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.

ACQIS, LLC v. EMC Corp. (14-cv-13560).

ACQIS accused EMC of infringing eleven patents relating to consoles containing computer peripherals, such as a keyboard, mouse, display and disk drive, into which a core computer module having the CPU, memory, I/O and hard drive) can be inserted to form a complete PC. EMC filed a number of affirmative defenses, including alleging that the complaint failed to state a claim on which relief could be granted. In July 2018, ACQIS moved for summary judgment on that defense, asserting that failure to state a claim is not a proper affirmative defense under the Federal Rules of Civil Procedure as well as EMC’s purported failure to identify a factual or legal basis for the defense when the parties met and conferred on the issue. Judge Burroughs denied that motion, finding that the viability of pleading failure to state a claim as an affirmative defense was, in the circumstances of the case, “purely academic” and that resolution of the question would not impact the litigation or entitle either party to judgment as a matter of law on any issue.

Intellectual Ventures I, LLC et al. v. Lenovo Group Ltd. et al. (16-cv-10860).

Following invalidation of independent claim 1 (and a number of other claims) of the sole asserted patent in an inter partes review, Lenovo moved for summary judgment of invalidity of the sole asserted claim of the patent. Lenovo asserted both collateral estoppel and that there was no genuine issue of fact that the claim was obvious. Judge Saris ruled that estoppel applied and granted Lenovo’s motion. The asserted patent related to symmetric multiprocessor or shared-memory multiprocessor systems. Claim 1, which was invalidated by the PTAB, recited the system in some detail; claim 11, the sole asserted claim, added that the system further comprised the microprocessors and the memory device of the system, without further limitation. Notably, claim 11 was not challenged during the IPR. Lenovo asserted that collateral estoppel should apply because Intellectual Ventures could not show that the additional limitations of claim 11 “materially alter the question of invalidity.” Noting that the Federal Circuit had determined that issue preclusion applies to an invalidity finding before the PTAB despite the different standards of proof and of claim construction between the PTAB and district court, Judge Saris determined that estoppel applies. She indicated that the claims need not be identical for estoppel to apply, merely that the issues be the same. As claim 1 had been fully adjudicated, the sole question was whether the differences between claim 1 and claim 11 alter the infringement analysis in a meaningful way – Judge Saris determined that it did not. Claim 1 included limitations on the interfaces between microprocessors and memory devices. Claim 11 merely affirmatively claimed the microprocessors and memory devices. The PTAB had determined that the prior art reference relied upon disclosed microprocessors and memory devices, meaning that the claim did not add anything to the invalidity analysis that had not been determined before the PTAB.

Photographic Illustrators Corp. v. Orgill, Inc. et al. (14-cv-11818).

Photographic Illustrators, a company working in commercial photography, accused Orgill of infringing a number of Photographic Illustrators’ copyrights in photographs of Osram Sylvania lighting products. Orsram has a license to the photographs; PI asserts that Orgill, an Osram distributor, is not covered by that license. Orgill was granted summary judgment on PI’s DMCA and Lanham Act claims in 2015, but Orgill’s motion with respect to the copyright infringement claim was denied. Following an arbitration involving PI and Osram, Orgill again moved for summary judgment on the copyright claim, asserting that they were sublicensed under the Osram license and that that arbitration award precludes the copyright claim. PI cross-moved for summary judgment that there was no sublicense or that Orgill’s use fell outside of the purported sublicense.

Orgill asserted that it had impliedly been sublicensed by Osram, which was confirmed in a nunc pro tunc 2014 sublicense. In her 2015 decision, Judge Saris found that PI had provided sufficient evidence that Orgill had sublicensed the photographs to Orgill’s dealers for a fee, which was not permitted under PI’s license with Osram, and without the attribution required by the PI/Osram agreement. Subsequently, the arbitrator found that the no-fee provision and the attribution provision were merely covenants enforceable via contract law, rather than conditions on Osram’s license.

In her decision of last week, Judge Saris determined that Osram had granted Orgill an unwritten sublicense, through its course of conduct in giving Orgill images to promote Osram products since 1998 and in never objecting to Orgill’s use of the images. She further found that an implied sublicense could legally be granted. PI had asserted that an implied copyright license could not be granted by a licensee to a sublicensee who has no direct contact with the copyright holder; looking to the totality of the circumstances to determine that the parties intended Orgill to be licensed, specifically that PI intended to permit Osram to sublicense the photographs and that Osram intended that Orgill be licensed to use the images. The arbitration decision effectively precluded PI from arguing that Orgill exceeded the scope of this implied sublicense, because the relevant terms of PI’s license with Osram did not condition sublicenses Osram could make. She further found that the confirmatory sublicense, which included language requiring attribution where feasible, but further stated that this requirement was “[w]ithout effect on the rights of Orgill… to Use the Images as granted…” This quoted language meant that the attribution requirement was not a condition which must be met to form the sublicense, but again merely a contractual obligation. Accordingly, use by Orgill of photographs lacking attribution cannot be the basis for the copyright infringement claim.

Judge Saris further addressed PI’s argument that it had not licensed “approval” images to Osram, such that Orgill could not have been sublicensed with respect to those images. These “approval” images were rough photographs sent to Osram for approval before being retouched and refined into he final photographs by PI. While the issue of whether these images were licensed was not affirmatively determined by the arbitrator, Judge Saris determined that PI had not disclosed this infringement theory during discovery, and precluded PI from pursuing this theory under FRCP 37(c)(1). Accordingly, she granted Orgill’s motion for summary judgment.

