Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_01-cv-02187/USCOURTS-cand-4_01-cv-02187-13/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:145 Patent Infringement

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United States District Court

For the Northern District of California

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The original complaint named several other defendants and two

other patents that are no longer at issue in this case.

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

LG ELECTRONICS, INC.,

Plaintiff,

v.

Q-LITY COMPUTER INC., QUANTA COMPUTER

INC., and QUANTA COMPUTER USA INC.,

Defendants. /

No. C 01-2187 CW 

TENTATIVE RULING

REINSTATING

JUDGMENT

Defendants Q-Lity Computer Inc., Quanta Computer Inc. and

Quanta Computer USA Inc. have filed a motion for summary judgment. 

Plaintiff LG Electronics (LGE) opposes the motion. The motion was

heard on August 21, 2008. Having considered all of the parties

papers and argument on the motion, the Court denies the motion as

moot and reinstates the judgment for Defendants

BACKGROUND

As described in the Court’s earlier orders, Plaintiff has sued

Defendants alleging infringement of three patents owned by

Plaintiff: United States Patents Numbers 4,939,641 (‘641 patent),

5,077,733 (‘733 patent) and 5,379,379 (‘379 patent).1

 The ‘641 and

‘379 patents relate to computer memory access and management. In

particular, the ‘641 patent involves a structure for maintaining

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2Although the August 20, 2002 order on the parties' crossmotions for summary judgment found that the patent exhaustion

doctrine did not apply to method claims, it did not distinguish

between the method and device claims in Plaintiff's patents. In a

later order, the Court clarified its prior order and granted

summary judgment in favor of Defendants on their claim that the

patent exhaustion doctrine precluded them from being liable for

infringement of Plaintiff's device patents and granted summary

adjudication in favor of Plaintiff on its claim that neither the

patent exhaustion doctrine nor the implied license doctrine

precluded it from pursuing its method claims. See Docket No. 359

at 2.

2

consistency between a high speed “cache” memory that is subject to

continuous updating and a computer’s main memory; and the ‘379

patent presents a technique for transmitting simultaneous read and

write requests in a manner that prevents the “reading” of data from

main memory when that data is the subject of a pending write

request. The ‘733 patent discloses a system that permits multiple

computer devices alternating access to a system bus. This patent

addresses a problem caused by the constant transmission of data by

a frequently used system component. So long as the frequently used

component is transmitting data, it can prevent other system

components from carrying out necessary functions that require the

transmission of data. The ‘733 patent addresses this problem

through a rotating priority scheme wherein a component with access

to the system bus must relinquish access to a waiting component

when predetermined criteria are satisfied. 

On August 20, 2002, the Court entered an order construing the

disputed terms and phrases used in the patents in suit and a

separate order granting Defendants’ motion for partial summary

judgment and denying Plaintiff’s cross-motion for partial summary

judgment.2

 In that motion, Defendants argued that Plaintiff’s

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patent rights were exhausted by a licensing agreement between

Plaintiff and Intel and in the alternative that Plaintiff had,

thorough its conduct, granted Defendants an implied license to

practice the patent. Therefore, Defendants argued that Plaintiff’s

infringement claims failed to the extent they were based on

Defendants’ integration into their computers of microprocessors and

chipsets purchased from Intel. The Court found that Defendants had

established that there were no non-infringing uses for the Intel

products. Therefore, the Court granted Defendants’ motion based on

the doctrine of exhaustion and denied Plaintiff’s cross-motion on

the same basis. Because the Court found that the patent exhaustion

doctrine precluded Plaintiff from enforcing its patents against

purchasers of Intel’s microprocessors and chipsets, it declined to

reach the question of whether the implied license doctrine also

applies and denied the cross-motions on that defense as moot. The

order stated, “To the extent that Defendants manufacture products

using non-Intel microprocessors and chipsets, those products are

not at issue in this motion.” Docket No. 209 at 5 n.2. 

On November 30, 2004, the Court entered an order addressing,

among other things, the parties’ cross-motions for summary judgment

on Plaintiff’s claim that Defendants’ Intel-based products infringe

the asserted method claims of the ‘733 patent and ‘379 patent. The

Court denied Defendants’ motion, stating that, while method patents

could not be exhausted under then-existing Federal Circuit law,

their products did not infringe those patents. The order again

stated, “To the extent that Defendants manufacture products using

non-Intel microprocessors and chipsets, those products are not at

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issue in this Order.” Docket No. 846 at 3 n.4. The Court

instructed the parties to “meet and confer in an attempt to

identify the remaining issues in the case, if any.” Id. at 23. 

The Court noted that Defendants had stated “that they would move to

dismiss their invalidity counterclaims if they were found not to

infringe LGE’s patents.” Id. at 3 n.3. 

On January 6, 2005, the parties stipulated to entry of final

judgment. After summarizing the Court’s orders, the stipulation

stated, “No causes of action remain to be decided.” Docket No.

