Eastern District of Texas Federal Court Practice

Motion to Compel Discovery Regarding Plaintiff's Patent Licensing Practices Granted In Part

MOSAID Technologies Inc. v. Micron Technology, Inc. et al (2:06-cv-00302) (6/18/08)
Judge: David Folsom
Holding:  Motion to Compel Response to Discovery Regarding Plaintiff's Licensing Practices GRANTED in part.
Plaintiff MOSAID was a member of an industry standard setting group, which required it to provide licenses to its patents on terms that were reasonable and nondiscriminatory (RAND).  The defendant sought discovery into the terms of the licenses MOSAID obtained, since it asserted that MOSAID did not provide RAND terms, and that its alleged failure to do so supported the defendant's claims for breach of contract and promissory estoppel.
First, on the subject on how much value the patents-in-suit received in the licenses, MOSAID claimed it didn't have anything responsive other than litigation experts' opinions.  Judge Folsom ordered MOSAID to produce anything on the subject that wasn't litigation expert (which wasn't due yet).  Second, defendant sought MOSAID's prior licensing offers.  Judge Folsom granted the motion insofar as it requested prospective information, i.e. what terms would MOSAID grant a license on, as well as on past settlements and negotiations, as they were relevant to the issue of whether MOSAID was abiding with its RAND obligations in its licensing offers to the defendant.

Summary Judgment of Noninfringement Granted

Ring Plus v. Cingular Wireless LLC, et al, 5:08cv42 (Document #280) (June 4, 2008)
Judge: David Folsom
Holding: Summary Judgment of Noninfringement GRANTED
This is a patent case involving telecommunications.  Defendants moved for summary judgment of noninfringement on two bases, and Judge Folsom conducted a hearing on April 22 of this year.  Regardless of the filing date (perhaps this is a follow-on case or was severed - I haven't checked) Judge Folsom conducted a claims construction hearing last year and the order refers repeatedly to the constructions adopted by the Court in orders dated July 9 and July 26, 2007.  Based upon those constructions, he concluded that summary judgment of noninfringement under both literal and doctrine of equivalents was appropriate on both asserted bases.

So Say We All - Defendants accept conditional stay pending reexamination in Premier cases

Two weeks ago Judge Folsom issued orders on the defendants' motions for stay pending reexamination in the Premier v. HP and Premier v. Microsoft cases.  (2:07cv 395 and 396 - docket no's 104 and 234 respectively) granting the motions conditioned on the defendants signing a stipulation "so that neither side will be prejudiced by the other side getting “two bites at the apple.”"  Today Judge Folsom noted that all defendants in both cases accepted the stipulation, and accordingly stayed both cases, and directed the parties to notify the Court when the reexamination proceedings are complete. 

Motion for Stay Pending Reexamination Granted with Modifications

Today Judge Folsom issued orders on the defendants' motions for stay pending reexamination in the Premier v. HP and Premier v. Microsoft cases.  (2:07cv 395 and 396 - docket no's 104 and 234 respectively).  Judge Folsom wrote that "[a]ll three Soverain factors weigh in favor of a stay; however, the Court determines that a stay should be counterbalanced with an appropriate stipulation so that neither side will be prejudiced by the other side getting “two bites at the apple.”"  Accordingly, the order provided:

It is further ORDERED that within fourteen (14) days, Defendants shall either (1) file with the Court a signed copy of the following stipulation, or (2) notify the Court in writing of their decision not to sign the following stipulation:

As a condition of the stay, Defendant may not argue invalidity at trial based on one or more prior art printed publications that were submitted by Yahoo! or those provided by Apple, either to the PTO directly or to Premier during the Apple litigation, in the reexamination proceedings, as well as, those prior art printed publications submitted in any newly requested reexamination process. However, Defendant will be permitted to rely for obviousness on the combination of printed publication references that were submitted by petitioner in the reexamination with prior art that was not so submitted. Any Defendant seeking a request for reexamination must do so within ninety (90) days of filing its stipulation.

It is further ORDERED that as to each Defendant entering into the stipulation, a stay of all proceedings shall ensue.

