Eastern District of Texas Federal Court Practice

Should I Stay Or Should I Go Now?

 The Federal Circuit's record on venue mandamuses this year goes from 1-1 to 2-2 over the weekend with (yet another) In re Volkswagen and In re Genentech.
In the former, arising out of the MHL Tek litigation, the Court denied a petition directing it to mandamus Judge Ward's denial of a motion to transfer the case to Michigan.  There are three MHL Tek cases pending in Judge Ward's court - two filed by MHL, and a third, a dec action originally filed by Volkswagen against MHL in Michigan, but which was transferred by the Michigan court to Texas, citing judicial economy.  VW filed a mandamus on that transfer, and the Federal Circuit denied it last year.  That denial, incidentally, was part of the basis for Judge Ward's denial of the defendants' motion to transfer the three Marshall cases to Michigan earlier this year.  The Federal Circuit agreed, noting that "[i]n this case, the existence of multiple lawsuits involving the same issues is a paramount consideration when determining whether a transfer is in the interest of justice" and denied the petition for mandamus.
In re Genetech arises out of the Sanofi litigation pending in Judge Ron Clark's court, in which a German plaintiff sued two California companies.  The Court observed that California was only marginally less convenient than Texas for the foreign plaintiff, and declined to allow the Texas court's central location to trump the fact that the California court was "clearly more convenient" for the parties and witnesses in this case.

Judge Clark finds patent invalid on remand in Finisar v. DirecTV

  An eagle-eyed reader asked yesterday what effect Judge Clark's May 19 ruling finding the patent invalid in Finisar v. DirecTV, No. 1:05cv264 had on my recent statement that the last 2 1/2 years the results at trial in patent cases in the Eastern District are 17-17.  The short answer is none, as the Finisar trial was before the period I was referring to, so I wasn't counting it as a plaintiff's win because they won at trial or as a defense win because the Federal Circuit set aside the verdict and remanded.  Finisar was, incidentally, the last in the string of consecutive plaintiff's verdicts that ended in the fall of 2006.  But a little more background is in order.
In the summer of 2006, a Beaumont jury returned a verdict of $78.9 million for Finisar in Judge Ron Clark's court, following the court's pretrial ruling that while seven of the asserted claims were invalid as indefinite, seven were not.  Whether this was a plaintiff or defense win depends on who you believe - the plaintiffs claimed a win because they won about four times what the defense said the proper measure of damages was, assuming infringement and invaldity (which were contested) while the defendants told me that they won because the damages were about three percent of what the plaintiff had sought at trial.
The case went up on appeal and the Federal Circuit reversed in part, remanding for reconsideration due to a change it made in the court's claims construction (they do that, you know).  See Finisar Corp. v. DirecTV Group, Inc., 523 F.3d 1323, 1341 (Fed. Cir. 2008).  On remand, Judge Clark invited briefing on the invalidity issues under the new construction, and on Tuesday of this week granted the motion for summary judgment that the remaining asserted claims were either anticipated or obvious.

Limitations in Licensing Agreements Did Not Constitute Patent Misuse

Hearing Components, Inc. v. Shure, Inc., 2009 WL 815526(E.D.Tex. Mar 26, 2009) (NO. 9:07-CV-104)
Judge: Ron Clark
Judge Clark recently conducted a bench trial on the defendant's claims of laches and patent misuse in this case.  While he denied the laches claim at the hearing, he issued this order later denying the patent miuse claim and setting forth his reason for concluding that the limitations in the plaintiff's licensing agreements did not constitute patent misuse, either per se or under a "rule of reason" analysis.  The specific provisions complained of in this case included (1) providing for a post-expiration marking requirement; (2) requiring postexpiration supply obligations; (3) providing for an undiminishing royalty rate; and (4) including a potential retroactive royalty increase.

