Posts in District Courts

The Federal Circuit affirmed a district court decision upholding the validity of two patents belonging to Intellectual Ventures (“IV”), but reversed all findings of infringement regarding one patent and remanded for further proceedings regarding the other. IV sued Motorola for infringement of two patents. The ‘144 patent relates to a file transfer system between computer devices. The ‘462 patent relates to a portable computer formed by docking a smartphone into a “shell” with a larger display and keyboard. Motorola defended the suit by arguing non-infringement and the invalidity of the patents. At separate trials, a jury found Motorola infringed both patents and failed to prove them invalid. Motorola moved for judgment as a matter of law and the district court denied both motions.

My intuition is that the judge came to the correct conclusion, but that the Supreme Court test ultimately did little to guide her thinking.  As I mentioned in my previous IPWatchdog article, determining the contours of the useful article is a metaphysical exercise that likely will require other “tests” to resolve.  Why, for instance, does the useful article not consist of the lighting elements, sockets, wires and covers, which the judge admits also serve important utilitarian functions?  What factors caused her to draw the line so that the covers were not included within her concept of the useful article?  My guess is that it came down to the fact that in her view, “The primary purpose of the cover is artistic; once the covers are removed, the remainder is a functioning but unadorned light string.” 

To get the case off the ground, the court will decide whether Equifax can be sued in the first place – it’s tricky, because different federal circuits disagree about when this can happen. So, courts in Delaware, Illinois and Washington DC (for example) would allow the plaintiffs to proceed merely because their data is at risk after a hack. This is pretty easy to show. On the other hand though, New York, Conneticut and North Carolina would need to see not just a leak, but that the leaked data has actually been misused afterwards. Equifax HQ is in Atlanta, the 11th circuit. Although those courts have a history of recognising that difficulty (and so supporting data victim lawsuits), it hasn’t yet come down firmly on the question of risk vs misuse.

A memorandum signed by Judge Sleet shows that Mallinckrodt’s patents were invalidated under the Section 101 patentability standard set by the U.S. Supreme Court in 2012’s Mayo Collaborative Services v. Prometheus Laboratories, Inc., a standard affirmed by SCOTUS’ 2014 decision in Alice Corporation v. CLS Bank International. Applying the two-step test for Section 101 patentability, the Delaware court found that the Mallinckrodt patents covered natural phenomenon which did not include an inventive step. The court found that patent claim limitations directed at echocardiography or severe adverse reactions did not satisfy the inventive concept step. “It does not matter what the severe adverse reaction is,” Judge Sleet’s memo reads. “Any reaction to treatment with iNO will be a natural phenomenon, dictated by the patient’s physiological response to the drug.”

Since the Supreme Court’s decision in Halo, there have been approximately 100 cases analyzing whether the adjudged infringer acted egregiously/willfully en route to a determination of whether to enhance a damages award (and, if so, to what degree damages should be enhanced). The issue of egregiousness/willfulness and/or enhanced damages has been the subject of Federal Circuit opinions on seven occasions since Halo. With two exceptions noted herein regarding the availability of enhanced damages for infringement occurring after suit has been filed, these cases do not provide much in the way of additional guidance other than re-tracing the evolution of the law governing egregiousness/willfulness and enhanced damages through Seagate and Halo and re-iterating the standards discussed in Halo. In five of the seven relevant post-Halo cases the Federal Circuit remanded for further consideration in light of the new standards set forth in Halo.

It’s not everyday that a copyright case involves claims of false imprisonment but an order granting summary judgment entered on August 30th in the Eastern District of Texas granted a legal win to American TV personality and psychologist Dr. Phil and his production studio in just such a case. Judge Rodney Gilstrap decided to grant summary judgment sua sponte to Dr. Phil and Peteski Productions in a case against a former segment director for The Dr. Phil Show after the director recorded an iPhone video from archived footage of The Dr. Phil Show to build evidence for a emotional distress suit against Dr. Phil.

A jury verdict recently entered into a patent infringement case in the Northern District of Texas found that Japanese gaming giant Nintendo infringed upon a patent asserted by Texas-based medical tech firm iLife Technologies Inc. In the verdict, the jury agreed that iLife proved that it was owed $10.1 million in a lump sum royalty for the sales of a series of games for the Wii U console. The jury also found that Nintendo didn’t prove invalidity of the asserted patent. The jury found that sales of Nintendo’s Wii U games including Wii Sports, Wii Sports Resort, Wii Club Sports and Mario Kart 8, infringed upon claim 1 of U.S. Patent No. 6864796.

