Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_05-cv-01940/USCOURTS-cand-3_05-cv-01940-14/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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UNITED 

STATES 

DISTRICT 

COURT

U

For the Northern District of California

NITED 

STATES 

DISTRICT 

COURT

U

For the Northern District of California

NITED 

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DISTRICT 

COURT

For the Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

COLLABORATION PROPERTIES, INC., a Nevada

Corporation

Plaintiff/Counter-Defendant,

v.

TANDBERG ASA and TANDBERG, INC., a

Delaware Corporation

Defendants/Counter-Plaintiffs. /

No. C 05-01940 MHP

MEMORANDUM & ORDER

Re: Plaintiff’s Motion for Costs

On May 11, 2005, plaintiff Collaboration Properties, Inc., a Nevada Corporation (“CPI”)

filed a complaint alleging patent infringement (the “Complaint”) against defendants, Tandberg ASA

and Tandberg Inc., a Delaware Corporation (“Tandberg”). On July 15, 2005 defendants filed an

answer and counterclaim against plaintiff and counter-defendant CPI, denying infringement and

further alleging that the patents in question are not duly and lawfully issued to the plaintiff. Now

before the court is plaintiff’s motion for costs and to strike certain of defendants’ invalidity

contentions. Having considered the parties’ arguments and submissions, and for the reasons set

forth below, the court enters the following memorandum and order.

BACKGROUND1

The present motion stems from CPI’s request to inspect two alleged “prior art” systems

identified in Tandberg’s Preliminary Amended Invalidity Contentions—the “Vision” (also known as

the “Vision Classic”) and the “TT4001.” The invalidity contentions identify the two systems as

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prior art, as well as the “supporting technical manuals, product brochures and other documentation.” 

Declaration of Noah M. Leibowitz in Support of CPI’s Memorandum for Costs and Expenses

(“Leibowitz Dec.”), Exh. A at 5, 8. On October 12, 2005, CPI served a request for documents that

included the request to inspect the two systems:

Each product . . . that YOU allege is prior art under 35 U.S.C. § 102 set up in a

videoconference between at least two endpoints and/or in any manner contended by

YOU to invalidate in whole or in part any claim of the PATENTS-IN-SUIT. If the

alleged items of prior act are inoperable, or it is impossible to configure a

videoconference using the alleged prior act, then the alleged prior art should still be

produced for inspection. 

Declaration of Chester W. Day in Support of Tandberg’s Memorandum in Opposition to CPI’s

Motion for Costs (“Day Dec.”), Exh. A at 5 ¶ 12. Tandberg agreed to allow CPI to inspect the two

devices in Norway, but CPI requested that the devices be transported to the United States. In

opposition, Tandberg submitted a declaration from Mr. Tom-Ivar Johansen, a Tandberg employee in

Norway, explaining that the devices were old and fragile:

Because of their age and fragile conditions, the TT4001 and Vision Classic devices

are irreplaceable. Tandberg does not routinely repair such devices and does not stock

parts for these devices.

Day Dec., Exh. B at 2 ¶ 6. At a March 20, 2006 hearing, the court ordered CPI to travel to Norway

to conduct an inspection of the two systems. However, the court noted to CPI that “if your people

go over there and it turns out it’s been a total waste of time because they have misrepresented

something about these pieces of equipment, this TT 4001, or whatever, and the Vision [Classic] . . .

I can order them to pay the cost of your trip.” Leibowitz Dec., Exh. B at 22. 

CPI made arrangements to travel in Norway in early April, 2006. In a letter dated April 3,

2006, Tandberg purports to summarize a “meet and confer” between the parties that took place on

March 30, 2006, which included a discussion of CPI’s upcoming trip to Norway. See Leibowitz

Dec., Exh. F, Part 2, Encl. 3. Tandberg alleges that during this meeting it communicated to CPI that

the “TT4001s codes are currently not operable and cannot be rendered so given the short notice of

CPI’s inspection demand (if at all).” Id. at 4. In the letter Tandberg describes a CPI request to

inspect Synercom software in conjunction with the Vision Classic devices during the planned

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inspection in Norway. Id. However, Tandberg claims that this request was received on March 31,

2006 at 11.25 a.m. (PST), after the close of business in Norway, and in the April 3 letter, Tandberg

informed CPI that it attempted to locate such software and found that it currently had none in its

possession. Id.

