Northwest Patent Litigation Blog

Attorney Argument “No Substitute for Evidence” of Indefiniteness

By Dana Herberholz on Posted in Claim Construction, Evidence, Northwest Companies

Tessenderlo Kerley, Inc. v. D&M Chem, Inc., CV-11-3112-LRS, Slip Op. (E.D. Wa. Mar. 25, 2013) (Suko, J.) 

Tessenderlo Kerley, Inc. (“TKI”) and D&M Chem manufacture competing sun protectants for crops.  TKI makes and sells products under the brand names Surround® and Purshade®.  These products coat plant surfaces with a protective film that scatters light and dissipates heat, resulting in enhanced photosynthesis.   

D&M, of Moxee, Washington (population 3,308), distributes a crop protectant under the brand name Eclipse®.  According to TKI, D&M’s Eclipse® product, like Purshade®, is a calcium carbonate-based liquid used to control sunburn and minimize the effects of heat stress in plants.   

In August 2011, TKI sued D&M for patent infringement in the Northern District of California.  TKI claimed that D&M infringed U.S. Patent Nos. 6,110,867 (“Method for Providing Enhanced Photosynthesis”) and 6,464,995 (“Treated Horticultural Substrates”) by distributing the Eclipse® crop protectant. D&M successfully moved to transfer the case to the Eastern District of Washington.   

Following a Markman hearing in Yakima, Washington (home of the world-famous Sun Dome, pictured below), Judge Suko entered a 36-page order construing five claim terms, including the term “effective amount,” which appears in claim 1 of the ‘867 patent:   

Yakima SunDome (Wikimedia Commons, Cacophony)

     1. A method for enhancing photosynthesis of a horticultural crop by increasing carbon dioxide assimilation of said horticultural crop which comprises applying to the surface of said horticultural crop an effective amount of one or more highly reflective particulate materials, said particulate materials being finely divided, and wherein the particles as applied allow for the exchange of gases on the surface of said crop and the finely divided particulate materials have a median individual particle size below about 3 microns.

D&M argued that the claim 1 was invalid for indefiniteness under 35 U.S.C. § 112 ¶ 2 because one of ordinary skill in the art would not understand what amount of highly reflective particulate materials constitutes an “effective amount” for a given application.  Notably, D&M did not rely on expert testimony in support of its indefiniteness argument, and it represented that it intended to file a separate motion for summary judgment of indefiniteness.        

TKI argued that the term “effective amount” was not indefinite and was defined in the specification and prosecution history as “an amount that is sufficient to increase photosynthesis of horticultural crops by increasing carbon dioxide assimilation of said crops.”  During the Markman hearing, TKI’s counsel argued that a person of ordinary skill in the art would be able to determine the amount necessary to enhance photosynthesis by measuring “carbon dioxide uptake, stomatal conductance and the like” using available equipment.   

The Court held that D&M failed to meet its “heightened burden” of proving indefiniteness:  “D&M failed to offer sufficient evidence that a person of ordinary skill in the art could not discern what would be considered ‘effective amount’ for the given commercial purpose of improving photosynthesis as applied to horticultural crops.”  The Court was critical of D&M’s “unsupported assertion” in in its claim construction brief that “effective amount” was indefinite, noting that its argument “is no substitute for evidence to this effect.”   

Ultimately, the Court adopted TKI’s proposed construction of “effective amount,” and the parties filed a stipulation for dismissal four days after Judge Suko entered his claim construction order.   

The obvious takeaway here is that accused infringers arguing indefiniteness should consider supporting their arguments with extrinsic evidence, including expert testimony. As I have argued before, indefiniteness is an issue of claim construction and, as such, little (if any) extrinsic evidence should be required to determine whether a claim term is indefinite.  But who cares what I think?  The Federal Circuit has looked to extrinsic evidence in determining whether a claim term is indefinite; therefore, accused infringers should not overlook extrinsic evidence when asserting indefiniteness.  See, e.g., Datamize, LLC v. Plumtree Software, Inc., 417 F.3d 1342 (Fed. Cir. 2005). 

Attacking Counterclaims and Affirmative Defenses Using Rule 12

By Dana Herberholz on Posted in Complaint, Local Rules, Motions to Dismiss, Pleadings, Practice Tips

Fleming v. Escort, Inc., et al., 1:12-CV-066-BLW, Slip. Op. (D. Idaho March 6, 2013) (Winmill, C.J.)  

