Source: http://docketreport.blogspot.com/2017/08/
Timestamp: 2019-04-23 04:20:14+00:00

Document:
The court denied defendants' motion to stipulate to infringement "under the present claim construction" and change the order of proof at trial to begin with defendants' invalidity claims. "[T]he Court anticipates that in light of the parties’ positions [at summary judgment], it will likely be necessary to construe the term 'acrylate/C10-30 alkyl acrylate cross-polymer' at trial, and that the Court expects the parties to provide additional evidence on that issue at trial. Because that issue bears on infringement as well as invalidity, the defendants’ stipulation to infringement under the 'the present claim construction' is no real stipulation at all. . . . [C]ourts have on occasion acquiesced in the request of the accused infringer to present its case first at trial. In several of those instances, however, the courts have allowed the patentee to present background information at the outset before the accused infringer begins its invalidity challenge. That sequence seems fair to the Court in this case, particularly in light of [plaintiff's] having organized the appearance of its background witnesses around the assumption that it would go first at trial."
The court denied plaintiff's motion to disqualify its former counsel as counsel for defendant because plaintiff waived its argument by delaying its motion for a year after it learned of the representation and the delay substantially prejudiced defendant. "[19 months ago], [plaintiff's former counsel] entered notices of appearance on the public docket as [defendant's] counsel. . . . [Plaintiff] had knowledge of both sides of the conflict coin: [counsel's] prior work for [plaintiff] and its current work for [defendant]. And although not necessary to show waiver, [counsel] also put forward evidence that [plaintiff's current counsel] was aware of [defense counsel's] prior relationship with [plaintiff]. . . . [T]he Court is convinced that [plaintiff] knew about the . . . conflict for a year before it decided to file this motion to disqualify. And one year qualifies as an extended delay. . . . In . . . the year during which [plaintiff] knew of the alleged conflict but took no action [its former counsel] billed over 3,400 hours to prepare this matter for trial. Although the Court has not yet set a trial date, this expenditure of time and resources weighs in favor of waiver."
The court granted defendants' motion to dismiss because the asserted claims of plaintiff’s multimedia messaging patents encompassed unpatentable subject matter and found that the asserted claims were directed toward an abstract idea. "Defendants argue that claim 17 covers an abstract idea because it addresses the problem of 'incompatability in communication.' In Defendants' view, such a problem 'has existed ever since human languages diverged' and claim [plaintiff's] solution 'is equally ancient' because it involves 'conversion to and from a common format.' The Court agrees. . . . [Plaintiff] counters that claim 17 is not directed to an abstract idea because it is 'limited to the transmission of multimedia messages in a multi-carrier environment.' But claims that 'limit [an] abstract idea to a particular environment' are 'no less abstract for the step 1 analysis.'"
The court denied defendants' motion to dismiss because the asserted claims of plaintiff’s data transmission patent encompassed unpatentable subject matter and found that the asserted claims were not directed toward an abstract idea. "Broadly speaking, claim 1 is directed to the idea of improving data transmission over wireless networks. . . . The invention described by claim 1 is directed to improving the transmission of data in a wireless communication system, while avoiding transmission problems, such as fading. The specification of the [patent] confirms that this concept is the essence of the claimed invention. The Court further agrees with [plaintiff] that the claims are 'directed to an improvement of an existing technology.'. . . Instead of simply reciting a mathematical relationship, the [patent] employs that relationship to aid in the high-speed transmission of data without compromising bandwidth efficiency."
