Eastern District of Texas Federal Court Practice

Summary Judgment of Noninfringement Mostly Granted

DeepNines, Inc v. McAfee, Inc (9-06-cv-00174) (6/18/08)
Judge: Ron Clark
Holding: Defendant's Motion for Summary Judgment GRANTED in part.
Judge Clark granted the defendant's post-Markman ruling motion for summary judgment of noninfringement with respect to three of the four products asserted, and one of the three claims asserted as to the fourth. Fact issues remained as to two of the claims on the fourth product, however.  Of note, Judge Clark held that any claims of indirect infringement were precluded as well, since no theories of inducing or contributory were contained in the plaintiff's complaint or in its infringement contentions.  That its expert opined on indirect infringement less than two months before trial was not enough to save any such claims.
Judge Clark's opinion contains a good discussion of prosecution history estoppel (which caused the plaintiff problems with any claim of infringement under the doctrine of equivalents) and a "cleanup" claims construction in light of the Supreme Court's O2  Micro v. Beyond Innovation Tech., under which he wrote "the court is apparently required to supplement its claim construction whenever an issue arguably related to claim scope arises."

Summary Judgment of Noninfringement Granted

Ring Plus v. Cingular Wireless LLC, et al, 5:08cv42 (Document #280) (June 4, 2008)
Judge: David Folsom
Holding: Summary Judgment of Noninfringement GRANTED
This is a patent case involving telecommunications.  Defendants moved for summary judgment of noninfringement on two bases, and Judge Folsom conducted a hearing on April 22 of this year.  Regardless of the filing date (perhaps this is a follow-on case or was severed - I haven't checked) Judge Folsom conducted a claims construction hearing last year and the order refers repeatedly to the constructions adopted by the Court in orders dated July 9 and July 26, 2007.  Based upon those constructions, he concluded that summary judgment of noninfringement under both literal and doctrine of equivalents was appropriate on both asserted bases.

Ixnay on the Gamesmanship and Chicanery: Plaintiff's Motion for Leave to Amend Answer & Serve Invalidity Contentions Against Intervenor After Deadlines Denied

MASS Engineered Design, Inc. v. Ergotron, Inc., --- F.Supp.2d ----, 2008 WL 2223036(E.D.Tex. May 30, 2008) (NO. 2:06 CV 272)
Judge: Leonard Davis
Holding: Plaintiff's Motion for Leave to Amend Answer and Serve Invalidity Contentions Against Intervenor DENIED
Two "gamesmanship"s and a "chicanery" in an order is usually not a good sign.  Both were present here, with a couple of "will not tolerate"s thrown in, so you know it's going to be an interesting order.
In this case, Plaintiff sued defendants Dell and Ergotron.  Dell's indirect subsidiary, Dell Marketing L.P. (“DMLP”) was granted leave to intervene, and it asserted a counterclaim that Plaintiff infringed its patent.  Judge Davis set a date for Plaintiff to serve any invalidity contentions pursuant to P.R. 3-3 (June 6, 2007) and it did not serve any.  Following issuance of the Court's claim construction ruling on March 13, 2008, Plaintiff sought leave to amend its answer and to serve invalidity contentions (although these analyses are technically separate - FRCP 16 for one and P.R. 3-6 for the other, the order conflates them since the underlying analytical standard is the same).
MASS did not claim that it "could not" meet the Court's deadlines, Judge Davis noted (after noting that that's what the applicable "good cause" standard requires - never a good sign for the movant) "but simply that it chose not to meet the deadlines. MASS contends that invalidity arguments are costly; thus, MASS proposed constructions that focused solely on its non-infringement argument."  This argument was not persuasive to the Court.  "While invalidity arguments may prove to be a costly endeavor, this Court's rules oblige MASS to assert such a defense early in the litigation if it is going to assert the defense at all. MASS, as the original plaintiff, chose this forum and thus chose this forum's rules. It cannot pick and choose which rules and orders to follow and which to ignore. Choosing to avoid potential litigation expenses is not an adequate explanation for ignoring this Court's orders."
MASS also claimed that it did not anticipate the Court's “very broad constructions.”  This argument was similarly not persuasive.  "This is not a situation where the Court issued constructions that greatly differed from what the parties proposed. Rather, the Court adopted all of DMLP's proposed constructions, without major modification. Thus, MASS was on notice of the possibility of the Court's constructions from at least the time MASS proposed its constructions. MASS's “wait-and-see” approach to claim construction is antithetical to the Local Patent Rules. Allowing such an approach would completely abrogate the purpose of the Patent Rules, which is to effectuate an orderly and efficient pretrial process. STMicroelectronics, Inc. v. Motorola, Inc., 307 F.Supp.2d 845, 849 (E.D.Tex.2004) (Davis, J.). Such a policy would encourage future accused infringers to propose narrow constructions focused on non-infringement while sidelining potential invalidity defenses until the Court issues its claim construction opinion. Such gamesmanship is not tolerated in this Court, and the Court's rules are intended to avoid this type of chicanery. Accordingly, this factor heavily weighs against finding good cause."
Later in the order, Judge Davis returned to the theme of the purpose of the local patent rules, citing decisions by Judge Clark in the Eastern District of Texas as well as a Northern District of California case, writing that "the Court will not reward MASS for its gamesmanship. The Local Patent Rules “exist to further the goal of full, timely discovery and provide all parties with adequate notice and information with which to litigate their cases, not to create supposed loopholes through which parties may practice litigation by ambush.” Finsar Corp. v. DirectTV Group, Inc., 424 F.Supp.2d 896, 901 (quoting IXYS Corp. v. Advanced Power Tech., Inc., 2004 WL 1368860 * 3 (N.D.Cal. June 16, 2004)). Allowing MASS to serve its untimely invalidity contentions would open the floodgates for other accused infringers to circumvent the Local Patent Rules, thereby completely nullifying Patent Rule 3-3."
As you might guess, the motion for leave to amend to assert the invalidity defense was denied as moot, with the statement that "[t]he Court will not reward MASS for its dilatory tactics." (For some reason, West has it spelled "dillatory", perhaps as a reference to the plaintiff being in a pickle.  Ba-da-bing!)

