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Nos. 2013-1307, -1313
IN THE United States Court of Appeals
FOR THE FEDERAL CIRCUIT
I/P ENGINE, INC.,
Plaintiff-Cross Appellant,
v.
AOL INC., GOOGLE INC., IAC SEARCH & MEDIA, INC., GANNETT
COMPANY, INC., and TARGET CORPORATION,
Defendant-Appellants.
APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE
EASTERN
DISTRICT OF VIRGINIA IN CASE NO. 11-CV-512, JUDGE RAYMOND A.
JACKSON.
REPLY BRIEF OF PLAINTIFF-CROSS APPELLANT I/P ENGINE, INC.
JEFFREY K. SHERWOOD FRANK C. CIMINO, JR. KENNETH W. BROTHERS
DAWN RUDENKO ALBERT CHARLES J. MONTERIO, JR. JONATHAN L. FALKLER
DICKSTEIN SHAPIRO LLP 1825 Eye Street NW Washington, DC 20006 (202)
420-2200
JOSEPH R. RE Counsel of Record STEPHEN W. LARSON KNOBBE,
MARTENS, OLSON & BEAR, LLP2040 Main Street, 14th Floor Irvine,
CA 92614 (949) 760-0404 Attorneys for Plaintiff-Cross Appellant
January 2, 2014
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CERTIFICATE OF INTEREST
Counsel for Plaintiff-Cross Appellant I/P Engine, Inc. certifies
the
following:
1. The full name of every party being represented by me is:
I/P Engine, Inc.
2. The real party in interest represented by me is:
Vringo, Inc.
3. All parent corporations and any publicly held companies that
own 10 percent
or more of the stock of the parties represented by me are as
follows:
Innovate/Protect, Inc., which is a wholly owned subsidiary of
Vringo, Inc.
4. The names of all law firms and the partners or associates
that appeared for
the party now represented by me in the trial court or agency or
are expected to
appear in this Court are:
Joseph R. Re, Stephen W. Larson, KNOBBE, MARTENS, OLSON &
BEAR, LLP; Donald C. Schultz, W. Ryan Snow, CRENSHAW, WARE &
MARTIN PLC; Jeffrey K. Sherwood, Frank C. Cimino, Jr., Kenneth W.
Brothers, Dawn Rudenko Albert, Charles J. Monterio, Jr., James
Ryerson, Jonathan Falkler, Katie Scott, Krista Carter, Leslie
Jacobs, Jr., DICKSTEIN SHAPIRO LLP; Richard H. Ottinger, Dustin M.
Paul, VANDEVENTER BLACK LLP.
Dated: January 2, 2014 By: /s/ Joseph R. Re Joseph R. Re
Attorney for Plaintiff-Cross Appellant
I/P ENGINE, INC.
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TABLE OF CONTENTS
Page No.
-ii-
I. INTRODUCTION
...........................................................................................
1
II. ARGUMENT
...................................................................................................
3
A. The District Courts Laches Ruling Was Unsupported And Legally
Erroneous
.........................................................................
3
1. Defendants Cite No Evidence That The Blog Post Was Pervasive,
Open, And Notorious ........................................ 3
2. Comparisons Between The Content Of The Blog Post And I/P
Engines Infringement Allegations Do Not Establish Constructive
Knowledge ................................ 7
3. The District Court Erred In Implementing The Laches
Presumption
..................................................................
11
4. Even Without The Opportunity To Present Rebuttal Evidence,
I/P Engine Burst The Bubble Of Any Laches Presumption
..................................................... 14
B. The District Court Erred In Denying I/P Engines Motion For A
New Trial On Past Damages
..................................................... 17
III. CONCLUSION
..............................................................................................
19
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TABLE OF AUTHORITIES
Page No(s).
-iii-
A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020
(Fed. Cir. 1992) (en banc)
..................................................... 14
Allen Archery, Inc. v. Browning Mfg. Co., 898 F.2d 787 (Fed.
Cir. 1990)
.......................................................................
19
Hall v. Aqua Queen Mfg., 93 F.3d 1548 (Fed. Cir. 1996)
.................................................................