The court granted defendant's motion to dismiss plaintiffs' willful infringement claims for failing to sufficiently allege knowledge. "Plaintiffs allege that Defendant must have known of Plaintiffs’ patents simply by virtue of operating a business in the same industry. The [operative complaint] states that [plaintiff] is 'among the most prominent innovative vaporizer companies in the United States and throughout the world[,]' and the 'inventions . . . in [plaintiff's] patents have been recognized by those in the industry as major milestones in the field.' Furthermore, Plaintiffs allege that Defendant 'is aware that [plaintiff] has established one of the most successful vaporizer companies in the world' and has 'sought to replicate [plaintiff's] success by infringing on [its] intellectual property.' Defendant asks the Court to make a logical leap. Simply because [a plaintiff] is successful and well-known in the industry and Defendant purchased Plaintiffs’ products for resale prior to the alleged infringement, does not mean that Defendant had knowledge of Plaintiffs’ patents, and it certainly does not necessarily follow that [defendant's] conduct is so egregious as to warrant increased damages."
The court denied defendant's motion to transfer for improper venue because defendant had a regular and established business in the forum through its part-time field technicians who regularly provided service to purchasers of the accused product. "A fixed physical presence in a district is not dispositive, and the guiding question is whether the corporate defendant does it business through a permanent and continuous presence in the district. . . . [T]he defendant is registered to do business in the State of North Carolina . . . . Defendant claims that it has six part-time field technicians, who are paid hourly. According to defendant, these technicians do not solicit orders, enter into contracts, or make sales, but instead service existing accounts. . . . [T]he contacts in the instant case involve technicians who actively work on-site throughout the District. . . . [T]he court here finds that venue is appropriate in this district as defendant employs six field technicians who regularly service customers in this district who have purchased defendant’s allegedly infringing product."
​ The court granted defendants' motion to dismiss because the asserted claims of plaintiffs’ biometric identification patent encompassed unpatentable subject matter and found that the claims were directed toward an abstract idea. "[H]umans have long compared images of faces they have seen previously (an old-fashioned registration template) to faces they encounter in the world to determine or confirm an individual’s identity. . . . Plaintiffs argue that the [patent] 'focus[es] on a specific means or method that improves the relevant technology of a global biometric authentication system.' But neither the template receiver nor the verifier has any relation to the creation of a template; the plain language of claim 1 states that the system components only receive and compare the templates. . . . Nor does the patent discuss how the templates are compared. And even though part of the system operates remotely, that does not evidence a nonabstract concept."
The court granted defendant's motion to dismiss plaintiff's patent infringement action for improper venue and rejected the argument that defendant's failure to object to personal jurisdiction established residency for purposes of venue. "[Plaintiff] agues [defendant] failed to object to personal jurisdiction and accordingly is deemed to 'reside' here for purposes of venue. In support of this argument, [plaintiff] cites several cases in which courts have denied a motion to dismiss for improper venue when the defendant waived its objection to personal jurisdiction. The reasoning in these cases is that 'not challenging personal jurisdiction in a motion to dismiss challenging venue concedes personal jurisdiction, which in turn establishes venue.' This argument fails. A defendant’s waiver of personal jurisdiction can only 'establish' venue if venue is proper everywhere the defendant is subject to personal jurisdiction."
The magistrate judge recommended denying defendant's motion to dismiss or transfer for improper venue because defendant waived that defense by limiting its venue challenge in its answer to its personal jurisdiction challenge. "[Defendant] did not generally deny that venue is proper. Instead, [Defendant] specifically denied venue is proper 'for the reasons set forth in the Complaint' -- namely, that [its] acts of infringement subject it to personal jurisdiction in this District. In other words, [defendant's] objection was based solely on the argument this District does not have personal jurisdiction over [defendant] because it does not infringe, and [defendant] admits as much. This Court has already concluded a defendant’s acknowledgement of the applicability of [28 U.S.C. § 1391(c)], without more, results in waiver. . . . [Defendant] conceded the applicability of § 1391(c) while omitting from its Answer an objection to venue because it had no 'regular and established place of business' in this District. That waives any such objection."
