Universal Elecs., Inc. v. Universal Remote Control, Inc.
| Decision Date | 24 March 2014 |
| Docket Number | Case No. SACV 12–00329 AG JPRx. |
| Citation | 34 F.Supp.3d 1061 |
| Court | U.S. District Court — Central District of California |
| Parties | UNIVERSAL ELECTRONICS, INC., Plaintiff, v. UNIVERSAL REMOTE CONTROL, INC., Defendant. |
Anna R. Buono, Martin L. Fineman, Nicolas A. Jampol, Davis Wright Tremaine LLP, Los Angeles, CA, Brian E. Haan, Christopher J. Lee, Frederick C. Laney, Laura A. Kenneally, Raymond P. Niro, Sr., Ashley E. Lavalley, Niro Scavone Haller and Niro Ltd., Chicago, IL, for Plaintiff.
Brian K. Brookey, Clarence Andrew Rowland, Theodore W. Chandler, Sidley Austin LLP, Steven Erick Lauridsen, Tucker Ellis LLP, Los Angeles, CA, Cynthia A. Chi, Samuel R. Miller, Sidley Austin LLP, Teague I. Donahey, Skjerven Morrill, San Francisco, CA, Keith J. Barkaus, Douglas A. Miro, Martin Pfeffer, Michael F. Hurley, Osterlenk Faber LLP, New York, NY, Peter H. Kang, Sidley Austin LLP, Palo Alto, CA, Brian E. Haan, Laura A. Kenneally, Niro Haller and Niro Ltd., Chicago, IL, for Defendant.
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT UNIVERSAL REMOTE CONTROL, INC.'S OMNIBUS MOTION FOR SUMMARY JUDGMENT
Defendant Universal Remote Control, Inc. (“Defendant”) moves for summary judgment on seven separate issues. Plaintiff Universal Electronics, Inc. (“Plaintiff”) opposes the Motion. The Motion is GRANTED IN PART and DENIED IN PART.
Plaintiff and Defendant are competitors in the universal remote control business.
On March 2, 2012, Plaintiff filed this suit, alleging infringement of U.S. Patents Nos. 5,414,426 (“'426 Patent”), 5,614,906 (“'906 Patent”), 6,587,067 (“'067 Patent”), and 5,568,367 (“'367 Patent”). Both the '426 Patent and the '067 Patent have expired. On February 1, 2013, the Court issued its Claim Construction Order, 2013 WL 2356163, which invalidated the only relevant claim in the '367 Patent. On May 2, 2013, 943 F.Supp.2d 1028 (C.D.Cal.2013), the Court denied Defendant's motion to stay the case pending inter partes review. On May 14, 2013, the Court denied Plaintiff's Motion for Reconsideration of Claim Construction. Defendant sought to file three summary judgment motions, with overlength briefing. The Court denied Defendant the excessive length it sought, but allowed opening and opposition briefs of 45 pages, and a reply of 20 pages. Plaintiff's separate motion for summary judgment is addressed in an accompanying order. Trial is set for May 6, 2014.
Summary judgment is appropriate where the record, read in the light most favorable to the non-moving party, shows that “there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c) ; see Celotex Corp. v. Catrett, 477 U.S. 317, 323–24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Material facts are those necessary to the proof or defense of a claim, as determined by reference to substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A factual issue is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. In deciding a motion for summary judgment, “[t]he evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor.” Id. at 269, 106 S.Ct. 2505.
The burden initially is on the moving party to show an absence of a genuine issue of material fact or to demonstrate that the nonmoving party will be unable to make a sufficient showing on an essential element of its case for which it has the burden of proof. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. Only if the moving party meets its burden must the non-moving party produce evidence to rebut the moving party's claim and create a genuine issue of material fact. Id. at 322–23, 106 S.Ct. 2548. If the non-moving party meets this burden, then the motion will be denied. Nissan Fire & Marine Ins. Co. v. Fritz Co., Inc., 210 F.3d 1099, 1103 (9th Cir.2000).
The legal standards applicable to each issue on which Defendant seeks summary judgment will be discussed in the appropriate portion of the Analysis section.