4, 5, 6
Intirtool, Ltd. v. Texar Corp., 369 F.3d 1289 (Fed. Cir. 2004)
.......................................................................
3
Mitutoyo Corp. v. Cent. Purchasing, LLC, 499 F.3d 1284 (Fed.
Cir. 2007)
.....................................................................
19
Potter Instr. Co. v. Storage Tech. Corp., No. 79-579, 1980 WL
30330 (E.D. Va. Mar. 25, 1980) ...............................
15
Pullman-Standard v. Swint, 456 U.S. 273 (1982)
......................................................................................
17
Ultimax Cement Mfg. Corp. v. CTS Cement Mfg. Corp., 587 F.3d
1339 (Fed. Cir. 2009)
.......................................................................
6
Wanlass v. Fedders Corp., 145 F.3d 1461 (Fed. Cir. 1998)
(Wanlass II) .......................................... 4, 5
Wanlass v. General Elec. Co., 148 F.3d 1334 (Fed. Cir. 1998)
(Wanlass I) ............................................ 4, 5
OTHER AUTHORITIES
Fed. R. Civ. P. 11
.......................................................................................................
8
Fed. R. Civ. P. 50
...............................................................................................
12, 17
Fed. R. Civ. P. 52
.....................................................................................................................
12
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I. INTRODUCTION
Defendants Opposition Brief confirms that the district courts
laches ruling
is unsupported by the evidence and legally erroneous. Like the
district court,
Defendants identify no record evidence that the
laches-triggering blog post was
pervasive, open, and notorious. Indeed, like the district court,
Defendants identify
no record evidence that anyone ever viewed the 2005 blog post.
Moreover, the
blog post itself records zero comments.
Lacking evidence, Defendants draw comparisons between the
substantive
content of the blog post and I/P Engines infringement arguments.
But the blog-
post content is irrelevant absent evidence that Lycos (the owner
of the Patents-in-
Suit in 2005) knew or should have known of the blog post in
2005.
Undaunted, Defendants and the amici curiae urge this Court to
adopt an
untenable rule: If a party relies on public information to
assert allegations of patent
infringement in its complaint or to argue infringement at trial,
that party should be
charged with constructive knowledge of the information,
effective the date it was
first made public. For good reason, that is not the law. That
information or
evidence, once known, supports a charge of infringement does not
mean that such
evidence or information was pervasive, open, and notorious the
instant it became
public. This Court should reverse the district courts
unsupported and legally
erroneous decision finding a presumption of laches.
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At a minimum, I/P Engine burst the presumption of laches, and
Defendants
identify no support for the district courts contrary holding.
Indeed, Defendants
agree that the district courts statement of the laches
presumption was erroneous.
Defendants nonetheless ask this Court to take the extraordinary
step of weighing
the evidence for the first time on appeal. But where, as here,
facts remain to be
found and evidence remains to be weighed, a remand is the proper
course.
Regarding damages, Defendants first argue that JMOL of zero
damages is
appropriate because I/P Engine purportedly put forward no
evidence of post-
Complaint damages. Defendants then admit that I/P Engine did
introduce evidence
regarding damages for the entire period, including the
post-Complaint period. In
reality, Defendants argument is that I/P Engine did not
introduce a specific
damages number for the post-Complaint period. But I/P Engines
expert testified
using a chart showing damages by quarter, including data for the
post-Complaint
period. In view of this evidence and presentation, the jury
could have reached a
supportable damages award. That it did not do so requires a
remand to correct the
award, not a free pass in the form of JMOL of zero damages for
Defendants
adjudged infringement.
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II. ARGUMENT
A. The District Courts Laches Ruling Was Unsupported And Legally
Erroneous
1. Defendants Cite No Evidence That The Blog Post Was Pervasive,
Open, And Notorious
Like the district court, Defendants fail to identify any
evidence that the blog
post was pervasive, open, and notorious. That is because
Defendants failed to
create such a record before the district court. The entirety of
Defendants evidence
is the blog post itself, and the fact that the name of the blog
contains the word
official. Defendants Cross-Appeal Opposition Brief, D.I. 64
(Opp. Br. ) at
50. But Defendants cite no evidence to show that the blogs
self-proclaimed
official status establishes any audience for the blog in
2005.
