Tuesday, October 7, 2014

Attorney Fees Upheld For Prevailing Defendant

InDyne, Inc. sued Abacus Technology Corp. for copyright infringement relating to Abacus's setting up of a NASA website.  InDyne's allegations were that Abacus used InDyne's software for setting up the NASA website and such usage infringed InDyne's copyright.

The trial court granted summary judgment of non-infringement to Abacus, finding that InDyne did not have sufficient evidence to show that the copied elements of software were original, and thus worthy of copyright protection.  Abacus sought and was awarded its fees as a prevailing party under 17 U.S.C. § 505.  InDyne appealed this fee award.

InDyne argued on appeal that Abacus was "a bad actor" and had essentially gotten away with copyright infringement.  The Eleventh Circuit was not persuaded.  InDyne had failed to put forth adequate evidence of copyright infringement (a decision the Eleventh Circuit had previously upheld), thus, by definition, Abacus was not a copyright infringer (and therefore didn't "get away with it.")

InDyne also argued that it had sufficient witness testimony to support its claim (thus militating against a finding that its claim was objectively unreasonable).  Again, the Eleventh Circuit was not persuaded.  InDyne failed to the court the revision history for its "chameleon-like" "constantly morphing" software.

Fee award upheld.
InDyne, Inc. v. Abacus Technology Corp, Case No. 14-11058 (11th Cir. Sept. 24, 2014)

Monday, August 25, 2014

Where To Litigate "Disposable Living-Grass Pet Toilets?"

Fresh Patch, LLC owns U.S. Patent 8,522,719 directed to a pet toilet continuous delivery and replacement method.  Fresh Patch ("Real Dogs Use REAL Grass") offers a subscription service where they send you a patch of grass each week for your pet to use as a toilet.  DoggieLawn ("Your Dog's Backyard In A Box") offers a competing service.  Fresh Patch sued DoggieLawn and its owner for patent infringement.  DoggieLawn moved to transfer the case from the Middle District of Florida to DoggieLawn's home in the Central District of California.  The Court addressed the typical 1404 factors:

Section 1404 factors include (1) the convenience of the witnesses; (2) the location of relevant documents and the relative ease of access to sources of proof; (3) the convenience of the parties; (4) the locus of operative facts; (5) the availability of process to compel the attendance of unwilling witnesses; (6) the relative means of the parties; (7) a forum's familiarity with the governing law; (8) the weight accorded a plaintiff's choice of forum; and (9) trial efficiency and the interests of justice, based on the totality of the circumstances.
quoting Manuel v. Convergys Corp., 430 F.3d 1132, 1135 n.1 (11th Cir. 2005).   

Concerning witness convenience, both parties identified non-party witnesses.  Plaintiff's non-party witnesses, however, were not in Florida, so keeping the dispute in Florida was of no great benefit.  Defendant identified witnesses from a number of competitors (Pooch Potty, PetaPotty, and Porch Potty), and each of those witnesses were in California.  [Ed. Note: Who knew the subscription pet toilet service industry had so many players?]

The Court next noted that the Defendant was a small startup, while Plaintiff's revenues were in excess of $1m.  The Court also appeared persuaded (to a small degree) by the fact that Plaintiff's law firm also had an office in California.  [Ed. Note: Is this really relevant?]

Generally, a plaintiff's choice of forum will be given deference.  But here, the Court appears to have not believed Plaintiff's claim that the Middle District of Florida was its home forum.  For instance, Plaintiff could not identify any employees or offices in the Middle District and did not quantify any of its business here.

Motion to transfer, granted.
Fresh Patch, LLC v. Youn, Case No. 8:13-CV-2602 (M.D. Fla. July 25, 2014) (J. Merryday)

Monday, August 18, 2014

Different Standards For Deciding Whether To Stay?

