U.S. Ethernet Innovations, LLC v. Acer, Inc. et al

Filing 867


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1 IN THE UNITED STATES DISTRICT COURT 2 FOR THE NORTHERN DISTRICT OF CALIFORNIA 3 4 U.S. ETHERNET INNOVATIONS, LLC, 5 Plaintiff, 6 7 8 9 United States District Court For the Northern District of California 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 v. ACER, INC.; ACER AMERICA CORPORATION; APPLE, INC.; ASUS COMPUTER INTERNATIONAL; ASUSTEK COMPUTER, INC.; DELL, INC.; FUJITSU, LTD.; FUJITSU AMERICA, INC.; GATEWAY, INC.; HEWLETT PACKARD CO.; SONY CORPORATION; SONY CORPORATION OF AMERICA; SONY ELECTRONICS INC.; TOSHIBA CORPORATION; TOSHIBA AMERICA, INC.; and TOSHIBA AMERICA INFORMATION SYSTEMS, INC., Defendants. INTEL CORPORATION; NVIDIA CORPORATION; MARVELL SEMICONDUCTOR, INC.; ATHEROS COMMUNICATIONS, INC.; and BROADCOM CORPORATION, Intervenors. ________________________________/ No. C 10-3724 CW 1 U.S. ETHERNET INNOVATIONS, LLC,, 2 3 4 5 6 7 8 9 United States District Court For the Northern District of California 10 11 12 13 14 15 16 No. C 10-5254 CW Plaintiff, ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR PARTIAL SUMMARY JUDGMENT ADDRESSING MARKING AND NOMINAL DAMAGES (Docket Nos. 766 in 103724, 450 in 105254), GRANTING USEI’S RULE 56(D) MOTION (Docket No. 793 in 10-3724) AND GRANTING IN PART AND DENYING IN PART USEI’S MOTION FOR LEAVE TO FILE A NOTICE OF NEWLY DISCOVERED EVIDENCE AND A SURREPLY (Docket No. 823 in 103724) v. AT&T MOBILITY LLC; BARNES & NOBLE, INC.; CLAIRE’S BOUTIQUES, INC.; J. C. PENNEY COMPANY, INC.; SALLY BEAUTY HOLDINGS, INC.; ANN TAYLOR STORES CORPORATION; ANN TAYLOR RETAIL, INC.; HARLEYDAVIDSON, INC.; HARLEY-DAVIDSON MOTOR COMPANY, INC.; KIRKLAND’S INC.; KIRKLAND’S STORES, INC.; MACY’S, INC.; MACY’S RETAIL HOLDINGS, INC.; MACY’S WEST STORES, INC.; NEW YORK & COMPANY, INC.; LERNER NEW YORK, INC.; RADIOSHACK CORPORATION; RENT-ACENTER, INC.; and THE DRESS BARN, INC., Defendants. ________________________________/ AND ALL RELATED CLAIMS AND COUNTERCLAIMS ________________________________/ Intervenors Intel Corporation, Broadcom Corporation, 17 Marvell Semiconductor Inc., Nvidia Corporation, Atheros 18 Communications Inc. and Sigma Designs, Inc., and Defendants Acer, 19 Inc., Acer America Corporation, Apple, Inc., Asustek Computer 20 Inc., AT&T Services, Inc., Dell Inc., Fujitsu Ltd., Fujitsu 21 America, Inc., Gateway, Inc., Hewlett Packard Co., Sony 22 Corporation, Sony Corporation of America, Sony Electronics Inc., 23 Toshiba Corporation, Toshiba America, Inc., and Toshiba America 24 Information Systems, Inc. (collectively, with Defendant ASUS 25 Computer International, Movants) move for partial summary judgment 26 against Plaintiff U.S. Ethernet Innovations, LLC (USEI), seeking a 27 determination that USEI cannot recover pre-suit damages for 28 2 1 infringement of three of the patents-in-suit, U.S. Patent Nos. 2 5,434,872, issued on July 18, 1995 (the ‘872 Patent), 5,307,459, 3 issued on April 26, 1994 (the ‘459 Patent) and 5,299,313, issued 4 on March 29, 1994 (the ‘313 Patent) based on its failure to mark 5 under 35 U.S.C. § 287(a).1 6 a determination that USEI cannot recover pre-suit damages for 7 infringement of the ‘313 Patent based on its failure to mark. 8 Intel and Nvidia further move for partial summary judgment 9 precluding USEI from recovering more than nominal damages against ASUS Computer International also seeks United States District Court For the Northern District of California 10 them. 11 Intel and Nvidia’s request under Federal Rule of Civil Procedure 12 56(d) and moves for leave to file a notice of additional evidence 13 and a surreply. 14 and their arguments at the hearing on this motion, the Court 15 GRANTS in part the motion for partial summary judgment, DENIES it 16 in part, GRANTS the Rule 56(d) motion and GRANTS IN PART AND 17 DENIES IN PART the motion for leave to file a notice of additional 18 evidence and surreply. USEI opposes the motion, moves to continue resolution of 19 20 Having considered the papers filed by the parties BACKGROUND On June 1, 1999, 3Com Corporation, the original owner of the 21 patents-in-suit, entered into a license agreement with 22 International Business Machines Corporation (IBM). 23 ¶ 2, Ex. A.1. 24 IBM’s use of “3COM Licensed Patents,” which are defined to “mean Constant Decl. Among other things, the license agreement addressed 25 26 1 27 28 Movants do not seek summary judgment regarding U.S. Patent No. 5,732,094 (the ‘094 Patent) on this ground. Accordingly, USEI’s argument that the ‘094 Patent is not subject to the requirements of 35 U.S.C. § 287(a) is not on point. 3 1 all patents,” with certain limitations, “issued or issuing on 2 patent applications entitled to an effective filing date prior to 3 June 1, 2005” and for which 3Com had the right to grant licenses. 4 Id. at § 1.4. 5 that 3Com 6 7 8 grants to IBM, as Grantee, a nonexclusive and worldwide license under 3COM’s Licensed Patents: (a) to make (including the right to use any apparatus and practice any method in making), use, import, offer for sale, lease, sell, and/or otherwise transfer or distribute IBM’s Licensed Products, and/or practice any businesses related to such IBM Licensed Products; (b) to have IBM’s Licensed Products made by another manufacturer for the use, importation, offer for sale, lease, sale and/or other transfer or distribution by IBM only when the conditions set forth in Section 2.2 are met. 9 United States District Court For the Northern District of California 10 11 The license agreement provided in relevant part 12 13 14 . . . 15 Id. at § 2.1.2. 16 license agreement. 17 for several types of apparatuses, including “Manufacturing 18 Apparatus,” “Data Processing Apparatus” and “Semiconductor 19 Apparatus.” The phrase “any apparatus” was not defined in the However, the agreement did provide definitions Id. at §§ 1.8-1.11. 20 Section 2.2 provided, 21 22 The License granted in [Section 2.1.2(b)] to the respective Grantee to have products made by another manufacturer: 23 . . . 24 (b) shall only apply when the specifications for such Grantee’s Licensed Products were created by or for the Grantee (either solely or jointly with one or more third parties; and (c) shall not apply to (i) any methods used; or (ii) any products in the form manufactured or marketed by said other manufacturer prior to the Grantee’s furnishing of said specifications. 