Lacking evidence, Defendants accuse I/P Engine of indulging in a
semantic
exercise, because I/P Engine contends that each of the three
words set forth in this
Courts precedentpervasive, open, and notorioushas meaning. Id.
at 50.
Unable to meet each of the three criteria, Defendants conflate
the pervasive, open,
and notorious requirement into a single amorphous test of
published, and then
equate published with public, concluding that the blog post was
published
simply because it was publicly available on the Internet. Id. at
50-51. But that is
not the law. See, e.g., Intirtool, Ltd. v. Texar Corp., 369 F.3d
1289, 1297 (Fed.
Cir. 2004) (constructive knowledge not established even though
product was
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public); Hall v. Aqua Queen Mfg., 93 F.3d 1548, 1555-56 (Fed.
Cir. 1996) (same
as to eighth defendant, U.S. Watermattress).
In an attempt to argue otherwise, Defendants cite Wanlass v.
General Elec.
Co., 148 F.3d 1334 (Fed. Cir. 1998) (Wanlass I), but that case
does not hold that
constructive knowledge is established by the mere existence of
publicly accessible
information. To the contrary, Wanlass I quotes Hall and confirms
that advertising
or other relevant activities must be pervasive, open and
notorious. Wanlass I,
148 F.3d at 1338 (quoting Hall, 93 F.3d at 1553).
In Wanlass I, in addition to the advertising activities, the
plaintiff had
offered the defendant a license and the defendant had refused,
responding that the
patent was invalid and that it would continue to use the
products. 148 F.3d at
1340. There was also direct evidence of actual knowledge of
infringement. Id.
at 1339 n.***. No such evidence exists in this case.
Moreover, in Wanlass v. Fedders Corp., 145 F.3d 1461, 1467 (Fed.
Cir.
1998) (Wanlass II), the same panel that decided Wanlass I
rejected a holding of
constructive knowledge where, as here, there was little evidence
to support such a
conclusion. The Wanlass II Court contrasted the vacant
evidentiary record in
Wanlass II with the record established in Wanlass I:
Compare the record in this case, in which there was a lack of
evidence that Wanlass should have known of Fedders's allegedly
infringing activity and virtually no evidence of communications
between them, with that in
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the copending appeal, Wanlass v. General Electric Co., 148 F.3d
1334 [Wanlass I], in which GE had considered Wanlasss suggestion of
taking a license under the Wanlass patent but told Wanlass that it
thought the patent was invalid as old art and despite rejecting the
proffered license intended to continue to use the technology.
145 F.3d at 1465, n.3 (emphasis added); see also id. at 1468
(Rader, J., concurring)
(I join this opinion to the extent that it explains that the
duty created in [Wanlass
I] is not as sweeping as the language of that opinion
suggests.)
The record in this case is nothing like the record in Wanlass I.
Instead, it is
much closer to the vacant record in Wanlass II. Here, similar to
Wanlass II, there
is no evidence of communications between Lycos and Google in
2005, no evidence
of any meetings or attendance by either at any trade shows, and
no evidence that
Lycos knew or should have known of any advertising at the time
describing the
infringing technology.
Defendants quote Hall and contend that Hall found constructive
notice
because defendants advertised heavily in trade magazines. Opp.
Br. at 51
(quoting Hall, 93 F.3d at 1553). That case, in Defendants view,
thus strongly
supports [their] laches position . . . . Id. But Defendants
mischaracterize Hall.
As the complete quotation reveals, Hall did not base
constructive knowledge solely
on magazine advertisements:
[Atlanta Vinyl] advertised heavily in trade magazines from the
outset of its activities and attended numerous
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trade shows attended by Hall. Mr. DeHan, Atlanta Vinyls
president, indicated that he met with Hall many times at these
shows.
93 F.3d at 1553 (emphasis added). Here, there is no evidence to
suggest that
Lycos and Google met at trade shows, that Google discussed the
accused products
at any trade shows, or that Google advertised heavily in trade
magazines. Id.
