Young Conaway Stargatt & Taylor, LLP recently unveiled the formation of its Trade Secret and Employee Mobility practice. Our practice is comprised of a team of intellectual property, employment, corporate, and business litigation specialists who have a wide range of experience with internal investigations, employee mobility counseling, and prosecuting and defending expedited cases in various courts in and around the Mid-Atlantic region, including the Delaware Court of Chancery, Delaware Superior Court and District Court for the District of Delaware.
Registration is now open for the 2018 District of Delaware Bench and Bar Conference. Please visit https://defba.org/bench-and-bar/ to register. The agenda for the Conference is available here. We hope to see you on Mary 3 and 4.
Chief Judge Stark recently was faced with a motion for final judgment under Fed. R. Civ. P. 58 following a jury verdict of induced infringement. The parties in the case agreed that the instruction given to the jury on inducement was erroneous in light of a related litigation between the same parties in which the Federal Circuit had ruled that the same instruction was erroneous. The patentee, Power Integrations, however, had not objected to the identical instruction in this case. Judge Stark, nonetheless, concluded that “in the unusual circumstances presented here its induced infringement instruction was plain error” and “it would be a manifest injustice . . . to uphold[ the] jury verdict.” Fairchild Semiconductor Corp., et al. v. Power Integrations, Inc., C.A. No. 12-540-LPS, Memo. Op. at 1-11 (D. Del. Mar. 16, 2018). Moreover, because “the Court [had] already determined that the jury instruction on active inducement was plain error that was prejudicial to Fairchild, resulting in a miscarriage of justice . . . [and] the Court [did] not believe it is highly probable that the error did not contribute to the judgment . . . [the Court therefore] order[ed] a new jury trial on the issues of induced infringement of the ’359 patent and damages.” Id. at 11-13.
Judge Richard G. Andrews recently granted a motion for summary judgment that the asserted claims of a patented “apparatus, method and database for control of audio/video equipment” is invalid under 35 U.S.C. § 101. D&M Holdings Inc. v. Sonos, Inc., C.A. No. 16-141-RGA (D. Del. Feb. 20, 2018). The Court agreed with the defendant that the claim at issue was “at most, directed to the automation process that can be (and has been) performed by humans,” such as when (1) a person chooses a particular DVD to watch by identifying its title, (2) the person determines, based on memory, whether he or she watched the DVD previously and, if so, whether he or she selected playback preferences, and (3) if the person recalls such playback preferences, selecting the same preferences before beginning to watch the DVD or, if no such preferences are recalled, the DVD plays with default preferences. Id. at 8. The Court thus viewed the asserted claim as “directed to the abstract idea of choosing to play back media with or without playback preferences.” Further, it “provides no inventive concept, and at most merely automate[s] the abstract idea through the use of a generic, conventional technology.” Id. at 12.
In December 2016, a Delaware jury found that Gilead had failed to prove the asserted patent in this case was invalid and awarded damages of $2.54 billion. But Chief Judge Stark has now granted Gilead’s motion for judgment as a matter of law that the asserted claims are not enabled. Although Gilead also moved for JMOL or a new trial with respect to damages, Judge Stark denied that motion and a motion arguing that the asserted patent failed the written description requirement. Instead, Judge Stark found that because “the Structural Limitations [of the asserted claims] are satisfied by such a large number of compounds . . . the amount of experimentation to refine this broad set of compounds to those that also satisfy the Functional Limitations [of the asserted claims], given the limited teachings on this point in the patent and the state of the prior art, is an ‘undue’ amount. Thus, the only conclusion that can be reached based on the trial record is that the asserted claims . . . are invalid for lack of enablement.”Idenix Pharmaceuticals LLC, et al. v. Gilead Sciences, Inc., C.A. No. 14-846-LPS, Op. at 45-46 (D. Del. Feb. 16, 2018).
The agenda for the 2018 District of Delaware Bench and Bar Conference has been released and is available below. Registration for the conference will open in a few weeks. We hope to see you on May 3 and 4!
