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N.D. Cal. excludes expert damages testimony that based royalty rate on patents’ hold-up value

Posted in Court Orders, District Courts, Litigation

With standard-essential-patent (SEP) damages discussions frequently focused on how to calculate a RAND rate, one can sometimes forget that not all SEPs are subject to [F]RAND obligations, which raises the issue whether and to what extent a reasonable royalty rate would be different between RAND and non-RAND encumbered patents. Last week, N.D. Cal. Judge Lucy Koh issued a Daubert ruling in an interesting case where the damages model from a non-practicing patent monetization entity attempted to affirmatively factor-in a higher royalty rate beyond the technical value of the patent based on the “hold-up” value the patent obtained by allegedly covering a cellular standard without the patent being subject to any standard setting RAND or other licensing obligation. The court, however, excluded such testimony from plaintiff’s damages expert.

Other SEP cases have theorized that patent hold-up may occur with an SEP, but there was no evidence that patent hold-up actually occurred.  This case, GPNE Corp. v. Apple, Inc. (Case No. 12-CV-02885-LHK), serves as the only litigated instance we are aware of in which actual hold-up was shown to occur based on the SEP patent owner affirmatively trying to use the value of patented technology being in a standard to demand a rate higher than the particular patented technology itself warranted.  As this is only a single data point, we cannot extrapolate too far, but the case indicates that, in a rare instance so far where actual SEP hold-up is shown to occur, a court may reject an attempt to seek a royalty beyond the value of the patented invention itself based on a patent covering a standard regardless whether that patent is or is not subject to RAND or other standard setting obligation.

Here is how the ruling came about. GPNE filed an infringement suit against Apple on May 10, 2012, asserting three patents that are alleged to be essential to 3G and 4G cellular standards. Both parties submitted expert reports and testimony on damages, each of which performed a reasonable royalty damages analysis using the Georgia Pacific factors. After expert discovery closed, both parties sought to exclude one another’s damages expert testimony from trial.  In a hypothetical negotiation for a reasonable royalty, GPNE’s damages expert relied upon a number of qualitative factors indicating the importance of 3G and 4G cellular technology as a whole to the accused infringing devices–rather than just the importance of the patented technology to those devices– to arrive at a royalty rate of $1 per device.

GPNE’s expert assumed that the patents covered cellular connectivity standards such that Apple could not design around the patents and still sell products that could work on GPRS, EDGE, and LTE networks without a license to GPNE’s patents. In other words, GPNE’s expert asserted that the hypothetical negotiation could factor-in patent “hold-up” value in which the patent owner would capture the value of the patent covering a standard–and hence the value of complying with the standard– regardless of the patent’s particular technical contribution/value to the standard or the accused product:

GPNE had the power to “hold up” Apple, giving it considerable negotiating leverage
based on the scope of its intellectual property rights. GPNE had no obligations to use an ex
ante framework to license its [standard-essential patents] – the ex ante evaluation would be
irrelevant as would be the consideration of rates for patent pools in determining an
appropriate royalty rate in this matter.

The expert apparently based the $1/unit figure on the value of cellular technology in general to the Apple products, rather than the value of the specific patents themselves. The damages expert further indicated that the $1/unit royalty amount was determined generally based on his “30 years of experience in the licensing world” and that “there is no mathematical calculation… to derive the one dollar”.

Reviewing GPNE’s proffered expert opinions, the Court granted Apple’s motion to exclude the damages testimony on the grounds that GPNE’s expert provided no methodology to derive the $1/unit royalty from the average net incremental profit ($86), performed no analysis to apportion value to the specific patent’s technological contribution, and cited various licenses that did not support the $1/unit rate. The court reasoned that GPNE’s expert analysis “is a black box that provides no basis for the $1 per unit royalty figure, cloaking this arbitrary choice in broad statements about the general value of cellular connectivity.”