Plaintiff's Motion for Limited Jurisdictional Discovery Granted

Womack v. Nissan North America, Inc., 2007 WL 5160790(E.D.Tex. Oct 12, 2007) (NO. 2:06-CV-479-DF)
Judge: David Folsom
Holding: Plaintiff's Motion for Limited Discovery GRANTED; Defendant's Motion to Dismiss for Lack of Jurisdiction and Insufficient Service of Process DENIED WITHOUT PREJUDICE
This is the putative (a word created to describe the first stages of class actions, as best I've been able to tell) odometer class action.  Plaintiff moved for limited discovery on matters bearing on Nissan America's motion to transfer to the Eastern District of Michigan and to consolidate with three other cases pending in other districts and to establish proper service.  Subsequent to this motion, the other actions with which Nissan America had requested consolidation were voluntarily dismissed. At the hearing on September 6, 2007, the parties indicated that they had reached an agreement on the motion to dismiss for improper service, so the only matter remaining for Judge Folsom to rule on was the motion for jurisdictional discovery and the motion to dismiss for lack of jurisdiction.
Essentially, Defendant Nissan Japan moved for dismissal alleging lack of personal jurisdiction, and plaintiff sought discovery into the defendant's contacts in order to respond.  After reviewing the parties' arguments, Judge Folsom held that the Plaintiff has “suggest[ed] with reasonable particularity the possible existence of the requisite contacts” and therefore allowed discovery into the extent of control exercised by Nissan Japan over the affairs of Nissan America, and denied Nissan Japan's Motion to Dismiss without prejudice.  The specific jurisdictional discovery permitted (whichs sets forth the framework for the proceedings to resolve Nissan Japan's personal jurisdiction defense) was the following:

It is ORDERED that for jurisdictional discovery as to Nissan (Japan), Plaintiffs may serve no more than twenty-five (25) interrogatories and twenty-five (25) requests for admissions. It is further ORDERED that for jurisdictional discovery as to Nissan (Japan), depositions shall be limited to a total of twenty-five (25) hours, except that deposition time requiring the use of an interpreter shall only count as half-time toward this total, e.g. one hour of deposition time requiring an interpreter shall only count as thirty minutes toward the twenty-five hour limit. No one deposition shall last longer than six (6) hours. These depositions shall take place in a mutually agreeable city in Japan, unless the parties agree otherwise.
It is further ORDERED that jurisdictional discovery shall be completed within 75 days after entry of this Order. Defendant may renew its motion to dismiss for lack of jurisdiction within 30 days of jurisdictional discovery being completed.

Motion to Dismiss Federal Odometer Act Class Action Denied

Womack v. Nissan North America, Inc., --- F.Supp.2d ----, 2007 WL 5160791(E.D.Tex. Feb 16, 2007) (NO. 2:06-CV-479-DF)
Judge: David Folsom
Holding: Motion to Dismiss for Lack of Subject Matter Jurisdiction DENIED
This is a class action in which the plaintiff claims that the defendant makes vehicles that violate the Federal Odometer Act because they allegedly inflate the mileage driven by 2% over the actual mileage driven, thus reducing the value of the warranties and diminishing resale value.  Judge Folsom found that the plaintiffs stated a sufficient claim to confer standing, and accordingly denied the motion to dismiss for lack of subject matter jurisdiction.  Judge Folsom also denied the 12(b)(6) motion, noting that an issue of fact existed as to how much inflation occurs, as well as how much inflation is permissible under the Act.
Nissan also sought dismissal or repleading under FRCP 9, claiming that the plaintiff had not sufficiently pleaded its "fraud-based" claim under FRCP 9.  Judge Folsom declined to decide whether the plaintiff's claim was sufficiently fraud-ish to trigger the pleading requirements of FRCP 9, instead deciding that even if the rule applied, the plaintiff's allegations satisfied it.

Two Down and Two Out: Defendants' Joint Motion to Dismiss, Sever, and/or Transfer Patent Case Granted