Palomar Technologies, Inc. v. MRSI Systems, LLC (18-cv-10236).

In a case involving allegations of infringement of a patent relating to placement of components on circuit boards, Palomar sought partial summary judgment of literal infringement.  Palomar asserted that of the three non-infringement grounds MRSI provided, one was based on a frivolous claim construction and the other two were directly contradicted by MRSI’s 30(b0(6) witness. Palomar also sought summary judgment on MRSA’s public use invalidity defense, alleging that MRSI had failed to timely provide contentions relating to this issue that provided the requisite detail to maintain the defense. Noting that o claim construction order has yet issued and discovery remains on-going, Judge Saylor denied Palomar’s motions without prejudice, finding them to be premature. He further noted that, to the extent the motions were the result of an alleged failure of MRSI to provide discovery or make required disclosures, a motion to compel or for sanctions would be the appropriate step for Palomar to take.

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

Egenera accused Cisco of infringing the ‘430 patent, which names Egenera employee Peter Schulter as one of the inventors. When Cisco sought inter partes review on the basis of a 2000 reference, Egenera sought to swear behind the reference (under the first-to-invent rule, as the invention predates the AIA’s first-to-file system). Egenera relied on a document authored by inventor Max Smith, that Egenera asserts fully described the claimed invention. This document, however, pre-dates Schulter’s employment with Egenera. Egenera successfully petitioned to have Schulter removed as an inventor, and filed a declaration from Schulter stating that he was erroneously named. Cicso contended that Schulter should have been named as an inventor, and that by his removal the patent is invalid.

Judge Stearns agreed with Cisco that, should Schulter be determined to have contributed to the invention, Egenera could not petition to have him restored as an inventor under the doctrine of judicial estoppel, as such a claim would be inconsistent with Egenera’s assertion that he was incorrectly named. Judge Stearns determined, however, that while Schulter authored a pre-critical date document on a virtual LAN proxy that potentially read on a means-plus-function term in the claims, his authorship alone was not enough to determine, as a matter of law, that he conceived of the virtual LAN proxy or that the virtual LAN proxy was claimed via the means-plus-function limitation. Accordingly, he denied the cross motions for summary judgment on inventorship.

Purdue Pharma LP et al. v. Collegium Pharmaceutical, Inc. (15-cv-13099).

Purdue alleges that Collegium infringed three patents relating to abuse-deterrent extended-release oxycodone by filing an NDA for Collegium’s XTAMPZA ER product. Collegium sought summary judgment of non-infringement on two theories – that its active ingredient (oxycodone myristate) is not the equivalent of Purdue’s oxycodone hydrochloride, and that Collegium’s product lacks the claimed “irritant.” Collegium also asserted that one of the patents should be deemed invalid under issue preclusion or collateral estoppel, based on a final judgment in a New York court that three related patents were invalid and the PTO’s requirement, during examination of the patents at issue, that a terminal disclaimer be filed to overcome obviousness-type double patenting over the related patents.

The invalidated claims from the prior litigation were all product-by-process claims; while the Judge in that case acknowledged the process was novel, the claims stood or fell based solely on the product limitations, which did not describe a patentably-distinct compound. In evaluating the collateral estoppel argument, Judge Saylor noted that it had not been applied by the District of Delaware in an infringement case involving one of the patents of this suit. Judge Saylor applied Federal Circuit law on the preclusion and estoppel issues, which allows for preclusion on patent invalidity where the differences between the unadjudicated and adjudicated claims do not materially alter the question of patentability. He determined that the PTO’s double patenting analysis fails to satisfy this requirement, and that Purdue’s filing of the terminal disclaimers (particularly while expressly indicating its lack of agreement with the rejections) could not be converted into an admission or acquiescence on the merits of the rejections. He also determined that the claims at issue included additional limitations that materially alter the patentability as compared with the previously-invalidated claims, as the new claims included limitations relevant to the process that were not considered in the New York litigation. Collegium asserted that these limitations were inherently present in the invalidated Purdue patents, but Judge Saylor declined to apply the doctrine of inherency where the references in question, related Purdue patents, would not qualify as prior art, and noted that in any event there were unresolved issues of material fact that precluded summary judgment on the issue. While rejecting the preclusion issue, Judge Saylor did note that the findings of fact by the New York court rendered the validity of at least some of the asserted claims doubtful.

Collegium next sought to apply prosecution history estoppel to preclude a finding of infringement by equivalents, asserting that Purdue had specifically distinguished its hydrochloride form of oxycodone over other forms of oxycodone. Judge Saylor, however, determined that the scope of disavowal extended not further than products including oxycodone free base and declined to estop the equivalency argument. He found factual issues as to whether the two forms were equivalent that precluded summary judgment of non-infringement.

Collegium sought judgment of non-infringement on method claims, asserting that it does on itself complete all of the method steps because its product is manufactured by two companies that it does not control; Judge Saylor determined that Collegium could not demonstrate an absence of material fact on this issue, and denied summary judgment. Collegium’s last effort was to escape infringement of two of the patents on the basis that the myristic acid it utilized in its product is not an “irritant,” but instead is included to dissolve the oxycodone base. Looking back to the construction of “irritant,” the Court noted that Purdue had disavowed from the scope of that term components that both served both as an irritant and provided some other benefit, such as serving as an excipient. Noting that Purdue concedes that myristic acid in the XTAMPZA ER provides an excipient function, Judge Saylor granted summary judgment of non-infringement of all claims requiring an irritant, which effectively resulted in non-infringement on two of the three asserted patents.