On April 3 and 4, 2006, Noah M. Leibowitz, an attorney with plaintiff’s counsel, Simpson

Thacher & Bartlett LLP, along with Mr. Christopher Schmandt, Principal Research Scientist at the

Massachusetts Institute of Technology (“MIT”) Media Lab and a CPI expert consultant, traveled to

Tandberg’s facility in Lysaker, Norway to inspect the Vision and TT4001 systems. Upon arrival at

Tandberg’s facility in Norway, Tandberg provided CPI with access to the two Vision Classic

systems and two TT4001s. Tandberg also arranged for a Tandberg engineer to be available to

answer any questions and provide any assistance to CPI, as needed.

CPI found the two Vision systems were connected to modern IBM laptop computers running

Windows XP and other current-day software. While inspecting the Vision systems, CPI was able to

access a menu that displayed the version of Tandberg’s Vision software that the Vision systems

were running. See Leibowitz Dec., Exh. C. The Vision Classic systems made available to CPI in

Norway were running version K2.2 of Tandberg’s Vision software, which was released in July 1995

and therefore post-dates the critical patents-in-suit by three years. Moreover, the two TT4001s

stored at Tandberg’s Norway facility were not powered-up, nor connected to any network or

external device such as a monitor, keyboard, speaker, or camera. Tandberg denied CPI’s request to

power up the TT4001 because the devices had been dormant for years and Tandberg’s engineer on

site was concerned about the potential adverse consequences of attempting to power up the devices. 

As a result Mr. Leibowitz and Mr. Schmandt were only able to examine the outside of the TT4001

boxes.

Upon return to the United States, on June 1, 2006, CPI sent a letter to Rory G. Bens, counsel

for Tandberg, requesting reimbursement for CPI’s costs and expenses incurred with respect to the

Norway trip, totaling $55,611.50. CPI’s costs and expenses related to the Norway trip include

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attorney and expert preparation for the trip, travel to and from Norway and conducting and

documenting the inspection as follows:

Noah M. Leibowitz time: 43.9 hours @ $550/hour= $24,145.00

Jonathan Sanders time: 2.5 hours @ $450/hour= $1,125.00

Christopher Schmandt invoice: $13,637.00

Surridge Films invoice: $3,670.00

Noah M. Leibowitz airfare (New York/Oslo): $5,151.70

Noah M. Leibowitz hotel and meals: $313.43

Christopher Schmandt airfare (Boston/Oslo): $6,679.20

Christopher Schmandt hotel and meals: $542.39

Taxi in Norway $30.57

Taxi from airport in New York $172.69

See Leibowitz Dec., Exh. G.

CPI claims that it is entitled to compensation for two reasons. First, CPI argues that the

purpose of its trip was thwarted because its expert was unable to conduct an examination of the two

TT4001 systems, which had not been powered up in 13 years. Second, the two Vision systems, in

the manner in which they were configured for CPI inspection—running software dating from

1995—did not predate the critical dates of the patents-in-suit and therefore according to CPI do not

qualify as “prior art.” Furthermore, CPI moves to strike certain of Tandberg’s invalidity contentions

as they relate to allegedly “prior art” systems on the basis that Tandberg now claims that it is not

relying on these physical systems at all. 

LEGAL STANDARD

Three primary sources of authorities enable courts to sanction parties or their lawyers for

improper conduct: (1) Federal Rule of Civil Procedure 11, which applies to signed writings filed

with the court, (2) 28 U.S.C. section 1927, which is aimed at curtailing conduct on the part of an

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attorney that unreasonably and vexatiously multiplies the proceedings, and (3) the court’s inherent

power. See Fink v. Gomez, 239 F.3d 989, 991 (9th Cir. 2001). 