QR Spex, Inc. v. Motorola, Inc., 507 F.Supp.2d 650 (E.D.Tex. Jun 18, 2007) (NO. C.A. 5:06-CV-124 (DF)
Judge: David Folsom
Holding: Defendants' Joint Motion to Dismiss, Sever, and/or Transfer GRANTED
This is a patent case with really interesting personal jurisdiction and venue facts. 
QR Spex alleges that Oakley's O Rokr sunglass infringes its patent. “O Rokr” is the marketing name for a Bluetooth enabled product that allows a user to talk on a cell phone or listen to music transmitted from a Bluetooth enabled device.
When this suit was filed Oakley promptly began action to, as QR Spex put it, “divest this Court of jurisdiction.” For example, the ten samples of the O Rokr given to Texas “O Stores” and to certain Oakley sales representatives in Texas were immediately removed from this state.  The only two O Rokrs to reach Texas were those purchased by a private investigator, who was retained to seek out and purchase O Rokr glasses via the “stream of commerce.” He was able to purchase two O Rokrs, one through the Oakley “O Store” located in Scottsdale, Arizona.  Mr. Jones telephoned the store's assistant manager and inquired about having an O Rokr sent to Texas. Not knowing the motives of either Mr. Jones or QR Spex, the assistant manager assured Mr. Jones that she could ship an O Rokr to him if he would first mail a money order to her in Arizona. Mr. Jones complied and he received his O Rokr in Texas. He then purchased the second O Rokr from HDO Sports's website on August 21, 2006 by placing an online order.  At oral argument Oakley informed the Court that upon learning of these purchases the assistant manager in Scottsdale was disciplined, all Oakley retailers were again instructed not to make any sales to Texas residents, and the O Rokr was removed from the HDO Sports website.
In any event, Judge Folsom noted, the evidence shows that Oakley, ODI, OSC, and Motorola do not and will not offer the O Rokr for sale in Texas or to Texas residents any time in the near future.  As a result, Oakley and ODI asked Judge Folsom to dismiss them for lack of personal jurisdiction because the O Rokr has not, and will not, enter Texas via the stream of commerce. In the alternative, the Defendants moved the Court to either dismiss for improper venue or to transfer this case to the Central District of California under 28 U.S.C. § 1404. 
After setting forth the Federal Circuit's test for personal jurisdiction, Judge Folsom  noted that this case presented him with what is apparently an issue of first impression: whether the stream-of-commerce theory can support personal jurisdiction over a defendant even if the allegedly infringing product never reaches the forum through the stream of commerce (every controlling stream-of-commerce case that he could locate involved a scenario where the accused product actually reaches the forum).  Judge Folsom held that "[g]iven these circumstances [Oakley's extensive efforts to not market the O Rokr in Texas and to intentionally avoid shipping or distributing the O Rokr here] and the controlling precedent, the Court finds that an exercise of personal jurisdiction under the stream-of-commerce theory is only appropriate where the allegedly infringing product reaches the forum."
Next, Judge Folsom evaluated whether any allegedly infringing use, sale, or offer to sell of an O Rokr occurred in Texas, i.e. whether the presence of the engineering samples or the Plaintiff's purchases in Texas were sufficient to support personal jurisdiction.  He concluded that the samples were not sufficient to support jurisdiction either as an infringing use or as an offer for sale, and with respect to the investigator's purchases noted that "the Court finds it unnecessary to consider these purchases because they constitute QR Spex's unilateral acts; albeit acts that successfully circumvented the measures Oakley undertook to avoid availing itself to this forum."  (He also rejected the Plaintiff's claim that there was personal jurisdiction because the defendant had given lance Armstrong a O Rokr in California, and Lance lives in Texas).  Although the issue was moot given that he held that the "minimum contacts" test was not met, he also held that the "fair play" requirement was not met, writing that "the Court finds that this case is one of those rare circumstances where an exercise of personal jurisdiction would not comport with notions of fair play and substantial justice."
Judge Folsom then rejected the Plaintiff's alter ego argument, which claimed that because the Court had general jurisdiction over one of the defendants (whose headquarters was in the Eastern District) it also had jurisdiction over related companies. 
Having pared the case down from four defendants to two, Judge Folsom proceeded to the venue claim.  Although the plaintiff's choice of forum was a factor that weighed against transfer, the private factors, as a whole weighed in favor of transfer, and the public factors either favored a transfer or were neutral.  Accordingly, Judge Folsom concluded that "the Court finds that Defendants have met their burden in showing that the substantial absence of infringing acts in the Eastern District of Texas clearly favors transfer of this case to the Central District of California. Furthermore, proceeding with this case without Oakley and ODI would hinder judicial economy and would risk wasting judicial resources. As a result, the Court hereby GRANTS Defendants' Motion to Transfer Venue as to OSC and Motorola."

