Source: https://www.lexology.com/library/detail.aspx?g=9583a90b-d125-486c-8879-b31adc67b516
Timestamp: 2019-04-23 12:15:44+00:00

Document:
The Eastern District of Virginia (the District) continues to receive a steady diet of intellectual property cases. Although patent filings in the District have decreased over the years, the District remains a popular venue for plaintiffs seeking a swift resolution and solid judging.
2018 was another active and interesting year in the District, as the litigants and judges tackled a number of issues in the areas of patent, trademark, copyright and trade secret litigation.
We highlight some of these cases below in our annual Intellectual Property Year in Review for the Eastern District of Virginia.
The federal Defend Trade Secrets Act (DTSA) became law in 2016. With a federal cause of action and federal question jurisdiction now in place, we can expect to see more and more trade secret claims filed in federal court. Thus, we start our review with a brief discussion of a trade secret case that was tried to verdict this past year in the Richmond Division of the court.
favor, finding that Jeld-Wen's 2012 merger with a competitor violated the Clayton Act. The jury awarded Steves $12 million in past antitrust damages and $46.5 million in lost future profits. These damages are automatically trebled under the antitrust laws, and Steves will be entitled to recover its reasonable attorneys' fees. The court then ordered Jeld-Wen to sell the principal asset it acquired in the merger. Post-trial motions have not yet been resolved, and Jeld-Wen has stated an intention to appeal. 3 Id. at *4. 4 Id.
5 Id. at *5. 6 Steves and Sons, Inc. v. Jeld-Wen, Inc., 2018 WL 4844173, *3 (Oct. 4, 2018 E.D. Va.). 7 Id. 8 Steves and Sons, Inc. v. Jeld-Wen, Inc., 2018 WL 6272893 (Nov. 30, 2018 E.D. Va.). 9 Id.at *5. 10 Id.
Because post-trial activity continues, we have limited our discussion of this case. However, it highlights the need to prove the existence of a trade secret with concreteness and specificity in order to prevail on a DTSA or state trade secret claim at trial. Bare allegations and assertions are not enough. This is true at the pleadings stage as well, as demonstrated by two trade secret cases from the Norfolk Division of the court.
the defendant, Orbital ATK, Inc. (Orbital), were both NASA contractors.15 NASA set up a computer server to facilitate the sharing of information. NASA discovered a data breach involving SSL's proprietary information, and identified an Orbital employee as responsible for the breach.16 SSL asserted various claims against Orbital, including a claim for misappropriation of trade secrets under both state and federal law. The court held that the complaint contained sufficient facts to support the trade secret claims. The court noted that the complaint "provides factual descriptions of the breached documents including their relation to its technological development for robotic satellite assembly, system engineering, and research and development" and that these descriptions were sufficient to meet the statutory definition of trade secrets.17 Moreover, SSL "sufficiently pleads that it derived independent economic value from the documents being kept secret because they contained financial data, business plans, and procurement strategies, and were created after considerable economic investment -- the disclosure of which could create an unfair competitive advantage."18 The court therefore denied the motion to dismiss.
These cases, as well as Steves and Sons, demonstrate the need to properly plead, articulate in discovery and ultimately prove at trial, the existence of a trade secret in specific, concrete terms, in order to prevail on either a federal or state claim for misappropriation. Conclusory allegations are not enough to get past the pleadings stage, much less make it to trial, and the judges in this District will expect the plaintiff to meet its burden or face dismissal or summary judgment.
11 310 F. Supp.3d 648 (E.D. Va. 2018). 12 Id. at 656. 13 Id. citing Va. Code Ann. 59.1-336. 14 306 F. Supp. 3d 845 (E.D. Va. 2018).
16 Id. 17 Id. at 853. 18 Id. at 853-854.
The court also decided several trademark cases in 2018 on a variety of issues, including what constitutes "use in commerce" and what type of conduct warrants an exceptional case finding.
The plaintiff in Combe Inc. was the owner of the trademark VAGISIL, and sold feminine care products under that name. The defendant, a German company, sold similar products under the name VAGISAN. At the time of the suit, the defendant had not sold any of its competing products in the United States, but had taken steps to do so.
19 309 F.Supp.3d 414 (E.D.Va. 2018). 20 Id. at 416.
The plaintiff also argued that the defendant's preparatory steps were sufficient to permit the claims to go forward.
