Eastern District of Texas Federal Court Practice

Motion to Transfer Denied

U.S. Ethernet Innovations LLC v. Ricoh Americas Corp., 6:12cv235

Judge: John Love

Holding: Motion to Transfer Venue DENIED

Judge Love denied the motion to transfer this case to the Northern District of California, applying the new timing standard enunciated in In re EMC II to a complex set of facts involving multiple cases in different courts.  "For the aforementioned reasons," he concluded, "the Court cannot find that the Northern District of California is a clearly more convenient forum."

"Ricoh has only generalized the location of relevant sources of proof, and as such the Court cannot speculate into the weight of that factor. The only witnesses specifically identified rendered the consideration of compulsory process to only slightly favor transfer and the convenience of witnesses neutral under the Court’s analysis. Further, Ricoh was unable to establish the Northern District of California has a local interest in the outcome of this litigation. Ultimately, Ricoh has failed to meet its burden to establish that transfer is clearly more convenient."

The Court found it important that Ricoh did not seek transfer to its home district in New Jersey.  "Instead, Ricoh seeks transfer to a district, the Northern District of California, farther away from its home district than the Eastern District of Texas. If a party cannot establish the clear convenience of the transferee forum it requests, the Court cannot transfer a case simply because it chooses a district it would prefer to be transferred to.  See Wellogix Technology Licensing LLC v. Automatic Data Processing, Inc. et al, 6:11-cv-401 (E.D. Tex. March 19, 2013). (“although litigation is always an inconvenience, the “clearly more convenient” standard does not address a shift in inconvenience”)."

Accordingly, the Court denied Ricoh’s Motion to Transfer.

Motion to Dismiss Plaintiff's Claims for Indirect Infringement and Willful Infringement Recommended Granted

U.S. Ethernet Innovations, LLC v. Samsung, et al., 6:12cv398 (2/7/13)

Judge: John Love

Holding: Motion to Dismiss Plaintiff's Claims for Indirect Infringement and Willful Infringement Recommended Granted.

Defendant Yamaha filed a motion to dismiss, contending that USEI’s allegations of inducement, contributory infringement, and willful infringement in its amended complaint were insufficient.

With respect to the inducement allegations, Judge Love wrote that because Form 18 does not expressly pertain to indirect infringement, the general principles of Twombly and Iqbal apply. Yamaha claimed that the plaintiffs complaint failed to meet the pleading requirements for inducement because it did not allege the requisite intent element or "knowledge that its current customer's acts constituted infringement":

Essentially, USEI  argues that a reasonable inference of intent and knowledge  can be made  from  the following allegations in its complaint: (1)  Yamaha has actual or constructive knowledge of the asserted patents, yet continues to infringe; (2)  Yamaha supplies “infringing systems and components to [its] customers;” and (3) Yamaha’s “customers who purchase systems and components thereof and operate such systems and components thereof in accordance with [Yamaha’s] instructions directly infringe one or more claims.” Here, USEI’s complaint alleges a direct infringer, namely Yamaha’s customers, but nevertheless fails to: (1) recite the elements of an inducement claim; and (2) allege any facts that, if taken as true, establish a plausible inference that Yamaha had the specific intent to induce its customers actions, and knowledge that those actions amounted to infringement. ... USEI’s allegations that Yamaha “supplies” infringing systems and components and provides “instructions” to its customers who allegedly infringe do not create a reasonable inference of inducement. In sum, USEI’s complaint as to its inducement allegations fails to provide Yamaha with adequate notice.  

(Internal cite omitted).

With respect to contributory infringement, Judge Love held that the complaint failed to put Yamaha on notice of a claim of contributory infringement because it was "devoid of any allegation from which the court can plausibly infer that any components being sold have 'no substantial non-infringing uses.'"