Paice v. Toyota - jury verdict & denial of injunction affirmed, remanded for calculation of ongoing royalty

Readers will recall that last year Judge Folsom issued orders on requests for injunctions in two trials where plaintiffs had prevailed, granting the injunction in one case (TiVo v. Echostar) and denying it in the other (Paice v. Toyota).  Yesterday the Federal Circuit ruled on the appeal of the latter.  Readers interested in a thorough discussion of the holding should check out Dennis Crouch's analysis here but in short, the court affimed the jury's finding of infringement under equivalents and its decision not to find literal infringement.  It was also okay with the decision not to grant an injunction and with the idea of  an ongoing royalty (which it wouldn't call a compulsory license). 
What it was not okay with and remanded for a redetermination was the district court's setting the royalty at the $25 per engine found by the jury, noting in passing that the plaintiff does not get a jury to determine the ongoing rate.  The language I found interesting was the reason for the remand - it was because the court "was unable to determine whether the district court abused its discretion" with respect to calculating the royalty because the district court didn't provide any basis for that number beyond the jury's verdict.  Seems a little backwards to me - if the burden is to show that the court abused its discretion, then if the appealing party doesn't meet it by showing that the number is affirmatively really wrong, the court's decision must be affirmed.   Apparently the Federal Circuit sees things a little differently - the number may be right, it said - it isn't saying $25 an engine is wrong - but there must be some (unidentified) analysis backing it up and an explicit opportunity for the parties to negotiate out a royalty rate before the court sets one (the dissent even suggests that the district court has to get the parties' permission to set one - indicating that the court must allow the parties a chance to negotiate a rate first.  I wonder if the Court realizes that discussions like this are ongoing in almost every case, and that knowing the court is moving along with the case is what drives the parties to reach resolution.  If the court announces it's not doing anything, what incentive do the parties have to reach agreement?).  While I don't disagree that's a good idea, I would point out that the order explicitly allowed the parties to work something out, the parties of course had had months after the verdict and during the appeal to do so, and the parties had every opportunity to argue why $25 was or wasn't an appropriate amount both before the jury and in the post-trial briefing (plus the appeal). 
The question on appeal was whether $25 per engine was an abuse of discretion or not - if Toyota didn't show that it was, then it wasn't.  That the record may not have been fleshed out the way the court would have preferred, or the district court did or didn't use the procedure the appellate court would have liked to me is irrelevant.  Was the result an abuse of discretion or was it not - clearly the Federal Circuit could not say that it was, or that the court violated any standards in setting it, so the amount should have been affirmed.  That's how I understood standards of review to work, but what do I know?
In any event, at least the parties get a chance to rehash this issue under the guidance provided by the opinion, and then they can appeal that to see if this time they have enough information to earn a finding that they got it right.  My complaint is just that this decision adds another two years to the dispute without even finding that the district court did anything incorrectly.  If I were king, I'd simply say that Toyota had not persuaded the appellate court that the district court's simple application of the rate found by the jury was an abuse of discretion in this case.  Not saying that's the right way to do it or that it'll always or even often be sufficient, but here, there was no persuasive argument that the court should have calculated it differently.  (Again, I'm just going by the opinion - it's possible that Toyota did exactly that and this is simply a courteous way of finding abuse of discretion - wouldn't be the first time that an appellate opinion bore no relation to the case.  Reminds me of the statement by a former Texas Supreme Court judge, who said that the reason they put the case names at the top of the opinions is so the lawyers can tell which case they apply to - because sometimes you can't recognize your case by reading the court's opinion on it.)

Cybergym v. ICON settles

I posted on Tuesday that the parties in Cybergym v. ICON Health & Fitness, 2:05cv527-DF started trial this morning in Judge David Folsom's court in Marshall.  The parties announced a settlement to the Court this morning (the case was still in plaintiff's case in chief at the time of settlement).   The jury was discharged with the thanks of the Court and the parties, but afterwards was kind enough to come into the courtroom to ask and answer questions about the conduct of the trial with the counsel in the case (our firm was local counsel for Cybergym) and Judge Folsom. 

Cybergym v. ICON Health & Fitness trial gets underway in Marshall

The parties in Cybergym v. ICON Health & Fitness, 2:05cv527-DF started trial this morning in Judge David Folsom's court in Marshall.  The jury was selected last Tuesday, and the trial is expected to last until sometime next week.  The patents deal with certain exercise machines made by ICON as part of its iFIT.com line of products which the plaintiff asserts infringe its patents.