Source: http://docketreport.blogspot.com/2010/03/
Timestamp: 2019-04-23 04:04:13+00:00

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The court granted plaintiff's motion for summary judgment of invalidity as to defendants' patent claims relating to human breast cancer susceptibility genes, BRCA1 and BRCA2. "[T]he issue presented in the present motions with respect to the composition claims is whether or not the claims directed to isolated DNA containing naturally-occurring sequences fall within the products of nature exception to §101. . . . [T]he clear line of Supreme Court precedent and accompanying lower court authorities . . . establishes that purification of a product of nature, without more, cannot transform it into patentable subject matter. Rather, the purified product must possess 'markedly different characteristics' in order to satisfy the requirements of §101. . . . While the absence of proteins and other nucleotide sequences is currently required for DNA to be useful for the cited purpose, the purification of native DNA does not alter its essential characteristic -- its nucleotide sequence -- that is defined by nature and central to its biological function within the cells and its utility as a research tool in the lab."
The court granted defendants' motion to dismiss plaintiff's infringement claims for failure to state a claim with leave to amend. "[Plaintiff's] allegation of direct infringement does not adhere to Form 18 [of the federal Rules of Civil Procedure] in that it does not identify any accused products, services, or methods or other infringing acts for the patent-in-suit. As to its indirect infringement claims, [plaintiff] also does not identify any accused products or services, nor does [plaintiff] expressly identify a direct infringer. Form 18 does not address indirect infringement claims, and courts are split on whether a direct infringer must be at least generically identified. . . . Taken as whole [plaintiff's] complaint does not state a claim for relief that is plausible on its face. The complaint simply fails to inform Defendants as to what they must defend. While Form 18 does not set a high bar for what must be alleged, [plaintiff] has not met that bar. The Court has high expectations of a plaintiff’s preparedness before it brings suit."
Will The Federal Circuit’s Decision in Pequignot v. Solo Cup Co. Impact The Number of New False Marking Cases?
The court denies a motion to dismiss in Pequignot v. Solo Cup Co., 540 F. Supp. 2d 649 (E.D. Va. 2008), concluding that marking with expired patent numbers may constitute false marking and the use of permissive language (“may be covered”) in the marking does not create a safe harbor.
The Federal Circuit issues an opinion in Forest Group Inc. v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 2009), holding that the $500 penalty for falsely marking a product under 35 U.S.C. § 292 applies to each article so marked.
As shown in the chart below, the twenty months following the Solo Cup decision saw a modest increase in the number of false marking cases. Yet even though Solo Cup opened the door for expired patent cases, it prompted only 13 new filings of that type. In fact, during that same period of time, false marking cases based on allegations that the marked product did not fall within the scope of the patent (“patent scope cases”) outnumbered expired patent cases 19 to 13.
All of that changed after the Forest Group decision. In the 3 months following that decision, over 100 new expired patent cases were filed. That represents an increase from approximately one new expired patent case per month to more than 30 per month. And expired patent cases now outnumber patent scope cases nearly 5 to 1.
In our prior post on this topic, we observed: “Should the Federal Circuit adopt this position [that establishing intent to deceive is difficult in expired patent cases], more than two-thirds of the pending false marking cases would be affected.” That is undoubtedly true. But this new data suggests, perhaps, that the affect may not be as significant as we once imagined. If the driving force behind the recent surge in new false marking cases is damages, creating an additional hurdle on liability may do little to dissuade qui tam plaintiffs.
Defendants' motion to limit the number of claims was granted in part and plaintiff was ordered to reduce its claims from 183 to 50 despite plaintiff's argument that claim construction had not yet occurred. In addition, plaintiff's motion to reduce the number of asserted prior art references was granted in part and defendants were ordered to reduce the number of asserted prior art references from 166 to 40.
The court granted plaintiff's motion to amend its infringement contentions despite defendant's argument that "the information providing the basis for the amendment was publicly available. . . . This case is similar to [American Video Graphics, L.P. v. Elec. Arts, Inc., 359 F. Supp. 2d 558 (E.D. Tex. 2005)] insofar as both of these software cases involve alleged-infringing products that require analysis of highly technical information that is not necessarily apparent in the products’ final manifestation. While the final manifestation of [defendant's] products and some of the technical information underlying them may have been publicly available . . . this does not mean [plaintiff] could have meaningfully utilized that information in making its preliminary infringement contentions."
Court's Prior Experience With Patents and Technology "Weigh Heavily Against Transfer"
Defendants' motion to transfer was denied. "This Court previously adjudicated a lawsuit involving the same patents with the same plaintiff. In that prior case, this Court construed twenty-five patent terms. Defendants argue that reexamination proceedings might result in different constructions for those. . . . Claim construction requires a court to develop an in-depth understanding of the patented technology, which reexamination does not change. This Court has already performed much of the heavy lifting involved in claim construction and the interests of justice weigh heavily against transfer."
