Honeywell lntern., Inc. v. Nikon Corp., Not Reported in F.Supp.2d (2009)
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`2009 WL 577274
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`Only the Westlaw citation is currently available.
`United States District Court,
`D. Delaware.
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`HONEYWELL INTERNATIONAL, INC., and
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`Honeywell Intellectual Properties, Inc., Plaintiffs,
`v.
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`NIKON CORPORATION, et al., Defendants.
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`Civil Action No. o4—1337—JJF.
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`| March 4, 2009.
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`Attorneys and Law Firms
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`Leslie A. Polizoti, Thomas C. Grimm, Morris, Nichols, Arsht
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`& Tunnell, Steven J. Balick, John G. Day, Lauren E. Maguire,
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`Ashby & Geddes, Wilmington, DE, for Plaintiffs.
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`William J. Marsden, Jr., Thomas Lee Halkowski, Fish &
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`Richardson, P.C., William F. Taylor, Jr., McCarter & English,
`LLP, Matt Neiderman, Aimee M. Czachorowski, Duane
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`Morris LLP, Robert J. Katzenstein, Smith, Katzenstein, &
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`Furlow, Amy Elizabeth Evans, Cross & Simon, LLC, Richard
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`L. Horwitz, Philip A. Rovner, David Ellis Moore, Potter
`Anderson & Corroon, LLP, William J. Wade, Richards,
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`Layton & Finger, PA, Wilmington, DE, Robert J. Benson,
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`Donald R. McPhail, Ian G. Dibernardo, Angie Hankins,
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`Lawrence Rosenthal, Matthew W. Siegal, Christopher E.
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`Chalsen, Christopher J. Gaspar, David J. Lender, Alana A.
`Prills, Pro Hac Vice, for Defendants.
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`Opinion
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`MEMORANDUM ORDER
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`JOSEPH J. FARNAN, JR., District Judge.
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`*1 Pending before the Court is an Objection (D.I.549)1
`to the Special Master's Report And Recommendation On
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`Manufacturer Defendants' Motion In Limine Regarding
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`Admissibility of Honeywell License Agreements (D.I.527)
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`filed by Plaintiffs Honeywell
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`International,
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`Inc.
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`and
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`Honeywell
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`Intellectual
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`Properties,
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`Inc.
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`(collectively
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`“Honeywell”).
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`1
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`Unless otherwise noted, all D.I. numbers in this
`Memorandum Order are D.I. numbers in Civil Action
`04—1337—JJF.
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`WestlaNNexI
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`Briefly, the Special Master considered whether a series of
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`21 license agreements that Honeywell negotiated with a
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`number of defendants and third parties should be admissible
`as evidence of commercial success to rebut Defendants'
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`invalidity defense. In addition, “in the interest of judicial
`7’
`
`the
`the Special Master considered whether
`economy,
`licenses should be admissible as evidence of reasonable
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`royalty. (D.I. 527 at 13.)
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`As to whether the licenses should be admissible on the
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`issue of commercial success, the Special Master, relying
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`on Federal Circuit and district court authority, concluded
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`that the license agreements “have little, if any, probative
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`value not only because they were garnered in a litigation
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`context, but also because Honeywell has not presented any
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`evidence demonstrating a ‘negotiation history’ to conclude
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`otherwise.” (Id. at 7.) Noting the complexity of the licenses,
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`including that they often cover multiple patents and a range
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`of licensee activity, the Special Master further concluded that
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`the licenses lacked a sufficient nexus to the asserted patent
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`claim and, if admitted, could lead to juror confusion. (Id.
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`at 10—12.) Accordingly, the Special Master concluded that
`the licenses Should be excluded as evidence of commercial
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`success under Fed.R.Evid. 403.
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`With regard to whether the licenses should be admissible
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`as evidence of reasonable royalty,
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`the Special Master,
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`relying largely on this Court's decision in PharmaStem
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`Theraputics v. Viacell, 2003 WL 22387038, at *2 (D.Del.
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`Oct.7, 2003), concluded that the licenses were inadmissible
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`under Fed.R.Evid. 408 mainly because they arose out of
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`litigation or a threat of litigation. (Id. at 14—15.)
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`Pursuant
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`to Federal Rule of Civil Procedure 53(f),
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`the
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`Court “may adopt or affirm; modify; wholly or partly reject
`or reverse; or resubmit to the master with instructions.”
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`Fed.R.Civ.P. 53(g)(1). The Court
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`reviews the Special
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`Master's conclusions of law de novo. Fed.R.Civ.P. 53(f)
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`(4). Findings of fact rendered by the Special Master are
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`also reviewed de novo absent the parties' stipulation to the
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`contrary. Fed.R.Civ.P. 53(f)(3). The Special Master's rulings
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`on procedural matters are reviewed under the abuse of
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`discretion standard. Fed.R.Civ.P. 53(f)(5).