21 Id. At 418 22 Id. at 420. 23 Id. 24 Id. at 421-422.
Klumba.ua, LLC v. Klumba.com involved a claim of alleged infringement of common law trademark rights and a violation of the Anticybersquatting Consumer Protection Act (ACPA).32 The issue in the case also focused on "use in commerce" but from a different perspective.
25 Id. at 423 (citations omitted). 26 Id. at 423. 27 Id. at 417, 424. 28 Id. at 424. 29 Id. (citations omitted).
31 Id. 32 320 F. Supp. 3d 772 (E.D. Va. 2018) (Appeal Noted). 33 Id. at 775. 34 Id. at 776.
The plaintiff also sold advertising space to Google on its website via the Google AdSense program. When a user clicked on one of the Google-sponsored advertisements on the klumba.ua website, the plaintiff would receive advertising revenue from Google.
The plaintiff also argued that its relationship with Google constituted a use of its mark in commerce in the United States. Plaintiff essentially rented space on its website to Google, like the cyber equivalent of a billboard.44 However, there was no evidence that "the Klumba mark was used in connection with the sale or even the advertising of plaintiff's `service' to Google" or that "Google knew of the Klumba mark, or that the mark was associated with the advertising space service Klumba provided."45 The court concluded: "There is simply no evidence in this record that the Klumba mark has any meaning for Google or that the Klumba mark was used as a means of attracting Google to purchase advertising space."46 Thus, the transaction with Google did not constitute use of the service mark in commerce.
39 Id. 40 Id. at 778 (citations omitted). 41 Id. (citations omitted).
43 Id. 44 Id. at 779.
46 Id. 47 Id. (citations omitted). 48 Id. at 780.
49 Id. 50 Id. 51 323 F. Supp. 3d 784 (E.D. Va. 2018) (Appeal Noted). 52 Id. at 791. 53 Id. at 791-793. 54 Id.at 794.
Following this decision, the plaintiff, as the prevailing party, moved for an exceptional case finding and an award of attorney's fees.57 Judge Ellis denied the motion.
the clear and convincing evidence standard for an exceptional case finding). 61 Id.
62 Id. at 566. 63 Id. at 567. 64 Id. at 569. 65 Id.
The court also considered a motion for an exceptional case finding and attorney's fees in Verisign, Inc. v. XYZ. Com, LLC.66 In that case, the court granted summary judgment for the defendants. The summary judgment decision was appealed to the Fourth Circuit and affirmed on narrow grounds. The Fourth Circuit declined to rule on whether "XYZ's registration numbers are false or misleading because they include not only registrations bought and paid for by customers--indicating actual consumer demand--but also 375,000 .xyz registrations given away for free just after XYZ's 2014 launch...."67 On remand, defendants moved for an exceptional case finding and attorney's fees. The court applied a clear and convincing standard and denied the motion, holding that "a good faith claim that proves unsuccessful is not a basis for awarding attorney fees."68 The defendants appealed to the Fourth Circuit, and the Fourth Circuit remanded, with instructions for the court to apply a preponderance of the evidence standard. On remand, Judge Claude M. Hilton again denied the motion for fees.
WL 6257101 (Nov. 28, 2018 E.D. Va.). 69 Id. at *1. 70 Id. at *3.
71 Id 72 Id. at *2. 73 Id. at *2. 74 Id. 75 Id. at *2. 76 Id. at **2-3.
Plaintiff's "belief that Defendants had engaged in false advertising."77 Defendants did not appeal this ruling.
Unlike the two prior cases discussed, the court in Valador, Inc. v. HTC Corp. granted an exceptional case finding and an award of over $1.5 million in attorney's fees.78 Magistrate Judge John F. Anderson issued his report and recommendation granting the motion, and Judge Ellis adopted his findings and conclusions in their entirety.
Recommendation) and 2018 WL 4937057 (Oct. 10, 2018 E.D. Va.) (adopting R&R) (Appeal Noted). 79 2018 WL 4940721 at *3. 80 Id. 81 Id. at *4. 82 Id. at *6.
83 Id. at *5 (emphasis in original). 84 Id. 85 Id. at *6. 86 Id. 87 Id. at *7. 88 Id. at *8.
89 338 F. Supp. 3d 477 (E.D. Va. 2018) (Appeal Noted). 90 Id. at 484.
