Federal Circuit Heightens Standard for Induced Infringement

On June 25, 2013, the Federal Circuit issued its opinion in Commil USA v. Cisco Systems (opinion available here). The district court had instructed the jury that that it could find inducement if “Cisco actually intended to cause the acts that constitute direct infringement and that Cisco knew or should have known that its actions would induce actual infringement.” The “knew or should have known” phrase was taken verbatim from DSU Medical. Cisco argued that this instruction allowed the jury to find inducement if it was shown that Cisco was negligent; Cisco argued that this conflicted with the Supreme Court’s recent decision in Global–Tech Appliances, Inc. v. SEB S.A., 131 S.Ct. 2060 (2011).

The Federal Circuit agreed with Cisco:

While the court did instruct the jury that certain circumstantial evidence could support a finding of inducement, the present jury instruction plainly recites a negligence standard, which taken literally, would allow the jury to find the defendant liable based on mere negligence where knowledge is required. Therefore, to the extent our prior case law allowed the finding of induced infringement based on recklessness or negligence, such case law is inconsistent with Global–Tech and no longer good law. It is, therefore, clear that the jury instruction in this case was erroneous as a matter of law.

Because the jury “was not instructed that in order to be liable for induced infringement, Cisco must have had knowledge that the induced acts constitute patent infringement” the Federal Circuit reversed and remanded:

With respect to whether the induced acts constitute patent infringement, it is clear that the jury was permitted to find induced infringement based on mere negligence where knowledge is required. This erroneous instruction certainly could have changed the result. Facts sufficient to support a negligence finding are not necessarily sufficient to support a finding of knowledge. Accordingly, we vacate the jury’s verdict on induced infringement and remand for a new trial.

The Federal Circuit also held that the district court erred by refusing to permit Cisco to introduce evidence regarding its alleged good-faith belief of invalidity with respect to whether Cisco possessed the specific intent to induce infringement:

[O]ne could be aware of a patent and induce another to perform the steps of the patent claim, but have a good-faith belief that the patent is not valid. Under those circumstances, it can hardly be said that the alleged inducer intended to induce infringement. Thus, a good-faith belief of invalidity is evidence that may negate the specific intent to encourage another’s infringement, which is required for induced infringement. . . . We now hold that evidence of an accused inducer’s good-faith belief of invalidity may negate the requisite intent for induced infringement.

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Judge Lynn Grants Motion to Limit Patent Holder’s Asserted Claims

On July 11, 2013, Judge Lynn issued an Order (available here) in Mobile Telecommunications Technologies v. Research In Motion. Judge Lynn found that, at the present stage of the case, the plaintiff would be limited to 14 asserted claims. “The Court will later determine the handling of additional claims Plaintiff seeks to pursue.”

The plaintiff had filed a cross-motion to limit the number of terms proposed for construction, which Judge Lynn deferred ruling on until the plaintiff advises the Court which claims it will now pursue.

This is not the first time that Judge Lynn has granted a motion to limit asserted claims. As we previously noted, she granted one in the Good v. Little Red Wagon matter where she limited the patent holder to 10 claims.

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Magistrate Judge Stickney Resolves Motion to Compel In Patent Infringement Case

On July 10, 2013, Magistrate Judge Stickney issued a memorandum order (available here) in Comcast Cable v. BT Americas. Comcast had filed a motion to compel BT to produce documents responsive to certain of Comcast’s requests for production, “including core technical documents relating to [BT’s] accused products and services.” “Defendants represent that they are working to collect, process, and produce documents as quickly as possible, but that their efforts have been impaired by Plaintiffs’ failure to clearly articulate their infringement contentions.” BT also argued that the “motion to compel is premature because the deadline for fact discovery does not expire until October 15, 2013.”

Judge Stickney rejected BT’s arguments:

Contrary to [BT’s] assertion, [the] motion is not premature. Nothing in the Federal Rules of Civil Procedure or the Scheduling Order entered in this case requires Plaintiffs to wait until after the close of fact discovery to file a motion to compel. Nor is [BT’s] promise to continue to search for documents and supplement [its] responses an adequate response to Plaintiffs’ proper discovery request.

Judge Stickney required the requested documents to by produced by July 31, 2013:

Accordingly, Plaintiffs’ motion to compel is granted. Defendants shall produce documents responsive to Plaintiffs’ Requests for Production Nos. 14-56 no later than July 31, 2013. To the extent Defendants still contend that they do not understand Plaintiffs’ infringement contentions, lead counsel for both parties shall confer by telephone in an attempt to resolve Defendants’ confusion on or before July 17, 2013. The attorneys should focus their discussions on the substantive information and documents requested by Plaintiffs. Defendants should fully answer each discovery request, subject to any objections, and affirmatively indicate whether any responsive information or documents have been withheld. A privilege log must be produced for any documents, communications, or other materials withheld from production on the grounds of attorney-client, work product, or other privilege or immunity. Counsel for both parties are reminded of their obligations under Dondi Props. Corp. v. Commerce Sav. & Loan Ass’n, 121 F.R.D. 284, 289-90 (N.D. Tex. 1988) (en banc), and are admonished to participate in meaningful discussions in an attempt to resolve any future discovery dispute prior to seeking court intervention.