The court further criticized the lack of apportionment analysis in GPNE’s expert opinion on damages, indicating GPNE’s expert presented no evidence of the value of the specific patented technologies. Citing Georgia Pacific factor  13, “[t]he portion of the realizable profit that should be credited to the invention as distinguished from non-patented elements, the manufacturing process, business risks, or significant features or improvements added by the infringer”, the court found that no such apportionment was taken into consideration. The court stated that, while the expert report relies on generic statements regarding the importance of 3G and 4G LTE connectivity technology to Apple generally, the report made no attempt to distinguish technologies covered by the patents-at-issue, which the court’s claim construction found are related primarily to pager technology, from the non-infringing features of 3G and 4G LTE technology standards. The failure to distinguish between the two proved fatal to the damages opinion, with the court ruling “GPNE must make some attempt to distinguish the allegedly infringing features of 3G and 4G LTE from the non-infringing features, so that [GPNE's expert] may apportion value between them.”

This case indicates that a proper analysis for determining either a reasonable royalty or RAND-encumbered royalty for a patent that covers an industry standard may account for patent hold-up concerns by providing a reasoned apportionment between the value of the patented features and the unpatented technical value of the affected standard.  That rationale is supported by Factor 13 of a typical Georgia-Pacific analysis that seeks to apportion value to the specific patented technology apart from other non-patented features.

Back to state court: Vermont’s unfair competition suit premised solely on state law

Posted in Court Orders, Legislation, Non-Practicing Entities

After being removed to federal district court last May, the Vermont Attorney General’s suit against non-practicing entity MPHJ is being sent back to state court. The decision holds that the AG’s unfair competition claims arising from MPHJ’s patent enforcement efforts belong in state court and raises the question of whether other patent demand letter jurisprudence will be formed by patch-work state competition claims in lieu of a uniform federal law.

Background

MPHJ is widely regarded as a non-practicing entity whose patent portfolio includes a number of patents directed to scan-to-email technology. Over the past several years, MPHJ has sought to enforce these scanner patents against a large number of businesses through an extensive demand letter writing campaign.

Vermont’s attorney general initially filed suit in Vermont’s Superior Court last May, alleging that MPHJ’s local patent assertion efforts constitute unfair and deceptive trade practices in violation of state unfair competition laws. See our May 22, 2014 post for more information. MPHJ moved to have the action heard in federal court, and action was removed to district court in June 2014. The Vermont Attorney General then moved the district court to have the action returned to state court, arguing the claim that MPHJ has violated state consumer protection laws must be heard in state court. In response, MPHJ argued that the suit involved questions of federal patent law and as such was properly before the District Court.

The District Court’s Ruling

U.S. District Court Judge William Sessions agreed with Vermont’s position, ruling that the case “is premised solely on Vermont state law, not federal patent law” and belongs in state court. In reaching this decision, Judge Sessions reasoned that the suit claims MPHJ violated state unfair competition law without raising claims related to the infringement or validity of MPHJ’s patents:

Instead, the state is targeting bad faith conduct irrespective of whether the letter recipients were patent infringers or not, on the basis that MPHJ’s bad faith conduct would be unlawful even MPHJ’s patents were valid and the conduct was directed toward actual patent infringers.

The court weighed the claims made in the complaint, such as the allegation that MPHJ’s letters falsely claimed to have performed an infringement analysis and that the letters falsely asserted that most recipients had already taken a license, and found that none involved questions of patent law. From the Court’s perspective, “this case is about consumer protection, not about patents”.

Opponents of the decision will likely question whether it will have a chilling affect on patent enforcement, placing patent owners seeking to enforce their rights at the risk of being subjected to numerous state court challenges across multiple jurisdictions. Opposing Vermont’s motion, MPHJ specifically argued that the suit would undermine the patent system by subjecting patent owners to potential liability for sending licensing demand letters and by providing patent infringers with relative immunity. The court called such arguments a “gross mischaracterization” of the case at hand and indicated the action is directed not to prevent MPHJ from lawfully enforcing its patent rights in Vermont, but rather to prevent MPHJ from engaging in activity that violates state law.

