Antitrust and Patent Misuse

By Memorandum Opinion entered by The Honorable Leonard P. Stark in Intellectual Ventures I LLC et al. v. Symantec Corp. et al., C.A. No. 13-440-LPS (D.Del. February 13, 2017), the Court granted Defendants’ motion for summary judgment of patent ineligibility upon finding that the claims at issue – claims 25 and 33 of U.S. Patent No. 5,537,533 (“the ‘533 patent”) – (1) are directed to an abstract idea, and (2) fail to include any inventive concept sufficient to elevate them into patent-eligible applications of the abstract idea of backing up data. Id. at *3-11.

In so ruling, the Court agreed with Symantec that the claims at issue simply recite the basic steps of copying data from one location to another several times and sending a confirmation that the data has been received; and this is something humans and institutions have been doing for centuries, even before computers. Id. at *8. The Court also agreed that, although the claims invoke existing computer functionality as a tool to better back up data, the claims do not themselves purport to improve anything about the computer or network itself. Id. at *8-9. For example, unlike Enfish and McRo, the claims do not improve the way computers store information or otherwise function and do not otherwise provide an inventive concept. Id. Therefore, the court agreed with Symantec that the claims lack anything sufficient to transform the abstract idea into patent-eligible subject matter. Id.

A copy of the Memorandum Opinion is attached.

The general take away is that simply citing to generic computer components or functionality when describing an abstract idea, law of nature, or physical phenomena without some new, additional improvement, unique combination or something else that can be considered an inventive concept is not going to transform patent-ineligible subject matter into patent-eligible under 35 U.S.C. §101. Whenever a patent possibly claims an abstract idea, law of nature or physical phenomena, an analysis of the claims under the two-step process set forth in Mayo should be performed.

The United States District Court for the District of Delaware announced that, effective February 3, 2017, the Honorable Sue L. Robinson, transitioned to Senior Judge.  In the announcement, the Court also set forth certain changes to its case assignment practices given Judge Robinson’s transition to a Senior United States District Judge.  In short, Judge Robinson will not be assigned any new criminal cases or new civil cases.  Until the vacancy is filled, all new criminal cases will be assigned to Chief Judge Stark, Judge Sleet and Judge Andrews.  Until the vacancy is filled, all new civil cases will be assigned to Chief Judge Stark, Judge Sleet, Judge Andrews and a new docket referred to as “Vacant Judgeship” or “VAC”.  The cases assigned to VAC will also be referred to one of the Magistrate Judges – Judge Thynge (“MPT”), Judge Burke (“CJB”), and Fallon (“SRF”).

A copy of the Court’s Announcement is attached.

Through Order entered by Chief Judge Leonard P. Stark and pursuant to the authority vested in the Court by Rule 83 of the Federal Rules of Civil Procedure, the United States District Court for the District of Delaware amended its Local Rules of Civil Practice and Procedure. The revised Local Rules become effective on August 1, 2016.

Copies of the Revised Local Rules of Civil Practice and Procedure of the United States District Court for the District of Delaware and the implementing Order are attached.

By Memorandum Opinion entered by The Honorable Leonard P. Stark in GN Netcom, Inc. v. Plantronics, Inc., Civil Action No. 12-1318-LPS (D.Del., July 12, 2016) (redacted), the Court granted in part Plaintiff’s Motion for Sanctions arising from the deletion of emails by a senior executive of Defendant who was responsible for all domestic sales functions and ultimately responsible for the execution and implementation of the Plantronics Only Distributor (“POD”) program and agreements which are the focus of the claims asserted in the antitrust action.  The record contained evidence that, after the filing of the lawsuit and despite Defendant promptly issuing a litigation hold to relevant employees upon receiving Plaintiff’s demand letter, updating the litigation hold after the lawsuit was filed, providing training sessions and sending quarterly reminders to ensure compliance, the senior executive of Defendant deleted certain emails that should have been preserved in the anticipation or conduct of litigation, instructed others in the company to delete certain emails, and Defendant otherwise engaged in spoliation of electronically stored information (“ESI”). Id. at * 1-18.  The Court found that (1) Defendant, due to its senior executive’s deletion of emails and his instructing others to delete certain emails, failed to take reasonable steps to preserve ESI which cannot be restored or replaced; (2) Defendant did so in bad faith with the intent to deprive Plaintiff from using the information contained in the emails; and (3) Plaintiff is prejudiced by the loss of the emails. Id. at *18-26.

