Aptix Corp v. Quickturn Design Systems

Citation269 F.3d 1369
Parties(Fed. Cir. 2001) APTIX CORPORATION, Plaintiff/Counterclaim Defendant-Appellant, and META SYSTEMS, INC., Plaintiff/Counterclaim Defendant-Appellant, and MENTOR GRAPHICS CORPORATION, Counterclaim Defendant, v. QUICKTURN DESIGN SYSTEMS, INC., Defendant/Counterclaimant-Appellee. 00-1468, -1469 DECIDED:
Decision Date05 November 2001
CourtUnited States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Raphael V. Lupo, McDermott, Will & Emery, of Washington, DC, argued for plaintiff/counterclaim defendant-appellant Aptix Corporation. With him on the brief were Donna M. Tanguay, Mark G. Davis, and M. Miller Baker. Of counsel on the brief were Robert P. Taylor, Edwin H. Wheeler, and Erik K. Moller, Howrey Simon Arnold & White, LLP, of Menlo Park, California.

Charles S. Crompton, Latham & Watkins, of Menlo Park, California, argued for plaintiff/counterclaim defendant-appellant Meta Systems, Inc. With him on the brief were David A. York, Rita A. Hao, and James L. Day.

J. Donald McCarthy, Lyon & Lyon LLP, of Los Angeles, California argued for defendant/counterclaimant-appellee Quickturn Design Systems, Inc. With him on the brief was James C. Brooks. Of counsel on the brief were James W. Geriak, Lyon & Lyon LLP, of Irvine, California; and Jeffrey A. Miller, Lyon & Lyon LLP, of San Jose, California.

Before MAYER, Chief Judge, RADER, and LINN, Circuit Judges.

Opinion for the court filed by Circuit Judge RADER. Chief Judge MAYER dissents-in-part.

RADER, Circuit Judge.

On June 14, 2000, the United States District Court for the Northern District of California dismissed the patent infringement complaint of Aptix Corporation and Meta Systems, Inc., after ruling that Aptix's United States Patent No. 5,544,069 ('069 patent) is unenforceable. The trial court refused to enforce the '069 patent because Aptix submitted falsified engineering notebooks to the court.

Because substantial evidence supports the district court's finding of unclean hands, this court affirms the district court's dismissal of Aptix from the suit. Furthermore, because Meta, as Aptix's non-exclusive licensee, lacks standing to enforce the patent without Aptix, this court also affirms the district court's dismissal of Meta's complaint. However, because the district court exceeded its discretion by declaring the '069 patent unenforceable due to litigation misconduct, this court vacates that judgment.


Dr. Amr Mohsen, the founder, chairman, and chief executive officer of Aptix, is the sole inventor of the '069 patent. The '069 patent discloses and claims "field programmable" circuit boards that permit computer programmers to reconfigure the electronic components of an integrated circuit. Dr. Mohsen filed a patent application on September 20, 1989. The United Stated Patent Office issued the '069 patent on August 6, 1996.

Aptix licensed the '069 patent to Meta and Mentor Graphics Corporation, granting Meta the right to sue to enforce the patent in San Jose, California, where Quickturn Design Systems, Inc. is located. Under the agreement, Mentor agreed to advance Aptix the cost of enforcing the '069 patent against Quickturn. On February 26, 1998, Aptix and Meta jointly sued Quickturn for infringement of the '069 patent. Quickturn asserted counterclaims and added Mentor as a counterclaim defendant.

The local rules for the Northern District of California require patentees to disclose a date of conception for each asserted claim. N.D. Cal. Civ. L.R. 16-7(b)(3) (1998). On April 13, 1998, Aptix submitted to the court seventeen pages of Dr. Mohsen's alleged 1989 notebook as an initial proffer of a conception date. On April 18, 1998, Dr. Mohsen advised Aptix's counsel that he found another of his engineering notebooks, allegedly started in 1988. Relying on the 1988 notebook, Aptix and Meta listed July 31, 1988, as the date of conception for all asserted claims. Without this earlier notebook, Aptix later conceded, it would "have a hard row to hoe to avoid invalidating prior art." Aptix Corp. v. Quickturn Design Sys., No. 98-00762, 2000 WL 852813, at *23 (N.D. Cal. June 14, 2000).

During discovery, Quickturn obtained a copy of a number of pages from a 1989 notebook that Dr. Mohsen had provided to Skjerven, Morrill, MacPherson, Franklin & Friel, patent counsel during prosecution of the '069 patent. Quickturn noticed substantial differences between this copy and the purported 1989 notebook Dr. Mohsen first supplied the court. The submission to the court contained extensive text and diagram additions not found in the version of the 1989 notebook obtained from Skjerven. When asked about these discrepancies in his deposition, Dr. Mohsen conceded that he added material to his notebooks after they had been signed.

