Sound View Innovations, LLC v. Hulu, LLC

MEMORANDUM in Opposition to NOTICE OF MOTION AND MOTION for Summary Judgment of No Willful Infringement 254

C.D. Cal.March 18, 2019

REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 1 Case No. LACV17-04146 JAK (PLAx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION SOUND VIEW INNOVATIONS, LLC, Plaintiff, v. HULU, LLC, Defendant. Case No. LACV17-04146 JAK (PLAx) PLAINTIFF SOUND VIEW INNOVATIONS, LLC’S MEMORANDUM IN OPPOSITION TO DEFENDANT HULU, LLC’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT Date: April 15, 2019 Time: 8:30 a.m. Hon. Judge John A. Kronstadt Courtroom: 10B Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 1 of 31 Page ID #:18380 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW INNOVATIONS, LLC’S MOTION FOR SUMMARY JUDGMENT OF NO ANTICIPATION BY HOOPER i Case No. LACV17-04146 JAK (PLAx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS Pages I. INTRODUCTION ........................................................................................... 1 II. BACKGROUND ............................................................................................. 2 A. The Parties and Patents-in-Suit ............................................................. 2 B. Hulu’s Knowledge of Its Infringing Activities ..................................... 3 C. Hulu’s Alleged Investigation of the Patents-in-Suit ............................. 4 D. Ongoing Discovery Activities Relevant to Willfulness ........................ 5 III. LEGAL STANDARDS ................................................................................... 5 A. Summary Judgment ............................................................................... 5 B. Willful Infringement ............................................................................. 6 IV. ARGUMENT................................................................................................... 8 A. A Reasonable Jury Could Find that Hulu Continued to Infringe the Patents-In-Suit Despite a Risk of Infringement That Was Either Known or Obvious. ............................................................................... 8 1. Hulu Undisputedly Knew of Sound View’s Patent Infringement Allegations Prior To This Lawsuit. ...................... 9 2. Evidence Supports A Finding That, Upon Receiving Sound View’s Notice Letters, Hulu Continued Infringing Sound View’s Patents Despite A Risk Of Infringement That Was Known Or Obvious. .................................................................... 9 a. Evidence Shows Hulu Knew Which Sound View Patent Claims Read on Its Technology and Which of Its Offerings Infringed. ................................................... 10 b. Evidence Shows Hulu Had Access to All the Information It Needed to Assess the Risk It Infringed. . 12 3. Evidence Supports a Finding That Hulu Lacked a Good Faith Basis to Believe It Did Not Infringe. ............................... 14 a. Evidence Supports a Finding That Hulu Did Not Investigate Sound View’s Infringement Claims. ........... 15 b. Hulu’s Litigation-Inspired Defenses and Post-Suit Opinion of Counsel Are Irrelevant to the Willfulness Inquiry. ........................................................................... 16 4. Sound View Has Not Finished Gathering Evidence Relevant to Willfulness. ........................................................................... 17 Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 2 of 31 Page ID #:18381 SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT ii Case No. LACV17-04146 JAK (PLAx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B. Infringing a Patent Despite a Risk of Infringement That Is Known or Obvious Is Proof of Willfulness under Halo. ................................. 18 1. Halo Confirmed That Willful Infringement Is Egregious Conduct Deserving Enhanced Damages under § 284. ............. 18 2. The Federal Circuit Has Held, Both Before and After Halo, That Conduct Like Hulu’s Constitutes Willful Infringement Meriting Enhanced Damages .................................................... 22 3. Hulu’s Conduct Is Exactly the Type of Behavior the Supreme Court Intended to Capture When It Eliminated the “Objective” Prong of the Willfulness Standard. ....................... 23 V. CONCLUSION ............................................................................................. 24 CERTIFICATE OF SERVICE ................................................................................ 26 Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 3 of 31 Page ID #:18382 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW INNOVATIONS, LLC’S MOTION FOR SUMMARY JUDGMENT OF NO ANTICIPATION BY HOOPER i Case No. LACV17-04146 JAK (PLAx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Pages Cases Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) ........................................................................................ 6 Arctic Cat Inc. v. Bombardier Recreational Prod. Inc., 876 F.3d 1350 (Fed. Cir. 2017) ......................................................... 7, 8, 9, 20 Ashcroft v. Iqbal, 556 U.S. 662 (2009) ...................................................................................... 11 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) ....................................................................................... 5 Del Mar Avionics, Inc. v. Quinton Instrument Co., 836 F.2d 1320 (Fed. Cir. 1987) ............................................................... 22, 23 Doc. Sec. Sys., Inc. v. Lite-On, Inc., Case No. 17-CV-6050-JVS(JCGx), 2018 WL 2422589 (C.D. Cal. Feb. 5, 2018) .............................................................................................................. 21 Fitness Anywhere LLC v. WOSS Enterprises LLC, Case No. 14-CV-01725-BLF, 2018 WL 6069511 (N.D. Cal. Nov. 20, 2018) ................................................................................................................ 7 Georgetown Rail Equip. Co. v. Holland L.P., 867 F.3d 1229 (Fed. Cir. 2017) ..................................................................... 20 Greatbatch Ltd. v. AVX Corp., Case No. 13-723-LPS, 2016 WL 7217625 (D. Del. 2016) .......................... 21 Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923 (2016). .......................................................................... passim In re Seagate Tech., LLC, 497 F.3d 1360 (Fed. Cir. 2007) ....................................................................... 6 Intellectual Ventures I LLC v. Symantec Corp., 234 F. Supp. 3d 601 (D. Del. 2017) .............................................................. 21 Liquid Dynamics Corp. v. Vaughan Co., 449 F.3d 1209 (Fed. Cir. 2006) ....................................................................... 7 LoggerHead Tools, LLC v. Sears Holdings Corp., Case No. 12-CV-9033, 2016 WL 5112017 (N.D. Ill. Sept. 20, 2016) ......... 20 McAfee Enterprises, Inc. v. Yamaha Corp. of Am., Case No. 2:16-CV-2562, 2016 WL 6920675 (C.D. Cal. June 24, 2016) ..... 11 Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 4 of 31 Page ID #:18383 Pages SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT ii Case No. LACV17-04146 JAK (PLAx) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Metabolite Labs., Inc. v. Lab. Corp. of Am. Holdings, 370 F.3d 1354 (Fed. Cir. 2004) ............................................................... 