Chicago Kent has an excellent program coming up on September 30, 2010 at 1:00pm. Kent has gathered a very impressive group of experts to kick off its inaugural Supreme Court Intellectual Property Review. The Northern District’s own Judge Zagel will be a featured speaker.
The program promises to address the big IP decisions from last year’s Supreme Court: American Needle, Inc. v. NFL, Bilski v. Kappos, and Reed Elsevier, Inc. v. Muchnick. The event will also look at significant IP cases that await certiorari decisions, including Costco v. Omega, S.A., and Schwarzenegger v. Entertainment Merchants Ass’n.
In addition to Judge Zagel, the impressive panel includes:
Donald Chisum, author of Chisum on Patents, Patent Law Digest and Chisum Patent Law Reference Guides;
Roy T. Englert, Jr., of Robbins, Russell, Englert, Orseck, Untereiner & Sauber LLP (counsel for Costco);
Randal C. Picker, Paul H. and Theo Leffmann Professor of Commercial Law at the University of Chicago Law School; and
Paul M. Smith of Jenner & Block LLP (counsel for Entertainment Merchants Association and Entertainment Software Association).
Other speakers include:
Thomas C. Goldstein of Akin Gump Strauss Hauer & Feld LLP and publisher of SCOTUSblog;
Deborah Jones Merritt, John Deaver Drinko-Baker & Hostetler Chair in Law at Moritz College of Law, Ohio State University (court-appointed amicus in Reed Elsevier);
Jeffrey M. Carey, general counsel of American Needle, Inc.; and
Scott E. Gant of Boies, Schiller & Flexner LLP.
The program is free of charge, but requires registration. Contact Patricia O’Neal at (312) 906-5128 or ipconference@kentlaw.edu for registration or more information.

Continue Reading Supreme Court Intellectual Property Preview at Chicago-Kent

Gabbanelli Accordions & Imports, L.L.C. v. Italo-Am. Accordion Mfg. Co., No. 02 C 4048, Slip. Op. (N.D. Ill. Sept. 21, 2009) (Zagel, J.).
Judge Zagel entered judgment on behalf of plaintiffs in the amount of $151,200 in lost profits after the Seventh Circuit affirmed the Court’s judgment.* The Court also held defendants jointly and severally liable for $147,576.12 in plaintiff’s attorneys’ fees.
* Click here for more on this case in the Blog’s archives.

Continue Reading Court Enters Judgment on Trademark Damages and Attorneys Fees in Accordian Case

