I/P Engine, Inc. v. AOL, Inc. et al
MEMORANDUM OPINION AND ORDER: As outlined in this Memorandum Opinion and Order, a presumption of laches arises in this case, which I/P Engine was unable to rebut. Therefore, I/P Engine is barred from recovering damages from any of the defendants for any infringement occurring before September 15,2011. (See Order for Specifics) Entered and filed 11/20/12. (Signed by District Judge Raymond A. Jackson on 11/20/12). (ecav, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
NOV 2 0 2012
CLERK, US DISTRICT COURT
I/P ENGINE, INC.,
CIVIL ACTION NO. 2:llcv512
AOL INC., et a/.,
MEMORANDUM OPINION AND ORDER
Beforethe Court is the issue of whetherthe equitable defense of laches should apply in
this case. The Court initially styled itsruling from the bench as a response to a renewed motion
for a Judgment as a Matter ofLaw on Laches from the Defendants. However, in reviewing the
trial transcript, the Court notes that Defendants made no such Rule 50(a) motion regarding
laches. The Plaintiff, however, did make a Rule 50(a) motion regarding laches and provided
argument on the matter. Furthermore, Defendants responded tothis motion and proffered
additional evidence for the Court's consideration, which Plaintiff received and had an
opportunity to respond to, but did not. Creating additional confusions isthe fact that because
laches is anequitable defense to be resolved as to both fact and law bythe Court, a Rule 50(a)
motion is inappropriate from either party. Inthe end, however, the Court will not place form
over substance, particularly when all parties have been given a fair opportunity to litigate on the
issue. Accordingly, the Court construes Plaintiffs Rule 50(a) Motion for Judgment as a Matter
of Law on Laches as a Motion for Partial Findings pursuant to Rule 52(c). By making their
inappropriate Rule 50(a) Motion, the Court determined that Plaintiff had placed into evidence all
relevant materials regarding laches, a determination that was only questioned by Plaintiffafter
the Court provided its initial rulingagainst them on laches from the bench on October 31,2012.
Even when given an opportunity to proffer additional evidencewith the benefitof consideration
of the Court's rulingon the matter, the Plaintiffput forward a proffer that containsinformation
already in the record or that is irrelevant in light of relevant case law.
Therefore, havingtaking evidence on laches concurrently with the jury trial on
infringement, invalidity, and damages and after thoroughly reviewing the evidence, arguments
(including those made on summary judgment), and record in this case, as well as considering
Rule 52's advisory committee's notes, which "authorizes the court to enterjudgment at any time
that it can appropriately make a dispositive finding of fact on the evidence," the Court found that
this case was ripe for decision and ruled from the bench on the issue of laches. As the Court
indicated when it ruled on laches, it reserved the right to further elaborate on its decision in a
written opinion. For the reasons stated herein and on the record, the Court finds that the doctrine
of laches should apply to all defendants in this case.
The Equitable Doctrine of Laches
The Patent Act does not provide a statute of limitations for infringement claims.
However, it is well-established law that the equitable doctrine of laches may bar a patentee's
recovery of pre-filing damages where (1) the patentee knew of his claim, but unreasonably
delayed in filing suit and (2) that delay caused material prejudice to the alleged infringer. See
Hair v. UnitedStates, 350 F.3d 1253, 1257 (Fed. Cir. 2003) ("Even without a specific statutory
bar to call into play, courts will impose a parallel bar—under the rubric of laches—in cases in
which the plaintiff has failed to act in a reasonably prudent manner to protect and enforce rights,
and when aperceived injustice to the defendant exists."). With respect to the first requirement -
knowledge ofinfringement coupled with unreasonable delay in pursing claims against said
infringement - The Federal Circuit has held that "[t]he length oftime which may be deemed
unreasonable has no fixed boundaries but rather depends on the circumstances." A. C Aukerman
Co. v. R. L. Chaides Constr. Co., 960 F.2d 1020,1032 (Fed. Cir. 1992). Furthermore, "[t]he
period ofdelay is measured from the time the plaintiff knew or reasonably should have known of
the defendant's alleged infringing activities to the date ofsuit. However, the period does not
begin prior to issuance ofthe patent." Id. (citations omitted). Put another way, "[t]he period of
delay begins at the time the patentee has actual or constructive knowledge ofthe defendant's
potentially infringing activities." Wanlass v. GE, 148 F.3d 1334,1337 (Fed. Cir. 1998)
With respect to constructive knowledge, the Federal Circuit charges apatentee "with
making the inquiry that adiligent and reasonably prudent patentee would make to determine
whether another device infringes his patent." Odetics, Inc. v. Storage Tech. Corp., 919 F. Supp.
