Samsung Electronics Co., Ltd. v. Imperium IP Holdings (Cayman), Ltd.

Filing 199

MEMORANDUM ORDER denying 198 MOTION for Reconsideration re 197 Order on Motion for Summary Judgment filed by Imperium IP Holdings (Cayman), Ltd. Signed by Judge Colm F. Connolly on 5/17/2021. (nmf)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
SAMSUNG ELECTRONICS CO.,
LTD.,
Plaintiff,
V.

Civil Action No. 15-1059-CFC-CJB

IMPERIUM IP HOLDINGS
(CAYMAN), LTD.,

Defendant.

MEMORANDUM ORDER
On May 12, 2021 I issued an Order (D.I. 197) denying Defendant Imperium
IP Holdings (Cayman), Ltd.'s motion for summary judgment in this breach of
contract action brought by Plaintiff Samsung Electronics, Company, Ltd.
Imperium has moved for reconsideration of the Order. Imperium argues that the
Order "does not address a legal issue-that Samsung is an Excluded Party [under
the contract in question]-that is case dispositive." D.I. 198 at 1. Whether
Samsung is an Excluded Party with respect to what the contract calls "Covered
Third Party Products," however, is not a legal issue for the Court to decide. It is
rather, as I concluded in my Order, an issue of fact subject to conflicting record

evidence that only the jury can resolve. I will therefore deny Imperium's motion
for reconsideration.
The contract in question, titled "Settlement and License Agreement" (SLA),
was executed in 2013 by Imperium and two non-parties: Sony Corporation and its
subsidiary, Sony Mobile Communications (USA) Inc. Samsung claims to be a
third-party beneficiary of the SLA. Samsung alleges that Imperium breached the
SLA when Imperium litigated a 2014 patent infringement suit against Samsung in
the Eastern District of Texas and on appeal in the Federal Circuit and that
Imperium again breached and continues to breach the SLA based on Imperium' s
filing in 2020 of an action against Samsung that is cunently pending before the
International Trade Commission (ITC). Imperium accused Samsung in both the
Texas case and the ITC proceeding of infringing patents in a portfolio (the
Licensed Patents) that Imperium licensed to Sony under the SLA. Some of the
Samsung products Imperium accused of infringement in the Texas case and the
ITC proceeding contain Sony products.
Section 2.8 of the SLA is titled "Excluded Parties." The section consists of
three sentences, which I have marked by bracketed numbers for ease of reference:
[1] To the extent any license, covenant or release
conveyed hereunder extends to a Third Party, such rights
only extend to the provision of goods and the exploitation
of goods provided by or to [Sony] and its Affiliates, and
expressly do not extend to the provision of goods to or
the exploitation of goods by any other entity. [2] For
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avoidance of doubt, nothing herein shall be construed to
convey any license, release or other right (other than for
the provision of goods directly or indirectly to, and the
exploitation of goods provided directly or indirectly by,
[Sony] and its Affiliates) to (i) any entity as long as it is a
defendant (other than Sony Mobile) in the civil action
referenced in the first WHEREAS clause of this
Agreement; (ii) the persons listed on Schedule 2.5 hereto
or (iii) Affiliates of any of the foregoing (but Affiliates of
entities identified in Schedule 2.5, shall be Excluded
Parties only if the name of such Affiliate includes the
term set forth in Schedule 2.5 so as to enable ready
identification of such entity as an Affiliate based on the
terms in Schedule 2.5) (each, an "Excluded Party"). [3]
Excluded Party shall not, however, include any Licensee
Third Parties with respect to [Sony's] Products or
Covered Third Party Products (regardless of whether or
not they are included in subsections (i) - (iii) of this
Section 2.8) (by way of example and not of limitation, an
Entity which is a purchaser or end-user of a Sony
imaging sensor is not an Excluded Party with respect to
that Sony imaging sensor).
D.I. 177, Ex. 1 § 2.8.
The first sentence of section 2.8 expressly limits the rights that accompany
any third-party license granted by the SLA to "the provision of goods and the
exploitation of goods provided by or to [Sony] and its Affiliates." The SLA uses
the word "exploitation" four times (three times in section 2.8). It does not use the
word "exploit" and does not define "exploitation." I think it safe to give
"exploitation" its ordinary meaning-i.e., making use of or deriving benefit from.
Accordingly, as applied to this case, I read the first sentence of section 2.8 to mean
that any rights Samsung has as a Licensee Third Party under the SLA would
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extend only to products Samsung makes or sells that have in them or otherwise
make use of a Sony product.
The stated intention of the second sentence of section 2.8 is to clearly
identify ("[fJor avoidance of doubt") parties that are not Licensee Third Parties.
The SLA calls these parties "Excluded Parties" and it identifies in the second
sentence of section 2.8 three categories of Excluded Parties. The second category,
defined in subsection (ii) of section 2.8, is "persons listed on [sic] Schedule 2.5
hereto." Although subsection (ii) refers to "persons," neither Imperium nor
Samsung has suggested that a "person" cannot be an entity; and all the "persons"
listed "on" Schedule 2.5 are in fact entities. One of those entities is Samsung.
Accordingly, if the definition of Excluded Party were limited to the second
sentence of section 2.8, Samsung would be an Excluded Party and would not be a
Licensee Third Party under the SLA.
The definition of Excluded Pmiy, however, is not limited to the second
sentence of section 2.8. The third sentence of section 2.8 explicitly carves out
from the definition of Excluded Party "any Licensee Third Pmiies with respect to
[Sony's] Products or Covered Third Pmiy Products (regardless of whether or not
they are included in subsections (i) - (iii) of this Section 2.8)." Thus, even if a
party is listed in Schedule 2.5, it is not an Excluded Party "with respect to [Sony's]

