craigslist, Inc. v. GraphOn Corporation

Filing 15

AMENDED COMPLAINT for Declaratory Judgment against GraphOn Corporation. Filed bycraigslist, Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E)(Kao, Christopher) (Filed on 4/29/2010)

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Christopher Kao (SBN 237716) E-mail: CKao@perkinscoie.com Brian Hennessy (SBN 226721) E-mail: BHennessy@perkinscoie.com PERKINS COIE LLP 101 Jefferson Drive Menlo Park, CA 94025-1114 Telephone: (650) 838-4300 Facsimile: (650) 838-4350 Attorneys for Plaintiff craigslist, Inc. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION craigslist, Inc., a Delaware corporation, Plaintiff, v. GraphOn Corporation, a Delaware corporation, Defendant. GraphOn Corporation, a Delaware corporation, Counter-Plaintiff, v. craigslist, Inc., a Delaware corporation, Counter-Defendant Case No. CV-10-1156 CRB CRAIGSLIST INC.'S FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGMENT -1CV-10-1156 CRB CRAIGSLIST'S FIRST AMENDED COMPLAINT AGAINST GRAPHON CORPORATION 40753-0067/LEGAL18112950.1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiff craigslist, Inc. ("craigslist") alleges as follows for its First Amended Complaint for Declaratory Relief against Defendant GraphOn Corporation ("GraphOn"): PARTIES 1. craigslist is a Delaware corporation, with its principal place of business in San Francisco, California. 2. Upon information and belief, GraphOn is a Delaware corporation, with its principal place of business in Santa Cruz, California. JURISDICTION 3. This action arises under the patent laws of the United States, 35 U.S.C. 1 et seq., and the Declaratory Judgment Act, 28 U.S.C. 2201 and 2202. This Court has subject matter jurisdiction pursuant to 28 U.S.C. 1331 and 1338(a). 4. 1400(b). INTRADISTRICT ASSIGNMENT 5. This is an Intellectual Property Action to be assigned on a district-wide basis under Venue is proper in this district pursuant to 28 U.S.C. 1391(b) and (c), and Civil Local Rules 3-2(c) and 3-5. BACKGROUND 6. craigslist operates the website, www.craigslist.org, which provides online localized classified ad placement and related online services. 7. GraphOn claims to be the owner of U.S. Patent Nos. 6,324,538 (the "'538 Patent"), which is attached hereto as Exhibit A, 6,850,940 (the "'940 Patent"), which is attached hereto as Exhibit B, 7,028,034 (the "'034 Patent"), which is attached hereto as Exhibit C, and 7,269,591 (the "'591 Patent"), which is attached hereto as Exhibit D. These patents are collectively referred to hereinafter as the "Patents-in-Suit." 8. On January 18, 2010, GraphOn, through its counsel Watson Rounds, sent a letter to craigslist, a copy of which is attached hereto as Exhibit E. -2CV-10-1156 CRB CRAIGSLIST'S FIRST AMENDED COMPLAINT AGAINST GRAPHON CORPORATION 40753-0067/LEGAL18112950.1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9. The letter stated that Watson Rounds had "reviewed the [c]raigslist website in detail" and that it "believe[d] that there may be interest on the part of [c]raigslist in licensing four of GraphOn's patents, U.S. Patent No.'s. 6,324,538, 6,850,940, 7,028,034 and 7,269,591." 10. The letter further stated that: "To date, GraphOn has licensed its portfolio to AutoTrader.com, Classified Ventures (Cars.com), Careerbuilder.com, Google, Yahoo!, eBay and others, and it would appreciate the opportunity to add [c]raigslist to this growing list without time-consuming and costly litigation for both parties." 11. GraphOn has previously commenced litigation against numerous other parties alleging infringement of some or all of the Patents-in-Suit: a. On August 24, 2007, GraphOn filed a complaint alleging infringement of the '538 and '940 Patents against AutoTrader.com, Inc. in the U.S. District Court for the Eastern District of Texas. At the time of that suit, the '591 and '034 patents had not yet issued. b. On March 6, 2008, GraphOn filed a complaint alleging infringement of the Patents-in-Suit against Classified Ventures, LLC, IAC/InterActiveCorp., Match.com, LLC, Yahoo! Inc., eHarmony.com, and CareerBuilder, LLC in the U.S. District Court for the Eastern District of Texas. c. On August 13, 2008, GraphOn filed a complaint alleging infringement of the Patents-in-Suit against Google Inc. in the U.S. District Court for the Eastern District of Texas. 12. In addition, GraphOn's predecessor-in-interest, Network Engineering Software, Inc. filed a complaint against eBay, Inc. in the U.S. District Court for the Northern District of California on March 23, 1999, alleging infringement of U.S. Patent No. 5,778,367, which contains an identical specification to the Patents-in-Suit, and of which the Patents-in-Suit are continuations. 13. On February 10, 2010, MySpace, Inc. ("MySpace")--after having received a letter from GraphOn similar to the one received by craigslist--filed a complaint for declaratory judgment of non-infringement, invalidity and unenforceability of the Patents-in-Suit in the U.S. -3CV-10-1156 CRB CRAIGSLIST'S FIRST AMENDED COMPLAINT AGAINST GRAPHON CORPORATION 40753-0067/LEGAL18112950.1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 District Court for the Northern District of California, MySpace, Inc. v. GraphOn Corporation, 10 CV 604 (EDL). 