Hon. Jeff Kaplan, U.S. Magistrate Judge in the Northern District of Texas, Dallas Division, participated in a judges panel at the State Bar of Texas 7th Annual Advanced Patent Litigation course in San Antonio on July 14, 2011. Judge Kaplan addressed several subjects of interest:

Patent Pilot Program. Judge Kaplan touched on how the judges of the Northern District are excited about being part of the Patent Pilot Program. The patent docket in the N.D. Texas is steadily increasing, and they hope to see more filings. Judges Linn, Godbey and Kinkeade of the Dallas Division will be part of the Pilot Program, and they hope that the other judges of the Northern District will pass their patent cases to them as they are entitled to do in the Program. Judge Kaplan also anticipates that the judges in the Patent Pilot Program will adhere to the Patent Rules and conduct patent cases in a somewhat uniform manner.

Daubert Challenges. Judge Kaplan noted that Daubert challenges are becoming too common. Attorneys need to be careful about the number and type of points made in Daubert motions. Judge Kaplan described how he now holds a pre-Daubert motion conference to confirm which experts may testify at trial to more effectively narrow the amount and scope of expert testimony and informally examine the possible challenges. Judge Kaplan thinks this pre-Daubert motion conference may cause parties to think twice before filing Daubert motions.

Damages. Judge Kaplan discussed the need for patent trial attorneys to appreciate and master the art of proving damages. He suggested that patent attorneys seek out successful plaintiff’s attorneys for advice on proving damages effectively.

Trial. Judge Kaplan observed that attorneys are often too repetitive at trial.

Summary Judgment. Judge Kaplan noted that the summary judgment record in patent cases is often too long and includes much more than is necessary for the court to fully consider the motion. Do not bury important information in an overly long record – by doing so, parties run the risk of that information not being fully considered or that information may be obscured by less pertinent information.

Thanks to Magistrate Judge Kaplan as well as Hon. Lee Yeakel (Western District of Texas), Hon. Ron Clark (Eastern District of Texas), and Hon. Andrew S. Hanen (Southern District of Texas) for their participation in this interesting panel.

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Judge Fitzwater’s denial of the motion to dismiss found that the claims of direct and indirect infringement are supported by the following pertinent facts alleged in the amended complaint:

• Direct Infringement –
  • Defendant produces and sells using an infringing method (the Court noted the method was fully described in the complaint);
  • Defendant either uses or directs, controls, or instructs a third party who uses every element of the infringing method;
  • Defendant describes and advertises the accused method on its website; and
  • Defendant has actual knowledge of the patent at issue.

• Inducement of Infringement –
  • Defendant uses or sells methods claimed in the patent at issue in the accused application or directs or controls third parties who perform the claimed method; and
  • Defendant has actual knowledge of the patent at issue and continued to sell its infringing application willfully.

• Contributory Infringement –
  • Defendant sells a product, method, or system that is a component designed for use in the infringing manner; and
  • Defendant has sold software tools and instructions to aid in the use of the application.

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Local patent rules “are considered part of the Court’s scheduling order,” thus Patent Rule 3-7 permits amendment of preliminary invalidity contentions “only by order of the presiding judge upon a showing of good cause.”  In relevant part, Patent Rule 3-7 provides that “[g]ood cause for the purposes of this paragraph may include … newly discovered prior art references.  A party seeking amendment of the preliminary or final … invalidity contentions must include in its motion to amend a statement that the … newly discovered prior art references were not known to that party prior to the motion despite diligence in seeking out same.”  Accordingly, after noting that Defendant X10 Wireless had timely filed its Preliminary Infringement Contentions, the Court set out to determine whether X10 had shown good cause to amend the Scheduling Order.  “Good cause,” in turn, requires an evaluation both of the moving party’s diligence and potential prejudice to the non-moving party.

The parties disputed whether X10 had demonstrated the required diligence.  According to Judge Boyle:

The local rules do not require perfection in the search for prior art references; they do, however, require diligence and an absence of gamesmanship.  It is expected that through the course of discovery and evaluation by experts that additional sources may be found which support timely disclosed theories of invalidity.  P.R. 3-7 allows that good cause may include “newly discovered prior art references” so long as the moving party carries its burden of showing its search was diligent and that the reference was timely disclosed.  A party may not, however, delay in diligently searching for references or strategically withhold their prompt production as its opponent commits to a path.  A party seeking to amend its invalidity contentions must include P.R. 3-7’s required statement that the “newly discovered prior art references were not known to that party prior to the motion despite diligence in seeking out same,” and if its diligence is meaningfully challenged, it must respond with evidence.

Here, Judge Boyle concluded that X10 proved the required diligence by virtue of its continuous and broad prior art search, its timely disclosure of the newly found prior art references, and its prompt filing of a motion to amend upon receiving the plaintiff’s objection to the new references.  The Court also emphasized the thorough nature of X10’s preliminary and amended invalidity contentions.

The parties also disputed whether X10 had demonstrated the absence of unfair prejudice to Guardian.  Judge Boyle determined that Guardian did not present any particular evidence of prejudice:

X10′s proposed amendment does not drastically reframe the suit by inserting previously undisclosed theories of invalidity, and instead timely discloses newly discovered references to support its arguments.  More importantly, X10′s proposed amendment is made well in advance of the deadlines for expert reports and the close of discovery.  The schedule set in this case does not preclude a full and fair analysis of the additional proposed references.  While Guardian points to a potential impact on claim construction, it does not point to any claim language that would be affected by the addition and the Court does not find any potential need to revisit claim construction to be readily apparent.

The Court thus found that the potential for unfair prejudice did not provide sufficient basis to deny X10’s motion to amend.

Based on X10’s showing of diligence and an absence of unfair prejudice to Guardian, Judge Boyle granted X10’s Motion to Amend its Preliminary Invalidity Contentions.  The Court expressly reserved any decision regarding Guardian’s argument that the newly included references do not qualify as prior art.

FULL DISCLOSURE: Attorneys at Klemchuk Kubasta LLP represent X10 Wireless Technology, Inc., one of the Defendants in this patent infringement litigation.

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