Defendants hypothesize that a blog post could be considered a
digital
analogue to the trade-magazine advertisements in Hall. Opp. Br.
at 51. Perhaps;
but that question is academic in view of Defendants failure to
create a record in
the district court that could support such a comparison. For
example, Defendants
cite no evidence that the AdWords Blog had any subscribers or
regular visitors in
2005, much less that Lycos was (or should have been) such a
visitor. Defendants
also cite no evidence that the blog post appeared more than
once, much less so
regularly and prominently that it could be equivalent to heavy
advertising in a
trade magazine, as in Hall, 93 F.3d at 1553.
Defendants also theorize that Lycos would have been an ideal
audience for
the blog post because Lycos was a competitor and a customer of
Google.
Opp. Br. at 46. That Lycos was a competitor of Google, however,
is not a
sufficient basis to establish constructive knowledge. See, e.g.,
Ultimax Cement
Mfg. Corp. v. CTS Cement Mfg. Corp., 587 F.3d 1339, 1350 (Fed.
Cir. 2009)
(constructive knowledge not established even though plaintiff
was competitor of
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defendant). Moreover, in 2005, Lycos was not a customer placing
ads on
AdWords. See A5817 at 6. At that time, Lycos was a publisher
using a non-
accused Google service called AdSense for Content to place ads
on Lycos
website based on the content of the website, rather than on a
users Internet
searches. See A9254:9-12; A9256:6-8; see also A5828:4-14. The
July 2005 blog
post was not directed to publishers, like Lycos, but rather to
advertisers that
created the advertisements to be displayed. A2936:25-A2937:3.
Because Lycos
was not the intended audience, it had no reason to be aware of
the blog post.
Contending otherwise, Defendants cite two Lycos deposition
excerpts, but both
excerpts confirm that Lycos was a publisher, not an advertiser,
the intended
audience of the blog post. See A4206:12-4207:2;
A9255:24-A9256:8.
2. Comparisons Between The Content Of The Blog Post And I/P
Engines Infringement Allegations Do Not Establish Constructive
Knowledge
Attempting to sidestep the lack of evidence that the blog post
was pervasive,
open, and notorious, Defendants point to similarities between
the substantive
content of the blog post and I/P Engines Complaint and
infringement arguments.
Opp. Br. at 52. But Defendants must first show that Lycos knew
or should have
known of the blog post. Only then would the content of that blog
post be relevant.
Defendants, as well as the amici curiae, urge this Court to
adopt a new and
peculiar rule: Where a party relies on public information to
bring a complaint or
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argue infringement, that party will be charged with knowing of
that information as
of the date it first appeared publicly. See Opp. Br. at 53;
Brief of Amici Curiae
Newegg, Cisco Systems, and Dell In Support of Defendants, D.I.
70 at 1. But such
a rule would directly contravene this Courts precedent requiring
that the evidence
be pervasive, open, and notorious. Indeed, it would eliminate
that test.
Moreover, Defendants and amicis proposed rule defies logic.
Simply
because evidence, once known, supports an allegation of
infringement does not
prove that that the evidence should have been discovered the
instant it first
appeared in public. Thus, Defendants and amicis references to
I/P Engines basis
for bringing suit are entirely beside the point. A Rule 11
inquiry considers whether
a pre-filing investigation of known facts, whether acquired by
reverse engineering
or otherwise, supports a reasonable belief of infringement. But
the inquiry says
nothing about when those facts were or should have been known,
which is the
relevant question for a laches defense. Mere knowledge of facts
at the time a
complaint is lodged does not establish that the facts were
pervasive, open, and
notorious the moment the facts first entered the public
domain.
Defendants and amicis rule would place an unprecedented and
impossible
burden on patentees. With the incredible scope and content of
the Internet, if
Defendants and amicis rule were adopted, even the most prudent
of unknowing
patentees could easily fall victim to the rule. A defendants
later search of the
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Internet, with the benefit of 20-20 hindsight, could often
locate a webpage that
would, if known, support an allegation of infringement or,
together with attorney
scrutiny and investigation, provide a basis to file suit. That a
motivated defendant
could identify such information among millions upon millions of
search results
does not mean that a particular webpage was so obvious that an
unknowing
patentee should be charged with constructive knowledge of its
existence when it
was first made public.
