In Drop Stop LLC v. Jian Qing Zhu et al, 2-16-cv-07916 (CACD January 22, 2018), the Central District of California granted Plaintiff’s motion to award attorney fees due to Defendants’ exceptional litigation tactics under 35 U.S.C. § 285. Initially, counsel for Plaintiff sent a cease and desist email to Defendants to stop selling an infringing product, and attached a draft claim chart in support of its infringement position. The claim chart included a disclaimer stating “PLEASE NOTE – this informal opinion cannot be relied upon definitively. A formal opinion is required, and that involves extensive study and other efforts to provide a reliable outcome. Please call me to discuss.” However, four days later, Defendants re-listed the accused products and sent Plaintiff an email attaching Plaintiff’s draft claim chart without the disclaimer. Defendants relied upon Plaintiff’s claim chart to support its non-infringement positions despite not having performed any analysis of their own, and entirely dismissing Plaintiff’s disclaimer, which expressly disclaimed any formal legal opinion.
Tony is an Associate in the firm’s Boston office. He has worked with a wide range of technologies including manufacturing, telecommunications, and software development.
Tony’s experience includes assisting in the preparation of patent applications and pre-suit diligence, including patent portfolio analysis; drafting infringement/non-infringement and validity/invalidity analyses; and providing technical and scientific advice to legal practitioners in ITC-337 investigations and US District Court matters. During law school, Tony served as the production editor of the Journal of Health & Biomedical Law.
In a recent development from the Eastern District of Texas, Magistrate Judge Roy S. Payne concluded that defendants Globalfoundries, Qualcomm, and Samsung waited too long prior to moving to dismiss or transfer the case due to improper venue (see report and recommendation here). KAIST IP US LLC filed its complaint back in November 2016, and a significant portion of discovery already occurred. Similar to In re Micron (which we previously covered here), defendants reserved the right to challenge venue pending the decision in TC Heartland, in their respective answers to the complaint. However, it was not until September 2017, about four months after the decision in TC Heartland issued, that defendant Globalfoundries affirmatively challenged venue. Qualcomm and Samsung filed similar motions a month later. The defendants argued that “after lengthy negotiations… it become clear that KAIST did not have a legitimate, good faith interest in an agreed transfer to a proper venue.”
MJ Payne disagreed, largely because the parties were already immersed in claim construction briefing. MJ Payne opined that “[g]ranting such untimely motions at this stage of the proceeding would disrupt the efficiency of the judicial process, both here and in the proposed transferee district.” Further, MJ Payne was perplexed as to why defendants sat on their hands for four to five months after the TC Heartland decision to move. Accordingly, the court denied defendants motions to dismiss or transfer venue citing In re Micron (affirming a district court’s ability to find forfeiture when a party does not raise a timely objection to venue). We will continue to track any developments regarding this matter.
Further to our ongoing coverage of the post-TC Heartland patent litigation landscape, a pair of recent and interesting cases from Texas and Delaware further evolved this important venue-related jurisprudence.
On November 22, 2017, in Intellectual Ventures II LLC v. FedEx Corp. et al., Case Number 2:16-cv-00980 (E.D. TX Nov. 22, 2017), Judge Rodney Gilstrap denied defendants’ motion to dismiss for improper venue due to their conduct in view of the Federal Circuit’s recent decision in In re Micron, which determined that TC Heartland was a change in the law, potentially reviving venue-based transfer motions previously waived. (We previously covered the In re Micron case here.) Defendants sought to dismiss the case for improper venue a few days after the denial of their IPR petitions. After they participated actively in litigation for months, the court did not take kindly to defendants’ motion. Citing In re Micron, the court reasoned that “defendants who take a ‘tactical wait-and-see’ approach in objecting to venue present ‘an obvious starting point for a claim of forfeiture.’” Further, the court noted that prior to the TC Heartland decision, defendants sought to transfer the case to the Western District of Tennessee under § 1404 rather than § 1406. Judge Gilstrap noted that this reliance on § 1404 was important because that statute “is premised on venue being proper in the transferor court whereas a motion under § 1406 reflects an objection to the current venue as being proper.” Accordingly, the court concluded that defendants’ waived their venue objection based on their own conduct, the judicial resources already expended, and the prejudice to plaintiff in reopening a dormant venue dispute “simply because it has become convenient for Defendants to litigate the issue now.” Continue Reading Lower Courts Continue to Grapple with Venue in the Wake of In re Micron and In re Cray
On November 15, 2017, the United States Court of Appeals for the Federal Circuit resolved a split among district courts on the question whether the United States Supreme Court’s TC Heartland decision constituted a change in the law, or merely a course-correction to honor preexisting law. The Federal Circuit held that the Supreme Court’s decision changed the controlling law. In re: Micron, No. 17-00138 at 13 (Fed. Cir. Nov. 15, 2017).
Micron Technology, Inc. asked the Federal Circuit to set aside the district court’s denial of its motion to dismiss or transfer the case for improper venue. The district court held that Micron waived its objection to venue because it failed to raise an available venue defense in its initial Rule 12 motion to dismiss, and concluded that TC Heartland was not a change in the law.
The Federal Circuit disagreed. It reasoned that the Supreme Court clearly rejected V.E. Holding and concluded that the definition of “resides” in § 1391(c) does not apply to § 1400(b). The Federal Circuit further reasoned that the Supreme Court changed the law by severing § 1400(b) from § 1391(c). As a result, the objection was not “available” under Rule 12(g)(2) when Defendant filed its motion to dismiss in 2016, before TC Heartland came down. On this basis, the Federal Circuit reversed and remanded the case. This decision resolves a previously open question in the wake of TC Heartland that we wrote about here.
