Articles Posted in District Courts

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In a case involving application of the “first-filed action” doctrine and transfer, the district court in the Eastern District of Texas transferred a case as to one defendant but severed and kept the case as to two other defendants. One of the defendants in Texas, Interwoven, began the litigation, not in Texas, but in the Northern District of California by filing suit against Vertical Computer Systems, Inc. seeking a declaration that the Vertical patents were invalid and were not infringed by Interwoven. Vertical subsequently filed a patent infringement action on the same patents against Interwoven and two additional defendants, Samsung and LG, in the Eastern District of Texas. Samsung then filed a declaratory judgment action in the Northern District of California.

In analyzing the first-filed action doctrine on a motion to transfer, the district court agreed that the Interwoven action was filed first and that therefore the case against Interwoven should be transferred to the Northern District of California. The district court disagreed with Samsung, however, and found that the action against Samsung should remain in Texas as Samsung was not a party to the first filed case.
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The district court determined that plaintiff had waived the attorney-client privilege because the plaintiff’s in-house counsel revealed too much information in answering questions during a deposition. The defendants raised the waiver issue in the context of a motion to compel by contending that the plaintiff’s in-house counsel’s answers during a deposition revealed attorney-client communications and therefore waived the privilege regarding the plaintiff’s motivation in seeking the reissuance of its patent.

The district court found that the in-house counsel “expanded on the statements to the PTO, revealing that because of the issue of the different effective filing dates, there was a specific concern that the mixed subject matter claims were technically anticipated by” another published application. The in-house counsel also explained that there were additional communications between himself and other in-house and outside counsel that led to this concern. The district court found that these types of statements were sufficient to waive the attorney-client privilege.
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In another decision involving sanctions for defendants failure to provide discovery, the district court for the Western District of Michigan granted plaintiff’s motion for default judgment. The default was granted because the defendant had not participated in discovery. As the district court stated, “Defendants have not participated in discovery, but rather have refused to provide depositions or responses to [plaintiff’s] written discovery requests.”

The district court went on to note that defendants’ conduct was willful in that the defendants had ignored discovery deadlines and previous orders from the district court. “Defendants have ignored discovery deadlines and other obligations imposed both by the Rules of Civil Procedure and explicit orders of the Court.”
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In a recent case in the Eastern District of Texas, the district court addressed the admissibility of a consumer survey to show demand for the patented features in accused products. The district court rejected plaintiff’s consumer surveys and granted the defendants’ motion to exclude plaintiff’s survey experts because the surveys did not measure the purported advantages of plaintiff’s technology.

The surveys measured whether consumers valued incorporating internal antennas in cell phones in place of external antennas. The problem with these surveys, however, was that plaintiff did not invent–and the patents did not claim–internal antennas for cell phones. Instead, the patents were directed only to one type of internal antenna that had increase advantages over other internal antennas and external antennas because of multiband functionality and reduced size. Thus, the surveys did not measure the value of plaintiff’s technology. “While Plaintiff claims that its experts contend that the patents-in-suit are ‘fundamental’ to internal antennas, the surveys are not tied to the alleged advantageous technical characteristics of the patents-in-suit. Put another way, the surveys do not measure how consumers value the purported advantages provided by Plaintiff’s technology.”
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After a serious delay by the defendant in providing discovery, the district court granted plaintiff’s motion to strike the defendant’s answer and enter a default judgment. The district court found that the defendant continually mislead the plaintiff and the court regarding its discovery obligations and caused the case to be delayed for several years by doing so. “This Court gave [defendant] numerous opportunities to provide the requested documents, yet it chose to produce incomplete responses. . . . [Defendant] and [its counsel] affirmatively misled Plaintiffs — and more importantly, this Court — as to the production of documents and compliance with Court orders. . . . By failing to provide the discovery as ordered, [defendant] has prevented Plaintiffs from pursuing their claims and delayed this litigation for nearly seven years.”
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In yet another multi-defendant case, a district court has severed defendants from a patent infringement suit brought by a plaintiff against many defendants. In this case, the plaintiff brought suit against eleven defendants for infringing the same four patents. The district court granted defendants’ motion to sever because the plaintiff did not allege that the defendants were engaged in the same transaction or occurrence.

