Intel Corp. v. Future Link Sys., LLC, C.A. No. 14–377–LPS

268 F.Supp.3d 605

INTEL CORPORATION, Plaintiff,

v.FUTURE LINK SYSTEMS, LLC, Defendant.

C.A. No. 14–377–LPS

United States District Court, D. Delaware.

Signed July 31, 2017

UNSEALED ON AUGUST 3, 2017

Jack B. Blumenfeld, Maryellen Noreika, Jeremy A. Tigan, MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington, DE, Adam Alper, Sarah E. Piepmeier, Akshay S. Deoras, KIRKLAND & ELLIS LLP, San Francisco, CA, Michael W. De Vries, Christopher M. Lawless, Kevin D. Bendix, Benjamin A. Herbert, KIRKLAND & ELLIS LLP, Los Angeles, CA, Gregory S. Arovas, Jon R. Carter, KIRKLAND & ELLIS LLP, New York, NY, Lien K. Dang, Eric B. Cheng, KIRKLAND & ELLIS LLP, Palo Alto, CA, David Rokach, KIRKLAND & ELLIS LLP, Chicago, IL, Attorneys for Plaintiff Intel Corporation.

Brian E. Farnan, Michael J. Farnan, FARNAN LLP, Wilmington, DE, Morgan Chu, Benjamin W. Hattenbach, Ellisen S. Turner, Richard W. Krebs, Amy E. Proctor, Dominik Slusarczyk, Molly Russell, IRELL & MANELLA LLP, Los Angeles, CA, Attorneys for Defendant Future Link Systems, LLC.

MEMORANDUM OPINION

STARK, U.S. District Judge:

Pending before the Court are four summary judgment and Daubert motions: (1) Future Link Systems, Inc.'s ("Defendant," "FLS," or "Future Link") motion for summary judgment (D.I. 520); (2) Intel Corporation's ("Plaintiff" or "Intel") motion for summary judgment that U.S. Patent No. 7,478,302 is indefinite and that Intel does not infringe U.S. Patent Nos. 5,754,867 ; 6,052,754 ; 6,317,804 ; and 5,870,570 (D.I. 522) ; (3) Future Link's motion to preclude expert testimony¹ (D.I. 526); and (4) Intel's motion for summary judgment of no willfulness and no unclean hands (D.I. 531).

For the reasons discussed below, the court will grant in part and deny in part Future Link's motion for summary judgment (D.I. 520); deny Intel's motion for summary judgment on indefiniteness and non-infringement (D.I. 522); grant in part and deny in part Future Link's motion to preclude expert testimony (D.I. 526); and grant in part and deny in part Intel's motion for summary judgment of no willfulness and no unclean hands (D.I. 531).

I. LEGAL STANDARDS

A. Summary Judgment

Pursuant to Rule 56(a) of the Federal Rules of Civil Procedure, "[t]he court shall grant summary judgment if 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." The moving party bears the burden of demonstrating the absence of a genuine issue of material fact. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp. , 475 U.S. 574, 585–86, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). An assertion that a fact cannot be—or, alternatively, is—genuinely disputed must be supported either by citing to "particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials," or by "showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Fed. R. Civ. P. 56(c)(1)(A) & (B). If the moving party has carried its burden, the nonmovant must then "come forward with specific facts showing that there is a genuine issue for trial." Matsushita , 475 U.S. at 587, 106 S.Ct. 1348 (internal quotation marks omitted). The Court will "draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence." Reeves v. Sanderson Plumbing Prods., Inc. , 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000).

To defeat a motion for summary judgment, the nonmoving party must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita , 475 U.S. at 586, 106 S.Ct. 1348 ; see also Podobnik v. U.S. Postal Serv. , 409 F.3d 584, 594 (3d Cir. 2005) (stating party opposing summary judgment "must present more than just bare assertions, conclusory allegations or suspicions to show the existence of a genuine issue") (internal quotation marks omitted). The "mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment;" a factual dispute is genuine only where "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Id. at 249–50, 106 S.Ct. 2505 (internal citations omitted); see also Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (stating entry of summary judgment is mandated "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial"). Thus, the "mere existence of a scintilla of evidence" in support of the nonmoving party's position is insufficient to defeat a motion for summary judgment; there must be "evidence on which the jury could reasonably find" for the nonmoving party. Anderson , 477 U.S. at 252, 106 S.Ct. 2505.