(citations and certain emphases omitted)

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OL2 Sues Dual Digital Media Seeking A Declaratory Judgment Of Non-Infringement

On July 15, 2013, OL2 filed a declaratory judgment lawsuit (complaint available here) in the Northern District of Texas. OL2 claims that Dual Digital Media, less than two weeks ago, sued the prior provider of OL2’s OnLive Game Service of infringement of Dual Digital Media’s U.S. Patent No. 7,925,897. OL2 seeks a declaratory judgment that it does not infringe the ’897 patent and that Dual Digital Media lacks sufficient rights in the patent to assert an infringement action.

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Office of Medical & Scientific Justice, Inc. Sues Texas Resident For Trademark Infringement

On July 9, 2013, the Office of Medical & Scientific Justice, Inc. (OMSJ) filed
its lawsuit (complaint available here) against Jeffrey Deshong. OMSJ claims
that Deshong violated the Lanham Act when it committed trademark infringement through certain online activities. OSMJ seeks, among other things, damages and an injunction.

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Magistrate Judge Toliver Orders NFL’s Roger Goodell To Sit For Deposition

On July 10, 2013, Magistrate Judge Toliver issued an Order (available here) in Simms v. National Football League. The case involves “claims by Plaintiffs, ticketholders to the Super Bowl XLV game at Cowboys Stadium in Arlington, Texas, against Defendant National Football League (‘NFL’) for breach of contract and fraudulent inducement resulting from being denied seating at the Super Bowl XLV game.”

Judge Toliver had previously granted a protective order precluding Commissioner Goodell from being deposed in response to plaintiffs’ motion to compel his deposition. Subsequently, after deposing several witnesses proffered by the NFL, plaintiffs filed another motion to compel Goodell’s deposition:

Plaintiffs again move to compel the deposition of Goodell, averring that they have since deposed the executives the NFL designated as employees with knowledge, but they were still unable to obtain the information they seek. Plaintiffs seek specific information regarding Goodell’s statements in which he allegedly admitted the NFL’s fault in the events giving rise to this lawsuit and to mistakes relating to the temporary seating, as well as his alleged claims that the NFL would conduct a thorough investigation. Id. Plaintiffs aver that the witnesses they have deposed claimed that they were unable to answer what Goodell intended by his statements.

(Record citations omitted).

Ultimately, Judge Toliver ordered Goodell to sit for deposition:

the Court concludes Commissioner  Goodell possesses first- hand knowledge of relevant information regarding the events giving rise to Plaintiffs’ causes of action for breach of contract and fraudulent inducement. Said first-hand knowledge includes Goodell’s own statements and actions involving the temporary seating and the video replay board, before, during and after the Super Bowl, as well as his intentions in communicating about the same with fans, including those persons directly affected by the temporary seating issues. Plaintiffs are not required to establish that the matters about which Goodell possesses firsthand knowledge are directly relevant to their claims, only that those matters “bear[] on, or [] reasonably could lead to other matter that could bear on, any issue that is or may be in the case.” Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978). The Court finds that Plaintiffs have met that burden with respect to the limited issues just referenced.

In addition, it logically follows that if the other NFL executives were unable to answer questions regarding Goodell’s statements, the remaining proffered witnesses, who are not employed by the NFL, would be unlikely to answer those questions as well. Under these circumstances, Plaintiffs are not required to expend additional resources to also depose the third-party witnesses proffered by the NFL. The Court finds Plaintiffs have established that they “first attempt[ed] to obtain the sought after information through less burdensome means of discovery.” Gauthier v. Union Pac. R. Co., 2008 WL 2467016, at *4 n. 2 (E.D. Tex. June 18, 2008).

Judge Toliver imposed conditions on Goodell’s deposition:

Plaintiffs are permitted to depose NFL Commissioner Roger Goodell on the limited topics of (1) his non-privileged statements about the temporary stadium seating, the video replay board, and the affected fans at the Super Bowl XLV; (2) his involvement (a) in developing the video replay board, (b) with the temporary seating, and/or (c) any attempt or goal to break the NFL’s Super Bowl attendance record; and (3) any communications he had with the affected fans — directly or indirectly — before, during and/or after the Super Bowl game, including the intentions behind any such communications. The deposition must be conducted at the NFL’s offices in New York City, unless the parties otherwise agree.

