Eolas Technologies Incorporated v. Adobe Systems Incorporated et al

Filing 1028

Staples, Inc.'s Third Amended Answer, Defenses and Counterclaims ANSWER to 891 Amended Complaint,, COUNTERCLAIM against All Plaintiffs by Staples, Inc.. (Attachments: # 1 Exhibit Third Amended Answer (pages 16-17), # 2 Exhibit Third Amended Answer (pages 18 - 27), # 3 Exhibit Third Amended Answer (pages 28 - 33), # 4 Exhibit Third Amended Answer (pages 34 - 48), # 5 Exhibit Third Amended Answer (pages 49 - 69))(Richardson, Michael)

IN THE T]NITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF TEXAS
TYLER DIVISION
EOLAS TECHNOLOGIES
TNCORPORATED,

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$
$

Plaintiff,
v.

ADOBE SYSTEMS INC.,
ET AL.,

$
$
$
$
$

C.A. NO. 6:09-CY-446

ruDGE LEONARD E. DAVIS
JURY TRIAL DEMANDED

$
$

Defendants.

$

$

STAPLES.INC.OS THIRD AMENDED ANSWER. DEFENSES. A¡ID
COTJNTERCLAIMS
Defendant Staples, Inc. ("Staples") files this Third Amended Answer to Plaintiff Eolas

Technologies Incorporated's ("Eolas"

or "Plaintiff') Third Amended Complaint for

Patent

Infringement ("Amended Complaint") and asserts counterclaims, as follows:

PARTIES

1.
of the

Staples lacks knowledge and information sufficient to form a belief as to the truth

allegations

in Paragraph 1 of the Amended

Complaint and therefore denies those

allegations.

2.
of the

Staples lacks knowledge and information sufficient to form a belief as to the truth

allegations

in Paragraph 2 of the Amended

Complaint and therefore denies those

allegations.

3.

Paragraph 3 of the Amended Complaint is not directed at Staples. To the extent

any response is necessary, Staples lacks knowledge and information sufficient to form a belief as
to the truth of the allegations of Paragraph 3 and therefore denies those allegations.

4.

Paragraph 4 of the Amended Complaint is not directed at Staples. To the extent

any response is necessary, Staples lacks knowledge and information sufficient to form a belief as

to the truth of the allegations of Paragraph 4 and therefore denies those allegations.

5.

Paragraph 5 of the Amended Complaint is not directed at Staples. To the extent

any response is necessary, Staples lacks knowledge and information sufficient to form a belief as

to the truth of the allegations of Paragraph 5 and therefore denies those allegations.

6.

Paragraph 6 of the Amended Complaint is not directed at Staples. To the extent

any response is necessary, Staples lacks knowledge and information sufficient to form a belief as

to the truth of the allegations of Paragraph 6 and therefore denies those allegations.

7.

Paragraph 7 of the Amended Complaint is not directed at Staples. To the extent

any response is necessary, Staples lacks knowledge and information sufficient to form a belief as

to the truth of the allegations of Paragraph 7 and therefore denies those allegations.

8.

Paragraph 8 of the Amended Complaint is not directed at Staples. To the extent

any response is necessary, Staples lacks knowledge and information sufficient to form a belief as

to the truth of the allegations of Paragraph 8 and therefore denies those allegations.

9.

Paragraph 9 of the Amended Complaint is not directed at Staples. To the extent

any response is necessary, Staples lacks knowledge and information sufficient to form a belief as

to the truth of the allegations of Paragraph 9 and therefore denies those allegations.

10.

Paragraph 10 of the Amended Complaint is not directed at Staples. To the extent

any response is necessary, Staples lacks knowledge and information sufficient to form a belief as

to the truth of the allegations of Paragraph 10 and therefore denies those allegations.

11.

Staples admits the allegations of Paragraph 11 of the Amended Complaint.

12.

Paragraph 12 of the Amended Complaint is not directed at Staples. To the extent

any response is necessary, Staples lacks knowledge and information sufficient to form a belief as

to the truth of the allegations of Paragraph12 andtherefore denies those allegations.

