Eastern District of Texas Federal Court Practice

Federal Circuit affirms in part and reverses in part Blackboard v. Desire2Learn rulings

Back in February of 2008 the jury in the Blackboard Inc. v. Desire2Learn Inc. case, 9:06cv155 in Lufkin in Judge Clark's court found for the plaintiff on infringement and found that the defendant had not shown by clear and convincing evidence that the patent was invalid.  Plaintiff sought $17 million, and the jury awarded $3.1 million ($2.5 million in lost profits and $600k in royalties).  The trial went forward only on claims 36-38 of the patent, as Judge Clark had previously held claims 1-35 to be invalid for indefiniteness.
Last week the Federal Circuit affirmed Judge Clark's invalidating of the first 35 claims as indefinite, but reversed the jury's finding (and Judge Clark's denial of the JMOL on this ground) that claims 36-38 were not invalid as anticipated.  Since the anticipation finding deep-sixed the claims, the court didn't address D2L's claim that they were also obvious.  The court didn't address the infringement arguments on appeal, and held that Blackboard's appeal pertaining to the amount of court costs was moot.

JMOL motions filed in Centocor v. Abbott

Yesterday defendant Abbott opened the postverdict briefing in this case with a salvo worthy of a case with a $1.6 billion dollar jury verdict - five motions for judgment as a matter of law pursuant to FRCP 50.  They are helpfully numbered by Abbott and are listed below, prefaced with the docket number.  At a quick glance, they seem to track each of the jury's findings (or failure to find, in the case of Abbott's defenses):

289 - Defendants' Motion Number 1: Motion and Supporting Memorandum for JMOL or for New Trial Based on Failure to Comply with the Written Description Requirement or, in the Alternative, for Reconsideration of this Court's Claim Construction and Entry of JMOL of Non-Infringement

294 - Defendants' Motion Number 2: Motion and Supporting Memorandum for JMOL or for New Trial Based on Failure to Comply with the Enablement Requirement

 290 - Motion Number 3: Motion and Supporting Memorandum for JMOL of Non-Infringement or for a New Trial

292 - Defendants' Motion Number 4: Motion and Supporting Memorandum for JMOL or for New Trial on Issue of Willfulness

293 - Defendant's Motion Number 5: Abbott's Motion and Supporting Memorandum for JMOL or for New Trial Regarding Lost Profits and Damages Period

Christmas in July at Marshall patent cases status conference - trial settings under two years

Well, I don't know that we've been good enough to deserve it this year thus far, but we sure got some presents this morning at the bimonthly patent case status conference (essentially case management conferences for new filings) in Marshall.  Judge Ward announced that he and Judge Everingham would be filling in the holes in their docket where cases that were set for Markman hearings or trials had settled - and promptly started handing out Markman and trial settings that were a year to a year and a  half quicker than those last given out. 
The first cases up got Markmans as early as February of next year, and trial settings in September of next year - compare this to the last batch were Markmans in late 2011 and trial settings in early 2012.  I did the math on the time to trial and realized we were seeing trial settings as short as 15 months and no longer (on the cases I checked) than 27 months from the last answer.  On average they looked to be a little under two years - and in some cases significantly under (although the shorter ones appeared to be in cases where there was a prior related case, or the case had spent a substantial amount of time waiting on answers from defendants - in some cases as long as ten months). 
As I've told numerous people, I expected that the Marshall trial settings would start coming down once the large influx of patent filing in 2007 and 2008 worked their way through the system (current filings districtwide are a little over half what they were in 2007) but it looks like the Court found a way to head back towards the two year norm sooner than anyone thought.  (Trial settings in Tyler and Lufkin have held steady at a little under two years for some time - the docket delay has only been in Marshall).

