Opinion
SACV 12-00329 AG (JPRx)
April 21, 2014, Decided. April 21, 2014, Filed
For Universal Electronics Inc, Plaintiff: Mark A Finkelstein, LEAD ATTORNEY, Jones Day, Irvine, CA; David B Cochran, Theodore M Grossman, Thomas R Goots, PRO HAC VICE, Jones Day, Cleveland, OH.
For Universal Remote Control Inc, Defendant: Brian K Brookey, LEAD ATTORNEY, Steven Erick Lauridsen, Tucker Ellis LLP, Los Angeles, CA; Clarence Andrew Rowland, Theodore W Chandler, LEAD ATTORNEYS, Sidley Austin LLP, Los Angeles, CA; Cynthia A. Chi, Samuel R Miller, LEAD ATTORNEYS, Sidley Austin LLP, San Francisco, CA; Keith J Barkaus, PRO HAC VICE, LEAD ATTORNEY, Ostrolenk Faber LLP, New York, NY; Peter H Kang, LEAD ATTORNEY, Sidley Austin LLP, Palo Alto, CA; Teague I Donahey, LEAD ATTORNEY, Skjerven Morrill, San Francisco, CA; Brian E Haan, Laura A Kenneally, Niro Haller and Niro Ltd, Chicago, IL; Douglas A Miro, Martin Pfeffer, PRO HAC VICE, Ostrolenk Faber LLP, New York, NY; Michael F Hurley, PRO HAC VICE, Osterlenk Faber LLP, New York, NY.
For Universal Remote Control Inc, Counter Claimant: Brian K Brookey, LEAD ATTORNEY, Steven Erick Lauridsen, Tucker Ellis LLP, Los Angeles, CA; Clarence Andrew Rowland, Theodore W Chandler, LEAD ATTORNEYS, Sidley Austin LLP, Los Angeles, CA; Cynthia A. Chi, Samuel R Miller, LEAD ATTORNEYS, Sidley Austin LLP, San Francisco, CA; Peter H Kang, LEAD ATTORNEY, Sidley Austin LLP, Palo Alto, CA; Teague I Donahey, LEAD ATTORNEY, Skjerven Morrill, San Francisco, CA; Douglas A Miro, Martin Pfeffer, PRO HAC VICE, Ostrolenk Faber LLP, New York, NY; Michael F Hurley, PRO HAC VICE, Osterlenk Faber LLP, New York, NY.
For Universal Electronics Inc, Counter Defendant: Anna R Buono, Martin L Fineman, Nicolas A Jampol, Davis Wright Tremaine LLP, Los Angeles, CA; Ashley E LaValley, PRO HAC VICE, Niro Scavone Haller and Niro Ltd, Chicago, IL; Raymond P Niro, Sr, Laura A Kenneally, Frederick C Laney, Christopher J Lee, PRO HAC VICE, Brian E Haan, Niro Haller and Niro Ltd, Chicago, IL; David B Cochran, Theodore M Grossman, Thomas R Goots, PRO HAC VICE, Jones Day, Cleveland, OH.
CIVIL MINUTES - GENERAL
Proceedings: [IN CHAMBERS] ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S "MOTION TO DISMISS DEFENDANT'S COUNTERCLAIMS AND DEFENSES RELATED TO THE '426 AND '067 PATENTS AS MOOT AND TO BAR DEFENDANT FROM PRESENTING EVIDENCE AT TRIAL ALLEGEDLY IN SUPPORT OF ITS REQUEST FOR FEES UNDER 35 U.S.C. § 285"
This matter was set for hearing on April 28, 2014, but because briefing has closed and the parties are appearing for the final pretrial conference on April 21, 2014, the Court has decided to hear argument on this matter at the final pretrial conference.
