Eastern District of Texas Federal Court Practice

Monster not Trippe'd - Motion to Transfer Venue Denied

Monster Cable Products, Inc. v. Trippe Manufacturing Co., (9-07-cv-00286) (June 18, 2008)
Judge: Ron Clark
Holding: Motion to Transfer Venue DENIED
There are four things about this opinion that readers might find interesting:
First, readers may recall that the poster child for Eastern District opinions declining to transfer patent cases, cited repeatedly by AIPLA in its amicus brief in the In re Volkswagen case, was Aerielle, Inc. v. Monster Cable Prods., Inc., 2007 WL 951639 (E.D. Tex. Mar. 26, 2007), in which the court declined to transfer the case even though both parties were from the Northern District of California. What numerous commentators did not note (although I did my best to tell them) was that while Monster is a California resident, its claims in that case of inconvenience should be considered in the context of the fact that it files its patent infringement cases not in its home district in California either, but in the Eastern District of Texas.
This was the case presented in this case, in which the defendant sought a transfer of Monster's patent infringement claims to Illinois. Judge Clark denied the motion,. noting that the defendant had not identified a single non-party witness whose testimony may be important and who would have to travel to the district.  More interestingly, he noted that "[s]ince this court already has several cases involving Plaintiff’s products" it already had some expertise on the subject matter involved.  What, the aggrieved defendant in Aerielle actually files its patent cases in the Eastern District of Texas too?  A bunch, actually, including Monster Cable Products, Inc. v. Monster Pod Technology, Inc., Civil Action 9:07cv226 (Clark, J.) (closed March 7, 2008) and Monster Cable Products, Inc. v. Dealtree, Inc., et al., Civil Action 9:07cv306 (Clark, J.).  Just a little perspective I thought readers might find useful.
Second, following Judge Love's lead in the Aloft Media case, Judge Clark explained how he handled this motion to transfer in light of the pendency of In re VW en banc.

The vacated opinion [In re VW II] “appears to adopt a slightly lower threshold favoring the party moving for transfer.” See Aloft Media, LLC v. Adobe Sys., Inc., 2008 WL 819956 (E.D. Tex. Mar. 25, 2008). In light of the uncertainty surrounding the applicable legal standard governing Section 1404(a) venue transfer motions, this court will follow the example of the court in Aloft Media and give Trippe the benefit of the doubt by analyzing Trippe’s motion under the Volkswagen II standard, even though that opinion was vacated. Analysis under the standard set out in earlier cases would only bolster the court’s decision to deny transfer.

Third, in discussing the possibility of delay or prejudice, Judge Clark raised a few interesting facts.  He first noted that  the defendant admitted that the Eastern District of Texas typically brings cases to trial faster than the Northern District of Illinois, an admission supported by statistics indicating that in 2007 the median time from filing of a civil case to trial was 29.7 months in the Northern District of Illinois and 18.0 months in the Eastern District of Texas. "With more than 600 weighted case filings before the undersigned during the last twelve months, punting a complex patent case to Illinois would be the easy choice," Judge Clark wrote.  "However, during the twelve months prior to September 30, 2007 the median disposition time for felony cases was 14.7 months in the Northern District of Illinois and 8.7 months in the Eastern District of Texas. Should this court shirk an irksome task by transferring it to a sister court struggling to comply with Congressional Speedy Trial Act mandates?" Accordingly, after considering whether he ought to shirk his duties by dumping on a court struggling to prosecute criminals effectively, much less handle patent cases Judge Clark decided no, he really shouldn't, and held that this factor weighed against transfer as well.
Fourth, and most important, we now have a source (well, other than judicial notice) for the statement that "Nothing patent lawyers do is cheap."

Summary Judgment of Noninfringement Mostly Granted

DeepNines, Inc v. McAfee, Inc (9-06-cv-00174) (6/18/08)
Judge: Ron Clark
Holding: Defendant's Motion for Summary Judgment GRANTED in part.
Judge Clark granted the defendant's post-Markman ruling motion for summary judgment of noninfringement with respect to three of the four products asserted, and one of the three claims asserted as to the fourth. Fact issues remained as to two of the claims on the fourth product, however.  Of note, Judge Clark held that any claims of indirect infringement were precluded as well, since no theories of inducing or contributory were contained in the plaintiff's complaint or in its infringement contentions.  That its expert opined on indirect infringement less than two months before trial was not enough to save any such claims.
Judge Clark's opinion contains a good discussion of prosecution history estoppel (which caused the plaintiff problems with any claim of infringement under the doctrine of equivalents) and a "cleanup" claims construction in light of the Supreme Court's O2  Micro v. Beyond Innovation Tech., under which he wrote "the court is apparently required to supplement its claim construction whenever an issue arguably related to claim scope arises."