Ring Plus "Cycle" Ends With Finding of Unenforceability

Ring Plus, Inc. v. Cingular Wireless LLC, --- F.Supp.2d ----, 2009 WL 2184541(E.D.Tex. Jul 17, 2009) (NO. 5:08-CV-42-DF)
Judge: Folsom
Holding: Patent unenforceable due to inequitable conduct.
Yep, she's singing. 
Judge Folsom conducted a hearing on the defendant's claims that the plaintiff's patent was unenforceable due to inequitable conduct, and concluded that "[h]aving weighed both materiality and intent, the Court finds that Defendants have shown by clear and convincing evidence that the applicants for the '608 Patent made material misrepresentations coupled with an intent to deceive the USPTO.  Further, Plaintiff has not made a sufficient showing of equitable considerations to outweigh
the findings of materiality and intent. The Court thus finds that the '608 Patent is unenforceable due to inequitable conduct."
On the bright side for the plaintiff, defendants sought to have the case declared exceptional and have attorneys fees awarded, but Judge Folsom declined to go that far.  "Plaintiff's conduct has been less than exemplary," he conceded, but concluded that  "[o]n balance, Plaintiff's conduct has not been sufficiently egregious to justify an award of attorney's fees."  He did note that as a result of the Plaintiff's prior sins he had previously reduced Plaintiff's time limit for its trial presentation from seven and a half hours to five hours but reserved for consideration whether to impose any additional sanctions. 
As best I can recall, that's four holdings of patents as unenforceable (at least three followings verdicts of infringement) in the last eight months or so.

"Error, error, shalt thou pursue... "; New Trial Denied & Bill of Costs Denied in Part in West v. Perry

It was big news locally when Tyler Perry (best known of course for playing the Starfleet Academy commandant in Star Trek) prevailed in the copyright infringement case brought against him in Marshall recently over the authorship of his movie Diary of a Mad Black Woman.  Today Judge Davis issued a 25 page opinion denying the plaintiff's motion for new trial and denying in part the bill of costs submitted by the prevailing defendant.
At trial, Judge Davis observed, the main issues were whether Perry had access to plaintiff Donna West’s play Fantasy of a Black Woman such that he copied it, whether he copied it, and whether the two works are so similar that the jury could find he had copied it even without proof of access.  The relevant standard, he noted, is set forth in Positive Black Talk Inc. v. Cash Money Records, Inc., 394 F.3d 357, 367 (5th Cir. 2004).  (No, seriously, that's really the name of the seminal case).
Judge Davis began by identifying numerous grounds asserted in the motion for new trial that West did not preserve either through objection at trial or otherwise, including improper appeals to emotions, Defendants' alleged misrepresenting of a witness's testimony, prejudice by unfair surprise created by Defendants’ argument that Perry first came to Dallas in 1999, that Defendants misrepresented the existence of the original Diary of a Mad Black Woman script, evidence of Perry’s post-1998 work, the Court’s ruling regarding the admissibility of West’s copyright registration that is reflected in the Court’s ruling on West’s motion in limine, and that the charge misled the jury.  On the copyright registration issue, Judge Davis noted that he never excluded the registration - he simply held that if it were offered, it was coming in in its entirety.  But Plaintiff never offered it in any form, nor did she make an offer of proof of the registration, thus any claim of error was waived.
On issues that were preserved via a timely objection, the plaintiff didn't fare much better.  First, she complained that the defendant made a prohibited "golden rule" argument to the jury.  Judge Davis noted that as the statement pertained to liability and not damages, it was not prohibited as such - but he sustained the objection anyway.  As the plaintiff did not then request a curative instruction, it waived any complaint (this is often referred to as "failing to pursue an adverse ruling.")  Next up was a complaint about a statement in closing statement, which Judge Davis held did not warrant a new trial, and objections to testimony by the defendant's expert, as to which Judge Davis had the same conclusion.  Next was a statement by Perry during his testimony which Judge Davis instructed the jury to disregard.  In light of the instruction (which was not objected to, and thus only plain error review applied) and the minor probative value of the statement, Judge Davis held that any error was harmless.  (Ed. note: It's not that it is difficult to preserve error on our various Baylor Law School - educated judges, like Judge Davis.  It's just that they know when you don't do it, having been educated at a school where the exterior frieze has an engraved inscription "Error, error, shalt thou pursue."  Or maybe I'm just thinking about the inside of my forehead after going there ...).  See QPSX v. Nortel (no offer of proof on excluded expert testimony). 
Finally, plaintiff asserted objections to the Court's charge, and after review, Judge Davis concluded that the charge, as submitted, was proper (and on some of the objections, again - you got it - plaintiff did not preserve error).  Finally, Judge Davis rejected the plaintiff's claim that the jury's verdict was against the great weight of the evidence, spending several pages to detail the evidence and the applicable standards, before concluding that the jury's verdict should be upheld.

