Chrimar Systems, Inc. et al v. Alcatel-Lucent S.A. et al
MEMORANDUM OPINION AND ORDER. For the reasons stated herein, the Court finds that ALE has failed to meet its burden in proving equitable estoppel, waiver, prosecution laches, and inequitable conduct. Judgment will issue as a separate order. Signed by Magistrate Judge John D. Love on 01/24/17. (mll, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
CHRIMAR SYSTEMS, INC., CHRIMAR
HOLDING COMPANY, LLC,
ALCATEL-LUCENT ENTERPRISE USA
CIVIL ACTION NO. 6:15-CV-00163-JDL
MEMORANDUM OPINION AND ORDER
On March 9, 2015, Plaintiffs Chrimar Systems, Inc. d/b/a CMS Technologies and
Chrimar Holding Company LLC (“Chrimar”) filed the instant action against Defendant AlcatelLucent Enterprises USA, Inc. (“ALE”). (Doc. No. 3.) In this action, Chrimar alleges
infringement of U.S. Patent Nos. 8,115,012 (“the ’012 Patent”), 8,902,760 (“the ’760 Patent”),
8,942,107 (“the ’107 Patent”), and 9,019,838 (“the ’838 Patent”) (“patents-in-suit”)). This case
proceeded through claim construction, dispositive motions and pretrial, and the trial between
Chrimar and ALE commenced on October 3, 2016. The following claims, defenses, and
counterclaims were presented to the jury: damages, invalidity based on derivation and improper
inventorship, fraud, and breach of contract. (Doc. No. 350.) At the close of evidence, the Court
provided ALE an opportunity to present additional evidence pertaining to ALE’s equitable
defenses.1 On October 7, 2016 the trial concluded and the jury returned a verdict as follows: (1)
ALE indicated they wanted to call Mr. Crayford—their technical expert—back on the stand to provide testimony
on prosecution laches. Tr. at 1209:10–18. Chrimar objected that Mr. Crayford had not opined on prosecution history
Claims 31, 35, 43, and 60 of the ’012 Patent were not invalid; Claims 1, 5, 72, and 103 of the
’107 Patent were not invalid; Claims 1, 59, 69, 72, and 145 of the ’760 Patent were not invalid,
and Claims 1, 7, and 26 of the ’838 Patent were not invalid; (2) the sum of money that would
fairly and reasonably compensate Chrimar for ALE’s infringement was $324,558.34; (3) ALE
did not prove by a preponderance of the evidence that Chrimar committed fraud against ALE;
and (4) ALE did not prove by a preponderance of the evidence that Chrimar breached a contract
with the IEEE. (Doc. No. 349.) After the conclusion of the trial, on November 10, 2016, ALE
filed a brief on equitable issues seeking judgment against Chrimar on: (1) equitable estoppel; (2)
waiver; (3) prosecution laches; and (4) inequitable conduct. (Doc. No. 377.) Chrimar filed a
response (Doc. No. 394), to which ALE filed a reply (Doc. No. 397), and Chrimar filed a surreply (Doc. No. 399). The Court rules on these equitable defenses as set forth herein.
A. Equitable Estoppel
To prove equitable estoppel, the accused infringer must prove by a preponderance of the
evidence that: (1) “[t]he patentee, through misleading conduct, leads the alleged infringer to
reasonably infer that the patentee does not intend to enforce its patent against the alleged
infringer…”; (2) “[t]he alleged infringer relies on that conduct”; and (3) “[d]ue to its reliance, the
alleged infringer will be materially prejudiced if the patentee is allowed to proceed with its
claim.” A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 1028 (Fed. Cir. 1992)
In arguing Chrimar is estopped from enforcing the patents-in-suit, ALE argues first that
Chrimar misled the PoE industry by failing to disclose the patent family to the IEEE. (Doc. No.
377, at 3.) To establish this, ALE argues that Chrimar had a duty to disclose the patents-in-suit to
laches in his expert report. Tr. at 1209:19–1210:10. The Court directed the parties to meet and confer and submit the
issue on the papers, which are the papers filed relevant to this Order. Tr. at 1210:16–1213:2.
the IEEE via a letter of assurance. Id. at 4. Chrimar contests it owed any such duty to the IEEE.
