On August 15, 2016, Judge Orrick of the Northern District of California granted-in-part defendant Sophos’s motion to exclude the testimony of plaintiff Finjan’s damages expert. Sophos urged, among other things, that the expert’s apportionment methodology improperly inflated her royalty base. Specifically, Sophos argued that Finjan’s expert improperly inflated the royalty base by double or triple counting revenue attributable to the “threat engine” and “live protection” features of the accused software products. That is, Finjan’s expert apportioned the royalty base by 28.6 percent (or 2/7) as to both patents-in-suit, even though each patent covered those same two features. “In this way, [the expert] counts the revenue attributable to certain features multiple times in calculating her royalty base such that her total apportionment calculation uses a royalty base that is over 100 percent of the total value of several of the accused products.”
On April 18, 2016, Magistrate Judge Mitchell of the Eastern District of Texas granted-in-part a motion to exclude damages expert opinion based in part on a litigation verdict for failure to account for litigation-related economic circumstances.
Mars, Inc. and Mars Petcare US, Inc. (“Mars”) brought a patent infringement lawsuit against TruRX LLC and True Science Holdings, LLC (“True Science”) alleging infringement of two U.S. patents related to breath-freshening pet food compositions. True Science moved to exclude the testimony of Mars’ damages expert, Mr. Britven, for improperly relying on the verdict in a previous litigation involving Mars to support his reasonable royalty opinion. The Court granted the motion and excluded that testimony as unreliable.
Judge Gilstrap of the Eastern District of Texas denied defendant Genband US LLC’s motion for summary judgment that plaintiff Metaswitch Networks Ltd.’s patent, relating to the control of communication sessions in a telecommunications network, was invalid. Metaswitch argued that the prior art patent application is fundamentally different from the asserted patent and does not disclose even a single limitation of the asserted claim 8. In general, Metaswitch’s arguments related to the asserted patent and prior art reference having different network topologies.
In a January 27, 2016 decision, the Patent Trial and Appeal Board (PTAB) denied institution of Inter Partes Review (IPR) of a patent under 35 U.S.C. § 103(a). Petitioner Allsteel Inc. sought review of U.S. Patent No. 8,024,091, which relates to a wall system that includes modules connected through a removable connecting strip. The asserted independent claim requires a connecting strip with a pair of spaced apart arms, each having a beaded portion. Further, the claim requires the beaded portions to have flanges fitting inside the arms of the connecting strip. The prior art, however, disclosed beaded portions with members fitting outside the arms. Petitioner contended that a skilled artisan would have found it obvious to reverse the positions of the members to fit inside the arms. Petitioner also relied on the testimony of its expert to show that it would have been obvious to reverse some inwardly projecting members so that the beaded portions would fit inside the arms.
Judge Gilstrap in the Eastern District of Texas recently held that plaintiff’s damages expert failed to properly apportion the royalty base “because he has failed to specify, distinguish, and then separate the value of BMC’s patented features from the unpatented features of ServiceNow’s products.” Plaintiff’s damages expert created his relevant royalty base by simply reducing defendant’s total revenue by 50%, then subtracting out the revenues he determined were subject to lost profits. The Court rejected plaintiff’s argument that the “original 50% reduction” was sufficient to isolate or apportion the incremental value associated with the infringement of the asserted patents. Although the Court recognized that the damages expert adequately identifies a portion of defendant’s revenue that is at risk, the Court rejected the asserted royalty base because the expert failed to apportion out any of the value of the unpatented features in the accused products. Relying on the Federal Circuit’s recent Ericsson opinion, the Court held that the “expert fails to provide an ultimate combination of royalty base and royalty rate based on the ‘incremental value that the patented invention adds to the end product.’” Ultimately, the Court carried defendant’s motion to exclude and ordered plaintiff to supplement its damages exert report to correct the deficiency within ten days, reserving the right to readdress this issue after supplementation.
PTAB, in a rare move, granted-in-part and denied-in-part the Petitioner AVX Corp.’s Request for Rehearing and instituted an inter partes review of a Greatbatch Ltd. patent on a pacemaker component. The Request asserted that the Board misapprehended or overlooked certain matters in its decision on institution. The same three-judge panel of the PTAB that had previously denied AVX’s request for inter partes review under the America Invents Act in August, granted the company’s request for rehearing and agreed that the first decision was erroneous. In doing so, the Board agreed that it had overlooked Petitioner’s previously presented arguments about the disclosure in the alleged prior art. The Board held that upon properly considering AVX’s arguments, it was persuaded that AVX had shown that several claims of the patent are likely invalid.
The Federal Circuit has affirmed a summary judgment of invalidity finding the asserted claims patent-ineligible under Alice. Plaintiff Mortgage Grader sued Costco and First Choice alleging infringement of two patents relating to systems and methods for a borrower to evaluate and obtain financing from multiple lenders. The patent claims are directed to “a computer-implemented system for enabling borrowers to anonymously shop for loan packages offered by a plurality of lenders” using a loan package database and computer interfaces that allow the lenders and borrowers to interact. First Choice filed a motion for summary judgment that the asserted claims were patent-ineligible under § 101. Both sides submitted expert reports in support of their § 101 positions. The district court agreed with First Choice and entered summary judgment that all of the asserted claims were directed to the unpatentable abstract idea of “anonymous loan shopping.” On appeal, Mortgage Grader argued that the district court erred by improperly resolving underlying factual disputes and misapplying the Alice test.
The Federal Circuit affirmed the Patent Trial and Appeal Board’s (PTAB) decision to deny the petitioner’s motion to submit supplemental information after the institution of an inter partes review. Less than a month after the IPR was instituted, the petitioner filed a Motion for Supplemental Disclosure of New Exhibits under 37 C.F.R. §42.123, requesting submission of a 60-page declaration from its expert and other evidence. The petitioner provided as its only reason for submitting the declaration late was that it would be more cost-effective for the expert to only opine on the grounds on which the board instituted the review. The PTAB and the Federal Circuit agreed that saving money was not a good enough reason to allow the submission of the expert’s declaration after institution.