Patent Verdict Cut by 2/3 Postverdict

Hearing Components, Inc v. Shure, Inc (9-07-cv-00104) (E.D. Tex. March 6, 2009)
Judge Clark.
The jury in this case returned a verdict for the plaintiff and awarded damages of $4.622 million on January 21 in Judge Clark's court. Defendant Shure filed a motion for judgment as a matter of law (JMOL) of noninfringement, and Judge Clark granted it, in part, finding that the evidence was legally insufficient to support a finding that Shure’s straight nozzle products infringe the asserted claims of the patents-in-suit. Accordingly, he struck the portion of the jury verdict awarding damages for infringement by Shure’s straight nozzle products, which totalled $3,230,635.00. The remainder of the jury verdict, $1,392,364.00 for infringement by Shure’s barbed nozzle products, stood.

Motion for Stay REALLY Denied

Affinity Labs of Texas, LLC v. Dice Electronics, LLC et al (9-08-cv-00163) (Feb. 20. 2009)
Judge: Ron Clark
Defendant filed a motion for stay, noting that it had filed an ex parte reexamination of patent in suit.  Others may disagree, but I detected a touch of judicial disapproval in Judge Clark's order, expressed some dislike for the defendant's choice of reexamination, and well as the circumstances of the case.  "Defendants did not act with dispatch in seeking review (ed note: the motion was filed five months after the case was filed); the parties are well into the discovery process already," Judge Clark wrote.  "[S]taying the case pending outcome of an ex parte reexamination is not likely to simplify the issues. Defendants’ failure to choose the congressionally provided option of a binding inter partes reexamination smacks of a litigation tactic designed to bog down, rather than expedite, resolution of this case."
Defendants’ motion to stay was accordingly denied.

Patent case transferred where no infringing acts in the district

Fifth Generation Computer Corporation v. International Business Machines Corporation, 9:08cv00205 (Feb. 17, 2009)
Judge: Ron Clark
This is Judge Clark's first venue ruling post VW Tech, and after analyzing the private and public interest factors, he concluded that transfer was warranted.  The public interest factors were a wash, with one in favor, one against, and two neutral.  Two of the private factors nudged the court slightly towards transfer, with one neutral and one slightly against.  But the other two – the relative ease of access to sources of proof and the cost of attendance for witnesses – both weighed "fairly heavily" in favor of transfer. "Key to the court’s decision," Judge Clark wrote, "are the facts that no (accused products) have been sold in Texas; no act of infringement has been identified as occurring in the Eastern District; only one potential witness has been identified as having any connection to Texas at all; multiple potential witnesses are located in or near the Southern District of New York ... and both parties have their principal places of business in the Southern District. Although other witnesses and evidence may be located outside of New York, (Plaintiff) fails to specifically identify any such individuals or documents to the court. Under these facts, transfer to the Southern District of New York is appropriate."

How Not to Appeal a Markman Ruling

SciCo Tec GmbH v. Boston Scienific Corp., --- F.Supp.2d ----, 2009 WL 259742(E.D.Tex. Jan 30, 2009) (NO. CIV.A. 9:07-CV-76)
Judge: Ron Clark
This is a patent case (well, obviously - not a lot of Markman rulings outside of patent cases).  Judge Giblin conducted the Markman, and the defendant, Boston Scientific (name sounds familiar, but I can't remember why...) appealed.  But, contrary to the requirements of the local rules (Judge Clark noted), BSC neither stated specific objections to Judge Giblin's order construing the claims, nor set out any basis for its objections. It simply asserted that it objected, lists some 22 alleged points of error, and stated that it “relies on the argument and authorities set forth in its February 19, 2008 Responsive Claim Construction Brief (Dkt. No. 50), its April 18, 2008 Letter Brief to the Court (Dkt. No. 67), and at oral argument before the Magistrate Judge on April 10, 2008 (Dkt. No. 70).”
Judge Clark was not amused.  BSC's objections "are no better than a complete failure to object," he wrote. "They shed no light on their desired construction of disputed terms, why those terms may be important in light of the infringement or invalidity contentions, or how Judge Giblin allegedly erred in his analysis. By no stretch of the imagination can such conclusory objections be said to have “shown that the magistrate judge's order is clearly erroneous or contrary to law” as required by § 636(b)(1)(A)."  Wait - he's not done yet.  "Boston's bare assertions do not set out any basis for the objections as required by Local Rules for cases under § 636(b)(1) subsections A and B. Rather they appear to be an attempt to lard the record with a wide variety of potential points of error from which the best, as determined by future development of the case, may chosen and briefed at the Court of Appeals in the event of an adverse judgment."  No, wait - still not done.
"As in most patent cases, Boston is represented by a team of experienced counsel with qualified experts at their side. Their objections to a magistrate judge's order cannot simply be a demand that a district judge conduct a de novo review of the entire record in a blind hunt for a nugget of harmful error buried somewhere in mounds of briefing and oral arguments. Such an approach prevents the district court from effectively reviewing the magistrate judge's order, and frustrates one of the purposes of 28 U .S.C. § 636-to assist district courts in their work."  Accordingly, Judge Clark found that BSC had not complied with the requirements for objecting to a magistrate judge's claim construction order, and denied its objections.  He did not - surprisingly in my unlearned opinion - cite Nicholas Acoustics & Specialty Co. v. H&M Constr. Co., Inc., 695 F.2d 839, 846-47 (5th Cir. 1983) which sagely observed that "Judges are not ferrets!" (I actually have a graphic for this, but there's no way I'm posting it).