Defendants seize on I/P Engines statement at trial that its
infringement case
was based, in part, on [y]ear after year of the same public
statements by Google as
to how the system works. Opp. Br. at 54 (quoting A3854:13-14).
But the district
court did not establish constructive knowledge on that basis.
The district court
based constructive knowledge on a single blog post in 2005. A48.
That I/P Engine
should have immediately known of Googles infringement based on
this single
blog post flies in the face of Defendants own arguments to this
Court that such
public descriptions are not probative of how the accused systems
actually
work . . . . Defendants Appeal Principal Brief, D.I. 53 at
13.
In the same vein, Defendants argue that Plaintiff here could and
did bring
suit based on Googles public disclosures about ad rank, Quality
Score, and the
components of Quality Score and those public disclosures began
at least as early
as July 2005 . . . . Opp. Br. at 54 (emphasis added). Defendants
again miss the
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point. The district court did not base its laches ruling on
Googles public
disclosures about ad rank, Quality Score, and the components of
Quality Score
beginning in 2005. The district court based constructive
knowledge on two
sentences in a single 2005 blog post to establish constructive
knowledge the instant
the blog post appeared, narrowly establishing a six-year
presumption of laches.
A51.
Tellingly, Defendants never squarely address why their
infringement should
be considered open, given that, as the district court found,
Google considered
its technology a trade secret and did not disclose its technical
details . . . . A54.
Defendants do not dispute that Google kept its technology secret
and argue that
Googles public documents are not probative of infringement
because they only
describe Googles technology at a high level. See Opp. Br. at
47-55; Defendants
Appeal Principal Brief at 13; see also A2936:23-A2937:3. Yet,
Defendants seek to
impose on I/P Engine constructive knowledge the instant a single
not probative
and high level Google document appeared on the Internet, with no
evidence the
document was pervasive, open and notorious. That is not the law.
This Court
should reverse the district courts laches ruling that
constructive knowledge was
established.
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3. The District Court Erred In Implementing The Laches
Presumption
Even if constructive knowledge were established, this Court
should at least
vacate the district courts laches ruling because the district
court erred in holding
that I/P Engine failed to rebut any laches presumption. The
district court
erroneously held that I/P Engine had to respond to the
presumption by rebutting
both elements of laches (by a preponderance of the evidence) . .
. . A45
(emphasis added). Defendants acknowledge this was erroneous, but
argue that it
was harmless error because it was only a single erroneous phrase
regarding the
presumption . . . . Opp. Br. at 59. But that single phrase was
the district courts
statement regarding the standard for rebutting the presumption.
Such a critical
error should be dispositive in I/P Engines favor, not casually
dismissed.
Moreover, Defendants do not dispute that the district court
precluded
I/P Engine from submitting rebuttal evidence at trial. Opp. Br.
at 56. First,
Defendants claim I/P Engine expressly told the district court
that it would not call
any rebuttal witnesses other than its validity expert. Id. at
55. What I/P Engines
counsel said was, at this point I dont think we anticipate
calling any other
witnesses on rebuttal. A3228:23-24. That was five days before
Defendants
finished presenting their case-in-chief, see A3624:5-6, and five
days before
Defendants proffered eighty pages of deposition testimony in an
attempt to show
evidentiary prejudice with regard to laches. See A3625:22-24;
A5717-A5719.
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I/P Engine did not forfeit its right to rebut Defendants case by
providing its
expectations regarding witnesses before the close of Defendants
case and before
I/P Engine even knew if or how Defendants intended to present
their laches case.
Second, Defendants suggest that no rebuttal was necessary
because laches
was heavily litigated throughout the case. Opp. Br. at 41. But
even if that were
true, I/P Engine would still be entitled to respond to
Defendants laches evidence
in its rebuttal case. Moreover, Defendants identify only two
pieces of evidence at
trial relating to laches: Kosaks testimony regarding the sale of
Lycos in 2000 and
2004, and the blog post itself. Id. at 42. That is hardly
evidence that the laches
issue was heavily litigated by the parties prior to the district
courts ruling.
