EDTX & NDTX Monthly Wrap-Up — November 2019

This post summarizes two interesting opinions out of the Eastern and Northern Districts of Texas in November 2019.

Music Choice v. Stingray Dig. Grp. Inc.: What qualifies as sufficient disclosure of an expert's non-infringement and invalidity opinions?

Magistrate Judge Payne recently granted a motion for leave to serve a supplemental expert report after denying a motion to strike deposition testimony.[1] Plaintiff Music Choice moved to strike two opinions from Defendants' expert Dr. Shamos's deposition testimony. Dr. Shamos opined that:

• "the Audio Engine and StillPic Generator components of the accused Ubiquicast machine purportedly send data between them via a shared RAM memory, which . . . does not qualify as the '€˜transmission' of data as recited in ‘245 claims 10 and 15;" and
• "[prior art reference] Rothman made MP4 technology obvious."

Music Choice also sought leave to file a supplemental expert report addressing these opinions if the Court denied its motion to strike.

Judge Payne first addressed the non-infringement theory regarding common memory. Music Choice argued that Dr. Shamos's expert report only opined "that there was no '€˜transmission' of data packets between the Audio Engine and StillPic Generator because the two supposedly were '€˜the same piece of software.'" According to Music Choice, Dr. Shamos pivoted in his deposition to argue that there is no transmission "because data is purportedly sent between the StillPic Generator and Audio Engine via shared RAM or common memory." Music Choice pointed out that the terms "RAM" and "common memory" did not appear in Dr. Shamos's report.

The Court rejected Music Choice's arguments because Dr. Shamos's deposition testimony fell within the scope of his expert report. "While Dr. Shamos does not explicitly discuss a common memory non-infringement theory within his report, Dr. Shamos does discuss a non-infringement theory that no transmission occurs as required by the claims because the Audio Engine and StillPic Generator are part of the same software program." Judge Payne cited to other cases where experts were allowed to elaborate on opinions in their report.[2]

The Court next addressed the Rothman prior art. Music Choice argued that Dr. Shamos did not sufficiently disclose the theory that MP4 technology was rendered obvious by Rothman because his expert report failed to discuss MP4 in relation to Rothman. The Court rejected this argument because Music Choice was sufficiently put on notice of this theory via Defendants' invalidity contentions.[3]

After rejecting both portions of Music Choice's motion to strike, the Court granted the motion for leave to supplement. The Court limited the supplemental expert report to the two issues discussed above. Judge Payne considered the issues "sufficiently close" and wished "to mitigate any prejudice to Plaintiff."

Fundamental Innovation Sys. Int'l v. Zte Corp.: Does estoppel apply when two IPR petitions are filed but only one institutes?

In the Northern District of Texas, Judge Godbey recently denied a motion for partial summary judgment of no invalidity.[4] Defendant ZTE filed two petitions for inter partes review against the asserted patent. The PTAB instituted the first petition on all claims and grounds but declined to institute the second petition. ZTE then raised the second petition's arguments in the district court case.

Plaintiff FIS argued that ZTE was estopped from making these arguments because they could have been included in its first IPR petition, which was instituted. The Federal Circuit has held that IPR estoppel does not apply to grounds raised in a petition that is not instituted because "IPR does not begin until it is instituted."[5] ZTE argued estoppel did not apply because it was not required to raise all its grounds in the first IPR petition and did raise its invalidity arguments in the second petition.

The Court agreed with ZTE and denied FIS's motion. The Court acknowledged that the relevant Federal Circuit precedent occurred before the Supreme Court invalidated the practice of partial institution,[6] but nothing in the text of the IPR estoppel statute nor the Supreme Court's holding expressly requires that an IPR petitioner file only one IPR petition including all of its grounds. "In fact, IPR petition requirements, such as word limits, discourage raising all possible grounds in a single petition." The Court also recognized that "the statutory aim — to prevent strategic splitting where a party asserts some grounds in an IPR petition and saves others for litigation —€” would not be frustrated in a situation, like this, where all grounds were asserted in same-day IPR petitions prior to litigation."[7] As such, FIS's motion failed.

[1] Music Choice v. Stingray Dig. Grp. Inc., No. 2:16-cv-00586-JRG-RSP (E.D. Tex. Nov. 5, 2019).

[2] Id. (citing Gay v. Stonebridge Life Ins. Co., 660 F.3d 58, 64 (1st Cir. 2011) ("Although his testimony uses different words than the expert report, it was a reasonable elaboration of the opinion disclosed in the report."); SEC v. Life Partners Holdings, Inc., 2013 U.S. Dist. LEXIS 194549, 2013 WL 12076934, at *3 (W.D. Tex. Nov. 8, 2013) (quoting Thompson v. Doane Pet Care Co., 470 F.3d 1201, 1203 (6th Cir. 2006))).

[3] Id. (citing Effective Exploration, LLC v. Bluestone Natural Res. IIl, LLC, No. 216-CV-00607-JRG-RSP, 2017 U.S. Dist. LEXIS 197338, 2017 WL 5895164, at *3 (E.D. Tex. Nov. 13, 2017), report and recommendation adopted, No. 2:16-CV-00607-JRG-RSP, 2017 U.S. Dist. LEXIS 196147, 2017 WL 5890082 (E.D. Tex. Nov. 29, 2017), appeal dismissed, No. 2018-1365, 2018 WL 3244574 (Fed. Cir. Apr. 26, 2018) (citing Ciomber v. Coop. Plus, Inc., 527 F.3d 635, 642 (7th Cir. 2008))).

[4] Fundamental Innovation Sys. Int'l v. Zte Corp., Civil Action No. 3:17-CV-1827-N (N.D. Tex. Nov. 20, 2019).

[5] Shaw Indus. Grp., Inc. v. Automated Creel Syst., Inc., 817 F.3d 1293, 1300 (Fed. Cir. 2016).

[6] Id. (citing SAS Inst., Inc. v. Iancu, 138 S.Ct. 1348, 1353 (2018)).

[7] Id. (citing Milwaukee Elec. Tool Corp. v. Snap-On, Inc., 271 F. Supp. 3d 990, 1027, 1029 (E.D. Wis. 2017) ("[A] petitioner cannot be left with the option to institute a few grounds for IPR while holding some others in reserve for a second bite at the invalidity apple once in the district court.").

Author: Aaron Pirouznia