Eolas Technologies Incorporated v. Adobe Systems Incorporated et al

Filing 1339

TRIAL BRIEF REGARDING THE ADMISSIBILITY OF LICENSES IN THE VALIDITY TRIAL by Eolas Technologies Incorporated, The Regents of the University of California. (McKool, Mike)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
TYLER DIVISION
EOLAS TECHNOLOGIES
§
INCORPORATED and THE REGENTS
§
OF THE UNIVERSITY OF CALIFORNIA §
§
Plaintiffs,
§
§
vs.
§
§
ADOBE SYSTEMS INC., AMAZON.COM §
INC., CDW CORPORATION, CITIGROUP §
INC., THE GO DADDY GROUP, INC.,
§
GOOGLE INC., J.C. PENNEY
§
CORPORATION, INC., STAPLES, INC.,
§
YAHOO! INC., and YOUTUBE, LLC.,
§
§
Defendants.
§

CASE NO. 6:09-CV-00446-LED

JURY TRIAL

PLAINTIFFS’ TRIAL BRIEF REGARDING THE
ADMISSIBILITY OF LICENSES IN THE VALIDITY TRIAL

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Plaintiffs The Regents of the University of California (“University of California”) and
Eolas Technologies Incorporated (“Eolas”) (collectively “Plaintiffs”) submit this Trial Brief
Regarding the Admissibility of Settlement Licenses in the Validity Trial and in support thereof
would show as follows:
I.

ARGUMENT
The Federal Circuit has plainly and unambiguously held that “[s]econdary considerations

of non-obviousness must be considered when present.” Geo M. Martin Co. v. Alliance Mach.
Sys. Int’l LLC, 618 F.3d 1294, 1304 (Fed. Cir. 2010) (emphasis added). “[S]econdary
consideration evidence is not just a cumulative or confirmatory part of the obviousness calculus
but constitutes independent evidence of nonobviousness.” Pressure Prods. Med. Supplies, Inc. v.
Greatbatch Ltd., 599 F.3d 1308, 1319 (Fed. Cir. 2010) (internal citation omitted). Licensing is a
well-recognized secondary consideration of nonobviousness that courts—including the Federal
Circuit and the Eastern District of Texas—have admitted into evidence even when the licenses
arose out of litigation.
There can be no doubt that licensing to the patents-in-suit is a secondary consideration of
nonobviousness. The Federal Circuit has repeatedly held so. E.g., Star Sci., Inc. v. R.J. Reynolds
Tobacco Co., 655 F.3d 1364, 1376 (Fed. Cir. 2011) (holding that “the record contains many
secondary considerations that support nonobviousness,” for example, “as evidenced by Brown &
Williamson’s licenses, which cost millions of dollars, Williams’ invention had achieved
considerable market acceptance and commercial success”); Rothman v. Target Corp., 556 F.3d
1310, 1322 (Fed. Cir. 2009) (citing with approval the district court’s instructions that “the jury
‘must consider’ objective indicia of nonobviousness, such as …licensing activity” and that “[i]t
is inappropriate to disregard any evidence relating to the issue of obviousness”). District courts
have relied on such holdings in considering licenses in their nonobviousness determinations.

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E.g., DataTreasury Corp. v. Wells Fargo & Co., No. 2:06-CV-72 DF, 2010 U.S. Dist. LEXIS
143587, at *9 (E.D. Tex. Sept. 27, 2010) (“Licensing, longfelt need, and copying are all
secondary considerations probative of non-obviousness”.); Aventis Pharma S.A. v. Hospira, Inc.,
743 F. Supp. 2d 305, 344 (D. Del. 2010) (“Secondary considerations can include evidence of …
licenses showing industry respect for the invention”) (internal citations omitted); Murata Mfg.
Co., Ltd. v. Bel Fuse, Inc., 2004 U.S. Dist. LEXIS 9771, at *12-13 (N.D. Ill. May 26, 2004)
(“Courts have considered the following as relevant to and probative of commercial success: …
evidence that the applicant has been able to license the invention”); Surgical Dynamics, Inc. v.
Karlin Tech., Inc., No. CV 95-0258-GHK(BQRx), 1999 U.S. Dist. LEXIS 21932, at *11 (C.D.
Cal. Aug. 11, 1999) (“Licenses taken under the patent in suit may constitute evidence of
nonobviousness.”).
Furthermore, admitting into evidence licenses that arose out of litigation is directly in line
with precedent in this and other district courts. Particularly instructive in this district is the
holding in DataTreasury Corp. v. Wells Fargo & Co., No. 2:06-CV-72 DF, 2010 U.S. Dist.
LEXIS 25291 (E.D. Tex. Mar. 4, 2010). There, the defendant—just as Defendants did in this
case—filed a motion in limine to “preclude Plaintiff from offering evidence of litigation-induced
licensing agreements…as evidence of the value of the patents-in-suit, whether pertaining to a
‘reasonable royalty’ analysis or as alleged ‘secondary considerations’ of nonobviousness and/or
commercial success.” Id. at *17. The Court denied the motion in limine, holding that “[i]n light
of ResQNet, litigation-related licenses should not be excluded from the March 2010 Phase I trial”
because “Defendants’ concerns about the reliability of litigation-related licenses are better
directed to weight, not admissibility.” Id. at *19-20 (emphasis added). Just as the Court found in