You may recall that Judge Covington denied a defendant's request to stay litigation, rejecting that defendant's argument that it was merely a "peripheral" defendant since it had only bought the accused product from another defendant.  While the Court noted in that decision that cases are generally stayed against peripheral defendants, that general rule does not apply where the peripheral defendant and the plaintiff are competitors.  In denying the peripheral defendant's request for stay, the Court required that defendant to put forward "an undue hardship or inequity."  Because that defendant couldn't, a stay was not appropriate.

The other defendants in that case separately moved to stay the litigation in favor of the inter partes reviews of the three patents-in-suit those defendants had instituted.  Here, for the primary defendant who had instituted inter partes reviews, the standard for granting a stay is different, relying on a "liberal policy" in favor of granting them:

“Courts have inherent power to manage their dockets and stay proceedings, including the authority to order a stay pending conclusion of a PTO” proceeding.  Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988). The party moving for a stay bears the burden of demonstrating that a stay is appropriate. See Landis v. N. Am. Co., 299 U.S. 248, 255 (1936). As acknowledged in Automatic Manufacturing Systems, Inc. v. Primera Technology, Inc., No. 6:12-cv-1727-RBD-DAB, 2013 WL 1969247, at *1 (M.D. Fla. May 13, 2013), “In patent cases, a number of courts reason that such stays should be liberally granted when there is a pending administrative proceeding pending before the USPTO.” (citing Sabert Corp. v. Waldington N. Am., No. 06-5423, 2007 WL 2705157, at *5 (D.N.J. Sept. 14, 2007)(highlighting the “liberal policy in favor of granting motions to stay proceedings” because review by the USPTO “might assist the court in making a validity determination or [] eliminate the need to make an infringement determination.”); WABCO Holdings, Inc. v. Bendix Commercial Vehicle Sys., LLC, No. 09-3179, 2010 WL 2628335, at *2 n.2 (D.N.J. June 28, 2010)(“the liberal policy towards stays . . . arises due to the potential waste in using a court’s time and energy when a USPTO decision could drastically alter the nature of the case.”))
The Court then addressed the typical factors: (1) whether the stay would unduly prejudice or present a clear tactical disadvantage to the non-moving party; (2) whether the stay will simplify the issues in question and trial of the case; and (3) whether a stay will reduce the burden of litigation on the participants or the court.   Here, the Court appeared persuaded in part because of the "highly technical component" of the case.  Importantly, while the Court previously rejected the peripheral defendant's request to stay because the peripheral defendant was a competitor, that same logic did not carry the day here:
The Andersons, Inc. also opposes the requested stay on the grounds that it is in direct competition with Defendants, and any stay of the proceedings will allow Defendants to continue their allegedly infringing activities unabated.  Defendants correctly counter that The Andersons, Inc. has not sought a preliminary injunction and that any damages The Andersons, Inc. incurs may be remedied with money damages.  See Tomco Equip. Co. v. SE Agri-Sys., Inc., 542 F. Supp. 2d 1303, 1308 (N.D. Ga. 2008)(rejecting the argument that plaintiff's damages "will intensify during a stay" because "the availability of money damages is sufficient to protect plaintiff from prejudice.").
Motion for stay, granted.  Case administratively closed and parties obligated to file a status report every 90 days.

The Andersons, Inc. v. Enviro Granulation, LLC., Case No. 8:13-CV-3004 (M.D. Fla. Aug. 14, 2014) (J. Covington)

Wednesday, August 6, 2014

Who Do You Sue For Copyright Infringement, Father or Son?

When last we checked in with Malibu Media (owner of a library of adult films and associated copyrights), Malibu had filed suit against John Doe and then used the Court's subpoena power to take an IP address which identified an alleged infringer's network connection and force the ISP to identify which subscriber belonged to that IP address.  (The Electronic Frontier Foundation has written about Malibu Media here.)

