Technology Properties Limited, LLC v. Canon, Inc. et al

MOTION for Judgment on the Pleadings

N.D. Cal.May 1, 2015

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 Case No. 4:14-cv-03643-CW DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS Megan Rae Whyman Olesek (Bar No. 191218) KENYON & KENYON LLP 1801 Page Mill Road Suite 120 Palo Alto, CA 94304-1216 Telephone: (650) 384-4701 Facsimile: (650) 384-4701 Email: molesek@kenyon.com T. Cy Walker (admitted Pro Hac Vice) KENYON & KENYON LLP 1500 K Street, NW, Suite 700 Washington, DC 20005 Telephone: 202-220-4200 Facsimile: 202-220-4201 Email: cwalker@kenyon.com Marcia H. Sundeen (admitted Pro Hac Vice) GOODWIN PROCTER LLP 901 New York Avenue, N.W. Washington, DC 20001 Telephone: (202) 346-4000 Facsimile: (202) 346-4444 Email: msundeen@goodwinprocter.com ATTORNEYS FOR DEFENDANTS HEWLETT-PACKARD COMPANY. ADDITIONAL PARTIES LISTED ON SIGNATURE PAGE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA OAKLAND DIVISION TECHNOLOGY PROPERTIES LIMITED LLC, et al., Civil Action No. 4:14-cv-03643-CW Plaintiffs, DEFENDANTS’ NOTICE OF MOTION AND MOTION FOR JUDGMENT ON THE PLEADINGS vs. HEWLETT-PACKARD COMPANY, Date: June 18, 2015 Time 2:00 pm Defendant. Place: Courtroom 2 – 4th Floor Judge: Hon. Claudia Wilken TECHNOLOGY PROPERTIES LIMITED LLC, et al., Civil Action No. 14-03640 CW DEFENDANTS’ NOTICE OF MOTION AND Case4:14-cv-03640-CW Document302 Filed05/01/15 Page1 of 21 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 2 MOTION FOR JUDGMENT ON THE PLEADINGS Plaintiffs, Date: June 18, 2015 Time 2:00 pm vs. CANON INC. et al., Defendants. Place: Courtroom 2 – 4th Floor Judge: Hon. Claudia Wilken TECHNOLOGY PROPERTIES LIMITED LLC, et al., Civil Action No. 14-03640 CW DEFENDANTS’ NOTICE OF MOTION AND MOTION FOR JUDGMENT ON THE PLEADINGS Plaintiffs, Date: June 18, 2015 Time 2:00 pm vs. NEWEGG INC. et al., Defendants. Place: Courtroom 2 – 4th Floor Judge: Hon. Claudia Wilken TECHNOLOGY PROPERTIES LIMITED LLC, et al., Civil Action No. 3:14-cv-03646-CW Plaintiffs, DEFENDANTS’ NOTICE OF MOTION AND MOTION FOR JUDGMENT ON THE PLEADINGS vs. SEIKO EPSON CORPORATION, et al., Date: June 18, 2015 Time 2:00 pm Defendants. Place: Courtroom 2 – 4th Floor Judge: Hon. Claudia Wilken Case4:14-cv-03640-CW Document302 Filed05/01/15 Page2 of 21 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 -1- Case No. 4:14-cv-03643-CW DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS NOTICE OF MOTION PLEASE TAKE NOTICE THAT on June 18, 2015, at 2:00pm, or as soon thereafter as counsel may be heard before the Honorable Claudia Wilken in Courtroom 2 of the above-entitled Court, located at 1301 Clay St., Oakland, CA 94612, Defendants Hewlett-Packard Company, Canon Inc., Canon U.S.A., Inc., Newegg Inc, Rosewill Inc., Seiko Epson Corporation, and Epson America, Inc. (collectively “Defendants”) will and hereby move this Court, pursuant to Federal Rule of Civil Procedure 12(c), for judgment on the pleadings with respect to Technology Properties Limited’s and MCM Portfolio LLC’s (“TPL” or “Plaintiffs”) pending causes of action (Counts I- III). This motion is made on the following ground: Plaintiffs’ pending causes of action are barred by the Kessler doctrine because the U.S. International Trade Commission (“the ITC”) found that Defendants did not infringe U.S. Patent Nos. 7,295,443, 7,522,424 and 7,719,847 (the “patents-in- suit”), and Plaintiffs chose not to appeal the decision to the Federal Circuit. This Motion is based on this Notice, the attached Memorandum of Points and Authorities, the pleadings and papers on file in this action or deemed to be on file at the time this Motion is heard, other such evidence and argument as may be presented in connection with the hearing of this Motion, and all matters of which this Court may take judicial notice. DATED: May 1, 2015 GOODWIN PROCTER LLP By /s/Marcia H. Sundeen Marcia H. Sundeen Attorney for Defendant Hewlett-Packard Company Case4:14-cv-03640-CW Document302 Filed05/01/15 Page3 of 21 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 -i- Case No. 4:14-cv-03643-CW DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS TABLE OF CONTENTS Page PRELIMINARY STATEMENT ......................................................................................................... 4 STATEMENT OF ISSUE TO BE DECIDED..................................................................................... 5 STATEMENT OF FACTS .................................................................................................................. 5 A. TPL’s Complaint in the ITC ........................................................................................ 5 B. TPL’s Complaint in This Action.................................................................................. 6 C. The ITC Decision ......................................................................................................... 6 ARGUMENT ....................................................................................................................................... 7 I. LEGAL STANDARD .............................................................................................................. 7 II. THE KESSLER DOCTRINE BARS TPL FROM RE-LITIGATING WHETHER DEFENDANTS’ PRODUCTS INFRINGE THE PATENTS-IN-SUIT ................................. 7 A. The Kessler Doctrine Prevents a Plaintiff from Relitigating a Finding of Non- Infringement ................................................................................................................. 