Third, Defendants contend that the district courts ruling was
justified
because their own Rule 52(c) motion was pending by the morning
of October 31,
2013. Id. at 43. But even the district court recognized that
Defendants motion,
which Defendants filed after the parties oral argument on
October 30, was not
before the district court on the morning of October 31. A41. Nor
is the district
courts ruling justified by the fact that, in response to I/P
Engines Rule 50(a)
motion and oral argument regarding laches, Defendants argued
that laches should
apply. Opp. Br. at 43 (emphasis in original). Defendants had not
filed their own
motion, but were arguing that their laches defense was viable in
response to
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I/P Engines Motion. A41. This, again, was acknowledged by the
district court.
Id.
Fourth, Defendants argue that any error was harmless because the
district
court considered I/P Engines laches proffer in its written
laches ruling. Opp. Br.
at 56. But the district courts only substantive reference to
this proffer was in the
portion of its opinion regarding constructive knowledgenot its
discussion of the
laches presumption. A51. In its constructive knowledge
discussion, the district
court used the proffer against I/P Engine, faulting Lycos for
not undertak[ing]
any steps to investigate whether Google was infringing its
patents after the 2005
blog post. Id. In its discussion of the rebuttal of the
presumption, however, the
district court did not cite any of I/P Engines evidence. A53.
This silence is
striking, particularly because the district court specifically
discussed and relied on
Defendants laches proffer. Id.
Defendants also argue that any error was harmless because I/P
Engines
evidence was simply not persuasive. Opp. Br. at 56. Defendants
state that I/P
Engine only sought to introduce [l]ive testimony from Mr. Blais
(whom Plaintiff
had not even brought to Norfolk) and a declaration from Mr.
Blais (which Plaintiff
did not even create until after the laches ruling issued). Id.
In reality,
I/P Engines laches proffer was over two-thousand pages long and
was not limited
to live testimony and a declaration by Blais. A5804-A7863.
Moreover, the fact
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that Blais was not in Norfolk and not immediately prepared to
testify in view of
Defendants proffer is legally irrelevant. Nor is it relevant, or
surprising, that Blais
prepared a declaration rebutting Defendants proffer after
Defendants submitted
their proffer.
4. Even Without The Opportunity To Present Rebuttal Evidence,
I/P Engine Burst The Bubble Of Any Laches Presumption
The district court also erred in failing to recognize that, even
without
I/P Engine having been given the opportunity to present rebuttal
evidence, the
record contained evidence to overcome a laches presumption.
Defendants argue
that I/P Engine had to put forward inventor testimony stating
that their memories
are just as fresh and their documents just as voluminous as they
would have been
without the 6-year plus delay. Opp. Br. at 56-57. Defendants
similarly repeat the
district courts argument faulting I/P Engine for not providing
evidence (expert or
otherwise) to show that the memories of Mr. Lang, Mr. Kosak, or
Lycos
(institutionally) would be unimproved by being questioned
earlier in relation to
this suit. Id. at 59-60 (quoting A53) (emphasis added). But the
scope of relevant
evidence on the issue of evidentiary prejudice is not so
narrow.
For example, as this Court explained in A.C. Aukerman Co. v.
R.L. Chaides
Constr. Co., 960 F.2d 1020, 1038 (Fed. Cir. 1992) (en banc), a
party may eliminate
the presumption of laches by showing that evidence respecting an
alleged
infringers defenses remains available substantially as before
the delay . . . . Here,
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both inventors provided extensive testimony about their patented
inventions and
numerous other issues, and Defendants cross-examined them at
length. See
A2059:19-A2106:12; A2108:3-A2161:25; A2162:17-A2185:24;
A2186:10-
A2206:7. At a minimum, such evidence created a dispute regarding
whether
Defendants defenses were available substantially as before the
delay.
Defendants argue they were prejudiced because the inventors no
longer
possess all of their inventor notebooks from their time at
Lycos. Opp. Br. at 57.
