WI-LAN Inc. v. HTC Corporation et al

Filing 290

MEMORANDUM AND OPINION Granting In Part Dell's Motion for Partial Summary Judgement of Non-Infringement (filed in 2:12cv600, #192). Signed by Judge Rodney Gilstrap on 3/25/2013. (sm, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
WI-LAN, INC.,
Plaintiff,
v.
HTC CORPORATION, et al.,
Defendants.

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WI-LAN, INC.,
Plaintiff,
v.
APPLE, INC., et al.,
Defendants.

CASE NO. 2:11-cv-68-JRG
CONSOLIDATED

CASE NO. 2:12-cv-600-JRG

MEMORANDUM OPINION AND ORDER
I.

Introduction

Before the Court is Defendant Dell Inc.’s (“Dell”) Motion for Partial Summary Judgment
of Non-Infringement (2:12-cv-600, Dkt. No. 192).

In its Motion, Dell moves for partial

summary judgment based upon a stipulated dismissal with prejudice of an earlier case involving
the same patents-in-suit and certain overlapping products. Id. After considering the parties’
written submissions, the Court GRANTS-IN-PART Dell’s Motion to the extent that it applies to
overlapping products in existence on or before March 11, 2011 and DENIES-IN-PART Dell’s
Motion to the extent that it (1) is applies to overlapping products that came into existence after
March 11, 2011 and (2) to the extent that it applies to non-overlapping products, regardless of the
dates they came into existence.

II.

Facts and Procedural Background

In this patent infringement action, Plaintiff Wi-LAN, Inc. (“Wi-LAN”) accuses Dell of
infringement of U.S. Patent Nos. 5,282,222 and RE37,802 (“the ‘222 Patent” and “the ‘802
Patent”). This is not the first time that Wi-LAN has sued Dell for infringing these patents. In
Wi-LAN Inc. v. Dell Inc. et al., 2:07-cv-473 (E.D. Tex.) (“Wi-LAN I”), Wi-LAN accused Dell of
infringing three patents, including the ‘222 Patent and the ‘802 Patent. (Wi-LAN I, Am. Compl.
¶¶ 18-19).

Dell and Wi-LAN litigated Wi-LAN I until the eve of trial, and then settled

immediately prior to jury selection. In resolving Wi-LAN I, Wi-LAN and Dell filed a Stipulation
and Joint Motion to Dismiss With Prejudice on March 11, 2011, which was granted by this
Court. (Wi-LAN I, Dismissal Order, Dkt. No. 1139). The terms of the Dismissal Order stated:
PURSUANT TO STIPULATION, IT IS HEREBY ORDERED
that:
(1) All claims against Dell presented by Wi-LAN’s Complaint and all
of Dell’s counterclaims shall be dismissed with prejudice;
(2) Wi-LAN reserves all rights to assert the Patents-in-Suit with
respect to infringement occurring after March 11, 2011 and Dell
expressly reserves all counterclaims or defenses as to any future
actions by Wi-LAN against Dell; and
(3) Wi-LAN and Dell shall each bear their own costs and attorneys’
fees.
(Id. at 1.)
The present action was filed by Wi-LAN on September 1, 2011 (“Wi-LAN II”). In the
current Complaint, Wi-LAN again accuses Dell of infringing the ‘222 Patent and the ‘802 Patent.
(Am. Compl. ¶ 20.) In addition to several of the accused products from Wi-LAN I, Wi-LAN in
its Complaint in Wi-LAN II identifies several newly accused products, such as Dell cellular
telephones, tablets, and wireless broadband cards. (2:12-cv-600, Dkt. No. 192, at 4.) However,
Wi-LAN also accuses several Dell products that were previously accused of infringing the ‘222
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and ‘802 Patents in Wi-LAN I (the “Overlapping Accused Products”). Id. The parties’ dispute
before the Court in this motion relates to whether Wi-LAN’s claims against the Overlapping
Accused Products are barred under the agreed dismissal order pursuant to the doctrine of res
judicata.
III.