8 B. The Kessler Doctrine Bars TPL’s Infringement Claims .............................................. 9 C. TPL Cannot Evade the Binding Effect of an ITC Finding of Non-Infringement by Choosing Not to Appeal............................................................................................. 11 CONCLUSION .................................................................................................................................. 14 Case4:14-cv-03640-CW Document302 Filed05/01/15 Page4 of 21 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 -ii- Case No. 4:14-cv-03643-CW DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS TABLE OF AUTHORITIES Page(s) Cases Ackermann v. United States, 340 U.S. 193 (1950) ..................................................................................................................... 12 B&B Hardware, Inc. v. Hargis Indus., Inc., No. 13-352, slip op., 575 U.S. __ (2015) ....................................................................................... 9 Bio-Tech. Gen. Corp. v. Genentech, Inc., 80F.3d 1553, 1563 (Fed. Cir. 1996)....................................................................................... 10, 12 Brain Life, LLC v. Elekta Inc., 746 F.3d 1045 (Fed. Cir. 2014)............................................................................................. passim Certain Computers and Computer Peripheral Devices, and Components Thereof, and Products Containing the Same, Inv. No. 337-TA-841 ..................................................................................................................... 6 EFCO Corp. v. U.W. Marx, Inc., 124 F.3d 394 (2d Cir. 1997)......................................................................................................... 12 Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394 (1981) ..................................................................................................................... 12 Function Media, L.L.C. v. Kappos, 508 F. App’x 953 (Fed. Cir. 2013) .............................................................................................. 12 Harris v. County of Orange, 682 F.3d 1126 (9th Cir. 2012) ....................................................................................................... 7 Heliotrope Gen., Inc. v. Ford Motor Co., 189 F.3d 971 (9th Cir. 1999) ......................................................................................................... 7 Kessler v. Eldred, 206 U.S. 285 (1907) .............................................................................................................. passim LSI Corp. et al. v. U.S. International Trade Commission, No. 14-1410 (Fed. Cir. Mar. 20, 2015) ........................................................................................ 10 Lyon v. Chase Bank USA, NA, 656 F.3d 877 (9th Cir. 2011) ......................................................................................................... 7 McLellan v. Perry, No. 3:12-CV-00391-MMD, 2014 WL 1309291 (D. Nev. Mar. 27, 2014) .................................. 12 MGA, Inc. v. General Motors Corp., 827 F.2d 729 (Fed. Cir. 1987).................................................................................................. 9, 10 Case4:14-cv-03640-CW Document302 Filed05/01/15 Page5 of 21 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 iii Powertech Tech. Inc. v. Tessera, Inc., 660 F.3d 1301 (Fed. Cir. 2011)........................................................................................ 10, 11, 12 SpeedTrack, Inc. v. Office Depot, Inc., No. C 07-3602 PJH, 2014 WL 1813292 (N.D. Cal. May 6, 2014) ............................... 8, 9, 11, 13 Tech. Prop. Ltd. LLC et al. v. Barnes & Noble, Inc., No. 12-cv-03863 (N.D. Cal. Feb. 4, 2015), ECF No. 48 ............................................................... 5 Texas Instruments v. Cypress Semiconductor Corp., 90 F.3d 1558,1569 (Fed. Cir. 1996)................................................................................. 10, 11, 12 Twelve John Does v. Dist. of Columbia, 841 F.2d 1133 (D.C. Cir. 1988) ................................................................................................... 12 Statutes 28 U.S.C. § 1659 .................................................................................................................................. 6 An Administrative Law ........................................................................................................................ 5 Other Authorities (http://edis.usitc.gov) ........................................................................................................................... 6 Rule 12(b) ............................................................................................................................................ 7 Rule 12(c)....................................................................................................................................... 7, 14 Rule 60(b)(6) ...................................................................................................................................... 12 U.S. Patent No. 7,162,549.................................................................................................................... 6 U.S. Patent Nos. 7,295,443 .................................................................................................................. 