Eastern District of Texas Federal Court Practice

Once and Future Willful Infringement Claims

Touchscreen v. RIM, 6:12cv263 (3/27/13)

Judge: Michael Schneider

Holding: Motion to Dismiss Willful Infringement Claims GRANTED

Defendant RIM contended that Plaintiff Touchscreen’s willfulness claims should be dismissed.  Judge Schneider agreed, and addressed both Touchscreen's pre-filing and post-filing allegations of willful infringement.

First, with respect to the allegations of pre-suit willful infringement, the Court noted that the original complaint did not allege any pre-filing knowledge of the patents. "Rather," the Court wrote, "the complaint merely states as to each patent that “[t]o the extent that facts learned in discovery show that RIM’s infringement of the [asserted patents] is or has been willful, Touchscreen Gestures, LLC reserves the right to request such a finding at time of trial."  This "reserves the right" allegation, absent any supporting facts, Judge Schneider concluded, was insufficient to establish a willful infringement claim.

Judge Schneider concluded that the complaint presented no facts supporting that Touchscreen had a good faith basis for alleging willful infringement. The absence of any allegation of pre-filing knowledge of the patents was held fatal to Touchscreen’s willful infringement claims, as was the fact that the plaintiff made no allegation that RIM acted despite an objectively high likelihood that that its actions constituted infringement of a valid patent.

Moving on to post-filing will infringement (or at least attempting to) Touchscreen next argued that the filing of the suit itself was sufficient to support post-filing willful infringement claims.  Judge Schneider disagreed, finding that the allegations were not sufficient, and that post-filing conduct could be remedied by seeking a preliminary injunction, which Touchscreen had not done.  

To maintain willful infringement claims, Touchscreen must demonstrate that RIM knew about the patents and acted despite an objectively high likelihood that its actions constituted infringement of a valid patent. Touchscreen’s complaint is completely void of any allegations or facts pertaining to willful infringement. See Realtime Data, LLC v. Stanley, 721 F. Supp. 2d 538, 545 (E.D. Tex. 2010) (finding that based on pleading language nearly identical to the instant case, that “Seagate clearly requires a patentee to do more than suggest that more definite allegations are to follow once discovery is underway”).

 

Plaintiff Win in Invalidity-only Trial in Marshall; Patent Trials Year-to-Date

A Marshall jury in Judge Michael Schneider's court in Marshall (sitting in the old courthouse) rendered a verdict for the plaintiff today in Alexsam v. Best Buy, et al., finding that the twelve claims asserted in the related infringement actions were not shown by clear and convincing evidence to be invalid as anticipated by two prior art references, or for improper inventorship.  The case is set for an imequitable conduct bench trial before Judge Schneider later this month, followed by the first of the multiple infringement trials against the defendants.

This is the second invaldity-only case of the year.  In the prior one, Oasis v. Carbonite/EMC, a Sherman jury in Judge Mazzant's court found the asserted claims invalid for improper inventorship.  In the other four trials this year, the plaintiff won infringement and defeated invalidity in one (Patent Harbor v. Funai), the defendant won a noninfringement verdict but did not win on invalidity in another (VirnetX v. Cisco), and in the remaining two (Hitachi v. Top Victory; Realtime v. T-Mobile)  the defendants won both noninfringement and invalidity.  At least those are the verdicts I am aware of - if I have missed any readers please let me know.  

So the win rate thus far this year for plaintiffs is 1-1 on invalidity-only cases, and 1-4 in infringement and invalidity cases.

Shades of 2007...

Motion to Stay Under "Customer Suit" Exception Denied - But Cases Realigned so Manufacturers Go First

Keranos v. Analog, et al. 2:10cv207 (1/10/13)

Judge: Michael Schneider

Holding: Motions to Stay DENIED

Plaintiff accused Defendants of infringing a series of patents by manufacturing or incorporating SuperFlash memory chips into multiple accused products. SST, which was not named in the original Texas action, and several of the Defendants that were, filed four cases seeking declarations of no infringement and invalidity in the Northern District of California.  The Northern District of California transferred the Declaratory Judgment Actions to the Eastern District of Texas to be considered with the original action.  The customer defendants now asked the Court to stay Keranos’ claims against them until after resolution of Keranos’ claims against the manufacturers of the accused products.