Plaintiff Universal Electronics, Inc. ("Plaintiff") filed a motion to dismiss Defendant Universal Remote Control, Inc.'s ("Defendant") counterclaims and defenses related to the '426 and '067 Patents as moot and to bar Defendant from presenting evidence at trial in support of its request for fees under 35 U.S.C. § 285 ("Motion"). (Dkt. No. 232.) The parties later stipulated to the dismissal of Defendant's counterclaim of invalidity of the '067 Patent without prejudice, and the Court did so. (Dkt. Nos. 265, 271.) This Order therefore does not address the '067 Patent issues. The Motion is GRANTED IN PART
BACKGROUND
Trial is set for May 6, 2014. On March 24, 2014, the Court heard and decided the parties' motions for summary judgment. (Dkt. Nos. 222, 223.) The Court granted the summary judgment motions in part and denied them in part, narrowing the scope of the case for trial. Plaintiff argues that some of Defendant's counterclaims and defenses, while not decided on summary judgment, should be dismissed as moot due to various summary judgment rulings. (Mot. 1-3.) Defendant contends that the relief Plaintiff seeks was already denied on summary judgment, that the Motion is an improper motion for reconsideration, and that Plaintiff filed the Motion only three days into the Local Rule 7-3 seven-day waiting period. (Opp'n 1.) Plaintiff responds that it did not file the Motion early, and that Defendant ignores the in-person meet and confer the parties had on the day of the summary judgment hearing and several follow-up discussions. (Reply 3.)
LEGAL STANDARD
"A district court judge faced with an invalidity counterclaim challenging a patent that it concludes was not infringed may either hear the claim or dismiss it without prejudice, subject to review only for abuse of discretion." Liquid Dynamics Corp. v. Vaughan Co., 355 F.3d 1361, 1371 (Fed. Cir. 2004).
A court may reach an affirmative defense of unenforceability even after a verdict of non-infringement. Qualcomm Inc. v. Broadcom Corp., 548 F.3d 1004, 1025 (Fed. Cir. 2008).
"The court in exceptional cases may award reasonable attorney fees to the prevailing party." 35 U.S.C. § 285. Such fees are an issue for the Court. See Kilopass Tech., Inc. v. Sidense Corp., 738 F.3d 1302, 1308-09 (Fed. Cir. 2013).
ANALYSIS
Defendant raises numerous procedural objections to the Motion, including that it is a dispositive motion filed long after the February 11, 2014 deadline for such motions. The Court treats the Motion as one to clarify the scope of the issues to presented at trial due to the summary judgment motions, rather than to reconsider prior rulings. The Court also finds that Plaintiff complied with the meet-and-confer requirements of Local Rule 7-3. The Court therefore reaches the substance of the Motion.
1. '426 PATENT COUNTERCLAIMS AND AFFIRMATIVE DEFENSES
Plaintiff contends that the '426 Patent invalidity counterclaim should be dismissed because it has confirmed that it will not pursue any claims for infringement of the '426 Patent against Defendant for products not accused in this lawsuit. (Mot. 2.) Plaintiff thus argues that it cannot enforce the '426 Patent against Defendant unless the Federal Circuit disturbs the Court's summary judgment for Defendant on the issue of infringement of the '426 Patent. (Mot. 2.)
Plaintiff argues that Defendant nonetheless wants to pursue its invalidity counterclaim and affirmative defenses "to complicate and multiply the trial and distract the jury from the only real remaining claims by the parties — infringement and validity of the '906 patent." (Mot. 2.) But the '426 Patent is still in dispute between the parties. Plaintiff has not granted Defendant an unconditional covenant not to sue on the '426 Patent. Instead, Plaintiff has now covenanted in writing only that it will not assert the '426 Patent against products other than those accused in this case. (Mot. 5.) But as to the products accused in this case, Plaintiff merely acknowledges the fact that it cannot pursue that claim "until" the Federal Circuit reverses. (Mot. 2.) Defendant is not obligated to wait for an appellate reversal to completely defend itself against the charges of infringement Plaintiff brought in this case and threatens to renew in the future.
A finding of non-infringement does not moot a counterclaim for invalidity. Cardinal Chem. Co. v. Morton Int'l, Inc., 508 U.S. 83, 96, 113 S. Ct. 1967, 124 L. Ed. 2d 1 (1993). While the Court has discretion to dismiss or not dismiss Defendant's counterclaim for a declaration that the '426 Patent is invalid, that counterclaim is not moot. Fort James Corp. v. Solo Cup Co., 412 F.3d 1340, 1348-49 (Fed. Cir. 2005) ("a counterclaim questioning the validity or enforceability of a patent raises issues beyond the initial claim for infringement that are not disposed of by a decision of non-infringement").
