Pecorino v. Vutec Corp.

6 F.Supp.3d 217

Philip A. PECORINO, Aldo Medaglia, and Sheward & Sons, d/b/a Visionart, Plaintiffs,

v.VUTEC CORPORATION and Farralane Lighting Audio and Video Systems, Inc., Defendants.

No. 11–CV–6312 (PKC).

United States District Court, E.D. New York.

Signed Sept. 9, 2013.

Cameron Sean Reuber, Jordan Grant Garner, Melvin C. Garner, Jonathan Webster Thomas, Leason Ellis LLP, White Plains, NY, for Plaintiffs.

Edwin D. Schindler, Coram, NY, for Defendants.

MEMORANDUM & ORDER

PAMELA K. CHEN, District Judge:

Pending before the Court in this patent infringement action is Defendants' motion for summary judgment based on the equitable defense of laches. (Dkt. 94.) For the reasons set forth below, Defendants' motion is denied in its entirety.

BACKGROUND

The procedural history of this and related litigation largely is not in dispute. On November 23, 1993, the U.S. Patent and Trademark Office (“PTO”) issued Plaintiffs Pecorino and Medaglia patent number 5,264,765 (“765 Patent”) for a “video display screen cover.” (Dkt. 52–1.) Pecorino and Medaglia in 2005 entered into a licensing agreement with Plaintiff Visionart, under which Visionart was granted an exclusive license to the 765 Patent. (Dkt. 1 ¶ 11). As early as July 1, 2005, Plaintiffs became aware of the potentially infringing activities of Vutec. (Dkt. 52 ¶ 12.) ¹ On May 15, 2007 Plaintiffs commenced a lawsuit against Defendant Vutec Corporation and others alleging infringement of the 765 Patent. See Pecorino, et al. v. Audio Command Sys., Inc., et al., 07–CV–1997(LDW) Dkt. 1 (E.D.N.Y. May 15, 2007) (the “2007 Litigation”). In defense of that lawsuit, Defendants claimed that another patent and other “prior art” rendered the 765 Patent invalid and that, therefore, Defendants had not infringed upon it. (Defendant St. ¶¶ 5–6.)

On November 14, 2007, Plaintiffs voluntarily dismissed without prejudice the 2007 Litigation to pursue a reexamination of the 765 Patent before the PTO. See 07–CV–1997 Dkt. 11 (E.D.N.Y. Nov. 5, 2007) (notice of dismissal). Specifically, Plaintiffs sought reexamination to determine the validity of the 765 Patent in light of the prior art and other defenses asserted by Defendants. ( See Dkt. 90–3.) In Plaintiffs' letter notifying Defendants of the voluntary dismissal, Plaintiffs informed Defendants' counsel that “[u]nless and until we have the patent certified by the Patent Office as having claims that overcome the Luckie patent and other prior art, we will not initiate an infringement suit against Vutec or its distributors.” (Dkt. 90–3 at 1.)

On January 12, 2010, the PTO confirmed the patentability of the 765 Patent. (Dkt. 1 ¶ 14.) Plaintiffs commenced this suit on December 27, 2011. (Dkt. 1.)

LEGAL STANDARD

I. Summary Judgment

“The standard for summary judgment in a patent case is the same as in any other case.” CA, Inc. v. Simple.com, Inc., 780 F.Supp.2d 196, 208 (E.D.N.Y.2009) (citing Desper Prods., Inc. v. QSound Labs, Inc., 157 F.3d 1325, 1332 (Fed.Cir.1998)). Summary judgment may be granted only if the submissions of the parties taken together “show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. Proc. 56(c); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251–252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). “The moving party bears the burden of establishing the absence of any genuine issue of material fact,” Zalaski v. City of Bridgeport Police Department, 613 F.3d 336, 340 (2d Cir.2010); see Salahuddin v. Goord, 467 F.3d 263, 272–73 (2d Cir.2006), after which the burden shifts to the nonmoving party to “come forward with specific evidence demonstrating the existence of a genuine dispute of material fact.” Brown v. Eli Lilly & Co., 654 F.3d 347, 358 (2d Cir.2011); see also F.D.I.C. v. Great American Ins. Co., 607 F.3d 288, 292 (2d Cir.2010). A dispute of fact is “genuine” if “the [record] evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248, 106 S.Ct. 2505.