A motion to dismiss for failure to state a claim can be a powerful tool for an accused infringer.  Companies sued for patent infringement have used this tool with increasing frequency, particularly since 2009 when the Supreme Court affirmed and clarified the pleading standard of Rule 8 of the Federal Rules of Civil Procedure in Ashcroft v. Iqbal.      

While patent owners often find themselves defending motions to dismiss for failure to state a claim, Chief Judge Winmill’s recent order in Fleming v. Escort is a reminder that patent owners can also use Rule 12 as a sword to attack fact-barren counterclaims and affirmative defenses asserted by accused infringers.         

Background 

In 2009, Fleming sued Escort, Inc. and Beltronics USA, Inc. for infringing US Patent Nos. RE39,038 and RE40,653, which are directed to GPS-enabled radar detectors.  In July 2012, a jury found that Escort and Beltronics infringed claims of the ‘038 and ‘653 patents and awarded Fleming $750,000.   

Escort 9500ix Radar Detector

 

In February 2012—prior to the jury verdict, and in a separate case—Fleming sued Escort and several of its distributors for infringing the ‘038 and ‘653 patents and US Patent No. RE41,905 (also directed to GPS-enabled radar detectors).   

Escort answered and asserted counterclaims for noninfringement, invalidity, and unenforceability due to inequitable conduct.  Fleming responded by moving to dismiss Escort’s counterclaims pursuant to Rule 12(b)(6) and moving to strike Escort’s affirmative defenses under Rule 12(f).   

Escort’s Counterclaims 

Escort’s non-infringement and invalidity counterclaims provided, in relevant part: 

10.       Escort has not infringed, either directly, indirectly, contributorily, or by inducement, or in any other way, the ‘038 patent or the ‘653 patent or the ‘905 patent, either literally or under the doctrine of equivalents, willfully or otherwise.   

. . .

15.       The ‘038 patent and the ‘653 patent are invalid for failure to comply with the requirements of Title 35, United States Code, including but not limited to Sections 12-103, 112, and/or 251.   

Citing the Supreme Court’s opinions in Bell Atl. Corp. v. Twombly and Ashcroft v. Iqbal, Judge Winmill noted that Escort’s counterclaims must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face.   

Applying this standard, Judge Winmill held that Escort’s non-infringement counterclaim included no factual content and failed to state a viable claim.  Although he dismissed Escort’s non-infringement counterclaim, he provided Escort 21 days to amend its pleadings to include the detail required to satisfy the pleading requirements of Twombly and Iqbal.   

The Court also held that Escort failed to state a plausible counterclaim for invalidity; however, it declined to dismiss that counterclaim since “Escort will soon be compelled to provide a much more detailed explanation of that claim” in its invalidity contentions. 

Escort’s 18 pages of allegations in support of its unenforceability counterclaim were enough to convince Judge Winmill that Escort satisfied the requirements for pleading inequitable conduct, as outlined in Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312 (Fed. Cir. 2009).     

Escort’s Affirmative Defenses 

Escort’s answer included several affirmative defenses.  One such defense stated in its entirety, “intervening rights,” and another stated, “Fleming is not the owner of the ‘038 patent or the ‘653 patent or the ‘905 patent.”  Judge Winmill held that these affirmative defenses and others were inadequate under Ninth Circuit law because they contained “no detail” and failed to provide Fleming with “fair notice of the defense.”    

The Court declined to decide whether Twombly and Iqbal applied to Escort’s affirmative defenses because the defenses ”failed to satisfy even the lesser standard [fair notice] set prior to those two cases.”  Thus, there remains a split of authority as to whether Twombly and Iqbal apply to affirmative defenses, and the District Idaho has yet to take a position on the issue.   

After Escort agreed to withdraw some of its affirmative defenses, Judge Winmill dismissed Escort’s affirmative defenses of: (1) res judicata, collateral estoppel, and/or patent misuse; (2) invalidity; (3) equitable estoppel; (4) unclean hands and laches; (5) non-ownership; and (6) intervening rights.  Judge Winmill granted Escort leave to amend to replead these affirmative defenses within 21 days.  He declined to dismiss Escort’s affirmative defense of inequitable conduct for the reasons described above and declined to dismiss Escort’s affirmative defense of noninfringement because Escort would soon be required to serve invalidity contentions.         