13.

Paragraph 13 of the Amended Complaint is not directed at Staples. To the extent

any response is necessary, Staples lacks knowledge and information sufficient to form a belief as

to the truth of the allegations of Paragraph 13 and therefore denies those allegations.

JURISDICTION Ai\D \rEI\{UE

14.

Staples refers to and incorporates herein its previous answers to Paragraphs 1-13.

15.

Staples admits that Paragraph 15 of the Amended Complaint alleges that this is an

action arising under the patent laws of the United States, Title 35 of the United States Code, but
denies the merits of such action. Staples admits that this Court has subject matter jurisdiction
pursuant to 28 U.S.C. $$ 1331 and 1338(a).

16.

The allegations contained in paragraph 16 constitute conclusions of law to which

no answer is required.

17.

The allegations contained in paragraph 17 constitute conclusions of law to which

no answer is required.

ANSWER TO ALLEGED INFRINGEMENT OF
U.S. PATENT NOS. 5.838.906 and 7.599.985

18.

Staples refers to and incorporates herein its previous answers to Paragraphs 1-17.

19.

Staples admits that U.S. Patent

No. 5,838,906 (the "'906 Patent")

entitled

"Distributed hypermedia method for automatically invoking external application providing
interaction and display of embedded objects within a h¡permedia document," and U.S. Patent

No. 7,599,985 (the "'985 Patent") entitled "Distributed h¡permedia method and system for
automatically invoking external application providing interaction and display

of

embedded

objects within a hlpermedia documenf'\ryere issued by the U.S. Patent and Trademark Ofñce on

November 11,1998 ('906 Patent) and October 6, 2009 ('985 Patent). Staples lacks knowledge

and information sufficient

to form a belief as to the truth of the remaining

allegations

of

Paragraph 19 of the Amended Complaint, and therefore denies them.

20.

Staples lacks knowledge and information sufficient to form a belief as to the truth

of the allegations of

Paragraph 20

of the Amended Complaint and therefore

denies those

allegations.

21.

Paragraph 21 of the Amended Complaint is not directed at Staples. To the extent

any response is necessary, Staples lacks knowledge and information sufficient to form a belief as

to the truth of the allegations of Paragraph2I and therefore denies those allegations.

22.

Paragraph 22 of the Amended Complaint is not directed at Staples. To the extent

any response is necessary, Staples lacks knowledge and information sufficient to form a belief as

to the truth of the allegations of Paragraph22 and therefore denies those allegations.

23.

Paragraph 23 of the Amended Complaint is not directed at Staples. To the extent

any response is necessary, Staples lacks knowledge and information sufficient to form a belief as

to the truth of the allegations of Paragraph23 and therefore denies those allegations.

24.

Paragraph 24 of the Amended Complaint is not directed at Staples. To the extent

any response is necessary, Staples lacks knowledge and information sufficient to form a belief as

to the truth of the allegations of Paragraph24 and therefore denies those allegations.

25.

Paragraph 25 of the Amended Complaint is not directed at Staples. To the extent

any response is necessary, Staples lacks knowledge and information suffrcient to form a belief as

to the truth of the allegations of Paragraph 25 and therefore denies those allegations.

26.

Paragraph 26 of the Amended Complaint is not directed at Staples. To the extent

any response is necessary, Staples lacks knowledge and information sufficient to form a belief as

to the truth of the allegations of Paragraph26 a¡d therefore denies those allegations.

27.

Paragraph 27

of the Amended Complaint is not directed at Staples. To the extent

any response is necessary, Staples lacks knowledge and information sufficient to form a belief as

to the truth of the allegations of Paragraph2T and therefore denies those allegations.

28.

Paragraph 28 of the Amended Complaint is not directed at Staples. To the extent

any response is necessary, Staples lacks knowledge and information sufficient to form a belief as

to the truth of the allegations of Paragraph 28 and therefore denies those allegations.

29.