Defendants' motion to transfer was denied. "The Court is intimately familiar with the asserted patent and the related technology. The Court has previously reviewed related technology tutorials, held a Markman hearing, and issued an extensive claim construction opinion construing several claim terms. . . . Thus, the interest of judicial economy weighs heavily against transferring this case."
Colorquick, LLC v. Vistaprint Ltd. et al., 6-09-cv-00323 (TXED March 23, 2010, Memorandum Opinion & Order) (Love, M.J.).
Defendants' motion to strike the report of plaintiff's inequitable conduct expert was granted to the extent the report addressed "the duty of candor and good faith to the USPTO." "Defendants argue this testimony should not be admitted because [the expert] 'made his own materiality determinations' even though he is not qualified as a person of ordinary skill in the art. . . . [A]t trial, even if [the expert] stated he based his opinions upon the opinions of Dr. Smith (who is one skilled in this art), [the expert's] extensive testimony regarding the prior art and materiality would necessarily require some level of expertise of one skilled in the art. By admitting the testimony of [the expert] on these issues, this Court could run afoul of the Federal Circuit’s mandate in [Sundance, Inc. v. Demonte Fabricating Ltd., 550 F.3d 1356, 1363 (Fed. Cir. 2008)] that 'where an issue calls for consideration of evidence from the perspective of one of ordinary skill in the art, it is contradictory to Rule 702 to allow a witness to testify on the issue who is not qualified as a technical expert in that art.'"
In the months following the Federal Circuit's decision in Forest Group, Inc. v. Bon Tool Co., Docket Navigator has collected a comprehensive group of over 150 patent cases alleging False Marking . Of these known cases, 114 allege that the patents in suit are expired, 43 allege that the accused products are not within the scope of the marked patent, 5 allege that the products erroneously claim to be either patent “protected” or “pending”, 2 allege that the marked patent has been found invalid in a civil proceeding, and 1 alleges that the marked patent has been found unenforceable in a civil proceeding.
"When a product is marked with an expired patent number, any person with basic knowledge of the patent system can look up the patent and determine its expiration date, reducing the potential for being deceived."
Should the Federal Circuit adopt this position, more than two-thirds of the pending false marking cases would be affected.
The chart below provides a visual of these statistics as of this writing. The complete listing of cases can be found at the Gray On Claims blog here. Additionally, a downloadable pdf complete with accused products and patents can be found here.
Defendant's emergency motion to disqualify plaintiff's counsel was denied despite plaintiff's counsel's work on defendant's IPO. "The [defendant's] IPO matter involved due diligence tasks necessary to ensure proper disclosure to the [SEC] and the public, while this litigation involves the alleged infringement of the patents-in-suit. The matters are factually and legally different. This is further supported by the fact that [plaintiff's counsel] has not reviewed the patents-in-suit, pleadings, or any litigation related material, nor was he required to do so in order to perform his due diligence duties in the [defendant's] IPO matter."
Google AdWords Do Not Infringe Patent Requiring "Price-Determining Activity"
Defendants Google Inc. and AOL LLC were entitled to summary judgment of noninfringement as to the asserted patent claiming "methods of doing business over the Internet 'wherein various forms of competition and/or entertainment are used to determine transaction prices between buyers and sellers'" because the accused services (Google's AdWords and the AOL Search Marketplace) "do not have a 'price-determining activity' as that term is used in the [patent-in-suit]." "AdWords is not at all akin to a buyer correctly answering baseball trivia in order to obtain a lower price on a separate pre-existing baseball card. Instead, the submission in this case actually becomes a part of the product by taking its place in the ad space. . . . In other words, the buyer’s performance in AdWords not only affects the price, it affects, and in a sense actually becomes part of, the product."
The court granted defendant's motion to dismiss plaintiff's false marking claim based on defendant's incorrect statement that patented software was "functioning" on a website. "Though [plaintiff] does not allege that [defendant] marked the Website itself as being patented, it nonetheless asserts that [defendant] indirectly marked the site by claiming that Dynamic Firewall was patented. [Plaintiff] avers that the marking of Dynamic Firewall can be imputed to the Website generally on the ground that [defendant] represented that Dynamic Firewall was 'functioning' on the site when it could not have been. . . because [defendant] had lost the only embodiment of Dynamic Firewall as a result of a hard drive crash which occurred in 1999. . . . The false marking statute is intended to protect the public from being misled into believing that an article is patented when, in fact, it is not. That is not what is alleged here. Rather . . . the alleged deceit is that [defendant] wrongly implied that Dynamic Firewall was a functioning component of his Website when that could not have been the case. . . ."
