Innovus Prime, LLC v. Panasonic Corp., Case No. C-12-00660-RMW

• Decision Date: 02 July 2013
• Docket Number: Case No. C-12-00660-RMW
• Court: U.S. District Court — Northern District of California
• Parties: INNOVUS PRIME, LLC, Plaintiff, v. PANASONIC CORPORATION AND PANASONIC CORPORATION OF NORTH AMERICA, INC., Defendant.

INNOVUS PRIME, LLC, Plaintiff,

v.PANASONIC CORPORATION AND PANASONIC CORPORATION OF NORTH AMERICA, INC., Defendant.

Case No. C-12-00660-RMW

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION

Dated: July 2, 2013

ORDER GRANTING PLAINTIFF'S

MOTION TO STRIKE AND

GRANTING DEFENDANT'S MOTION

FOR SUMMARY JUDGMENT

[Re Docket Nos. 53, 64]

Defendants Panasonic Corporation and Panasonic Corporation of North America, Inc. (collectively "Panasonic") move for summary judgment that they do not infringe U.S. Patent No. 5,280,350 ("'350 Patent"). Plaintiff Innovus Prime, LLC ("Innovus") acquired the '350 Patent on April 17, 2011, as the fourth owner in a chain of assignees. Panasonic relies on a 1982 non-assertion agreement between itself and the original owner of the '350 Patent ("1982 Agreement") as the basis for its authority to practice the invention of the '350 Patent for the duration of the patent's term. Because the court concludes that the 1982 Agreement authorized Panasonic to practice the patented invention for the life of the '350 Patent (which is now expired), and for the reasons explained below, the court GRANTS Panasonic's motion for summary judgment of noninfringement.

I. BACKGROUND

The United States Patent and Trademark Office issued the '350 Patent on January 18, 1994 to U.S. Philips Corporation, a subsidiary of N.V. Philips Gloeilampenfabrieken, currently doing business as Koninklijke Philips Electronics ("Philips"). The '350 Patent relates to an apparatus for processing picture signals for television.

On December 20, 1982, Philips entered into an agreement with Panasonic whereby each party agreed not to assert against the other any patents relevant to "audio and video products" that were filed (or entitled to priority) before January 1, 2005.¹ Watanabe Decl., Ex. 1 at 1, Dkt. No. 53-4 ("1982 Agreement"). There is no dispute that the '350 Patent is relevant to a video product and was filed before 2005, and thus was subject to the 1982 Agreement between Philips and Panasonic (at least before the patent was assigned). In 2007, Philips and Panasonic entered into a new agreement in which they clarified the definitions of "audio and video products" in the 1982 Agreement (to include six new products that did not exist in 1982). Watanabe Decl., Ex. 2 at 1, 6 Dkt. No. 53-5 ("2007 Agreement").

On February 1, 2008, Philips assigned its interest in the '350 Patent to NXP B.V., "subject to all existing rights, commitments, licenses, non-assertion agreements and the like made by Assignor, [Philips] and/or its affiliates under said Patent Rights and to any extensions of term and/or renewal thereof." Yohai Decl., Ex. 3 at Reel 021411, Frame 0447, Dkt. No. 53-9 ("1st Assignment"). On February 7, 2010, approximately two years following the assignment from Philips, NXP B.V. assigned all rights to the '350 Patent to NXP Holding 1 B.V. (Now Trident Microsystems (Far East) LTD). Yohai Decl., Ex. 4 at Reel 023928, Frame 0496, 0502-0506, Dkt. No. 53-10 ("2nd Assignment"). In April 2011, Trident Microsystems (Far East) assigned all its rights to the '350 Patent to plaintiff Innovus Prime, LLC ("Innovus"). Yohai Decl., Ex. 5 at Reel 026156, Frame 0365-59, Dkt. No. 53-11 ("3rd Assignment"). The '350 Patent expired shortly thereafter, in August 2011. 35 U.S.C. § 154(c) (twenty years from the filing date).

In August 2011, Innovus initially brought a patent infringement action against Panasonic and three other defendants alleging infringement of the '350 Patent. However, the court dismissed Panasonic from the case on misjoinder grounds. On February 9, 2012, Innovus filed the instant patent infringement action against Panasonic. Panasonic moves for summary judgment of noninfringement based on its non-assertion rights under the 1982 and 2007 Agreements.

II. ANALYSIS

A. Evidentiary Rulings on Innovus's Motions to Strike

Innovus moves to strike portions of the declarations submitted by Panasonic in support of their motion for summary judgment on the basis that they contain parol evidence, are not supported by personal knowledge, and make legal conclusions.² Dkt. Nos. 56 and 64.³ Innovus also moved for an expedited hearing on the motion to strike in conjunction with the present motion for summary judgment. Dkt. No. 65.⁴

Civil Local Rule 7-3(a) provides that "[a]ny evidentiary and procedural objections to the motion must be contained within the brief or memorandum" filed in opposition to the motion. Innovus improperly filed its motion separately on two occasions, Dkt. Nos. 56 and 64, but the court nevertheless considers the motions under Federal Rule of Civil Procedure ("Rule") 56(e) because the court agrees that the contested portions of the declarations make impermissible legal conclusions and are improper.