In United Supreme Council 33 Degree of the Ancient and Accepted Scottish Rite of Freemasonry, Prince Hall Affiliation, Southern Jurisdiction of the United States of America v. United Supreme Council of the Ancient Accepted Scottish Rite for the 33 Degree of Freemasonry, Southern Jurisdiction, Prince Hall Affiliated, the court granted summary judgment for the defendant.93 In that case, the plaintiff fraternal organization sued another organization for trademark infringement and unfair competition. The defendant moved for summary judgment on various grounds, and Judge Liam O'Grady granted the motion.
91 Id. at 484-85. 92 Id. at 486. 93 329 F. Supp. 3d 283 (E.D. Va. 2018).
94 Id. at 292. 95 Id.at 293 96 Id. at 295 (citation omitted). 97 Id. at 296.
There was no shortage of patent infringement decisions in the District this year.
In SmarTen LLC v. Samsung Electronics America, Inc., the court held several patents invalid under 101.99 That case involved four related patents that disclosed "a mobile computing device executing weight, nutrition, health, behavior and exercise application software" that " `serves as a simulated combination personal trainer and dietician/nutritionist for the user using comprehensive databases storing personalized health, nutrition and exercise information.' "100 Judge Leonie M. Brinkema, applying the two-step Alice framework, granted the defendant's motion to dismiss.
98 573 U.S. 208 (2014). 99 316 F. Supp. 3d 913 (E.D. Va. 2018) (Appeal Noted). 100 Id. at 915. 101 Id. at 917 (citations omitted). 102 Id. at 922.
103 Id. at 923 (citations omitted). 104 Id. (citations omitted). 105 Id. (citations omitted). 106 Id. at 924. 107 Id. at 924.
108 319 F. Supp. 3d 818, 820 (E.D. Va. 2018) (Appeal Noted). 109 Id. at 821. 110 Id. at 827. 111 Id. (internal citations omitted). 112 343 F. Supp. 3d 581 (E.D. Va. 2018) (Appeal Noted). 113 Id. at 583.
114 Id. at 588. 115 Id. at 589. 116 Id. at 592. 117 Id. at 589, 592 (citations omitted).
Genetic Veterinary Sciences v. Laboklin GMBH & Co. also resulted in the court's finding that the patent was invalid under 101this time on a motion for judgment as a matter of law after the parties participated in a jury trial.119 In that case, the plaintiff filed a declaratory judgment complaint seeking to invalidate the defendant's patent on 101 grounds. The defendant moved to dismiss, which Judge Henry Coke Morgan denied. Thereafter, the defendant filed an answer and counterclaim of infringement. After the case progressed, the plaintiff moved for summary judgment on the validity of the patent, and the court denied the motion. The parties participated in a jury trial, and at the close of defendant's evidence, the plaintiff moved for judgment as a matter of law on the validity of the patent.120 The court granted the plaintiff's motion.
118 Id. 119 314 F. Supp. 3d 727 (E.D. Va. 2018) (Appeal Noted). 120 Id. at 729. 121 Id. at 730. 122 Id. at 731.
123 Id. at 732. 124 Id. at 733. 125 Civil Action No. 3:15cv720, 2018 WL 678245 (Feb. 2, 2018 E.D.Va.). 126 Id. at *1. 127 Id.
128 Id. at *2. 129 Id. at *3. 130 Id. 131 Id.
Although Dr. Prowse later adjusted the split under the other Georgia-Pacific factors, the court held that "he adjusts an unsubstantiated, wholly unreliable number." Thus, the court excluded Dr. Prowse's reasonable royalty analysis with respect to three of the patents.
Dr. Prowse offered a different reasonable royalty analysis for the `002 patent asserted by Limelight. For this analysis, Dr. Prowse looked to Akamai's purchase of an entity known as Cotendo. In that purchase, Akamai paid Cotendo a 15 percent royalty on all of the acquired technology, including the `571 patent. Dr. Prowse opined that the `571 patent was comparable to the `002 patent. He further determined that the `571 patent represented 59 percent of the total value of Cotendo's technology. Based on this, he multiplied 59 percent by the 15 percent royalty paid for all of the technology and determined that Akamai paid an 8.9 percent royalty for the `571 patent. Thus, he used this 8.9 percent royalty as the royalty that Akamai would pay for comparable technology, i.e., the `002 patent, and adjusted down to 8 percent based on the other Georgia-Pacific factors. He applied this royalty to Akamai's revenues on the accused product to determine the amount of damages.