The most popular posts on the Blog during 2009, in terms of both views and reader questions, were those on the Local Patent Rules. Because of high interest, I have plans for additional analysis this year. This is the first of those posts. In late 2009, I had an article published in Bloomberg Law discussing why the new Rules will drive patent cases to the Northern District of Illinois. Bloomberg generously allowed me to post a pdf version of the story — click here to download it — and to repost it on the blog. Here is the article:
The Northern District of Illinois enacted Local Patent Rules (“LPR” or “Rules”) on October 1, 2009. The purpose of the Rules is to normalize patent litigation in the Northern District of Illinois and to streamline the patent litigation discovery process. See LPR, Preamble. The rules also make clear that the court does not intend to become a “rocket docket.” In fact, the Rules create a schedule that would have cases ready for trial in a little over two years, although cases would not necessarily be tried at that time. That is at most a modest change from the court’s average time to trial for all cases–about twenty-seven months, according to the most recent Federal Court Management Statistics.
The Northern District of Illinois did not intend that its new Rules would drive patent cases to Chicago, as has happened when other courts enacted local patent rules, such as the Eastern District of Texas. But despite its intentions, the Northern District of Illinois’s plan to normalize patent litigation practice and streamline discovery will significantly increase patent filings in Chicago. To understand why the Rules will increase case filings, it is important to understand the process created by the Rules, and then look at the impact specific Rules will have for both patentholders and accused infringers.
The Rules
The Rules were drafted and revised after public comment by a committee comprised of practitioners representing a cross-section of the District’s patent bar and four Northern District of Illinois judges: Chief Judge James F. Holderman, Judge Matthew F. Kennelly, Judge James B. Zagel, and Judge Amy J. St. Eve. The Rules were then enacted by the Northern District of Illinois judges.
The Rules require early discovery through substantial production obligations accompanying all parties’ Initial Disclosures. The Rules also require parties to take early positions on the merits of their claims and defenses in the form of Initial Contentions, presumably based upon documents exchanged with Initial Disclosures. Finally, the Rules position claim construction at the end of fact discovery, and show a preference against summary judgment motions prior to claim construction.
Here is a more detailed look at the schedule and duties contemplated by the Rules:
Protective Order. A standard two-tier protective order is deemed entered when Initial Disclosures are served. LPR 1.4. Any party is free to seek modifications to the protective order. Id. The automatic entry of the order prevents discovery delays while parties negotiate a proposed protective order and reduces legal fees for the negotiation.
Initial Disclosures & Production. Two weeks after the accused infringer answers, or two weeks after the patentholder answers any counterclaims, the parties must exchange substantive, non-evasive Fed. R. Civ. P. 26(a) Initial Disclosures. LPR 2.1. And along with the Initial Disclosures, the parties must exchange initial document production.
LPR 2.1(a) requires patentholders to produce all documents regarding: 1) any sale, offer for sale or use of the patented invention before filing; 2) design, reduction to practice, or invention of the patented technology generally; 3) all communications with the U.S. Patent and Trademark Office (the prosecution history) for the patents in suit and any patents from which they claim priority; and 4) ownership of the patent. LPR 2.1(b) requires that along with its Initial Disclosures, an accused infringer produce: 1) documents sufficient to show the operation and construction of each element of any product or process specifically accused in the Complaint; and 2) copies of all known prior art. Additionally, all parties are required to identify which documents, by Bates number, fall into each required production category. For cases in which there are lengthy lists of accused products, both the production and the identification of documents by categories could be a significant undertaking early in a case.
Initial Contentions. Two weeks after Initial Disclosures are served, parties claiming patent infringement serve Initial Infringement Contentions that will likely be substantive because the patentholder should have the accused infringer’s Initial Disclosure document production. LPR 2.2. Two weeks after Initial Infringement Contentions are served, accused infringers serve Initial Non-infringement, Unenforceability and Invalidity Contentions. LPR 2.3. Along with these contentions, accused infringers must produce any additional documents relied upon including prior art and technical information. Two weeks later, patentholders must serve an Initial Response to Invalidity Contentions. LPR 2.5.
