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Chasing the Rocket Docket in IP cases
As Law360 recently reported (“Judges Go On Offensive Against Rash Of Weak Motions,” 5/26/2010), long-time District Judge William G. Young (D. Mass) recently began raising the possibility of sua sponte summary judgment as a means of keeping patent litigants in line and restraining the tendency to file multiple or weak summary judgment motions. The article, and the case that prompted Judge Young’s actions, provide an interesting contrast with life in the United States District Court for the Eastern District of Virginia.
Continue Reading...Netscape v. ValueClick Redux - Inherency, Corroboration and Hearsay in the Prior Art Context
At the risk of focusing too much on Judge Ellis, whose opinions we recently addressed here and here, we’d like to comment on two lengthy opinions Judge Ellis issued in Netscape Comm’s Corp. v. ValueClick, Inc. on April 2 (found here and at 2010 U.S. Dist. LEXIS 32817) and April 15 (found here and at 2010 U.S. Dist. LEXIS 50234). We posted on Judge Ellis’ January 29 decision in the same case here. That opinion is also reported and can be found at 684 F.Supp.2d 699.
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Netscape involved U.S. Patent No. 5,774,670, commonly called “the cookie patent.”
In his January 29 decision, Judge Ellis granted summary judgment that claim 1 of the patent was invalid under the on-sale bar of 35 U.S.C. § 102(b) as applied in Pfaff v. Wells Electronics, Inc., 525 U.S. 55 (1998). On April 2, Judge Ellis denied Netscape’s motion for reconsideration and his ruling addressed a number of interesting issues for patent litigators in the EDVA, including:
- A motion to reconsider entry of partial summary judgment is interlocutory, and so is governed by FRCP 54(d) which allows revision of a ruling “at any time,” rather than Rule 59(e) and Rule 60(b)(6), which require a showing of “extraordinary circumstances.”
- The doctrine of inherent anticipation applies in the on-sale bar context “if the natural result flowing from the operation of the process offered for sale would necessarily result in achievement of each of the claim limitations.” (emphasis in original).
- Resolving a conflict in Federal Circuit panel decisions, Judge Ellis ruled that “corroboration is required of any witness whose testimony alone is asserted to invalidate a patent, regardless of his or her level of interest.”
- The sufficiency of corroborating evidence is judged by a “rule of reason” analysis under Woodland Trust v. Flowertree Nursery, Inc., 148 F. 3d 1368 (Fed. Cir. 1998).
- The aim of the “rule of reason” analysis is to determine whether the testimony and documentary evidence provide a “coherent and convincing story.” Corroboration of every point of reduction to practice by evidence totally independent of the inventor is not required.
- Proof that an invention is “ready for patenting” based on an enabling disclosure to one “skilled in the art” does not require testimony that either the inventor or the person to whom the disclosure was made subjectively believed that an enabling disclosure had been made.
On April 15, in another summary judgment ruling, the judge addressed some common sufficiency and hearsay issues relating to prior art references. Specifically, Judge Ellis ruled:
- A scholarly paper qualifies as a prior art reference under Section 102(b) based on (1) the testimony of the paper’s author that he routinely posted his papers on one of two websites and presented the paper at a conference that occurred before the priority date; (2) a statement in the paper itself that it was presented at the conference; and (3) a web page printout from the conference that lists the paper. The judge overruled the plaintiff’s hearsay objections to the documentary evidence but required that the defendant establish that the documents met the business records hearsay exception at trial.
- The “date of invention” for purposes of determining whether a patent application qualifies as prior art under Section 102(e)(2) is the date the invention was “ready for patenting” as defined by Pfaff.
- Source code can qualify as a prior art reference under Section 102(g)(2) based on a time stamp on the source code documents, but the defendant must qualify the documents as business records under the hearsay rules at trial.
- References that do not qualify as prior art under Section 102 are inadmissible to prove the scope and content of the prior art, but they may still be admissible to show the knowledge of one of ordinary skill in the art under Section 103 if they are “contemporaneous” with the claimed invention.
