Morris Reese v. T-Mobile USA Inc

Filing 40

ORDER GRANTING T-Mobile USA Inc MOTION FOR SUMMARY JUDGMENT 21 . A Judgment will issue. The parties are directed to file a joint status report detailing what issues, if any, remain for this Court to resolve by Judge Otis D. Wright, II (lc) Modified on 5/9/2014 (lc).

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United States District Court
Central District of California

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MORRIS REESE,
Plaintiff,

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Case No. 2:13-cv-05199-ODW(PLAx)

v.

ORDER GRANTING MOTION FOR
SUMMARY JUDGMENT [21]

T-MOBILE USA, INC.,
Defendant.

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I.

INTRODUCTION

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Plaintiff Morris Reese notified virtually the entire cellular wireless industry of

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U.S. Patent No. 6,868,150 (“the ’150 Patent”) in 2005 through letters alleging that

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providing call-waiting and caller-ID services infringed the ’150 Patent. But it was not

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until May 2013—more than eight years later—that Reese filed patent-infringement

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suits against the five cellular service providers. Finding this delay unfair, the service

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providers, including Defendant T-Mobile USA, Inc., all individually filed motions for

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summary judgment against Reese based on the defense of laches.

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dismissal of his current suits because of his prolonged delay, Reese now offers

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excuses—such as his illness and involvement in other litigation—to justify his delay

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in bringing suit. Because none of Reese’s explanations excuse his delay, the Court

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GRANTS T-Mobile’s Motion for Summary Judgment. (ECF No. 21.)

Faced with

II.

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FACTUAL BACKGROUND

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Reese is the sole named inventor on the ’150 Patent, which issued on March 15,

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2005. (SUF ¶ 2.) The ’150 Patent is a continuation of the ’009 Patent which issued

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July 30, 2002. (Id. ¶ 47.) The ’150 Patent expired in 2011, two years prior to Reese’s

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suit against T-Mobile. (Id. ¶ 30.)

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On April 13, 2005, Reese sent a letter to T-Mobile Communications, Inc. and T-

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Mobile Wireless asserting that it infringed the ’150 Patent with its call-waiting ID

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service. (SUF ¶¶ 4–5; Mot. Ex. 1.) The April 13, 2005 letter informed T-Mobile of

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the ’150 Patent, and directed T-Mobile in particular to claims 25 and 36—which Reese

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indicated were “applicable to [T-Mobile] customers subscribed to ‘Call Waiting ID’

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service.’” (Mot. Ex 1.) Reese asserted that for T-Mobile’s to continue to provide that

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service to its customers, T-Mobile required a license from Reese. (Id.)

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T-Mobile responded on April 22, 2005, explaining that it was neither a

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developer nor manufacturer of wireless telecommunications devices, and thus

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believed it did not infringe the ’150 Patent. (SUF ¶ 8; Mot. Ex. 2.) Reese responded

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on June 6, 2005, requesting to know “within the next two weeks as to how [T-Mobile]

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would like to proceed with this matter.” (SUF ¶ 9; Mot. Ex. 3.) Reese neither

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informed T-Mobile that it would be sued if it did not take a license, nor asserted that

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T-Mobile’s status was sufficient to avoid infringement. (SUF ¶ 10–11: Mot. Ex. 3.)
On May 9, 2006, Reese wrote T-Mobile a second letter.

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(SUF ¶ 20; Mot.

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Ex. 4.) Again, Reese stated that T-Mobile needed to discuss licensing with Reese, and

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again he did not inform T-Mobile that it would be sued if it did not take a license.

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(SUF ¶ 21, Mot. Ex. 4.) On May 15, 2006 T-Mobile responded, reminding Reese that

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it was neither a developer nor manufacturer of wireless telecommunications devices.

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(SUF ¶¶ 24–25.) There is no evidence that Reese contacted T-Mobile again during the

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subsequent eight years. (SUF ¶ 21).

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Between 2005 and 2013, Reese litigated several other patent-infringement

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lawsuits across the country.1 (SUF ¶¶ 40–42.) Four of these suits involved the ’150

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Patent or its immediate parent. Reese was represented by counsel for all of these

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suits, with the exception of Reese v. T-Mobile Cal., Inc. et al., Case No. CV-11-01934

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SJO (C.D. Cal. Aug. 11, 2011), which he litigated pro se. (Reese Decl. ¶ 33.)

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From 2000 to 2008, Reese experienced serious heath problems. Reese began

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dialysis treatments for renal failure in 2000. (Id. ¶ 29.) Reese’s dialysis treatments

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were performed three times per week until Reese had a kidney transplant in 2008. (Id.