5 U.S. Patent Nos. 7,295,443, 7,522,424 and 7,719,847 .................................................................... 4, 5 Case4:14-cv-03640-CW Document302 Filed05/01/15 Page6 of 21 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 -4- Case No. 4:14-cv-03643-CW DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS Defendants Hewlett-Packard Company, Canon Inc., Canon U.S.A., Inc., Newegg Inc, Rosewill Inc., Seiko Epson Corporation, and Epson America, Inc. (collectively “Defendants”) respectfully bring this motion for judgment on the pleadings to dismiss Plaintiffs’ pending causes of action – regarding alleged infringement of U.S. Patent Nos. 7,295,443, 7,522,424 and 7,719,847 (the “patents-in-suit”).1 PRELIMINARY STATEMENT The day before TPL filed its complaint initiating individual district court suits against each Defendant, TPL filed a complaint requesting the ITC to institute an investigation into the alleged infringement of the patents-in-suit due to Defendants’ importation and sale of various products, such as printers, laptops and desktops, that allegedly include infringing memory card readers (“Defendants’ products”). TPL requested that the ITC issue an exclusion order barring importation of Defendants’ products, if the ITC determined, inter alia, that Defendants’ products infringed the patents-in-suit. At the outset of the individual district court suits, Defendants requested, and TPL did not oppose, that the district court grant stays pending the outcome of the ITC investigation. The district court actions were stayed, the ITC investigation proceeded to trial, and TPL lost all of its infringement claims against Defendants’ products relating to the patents-in-suit. TPL did not appeal the final ITC judgment, but now seeks to relitigate the same claims of infringement here. TPL should not be allowed a “do-over.” The ITC has already ruled that Defendants’ products do not infringe the patents-in-suit, and that finding is binding on this Court under the doctrine of Kessler v. Eldred, 206 U.S. 285 (1907). The Kessler doctrine instructs that a finding of non-infringement precludes relitigation even where that finding would not be the basis for res judicata or collateral estoppel. In a case just decided last year, the Federal Circuit held that the Kessler doctrine is still binding precedent and still stands for the proposition that a patentee cannot bring a second suit after a finding of non- 1 Defendants provided notice to TPL on April 23, 2015, as to the substance of this motion and the proposed hearing date of June 18, 2015. TPL cited no scheduling conflict as to the proposed hearing date, but rather objected generally to the motion being raised at this stage of the proceedings. See Declaration of Marcia Sundeen in Support of Defendants’ Motion for Judgment on the Pleadings (“Sundeen Decl.”), ¶ 6. Case4:14-cv-03640-CW Document302 Filed05/01/15 Page7 of 21 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 -5- Case No. 4:14-cv-03643-CW DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS infringement. Specifically, the Kessler Doctrine “fills the gap” in preclusion doctrines and allows “an adjudged non-infringer to avoid repeated harassment for continuing its business as usual post- final judgment in a patent action where circumstances justify that result.” Brain Life, LLC v. Elekta Inc., 746 F.3d 1045, 1056 (Fed. Cir. 2014). A straight-forward application of the Kessler doctrine establishes that TPL cannot relitigate the ITC’s finding of non-infringement. TPL chose to simultaneously bring actions in the ITC and in district court. The ITC has jurisdiction to resolve the question of infringement and it conducted a thorough and extensive investigation before rendering its final decision. An Administrative Law Judge (ALJ) reached a carefully reasoned opinion finding non-infringement. The full Commission considered that decision and affirmed the non-infringement determination. TPL could have appealed that decision to the Federal Circuit, but chose not to. Thus, TPL had every opportunity to prove infringement in a competent tribunal and ultimately to the appellate court that would hear an appeal in this case. TPL should not get another chance simply because it would like to try again in another forum. The ITC proceeding is over and TPL lost. Having elected to forgo appealing the ITC’s determination that Defendants’ products do not infringe the patents-in-suit, the issues in the pending cases are resolved. There is no basis in law or policy for TPL to get another bite at the apple. STATEMENT OF ISSUE TO BE DECIDED Does the Kessler doctrine bar TPL’s claims for infringement of the patents-in-suit because the ITC has already found that Defendants’ products do not infringe those patents, and TPL chose not to appeal that decision to the Federal Circuit?2 STATEMENT OF FACTS A. TPL’s Complaint in the ITC On March 27, 2012, TPL filed a complaint in the ITC under Section 337, alleging infringement of, inter alia, the same three patents that are asserted in this action, and requesting the 2 A similar motion is pending in the N.D. Cal. San Jose division in another matter involving TPL. See Defendant Barnes & Noble, Inc,’s Motion for Judgment on the Pleadings, Tech. Prop. Ltd. LLC et al. v. Barnes & Noble, Inc., No. 12-cv-03863 (N.D. Cal. Feb. 4, 2015), ECF No. 48. Case4:14-cv-03640-CW Document302 Filed05/01/15 Page8 of 21 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 -6- Case No. 4:14-cv-03643-CW DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS ITC