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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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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BRILLIANT INSTRUMENTS, INC.,

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United States District Court
For the Northern District of California

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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
/

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In this patent infringement case, Defendants GuideTech, Inc.
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and Ronen Sigura move for summary judgment on the issue of
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assignor estoppel.

Plaintiff Brilliant Instruments, Inc.

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(Brilliant) opposes.

Having considered the papers and arguments

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of counsel, the Court GRANTS GuideTech’s motion.
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BACKGROUND
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In 1998, Shalom Kattan founded Guide Technology, Inc., the
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predecessor entity to GuideTech, which is in the business of
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manufacturing and selling precision time and frequency measurement
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instruments.

Docket No. 35 ¶ 3.

Kattan is the sole named

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inventor for the patents-in-suit, which he assigned to Guide
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Technology.

Chin Decl., Exs. 1-3, 12.

In 2004, Kattan left his

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employment with Guide Technology, but remained on its board of
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directors until 2005.

Chin Decl., Ex. 25 at 32:18-33:18.

Also in

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2004, Kattan established Brilliant, a one-man company headed by
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Kattan himself.
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Id. at 42:12-25; Chin Decl., Ex. 9; Docket No. 86

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at 2.

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instruments.

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Technology sold its assets, including the patents-in-suit, to

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Ronen Sigura, who founded GuideTech.

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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

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declaratory relief, asserting that its accused products, including

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BI200 and BI220, do not infringe GuideTech’s U.S. Patent Nos.

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6,091,671 (‘671 patent); 6,181,649 (‘649 patent); 6,226,231 (‘231

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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

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patents concern time interval analyzers, which are testing

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instruments used in the semiconductor industry to detect timing

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errors in integrated circuits.

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counterclaim, asserting that Brilliant’s products infringe the

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‘671, ‘649 and ‘231 patents.

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and counterclaim for declaratory judgment of invalidity of the

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‘671, ‘659, and ‘231 patents.

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GuideTech filed its answer and

Brilliant in turn filed its answer

In early 2011, Brilliant filed a motion for summary judgment

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of non-infringement and GuideTech filed a motion for summary

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adjudication on the issue of assignor estoppel.

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Brilliant’s motion for summary judgment, finding Brilliant’s

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products did not infringe the patents-in-suit.

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137.

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GuideTech’s motion for summary judgment as moot.

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October 4, 2011, GuideTech filed an appeal to the Federal Circuit

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from the order and judgment entered by the Court in favor of

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Brilliant.

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remanded the Court’s summary judgment order, finding disputed

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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

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suit under the doctrine of equivalents.

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Inc. v. GuideTech, LLC, 707 F.3d 1342, 1348-49 (Fed. Cir. 2013).

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The Court now considers the merits of GuideTech’s motion for

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summary judgment on the issue of assignor estoppel, which the

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Court previously denied as moot.

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Brilliant Instruments,

LEGAL STANDARD

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Summary judgment is appropriate only where the moving party

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demonstrates there is no genuine dispute as to any material fact

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such that the moving party is entitled to judgment as a matter of

United States District Court
For the Northern District of California

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law.

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317, 323 (1986).

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outcome of the case, as defined by the framework of the underlying

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substantive law.

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248 (1986).

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reasonable jury could return a verdict for either party.

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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

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district court of the basis for its motion and identifying those

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portions of the pleadings, discovery, and affidavits that

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demonstrate the absence of a disputed issue of material fact.

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Celotex, 477 U.S. at 323.

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moving party to show there are disputed issues of material fact.

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Id.

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merely on allegations or denials of its pleadings, but must set

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forth “specific facts showing that there is a genuine issue for

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trial.”

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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

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favorable to the non-moving party, making all reasonable

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inferences that can be drawn.

Matsushita Elec. Indus. Co., Ltd.
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v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Intel Corp. v.

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Hartford Accident & Indem. Co., 952 F.2d 1551, 1558 (9th Cir.

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1991); Eisenberg v. Ins. Co. of N. Am., 815 F.2d 1285, 1289 (9th

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Cir. 1987).

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DISCUSSION
GuideTech seeks to apply the doctrine of assignor estoppel to

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preclude Brilliant from challenging the validity of the patents-

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in-suit because Brilliant’s founder is the inventor and assignor

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of those patents.

“Assignor estoppel is an equitable doctrine

United States District Court
For the Northern District of California

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that prevents one who has assigned the rights to a patent (or

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patent application) from later contending that what was assigned

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is a nullity.”

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1220, 1224 (Fed. Cir. 1988); see also Westinghouse Elec. & Mfg.

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Co. v. Formica Insulation Co., 266 U.S. 342, 349 (1924) (“As to

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the rest of the world, the patent may have no efficacy and create

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no right of monopoly; but the assignor cannot be heard to question

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the right of his assignee to exclude him from its use”).

