Are Magistrate Judges’ Orders on Claim Construction Reviewed De Novo By the District Court Judge?

Posted on June 13, 2014 by Steven Callahan

I came across Judge Schneider’s decision in the East Texas Adaptix cases a couple of days ago (decision available here). The decision is notable for, among other things, the following analysis regarding what standard is applied when a district court judge reviews a magistrate judge’s claim construction ruling:

Defendants assert that the district court must review de novo the magistrate judge’s claim construction order. But the Court’s local rules establish a clearly erroneous standard when reviewing a magistrate’s judge order on non-dispositive matters. Local Rule CV-72(b).

Claim construction is a non-dispositive, pretrial issue that can be referred to a magistrate judge under 28 U.S.C. § 636(b)(1)(A). SciCo Tec GmbH v. Boston Scientific Corp., 599 F. Supp. 2d 741, 742 (E.D. Tex. 2009). In some circumstances, out of an abundance of caution, the magistrate judge may choose to issue a report and recommendation (under 28 U.S.C. § 636(b)(1)(B)) rather than an order on claim construction (under 28 U.S.C. § 636(b)(1)(A)). See, e.g., Innova Patent Licensing, LLC v. Alcatel-Lucent Holdings, No. 2:10cv251, 2012 WL 2958231, at *1 (E.D. Tex. July 19, 2012). The district judge reviews a report and recommendation under the more demanding de novo standard. Local Rule CV-72(c); Innova Patent Licensing, 2012 WL 2958231, at *1.

But in this case, the magistrate judge issued an order on the non-dispositive issue of claim construction, not a report and recommendation. Accordingly, the clearly erroneous standard applies. Yet, the Court acknowledges that its order will be held to the de novo standard by the appellate court. Thus, the Court determines that even under the more burdensome de novo standard of review, the Court would still agree with and uphold the constructions of the magistrate judge.

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Judge Godbey Grants Motion To Stay Pending Inter Partes Review

Posted on June 13, 2014 by Steven Callahan

On May 27, 2014, Judge Godbey granted defendant’s motion to stay pending inter partes review of the patent-in-suit in Employment Law Compliance v. Compli (decision available here). The patent-in-suit had previously been the subject of a petition for ex parte reexamination, which was granted in May 2014. The defendant in the instant suit filed a request for inter partes reexamination in April 2014. The PTO had not yet ruled on this petition.

Judge Godbey ultimately decided to grant the motion to stay. The Court found that a stay would not unduly prejudice the plaintiff, a stay would simplify the issues in the case, and that the case was in in the early stages of litigation.

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Judge Kinkeade Grants Transfer Motion In Patent Infringement Case

Posted on June 13, 2014 by Steven Callahan

On May 15, 2014, Judge Kinkeade entered an Order (available here) that granted the defendant’s motion to change venue in Eight One Two v. Purdue Pharma.

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Supreme Court Reverses Federal Circuit’s Inducement Ruling in Akamai

Posted on June 13, 2014 by Steven Callahan

On June 2, 2014, the Supreme Court issued its unanimous opinion in Limelight Networks v. Akamai (available here). The Supreme Court held that a defendant cannot be held liable for inducing infringement of a patent under 35 U. S. C. § 271(b) when “no one has directly infringed the patent under § 271(a) or any other statutory provision.” The Supreme Court reasoned that, “in this case, performance of all the claimed steps cannot be attributed to a single person, so direct infringement never occurred” and faulted the Federal Circuit for “adopt[ing] the view that Limelight induced infringement on the theory that the steps that Limelight and its customers perform would infringe the ’703 patent if all the steps were performed by the same person.” Because there was no direct infringement, “Limelight cannot be liable for inducing infringement that never came to pass.” The practical effect of this reversal is that it makes it harder to establish liability for induced infringement.