to institute an investigation. (See Dkt. 12, Exh. A (4:14-cv-03640) (ITC Complaint).) The three patents are U.S. Patent Nos. 7,295,443 (the ’443 Patent”), 7,522,424 (the ’424 Patent”) and 7,719,847 (the ’847 Patent”). All three of these patents relate to memory card readers, which are used in electronic devices such as laptops and printers. TPL alleged that memory card readers used in Defendants’ products infringed these three patents. The ITC instituted an investigation based on TPL’s allegations of infringement and the investigation proceeded.3 B. TPL’s Complaint in This Action On March 28, 2012, TPL brought suit in the U.S. District Court for the Eastern District of Texas against each Defendant for alleged infringement of the same respective patents asserted in the ITC.4 The operative allegations of infringement in each case are the same allegations set forth in TPL’s ITC Complaint. See, e.g., Compl. ¶¶ 5-52 (HP). TPL’s Complaint alleges that memory card readers in Defendants’ products infringe the patents-in-suit. Id. ¶¶ 14, 26, 38 and 50. The newly identified products in this Action are essentially the same as the accused products identified by TPL in the ITC matter. Pursuant to 28 U.S.C. § 1659, the Court granted mandatory stays of those cases pending the outcome of the ITC investigations based on unopposed motions. (See, e.g., Dkt. 10.) C. The ITC Decision The ITC investigation proceeded before Administrative Law Judge Essex. The parties engaged in extensive fact and expert discovery. Judge Essex held a Markman hearing in August 2012 and issued a lengthy Markman order in October 2012. In January 2013, Judge Essex held a four-day evidentiary hearing where the parties presented extensive fact and expert testimony. After the hearing and briefing, Judge Essex, in August 2013, ruled that Defendants’ products did not infringe any of the three patents at issue in this suit. With regard to the patents-in-suit, Judge Essex 3 Certain Computers and Computer Peripheral Devices, and Components Thereof, and Products Containing the Same, Inv. No. 337-TA-841 (the “841 investigation”). The public version of the ITC opinion is available on the ITC’s EDIS system (http://edis.usitc.gov) and is also attached as Exhibit A to the Sundeen Declaration being submitted herewith. 4 Different combinations of patents were asserted against various Defendants, but each of the patents asserted in the currently-pending actions was also asserted against the same Defendants in the ITC action. Case4:14-cv-03640-CW Document302 Filed05/01/15 Page9 of 21 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 -7- Case No. 4:14-cv-03643-CW DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS found that the memory card readers in Defendants’ products did not satisfy the “mapping” limitations required by all asserted claims. TPL petitioned the Commission for review and reversal of Judge Essex’s conclusions. The Commission granted review and, after additional briefing, issued an opinion affirming the ALJ’s decision of non-infringement. TPL could have appealed to the Federal Circuit, but chose not to do so, thus rendering the ITC judgment of non-infringement final. Instead, TPL moved to lift the stays in the Eastern District of Texas actions in an attempt to litigate anew the issues it lost at the ITC. After lifting the stays and consolidating the cases for pretrial purposes, the Texas Court transferred the cases to this Court on August 12, 2014. ARGUMENT I. LEGAL STANDARD “After the pleadings are closed – but early enough not to delay trial – a party may move for judgment on the pleadings.” Lyon v. Chase Bank USA, NA, 656 F.3d 877, 883 (9th Cir. 2011) (quoting Dworkin v. Hustler Magazine Inc., 867 F.2d 1188, 1192 (9th Cir. 1989)). A motion under Rule 12(c) is “functionally identical” to a motion to dismiss under Rule 12(b). Id. (quoting Dworkin, 867 F.2d at 1192). Thus, for a Rule 12(c) motion, “[t]he Court inquires whether the complaint at issue contains ‘sufficient factual matter, accepted as true, to state a claim of relief that is plausible on its face.’” Harris v. County of Orange, 682 F.3d 1126, 1131 (9th Cir. 2012) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “When considering a motion for judgment on the pleadings, this court may consider facts that are contained in materials of which the court may take judicial notice.” Heliotrope Gen., Inc. v. Ford Motor Co., 189 F.3d 971, 981 n. 18 (9th Cir. 1999) (internal quotation marks omitted). II. THE KESSLER DOCTRINE BARS TPL FROM RE-LITIGATING WHETHER DEFENDANTS’ PRODUCTS INFRINGE THE PATENTS-IN-SUIT Because TPL brought suit in the ITC, and the ITC held that Defendants’ products do not infringe the patents-in-suit, TPL cannot relitigate that holding now. This case falls squarely within the Kessler doctrine, which bars relitigation of failed patent claims even where the case does not fit precisely within the scope of res judicata or collateral estoppel. Case4:14-cv-03640-CW Document302 Filed05/01/15 Page10 of 21 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 -8- Case No. 4:14-cv-03643-CW DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS A. The Kessler Doctrine Prevents a Plaintiff from Relitigating a Finding of Non- Infringement In Kessler, the owner of a patent related to electric lighters (Eldred) filed an infringement suit against a competing seller of lighters (Kessler). Kessler, 206 U.S. at 287-88. Although Kessler prevailed, Eldred then brought an infringement suit against one of