Staples denies the allegations of Paragaph 29 of the Amended Complaint.

30.

Paragraph 30 of the Amended Complaint is not directed at Staples. To the extent

any response is necessary, Staples lacks knowledge and information sufficient to form a belief as

to the truth of the allegations of Paragraph 30 and therefore denies those allegations.

31.

Paragraph 31 of the Amended Complaint is not directed at Staples. To the extent

ariy response is necessary, Staples lacks knowledge and information sufficient to form a belief as

to the truth of the allegations of Paragraph 31 and therefore denies those allegations.

32.

Staples admits that following coÍtmencement of this case it obtained knowledge

of the '906 patent and denies the remaining

allegations

of

Paragraph 32

of the Amended

Complaint. V/ith respect to the other Defendants, Staples lacks knowledge and information
sufficient to form a belief as to the truth of the allegations of Paragraph 32 of the Amended
Complaint and therefore denies those allegations.

33.

With respect to Staples, Staples denies the allegations of Paragraph 33 of the

Amended Complaint. With respect to the other Defendants, Staples lacks knowledge and

information sufficient to form a belief as to the truth of the allegations of Paragraph 33 and
therefore denies those allegations.

34.

V/ith respect to Staples, Staples denies the allegations of Paragraph 34 of the

Amended Complaint. With respect

to the other Defendants,

Staples lacks knowledge and

information sufficient to form a belief as to the truth of the allegations of Paragraph 34 arñ
therefore denies those allegations.

35.

With respect to Staples, Staples denies the allegations of Paragraph 35 of the

Amended Complaint. With respect to the other Defendants, Staples lacks knowledge and
information sufficient to form a belief as to the truth of the allegations of Paragraph 35 and
therefore denies those allegations.

ANSWER TO PRAYER FOR RELIEF

36.

Staples denies that Plaintiff

is

entitled

to any of the relief

requested

in the

Amended Complaint for Patent Infringement.
DEFENSES

Without conceding that any of the following necessarily must be pled as an affirmative
defense, or that any of the following is not already at issue by virtue of the foregoing denials, and

without prejudice to Staples' right to plead additional defenses as discovery into the facts of the
matter may warrant, Staples hereby asserts the following defenses. Staples specifically reserves
the right to amend its defenses further as additional information is developed through discovery
or otherwise.

FIRST DEFENSE
Staples does not infringe and has not infringed (either directly, contributorily, or by
inducement) any claim
doctrine of equivalents.

of the '906 Patent and the '985 Patent either literally or under the

SECOND DEFENSE
The claims of the '906 Patent and the '985 Patent are invalid and/or unenforceable for

failing to meet the requirements of one or more sections of Title 35, United States
including at least sections 102,103, and/or

Il2,

arrd one

Code,

or more sections of Title 37, Code of

Federal Regulations.

THIRD DEFENSE
Plaintiff

s claim

for damages is limited in time by 35 U.S.C. $ 286.

FOURTII DEF'ENSE
The Amended Complaint fails to plead, and Plaintiff cannot carry its burden to prove,
compliance with, or an exception to, the notice requirements of the patent laws, Title 35 of the

United States Code, including, but not limited to, 35 U.S.C.
damages,

if

ç

287, and therefore alleged

any, predating Plaintiff s assertion of the '906 Patent and the '985 Patent against

Staples are not recoverable by Plaintiff.

FIF'TH DEF'ENSE

Plaintiff s Amended Complaint fails to state a claim for which relief can be granted.
SIXTH DEFENSE
The claims stated in the Amended Complaint are bared by the doctrines of laches,
estoppel, or other equitable defenses.

SEVENTII DEFENSE
PlaintifPs claims for relief are limited by patent exhaustion andlor implied license.

EIGIITII DEFENSE
Plaintiff is estopped from asserting

a

construction of any claim of the '906 Patent andlor

the '985 Patent in any manner inconsistent with prior positions taken before the United States
Patent and Trademark Office or any court of law.