14. In view of the foregoing, and specifically that (a) GraphOn has asserted that craigslist infringes the Patents-in-Suit and should enter into a license agreement with GraphOn or else face litigation, (b) craigslist believes that it does not infringe the Patents-in-Suit, and (c) craigslist does not believe that all of the claims of the Patents-in-Suit are valid and enforceable, there exists an actual and justiciable controversy between the parties. On that basis, craigslist brings this action for declaratory judgment. COUNT I DECLARATORY JUDGMENT OF NON-INFRINGEMENT 15. craigslist incorporates and realleges the allegations in each of the preceding paragraphs as if set forth herein in their entirety. 16. craigslist has not infringed, nor is it presently infringing, any valid claims of the Patents-in-Suit. 17. An actual controversy exists between GraphOn and craigslist with respect to whether craigslist infringes the Patents-in-Suit. 18. craigslist seeks a declaratory judgment that it does not infringe any claims of the Patents-in-Suit. COUNT II DECLARATORY JUDGMENT OF INVALIDITY 19. craigslist incorporates and realleges the allegations in each of the preceding paragraphs as if set forth herein in their entirety. 20. An actual controversy exists between GraphOn and craigslist with respect to the validity of the Patents-in-Suit. 21. The Patents-in-Suit are invalid for failure to comply with one or more of the requirements of the patent laws of the United States, including, but not limited to, those codified at 35 U.S.C. 101, 102, 103 and 112. -4CV-10-1156 CRB CRAIGSLIST'S FIRST AMENDED COMPLAINT AGAINST GRAPHON CORPORATION 40753-0067/LEGAL18112950.1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 22. craigslist seeks a declaration that the Patents-in-Suit are invalid. COUNT III DECLARATORY JUDGMENT OF UNENFORCEABILITY 23. craigslist incorporates and realleges the allegations in each of the preceding paragraphs as if set forth herein in their entirety. 24. Ralph E. Wesinger, Jr. ("Wesinger") and Christopher D. Coley ("Coley") are the named inventors on each of the Patents-in-Suit. 25. During the relevant times discussed herein, U.S. Patent Application Serial No. 08/595,956 ("'956 application") was prosecuted by Robert J. Irvine of McDonnell Boehnen Hulbert Berghoff LLP ("MBHB"). 26. During the relevant times discussed herein, the application that issued as the '538 patent was prosecuted by Robert J. Irvine, Christopher Agnew, and George Lee of MBHB, Timothy Morella of Baniak Nicholas Pine & Gannon, and Michael Lindsey of the Cardinal Law Group. 27. During the relevant times discussed herein, the application that issued as the '940 patent was prosecuted by Frank Nicholas of the Cardinal Law Group, then later by Kenneth D'Allessandro, Timothy Brisson, and William Wilbar of the Sierra Patent Group. On information and belief, Timothy Brisson left Sierra Patent Group to work as in-house counsel for GraphOn in July 2005. 28. During the relevant times discussed herein, the application that issued as the '034 patent was prosecuted by Timothy Brisson and Kenneth D'Alessandro of the Sierra Patent Group. 29. During the relevant times discussed herein, the application that issued as the '591 patent was prosecuted by Timothy Brisson and Kenneth D'Alessandro of the Sierra Patent Group. 30. Wesinger, Coley, Irvine, Brisson, Nicholas and/or other individuals associated with the filing and prosecution of the applications for the Patents-in-Suit violated their duty of candor and good faith in dealing with the United States Patent and Trademark Office ("PTO") by -5CV-10-1156 CRB CRAIGSLIST'S FIRST AMENDED COMPLAINT AGAINST GRAPHON CORPORATION 40753-0067/LEGAL18112950.1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 intentionally and deceptively failing to disclose to the PTO material information during the prosecution of the applications for the Patents-in-Suit. 31. Specifically, Wesinger and Coley, Irvine, Brisson, Nicholas and/or other individuals associated with the filing and prosecution of the applications for the Patents-in-Suit intentionally and deceptively failed to disclose to the PTO during prosecution of each of the patent applications the existence of a related application, the '956 application, and the PTO's office actions and the prior art relied upon by the patent examiner in the prosecution of that application. 32. The '034 and '591 patents issued from patent applications that are continuation applications to the applications that issued as the '538 and '940 patents. And for priority purposes, the Patents-in-Suit each claim the benefit of the filing date of the parent patent application that issued as U.S. Patent No. 5,778,367 ("'367 patent"). In other words, each of the patents asserted against craigslist belongs to the same patent family, and each shares an identical specification and similar claims. The Patents-in-Suit therefore are unenforceable, both directly and under the doctrine of infectious unenforceability, as a result of the inequitable conduct described below. 