a force majeure?
  • What constitutes force majeure in California?
  • How to determine when to assert force majeure?
  • Does force majeure trigger business interruption insurance?
  • What are the practical considerations for addressing force majeure in the
    COVID-19 Pandemic?

Our speakers include:

  • Stan Gibson, Partner, Jeffer Mangels Butler & Mitchell LLP

Stan is an experienced business trial lawyer and is the Chair of JMBM’s Patent Litigation Group. Among his numerous successes is the $570M breach of contract and patent infringement verdict for his client in Medtronic v. Michelson, which is listed in the National Law Journal’s Hall of Fame, a list of the 100 highest grossing verdicts since 2003.

 

Register Now

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District Court Determines No Personal Jurisdiction Exists Under Rules (4)(k)(1) and (4)(k)(2) of the Federal Rules of Civil Procedure Where Plaintiff Could Show Only a Single Infringing Unit Was Sold in the State and Defendant’s Website and Other Activities Were Not Directed at Residents of the State

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Stan Gibson and Julia Consoli-Tiensvold

In Miller Industries Towing Equipment Inc., v. NRC Industries, Plaintiff Miller Industries Towing Equipment Inc. (“Plaintiff” or “Miller”) alleged infringement of a patent by NRC Industries (“Defendant” or “NRC”). The patents in question involve towing recovery vehicles designs and uses. Defendant moved to dismiss under Federal Rule of Civil Procedure (“FRCP”) 12(b)(2), alleging that the Court lacked personal jurisdiction over NRC. Defendant also moved to dismiss the claims under FRCP 12(b)(6), but this was ultimately determined to be moot in light of the Court’s determination.

Plaintiff argued that the district court could exercise personal jurisdiction over NRC as it has exercised sufficient “minimum contacts” with the state of Tennessee under Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945), because NRC advertises in two magazines that have Tennessee subscribers, posts training videos to nationally accessible third-party websites (such as YouTube), maintains a website accessible by Tennessee residents, participates in trade shows where NRC markets its infringing products to Tennessee residents, and because NRC has sold the infringing product to at least one Tennessee resident.

The legal standard for determining whether a court may exercise personal jurisdiction over a defendant is based on FRCP 4(k)(1) and 4(k)(2). Touchcom, Inc. v. Bereskin & Parr, 574 F.3d 1403, 1410 (Fed. Cir. 2009). Continue reading

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Force Majeure in California: Does the COVID-19 Pandemic Qualify?

A Three Part Series

By Stan Gibson

Part 3 – Practical Guidance: Force Majeure and the COVID-19 Pandemic

 

See Part 1 – What Constitutes a Force Majeure

See Part 2 – Asserting Force Majeure

See Part 3 – Practical Guidance

Practical Guidance for Addressing Force Majeure in the COVID-19 Pandemic

Parties on both sides of a contract must weigh their options when faced with a force majeure event and should take steps to ensure that they have a clear understanding as to their obligations, the claims being made by the other contracting party, and what steps they can take to mitigate their losses and/or protect their rights.

There are a number of steps a party can and should take to limit any potential liability in the midst of the current COVD-19 Pandemic.

Review the Terms of Your Contract

First, review the specific terms of your contract. Parties may contract around certain risks that might otherwise be viewed as a force majeure event. You will need to know what your obligations are under the contract and whether you, or the other contracting party, will still be expected to perform even in the face of these unprecedented circumstances. For example, a contract may include specific provisions that a strike or national emergency does not relieve a party of its obligations under the contract.

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After the jury concluded that LG Electronics had willfully infringed a patent held by Mondis Technology and awarded $45 million in damages, the district court let stand the willful infringement determination but vacated the damage award of $45 million.  The district court concluded that the damage award was based on an invalid theory because it was not properly apportioned under relevant Federal Circuit law.  LG Electronics then asserted that Mondis had waived the right to a damage award based on its reliance of an invalid damage theory under  Promega Corp. v. Life Techs. Corp., 875 F.3d 651, 666 (Fed. Cir. 2017).

