Case 2:14-cv-10290-AC-RSW ECF No. 1 filed 01/22/14 PageID.1 Page 1 of 41
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF MICHIGAN
`SOUTHERN DIVISION
`
`CISCO SYSTEMS, INC. and
`LINKSYS LLC,
`
` Plaintiffs,
`
`v.
`
`CHRIMAR SYSTEMS INC.
`D/B/A CMS TECHNOLOGIES,
`
` Defendant.
`
`Case No.
`
`Honorable
`
`Magistrate Judge
`
`COMPLAINT AND JURY DEMAND
`
`Plaintiffs Cisco Systems, Inc. and Linksys LLC (collectively "Cisco")
`
`hereby demand a jury trial and allege as follows for their complaint against
`
`Defendant ChriMar Systems Inc. d/b/a CMS Technologies ("ChriMar"):
`
`COMPLAINT
`
`PARTIES
`
`1.
`
`Cisco Systems, Inc. is a California corporation with its principal place
`
`of business on Tasman Drive in San Jose, California 95134.
`
`2.
`
`Linksys LLC is a limited liability corporation organized under the
`
`laws of California with its principal place of business at 12045 East Waterfront
`
`Drive, Playa Vista, California, 90094.
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`3.
`
`On information and belief, ChriMar Systems, Inc. d/b/a CMS
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`Technologies is a Michigan corporation with its principal place of business at
`
`36528 Grand River Avenue, Suite A-1 in Farmington Hills, Michigan.
`
`JURISDICTION AND VENUE
`
`4.
`
`This action is predicated on the patent laws of the United States, Title
`
`35 of the United States Code, with a specific remedy sought based upon the laws
`
`authorizing actions for declaratory judgment in the courts of the United States, 28
`
`U.S.C. §§ 2201 and 2202. This court has jurisdiction over this action pursuant to
`
`28 U.S.C. §§ 1331, 1338(a), and 1367.
`
`5.
`
`An actual and justiciable controversy exists between ChriMar and
`
`Cisco as to the noninfringement, invalidity, and unenforceability of U.S. Patent
`
`No. 8,155,012 ("'012 Patent") (attached as Exhibit A). As further alleged below,
`
`ChriMar is and has been engaged in a campaign to license and enforce its patent
`
`portfolio against manufacturers and sellers of Power over Ethernet ("PoE")
`
`networking products, including Cisco. In connection with ChriMar's licensing
`
`campaign targeting PoE products, Cisco is currently involved in litigation against
`
`ChriMar with respect to U.S. Patent No. 7,457,250 ("'250 Patent").1 This litigation
`
`involves PoE products implementing the IEEE 802.3af and 802.3at standards.
`
`ChriMar Systems, Inc. v. Cisco Systems, Inc., No. 3:13-cv-1300-JSW (N.D.
`
`1.
`Cal.).
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`Cisco maintains that the '250 and '012 Patents are invalid, unenforceable, and are
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`not infringed by Cisco's PoE products implementing IEEE Standards 802.3af/at.
`
`6.
`
`This Court has personal jurisdiction over ChriMar at least because, on
`
`information and belief, ChriMar is a Michigan corporation having its principal
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`place of business within the Eastern District of Michigan at 36528 Grand River
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`Avenue, Suite A-1 in Farmington Hills, Michigan. ChriMar has made substantial
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`business contacts in Michigan including product sales to Michigan entities and
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`ChriMar's campaign to enforce and license its patent portfolio, including the '012
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`Patent, has a substantial relationship to Michigan. ChriMar has availed itself of the
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`laws of this district in connection with its current portfolio licensing efforts
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`targeting PoE products, including by litigating patent infringement claims
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`involving that portfolio in this district.
`
`7.
`
`Venue is proper in this Court under 28 U.S.C. § 1391(b)(1), (c) and
`
`§ 1400(b) at least because ChriMar is subject to personal jurisdiction in this
`
`District and is located within this District and because a substantial part of the
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`events that give rise to the claims herein occurred in this district.
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`A. CHRIMAR'S PATENTS
`
`BACKGROUND
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`8.