Activity in Other States

Vermont’s AG isn’t the only one giving MPHJ’s scanner-patent-enforcement programs some  unwanted attention. As discussed in our January 22, 2014 post, MPHJ’s counsel received a cease and desist order from Nebraska’s attorney general in July 2013, though MPHJ was able to secure an injunction preventing the order from being enforced. MPHJ also reached settlement with New  York’s attorney general in January, pursuant to which MPHJ is required to repay licensing money received from organizations in New York after a similar letter-writing campaign. MPHJ also filed suit against the FTC in January, preemptively seeking to prevent an enforcement action threatened by the commission. See our March 21, 2014 and January 14, 2014 posts for more information.

Senate postpones vote on patent reform bill until after recess

Posted in Legislation, Non-Practicing Entities

The Senate Judiciary Committee was scheduled to mark-up and vote on the Patent Transparency and Improvements Act of 2013 last Thursday but again postponed the vote until after the Senate recess.  The mark-up and vote have been postponed several times before.  As we discussed in a prior post, the bill, if passed would require patent-plaintiffs to disclose ownership information for asserted patents at the outset of infringement litigation and would also require courts to stay infringement suits against customers of infringing products or processes in certain situations where the manufacturer is also a party to an action involving the same patents, products or services.

A statement released by Senator Leahy, the Committee’s Chairman and the sponsor of the bill, indicated that “[f]or weeks, members of the Judiciary Committee have been engaged in extensive bipartisan negotiations on legislation to address abuses in the patent system” that the bill is supposed to remedy.  The Committee has apparently “made enormous progress, and . . . now have a broad bipartisan agreement in principle” regarding the bill’s provisions.   However, the vote was again postponed to allow Committee members and their staff to attempt to reach agreement on fee-shifting provisions proposed by Republican Committee members that would require the loser in cases involving non-practicing entities to pay the winner’s attorneys’ fees.  According to Senator Leahy, this “is a complex issue” and the Committee needs “additional time to draft the important provisions that have been the subject of discussion.”  Senator Leahy went on to indicate that he would circulate a revised version of the bill on April 28, the day the Committee returns from recess.   The Committee “will consider [the bill] the first week [they] are back.”

The House of Representatives has already passedbill that includes fee-shifting provisions.  Specifically, the House bill includes provisions providing for the award of costs and attorneys fees to a prevailing party unless the position and conduct of the nonprevailing party was reasonably justified in law and fact.

Update: Senators reach tentative compromise on patent reform legislation

Senators Chuck Schumer (D-NY) and John Cornyn (R-TX) have apparently reached a bipartisan compromise on certain provisions of the Patent Transparency and Improvements Act of 2013.  A revised version of the bill including the compromise will be circulated to the Committee for a vote the week of April 28 after the Senate recess concludes.

Heightened Pleading Standards: The compromise would add a provision to the Senate bill imposing heightened pleading requirements similar those in the Innovation Act passed by the House late last year.  Specifically, unless the following “information is not readily accessible,” patent-plaintiffs will be required to include “in a complaint, counterclaim, or cross-claim” a “short and plain statement setting forth” the patents, the patent claims specifically asserted, the instrumentalities accused of infringement, and an element-by-element description of how each accused instrumentality practices the asserted patent claims.

The compromise also attempts to resolve a misnomer in the House bill that we identified in a prior post. The House bill would require complaints for patent infringement to describe

whether a standard-setting body has specifically declared [the asserted] patent to be essential, potentially essential, or having potential to become essential to that standard-setting body, and whether the United States Government or a foreign government has imposed specific licensing requirements with respect to such patent.

