Source: http://docketreport.blogspot.com/2015/12/
Timestamp: 2019-04-23 03:56:08+00:00

Document:
Following summary judgment of invalidity, the court granted defendant's motion for attorney fees under 35 U.S.C. § 285 because plaintiff's litigation tactics weighed in favor of a fee award. "[Plaintiff] has never provided an explanation of its failure to allege infringement of the additional [seven] products prior to the last minute before the close of fact discovery. . . . Although [plaintiff] did serve its amended contentions just before the close of fact discovery, its assertion that the amendments were made 'as soon as reasonably possible based on the information available' does not hold up under scrutiny. . . . [Plaintiff's] amended contentions were principally 'based on publicly available information.' Additionally, five months was more than a reasonable time to amend the contentions to include information [plaintiff] itself characterized as the 'limited documentation produced to date.' The circumstances strongly support the inference that [plaintiff's] assertion of infringement by seven additional vehicles two hours before the close of fact discovery was illegitimately motivated."
The court denied defendant's motion for attorney fees under 35 U.S.C. § 285 after plaintiff dismissed its action following reexamination and rejected defendant's argument that sanctions were needed to deter plaintiff as a bad faith actor. "[Defendant] asserts that [plaintiff] is a repeat bad-faith actor, pointing to sanctions against [plaintiff] in unrelated cases. . . . It would be one thing if [plaintiff] were bringing multiple frivolous actions based on the patent at issue in this case. But instead, [defendant] attempts to aggregate any litigation misconduct [plaintiff] has ever engaged in, in cases of widely varying subject matter, in an effort to have this particular case declared exceptional. This Court refuses to go down that road. Nothing that [plaintiff] did in those other cases occurred before this Court and this Court has no intention of spending countless hours reviewing and critiquing sanction orders issued by other courts."
The special master recommended reducing the amount of attorneys' fees defendant requested under 35 U.S.C § 285, but rejected plaintiff's argument that a $6.8 million fee request was inherently unreasonable. "[T]he AIPLA Survey lists the average cost of a patent defense may run as high as $5,500,000.00 to $6,000,000.00 for a claim which might result in damages in excess of $25,000,000.00. In determining the amount involved, [plaintiff] self-servingly attempted to value the case somewhere between $1,000,000.00 and $10,000,000.00. However . . . [plaintiff] demanded a settlement 2 months before trial of $18,300,000.00 upfront and $25,000,000.00 per drug candidate approved for market. . . . [Defendant] was justified in thinking it was facing an exposure in excess of $25,000,000.00 and therefore the AIPLA survey supports a finding the request for counsel fees was not obviously excessive."
The court granted plaintiff's motion for summary judgment that its remote access communication portal patent was not invalid for lack of patentable subject matter and found that the claims were not directed toward an abstract idea. "[Defendant] . . . argues that the invention could be, and was, performed by humans when telephone operators connected one caller to a second caller at the first caller’s request. . . . [Defendant's] analogy breaks down when claim 24 is considered as a whole, as [Alice Corp. Pty. Ltd., v. CLS Bank Int’l., 134 S. Ct. 2347 (2014)] requires. . . . [T]he purpose of claim 24 . . . in creating the private communication channel for remote access is not simply to allow people to talk with each other, but to allow direct access of data on the personal computer from the remote computer. A telephone operator cannot and does not provide the caller with direct access to data on the callee’s desk. [Defendant] oversimplifies the subject matter of the [patent] and claim 24 in an attempt to characterize the invention as an abstract idea. . . . Rather, claim 24 describes a 'particular approach' to solving problems with prior art remote access patents that could only exist in a post-Internet world, utilizing a 'location facility' that creates the private communication portal between the personal and remote computers in a specific way, even if the IP address of the personal computer is dynamic and not publicly addressable, to achieve the solution taught by the [patent-in-suit]."
Following a jury verdict of $30 million the court denied plaintiff's motion for an ongoing royalty and accounting. "[T]he jury instructions were clear in providing [plaintiff] with complete relief from infringement. . . . The jury was instructed that, '[T]he damages you award must be adequate to compensate [plaintiff] for the infringement. . . . Your damages award, if you reach this issue, should put [plaintiff] in approximately the same financial position that it would have been in had the infringement not occurred.' In addition, question 2 on the verdict form indicated that the jury would be awarding damages in the amount of a reasonable royalty. The Court finds that an accounting and ongoing royalties would be inappropriate because the $30 million jury verdict represents the jury’s award of a reasonable royalty to compensate [plaintiff] for [defendant's] past, present, and ongoing infringement."
