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HUGHES AIRCRAFT CO. v. NATIONAL SEMICONDUCTOR CORP

June 2, 1994

HUGHES AIRCRAFT COMPANY, Plaintiff,
v.
NATIONAL SEMICONDUCTOR CORPORATION, Defendant.


Williams


The opinion of the court was delivered by: SPENCER WILLIAMS

BACKGROUND

 Plaintiff Hughes Aircraft Company (hereafter "Hughes") is the assignee of the following United States patents, each of which is directed to technology used in the semiconductor industry: (1) No. 3,472,712, entitled "Field-Effect Device with Insulated Gate," originally issued on October 14, 1969; (2) No. 3,507,709, entitled "Method of Irradiating Dielectric-Coated Semiconductor Bodies with Low Energy Electrons," originally issued on April 21, 1970; and (3) No. 3,615,934, entitled "Insulated Gate Field Effect Device Having Source and Drain Regions Formed in Part by Ion Implantation and Method of Making Same," originally issued on October 26, 1971. These patents are collectively referred to as "the Bower patents."

 Starting in 1980, Hughes began contacting companies which it believed were infringing the Bower patents. Defendant National Semiconductor Corporation (hereafter "NSC") was one of the companies Hughes contacted. In 1988 Hughes entered into a tolling agreement with NSC which provided in pertinent part that

 
The statutory period of recovery under 35 U.S.C. § 286 *fn1" is hereby tolled as of September 1, 1988 with respect to [the Bower patents] such that in any subsequent lawsuit by HUGHES AIRCRAFT COMPANY against NATIONAL SEMICONDUCTOR CORPORATION alleging infringement of [the Bower patents], NATIONAL SEMICONDUCTOR CORPORATION shall not assert 35 U.S.C. § 286 as a defense for any infringement of said patents occurring subsequent to September 1, 1982.

 On May 29, 1992, NSC and Hughes executed a tolling agreement extension, which provided in pertinent part that

 
HUGHES and NATIONAL desire to promptly enter into and pursue negotiations toward settlement of HUGHES' claim against NATIONAL for infringement of the [Bower] patents without the need for HUGHES to file an infringement lawsuit against NATIONAL and for NATIONAL to defend such suit[.]
 
* * *
 
WHEREAS [in the 1988 tolling agreement], NATIONAL agreed [that it] would not assert 35 U.S.C. 286 as a defense to damages for any infringement of said patents occurring subsequent to September 1, 1982 . . . . The tolling period under 35 U.S.C. 286 in the aforesaid Tolling Agreement between NATIONAL and HUGHES is hereby extended until December 1, 1992 with respect to damages under 35 U.S.C. 286 such that the tolled period runs from September 1, 1982 to December 1, 1986.

 On December 2, 1992, Hughes filed the above-captioned patent infringement suit against NSC in the Northern District of Illinois. Also on December 2, 1992, NSC filed a Complaint for Declaratory Relief and Breach of Contract in Santa Clara County Superior Court, alleging among other things that the tolling agreements were unenforceable. Santa Clara County Sup. Ct. No. 726934. According to its memorandum of points and authorities in support of its Motion for Summary Adjudication of Contract Unenforceability, NSC's theory was that enforcement of the tolling agreements would (1) extend the life of the Bower patents and Hughes' right to sue for infringement of them beyond that which was allowed under federal law; and (2) give Hughes an almost limitless right of recovery, since neither the tolling agreement nor the tolling agreement extension placed any limitation on how long Hughes could delay in bringing suit. The Superior Court denied NSC's Motion for Summary Adjudication and subsequently entered summary adjudication in favor of Hughes. See October 28, 1993 Notice of Ruling; April 13, 1994 Notice of Ruling.

 On March 4, 1993, Hughes' federal action was transferred to the Northern District of California pursuant to 28 U.S.C. § 1404(a). On May 7, 1993, NSC and its subsidiary, Fairchild Semiconductor Corporation (hereafter "Fairchild"), filed a Counterclaim against Hughes and its parent company, General Motors Corporation, alleging that they had infringed and induced the infringement of three of its United States Patents: (1) No. 3,901,735, entitled "Integrated Circuit Device and Method Utilizing Ion Implanted and Up Diffusion for Isolated Region," issued August 26, 1975; (2) No. 4,325,984, entitled "Plasma Passivation Technique for the Prevention of Post-Etch Corrosion of Plasma-Etched Aluminum Fields," issued on April 20, 1982; and (3) No. 4,599,634, entitled "Stress Insensitive Integrated Circuit," issued on July 8, 1986.

 Also on December 28, 1993, NSC moved for partial summary judgment regarding its alleged acts of infringement occurring more than six years before Hughes filed its Complaint. In this Motion, NSC argued that even if the tolling agreements were fully enforceable as written, they were nevertheless irrelevant, since Hughes filed its Complaint one day after they expired. Hughes filed a Cross-Motion for Partial Summary Judgment on the issue of whether, based on the tolling agreements, it can recover damages for infringement occurring as early as September 1, 1982. On March 24, 1994, the Court ordered supplemental briefing on these Motions and scheduled a supplemental hearing for May 25, 1994. Hughes Aircraft Company v. National Semiconductor Corp., 850 F. Supp. 828, 1994 WL 175865 (N.D. Cal. March 24, 1994).

 On April 20, 1994, Counterdefendant General Motors filed a Motion for Summary Judgment on NSC and Fairchild's Counterclaim for infringement of the '735, '984 and '634 patents. On April 28, 1994, NSC and Fairchild filed a Motion for Leave to File an Amended Counterclaim which would add Delco Electronics Corporation, a subsidiary of General Motors, as a Counterdefendant. The Court also heard oral argument regarding these Motions on May 25, 1994.

 For the reasons stated below, the Court (1) DENIES NSC's Motion for Partial Summary Judgment; (2) GRANTS Hughes' Cross-Motion for Partial Summary Judgment; (3) GRANTS General Motors' Motion for Summary Judgment; and (4) DENIES NSC and Fairchild's Motion for Leave to File an Amended Counterclaim.

 DISCUSSION

 A. NSC's Motion for Partial Summary Judgment Re: Infringement Occurring More Than Six Years Before the Filing of The Complaint and Hughes' Cross-Motion for Partial Summary Judgment

 
1. Legal Standard

 A party moving for summary judgment bears "the initial responsibility of informing the district court of the basis for its motion . . . ." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986). To sustain this burden, the moving party must demonstrate that no genuine issue of material fact exists for trial. Id., 477 U.S. at 322, 106 S. Ct. at 2552. However, the moving party is not required to ...


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