I have been on the planning committees for two seminars that will take place the last week of October, the 38th Annual Page Keeton Civil Litigation Conference presented by UT Law CLE at the Four Seasons Hotel in Austin on October 23 – 24, 2014, and the annual Eastern District of Texas bench/bar, which will take place in Plano from October 22 – 24. Not for the first time, I am reminded of the saying that "[t]ime is the quality of nature that keeps things from happening all at once. Lately it doesn't seem to be working."
On both committees, I have been advocating looking into teaching attendees how judges use technology these days, including whether lawyers need to prepare their written materials differently for judges that will be viewing them in electronic format, rather than written. (The answer is yes - attend one of the two aforesaid conferences to find out why and how).
The issue is a timely one - in fact the Eastern District's rules were amended earlier this year to provide guidance for hyperlinking cases, so the idea of making online filings even more useful is a timely one. And the sight of local judges at seminars with iPads in hand issuing rulings commando, as it were, is growing more and more common. (I recall one day a few months back where I was reading emails instead of paying attention to a speaker at a seminar and another lawyer indicated that a certain judge wasn't going to be signing orders in our case till Monday because they were out of town at a seminar. I looked to my right and there the judge was, sitting next to me happily signing away on their iPad).
This morning, I saw a new article on the subject by Nicole Black in Above the Law, A Federal Judge And His iPad, which interviews Second Circuit judge Richard Wesley. Today's article explains how Judge Wesley uses technology and likes it - the second installment in two weeks will reveal what he doesn't like. I enjoyed today's, and look forward to September's when it comes out.
Judge: Rodney Gilstrap
Holding: Defendants Motion for Judgment As a Matter of Law Denied
As readers may recall, on January 23, 2014, after three day jury trial, a Marshall jury in Judge Rodney Gilstrap's court reached a verdict regarding plaintiff Google's breach of contract claim against Beneficial Innovations. The jury found that Beneficial had breached a prior settlement agreement between the parties by bringing a lawsuit against Google's customers based on their use of Google's DoubleClick product, and that Google was entitled to recover nominal damages in the amount of one dollar. Beneficial filed a motion for judgment as a matter of law asking Judge Gilstrap to set aside the jury's verdict.
Beneficial's argument was that Google had not met its burden of proving that the customers' use of DoubleClick would constitute indirect infringement by Google, claiming that the license only covered the customers' use of a product or service to the extent that such use would constitute direct or indirect infringement by Google but for the license. The Court noted that at trial, Google presented two theories of indirect infringement, which Beneficial now contended were not supported by substantial evidence.
As an aside, this is not an easy order to follow, because Google, in the unusual position of the plaintiff, had to prove that its customers' use of the service directly infringes the asserted patents in order to prove indirect infringement, and thus bring the usage under the license. Further taking us through the looking glass, Beneficial's assertions in its complaint and infringement contentions that the customers were infringing served as evidence of direct infringement, and supported the jury's finding to that effect, meaning that the pleadings and contentions in this case by the defendant patentee provided factual matter which constituted a party admission – here a defendant arguing that the plaintiffs customers infringe, which was a necessary element of the plaintiffs cause of action. I'm glad that I have been watching my new set of Twin Peaks episodes this week or this would be really confusing.
Beneficial next asserted that Google had not carried its burden of proof as to contributory infringement by its customers. Judge Gilstrap reviewed the facts and concluded that a reasonable jury could have concluded as it did. The finding was the same with respect to Beneficial's argument that Google had failed to meet its burden of proving induced infringement – there was evidence from which a reasonable jury could have concluded as it did. Again, I have to reiterate that the argument here is that the patentee is arguing that the defendant failed to present substantial evidence that it either actively encouraged its customers to infringe the asserted claims, or that it specifically intended its customers to infringe the patentee's patents. This is starting to remind me of a recent book I read on how subatomic particles perform. It's actually not that complicated once you accept that everything works the opposite way from the way you think it would. (Actually, since I am married this all makes a lot more sense than it ought to. Nobody tell my wife I said that, okay?)