The Court next evaluated the appropriate sanctions to impose and decided to impose against Defendant the following: (1) monetary sanctions in the form of the reasonable fees and costs incurred by Plaintiff in connection with the spoliation disputes; (2) punitive sanctions in the amount of $3 million dollars; (3) possible evidentiary sanctions during trial, if requested in the future by Plaintiff and found by the Court to be warranted; and (4) sanction instructions to the jury that it “may” – as opposed to that it “must” – draw an adverse inference that emails destroyed by Defendant would have been favorable to Plaintiff’s case and/or unfavorable to Defendant’s defense. Id. at *26-30.

A copy of the redacted public version of the Opinion is attached.

Of particular note is the fact that, in rendering its ruling in the Opinion, the Court applied Federal Rule of Civil Procedure 37(e) as revised by the December 1, 2015 amendment.

By Memorandum Opinion entered by The Honorable Sue L. Robinson in In Re Class 8 Transmission Indirect Purchaser Antitrust Litigation, Civil Action No. 11-00009-SLR (D.Del., October 21, 2015), the Court denied plaintiffs’ class certification motion, found the case does not present a case or controversy under Article III, and dismissed the case.

By way of background, the suit was filed on behalf of and the proposed plaintiffs class was a number of purchasers of Class 8 trucks from one or more of defendants’ authorized sales agents or dealers.  Defendants in the action were Eaton Corporation (“Eaton”) and a number of Original Equipment Manufacturers (“OEMs”).  Eaton manufactures transmissions for Class 8 trucks and the OEMs manufacture and sell Class 8 trucks.  In order to assemble and sell Class 8 trucks, OEMs purchase component parts, such as transmissions, from suppliers like Eaton.  Id. at 2.

Plaintiffs alleged that Eaton and the OEMs conspired to put Eaton’s main competitor, ZF Meritor, out of business thereby expanding Eaton’s monopoly in the Class 8 truck transmission market and permitting all defendants to share in the profits resulting from the monopoly.  Id. at 3.  Plaintiffs alleged that the conspiracy was achieved by Eaton entering into Long Term Agreements (“LTAs”) in the early 2000s with each of the four OEMs designed to eliminate ZF Meritor’s market share in the Class 8 transmission market.  Plaintiffs ultimately alleged that they had to pay higher prices for transmissions and, in turn, for Class 8 trucks, as a result of defendants’ actions and had “less choice and suffered from a decrease in innovation.”  Id. at 3-4.

In evaluating whether to certify the proposed class of indirect purchaser plaintiffs, the Court noted that a “district court has broad discretion to grant or deny a class certification.”  Id. at 5.  The Court also noted that a party seeking certification bears the burden of establishing that certification is warranted under the circumstances.  In other words, plaintiffs bear the burden of establishing that all four requirements of Federal Rule of Civil Procedure 23(a) are met and that at least one part of Federal Rule of Civil Procedure 23(b) is met.  Id. at 5-6.  The requirements of Federal Rule of Civil Procedure 23(a) are:  (1) numerosity; (2) commonality; (3) typicality; and (4) adequacy.  Id.  The two additional requirements of Federal Rule of Civil Procedure 23(b)(3) are: (1) predominance; and (2) superiority.  Id.

In reaching its decision to deny the class certification motion, the Court found that plaintiffs failed to meet the adequacy requirement under Federal Rule of Civil Procedure 23(a) because plaintiffs failed to demonstrate that the class representatives could adequately represent the class.  Id. at 10-13.  The Court also found that plaintiffs failed to meet the predominance requirement of Federal Rule of Civil Procedure 23(b)(3) because plaintiffs were unable to demonstrate common evidence to show that all or nearly all members of the proposed class suffered antitrust injury as a result of defendants’ alleged conduct.  Id. at 13-15.  The Court did find that plaintiffs met the numerosity, commonality and typicality requirements of Federal Rule of Civil Procedure 23(a).  Id. at 6-10.  The Court did not making any findings concerning the superiority requirement of Federal Rule of Civil Procedure 23(b)(3) given its findings of failure to meet the adequacy and predominance requirements.  Id. at 27.

A copy of the Memorandum Opinion is attached.

