Texas Patent Litigation Monthly Wrap-Up: June 2023

Apax Beam Technologies LLC v. ZTE Corporation, No. 2:22-CV-000310JRG-RSP (E.D. Tex. Jun. 14, 2023) Defendants’ Motion to Stay Pending Inter Partes Review

Defendants Samsung Electronics Co, Ltd. and Samsung Electronics America, Inc. moved to stay this lawsuit pending inter partes review. The Court found that the PTAB’s institution decisions were not due for at least another three months. In denying Defendants’ motion, the Court noted in the Eastern District of Texas, “courts usually deny motions for stay when the PTAB has not acted on a petition for inter partes review.”

Koninklijke KPN N.V. v. Telefonaktiebolaget LM Ericsson, Ericsson Inc., No. 2:21-cv-00113-JRG (E.D. Tex. Jun. 15, 2023) Plaintiff’s Motion for an Exceptional Case Finding and Fees under 35 U.S.C. § 285 and an Award of Expert Fees

Plaintiff KPN filed a motion for an exceptional case finding and fees and an award of expert fees after prevailing at trial.

KPN argued it was entitled to fees because Ericsson allegedly (1) prejudiced KPN by asserting a sham FRAND defense, which Ericsson later dropped, to distract KPN, increase KPN’s expenses, and as a means to introduce evidence that would not otherwise come in at trial; (2) mislead KPN and the Court of the existence of highly relevant evidence before springing it on KPN at trial; and (3) violated court orders, committed trial misconduct, and increased KPN’s costs. KPN further argued that Ericsson’s willful infringement further supported its position that the case was exceptional. Ericsson argued that (1) the Court already addressed the FRAND issue by previously ordering sanctions and the KPN’s motion amounts to an attempted second recovery; (2) KPN overstates the effect of Ericsson’s withdrawal of its FRAND defense because even if Ericsson never pled this defense, FRAND related issues would still have arisen; and (3) the time KPN spent rebutting this defense had no effect on KPN’s time limits at trial given that KPN still had time remaining when it rested its case. Ericsson further argues that KPN employed the same late-withdrawal strategy with respect to its claims for indirect infringement, which should factor into the totality of the circumstances in determining if this case was exceptional. Finally, Ericsson argued that a finding of willful infringement by the jury does not necessarily make a case exceptional, particularly where the parties engaged in pre-suit negotiations involving claims charts and when the Court decided not to enhance damages.

The Court found that the case was not exceptional based on the totality of the circumstances. Concerning Ericsson’s dropped FRAND defense, the Court reiterated that the impropriety of Ericsson’s conduct was more so in disclosing to KPN that it was dropping its FRAND defense mid-trial than about Ericsson’s substantive legal position regarding FRAND and that the Court already address that misconduct by imposing sanctions to remedy the harm done to KPN. The Court also found that KPN’s other complaints did not rise to the level of misconduct that warranted an award of attorney’s fees. In doing so, the Court noted that KPN had engaged in similar conduct that it complains of against Ericsson concerning late withdrawal of claims. Further, the Court did not find that Ericsson reaped the full benefit of its FRAND defense without actually pursing it or that Ericsson mislead KPN or the Court about any evidence. The Court also did not find Ericsson’s trial conduct to be unreasonable. Finally, although the Court was mindful of the jury’s finding of willfulness, it did not find that Ericsson’s willfulness in this case went so far as to make Ericsson’s litigation position so meritless as to stand out from the norm. Taking all relevant factors into consideration, the Court ultimately was not persuaded that this was an exceptional case entitling KPN to attorney’s fees.

Howlink Global LLC v. AT&T, Inc. ET AL, No. 2:22-CV-0040-JRG-RSP (E.D. Tex. Jun. 21. 2023) Defendants’ Motion for Summary Judgement for Non-infringement of the Festo Bar

Defendants¹ filed a motion for summary judgement for noninfringement on the ground that Plaintiff Howlink’s sole reliance on a doctrine of equivalents infringement theory as to the “concatenation” term, recited in every claim, is barred by prosecution history estoppel.

Defendants first argued that an amendment replacing “combination” with “concatenation” was a narrowing amendment for the purposes of patentability, and therefore, triggered the Festo presumption. Second, Defendants contended that Howlink cannot rebut the Festo presumption based on the record clearly laid out in the prosecution history and Howlink’s admissions before the Court.