911,917 (E.D. Va. 1996) (citing Jamesbury v. Litton Industrial Products, Inc., 839 F.2d 1544,
1552 (Fed. Cir.), cert, denied, 488 U.S. 828 (1988)). Moreover, the Supreme Court holds that
"the plaintiff is chargeable with such knowledge as he might have obtained upon inquiry,
provided the facts already known by him were such as to put upon aman of ordinary intelligence
the duty of inquiry." Johnston v. Standard Mining Co., 148 U.S. 360,370 (U.S. 1893). With
respect to the question ofwhen apatentee has aduty to make inquiries as to whether its patents
are being infringed, the Court finds the standard laid out in Odetics to be persuasive and
applicable in this case:
If a patentee knows of the existence of a product or device that (i) embodies
technology similar to that for which he holds a patent and (ii) uses that similar
technology to accomplish a similar objective, he has a duty to examine the
product or device more closely to ascertain whether it infringes his patent. If he
shirks this duty, he does so on peril of triggering the laches period and perhaps
ultimately losing his right to recover damages for the infringement.
Odetics, 919 F. Supp. at 918. The Federal Circuit has further elaborated on the circumstances
that necessitate inquiry by apatentee as to whether infringement is occurring: "[tjhese
circumstances include "pervasive, open, and notorious activities" that a reasonable patentee
would suspect were infringing." Wanlass, 148 F.3d at 1338 (quoting Hall v. Aqua Queen Mfg.,
Inc., 93 F.3d 1548,1553 (Fed. Cir. 1996). As indicated by the Federal Circuit, "sales, marketing,
publication, or public use ofaproduct similar to or embodying technology similar to the patented
invention, or published descriptions ofthe defendant's potentially infringing activities" certainly
create aduty to investigate whether infringement ofone's patents is occurring. Id. (internal
citations omitted). Additionally, even ifapatentee is not actually aware of these activities,
"constructive knowledge ofthe infringement may be imputed to the patentee... ifthese activities
are sufficiently prevalent in the inventor's field of endeavor." Id. See also, Wollensak v. Reiher,
115 U.S. 96,99 (1885) ([T]he law imputes knowledge when opportunity and interest, combined
with reasonable care, would necessarily impart it. Not to improve such opportunity, under the
stimulus ofself-interest, with reasonable diligence, constitutes laches which in equity disables
the party who seeks to revive aright which he has allowed to lie unclaimed from enforcing it, to
the detriment ofthose who have, in consequence, been led to act as though itwere abandoned").
It is also widely accepted law that apresumption oflaches arises ifthere is adelay ofsix
years or more once aparty has actual or constructive notice ofpossible infringement of their
The presumption of laches arising from amore than six-year delay in filing suit is
consonant with the mainstream of the law. The length of the time period-six
years-is reasonable compared to the presumptions respecting laches in other
situations, which may be as short as one year. Also the presumption provides a
yardstick for reaching comparable results in comparable circumstances rather than
leaving the matter without any guidelines to a district court's exercise of
discretion. In any event, this court adopted a laches presumption seven years ago
in Leinoff, 726 F.2d at 741-42, 220 USPQ at 850, agreeing with our sister circuits
that the presumption represents an equitable balancing of the interests of the
A. C Aukerman Co., 960 F.2d at 1035 (internal citations omitted). Ifthe presumption oflaches
applies, it applies to both required elements of the doctrine - (1) that the delay was unreasonable
and; (2) that the defendant must be prejudiced by the delay. Odetics, at 919 F. Supp at 918.
