Articles Posted in District Courts

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Zep Solar Inc. (“Zep”) filed a patent infringement action against several defendants. Two of the defendants, Lightway Green new Energy Company, LTD (“Lightway”) and Brightway Global LLC (“Brightway”) answered and counterclaimed with an allegation of inequitable conduct. Zep moved to strike or dismiss the counterclaim and affirmative defense.

As the district court stated, “[i]n the fourth affirmative defense, Brightway and Lightway allege that ‘[t]he Complaint and the purported claim for relief therein is barred because the ‘537 Patent, and each claim thereof, is unenforceable due to inequitable conduct.’ (Docket No. 49, Answer and Counterclaims for Relief at 7:26-27.) In their second counterclaim for relief, Lightway and Brightway alleged hat the ‘537 Patent is ‘invalid and/or unenforceable for failing to meet the conditions of patentability including but not limited to hose specified in 36 U.S. C. Sections 1 et seq., including 35 U.S.C. sections 102, 103, 112, 199, 256 and 37 C.F.R. section 1.56.'”
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In a patent case pending before Judge Selna in the Central District of California, Defendant Nestlé USA, Inc. (“Nestlé”) moved pursuant to Rule 12(b)(6) to dismiss Plaintiff Network Signatures, Inc.’s (“NSI”) infringement claims under Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007) and Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). The Court denied Nestlé’s motion finding that NSI’s complaint alleged enough facts to plausibly state a claim for direct, indirect and willful infringement.

The Court recited the well established legal standard for attacking a complaint under Twombly and Iqbal:

In resolving a Rule 12(b)(6) motion under Twombly, the Court must follow a two-pronged approach. First, the Court must accept all well-pleaded factual allegations as true, but “[t]hread-bare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. Most succinctly stated, a pleading must set forth allegations that have “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 1940. Courts “‘are not bound to accept as true a legal conclusion couched as a factual allegation.'” Id. at 1950 (quoting Twombly, 550 U.S. at 555). “In keeping with these principles[,] a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.” Iqbal, 129 S.Ct. at 1950.

Second, assuming the veracity of well-pleaded factual allegations, the Court must “determine whether they plausibly give rise to an entitlement to relief.” Id. at 1950. This determination is context-specific, requiring the Court to draw on its experience and common sense; there is no plausibility “where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct.” Id.

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And so began a recent order from Judge Posner in the ongoing dispute between Apple and Motorola over various patents directed to features of smart phones. Apple and Motorola have each asserted patent claims against the other and, as the case approaches trial, Judge Posner has issued an order regarding the phases and sequence of the trial.
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On remand to the district court after the Federal Circuit’s en banc decision in Therasense v. Becton, Dickinson and Co., the district court reviewed the procedural posture of the case and the landmark Therasense decision. The district court noted that “Therasense worked a seismic shift in the law of inequitable conduct,” and particularly that “materiality would henceforth use a but-for definition, meaning that submission of the withheld item would have led to a rejection.” The district court also analyzed the decision including the closeness of the vote on the new standard, stating that “[d]espite the closeness of the decision and the importance of the question to our patent system and national economy, no petition for certiorari was filed in the Supreme Court.”

Before applying the facts to the new standard articulated by the Federal Circuit, the district court noted the Federal Circuit’s instructions on remand (1) that the “district court should determine whether there is clear an convincing evidence demonstrating that Sanghera or Pope knew of the EPO brief, knew of their materiality, and made the conscious decision not to disclose them in order to deceive the PTO” and (2) the “district court should determine whether the PTO would have granted the patent but for Abbott’s failure to disclose the EPO briefs. …”
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ArrivalStar filed a motion seeking to extend the deadline for providing its preliminary infringement contentions arguing that the district court’s scheduling order only provided fourteen days for ArrivalStar to prepare and serve its preliminary infringement contentions, that ArrivalStar was misled by Enroute Systems, the opposing party, into believing that the case management deadlines were on hold while the parties explored settlement and denying an extension would severely prejudice ArrivalStar by precluding consideration of its claims on the merits.

