Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_00-cv-04524/USCOURTS-cand-3_00-cv-04524-7/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 28:1331 Fed. Question

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAMSUNG ELECTRONICS CO, LTD,

Plaintiff,

v

QUANTA COMPUTER, INC et al,

Defendants. /

No C-00-4524 VRW

ORDER

The court has before it motions in limine filed by both

parties. As the court writes principally for the parties, it will

simply address seriatim certain issues raised in those motions,

without laying out the full factual background of each of the

motions. To the extent an issue is not addressed in this order, it

is because the court has concluded that the issue is not an

appropriate subject for a motion in limine or is not ripe for

decision and will, therefore, be deemed DENIED. The court

anticipates addressing such issues as they occur at trial, if

necessary, and outside the hearing of the jury, if appropriate. As

the parties are on notice of each other’s contentions regarding the

admissibility of certain evidence, the court expects counsel to be

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well-prepared at trial to address issues of relevance, foundation

and admissibility.

(1) Samsung’s motion to preclude Compal from arguing that the IBM

PC Convertible or Poqet PC anticipate asserted claims of the

‘273 patent (Doc #460)

Samsung asks the court to preclude testimony regarding 

anticipation because the court’s summary judgment order already

resolved the issue. Compal agrees, at least “in principle,” but

seeks clarification that Samsung’s motion would not affect Compal’s

ability to argue that the prior art renders the claimed invention

obvious pursuant to 35 USC § 103. 

Because Compal “does not intend to argue at trial that

either the IBM PC Convertible or Poqet PC anticipate the ‘273

patent under 35 USC § 102,” this motion does not concern a material

dispute. Accordingly, Samsung’s motion is DENIED.

(2) Samsung’s motion to preclude Compal from presenting noninfringement theories inconsistent with the court’s claim

construction (Doc #461)

Samsung’s motion begins with the non-controversial

proposition that the evidence and argument at trial should conform

to the court’s claim construction. But, as Compal notes, the

relief sought by Samsung’s motion exceeds this proposition and

attempts to convert the court’s denial of Compal’s motion for

summary judgment of non-infringement into settled factual findings

adverse to Compal. 

For example, Samsung’s motion asks the court to prevent

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Compal from arguing that claims 1 and 5 of the ‘273 patent cannot

encompass a keyboard and keyboard controller that share any common

circuitry. But the court’s order did not preclude this argument;

rather, it stated that “[a]t this point, defendants have not

convincingly demonstrated that for the keyboard and keyboard

controller to share a microprocessor core necessarily renders them

electronically and functionally indistinct.” Doc #423. 

In any event, the court anticipates the parties will not

offer evidence contrary to the claim construction order. Should

that occur, the court will deal with such evidence’s admissibility

at trial. Accordingly, Samsung’s motion is DENIED.

(3) Samsung’s motion to exclude evidence of litigation settlement

agreements (Doc #485)

Both parties agree that evidence, argument and testimony

concerning the terms of the settlement agreements Samsung reached

with third parties Inventec, Arima, Twinhead and Quanta should be

excluded at trial pursuant to FRE 408. Moreover, the parties

appear to agree that the existence of settlement agreements may be

admissible for limited purposes, although the relevance of this

evidence is not clear to the court. 

Federal Rule of Evidence 408 provides that “[e]vidence of

(1) furnishing or offering or promising to furnish, or (2)

accepting or offering or promising to accept, a valuable

consideration in compromising or attempting to compromise a claim

which was disputed as to validity or amount, is not admissible to

prove liability or invalidity of the claim or its amount.” FRE

408. This rule does not necessarily require exclusion here because

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the parties do not seek to offer the existence of a settlement

agreement to prove “liability or invalidity of the claim.” 

Yet, even with a limiting instruction, a jury may still

impermissibly infer that Samsung’s settlement with third parties

bears on the validity of Samsung’s claim vis-a-vis Compal. Hence,

exclusion under FRE 403 may be appropriate if the danger of unfair

prejudice — i e, the threat of this impermissible inference —

substantially outweighs the evidence’s probative value. According

to the advisory notes, in assessing the FRE 403 calculus, the court

should also consider the availability of other means of proof. See

FRE 403, Advisory Committee Notes. Hence, the court will not

entirely preclude reference to settlement but will require a party

seeking to admit such evidence to obtain an order governing

admissibility prior to offering such evidence. Accordingly,

Samsung’s motion is DENIED. 