Netscape was set for trial to begin on April 26, but shortly after Judge Ellis’ rulings, the parties began settlement discussions, and the case was settled and dismissed on May 6.
EDVA District Judge Reverses Magistrate Order Requiring a Foreign Defendant to Travel to Virginia for Deposition
In a recent trade secret case, Judge Ellis addressed an issue that often comes up in intellectual property litigation but is rarely litigated: Do out of state defendants have to come to Virginia for a deposition?
The last case that addressed this issue in Virginia was Armsey v. Medshares Mgmt., 184 F.R.D. 569 (W.D. Va. 1998), which is not only more than twelve years old, it is a magistrate’s decision, and so its precedential value was uncertain.
In Judge Ellis’ decision, In re: Outsidewall Tire Litigation, 2010 U.S. Dist. LEXIS 44019 (E.D. Va. May 4, 2010) (found here), the defendants, which were based in Dubai, allegedly conspired with a former employee of the plaintiff to steal plaintiff’s tire designs. The plaintiff sought to take the depositions of the defendants in Virginia by noticing Rule 30(a)(1) depositions of the defendants’ managing agents and a Rule 30(b)(6) deposition of three related corporate defendants. Notably, while the corporate defendants had been served, they had not filed counterclaims. If they had, they likely would have been subject to deposition in Virginia under E.D. Va. Local Rule 30(A).
Applying Armsey, Magistrate Judge Davis held that the witnesses had to travel to Virginia for a deposition because the witnesses frequently traveled for business (though not to Virginia) and because of the time difference between Virginia and Dubai.
Judge Ellis reversed, holding that courts have generally recognized that there is a presumption that depositions of a corporate defendant, whether under Rule 30(a)(1) or Rule 30(b)(6), should be taken at the corporation’s principal place of business. The presumption can be overcome only under special circumstances, such as:
- When the deponent regularly conducts business in the place where the deposition is sought.
- When the governing law of the defendant’s principal place of business would prevent the deposition or frustrate the deposing party’s legitimate discovery-related objectives.
- Where the foreign deponents had previously disregarded deposition orders.
Judge Ellis found that Armsey properly applied the presumption, but he overruled the magistrate judge’s order because:
- While the witnesses traveled frequently, they did not frequently come to the forum district.
- There was no showing that Dubai law would hinder the deposition, and the defendants agreed to conduct the deposition under the Federal Rules
- There was no evidence that disputes requiring judicial intervention were likely
Interestingly, Judge Ellis went on to state that it was appropriate for the defendants to pay the travel costs and attorneys’ fees for travel time for two of the plaintiff’s attorneys to travel to Dubai. Conversely, if the deposition had taken place in Virginia, the judge stated, the deponents travel costs would be borne by plaintiffs. While not stating a hard a fast rule, Judge Ellis’ comments about the shifting of costs could well be relevant to future cases.
Finally, the plaintiff claimed that holding the depositions in Virginia would facilitate service of process on one of the witnesses, who was named as a defendant individually. Judge Ellis rejected this argument, emphatically stating that “[f]acilitating service of process on managing agents of foreign corporations is not a legitimate reason to compel deponents to appear in Virginia.”
The Stream of Commerce Theory of Personal Jurisdiction in Patent Cases
Earlier this week, Judge Ellis transferred a case from the EDVA to the Northern District of California under 28 U.S.C. 1404(a). Convergence Techs. (USA) LLC v. Microloops Corp., et al., 2010 U.S. Dist. LEXIS 46155 (May 11, 2010) (opinion found here). Venue transfer decisions are common in the EDVA and probably wouldn’t justify a blog post, but Judge Ellis’ decision included a discussion of the “stream of commerce” theory of personal jurisdiction in patent cases. Federal Circuit, not regional circuit, law applies to the issue of personal jurisdiction, and so Judge Ellis’ ruling should be of interest to Virginia litigators more familiar with the Fourth Circuit’s precedent.