Legal Standard

Summary judgment is appropriate when “the pleadings, the discovery and disclosure
materials on file, and any affidavits show that there is no genuine issue as to any material fact
and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c)(2). A
genuine issue of material fact exists if “the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In
determining summary judgment motions, courts must review “facts … in the light most
favorable to the nonmoving party only if there is a ‘genuine’ dispute as to those facts.” Scot v.
Harris, 550 U.S. 372, 380 (2007). The party seeking summary judgment has the burden of
establishing the lack of any genuine issue of material fact. Celotex v. Catrett, 477 U.S. 317, 323
(1986).
Under the doctrine of res judicata claim preclusion, a plaintiff’s cause of action, once
decided on the merits, may not be relitigated. “The general concept of claim preclusion is that
when a final judgment is rendered on the merits, another action may not be maintained between
the parties on the same ‘claim,’ and defenses that were raised or could have been raised in that
action are extinguished.” Hallco Mfg. Co., Inc. v. Foster, 356 F.3d 1290, 1294 (Fed. Cir. 2001).
As described by the Supreme Court:
Simply put, the doctrine of res judicata provides that when a final
judgment has been entered on the merits of a case, “[i]t is a finality
as to the claim or demand in controversy, concluding parties and
those in privity with them, not only as to every matter which was
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offered and received to sustain or defeat the claim or demanded,
but as to any other admissible matter which might have been
offered for that purpose.” Cromwell v. County of Sac, 94 U.S. 351,
352 (1876). The final “judgment puts an end to the cause of
action, which cannot again be brought into litigation between the
parties upon any ground whatsoever.” Commissioner v. Sunnen,
333 U.S. 591, 597 (1948).
Nevada v. United States, 463 U.S. 110, 129-30 (1983). Consistent with the Nevada decision, the
Fifth Circuit applies claim preclusion where: “(1) the parties are identical in the two actions; (2)
the prior judgment was rendered by a court of competent jurisdiction; (3) there was a final
judgment on the merits; and (4) the same claim or cause of action is involved in both cases.”
Oreck Direct, LLC v. Dyson, Inc., 560 F.3d 398, 401 (5th Cir. 2009) (citation omitted).
Although res judicata prevents parties form re-litigating essentially the same claim that
has been finally determined, there are at least two exceptions to that principle, as shown in
RESTATEMENT (SECOND) OF JUDGMENT § 26 (hereinafter “Restatement § 26”). Specifically, res
judicata or claim preclusion does not apply in the following situations:
(a) The parties have agreed in terms or in effect that the plaintiff may split his claim, or the
defendant has acquiesced therein; or
(b) The court in the first action has expressly reserved the plaintiff’s right to maintain the
second action.
Restatement § 26(1)(a) & (b).
The Court finds that these exceptions apply in the present case. Since a main purpose of
claim preclusion is to protect the defendant from being harassed by repetitive actions, claim
preclusion is not applicable where the defendant consents “in express words or otherwise” to the
splitting of the claim.

Restatement § 26, cmt. A.

In fact, the parties may enter into an

agreement, not directed to a particular contemplated action, “which may have the effect of

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preserving a claim that might otherwise be superseded by a judgment.” Id.; see also Pactiv
Corp. v. Dow Chem., Co., 449 F.3d 1227, 1231 (Fed. Cir. 2006).
IV.