As to the willful infringement allegations, Judge Love wrote that while a plaintiff need only a good-faith basis for alleging willful infringement, at the pleading stage, the plaintiff alleging willful infringement "should provide enough facts that, when taken as true, show objective recklessness of the infringement risk." Judge Love held that plaintiff had not satisfied the standard because it "fail[ed] to state any facts that could be taken as true to recite a relief–worthy claim for willful infringement." This was because the allegation was devoid of any facts that created an inference of Yamaha's objective recklessness. Instead "it only makes the conclusory assertion that Yamaha had knowledge of the asserted patents and continue to infringe. Without more, USEI's allegation of willful infringement fails to provide adequate notice."

The court granted plaintiff leave to amend its pleadings to correct the identified deficiencies within 14 days.

 

 

Motion to Dismiss for Failure to State a Claim and for Improper Joinder Recommended Denied

U.S. Ethernet Innovations, LLC v. Samsung, et al., 6:12cv398 (2/6/13)

Judge: John Love

Holding: Motion to Dismiss Plaintiff’s Claims for Failure to State a Claim and for Improper Joinder Recommended Denied

A defendant in this case filed a motion seeking two things: (1) dismissal of the plaintiff's claims for failure to state a claim because it claimed the plaintiff's allegation that the product at issue used Samsung's "System-on-Chips" was false; and (2)  dismissal of the case for improper joinder under the AIA.

As to the first issue, the defendant attached a declaration attesting to the falsity of the allegation at issue, but Judge Love declined to inquire into the truth of the allegations at the pleadings stage, citing caselaw to the effect that "“the allegations in the complaint must be liberally construed in favor of the  plaintiff,  and  all  facts  pleaded  in  the  complaint  must  be  taken  as  true" and held that the plaintiff's allegations formed the basis of a claim that was "plausible on its face."

As to the second issue, the defendant asserted that joinder was not proper because the two defendants named in the suit were competitors, citing a 2012 Florida case, Motorola Mobility.  Judge Love distonguished the case because that case involved "similar products," while in this case the same product was at issue (a product by defendant 1 that incorporates defendant 2's chip) thus satisfying the "same product" prong of the AIA's joinder provision.  The Court noted that the joinder issue was resolved on the pleadings because it was part of a motion to dismiss and stated that "[s]hould facts arise under discovery that would re-urge the Court's calculation of joinder" the defendant could present those to the Court at the proper time.

Tyler jury finds for patent plaintiff - awards $608,373

I thought I'd let everyone see my three boys playing Minecraft in the conference room this afternoon (they got out of school early today to start their Christmas break) as I mention that on Monday a Tyler jury in Judge John Love's court found for the plaintiff in Patent Harbor LLC v. Funai Corp..  The jury found that all six of the accused products infringed the one asserted claim, and that the defendant had not shown by clear and convincing evidence that the claim was invalid as anticipated, obvious, or not enabled.  The jury awarded $608,373.  I do not know what the plaintiff asked the jury for, or the defendant said the damages were in the event of infringement.

While there were a number of other defendants in the case originally, Funai was the only defendant by the time of trial.

Motion for Stay Pending Reexamination Denied

Fractus v. Samsung, 6:09cv203 (8/17/12)

Judge: John Love

Holding: Motion to Stay Pending Reexamination DENIED

Fractus filed suit against Samsung in May 2009.  Over a year later, Samsung petitioned the United States Patent and Trademark Office (“PTO”) for inter partes reexamination for all the claims Fractus asserted in the litigation.  Fractus and Samsung proceeded to trial on May 16, 2011, and after a five day trial, a jury found that Samsung’s accused phones infringed Fractus’s asserted patents and assessed damages through trial.  After the jury’s verdict, the Court denied Samsung’s post-trial motions and entered final judgment. See Fractus verdict affirmed in JMOL rulings; damages enhanced but no injunction.  The Court also severed Fractus’s claim for an ongoing royalty into a separate action and ordered the parties to attempt to negotiate, via mediation, a license for a post-verdict royalty without the Court’s intervention. 

But just recently, the PTO issued a ruling closing the reexam proceedings and rejecting all the assrted claims of the four patents that the jury determined were infringed.  Samsung now requested a stay of the proceedings in order to allow any potential appeal from the BPAI to proceed concurrently at the Federal Circuit with Samsung’s appeal from the jury’s verdict.  Fractus, on the other hand, asserted that it was entitled to a stay of the reexam proceedings, and was seeking that from the PTO.