Judge Schneider noted that when cases are pending in the same venue, “the court may exercise its general discretion to manage its docket and need not rely on the customer-suit exception.” As the customer defendant claims “currently are pending in the same court and even within the same cases as the manufacturing defendant claims. . . . the Court finds the customer-suit exception unavailing in these actions.”  However, although the customer-suit exception did not compel it to stay the claims involving the customer defendants, the Court found that an amended case management plan separating the manufacturers from the customers and placing the latter on a slow train would further judicial economy and efficiency in these cases.

The Court finds that grouping the parties for scheduling and pretrial purposes presents the most efficient and practical approach for managing these cases through trial. Based on the parties’ arguments in their motions to stay and the responsive briefing and argument at the status hearing on December 12, 2012, the Court agrees that the claims against the manufacturing defendants will resolve many of the issues related to the customer defendants. But an indefinite stay of the customer defendant claims—which are nearly three years old—is not warranted. Instead, the Court will realign the cases into two new actions divided between manufacturing defendants and customer defendants, as designated below. The new cases will proceed on a staggered schedule with the manufacturing defendant action proceeding on a more accelerated schedule.

 

Geotag transfer orders

As I posted last week, the docket reallocation sent a couple hundred of Judge Schneider's pending cases to Judge Gilstrap. Prior to that, however, Judge Schneider ruled on a number of pending motions to transfer in the Geotag litigation..  I have extracted two grants to summarize, and will try to post on an exemplar denial in the next few days.

In a truly magnificent coincidence, the motions below are by Godfather's and Fredo (okay, Fred's).

Geotag v. Godfather's Pizza, 2:10cv572 (1/14/13)

Judge: Michael Schneider

Holding: Motion to Transfer Venue GRANTED

Nebraska.  That's where Geotag's claims against Godfather's Pizza are headed after Judge Schneider granted the motion to transfer.  Geotag didn't opose GP's motion to sever as long as the case stayed and was consolidated for pretrial, but did oppose if it would be transferred.

With respect to the private interest factors, Judge Schneider found that Geotag's ties to the Eastern District were not recent or ephemeral, nor was its presence an artifact of prior litigation, nor in anticipation of litigation, and detailed the facts he considered in coming to this determination, but still found that the location evidence favored transfer, since the bulk of the relevant identified evidence is more easily accessed from the District of Nebraska.  In addition, he found that the District of Nebraska has absolute subpoena power over all of the identified third-party witnesses, while the Eastern District of Texas does not have absolute subpoena power over any identified non-party witnesses. The Court found that this factor "weighs heavily" in favor of transfer.  It also found that the convenience to non-party witnesses factor weighed in favor of transfer.Finally, looking at the "all other practical problems" factor, Judge Schneider found that it was neutral:

This litigation involves over 100 cases against in excess of 400 defendants. Although GeoTag asserts the ‘474 patent in each case, none of the cases involve related defendants or overlapping products or services. GeoTag argues that having a single court familiar with the facts and legal issues would produce significant gains in judicial economy. The Court disagrees.

Although all of the cases involve infringement claims, none of them share the same accused services. GeoTag claims that common issues between defendants provide gains in efficiency. But this argument is unavailing. GeoTag has not pointed to any “common issues” that would not be present in all infringement cases (i.e. claim construction). This is not a situation where other practical problems jeopardize the easy, expeditious, and inexpensive trial of this dispute.

The Court will not permit the existence of separately filed cases to sway its transfer analysis. Otherwise, a plaintiff could manipulate venue by serially filling cases within a single district. Allowing a plaintiff to manufacture venue based on this alone would undermine the principals underpinning transfer law and the recently enacted America Invents Act. See Leahy-Smith America Invents Act, 35 U.S.C. § 299 (2011) (codifying new law for determining proper joinder in patent cases).

With respect to the public interest factors, Judge Schneider found three factors netrual, and one, the local interest, to slightly favor transfer.  Taking all the factors together, he found that the defendant had carried its "significant burden" to justify a transfer.

Geotag v. Fred's, 2:10cv478 (1/14/13)

Judge: Michael Schneider

Holding: "You are nothing to me now."  Okay, okay, motion to transfer was GRANTED

Godfather homage, aside, the motion to transfer by Fred's did not take the proverbial fishing trip on Lake Tahoe, and was granted as well.