In conclusion, the Court found the Google had presented substantial evidence to the jury demonstrating that its customers' use of DoubleClick would constitute indirect infringement – both contributory and induced – by Google, but for the license. Under the terms of the settlement agreement between Google and Beneficial, once that condition had been satisfied, the accused Google customers were licensed to use Beneficial's patented technologies. Therefore, the Court declined to disturb the jury's verdict that Beneficial had breached the settlement agreement by bringing the instant lawsuit against the accused Google customers.
I'm going to go read some nice simple civil rights cases now, and make sure I haven't been drinking decaf.
Smartflash v. Apple, 6:13cv447 (7/8/14)
Judge: K Nicole Mitchell
Holding: Motion to Stay Pending Covered Business Method Review Denied Without Prejudice
After reviewing the applicable legal standards and the facts, the Court concluded that the current status of the case weighed slightly in favor of staying the action, the possible issue simplification and prejudice factors weighed against staying the action, and the burden factor was neutral. Accordingly, "balancing the factors in whole" they favored denying the motion to stay at this time. The court noted that once the PTO decides whether it will grant review, the Court will better be able to analyze the full repercussions of granting or denying a stay. Accordingly, the motion was denied without prejudice.
Judge: William C. Bryson
Holding: Joint Motion to Seal Portions of the Trial Transcript Granted in Part
And here I thought Rosie the Riveter had the corner on patriotism. Stenographers, this one's for you.
Judge Bryson's opinion begins by setting forth the underlying principle that judicial proceedings in this country are to be conducted in public, and the rules applicable to requests to seal portions of the transcript of a trial. Towards the bottom of page 3 of the opinion, the court finishes with the law and begins to steer into the facts of the case, noting that the parties have moved to seal "significant portions" of the trial transcript, which despite the parties' characterization as "narrowly tailored excerpts" consist of nearly 100 portions of the transcript.
Judge Bryson was not persuaded that the excerpts were in fact "narrowly tailored", and noted that in their motion the parties had provided only a "bare-bones" explanation for why they believe sealing is necessary. While this absence of detail could, by itself, be deemed a failure to articulate a compelling reason that outweighs the general public policy favoring disclosure of court records, the Court noted that in earlier pleadings the parties had provided more detailed arguments. Although those arguments pertained to pleadings and orders, and not trial testimony, and were not re-argued in the current motion, the court assumed that the parties intended those arguments to be applicable, and therefore considered them as though raised.
The court concluded that sealing was appropriate for certain portions of the transcript revealing details of the invention disclosure they were not disclosed elsewhere in the public record. It also held that sealing was appropriate for very limited portions of the transcript relating to the nature of a presentation at issue. However, the court rejected the parties' request relating to the royalty rates for the design team and certain applicable profit margins.
The Court also noted that the parties request for sealing was contradicted to some extent by their failure to take "appropriate measures" to protect the material that they now wish to have sealed, specifically no request to close the courtroom was ever made during the trial, nor did the parties ever alert the court that they objected to public disclosure of certain portions of the testimony. Even after the issue was raised during the proceedings, the parties continue to not ask to have the courtroom closed or materials protected during hearings on sensitive issues. Nonethess the Court would not infer waiver. "Because the Court did not flag this issue for the parties prior to trial," Judge Bryson wrote, "the Court will not treat the parties' lax approach to the issue of protecting sensitive information from public disclosure as a waiver of their right now to seek sealing of the trial testimony."
The Court also perceived as a problem that the parties were asking to seal information, the substance of much of which had already been publicly disclosed, either through unsealed filings or in portions of the trial transcript that the parties had not moved to have sealed. The court helpfully provided not only citations to the record locations, but detailed the information that was sought to be sealed, but which was already in the record, and in some cases publicly reported. In the spirit of the Court's order, I am happy to note that those included "allusions to Globus’s royalty base profits of more than $100 million on Caliber and Rise (1/13/14 PM Tr. 10:6-12, 22:16-19; 1/15/14 AM Tr. 79:22-80:4), and net profits of $38.5 million (1/15/14 AM Tr. 46:6-12, 61:21-62-7, 77:17)." (You know, this is kind of fun ... when it's not my case).
