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Chicago IP Litigation

Tracking Northern District of Illinois IP Cases

Patent Exhaustion Applies Despite License Restrictions

Posted in Summary Judgment

Cascades Computer Innovation, LLC v. Samsung Elecs. Co., Nos. 11 C 4574 & 11 C 6235, Slip Op. (N.D. Ill. Sep. 14, 2014) (Kennelly, J.).

Judge Kennelly granted in part defendants Samsung’s and HTC’s motions for summary judgment of patent exhaustion based upon a prior settlement agreement that plaintiff Cascades Computer Innovation (“Cascades”) previously entered with Google, the parent of Motorola Mobility who was previously a defendant in a related suit.  This patent case involves a method for implementing software meant for one computer architecture on another computer architecture.  Defendants were accused based upon the alleged use of the Dalvik Virtual Machine.

The license covered:

“Google Products” including, among others, “all Motorola and Nexus devices, but . . . excludes mobile devices manufactured by third parties and running the Android OS except any Nexus-branded devices.

The license also provided a release and a covenant not to sue.  The release provided that:

Cascades releases and discharges Google, Motorola, Google Affiliates, Google Partners . . . from any and all claims, demands, debts, liabilities, actions, causes of actions or suits of whatever kind of nature, asserted or not asserted, known or unknown, arising out of the claims or matters that have been or could have been asserted by Cascades in the Actions relating to the same facts and circumstances therein, provided that such release and discharge shall not extend to any other defendant in the Actions. 

The covenant not to sue states that

Cascades covenants not to sue Google, Motorola, Google Affiliates and/or Google Partners for any infringement or any other violation of the Cascades Patents based upon any licensed activity, permitted pursuant to this Section, related to any Google Product; provided this covenant does not extend to any other defendant in the Patent Suit.

Google provided the Android operating system to numerous entities, including Samsung and HTC, as open source code, including the Dalvik Virtual Machine.  Looking to the Supreme Court’s Quanta decision, the Court held that because the license authorized Google to convey the Android operating system to others, including Samsung and HTC, the additional restrictions in the license grant were not allowed because they sought to “circumvent the patent exhaustion doctrine and reap multiple gains from a single sale.”

Having determined that there was an authorized sale pursuant to the Google license, the Court turned to the other patent exhaustion factors.  The Court held that there were no reasonable noninfringing uses.  While one Android version, KitKat, allied a user to switch off the Dalvik Virtual Machine in favor of Android Run Time, the Android website expressly warned users against doing so because making the switch runs the risk of malfunctions.  The Court, therefore, granted defendants’ motion for patent exhaustion from the date of the Google license forward.

The Court then turned to use before the Google license agreement was executed.  Holding that the release and covenant not to sue were personal to Google and Motorola and backward looking, the Court held that patent exhaustion did not flow from the release or covenant not to sue before the date of the Google license.  The Court did, however, note that some courts had disagreed holding that a backward looking covenant not to sue exhausted patents.

Related Party Bound to Agreement’s Arbitration Clause

Posted in Jurisdiction

FarmedHere, LLC v. Just Greens, LLC d/b/a AeroFarm Systems, LLC, No. 14 C 370, Slip Op. (N.D. Ill. June 16, 2014) (Holderman, Sen. J.).

Judge Holderman granted defendant AeroFarm’s Fed. R. Civ. P. 12(b)(3) motion to dismiss plaintiff FarmedHere’s Lanham Act and declaratory judgment patent claims related to the parties’ aeroponic, locally grown farming businesses because AeroFarm had filed for arbitration. AeroFarms entered a Distribution Agreement with CityPonics, but the principal of CityPonics never formed the entity, instead forming FarmedHere, allegedly to gain the benefits of the Distribution Agreement without the obligations.  The Distribution Agreement contains a mandatory arbitration clause.

This case was different than a typical arbitration clause because the Court had to make a threshold determination regarding whether FarmedHere was bound by the Distribution Agreement.  FarmedHere at least bound itself to the Distribution Agreement for the purpose of allowing the Court to decide whether it had jurisdiction over FarmedHere’s complaint.

The Court held that FarmedHere’s principal bound it to the Distribution Agreement for at least the following reasons:

  • The principal requested substituting FarmedHere for CityPonic in the Distribution Agreement;
  • The principal drafted a document attempting to formally allow FarmedHere to exploit the technology;
  • FarmedHere and CityPonic shared an address; and
  • FarmedHere chose not to provide any countervailing documents outside of its complaint.

Having found that FarmedHere was bound by the Distribution Agreement, the Court held it lacked jurisdiction based upon the arbitration clause.  The Court, therefore, dismissed without prejudice so that to the extent that the arbitration or a New York court proceeding refused to address all of FarmedHere’s claims, it could refile in this Court.

Trading Technologies: New Expert Opinions Doomed by Lack of Inclusion in LPR Final Contentions

Posted in Experts, Local Rules

The Court also struck some, but not all, of the experts’ opinions based upon trader usage. Trading Techs. Int’l, Inc. v. CQG, Inc., No. 05 C 4811, Slip Op. (N.D. Ill. Sep. 10, 2014) (Coleman, J.).

