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Plaintiffs, Ubisoft Entertainment, S.A. and Ubisoft, Inc. (collectively, “Ubisoft”) are developers and publishers of the video game Rocksmith and own patent no. 9,839,852 (“the ‘852 patent”), which is entitled “interactive guitar game.” Ubisoft filed a complaint against the defendant, Yousician, a software provider for learning to play musical instruments, for direct, induced, and contributory infringement in violation of 35 U.S.C. § 271. Yousician moved to dismiss the complaint on the grounds that the patent is directed to an abstract idea that does not cover patentable subject matter under 35 U.S.C. § 101.

Ubisoft responded to the motion by asserting that the patent’s claims of “assessing a user’s performance for improvement and selectively changing the difficulty level of a song based on that performance, as claimed in the ‘852 patent, is an improvement on the prior art that utilizes computer programming to receive and assess audio signals from a guitar and selectively change the difficulty level to be played by the user and/or generate a different game targeted to improve the user’s skills based on the user’s performance.”

The district court first discussed the relevant standard under the Supreme Court’s Alice decision, which delineates a two-step process for “distinguishing patents that claim of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts.” Alice Corp. Pty. Ltd., v. CLS Bank Int’l, 134 S. Ct. 2347, 2354-55. The first step requires the court to determine whether the patent claims at issue are directed toward an abstract idea. Id. If the court concludes the claims are directed to an abstract idea, it proceeds to the second step. Id. At the second step, the court determines whether the patent contains an “inventive concept”– that is, whether there exists “an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself.” Id. (internal quotations omitted). Continue reading

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Earlier this month, I participated in a roundtable discussion, hosted by Financier Worldwide, on the topic of “Resolving Patent Disputes.” The roundtable participants comprised seven experienced patent lawyers, and we each responded to the questions below.

  • In your opinion, what have been the key trends and developments shaping patent disputes over the last 12 months or so?
  • To what extent have you observed an increase in the number of patent disputes in today’s business world? What are the most common causes of conflict?
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In this patent infringement action, Intel filed a motion to dismiss the patent infringement claims for direct and indirect infringement pursuant to Fed.R.Civ.P. 12(b)(6). The plaintiff, VSLI Technology (“VLSI”), opposed the motion and argued that its complaint stated facts sufficient to state claims for relief.

In its motion, Intel asserted that VLSI’s claims for indirect infringement should be dismissed because there were insufficient allegations to establish that Intel was willfully blind to the existence of certain patents. The district court concluded that the allegations were insufficient since they were based solely on the allegation that Intel instructed its employees not to review patents from third parties: “The Court finds that Intel’s policy that forbids its employees from reading patents held by outside companies or individuals is insufficient to meet the test of willful blindness.”

Nonetheless, the district court determined that the claims should only be dismissed without prejudice to allow VLSI to re-allege the indirect infringement claims if discovery justified doing so. “Specifically, that the Court will dismiss VLSI’s claims of indirect infringement without prejudice to the refiling of these claims after discovery has been conducted. The Court intends to be very liberal in the discovery that it will allow VLSI to conduct. For example, VLSI may do discovery into its belief that Intel has been provided with notice of unasserted NXP patents, and the reasons for Intel’s failure to ascertain information about the patents asserted in this litigation. If after VLSI has taken discovery it decides to amend its complaint to make allegations of indirect infringement, it will be free to do so, subject to the provisions of Rule 11. Intel can then file a motion for summary judgment with respect to that issue if it wishes to do so.” Continue reading

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Ethicon filed a motion for summary judgment on one of the Panduit factors that are necessary to obtain lost profits. In its motion, Ethicon contended that Covidien’s alleged non-infringing alternatives were neither acceptable nor available.

