Northern District of Texas Blog

Patent Pilot Program To Expire In July 2021

Posted on June 13, 2021 by Steven Callahan

The patent pilot program expires by operation of law on July 4, 2021, so Chief Judge Lynn issued an order (available here) vacating Special Order No. 3-287 (which set forth the prior procedure for assigning judges to patent cases under the patent pilot program). After July 4, 2021, all district court judges in the N.D. Tex. will handle patent-infringement cases.

Posted in Judge Lynn, N.D. Tex. News | Comments Off

Repeat Copyright Plaintiff (Who Is Also Attorney Who Represents Himself) Hit With $172,173 Award For Losing Copyright Case

Posted on June 1, 2021 by Steven Callahan

Everyone loves a good man-bites-dog story. This is the story of an attorney who took pictures of the Indianapolis skyline and filed dozens of lawsuits accusing defendants of copyright infringement. The story didn’t end well for the attorney.

The jury found that the attorney did not prove he authored the photo, owned its copyright, and registered it with the Copyright Office (it appears as if the jury could’ve found that the attorney took the photo as a work made for hire for his prior law firm). Judgment was thus entered for Defendant Carmen Commercial Real Estate Services. Defendant then moved for attorney’s fees and costs.

The Court hit the attorney with $172,173 in fees and costs (decision available here). The Court found that the attorney’s position on ownership was not unreasonable, but his position on damages was a different matter.

Similar licenses to images went for $5 to $200. The attorney testified at trial that he typically licensed the photograph for $200. In a prior case, after prevailing at trial, he was awarded $200 in statutory damages. The attorney testified at trial that his “actual damages are probably $200.”

The Defendant offered to settle, pre-suit, for $1,000. But the attorney proceeded to trial seeking $150,000 in statutory damages “on scant evidence of willful infringement.”

This the Court did not like:

[The attorney] has filed many lawsuits over this photograph. Other judges have found indicia of improper motive: “[The attorney’s] motivation for filing this action appears to be an attempt to extract quick, small settlements from many defendants instead of using the judicial process to protect his copyright against legitimate infringing actors.” . . . .
Here, the record similarly reflects that [the attorney] used the threat of litigation costs to extract quick settlements. In his initial $5,000 settlement demand, [the attorney] wrote:
If not settled by noon May 9th, all offers will be withdrawn[,] and any settlement offers will be substantially higher, as you are responsible for statutory damages, costs, and the copyright holder’s legal fees.
In response to Defendant’s offer to settle for $1,000, [the attorney] wrote:
The infringer is liable for statutory damages, plus copyright holder’s attorney fees and costs, which is substantially more than $5,000. Suit will be filed May 9th, 20[1]6. If you wish to avoid legal action, deleting the photo without payment is not an option. You still owe $5,000 for past unauthorized use. Should the $5,000 not be paid by noon May 9th, 20[1]6, [the attorney] will be filing a lawsuit against Carmen Commercial Real Estate Services for copyright infringement. Once the lawsuit is filed, fees and costs go up and Carmen Commercial Real Estate Services will not be able to settle the case for $5,000. It will cost substantially more.

Not looking good for our hero. (In general, it’s never a good idea to say, “My offer is $X. If you don’t accept it, it’ll go up.” Because nobody will believe you and that’s generally not the way things work.) Ultimately, the Court awarded the Defendant attorney’s fees and costs totaling $172,173.06.

A few items to reflect upon:

If you’re an attorney, going into the copyright lawsuit game as a plaintiff probably isn’t a good idea. 172,173 reasons not to do so here.
If your photo generally sells for $200, it’s probably not a good idea to seek $150,000 in damages at trial. That just may be a good way for the jury to pour you out on liability.
Always be careful of what you say in your settlement communications. The Court clearly didn’t like the pre-suit demand that, if the claim wasn’t settled, the attorney would have to be paid more post-lawsuit.

Posted in Attorney's Fees, Non-N.D. Tex. Notable Decisions | Comments Off

Federal Circuit to W.D. Tex.: Court Congestion Not Enough To Justify Keeping Case On Transfer Motion

Posted on May 14, 2021 by Steven Callahan

So holds the Federal Circuit in its July 28, 2020 decision in In re Adobe Inc. (available here) issuing a writ of mandamus directing the Western District of Texas to transfer a patent case brought against Adobe to the Northern District of California. In In re Adobe, the defendant Adobe was located in San Jose, California and the plaintiff located in Delaware. Adobe sought transfer to the Northern District of California, noting that its witnesses were in the Northern District of California, as was the inventor and his company which had assigned the patents to the plaintiff.

The district court denied Adobe’s motion. The single factor weighing in favor of retaining the case was the “court congestion” factor.