DISCUSSION

I. Authority to Order Sanctions

 In its brief, CPI relies on 28 U.S.C. section 1927 as an authority for the court to award

damages. Under 28 U.S.C. section 1927, “[a]ny attorney . . . who multiplies the proceedings in any

case unreasonably and vexatiously may be required by the court to satisfy personally the excess

costs, expenses, and attorneys’ fees reasonable incurred because of such conduct.” 28 U.S.C. §

1927. An award of sanctions under section 1927 “must be supported by a finding of subjective bad

faith.” B.K.B. v. Maui Police Dep’t, 276 F.3d 1091, 1107 (9th. Cir. 2002) (quoting In re Keegan

Mgmt. Co. Sec. Litig., 78 F.3d 431, 436 (9th Cir. 1996)). The Ninth Circuit has held that bad faith

“is present when an attorney knowingly or recklessly raises a frivolous argument, or argues a

meritorious claim for the purpose of harassing an opponent.” Id. (quoting Keegan, 78 F.3d at 436)

(original emphasis omitted). Thus, “reckless nonfrivolous filings, without more, may not be

sanctioned [under section 1927].” Keegan, 78 F.3d at 436.

The current case is more appropriately adjudicated under the court’s inherent power owing to

the involvement of Tandberg’s employees, as well as its attorneys, in the conduct at issue. The

Supreme Court has long acknowledged that federal courts have the inherent power to manage their

own proceedings and to control the conduct of those who appear before them. See Chambers v.

NASCO, Inc., 501 U.S. 32, 44 (1991) (holding that “these powers are ‘governed not by rule or

statute but by the control necessarily vested in courts to manage their own affairs so as to achieve the

orderly and expeditious disposition of cases.’”) (quoting Link v. Wabash R. Co., 370 U.S. 626,

630–31 (1962)); see also Roadway Express, Inc. v. Piper, 447 U.S. 752, 766 (1980) (explaining that

federal courts possess the inherent power to levy sanctions, including attorneys’ fees, for “willful

disobedience of a court order . . . or when the losing party has acted in bad faith, vexatiously,

wantonly, or for oppressive reasons . . . .”) (internal quotation marks and citations omitted).

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To insure that restraint is properly exercised, in order to impose sanctions under its inherent

powers, district courts are required to ascertain a finding of bad faith. See Zambrano v. City of

Tustin, 885 F.2d 1473, 1478 (9th Cir.1989); accord Yagman v. Republic Ins., 987 F.2d 622, 628 (9th

Cir.1993) (“Courts may not invoke these powers without a ‘specific finding of bad faith.’”) (internal

citations omitted). The court’s inherent powers “derive from the absolute need of a trial judge to

maintain order and preserve the dignity of the court.” Id.

II. TT4001 Systems

Tandberg offers several reasons why it should not be sanctioned for asserting that the

TT4001 is prior art and for failing to inform CPI that CPI would not be permitted to attempt to

operate the TT4001s in Norway. First, Tandberg argues that it has never alleged that the two

TT4001s located in Norway are in and of themselves “prior art.” Rather Tandberg asserts that in its

Amended Preliminary Invalidity Contentions, it was solely relying on the “technical manuals, and

other printed publications prior to October 1992 ” describing its TT4001 devices. Leibowitz Dec.,

Exh. A. This argument is impossible to square with the invalidity contentions, which also state that

to the extent that these devices were “publicly known and used in the U.S. on or before October, 31,

1992,” they also constitute prior art. Id. at 5.

Tandberg’s argument that the two devices in Norway were not themselves sold in the United

States is irrelevant. Tandberg argued to this court that the two remaining TT4001s located in

Norway may help to corroborate the manuals and moreover, the devices in Norway are

representative of the devices sold in the United States. See Leibowitz Dec., Exh. F, Part 2

(“Tandberg believes that these devices are representative of the prior art devices offered for sale and

sold within the United States.”). At the March 20, 2006 hearing, Tandberg’s counsel represented to

the court that “the equipment is of interest because it will help explain what the manuals say.” 

Leibowitz Dec., Exh. B at 14. 

Second, Tandberg maintains that during the March 30, 2006 “meet and confer” between the

parties that it informed CPI prior to its trip to Norway that the TT4001s would not be operational in

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time for CPI’s planned inspection of the devices. See Leibowitz Dec., Exh. F, Doc. 2, Encl. 2. 