Judge Love noted that Samsung failed to address any of the factors that district courts consider when determining the efficacy of staying a litigation pending completion of a reexamination. "Given that the factors cut heavily against the granting of a stay," he noted, "Samsung argues that the factors are not applicable, and that the Court should instead apply the appellate standard for staying an appeal."  Judge Love rejected this argument and addressed the traditional factors typically considered by district courts regarding such a motion, and denied the requested stay.

Oh Frak - Survey Evidence Not Admissible

(Ed. note:  in going through my recent posts in preparation for the upcoming bench/bar, I just realized that I never took this post off "draft".  So while it's a year and a half old, since Battlestar Galactica is sort of an evergreen, I thought there might still be some interest in frakking survey evidence). 

I have thus far managed to avoid the obvious comment that the Fractus trial before Judge Davis in Tyler this month has been ... fractured ... into four trials (ba-da-bing) but when I saw a particularly interesting pretrial ruling from Judge Love I just couldn't help noticing the similar between the name of the case and a favorite made-up expletive on the Battlestar Galactica series - frak (originally "frack" in the 1978 series).

It's a great word - the YouTube video here explains the word and compiles all the uses during the first season of the new series (with links to season 2-4, proving that somebody has way too much time on their hands).  Here I think the new series improved on the original, which was a bit prissy to make full use of the word's potential (although I still like the unforms better).  The word's utility is extended yet further by the oil and gas technique (not unknown in East Texas, by the way) of "fracking"  which is where you basically give the ground an enema to assist in extracting your petrochemical of choice. 

Anyway, this oh-so-versatile word was not used in Judge Love's opinion in the frakking, excuse me, Fractus litigation this week when he dealt with the issue of the admissibility of survey evidence in the face of a Daubert challenge to the experts presenting.  In Fractus, the plaintiff commissioned two surveys to determine the value to consumers of "incorporating internal antennas in cell phones in place of external antennas."  This survey provided the opinions that internal antennas are 109% as important as keyboards, and contribute between $16.02 and $29.96 to the value of a cell phone, which represented an attempt to quantify the estimated value to consumers of preference for internal antennas in cell phone. 

But in Fractus, S.A. v. Samsung, et al., 6:09cv203 (April 29, 2011) Judge Love excluded these surveys, noting that they were not tied to the alleged advantageous characteristics of the frakking patents - I mean the Fractus patents.  The plaintiff didn't invent internal antennas, and while it contended its patents were "fundamental" to the operation of internal antennas, the surveys didn't measure how consumers valued the advantages provided by the Plaintiff's technology - just how much customers like internal antennas. Judge Love wrote:

Survey evidence purportedly demonstrating the value of internal antennas not tied directly to Plaintiff’s technology confuses the issues and must be excluded. Allowing the jury to hear such evidence not tied to the claimed invention risks “compensation for infringement [that] punishes beyond the reach of the statute.” ResQNet.com, Inc. v. Lansa, 594 F.3d 860, 869 (Fed. Cir. 2010). Indeed, admissible expert testimony must “carefully tie proof of damages to the claimed invention’s footprint in the market place.” Id.; see also Lucent Technologies, Inc. v. Gateway, Inc., 580 F.3d 1301, 1337 (Fed. Cir. 2009) (the court’s objective is “determining the correct (or at least approximately correct) value of the patented invention, when it is but one feature among many” ) (emphasis added).

But there was a voluminous (as footnotes go) footnote containing a warning, since lawyers are peculiarly unable to leave well enough alone, and most evidentiary exclusions - at least in my experience - are at least implicitly conditional, something a lot of lawyers are phenomenally bad at recognizing.  Doors don't open just a crack, as I've heard Judge Ward said many the frakking time - they open all the way.  "Absent specific valuations, survey evidence demonstrating that consumers generally prefer cell phones with internal versus external antennas may be relevant if Defendants open the door to such a comparison. For example, if Defendants contend that a particular external antenna is an acceptable noninfringing alternative, evidence of broad consumer demand for internal antennas may rebut the acceptability of external antenna as an alternative. While the Court does not anticipate such evidence, in the event that Defendants take such a position, Plaintiff may approach and request admission of the general survey evidence demonstrating consumer demand for internal antenna – without the specific dollar and percentage valuations."  (Emphasis added).