And affirmative defenses of unenforceability are not necessarily mooted by a finding of non-infringement:
[Plaintiff] argues that the remedy of unenforceability entered on [defendant's] defense of waiver is contrary to law. It submits that once the jury returned a non-infringement verdict the district court lacked any legal basis to consider the affirmative defense of waiver. It appears to base this argument largely on the fact that [defendant] pled waiver only as an affirmative defense, as opposed to a counterclaim. Thus, [plaintiff] argues that, because waiver was pled as an affirmative defense, it cannot result in a judgment of unenforceability. We disagree. It was entirely appropriate for the district court to address the defense of waiver after the jury returned a non-infringement verdict.
Qualcomm Inc. v. Broadcom Corp., 548 F.3d 1004, 1025 (Fed. Cir. 2008). Plaintiff cites PODS, Inc. v. Porta Stor, Inc., 484 F.3d 1359 (Fed. Cir. 2007), which held that the Federal Circuit had "no need to consider [defendant's] arguments related to invalidity, since our finding of non-infringement moots any affirmative defense of invalidity, and [defendant] has not argued its invalidity counterclaim on appeal." Id. at 1368. But an appellate court's holding of no liability moots the issue conclusively, absent the rare grant of certiorari. That is not the case with a trial court's holding. Success on the affirmative defenses may protect Defendant in the event the Federal Circuit disagrees with this Court's summary judgment rulings. The Court finds that efficiency and finality are served here by allowing Defendant to proceed on its counterclaim and defenses.
The Motion also discusses the fact that the Court granted summary judgment in Plaintiff's favor on Defendant's patent misuse defense based on Plaintiff's assertion of the '906 Patent in this case. (Mot. 6-7.) But the Motion is not directed to that issue, and the Court has already ruled on it.
The Motion is DENIED as to the '426 Patent issues.
2. 35 U.S.C. § 285 EXCEPTIONAL CASE ATTORNEY FEES ISSUES
Plaintiff argues that Defendant intends to offer evidence concerning moot issues to support its request for fees under 35 U.S.C. § 285. (Mot. 9.) Plaintiff notes that "Section 285, however, is not an independent basis for jurisdiction, providing only that 'the court in exceptional cases may award reasonable attorney fees to the prevailing party." (Mot. 10 (quoting Sony Elecs., Inc. v. Soundview Techs., Inc., 359 F. Supp. 2d 173, 176 (D. Conn. 2005).) But jurisdiction is not the issue: "[n]o Article III case or controversy is needed with regard to attorneys' fees as such, because they are but an ancillary matter over which the district court retains equitable jurisdiction even when the underlying case is moot." Zucker v. Occidental Petroleum Corp., 192 F.3d 1323, 1329 (9th Cir. 1999).
Plaintiff also argues, correctly, that a party's entitlement to attorney fees is an issue for the Court, not the jury, and should be presented in a post-trial motion. (Mot. 10 (citing non-§285 attorney fee cases).) Defendant challenges the idea that attorney's fees are not triable before the jury, and distinguishes Plaintiff's cases as dealing with contractual or bankruptcy fees. (Opp'n 9.) The distinction Defendant urges seems to be that in the cited contract cases, the issue is limited to amount, not liability. But Defendant does not say so clearly, and has not convinced the Court. Defendant's attempt to distinguish the cases is therefore unpersuasive. And Defendant cites no authority for the proposition that 35 U.S.C. § 285 attorney fees are a jury issue.
To the contrary, they are an issue for the Court. See Kilopass Tech., Inc. v. Sidense Corp., 738 F.3d 1302, 1308-09 (Fed. Cir. 2013). The Court does not need the jury's assistance on this issue, and will not burden it with evidence relevant only to attorney fees. The Motion is GRANTED insofar as it seeks a ruling that any evidence relevant solely to the issue of fees under 35 U.S.C. § 285 shall be not be presented to the jury.
DISPOSITION
The Motion is GRANTED IN PART and DENIED IN PART.