 

 

Protective order provisions on source code review & prosecution bar

Geotag v. The Known Universe, 2:10cv570 (1/8/13)

Judge: Michael Schneider

Holding: Motion for Protective Order GRANTED

Protective orders are common, and orders resolving the parties' disputes as to specific provisions in protective order are also fairly routine.  Unfortunately (or fortunately) the disputes are usually few enough and narrow enough that courts often resolve them by simply including the preferable provision in the final order, without an explanation of what the disputed issues were, or why the court found that provision persuasive.

That makes this morning's entry of a twelve page opinion in the Geotag litigation of particular interest, because in the order Judge Schneider identifies six disputed provisions, which he then goes on to resolve: (1) where source code will be made available; (2) what kinds of media will be allowed in the secure source code review room; (3) the format of source code production; (4) the tools available for source code analysis; (5) the burden for denying production of additional source code beyond the agreed page limitations; and (6) the scope of the patent prosecution bar.  Many of these issues come up repeatedly in patent infringement litigation, so the court's analysis of them under the facts of this case is particularly useful.

Location of Source Code

Plaintiff wanted production limited to Dallas or the Eastern District of Texas - defendants wanted the office of counsel for the producing party or as permitted under the Federal Rules of Civil Procedure.  Judge Schneider sided with the defendants.  "Given the circumstances of this case," he wrote, "the Court finds Plaintiff’s proposal overly restrictive. The Court believes it is reasonable for Defendants to provide source code at the office of the producing party or where it is kept in the ordinary course of business. See Fed. R. Civ. P. 34(b)(2)(E)(i). Shifting the travel burden from Plaintiff to Defendants is unwarranted in this action. Plaintiff voluntarily chose to pursue this litigation against a significant number of defendants. Because Plaintiff created this logistical burden, it must now bear the impact."

Media Devices in Secure Source Code Review Room

Plaintiff requested that the receiving party be allowed to bring into the secure room a cellular telephone and a note-taking computer disconnected from the internet.  Judge Schneider disagreed, writing that "[t]he Court is unconvinced that sufficient review of Defendants’ source code requires a cellular telephone or note-taking computer. In light of the highly confidential nature of the source code, allowing these devices within the secure room would significantly increase the possibility of inadvertent disclosure. Plaintiff has not shown any necessity for these devices. In this instance, the interest of protecting the source code far outweighs the convenience of allowing a cellular telephone or note-taking computing within the secure source code room."

Format of Source Code

Defendants proposed production in native format, and plaintiff wanted it in compilable form.  (You wonder what Blackstone would have made of this issue, don't you?)  Judge Schneider found that electronic native format was sufficient, citing the applicable federal rule.  "Generally, a party need not produce source code in any other format than electronic native form. See generally Fed. R. Civ. P. 34(b)(2)(E)(ii)–(iii) (“[A] party must produce [electronically stored information] in a form or forms in which it is ordinarily maintained or in a reasonably useable form or forms” and “[a] party need not produce the same electronically stored information in more than one form”). Here, the Court sees no compelling reason to deviate from this principle."

The Tools Available for Source Code Analysis

Plaintiff requested that the tools Visual Studio and Understand be available on the standalone computers containing the source code, asserting that without these tools, it could not sufficiently perform its infringement analysis.  "Defendants broadly dismiss Plaintiff’s request as inappropriate without any detailed discussion," Judge Schneider wrote, and agreed with the plaintiff that analysis tools are necessary for Plaintiff to properly conduct its infringement analysis. "Although Defendants bear the burden to support their proposed limitation," he noted, "they provide no compelling rationale for denying Plaintiff’s request."

The Burden for Increases in the Printing Limits

The parties agreed that the receiving party shall be permitted to print continuous blocks of source code not in excess of 35 pages or 500 pages in total, but disagreed on who should bear the burden when a parties request additional pages.  "The Court finds that it should be the producing party that bears the burden of establishing why it should not comply with the request for additional pages," Judge Schneider decided.  "It is well established that the party seeking to limit discovery carries the burden of showing good cause. . . Here, the Court is not persuaded to shift the burden to the receiving party to demonstrate good cause for the request. But the Court nevertheless expects that any additional pages requested by the receiving party be made in good faith."  (Internal citations omitted).