During discovery, Aptix produced still another notebook, the "Ink-On-Photocopy" version of the 1989 notebook. This version of the 1989 notebook contained Dr. Mohsen's handwritten additions to the photocopied entries of an earlier version of the 1989 notebook. The trial court determined that the Ink-On-Photocopy version was a "dry run" for Dr. Mohsen's fabrications. Id. at *24. Once Dr. Mohsen had inked new material onto the rudimentary photocopied version, according to the district court, he inserted pages of the Ink-On-Photocopy version underneath the corresponding pages of the 1989 notebook to assist as a copying template. Id. Forensic evidence showed that the Ink-On-Photocopy version retained the impressions of Dr. Mohsen's pen as he copied the newly inked material into the evolving 1989 notebook. The Ink-On-Photocopy version was the source for the seventeen-page production to the court.

Thus, the record before the district court included four different notebook submissions: the seventeen pages originally submitted to the court from Mohsen's purported 1989 notebook, another notebook allegedly started in 1988, an original copy of the 1989 notebook that was used to prosecute the '069 patent (containing discrepancies from the seventeen-page submission), and the Ink-On-Photocopy version of the 1989 notebook, which apparently served as the template for Dr. Mohsen's elaborations.

On November 24, 1998, Quickturn moved to compel production of the original notebooks for forensic testing. Dr. Mohsen had been insistent upon personally keeping the notebooks, locking them in a safe in his house. However, on December 14, 1998, Dr. Mohsen took the notebooks to work and left them in his car the entire day. That night, he purportedly found his car window broken and the notebooks gone. The trial court found that the "circumstances of the 'theft' strongly suggest that Amr Mohsen staged the incident." Id. at *26.

After the disappearance of the notebooks, Dr. Mohsen produced additional evidence to corroborate his asserted conception date. His 1989 Daytimer, for example, included various entries referring to the engineering notebooks. However, forensic evidence showed that these entries were written with an ink that was not manufactured until 1994, five years after the supposed entries.

Shortly before the scheduled date of an evidentiary hearing on spoliation of the notebooks (at which time Aptix would have had to demonstrate under Fed. R. Evid. 1004 that the original notebooks were not destroyed in bad faith), Dr. Mohsen purportedly received a priority mail package containing fragments of the missing notebooks. The package, which bore Dr. Mohsen's correct mailing address, had no return address but contained an anonymous note from "FL" stating: "These were discovered lately in our backyard. These look like important documents for you." The package contained invoices with Dr. Mohsen's address, which apparently provided the basis for "FL" to address the envelope. Significantly, however, those invoices had either the wrong zip code, or no zip code at all, even though the address on the package from "FL" included the proper zip code. The trial court found that "[i]t seems plain that Amr Mohsen addressed the envelope, or instructed someone else to address it, and simply slipped up in using the correct zip code." Id. at *27.

Referring to the 1988 notebook, the trial court noted that in five instances, Dr. Mohsen had first written "1998," and then overwritten the date to read "1988." Moreover, although Dr. Mohsen's brother, Aly Mohsen, had witnessed many pages of the notebook by writing "read and understood," the court noted that many of these pages were blank with nothing but a large "X," suggesting that Aly had witnessed a blank notebook, and that his brother later filled in text and diagrams. Indeed, all of Aly's signatures were written in the same ink, despite their purported dates on occasions 22 days apart. Furthermore, the court noted that none of Dr. Mohsen's colleagues, including his trial attorneys, patent prosecutors, and fellow executives, knew about the 1988 notebook until 1998. The trial court concluded that the 1988 notebook was a "complete fraud from bark to core, a notebook without a single genuine entry." Id. at *24.

On May 9-10, 2000, the trial court held an evidentiary hearing concerning the authenticity of the notebooks. Dr. Mohsen took the stand and asserted his Fifth Amendment privilege against self-incrimination in response to all questions. Thereafter, the trial court concluded that Aptix had attempted "to defraud the Court and to strengthen its patent through a premeditated and sustained campaign of lies and forgery." Id. at *27. The trial court determined that the '069 patent was unenforceable and dismissed the complaint, invoking the unclean hands doctrine as set forth in Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 19 USPQ 228 (1933) ("Keystone I"). After finding this case exceptional under 35 U.S.C. 285 (1994), the trial court ordered Aptix to pay Quickturn's reasonable attorney fees and...

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