Today the United States Senate Committee on the Judiciary held a hearing on the nominations of Colm F. Connolly and Maryellen Noreika to be United States District Judges for the District of Delaware, bringing the District of Delaware one step closer to returning to full strength. The nominations will next be voted on by the full Senate.
Colm Connolly is a partner with the law firm of Morgan, Lewis & Bockius LLP, where he manages the Wilmington office as a member of the firm’s litigation and intellectual property practice groups. He joined Morgan Lewis in 2009, after serving eight years as the United States Attorney for the District of Delaware. Before his confirmation as United States Attorney, Mr. Connolly spent more than two years as a partner in the Wilmington law firm Morris, Nichols, Arsht & Tunnell LLP. Prior to joining Morris Nichols, Mr. Connolly served for seven years as an Assistant United States Attorney for the District of Delaware and as a law clerk to Judge Walter K. Stapleton of the U.S. Court of Appeals for the Third Circuit. Mr. Connolly earned his B.A., with honors, from the University of Notre Dame, his M.Sc. from the London School of Economics, and his J.D., with honors, from the Duke University School of Law.
Maryellen Noreika is a partner in the Wilmington law firm of Morris, Nichols, Arsht & Tunnell LLP where she began her career as an associate upon graduation from law school in 1993. During her 24 years at Morris Nichols, Ms. Noreika has served as counsel in more than 500 cases, while specializing in patent law, and representing parties in cases involving biotechnology, chemistry, consumer products, computer science, medical devices, and pharmaceuticals. Ms. Noreika earned her B.S. from Lehigh University, her M.A. in biology from Columbia University, and her J.D., magna cum laude, from the University of Pittsburgh, where she was inducted into the Order of the Coif, and served as a member of the University of Pittsburgh Law Review.
Judge Andrews recently issued a memorandum order ruling on the Defendants’ motion to exclude testimony of Plaintiffs’ damages expert in MiiCs & Partners, Inc., et al. v. Funai Electric Co., Ltd., et al., C.A. No. 14-804-RGA, Memo. Or. (D. Del. Dec. 7, 2017). The Defendants lodged several challenges to the Plaintiffs’ expert’s opinion. First, Judge Andrews found that, for one patent-in-suit, the expert’s use of a “5% to 10% cost-savings benefit” provided by the Plaintiffs’ technical expert “demonstrates that he properly apportioned damages and profits between the patented and unpatented features.” Id. at 4-5. For a second patent-in-suit, however, Judge Andrews found “no basis for concluding that he apportioned between the patented and unpatented features” because the “only place where [the expert] appears to consider the profit attributable to the inventions, as distinguished from unpatented features, is in his discussion of Georgia-Pacific Factor 13 . . . [which] lacks any meaningful analysis or attempt to quantify the portion of realizable profit that should be attributed to the patented feature of the smallest salable unit.” Id. at 6.
Moreover, the Defendants argued, and Judge Andrews agreed, that an unaccepted offer to license a portfolio of over 360 patents was not a reliable starting point for the hypothetical negotiation as to one patent-in-suit because it was only an offer, it was not a comparable number of patents, its timing suggested that it was litigation-influenced, and it involved different parties. Id. at 7-8.
Finally, Judge Andrews rejected the use of a “composite royalty rate,” which the Defendants characterized as “appl[ying] a royalty base that includes units accused under any asserted patent to a royalty rate with contributions from every asserted patent.” Id. at 10. This approach, Judge Andrews found, “assigns to each accused product the same per-unit royalty regardless of how many patents that product is accused of infringing.” Id. at 11. Judge Andrews also rejected several other arguments for excluding other portions of the proffered expert testimony.
