Certusview Techs., LLC v. S&N Locating Servs., LLC

198 F.Supp.3d 568

CERTUSVIEW TECHNOLOGIES, LLC, Plaintiff/Counter-Defendant,

v.S&N LOCATING SERVICES, LLC and S&N Communications, Inc., Defendants/Counter-Plaintiffs.

Case No.: 2:13cv346

United States District Court, E.D. Virginia, Norfolk Division .

Signed August 02, 2016

Aaron William Moore, Matthew Burt Lowrie, Ruben Jose Rodrigues, Foley and Lardner, Boston, MA, Pro Hac, Vice, Angela L. Campbell, James Patrick Brogan, Orion Armon, Wayne Odis Stacy, Cooley LLP, Broomfield, CO, Pro Hac, Vice, Christopher Charles Campbell, Cooley LLP, Reston, VA, Gregory N. Stillman, Wendy Cohen McGraw, Hunton & Williams Norfolk, VA, Lori Allison Rubin, Michael J. Lockerby, Foley & Lardner LLP, Washington, DC, Thomas Joseph Friel, Jr., Cooley LLP, San Francisco, CA, Pro Hac, Vice, for Plaintiff/Counter-Defendant.

Brian L. Whisler, Matthew Steven Dushek, Baker & McKenzie LLP, Washington, DC, Erin Marie Choi, Benjamin Beckage Kelly, John Giuseppe Flaim, MacKenzie Marie Dewerff, Weldon Barton Rankin, Baker & McKenzie LLP, Dallas, TX, Pro Hac, Vice, Daniel Joseph O'Connor, Michael Anthony Duffy, Baker & McKenzie LLP, Chicago, IL, Pro Hac, Vice, for Defendants/Counter-Plaintiffs.

OPINION AND ORDER

Mark S. Davis, UNITED STATES DISTRICT JUDGE

CertusView Technologies, LLC ("CertusView" or "Plaintiff/Counter-Defendant") filed this patent infringement action alleging that S&N Locating Services, LLC and S&N Communications, Inc.'s ("S&N" or "Defendants/Counter-Plaintiffs") infringed the five Patents-in-Suit. S&N responded by filing an amended answer asserting an inequitable conduct declaratory judgment counterclaim. Although the Court granted S&N's Motion for Judgment on the Pleadings and found that each of the asserted claims of the Patents-in-Suit were invalid because they did not claim patent-eligible subject matter, S&N's inequitable conduct declaratory judgment counterclaim remained for trial.¹ After a five-day bench trial, and with the benefit of post-trial briefs and proposed findings of fact and conclusions of law, S&N's inequitable conduct declaratory judgment counterclaim is ripe for decision.

Before ruling on the inequitable conduct declaratory-judgment counterclaim, the Court must address the following four motions filed by CertusView in association with the counterclaim: (1) CertusView's Rule 52(c) trial motion; (2) CertusView's remaining Motion in Limine, ECF No. 436; (3) CertusView's Motion to Enforce the Court's March 7, 2016 Memorandum Order, ECF No. 494; and (4) CertusView's Objections to Materials Cited in S&N's Post-Trial Brief, ECF No. 529.² After ruling on these motions, the Court will present its findings of fact and conclusions of law regarding S&N's inequitable conduct declaratory judgment counterclaim.

I. CERTUSVIEW'S RULE 52(c) MOTION

Before and during trial, CertusView moved for entry of partial judgment, pursuant to Federal Rule of Civil Procedure 52(c), asserting, among other things,³ that the Court is precluded from entering judgment in S&N's favor on its inequitable conduct counterclaim because the Court's previous ruling, that certain claims of the Patents-in-Suit are patent ineligible pursuant to 35 U.S.C. § 101, is inconsistent with a finding of inequitable conduct. See Final Pretrial Order, 41, ECF No. 472; CertusView's Post-Trial Br., 20-21, ECF No. 516; Trial Tr. Vol. 5B, 1113:15-1119:6, ECF No. 511. CertusView argues that a determination of patent eligibility is a "threshold test" that "must be satisfied before a court can proceed to consider subordinate validity issues," relying on Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 718 (Fed.Cir.2014) (Mayer, J., concurring), which cites Bilski v. Kappos, 561 U.S. 593, 602, 130 S.Ct. 3218, 177 L.Ed.2d 792 (2010) and Parker v. Flook, 437 U.S. 584, 593, 98 S.Ct. 2522, 57 L.Ed.2d 451 (1978). CertusView asserts that, because the Court found the asserted claims of the Patents-in-Suit did not claim patent-eligible subject matter, such "threshold test" was not satisfied in this matter, and therefore the Court should not consider additional claims of invalidity or unenforceability. CertusView's Post-Trial Br. at 20-21. While acknowledging that the patent eligibility requirements of § 101 should ideally be addressed early in a case before moving on to other requirements for patentability, S&N responds by arguing that CertusView's inequitable conduct before the United States Patent and Trademark Office ("PTO") should not be excused simply because its patents were later invalidated by this Court. S&N further argues that inequitable conduct before the PTO remains actionable after a finding of patent ineligibility because a finding of patent ineligibility and a finding of inequitable conduct are not inconsistent as such findings address substantively different legal issues. Defs.' Post-Trial Br., 28-30, ECF NO. 517.