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Supreme Court Reverses Federal Circuit Indefinite Standard in Nautilus

Posted on June 13, 2014 by Steven Callahan

On June 2, 2014, the Supreme Court issued its opinion in Nautilus v. Biosig Instruments (available here). The Supreme Court unanimously reversed the Federal Circuit’s standard for determining whether a patent was indefinite under 35 U. S. C. §112, ¶ 2, which requires that a patent specification “conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as [the] invention.” The Federal Circuit had found that “a patent claim passes the § 112, ¶ 2 threshold so long as the claim is ‘amenable to construction,’ and the claim, as construed, is not ‘insolubly ambiguous.’” The Supreme Court reversed, and announced a new, “reasonable certainty” test:

We conclude that the Federal Circuit’s formulation, which tolerates some ambiguous claims but not others, does not satisfy the statute’s definiteness requirement. In place of the “insolubly ambiguous” standard, we hold that a patent is invalid for indefiniteness if its claims, read in light of the specification delineating the patent, and the prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention. . . .

[W]e read §112, ¶2 to require that a patent’s claims, viewed in light of the specification and prosecution history, inform those skilled in the art about the scope of the invention with reasonable certainty. The definiteness requirement, so understood, mandates clarity, while recognizing that absolute precision is unattainable.

The decision therefore has the effect of making it easier for defendants to challenge a patent’s validity.

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Supreme Court Finds Laches Cannot Be Applied To Bar Relief On Copyright Claim Brought Within Three Year Limitations Period

Posted on June 13, 2014 by Steven Callahan

On May 19, 2014, the Supreme Court ruled in Petrella v. Metro-Goldwyn-Mayer (decision available here) that the equitable defense of laches (unreasonable, prejudicial delay in commencing suit) may not bar relief on a copyright infringement claim brought within § 507(b)’s three-year limitations period. Specifically, the Supreme Court held:

To the extent that an infringement suit seeks relief solely for conduct occurring within the limitations period, however, courts are not at liberty to jettison Congress’ judgment on the timeliness of suit. Laches, we hold, cannot be invoked to preclude adjudication of a claim for damages brought within the three-year window.

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Federal Circuit Provides Guidance Concerning Advice of Counsel Defense in Patent Cases

Posted on June 13, 2014 by Steven Callahan

On March 14, 2014, the Federal Circuit issued its opinion in SDI v. Imation Corp. (available here). Several important things to note regarding the advice of counsel defense:

  • A good-faith belief of noninfringement can be established by reliance on advice of counsel obtained after learning of the asserted patent.
  • “Where the record reveals no basis for a good-faith belief sufficient to thwart liability, summary judgment of no liability cannot stand. Whether SDI had such a good-faith belief prior to receiving the opinion of counsel is a triable issue for the jury to consider. Therefore the summary judgment incorrectly absolves SDI of liability from December 10, 2008 until May 22, 2009, when SDI received the opinion of counsel.”
  • An opinion of counsel cannot shield a defendant from post-verdict liability if, at trial, the jury found the patent not invalid and infringed, as the defendant “could not credibly argue that it maintained its good-faith belief of invalidity following a verdict to the contrar.” Accordingly, summary judgment should not have been entered absolving the defendant of post-verdict liability.
  • A party seeking to show lack of the requisite intent to infringe, based on receipt of a competent counsel opinion of noninfringement or of invalidity, must also show that it “had exercised reasonable and good-faith adherence to the analysis and advice therein.” “In other words, such a party must prove good-faith reliance on the opinion of counsel. Upon receipt of an opinion, it is possible that a party may choose to ignore the opinion, or disagree with it, or be indifferent to it, among a wide range of reactions to having the opinion in hand. Without proof of good-faith reliance, possession of the opinion alone is hardly dispositive of the state of mind necessary to avoid liability. . . . [U]nquestionable proof of good-faith reliance is necessary to support a summary judgment of no indirect infringement.”
  • Summary judgment “cannot lie for any time before SDI received its opinion, nor can it lie thereafter because SDI’s good-faith reliance on the opinion remains to be tested.”