Summary Judgment Granted for Defendant on Patent License Defense

Orion IP, LLC v. Mercedes-Benz USA, LLC, --- F.Supp.2d ----, 2008 WL 2222964(E.D.Tex. May 30, 2008) (NO. 6:07 CV 451)
Judge: Leonard Davis
Holding: Defendant's Motion for Judgment on the Pleadings or in the Alternative Motion for Summary Judgment GRANTED
One interesting issue I have seen come up more than once in local patent infringement litigation is what happens when a patent holding company settles claims against one defendant, and then a later case is filed either by a company related to the releasing plaintiff against the released defendant, or by the settling plaintiff against a company related to the released defendant.  (Got that?)
The latter situation arose when Orion sued DaimlerChrysler Corporation (“DCC”) for infringement of two patents in Orion IP, LLC v. Ford Motor Company, 2:04cv313. Orion had previously sued Mercedes-Benz USA, LLC ("MBUSA") for infringement of the patents in Orion IP LLC v. Mercedes-Benz USA LLC, 6:05cv322. On February 16, 2006, DCC and Orion entered into a “Patent License and Settlement Agreement” to resolve both litigations. DCC settled with Orion on behalf of itself and all “DCC Related Companies,” including MBUSA, and in the Settlement Agreement, Orion granted “DCC and the DCC Related Companies a nonexclusive, non-transferable ... royalty-free, fully paid-up, worldwide license ...” to both patents.
On August 3, 2007, the Daimler companies (including MBUSA) spilt from the Chrysler companies. Chrysler LLC is the successor to DCC and retained the benefits and obligations under the Settlement Agreement. MBUSA is no longer affiliated with Chrysler LLC.  On September 25, 2007, Orion filed suit against MBUSA alleging MBUSA “lost” its status as licensee of the patents when the Daimler-Chrysler split occurred and MBUSA infringes the patents. MBUSA denied infringement, and alleged that it has a license to practice the patents, and that it has a release of claims for any infringement.  Accordingly, it filed a motion for judgment on the pleadings or in the alternative for summary judgment against Orion's patent infringement claims, claiming it is still entitled to the benefits of the Settlement Agreement.
Judge Davis concluded that MBUSA was entitled to the benefits of the settlement agreement, even after the split.  "The Agreement is what it is as written", he wrote.  "The Court will not rewrite the Settlement Agreement to place limitations on the license. The language of the Agreement does not support Orion's proffered interpretation, and the Court rejects it."
In the order's final paragraph, Judge Davis noted that while MBUSA's counterclaims of invalidity and noninfringment are moot in light of his order, its counterclaim for breach of contract remains justiciable. But, MBUSA based its allegation of the Court's jurisdiction over its counterclaims on the Court's jurisdiction in patent cases.  Accordingly, "[i]f MBUSA wishes to continue to assert its breach of contract claim in this Court, the Court ORDERS MBUSA to replead its claim specifying the basis for jurisdiction within ten days of this Order or the Court will dismiss the claim without prejudice."

