I/P Engine, Inc. v. AOL, Inc. et al
Opposition to 835 MOTION for Judgment under Rule 52(B) and a New Trial under Rule 59 filed by IAC Search & Media, Inc., Target Corporation, AOL Inc., Gannett Company, Inc., Google Inc. . (Attachments: # 1 Exhibit 1)(Noona, Stephen) Modified on 1/25/2013 to add filers as stated in the document.(mwin, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF VIRGINIA
I/P ENGINE, INC.
Civil Action No. 2:11-cv-512
AOL, INC., et al.,
DEFENDANTS’ OPPOSITION TO PLAINTIFF’S MOTION FOR JUDGMENT UNDER
RULE 52(B) AND A NEW TRIAL UNDER RULE 59 ON LACHES
In an attempt to avoid the Court’s laches ruling, Plaintiff I/P Engine, Inc. attacks this
ruling on both procedural and substantive grounds. Neither attack has any merit.
At the outset, it is important to recognize the relief Plaintiff seeks. Although Plaintiff’s
Motion is styled as a motion for judgment under Rule 52(b) and a motion for new trial under
Rule 59, Plaintiff does not seek a new trial on laches. Instead, Plaintiff asks this Court to simply
reverse its laches ruling under Rule 52(b) and then grant a new trial on damages (not laches)
under Rule 59 so that Plaintiff can collect damages for the laches period. (Plaintiff’s
Memorandum in Support of its Motion (“Motion”), 1, 30.)
Plaintiff bears a heavy burden in asking this Court to reverse its laches ruling under Rule
52(b), as Rule 52(b) motions are designed “to correct manifest errors of law or fact.” Morrow
Corp. v. Harleysville Mut. Ins. Co., 110 F. Supp. 2d 441, 445 n. 4 (E.D. Va. 2000). Rule 52(b)
motions should not be used “to relitigate old issues, to advance new theories, or to secure a
rehearing on the merits.” U.S. v. Mathis, No. 6:06-815, 2008 WL 906554, *1 (D.S.C. Mar. 31,
2008) (citation omitted). Plaintiff does not even try to meet the proper Rule 52(b) standard.
Rather, contrary to this standard, Plaintiff’s Motion repeatedly re-hashes issues and arguments
that the Court already considered and rejected.
Procedurally, Plaintiff argues that the Court ruled on laches without giving Plaintiff a fair
opportunity to address this issue. But as the Court already held during trial, this position is
“disingenuous” and an attempt to “reinvent history.” (Trial Tr., 1937:5-10.) By the time the
Court made its oral laches ruling on the morning of October 31, Defendants had moved for
summary judgment of laches (which was briefed and held over to trial by the Court), Plaintiff
had made a Rule 50(a) motion that laches does not apply, Defendants had filed a Rule 52(c)
motion that laches does apply, and the parties had made dueling oral arguments on the question
of whether laches should apply. In light of this record, it is frankly incredible for Plaintiff to
claim that it did not have a fair opportunity to address the laches issue.
Nonetheless, Plaintiff argues that the timing of the Court’s ruling prevented Plaintiff from
presenting rebuttal testimony on laches. Here too, the Court already held that this is a “Johnny
come lately” argument and “an attempt to game the trial court.” (Trial Tr., 1936:24-25, 1944:241945:8.) Plaintiff repeatedly told the Court that its only rebuttal witness would be its invalidity
expert, who could offer no testimony on laches. Nor was Plaintiff planning to proffer any
written rebuttal testimony on laches. It was not until hours after the Court made its laches ruling
that Plaintiff first tried to proffer written rebuttal testimony, in the form of a declaration from
Mark Blais. As the Court already recognized, the Blais declaration is utterly at odds with Mr.
Blais’ sworn deposition testimony. (Trial Tr., 1946:18-20.) Moreover, in response to
questioning by the Court, Plaintiff’s counsel admitted that this declaration was not created until
after the Court had made its laches ruling that morning. (Trial Tr., 1946:9-17.) Thus, Plaintiff
had no pre-existing intent to submit rebuttal testimony from Mr. Blais, or from anyone else,
before closing its rebuttal case. Only after receiving an adverse laches ruling did Plaintiff
belatedly craft and attempt to proffer the Blais declaration. As the Court noted, it is indeed
“disingenuous” and “an attempt to game the trial court” for Plaintiff to stay mute about any
rebuttal evidence on laches, wait for an adverse ruling, then belatedly craft rebuttal evidence and
use this very evidence to argue that the adverse ruling was premature.
Finally, Plaintiff ignores the fact that the Court did ultimately consider Plaintiff’s belated
rebuttal evidence in its written laches order – it just found this evidence to be lacking on the
merits. Thus, there was no procedural error – let alone “manifest” procedural error – in the
Court’s willingness to consider rebuttal evidence on laches.
Plaintiff’s substantive attacks on the Court’s laches ruling have no more merit than its
procedural attacks, and certainly do not rise to the heightened standard of showing “manifest
errors of law or fact.” Plaintiff first argues that Lycos had no reason to look at the 2005 Google
AdWords Post (PX-176) that provided constructive knowledge of the alleged infringement. But
the AdWords Post was available on the Internet for all to see, and Lycos’ status as both Google’s
customer and its competitor in 2005 gave Lycos every reason to stay abreast of Google’s
activities in the search advertising field. Furthermore, the aspects of Google’s system accused in
the Complaint are precisely those that were described in the AdWords Post. Thus, the Court
correctly found that the AdWords Post gave Lycos constructive knowledge of its infringement
claims since 2005, thereby triggering a presumption of laches.
Nor has Plaintiff rebutted the laches presumption. Plaintiff offers no excuse for the sixplus year delay in bringing suit. Plaintiff’s Motion even abandons the two excuses it offered at
trial; namely, Lycos’ assertion of other patents during the delay period and Lycos’ corporate
parents’ indecision about what to do with the patented technology.
As to the prejudice prong of laches, Plaintiff offers a series of arguments as to why
Defendants’ proffered testimony of faded memories is insufficient for evidentiary prejudice.
None of these arguments discharge Plaintiff’s burden to rebut the laches presumption. Due to
the presumption, Plaintiff must offer affirmative evidence that Defendants did not suffer
prejudice – not merely attorney argument that Defendants’ own prejudice evidence is
unpersuasive. In any event, Plaintiff ignores that both inventors’ documents were lost during the
delay period, and Plaintiff’s arguments against Defendants’ other evidence are unfounded.
Furthermore, even if the Court found that Plaintiff somehow rebutted the laches
presumption, that would not mean that the Court erred in upholding Defendants’ laches defense.
Rather, it would simply mean that Defendants bore the burden of establishing unreasonable delay
and prejudice. Defendants fully met this burden, as the six-plus year delay in bringing suit was
“unreasonable” and Defendants’ evidence of faded memories and lost documents established
evidentiary prejudice. Thus, the Court’s laches ruling was correct regardless of whether or not
the presumption was formally rebutted.
Finally, Plaintiff argues that the laches ruling “cannot limit the damages of AOL or
Gannett” (Motion, 29) on the theory that AOL and Gannett cannot rely on Google’s laches
defense. As an initial matter, Plaintiff has waived this argument several times over. When the
various Defendants served interrogatories seeking the basis for Plaintiff’s contention that its
claims are not barred by laches, Plaintiff’s interrogatory responses never suggested that the other
Defendants could not rely on Google’s laches defense. When Defendants collectively moved for
summary judgment of laches, based on Plaintiff’s constructive knowledge of Google’s allegedly
infringing system, Plaintiff never argued that the other Defendants could not rely on Google’s
laches defense. It was not until the day after the Court made its oral laches ruling that Plaintiff
first argued that the laches defense applies only to Google, not the other Defendants. If Plaintiff
believed that the laches defense applies only to Google and cannot reach the other Defendants,
then Plaintiff had a duty to make this argument before the Court made its laches ruling. Failure
to do so constitutes waiver of the argument. In any event, AOL and Gannett (like the other co-
Defendants) are being indemnified by Google, and thus the Court properly ruled that laches
should apply to AOL and Gannett for this reason.