As we discuss in our prior post, standard setting organizations (SSOs) generally do not declare patents essential or potentially essential.  Instead, declarations of potential essentiality are generally made by patent holders themselves in a letter of assurance or similar disclosure to the SSO.  These disclosures typically do not state definitively whether the patent covers the standard, but that it may cover the standard and what the patent owner agrees to do if the patent actually is essential to the standard.

The compromise language from Senators Schumer and Conyn attempts to clean-up this issue and would require pleadings alleging patent infringement to include, for each asserted patent:

a statement as to whether the patent is subject to an assurance made to a standards development organization to license others under such patent should the patent be deemed essential under the relevant standards development organization’s policy to practice that standard, provided that the allegation of infringement is related to such standard.

Unlike the House bill, the compromise language would specifically require patent infringement plaintiffs to plead whether the patent is encumbered by a licensing obligation as a result of an assurance made to an SSO.

However, the last phrase of the compromise language – “provided that the allegation of infringement is related to such standard” – may create further controversy.   A plaintiff that files a complaint asserting infringement of potentially essential patents may not specifically plead in their complaint that the defendant is practicing the respective standard and, therefore, infringing plaintiff’s patents.  In some cases, it is the accused infringer that raises a patent-plaintiff’s alleged license obligation to the SSO as a defense to a claim of infringement.  The language in the compromise, as currently drafted, may create further dispute as to whether it is the patent-plaintiff’s complaint or the defendant’s answer or counterclaim (or, potentially, both) that controls whether “the allegation of infringement is related to such standard” thereby requiring the plaintiff to include a statement about whether the asserted patent(s) is/are encumbered by an assurance made to an SSO.

Some other differences between the compromise language and the House bill on heightened pleading standards are:

• The House bill would require patent-plaintiffs to list all other complaints that have asserted the same patents. The Senate compromise would only require patent-plaintiffs to identify such other complaints that were filed within the three years preceding the date of the filing of the instant suit.

• The compromise expressly includes language permitting amendment of pleadings based on newly discovered information.

Fee Shifting:  Unlike the bill passed by the House, the Senate bill does not currently include any language addressing fee-shifting. The Schumer-Cornyn compromise adds such language to the Senate bill, attempting to resolve what Senator Leahy has characterized as a “complex issue.” The House fee-shifting language provides as follows:

The court shall award, to a prevailing party, reasonable fees and other expenses incurred by that party in connection with a civil action in which any party asserts a claim for relief arising under any Act of Congress relating to patents, unless the court finds that the position and conduct of the nonprevailing party or parties were reasonably justified in law and fact or that special circumstances (such as severe economic hardship to a named inventor) make an award unjust.

The Senate compromise expressly requires the Court to determine whether the positions of the non-prevailing party as well as such party’s conduct were “objectively reasonable”, and only addresses an award of fees, not expenses:

[U]pon on a motion by a prevailing party, the court shall determine whether the position of the non-prevailing party was objectively reasonable in law and fact, and whether the conduct of the non-prevailing party was objectively reasonable. If the court finds that the position of the non-prevailing party was not objectively reasonable in law or fact or that the conduct of the non-prevailing party was not objectively reasonable, it shall award reasonable attorney’s fees unless special circumstances make an award unjust.

Other Provisions:  With some modification, the Schumer-Cornyn Compromise also includes provisions that are similar to those of the bill passed by the House, such as:

• Core Discovery and Discovery Fee Shifting, limiting the types of discovery prior to claim construction and requiring the Judicial Conference to develop rules and proposals limiting discovery in patent cases;

• Demand Letters, a claimant seeking to establish willful infringement may not rely on evidence of pre-suit notification that fails to set forth claimant’s infringement allegations with particularity.