On the bill of costs issue (not one of Judge Davis' favorite motions, as local practitioners know), one useful data point is that he excluded costs for videotaped depositions, citing Fifth Circuit precedent (which is admittedly contrary to some other circuits on this point).  The interesting part is that on October 13, 2008, as part of a package of cleanup amendments, Congress amended the court costs statute, 28 USC 1920 (see Pub. L. 110-406) to allow recovery of "electronically recorded transcripts."  I studied this legislation recently trying to figure out whether this section covered videotaped depositions as well as electronic copies, i.e. ascii disks or CD copies of transcripts, and the legislative history is not helpful, so it is useful (or at least interesting - the adjective depends on which side of the argument you are on) to have an opinion from Judge Davis that postdates the statute concluding that it does not.  Of course the opinion also reflects that the defendant specifically did not seek costs for video depositions, and there's no indication that anyone brought the new statute to the Court's attention (at different places the order quotes the prior and the current language), so the issue may still be virgin territory, legally speaking.

In any event, the order provides a detailed analysis of specifically which costs are recoverable for court reporter fees and which are not, spanning depositions, pretrial, and trial.  In the most crucial part of the opinion for practitioners, Judge Davis notes that "[t]he rates of $0.15 per page for black and white copies and $0.99 per page for color copies are not exorbitant on their face."  He also sent the parties back to confer on the issue of recoverability of costs for exhibits, demonstratives, and duplicates, and rejected the plaintiff's claim that the costs should be reduced as a result of her inability to pay due to a medical condition.  Finally, in likely the most crucial part of the opinion for the Court, Judge Davis concluded by holding that "The Court ORDERS the parties to meet and confer as detailed above and are urged to work diligently to resolve these matters without further Court intervention."  (Emphasis not in original, surely due to an oversight).

"I Have Good Cause, But It's A Secret" - Motion for Leave to Amend PICs Denied

Hill v. Abercrombie & Fitch, 2:07cv234 (Ed. Tex. April 17, 2009)
Judge: David Folsom
Holding: Motion for Leave to Amend PICs Denied
Plaintiff sought leave to amend its infringement contentions to add a website operated by Microsoft, which has intervened in this case.  (Plaintiff had previously accused some Microsoft products, but not its websites).  Judge Folsom detailed the general standards for infringement contentions and for when such contentions can be amended pursuant to P.R. 3-6 by the plaintiff showing "good cause" for the amendment. 
"On the facts of this case," Judge Folsom wrote, "the Court finds diligence and undue prejudice are the dispositive factors. Hill claims he was diligent because he sought leave to amend his infringement contentions shortly after Microsoft deployed the new website. The Court disagrees.  Although Hill was not tardy in filing this Motion, Hill, through his proposed amendment, seeks to assert an entirely new theory of infringement against Microsoft, without showing why this theory was unavailable to Hill prior to the amendment deadline in the scheduling order. Hill claims that he has diligently analyzed all of Microsoft’s websites but had no reason to believe any of them infringed until now. When asked to explain why this theory—direct infringement by a Microsoft website—was not available to Hill based on the websites Hill previously analyzed, Hill claimed the information was work-product and need not be disclosed.  Thus, Hill attempts to use the work-product doctrine as a shield to
protect itself from disclosing its previous analysis while, at the same time, using it as a sword to justify diligence." (Emphasis mine).
We can just stop reading right there, don't you think?