In another case, a little further down the enforcement timeline, Malibu Media had received from the ISP the subscriber's identity.  But instead of suing the subscriber, Malibu Media sued the subscriber's son:
The ISP, Bright House Networks Online Service, identified [Father] as the internet subscriber...Upon investigation, Plaintiff learned that [Father] lives with his son...
At the time this case was originally filled, Plaintiff knew only that the infringer was using the internet subscriber's IP address.  Usually, the subscriber is the infringer.  But, as is the case here, sometimes the infringer is another person residing with the the subscriber, who the subscriber has authorized to use the subscriber's internet.
Time timespan of infringing activity precludes the possibility that the infringer was a short term guest or other interloper.
Plaintiff's Amended Complaint [Dkt. 8] at 5.  Malibu then goes on to explain that it found other video files downloaded by the IP address (for tv shows like Breaking Bad, Lost, Weeds, and Futurama) and that the Son had "liked" these tv shows on Facebook.  Thus:
...[Son] is the most likely person to have used BitTorrent in the house from where the infringement emanated.  Consequently, Defendant is the most likely person to have infringed Plaintiff's copyrighted works through the use of BitTorrent.
Plaintiff's Amended Complaint [Dkt. 8] at 6-7.

So, after being served, [Son] sought dismissal, explaining that [Son] did not reside in the home during the time of alleged infringement and attacked Malibu's infringement evidence as stemming from an unlicensed investigator on a contingency pay arrangement.

[Son] also explained a decision by Judge Ungaro in the Southern District that [Son] described as a "game changer" for thwarting Malibu's activities:
Plaintiff has not shown how this geolocation software can establish the identity of the Defendant.  There is nothing that links the IP address location to the identity of the person actually downloading and viewing Plaintiff's videos, and establishing whether that person lives in this district..... 
Even if this IP address is located within a residence, the geolocation software cannot identify who has access to that residence's computer and who would actually be using it to infringe Plaintiff's copyright.
Malibu Media v. Doe, Case No. 1:14-CV-20213 (S.D. Fla. Mar. 5, 2014) (J. Ungaro).

Returning to the present case, Judge Moody was not persuaded by the Southern District's reasoning:
While it may be true that the IP subscriber, or the son of an IP subscriber as it is in this instance, is not undoubtedly the infringing individual, the Plaintiff's burden at this stage is only to demonstrate plausibility.  See [Ashcroft v.] Iqbal, 556 U.S. 662, 678-79 (2009); cf., Malibu Media LLC v. John Does 1-16, 902 F. Supp. 2d 690, 698 (E.D. Pa. 2012) ("The Court acknowledges, however, that the information provided by the ISPs in response to the subpoenas will not necessarily reveal the identities of the actual infringers, but may, with other discovery, lead to the infringer's identities.")  To that end, Plaintiff has alleged a plausible link between the subscriber assigned to [the IP address], Defendant, and the copyright infringement, and any factual disputes are inappropriate at this stage.
As to the charge that the investigator's technique's were inappropriate, the Court found those allegations premature.

Motion to dismiss, denied.
Malibu Media, LLC v. [Son], 8:13-cv-3007 (M.D. Fla. Aug. 1, 2014) (J. Moody)

Thursday, July 31, 2014

Super Sacking -- Does a Covenant Not To Sue Eliminate Subject Matter Jurisdiction on a Subsequent Infringement Claim?

Apparently not.  Foliar Nutrients sued Plaint Food Systems (PFS) in 2004 for infringing a number of its patents.  After PFS sought reexamination of some of those patents, the parties settled.  That settlement called for Foliar to pay PFS $50,000 over five years, and included a mutual covenant not to sue where Foliar agreed not to assert its previously asserted patents and PFS agreed not to challenge their validity.

The settlement didn't work.  After the first year's payment, the parties were unable to continue operating under the agreement.  PFS sued Foliar a couple of times, trying to collect the money that Foliar didn't pay, but those cases didn't last.  Eventually, PFS gave up on filing lawsuits against Foliar.  Foliar, however, filed suit for patent infringement, asserting a number of its patents against PFS.