(Doc. No. 394, at 4–6.)
“The existence of a disclosure duty is a legal question with factual underpinnings.”
Qualcomm Inc. v. Broadcom Corp., 548 F.3d 1004, 1012 (Fed. Cir. 2008) (citing Rambus Inc. v.
Infineon Techs. AG, 318 F.3d 1081, 1087 n.3 (Fed. Cir. 2003)). In deciding whether a duty to
disclose existed, the Court looks first to (1) whether the written policies impose disclosure
obligations; and (2) if it is understood that the policies impose such obligations. Qualcomm, 548
F.3d at 1012.
In ruling on summary judgment, this Court already addressed the issue of whether a duty
of disclosure was owed to the IEEE by Chrimar. As to the written policies, the Court reviewed
the relevant IEEE written policies as follows:
Turning first to the written policies, Section 6.3 of the IEEE-SA Standards Board
Operations Manual provides: “Patent holders shall submit letters of assurance to
the IEEE Standards Department (to the attention of the Staff Administrator,
Intellectual Property Rights) before the time of IEEE-SA Standards Board review
for approval.” (Doc. No. 204-29, at 24.) Section 6.3.2 further provides that
“[t]hrough the working group, the Sponsor chair shall request that known patent
holders submit a statement either that the patent does not apply to the standard or
that licenses will be made available without compensation or under reasonable
rates, terms, and conditions.” Id. at 25. The operations manual further refers to the
“patent policy” as set forth in clause 6 of the IEEE-SA Standards Board Bylaws.
(Doc. No. 255, at 13.)
The Court then turned to Section 6 of the Bylaws, which provides the following patent policy:
IEEE standards may include the known use of patent(s), including patent
applications, if there is technical justification in the opinion of the standardsdeveloping committee and provided the IEEE receives assurance from the patent
holder that it will license applicants under reasonable terms and conditions for the
purpose of implementing the standard. This assurance shall be provided without
coercion and prior to approval of the standard (or reaffirmation when a patent
becomes known after initial approval of the standard).
Based on the analysis of these relevant policies, the Court concluded that “[t]hese written
policies appear to be directed to how the IEEE Board deals with patents and standard adoption
generally” and that it “is unclear to what extent the written policies place an affirmative duty on
patent holders through the black letter of the policy.” Id. at 14 (emphasis added). Therefore, the
Court concluded that “further testimony from the parties’ IEEE experts will be necessary for the
Court to fully resolve this question.” Id. These policies remain the relevant policies with the
Bylaws being asserted as the guiding policy.
Having now received the testimony of both side’s IEEE experts, the Court is not
convinced that the IEEE policies place any affirmative duties on patent holders. For example,
Chrimar’s IEEE expert, Mr. Camp, testified at length that the IEEE has a “request and
encourage” policy for submissions by patent holders who may have patents relevant to a standard
because the IEEE bylaws provide a “without coercion” policy and the IEEE has no control over
patent holders. Trial Transcript “Tr.” at 997:10–998:20; 1028:11–1029:25. Further, Mr. Camp
testified that the IEEE bylaws only govern “the board itself, the staff, and any officers of the
organization, such as committee chairs”—not patent holders. Tr. at 999:6–8. ALE’s expert Mr.
Petrick testified that the bylaws “allow patent holders to participate and patent holders may
include the known use of patents and patent applications and they must provide an assurance on
that particular application.” Tr. at 741:15–22 (emphasis added). Thus, Mr. Petrick agrees that the
relevant IEEE policies permissively allow patent holders to participate—i.e. there is no forced
participation—and that similarly patent holders may include the known use of patent and patent
applications. Given the clear language of the IEEE patent policies and the testimony of the
experts at trial, the Court concludes that the policies themselves did not impose a duty of
disclosure on Chrimar as a patent holder.
Further, there was insufficient evidence presented that the treatment of such policy
language by those involved with the IEEE imposed the duty ALE contends Chrimar had.
Rambus, 318 F.3d at 1098. Here, Mr. Petrick simply provided bare conclusions that Mr.