Once this presumption is met, the patentee bears the burden of rebutting both elements of laches
(by apreponderance of the evidence) by showing that their delay was reasonable and/or by
showing alack of prejudice as aresult ofany unreasonable delay. Id. Ifthe presumption does
not apply, the defendant seeking protection behind the shield of laches must make ashowing by
the preponderance of the evidence that the delay was unreasonable and that prejudice occurred as
On a variety ofoccasions, the Federal Circuit and other federal courts ofappeals have
defined the circumstances in which delay is reasonable. See 6 Chisum on Patents § 19.05[b][i]-
[vii]. The Plaintiff has principally argued that their delay was either the result of strategic
indecision at Lycos (the predecessor-in-interest ofthe patents-in-suit) or that Lycos was unable
to pursue litigation against the Defendants due to on-going lawsuits and negotiations involving
related patents to those in suit. As aresult, the Court focuses on relevant case law concerning
the excuses for which evidence was admitted into the record: strategic indecision and ongoing
lawsuits. With respect to reasonable delay due to other lawsuits, the Odetics Court summarizes
the general boundaries ofthe "ongoing litigation" excuse:
Thus, an ongoing litigation involving the patent at issue can excuse a delay in
filing an infringement action against aputative infringer. In such cases, however,
the patentee must give notice to the accused infringer, warning him that he might
be subject to suit in the future, after resolution of the other litigation. Indeed,
some form of notice to a putative infringer - some signal that the patentee
considers his rights to be infringed and intends to respond to the infringement - is
typically, though not invariably, required in connection with excusing adelay in
initiating an infringement suit. For example, a patentee who gives notice of
infringement to asuspected infringer may then delay suit until the extent of the
infringement makes litigation financially feasible. Apatentee may also excusably
delay the onset of infringement litigation to negotiate with the accused infringer.
Notice to an alleged infringer is the key to afinding of excusable delay, for notice
allows the accused infringer to take steps to protect himself from liability - to
change his product or his activities, for instance, or to institute a declaratory
judgment suit himself against the patentee.
Odetics, Inc., 919 F. Supp. at 918-919 (internal citations omitted). The Court found no support
in the case law for anexcuse concerning "strategic indecision."
Ifadelay is considered unreasonable, ashowing by the party with the burden must be
made as to the existence ofmaterial prejudice. A. C. Aukerman Co., 960 F.2d at 1033 ("Material
prejudice to adverse parties resulting from the plaintiffs delay is essential to the laches
defense"). Evidentiary prejudice occurs when adefendant is unable "to present afull and fair
defense on the merits due to the loss of records, the death ofawitness, or the unreliability of
memories oflong past events, thereby undermining the court's ability to judge the facts." Id.
(internal citations omitted). Economic prejudice arises "where adefendant and possibly others
will suffer the loss ofmonetary investments or incur damages which likely would have been
prevented by earlier suit." Id. The Federal Court, however, has been clear that "[s]uch damages
or monetary losses are not merely those attributable to afinding of liability for infringement." Id
(internal citation omitted). Instead, "[t]he courts must look for achange in the economic position
of the alleged infringer during the period of delay." Id.
The authority to impose laches lies within the sound discretion ofthe district court. See
Gasser Chair Co., Inc. v. Infanti Chair Mfg. Corp., 60 F.3d 770,773 (Fed. Cir. 1995) ("Even if
the elements of laches are established, however, a court need not bar a plaintiffs suit. The
application ofthe laches defense is discretionary, and as an equitable matter, the district court is
to look to all the facts and circumstances of the case andweigh the equities of the parties.").
Finally, itis settled law in the United States "that in determining the length ofdelay, atransferee
ofthe patent must accept the consequences ofthe dilatory conduct ofimmediate and remote
transferors." 6 chisum on patents §19.05[a][ii]; accord Eastman Kodak Co. v. Goodyear
Tire &Rubber Co., 114 F.3d 1547,1559 (Fed. Cir. 1997), rev 'd on other grounds, Cybor Corp.
v. Fas Techs., 138F.3d 1448, 1455 (Fed. Cir. 1998).