Defendant's motion to transfer venue was denied even though all but one factor favored transfer or was neutral. "While this case has not progressed as [far as] claim construction, the parties and the Court have expended substantial resources and the Court has become familiar with the issues in the case. Transferring this case now would impose upon [plaintiff] the burden of hiring new counsel in California who would then duplicate previously expended efforts developing an intimate familiarity with the facts and issues of the case. Moreover, the already-burdened judicial system will have wasted time developing familiarity with the case. Furthermore, [plaintiff] argues that it would lose the currently-set Markman and trial dates, delaying them for at least a year or more."
Defendants' renewed motion for summary judgment regarding joint and several liability was denied despite the two defendants' claims that they were "servants" and could not be found liable under "respondeat inferior." "Plaintiff responds that 'one unique and compelling aspect of this litigation which sets it apart from all other precedent discussing joint infringement . . . is that the Defendants at bar are companies that were created by banks for the specific and exclusive purpose of carrying out the elements of infringement alleged by [Plaintiff]' . . . Plaintiff’s theories of liability include facts that may set this case apart from [BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007) and [Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008)] and justify a finding of joint and several liability, as apparently contemplated in On Demand Machine Corp. v. Ingram Indus., Inc., 442 F.3d 1331, 1344-45 (Fed. Cir. 2006). . . . Plaintiff contends that [the two defendants] are not innocent servants and are entangled with [the alleged mastermind defendant] to a degree far exceeding mere direction and control."
Datatreasury Corporation v. Wells Fargo & Company et al., 2-06-cv-00072 (TXED March 12, 2010, Order) (Folsom, J.).
Defendants were entitled to summary judgment of noninfringement with respect to the asserted method claim because their accused search engines did not perform the step of "providing, by the user to the local computer system, search request data representative of the users expressed desire to locate data substantially pertaining to said search request data" "In an attempt to avoid the general rule of divided infringement, [plaintiff] contends that [defendants] . . . (1) provide the HTML code that allows users to input their search queries; (2) receive and process the search query submitted by the user; and (3) offer search suggestions and spelling corrections after a user has entered information. This court rejects each of these rationales. As to the first two, [Defendants'] method of providing access to user search queries is irrelevant to infringement because claim 1 requires the user to provide to the system query data. The system’s actions are meaningless with respect to that limitation. As to the third point, while it is true that searches initiated by [defendants] could be relevant to infringement, neither accused system 'initiates' any search. Notably, [defendants] only offer suggestions and spelling changes after the user has begun a search query. . . . Moreover, the user continues to choose the course of the search without the 'control or direction' of the accused search engines."
In denying defendant's motion to transfer venue, the court rejected defendant's argument that In re TS Tech USA Corp., 551 F.3d 1315 (Fed. Cir. 2008) and In re Genentech, 566 F.3d 1338 (Fed. Cir. 2009) applied to this case. "[T]hese are remarkable cases, for two reasons. First, they were initially filed in the Eastern District of Texas, a venue notorious for the opportunistic filing of patent infringement lawsuits. Second, the alternative venues in these cases . . . were sufficiently distant from the Eastern District . . . to offer substantial convenience gains. These cases certainly don’t stand for the rule that the Court must transfer a patent infringement case whose only connection to the venue in which it was filed is that the allegedly infringing goods are sold in that venue."
Plaintiff's post-trial motion for a permanent injunction was granted. "[The parties] are direct market competitors in a two-supplier market, contending for the business of 5,000 nationwide distributors. . . . In light of these market dynamics, the court concludes that [defendant's] infringement has seriously affected [plaintiff's] market position. . . . "Furthermore, [plaintiff] strategically declines to license the patent on its [product] and, instead, exploits its monopoly to exclude potential rivals. [Plaintiff's] licensing behavior illustrates the insufficiency of money damages for future infringement, for financial remuneration alone will not restore [plaintiff's] position as the exclusive non-infringing supplier of [these] products."
Defendants' motion to transfer venue was denied. "[Defendant] argues that [plaintiff] moved its location from Ann Arbor to Longview as a sham concocted simply in anticipation of this litigation. . . . [A] business opens its doors in a particular location for a number of considerations, including the cost of rent, market profitability, cost of doing business, and tax benefits. The Court declines to scrutinize litigants’ business decisions in order to determine whether opening an office in a particular location has a legitimate business purpose or is merely a 'tactic . . . to manipulate venue.' Moving a business to a particular location is not the type of activity that, on its face, serves no purpose but to manipulate venue."
In denying defendant's motion to preclude the expert testimony of plaintiff's lost profits damages expert, Brian Napper, the court rejected defendant's argument that "the premium ball market (more than $30 per dozen) used by Mr. Napper for his lost profits analysis does not account for what 'all Pro VI users [would] play in the absence of that ball.'" "[A]ccording to [defendant], Mr. Napper does not assess what [defendant] would have offered in 2001 if the Pro VI were not available, how the market would have responded to these offerings, or what the market might have looked like in 2003 had [defendant] withdrawn the Pro VI from the market. . . . To credibly demonstrate that [defendant] would have had viable, non-infringing alternatives to offer in 2001 - as well as to predict how the market would have responded to these alternatives by 2003 - is an exercise that may be appropriate, but certainly is not one that is mandatory in light of its speculative nature."