The court also considered challenges to Dr. Prowse's lost profits analysis and a reasonable royalty analysis based on a non-infringing alternative. The court expressed skepticism about these damage analyses, but did not exclude them.
133 Id. 134 Id. at *6.
135 Limelight Networks, Inc. v. XO Communications, LLC, 2018 W 1460703 (March 23, 2018 E.D. Va).
136 Id. at *3. 137 Id. at *4. 138 Id.
In light of the above, the court granted Akamai's motion to strike Limelight's proffer and revised reasonable royalty analysis.
The court considered whether to grant an award of attorney's fees in the patent context in CertusView Technologies, LLC v. S & N Locating Services, LLC.139 In that case, the court had previously invalidated the patents-in-suit on 101 grounds. The defendant argued that fees were appropriate because the plaintiff "asserted objectively unreasonable patent claims" and "conducted the litigation in an unreasonable manner."140 Judge Mark S. Davis denied the motion for fees.
139 287 F. Supp. 3d 580 (E.D. Va. 2018). 140 Id. at 584.
Finally, in TecSec, Inc. v. Adobe Systems, Inc.,142 Judge Liam O'Grady granted summary judgment on several affirmative defenses asserted by Adobe in a patent infringement case filed by TecSec.
The court's opinion discusses the defenses of obviousnesstype double patenting, laches, government sales and standards-setting misconduct. In each instance, the court granted TecSec's motion for summary judgment because Adobe failed to present evidence to support the defenses.
141 Id. at 592. 142 326 F. Supp. 3d 105 (E.D. Va. 2018). 143 __ U.S. __, 137 S. Ct. 954 (2017). 144 326 F. Supp. 3d at 111.
This year also included a pair of cases in which the court granted a motion to dismiss because the plaintiff failed to sufficiently plead infringement. In these instances, the plaintiff was granted leave to amend.
145 Civil Action No. 1:10-cv-910, 2018 WL 1699429 (Apr. 6, 2018 E.D. Va.) and 2018 WL 2426581 (Apr. 12, 2018 E.D. Va.).
(March 23, 2018 E.D. Va.) (reconsidering construction of "neighboring server").
148 Civil Action No. 3:17cv00449, 2018 WL 1172998, *1 (March 6, 2018 E.D. Va.). 149 Civil Action No. 2:17cv548, 2018 WL 2977398, *4 (June 13, 2018 E.D. Va.).
We address three cases challenging the Patent and Trademark Office (PTO) patent term adjustment: Mayo Clinic Foundation v. Iancu,151 Ariad Pharmaceuticals, Inc. v. Matal152 and Intra-Cellular Therapies, Inc. v Matal.153 Two of these cases upheld the PTO decision, and one reversed.
"A Delay extends the patent term one day for each day the PTO fails to meet prescribed deadlines for certain events during the processing and prosecution of the patent application, including deadlines for mailing notices of allowance, responding to replies under 132, and issuing the patent after payment of the required fees."
"B Delay extends the patent term one day for each day beyond three years that the application remains pending." However, in calculating the threeyear period, certain time periods are excluded, including " `any time consumed by continued examination of the application requested by the applicant under section 132(b)' " or time incurred during the pendency of an interference proceeding.
151 309 F. Supp. 3d 425 (E.D. Va. 2018) (Appeal Noted). 152 283 F. Supp. 3d 503 (E.D. Va. 2018). 153 Civil Action No. 1:17cv00776, 2018 WL 852368 (Feb. 13, 2018 E.D. Va.) (Appeal Noted).
Any adjustment under 154(b)(1)(A)-(C) must be offset by any delay in processing caused by the patent owner. See 35 U.S.C. 154(b)(2).
With this backdrop, the first case we consider is Mayo Clinic Foundation.155 The issue in that case concerned the calculation of B-Delay, and the exclusion of time "consumed by" a request for continued examination (RCE).
154 The Mayo Clinic Foundation, 309 F. Supp. 3d at 429 (Appeal Noted). (citing 154(b)(1)(A)-(C).
155 309 F. Supp. 3d 425. 156 Id. at 430.
157 Id. at 432. 158 Id. at 431-432. 159 Id. at 433. 160 Id. at 436.
161 Id. 162 Ariad Pharmaceuticals, Inc., 283 F. Supp. 3d at 506-507. 163 Id. at 507. 164 Id. 165 Id. at 508. 166 Id.
Intra-Cellular Therapies, Inc. v Matal involved an offset for the patent owner's delay in prosecution.170 In this case, Judge Claude M. Hilton deferred to the agency's interpretation of the statute.