Another patent verdict from Lufkin

On January 21, the jury in Judge Ron Clark's court rendered a verdict in Hearing Components v. Shure, 9:07cv104.   Yes on infringement, no on invalidity defenses, and damages of approximately $4.6 million.

Objections to Submission of Future Royalty Rate to Jury

Cummins-Allison Corp. v. SBM Co., Ltd., 584 F.Supp.2d 916 (E.D.Tex. Nov 03, 2008) (NO. 9:07 CV 196)
Judge: Ron Clark
Holding: Objections to Submission of Future Royalty Rate to Jury OVERRULED
As readers know, Judge Clark recently started issuing orders indicating he would consider submitting to the jury a question on future damages.  Plaintiff in this case objected, asserting that because it is entitled to a permanent injunction if the jury finds infringement, submission of a question on a future royalty rate would confuse the jury, greatly increase the time and expense of trial preparation, and endanger its right to seek injunctive relief.
Judge Clark rejected the plaintiff's reasoning, writing that "The Federal Circuit has recognized
the need for the district court to provide a “concise but clear explanation of its reasons for the
[future royalty] fee award.” Amado, 517 F.3d 1353, 1362. The jury verdict provides some assistance in this regard. As stated by United States District Judge William Young, the concept of a jury question on future damages is “not only efficient” but a technique that “recognizes the vital role of the jury as fact finding partner.” Amgen, Inc. v. F. Hoffman-La Roche Ltd., 581 F.Supp.2d 160, 210, n. 12, 2008 WL 4452454 at *45, n. 12 (D.Mass. Oct. 2, 2008)."

Judgment and injunction entered in Ariba v. Emptoris

Also this fall, a Lufkin jury in Judge Ron Clark's court returned a verdict for the plaintiff in Ariba v. Emptoris, 9:07cv0090-RHC.  The jury found infringement, but split on willfulness, finding one claim not, and one yes.  No on invalidity, and no on a question whether the plaintiff unreasonably delayed in filing suit.  Damages were $1.45 million for the first patent, $600,000 in past royalties, and an ongoing royalty of 1.5% of gross sales. Yes on a question that asked if the plaintiff properly marked.  Damages on the second patent were $2.27 million, $600,000 in past royalties and the same 1.5% ongoing royalty, plus yes on marked.
Readers may recall Judge Clark's prior order re: asking juries to provide ongoing royalty rates - but the issue won't be settled with this case.  In the judgment entered January 7 Judge Clark entered a permanent injunction along with an order that the defendants pay $4.982 million in damages, prejudgment interest of $207,000, and enhanced damages of $1.449 million (plus of course court costs and future interest at the current rate of .37%).
Of interest are provisions indicating that Emptoris is implementing a software patch that it appears may act as a "design-around" thus largely mooting both the injunction and the need for an ongoing royalty had the Court not entered an injunction.