Why Don't We Just Take the Depositions in My Courtroom, Shall We?

Realtime Data v. MetroPCS, 6:10cv493 (9/7/12)

Judge: John Love

Holding:  Motion to Exclude Evidence and Testimony from Flash Employee Witnesses DENIED

Judge Love held that "[d]ue to the parties’ inability to work out this particular dispute, the Court ORDERS the depositions of Flash employees Eric Carmel, Ed Graefen, Roy Rodan, and Marcin Zablocki to occur in the undersigned’s courtroom at 9 a.m. on September 24, 2012."

I had a hotline call a couple of months ago where the judge on that call ordered the deposition to proceed and he'd just stay on the line and rule on objections as they came up.  The parties in this case are in for a real treat. 

Motion to Dismiss the Indirect Infringement Counts from the Complaint Granted in Part

Patent Harbor v. Dreamworks, et al., 6:11cv229 (E.D. Tex. 7/27/12)

Judge: John Love

Holding: Motion to Dismiss the Indirect Infringement Counts from the Complaint GRANTED IN PART

Defendants argued that the plaintiff's complaint failed to adequately plead any form of indirect infringement because: (1) it does not allege that Defendants had knowledge of the ‘514 patent or
the required specific intent and (2) it fails to identify a direct infringer.  After reciting the applicable standards, Judge Love held that the complaint adequately identified a direct infringer, i.e. "contractors" and that the categories of products were sufficiently identified, i.e. "DVDs and Blu-Ray discs with content-addressing features" which he found was "more than adequate to comply with Form 18 because not only does it identify a general category of products analogous to “electric motors,” but it also identifies specific features of the accused products that embody the claimed invention, i.e., “content-addressing features (e.g., illustrated chapter/scene selection).” 

Judge Love also held that the plaintiff adequately pleaded inducement, but that its pleadings with respect to contributory infringement were not sufficient to state a claim because "the Complaint fails to identify the components used in the infringing method and is devoid of any allegation from which the Court can plausibly infer that any components being sold have “no substantial non-infringing uses.”  Patent Harbor was given 14 days to replead.

Stipulation of Noninfringement Following Markman Ruling

NovelPoint Learning, LLC v. Leapfrog Enterprises, Inc., 6:10cv229 (3/8/12)

Judge: John Love

Holding: Order Granting Agreed Motion for Entry of Final Judgment

The parties stipulated to Judge Love's entry of final judgment of noninfringement in this case as a result of Judge Love's claim construction ruling.

Motion to Transfer Venue to Nebraska Granted

Phil-Insul Corp v. Reward Wall Systems, Inc., et al., 6:11cv53 (E.D. Tex. 2/10/12)

Judge: John Love

Holding: Motion to Transfer Venue GRANTED

This is a patent case dealing with insulated concrete forms, illustrated by the "standard panel" shown at left.  Judge Love concluded that the Defendants had met their burden  to show that transfer to the District of Nebraska was clearly more convenient. The Court found that the relative ease of access to sources of proof and the cost of attendance for willing witnesses heavily favor transfer, as did the local interest factor. The remaining convenience factors, including judicial economy, are neutral or slightly against transfer.  "This is a case that is significantly localized in Nebraska and Canada," Judge Love wrote.  "Most of the Defendants are Canadian, as is Plaintiff; yet, Reward Wall’s presence in Nebraska creates a domestic locus in the transferee venue. In addition, most of the identified witnesses and documents are in Canada or Nebraska. It would be far more convenient for many of the parties to travel to Nebraska, as it would to transport relevant documents and demonstrative devices to the transferee venue. Further, this action has no meaningful connection to Texas. In sum, there is little convenience to the parties should this case remain in Texas, while there are several reasons why it would be more convenient for the parties to litigate this case in Nebraska."

From Docket Navigator.