In a recent order allowing a defendant’s motion to dismiss a case involving heated products and heat pack technology, Judge Sorokin clarified a specific application of the first-filed rule.
In the case at hand, Schawbel Technologies LLC v. The Heat Factory USA, Inc., the plaintiff Schawbel alleged breach of an asset purchase agreement (Count I); alleged patent infringement involving heated insole, battery pack, and heat pack technology (Count II); and also sought declaratory judgment that its license agreement with the defendant The Heat Factory had terminated (Count III). Counts I and III were first brought in California state court prior to the instant case at the U.S. District Court for the District of Massachusetts.
The Heat Factory filed a motion to dismiss or transfer the patent claim based on lack of venue in the District of Massachusetts and to dismiss or stay the state court claims in favor of the California state action. Shortly after, and while the motion was pending, the California state court action was removed to the U.S. District Court for the Southern District of California.
According to the first-filed rule, where identical actions are proceeding concurrently in two federal courts, the first-filed action is generally preferred in a choice-of-venue decision. Furthermore, when a state court action is later removed to federal court, the date of the action’s filing in state court, rather than the date of removal, is the relevant date. Finally, there are at least two exceptions to the first-filed rule: (1) where special circumstances justify a transfer, such as where the party bringing the first-filed action engaged in misleading conduct in a preemptive “race to the courthouse,” and (2) where the balance of convenience substantially favors the second-filed action.
Because the date of filing of the California state court action preceded the date of filing of the instant case, and because both parties described the two actions as “sufficiently identical as to trigger the first-filed rule,” the court found that the Southern District of California was preferred over Massachusetts.
Although Schawbel argued that the exceptions to the first-filed rule applied, the court was not convinced, and cited a First Circuit opinion that gives a preference to the judge presiding over the first-filed action to determine whether certain exceptions apply. The court’s determination was further supported by the fact that the venue for the patent claim was unequivocally in California, whereas the same venue analysis for Massachusetts was more complicated.
Schawbel’s additional arguments that the dismissal of the action in Massachusetts would result in prejudicial delay also were unconvincing to the court because the parties could file a motion for a prompt hearing in California and/or seek an expedited scheduling conference or early evaluation under the California local rules.
The case is Schawbel Technologies LLC v. The Heat Factory USA, Inc., Civil Action No. 18-cv-10227-LTS (D. Mass.) before Hon. Leo T. Sorokin. A copy of the order can be found here.
After a lengthy and circuitous patent proceeding between plaintiff O.F. Mossberg & Sons (“Mossberg”) and defendants Timney Triggers, LLC and its related manufacturing entity (collectively, “Timney”), which ultimately resulted in Mossberg voluntarily dismissing the action, Judge Bolden of the District of Connecticut recently determined that the case was not “exceptional” such as to warrant awarding Timney’s attorneys’ fees.
The case began in 2012, when Mossberg filed a lawsuit against Timney alleging infringement of U.S. Patent No. 7,293,385 (the “’385 Patent”), directed to a “Modular Trigger Group for Firearms and Firearm Having a Modular Trigger Group.” The accused product was Timney’s own “specialized aftermarket gun triggers.” Timney quickly went on the offensive, filing a request for inter partes reexamination of the ’385 Patent with the USPTO (the court stayed the litigation pending the outcome). During the reexamination, the USPTO rejected several claims over the prior art, and Mossberg then canceled those claims and added new ones. Then, in a likely unexpected turn of events, the USPTO issued a final agency action determining it lacked jurisdiction to conduct the reexamination due to a failure to identify the real party in interest.
Timney did not stop there, and if nothing else, this story is one of persistence. After the initial USPTO decision, Timney then filed three ex-parte reexamination proceedings in sequence. The first resulted in the rejection of every claim of the ’385 Patent, and Mossberg amended its claims in response. The second again resulted in the rejected of claims of the ’385 Patent, and Mossberg again amended its claims. The third was the nail in the coffin—Timney had an ace up its sleeve on its final attempt, a “new” prior art reference that had not been considered in any of the prior proceedings. The USPTO found all claims unpatentable in light of that reference, and issued a Final Rejection of all claims, which the PTAB affirmed.
