Motion to Sever and “Reverse” Bifurcate (2:11cv216; Docket 133) (July 22, 2011)
Judge: None - it's a motion
Holding: Again none - it is a Motion to Sever and “Reverse” Bifurcate by Defendant Otter Products, LLC
It is rare for me to post on a motion as opposed to an order, but to celebrate the end of the NFL lockout, let me say that this one's an exception, and represents the advocacy equivalent of Dallas Cowboys cornerback Bryan McCann's performance last season, where he arguably won two games for the Cowboys by seizing an opportunity. Against the Giants, McCann stepped in front of a New York receiver and picked off an Eli Manning pass and took it to the house. A week later, with the Cowboys on the ropes against the Detroit Lions, McCann saw that the Lion defenders were consistently tipping punts back into the field of play without protecting them - so he lurked close to the goal line covering a punt, then grabbed the ball when the Lion defenders tipped it back and - stop me if you're heard this before - took it to the house. In both cases, he saw an opportunity, and took it to the... , uh made the most of the opportunity. (I am so happy the lockout is over - can't you tell?)
As I posted recently, Judge Davis in particular "has some concerns about plaintiffs who file cases with extremely weak infringement positions in order to settle for less than the cost of defense and have no intention of taking the case to trial. Such a practice is an abuse of the judicial system and threatens the integrity of and respect for the courts.” Uniloc USA, Inc. v. Sony Corp. of Am., No.
6:10-CV-373-CA, 2011 U.S. Dist. LEXIS 54541, at *23 (E.D. Tex. May 20, 2011). “In some cases," Judge Davis has observed, "Defendants are faced with a Hobson's choice of spending more than the settlement range on discovery, or settling for less than their cost of defending the case, regardless of the merits of the case.” Parallel Networks v. AEO Inc. et. al., Case 6:10-cv-00111, Docket No. 338 p.6 (ED Tex. March 15, 2011).
Well somebody was listening. In this case, the plaintiff filed suit against 37 defendants alleging infringement of one patent. According to its motion, upon being served with the Complaint, Defendant Otter Products, LLC attempted to identify the purported products accused of infringing the patent. "Of the five purported Otter products named in the Complaint, only two were actually ever sold by Otter. These two products were only sold from 2006 to 2009 and both were discontinued in 2009. Both products were secondary Otter products and the sales of both products were trivial."
Otter denies that its products infringe the patent, and told Judge Everingham that it believed the plaintiff's asserted patent will not survive an invalidity challenge. But after conducting a damages analysis, Otter stated that infringement and validity were really beside the point because it "realized that the cost of litigating this lawsuit may exceed a thousand times any conceivable damages value." Specifically, it came up with damages of $800-$2,500 even if the patent was found to be infringed and valid. Accordingly, it made a settlement offer, which, after repeated calls, was finally rejected.
It is what Otter did next that is unusual, if not unprecedented. Otter, represented in this case by Rachael ("Bryan McCann") Lamkin of the San Francisco firm of Turner Boyd LLP (which means she probably really doesn't appreciate the Cowboys references) moved for "a procedural remedy directly aimed at preventing the extraction of settlements based on the cost of defense instead of actual damages. Pursuant to this Court’s broad discretionary authority under Rules 21 and 42(b), Otter respectfully asks this Court to:
Otter told the Court that it believes the above "reverse bifurcation" solution will "avoid a monumental waste of resources, promote judicial efficiency, and discourage plaintiffs from using patent litigation as a tactic for extracting cost-of-defense settlements and refusing to participate in early settlement negotiations as part of that strategy." The motion goes on to provide an excellent precis of the legal authority supporting its unusual request.
While this issue has come up in previous cases with Judge Davis, and I have brought the issue up myself at a hearing, it hasn't been presented so clearly by a small defendant, and I just wanted to recognize this example of the sort of innovative procedures that we often see from our judges. Of course it may turn out that the damages are really more, or that the plaintiff will eventually drop small defendants like this on its own, but it's the tactic that I wanted to highlight.
Now for the caveats: I am not saying this motion should, or will be granted - I don't know all the facts and I have this thing about expressing opinions when that's the case. And it is important to note that this isn't necessarily the right tactic for all defendants - even in this case - and certainly not in every case. But it's an innovative way to try to resolve very small patent infringement claims, it's very well-presented, and I just wanted to recognize it. (Okay, it may have had a little to do with that the NFL lockout ended today and I just had to get a football analogy in somehow).