Judge Coleman granted in part and denied in part defendants’ (collectively “CQG”) motion to strike portions of plaintiff Trading Technologies’ (“TT”) expert reports that allegedly sought to introduce theories and analysis not contained in TT’s Final Infringement Contentions (“FIC”), which were tendered in November 2013. 

For certain independent claims, TT failed to supplement its FIC with manual re-centering elements as required by the Federal Circuit’s and the Court’s claim constructions.  It was not enough that dependent claims contained an identification of the manual re-centering elements in the accused products and that the “new” arguments for the independent claims were of the same scope.  The Court, therefore, struck TT’s experts new opinions as to those limitations.

TT did, however, sufficiently disclose its argument regarding modifying .ini files, even though in its FIC it refers to changing .ini files instead of modifying them.  The Court, therefore, denied the motion as to those theories. 

TT did not sufficiently disclose its copying arguments related to willfulness.  So, those arguments were struck.  TT was, however, allowed to have its experts testify as to certain deficiencies in CQG’s noninfringement opinion letters, although not that the letters were a basis for willful infringement.

The Court struck TT’s doctrine of equivalents theory regarding disabling the Market Window because it was not disclosed in the FIC.  TT’s argument regarding the state of the DOM Grid, however, was merely a refinement of an argument already in TT’s FIC.  So, the arguments were allowed.  The Court also struck an argument based upon the use of a ChartTrader and Price Hold features together because it was not sufficiently explained.

The Court also struck some, but not all, of the experts’ opinions based upon trader usage.

 

Alleged seeding of copyrighted material on BitTorrent is not Copyright Misuse

Posted in Pleading Requirements

Malibu Media, LLC v. Doe, No. 13 C 3648, Slip Op. (N.D. Ill. Jun. 9, 2014) (Kennelly, J.).

Judge Kennelly granted in part plaintiff Malibu Media’s motion to dismiss Doe defendant’s counterclaim and certain of its nineteen affirmative defenses in this BitTorrent copyright infringement case.

Doe’s counterclaim was not appropriate because it sought no affirmative relief, just a determination that its affirmative defenses were meritorious.  The counterclaim was, therefore, dismissed.

Doe did not properly plead copyright misuse.  Doe pled that Malibu made a business out of filing copyright litigations and that plaintiff Malibu Media seeded BitTorrent with its movies to generate copyright infringement.  But those allegations are not using the limited copyright monopoly to control something outside the bounds of the monopoly.

Doe did not properly plead estoppel.  The allegations that Malibu seeded its movies to encourage infringement does not meet the requirement that Malibu did something to mislead Doe into believing that Doe’s acts were condoned or otherwise legal.

Doe sufficiently pled unclean hands.  Doe alleged that Malibu created child pornography which would not be patentable and should not be enforceable. While it was unclear from the law whether the claim could stand, the Court allowed it at the early stage of the case until it could be further developed.

Doe sufficiently pled an implied license based upon Malibu’s alleged seeding of its copyrighted material.  It was not clear that the alleged seeding met each prong of an implied license defense, but at the early stage the Court allowed the defense to remain in the case.

Doe did not sufficiently plead the single satisfaction rule.  There was no case law suggesting that Malibu could only recover a single statutory damages award for a copyrighted work.  Rather, the law suggested Malibu could recover separately from each infringer.

Doe did not sufficiently plead mitigation of damages because it was irrelevant as Malibu had elected statutory damages.

Stay Pending Inter Partes Review Warranted by Plaintiff’s Delay in Filing Suit

Posted in Local Rules

Ignite USA, LLC v. Pacific Market Int’l, LLC, No. 14 C 845, Slip Op. (N.D. Ill. May 29, 2014) (Holderman, J.).

Judge Holderman granted defendant Pacific Marketing International’s (“PMI’s”) motion to stay plaintiff Ignite USA’s patent litigation case pending the results of PMI’s Inter Partes Review (“IPR”) seeking to invalidate Ignite USA’s asserted patent regarding a drinking container.

Ignite USA would not be prejudiced by a stay.  PMI promptly filed its IPR petition and the litigation was in its early stages.  Ignite USA’s own delay in filing the suit after learning of the alleged infringement — from March 2012 to April 2014 — suggested that Ignite USA would not be prejudiced by the delay. Additionally, Ignite USA’s failure to seek a preliminary injunction suggested that its claims of lost market share were not as severe as it claimed. 

The stay would streamline the case.  Patent Office statistics suggest an “82% probability” that the Patent Office will institute the IPR and a greater than 92% likelihood that at least one claim will be amended or cancelled outright.  In fact, even an IPR decision upholding all of the claims would simplify issues by reducing PMI’s invalidity arguments.  To avoid additional delay, the parties were required to report to the Court within seven days of the Patent Office’s decision on the IPR petition.

Finally, the reduced litigation burden counseled in favor of the stay.  Whatever the outcome of the IPR, it would reduce the scope of the case and the work required by the parties and the Court.

Permissible Repair Doctrine Applies Where Patentee Recommends Changing the Accused Part

Posted in Summary Judgment

Robert Bosch LLC v. Trico Prods Corp., No. 12 C 437, Slip Op. (N.D. Ill. May 21, 2014) (Grady, Sen. J.).