After the PTAB affirmed the rejection of all claims of the ’385 Patent, Mossberg filed a notice of voluntary dismissal of the litigation under Fed. R. Civ. P. 41. Then, Timney moved for an “exceptional case” finding that would entitle it to recover its attorneys’ fees. Judge Bolden denied Timney’s motion, for several reasons.
First, the Court found that Timney was not a “prevailing party” – a prerequisite to an “exceptional case” finding. According to the Court, for a party to “prevail,” there must be a decision on the merits that effects a “judicially sanctioned change in the legal relationship of the parties.” Although Timney in fact prevailed with the USPTO in invalidating all of the asserted claims, Mossberg voluntarily dismissed the district court litigation. The Court found that “a Rule 41 dismissal without prejudice is not a decision on the merits,” and as a result, Timney was not entitled to an “exceptional case” finding.
Second, the Court found that the case was not “exceptional” simply because it did not “stand out from others with respect to the substantive strength of a party’s litigating position” and there was no evidence of bad faith or frivolousness. On this issue, the Court pointed to the fact that, until the very end of the proceeding, neither party was aware of the prior art reference that doomed the ’385 Patent. Also important to the Court’s decision was that the district court litigation never proceeded far beyond the complaint stage – the case had been stayed pending the outcome of the USPTO proceedings, and therefore “the Court [had] no basis to find bad faith or vexatious litigation strategies.”
The case is O.F. Mossberg & Sons, Inc. v. Timney Triggers, LLC et al., 3:12-cv-00198, in the District of Connecticut. A copy of the opinion can be found here.
Determining who qualifies as an inventor on a patent application requires careful attention to the facts surrounding each person’s contribution to conception of the invention, as embodied in the patent claims. In one recent case out of Massachusetts, the court evaluated a complex set of circumstances to resolve an inventorship dispute involving a collaboration between scientists on use of stem cells to treat autoimmune diseases.
The parties to the case are biotechnology companies that focus on stem cell research and development of corresponding therapies and treatments for various diseases involving stem cells. Dr. Wang, a research scientist at Defendant ImStem, specialized in research on genetic mechanisms of multiple sclerosis including the experimental autoimmune encephalopathy (“EAE”) mouse model. Dr. Wang contacted two researchers at Plaintiff SCRMI, Drs. Kimbrel and Lanza, to discuss a collaboration involving mesenchymal stem cells (“MSCs”) derived from hemangioblast cells, and the use of the EAE mouse model to test the effectiveness of MSCs to treat autoimmune diseases. In 2010, the scientists agreed to work together to conduct experiments involving hemangioblast-derived MSCs on the EAE mouse model, and published their work in a scientific journal in 2014.
However, in late 2011, SCRMI filed a provisional patent application that incorporated data from the above-referenced collaboration. The application only listed Drs. Kimbrel and Lanza as co-inventors—and did not list Dr. Wang. This application later issued as U.S. Pat. No. 8,961,956. In 2017, ImStem received its own patent (U.S. Pat. No. 9,745,551) on subject matter relating to the collaboration; the ’551 patent named Dr. Wang as a co-inventor but did not include Drs. Kimbrel and Lanza.
Plaintiffs subsequently filed suit against Defendants, seeking a correction of inventorship on the ’551 patent. In their Answer, Defendants asserted a counterclaim for correction of inventorship on the ’956 patent, asserting that Dr. Wang contributed the idea of using hemangioblast-derived MSCs in the treatment of multiple sclerosis and other autoimmune disorders—a concept allegedly embodied in claims 3 and 4 of the ’956 patent.
Plaintiffs then filed a motion to dismiss the Defendants’ counterclaim, arguing (i) that Dr. Wang did not contribute anything to the ’956 patent beyond knowledge contained in the prior art (pointing to ten clinical studies cited in the patent); and (ii) Dr. Wang’s alleged contributions to the patent were too insignificant to qualify him as a joint inventor, in part because the method claimed in the patent recites treatment of over 60 diseases with only one of those being multiple sclerosis.