 

 

 

Infringement contentions identifying technical standards are insufficient to identify specific products-at-sssue under N.D. Cal. Patent Local Rules

Posted in Court Orders, District Courts, Litigation

As the Senate continues to weigh patent reform measures focused on improving preliminary disclosures in patent litigation, courts continue to distinguish between sufficient and insufficient disclosures under their own patent local rules. According to a recent ruling from the Northern District of California, a generalized claim that any products practicing a technical standard infringe an asserted patent does not adequately identify the specific products accused of infringement under the court’s Patent Local RulesAsus Computer Int’l v. Round Rock Research, LLC, Case No. 12-cv-02099 JST (NC) (N.D. Cal.).

Case Background

On April 26, 2012, ASUS filed for Declaratory Judgment of Patent Non-Infringement, Invalidity, and Unenforceability against Round Rock. According to the schedule set forth under the Northern District’s Patent Local Rules, Round Rock served its original infringement contentions in September 2012, accusing over 300 ASUS products of infringing six Round Rock patents and providing claim charts for three products, stating that those three products were representative of hundreds of other accused products that infringe in the same manner without specifically identifying those products by name or model number.

Fact discovery closed December 20, 2013. Round Rock moved to amend its infringement contentions on December 23, 2013, but the Court denied Round Rock’s request on the basis that the proposed amendments relied upon “documents that have been in Round Rock’s possession for many months or even a year” and Round Rock had not met its burden to establish that the amendments had been diligently sought.

Sufficiency of Round Rock’s Disclosures

The parties submitted opening expert reports on January 8, 2014. Three weeks later, ASUS moved to strike portions of Round Rock’s expert reports on infringement, arguing that the portions at issue were  directed to allegedly infringing products that were not specifically identified in Round Rock’s original infringement contentions. In response, Round Rock argued that the infringement contentions sufficiently identified: (i) products that include DDR3 SDRAM memory or otherwise practice the JEDEC standard, (ii) products that have different names but are substantially similar to other identified products, and (iii) devices falling within a specific series of ASUS products.

Citing a 2011 decision in which the court ruled that accusing all products running Android did not specifically identify the accused products (See Oracle Am., Inc. v. Google Inc., No. 10-cv-03561 WHA, 2011 WL 4479305, at *2 (N.D. Cal. Sept. 26, 2011)), Magistrate Judge Cousins granted ASUS’s motion to strike
all references to newly accused products that Round Rock alleged were identified as practicing the JEDEC standard:

The Court finds that identifying products “that include DDR3 SDRAM memory” or otherwise practice the JEDEC standard is not sufficient to specifically identify products that may fall into those categories. Although identifying that a component practices a standard may be useful for proving an infringement theory across several products that contain that component, identifying a standard is not sufficient to specifically name an accused product.

The court reasoned that the Northern District’s Patent Local Rule 3-1(b) requires a  patentee to identify products accused of infringing each claim as specifically as possible, identifying each accused product, device, and apparatus by name or model number, to the extent known, and that such disclosures were never made to ASUS.

Round Rock also argued that identifying the standard was sufficient to put ASUS on notice of the accused products practicing the standard. However, the court declined to rule on the sufficiency of the notice, instead finding the Local Rules require a patentee “to do the work of identifying those products.”

Comparison with Previous Rulings

The ASUS v. Round Rock decision provides an interesting contrast from Magistrate Judge Cousins’ May 2013 ruling in France Telecom v. Marvell, where he found that infringement contentions based on ETSI 3GPP industry standards were sufficient to comply with N.D. Cal. Patent Local Rule 3-1(c), which requires a patentee to disclose its theory of infringement. (See our May 7, 2013 post for more information). Although a cursory look at the two decisions might lead one to conclude Magistrate Judge Cousins has come down on both sides of the issue, a closer comparison distinguishes the cases: a standard may not be used to identify specific accused products, as the Court held in ASUS, though a patentee is not prohibited from relying on a standard to disclose its infringement theory.