By Memorandum Opinion entered by The Honorable Sue L. Robinson in Apotex, Inc., et al. v. Senju Pharmaceutical Co., Ltd., et al., Civil Action No. 12-196-SLR (D.Del., May 1, 2015), the Court denied defendants’ Rule 12(b)(6) motion to dismiss a complaint alleging antitrust violations by defendants under Section 2 of the Sherman Act.  In denying the motion, the Court concluded that plaintiffs alleged a plausible relevant market and offered enough explanation as to why the market should be limited to at least get pass the motion to dismiss stage.  Id. at 5.  The court recognized that “in the case at bar, as in most cases, proper market definition can be determined only after a factual inquiry into the commercial realities faced by consumers.”  Id.

A copy of the Memorandum Opinion is attached.

Recognized for its strategic litigation and intellectual property work, Fox Rothschild LLP was recently named a “Go-To Law Firm” by several clients in a survey of Fortune 500 companies conducted by American Lawyer Media (ALM).  The article can be found at http://www.foxrothschild.com/newspubs/newspubsArticle.aspx?id=19327354477.  In the article, Gregory B. Williams is recognized for leading Fox’s team of attorneys representing Walmart Stores, Inc., which recognized Fox as a “go-to” firm for its contract litigation work.

By Memorandum Opinion entered by The Honorable Sherry R. Fallon in Monec Holdings AG v. Motorola Mobility, Inc., et al., Civil Action No. 11-798-LPS-SRF (D.Del., September 5, 2014), the Court granted the motion of defendants HTC Corporation and HTC America, Inc. (collectively, “HTC”) to strike the opening summary judgment and Daubert filings of plaintiff Monec Holding AG (“Monec”).

In support of their motion, HTC asserted that Monec improperly exceeded the page limits for its summary judgment briefing by including factual material, citations and legal analysis in the attached exhibits. Id. at 2. In response, Monec alleged that the exhibit in dispute, a witness Declaration, contained only facts and citations, as opposed to legal argument. Id. at 3.

Upon review, the Court found that the infringement portion of Monec’s opening brief contained no legal analysis and HTC had to refer to the exhibit in dispute in order to respond to Monec’s submissions. Id. Thus, the Court concluded that HTC was prejudiced by Monec’s improper reliance on the exhibit in dispute to convey its legal arguments, because HTC had to respond to the 272 page exhibit within the court’s page limitations on briefs. Id. Accordingly, the Court granted HTC’s motion to strike without prejudice, giving Monec the opportunity to file amended opening briefs and supporting documents within fourteen (14) days of the Court’s Order.

The take away for litigants from this Case is that the Court’s page limitations are real and need to be taken seriously, substantive legal arguments on infringement and other issues have to be made in the brief, and litigants need to be mindful that they are not attempting to use exhibits to the brief in an improper manner to attempt to circumvent applicable page limitations.

A copy of the Memorandum Opinion is attached.

 

By Memorandum Opinion entered by The Honorable Sue L. Robinson in Technology Innovations, LLC v. Amazon.com, Inc., Civil Action No. 11-690-SLR (D.Del., March 31, 2014), the Court granted defendant Amazon’s motion for summary judgment of invalidity of U.S. Patent No. 7,429,965 (“the ‘965 patent”). The Court also found that plaintiff’s assertion of U.S. Patent No. 5,517,407 (“the ‘407 patent”) against defendant Amazon’s Kindle product warranted sanctions because the claims and specification made it clear that the invention refers only to printed materials and not an electronic book. Id. at 11-24. Accordingly, the Court found that plaintiff’s assertion of infringement of the ‘407 patent by the Kindle was not “objectively reasonable under the circumstances.” Id. at 24.

A copy of the Memorandum Opinion is attached.

 

By Memorandum Opinion entered by The Honorable Leonard P. Stark in Kickflip, Inc. v. Facebook, Inc., Civil Action No. 12-1369-LPS (D.Del., September 27, 2013), the Court denied defendant Facebook, Inc.’s (“Facebook”) motion to dismiss the complaint of plaintiff Kickflip, Inc. (“Kickflip”) which alleges antitrust violations and tortious interference in connection with Facebook’s virtual-currency service, Facebook Credits, and Facebook’s social-gaming network.  Among other things, Facebook argued that Kickflip failed to define the markets for virtual-currency service and social-game networks and to allege that Facebook has monopoly power in the relevant markets.  Id. at 6 and 10.  The Court disagreed with Facebook and found that Kickflip’s descriptions of the relevant markets were sufficient to survive Facebook’s motion to dismiss.  Id. at 11-12.  Moreover, the Court concluded that the complaint adequately alleged facts that supported a plausible inference that Facebook had monopoly power in the relevant markets.  Id. at 12-14.

A complete copy of the Memorandum Opinion is attached.