(4) Samsung’s motion to preclude evidence, argument and reference

to patent claims that were voluntarily withdrawn (Doc #462)

Samsung moves in limine for the court to preclude Compal

from referencing the five patent infringement claims previously

asserted by Samsung in this action that were voluntarily dismissed

by stipulation of the parties. Samsung asserts that it withdrew

these patents “voluntarily [to] streamline the case and reduce the

number of issues for discovery and trial.” As such, Samsung

contends that reference to these patents would not satisfy FRE

402's relevance standard, or alternatively, would inflict unfair

prejudice substantially outweighing any probative value under FRE

403. 

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Compal argues that the five withdrawn patents may be

relevant to its defense against Samsung’s claim for willfulness. 

In particular, the withdrawn patent claims explain the timing of

the written opinion Compal received from its counsel regarding

potential infringement of the six patents Samsung originally

asserted. Further, whether Compal reasonably believed it had a

meritorious defense is a consideration in determining willfulness;

that Samsung voluntarily dismissed five claims of patent

infringement is relevant to the reasonability of such a belief. 

Because referencing the withdrawn patents may be relevant

to Samsung’s claim for willfulness, categorical exclusion under

Samsung’s motion is inappropriate. Accordingly, Samsung’s motion

is DENIED. 

(5) Samsung’s motion to exclude evidence and argument concerning

other litigation regarding the patent-in-suit (Doc #464)

Samsung asks the court to exclude any evidence concerning

its litigation against other defendants. In particular, Samsung

worries that a jury may speculate that “(1) Samsung lost these

actions; (2) these actions still are pending or (3) Samsung did

not, or was unable to, reach agreement with these defendants.” Doc

#464.

In response, Compal argues that testimony and evidence

adduced at the prior litigation concerning the ‘273 patent is

directly relevant on at least two grounds: “(1) testimony by

Samsung’s employees agents in the prior litigation is admissible

for all purposes; and (2) prior testimony at deposition and in

hearings is admissible for impeachment on cross-examination.” Doc

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#499.

At the hearing on the present motions, the parties

resolved this dispute; namely, Compal will not refer to other

litigation concerning the patent-in-suit. Accordingly, Samsung’s

motion is DENIED.

(6) Samsung’s motion to preclude admission of Dr Swatzlander’s

deposition testimony (Doc #465)

Samsung asks the court to prevent Compal from making any

reference to testimony from Dr Swartzlander, an expert Samsung

retained in the Texas litigation. Dr Swartzlander’s testimony

allegedly fails under FRE 702 for being “conclusory and unsupported

by the evidence.” The court rejects Samsung’s questionable attack

of its own expert. While Samsung is free to switch legal theories

during the course of litigation, it may not obscure the resulting

inconsistencies and twist the rules of evidence to avert

impeachment. 

Accordingly, Samsung’s motion is DENIED. To the extent

Samsung raises hearsay objections concerning Dr Swartlander’s

availability pursuant to FRE 804, the court reserves decision. 

(7) Samsung’s motion to preclude Compal from presenting certain

incorrect and inadmissible evidence concerning Samsung’s

licensing activities (Doc #486)

During discovery in 2001, Samsung’s witnesses (correctly)

testified that no defendant had taken a license to the ‘273 patent. 

Samsung seeks to exclude this testimony because it cannot “cure”

the “misleading testimony through rebuttal testimony from its own

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witnesses without giving testimony concerning the litigation

settlement agreements, evidence of which should be excluded from

trial under Rules 402, 403 and 408.” 

But this testimony is not misleading. Deposition

testimony in 2001 only speaks to licensing efforts as of 2001; it

does not bear on events in 2006. Hence, this testimony does not

force Samsung to disclose the settlement agreement because there is

no plausible inference for Samsung to rebut. Moreover, Samsung can

cure any prejudice without disclosing the terms of the settlement

agreements. Accordingly, Samsung’s motion is DENIED.