As readers know, there will be a district court vacancy created by Judge Ward's retirement at the end of September. This afternoon the Senate Judiciary committee in Washington set Marshall lawyer Rodney Gilstrap's nomination for a hearing next week, notably before the Senate's August recess.
On the magistrate judge front, the applications period for Judge Everingham's magistrate judge position closes this afternoon.
Judge: T. John Ward
Holding: Motion to Transfer Venue GRANTED
Before proceeding into the public and private interest factors on this motion to transfer venue, Judge Ward addressed two "unique issues related to judicial economy", specifically the plaintiff's assertion that two judicial economy reasons weighed against a transfer, specifically: (1) judicial economy weighs against transfer because of this Court's experience with the patents-in-suit; and (2) judicial economy weighs against transfer because JJVC waited seventeen months to file this motion to transfer. Judge Ward held that these assertions didn't weigh against transfer in this case.
Because both the undersigned and Magistrate Judge Everingham are retiring from the bench on October 1, 2011, these issues do not weigh as heavily, with respect to judicial economy, as they may have otherwise. Issues of “judicial economy” are generally considered in connection with the “other practical problems” private interest factor. See Software Rights Archive, LLC v. Google, Inc., Civ. No. 2:07-CV-511-CE, 2010 WL 2950351, at *3-4 (E.D. Tex. July 22, 2010). In this case, Rembrandt's argument with respect to the seventeen-month delay is an issue of judicial economy. See id. Further, the Court‟s familiarity with the particular case is also an issue of judicial economy. Id.
With respect to the Court‟s familiarity and experience with the patents-in-suit, due to the approaching retirement of both the undersigned and Magistrate Judge Everingham, there will no longer be a judge in the Marshall Division with familiarity of this case. Therefore, the Court‟s current familiarity is of no further use in this case, given that this Court has already performed a claim construction in this case and neither the undersigned nor Magistrate Judge Everingham will be available to try this case in May of 2012. As such, the Court's familiarity and experience under the unique facts of this case, do not affect the analysis of judicial economy or the other private or public interest factors.
With respect to the seventeen-month delay in filing this motion to transfer venue, though not commendable, under the unique facts of this case, the Court holds that the delay is not sufficient for this Court to keep the case in the Eastern District of Texas.... JJVC filed this motion to transfer venue three months after learning of the undersigned‟s retirement—and potentially less than three months. As indicated above, the undersigned‟s announcement of retirement shifts the analysis of the private and public interest factors more in the direction of transferring venue, so it is reasonable that JJVC may have decided to file the motion to transfer venue only after learning of the undersigned's retirement.
Though in Novartis Vaccines & Diagnostics, Inc. v. Wyeth this Court has found that a sixteen-month delay may “weigh heavily against transfer,” that case is distinguishable because the motion to transfer was not filed soon after the judge on the case announced his retirement. 2:08-cv-76-TJW-CE, 2010 WL 1374806 (E.D. Tex. Mar. 31, 2010) (Everingham, M.J.).
Therefore, under the unique facts of this case, the seventeen-month delay does not weigh as heavily against transfer.
Having addressed these two factors, Judge Ward examined the traditional factors, and observed that the relative ease of access to sources of proof and the availability of compulsory process to secure the attendance of witnesses weigh slightly in favor of transfer, and the cost of attendance for willing witnesses and local interest weigh in favor of transfer. In addition, no factors weigh against transfer and all other factors are neutral. Therefore, the Court concluded that JJVC had met its burden of showing that the Middle District of Florida is “clearly more convenient” than the Eastern District of Texas, and granted the motion to transfer.
Because of the delay between the editorial board meetings and when an issue comes out it frequently surprises me when an issue of the Texas Bar Journal hits my desk and it has this brilliant theme with state of the art articles on an issue that's timely for practitioners. It happened this week when the July issue, which focuses on the state of forensic science showed up in my in box. The issue can be found here online.
The genesis of the issue was the Texas Forensic Science seminar, held last October by the Texas Criminal Justice Integrity Unit and seven other organizations. The event covered numerous issues relating to forensics in the legal field, including the admissibility of forensic science testimony, and issues in forensic laboratories.
