Eastern District of Texas Federal Court Practice

Motion for Summary Judgment on Patent Exhaustion & Implied License Granted in part

Laserdynamics, Inc. v. Quanta Storage America, Inc., 2009 WL 3763444(E.D.Tex. Jun 29, 2009) (NO. 2:06-CV-348-TJWCE)
Judge: T. John Ward
Holding: Motion for Summary Judgment on Patent Exhaustion & Implied License GRANTED in part
Apparently somebody needed this opinion from last June published.  In it, Judge Ward granted in part the defendants' motion for summary judgment on patent exhaustion and implied license issues.  Judge Ward noted that a detailed order would follow, but in the meantime, there were three things the parties needed to know to continue preparation for trial:

• First, the exhaustion doctrine does not apply to sales made overseas by the plaintiff's licensees. As such, the court denied the defendants' motion for summary judgment to the extent it relies on the exhaustion doctrine.
• Second, QCI has an implied license with respect to drives manufactured by non-Quanta entities licensed by the plaintiff under worldwide licenses and sold by those licensees to QCI for incorporation into QCI computers. In addition, QSI is not liable for manufacturing drives for Philips or Sony/NEC/Optiarc which are, in turn, resold into the United States to non-Quanta entities. (I know we were all wondering about this).
• Finally, the Quanta defendants do not have an implied license with respect to drives that are sold through two of the plaintiff's licensees. The effect of such transactions, the Court concluded, would be to grant an impermissible sublicense.

Patent Case Transferred to California

Vasudevan Software, Inc. v. International Business Machines Corp., 2009 WL 3784371(E.D.Tex. Nov 10, 2009) (NO. 2:09-CV-105-TJW)
Judge: T. John Ward
Holding: Motion to Transfer Venue GRANTED
This is a patent case with the plaintiff in North Carolina and the defendants in New York (but activity related to case in California) and California.  Judge Ward went through the current analysis, and concluded that the defendants had met their burden to show that transfer was appropriate.

Defense verdict in patent case in Marshall; trial stats so far in 2009

Last Thursday a Marshall jury in Judge Ward's court in Fiber Systems Int'l v. Applied Optical, 2:06cv473 returned a defense verdict on infringement in a patent case.  One claim and one product was submitted - from what I've been able to ascertain the plaintiff dropped the rest of the asserted claims right before trial started, and Judge Ward JMOLed two of the three accused products before the case went to the jury.  As for defenses, as I noted in a prior post, a number were summary judged the day before the pretrial conference and a couple set for a later bench trial - the remainder, including invalidity did not go to the jury (whether they were voluntarily dropped by the defendant or dismissed as a result of JMOL rulings I don't yet know).

If true, I think that's the third defense jury verdict in the district this year in patent cases (two Marshall and one Beaumont), not counting Judge Davis' ruling in favor of Microsoft after jury selection in the Fenner case in March, and Judge Ward's granting of JMOL in defendant's favor at the conclusion of the plaintiff's case in Paradox.  That's without getting into the sticky issue of how you count defense wins on damages (Retractable) or on postverdict JMOLs on damages (Hearing Components - award reduced postverdict from $4.6 million to $1.39 million).  By my count then, you can score it this year so far anywhere from 8-3-1 to 6-6-1 (depends on whether you count a post-jury selection grant of summary judgment or not) depending on what you count as a plaintif win and what as a defense win.  The tie is, of course the Thermapure case, which as I posted last was, was a plaintiff win on infringement but a hung jury on damages, which will be retried on damages next March.

Inequitable Conduct and Prosecution Laches Claims Rejected in Bench Trial in Centocor v. Abbott

Centocor Ortho Biotech, Inc. v. Abbott Laboratories, 2009 WL 3734119(E.D.Tex. Nov 04, 2009) (NO. 2:07-CV-139-TJW)
Judge: T. John Ward
Holding: Patent in Suit Not Unenforceable Due to Inequitable Conduct and Prosecution Laches (or invalid as indefinite)

As readers will recall, this is the case where Centocor obtained a large infringement verdict against defendant Abbott Laboratories in late June of this year.  Judge Ward previously set aside the jury's finding of willful infringement but otherwise denied Abbott's motions for judgment as a matter of law.  Now he addressed Abbott's inequitable conduct and prosecution laches claims, via the customary bench trial about five weeks after the jury verdict, as well as going back over some ground as far as indefiniteness.

First, after detailing the argument, the responses, the applicable law, and explaining what he found, Judge Ward concluded that Abbott had not satisfied its burden of proving that Centocor made material misrepresentations or omissions during prosecution of the ′775 patent family or deceptive intent by clear and convincing evidence, thus inequitable conduct could not be found in this case.

As far as prosecution laches, Judge Ward similarly found that Abbott had not met its burden of proving that there was any unreasonable delay by Centocor in the prosecution of the applications in the ′775 patent family.

Judge Ward also ruled on Abbott's claim that the patent was invalid as indefinite.  He noted that he had already rejected this argument in his Markman order, and now "again finds that Abbott has not shown by clear and convincing evidence that those skilled in the art would not understand the bounds of the claims or that the claims are 'insolubly ambiguous.'"

By my reading that's a wrap on the proceedings at the district court level, and the parties will now move to the Federal Circuit round.

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).