PFS sought dismissal, arguing that there was no subject matter jurisdiction because of the covenant not to sue.  Specifically, PFS relied on Super Sack and its progeny.  See Super Sack Manufacturing Corp. v. Chase Packaging Corp., 57 F.3d 1054 (Fed. Cir. 1995).  I have previously written about Super Sack a few times.

Super Sack

The typical circumstances are a patent owner asserts its patent and the defendant challenges validity of the patent.  For whatever reason, the patent owner decides it doesn't wish to pursue the patent infringement case, but it must also dispose of the counterclaim dealing with non-infringement and invalidity.  One solution to this issue is for the patent owner to covenant not to sue the defendant for infringement of the patent.  By doing this, the defendant's counterclaims for invalidity and non-infringement are no longer justiciable.  There is no longer a threat that the defendant can be sued for infringing the patent, so it can't ask the Court for a declaration that it does not infringe the patent and it has no basis to pursue a declaration that the patent is invalid.  Makes sense.

But what about when the patent owner changes its mind and wants to sue on the patent.  Does the covenant not to sue deprive the Court of subject matter jurisdiction to resolve that dispute?
"There is no authority for the proposition that a covenant not to sue stands as a jurisdictional bar to bringing a subsequent infringement claim."  Samsung Elecs. Co. v. Rambus, Inc., 440 F. Supp. 2d 495, 504 (E.D. Va. 2006).  PFS' argument to the contrary overextends the U.S. Court of Appeals for the Federal Circuit's precedent regarding invalidity claims, which are brought pursuant to the Declaratory Judgment Act and require the continuous presence of a real and immediate controversy between the litigants in order to remain justiciable.  See MedImmune v. Genentech, Inc., 549 U.S. 118, 127 (2007).  Under Super Sack and its progeny, where the case or controversy underlying a patent-invalidity action is the threat that the patentee will press an allegedly invalid patent against the invalidity claimant, the patentee can unilaterally divest the court of subject matter jurisdiction over the invalidity claim by extinguishing the immediacy and reality of that threat.  See Super Sack, 57 F.3d at 1058-60; Revolution Eyewear v. Aspex Eyewear, Inc., 556 F.3d 1294 (Fed. Cir. 2009).  One way to do so is by issuing a sufficiently broad covenant not to assert the patents-in-suit against the invalidity claimant.  Super Sack, 57 F.3d 1058.  Additionally, if the patentee has any infringement claims pending against the invalidity claimant at the time of the covenant's execution, the patentee must move to dismiss those claims under Federal Rule of Civil Procedure 41.  See Highway Equip. Co. v. FECO, Ltd., 469 F.3d 1027, 1033 (Fed. Cir. 2006); cf. Already, LLC v. Nike, Inc., 133 S.Ct. 721, 726-28 (2013) (addressing this procedure in the trademark context).  If the combination of the covenant not to sue and the Rule 41 dismissal sufficiently diminishes the controversy underlying an invalidity claim, the invalidity claim is rendered nonjusticiable and the Court is divested of subject matter jurisdiction over it.
But that logic does not extent to a plaintiff's claim of patent infringement:
Significantly though, the holdings in the Super Sack line of cases do not extend to patent-infringement claims, which are not brought pursuant to the Declaratory Judgment Act and are therefore not subject to its unique justiciability requirements.  See 35 U.S.C. 271 (Providing an independent statutory basis for patent infringement claims).  To the contrary, the Federal Circuit has clarified that a patentee's covenant not to sue does not divest a district court of subject matter jurisdiction over infringement claims -- even those that remain pending at the time of the covenant's execution.  Highway Equip., 469 F.3d at 1033 n.1 (observing that, in situations where a patentee unilaterally secures a Super Sack dismissal, the patentee's "covenant does not deprive the district court of jurisdiction to determine the disposition of the patent infringement claims raised in the Complaint under Rule 41"); Cooper Notification, Inc. v. Twitter, Inc., 545 F. App'x 959, 966-67 (Fed. Cir. 2013) (same).
Thus, PFS's motion to dismiss Foliar's patent infringement claim, for lack of subject matter jurisdiction, was denied.
Foliar Nutrients, Inc. v. Plant Food Systems, Inc., Case No. 6:13-CV-748 (M.D. Fla. July 14, 2014) (J. Dalton)

[NOTE: GrayRobinson, PA is involved in the above-captioned matter]

Monday, July 28, 2014

Stay Against a "Peripheral" Defendant?

