Eastern District of Texas Federal Court Practice

Inequitable conduct defense rejected in Rembrandt case

Rembrandt v. CIBA, 2:05cv491 (CE) (Sept. 26, 2008)
Judge: Chad Everingham
Holding: Inequitable conduct defense rejected
The jury in Judge Everingham's court in Marshall returned a verdict in this case for the plaintiff earlier this year.  After sending out five notes, the jury returned a verdict for the plaintiff on infringement, but for the defendant on the issue of willfulness.  The jury also found that the defendant had failed to prove by clear and convincing evidence that the patents were invalid either for indefiniteness or because they were not enabled.  Damages were $41,083, 853.
The court later conducted a bench trial on the issue of inequitable conduct, and last Friday issued its findings rejected the defense under the facts of this case.

CSIRO v. Buffalo infringement holding vacated for reconsideration in light of KSR; Federal Circuit Mum on Whether Grant of Injunction Appropriate

CSIRO v. Buffalo Technology, Inc., No. 2007-1449 (Federal Circuit, Sept. 19, 2007)
In the fall of 2006, Judge Leonard Davis resolved this case on cross-motions for summary judgment (at the parties' request in lieu of a trial), finding for the plaintiff CSIRO.  Then, last summer, in CSIRO v. Buffalo Technology, Inc., 2007 WL 1739999 (E.D. Tex., June 15, 2007) (6:06-CV-324), he held that the prevailing plaintiff, CSIRO was entitled to an injunction against defendant Buffalo. (See weblog post with additional details on the grant of the injunction here).  On appeal, the case generated intense interest because of the issue of when a non-practicing entity (at least one with CSIRO's characteristics) is entitled to an injunction after prevailing at trial.
On September 19, the Federal Circuit issued its opinion in the case, and, showing once again that what the bar thinks is important about a case isn't necessarily what really is important, it did not address the injunction issue at all.  Instead, it affirmed Judge Davis' summary judgment holdings in all respects but one, and remanded for a determination on that issue.  It affirmed his finding of infringement, and his finding that the patent was not invalid due to anticipation or lack of specific written description, but vacated his finding that the patent was not invalid as obvious.  Why?  Because in making his holding in late 2006 (before the Supreme Court issued KSR) Judge Davis used the pre-KSR strict requirement for a motivation to combine references, and under the new standard for determining obviousness, there was a fact issue which precluded summary judgment on Buffalo's obviousness defense.  This holding once again illustrates the continuing application of the immortal phrase from Otter in Animal House, "you [screwed] up - you trusted us".   Accordingly, the court remanded for further proceedings limited to the obviousness defense, so the next appeal will, presumably consider the obviousness issue under the KSR standard, and if the court got that right, then maybe the injunction issue, and maybe maybe whichever other issues the law has been changed on in the interim.
Interestingly, Judge Lourie added a brief concurrence noting that there was a "sound basis" for a different decision on one of the infringement defenses, but given the standard of review he believes that the affirmance on that ground was okay as well. 