25 26 27 28 4 1 . . . Id. at § 2.2. 2 The agreement defined “IBM Licensed Products” to mean “IHS 3 Products and Peripheral Devices.” Id. at § 1.5. In turn, “IHS 4 Products” was defined to mean, 5 6 7 8 an Information Handling System or any instrumentality or aggregate of instrumentalities (including without limitation, any component, subassembly, computer program or supply) designed for incorporation in an Information Handling System. . . . Id. at § 1.2. An “Information Handling System” referred to 9 United States District Court For the Northern District of California 10 11 12 13 any instrumentality or aggregate of instrumentalities primarily designed to compute, classify, process, transmit, receive, retrieve, originate, switch, store, display, manifest, measure, detect, record, reproduce, handle or utilize any form of information, intelligence or data for business, scientific, control, entertainment, or other purposes. Id. at § 1.1. A “Peripheral Device” meant “an ancillary device 14 which is designed to operate in combination with a Grantee’s 15 Licensed Product.” Id. at § 1.19. The agreement did not require 16 that IBM Licensed Products be marked with the relevant patents 17 utilized, including the patents-in-suit. 18 On November 8, 2002, Intel and 3Com entered into three 19 agreements to resolve litigation taking place between 3Com and 20 Xircom, Inc., a subsidiary of Intel. Jones Decl., Ex. AA.2 These 21 included a settlement agreement, a covenant not to sue and a cross 22 license. The latter two documents were attached to the 23 settlement agreement as exhibits. In the covenant not to sue, 24 Intel and 3Com agreed not to assert “any Patent” that they owned 25 against one another for a two-year time period. Id. at Ex. I 26 27 2 28 Although USEI refers to this as the “IBM Settlement Agreement,” IBM was not a party to any of the three agreements. 5 1 (Covenant Not to Sue) §§ 3.2.1, 3.2.2. 2 did not require Intel to mark any products it made during this 3 time period to qualify for the protection under it. 4 license agreement, 3Com granted Xircom and Intel a license to 5 practice five of 3Com’s patents, none of which are at issue in 6 this case. 7 3.4. 8 9 The covenant not to sue In the cross- Id. at Ex. H (Cross License Agreement) §§ 1.6, 3.3, Between 2003 and 2006, 3Com’s patented product sales totaled about $200 million. Constant Decl., Ex. A.5, 475:16-23; Constant United States District Court For the Northern District of California 10 Decl., Ex. A.6. 11 sold more than 140 million components that USEI now accuses of 12 infringing the patents-in-suit, for almost $1.9 billion. 13 Decl. ¶ 3, Ex. B. 14 twenty-five million Intel components, for more than $350 million. 15 Insley Decl. ¶ 2, Ex. A. 16 that IBM purchased from Intel were incorporated into IBM products 17 that it subsequently sold to customers. 18 ¶ 10.3 19 against Intel accuse many of the components that IBM purchased for 20 inclusion in its products. 21 IBM nor Intel marked their products with the ‘872, ‘459 or ‘313 22 Patent numbers. 23 ¶ 11. Between November 2003 and November 2004, Intel Insley Between 2004 and 2009, IBM purchased more than The “vast majority” of the components Constant Decl., Ex. A.3, In the present lawsuit, USEI’s infringement contentions Constant Decl., Ex. A.2, 2-5. Neither Schiffhauer Decl. ¶ 2; Constant Decl., Ex. A.3 24 25 26 3 27 28 In their reply brief, Movants cite “Exhibit C” to the Constant declaration. However, there is no such exhibit attached to this declaration, and it appears that Movants intended to refer to Exhibit A.3 to the declaration instead. 6 1 Starting in 2003, 3Com was involved in a separate lawsuit in this district with Realtek Semiconductor System and D-Link 3 Systems, Inc. 4 infringed of the ‘872, ‘459 and ‘094 Patents. 5 not at issue in that case. 6 motion for partial summary judgment based on marking. 7 Decl., Ex. I. 8 offered “a spreadsheet showing the sales of products practicing 9 the patents at issue for which marked samples have been located 10 United States District Court For the Northern District of California 2 and products for which marked samples could not be found during 11 the period roughly from 1997 until [July 13, 2004] . . . According 12 to this spreadsheet, 3Com sold 32,196,864 units practicing the 13 patents at issue during this time, of which 4,803,508 units, or 14 14.9 percent were of product types for which 3Com could not locate 15 a marked sample.” 16 “[m]arking 85 percent of products sold is almost certainly not 17 marking ‘substantially all’ products,” it held that a jury could 18 infer, based on other evidence in the record, that, although 3Com 19 had lost some documentary evidence, it had a practice of marking 20 its products since at least 1997 and thus that the remaining 21 products for which documentary evidence did not exist were in fact 22 marked. 23 submitted in the Realtek case. 24 In that case, 3Com alleged that Realtek and D-Link The ‘313 Patent was In 2008, the court denied Realtek’s Jones In opposing the summary judgment motion, 3Com Id. at 1, 7. Id. at 7-8. Although the court noted that USEI has offered here the evidence that 3Com At the deposition taken in this matter, USEI’s Rule 30(b)(6) 25 witness testified that he did not know if there were ever any 26 products marked with the ‘313 Patent produced by 3Com or anyone 27 else. 28 did practice this patent. Constant Decl., Ex. A.7, 21:6-14. USEI contends that 3Com Constant Decl., Ex. A.2, 18. 7 1 USEI also offers evidence that it has entered into license 2 agreements with Realtek, ADMtek and VIA, to authorize them to use 3 some or all of the ‘459, ‘872 and ‘094 Patents, that these 4 licenses included marking requirements, and that the licenses had 5 complied with their marking obligations or that 3Com took steps to 6 ensure that they did so. 7 LEGAL STANDARD 8 Summary judgment is properly granted when no genuine and disputed issues of material fact remain, and when, viewing the 10 United States District Court For the Northern District of California 9 evidence most favorably to the non-moving party, the movant is 11 clearly entitled to prevail as a matter of law. 12 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); 13 Eisenberg v. Ins. Co. of N. Am., 815 F.2d 1285, 1288-89 (9th Cir. 14 1987). 