The Federal Circuit found that the district court committed “several errors.” It “failed to accord the full weight of the convenience factors it considered and weighed in favor of transfer.” The district court also “overlooked that the willing witness factor also favored transferring the case.” Third, the district court “ran afoul of governing precedent in giving dispositive weight to its ability to more quickly schedule a trial.”

As the Western District of Texas has recently become the number 1 venue for patent-infringement lawsuits in the United States, one could expect that In re Adobe will result in more cases being transferred out of the Western District of Texas.

Posted in Federal Circuit Court of Appeals | Comments Off

Supreme Court Holds That Booking.Com May Be A Trademark

Posted on April 6, 2021 by Steven Callahan

On June 30, 2020, the Supreme Court issued its decision in USPTO v. Booking.Com (available here). The Court rejected the PTO’s suggested rule that “[t]he combination of a generic word and ‘.com’ is generic.” Because consumers do not perceive the term “Booking.com” to “signify online hotel-reservation services as a class[,]” it is eligible for federal trademark registration. Per the Court:

While we reject the rule proffered by the PTO that “generic.com” terms are generic names, we do not embrace a rule automatically classifying such terms as nongeneric. Whether any given “generic.com” term is generic, we hold, depends on whether consumers in fact perceive that term as the name of a class or, instead, as a term capable of distinguishing among members of the class.

Posted in U.S. Supreme Court | Comments Off

Post-Judgment Discovery Revealing Party As Judgment-Proof Shell Company Warrants Re-Opening Case And Joining New Parties (Including Party’s Owners and Law Firm)

Posted on March 28, 2021 by Steven Callahan

On March 23, 2021, the Northern District of Texas entered a decision in SAP America, Inc. v. InvestPic, LLC (available here). In the case, the Court granted Plaintiff’s motion for judgment on the pleadings asserting that all of the claims of the patent-in-suit were invalid because they did not meet the subject matter requirements of 35 U.S.C. § 101. While the case was on appeal, the Court granted Plaintiff’s motion to find the case exceptional under 35 U.S.C. § 285 and awarded Plaintiff its reasonable and necessary attorney’s fees. The Federal Circuit affirmed. In post-judgment discovery, Plaintiff found that Defendant is judgment proof and operated as a shell company.

Plaintiff argued that the Court should re-open the case under Federal Rule of Civil Procedure 60(b) for newly discovered evidence, for fraud or misconduct, and under a general catch-all provision. The Court agreed based on the newly discovered evidence: “This post-judgment evidence indicates that [Defendant] is a sham or shell entity that is designed and intended to avoid liability. . . . [This evidence] is more than sufficient to meet [Plaintiff’s] burden with respect to setting aside the judgment. . . . [This evidence] is material and likely would have produced a different result if before the Court at the time the final judgment and related ordered were entered.” The Court noted that Plaintiff had asked to find two individuals liable for attorney’s fees who had ownership interests in Defendant and allegedly made the case exceptional, but the Court declined under the mistaken belief that a judgment against Defendant would flow through to these individuals.

Plaintiff further argued that the Court should allow joinder under Federal Rules of Civil Procedure 19 and 20 of (i) parties with an ownership interest in Defendant and (ii) Defendant’s law firm who was responsible for making the case exceptional. The Court agreed to join the majority of the requested parties under both Rules.

In regards to the parties with an ownership interest in Defendant:

As for Rule 19, joinder is necessary because in the absence of joinder, [Plaintiff] would be forced to take action against these parties in another manner, which would possibly subject [Plaintiff] to double, multiple, or inconsistent results. Without joinder of these parties with an ownership interest, [Plaintiff] would not be able to seek complete relief. Joinder is also permissible under Rule 20. [Plaintiff] seeks joint, several, or alternative liability against these parties as they all have an ownership interest in [Defendant] and [Plaintiff] intends to attempt to pierce [Defendant’s] corporate veil. The claims will involve overlapping questions of law and fact. Each of these parties has an ownership interest in [Defendant] and allegedly had a hand in establishing and operating [Defendant] as a judgment-proof company.

In regards to Defendant’s law firm:

The Court also finds that they, along with [Defendant’s law firm], are proper and necessary parties under Rule 19 and Rule 20 based on their alleged actions causing this case to be exceptional. [Plaintiff’s] asserted claim is that each of these parties should be held liable for attorneys’ fees under § 285. Without joinder of these parties, [Plaintiff] is unable to seek full relief from [Defendant]. Joinder of a party who is an active participant in the alleged wrong-doing is proper and necessary under Rule 19. [citation omitted]. In addition, joinder under Rule 20 is also proper because the claims against each of these parties asserts liability jointly, severally, or in the alternative with respect to or arising out of the same transactions, occurrence, or series of transactions or occurrences and have overlapping questions of both law and fact.