The court granted defendants' motion for attorney fees under 35 U.S.C. § 285 after the court found that plaintiff's information storage patent was invalid for lack of patentable subject matter because plaintiff's litigation position was unreasonable. "The Court notes that the [patent-in-suit] is demonstrably weak on its face, despite the initial presumptions created when this patent was issued by the PTO. . . . The [patent] claims were clearly directed toward unpatentable subject matter, and no reasonable litigant could have reasonably expected success on the merits when defending against the numerous § 101 motions filed in this case. . . . However, rather than acknowledging the inherent weaknesses of the [patent], [plaintiff] proffered completely untenable arguments to the Court throughout the § 101 briefing process and at the . . . hearing. . . . This causes the Court to question whether [plaintiff] engaged in a reasonable and thorough pre-suit investigation regarding the § 101 standard and relevant authority before filing a significant number of lawsuits. In these particular and focused circumstances, the Court identifies a clear need to advance considerations of deterrence. Accordingly, [plaintiff's] unreasonable § 101 positions support an 'exceptional' case finding."
The magistrate judge recommended granting plaintiff's motion for an adverse jury instruction on damages because of defendant's discovery failures. "It took a motion to compel, a motion for contempt, a motion for sanctions, and three orders from this Court to dislodge from [defendant] the entirety of its information responsive to [plaintiff's requests]. . . . Additionally, the record shows that [defendant] engaged in tactics designed to delay its production, such as waiting weeks after the Court’s deadline for producing responsive information to ask for a change to the protective order. . . . [T]he fact that [defendant] eventually complied with this Court’s orders does not preclude the imposition of sanctions. In sum, for the reasons stated here and on the record, the Court finds that an instruction is warranted, albeit a less punitive instruction of the type that permits the jury to presume that the belatedly-produced evidence was helpful to [plaintiff] and harmful to [defendant]."
The court denied defendants' motion to modify the court's claim construction in light of the PTAB’s claim construction during inter partes review because issue preclusion did not apply. "In its response [to defendant's petition for inter partes review], [plaintiff] stated that it disagreed with [defendant's] construction of [a claim term], but did not propose any construction of its own. [Plaintiff] then argued that under [defendant's] construction, the patented claims were not anticipated. The PTAB agreed with [plaintiff] and denied the Petition. . . . The defendants argue that because the PTAB relied on a different claim construction than the court, collateral estoppel should apply. The PTAB's choice not to institute an IPR is not the type of adjudication that leads to issue preclusion. In declining to institute the IPR, the PTAB did not reach a final decision on the construction of [the term]. Without analysis, the PTAB adopted [defendant's] construction 'for purposes of this decision.'. . . Contrary to the defendants' assertions, the patentee is not 'trying to have its cake and eat too.' The court is not bound by a preliminary claim construction used by the PTAB for the limited purpose of denying an IPR request."
The court reduced the lead defendant's requested attorney fees under 35 U.S.C. § 285 by 20% for billing overlap. "I know cases like this spawn big teams at big firms, and both partners and associates end up reviewing everything and commenting on everything, while multiple paralegals perform administrative tasks. I do not suggest that this is unreasonable - everyone on the team needs to familiarize himself or herself with developments, and I recognize that many different people end up making meaningful contributions to the finished product. But some duplication of work is inevitable, and when awarding sanctions, a court should make some effort to minimize the effects of that duplication, especially within a single firm. . . . I will apply a 20% discount (over and above the 12% already worked into the bill sent to the client) to the billable hours fees requested by [defendant]. That effectively takes one-third off the full value of [the defense] attorneys' billable hours. This discount will allow not only some remedy for inevitable duplication of effort, but also some remedy for the fact that much of the factual work done is attributable, not only to the Rule 285 motion on which the parties prevailed, but also to the motions on which they did not prevail."
The court denied plaintiffs' motion to extend the stay of FDA approval after the court granted defendants' renewed motion to stay pending inter partes review. "Plaintiffs argue that if the Court grants Defendants’ request for a stay, the Court should order corresponding extension of the regulatory stay. There is no law that justifies this request. The only basis that courts have relied on to extend the regulatory stay is the violation of the statutory requirement of 21 U.S.C. § 355(j)(5)(B)(iii) that a party has failed to reasonably cooperate in expediting the litigation. There is no basis to make such a finding in this case. Therefore, the Court declines Plaintiffs’ invitation to extend or toll the regulatory law stay."