The Court did agree to seal portions of the drawings, which the jury had found to be trade secrets, where they consisted of more detailed accounts of the drawings that had not otherwise been made public. Again, the Court noted specifically the descriptions of the drawings that were already a matter of public record. Similarly, the Court declined to seal information regarding royalty rates and excerpts of the transcript relating to the plaintiff's presentation to a third-party, given the information disclosed during the course of trial, again specifically noting transcript locations including in some cases citations to the opening and closing arguments.
Finally, the Court stayed the effect of the order for 10 days in the event that the parties wished to seek modification, reconsideration, or appellate review the court's decision. Since it is a slow day here on the farm waiting for somebody to get themselves in trouble across the proverbial way, I checked the docket, and neither party filed any objections to Judge Bryson's order, thus the redacted transcripts have now made their way onto the court docket.
While my family and I were on vacation last month, I traded emails with Justin Rohrlich, a reporter for VICE News (shown at right discussing the issue of patent litigation trends with Mr. T) who was working on a story that eventually ended up as Trolling the Patent Troll Myth. The article provides good analysis on the issues discussed in the recent 2014 PricewaterhouseCoopers (PwC) study on patent litigation, As case volume leaps, damages continue general decline.
Those in the business will probably find Justin's article interesting - I apologize for the delay getting a post on it up. I know we've all been wondering what which fool Mr. T pities on this issue. (Those of you under 40 have no idea what I'm talking about, do you? Well, that's what the Internet is for - see here.)
Judge: Rodney Gilstrap
Holding: Post Verdict Rulings; Court Costs
Last December, after a five-day jury trial, a Marshall jury in Judge Rodney Gilstrap's court found for the defendant on both infringement and invalidity, finding that none of the asserted claims were infringed and all of the asserted claims were invalid. Judge Gilstrap granted the plaintiff's motion for judgment as a matter of law that the asserted claims were not indefinite, were not invalid for being obvious, and no asserted dependent claims were invalid for being anticipated, as was the defendants motion for judgment as a matter of law that there was no direct infringement of five defendant claims. Judge Gilstrap recently ruled on the plaintiffs motions for judgment as a matter of law on both infringement and invalidity, denying the former, but granting the latter in part, and resolving the parties disputes is to court costs.
Motion for Judgment As a Matter of Law
With respect to infringement, as is the case with most challenges to a jury's factual finding as to infringement, the challenge failed. While the great weight of the evidence confirmed that the defendant did infringe one element of the claim, the Court observed, it was not against the great weight of the evidence for the jury to find that other claim elements were not satisfied, and thus the noninfringement verdict would stand.
With respect to invalidity, the plaintiff asked the court to set aside the finding of invalidity by finding that there was not legally sufficient evidence by which a reasonable jury could have found any claim of the patent invalid under the theories of (1) improper inventorship; (2) anticipation; or (3) lack of written description or enablement. With respect to anticipation, the court found that no reasonable jury could have found that the claimed reference to disclosed each and every element of the claim, and therefore granted the motion for judgment as a matter of law that defendants had failed to prove by clear and convincing evidence that the cited reference anticipated the referenced claim of the asserted patent. Similarly, with respect to the claim of lack of written description or enablement, the court found that the expert's testimony consisted of a series of "yes" and "no" answers without any reason for the answers. These "ipse dixit statements that the apostrophe 858 patent failed the written description and enablement requirements cannot be sufficient to constitute clear and convincing evidence," the court concluded, granting the motion for judgment as a matter of law on this ground as well.
However, After a lengthy recitation of the factual record, Judge Gilstrap concluded that the verdict of improper inventor ship was not against the great weight of the evidence, and accordingly denied the plaintiff's motion for new trial on this basis. The finding of improper inventorship standing alone was sufficient to support the judgment of invalidity, so the JMOL was denied, leaving the jury's verdict of noninfringement and invalidity undisturbed.