In deciding the motion to dismiss, Judge Burroughs analyzed the two arguments set forth by Plaintiffs and found them lacking. With respect to the assertion that Dr. Wang did not contribute anything but prior art, the court found that none of the ten studies cited by Plaintiffs describes using hemangioblast-derived MSCs in the treatment of multiple sclerosis or other autoimmune disorders—the very concept that Dr. Wang claims to have contributed to the ’956 patent. In addition, the PTO Examiner acknowledged that the methods of using hemangioblast-dervied MSCs to treat diseases was not in the prior art. As a result, Judge Burroughs concluded that Plaintiffs did not establish sufficient facts to show that Dr. Wang’s contribution was in the prior art.
With respect to the assertion that Dr. Wang’s contributions were too insignificant, the court pointed to Plaintiffs’ inability to cite any relevant authority for its position that significance of a contribution is measurable by the number of claim subparts that encompass an idea. Instead, the court confirmed that there is no bright-line test for determining inventorship, and that a contribution to one claim is enough. Therefore, Judge Burroughs determined that Plaintiffs failed to provide enough evidence for the court to “fairly measure the significance of Dr. Wang’s alleged contributions against the full ’956 patent.”
Based on the above determinations, the court found that Defendants alleged enough facts to state a plausible claim for relief, and denied Plaintiffs’ motion to dismiss.
The case is Astellas Institute for Regenerative Medicine v. ImStem Biotechnology, Inc., Civil Action No. 17-cv-12239-ADB (September 28, 2018), before Hon. Allison D. Burroughs. A copy of the court’s order can be found here.
Chief Judge Saris in the District of Massachusetts recently granted a motion to disqualify the Sunstein law firm from representing Altova in a patent suit against Syncro Soft, upon finding that the conflict was foreseeable based on the history of the parties’ interactions and their status as direct competitors. Both companies operate in the market for extensible markup language (“XML”) editor software. Altova alleged that version 19.0 of Syncro Soft’s OXYGEN XML Editor Software, which includes a feature called “Quick Fix” that automatically fixes problems such as missing required attributes or invalid elements, infringes U.S. Patent No. 9,501,456 (“the ‘456 patent”).
By way of background, in 2004, Syncro first retained Sunstein in response to a cease-and-desist letter it received for an unrelated trademark dispute. The engagement letter from Sunstein included a paragraph about withdrawal based on future conflicts of interest and that such withdrawal would occur “upon reasonable notice.” In 2009, Syncro received another cease-and-desist letter, this time from Altova regarding copyright infringement and trade dress misappropriation, specifically that version 10.1 of Syncro Soft’s OXYGEN copied the look and feel of Altova’s XMLSpy product. Following the parties’ exchange, Syncro Soft made changes to its product to both parties’ satisfaction, and released versions 10.2 and 10.3. Altova’s counsel indicated in a letter to Sunstein regarding this matter that Altova would “review the new release of OXYGEN 10.3 and continue to monitor this situation.”
In 2011, before the ‘456 patent had been filed, Sunstein began representing Altova in trademark matters not adverse to Syncro Soft. In June 2017, Altova approached Sunstein regarding the present patent dispute involving Syncro Soft. Sunstein, in an attempt to avoid the conflict of interest, sent Syncro Soft a letter to terminate its relationship with Syncro Soft on July 6, 2017. The letter did not request Syncro Soft’s consent to allow Sunstein to represent Altova in litigation against Syncro Soft. The response letter from Syncro Soft’s CEO stated that Syncro Soft was not aware of any such issues that could affect the company. Syncro Soft did not provide written consent to Sunstein’s representation of Altova.
Syncro Soft argued that Sunstein should be disqualified because the firm violated Rule 1.7 of the Massachusetts Rules of Professional Conduct, which governs conflicts of interest among current clients, or alternatively, Rule 1.9, which provides for a lawyer’s duties to former clients.
The court found that Sunstein could not simultaneously uphold its duty of loyalty to Syncro Soft and its duty of confidentiality to Altova after Sunstein learned of the patent dispute and prior to termination of Sunstein’s representation of Syncro. While not explicitly stating Massachusetts’ position on the “hot potato” doctrine—that a firm may not drop a current client like a hot potato in favor of a more lucrative client—the court applied a similar line of reasoning upon determining that Sunstein breached the duty of loyalty and failed to comply with Rule 1.7. Specifically, the court rejected Sunstein’s argument that it had billed Syncro for less than 50 hours of work, and found that Sunstein owed a duty of loyalty based on its thirteen-year relationship with Syncro Soft.
