Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_02-cv-02385/USCOURTS-cand-3_02-cv-02385-8/pdf.json

Parties Involved:
Microsoft Corporation
Counter-claimant
TV Interactive Data Corporation
Counter-defendant

Document Text:

United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

TV INTERACTIVE DATA CORPORATION,

Plaintiff,

 v.

MICROSOFT CORPORATION,

Defendant. /

No. C 02-02385 JSW

ORDER DENYING IN PART AND

GRANTING IN PART TV

INTERACTIVE DATA’S MOTION

FOR SUMMARY JUDGMENT

Now before the Court is the motion of Plaintiff TV Interactive Data Corporation

(“TVI”) for summary judgment. Having carefully reviewed the parties’ papers and considered

their arguments and the relevant legal authority, and good cause appearing, the Court hereby

DENIES IN PART AND GRANTS IN PART TVI’s motion for summary judgment. According

to the parties’ representations and the Court’s prior rulings on the motions for summary

judgment filed by Defendant Microsoft Corporation (“Microsoft”), the only remaining issues

before the Court are the affirmative defenses of inequitable conduct and laches. The Court

DENIES summary judgment as to the inequitable conduct affirmative defense and GRANTS

summary judgment as to the laches affirmative defense.

Case 3:02-cv-02385-JSW Document 495 Filed 09/19/05 Page 1 of 4
United States District Court

For the Northern District of California

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A. Legal Standard on Summary Judgment.

Summary judgment is appropriate when there is no genuine issue as to any material fact

and the moving party is entitled to judgment as a matter of law. Union States Gypsum Co. v.

Nat’l Gypsum Co., 74 F.3d 1209, 1212 (Fed. Cir. 1996). The burden of demonstrating the

absence of any genuine issue of material fact rests with the moving party. SRI Int’l v. 

Matsushita Elec. Corp., 775 F.2d 1107, 1116 (Fed. Cir. 1985). In order to defeat summary

judgment, the non-moving party must do “more than simply show that there is some 

metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,

475 U.S. 574, 586 (1986). Rather, the non-moving party must set forth “specific facts showing

that there is a genuine issue for trial.” Fed. R. Civ. P. 56(2); Matsushita Elec., 475 U.S. at 587. 

B. Inequitable Conduct.

To establish inequitable conduct, Microsoft must prove by clear and convincing

evidence that TVI’s investors (1) made affirmative misrepresentations of a material fact to, or

purposely withheld material prior art from, the Patent and Trademark Office (“PTO”), and (2)

that they did so with an intent to deceive the PTO into issuing the patents. Molins PLC v.

Textron, Inc., 48 F.3d 1172, 1178 (Fed. Cir. 1995). Microsoft alleges that TVI is guilty of

inequitable conduct because it failed to disclose the 3DO system comprehensively and because

it failed to disclose Commodore’s CDTV as prior art. Because the Court finds that the evidence

is disputed regarding TVI’s knowledge of these systems and their similarity to the patented

technology, the Court must deny summary judgment as to the inequitable conduct affirmative

defense. Although inequitable conduct is a matter for the court rather than the jury to resolve,

summary judgment is inappropriate if there remain genuine issues of material fact. Paragon

Podiatry Lab., Inc. v. KLM Labs., Inc., 984 F.2d 1182, 1190 (Fed. Cir. 1993).

C. Laches.

TVI moves for summary judgment against Microsoft’s affirmative defense of laches. 

Microsoft contends that the complaint, filed on May 16, 2002, is barred by the doctrine of

laches due to unreasonable delay in filing. The complaint was filed five years after the first

patent-in-suit was issued by the PTO and seven weeks after the last patent-in-suit was issued. 

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United States District Court

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To successfully invoke laches as an affirmative defense, a defendant must prove that the

plaintiff delayed filing suit an unreasonable and inexcusable length of time after the plaintiff

knew or reasonably should have known of its claim against the defendant and that the delay

resulted in material prejudice to the defendant. State Contracting & Engineering Corp. v.

Condotte America, Inc., 346 F.3d 1057, 1065-66 (Fed. Cir. 2003); Gasser Chair Co., Inc. v.

Infanti Chair Mfg. Corp., 60 F.3d 770, 773 (Fed. Cir. 1995). Once those factual premises are

established, the Court must weigh the equities in order to assess whether laches should apply to

bar those damages that accrued prior to suit. Advanced Cardiovascular Sys., Inc. v. SciMed Life

Sys., Inc., 988 F.2d 1157, 1161 (Fed. Cir. 1993); A.C. Aukerman Co. v. R.L. Chaides Constr.

Co., 960 F.2d 1020, 1041 (Fed. Cir. 1992). Because the period of delay in this case was less

than six years, prejudice cannot be presumed. See Aukerman, 960 F.2d at 1035-36. 

Accordingly, in order to establish their defense of laches, Microsoft must demonstrate that the

delay was unreasonable, inexcusable and materially prejudiced them. 

Material prejudice may be either economic or evidentiary. Id. at 1033. Economic

prejudice arises when a defendant suffers the loss of monetary investments or incurs damages 

that likely would have been prevented by earlier suit. Id. A nexus must be shown between the

patentee’s delay in filing suit and the expenditures; the alleged infringer must change his

position “because of and as a result of the delay.” Hemstreet v. Computer Entry Sys. Corp., 972

F.2d 1290, 1294 (Fed. Cir. 1992); see also Gasser Chair, 60 F.3d at 775 (“We reiterate that a

change in the economic position of the infringer during the period of delay must be as a result

of the delay; the infringer must prove that the change in economic position would not have

occurred had the patentee sued earlier.”). 

Microsoft contends that it incurred economic prejudice because with earlier knowledge

of potential infringement, it might have changed the design of Autoplay. (See Declaration of

Kelly C. Hunsaker, Ex. LL, Wagner Depo. at 160:25-161:19, 222:3-19.) However, it is

undisputed that Microsoft was on notice of TVI’s patent rights as of January 1999 when the

patent examiner rejected Microsoft’s application as anticipated by the Redford patent. (See

Second Declaration of Niall A. MacLeod, Ex. 35.) There is no evidence in the record that 

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United States District Court

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Microsoft had any plans to change the design of Autoplay at any time between notice and TVI’s

filing of this lawsuit. The damages Microsoft avers does not establish that it changed its

position “because of and as a result of the delay.” See Hemstreet, 972 F.2d at 1294. Monetary

losses are not merely those attributable to a finding of liability for infringement. The Court

must look for a change in the economic position of the alleged infringer during the period of

delay. See Aukerman, 960 F.2d at 1033. Microsoft has failed to establish the kind of economic

prejudice that is required to support a finding of laches. 

Evidentiary prejudice arises where the plaintiff’s delay impairs the defendant’s ability to

defend a patent suit on the merits “due to the loss of records, the death of a witness, or the

unreliability of memories of long past events, thereby undermining the court’s ability to judge

the facts.” Id. Here, however, the passage of time and the potential evidentiary prejudice

appears to favor Microsoft, not to work at its disadvantage. The evidence related to TVI’s

reduction to practice arguments would have benefitted TVI and Microsoft’s failure to find its

own e-mails from 1993 is unrelated to the timing of this lawsuit and arises from its own failure

to preserve all patent-related materials for thirty years, as required by its retention policy. 

Accordingly, TVI’s motion for summary judgment as to the inequitable conduct

affirmative defense is DENIED and as to the laches affirmative defense is GRANTED. 

IT IS SO ORDERED.

Dated: September 19, 2005 

JEFFREY S. WHITE

UNITED STATES DISTRICT JUDGE

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