Interesting Notes

Judge Winmill’s application of Twombly and Iqbal to a counterclaim for noninfringement raises some interesting issues.  Indeed, a patent owner is not required to satisfy the pleading standards of Twombly and Iqbal to state a claim for direct infringement.  In re Bill of Lading Transmission & Processing Sys., 681 F.3d 1323 (Fed. Cir. 2012).  It follows that an accused infringer should not be required to meet this standard when pleading the inverse counterclaim of no direct infringement.  Gaston Kroub does a nice job of addressing this “imbalance favoring patentees” in his summary of PageMelding, Inc. v. ESPN, Inc, 2012 WL 3877686 (N.D.Cal. Sept 6, 2012)–an opinion that Judge Winmill cited in his order.     

Also, Judge Winmill declined to dismiss Escort’s affirmative defense of noninfringement on the ground that Escort would soon be required to serve invalidity contentions.  Yet, the fact that Escort would soon serve invalidity contentions was not enough to save Escort’s affirmative defense of invalidity from dismissal. 

Federal Circuit Affirms in Part and Denies in Part Judge Lasnik’s Order Re: Equitable Estoppel

By Dana Herberholz on Posted in Claim Construction, Equitable Estoppel, Federal Circuit, Summary Judgment

Radio Systems Corp. v. Lalor (Fed. Cir. 2013)

Judge Moore

Last week, a Federal Circuit panel issued an opinion affirming in part and denying in part Judge Lasnik’s January 26, 2012 order granting summary judgment of noninfringement in Radio Systems Corp. v. Lalor.  The opinion, authored by Judge Moore and joined by Judge Reyna, is particularly interesting for its discussion on equitable estoppel.  Judge Newman authored an opinion concurring-in-part and dissenting-in part.

The takeaway:  If you’re going to serve a demand letter asserting patent infringement, it’s probably not a good idea to wait almost five years before asserting your infringement claim in court.

Factual Background

A summary of Judge Lasnik’s order that led to the appeal can be found in one of my earlier posts.  In short, Bumper Boy and Lalor (collectively “Bumper Boy”) sent a demand letter to Innotek in February 2005 claiming that Innotek’s UltraSmart electric dog collar infringed the ‘014 patent.  Innotek responded shortly after receiving the demand letter, claiming that the ‘014 patent was invalid for anticipation. 

Bumper Boy did not respond and was silent for more than four years.  In November 2009, Bumper Boy sent a demand letter to Radio Systems (who acquired Innotek in 2006), accusing Innotek’s UltraSmart collar (again) and a separate Radio Systems collar of infringing the ‘014 Patent.  The letter also accused the same collars of infringing the ‘082 patent, which issued in 2007 as a continuation-in-part of the application for the ‘014 patent.  

Notably, Bumper Boy had not yet filed the application for the ‘082 Patent when it sent its demand letter to Innotek in 2005.

The District Court Case

In May 2010, Radio Systems sued Bumper Boy in the Western District of Washington, seeking declarations of noninfringement and invalidity of the ‘014 and ‘082 patents.  Bumper Boy counterclaimed, accusing several products based on four basic designs (including the UltraSmart design) of infringing both patents. 

Judge Lasnik construed the claims and granted Radio System’s motion for summary judgment of noninfringement.   He held that that the accused collars, with the exception of those based on the UltraSmart design, did not infringe the asserted claims as construed.  He also held that Bumper Boy’s infringement claims directed to the UltraSmart design were barred by equitable estoppel, concluding that Bumper Boy’s four-and-a-half year delay between communications with Innotek was more than enough to mislead Innotek into thinking that [Bumper Boy] was no longer pursuing [its] claim.”  

The Federal Circuit’s Opinion

The Federal Circuit affirmed Judge Lasnik’s claim construction and his order granting summary judgment of noninfringement for the three collar designs.  It also affirmed his order that equitable estoppel barred Bumper Boy’s infringement claims as to the ‘014 patent.   The Court held that Judge Lasnik abused his discretion, however, in extending the defense of equitable estoppel to the ‘082 Patent.

The elements of equitable estoppel are as follows:

  1. The patentee must communicate something to the accused infringer in a misleading way by statements or conduct;
  2. The accused infringer must show that it substantially relied on the patentee’s misleading conduct; and,
  3. The accused infringer must prove that it would be materially prejudiced if the patentee is permitted to proceed with its infringement case.

A.C. Aukerman Co. v. R.L. Chaides Const. Co., 960 F.2d 1020 (Fed. Cir. 1992) (en banc):

The Federal Circuit held that these elements were not met with respect to the ‘082 patent because Bumper Boy did not notify Radio Systems of the ‘082 Patent until 2009 – just months before Radio Systems filed suit.  Accordingly, the Court concluded “there was no misleading conduct or silence by Bumper Boy to indicate that it did not intend to enforce the ‘082 patent against Radio Systems” and there was no evidence that Radio Systems relied on such (non-existent) misleading conduct or silence.    