Based on forgoing principles oflaw, the court turns to its findings offact and conclusions
of law regarding laches in this case.
Findings of Fact and Conclusions of Law
Looking to the totality ofevidence presented, the Court finds it appropriate to limit I/P
Engine's damages based upon the principle oflaches. Specifically, the Court finds that a
presumption oflaches is applicable in this case as Plaintiff waited in excess ofsix years to file its
lawsuit against Defendants after having constructive knowledge of Defendants' infringement
activities. Inlight ofthe presumption of laches, the burden shifts to Plaintiff to show that its
delay was reasonable and/or that no evidentiary or economic prejudice resulted from said delay.
The Court finds the Plaintiff fails on both counts. As such, the presumption of laches does not
fall. Finally, the weight ofthe equities inthis case supports application ofthe equitable doctrine
oflaches. Accordingly, Plaintiffs pre-filing damages are barred.
A. Presumption of Laches Applies
Defendants have claimed throughout the trial and through presentation ofevidence that a
presumption of laches applies because Plaintiffs waited more than six years to file suit. The
record establishes, and the Court finds, that Lycos (and thus I/P Engine) had constructive notice
that the Google Adwords system potentially infringed its patents as ofJuly 2005 and failed to
undertake any reasonable investigation to further determine ifinfringement was occurring.
The source of Plaintiffs constructive knowledge of Google's infringement rests on
disclosures made by Google itself. On July 18,2005, Google published apost on its "Google
Inside AdWords" Blog, its official blog with respect to the AdWords system. This post was
entered into the record as PX-176 (the "AdWords Post"). In a series ofquestions, the AdWords
Post described aset of changes to the AdWords system. Of particular relevance to the question
of laches are Google's statements concerning how ads are ranked and the introduction ofQuality
Question no. 1: Are you changing how you rank ads?
Though you'll see new keyword states in your account, we want to assure you
that the 'auction' will remain the same. We'll continue to rank your ads based on
your maximum CPC and the Quality Score.
Question no. 2: What is the Quality Score?
The Quality Score is simply a new name for the predicated CTR, which is
determined based on the CTR of your keyword, the relevance of your ad text, the
historical keyword performance, and other relevancy facts.
(PX-176). In I/P Engine's complaint, filed September 15,2011, the company's core allegations
are as follows:
37. The accused systems in this litigation use the Lang/Kosak Relevance Filtering
Technology by filtering and presenting search and search advertising results based
on acombination of(i) an item's content relevance to a search query; and (ii)
click-through-rates from prior users relative to that item.
43. For example, Google adopted the Lang/Kosak Relevance Filtering Technology with
its use of "Quality Score." Google's search advertising systems filter advertisements by
using "Quality Score" which is acombination of an advertisement's content relevance to
asearch query (e.g., the relevance ofthe keyword and the matched advertisement to the
search query), and click-through-rates from prior users relative to that advertisement
(e.g., the historical click-through rate of the keyword and matched advertisement).
37,42). The language included in the AdWords Post quoted above is significantly
similar to the language utilized by the Plaintiff inits complaint.
The Defendants argue that this similarity shows that as early as July 18,2005, sufficient
information had been made public by Google regarding the infringing technologies to put Lycos
on notice that it should at the very least investigate for possible infringement or bring suit against
Google because the same information eventually put I/P Engine on notice for their suit. I/P
Engine refutes this point on two grounds. First, Plaintiffargues that the blog post was not a
technically accurate description ofthe AdWords system by pointing to testimony by Jonathan
Alferness, aGoogle employee. Second, Plaintiffargues that no one at Lycos was even aware of
the AdWords Post and thus this is why they took no action to investigate. Both ofthese reasons
lack merit. With respect to the first, the Federal Circuit does not require that perfect or exacting
information being made public of apossibly infringing technology to place apatentee on notice.