B. Expert Testimony

In Daubert v. Merrell Dow Pharmaceuticals, Inc. , 509 U.S. 579, 597, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), the Supreme Court explained that Federal Rule of Evidence 702 creates "a gatekeeping role for the [trial] judge" in order to "ensur[e] that an expert's testimony both rests on a reliable foundation and is relevant to the task at hand." Rule 702(a) requires that expert testimony "help the trier of fact to understand the evidence or to determine a fact in issue." Expert testimony is admissible only if "the testimony is based on sufficient facts or data," "the testimony is the product of reliable principles and methods," and "the expert has reliably applied the principles and methods to the facts of the case." Fed. R. Evid. 702(b)–(d).

There are three distinct requirements for proper expert testimony: (1) the expert must be qualified; (2) the opinion must be reliable; and (3) the expert's opinion must relate to the facts. See Elcock v. Kmart Corp. , 233 F.3d 734, 741 (3d Cir. 2000).

II. Future Link's Motion for Summary Judgment (D.I. 520)

Future Link seeks summary judgment on seven grounds, arguing that Intel failed to: (1) show that any FLS patents are standards-essential; (2) show that equitable estoppel applies; (3) support its numerous prior art theories by admissible evidence; (4) show that it is licensed to any asserted patent; (5) show that any asserted patent is unenforceable; (6) show that the marking statute applies; and (7) join necessary third parties, Dell and HP.² (D.I. 520)

A. Standards–Essential Licensing

Intel asserts that standards-essential reasonable and non-discriminatory ("RAND") licensing requirements attach to U.S. Patent Nos. 5,608,357 ; 7,917,680 ; 7,983,888 ; and 5,870,570. In its motion for summary judgment, Future Link argues that Intel failed to meet its burden of demonstrating that RAND licensing requirements attach to these patents, as Intel failed to show that (1) each patent contains at least one "Necessary Claim" and (2) there were no commercially reasonable non-infringing alternatives. (D.I. 521 at 3–4) In particular, Future Link contends that Intel's expert, Dr. Ray Perryman, wrongly classifies claims as "Necessary Claims" when "any element of the claim—not the claim as a whole—is necessarily embodied by products that implement a PCI–SIG [ (PCI Special Interest Group) ] standard." (Id. at 4; see also D.I. 537.093 at ¶ 78 ("If an implementation practices any part of a patent, even just a partial claim, a RAND commitment is necessary.")) Future Link adds that Intel's other experts erroneously base their analyses on Dr. Perryman's misinterpretation, but none of the experts, including Dr. Perryman, showed that the infringement could not have been avoided by another commercially reasonable non-infringing implementation. (D.I. 521 at 6–7)

Intel responds that Dr. Perryman properly opined that "it is not a requirement for every single element of a patent claim to be infringed by every single implementation of a standard in order for that claim to be subject to the standard's RAND obligation." (D.I. 555 at 6) According to Dr. Perryman, "a claim may be a ‘Necessary Claim’ so long as that claim is necessarily infringed by ‘an implementation of a Specification’ and one or more elements of the claim are within the ‘Scope’ as described by the Bylaws." (D.I. 556, Ex. 4 at ¶ 77) Additional claim elements that "merely add basic, well-known items or that otherwise describe compliant implementations of a Specification" need not be met by each implementation in order for a claim to be a "Necessary Claim." (Id. at ¶ 82) Because Dr. Perryman's opinion is supported by substantial evidence, Intel asserts that summary judgment would be improper. (D.I. 555 at 6) Intel also argues that experts are permitted to rely on the expertise of other qualified experts, and that each of those who relied on Dr. Perryman's interpretation also provided detailed technical analyses concerning why the asserted claims are RAND obligated. (Id. at 9) Lastly, Intel adds that its experts investigated non-infringing alternatives and concluded that no such commercially reasonably non-infringing implementation existed at the relevant time period. (Id. )

The PCI–SIG Bylaws define a "Necessary Claim" as a claim that is "necessarily infringed by an implementation of a Specification ... and which [is] within the bounds of the Scope, where such infringement could not have been avoided by another commercially reasonable noninfringing implementation of such Specification." (D.I. 556, Ex.3 at PCI–SIG000309) The Bylaws define "Scope" as "the protocols, electrical signaling characteristics,...