Not if the defendant is a direct competitor.  The Andersons, Inc. has sued Harrell's, LLC and three other defendants for infringement of U.S. Patent Nos. 6,884,756; 8,435,321; and 8,574,631 relating to water-dispersible pellet fertilizer.  Harrell's asked the Court to stay the case against it, arguing that it was a "peripheral" defendant in that it merely bought the accused products from the other defendants and resold them.

The Court outlined the law for such a stay:
A district court has inherent discretionary authority to stay proceedings to control its docket and further the interests of justice. CTI-Container Leasing Corp. v. Uiterwyk Corp., 685 F.2d 1284, 1288 (11th Cir. 1982). The applicant for a stay “must make out a clear case of hardship or inequity in being required to go forward, if there is even a fair possibility that the stay for which he prays will work damage to some one else.” Landis v. N. Am. Co., 299 U.S. 248, 255, 57 S.Ct. 163, 166 (1936).  
When a patent-holder sues both the manufacturer of an allegedly infringing device and a customer of the manufacturer--who merely resells the device to the public--district courts frequently stay the claims against the customer-retailer while the suit against the manufacturer proceeds. See generally Heinz Kettler GMBH & Co. v. Indian Indus., Inc., 575 F. Supp. 2d 728, 730 (E.D. Va. 2008); Ricoh Co., Ltd. v. Aeroflex Inc., 279 F. Supp. 2d 554, 557 (D. Del. 2003); Oplus Techs., Ltd. v. Sears Holding Corp., No. 11-cv-8539, 2012 WL 2280696, at *4 (N.D. Ill. Jun. 15, 2012). In such cases, the manufacturer of the allegedly-infringing device is considered to be the real-party interest and in a better position to contest validity and infringement. See id
Notwithstanding these frequent stays, the situation is different when the "peripheral" defendant is one of plaintiff's competitors:
Plaintiff alleges that Harrell's is Plaintiff's direct competitor, that Harrell's previously approached Plaintiff about buying its product, that Plaintiff refused, and that Harrell's then sought out the accused product from [another defendant].  Plaintiff thus maintains that discovery from Harrell's will be relevant to validity, particularly non-obviousness, as well as the issue of willful infringement.
Harrell's desire to avoid the expense and time to participate in discovery did not present an undue hardship or inequity.

Motion to stay, denied.
The Andersons, Inc. v. Enviro Granulation, LLC., Case No. 8:13-CV-3004 (M.D. Fla. July 21, 2014) (J. Covington)

Tuesday, July 15, 2014

Expert Lied On The Stand - New Trial, Right?

Rembrandt Vision Technologies sued Johnson & Johnson Vision Care for alleged infringement of U.S. Patent No. 5,712,327.  During a two-week jury trial, the Court granted judgment as a matter of law in favor of Defendant based on defects in one of the Plaintiff's expert's testimony.  The jury had also found in Defendant's favor.  After the jury ruled against it, Plaintiff filed a motion asking for discovery and to reopen the case because one of Defendant's expert's had apparently lied on the stand -- he said he conducted a test when he had not personally done so and he had not told the truth about his qualifications.  The Court denied the request for discovery into this matter.  That decision (granting judgment as a matter of law and denying Plaintiff's request for discovery) was appealed and the Federal Circuit affirmed without reaching the question of whether or not denying discovery for the alleged perjury was proper.  See Rembrandt Vision Technologies, LP v. Johnson & Johnson Vision Care, Inc., 725 F.3d 1377 (Fed. Cir. 2013).