22, 23 Move, Inc. v. Real Estate All. Ltd., 221 F. Supp. 3d 1149 (C.D. Cal. Dec. 1, 2016) ............................................ 21 Polara Eng’g Inc v. Campbell Co., 894 F.3d 1339 (Fed. Cir. 2018) ..................................................................... 17 Rolls-Royce, Ltd. v. GTE Valeron Corp., 800 F.2d 1101 (Fed. Cir. 1986) ....................................................................... 7 Rosemount, Inc. v. Beckman Instruments, Inc., 727 F.2d 1540 (Fed. Cir. 1984) ..................................................................... 23 SRI Int’l, Inc. v. Advanced Tech. Labs., Inc., 127 F.3d 1462 (Fed. Cir. 1997) ................................................................. 7, 23 WBIP, LLC v. Kohler Co., 829 F.3d 1317 (Fed. Cir. 2016) ............................................................... 16, 23 WCM Indus., Inc. v. IPS Corp., 721 Fed. Appx. 959 (Fed. Cir. 2018) ............................................................ 20 WesternGeco LLC v. ION Geophysical Corp., 837 F.3d 1358 (Fed. Cir. 2016) ............................................................. 6, 8, 20 Wisconsin Alumni Research Found. v. Apple, Inc., 261 F. Supp. 3d 900 (W.D. Wis. 2017) ......................................................... 21 XpertUniverse, Inc. v. Cisco Systems, Inc., Case No. 17-CV-03848, 2017 WL 4551519 (N.D. Cal. Oct. 11, 2017) ....... 21 Statutes 35 U.S.C. § 284 ................................................................................................. passim Rules Fed. R. Civ. P. 56(a) .................................................................................................. 5 Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 5 of 31 Page ID #:18384 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 1 Case No. LACV17-04146 JAK (PLAx) I. INTRODUCTION Since the Supreme Court’s 2016 decision in Halo Elecs., Inc. v. Pulse Elecs., Inc.,1 proof of willful infringement has consisted of a showing that the infringer knew or should have known its actions infringed a valid patent. In this case, there is considerable evidence that Hulu willfully infringes Sound View’s patents. Sound View informed Hulu of its patents eight months before this case was filed. Sound View identified particular patent claims Hulu was infringing, and how Hulu infringed them. Hulu had all of the documents and information it needed to determine whether it performed the steps of the asserted claims. And there is no evidence that Hulu conducted any kind of investigation that would have given it reason to doubt that its accused products and services infringed. Based on that evidence, a reasonable jury could find that, since receiving Sound View’s letters, Hulu has known or should know that it is infringing Sound View’s patents. Hulu nevertheless moved for summary judgment of no willful infringement, arguing that its actions are merely “typical” infringement, not “egregious” conduct meriting enhanced damages under 35 U.S.C. § 284. But that argument gets the legal standard for willfulness backward. As the Halo court explained, willfulness is the measure of egregiousness under § 284, not vice versa. And so, after Halo, the willfulness standard continues to call for only an analysis of what the infringer knew or should have known, and not an additional comparison of the infringer’s conduct to some nebulous standard of bad behavior. Because Sound View has set forth sufficient facts to demonstrate at least a genuine dispute as to whether, since 2016, Hulu subjectively has known or should know it is infringing Sound View’s patents, Hulu’s motion for summary judgment of no willfulness should be denied. 1 136 S. Ct. 1923 (2016). Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 6 of 31 Page ID #:18385 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 2 Case No. LACV17-04146 JAK (PLAx) II. BACKGROUND A. The Parties and Patents-in-Suit Plaintiff Sound View owns more than 900 active and pending worldwide patents, including approximately 475 active United States Patents. (Dkt. No. 40 ¶ 1.) Hulu’s Motion for Summary Judgment of No Willful Infringement (Dkt. No. 254 (“Motion”)) relates to three of those patents (the “streaming patents”), which are directed to technology for streaming media over the Internet.3 Specifically, the patents are directed to systems and methods for streaming media, such as video, from a content provider (e.g., the source of a video) to a content consumer (who watches the video) using a “helper server” at a content distribution network (or “CDN”).4 Defendant Hulu makes money by streaming video over the Internet. Hulu offers both subscription video-on-demand services and a “Hulu Live” service that allows users to stream live television. (Motion at 2.) Hulu infringes the streaming patents by contracting with third party CDNs (including Akamai Technologies, Inc. and Level 3 Communications, Inc.) to facilitate the transmission of video over the Internet. In 2017, Hulu is a subsidiary of the Walt 2 Unless otherwise indicated, all citations to exhibits refer to exhibits to the Declaration of C. Austin Ginnings in Support of Plaintiff Sound View Innovations, LLC’s Memorandum In Opposition to Defendant Hulu, LLC’s Motion for Summary Judgment of No Willfulness. 3 Because this case is stayed with respect to one of the patents-in-suit, and Sound View has not alleged willful infringement of the other, Hulu’s Motion pertains to only the three streaming patents: U.S. Patent Nos. 6,708,213 (the “’213 patent”), 6,757,796 (the “’796 patent”), and 9,462,074 (the “’074 patent). (See Motion at 1.) 4 See, e.g., ’213 Patent at 1:17-39, 2:57-3:5, 3:65-4:62; ’796 Patent at 1:13-32, 1:60- 2:59, 3:25-4:20; ’074 Patent at 1:27-49, 2:64-3:20, 3:45-4:61. Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 7 of 31 Page ID #:18386 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 3 Case No. LACV17-04146 JAK (PLAx) Disney Company, and employs numerous attorneys. (Id. ¶ 25; Exh. 2 at 2-3 (correspondence with four Hulu attorneys).) B. Hulu’s Knowledge of Its Infringing Activities Sound View first contacted Hulu about its infringement on October 10, 2016, by sending a letter to Hulu’s general counsel. (Exh. 3 at 1.) Hulu’s letter included a table identifying patents and examples of claims Hulu infringes.5 (Id. at 3.) The table also identified the particular Hulu offerings that infringe each patent and exemplary claim. (Id.) Sound View stated that it would offer Hulu a license to its patents, and requested a meeting to discuss that possibility. (Id. at 2.) Hulu did not respond to Sound View’s October 2016 letter. Nearly six months later, on March 28, 2017, Sound View followed up with a second letter to Hulu’s general counsel. (Exh. 4 at 1.) The letter reiterated Sound View’s initial infringement allegations, enclosing Sound View’s previous letter and table for reference. (Id. at 1, 3-5.) Sound View also identified an additional patent that Hulu infringed, and Hulu’s corresponding infringing activities.6 (Id. at 1.) Sound View further informed Hulu that Sound View had “charted several of [the identified] patents against Hulu’s video streaming service,” and requested a meeting so Sound View could “present that information[.]”7 (Id.) When Hulu still had not responded on April 3, 2017, Sound View’s general counsel followed up with Hulu’s intellectual property litigation counsel, leaving a voicemail and forwarding a copy of Sound View’s earlier letters to Hulu’s general counsel. (Exh. 5 at 1.) On April 20, Sound View received a letter from Erin Greenfield Mehta, who identified herself as “the point of contact for all patent matters at Hulu[.]” (Exh. 2 at 2; Exh. 6 at 1.) Ms. Mehta stated that she would be traveling overseas for a 5 The table included specific infringement allegations for several of the patents involved in this case, including the ’213 patent and the ’796 patent. 