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E-Z Mart Stores Sues Shamsa Enterprises For Registered Service Mark Infringement

On July 8, 2013, E-Z Mart Stores filed a lawsuit (complaint available here) in the Northern District of Texas against Shamsa Enterprises. E-Z Mart claims that Shamsa infringes E-Z Mart’s service marks by operating a convenience store in Everman, Texas using E-Z Mart’s marks to promote its store, including through prominent signage.

E-Z Mart asserts claims for registered service mark infringement, common law service mark infringement, and unfair competition, and seeks, among other things, an injunction, damages and attorney’s fees.

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Northern District Of Texas Judges Offer Advice at “Patent Law: Best Practices As Seen From The Bench”

On May 1, 2013, Judge Lynn and Judge O’Connor participated in a roundtable discussion in Dallas: “Patent Law: Best Practices As Seen From The Bench.” The Texas Lawyer subsequently wrote an article on the roundtable (article available here). Here’s what we think the most notable aspects of the roundtable were:

Filings Up, But Not As Much As Expected: Judge Lynn stated that patent filings were up in the Northern District of Texas, but not as much as she expected. Judge Lynn noted that the Northern District of Texas’ patent rules are comparable to the Eastern District of Texas’ patent rules.

If You Want Judge O’Connor To Handle Your Patent Case, File It In the Wichita Falls Division: Judge O’Connor noted that, although he is not on the patent pilot project (which consists of three judges (Judges Lynn, Godbey, and Kinkeade) who hear all patent cases filed in the Dallas Division)), he handles the Wichita Falls Division. So, if a patent case is filed in Witchita Falls, he’ll handle it. He can also get the case to trial quickly in Wichita Falls.

Judge Lynn Decides Venue Matters Quickly: Judge Lynn indicated that she tries to decide venue disputes quickly.

PowerPoints: Judge Lynn stated that in a bench proceeding, “unless something is moving” (i.e., the slides are animated), she’d rather have the slides printed for her so that she can take notes on them. She does think PowerPoints are useful for juries. Try not to put too many words on the slide, as the jurors feel cheated when something is shown and then it taken away before they can review it. The same is true when blowing up a specific portion of a document. Many jurors have spoken to Judge Lynn after trial and have indicated that they feel as if something had been kept from them. Attorneys can explain that, for example, the item being shown on the screen is the only thing that relates to the particular issue in dispute.

Depositions At Trial: Judge Lynn said that jurors are “bored to tears” with depositions, regardless of whether the depositions are played on videotape. She also believes that depositions are overused. Quick deposition designations are much more effective. Don’t overdesignate testimony.

Tutorials: Judge Lynn finds technical tutorial in connection with the Markman hearing to be very helpful; she usually does live tutorials, but also likes them to be put on a disc so that she can watch it whenever she wants.

Local Counsel: Judge O’Connor thinks that it’s important to have local counsel who has familiarity the Northern District of Texas, the Dondi opinion, etc. Judge Lynn also thinks it’s useful to hire local counsel who is familiar with the Northern District of Texas’ procedures.

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Coach Sues Manny’s Place For Trademark Infringement In Northern District Of Texas

On June 27, 2013, Coach hit Manny’s Place with a lawsuit (complaint available here) alleging trademark infringement, false designation of origin, and false advertising under the Lanham Act. Coach alleges that Manny’s Place “traffic[s] in * * * counterfeit Coach wallets, handbags and sunglasses.”

Coach seeks, among other things, an injunction, its damages, and its attorney’s fees.

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Magistrate Judge Toliver Quashes Deposition Notice Directed to Former CEO of Good Technology

On July 1, 2013, Magistrate Judge Toliver issued an Order (available here) in Good Technology v. Fixmo that resolved Good’s motion seeking to quash the deposition notice of its former CEO (who is now Executive Chairman of Good’s Board of Directors). Judge Toliver held:

Without question, as Executive Chairman of the Board of the Plaintiff company, [the noticed individual] is an apex executive. Moreover, there is insufficient evidence that [he] possesses “firsthand and non-repetitive knowledge” regarding the relevant issues. See Computer Acceleration Corp., 2007 WL 7684605, at *1 (emphasis added). Specifically, while the emails attached to Defendants’ response demonstrate that [he] was involved in various meetings and strategy sessions, they do not show that [he] is the only person with knowledge of those events. Particularly germane to the Court’s determination that the requested relief is warranted is the fact that Defendants have not first deposed lower-ranking employees and [Good’s current CEO] before seeking [the Executive Chairman’s] deposition, as is the approach sanctioned by Rule 26(b)(1) and this Circuit’s precedent.

Judge Toliver indicated that “Defendants may petition the Court for leave to depose [the Executive Chairman] in the future, if, after taking the depositions of the other individuals proposed by Plaintiff, Defendants are unable to obtain the relevant and material information sought.”

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