Final Contentions. Twenty-one weeks after Initial Infringement Contentions, parties claiming infringement serve Final Infringement Contentions, and accused infringers serve Final Unenforceability and Invalidity Contentions at the same time. LPR 3.1. Four weeks later, accused infringers serve Final Non-infringement Contentions and parties claiming patent infringement serve Final Enforceability and Validity Contentions (after the final contentions, leave of Court is required for any amendments). LPR 3.2. This gives the parties about four months to complete the bulk of their technical discovery and depositions.
Final Contentions are not amendable without a Court order upon a showing of good cause and an absence of unfair prejudice to the opposing party. LPR 3.4. In a comment, the court noted that its adoption of a new, unargued claim construction would be an example of good cause.
Deadline for Stays Pending Reexamination. No party can seek a stay pending reexamination after serving its Final Contentions. LPR 3.5. The Rule, however does not create a presumption for staying cases pending reexamination prior to the cutoff date. Id.
Claim Construction. The claim construction process begins two weeks after defendant’s Final Invalidity Contentions are served with an exchange of terms and proposed constructions. LPR 4.1(a). Within seven days of exchanging terms, the parties must meet and confer to agree upon no more than ten terms for construction by the court. Presenting more than ten terms requires prior leave of court and requires a showing of good cause. LPR 4.1(b).
Claim Construction Briefing. Five weeks after exchanging terms, accused infringers file opening claim construction briefs along with a joint appendix by all parties including the patents in suit and their prosecution histories consecutively paginated. LPR 4.2(a)-(b). Parties claiming patent infringement have four weeks to file response briefs. LPR 4.2(c). Accused infringers have fourteen days to file a reply. LPR 4.2(d). Any party offering witness testimony must include a sworn declaration and promptly make the witness available for deposition. If witness testimony is included in a response brief, the reply deadline is extended by seven days.
After the reply brief is filed, the parties have seven days to file a joint claim construction chart setting out each claim term, the proposed constructions, and the parties’ proposal for a claim construction hearing.
Claim Construction Hearing. The Rules contemplate a claim construction hearing four weeks after the reply brief, but the judge can decline a hearing. LPR 4.3. The lack of a hearing may be a reason to allow a sur-reply brief. Id. A judge also may decide not to accept a reply brief. The parties must exchange all exhibits, including demonstratives, at least three days before a claim construction hearing. Id.
Fact Discovery Close. Fact discovery closes six weeks after the claim construction rulings, which triggers expert discovery followed by a dispositive motion deadline. LPR 1.3. Fact discovery is also suspended from four weeks after the LPR 4.1(a) exchange of claim terms, until the Court enters a claim construction ruling. LPR 1.3. This leaves parties free to focus on claim construction briefing without dealing with discovery issues at the same time.
Expert Discovery. Three weeks after the close of fact discovery, parties must make their initial expert witness disclosures for non-claim construction issues on which they have the burden of proof. LPR 5.1(b). Five weeks later, rebuttal expert witness disclosures are due. LPR 5.1(c). Expert depositions must be finished five weeks later. LPR 5.2. Supplementation of expert reports after the LPR 5.1 deadlines is presumed prejudicial and is not allowed absent a showing that the material could not have been added or amended earlier and that there is no unfair prejudice. LPR 5.3.
Trial. Cases should be trial ready approximately two years after the filing of the complaint. This would be slightly faster than the Northern District of Illinois’s average time to trial of twenty seven months. But the Rules do not require that trial occur at that time, just that the case is ready for trial.
The Rules Will Drive Patent Cases to Chicago
While the Northern District has made clear that it is not transforming itself into a “rocket docket” like the District of Virginia or the Western District of Wisconsin, the newly enacted Rules will significantly increase patent litigation filings in Chicago. The cases will not proceed to trial faster than the Northern District’s average for Eastern all cases of slightly more than twenty-seven months, but the path to trial will be significantly different as described above. The changes are even-handed, with Rules benefiting patentholders being largely offset by the Rules that benefit accused infringers. One might expect even-handed Rules to have little impact on filings, but in this case patentholders will conclude that the Rules provide enough value to overcome the Rules that benefit accused infringers. The Rules, therefore, will draw patent cases to the Northern District. Here are the particular elements of the Rules that will attract patent plaintiffs to the Northern District, along with an analysis of how the Rules nevertheless also benefit accused infringers.
1. Substantive Initial Disclosures & Document Production.