Earlier this week, the United States Patent and Trademark Office (“USPTO”) published a new rule governing when privilege exists for communications between clients and their domestic or foreign patent attorneys and patent agents before the Patent Trial and Appeal Board (“PTAB”). For context, the originally proposed amendment sought to resolve ambiguity as to when privilege extends to USPTO patent practitioners during PTAB discovery proceedings in light of prior Federal Circuit, District Court and PTAB decisions. The now-published rule codifies the PTAB’s intent to protect communications between patent agents and clients from discovery, stating that:
“communication[s] between a client and a USPTO patent practitioner or a foreign patent practitioner that is reasonably necessary and incident to the scope of the patent practitioner’s authority shall receive the same protections of privilege under Federal law as if that communication were between a client and an attorney authorized to practice in the United States, including all limitations and exceptions[;]”
“USPTO patent practitioners and foreign jurisdiction patent practitioners shall receive the same treatment as attorneys on all issues affecting privilege or waiver, such as communications with employees or assistants of the practitioner and communications between multiple practitioners.”
In an interesting development in the post-TC Heartland world, it appears that the Federal Circuit will soon answer the question whether the Supreme Court’s venue decision was a change in the law, or merely a course-correction to honor preexisting law. Here, in a case arising out of the Eastern District of New York, the Federal Circuit ordered AlmondNet, Inc., Datonics, LLC, and Intent IQ, LLC to respond to a petition for a writ of mandamus submitted by Yahoo Holdings, Inc. In its petition, Yahoo argued that the District Court erred in denying its motion to transfer, and specifically that it waived the right to challenge venue on the basis that TC Heartland did not change the law of venue.
The United States Supreme Court decided earlier this year that a 1957 opinion is still valid and still limits venue choices for patent infringement actions under 28 U.S.C. § 1400. See TC Heartland LLC v. Kraft Foods Group Brands LLC, 581 U.S. ___ (2017) (citing Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 226 (1957)). In its extensively-covered TC Heartland decision issued in May, the Court held that “[a]s applied to domestic corporations, ‘reside[nce]’ in § 1400(b) refers only to the State of incorporation,” where the accused infringer has a “regular and established place of business” in the venue. While framed as merely confirmation of precedent from the 1950s, many practitioners and commentators viewed this decision as a dramatic change in the patent litigation landscape.
Since TC Heartland came down, lower courts have applied the new paradigm in differing ways. As trends have developed in recent months, we thought it useful to provide a sampling of the various approaches to venue issues post-TC Heartland. These issues include, for example, whether defendants who did not contest venue prior to the TC Heartland decision waived the defense of improper venue because the case was—or was not—an “intervening change” in the law, and how to assess whether a defendant has regular and established place of business in a particular venue.
Late last week, the Federal Circuit granted a writ of mandamus in In re Cray, 2017-129 (Fed. Cir. Sept. 21, 2017), overturning Judge Gilstrap’s four-factor test for determining whether a defendant possesses “a regular and established place of business” in a district such that the defendant could be sued for patent infringement in that district. In re Cray provides useful guidance because it is the first time since the Supreme Court’s TC Heartland decision that the Federal Circuit has weighed in on what constitutes a “regular and established place of business.” The patent venue statute, 28 U.S.C. § 1400(b), provides that venue is proper in a patent infringement lawsuit only where the defendant (1) resides or (2) has “committed acts of infringement and has a regular and established place of business.” TC Heartland clarified that a defendant “resides” only in the state in which it is incorporated. It did not address the second prong, however, which is an alternative way of establishing venue. More frequently patent owners are looking to the second prong to determine the locus of an appropriate venue now that the first prong of the statute has been interpreted narrowly.
On April 6, 2017, the Federal Circuit reversed-in-part and affirmed-in-part the district court’s judgment of infringement and summary judgment for non-infringement of The Medicines Company’s (“MedCo”) patents-in-suit. See The Medicines Company v. Mylan, Inc., 2015-1113 (Fed. Cir. 2017). The patents-in-suit were U.S. Patent Nos. 7,582,727 (“the ’727 Patent) and 7,598,343 (“the ’343 Patent”). MedCo initiated a suit against Mylan, Inc. (“Mylan”) in response to Mylan submitting an Abbreviated New Drug Application (“ANDA”). Through submitting an ANDA request, Mylan wished to obtain approval from the Food and Drug Administration (“FDA”) for a generic drug that would directly compete against MedCo’s ANGIOMAX® product. To counter Mylan’s ANDA request, and keep their product exclusive, MedCo filed suit alleging that Mylan’s ANDA drug infringed claims in both the ’727 and ’343 Patents.
The district court held on summary judgment that Mylan’s drug did not satisfy the “efficient mixing” limitation of the ’343 Patent; however, following a 6-day bench trial found that Mylan’s drug did infringe the ’727 Patent because the asserted claims did not include an “efficient mixing” limitation. Mylan argued on appeal that the district court erred by not including the “efficient mixing” limitation as part of the “batches” limitation in the ’727 Patent.
In ClassCo, Inc. v. Apple, Inc. the Federal Circuit upheld a decision from the Patent Trial and Appeal Board (“the Board”), which invalidated several claims of ClassCo’s US Patent No. 6,970,695 (“the ’695 patent”) that discussed caller ID technology that would verbally announce the name of an incoming caller before the call is connected. The ’695 patent has been asserted in litigation against Apple, Samsung, LG, HTC America, Hewlett-Packard, Palm, Inc., Nokia, and ZTE Corp., in both the Northern District of Illinois, and another suit in the District of Massachusetts, respectively. Apple filed an Inter Partes Review (“IPR”) against the ’695 patent, whereby the Board found the ’695 patent obvious in view of two prior art references, the Fujioka and Gulick patents.