The court found that Sunstein failed to follow the proper course of action, which would have been to either disclose the conflict and obtain the informed consent of both clients, or withdraw from representation. The court further rejected Sunstein’s attempt to rely on Comment 5 of Rule 1.7, which provides for the possibility of continued representation in light of an unforeseeable conflict. While acknowledging that Sunstein may not have known of the conflict back in 2011 when Sunstein first began representing Altova, the court stated that a reasonable lawyer should have known that there was a significant risk that Altova’s interests would become adverse to Syncro Soft’s no later than November 2016 when Altova’s patent issued.
The case is Altova GmbH et al v. Syncro Soft SRL, Civil Action No. 17-11642-PBS (D. Mass.) before Hon. Patti B. Saris. A copy of the memorandum and order can be found here.
On August 10, 2018, Massachusetts Governor Charlie Baker signed into law a bill making significant reforms to Massachusetts’ law regarding non-compete agreements, as well as adopting the Uniform Trade Secrets Act (“UTSA”) (joining 48 other states as well as DC in adopting the UTSA at least in part, and leaving New York as the lone state to not have adopted any version of the UTSA). The reform comes at the tail end of the 2018 legislative session and after several years of failed attempts at passing non-compete reform. Although Massachusetts lawyers should read the legislation in full and consult with counsel to prepare for the laws to take effect on October 1, 2018, the following post provides a summary of notable provisions in the non-compete legislation.
Coverage and Scope
The new non-compete law applies to traditional non-compete agreements, but does not apply to other varieties of restrictive covenants, such as non-disclosure agreements, non-solicitation agreements, certain agreements applying to the sale of a business, and invention assignment agreements. Moreover, and particularly notably, the new lawdoes not apply to “non-compete agreements entered in connection with an employee’s separation, provided the employee has 7 days to rescind acceptance.”
The law will cover non-compete agreements entered into with Massachusetts residents and Massachusetts employees on or after October 1, 2018 (but not retroactively), including independent contractors. Employers cannot evade application of the law to its employees or independent contractors by use of choice of law provisions that would require application of a different state’s law. This is particularly important for employers who may have a principal place of business outside of Massachusetts and may wish to apply laws of that jurisdiction to its non-compete agreements, or for employers who may employ individuals who are Massachusetts residents but work in another state.
Enforceability of Non-Compete Agreements
The law prohibits employers from entering non-compete agreements with the following categories of individuals: employees classified as non-exempt/overtime eligible under the Fair Labor Standards Act; employees who are under the age of 18; undergraduate or graduate students working as interns or in other short-term employment; and, notably, employees who are or terminated “without cause” or laid off. Because the term “without cause” is not defined, it seems likely that any contracts containing non-compete provisions will now include a definition of termination “for cause.”
While employers may continue to enter into non-compete agreements with individuals who do not fall within the above-described categories, the new law establishes several minimum requirements in order for those agreements to be considered valid and enforceable. In terms of contents and procedure, the non-compete agreement:
Must be in writing;
Must be signed by the employee and employer;
Must include provisions which expressly state that the employee has a right to counsel prior to signing;
Must be provided to the employee at least ten days prior to the date of hire (or at least ten days prior to the effective date of the agreement, if entered into after the date of hire);
Must not exceed 12 months in duration, unless the employee has breached a fiduciary duty or has unlawfully taken the employer’s physical or electronic property, which could extend the duration to a maximum of 24 months;
Must include a “garden leave” provision, which would require the employer to pay the employee at least 50% of the employee’s highest annualized base salary in the past two years, or “other mutually agreed upon consideration” (which is not defined the law); and
If signed after employment has commenced, the employer must provide “fair and reasonable consideration,” which must be more than an offer of continued employment alone.
The law also affirms and attempts to clarify additional prerequisites that are currently established in common law principles, including requirements that the non-compete be reasonable in scope. For instance, where a non-compete contains a geographic reach “that is limited to only the geographic areas in which the employee, during any time within the last 2 years of employment, provided services or had a material presence or influence,” it is to be treated as presumptively reasonable. Moreover, the scope of prohibited activities must also be reasonable, and should be assessed based on the employee’s services over the prior 24 months. Finally, the non-compete must be no broader than necessary to protect the legitimate business interest of the employer, and must be consonant with public policy.