Judge Grady denied defendants’ (collectively “Trico”) motion for summary judgment of noninfringement with respect to Trico’s Duralast Flex Blade windshield wiper blade in this patent infringement dispute.  

As an initial matter, the Court held that a first sale in the United States is still required for patent exhaustion, even if a US first sale is not required for copyright exhaustion.  

To the extent that plaintiff Robert Bosch (“Bosch”) sold some wiper blades in the US, the Court addressed whether Trico’s acts fell within the doctrine of permissible repair.  The Court held that a consumer replacing the wiper blade in a wiper assembly with a Trico wiper blade was a permissible repair, noting that Bosch recommended replacing the blades every six months.  The Court also noted that there was an established market for replacement wiper blades.  But the Court withheld ruling upon the issue until there was a more developed record regarding the differences between patent claims that covered the entire wiper system and other claims that allegedly covered just the wiper blades, as well as related case law.

The Court held that there was not sufficient evidence that Bosch’s acquisition of Unipoint, from whom Trico purchased the accused products, prevented Bosch’s claims to pre-acquisition sales to Trico.  Trico failed to provide the relevant language of the acquisition agreements to determine whether the agreements prevented suits against customers.  And Trico did not support or sufficiently develop its theory that Bosch benefited from Unipoint’s pre-acquisition sales to Trico and therefore should be barred from suit.  The Court, therefore, denied the motion.

Claim Differentiation Informs Claim Construction

Posted in Claim Construction

Cumberland Pharms, Inc. v. Mylan Inst. LLC, No. 12 C 3846, Slip Op. (N.D. Ill. Feb. 26, 2014) (Pallmeyer, J.).

Judge Pallmeyer construed the claims in this patent infringement case involving an IV form N-acetylcysteine — used for treating acetaminophen overdoses.  Of particular note, the Court held as follows:

  • “Free From A Chelating Agent & “Free Of A Chelating Agent” were defined as “lacking one or more chelating agents.”  “A” in these terms limited adding chelating agents, not the existence of any chelating agent.  This was supported by dependent claims which specified chelating agents.
  • “Acetylcysteine” was defined as “the nonproprietary name for the N-acetyl derivative of the naturally occurring amino acid, L-cysteine (also known as N-acetyl-L-cysteine and NAC) and impurities associated therewith.”
  • “Stable Aqueous Pharmaceutical Composition” was defined as “a composition that exhibits minimal change over time relative to when it is manufactured,” consistent with its plain meaning.

Patent Eligibility Could Not be Decided on the Pleadings

Posted in Discovery

Vehicle Intelligence & Safety LLC v. Mercedes-Benz USA LLC, No. 13 C 4417, Slip Op. (N.D. Ill. Mar. 13, 2014) (Hart, Sen. J.).

Judge Hart denied defendant’s Fed. R. Civ. P. 12(c) motion to dismiss plaintiff’s patent infringement claims related to screening drivers for various types of impairment and “controlling operation” of the vehicle if the driver is impaired.  While the parties’ briefs showed likely issues of patentability, the Court could not decide whether the claims were patent eligible without further discovery regarding how and whether computers were used in the patent-in-suit.

Social Media Alone Does Not Create Personal Jurisdiction

Posted in Jurisdiction

Telemedicine Sol’ns LLC v. WoundRight Techs, LLC, No. 13 C 3431, Slip Op. (N.D. Ill. Mar. 14, 2014) (Dow, J.).

Judge Dow granted defendant WoundRight Technologies’ (“WoundRight”) Fed. R. Civ. P. 12(b)(2) motion to dismiss for lack of personal jurisdiction in this Lanham Act case involving plaintiff Telemedicine Solutions’ (“Telemedicine”)  & WOUND ROUNDS federal registration.  Despite no physical or sales contacts with Illinois, Telemedicine argued that WoundRight “expressly aimed” its alleged infringing activities at Illinois using Google Ad Words, its website and social media.

Of particular note, the Court held as follows:

  • “Express aiming” required more than an intentional tort to create jurisdiction from internet activity.  There must be some connection to Illinois.
  • Telemedicine’s residence in Illinois is not enough, unless without evidence that WoundRight knew that or otherwise directed its alleged harm at Illinois.
  • WoundRight, further, had not targeted Illinois or generated Illinois contacts except by “happenstance.”

Not Accepting Well-Pled Allegations is “Cardinal Sin” of Affirmative Defenses

Posted in Pleading Requirements

Sonic Indus., LLC v. iRobot Corp. No. 13 C 9251, Slip Op. (N.D. Ill. Feb. 28, 2014) (Shadur, Sen. J.).

Judge Shadur sua sponte struck portions of defendant iRobot’s answer and affirmative defenses, and allowed other portions to be repled.  Of particular note:

  • The Court struck iRobot’s noninfringement affirmative defense for committing the “cardinal sin” for an affirmative defense of not accepting plaintiff Sonic’s well-pled allegations.
  • The invalidity defense was stricken with leave to replead it in a “more particularized and fleshed-out form.”