Unfortunately, the answer may be not as much as many expected. Right after the decision there were 350 motions to transfer or dismiss in the EDTX. But the limitations imposed by TC Heartland have been called into question by a ruling from EDTX Judge Rodney Gilstrap in Raytheon Co. v. Cray Inc. In his decision, Gilstrap denied a motion by Cray seeking to transfer the case to another district in light of TC Heartland. Gilstrap found that the existence of a single employee in the district constituted “regular and established place of business,” and he established a four-factor test to decide whether newer cases belong in the district… As hopeful as some folks were about TC Heartland, it certainly hasn’t stopped NPEs. The IP community must acknowledge this and adjust accordingly – it’s still the wild west out there, for now.

On Monday, August 30th, national fast food chain In-N-Out Burger filed a lawsuit alleging federal trademark infringement and other claims against fellow fast food chain Smashburger. The suit, filed in the Central District of California, alleges that Smashburger has recently adopted certain promotional advertising marks which infringe upon both state and federal trademarks held by In-N-Out. In-N-Out holds a series of 10 federally registered trademarks as well as seven trademarks registered within the state of California.

“The most important change was that DTSA allowed someone claiming their trade secret was being used improperly to go into a federal court,” explained Jacoby. “In most situations, the employer and the employee in a trade secret dispute are likely to be in the same state. Usually, two citizens of the same state can’t bring a lawsuit into a federal court unless an independent basis for federal jurisdiction over the case exists. So, if my client wants to sue the business next door to his yoga school for blasting out heavy metal during his meditation classes, I literally can’t make a federal case out of it.” However, DTSA changed that rule for trade secret protection — that claim now can be brought into a federal court even if the parties are both from the same state. Up until DTSA, that only happened if you had some other jurisdictional basis to be in federal court, such as the parties were from different states and met the jurisdictional amount for a diversity claim, or perhaps if you sued under another federal statute relating to IP.

On Monday, August 21st, Omaha, NE-based voting machine firm Election Systems & Software filed a patent infringement suit against election product company Dominion Voting Systems of Toronto, Ontario. Election Systems is asserting a patent on an electronic voting machine technology that provides multiple methods by which a user may cast a vote in an effort to improve accessibility. The suit has been filed in the District of Delaware. Election Systems is asserting a single patent in the case: U.S. Patent No. 8991701, titled Integrated Voting System and Method for Accommodating Paper Ballots and Audio Ballots and issued to the firm in March 2015.

On August 8th, a memorandum opinion entered in the District of Nebraska overturned a jury verdict award of more than $30 million handed to Omaha, NE-based intellectual property licensing firm Prism Technologies LLC back in June 2015. After Prism won the multi-million damages award from Overland Park, KS-based telecommunications company Sprint (NYSE:S), a decision by the Court of Appeals for the Federal Circuit upheld findings of patent invalidity in a different case involving the patents asserted by Prism. That Federal Circuit decision was applied to Prism’s case against Sprint in a way which shows patent owners that their intellectual property rights are seemingly never safe under the current U.S. patent policy regime.

John Thorne was VP and deputy general counsel for Verizon during its legal battle against former American cable television company Cablevision where Verizon asserted a series of patents it owned… A closer look into the patents renders some interesting information about the patents Verizon asserted and the company’s legal strategy in the case. Two of the eight patents asserted by Verizon in the District of Delaware weren’t originally invented by Verizon, Bell Atlantic or other any other of Verizon’s predecessor companies; they were acquired from outside entities… And haven’t we been told by the likes of Unified Patents that all patent owners who enforce their patents are patent trolls? One would have to assume if Unified is being logically consistent they would have extraordinary problems with Verizon’s activities particularly here where the patents used to sue Cablevision were acquired and not the subject of in-house innovation.

Finjan asserts four patents in the case and alleges that Bitdefender’s marketing of antivirus, cloud and sandboxing technologies infringes upon the patents-in-suit. The case has been filed in the Northern District of California… Finjan’s suit against Bitdefender alleges that Bitdefender was presented with written notice of the alleged infringement of Finjan’s patents as early as February 2015. In October 2015, Finjan alleged that it discussed the ‘844, ‘154 and ‘494 patents with Bitdefender and how those patents read on technology practiced by Bitdefender. Despite numerous in-person and telephone meetings, Finjan alleges that that Bitdefender has continued to engage in willful and deliberate infringement of Finjan’s IP.

Atari Interactive Inc. filed a lawsuit alleging trademark and copyright infringement claims against Swiss food and drink company Nestlé SA (VTX:NESN). The suit targets a worldwide and multi-platform advertising campaign produced by Nestlé for the company’s Kit Kat candy bars, which uses elements of Atari’s Breakout video game. The suit is filed in the Northern District of California. Atari’s suit alleges that Nestlé leveraged the look of Breakout for its Kit Kat ad campaign 40 years after Steve Jobs and Steve Wozniak created the game for Atari. “To be clear, this is not a case where a good faith dispute could exist between the rights holder and alleged infringer,” the complaint reads.