To enforce a non-compete, the action must be initiated in the county of the employee’s residency, or in Suffolk County state court if mutually agreed upon by the parties. If a court determines that a non-compete covenant part of a larger agreement is unenforceable, such a determination will not void the other provisions of the agreement. In addition, the law permits courts to “reform or otherwise revise” invalid non-compete agreements in order to make the offending provision(s) enforceable. Courts are also granted the ability to impose non-compete restrictions as a remedy for a breach of contract, or statutory or common law duties.
With less than two months until the law goes into effect, employers should promptly consult with counsel to discuss the impact of the new legislation and to prepare compliant language and forms for future non-compete agreements.
In a recent decision involving a dispute between head-to-head competitors in the market for “poster boards and poster board accessory products,” Judge Bolden in the District of Connecticut dismissed defendant Royal Consumer Products, LLC’s (“Royal”) counterclaim for false patent marking for failure to plead the claim with sufficient particularity.
According to the decision, Plaintiff ArtSkills, Inc. (“ArtSkills”) “develops and sells poster boards and poster board accessory products,” including a “Trifold Display Board with Header.” ArtSkills claimed that its Trifold Board is “a patented display board of the type used to display information for presentation,” and is “uniquely designed to remain securely closed and undamaged until ready for use” because of its “key advantage” of using “a single sheet of material, including three display panels and a header panel . . . .”
According to ArtSkills’ complaint, in the late 2000s, Royal began to introduce competing products “that were deliberately designed to duplicate the appearance of ArtSkills products.” ArtSkills specifically asserted infringement against Royal’s “Eco Brites Project Board with Header,” which allegedly included “all the unique functional features of the ArtSkills Trifold Display Board” and was “configured in the same manner to stay securely closed and intact until used by the consumer.”
Royal then answered, asserting affirmative defenses and counterclaims, including a counterclaim for false marking—a claim based on “mislead[ing] the public into believing that a patentee controls the article in question,” which, the court explained, “can injure the public interest in free and full competition.”
Before dismissing Royal’s counterclaim, the Court noted that a false marking claim, like a claim for fraud, is subject to the heightened pleading standard of Federal Rule of Civil Procedure 9(b). As such, the Court found that Royal was required to plead all elements of a false marking claim—namely, (1) an unpatented article, (2) a purpose to deceive the public, and (3) a competitive injury—“with particularity.”
The Court determined that Royal’s false marking counterclaim fell short of the “particularity” standard on the second element—“a purpose to deceive the public.” Although Royal alleged that “ArtSkills marked its products with the design patent numbers, while aware that the Trifold Board was not covered by those patents, and falsely marked the products with the patent numbers for the purpose of deceiving the public,” that was not enough. According to the court, “the bar for proving deceptive intent in the context of a false marking case is ‘particularly high, given that the false marking statute is a criminal one, despite being punishable only with a civil fine.’” The court concluded that without “facts sufficient to establish that ArtSkills knew that the marking was false, and, despite that knowledge, . . . chose nevertheless to mark the Trifold Display with the false patent number,” Royal’s counterclaim could not proceed.
Royal’s counterclaim is not lost completely, however. The court granted Royal leave to amend the counterclaim, to correct the problems identified in the court’s opinion. The case is ArtSkills, Inc. v. Royal Consumer Prods., LLC, 3:17-cv-1552, in the District of Connecticut. A copy of the opinion can be found here.
In a 7-2 decision issued late last month, the U.S. Supreme Court ruled that patentees can recover damages resulting from the exportation of certain components to foreign jurisdictions, where those components are then incorporated into an infringing system used outside of the United States. The Court’s decision reversed a Federal Circuit ruling that the patent holder could not receive lost profits stemming from overseas activity.
The patents-in-suit, each owned by plaintiff WesternGeco, involve technology for surveying the ocean floor using lateral steering. Defendant ION developed a competing system that infringed WesternGeco’s patents; ION manufactured components for its system in the U.S., then shipped the components overseas to foreign companies which assembled and used the infringing system. After losing a number of survey contracts to ION’s system, WesternGeco sued ION for infringement under Sections 271(f)(1) and (f)(2) of the Patent Act. A jury subsequently found ION liable and awarded WesternGeco nearly $95 million in lost profits damages. On appeal, the Federal Circuit reversed the lost profits award—concluding that Section 271(f) should be interpreted to exclude recovery of damages from lost foreign sales because it does not apply to extraterritorial activities.