Laches Was Pled and Heavily Litigated Throughout This Case
Plaintiff had a fair and fulsome opportunity to litigate the laches issue. Defendants’
Answers to Plaintiff’s Complaint all pled the laches defense. (D.N. 45, 20-21; D.N. 58, 19; D.N.
59, 16; D.N. 60, 17; D.N. 61, 17.) At the close of discovery, Defendants moved for summary
judgment of laches on behalf of all Defendants. (D.N. 238, 38-40.) In that motion, Defendants
argued that there was a presumption of laches due to Plaintiff’s and Lycos’ constructive
knowledge of Google’s allegedly infringing system, and that Plaintiff had offered no evidence to
rebut the presumption. (Id.) In response, Plaintiff argued that laches should not apply because
Plaintiff and Lycos did not have constructive knowledge of Google’s system, because Google
was secretive about the details of its system, because Lycos was engaged in other activities
during the delay period, and because Defendants did not suffer prejudice from the delay. (D.N.
427, 35-40.) Notably, Plaintiff did not dispute Defendants’ position that constructive knowledge
of Google’s system (if proven) could help set up a laches defense for all Defendants who were
using that system, nor did Plaintiff argue that any Defendants were differently situated from the
others with respect to laches.
The Court denied Defendants’ summary judgment motion on October 3, 2012 on the
ground that “there are genuine issues of material fact in dispute.” (D.N. 572.) Later, at trial, the
Court explained that it was not comfortable granting judgment of laches at that time because it
wanted to ensure that its laches ruling would be based on a full record. (Trial Tr., 1807:13-17
(“not only that, Mr. Brothers, I want you to understand this. The parties filed a motion for
summary judgment in this case on this very same thing. The Court didn’t rule on the motion for
summary judgment on laches. It waited to get a full record, and the Court has a full record.”).)
The Pre-Trial Conference Did Not Defer Laches Until a Post-Verdict Stage
The issue of when and how to decide the laches issue was raised at the pre-trial
conference, but at no point in the pre-trial conference did the Court rule that laches would be
deferred to a post-verdict or post-trial stage. As Plaintiff admits in the present Motion, “[t]he
court never indicated when it would take this evidence [on laches].” (Motion , 2.)
The Parties Presented Laches Evidence During Their Cases-in-Chief
Because the Court never deferred laches to a post-verdict or post-trial stage, both parties
presented laches evidence during their cases-in-chief, just as they did for every other legal issue
in this case. For example, Plaintiff elicited testimony from named inventor and former Lycos
employee Don Kosak about how Lycos was sold in 2000 and 2004. (Trial Tr., 326:22-329:14.)
When asked by the Court what relevance this testimony had, Plaintiff replied that it was relevant
to laches. (Id., 331:20-25.) For their part, Defendants introduced the 2005 AdWords Post (PX176) during their direct examination of Google employee Jonathan Alferness. (Trial Tr.,
1047:17-1048:9.) This post was the primary document that the Court relied on to show
constructive knowledge of the alleged infringement for purposes of laches. (D.N. 800 at 8-10.)
The Parties’ Cross-Motions for Judgment on Laches
At the close of Defendants’ case, on the afternoon of October 30, Plaintiff made an oral
Rule 50(a) motion for judgment as a matter of law on Defendants’ invalidity and laches defenses.
(Trial Tr., 1771:12-15.) The fact that Plaintiff simultaneously moved for invalidity JMOL and
laches JMOL further shows Plaintiff’s understanding that laches would be litigated and
adjudicated contemporaneously with the other issues – not deferred to some later stage.
Plaintiff accompanied its laches JMOL with oral argument explaining why it believed
laches should not apply. (Trial Tr., 1775:22-1777:14.) At no point did Plaintiff state that it
wished to proffer any written evidence on laches. Likewise, Plaintiff never indicated that it
would call any live rebuttal witnesses other than its validity expert, who could not and did not
give any testimony on laches. (Id., 1726:16-19, 1732:4-8, 1867:22-1868:5.)
In response to Plaintiff’s motion, Defendants argued that laches should apply. (Id.,
1785:21-1789:17; see also id., 1789:1-2 (“So for all those reasons, your Honor, we respectfully
submit that laches certainly does apply.”).) Defendants also submitted a proffer of written
evidence supporting their laches position. (Id., 1768:21-1769:2.) The Court accepted
Defendants’ submission and gave clear notice that it would rule the next morning: “The Court
wants an opportunity to address these motions, plus the Court wants an opportunity to read your
submission on laches. So you’ll have to get my decision on all these things tomorrow morning.”
(Id., 1785:13-18.) Defendants filed their written laches motion that night. (D.N. 767.)
The Court’s Oral Laches Ruling and Plaintiff’s Belated Attempt to Introduce
When Court re-convened the morning of October 31, Plaintiff’s counsel began the day by
entering into the record one exhibit and several video depositions. (Trial Tr., 1799:2-21.)
Plaintiff did not seek to proffer any laches evidence at that time, even though Plaintiff’s Rule
50(a) laches motion and Defendants’ Rule 52(c) laches motion were both pending by that time,
and the Court had clearly indicated the day before that it would rule that morning.
After Plaintiff had finished entering its evidence into the record, the Court ruled from the
bench that Plaintiff’s pre-suit damages were barred by laches. The Court provided a detailed
explanation on the record for that ruling. (Trial Tr., 1800:14-1805:23.)
Immediately following the Court’s ruling, Plaintiff’s counsel disputed that ruling on
several grounds. Plaintiff’s counsel argued that Defendants had unclean hands (id., 1808:5-13),
that Google kept the details of its products secret (id., 1809:20-1810:6), and that Lycos was
engaged in other litigation during the delay period. (Id., 1810:15-1811:2.) As had been the case
before the Court’s ruling, Plaintiff did not say that it wished to proffer any written rebuttal
evidence on laches, or that the Court’s ruling prevented it from doing so. Nor did Plaintiff say
that it wished to call any live rebuttal witnesses on laches.
It was not until that afternoon that Plaintiff first expressed a desire to call a rebuttal
witness on laches. Specifically, Plaintiff proposed calling Mr. Blais, Lycos’s Rule 30(b)(6)
witness, whom it had an opportunity to question at his deposition. (Trial Tr., 1867:2-10.)
Plaintiff had expressed no prior intent to call Mr. Blais before being faced with the adverse
laches ruling. Plaintiff had previously opposed the use of Mr. Blais’ deposition testimony by
Defendants, claiming he lacked personal knowledge. (Nelson Decl., ¶ 8.) Plaintiff had never
disclosed any rebuttal witnesses besides its validity expert Dr. Carbonell, and Plaintiff had not
even brought Mr. Blais to Norfolk for testimony. (Trial Tr., 1867:5-10.)
Later in the afternoon, Plaintiff stated for the first time that it wished to proffer written
evidence on laches. (See id., 1945:15-20.) Specifically, Plaintiff stated that it wished to proffer
a declaration by Mr. Blais. (Id.) In response to questioning by the Court, Plaintiff admitted that
it created this declaration after receiving the Court’s adverse laches ruling. (Id., 1946:9-17.)
