Texas Patent Litigation Monthly Wrap-Up: November 2021

This post is our latest review of noteworthy case developments in Texas district courts in the month of November 2021. Four subjects stand out this month: (1) stays of district court litigation pending IPR, (2) subject matter eligibility under § 101, (3) service of foreign subsidiaries, and (4) damages expert opinions.

Sable Networks, Inc. et al v. Splunk Inc. et al, 5-21-cv-00040 (Nov. 1, 2021, E.D. Tex.) (Schroeder, J.)

The court denied without prejudice defendants' motion to stay pending petitions for inter partes review because the undue prejudice and lack of potential simplification of issues weighed against a stay. The court reasoned that "[t]he mere fact that [plaintiff] is not currently practicing the patents does not mean that, as a matter of law, it is not prejudiced by a substantial delay of an imminent trial date." Id. at 3. The court also noted that "any finding [pre-institution] as to the likelihood of simplification would be pure speculation." Id.

SynQor, Inc. v. Vicor Corporation, 2-14-cv-00287 (Nov. 16, 2021, E.D. Tex.) (Craven, Mag.)

The court granted plaintiff's motion to lift a stay pending inter partes review and ex parte reexamination proceedings as to two of three asserted patents. The court noted that "[t]he reexamination proceedings have taken longer than anticipated, but have simplified the issues and most likely conserved judicial resources." Id. at 11. The court found that "any likelihood of further simplification of the issues does not justify extending the stay." Id.

United Services Automobile Association v. PNC Bank, NA, 2-20-cv-00319 (Nov. 18, 2021, E.D. Tex.) (Gilstrap, J.)

The court denied plaintiff's motion to dismiss on the ground that the patentee's customer tracking patents encompassed unpatentable subject matter because the movant failed to establish that the asserted claims lacked an inventive concept. The court noted that the patentee "argues that the inventive concept disclosed in the claims of the [patent] 'is a highly specific method for aggregating and displaying banking information to improve an online banking interface.'" Id. at 9. The court found "that there are factual disputes related to whether various elements of the asserted claims, alone or in combination, were conventional and well-understood at the time the patent was filed." Id.

Gravel Rating Systems LLC v. McAfee, LLC, 4-21-cv-00259 (Nov. 15, 2021, E.D. Tex.) (Mazzant, J.)

The court denied defendants' motions to dismiss on the ground that plaintiff's self-organizing knowledge base patent encompassed unpatentable subject matter because defendants failed to establish that the asserted claims lacked an inventive concept. The court noted that "[t]he [patent] improved the threaded discussion scheme by 'collecting ratings and comments associated with each item of information and allowing users to access and sort items of information according to selected rating criteria'" and that plaintiff's "allegations suggest that the claimed invention is directed to an improvement in the computer technology itself and not directed to generic components performing conventional activities." Id. at 8. The court was therefore "unconvinced Defendants have met their burden of showing the patent-in-suit is invalid by clear and convincing evidence." Id.

Stingray IP Solutions, LLC v. Signify NV f/k/a Philips Lighting NV, 2-21-cv-00044 (Oct. 29, 2021, E.D. Tex.) (Gilstrap, J.)

The court granted plaintiff's motion to serve Chinese and Polish subsidiary defendants via alternative means and allowed plaintiff to serve these subsidiaries through counsel for the parent company defendant. The court explained:

[T]he efficiency of alternative service — particularly where the parent of the unserved entities is aware of the unsuccessful service attempts — is an initial consideration that weighs in favor of granting relief under Rule (4)(f)(3). . . . [F]our defendants remain to be served and each must be served through a different Hague Convention signatory nation. Requiring service to proceed solely under the Hague Convention would add the cost of four separate applications to the respective central authorities along with the expense from any resulting delay. . . . Beyond delay and expense, the Court further finds that [plaintiff's] multiple attempts to effectuate service — combined with [the parent company's] active role in objecting to service on behalf of its foreign subsidiaries — also favors granting alternative service under Rule 4(f)(3).

Id. at 7. The court, however, denied plaintiff's motion to serve the Dutch and Hong Kong subsidiary defendants via alternative means because plaintiff attempted to serve these subsidiaries via FedEx "outside the purview of Rule 4(f)(2)(C)(ii), without the Court's permission and the Clerk's assistance." Id. at 9. The court noted that "[n]o party is permitted to unilaterally invoke Rule 4(f)(2)(C)(ii) to serve foreign entities." Id. The court then "authorize[d] a proper attempt at service under Rule 4(f)(2)(C)(ii) with respect to [these defendants]." Id.

CloudofChange, LLC v. NCR Corporation, 6-19-cv-00513 (Nov. 3, 2021, W.D. Tex.) (Albright, J.)

The court granted plaintiff's motion to exclude the testimony of defendant's damages expert regarding his patent-based apportionment approach to calculating a reasonable royalty. The court explained that the expert "performed his patent similarity analysis without consulting a technical expert." Id. at 7. The court further explained that the expert "is a damages expert without any technical training and is therefore not qualified to offer opinions on whether any of [defendant's] patents are technically 'similar' or comparable to the asserted patents." Id. The court further noted that the expert's "damages analysis totally ignores the scope of the inventions as indicated in the patent claims themselves" (id. at 7) and found that "[t]his is completely divorced from the Federal Circuit's guidance on damages analysis and therefore should be excluded" (id. at 8).