Patent Prosecution Bar

The parties first dispute to whom the prosecution bar should be applied. Plaintiff contended that it should apply to all parties in this litigation who review highly sensitive information, while Defendants proposed that the bar apply only to Plaintiff’s counsel or any individual associated with Plaintiff who reviews Defendants’ highly sensitive information.  Judge Schneider decided that the bar would apply only to plaintiff's counsel.  "As justification for its proposition, Plaintiff argues that it currently has a product, ZLand.com which includes proprietary code relevant to the patent-in-suit. But Plaintiff provides no further explanation of the relevance of its product to the asserted patent or this case. Plaintiff’s statement that its product is merely relevant to this suit is an insufficient basis for implementing the prosecution bar to the several hundred attorneys representing Defendants. The Court is unwilling to place such an immense burden on Defendants’ counsel without a detailed explanation for its justification. Because Plaintiff has failed to show good cause to support its proposal, the Court finds that the prosecution bar should be limited to Plaintiff’s counsel who review Defendants’ highly sensitive information."

The parties also disagreed on whether the prosecution bar should apply to reexamination proceedings. Plaintiff believed that the bar should not apply to reexaminations, and defendants disagree.  Judge Schneider found Mirror Worlds, LLC v. Apple, Inc., No. 6:08-CV-88, 2009 WL2461808, at *1–2 (E.D. Tex. Aug. 11, 2009) instructive in this case, and decided that the bar should not apply to reexaminations in this case. "Defendants’ concern about the use of its highly sensitive information in reexamination is undercut by the fact that claims can only be narrowed, not broadened, during reexamination. Given the large number of defendants in this case, it is highly unlikely that Plaintiff would seek to narrow its claims to cover any single defendant at the risk of excluding the remaining accused infringers. . . . The Court is unconvinced that the burden of requiring Plaintiff to obtain separate counsel for reexamination outweighs any risk of inadvertent use or disclosure of Defendants’ highly sensitive material. Defendants have failed to show good cause to justify the extension of the prosecution bar to reexamination proceedings."

Judge Schneider directed the parties to submit a revised proposed protective order reflecting his rulings within ten days of today.

 

Motion to Withdraw as Counsel Denied; 14 Days to Secure New Counsel or Dismiss the Case

Should I stay or should I go now?
If I go there will be trouble
An if I stay it will be double.

    Should I Stay Or Should I Go,

    The Clash

Geotag v. Frontier Communications, et (seriously) al., 2:10cv265 (8/30/12)

Judge: Michael Schneider

Holding: Plaintiff's Opposed Motions to Withdraw as Counsel DENIED

This is actually Judge Schneider's second stay ruling in this case this week.  The first, on Monday, was that the case was going to stay.  The second on Thursday was that the lawyers were going to as well.

As the Court observed in denying a motion to stay these cases on Monday of this week given the pendency of a related action in Delaware, this litigation involves a number of related patent infringement cases. In approximately 72 cases, Plaintiff GeoTag, Inc. accuses over 400 defendants of infringing U.S. Patent No. 5,930,474 by providing various locator services on their commercial websites.

Two days later, late on Wednesday of this week, all three of the law firms representing Geotag in these cases moved to withdraw from the case.  Late Thursday, Judge Schneider denied the motion without prejudice, noting that the motions provided no explanation for the termination of counsel.

"In agreeing to represent their client," Judge Schneider wrote, citing Tex. Disciplinary R. Prof'l Conduct 1.15 and Local Rule AT-3(A), "counsel is expected to continue representation through completion of the case.  In addition to the duties counsel owes to its client, counsel 'must be ever conscious of the broader duty to the judicial system that serves both attorney and client.'"   The Court also noted, citing TDR 1.15(c) that it may deny counsel's request to withdraw, even when counsel has good cause for his request. He continued:

Plaintiff’s Counsel has indicated that they no longer have the authority to represent Plaintiff in any matters related to this litigation. Of paramount concern is that no other counsel has appeared as substitute counsel for Plaintiff. “[T]he ‘clear’ rule is ‘that a corporation as a fictional legal person can only be represented by licensed counsel.” The Court cannot waive compliance with this rule, even in cases of severe financial hardship.  On the eve of the deadlines related to claim construction, the Court will not grant withdrawal without substitute counsel capable of prosecuting Plaintiff’s claims within the scheduled time frame.