Of note, Bumper Boy argued that equitable estoppel did not bar its claims against Radio Systems because it was a legal entity separate from Innotek and because it did not have knowledge of the 2005 demand letter.  The Court rejected that argument and confirmed that “equitable estoppel applies to successors-in-interest where privity has been established.”  Bumper Boy did not challenge Judge Lasnik’s privity findings on appeal.     

In a separate opinion, Judge Newman concurred with the Court’s determination that equitable estoppel barred Bumper Boy’s claims on the ‘014 patent.  In dissent, she wrote that Judge Lasnik did not abuse his discretion in applying equitable estoppel to the ‘082 patent because the subject matter of the ‘082 patent was disclosed and described in the ‘014 patent.

Inability to Show Diligence Fatal to Motion to Amend Infringement Contentions

By Dana Herberholz on Posted in Claim Construction, Infringement Contentions, Local Rules, Northwest Companies, Patent Disclosures

Allvoice Developments US, LLC v. Microsoft Corp., 2:10-CV-02102-RAJ (W.D. Wash. Dec. 27 2012) (Jones, J.)

Need to amend your infringement contentions?  If so, you better move fast, and you better be prepared to identify specific evidence that you acted diligently in amending. Judge Jones’ order in Allvoice Developments v. Microsoft is the latest in a handful of orders from the Western District of Washington over the past year denying motions for leave to amend infringement contentions because the patentee did not act diligently. 

The Western District of Washington, like most districts, allows a patentee to amend its infringement contentions “only by order of the Court upon a timely showing of good cause.”  WD Wash. LPR 124.  Absent undue prejudice to the non-moving party, circumstances that support a finding of good cause include:

  1. A claim construction by the Court different from that proposed by the party seeking amendment;
  2. Recent discovery of material prior art despite earlier diligent search; and
  3. Recent discovery of nonpublic information about the Accused Device which was not discovered, despite diligent efforts, before the service of the Infringement Contentions.

LPR 124. 

Courts in the Western District of Washington consider two factors in determining whether good cause supports a motion for leave to amend infringement contentions: the moving party’s diligence and prejudice to the non-moving party.  If the moving party does not demonstrate diligence, the court will not evaluate prejudice to the non-moving party. 

In this case, Allvoice filed a post-Markman motion for leave to amend its infringement contentions to incorporate changes that “relate to two claim constructions by [the] Court that differed from Allvoice’s proposals, and to provide technical corrections or clarifications … to avoid confusion.”  Allvoice filed its motion three months after the Court entered its Markman order and more than 19 months after the parties submitted their proposed claim constructions pursuant to LPR 132.   

Microsoft opposed the motion, arguing undue delay and unfair prejudice. 

Judge Jones held that Allvoice failed to make the required showing that it acted diligently in amending its infringement contentions.  Although Allvoice focused its arguments on the prejudice prong of the analysis, the court found that Allvoice failed to explain why it waited three months after the Markman hearing and 19 months after submitting its proposed constructions to file its motion for leave.  Judge Jones also rejected Allvoice’s argument that its “recent investigation” of an accused Microsoft product was evidence of its diligence because Alvoice failed to explain what it was doing during the investigation. 

The order does a nice job of explaining the policy considerations behind the diligence requirement of LPR 124. Citing case law from the Northern District of California, Judge Jones explained that motions for leave to amend contentions are not subject to the more lenient standards for amending pleadings.  Instead, the Local Patent Rules require a showing of good cause to avoid ‘vexatious shuffling of positions’ that could occur if the parties are permitted to freely modify their infringement contentions at any point in the action.” 

Tying these policy considerations to the present case, Judge Jones concluded:  “To allow Allvoice to amend its infringement contentions without regard to its diligence would virtually destroy the effectiveness of the Local Patent Rules in balancing the conduct of discovery, trial preparation, and responsibilities of the parties.”  Because Allvoice did not show diligence, the Court declined to address whether granting Allvoice’s motion would prejudice Microsoft. 

This isn’t the first time that a court in the Western District of Washington denied a motion for leave to amend infringement contentions based on the moving party’s failure to show diligence.  As I reported last April, in what he described as a “harsh” but necessary result, Judge Lasnik denied a patentee’s motion for a two-week extension of time to serve its infringement contentions, in part, because the moving party was not diligent.  In another case a few months later, Judge Lasnik pointed to the patent owner’s lack of diligence as the basis for denying its motion to amend its infringement contentions.  Avocent Redmond Corp. v. Rose Electronics, 2:06-cv-017-RSL (Jul. 6 2012) (Lasnik, J.). 

