Semiconductor Energy Lab. v. Chi Mei Optoelect.

531 F.Supp.2d 1084

SEMICONDUCTOR ENERGY LABORATORY COMPANY LTD., Plaintiff, v. CHI MEI OPTOELECTRONICS CORP., et al., Defendant(s).

No. C 04-04675 MHP.

United States District Court, N.D. California.

June 19, 2007.

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Barbara S. Steiner, Donald R. Harris, John E. Titus, Joseph F. Marinelli, Joseph Albert Saltiel, Matthew J. Thomas, Patrick L. Patras, Reginald J. Hill, Stanley A. Schlitter, Stephen M. Geissler, Terrence Joseph Truax, Jenner & Block LLP, Chicago, IL, Victoria F. Maroulis, Quinn Emanuel Urquhart Oliver & Hedges LLP, Redwood Shores, CA, R. Tulloss Delk, Quinn Emanuel. Urquhart Oliver & Hedges LLP, San Francisco, CA, for Plaintiff.

Teresa M. Corbin, Daniel X. Yan, Howrey LLP, San Francisco, CA, Benjamin Charles Deming, Christopher Anthony Mathews, Howrey LLP, Los Angeles, CA, Ryan Edward Lindsey, Yuri Mikulka, Howrey LLP, Gregory. Stuart Cordrey, Irvine, CA, Robert Unikel, Howrey LLP, Chicago, IL, for Defendant(s).

MEMORANDUM & ORDER

Re: Motions for Summary Judgment

MARILYN HALL PATEL, District Judge.

Plaintiff Semiconductor Energy Laboratory Company Ltd. ("SEL") brought this patent infringement action against defendant Chi Mei Optoelectronics Corp. ("CMO") et al., alleging infringement of four United States patents related generally to the design and manufacture of liquid crystal display ("LCD") devices. Two patents in suit currently remain. Now before the court are the parties' motions for summary judgment. Having considered the parties' arguments and submissions, and for the reasons set forth below, the court enters the following memorandum and order.

BACKGROUND

An overview of the relevant technology and summaries of the asserted patents are provided in this court's Claim Construction Order. Docket Entry 111 at 1-6 (hereinafter "Claim Construction Order"). SEL filed this action on November 3, 2004, alleging that CMO had infringed and was infringing various patents. On August 11, 2006 the parties filed a stipulation dismissing with prejudice all claims regarding U.S. Patent No. 5,995,189. April 19, 2007 this court entered an order granting summary judgment of noninfringement of U.S. Patent No. 4,691,995 ("the '995 patent"). Docket Entry 331 (hereinafter "Summary Judgment Order"). All claims and defenses with respect to the '995 patent were subsequently dismissed by stipulation. Docket Entry 357. Accordingly, two patents-in-suit currently remain: U.S. Patent No. 6,756,258 ("the '258 patent") and U.S. Patent No. 6,404,480 ("the '480 patent"). The asserted claims of the '258 patent cover methods of fabricating thin-film transistors ("TFTs") for use in LCDs. In particular, the TFTs claimed by the '480 patent include a "stepped" structure whereby the upper surface of the second semiconductor layer is exposed. The '480 patent claims an active matrix display device providing a way of reliably creating an electrical connection between the substrates comprising the LCD.

SEL now moves for summary judgment on its claim of infringement of the '480 patent and CMO's affirmative defenses of inequitable conduct, lathes and patent misuse. CMO moves for summary judgment of noninfringement and invalidity of the '258 patent, noninfringement and invalidity of the '995 patent, no liability for foreign sales and no liability for infringement prior to the receipt of statutory notice of infringement. The parties have additionally cross-moved for summary judgment as to CMO's license defense. Because the '995 patent is no longer at issue in this case, the court will not reach the, parties' arguments in, these motions regarding the '995 patent.

LEGAL STANDARD

Summary judgment is proper when the pleadings, discovery and affidavits show that there is "no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). Material facts are those which may affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. Id. The party moving for summary judgment bears the burden of identifying those portions of the pleadings, discovery, and affidavits that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). On an issue for which the opposing party will have the burden of proof at trial, the moving party need only point out "that there is an absence of evidence to support the nonmoving party's case." Id.

