Minnesota Patent Litigation Wrap-Up — February 2018

This post continues our monthly summary of patent litigation in the District of Minnesota, including short summaries of various substantive orders issued in pending cases.

Cutsforth, Inc. v. LEMM Liquidating Co., No. 12-cv-1200 (Feb. 13, 2018) (Nelson)

• Motion to Dismiss/Transfer for Improper Venue: Granted

Judge Nelson granted LEMM's motion to transfer venue of pending cases pursuant to the Supreme Court's recent TC Heartland decision and the Federal Circuit's interpretation of that decision in In re Micron.

Cutsforth brought suit against LEMM, alleging that LEMM's electric brush holders infringe various of Cutsforth's patents. LEMM does not maintain a physical office in Minnesota. LEMM argued that venue was improper in the District of Minnesota under TC Heartland and sought transfer to the Western District of Pennsylvania. Judge Nelson granted the transfer motion, finding that TC Heartland was a change in the law and LEMM had not waived its venue challenge. Following this grant, Cutsforth appealed to the Federal Circuit. The Federal Circuit granted Cutsforth's petition and remanded the case to Minnesota for further consideration in light of that Court's recent In re Micron decision.

After reconsidering the parties' arguments in view of In re Micron, Judge Nelson again ordered that the case be transferred to the Western District of Pennsylvania. In so holding, Judge Nelson concluded that "Defendants' conduct provide[d] no basis for finding [LEMM] forfeited their venue objections." Pursuant to the Federal Circuit's guidance, Judge Nelson also considered the parties' respective claims of prejudice under Rule 1, and concluded that the prejudice to LEMM outweighed the prejudice to Cutsforth and Cutsforth's claims of prejudice did not "warrant a finding of forfeiture of Defendants' venue objections." Finally, Judge Nelson found that the trial date was not sufficiently immediate to warrant keeping the case in Minnesota.

Regents of the University of Minnesota v. LSI Corp., No. 16-cv-2891 (Feb. 1, 2018) (Wright)

• Motion to Dismiss/Transfer for Improper Venue: Granted

After the University sued LSI in Minnesota, LSI sought to dismiss the case for improper venue pursuant to TC Heartland, or in the alternative to transfer the case to the Northern District of California for the convenience of the parties. LSI maintains offices in Minnesota, but is based in San Jose, California. The other Defendant (Avago) is also based in San Jose but maintains no offices in Minnesota.

As neither Defendant is incorporated in Minnesota, Judge Wright's analysis focused on the second prong of the venue statute (35 U.S.C. § 1400(b)), which allows suit to be brought where the defendant has a "regular and established place of business." Following the Federal Circuit's Cray test, Judge Wright ultimately found that the University could not show: 1) that Defendant Avago had a physical place in the district, 2) that any Avago employee is based in Minnesota, or that 3) Avago's business interactions with LSI were sufficient to establish that Avago itself has a physical place in Minnesota. As such, Judge Wright concluded that venue was improper in the District of Minnesota and ordered the case transferred to the Northern District of California.

Telebrands Corp. v. Seasonal Specialties, LLC., No. 17-cv-4161 (Feb. 23, 2018) (Bowbeer)

• Motion to Stay Pending Reexamination and Inter Partes Review: Granted

Shortly after Telebrands brought suit against Seasonal Specialties, the USPTO instituted ex parte reexamination of two of Telebrands' asserted patents, and various third parties sought post-grant review of the same patents. Seasonal Specialties moved to stay the litigation until the various proceedings before the USPTO concluded.

Judge Bowbeer granted Seasonal's motion, finding that a stay was appropriate given the early stage of the case, that a stay would not unduly prejudice Telebrands, and that a stay would likely simplify the issues for trial. Judge Bowbeer rejected Telebrands' argument that the stay would cause undue delay, citing numerous cases from this District rejecting that same argument. Judge Bowbeer noted that Telebrands had not sought a preliminary injunction, nor had it identified any evidence of delay by Seasonal in seeking a stay.

Notably, Judge Bowbeer granted Seasonal's request for a stay despite the fact that three other asserted design patents were not subject to any USPTO proceedings. However, Judge Bowbeer concluded that due to the substantial overlap in subject matter between these patents and the patents under review, along with the overlap in percipient witnesses and documents, a stay would still likely simplify the case and narrow the issues for trial.

Schwendimann v. Arkwright Advanced Coating, Inc., No. 11-820 (Feb. 23, 2018) (Tunheim)

• Motion for Attorneys' Fees: Denied

Following a judgment that Arkwright infringed Schwendimann's patent relating to "dark T-shirt transfer technology," Plaintiff moved to recover its attorneys' fees of approximately $3.3 million. Plaintiff alleged Arkwright engaged in inappropriate litigation tactics, ignored rulings from the court, and adopted meritless defenses. Judge Tunheim disagreed and denied Plaintiff's motion for fees.

As to litigation tactics, Judge Tunheim found that Plaintiff "overstates the nature of the facts that she contends constitute egregious litigation conduct." And while Judge Tunheim agreed that Arkwright's counsel made misrepresentations to the jury, the Court concluded the misrepresentations were immaterial and did not make the case exceptional. Judge Tunheim similarly rejected Plaintiff's charge that Arkwright's defenses were meritless, explaining that they all "concern factual and credibility disputes best left to be resolved by the jury." Judge Tunheim further noted that had the defenses been truly meritless, the Court would have granted summary judgment or judgment as a matter of law at the appropriate time. The Court concluded that any delay in the case was attributable to both parties who each "engaged in excessive motion practice, dilatory tactics, and histrionic argumentation."