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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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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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K Tech Telecommunications (“K Tech”) filed patent infringement actions against Time Warner and DirecTV. DirecTV and Time Warner moved to dismiss the patent infringement complaint for failure to state a claim or, in the alternative, for a more definite statement. K Tech owns several patents that are directed toward particular ways of updating certain channel information associated with certain digital television signals.

As explained by the district court, “[a]ccording to Plaintiff, full-power television stations identify individual television programs carried by a digital television signal transmitted over the air using a major channel number, a minor channel number, and/or a carrier frequency. Plaintiff’s patents explain that when a television translator facility receives a broadcast, translates it to a new frequency, and rebroadcast it, so-called Program and System Information (“PSIP”) data associated with the transmission, including channel number and carrier frequency, might not be updated. Plaintiff’s patented inventions enable a television translator facility to update the PSIP table with proper channel and carrier frequency information.”
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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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Plaintiff Brandeis University (“Brandeis”) alleged that it was the owner of the patents-in-suit and plaintiff GFA Brands, Inc. (“GFA”) alleged that it was the exclusive licensee of the patents-in-suit. Plaintiffs asserted that the defendants infringed the patents by making, using, selling or importing various products such as cookies, cookie dough and spreads. A number of the defendants moved to transfer or sever.

With respect to the motions to sever, some of the defendants asserted that the joinder violated Fed.R.Civ.P. 20. Although most of the parties agreed that there were common questions of fact and law, the question remained whether plaintiffs’ claims against the different defendants arose out of the same transaction, occurrence or series of transactions or occurrences.
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SanDisk Corporation (“SanDisk”) brought a declaratory relief action seeking a declaration that its products do not infringe certain patents held by Round Rock Research and that the patents were invalid. Round Rock moved to dismiss for lack of personal jurisdiction, contending that its conduct in sending letters to SanDisk in California demanding licensing negotiations were insufficient for the assertion of personal jurisdiction.

According to the district court, Round Rock is a technology research and licensing company that holds thousands of patents and pending patent applications. Round Rock does not manufacture or market products utilizing its patented inventions but instead seeks licensing agreements from parties who do make and sell such products, or pursues litigation against them when it deems it necessary to do so.
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Defendants filed a motion for summary judgment asserting that all claims of the patent-in-suit was invalid under 35 U.S.C. § 101 because the claims did not satisfy the machine-or-transformation test and otherwise disclosed an abstract idea. The patent-in-suit is directed to a method for computing Current Procedural Technology (“CPT”) from documents generated by physicians. CPT codes are a system of codes developed by the American Medical Association (“AMA”) in conjunction with the Health Care Financing Administration.

The CPT codes provide a uniform language, which facilitates patient billing. The invention allows a CPT code to be calculated based on the documentation process that occurs during the physician-patient meeting. During the meeting, the computer prompts the physician with a list from which the physician chooses particular descriptions that best characterize the patient’s status. All of the claims involve a process for determining CPT codes based on information that is gathered during the physician-patient meeting.
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Oracle continues to experience trouble with its damage expert report in the ongoing battle over the Android Operating System. In its third attempt to prepare an appropriate damage report, Oracle’s expert apparently consulted with a number of Java engineers employed by Sun (now Oracle). He consulted with the engineers in order to rank the importance of the intellectual property in the 2006 license bundle, which he used to support his analysis.

Google sought to depose these Java engineers. Oracle opposed the request and argued that only one person who consulted with the expert, Dr. Mark Reinhold, should be deposed. Oracle asserted that only Dr. Reinhold provided information to the Oracle expert and the language in the report that he consulted with “other Java engineers” was unfortunately the result of a “drafting error.” Oracle explained that these other Java engineers only assisted Dr. Reinhold and did not directly speak with the expert and are not expected to testify at trial.
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Defendant Farpointe Data (“Farpointe”) served invalidity contentions on HID Global that identified twenty-two prior art patents, as well as many devices and publications that Farpointe alleges constitute prior art. After the invalidity contentions were served, the parties exchanged claim construction positions and a claim construction hearing was held later in the year. The district court followed HID Global’s recommendation and declined to construe some of the claims presented by the parties, which Farpointe argued caused it to revisit the invalidity contentions. As a result, Farpointe sought to add four patents and two HID Global products to the invalidity contentions.

The district court noted that it was following the Local Patent Rules from the Northern District of California and under Patent Local Rule 3-6, a party may amend its preliminary contentions “only by order of the Court upon a timely showing of good cause.” The party seeking to amend its contentions bears the burden of establishing due diligence and must show “that it was diligent in moving to amendment of the invalidity contentions and diligent in discovering the basis for the proposed amendment.”
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