Drivers' Privacy Protection Act (DPPA) Class Action Dismissed

Note:  This guest post is by Karl Neudorfer of Seyfarth Shaw, LLP, who was my cocounsel representing one of the defendants in the Taylor v. Acxiom case discussed below.  The outcome of the case made him precisely as happy as he appears in this photo.
Sharon Taylor et al. v. Acxiom Corporation et al., 2:07cv0001, 2:07cv0013, 2:07cv0014, 2:07cv0017, 2:07cv0018, 2:07cv0410 (E.D. Tex. 2007)
Judge: Donald E. Walter
In January 2007, approximately twenty-five plaintiffs brought five separate but nearly identical putative class actions against more than 100 different defendants, alleging violations of the Driver's Privacy Protection Act, 18 U.S.C. §§ 2721 et seq.  In September 2007, the same plaintiffs filed a sixth suit, almost identical to its companions, against several more defendants.  In all, the plaintiffs sought hundreds of billions of dollars in statutory damages.  They did not allege actual harm.  On September 9, 2008, Judge Donald E. Walter, visiting from the Western District of Louisiana in Shreveport, dismissed the plaintiffs' claims with prejudice.
Congress enacted the DPPA-the basis for plaintiffs' claims-as a result of growing concern over the availability of personal information maintained by state departments of motor vehicles.  That concern was motivated in part by the murder of actress Rebecca Schaeffer (My Sister Sam), whose killer obtained her address by presenting Schaeffer's license plate number to the California DMV.  To prevent similar crimes, the DPPA establishes fourteen permissible uses for personal information contained in motor vehicle records, and then prohibits the States from disclosing that information for any purpose other than those enumerated in the Act.  Likewise, the DPPA prohibits private actors from knowingly obtaining, using, or disclosing personal information from a DMV record for any purpose not permitted by the Act.  The DPPA contains a provision allowing for an award of "liquidated" damages of up to $2500 per violation.
Because the DPPA regulates (but does not prohibit) the disclosure of personal information, several states continue to sell DMV records to legitimate users.  Texas is one of them.  Texas sells its complete database of Motor Vehicle Records, containing information about every driver and motor vehicle registered with the State.  By most estimates, there are twenty to twenty-five million pieces of personal information in Texas' VTR database.
Here, plaintiffs brought improper obtainment claims against each of the defendants.  They alleged that each defendant had purchased Texas' complete VTR database, that each defendant lacked a permissible purpose for doing so, and that therefore each defendant had violated the DPPA by impermissibly obtaining the State's motor vehicle records.  Plaintiffs sought to certify a class of everyone with a Texas driver's license.  Relying on the Act's "liquidated" damages provision, the plaintiffs claimed they were entitled to an award of hundreds of billions of dollars (25 million violations x 120 defendants x $2500/violation).
The case initially was assigned to Judge T. John Ward of Marshall.  It was transferred to Judge Walter of the Western District of Louisiana as a result of Plaintiffs' proposed class definition.  Apparently every judge in the Eastern District holds a Texas driver's license, and thus every judge also was a member of the putative class.  After Judge Ward and several other Eastern District Judges recused themselves due to this conflict, Chief Judge Heartfield assigned the case to Judge Walter, who sat in Marshall as a visiting judge.
On September 9, 2008, Judge Walter dismissed the plaintiffs' claims with prejudice in a thirteen-page opinion.  He did so on two grounds:  failure to state a claim for which relief can be granted, and for lack of subject matter jurisdiction due to a lack of standing.  Judge Walter began the opinion with a summary of the history and purposes of the DPPA, and then confronted the 12(b)(6) prong of defendants' motions.  The opinion divides the defendants into two groups, those who obtain DPPA-regulated data for their own internal use ("Nonresellers"), and those who obtain DPPA-regulated information at least in part to resell it ("Resellers").  With respect to Nonresellers, Judge Walter rejected the plaintiffs' argument that Nonresellers violated the DPPA by not putting MVR data to an immediate use, because the Act does not require any use of permissibly obtained data.  Recognizing that "the DPPA does not prohibit the nonuse of data obtained for a permissible purpose, immediate or otherwise," the opinion concludes that plaintiffs' proposed interpretation of the Act would "impose . . . an illogical restriction on the use of data obtained for a permissible purpose."
Judge Walter rejected the plaintiffs' claims against the Resellers for similar reasons.  Plaintiffs had alleged that the Reseller defendants violated the DPPA by obtaining the data solely for purposes of resale.  But the opinion recognizes that the DPPA expressly allows for resale if an "authorized recipient" made the resale "for a use permitted under" the Act. 18 U.S.C. § 2721(c).  Relying in part upon the DPPA's use of the phrase "authorized recipient" as opposed to "authorized user," Judge Walter determined the Act does not require Resellers to use permissibly obtained information, and instead expressly permits obtainment for the purpose of resale if the resale is made for a use permissible under the Act.  Therefore, the plaintiffs failed to allege an impermissible obtainment by either Resellers or Nonresellers, and thus they failed to state a claim.
Judge Walter's opinion then discusses the constitutional standing issue.  The opinion concludes that the plaintiffs could not establish any of the three elements of standing, particularly the injury-in-fact requirement.  The only injury the plaintiffs alleged was an invasion of their statutorily protected interest in the freedom from impermissible obtainment of DPPA-regulated data.  But because plaintiffs had not properly alleged a violation of that interest, they did not have an injury-in-fact.  Without an injury-in-fact, the plaintiffs could not meet their burden of showing standing, and in the absence of standing, the Court lacked jurisdiction

I am happy to report that my partner Clyde Siebman and I have been recognized in the 2008 edition of Texas Super Lawyers.  The complete profile of our firm from the publication can be downloaded here. 

Download TXSL08_Siebman.pdf

(No comment on the rumor that SRBPS firm regulations require me to wear a blue tie, not red, and let Clyde stand on the right).

Good Service Down Under

Retractable Technologies, Inc. v. Occupational & Medical Innovations, Ltd., --- F.Supp.2d ----, 2008 WL 4287579(E.D.Tex. Sep 11, 2008) (NO. 6:08CV120)
Judge: Leonard Davis
Holding:  Defendant’s Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(5) DENIED
This was a dispute over the sufficiency of service on an Australian corporation in a patent case.  Plaintiff initially served the defendant with a private process server, then through the Texas Secretary of State.  Judge Davis' opinion navigates the requirements of service on a foreign corporation, notes that Australia is not a signatory to the Hague Service Convention, and then explains the significance of that. 
Nine years of working on the service of process provisions in O'Connor's Federal Rules * Civil Trials has left me with a permanent phobia about service issues, so to avoid bursting into tears at my desk trying to sort out which sub-sub-sub provisions of Rule 4 are involved, implicated, referred to, adjudged, addressed, ridiculed or ignored, (not to mention what Australian state or national applies) let's just say that it all ends happily, with the judge pronouncing service sufficient and proper, and telling the plaintiff that all they have to do to go home is click their heels three times and say "G'day".
For some reason I now have a craving for barbecued shrimp...

