Eastern District of Texas Federal Court Practice

Motion for Summary Judgment as to Patent Defendant's Defenses and Counterclaims Granted in Part; Antitrust Claims Severed

Fiber Systems Intern., Inc. v. Applied Optical Systems, Inc., 2009 WL 3571350(E.D.Tex. Oct 26, 2009) (NO. 2:06-CV-473)

Judge: T. John Ward

Holding: Plaintiff's Motion for Summary Judgment as to Defendant's Affirmative Defense and Counterclaims GRANTED IN PART

This is a patent case which just had its pretrial conference and jury selection last week.  In response to FSI's infringement claim, defendant AOSI raised eight affirmative defenses and counterclaims: (1) patent invalidity, (2) inequitable conduct, (3) impermissible broadening of claims, (4) unenforceability due to express or implied license, (5) patent misuse, (6) antitrust violations, (7) unfair competition, and (8) fraud and negligent misrepresentation. FSI filed a motion seeking summary judgment as to all of these claims. 

On invalidity, AOSI contended that the patent in suit was invalid on grounds of anticipation, obviousness, and lack of enablement.  Judge Ward granted the summary judgment in part here, knocking out AOSI's defenses of anticipation and enablement (the latter of which AOSI did not respond in opposition), but denied it as to obviousness, noting that while AOSI had not designated an expert on obviousness, it was not required to put on expert testimony to support its claim of obviousness.  AOSI had also argued as a ground of invalidity that FSI impermissibly broadened the scope of its claims during reexamination. For essentially the reasons outlined in the Report and Recommendation filed by Judge Everingham, Judge Ward held that AOSI's defense lacked merit, and FSI was entitled to summary judgment on this defense.

On inequitable conduct, Judge Ward denied the motion, finding a genuine issue of material fact.  Also, because AOSI claimed that it was not alleging express or implied license or patent misuse as affirmative defenses, Judge Ward denied as moot FSI's motion for summary judgment as to these issues.

Finally, Judge Ward noted that AOSI's answer raised counterclaims against FSI for antitrust violations, unfair competition, and fraud and negligent misrepresentation.  He denied the motion for summary judgment on the claim for unfair competition, fraud, and negligent misrepresentation, but found that the trial of the antitrust counterclaim in this patent infringement suit posed a significant risk of confusion for the jury, and accordingly sua sponte ordered a separate trial of AOSI's antitrust counterclaim. As such, FSI's motion for summary judgment on this counterclaim was carried with the case. 

Patent Case Transferred

Prust v. Apple Inc, No. 2:09cv00092 (10/7/09)

Judge: T. John Ward    2009-10-07

Holding: Motion to Transfer Venue GRANTED

Short and sweet result for defendant Apple.  Judge Ward wrote that "[t]he plaintiff is in Minnesota, the defendant is in the Northern District of California, and the non-party witnesses are in Minnesota, California, Missouri, Illinois, New Mexico, Colorado, Montana, Georgia, and Florida. The plaintiff has failed to show greater convenience or a sufficient connection to this District that would warrant denying transfer."

Class Action Against Trustee Wells Fargo Certified

Clower v. Wells Fargo Bank, N.A., --- F.R.D. ----, 2009 WL 901486(E.D.Tex. Mar. 30, 2009) (NO. 2:07-CV-510-TJW)

Judge: T. John Ward

Holding: Motion for Class Certification GRANTED

Plaintiffs as beneficiaries of irrevocable or testamentary trusts sued Wells Fargo, as successor administrator of trusts, alleging that it was acting without authority in administering trusts, and asserting claims for constructive fraud, conversion and trespass to title. Plaintiffs moved to certify a class action that would encompass other trusts administered by bank that shared the same trustee history.  Plaintiffs seek removal of Wells Fargo as the trustee of all of these trusts, as well as actual damages for trustee fees, commissions and other charges collected by Wells Fargo during its administration of these trusts.

Judge Ward's order goes through the various requirements for class actions under FRCP 23 and concludes that certification is appropriate, holding that "the Court is of the opinion that a class action, rather than innumerable individual actions, is the better method of litigating this dispute."