Be Careful What You Wish For - Joint Motion to Exceed Page Limits for Claim Construction Briefing Denied, But Claims and Terms Limited (So You Don't Really Need It Now)

Hearing Components, Inc v. Shure, Inc (9-07-cv-00104) TXED
Judge: Ron Clark
Holding: Stipulated/Agreed Motion for Leave to Exceed the Page Limits for Claim Construction Briefs DENIED
 The late great Sam Kinison had a routine in which he said that the answer to homelessness was to line up the homeless people and shoot the first one who said he had tried to get a job and just couldn't, on the theory was that the next homeless person in line would be far more motivated to find a job. (Recall that Sam was a comedian, not a serious political commentator, so this isn't me opining on public policy issues - just exhuming a metaphor - and no, I am not posting a link to the routine - my mother might be reading this, and she'd have a stroke if she heard any Kinison).
I couldn't help but recall the late comedic master when I read Judge Clark's June 13 order in the Hearing Components case pending before him in Lufkin.  In that case the parties filed a joint motion to exceed the page limits for Markman briefing from 35 pages per side to 45 because the case involved three patents and twenty claim terms. Judge Clark noted that he expects the parties to limit the claim terms submitted for construction "to those that might be unfamiliar or confusing to the jury, or which are unclear or ambiguous in light of the specification and patent history."   He also observed in a footnote that the reason the page limit was 35 in the first place was that the parties had not identified the pages they needed as required in the Court's scheduling order. Accordingly, the Court denied the joint motion, but then (and here's the funny part) sua sponte limited the claim terms to ten (citing the recently amended ND Cal. P.R. 4-1(b) which does the same) and the claims to three from each patent.  With those limitations, he held that 35 pages per side would be plenty.
Somewhere I think Sam Kinison is smiling.

Postverdict rulings in Grantley v. Clear Channel - 25% enhancement but no fees - judgment entered

The Lufkin jury in Judge Clark's court in Grantley Patent Holdings, Ltd. v. Clear Channel Communications, Inc., (NO. CIV.A. 9:06CV259) returned a verdict in plaintiff's favor last month in the amount of $66,029,750.  Yes on infringement, yes on willful, and no on the anticipation and obviousness defenses.  Judge Clark held a hearing June 4 on the parties' post-trial motions, and on June 10 entered an order resolving them and a final judgment.
The defendant's renewed motion for JMOL on damages was denied, as were its motions for reconsideration of the denials of its motion for JMOL on non-infringement, willful infringement and invalidity.  The Plaintiff's motion for ongoing royalty was granted, and injunctive relief was denied.  The parties agreed to a reasonable royalty from date of verdict to the date of the design-around's implementation a month later of $978,000.  Plaintiff's motion for entry of judgment including enhanced damages, interest, attorney fees, expenses and costs was granted in part. 
The order contained a few interesting items.
First, on the willfulness finding, Judge Clark noted that although the defendant objected that there was not evidence of willfulness with respect to some of the patents, it didn't object to the court submitting one question on willfulness, as opposed to patent by patent.  However, the court factored the evidence on a patent by patent basis into its analysis of enhanced damages - that was one reason why the enhancement was limited.
Second, on the money, Judge Clark award enhanced damages of 25% of the jury's verdict, or about $16 million, plus the stipulated amount of prejudgment interest ($6.2 million) and postjudgment interest at the prevailing rate of 2.14% for a final judgment of approximately $89 million.
Third, Judge Clark found that the case was not exceptional and denied attorneys fees, but did award costs to the plaintiff.

Beaumont jury verdict in patent case

Another Eastern District jury returned a verdict in a patent case last week, this time in the Pressure Products Medical Supplies v. Quan Emerteq Corp. case, 9:06cv121.  The Beaumont jury in Judge Clark's court (passing on a Lufkin case tried in Beaumont) found that both of the products infringed all of the asserted claims, but that none of the infringement was willful.  The jury found that the defendant had failed to show by clear and convincing evidence that any of the asserted claims were invalid as obvious or anticipated, and assessed damages at $1.1 million.
Judge Clark has already set the hearing on the post-trial motions for July 31.

(My apologies for the earlier goof on the case number - obviously no matter how much of a rocket docket you may have, it's still a bit early for 2:09cv121 to be going to trial).