Posted in Attorney's Fees, Developing Law, Judge Kinkeade | Comments Off

Federal Circuit Requires Stay Until Transfer Ruling (Part 2)

Posted on March 17, 2021 by Steven Callahan

On March 8, 2021, the Federal Circuit issued an order in In re: Tracfone Wireless, Inc. (available here). This order is another Federal Circuit decision directing W.D. Tex.’s Judge Albright to stay a case pending the resolution of a motion to transfer venue. The Federal Circuit held that proceeding with the case (including through a claim-construction hearing) while a motion to transfer was pending constituted an abuse of discretion.

Two additional points to note: (i) the Federal Circuit directed the district court to issue a ruling (that provides a reasoned basis) within 30 days and (ii) indicated that “any familiarity that [the district court] has gained with the underlying litigation due to the progress of the case since the filing of the complaint is irrelevant when considering the transfer motion and should not color its decision.” This decision will likely result in more defendants filing motions to transfer venue, regardless of their likelihood of success, as the motion will likely result in the case schedule being slowed down.

Posted in Developing Law, Federal Circuit Court of Appeals | Comments Off

“Highly Sensitive” Documents May Be Filed Offline

Posted on February 15, 2021 by Steven Callahan

In the wake of a large-data breach of the federal courts case management system, the Northern District of Texas Bankruptcy Court entered General Order 2021-02 (available here). The order provides for offline filing of “highly sensitive documents”— documents “containing classified information relating to matters of national security, foreign sovereign interests, or cybersecurity; disclosing protected intellectual property or trade secrets; or involving the reputational interests of the United States.” To file such a document, a party must first electronically file a motion to treat the document as a highly sensitive document, deliver the document to Court, and await an order granting the motion. A party (or the Court on its own motion) may also move to remove highly sensitive information from CM/ECF.

Posted in N.D. Tex. News | Comments Off

Federal Circuit Requires Stay Until Transfer Ruling

Posted on February 5, 2021 by Steven Callahan

On February 1, 2021, the Federal Circuit issued an order in In re: SK Hynix Inc. (available here). The order required a Western District of Texas district court judge to stay all proceedings until ruling on a pending transfer motion. Per the Federal Circuit, allowing the case to progress for eight months without ruling on the transfer motion constitutes “egregious delay and blatant disregard for precedent.” “Once a party files a transfer motion, disposing of that motion should unquestionably take priority.”

Prediction: this decision will result in significantly extending time-to-trial in W.D. Tex. cases where transfer motions have been filed and will encourage more defendants in patent cases (whether pending in W.D. Tex. or elsewhere) to file motions to transfer, regardless of whether such motions are likely to succeed, so as to obtain an “automatic” stay of the case until the transfer motions are decided.

Posted in Developing Law, Federal Circuit Court of Appeals | Comments Off

Federal Circuit Upholds Nintendo’s Alice Win

Posted on January 15, 2021 by Steven Callahan

On January 13, 2021, the Federal Circuit issued a decision in iLife Technologies, Inc. v. Nintendo of America, Inc. (available here). The decision affirmed Chief Judge Lynn’s decision that, under Alice, iLife’s patent claim at issue was directed to patent ineligible subject matter.

Under Alice step 1, the Court held “that these claims are directed to the abstract idea of gathering, processing and transmitting data.” “[C]laim 1 . . . is not focused on a specific means or method to improve motion sensor systems, nor is it directed to a specific physical configuration of sensors.”

Under Alice step 2, the Court held that “[a]side from the abstract idea, the claim recites only generic computer components, including a sensor, a processor, and a communication device. The specification’s description of these elements confirms they are generic.” “[C]laim 1 does not recite any unconventional means or method for configuring or processing that information to distinguish body movement based on dynamic and static acceleration. Therefore, we conclude that claim 1’s mere call for sensing and processing static and dynamic acceleration information using generic components does not transform the nature of claim 1 into patent eligible subject matter.”

Posted in Federal Circuit Court of Appeals, Judge Lynn | Comments Off

Federal Circuit Axes Graphical Processing Patent Under Alice

Posted on December 31, 2020 by Steven Callahan

On December 29, 2020, the Federal Circuit issued its opinion in Simio v. Flexim Software (available here), deeming the patent-in-suit ineligible for patenting under the Supreme Court’s Alice decision. Under Alice Step 1, the Court held that the patent’s key advance—“using graphics instead of programming to create object-oriented simulations”—has been done since the 1980s and 1990s. Accordingly, “[s]imply applying the already-widespread practice of using graphics instead of programming to the environment of object-oriented simulations is no more than an abstract idea.” (emphasis in original). Under Alice Step 2, the Court held that the elements of the claim were not enough to transform the nature of the claim into a patent-eligible application. The necessary inventive concept was not present because the abstract idea itself cannot supply the inventive concept.