(8) Compal’s motion to preclude testimony from Dr Robert G Wedig

concerning undisclosed expert opinions (Doc #473)

Compal moves for the court to prevent Dr Wedig from

asserting that the use of the patented invention increased

reliability in notebook computers because Dr Wedig did not provide

a complete statement of his opinion regarding this theory in his

written expert witness reports. 

FRCP 26(a)(2)(B) requires expert witnesses to provide a

written report that contains “a complete statement of all opinions

to be expressed and the basis and reasons therefor.” FRCP

26(a)(2)(B). An expert report is to be a detailed and complete

statement of the testimony of the expert on direct examination. 

FRCP 26 Advisory Committee Note to 1993 amendment. If a party’s

expert witness, without substantial justification, fails to

disclose such information, then FRCP 37(c)(1) provides that the

party “shall not, unless such failure is harmless, be permitted to

use [such information] as evidence at a trial.” FRCP 37(c)(1). 

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Compal’s argument fails because Dr Wedig’s theory is not

new. Throughout his expert report, Dr Wedig acknowledges that

prior art computer systems suffered from poor operation due to

interference between multiple programs using hot keys and that the

‘273 patent resolved these interference problems. Deducing that

increased reliability would result from resolving these

interference problems constitutes a trivial inference, not a “new

reliability theory.” As such, Samsung is hardly engaging in “trial

by ambush” in violation of FRCP 26(a)(2)(B). Accordingly, Compal’s

motion is DENIED.

(9) Compal’s motion to preclude Samsung from calling Unki Kim as a

witness at trial (Doc #474)

Compal moves to preclude Samsung from calling Unki Kim as

witness at trial because Samsung did not identify him to testify

until September 5, 2006. Samsung asserts that Unki Kim was

recently added to replace Justin Ji, who left the employ of Samsung

after the December 21, 2005, discovery cut-off, although Samsung

fails to inform the court precisely when Justin Ji departed or

explain why it waited until last month to replace him.

The issue appears to be moot in light of the bifurcation

of injunctive relief claims. Accordingly, Compal’s motion is

DENIED.

(10) Compal’s motion to preclude reference to pre-litigation 

settlement negotiations (Doc #448)

In October 2000, prior to commencing the present suit,

Samsung sent Compal a cease-and-desist letter, alleging

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infringement of the ‘273 patent. This letter triggered a series of

meetings and negotiations to resolve the dispute, including offers

and counter-offers regarding licensing terms. Compal contends that

evidence of theses negotiations should be excluded under FRE 408. 

In response, Samsung argues FRE 408 does not apply because the prelitigation negotiations dealt with licensing, not settlement. 

FRE 408 provides that “[e]vidence of (1) furnishing or

offering or promising to furnish, or (2) accepting or offering or

promising to accept, a valuable consideration in compromising or

attempting to compromise a claim which was disputed as to validity

or amount, is not admissible to prove liability or invalidity of

the claim or its amount.” FRE 408. Hence, FRE 408 may exclude

evidence of pre-litigation negotiations, so long as the parties

“disputed” the validity or amount of the claim. 

Samsung correctly notes that in patent licensing

negotiations, the threat of enforcement necessarily looms in the

background. Hence, the question is whether negotiations

“crystallized to the point of threatened litigation.” See Big O

Tire Dealers, Inc v Goodyear Tire & Rubber Co, 561 F2d 1365, 1372

(10th Cir 1977). 

Here, the threat of litigation did not merely loom in the

background. In Samsung’s first communication, it demanded that

Compal “immediately cease the infringement of Samsung patents,

including the cessation of all manufacturing and sales of the

infringing products in the various nations and territories in which

Samsung has procured patent rights.” Jones decl, Ex 6. When

negotiations stalled, Samsung warned Compal that its “current

approach to this matter [could] negatively affect [Compal’s]

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position with Samsung and result in a serious problem after this

November.” Id, Ex 9. When compromise failed, Samsung followed

through on its earlier threats and filed this action on October 13,

2000. 

Contrary to Samsung’s characterization, these

negotiations were not standard “business communications.” Samsung

expressly and impliedly threatened suit throughout the

negotiations. Under these circumstances, Samsung’s license offers

and Compal’s counter-offer are precisely the sort of settlement

offers — made in an effort to avoid litigation — that FRE 408 bars. 