The “stream of commerce” refers to a defendant’s placing a product in the “stream of commerce” that takes the product to the forum state. In Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102 (1987), the Supreme Court split over whether a foreign manufacturer of bicycle components which sold its products to another foreign manufacturer was subject to personal jurisdiction in California. In short, Justice O’Connor, writing for four justices, said no, and Justice Brennan, writing for four other justices, said yes. Justice Stevens couldn’t decide who to agree with, and so no theory commanded a majority and uncertainty remains as to what is necessary to establish personal jurisdiction under a stream of commerce theory.
The stream of commerce theory is important to any component part manufacturer or to any manufacturer which sells its products to only a limited number of customers or only through third-party retailers, especially internet retailers. If personal jurisdiction requires more than selling a product which ultimately is sold to a consumer in a forum state, such manufacturers can conceivably limit the number of states in which they can be sued.
As Judge Ellis points out, the Federal Circuit held several years ago that the stream of commerce theory applies in patent infringement suits, Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F. 3d 1558, 1565-68 (Fed. Cir. 1994). The difficulty is that the Federal Circuit has refused at least three times to endorse either Justice O’Connor’s or Justice Brennan’s view of the stream of commerce theory. In that sense, the Federal Circuit shares a kinship with Justice Stevens. Thus, it isn’t entirely clear what the Federal Circuit meant when it said the stream of commerce theory applies in patent cases.
Judge Ellis’ decision, however, clarified a few points:
- The stream of commerce theory requires, at a minimum, knowledge of the product’s likely destination through an established distribution channel. Thus, a component part manufacturer who doesn’t know that its products would end up in the forum state is not subject to personal jurisdiction.
- Ordering an accused product online from a third-party, without more, does not satisfy the stream of commerce theory, where the website is passive and the purchaser initiates the sale. Thus, manufacturers whose products are sold only online may be able to avoid jurisdiction in forums in which they do not sell directly.
- A manufacturer which delivers its products to a forum or knows that its products will be sold in a forum through established distribution channels is subject to personal jurisdiction.
A few other “stream of commerce” jurisdiction points:
- As the Courts have often stated, jurisdiction cannot be created by the actions of others. Touchcom, Inc. v. Bereskin & Parr, 574 F.3d 1403 (Fed. Cir. 2009). Thus, sales by third-party retailers should not establish jurisdiction over a product manufacturer.
- Sales by a patent licensee do not establish jurisdiction over a patent holder. Red Wing Shoe Company, Inc. v Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1361 (Fed. Cir. 1998). “In simple terms, doing business with a company that does business in Minnesota is not the same as doing business in Minnesota. . . . [The plaintiff’s] flawed theory would subject a defendant to nationwide personal jurisdiction if it decides to do business with a company that does business nationwide.” Id.
- Beverly Hills Fan required an “established distribution channel into the forum,” and the case involved delivery of accused products to a retail store in the forum state. Thus, internet sales alone, where the seller has no physical location in the forum state, may not be sufficient for jurisdiction.
- The Federal Circuit has specifically held in one case that the availability of a defendant’s products for sale on a third-party’s website supports jurisdiction “only if [the defendant] had some responsibility for the third party’s advertising of [the defendant’s] products on [the third-party’s] sites.” Trintec Industries, Inc. v. Pedre Promotional Products, Inc., 395 F.3d 1275, 1281 (Fed. Cir. 2005).
Tobacco trademark ghetto challenged
As reported recently by Virginia Lawyers Weekly, four small cigarette manufacturers have filed suit in the United States District Court for the Eastern District of Virginia, challenging a FDA regulation adopted on
Federal Circuit Affirms EDVA Judge's Ruling in Long-Running Patent Interference Action
On May 5, the Federal Circuit upheld a decision by EDVA District Judge Leonie Brinkema reversing a decision of the Board of Patent Appeals and Interferences (BPAI) in an interference proceeding that has taken eight years to work its way through the courts. Rolls-Royce, PLC v. United Technologies Corp., No. 2009-1307 (Fed. Cir. May 5, 2010) (found here).
