Chatham v. Canterbury Ventures, LLC (17-cv-11473).

Ex-Patriot Matt Chatham and his wife sued their former builder Daniel Lewis and his company, Canterbury Ventures in 2017, accusing Lewis of seeking to sell a house built using Chatham’s copyrighted custom architectural plans to a third party after failing to complete construction for the Chathams and then unilaterally terminating their agreement. Prior to the close of discovery, the Defendants moved for summary judgment on the copyright, breach of contract, and breach of the implied covenant of good faith and fair dealing claims, and further that specific performance was not available. The motion was argued before Magistrate Judge Cabell, who yesterday recommended denial the Defendants’ motion in its entirety. Defendants had argued that the copyright claim should fail because Chatham never reserved his copyrights when giving the plans to Lewis, and therefore could no longer claim copyright protection. Judge Cabell, noting that copyright vests at the time of creation, found this argument to have no legal consequences, because silence does not affect the validity of an existing copyright. He found that the First Sale Doctrine does not apply, because while the Chathams may have provided a copy of the plans and authorized the use to build the Chatham’s home, they did not sell the copyrighted article. Finally he determined that, while the Chathams’ Purchase and Sale Agreement licensed Canterbury to use the plans to construct the house, there was a factual dispute as to whether the scope of the license permitted construction of the house for sale to anyone other than the Chathams. On the contract issue, Judge Cabell determined that there was a factual dispute as to whether the P&S Agreement terminated as of the last closing date identified in the Agreement or whether there was an oral agreement to extend the Agreement to allow the home to be completed and sold to the Chathams. He noted that correspondence from counsel for the Defendants following the purported termination stating that “Canterbury continues to perform construction on the Property in good faith and in accordance with the P&S” and the fact that Canterbury continued working on the house in consultation with the Chathams following the purported termination date provided “strong if not dispositive evidence” that the parties had agreed to extend. Finally, he denied the motion with respect to the covenant of good faith and fair dealing and specific performance as they were reliant on success in the copyright and contract parts of the motion.

I and others at my firm, along with Paul Mordarski and Jordan Carroll of Morrissey, Hawkins & Lynch, represent the Chathams in this matter, and naturally, we are quite pleased with the result.

Egenera, Inc. v. Cisco Systems, Inc. (16-cv-11613).

Judge Stearns denied Cisco’s motion for attorneys’ fees under § 285. Cisco asserted that the case became exceptional on August 17, 2016, when Egenera, in a parallel IPR proceeding, submitted a declaration from one of its employees stating that he had been erroneously named as an inventor. Egenera removed him as an inventor so that it could rely on an internal document that pre-dated his employment to swear behind a reference. The patent was subsequently invalidated for failure to name all inventors when Judge Stearns construed the claims and determined that the employee had made an inventive contribution. According to Cisco, Egenera at that point had thoroughly reviewed the inventorship issue and should have realized, at least as of the claim construction order, that the employee was improperly removed. While agreeing that Egenera’s investigation was “wanting,” Judge Stearns found that the survival of the inventorship dispute through summary judgment meant that the case did not rise to exceptional.

Cisco’s Bill of Costs was denied in part. He allowed costs related to professionally produced video deposition clips and trial demonstratives, noting that the prevalence of witness credibility issues necessitated their use, but found the requested amount of $60,341 for a three-day trial excessive by half. He further cut summons and subpoena costs to eliminate the excess fees charged for emergency or urgent service.

This is the second case I have seen in recent days in which exceptionality was tied to amenability to summary judgment – Judge Saylor denied a request for fees because the plaintiff had not sought summary judgment. I do not that the grant of summary judgment does not automatically result in a finding of exceptionality, however, and hope that this recent small trend does not become a de facto precedent for the award of attorneys’ fees, as I can envision cases that, while having issues of fact in dispute, still rise to the level of exceptionality, and would hate to see arguments to that effect precluded.