Upcoming Webinar – NPEs in Patent Litigation: Latest Developments

By Dana Herberholz on Posted in America Invents Act, Practice Tips, Upcoming Events

I’m giving away three complimentary registrations to an upcoming webinar.

On January 9 at 10am PST, Dave Donoghue (patent trial attorney at Holland & Knight) and I will discuss recent trends and developments in patent litigation involving non-practicing entities.  The 90-minute webinar is hosted by Strafford Publications and includes an interactive Q&A session.   More information about the program can be found here.

Please email me at DHerberholz@parsonsbehle.com if you are interested.

Summary Judgment Of Noninfringement Inappropriate When Based On “Technical Deficiencies” in The Evidence

By Dana Herberholz on Posted in Claim Construction, Discovery, Evidence, Summary Judgment

Avocent Redmond Corp. v. Rose Electronics, et al., No. C06-171RSL (W.D. Wash. November 13, 2012) (Lasnik, J.)

Is a patent owner required to support its infringement claims with admissible evidence to overcome a motion for summary judgment of noninfringement?  Does a patent owner need to authenticate documents supporting its infringement claims to survive a motion for summary judgment? 

Judge Lasnik addressed these issues in a recent order granting in part Belkin International Inc.’s motion for partial summary judgment of noninfringement.   

Background

Way back in 2007, Avocent Redmond Corp. sued Belkin International Inc. and others for infringing three patents directed to “a computerized switching system for coupling a workstation to a remotely located computer.” U.S. Patent Nos. 5,884,096, 6,112,264, and 7,113,978 (abstract). 

Belkin did not design or manufacture 86 of the 107 accused products (keyboard, video, and mouse “KVM” switches).  During discovery, Avocent requested technical schematics for the accused Belkin KVM switches.  Belkin obtained some of the technical schematics from its third-party vendors and produced them directly to Avocent.  The third-party vendors produced other schematics directly to Avocent.

Belkin KVM Switch

Belkin moved for partial summary judgment of noninfringement on several grounds.  It argued that Avocent could not prove infringement for 86 of the 107 accused products because: (1) the technical schematics on which Avocent relied to support its infringement claims were not properly authenticated; (2) the technical schematics constituted inadmissible hearsay; and (3) expert testimony based on the schematics was inadmissible and could not be considered.  Judge Lasnik rejected all three arguments.  He overruled Belkin’s evidentiary objections without prejudice to allowing Belkin to reassert the objections at trial if and when Avocent moves for admission of the technical schematics into evidence. 

Authentication

Belkin maintained that it was unable to identify or authenticate the technical schematics for the 86 accused products that it did not design or manufacture and that Avocent failed to conduct formal discovery regarding the contents of the schematics.  Belkin disclaimed knowledge regarding the accuracy of the technical schematics and argued that Avocent’s evidence of infringement (based on the schematics) was insufficient to survive summary judgment.   

The Court found there were “indicia of authenticity” for the schematics.  It explained that Belkin “offered no reason to doubt that the technical schematics are anything other than the third-party vendors’ working diagrams of Belkin’s products….” 

Although Avocent obtained some of the schematics from third parties, the Court determined that several factors supported a finding that those documents were, in fact, the technical schematics for the accused Belkin products.  Those factors included correspondence between Belkin and Avocent, the stamps and logos on the schematics, the “established similarities” between the schematics and the accused Belkin products, and the manner in which the schematics were produced to Avocent.  In addition, the Court noted that Belkin failed to identify any problems with the technical schematics to suggest they were unreliable. 

Critically, Judge Lasnik noted that Avocent could provide evidence at trial to overcome Belkin’s authenticity objections.  In summarizing its holding, the Court concluded that it was “not inclined to dismiss causes of action where technical deficiencies in the evidence can be easily remedied.” 

Hearsay and Experts’ Reliance on Hearsay

Although Avocent intended to offer the schematics to prove the truth of the matters asserted therein, the Court concluded that the schematics were non-hearsay because they were admissions of a party-opponent (Belkin) under Fed. R. Evid. 801(d)(2).  Interestingly, the Court reached this conclusion despite the fact that the schematics were prepared by Belkin’s third-party vendors and not Belkin. 