But Kosak testified that he no longer had the notebooks because
he left all of [his]
notebooks with his former employer, Lycos. A9194:11-18. Evidence
in the
custody of a third party is not lost or destroyed evidence, much
less evidence lost
or destroyed due to the passage of time. Similarly, Langs
testimony does not
establish that any inventor notebooks or indeed any categories
of documents were
lost or destroyed, much less lost or destroyed because of the
passage of time. See
A9162:21-A9165:17. Accordingly, this case is nothing like Potter
Instr. Co. v.
Storage Tech. Corp., No. 79-579, 1980 WL 30330, at *7 (E.D. Va.
Mar. 25, 1980),
cited by Defendants, where many crucial documents were lost or
destroyed
because of the passage of time, and several crucial witnesses,
including the
inventors of the patents in suit, had died.
Defendants next point to the fact that Lang and Kosak failed to
recall some
of their involvement with the prosecution of the patents. Opp.
Br. at 57-58.
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Defendants suggest they may have lost an inequitable conduct
defense, but provide
no support, by citation to the file wrapper or otherwise, that
any such legitimate
defense was lost. Id. Thus, Defendants arguments amount to
little more than rank
speculation that the inventors verbal testimony may have
identified some such
defense. Such speculation, however, does not establish
evidentiary prejudice as a
matter of law.
Defendants then allege that the Blais deposition shows that
Lycos
institutional memory had faded regarding important
damages-related issues.
Id. at 58. That is incorrect. Blais fully answered each of
Defendants cited
questions regarding the events that took place after he began
working at Lycos in
2005. See, e.g., A4224:1-8, A4224:14-A4225:2; see also
A4181:10-13.
Regarding events that were before his employment and outside the
scope of
Defendants 30(b)(6) Notice, Blais accurately stated that he
simply did not know
the answers to the questions. A4203:10-A4204:21; A4223:14-17;
A4224:9-13;
A4225:3-6; see A4464-66; A4528-40.
Finally, Defendants suggest that, even if the presumption were
burst, this
Court should affirm the overall laches ruling. Opp. Br. at 59.
But the district court
never decided, in view of the evidence as a whole, the factual
question of
evidentiary prejudice. See A47; A53. When a district court has
failed to make a
finding because of an erroneous view of the law, the usual rule
is that there should
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be a remand for further proceedings . . . . Pullman-Standard v.
Swint, 456 U.S.
273, 291 (1982). Defendants provide no reason for this Court to
depart from the
usual rule in this case.
B. The District Court Erred In Denying I/P Engines Motion For A
New Trial On Past Damages
Defendants argue that this Court should grant JMOL of zero
damages,
incorporating by reference their arguments on reply in support
of their Appeal.
Opp. Br. at 60. Defendants acknowledge I/P Engines evidence, but
argue that
I/P Engine merely needed to present its damages evidence on a
yearly or quarterly
basis . . . . Id. at 30 (emphasis in original). But I/P Engines
expert, Dr. Becker,
testified using a chart showing the reasonable-royalty damages
by quarter
throughout the full damages period, including the post-Complaint
period. A9040;
A2702:14-21. Based on Dr. Beckers testimony and presentation,
the jury could
have determined a royalty-damages award for the post-Complaint
period supported
by the evidence. See A9040; A2702:14-21; A5562; A3863:19-24.
That the jury
did not do so requires remand for correction, not a damages
award of zero.
Defendants argue that I/P Engine knew that laches would be
decided before
the case went to the jury, because I/P Engine brought its Rule
50(a) motion at the
close of Defendants case. Opp. Br. at 30. But I/P Engines motion
was
appropriate in view of Defendants scant laches evidence at
trial, and in view of
Defendants laches proffer offered prior to the close of
Defendants case.
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A3623:21-A3624:2. Even though the district court had previously
left open the
possibility of post-trial submissions of evidence on laches, I/P
Engine acted
reasonably in concluding that Defendants had no further evidence
to offer in
support of this affirmative defense on which they bore the
burden of proof. See
A4544-A4557.
But even if I/P Engine should have anticipated that the district
court would
decide the laches issue during trial, it does not follow that
I/P Engine should have
expected that the district court would task the jury with
implementing the laches
decision by adjusting the damages award based on its memory of
the evidence. As
I/P Engine has explained, where laches is at issue, the common
practice is for the
jury to decide the damages due for the full damages period. I/P
Engines Cross-
Appeal Principal Brief, D.I. 57 (Br.) at 60-61. Indeed,
Defendants do not
provide a single example of a case in which a district court
implemented a laches
ruling in a manner similar to this case.