15 Fed. R. Civ. P. The moving party bears the burden of showing that there is no 16 material factual dispute. 17 true the opposing party’s evidence, if supported by affidavits or 18 other evidentiary material. 19 815 F.2d at 1289. 20 in favor of the party against whom summary judgment is sought. 21 Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 22 587 (1986); Intel Corp. v. Hartford Accident & Indem. Co., 952 23 F.2d 1551, 1558 (9th Cir. 1991). 24 Therefore, the court must regard as Celotex, 477 U.S. at 324; Eisenberg, The court must draw all reasonable inferences Material facts which would preclude entry of summary judgment 25 are those which, under applicable substantive law, may affect the 26 outcome of the case. The substantive law will identify which 27 facts are material. Anderson v. Liberty Lobby, Inc., 477 U.S. 28 242, 248 (1986). 8 1 Where the moving party does not bear the burden of proof on 2 an issue at trial, the moving party may discharge its burden of 3 production by either of two methods: 4 5 6 7 The moving party may produce evidence negating an essential element of the nonmoving party’s case, or, after suitable discovery, the moving party may show that the nonmoving party does not have enough evidence of an essential element of its claim or defense to carry its ultimate burden of persuasion at trial. Nissan Fire & Marine Ins. Co., Ltd., v. Fritz Cos., Inc., 210 F.3d 8 1099, 1106 (9th Cir. 2000). 9 If the moving party discharges its burden by showing an 10 United States District Court For the Northern District of California absence of evidence to support an essential element of a claim or 11 defense, it is not required to produce evidence showing the 12 absence of a material fact on such issues, or to support its 13 motion with evidence negating the non-moving party’s claim. Id.; 14 see also Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 885 (1990); 15 Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir. 1991). If 16 the moving party shows an absence of evidence to support the non17 moving party’s case, the burden then shifts to the non-moving 18 party to produce “specific evidence, through affidavits or 19 admissible discovery material, to show that the dispute exists.” 20 Bhan, 929 F.2d at 1409. 21 If the moving party discharges its burden by negating an 22 essential element of the non-moving party’s claim or defense, it 23 must produce affirmative evidence of such negation. Nissan, 210 24 F.3d at 1105. If the moving party produces such evidence, the 25 burden then shifts to the non-moving party to produce specific 26 evidence to show that a dispute of material fact exists. 27 28 9 Id. 1 If the moving party does not meet its initial burden of 2 production by either method, the non-moving party is under no 3 obligation to offer any evidence in support of its opposition. 4 Id. 5 ultimate burden of persuasion at trial. This is true even though the non-moving party bears the 6 7 8 9 Id. at 1107. DISCUSSION I. Failure to mark Movants contend that they are entitled to a summary adjudication that USEI cannot collect pre-suit damages for United States District Court For the Northern District of California 10 infringement of the ‘459, ‘872 and ‘313 Patents pursuant to 35 11 U.S.C. § 287(a) because it cannot show that “substantially all” of 12 the licensed products were marked during the damages period4 or 13 that it provided any or adequate actual notice of alleged 14 infringement to Movants.5 15 3Com marked substantially all of the products that it sold itself, 16 this is not sufficient to meet the statutory requirement because 17 3Com’s sales were dwarfed by the sales by Intel and IBM, as 18 licensees, of purportedly infringing products. They argue that, even assuming that 19 20 21 22 4 23 24 25 26 27 28 USEI filed the original complaint in the earlier case on October 9, 2009. Title 35 U.S.C. § 286 provides that “no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint or counterclaim for infringement in the action.” Accordingly, USEI may not recover damages for infringement that occurred prior to October 3, 2003. 5 ASUS Computer International joins this motion as to the ‘313 Patent but not as to the ‘459 and ‘872 Patents. It acknowledges that it received a letter from 3Com dated December 8, 2003, asserting that certain ASUS products infringed the ‘459 and ‘872 Patents. 10 1 USEI responds that 3Com and its authorized licensees did mark 2 “substantially all” patented products that they produced, and it 3 disputes that Intel and IBM were actually licensed.6 4 Title 35 U.S.C. § 287(a) provides, 5 15 Patentees, and persons making, offering for sale, or selling within the United States any patented article for or under them, . . . may give notice to the public that the same is patented, either by fixing thereon the word “patent” or the abbreviation “pat.”, together with the number of the patent, or by fixing thereon the word “patent” or the abbreviation “pat.” together with an address of a posting on the Internet, accessible to the public without charge for accessing the address, that associates the patented article with the number of the patent, or when, from the character of the article, this can not be done, by fixing to it, or to the package wherein one or more of them is contained, a label containing a like notice. In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. Filing of an action for infringement shall constitute such notice. 16 “Thus, the statute defines that ‘[a patentee] is entitled to 17 damages from the time when it either began marking its product in 18 compliance with section 287(a)[, constructive notice,] or when it 19 actually notified [the accused infringer] of its infringement, 20 whichever was earlier.’” 21 1111 (Fed. Cir. 1996) (quoting American Medical Sys., Inc. v. 22 Medical Eng’g Corp., 6 F.3d 1523, 1537 (Fed. Cir. 1993)) 23 (formatting in original). 6 7 8 9 United States District Court For the Northern District of California 10 11 12 13 14 Maxwell v. J. Baker, Inc., 86 F.3d 1098, The Federal Circuit has “construed 24 25 6 26 27 28 USEI has not presented any argument to dispute Movants’ contentions regarding the issue of actual notice. Although it avers in a footnote that “[a]ny decision on actual notice is premature” in light of the status of discovery, Opp. at 19 n.51, it has not made a showing of any essential facts relevant to this determination that it may obtain through discovery. 