Eastern District of Texas Federal Court Practice

Summary Judgment of Invalidity (Obviousness) Granted; Motion for Leave to Amend to Assert Walker Process Claims Denied

The Ohio Willow Wood Company v. Thermo-Ply, Inc., (9-07-cv-00274) (Nov. 20, 2009)
Judge: Ron Clark
Holding: Defendant's Motion for Summary Judgment GRANTED; Defendant's Motion to Amend PICs DENIED
On Friday Judge Clark granted summary judgment ending this case.  It has an interesting procedural history.  After plaintiff OWW filed suit against TP, another company intervened, claiming ownership rights in the patent.  Judge Clark held a hearing on the inventorship and invalidity issues raised to the defendant and stayed the case pending resolution of these issues.  The defendant then filed a motion seeking to assert Walker Process claims (Sherman Act violations which allege fraud before the PTO).  Judge Clark denied the motion, concluding that TP could have met the deadline in the scheduling order for asserting such a claim.
More interesting (not that anyone could ask for more from the first order, of course) is another order, also from Friday, in which Judge Clark granted TP's motion for summary judgment that all asserted claims were invalid as obvious (SJ on anticipation was sought, but not granted).

Motion to Tranfer Venue to Minnesota Denied

Deep Nines, Inc. v. McAfee, Inc., 2009 WL 3784372(E.D.Tex. Nov 10, 2009) (NO. CIV.A.9:09CV89)
Judge: Ron Clark
Holding: Motion to Transfer Venue DENIED
"It is clear that where there is no connection with Texas or the Eastern District of Texas, venue is improper here," Judge Clark opens this opinion, citing In re Genentech, 566 F.3d 1338 (Fed.Cir.2009). That was not the situation in this case, he concluded, since there were significant contacts with Texas generally, and the Eastern District specifically. One of the Defendants has an office in the Eastern District, and several potential witnesses are located in the district. In addition, a number of witnesses have also been identified in Dallas (which seasoned venue practitioners know is immediately adjacent to the Eastern District). In addition, Judge Clark had previously adjudicated a dispute between two of the parties in this case, including a claim construction hearing and a trial, involving infringement of one of the patents-in-suit. Also, Deep Nines's claims involve, to some extent, the settlement agreement entered into by Deep Nines and McAfee at the conclusion of the earlier case, and the agreement provides that it shall be governed by Texas law. "Under these facts," Judge Clark wrote, "Secure has not met its burden to demonstrate that transfer to the District of Minnesota is 'clearly more convenient.'”

Order Awarding Damages for Post-Verdict Sales

Cummins-Allison Corp. v. SBM Co., Ltd., --- F.Supp.2d ----, 2009 WL 3855958 (E.D.Tex. Nov 13, 2009) (NO. CIV.A. 9:07CV196)
Judge: Ron Clark
Holding: Order re: Damages for Post-verdict Sales of Infringing Products
This order arose in the context of sales made after the date of the verdict for the plaintiff and before the date the court entering an injunction to prevent future infringing conduct.
In this case, pursuant to notice given to the parties well before trial, the jury was asked to determine future damages, and arrived at a royalty rate of $400.00 per infringing unit sold. Judge Clark concluded that there was substantial evidence to support this finding. In accordance with 35 U.S.C. § 284, and after considering the Seagate factors, Judge Clark determined that Defendants' post-verdict sales were willful and thus enhanced the jury's award to $500.00 per infringing unit sold.
Judge Clark's order is a very helpful analysis of the law - constantly evolving though it may be - on the issue of future damages in patent cases.

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.

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."