Thus, Plaintiff had no prior intent to submit this written evidence on laches, as Plaintiff did not
even create this evidence until after it received the adverse laches ruling.
The Blais declaration was also a transparent sham. When Plaintiff proffered this
declaration to the Court, the Court recognized at first glance that the declaration was utterly at
odds with Mr. Blais’ deposition testimony. (Trial Tr., 1946:18-20.) The Court’s conclusion was
correct. For example, the Blais declaration states that “[t]o the best of my knowledge, and as I
testified to during my deposition on July 31, 2012, Lycos was not using AdSense for Search or
Google’s Sponsored Listings in 2005.” (D.N. 771-1, ¶ 6.) In deposition, however, Mr. Blais
testified that Lycos was using Google’s Sponsored Listings in 2005:
Q: Similarly in 2005, was Lycos using Google’s sponsored listings product?
A: In 2005?
A: I believe so, yes.
(D.N. 818-2, 111:24-112:5 (objection omitted).) Similarly, Mr. Blais testified at his deposition
that Lycos was using AdSense for Search in 2005:
Q: How about in 2005, was Lycos using AdSense in 2005?
Q: Was Lycos using AdWords in 2005?
A: Define what you mean by AdWords as opposed to AdSense for Search.
Q: That’s fair. So when I’m referring to AdSense for Search, I mean the sponsored link
on Lycos. When I’m referring to AdWords, I mean the sponsored links on Google.com.
A: So you’re asking me did we use the sponsored links on Google.com.
A: That would have been shown on Lycos that we were using them.
Q: Would – let’s use the term Google sponsored links to understand the links that were
used on Lycos.com, was Google using – was Google, was Lycos using Google-sponsored
links in 2005?
A: I think for part of 2005 we did.
(D.N. 818-1 at 32:24-34:4 (emphasis added, objections omitted).)
Plaintiff Refuses to Meet and Confer About the Impact of the Court’s Laches
Ruling and Then Argues in Chambers That Laches Only Applies to Google
As the Court recognized and told the parties on October 31, the laches ruling would have
a significant impact on the way the parties would present closing damages arguments to the jury
the following day. (Trial Tr., 1806:16-22.) Accordingly, Defendants emailed Plaintiff at 5:46
p.m. on October 31 seeking information on “(1) what evidence concerning the royalty base
Plaintiff intends to rely on during closing, (2) what arguments Plaintiff intends to make regarding
the amount of any running royalty damages, and (3) what curative jury instruction Plaintiff
proposes the Court give with respect to the damages period.” (Nelson Decl., Ex. A.) Plaintiff
did not respond. (Id., ¶ 2.) Defendants emailed Plaintiff again at 8:36 p.m., stating “[w]e need
an answer to these questions tonight, given the schedule tomorrow.” (Id., Ex. B.) Again,
Plaintiff did not respond. (Id., ¶ 3.)
Instead, during the charge conference the next morning, Plaintiff’s counsel cited case law
purporting to state that laches was a personal defense, and argued to the Court that laches should
only apply to Google. (Id., ¶ 4.) Defendants’ counsel responded that such case law was
inapplicable given that Google was indemnifying all Defendants, and thus any damages against
any Defendant would come out of Google’s pocket. (Id.) Nonetheless, the Court initially
adopted Plaintiff’s arguments and ruled that laches should only apply to Google. (Id.)
In the short timeframe between Plaintiff’s arguments at the charge conference and closing
arguments before the jury, Defendants found case law showing that laches should apply to all
Defendants given Google’s indemnity obligations to all Defendants. See Odetics, Inc. v. Storage
Tech. Corp., 919 F. Supp. 911 (E.D. Va. 1996). Defendants presented Odetics to both the Court
and Plaintiff. (Nelson Decl., ¶ 4.) In light of Odetics, the Court properly recognized that laches
should apply to all Defendants. (Trial Tr., 2021:16-2022:12.) In its proffer of case law at the
charge conference, Plaintiff did not notify the Court of Odetics, despite the fact that Odetics was
from this very District, had been cited over 100 times, and spoke to the precise laches issue in
this case (namely, one defendant indemnifying others in a patent infringement context).
The Court’s Written Laches Order
On November 20, 2012, the Court issued a written order memorializing and elaborating
on its laches decision. (D.N. 800.) This Order explained why laches was ripe for decision when
the Court decided it (id., 1-2), discussed the legal standard applicable to laches (id., 2-7), and
applied this legal standard to the facts of this case. (Id., 7-15.) Importantly, this Order
considered all the record evidence related to laches, including the untimely rebuttal evidence that
Plaintiff created and proffered after the Court’s oral laches ruling had issued. (Id., 2, 11.)
Applying the proper standard, Plaintiff utterly fails to show that the Court’s laches ruling
was based on “manifest errors of law or fact.” Morrow, 110 F. Supp. 2d at 445 n. 4.
The Court’s Laches Ruling Was Procedurally Proper
The Court Did Consider Plaintiff’s Belated Rebuttal Evidence on Laches
The centerpiece of Plaintiff’s procedural argument is that the Court supposedly barred it
from submitting rebuttal evidence on laches. (Motion, 13-15.) Plaintiff even accuses the Court
of violating its due process rights in this regard. (Id., 16.) But contrary to Plaintiff’s argument,
the Court did consider Plaintiff’s rebuttal evidence in its written laches order. (D.N. 800.) The
Court’s order repeatedly cited Plaintiff’s belated proffer of laches evidence – it just found this
proffer to be lacking on the merits. (See id., 2 (“Even when given an opportunity to proffer
additional evidence with the benefit of consideration of the Court’s ruling on the matter, the
Plaintiff put forth a proffer that contains information already in the record or that is irrelevant in
light of relevant case law.”); 11.) Plaintiff’s Motion nowhere addresses the fact that the Court
ultimately considered Plaintiff’s belated laches evidence in its written laches order, and fails to
show that the Court’s findings in that regard were based on a manifest error of law or fact.
The Court’s Laches Ruling Did Not Preclude Plaintiff from Submitting
Rebuttal Evidence During Trial
Even leaving aside the Court’s post-trial written laches ruling, and focusing only on the
trial portion of this case, there is no merit to Plaintiff’s argument that the Court unfairly
precluded it from submitting rebuttal evidence on laches. Rather, this is the same argument that
the Court already rejected as “disingenuous” and “an attempt to game the trial court.” (Trial Tr.,
1937:5-10, 1945:4-12.) It is improper for Plaintiff to rehash this previously-rejected argument in
a Rule 52(b) motion. Mathis, 2008 WL 906554 at *1.
As the Factual Background recited above demonstrates, Plaintiff’s argument is indeed
disingenuous. Prior to receiving the adverse laches ruling, Plaintiff had expressed no intention to
submit either oral or written rebuttal evidence on laches. And the one piece of rebuttal evidence
that Plaintiff tried to proffer after the Court’s laches ruling (namely, the Blais declaration) was
not even created until after the Court’s laches ruling had issued. (Trial Tr., 1946:9-17.) Plaintiff
does not even argue that it would have created and proffered the Blais declaration on October 31
had the Court not issued its laches ruling earlier that day. Furthermore, given that the Court’s
laches ruling came on the very day Plaintiff rested its rebuttal case, the only plausible inference
is that Plaintiff had no pre-existing intent to submit any rebuttal laches evidence before resting.
It is utterly disingenuous for Plaintiff to wait until it received an adverse ruling, then belatedly
create and proffer new evidence, and finally try to vacate the adverse ruling on the ground that
the Court would not allow this new evidence.