11 1 section 287(a) to require that ‘once marking has begun, it must be 2 substantially consistent and continuous in order for the party to 3 avail itself of the constructive notice provisions of the 4 statute.’” 5 Id. (quoting American Medical Sys., 6 F.3d at 1537). “In addition to governing patent owners, the provisions of 35 U.S.C. § 287(a) extend to licensees.” 7 v. Dell Computer Corp., 262 F. Supp. 2d 358, 362 (D. Del. 2003) 8 (citing 35 U.S.C. § 287(a); Devices for Medicine, Inc. v. Boehl, 9 822 F.2d 1062 (Fed. Cir. 1987)); see also Amsted Indus. v. Buckeye 10 United States District Court For the Northern District of California 6 Steel Castings Co., 24 F.3d 178, 185 (Fed. Cir. 1994) (“A licensee 11 who makes or sells a patented article does so ‘for or under’ the 12 patentee, thereby limiting the patentee’s damage recovery when the 13 patented article is not marked.”); Maxwell, 86 F.3d at 1111 14 (“licensees, such as Target, and other authorized parties, such as 15 Target’s manufacturers, must also comply” with the marking 16 requirement). 17 not implicate Section 287(a), . . . a licensee’s failure to mark 18 does bear consequences for a patent owner seeking damages for 19 infringement.” 20 bears responsibility to ensure that ‘licensees . . . and other 21 authorized parties . . . comply’ with Section 287(a).” 22 (quoting Maxwell, 86 F.3d at 1111-12). 23 to both express licensees and implied licensees. 24 24 F.3d at 185. 25 Tulip Computers Int’l B.V. “Thus, while an infringer’s failure to mark does Id. (internal citation omitted). “A patent owner Id. This requirement applies Amsted Indus., “However, with third parties unrelated to the patentee, it is 26 often more difficult for a patentee to ensure compliance with the 27 marking provisions.” 28 reason’ approach is justified in such a case and substantial Maxwell, 86 F.3d at 1111. 12 “A ‘rule of 1 compliance may be found to satisfy the statute.” 2 failure to mark is caused by someone other than the patentee, the 3 court may consider whether the patentee made reasonable efforts to 4 ensure compliance with the marking requirements.” 5 6 7 Id. “When the Id. at 1111-12. As the patentee, USEI bears the burden of pleading and proving compliance with the marking statute. Id. at 1111. As previously noted, the parties dispute whether Intel or IBM 8 was either explicitly or implicitly licensed to practice the 9 patents at issue. If Intel and IBM were not acting in accordance United States District Court For the Northern District of California 10 with a license or with their obligations under a license when they 11 sold the products in question, then the sales may not be imputed 12 to 3Com or its successor, USEI. 13 Tulip, 262 F. Supp. 2d at 362. 14 See Maxwell, 86 F.3d at 1111-12; Regarding IBM, USEI argues that the 1999 license agreement 15 between 3Com and IBM did not permit IBM to purchase infringing 16 Intel components and then resell them, absent compliance with the 17 requirements of section 2.2 of the agreement that IBM create the 18 specifications for the products and not purchase premade items. 19 Movants contend that the evidence shows that IBM did not simply 20 sell the premade components but instead used them to make its 21 Licensed Products and then sold the completed item. 22 that this was authorized by section 2.1.2(a) of the license 23 agreement, which permits IBM to “use any apparatus . . . in 24 making” its Licensed Products. 25 Movants argue USEI’s interpretation of the 3Com-IBM license agreement is 26 not persuasive. 27 under which IBM can use 3Com’s patents “to have IBM’s Licensed 28 Products made by another manufacturer.” The sections on which it relies govern the terms 13 Constant Decl., Ex. A.1, 1 §§ 2.1.2(b), 2.2. 2 under which IBM can obtain parts for use when it makes its own 3 Licensed Products. 4 own products; the issue is instead whether it was permitted to 5 obtain purportedly infringing, premade components and to use those 6 components when it made its products. Thus, these sections do not address the terms Here, there is no dispute that IBM made its As Movants contend, pursuant to section 2.1.2(a) of the 8 license agreement, the answer is that IBM was allowed to do this. 9 In that provision, 3Com gave IBM the right to make its own 10 United States District Court For the Northern District of California 7 Licensed Products and to “use any apparatus” in doing so. 11 agreement placed no restriction that IBM was permitted to use only 12 particular types of components--for example, those obtained from 13 licensed chip suppliers--and instead unambiguously provided that 14 “any apparatus” could be used. 15 relevant components accused here do not qualify as “any apparatus” 16 under the terms of section 2.1.2(a). 17 the reference in section 2.1.2(a) to “any apparatus” should be 18 construed to mean only “manufacturing apparatus,” it provides no 19 reason that this phrase should be so construed. 20 parties to the agreement specifically defined and used the term 21 “manufacturing apparatus” elsewhere in the agreement where they 22 intended to do so and distinguished it from other apparatus types. 23 Thus, to define apparatus to mean “manufacturing apparatus” here 24 would render other parts of the agreement surplusage or 25 contradictory. 26 is frequently used in the patents at issue themselves to refer to 27 the claimed inventions. The USEI provides no argument that the Although USEI argues that Notably, the Further, the Court notes that the term “apparatus” 28 14 1 The sole case upon which USEI relies is not to the contrary. 2 In that case, Tulip Computers, IBM had entered into a license 3 agreement with Tulip very similar to the one at issue here. 4 that case, the court held that IBM’s purchase and sale of the 5 allegedly infringing products from Dell was not imputable to Tulip 6 because IBM had not complied with the specific restrictions on its 7 “have made” rights under section 2.2 of the agreement and was thus 8 not acting within its license granted by Tulip. 9 262 F. Supp. 2d at 366. In Tulip Computers, However, there, IBM had entered into a United States District Court For the Northern District of California 10 remarketing agreement with Dell Computer Corporation, pursuant to 11 which “IBM made off-the-shelf purchases of products manufactured 12 by Dell and resold them to its customers.” 