Following a jury trial, the court denied defendant's renewed motion for judgment as a matter of law on the ground that plaintiff’s messaging patent encompassed unpatentable subject matter because the asserted claims were not directed toward an abstract idea. "The Court concludes that the asserted claims in the [patent] are not directed to an abstract idea, but that they instead implement a specific improvement in cellular networking. . . . [At trial, plaintiff's expert] testified that [the manual process of call switching] formerly performed by the switchboard operator 'is now being done by computers.'. . . [The expert's] testimony at trial was merely an analogy to assist the jury in understanding a complex process. It does not disturb the Court’s previous conclusion that the [patent] 'can only be performed on a computer.'. . . [T]he claims of the [patent] 'set out a method for achieving a specific goal -- obtaining information about a wireless terminal with a dynamic network address -- by applying the abstract idea of matching identifiers to retrieve information in the cellular network.' [Recent Federal Circuit decisions] do not affect that ruling."
The magistrate judge recommended granting plaintiffs' motion for summary judgment that their patents were not unenforceable for inequitable conduct or unclean hands because the failure to submit a copy of a disclosed PGR institution decision was not material. "Defendants’ position practically assumes there is some requirement to submit relevant PTAB decisions to the Examiner during prosecution. But Defendants do not cite any authority for this kind of requirement. Regardless, knowing that the Examiner was indeed aware of the decision, Defendants’ position assumes that Examiner is somehow incapable of finding the PTAB’s PGR Institution Decision on his own (otherwise the patentee’s duty of candor would have been discharged by informing the Examiner). . . . It would be difficult to understand how the USPTO could not obtain the necessary publicly available documents from its own administrative agency when needed."
The court transferred plaintiff's patent infringement action for improper venue and rejected plaintiff's argument that TC Heartland did not apply to limited liability companies like defendant. "The Supreme Court explicitly limited its analysis in [TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017)]: 'we confine our analysis to the proper venue for corporations' and reserved the applicability of its holding to unincorporated entities. . . . Unincorporated associations, such as limited liability companies, are generally treated like corporations for purposes of venue, whereby the 'residence' is the association’s principle place of business. Now that the Supreme Court has reinforced that 'residence' for corporate defendants in a patent infringement case is limited to the state of incorporation, [plaintiff] is hard-pressed to present a reason why unincorporated associations should be treated differently."
The court ordered the parties to choose an expert to help determine whether defendant reasonably could have raised certain prior art in its petition for inter partes review. "In its [prior] opinion, the Court did not resolve whether [defendant] reasonably could have raised three prior art references in its IPR petition. The Court orders the parties to confer and choose an agreed, independent, court-appointed expert to offer an opinion on whether a skilled searcher conducting a diligent search reasonably would have discovered these references. The parties will split the cost of the expert evenly."
The court granted defendants' motion to dismiss plaintiff's patent infringement action for improper venue because defendants did not have a regular and established place of business in the forum. "At the time of this action's filing, [one defendant] was a sole proprietorship operated by [another defendant], a Texas resident, and the three individual Defendants are each residents of Texas. There is no evidence that any of the Defendants reside in Virginia. Additionally, the fact that [the sole proprietorship defendant] has made its product available online through [an online marketplace] is not sufficient to create a regular and established place of business for the purposes of the patent venue statute."
The court denied defendant's motion to dismiss plaintiff's patent infringement action for improper venue because defendant failed to establish that it did not have a regular and established place of business in the forum. "[Defendant] does not dispute [plaintiff's] allegation it has a retail store in Delaware, it argues one retail store is not enough to establish a 'permanent and continuous presence.' We disagree; [defendant's] retail store is a permanent and continuous presence where it sells the alleged infringing technology to consumers on a daily basis. [Defendant] does not meet its burden of showing it does not have 'a regular and established place of business' in this District."