In two opinions issued the same day, Chief Judge Leonard P. Stark considered motions to transfer venue in light of TC Heartland and the Federal Circuit’s recent pronouncement on the venue defense in In re Micron Tech, Inc., 875 F.3d 1091 (Fed. Cir. 2017). Koninklijke KPN N.V. v. Kyocera Corporation, et al., C.A. No. 17-87-LPS-CJB (D. Del. Dec. 18, 2017) & 3G Licensing, SA, Koninklijke KPN N.V. and Orange S.A. v. HTC Corporation, et al., C.A. No. 17-83-LPS-CJB (D. Del. Dec. 18, 2017)
In Koninklijke v. Kyocera, the Court concluded that Defendant’s improper venue defense was not untimely as it was not available to it pre-TC Heartland. Id. at 2. Furthermore, Defendants’ filing of a 12(c) motion did not forfeit its improper venue challenge, where Defendants had responded to the complaint with a motion to dismiss for improper venue and “ha[d] repeatedly reaffirmed that it contents venue . . . and even moved to stay the case pending resolution of the instant motion.” Id. at 2-3. The Court then concluded that venue was improper for the domestic defendant headquartered in California, but not for the foreign, Japanese defendant, and further that the Court could exercise personal jurisdiction over the Japanese defendant under a theory of “dual jurisdiction”/”stream of commerce” Id. at 4-7. Accordingly, the Court concluded that
[A]n immediate transfer of the case as to both Defendants is not the most reasonable and appropriate outcome — particularly given [Plaintiff’s] objection, [its] contingent request that its case against [the domestic defendant] be dismissed, and the fact that ten other, related actions (involving the [patent-in-suit]) are pending before the undersigned Judge. . . . [T]he Court will provide Plaintiff an opportunity to dismiss its claims against [the domestic defendant] . . . and will then permit [the foreign defendant] to renew its motion to transfer venue (and address the totality of circumstances), or seek any other appropriate relief.”
In Sonos, Inc. v. D&M Holdings Inc. d/b/a The D+M Group, et al., C.A. No. 14-1330-WCB (D. Del. Dec. 7, 2017) (Apportionment Order), Judge William C. Bryson denied Plaintiff’s motion for leave to submit a second supplemental report from its damages expert because the supplemental report failed to conduct a proper apportionment analysis. The Court had previously excluded the expert’s first report due to a failure to apportion and because it therefore violated the entire market value rule. Apportionment Order at 1. The supplemental report looked to the least expensive accused product for a revised and reduced royalty base, in order to “to “account for additional, non-patented features and componentry associated with higher priced products.” Id. at 2 (quoting report). The Court concluded that the method still calculated the royalty based on the entire market value of the product where the least expensive accused product still contained features not covered by the patents. Id. at 3. The Court observed that “it appears that the [expert] regarded the effective reduction in the accused revenue resulting from that calculation as constituting apportionment because it reflects a reduction in the amount that he previously cited. While an apportionment would certainly produce a reduction, that does not mean that a reduction necessarily constitutes apportionment. Nothing in [the] report reflects an apportionment directed to the role of the patented features in driving demand for the product.” Id. at 3-4.
While the Court would therefore not permit Plaintiff to offer a royalty rate premised on the entire market value rule, the Court did permit Plaintiff to accept Defendants’ proposal for a reasonable royalty at trial. Id. at 4.
In a separate opinion issued December 8, 2017, Judge Bryson also excluded certain of Plaintiff’s proposed secondary considerations evidence of praise as hearsay (“Exhibits Order”). See Exhibits Order at 4-10. While the Court would permit evidence of industry praise, the Court excluded praise that included factual statements about the products that went beyond assertions of opinion. For example, statements that a product was “mind blowing” were admissible, but following statements that the product was the first of its kind to perform a function was a factual assertion offered for the truth of the matter asserted, and thus excludable hearsay. Id. at 6-7. Furthermore, some exhibits addressed praise of features of the product that were outside the scope of the asserted claims. Id. at 7-8. The Court also took Rule 403 into consideration and concluded that the prejudicial effect of such evidence outweighed its probative value. Id. at 8-9.The Court also ordered such statements redacted from exhibits that contained admissible evidence of praise. Finally, the Court ruled that “out-of-court statements by third-party declarants that [Defendants] or others copied [Plaintiff] are inadmissible hearsay.” Id. at 10.