13 there, IBM did not make the products at issue and rather purchased 14 them premade. 15 products, using chips purchased from Intel. 16 Movants’ interpretation would render the restrictions in section 17 2.2 of the agreement “virtually meaningless” is also unavailing. 18 IBM was not allowed to have its own licensed products made by 19 another manufacturer practicing 3Com’s patents, except in 20 compliance with those restrictions. Id. at 360. Thus, In contrast, here, IBM made its own licensed USEI’s argument that 21 Thus, because the license agreement allowed IBM to make and 22 sell its own licensed products, using any apparatus to do so, it 23 acted pursuant to its license rights when it made and sold 24 products that included purportedly infringing components that it 25 purchased from Intel.7 Accordingly, those products--the “vast 26 27 28 7 USEI has moved for leave to file a surreply to address this issue. It contends that this argument was raised for the first time in Movants’ reply brief. 15 1 majority” of twenty-five million between 2004 and 2009--can be 2 imputed to 3Com and USEI. 3 nor IBM marked these products or components with the patent 4 numbers. 5 IBM constitute a de minimis number of the licensed products or 6 that the marked products sold by 3Com or the licensees whose 7 agreement required marking constituted substantially all of the 8 relevant products sold. There is no dispute that neither Intel USEI has not offered evidence that the products sold by USEI contends that summary judgment is nevertheless 10 United States District Court For the Northern District of California 9 inappropriate because “3Com made reasonable efforts to ensure 11 compliance with the marking requirements.” 12 argues that, because the IBM-3Com cross-licensing agreement was 13 “broad” and encompassed the entirety of each company’s portfolio 14 of patents, it would have been unreasonable for 3Com to monitor 15 IBM’s large number of products to determine which infringed the 16 patents-in-suit. 17 “any relationship to the patents at issue” here and that there is Opp. at 13-16. It It contends that IBM-3Com agreement did not have 18 19 20 21 22 23 24 25 26 27 28 In their opening brief, Movants made clear that they based their arguments in part on IBM’s sale of its own licensed computers that were built with accused Intel components, not simply on IBM’s “sale of accused Intel chips,” as USEI argues. Mot. for Leave to File a Notice and Surreply, Docket No. 823, 2 n.1; see, e.g., Mot. at 3 (arguing that “IBM purchased more than 25 million Intel components now accused of infringement for inclusion in IBM’s licensed products”). Thus, USEI could have responded to this argument in its opposition brief. Further, even if USEI misunderstood the argument at the time that it filed its opposition, it had ample opportunity to present any further response on this issue at the hearing. Nonetheless, because the Court has considered the arguments raised by USEI in its proposed surreply and has not found them meritorious, the Court GRANTS it leave to file the surreply. 16 1 no evidence that 3Com suspected that IBM was selling products that 2 infringed any of these patents. 3 However, here, the evidence does not support that 3Com made 4 reasonable efforts to ensure that IBM marked any licensed products 5 with the patents-in-suit. 6 that 3Com took no steps whatsoever to do so. 7 have been burdensome for 3Com to monitor whether IBM was in fact 8 marking all products practicing the patents, 3Com failed even to 9 include in the licensing agreement an obligation that IBM itself In fact, the evidence offered shows Even if it would United States District Court For the Northern District of California 10 make efforts to mark any products that it reasonably believed 11 practiced 3Com’s patents.8 12 the patents-in-suit without any requirement that IBM even make a 13 minimal effort to mark them. 14 such a step without first knowing itself that IBM was making 15 products that practiced its patents, given that 3Com was 16 authorizing IBM to do so.9 It instead authorized IBM to practice 3Com could reasonably have taken USEI’s argument that the licensing 17 18 19 20 21 22 23 24 25 26 27 28 8 The Court also notes that, although USEI contends that it would have been unreasonable to expect 3Com to investigate fully which IBM products practiced each of 3Com’s patents in order to monitor compliance and to know which products had to be marked with the patents-in-suit, 3Com would simply have had to conduct the same type of investigation that USEI was required to conduct for the accused products in this suit. 9 Movants have offered some evidence that 3Com did in fact have such knowledge. Notably, in an August 1999 Form 10-K filed with the Securities Exchange Commission, 3Com wrote that “we derive a significant portion of our personal connectivity product sales from PC OEMs, such as . . . IBM, who incorporate our [Network Interface Cards], analog modems, or chipsets into their products.” Constant Decl., Ex. A.16. 17 1 agreement had no relationship to the patents-in-suit is 2 unavailing. 3 certain patents by number, and the parties did not discuss in 4 their negotiations particular products that would be licensed 5 under the agreement, the license encompassed 3Com’s patents with 6 an effective filing date prior to June 5, 2005, which includes all 7 of the patents at issue here. 8 9 Although the agreement did not specifically identify In addition, USEI provides no authority that supports its contention that the sale of products under a broad portfolio United States District Court For the Northern District of California 10 license cannot be imputed to the patent holder.10 11 § 287(a) do not contain any such express exemption and instead 12 apply to any “persons making, offering for sale or selling within 13 the United States any patented article” under a patentee. 