Discovision Associates v. Disc Mfg., Inc.

• Decision Date: 26 October 1998
• Docket Number: Civil Action No. 95-21-SLR.
• Citation: 25 F.Supp.2d 301
• Parties: DISCOVISION ASSOCIATES, Plaintiff, v. DISC MANUFACTURING, INC., a Delaware Corporation, Defendant.
• Court: U.S. District Court — District of Delaware

25 F.Supp.2d 301

DISCOVISION ASSOCIATES, Plaintiff, v.DISC MANUFACTURING, INC., a Delaware Corporation, Defendant.

Civil Action No. 95-21-SLR.

United States District Court, D. Delaware.

October 26, 1998.

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Edward M. McNally, Peter A. Pietra, Morris, James, Hitch (Thomas J. Nolan, John S. Schuster, Christopher A. Mathews, Ben M. Davidson, of Howery & Simon, Los Angeles, California, Anthony C. Roth, D. Michael Underhill, Penelope M. Lister, Robert Gaybrick, Richard S. Meyer, Nathan W. McCutcheon, of Morgan, Lewis & Bockius LLP, Washington, DC, Frederick S. Frei, Stephen L. Sulzer, Stuart Huang, and Gary J. Rinkerman, of Steptoe & Johnson LLP, Washington, D.C., of counsel), for plaintiff.

R.H. Richards, III, of Richards, Layton & Finger, Wilmington, Delaware (James R. Blanchard, Joel W. Benson, Allan J. Sternstein, Harold V. Johnson, Thomas J. Filarski, Gustavo Siller, Jr., George I. Lee, Christopher M. Cavan, Steven G. Steger, and Ajay K. Gambhir, of Brinks, Hofer, Gilson & Lione, Chicago, Illinois, Michael Chertoff, Robert J. Gunther, Jr., John T. Brennan, of Latham & Watkins, Newark, New Jersey, of counsel), for defendant.

OPINION

SUE L. ROBINSON, District Judge.

I.INTRODUCTION

PlaintiffDiscoVision Associates("DiscoVision") filed this action against defendantDisc Manufacturing, Inc.("DMI") on January 17, 1995, alleging infringement of six DiscoVision patents relating to optical disc technology.(D.I.1)On September 20, 1995, DiscoVision filed an amended complaint which alleged that DMI infringed ten patents relating to optical disc technology.(D.I.63, 484)During discovery, DiscoVision voluntarily agreed to drop several of its patent claims.¹(D.I. 287at 14;D.I. 299at 2;D.I. 308at 2;D.I. 323at 3)Prior to trial, DiscoVision further reduced its case to the following six patents: (1)U.S. PatentNo. 4,819,223("the '223 patent");(2)U.S. PatentNo. 4,893,297("the '297 patent");(3)U.S. PatentNo. 4,228,326("the '326 patent");(4)U.S. PatentNo. 4,190,860("the '860 patent");(5)U.S. PatentNo. 4,337,538("the '538 patent"); and (6)U.S. PatentNo. 5,373,490("the '490 patent").

The parties tried this matter to the court from October 6, 1997 to October 16, 1997.As a result of this court's claim construction order (D.I.558), DiscoVision did not present evidence of infringement with respect to the '538 and '223 patents and further reduced the number of claims it alleged DMI had infringed.²At trial, DiscoVision presented evidence of infringement on the following four patents and their respective claims: (1) DMI's compact discs ("CDs") and stampers infringe claims 1, 10, and 13 of the '297 patent; (2) DMI's version one mastering machine infringes claims 2 and 8 of the '326 patent; (3) DMI's version two mastering machine infringes claims 1, 16, and 21 of the '860 patent; (4) DMI's Philips mastering machine infringes claims 16 and 21 of the '860 patent; and (5) DMI's CDs, stampers, and master discs infringe claims 6 and 11 of the '490 patent.DiscoVision's infringement case is based on both literal infringement and infringement under the doctrine of equivalents.

DMI asserted the defenses of noninfringement and invalidity.More specifically, DMI proffered evidence that the '297 patent is: (1) invalid as anticipated under 35 U.S.C. § 102(b);(2) obvious under 35 U.S.C. § 103; and (3) invalid under 35 U.S.C. § 112 because of (a) lack of enablement, (b) insufficient written description, and (c) failure to disclose the best mode.With respect to the remaining patents, DMI presented evidence of invalidity under § 103.

The court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1331and1338(a).The following constitutes the court's findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52(a).

II.FINDINGS OF FACT

A.Introduction

1.DMI is a Delaware corporation that engaged in the manufacture and sale of CDs during the time relevant to the issues of the complaint.³DMI operated CD manufacturing plants in Anaheim, California and Huntsville, Alabama.DMI's operations and CD manufacturing plants were sold to Cinram, Inc. on March 27, 1997.(D.I. 564, Ex. Aat 1;D.I. 633)

2.DiscoVision is a California partnership with its principal place of business in Irvine, California.(D.I. 564, Ex. Aat 1;D.I. 633) DiscoVision is the owner, by assignment, of the four patents at issue.