The nonmoving party can only defeat summary judgment “by coming forward with evidence that would be sufficient, if all reasonable inferences were drawn in [its] favor, to establish the existence of” a factual question that must be resolved at trial. Spinelli v. City of New York, 579 F.3d 160, 166 (2d Cir.2009) (internal quotations and citations omitted); see also Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). “The mere existence of a scintilla of evidence in support of the [non-movant's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [non-movant].” Hayut v. State Univ. of N.Y., 352 F.3d 733, 743 (2d Cir.2003) (alterations in original); see also Lyons v. Lancer Ins. Co., 681 F.3d 50, 56–57 (2d Cir.2012); Jeffreys v. City of N.Y., 426 F.3d 549, 554 (2d Cir.2005). The nonmoving party cannot avoid summary judgment simply by relying “on conclusory allegations or unsubstantiated speculation,” Jeffreys, 426 F.3d at 554 (quotations and citations omitted); see also DeFabio v. East Hampton Union Free Sch. Dist., 623 F.3d 71, 81 (2d Cir.2010); and must offer “some hard evidence showing that its version of the events is not wholly fanciful.” Miner v. Clinton Cnty., New York, 541 F.3d 464, 471 (2d Cir.2008). In determining whether a genuine issue of fact exists, the court must resolve all ambiguities and draw all reasonable inferences against the moving party. Major League Baseball Props., Inc. v. Salvino, Inc., 542 F.3d 290, 309 (2d Cir.2008).

II. Laches

Because laches is an affirmative defense, a defendant asserting laches bears the ultimate burden of persuasion, even where a presumption of laches may apply. A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 1038 (Fed.Cir.1992). Whether to apply the equitable remedy of laches lies in the sound discretion of the court. King v. Innovation Books, a Div. of Innovative Corp., 976 F.2d 824 (2d Cir.1992); Serdarevic v. Advanced Medical Optics, Inc., 532 F.3d 1352, 1358 (Fed.Cir.2008). “The equitable nature of laches necessarily requires that the resolution be based on the circumstances peculiar to each case.... The inquiry is a factual one”, Tri–Star Pictures, Inc. v. Leisure Time Prods., B.V., 17 F.3d 38, 44 (2d Cir.1994), and thus laches is not always amenable to determination on summary judgment. Moreover, “the establishment of the factors of undue delay and prejudice, whether by actual proof or by the presumption, does not mandate recognition of a laches defense in every case. Laches remains an equitable judgment of the trial court in light of all the circumstances.” A.C. Aukerman Co., 960 F.2d at 1036.

Laches is established where (1) “the plaintiff delayed filing suit for an unreasonable and inexcusable length of time from the time the plaintiff knew or reasonably should have known of its claim against the defendant, and (2) the delay operated to the prejudice or injury of the defendant.” A.C. Aukerman Co., 960 F.2d at 1032 (citing Costello v. United States, 365 U.S. 265, 282, 81 S.Ct. 534, 5 L.Ed.2d 551 (1961)). Importantly, even though the defense of laches may bar “the patentee's claim for damages prior to suit”, the entire action need not be dismissed, and any claims of damages subsequent to the filing of the suit and claims for injunctive relief are still permitted. Id.

DISCUSSION

I. Presumption of Laches

A presumption of laches applies in a patent infringement action where a plaintiff delays in bringing suit six or more years after the plaintiff knew or reasonably should have known of the alleged infringing activity. A.C. Aukerman Co., 960 F.2d at 1032; Bott v. Four Star Corp., 807 F.2d 1567, 1576 (Fed.Cir.1986). The effect of a presumption of laches is that the burden of providing evidence to defeat laches shifts to the plaintiff, although the ultimate burden of persuasion remains with the defendant. Id. at 1032.

Here, Defendants argue that Plaintiffs delayed more than six years from when they learned of the potential infringement before bringing suit, and that a presumption of laches therefore applies. (Dkt. 93 at 1–3.) At the core of Defendants' argument is the claim that Plaintiffs' 2007 Litigation should not be considered in calculating the six-year time period for the presumption of laches because Plaintiffs voluntarily dismissed the action, without prejudice, which, according to Defendants, is the legal equivalent of having never been brought. (Dkt. 93 at 10.) This is incorrect. Defendants' characterization of Plaintiffs' withdrawal of the 2007 Litigation is instructive. First, Defendants state that “[i]t is well-settled and beyond serious debate that Pecorino's unilateral dismissal of its patent infringement action brought in 2007 against Vutec is legally tantamount to having never brought suit against Vutec prior to the commencement of this action on December 27, 2011.” (Dkt. 93 at 9) (italicized emphasis added). Next, Defendants cite the Sixth Circuit case Rice v. Jefferson Pilot Financial Insurance Company for the proposition that “[i]t is generally accepted that a dismissal without prejudice leaves the situation the same as if the suit had never been brought, and that in absence of a statute to the contrary, a party cannot deduct from the period of the statute of limitations the time during which the action so dismissed was pending.” 578 F.3d 450, 457 (6th Cir.2009) (emphasis added). Defendants further contend that “Pecorino cannot legally rely upon the prior litigation brought against Vutec in 2007 as any sort of justification or ‘excuse’ for now barring the application of laches against Pecorino.” (Dkt. 93 at 10) (italicized emphasis added).

Regardless of whether Defendants' use of the term “legal” was intentional or merely used in the general sense, Defendants fail to recognize the critical distinction between the legal bar of the statute of limitations and the...