NINTII DEFENSE
Each and every claim of the '90ó and '895 Patents is unenforceable due to inequitable
conduct and"ior unclean hands. Staples incorporates by reference the allegations contained in
Paragraphs 17 to 268 and282 to 307 of its Counterclaims.

COUNTERCLAIMS
In further response to the Complaint by Eolas, Staples asserts the following
Counterclaims against Eolas:

PARTIES

1.

Counterclaimant Staples Inc. ("Staples") is a corporation organized and existing

under the laws of Delaware with a principal place of business at 500 Staples Drive, Framingham,
Massachusetts 01702.

2.

On information and belief, Counterclaim-Defendant Eolas Technologies, Inc.

("Eolas") is

a

corporation organized and existing under the laws of Texas with a principal place

of business in at 313 East Charnwood Street, Tyler, Texas 75701.

JURISDICTION AND VENUE

3.

These Counterclaims arise under the patent laws of the United States, 35

I

e/. seq., and the Declaratory Judgment Act, 28 U.S.C. $$ 2201-02. The Court has

U.S.C. $

subject matter jurisdiction over these Counterclaims pursuant to 28 U.S.C. $$ 1331, 1338, and

2201-02.

4.

This Court has personal jurisdiction over Eolas because Eolas is a corporation

organized and existing under the laws of Texas, Eolas has its principal place of business in this

district, and by virtue of Eolas filing the Complaint in this action in this Court.

5.

Venue with respect to these Counterclaims in this district is met under 28 U.S.C.

$$ 1391 (b) and (c) because Eolas is a corporation subject to the personal jurisdiction of this
Court..

COI]NT

6.

I

Staples incorporates by reference the allegations contained in Paragraphs

I to 5 of

its Counterclaims.

7.

An actual controversy exists between the parties with respect to the alleged

infringement'906 Patent.

8.

Although Eolas alleges in its Complaint that Staples has directly and/or indirectly

infringed the claims of the '906 Patent, Staples has not directly and/or indirectly infringed, and
does not directly and/or indirectly infünge, any claim of the '906 Patent.

9.

A judicial determination of the respective rights of the parties with respect to the

infringement of the claims of the '906 Patent is now necessary and appropriate under 28 U.S.C.
ç 2201.

COUNT

10.

II

Staples incorporates by reference the allegations contained in Paragraphs

I to 5 of

its Counterclaims.
I

l.

An actual controversy exists between the parties with respect to the invalidity of

the'906 Patent.

12.

Although Eolas alleges in its Complaint that the '906 Patent was duly and legally

issued by the United States Patent and Trademark Office after

fulI and fair examination, each and

every claim of the '906 patent is invalid for failure to comply with the patent laws, including, but

not limited to, 35 u.s.c. $$ 101, 102, T03,I12, and

ll3.

13.

A judicial determination of the respective rights of the parties with respect to the

validity of the claims of the '906 patent is now necessary and appropriate under 28 U.S.C.
ç 2201.
COT]NT

14.

III

Staples incorporates by reference the allegations contained in Paragraphs

I to 5 of

its Counterclaims.

15.

An actual controversy exists between the parties with respect to the

unenforceability of the '906 Patent.

16.

Although Eolas alleges in its Complaint that the '906 Patent was duly and legally

issued by the United States Patent and Trademark Office after

full

and fair examination, each and

every claim of the '906 Patent is unenforceable due to inequitable conduct before the United
States Patent and Trademark Office.

L

Overview

A.
17.

Doyle and Krueger had a duty of candor and good faith in
dealing with the Patent Offïce

Michael D. Doyle ("Doyle") is one of the named inventors of the patents-in-suit,

U.S. Patent Nos. 5,838,906 and 7,599,985.

18.

Charles E. Krueger ("Krueger") was the patent prosecutor for the patents-in-suit,

U.S. Patent Nos. 5,838,906 and 7,599,985.

19.

Doyle, as a named inventor, and Krueger, as the patent prosecutor, each had a

duty of candor and good faith in dealing with the United States Patent and Trademark Office
("the Patent Office") during prosecution of the '906 and '985 patents.

