Virginia IP Law : Virginia Intellectual Property Lawyer & Attorney : Troutman Sanders Law Firm : Technology & Patent Litigation

On January 26, 2012, Bear Creek Technologies, Inc. ("Bear Creek") filed a Notice of Filing Motion for Multi-District Litigation pursuant to 28 U.S.C. § 1407, in Bear Creek Technologies, Inc. v. RCN Telecom Services, LLC, Civil Action No.: 2:11-cv-103 (RAJ/FBS).  This is an interesting new chapter in this long-running saga. 

Back on February 22, 2011, Bear Creek launched patent litigation against 23 different telecommunications companies in the EDVA, and the case was assigned to Judge Raymond A. Jackson in the Norfolk Division.  After numerous several months and numerous (340+) docket entries, Judge Jackson -- perhaps anticipating the AIA -- raised the issue of misjoinder sua sponte and pursuant to several motions to sever, and then proceeded to drop all of the defendants except RCN Telecom Services (the first named defendant in the case).  That August 17, 2011 Memorandum Opinion and Order can be found here. 

• Email This
• Print
• Comments
• Trackbacks

While the AIA bars the joinder of patent infringement claims against multiple defendants (discussed here), there are still a few pre-AIA suits alleging that multiple defendants independently infringed the same patents. Judge Smith recently became the latest Eastern District of Virginia judge to dismiss such a suit for improper joinder. Automated Tracking Solutions, LLC v. Awarepoint Corp., et al., Case No. 2:11CV424 (E.D.Va. Jan. 13, 2012), found here.

Automated Tracking accused five separate defendants of infringing four different patents. According to the defendants, the Complaint asserted different patent claims against each defendant’s product, and so there was no commonality at all between the claims. In response, Automated Tracking asserted only that joinder of all claims into one suit created significant efficiencies and that there was no evidence of prejudice from proceeding jointly.

Unfortunately for Automated Tracking, Rule 20 does not allow joinder based solely on efficiency and lack of prejudice. As Judge Smith pointed out, claims against separate defendants must also arise out of the same transaction, occurrence or series of transactions and occurrences. Judge Smith also rejected Automated Tracking’s claims of judicial economy, holding that the “type of joinder in the case at bar represents judicial ineconomy and serves no purpose but to thwart the rules of proper procedure for filing separate lawsuits.” 

Judge Smith dismissed all but Awarepoint, the first named defendant. As of this date, Automated Tracking has re-filed suit against three of the dismissed defendants, and those cases have been assigned to separate judges in Alexandria and Norfolk. It will be interesting to see whether and to what extent the district judges handling these cases attempt to coordinate claim construction, discovery and other pre-trial matters.

Automated Tracking also provides an interesting contrast to Judge Cacheris’ recent decision in Coach, Inc. v. 1941 coachoutletstores.com to allow joinder of claims under the ACPA against 356 unrelated alleged cybersquatters. It is difficult to articulate a distinction between the two decisions other than that practical considerations support allowing a plaintiff  to join claims against multiple accused cybersquatters, but those same considerations do not apply to other types of litigation, including patent litigation.

• Email This
• Print
• Comments
• Trackbacks

If you thought passage of the America Invents Act would end the flood of false patent marking claims, think again. In December, Judge Turk in the Western District of Virginia ruled that a false marking plaintiff could proceed under state consumer protection laws and that such claims were not preempted by the patent laws or the AIA. Sukumar v. Nautilus, Inc., Case No. 7:11CV218, 2011 U.S. Dist. LEXIS 145960 (W.D.Va. Dec. 19, 2011) found here. 

Sukumar alleged that Nautilus had falsely marked a number of products in violation of 35 U.S.C. 292. After enactment of the AIA, Sukumar amended its Complaint to allege that it had suffered a competitive injury and that Nautilus acted in bad faith. Sukumar also added state-law claims of false advertising and unfair competition under California law and unfair competition under Washington law.

Nautilus moved to dismiss the state law claims as preempted by federal patent law and the AIA. While acknowledging that “the patent grant is within the exclusive purview of federal law,” Judge Turk denied the motion holding:

• The AIA contains no express preemption provision.
   
• There is no field preemption of state unfair competition claims that rely on a substantial question of federal patent law, relying on Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 1318 (Fed. Cir. 1998), overruled on other grounds, Midwest Indus. Inc. v. Karavan Trailers, Inc., 175 F.3d 1356, 1359 (Fed. Cir. 1999). 
   
• Neither the AIA nor its legislative history reveals any evidence that Congress intended to “impose upon the traditional authority of the states to regulate areas of consumer protection.”
   
• There was no direct conflict that made it physically impossible for Nautilus to comply with both federal and state law.
   
• Sukumar’s state-law unfair competition claims did not create an obstacle to Congress’ intent in passing the AIA

Judge Turk’s opinion contains two important limitations on state-law unfair competition claims for false marking. 

First, citing Hunter Douglas, Judge Turk held that federal law would preempt Sukumar’s claims if Nautilus did not act in bad faith. In effect, Judge Turk added an element of bad faith to Sukumar’s claims by judicial fiat and allowed this new “unfair competition plus bad faith” claim to go forward. Second, Judge Turk left open the possibility of preemption if a plaintiff did not allege competitive injury.

Two days after his ruling, Judge Turk heard argument on Sukumar’s motion for partial summary judgment on liability on both its false marking claims under Sec. 292 and its unfair competition claims. Judge Turk took the motions under advisement and has not ruled as of today.

• Email This
• Print
• Comments
• Trackbacks

While no Virginia court has addressed the issue, a split has developed in orher federal district courts on whether the requirements of Bell Atlantic v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009) apply to counterclaims for patent invalidity.  The Northern District of Illinois recently weighed in on the issue, holding that the Twombly/Iqbal standard applied and dismissing a counterclaim for invalidity. Cleversafe, Inc. v. Amplidata, Inc., 2011 U.S. Dist. LEXIS 145995 (N.D. Ill. Dec. 20, 2011) found here.

The Ruling

In Cleversafe, the defendant/counterclaim plaintiff, Amplidata, alleged only that the asserted patents were “invalid for failing to comply with provisions of the United States patent laws, including one or more of 35 U.S.C. §§ 101-103 and/or 112.” 

The Court dismissed the counterclaim under Twombly/Iqbal because Amplidata did not articulate why the patents were invalid, identify the statutory provisions that applied or provide any factual support for the counterclaim. The Court also dismissed Amplidata’s affirmative defense of invalidity on the grounds that “bare bones conclusory allegations” did not meet the Seventh Circuit’s standard for an affirmative defense under Fed. R. Civ. P. 8(c).

Split Among the District Courts

Some courts have reached the same conclusion as Cleversafe, while others have applied a more lenient standard to patent invalidity counterclaims. Compare Groupon, Inc. v. MobGob LLC, 2011 WL 2111986 (N.D. Ill. May 25, 2011) (dismissing counterclaim); and Tyco Fire Products LP v. Victaulic Co., 777 F.Supp.2d 893 (E.D. Pa. 2011) (dismissing counterclaim but not affirmative defense); with Pfizer v. Apotex, Inc., 726 F.Supp. 2d 921 (N.D. Ill. 2010) (notice of claim sufficient for invalidity counterclaim); and Elan Pharma Int’l. Ltd. v. Lupin Ltd., 2010 U.S. Dist. LEXIS 32306 (D.N.J. Mar. 31, 2010) (same). 

• Email This
• Print
• Comments
• Trackbacks

Earlier this month, the Federal Circuit granted a petition for mandamus and directed the District Court of Delaware to transfer venue of a patent infringement suit filed against Link_A_Media Devices to the Northern District of California, even though Link_A is a Delaware corporation. In Re Link_A_Media Devices Corp., Misc. Docket No. 990 (Fed. Cir. Dec. 2, 2011) found here. 

In a nutshell, the Federal Circuit held that the district court’s “fundamental error” was holding that the patentee’s choice of Delaware as the forum for its suit and Link_A’s incorporation in Delaware were dispositive. Since Delaware was not the patentee’s home forum, the Court ruled, its choice of forum was entitled to much less deference, and aside from Link_A’s incorporation in Delaware, the forum had not ties to the dispute or either party. The plaintiff was a holding company located in Bermuda and both its operating affiliate and Link_A were located in Santa Clara, California. All of the identified witnesses, including the named inventors (who were employed by the plaintiff’s affiliate) and the relevant documents, were located in California.

The Impact of Link_A on Delaware, California and East Coast Plaintiff-Patentees

Link_A extends the series of Federal Circuit decisions granting mandamus and ordering transfer of venue from the Eastern District of Texas, discussed here and here, to the District of Delaware. If the judges in Delaware apply Link_A as the Federal Circuit has dictated, the decision could result in a sharp reduction in the number of patent cases filed in Delaware. While Delaware is the state of incorporation of many corporations, far fewer corporations operate there. As a result, the convenience factors in the venue analysis will seldom favor venue in Delaware, except perhaps in the case of companies located in nearby venues such as New Jersey, New York and Pennsylvania.

Link_A is also likely to increase the number of cases filed in California, where many high technology businesses are headquartered. Given the crowded dockets in the federal district courts and the distance and expense of litigating in California, though, many East Coast-based plaintiff-patentees may seek an alternative venue that is closer to home.

The EDVA as an Alternative

The Eastern District of Virginia is a good candidate to be an alternative venue for plaintiffs seeking an East Coast forum. As we have written here, the speed of the Rocket Docket and the numerous significant patent verdicts in the Eastern District make it a favorable venue for plaintiff-patentees. While judges in the Eastern District of Virginia will not hesitate to transfer venue of a patent case with little connection to Virginia, many high technology companies have operations in Virginia which will make them subject to venue. Further, many defendants may prefer the Eastern District of Virginia’s more efficient procedures and the experience of its judges in patent litigation. Time will tell whether the impact of Link_A will be to spread patent litigation which would otherwise be filed in Delaware to other Eastern venues, including Virginia.

• Email This
• Print
• Comments
• Trackbacks

In a two-part decision in Heflin v. Coleman Music, Judge Doumar of the Eastern District of Virginia granted summary judgment of non-infringement to Coleman but dismissed Coleman's counterclaims of tortious interference and false advertising that were based on notices of potential infringement Heflin sent to Coleman's customers. Heflin v. Coleman Music and Entertainment, Case No. 2:10CV566, 2011 U.S. Dist. LEXIS 141579 (E.D.Va. Dec. 5, 2011), found here.

Summary Judgment

Judge Doumar's summary judgment ruling was straightforward. The patent-in-suit claimed a system for dispensing "collector cards." It was undisputed that Coleman's devices did not dispense cards which met the Court's construction of "collector cards," but Heflin argued that the devices still infringed because they were "capable of" dispensing collector cards. Judge Doumar held that the Federal Circuit has expressly disclaimed this logic in High Tech Medical Instrumentation, Inc. v. New Image Indus., Inc., 49 F.3d 1551 (Fed. Cir. 1995). There, the Federal Circuit held that "a device does not infringe simply because it is possible to alter it in a way that would satisfy all limitations of a patent claim." Capability of infringement, Judge Doumar found, must be coupled with intent to use the accused devices to dispense collector cards. Moreover, the devices at issue were not capable of dispensing collector cards and even if they were, such an interpretation of the patent would make it invalid over the prior art.

Tortious Interference and False Advertising

Perhaps the more interesting aspect of Judge Doumar's decision is his dismissal of Coleman's claims of tortious interference and false advertising under the Lanham Act. Coleman's counterclaims were based on Heflin's statements in letters, emails and telephone calls to several of Coleman's customers that Coleman's devices potentially infringed its patent. Judge Doumar made clear that Heflin's communications did not rise to the level of intentional misconduct necessary for a claim of tortious interference as long as Heflin had a good faith belief that Coleman's devices infringed.

While the Court ultimately held that the infringement claims were meritless, it could not say that Heflin knew his claims were false when suit was filed or that Heflin's suit constituted an "outrageous act." "[T]he filing of a lawsuit to enforce a patent does not constitute an 'improper method' unless there is bad faith and an improper purpose in bringing the suit."

Likewise, the Court dismissed Coleman's Lanham Act false advertising claims. The Court held that Heflin's statements were not literally false because he only stated that he was investigating a claim of potential infringement, not of actual infringement. Moreover, Coleman failed to produce any evidence that Heflin's statements were intended to mislead or confuse customers.

• Email This
• Print
• Comments
• Trackbacks

As we posted here, Judge Jackson granted Verizon a temporary stay of the permanent injunction he entered in favor of ActiveVideo in return for Verizon’s payment of royalties for a six-month “sunset” period. Verizon then moved for an automatic stay of the payment of “sunset” royalties under Fed. R. Civ. P. 62(d) upon its posting of a supersedeas bond. On December 12, Judge Jackson denied Verizon’s motion for a stay.  ActiveVideo Networks, Inc. v. Verizon Comm's., Inc., et al., Case No. 2:10CV248 (Dec. 12, 2011) (Jackson, J.).  Judge Jackson's opinion can be found here.

While Rule 62(d) entitles a party to a stay of a money judgment as a matter of right upon posting a supersedeas bond, Judge Jackson ruled that Rule 62(d) did not apply where the Court had not issued a money judgment. By pointing to decisions which involved a monetary award coupled with some nonmonetary relief, the judge stated, “Verizon is attempting to separate the royalty payments from the permanent injunction as if the royalty payments were not one with the grant of a permanent injunction.”

As Judge Jackson pointed out, the Court conditioned the stay of the permanent injunction on payment of the sunset royalties. Staying the royalties “would merely provide Verizon the freedom to continue to infringe without any recourse” to ActiveVideo. Moreover, if courts were required to stay sunset royalties upon payment of a bond, the judge noted, “it is likely that no court would ever grant sunset royalties.”

Judge Jackson’s logic is compelling, but there is little authority on the issue, and the Federal Circuit may see it differently and hold that the language of Rule 62(d) requires a stay once a supersedeas bond is posted. Indeed, Verizon filed an emergency motion to stay the payment of sunset royalties in the Federal Circuit the day of Judge Jackson’s ruling. In the meantime, Verizon’s first sunset royalty payment is due December 16, and Judge Jackson refused Verizon’s request to extend the time for that payment.

• Email This
• Print
• Comments
• Trackbacks

As Judge Conrad notes in DE Techs., Inc. v. IShopUSA, No. 7:11CV183, 2011 U.S. Dist. LEXIS 137894 (W.D.Va. Dec. 1, 2011), found here, “there is an ongoing debate as to the preclusive effects of a Markman ruling.” IShopUSA was the second patent case brought by DE that was assigned to Judge Conrad. In the first case, DE Techs., Inc. v. Dell, Inc., No. 7:04CV00628 (W.D.Va.), the parties settled after Judge Conrad issued his claim construction ruling. Neither DE or Dell asked that to have the court’s rulings withdrawn as part of the settlement, but the dismissal order noted that the claim construction ruling was not final and was subject to further revision at any time prior to entry of final judgment.

IShopUSA argued that collateral estoppel barred DE from relitigating the Court’s claim construction ruling. Judge Conrad noted that the Federal Circuit had not provided any guidance on whether a prior Markman ruling should have preclusive effect and the District Courts were split on the issue, especially where the first litigation settled before final judgment. 

Judge Conrad declined to apply collateral estoppel to his earlier claim construction ruling, but held that the prior ruling would be given “deferential treatment unless clearly erroneous.” “Absent a showing by DE that the court’s original construction of a disputed term was incorrect as a matter of law, the court will apply its prior Markman rulings.” That result, the Court held, balanced “fairness to all litigants” with “consistency in the construction of patent claims.” On the one hand, it is only reasonable to expect the prior rulings would carry some precedential value, but the court “should not be so intransigent as to ignore persuasive arguments” showing clear error in the earlier ruling.

Judge Conrad’s approach is clearly correct. In the absence of final judgment, a finding of collateral estoppel is probably subject to reversal. By refusing to apply collateral estoppel but imposing the high burden of showing “clear error” on DE, Judge Conrad left himself the opportunity to reach a different ruling without sacrificing consistency.

• Email This
• Print
• Comments
• Trackbacks

As we posted here and here, ActiveVideo Networks won a jury verdict that the Verizon FiOS Video on Demand (“VOD”) Service infringes two of its patents. On November 23, Judge Raymond Jackson granted ActiveVideo’s motion for a permanent injunction of the FiOS VOD service but instituted a six-month sunset provision so that Verizon could implement a non-infringing alternative. ActiveVideo Networks, Inc. v. Verizon Comm’s., Inc., 2011 U.S. Dist. LEXIS 135673 (E.D.Va. Nov. 23, 2011) (Jackson, J.) (opinion found here).

Applying the four-factor test for a permanent injunction from eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), Judge Jackson ruled:

• ActiveVideo was suffering irreparable harm from Verizon’s continuing infringement even though it was not a direct competitor of Verizon.
   
• ActiveVideo’s willingness to license its patents to Verizon prior to the jury’s verdict did not preclude injunctive relief.
   
• “With every customer Verizon has unlawfully acquired, they have taken away ActiveVideo’s ability to spread its brand name, to obtain references from potential customers and to expand its goodwill …”
   
• ActiveVideo’s diversion of millions of dollars to its litigation against Verizon qualifies as lost opportunities which can support a finding of irreparable harm.
  
• ActiveVideo’s failure to request a preliminary injunction did not bar it from obtaining a permanent injunction.
   
• In the absence of some other key interest, the value of consumer entertainment will not outweigh the public interest in protecting patents.

Judge Jackson awarded ActiveVideo a royalty of 40% of Verizon's profits from the FiOS VOD service, equaling $2.74 per customer per month.

• Email This
• Print
• Comments
• Trackbacks

Seeking to revive its counterclaim and perhaps ultimately escape an adverse verdict for $115 million, Verizon Communications moved to reverse Judge Jackson’s dismissal of its counterclaim for  patent infringement based on allegedly new evidence regarding the date of conception of its patented invention. In a November 7 ruling, found here, Judge Jackson forcefully denied the motion. Our previous posts on the Verizon v. ActiveVideo litigation can be found here, here and here.

Verizon claimed that it had one of the co-inventors on the patent, Howard Wan, had discovered invoices for his work on the invention which established a date of conception before the date of the invalidating prior art. Mr. Wan, according to Verizon, was in China and unable to search his Boston-area home for the invoices until after Judge Jackson had granted summary judgment of invalidity.

Judge Jackson found that Verizon bore the burden of showing that (1) the evidence was newly discovered; (2) that Verizon previously exercised due diligence to discover the evidence; and (3) that the evidence was material and likely to produce a new outcome. Judge Jackson ruled that Verizon had failed to establish any of these requirements. Specifically

• Verizon knew for over a year before the Court’s ruling that the only place the documents could have been located was Mr. Wan’s home, and so the evidence was not newly discovered.
• Mr. Wan did not respond to Verizon’s communications for nine months, but Verizon failed to provide any evidence that they had attempted to locate Mr. Wan through other available avenues and failed to apprise the Court of its difficulty reaching Mr. Wan.
• Even if the Court were to consider the evidence, the invoices did not show that the patented invention was “clearly defined” in the minds of the inventors before the date of the invalidating prior art, and Mr. Wan’s own invoices were insufficient corroboration of his statements of an earlier date of conception.

With this ruling, Judge Jackson has denied all post-trial motions, and so Verizon now moves to the Federal Circuit.

• Email This
• Print
• Comments
• Trackbacks

Dan Ladow, Jeff Morgan, and I have authored a Troutman Sanders Advisory discussing the Federal Circuit’s recent removal of the presumption of irreparable harm when seeking a permanent injunction. In Robert Bosch LLC v. Pylon Mfg. Corp., a three-judge panel at the Federal Circuit held the presumption of irreparable harm to no longer apply and that courts should conduct a full four-factor analysis when determining the appropriateness of injunctive relief. The full advisory, which analyzes the decision and how it informs future requests for such relief, can be found here.

• Email This
• Print
• Comments
• Trackbacks

In a follow-up to the largest patent infringement verdict in Eastern District of Virginia history, ActiveVideo has been awarded supplemental damages of $17.4 million, pre-judgment interest of $6.6 million and post-judgment interest in an amount to be determined. ActiveVideo Networks, Inc. v. Verizon Comm’s., Inc., Case No. 2:10CV248, 2011 U.S. Dist. LEXIS 119001 (E.D. Va. Oct. 14, 2011) (Jackson, J.) (found here). Judge Jackson also denied Verizon Communications’ post-trial motions in two short orders found here and here. 

