Clash of the 101 Motions: Motion to Dismiss Claims Versus Motion for Summary Judgment as to 101 Defense

Although most 101 defenses are raised via motions to dismiss under 12(b)(6), a few are brought under 12(c), and more than a few are either filed in or converted to the context of summary judgment.  But this case raises an interesting twist with the defendant seeking dismissal on 12(b)(6) grounds and the plaintiff seeking summary judgment that the 101 defense is without merit.  So let’s see how that worked out for them.

How Do You Know When The Case Is Over?

Ever had that situation where you think you have a settlement, but the other side doesn’t, or vice versa?  I mean in the absence of horned and breastplated opera singers, of course. That was the situation presented in this case, where the parties in a patent infringement case appeared to have settled their dispute, but the final settlement agreement fell through when Defendants learned that the Patent Trial and Appeal Board (PTAB) had instituted inter partes review (IPR) of one of the asserted patents. The Court found that

EDTX Grant Rate on 101 Motions Up to 75%; Del/ND Cal. 101 Grant Rate Drops to 23%

Fenwick & West’s BilskiBlog had a good summary of the state of 101 caselaw as of the end of Q1 2017 yesterday.  Most notable to me was their observation of the pronounced change in grant rates for 101 motions in patent-heavy district in the last six months.

They compared grant rates from mid-2014 through the third quarter of 2016, and then over the past six months, uncovering two significant trends.  First, the three top districts in terms of rulings that are not the EDTX had grant rates from 65-74%, but those rates dropped dramatically to 18-40% in the last six months.  Excluding CD Cal and only looking at the double digit districts, the rate is 18-25%.

In contrast to its 31.9% grant rate from 2014-2016, however, the EDTX grant rate for 101 motions the last six months has increased to 75%, with 12 of 16 motions being granted.  That is over three times the grant rate in D Del and ND Cal, which are currently at 23%.

The reason for the spike appears to be a batch of grants in March 2017, but the post recognizes that the overall national trend is a downward one nonetheless.

EDTX Creates Nonparty Liability in Exceptional Cases; CAFC Not So Much

I was working on an update on the Iris Connex case (you remember – noninfringement dismissal after expedited claim construction, $507,000 in sanctions against plaintiff and nonparty) when I saw Dennis Crouch’s summary this morning of the Federal Circuit’s decision in Asetek Danmark v. CMI USA (“Cooler Master”) (Fed. Cir. 2017) focused on the issue on enjoining a nonparty.

In light of that case, I realized that the time might be right for a detailed post on the issue of the new EDTX-created mechanism for nonparty liability, which I’ll refer to as a the “Iris Connex” test.

The significance of this new test appears to be starting to seep in – I just read an analysis of it in an article by some TBL partners that correctly noted it as evidence that “courts on the front lines of patent litigation, and particularly in the Eastern District of Texas, are more adept at addressing potential systemic abuses than reform-minded politicians.” 23 No. 25 Westlaw Journal Intellectual Property 1.  The specific proposals they were addressing were those in recent patent reform bills that sought to increase transparency in NPE cases to address exactly the abuses that the Court found in this case, but which ran into trouble trying to craft specific measures that didn’t cause other problems.  When faced with a “shell corporation” scheme to elude liability under Section 285, the article wrote that “the Eastern District of Texas created a solution – and set an example for other courts and patent litigants to follow.”  The article opines, and I think correctly so, that this may be another example of the courts developing an effective solution to a problems using existing tools before Congress legislates one.

But first, we need some background facts on the Iris Connex case.  After all, it is the one Judge Gilstrap described as “the clearest example of an exceptional case to yet come before the undersigned. Simply put, if this case is not an exceptional case, then there are none.”

The next 4,296 words are my attempt to summarize the case, its resolution, and its significance.  Pour yourself a cup of coffee, pull up a seat, and let’s get exceptional.