The Court found that when Belkin produced the schematics, it designated them responsive to Avocent’s document requests for technical schematics for the accused products.  In so doing, the Court concluded that Belkin “effectively represented that the[] documents were the technical schematics requested” and that, by linking the schematics to its products, Belkin treated the documents as if they were what they purport to be. 

Judge Lasnik was not concerned that Avocent’s expert relied on the technical schematics in his expert report, even if the schematics were hearsay.  Citing Ninth Circuit law, the Court noted that Federal Rule of Evidence 703 “expressly authorizes the presentations of opinions based on facts or data that are themselves inadmissible, as long as experts in the field would reasonably rely on those kinds of facts or data.”  Because engineers and technical experts would rely on technical schematics of a product when evaluating its structure and function, the Court held that Avocent could offer evidence based on the specifications through its expert, even if the schematics were hearsay or could not be authenticated. 

Anticipation and Pre-Suit Damages

It wasn’t all bad news for Belkin.  The Court held that Avocent could not prove infringement of claims that required an “independent, dedicated cable element” and, therefore, granted summary judgment of noninfringement on all claims containing that limitation.  The Court also limited the period for which Avocent could recover damages because Avocent failed to comply with the marking requirement of 35 U.S.C. 287.    

Takeaways

No major surprises here.  Courts want to make sure plaintiffs get their day in court.  Absent compelling reasons, accused infringers should not count on a court throwing out infringement claims on summary judgment based solely on evidentiary objections.

Success Rates on Motions to Stay Pending Reexamination

By Dana Herberholz on Posted in Motion to Stay, Reexamination

Earlier this year, I wrote about the number of claim construction opinions authored by each judge in the Pacific Northwest.  That post was well-received, and I thought it would be useful to provide a similar judge-by-judge breakdown of orders granting or denying motions to stay pending reexamination.   

Companies sued for patent infringement should always consider challenging the validity of the patent(s) in a reexamination proceeding through the United States Patent and Trademark Office. To evaluate whether reexamination is worth the time and expense, these companies should consider whether the district court in which it was sued is likely to stay the litigation pending the outcome of the reexamination (assuming the USPTO grants the request for reexamination). 

I reviewed all orders on motions to stay pending reexaminations entered from January 1, 2008 to the present date in the Western District of Washington, Eastern District of Washington, District of Oregon, and District of Idaho.   

Although the sample size is admittedly small, if history is any indication, litigants here in the Pacific Northwest have a very good chance of prevailing on a motion to say pending reexamination:

How do these figures stack up against those in popular patent districts?   

From a pure statistical standpoint, and based on data from 2010 to the present, the odds of prevailing on a motion to stay pending reexamination in the Eastern District of Texas are less than 50%.  Your chances are much better in the Northern District of California and the Central District of California, where courts granted motions to stay pending reexamination more than 60% and 70% of the time during that same period, respectively.   

If you find yourself on the losing end of a motion to stay pending reexamination filed in the Pacific Northwest and are considering moving for reconsideration, good luck.  Since 2008, there have been six motions for reconsideration/clarification of such orders (five in WD Wash. and one in D. Ore.).  All six motions were denied.  

Has the passage of the America Invents Act, with its new post-grant and inter partes review provisions, impacted the likelihood of obtaining a stay?  It’s too early to tell, but that doesn’t appear to be the case.  Since the AIA was signed into law last September, there have only been four orders on motions to stay pending reexamination:  two were granted and two were denied.    

 

Sources: Docket Navigator & PACER

Nintendo Unwilling to Play Games in Oregon – Case Transfered to Western District of Washington

By Dana Herberholz on Posted in Motion to Transfer, Venue

RecogniCorp, LLC v. Nintendo Co., Ltd. and Nintendo of America, Inc., No. 3:11-cv-01532-ST, Slip. Op. (D. Or. Oct. 3, 2012) (Stewart, J.)

Earlier this month, Magistrate Judge Stewart granted Nintendo’s motion to transfer a patent case from the District of Oregon to the Western District of Washington (less than 200 miles away and a short drive up I-5) on the grounds that the District of Oregon was an inconvenient venue under 28 U.S.C. § 1404(a). 

The plaintiff, RecogniCorp, is a Texas LLC that formed six months before filing its complaint.  It has no contacts with Oregon and maintains its principal place of business in Round Rock, Texas.  Defendant Nintendo Co., Ltd. is a Japanese corporation, and defendant Nintendo of America, Inc. is a Washington corporation with its principal place of busines in Redmond, Washington.

up-up-down-down-left-right-left-right-b-a-start

RecogniCorp accused the defendants (collectively, “Nintendo”) of infringing U.S. Patent 8,005,303 (“Method and Apparatus for Encoding/Decoding Image Data”) by making, using, selling, and offering to sell “composite image customization products, including software on the Nintendo Wii….” 