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DataTreasury, Defendants’ concerns in this case regarding the reliability of Plaintiffs’
“litigation-related licenses are better directed to weight, not admissibility.” Id. at *20.1
Other district courts have likewise found litigation-based licenses relevant to a
determination of nonobviousness. For example, in Datapoint Corp. v. Picturetel Corp., No. 3:93CV-2381-D, 1998 U.S. Dist. LEXIS 1145 (N.D. Tex. Jan. 23, 1998), Judge Fitzwater explained
that “Patentees like Datapoint often use license agreements obtained in settlement of litigation to
show the commercial success and nonobviousness of a patent.” Id. at *6 (emphasis added)
(citing Am. Standard Inc. v. Pfizer Inc., 8 U.S.P.Q.2D (BNA) 2019, 2020-21 (S.D. Ind. 1988).
Similarly, the court found in Pfizer Inc. v. Apotex, Inc., 731 F. Supp. 2d 754 (N.D. Ill. 2010), that
“[r]egardless of whether Pfizer will rely on any potential licensing agreement reached in a
settlement, the licensing agreements (as contained in the settlements) are relevant. The
documents may indicate the ’667 patent is nonobvious, despite Pfizer’s insistence that it will not
rely on the license to show this fact.” Id. at 759. And in Indian Head Indus. v. Ted Smith Equip.
Co., 859 F. Supp. 1095 (E.D. Mich. 1994), the district court found that “objective evidence of
non-obviousness is the fact that Anchorlok and Midland have taken out licenses for the Indian
Head patents.”

Id. at 1105. The district court granted the plaintiff’s motion for summary

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When the defendants in DataTreasury filed a “Renewed Motion for Judgment as a Matter of
Law that the Asserted Claims are Invalid as Obvious” after a jury trial in which the patents were
found valid, the Court examined the evidenced proffered by the plaintiff at trial to establish
nonobviousness. DataTreasury Corp. v. Wells Fargo & Co., No. 2:06-CV-72 DF, 2010 U.S.
Dist. LEXIS 143587, at *1 (E.D. Tex. Sept. 27, 2010). Examining the licensing nonobviousness
factor, the Court held that “Plaintiff presented sufficient evidence at trial to support a ‘nexus’
between Plaintiff’s licensing and the secondary consideration of licensing”, given that “Plaintiff
showed that its licenses covered the patents-in-suit.” Id. Reconfirming its position that any
issues regarding the licenses go to the weight and not their admissibility, the Court held that
“[a]lthough many of these licenses included other patents and intellectual property, the jury was
free to weigh that fact in deciding how much weight to give to Plaintiff’s licenses.” Id. at *9-10.

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judgment of nonobviousness, holding, in part, that “[w]hile TSE disputes the probative value of
the licenses”, such licenses supported a finding of nonobviousness. Id. at 1109-10.
II.

CONCLUSION
Preventing Plaintiffs’ from using their licenses to the patents-in-suit in the validity trial of

this case is contrary to the Federal Circuit’s mandate that “[s]econdary considerations of nonobviousness must be considered when present.” Geo M. Martin Co. v. Alliance Mach. Sys. Int’l
LLC, 618 F.3d 1294, 1304 (Fed. Cir. 2010) (emphasis added). The foregoing establishes that
licensing—including licenses that arise in the context of litigation—is a well-recognized
secondary consideration of nonobviousness.2
Accordingly, Plaintiffs would offer the licenses with Microsoft Corp., Apple Inc., Oracle
Corp., eBay, Inc., Office Depot, Inc., and JPMorgan Chase & Co. to the patents-in-suit as
evidence of secondary considerations of non-obviousness. See PX00456, PX0454, PX0453,
PX0455, PX0066, and PX0065, respectively.

2

Defendants inexplicably cite Rule 408 of the Federal Rules of Evidence as a basis for excluding
those licenses. Yet, Rule 408 has no place whatsoever in the Court’s consideration, as Plaintiffs
do not seek to use evidence of “furnishing, promising, or offering — or accepting, promising to
accept, or offering to accept — a valuable consideration in compromising or attempting to
compromise the claim” to “prove or disprove the validity or amount of a disputed claim or to
impeach by a prior inconsistent statement or a contradiction”.

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Dated: February 8, 2012.

MCKOOL SMITH, P.C.
/s/ Mike McKool
Mike McKool
Lead Attorney
Texas State Bar No. 13732100
[e-mail]
Douglas Cawley
Texas State Bar No. 04035500
[e-mail]
Holly Engelmann
Texas State Bar No. 24040865
[e-mail]
MCKOOL SMITH, P.C.
300 Crescent Court, Suite 1500
Dallas, Texas 75201
Telephone: [phone]
Telecopier: [phone]
Kevin L. Burgess
Texas State Bar No. 24006927
[e-mail]
Josh W. Budwin
Texas State Bar No. 24050347
[e-mail]
Gretchen K. Curran
Texas State Bar No. 24055979
[e-mail]
Matthew B. Rappaport
Texas State Bar No. 24070472
[e-mail]
J.R. Johnson
Texas State Bar No. 24070000
[e-mail]
MCKOOL SMITH, P.C.
300 West Sixth Street, Suite 1700
Austin, Texas 78701
Telephone: [phone]
Telecopier: [phone]

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Robert M. Parker
Texas State Bar No. 15498000
[e-mail]
Robert Christopher Bunt
Texas Bar No. 00787165
[e-mail]
Andrew T. Gorham
Texas State Bar No. 24012715
[e-mail]
PARKER, BUNT & AINSWORTH, P.C.
100 E. Ferguson, Suite 1114
Tyler, Texas 75702
Telephone: [phone]
Telecopier: [phone]
ATTORNEYS FOR PLAINTIFFS
THE REGENTS OF THE UNIVERSITY
OF CALIFORNIA AND EOLAS
TECHNOLOGIES INCORPORATED

CERTIFICATE OF SERVICE
Pursuant to Local Rule CV-5(a)(7), the undersigned certifies that the foregoing document
was filed electronically on February 8, 2012. As such, counsel for Plaintiffs has served this
Motion in electronic form on all counsel who have consented to electronic service.
/s/ Gretchen Curran
Gretchen Curran

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