Austermann had a duty of disclosure based on alleged attendance at IEEE meetings in Ottawa
and La Jolla. Tr. at 770:10–771:8. The Court cannot find these conclusions credible without any
explanation as to how Mr. Austermann’s conduct would have given rise to an affirmative duty to
disclose the patents-in-suit where the plain language of the policies do not impose any
ALE points to the fact that Chrimar had attended a PatCom meeting (the committee
responsible for setting patent policies), that Chrimar had discussions with IEEE members, that
Chrimar had submitted letters of assurance pursuant to the patent policy, had received the
Bylaws via email, and was asked to submit a letter of assurance. (Doc. No. 377, at 4, citing DX208, DX-209A, DX-210, and DX-211.) But Chrimar’s knowledge of the Bylaws and voluntary
participation cannot give rise to an additional affirmative disclosure duty where Chrimar’s
conduct was consistent with what the Bylaws require. Again, Mr. Camp testified that even when
the IEEE sends out a letter requesting disclosure, like the one Chrimar received, it is a “request
and encouragement” because the Bylaws themselves state that “assurance shall be provided
without coercion.” Tr. at 997:10–998:20; 1028:11–1029:25; DX-247, at § 6. ALE provided no
evidence of other IEEE members or participants who complied with the IEEE policies in a
manner that is consistent with the duty it claims exists. Indeed, it may also very well be that the
jury in considering this exact evidence, similarly found that ALE had not proven by a
preponderance of the evidence that Chrimar had breached a contract to the IEEE or committed
fraud. (Doc. No. 349.) Accordingly, the Court finds that, based on the evidence presented,
Chrimar did not owe a duty of affirmative disclosure to the IEEE.
Because Chrimar was under no affirmative duty to disclose the patents-in-suit to the
IEEE, ALE’s claim of equitable estoppel fails. However, even if Chrimar had had a duty to
disclose, ALE has not provided evidence of reliance or material prejudice. ALE indisputably did
not exist at the time the relevant standards were being considered and adopted and was not a
member of the IEEE. ALE argues that its “predecessors relied on Chrimar to tell the truth in its
letters of assurance.” (Doc. No. 377, at 6.) This statement is problematic for two reasons. First,
ALE provided no evidence that the information contained in Chrimar’s letter of assurance was
false or misleading. Rather, it was ALE’s argument that because Chrimar had sent a letter of
assurance on a patent from a different patent family, it had an affirmative obligation to send in a
letter on the patents-in-suit. Second, ALE provided no evidence at trial regarding its
predecessor’s interest and involvement in the IEEE or the PoE standard-setting process. As such,
ALE has failed to prove by a preponderance of the evidence that it relied on Chrimar’s
misleading conduct. Similarly, with respect to prejudice, ALE relies on economic prejudice
suffered by its predecessor from 2000 through 2013. (Doc. No. 377, at 6.) Once again, there was
no evidence presented by ALE with respect to its relationship to its predecessor such that a nexus
could be shown to establish material prejudice to ALE.
For these reasons, the Court finds that ALE did not prove by a preponderance of the
evidence that Chrimar is equitably estopped from enforcing the patents-in-suit based on its
interactions with the IEEE.
ALE relies on the same evidence and argument to contend that Chrimar has waived its
rights to enforce the patents-in-suit and any related patents. (Doc. No. 377, at 7–8.) For the same
reasons explained above with respect to equitable estoppel, the Court finds that ALE has failed to
prove by a preponderance of the evidence that Chrimar has waived its rights to enforce the
C. Prosecution Laches
ALE relies on Symbol II to argue that “the equitable doctrine of laches may be applied to
bar enforcement of a patent that issued after unreasonable and unexplained delay in prosecution
even though the patent applicant complied with pertinent statutes and rules.” (Doc. No. 377, at
8–9, citing Symbol Techs. Inc., v. Lemelson Med., Educ. & Research Found., LP, 277 F.3d 1361,
1368 (Fed. Cir. 2002). ALE argues that the prosecution of the patents-in-suit started in 1998 and
extended over 17 years, during which the IEEE standards were implemented and ALE was
locked into use of the standard based on industry-wide adoption. (Doc. No. 377, at 9–10.)
Chrimar argues that ALE cites to no evidence to support this defense and instead relies on cases
that “involve patents that were governed by the pre-GATT term-limits provisions that were
enacted in the early 1990s.” (Doc. No. 394, at 16.)