LPR 2.1 requires that parties exchange significant discovery along with their Initial Disclosures. In particular, accused infringers must produce documents sufficient to show how all specifically accused products or processes operate. LPR. 2.1(b). This early document production, which is generally contemplated by Rule 26 but almost never done in practice, will be a major draw for patentholders. The ability to get immediate technical information in discovery, without the expense of serving document requests, is significant. It allows patentholders to have information before preparing their Initial Infringement Contentions. Patentholders will also get a preview of invalidity defenses and patentholders receive all of this information early in the case, before they incur significant discovery costs.
But while LPR 2.1 will attract patent plaintiffs, it also benefits accused infringers. As described above, patentholders must make an initial document production as well, and their obligation is more significant. LPR 2.1(a). Additionally, as with accused infringers, patentholders must identify which documents correspond to each of the four categories. Having this early information will allow accused infringers to evaluate their defenses early in the case and prepare for early dispositive motions such as motions challenging ownership or validity based upon a bar date. And the documents will allow accused infringers to update affirmative defenses or add counterclaims before there could be any prejudice.
Finally, the accused infringers’ production obligation regarding its products is only triggered if the patentholder specifically identifies the accused products in its complaint. This will strongly encourage plaintiffs to identify the accused products in the complaint. A standard which comports with the Twombly/Iqbal pleading standards and will lead to more focused patent litigations. R. David Donoghue, The Uneven Application of Twombly in Patent Cases: An argument for Leveling the Playing Field, 8 J. Marshall Rev. Intell. Prop. 1.1 (2008).
2. Defendant opens and closes Markman briefing.
Most Districts either have two rounds of concurrent claim construction briefing or a traditional opening-response-reply schedule with the patentholder opening and replying. Significantly, the Rules provide for a single set of briefs, with the accused infringer–not the patentholder–submitting the initial and final briefs. The court reasoned that this briefing schedule provided the best, most coherent set of papers because a patentholder’s opening brief often argues for “ordinary” meanings of most terms without specific proposed definitions. Then after the accused infringer offers constructions in its response, the patentholder offers detailed constructions of those terms for the first time on reply. That scenario either leaves the accused infringer without a chance to answer the patentholder’s constructions on the papers, or it requires a sur-reply. Similarly, concurrent briefing results in the parties arguing past each other, generating briefs that do not fully crystallize the issues for the court. Writing first and last, of course, benefits the accused infringer. But the patentholder saves money by only writing one brief and can make any follow up arguments during a hearing or seek a sur-reply if the court does not hold a hearing.
3. Late Claim Construction briefing.
The final major draw for patentholders is the late claim construction proceedings. In addition to cost savings in the briefing process, claim construction is set during the end of a floating fact discovery period that is scheduled to end forty-five days after the court rules on claim construction. Maintaining pre-claim construction uncertainty through most of discovery benefits patentholders. Furthermore, the Rules make clear that a judge can disregard early dispositive motions that would require claim construction before the claim construction contemplated by the Rules. LPR 1.1. So, patentholders may face fewer early summary judgment motions.
Conclusion
The Northern District of Illinois’s Local Patent Rules are evenhanded, benefiting both patentholders and accused infringers. But the specific benefits afforded patentholders will drive patentholders to file in the Northern District of Illinois over other courts, some that may have faster times to trial.
R. David Donoghue is a litigation partner in Holland & Knight’s Intellectual Property Group focusing on patent disputes. His practice spans diverse technology areas including cellular telephony, computer software, internet technologies, pharmaceuticals, automotive technologies, television production equipment, nutritional supplements, and numerous medical devices. He also has extensive intellectual property licensing experience. Mr. Donoghue was previously with Delphi, the world’s largest automotive supplier, where he was a founding member of Delphi’s Technology Licensing and Litigation group. Additionally, Mr. Donoghue founded and authors the Chicago IP Litigation Blog where he analyzes intellectual property cases in the Northern District of Illinois (www.chicagoiplitigation.com). He can be reached by phone at 312.578.6553 or by email at david.donoghue@hklaw.com.
© 2009 Bloomberg Finance L.P. All rights reserved. Originally published by Bloomberg Finance L.P in the Vol. 3, No. 48 edition of the Bloomberg Law Reports – Intellectual Property. Reprinted with permission. The views expressed herein are those of the authors and do not represent those of Bloomberg Finance L.P. Bloomberg Law Reports® is a registered trademark and service mark of Bloomberg Finance L.P.