Kessler’s customers, who sold the same lighters that were at issue in the first action. Id. Kessler intervened and also brought a separate suit to enjoin Eldred from asserting infringement claims against any of his customers for the use of the same lighter that had already been adjudged to be non-infringing. Id. The Supreme Court ultimately upheld the injunction, holding that the prior judgment, “whether it proceeds upon good reasons or upon bad reasons, whether it was right or wrong, settled finally and everywhere, and so far as Eldred … was concerned, that Kessler had the right to manufacture, use and sell the electric cigar lighter before the court.” Id. The Court explained that the judgment that Kessler had the right to sell his lighter came with “the corresponding duty of Eldred to recognize and yield to that right everywhere and always.” Id. If Eldred were able to continue to file suits accusing products previously determined not to infringe, “the result will be practically to destroy Kessler’s judgment right.” Id. at 290. In short, by prevailing in the first suit, Kessler had immunized his lighter from any future infringement suits brought by Eldred. The Kessler doctrine remains binding Supreme Court precedent, and the Federal Circuit recently reaffirmed its validity. See Brain Life, LLC v. Elekta Inc., 746 F.3d 1045 (Fed. Cir. 2014). In Brain Life, the Federal Circuit recognized that “[t]here exists a separate and distinct doctrine, known as the Kessler Doctrine, that precludes some claims that are not otherwise barred by claim or issue preclusion.” Id. at 1055-56. “The Kessler Doctrine fills the gap between these preclusion doctrines, … allowing an adjudged non-infringer to avoid repeated harassment for continuing its business as usual post-final judgment in a patent action where circumstances justify that result.” Id. at 1056. The principle underlying this conclusion is that “when an alleged infringer prevails in demonstrating noninfringement, the specific accused device(s) acquires the ‘status’ of a noninfringing device vis-á-vis the asserted patent claims” and “when the devices in the first and second suits are essentially the same, the new product(s) also acquires the status of a noninfringing Case4:14-cv-03640-CW Document302 Filed05/01/15 Page11 of 21 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 -9- Case No. 4:14-cv-03643-CW DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS device vis-á-vis the same accusing party or its privies.” Id. at 1057 (internal quotation marks omitted). The Federal Circuit held that “because Elekta’s GammaPlan, GammaKnife, and SurgiPlan are essentially the same accused products” found non-infringing in a prior suit, “Brain Life’s claims are barred under the Kessler Doctrine.” Id. at 1058. Shortly after Brain Life was decided, this Court recognized that Brain Life had “demonstrat[ed] that Kessler is still in force, and … that it ‘precludes some claims that are not otherwise barred by claim or issue preclusion.’” SpeedTrack, Inc. v. Office Depot, Inc., No. C 07- 3602 PJH, 2014 WL 1813292, at *9 (N.D. Cal. May 6, 2014) (quoting Brain Life, 746 F.3d at 1055- 56). And this Court accordingly held an infringement suit barred under Kessler where the same plaintiff had previously lost an infringement suit involving the same patent and essentially the same product. Id. B. The Kessler Doctrine Bars TPL’s Infringement Claims Here, as in Kessler, Brain Life, and SpeedTrack, there is a prior judgment that Defendants’ products do not infringe the same patents at issue. In particular, the ITC found the memory card readers in Defendants’ products do not infringe the patents-in-suit because they have fixed signal assignments and thus do not meet the “mapping” limitations required by all asserted claims. That judgment is final because TPL deliberately elected not to appeal to the Federal Circuit. The Kessler doctrine bars TPL from relitigating its claims of infringement against Defendants’ products in this Court. That the prior judgment came from the ITC, rather than a federal court, is of no moment. In Kessler itself, the Supreme Court recognized that the nature of the court did not matter: “If rights between litigants are once established by the final judgment of a court of competent jurisdiction those rights must be recognized in every way, and wherever the judgment is entitled to respect, by those who are bound by it.” Kessler, 206 U.S. at 289 (emphases added). It is beyond dispute that the ITC – and the Federal Circuit – had jurisdiction over the matter at issue here, and that the ITC’s judgment is entitled to respect. 5 If TPL had any basis to 5 See also B&B Hardware, Inc. v. Hargis Indus., Inc., No. 13-352, slip op., 575 U.S. __ (2015) (holding that findings made by the Trademark Trial and Appeal Board (“TTAB”) can have a preclusive effect in subsequent federal court proceedings if the usual requirements of issue preclusion are met, and the issues litigated in the two actions are “materially the same.”) (emphasis added). Case4:14-cv-03640-CW Document302 Filed05/01/15 Page12 of 21 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 -10- Case No. 4:14-cv-03643-CW DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS disturb any aspect of the ITC’s judgment, the proper course would have been to appeal. Having elected not to do so, TPL may not now press infringement claims against Defendants’ products that the ITC has finally resolved. The Kessler doctrine applies even where no Federal