Inspired by that seminar, this issue of the Texas Bar Journal looks at the status of forensic science in Texas, and features the following:
On a final note, readers owe a debt of thanks to Justice FitzGerald, who helped coordinate this issue. Kerry (I've tried calling him Judge for six years on the bar journal board now and finally gave up because it plainly irritates him) just rotated off the board this summer and we have been fortunate indeed to have his input and ideas and commentary. It has made the Texas Bar Journal a better publication, and we will miss him.
I spent an enjoyable day in Tyler setting up SBPS' newest office in suite 204 of the Plaza Tower building (the black one in the picture) across the street from the federal courthouse in Tyler. It was my first time to see the beautiful new conference table in the new offices - actually longer than both the conference tables in Marshall combined - but it's not much use yet since the chairs are on back order, so I had to bring a folding chair. But we can serve coffee and there are pictures of ships on the wall (including Judge Hannah's old print of the battleship Texas by R.G. Smith - back in Tyler where it belongs) so it's a real office now. Just one in which only one person can sit down at a time. Unless you tell me ahead of time, and then I'll bring another chair, of course. This was certainly the right day for it, since I had several conference calls and hearings and it was nice to have an actual office to settle down and concentrate. And of course it will come in handy for hearing prep, as well as meals and meetings during trial. Well, and I sort of enjoy setting up furniture and electronics in a new office, so that was nice as well. Routers and wireless networks, and office supplies and surge protectors - all that good stuff.
But the high point of the day was attending the second of the "mini-Markman" hearings set by Judge Davis and Judge Love. As readers know, they have, at the defendants' request in a couple of multi-defendant cases, agreed to conduct early "mini-Markman" hearings on three claim terms identified by the defendants as potentially dispositive in noninfringement summary judgment motions. The first was held late last month in the Parallel Networks case, and Judge Davis has not yet ruled, and today's before Judge Love was the second. As I have noted before, this isn't the only tool they have used to manage large cases differently recently, but it is the one that's drawn the most attention and interest.
SynQor, Inc. v. Artesyn Technologies, Inc. et al, 2:07-cv-00497 (July 11, 2011)
Judge: T. John Ward
Holding: Defendant Lineage's Motion to Amend and Increase the Partial Judgment Pursuant to Fed. R. Civ. P. 59 DENIED; Sanctions Against Defendant Lineage GRANTED. Motion for Sanctions and Supplemental Damages as to Defendant Delta GRANTED.
As I posted previously, back on December 21, 2010, a Marshall jury in Judge T. John Ward's court found that the eleven named defendants (I think there were five or maybe seven defendant groups) directly and/or indirectly infringed various patent claims. On December 29, 2010, the Court entered a partial judgment on the verdict ordering the defendants to pay the monetary damages awarded by the jury, which collectively totaled $95,224,863, of which approximately $87.1 million was lost profits and the balance of which was a reasonable royalty on units for which lost profits were not calculated.
Defendant Lineage Power Corp. later filed a Motion to Amend and Increase the Partial Judgment Pursuant to Fed. R. Civ. P. 59. Admittedly an odd motion from a defendant, but not nearly as odd as the facts - it dealt with products which the defendant had not disclosed until after the trial and the injunction had been entered after the trial, so the defendant was asking the court to find certain products infringed based on the jury's findings and ratchet up the damages accordingly. Not so fast - Plaintiff SynQor, Inc. filed an opposition and a cross-motion for sanctions due to failure to timely disclose products during discovery and for an assessment of supplemental damages on recently disclosed sales of Lineage products. Judge Ward denied Lineage's request to amend and increase the partial judgment pursuant to Fed. R. Civ. P. 59, and granted SynQor‟s requests for supplemental damages for the sales of 79,881 semi-regulated QSW025 and QBW025A0B bus converters incorporated into Lineage's CDC 350 product and 566/568 products. Based on the damages model adopted by the jury, the Court awarded $4,475,051.00 to SynQor for these sales by Lineage.
In addition, Judge Ward held that Lineage was subject to sanctions for discovery violations, and ordered Lineage to pay $100,000.00 in civil contempt sanctions, as well as fees and costs attributable to the discovery abuses for failure to timely identify these relevant products.