Plaintiff's Motion to Strike Defendant's Designation of Responsible Third Parties Denied

Flanagan v. Wells Fargo Financial Nat. Bank, 2009 WL 2143439, E.D.Tex. July 14, 2009)
Judge: Amos Mazzant
Holding: Plaintiff's Objection to and Motion to Strike Defendant's Designation of Responsible Third Parties DENIED
Judge Schneider adopted Judge Mazzant's ruling in this case, which mentions the recent Texas "responsible third party" practice under Texas Civil Practices and Remedies Code § 33.004.
This dispute arises out of Defendant's handling of a credit card account that was in Plaintiff's name, which Plaintiff asserts was fraudulently obtained. Plaintiff filed suit asserting that Defendant's unreasonable collection efforts caused him damages under the Texas Debt Collections Practices Act, Fair Debt Collections Practices Act (“FDCPA”), Fair Credit Reporting Act (“FCRA”), as well as for libel, intentional infliction of emotional distress, malice, negligence and gross negligence.
The defendant filed a third party complaint against the plaintiff's wife (I think it is) and father, and designated them as responsible third parties (RTP).  The plaintiff moved to strike the designation as responsible third parties.  Judge Mazzant denied the motion, finding sufficient facts alleged to bring the third party claim, and also denied the motion to sever the third party claim at this time.
But what isn't clear to me is why the designation or motion were filed in the first place - the defendant actually joined the Flanagans to the case as third parties, so the designation as responsible third parties was superfluous.  What the new Texas RTP procedure permits is a defendant to name a nonparty it believes has some responsibility for a plaintiff's injuries but whom the plaintiff did not sue (including bankrupts or entities over whom the court does not have jurisdiction) and have the jury assess a percentage of responsibility against that nonparty, which has the effect of reducing the percentage remaining to be assessed against the defendant.  (It reminds me of the famous Cadaver Synod (or Synodus Horrenda) back in 897 where Pope Formosus who was out of favor - and dead since the previous year - was dug up, his rotting corpse put in a chair, and tried for violations of canon law by his successor, Stephen VI.  Formosus, who unsurprisingly was not very vocal in his own defense (he did have a deacon appointed to represent him, but I doubt he was very vocal when the prosecuting attorney was, uh, the current pope) was found guilty, but the blowback was pretty severe - by the end of the year Stephen was deposed, imprisoned and strangled, and Formosus' corpse, after a brief burial and trip down the Tiber, was reinterred in St. Peter's). 
Back to RTP practice.  What the RTP procedure does not do is make the RTP a party to the case or impose any liability on them, including any res judicata effect from the prior trial.  (As opposed to Formosus, who lost three fingers off his right hand and stripping of the papal vestments, plus the aforementioned burial and temporary slumber with the fishes).  The principal difference between naming and joining (which is what the defendant did here) is that the defendant can actually place liability on the third party and recover from them if it is found to be liable if it joins them to the action as the defendant did here. 
Perhaps the defendant simply belt and suspender-ed the third parties.  In either event, Judge Mazzant focused on whether the real claim - the third party claim, not the RTP - was properly party of the case, and found that it was.
Tomorrow I'll discuss how the new method of counting days under the federal rules is similar to Vatican II.  Or an episode of Star Trek - I haven't decided which.