The court granted defendant's motion to transfer venue from the Eastern District of Texas to the Northern District of California even though judicial economy weighed against transfer. "Given that this Court is the only court with substantive experience with some of the patents-in-suit, and currently has twenty-six pending cases involving all four asserted patents, and six cases involving two asserted patents — all assigned to the same judge — there were at least some apparent judicial economy benefits at the time of the filing that favor this action remaining in this District. . . . In this situation, where [defendant] has made a strong showing in favor of transfer on factors such as the location of sources of proof and the convenience of witnesses, the benefits of judicial economy do not outweigh [defendant's] showing that the Northern District of California is clearly more convenient. Simply put, where [defendant] has shown the Northern District of California is a clearly more convenient forum, the considerations of judicial economy involving this Court’s prior experience with an overlapping patent do not override that showing to warrant a denial of transfer."
The Commission affirmed the ALJ's final initial determination that no violation of section 337 occurred with respect to complainant's vehicle accessory patents and rejected respondent's argument that the claims were directed to unpatentable subject matter because they were directed to a human organism. "[Respondent] contends that [certain claims of a patent-in-suit] claim[s] 'a viewer' and [complainant's] expert . . . testified the claimed viewer is a person; therefore, under the America Invents Act ("AIA") § 33(a) . . . [the claims] are invalid. . . . The Commission finds that a person is not a limitation of the claims, and therefore the claims are not invalid on this basis. The specification discloses 'a substantially opaque black-out frit to mask the presence of such members when viewed from outside the vehicle through the front windshield.' The use of the word 'when' illustrates that the patent does not require a person to actually be looking through the windshield from outside the automobile."
The court granted plaintiff's motion in limine to exclude the testimony of defendant's damages expert to the extent the expert relied on a hypothetical negotiation that included entities other than the plaintiff and defendant. "[The expert's] opinions are thoroughly laced with legal commentary and that his opinions about what constitutes a reasonable royalty are based on a hypothetical negotiation that includes an entity other than the plaintiff and the defendant as a party to the negotiation. . . . [H]is opinion on the topic of a reasonable royalty is largely predicated on the financial status and interest of that third-party entity, and . . . the controlling law is predicated on a hypothetical negotiation between the plaintiff and the defendant. . . . [Defendant's expert] is precluded from testifying on legal matters and from rendering opinions about a reasonable royalty that are based on a hypothetical negotiation that is not structured as involving only the plaintiff and defendant or that relies on the financial data or status of a third-party to the hypothetical negotiation."
The court partially denied defendant's motion for summary judgment that issue preclusion barred plaintiff's claims of infringement for its arterial thermometer patents after another court found certain claims invalid for lack of patentable subject matter and rejected defendant's argument that an invalidation of certain claims invalidates an entire patent. "[Defendant] makes a sweeping argument that the [other court's] decision invalidates all of the claims of the [patents-in-suit]. In pushing this argument, [defendant] relies on the rule regulating patent prosecution that permits a patent application to claim only one 'independent and distinct' invention. . . . [Plaintiff] counters, and this court agrees, that [defendant's] argument amounts to an impermissible bypass of the required claim-by-claim analysis. [Defendant] cites no authority for the proposition that rules of prosecution have any effect on a judicial determination of validity."
The court granted in part defendant's motion for expert witness fees as sanctions under the court's inherent power because of plaintiff's reprehensible conduct. "The conduct was more reprehensible than the typical frivolous claim asserted to extract a cost of litigation settlement. . . . Instead of inventing something novel deserving of patent protection, [plaintiff] applied for a patent on its competitor's product with the intention of suing for infringement. . . . Selective information was provided to an expert in order to obtain a misleading declaration used to convince the examiner. Examples provided in the patent claimed experiments that were never conducted. . . . From beginning to end, this was a pernicious scheme to use the patent system and the judicial process for an improper purpose. It was not the first time [plaintiff] had employed such a scheme. This misconduct merits recovery of expert witness fees and expenses, at least for. . . a testifying expert, in the amount of $173,193.19. I decline to award fees for [an expert], who did not testify but was retained as a rebuttal expert on damages."