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¶¶ 30–32.)

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On May 29, 2013, Reese filed suit against T-Mobile—along with Sprint Nextel

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Corp., TracFone Wireless, Inc., United States Cellular Corporation, AT&T Mobility

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LLC, and Verizon. (Morris Reese v. Sprint Nextel Corporation et al., 2:13-cv-03811-

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ODW-PLA (C.D. Cal. May 29, 2013) ECF No. 1.) The Court severed the case on July

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15, 2013. (Id. ECF No. 18.) Reese refiled a separate complaint against T-Mobile on

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July 18, 2013. (ECF No. 1.)
III.

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LEGAL STANDARD

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Summary judgment should be granted if there are no genuine issues of material

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fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P.

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56(c). The moving party bears the initial burden of establishing the absence of a

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genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323–24 (1986).

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Once the moving party has met its burden, the nonmoving party must go beyond the

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pleadings and identify specific facts through admissible evidence that show a genuine

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Reese v. BellSouth Telecommunications, No. 5:97-cv-00568-BO (E.D.N.C Nov. 14, 1997); Reese
v. U.S. West Inc., No. 98-cv-80575-CRW (S.D. Iowa Mar. 12, 1999) (transferred to Reese v. U.S.
West Inc., No. 1:99-cv-00773-WDM-MJW (D. Col. Sept. 23, 2002)); N. Telecom, Inc. v. Reese, No.
2:98-cv- 09591-LGB (C.D. Cal. Feb. 9, 1999) (transferred to N. Telecom, Inc. v. Reese, No. 4:99-cv80081-CRW (S.D. Iowa Mar. 10, 1999)); Reese v. Aastra Technologies, No. 2:03-cv-00267-TJW
(E.D. Tex. Feb. 9, 2005); Reese v. Samsung Telecommunications America, L.P., No. 2:05-cv- 00415DF (E.D. Tex. Jan. 31, 2007); Reese v. Southwestern Bell Telephone, L.P., et. al., Case No. 2:07CV-219 (E.D. Tex. Dec. 23, 2008); and Reese v. Verizon California, Inc. and AT&T California,
Case No. CV-11-01934 SJO (C.D. Cal. Dec. 21, 2012).

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issue for trial. Id.; Fed. R. Civ. P. 56(c). Conclusory or speculative testimony in

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affidavits and moving papers is insufficient to raise genuine issues of fact and defeat

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summary judgment. Thornhill’s Publ’g Co. v. GTE Corp., 594 F.2d 730, 738 (9th Cir.

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1979).

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A genuine issue of material fact must be more than a scintilla of evidence, or

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evidence that is merely colorable or not significantly probative. Addisu v. Fred Meyer,

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198 F.3d 1130, 1134 (9th Cir. 2000).

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resolution of that fact might affect the outcome of the suit under the governing law.

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Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1968). An issue is “genuine” if

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the evidence is sufficient for a reasonable jury to return a verdict for the nonmoving

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party. Id. Where the moving and nonmoving parties’ versions of events differ, courts

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are required to view the facts and draw reasonable inferences in the light most

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favorable to the nonmoving party. Scott v. Harris, 550 U.S. 372, 378 (2007).

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IV.

A disputed fact is “material” where the

DISCUSSION

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In the interest of fairness, those who are granted a monopoly under the patent

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system have an obligation to enforce their rights in a timely manner. A defendant in a

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patent-infringement suit may raise the equitable defense of laches when the plaintiff is

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dilatory bringing suit and that delay prejudices the defendant. A.C. Aukerman Co. v.

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R.L. Chaides Const. Co., 960 F.2d 1020, 1030 (Fed. Cir. 1992). In patent cases, laches

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bars recovery of damages for any infringement that occurs prior to the filing of suit.

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Id. at 1040. A laches defense is a matter within the trial court’s discretion based on

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consideration of all of the facts in a particular case. Id. at 1040–41.

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To prevail on a laches defense, a defendant must prove by a preponderance of

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the evidence that: (1) the plaintiff knew or should have known of the infringement and

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with that knowledge delayed filing suit for an unreasonable and inexcusable length of

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time, and (2) the defendant was materially prejudiced by the delay. Id. at 1032; see

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also Hearing Components, Inc. v. Shure, Inc., 600 F.3d 1357, 1375 (Fed. Cir. 2010).

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Where the delay in filing the suit exceeds six years, the court will presume the delay

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was unreasonable and prejudicial to the defendant. 35 U.S.C. § 286; Hearing, 600

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F.3d at 1375 (citing Aukerman, 960 F.2d at 1035–36.) The burden is then on the

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plaintiff to prove the existence and reasonableness of an excuse for the delay, and to

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show a lack of prejudice to the infringer. Hearing, 600 F.3d at 1375.