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rationale of this doctrine is primarily one of fairness and

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justice -- it would be inequitable to permit a party to sell a

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thing for value and then later assert that what was sold is

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worthless.

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assignor himself, but also other parties in privity with the

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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

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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).
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In the wake of the United States Supreme Court’s decision

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emphasizing the importance of patent validity challenges to

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protect the public domain,2 the Federal Circuit recognized that

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the interests of preserving the rights of a patent assignee ought

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to be balanced against that important public interest.

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Diamond Scientific, 848 F.2d at 1225.

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determined that, although assignor estoppel may no longer be a

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device of “automatic application,” it should act as a bar to an

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assignor’s invalidity challenge where the balancing of the

United States District Court
For the Northern District of California

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equities requires its application.

See

The Federal Circuit

Id.

Here, it is undisputed that Kattan assigned his interest in

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the patents-in-suit to GuideTech’s predecessor.

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that because Kattan sold the patents-in-suit for value, it would

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be unjust to allow Kattan to now deprive GuideTech of the assets

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it received.

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that an estoppel will apply” on the equities scale.

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Graphics Corp. v. Quickturn Design Sys., Inc., 150 F.3d 1374, 1378

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(Fed. Cir. 1998).

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countering evidence to tip the equities in its favor.

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asserts that there are disputed issues of material fact regarding

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the balancing of the equities.

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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

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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”).
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doing so,” Brilliant argues, then the equities will tip in

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Brilliant’s favor and assignor estoppel will not apply.

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No. 126 at 14.

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Docket

But the scope of the equities inquiry is not unbounded.

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making their equities arguments, parties should look to the

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rationale of assignor estoppel, which arises from the

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determination that the injustice of permitting an assignor to

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challenge a patent he represented was valid outweighs the

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potential gains in the public domain.

In

6 Moy's Walker on Patents

United States District Court
For the Northern District of California

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§ 17:43 (4th ed.); Diamond Scientific Co., 848 F.2d at 1224.

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assignor seeking to overcome a presumption of assignor estoppel

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should therefore focus on this rationale.

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the inventor assigned the patent to another, there are a number of

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exceptions where the equities would weigh against assignor

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estoppel.

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unfair dealings between the parties during assignment, such as

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duress or fraud.3

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before the USPTO declared the patent valid and expressed serious

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doubts to his employer/assignee that any resulting patent would be

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valid.4

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even reserved the right to challenge the validity of the patent or

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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

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See Shamrock Technologies, 903 F.2d at 794; Carroll Touch,
Inc. v. Electro Mech. Sys., Inc., 15 F.3d 1573, 1580 (Fed. Cir.
1993).
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Cf. BorgWarner, Inc. v. Honeywell Int'l, Inc., 747 F. Supp.
2d 554, 560 (W.D.N.C. 2010).
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assignor estoppel.5

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the modern workplace, the inventor may be an employee who

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participated perfunctorily in the claims prosecution process, with

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very little say in drafting the scope of the claims, and the

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resulting patent may cover a far broader invention than the

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inventor intended to convey.6

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challenge the strength of the assumption that the assignor

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represented that what he sold was valuable.

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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

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the circumstances of the patent prosecution or assignment process.

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Brilliant only argues the possibility that GuideTech brought this

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suit against a former employee without justification, which is

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irrelevant in that it concerns the equities of the litigation

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itself, not the facts surrounding the assignment contract.

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Mentor Graphics, 150 F.3d at 1378.

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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).

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Brilliant fails to present evidence raising a disputed issue of

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material fact.

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by Kattan remains uncontradicted, the balancing of the equities

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tips in favor of imposing assignor estoppel and Brilliant

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therefore cannot challenge validity of the patents in question.

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Because GuideTech’s evidence of a valid assignment

As noted by Brilliant, however, the effect of assignor

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estoppel is not absolute.

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the patent, it can assert its “right to make use of the prior art

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invention of an expired patent, which anticipates that of the

Although Brilliant cannot invalidate

United States District Court
For the Northern District of California

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assigned patent.”

Scott Paper Co. v. Marcalus Mfg. Co., 326 U.S.

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249, 257 (1945).

In other words, Brilliant cannot be held liable

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for infringement of portions of the patented invention that are in

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the public domain.

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against infringement by advocating for a narrow claim construction

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or demonstrating that the accused devices are within the prior art

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and therefore do not infringe.

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Brilliant is free to exercise these rights.

Id.

The estopped party may still defend

Mentor Graphics, 150 F.3d at 1379.

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CONCLUSION

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The Court GRANTS GuideTech’s summary judgment motion and

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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.

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Dated:

2/12/2014

CLAUDIA WILKEN
United States District Judge

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