Plaintiff next asked the Court for a new trial pursuant to Fed. R. Civ. P. 60(b)(2) and (b)(3).  For relief under 60(b)(2) (newly discovered evidence), the requesting party must show:
(1) the evidence must be newly discovered since the trial;
(2) due diligence on the part of the movant to discover the new evidence must be shown;
(3) the evidence must not be merely cumulative or impeaching;
(4) the evidence must be material; and
(5) the evidence must be such that a new trial would probably produce a new result.
quoting Waddell v. Hendry Cnty. Sheriff's Office, 329 F.3d 1300, 1309 (11th Cir. 2003).  The Court was satisfied that the plaintiff met the first two elements, but elements (3) through (5) caused problems:
Regardless of the seriousness of Dr. Bielawski's offense, however, Rembrandt still must demonstrate that a new trial would probably produce a different result.  Upon sober reflection, I conclude it cannot do so. ... Rembrandt's lost opportunity to impeach Dr. Bielawski with evidence of his false testimony does not lead to Rule 60(b)(2) relief. ...Having carefully followed the evidence at trial, the Court was unsurprised by the jury's verdict of non-infringement.
It is interesting to also note that the Court conducted a three-hour hearing to address this motion, and specifically noted: "The reader is encouraged to consider the transcript of the three-hour August 2, 2013 hearing, in which counsel and the Court engaged in extensive discussions on this motion.  (Doc. 373)."

The Court turned next to Rule 60(b)(3), seeking relief from a final judgment on the basis of fraud, misrepresentation, or misconduct "by an opposing party."  Ultimately, the Court rejected plaintiff's bid because it could not show that the expert's misconduct was misconduct "by an opposing party" because the Plaintiff couldn't show that the Defendant's counsel knew or should have known of the expert's misconduct:
With the benefit of this type of hindsight [relating to the evidence showing the expert's false testimony], it is tempting to fault [Defendant's] lawyers for not discovering Dr. Bielawski's misconduct.  However, he was apparently successful in convincing [Defendant's] lawyers that he knew the subject matter and that he was going to give truthful testimony.
So, a defense expert lies on the stand and the plaintiff gets no remedy?  The Court was concerned with this perception as well:
The Seventh Circuit has put it aptly:
A motion under Rule 60(b)( often puts to a court a question without a right answer.  The district judge must weigh incommesurables -- the value of finality, the probability that an error affected the outcome of the proceeding, the probability that a second go-round would product a 'better' outcome, the costs of that second proceeding to the parties (and ultimately to society as the finality of judgments is undercut).
(citation omitted).
This is a close and difficult call.  The Court recognizes that this decision could be interpreted as not taking seriously enough the integrity of this Court's proceedings and the importance of truthful witnesses.  The Court could also be accused of treating misconduct by Rembrandt's expert witness more seriously than that of JJVC's.  While this criticism would be understandable, there are other important attributes to be considered and balanced -- finality, respect for the jury's verdict, and whether the ultimate result is just.  I sat through the trial, heard all of the evidence, and have not conducted a lengthy hearing on the Rule 60 motion.  I believe, notwithstanding the serious misconduct by Dr. Bielawski, this was a fair, through imperfect trial.  The jury's verdict is supported by the untainted evidence and should be allowed to stand.
All is not lost, however, for the plaintiff.  The Court has left open other possibilities, including reporting the issue to the U.S. Attorney's Office and requiring Defendant to explain why it should not pay Plaintiff's attorney's fees and costs associated with the investigation into the expert's misconduct.  It is also worth noting that the expert has apparently been sanctioned by his university (including a reduction in pay) and has moved to teach in Korea.

Motion to set aside judgment, denied.
Rembrandt Vision Technologies, L.P. v. Johnson & Johnson Vision Care, Inc., Case No. 3:11-CV-819 (M.D. Fla. July 10, 2014) (J. Corrigan).