The court granted plaintiff's motion for monetary sanctions, reduced the number of depositions available to defendants, and indicated it would close defendants' discovery for any further abuses. "Notwithstanding the amount of discovery that defendant did provide after [the court's prior order compelling discovery], among other failures, defendant failed to disclose requested material information about product redesign and pre-redesign products. Defendant also failed to provide requested material information over which it appears to have had joint control, but that at the least was easily accessible to it on request from [a third party], notwithstanding the court's order to defendant to use all of its leverage to obtain this information and defendant's confirmation that it would do so. As a result, it is ordered that defendant's number of non-30(b)(6) depositions is reduced from 10 to 9, and defendant shall pay plaintiff's reasonable costs in taking defendant's 30(b)(6) deposition and plaintiff's costs in making the instant motion. . . . It is further ordered that if the court [finds] that defendant has failed in a material way to meet its discovery obligations after [this order] then the court will close defendant's discovery in this case."
The court entered a judgment of default against defendant for discovery abuses and spoliation of evidence. "Defendant has so damaged the integrity of the discovery process, as well as the litigation process itself, that a case dispositive motion is appropriate. . . . Defendant demonstrated a complete inability to comply with virtually any deadline in this case, whether the deadline was set by agreement of the parties or the Court. Defendant significantly delayed responding to discovery, meeting and conferring over discovery disputes, and supplementing discovery. Further, when Defendant actually responded to discovery, such responses were routinely, significantly, and unrelentingly, deficient. . . . Defendant also committed spoliation of evidence by admittedly destroying products which infringed the Patent, doing so after Defendant knew of the existence of this lawsuit. . . . Such behavior makes it so there is no assurance that this matter can proceed to trial on the true facts. . . . Due to the fact that full, fair, and adequate discovery could not be obtained by Plaintiff, preventing any ability to determine damages with any precision, Plaintiff is entitled to an award of its reasonable attorney’s fees and costs under the relevant statutes."
The magistrate judge recommended denying without prejudice defendants' motion to dismiss the asserted claims of plaintiff’s data compression patents because claim construction had not occurred and defendant failed to establish that the claims were directed toward an abstract idea. "Defendants urge the Court to read the patents as to conclude that the data to be compressed is so simple that it can be performed mentally or with pencil and paper and that the output described within the patents requires no 'particular tangible form.'. . . The parties’ disagreements revolving around these claim terms indicate that claim construction is necessary. It would be improper for the Court to accept Defendants’ interpretation of the claim terms without determining how a person of ordinary skill in the art would do so. Further, an assessment of the claims at issue — by a careful reading of the claims themselves — does not clearly reveal that the patents are abstract, that they have 'no particular concrete or tangible form,' which further prevents the Court from summarily finding the claims to be abstract prior to claim construction."
The court granted defendant's motion for summary judgment that plaintiff's search refinement patent was invalid for lack of patentable subject matter and rejected plaintiff's argument that its patent was valid because a nearly identical continuation patent had just been issued by the PTO. "[Plaintiff] argues the post-Alice issuance of a continuation patent similar to the [patent-in-suit] confirms the validity of the asserted claims of the [patent]. . . . [Plaintiff] notes a Corrected Notice of Allowance issued for the [continuation] patent . . . after the Supreme Court’s decision in Alice, purportedly adding further confirmation that the Patent Office believes these claims qualify for patent protection. . . . Although [plaintiff] states it provided the Patent Office with [defendant's] prior art, invalidity contentions, and expert report during the prosecution of the [continuation] patent, it does not aver [defendant] had raised its Section 101 contentions during that time period. It appears it had not. Also the fact that a Corrected Notice of Allowance issued post-Alice does not persuade the court of [plaintiff's] position on this issue. Were that fact determinative, [plaintiff's] position appears to be that any patent issued post-Alice would be inoculated from invalidity under Section 101. That is not the case."
The court sustained plaintiffs' objections to the magistrate judge's order denying their motion to compel defendant to produce discovery on foreign sales. "[Defendant] asserts that recent Federal Circuit jurisprudence [principally Power Integrations, Inc. v. Fairchild Semiconductor Intern., Inc., 711 F.3d 1348, 1372 (Fed. Cir. 2013)], read in the context of a revitalized presumption against the extraterritorial application of U.S. patent law, precludes discovery concerning foreign sales of an allegedly infringing product. . . . None of [defendant's] cited authorities demonstrates that discovery of foreign sales information – which is relevant to [plaintiffs'] claim for damages for allegedly infringing activities in the United States since it has, at a minimum, implications for the valuation of the invention – is precluded by the presumption against extraterritoriality. Even if [plaintiffs] were only entitled to a 'reasonable royalty for the use made of the invention by the infringer,' the profits that [defendant] allegedly obtained from the sales to foreign customers would be relevant to the determination of a reasonable royalty."

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