Motion to Transfer Denied - Prior Case Involving Same Patent Pending

Novartis Vaccines and Diag., Inc. et al. v. Bayer Healthcare, LLC et al., 2:08-cv-00068 (E.D. Tex. September 28, 2009)

Judge: T. John Ward

Holding: Motion to Transfer Venue DENIED

Judge Ward denied the defendants' motion to transfer venue for convenience relying primarily on the existence of a related case. He wrote that "[t]he Federal Circuit has found that, in patent cases, the 'consideration of the interest of justice, which includes judicial economy, may be determinative to a particular transfer motion, even if the convenience of the parties and witnesses might call for a different result.' "  In this case, Plaintiffs had pending in Marshall a related lawsuit against another company asserting the same patent-in-suit.  "The two cases involve the same claim construction issues," Judge Ward observed, "and transferring the case will only consume unnecessarily additional judicial resources."  Accordingly, Judge Ward held that "the interests of justice weigh heavily against transfer."

Patent case transferred to California

Chrimar Systems, Inc. v Garrettcom, Inc., et al, 2:09-cv-00085 (E.D. Tex., Aug. 27, 2009)
Holding: Motion to Transfer Venue GRANTED
Judge: T. John Ward

Friday was a good day for defendants!

Defendants' motion to transfer venue for convenience in this case was granted.  The remaining two defendants in this case had principal offices located in the transferee forum, and the Plaintiff . . . had no connections in the Eastern District, thus Judge Ward held that the "clearly more convenient" standard was met.

Plaintiff Lacks Standing to Pursue Claims Absent Joinder of Owner

US Foam, Inc. v. On Site Gas Systems, Inc., 2009 WL 2605280(E.D.Tex. Aug 21, 2009) (NO. 2:07-CV-466-TJW, 6:08-CV-31-LED)
Judge: T. John Ward
Holding: Motion to Dismiss for Lack of Standing DENIED
What's a patent case without a motion to dismiss for lack of standing at the outset?  It'd be like the waiter forgetting to bring chips and hot sauce, right?  Well, in this case, Judge Ward was served with the requisite chips, salsa (and possibly queso, although the record isn't clear on this point) and denied the defendant's motion to dismiss for failure to join the patent owner, but determined that the patent owner was a necessary party and provided plaintiff leave to amend to add the new party. Judge Ward found that the patent owner had retained a significant amount of interest in the patent in suit, and that the exclusive licensee had failed to show that it has all substantial rights under the patent.  But a dismissal was not proper if the owner could be added, so he gave the plaintiff 60 days to invite the owner to the fiesta (continuing the Tex-Mex theme of this post).  If the defendant was cordially invited to refile the motion to dismiss, at which point the plaintiff would likely assume pinata status.  (For those of you not familiar with a pinata, it's sort of like a cross between pin the tail on the donkey and a lynching).

Summary Judgment Ruling Published in Abbott v. Centocor

Centocor Ortho Biotech, Inc. v. Abbott Laboratories, --- F.Supp.2d ----, 2009 WL 1473431(E.D.Tex. May 27, 2009) (NO. 2:07-CV-139)

Judge: T. John Ward

Holding: Summary Judgment as to priority date GRANTED; summary judgment as to anticipation defense DENIED

One of the things that happens when the a big verdict comes out (although none have been quite the size of the $1.6 billion in Abbott v. Centocor) is that the court's prior rulings in the case which Westlaw hadn't deemed worthy of publication start getting published.  This opinion by Judge granting in part one of defendant Abbott's motions for summary judgment just came out.  In it, Abbott argued that Centocor, through its actions before the United States Patent and Trademark Office (“PTO”) during the prosecution of the patents-in-suit, acquiesced to a priority date of no earlier than February 4, 1994. Centocor's acquiescence purportedly transpired through its abandonment of a parent application and the subsequent filing of a continuation-in-part (“CIP”) application in the face of an examiner's 35 U.S.C. § 112 (first paragraph) rejection. Judge Ward granted Abbott's motion for summary judgment that Centocor was entitled to a priority date of no later than February 4, 1994, but denied Abbott's motion that all of the asserted claims of the patents-in-suit were invalid as anticipated under 35 U.S.C. § 102(b).