33. On February 6, 1996, Wesinger and Coley filed the '956 application, which related to a secure database that can be attached to and receive information over a public network and, in particular, to a credit card server system for securely storing credit card information received over the Internet in the context of a commercial transaction. 34. In February 1997, the PTO rejected the '956 application under 35 U.S.C. 103 as obvious in light of the prior art. Other rejections followed. 35. In July 1998, while the '956 application was pending, Wesinger and Coley filed an application for the '538 patent. This '538 patent application was assigned to a different examiner than the examiner on the '956 application. Initially, the claims in the '538 patent application did not seek patent coverage of a method for charging users, or charging users by credit card. -6CV-10-1156 CRB CRAIGSLIST'S FIRST AMENDED COMPLAINT AGAINST GRAPHON CORPORATION 40753-0067/LEGAL18112950.1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 36. On February 16, 1999, following the filing of the application for the '538 patent, the PTO issued a final rejection of the claims of the '956 application. 37. In April 1999, the PTO issued a Notice of Allowance for the '538 patent. Wesinger and Coley thereafter abandoned the allowed application, requested acceptance of a continued prosecution application, and immediately filed a preliminary amendment to the application that added two claims that pertained to charging a user for a database entry and, more specifically, charging the user by credit card. 38. After submitting the amendment to the '538 patent application, Wesinger and Coley on January 6, 2000, abandoned the '956 application altogether. 39. Notably, the Patents-in-Suit each state that "[a]lthough various methods of processing credit card transaction [sic] have been proposed, with various degrees of attendant security, such processing is preferably performed in accordance with a proprietary method developed by the assignee to provide the highest level of security possible." '538 patent, col. 10., ll. 11-16; '940 patent, col. 10, ll. 15-20; '034 patent, col. 10, ll. 20-25; '591 patent, col. 10, ll. 2126. In a previous action filed by GraphOn, GraphOn Corp. v. AutoTrader.com, Inc., No. 05-530TJW (E.D. Tex.), in response to an interrogatory requesting that GraphOn identify any patent claims that cover this "proprietary method," GraphOn admitted that "`A System for Securely Storing Information Received Over a Public Network' was claimed by U.S. Patent Application No. 08/595,956 (`the '956 Application'), which was subsequently abandoned." Plaintiff GraphOn's Responses to Third Set of Interrogatories, at 4 (July 31, 2007). The '538 Patent 40. Despite the obvious materiality of the '956 application to the prosecution of the application for the '538 patent, neither Wesinger nor Coley, nor their patent counsel including Irvine, nor any other person that was associated with the filing and prosecution of the application for the '538 patent, disclosed during the prosecution of the '538 patent application the existence of the '956 application that was directed to a credit card server system, the "proprietary method" referenced in the '538 patent and others as the preferred method for "processing credit card -7CV-10-1156 CRB CRAIGSLIST'S FIRST AMENDED COMPLAINT AGAINST GRAPHON CORPORATION 40753-0067/LEGAL18112950.1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 transaction[s] on-line." This is particularly surprising, since immediately before abandoning the '956 application in the face of the PTO's rejections, Wesinger and Coley amended the '538 patent application to include claims directed to charging users' credit cards. The only reasonable inference that can be drawn from such conduct is an intent to deceive the PTO. 41. The '538 patent thereafter issued on November 27, 2001, with claims to charging users' credit cards intact. The best mode for performing those claimed methods, as was fully described in the '956 application, was never disclosed to the PTO during prosecution of the '538 patent, claims 2 and 3 of which are directed toward charging users' credit cards. The '940 Patent 42. Likewise, neither Wesinger nor Coley, nor their patent counsel including Irvine, Nicholas, and Brisson, nor any other person that was associated with the filing and prosecution of the application for the '940 patent, disclosed the unsuccessful '956 application and the PTO's office actions and the prior art relied upon by the patent examiner in the prosecution of that application to the PTO during the prosecution of the '940 patent application. 