 

Update on patent litigation reform legislation

Posted in Federal Trade Commission, Legislation, Non-Practicing Entities

Hopefully the current patent reform effort to address perceived patent litigation abuse problems will result in carefully targeted tweaks to–without harming–our otherwise thriving U.S. patent system, the greatest system for innovation that the world has ever known (see our Patent Forest post).  The Senate is currently considering this balance.  The Senate Judiciary Committee was scheduled to mark-up and vote on a proposed bill designed to curb perceived litigation abuses by non-practicing entities (what some refer to as patent “trolls”) last Thursday but the vote was postponed to give Committee members and their staff time to continue working on language that strikes a balance between protecting the rights of patent holders to pursue good faith claims of infringement and reducing the alleged bad faith tactics of non-practicing entities.  According to Senator Leahy (D-Vt.), the bill’s sponsor, a proposed provision aimed at reducing the ability of non-practicing entities to hide behind shell corporations in order to be judgment proof had proven to be “complicated.”  However, the Senator noted that the bill had bipartisan support.

The Committee pushed the vote to Tuesday, April 8, however it was again postponed.  According to published reports, Democrats circulated revisions of the bill to the Committee but have yet to receive feedback from Republican members.  The Committee will attempt to mark-up the bill on April 10.

As we discussed in a prior post, the proposed bill would require patent-plaintiffs to disclose ownership information for asserted patents at the outset of infringement litigation.  The bill would also require courts to stay infringement suits against customers of infringing products or processes if the manufacturer and customer consent, the manufacturer is a party to an action involving the same patents or product(s), the customer agrees to be bound by the result of the manufacturer’s litigation, and the motion for stay is filed within a specified time early in the case.

The bill would also expressly grant the Federal Trade Commission authority to investigate and bring enforcement actions against patent holders that engage in unfair and deceptive acts and practices in connection with demand letters to accused infringers.

Late last year, the House of Representatives passed a competing bill that would impose heightened pleading standards for patent infringement complaints and also require a patent-plaintiff to plead       “[w]hether a standard-setting body has specifically declared such patent to be essential, potentially essential, or having potential to become essential to that standard-setting body.”  As we have discussed before, SSOs generally do not declare patents essential or potentially essential to their standards.  Rather, declarations of essentiality are usually made by the patent owners themselves in letters of assurances or similar disclosures. However, these disclosures frequently do not declare whether the patent covers the standard, but assert that it might cover the standard and set forth the obligations the patent owner agrees to if the patent actually is essential to the standard.

Jury finds BlackBerry did not infringe NXP’s alleged standard essential patents (NXP v. BlackBerry)

Posted in District Courts, Jury verdicts, Litigation

Yesterday, a Florida jury returned a verdict that BlackBerry did not infringe NXP’s patents alleged to be essential to the IEEE 802.11 WiFi and JEDEC eMMC standards and that the asserted patent claims were invalid.  The role of BlackBerry’s standard essential patent defenses is not clear from the record, though it appears to have been limited to arguments that any damages must be consistent with reasonable and non-discriminatory (RAND) licensing terms (e.g., no apparent allegation or remedy sought for NXP breaching a RAND obligation).

Specifically, a few weeks ago Judge Kane denied NXP’s motion in limine to preclude BlackBerry from offering any affirmative defense based on RAND or FRAND licensing obligations because BlackBerry allegedly did not plead or disclose any such defenses.  Judge Kane held that the RAND defense may be based on pleadings of implied license, patent misuse, or equitable estoppel even though the “better practice is to assert the RAND obligation in conjunction with pleading license, exhaustion, or implied license.”

In its opposition to NXP’s motion in limine and in its trial brief, BlackBerry did not focus on any RAND-based defenses other than arguing that, if NXP’s patents covered the standards (which BlackBerry disputed), then any damages must be based on a RAND royalty rate (though not clear how that was alleged to be different from a reasonable royalty rate).  The jury instructions did not have any RAND-specific instructions or defenses.  The RAND-obligation issue, therefore, appears to have been subsumed in the reasonable royalty damages argument (based on the typical Georgia-Pacific reasonable royalty analysis per Jury Instruction Nos 23-25), which damages issue the jury did not reach because they found that the patent claims were not infringed and were invalid.