Analysis

Dell contends that it is entitled to partial summary judgment under the doctrine of res
judicata such that Wi-LAN is precluded from maintaining this action with respect to the
Overlapping Accused Products that were previously accused of infringing the same patents in
WI-LAN I. (Dkt. No. 192, at 1.) Dell argues that the March 23, 2011 Dismissal Order form WiLAN I constitutes a judgment on the merits because it recites that “[a]ll claims against Dell
presented by Wi-LAN’s Complaint and all of Dell’s counterclaims shall be dismissed with
prejudice.” (Wi-LAN I Dismissal Order at 1.) Further, Dell contends that the Dismissal Order
has the effect of a trial on the merits and such “has already determined, for all time, that the
Overlapping Dell Products do not infringe the Asserted Patents.” (Dkt. No. 192, at 11) (citing
Fernandez-Montes v. Allied Pilot Assn., 987 F.2d 278, 284 n.8 (5th Cir. 1993) (“A dismissal
which is designated with prejudice is normally an adjudication on the merits for purposes of res
judicata.”).
Wi-LAN responds that Dell’s motion should be denied because Dell fails to show that the
structures accused in the Dell devices in Wi-LAN I are the same as in the present case. (Dkt. No.
216 at 1.)

Wi-LAN argues that Dell’s accused products are “highly configurable” or

“customizable” by the customer and that the Overlapping Products accused in this case are not
the “same” as the products in Wi-LAN I, even if the products share the same product name. Id.
Wi-LAN also argues that summary judgment is improper because the dismissal order in Wi-LAN
I expressly reserved Wi-LAN’s “rights to assert the Patents-in-Suit with respect to infringement
occurring after March 11, 2011.” (Wi-LAN I Dismissal Order).

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In this case, the Dismissal Order entered in Wi-LAN I contains a clear reservation of all of
Wi-LAN’s “rights to assert the Patents-in-Suit with respect to infringement occurring after
March 11, 2011.” Id. The language of this express reservation is sufficient to defeat preclusion
based upon res judicata, but only to the extent such claims relate to Dell products alleged to have
infringed the ‘222 and ‘802 Patents on or after March 11, 2011. The Federal Circuit adheres to
the general principle that a party may expressly reserve in a judgment the right to litigate some or
all issues that would have otherwise been barred between the same parties. See Hallco Mfg. Co.
v. Foster, 256 F.3d 1290, 1297 (Fed. Cir. 2001).
As noted above, Restatement § 26(1)(b) also provides an exception to claim preclusion
when a court order in the first action expressly reserves a party’s right to maintain the second
action. See Ind. Mich. Power v. U.S., 422 F.3d 1369, 1378 (Fed. Cir. 2005). Dell misconstrues
the facts and law and it clearly overreaches when it argues that the Wi-LAN II Dismissal Order
“has already determined, for all time, that the Overlapping Dell Products do not infringe the
Asserted Patents.” (Dkt. No. 192, at 11.) The Wi-LAN I dismissal contains an express carve-out
provision whereby “Wi-LAN reserves all rights to assert the Patents-in-Suit with respect to
infringement occurring after March 11, 2011.” (Wi-LAN I Dismissal Order). This express
stipulation by and between the parties – and adopted by the Court – defeats all of Dell’s res
judicata arguments regarding infringement occurring after March 11, 2011, regardless of
whether the same family of products (e.g., Dell Inspiron Notebook Computers) that are accused
in this case were also accused of infringement in Wi-LAN I.
V.

Conclusion

The Court rules as a matter of law in this case that Wi-LAN’s claims regarding the
Overlapping Accused Products are barred to the extent that they relate to infringing activity

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occurring on or before March 11, 2011. Dell's Motion for Summary Judgment is Granted
to this extent only. However, the Court rules as a matter of law that such claims as to the Overlapping
.
Accused Products are not barred to the extent they relate to infringing activity occurring after March
11, 2011.

Further, Dell’s Motion for summary judgment is Denied as to all Non-Overlapping Accused

Products, regardless of when they are alleged to have infringed the ’222 and ‘802 Patents.
Therefore, Dell’s Motion for Summary Judgment is GRANTED-IN-PART and
DENIED-IN-PART to the extent and as described above.
SIGNED this 19th day of December, 2011.
So ORDERED and SIGNED this 25th day of March, 2013.

____________________________________
RODNEY GILSTRAP
UNITED STATES DISTRICT JUDGE

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