For an EDVA case, the case has a long and unusual history, and it’s not over. United Technology Corp. (UTC) filed its Request for Interference in the BPAI in July, 2002, and Judge Brinkema conducted a bench trial on the appeal from the BPAI in December, 2005. For some reason, however, Judge Brinkema did not issue a decision until more than three years later, on March 31, 2009. Rolls-Royce didn’t waste any time once the Federal Circuit upheld Judge Brinkema’s decision in its favor, however. The same day of the decision, Rolls-Royce filed suit for infringement of the patent-at-issue in the EDVA (Complaint found here). Rolls-Royce, PLC v. United Technologies Corp., Case No. 1:10CV00457 (E. D. Va.). The infringement suit has also been assigned to Judge Brinkema. Because of the long delay, however, Rolls-Royce has potentially lost several years of recoverable damages.
The patents involved in the interference proceeding involve an improved design for jet engine fan blades to reduce the amount of shockwaves produced by the engine. The BPAI ruled in favor of UTC, holding that UTC’s application covered a fan blade that had a tip that swept either forward or rearward.
Judge Brinkema reversed the BPAI’s decision. She construed the UTC claim to cover only fan blades with tips that swept rearward, and so the UTC patent did not capture Rolls-Royce’s patent on a forward swept tip. Based on her claim construction, Judge Brinkema found that the Rolls-Royce patent was not obvious over the UTC claim.
UTC appealed, and the Federal Circuit upheld both Judge Brinkema’s construction and her finding of non-obviousness. The Federal Circuit rejected UTC’s argument that a forward sweep in the tip of the fan blade would have been an easily predictable and achievable variation in view of the disclosure of the rearward sweep in UTC’s earlier application. The invention was not obvious to try, the Court held, because of the broad selection of choices for further investigation that included any degree of sweep for the fan blade tip. Further, secondary considerations, which showed that an embodiment of Rolls-Royce’s invention had become the industry standard, reinforced the finding of non-obviousness.
Federal Circuit Affirms Verdict of Noninfringement in EDVA case
In a brief Order (found here) on May 5, the Federal Circuit affirmed Limelight Network’s victory over Level 3 Communications in a jury trial before Judge Mark Davis in January, 2009. Level 3 Comm., Inc. v. Limelight Networks, Inc., Case No. 2:07CV589 (E.D. Va.). In the trial, which was the first patent trial overseen by Judge Davis, the jury found that Limelight did not infringe the two patents asserted by Level 3 but rejected Limelight’s claim that the patents were invalid. The patents at issue covered Internet content delivery technology which provides web site operators faster delivery for content such as video, games, music and software.
A Prelude to Therasense
On April 26, 2010 in Therasense v. Becton, Dickinson, the Federal Circuit granted a petition for a rehearing en banc and requested new briefing on several issues that go to the heart of the materiality-intent balancing inquiry for determinations of inequitable conduct. Based on the May 5, 2010 decision in Optium v. Emcore, practitioners may have been given insight into the Federal Circuit's analysis of at least Question 4: "Under what circumstances is it proper to infer intent from materiality?"
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The Jamie Foxx deception, the unquestionably accurate New York Times, and more from the "Dreamgirls" case
“Dreamgirls” fans and entertainment execs, breathe easy. On Monday, Chief U.S. District Judge James R. Spencer granted a motion to dismiss a case brought by a pro se litigant alleging that the film infringed upon his copyright. In Bailey v. Black Entertainment Television, Inc. et al (Eastern District of Virginia case no.
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Eastern District of Virginia -- A Top Venue for Patentee Plaintiffs (?)
As reported on Dennis Crouch’s Patently-O (link here), Professor Mark A. Lemley of Stanford Law School has released a draft of his study on patent forum shopping, “Where to File Your Patent Case” (found here). The U.S. District Court for the Eastern District of Virginia gets a fair amount of attention in Professor Lemley’s study. Some of the take-away points about the Eastern District of Virginia include:
- The Eastern District Virginia is the second “best aggregate district for plaintiffs,” after the Middle District of Florida, and ranks at the top of surveys based on outcome-oriented plaintiffs and plaintiffs’ interest in getting to trial.
