Brilliant Instruments, Inc. v. GuideTech, Inc.

Filing 247

ORDER GRANTING GUIDETECH, INC.S 119 MOTION FOR SUMMARY JUDGMENT ON ASSIGNOR ESTOPPEL. Signed by Judge Claudia Wilken on 2/12/2014. (ndr, COURT STAFF) (Filed on 2/12/2014)

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1 IN THE UNITED STATES DISTRICT COURT 2 FOR THE NORTHERN DISTRICT OF CALIFORNIA 3 4 BRILLIANT INSTRUMENTS, INC., 5 6 7 8 9 United States District Court For the Northern District of California 10 11 No. C 09-5517 CW Plaintiff, ORDER GRANTING GUIDETECH, INC.’S MOTION FOR SUMMARY JUDGMENT ON ASSIGNOR ESTOPPEL v. GUIDETECH, INC.; and RONEN SIGURA, an individual; (Re: Docket No. 119) Defendants. ________________________________ AND ALL RELATED COUNTERCLAIMS / 12 In this patent infringement case, Defendants GuideTech, Inc. 13 and Ronen Sigura move for summary judgment on the issue of 14 assignor estoppel. Plaintiff Brilliant Instruments, Inc. 15 (Brilliant) opposes. Having considered the papers and arguments 16 of counsel, the Court GRANTS GuideTech’s motion. 17 BACKGROUND 18 In 1998, Shalom Kattan founded Guide Technology, Inc., the 19 predecessor entity to GuideTech, which is in the business of 20 manufacturing and selling precision time and frequency measurement 21 instruments. Docket No. 35 ¶ 3. Kattan is the sole named 22 inventor for the patents-in-suit, which he assigned to Guide 23 Technology. Chin Decl., Exs. 1-3, 12. In 2004, Kattan left his 24 employment with Guide Technology, but remained on its board of 25 directors until 2005. Chin Decl., Ex. 25 at 32:18-33:18. Also in 26 2004, Kattan established Brilliant, a one-man company headed by 27 Kattan himself. 28 Id. at 42:12-25; Chin Decl., Ex. 9; Docket No. 86 1 at 2. 2 instruments. 3 Technology sold its assets, including the patents-in-suit, to 4 Ronen Sigura, who founded GuideTech. 5 Brilliant also manufactures and sells measurement Docket No. 39 ¶ 4. On May 23, 2008, Guide Chin Decl., Ex. 24. On November 20, 2009, Brilliant filed this action for 6 declaratory relief, asserting that its accused products, including 7 BI200 and BI220, do not infringe GuideTech’s U.S. Patent Nos. 8 6,091,671 (‘671 patent); 6,181,649 (‘649 patent); 6,226,231 (‘231 9 patent); 6,456,959; 6,621,767; 6,999,382; and 7,203,610. These United States District Court For the Northern District of California 10 patents concern time interval analyzers, which are testing 11 instruments used in the semiconductor industry to detect timing 12 errors in integrated circuits. 13 counterclaim, asserting that Brilliant’s products infringe the 14 ‘671, ‘649 and ‘231 patents. 15 and counterclaim for declaratory judgment of invalidity of the 16 ‘671, ‘659, and ‘231 patents. 17 GuideTech filed its answer and Brilliant in turn filed its answer In early 2011, Brilliant filed a motion for summary judgment 18 of non-infringement and GuideTech filed a motion for summary 19 adjudication on the issue of assignor estoppel. 20 Brilliant’s motion for summary judgment, finding Brilliant’s 21 products did not infringe the patents-in-suit. 22 137. 23 GuideTech’s motion for summary judgment as moot. 24 October 4, 2011, GuideTech filed an appeal to the Federal Circuit 25 from the order and judgment entered by the Court in favor of 26 Brilliant. 27 remanded the Court’s summary judgment order, finding disputed 28 issues as to whether Brilliant’s products infringe the patents-in2 The Court granted See Docket No. Due to its finding of non-infringement, the Court denied Docket No. 166. See id. On The Federal Circuit reversed and 1 suit under the doctrine of equivalents. 2 Inc. v. GuideTech, LLC, 707 F.3d 1342, 1348-49 (Fed. Cir. 2013). 3 The Court now considers the merits of GuideTech’s motion for 4 summary judgment on the issue of assignor estoppel, which the 5 Court previously denied as moot. 6 Brilliant Instruments, LEGAL STANDARD 7 Summary judgment is appropriate only where the moving party 8 demonstrates there is no genuine dispute as to any material fact 9 such that the moving party is entitled to judgment as a matter of United States District Court For the Northern District of California 10 law. 11 317, 323 (1986). 12 outcome of the case, as defined by the framework of the underlying 13 substantive law. 14 248 (1986). 15 reasonable jury could return a verdict for either party. 16 Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. Material facts are those that might affect the Anderson v. Liberty Lobby, Inc., 477 U.S. 242, A dispute is genuine if the evidence is such that a Id. The moving party bears the initial burden of informing the 17 district court of the basis for its motion and identifying those 18 portions of the pleadings, discovery, and affidavits that 19 demonstrate the absence of a disputed issue of material fact. 20 Celotex, 477 U.S. at 323. 