Egenera, Inc. v. Cisco Systems, Inc. (16-cv-11613).

Judge Stearns denied Cisco’s motion for attorneys’ fees under § 285. Cisco asserted that the case became exceptional on August 17, 2016, when Egenera, in a parallel IPR proceeding, submitted a declaration from one of its employees stating that he had been erroneously named as an inventor. Egenera removed him as an inventor so that it could rely on an internal document that pre-dated his employment to swear behind a reference. The patent was subsequently invalidated for failure to name all inventors when Judge Stearns construed the claims and determined that the employee had made an inventive contribution. According to Cisco, Egenera at that point had thoroughly reviewed the inventorship issue and should have realized, at least as of the claim construction order, that the employee was improperly removed. While agreeing that Egenera’s investigation was “wanting,” Judge Stearns found that the survival of the inventorship dispute through summary judgment meant that the case did not rise to exceptional.

Cisco’s Bill of Costs was denied in part. He allowed costs related to professionally produced video deposition clips and trial demonstratives, noting that the prevalence of witness credibility issues necessitated their use, but found the requested amount of $60,341 for a three-day trial excessive by half. He further cut summons and subpoena costs to eliminate the excess fees charged for emergency or urgent service.

This is the second case I have seen in recent days in which exceptionality was tied to amenability to summary judgment – Judge Saylor denied a request for fees because the plaintiff had not sought summary judgment. I do not that the grant of summary judgment does not automatically result in a finding of exceptionality, however, and hope that this recent small trend does not become a de facto precedent for the award of attorneys’ fees, as I can envision cases that, while having issues of fact in dispute, still rise to the level of exceptionality, and would hate to see arguments to that effect precluded.

Rice v. SAJ Technologies, Inc. (19-cv-10103).

Judge Stearns granted photographer John Curtis Rice default judgment, finding that SAJ wrongfully reproduced Rice’s copyrighted photograph of New York City taken by drone from above in SAJ’s “DroneLife” drone news website. The default came after SAJ’s CEO was informed that he (a non-lawyer) could not file an answer on SAJ’s behalf and SAJ could not afford to pay for a defense. Judge Stearns refused, however, to go along with Rice’s demand for regarding damages and fees. Rice had sought $3000 in actual damages for copyright infringement, $10,000 in statutory damages for removal of copyright management information, and $3,825 in fees and $475 in costs, asserting that SAJ’s “infringement and refusal to appear and respond” were “objectively unreasonable.” Judge Stearns, noting that an intern at SAJ had utilized the image without the corporation’s knowledge and that SAJ immediately took down the photograph upon learning of its use, determined that the violations were “unintentional, very limited, and the source of no discernable profit to SAJ.” He awarded only the minimum $750 in statutory damages.

As I have previously noted, the attorney representing Rice has achieved quite a bit of notoriety in demanding vastly unreasonable sums having no ties to the actual infringement or actual likely measure of damages. As Judge Furman of Liebowitz’s home court in the Southern District of New York, recently noted, “[i]n his relatively short career litigating in this District, Richard Liebowitz has earned the dubious distinction of being a regular target of sanctions-related motions and orders. Indeed, it is no exaggeration to say that there is a growing body of law in this District devoted to the question of whether and when to impose sanctions on Mr. Liebowitz alone.” Perhaps this decision is an indication that courts outside of New York’s Southern District are taking note of Mr. Liebowitz’s predatory practices.

Sobol v. Canavan et al. (17-cv-12275).

Photographer Richard Sobol, faced with counterclaims that he repeatedly lied to the Copyright Office to obtain his registrations, opted to settle his infringement suit against the makers of a Barney Frank documentary. Sobol had asserted that filmmakers Sheila Canavan and Michael Chandler had used ten of his photographs without license. Canavan and Chandler asserted that Sobol had lied to the Copyright Office about the initial publication date of the photographs and that he was the photographer on three of them, and that some of his submissions were actually screenshots from the documentary. Sobol’s settlement seems to validate the defendants’ positions – he agreed to dismiss all claims with prejudice, and admitted that the film did not infringe his copyright, that he did not take three of the photographs covered by one of the registrations, that six of the photographs covered by the registration were published more than five years prior to registration, and that two registrations were invalid and must be cancelled. Sobol agreed to cancel the registrations. Sobol further acknowledged that the defendants expected to recover more than $480,000 in damages should the case proceed, and agreed to pay an undisclosed amount as a part of the settlement.

Uniloc 2017 LLC v. Paychex, Inc. (19-cv-11272), Akamai Technologies, Inc. (19-cv-11276) and athenahealth, Inc. (19-cv-11278).

