Lucent Technologies Inc. v. Gateway, Inc.

• Decision Date: 06 August 2007
• Docket Number: Civil No. 03CV0699-B (CAB).,Civil No. 03CV1108-B (CAB).,Civil No. 02CV2060-B(CAB).
• Citation: 509 F.Supp.2d 912
• Parties: LUCENT TECHNOLOGIES INC., Plaintiff and Counterclaim-defendant, v. GATEWAY, INC. and Gateway Country Stores LLC, Gateway Companies, Inc., Gateway Manufacturing LLC and Cowabunga Enterprises, Inc., Defendants and Counter-claimants, and Microsoft Corporation, Intervenor and Counter-claimant, Microsoft Corporation, Plaintiff and Counterclaim-defendant, v. Lucent Technologies Inc., Defendant and Counter-claimant Lucent Technologies Inc., Plaintiff, v. Dell, Inc., Defendant.
• Court: U.S. District Court — Southern District of California

509 F.Supp.2d 912

LUCENT TECHNOLOGIES INC., Plaintiff and Counterclaim-defendant, v. GATEWAY, INC. and Gateway Country Stores LLC, Gateway Companies, Inc., Gateway Manufacturing LLC and Cowabunga Enterprises, Inc., Defendants and Counter-claimants, and Microsoft Corporation, Intervenor and Counter-claimant, Microsoft Corporation, Plaintiff and Counterclaim-defendant, v. Lucent Technologies Inc., Defendant and Counter-claimant Lucent Technologies Inc., Plaintiff, v. Dell, Inc., Defendant.

Civil No. 02CV2060-B(CAB).

Civil No. 03CV0699-B (CAB).

Civil No. 03CV1108-B (CAB).

United States District Court, S.D. California.

August 6, 2007.

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ORDER ON MICROSOFT'S MOTIONS FOR JUDGMENT AS A MATTER OF LAW AND NEW TRIAL AND LUCENT'S MOTION TO ALTER OR AMEND THE JUDGMENT REGARDING U.S. PATENT NOS. 5,341,457 AND RE 39,080

RUDI M. BREWSTER, Senior District Judge.

I. INTRODUCTION

On January 29, 2007, a jury trial commenced in case no. 02cv2060 on issues pertaining to audio coding patents U.S. Patent Nos. 5,341,457 and RE 39,080 ("the '457 patent" and "the '080 patent," respectively). On February 22, 2007, the jury returned a verdict in favor of Plaintiff Lucent Technologies, Inc. ("Lucent") finding the patents valid and infringed by Defendant Microsoft Corporation ("Microsoft").

Following the trial, the Court also ruled on the non-jury issues of standing and Microsoft's license defense. These rulings were based on the jury's finding that the work incorporated into U.S. Patent No. 5,627,938 ("the '938 patent"), the patent on which the reissue '080 patent is based, was not performed on or after April 1989. The Court held that the '080 reissue patent is not co-owned by Fraunhofer; Lucent is sole owner of the '080 patent and has standing to sue for infringement. The Court also ruled that the Fraunhofer-Microsoft Agreement did not confer a license to Microsoft to practice the '080 patent.

Microsoft now moves the Court for judgment as a matter of law under Fed. R.Civ.P. 50(b) on the following issues: (1) no infringement of the '457 patent; (2) no infringement the '080 patent; (3) the '080 patent is not "existing work" under the AT & T-Fraunhofer Agreement; (4) invalidity; and (5) damages. In addition, Microsoft moves the Court to amend its judgment under Fed.R.Civ.P. 52(b) regarding Lucent's standing and Microsoft's license defense. Microsoft also moves for a new trial on related issues including: (1) infringement; (2) the categorization of the '080 patent as "Existing Work";(3) invalidity; and (4) damages.

II. STANDARD OF LAW

A. Judgment as a Matter of Law

A motion for judgment as a matter of law must be denied, and a jury verdict upheld, if the judgment is supported by substantial evidence. Johnson v. Paradise Valley Unified School District, 251 F.3d 1222, 1227 (9th Cir.2001). Substantial evidence is "evidence adequate to support the jury's conclusion, even if it is possible to draw a contrary conclusion from the same evidence." Id. The Court must review the record as a whole but disregard all evidence favorable to the moving party that the jury is not required to believe. Id. All reasonable inferences must be drawn in the light most favorable to the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250-51, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

B. New Trial

The power of the court to grant a new trial under Fed. R Civ. P. 59(a) is "confided almost entirely to the exercise of discretion on the part of the trial court." Murphy v. City of Long Beach, 914 F.2d 183, 186 (9th Cir.1990) (quoting Allied Chem. Corp. v. Daiflon, Inc., 449 U.S. 33, 36, 101 S.Ct. 188, 66 L.Ed.2d 193 (1980)). Unlike a motion for judgment as a matter of law, "[t]he judge can weigh the evidence and assess the credibility of witnesses, and need not view the evidence from the perspective most favorable to the prevailing party." Landes Const. Co., Inc. v. Royal Bank of Canada, 833 F.2d 1365, 1371 (9th Cir.1987); Molski v. M.J. Cable, Inc., 481 F.3d 724, 729 (9th Cir.2007) ("the district court has the duty to weigh the evidence as the court") (internal quotations omitted). The district court should "set aside the verdict of the jury, even though supported by substantial evidence, where, in the court's conscientious opinion, the verdict is contrary to the clear weight of the evidence." Molski, 481 F.3d at 729.; see also Silver Sage Partners, Ltd. v. City of Desert Hot Springs, 251 F.3d 814, 819 (9th Cir.2001) ("a trial court may grant a new trial if the verdict is contrary to the clear weight of the evidence ... or to prevent, in the sound discretion of the trial court, a miscarriage of justice"). In general, a court should grant a new trial only when it "is left with the definite and firm conviction that a mistake has been committed." Landes Constr., 833 F.2d at 1372. "[A] district court may not grant a new trial simply because it would have arrived at a different verdict." Silver Sage Partners, 251 F.3d at 819.