• Email This
• Print
• Comments
• Trackbacks

There are many patents awarded for inventions that may well be “new” but it is debatable whether they are “useful.” A recent Eastern District of Virginia case dealt with one such invention – a device that combined exercise equipment with a gambling device – which presumably allows a user to lose pounds and money at the same time. Fitness Gaming Corp. v. ICON Health & Fitness, Inc., 2011 U.S. Dist. LEXIS 90605 (E.D. Va. Aug. 12, 2011) (Hilton, J.), found here.

• Email This
• Print
• Comments
• Trackbacks

Some of our colleagues have produced a concise summary of the most significant aspects of the Leahy-Smith America Invents Act (AIA), which can be found here. In advance of the legislation’s expected enactment by the President, we’d like to highlight a few provisions that will directly impact patent litigation in Virginia:

Venue

As we blogged here way back in 2009, Section 9 of the AIA moves venue for civil actions appealing various decisions of the PTO, BPAI and TTAB from the District Court in Washington, D.C. to the Eastern District of Virginia. Such actions include civil actions appealing decisions by the BPAI relating to patent rejections (35 USC 145) and interferences (35 USC 146), civil actions appealing decisions by the PTO relating to patent term adjustments (35 USC 154(b)(4)(A)), civil actions appealing decisions of the TTAB relating to registration of a trademark (15 USC 1071(b)(4)), and civil actions appealing suspensions or exclusions from practice before the PTO (35 USC 32). The change applies to any civil action commenced on or after the enactment of the AIA.

Multi-Defendant Litigation

We’ve noted  the increased frequency of patent litigation involving large groups of defendants on several occasions. Section 19 of the AIA addresses these cases by severely limiting joinder of defendants in patent litigation. Plaintiffs filing suit after enactment of the AIA can join multiple accused infringers only if the defendants are jointly or severally liable or liable in the alternative for infringement arising out of the same transaction, occurrence or series of transactions or occurrences. The claims must also involve questions of fact common to all defendants, and so common issues of claim construction will presumably be insufficient. In addition, the AIA specifically provides that an allegation that each defendant has infringed the same patent is insufficient for joinder. 

False Marking

Virginia has not been a hotbed of false marking cases, but many such cases have been brought here. Section 16 of the AIA effectively ends the practice of bringing qui tam false marking cases by restricting the award of statutory damages to the United States. A plaintiff can still recover compensatory damages for actual competitive injury, but the AIA provides that the marking of a product with an expired patent that covered the product does not constitute false marking. The false marking provisions of the AIA apply to all suits pending at the time of enactment.

• Email This
• Print
• Comments
• Trackbacks

While jury trials are more common in patent infringement suits, under some circumstances a patentee may prefer a bench trial. A recent Order from Judge Lee reaffirms that a plaintiff may switch course and opt for a bench trial by waiving its damages claim, even if the waiver is made on the eve of trial and even if the defendant has filed a counterclaim. MeadWestvaco v. Rexam PLC, Case No. 1:10CV511 (E.D. Va. Aug. 31, 2011) (Lee, J.) (found here).

In Rexam, MeadWestvaco withdrew both its damages claim and its claim for attorneys’ fees just a few weeks before trial and so sought only equitable relief.  Rexam objected that the Seventh Amendment gives an accused infringer a right to jury trial on the issues of validity and infringement, but to no avail.  Since the defendant likewise sought only a declaratory judgment, Judge Lee ruled, there is no independent right to a jury trial. See Tegal v. Tokyo Electron Am., 247 F.3d 1331 (Fed. Cir. 2001). 

• Email This
• Print
• Comments
• Trackbacks

As we’ve noted before, more and more patentees are suing multiple defendants selling unrelated – and often competing – accused products. While most EDVA judges deny defense efforts to sever these cases into individual claims, others have granted severance and transferred the severed actions. In a recent decision, Judge Morgan joins the majority, denying a motion to sever as premature. Bel IP LLC v. Boomerangit Inc., Case No. 2:11CV188 (E.D.Va. Aug. 26, 2011) (Morgan, J.).

• Email This
• Print
• Comments
• Trackbacks

For the first time, an Eastern District of Virginia judge has addressed claims of indirect patent infringement claims under Twombly and Iqbal, and it appears that a plaintiff needs only to recite the elements of induced or contributory infringement to defeat a motion to dismiss. The Nielsen Co. v. comScore, Inc., Case No. 2:11CV168 (E.D.Va. Aug. 19, 2011) (Davis, J.).

• Email This
• Print
• Comments
• Trackbacks

Our colleague Suraj Balusu has written an analysis, which can be found here, of last week's decision by the Federal Circuit that provides an important refinement of the patentable subject matter debate.  CyberSource Corp. v. Retail Decisions, Inc.,  No. 2009-1358  (Fed. Cir. Aug. 16, 2011).  As noted in the analysis, this ruling further erodes the ability to patent (and protect) certain alleged innovations in the business world and potentially opens a new avenue for those accused of infringement to challenge a Beauregard claim. 

• Email This
• Print
• Comments
• Trackbacks

Standing can be a tricky issue in situations where affiliated corporate entities assign and cross-license patents amongst themselves. In Pfizer, Inc., v. Teva Pharmaceuticals USA, Inc., Case No. 2:10cv128, 2011 U.S. Dist. LEXIS 90021 (E.D.Va. Aug. 12, 2011), Judge Smith weighed-in on two interesting scenarios: trustee-beneficiary patent ownership and exclusive licenses with owner-retained rights.

• Email This
• Print
• Comments
• Trackbacks

Among his eleven summary judgment rulings in MeadWestvaco’s (“MWV”) patent infringement suit against Rexam and Valois, Judge Lee dismissed claims of inequitable conduct  under Therasense but allowed claims of inducement of infringement to survive under the Supreme Court’s new standard of “willful blindness.” 

Judge Lee’s rulings heavily favored MWV, which prevailed on its motions for summary judgment on anticipation, obviousness and inequitable conduct and defeated Rexam’s and Valois’ motions on indefiniteness, infringement and willfulness. MWV lost only on the defendants’ motion for summary judgment on infringement under the doctrine of equivalents.

Judge Lee’s opinion can be found here and at MeadWestvaco Corp. v. Rexam PLC, Case No. 1:10CV511, 2011 U.S. Dist. LEXIS 92947 (E.D.Va. Aug. 18, 2011). Our earlier post on this case can be found here, and a summary of Judge Lee’s rulings follows:

• Email This
• Print
• Comments
• Trackbacks

Following up on the jury’s $115 million verdict in favor of ActiveVideo in its patent infringement suit against Verizon, Judge Jackson has issued three separate written opinions relating to invalidity and inequitable conduct claims made at trial, including:

• Granting ActiveVideo’s Motion for Judgment as a Matter of Law on the validity of its four patents on the grounds that Verizon’s expert failed to give a detailed explanation of how the elements of the asserted claims were described in the prior art.  ActiveVideo Networks, Inc. v. Verizon Comm's., Inc., Case No. 2:10CV248, 2011 U.S. Dist. LEXIS 91722 (E.D.Va. Aug. 17, 2011).
• Denying both parties’ Motions for Judgment under Fed. R. Civ. P. 52(c) on their respective claims of inequitable conduct. Judge Jackson ruled that Verizon had not show materiality because none of the prior art that ActiveVideo failed to disclose would have anticipated any of the asserted claims. Judge Jackson also declined to infer an intent to deceive based merely on ActiveVideo’s awareness of the prior art, stating that an intent to withhold prior art was not enough to show an intent to deceive.  ActiveVideo Networks, Inc. v. Verizon Comm's., Inc., Case No. 2:10CV248 (E.D.Va. Aug. 17, 2011) 
• Granting Verizon’s Motion for Judgment as a Matter of Law on the validity of its two asserted patents on the grounds that ActiveVideo’s expert failed to opine whether the asserted prior art would enable one of skill in the art to practice the invention.   ActiveVideo Networks, Inc. v. Verizon Comm's., Inc., Case No. 2:10CV248, 2011 U.S. Dist. LEXIS 91658 (E.D. Va. Aug. 17, 2011).

• Email This
• Print
• Comments
• Trackbacks

Judge Hilton, in a textbook case of Prosecution History Estoppel, granted a fitness equipment manufacturer summary judgment of non-infringement without breaking a sweat. The 24 page opinion in Fitness Gaming Corp. v. Icon Health & Fitness, Inc., Case No. 1:11CV200, 2011 U.S. Dist. LEXIS 90605 (E.D. VA. Aug. 12, 2011) is worth a read for patent prosecutors and litigators wishing to get results (or at least well-versed in the subject) in 30 minutes or less.

• Email This
• Print
• Comments
• Trackbacks

Those of you planning to give a Crock Pot® Cook & Carry Slow Cooker as a Christmas gift can breathe easy. Judge Spencer has denied Hamilton Beach’s bid for a preliminary injunction to bar sales of the Sunbeam product for infringing Hamilton Beach’s patent on a clip to prevent the lid of the cooker from sliding off during transportation. Hamilton Beach Brands, Inc. v. Sunbeam Products, Inc., Case No. 3:11CV345 (E.D.Va. Aug. 15, 2011) (Spencer, J.). The Order denying the injunction can be found here

As is typical in the Eastern District of Virginia, the preliminary injunction process moved swiftly. The patent at issue, U.S. Patent No. 7,947,928 (“the ‘928 patent”) issued on May 24, 2011, and Hamilton Beach filed its Complaint and Motion for Preliminary Injunction the same day. The parties conducted discovery and briefed the motion and a hearing on the motion was held less than three months later, on August 11.  Judge Spencer issued his Order only four days later.

• Email This
• Print
• Comments
• Trackbacks

Successful patent invalidity challenges asserting prior invention under § 102(g)(2) are rare, which makes Judge Smith’s recent award of summary judgment on that basis even more noteworthy. In her latest opinion in The Fox Group, Inc. v. Cree, Inc., Case No. 2:10CV314, 2011 U.S. Dist. LEXIS 87231 (E.D.Va. Aug. 8, 2011), found here, Judge Smith sets out a helpful roadmap for an accused infringer pursuing a § 102(g)(2) invalidity claim.

• Email This
• Print
• Comments
• Trackbacks

Following up on our earlier post here, Judge Spencer has issued his Memorandum Opinion, found here, detailing his reasons for issuing a stay pending reexamination in JuxtaComm-Texas Software, LLC v. Lanier Parking Systems of Virginia, Inc., Case No. 3:11CV299 (E.D.Va. Aug. 1, 2011) (Spencer, J.).   The opinion reiterates that the factor distinguishing JuxtaComm from cases where stays have been denied is that the PTO had issued a Final Office Action rejecting the claims at issue before the Complaint was served.  JuxtaComm argued that it was prejudiced by the slow speed of the reexamination process.  On the contrary, Judge Spencer, held, a stay "would permit JuxtaComm to race to the finish line in litigation it pursued after learning that the PTO had rejected virtually all of its claims."

• Email This
• Print
• Comments
• Trackbacks

Late yesterday, a jury awarded ActiveVideo $115 million from Verizon, concluding the trial phase of the heated patent litigation.

• Email This
• Print
• Comments
• Trackbacks

It looks like summer is the time for Eastern District of Virginia judges to clear out their backlog. In addition to the recent decisions we’ve blogged about here, here and here, there have been several rulings in patent, trademark and copyright cases in the EDVA in the past ten days. Here’s a quick summary of several:

• Email This
• Print
• Comments
• Trackbacks

Typically, a plaintiff can feel confident that a patent infringement claim filed in the Eastern District of Virginia against Virginia-based defendants will not be transferred – but that’s not always the case, as shown by Judge Hudson’s recent decision, found here, to transfer venue in Augme Tech’s., Inc. v. Gannett Co., Inc., et al., Case No. 3:11CV282, 2011 U.S. Dist. LEXIS 81605 (E.D.Va. July 26, 2011) (Hudson, J.).

• Email This
• Print
• Comments
• Trackbacks

The jury trial regarding alleged patent infringement by Verizon's FiOS service is approaching conclusion, and Judge Jackson has issued a recent order addressing two motions for judgment as a matter of law regarding pre-suit damages.  (UPDATED 7/28 evening -- see below.)

• Email This
• Print
• Comments
• Trackbacks

The conventional wisdom in the EDVA is that patent cases will not be stayed pending a petition for reexamination. Sometimes, however, a stay pending reexam will be granted, and a recent Order entered by Judge Spencer, found here, succinctly describes the appropriate circumstances for a stay.  JuxtaComm-Texas Software, LLC v. Lanier Parking Systems of Virginia, Inc.,  Case No  3:11CV299 (E.D. Va. July 21, 2011) (Spencer, J.)

As Judge Spencer states, the three factors a Court which determine whether a case should be stayed pending a reexamination are:

• Whether discovery is complete and a trial date scheduled;
• Whether a stay would simplify the matters at issue;
• Whether a stay prejudice or disadvantage the non-moving party.

The key factor is whether the reexamination has reached an advanced stage before or soon after suit is filed. In JuxtaComm, a stay was granted because the PTO had issued a Final Office Action rejecting virtually all of the claims at issue before the suit was served.

In the EDVA, it is not likely that a stay will be granted unless the PTO has rejected at least some of the claims of the patent at issue before litigation moves beyond a preliminary stage. 

If the reexamination is not filed until after suit is filed, a motion to stay in the EDVA is almost certain to be denied because of the slow pace of the reexamination process. An example of that slow pace is the NTP case, which Judge Spencer stayed in 2007.  NTP, Inc. v. T-Mobile, USA, Inc., Case No. 3:07CV548, 2007 U.S. Dist. LEXIS 82063 (Nov. 2, 2007) (found here). The NTP case remain stayed because the NTP reexaminations, filed in 2002 and 2003, still have not concluded.

• Email This
• Print
• Comments
• Trackbacks

On July 18, EDVA Judge Gerald Bruce Lee rejected MeadWestvaco’s effort to obtain the results of expert testing done by Rexam PLC shortly after it received MeadWestvaco's cease and desist letter regarding its patent for a "Fragrance Product, Dispenser and Dispenser Assembly. MeadWestvaco Corp. v. Rexam PLC, Case No. 1:10CV511, 2011 U.S. Dist. LEXIS 78028 (E.D.Va. July 18, 2011) (found here).

After receiving MeadWestvaco's cease and desist letter, Rexam hired counsel who retained two experts to test Rexam's product but Rexam decided not to identify either expert to testify at trial. MeadWestvaco moved to compel production of the test results.  Judge Lee, as Magistrate Judge Jones had done before him, dismissed all of MeadWestvaco's arguments. 

• Email This
• Print
• Comments
• Trackbacks

In the most recent rulings in the long-running suit by Touchcom, Inc. for malpractice against its Canadian patent firm, Bereskin & Parr (“B&P”), Judge Cacheris recently granted partial summary judgment (found here) to B&P that Touchcom, Inc. lacked standing and denied Touchcom’s motion to reconsider that ruling (found here). Touchcom, Inc. v. Bereskin & Parr, Case No. 1:07CV114, 2011 U.S. Dist. LEXIS 72905 (E.D. Va. July 7, 2011).

The relationship between Touchcom and B&P dates back to 1987, when Touchcom retained B&P to obtain patents over its gasoline pump invention in Canada and the U.S. After a 2005 finding that its U.S. patent was invalid because certain software code was missing from the specification, Touchcom sued B&P for malpractice.

Judge Cacheris dismissed the case for lack of personal jurisdiction over B&P, but the Federal Circuit reversed, holding that under Fed .R. Civ. P. 4(k)(2) the act of filing an application for a U.S. patent at the USPTO was sufficient to subject a Canadian filing attorney to personal jurisdiction in a malpractice claim based upon that filing.  Touchcom, Inc. v. Bereskin & Parr, 574 F.3d 1403 (Fed. Cir. 2009).

After remand, B&P moved for summary judgment on several grounds, but the Court granted the motion on only one ground – that Touchcom, Inc. lacked standing on the grounds that it had granted its affiliate, Touchcom Technologies, Inc. (“TTI”), the sole and exclusive right to collect proceeds from litigation enforcing patent rights. 

On a motion for reconsideration, Judge Cacheris affirmed his decision that a 2003 Amendment to the licensing agreement between Touchcom and TTI granted TTI sole rights in the patent, even though the Amendment had never been signed. Based on deposition testimony of the inventor, the Court held that the terms of the Assignment had been effected by Touchcom’s and TTI’s Boards of Directors, and so was a binding agreement that deprived Touchcom, Inc. of standing. 

• Email This
• Print
• Comments
• Trackbacks

Within the hour, the second day of trial will begin in Norfolk in a patent infringement case that reaches into the home of many Americans.  At issue is FiOS, Verizon’s marquee television, Internet, and phone service.

• Email This
• Print
• Comments
• Trackbacks

IPLaw360 just published an article (link below) using statistics from PACER to conclude that IP litigation is on the rise.  That made us wonder how things are going in Virginia’s federal courts.

• Email This
• Print
• Comments
• Trackbacks

Two recent decisions out of the Norfolk Division of the U.S District Court for the Eastern District of Virginia highlight the Court’s increasing skepticism towards plaintiffs’ choice of Virginia as a forum for patent infringement claims that otherwise have no real connection with Virginia. In Adiscov, LLC v. Autonomy Corp., PLC, Civil Action No. 2:11cv201, Judge Rebecca Beach Smith granted a motion to transfer venue to the Northern District of California, finding that “though the district is the plaintiff’s home venue, the Eastern District as a forum has very little connection to the cause of action.” The Court focused on the fact that Adiscov is a non-practicing entity and that the center of the alleged infringing activity is San Francisco in concluding that “the plaintiff’s choice of forum does not warrant a strong presumption and instead counsels that transfer may well be proper.” Judge Smith’s Opinion can be found here. 

• Email This
• Print
• Comments
• Trackbacks

Our colleagues, Dan Ladow, Jeff Morgan, Trenton Ward and Dustin Weeks have authored a Troutman Sanders Advisory discussing the Federal Circuit’s new, heightened standard for materiality for inequitable conduct claims announced last week in Therasense, Inc. v. Becton Dickson and Company. In Therasense, the en banc Federal Circuit held that when an applicant for a patent fails to disclose prior art to the PTO, such prior art will be material for purposes of inequitable conduct only if the PTO would not have allowed one of the claims in the application if it had been aware of the undisclosed prior art. The full advisory, which analyzes the decision and how it might limit future claims of inequitable conduct, can be found here.

• Email This
• Print
• Comments
• Trackbacks

In a near unanimous, 8 to 1, decision  today, the Supreme Court held that induced infringement under 35 U.S.C. § 271(b) requires knowledge that the induced acts constitute patent infringement but such knowledge need not rise to the level of actual knowledge. Global-Tech Appliances, Inc. v. SEB S.A., No. 10-6 (U.S. Sup. Ct. May 31, 2011) (found here).

Instead of an actual knowledge requirement, the Court adopted the criminal doctrine of “willful blindness” and held that a defendant is liable for induced infringement if it (1) subjectively believed that there is a high probability that the acts it induces infringe a patent; and (2) took deliberate actions to avoid learning of that infringement. Willful blindness, the Court held, has a “limited scope that surpasses recklessness and negligence” and that a willfully blind defendant “is one who takes deliberate actions to avoid confirming a high probability of wrongdoing and can almost be said to have actually known the critical facts.”

Our earlier posts on the Global-Tech case, which detail the facts of the case and the Federal Circuit’s decision can be found here, here and here. In short, the Federal Circuit held that inducement liability requires only a “deliberate indifference” to a known risk that a patent exists. The Supreme Court rejected this holding as flawed because it permits a finding of knowledge where there is merely a “known risk” that the induced acts are infringing and because the “deliberate indifference” standard did “not require active efforts by an inducer to avoid knowing about the infringing nature of the activities.”

While the Supreme Court overturned the Federal Circuit’s deliberate indifference standard, it affirmed the result on the grounds that the evidence was more than sufficient for a jury to find that the accused infringer met the willful blindness standard.Specifically, the Court pointed out that  the infringer, Pentalpha:

• Copied the patentee’s “cool-touch” deep fryer;
• Believed that the patentee’s product embodied advanced technology, as shown by its decision to copy all but the cosmetic features of the deep fryer;
• Copied an overseas model of the patented deep fryer with the awareness that it would not bear U.S. patent markings;
• Failed to inform the attorney from whom it sought a right-to-use opinion that it had copied the deep fryer. The Court stated that it “cannot fathom” what motive Pentalpha might have had for withholding this information from its attorney.