20.

Doyle and Krueger's duty of candor and good faith also existed during the

reexaminations of the'906 patent.

10

21.

The duty of candor and good faith owed by Doyle and Krueger included a duty to

disclose to the Patent Office all information known to that individual to be material to

patentability as definedín37 C.F.R. $ 1.56.

B.
22.

Doyle had a financial incentive to deceive the Patent Offïce

Doyle had a financial incentive to deceive the Patent Office during prosecution

of

the '906 patent, during the reexaminations of the '906 patent, and during the prosecution of the
'985 patent.

23.

On information and belief, Doyle worked at the University of California, San

Francisco when he allegedly conceived of the inventions claimed in the '906 and '985 patents.

24.

The '906 and '985 patents are owned by The Regents of the University

of

California.

25.

Doyle and his co-inventors are entitled to receive

a

portion of any royalties paid to

The Regents of the University of California related to the '906 andlor'985 patents.

26.

Doyle is a founder of the plaintiff in this action, Eolas Technologies Incorporated

("Eolas").

27.

On information and belief, Doyle quit his job to found Eolas, and personally

invested time and money in Eolas.

28.

Doyle has had a financial interest in Eolas since at least August21,7995.

29.

On or about August 27,1995, Eolas acquired rights to the patent application that

matured into the '906 patent.

30.

On information and belief, Doyle was personally involved in the prosecution

of

the '906 patent, the reexaminations of the '906 patent, and the prosecution of the'985 patent at
the same time that he had a financial interest in Eolas and a financial interest in any royalties on
the '906 and/or'985 patents paid to The Regents of the University of California.
11

C.
31.

Doyle and Krueger breached their duty of candor and good
faith with an intent to deceive the Patent Office

As explained in more detail below, Doyle and Krueger breached the duty

of

candor and good faith in dealing with the Patent Office. Doyle and Krueger failed to disclose

material information and made affi.rmative misrepresentations of material facts. Doyle and
Krueger did so with knowledge of the information they withheld, with knowledge of the falsity
of their misrepresentations, and with the specific intent to deceive the Patent Office. The
circumstances of Doyle and Krueger's actions confirm an intent to deceive the Patent Office.

II.
32.

Doyle and Krueger failed to disclose material information related to
the ViolaW'W"W browser

As explained in more detail below, Doyle and Krueger breached the duty of

candor and good faith in dealing with the Patent Office by failing to disclose material

information related to the ViolaW.WW browser. On information and belief, Doyle and Krueger
did so with knowledge of the information they withheld and with the specific intent to deceive
the Patent Office. The circumstances of Doyle and Krueger's actions confirm an intent to
deceive the Patent Office.

33.

As explained in more detail below, the ViolaWWW browser was material to the

patentability of all the claims of the '906 patent because it disclosed limitations that the Patent
Office believed were missing in the prior art, including interactivity embedded wíthin the
webpage (as opposed to a separate window), automatic invocation of the interactivity (as
opposed to requiring a mouse click to enable the interactivity), and use of a separate executable

application (as opposed to a script). Doyle and Krueger knew that the ViolaWWW browser
disclosed these limitations, yet they withheld this information from the Patent Office at the same

time that they argued to the Patent Office that these limitations were missing from the prior art.

t2

A.

Doyle knew about the Viola\ilWW browser before the
application for his '906 patent was filed on October 17r1994

34.

The application for the '90ó patent was filed on October 17,1994.

35.

Thus the critical date for purposes of 35 U.S.C. $ 102(b) was October 17, 1993.

Any printed publication describing the claimed invention, or any public use of the claimed
invention in the United States, before October 17,1993, would be an absolute bar to
patentability.

36.

On information and beliet Doyle knew before the application for the '906 patent

was filed that an individual in Northern California named Pei Wei had developed a browser
called "ViolaWW-W" before the critical date of October 17,7993.

37.