In analyzing ArrivalStar’s request, the district court noted that case management deadlines could only be modified by a showing of good cause under Fed.R.Civ.P. 16(b)(4). The district court then concluded that none of the arguments raised by ArrivalStar established good cause for the requested extension.
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In the ongoing struggle between Apple and Motorola over claims of patent infringement in just one of many battles that is taking place across the country over smart phones, both parties proposed claim constructions that were not particularly well-written for lay jurors.

After reviewing the claim construction briefs and stating that the briefs “well written and helpful,” the district court, Judge Posner, stated that he had a concern regarding the proposed claim constructions.
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Plaintiff moved to compel the production of documents that were listed on the defendants’ privilege logs. The district court explained the disputed documents as follows: “The disputed documents at issue were either authored by Ablation Frontiers, Inc.’s (“AFI”) outside counsel for AFI, or Medtronic’s outside counsel for Medtronic. The documents were subsequently turned over to each respective party by the other during Medtronic’s negotiations to acquire all of AFI’s products and related intellectual property.”
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Interwoven moved to stay all proceedings pending the outcome of an ex parte reexamination of the two patents-in-suit. Interwoven asserted that a stay was warranted because the defendant appeared unprepared to litigate and a reexamination would likely modify the issues in the case, with no undue burden to the defendant. The defendant, Vertical, opposed the motion, arguing that a stay would impose an unreasonable delay and that the stay request was a dilatory tactic that would prejudice the defendant, as the alleged infringement would continue while the stay was in effect.

Vertical had filed a patent infringement action against Microsoft Corporation in the Eastern District of Texas. After it settled with Microsoft, Vertical told Interwoven that it believed Interwoven was infringing its patents. After negotiations failed, Interwoven filed the declaratory judgment action in the Northern District of California. During the litigation, the parties began discovery, briefed claim construction issues and participated in the Markman hearing. The district court then issued its claim construction ruling, which largely rejected Interwoven’s positions. Interwoven then filed its ex parte request for reexamination and moved to stay the litigation that it had initiated.
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Plaintiff, Ferring B.V., filed a patent infringement action against Watson Laboratory, Inc. (“Watson Labs”) for tranexamic acid tablets sold under the trademark Lysteda. Watson Labs applied to the FDA for permission to manufacture and sell generic tranexamic acid tablets. Watson Labs filed a counterclaim and answer, including an assertion that the patent-in-suit was invalid. Ferring moved to dismiss the counterclaims for invalidity and to strike invalidity as an affirmative defense.

The district court began its analysis by noting that “[a]s a matter of both fairness and efficiency, it seems improper to permit a defendant to force a plaintiff to choose between ambush at trial and needless preparation for a myriad of potential affirmative defenses consistent with a single broad affirmative defense in the answer. The purpose behind the contemporary reading of Rule 8(a) is to prevent a plaintiff from extorting a settlement from a defendant through the prospect of an expensive, detracted discovery process predicated on threadbare claims that would be seen to be legally insufficient if the circumstances of the alleged wrongdoing were even read, much less put to proof.”
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The parties, ICOS Vision Systems and Scanner Technologies, have been involved in patent litigation against one another for over ten years. The patents at issue concern technology used to inspect electronic packaging and one of the patents involved the use of ball grid arrays that provide a method of securing the electrical connections between the microchip and circuit board. Scanner owns a patent pertaining to a method of calibrating and inspecting ball grid arrays. With respect to this patent, the district court bifurcated liability and damages and permitted ICOS to file a single summary judgment motion as to whether ICOS had an implied license through legal estoppel and whether the patent was unenforceable due to laches.

With respect to the implied license issue, the district court discussed the prior litigation between the parties in which Scanner had sued ICOS for patent infringement based on eight patents. After extensive litigation, including a trip to the Federal Circuit, the parties engaged in settlement negotiations that ultimately led to Scanner providing a covenant not to sue on these eight patents. The covenant not to sue provided that Scanner would not sue ICOS for infringement based on the methods or products previously or currently made, used or offered for sale in the United States or imported into the United States. Scanner subsequently attempt to revoke the covenant not to sue when ICOS proceeded with its declaratory judgment claim and the district court found that the covenant not to sue did not deprive it of subject matter jurisdiction to hear the declaratory judgment claim.
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