Despite the result in Global-Tech, most plaintiffs asserting an inducement claim will still have to meet the higher standard of proving that a defendant had actual knowledge that the acts it induced constitute patent infringement. Except in extreme cases like Global-Tech -- where an accused infringer copies a competitor’s product and takes active steps to avoid finding out if the product is patented -- the willful blindness standard will be difficult to meet. As the Supreme Court pointed out, willful blindness requires more than reckless or negligent conduct, and evidence that an accused infringer subjectively believed that there was a high probability that it was inducing patent infringement will be difficult to obtain. If Pentalpha itself, for example, had just told its right-to-use attorney that it had copied a competitor’s product or even if it had copied a U.S. model of the deep fryer that had no patent markings, it may have escaped liability. Thus, it is likely that cases of inducement liability in the absence of proof of actual knowledge of the infringing nature of the induced acts will be few and far between.

One last note -- the one dissenting Justice was Justice Kennedy, who is almost always in the majority because of his status as the swing-vote in most cases.   Global-Tech is the rare case where he not only wrote a dissent, but he couldn't get any other justice to join him.

• Email This
• Print
• Comments
• Trackbacks

In early 2005, Judge Robert E. Payne of the EDVA dismissed Rambus’ long-running patent infringement litigation against Infineon on the grounds that Rambus had destroyed documents after litigation became reasonably foreseeable. The Infineon case settled before Judge Payne could issue a written opinion and Rambus mooted a similar case before Judge Payne, Samsung Electronics Co. v. Rambus Inc., 439 F.Supp.2d 524 (E.D. Va. 2006), by granting Samsung covenants not to sue on the patents at issue.

It took six years and two other Rambus suits, but the Federal Circuit has finally agreed with Judge Payne, essentially adopting his spoliation reasoning in its twin opinions in Micron Technology, Inc. v. Rambus, Inc., No. 2009-1263, 2011 U.S. App. LEXIS 9730 (Fed. Cir. May 13, 2011) (found here) and Hynix Semiconductor, Inc. v. Rambus, Inc., No. 2009-1299, 2011 U.S. App. LEXIS 9728 (Fed. Cir. May 13, 2011) (found here).

Rambus sued Infineon in the EDVA way back in 2000. Rambus, Inc. v. Infineon Tech’s. AG, 3:00CV524 (E.D.Va.). After a trial which went in Infineon’s favor and a Federal Circuit appeal which resulted in a partial remand, post-remand discovery revealed that Rambus had destroyed documents as part of several “shred-days” in 1998 and 1999. Judge Payne ruled that the spoliation warranted piercing the attorney-client privilege and held a bench trial on Infineon’s defense of unclean hands. In February, 2005, Judge Payne ruled from the bench that Infineon had proven that Rambus had spoliated evidence, for which dismissal was the appropriate sanction. Before the Court could issue a written opinion, however, Rambus and Infineon settled.

Soon after, Samsung filed a declaratory judgment action against Rambus in the EDVA based on the same theories of spoliation and unclean hands asserted by Infineon. Samsung Elec’s. Co. v. Rambus, Inc., Case No. 3:05CV406 (E.D.Va.). In an apparent attempt to avoid any ruling on spoliation by Judge Payne, Rambus granted Samsung covenants not to sue on the four patents at issue, made an offer of judgment to pay Samsung’s attorney’s fees incurred in the EDVA action and then moved to dismiss for lack of subject matter jurisdiction. Judge Payne, however, held that he retained jurisdiction to determine whether the case was exceptional, and, in a lengthy opinion relying primarily on Silvestri v. General Motors Corp., 271 F.3d 583 (4th Cir. 2001), he held that Rambus had destroyed relevant documents at a point in time when it anticipated or reasonably should have anticipated litigation and that such destruction rendered the case exceptional. On appeal, the Federal Circuit vacated Judge Payne’s opinion on the grounds that the covenants not to sue and the offer to pay attorney’s fees rendered the case moot. Samsung Elec’s. Co. v. Rambus, Inc., 523 F.3d 1374 (Fed. Cir. 2008).

In the meantime, Hynix and Micron filed declaratory judgment actions against Rambus (Hynix in the Northern District of California and Micron in Delaware) and both asserted that Rambus’ document destruction barred any infringement claims. In Hynix, Judge Ronald Whyte ruled that Rambus did not actively contemplate litigation at the time of the document shredding, and so the document destruction did not constitute spoliation. In Micron, Judge Sue Robinson reached the opposite conclusion, holding that litigation was reasonably foreseeable at the time of the document destruction and held that the patents were unenforceable as a sanction.

The Federal Circuit sided with Judge Robinson, holding that the duty to preserve documents attaches when a reasonable party in the same factual circumstances would have reasonably foreseen litigation. Litigation need not be “imminent or probable without significant contingencies” as Rambus contended. Like Judge Payne six years earlier, the Federal Circuit relied on the Silvestri decision to conclude that the duty to preserve evidence begins when litigation is “pending or reasonably foreseeable.” Likewise, in language very similar to Judge Payne’s decision in Samsung, the Federal Circuit rejected Judge Whyte’s conclusion that litigation was not reasonably foreseeable because multiple contingencies had not yet occurred. While certain contingencies had to occur before litigation would begin, “contingencies whose resolution are reasonably foreseeable do not foreclose a conclusion that litigation is reasonably foreseeable.”

The Federal Circuit cited several considerations which “compel a finding that litigation was reasonably foreseeable” prior to the second shred day in August, 1999:

• It was not clear error for Judge Robinson to conclude that Rambus adopted its document retention policy to further its litigation strategy;
• Rambus was on notice of infringing activities . “While it might not be enough to have a target in sight, the knowledge of likely infringing activity by particular parties makes litigation more objectively likely to occur.”
• Rambus took several steps in furtherance of litigation prior to the second shred day.
• That the Rambus had not received Board approval for licensing negotiations or litigation showed only that litigation was not imminent, not that litigation was not reasonably foreseeable.
• As the plaintiff-patentee, the decision whether litigation would ensue was within Rambus’ control;
• Rambus’ business relationship with the manufacturers did not make litigation significantly less likely, nor was there a longstanding and mutually beneficial relationship that made litigation less foreseeable;

Digging a little deeper, findings of spoliation such as in Rambus may be rare in the future. In Rambus, a great deal of the evidence about Rambus’ “shred days” and its litigation strategy was available to Hynix and Micron because all three district judges pierced the attorney-client privilege based on the basis of the crime-fraud exception. Without that evidence, it would have been difficult to satisfy the “reasonably foreseeable litigation” standard. Such evidence may not be available in other cases, though the Federal Circuit’s Micron decision provides litigants with a roadmap for establishing a prima facie case of the crime-fraud exception to the attorney-client privilege. 

• Email This
• Print
• Comments
• Trackbacks

The Federal Circuit’s recent decision in Radio Systems Corp. v. Accession, Inc., Case No. 2010-1390, 2011 U.S. App. LEXIS 8465 (Fed. Cir. April 25, 2011), found here, does not plow much new ground, but it provides a helpful primer on personal jurisdiction over a patentee in a declaratory judgment action.
In Radio Systems, the patentee (Accession) was in New Jersey, and the declaratory judgment plaintiff (Radio Systems) was in Tennessee. Over the course of three years:

• The inventor corresponded with Radio Systems by mail and email about the issuance of the patent and his desire to license his product to the plaintiff for commercialization;
• The inventor travelled to Tennessee and met with Radio Systems to demonstrate his product and show a product video;
• Accession’s counsel contacted Radio Systems’ counsel by telephone and mail. Those communications included an outline of Accession’s infringement allegations and an assertion that the interference proceedings would be warranted between Radio Systems’ patent and the Accession patent;

Based on these actions, Radio Systems brought a patent declaratory judgment action in Tennessee. The District Court dismissed the case for lack of jurisdiction, and the Federal Circuit affirmed.
In its decision, the Federal Circuit reiterated its prior holdings that an action for declaratory judgment must arise of efforts by the patentee to enforce the patent in suit, not just to commercialize the patent. The Court’s discussion of its authority in the area provides a helpful summary of the activities that do and do not create jurisdiction.

Activities that Do Not Create Jurisdiction

• Attempts to commercialize a patent by selling a product or licensing a patent are insufficient, even where the patentee travels to the forum state. Radio Systems; Avocent Huntsville Corp. v. Aten Int’l Co., 552 F.3d 1324, 1332 (Fed. Cir. 2008);
• Ordinary cease and desist notices sent to an alleged infringing party in the forum state is insufficient. Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355 (Fed. Cir. 1998);
• Entering into non-exclusive licenses with residents of the forum to sell the patented product is not enough. Red Wing Shoe at 1359;

Activities that Do Create Jurisdiction

• Hiring an attorney in the forum state who communicated with the declaratory judgment plaintiff relating to enforcement of the patent is enough. Electronics for Imaging, Inc. v. Coyle, 340 F.3d 1344, 1351 (Fed. Cir. 2003);
• Enlisting a third party to remove to remove the accused products from a trade show is sufficient. Campbell Pet Co. v. Miale, 542 F.3d 879 (Fed. Cir. 2008);
• Entry into an exclusive license with an entity in the forum state is sufficient. Breckenridge Pharm, Inc. v. Metabolite Labs., Inc., 444 F.3d 1356, 1366-67 (Fed. Cir. 2006);
• Contracting with an exclusive distributor to sell the patented product in the forum state, where the agreement is analogous to a patent license, is sufficient. Genetic Implant Sys., Inc. v. Core Vent Corp., 123 F.3d 1455, 1458 (Fed. Cir. 1997);
• Suing another infringer on the same patent in the forum is enough. Viam Corp. v. Iowa Exp.-Imp. Trading Co., 84 F.3d 424, 430 (Fed. Cir. 1996);
• Exclusive licensing of the accused infringer’s competitor in the forum is enough. Akro Corp. v. Luker, 45 F.3d 1541, 1548-49 (Fed. Cir. 1995);

For patentees, the bottom line is that while sending a cease and desist letter to an accused infringer will create subject matter jurisdiction for a declaratory judgment action, a patentee can still control the forum for patent litigation by avoiding any other enforcement activities in the forum state.

• Email This
• Print
• Comments
• Trackbacks

As we blogged here, Judge Smith’s dismissal of the Complaint in Adiscov, L.L.C. v. Autonomy Corp., Case No. 2:10cv218, 2011 U.S. Dist. LEXIS 11551 (E.D.Va. Jan. 27, 2011), based on Twombly/Iqbal, went a step beyond similar decisions by holding that a patentee must set forth how the accused products infringe the patent at issue.  That decision has caused some among the EDVA patent bar to question how much detail a Complaint must contain to satisfy Fed. R. Civ. P. 8.

Adiscov clearly got the message. Its re-filed Complaint specified the accused products and included a detailed claim chart laying out the basis of its claims. Earlier this week, on a renewed motion to dismiss, Judge Smith held that “Adiscov has cured the fatal deficiencies which caused the court to dismiss its complaint in the first case.” Adiscov, L.L.C. v. Autonomy Corp., 2:11Cv201 (E.D.Va. April 26, 2011) (“Adiscov II”), which can be found here.

Specifically, Adiscov’s complaint met the pleading requirements of Rule 8 because it:

• “specifically identified the Autonomy’s products that it claims to infringe”
• “names the elements of Claim 1 of the ‘760 patent which are specifically infringed”
• states “in general how such products infringe the ‘760 patent.”

Judge Smith brushed aside Autonomy’s arguments that Adiscov’s allegations were overinclusive and conclusory, implying that Rule 8 only requires that a patentee set forth some theory of infringement. Beyond determining whether that theory is plausible, the District Court will not delve any further.

Adiscov II clarifies that Twombly/Iqbal and Rule 8 set a low bar to plead patent infringement that a patentee should be easily able to meet. In sum, a Complaint for patent infringement need only:

1. assert that the plaintiff owns the patent
2. identify the defendants
3. assert that the defendant infringed the patent
4. identify the accused products
5. state in general how the accused products infringe
6. identify the parts of patent law that are implicated.

As a result, dismissals under Twombly/Iqybal will be rare and short-lived, as any competent patent lawyer should be able to meet any grounds for dismissal in a re-filed Complaint.

• Email This
• Print
• Comments
• Trackbacks

As we noted here, Judges Bryson and Newman forecasted in the McKesson Tech’s. v. Epic Systems decision issued last week that the full Federal Circuit would have to resolve whether a method claim was directly infringed where the steps of the claim are performed by separate actors who are not under the other’s direction or control.

Sure enough, yesterday the Court granted rehearing en banc in Akamai Technologies v. Limelight Networks, No. 2009-1372 (Fed. Cir. 2011) to address that issue. (en banc order here).

In its order granting rehearing en banc, the Court ordered the parties to address the following question: “If separate entities each perform separate steps of a method claim, under what circumstances would that claim be directly infringed and to what extent would each of the parties be liable?”

Our earlier post discussing the Akamai decision in detail can be found here.

• Email This
• Print
• Comments
• Trackbacks

Much of the reaction to the Federal Circuit’s en banc decision yesterday in TiVo Inc. v. EchoStar Corp., No. 2009-1374 (Fed. Cir. April 20, 2011) (found here), will focus on the Court’s affirmance of the $90 million contempt sanction and the holding that EchoStar waived its challenges to the scope and specificity of the permanent injunction.
That aspect of the decision offers an important cautionary lesson for patent litigators, but the more significant ruling in TiVo was the Court’s unanimous decision to overrule the two-step analysis set forth in KSM Fastening Sys., Inc. v. H.A. Jones Co., 776 F.2d 1522 (Fed. Cir. 1985) for determining whether a contempt hearing is appropriate for evaluating the effectiveness of a design-around. In TiVo, the Court collapsed “the current two-fold KSM inquiry into one, eliminating the separate determination whether contempt proceedings were properly initiated.” TiVo, slip op. at 17.
The contempt analysis for redesigned products will now proceed as follows:

• The patentee moving for contempt “must prove both that the newly accused product is not more than colorably different from the product found to infringe and that the newly accused product actually infringes” by clear and convincing evidence.
• “the contempt analysis must focus initially on the differences between the features relied upon to establish infringement and the modified features of the newly accused product.” The analysis must focus on “those aspects of the product that were previously alleged to be, and were a basis for, the prior finding of infringement.”
• “Where one or more of those elements previously found to infringe has been modified, or removed, the court must make an inquiry into whether that modification is significant. If those differences between the old and new elements are significant, the newly accused product as a whole shall be deemed more than colorably different from the adjudged infringing one” and contempt is inappropriate.
• “The court must also look to the relevant prior art, if any is available, to determine if the modification merely employs or combines elements already known in the prior art …”
• “[W]hen a court concludes there are no more than colorable differences between the adjudged infringing product and modified product ... the court is required to evaluate the modified elements of the newly accused product against the asserted claim, on a limitation by limitation basis, to ensure that each limitation continues to be met.”
• The Court’s finding on both whether the modified product is colorably different and whether the modified product continues to infringe are reviewed for clear error.

In TiVo, the Court vacated the finding of contempt on the infringement portion of the injunction because the feature accused of infringement in the contempt proceeding was different from the feature accused of infringement at trial. The Court remanded the case to the district court for a determination of whether the differences between the two features at issue were significant. If that were the case, the new device would be more than colorably different, and TiVo would have to pursue a new infringement proceeding against the modified product.
In many instances, the TiVo analysis may cut off a patentee’s ability to use the relatively swift contempt process to attack the sufficiency of a design-around. Where a design-around eliminates or even just changes the feature accused of infringement at trial, a patentee may find it easier to file a new infringement action rather than attempt to meet the heavy clear and convincing burden of proof to obtain a contempt sanction.

• Email This
• Print
• Comments
• Trackbacks

In McKesson Tech’s. Inc. v. Epic Sys. Corp., No. 2010-1291, 2011 U.S. App. LEXIS 7531 (Fed. Cir. April 12, 2011), found here, the Federal Circuit reaffirmed its recent holdings that infringement of a method claim requires that all the steps of the claim be performed by a single party -- but not without a strong dissent that may portend en banc review.

In McKesson, the defendant sold an interactive computer system that allowed health care providers to create personalized web pages for their patients. The parties did not dispute that the first step of the asserted method claims was performed by the patient and the remaining steps by the health care provider. Citing a series of recent cases, including BMC Resources, Inc. v. Paymentech LP, 498 F.3d 1373 (Fed. Cir. 2007), Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008) and Akamai Tech’s., Inc. v. Limelight Networks, Inc., 629 F.3d 1311 (Fed. Cir. 2010) (summarized here), the Court held that the actions of multiple parties could establish direct infringement of a method claim only where one party exercised control or direction over the entire process. Since the patients were not agents of the health care providers nor were they contractually obligated to perform any of the method steps, the patentee could not show the necessary control or direction.

While McKesson breaks no new legal ground, it is interesting that both Judge Bryson, in a two-sentence concurrence, and Judge Newman, in a lengthy dissent. suggested that the issue may warrant en banc review. Judge Newman pointed out that there was no bar to patenting computer-implemented methods simply because their performance involves more than one entity, yet the majority’s ruling effectively held that such claims could never be infringed. The majority erred, she argued, in pronouncing a “single entity rule” as an absolute rule of law when “no rule of law, no precedent, prohibits patenting and enforcing a method that is performed by interacting entities.”

• Email This
• Print
• Comments
• Trackbacks

After Exergen v. Wal-Mart Stores, Inc., 575 F.3d 1312 (Fed. Cir. 2009) (summarized here), it appeared that claims of inequitable conduct would fail at the pleading stage because of the requirements of a specific “who, what, when, where and how” of the alleged misrepresentation and specific facts that permitted an inference of an intent to deceive.

A recent case before Judge Brinkema, though, breathes some new life into inequitable conduct claims in the EDVA. Rolls-Royce PLC v. United Tech’s. Corp., 1:10CV457, 2011 U.S. Dist. LEXIS 20679 (E.D.Va. March 2, 2011) (Brinkema, J.) (found here). The key is the specificity of the allegations. If a defendant's allegations state a plausible claim of inequitable conduct, Judge Brinkema concluded, questions of materiality and intent are merely issues of disputed fact unsuitable for resolution on either a motion to dismiss or a motion for summary judgment. 

In her decision on the motion to dismiss in Rolls-Royce, Judge Brinkema addressed four theories of inequitable conduct:

• First, the defendant claimed the inventor had filed a false inventor declaration. Judge Brinkema held that the inventor’s deposition testimony presented a plausible claim of a false statement and “would lead to a reasonable inference that Rolls-Royce intended to deceive the PTO by filing the declaration.”
  
• Second, the defendant alleged that Rolls-Royce had falsely claimed a priority date in a continuation-in-part application in order to avoid disclosure of material prior art. Judge Brinkema held that the defendant’s specific identification of material prior art and its explanation of Rolls-Royce's reasons for its conduct date were sufficient. Whether the application contained new subject matter, the Court held, was a question of fact.
   
• Third, the defendant asserted that Rolls-Royce failed to disclose several pieces of prior art and proffered reasons why the art was material, not cumulative and might have impacted the examiner’s review. Rolls-Royce claimed that the art was cumulative, but Judge Brinkema held that it could not make that determination on a motion to dismiss.
  
• Finally, the defendant claimed that Rolls-Royce misrepresented the defendant’s patent during prosecution. Rolls-Royce conceded that it had mischaracterized the patent but claimed its statements were immaterial. Again, Judge Brinkema held that the allegations satisfied Rule 9(b)’s standard of specificity and that whether Rolls-Royce’s statement was material required evidence beyond the scope of a motion to dismiss.

In essence, Judge Brinkema concluded at the motion to dismiss stage that the defendant had established a prima facie case of inequitable conduct, particularly on issue of intent to deceive.  Indeed, Judge Brinkema denied Rolls-Royce’s motion for summary judgment based on a lack of intent to deceive on April 8. Thus, the lesson for litigants may be that if claims of inequitable conduct are sufficiently fact-based to overcome a motion to dismiss, they will also create a genuine issue of fact to defeat summary judgment.

• Email This
• Print
• Comments
• Trackbacks

We previously blogged about the massive patent infringement case TecSec filed against thirteen separate defendant groups here, here and here. After more than a year of procedural wrangling, Judge Brinkema brought the first phase of the case to an abrupt end by awarding summary judgment to IBM on all of TecSec’s claims. The judge’s opinion can be found here and is also at TecSec, Inc. v. International Business Machines Corp., 2011 U.S. Dist. LEXIS 21726 (E.D. Va. March 3, 2011).

TecSec asserted infringement of three separate groups of patents addressing encryption and security methods and products. The Court identified the patents as the “DCOM” patent family, the XML patent and the Parallel Processor patent.