The Wanlass Court held that "sales, marketing, publication, or public use ofaproduct similar to
or embodying technology similar to the patented invention, or published descriptions ofthe
defendant's potentially infringing activities, give rise to aduty to investigate whether there is
infringement." Wanlass, 148 F.3d at 1338 (quoting Hall v. Aqua Queen Mfg., Inc., 93 F.3d
1548,1553 (Fed. Cir. 1996). Given that Google described what Quality Score is in their
AdWords Post and given that Quality Score is atthe heart ofthe Plaintiffs claims against
Defendants (as indicated by the substantial similarity ofdescription ofQuality Score in the
complaint), the Court finds any argument that somehow Google's description ofQuality Score as
being too inaccurate to provide notice to Lycos in 2005 to be totally disingenuous and is
rejected.1 Even ifthe AdWords is technically inaccurate, itstill serves as the kind ofmarketing
document the Wanlass Court cited as putting a patentee on notice of possible infringement.
Asto Plaintiffs second argument, that no one at Lycos was aware of the AdWords Post
and that even ifLycos had been aware ofthe AdWords Post, itwould not have engaged in an
investigation, italso lacks merit and is contrary to established law. As the Wanlass Court also
made clear, even ifa patentee isnot actually aware ofactivities that should put them on notice of
infringement, like the AdWords Post, "constructive knowledge ofthe infringement may be
imputed to the patentee... ifthese activities are sufficiently prevalent in the inventor's field of
endeavor." Furthermore, questions ofconstructive knowledge are not answered through a
subjective lens but rather from the perspective ofa"man ofordinary intelligence." Johnston v.
Standard Mining Co., 148 U.S. 360,370 (U.S. 1893). The fact that Lycos in 2005 had no actual
knowledge ofthe AdWords Post is meaningless ifithad constructive knowledge, which the
Court finds thatit did. Google's publication of information concerning new advances in their
search and ad serving technologies is the kind of"prevalent" activity inthe field ofthe Lang and
Kosak's inventions that Lycos should have been aware of in determining whether to enforce their
patents. As the record indicates, the inventors ofthe asserted patents did little to investigation
1There is also evidence on the record indicating that I/P Engine itselfsoughtto use the Google AdWords Post to
support its infringementclaims at trial.
potential infringement despite being on notice and having the opportunity to do so. For example,
when asked at trial, aco-inventor ofthe asserted patents, Dr. Kosak, when asked "[a]nd have you
ever done anything personally while you were at Lycos to determine whether anyone was using
the patents in this case," he responded "I did not." Trial Tr. at 353. Furthermore, Mr. Blais in a
declaration submitted along with Plaintiffs Laches Proffer indicated that Lycos did not
undertake any steps to investigate whether Google was infringing its patents. Plaintiffs Laches
Proffer, Blais Dec. at K3).
Taken together, the Court concludes that I/P Engine (and Lycos as the predecessor-ininterest ofthe patents-in-suit) had constructive notice of possible infringement on the date
Google published the AdWords Post on July 18,2005. The Google AdWords Post contained
information that serves as the heart of I/P Engine's claims against Google. Ifthe information
contained in the AdWords Post was sufficient to place I/P Engine on notice of infringement by
Defendants in 2011, it was sufficient to place Lycos on notice in 2005. The record indicates that
I/P Engine filed its lawsuit in the Eastern District ofVirginia on September 15,2011. Between
July 18,2005 and September 15,2011, six years, one month, and 28 days passed. In short, more
than six years passed before infringement claims were brought against Defendant. As aresult,
the presumption of laches applies in this case.
B. Plaintiff Fails to Rebut Presumption of Laches
Because apresumption of laches arises in this case, the burden in on plaintiffto
"introduce evidence sufficient to support a finding ofnonexistence ofthe presumed facts."
Wanlass v. Fedders Corp., 145 F.3d 1462, 1464 (Fed. Cir. 1998) (en banc) (citing A.C.
Aukerman Co. v. 960 F.2d at 1037). Specifically, the plaintiffmust provide sufficient evidence
to show that either their delay in filing their suit was reasonable and/or that no economic or
evidentiary prejudice occurred. In this case, I/P Engine has failed on both counts.2
First, I/P Engine has failed to make its required showing that its delay was reasonable.