Continue Reading N.D. Illinois Local Patent Rules Will Drive Cases to Chicago

Here are several stories that I have been wanting to blog about, but have not been able to get to because of the new Local Patent Rules, my webinar on reducing IP litigation costs (I was glad to see that so many of you attended and found the presentation valuable) and pressing client matters:
Judge Zagel was interviewed by Metropolitan Corporate Counsel. He discussed how his docket has been impacted by the recession and noted, among other things, that parties have been much more interested in and willing to agree to staying cases or slow discovery — click here to read the story. He also briefly discusses discovery of electronically stored information.
Seattle Trademark Lawyer has an excellent series of posts on the US Olympic Committee’s enforcement of the Olympic marks, to which it has almost absolute rights based upon federal law — click here, here, here, here and here. I had planned to write about these issues myself early this week while Chicago enjoyed winning the 2016 Summer Olympics, but as you all likely know by now that is not quite how the vote went.

Continue Reading IP News Shorts

Bajer Design & Marketing Inc. v. Ware Mfg. Inc., No. 09 C 1425, Min. Order (N.D. Ill. Jun 11, 2009) (Kendall, J.).
Judge Kendall denied plaintiff Bajer’s motion to reassign its second filed patent infringement suit pending before Judge Zagel asserting the patent in suit to Judge Kendall pursuant to Fed. R. Civ. P. 42 and Local Rule 40.4. The cases met two of the four Rule 40.4(b) requirements for reassignment because both cases were pending in the Northern District and because both cases were at similar stages with defendants having just answered, such that reassignment would not slow progress of the first case. The Court also noted that a single Markman proceeding and set of claim constructions was a benefit of reassignment. But the potential for a uniform claim construction was outweighed by the fact that defendants’ accused products and, therefore, noninfringement positions were significantly different. Based upon the differing noninfringement positions and other possible differences in the parties defenses, the Court held that reassignment would not achieve the required substantial savings of judicial time and effort.

Continue Reading Same Patent Not Enough for Reassignment of Plaintiff’s Suits to One Judge

Krippelz v. Ford Motor Co., No. 98 C 2361, Min. Order (N.D. Ill. Dec. 5, 2008) (Zagel, J.).
Judge Zagel ruled upon various motions in limine. Of particular interest, the Court denied defendants motion for reconsideration of the Court’s grant of summary judgment of infringement. The Court held that the evidence defendant used to create a material question of fact was inadmissible. And while the motion could be construed to include new arguments, they were too late to overcome summary judgment.
The Court also granted plaintiff’s motion to preclude defendant’s evidence of noninfringing alternatives because plaintiff was only seeking a reasonable royalty, not lost profits. Finally, the Court denied defendant’s motion to exclude evidence of defendant’s vehicle sales as evidence of commercial excess. While it is unlikely that anyone purchased a vehicle because of the infringing puddle lamp, the fact that defendant used the lamps in its vehicles and sold a “fair number” is evidence of commercial success.

Continue Reading Product Sales Including Infringing Product is Evidence of Commercial Success

The Seventh Circuit instituted a Commission to study the implementation of the ABA Jury Project. The Northern District was heavily represented on the Commission. The following Northern District Judges were members of the Commission: Bucklo, Brown, Coar, Darrah, Denlow, Der-Yeghiayan, Gottschall, Holderman, Kennelly, Lefkow, Moran, Schenkier, St. Eve, and Zagel. The Commission recently published its report — click here to read it. The report describes a two phase analysis. In the first phase, district judges tested the following seven ABA Principles:
1. Twelve-Person Juries;
2. Jury Selection Questionnaires;
3. Preliminary Substantive Jury Instructions;
4. Trial Time Limits;
5. Juror Questions;
6. Interim Trial Statements by Counsel; and
7. Enhanced Jury Deliberations.
Other Principles, such as juror notebooks and allowing jurors to take notes, were already in such widespread use that they were not tested. Click here for the Phase One Project manual detailing the principles, the rationales and authority behind them, and suggested procedures. Phase One resulted in questionnaires from 22 participating federal trial judges, 74 participating attorneys and 303 jurors from 38 trials that used one or more of the seven Principles. Based upon the analysis of Phase One results and questionnaires, the Commission focused Phase Two on the following four Principles:
1. Juror Questions;
2. Interim Trial Statements by Counsel;
3. Twelve-Person Juries; and
4. Preliminary Substantive Jury Instructions.
These Principles were chosen because of Phase One popularity (78% of jurors reported that being able to ask questions increased their satisfaction with the process) and because of a desire to study the Principles more. Click here for the Phase Two manual.
In Phase Two, 108 jurors from 12 trials employing one or more of the Phase Two Principles filled out questionnaires. In addition, 12 attorneys and 4 district judges that participated also filled out questionnaires. The results are interesting, but more importantly create the opportunity to powerfully impact the trial system across the Seventh Circuit in ways that benefit all of the stakeholders in the trial process — the litigants, the jurors, the judge and the judge’s chambers, and the litigators.
All four of the Phase Two Principles showed significant benefits to the trial process. 83% of jurors reported an increased understanding of the facts when allowed to ask written questions through a judge — the questions were reworded to meet evidentiary rules. And 75% of judges and 65% of attorneys thought the questions benefited jurors. Similarly, preliminary substantive jury instructions were found to improve trials by jurors (80%), judges (85%) and attorneys (70%). And the same was true for interim statements to the jury — jurors (80%) and judges (85%). Finally, twelve-person juries were found not to harm efficiency, while increasing juror diversity.
Each of the four Phase Two Principles, as well as several of the additional three Phase One Principles deserve more attention and analysis. So, over the next several weeks I will provide follow up posts discussing the findings of those Principles in greater detail. I will start with the idea of juror questions, which I find particularly important, later this week or early next.