CertusView is seeking a partial judgment pursuant to Federal Rule of Civil Procedure 52(c). Federal Rule of Civil Procedure 52(c) allows the Court to "enter judgment against [a] party on a claim or defense that, under the controlling law, can be maintained or defeated only with a favorable finding on that issue," once that party has been fully heard on such issue. Fed. R. Civ. P. 52(c). For the following reasons, the Court finds that CertusView has not demonstrated that controlling law precludes the Court from entering judgment in S&N's favor on its inequitable conduct counterclaim.

While the parties have not cited any controlling law directly addressing the effect of a 35 U.S.C. § 101 patent ineligibility finding on an inequitable conduct counterclaim,⁴ there are many decisions from the United States Court of Appeals for the Federal Circuit addressing the effect of a 35 U.S.C. § 102 or § 103 invalidity finding on an inequitable conduct counterclaim and concluding that a finding of patent invalidity does not preclude a finding of inequitable conduct. See Am. Calcar, Inc. v. Am. Honda Motor Co., 768 F.3d 1185, 1189 (Fed.Cir.2014) (affirming the district court's finding that a patent was both invalid, pursuant to § 102 and § 103, and unenforceable due to inequitable conduct, and stating that "[t]he jury's verdict finding the patents at issue non-obvious ... does not weigh on the determination of materiality for inequitable conduct"); Paragon Podiatry Lab., Inc. v. KLM Labs., Inc., 984 F.2d 1182, 1188 (Fed.Cir.1993) (affirming finding of patent invalidity under § 102 and finding that defendant engaged in inequitable conduct with regards to the invalidated patent); Buildex Inc. v. Kason Indus., Inc., 849 F.2d 1461, 1466 (Fed.Cir.1988) (finding that a patent was invalid under § 102(b) but remanding for determination of inequitable conduct counterclaim as "conduct in the procurement of the patent is still relevant to Kason's request for attorney fees ...4"); cf. Apotex Inc. v. UCB, Inc., 763 F.3d 1354, 1361–63 (Fed.Cir.2014) (affirming district court's finding that patent applicant committed inequitable conduct, and affirming, without considering, district court's determination that certain patent claims were invalid, pursuant to 35 U.S.C. § 112 ). The Court will look to such cases because, as S&N argues, a finding of patent invalidity, pursuant to § 102 or § 103, is analogous to a finding of patent ineligibility, pursuant to § 101, in that a determination under each statute results in a finding that the entire patent should not have issued. Defs.' Post-Trial Br. at 29.

As this Court previously noted in its decision denying CertusView's motion to strike S&N's inequitable conduct counterclaim, a finding of patent ineligibility under § 101 and a finding of inequitable conduct are not inherently inconsistent as they address substantively different legal issues. May 22, 2015 Op. & Order, 15-16 n.3, ECF No. 325 (discussing the differences between a finding of patent ineligibility and a finding of inequitable conduct with its "atomic bomb" remedy (quoting Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1288–89 (Fed.Cir.2011) (en banc))).⁵ For example, a determination of patent ineligibility under § 101 addresses the question of whether the subject matter at issue in a patent is of "the kind of discover[y]" eligible for statutory patent protection. Parker, 437 U.S. at 594, 98 S.Ct. 2522 ; see 35 U.S.C. § 101. Alternatively, inequitable conduct is a judicial doctrine concerned with a patent applicant's deceptive conduct before the PTO.

Therasense, 649 F.3d at 1285–86. Moreover, a finding of patent ineligibility is a claim-by-claim determination, and the Court's determination of ineligibility as to the asserted claims of the Patents-in-Suit did not render all claims of the Patents-in-Suit patent ineligible. See January 21, 2015 Op. & Order, ECF No. 250. By contract, a finding of inequitable conduct renders an entire patent, and potentially other patents in the same technology family, unenforceable. Therasense, 649 F.3d at 1288–89. Additionally, "[a] finding of inequitable conduct may also spawn antitrust and unfair competition claims," lead to an award of attorneys' fees under 35 U.S.C. § 285 because inequitable conduct often makes a case "exceptional," or a finding of inequitable conduct "may also prove the crime or fraud exception to the attorney-client privilege." Id. at 1289 (citations omitted). Finally, a finding of inequitable conduct, "[u]nlike other deficiencies ... cannot be cured by reissue or reexamination." Id. at 1288 (citations omitted).

The Court also notes that, while Plaintiff's Rule 52(c) Motion relies on Bilski v. Kappos, 561 U.S. 593, 130 S.Ct. 3218, 177 L.Ed.2d 792 (2010), Parker v. Flook, 437 U.S. 584, 98 S.Ct. 2522, 57 L.Ed.2d 451 (1978), and Judge Mayer's concurrence in Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709 (Fed.Cir.2014), such cases do not support the proposition that a finding of patent ineligibility precludes consideration of an inequitable conduct counterclaim. Indeed, those cases do not address inequitable conduct at all; they...