(Internal citations omitted).  Accordingly, Judge Schneider ordered that:

• Within 14 days from the date of this Order, Plaintiff is ORDERED to file a notice with the Court stating whether it has secured new counsel or whether it will be dismissing this litigation.
• Plaintiff’s Counsel is to notify Plaintiff as to this Order and provide Plaintiff a copy via certified mail.
• Plaintiff is cautioned that its failure to respond to this Order may result in dismissal.
• The Court expects Plaintiff’s existing counsel to continue diligently prosecuting this litigation.
• The parties are reminded that all deadlines and appearances remain in effect.

Unlike the original, the order is not believed to be accompanied by backing vocals in Ecuadorian Spanish.  See n. 6.

Yet another JMOL affirming jury verdict

Alexsam v. Pier 1 Imports, 2:08cv015 (8/27/12)

Judge: Leonard Davis

Holding: Motions for Judgment as a Matter of Law DENIED

Well, the verdicts are splitting pretty evenly these days, but juries are batting pretty close to 1.000 on JMOL rulings, be they a win or a loss.  Judge Schneider has just joined the late summer JMOL rulings party, issuing an order resolving the remaining postverdict motions in the Alexsam v. Pier 1 Imports case. 

As readers know, a Marshall jury in Judge Schneider's court found that the defendant's gift cards did not infringe the asserted claims of the plaintiff's patent last October.  Earlier today Judge Schneider denied plaintiff Alexsam's motion for judgment as a matter of law of infringement, and similarly denied Pier 1's motion for judgment as a matter of law that the patents were invalid.  In both cases, the Court found that there was sufficient evidence to support the jury's findings.

Lead Defendant designation for claim construction purposes

Geotag v. Circle K Stores, Inc., et al., 2:11cv405 (8/14/12)

Judge:  Michael Schneider

Holding:  Emergency Motion to Stay Scheduling Order Deadlines and Objections to Scheduling Order DENIED

A number of rceent orders dealing with either multidefendant or serially filed cases have included provisions designating a "lead defendant" for claims construction purposes.  The provsions are usually along the following lines:

For efficiency purposes, one Defendant will be designated as the Lead Defendant for briefing and arguing the claim construction issues raised in this case. Defendants must file a joint notice designating the Lead Defendant ten (10) days prior to the deadline to exchange proposed terms for construction (pursuant to P.R. 4-1). The Court will designate a Lead Defendant if the Defendants are unable to agree.

On behalf of all Defendants, the Lead Defendant must comply with the requirements of P.R. 4-2, 4-3, and 4-5(d) and fully brief the claim construction issues and the motion for summary judgment of indefiniteness pursuant to the deadlines set forth in this order. The Lead Defendant must coordinate with the other Defendants throughout the claim construction stage. This includes briefing all of the terms requested by substantially all of the Defendants. Accordingly, the Lead Defendant should confer with all of the Defendants to identify a reasonable number of terms for construction. The Court expects Defendants to reach a cost-sharing arrangement regarding the costs incurred by the Lead Defendant. (Parties in all cases should be given notice of all communications between the Plaintiff and Lead Defendant. All filed documents must be filed simultaneously in all of the related cases that are governed by this order, using a serial caption similar to the one used in this order.)

After the Lead Defendant files the responsive claim construction brief and the motion for summary judgment of indefiniteness (if any), any individual Defendant may file a separate brief on additional issues. The additional brief shall not exceed ten (10) pages, and it must be filed within seven (7) days after the Lead Defendant files the responsive claim construction brief and the motion for summary judgment of indefiniteness. The Court expects Defendants to cooperate with the Lead Defendant in preparing the briefing to limit the number of additional, separate briefs filed. Plaintiff may respond to any additional, separate briefs within ten days from the date of filing.