Plaintiff attempts to justify its belated submission of evidence by saying that “[t]he
Court’s laches ruling was totally unexpected by I/P Engine.” (Motion, 6.) Plaintiff states that
“[c]ounsel for I/P Engine understood that the Court would not rule on laches prior to the jury
verdict” (id., 3) and cites four declarations from its counsel stating: “I understood that the Court
would accept laches evidence after the jury’s verdict and that the Court would then rule on
laches.” (D.N. 839, ¶ 2; D.N. 840, ¶ 2; D.N. 841, ¶ 2; D.N. 842, ¶ 2.) However, Plaintiff’s
statements are just not credible. The Court expressly told the parties on October 30 that it would
decide the laches issue raised by Plaintiff’s motion the following morning. (Trial Tr., 1785:1118.) Furthermore, because Plaintiff filed its dispositive laches motion before the jury verdict,
Plaintiff’s counsel cannot credibly assert that they believed the Court would take laches evidence
after the jury verdict and only rule on laches at that time.
A Court May Grant Judgment under Rule 52(c) Sua Sponte
Plaintiff’s final procedural argument is that the Court violated Rule 52(c) by granting
judgment of laches sua sponte. (Motion, 11 (“The Court’s Sua Sponte Ruling Violated Rule
52”).) As an initial matter, Defendants made a laches motion under Rule 52(c) before the Court
issued its oral ruling on laches (D.N. 767), and thus it is not correct to say that the Court’s ruling
was sua sponte. And Plaintiff was on full notice that the Court would rule on laches, following
the parties’ dueling laches motions and dueling oral arguments on whether laches should apply.
Nevertheless, to the extent that the Court’s final written laches order might be read as a
sua sponte order, that is allowable under Rule 52(c). The Advisory Committee Note to Rule
52(c) states that the Rule “authorizes the court to enter judgment at any time that it can
appropriately make a dispositive finding of fact on the evidence.” The Rule does not require a
party motion and fully allows for sua sponte rulings. EBC, Inc. v. Clark Bldg. Sys., Inc., 618
F.3d 253, 272 (3d Cir. 2010) (“A court may grant a Rule 52(c) motion made by either party or
may grant judgment sua sponte at any time during a bench trial, so long as the party against
whom judgment is to be rendered has been ‘fully heard’ with respect to an issue essential to that
party's case. As a result, the court need not wait until that party rests its case-in-chief to enter
judgment pursuant to Rule 52(c).”) (emphasis added). Thus, even if the Court’s written laches
order was deemed a sua sponte order, sua sponte orders are allowed under Rule 52(c).1
A Laches Presumption Applies Because the Google AdWords Post (PX-176) Put
Plaintiff on Constructive Notice of its Infringement Claims by July 2005
The Court held that Plaintiff and Lycos “had constructive notice of possible infringement
on the date Google published the AdWords Post [PX-176] on July 18, 2005. The AdWords Post
contained information that serves as the heart of I/P Engine’s claims against Google. If the
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.” (D.N.
800, 11.) While Plaintiff makes several arguments against the Court’s conclusion that the
AdWords Post gave Lycos constructive notice of the alleged infringement, none of these
arguments show a manifest error of law or fact.
Plaintiff Cannot Escape Constructive Knowledge by Alleging that Lycos Was
Not a Google AdWords Customer in 2005
Plaintiff argues that Lycos had no reason to read the AdWords Post in 2005, on the
theory that this post was aimed at Google’s AdWords customers and Lycos was not an AdWords
customer in 2005. (Motion, 17.) This argument fails for at least three reasons. First, Plaintiff
does not dispute that the AdWords Post was published on the Internet and thus was available to
anyone, whether or not they were an AdWords customer. Second, Mr. Blais’ deposition (as
opposed to Mr. Blais’ sham declaration) shows that Lycos was using both AdWords and
AdSense for Search in 2005. (D.N. 818-1, 32:24-34:4.) Third, Plaintiff admits that Lycos also
Plaintiff tries to rebut this conclusion by arguing that Rule 50(a) orders and summary judgment
orders cannot be sua sponte. (See Motion at 10, 13.) The fact that Plaintiff relies on Rule 50(a)
arguments and summary judgment arguments shows the weakness of its position. There is no authority
holding that Rule 52(c) orders cannot be sua sponte. In any event, the Court gave clear notice of its
intention to rule well in advance of the ruling.
had its own search advertising product in 2005. (Motion, 17.) Thus, not only was Lycos
Google’s customer, but Lycos also was Google’s competitor in the search advertising field. This
means that, as a matter of law, Lycos must be charged with constructive knowledge of Google’s
published activities in this field, such as the disclosures in the AdWords Post. See Wanlass v.
Gen. Elec. Co., 148 F.3d 1334, 1339 (Fed. Cir. 1998) (“a reasonable patentee, motivated by his
interest in recovering for and preventing infringement, keeps abreast of the activities of those in
his field of endeavor.”).
The AdWords Post Was Sufficiently Detailed For Constructive Knowledge
As the Court correctly held, “[t]he language included in the AdWords Post quoted above
is significantly similar to the language utilized by the Plaintiff in its complaint” and “[t]he
Google AdWords Post contained information that serves as the heart of I/P Engine’s claims
against Google.” (D.N. 800, 9, 11.) In response, Plaintiff quotes testimony from Google
employee Jonathan Alferness that the AdWords Post “was not ‘a technical prescription for how
the product works.’” (Motion, 18.) But the Court already rejected this precise argument in its
written laches order (D.N. 800, 9-10), which Plaintiff ignores in its Motion. A Rule 52(b)
motion is no place to reiterate arguments that have already been rejected. Mathis, 2008 WL
906554 at *1.
The Court correctly rejected this argument. Whether the AdWords Post was a technically
accurate description of how Google’s system actually works, it mirrors the infringement
allegations in the Complaint, and therefore Plaintiff and Lycos had constructive knowledge of
the alleged infringement by 2005. A.C. Aukerman Co. v. R.L. Chaides Const. Co., 960 F.2d
1020, 1037 (Fed. Cir. 1992) (en banc) (“a prima facie defense of laches is made out upon proof
by the accused infringer that the patentee delayed filing suit for six years after actual or
constructive knowledge of the defendant's acts of alleged infringement.”) (emphasis added).
Plaintiff next argues that its Complaint contains more than just the two paragraphs (¶¶ 37
and 43) that mirror the language in the AdWords Post. But Plaintiff does not identify any
additional Complaint paragraphs that set forth the workings of Google’s system or allege why
Google’s system infringes the patents-in-suit. Thus, the Court was absolutely correct to cite ¶¶
37 and 43, characterize those paragraphs as “the heart of I/P Engine’s claims against Google,”
and conclude that the infringement allegations in those paragraphs are extremely similar to the
disclosures in the AdWords Post. (See D.N. 800, 8-11.)
Plaintiff next argues that there could be no constructive knowledge because Google kept
many details about its system as a trade secret. (Motion, 20-21.) Plaintiff already raised this
“secrecy” argument in response to the Court’s oral laches ruling (Trial Tr., 1809:20-23), and the
Court already rejected this argument at trial. (Id., 1810:7-11.) Again, a Rule 52(b) motion is not
the place to re-hash this argument. This “secrecy” argument also fails on the merits. While there
is no dispute that many aspects of Google’s system were and are kept secret, the Complaint
alleged infringement based on Google’s use of a Quality Score that allegedly includes a
combination of click-through rate and ad text relevance. (See D.N. 1, ¶ 43.) As the Court
properly found, the AdWords Post publicly described Quality Score in exactly these terms back
in July 2005. (D.N. 800, 8-9.) Thus, Plaintiff had constructive knowledge of its infringement
claims as of that date, regardless of whether other aspects of Google’s system were still secret.