In the course of her summary judgment ruling, Judge Brinkema reached three decisions on claim construction which led directly to her conclusion on summary judgment:

1. First, she ruled that the phrase “multi-level multimedia security” in the preamble of the DCOM patent family was a defining aspect of the invention and so served as a claim limitation.
2. Second, she ruled that “multi-level security” requires multiple layers of encryption. Thus, encrypted objects must be nested within other encrypted objects. TecSec attempted to broaden the definition to include a single level of encryption, but Judge Brinkema ruled that it had advocated multiple levels of encryption as the essence of the invention during prosecution.
3. Third, Judge Brinkema held that “storing” of encrypted objects could not be interpreted to cover passing information on a real-time basis to the intended recipient of the information.

From these rulings, a finding of non-infringement followed because IBM’s products provided, at most, only a single level of encryption or were designed to pass encrypted messages on a real-time basis.

Other significant rulings by Judge Brinkema included:

• IBM did not infringe the asserted method claims because neither IBM or any third party performed all of the steps of those claims;
• IBM did not infringe the asserted system claims because TecSec only accused IBM’s software of infringement but the claimed systems also included hardware means;
• TecSec claimed that six different configurations of IBM products infringed but offered no evidence that IBM actually made or sold the specific accused configurations;
• TecSec could not prove inducement of infringement because there was no evidence that any customer used the IBM products in any of the six accused configurations;
• TecSec’s claim that circumstantial evidence showed that the products might be used in an infringing configuration failed because such a theory required a showing that the products would necessarily infringe, and IBM’s products could be used in a variety of ways that did not infringe;
• The ability of the products to be used in non-infringing configurations also doomed TecSec’s claim of contributory infringement;
• TecSec failed to identify sufficient corresponding structure in the specification for the means plus function claims of its patents.

After ruling on summary judgment, Judge Brinkema entered an Order, found here, continuing the stay of the litigation against all of the other defendants based on TecSec’s representations that it would promptly pursue an appeal of the summary judgment ruling and that  it will not pursue its claims against the other defendants until the conclusion of that appeal.

• Email This
• Print
• Comments
• Trackbacks

On March 8, the Senate passed comprehensive patent reform legislation by a vote of 95-5. While almost all the litigation-related provisions were removed, one provision, placing venue for suits against the PTO in the Eastern District of Virginia, was included in the final bill.

Congress has struggled with patent reform over the past several Congresses, and a few of our posts from previous efforts can be found here and here. The latest bill, S. 23, with changes made in the Judiciary Committee, can be found here.  A good summary of the provisions of the bill as passed by the Senate written by the Congressional Research Service can be found here.

There are few provisions left which will alter patent litigation lawsuits. The proposal to alter willfulness claims in the original bill was eliminated in Committee, and other litigation provisions affecting venue and damages were removed on the Senate floor through a manager’s amendment, which can be found here.  The bill also left out a proposal for a pilot program in district courts to provide training and additional resources for judges willing to take patent cases, which appeared in earlier versions of patent reform legislation.

The one venue provision that survived the manager’s amendment has a direct effect on Virginia. That provision changes the venue for litigation against the Patent and Trademark Office from the federal court in Washington to the Eastern District of Virginia, since the PTO is located in Alexandria.  The bill also effectively eliminates false patent marking claims under 35 U.S.C. 292(a) and eliminates the best mode defense to claims of patent infringement.

The legislation now moves to the House of Representatives, which held subcommittee hearings on patent reform on March 9 and 10.  There are indications that the Senate attempted to address some of the House's concerns in the manager's amendment, and so hopes for ultimate enactment of the legislation are higher than in past years.  Even if passed by the House and enacted into law, though, patent reform will be delayed a bit longer. The effective date of the Act is one year after enactment and applies to any patent issued after that effective date.

• Email This
• Print
• Comments
• Trackbacks

On January 27, Judge Rebecca Beach Smith dismissed a patent infringement action on the grounds that the Complaint failed to meet the pleading requirements in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009). Adiscov, LLC v. Autonomy Corp., Case No. 2:10CV218 (E.D.Va. Jan. 27, 2011) (Smith, J.). The decision can be found here.

Adiscov LLC brought suit against three defendants alleging infringement of its patent covering methods for conducting electronic discovery on computer systems.  Adiscov’s allegation of infringement was brief and simple: it alleged that each defendant manufactured, used and sold products and services including “legal discovery software and services . . . acting or capable of acting in the manner described and claimed in the ‘760 patent.” Adiscov did not identify any specific infringing product or class of products nor did the Complaint identify how the defendants’ products infringe its patent.

• Email This
• Print
• Comments
• Trackbacks

In two recent opinions, the Federal Circuit clarified the requirements for so-called “divided” infringement, i.e., where the infringing acts are committed by multiple actors. The bottom line is that for method claims, joint infringement is limited to vicarious liability situations. For system claims, however, either of two parties which separately possess parts of a claimed system, infringe if that party “put[s] the invention into service, i.e., control[s] the system as a whole and obtain[s] benefit from it.”

First, in Akamai Technologies v. Limelight Networks, Case No. 2009-1372 (Fed. Cir. Dec.20, 2010), the Court addressed joint infringement of method claims. There, the Court held that Limelight (the accused infringer) did not infringe because it did not perform all of the steps of the claimed method and the actions of its customers, who carried out other steps, could not be attributed to Limelight.  Joint infringement of a method claim, the Court held, requires either that (1) there is an agency relationship between the parties who perform the method steps; or (2) one party is contractually obligated to the other to perform the steps.

The patents at issue in Akamai covered a method for storing Internet content across a network of servers. The patented method included steps involving (1) the storage of embedded objects from a customer’s web page on a network (called a CDN) and (2) “tagging” embedded objects in the customer’s web page to link the object to the CDN. Under Limelight’s contract with its customers, Limelight stored the objects on the CDN, but the customers chose which objects to tag, and the customer performed the tagging as instructed by Limelight. Thus, neither Limelight nor its customer performed all of the steps of the patented method.

Under BMC Res., Inc. v. Paymentech LP, 498 F.3d 1373, 1380 (Fed. Cir. 2007), liability for joint infringement of a method claim requires that one party “control or direct” the activities of another. BMC and Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008), also hold that “control or direction” requires that the accused infringer be vicariously liable for the acts of the third party. Neither Limelight’s contract with its customer nor its instructions to its customer, the Court held, established an agency relationship such that Limelight could be held vicariously liable for the actions of its customer. That Limelight received a benefit from its customer’s actions, the Court held, was not enough.  

The Federal Circuit returned to the issue of joint infringement, at least tangentially, a month later in Centillion Data Systems, LLC v. Qwest Comm’s. Int’l. Inc., 2011 U.S. App. LEXIS 1117 (Fed. Cir. Jan. 20, 2011). Centillion dealt with system claims for collecting, processing and delivering information from a telephone service provider to a customer's personal computer. The claims required three “back-end” components provided by the accused infringer, Qwest, and a “front-end” system maintained by Qwest’s customer on a personal computer.

Relying on BMC and Cross Medical Products v. Medtronic Sofamor Danek, Inc., 424 F.3d 1293 (Fed. Cir. 2005), Qwest argued that neither it nor its customers “used” the entire system under 35 U.S.C. § 271(a) nor did Qwest direct or control the actions of its customers. The District Court agreed and granted summary judgment of non-infringement, but the Federal Circuit reversed.

The Federal Circuit noted that it had never directly addressed the issue of infringement for “use” of a system that includes elements in the possession of more than actor. Looking to its decision in NTP v. Research in Motion, Ltd., 418 F.3d 1282, 1317 (Fed. Cir. 2005), the Court held that “to ‘use’ a system for purposes of infringement, a party must put the invention into service, i.e., control the system as a whole and obtain benefit from it.”  Such control, however, does not require physical or direct control. Rather, it only required the ability to place the system as a whole into service and use each and every element of the claimed invention. 

A customer of Qwest, the Court held, “used” the entire system when it issued a query because it caused the system as a whole to perform processing and obtained benefit as a result. A Qwest customer also “used” the system by subscribing to Qwest’s service because by subscribing, the customer caused the back-end processing to generate a report on a monthly basis

. 

Qwest itself, by contrast, did not “use” the entire system because it never put into service the front-end data processing means nor did it "make" the system because only the customer combined all the claimed elements of the system. Further, Qwest was not vicariously liable for the actions of its customers because those customers did not act as its agents. 

While the Federal Circuit’s limitation on infringement of method claims will cut off liability in most instances where two parties perform the steps of a claimed method, its holding that a party need not have physical or direct control over all elements of a system expands infringement liability for system claims. Presumably, patentees will focus on proving direct infringement against customers who “use” a claimed system and assert indirect infringement against defendants, like Qwest, which sell the services for which the claimed system is used.

• Email This
• Print
• Comments
• Trackbacks

A patent infringement suit against Facebook, YouTube, LinkedIn, and Photobucket is headed to California, after the defendants prevailed on their motion to transfer venue.  The opinion reinforces a trend against giving choice of forum deference to patent holding companies, particularly if those companies formed shortly before the lawsuit.  The opinion also makes clear that compliments about the Rocket Docket do not help a plaintiff stay in Virginia.

• Email This
• Print
• Comments
• Trackbacks

As we posted here and here, the case of TecSec v. IBM et al., Case No. 1:10CV115 (E.D.Va.), pending before Judge Brinkema, is one of the most complex patents suits ever filed in the Eastern District of Virginia. TecSec asserted 11 patents involving 380 claims against thirteen unrelated groups of defendants. To gain control over this massive suit, Judge Brinkema stayed the litigation as to all defendants except IBM.

Judge Brinkema is now working her way through the parties’ summary judgment motions. In an opinion (found here) issued January 12 on a first-round of motions, Judge Brinkema denied IBM’s motion for summary judgment of inequitable conduct but allowed the inequitable conduct claim to proceed to trial.   TecSec, Inc. v. IBM, 2011 U.S. Dist. LEXIS 3116 (E.D. Va. Jan. 12, 2011).

IBM asserted inequitable conduct based on the patentee’s failure to disclose the role of a former TecSec employee, Roy Follendore, in inventing the methods contained in one family of the patents at issue. Follendore was one of the pioneering developers of the technology at issue and had been awarded a patent on a closely related invention. TecSec, however, did not specifically disclose the Follendore patent to the PTO, even though the Follendore patent contained claim language that was, in the Court’s words, “strikingly similar” to the claims of the patents in suit. Moreover, the same attorneys prosecuted both the Follendore patent and the patents in suit.

The patents in suit, however, specifically referenced the Follendore patent in their specification and there was other evidence of a lack of materiality and intent to deceive. For those reasons, Judge Brinkema held that IBM had not met its burden of proving inequitable conduct by clear and convincing evidence but allowed the claim to proceed to trial.

IBM also moved for summary judgment of invalidity of two patents due to anticipation and lack of adequate written description as to one of those patents. Judge Brinkema not only denied IBM’s motion but held that TecSec was entitled to summary judgment on IBM’s written description defense and judgment that the cited prior art references did not invalidate those two patents. IBM recently moved for reconsideration of the invalidity decision (brief in support found here) on the grounds that TecSec did not seek summary judgment that the prior art references were not anticipating and on the grounds that the Court did not apply the proper standard. A hearing on the reconsideration motion is scheduled for February 4. 

Finally, the parties recently filed a second round of cross-summary judgment motions. A hearing on those motions is set for February 11. 

• Email This
• Print
• Comments
• Trackbacks

The Supreme Court has scheduled argument in the case of Global-Tech Appliances Inc. v. SEB S.A. for February 23, and, coincidentally, we published an article last week in BNA’s Patent, Trademark and Copyright Journal (found here), analyzing the issues the Court will address and predicting that the Court will overturn the Federal Circuit’s holding that inducement of patent infringement requires only “deliberate indifference” to the existence of a patent.

For background on the Federal Circuit’s decision and the Supreme Court’s decision to grant cert see our earlier blog posts here and here. A few of the highlights of our BNA article are:

• Global-Tech raises an issue of justiciability which could allow the Supreme Court to avoid the merits and simply remand the case for a trial on damages for direct infringement.
   
• The Court is likely to approach Global-Tech as a straightforward case of statutory interpretation, much as it did in KSR and Bilski.  Thus, the Court will strictly construe the statutory language and give little weight to Federal Circuit authority that is not firmly grounded in the statute or Supreme Court precedent.
   
• Because the Federal Circuit did not derive its “deliberate indifference” standard from the language of 35 U.S.C. § 271(b) or Supreme Court precedent, the Federal Circuit’s standard is probably doomed.
   
• Even if it reverses the Federal Circuit, the Court is not likely to simply adopt the standard of “purposeful, culpable expression and conduct” proposed in the Question Presented.
   
• The Supreme Court is also not likely to adopt a standard of intent that is lower than set forth in the Federal Circuit’s earlier en banc decision in DSU Medical Corp. v. JMS Co., 471 F.3d 1293 (Fed. Cir. 2006) (en banc).
   
• The factors that support the conclusion that the Court will require knowledge of a patent for inducement liability also support the conclusion that such knowledge must be actual knowledge.
   
• An actual knowledge standard will reduce damage awards but it will not allow indirect infringers to escape liability for injunctive relief or damages once notice is given.
   
• An actual knowledge standard will make marking under 35 U.S.C. § 287(a) more important and will raise numerous questions about the nature and quality of evidence sufficient to show actual knowledge for later cases to decide.

For all the details, click here for the full article.

• Email This
• Print
• Comments
• Trackbacks

As reported previously here, in WiAV Solutions LLC v. Motorola, Inc., et al., Case No. 3:09CV447, Judge Robert E. Payne dismissed seven claims of patent infringement for lack of standing because the plaintiff did not have the exclusive right to license the patent. Plaintiff WiAV had licensed seven of the nine patents at issue from Mindspeed Technologies (which was also named in the case as defendant patent owner).  In a December 18, 2009 decision, Judge Payne ruled that WiAV lacked constitutional standing because it was not an exclusive licensee of the patents. Judge Payne later certified WiAV’s appeal of that decision to the Federal Circuit, as reported here. 

• Email This
• Print
• Comments
• Trackbacks

As reported previously here, in WiAV Solutions LLC v. Motorola, Inc., et al., Case No. 3:09CV447, Judge Robert E. Payne dismissed seven claims of patent infringement for lack of standing because the plaintiff did not have the exclusive right to license the patent. Plaintiff WiAV had licensed seven of the nine patents at issue from Mindspeed Technologies (which was also named in the case as defendant patent owner).  In a December 18, 2009 decision, Judge Payne ruled that WiAV lacked constitutional standing because it was not an exclusive licensee of the patents. Judge Payne later certified WiAV’s appeal of that decision to the Federal Circuit, as reported here. 

• Email This
• Print
• Comments
• Trackbacks

As American companies face increased competition from foreign entities, service on foreign defendants can be a critical issue for intellectual property litigants.

The Federal Circuit recently took a broad view of both service and personal jurisdiction in a patent infringement case in Nuance Comm’s, Inc. v. Abbyy Software House, et al., 2010 U.S. App. LEXIS 23419 (Fed. Cir. Nov. 12, 2010). In Nuance, the Court reversed the District Court’s dismissal of a Russian corporation for lack of jurisdiction and insufficient service of process.

The Court’s ruling on jurisdiction is not surprising, as the Russian defendant had imported the accused software to its American affiliate in California, and the decision is consistent with Federal Circuit authority applying the “stream of commerce” test for jurisdiction (as we discuss here). By allowing substituted service on the Russian company through its American affiliate under Rule 4(f)(3), however, the decision opens up a flexible and relatively simple avenue for parties to serve foreign defendants through their U.S. agents where Hague Convention service is impossible or merely time consuming.

• Email This
• Print
• Comments
• Trackbacks

As the third in our series of posts following up on our article on litigating patent infringement cases in the Eastern District of Virginia (earlier posts can be found here and here), we want to make a few brief points about one of the key events in any patent case – claim construction and the Markman process. Claim construction is especially important in the EDVA because the seven to nine month schedule of the typical patent case makes the timing of a Markman hearing crucial.

The short summary of how the EDVA handles claim construction is that each judge does it differently. There are, however, similarities among the practices of the judges in each of the three divisions of the Court.

In the Alexandria Division, most of the district judges prefer to delay consideration of claim construction until the summary judgment stage. This practice is consistent with other civil cases in Alexandria, where non-dispositive motions are handled by a magistrate judge, and so the district judges tend to have little contact with cases until later in the litigation process. The prevailing view appears to be that claim construction issues are more ripe for determination later in the case, after the parties have conducted discovery and after the parties have had more time to consider settlement.

Some litigants prefer the approach in Alexandria, but in the EDVA, it creates a great deal of uncertainty because the deadline for summary judgment motions is less than two months before trial. The lack of a claim construction until the eve of trial not only makes settlement more difficult, but experts must prepare reports using alternative claim constructions, and trial strategy cannot be set until a decision is rendered, which can be within a week or two of trial.

In Richmond, the district judges are more involved in patent cases from the beginning. Unlike Alexandria, the district judges oversee the initial pre-trial conference and hear non-dispositive motions, including discovery motions. District judges are also more closely involved in the claim construction process. As a result, in Richmond, whether to hold a Markman hearing is typically addressed at the initial pre-trial conference, and Markman hearings usually occur three to four months after responsive pleadings are filed, before expert reports are filed and well before trial. While the Court does not always issue a claim construction before opening expert disclosures are due, that often occurs, simplifying expert reports and summary judgment motions, and allowing the parties more time to prepare trial strategies.

In Norfolk, like Alexandria, the district judges have less contact with patent cases until later in the litigation process. The clerk handles the initial pre-trial conference, and magistrate judges handle most non-dispositive motions. Markman hearings are not scheduled unless the parties request one by motion. In Norfolk, the time between the initial pre-trial conference and trial tends to be the shortest of the three divisions, often less than seven months. Thus, if a party wants the court to schedule an early Markman hearing, they are advised to request one as early as possible. Even then, it may be some time before they receive a ruling on their request. Unlike Alexandria, however, the district judges in Norfolk do not have as strong a preference for combining claim construction with the summary judgment process. As a result, the timing of Markman hearings in Norfolk cases vary from relatively early in the litigation process to as late as a few weeks before trial.

One thing the divisions share is the format for Markman hearings. Live testimony is rarely offered in civil hearings in the EDVA, and the same is true for Markman hearings. Thus, in most cases, Markman hearings last less than a day and resemble an appellate argument, supplemented by exhibits and perhaps PowerPoint presentations. Further, the EDVA judges all have experience with Markman hearings and are familiar with the standards for claim construction, and so litigants can expect judges to be well prepared and capable of understanding patent law concepts.

Lastly, parties should remember that while the EDVA judges all have tendencies and standard practices for handling claim construction, they all make exceptions in particular cases. While parties need to be alert to a judge’s practices, if requested early enough and supported by sound reasoning, all of the judges are open to suggestion about different approaches to Markman hearings.

• Email This
• Print
• Comments
• Trackbacks

As we posted here, the Federal Circuit held in February that an accused infringer need not have actual knowledge of a patent to be liable for inducement of infringement. SEB S.A. v. Montgomery Ward & Co., Inc., 594 F.3d 1360 (Fed. Cir. 2010). That decision conflicted with the Federal Circuit’s en banc holding a little over three years earlier in DSU Medical Corp. v. JMS Co., Ltd., 471 F.3d 1293 (Fed. Cir. 2006), that “[t]he requirement that the alleged infringer knew or should have known his actions would induce actual infringement necessarily includes the requirement that he or she knew of the patent.” The SEB panel danced around the DSU decision by stating that DSU did not set out the “metes and bounds” of the knowledge-of-the-patent requirement.

This morning, the Supreme Court granted a petition for certiorari filed by two of the defendants in SEB to decide “Whether the legal standard for the ‘state of mind’ element of a claim for actively inducing infringement under 35 U.S.C. 271(b) is ‘deliberate indifference of a known risk’ that an infringement may occur or instead ‘purposeful, culpable expression and conduct’ to encourage an infringement.” Global-Tech Appliances, Inc. v. SEB S.A., cert. granted, Docket No. 10-6 (U.S. Oct. 12, 2010).

The cert. petition can be found here, the opposition brief can be found here, and an amicus brief in support of granting cert. filed by 26 Law, Economics and Business Professors can be found here.

• Email This
• Print
• Comments
• Trackbacks

Twombly, Iqubal, Winter, eBay and Real Truth About Obama. To many, these names make little sense, but to intellectual property litigators, they are well-known examples of the constantly changing nature of federal procedure. On September 29, a seminar sponsored by the Richmond Chapter of the Federal Bar Association offered some guidance through these cases and the procedural thicket in the Eastern District of Virginia.

