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Accused infringers have long relied on the Declaratory Judgment Act (“the Act”) to bring actions against patent owners to clear any cloud over their accused business activities. To that end, the Act has served as a powerful tool. Accused infringers do not even have to wait to be named as a defendant in an infringement lawsuit before bringing their own cause of action, as a plaintiff, for declaratory relief that the patent-at-issue is invalid, unenforceable, or not infringed. The Act, however, requires that the party seeking declaratory relief establish that a “case or controversy” exist from the moment it files its action. Although many courts, including the Supreme Court, have provided guidance as to where to draw the line above which a sufficient case or controversy exits, that line is still a murky one. What actions must a patent owner take–and when must it take those actions–to trigger the requisite case or controversy allowing an accused infringer to file its action first?

Well, the Federal Circuit recently added further guidance on the issue. In Danisco US, Inc., v. Novozymes A/S, a unanimous panel of the Federal Circuit reversed a district court and held that the patent holder’s conduct prior to the issuance of the patent can form a sufficient case or controversy for declaratory relief.

The relationship between the parties in the case provides important background. The declaratory judgment plaintiff, Danisco, and defendant, Novozymes, compete to develop and supply Rapid Starch Liquefaction (“RSL”) products. Since about 2001, Novozymes had sued Danisco for patent infringement numerous times. In one of those suits, Novozymes amended a pending patent application to claim one of Danisco’s new products, then sued Danisco on the same day the patent issued.

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On August 11, 2010, VirnetX filed suit alleging that Apple and several other defendants infringed several U.S. Patents, which generally describe a method for transparently creating a virtual private network (“VPN”) between a client computer and a target computer or disclosing a secure domain name service. The accused products were Apple’s VPN On Demand and FaceTime. The jury returned a verdict in favor of VirnetX, finding that the patens were not invalid and that Apple infringed the asserted claims. To compensate VirnetX for Apple’s infringement, the jury awarded VirnetX $368,160,000 in damages.

After the jury trial, VirnetX filed a motion for an ongoing royalty against Apple, requesting that the royalty rate be enhanced from .52% to 1.52%. VirnetX argued the royalty rate should be trebled because of changed circumstances in light of the Georgia-Pacific factors and Apple’s now willful infringement and because the bargaining positions of the parties would have dramatically shifted in favor of VirnetX. VirnetX also relied on Apple’s continuing infringement post-trial, and its inability to easily implement the non-infringing alternatives discussed at trial.
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Zurn Industries, Inc. (“Zurn”) moved to exclude Sloan Valve Company’s (“Sloan”) consultant witness and other testimony based on the consultant’s investigation. The patent-at-issue, U.S. Patent No. 7,607,635, entitled “Flush Valve Handle Assembly Providing Dual Mode Operation” (the “‘635 Patent”), pertains “to flush valves for use with plumbing fixtures such as toilets, and more specifically to improvements in the bushing of the actuating handle assembly that will provide for user-selectable, dual mode operation of the flush valve.” As explained by the district court, the improvement is a mechanism that allows a user to select one of two flush volumes based on the direction of actuation of the handle: a full flush volume to evacuate solid waste from the bowl or a reduced flush volume to remove liquid waste.

The district court explained that Sloan hired Leone Flosi of Quest Consultants Int’l Ltd. (“Quest”) to perform an investigation of bathrooms containing either Sloan or Zurn manual dual flush valves and handles at Sloan’s damage expert, Mr. Bero’s, direction. Specifically, Sloan hired Mr. Flosi and Quest to “assist in estimating the ratio of collateral product sales relative to manual dual-flush flushometer valves.” Mr. Bero used this data to project and calculate the profits that Sloan allegedly lost on collateral sales of unpatented products.
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Sonic Industry (“Sonic”) filed a patent infringement action against iRobot Corporation (“iRobot”). iRobot filed an Answer and Affirmative Defenses to the patent infringement complaint. The district court issued a memorandum order sua sponte because of some “problematic aspects of that responsive pleading.”

The district court noted that iRobot had regularly “coupled its invocation of the disclaimer made available under appropriate circumstances by Fed. R. Civ. P. (“Rule”) 8(b)(5) with the language ‘and, therefore, denies those allegations.'” The district court found that these answers were problematic. “But it is of course oxymoronic for a party to assert (presumably in good faith) that it lacks even enough information to form a belief as to the truth of an allegation, then proceed to deny it. Because such a denial is at odds with the pleader’s obligations under Rule 11(b), the quoted language is stricken from each of those paragraphs of the Answer.”
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Plantronics, Inc. (“Plantronics”) filed a patent infringement action against ALIPH, Inc. (“ALIPH”). After expert reports were submitted, ALIPH moved to exclude the expert report of Plantronics’ infringement expert.

At the heart of the action is the fit of ear buds in a human ear. However, the district court found that Plantronics’ expert had done very little infringement analysis in this regard. As the district court explained, “plaintiff’s infringement expert, Professor Katz, did nothing more than try defendants’ products on various (unidentified) ear molds and state that defendants’ products infringed based on conclusory ipse dixit recitations of claim limitations with no explanation or analysis.”
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In this patent infringement action between Emblaze and Apple, Apple filed a motion to stay the case pending the recent grant of certiorari in Akamai v. Limelight Networks. In Akamai, a divided en banc Federal Circuit panel held that Akamai did not have to prove that any Limelight customer directly infringed its patent and that Limelight’s inducement alone is sufficient to prove infringement. In motion to stay, Apple argued that a reversal of the Federal Circuit’s decision could effectively end Emblaze’s case because Emblaze has no proof that any Apple customer directly infringes the method claims at issue.