As an initial matter, the Court has previously noted the oddity of this case:
Chrimar contends that all of the patents-in-suit are standard essential patents. Yet,
the progression of the patents-in-suit and the IEEE PoE standard adoption is
perplexing. Chrimar maintains that it filed Provisional Application No.
60/081,279 on April 10, 1998 (“the Provisional Application”). (Doc. No. 204-3.)
Chrimar next maintains that it filed Non-Provisional Application No.
PCT/US99/07846 on April 8, 1999 (the ’430 Patent Application), claiming
priority to the Provisional Application. Chrimar maintains that the ’430 Patent
Application was unpublished until it issued as U.S. Patent No. 6,650,622 (“the
’622 Patent”) on November 18, 2003. Chrimar maintains that each of the patentsin-suit claims priority to the ’622 Patent, the ’430 Patent Application, and the
Provisional Application. (Doc. No. 204, at ¶ 35.) The IEEE adopted the 802.3af
standard in June 2003, and the patents-in-suit issued on April 10, 2012, January
27, 2015, December 2, 2014, and April 28, 2015, respectively. ¶ While Chrimar
maintains that the patents-in-suit are standard essential and claim priority to the
’430 Patent Application, Chrimar also maintains that the claims that arose from
the ’430 Patent Application are not essential to the standard. In other words,
Chrimar claims priority to an application that existed prior to the adoption of the
IEEE 802.3 standard that Chrimar claims is not essential to that standard, but that
gave rise to the claims of the patents-in-suit that are allegedly standard essential.
(Doc. No. 255, at 15–16.)
Thus, while the Court notes the unusual circumstances of this case, there is no equitable
basis for it to render judgment on these facts. Indeed, Chrimar is correct in that the term of the
patents-in-suit are subject to a 20 year limit from “the date on which the earliest such application
was filed.” 35 U.S.C. § 154(a)(2). These provisions, which provide the counterbalance of
limiting the life of a patent that undergoes a lengthy prosecution (by starting the term from the
first filed application), alleviate the need for the equitable remedy ALE promotes based on a
delayed prosecution. Here, there is no evidence cited by ALE that there was any unreasonable or
unexplained delays in prosecution or any conduct by Chrimar to support such a delay.
ALE did submit an additional declaration from its expert, Ian Crayford, setting forth
opinions on this equitable remedy. (Doc. No. 376-1.) Mr. Crayford’s declaration simply goes
over the timeline of the prosecution of the patents-in-suit and concludes that Plaintiffs have
claimed a “relatively simple concept in thousands of different ways throughout the prosecution
history,” and that “[t]he seventeen year prosecution history has allowed Plaintiffs to morph their
claims to attempt to cover the IEEE 802.3af and 802.3at PoE standards.” Id. at ¶ 21. Mr.
Crayford also opines that he understands that Chrimar “had knowledge of the IEEE 802.3af PoE
standard in the early 2000s, before prosecution of the claims that issued in the patents-in-suit
began.” Id. But other than these conclusions provided by their expert, ALE has provided no
evidence of Chrimar’s knowledge or its conduct with respect to the prosecution of the patents-in-
suit that would warrant barring Chrimar from enforcing its rights to the patents-in-suit. The
Court is unaware of any equitable remedy that would suggest the patents-in-suit should be held
to be unenforceable and ultimately finds the evidence insufficient here. Finally, for the same
reasons that were discussed above, ALE has not shown by a preponderance of the evidence that
it was prejudiced by these actions.
For these reasons, the Court finds that ALE did not prove by a preponderance of the
evidence that Chrimar is equitably estopped from enforcing the patents-in-suit based on
D. Inequitable Conduct
Lastly, ALE argues that the patents-in-suit are unenforceable as a result of inequitable
conduct. (Doc. No. 377, at 11.) Specifically, ALE contends that to secure allowance of the ’250
Patent during reexamination, the named inventors submitted a false declaration to the PTO to
swear behind certain prior art. (Doc. No. 377, at 11.) Chrimar argues that ALE assumes the
declaration is false and therefore assumes it was material and the alleged falsity was intentional.
(Doc. No. 394, at 21.) Chrimar argues that ALE has not met its burden on proving materiality or
intent to deceive. Id. at 21–22.