The seminar, titled “Procedural Issues in Civil Litigation in the Richmond Division of the Rocket Docket,” included excellent written materials (found here) and featured a panel of speakers that included Senior U.S. District Judge Robert E. Payne, David Anthony of Troutman Sanders LLP and Maya M. Eckstein of Hunton & Williams LLP.

For a recap of the panel's comments, see below. For more on litigating intellectual property cases in the Rocket Docket of the  Eastern District of Virginia, see our article found here.

• Email This
• Print
• Comments
• Trackbacks

On September 23, Judge Raymond Jackson of the Eastern District of Virginia denied a motion by Verizon to sever two of its Virginia-based subsidiaries and transfer venue of a patent infringement action involving its FiOS interactive television services. ActiveVideo Networks, Inc. v. Verizon Comm’s., Inc., et al., Case No. 2:10cv248 (E.D. Va. Sept. 23, 2010) (Jackson, J.), found here.

Verizon argued that its two Virginia subsidiaries, Verizon Virginia, Inc. and Verizon South, were “peripheral” defendants with only an indirect connection to the main claims, and so should be severed and the remaining claims transferred to New Jersey under the decision in Corry v. CFM Majestic, Inc., 16 F.Supp.2d 660 (E.D.Va. 1998).

Verizon claimed that the two Virginia subsidiaries should be severed because neither were responsible for the design, development, research or creation of the allegedly infringing FiOS services and relied on several Eastern District of Virginia cases in which the Court had severed claims against retailers and distributors of allegedly infringing devices.

Judge Jackson rejected this argument, finding that the two Virginia subsidiaries were not merely retailers, but were actually providing and selling the allegedly infringing services. The parent company defendants, by contrast, did not provide or offer for sale any products or services to the public, and so were less involved in the alleged infringing sales and service than the subsidiaries.

The lesson here is that a plaintiff cannot create venue in Virginia merely by suing a company’s Virginia sales subsidiary.  If the infringing acts involve provision of services by the subsidiary, however, or if the parent company has little involvement in the allegedly infringing sales, a Virginia subsidiary is enough to overcome a venue objection.

• Email This
• Print
• Comments
• Trackbacks

By Robert Angle and Dabney Carr

This is the second in a series of posts following up on our recent article on patent litigation in the Eastern District of Virginia (found here). In this post, we talk about how the defendant-accused infringer should respond to a lawsuit to avoid putting itself behind the EDVA eight ball and turn the tide in its favor.

• Email This
• Print
• Comments
• Trackbacks

As we posted here, Judge Spencer upheld CompX International’s $39 million jury verdict against Humanscale Corporation for patent infringement. In keeping with our motto that “We read the opinions so you don’t have to,” here’s a bullet-point summary of Judge Spencer’s 40-page opinion, which can be found here and is also at 2010 U.S. Dist. LEXIS 83881 (E.D. Va. Aug. 16, 2010):

• Non-infringement

The Court correctly held that the term “tilting” should be given its ordinary meaning and did not impermissibly allow the jury to define a disputed claim term in violation of O2 Micro Int’l. Ltd. v. Beyond Innovation Tech., Co., 521 F.3d 1351 (Fed. Cir. 2008).

• Obviousness

Substantial evidence supported the jury’s conclusion that there was no motivation to combine previous models of CompX’s patented products to include features found in equipment supports for other types of equipment, such as sewing machines, typewriters and ironing boards.

• On-Sale Bar

Humanscale failed to prove that sales of patented products occurred before the critical date.

• Laches

The Court’s most in-depth analysis concerned laches. CompX had brought suit on the same patents a decade earlier, but had dismissed the suit without prejudice nine years before re-filing. The Court held that CompX’s nine-year delay was inexcusable and unreasonable but held that Humanscale failed to prove prejudice.

 In a separate ruling, found here, the Court denied CompX's claim for prejudgment interest because of the delay in filing suit, but that is a hollow victory given the size of the damage award.

If nothing else, the ruling illustrates just how difficult it is to prevail on a laches defense. Even with a nine-year delay, Humanscale could not persuade the Court that it had suffered evidentiary or economic prejudice. The case illustrates how hard it is to show evidentiary prejudice when a defendant does not know what evidence has been lost, and it’s even harder for a defendant to adamantly deny it infringes while also claiming that it suffered economic prejudice because it would have behaved differently if suit had been filed earlier.

• Inequitable Conduct, Equitable Estoppel and Inventorship

The Court refused to reconsider its decision to grant judgment as a matter of law on these three defenses, illustrating, as was the case with laches, the heavy burden a defendant bears on these defenses.

• Email This
• Print
• Comments
• Trackbacks

As we noted here, Judge Robert E. Payne recently ruled on two summary judgment motions in WiAV Solutions LLC's patent suit against numerous mobile telephone companies. Our earlier post addressed the Court’s ruling on marking. In his second opinion, Judge Payne granted defendants summary judgment on WiAV’s claim of infringement under the doctrine of equivalents. The decision can be found here.

WiAV’s patent provides a method for monitoring the quality of a traffic channel for mobile phones by measuring the quality of a separate control channel. WiAV claimed that a "training sequence" and a "common pilot channel" used by the accused products were equivalent to a control channel. The defendants pointed out, however, that

• the control channel described in the patent carries data, while the training sequence and common pilot channel are fixed sequences that do not carry data. 
• the control channel uses error protection while the training sequence and common pilot channel do not
• the control channel described in the patent determines channel quality in a different manner from the training sequence and common pilot channel.

WiAV, Judge Payne ruled, “offers a function, way and result divorced from the language of the claims.” For example, WiAV’s argument that the function of the patented process did not include a control channel was “belied by the claim terms themselves” which made clear that a control channel was required.

In the same opinion, Judge Payne denied summary judgment on literal infringement, and so WiAV's claims remain alive for trial, which is set for October.

• Email This
• Print
• Comments
• Trackbacks

In a 40 page opinion filed Monday, Chief Judge James R. Spencer of the U.S. District Court for the Eastern District of Virginia has denied several post-trial motions by the losing litigant, HumanScale, in a patent infringement case where CompX won a $19.3 million jury verdict on its counterclaims (case no. 3:09-CV-86). 

For more information on the case, see our past blog entries here (after the jury verdict) and here (after denial of a permanent injunction to CompX).

Hat tip:  Virginia Lawyers Weekly blog, which also offers a copy of the opinion for download.

• Email This
• Print
• Comments
• Trackbacks

In the ongoing patent battle between WiAV Solutions, LLC and a number of mobile technology companies (Motorola, Nokia, et al.), Judge Robert E. Payne has ruled in the last two days on two of defendants’ motions for summary judgment.  One opinion’s interpretation of the patent marking statute has implications beyond this suit, and that opinion also offers both positive and negative procedural lessons of which practitioners should take note.

• Email This
• Print
• Comments (1)
• Trackbacks

By Dabney Carr and Robert Angle

As we noted in an earlier post, we will blog about several issues that space did not allow us to address in depth in our recent article, found here, on patent litigation in the Eastern District of Virginia. As our first follow-up post, we want to talk about some of the pre-filing concerns faced by a patentee planning to file an infringement suit in the EDVA.

The docket speed of the EDVA is a two-edged sword for the plaintiff-patentee. On the one hand, getting to trial in less than a year allows a patentee to enforce its rights swiftly. On the other hand, the court's system of randomly assigning patent cases to the three divisions creates some uncertainties (the differences between divisions and judges is discussed in more depth in the article). In addition, the fast schedule requires the plaintiff-patentee to do more pre-filing "due diligence" because there is no time to conduct a fact investigation during discovery. Among the tasks a plaintiff-patentee should complete before filing suit are:

• Issue a litigation hold letter to/within the client -- This is a basic requirement of modern federal court litigation, but is all the more important in the EDVA's speedy docket. The well-known Infineon v. Rambus saga shows the dangers of ignoring (or flaunting) ediscovery obligations.
• Investigate the patent - Obviously, an attorney representing a plaintiff-patentee must carefully review the patent and the file history and look at any potentially invalidating prior art that the defendant might assert. In the EDVA, the potential plaintiff should go beyond these basic steps to craft well-developed claim construction and infringement positions before suit is filed.
• Retain an Expert and Develop an Infringement Theory - Again, it's obvious that a plaintiff-patentee must be able to articulate its infringement theory before filing suit. It is strongly recommended, that the EDVA plaintiff go farther and have its infringement expert perform an infringement analysis before suit is filed. That analysis will guide everything - from identifying potential defendants, to claim construction and discovery requests - and will become the basis of the expert's report.
• Investigate the Accused Product - As in any case, a plaintiff-patentee should find out everything it can about the accused products from publicly available information before filing suit. Counsel should take full advantage of its client, who often has the most knowledge of the industry and its competitor's products. Even where technical information or the accused products themselves are not readily available in the market, the plaintiff-patentee must use what information it does have to clearly understand the non-public technical information it needs so that it can seek that information -- either from the defendant or third parties -- as soon as suit is filed.
• Investigate Damages - Like all plaintifffs, a patent infringement plaintiff must always weigh the costs of litigation against the potential recovery. The EDVA's speed compacts the costs of litigation and inevitably increases them. Before filing suit, the plaintiff-patentee must make at least a rough estimate of the potential damages to make sure that the fight is worth the cost.
• Gather Your Documents - Staying ahead of discovery deadlines is crucial in patent litigation in the EDVA. The plaintiff-patentee is well-positioned to do this because it can gather its documents before filing suit, when document collection and review can be done on a longer timeline, putting less pressure on the client. It also allows counsel to fully understand its client's documents before suit begins, heads off potential discovery motions and puts pressure on the defendant to move just as quickly.
• Serve Discovery as Soon as Possible - Many of the pretrial orders in the EDVA permit the parties to begin discovery as soon as a Rule 26(f) conference is held, even before the inital scheduling conference. A plaintiff should have its interrogatories, including interrogatories seeking claim construction positions, non-infringement contentions and the basis for affirmative defenses, ready to serve as soon as it is allowed. A plaintiff should request the most important information up front and focus its discovery requests by seeking "documents sufficient to show" requested information. Such requests both preclude claims of overbreadth and prevent a defendant from attempting to overwhelm the plaintiff with large amounts of irrelevant or tangential information.

The moral of the story for the plaintiff-patentee is "prepare as much as you can before filing suit." The more prepared the plaintiff-patentee is, the more it will be able to take advantage of the EDVA's "rocket docket."

Next time …. How the Defendant-Accused Infringer should respond to a new lawsuit to avoid putting itself behind the EDVA eight ball and even turn the tide in its favor.

• Email This
• Print
• Comments
• Trackbacks

In a July 22 opinion, Judge Payne disqualified Steptoe & Johnson as counsel for Sunbeam Products because a Steptoe associate had performed work involving one of the defendants’ accused products while employed at a prior firm. Sunbeam Products v. Hamilton Beach Brands, Inc., et al., Case No. 3:09CV791, 2010 U.S. Dist. LEXIS 74001 (E.D. Va. July 22, 2010). The opinion can be found here.

While at his prior firm, the associate had done extensive patent-related work with the accused products, including working on patent litigation involving the products, preparing utility and design patents, preparing a patentability opinion relating to the accused products and analyzing the prior art, some of which was being asserted by the defendant in the Sunbeam case. Steptoe had identified the potential conflict during its conflict check but determined that the Sunbeam litigation was not “substantially related” to the associate’s prior work because the associate had not done any work relating to the patents Sunbeam was asserting, and Sunbeam did not challenge the defendant’s patents on which the associate had worked.

The opinion is a straightforward application of Rule 1.9(a) of Virginia’s Rules of Professional Conduct, which bars a lawyer who has formerly represented a client in a matter from representing another client in the same or a substantially related matter, and Rule 1.10(a), which imputes a conflict involving one attorney to all other attorneys in the firm.

More importantly for practicioners in the EDVA, the opinion highlights the high level of scrutiny of potential conflicts in the Fourth Circuit. Judge Payne cited a long line of Fourth Circuit and Eastern District of Virginia authority holding that “ethical rules are not to be applied ‘with hair-splitting nicety,’” and that all doubts should be resolved in favor of disqualification. Judge Payne rejected Steptoe’s reliance on a number of cases from other circuits which “have parsed the issues in the prior and current representations finely so as to distinguish the two representations and declare them not to be substantially related.” Such authorities, Judge Payne held firmly, “neither control nor persuade the Court to engage in the sort of ‘hair-splitting’ which the Fourth Circuit expressly has said cannot be done.”

• Email This
• Print
• Comments
• Trackbacks

As a follow-up to our July 1, 2010, post regarding Walker Digital, LLC v. Capital One Services, LLC, Case No. 1:10cv212 (E.D. Va.) (see here), Magistrate Judge Anderson granted Capital One’s motion for summary judgment of non-infringement on July 2, 2010. The one-page Order offers no explanation of the grounds for Magistrate Judge Anderson’s decision and no memorandum opinion appears to be forthcoming. On July 12, 2010, the Court entered an Order dismissing Capital One’s counterclaims against Walker Digital without prejudice, and directing the clerk to enter final judgment of non-infringement in favor of Capital One.

From Capital One’s perspective, the election of Magistrate Judge Anderson to oversee the case seems to have paid off, at least for now. The case appears destined for the Federal Circuit, so we will see how it fairs on appeal.

• Email This
• Print
• Comments
• Trackbacks

As reported by Virginia Lawyers’ Weekly here, the Administrative Office of the U.S. Courts’ Judicial Business 2009 report finds that the Eastern District of Virginia is – once again – the fastest in the country.

The Eastern District of Virginia's median time to trial of 10.2 months is less than half of many other popular intellectual property venues, such as the Eastern District of Texas (25 mos.), the Northern (24.5 mos.) and Central (19.0 mos.) Districts of California, the District of New Jersey (37.7 mos.) and the District of Delaware (34 mos.).

The Judicial Business Report further confirms the studies by Professor Mark Lemley and LegalMetric, which we blogged about here and here, which found the E.D. Va. to not only be fast, but also a favorable venue for patentees.

• Email This
• Print
• Comments
• Trackbacks

Yesterday, July 8th, Virginia patent company NTP, Inc. filed suit in the Richmond Division of the Eastern District of Virginia against pretty much every mobile technology heavyweight it had not yet sued, namely:  Apple, Google, HTC, LG, Microsoft, and Motorola.

• Email This
• Print
• Comments
• Trackbacks

Litigants in the Eastern District of Virginia can agree to magistrate judge jurisdiction, but in our experience, it is very rare that parties agree to use a magistrate judge to oversee a patent case. A recent exception is Walker Digital, LLC v. Capital One Services, LLC, Case No. 1:10CV212 (E.D. Va.) in which the parties consented to jurisdiction before Magistrate Judge Anderson in the Alexandria Division.  As a result, Judge Anderson will hear both non-dispositive and dispositive motions in the case, and he will oversee the trial.

The parties’ decision is a significant one because Judge Anderson, though relatively new to the bench, spent a number of years litigating patent cases in private practice.  Given that background, he is uniquely qualified to oversee patent litigation.

The Walker Digital case has moved swiftly under Judge Anderson’s watch. A Markman hearing was held on May 28, just eight weeks after the Initial Pretrial Conference, Judge Anderson issued his ruling on claim construction less than two weeks later (opinion here), and defendant’s Motion for Summary Judgment is set for hearing this Friday, July 2. 

We will blog about the summary judgment ruling once it is issued.

• Email This
• Print
• Comments
• Trackbacks

In its long-awaited opinion in Bilksi v. Kappos, found here, the Supreme Court unanimously affirmed the Federal Circuit's judgment that the claims at issue were unpatentable but also held unanimously that the "machine or transformation" test of determining whether a claimed process is patentable is not the sole test for determining patentability.  Beyond holding that the petitioners' claims were unpatentable abstract ideas, however, the majority did not go any further, merely stating that  it "need not define further what constitutes a patentable 'process,' beyond pointing to the definition of that term provided in §100(b)" and its earlier precedents.

Kennedy wrote the majority opinion, which was joined in full by Roberts, Thomas and Alito.  Scalia joined in all but two parts of Kennedy's opinion.  Stevens wrote a concurrence joined by Ginsburg, Breyer and Sotomayor; and Breyer wrote an opinion concurring in the judgment, in which Scalia joined in part.

• Email This
• Print
• Comments
• Trackbacks

Chambers and Partners' 2010 Edition of Chambers USA gives Troutman Sanders a top-level ranking for Intellectual Property in Southern Virginia, stating that the group "continues to garner praise for its litigation expertise." Virginia IP Law bloggers Robert Angle, Rob Brooke and Dabney Carr are also ranked individually in intellectual property.  A full list of Troutman Sanders' rankings can be found here.

• Email This
• Print
• Comments
• Trackbacks

Two of our bloggers, Dabney Carr and Robert Angle, have published an article this month in the Intellectual Property & Technology Law Journal titled “Litigating Patent Infringement Cases in the ‘Rocket Docket’ of the Eastern District of Virginia.” The article can be found here.

Among other topics, the article delves into pretrial scheduling, discovery, claim construction, motions practice and trial practice in all three divisions of the EDVA. We hope that you find it a helpful and useful guide for litigating in the “Rocket Docket.”

There were several issues that space did not allow us to address in the article to the depth we would like, including specific advice for both patentees and accused infringers. We plan to have an ongoing series of posts on the blog on these individual topics, so stay tuned.

• Email This
• Print
• Comments
• Trackbacks

As we recently posted here, TecSec v. IBM, which is pending before Judge Brinkema in the Alexandria Division, is an example of a recent trend in patent infringement litigation – a plaintiff suing multiple defendants selling different accused products. In many cases, the defendants are market competitors selling completely distinct products which have no connection to each other.

These cases resemble mass tort litigation, except that instead of multiple plaintiffs consolidating tort claims against a single defendant, in a “mass patent” case a single plaintiff consolidates multiple claims against a large group of defendants, perhaps all the defendants in the industry. For example, in TecSec the plaintiff asserted 13 patents against 11 separate groups of defendants selling widely different products.

• Email This
• Print
• Comments
• Trackbacks

In a widely-followed appeal of an Eastern District of Virginia case which we previously blogged about here, the Federal Circuit held today that Solo Cup did not have the "intent to deceive the public" required for false marking liability.  in Pequignot v. Solo Cup Co., No. 2009-1547 (Fed. Cir. June 10, 2010) (found here). The decision affirmed Judge Brinkema's ruling granting summary judgment in favor of Solo Cup, Pequignot v. Solo Cup Co., 646 F.Supp. 2d 790 (E.D. Va. 2009). Under the Federal Circuit’s decision, even if a patentee knowingly marks a product with an expired patent, it can avoid liability by showing by a preponderance of the evidence that it did not intend to deceive the public.

In short, Solo Cup marked certain plastic cold drink lids by stamping the lids with two patent numbers during the production process. After one of the patents expired, Solo sought advice of counsel about whether it needed to replace all of its stamping molds to remove the patent number. Based on the advice it received and the cost of replacing all of its molds, Solo developed a policy to wait to remove the expired patents when it replaced the molds. Solo’s outside counsel also advised Solo to include on its packaging the phrase “the product may be covered by one or more U.S. or foreign pending or issued patents. For details contact www.solocup.com.” Based on that advice, Solo placed the “may be covered” language on its packaging, even though it knew that some of the packaging was not patented.

Judge Brinkema granted summary judgment to Solo, finding that Solo had no intent to deceive the public. Solo’s knowledge of the falsity of the patent marking, she held, raised a rebuttable presumption of intent to deceive. Solo successfully rebutted that presumption, however, based on its good faith reliance on advice of counsel and its desire to reduce costs and avoid business disruption. Judge Brinkema likewise found that Solo had rebutted the presumption with respect to the “may be covered” language based on the advice of counsel and for logistical and financial reasons.

The Federal Circuit affirmed the finding of lack of intent to deceive.

• Agreeing with Judge Brinkema, the court held that under Clontech Labs., Inc. v. Invitrogen, 406 F.3d 1347 (Fed. Cir. 2005) the combination of a false statement and knowledge that the statement was false created a rebuttable presumption of intent to deceive, not irrebuttable proof of such intent.
• Solo’s burden of proof was to show by a preponderance of the evidence that it did not have the requisite intent to deceive.
• Where the false markings at issue are expired patents that had previously covered the marked products, the presumption is weaker.
• A good faith belief that an action is appropriate, especially when it is taken for a purpose other than deceiving the public, can negate the presumption.

Solo’s unrebutted evidence that it relied on the advice of counsel, its evidence that its true intent was to reduce costs and business disruption and its good faith step of implementing and following a policy to remove the patent numbers when molds were replaced were sufficient to rebut the presumption of deceptive intent.