III. OWNERSHIP AND LICENSE OF THE '080 PATENT

Among the affirmative defenses raised by Microsoft, two related to the ownership of the '080 patent. Microsoft asserted that the '080 patent was co-owned by Fraunhofer Gesellschaft ("Fraunhofer"), a German research company. As such, Microsoft contended that Lucent lacked standing to bring suit against Microsoft for infringement of the '080 patent. Microsoft also asserted the defense of license, contending that it had a license from Fraunhofer to practice the '080 patent. These affirmative defenses were addressed in two parts at trial. The jury heard evidence on the factual question of whether any work performed during the period of collaboration between AT & T and Fraunhofer had been incorporated into any of the claims of U.S. Patent No. 5,627,938 ("the '938 patent") which then was reissued as the '080 patent. The Special Verdict Form included a "Special Question" on this issue: "Has Microsoft proven by a preponderance of the evidence that work was performed on or after April 1989 which was incorporated into any of the claims of the '938 patent? Please answer yes or no." The jury answered "no." Based then on the jury's factual finding, the Court ruled that under the 1989 research agreement between AT & T and Fraunhofer ("the JDA"), Fraunhofer was not a co-owner of the '938 patent or the '080 reissue patent., Therefore, Lucent had standing to sue and the defense of license was not available to Microsoft. Microsoft now challenges the jury's findings and the Court's subsequent rulings on a number of grounds.

A. Exclusion of Deposition Testimony from Mr. Restaino and Mr. Devilliers

At trial on February 12, Microsoft attempted to play two video-taped depositions before the jury to which Lucent objected. (Trial Tr. vol. X, 17:6-24:7, Feb. 12, 2007.) The first was the deposition of Mr. Restaino from AT & T and the other was the deposition of Mr. DeVilliers from Creative Labs. Mr. Restaino was to testify about AT & T's view of the rights under the JDA. (Id. at 18:4-18.) The Court ruled that AT & T's opinions of Lucent's duties under the agreement were not relevant. (Id. at 19:16-24.) Mr. DeVilliers was to testify about Lucent's reticence in its negotiations with Creative Labs to discuss Lucent's rights under the JDA. (Id. at 20: 8-16, 21:18-25.) The Court ruled that this latter testimony was collateral, lacking relevance and confusing to the jury. (Id. at 23:2-6.)

Microsoft now argues that the exclusion of these depositions was in error because the jury was entitled to hear how AT & T and Lucent viewed the JDA. The Court, however, finds no error or prejudice in the exclusions. First, Microsoft incorrectly asserts that the Court's reason for the exclusion of the testimony was because it was deemed "not credible" and that credibility should have been a question for the jury. This is belied by the record; the Court excluded the testimony as not relevant and/or prejudicial. Microsoft confuses "credibility" with "admissibility." Admissibility is a question for the court, not the jury. Fed.R.Evid. 104. Additionally, Microsoft has not pointed to any jury issue on which this evidence would have been relevant. The interpretation of the JDA was a question left to the Court, not the jury. Therefore, the Court DENIES Microsoft's motion for a new trial on this ground.

B. New Work Versus Existing Technology Under the JDA

The JDA between Fraunhofer and AT & T covered collaborative work during the period of the stay of Karlheinz Brandenburg at AT & T. (DX 6489 at 2.) This period began in April 1989 and ended in June 1990: (Trial Tr. vol. VI, 192:15-17, Feb. 5, 2007.) All work done on digital audio coding during this period was classified as "New Work" and would be jointly owned by AT & T and Fraunhofer. (DX 6489 at 2, 3 § 1.) In 1991, the period covering New Work was extended by AT & T and Fraunhofer to cover work that continued after the expiration of the JDA and the departure of Brandenburg. ("the extension letter," DX5616.) The parties agreed to extend the period indefinitely, until one of the parties gave notice to terminate the arrangement. (Id.) No evidence was presented that the parties ever terminated the agreement. Hence, the combined effect of the JDA and the extension letter defines the period of New Work as beginning in April 1989 at the arrival of Brandenburg and continuing indefinitely thereafter.

In the instant trial, Lucent and Microsoft agreed to present the factual question of New Work to the jury by asking whether or not work performed on or after April 1989 was incorporated into any of the claims of the '938 patent. (Special Verdict Form; Tr. Chambers Feb. 7, 2007, 173:12-24; Trial Tr. vol. XII, 90:7-22, Feb. 14, 2007.) Microsoft's prima facie case relied on the description of the work in the '938 patent specification. The '938 patent was applied for on September 22,...