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On summary judgment, the district court determined that the defendants directly infringed all patents at issue in the lawsuit. The district court subsequently conduct a bench trial on issues of willfulness and on defendants’ equitable defenses, particularly whether the defenses of laches and equitable estoppel provided a defense to the finding of direct infringement.

The district court first focused on the issue of willful infringement and stated the two-prong test for willfulness. “To establish willful infringement, a patentee must satisfy a two-pronged test. In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007). First, the patentee must “show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent.” Id. In analyzing this prong, “[t]he state of mind of the accused infringer is not relevant.” Id. Second, and only after “[the objective prong] is satisfied, the patentee must demonstrate that this objectively-defined risk (determined by the record developed in the infringement proceeding) was either known or so obvious that it should have been known to the accused infringer.” Id.”
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In Mayo v. Prometheus, the U.S. Supreme Court held that claims directed to a diagnostic method were unpatentable, not simply because the subject matter of the claims was not novel or obvious, but rather because the subject matter covered by the claims was the mere application of the laws of nature – the discovery of facts of nature – and therefore not patentable on a more fundamental basis under Section 101 of the Patent Act.
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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 NetAirus Technologies (“NetAirus”) contended that Apple was infringing U.S. Patent No, 7,103,380 (the “‘380 Patent”), which pertains to a method in which a handset device communicates wirelessly over both local area networks and wide area networks. NetAirus claimed that the iPhone 3G and later models infringed the ‘380 Patent by switching between a cellular data network and local Wi-Fi hotspots. Apple moved for summary judgment contending that the ‘380 Patent was invalid.
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Plaintiff Schering Corp. (“Schering”) filed a patent infringement action against Apotex Inc. (“Apotex”). Schering brought a motion contending that Apotex spoliated relevant evidence. The motion was based on the omission of allegedly relevant evidence from Apotex’ expert report. The expert report was served in October 2011 and Schering notified Apotex of the alleged spoliation a few days after the report was served. Apotex responded to the letter and stated that it had no other additional information to provide because the expert did not save the slides that he analyzed.

Schering did not bring the alleged spoliation to the court’s attention for several months. The court found that this delay was significant and that Schering had not adequately explained the delay. “Schering fails to adequately explain why it waited for months, and until the eve of trial, to bring this alleged spoliation to the attention of the Court.”
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In two separate actions, Robocast sued Apple and Microsoft for patent infringement. Apple responded by filing a motion to transfer and Microsoft subsequently filed a similar motion to transfer. Both complaints are centered on U.S. Patent No. 7,155,451 (the “‘451 Patent”), which is directed toward an “Automated Browsing System for Publishers and Users on Networks Serving Internet and Remote Devices,” which was invented by the president of Robocast. Robocast accused AppleTV, Front Row, iTunes, Bing and Windows Vista of infringing the patent.
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In this patent infringement action, the defendant, Varian Medical Systems, provided an expert report on damages that did not state a royalty rate for the accused products. The district court termed this a tactical decision. “By the way of background, Defendant Varian made the tactical decision to have its expert not state any royalty rate for the sales …”

Varian subsequently filed objections to the district court’s final jury instructions with respect to damages and sought to clarify the jury instructions so that it could argue to the jury reasonable royalties may consist of the sale of one component but there should be no royalty on the sale revenue of the combination of various components. “Alternatively, Varian seeks to argue to the jury that ‘if the jury is to award any royalty on the revenue from the Clinac or Trilogy that royalty should be small given, that Varian contributed to the combination.'”
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Defendant American Master Lease LLC (“AML”) appealed the decision of Judge Guilford of the Central District of California holding that all claims of U.S. Patent No. 6, 292,788 were invalid for failing to meet the subject matter eligibility requirements of Section 101 of the Patent Statute. The Federal Circuit (in a panel consisting of Circuit Judges Prost, Schall and Moore) affirmed the invalidity of the claims based on the district court’s pre-In re Bilski application of the machine or transformation test.

The claims at issue relate to an investment tool to enable property owners to buy and sell property without incurring tax liability pursuant to 26 U.S.C. § 1031 (“1031 Exchange”). All claims in the ‘788 patent are method claims, with claim 1 being representative:

1. A method of creating a real estate investment instrument adapted for performing tax-deferred exchanges comprising:

aggregating real property to form a real estate portfolio;

encumbering the property in the real estate portfolio with a master agreement; and
creating a plurality of deedshares by dividing title in the real estate portfolio into a plurality of tenant-in-common deeds of at least one predetermined denomination, each of the plurality of deedshares subject to a provision in the master agreement for reaggregating the plurality of tenant-in-common deeds after a specified interval.
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After passing Congress with bipartisan support, the Leahy-Smith America Invents Act, also known as the Patent Reform Act,1 was signed by President Barack Obama on September 16, 2011. The new law significantly reforms the way inventors protect their inventions and advances the harmonization of global patent laws, but until many details of implementation are settled, the costs of patent litigation may not decrease.

This article, written by Rod Berman, was first published by the Los Angeles Lawyer, The Magazine of the Los Angeles County Bar Association, and is reprinted with permission. Copyright 2012.
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