As to the “may be covered” language, the Court held that “it is highly questionable” whether such a statement could be made for the purpose of deceiving the public. Regardless, the court affirmed Judge Brinkema’s decision that Solo’s evidence successfully rebutted the presumption.

The Federal Circuit did not agree with Solo on everything, however. It rejected Solo’s claim that the statute did not apply where products were previously covered by a patent. It also refused to reach Judge Brinkema’s alternative holding that even if Solo had an intent to deceive, it could have committed no more than three “offenses” within the meaning of the statute.

• Email This
• Print
• Comments
• Trackbacks

Late last week, Judge Norman K. Moon of the U.S. District Court for the Western District of Virginia, issued a 55-page opinion denying a motion for preliminary injunction in patent litigation regarding a medical device.  See MicroAire Surgical Instruments, LLC v. Arthrex, Inc., case no. 3:09-cv-00078 (W.D. Va. June 3, 2010).

• Email This
• Print
• Comments
• Trackbacks

The Northern Virginia Chapter of the Federal Bar Association will hold its annual Patent Litigation Seminar on June 22 from 3:00 to 5:00 at the Eastern District of Virginia's Alexandria Courthouse.  District Judge Lee and O'Grady and Magistrate Judges Jones and Anderson will speak on a panel moderated by Chip Molster and Caitlin Lhommedieu.  This annual seminar is known for its valuable tips from the Eastern District Judges on practice in patent cases in the Alexandria Division.  A flyer and registration form for the seminar can be found here. 

• Email This
• Print
• Comments
• Trackbacks

In an order entered June 4 in TecSec v. IBM, et al, Case No. 1:10CV115, Judge Brinkema in Alexandria rejected an increasingly common tactic in patent cases – suing multiple unrelated defendants on numerous patents. While the practice apparently is allowed in the Eastern District of Texas, Judge Brinkema rebuffed it – ordering that the litigation proceed solely against IBM and staying the claims against the other defendants. The Court’s June 4 Order can be found here.

TecSec’s Complaint was massive and complex. It asserted 11 patents with a total of 380 claims in the very esoteric field of computer encryption technology against 13 separate defendant groups, including IBM, Oracle, SAP, Adobe, eBay and PayPal.

The defendants responded aggressively, filing an early motion to modify the Court’s normal pretrial schedule to extend the time for discovery and to require TecSec to issue its claim charts very early -- prior to the Rule 16(b) Pretrial Conference. The defendants emphasized the extraordinary nature of the case, pointing out that TecSec would not identify which of the 380 claims it was asserting and the massive amount of discovery that was expected – including an agreement to up to 800 hours of fact-witness depositions.

Judge Brinkema swiftly issued an order the day after defendants’ motion was filed ordering the parties to appear for a hearing the following Friday and indicating that she was considering limiting the litigation to one of the named defendants. At the hearing, Judge Brinkema granted the motion and moved the case schedule back by more than two months, which is almost unprecedented in the Eastern District of Virginia. The judge also ordered TecSec to file its finalized claim charts in two weeks. Judge Brinkema’s April 30 Order can be found here.

TecSec’s claim charts did little to narrow the case. It asserted 205 of the claims against a total of 61 accused products. TecSec asserted 196 claims against 29 IBM products and no fewer than 68 claims against each of the other Defendants. Moreover, TecSec accused a diverse range of products of infringement, ranging from mainframes, to programming languages, routers, database systems and PayPal’s online payment systems.

In response, all of the defendants except IBM moved to sever and to stay the claims against them. The moving defendants pointed out that they were competitors selling unique, proprietary products and argued that FRCP 18 and 20 do not permit the joinder of multiple defendants into a single lawsuit where the claims against the defendants are unrelated.

After a hearing on June 4, Judge Brinkema agreed with the moving defendants and entered an order directing that the litigation proceed solely against IBM and that the claims against all other defendants be stayed.

Judge Brinkema did not set forth the reasoning for her decision, but two factors made TecSec a good candidate for severance:

• the large number of defendants and asserted claims made the case very unwieldy, especially under the Eastern District of Virginia’s fast trial procedures.
• none of the moving defendants moved for transfer in addition to severance. As a result, there was no danger of inconsistent verdicts and greatly lessening the possibility of inconsistent claim constructions.

The broader issue is whether the Eastern District of Virginia judges would grant severance in other multiple defendant patent cases. On that issue, there appears a clear divide between the Eastern District of Virginia and the Eastern District of Texas. We plan to address the split between the courts in detail in a follow-up blog post soon.
 

• Email This
• Print
• Comments
• Trackbacks

We blogged earlier about Prof. Mark Lemley's conclusions that the Eastern District of Virginia was a top venue for patentee plaintiffs (and for fastest resolution).  Another patent litigation report -- this time by LegalMetric, an intellectual property case law research and analysis company -- has now come to similar conclusions. 

The exact rankings appear to differ a bit, and LegalMetric's full data/methodology is not explained online (although we gathered and reported a bit of information about LegalMetric's methodology in a prior post).  The company recently ranked the Eastern District of Virginia among the top five districts in two categories:

• Most Favorable to Patentee based on last ten years contested judgments for districts with at least 30 contested judgments, and


• Fastest based on last ten years of contested judgments for districts with at least 30 contested judgments.

The latter speed ranking comes as no surprise in the "Rocket Docket," but the continued ranking of the Eastern District among top patentee plaintiff venues may raise some eyebrows.

• Email This
• Print
• Comments
• Trackbacks

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.

• Email This
• Print
• Comments
• Trackbacks

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.

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.

• Email This
• Print
• Comments
• Trackbacks

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.”

• Email This
• Print
• Comments
• Trackbacks

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).

• Email This
• Print
• Comments
• Trackbacks

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.

• Email This
• Print
• Comments
• Trackbacks

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.

• Email This
• Print
• Comments
• Trackbacks

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.

• Email This
• Print
• Comments
• Trackbacks

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.

• Email This
• Print
• Comments
• Trackbacks

Summary Judgment Granted of Noninfringment
By Megan Rahman

In a March 10, 2010, Judge Smith granted summary judgment of noninfringement in the case of American Piledriving Equipment, Inc. v. Geoquip, Inc., Civil Action No. 2:08cv547 (E.D. Virginia). Plaintiff American Piledriving Equipment (“APE”) claimed that the Defendant Geoquip infringed U.S. Patent No. 5,355,964 (the “964 Patent”), which involves an assembly for pile driving. The parties filed cross-motions for summary judgment – Geoquip filed a motion for summary judgment of noninfringment and invalidity of the ‘964 Patent and APE filed a motion for summary judgment of infringement.

Of the twenty-seven claims recited in the ‘964 Patent, APE claimed that Geoquip’s Model 250 and Model 500 vibratory pile driving devices infringed 16 of them. The court had conducted a Markman hearing in December and the parties had filed their summary judgment motions in January. With no dispute regarding the configuration of the accused devices or Geoquip’s use and rental of the devices, all involved agreed that the matter was ripe for summary judgment.

Relying on the claim construction, the court determined that the claims did not encompass either the Model 250 or the Model 500 either literally or under the doctrine of equivalents. As a result, the court found no infringement of the independent claims of the ‘964 Patent, granting Geoquip’s motion for summary judgment of noninfringment and denying APE’s summary judgment motion of infringement. Finally, the court exercised its discretion to dismiss Geoquip’s counterclaim of invalidity as moot in light of its holding of noninfringement, thereby denying Geoquip’s motion for summary judgment of invalidity.

One comment on this case is that despite holding a claim construction hearing some months prior to the summary judgment briefing, the court was still left to determine the meaning of at least one additional term not used within the claims of the ‘964 Patent but used within the specification in order to reach its ruling.
 

• Email This
• Print
• Comments
• Trackbacks

Free-Flow Packaging (FPI) probably felt like it won a victory when Judge Gerald Bruce Lee granted it partial summary judgment in a the declaratory judgment action brought by Pregis Corporation. Pregis Corp. v. Doll, et al., 2010 U.S. Dist. LEXIS 25582 (E.D. Va. March 16, 2010).

Free-Flow’s victory, however, was short-lived. On March 18 -- after twenty-two days of trial and deliberations -- the jury returned a verdict in favor of Pregis on all four of the FPI patents in suit.

FPI and Pregis are direct competitors in the business of making and selling machines used to make air-filled packing cushions (like bubble wrap). Pregis sought a declaratory judgment that it did not infringe four FPI patents and that the patents were invalid.

In his summary judgment opinion, Judge Lee ruled:

• A previous settlement agreement between FPI and a predecessor to Pregis did not preclude FPI from asserting its patents against Pregis; 
• FPI was not entitled to summary judgment of non-infringement because there were issues of fact as to whether the accused devices met every element of the claims; 
• FPI was entitled to summary judgment on Pregis’ claim that FPI improperly introduced new matter in a post-filing amendment in violation of 35 USC §§ 112 and 132; 
• FPI was entitled to summary judgment on Pregis’ claim that a related patent was not prior art to two of the patents in suit; 
• FPI was entitled to summary judgment on Pregis’ claim of double patenting;
• FPI was entitled to summary judgment on Pregis’ assertion of intervening rights because none of the patents-in-suit were reissue patents.

FPI’s victory, however, proved illusory. The jury found that Pregis did not infringe 22 of the 23 asserted claims and that all the asserted claims of three of the four patents at issue, including the one infringed claim, were obvious.  The verdict form can be found here. 

Two other comments on this case:

• First, it is notable that Judge Lee allowed FPI to assert 23 claims at trial and that the case took more than four weeks to try – much longer than almost all civil cases in the Rocket Docket, including patent cases. Is the conventional wisdom that most cases in the EDVA can be tried in a couple of days and any case can be tried in less than two weeks changing? 
• Second, Judge Lee, like some other judges in the Alexandria Division of the EDVA, did not conduct a claim construction proceeding early in the case but rather construed certain claims roughly eight weeks before trial and construed other claims in his summary judgment opinion.

• Email This
• Print
• Comments
• Trackbacks

Our colleagues Al Jacobs, Trenton Ward, Jihan Jenkins and Puja Patel have written a detailed analysis of the Federal Circuit's highly anticipated en banc decision in Ariad Pharmaceuticals, Inc. v. Eli Lilly and Co., No. 2008-1248 (Fed. Cir. March 22, 2010), which can be found here.   

In Ariad, "the Federal Circuit reaffirmed that patents must satisfy “two separate description requirements: a ‘written description’ [i] of the invention, and [ii] of the manner and process of making and using [the invention].”   The Federal Circuit’s decision is in line with existing recent precedent, but raises questions about the ability of some inventors, particularly universities and research entities, to obtain patents on early stage research."  To read more, click here.

• Email This
• Print
• Comments
• Trackbacks

In a string of recent cases addressing reasonable royalty damages, the Federal Circuit has put patent litigators and district courts on notice that they “must carefully tie proof of damages to the claimed invention’s footprint in the marketplace.” ResQNet.com, Inc. v. Lansa, Inc., 2010 U.S. App. LEXIS 2453 at *19 (Fed. Cir. Feb. 5, 2010).

First, in Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301 (Fed. Cir. 2009), the Court sharply criticized evidence on damages and overturned an award of a lump sum royalty of $358 million.

Then, in ResQNet.com, decided last month, the Court overturned a district judge’s award of a 12.5% hypothetical royalty as speculative.

Just last week, Judge Rader, sitting in the district court for the Eastern District of Texas, applied Lucent and ResQNet and excluded the opinion of an expert witness for improperly relying on general royalty rates in the software industry rather than existing licenses to the patents-in-suit and improperly applying the “entire market value rule.”  IP Innovation L.L.C. v. Red Hat, Inc., Case No. 2:07-cv-447 (E.D. Tex. March 2, 2010) (Rader, J.).

The one exception to this trend is the December, 2009 decision in i4i L.P. v. Microsoft Corp., 589 F.3d 1246 (Fed. Cir. 2009), in which the Court did not conduct the type of searching review of the evidence that characterizes Lucent and ResQNet. i4i, however, involved only the appeal of a motion to exclude an expert’s testimony because the defendant failed to make a pre-verdict motion for judgment as a matter of law (JMOL) challenging the sufficiency of the evidence of damages. A district court’s decision on a motion to exclude evidence is reviewed under a deferential abuse of discretion standard, and the Court expressly stated that it addressed only the reliability of the expert’s methodology, not his conclusions. The Court also stated that the result may have been different if the defendant had made a timely motion for JMOL and appeared to draw a distinction between the admissibility of an expert opinion and whether that opinion provided a sufficient basis for a damage award.

A full analysis of the opinions is beyond the scope of a blog post, but the cases contain several high-level lessons for patent litigators, including:

• Email This
• Print
• Comments
• Trackbacks

As we blogged here, Judge Payne recently dismissed claims relating to seven of the nine patents asserted by WiAV Solutions against multiple defendants (including Nokia, Motorola and Palm) because the plaintiff did not have the exclusive right to license the patents. The Court  has now certified WiAV’s appeal of that decision to the Federal Circuit.  WiAV Solutions LLC v. Motorola, Inc. et al., 2010 U.S. Dist. LEXIS 21508 (E.D. Va. March 9, 2010).

In his opinion, Judge Payne rejected the defendants’ argument that the appeal should not be certified because most of the accused products are alleged to infringe both the dismissed patents and the two remaining patents.  The judge also rejected the argument that certification of the appeal could result in a “two-trial scenario” that may subject the defendants to “double jeopardy on damages.” Judge Payne noted that the appeal would only involve the discrete issue of standing and that delaying certification could also result in two trials if the Federal Circuit overturns the standing decision after trial on the remaining patents.

• Email This
• Print
• Comments
• Trackbacks

Sen. Patrick Leahy announced last Thursday that agreement had been reached by a bipartisan group of Senators on a compromise bill providing for patent reform. The full text of the bill can be found here.

Undoubtedly, the blogosphere and legal publications will shortly become saturated with analysis of the compromise bill and speculation about its chances for passage.  Last April, we blogged about a relatively minor provision of the bill -- the provisions addressing venue.  As patent litigators in Virignia, we have a particular interest in venue, because the venue provisions of the bill will direcly affect the volume of patent cases filed here.

The compromise version of the bill includes the same provisions discussed in our earlier post, which can be found here. Here are the highlights (all of which are discussed in detail in the earlier post):

• the legislation provides that a district court shall transfer a case upon finding that a transferee forum is clearly more convenient. (Sec. 8 of the bill, page 72).
   
• the legislation establishes a pilot program in six U.S. District Courts that provides $5 million a year for education of judges and hiring of patent law clerks. (Sec. 16 of the bill, pages 92-93). 
   
• the legislation changes venue for civil actions appealing decisions by the BPAI relating to patent rejections and interferences, civil actions appealing decisions of the PTO relating to patent term adjustments, civil actions appealing decisions of the TTAB relating to registrations of a trademark, and civil actions appealing suspensions or exclusions from practice before the PTO from the District Court in Washington to the Eastern District of Virginia. (Sec. 8 of the bill, pages 72-73).

• Email This
• Print
• Comments
• Trackbacks

On February 25, a jury found in favor of the patentee, CompX International, in the case of Humanscale Corp. v. CompX International, et al., Case No. 3:09cv86 (E.D. Va.), and awarded $19 million dollars in past damages and a reasonable royalty of 6% of future sales of infringing products. The jury’s verdict can be found here.

The patents-at-issue, U.S. Patent Nos. 5,037,054 and 5,257,767, cover adjustable platforms for computer keyboards. After an eight-day jury trial before Chief Judge Spencer in the Richmond Division of the EDVA, the jury found that Humanscale’s accused keyboards infringed three claims of the ‘054 patent and two claims of the ‘767 patent. The jury also found that the patents were valid and rejected Humanscale’s on-sale bar and laches defenses.
 

• Email This
• Print
• Comments
• Trackbacks

In a December 18 decision, the U.S. District Court in Richmond dismissed seven claims of patent infringement for lack of standing because the plaintiff did not have the exclusive right to license the patent.

In WiAV Solutions LLC v. Motorola, Inc., et al., Case No. 3:09CV447 (E.D. Va. Dec. 18, 2009), WiAV brought claims of infringement of nine patents involving wireless communication technology against multiple defendants. Seven of the patents (the “Mindspeed Patents”) had been assigned to Mindspeed Technologies, which was named in the case as defendant patent owner.

The defendants moved to dismiss the claims related to the Mindspeed patents for lack of standing. In a December 18, 2009 decision, Judge Robert E. Payne ruled that WiAV lacked constitutional standing because it was not an exclusive licensee of the patent. The key points from Judge Payne’s opinion:

• To show that a case or controversy exists, a plaintiff must meet both constitutional and prudential standing requirements.
   
• To have constitutional standing, a plaintiff in a patent suit must have both the contractual right to bring suit and the right to exclude others from making, using, selling or offering to sell the patented invention.
   
• A party with “all substantial rights” under a patent or an exclusive licensee of a patent in a field of use has standing to sue but a “bare licensee” has no standing.
   
• A licensee which is granted an exclusive license subject to prior, nonexclusive licenses has standing as an exclusive licensee.
   
• A licensee is not an exclusive licensee, however, if others retain the right to grant additional licenses, even when the right to sublicense is limited to subsidiaries and affiliates.

The Mindspeed Patents had been transferred and licensed through a complicated series of agreements. At least four other parties retained the right to grant new licenses in the field of wireless handsets, defeating WiAV’s claim of exclusivity.

Judge Payne rejected WiAV’s request to adopt a new legal principle that, if a grantor retains a limited right to sublicense, it does not defeat exclusivity because WiAV could have alleviated the standing issue at the time it contracted for its rights and because WiAV’s request ran against well-accepted legal principles.

• Email This
• Print
• Comments
• Trackbacks

Last August, we raised here whether the Supreme Court’s decision in Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009) foreshadowed enhanced pleading requirements in patent infringement cases. After several months, the answer from the district courts appears to be yes and no.

For claims of direct infringement, the district courts have followed the Federal Circuit’s decision in McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1357 (Fed. Cir. 2007), a pre-Iqbal decision in which the Court set a low bar for pleading direct infringement.

For claims of indirect infringement, however, the courts have required specific factual allegations showing knowledge and intent to induce or contribute to infringement by another.

Direct Infringement

Only two reported decisions, Elan Microelectronics Corp. v. Apple, Inc., 2009 U.S. Dist. LEXIS 83715 at *5 (N.D. Cal. Sept. 14, 2009), and Fifth Market, Inc. v. CME Group, Inc., 2009 U.S. Dist. LEXIS 108776 at *3-*4 (D.Del. May 14, 2009), have granted a motion to dismiss a complaint for failure to meet the pleading requirements of Fed.R.Civ. P. 8, and in Fifth Market, the defendant's victory was short-lived, as the Court held that an amended complaint was sufficient.

Form 18 of the Federal Rules of Civil Procedure contains a sample complaint for direct patent infringement, and a range of district courts have held that a Complaint asserting a claim for direct infringement is sufficient if it contains the minimal information listed in Form 18. While several courts have noted that it is difficult to reconcile Form 18 with the Supreme Court’s guidance in Iqbal and Twombly, it appears that a claim for direct infringement requires only the following:

• An allegation of jurisdiction and the specific patent law infringed;
   
• An identification of the patent and a statement that the plaintiff owns the patent;
   
• An identification of at least one infringing product and a statement that the defendant has been infringing the patent “by making, selling, and using” the product;
   
• A statement that the plaintiff has given the defendant notice of its infringement, and
   
• A demand for an injunction and damages.

See McZeal, 501 F.3d 1354, 1356-58;
Mark IV Indus. Corp. v. Transcore, L.P., 2009 U.S. Dist. LEXIS 112069 at *8-*10 (D.Del. Dec. 2, 2009);
Sharafabadi v. University of Idaho, 2009 U.S. Dist. LEXIS 110904 at *10-*11 (W.D. Wash. Nov. 27, 2009);
Mallinckrodt, Inc. v. E-Z-EM, Inc., 2009 U.S. Dist. LEXIS 108696 at *9-*10 (D.Del. Nov. 20, 2009);
Fifth Market, Inc. v. CME Group, Inc., 2009 U.S. Dist. LEXIS 108776 at *3-*4 (D. Del. May 14, 2009)

• A plaintiff is not required to plead specifics as to how an allegedly infringing product works. McZeal, 501 F.3d at 1358; Mark IV, at *10.

