Personalized Media Commc'ns, LLC v. Apple, Inc.

• Decision Date: 05 August 2021
• Docket Number: CIVIL ACTION NO. 2:15-CV-01366-JRG
• Citation: 552 F.Supp.3d 664
• Parties: PERSONALIZED MEDIA COMMUNICATIONS, LLC, Plaintiff, v. APPLE, INC., Defendant.
• Court: U.S. District Court — Eastern District of Texas

552 F.Supp.3d 664

PERSONALIZED MEDIA COMMUNICATIONS, LLC, Plaintiff,
v.
APPLE, INC., Defendant.

CIVIL ACTION NO. 2:15-CV-01366-JRG

United States District Court, E.D. Texas, Marshall Division.

Signed August 5, 2021

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Arun S. Subramanian, Susman Godrey LLP, Alexandra Daloia Valenti, Autumn Elizabeth Soucy, Naomi L. Birbach, Goodwin Procter LLP, New York, NY, Amanda K. Bonn, Rohit D. Nath, Susman Godfrey LLP, Los Angeles, CA, Andrew S. Ong, Goodwin Procter LLP, Menlo Park, CA, Ce Li, Phong T. Dinh, Stephen Schreiner, Goodwin Procter, LLP, Washington, DC, Dmitry Kheyfits, Kheyfits Belenky LLP, Austin, TX, Douglas J. Kline, James Anthony Downs, Kevin P. Martin, Robert Frederickson, III, Sarah Jane Fischer, Goodwin Proctor, LLP-Boston, Lana Svetlana Shiferman, Goodwin Procter LLP, Boston, MA, Elizabeth L. DeRieux, Sidney Calvin Capshaw, III, Capshaw DeRieux LLP, Gladewater, TX, Joseph Samuel Grinstein, Meng Xi, Susman Godfrey LLP, Houston, TX, Timothy Robert DeWitt, Pro Hac Vice, 24IP Law Group USA, PLLC, Annapolis, MD, for Plaintiff.

Alan Rabinowitz, Gregory S. Arovas, Pro Hac Vice, Jonathan D. Brit, Robert A. Appleby, Kirkland & Ellis, LLP, New York, NY, Andrew Thompson (Tom) Gorham, James Travis Underwood, Gillam & Smith LLP, Tyler, TX, Edward C. Donovan, Pro Hac Vice, Sean M. McEldowney, Kirkland & Ellis LLP, Washington, DC, Ellisen S. Turner, Luke L. Dauchot, Kirkland & Ellis LLP, Los Angeles, CA, Gregory Matthew Polins, Jacob Rambeau, Joel R. Merkin, Marcus E. Sernel, Pro Hac Vice, Meredith Zinanni, Kirkland & Ellis LLP, Chicago, IL, Harry Lee Gillam, Jr., Melissa Richards Smith, Gillam & Smith, LLP, Marshall, TX, for Defendant.

MEMORANDUM OPINION AND ORDER SUPPORTED BY FINDINGS OF FACT AND CONCLUSIONS OF LAW

RODNEY GILSTRAP, UNITED STATES DISTRICT JUDGE

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A bench trial was held on June 22, 2021, wherein the Court heard evidence and argument on Defendant Apple, Inc.’s ("Apple") counterclaim of prosecution laches and affirmative defenses of obviousness-type double patenting and unclean hands. (Dkt. No. 635). The Court has considered the totality of the evidence presented at the jury trial, the bench trial, and in the written record,¹ including the post-trial submissions from the parties (Dkt. Nos. 638, 639, 640, 641), and now issues its opinion supported by the following Findings of Fact ("FF") and Conclusions of Law ("CL") pursuant to Fed. R. Civ. P. 52(a)(1) and 52(c). In view of the evidence presented and the salient authorities—most notably, the recent Federal Circuit decision in Hyatt v. Hirshfeld , 998 F.3d 1347 (Fed. Cir. 2021) —and as discussed in detail herein, the Court finds and declares that Plaintiff Personalized Media Communications, LLC's ("PMC") asserted patent, U.S. Patent No. 8,191,091, is UNENFORCEABLE under the doctrine of prosecution laches.²

I. FINDINGS OF FACT

A. Procedural History

[FF 1] This is an action for patent infringement. PMC sued Apple in July of 2015, asserting U.S. Patent No. 8,191,091 (the "’091 patent") and United States Patent No. 8,559,635 (the "’635 patent"). (Dkt. No. 1). Both patents are entitled "Signal Processing Apparatus and Methods. (Id. ). PMC alleged that both patents were infringed by FairPlay, a digital rights management (DRM) technology developed and implemented by Apple on its computers, mobile phones, and other devices. (Dkt. No. 1 at ¶ 2).

[FF 2] On February 17, 2017, the Court granted an agreed motion to stay this case pending inter partes review of the asserted patents. (Dkt. No. 355). The Patent Trial and Appeal Board (PTAB) initially invalidated all asserted claims of both patents, but the Federal Circuit reversed as to several claims of the ’091 patent. (Dkt. No. 373). Upon remand, the Court severed the asserted claims of the ’635 patent —which remains held in administrative abeyance at the PTAB—and lifted the stay as to the ’091 patent, setting it for trial. (Id. ).

