Articles Posted in District Courts

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Raffel Systems, LLC (“Raffel”) filed a patent infringement action against Man Wah Holdings (“Man Wah”).  Man Wah moved to dismiss the patent claims on the ground that Raffel did not possess title to the patents at the time the lawsuit was filed and therefore lacked standing to sue.

As explained by the district court, Man Wah asserted that Raffel lost title to the patents when Raffel mortgaged its patents to obtain loans with PrivateBank and East West Bank. Man Wah relied on the U.S. Supreme Court case of Waterman v. Mackenzie, 138 U.S. 252 (1891) for its position that because Raffel granted PrivateBank and East West Bank security interests in its patents and the banks recorded their security interests with the USPTO, this transferred title in the patents from Raffel to the banks.

In opposition to the motion, Raffel argued that its agreements with the banks are nothing more than standard security agreements granting the banks a security interest in the patents, not a conveyance of title. Continue reading

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In this patent infringement action, AT&T filed a motion to compel certain litigation-funding discovery from the plaintiff, United Access Technologies, LLC (“UAT”).  The district court reviewed documents relating to or from third parties regarding potential investments by those third parties in UAT’s lawsuits and communications to and from third parties relating to “quarterly updates” about UAT’s current lawsuits.  In its motion, AT&T contended the information was not privileged and should be produced.  UAT responded that the litigation funding was irrelevant and was protected by the work-product doctrine.

To analyze the issue, the district court explained that “[d]iscoverability of litigation funding materials under Federal Rule of Civil Procedure 26 is a contested issue on which there is no binding precedent in the Third Circuit. See In re Valsartan N-Nitrosodimethylamine (NDMA) Contam. Prod. Liab. Lit., 405 F. Supp. 3d 612, 615 (D.N.J. 2019) (collecting cases and agreeing “with the plethora of authority that holds that discovery directed to a plaintiff’s litigation funding is irrelevant”). Generally, when confronted with this sort of dispute, close consideration of the subject matter in the disputed documents (e.g., through in camera review) is a prudent approach. See, e.g., ART+COM Innovationpool GmbH v. Google, Inc., C.A. 14-217 D.I. 196 (D. Del. Sept. 11, 2015) (finding, after in camera review, agreements with plaintiff’s litigation financiers were irrelevant).” Continue reading

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Following Straight Path IP Group’s, the patent owner’s, unsuccessful appeal, Apple and Cisco moved for reasonable attorney’s fees. Although the district court reaffirmed the exceptionality of the patent owner’s prosecution of the case, the district court found that defendants’ fee requests were too high and directed the parties to submit their billing requests to a special master. The order cautioned the defendants to “take care to submit only for time and expenses that truly deserve compensation and at billing rates that truly deserve to be compensated,” stating that the district court might treble the deductions for requests the special master found unreasonable.

After briefing and a hearing, the special master recommended that Apple should receive nearly all it requested, with some minor deductions taken for “certain ambiguous or duplicative time entries.” On the other hand, the Special Master recommended that Cisco should receive only half because its billing records never conformed to the district court’s direction. As part of the reasoning, the special master explained that Cisco did not pay counsel by the hour, rather it paid a flat-monthly fee. As explained by the district court, “[t]he special master found Cisco’s original billing submission deficient and asked Cisco to resubmit. Cisco did so, but the special master found the records remained deficient for an ordinary lodestar review. To be sure, the special master found this alternative billing method compensable under § 285, but the records did not paint a clear picture of counsel’s billable activities or clearly delineate between this case and other, non-compensable work for Cisco. Thus, the special master concluded a 50% reduction would ensure patent owner did not overpay, yet still compensate Cisco for fees actually paid. Finally, the special master declined to treble the deduction, finding Cisco’s noncompliance a product of the alternate billing arrangement and not of bad faith.”

The patent owner subsequently objected that the special master’s awards of fees was too high. Continue reading

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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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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

by
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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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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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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District Court Permits Ex Parte Communication with Former Employee and Co-Inventor of Plaintiff But Orders Defendants to Turn Over Certain Email Communications

by

Stan Gibson and Julia Consoli-Tiensvold

In ICM Controls Corp. v. Honeywell International, Inc., Plaintiffs ICM Control Corp. (“Plaintiffs” or “ICM”) filed a letter motion objecting to ex parte communications between counsel for Defendants Honeywell International, Inc. (“Defendants”) and a former employee and co-inventor of Plaintiffs, due to the possibility that the former co-inventor may have disclosed privileged or confidential information obtained as a result of his employment.

The former employee, Andrew Nguyen, was the co-inventor on the patent at issue in this case alongside Andrew Kadah, the current President of ICM. Mr. Kadah, during Mr. Nguyen’s employment, would have regular communications with co-inventors, including Mr. Nguyen, for the purpose of providing information to legal counsel in order to receive legal advice. Mr. Nguyen left his employment at ICM in 1997, prior to ICM applying for the patent at issue.

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In this patent infringement action, Defendants moved to amend their invalidity contentions and justified the amendment based, in part, on the replacement of its technical expert.

Defendants asserted that its “replacement technical expert (engaged in December 2019 following the passing of prior expert Thomas Gafford) completed an independent review of the current contentions in January 2020 and concluded that, in light of the Court’s rulings on claim construction and ICM’s amended infringement contentions, these additional references would support his explanation why ICM’s doctrine of equivalents theory sweeps in the prior art.”  Defendants also argued that plaintiffs will not be prejudiced by these amendments because the three additional references are “modest” and “originate from the same technical field as those previously charted references;” and because “there [are] still several months before ICM’s June 1, 2020 deadline to respond, giving its technical expert ample time to consider them.”

The court disagreed with this argument, reasoning that “[t]he fact that defendants’ replacement expert found additional prior art and publications that he deemed relevant to the validity of the `645 patent provided no justification for why the defendants or their prior expert did not marshal the same evidence from at least 25 years ago in a more timely fashion.2 The defendants may not exploit the need to replace a deceased expert as an excuse to belatedly make significant changes to their invalidity theories. See, e.g., Apple v. Samsung Elecs. Co., No. C 11-1846, 2012 U.S. Dist. LEXIS 190470, at *61-65 (N.D. Cal. June 27, 2012) (striking numerous expert opinions of invalidity based on theories not previously disclosed in the defendant’s invalidity contentions); Chemfree Corp. v. J. Walter, Inc., 2008 U.S. Dist. LEXIS 93376, at *13-16 (N.D. Ga. Aug. 26, 2008) (denying leave to amend invalidity contentions to incorporate input from a technical expert where the original invalidity contentions were prepared without expert consultation).”

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