The court granted defendant's alternative motion to transfer plaintiff's patent infringement action to the District of Delaware because defendant did not have a regular and established place of business in the District of Nevada. "Plaintiff argues that based on Defendant’s attendances at the CES conferences, as well as one alleged infringing product sale to a Nevada resident, the Court has specific personal jurisdiction over [defendant], and therefore venue is proper in the District of Nevada. The Court disagrees that, under the patent venue statute, the alleged conduct is sufficient to make venue in Nevada appropriate. Additionally, [defendant] does not have a 'regular and established place of business' in Nevada. [Defendant's] only offices in the U.S. are in California. [Defendant] does not have any offices, employees, or land in Nevada."
The court granted defendant's motion for relief from a $30 million judgment because the Federal Circuit invalidated the patent in another case under 35 U.S.C. § 101. "The patent claims at issue in the [other] case which were invalidated by the Federal Circuit were and are the same claims at issue here. . . . Given that the Federal Circuit has conclusively adjudged the patent claims, which provide the very basis for [plaintiff's] $30 million judgment, to be invalid; the Court finds no just reason why such a judgment ought to stand when the claims 'are predicated on a nullity' and unenforceable to the rest of the world."
​ The court granted defendant's motion to dismiss plaintiff's patent infringement action for improper venue because a CEO's residence was insufficient to establish defendant had a regular and established place of business in the forum. "[Defendant] asserts that it does not engage in business operations, own or lease office space, or maintain a public presence in this State, much less this District. . . . The gravamen of [plaintiff's] venue-based arguments appears to be that the mere presence of a high-level employee of a corporate defendant within a particular judicial district is sufficient to satisfy the rigors of Section 1400(b). Case law and common sense dictates that it is not, and [plaintiff] cites to no authority, either binding or persuasive, suggesting otherwise."
After the Federal Circuit found the parent patent to the patents-in-suit invalid, the court granted defendant's motion to dismiss because the asserted claims of plaintiffs’ cardiovascular disease diagnosis patent encompassed unpatentable subject matter and found that the claims were directed toward a law of nature. "According to plaintiffs . . . because the [patents] merely claim a laboratory method of 'detecting' [myeloperoxidase] activity, as opposed to a diagnostic method, they are not directed to patent ineligible subject matter. Plaintiffs' argument is overly superficial. . . . It is not a general laboratory technique for detecting MPO levels. Because the method is directed at detecting the correlation that is the natural law, rather than MPO levels generally, it is clear that the method is directed to the natural law. Accepting plaintiffs' argument to the contrary would permit artful drafters to recast any diagnostic patent as a laboratory method patent, frustrating the purpose of the natural law exception."
The court granted defendant's renewed motion to dismiss because the asserted claims of plaintiffs' neurotransmission disorder diagnosis patent encompassed unpatentable subject matter and found that the claims were directed toward a law of nature. "Contrary to Plaintiffs' argument, the [patent] is not a composition patent directed at the creation of the [laboratory-created molecule]. Rather, the patent is directed at a method for the diagnosis of a disease. Although the patented method uses man-made [laboratory-created molecules], the use of a man-made complex does not transform the subject matter of the patent. The focus of the claims of the invention is the interaction of the [laboratory-created molecule] and the bodily fluid, an interaction which is naturally occurring. . . . Counter to Plaintiffs' argument, because the patent focuses on this natural occurrence, it is directed to a patent-ineligible concept."
Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017), the court denied defendant's motion to dismiss plaintiff's patent infringement action for improper venue but rejected plaintiff's argument regarding waiver because defendant's motion to dismiss under Rule 12(b)(6) remained pending. "There is authority supporting both sides of the waiver issue. But the Court need not choose a side, because [defendant's] original motion to dismiss is still pending. . . . [A] party that files a Rule 12(b) motion and fails to raise the issue of improper venue can avoid waiving that issue if the party supplements its motion 'before the . . . court [takes] up the matter.' To the extent that 'prompt' amendment is a requirement to avoid waiver, the Court finds that [defendant's] filing of a motion raising improper venue within a month of the Supreme Court’s decision in TC Heartland is sufficiently prompt as this case has not progressed past the pleading stage."