43. The application for the '940 patent was filed on September 14, 2001 (well after the '956 application was abandoned), and was assigned to a different examiner than the examiner of the '956 application. During the prosecution of the '940 patent application, the PTO rejected the pending claims in the application as anticipated by an article describing Microsoft Access 2. 44. In response, Wesinger and Coley distinguished their invention by noting that the prior art did not describe "storing an identification of the user authorized to modify a record in a web accessible database." 45. But neither Wesinger nor Coley, nor their patent counsel including Irvine, Nicholas and Brisson, nor any other person that was associated with the filing and prosecution of the application for the '940 patent, disclosed that the PTO observed in its rejection of the '956 application that the network devices comprising the claimed invention (including a web server and a database, which are the network devices claimed in the '940 patent) "are notoriously old and well known in the art of telecommunication networking . . . ." See, e.g., Office Action, at 7 -8CV-10-1156 CRB CRAIGSLIST'S FIRST AMENDED COMPLAINT AGAINST GRAPHON CORPORATION 40753-0067/LEGAL18112950.1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (Feb. 14, 1997). The only reasonable inference that can be drawn from such conduct is an intent to deceive the PTO. The '034 and '591 Patents 46. The '034 and '591 patents were filed on May 11, 2004, well after the '956 application was abandoned. 47. Both patents are directed to a web server for providing a "pay-for service web site" that includes a process for receiving "a fee for making the personal homepage accessible on a network." '034 patent, Abstract; '591 patent, Abstract. Every claim of the '034 and '591 patents involves receiving a fee. 48. Both patents reference the same "proprietary" method referenced in the '538 and '940 patents for charging users of the invention, a method that was claimed in the Abandoned '956 application, which was directed to a credit card server system. 49. Neither Wesinger nor Coley, nor their patent counsel including D'Alessandro and Brisson, nor any other person that was associated with the filing and prosecution of the applications for the '034 and '591 patents, however, disclosed the unsuccessful '956 application and the PTO's office actions and the prior art relied upon by the patent examiner in the prosecution of that application to the PTO during the prosecution of the applications for the '034 and '591 patents. The only reasonable inference that can be drawn from such conduct is an intent to deceive the PTO. 50. The existence of the '956 application and its prosecution was material to the patentability of the Patents-in-Suit. The failure to disclose the application and its prosecution to the PTO amounts to a breach of the duty of candor and good faith and was done with deceptive intent. The Patents-in-Suit therefore are unenforceable as a result of the inequitable conduct. 51. An actual controversy exists between GraphOn and craigslist with respect to the enforceability of the Patents-in-Suit. 52. craigslist seeks a declaration that the Patents-in-Suit are unenforceable. -9CV-10-1156 CRB CRAIGSLIST'S FIRST AMENDED COMPLAINT AGAINST GRAPHON CORPORATION 40753-0067/LEGAL18112950.1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 53. COUNT IV DECLARATORY JUDGMENT OF UNENFORCEABILITY craigslist incorporates and realleges the allegations in each of the preceding paragraphs as if set forth herein in their entirety. 54. Wesinger, Coley, their patent counsel, and/or other individuals associated with the filing and prosecution of the applications for the Patents-in-Suit violated their duty of candor and good faith in dealing with the PTO by intentionally and deceptively failing to disclose to the PTO material information during the prosecution of the applications for the Patents-in-Suit. 55. Specifically, Wesinger and Coley, their patent counsel including Irvine, Nicholas, and Brisson, and/or other individuals associated with the filing and prosecution of the applications for the Patents-in-Suit intentionally and deceptively failed to disclose to the PTO during prosecution of each of the patent applications the existence of a related litigation, Network Engineering Software, Inc. v. eBay, Inc., No. 99-1433-BZ (N.D. Cal.) ("the eBay litigation"), and material information arising therefrom. Wesinger and Coley, their patent counsel including D'Alessandro and Brisson, and/or other individuals associated with the filing and prosecution of the applications for the '034 and '591 patents also intentionally and deceptively failed to disclose to the PTO during prosecution of each of these two patent applications the existence of another related litigation GraphOn Corp. v. AutoTrader.com, Inc., No. 05-cv-530-TJW (E.D. Tex.); see also GraphOn Corp. v. AutoTrader.com, Inc., No. 07-cv-367-TJW (E.D. Tex.) (incorporating the pleadings from No. 05-cv-530) (collectively, "the AutoTrader.com litigation") and material information arising therefrom. 