Judge Andrews Imposes Prosecution Bar and Covenant Not to Sue on a Non-Practicing Entity’s Executives and In-House Counsel

June 8, 2016

Publication| Intellectual Property

In Blackbird Tech LLC v. Service Lighting and Electrical Supplies, Inc., et al., C.A. No. 15-53-RGA (D. Del. May 18, 2016), Judge Andrews imposed restrictions on the information that a non-practicing entity plaintiff’s in-house counsel, who also served as its executives, could view. The defendants sought to impose a prosecution bar that would exclude the plaintiff’s “reviewing attorneys,” including its co-founders, from participating in activities involving the “acquisition of a patent or patent application.” The plaintiff agreed to a bar on prosecution activities, but argued that a bar against acquiring patents was not appropriate. The plaintiff also sought to limit the prosecution bar’s applicability to only those products that were not on sale as of the date of the protective order. Noting that the “main practice” of the non-practicing entity plaintiff was the acquisition of patents and assertion of those patents in litigation, Judge Andrews found that the plaintiff’s co-founders, who also served as in-house counsel, “intend[ed] to litigate these cases entirely.” Judge Andrews found that the plaintiff’s co-founders “essentially have the final say on what patents [the plaintiff] will acquire and assert in subsequent litigation.” Thus, Judge Andrews found that these individuals were “competitive decisionmakers” and “a prosecution bar and covenant not to sue these [d]efendants on after-acquired patents in the lighting industry” was appropriate. Judge Andrews also rejected the plaintiff’s proposed restriction of the bar to only those products that were not on sale as of the date of the protective order, noting that this limitation appeared to be “pluck[ed] . . . out of thin air.”

Analysis: Defendants should raise prosecution bars and covenants not to sue in protective orders, particularly when the plaintiff is a non-practicing entity.

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