The court denied plaintiff's motion to exclude invalidity contentions on the ground that inter partes review estoppel precluded defendant from asserting two individual references after the PTAB instituted review on the combination of those references. "[T]he PTAB explicitly considered in its final written decision whether a subset of the instituted grounds was properly before it, and determined that it was not. . . . Though the PTAB then noted in dicta that '[e]ven if we were to consider [one reference] alone, we find that [reference] does not render the challenged claims obvious,' it is clear the PTAB did not believe any subset of the instituted grounds were properly before it. Given the PTAB’s explicit statements of what was 'properly part of [the IPR]' and what was not, the Court concludes that . . . only the instituted ground (obviousness based on the combination of [the two references]) gives rise to estoppel . . . ."
The court granted defendant City of Seattle's motion to dismiss plaintiffs' Sherman § 1 claims because Seattle was protected by state action immunity. The court first found that Seattle's ordinance was clearly articulated as a state policy. "The statute [from which the ordinance derives its authority] specifically states that 'it is the intent of the legislature to permit political subdivisions of the state to regulate for hire transportation services without liability under federal antitrust laws.' . . . The Ordinance, by its terms, is an attempt to exercise the authority granted by [this and similar] state statutes to ensure safe and reliable for-hire and taxicab transportation services within the City of Seattle. . . . The statutes on which the City relies clearly delegate authority for regulating the for-hire transportation industry to local government units and authorize them to use anticompetitive means in furtherance of the goals of safety, reliability, and stability. The state 'affirmatively contemplated' that municipalities would displace competition in the for-hire transportation market, a situation which satisfies the 'clearly articulated and affirmatively expressed' requirement for state immunity."
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Following the Supreme Court's decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514 (2017), the magistrate judge recommended denying defendant's motion to dismiss plaintiff's patent infringement action for improper venue because defendant did not establish that it did not have a regular and established place of business in the forum. "[Defendant's] underlying affidavit to support this assertion simply states, '[Defendant] does not directly or indirectly own business, sales, or distribution locations or other physical facilities in the Eastern District of Texas.' But lack of physical presence in the District is insufficient to establish improper venue. . . . By solely making statements regarding physical facilities in the District, [defendant] fails to set forth sufficient facts to support its argument that it lacks a regular and established place of business in the District."
The court scheduled a "bellwether" trial on ten claims from three of defendant's patents due to the complexity of the case and the discrepancy in the parties' valuation of suit. "More than a dozen patents are asserted in this highly complex, highly contentious litigation. . . . [Defendant] contends that it is entitled to approximately $10 billion in reasonable royalties, while [plaintiff] counters that (assuming it is found to infringe valid patents, which it denies) it is liable only for around $10 million, a disparity of about 1000 times. . . . A three-patent liability and damages trial will have the virtue of giving the parties a near-term opportunity to obtain certainty -- in this Court, and then on appeal -- as to the value of a substantial subset of their disputes. . . . Whether this case will ever be amenable to settlement is an open question, but the Court believes that obtaining clarity on the value of one-third (even a non-representative one-third, if that is what it is) of the case is at least as likely to promote settlement as would an advisory damages verdict on the entirety of the case."
Following the Supreme Court decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017), the court granted defendants' motions to transfer for improper venue and rejected plaintiffs' arguments that defendants waived their defense. "Federal Circuit precedent clearly foreclosed the venue defense. It would be inequitable to expect Movants to have objected to venue, especially where the Supreme Court had already denied certiorari on the exact question in [VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990)] itself. . . . Both reconsideration of certiorari and reconsideration of merits rulings are, strictly speaking, possibilities, so arguments directed to those results are, strictly speaking, available. But in fairness, neither possibility is great enough upon which to base a finding of waiver where circuit precedent forecloses an argument, particularly in cases such as this one where the relevant circuit is the only one with jurisdiction over the issue, such that even the possibility of a future circuit split does not exist."

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