In reversing the Federal Circuit’s decision, the Supreme Court applied its two-step framework for deciding questions of extraterritorality: (1) whether the presumption against extraterritorality has been rebutted; and (2) if the presumption is not rebutted, whether the case involves a domestic application of the statute. As an initial matter, Justice Thomas, writing for the majority, exercised the Court’s discretion to begin with step two of the test because addressing step one in this case (namely, whether extraterritorality should never apply to statutes that merely provide a general damages remedy, like Section 284 of the Patent Act) could involve many other statutes apart from the Patent Act, but would not change the outcome of this case.
To resolve step two, the Court had to identify the focus of the statute—which can include the relevant conduct that the statute seeks to regulate, and the parties it seeks to protect. Looking first to Section 284, which enables courts to award “damages adequate to compensate for infringement,” the Court concluded that its focus is the “infringement.” Because Section 271(f)(2) served as the basis for WesternGeco’s infringement claim, the Court next analyzed the provisions of that section to determine its focus. The Court found that 271(f)(2) focuses on domestic conduct because it provides for infringement liability if a company “supplies or causes to be supplied in or from the United States” certain components of a patented invention. Thus, the Court ruled that ION’s act of supplying the components to entities outside of the U.S. was a domestic act of infringement under 271(f)(2), and the resulting lost profits damages awarded pursuant to Section 284 were a permissible domestic application of the statute.
In dissent, Justice Gorsuch (joined by Justice Breyer) argued that permitting recovery of damages for overseas infringement of a U.S. patent “would effectively allow U.S. patent owners to use American courts to extend their monopolies to foreign markets.” This result, he warns, “would invite other countries to use their own patent laws and courts to assert control over our economy.” In Justice Gorsuch’s view, the Patent Act’s own terms limit its reach to conduct occurring within this country and does not cover infringing use of patented technology outside the United States.
The opinion of the Court significantly broadens the scope of lost profits damages available to patentees who can assert infringement claims under Section 271(f)(2). Parties involved in pending or soon-to-be-instantiated litigation should assess the infringement and damages claims in the case to determine whether foreign lost profits are implicated. However, the majority noted that its holding does not address issues such as proximate cause—which may serve as a check against exorbitant and far-reaching damages calculations.
The case is WesternGeco LLC v. ION Geophysical Corp., No. 16-1011, 2018 WL 3073503 (U.S. June 22, 2018). A copy of the Court’s opinion can be found here.
Massachusetts is home to one of America’s chief innovation hubs. Yet, historically, the District of Massachusetts has seen relatively few patent cases when compared to other high-tech venues around the country. While there are several reasons that may explain this dearth of patent cases, factors many have pointed to include that a large number of patent cases filed in the district ended up taking 3 or more years to reach trial. Additionally, patent case schedules issued in the district were often criticized as slowly paced and lacking in certainty. And so plaintiffs looking for a quick and certain resolution tended to file their cases elsewhere.
Change appears to be here, however, as effective June 1, 2018, the District of Massachusetts amended its Local Rule 16.6 to provide for mandatory patent rules and scheduling. The prior local rules suggested a schedule for patent proceedings that parties could use in their scheduling orders, but left it up to the parties to agree to certain deadlines in the proposed order. The amended rules, however, require that the assigned judge set a trial date that is within 2 years of the initial scheduling conference (a court hearing that usually takes place within months of the complaint filing), and set certain other patent-specific deadlines on dates calculated from the initial scheduling conference date.
The new Massachusetts patent rules appear to be relatively plaintiff-friendly. While they require that the patent plaintiff provide its infringement contentions within 3 weeks after the initial scheduling conference, they also mandate that the patent defendant provide not only its patent invalidity contentions, but also its non-infringement contentions and a production of its technical documents and source code within a short 9 weeks after the initial scheduling conference. And these deadlines appear to be strict; parties may not amend these initial patent disclosures in the case without a court order and a showing of good cause. We provide some of the highlights of the new patent rules below.