ACQIS, LLC v. EMC Corp. (14-cv-13560).

ACQIS accused EMC of infringing eleven patents relating to consoles containing computer peripherals, such as a keyboard, mouse, display and disk drive, into which a core computer module having the CPU, memory, I/O and hard drive) can be inserted to form a complete PC. EMC filed a number of affirmative defenses, including alleging that the complaint failed to state a claim on which relief could be granted. In July 2018, ACQIS moved for summary judgment on that defense, asserting that failure to state a claim is not a proper affirmative defense under the Federal Rules of Civil Procedure as well as EMC’s purported failure to identify a factual or legal basis for the defense when the parties met and conferred on the issue. Judge Burroughs denied that motion, finding that the viability of pleading failure to state a claim as an affirmative defense was, in the circumstances of the case, “purely academic” and that resolution of the question would not impact the litigation or entitle either party to judgment as a matter of law on any issue.

Intellectual Ventures I, LLC et al. v. Lenovo Group Ltd. et al. (16-cv-10860).

Following invalidation of independent claim 1 (and a number of other claims) of the sole asserted patent in an inter partes review, Lenovo moved for summary judgment of invalidity of the sole asserted claim of the patent. Lenovo asserted both collateral estoppel and that there was no genuine issue of fact that the claim was obvious. Judge Saris ruled that estoppel applied and granted Lenovo’s motion. The asserted patent related to symmetric multiprocessor or shared-memory multiprocessor systems. Claim 1, which was invalidated by the PTAB, recited the system in some detail; claim 11, the sole asserted claim, added that the system further comprised the microprocessors and the memory device of the system, without further limitation. Notably, claim 11 was not challenged during the IPR. Lenovo asserted that collateral estoppel should apply because Intellectual Ventures could not show that the additional limitations of claim 11 “materially alter the question of invalidity.” Noting that the Federal Circuit had determined that issue preclusion applies to an invalidity finding before the PTAB despite the different standards of proof and of claim construction between the PTAB and district court, Judge Saris determined that estoppel applies. She indicated that the claims need not be identical for estoppel to apply, merely that the issues be the same. As claim 1 had been fully adjudicated, the sole question was whether the differences between claim 1 and claim 11 alter the infringement analysis in a meaningful way – Judge Saris determined that it did not. Claim 1 included limitations on the interfaces between microprocessors and memory devices. Claim 11 merely affirmatively claimed the microprocessors and memory devices. The PTAB had determined that the prior art reference relied upon disclosed microprocessors and memory devices, meaning that the claim did not add anything to the invalidity analysis that had not been determined before the PTAB.

Photographic Illustrators Corp. v. Orgill, Inc. et al. (14-cv-11818).

Photographic Illustrators, a company working in commercial photography, accused Orgill of infringing a number of Photographic Illustrators’ copyrights in photographs of Osram Sylvania lighting products. Orsram has a license to the photographs; PI asserts that Orgill, an Osram distributor, is not covered by that license. Orgill was granted summary judgment on PI’s DMCA and Lanham Act claims in 2015, but Orgill’s motion with respect to the copyright infringement claim was denied. Following an arbitration involving PI and Osram, Orgill again moved for summary judgment on the copyright claim, asserting that they were sublicensed under the Osram license and that that arbitration award precludes the copyright claim. PI cross-moved for summary judgment that there was no sublicense or that Orgill’s use fell outside of the purported sublicense.

Orgill asserted that it had impliedly been sublicensed by Osram, which was confirmed in a nunc pro tunc 2014 sublicense. In her 2015 decision, Judge Saris found that PI had provided sufficient evidence that Orgill had sublicensed the photographs to Orgill’s dealers for a fee, which was not permitted under PI’s license with Osram, and without the attribution required by the PI/Osram agreement. Subsequently, the arbitrator found that the no-fee provision and the attribution provision were merely covenants enforceable via contract law, rather than conditions on Osram’s license.