This morning, Judge Schneider provided further clarification on the procedure in a written opinion.  Writing in Geotag v. Circle K (in which he issued another opinion today that may be of interest as well) he addressed an Emergency Motion to Stay Scheduling Order Deadlines and Objections to Scheduling Order brought by Defendant J. Crew.  J. Crew argued that the imposition of any scheduling deadlines should be suspended given that it has several pending motions before the Court. J. Crew also alleged that the Court’s procedure for claim construction briefing and argument violated its due process rights. With respect to the stay, Judge Schneider denied the motion. holding that "[a] stay of the scheduling order in light of J. Crew’s pending motions would unnecessarily and unjustifiably delay litigation," and, after noting that J. Crew cited to no authority to justify a stay in this circumstance, held that "[t]he Court will not issue a stay merely for the convenience of the moving party."

With respect to the lead defendant provision, the Court had this to say:

J. Crew claims it is improper to require an unrelated defendant to argue claim construction on J. Crew’s behalf. Although J. Crew objects to the Court’s procedure, it does not propose any substitute procedure. The Court’s procedure mimics the accepted procedure of assigning lead parties in complex cases, such as in multidistrict litigation and class action suits. See generally, Wilson v. Merrill Lynch & Co., 671 F.3d 120, 127 (2d Cir. 2011) (implementing a lead plaintiff in a securities related multidistrict litigation case); In re Aqua Dots Prods. Liab. Litig, 270 F.R.D. 377, 379 (N.D. Ill. 2010) (invoking lead defendant in products liability related multidistrict litigation). The lead defendant requirement does not prevent J. Crew from raising any issues specific to itself. The procedure implemented by the Court allows defendants to file a responsive letter brief to address issues specific to that defendant that are not addressed in the common briefing. To the extent the defendants can agree, the lead defendant requirement does not prevent the parties from dividing up the briefing or argument on the agreed terms. The lead defendant in effect acts as the liaison for all the defendants during the Markman procedure. Although the lead defendant is the responsible party, it serves in a representative capacity on behalf of all defendants for common issues. Accordingly, the Court is unpersuaded that its procedure deprives J. Crew of any constitutional right. See In re Katx Interactive Call Processing Patent Litig., 639 F.3d 1303, 1311 (Fed. Cir. 2011) (“To make out a due process claim, [a party] must demonstrate that the district court’s … procedure risked erroneously depriving it of its rights and that the risk outweighed the added costs associated with a substitute procedure.”).

Accordingly, Judge Schneider denied the motion.

Ex Uno, Plures - Motions to Sever Granted

Geotag v. Circle K Stores, Inc., 2:11cv405 (8/14/12)

Judge: Michael Schneider

Holding: Motion to Dismiss for Misjoinder GRANTED IN PART

As was the case in Judge Davis' Norman IP case last week, this is a case which was filed against one defendant three days before enactment of the AIA, which was amended several weeks later to add over 50 additional defendants.  The newly added defendants moved for dismiss and/or severance due to misjoinder.

Judge Schneider agreed, finding that the AIA controlled the joinder analysis as it was enacted before the newly accused parties were added, citing the Fifth Circuit caselaw to the effect that the addition of a new defendant commences the lawsuit as to that defendant.  He then found that the claims against the new defendants did not relate back to the original filing, and therefore the relevant filing date was the date the new defendants were added, which was after enactment of the AIA.  In a footnote, the Court noted, as did Judge Davis last week, that severance would likely be appropriate under vthe pre-AIA joinder standard as well, citing In re EMC. 

Accordingly, Judge Schneider ordered the case severed into 54 separate cases.

Dogs That Won't Hunt: Unopposed Motions to Stay Case Denied

Tallgrass Prairie Management, LLC v. Microsoft, et al., 2:11cv411 (E.D. Tex. 7/27/12)

Judge: Michael Schneider

Holding: Unopposed Motions to Stay DENIED

Plaintiff and two defendants filed unopposed motions to stay the case as to them, stating that they “are working toward a resolution” and requesting an indefinite stay as to those two defendants to “facilitate such a resolution.”

Uh, nope.

"The Court expects and encourages parties to work diligently towards an agreed resolution when possible," Judge Schneider wrote.  "Accordingly, the Court sees no justification to grant an indefinite stay for compliance with a basic expectation of the Court applicable in all cases. When the parties notify the court of a settlement, the applicable deadlines will be abated."

From Docket Navigator.