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

Undeterred, Bear Creek proceeded to file new actions against the former defendants in the EDVA (Bear Creek Technologies, Inc. v. Aptela, Inc. , 2:11-cv-00460 (RGD/TEM); Bear Creek Technologies, Inc. v. Primus Telecommunications, Inc., et al., 2:11-cv-00461 (HCM/FBS)), the North District of Georgia (Bear Creek Technologies, Inc. v. Cox Communications, Inc., 1:11-cv-03784 (AT)), and the District of Delaware (Comcast Cable Communications, LLC v. Bear Creek Technologies, Inc., 1:11-cv-00721-GMS (D. Del.); Charter Communications, Inc. v. Bear Creek Technologies, Inc., 1:11-cv-00722-GMS (D. Del.); Bear Creek Technologies, Inc. v. Vonage Holdings Corporation, et al., 1:11-cv-00723-GMS (D. Del.); Bear Creek Technologies, Inc. v. CSC Holdings, LLC, 1:11-cv-00724-GMS (D. Del); Bear Creek Technologies, Inc. v. Mediacom Communications Corporation, et al., 1:11-cv-00725-GMS (D. Del); Bear Creek Technologies, Inc. v. Qwest Communications International, Inc. et al., 1:11-cv-00726-GMS (D. Del.); Bear Creek Technologies, Inc. v. T-Mobile USA, Inc., 1:11-cv-00727-GMS (D. Del.); Bear Creek Technologies, Inc. v. 8x8, Inc., 1:11-cv-00728-GMS (D. Del); Bear Creek Technologies, Inc. v. AT&T, Inc., et al., 1:11-cv-00729-GMS (D. Del); and Bear Creek Technologies, Inc. v. Time Warner Cable, Inc., et al., 1:11-cv-00730-GMS (D. Del)).  

Perhaps liking what it found in Delaware, Bear Creek is now moving to have the EDVA cases and the Northern District of Georgia case transferred to the District of Delaware, and to have all of the cases consolidated for purposes of Multi-District Litigation.  A copy of the Notice filed by Bear Creek in the Bear Creek Technologies, Inc. v. RCN Telecom Services, LLC, Civil Action No.: 2:11cv00103 (RAJ/FBS) can be found here.

Plainly, Bear Creek did not intend to set out on this tortured path, but it may well achieve the consolidation of its claims against 28 different defendants by a different means.  Given the limitations of joinder under the AIA, perahps MDL will be the new pathway to consolidating cases against multiple defendants ... if Bear Creek's efforts are successful.

As Justice Lemons explained, "the Trade Secrets Act does not require that one who is accused of misappropriating a trade secret use the allegedly misappropriated trade secret to compete with the holder of the trade secret."  Slip Op. at 19.  Rather, "all that GSI was required to show ... was that Boeing ... acquired GSI's trade secrets and they knew or had reason to know that the trade secrets were acquired by improper means and that GSI suffered compensable damages or was otherwise entitled to relief."  Id.  GSI, the Court held, presented sufficient evidence to make such a showing, and reversed on that basis. 

While the Supreme Court's ruling on the competition issue is on sound footing, what is more interesting is Justice McLanahan's partial dissent regarding the sufficiency of GSI's proof of damages. At trial, GSI presented two damages experts, one of whom testified as to GSI’s diminution in value as a result of Boeing’s use of GSI’s trade secrets, and the other who testified about the cost GSI incurred in developing its trade secrets and offered a reasonable royalty theory of damages.  Neither expert testified that GSI sustained any actual losses, which Justice McLanahan found to be fatal to GSI’s claim.  Thus, in Justice McLanahan's view, the trial court reached the right result if for the wrong reason.  The majority took a pass on this issue, commenting only that “we cannot say as a matter of law that GSI did not present sufficient evidence on the question of damages to survive a motion to strike.”  Slip Op. at 23. 

Justice McLanahan’s insistence on proof of actual losses, if followed, would raise a significant issue for plaintiffs in trade secrets cases.   It may be difficult, if not impossible, to show where the trade secrets are being used by a non-competing party.  If Boeing was not competing with GSI and not taking business away from GSI, how could GSI show actual losses?  Thus, requiring proof of actual losses may limit the scope of trade secrets claims in the same way that the majority rejected.   