Federal Circuit Affirms Claims Construction in Patriot Scientific v. ARM case

The Federal Circuit, in Technology Properties Ltd. v. ARM Ltd., 2008- 1020, without issuing an opinion, upheld May 9 a finding that ARM doesn't infringe Patriot Scientific's patent. Patriot Scientific's Technology Properties unit (TPL) sued electronics companies including Matsushita Electric Industrial Co., Toshiba Corp. and Fujitsu Ltd. in Marshall in 2005 over several patents in Technology Properties Ltd. v. Fujitsu Ltd., 2:05cv494.  TPL eventually settled with the defendants other than ARM, but it had previously stipulated to noninfringement as to ARM based on Judge Ward's claims construction ruling, and appealed that ruling.  ARM lawyer Kevin Anderson of Wiley Rein in Washington argued the case before the appeals court last week, and told Bloomberg Media that "[t]his is the first time they've litigated their patents to finality and they lost.''  Congratulations to Kevin and James Wallace of Wiley Rein, both of whom I was fortunate to work with in the underlying case as local counsel for ARM. 

Motion for Stay Pending Reexam Granted

Spa Syspatronic, AG v. Verifone, Inc., 2008 WL 1886020(E.D.Tex. Apr 25, 2008) (NO. CIV.A. 2:07-CV-416)
Judge: John Love
Holding: Motion for Stay Pending Reexam GRANTED
Yes, you read it right - the request for a stay pending reexam was granted.  Judge Love cited a couple of factors as specifically supporting a stay in this case.  First, he was not persuaded Spa would suffer any undue prejudice or tactical disadvantage, because while Spa argued that VeriFone unduly delayed in seeking reexamination, he found that VeriFone acted diligently.  "Moreover," he wrote, "Spa's argument regarding VeriFone's delay is somewhat disingenuous. While Spa contends that it has been negotiating with VeriFone, it nonetheless brought its lawsuit late in the '862 patent's life, which ultimately resulted in a trial date after the expiration of the patent's twenty year term . . .  Since Spa will apparently be unable to enforce its exclusive intellectual property rights in the '862 patent post-trial, a permanent injunction to prevent future infringement will be unavailable as a remedy, and therefore damages and pre-judgment interest provide an adequate measure of relief to Spa for any infringement finding.  Moreover, the parties are apparently not direct competitors in the marketplace, and therefore a stay is also unlikely to directly prejudice Spa's standing in the market during the remainder of the '862 patent's life, making any harm from delay even less acute."
"Awaiting a reexamination is particularly pertinent in this case," he continued "since the '862 patent's European counterpart was recently revoked after reexamination for lack of novelty. While the Court is cognizant of the differences between the United States and European patent systems, and also cognizant that the invalidation of the European patent on its own has little bearing on the validity of the '862 patent in the United States, proceeding with litigation on a patent whose counterpart has already been invalidated is a questionable expense of the Court and parties' resources, particularly when considering the frequency with which the PTO modifies claims in some manner. Aside from the European invalidation, VeriFone also presented other potentially invalidating prior art to the PTO which the PTO stated raised substantial questions of patentability. The risk of proceeding through a trial only to have the PTO modify the claim terms (or revoke the patent entirely) and force the parties to relitigate vastly outweighs any benefits of continuing litigation currently in its infancy."

Defense verdict in Marshall patent case

Last Thursday a Marshall jury returned a defense verdict in the Sofpool v. Intex Recretaion Corp. case in Judge Everingham's court in Marshall.  It found that the defendant did not infringe either of the asserted patents, but it did find that the defendant had not shown by clear and convincing evidence that the second patent was invalid as obvious (no invalidity question on the first patent).  As a result of the "no" on infringement, the jury did not reach the willfulness questions, or the damages question, which asked for the defendant's profits as a result of the use of the patents, as well as for a reasonable royalty.  As far as anyone is aware, this is the first design patent case tried to a verdict in the district.
2008 jury verdict stats for the district are thus now tied at two verdicts for plaintiffs and two for defendants.