Claim Construction Hearing and Trial Scheduling
The new rules require that trial be scheduled to be held within 2 years of the initial scheduling conference. This requirement is a significant change in a district that was notorious for much longer times to trial.
Although there is no set deadline by which the Court must make its claim construction ruling, under the rules the claim construction hearing must be held within 9 months of the initial scheduling conference. L.R. 16.6(c)(2). The exchange of the parties’ lists of claim terms for claim construction must be made no later than 12 weeks after the initial scheduling conference. L.R. 16.6(e)(1)(A).
Importantly, the parties may jointly present no more than 10 claim terms for construction, absent a showing of good cause. L.R. 16.6(e)(1)(C). Factors supporting good cause include the complexity of the patented technology, the number of asserted claims and patents, the lack of relation among the asserted patents, the number and complexity of invalidity defenses, and the number and diversity of accused products or methods.
Amendments to Preliminary Patent-Related Disclosures
Preliminary patent-related disclosures by the patentee – including infringement claim charts – must be made no later than 3 weeks after the initial scheduling conference. L.R. 16.6(d)(1). In turn, the accused infringer’s preliminary patent-related disclosures – including a production of documents and/or source code describing the accused products, non-infringement claim charts and invalidity contentions – must be made no later than 9 weeks after the initial scheduling conference. L.R. 16.6(d)(4).
These preliminary patent-related disclosures may be amended and supplemented only by leave of court upon a timely showing of good cause. L.R. 16.6(d)(5). Furthermore, according to the rules, “[t]he duty to supplement discovery responses does not excuse the need to obtain leave of court to amend disclosures.”
Fact and Expert Discovery
The close of fact discovery is set within 15 months of the initial scheduling conference, or 60 days after the entry of the Court’s ruling on claim construction, whichever is later. L.R. 16.6(c)(4). The close of expert discovery is set within 18 months of the initial scheduling conference, or 90 days after the close of fact discovery, whichever is later. L.R. 16.6(c)(5).
The amended L.R. 16.6(d)(6) now provides for a default protective order for “documents and information that either party believe are confidential,” including the preliminary patent-related disclosures, until a case-specific protective order is entered. Relatedly, L.R. 16.6(d)(7) permits any party to challenge the confidentiality designation of the required patent-related disclosures.
The following chart sets forth the schedule of events according to the amended L.R. 16.6 for patent proceedings:
Patentee’s preliminary patent-related disclosures
· infringement claim charts
· patent prosecution history
· ownership evidence
· real parties in interest documentation
3 weeks after initial scheduling conference (“ISC”)
Meet and confer concerning patentee’s preliminary patent-related disclosures
· technical documents
· product samples
· source code
· non-infringement claim charts
· invalidity claim charts on anticipation and obviousness, and disclosure of other grounds of invalidity, including production of evidence supporting invalidity defenses
· real parties in interest documentation
9 weeks after ISC
Exchange of claim terms and proposed constructions
12 weeks after ISC
Meet and confer on exchanged claim terms
13 weeks after ISC
Joint statement of number of claims and terms to be construed, and joint claim construction chart
14 weeks after ISC
Opening claim construction briefs (parties file simultaneous briefs)
17 weeks after ISC
Claim construction expert depositions
20 weeks after ISC
Responsive claim construction briefs
23 weeks after ISC
Claim construction hearing
9 months after ISC
Disclosure of written opinion or oral advice of counsel
4 weeks after entry of the Court’s claim construction ruling
Fact discovery cut-off
15 months after ISC, or 60 days after entry of the Court’s claim construction ruling, whichever is later
Expert discovery cut-off
18 months after ISC, or 90 days after close of fact discovery, whichever is later
24 months after ISC
The new patent rules set forth a more predictable schedule that is expected to make patent plaintiffs more comfortable in Massachusetts. Moreover, requiring defendants to produce their invalidity contentions within months of the initial scheduling conference, and without the ability to amend such contentions absent a showing of good cause, places the burden on defendants to very quickly get up to speed on the case. Time will tell as we see how the new rules are implemented by the Court, but based on the face of the rules, it appears that Massachusetts is poised to become a faster and more plaintiff-friendly venue for patent litigation. A copy of the amended Local Rule 16.6 is here.