Circuit appeal is available and the question of infringement is resolved by a state court in interpreting a license agreement. In MGA, Inc. v. General Motors Corp., 827 F.2d 729 (Fed. Cir. 1987), the Federal Circuit held that the Kessler doctrine applies to state court judgments about the scope of license agreements that effectively resolve infringement questions, even though jurisdiction over infringement is exclusively federal. The court explained: “In this case, MGA selected its first defendant, first forum and first remedy. MGA had its day in court with a full trial on the merits of its case. … Nor was MGA left without recourse to seek correction of any perceived errors committed by the state court.” Id. at 735. The same (and more) is true of the ITC judgment here: TPL chose to sue Defendants in the ITC, and chose not to appeal the ITC’s decision despite its potential for review of the decision in the Federal Circuit. The Kessler doctrine is based on the policy behind preventing harassment and repeat litigation after a finding of non-infringement, and not on the availability of res judicata. This policy applies equally to an ITC matter as it does to a state court matter. Indeed, the case for application of the Kessler doctrine is even stronger in the ITC context, given the expertise of the ITC in patent matters, as opposed to a state court, which has no jurisdiction at all over patent claims and addressed the patent law issue only because it was a predicate to deciding the contract claim. Federal Circuit opinions holding that ITC decisions are not binding on district courts as a matter of res judicata or collateral estoppel are inapposite because that is not the issue here. See, e.g., Texas Instruments v. Cypress Semiconductor Corp., 90 F.3d 1558,1569 (Fed. Cir. 1996) (‘The district court can attribute whatever persuasive value to the prior ITC decision that it considers justified.”); LSI Corp. et al. v. U.S. International Trade Commission, No. 14-1410 (Fed. Cir. Mar. 20, 2015) (“decisions of the ITC involving patent issues have no preclusive effect in other Case4:14-cv-03640-CW Document302 Filed05/01/15 Page13 of 21 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 -11- Case No. 4:14-cv-03643-CW DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS forums.”)6 None of those cases involved a finding of non-infringement; thus there was no reason to consider the Kessler doctrine. See, e.g., Cypress, 90 F.3d at 1562-63 (noting ITC finding of infringement); Bio-Tech. Gen. Corp. v. Genentech, Inc., 80 F.3d 1553, 1563 (Fed. Cir. 1996) (considering ITC decision based on sanction for discovery violation).7 Thus, with respect to an ITC finding of non-infringement, the Federal Circuit has not yet considered the Kessler doctrine or the policy behind that doctrine, i.e., the strong interest in preventing parties from getting a second chance at an infringement suit against products that have been found not to infringe. The Federal Circuit case law on res judicata and collateral estoppel is also inapposite because the Kessler doctrine was created by the Supreme Court for the exact purpose of “fill[ing] the gaps” when res judicata or collateral estoppel are inapplicable but the party should still be bound. Brain Life, 746 F.3d at 1056; see also SpeedTrack, 2014 WL 1813292, at *9. Indeed, the Kessler doctrine is a special rule for patents given the particular interest there in preventing unfair harassment with multiple infringement suits. Res judicata and collateral estoppel are general doctrines that apply to all subject matters, and thus do not take account of this particular interest in patent cases. C. TPL Cannot Evade the Binding Effect of an ITC Finding of Non-Infringement by Choosing Not to Appeal An ITC decision is binding under the doctrine of stare decisis when the Federal Circuit decides an appeal from that decision. As the Federal Circuit has explained: 6 Defendants preserve the right to move at a future date for summary judgment based on the persuasive value that should be accorded to the ITC judgment. Defendants also preserve an argument that the Federal Circuit decisions regarding res judicata and collateral estoppel, which have never been confirmed by the Supreme Court, are erroneous, though Defendants recognize that they are binding on this Court. 7 The one case that did involve a finding of non-infringement supports Defendants’ position. Powertech Tech. Inc. v. Tessera, Inc., 660 F.3d 1301 (Fed. Cir. 2011). That case in fact confirms that there are circumstances under which an ITC decision will be binding in later proceedings. In Powertech, the Federal Circuit held that the ITC’s decision, as affirmed by the Federal Circuit, was binding as a matter of stare decisis. Id. at 1303-04, 1308. The Federal Circuit did not consider whether the Kessler doctrine provided an additional basis for holding that the finding of non- infringement was binding. Case4:14-cv-03640-CW Document302 Filed05/01/15 Page14 of 21 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 -12- Case No. 4:14-cv-03643-CW DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS TI also argues that by our denying preclusive effect to ITC determinations and to our decisions in appeals from ITC decisions, district courts would be free to ignore our decisions. That is not correct. District courts are not free to ignore holdings of this court that bear on cases before them. Subsequent panels of this court are similarly not free to ignore precedents set