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Determining the length of the delay involves two sub-issues: when the delay

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period begins to run and when the delay period ends. The delay period begins to run

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from the time that the plaintiff had actual or constructive knowledge of the alleged

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infringing activities. Aukerman, 960 F.2d at 1032; Hearing Components, 600 F.3d at

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1375. But the plaintiff need not be certain that the conduct is infringing; time starts to

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run when the patentee is aware of sufficient facts to form a reasonable belief that some

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infringing conduct exists. Aukerman, 960 F.2d at 1032. The delay period ends no

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later than the date of the filing of suit. (Id.)

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The reasonableness of the delay is not determined by application of mechanical

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rules. Aukerman, 960 F.2d at 1032. Rather, the reasonableness of the delay depends

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on the particular facts and circumstances of the individual case. Id. The court must

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consider and weigh any justification offered by the plaintiff for its delay. Id. at 1033.

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Prejudice to the defendant may be either economic or evidentiary.

Id.

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Economic prejudice arises when a defendant incurs damages that would likely have

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been prevented by earlier suit. See id. Economic prejudice is not merely damages

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attributable to patent infringement liability. Id. at 1033. Evidentiary or “defense”

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prejudice arises when the defendant can no longer present a full and fair defense on

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the merits due to the plaintiff’s delay. Id. at 1032. This inability may be occasioned

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by “the loss of records, the death of a witness, [or] the unreliability of memories of

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long past events.” Id.

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T-Mobile asserts that it is entitled to a laches presumption because of Reese’s

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eight-year delay in filing suit. Reese contends that T-Mobile is not entitled to a laches

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presumption because there is no evidence that the delay period, for laches purposes,

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began to run in 2005. In the alternative, Reese argues that he can rebut the laches

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presumption because his delay was reasonable and resulted in no prejudice to T-

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Mobile. The Court considers each in turn.

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A. Laches Presumption

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T-Mobile asserts that it is entitled to a presumption that Reese’s delay in filing

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suit was unreasonable and prejudicial to T-Mobile. In support of this assertion, T-

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Mobile argues that Reese knew or should have known of T-Mobile’s alleged

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infringement as of April 13, 2005, when Reese sent the infringement-allegation letter

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to T-Mobile. Reese then failed to formally assert his infringement claims against T-

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Mobile until 2013. T-Mobile asserts that because this amounts to a more than eight-

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year delay, it is entitled to the laches presumption under § 286.

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Reese argues that the delay period did not begin to run on April 13, 2005

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because his letter to T-Mobile was not an infringement allegation, but merely an

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invitation for T-Mobile to open licensing discussions with Reese.

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contends, there is no evidence that Reese actually knew of T-Mobile’s infringement in

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2005. This argument is contrary to the plain text of the letter. Reese states in his letter

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to T-Mobile that in order for it to continue to provide call-waiting-ID services, T-

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Mobile “requires a license from Mr. Reese.” (Mot. Ex. 1.) It strains credibility to

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argue that a patent owner who demands that a company take a license can somehow

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not know of his infringement claim on that patent.

Thus, Reese

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Moreover, Federal Circuit precedent establishes that knowledge as to whether

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the device actually infringes is not required to establish laches. A good-faith belief is

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sufficient. Aukerman, 960 F.2d at 1032. Reese clearly believed that T-Mobile’s call-

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waiting-ID services infringed the ’150 Patent—evidenced by his attempt to open

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licensing negotiations in 2005. Accordingly, the Court finds that Reese had actual

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knowledge of T-Mobile’s infringement at least on April 13, 2005. Because Reese

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failed to formally assert his rights until 2013, T-Mobile is entitled to a presumption of

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laches. Thus, Reese “must come forward with evidence sufficient to put the existence

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of these presumed undisputed facts into genuine dispute, either by showing that the

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delay was reasonable or that the movant did not suffer prejudice caused by the wait.”

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Id. at 1038.

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B. Reasonableness of the delay

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Reese argues that even if he had knowledge of T-Mobile’s infringement in

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2005, his eight-year delay in filing suit was reasonable.

Reese proffers two

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justifications for his delay: his involvement in other litigation and his worsening

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medical condition. Reese also claims he is entitled to leniency because he was

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representing himself for some of the litigation. The Court addresses each in turn.