56. The '034 and '591 patents issued from patent applications that continued from the applications that issued as the '538 and '940 patents. And for priority purposes, the Patents-inSuit each claim the benefit of the filing date of the parent patent application that issued as the '367 patent. In other words, each of the Patents-in-Suit belongs to the same patent family, and each shares an identical specification and very similar claims. The Patents-in-Suit therefore are -10CV-10-1156 CRB CRAIGSLIST'S FIRST AMENDED COMPLAINT AGAINST GRAPHON CORPORATION 40753-0067/LEGAL18112950.1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 unenforceable, both directly and under the doctrine of infectious unenforceability, as a result of the inequitable conduct described below. Duty To Disclose Related Litigation 57. The PTO has determined that [w]here the subject matter for which a patent is being sought is, or has been involved in litigation, the existence of such litigation and any other material information arising therefrom must be brought to the attention of the Patent and Trademark Office. Examples of such material information include evidence of possible prior public use or sales, questions of inventorship, prior art, allegations of `fraud,' 'inequitable conduct,' and 'violation of duty of disclosure.' Another example of such material information is any assertion that is made during litigation which is contradictory to assertions made to the examiner. . . . Such information might arise during litigation in, for example, pleadings, admissions, discovery including interrogatories, depositions, and other documents and testimony." MPEP 2001.06(c) (Aug. 1993); see also Nilssen v. Osram Sylvania, Inc., 504 F.3d 1223, 1234 (Fed. Cir. 2007) ("[T]he existence of the litigation itself is material information that an examiner needs to have. It is important because it signals to the examiner that other material information relevant to patentability may become available through the litigation proceedings. The PTO obviously considers such information material and there is no basis for us to conclude otherwise."). The eBay Litigation 58. During the time the application for the '538 patent was pending, Network Engineering Software, Inc. ("NES"), the employer of Wesinger (NES's CEO) and Coley and assignee of the '367 patent, initiated the eBay litigation, alleging infringement of the '367 patent. NES's litigation counsel, MBHB, was also prosecuting the application for the '538 patent during the pendency of such litigation. In fact, at least one of the lawyers from MBHB, Robert J. Irvine, who filed an individual appearance in the eBay litigation, was intimately involved in the prosecution of the '538 patent, the '367 parent application and a related application also naming Wesinger and Coley as inventors (the '956 application). Mr. Irvine signed most of the office action responses and many of the other filings with the PTO in the '538 patent application, the -11CV-10-1156 CRB CRAIGSLIST'S FIRST AMENDED COMPLAINT AGAINST GRAPHON CORPORATION 40753-0067/LEGAL18112950.1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 '367 patent application and the '956 application. Mr. Irvine was thus personally familiar with both the eBay litigation and the substance and status of the pending applications. 59. Wesinger and Coley, MBHB, the applicants' subsequent patent counsel (Cardinal Law Group and Sierra Patent Group, including Nicholas, D'Alessandro, and Brisson), and/or other individuals associated with the filing and prosecution of the applications for the Patents-inSuit had a duty to disclose the existence of the eBay litigation and the material information arising from the litigation to the PTO. 60. Despite the intimate familiarity of MBHB and Mr. Irvine with the eBay litigation and the pending applications, MBHB and the applicants failed to disclose the existence of the eBay litigation, as well as material information submitted by eBay in the litigation, during the prosecution of the applications for the Patents-in-Suit. Furthermore, neither Mr. Irvine nor anyone else at MBHB disclosed to the examiner of the application for the '538 patent the existence of at least two highly material prior art references that were (as discussed more fully below) the subject of two summary judgment motions filed by eBay alleging that the asserted claims of the parent '367 patent were anticipated by such references. These references were not disclosed by Mr. Irvine or anyone else at MBHB even though Mr. Irvine signed a terminal disclaimer for the '538 patent after the examiner rejected the pending claims of the '538 patent for double patenting in light of the very claims of the '367 patent that were the subject of the summary judgment motions filed by eBay. Furthermore, Mr. Irvine and MBHB either knew or should have known that the pending claims of the application for the '538 patent were very similar in scope to the claims of the '367 patent that were the subject of eBay's anticipation motion, because they prosecuted both sets of claims. 