- The Eastern District of Virginia has an patentee “win rate” is a relatively high 30.4% -- not far off of the Eastern District of Texas (at 40.3%) and above the traditionally plaintiff-friendly Western District of Wisconsin (at 24.0%);
- The Eastern District of Virginia has the fourth highest rate of patent cases going to trial (at 6.4%), just below the District of Delaware (11.8%), Eastern District of Texas (8.0%), and Western District of Wisconsin (7.4%);
- The Eastern District of Virginia has the second shortest time to resolution (0.64 years) and time to trial (0.96 years), just shy of the Western District of Wisconsin (0.56 and 0.67, respectively);
Thus, if statistics are any guide, the Eastern District of Virginia appears to be one of the best venues for patentee plaintiffs.
The results of Professor Lemley’s study are interesting. For example, he points out that the W.D. of Wisconsin, usually a top choice for plaintiffs, actually has among the lowest patentee win rates. Likewise, the Eastern District of Texas is not one of the five best districts for plaintiffs. While Professor Lemley includes a number of caveats and qualifications, his draft report (and Dennis Crouch’s summary thereof) are well worth a read.
IP Statistics Confirm Drop Off in 2009
FTI Consulting (“FTI”) recently issued its annual Intellectual Property Statistics, which compiles statistics on intellectual property prosecution and litigation over the past several years. Some of the interesting trends from FY2008 to FY 2009 include the following:
- Total patent applications dropped off slightly (about 3%) while patents granted increased only very slightly from the prior year;
- Trademark applications dropped approximately 12% and trademarks granted dropped approximately 14% from the prior year;
- The number of patent cases commenced in U.S. District Courts dropped approximately 6% from the prior year;
- The number of trademark cases commenced in U.S. District Courts dropped approximately 3% from the prior year;
- The number of copyright cases commenced in U.S. District Courts dropped approximately 32% from the prior year (continuing a sharp decline from FY2005 of approximately 62%).
In addition to these statistics, FTI compiles a list of the Top Organizations Receiving U.S. Patents (IBM continues to head a list largely populated by technology companies) and the Top Countries Receiving U.S. Patents. The statistics are worth a look and can be found here.
EDVA Judge Denies Permanent Injunction After Jury Finds Infringement
As we posted here, on February 25 a jury awarded $19 million in damages to CompX International in its patent infringement lawsuit against Humanscale Corp. Humanscale Corp. v. CompX Inter., Inc., Case No. 3:09CV86 (E.D. Va.). In a Memorandum Opinion dated April 29, Judge Spencer has denied CompX’s post-trial motion for a permanent injunction enjoining the sale of the accused products.
CompX claimed that the parties were direct competitors and that it had lost market share and customer goodwill as a result of Humanscale’s infringement. In response, Judge Spencer held:
- CompX’s claim of direct competition was not enough. Rather, citing the Federal Circuit’s recent decision in i4i Ltd. P’ship v. Microsoft Corp., the Court held that a patentee must point to some record evidence of direct competition. If any claim of direct competition sufficed, it “would essentially create a presumption in favor of irreparable harm, contrary to the Supreme Court’s directive in eBay.”
- The direct competition used to justify a finding of irreparable harm typically involves a two-supplier market, which CompX had not shown.
- Even if CompX could show some evidence of loss of market share and sales, those facts would not necessarily establish irreparable harm.
- That the patents at issue will expire in six weeks further undermined any claim of irreparable harm.
- The balance of hardships tipped in favor of Humanscale because of the short life left on the patents and because the injunction would prevent the sale of the accused products even though only one component of the products was found to be infringing.
CompX also moved for entry of judgment on the jury’s verdict and for an award of pre-judgment and post-judgment interest. The Court took those motions under advisement because Humanscale’s post-trial motions, particularly its laches motion, had not yet been decided. Humanscale’s motions were filed April 16 and will not be fully briefed until late May.