You know the saying about "if you friend jumped off a cliff, would you too?" Well, apparently so. The next order Judge Ward issued was also a sanctions order, this time against defendant Delta Equipment, this time for $500,000. Again, Judge Ward found that Delta "willfully and intentionally" violated the Court's discovery orders when it failed to disclose substantial sales until after the verdict, and adjusted damages upward a little over $560,000. He then asessed a monetary sanction of $500,000 as a civil contempt sanction, plus fees and costs.
Remember the "bit" in the original Tron that yipped "yes, yes, yes, yes!" or "no, no, no, no!" at Jeff Bridges' character (it even has a wiki entry here). This jury verdict form reminds me of that because the jury form has 24 "yes" answers on page 2, 24 more on the next page, then 14 "no's", 21 "no's", 16 more, and finally three more. Appropriately, the damages number was a single digit (well, not counting the "million" part) although not a binary one.
Friday a jury in Judge Ron Clark's court in the Lufkin case Personal Audio v. Apple, 9:09cv111 awarded the plaintiff $8 million after finding that all eight product groups infringed the three asserted claims literally (and four claims by doctrine of equivalents). The jury found that the numerous (and separately submitted) references alleged to anticipate or render the claims obvious did not do so, at least not be clear and convincing evidence. I do not know what the plaintiff was asking for at trial, but I have seen a report of $84 million earlier in the litigation - I'll update this post when I hear something more concrete.
Motorola Mobility, Inc., et. al. v. TiVo Inc., 5:11cv053 (E.D. Tex. 7/6/11)
Judge: Caroline Craven
Holding: Motion to Stay GRANTED
TiVo filed a motion to stay, asserting that Motorola filed this case in retaliation for TiVo's filing another case against Motorola's customer Verizon. Judge Craven noted that TiVo relied on the "first to file" rule, but held that the rule did not apply in this case "as both the Verizon Lawsuit and this case are pending before the same district judge, eliminating the concern over comity and minimizing the concerns of inconsistent and duplicative rulings. Rather than apply the two-part test relied upon by TiVo, in determining whether to stay this litigation, the Court will instead apply the factors laid out by this Court in Soverain Software LLC v. Amazon.com, 356 F.Supp.2d 660 (E.D. Tex. 2005)" which I note were in the context of a stay pending reexam, thus providing these factors with a new context.
Judge Craven eventually concluded that "[w]hen considering the totality of the circumstances, the Court finds this lawsuit should be stayed in its entirety for six months, pending resolution of the Verizon Lawsuit. The stay shall be automatically lifted on January 3, 2012, and a status conference is scheduled before the undersigned at 10:00 a.m. on January 4, 2012. TiVo may request another stay at that time if circumstances warrant."
From Docket Navigator.
Yes, it's road trip time again for the Eastern District. This year the annual bench/bar will be a month earlier than usual, and as the invitation to the 2011 Eastern District of Texas Bench/Bar Conference from Bar Association President Glenn Thames points out, this year will be a little different as well, as this year it will be a joint conference with the U.S. Court of Appeals for the Federal Circuit. The meeting will begin at the Four Seasons resort in Las Colinas (better known as Irving, better know as Dallas, better known as close to DFW) with a reception on the evening of Sunday, September 25 followed by events on Monday and Tuesday, September 26 and 27.
I can tell you from working on the program committee that the program will be outstanding, headed by Chief Judges Randall Rader of the Federal Circuit and David Folsom of the Eastern District, and will include other judges of Federal Circuit and essentially the entire Eastern District bench, as usual, as well as an exceptional lineup of local and national practitioners and topics focused on patent litigation (go figure).
While there will be a dinner and speaker Monday evening, conference planners have helpfully scheduled other Monday evening entertainment that may be of interest to attendees at this DC/Texas- themed conference nearby - the Dallas Cowboys will be hosting the Washington Redskins at their home opener in Cowboys Stadium in nearby Arlington at 7:30 pm Monday night (it's probably on TV at the hotel as well). No, your registration won't include seats, which will likely be rare for this rivalry, but - assuming the lockout is over - you can look for them here if you're interested in sneaking off for a few hours to cheer for your favorite team at JerryWorld.
(Maybe next year we can a have bench/bar with the Fifth Circuit in New Orleans when the Cowboys play the Saints...)