In Promega, the Federal Circuit held:

But, as explained above, a patent owner may waive its right to a damages award when it deliberately abandons valid theories of recovery in a singular pursuit of an ultimately invalid damages theory. When a plaintiff deliberately takes a risk by relying at trial exclusively on a damages theory that ultimately proves unsuccessful, and, when challenged, does not dispute that it failed to present an alternative case for damages, a district court does not abuse its discretion by declining to give that plaintiff multiple chances to correct deficiencies in its arguments or the record.

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Force Majeure in California: Does the COVID-19 Pandemic Qualify?

A Three Part Series

By Stan Gibson

Part 2 – Asserting Force Majeure

 

See Part 1 – What Constitutes a Force Majeure

See Part 2 – Asserting Force Majeure

See Part 3 – Practical Guidance

When to Assert Force Majeure

As discussed in Part I, the party claiming inability to perform must be able to show that its performance is impossible or unreasonably difficult due to unforeseeable circumstances beyond its control. Typically, a claim of force majeure is made as an affirmative defense to a claim for breach of contract.

Where a force majeure event is claimed the party faced with the claim has two options. The party may “treat the repudiation as an anticipatory breach and immediately seek damages for breach of contract, thereby terminating the contractual relationship between the parties, or [they] can treat the repudiation as an empty threat, wait until time for performance arrives, and exercise [their] remedies for actual breach if a breach does in fact occur at such time.”[1] Although California law “authorizes the injured party to immediately seek damages” it does “not require the injured party to seek damages or lose the right to treat the repudiation as an anticipatory breach.”[2] If, however, a party “continues to accept the [repudiating party’s] performance, [it] may be deemed to have waived the breach.”[3]

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In this patent infringement action, Plaintiff intended to use a damage expert to support a “lost profits” measure of damages and/or a “reasonable royalty” measure of damages. Defendant moved to exclude the lost profits analysis because the damage expert ignored the testimony of Plaintiff’s corporate designee that contradicted his ultimate conclusion.

In the motion to exclude, as explained by the district court, Defendant argued that the damage expert “ignores” testimony from Plaintiff’s corporate designee (Patrick Cox) that purportedly contradicts his ultimate conclusion that, but for Defendant’s infringement, Plaintiff would have realized the sales that Defendant obtained; and (b) Mr. Holzen “lacks information sufficient to reliably determine [Plaintiff]’s profit per call, because that information is based on negotiated customer agreements, which vary by customer.”

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Force Majeure in California: Does the COVID-19 Pandemic Qualify?

A Three Part Series

By Stan Gibson

Part 1 – What Constitutes a Force Majeure

See Part 1 – What Constitutes a Force Majeure

See Part 2 – Asserting Force Majeure

See Part 3 – Practical Guidance

Introduction

The ongoing COVID-19 Pandemic is disrupting day-to-day operations, supply and delivery chains and general contractual obligations around the world and throughout California. Many companies and individuals are facing unprecedented situations and demands. In the midst of all this you may be wondering what effect, if any, the COVID-19 Pandemic will have on your, and other parties’, contractual obligations. You may have heard people throwing around the term “force majeure” as a reason for excusing performance or terminating a contract. But what does that term mean? And how does it work in California? The purpose of this series of articles is to answer these questions and more.

Although these are unprecedented times, the disruption caused by the COVID-19 Pandemic alone, may not be sufficient to excuse performance under a contract. Before making or responding to any claims of impossibility of performance due to the current situation you should carefully review the terms of your contract. Bear in mind that you, or another party, will not be excused from performance simply because performance is more difficult or expensive than anticipated. If faced with a claim of inability to perform by another party, you should ask yourself whether you are willing and able to continue performing your own contractual obligations before asserting that they are in breach. A party suing for breach of contract must be able to show that it was capable of holding up its end of the contract.

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