169 Id. 170 2018 WL 852368. 171 35 U.S.C. 154(b)(2)(C)(i). 172 Id. at 154(b)(2)(C)(ii). 173 Id. at 154(b)(2)(C)(iii).
174 2018 WL 852368. at *1. 175 Id. at *3. 176 Id. at *2 (citation omitted). 177 Id. at *5.
We review several copyright cases this year on a variety of issues, including fair use, contribution among joint tortfeasors and preemption.
179 Civil Action No. 1-17-CV-01009, 2018 WL 2921089 (June 11, 2018 E.D. Va.) (Appeal Noted). 180 Id. at *1. 181 Id. at *1 (citations omitted).
182 Id. at *2 (citations omitted). 183 Id. (citations omitted).
185 Id. 186 Id. (citations omitted).
online in order to gain fame and increase the overall value of his work. Third parties were authorized to use the photographs free of charge, by agreeing to a license that included a provision that required the third party to identify plaintiff as the photographer.
187 Id. 188 Id. 189 Id. 190 Id. at *3. 191 Id. 192 279 F. Supp. 3d 708 (E.D. Va. 2018).
193 Id. at 710-712. 194 Id. at 714. 195 Id. at 715.
196 Id. 197 Id. at 718. 198 Id. at 718-719. 199 Id. at 719. 200 Id. at 721-722 (citations omitted).
Parks, Millican, & Mann, LLC v. Figures Toy Company addressed whether a defendant may seek contribution from another defendant for liability under the Copyright Act or the Digital Millennium Copyright Act (DMCA).201 Judge Robert G. Doumar granted the defendant's motion to dismiss a crossclaim for contribution filed against it by the other defendant, thereby rejecting the contribution argument.
201 Civil No. 2:16CV522, 2018 WL 2023127 (Apr. 30, 2018 E.D. Va.). 202 Id. at *2 203 Id. at *3. 204 321 F. Supp. 3d 624 (E.D. Va. 2018). 205 Id. at 626.
In Levi v. Twentieth Century Fox Film Corp., the pro se plaintiff asserted a claim for copyright infringement against Twentieth Century Fox.210 The defendant moved to dismiss, and Judge M. Hannah Lauck granted the motion.
206 Id. 207 Id. at 629-630.
208 Id. 209 Id. at 630. 210 Civil Action No. 3:16cv129, 2018 WL 1542239 (March 29, 2018 E.D. Va.).
211 Id. at *1. 212 Id. at *4. 213 Id. at *5.
2018 was an active year for intellectual property litigation in the Eastern District of Virginia, and 2019 is likely to be even busier. The cases reviewed above demonstrate, once again, that the District is an attractive forum for intellectual property litigants, both plaintiffs and defendantsat least, those who are prepared to deal with the demanding schedule that befalls all litigants in the "rocket docket," no matter how complex the case.
The District Judges are well-versed in the intricacies of intellectual property law, and are exacting in demanding strict adherence to the law. Those who attempt to circumvent well-established legal requirements, particularly in the area of damages as seen above, with the hope of just getting to a jury trial will be disappointed to find that they will likely never get there.
not mean that close scrutiny will not be applied to both the plaintiff's and defendant's case prior to trial. If the law dictates a certain outcome, or if one side fails to present sufficient proof to create a genuine issue of material fact, the District Judges will not allow such a case to reach the jury trial stage.
The District Judges will rule decisively on legal issues presented in intellectual property cases, and will not let unresolved questions linger to be dealt with at trial or after. This is one of the principal benefits of litigating intellectual property cases in the District; the Judges are not shy to rule on difficult questions, and litigants will know where they stand before trial. It's not for the faint-hearted--but it is ideal for those who are committed to the litigation path (and for those who welcome judicial resolution of questions that lead to a settlement).
We shall see what 2019 brings, but most assuredly, it will bring a plethora of new intellectual property litigation to the District. The District's adherence to the guiding principle of "Justice Delayed is Justice Denied," emblazoned above the courthouse door, will continue to attract interesting cases with the promise of a quick and decisive resolution.
The chart below summarizes the number of intellectual property cases filed in the EDVA by judge.

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