United States District Court, N.D. California
September 19, 2005.
TV INTERACTIVE DATA CORPORATION, Plaintiff,
MICROSOFT CORPORATION, Defendant.
The opinion of the court was delivered by: JEFFREY S. WHITE, District Judge
ORDER DENYING IN PART AND GRANTING IN PART TV INTERACTIVE DATA'S
MOTION FOR SUMMARY JUDGMENT
Now before the Court is the motion of Plaintiff TV Interactive
Data Corporation ("TVI") for summary judgment. Having carefully
reviewed the parties' papers and considered their arguments and
the relevant legal authority, and good cause appearing, the Court
hereby DENIES IN PART AND GRANTS IN PART TVI's motion for summary
judgment. According to the parties' representations and the
Court's prior rulings on the motions for summary judgment filed
by Defendant Microsoft Corporation ("Microsoft"), the only
remaining issues before the Court are the affirmative defenses of
inequitable conduct and laches. The Court DENIES summary judgment
as to the inequitable conduct affirmative defense and GRANTS
summary judgment as to the laches affirmative defense. A. Legal Standard on Summary Judgment.
Summary judgment is appropriate when there is no genuine issue
as to any material fact and the moving party is entitled to
judgment as a matter of law. Union States Gypsum Co. v. Nat'l
Gypsum Co., 74 F.3d 1209, 1212 (Fed. Cir. 1996). The burden of
demonstrating the absence of any genuine issue of material fact
rests with the moving party. SRI Int'l v. Matsushita Elec.
Corp., 775 F.2d 1107, 1116 (Fed. Cir. 1985). In order to defeat
summary judgment, the non-moving party must do "more than simply
show that there is some metaphysical doubt as to the material
facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586 (1986). Rather, the non-moving party must set forth
"specific facts showing that there is a genuine issue for trial."
Fed.R.Civ.P. 56(2); Matsushita Elec., 475 U.S. at 587.
B. Inequitable Conduct.
To establish inequitable conduct, Microsoft must prove by clear
and convincing evidence that TVI's investors (1) made affirmative
misrepresentations of a material fact to, or purposely withheld
material prior art from, the Patent and Trademark Office ("PTO"),
and (2) that they did so with an intent to deceive the PTO into
issuing the patents. Molins PLC v. Textron, Inc., 48 F.3d 1172,
1178 (Fed. Cir. 1995). Microsoft alleges that TVI is guilty of
inequitable conduct because it failed to disclose the 3DO system
comprehensively and because it failed to disclose Commodore's
CDTV as prior art. Because the Court finds that the evidence is
disputed regarding TVI's knowledge of these systems and their
similarity to the patented technology, the Court must deny
summary judgment as to the inequitable conduct affirmative
defense. Although inequitable conduct is a matter for the court
rather than the jury to resolve, summary judgment is
inappropriate if there remain genuine issues of material fact.
Paragon Podiatry Lab., Inc. v. KLM Labs., Inc., 984 F.2d 1182,
1190 (Fed. Cir. 1993).
TVI moves for summary judgment against Microsoft's affirmative
defense of laches. Microsoft contends that the complaint, filed
on May 16, 2002, is barred by the doctrine of laches due to
unreasonable delay in filing. The complaint was filed five years
after the first patent-in-suit was issued by the PTO and seven
weeks after the last patent-in-suit was issued. To successfully invoke laches as an affirmative defense, a
defendant must prove that the plaintiff delayed filing suit an
unreasonable and inexcusable length of time after the plaintiff
knew or reasonably should have known of its claim against the
defendant and that the delay resulted in material prejudice to
the defendant. State Contracting & Engineering Corp. v. Condotte
America, Inc., 346 F.3d 1057, 1065-66 (Fed. Cir. 2003); Gasser
Chair Co., Inc. v. Infanti Chair Mfg. Corp., 60 F.3d 770, 773
(Fed. Cir. 1995). Once those factual premises are established,
the Court must weigh the equities in order to assess whether
laches should apply to bar those damages that accrued prior to
suit. Advanced Cardiovascular Sys., Inc. v. SciMed Life Sys.,
Inc., 988 F.2d 1157, 1161 (Fed. Cir. 1993); A.C. Aukerman Co.
v. R.L. Chaides Constr. Co., 960 F.2d 1020, 1041 (Fed. Cir.
1992). Because the period of delay in this case was less than six
years, prejudice cannot be presumed. See Aukerman,
960 F.2d at 1035-36. Accordingly, in order to establish their defense of
laches, Microsoft must demonstrate that the delay was
unreasonable, inexcusable and materially prejudiced them.
Material prejudice may be either economic or evidentiary. Id.
at 1033. Economic prejudice arises when a defendant suffers the
loss of monetary investments or incurs damages that likely would
have been prevented by earlier suit. Id. A nexus must be shown
between the patentee's delay in filing suit and the expenditures;
the alleged infringer must change his position "because of and as
a result of the delay." Hemstreet v. Computer Entry Sys. Corp.,
972 F.2d 1290, 1294 (Fed. Cir. 1992); see also Gasser Chair,
60 F.3d at 775 ("We reiterate that a change in the economic position
of the infringer during the period of delay must be as a result
of the delay; the infringer must prove that the change in
economic position would not have occurred had the patentee sued
Microsoft contends that it incurred economic prejudice because
with earlier knowledge of potential infringement, it might have
changed the design of Autoplay. (See Declaration of Kelly C.
Hunsaker, Ex. LL, Wagner Depo. at 160:25-161:19, 222:3-19.)
However, it is undisputed that Microsoft was on notice of TVI's
patent rights as of January 1999 when the patent examiner
rejected Microsoft's application as anticipated by the Redford
patent. (See Second Declaration of Niall A. MacLeod, Ex. 35.)
There is no evidence in the record that Microsoft had any plans to change the design of Autoplay at any
time between notice and TVI's filing of this lawsuit. The damages
Microsoft avers does not establish that it changed its position
"because of and as a result of the delay." See Hemstreet,
972 F.2d at 1294. Monetary losses are not merely those attributable
to a finding of liability for infringement. The Court must look
for a change in the economic position of the alleged infringer
during the period of delay. See Aukerman, 960 F.2d at 1033.
Microsoft has failed to establish the kind of economic prejudice
that is required to support a finding of laches.
Evidentiary prejudice arises where the plaintiff's delay
impairs the defendant's ability to defend a patent suit 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. Here,
however, the passage of time and the potential evidentiary
prejudice appears to favor Microsoft, not to work at its
disadvantage. The evidence related to TVI's reduction to practice
arguments would have benefitted TVI and Microsoft's failure to
find its own e-mails from 1993 is unrelated to the timing of this
lawsuit and arises from its own failure to preserve all
patent-related materials for thirty years, as required by its
Accordingly, TVI's motion for summary judgment as to the
inequitable conduct affirmative defense is DENIED and as to the
laches affirmative defense is GRANTED.
IT IS SO ORDERED.
© 1992-2005 VersusLaw Inc.