“To prevail on the defense of inequitable conduct, the accused infringer must prove that
the applicant misrepresented or omitted material information with the specific intent to deceive
the PTO.” Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1287 (Fed. Cir. 2011)
(en banc). Intent and materiality are separate elements. Id. at 1290. To establish intent, the
accused infringer must show that a specific intent to deceive is “the single most reasonable
inference” supported by the evidence. Id. To establish materiality, the accused infringer must
generally show that the patent would not have been granted but for the applicant’s inequitable
conduct. Id. at 1291. Both intent and materiality must be established by clear and convincing
evidence. Id. at 1287.
Here, ALE’s defense of inequitable conduct relies entirely on the declaration submitted
by Messrs. John Austermann and Marshall Cummings to the USPTO to swear behind certain
prior art. (DX-085.) That declaration states in relevant part:
6. We designed circuity that was utilized in conjunction with a system and method
for performing the claimed subject matter prior to the critical date. Evidence of
our circuit design is attached as Exhibits B1–B17. (Note: Sheet 6 of 18 is not
currently available) The dates in Exhibit B have been redacted but they are prior
to the critical date. The circuit boards were ordered from a company called
American Broadband, Inc. A copy of an invoice from American Broadband, Inc.
is attached as Exhibit C. The dates in Exhibit C have been redacted but they are
prior to the critical date.
(DX-085, at ¶ 6.)
ALE further cites to the testimony of Clyde Boenke stating that Messrs. Austermann and
Cummings did not design the circuitry in question. (Doc. No. 377, at 12, citing Tr. at 911:8–21.)
Thus, it is ALE’s argument that the declaration was unmistakably false because Clyde Boenke
created the circuit schematics attached to the declaration. Id. The Court finds that Mr. Boenke’s
testimony in conjunction with the declaration does not provide clear and convincing evidence of
materiality. Indeed, the declaration itself states that the “circuit boards were ordered from a
company called American Broadband, Inc.” (DX-085.) American Broadband, Inc. is Mr.
Boenke’s company and the fact that the circuit boards came from American Broadband, Inc. was
disclosed to the PTO via the declaration. DX-085; Tr. at 873:15–18. Thus, there is no indication
that the declaration was “unmistakably false.” See Therasense., 649 F.3d at 1292 (“When the
patentee has engaged in affirmative acts of egregious misconduct, such as the filing of an
unmistakably false affidavit, the misconduct is material.”)
Even if ALE had proven materiality by clear and convincing evidence, there is a dearth of
evidence regarding an intent to deceive. “[T]o meet the clear and convincing evidence standard,
the specific intent to deceive must be the single most reasonable inference able to be drawn from
the evidence.” Therasense., 649 F.3d at 1290 (internal quotations omitted). To draw this
inference, ALE argues that Chrimar failed to cure any false statements in the declaration, that
Mr. Boenke designed the circuits, that there is no evidence that the named inventors did any
circuit design, and that the inventors have a habit of deceiving their patent attorney. (Doc. No.
377, at 12.) Regarding the declaration, again, ALE’s arguments rely on the assumption that the
statements were false such that Chrimar would have needed to correct the declaration because
Mr. Boenke designed the circuit schematics and the named inventors did not. But as discussed
above, the declaration is not unmistakably false. While the declaration states “[w]e designed
circuity…” it very clearly states that the attached “circuit boards were ordered from a company
called American Broadband, Inc.”—Mr. Boenke’s company. Perhaps this language in the
declaration could have been worded better; however, the following language disclosing
American Broadband, Inc.’s work and attached circuit schematics does not lead to the single
inference that this statement was made with the specific intent to deceive. Further considering
the inventor’s statements to their patent attorneys and the testimony provided at trial does not
lead to the single inference that this statement was made with the specific intent to deceive. As
such, ALE has failed to prove an intent to deceive by clear and convincing evidence.
For these reasons, the Court finds that ALE has failed to meet its burden on proving
For the reasons stated herein, the Court finds that ALE has failed to meet its burden in
proving equitable estoppel, waiver, prosecution laches, and inequitable conduct. Judgment will
issue as a separate order.
So ORDERED and SIGNED this 24th day of January, 2017.
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