850. On January 19, 2005, the Court signed the parties’ proposed

order entering judgment. The order states in relevant part,

“Judgment on plaintiff’s claims of infringement is entered in favor

of defendants. . . . The Clerk of this Court shall enter Final

Judgment in these matters in accordance with the provisions of Rule

58 of the Federal Rules of Civil Procedure, and in accordance with

the terms of this Order.” Docket No. 852. The parties did not

cite Federal Rule of Civil Procedure 54(b), which governs partial

judgments. 

Plaintiff appealed to the Federal Circuit the Court’s judgment

of noninfringement of its device claims based on the patent

exhaustion doctrine and noninfringement of its method claims,

either literally or under the doctrine of equivalents. Plaintiff

also appealed and Defendants cross-appealed certain claim

construction rulings. Finally, Defendants cross-appealed the

denial of summary judgment based on their implied license defense. 

The Federal Circuit reversed the finding of noninfringement of

the device patents under the patent exhaustion doctrine. The

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3The Federal Circuit's decision also addressed only those

claims related to Defendants' Intel-based products. See id. at

1368 (describing Defendants as companies that "purchase

microprocessors and chipsets from Intel or its authorized

5

Federal Circuit found that the license Plaintiff granted to Intel

constituted a sale but noted that the “sale involved a component of

the asserted patented invention, not the entire patented system.” 

LG Electronics, Inc. v. Bizcom Electronics, Inc., 453 F.3d 1364,

1370 (Fed. Cir. 2006). Moreover, the Federal Circuit noted that

the license agreement “expressly disclaims granting a license

allowing computer system manufacturers to combine Intel’s licensed

parts with other non-Intel components” and “required Intel to

notify its customers of the limited scope of the license, which it

did.” Id. Therefore, the Federal Circuit held that Plaintiff’s

patent rights with respect to its device claims were not exhausted. 

The Federal Circuit affirmed the finding that “the sale of a device

does not exhaust a patentee’s rights in its method claims” and

affirmed the Court’s finding of no implied license with respect to

the method patents. Id. 

In addition, the Federal Circuit held that (1) there were

triable questions of fact with respect to infringement of the

method claims in the ‘733 patent; (2) this Court erred in its 

construction of the relevant device claims of the ‘641 patent and

the ‘379 patent; and (3) while this Court properly found that the

method claims of the ‘379 patents were not literally infringed, it

erred in finding no infringement under the doctrine of equivalents. 

Accordingly, the Federal Circuit reversed in part the Court’s

judgment, affirmed it in part and vacated it in part.3 

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distributors and install them in computers"). 

6

Defendants petitioned for certiorari and the Supreme Court

granted the petition. Quanta Computer, Inc. v. LG Electronics, 128

S. Ct. 28 (2008). The Supreme Court characterized the Federal

Circuit as holding that “the [patent exhaustion] doctrine does not

apply to method patents at all and, in the alternative, that it

does not apply here because the sales were not authorized by the

license agreement.” Quanta Computer, Inc. v. LG Electronics, 128

S. Ct. 2109, 2113 (2008). The Supreme Court rejected the "argument

that method claims, as a category, are never exhaustible." Id. at

2118. In addition, the Supreme Court held that the Intel products

embodied the patents-in-suit. Id. at 2121-2122. Moreover, the

Supreme Court held, "The License Agreement [between LGE and Intel]

authorized Intel to sell products that practiced the LGE Patents. 

No conditions limited Intel's authority to sell products

substantially embodying the patents." Id. at 2122. The Supreme

Court concluded, “Intel’s authorized sale to Quanta thus took its

products outside the scope of the patent monopoly, and as a result,

LGE can no longer assert its patent rights against Quanta.” Id. at

2122. Accordingly, the Supreme Court reversed the Federal

Circuit’s judgment. It did not remand the case to the Federal

Circuit or to this Court for any further proceedings

DISCUSSION

I. Intel-based Products

In accordance with the Court’s instructions, Defendants

include in their motion for summary judgment their position with

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respect to the issues remaining to be decided following the Supreme

Court’s decision. Defendants assert that Plaintiff’s claims of

infringement based on the Intel products have been fully resolved. 

Plaintiff disputes this contention, arguing that triable questions

of fact remain with respect to whether the sales upon which the

defense is based took place within the United States.

Plaintiff relies on two cases in support of its contention

that it is entitled to raise its new argument that Defendants are

not entitled to a patent exhaustion doctrine defense with respect

to Intel products which were sold outside the United States. First

Plaintiff cites United States v. Cote, 51 F.3d 178 (9th Cir. 1995),

a case in which the Ninth Circuit held that a mandate reversing a

conviction does not necessarily preclude retrial. In reaching that

decision, the Ninth Circuit noted that, on remand, a lower court

“may consider and decide any matters left open by the mandate of

[the appellate] court.” Id. at 182. On this basis, Plaintiff

argues that neither the Supreme Court nor the Federal Circuit

addressed the factual question of whether there were any foreign

sales of products. However, Cote is clearly distinguishable. 