The court began by noting a number of decisions that granted severance under Ninth Circuit precedent and it sharply distinguished cases from the Eastern District of Texas that denied motions to sever because those cases followed a different rule than what the Ninth Circuit employs. Based on Ninth Circuit law, the court found that the motion to sever should be granted because the defendants had not engaged in the same transaction or occurrence or series of transactions or occurrences. The fact that the defendants were allegedly infringing the patents in a similar way was not sufficient. The court stated: “”Plaintiff has not alleged that the Defendants have engaged in the same transaction or occurrence or series of transactions or occurrences. Rather, Defendants are accused of infringing the patents in similar ways, but not as part of the same transaction or occurrence or series of transactions or occurrences.
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The multitude of multiple defendants in patent infringement suits continue to increase on a daily basis. But some district courts are putting a stop to the practice, at least in certain circumstances, by severing defendants that are misjoined. In a recent case in the Central District of California, the court granted a motion to dismiss for misjoinder when a plaintiff filed a patent infringement action against three unrelated companies for dissimilar products.

The court found that dismissal of all but the first named defendant was appropriate to eliminate the prejudice to the other defendants, i.e., by allowing each defendant to prepare their own defense instead of requiring them to jointly defend an action that involves very different products. The court also found that “dismissal will remedy the burden resulting from one judge presiding over a single action that consists of three separate and distinct cases.”
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On April 7, 2011, the United States District Court for the Eastern District of Wisconsin denied plaintiff’s motion for summary judgment of direct infringement. Plaintiff’s patent, focused on graphics cutting, contained method claims that the district court concluded were not directly infringed. The district court concluded that even if defendant’s software product contained an infringing search function, there was still no direct infringement because the defendant disabled that function when it sold the software. The district court reached this conclusion even though a user or customer could enable the infringing function. “[T]he question is whether the claims read on a device that contains source code for searching, even if that code has been disabled. . . . Nothing in [plaintiff’s] apparatus claims suggests that a device that contains disabled source code for searching is within the scope of the claims. The claims are not drafted in terms of software components but in terms of the actual function of the apparatus. . . . When the code for searching is disabled, the device does not perform [plaintiff’s] methods, and thus sales of the device with the code for searching disabled is not direct infringement.”

This type of decision once again heightens the importance of including apparatus claims that closely track the method claims, if possible. Here, an apparatus claim was included but it was significantly different than the method claim. An apparatus claim that tracked the method claim would likely have survived the analysis of the district court.

The case is Mikkelsen Graphic Engineering, Inc. v. Zund America, Inc., Case No. 2-07-cv-00391 (E.D. Wis. April 7, 2011 (Adelman, J.)

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On March 31, 2011, the United District Court for the Eastern District of Texas (Judge Ward) entered a judgment against Johnson & Johnson and Cordis Corporation in the amount of $583 million. The judgment stems from a patent infringement action filed by Bruce Saffran, M.D., Ph.D. against Johnson & Johnson and Cordis over drug eluting stents (this is not the first time Dr. Saffran has won a large patent case against a medical device maker for drug eluting stents as he previously prevailed on a case against Boston Scientific for over $400 million which has since settled).

In upholding the jury verdict, the Court found that, based on the Court’s earlier claim construction (which the Court declined to reconsider), there was sufficient evidence to support the jury verdict of patent infringement. In reaching this conclusion, the Court noted the testimony of plaintiff’s expert and found that a reasonable jury could have relied on the testimony of plaintiff’s expert and that was sufficient to support the finding of infringement.

The Court also rejected defendants’ challenge to the validity of the patent and also noted that the parties had stipulated to use a preponderance of the evidence standard for prior art that was not before the patent office in light of the i4i v. Microsoft case that is currently pending before the United States Supreme Court. Such a strategic decision by the plaintiff eliminate a potential ground for reversal of this award in the event that the United States Supreme Court changes the burden of proof for validity challenges.

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On April 4, 2011, the District Court for the Eastern District of Texas set aside a jury verdict of $625 million in favor of Mirror Worlds and against Apple, Inc. Mirror Worlds, LLC v. Apple, Inc., Case No. 6-08-CV-88 (E.D. Tex. April 4, 2011) (Judge Davis). The Court set aside the jury’s finding of infringement because Mirror Worlds failed to prove that Apple directly infringed Mirror Worlds’ patents because Mirror Worlds did not present evidence that Apple performed the steps detailed in the method claims.

The Court found that it was insufficient to show that Apple sold software that could perform the steps; rather, the Court held that Mirror Worlds needed to prove through appropriate evidence that Apple performed each and every step of the method claimed in the patent, i.e., that Apple itself used the methods claimed in the patent. As Mirror Worlds failed to proceed on that theory–and relied instead on mere sales of software–there was not sufficient evidence to support the jury verdict.

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