Moreover, permitting Samsung to use these licensing offers in trial

would frustrate FRE 408's underlying purpose: “the promotion of

the public policy favoring the compromise and settlement of

disputes.” FRE 408, Advisory Committee Notes. 

Nonetheless, FRE 408 only precludes Samsung from using

these pre-litigation settlement negotiations to establish

infringement or the amount of Compal’s liability. Consequently,

some evidence regarding the pre-litigation negotiations may be

admissible. For example, to demonstrate Compal had actual notice

of the ‘273 patent and Samsung’s assertion of infringement, Samsung

intends to offer Exhibit STX 227, Samsung’s initial letter it sent

to Compal on February 5, 1999. 

Because portions of the pre-litigation negotiation may

satisfy FRE 408, the court declines to exclude evidence regarding

the negotiations. The court anticipates addressing this issue with

respect to specific evidence as it is offered at trial. 

//

//

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(11) Compal’s motion to preclude testimony or new analysis from

Paul Meyer regarding the impact of different operating systems

on his damages analysis (Doc #449)

Compal asks the court to preclude Samsung’s damages

expert witness, Paul Meyer, from offering any supplemental damages

calculation that multiplies the designated royalty rate by a

royalty base that consists only of Compal’s 32U, 32U2, 32U3, 32U5,

32NN, 32T3, 32T5 and 32T6 products when sold with Windows NT. 

Apparently, the royalty rate presented in Meyer’s expert witness

report is generated by multiplying the royalty rate against a

royalty base consisting of all accused Compal computer products. 

As such, the report does not contain any damage calculations for

use if the jury finds that only claims 1, 3 and 4 of the ‘273

patent are infringed by certain Compal computer products sold with

specific operating systems. 

As Samsung notes, Compal’s motion is predicated on the

occurrence of two contingent events: Compal must be found to

infringe claims 1, 3 or 4, but not claims 5, 6 or 7 and Compal must

prevail on its argument that its products using an operating system

other than Windows NT do not infringer claims 1, 3 or 4. As a

result, this motion does not concern a ripe controversy. If these

two events occur, the court may address this issue upon Compal’s

renewed objection. Accordingly, Compal’s motion is DENIED. 

//

//

//

//

//

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(12) Compal’s motion to preclude argument attempting to swear

behind Compal’s prior art (Doc #450)

Compal urges the court to preclude Samsung from swearing

behind Compal’s prior art references because: (1) the testimony of

‘273 patent’s inventors cannot establish an invention before

November 9, 1990, (2) Samsung’s corroborating documents and

testimony are either inadmissible or do not corroborate any date of

conception prior to October 26, 1990. 

Testimony of a named inventor is inadequate as a matter

of law to establish either conception or reduction to practice. 

Chen v Bourchard, 347 F3d 1299, 1309-10 (Fed Cir 2003). Instead,

testimony of an inventor must be corroborated, the adequacy of

which is measured under a “rule of reason” standard. Lack Indus,

Inc v McKechnie Vehicle Components USA, Inc, 322 F3d 1335, 1349

(Fed Cir 2003).

Although questions of law, the issues of priority,

conception and reduction to practice often require factual

determinations by a jury. Cooper v Goldfarb, 154 F3d 1321, 1327

(Fed Cir 1998). Hence, Compal’s motion attempts to turn a factual

issue, which encompasses the apparently disputed meaning of certain

evidence and the disputed credibility of witnesses, into a de facto

summary judgment issue. The court declines to resolve these

factual disputes.

The only evidentiary issue posed in Compal’s motion is

whether Mr Goodman’s daily planner constitutes inadmissible

hearsay. The court finds that the statements in the planner

evidence Mr Goodman’s then-present state of mind under FRE 803(3),

which exempts “statement[s] of the declarant’s then existing state

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of mind * * * (such as intent, plan, motive, design, mental

feeling, pain and bodily health).” FRE 803(3). Accordingly, Mr

Goodman’s daily planner does not require exclusion under FRE 802

and Compal’s motion is DENIED. 

IT IS SO ORDERED.

 

VAUGHN R WALKER

United States District Chief Judge

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