14 U.S.C. § 287(a); see also In re Yarn Processing Patent Validity 15 Litig., 602 F. Supp. 159, 169 (W.D.N.C. 1984) (this section 16 “applies to authorizations by patentee of other persons to make The terms of 35 17 18 19 20 21 22 In response, USEI asserts that the Form 10-K is not a “reasonable basis for 3Com to believe that” IBM was infringing the patents-in-suit. Opp. at 16 n.42. However, USEI does not explain why not. Further, Movants did not offer this document as evidence from which 3Com should have learned that IBM was using technology covered by the patents-in-suit in its products; instead, they offered it to show that 3Com knew that IBM was doing so. 10 23 24 25 26 27 28 USEI suggests in its opposition that the court in Clancy Sys. Int’l v. Symbol Techs., 953 F. Supp. 1170 (D. Colo. 1997), found that, for a licensee to sell a patented article “for or under” a patentee, the license must “specifically” permit the licensee to sell the infringing product, and thus that a “broad portfolio license” is insufficient. However, there was no such discussion or holding in Clancy. The portion of that opinion that USEI cites is simply a description of the license agreement at issue in that case and a recitation of the fact that the patent owner there admitted that the licensed product infringed the patent, thereby qualifying as a “patented article” under § 287(a). Id. at 1173. 18 and sell patented articles regardless of the particular form these 2 authorizations may take”), cited with approval by Amsted Indus. v. 3 Buckeye Steel Castings Co., 24 F.3d 178, 185 n.2 (Fed. Cir. 1994). 4 Here, 3Com, as the patentee, granted IBM the right to make and 5 sell products that practice its patents. 6 applied marking requirements in the context of a portfolio 7 license. 8 Supp. 2d 634, 636, 641-43 (E.D. Va. 2010). 9 otherwise would be inconsistent with the “three related purposes” 10 United States District Court For the Northern District of California 1 of the marking statute: “1) helping to avoid innocent infringement 11 . . .; 12 the article is patented . . . ; and 3) aiding the public to 13 identify whether an article is patented . . .” 14 Mart Stores, 138 F.3d 1437, 1443 (Fed. Cir. 1998). 15 penalizes patentees who put into the marketplace--either directly 16 or indirectly, through their failure to take reasonable efforts to 17 police their licensees--unmarked products that do not inform the 18 public that the intellectual property embodied in those products 19 is protected. Other courts have See, e.g., WiAV Solutions LLC v. Motorola, Inc., 732 F. Further, to hold 2) encouraging patentees to give notice to the public that Nike Inc. v. WalSection 287(a) 20 The parties also dispute whether the products sold by Intel 21 were subject to the marking requirement due to the 2002 covenant 22 not to sue between Intel and 3Com. 23 the purpose of the covenant not to sue was to obtain “patent 24 peace” and not to grant a license or authorization to make 25 products, courts have previously found that § 287’s marking 26 requirement applies to a patentee’s authorization of other persons 27 to make and sell patented items in whatever form the authorization 28 was given, “regardless of whether the authorizations are 19 Although USEI contends that 1 ‘settlement agreements,’ ‘covenants not to sue’ or ‘licenses.’” 2 In re Yarn Processing Patent Validity Litig., 602 F. Supp. at 169; 3 see also De Forest Radio Tel. Co. v. United States, 273 U.S. 236 4 (1927) (“As a license passes no interest in the monopoly, it has 5 been described as a mere waiver of the right to sue by the 6 patentee”) (internal quotation marks and citation omitted); 7 TransCore, LP v. Elec. Transaction Consultants Corp., 563 F.3d 8 1271, 1275 (Fed. Cir. 2009) (stating that “this court and its 9 predecessors have on numerous occasions explained that a non- United States District Court For the Northern District of California 10 exclusive patent license is equivalent to a covenant not to sue” 11 and collecting cases). 12 USEI also argues that the covenant not to sue should not be 13 read as such an authorization because 3Com did not grant Intel the 14 rights to practice the patents-in-suit under the restrictive 15 cross-license that they entered at the same time as the covenant 16 not to sue. 17 Adams & Assocs., LLC v. Winbond Elecs. Corp., 2010 U.S. Dist. 18 LEXIS 93799 (D. Utah), in which the district court considered a 19 licensing agreement that contained a covenant not to sue and 20 addressed whether it authorized the sale of particular products, 21 which were not encompassed in the express license, as “for or 22 under the” patentee pursuant to § 287. 23 read the covenant not to sue as granting an implied license as to 24 all matters covered in that covenant would render all of the 25 limitations in the express license “surplusage, an impermissible 26 result under California law.” 27 concluded that the products sales could not be imputed to the 28 patentee for the purposes of the marking statute. In support of its argument, USEI relies on Phillip M. The court found that, to Id. at 29-30. 20 Thus, the court Id. at 30. 1 However, USEI fails to demonstrate that the separate cross 2 license and covenant not to sue at issue here are the equivalent 3 of those analyzed by in the Adams case or that reading of the 4 covenant not to sue as an implied license in this case would 5 render any part of the cross license as surplusage. 6 Adams, the documents here are separate contracts that involve 7 different parties. 8 litigation, Xircom, 3Com and Intel contemporaneously entered into 9 a series of contracts. Unlike in As explained above, to resolve the Xircom The settlement agreement was signed by all United States District Court For the Northern District of California 10 three and had the other two contracts attached to it. 11 license was also executed by all three and involved only Xircom 12 and 3Com patents, among other things, granting Xircom and Intel 13 the right to use five specific 3Com patents that are not at issue 14 in this litigation. 15 contrast, the covenant not to sue was executed only by Intel and 16 3Com. 17 assert any of their patents against each other alleging 18 infringement of the subject matter covered by the agreement. 19 Covenant Not to Sue § 3.2. 20 broadly and encompasses all products made by the respective 21 companies, with limited exclusions. 22 1.21. 