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First, Reese argues that his eight-year delay in filing suit against T-Mobile was

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reasonable because he was extensively involved in other litigation. On August 31,

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2005, Reese filed suit against cellular phone manufacturers Samsung, Motorola, Sony,

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Siemens, LG, RiM and Palm, alleging infringement of the ’009 Patent (the immediate

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patent of the ’150 Patent). (Reese Decl. ¶ 17.) That suit continued through January

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31, 2007. (Id. ¶ 18.) Four months later, Reese sued land-line telephone service

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providers Southwestern Bell Telephone Company, GTE Southwest, and their parent

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companies AT&T and T-Mobile, for infringement of the ’150 Patent. (Id. ¶ 21.)

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Reese voluntarily dismissed AT&T and T-Mobile from that action, but later brought a

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separate suit against the same companies that lasted from March 2011 to December

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21, 2012. (Id. ¶¶ 24, 33.) Approximately five months later, Reese filed this action

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against T-Mobile, again alleging infringement of the ’150 Patent.

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Involvement in other enforcement litigation may, in some circumstances,

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excuse a plaintiff’s delay in suing an alleged infringer. But the Federal Circuit has

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held that a plaintiff’s calculated choice to proceed with certain lawsuits while delaying

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others—absent other factors—is a strategic decision that does not excuse or otherwise

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toll the presumption period for laches. Hall v. Aqua Queen Mfg., Inc., 93 F.3d 1548,

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1554 (Fed. Cir. 1996).

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In Hall, the Federal Circuit noted that delay occasioned by involvement in other

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enforcement litigation may be reasonable if the alleged infringer has knowledge of

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(1) the existence of the other litigation, and (2) the plaintiff’s intent to enforce its

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rights against the infringer at the conclusion of the other litigation. Although there is

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no rigid requirement that such notice be given, “[w]here there is prior contact

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[between the patentee and the accused infringer], the overall equities may require

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appropriate notice.”

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Aukerman, 960 F.2d at 1039.

Hall, 93 F.3d at 1554 (internal quotations omitted); accord

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Here, T-Mobile received no communications from Reese for seven years after

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the infringement-allegation letters of 2005 and 2006. There is no evidence that T-

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Mobile had any notice—from Reese or otherwise—that Reese intended to sue it after

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the close of his other litigation. Reese’s seven-year silence and eight-year inaction

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made it reasonable for T-Mobile to believe that Reese had declined to assert his rights

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against T-Mobile. Where there is prior contact between the plaintiff and the accused

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infringer—especially when the contact is in the form of an infringement accusation—

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notice becomes essential to a finding of excusable delay. A clear indication that the

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plaintiff intends to enforce its rights against the alleged infringer after the conclusion

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of the other litigation allows the accused infringer an opportunity to take steps to

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protect itself from liability. Accord Odetics, Inc. v. Storage Tech. Corp., 919 F. Supp.

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911 (E.D. Va. 1996). Here, T-Mobile had no such opportunity.

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The equivocal nature of Reese’s contacts with T-Mobile failed to give adequate

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notice that it may be subject to suit in the future. The equities dictate that notice of

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intent to pursue infringement claims against T-Mobile at the conclusion of Reese’s

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other litigation was required in this case. Accordingly, Reese’s choice to strategically

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pursue other lawsuits while ignoring T-Mobile is legally insufficient to overcome the

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presumption of unreasonable delay.

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Second, Reese argues that his delay in bringing suit was reasonable because of

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the serious health problems he experienced from 2000 to 2008. He argues that his

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ability to sue T-Mobile was significantly restricted because of his frequent dialysis

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treatments and eventual kidney transplant.

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Generally, illness is not recognized as an adequate excuse for a plaintiff’s delay

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in bringing suit. And although Reese certainly was afflicted with a debilitating illness,

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Reese’s assertion that his delay was necessary because of his failing health is directly

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contradicted by his previous excuse—his extensive involvement in other litigation.

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Notwithstanding his poor health, Reese was able to file multiple suits against other

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infringers during his illness and litigate them to conclusion. (Reese Decl. ¶¶ 17–33.)

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The fact that Reese was able to competently litigate several other lawsuits undermines

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his contention that he was physically unable to pursue lawsuits against T-Mobile.

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Moreover, Reese ignores the five years that have passed since his kidney

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transplant. Even after his health issues ended in 2008, Reese did and said nothing

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until he filed suit in 2013. Reese does not assert that his health issues continued after

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2008. Thus, at a minimum Reese had three years after the resolution of his health

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issues before laches would be presumed.

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Finally, an inability to find willing counsel, another of Reese’s excuses, is

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widely rejected as a legally cognizable reason to excuse an unreasonable delay in

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filing suit. Hall, 93 F.3d at 1554. Additionally, Reese’s litigation history shows that

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he has used multiple counsel at various times, and was fully capable of engaging in

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different litigation activities with different counsel—or by himself.