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`Reviewing the Special Master's decision in light ofthe parties'
`submissions and the relevant standard of review, the Court
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`concludes that the Special Master correctly concluded that
`the licenses should not be admitted as evidence of either
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`commercial success or reasonable royalty. As the Special
`EMC/VMware v. PersonalWeb
`
`IPR2013-00083
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`EMCVMW 1082
`
`

`

`Honeywell lntern., Inc. v. Nikon Corp., Not Reported in F.Supp.2d (2009)
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`Master noted,
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`to the extent the licenses do not involve
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`defendants once named in this case, the language of the
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`licenses confirm that the licenses were negotiated under threat
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`of litigation. For instance, the license to Samsung Electronics
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`Co. Ltd. states that “the Parties recognize that it
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`is not
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`necessary to use litigation to resolve their differences in
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`this dispute and that costs would be incurred as a result of
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`litigation between the Parties ....” (D.I. 434, Exh. C at Tab
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`2.) On conducting its own independent review of the caselaw,
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`the Court, like the Special Master, is unable to identify any
`cases, either from this District or the Federal Circuit, in which
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`licenses taken under threat of litigation were given significant
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`weight, particularly in jury cases. Indeed, as the Federal
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`Circuit explained, “it is often cheaper to take licenses than
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`to defend infringement suits.” Iron Grip Barbell Co. v. USA
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`Sports, Inc., 392 F.3d 1317, 1324 (Fed.Cir.2004) (citations
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`omitted); see also Cornell Univ. v. Hewlett—Packard Co.,
`No. 01—cv—1974, 2008 US. Dist. LEXIS 39343 at *12
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`(N.D.N.Y May 8, 2008) (Rader, J.) (“Where, as here, a license
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`agreement arises under the threat of litigation, it has little
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`relevance to the hypothetical reasonable royalty situation”);
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`Pioneer Corp. v. Samsung SDI Co., No. 06—CV—384, 2008
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`US. Dist. LEXIS 107079, at *18 (E.D.Tex. Oct. 2, 2008)
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`nexus between the licenses and the asserted patent claim. As
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`the Federal Circuit explained, aprimafacie case ofnexus may
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`be made when the thing that is commercially successful (i.e.,
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`product or method) is coextensive with the claimed invention.
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`Brown & Williamson Tobacco Corp. v. Philip Morris, Inc.,
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`229 F.3d 1120, 1130 (Fed.Cir.2000) (“[I]f the marketed
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`product embodies the claimed features, and is coextensive
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`with them, then a nexus is presumed and the burden shifts to
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`the party asserting obviousness to present evidence to rebut
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`the presumed nexus.”). Here, however, the subject matter
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`of the licenses, including the LPL license, is decidedly not
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`coextensive with the asserted claim. (See generally D.I. 527
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`at App. A (Special Master's summary of the content of the
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`21 license agreements).) Though the licenses include some
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`relationship to the asserted patent claim, the Court agrees with
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`the Special Master that the connections Honeywell identifies
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`are insufficient to establish aprimafacie nexus to the asserted
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`patent claim. In these circumstances, the Court further agrees
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`with the Special Master that the potential for jury confusion is
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`great and that the licenses should be excluded under Rule 403.
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`Only 1 ofthe 21 licenses, the LPL license, appears to fall
`into this category.
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`(“Accordingly, this Court finds that even if negotiations,
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`NOW THEREFORE, IT IS HEREBY ORDERED that:
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`offers, and agreements reached under the threat of litigation
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`had some probative value, such value would be too slight
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`and clearly outweighed by the danger of unfair prejudice and
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`confusion. Such evidence is thus excluded under Rule 403.”)
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`1. Honeywell's Objection To Special Master's Report And
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`Recommendation Dated January 21, 2009 (13.1549)
`OVERRULED.
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`is
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`*2 To the extent any of the license agreements may
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`2. The Special Master's Report and Recommendation On
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`on reviewing
`be viewed as non—litigation licenses,2
`Honeywell's response to the Special Master's Report and
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`Manufacturer Defendants' Motion In Limine Regarding
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`Admissibility Of Honeywell License Agreements DM10(a)
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`Recommendation, the Court agrees with the Special Master
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`(D.I.527) dated January 21, 2009, is ADOPTED.
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`that Honeywell has not established prima facie proof of a
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`End of Document
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`© 2013 Thomson Reuters. No claim to original U.S. Government Works.
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`WestlawN Ir.
`III
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