In her decision of last week, Judge Saris determined that Osram had granted Orgill an unwritten sublicense, through its course of conduct in giving Orgill images to promote Osram products since 1998 and in never objecting to Orgill’s use of the images. She further found that an implied sublicense could legally be granted. PI had asserted that an implied copyright license could not be granted by a licensee to a sublicensee who has no direct contact with the copyright holder; looking to the totality of the circumstances to determine that the parties intended Orgill to be licensed, specifically that PI intended to permit Osram to sublicense the photographs and that Osram intended that Orgill be licensed to use the images. The arbitration decision effectively precluded PI from arguing that Orgill exceeded the scope of this implied sublicense, because the relevant terms of PI’s license with Osram did not condition sublicenses Osram could make. She further found that the confirmatory sublicense, which included language requiring attribution where feasible, but further stated that this requirement was “[w]ithout effect on the rights of Orgill… to Use the Images as granted…” This quoted language meant that the attribution requirement was not a condition which must be met to form the sublicense, but again merely a contractual obligation. Accordingly, use by Orgill of photographs lacking attribution cannot be the basis for the copyright infringement claim.

Judge Saris further addressed PI’s argument that it had not licensed “approval” images to Osram, such that Orgill could not have been sublicensed with respect to those images. These “approval” images were rough photographs sent to Osram for approval before being retouched and refined into he final photographs by PI. While the issue of whether these images were licensed was not affirmatively determined by the arbitrator, Judge Saris determined that PI had not disclosed this infringement theory during discovery, and precluded PI from pursuing this theory under FRCP 37(c)(1). Accordingly, she granted Orgill’s motion for summary judgment.

Palomar Technologies, Inc. v. MRSI Systems, LLC (18-cv-10236).

In a case involving allegations of infringement of a patent relating to placement of components on circuit boards, Palomar sought partial summary judgment of literal infringement.  Palomar asserted that of the three non-infringement grounds MRSI provided, one was based on a frivolous claim construction and the other two were directly contradicted by MRSI’s 30(b0(6) witness. Palomar also sought summary judgment on MRSA’s public use invalidity defense, alleging that MRSI had failed to timely provide contentions relating to this issue that provided the requisite detail to maintain the defense. Noting that o claim construction order has yet issued and discovery remains on-going, Judge Saylor denied Palomar’s motions without prejudice, finding them to be premature. He further noted that, to the extent the motions were the result of an alleged failure of MRSI to provide discovery or make required disclosures, a motion to compel or for sanctions would be the appropriate step for Palomar to take.

Egenera, Inc. v. Cisco Systems, Inc. (16-cv-11613).

Egenera accused Cisco of infringing the ‘430 patent, which names Egenera employee Peter Schulter as one of the inventors. When Cisco sought inter partes review on the basis of a 2000 reference, Egenera sought to swear behind the reference (under the first-to-invent rule, as the invention predates the AIA’s first-to-file system). Egenera relied on a document authored by inventor Max Smith, that Egenera asserts fully described the claimed invention. This document, however, pre-dates Schulter’s employment with Egenera. Egenera successfully petitioned to have Schulter removed as an inventor, and filed a declaration from Schulter stating that he was erroneously named. Cicso contended that Schulter should have been named as an inventor, and that by his removal the patent is invalid.

Judge Stearns agreed with Cisco that, should Schulter be determined to have contributed to the invention, Egenera could not petition to have him restored as an inventor under the doctrine of judicial estoppel, as such a claim would be inconsistent with Egenera’s assertion that he was incorrectly named. Judge Stearns determined, however, that while Schulter authored a pre-critical date document on a virtual LAN proxy that potentially read on a means-plus-function term in the claims, his authorship alone was not enough to determine, as a matter of law, that he conceived of the virtual LAN proxy or that the virtual LAN proxy was claimed via the means-plus-function limitation. Accordingly, he denied the cross motions for summary judgment on inventorship.