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C. Prejudice

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A plaintiff can also rebut the laches presumption by raising a genuine fact issue

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regarding the absence of prejudice to the defendant. Aukerman, 960 F.2d 1030. Reese

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contends that his delay did not materially prejudice T-Mobile. But Reese attempts to

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prove this lack of prejudice by asserting that T-Mobile has failed to demonstrate that it

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has been prejudiced by Reese’s delay—thus placing the burden of production on T-

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Mobile.

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production on the plaintiff. Hall, 93 F.3d at 1553. Thus it is Reese’s burden to come

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forward with affirmative evidence of a lack of prejudice. T-Mobile may remain

This is incorrect; the Auckerman presumption places the burden of

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“utterly mute on the issue of prejudice and nonetheless prevail[].” Hall, 93 F.3d at

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1554.
1. Evidentiary prejudice

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Reese has provided no affirmative evidence that T-Mobile will not suffer

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evidentiary prejudice from his eight-year delay. In contrast, T-Mobile argues that they

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will suffer evidentiary prejudice because Reese is unable to account for evidence

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relevant to T-Mobile’s defense of this action. Reese does not dispute that he no longer

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has a complete of set documents produced in or generated during the course of his

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prior litigation relating to ’150 Patent. (SUF ¶ 58–60; Mot. Exs. 20–21.) To date,

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Reese has been unable to produce all the documents that existed for the US West,

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Northern Telecom, Aastra, Samsung, or Verizon California cases. Additionally, Reese

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does not dispute that he no longer has a complete set of licensing agreements for the

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’150 or related patents. (SUF ¶¶ 48–49; Mot. Exs. 17–18.) Reese’s prior counsel also

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admitted to destroying 68 folders of documents related to Reese’s prior litigation—

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some of which directly involved the ’150 Patent. (SUF ¶ 59; Wong Decl. ¶ 23, Ex.

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21.) Although the contents of the documents are unknown, a chart provided by prior

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counsel shows a variety of potentially responsive documents including “current

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settlements” and “Reese/T-Mobile Issue.” (Mot. Ex. 21–22.)
The loss of these documents is problematic for two major reasons.

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the

licenses—many

of

which

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because

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manufacturers—may protect T-Mobile from Reese’s infringement allegations.

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Reese licensed customers to use handsets that subscribe to T-Mobile’s services or

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network, that license may protect T-Mobile from infringement claims. Second, those

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licenses are essential to allow T-Mobile to propose a reasonable-royalty rate for any

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potential damages involving unlicensed products. In the absence of this evidence, T-

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Mobile’s opportunity to defend itself against Reese’s infringement claim is somewhat

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less than “full and fair.”

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were

given

to

First,

cell-phone-handset
If

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Reese attempts to argue that T-Mobile should endeavor to reconstruct the

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evidence for its defense, which he alleges should still be available from some other

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sources. But Reese presents no authority for his novel proposition that T-Mobile is

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required to attempt to gather whatever evidence remains and hope that it works for

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their defense. This burden lies with Reese, not T-Mobile. Consequently, Reese has

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not met his burden to come forward with affirmative evidence of a lack of evidentiary

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prejudice.
2. Economic prejudice

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Reese also argues that T-Mobile has failed to prove that it has been

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economically prejudiced by Reese’s delay in filing. But again, it is not T-Mobile’s

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burden, as Reese argues, to demonstrate economic prejudice in light of the laches

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presumption. Rather, Reese has the burden of proving that T-Mobile has not been

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economically prejudiced by Reese’s delay—which he does not attempt to do in his

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Opposition. Reese merely attacks T-Mobile’s assertions of economic prejudice as

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“largely conclusory and lack[ing] any proof.”

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Accordingly, Reese has failed to adduce any affirmative evidence that T-Mobile has

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not been economically prejudiced by Reese’s eight-year delay in filing suit.

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(Opp’n 15.) This is insufficient.

V.

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CONCLUSION

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Based on the undisputed facts, T-Mobile is entitled to the presumption of

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laches. Reese has failed to prove that his delay was reasonable, or that T-Mobile

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suffered no prejudice as a result of the delay. Accordingly, for the reasons discussed

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above, T-Mobile’s Motion for Summary Judgment is GRANTED. (ECF No. 21.) A

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Judgment will issue. The parties are directed to file a joint status report detailing what

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issues, if any, remain for this Court to resolve.

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IT IS SO ORDERED.

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May 9, 2014

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____________________________________
OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE

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