Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_06-cv-02823/USCOURTS-cand-5_06-cv-02823-4/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

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28 This disposition is not designated for publication and may not be cited. 1

Case No. C 06-2823 JF (RS)

ORDER DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC2) 1

**E-Filed 1/29/07**

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

IMMERSION CORPORATION,

 Plaintiff,

 v.

CRAIG THORNER,

 Defendant.

Case Number C 06-2823 JF (RS)

ORDER DENYING DEFENDANT’S 1

MOTION FOR SUMMARY

JUDGMENT

[re: doc. no. 43]

Defendant Craig Thorner (“Thorner”) seeks summary judgment with respect to the

complaint of Plaintiff Immersion Corporation (“Immersion”). The complaint alleges a single

claim for breach of contract. The Court has considered the briefing of the parties as well as the

oral arguments presented at the hearing on January 26, 2007. For the reasons discussed below,

the motion will be denied.

I. BACKGROUND

Immersion is a developer and licensor of tactile feedback technology. Thorner, a

computer programmer in the area of vibro-tactile technology, owns several patents including

Case 5:06-cv-02823-JF Document 60 Filed 01/29/07 Page 1 of 7
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Case No. C 06-2823 JF (RS)

ORDER DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC2) 2

United States Patent No. 5,684,722 (“the ‘722 patent”). In April 2003, Immersion and Thorner

entered into an agreement that, inter alia, granted Immersion the exclusive right to license the

‘722 patent to third parties (“the Thorner-Immersion License Agreement”). Under the ThornerImmersion License Agreement, Immersion agreed to pay Thorner fifty percent of all revenues

realized from any licensing of the ‘722 patent.

In May 2005, Thorner executed a Deal Point Memorandum, summarizing deal points

between Thorner and third party Electro Source LLC (“Electro Source”). In that memorandum,

Thorner agreed to grant Electro Source a license to a number of patents, including the ‘722

patent. Thorner and Electro Source executed the contemplated licensing agreement in June 2005.

Immersion filed the instant action against Thorner in the Santa Clara Superior Court in

March 2006, alleging breach of the Thorner-Immersion License Agreement. Immersion alleges

that although the Thorner-Immersion License Agreement grants Immersion the exclusive right to

license the ‘722 patent to third parties, Thorner subsequently licensed the ‘722 patent to Electro

Source.

Thorner removed the action to this Court on the basis of diversity of citizenship, and

subsequently filed an answer and counterclaim, alleging claims for: (1) breach of contract; (2)

breach of the implied covenant of good faith and fair dealing; (3) fraud; (4) promissory fraud; (5)

breach of fiduciary duty; and (6) negligent misrepresentation. On September 12, 2006, the Court

granted Immersion’s motion for judgment on the pleadings with leave to amend as to Thorner’s

claims for breach of contract and fraud. Thorner did not amend his counterclaim; accordingly

those claims have been dismissed from the case. On January 12, 2007, Thorner filed a motion

for leave to amend his answer and counterclaim to add a new affirmative defense of judicial

estoppel and new claims for breach of contract, breach of the implied covenant of good faith and

fair dealing and rescission. That motion is set for hearing on February 16, 2007 and is not

addressed in this order.

II. LEGAL STANDARD

A motion for summary judgment should be granted if there is no genuine issue of

material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P.

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Case No. C 06-2823 JF (RS)

ORDER DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC2) 3

56©; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The moving party bears the

initial burden of informing the Court of the basis for the motion and identifying the portions of

the pleadings, depositions, answers to interrogatories, admissions, or affidavits that demonstrate

the absence of a triable issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323

(1986). 

If the moving party meets this initial burden, the burden shifts to the non-moving party to

present specific facts showing that there is a genuine issue for trial. Fed. R. Civ. P. 56(e);

Celotex, 477 U.S. at 324. A genuine issue for trial exists if the non-moving party presents

evidence from which a reasonable jury, viewing the evidence in the light most favorable to that

party, could resolve the material issue in his or her favor. Anderson, 477 U.S. 242, 248-49;

Barlow v. Ground, 943 F. 2d 1132, 1134-36 (9th Cir. 1991). 

III. DISCUSSION

Thorner contends that Immersion is judicially estopped from asserting a breach of the

Thorner-Immersion License Agreement based upon Thorner’s alleged licensing of the ‘722

patent to Electro Source. As an initial matter, the Court notes that Thorner has not pled judicial

estoppel as an affirmative defense, although Thorner does seek to add this defense in his pending

motion for leave to amend his answer and counterclaim. Because Immersion has addressed

Thorner’s motion on the merits, and because the Court concludes that Thorner is not entitled to

summary judgment even assuming that judicial estoppel properly may be asserted as a defense,

the Court will reach the merits of the judicial estoppel issue at this time even though judicial

estoppel has not as yet been pled specifically as a defense. 

“Federal law governs the application of judicial estoppel in federal courts.” Johnson v.

Oregon, 141 F.3d 1361, 1364 (9th Cir. 1998). “‘[W]here a party assumes a certain position in a

legal proceeding, and succeeds in maintaining that position, he may not thereafter, simply

because his interests have changed, assume a contrary position, especially if it be to the prejudice

of the party who has acquiesced in the position formerly taken by him.’” New Hampshire v.