`
`ChriMar's patent portfolio includes the '250 Patent, the '012 Patent,
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`U.S. Patent No. 6,650,622 (the "'622 Patent"), and U.S. Patent No. 5,406,260 (the
`
`"'260 Patent").
`
`9.
`
`The '012 Patent, entitled "System and Method for Adapting a Piece of
`
`Terminal Equipment," reports that it was filed on September 26, 2008 as
`
`Application No. 12/239,001, and issued on April 10, 2012. The '012 Patent reports
`
`that it is a continuation of Application No. 10/668,708, filed on September 23,
`
`2003, now the '250 Patent, which is a continuation of Application No. 09/370,430,
`
`filed on August 9, 1999, now the '622 Patent, which is a continuation-in-part of
`
`application No. PCT/US99/07846, filed on April 8, 1999. The inventors named on
`
`the '012 Patent are John F. Austermann, III and Marshall B. Cummings.
`
`10. As alleged herein, Cisco denies that the '012 Patent was duly and
`
`legally issued.
`
`11. On information and belief, ChriMar is the current assignee of the '012
`
`Patent.
`
`12. The '250 Patent, entitled "System for Communicating with Electronic
`
`Equipment," reports that it was filed on September 23, 2003, issued on November
`
`25, 2008 and then had a reexamination certificate issued on March 1, 2011. The
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`'250 Patent reports that it is a continuation of Application No. 09/370,430, filed on
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`August 9, 1999, now the '622 Patent, which is a continuation-in-part of Application
`
`No. PCT/US99/ 07846, filed on April 8, 1999. The inventors named on the '250
`
`Patent are John F. Austermann, III, and Marshall B. Cummings.
`
`13. On information and belief, ChriMar Systems is the current assignee of
`
`the '250 Patent.
`
`14. The '012 Patent shares a common specification with its parent, the
`
`'250 Patent.
`
`15. As alleged herein, on information and belief, Cisco believes that
`
`ChriMar asserts, and will assert, that the '012 Patent covers products with PoE
`
`functionality.
`
`B. CHRIMAR'S LICENSING AND ENFORCEMENT EFFORTS
`TARGETING PRODUCTS WITH POWER OVER ETHERNET
`FUNCTIONALITY
`
`16. For many years, ChriMar has actively pursued a patent licensing and
`
`enforcement campaign targeting products with Power Over Ethernet ("PoE")
`
`functionality specified by certain standards promulgated by the Institute of
`
`Electrical and Electronics Engineers ("IEEE") and sellers of such products,
`
`including numerous California-based companies.
`
`17. ChriMar's licensing and enforcement campaign began in 2001, when
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`ChriMar sued Cisco in this District for allegedly infringing the '260 Patent.
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`ChriMar sued Cisco for alleged infringement of the '260 Patent in 2001, accusing,
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`for example, Cisco's IP phones. 2 ChriMar thereafter claimed that the '260 Patent
`
`was "essential" to the IEEE PoE standards. 3 After the court in that action entered
`
`an order granting Cisco's motion for summary judgment that claim 1 of the '260
`
`Patent was invalid, that litigation between Cisco and ChriMar was resolved by way
`
`of settlement, with Cisco taking a license to ChriMar's alleged technology.
`
`ChriMar also sued D-Link Systems ("D-Link")4
`
` and Foundry Networks
`
`("Foundry"),5 two other California-based companies, and also PowerDsine, Ltd.
`
`("PowerDsine")6 based on their respective sales of products with PoE functionality
`
`accusing those companies of infringing the '260 Patent based on sales of those
`
`products. D-Link and PowerDsine took licenses to the '260 Patent after favorable
`
`rulings were issued, and ultimately an additional claim of the '260 Patent (claim
`
`17) was invalidated by the court in the Foundry action, leading to dismissal of that
`
`action and summary affirmance by the Federal Circuit.
`
`
`ChriMar Sys., Inc. v. Cisco Sys., Inc., No. 2:01-cv-71113 (E.D. Mich.) (filed
`2.
`Mar. 21, 2001, terminated Sept. 15, 2005).
`at
`available
`See
`Assurance,
`3.
`ChriMar
`Letter
`of
`http://standards.ieee.org/about/sasb/patcom/loa-802_3af-chrimar-03Dec2001.pdf.