Neither of the cases cited by Plaintiff (see Motion, 19-20) negates this conclusion. In
Intirtool, Ltd. v. Texar Corp., 369 F.3d 1289 (Fed. Cir. 2004), the Federal Circuit found no actual
or constructive knowledge based on a phone call between the defendant’s officer (Dawsey) and
the patentee’s officer (Sullivan). See id. at 1297-98. At the time of this phone call, the defendant
was still buying licensed products from the patentee and thus was not infringing. The Federal
Circuit noted that “Dawsey’s conversation with Sullivan indicated only that he had a potential
alternative supplier, and that he asked for a reduction in price and was refused . . . At most, the
conversation notified Intirtool that Texar contemplated the possibility of reselling competing
tools at some future date.” Id. at 1298. The Federal Circuit held that that this mere possibility of
future infringement was insufficient for constructive knowledge. See id.
The facts in Intirtool are not remotely similar to this case. Rather than merely disclosing
the possibility of future infringement at some unidentified time by some unidentified product,
Google’s AdWords Post contains the very same description of Quality Score upon which
Plaintiff based its infringement theory.
Also unhelpful is the other case Plaintiff cites, U.S. Philips Corp. v. ATI Tech., Inc., No.
05-8176, 2008 WL 2073928 (S.D.N.Y. May 8, 2008). Philips found no constructive knowledge
based on a “press release on [Defendant’s] website announcing a product that had, among other
features, I 2C capability.” Id. at *3. The court’s discussion of constructive knowledge spanned
just two brief paragraphs, provided no further detail on the press release, and never compared the
language of the press release to the plaintiff’s complaint to see how closely the press release
tracked the plaintiff’s infringement allegations. Id. By contrast, this Court’s laches order
discussed at length how “[t]he Google AdWords Post contained information that serves as the
heart of I/P Engine’s claims against Google.” (D.N. 800, 11; see also id., 8-11.) Thus, the brief
discussion in Philips provides no basis for this Court to reconsider its own laches order.
Mr. Kosak’s “Pokes” at Google’s System Do Not Affect the Laches Analysis
In a separate section of its Motion, even before addressing the constructive knowledge
issue, Plaintiff argues that laches should not apply because Mr. Kosak casually “poked at Google
asking them specifically how AdSense or AdWords was operating when we had some problems
with the system.” (Motion at 16-17 (citing Trial Tr. 352:17-353:3).) The transcript does not
state when Mr. Kosak made his “pokes” or what the result of these pokes were. Nor does
Plaintiff articulate how Mr. Kosak’s pokes fit into the laches analysis. For example, Plaintiff
does not state whether it contends that Mr. Kosak’s pokes nullified the constructive knowledge
that the AdWords Post imputed to Lycos, or whether they had some other legal significance.
Plaintiff simply states that “[i]n such a situation, laches does not apply.” (Id., 17.)
Because the AdWords Post gave Lycos constructive knowledge of the alleged
infringement as of 2005, it is legally irrelevant whether Mr. Kosak sought additional knowledge
from Google at some other time. Furthermore, Mr. Kosak’s inquiries are doubly irrelevant
because they had nothing to do with investigating whether Google infringed the patents-in-suit.
In fact, Mr. Kosak never did anything to determine whether anyone infringed these patents. He
made this clear in the testimony immediately following the passage that Plaintiff quotes:
A: I had, at least two different occasions, poked at Google asking them
specifically how AdSense or AdWords was operating when we had some
problems with the system.
Q: And you did that in relation to determining what they did in relation to the
patents that are asserted in this case?
A: I did that because they didn’t pay us. That’s why I did it.
Q: And have you ever done anything personally while you were at Lycos to
determine whether anyone was using the patents in this case?
A: I did not.
(Trial Tr., 352:21-353:7.) Thus, Mr. Kosak’s “pokes” have no relevance to laches. They had
nothing to do with investigating potential infringement of the patents-in-suit, nor could they
nullify the constructive knowledge that Lycos acquired through the Google AdWords Post.
Plaintiff Failed to Rebut the Laches Presumption
Because Plaintiff and Lycos had constructive knowledge of the alleged infringement
more than six years before this suit was filed, a presumption arose that Plaintiff’s delay was
unreasonable and that Defendants suffered prejudice. Aukerman, 960 F.2d at 1037. To rebut the
presumption, Plaintiff bore the burden of coming forward with sufficient evidence to raise a
genuine issue of material fact as to whether unreasonable delay or prejudice actually exist. Id. at
1038. If Plaintiff failed to raise a genuine issue of material fact as to either of these presumed
elements, then the presumption of laches must stand. Id. As discussed below, there was no error
(let alone manifest error) in the Court’s conclusion that Plaintiff failed to meet its burden to rebut
either prong of laches.
Plaintiff Did Not Rebut the Unreasonable Delay Prong of Laches
Plaintiff’s Motion does not even argue that Plaintiff rebutted the “unreasonable delay”
prong of laches. Plaintiff’s Motion even abandons the two excuses for Lycos’ delay that Plaintiff
had previously offered at trial – namely, the excuses that Lycos was asserting other patents
during the delay period and that Lycos’ corporate parents didn’t know what to do with the
patented technology. In fact, the structure of Plaintiff’s Motion makes clear that Plaintiff is no
longer contesting the unreasonable delay prong of laches. After discussing constructive
knowledge in Section IV(B)(2) of its Motion, Plaintiff skips directly to discussing the prejudice
prong of laches in Section IV(B)(3), without ever addressing the unreasonable delay prong.2
Plaintiff Did Not Rebut the Prejudice Prong of Laches
Plaintiff’s Motion does purport to address the “prejudice” prong of laches. Specifically,
Plaintiff spends seven pages of its Motion arguing that Defendants’ showing of evidentiary
prejudice is unpersuasive. (See Motion, 23-29.) As a matter of law, these arguments do not
discharge Plaintiff’s burden on the “prejudice” prong. Due to the presumption, Plaintiff must
come forward with affirmative evidence that Defendants did not suffer evidentiary prejudice –
To the extent Plaintiff tries to re-package Mr. Kosak’s “pokes” as an excuse for Lycos’ delay, this
excuse must fail, as noted above, because the pokes had nothing to do with investigating alleged
infringement by Google and because the record does not even reflect when these pokes occurred. See
supra at Section III(C).
e.g., testimony or other evidence showing that memories are just as fresh and documents are just
as voluminous as they would have been without the delay. Aukerman, 960 F.2d at 1038.
Plaintiff cannot meet its burden merely by criticizing Defendants’ affirmative evidence of
prejudice. The Federal Circuit made this point explicitly in Hall v. Aqua Queen:
Hall attacks the district court's conclusion that each of the defendants had
demonstrated economic and/or evidentiary prejudice by pointing to perceived
weaknesses in the affidavits on which the defendants and the district court relied.
Such an attack is, of course, unavailing, inasmuch as the defendants could have
remained utterly mute on the issue of prejudice and nonetheless prevailed. Hall
failed to come forward with any evidence demonstrating a lack of prejudice as to
any of the defendants, and thus failed to “burst” the Aukerman presumption
“bubble” with a “no prejudice” lance.
Hall v. Aqua Queen Mfg., Inc., 93 F.3d 1548, 1554 (Fed. Cir. 1996) (emphasis added). Because
Plaintiff never came forward (and still does not come forward) with any affirmative evidence
that Defendants lacked prejudice, the prejudice prong of laches remains unrebutted.
