Whitserve LLC v. G0daddy.Com, Inc., CIVIL ACTION No. 3:11-cv-00948-WGY

WHITSERVE LLC, Plaintiff, v. G0DADDY.COM, INC., Defendant.

CIVIL ACTION No. 3:11-cv-00948-WGY

UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT

July 20, 2015

YOUNG, D.J.¹

FINDINGS OF FACT AND RULINGS OF LAW on the LACHES DEFENSE

I. INTRODUCTION

The plaintiff, WhitServe LLC ("WhitServe"), commenced suit against the defendant, GoDaddy.com, Inc. ("GoDaddy"), alleging infringement of two of WhitServe's patents: U.S. Patent No. 5, 895, 468 (the "'468 patent") and U.S. Patent No. 6, 182, 078 (the "'078 patent") (collectively, the "Reminder Patents"). GoDaddy argues that WhitServe delayed asserting its rights under the Reminder Patents for more than six years after GoDaddy publicly launched a renewals website that openly offered the functionality that WhitServe now accuses of infringement.GoDaddy asserts that WhitServe's delay was unreasonable, inexcusable, and materially prejudicial, and thus that laches should bar WhitServe from collecting damages accrued prior to the filing of the complaint.

On June 14, 2011, WhitServe filed a complaint against GoDaddy for patent infringement in the United States District Court for the District of Connecticut. Compl., ECF No. 1. GoDaddy answered with affirmative defenses, a jury demand, and counterclaims on August 12, 2011. Def. GoDaddy.com, Inc.'s Answer, Aff. Defenses, & Countercls. Resp. WhitServe, LLC's Compl., ECF No. 34. GoDaddy filed an amended answer to the complaint on December 1, 2011 asserting that WhitServe's claims for infringement are barred in whole or in part by the equitable doctrine of laches. Def. GoDaddy.com, Inc.'s First Am. Answer, Aff. Defenses, & Countercls. Resp. WhitServe, LLC's Compl. 6, ECF No. 87. On September 2, 2011, WhitServe filed a motion to dismiss GoDaddy's counterclaims and to strike GoDaddy's affirmative defenses. WhitServe's Mot. Dismiss GoDaddy's Countercls. & Strike Affirm. Defenses, ECF No. 39. This Court denied WhitServe's motion to dismiss GoDaddy's affirmative defenses on November 17, 2011. Ruling Re: Pl.'s Mot. Dismiss Countercls. & Strike Affirm. Defenses, ECF No. 84.

On February 27, 2015, WhitServe filed a memorandum regarding the issue of a separate bench trial on prosecutionhistory estoppel, marking, and laches. Pl. WhitServe's Mem. Law Issue Separate Bench Trial ("Bench Trial Mem."), ECF No. 396. WhitServe argued that laches was no longer a viable defense under the Patent Act because Petrella v. Metro-Goldwyn-Mayer, 134 S. Ct. 1962 (2014), a recent Supreme Court ruling on laches under the Copyright Act, conflicts with A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020 (Fed. Cir. 1992), which outlined the laches defense in modern patent cases. Bench Trial Mem. 6. Conversely, GoDaddy argued that laches remains a viable defense under the Patent Act because the Petrella Court's holding was limited to copyright infringement suits. GoDaddy's Resp. Mem. Re: Issue Separate Bench Trial 3, 7-8, ECF No. 400.

In a March 6, 2015 status conference, this Court informed counsel that a bench trial would proceed on March 17, 2015 as to GoDaddy's laches defense. Min. Entry, March 6, 2015, ECF No. 401. The bench trial began as scheduled on March 17, 2015 and concluded the following day, at which time this Court took the matter under advisement. Min. Entry, March 18, 2015, ECF No. 408.

II. FINDINGS OF FACT

A. The Patents

The '468 patent, entitled "System Automated Delivery of Professional Services," was issued to Wesley Whitmyer, Jr., founder and manager of WhitServe and patent attorney at St. OngeSteward Johnston & Reens LLC ("SSJR"), on April 20, 1999. Tr. Vol. I 14:10-16:7, 17:12-19, ECF No. 410. The '078 patent, entitled "A System for Delivering Professional Services Over the Internet," was issued to Whitmyer on January 30, 2001. Id. at 17:20-18:7. The Reminder Patents relate to "a computer and database device that allows a service provider to automate communication with clients about date-sensitive matters, and obtain client instructions, over the Internet." Joint Final Pretrial Mem. ("Joint Pretrial Mem.") 2, ECF No. 357.

B. The Parties

WhitServe owns the Reminder Patents, as well as other patents, and owns companies that run businesses related to the company's patents. Tr. Vol. I 60:3-8. One of these companies, NetDocket, provides internet software for payment of patent annuities using the functionalities protected by the Reminder Patents. Tr. Vol. II 88:7-10, ECF No. 411.

GoDaddy is the world's largest domain name registrar. Joint Pretrial Mem. 2. WhitServe alleges that GoDaddy uses patented databases to automate renewals of domain name registrations and other services. Id. at 2-3; Compl. ¶¶ 16, 19-56. A GoDaddy service called "My Renewals" sends renewal notices to customers over the internet regarding upcoming payment deadlines for the renewal of domain names and services. Compl. ¶ 17. In addition, a customer can renew GoDaddy productson the My Renewals section of GoDaddy's website. Tr. Vol. II 109:13-20. To access My Renewals, a private GoDaddy page, a member of the public creates a personal account, including a username and password, and logs in to GoDaddy's website. See id. at 83:2-7.