Order on Motion in Limine in I/O v. Sercel

Input/Output, Inc. et al v. Sercel, Inc., (5-06-cv-00236) (July 22, 2009)
Judge: David Folsom
Holding: Motions in Limine Granted in Part
Orders on motions in limine are always difficult for lawyers not in the case to fully comprehend (and sometimes even lawyers in the case) for several reasons.  First, the order frequently refers to the motions by number and not issue, since the lawyers in the case know well what the numbers refer to.  Second, it's often impossible to fully understand the ruling unless you were at the hearing and heard what the parties told the court the issue really was, and what the court said.  And third, the procedural context of an in limine ruling is crucial, and often the lawyers simply don't take into account the difference between an order excluding or admitting evidence and an in limine ruling, which the judges well understand is a tentative ruling which simply requires counsel to approach the bench before going into an area.  Generally speaking (the Fifth Circuit caselaw is not completely consistent on this point) a ruling on a motion in limine doesn't preserve error or obviate the need to actually offer the evidence at trial, or object to the evidence.  (You might want to check your O'Connor's on this point, because it contains a unseful analysis what a limine ruling does and doesn't do).
A few of these issues came to mind this morning when I was reading Judge Folsom's order on defendant Sercel's motion in limine in this case.  Download 1771 - Ion limine order While it's a good example of how much the casual reader of such an order can't tell from the order in isolation, there are a few interesting points even to an uninformed reader like myself.
First, with respect to Sercel's motion no. 1 seeking in broad terms to limit damages, Judge Folsom first had to break the motion into threee subparts because it had three separate bases.  But all three shared the same basic flaw, he held, which was that they should have been brought as a motion to strike or as a Daubert motion within the required time frame.  Parts also asked the Court to weight the sufficiency of the evidence of lost profits.  All of which pointed to a common problem with motions in limine, which is their use as either a rearguing of a summary judgment or Daubert motion, or, as in the latter case, a premature motion for judgment as a matter of law.  (In this order, #3 was in fact simply a rearguing of a previously filed motion to strike).  If an issue or evidence shouldn't go to the jury, the tool is, as Judge Folsom observed, a motion to strike, or a Daubert motion, or perhaps a motion for summary judgment or to exclude.  Motions in limine are late in the game, and a poor substitute for a substantive motion.  As I've told people for years, file a motion to exclude the objectionable evidence - not a motion in limine.
It bears repeating that an order in limine does not exclude evidence - it simply requires a party to approach the bench before going into something because of the risk of incurable prejudice if it gets out there.  A good example is, well, suggesting to the jury that the plaintiff incorporated where it did to avoid paying taxes.  That would be a good motion in limine subject, I would think, because of the risk of prejudice - but if the plaintiff got cute and started claiming what a great corporate citizen they are the defendant might ask to approach and argue that the plaintiff has opened the door.  But an in limine ruling protects the parties from messing up the fact finder until the Court has decided that something really ought to be introduced.  I've had motions in limine granted against me with the clear understanding that the Court was not indicating he was likely to exclude the evidence at trial - he just wanted to retain control over the issue and wait until he saw the evidence at trial to make sure that the issue ought to come in - had he not granted that, an issue might have gotten before the jury before the Court had a full picture of whether it was proper for it to.  A good example is the common, common ruling that motions in limine are granted essentially in toto for voir dire unless someone really screams that they need to voir dire on a specific subject - but without prejudice to the Court's more substantive ruling on them following voir dire for the evidentiary part of the trial.
Back to the order. 
One issue that is case specific is a ruling permitting the plaintiff to introduce evidence that the defendant's opwn scientists were surprised at how similar the plaintiff's patent was to a Sercel patent, which they believe is non-obvious, in response to Sercel's assertion that the patent is obvious.  (Unless of course Sercel drops the obviousness defense).  Other rulings are not permitting the plaintiff to suggest that failure to obtain an opinion of counsel should result in an adverse inference, and excluding any reference to injunctions.  There are numerous other rulings made, but as they either adopt agreements by the parties are refer only to numbers, as I said, it's not possible to tell what they refer to without studying the underlying motions.
But as I said, a useful order to understand, at least in part, the use and misuse of motions in limine. 

O2 Micro v. BiTEK Update - Court declares mistrial, sets new jury selection and enters sanctions

Back on July 10 Judge Everingham issued his sanctions order in O2 Micro Int’l Ltd. v. Beyond Innovation Tech. Co. and invited briefing.  Some fo that briefing was public and some was not, so it's unclear what exactly the parties' positions are on the issues presented in the sanctions order.  (Now I know how Joe Mullin feels).  Today he entered his order declaring a mistrial, severing the claims against BiTEK, resetting the case for a new jury selection, and imposing the sanctions set for in his July 10 order.  A written memorandum order will follow - the Court indicated that this order was simply to facilitate trial preparation.