https://patentlaw.jmbm.com/files/2019/01/background-close-up-court-1415558-pexels-CC0-01.14.2019-1-300x201.jpgIn evaluating the motion, the district court explained that a “noninfringing alternative need not be on the market during the infringement period to factor into a lost profits analysis.” Wechsler v. Macke Intern. Trade, Inc., 486 F.3d 1286, 1298 (Fed. Cir. 2007). But the district court also noted that where an alleged non-infringing alternative was not on the market during the relevant time period, “a trial court may reasonably infer that it was not available as a non-infringing substitute at that time. The accused infringer then has the burden to overcome this inference by showing that the substitute was available.” Grain Processing, 185 F.3d at 1353 (citation omitted). Moreover, “[t]he acceptable substitute element, though it is to be considered, must be viewed with limited influence where infringer knowingly made and sold the patented product for years while ignoring the substitute.” Panduit, 575 F.2d at 1162, n.9.

Covidien did not dispute that its alleged non-infringing alternatives were not on the market during the relevant time period and, therefore, Covidien bore the burden to overcome the inference of non-availability. See Grain Processing, 185 F.3d at 1353. Covidien contended that at least two non-infringing alternatives to its allegedly infringing device were available during the relevant time period. However, the district court noted that the record showed that it would between 46 and 62 weeks to develop such a non-infringing alternative.

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Cisco moved to dismiss the plaintiff’s patent infringement complaint pre-lawsuit willfulness allegations. As the district court explained, the allegations in the first amended complaint asserted: “(i) that an investor of both the owner of the ‘951 Patent and of OpenDNS informed unspecified employees or agents of OpenDNS that certain OpenDNS technology infringed the ‘951Patent (ii) that defendant acquired OpenDNS in 2015 and (iii) that defendant incorporated the allegedly infringing OpenDNS technology into the Accused Security Products.”

To analyze whether the allegations were sufficient, the district court explained that “[a]t the motion to dismiss stage, courts have concluded that a plaintiff must “plead facts showing willfulness” in order to avoid dismissal of a willful infringement claim. Cont? Circuits LLC v. Intel Corp., No. CV16-2026 PHX DGC, 2017 WL 2651709, at *7 (D. Ariz. June 19, 2017) (collecting cases). In this respect, the complaint must allege, as a “prerequisite” to a willfulness claim, that the defendant had “[k]nowledge of the patent alleged to be willfully infringed.” See WBIP, LLC v. Kohler Co., 829 F.3d 1317, 1341 (Fed. Cir. 2016). Yet, a plaintiff has not plausibly alleged willful infringement if he alleges only that “the evidence shows that the infringer knew about the patent and nothing more.” Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923, 1936 (2016) (Breyer, J., concurring). As courts have sensibly concluded, the complaint must also allege facts that support a plausible inference that the defendant’s behavior was “egregious,” such as facts showing that defendant was put on notice or was otherwise subjectively aware of the risk that its conduct constituted infringement. See, e.g., Puget Bioventures, LLC v. Biomet Orthopedics LLC, 325 F. Supp. 3d 899, 911 (N.D. Ind. 2018); Finjan, Inc. v. Cisco Systems, Inc., No. 17-CV-00072-BLF, 2018 WL 7131650, at *4-5 (N.D. Cal. Feb. 6, 2018) (collecting cases).”

After reviewing the relevant case law, the district court noted that “[i]t is a close call whether the facts alleged in the First Amended Complaint are sufficient to support a plausible inference that, prior to the initiation of the instant infringement suit, defendant (i) knew of the ‘951 Patent and (ii) was subjectively aware of the risk that its conduct infringed the ‘951 Patent. In its response to defendant’s motion, plaintiff argues that OpenDNS’s knowledge of the ‘951 Patent and awareness of the infringing nature of its technology are attributable to defendant by virtue of defendant’s acquisition of OpenDNS in 2015.”

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After the district court dismissed plaintiff’s patent infringement claims, finding the patents directed to patent-ineligible subject matter, and awarded attorneys’ fees based on the exceptional case doctrine, the Federal Circuit affirmed both determinations. The defendant filed a supplemental motion for attorneys’ fees seeking to recover attorneys’ fees for the appellate process. The plaintiff opposed the motion.

https://patentlaw.jmbm.com/files/2019/05/banner-money-paper-brand-cash-illustration-815076-pxhere-cc0-05.01.2019-1024x405.jpgIn analyzing the motion, the district court explained that it had previously “determined that this case was frivolous and that plaintiff had litigated it in an unreasonable manner, rending the exceptional and entitling defendant to an award of attorneys’ fees. None of those underlying facts have changed, and plaintiff does not argue that they have.”