Patent case transferred to Delaware

Chi Mei Optoelectronics Corporation v. LG Phillips LCD Co., LTD et al, 2:07-cv-176 (March 31, 2008)
Judge: T. John Ward
Holding: Motion to Transfer Venue GRANTED
This is a patent case in which Judge Ward earlier today transferred the case to the location of a prior-filed action in Delaware.  I'll go through the procedural history briefly, as it explains the ruling.
On December 1, 2006, LG Philips LCD Co., Ltd. (“LPL”) filed an action in the District of Delaware alleging infringement of patents directed at various aspects of liquid crystal display (“LCD”) technology,. The first-named defendant in the Delaware action is the plaintiff here, Chi Mei Optoelectronics Corporation (“CMO”). On March 8, 2007, one of the defendants in the Delaware action, AUO filed an infringement action regarding patents directed at LCD technology in the Western District of Wisconsin against the two defendants here, LPL and LPL’s subsidiary, LG Philips LCD America, Inc. (“LPLA”). LPL amended its Delaware complaint against AUO to add declaratory judgment counts of invalidity and non-infringement relating to the patents asserted by AUO.
LPL then filed a motion to transfer the Wisconsin court to Delaware.  Judge Shabaz granted the motion, concluding that “[t]he interest of justice overwhelmingly favors transfer to Delaware for consolidation with the first filed case presently pending in that Court.” AU Optronics Corp. v. LG.Philips LCD Co., Ltd., No. 07-C-137-S, 2007 U.S. Dist. LEXIS 39340, at *13 (W.D.Wis. 2007).
CMO filed this action on May 4, 2007, against LPL and LPLA accusing them of infringing patents related to LCD technology. As it had done after AUO filed the Wisconsin complaint, LPL amended its Delaware complaint against CMO to add declaratory judgment counts of invalidity and non-infringement for the patents asserted by CMO in this action.
Judge Ward held that although the private interest factors in this case were neutral, the public interest factors overwhelmingly favored a transfer. The accused technology in this case is similar to the accused technology in the Delaware action: all patents involved relate to LCD display technology. Moreover, Judge Shabaz has already addressed a nearly-identical issue with respect to CMO’s co-defendant in the Delaware case, AUO. Accordingly Judge Ward declined to allow CMO, by filing this case, to "circumvent the intention of Judge Shabaz’s order relating to AUO’s case." The interest of justice factor weighs in favor of having the parties resolve their related disputes in one forum, the District of Delaware.

The Other Shoe Drops: The Rest of the Plaintiff's Claims are Invalid as Indefinite Too

PureChoice, Inc. v. Honeywell Intern., Inc., 2008 WL 695047(E.D.Tex. Mar 13, 2008) (NO. CIV.A. 2:06-CV-244)
Judge: T. John Ward
Holding:
Two months ago Judge Ward in his January 22, 2008 Markman order found that two claim limitations in United States Reissued Patent No. RE38,985 (“the '985 patent”) indefinite under 35 U.S.C. § 112 - see Judgment for Patent defendant following claims construction ruling; Claims Indefinite. The court informed the parties that it would treat defendant's Motion for Entry of Final Judgment as a motion for summary judgment of indefiniteness as to the remaining asserted claims in this case. 
Judge Ward today held that each of the remaining asserted claims of the '985 patent contain the claim limitations he previously held as indefinite in its Markman Order.

Claims construction opinion; Plaintiff stipulates to noninfringement

RFID Tracker Ltd. v. Wal-Mart Stores Inc., 2008 WL 382317, E.D.Tex., February 11, 2008 (NO. 6:06 CV 363)
Judge: Leonard Davis
Holding: Claims construction ruling.
As part of Judge Davis' claim construction order, he adopted Defendants’ definition of the term “interrogator/reader” and construed it to mean “an interrogator/reader that includes a field generator and a receiver, but not a transmitter”.  Today the Plaintiff stipulated to noninfringement as a result of the Court's claims construction ruling, and asked the court to enter a final judgment in accordance with this ruling.