However, Tandberg’s only evidence of this discussion is catalogued in a brief hearsay statement in a

letter dated April 3, 2006, when CPI was already en route to Norway for its planned inspection of

Tandberg’s facilities. Furthermore, Tandberg’s previous statements to CPI concerning the condition

of the TT4001s in Norway were more encouraging. See Leibowitz Dec., Exh. B at 11 (during the

March 20, 2006 court hearing, although Tandberg informed CPI that the TT4001 devices had not

been powered up for a long time and were likely not operational, Tandberg expressly noted that “if

[CPI] would like to see these devices in operation . . . we will endeavor to repair the TT4001 so that

it’s operable and they can inspect it, but that they should do this inspection at Tandberg’s facility in

Norway.”). As a result, although CPI might have been aware that the TT4001s had not been

powered up in many years, there was no indication that CPI would be prevented from even

attempting to power up the devices during its inspection in Norway.

Lastly, Tandberg contends that it reserved a private space at its facilities in Norway over a

two-day period and arranged for Mr. Johansen, a Tandberg engineer, to be on hand to assist CPI in

its inspection. See Day Dec., Exh. D. Tandberg argues that CPI and its expert spent a mere three

hours inspecting the systems and raised no complaints about the inspection until after returning to

the United States. However, CPI was informed that the TT4001s would not be powered up,

foreclosing the possibility of a more detailed inspection. Moreover, Tandberg admits that the

TT4001s could not have been repaired within two days, effectively conceding that further attempts

to inspect the TT4001s during the trip would have been fruitless.

III. Vision Classic Systems

Similar to its argument with respect to the TT4001 devices, Tandberg maintains that the

Vision Classic systems located in Norway do not in and of themselves constitute prior art. However,

as discussed above this argument is incompatible with Tandberg’s previous representations.

Tandberg also argues that it only learned that CPI wished to inspect a system configured with

the prior art “Synercom” software on March 31, 2006, four days before the visit. See Leibowitz

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Dec., Exh. F, Doc. 2, Encl. 2. Tandberg claims that despite receiving the request after the close of

business in Norway on a Friday, it made an attempt to locate the software, but found that it had none

in its possession.

Tandberg has no reasonable basis for its claim of surprise as to CPI’s desire to inspect

systems configured as they would have been during the relevant period. In its Amended Preliminary

Invalidity Contentions, Tandberg expressly lists “Tandberg Vision and TT4001 products, available

in the U.S. at least by October 31, 1992, and supporting technical manuals, product brochures and

other documentation.” Leibowitz Dec., Exh. A at 8. By representing that the systems in Norway

were representative of the asserted prior art, Tandberg necessarily represented that they were

configured similarly to the alleged prior art, i.e. as they would have been prior to the critical date. 

See Leibowitz Dec., Exh. F, Part 2 (“Tandberg believes that these devices are representative of the

prior art devices offered for sale and sold within the United States.”). Tandberg’s argument that the

1995 software, which the Vision Classic devices were operating at the time of the inspection, is

virtually identical to the pre-critical date software is specious, as it would require CPI to accept

Tandberg’s contentions without independent scrutiny, a prospect that the evidence shows would be

foolhardy on CPI’spart.

Tandberg also argues that CPI could have tested the hardware alone for two of the three

asserted patents. See Leibowitz Dec., Exh. F, Part 2 (“First, the software is only relevant to claims

of the ’500 patent. Thus, according to this argument, CPI could and did complete its inspection with

respect to the ’654 and ’547 patents.”). The claims of both United States Patent Nos. 5,867,654 and

6,212,547 (the “’654” and “’547” patents respectively) require interactive data sharing. Verifying

the data sharing capability requires a functioning combination of hardware and software. As a

result, the particular software running on the Vision Classic devices was critical to CPI’s inspection

in Norway.

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IV. Bad Faith

Because the court is examining plaintiff’s motion for sanctions pursuant to the inherent

power of the court to prevent abuse of the judicial process, the court must address the threshold issue

of whether Tandberg acted in bad faith. See Zambrano, 885 F.2d at 1478. Viewed together,

Tandberg’s arguments prior to the trip with respect to the systems in Norway being representative of

prior art are at best grossly incompetent. They are particularly troubling in light of Tandberg’s

previous insistence that CPI must travel to Norway to avoid damaging the TT4001 systems—which

turned out to be inoperable— and to have access to Tandberg’s special testing facilities. See

Leibowitz Dec., Exh. A at 16 (“these devices are already hooked up. They can be shown to them

when they come to Norway for the deposition or before that if they want to inspect them sooner.”).2

 

Tandberg’s actions demonstrate an “improper purpose” and the court is within its authority

to award costs for bad faith. See United States v. Stoneberger, 805 F.2d 1391, 1393 (9th Cir. 1986)

(holding that “[a] specific finding of bad faith . . . must ‘precede any sanction under the court’s

inherent powers.’” (quoting Roadway, 447 U.S. at 767). “Willful or reckless disregard of court rules

justifies punitive action.” Zambrano, 885 F.2d at 1484.