21 moving party to show there are disputed issues of material fact. 22 Id. 23 merely on allegations or denials of its pleadings, but must set 24 forth “specific facts showing that there is a genuine issue for 25 trial.” 26 The burden then shifts to the non- In opposing the motion, the non-moving party may not rely Anderson, 477 U.S. at 248 (citing Fed. R. Civ. P. 56(e)). The court must construe the evidence in the light most 27 favorable to the non-moving party, making all reasonable 28 inferences that can be drawn. Matsushita Elec. Indus. Co., Ltd. 3 1 v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Intel Corp. v. 2 Hartford Accident & Indem. Co., 952 F.2d 1551, 1558 (9th Cir. 3 1991); Eisenberg v. Ins. Co. of N. Am., 815 F.2d 1285, 1289 (9th 4 Cir. 1987). 5 6 DISCUSSION GuideTech seeks to apply the doctrine of assignor estoppel to 7 preclude Brilliant from challenging the validity of the patents- 8 in-suit because Brilliant’s founder is the inventor and assignor 9 of those patents. “Assignor estoppel is an equitable doctrine United States District Court For the Northern District of California 10 that prevents one who has assigned the rights to a patent (or 11 patent application) from later contending that what was assigned 12 is a nullity.” 13 1220, 1224 (Fed. Cir. 1988); see also Westinghouse Elec. & Mfg. 14 Co. v. Formica Insulation Co., 266 U.S. 342, 349 (1924) (“As to 15 the rest of the world, the patent may have no efficacy and create 16 no right of monopoly; but the assignor cannot be heard to question 17 the right of his assignee to exclude him from its use”). 18 rationale of this doctrine is primarily one of fairness and 19 justice -- it would be inequitable to permit a party to sell a 20 thing for value and then later assert that what was sold is 21 worthless. 22 assignor himself, but also other parties in privity with the 23 assignor, such as a corporation founded by the assignor. Id. Diamond Scientific Co. v. Ambico, Inc., 848 F.2d The The doctrine acts as a bar to not only the Id.1 24 25 26 27 28 1 Brilliant does not contest that if assignor estoppel applies to Kattan, it would also apply to Brilliant. However, whether another entity is barred by privity with the assignor is usually determined by balancing the equities, considering the closeness of the relationship. See Shamrock Technologies, Inc. v. Med. Sterilization, Inc., 903 F.2d 789, 793 (Fed. Cir. 1990). 4 1 In the wake of the United States Supreme Court’s decision 2 emphasizing the importance of patent validity challenges to 3 protect the public domain,2 the Federal Circuit recognized that 4 the interests of preserving the rights of a patent assignee ought 5 to be balanced against that important public interest. 6 Diamond Scientific, 848 F.2d at 1225. 7 determined that, although assignor estoppel may no longer be a 8 device of “automatic application,” it should act as a bar to an 9 assignor’s invalidity challenge where the balancing of the United States District Court For the Northern District of California 10 11 equities requires its application. See The Federal Circuit Id. Here, it is undisputed that Kattan assigned his interest in 12 the patents-in-suit to GuideTech’s predecessor. 13 that because Kattan sold the patents-in-suit for value, it would 14 be unjust to allow Kattan to now deprive GuideTech of the assets 15 it received. 16 that an estoppel will apply” on the equities scale. 17 Graphics Corp. v. Quickturn Design Sys., Inc., 150 F.3d 1374, 1378 18 (Fed. Cir. 1998). 19 countering evidence to tip the equities in its favor. 20 asserts that there are disputed issues of material fact regarding 21 the balancing of the equities. 22 sued its founder’s new company “without a reasonable basis for GuideTech argues This intrinsic unfairness creates a “presumption Mentor It is then up to Brilliant to provide Brilliant If it turns out that GuideTech 23 24 25 26 27 28 2 See Lear, Inc. v. Adkins, 395 U.S. 653, 670 (1969)(abandoning the doctrine of licensee estoppel because the interest in preventing licensees from repudiating a promise because they later regretted the bargain was outweighed by the stronger public interest “in permitting full and free competition in the use of ideas which are in reality a part of the public domain”). 5 1 doing so,” Brilliant argues, then the equities will tip in 2 Brilliant’s favor and assignor estoppel will not apply. 3 No. 126 at 14. 4 Docket But the scope of the equities inquiry is not unbounded. 5 making their equities arguments, parties should look to the 6 rationale of assignor estoppel, which arises from the 7 determination that the injustice of permitting an assignor to 8 challenge a patent he represented was valid outweighs the 9 potential gains in the public domain. In 6 Moy's Walker on Patents United States District Court For the Northern District of California 10 § 17:43 (4th ed.); Diamond Scientific Co., 848 F.2d at 1224. 