Eastern District of Texas Federal Court Practice

Summary Judgment of Invalidity (Obviousness) Granted; Motion for Leave to Amend to Assert Walker Process Claims Denied

The Ohio Willow Wood Company v. Thermo-Ply, Inc., (9-07-cv-00274) (Nov. 20, 2009)
Judge: Ron Clark
Holding: Defendant's Motion for Summary Judgment GRANTED; Defendant's Motion to Amend PICs DENIED
On Friday Judge Clark granted summary judgment ending this case.  It has an interesting procedural history.  After plaintiff OWW filed suit against TP, another company intervened, claiming ownership rights in the patent.  Judge Clark held a hearing on the inventorship and invalidity issues raised to the defendant and stayed the case pending resolution of these issues.  The defendant then filed a motion seeking to assert Walker Process claims (Sherman Act violations which allege fraud before the PTO).  Judge Clark denied the motion, concluding that TP could have met the deadline in the scheduling order for asserting such a claim.
More interesting (not that anyone could ask for more from the first order, of course) is another order, also from Friday, in which Judge Clark granted TP's motion for summary judgment that all asserted claims were invalid as obvious (SJ on anticipation was sought, but not granted).

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.

Motion to Tranfer Venue to Minnesota Denied

Deep Nines, Inc. v. McAfee, Inc., 2009 WL 3784372(E.D.Tex. Nov 10, 2009) (NO. CIV.A.9:09CV89)
Judge: Ron Clark
Holding: Motion to Transfer Venue DENIED
"It is clear that where there is no connection with Texas or the Eastern District of Texas, venue is improper here," Judge Clark opens this opinion, citing In re Genentech, 566 F.3d 1338 (Fed.Cir.2009). That was not the situation in this case, he concluded, since there were significant contacts with Texas generally, and the Eastern District specifically. One of the Defendants has an office in the Eastern District, and several potential witnesses are located in the district. In addition, a number of witnesses have also been identified in Dallas (which seasoned venue practitioners know is immediately adjacent to the Eastern District). In addition, Judge Clark had previously adjudicated a dispute between two of the parties in this case, including a claim construction hearing and a trial, involving infringement of one of the patents-in-suit. Also, Deep Nines's claims involve, to some extent, the settlement agreement entered into by Deep Nines and McAfee at the conclusion of the earlier case, and the agreement provides that it shall be governed by Texas law. "Under these facts," Judge Clark wrote, "Secure has not met its burden to demonstrate that transfer to the District of Minnesota is 'clearly more convenient.'”

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.

Order Awarding Damages for Post-Verdict Sales

Cummins-Allison Corp. v. SBM Co., Ltd., --- F.Supp.2d ----, 2009 WL 3855958 (E.D.Tex. Nov 13, 2009) (NO. CIV.A. 9:07CV196)
Judge: Ron Clark
Holding: Order re: Damages for Post-verdict Sales of Infringing Products
This order arose in the context of sales made after the date of the verdict for the plaintiff and before the date the court entering an injunction to prevent future infringing conduct.
In this case, pursuant to notice given to the parties well before trial, the jury was asked to determine future damages, and arrived at a royalty rate of $400.00 per infringing unit sold. Judge Clark concluded that there was substantial evidence to support this finding. In accordance with 35 U.S.C. § 284, and after considering the Seagate factors, Judge Clark determined that Defendants' post-verdict sales were willful and thus enhanced the jury's award to $500.00 per infringing unit sold.
Judge Clark's order is a very helpful analysis of the law - constantly evolving though it may be - on the issue of future damages in patent cases.

Motion to Transfer Granted as to California Defendants - Denied as to New Texas Defendants

Balthaser Online, Inc. v. Network Solutions LLC et al., 2:08cv00430 (E.D. Tex. 2009)

Judge: David Folsom

Holding: Motion to Transfer Venue GRANTED in part.

One of the interesting things about the recent venue cases out of the Federal Circuit (TS Tech, Telular, VW IV and Genentech) is seeing how they affect cases that were in the pipeline when the law changed.  In this case, the California plaintiff had sued a raft of defendants, most from California.  Then after TS Tech indicated that cases should be transferred where all the defendants are clustered in (or near) the proposed transferee forum, the plaintiff added several tee-ninecy defendants in the Eastern District of Texas.  (yes, that's a word around here, and it's the best one to describe the defendants because in this case, size really does matter.  Wonder if there's a West headnote for that?). 

What makes makes this case notable, in addition to the fact that it allows readers to see whether the additional defendants added in this case change the outcome, is that it occurred after a full hearing on the motion, so readers can, as Judge Folsom did, review the transcript and cite to statements by the parties in support of their arguments in response to the court's questions.  Thus there was no question why the new defendants were added - just what the effect would be.

Judge Folsom's order first copncludes that transfer is required as to the original defendants, noting that the plaintiff and most of the defendants were located the ND Cal, and what non-ND defendants there were were insufficient to show that continuing the case in Texas was the way he should go.  But Judge Folsom agreed that a transfer to California would be extremely inconvenient for the small Texas defendants the plaintiff had added.  Two had appeared pro se only, one had not appeared, and one opposed the transfer for convenience reasons.  Judge Folsom concluded that the issues as between the California and the Texas defendants were different enough that they need not be litigated together, thus the motion was denied as to the newly added Texas defendants.

New SBPS offices in Marshall featured in Marshall News Messenger

This morning's front page story in the Marshall News Messenger was about some local attorney named Michael Smith, who has bought two historic old storefronts downtown next to his grandfather's old store and is in the process of restoring them for new office space for his firm Siebman, Burg, Phillips & Smith, LLP, and for use by visiting attorneys. 

The occasion for the article was the removal of the aluminum facade Tuesday to expose the original 1897 (or older) storefront.  The article is a good one (especially the part where the Kariels call me a "young man") and I've reproduced the photos from it below. 

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.

The Audacity of the US Patent & Trademark Office

This was the title of the talk at the IP seminar at CAIL in Plano today by U.S. PTO Deputy Director Sharon R. Barner, riffing on President Obama's book The Audacity of Hope.  Director Barner talked about her office's efforts to listen to stakeholders in the office and to try to produce a better product.  I tried to take some notes during her talk to give readers an idea of the issues Director Barner talked about.

One issue she is emphasizing is speed, both on initial office actions and on average pendency overall, which means getting the backlog of pending applications down.  She went over the current times, and the reasons why those times create problems for applicants.  There is a management review in process, and she mentioned the need for IT infrastructure improvements at the PTO and some additional use of online filing procedures to achieve some additional efficiencies.

The pre-first action communication pilot program was discussed - it is improving the success of first action allowances by some 600%.

A new initiative announced last week was discussed - a backlog reduction pilot project which allows you to get what sounded to me like a "fast pass" for one application if you drop a pending application. 

The Patent Prosecution Highway (PPH) was also discussed and its successes detailed.

The Peer Reviewed Prior Art program was mentioned - it is being looked at but no definite decision yet - jury is still out on it.

She spoke on the need for patent reform legislation, but her only comment was that the final legislation needed to reflect the right balance as well as provide it with the funding necessary.  The funding and fee structure issue was the most important issue she said, when pressed for specifics.  (No one asked what the second most important issue was).

She opened the program up for questions and there were a number.  They included questions on fee structure, and non-U.S. attorneys filing patent applications.  One questioner asked where they could find tips on what practices by applicants that hinder the application, and Ms. Barner referred them to the website, which she noted was being overhauled to make it more user-friendly.