1. LACHES, ESTOPPEL, AND IMPLIED LICENSE
Defendant argues that Plaintiff knew of Defendant's alleged infringement of the '067 Patent and '426 Patent for over a decade before filing this action. (Mot. 3.) Defendant also argues that it has an implied license to the '426 Patent because (1) Plaintiff licensed U.S. Patent No. 5,959,751 (“'751 Patent”) to Defendant and (2) Defendant cannot practice the '751 Patent without practicing the '426 Patent because the patents claim the same subject matter. (Mot. 3–4.) Plaintiff responds that the lawsuit it filed against Defendant in 2000 (“2000 Litigation”) involved claims 1 and 4 of the ' 426 Patent, but not claims 2 and 3 of that patent, which are the claims at issue in this case. (Opp'n 2.) In the 2000 Litigation, Plaintiff dismissed its claim for infringement of the '426 Patent in 2002, and then in 2004, the parties entered into a settlement and license agreement for the “Patents–In–Suit.” (Opp'n 2, Decl. of Clarence Rowland In Supp. of Mot. (“Rowland Decl.”) Exs. 16–17.) The parties agree that at the time, Plaintiff offered Defendant a license to other patents, including the '067 Patent, which Defendant declined. (Mot. 4–6, Opp'n 2–3.) But the parties dispute whether the '426 Patent was part of that offer, and whether it was impliedly licensed through the express license to the '751 Patent. (Mot. 4–6, Opp'n 2–3.)
1.1 Laches ('426 Patent and '067 Patent )
1.1.1 Legal Standard
“As equitable defenses, laches and equitable estoppel are matters committed to the sound discretion of the trial judge,” reviewed for abuse of discretion. A.C. Aukerman Co. v. R.L. Chaides Const. Co., 960 F.2d 1020, 1028 (Fed.Cir.1992) (en banc). “[L]aches may be defined as the neglect or delay in bringing suit to remedy an alleged wrong, which taken together with lapse of time and other circumstances, causes prejudice to the adverse party and operates as an equitable bar.” Id. at 1028–29. Laches may operate to bar damages otherwise within the six year recovery period provided by 35 U.S.C. § 286. Id. at 1030.
Id. at 1032. “Such prejudice may be either economic or evidentiary.” Id. at 1033. “Evidentiary, or ‘defense’ prejudice, may arise by reason of a defendant's inability to present a full and fair defense on the merits due to the loss of records, the death of a witness, or the unreliability of memories of long past events, thereby undermining the court's ability to judge the facts.” Id. Economic prejudice may arise where there is a “change in the economic position of the alleged infringer during the period of delay.” Id. “[E]conomic prejudice is not a simple concept but rather is likely to be a slippery issue to resolve.” Id. “A court must also consider and weigh any justification offered by the plaintiff for its delay.” Id. ().
“A patentee may also defeat a laches defense if the infringer has engaged in particularly egregious conduct which would change the equities significantly in plaintiff's favor.” Id. (internal citations and quotations omitted). “Conscious copying may be such a factor weighing against the defendant, whereas ignorance or a good faith belief in the merits of a defense may tilt matters in its favor.” Id. In patent cases, there is a presumption of laches where the patentee delayed filing suit for more than six years after actual or constructive knowledge of the infringement. Id. at 1035–36. Laches must be shown by a preponderance of the evidence. Id. at 1045.
1.1.2 The Reasonableness of Plaintiff's Delay
Defendant argues that although the '067 Patent was specifically referenced in the 2004 license as a “UEI Related Patent” that potentially could be the subject of an infringement action in the future, and although Plaintiff had full knowledge of Defendant's product line, Plaintiff delayed suing for infringement of the '067 Patent. Plaintiff filed suit in March 2012, more than seven years after the 2004 license and almost five years after the '067 Patent expired. (Mot. 6, Rowland Decl. Ex. 16 §§ 1.8, 3.5.) Plaintiff accused Defendant of infringing the '426 Patent on March 1, 2010. (Mot. 6, Rowland Decl. Ex. 18.) Defendant argues that Plaintiff admitted that it keeps abreast of its competitor's products, has encountered Defendant's products many times over the years, and has investigated Defendant for reasons concerning competitive bidding processes. (Mot. 8 .)
Defendant's quotation ends at page 448, line 9 of the deposition, but lines 10–22 undercut the idea that Plaintiff knew of Defendant's activities that might infringe the '067 Patent “for years” before filing this action. Specifically, the following question and answer revealed that the only time the deponent could recall Plaintiff “investigating what URC was doing” “as part if its ... due diligence and in trying to position itself as well as possible” in competitive business processes was in 2010, when Defendant was promoting a feature called “Quick Step” or “Quick Set.” (Sept. 12, 2013 Hayes Dep. 448:10–22, Rowland Decl. Ex. 81.)
Defendant also argues that Plaintiff had constructive notice because Defendant's sale of millions of remote control devices and website describing many of the accused products rendered the allegedly infringing activity “sufficiently prevalent in the inventor's field of endeavor.” (Mot. 8 (...
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