61. Rather than disclose these summary judgment motions and the material prior art references to the examiner in the pending application for the '538 patent in a timely fashion after receiving such references from eBay (as they had a duty to do), Mr. Irvine and MBHB made no mention to the PTO of any of this information. Instead, the applicants' subsequent patent counsel (Cardinal Law Group) waited until after the notice of allowance was received for the pending -12CV-10-1156 CRB CRAIGSLIST'S FIRST AMENDED COMPLAINT AGAINST GRAPHON CORPORATION 40753-0067/LEGAL18112950.1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 claims almost two years later to submit these two material references to the examiner along with 236 other highly technical references. Even then, neither the eBay litigation, nor the summary judgment motions were ever disclosed. As discussed more fully below, the delay in submitting the references, the burying of the references in a submission with 236 other references, and the failure to ever disclose the eBay litigation or the summary judgment motions violated the duty of candor that the applicants, MBHB, Mr. Irvine and Cardinal Law Group owed to the PTO. 62. NES filed suit against eBay, Inc. on March 23, 1999, alleging that eBay infringed several claims of the '367 patent. The '367 patent claims methods of using a computer network and a database accessible through a computer network similar to those claimed in the Patents-inSuit. In fact, the applicants filed terminal disclaimers in the applications for the '538 and '034 patents over the '367 patent and claims substantially similar to the issued claims in the '538 patent were rejected by the examiner for double patenting in light of the disclosure and claims of the '367 patent. Therefore, prior art material to the claims of the '367 patent was material to the claims pending in the applications for each of the Patents-in-Suit. Given its role as litigation counsel in the eBay litigation and its role as prosecution counsel in the applications for the '367 and '538 patents, MBHB (and Robert J. Irvine) were intimately familiar with the materiality of the references relied upon by eBay in the summary judgment motions. NES's subsequent patent counsel (the Cardinal Law Group) recognized the relevance of these two references relied upon by eBay in the motions, but they buried them along with 236 other references in an IDS submitted to the PTO after the notice of allowance in the application for the '538 patent. Neither these references, nor their role in the eBay litigation, was highlighted to the examiner when the voluminous IDS was dumped on the examiner. The only reasonable inference that can be drawn from such conduct is an intent to deceive the PTO. 63. On June 1, 1999, eBay filed a motion for summary judgment of invalidity of several claims of the '367 patent in light of U.S. Patent No. 5,832,497 (the "'497 patent"). eBay asserted in the motion that claims 1, 16 and 17 of the parent '367 patent were anticipated by the '497 patent. On October 27, 1999, eBay filed another motion for summary judgment of invalidity -13CV-10-1156 CRB CRAIGSLIST'S FIRST AMENDED COMPLAINT AGAINST GRAPHON CORPORATION 40753-0067/LEGAL18112950.1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 under 35 U.S.C. 102 alleging that claims 1-13, 16-17 and 25 of the '367 patent were anticipated by U.S. Patent No. 5,870,552 (the "'552 patent"). 64. Neither of these motions by eBay was addressed substantively by the Court in the pending litigation, because the eBay litigation was settled and ultimately dismissed by stipulation on January 19, 2000, while prosecution of the '538 patent application was ongoing, and before the applications for the '940, '034, and '591 patents were filed. The fact that the invalidity issue was not resolved by the Court prior to dismissal of the action is irrelevant, as during prosecution the PTO applies the broadest reasonable construction standard to the pending claims. 65. Furthermore, the applicants and their patent counsel apparently did not rely on the Court's refusal to consider the summary judgment motions during the eBay litigation in connection with their decision not to submit the art submitted by eBay to the examiner in a timely fashion, because they later submitted these references, albeit in a buried fashion, almost two years after receiving the motions for summary judgment from eBay. Telling of the applicants' intent to bury these highly material references was the timing and manner in which they were belatedly submitted to the examiner. Both references were submitted in connection with an information disclosure statement filed by the applicants after the notice of allowance in the application (but before issuance) along with 236 other references (128 other patents and 108 printed publications) on the same IDS. Burying such material references is inconsistent with the applicant's duty of candor and, upon information and belief, was calculated to limit the examiner's ability to seriously consider such references, as evidenced by the fact that the examiner indicated on the PTO-1449 form that he reviewed each of these 238 technical references on the same day July 17, 2001. 