Shortly after both Nintendo entities were served, Nintendo filed its motion to transfer to the Western District of Washington.

The Opinion 

A defendant may move for a change of venue—even if venue is proper—if the venue is inconvenient.  28 U.S.C. § 1404(a).  Applying Ninth Circuit Law, Judge Stewart considered the following factors in evaluating Nintendo’s 1404(a) motion and its claim that the District of Oregon was an inconvenient forum:   

  • Location where relevant agreements between the parties were negotiated and executed (no such agreements in this case)
  • RecogniCorp’s choice of forum
  • The parties’ contacts with the forum
  • Contacts relating to the cause of action in the forum
  • Differences in costs of litigation (Location of documents, physical evidence, and witnesses)
  • Availability of compulsory process
  • Ease of access to sources of proof

Plaintiff’s Choice of Forum:  Because none of the parties are located in the District of Oregon, the Court concluded that RecogniCorp’s choice of forum was “entitled to only minimal consideration.” 

The Parties’ Contacts with the Forum:  RecogniCorp had no contacts with Oregon.  It argued that Nintendo, however, had sufficient contacts with Oregon because it used a recruiter who lives in Portland and two third-party game developers in Oregon.  The Court was not persuaded by these arguments because: (1) the Nintendo recruiter was an independent contractor and not an employee of Nintendo; (2) the recruiter had no knowledge about the accused products; and (3)  the third-party developers for Nintendo’s games had no role in developing, creating, or programming the accused products.  

Contacts Relating to Cause of Action in the Forum: The Court acknowledged that Nintendo may have sold the accused products in the District of Oregon.  Nevertheless, the Court was persuaded by the fact that Nintendo makes “key marketing and sales decisions” in Washington and not in Oregon.  The Court concluded this factor favored transfer.     

Documents and Physical Evidence:  Nintendo represented that the bulk of its relevant documents are located in Washington, California, New York, or Japan.  RecogniCorp’s relevant documents are in Texas.  Accordingly, the Court found this factor favored transfer to the Western District of Washington. 

Availability of Compulsory Process:  RecogniCorp was unable to name any potential witness within the District of Oregon’s subpoena power.  The named inventor resides in California, and the prior assignees and prosecuting attorneys are located in Canada, California, Texas, and Connecticut.  The Court concluded this factor was “neutral at best.”   

Witnesses and Ease of access to Sources of Proof:  Nintendo identified two potential witnesses in Japan.  Although the Court acknowledged that travel from Japan to Washington or Oregon would be inconvenient for these witnesses, the Court concluded that travel to Seattle “would cause a significantly smaller disruption” to Nintendo’s business than travel to Portland because these witnesses would be able to work at Nintendo of America’s Redmond, Washington headquarters when not needed in trial.   

Even though Portland is less than a three-hour drive from Seattle, the Court also concluded that transferring the case to the Western District of Washington would minimize Nintendo’s travel time because its Redmond facility is only about 15 miles from the federal courthouse in Seattle. As an aside, having spent countless hours stuck in traffic on SR 520, I’m not sure the 15-mile drive from Redmond to Seattle is much more convenient than the drive from Seattle to Portland.    

Takeaways 

It’s quite possible that the Court would have denied Nintendo’s motion to transfer and deferred to plaintiff’s choice of forum had RecogniCorp formed in Oregon, as opposed to in Texas. 

I suppose RecogniCorp had a good reason for forming in Texas, but brining suit in Oregon apparently was not one of them.  Interestingly, RecogniCorp filed several patent infringement lawsuits across the United States this summer, including in the Northern District of Georgia, the Northern District of California, the District of Colorado, the District of Massachusetts, the Middle District of Florida, the District of Maryland, and the District of Delaware.  It filed no cases in Texas.   

Although you don’t see many cases transferred to a neighboring jurisdiction just a couple hundred miles away, this opinion provides a roadmap for doing so.  The opinion underscores the importance of identifying, in a motion to transfer, the impact that litigating in the plaintiff’s chosen forum will have on specific individuals—even if the chosen forum is nearby.  Indeed, the Court was particularly sensitive about the resources consumed by patent litigation, noting “[p]atent cases are disruptive and a drain on the time of management and employees.”