6 The additional patent Sound View identified was the ’074 patent. 7 Among patent lawyers, “charting” refers to preparing “claim charts” that detail how an infringer’s product or service meets every limitation of an asserted claim. Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 8 of 31 Page ID #:18387 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 4 Case No. LACV17-04146 JAK (PLAx) “few weeks” and “plan[ned] to investigate” Sound View’s infringement allegations “upon her return.” (Exh. 6 at 1.) She did not request a meeting with Sound View or a copy of its claim charts. Instead, she asked for a list of companies that had engaged in licensing discussions with Sound View, and whether those companies had licensed Sound View’s patents. (Id.) Sound View responded that day, informing Hulu that seven major companies had licensed the Sound View patent portfolio, and that Sound View had resolved patent infringement lawsuits with LinkedIn and Twitter. (Exh. 2 at 2.) Sound View sent Hulu claim charts for the streaming patents on May 22, reiterating its infringement allegations and offer to discuss licensing. (Exh. 7 at 1-2.) Once again, Hulu did not respond. Sound View filed this lawsuit on June 2, 2017. C. Hulu’s Alleged Investigation of the Patents-in-Suit Sound View propounded an interrogatory in this case requesting a detailed description of any investigation-whether technical or legal-Hulu undertook regarding its infringement of the patents-in-suit. (Exh. 8 at 7-8.) Hulu’s response does not state when that investigation occurred, nor does it cite documents showing what Hulu did to investigate.8 In fact, Hulu claims that, prior to this lawsuit, it “did not even know the details” it needed to assess whether it met the claim limitations that are performed by its CDNs. (Motion at 22.) Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 9 of 31 Page ID #:18388 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 5 Case No. LACV17-04146 JAK (PLAx) D. Ongoing Discovery Activities Relevant to Willfulness Sound View has yet to take two depositions relevant to the issue of willfulness. First, Sound View has yet to depose the Hulu 30(b)(6) witness designated for the topic of Mr. Yang’s opinions, as that witness is presently on parental leave. Second, Sound View has yet to depose Erin Mehta, Sound View moved to compel Ms. Mehta’s deposition by separate motion (see Dkt No. 240), and the Court granted that motion shortly before the filing of this opposition. (See Dkt. No. 296.) III. LEGAL STANDARDS A. Summary Judgment Summary judgment is warranted only where “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The burden is on the moving party to show an absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 10 of 31 Page ID #:18389 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 6 Case No. LACV17-04146 JAK (PLAx) (1986). In deciding a summary judgment motion, “[t]he evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). A factual issue is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. at 248. B. Willful Infringement Section 284 of the Patent Act provides that, in a case of infringement, a court “may increase the damages up to three times the amount found or assessed.” 35 U.S.C. § 284. A patentee seeking enhanced damages for willful infringement must prove that the defendant acted despite a risk of infringement that was “either known or so obvious that it should have been known to the accused infringer.” See also WesternGeco LLC v. ION Geophysical Corp., 837 F.3d 1358, 1362 (Fed. Cir. 2016) (applying Halo), rev’d sub nom. WesternGeco LLC v. ION Geophysical Corp., 138 S. Ct. 2129 (2018) (reversing on other grounds), and opinion reinstated in part, 913 F.3d 1067 (Fed. Cir. 2019). In 2016, the Supreme Court in Halo Electronics, Inc. v. Pulse Electronics, Inc., affirmed that this test is a purely subjective inquiry into the knowledge and intentions of the infringer at the time the infringement occurred. 136 S. Ct. at 1932-33. The Supreme Court’s decision to adopt a subjective test for eligibility for enhanced damages lowered the prevailing Federal Circuit standard for proving willfulness, and the Court’s reasons for adopting that test illuminate its application. Before Halo, a patentee seeking enhanced damages was required to establish not only that the infringer subjectively knew or should have known of the risk that he was infringing a patent, but also that the risk that he infringed was “objectively high.” See In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007) (emphasis added), abrogated by Halo. The Supreme Court preserved the subjective prong of that test, but nixed the objective prong. See Halo, 136 S. Ct. at 1932-33; WesternGeco, 837 F.3d at 1362. The Court explained that the objective prong had inadvertently placed Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 11 of 31 Page ID #:18390 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 7 Case No. LACV17-04146 JAK (PLAx) beyond the grasp of § 284 much of the “bad-faith” conduct it was meant to capture. See Halo, 136 S. Ct. at 1932-33. By way of example, the Court noted that the objective requirement would allow someone who “plunders a patent-infringing without any reason to suppose his conduct is arguably defensible”-to wriggle out of a willfulness finding simply because his litigation counsel shored up a reasonable defense after he was sued. Id. at 1933. Making the analysis a subjective one, the Court reasoned, would empower district courts to deploy § 284 to punish the “full range of culpable behavior.” Id. The Federal Circuit has affirmed that Halo merely eliminated the objective prong of the earlier test, but “did not disturb” the subjective prong. Arctic Cat Inc. v. Bombardier Recreational Prod. Inc., 876 F.3d 1350, 1371 (Fed. Cir. 2017), cert. denied, 139 S. Ct. 143 (2018). Thus, the primary consideration in determining whether conduct is willful continues to be “whether the infringer, acting in good faith and upon due inquiry, had sound reason to believe that it had the right to act in the manner that was found to be infringing.” SRI Int’l, Inc. v. Advanced Tech. Labs., Inc., 127 F.3d 1462, 1464-65 (Fed. Cir. 1997). Both direct and circumstantial evidence may be probative of willfulness. Fitness Anywhere LLC v. WOSS Enterprises LLC, Case No. 14-CV-01725-BLF, 2018 WL 6069511, at *5 (N.D. Cal. Nov. 20, 2018). And, as the Federal Circuit has observed, “[t]he drawing of inferences, particularly in respect of an intent-implicating question such as willfulness, is peculiarly within the province of the fact finder[.]” Liquid Dynamics Corp. v. Vaughan Co., 449 F.3d 1209, 1225 (Fed. Cir. 2006), quoting Rolls-Royce, Ltd. v. GTE Valeron Corp., 800 F.2d 1101, 1110 (Fed. Cir. 1986). Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 12 of 31 Page ID #:18391 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 8 Case No. LACV17-04146 JAK (PLAx) IV. ARGUMENT A. A Reasonable Jury Could Find that Hulu Continued to Infringe the Patents-In-Suit Despite a Risk of Infringement That Was Either Known or Obvious. There is at least a genuine dispute of material fact as to whether Hulu willfully infringed Sound View’s patents. It is undisputed that Hulu knew of Sound View’s patents and infringement allegations prior to this lawsuit. And, as described further below, additional evidence supports a finding that Hulu had all of the information it needed to appreciate that it infringes Sound View’s patents, yet continued to do so without a good-faith belief that its conduct was legally defensible. A reasonable jury could therefore find that Hulu knew or should have known it was infringing Sound View’s patents. See Arctic Cat, 876 F.3d at 1371; WesternGeco, 837 F.3d at 1363. None of the evidence cited in Hulu’s motion forecloses such a finding. Far from showing that Hulu “did not and could not have had the requisite mental state for a finding of willful infringement,” (Motion at 2) Hulu’s Motion cites facts that supposedly support two potentially inconsistent theories of no willfulness. Thus, Hulu has not demonstrated the absence of a genuine dispute of material fact as to willfulness. Moreover, Hulu’s motion for summary judgment is premature. Sound View has not yet had a chance to depose Hulu’s 30(b)(6) witness for issues relevant to willful infringement. And the Court only recently granted Sound View’s motion to compel the deposition of Erin Mehta, the Hulu in-house attorney who was responsible for investigating the patents-in-suit. (See Dkt. No. 238.) Each of these depositions may Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 13 of 31 Page ID #:18392 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 9 Case No. LACV17-04146 JAK (PLAx) uncover additional evidence of Hulu’s willful behavior that is relevant to the disposition of this motion. 1. Hulu Undisputedly Knew of Sound View’s Patent Infringement Allegations Prior To This Lawsuit. There is no dispute that Hulu knew about the streaming patents prior to this litigation. (Motion at 3.) Hulu admits that it received Sound View’s October 2016 letter, which explained that Hulu infringed the ’213 and ’796 patents. (Id. at 4.) Hulu admits that it received Sound View’s March 2017 letter, which reiterated Sound View’s infringement allegations regarding the ’213 and ’796 patents and explained that Hulu also infringed the ’074 patent. (Id.) And Hulu admits that it received Sound View’s May 22 letter, which further described Sound View’s infringement allegations and enclosed claim charts. (Id. at 5.) 2. Evidence Supports A Finding That, Upon Receiving Sound View’s Notice Letters, Hulu Continued Infringing Sound View’s Patents Despite A Risk Of Infringement That Was Known Or Obvious. There is also no dispute that Hulu continued to engage in infringing activities after receiving Sound View’s notice letters. (See Motion at 20-21.) Thus, summary judgment is improper if evidence exists to support a finding that Hulu knew of the risk its activities infringed Sound View’s patents, or, in the alternative, that the risk was obvious. See Arctic Cat, 876 F.3d at 1371. Evidence does exist that supports such a finding. Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 14 of 31 Page ID #:18393 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 10 Case No. LACV17-04146 JAK (PLAx) a. Evidence Shows Hulu Knew Which Sound View Patent Claims Read on Its Technology and Which of Its Offerings Infringed. Hulu knew or should have known of the risk that it was infringing Sound View’s patents, because it had specific information about which of its products and services infringed Sound View’s claims. Sound View’s notice letters identified a representative claim of each patent-in-suit and the Hulu offerings that infringed that claim. For example, Sound View’s October 2016 notice letter explained that Hulu infringed claim 16 of the ’213 patent by offering “television service streaming over IP, including Hulu and Hulu Plus, performed in compliance with the MPEG Dash video streaming standards.” (Exh. 3 at 3.) Similarly, Sound View’s March 2017 letter explained that Hulu infringed the ’074 patent by “streaming video to Hulu and Hulu Plus customers via the Akamai Technologies content delivery network . . . using MPEG-DASH and HLS protocols.” (Exh. 4 at 3.) The patents themselves and the evidence regarding the operation of Hulu’s accused products support a finding Hulu would have understood which of its activities infringe Sound View’s patents, and how they did so. The claims themselves unambiguously invoke the use of CDNs: each asserted patent recites methods of using one or more “helper servers” to deliver streaming media from a “content server” to one or more “clients.” See ’213 Patent Claim 16; ’796 Patent 27; ’074 Patent Claim 9. Sound View’s recitation of specific products and services, and features of those products and services-such as the use of particular streaming protocols-provide further guidance about how its claims map to the identified Hulu products. Thus, evidence supports a finding that Hulu was in a position to appreciate the risk that it infringes Sound View’s patents after receiving Sound View’s initial notice letters. Hulu suggests otherwise, arguing that only Sound View’s final, May 22, 2017 notice letter gave Hulu sufficient information about Sound View’s claims to allow Hulu Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 15 of 31 Page ID #:18394 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 11 Case No. LACV17-04146 JAK (PLAx) to evaluate Sound View’s allegations. In particular, Hulu claims that Sound View’s May 2017 letter “shift[ed]” Sound View’s infringement theory by identifying a “new basis for contending that Hulu infringe[s]” and “new and different” accused technology as compared to its earlier letters. (Motion at 5-7, 25.) But Hulu’s side-by-side comparisons of Sound View’s May 2017 and initial notice letters show something different-namely, that Sound View’s final letter merely added further details to the same infringement theories already presented in the initial letters. (Id. at 5-7.) For example, Sound View’s initial notice letters stated that “[a]ll Hulu products, services, and activities which stream video” infringed claim 16 of the ’213 Patent; “[a]ll Hulu live streaming broadcasts” infringed claim 27 of the ’796 Patent; and “streaming video to Hulu and Hulu Plus customers” infringed claim 9 of the ’074 Patent. (Exh. 3 at 3 (also citing, without limitation, exemplary Hulu offerings); Exh. 4 at 1 (same).) Sound View’s May 2017 follow-up letter identified those same categories of technology and specified additional criteria for identifying infringing products within those categories (e.g., whether a product uses “adaptive bitrate streaming protocols”). (Exh. 7 at 3-4.) Likewise, Sound View’s identification of specific CDNs with whom Hulu contracts to “directly infringe[] and induce[] infringement” (see id. at 2) of the patents simply adds factual detail regarding its previously-identified theory of infringement-detail that Hulu itself already knew. Because Sound View’s May 2017 letter merely narrowed and focused the allegations in Sound View’s earlier letters, it provides no support for the inference that Sound View’s initial allegations were inaccurate, ambiguous, or otherwise misled Hulu as to the risk Hulu was infringing the patents-in-suit. Nor can Hulu credibly argue that Hulu needed those additional details to investigate Sound View’s allegations. Sound View’s initial letter included allegations-an asserted patent, claim, and product- sufficient to meet the pleading standard for patent infringement in this district. See McAfee Enterprises, Inc. v. Yamaha Corp. of Am., Case No. 2:16-CV-2562, 2016 WL Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 16 of 31 Page ID #:18395 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 12 Case No. LACV17-04146 JAK (PLAx) 6920675, at *3 (C.D. Cal. June 24, 2016). Hulu cannot credibly argue that allegations sufficient to raise a “plausible” inference of patent infringement under the notice pleading standard of Federal Rule of Civil Procedure 8(a) are somehow insufficient put Hulu on notice of its infringing conduct. See Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009) (describing plausibility requirement of notice pleading). b. Evidence Shows Hulu Had Access to All the Information It Needed to Assess the Risk It Infringed. Evidence further supports a finding that Hulu would have had all the information it needed to evaluate whether the products and services Sound View identified in its letters infringe the identified claims. In particular, Sound View’s expert Dr. Iain Richardson explains in his expert report that Sound View would have had all the relevant information about-and direct control over-every method step performed by its CDNs. The cited documents and testimony provide overwhelming evidence that Hulu knew about, and was in control of, every method step its CDNs performed.9 Dr. Richardson concludes that, based on review of this 9 Hulu has filed a separate motion to exclude Dr. Richardson’s opinions regarding willfulness. (See Dkt. No. 251.) Even if Dr. Richardson’s opinions regarding willfulness were excluded, the underlying factual information on which his opinion relies will still be evidence in this case because, as Hulu notes in its Motion to Exclude, Dr. Richardson cites that same evidence in support of his infringement arguments. (Id. at 8-9.) Thus, regardless of whether Dr. Richardson is allowed to provide an opinion Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 17 of 31 Page ID #:18396 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 13 Case No. LACV17-04146 JAK (PLAx) information, Hulu knew or should have known that its actions “constituted an unjustifiably high risk of infringement” of Sound View’s patents. (See id. ¶¶ 427, 583, 831.) Hulu nevertheless insists that it “did not even know the details of methods used by [its] CDNs because those details were protected by the CDNs as confidential business information and not shared with customers[.]” (Motion at 22.) But Hulu does not cite evidence that provides unambiguous support-let alone conclusive evidence- for that contention. Second, Hulu provides no corroboration for its claim that its CDNs would not provide the information Hulu needed to evaluate whether it infringed the Sound View patent. There is no evidence that Hulu actually inquired with its CDNs after hearing about Sound View’s allegations, nor that the CDNs declined to provide information Hulu thought it needed to assess whether it infringed Sound View’s patents. regarding willfulness, evidence will still support a finding that Hulu knew that it performed every limitation of every asserted claim. Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 18 of 31 Page ID #:18397 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 14 Case No. LACV17-04146 JAK (PLAx) As is discussed further below, it is unclear how Hulu both knew that it did not infringe, and lacked the information necessary to evaluate whether it infringed. In short, Hulu has not pointed to any uncontested (or even unambiguous) evidence that it was unable to determine whether it performed any infringing method step. Instead, as Dr. Richardson discusses in his report, there is ample evidence that Hulu was aware of or could have easily determined that it performed every step of the claimed methods when it received Sound View’s infringement notice letters in 2016 and 2017. That evidence creates a genuine factual dispute as to whether Hulu continued to infringe despite a known or obvious risk. 3. Evidence Supports a Finding That Hulu Lacked a Good Faith Basis to Believe It Did Not Infringe. In addition to Hulu’s knowledge of the patents, knowledge of the asserted claims and accused products, and knowledge of the factual details about how the accused products meet the asserted claims, a jury evaluating Hulu’s state of mind as to its risk of infringement would further consider whether Hulu believed in good faith that it did not infringe Sound View’s patents. Here, there is no evidence that Hulu had such a good faith-belief. First, the evidence strongly suggests that Hulu did not conduct the kind of reasonable investigation into Sound View’s infringement claims that could support such a belief. Second, neither the defenses Hulu has asserted in this case and Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 19 of 31 Page ID #:18398 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 15 Case No. LACV17-04146 JAK (PLAx) the related IPRs, nor the non-infringement defense outlined in the opinion of counsel Hulu obtained after this case was filed, shows that Hulu acted in good faith, because there is no evidence that Hulu was aware of those defenses prior to this lawsuit. a. Evidence Supports a Finding That Hulu Did Not Investigate Sound View’s Infringement Claims. None of Hulu’s written discovery or witness testimony in this case supports a finding that Hulu took any steps to evaluate Sound View’s patents and infringement allegations in the six months after it received Sound View’s October 2016 letter. Hulu did not seek clarification of Sound View’s allegations or agree to the meeting Sound View offered. Indeed, Hulu did not respond to Sound View’s initial notice letters and allegations in any way until Sound View repeatedly followed up by letter, phone call, and e-mail in March and April 2017. When Hulu finally did respond in April, Hulu’s in-house counsel confirmed that she had not yet investigated Hulu’s allegations, stating that she “plan[ned] to do so” in a “few weeks.” (Exh. 6 at 1.) Although Hulu now claims that at some point it “reviewed and evaluated” Sound View’s letters and “formed the opinion that [it] did not infringe,” Hulu does not state when that evaluation occurred, and has not produced a single document (or identified privileged documents) that corroborate its claims. In any event, even assuming Hulu did form such an opinion between October 2016 and April 2017, there is reason to doubt that Hulu did so in good faith. Hulu currently claims that, when it received Sound View’s infringement letters, it “lacked visibility into the details of the steps performed by its CDNs which form the basis of Sound View’s infringement contentions,” and was unable to evaluate Sound View’s infringement claims until its CDNs produced relevant evidence during this litigation. (Motion at 22.) If that is true, then Hulu also would have lacked sufficient information to form a conclusive belief that it did not infringe. Thus, even assuming Hulu did “review and evaluate” Sound View’s letters, Hulu could not have reasonably relied in on that evaluation. Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 20 of 31 Page ID #:18399 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 16 Case No. LACV17-04146 JAK (PLAx) b. Hulu’s Litigation-Inspired Defenses and Post-Suit Opinion of Counsel Are Irrelevant to the Willfulness Inquiry. Hulu’s efforts to identify defenses during this lawsuit are irrelevant to the willfulness analysis in this case. In its Motion, Hulu notes that it has asserted non- infringement and invalidity defenses in this litigation and petitioned the Patent Office for inter partes review of two asserted patents, suggesting that these activities are relevant to willfulness. (Motion at 8-9.) But the Supreme Court in Halo specifically rejected the notion that defenses developed during litigation are probative evidence that a defendant’s infringement is not willful. See Halo, 136 S. Ct. at 1933. Rather, because willfulness is a subjective determination, an infringer’s culpability is measured against his knowledge at the time he infringed, not facts he “neither knew nor had reason to know at the time he acted.” Id. Thus, Hulu cannot now “insulate itself from liability for enhanced damages” based on the defenses it developed after Sound View filed this case. See also WBIP, LLC v. Kohler Co., 829 F.3d 1317, 1340 (Fed. Cir. 2016) (describing holding in Halo). Likewise, the non-infringement opinions Hulu received from David Yang after Sound View field this lawsuit are not, as Hulu argues, “highly probative evidence” that it believed in good faith that it believed it did not infringe Sound View’s patents. (Motion at 22.) Hulu cites no evidence that it was aware of Mr. Yang’s opinions before this lawsuit was under way. Moreover, there is a genuine dispute of fact as to whether Hulu could have reasonably relied upon Mr. Yang’s opinions after Sound View filed this case. Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 21 of 31 Page ID #:18400 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 17 Case No. LACV17-04146 JAK (PLAx) Those inconsistencies call into question whether Hulu agreed with Mr. Yang’s constructions, and therefore whether it could have relied in good faith upon opinions based on those constructions. Whether an opinion of counsel provides a good faith basis for finding of non-infringement is a question properly decided by a jury. See Polara Eng’g Inc v. Campbell Co., 894 F.3d 1339, 1354 (Fed. Cir. 2018). Thus, to the extent Hulu argues that Mr. Yang’s opinions are evidence that its infringement is not willful, there is genuine dispute of fact for the jury as to whether Hulu relied in good faith on those opinions. 4. Sound View Has Not Finished Gathering Evidence Relevant to Willfulness. Based on the evidence that Hulu knew of Sound View’s patents, was able to evaluate Sound View’s infringement allegations, and continued its infringing activity 10 Apparently implying that its non-infringement positions are reasonable and Sound View’s infringement claims are not, Hulu’s Motion incorrectly claims that the Court “largely adopt[ed] constructions proposed by Hulu (and reject[ed] those proposed by Sound View) for five of the six terms construed in this litigation.” In fact, the Court’s claim construction order adopted two of Sound View’s proposed constructions (for “adjusting a data transfer rate . . .” and “SM object”); a modified version of one of Sound View’s proposed constructions (for “helper server”); a modified version of one of Hulu’s proposed constructions (for “pre-configured playout history buffer”); and two constructions of its own (for “live streaming media broadcast objects” and “ring buffer”). Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 22 of 31 Page ID #:18401 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 18 Case No. LACV17-04146 JAK (PLAx) with no good-faith reason to believe its conduct was permissible, a reasonable jury could conclude that Hulu knew or should have known it was infringing Sound View’s patents. It is likely, however, that Sound View will also uncover additional evidence that Hulu’s infringement was willful. Sound View not yet deposed either Karen Huoth, Hulu’s 30(b)(6) witness regarding Hulu’s alleged reliance on Mr. Yang’s opinions, or Erin Mehta, who was responsible for soliciting Mr. Yang’s opinion and corresponded with him about the process by which he prepared his opinions. These depositions will probably uncover evidence relevant to Hulu’s willful infringement, including, among other things, the details of Hulu’s alleged investigation of Sound View’s patents, and whether Hulu reasonably relied on Mr. Yang’s opinions. Thus, Hulu’s request for summary judgment of no willfulness will not ripen until those depositions are complete. See Fed. R. Civ. P 56(d). B. Infringing a Patent Despite a Risk of Infringement That Is Known or Obvious Is Proof of Willfulness under Halo. The record in this case contains considerable evidence that Hulu knew or should have known it was infringing Sound View’s patents. Hulu nevertheless insists that it is entitled to summary judgment of no willfulness, because this is a “typical” case of patent infringement and not an “egregious” case. (Motion at 1-2.) In so arguing, Hulu misstates the legal standard for willfulness. As the Supreme Court held in Halo, willful infringement-knowingly infringing a valid patent-is egregious conduct warranting enhanced damages under § 284. Because a reasonable jury could find that Hulu’s conduct was willful, Hulu is not entitled to summary judgment of no willful infringement. 1. Halo Confirmed That Willful Infringement Is Egregious Conduct Deserving Enhanced Damages under § 284. Hulu’s Motion incorrectly contends that Halo set out, and “[d]istrict courts across the country, and in this district, have applied” an “egregiousness” standard for Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 23 of 31 Page ID #:18402 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 19 Case No. LACV17-04146 JAK (PLAx) determining whether infringement is willful. (See Motion at 13.) Hulu suggests that, to determine whether infringement was willful, a court must compare the infringer’s conduct to that of other infringers and decide whether the infringer’s conduct was “egregious” or merely “typical.” (Id.) But the Halo Court did not hold that egregiousness is the measure of willful infringement. In fact, the opposite is true: the Supreme Court held that willful infringement is a hallmark of egregious behavior meriting enhanced damages under § 284. Although Halo is most commonly invoked in the context of willful infringement determinations, the Supreme Court’s decision in that case did not relate to willful infringement specifically, but to damages under § 284 more generally. Section 284 