The Court's resolution of the parties disputes over court costs is interesting because it makes reference to the Tyler Division's "Standing Order regarding Bill of Costs". That order's provisions regarding incidental costs associated with depositions helped provided the basis for the Court's ruling that while appearance fees for reporters and videographers were recoverable costs, fees for rough ASCII and rough draft were merely incidental costs not recoverable under the statute. The resubmitted costs were approved in the amount of $90,161.05.
CSIRO v. Real Communications, 6:12cv842 (8/8/14)
Judge: Leonard Davis
Holding: Defendant's Renewed Motion to Dismiss Granted
Defendant moved to dismiss for improper venue. The Court denied the motion and permitted jurisdictional discovery, and at the conclusion of the discovery defendant renewed its motion. While plaintiff argued that venue is proper because the defendant allegedly placed a parent company's products into the stream of commerce to sales, the Court noted that the facts showed that the defendant did not actually sell, distribute, deliver, or manufacture any product, let alone the accused product, and what marketing and sales attempts were shown to have occurred did not take place in the Eastern District of Texas. "Ultimately," the Court concluded, "there is no evidence that Real Communications actually places or uses a subsidiary to place any product into the stream of commerce," and accordingly rejected jurisdiction under the stream of commerce theory.
The Court also rejected the alternative theory that personal jurisdiction was proper by imputing the business of the defendants parent to it. The court noted that while the reverse situation is much more common – jurisdiction over a foreign parent company is sought through the subsidiary's local activities, the same legal principles applied in both cases. However the Court found that the facts in this case were not sufficient to show that the subsidiary was the alter ego of the parent under Fifth Circuit precedent.
Accordingly, the Court granted the defendants renewed motion to dismiss and dismissed all claims against it. It noted, however, that the defendant remained a party to the suit for purposes of its pending motion for sanctions.
A couple of weeks ago I posted on Judge Dyk's order denying a section 285 is exceptional case motion in Stragent, LLC v. Intel Corp.. This morning, David Donoghue's Retail Patent Litigation blog had a useful commentary on the opinion that is worth a look.
David starts by observing that this opinion is a good place to start when preparing an exceptional case brief (which it certainly is), and then notes a practical problem with the opinion's position that the defendant's argument that the plaintiffs infringement theory was "implausible" because defendant never sought summary judgment.
"This is an interesting and troubling position for retailers," David writes (and I would add for all parties). "While there is a significant advantage in seeking summary judgment whenever possible, there are often “implausible arguments” that are not amenable to summary judgment because of potential questions of material fact, or even the timing of the motion and the Court’s time to decision relative to the trial date. So, equating a lack of a summary judgment motion with a lack of confidence in a defendant’s arguments is an unfair link, even if it is sometimes true. Hopefully, district judges will make this distinction and this will not become a standard view across district courts."
I would add one more comment to David's, and that is to emphasize that if courts held that a failure to file a motion - either for summary judgment or on a discovery issue, to dig a little deeper into the opinion - equated to waiver of the ability to raise allegations or conduct later, it would encourage the decidedly unhelpful practice, from a docket management viewpoint, to say nothing of the fees parties would have to incur, of parties filing motions on every conceivable issue simply to "preserve" the issue for possible inclusion in a fees motion at the conclusion of the case. This would be the case even when – as David points out – the party knows that the summary judgment standard would likely preclude the motion being granted, or as I would point out – the party knows that the court would expect that the issue would be worked out without filing a motion, and in the absence of a preservation consideration it would be.
Of course perhaps the issues in Stragent were particularly hyperbolic arguments that were appropriately hoisted by their collective petards because they would have been appropriate subjects for summary judgment or discovery sanctions. (Not that I ever make over the top allegations in 285 motions, of course, but I have heard it may have happened a time or two). If that was the case, then the failure to file motions would undercut the credibility of the arguments and thus be a fair observation. And there is prior case law in the district on these points (perhaps more so on the discovery motions side of the question, now that I think about it). In any event, it will be interesting to see what guidance the Eastern District courts provide in coming months to practitioners as to the issues raised in the Stragent opinion.