Motion re: Infringement Contentions Granted in Part

Linex Technologies, Inc. v. Belkin Intern., Inc., --- F.Supp.2d ----, 2008 WL 4372708(E.D.Tex. Sep 19, 2008) (NO. CIV.A. 2:07CV222)
Judge: John Love
Holding: Motion to Strike PICs/Motion to Compel Amended PICs Granted in Part
One of the recurring issues in patent litigation under patent local rules such as those in the Eastern District is determining the sufficiency of infringement or invalidity contentions.  Overlapping partially is the issue of when contentions can be amended.  I say partially because the issue of whether inadequate contentions can be remedied is separate from the issue of when contentions can be amended by adding new products or new prior art, and this opinion addresses the former, but not the latter.
Last September Judge Love issued an opinion in this case which has just been reported on Westlaw, which presents a number of issues with respect to the adequacy question.  Judge Everignham's opinion reviewed the history and purpose of local patent rules, then he explained the context of dispute.  Specifically, the defendant here was complaining about three things.  First, that the plaintiff was using a industry standard (802.11n) as the basis for its infringement contentions; second that the plaintiff provided one generic claim chart for each defendant, not product by product; and third specific claim limitations arguments.
With respect to the first argument, Judge Love found the plaintiff's contentions sufficient but only up to a point, noting that Plaintiff failed to identify where each limitation of each asserted claim is found within each Accused Product.  "In essence," the Court wrote, "Plaintiff sought to rest on the vaguely articulated notion that networks which conform to the draft 802.11n standard conform to the teachings of the '322 patent, and 802.11n-compliant products therefore necessarily infringe the '322 patent."  While using the 802.11n standard as the starting point for infringement is permissible, the Court continued, the Plaintiff failed to demonstrate how each Accused Product conforms to the standard, which it could have done by linking each Accused Product - or even an exemplary Accused Product - to the draft standard.  That would have added the information and specificity needed to comply with the requirements of Patent Rule 3-1. While "[t]here may be times where an industry standard is sufficiently particular to alone be the basis for infringement cases" Judge Love concluded, "[h]ere, however, reliance on this industry standard alone is inappropriate."  The Court did go on to note that to the extent proprietary firmware or software used in the accused products, a plaintiff might have a valid reason for not having sufficiently specific contentions at the outset, but did not find this to be one of those cases.  In conclusion, while "the use of an industry standard as the basis for infringement contentions is permissible, and in certain cases may even be sufficient to put a defendant on notice of the plaintiff's assertions of infringement. Where-as here-an industry standard fails to delineate details which are critical to an assertion or determination of infringement, such a standard will not, alone, suffice as the basis for Infringement Contentions required by this Court's Patent Rules."  (Interestingly, the plaintiff also asserted that products that did not comply with the standard infringed as well - but provided no theory of infringement at all.  Accordingly, Judge Love ordered product by product charts since there was no overall basis for infringement for these products, as there was for the standards-compliant products).
Next up was the defendants' complaint that the plaintiff was using one generic claim chart which they contended didn't take into account the differences among the accused products.  Judge Love agreed with the plaintiff that the use of an exemplar product to outline infringement contentions was permitted, but disagreed that use of the standard - as opposed to an exemplar product, was sufficient in this case, noting that the contentions conspicuously lacked detail.  "At this point in time," the Court decided, "Plaintiff must list each individually Accused Product and go through specific infringement contentions for each. For information not publicly available, Plaintiff must note that such detail is forthcoming pending further discovery and Plaintiff must note from whom such discovery is expected. In doing so, Plaintiff
would meet the requirements of Patent Rule 3-1."
The remaining sections of the opinion deal with specific claim limitations, and here the Court set out the limits of specificity, noting that "At this point in the litigation, Plaintiff is merely required to outline in detail its specific Infringement Contentions regarding particularly Accused Products. As noted above, the Infringement Contentions are not intended to
be a forum for adjudicating the merits of the plaintiff's contentions. The Infringement Contentions are intended to disclose information as a means to expediting the discovery process. As such, the merits of Plaintiff's contentions -that OFDM is a spread spectrum modulation technique- is not at issue in the instant motion. Rather, the issue is whether Plaintiff's Infringement Contentions fulfill the particular requirements of Patent Rule 3-1, by disclosing sufficiently detailed information."  (Internal citation omitted; emphasis mine).
As always, the precise relief granted is worth reviewing.  Judge Love did not strike the Plaintiff's contentions - rather he ordered the plaintiff to supplement its contentions as set forth in the order.