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Products or Covered Third Pmiy Products" if it is a Licensee Third Party "with
respect to [Sony's] Products or Covered Third Party Products."
The parties dispute whether Samsung is a Licensee Third Party with respect
to Covered Third Party Products. The SLA defines Licensee Third Parties to mean
vendors, suppliers, manufacturers, developers,
distributors, contractors, partners, hosts, dealers,
resellers, retailers, value added resellers (VARs ),
original equipment manufacturers, maintenance and
support service providers, purchasers, customers and
end-users of any [Sony] Products or Covered Third Party
Products but solely with respect to such [Sony] Products
or Covered Third Party Products.
D.I. 177, Ex. 1 at 2. The SLA defines Covered Third Party Products to mean
(i) Third Party products or services designed and
marketed to operate in conjunction with or offered for
sale or sold via a Licensed Product; or (ii) Third Party
products or services that when running, using, operating
within, or otherwise benefitting from the functionality of
a [Sony] Product is [sic] covered by any claim of the
Licensed Patents.
D.I. 177, Ex. 1 at 2. Imperium argued in its summary judgment briefing that it was
entitled to summary judgment because "[t]he undisputed facts show that Samsung
cannot satisfy the second definition of Covered Third Party Products." D.I. 161 at
13.
I note as an initial matter what I conclude is a typographical error in the
second definition. Under the definition, the term Covered Third Party Products
(plural) "means ... (ii) Third Party products [plural] or services [plural] that when

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running, using, operating within, or otherwise benefitting from the functionality of
a [Sony] Product [singular] is [singular] covered by any claim of the Licensed
Patents." D.I. 177, Ex. 1 at 2 (emphasis added). I think it clear that the "is" should
be an "are." The sentence does not make sense if the "is" is paired with the only
singular noun that precedes it (a Sony product). With that correction, the definition
is clear that for Samsung to be a Licensee Third Patty with respect to Covered
Third Patty Products, two questions must be answered with a yes: (1) Do the
Samsung products Imperium accused of infringement in the Texas case and the
ITC proceeding "run[], us[e], operat[e] within, or otherwise benefit[] from the
functionality of a [Sony] Product? And (2) when "running, using, operating
within, or otherwise benefitting from the functionality of [the] [Sony] Product" in
question, are the Samsung products covered by any claim of the Licensed Patents? 1
The parties take opposing positions on these questions. The irony in both
patties' positions should make for an interesting trial. Imperium argues that
Samsung cannot satisfy the second definition of Covered Third Party Products and
thus by logical necessity it impliedly answers "no" to both questions, even though
in both the Texas case and the ITC proceeding Imperium accused Samsung

