EDTX & NDTX Monthly Wrap-Up: July 2021

This month's EDTX & NDTX Wrap-Up summarizes two decisions from the Eastern District of Texas that issued in late June and in July. In the first decision, Judge Schroeder addresses the scope of IPR estoppel related to system art. In the second decision, Judge Gilstrap rules on a motion to dismiss for lack of subject matter and personal jurisdiction and a motion to transfer for convenience. The summary of the second decision focuses on Judge Gilstrap's analysis of a unique timing issue related to the motion to dismiss for lack of subject matter jurisdiction.

General Access Solutions, Ltd., v. Sprint Spectrum LLC, No. 2:20-CV-00007, Dkt. No. 321 (E.D. Tex. Jul. 21, 2021) — IPR Estoppel — Judge Schroeder

Plaintiff General Access moved for partial summary judgment based on IPR estoppel following Sprint's IPR proceeding and appeal that resulted in cancellation of some (but not all) of the claims of the asserted patent. General Access Solutions, Ltd., v. Sprint Spectrum LLC, No. 2:20-CV-00007, Dkt. No. 321 at *1—2 (E.D. Tex. Jul. 21, 2021). The court denied General Access's motion. Id.

In the IPR, Sprint raised invalidity grounds that included a paper by Ulrih Vornefeld as the primary reference, and General Access conceded that the Vornefeld reference "knocked out" certain independent claims. Id. After the IPR proceeding and appeal concluded, Sprint served invalidity contentions with the "Navini System" as prior system art and asserted that certain claims were invalid in light of the Navini System and the knowledge of a POSITA and/or in combination with Toshimitsu—a written reference. Id. There was no evidence that the Vornefeld paper had any connection to the Navini System. Id. at *3.

General Access argued that the combination of Toshimitsu and the Navini System was an estopped "ground" under 35 U.S.C. § 315(e)(2). Id. at *3—4. Citing Wasica Fin. GmbH v. Schrader Int'l, Inc., 432 F. Supp. 3d 448 (D. Del. 2020), General Access argued that the Navini System was duplicative of Vornefeld and Sprint could have raised Toshimitsu in the IPR to challenge the validity of the surviving claims in the same way by using it with Vornefeld as the base reference. Id. According to General Access, Sprint had to show that the Navini System-Toshimitsu combination was meaningfully different from grounds it raised in the IPR. Id. at *5.

The court disagreed. See id. at *7. Citing Wasica (applying estoppel) and Intell. Ventures II LLC v. Kemper Corp., No 6:16-CV-0081, 2016 WL 7634422, at *3 (E.D. Tex. Nov. 7, 2016) (not applying estoppel), the court noted that district courts are split on whether estoppel applies when a patent challenger raised at IPR a reference that describes the systems art asserted in the district court, such as a manual. Id. at *7—8. However, the court reasoned that General Access sought to extend estoppel even further, "to apply estoppel to a systems combination that could not be raised and was not described or discussed in IPR." Id. at *8. The court distinguished Wasica on the basis that the Vornefeld reference raised in the IPR did not describe the Navini System. Id. at *8—9. Finding that the facts in the case were "easily distinguishable" from Wasica the court denied General Access's motion for summary judgment. Id. at *9.

Seagen Inc. v. Daichi Sankyo Co., Ltd., No. 2:20-CV-337-JRG, 2021 WL 2662184 (E.D. Tex. Jun. 28, 2021) — Subject Matter Jurisdiction — Judge Gilstrap

Defendant Daichi moved to dismiss based on lack of subject matter jurisdiction and lack of personal jurisdiction and moved to transfer under 28 U.S.C. § 1404 to the District of Delaware. Seagen Inc. v. Daichi Sankyo Co., Ltd., No. 2:20-CV-337-JRG, 2021 WL 2662184, at *1 (E.D. Tex. Jun. 28, 2021). The court denied both motions. Id.

Daichi based its motion for lack of subject matter jurisdiction on the timing of the lawsuit and the issue date of U.S. Patent No. 10,808,039, which issued to plaintiff Seagen on October 20, 2020. Id. At 12:02 a.m. (Eastern Time) on the issue date, Seagen filed its complaint for infringement of the '039 patent against Daichi in the Eastern District of Texas, which is in the Central Time zone. Id. Thus, Seagen filed its complaint at 11:02 p.m. on October 19, 2020, local time. Id. According to Daichi, Seagen filed its complaint prematurely, before the date of issuance, and the court therefore lacked subject matter jurisdiction. Id. at *3.

Daichi argued that the Uniform Time Act ("UTA"), 15 U.S.C. §§ 260—267, applied to patent rights and mandated that the applicable time zone for filing suit in the District was Central Time. Id. According to Daichi, § 262 of the UTA restricted when Seagen may file its complaint because it applies to "the time of performance of any act by any officer [of the] . . . judicial branch[ ]" and "the time within which any rights shall accrue or determine." Id. Thus, Daichi argued Seagen's rights to assert the '039 patent didn't accrue until the start of October 20, 2020 in the Central Time zone. Id.

The court agreed with Daichi that the UTA applied to patent rights but found that Seagen's complaint was timely filed under the UTA. Id. at *4. The court considered the language of the UTA and the patent statutes, and a prior case, NobelBiz, Inc. v. Global Connect, L.L.C., No. 6:13-CV-804, 2014 WL 12613389 (E.D. Tex. Feb. 26, 2014), with similar facts that applied an "absolute time" rule. Seagen, 2021 WL 2662184 at *3—4. According to the court, the plain language of § 262 of the UTA, encompassing "all statutes, orders, rules, and regulations" that implicated time in certain enumerated categories, applied to patent rights. Id. The court found that the issuance of a patent by the PTO Director was an "'act' by an officer and department of the United States." Id. at *5.

On whether the complaint was timely filed, the court determined that, consistent with statutory language framing a patentee's rights in terms of the United States, a patentee's nationwide right to exclude accrues when the patent issues in the Eastern Time zone, and the "patentee need not wait until "the date changes in the locale of the district court." Id. at *6. The court noted that even though Nobel Biz and other cases applying the absolute time rule did not control, the court's holding led to the same result. Id.

Turning to personal jurisdiction, the court noted an unresolved question exists regarding whether placing goods into the stream of commerce is alone enough for jurisdiction or if "something more" is required. Id. at *7 (discussing J. McIntyre Machinery, Ltd. v. Nicastro, 564 U.S. 873 (2011) and Asahi Metal Industry Co., Ltd. v. Superior Court of California, 480 U.S. 102 (1987)). Nevertheless, the court found that either test was satisfied. Id. It found that Daichi's clinical trials and research presentations in Texas, and its knowingly placing the accused products into the stream of commerce in Texas, "demonstrate[ed] an intentional targeting of Texas by [Daichi] for its business activities." Id. at *8—9.

Finally, the court considered and denied Daichi's motion to transfer. Id. at *9—10. The court first determined that Daichi had not established that the case could have been brought in the transferee forum. Id. at *10. ("[Daichi] has not presented any specific facts or analysis of personal jurisdiction [in Delaware] in the Motion to Transfer"). Next, the court analyzed the Fifth Circuit convenience factors, and found that that even if Daichi had shown the case could have been brought in Delaware, it failed to show the transferee forum was clearly more convenient. Id. at *10—13. Of note, the court "resist[ed] DSC’s attempt to conjure judicial economy" where the "risk of duplicative litigation and inconsistent decisions only exists because [Daichi] chose to file an identical lawsuit in Delaware after being sued in Texas." Id. at *12 (emphasis in original).