The Court Correctly Applied the Laches Presumption
Plaintiff argues that that the Court misapplied the laches presumption by putting the
burden on Plaintiff to rebut both prongs of laches by a preponderance of the evidence. (Motion,
15-16.) This argument rests entirely on the following sentence from the introductory section of
the Court’s laches order: “Once this presumption is met, the patentee bears the burden of
rebutting both elements of laches (by a preponderance of the evidence) by showing that their
delay was reasonable and/or by showing a lack of prejudice as a result of the unreasonable
delay.” (D.N. 800, 5.) Plaintiff seizes on this sentence to argue that the Court’s entire laches
order was erroneous, since a patentee can rebut the laches presumption by producing sufficient
evidence to create a genuine issue of material fact as to either prong of laches. (Motion, 15.)
But the Court’s actual application of the laches presumption to this case was completely
correct. As the Court’s findings show, Plaintiff had not raised a genuine issue of material fact as
to either prong of laches. For example, the Court found that the two excuses offered by Plaintiff
to excuse the delay – Lycos’ other litigation over different patents and Lycos’ strategic
indecision over the patents-in-suit – were invalid under the law. (D.N. 800, 12-13.) Needless to
say, Plaintiff cannot raise a genuine issue of material fact as to the unreasonable delay prong by
offering excuses that are legally invalid.
As to the prejudice prong, the Court ruled that Plaintiff “has failed to provide any
evidence (expert or otherwise) to support its contention that the memories of Mr. Lang, Mr.
Kosak, or Lycos (institutionally) would be unimproved by being questioned earlier in relation to
this suit.” (Id., 13.) Thus, Plaintiff failed to raise a genuine issue of material fact as to the
prejudice prong of laches as well.
In sum, the Court correctly ruled that the laches presumption remained unrebutted, based
on Plaintiff’s failure to offer any valid excuse for the delay or to provide any evidence that
Defendants did not suffer prejudice. This was a correct application of the laches presumption.3
Even Without the Presumption, Defendants Have Proven Laches
As discussed above, the Court properly granted judgment of laches based on Plaintiff’s
failure to rebut the laches presumption. But even if the presumption never existed, or even if
Plaintiff were somehow able to overcome the presumption, Defendants would still be entitled to
judgment of laches because Defendants affirmatively proved both the “unreasonable delay” and
“prejudice” prongs of laches. See Aukerman, 960 F.2d at 1038 (“Elimination of the presumption
does not mean the patentee precludes the possibility of a laches defense; it does mean, however,
that the presumption of laches plays no role in the ultimate decision. The facts of unreasonable
Thus, even if Plaintiff were somehow correct that the Court used an improper legal standard to
determine whether the laches presumption was rebutted, the Court’s actual findings on this issue (namely,
that Plaintiff had offered no valid excuse for the delay and no evidence that Defendants lacked prejudice)
fully support a conclusion that the laches presumption remained unrebutted under the correct legal
delay and prejudice then must be proved and judged on the totality of the evidence presented.”)
For this reason as well, Plaintiff cannot show that the Court’s laches ruling suffered from a
manifest error of law or fact.
Defendants Have Shown Unreasonable Delay
As to “unreasonable delay,” the evidence firmly established that Plaintiff and Lycos
delayed filing suit more than six years after the AdWords Post provided them with constructive
knowledge of their infringement claims. Even if there was no presumption of laches, the Court
was well within its rights to conclude that this six-plus year delay was “unreasonable.”
Defendants Have Shown Prejudice
As to “prejudice,” Defendants’ laches proffer (D.N. 766) showed that this lengthy delay
had created significant evidentiary prejudice. As the Court found in its written laches order:
“Defendants . . . have provided a number of examples in [their] laches proffer of what the Court
finds to be critical questions regarding Defendants’ defenses and damages that went unanswered
by Lang Kosak, or Lycos at their depositions.” (D.N. 800, 13.) The Court’s conclusion was
correct: Defendants showed significant evidentiary prejudice through their laches proffer.4
First, potentially critical documents were lost during the delay period. For example,
named inventors Ken Lang and Don Kosak testified that they no longer possess most or all of
their inventor notebooks and other documents from their time at WiseWire and Lycos. (D.N.
766, Ex. A (“Lang Dep.”), 119:21-120:11; id., Ex. B (“Kosak Dep.”), 159:22-160:4, 164:11-18.)
Loss of inventor documents establishes evidentiary prejudice for purposes of laches, as courts in
this District have held. See Potter Instr. Co., Inc. v. Storage Tech. Corp., No. 79-579, 1980 WL
Notably, a defendant only needs to show prejudice by a preponderance of the evidence in order
to succeed in a laches defense. See Aukerman, 960 F.2d at 1045.
30330, *7 (E.D. Va. Mar. 25, 1980) (finding evidentiary prejudice where “as a result of the long
delay in the filing of these suits, many crucial documents, including the inventor's files, have
become lost or been destroyed.”).
Plaintiff’s Motion does not even address the issue of Mr. Lang’s and Mr. Kosak’s lost
documents. Evidentiary prejudice is established based on this issue alone.
Important individual and corporate memories were also lost during the delay period. For
example, Mr. Lang could not remember whether his prior “NewsWeeder” system used contentbased and collaborative filtering – an important fact in determining whether the NewsWeeder
may have practiced the Asserted Patents for purposes of an on-sale bar. (Lang Dep., 81:1-15,
201:9-202:1.) Mr. Lang also could not remember whether he did a prior art search before filing
his patent applications (id., 152:22-153:7, 251:21-25), thus frustrating Defendants’ ability to
determine whether he may have located invalidating prior art or prior art that would support an
inequitable conduct charge and render the Asserted Patents unenforceable. See Aukerman, 960
F.2d at 1035 (noting that “testimonial evidence is frequently critical to invalidity defenses and
almost always so with respect to unenforceability”).
Mr. Kosak could not recall his first invention that used content-based and collaborative
filtering (Kosak Dep., 75:4-14, 214:11-215:21) – again, an important fact in determining whether
Mr. Kosak’s prior invention(s) may have constituted an on-sale bar. He also could not remember
what involvement he had with the prosecution of the patents-in-suit (id., 275:2-15), thus
frustrating Defendants’ ability to determine whether his behavior during prosecution could leave
him open to an inequitable conduct charge.
The deposition of Lycos’ Rule 30(b)(6) representative, Mark Blais, also showed that
Lycos’ institutional memory had faded regarding important issues in this case. For example, Mr.
Blais could not say whether Lycos evaluated the intellectual property of WiseWire (Mr. Lang’s
and Mr. Kosak’s company) when it acquired WiseWire, thus frustrating Defendants’ ability to
determine what value Lycos ascribed to WiseWire’s patents at that time. (D.N. 766, Ex. C
(“Blais Dep.”), 13:13-14:3.) Similarly, Mr. Blais could not say whether Lycos’ parent
companies evaluated Lycos’ intellectual property (including the Asserted Patents) when they
acquired Lycos in 2000 and 2004. (Id., 30:10-31:21.) He could not say how much revenue
Lycos was earning from Google’s products around the time of the hypothetical negotiation – an
important fact in determining how hard a bargain Lycos would have struck in this hypothetical
negotiation. (Id., 32:6-23, 109:10-110:4, 111:13-18.) And he could not recall Lycos’ corporate
policies regarding patent enforcement and licensing around the time of the hypothetical
negotiation – again, an important fact in determining how Lycos would have acted in the
hypothetical negotiation. (Id., 50:14-17, 51:9-13, 52:3-6, 52:16-20.)