On May 20,1994, David Raggett sent an e-mail to Doyle regarding object level

embedding in web browsers. úr this email, Raggett advised Doyle that he "might want to look at

Viola which fRaggett] seønfs] to remember takes advantage of the tk tool kit to provide a certain
level of embedding."

38.

Raggett further advised Doyle that he could "find a pointer to Viola off the CERN

WWW project page."

39.

Later on the same day May 20,1994, David Martin, who was one of Doyle's

colleagues at the University of California in San Francisco and who was also named as an

inventor on the '906 patent, responded to a posting from Pei Wei on a publicly-accessible e-mail
distribution list. Pei Wei's post had included the following statements: "fn order to do better
testings and support of ViolaWWW, I would like to solicit donations for guest accounts on the

major Unix platfoflns. . . . So, if your organization has some CPU crunchies to spare, good
network connectivit¡ don't have a firewall, want to help viola development, etc, please drop me
a

note. Based mostly on network connectivity,

I'll
13

select one (maybe two) offer(s) for each

different platform." David Martin's response to Pei Wei included the following statements:
am

"I

willing to discuss providing accounts on SGI IRIX 5.x, Solaris 2.x, AlphaOSF/l. Please let

me know what you require in terms of disk space, compiler, utilities, etc..."

40.

Thus by May 20, 1994

patent was filed

41.

-

-

several months before the application for the '906

Doyle knew about Pei Wei's ViolaWWW browser.

On information and belief, Doyle did not disclose this information to Krueger or

Charles J. Kulas ("Kulas"), the patent prosecutor that filed the '906 patent application, prior to
the filing of the application that lead to the '906 patent.

42.

On information and belief, Doyle learned even more about the ViolaWWW

browser before the application for the '906 patent was filed.

43.

On August 30,1994, at approximately 11:15 p.m. Califomia time, Doyle posted a

"Press Release" to the publicly-accessible

VRML e-mail distribution list that included the

following statements:
Researchers at the U. of California have created software

for

embedding interactive program objects within hypermedia
documents. Previously, object linking and embedding (OLE) has
been employed on single machines or local area networks using
MS Windows -TM-. This UC software is the first instance where
program objects have been embedded in documents over an open
and distributed hlpermedia environment such as the World Wide
Web on the Internet.

44.

On August 31,7994, at approximately 6:52 p.m. California time, Pei Wei posted a

rssponse on the publicly-accessible

VRML e-mail distribution list that included the following

statements: "I don't think this is the first case of program objects embedded in docs and
transported over the WWW. ViolaW-WW has had this capabilities for months and months now."

45.

Pei Wei's response included a link to an FTP site where anyone "interested

leaming more about how violaWWW does this embedded objects thing can get

t4

a

paper on

in

it."

46.

The paper cited by Pei Wei was entitled "A Brief Overview of the VIOLA

Engine, and its Applications."

47.

The paper cited by Pei Wei was dated August 16,1994

before the application for the '906 patent was

48.

filed ("August

-

over two months

1994 Viola Paper").

The paper cited by Pei Wei included the following statements and graphics:

Embedding mini applications

Viola's language and toolkit allows ViolaWWW to render
documents with embedded viola objects. Although the viola
language is not part of the World Wide Web standard (yet?),
having this capability provides a powerful extension mechanism to
the basic HTML.
For example, if the HTML's input-forms do not do exactly what
you want, you have the option to build a mini customized inputform application. And it could have special scripts to check for the
validity of the entered data before even making a connection to the
server.
Or, if your document needs to show data that is continuously
updated, you could build a small application such as this which
display the CPU load of a machine. Note that only the graph field
is continuously updated, but not the rest of the document.

tinuously Updating Field
Activity monitor:
The absve monitor application maintains a continuous nefi¡/ork connection to a
server to listen to a data stream,
Other possible applications include front-ends to the stock market
quotes, new wire updates, tele-video style service, etc.

Here's another example of a mini interactive application that is embedded into a
HTML document. It's a chess board in which the chess pieces are actually active
and movable. And, illegal moves can be checked and denied straight off by the
15