Maine, 532 U.S. 742, 749 (2001) (quoting Davis v. Wakelee, 156 U.S. 680, 689 (1895)). The

purpose of the doctrine is to protect the integrity of the judicial process. Id. at 749-50. While the

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Case No. C 06-2823 JF (RS)

ORDER DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC2) 4

circumstances under which the doctrine may be applied cannot be encompassed by any particular

rule, the following three factors typically inform a court’s decision whether to apply the doctrine

in a particular case. “First, a party’s later position must be ‘clearly inconsistent’ with its earlier

position.” Id. at 750. The second factor is whether the earlier position was accepted by a court,

such that judicial acceptance of the later position would create a perception that either the first

court or the second court was misled. Id. “A third consideration is whether the party seeking to

assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on

the opposing party if not estopped.” Id. at 751.

In the instant case, Thorner contends that judicial estoppel should be applied in light of

Immersion’s conduct during a prior lawsuit between Immersion and Sony Computer

Entertainment America, Inc. (“Sony”). In September 2004, a jury found that Sony had infringed

a number of Immersion’s patents and awarded Immersion $82 million in damages. Following

entry of judgment, Sony filed a motion for relief from judgment pursuant to Federal Rule of Civil

Procedure 60(b). Sony’s motion was supported by several declarations from Thorner, in which

Thorner stated that he had conspired with Immersion representatives to conceal from the court

and from Sony prior art that would be damaging to Immersion’s case. Thorner further stated that

in exchange for his part in the conspiracy, Immersion promised to share with him any damages it

recovered against Sony. In response to Sony’s Rule 60(b) motion, the district court reopened

discovery. During that discovery process, Immersion learned of Thorner’s licensing agreement

with Electro Source, and that the Thorner-Electro Source deal had hinged on Thorner’s

submitting declarations on behalf of Sony in connection with Sony’s Rule 60(b) motion. Finally,

Immersion learned that Sony actually was the source of the $150,000 that Electro Source paid

Thorner for the licensing agreement. Apparently, Sony’s general counsel wired $150,000 to

Electro Source’s outside counsel, who sent a cashier’s check for $150,000 to Sony’s outside

litigation counsel, who personally handed the check to Thorner at a meeting dealing with the

wording of Thorner’s declarations on behalf of Sony in connection with the Rule 60(b) motion.

Immersion argued to the district court presiding over the Immersion-Sony litigation that

Thorner’s testimony regarding the alleged conspiracy to hide prior art was perjured and in fact

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Case No. C 06-2823 JF (RS)

ORDER DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC2) 5

appeared to have been purchased by Sony. The court accepted these arguments, finding that

Thorner had understood the Electro Source deal to be quid pro quo for his testimony against

Immersion, and that the Electro Source deal was a sham agreement lacking a legitimate business

purpose. The court found that in light of all the evidence, “Thorner is too unreliable a witness to

enable Sony to meet its burden to prove by clear and convincing evidence that Immersion

engaged in misconduct.”

In the instant motion, Thorner appears to contend that because Immersion previously

argued that the Electro Source licensing agreement was a sham deal for the purpose of conveying

a $150,000 bribe from Sony to Thorner, Immersion cannot now argue that the Electro Source

licensing agreement was a breach of the Thorner-Immersion License Agreement. The Court

disagrees. The fact that Immersion previously identified the Electro Source licensing agreement

as a vehicle for Sony’s delivery of a bribe to Thorner is not “clearly inconsistent” with

Immersion’s current position that Thorner in fact granted Electro Source a license to the ‘722

patent. Immersion never argued in the prior litigation that Electro Source did not in fact receive a

license to the ‘722 patent, and the court did not make any finding as to whether the license to

Electro Source was valid. Thorner has not presented any evidence that Electro Source was not

granted a license to the ‘722 patent. Accordingly, it seems entirely possible that in executing the

Electro Source deal Thorner both accepted payment for perjured testimony and granted Electro

Source a license to the ‘722 patent in violation of the Thorner-Immersion License Agreement. 

Finally, the Court cannot perceive how Immersion will gain any kind of “unfair advantage” if it

is not estopped from arguing breach of the Thorner-Immersion License Agreement. Thorner’s

theory seems to be that since Immersion successfully argued that Thorner was bribed for perjured

testimony in the Sony litigation, Immersion should not also be allowed to pursue its contract

remedies against Thorner in this litigation. This simply is not the type of “unfairness” that the

judicial estoppel doctrine is designed to present.

At the hearing, counsel for Thorner argued for the first time that the Thorner-Electro

Source deal did not in fact grant Electro Source a license to the ‘722 patent. Immersion stated

that it was totally surprised by this argument, because Immersion had been under the impression

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Case No. C 06-2823 JF (RS)

ORDER DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC2) 6

that Thorner conceded that he had granted Electro Source a license to the ‘722 patent. The issue

of whether the Electro Source deal included a license to the ‘722 patent is one that may be

litigated in an appropriate motion. However, the issue has no bearing on Thorner’s current

motion for summary judgment based upon judicial estoppel.

Accordingly, Thorner’s motion for summary judgment will be denied. 

IV. ORDER

Defendant’s motion for summary judgment is DENIED.

DATED: 1/29/07

__________________________________

JEREMY FOGEL

United States District Judge 

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Case No. C 06-2823 JF (RS)

ORDER DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC2) 7

A copy of this Order was served on the following persons:

Richard M. Birnholz rbirnholz@irell.com, lwakino@irell.com; ddrescher@irell.com

Morgan Chu mchu@irell.com

Alan J. Heinrich aheinrich@irell.com

Jeffrey P. Widman jpwidman@comcast.net 

Glen M. Diehl

Diehl Servilla LLC

77 Brant Avenue

Clark, NJ 07066

Case 5:06-cv-02823-JF Document 60 Filed 01/29/07 Page 7 of 7