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I note that, consistent with the language of the SLA' s definition of Covered Third
Party Products, the second question asks whether Samsung's accused products are
covered (or were covered) by any claim of the Licensed Patents, not whether the
accused products are (or were) alleged to be covered by one of the patents' claims.
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products that ran, used, operated within and otherwise benefitted from a Sony
product of infringing claims of the Licensed Patents. Samsung, on the other hand,
insists that the accused products in the Texas case and the ITC proceeding meet the
second definition of Covered Third Party Products and thus by logical necessity it
impliedly answers both questions with a "yes," even though, when pressed by me
at the preliminary injunction argument, it said it was "not prepared to admit" that
its products accused of infringement in the ITC proceeding are covered by any of
the Licensed Patents. See Tr. of Jan. 29, 2021 Hr'g at 95.
Regardless of what Samsung is prepared to admit at this juncture, it has
adduced and brought to my attention record evidence that flatly contradicts
Imperium's assertion that "[t]he undisputed facts show that Samsung cannot satisfy
the second definition of Covered Third Party Products." As the movant for
summary judgment, Imperium bore the burden of establishing the absence of a
disputed material fact. But as I concluded in the Order:
Imperium has admitted that at least some of the Samsung
products that were at issue in the Texas case and are at
issue in the ITC proceeding contain Sony sensors that
practice at least one claim of a Licensed Patent. D.I. 177,
Ex. 16 at SA228-SA229; see also D.I. 177, Ex. 7 at
SA067-SA071; Ex. 15 at SA221-SA225. This
admission provides Samsung with record evidence from
which a jury could reasonably infer that ( 1) when the
Texas case was being litigated (and before any Licensed
Patent was declared invalid) the accused products in that
case were covered by a claim of a Licensed Patent and
(2) the Samsung products at issue in the pending ITC
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proceeding are covered by a claim of a Licensed Patent.
Because record evidence exists to dispute Imperium' s
assertion that Samsung could not satisfy the second
definition of Covered Third Party Products, there is at
least one disputed material fact that precludes the entry of
summary judgment. See Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986) (holding that summary
judgment will not lie if there is a genuine dispute about a
material fact).
D.I. 197 at 1-2. Nothing in Imperium's motion for reconsideration gives me
reason to doubt this conclusion.
Imperium makes two other points that I did not address in my Order but will
do so now for the benefit of the parties as we approach trial. First, Imperium
argues that the example described in the parenthetical clause that concludes the
third sentence of section 2.8 "is illustrative of the situation here" and demonstrates
that "Samsung image sensors are excluded and are not covered by the SLA." D.I.
198 at 4-5. The parenthetical clause reads: "[B]y way of example and not of
limitation, an Entity which is a purchaser or end-user of a Sony imaging sensor is
not an Excluded Party with respect to that Sony imaging sensor." (Emphasis
added.) Thus, contrary to Imperium' s argument, the purchase of a Sony imaging
sensor (or use of a Sony imaging sensor as a component of a product) does not
limit an entity to being a Licensee Third Party only with respect to that Sony
1magmg sensor.

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Second, Imperium makes much of the fact that I made comments during the
preliminary injunction argument to the effect that Imperium would never have
agreed to a release as broad as Samsung was arguing the SLA contained. In
retrospect and with the benefit of time that a preliminary injunction adjudication
does not afford, I believe that my comments may have been ill-advised (though I
would want to hear further argument before making a definitive conclusion about
that). In any event, "a court's findings and conclusions at the preliminary
injunction stage are by nature preliminary and therefore are not binding at
summary judgment." Parkell v. Senato, 639 F. App'x 115, 117 (3d Cir. 2016)
(citations, internal quotation marks, and ellipses omitted). Accordingly, my
comments should be the source of neither comfort nor concern.
NOW THEREFORE, at Wilmington this Seventeenth day of May in 2021,
IT IS HEREBY ORDERED that Imperium's motion for reconsideration (D.I.
198) is DENIED.

UNITED STAESrnsi:C

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