Patent Case: Supreme Court to review appellate standard for reviewing district court claim construction (Teva v. Sandoz)

Posted in Appeals, Litigation, Patent Alerts

Today, in Teva Pharmaceuticals v. Sandoz, Inc., the U.S. Supreme Court granted the petition seeking review of the Federal Circuit’s de novo standard of review of a district court’s claim construction ruling.  Teva phrased the question presented as follows:

QUESTION PRESENTED
Rule 52(a) of the Federal Rules of Civil Procedure provides that in matters tried to a district court, the court’s “[f]indings of fact … must not be set aside unless clearly erroneous.”
The question presented is as  follows:
Whether a district court’s factual finding in support of its construction of a patent claim term may be reviewed de novo, as the Federal Circuit requires (and as the panel explicitly did in this case), or only for clear error, as Rule 52(a) requires.

The question presented mirrors Judge O’Malley’s dissent in the Federal Circuit’s recent divided en banc decision in Lighting Ballast v. Philips Electronics, which upheld the Cybor de novo standard of review of a district court’s claim construction ruling (see our Feb. 21, 2014 post summarizing that decision).

Recall that, in Lighting Ballast, Judge Newman’s majority decision considered three proposed standards of review:

(1) clear error review that defers to the district court’s claim construction ruling,
(2) clearly erroneous review of facts that defers to factual findings underlying the district court’s claim construction ruling, and
(3) Cybor plenary (or de novo) review that does not defer to the district court’s claim construction ruling.

The majority concluded that, under principles of stare decisis, there was insufficient reason to depart from the Cybor standard of review.

Judge Lourie concurred, noting that “whatever rubrice is used to describe the standard” does not matter, because the appellate court will defer to the district court’s claim construction decision as a practical matter in instances where “there are truly factual issues involved in claim construction.”

Judge O’Malley dissented because, among other things, Rule 52(a) requires deference on appeal to the district court’s findings of facts — “findings of fact … must not be set aside unless clearly erroneous.”  Judge O’Malley–a former district court judge–also sought more deference to avoid undermining district court decisions.

The Supreme Court’s decision to review the standard of review of claim construction is not surprising given the en banc split at the Federal Circuit on this issue — the closest patent issues from the single patent appeal court come to a split among regional circuits that typically warrants Supreme Court review.

Some in the patent bar support the current Cybor de novo standard of review because, among other things, it will provide more uniformity in decisions dealing with what typically is the most important ruling in a patent case — what does the patent cover.  Others, however, prefer a more deferential standard so that cases may be resolved sooner in the litigation process, rather than the district court providing an advisory decision as a waypoint to inevitable Federal Circuit review.

Those supporting a more deferential review of the district court’s claim construction ruling may hope that a legal generalist’s view from the Supreme Court may not be inclined to carve-out an exception for patent cases to the general Rule 52(a) standard of review.  Recall that, in Dickinson v. Zurko, the Supreme Court set aside a long-standing Federal Circuit standard of review of Patent Office factual findings because it conflicted with the more deferential standard required under the general Administrative Procedures Act (APA).

You can find filings for this Supreme Court case at SCOTUSblog.

Update: ITC issues public version of decision to terminate LSI-Realtek investigation (Inv. No. 337-TA-837)

Posted in International Trade Commission, Litigation

The ITC has now released the public version of its decision to terminate the LSI-Realtek investigation without addressing RAND issues, which we discussed in our March 5, 2014 post.  The public version does not provide any more insight into the decision not to address the standard essential patent RAND issues beyond it being moot given no violation found:

8.  RAND and Equitable Defenses
Because we conclude that there are multiple grounds for determining no violation of section 337 with respect to the ’958 patent, the Commission does not reach any RAND or equitable defenses associated with the ’958 patent.  Therefore, the Commission takes no position on the ALJ’s determinations with respect to the respondents’ RAND defenses and equitable defenses. [Op. at 33-34]

So the RAND issues in this investigation are moot unless somehow revived from any appeal to the Federal Circuit. 