by prior panels of the court. Texas Instruments, 90 F.3d at 1569. The Federal Circuit has recently reiterated that “[a]lthough the resolution of the ITC action will not have preclusive effect on … the district court in this case,” the court is “nonetheless bound by stare decisis to abide by any legal precedents established by our court in” its decision affirming the ITC’s finding of non-infringement. Powertech, 660 F.3d at 1308; see also id. (“To the extent Tessera’s claims against PTI’s customers arise from the same set of facts addressed in Tessera, the result we reached there would control equally here. Accordingly, we vacate the dismissal on jurisdictional grounds and remand with instructions to apply our decision in Tessera”). TPL attempted to avoid this binding effect of stare decisis by choosing not to appeal, but a party cannot evade an ITC ruling in this way. The Federal Circuit has never suggested otherwise because in all of the cases regarding the binding effect of ITC rulings, there was an appeal from the ITC judgment. See Powertech, 660 F.3d at 1307; Texas Instruments, 90 F.3d at 1563; Bio-Tech. Gen. Corp., 80 F.3d at 1563. Indeed, there is no reasonable basis to allow a party to evade an ITC judgment by strategically choosing not to appeal an ITC judgment of non-infringement so as to simply start from scratch in district court. First, courts consistently refuse to give a party the benefit of a tactical decision not to appeal. For example, the Supreme Court has held that a party that makes “a considered choice not to appeal … cannot be relieved of such a choice because hindsight seems to indicate to him that his decision not to appeal was probably wrong ….” Ackermann v. United States, 340 U.S. 193, 198 (1950). In another case, the Supreme Court held that respondents could not become “windfall beneficiaries of an appellate reversal procured by other independent parties” where the respondents “made a calculated choice to forgo their appeals.” Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394, 400-01 (1981); see also, e.g., Twelve John Does v. Dist. of Columbia, 841 F.2d 1133, 1141 (D.C. Cir. 1988) (“[W]here the parties seeking relief have made a ‘free, calculated, deliberate’ Case4:14-cv-03640-CW Document302 Filed05/01/15 Page15 of 21 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 -13- Case No. 4:14-cv-03643-CW DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS decision not to appeal, Rule 60(b)(6) is simply not available to relieve them of the consequences of that decision, absent extraordinary circumstances.”). This simply reflects the general principle that a party’s failure to appeal a particular determination bars later relitigation of that issue. See, e.g., Function Media, L.L.C. v. Kappos, 508 F. App’x 953, 956 (Fed. Cir. 2013) (“Google’s failure to appeal the determined validity of those claims removed them from any subsequent actions.”); EFCO Corp. v. U.W. Marx, Inc., 124 F.3d 394, 399-400 (2d Cir. 1997) (“Where a plaintiff’s motion to amend its complaint in the first action is denied, and plaintiff fails to appeal the denial, res judicata applies to the claim sought to be added in the proposed amended complaint.”). In particular, in the administrative context, the decision not to appeal to an Article III court does not deprive the administrative judgment of binding effect. See, e.g., McLellan v. Perry, No. 3:12-CV- 00391-MMD, 2014 WL 1309291, at *5 (D. Nev. Mar. 27, 2014) (“McLellan’s contention that the unreviewed determination of the Hearing Officer cannot have a preclusive effect is contrary to established law… . [T]he claim was litigated at the agency and became final when McLellan chose not to appeal to the state district court.”). Here, likewise, the binding effect of the ITC judgment should not be undermined by TPL’s decision to forego an appeal. Second, the reasoning in the Kessler line of cases demonstrates that a decision not to appeal is an illegitimate basis to avoid what would be an otherwise binding judgment. For instance, in Brain Life, the patentee argued that because he abandoned some of the claims before trial in the first suit, he should be able to relitigate those claims. The court rejected that argument, holding: “Simply, by virtue of gaining a final judgment of noninfringement in the first suit—where all of the claims were or could have been asserted against Elekta—the accused devices acquired a status as noninfringing devices, and Brain Life is barred from asserting that they infringe the same patent claims a second time.” Brain Life, 746 F.3d at 1058 (emphasis added); see also id. at 1058-59 (“Brain Life instead focuses its efforts on demonstrating that the patent claims in the two suits are not essentially the same. That is beside the point under the Kessler Doctrine because Elekta’s … products have acquired the status of noninfringing products as to the ’684 patent, i.e., all claims that were brought or could have been brought in the first suit.” (emphasis added)). Case4:14-cv-03640-CW Document302 Filed05/01/15 Page16 of 21 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 -14- Case No. 4:14-cv-03643-CW DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS This Court similarly recognized in SpeedTrack that what matters under Kessler are the arguments the plaintiff could have pursued, regardless of whether it actually did so. See SpeedTrack, 2014 WL 1813292, at *9 (“Certainly, if the Kessler doctrine bars the assertion of new claims, it must also bar the