23 and parties to the agreements, it is not clear that interpreting 24 the covenant not to sue as an authorization to practice the 25 patented technology would have any effect whatsoever on the 26 separate cross license, and USEI has not identified any. 27 28 The cross Cross License Agreement §§ 1.6, 3.3, 3.4. In In that document, each of these companies agreed not to The covered subject matter is defined Id. at §§ 1.9, 1.10, 1.20, Particularly in light of the differing time periods, scope Further, reading the document as a whole, the covenant not to sue does unambiguously authorize Intel’s manufacture and sale of 21 1 products under any of 3Com’s covered patents, even if the parties 2 did not specifically discuss or know that Intel was practicing the 3 technology of the patents-in-suit at the time of contracting.11 4 the covenant, 3Com agrees that, for the effective term of the 5 agreement, it “will not Assert any Patent owned by 3Com or as to 6 which 3Com has the right to Assert infringement against Intel or 7 Permitted Assignees, alleging direct or indirect infringement with 8 respect to Covered Intel Subject Matter.” 9 term, without apparent restriction or limitation, thus authorizes Id. at § 3.2.2. In “This United States District Court For the Northern District of California 10 all acts that would otherwise be infringements: making, using, 11 offering for sale, selling, or importing.” 12 1276. 13 Matter” encompasses “all products manufactured, imported, sold or 14 offered for sale by or for Intel,” with limited exceptions that 15 USEI has not invoked here. 16 see also id. at § 3.1 (stating the intent of the parties to avoid 17 “patent disputes between themselves as a result of sales of their 18 products”). 19 TransCore, 563 F.3d at This is particularly clear because “Covered Intel Subject Cross License Agreement §§ 1.9, 1.21; Accordingly, Intel’s sales of purportedly infringing products 20 during the time period covered by the covenant not to sue were 21 carried out under the authority of 3Com and can thus be imputed to 22 3Com for the purposes of § 287’s marking requirement. 23 IBM agreement, 3Com did not take reasonable efforts--or any 24 efforts whatsoever--to ensure that any sale of products by Intel 25 under this authorization complied with this requirement. As with the Further, 26 27 28 11 Movants have offered evidence that shows that 3Com was aware that Intel was a “well-positioned competitor” in the relevant technology at this time. Constant Decl., Ex. A.17, 9. 22 1 the number of purportedly infringing components sold by Intel 2 during a one year time period from November 2003 to November 2004 3 dwarfs, by a factor of almost five, the number of components sold 4 by 3Com for a seven year period through 2004. 5 To the extent that USEI relies on the district court’s denial 6 of the defendant’s motion for partial summary judgment based on 7 marking in the Realtek litigation, this is unavailing. 8 there was brought based on 3Com’s purported failure to mark its 9 own products with the patents, not on its failure to make The motion United States District Court For the Northern District of California 10 reasonable efforts to ensure that licensees complied with the 11 marking requirements. 12 motion that 3Com did mark substantially all of its own products 13 and that it made reasonable efforts to ensure that its express 14 licensees, Realtek, ADMtek and VIA, did so, this is not sufficient 15 to preclude summary judgment, in light of the failure to take 16 reasonable steps to ensure that Intel and IBM marked products with 17 the patents. 18 Even assuming for the purposes of this USEI also argues that the motion should be denied because 19 Movants have not offered evidence that Intel’s products infringe 20 the patents-in-suit and instead rely on USEI’s assertions of 21 infringement. 22 some or all of Intel’s products may be found ultimately not to 23 infringe and “there would be no reasonable argument that 3Com 24 failed to comply with the marking requirements of Section 287 25 based on the sale of non-infringing Intel products.” 26 However, as explained by another district court presented with the 27 same argument, this argument is insufficient to raise a genuine 28 issue of material fact: It contends that this motion is premature, because 23 Opp. at 19. 1 2 3 4 5 6 7 8 9 United States District Court For the Northern District of California 10 11 12 13 14 15 Loral simply argues that a genuine factual issue remains as to whether the CCDs sold by Toshiba, NEC and the other defendants infringe claims of the ‘485 patent. Loral contends that this court cannot rule on this motion until the finder of fact rules on infringement. These legal contentions, however, do not satisfy Loral’s burden to present factual evidence showing a genuine issue of material fact. Loral has consistently asserted in this case that the CCDs sold by Matsushita, Toshiba, and NEC in the United States infringe claims of the ‘485 patent. Defendants have conclusively shown these specific allegedly infringing CCDs were sold, unmarked, during the terms of license agreements with Fairchild. Loral has not withdrawn its claim of infringement of any of these devices. In sum, Loral has provided no evidence to show a genuine issue of material fact. See Fed. R. Civ. P. 56(e). Rather than supply evidence creating a genuine factual issue, Loral has merely argued the possibility that the trier of fact could find that these CCDs do not infringe -- a position inconsistent with Loral’s pleadings, answers to interrogatories, statement of undisputed facts, and its interpretation of the scope of its patent, either literally or by equivalents. Loral cannot create a genuine issue of fact as to whether these licensed CCDs are covered by the ‘485 patent simply by arguing the possibility of such a result. 16 Loral Fairchild Corp. v. Victor Co. of Japan, 906 F. Supp. 813, 17 818 (E.D.N.Y. 1995). 18 the position that the relevant products sold by Intel infringe its 19 patents, and it has not offered any evidence here that they do 20 not--instead, it just speculates that the factfinder ultimately 21 may find that Intel’s products do not infringe. 22 motion, Movants offered evidence that the marking requirement was 23 not met and thus the burden shifted to USEI to raise an issue of 24 fact to preclude summary judgment. 25 do so simply through argument unsupported by evidence. 26 Similarly, here, USEI has consistently taken With their It cannot meet its burden to Further, USEI has raised no genuine issue of material fact 27 that 3Com failed to mark its products with the ‘313 Patent. 