Plaintiff’s arguments against this prejudice evidence are unpersuasive. For example,
Plaintiff argues that Mr. Blais’ testimony cannot show evidentiary prejudice because “virtually
all of the Blais testimony was inadmissible because it related to events that occurred before Mr.
Blais joined Lycos.” (Motion, 27.) While it is true that many of the relevant events preceded
Mr. Blais’ tenure at Lycos, and Mr. Blais thus did not have firsthand knowledge of them, this
itself shows how the delay in bringing suit prejudiced Defendants. As the Court found, “had the
suit been brought sooner, it is quite probable that Lycos would have been able to produce an
institutional representative with better knowledge of the period of time at issue in this case.”
(D.N. 800, 13.) Due to the passage of time, however, Lycos’ most knowledgeable 30(b)(6)
representative was Mr. Blais, who lacked firsthand knowledge about some of these events.
Plaintiff blames Defendants for this state of affairs, saying that the only reason
Defendants were forced to rely on the incomplete knowledge of Mr. Blais is that Defendants did
not notice the proper Rule 30(b)(6) topics to Lycos. For example, Plaintiff argues that
Defendants cannot complain about Mr. Blais’s lack of knowledge about Lycos’s licensing
policies in 2004 (the year of the hypothetical negotiation) because Defendants did not put a date
restriction on their Rule 30(b)(6) topic about “Lycos’ patent licensing policies and practices.”
(See Motion, 29.) This argument is, again, disingenuous. As both Plaintiff and Mr. Blais were
well aware during the deposition, Defendants’ Rule 30(b)(6) topic regarding “Lycos’ patent
licensing policies and procedures” included Lycos’s past and present policies on this subject.
For example, when Defendants questioned Mr. Blais about Lycos’ historical patent licensing
policies, neither Plaintiff nor Mr. Blais objected to a single one of these questions as beyond the
scope of the Rule 30(b)(6) topics. (See Blais Dep., 50-52.) Thus, it was not Defendants’ fault
that Lycos was unable to provide meaningful information about its patent policies at the time of
the hypothetical negotiation. Rather, the reason why Lycos was unable to provide information
on this subject is that the lengthy delay in bringing this suit left Lycos with no better 30(b)(6)
representative than Mr. Blais, who lacked first-hand knowledge of this time period.
Plaintiff also seeks to brush aside Mr. Lang’s and Mr. Kosak’s forgetfulness about their
patent prosecution activities, which frustrated Defendants’ ability to determine whether these
inventors engaged in inequitable conduct, by arguing that Defendants never pled inequitable
conduct. (Motion, 26.) This argument is truly grasping at straws. Inequitable conduct must be
pled with particularity under Rule 9(b),5 and inventor testimony is “almost always” critical to
establishing inequitable conduct and rendering a patent unenforceable. Aukerman, 960 F.2d at
1035. Mr. Lang’s and Mr. Kosak’s forgetfulness about their prosecution activities frustrated
Defendants’ ability to investigate inequitable conduct, which necessarily prevented Defendants
See Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1328 (Fed. Cir. 2009).
from pleading inequitable conduct. See McKechnie Vehicle Components USA, Inc. v. Lacks
Indus., Inc., No. 09-cv-11594, 2010 WL 4643081, *9 (E.D. Mich. Nov. 9, 2010) (“the Exergen
test all but requires the party seeking to press inequitable conduct charges to engage in fairly
extensive discovery prior to pleading it in order to meet the particularity demands”). Thus, it is
backwards for Plaintiff to say that Mr. Lang’s and Mr. Kosak’s forgetfulness about their
prosecution activities did not prejudice Defendants because Defendants never pled inequitable
conduct. Rather, the inventors’ forgetfulness is what prevented Defendants from being able to
investigate and potentially plead inequitable conduct.
The Court Correctly Ruled that All Defendants May Benefit from Laches
The Court ruled that all Defendants may benefit from Plaintiff’s laches as to Google
because Google is indemnifying all the Defendants, and thus any damages against any Defendant
would come out of Google’s pocket. (D.N. 800, 14-15.) In response, Plaintiff argues that laches
should not apply to Defendants AOL and Gannett because AOL’s and Gannett’s indemnification
agreements with Google were not entered into the trial record, and because the indemnification
clause in the Google-Gannett Agreement does not specifically refer to patents. (Motion, 30.) As
discussed below, however, there are numerous reasons why AOL and Gannett (like the other
Defendants) have a valid laches defense, and Plaintiff cannot show the Court’s laches ruling was
based on a manifest error of law or fact. Indeed, Plaintiff’s argument that AOL and Gannett
cannot benefit from laches just rehashes arguments that Plaintiff already made and the Court
already rejected. (Trial Tr., 2018:23-2023:17.) It is improper for Plaintiff to re-raise these same
arguments in a Rule 52(b) motion. Mathis, 2008 WL 906554 at *1.
Plaintiff Has Waived the Argument That AOL and Gannett Cannot Rely on
Google’s Laches Defense
First, Plaintiff has waived the argument that AOL and Gannett cannot rely on Google’s
laches defense because Plaintiff never raised this argument at any time before the Court issued
its oral laches ruling on October 31. During discovery, Gannett served two interrogatories
seeking the basis for Plaintiff’s contention that Gannett does not have a valid laches defense.
(Nelson Decl., Ex. C, 10-11, 13.) Plaintiff’s responses to these interrogatories stated: “To the
extent Gannett relies upon Google’s laches defense as it is Google’s accused product in
question,” followed by an explanation of why Google’s and Gannett’s laches defense supposedly
fails. (Id., 12-13, 14-17.) At no point in this explanation did Plaintiff allege that Gannett cannot
claim the benefit of Google’s laches defense, or that Gannett is differently situated from Google
with respect to laches. (See id.) Defendants Target and IAC served identical laches
interrogatories, and Plaintiff made identical responses. (Nelson Decl., Exs. D-E.) Because
Plaintiff’s interrogatory responses never argued that the other Defendants cannot claim laches on
equal terms as Google, Plaintiff has waived such argument. See Fed. R. Civ. P. 37(c)(1).
Plaintiff also never argued that the other Defendants cannot claim laches on equal terms
as Google when it responded to Defendants’ summary judgment motion on laches, when it made
its Rule 50(a) motion on laches, or at any time before the Court made its laches ruling on
October 31. By failing to make this argument at any time before the Court ruled, Plaintiff
waived this argument. Pandrol USA, LP v. Airboss Ry. Prods., 320 F.3d 1354, 1366-67 (Fed.
Cir. 2003) (arguments not raised until after a dispositive ruling are waived). Indeed, the Court
has admonished that: “[t]he record on appeal is based on what the Court considered before it
ruled, not what you introduce after the Court ruled. If you wanted me to know something more,
you should have introduced it before the Court ruled.” (Trial Tr., 1941:9-13 (emphasis added).)
AOL and Gannett are Entitled to the Benefit of Google’s Laches Defense
Because Their Allegedly Infringing Sales were Made Jointly with Google
Leaving aside the waiver issue, AOL and Gannett are entitled to the benefit of Google’s
laches defense because AOL’s and Gannett’s allegedly infringing advertising sales were made
jointly with Google. As the Court previously held: “AOL, Gannett, IAC Search & Media, and
Target Corporation may be jointly and severally liable for any alleged infringement with their
co-defendant, Google Inc., and the Plaintiff has alleged such.” (D.N. 705 at 9.) In other words,
the same sales allegedly create joint and several liability against both Google and the other
Defendants. In such case, Plaintiff cannot simply switch targets and collect damages from the
other Defendants for a given advertising sale, when laches would bar Plaintiff from collecting
damages from Google on that same sale. As the nation’s premier patent treatise has recognized,
allowing a plaintiff to switch targets in this manner would be “incongruous” and would vitiate
the laches defense. See CHISUM ON PATENTS § 19.05[A][ii] (2011) (“As for situations
involving manufacturer/seller and buyer/lessee use, it seems incongruous to free the former from
liability for past sales but hold the latter to liability for those same sales.”)