I/P Engine essentially makes two arguments on this point. One, I/P Engine argues that strategic
indecision at Lycos after aseries of corporation ownership transfers made it impossible for the
company to consider what to do with its patents. As the Court notes, Plaintiffhas not provided a
single case citation to support strategic indecision as ajustification for sleeping on its rights to
challenge infringement ofits patents, nor has the Court discovered such ajustification in the case
law.3 As such, strategic indecision provides no reasonable excuse to delay in bring their suit.
Second, I/P Engine argues ongoing litigation with respect to related patents to those in
suit in this case provides areasonable excuse for not filing suit sooner. Again, the Plaintiffhas
failed to provide any support in the case law that litigation concerning related patents is a
reasonable excuse for dilatory conduct. Furthermore, acourt in this jurisdiction has rejected the
argument that patents other than those at suit can justify adelay in bringing litigation because to
do so "would eviscerate the protection of laches." Humanscale Corp. v. CompXIntern. Inc., No.
09-86,2010 WL 3222411, *10 -11 (E.D.Va., 2010). However, assuming arguendo, that other
litigation concerning related patents can serve as reasonable justification for delay in bringing
suit, I/P Engine has still failed to provide any evidence to show that it gave notice of any kind to
Defendants that itintended to bring suit for infringement at the resolution of its ongoing
2Plaintiffargues that the Court failed to give it sufficient opportunity to rebut the presumption oflaches. This
argument is without merit. The Plaintiffwas aware before trial that the Defendants claimed apresumption oflaches
in this case. Plaintiff provided evidence on this issue before asking the Court to rule on laches. It is unclear why
Plaintiffwould seek resolution ofthe laches issue ifit had not put into evidence all ofits arguments on laches.
3Even ifstrategic indecision were an excuse, the Court notes that the record indicates that corporate ownership
changes occurred prior to the delay period. Common sense dictates that when those transfers occurred, the
Durchasers involved engaged in said transactions with apurpose in mind for Lycos.
litigation. As aresult, Plaintiffhas provided no evidence sufficient to justify the unreasonable
Plaintiffmust rebut the presumption of, in this case, evidentiary prejudice.4 I/P Engine
asserts that no evidentiary prejudice occurred as aresult ofthe six year delay in bringing the case
because the meaningful events in this case happened long before the start ofthe period ofdelay
and that it is unlikely Mr. Lang, Mr. Kosak, or Mr. Blais (as Lycos's Rule 30(b)(6)
representative) would have remembered any additional information ifthey had been questioned
in 2005. I/P, however, has failed to provide any evidence (expert or otherwise) to support its
contention that the memories ofMr. Lang, Mr. Kosak, or Lycos (institutionally) would be
unimproved by being questioned earlier in relation to this suit. Defendants, on the other hand,
have provided anumber ofexamples in its Laches Proffer ofwhat the Court finds to be critical
questions regarding Defendants' defenses and damages that went unanswered by Lang Kosak, or
Lycos at their depositions. See Defendants' Laches Proffer, Ex. A(Lang Dep.); Defendants'
Laches Proffer, Ex. B(Kosak Dep.); Defendants' Laches Proffer Ex. C(Blais Dep.).
Furthermore, had the suit been brought sooner, it quite probable that Lycos would have been able
to produce an institutional representative with better knowledge of the period oftime at issue in
this case. As aresult, Plaintiffhas provided no evidence sufficient to rebut the presumption of
C. Equities Favor Application of Laches
As indicated above, the authority to impose laches lies within the sound discretion of the
district court. Courts considering the question of laches are required to weight the totality ofthe
"Economic prejudice has notbeen at issue in this case.