28 their motion, Movants offered evidence that 3Com did practice the 24 With 1 ‘313 Patent. 2 “its predecessor in interest, 3Com Corporation, practiced [the 3 Asserted Claims] as 3Com was a world-wide leader in Ethernet 4 products until it was forced out of business . . .” 5 Decl., Ex. A.2, 18. 6 short of demonstrating that 3Com sold an unmarked products that 7 practiced the ‘313 Patent.” 8 offered this to show that 3Com did make products that practiced 9 the ‘313 Patent, and a jury could conclude from this statement In its infringement contentions, USEI asserted that Constant USEI responds that this statement “falls Opp. at 18, n.49. However, Movants United States District Court For the Northern District of California 10 that 3Com did this. 11 Rule 30(b)(6) witness that USEI did “not know” if 3Com or anyone 12 else ever marked products with the ‘313 Patent. 13 Ex. 14 that USEI would not able to meet its burden of persuasion at trial 15 to show that the products that 3Com made practicing the ‘313 16 Patent were marked. 17 demonstrate that there is a genuine issue of fact as to this.12 18 Finally, USEI argues that, even if the Court holds--as it A.7, 21:6-14. Movants also offered testimony from USEI’s Constant Decl., Thus, Movants produced evidence that showed USEI did not respond with any evidence to 19 has--that patented products sold by Intel during the term of the 20 covenant not to sue should be imputed to 3Com, “[a]ny limitation 21 on USEI’s ability to recover damages for infringement of the 22 Patents-in-Suit under 35 U.S.C. §287 should end on November 8, 23 2004,” the expiration of that covenant. Opp. at 17-18. However, 24 25 12 26 27 28 In addition, Movants offered evidence that USEI has identified Broadcom’s BCM5700 chip of infringing the ‘313 Patent, see Constant Decl., Ex. A.2, 7; Bremer Reply Decl., Ex. A.2, 7, and that 3Com itself made unmarked products that utilized this chip, see Bremer Reply Decl., Exs. A.3, A.4. USEI did not address or respond to this evidence at the hearing. 25 1 this argument fails to take into account that the license 2 agreement with IBM remained valid past that date and that IBM 3 continued to sell unmarked products that included accused Intel 4 components through 2009. 5 Accordingly, the Court GRANTS Movants’ motion for partial 6 summary judgment on the basis of marking. 7 damages for any acts of infringement of the ‘872, ‘459 or ‘313 8 Patents against Movants, except ASUS Computer International, that 9 took place before it filed infringement claims against each of USEI cannot recover United States District Court For the Northern District of California 10 them. 11 infringement of the ‘313 Patents against ASUS Computer 12 International that took place before USEI filed infringement 13 claims against it. 14 II. Further, USEI cannot recover damages for any acts of Nominal damages 15 Intel and Nvidia move for summary judgment precluding USEI 16 “from asserting that damages should be calculated by applying a 17 royalty rate or percentage to revenues or profits from the accused 18 products” and limiting USEI “to proffering a reasonable royalty 19 based on the total costs of permanently removing the accused 20 features from the accused products, rather than on any alleged 21 value of the accused features to Intel, Nvidia, or their 22 customers.” 23 2003, they have disabled the accused features of their Ethernet 24 products in the software drivers that they provide to purchasers. 25 USEI moves to continue the motion for partial summary judgment 26 pursuant to Federal Rule of Civil Procedure 56(d). 27 28 Mot. at 20. They argue that, since before October Although, if Intel and Nvidia were to prove ultimately that any infringing capabilities of their accused products were in fact 26 fully disabled for the damages period, and that the accused 2 features were of no benefit to them or their customers during that 3 time, USEI may be foreclosed from recovering damages as they urge, 4 USEI has identified sufficiently specific evidence that it may 5 obtain through discovery that may be relevant to the issue of 6 disablement, including whether the features may have been re- 7 enabled. 8 The Court DENIES Intel and Nvidia’s motion for partial summary 9 judgment without prejudice to re-filing as part of the parties’ 10 United States District Court For the Northern District of California 1 dispositive cross-motions that are set to be briefed after the 11 close of fact and expert discovery.13 Accordingly, the Court GRANTS USEI’s Rule 56(d) motion. 12 13 CONCLUSION For the reasons set forth above, the Court GRANTS in part and 14 DENIES in part Movants’ motion for partial summary judgment 15 (Docket Nos. 766 in 10-3724, 450 in 10-5254), GRANTS USEI’s Rule 16 56(d) motion (Docket No. 793), GRANTS USEI leave to file a 17 surreply and DENIES it leaves to file a notice of newly discovered 18 evidence (Docket No. 823). 19 Order, USEI shall file its proposed surreply in the docket. 20 Within three days of the date of this USEI is precluded from recovering damages for any acts of 21 infringement of the ‘872, ‘459 or ‘313 Patents by Intervenors 22 Intel Corporation, Broadcom Corporation, Marvell Semiconductor 23 Inc., Nvidia Corporation, Atheros Communications Inc. and Sigma 24 Designs, Inc., and Defendants Acer, Inc., Acer America 25 Corporation, Apple, Inc., Asustek Computer Inc., AT&T Services, 26 27 13 28 USEI’s motion for leave to file newly discovered evidence regarding disablement is therefore DENIED as moot. 27 1 Inc., Dell Inc., Fujitsu Ltd., Fujitsu America, Inc., Gateway, 2 Inc., Hewlett Packard Co., Sony Corporation, Sony Corporation of 3 America, Sony Electronics Inc., Toshiba Corporation, Toshiba 4 America, Inc., or Toshiba America Information Systems, Inc. that 5 took place before it filed infringement claims against such 6 Defendant or Intervenor. 7 recovering damages for any acts of infringement of the ‘313 8 Patents against ASUS Computer International that took place before 9 USEI filed infringement claims against it. United States District Court For the Northern District of California 10 Further, USEI is precluded from IT IS SO ORDERED. 11 12 13 Dated: 8/16/2013 CLAUDIA WILKEN United States District Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 28

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