Summary Judgment of Noninfringement Granted in Part

Renhcol Inc. v. Don Best Sports, 548 F.Supp.2d 356 (E.D.Tex. Apr 28, 2008) (NO. 2:06-CV-318)
Judge: Leonard Davis
Holding: Motion for Summary Judgment of Noninfringement GRANTED in part
The patentee brought this action against foreign website operators, alleging infringement of its patent disclosing an electronic marketplace for prediction information over a communications network. The defendant operators moved for summary judgment of noninfringement.
Judge Davis granted the Defendants' motion as to whether they make, sell, or offer for sale within the United States the invention claimed in claims 23, 24, and 25 and whether Defendants import into the United States the invention claimed in claims 23, 24, and 25. The Court further granted Defendants' motion as to whether Defendants use within the United States the invention claimed in claim 25 and whether Defendants infringe claim 25 under 35 U.S.C. § 271(b) and (c).
But Judge Davis denied the motion as to whether Defendants use within the United States the invention claimed in claims 23 and 24 and whether Defendants infringe claims 23 and 24 under 35 U.S.C. § 271(b) and (c).

P.R. 3-1(c) and the requirement of separate claim charts

Juxtacomm Technologies, Inc. v. Ascential Software Corp, 548 F.Supp.2d 379 (E.D.Tex. May 02, 2008) (NO. 2:07CV359)
Judge: Leonard Davis
Holding: Motion for Partial Judgment on the Pleadings DENIED
One of the defendants in this patent case sought partial judgment on the pleadings because the plaintiff did not provide separate infringement charts for each product under P.R. 3-1(c).  Plaintiff contended that separate charts weren't necessary because one product infringed only insofar as it incorporated another product (more or less).
Judge Davis noted that Patent Rule 3-1(c) requires a party asserting infringement to provide each defending party a “Disclosure of Asserted Claims and Infringement Contentions,” which shall contain “a chart identifying specifically where each element of each asserted claim is found within each Accused Instrumentality.” P.R. 3-1(c). Although the Patent Rules require separate charts for each accused product, he noted that he has allowed plaintiffs to use a single chart applicable to multiple products where separate charts would be identical for each product.
Accordingly, he allowed the plaintiff Juxtacomm to use one chart to accuse both products - but there was a catch. "Use of one chart, however, precludes Juxtacomm from arguing that iWay Service Manager infringes in any manner differently from how iWay DataMigrator infringes. In order to argue a different infringement theory for iWay Service Manager, Juxtacomm will need to separately chart the iWay Service Manager product, which will require good cause to amend its infringement contentions."

"Blatant disregard" of the local rules of meeting and conferring

Think maybe you ought to read the new local rules on meeting and conferring?  Today Judge Ward issued this order denying a motion to compel.  It read (in its entirety):
Before the court is Defendant’s Motion to Compel (Dkt. No. 22). Defendant has filed this discovery motion with blatant disregard for the local rules on meeting and conferring. Defendant’s Motion is, therefore, DENIED. Further violation of the local rules or orders of this court will result in severe sanctions, up to, and including, a bar from practicing in this district.
This case has three attorneys, none from the Eastern District and none with local counsel.  The certificate of conference simply stated that the filing party had sent the other side a letter asking for certain documents and they were not produced (which would have been insufficient even under the former rule).

2008 Bench/Bar cancelled

Due to the continuing problems as a result of Hurricane Ike, it's my understanding that the 2008 Bench/Bar has been cancelled. 
In other hurricane-related news, Judge Crone has joined Judge Clark in temporarily relocating her chambers, in her case to Sherman. 

Motion for Stay Pending Reexamination Granted

Microlinc, LLC v. Intel, 2:07cv488 (E.D. Tex. 9/16/08)
Judge: T. John Ward
Holding: Motion for Stay Pending Reexamination GRANTED
"This case presents an exceptional set of circumstances warranting stay," Judge Ward wrote, adding that "[t]his is not the typical case where a defendant puts the asserted patent in reexamination for tactical reasons.  Here the plaintiff put the patent in reexamination and then filed the suit."  (Emphasis in original).  In this case the plaintiff had filed a patent infringement case, then dismissed that action and filed for reexamination, which resulted in a rejection of nine of the ten claims it had asserted in the original suit.  The plaintiff then filed a new patent case asserting the same patent.
"Clearly not staying this case in light of the state of the reexamination would unduly prejudice the non-moving party," Judge Ward held.  "The defendants’ concerns about being subjected to another suit involving the same patent after the reexamination is justified."