circumstance to determine whether laches should apply, even when the basic requirements are
met. In this case, for all the reasons indicated above, the Court believes the equities favor
application ofthe equitable doctrine oflaches. Furthermore, there is also evidence on the record
indicating that Lycos was aclient ofGoogle as early as 2003 and used the infringing technology
during the course oftheir business relationship.5 While it is true that Google considered its
technology atrade secret and did not disclose its technical details, the Court finds its
confounding that Lycos, while in possession ofthe Lang/Kosak patents, was never curious as to
how Google AdWords worked and whether its patents were being infringed. Although the fog of
litigation makes it highly unlikely that we will ever fully understand the motivations ofthe
parties prior to the filing ofthis lawsuit, common sense dictates that Lycos didn't bring suit in
2005 because it did not believe its patents were being infringed and that the only thing that
changed was that the patents-in-suit were purchased by I/P Engine, anon-practicing entity, for
the sole purpose ofbringing this litigation. Although Congress is best left to consider the merits
ofnon-practicing patent entities in our patent system, the dilatory nature ofthis suit is precisely
why the doctrine oflaches has been applied to patent law. As aresult, the weight ofthe equities
inthis case warrants the application ofthe doctrine oflaches.
D. Laches Applies to Non-Google Defendants
Finally, at trial, Plaintiffraised the question ofwhether the non-Google Defendants
should be protected by the doctrine oflaches or whether it should apply only to Google, since the
Federal Circuit cites laches as apersonal defense. See Israel Bio-Engineering Project v. Amgen
Inc., 401 F.3d 1299, 1306 (Fed. Cir. 2005). However, as indicated by the record, Google's
5See eg. Trial Tr at 352 (Q. Now, we talked alot about Lycos and your work there. You're aware that Lycos was a
AdSense customer? A. Yes. Q. And you understand that's one ofthe accused products in
business relationship agreements with their co-defendants include an indemnification clause
against suits for patent infringement. See e.g. Plaintiffs Trial Exhibit 242125.1 ("Google will
defend.. .indemnify and hold harmless IAC.. .from and against any action.. .arising from aclaim
that...[t]he Services or any Google Brand Feature infringes any patent, copyright, trade secret or
trade markofsuch third party...'^
argued that the personal nature ofthe laches defense prevented the doctrine's application to
customer co-defendants. Odetics, 919 F. Supp. at 925. In that case, the court determined that:
This argument ignores the indemnity arrangements Storagetek has with its
customers, and the importance of this fact to the equitable P«^£^£
the benefi of laches is not extended to Storagetek's customers, Odetics woulI be
able to recover indirectly from Storagetek for infringement for which i is barred
by laches from recovering from Storagetek directly. More specificaUy if fe
customer defendants cannot rely on laches, Odetics can recover mfrmgement
damages from them that they in turn can recover from Storagetek on the basis of
^indemnity arrangements. This inequitable result effectively i«™«"»»*°
laches ruling and thus defeats the doctrine's equitable purposes. If Odetics^delay
warrants barring recovery from Storagetek, then because of the indemnity
arrangements, Odetics should be barred from recovering the same damage from
S « customers. Accordingly, the customer defendants are entitled to
benefit from Storagetek's laches defense, and Odetics may recover no damages
for the ue of allegedly infringing ATLs the customer defendants purchased from
Storagetek prior ^the institution ofthis suit on June 29, 1995 Case law support
this result. See, e.g., Van Alen v. Aluminum Co. ofAmerica, 43 F Supp. 833, 838
(SDNY. 1942) ("As far as [the infringer's customer] is concerned since it is but
acustomer of defendant, it is covered by the protectiort which laches.affords the
latter."); Boyle Leather Goods Co. v. Feldman, 30 F. Supp 914 915 (S-D-N.Y.
1940) ("An unreasonable delay [exists] which sustains the defense of laches
raised by both defendants, for Feldman's co-defendant is but acustomer of his. ).
Id, 925-26. (alteration in original). This Court finds the indemnification concerns articulated in
Odetics to be persuasive and applicable in this case. As aresult, all customer co-defendants in
this case deserve the benefit of the doctrine oflaches.
this case? A. I believe so, yes.)
In sum, apresumption oflaches arises in this case, which I/P Engine was unable to rebut.
Therefore, I/P Engine is barred from recovering damages from any ofthe defendants for any
infringement occurring before September 15,2011.
The Clerk is directed to send copies ofthis Memorandum Opinion and Order to all
counsel of record.
IT IS SO ORDERED.
vt c ii 17- „;„:«
Raymond A. Jackson
u""d a- «** M*