The court then determined that there was no need to make a second finding of exceptionality. “There is no need to make a second, separate determination under § 285 as to whether the case is exceptional. See, e.g., Dippin’ Dots, Inc. v. Mosey, 602 F. Supp. 2d 777 (N.D. Tex.2009) (rejecting plaintiffs’ argument that defendant had to “make a separate showing that the appeal itself is exceptional” and that fees “have to be separately justified in each phase of a case,” finding that defendant was entitled to fees without a second determination of exceptionality). That is, plaintiffs handling of the case since dismissal need not independently qualify as exceptional. Indeed, plaintiff does not argue here that a second, independent finding of exceptionality is required. As such, this Court’s earlier determination controls, and defendant is entitled to reasonable attorneys’ fees under 35 U.S.C. § 285.”

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In a previous litigation involving ZTE (but not the plaintiff), ZTE entered into a consulting arrangement with Dr. Madisetti. ZTE asserted that ZTE provided Dr. Madisetti with confidential information under the consulting agreement. When the plaintiff in this case, Bell Northern Research (“BNR”) retained Dr. Madisetti as an expert against ZTE, ZTE moved for a protective order to preclude BNR from using Dr. Madisetti as an expert.Image of a gavel resting on tabletop.

ZTE initially asserted that the terms of the Consulting Agreement prohibited Dr. Madisetti from serving as an expert for BNR in this case. BNR responded to that argument that the Agreement is no longer valid and Dr. Madisetti’s expertise in the current litigation would not involve products at issue in the previous matter.

The court agreed with ZTE, noting that the Consulting Agreement provided that it would terminate after the longest of three distinct time periods. “Though two years have passed from the effective date of the Agreement, the latter two time periods are not yet complete. First, Dr. Madisetti has not necessarily completed all work performed under the agreement, because the InterDigital District Litigation remains stayed, and there is a chance that more claims may arise. Second, because the InterDigital District Litigation is currently stayed and not complete—meaning the requisite one-year period following the close of that case has not yet begun—the agreement remains in effect. While BNR is correct that the InterDigital District Litigation has been stayed for a long time and that ZTE has advocated for the litigation to end, the fact remains that the litigation has not ended and therefore, the Consulting Agreement between ZTE and Dr. Madisetti remains in effect.”

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https://patentlaw.jmbm.com/files/2019/04/monument-statue-symbol-toy-sculpture-justice-1190413-pxhere.com-cc0-04.19.2019-1024x576.jpgIn this patent infringement action, the defendants, Synergistics, Inc. (“Synergistics”), filed a motion to dismiss the complaint for lack of personal jurisdiction. The plaintiff, Parabit Systems, Inc. (“Parabit”), opposed the motion on the ground that it was not required to establish personal jurisdiction in the complaint and that Synergistics had failed to come forward with any evidence that the district court did not have personal jurisdiction over it.

The district court agreed with Parabit, noting that a plaintiff does not have plead allegations pertaining to personal jurisdiction in the complaint. “The motion is mainly focused on the adequacy of allegations of personal jurisdiction in the complaint, but plaintiff has no obligation under Rule 8 to plead any allegations pertaining to personal jurisdiction, and so a complaint cannot inadequately allege the basis for personal jurisdiction.”

The district court also determined that Synergistics had not set forth any facts in any evidentiary form to switch the burden of proving personal jurisdiction to Parabit: “defendants have merely made allegations in their brief, but have submitted no affidavits or other evidence to support those statements. Although plaintiff has the burden of proving personal jurisdiction when it is properly challenged, defendants had the burden of going forward to show at least a colorable basis for challenging personal jurisdiction, and unsupported statements in a brief do not do that.”