Of course, the RAND issues are alive and well in the parallel district court litigation before Judge Whyte where the jury decided a RAND royalty rate and awarded damages for LSI breaching the RAND obligation (see our February 27, 2014  post)  and Judge Whyte will be ruling on Realtek’s motion to permanently enjoin LSI from seeking an exclusion order/injunction on its RAND-encumbered patents (see our March 13, 2014 post and March 21, 2014 post).  The appeal from the district court case, however, may go to the Ninth Circuit, rather than the Federal Circuit, based on this being a contract dispute (not patent infringement suit) and the prior appeal in this case to the Ninth Circuit of Judge Whyte’s preliminary injunction (see our March 21, 2014 post).

District of Delaware’s Judge Robinson Issues Revised Scheduling Order for Patent Cases

Posted in District Courts

In the midst of ongoing congressional efforts at patent litigation reform (see Monday’s post for the most recent developments), U.S. District Court Judge Sue Robinson released a new scheduling order on Monday, directed to better managing the hundreds of patent cases before her in the District of Delaware. Resulting from “the lively and informative discussions” prompted by the District of Delaware’s Patent Study Group, Judge Robinson’s new scheduling order implements several changes to improve efficiency and protect against perceived nuisances, including:

  • Submitting all discovery disputes, overall management of discovery, and motions to dismiss, to amend, and to transfer to a Magistrate Judge;
  • Requiring certain patent disclosures in advance of the initial scheduling conference, including plaintiffs’ identification of the accused products, its damages model, and which patents the accused products are alleged to infringe and defendants’ core technical documents demonstrating how the accused products work;
  • Setting forth at the onset of the case a schedule for claim construction briefing, expert discovery and reports, summary judgment briefing on infringement and invalidity, and trial; and
  • Eliminating motions in limine, instead addressing evidentiary issues at the pretrial conference and during trial.

At least some of these changes should be familiar to those who have litigated in districts with patent-specific scheduling orders, including N.D. Cal., E.D. Tex. and the ITC. Judge Robinson, whose docket currently hosts upwards of 300 patent cases, indicated in a letter to counsel that all non-ANDA patent cases that have had a scheduling order entered in the past six months will presumptively be switching to the new process, while preserving, to the extent possible, any pretrial and trial dates that have already been scheduled. Additional information regarding procedures in Judge Robinson’s court is available on her chambers’ website.

Samsung settles IEEE 802.3 patent dispute with US Ethernet Innovations

Posted in District Courts

Non-practicing entity US Ethernet Innovation’s (“USEI”) infringement action against Samsung was brought to a close last Friday, with E.D. Tex. Judge Michael H. Schneider granting the parties’ joint motion for dismissal with prejudice. USEI filed this action against Samsung and peripheral printing device manufacturer OKI Data Americas on June 22, 2012, alleging that certain OKI and Samsung printers employing Ethernet technologies infringe four USEI patents.

We previously commented on this case in our February 2013 post, when Magistrate Judge Love issued an order denying co-defendant OKI’s motion to dismiss for failure to state a claim and for improper joinder, holding, inter alia, that standards-compliant system-on-a-chip (SoC) suppliers may be properly joined with their customers under the AIA.  Samsung later moved for Summay Judgment of Invalidity, which was denied in October 2013. OKI then settled with USEI and was dismissed from the case in November 2013.

Last month, Samsung and USEI attended mediation before former Chief Judge David Folsom of the Eastern District of Texas.  The mediation apparently resolved the dispute, because Samsung and USEI jointly moved to dismiss the action and the Court entered final judgment dismissing the case with prejudice on March 21.

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