Indirect Infringement

There is no form complaint for indirect infringement analogous to Form 18.  As a result, district courts have applied a higher standard for pleading claims of indirect infringement.   One court, Elan, has even held that where a Complaint alleges that a defendant “directly and/or indirectly” infringed, a plaintiff cannot rely on Form 18 but must comply with the stricter standards in Iqbal and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007).

To satisfy Iqbal and Twombly, a claim of indirect infringement must include:

• Facts showing how the alleged infringer either induced or contributed to another party’s direct infringement. Sharafabadi at *14.
   
• An allegation that the alleged infringer knew of the patent at the time of the infringing activities. Mallinckrodt at *11.
   
• For induced infringement, an allegation that the alleged infringer specifically intended to induce infringement. Mallinckrodt at *11.
   
• For contributory infringement, an allegation that the alleged infringer knew that the combination for which his component was especially designed was both patented and infringing. Mallinckrodt at *12.

• Email This
• Print
• Comments
• Trackbacks

On January 29, 2010, Judge Ellis issued a comprehensive, 49-page opinion (available here) on the parties’ motions for summary judgment in Netscape Communs. Corp. v. Valueclick, Inc., et al., Civil Action No. 1:09cv225 (E.D. Virginia). Plaintiff Netscape claims that the Defendants willfully infringed U.S. Patent No. 5,774,670 (the ‘670 Patent), known as the “Internet cookie patent.” After several months of discovery, the parties filed for summary judgment on twelve separate issues. Specifically, the parties filed cross-motions on:

(1) invalidity based on the on-sale bar of 35 U.S.C. § 102(b); and

(2) whether plaintiff waived its right to enforce the ‘670 patent.  

• Email This
• Print
• Comments
• Trackbacks

In a February 5 decision, the Federal Circuit clarified that an accused infringer need not have actual knowledge of a patent to be liable for inducement of infringement. SEB S.A. v. Montgomery Ward & Co., Inc., 2010 U.S. App. LEXIS 2454 (Fed. Cir. Feb. 5, 2010).

A little over three years earlier, an en banc panel of the Court held in DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1304 (Fed. Cir. 2006) that “[t]he requirement that the alleged infringer knew or should have known his actions would induce actual infringement necessarily includes the requirement that he or she knew of the patent.”

The DSU decision would appear to require that an accused infringer have actual knowledge of a patent as a basis for inducement liability. The SEB panel held, though, that DSU did not set out the “metes and bounds” of the knowledge-of-the-patent requirement. Since the record showed that the accused infringer had actual knowledge of the patent in suit, the Court noted, the DSU Court never addressed the scope of knowledge required to prove intent.

The “knowledge” requirement, SEB holds, is met not only by actual knowledge but also by “deliberate indifference” to the existence of a patent. The basis for the Court’s conclusion, though, is unclear. The Court simply notes that inducement requires the specific intent to encourage another’s infringement, and that in other contexts, specific intent includes “deliberate indifference.” This reasoning assumes that the specific intent and knowledge of the patent are not separate elements of proof of inducement. Rather, the Court conflates knowledge of the patent within the requirement of specific intent and concludes that specific intent may be proven not only through actual knowledge but also through deliberate indifference.

The Court also clarified that “deliberate indifference” is not synonymous with a constructive knowledge. Deliberate indifference, unlike constructive knowledge, may require a subjective determination that a defendant knew of and disregarded a risk. Thus, “deliberate indifference” appears to be an intermediate standard, somewhere between constructive and actual knowledge. In fact, the Court held that deliberate indifference “is not different from actual knowledge, but is a form of actual knowledge.”

In SEB, there was no direct evidence of actual knowledge of the patent, but there was adequate evidence that the defendant deliberately disregarded a known risk that the plaintiff had patented its product based on the following factors:

• the defendant purchased the plaintiff’s product in Hong Kong and copied it but did not tell the counsel it hired to conduct a right-to-use study that it had done so, which was “highly suggestive” of deliberate indifference. 
• the defendant’s president was well-versed in the U.S. patent system and understood the plaintiff to be cognizant of patent rights. 
• the defendant produced no exculpatory evidence that it believed there were no patents covering the accused product.

The Court also left the door open to other ways of proving knowledge of a patent. For example, the Court suggested that constructive knowledge of a patent combined with “persuasive evidence of disregard for clear patent markings” may be sufficient.
 

• Email This
• Print
• Comments
• Trackbacks

On January 11, the Supreme Court declined certiorari in the case of Astellas Pharma, Inc. v. Lupin, et al., Case No. 09-335, upholding a June, 2007 decision by Judge Payne in the Eastern District of Virginia. Our earlier post on the Federal Circuit's Decision can be found here.

The Astellas case involves a generic version of the drug Omnicef (cefdinir), which is an antibiotic used to treat a number of common infections. The generic manufacturer, Lupin, alleged that Astellas’ patent on crystalline cefdinir only covered the Crystal A form of the drug, and Lupin alleged that its generic version of Omnicef only contained the Crystal B form.

In his claim construction opinion, Judge Payne ruled that Astellas’ patent was limited to the Crystal A form, effectively deciding the case in favor of Lupin. In short, the claims at issue were “product by process” claims, and Judge Payne ruled that each of the process steps in the claim were limitations on the invention. In an en banc decision, the Federal Circuit agreed, settling a long-standing split of authority on product by process claims.

• Email This
• Print
• Comments
• Trackbacks

In Heinz Kettler Gmbh v. Little Tikes Co., Civil Action No. 2:09cv500 (E.D. Va.), Judge Doumar denied Little Tikes’ motion to dismiss Kettler’s claims for patent infringement and awarded sanctions against Little Tikes for filing the motion to dismiss in the first place.  The case against Little Tikes follows an earlier case that Kettler brought against Rand International and Little Tikes, Heinz Kellter GmbH v. Rand International, Case No. 1:08cv679 (E.D. Va.), for infringement of Kettler’s patents by certain tricycles sold by Rand International and Little Tikes.  In that case, Kettler agreed to dismiss its claims against Little Tikes relating to the Ofrat Model No. 129H tricycle at issue based upon Little Tikes’ multiple representations, in discovery responses and correspondence from Little Tikes’ counsel, that Little Tikes and did not manufacture, sell or distribute the Ofrat Model No. 129H tricycles, and that Little Tikes was nothing more than a trademark licensor.  Kettler later learned that these representations were, “at best, misinformation” (according to Judge Doumar), and brought suit against Little Tikes and its parent, MGA Entertainment, Inc., for patent infringement by Little Tikes’ Product No. 615221. 

• Email This
• Print
• Comments
• Trackbacks

 On December 30, 2009, the Federal Circuit in The Forest Group, Inc. v. Bon Tool Company, issued a unanimous decision establishing a new standard for assessing the size of the penalty in an action for false patent marking.  This is a potentially significant development in the area of false patent marking. A full discussion of Forest Group, authored by James Moore Bollinger, George B. Snyder and Laura E. Krawczyk, can be found here.

In Pequignot v. Solo Cup Co., No 1:07cv897-LMB/TCB (E.D. Va.), which we discussed in April 2009 (see link), Judge Brinkema initially denied Solo Cup’s motion to dismiss, but later granted summary judgment to Solo Cups upon finding that Solo lacked an intent to deceive the public given its reasonable reliance on advice of counsel in deciding to replace patent-marking molds with non-marking molds in a gradual fashion. See Pequignot v. Solo Cup Co., 646 F. Supp.2d 790, 2009 U.S. Dist. LEXIS 76032 (E.D. Va. August 25, 2009). Significantly, Judge Brinkema also held that an "offense" under the statute is the overall decision to mark improperly and rejected Pequignot’s argument that Solo should be penalized for each and every lid it marked. This decision by Brinkema may not stand given the logic of the Federal Circuit’s decision in Forest Group.

• Email This
• Print
• Comments
• Trackbacks

LegalMetric, an intellectual property case law research and analysis company, recently released its list of district courts in which the most patent cases were filed in 2009.  That the Central District of California and Eastern District of Texas came in first and second, respectively, probably won't surprise any IP litigators.  Our own Eastern District of Virginia (the "Rocket Docket") placed tenth.

LegalMetric Director of Research Greg Upchurch, in a conversation with this author, stated that LegalMetric does a bulk download every quarter of every case identified in PACER as a patent case.  The company's business focuses on analyzing IP decisions so as to enable litigators to evaluate how particular courts, judges, and issues may impact their case.  Statistics like the 2009 patent filings list are a happy by-product of that business.

I think it's a great thing that there can be any degree of data mining from PACER and hope that the federal courts will continue to expand the ability to do queries and analysis.  In our electronic world, the data is there; the challenge is finding, organizing, and making good use of it.

Those interested in more information about the opportunities and challenges of litigating patent cases in the Eastern District of Virginia can check out past publications on that topic by my colleagues Robert Angle and Dabney Carr (listed under "Publications" on each's page or accessible directly here and here) and contact one of this blog's authors.

• Email This
• Print
• Comments
• Trackbacks

Four times over the course of less than a year, the Federal Circuit has reversed a decision by the Eastern District of Texas (EDTex) denying a motion to transfer venue under 28 U.S.C. § 1404(a). Posts on the first two decisions, In re: TS Tech USA Corp., 551 F.3d 1315 (Fed. Cir. 2008) and In re: Genentech, 566 F. 3d 1338 (Fed. Cir. 2009), can be found here and here.

Last month, the Federal Circuit issued two more writs of mandamus reversing the EDTex for refusing to transfer a patent case to a different venue. See In re: Nintendo Co., Ltd., Misc. No. 914, 2009 U.S. App. LEXIS 27647 (Fed. Cir. Dec. 17, 2009); In re: Hoffman-La Roche Inc., Misc. No. 911, 2009 U.S. App. LEXIS 26244 (Fed. Cir. Dec. 2, 2009).

In Hoffman, the Court reversed a decision by EDTex Chief Judge Folsom denying transfer of a pharmaceutical patent case to the Eastern District of North Carolina.

• The Federal Circuit rejected the reasoning (which can be found in numerous EDTex cases) that where a case is “decentralized” because witnesses and documents are located across the country, transfer should be denied.
   
• The court held that the district court improperly ignored the significant contrast between the strong connections the cause of action had with North Carolina, where the accused drug was developed, and the Eastern District of Texas, which had no factual connection to the case.
   
• The Court also held that a plaintiff could not manipulate venue by transferring documents to litigation counsel in the EDTex, calling the assertion that these were “Texas” documents a “fiction” and characterizing the district court’s ruling as having “no legally rational basis.”

In Nintendo, the Court used similarly strong language in reversing a denial of transfer by Judge Davis, holding that “in a case featuring most witnesses and evidence closer to the transferee venue with few or no convenience factors favoring the venue chosen by the plaintiff, the trial court should grant a motion to transfer.”

• Unlike Judge Folsom in Hoffman-La Roche, Judge Davis acknowledged that the Western District of Washington had a strong interest in the dispute, while the EDTex did not.
   
• As in Hoffman-La Roche, the Federal Circuit rejected the reasoning that the EDTex was as convenient as any other forum because witnesses and documents were located in several locations. Instead, the Court should have more strongly considered the convenience of witnesses who must travel farther to reach the EDTex and the location of the Defendant’s documents in Washington.
   
• The Federal Circuit also chided the EDTex court for glossing over a record “without a single relevant factor favoring the plaintiff’s chosen venue.”

Despite the strong messages that the Federal Circuit continues to send regarding venue motions in the EDTex, it remains to be seen whether the district judges will listen. Hoffman-La Roche and Nintendo will be helpful to sole defendants sued in the EDTex, but transfer will continue to remain difficult where there are multiple defendants in different forums.

• Email This
• Print
• Comments
• Trackbacks

            Hopefully you have already gotten a gift for that special IP litigant in your life this year.  If you’re thinking ahead to a 2010 wish list and have a preliminary injunction in mind, you may have noticed last month’s opinion by U.S. District Judge Henry E. Hudson in PRE Holding, Inc. v. Monaghan Medical Corp., no. 3:09CV458, 2009 U.S. Dist. LEXIS 107222 (E.D. Va. Nov. 17, 2009) (page citations to this opinion are to the version freely available from PACER/ECF).

            Other IP web news sources have questioned whether this opinion raises the bar for a preliminary injunction for patent litigants and whether it is consistent with case law from the U.S. Court of Appeals for the Federal Circuit.  (Federal Circuit law governs the issuance of injunctive relief under 35 U.S.C § 283 because the question “involves substantive matters unique to patent law.”  E.g., Hybritech, Inc. v. Abbott Labs, 849 F.2d 1446, 1451 n.12 (Fed. Cir. 1988).  “[P]urely procedural questions . . . are controlled by the law of the appropriate regional circuit.”  Id.

            In the post below, I conclude that debate over the PRE Holding opinion reflects the difficulties with the preliminary injunction standard and the hazards of not being concise, and that the PRE Holding opinion does not represent a change in the law.

• Email This
• Print
• Comments
• Trackbacks

Yesterday the Supreme Court of the United States heard oral arguments in Bilski v. Kappos (SCotUS case no. 08-964, on appeal from In re Bilski, 545 F.3d 943 (Fed. Cir. 2008)).

The Supreme Court’s website has the oral argument transcript. The Washington Post report shows a recognition of the high stakes and illustrations of skepticism in the justices’ hypotheticals. The New York Times also describes discomfort with the patent at issue and notes the unusual level of attention the case has received, with one GW professor labeling it “the case of the century for patent law.”

• Email This
• Print
• Comments
• Trackbacks

This post continues a roundup of recent Eastern District of Virginia decisions in IP cases, covering a patent summary judgment opinion and a Markman opinion.

In Rutherford Controls Int’l Corp. v. Alarm Controls Corp., Civil Action No. 3:08-cv-369, 2009 U.S. Dist. LEXIS 98762 (E.D. Va. Oct. 23, 2009), District Judge Henry E. Hudson issued an opinion rendering a decision on several summary judgment motions pending before the Court in a patent infringement action consisting of several consolidated cases. Rutherford filed a complaint for infringement against defendants Vanguard Security Engineering Corporation Ltd. and Harco Enterprise, and Vanguard and Harco filed counterclaims against Rutherford seeking declaratory judgment.

In a parallel action, Rutherford filed suit against Security Door Controls, Inc. seeking both damages for infringement and declaratory judgment. Security Door filed a counterclaim seeking declaratory judgment and damages for infringement. At issue were three patents regarding electronic door locking and unlocking mechanisms, often used to control access to buildings or closed areas. Two of the patent belonged to Rutherford and one was assigned to Security Door.

• Email This
• Print
• Comments
• Trackbacks

In a case appealed from the Eastern District of Virginia, the Federal Circuit has clarified how the doctrine of res judicata / claim preclusion applies to subsequent patent infringement actions.

On September 8, 2009, the Federal Circuit affirmed Nystrom v. Trex Co., 553 F. Supp. 2d 628 (E.D. Va. 2008) [Norfolk – Kelley, J.]. See Nystrom v. Trex Co., case no. 09-1026, 2009 U.S. App. LEXIS 20016 (Fed. Cir.). The opinion has been marked as precedential but not yet assigned an F.3d citation. The Federal Circuit affirmed on alternative grounds, however, reaching a different conclusion with respect to claim preclusion than the Eastern District of Virginia did.

This appeal was from Plaintiff Ron Nystrom’s second suit against several defendants, including Home Depot, alleging infringement of a particular patent related to certain types of boards for decking (“the ‘831 patent”). In the first suit, the judge construed the claims in the patent to apply to materials made of wood and manufactured with woodworking techniques and thus found no infringement in the challenged products because they were made of composite materials and not through woodworking techniques. 

Although the Eastern District granted summary judgment against Nystrom, it rejected Defendants’ claim preclusion argument in the second suit. Relying primarily on Hallco Mfg. Co. v. Foster (“Hallco II”), 256 F.3d 1290, 1294 (Fed. Cir. 2001), and Del Mar Avionics, Inc. v. Quinton Instrument Co., 836 F.2d 1320 (Fed. Cir. 1987), Judge Kelley explained that claim preclusion did not apply because the allegedly infringing product in the second suit was materially different from the allegedly infringing product in the first suit and because the proper way to apply the “essentially the same” test from prior Federal Circuit cases was to “compare[ ] device to device,” rather than the device to the claim. See Nystrom, 553 F.Supp.2d at 632, 633.

• Email This
• Print
• Comments
• Trackbacks

Last week’s decision by the Federal Circuit regarding the pleading requirements for an inequitable conduct claim, Exergen Corp. v. Wal-Mart Stores, Inc., 2009 U.S. App. LEXIS 17311 (Fed. Cir. Aug. 4, 2009), and the Supreme Court’s decision earlier this summer in Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009) may foreshadow additional enhanced pleading requirements in patent infringement cases. 

Robert Matthews at Mathews Patent-Law Consulting has published a detailed analysis of Exergen that can be found here. In short, under Fed.R.Civ.P. 9, a claim of inequitable conduct must include specific identification of the who, what, when, where and how of the material misrepresentation committed before the PTO. As Matthews states, under Exergen, “an accused infringer must identify the exact information within a withheld prior art reference that it alleges is material, identify where that information can be found in the reference, identify the particular claim limitations or combination of claim limitations for which the withheld information is material, and then show how the prosecution record lacked that information.” 

An accused infringer must also identify by name the specific individual who allegedly knew of the allegedly material information and withheld or misrepresented that information to the PTO. A party may plead “on information and belief” but only if essential information lies within another party’s control and only if the pleading sets forth specific facts upon which the belief is reasonably based. Thus, the mere fact that an applicant disclosed a reference while prosecuting one application but did not disclose the same reference while prosecuting a second application is insufficient to plead the requirement of deceptive intent. 

Exergen echoes the Supreme Court’s decisions in Iqbal and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) that under Fed.R.Civ. P. 8, a pleading offering “labels and conclusions” or a “formulaic recitation of a cause of action will not do.” As the Court stated in Iqbal, “While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.” Thus, a plaintiff must make “well-pleaded factual allegations” that “plausibly give rise to an entitlement to relief.” 

Exergen takes Iqbal and Twombly a step further, requiring allegation of facts with a high degree of specificity and detail, and Exergen may presage stricter pleading requirements for other types of patent claims and defenses. 

So far, though, the Federal Circuit has not required stricter pleading of patent infringement claims. Applying Twombly, the Federal Circuit has held that a claim for patent infringement must only assert that the plaintiff owns the patent and that the defendant infringed the patent, must describe, in general terms, “the means by which the patent was infringed” and must identify the specific parts of patent law that are implicated. McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1357 (Fed. Cir. 2007). A patentee “is not required to specifically include each element of the claims of the asserted patent." Thus, here in Virginia, Judge Payne has held that a plaintiff satisfies McZeal by identifying the infringing devices at issue. Taltwell, LLC v. Zonet USA Corp., 2007 U.S. Dist. LEXIS 93465 at *40 (E.D.Va. Dec. 20, 2007).  Judge Dyk dissented in McZeal, arguing that a patentee should be required to specify which claims are infringed and the features of the accused device that correspond to the claim limitations, and Iqbal arguably supports Judge Dyk’s position. At this point, though, it appears that the Federal Circuit will not impose stricter requirements for pleading patent infringement, even though a plaintiff’s Rule 11 obligations requires a detailed infringement analysis before suit is filed and such information often must be provided in a claim chart filed early in the case. 

• Email This
• Print
• Comments
• Trackbacks

As detailed in an earlier blog post found here, a group of intellectual property attorneys from around the Eastern District, including myself, Robert Angle, Maya Eckstein, Dave Finkelson, Dana McDaniel, Chip Molster, Steve Noona and Bob Barrett, have been working over the past several months to draft a local patent rule and model patent pretrial schedule and pretrial order to use in patent cases in the Eastern District of Virginia.

A draft of a proposed local rule was circulated to several statewide intellectual property bar groups, and comments were received from practicioners in all parts of the district. The comments were considered and many were adopted, and a revised proposed local rule, model scheduling order and model pretrial order have been submitted to Chief Judge Spencer.  The judges will consider the proposal at their district-wide meeting, which occurs in October. The revised rule can be found here, and an executive summary of the rule is here.

As we’ve said before, the judges of the EDVA will obviously decide on their own whether to adopt any proposed changes to their Local Rules. That said, the support of practitioners and interested bar organizations cannot hurt and may well help. If you believe the proposed rules make sense, please express your support to the EDVA judges.  If you have other comments, submit them on this blog, and we will pass them on to the judges.
 

• Email This
• Print
• Comments
• Trackbacks

A common concern in all patent litigation is how to maintain the confidentiality of proprietary and valuable business information produced in discovery.  Before trial, standard protective orders provide an easy, straightforward solution. Even confidential documents submitted with pre-trial motions are routinely filed under seal – and requests to seal such exhibits are rarely challenged. It is less certain, though, whether exhibits shown to a jury at trial may be kept from becoming a part of the public record.