Continue Reading Seventh Circuit American Jury Project

BorgWarner, Inc. v. Hilite Int’l., Inc., No. 07 C 3339, 2008 WL 3849908 (N.D. Ill. Aug. 14, 2008) (Zagel, J.)
Judge Zagel denied defendant Hilite’s 23 U.S.C. §1404(a) motion to transfer. Plaintiff BorgWarner filed this patent infringement suit over variable camshaft timing (“VCT”) in June 2007. Hilite answered and counterclaimed in March 2008. Five days after answering, Hilite filed a suit in the District of Delaware alleging that BorgWarner infringed Hilite’s VCT patent. Hilite reasoned that its VCT case was related to a prior Delaware patent case filed by BorgWarner on the patent currently at issue in the Northern District, and, therefore, by the transitive property this suit and BorgWarner’s closed Delaware case were related.
While the Seventh Circuit does not strictly follow the first-to-file rule, its use was warranted in this case. BorgWarner’s choice of forum deserved some deference. And the Northern District, while equivalent to Delaware in terms of time to trial, was significantly faster for average disposition without court actions – 6.2 months in the Northern District to 12.5 months in Delaware. Convenience factors were neutral, and therefore weighed in favor of keeping the case in the Northern District.

Continue Reading Motion to Transfer Filed 11 Months After the Complaint is Denied

Eazypower Corp. v. Jore Corp., No. 04 C 6372, 2008 WL 3849921 (N.D. Ill. Aug. 14, 2008) (Zagel, J.)
Judge Zagel construed the claims of plaintiff Eazypower’s patent to a portable screwdriver with a flexible shaft. Of particular interest, the Court held that despite Eazypower’s Jepson claim format, its preamble was not limiting.
Jepson claiming is a drafting style – common in Europe, but relatively rare in the United States – in which the prior art is described in the preamble and the claimed improvements over the prior art are described in the body of the claim. The Court acknowledged that Jepson claims carry a rebuttable presumption that the claim’s preamble is limiting. But the Court held that the Eazypower rebutted the presumption in this case. The claim’s preamble, therefore, was not limiting. First, the Court relied upon two 2003 Northern District opinions, by Judges Guzman and St. Eve, holding that the preambles of the claims at issue overcame the presumption and were not limiting. While these opinions were not controlling, the Court found them well-reasoned and persuasive. The Court explained that the preambles were not limiting because they were “not necessary to give life to the claims,” citing Judge Guzman’s decision. Eazypower v. Vermont Am. Corp., No. 01 C 3252, 2003 WL 1720024, at *10 (N.D. Ill. Mar. 28, 2003).

Continue Reading Jepson Claim Language Creates Presumption of a Limiting Preamble

ACCO Brands USA LLC v. SecuComputer, Inc., Nos. 03 C 1820, 06 C 7102, 07 C 0591, 2008 WL 2566863 (N.D. Ill., Jun. 25, 2008) (Zagel, J.).
Judge Zagel construed the claims of plaintiff’s patents to security locks for portable electronics, like laptops. The Court held that all term, but one had ordinary meanings that were not altered by the intrinsic evidence. Of particular note, the Court held that “about” had an ordinary meaning of “approximately.” The Court denied one defendant’s effort to limit “about” to within machining tolerances of dimensions set forth in a preferred embodiment.

Continue Reading Claim Construed Using Ordinary Meanings