 

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Annual Judiciary Appreciation Luncheon to be Held on Thursday, June 26

Posted on June 11, 2014 by Steven Callahan

On Thursday, June 26, 2014, the annual Judiciary Appreciation Luncheon will be held at the Belo from noon until 1:30 p.m. Chief Judge Fitzwater will lead a panel discussion on Tips for Practicing in the Northern District of Texas – A View from the Bench (1.0 hour of CLE credit). The event is free, but attendees will be responsible for meals/parking. The event is sponsored by the Federal Bar Association and the Judiciary Committee of the Dallas Bar Association. Preregistration is required by June 20, 2014, which can be done at the Court’s website.

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“Afternoon at the Courthouse” Program to be Held on Thursday, June 19, 2014

Posted on June 11, 2014 by Steven Callahan

On Thursday, June 19, 2014, the Dallas Chapter of the Federal Bar Association and the Dallas Association of Young Bankruptcy Lawyers will be sponsoring an “Afternoon at the Courthouse” program at the Federal Courthouse. The program will start at 2:00 and concludes with a happy hour beginning at 4:30. Many notable speakers will present, including Judge Lindsay and Magistrate Judge Ramirez.

More details concerning the program can be found here.

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New IP Cases Filed In Northern District of Texas

Posted on May 14, 2014 by Steven Callahan

Over the last several weeks, there have been many new intellectual property cases filed in the Northern District of Texas, including:

  • Encrypted Cellular Communications v. AT&T: In this case, the plaintiff asserts that AT&T infringes U.S. Patent No. 7,430,665, through the sale of AT&T’s Encrypted Mobile Voice system (complaint available here).
  • Beckett Media v. Miller Cards: Beckett sues Miller Cards for copyright infringement and for allegedly violating the Computer Fraud and Abuse Act. (Complaint available here.)
  • Choice Hotels International v. Superior Hotels of West Texas: Choice Hotels filed a lawsuit (available here) against Superior Hotels alleging trademark infringement, false designation of origin, and various common law claims.
  • Flexible Innovations v. Ideamax: Flexible Innovations’ complaint (available here) accuses Ideamax of trademark infringement, false parking marking, and unfair competition. The products at issue relate to screen cleaners.
  • Flowserve v. ITT Corp. and Goulds Pumps: Flowserve accuses defendants of committing copyright infringement, trade secret misappropriation, conversion, unfair competition, and tortious interference with contractual relations, among other things. The case relates to alleged theft of confidential and proprietary information. (The complaint is available here.)
  • Frazier v. Entrepreneur Media: Frazer’s complaint (available here) asserts that Entrepreneur Media has committed copyright infringement relating to Frazer’s “crowd funding” original illustration.
  • Brian Harness Photography v. Forever 21 Retail: Plaintiff alleges that Forever 21 Retail committed copyright infringement through the unauthorized use of Plaintiff’s images. (Complaint available here.)
  • U.S. Green Building Council v. Leed International:  U.S. Green’s complaint (available here) claims Leed engaged in trademark infringement, trademark dilution, unfair competition, false advertising, and cybersquatting with respect to the LEED mark.
  • The Linear Edge, LLC v. Clark: The Linear Edge asserts that Clark has committed trade dress infringement, false designation of origin, dilution, and unfair competition through the sale of knock-off goods (i.e., sculptures of world-famous racetracks). (Complaint available here.)
  • Mary Kay v. Ageless Concepts and WG Products: Mary Kay claims that defendants committed trademark infringement through the unauthorized use of Mary Kay’s JOURNEY trademark. (Complaint available here.)
  • Sprint Solutions v. Roberson: Sprint claims (complaint available here) that defendants are perpetrators of an unlawful scheme to profit from the illegal acquisition and resale of new Sprint Phones and to prey on Sprint customers with delinquent accounts for their own financial profit.
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