Judge Davis in the Norfolk Division recently addressed the confidentiality of trial exhibits in Level 3 Comm’s., LLC v. Limelight Networks, Inc., Case No. 2:07cv589, 2009 U.S. Dist. LEXIS 37775 (E.D.Va. April 30, 2009). In Level 3, a third party, Savvis, produced confidential information under a protective order. Two days before trial (on a Sunday), Level 3 informed Savvis that it intended to introduce some of Savvis’ documents as trial exhibits. In the evening after the first day of trial, Savvis responded by asking Level 3 to inform the Court that Savvis wanted the documents to remain under seal. Level 3 refused Savvis’ request, and Savvis took no further action until more than a month later (three weeks after the trial had ended), when it moved to seal the trial exhibits that contained its documents.

Judge Davis held that Savvis had waived the confidentiality of its documents by failing to object before the exhibits were introduced. Even if Savvis had objected, the judge ruled, the public’s First Amendment right of access to trial exhibits trumped Savvis’ confidentialiy interest because Savvis did not claim the documents contained trade secrets.

The main points in Judge Davis’ opinion are:

• The public has a right of access to documents filed in a District Court under both the common law and the First Amendment.
   
• The common law right of access extends to all judicial records and documents. The First Amendment right of access extends only to materials filed in connection with a dispositive motion or used at trial.
   
• The First Amendment right of access is far stronger than the common law right of access.
   
• Property rights in trade secrets can override the First Amendment right of access. Confidential information that is not a trade secret, however, will not overcome the public’s First Amendment right of access.
   
• Where only the common law right of access applies (such as in discovery or when documents are filed in connection with a non-dispositive civil motion), confidential information may receive more protection.
   
• Once information is released to the jury at trial, a party waives any confidentiality interest in that information.
   
• Even if Savvis had not waived its right to assert that the trial exhibits were confidential, Savvis could not overcome the public’s First Amendment right of access because it did not claim the exhibits contained any trade secrets.

Judge Davis did not define what constitutes a “trade secret” and the term could potentially encompass a multitude of categories of confidential business information – not just formulas, designs or inventions but also costs, pricing and specific contractual terms. Thus, while Judge Davis ultimately (after 33 pages) sets forth a simple rule – only exhibits that contain trade secrets can potentially remain sealed at trial – he does not shed any light on how broadly  the “trade secret” protection for trial exhibits extends.

• Email This
• Print
• Comments
• Trackbacks

Since I posted here on the shift of patent infringement case filings away from the Eastern District of Texas, the Federal Circuit has issued another decision reversing a denial of a motion to transfer venue in a patent case in the Eastern District of Texas (EDTex).  See In re Genentech, Misc. Dock. No. 901, 2009 U.S. App. LEXIS 10882 (Fed. Cir. May 22, 2009).

Genentech rejects several grounds cited in recent EDTex decisions denying transfer.

• First, the Court rejected the rationale that the location of witnesses favors transfer only if transfer is more convenient for all witnesses. Many post-TS Tech decisions in the EDTex have routinely rejected transfer if the plaintiff could identify relevant witnesses who lived far away from both Texas and the transferee forum.

In Genentech, fourteen witnesses lived in California, the proposed transferee forum, while the six inventors lived in Europe, a prior art witness lived in Iowa and four of the patent prosecuting attorneys lived on the East Coast. The Federal Circuit held that the District Court had placed too much emphasis on the additional distance that the European witnesses would have to travel to go to California rather than Texas.

Thus, the Court soundly rejected the rationale that “Texas must be more convenient because it’s in the middle of the country” found in several EDTex decisions. Rather, where material witnesses reside in the transferee forum and no witnesses reside in the EDTex, it is clear error to find that the convenience of witnesses weighs against transfer.

• The Federal Circuit also faulted the EDTex for requiring a showing that the witnesses in the transferee forum were “key witnesses.” Since they had relevant information, “it was not necessary for the district court to evaluate the significance of the identified witnesses’ testimony.”

Two other holdings in Genentech will also weigh in favor of transfer in future cases.

• First, despite the storage of most documents electronically, the Court found that it was clear error to discount the burden to transport documents from California to Texas.
   
• Second, the Court held that it was clear error to consider Genentech’s filing of an unrelated patent infringement suit in Texas in the decision to deny transfer.

One common basis for denying transfer post–TS Tech remains available – the presence of multiple defendants in different forums. In Genentech, both defendants were located in California (though they were in two different court districts). Where defendants are in multiple forums, or where there are relevant defense witnesses in multiple forums, transfer will remain difficult in the EDTex.
 

• Email This
• Print
• Comments
• Trackbacks

Below is a guest post from my colleague Merril Hirsh about a recent Federal Circuit decision on patent pools: 

On April 20, 2009, the Federal Circuit issued a 2-1 decision in Princo Corp. v. Int’l Trade Comm’n, analyzing whether there was "patent abuse" in the operation of a patent pool used for compact discs. The majority held that patent pools that are "too deep" (because they include unnecessary patents) could constitute an abusive tying arrangement (but that this one did not); and that patent pool that are "too wide" (because they also restrict the development of potentially alternative technology) could constitute an abusive agreement not to compete (and this one might). Read more about this important decision here.
 

• Email This
• Print
• Comments
• Trackbacks

To start, I have to admit my bias in favor of having local patent rules for the U.S. District Court for the Eastern District of Virginia (the "EDVA") and was involved in the process of the proposal discussed below. With that disclosure, I urge you to consider and offer support for this proposal. Obviously, the judges of the EDVA will decide on their own whether to adopt any proposed changes to their Local Rules. That said, the support of practitioners and interested bar organizations cannot hurt and may well help. Below is the text from an email distributed to the members of the Virginia State Bar’s Intellectual Property Section:

Over the past several years, many U.S. district courts have adopted some form of local patent rules (see http://www.nyipla.org/public/PatentLocalRules.doc for a slightly out-of-date list of U.S. district courts that have adopted some form of local patent rules) to provide judges and parties with a roadmap for handling patent cases. There are no local rules for patent cases in the U.S. District Court for the Eastern District of Virginia (the "EDVA"), and, indeed, the manner in which Judges in the EDVA handle patent cases vary widely from district to district and judge to judge. Believing that the EDVA would benefit from the adoption of some local rules for patent cases, several members of this IP Section of the Virginia States Bar contacted Chief Judge James C. Spencer to gauge the judges'  willingness to consider a proposal for some sort of local patent rules and to clarify the procedure for having such a proposal considered by the Court. At that time, Chief Judge Spencer expressed a willingness to consider local patent rules and described the procedure for getting such proposed local rules considered, which involves submitting them to a Local Rules subcommittee of judges for consideration over the summer so that they can be vetted and presented at the Court's annual conference in the Fall. Thus, he suggested that any proposal be submitted by late May or early June. By way of further guidance and advice, Chief Judge Spencer suggested that the proposed rules not be too long or intricate, and that they afford the judges substantial discretion in implementing the proposed rules or procedures in their own cases.
 
With this guidance and timeline in mind, a small working group (involving Dabney Carr, Maya Eckstein, Dave Finkelson, Dana McDaniel, Chip Molster, Steve Noona, Bob Barrett and Robert Angle) worked to craft a proposal that balances the various competing factors and interests in EDVA patent litigation, promotes consistency amongst the divisions, and saves the parties involved time and money. Attached is a draft proposed Local Rule and model Pretrial Order. Without explaining all of the back-and-forth that went into them, the proposed Local Rule and model Pretrial Order are drawn from practices and procedures already used by some of the judges in the EDVA, require parties to produce relevant disclosures and encourage resolution of claim terms early in the case to ameliorate the problem of late claim construction overlapping with expert witness disclosures, and leave much of the implementation to the discretion of the individual judges (which was deemed necessary to have any chance of adoption by the Court as a whole). The draft proposal has been reviewed with Chief Judge Spencer and a few other EDVA judges, all of whom have been generally favorable to the proposal.  Before making a formal presentation of the proposed Local Rule and model Pretrial Order to the Court, however, the drafters of the proposed Local Rule and model Pretrial Order are seeking the review and support of this Section and other IP-related organizations in the state. 

Please review the attached draft Local Patent Rule and model Pretrial Order and provide any questions or feedback you may have to Bob Barrett at rbarrett@hunton.com by May 15.

• Email This
• Print
• Comments
• Trackbacks

On March 27, 2009, Judge Brinkema ruled in Pequignot v. Solo Cup Company, 2009 U.S. Dist. LEXIS 26020 (E.D.Va. March 29, 2009), that 35 U.S.C. § 292 -- which prohibits false patent marking -- is "one of the few remaining qui tam statutes in American law." Matthew Pequignot, a licensed patent attorney, sued the Solo Cup Company ("Solo"), the well-known maker of many disposable cups, lids, plates, bowls and utensils, for falsely markings its products with two expired patents, U.S. Patent No. RE28, 797, entitled "Lid," and U.S. Patent No. 4,589,569, entitled "Lid for Drinking Cup," and for including the phrase "This product may be covered by one or more U.S. or foreign pending or issued patents" on products that were not protected by any patent or pending patent application. Solo moved to dismiss asserting that Pequignot lacked Article III standing because he failed to allege any actual or imminent injury. Solo also argued that Pequignot’s claims violated the constitutional separation of powers doctrine under Article II. Judge Brinkema rejected both arguments.

While agreeing that Pequignot lacked Article III standing as a traditional plaintiff, Judge Brinkema held that § 292(b) confers standing on him to sue as a qui tam relator. Section 292(a) provides that whoever falsely marks a product with either a patent number, the words "patent" or "patent pending," or other words or numbers implying that the product is protected by a current or pending patent when it is not, and does so with the intent of deceiving the public, "[s]hall be fined not more than $500 for every such offense." Significantly, § 292(b) provides that "Any person may sue for the penalty, in which event one-half shall go to the person suing and the other to the use of the United States." (Emphasis added). Judge Brinkema explained that § 292(b) meets five of the six elements of a qui tam statute:

It defines a wrong to the government as the false patent marking in violation of § 292(a). It imposes a statutory penalty of up to $500 per violation. It provides that "any person may sue for the penalty," regardless of whether or not such a person is personally harmed. Finally, it allows the suing person to receive half of the recovery from the suit, with the remainder going to the government.

Id. 2009 U.S. Dist. LEXIS 26020 at *18. Judge Brinkema also noted that "the Supreme Court and those courts that have adjudicated cases under § 292 have explicitly termed a § 292(b) a qui tam statute."  Id. at *18-19 (citations omitted). Accordingly, "[t]hese factors are more than sufficient to conclude that § 292(b) is indeed a qui tam statute, and therefore, that Pequignot has Article III standing, as a partial assignee of the government’s claims, to sue Solo."  Id. at *26.

Judge Brinkema swept aside Solo’s argument that such a construction of § 292(b) violates Article II by impermissibly undermining the Executive Branch’s ability to control qui tam litigation:

Enforcement of the substantive provisions of § 292 is not the type of executive function whose delegation to an authority not controlled by the Executive Branch would presumptively raise serious Article II questions.

Id. at *37. Judge Brinkema appeared to rue her decision to deny the motion to dismiss, describing the survival of § 292(b) as a qui tam statute as "likely an accident of history."  "The only practical impact of the qui tam provisions of § 292(b) appears to be its potential to benefit individuals, such as the plaintiff in the case at bar, who have chosen to research expired or invalid patent markings and to file lawsuits in the hope of financial gain."  Id. at *42.  Judge Brinkema invited Solo and other potential defendants to seek revision of it in Congress as has been done with other qui tam statutes. Until then, however, Pequignot opens the door for other qui tam plaintiffs to get into the potentially lucrative game of suing product manufacturers who continue to mark their products with expired patents.

• Email This
• Print
• Comments
• Trackbacks

The Federal Judicial Center has recently published a draft “Patent Case Management Judicial Guide” which is available on-line.  The Patent Case Management Guide is described as a “comprehensive, user-friendly, and practical judicial guide for managing patent cases” that addresses the distinctive case management challenges of patent litigation.  

The Guide is primarily intended to be a resource for district judges. Like past Federal Judicial Center publications, such as the Manual for Complex Litigation and the Reference Manual on Scientific Evidence, the Patent Case Management Guide is likely to become widely used by district judges as an authoritative source for best practices for patent case management. 

The Patent Case Management Guide includes guidelines on

• preliminary injunctions
• discovery
• claim construction
• summary judgment
• trial management
• ANDA cases
• a “Patent Law Primer” for judges
• patent local rules from the Northern District of California and the District of New Jersey
• Model Patent Jury Instructions from the Northern District of California (2007) and the National Jury Instruction Project (December, 2008). 

The Patent Case Management Guide is authored by Professor Peter Menell of the Berkeley Center of Law and Technology, Lynn Pasahow at Fenwick & West LLP, James Pooley at Morrison & Foerster LLP and Matthew Powers at Weil, Gotshal & Manges LLP. The Judicial Advisory Board for the Guide includes district judges from around the country, including Judge Payne of the Eastern District of Virginia, as well as three Federal Circuit Judges.

• Email This
• Print
• Comments
• Trackbacks

On April 2, the Senate Judiciary Committee passed a compromise version of S. 515, the Patent Reform Act (the “Act”). The original bill can be found here, and the amended bill is here.  A few observations on the Act’s impact on litigation in Virginia:

Venue

• The original bill limited venue in most patent cases to districts where the defendant is incorporated, has its principal place of business or has a “regular and established physical facility . . . that constitutes a substantial portion of [its] operations.” This provision would have shifted cases from popular plaintiff’s forums like the Eastern District of Texas to the homes of high-tech companies such as California, Delaware and New Jersey/New York and perhaps Virginia, based on the high-tech presence in Northern Virginia.

• The amended bill replaced those venue provisions with a very short new subsection, 28 U.S.C. §1400(c), which provides that “for the convenience of the parties and witnesses, in the interest of justice,” a district court shall transfer a patent case “upon a showing that the transferee venue is "clearly more convenient” than the current venue. (emphasis added).

• The “clearly more convenient” language comes from In re Volkswagen, 545 F.3d 304, 315 (5th Cir. 2008) (en banc) and In re TS Tech, 551 F.3d 1315 (Fed. Cir. 2008). Some commentators have characterized the amendments as “codifying” TS Tech, but the true impact is likely to be more muddled. Since the Act does not alter 28 U.S.C. § 1404(a), courts may well continue to apply their existing venue transfer standards and ignore the “clearly more convenient” standard. More likely, courts will simply add the “clearly more convenient” standard to their existing analysis.

• In Virginia, a “clearly more convenient” standard may produce fewer venue transfers. In several post-TS Tech decisions, transfer has been denied as not “clearly more convenient” where parties, evidence or witnesses are located in several forums. See Novartis Vaccines & Diagnostics, Inc. v. Hoffman LaRoche, Inc., 2009 U.S. Dist. LEXIS 14656 (E.D. Tex. Feb. 3, 2009) (transfer denied where drug developed in North Carolina, manufactured in Colorado, processed in Michigan or Switzerland, packaged in New Jersey and sold nationwide). Under Virginia federal court precedent, by contrast, transfer is often granted if the parties are not located in Virginia and Virginia is not the “center of accused activity.” See GTE Wireless v. Qualcomm, 71 F.Supp. 2d 517, 519 (E.D.Va. 1999). Thus, a “clearly more convenient” standard may shift the focus from whether the case has ties to Virginia to whether the case has ties to a particular transferee district. That accused activity is occurring nationwide, for instance, would count against transfer rather than, as it presently does, in favor of transfer.

District Court Pilot Program

• The amended bill establishes a 10-year pilot program for patent cases in at least six U.S. District Courts. Courts included in the program must be among the 15 districts with the largest number of patent cases or that have adopted local patent rules. At least three of the courts must have more than 10 active judges (including three judges who have requested and been designated to hear patent cases), and at least three must have fewer than 10 active judges (including two designated patent judges). The pilot program includes $5 million a year for education of judges and hiring patent law clerks. Cases would still be randomly assigned to all judges, but non-patent judges could decline to accept patent cases.

Venue for Patent and Trademark Appeals

• A technical amendment in the Act moves venue for civil actions appealing various decisions of the PTO, BPAI and TTAB from the District Court in Washington, D.C. to the Eastern District of Virginia. Such actions include civil actions appealing decisions by the BPAI relating to patent rejections (35 USC 145) and interferences (35 USC 146), civil actions appealing decisions by the PTO relating to patent term adjustments (35 USC 154(b)(4)(A)), civil actions appealing decisions of the TTAB relating to registration of a trademark (15 USC 1071(b)(4)), and civil actions appealing suspensions or exclusions from practice before the PTO (35 USC 32). Though such actions are relatively rare, this change could increase the volume of patent practice in Virginia.

• Email This
• Print
• Comments
• Trackbacks

The Eastern District of Texas led the country in patent case filings in 2008 with 306, more than 100 cases more than the next two districts (the Central District of California with 198 and the Northern District of California with 171).

In two recent cases, though, the Fifth Circuit and the Federal Circuit overturned rulings from the Eastern District of Texas denying motions to transfer venue. In the Federal Circuit case, In re: TS Tech USA Corp., 551 F. 3d 1315 (Fed. Cir. 2008), decided on December 29, the Court held that the district judge had committed a “clear abuse of discretion” in refusing to transfer a case to Ohio when the relevant evidence and witnesses were located in Ohio, Michigan and Canada.

In the three months since TS Tech was decided, there have been 9 rulings on motions to transfer venue from the Eastern District of Texas. Five of those motions have been granted and four have been denied. Transfer has been denied where the relevant evidence or witnesses was not confined to a specific forum or region but are located around the country or in other countries, even if the case has no strong connection to Texas. Transfer has been granted where most of the parties, witnesses or evidence are located in one particular forum or where the plaintiff or the inventors are located outside of Texas.

Tellingly, since TS Tech, patent case filings in the Eastern District of Texas appear to be plummeting. So far in 2009, the Eastern District of Texas has fallen into fourth place, behind the Central District of California, the Northern District of California and the District of New Jersey. On average, filings in the Eastern District of Texas appear down approximately 40% off last year’s rate, while filings in the next three most popular districts appear on pace with last year. See Stanford IP Litigation Clearinghouse (registration required).

Here in Virginia, patent case filings are in line with average filings in 2008. The drop in filings in Texas, though, could mean that the Eastern District of Virginia, with its fast docket and the presence of a number of high technology companies in the district, may become even more popular for patent case filings.

• Email This
• Print
• Comments
• Trackbacks

In recent years, federal district courts around the country have enacted local rules governing patent cases. The  Northern District of California was one of the first, and its local rules are now extensive and detailed. The Eastern District of Texas enacted local rules to speed up the litigation of patent cases, and it is now  the most popular forums for the litigation of patent suits in the country. The volume of patent cases, however, has slowed the E.D. Texas docket considerably.  Other districts have followed suit, including the Western District of Pennsylvania and, most recently, the District of Massachusetts, adopting local rules for patent cases. At least one result (and perhaps an underlying purpose) of those rules has been to encourage the filing of patent cases in those districts.

The Eastern District of Virginia is the original “Rocket Docket” having enacted local rules to speed up cases almost forty years ago. The E.D.Va. continues to be one of the fastest courts in the United States, with an average time to resolution of civil cases of only about six months. The E.D. Va. has also been a relatively popular forum for patent cases, ranking in the top ten of federal district courts for filing patent suits.

The E.D.Va., however, has no local rules for patent cases. Rather, the three divisions of the court, and even judges in the same division, follow different procedures for dealing with their cases and different ways of handling patent cases.  As a result, there is little predictability in the E.D.Va. on issues such as whether tol extend the pre-trial period for patent cases to allow for the greater amount of preparation necessary in such cases, whether the Court will allot more trial days for a patent trial than the two or maybe three days it allows for most trials and whether the Court will incorporate patent-specific procedures, such as the filing of claim charts and the scheduling of a Markman hearing.

There are many potential benefits to adoption of local patent rules. Scheduling can be more uniform, and the litigation can be streamlined. Conducting claim construction early in the case can remove uncertainty and encourage earlier resolution of cases, decreasing the Court’s workload. Given the volume of patent cases filed in the E.D.Va., the Court should consider adopting limited local rules addressing the unique features of patent litigation. Such rules should be simple, and they should be permissive, so that individual judges can adapt them to each judge's docket and the needs of a specific case.

• Email This
• Print
• Comments
• Trackbacks