3.A CD is a type of optical disc.It stores encoded information or data that can be accessed by CD players which contain optical reading devices.During the relevant period, DMI manufactured and sold at least two types of CDs: (1)"CD-Audio," which contains music; and (2)"CD-ROM," which contains computer software and computer data.(D.I. 564, Ex. Aat 1;D.I. 633at 2) Industry standards for CDs are found in the "Rainbow Books" promulgated by Sony and Philips.(D.I. 606at 1412-18; PX 77;PX 247at 7; PX 984)The Rainbow Books include the "Red Book"(PX 72), which is the industry standard for CD-Audio, and the "Yellow Book"(PX 2123), which is the industry standard for CD-ROM.(D.I. 604at 1410;PX 984at 3)Compliance with these standards results in CDs which can be played on commercially available CD players.DMI's CDs are manufactured to comply with these industry standards.(D.I. 604at 1409-18)

B.The Gregg Invention: Optical Discs and the '297 Patent(1) The Development of Information Storage Technology

4.After World War II, there was a "strong felt need" for new "high-density" information storage technologies.(D.I. 607at 2037-38)This need resulted in increased research activities during the 1950s through the 1970s. (D.I. 607at 2038) One of the first major developments was the announcement in 1957 of a new magnetic video recording process.(D.I. 607at 2038-39)This invention was widely recognized by those of ordinary skill in the art as the only efficient way of recording video.(D.I. 607at 2039)During this same time period, however, scientists sought to invent a competitor to magnetic video recording.(D.I. 607at 2040-47)

5.One of the technologies scientists explored was electrostatic recording.(D.I. 607at 2041)In an electrostatic recording, information is represented by the presence or absence of electrical charges in a storage medium.(D.I. 607at 2041)Electrostatic recording eventually failed because it did not have adequate storage density.(D.I. 607at 2041)

6.Scientists also explored thermoplastic recording, which utilizes electrostatic techniques.(D.I. 607at 2041)In a thermoplastic recording, plastic in the recording medium is turned into a fluid when it is heated to a high temperature.(D.I. 607at 2042)The plastic is then deformed by the force of electrical charges and cooled to retain the deformities.(D.I. 607at 2042)Information is represented by the presence or absence of these deformities in the record medium.(D.I. 607at 2042-43)This technology was not successful because: (1) the process required a vacuum; (2) the deformities were irregular and could not be contained in an information track; and (3) the recording was difficult to replicate.(D.I. 607at 2042-43)

7.A third type of recording technique involves burning holes in a recording medium.Information is represented by the absence or presence of a hole.(D.I. 607at 2044)Many different attempts at perfecting the hole burning technique were tried during the 1960s. (D.I. 607at 2044) The hole burning technique was never commercialized, however, because it was difficult to control the size, shape, and location of the holes.(D.I. 607at 2044)

8.Photographic recordings were also explored during this period.(D.I. 607at 2045)This type of recording utilizes two-dimensional features to represent information.(D.I. 607at 2045)In seeking to develop high-density storage capabilities, scientists encountered problems in perfecting the replication of photographic recordings since information is represented by two-dimensional features.(D.I. 607at 2045)

9.Capacitive recordings were explored.(D.I. 607at 2045-46)Similar to photographic recordings, replication problems were encountered in capacitive recording technology since these recordings involve two-dimensional features.(D.I. 607at 2046)

10.Finally, the optical disc emerged as a viable competitor to magnetic recordings.(D.I. 607at 2047)Optical disc technology was a significant development because information can be stored at a density more than one hundred times greater than was possible through magnetic recording.(D.I. 607at 2048)

11.Gregg's Initial Ideas.In the late 1950s, David Paul Gregg, the inventor of the '297 patent, started to develop ideas about an optical disc.(Defendant's Exhibit ("DX") 464, Gregg12/9/97at 22-23)⁴At that time he called his idea a "videodisk" system.(DX 464, Gregg12/9/97at 23)He envisioned combining his knowledge of video recording, optical recording, and "phonograph disc art" to invent a "video, optical disc."(DX 464, Gregg12/9/97at 23)Gregg knew that his videodisk system would have to be integrated seamlessly into the entertainment industry if it was to be a consumer product.(DX 464, Gregg12/9/97at 29)Accordingly, Gregg's "videodisk" system included ideas about the process of making master videodisks, the replication of videodisks, and the playback system.(DX 464, Gregg12/9/97at 31)

12.In 1964, Gregg and a partner founded Gauss Electrophysics to develop further his ideas about a videodisk system.(DX 464, Gregg2/4/97at 516-19)After forming this company, Gregg began to look for additional financing for his ideas from large corporations.(DX 464, Gregg2/5/97at 648-49)As early as 1965, Gregg documented his ideas in proposal form as part of his efforts to secure additional financing.(DX 90)He knew he needed the assistance of a large...