These cases, like Pragmatus AV, LLC v. Facebook, Inc., Civil Action No. 1:10cv1288, 2011 WL 320952 (E.D. Va. January 27, 2011), show that plaintiffs (particularly non-practicing entities) hoping to keep patent infringement cases in the EDVA cannot simply rely on the fact that they are formed or located in the district. 

As we discussed in our first post (found here), the docket speed of the EDVA provides a plaintiff-patentee with a number of advantages. However, if a defendant acts quickly, it can overcome these advantages and even gain an edge. In the EDVA perhaps more than any other jurisdiction, time is a very precious commodity. By far the most important advice we can give to the defendant accused of patent infringement is that it must not squander the time period after it receives the Complaint. As soon as a defendant learns it has been sued, it must act immediately. All too often, this is difficult for the defendant-accused infringer to appreciate fully, and weeks go by while the defendant does very little, perhaps waiting to be served or assuming that it will get a significant extension of time to file responsive pleadings. This is a costly mistake. While the defendant may obtain a short extension of time to respond -- rarely more than a few weeks -- the time wasted can never be recovered.

As soon as a defendant receives notice of the suit, it must do several things, such as issue a litigation hold letter, investigate the asserted patent(s), identify the accused product(s), and prepare a response to the Complaint.   In addition to these obvious steps, a defendant-accused infringer should also do the following:

• Gather Your Documents Early - Staying ahead of discovery deadlines is crucial in patent litigation in the EDVA. The defendant-accused infringer can count on receiving very broad document requests as soon as discovery begins. Too often, defendant-accused infringers wait until the requests are received and immediately fall behind in document collection, review and production. To avoid this, defendant-accused infringers must identify and begin collecting potentially relevant documents even before discovery begins. This will allow them to hit the ground running on discovery and head off potential discovery motions. Rather than getting bogged down, the well-prepared defendant can go on the offensive and focus on propounding discovery to the plaintiff-patentee and seeking third-party discovery.
   
• Retain technical/subject matter expert(s) and develop a non-infringement and/or invalidity theory - Sooner or later, defendants are almost always going to need a technical expert (or two), and sooner is much better than later in the EDVA. If retained early, the expert(s) can identify and articulate non-infringement and/or invalidity theories, thus helping to shape the defense and discovery strategy from the very beginning. All too often, technical experts are retained relatively late in the game, after discovery has been propounded and the parties positions have taken shape, which really limits their effectiveness.
   
• Push for Production of Infringement Contentions- The plaintiff-patentee is supposed to have the basis for its infringement contentions before it even files suit. Frequently, however, plaintiff-patentees attempt to withhold infringement contentions for as long as possible and sometimes even claim that they cannot provide such contentions until obtaining discovery. For the defendant-accused infringer, the infringement contentions drive many aspects of the case and so should be pursued relentlessly from the outset litigation. The defendant-accused infringer should serve contention interrogatories as soon as it is permitted and should press for the early production of infringement contentions during any Rule 26(f) and/or Rule 16(b) conferences. 
   
• Offer to produce a technical documents and witness(es) on the accused product(s) as soon as possible - Plaintiff-patentees often claim an inability to provide infringement contentions until after discovery because they “don’t fully understand” the accused products. To defeat this objection, accused infringers should offer to produce technical documents and one or more witnesses with technical knowledge of the accused product as early as possible. There is little downside to this -- the documents and witness(es) will have to be produced in discovery anyway -- and significant upside -- forcing the early production of infringement contentions and perhaps catching the plaintiff-patentee flat-footed and demonstrating your responsiveness to the Court.

At bottom, the defendant-accused infringer has no time to waste after getting sued in the EDVA and must be proactive to avoid getting behind the EDVA eight ball. By taking the forgoing steps the defendant-accused infringer can avoid some of the pitfalls of the EDVA and even turn the rocket docket speed into an advantage. 

Next time …. Managing Discovery in the EDVA.