In response, Howlink challenged three aspects of the Festo presumption. First, Howlink argues that there is no Festo presumption because the amendment at issue overcoming an obviousness rejection and resulting in an allowance was not a narrowing amendment. Second, Howlink asserted the amendment was not for the reason of patentability because there were other features distinguishing the amended claims from the relevant prior art reference. Finally, Howlink argued that even if the Festo presumption applies, that the amendment is only tangentially related to the equivalent at issue. In recommending that Defendants’ motion be granted, Magistrate Judge Payne walked through a three-part test laid out in Warner-Jenkins and Festo to determine whether prosecution history estoppel bars the doctrine of equivalents.

Judge Payne found that the amendment at issue was narrowing because the scope of the term “concatenation” was narrower than the term “combination,” which was originally used in the application. Judge Payne found Howlink's argument that the amendment actually broadens the claim unpersuasive for four reasons: (1) the relevant inquiry was confined to the disputed limitations containing the amended language, for which Howlink now relies on a doctrine of equivalents infringement theory, and not to the invention as a whole; (2) the amendment not only significantly limited the number of possible groups, but also narrowed the claims to require two particular sequences of the same two codes; (3) the applicant never challenged the Examiner’s narrower definition of “concatenation,” amended the claims to recited a broader term, or appealed the rejection, and instead modified its arguments directly acknowledging and acquiescing to the Examiner’s understanding that “concatenation” means “serial concatenation”; and (4) Howlink conceded to the narrower definition during the parties’ Markman hearing. Judge Payne then found that the narrowing amendment was directly related to patentability because the applicant amended the claims to overcome an obviousness rejection, which resulted in the allowance of the claims and issuance of the asserted patent. In doing so, Judge Payne found Howlink’s argument that the inclusion of certain language was conclusive evidence that it was not relying on its amendment to overcome the rejection unpersuasive. Judge Payne then concluded that Howlink’s arguments fell short of meeting its burden to rebut the Festo presumption.

After conducting this three-part test, Judge Payne concluded that every asserted claim included the amended language, and because Howlink only asserted that the disputed limitations are met under a doctrine of equivalents theory, that prosecution history estoppel precluded Howlink’s reliance on the equivalents sought. In viewing all facts and inferences in Howlink’s favor, Judge Payne ultimately concluded that no reasonable jury could find that every limitation recited in the asserted claims is found in the accused device either literally or under the doctrine of equivalents, and therefore, that Defendants were entitled to a judgment of non-infringement as a matter of law. Judge Gilstrap adopted Judge Payne’s recommendation and granted summary judgment for Defendants.

Sqwin SA v. Walmart, Inc., No. 4:22-CV-1040-SDJ (E.D. Tex. Jun. 28, 2023) Defendant’s 12(b)(6) Motion to Dismiss

SQWIN SA filed a lawsuit against Walmart asserting direct, indirect, and willful infringement of three patents generally relating to online transaction systems. Walmart moved to dismiss this lawsuit arguing that SQWIN’s complaint failed to state a claim upon which relief could be granted. Specifically, Walmart challenged SQWIN’s direct infringement claims concerning the ’176 Patent and SQWIN’s indirect and willful infringement claims for each of the asserted patents.

For the ’176 Patent, Walmart generally argued that SQWIN’s infringement theory rests on an implausible construction of “wireless network” to cover networks beyond Wi-Fi. In declining Walmart’s request to dismiss this lawsuit, the Court noted it “is not convinced, at this juncture, that as a matter of law Walmart’s proffered construction is the only plausible reading” of this patent and rejected to venture into a premature claim construction exercise to determine such. The Court found that, at this stage, neither the language of the patent nor the Court’s understanding of the terms at issue supported Walmart’s dismissal theory.

As for SQWIN’s indirect and willful infringement claims, SQWIN conceded during the hearing on Defendant’s motion to dismiss that its Complaint did not provide the factual predicate to support these claims. Therefore, the Court found that SQWIN’s claims of indirect and willful infringement fall far short of the “fair notice” pleading requirement set out in Twombly and granted Walmart’s motion to dismiss without prejudice, allowing SQWIN the opportunity to replead its indirect and willful infringement claims.