Based on an analysis of GoDaddy's source code, the Court finds that My Renewals was available to the public by October 2004. Id. at 107:8-25, 134:12-14, 140:12-23; Tr. Vol. III 8:3-20, ECF No. 412. Michael Micco, a solutions architect at GoDaddy, became a personal GoDaddy customer in 2004 and recalls receiving a GoDaddy renewal notice as early as 2007. Tr. Vol. II 104:25-105:17, 111:10-15.

WhitServe first learned of GoDaddy's potential infringement of the Reminder Patents when GoDaddy sent a domain name renewal notice to the personal email address of an SSJR associate, Michael Kosma, who owned a personal GoDaddy domain name. See Tr. Vol. I 45:25-46:21; Tr. Vol. II 80:14-82:4; Compl., Ex. 1, Renewal Notice, ECF No. 1-1. After Kosma showed the renewal notice to Whitmyer on March 23, 2011, WhitServe "started to prepare claim charts and draft a complaint almost immediately." Tr. Vol. II 83:15-19. WhitServe filed suit for patent infringement approximately three months later. Compl.

The parties do not dispute that WhitServe had no actual knowledge of GoDaddy's potential infringement prior to March 23,2011. Pl.'s Trial Br. Laches ("Pl.'s Trial Br.") 1, 3, ECF No. 402; Tr. Vol. I 10:7-8. In support of its laches defense, GoDaddy argues that WhitServe had constructive knowledge of GoDaddy's infringement as early as 2004, when My Renewals was publicly available. GoDaddy's Trial Mem. 7, ECF No. 403 ("WhitServe either knew or should have known of GoDaddy's alleged infringement from 2004-2011.").

C. WhitServe's Investigation of Potential Infringement of the Reminder Patents

WhitServe did not investigate or become aware of potential infringement of the Reminder Patents by GoDaddy or any other domain name registrar prior to March 23, 2011. Tr. Vol. I 44:9-16; Tr. Vol. II 79:6-8. WhitServe was aware that GoDaddy was a domain name registrar as early as 2005 but "had no indication from anything [WhitServe was] aware of" that domain name registrars might be infringing on the Reminder Patents. Tr. Vol. I 50:24-51:16; Tr. Vol. II 85:1-5.

Whitmyer was familiar with domain name registrars as early as 1996, when SSJR owned a domain name through the domain name registrar Network Solutions. Tr. Vol. I 19:13-23:8; see Trial Ex. 29, SSJR.com Account Records. WhitServe did not observe any infringement of the Reminder Patents on the Network Solutions website in the 1990s or in 2001, when WhitServe renewed the SSJR domain name for a period of ten years. Tr. Vol. II 77:20-78:18.

Once WhitServe learned of GoDaddy's possible infringement, WhitServe began investigating other domain name registrars "[b]ecause if GoDaddy infringed, there was some reason to believe that maybe other domain registrars infringed as well." Id. at 84:1-25. After suing GoDaddy, WhitServe sent demand letters to 113 domain name registrars, including Network Solutions, between June 23, 2011 and October 5, 2012. Tr. Vol. I 40:13-22, 70:10-21/ Trial Ex. 51, List of WhitServe Demands from June 23, 2011 to October 5, 2012.

Since 2005, WhitServe has investigated numerous potential infringers of the Reminder Patents that were not domain name registrars and brought several patent infringement suits against them. Tr. Vol. I 60:9-17. Prior to filing suit against GoDaddy, all of WhitServe's litigation was in the patent annuity field, a field familiar to Whitmyer because it was "something [he] did as a young lawyer." Tr. Vol. II 90:11-20. WhitServe first pursued litigation for infringement of the Reminder Patents in November 2004 against Computer Patent Annuities, Inc., a company with software for paying patent annuities and trademark renewals. Id. at 89:5-21; Trial Ex. 3, Complaint for Infringement of Patents. In November 2006, WhitServe filed an infringement action against Computer Packages, Inc. ("CPI") for violation of the Reminder Patents by CPI's patent annuity reminder system. Tr. Vol. II 89:22-90:1, 102:9-13; Trial Ex.17, Complaint for Infringement of Patents. WhitServe also sued Dennemeyer, another company in the patent annuity field, in 2010. Tr. Vol. II 93:20-94:7; Trial Ex. 10, Complaint for Infringement of Patents.

WhitServe also investigated potential infringement outside the patent annuity field in other areas related to Whitmyer's field of work. Tr. Vol. II 90:17-20. As part of Whitmyer's work as a patent attorney and manager of WhitServe, he investigated desktop software that was moving to internet hosting rather than local desktop installation, including calendaring and customer relationship management software. Id. at 90:20-25. WhitServe also investigated software related to the healthcare business, such as software used to manage appointments. Id. at 91:1-7. Whitmyer became familiar with this type of software after learning about dental practice management software from his father, who was a dentist....