[FF 3] The Court then ruled on several matters that had been pending when the case was stayed. Among these matters was a motion by PMC to strike several of

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Apple's counterclaims and affirmative defenses. (Dkt. Nos. 250, 251). The Court granted the motion in part, striking several of Apple's affirmative defenses due to a discovery order violation, but allowing Apple to proceed with its equitable counterclaims and affirmative defenses of inequitable conduct, unclean hands, and prosecution laches. (Dkt. No. 461). The Court ordered that the bench-trial issues would be undertaken post-verdict and that PMC would be afforded additional discovery in the interim. (Id. ).

[FF 4] The Court also denied a motion to strike several of Apple's invalidity theories, including obviousness-type double patenting ("OTDP"), concluding that those theories were adequately disclosed in Apple's invalidity contentions. (Dkt. No. 459).

[FF 5] A jury trial was held during the week of March 15, 2021. The jury returned a unanimous verdict finding that Apple infringed at least one of claims 13, 14, 15, or 16 of the ’091 patent. The jury awarded PMC $308,488,108.00 in reasonable-royalty damages in the form of a running royalty. (Dkt. No. 572).

[FF 6] A few weeks later, the Court entered a Bench Trial Docket Control Order, setting a date for the bench trial and setting interim dates for PMC's additional discovery. (Dkt. No. 616). The parties filed a Joint Bench Trial Memorandum, stating both the contested issues with respective positions and ninety-seven Stipulations. (Dkt. No. 623). The Court also held a pre-trial conference. (Dkt. Nos. 631, 632).

[FF 7] The bench trial was held on June 22, 2021. (Dkt. No. 631). The parties informed the Court that Apple would no longer pursue its inequitable conduct counterclaim. (Bench Tr. 12:22–13:1). The Court proceeded to hear evidence and argument on the three remaining issues of prosecution laches, OTDP, and unclean hands.

B. The 1981 and 1987 Patent Applications

[FF 8] PMC and its patents originated with the inventions of John Harvey and James Cuddihy. (Jury Tr. 325:22–329:10). On the advice of Tom Scott, a friend and former classmate of Mr. Harvey who is a patent attorney—Mr. Harvey and Mr. Cuddihy sought patent protection for their inventions. (Jury Tr. 329:23–330:9).

[FF 9] Messrs. Harvey and Cuddihy filed their first patent application on November 3, 1981. (Jury Tr. 325:29–331:12). Mr. Harvey testified that he and Mr. Cuddihy drafted the entire application themselves. (Id. ). This application was designated U.S. Patent Application No. 06/317,510 (the "’510 application"). (DTX-3 (cover); Stip. 36). U.S. Patent No. 4,694,490 (the "’490 patent") issued from the ’510 application on September 15, 1987. (Stips. 1–2). The ’510 application was 44 pages long. (Stip. 3). Harvey and Cuddihy filed several continuations based on the disclosure in the ’510 application. (Stips. 5–9). The ’510 application is referred to internally by PMC as "Harvey 1." (Stip. 4; Bench Tr. 23:6–12).

[FF 10] On September 11, 1987, Messrs. Harvey and Cuddihy filed U.S. Patent Application No. 07/096,096 (the "’096 application"). The ’096 application was a continuation-in-part of the original disclosure in the ’510 application. (DTX-3 (cover); Stips. 6–13). The ’096 application was around 557 pages long. (Stip. 11). The disclosure in the ’096 application eventually matured into the asserted ’091 patent, which issued 25 years later in 2012. (DTX-3 (cover)). The ’096 application is referred to internally by PMC as "Harvey 3." (Stip. 12; Bench Tr. 23:6–12).

[FF 11] These two applications formed the universe of PMC's patent disclosures.

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PMC has been issued 101 patents as of April 22, 2020 from the 1981 and 1987 specifications. (Stip. 96). Mr. Harvey acknowledged at the jury trial that PMC's patents did not contain any new inventions beyond what was originally disclosed in 1981 and 1987. (Jury Tr. 352:4–353:14). He noted that he "ha[d] not studied what's gone on in the world ... since 1987." (Jury Tr. 356:5–18).

C. PMC and its Patent Strategy

[FF 12] PMC was officially founded in 1987 as the National Cable Clearinghouse. (Jury Tr. 221:18–24). The name was later changed to the Personalized Mass Media Corporation ("PMMC"), and again to Personalized Media Communications (PMC).³ (Jury Tr. 251:10–14; Bench Tr. 43:11–13). Key individuals, along with Mr. Harvey, Mr. Cuddihy, and Mr. Scott, included Mary Katherine ("Kazie") Metzger and Gerald Holtzman. Mr. Holtzman (who died during the pendency of this lawsuit and testified only by deposition) was the past president of PMC, and before that served as its general counsel. Mr. Scott is PMC's current general counsel and was previously outside counsel. Ms. Metzger is PMC's current CEO. (Jury Tr. 212:22–214:3; 230:7–231:15; 249:1–9; 252:24–253:4; Bench Tr. 21:2–23).

[FF 13] From 1981 until 1994, PMC and its inventors prosecuted their patent applications serially. (DTX-3 (cover)). During that time, PMC filed a total of seven patent applications, including the ’510 application in 1981 and the ’096 application in...