AOL and Gannett Are Entitled to the Benefit of Google’s Laches Defense
Because Google is Indemnifying AOL and Gannett
AOL and Gannett are also entitled to the benefit of Google’s laches defense because
Google is indemnifying AOL and Gannett. As this Court already held, the other Defendants may
claim the benefit of Google’s laches defense to the extent Google is indemnifying them. (D.N.
800 at 14-15.) Plaintiff does not dispute this basic proposition, but argues that AOL and Gannett
cannot claim indemnity because their indemnification agreements were not entered into the trial
record and because the Gannett-Google Agreement does not refer to patents. (Motion at 30.)
Initially, the reason why these indemnification agreements (and/or other evidence of
indemnification) were not entered into the trial record is because Plaintiff hid its argument that
the other Defendants could not rely on Google’s laches defense, only raising this argument after
the trial evidentiary record was closed and the Court’s laches ruling had issued. If Plaintiff had
timely disclosed its position that the other Defendants could not benefit from Google’s laches
defense, then Defendants would have proffered the requisite indemnification evidence to obviate
this argument. Defendants respectfully refer the Court to the attached Declaration of Google’s
corporate trial representative, Jennifer Polse,6 who explains that Google is indeed indemnifying
AOL and Gannett and has been since the inception of this case. (Polse Decl., ¶ 2.) Because
Google is indemnifying both AOL and Gannett, AOL and Gannett may properly claim the
benefit of Google’s laches defense.
AOL Has a Valid Laches Defense in its Own Right Because the Elements of
Unreasonable Delay and Prejudice Exist Equally for AOL as for Google
AOL also has a valid laches defense in its own right because the same facts that give rise
to Google’s laches defense also give rise to a laches defense for AOL. Like all the Defendants in
this case, AOL is being accused of infringement due to its use of Google’s system, and the video
deposition testimony entered at trial shows that AOL has been using Google’s system since well
before 2005. (See Ex. 1 (Hickernell Dep.) at 21:2-13; see also Trial Tr. at 750:14-15 (playing
Hickernell Dep. in court); 1799:14-21 (entering Hickernell Dep. into the record).) Thus, when
the 2005 AdWords Post provided constructive notice of Plaintiff’s infringement claims against
Google, it also provided constructive notice of Plaintiff’s claims against everyone who was using
Google’s system at that time – including AOL. In other words, Plaintiff delayed bringing suit
against AOL for just as long as it delayed bringing suit against Google.7 And because AOL and
Google have identical defenses in this case, the lost documents and faded memories prejudiced
AOL in the same way that they prejudiced Google.
Given that Plaintiff attached no fewer than four substantive attorney declarations to support its
present Motion, Defendants respectfully submit that they may properly attach the Polse Declaration to
this Opposition Brief for the Court’s consideration.
To the extent Plaintiff argues that it and Lycos did not know AOL was using Google’s system in
2005, this argument must fail. Because Plaintiff and Lycos had constructive knowledge in 2005 that
Google’s system allegedly infringed their patents, they had a duty to investigate who was using Google’s
system in order to determine against whom to bring their infringement claims.
Plaintiff’s cited cases about laches not applying to all defendants involved situations
where the unreasonable delay and/or prejudice were different for the various defendants. In
Israel Bio-Eng’g Project v. Amgen, Inc., 401 F.3d 1299 (Fed. Cir. 2005), one defendant claimed
economic prejudice due to monetary investments that were not shared by the other defendants.
See id. at 1306. Thus, the court held that the defendants had qualitatively different laches
defenses. See id. In Lucent Tech. Inc. v. Gateway, Inc., 470 F. Supp. 2d 1187 (S.D. Cal. 2007),
plaintiff had given notice that it might sue defendants Dell and Gateway, but had given no such
notice to defendant Microsoft. See id. at 1191-92. Thus, the court held that Microsoft had a
viable laches defense while Dell and Gateway did not. See id.8
By contrast, there are no qualitative differences between Google’s and AOL’s laches
defense. Google and AOL are accused of infringement based on their use of the same system
(Google’s system), Plaintiff and Lycos had constructive knowledge of their claims against this
system more than six years before filing suit, Google and AOL were both using this system when
Plaintiff and Lycos acquired constructive knowledge, Plaintiff never notified Google or AOL of
the alleged infringement at any time before filing suit, and the resulting prejudice was identical
for Google and AOL. Thus, AOL has a valid laches defense for the same reasons Google does.
For the foregoing reasons, Plaintiff’s Motion should be denied.
Dated: January 25, 2013
/s/ Stephen E. Noona
Stephen E. Noona
Virginia State Bar No. 25367
KAUFMAN & CANOLES, P.C.
150 West Main Street, Suite 2100
Norfolk, VA 23510
The third case that Plaintiff cites is a trademark case, not a patent case, so the relevance of that case is
unclear. (See Motion at 29 (citing Sweetheart Plastics, Inc. v. Detroit Forming, Inc., 743 F.2d 1039, 1046
(4th Cir. 1984)).
Telephone: (757) 624.3000
Facsimile: (757) 624.3169
David A. Perlson
QUINN EMANUEL URQUHART &
50 California Street, 22nd Floor
San Francisco, California 94111
Telephone: (415) 875-6600
Facsimile: (415) 875-6700
Counsel for Google Inc., Target Corporation,
IAC Search & Media, Inc., and Gannett Co., Inc.
/s/ Stephen E. Noona
Stephen E. Noona
Virginia State Bar No. 25367
KAUFMAN & CANOLES, P.C.
150 W. Main Street, Suite 2100
Norfolk, VA 23510
Telephone: (757) 624-3000
Facsimile: (757) 624-3169
Robert L. Burns
FINNEGAN, HENDERSON, FARABOW, GARRETT
& DUNNER, LLP
Two Freedom Square
11955 Freedom Drive
Reston, VA 20190
Telephone: (571) 203-2700
Facsimile: (202) 408-4400
Cortney S. Alexander
FINNEGAN, HENDERSON, FARABOW, GARRETT
& DUNNER, LLP
3500 SunTrust Plaza
303 Peachtree Street, NE
Atlanta, GA 94111
Telephone: (404) 653-6400
Facsimile: (415) 653-6444
Counsel for Defendant AOL, Inc.
CERTIFICATE OF SERVICE
I hereby certify that on January 25, 2013, I will electronically file the foregoing with the
Clerk of Court using the CM/ECF system, which will send a notification of such filing (NEF) to
Jeffrey K. Sherwood
Kenneth W. Brothers
DICKSTEIN SHAPIRO LLP
1825 Eye Street NW
Washington, DC 20006
Telephone: (202) 420-2200
Facsimile: (202) 420-2201
Donald C. Schultz
W. Ryan Snow
CRENSHAW, WARE & MARTIN, P.L.C.
150 West Main Street, Suite 1500
Norfolk, VA 23510
Telephone: (757) 623-3000
Facsimile: (757) 623-5735
Counsel for Plaintiff, I/P Engine, Inc.
/s/ Stephen E. Noona
Stephen E. Noona
Virginia State Bar No. 25367
KAUFMAN & CANOLES, P.C.
150 West Main Street, Suite 2100
Norfolk, VA 23510
Telephone: (757) 624.3000
Facsimile: (757) 624.3169