Uniloc 2017, a non-practicing entity affiliated with the original Uniloc, sued Paychex, Akamai and athenahealth, accusing each of infringing a pair of patents relating to the management and distribution of application programs to target stations on a network. The patents originally belonged to IBM, and have an odd chain of title through the PTO’s assignment page – it appears that Uniloc assigned a security interest in the patents to Fortress Credit Co. in 2014 without having first obtained title from IBM – that assignment (to Uniloc Luxembourg S.A.) was executed in 2016. The patents each claim priority to a December 1998 filing, so both have expired.  The cases are all before Judge Stearns.

Rain Computing, Inc. v. Samsung Electronics Co., Ltd. et al. (18-cv-12639).

Judge Stearns denied Samsung’s motion to dismiss for failure to state a claim, agreeing that the complaint meets the Twombly “plausibility” standard because it states the patents alleged to be infringed and the acts by which they are allegedly infringed. Rain Computing asserts that Samsung’s delivery of their apps to end user devices via an app store that requires registration and subscription to use, which are asserted to infringe Rain’s patent directed to methods and systems for delivering software to client terminals based on a subscription service. Judge Stearns held that the Federal Rules of Civil Procedure, even as explained by Twombly, “do not require a plaintiff to plead facts establishing that each element of an asserted claim is met.” This holding seems to be inconsistent with a pair of prior D. Mass. cases (Rampage v. Global Graphics, Judge Burroughs, and Sunrise Techs. V. Cimcon Lighting, Judge Gorton) that held that a patent plaintiff “must allege that defendant’s product practices all the elements of at least one of the claims of the subject patent.” It will be interesting to see whether Samsung will challenge this decision down the road.

Egenera, Inc. v. Cisco Systems, Inc. (16-cv-11613).

This case involves allegations that Cisco infringed patents related to configuring, deploying and maintaining enterprise and application servers. Earlier in the litigation, the court determined that one of the patents was directed to ineligible subject matter, and Egenera dismissed a second without prejudice following institution of inter partes review. The court held a three day bench trial on the sole issue of whether Peter Schulter, an Egenera employee, should have remained listed as an inventor of the sole remaining patent-in-suit. Schulter was removed as an inventor after Egenera relied on an internal document that predated his being hired to swear behind prior art in the IPR (which, as it turns out, was not instituted with respect to the patent). Judge Stearns found that his removal was improper. He noted that none of the named inventors, including Schulter, reviewed the internal document before signing the declarations that accompanied the change of inventor petition, instead relying on Egenera’s management and counsel that the removal of Schulter was proper.

Later, the court construed the term “logic to modify said receiver to transmit said modified messages to the external communication network and to the external storage network” as a means-plus-function limitation. After reviewing internal documentation, including reviews of Schulter, the court determined that Schulter contributed to the means identified in the specification that were swept into the claim by means of 112(6). Judge Stearns identified passages in the specification that were taken from a state-of-development document authored by Schulter that post-dated Schulter’s employment and to which he contributed. Judge Stearns further considered testimony from one of the other inventors that the last-state-of-development document that pre-dated Schulter’s employment did not include information contained in the patent. Further, Egenera hired Schulter specifically to work on the servers covered by the patent This evidence was sufficient to overcome Schulter’s testimony that he was not an inventor, which was not corroborated by any contemporaneous evidence. As the court had already determined that judicial estoppel prevented Egenera from seeking to re-add Schulter as an inventor, the patent was deemed invalid, closing the case.

DUSA Pharmaceuticals, Inc. v. Biofrontera Inc. et al. (18-cv-10568).

Judge Stearns issued a claim construction order construing terms of the asserted patents, and addressed indefiniteness arguments urged by Biofrontera. The technology is directed to treating cancer by administering photoactive agents that accumulate in the tissue to be treated, and then exposing the tissue to visible light that causes the photoactive agent to chemically or biologically change and attack the target tissue in which it has accumulated. Biofrontera sought to have “illuminator” construed to require a light source that generally conforms to a contoured surface, asserting that DUSA’s specification disavowed flat illuminators by (a) consistently referring to the “present invention” as an illuminator conforming to a contoured surface; (b) including no non-contoured embodiments, and ascribes the improved performance of the claimed invention to the contoured surface of the illuminator; and (c) disparaging flat surface illuminators. Noting that there was no argument that DUSA acted as its own lexicographer, Judge Stearns determined that there was sufficient evidence to the contrary to prevent Biofrontera from meeting the “exacting” standard for a finding of disavowal. He noted that the specification provided objectives that did not require a contoured shape, and provided ways other than contouring to obtain the desired results.

Judge Stearns also determined that the phrase “all operation distances” was not indefinite. Biofrontera had argued that the specification provided no guidance on this, but Judge Stearns found that reference to a lower and upper limit in the specification set the range of distances with reasonable clarity. He rejected Biofrontera’s claim differentiation argument, noting that while a dependent claim specified the range, claim differentiation cannot be used to broaden a claim beyond its correct scope.