Under Rule 56(e), an affidavit "must be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein." Any affidavit which does not conform to these specifics must be stricken. Civil Local Rule 7-5(b) further provides that

[a]n affidavit or declaration may contain only facts, must conform as much as possible to the requirements of FRCivP 56(e), and must avoid conclusions and argument. Any statement made upon information orbelief must specify the basis therefore. An affidavit or declaration not in compliance with this rule may be stricken in whole or in part.

Civ. L. R. 7-5(b). An affidavit is conclusory if the facts contained are speculative or in the form of legal conclusions, but not if they are based on the affiant's recollection of the events. See Orsini v. O/S SeaBrooke O.N., 247 F.3d 953, 960 n.4 (9th Cir. 2001).

Those who participate in the negotiations of contracts are entitled to testify as to their interpretation of ambiguous terms, however their testimony "must be grounded in . . . the parties' expressed intent and understanding during the course of negotiations, rather than simply the witness's own subjective interpretation of the contract." Onyx Pharma., Inc. v. Bayer Corp., 863 F. Supp. 2d 894, 897-98 (N.D. Cal. 2011). The court finds that the contested portions of the declarations are nothing more than impermissible subjective interpretations of the meaning of the 1982 and 2007 Agreements. The Agreements speak for themselves, and the court strikes the contested portions of the declarations.

B. Choice of Law

The parties disagree on whether this dispute should be governed by the laws of the United States or the laws of England and Wales. Innovus contends that English law applies because Article 6.10 of the 2007 Agreement provides that "the applicable substantive law of the Agreement shall be the laws of England and Wales." Panasonic asserts that the '350 Patent is governed exclusively by the 1982 Agreement which contains no choice of law language. Panasonic further argues that this is a question of patent licensing and exhaustion which is to be governed exclusively by United States federal law.

The interpretation of contracts for rights under patents and patent licenses is "generally governed by state law." Rhone-Poulenc Agro, S.A. v. DeKaib Genetics Corp., 284 F.3d 1323, 1327-28 (Fed. Cir. 2002); see also Int'l Nutrition Co. v. Horphag Research LTD, 257 F.3d 1324, 1329 (Fed. Cir. 2001) ("A contractual agreement to apply French law as to ownership is just as valid as an agreement to apply the law of a particular state."); Hilgraeve Corp. v. Symantec Corp., 265 F.3d 1336, 1341 (Fed. Cir. 2001) (resolving a contractual licensing dispute under Ontario law).

In contrast to issues of pure contract interpretation, however, federal law applies to both substantive and procedural issues "intimately involved in the substance of enforcement of the patentright." Arma Refrigeration, Inc. v. Quadlus, Inc., 172 F.3d 852, 855 (Fed. Cir. 1999). The Federal Circuit has explained that the effect of a patent assignment under a contract, as opposed to the interpretation of contract terms themselves, is an issue unique to patent law that is governed by federal law. See Sky Tech v. SAP AG, 576 F.3d 1374, 1379 (Fed. Cir. 2009) ("Usually, federal law is used to determine the validity and terms of an assignment . . . ."); DDB Tech., LLC v. MLB Adv. Media, LP, 517 F.3d 1284, 1290 (Fed. Cir. 2008) (The determination of whether a patent assignment clause creates automatic assignment or obligation to assign is treated as a matter of federal law.).

Here, the parties do not dispute whether the '350 Patent is an audio-video product subject to the 1982 Agreement, or the meaning of any other terms in the 1982 Agreement. Instead, the parties' dispute whether the mutual non-assertion agreement between Philips and Panasonic affected later assignees' patent rights. The effect of the assignments in this case on Panasonic's non-assertion rights is an issue unique to patent law that is "intimately involved in the substance of the enforcement" of the '350 Patent. See Sky Tech, 576 F.3d at 1379. Therefore, this dispute is governed by United States federal law.

The court does not agree with Innovus that the choice of law provision in the 2007 Agreement requires this dispute to be resolved under the laws of England and Wales. As discussed infra, the 2007 Agreement does not expressly limit or supersede the rights provided in the 1982 Agreement.⁵ Regardless of whether the 2007 Agreement affects the 1982 Agreement, however, this dispute centers on the effect of Philip's assignment as opposed to general contract interpretation, and United States federal law applies.

C. Effect of the Assignments of the '350 Patent on Panasonic's Non-Assertion Rights

The relevant inquiry is whether the covenant not to sue between Philips and Panasonic affected later assignees' patent rights. After examining the 1982 Agreement, the 2007 Agreement, and the chain of assignments, this court concludes that Innovus is bound by the terms of the 1982 ...