Callaway Golf Company v. Acushnet Company, 1-06-cv-00091 (DED March 3, 2010, Memorandum Opinion) (Robinson, J.).
The court denied defendants' motion in limine to "preclude Plaintiff from offering evidence of litigation-induced licensing agreements, including any related consent decrees and judgments as well as communications related thereto, as evidence of the value of the patents-in-suit, whether pertaining to a ‘reasonable royalty’ analysis or as alleged ‘secondary considerations’ of nonobviousness and/or commercial success." "In light of [ResQNet.com, Inc. v. Lansa, Inc., --- F.3d ----, 2010 WL 396157 (Fed. Cir. 2010)], litigation-related licenses should not be excluded from the . . . trial in the above-captioned case. Although ResQNet involved a bench trial, the licenses at issue were considered by that trial court sitting as trier of fact, just as the jury will sit in the above-captioned case. Defendants’ concerns about the reliability of litigation-related licenses are better directed to weight, not admissibility. . . . Defendants (as well as Plaintiff) may nonetheless propose a final jury instruction that gives the jury guidance on applying litigation-related licenses."
The court granted defendant's renewed motion for judgment as a matter of law of no willful infringement where a court in a related case issued a claim construction favoring defendant. "In spite of the jury’s verdict, the court cannot ignore the contrary claim construction issued by [a judge in a related case]. . . . Although the undersigned disagrees with the claim construction provided by [the other court], I cannot characterize his conclusions as unreasonable. Consequently, the court finds that [defendant] maintained a reasonable non-infringement defense, one that entitles it to a finding of non-willfulness. Indeed, it would be difficult to conjure up a defense which would be more 'reasonable' than one expressly adopted by a federal judge, albeit in conflict with a second federal judge."
The court granted defendants' motion to preclude testimony by plaintiff's damages expert to the extent such testimony was based on the entire market value rule. "[Plaintiff] alleges that the operating systems’ multiple virtual workspaces and workspace switching features infringe the patents-in-suit. In invoking the 'entire market value rule,' [the expert] included 100% of [defendants'] total revenues from sales of subscriptions to the accused operating systems in his proposed royalty base. [The expert's] methodology however does not show a sound economic connection between the claimed invention and this broad proffered royalty base. The claimed invention is but one relatively small component of the accused operating systems. The evidence shows that the workspace switching feature represents only one of over a thousand components included in the accused products. . . . Most of [defendants'] accused sales come from their Server products, the majority of which are not connected to a display and thus do not take advantage of the workspace switching feature. [The expert] made no effort to factor out of his proffered royalty base these products which do not even feature the claimed invention. Once again, this blatant oversight shows that [the expert] did not use the type of reliable economic principles and methods required by Rule 702 for an economic damages expert."
Plaintiff's motion in limine concerning the change in the obviousness standard since its patents were issued was granted. "Defendants argue that [KSR Int’l Co. v. Teleflex Inc.] changed obviousness and that '[i]t will be especially unfair when the Court reads the jury instructions on obviousness if the jury thinks the PTO applied the same standard when examining the patents' . . . Defendants’ proposed arguments to the jury about the state of patent law would likely cause jury confusion and would risk invading the Court’s province of instructing the jury on the law."
Defendant's motion to dismiss plaintiff's claim of direct infringement for failure to state a claim was granted. "Nowhere in the Amended Complaint does Plaintiff identify, with the requisite level of factual detail, the particular product or line of products, that allegedly infringe the [patent-in-suit]. Instead, Plaintiff merely claims that the infringing 'products include, without limitation, cell phones, computers, [etc.], and other products where high performance, high speed analog circuits are used, and/or components thereof.' Plaintiff has done nothing more than recite a laundry list of electronic devices. These cursory allegations are insufficient to give the Defendant fair notice of the claims being alleged against it."
The court denied plaintiff's motion to strike defendant's inequitable conduct defense based on the alleged failure to disclose an IEEE article comparing plaintiff's product to a preexisting product embodying the patented invention. The court rejected plaintiff's argument that defendant's counterclaim "failed to identify which claims are disclosed in the Article, where the relevant information is found in the Article, why the Article is not cumulative, or how the examiner would have applied the Article to the claims of the [patent-in-suit]" and agreed with defendant's argument that "[plaintiff] does not need [defendant], for purposes of notice pleading, to explain why a three page article comparing [plaintiff's] product to a pre-existing product that embodies the invention claimed in the [patent-in-suit] is not cumulative or how the examiner would have applied it."

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