In a vacuum, Tandberg might receive the benefit of the doubt. Here, Tandberg’s history of

careless behavior weighs against it. See Memorandum and Order re: Motion for Leave to Seek

Reconsideration, Docket No. 184 at 4 (“Here, the court has found undue delay, prejudice and

frustration of the efficient administration of justice . . . . The court’s concerns about gamesmanship

have not diminished, particularly in light of Tandberg’s ongoing aggressive and arguably frivolous

motion practice.”). In view of all circumstances, Tandberg’s behavior prior to the Norway trip is in

bad faith.

Tandberg does not dispute the specific amount of fees, but rather that the trip to Norway was

unnecessary. However, Tandberg’s decision to withhold facts about the systems can only be

characterized as a bad faith attempt to impose additional burdens on CPI, and Tandberg should

reimburse CPI in the amount of $55,466.98 for costs and expenses associated with the Norway trip.

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V. Motion to Strike Tandberg’s Invalidity Contentions

CPI also moves the court to strike the portions of Tandberg’s invalidity contentions that

depend on the TT4001 and Vision Classic devices, as opposed to the manuals or other printed

documentation. See Leibowitz Dec. Exh. F at 2 (“Tandberg does not assert that the devices in

Norway, in and of themselves, constitute invalidating prior art.”). Tandberg’s Amended Preliminary

Invalidity Contentions fail to clearly differentiate between Tandberg’s reliance on the printed

manuals describing the Vision Classic and TT4001 devices and the actual physical devices

themselves. See Leibowitz Dec., Exh. A at 8 (“Tandberg Vision and TT4001 products, available in

the U.S., and supporting technical manuals, product brochures and other documentation.”)

(emphasis added). Given that Tandberg now argues that it is relying on manuals rather than the

systems and given Tandberg’s failure to identify any example of an operative system that pre-dates

the patents-in-suit, CPI’s motion to strike is granted.

VI. Summary

In summary, this court finds that Tandberg shall reimburse CPI for its costs and expenses

incurred for the Norway trip in April 2006. Although Tandberg claims that its invalidity contentions

do not rely on the Vision Classic and TT4001 systems located in Norway, Tandberg did claim that

the devices in Norway are representative of the devices sold in the United States. The costs

associated with CPI’s trip to Norway could have been avoided altogether if Tandberg had disclosed

that CPI would be unable to test Tandberg’s invalidity contentions because the Vision Classic was

running software that post-dates the critical date of the patents-in-suit by three years and the

TT4001s were not even powered up. Furthermore, for the reasons stated above CPI’s motion to

strike is granted.

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CONCLUSION

For the foregoing reasons, the court hereby GRANTS plaintiff’s motion for fees and costs in

the amount of $55,466.98 and GRANTS plaintiff’s motion to strike the Vision Classic and TT4001

systems from defendant’s invalidity contentions.

Defendant and its counsel shall pay over to plaintiff the amount of $55,466.98 within thirty

(30) days of the date of this order.

IT IS SO ORDERED.

Dated: September 5, 2006 

MARILYN HALL PATEL

District Judge

United States District Court

Northern District of California

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1. Unless other specified, background facts are taken from plaintiff’s Complaint and defendant’s

Answer and Counterclaim, and are assumed to be true for the purposes of this motion only.

2. Tandberg even goes so far as to argue that CPI should not be entitled to any reimbursement

because a separate trip to Norway to inspect the devices was unnecessary and could have been

combined with a trip to complete the depositions of Tandberg’s Norway employees. Tandberg does

not offer a coherent explanation, however, as to how combing the trips would have saved any costs. 

The inspection is separate from any depositions, and would have required additional attorney and

expert time. The court agreed that CPI should fly to Norway for the inspection rather than force

Tandberg to ship the devices to the United States. See Leibowitz Dec., Exh. B at 23. Tandberg

cannot now complain about the costs and timing of a trip that it insisted on.

ENDNOTES

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