There, the conviction was reversed based on an erroneous jury

instruction. As the Ninth Circuit clearly noted, “A reversal of a

criminal conviction based on an incorrect jury instruction does not

foreclose a second trial.” Id. at 183.

Plaintiff also relies on Exxon Chem. Patents, Inc. v. Lubrizol

Corp., 137 F.3d 1475 (Fed. Cir. 1998), in which the Federal Circuit

reversed a district court’s denial of a new trial on remand. In

Exxon, the original trial concluded in a jury finding of literal

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infringement. Id. at 1477. The district court denied the

defendant’s motion for judgment as a matter of law and the

defendant appealed. Id. On appeal, the Federal Circuit adopted

the defendant’s proposed claim construction and held that under

that claim interpretation, no reasonable jury could have found that

the defendant’s products literally infringed the plaintiff’s

patent. Id. The Federal Circuit reversed the jury verdict and

advised that the defendant was “‘entitled to a judgment of

noninfringement as a matter of law.’” Id. at 1478 (quoting order

in first appeal). Although the opinion reversing the jury verdict

stated that the reversal was “‘without remand for a second trial,’”

it clearly stated that the opinion “‘expressed no view’” on the

question of whether the plaintiff “would be entitled to a new trial

on infringement under the doctrine of equivalents.” Id. 

The district court denied a new trial, finding that the

Federal Circuit’s original opinion left it with “no authority to

grant a new trial.” Id. The plaintiff appealed that order and the

Federal Circuit reversed, holding that “it would be incorrect to

conclude that the court’s mandate encompassed an issue that was not

presented to the court.” Id. The Federal Circuit observed that

the plaintiff “cannot be charged with having abandoned its

doctrine-of-equivalents theory of liability by not submitting it to

the jury or raising it on the previous appeal. Once the district

judge construed the claim language in [the plaintiff’s] favor, the

doctrine-of-equivalents issue in the case became moot.” Id. at

1478-79. 

Plaintiff in this case argues that the Supreme Court’s mandate

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4

Plaintiff asserts that it would be unjust to find these

claims waived because it alleges that Defendants withheld

information demonstrating that Intel products were sold abroad

until after the Court decided the exhaustion issue. However,

Plaintiff clearly had much of this information at the time it

stipulated to entry of final judgment in January, 2005. 

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does not encompass the issue of foreign sales. However, in

contrast to the situation in Exxon, the question of whether some

products were sold outside the United States and such sales were

not protected under the patent exhaustion doctrine could and should

have been raised in the original litigation. However, Plaintiff

never raised the issue before this Court. Indeed, after the Court

inquired as to any matters remaining to be decided, Plaintiff

stipulated to entry of final judgment based on the Court’s orders

finding that summary judgment was appropriate on all Intel products

based on the patent exhaustion doctrine.4 As described above, this

stipulation was made pursuant to Federal Rule of Civil Procedure

58, which governs final judgments, not Rule 54(b), which governs

partial judgments. 

The Court finds that Plaintiff has waived its argument that 

Intel products sold outside of the United States are not protected

under the patent exhaustion doctrine. 

II. VIA Products

Both parties contend that, even if the Supreme Court’s

decision resolved all issues related to Defendants’ Intel-based

products, Plaintiff has unresolved claims based on non-Intel

products that the parties refer to as VIA products. However, it

appears that Plaintiff has waived any claims related to non-Intelbased products. As described above, the Court’s substantive preCase 4:01-cv-02187-CW Document 1153 Filed 08/19/08 Page 9 of 10
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judgment orders in this case explicitly stated that they related

only to Intel-based products. After the Court resolved all of

Plaintiff’s infringement claims with respect to Intel-based

products and inquired as to any matters remaining to be decided,

the parties stipulated to entry of final judgment. Indeed, the

proposed order to enter final judgment submitted by the parties and

entered by the Court states, “No causes of action remain to be

decided.” Docket No. 850 at ¶ 6.

Moreover, Plaintiff's claims that Defendants' non-Intel-based

products infringe its patents are not alternative or back-up claims

rendered moot or unnecessary by the Court's earlier orders. They

are separate and distinct claims that could have been tried and

decided in a manner not inconsistent with those orders.

Therefore, the Court finds that the Plaintiff has waived any

claims related to non-Intel-based products.

CONCLUSION

For the foregoing reasons, the Court finds that reinstatement

of judgment for Defendants is proper with respect to its Intelbased products. In addition, the Court finds that Plaintiff has

waived any claims related to non-Intel-based products. Therefore,

the Court DENIES Defendants’ motion for summary judgment as moot

(Docket No. 1125).

Judgment for Defendants shall be reinstated accordingly. 

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