Motion for Leave to Amend Invalidity Contentions Denied

The order isn't reported yet, but I thought I'd post on Judge Clark's recent opinion (June 9, 2008) denying the defendant's motion for leave to amend its invalidity contentions in the Iovate v. BSN litigation pending in Lufkin, as such orders are always of interest to practitioners.  The case number is 9:07cv46-RC and the docket number of the order is #162.
BSN sought leave to add several prior art references, but Judge Clark found that the references were all available at the time BSN filed its original and previously amended invalidity contentions, and that it had waited in some cases nearly three months after discovering them before filing its motion for leave to add them.  Judge Clark noted that the case is set for trial in September, and fact discovery closes in less than a month, yet BSN's motion for leave did not even include the substance of the proposed amendments, as required by Local Rule CV-7(k).  This failure presented a particular problem later on, when Judge Clark noted that the prejudice to the plaintiff was greater precisely because of this failure to specifically identify where in the prior art the elements of the claim could be found.
Of interest to practitioners is the cogent analysis in the order of the history and purpose of the local patent rules and their centerpiece requirement of mandatory contentions which in the ordinary course of events cannot be amended without a showing of good cause.  Also of interest is Judge Clark's explicit statement that as the ED Tex rules were modeled on the ND Cal rules, he considers the ND Cal's interpretations of its rules "persuasive authority."  Other Eastern District judges have, of course cited ND Cal cases on its patent rules when discussing the parallel ED Tex rule, but offhand I don't recall a court actually saying this before - it was simply assumed that a ND Cal case on point was worth citing.
Judge Clark analyzes the motion for leave using his customary five factor analysis (some formulations only come up with four, but the interests are essentially the same, although some of us might think that different judges consider different factors to be more important). 
One thing Judge Clark noted repeatedly in this case was an evidentiary gap in BSN's claims.  For example, it claimed that older bodybuilding magazines it was seeking leave to use were not available, but it nowhere supported that with an affidavit - and the plaintiff showed that they were in fact available.  Same thing for an old book.  BSN alleged that it was out of print and hard to find.  Plaintiff adduced evidence to the contrary, and Judge Clark got on Amazon and found it easily as well.  (Don't you hate it when that happens?)  Finally, BSN sought to add patents prosecuted by the plaintiff, but Judge Clark thought that searching for prior patents by the plaintiff was something that should have been done at the outset but, again, the chief problem seemed to be that the Court did not believe that the plaintiff carried its burden to show the "good cause" required by P.R. 3-6(b).  Good cause, in other words (mine, not the Court's) requires a pretty good excuse, and the Court didn't believe one was before it.
As noted above, the failure to specifically identify where in the prior art the claims could be found prejudiced the plaintiff standing alone, but Judge Clark went further in his analysis, noting the "pernicious effect" of accepting BSN's argument that simply producing the prior art references put the plaintiff on notice of BSN's invalidity contentions.  "Lawyers who attempted to analyze the possible range of claims against a client would be punished while lazy attorneys would be rewarded. Parties would be encouraged to adopt a
“rolling” approach to infringement and invalidity contentions in the hope of hiding their true
intentions until late in a case. This would thwart the purpose of the local patent rules."
Accordingly, Judge Clark denied the motion.  I'll revise this post if and when the case comes out on Westlaw to add the cite.

Nintendo verdict motion for remittitur filed

In a motion filed today, defendant asked for a remittitur, stating that

"[t]he only evidence in this case concerning the amount of a reasonable royalty was that offered by Anascape’s damages expert, Walter Bratic, who opined that a reasonable royalty would be 5% on sales of allegedly infringing controllers. No record evidence supporting a royalty rate higher than 5% was introduced by Anascape and no royalty base other than that provided by Mr. Bratic was submitted to the jury. Once the jury determined that the only infringing controllers were the Wii Classic and the older generation GameCube and Wavebird wireless controllers, under the time-honored maximum recovery rule, the highest damages supported by the record was an award of 5% on the sales of the controllers found by the jury to infringe."

That would result in a $2.79 million award, not the $21 million the jury found.  Stay tuned for further developments.

Patent case verdict for plaintiff in Lufkin

Another recent Lufkin patent case jury verdict.  The Lufkin jury in Judge Clark's court in Grantley Patent Holdings, Ltd. v. Clear Channel Communications, Inc., (NO. CIV.A. 9:06CV259) recently returned a verdict in plaintiff's favor in the amount of $66,029,750.  Yes on infringement, yes on willful, and no on the anticipation and obviousness defenses.  Postverdict motions are pending.

Plaintiff's Motion for Summary Judgment on Defendant's Inequitable Conduct Claims Granted

Grantley Patent Holdings, Ltd. v. Clear Channel Communications, Inc., 540 F.Supp.2d 724 (E.D.Tex. Mar 31, 2008) (NO. CIV.A. 9:06CV259)
Judge: Ron Clark
Holding: Plaintiff's Motion for Summary Judgment on Inequitable Conduct GRANTED
Plaintiff Grantley Patent Holdings, Ltd. moved for summary judgment on the inequitable conduct claims advanced by Defendants, arguing that defendants had produced no evidence of materiality or intent to deceive. Judge Clark noted that inequitable conduct must be proven by clear and convincing evidence, and that the defendant had provided "scant" evidence of the failure to disclose material information or of submission of false information, and "virtually no" evidence of intent to deceive (he later states that the evidence is "most accurately characterized as paltry.") "Under the governing evidentiary standard," the court held, "this exiguous" (ed note - no, I don't know what this word means either) "record demonstrates no genuine issue of material fact regarding the inequitable conduct claims [therefore] Grantley's motion for summary judgment is granted."
Judge Clark's opinion in this case provided a useful summary of the standards for summary judgment as well as for claims of inequitable conduct.  In the end, he concluded that while the evidence might get past SJ if the standard were preponderance of the evidence, as it is, with the evidence before him he'd have no choice but to grant a motion for judgment as a matter of law if the jury came back with a finding of inequitable conduct - accordingly he granted the motion.

Patent verdict in Lufkin

Yesterday afternoon a Lufkin jury found in favor of Anascape in a patent case brought against Nintendo having to do with controllers for the Wii and GameCube systems.  Anascape had also sued Microsoft, but settled shortly before trial began.  Damages assessed were $21 million.  I'll post with more details once I've studied the verdict form.