Motion to Dismiss for Failure to Exhaust Administrative Remedies Granted

Russell v. Good Shepherd Medical Center, 2009 WL 2487108(E.D.Tex. Aug 12, 2009) (NO. CIV.A. 2-08-CV-206)

Judge: T. John Ward

Holding: Defendant's Motion to Dismiss GRANTED

This is an employment case against a local hospital alleging sex and gender discrimination as a result of its alleged failure to allow a kitchen worker to interview for a security position. The hospital moved to dismiss claiming that the plaintiff had not exhausted her administrative remedies by failing to file a complaint with the EEOC. "[P]laintiff asks this Court to ignore well settled law that aggrieved parties must exhaust administrative remedies before seeking relief from this Court under Title VII," Judge Ward wrote. He noted that the Plaintiff argued that the Supreme Court's opinion in Zipes v. Trans World Airlines, Inc., 455 U.S. 385 (1982). allows a court to maintain jurisdiction over cases in which there has not been a timely filing with the EEOC. In Zipes, the Court held that Title VII's statute of limitations for filing with the EEOC was not a jurisdictional prerequisite but rather a statutory condition precedent, and the Fifth Circuit has subsequently agreed that the receipt of an EEOC right-to-sue letter is not a jurisdictional prerequisite, but rather is a condition precedent subject to various equitable modifications. See Pinkard v. Pullman-Standard, 678 F.2d 1211, 1217-19 (5th Cir.1982) But whether treated as a matter of jurisdiction or as a statutory condition precedent, Judge Ward concluded that the plaintiff's unexplained failure to obtain a right to sue letter requires dismissal of this case. "Given that the plaintiff never filed a charge with the EEOC, this Court can find no exception to the statutory condition precedent under which plaintiff may be granted any equitable relief. Nor has the plaintiff cited any case that supports the proposition that a plaintiff who never submits a charge to the EEOC can proceed in federal court with her Title VII claim." Accordingly, the case was dismissed.

Court declines to find inequitable conduct in Laserdynamics v. Asus

The jury in LaserDynamics v. Asus Computer International, 2:06cv348 found for the plaintiff back on July 6 in Judge Ward's court in Marshall.  Specifically, it found that the defendant contributed or induced infringement of one claim of the patent, that such infringement was willful, and that the defendant had failed to show by clear and convincing evidence that the patent was invalid as not enabled.  Damages were set at $52 million.

Today Judge Ward ruled on the inequitable conduct claims, which were presented to him in a bench trial on August 10.  After reviewing the applicable standards for such claims (which I would note in passing Judge Ward has found to be present in two or three cases in recent months) Judge Ward concluded that inequitable conduct (here claimed to be failure to disclose by a nonlawyer inventor) was not shown in this case.  The Court wrote:

Based on the evidence of record, the arguments of counsel, and the testimony of the
witnesses, the court does not find that the evidence is clear and convincing to prove that Mr. Kamatani intended to deceive the PTO by not disclosing the ‘875 Rosen patent to the Examiner of the ‘981 patent application. The Court has read the office actions and responses thereto relied upon by Quanta, and the Court does not believe that they show in their entirety the high level of deceptive intent by Mr. Kamatani that Quanta alleges. Further, the Court has considered the prior deposition of Mr. Kamatani and finds that, taken as a whole, it does not show an intent to deceive by Mr. Kamatani. Rather, it offers support for Mr. Kamatani’s explanation as to why he did not disclose the ‘875 Rosen patent to the Examiner of the ‘981 patent application. Because the Court has found that Quanta has not satisfied its burden of proving deceptive intent by clear and convincing evidence, inequitable conduct cannot be found in this instance.

JMOL motions filed in Centocor v. Abbott

Yesterday defendant Abbott opened the postverdict briefing in this case with a salvo worthy of a case with a $1.6 billion dollar jury verdict - five motions for judgment as a matter of law pursuant to FRCP 50.  They are helpfully numbered by Abbott and are listed below, prefaced with the docket number.  At a quick glance, they seem to track each of the jury's findings (or failure to find, in the case of Abbott's defenses):

289 - Defendants' Motion Number 1: Motion and Supporting Memorandum for JMOL or for New Trial Based on Failure to Comply with the Written Description Requirement or, in the Alternative, for Reconsideration of this Court's Claim Construction and Entry of JMOL of Non-Infringement

294 - Defendants' Motion Number 2: Motion and Supporting Memorandum for JMOL or for New Trial Based on Failure to Comply with the Enablement Requirement

 290 - Motion Number 3: Motion and Supporting Memorandum for JMOL of Non-Infringement or for a New Trial

292 - Defendants' Motion Number 4: Motion and Supporting Memorandum for JMOL or for New Trial on Issue of Willfulness

293 - Defendant's Motion Number 5: Abbott's Motion and Supporting Memorandum for JMOL or for New Trial Regarding Lost Profits and Damages Period