EDTX and NDTX monthly review: May 2021 | Fish & Richardson

This month’s EDTX and NDTX summary summarizes a decision by the Eastern District of Texas granting a new lawsuit over the validity of the patents. The court considered the admissibility of the unsubstantiated prior art testimony and whether there was a legally sufficient evidence base for the jury’s determination of invalidity. The court ultimately granted a new trial but dismissed the legal judgment (“JMOL”).

Unsubstantiated testimony is admissible as an indication of ordinary skill in the art, but inadmissible as prior art evidence – “This distinction makes all the difference”. Network-1 Techs., Inc. v. Hewlett-Packard Co., Case 6: 13-cv-00072, 2021 WL 1941693, at * 4 (ED Tex. May 7, 2021) (Schroeder, J.).

Defendants Hewlett-Packard Company and Hewlett Packard Enterprise Company (collectively, “HP”) were sued in 2011 for infringement of US Patent No. 6,218,930. Identifier. to 1. Plaintiff Network-1 Technologies, Inc. tried its infringement actions against HP in November 2017. Identifier. “HP presented only one theory of invalidity” at trial— “that the ‘930 patent was invalid as evident by combining four references”: “the Fisher system”, “the Fisher patents” and two additional print publications. Identifier. HP won; the jury returned a verdict of non-infringement and invalidity of all claimed claims. Identifier.

After the trial, the court issued a non-infringement judgment but granted JMOL in favor of Network-1 on validity, overturning the jury’s verdict of invalidity on two grounds. Identifier. to * 1–2. “First, the Court ruled that HP had failed to demonstrate that the Fisher system was prior art. ” Identifier. at 1. Second, the court found that HP was precluded under 35 USC § 315 (e) (2) from presenting a theory of invalidity based on the three remaining print publications. Identifier.

Both parties appealed. The Federal Circuit overturned the lower court’s non-infringement judgment and referred for a new infringement trial. Identifier. at 2 hours; see also Network-1 Techs., Inc. v. Hewlett-Packard Co., 981 F.3d 1015, 1023–26 (Fed. Cir. 2020) (considering that “the [district] The court misinterpreted the term “primary power source” by excluding alternating current power sources ”). The Federal Circuit also overturned the lower court ruling granting JMOL for Network-1 on validity. Network-1 Techs., 2021 WL 1941693, at * 2. The federal circuit resolved the estoppel issue but referred the remaining issues to the district court. Identifier.[1]

While in pre-trial detention, the court ruled on the validity of Network-1’s JMOL petition.

A new trial was appropriate because the evidence for the Fisher system should have been excluded and its inclusion detrimental to Network-1.

Network-1 requested a new trial on the grounds that “the Fisher System evidence should have been excluded and its inclusion prejudiced Network-1[.]” Identifier. at 3. Network-1 argued that the testimony of the creator of the Fisher system, David Fisher, was not corroborated and that HP failed to prove that the Fisher system was prior art. Identifier. “[B]because this system was not part of the prior art and Mr. Fisher’s testimony was not corroborated, neither should have been presented to the jury ”, and“ the inclusion of this evidence was so prejudicial as to warrant a new trial ”. Identifier.

The court concluded that the Fisher system was not prior art and that Network-1 suffered substantial harm as a result of its inclusion. HP’s only evidence of the Fisher system being publicly available prior to the priority date of the ‘930 patent was Mr. Fisher’s unsubstantiated testimony. Identifier. at 4 o’clock. But uncorroborated testimony “is legally insufficient” to establish the Fisher system as prior art. Identifier. (citing Tr. Woodland v. Flowertree Nursery, Inc., 148 F.3d 1368, 1371 (Fed. Cir. 1998) (“Throughout the history of the determination of patent rights, oral testimony from an alleged inventor asserting priority over the rights of a patent is viewed with skepticism and, therefore, such the inventor’s testimony must be supported by some type of corroborating evidence. “)).

HP replied that the Fisher system “was still admissible because it tended to make a consequent fact more probable.[le]-that is to say, that certain limitations were present in the prior art. Identifier. to 3. HP relied on a federal circuit decision in which “the court found that the references,” although not technically prior “, were” correctly used as indicators of the level of ordinary competence in the ‘art to which the invention relates’. Identifier. to * 4 (citing Thomas & Betts Corp. vs. Litton Sys., Inc., 720 F.2d 1572, 1581 (Fed. Cir. 1983)).

But the court noted how “HP used the Fisher system for much more than establishing the level of ordinary skill in the art.” Identifier. HP had used the Fisher system “as a crippling benchmark in its only combination of evidence.” Identifier. As the court explained:

This distinction makes all the difference. The precise date on which a reference was publicly available is less important in determining the level of ordinary skill in the art, as the level of skill is unlikely to change significantly from day to day. On the other hand, the precise date on which the potential state of the art was available to the public can make the difference between a valid and invalid patent. In this case, to the extent that the Fisher system’s evidence was relevant in this case, it was balanced by its prejudicial effect and should have been excluded. [FRE] 403.

Identifier. Unsubstantiated evidence of the Fisher system for establishing skill level is admissible because that level gradually changes, but unsubstantiated evidence of the Fisher system as prior art is inadmissible because the precise date is crucial in determining validity. See id. Thus, the court concluded that “neither the testimony of Mr. Fisher nor the Fisher system itself should have been submitted to the jury”. Identifier.

Based on these circumstances, “where the Fisher system and the uncorroborated testimony of its creator should not have been before the jury”, the court concluded that “a new trial is appropriate.” Identifier. at 5.

JMOL was not appropriate because the jury had a sufficient basis for its determination of invalidity and, in any event, fairness and judicial efficiency justify a new trial.

Network-1 made numerous arguments in its renewed JMOL motion, but the tribunal concluded that “Network-1 waived all of these arguments except one by raising them via a 50 (a) rule. [JMOL] motion during the trial. Identifier. to 6. “Motions under Rule 50 (a) shall be interpreted liberally”, “[b]But even the most liberal construction cannot save Network-1’s motion here. Identifier. Network-1, in raising it in its section 50 (a) motion, had only “to preserve[d] the specific argument. . . that the HP expert would have admitted the non-obviousness. Identifier. at 7 O’clock.

The court dismissed Network-1’s JMOL, finding that “the jury had sufficient basis for its determination of invalidity.” Identifier. The position of the HP expert was essentially that according to his interpretation, HP wins in infringement but loses validity. But [he] also insisted that if the jury disagreed and instead applied the interpretations of the Court’s request in the same way as the Network-1 expert. . . applied in infringement, then the patent was invalid. Identifier. Network-1’s argument, the court explained, “reads too much in [this] presumed admission. Identifier. HP’s expert simply presented an “alternative argument”, therefore JMOL was inappropriate. Identifier.

The court also concluded that a new trial was appropriate on JMOL “even though Network-1 was entitled to a remedy under Rule 50 (b)” because that rule “allows the court to order a new trial instead. than to order the registration of the judgment as a question of law. ” Identifier. (citing Fed. R. Civ. P. 50 (b) (2) and (3)). With the new infringement trial mandated by the Federal Circuit, “fairness and judicial efficiency would also justify trying HP’s disability defense.” Identifier.

The trial is scheduled for August 2, 2021 in Tyler, Texas. Identifier.

[1] On the estoppel issue, the Federal Circuit “ruled that the Court misapplied the estoppel provision of 35 USC § 315 (e) (2) because HP only joined [another defendant]and was unable to raise additional grounds to invalidate the ‘930 patent. ” Identifier. to * 2 (citing Network-1 Techs., 981 F.3d at 1026–28). [View source.]

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