Microsoft v. Motorola FRAND Litigation – Links

By Dana Herberholz on Posted in FRAND, Injunctive Relief, Northwest Companies

Big news last week in Microsoft v. Motorola where Judge Robart granted Microsoft’s motion for a preliminary injunction and a temporary restraining order preventing Motorola “from enforcing any injunctive relief it may receive in the German court system.”  The order has received considerable attention, and I will not get into the details in this post.  That being said, this is the Northwest Patent Litigation Blog, and I would be remiss if I did not at least mention the order and provide some links.

At the heart of the dispute in the case before Judge Robart is Microsoft’s claim that Motorola refused to license patents essential to the H.264 video codec standard on ”fair, reasonable, and non-discriminatory” (FRAND) terms.  Microsoft filed its complaint in November 2010 and, eight months later, Motorola sued Microsoft for patent infringement in Germany.  Oh, and the two are also taking each other on in the ITC.

Judge Robart’s order raises very interesting issues concerning the tools available to the Microsofts and Motorolas of the world for enforcing their patent portfolios globally.  Below are links to a handful of posts that I found informative and are sure to get you up to speed:

1. Florian Mueller knows Germany.  He does a fantastic job of describing the nature of injunctive relief in German courts and the significance of Judge Robart’s order

2. Florian also has a follow-up post that summarizes the heart of the dispute (a mere $4 billion) between Microsoft and Motorola

3. Jorge Contreras provides a very informative summary of U.S. cases where FRAND issues are currently being litigated

4. Here’s the  local write-up of Judge Robart’s order in the Seattle Times

5. Here’s an article that explains why Germany is becoming a popular forum for patent litigants, leading some to call it Europe’s Eastern District of Texas

Judge Lasnik Denies Motion for Two-Week Extension of Time to Serve Infringement Contentions

By Dana Herberholz on Posted in Infringement Contentions, Local Rules

Enroute Systems Corp., v. ArrivalStar S.A., No. C11-0451RSL, Slip Op., (W.D. Wash. March 28, 2012) (Lasnik, J.) 

In what he admitted was a “harsh result,” Judge Lasnik denied defendant ArrivalStar’s request for a two-week extension of time to serve its Rule 120 infringement contentions on plaintiff Enroute Systems.  The takeaway from this order is simple:  Do not ignore deadlines in a case management order, and be sure to file a timely request for an extension if additional time is needed.  

In this case, ArrivalStar argued that it needed additional time to serve its infringement contentions for three reasons: 

  1. The case management order (entered on December 21, 2011) gave ArrivalStar only 14 days (to January 4, 2012), including holidays, to prepare its contentions;
  2. Enroute misled ArrivalStar into believing all deadlines were on hold pending settlement discussions; and
  3. Denying the requested extension would prejudice ArrivalStar. 

The Court rejected ArrivalStar’s first argument, concluding that it should have filed a timely motion for an extension of time if the intervening holidays genuinely impacted its ability to comply with the January 4 deadline.  Instead, ArrivalStar waited six weeks and filed its motion requesting additional time on February 16, 2012.     

Judge Lasnik noted that the two-week period to serve infringement contentions should not have come as a surprise to ArrivalStar.  He explained this deadline is standard in the Western District of Washington and is designed to promote efficiency:  “Courts in this district expect that a party asserting a claim of patent infringement has, at the time of filing, information sufficient to support the claim and is therefore prepared to state its infringement contentions early in the litigation.”   

The Court also rejected ArrivalStar’s second argument.  ArrivalStar submitted a settlement demand one week after the Court entered its case management order.  Enroute’s counsel responded to the demand on January 3, 2012, representing that he was hoping to meet with his client and that he would get back to ArrivalStar.  Although its infringement contentions were due the following day, ArrrivalStar made no attempt to negotiate a stipulation for additional time to serve those contentions.  Based on these facts, the Court found Enroute did nothing to suggest that a settlement was likely or that deadlines would be postponed.   

Finally, Judge Lasnik concluded that ArrivalStar failed to establish good cause for the requested extension.  Federal Rule of Civil Procedure 16(b)(4) and the language of the Court’s case management order provide that good cause is required to modify court-imposed deadlines,  including ArrivalStar’s deadline to serve infringement contentions.  After explaining that “[p]rejudice to the moving party, standing alone, does not supply the necessary good cause,” the Court concluded that ArrivalStar did not act with reasonable diligence in seeking the extension, and, therefore, did not establish good cause for the extension.  The Court characterized its order as “harsh” but necessary to “serve the larger interests of judicial efficiency and economy, and not just the interests of individual litigants.”