Once the moving party meets its initial burden, the nonmoving party must go beyond the pleadings and, by its own affidavits or discovery, "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). Mere allegations or denials do not defeat a moving party's allegations. Id.; Gasaway v. Northwestern Mut. Life Ins. Co., 26 F.3d 957, 960 (9th Cir.1994). The court may not make credibility determinations, and inferences to be drawn from the facts must be viewed in the light most favorable to the party opposing the motion. Masson v. New. Yorker Magazine, 501 U.S. 496, 520, 111 S.Ct. 2419, 115 L.Ed.2d 447 (1991); Anderson, 477 U.S. at 249, 106 S.Ct. 2505.

The moving party may "move with or without supporting affidavits for a summary judgment in the party's favor upon all or any part thereof" Fed.R.Civ.P. 56(a). "Supporting and opposing affidavits shall be made on personal knowledge?, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein." Fed.R.Civ.P. 56(e).

DISCUSSION

I. SEL's Motions

A. Infringement of the '480 Patent

The parties' arguments regarding infringement of the '480 patent are substantively identical to the arguments raised regarding CMO's previous motion for summary judgment. In essence, SEL asserts that it has made a prima facie case for infringement, and that CMO's only defense against infringement is its contention that the claim term "second interlayer insulating film" must be construed as requiring a planar surface. Because CMO's products are intentionally non-planar, CMO argues, CMO's devices cannot infringe. CMO does not appear to contest this characterization of its position or otherwise offer any argument against infringement other than its argument based on the planarity of the dielectric film.¹ CMO does raise a separate argument asserting SEL's inability to show infringement based on foreign sales, which will be addressed in the section on defendant's foreign sales motion below.

This court previously held that "the asserted claims of the '480 Patent cover nonuniform second interlayer dielectric films in the common contact portion of the matrix." Summary Judgment Order at 22. This order was issued after the initial briefing, on the instant motions. Because the court has previously resolved this issue in favor of SEL, SEL is entitled to summary judgment of infringement as to the '480 patent subject to the court's holdings regarding foreign sales set forth below.

B. Inequitable Conduct

Inequitable conduct consists of (1) affirmative misrepresentations of material fact, (2) submission of false material information, or (3) the failure to disclose known material information during the prosecution of a patent, coupled with the intent to deceive the PTO. Life Techs., Inc. v. Clontech Labs., Inc., 224 F.3d 1320, 1324 (Fed. Cir.2000). "Materiality and intent to deceive are distinct factual inquiries, and each must be shown by clear and convincing evidence." Id. CMO has raised inequitable conduct as an affirmative defense as to the '480 patent and the '258 patent. SEL now moves for summary judgment as to both patents.

1. The '480 Patent

CMO's theory of inequitable conduct with respect to the '480 patent is that SEL created fictional prior art and failed `to cite actual prior art that would have revealed the falsity of SEL's purported prior art.

a. Material Misrepresentation or Omission

Omitted prior art is material if "there is a substantial likelihood that a reasonable Examiner would have considered the information important in deciding whether to allow the application to issue as a patent." Life Techs., 224 F.3d at 1325. CMO must demonstrate materiality both as to the purported falsity of the admitted prior art, labeled as "Figure 13" in the '480 patent, and the actual prior art references that. SEL allegedly withheld from the PTO.

i. Figure 13

Figure 13 of the '480 patent is a diagram labeled "Prior Art" showing a large conductive spacer in the opening of a second insulating film. As this court noted in its Claim Construction Order, the location of the conductive spacer was a critical issue in the '480 patent:

The '480 patent provides a way of reliably creating an electrical connection from the TFT substrate to the opposing substrate while maintaining a uniform gap between the substrates. One obstacle to achieving a uniform gap in the prior art is variation in thickness of the insulating — or "dielectric" — layer deposited just beneath the electrodes on the TFT substrate. In prior art displays, the metal contact for the electrical connection to the counter substrate was located on a layer below the level of the dielectric. Thus, the conductive spacer had to be of a size roughly equal to the thickness of the dielectric layer plus the width of the gap between the substrates in order to make electrical contact with both substrates. Because it is difficult to control the thickness of the dielectric layer from panel to panel, and even within a single panel, it was difficult to create spacers of the correct size. The improvement of the '480 patent is...