assertion of new theories involving the same, already-asserted claims.”). Simply put, once a product is given a status of a non-infringing product as to a certain patent, that status cannot be undone by arguments about what a plaintiff might have done differently in the first suit. This logic applies equally to TPL’s decision not to appeal—what matters is that TPL could have brought all of its arguments to the Federal Circuit. TPL chose not to do so and it cannot undermine the binding effect of the ITC judgment. Finally, Kessler was decided as a policy matter to ensure fairness to makers of products adjudged to be non-infringing, and those policies uniformly support giving binding effect to the ITC judgment here. TPL filed suit in district court and in the ITC within one day of each other, alleging the same basis for infringement. In the ITC proceeding, TPL had every incentive to—and in fact did—make its very best arguments for infringement. Accordingly, this case is nothing more than a second attempt by TPL to pursue claims on which it already failed in another forum and to force Defendants to defend themselves again after being forced to expend substantial sums in defending themselves in the ITC—a prime example of harassment. The proper way for TPL to challenge that decision would have been an appeal to the Federal Circuit, not to attack it indirectly (or otherwise ignore it) in this Court. Such an indirect challenge is especially inefficient for the parties and the Court given that the ultimate review in this matter would also rest with the Federal Circuit. And if allowed, it would wrongfully encourage parties not to appeal in the hope of receiving a different opinion from another forum, which they could still appeal if unsuccessful. CONCLUSION For the foregoing reasons, Defendants respectfully request that the Court grant this motion in accordance with Rule 12(c) and enter judgment on the pleadings, dismissing Plaintiffs’ pending causes of action with prejudice. Case4:14-cv-03640-CW Document302 Filed05/01/15 Page17 of 21 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 -15- Case No. 4:14-cv-03643-CW DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS DATED: May 1, 2015 By /s/Marcia H. Sundeen Marcia H. Sundeen (admitted Pro Hac Vice) GOODWIN PROCTER LLP 901 New York Avenue, N.W. Washington, DC 20001 Telephone: (202) 346-4000 Facsimile: (202) 346-4444 Email: msundeen@goodwinprocter.com T. Cy Walker (admitted Pro Hac Vice) KENYON & KENYON LLP 1500 K Street, NW, Suite 700 Washington, DC 20005 Telephone: 202-220-4200 Facsimile: 202-220-4201 Email: cwalker@kenyon.com Megan Whyman Olesek (CA Bar No. 191218) KENYON & KENYON LLP 1801 Page Mill Road, Suite 210 Palo Alto, CA 94304 Telephone: 650-384-4700 Facsimile: 650-384-4701 Email: molesek@kenyon.com Rose Cordero Prey (admitted Pro Hac Vice) KENYON & KENYON LLP One Broadway New York, NY 10004-1007 Telephone: 212-425-7200 Facsimile: 212-425-5288 Email: rcordero@kenyon.com COUNSEL FOR DEFENDANT HEWLETT- PACKARD COMPANY Case4:14-cv-03640-CW Document302 Filed05/01/15 Page18 of 21 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 -16- Case No. 4:14-cv-03643-CW DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS /s/ David M. Maiorana David M. Maiorana (Ohio Bar No. 0071440) Email: dmaiorana@jonesday.com Calvin P. Griffith (Ohio Bar No. 0039484) Email: cpgriffith@jonesday.com JONES DAY North Point 901 Lakeside Avenue Cleveland, OH 44114-1190 Telephone: (216) 586-3939 Facsimile: (216) 579-0212 Tracy A. Stitt (Washington Bar No. 1015680) Email: tastitt@jonesday.com JONES DAY 51 Louisiana Avenue, N.W. Washington, D.C. 20001-2113 Telephone: (202) 879-3939 Facsimile: (202) 626-1700 Jacqueline K. S. Lee (CA Bar No. 247705) Email: jkslee@jonesday.com JONES DAY 1755 Embarcadero Road Palo Alto, CA 94303 Telephone: (650) 739-3939 Facsimile: (650) 739-3900 ATTORNEYS FOR DEFENDANTS CANON INC. AND CANON U.S.A., INC Case4:14-cv-03640-CW Document302 Filed05/01/15 Page19 of 21 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 -17- Case No. 4:14-cv-03643-CW DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS /s/ Gordon M. Fauth, Jr.______ Gordon M. Fauth, Jr. (SBN: 190280) gmf@classlitigation.com LITIGATION LAW GROUP 1801 Clement Ave., Ste. 101 Alameda, CA 94501 Tel: (510) 238-9610 Fax: (510) 337-1431 Kent E. Baldauf, Jr. kbaldaufjr@webblaw.com Bryan P. Clark BClark@webblaw.com THE WEBB LAW FIRM One Gateway Center 420 Ft. Duquesne Blvd., Suite 1200 Pittsburgh, PA 15222 Tel: (412) 471-8815 Fax: (412) 471-4094 COUNSEL FOR DEFENDANTS NEWEGG INC. AND ROSEWILL INC., Kyle T. Barrett (State Bar No. 284595) kbarrett@jonesday.com JONES DAY 1755 Embarcadero Road Palo Alto, CA 94303 Telephone: (650) 739-3939 Facsimile: (650) 739-3900 William E. Devitt (Admitted Pro Hac Vice) wdevitt@jonesday.com Matthew J. Hertko (Admitted Pro Hac Vice) mhertko@jonesday.com JONES DAY 77 W. Wacker, Suite 3500 Chicago, IL 60601 Telephone: (312) 782-3939 Facsimile: (312) 782-8585 ATTORNEYS FOR DEFENDANTS SEIKO EPSON CORPORATION AND EPSON AMERICA, INC. Case4:14-cv-03640-CW Document302 Filed05/01/15 Page20 of 21 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 -18- Case No. 4:14-cv-03643-CW DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS CERTIFICATE OF SERVICE The undersigned hereby certifies that a copy of the foregoing was served on all counsel for all parties of record on May 1, 2015 via the Court’s CM/ECF system. /s/ Marcia H. Sundeen Case4:14-cv-03640-CW Document302 Filed05/01/15 Page21 of 21