Emblaze opposed the motion arguing that much of the case would not be subject to Akamai because 10 of the claims in suit are apparatus claims, which Akamai does not address. Emblaze further explained that because Emblaze’s damages theory is not dependent on the number of claims Apple infringes, a reversal in Akamai would substantially change the case.
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In a long-awaited decision, the Federal Circuit ruled en banc to uphold the the de novo standard for appellate review of claim construction issues, which was previously established in another en banc decision, Cybor Corp. v. FAS Technologies, Inc. 138 F.3d 1448 (Fed. Cir. 1998).

The facts and procedural background of the case presented a prime opportunity for the Federal Circuit to revisit the question of what deference, if any, it should give to a district court’s claim constructions. During the district court proceedings, the parties disputed the meaning of “voltage means.” As per usual, the district court analyzed the patent’s intrinsic evidence relating to the claim term. However, the district court also accepted testimony from expert witnesses and the inventor. After analyzing the different types of evidence, the district court sided with the patentee and ruled that the term should be given its plain meaning, as opposed to a more specific meaning as a means-plus-function term.

Applying the non-deferential Cybor standard of review, a panel from the Federal Circuit reversed the district court’s claim construction. The panel held that the term is a means-plus-function term and required disclosure of sufficient corresponding structure in the patent specification. Based on that conclusion, the panel invalidated the claims for indefiniteness. The patentee requested rehearing, arguing that the interpretation of documents is a fundamentally factual exercise and, therefore, a district court’s interpretation of patent claims requires some deference on appeal. In this case, the patentee argued that, on a deferential review, the district court would not, or should not, have been reversed. The Federal Circuit undertook rehearing en banc for the purpose of reconsidering the standard of appellate review of claim construction.

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PersonalWeb Technologies, LLC (“PersonalWeb”) filed a patent infringement action against Google for infringement of its “Truenames” patents. Google filed a motion for sanctions based on a contention that PersonalWeb systematically deleted relevant emails when it reasonably anticipated litigation. PersonalWeb opposed the motion arguing that it had an email retention policy and timely implemented a litigation hold shortly after the filing of the lawsuit against Google.

In working on its analysis of the motion, the court stated that PersonalWeb’s duty to preserve evidence arose when litigation became reasonably foreseeable. Google asserted that PersonalWeb anticipated litigation no later than June 2011, before it even acquired the patents-in-suit because there were discussions regarding future litigation against major technology companies during weekly lunch meetings. The court agreed that “PersonalWeb probably acquired the patents with an eye toward litigation. However, it is difficult to say that litigation was reasonably foreseeable before PersonalWeb even acquired the thing which would give it standing to sue.”
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Orbit Irrigation Products (“Orbit”) filed a patent infringement action against Sunhills International (“Sunhills”). After the completion of certain discovery, Sunhills filed a motion to compel. Sunhills contended that Orbit had failed to provide a computation of damages as required by Federal Rule of Civil Procedure 26 and failed to produce its documents related to its damages. As a result, Sunhills asked the district Court to bar Orbit from introducing any evidence related to damages beyond that already produced.

In its disclosure and in discovery, Orbit claimed that it suffered $19 million in damages. The court explained that “[o]n its face Rule 26 requires Orbit to provide Sunhills both with a computation of each category of damages it claims and with the non-privileged documents on which it bases those calculations. Orbit asserted a fixed number for damages suffered from price compression ($19 million) as compared to the lack of any concrete number offered for reputational damages. Sunhills has a right to know from the outset how Orbit reached that number. Such disclosure does not prevent a party from changing theories as the case proceeds.”
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After trial and the denial of post-trial motions, AT&T Operations, Inc. (“AT&T”) filed motion to extend the time to file a notice of appeal pursuant to Federal Rule of Appellate Procedure 4(a). AT&T argued that the e-mail notice of electronic filings (NEF’s) that defense counsel received did not provide them with “notice” that Defendants’ substantive post-trial motions had been resolved. To make this argument, AT&T noted that the e-mail notifications defense counsel received only contained language regarding the district court’s grant of their motions for leave to file sealed documents, but failed to mention the denial of their substantive post-trial motions, which was provided in the same orders. Nonetheless, the district court noted that AT&T did, however, receive e-mail notifications that the Court had entered an order on Plaintiff’s bill of costs and had denied Defendants’ motion for new trial and JMOL on invalidity which were not sealed pleadings.

AT&T also argued that the docket entries for the orders at issue were modified two days later to reflect the denial of the substantive post-trial motions, but no new electronic notices were sent by the district court’s electronic case filing (ECF) system to reflect these amended docket entries. Accordingly, AT&T contended that based on the NEFs they received, counsel believed the motions for JMOL and new trial on damages and non-infringement had not been disposed of and remained pending before the Court. As a result, AT&T claimed that it “did not receive sufficient notice of the substance of the orders entered justifies reopening the time to file an appeal.”
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