66. The applicants and their patent counsel also failed to raise the '497 and '552 patents in the prosecution of any of the subsequent continuation applications resulting in the other Patents-in-Suit. Furthermore, neither the applicants nor their patent counsel ever disclosed to the examiners of the Patents-in-Suit the existence of the eBay litigation or the motions for summary -14CV-10-1156 CRB CRAIGSLIST'S FIRST AMENDED COMPLAINT AGAINST GRAPHON CORPORATION 40753-0067/LEGAL18112950.1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 judgment filed by eBay. The only reasonable inference that can be drawn from such conduct is an intent to deceive the PTO. 67. A reasonable examiner would have found both the '497 and '552 patents to be material to the pending claims of the application leading to the '538 patent, as well as the claims in the remaining Patents-in-Suit. The '497 and '552 patents anticipate and/or render obvious numerous claims of the Patents-in-Suit. In fact, the '497 patent discloses an online job-posting and resume posting system that is substantially similar to a system that GraphOn claimed to infringe the Patents-in-Suit in litigation against Yahoo!, Inc. in the Eastern District of Texas. 68. The existence of the eBay litigation, the fully briefed summary judgment motions filed by eBay concerning invalidity of the claims of the '367 patent of nearly identical scope to claims in the pending application and the prior art relied upon by eBay in such motions was material to the patentability of the Patents-in-Suit. The failure to disclose the litigation and the material information arising therefrom, coupled with the concerted effort to bury the highly material references, amounts to a breach of the duty of candor and good faith and, upon information and belief was done with deceptive intent. The Patents-in-Suit are all therefore unenforceable as a result of this inequitable conduct. The AutoTrader.com Litigation 69. The applications for the '034 and '591 patents were filed on May 11, 2004. On November 22, 2005, while these applications were being prosecuted before the PTO, GraphOn filed a lawsuit in the Eastern District of Texas against AutoTrader.com for the alleged infringement of the '538 and '940 patents. 70. On January 17, 2006, AutoTrader.com filed an answer and counterclaim. It served a motion for summary judgment of invalidity of the '538 and '940 patents on March 24, 2006. 71. Brisson, D'Alessandro, Wesinger, and Coley were deposed in the AutoTrader.com litigation and were aware of the litigation. On information and belief, Wesinger and Brisson were intimately familiar with the conduct of the Autotrader.com litigation. -15CV-10-1156 CRB CRAIGSLIST'S FIRST AMENDED COMPLAINT AGAINST GRAPHON CORPORATION 40753-0067/LEGAL18112950.1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 72. The '034 patent issued on April 11, 2006, from an application that continued from the applications for the '538 and '940 patents. The '538, '940, and '034 patents share an identical specification and similar claims. Nevertheless, at no point during the prosecution of the '034 patent application did Wesinger, Coley, their patent counsel including Brisson and D'Alessandro, and/or any other person that was associated with the filing and prosecution of this application disclose the existence of the AutoTrader.com litigation to the PTO, or AutoTrader.com's motion for summary judgment of invalidity. The only reasonable inference that can be drawn from such conduct is an intent to deceive the PTO. 73. On September 27, 2006, AutoTrader.com served its first invalidity contentions, which outlined the invalidity of the '538 and '940 patents. The court issued its claim constructions on June 28, 2007, and AutoTrader.com filed a motion for leave to file an amended answer and counterclaim of inequitable conduct on August 13, 2007, and served expert reports on invalidity and unenforceability of the '538 and '940 patents on September 5, 2007. 