Finally, Defendants argue that, if this Court were to grant a
new trial, the
Seventh Amendment would require that the new trial be on all
damages issues,
including the royalty rate. But the Seventh Amendment only
precludes two juries
from deciding the same essential issues. Br. at 67. The royalty
base of an
infringing product is a discrete and separate issue from a
determination of the
royalty rate. Underscoring the separate nature of these issues,
this Court has
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affirmed a district courts determination of a royalty rate and
reversed and
remanded for a determination of the royalty base. See Mitutoyo
Corp. v. Cent.
Purchasing, LLC, 499 F.3d 1284, 1292 (Fed. Cir. 2007).
Similarly, this Court has
affirmed a royalty base and remanded for a determination of a
royalty rate. See
also, e.g., Allen Archery, Inc. v. Browning Mfg. Co., 898 F.2d
787, 790 (Fed. Cir.
1990). These are not the same essential issues.
Moreover, the jurys verdict as to the royalty rate is distinct
and free from
error, and the jurys use of a special verdict form permits this
Court to isolate and
correct the royalty-base error. In contrast, a retrial on all of
the damages issues
would be grossly inefficient and unnecessary. Accordingly, this
Court should
remand for an application of the determined royalty rate to a
royalty base
supported by the evidence.
III. CONCLUSION
This Court should reverse the district courts laches ruling and
remand for an
application of the adjudged royalty rate to the entire damages
period. At a
minimum, if laches applies, this Court should order a remand
limited to applying
the 3.5% royalty rate to a supportable royalty base for the
post-Complaint period.
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Respectfully submitted,
KNOBBE, MARTENS, OLSON & BEAR, LLP
Dated: January 2, 2014 By: /s/ Joseph R. Re Joseph R. Re
Attorney for Plaintiff-Cross Appellant I/P ENGINE, INC.
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CERTIFICATE OF COMPLIANCE
1. This brief complies with the type-volume limitation of
Federal Rule of
Appellate Procedure 28.1(e)(2)(C). This brief contains 4,461
words,
excluding the parts of the brief exempted by Federal Rule of
Appellate
Procedure 32(a)(7)(B)(i).
2. This brief complies with the typeface requirements of Federal
Rule of
Appellate Procedure 32(a)(5) and the type style requirements of
Federal
Rule of Appellate Procedure 32(a)(6). This Brief has been
prepared in a
proportionally spaced typeface using Microsoft Word 2003 in 14
point font
Times New Roman.
Respectfully submitted,
KNOBBE, MARTENS, OLSON & BEAR, LLP
Dated: January 2, 2014 By: /s/ Joseph R. Re Joseph R. Re
Attorney for Plaintiff-Cross Appellant I/P ENGINE, INC.
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CERTIFICATE OF SERVICE I certify that on January 2, 2014, this
REPLY BRIEF OF PLAINTIFF-
CROSS APPELLANT I/P ENGINE, INC. was filed electronically using
the CM/ECF system, which will send notification of such filing to
counsel of record for Defendants-Appellants, AOL Inc., Google Inc.,
IAC Search & Media, Inc., Gannett Company, Inc., and Target
Corporation, as follows:
David A. Perlson David L. Bilsker
Margaret P. Kammerud Antonio R. Sistos Kevin A. Smith
Emily C. OBrien QUINN EMANUEL URQUHART & SULLIVAN, LLP
50 California Street, 22nd Floor San Francisco, CA 94111
[email protected] [email protected]
[email protected] [email protected]
[email protected] [email protected]
David A. Nelson
QUINN EMANUEL URQUHART & SULLIVAN, LLP 500 W. Madison
Street, Suite 2450
Chicago, IL 60661 [email protected]
Robert B. Wilson
QUINN EMANUEL URQUHART & SULLIVAN, LLP 51 Madison Ave., 22nd
Floor
New York, NY 10010 [email protected]
/s/ Joseph R. Re Joseph R. Re
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