grants district courts discretion to enhance damages, but places no explicit limit or condition on when such damages are appropriate. Halo, 136 S. Ct. at 1931. In Halo, the Court held that district courts should have broad latitude to award enhanced damages-that is why the Court lowered the standard for proving entitlement to them- but cautioned that courts should exercise that discretion in light of the purpose of § 284. Id. at 1932. “Awards of enhanced damages under the Patent Act over the past 180 years establish that they are not to be meted out in a typical infringement case,” the Court explained, “but are instead designed as a ‘punitive’ or ‘vindictive’ sanction for egregious infringement behavior.” Id. The Court’s made clear that willful infringement is egregious behavior under § 284, holding that “egregious” behavior includes behavior that is “willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or-indeed-characteristic of a pirate.” Id. In fact, the Supreme Court pointed to willfulness as the standard by which egregiousness should measured, explaining that the egregious cases meriting enhanced damages under § 284 are “typified by willful infringement.” Id. at 1934 (emphasis added). In order to show that summary judgment of no willfulness is unwarranted, then, Sound View need only prove that there is a factual dispute as to whether Hulu infringed Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 24 of 31 Page ID #:18403 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 20 Case No. LACV17-04146 JAK (PLAx) knowingly or despite an obvious risk-not that Hulu’s infringement also meets some additional standard of egregiousness. Since Halo, the Federal Circuit has repeatedly affirmed that the test for willfulness is simply whether the infringer “knew or should have known that its actions constituted an unjustifiably high risk of infringement of a valid and enforceable patent[.]” Arctic Cat, 876 F.3d at 1371 (emphasis removed); WesternGeco, 837 F.3d at 1353 (approving of district court jury instruction that willfulness test is whether infringer “actually knew, or it was so obvious that [infringer] should have known, that its actions constituted infringement of a valid patent claim”); WCM Indus., Inc. v. IPS Corp., 721 Fed. Appx. 959, 970 (Fed. Cir. 2018) (holding that, after Halo, the test for willful infringement is whether the infringer “acted despite a risk of infringement that was either known or so obvious that it should have been known”). Under Halo, that analysis “is by definition a question of the actor’s intent, the answer to which must be inferred from all the circumstances.” WCM, 721 Fed. Appx. at 970; see also Georgetown Rail Equip. Co. v. Holland L.P., 867 F.3d 1229, 1245 (Fed. Cir. 2017). Hulu’s Motion ignores the federal Circuit’s post-Halo decisions articulating the willfulness standard. But the district court decisions it cites are of a piece with the Federal Circuit standard. In LoggerHead Tools, for example, the district court granted a motion for summary judgment of no willfulness where the accused infringer attempted to avoid infringement by consulting with a patent attorney while it designed its products. See LoggerHead Tools, LLC v. Sears Holdings Corp., Case No. 12-CV-9033, 2016 WL 5112017, at *3-4 (N.D. Ill. Sept. 20, 2016); see also XpertUniverse, Inc. v. Cisco Systems, Inc., Case No. 17-CV-03848, 2017 WL 4551519, at *5-*6 (N.D. Cal. Oct. 11, 2017) (evidence showed defendant attempted to design around the claims). Likewise, in Greatbatch, the district court reaffirmed its pre-Halo decision to grant summary judgment of no willfulness where the accused infringer sought an opinion of counsel well before litigation, conducted an internal analysis to evaluate whether it could Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 25 of 31 Page ID #:18404 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 21 Case No. LACV17-04146 JAK (PLAx) reasonably rely on the opinion, and attempted to design its products so as to avoid infringing the patents-in-suit. See Greatbatch Ltd. v. AVX Corp., Case No. 13-723-LPS, 2016 WL 7217625, at *2-*3 (D. Del. 2016). In other cases, district courts granted summary judgment or upheld jury verdicts of no willfulness where the patentee did not allege infringement prior to the lawsuit, or the infringer filed a lawsuit almost immediately after notifying the patentee of its allegations.11 The common thread among these cases is not that the case was “typical” rather than “egregious,” but instead that the record reflected that the patentee did not infringe knowingly, or despite an obvious risk-either because the infringer worked in good faith to avoid infringement, or the infringer wasn’t notified of its infringement, or the infringer had insufficient time to investigate the patentee’s allegations. Here, by contrast, there is evidence that Hulu persisted in infringing the patents- in-suit for more than six months with no notion of a defense. Sound View notified Hulu of its infringing activities in October 2016. Hulu did not respond to Sound View’s letters-not to deny Sound View’s allegations, not to inform Sound View of its intent to investigate those allegations, and not to seek the clarification of those allegations that it now claims to have needed-until Sound View reached out again by phone, e-mail, and letter the following April. There is no evidence that, during the six-month silence, Hulu took any steps to conduct a reasonable investigation of Sound View’s patents or its infringement allegations. And there is no evidence that Hulu made any attempt to modify its activities to avoid continued infringement. This evidence strongly supports a finding that Hulu infringed knowingly, or despite an obvious risk. 11 See Move, Inc. v. Real Estate All. Ltd., 221 F. Supp. 3d 1149, 1173 (C.D. Cal. Dec. 1, 2016) (defendant was aware the patent existed-the patent was cited on the face of one of the defendant’s patents-but patentee did not allege infringement prior to lawsuit); Intellectual Ventures I LLC v. Symantec Corp., 234 F. Supp. 3d 601, 611-12 (D. Del. 2017), aff’d, 725 F. App’x 976 (Fed. Cir. 2018) (same); Doc. Sec. Sys., Inc. v. Lite-On, Inc., Case No. 17-CV-6050-JVS(JCGx), 2018 WL 2422589, at *2-*3 (C.D. Cal. Feb. 5, 2018) (patentee sent notice letter but no specific allegation); Wisconsin Alumni Research Found. v. Apple, Inc., 261 F. Supp. 3d 900, 917-18 (W.D. Wis. 2017) (patentee learned of patent shortly before lawsuit was filed, and patentee did not allege infringement). Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 26 of 31 Page ID #:18405 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 22 Case No. LACV17-04146 JAK (PLAx) 2. The Federal Circuit Has Held, Both Before and After Halo, That Conduct Like Hulu’s Constitutes Willful Infringement Meriting Enhanced Damages The Federal Circuit has on numerous occasions found that actions like Hulu’s constitute willful infringement under § 284. In Del Mar Avionics, for example, the court ruled that enhanced damages were appropriate where, after receiving a notice letter from the patentee, the defendant proceeded with its infringing activities without conducting a patent search or consulting an attorney. See Del Mar Avionics, Inc. v. Quinton Instrument Co., 836 F.2d 1320, 1328-29 (Fed. Cir. 1987). The court so held despite the fact that the infringer in Del Mar-unlike Hulu, here-went to the trouble of meeting with the patentee prior to the lawsuit. Id. at 1328. Ultimately, the panel found the infringement was willful because no record evidence supported a finding that the infringer had a good faith basis to believe that it was not infringing a valid patent. Id. at 1328-29. Similarly, in Metabolite Labs., the panel upheld a district court’s decision to award enhanced damages because the record showed that the infringer-like Hulu, “a large company with extensive financial means”-conducted only a cursory investigation to determine whether it infringed the plaintiff’s patents. Metabolite Labs., Inc. v. Lab. Corp. of Am. Holdings, 370 F.3d 1354, 1370-71 (Fed. Cir. 2004). There, the court found that the infringer’s reliance on its engineer’s non-infringement opinion was unreasonable, because the engineer lacked sufficient legal training to evaluate patent infringement issues. Id. Likewise, in Rosemount, the panel held that, where the record reflects that an infringer who is informed of a patent continues to infringe “without investigating the validity or scope of the patent,” that infringement is willful. Rosemount, Inc. v. Beckman Instruments, Inc., 727 F.2d 1540, 1547 (Fed. Cir. 1984). The Federal Circuit recently reaffirmed the reasoning of Del Mar, Metabolite Laboratories, and Rosemount. In WBIP, LLC v. Kohler Co., the panel upheld a jury Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 27 of 31 Page ID #:18406 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 23 Case No. LACV17-04146 JAK (PLAx) verdict of willful infringement when the accused infringer continued to market its products after learning of the patent-in-suit. See 829 F.3d at 1340-41. As in this case, nothing in the record suggested that the infringer had any reason to believe the asserted patent was invalid or that its products did not infringe. Id. The panel held that, under the Halo standard, “an infringer's subjective bad faith alone may support an award of enhanced damages”-and a failure to investigate after receiving a notice of infringement constitutes bad faith. Id. at 1340. 3. Hulu’s Conduct Is Exactly the Type of Behavior the Supreme Court Intended to Capture When It Eliminated the “Objective” Prong of the Willfulness Standard. Under Federal Circuit precedent, “[t]he law of willful infringement does not search for minimally tolerable behavior, but requires prudent, and ethical, legal and commercial actions.” SRI Int’l, 127 F.3d at 1465. Hulu cites no authority for the proposition that an alleged infringer who for six months ignores a patentee’s infringement allegation and licensing offer12 can ever meet that standard. And Hulu points to no case in which a court granted summary judgment of no willfulness despite evidence that an accused infringer persisted in its infringing conduct without investigating the patentee’s claims. Instead, Hulu’s motion is littered with ad hominem excuses for its failure to act on Sound View’s allegations. Hulu notes, among other things: that Sound View is an intellectual property licensing company; that Sound View sent infringement notices to other companies; and that Sound View has sued some of those companies but not others. (Motion at 2-3, 18.) These legally-irrelevant statements invite the Court to condone Hulu’s conduct because Sound View is, to use Hulu’s term, a “non-practicing entity.” 12 Hulu’s claim that “Sound View, not Hulu [] refused to engage in meaningful licensing discussions before launching the present lawsuit” is demonstrably false. Sound View repeatedly offered to discuss licensing in the eight months from its initial notice letter until it filed its complaint. (See October 10, 2016 and March 28, 2017 letters (Exh. 3 at 2; Exh. 4 at 1-2); April 3, 2017 e-mail (Exh. 5 at 1); April 20, 2017 e-mail (Exh. 2 at 2); May 22, 2017 letter (Exh. 7 at 2).) Hulu did not agree to have that discussion. Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 28 of 31 Page ID #:18407 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 24 Case No. LACV17-04146 JAK (PLAx) But Hulu does not, and cannot, cite legal authority that Sound View’s intellectual property rights are unworthy of respect because Sound View is an patent licensing company. Indeed, Hulu’s sue-me-if-you-dare approach to Sound View’s allegations is precisely the sort of behavior the Halo Court sought to dissuade. See Halo, 136 S. Ct. at 1932. A finding of no willfulness must be based on an infringer’s subjective awareness of a defense at the time he infringed-not upon his expectation that, in a pinch, he could come up with one. See id. at 1933. Here, the evidence and argument in Hulu’s motion strongly suggest that Hulu stonewalled Sound View not because it believed it was not liable for infringement, but instead because Hulu hoped Sound View would pursue other infringers instead. As such, a reasonable jury could find that Hulu’s infringement was willful. V. CONCLUSION Because evidence supports a finding that Hulu knew or should have known that it was infringing Sound View’s ’213, ’796, and ’074 patents, and lacked any good faith reason to believe its conduct was permissible, there is at least a genuine dispute of material fact as to whether Hulu’s infringement was willful. Accordingly, Sound View respectfully requests that the Court DENY Hulu’s motion for summary judgment of no willfulness. Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 29 of 31 Page ID #:18408 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 25 Case No. LACV17-04146 JAK (PLAx) Dated: March 18, 2019 By: /s/ Kent N. Shum RUSS AUGUST & KABAT Marc A. Fenster Benjamin T. Wang Kent N. Shum 12424 Wilshire Boulevard, 12th Floor Los Angeles, California 90025 Tel: (310) 826-7474 Fax: (310) 826-6991 mfenster@raklaw.com bwang@raklaw.com kshum@raklaw.com Of Counsel: DESMARAIS LLP Alan S. Kellman (admitted pro hac vice) Richard M. Cowell (admitted pro hac vice) C. Austin Ginnings (admitted pro hac vice) Jennifer M. Przybylski (admitted pro hac vice) 230 Park Avenue New York, NY 10169 Tel: (212) 351-3400 Fax: (212) 351-3401 akellman@desmaraisllp.com rcowell@desmaraisllp.com aginnings@desmaraisllp.com jprzybylski@desmaraisllp.com Peter C. Magic (SBN 278917) 101 California Street, Suite 3070 San Francisco, CA 94111 Tel: (415) 573-1900 Fax: (415) 573-1901 pmagic@desmaraisllp.com Attorneys for Plaintiff Sound View Innovations, LLC Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 30 of 31 Page ID #:18409 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL SOUND VIEW’S OPPOSITION TO HULU’S MOTION FOR SUMMARY JUDGMENT OF NO WILLFUL INFRINGEMENT 26 Case No. LACV17-04146 JAK (PLAx) CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing document was filed electronically in compliance with Local Rule 5-3.2. Therefore, this document was served on all counsel who are deemed to have consented to electronic service. Pursuant to Federal Rule of Civil Procedure 5(d) and Local Rule 5-3.2, all other counsel of record not deemed to have consented to electronic service were served with a true and correct copy of the foregoing by email on March 18, 2019. ____/s/ Kent N. Shum Case 2:17-cv-04146-JAK-PLA Document 318 Filed 03/18/19 Page 31 of 31 Page ID #:18410