74. The '591 patent issued on September 11, 2007, from an application that continued from the applications for the '538 and '940 patents. The '538, '940 and '591 patents share an identical specification and similar claims. Nevertheless, at no point during the prosecution of the '591 patent application did Wesinger, Coley, their patent counsel including Brisson and D'Alessandro, or any other person that was associated with the filing and prosecution of this application disclose the existence of the AutoTrader.com litigation to the PTO, or AutoTrader.com's motion for summary judgment of invalidity, its invalidity contentions and several of the prior art references cited therein, its charge of inequitable conduct, or its expert report on invalidity, or the AutoTrader.com court's claim constructions. The only reasonable inference that can be drawn from such conduct is an intent to deceive the PTO. 75. The existence of the AutoTrader.com litigation and material information arising therefrom, including the prior art referenced in that litigation, was material to the patentability of the '034 and '591 patents. The failure to disclose this material information to the PTO amounts -16CV-10-1156 CRB CRAIGSLIST'S FIRST AMENDED COMPLAINT AGAINST GRAPHON CORPORATION 40753-0067/LEGAL18112950.1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 to a breach of the duty of candor and good faith and was done with deceptive intent. The '034 and '591 patents therefore are unenforceable as a result of inequitable conduct. 76. An actual controversy exists between GraphOn and craigslist with respect to the enforceability of the Patents-in-Suit, due to the failure to disclose to the patent office the existence of the eBay litigation, the AutoTrader.com litigation, and material information arising from the eBay litigation and the AutoTrader.com litigation. 77. craigslist seeks a declaration that the Patents-in-Suit are unenforceable. COUNT V DECLARATORY JUDGMENT OF UNENFORCEABILITY 78. craigslist incorporates and realleges the allegations in each of the preceding paragraphs as if set forth herein in their entirety. 79. The intentional failure of Wesinger and Coley, their patent counsel including Irvine, Nicholas, Brisson, and D'Alessandro, and/or other individuals associated with the filing and prosecution of the applications for the Patents-in-Suit to disclose to the PTO during the prosecution of the patent application material information, including the existence of the '956 patent and the prosecution thereof, and the existence of the eBay and AutoTrader.com litigations and material information arising therefrom, collectively constituted a pattern of inequitable conduct. 80. On information and belief, the inventors, their patent counsel including Irvine, Nicholas, Brisson, and D'Alessandro, and/or other individuals associated with the filing and prosecution of the application for the Patents-in-Suit engaged in this pattern of inequitable conduct in order to secure issuance of the Patents-in-Suit. 81. The pattern of inequitable conduct in which the inventors, their patent counsel including Irvine, Nicholas, Brisson, and D'Alessandro, and/or other individuals associated with the filing and prosecution of the application for the Patents-in-Suit engaged renders the Patentsin-Suit unenforceable. -17CV-10-1156 CRB CRAIGSLIST'S FIRST AMENDED COMPLAINT AGAINST GRAPHON CORPORATION 40753-0067/LEGAL18112950.1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 82. An actual controversy exists between GraphOn and craigslist with respect to the enforceability of the Patents-in-Suit. 83. craigslist seeks a declaration that the Patents-in-Suit are unenforceable. REQUEST FOR RELIEF WHEREFORE, craigslist prays for judgment against GraphOn on its Counterclaim as follows: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) Declaring that craigslist does not infringe the '538 patent; Declaring that the '538 patent is invalid; Declaring that the '538 patent is unenforceable; Declaring that craigslist does not infringe the '940 patent; Declaring that the '940 patent is invalid; Declaring that the '940 patent is unenforceable; Declaring that craigslist does not infringe the '034 patent; Declaring that the '034 patent is invalid; Declaring that the '034 patent is unenforceable; Declaring that craigslist does not infringe the '591 patent; Declaring that the '591 patent is invalid; Declaring that the '591 patent is unenforceable; Determining that this is an exceptional case under 35 U.S.C. 285 and awarding craigslist its attorneys' fees, costs and expenses in this action; (n) Granting such other and further relief as the Court deems just and proper. -18CV-10-1156 CRB CRAIGSLIST'S FIRST AMENDED COMPLAINT AGAINST GRAPHON CORPORATION 40753-0067/LEGAL18112950.1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -19CV-10-1156 CRB CRAIGSLIST'S FIRST AMENDED COMPLAINT AGAINST GRAPHON CORPORATION 40753-0067/LEGAL18112950.1 DATED: April 29, 2010 PERKINS COIE LLP By: Christopher Kao Christopher Kao (SBN 237716) CKao@perkinscoie.com Brian Hennessy (SBN 226721) BHennessy@perkinscoie.com Attorneys for Plaintiff craigslist, Inc. 1 2 3 4 DATED: April 29, 2010 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEMAND FOR JURY TRIAL craigslist hereby demands a jury trial of all issues in the above-captioned action which are triable to a jury. PERKINS COIE LLP By: Christopher Kao Christopher Kao (SBN 237716) CKao@perkinscoie.com Brian Hennessy (SBN 226721) BHennessy@perkinscoie.com Attorneys for Plaintiff craigslist, Inc. -20CV-10-1156 CRB CRAIGSLIST'S FIRST AMENDED COMPLAINT AGAINST GRAPHON CORPORATION 40753-0067/LEGAL18112950.1

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