11 assignor seeking to overcome a presumption of assignor estoppel 12 should therefore focus on this rationale. 13 the inventor assigned the patent to another, there are a number of 14 exceptions where the equities would weigh against assignor 15 estoppel. 16 unfair dealings between the parties during assignment, such as 17 duress or fraud.3 18 before the USPTO declared the patent valid and expressed serious 19 doubts to his employer/assignee that any resulting patent would be 20 valid.4 21 even reserved the right to challenge the validity of the patent or 22 the assignee may have expressly waived the right to assert An To be sure, even where For example, the assignor could present evidence of Or perhaps the inventor assigned his rights In some exceptional circumstances, the assignor may have 23 24 25 26 27 28 3 See Shamrock Technologies, 903 F.2d at 794; Carroll Touch, Inc. v. Electro Mech. Sys., Inc., 15 F.3d 1573, 1580 (Fed. Cir. 1993). 4 Cf. BorgWarner, Inc. v. Honeywell Int'l, Inc., 747 F. Supp. 2d 554, 560 (W.D.N.C. 2010). 6 1 assignor estoppel.5 2 the modern workplace, the inventor may be an employee who 3 participated perfunctorily in the claims prosecution process, with 4 very little say in drafting the scope of the claims, and the 5 resulting patent may cover a far broader invention than the 6 inventor intended to convey.6 7 challenge the strength of the assumption that the assignor 8 represented that what he sold was valuable. 9 Brilliant makes no such showing. Or, in an increasingly common circumstance in All of these possibilities Brilliant never challenges United States District Court For the Northern District of California 10 the circumstances of the patent prosecution or assignment process. 11 Brilliant only argues the possibility that GuideTech brought this 12 suit against a former employee without justification, which is 13 irrelevant in that it concerns the equities of the litigation 14 itself, not the facts surrounding the assignment contract. 15 5 16 17 18 19 20 21 22 23 24 25 26 Mentor Graphics, 150 F.3d at 1378. 6 The assignor's belief in the worth of the patent as a basis for applying assignor estoppel is a meaningful factor only when the assignor actively participates in the prosecution of the patent. In the usual course of assignment arrangements, the assignor/inventor has little say in the decision to file the patent or in later determining the scope of the claims. His employer's patent attorneys typically perform these activities . . . [and] [t]he application usually goes through many amendments, narrowing the claim specifications before final approval or rejection. Patricia Stanford, “Diamond Scientific Co. v. Ambico, Inc.: Enforcing Patent Assignor Estoppel,” 26 Hous. L. Rev. 761, 772-73 (1989). See also Diamond Scientific Co., 848 F.2d at 1225 (noting that the inventor/assignor “apparently participated actively in the patent application process, including drafting the initial version of the claims and consulting on their revision” and holding that assignor estoppel applied). 27 28 7 1 Brilliant fails to present evidence raising a disputed issue of 2 material fact. 3 by Kattan remains uncontradicted, the balancing of the equities 4 tips in favor of imposing assignor estoppel and Brilliant 5 therefore cannot challenge validity of the patents in question. 6 Because GuideTech’s evidence of a valid assignment As noted by Brilliant, however, the effect of assignor 7 estoppel is not absolute. 8 the patent, it can assert its “right to make use of the prior art 9 invention of an expired patent, which anticipates that of the Although Brilliant cannot invalidate United States District Court For the Northern District of California 10 assigned patent.” Scott Paper Co. v. Marcalus Mfg. Co., 326 U.S. 11 249, 257 (1945). In other words, Brilliant cannot be held liable 12 for infringement of portions of the patented invention that are in 13 the public domain. 14 against infringement by advocating for a narrow claim construction 15 or demonstrating that the accused devices are within the prior art 16 and therefore do not infringe. 17 Brilliant is free to exercise these rights. Id. The estopped party may still defend Mentor Graphics, 150 F.3d at 1379. 18 CONCLUSION 19 The Court GRANTS GuideTech’s summary judgment motion and 20 21 22 23 holds that assignor estoppel bars Brilliant’s invalidity claim. Trial for the remainder of the action shall take place from March 31, 2014 through April 4, 2014. IT IS SO ORDERED. 24 25 26 Dated: 2/12/2014 CLAUDIA WILKEN United States District Judge 27 28 8

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