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Plaintiff, Fox Factory, moved to amend its final infringement contentions, asserting that the defendant, SRAM, LLC, had failed to produce relevant information regarding its custom “BRAIN” product that had delayed Fox Factory from learning that the BRAIN product infringed the patent-in-suit. SRAM opposed the motion and contended that Fox Factory was well aware of the BRAIN product before the amendment deadline and that SRAM had no obligation to craft or intuit Fox Factory’s infringement position.

In analyzing whether there was good cause to permit the amendment, the court first looked at whether Fox Factory was diligent—and found that it was not. “Strikingly, Plaintiff’s arguments https://patentlaw.jmbm.com/files/2019/04/white-vintage-wheel-retro-old-bicycle-519554-pxhere.com-cc0-04.09.2019-crop-300x300.jpgsidestep its own knowledge—and when it gained such knowledge—about the existence and functionality of Defendants’ customized BRAIN shock for Specialized. Instead, FOX Factory seeks to direct the court’s attention to Defendants’ discovery shortcomings. But in considering good cause, this court first focuses on whether the original deadline could have been met with reasonable diligence by Plaintiffs, not any bad faith by Defendants. Colorado Visionary Academy, 194 F.R.D. at 687. Using this framework, based on the record before it, this court is not persuaded that FOX Factory exercised adequate diligence to warrant amendment of its Final Infringement Contentions at this late juncture.”

In reaching the conclusion that Fox Factory was not diligent, the court specifically noted that “FOX Factory carefully never argues it only learned of Defendants’ BRAIN shock at the end of the discovery period. Indeed, the record before this court belies any suggestion that FOX Factory’s knowledge of the BRAIN shock was dependent upon Defendants’ disclosures late in discovery. And while FOX Factory vigorously argues that it was diligent in pursuing Defendants’ identification of all its rear shock products so that it could pursue discovery and understand the full scope of infringement, Plaintiff never cogently explains why its own internal document related to competitive analysis from September 28, 2017 is insufficient to constitute knowledge of the BRAIN product and trigger its own independent obligation to diligently pursue discovery on the topic.”

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https://patentlaw.jmbm.com/files/2019/03/structure-wood-floor-building-steps-column-1049086-pxhere.com-cc0-03.22.2019-300x200.jpgIn this patent infringement action, the defendant moved to dismiss the plaintiff’s complaint for the plaintiff’s failure to participate in discovery and for ignoring several court orders. The motion explained that dismissal sanctions were appropriate in the light of, among other things, the plaintiff’s failure to comply with court orders, sanction order and to appear for a court hearing.

In analyzing the motion, the district court explained that Federal Rule of Civil Procedure 37 empowers the district court to compel compliance with discovery procedures though a broad choice of remedies and penalties, including dismissal with prejudice. Griffin v. Aluminum Co. of Am., 564 F.2d 1171, 1172 (5th Cir. 1977). “Dismissal of a complaint with prejudice is such a drastic remedy that a district court should only apply it only in extreme circumstances.” Id. However, dismissal with prejudice may be appropriate where a plaintiff’s failure to comply involves “either repeated refusals or an indication of full understanding of discovery obligations coupled with a bad faith refusal to comply.” Id.

The district court concluded that dismissal with prejudice was appropriate under the circumstances. As noted by the Magistrate Judge, the plaintiff had “willfully, in bad faith, and in disregard of his responsibilities failed to comply with the Court’s Order.” Furthermore, since the case was filed eight months ago, “Plaintiff has been sanctioned twice and has failed to: respond to an order to show cause; timely file a case management report; appear for a hearing; comply with the Court’s Order compelling discovery; and, most recently, respond to three separate motions by Defendant.” The district court found that these repeated violations establish a “clear record of delay or willful contempt,” far beyond mere negligence or confusion. See Goforth v. Owens, 766 F.2d 1533, 1535 (11th Cir. 2010). Given these “extreme circumstances,” the district court determined that dismissal with prejudice was warranted. See Griffin, 564 F.2d at 1172.

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