`See ChriMar Sys., Inc. v. D-Link Sys., Inc., No. 2:06-cv-13937 (E.D. Mich.)
`4.
`(filed Sept. 6, 2006, terminated Apr. 21, 2010).
`See ChriMar Sys., Inc. v. Foundry Networks, Inc., No. 2:06-cv-13936 (E.D.
`5.
`Mich.) (filed Sept. 6, 2006, terminated Aug. 1, 2012).
`6. ChriMar Sys., Inc. v. PowerDsine LTD., No. 2:01-cv-74081 (E.D. Mich.)
`(filed Oct. 26, 2001, terminated Mar. 31, 2010).
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`18. Shortly after issuance of the '250 Patent, which ChriMar deliberately
`
`failed to disclose to the IEEE standards bodies that developed the PoE standards,
`
`as alleged below, ChriMar continued its licensing and enforcement campaign
`
`against sellers of products with PoE functionality, including Cisco and a number of
`
`other California-based companies. ChriMar sued Waters Network Systems, LLC
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`for allegedly infringing the '250 Patent in 2008, and went on to sue multiple
`
`additional sellers of products with PoE functionality (including California-based
`
`companies Danpex Corp., Garrettcom, Inc., and Edgewater Networks) in 2009.7
`
`Following conclusion of a reexamination proceeding involving the '250 Patent,
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`ChriMar sued Cisco, and also California-based Hewlett-Packard, Avaya, Inc., and
`
`Extreme Networks, both in the International Trade Commission,8 and in district
`
`court,9 for allegedly infringing the '250 Patent by selling products with PoE
`
`functionality, including among other products, IP telephones, wireless access
`
`points, and wireless network cameras.
`
`
`See ChriMar Sys., Inc. v. Waters Network Sys., LLC, No. 2:08-cv-00453
`7.
`(E.D. Tex.) (filed Nov. 25, 2008, terminated June 19, 2009); ChriMar Sys., Inc. v.
`Danpex Corp., No. 2:09-cv-00044 (E.D. Tex.) (filed Feb. 6, 2009, terminated May
`20, 2009); ChriMar Sys., Inc. v. Garrettcom, Inc., No. 2:09-cv-00085 (E.D. Tex.)
`(filed Mar. 23, 2009), No. 3:09-cv-04516 (N.D. Cal.) (terminated Dec. 22, 2009);
`ChriMar Sys., Inc. v. KTI Network, Inc., No. 2:09-cv-00230 (E.D. Tex.) (filed July
`30, 2009, terminated Nov. 25, 2009).
`In the Matter of Certain Communication Equipment, Components Thereof,
`8.
`and Products Containing the same, including Power over Ethernet Telephones,
`Switches, Wireless Access Points, Routers and other Devices Used in LANs, and
`Cameras, Inv. No. 337-TA-817 (instituted Dec. 1, 2011, terminated Aug. 1, 2012).
`9. ChriMar Systems, Inc. v. Cisco Systems, Inc., No. 3:13-cv-1300-JSW (N.D.
`Cal.) ("the NDCA case").
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`19. ChriMar recently expanded its licensing and enforcement campaign
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`against products with PoE functionality to include the '012 Patent, which issued
`
`last year. ChriMar recently filed five actions in the United States District Court for
`
`the Eastern District of Texas alleging infringement of the '012 Patent by various
`
`manufacturers and re-sellers of PoE products. The complaints in these actions
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`accuse specific models of IP phones and/or Wireless Access Points, each of which
`
`includes PoE functionality.
`
`20. ChriMar brought suit against Aastra Technologies Limited and Aastra
`
`USA Inc. in the Eastern District of Texas, Case No. 6:13-cv-879, on November 8,
`
`2013, alleging infringement of the '012 Patent, for among other things, making,
`
`using, offering for sale, selling, and/or importing IP telephones, which, on
`
`information and belief, include PoE functionality.
`
`21. ChriMar brought suit against Alcatel-Lucent, Inc., Alcatel-Lucent
`
`USA, Inc., and Alcatel-Lucent Holdings, Inc., in the Eastern District of Texas,
`
`Case No. 6:13-cv-880, on November 8, 2013, alleging infringement of the '012
`
`Patent, for among other things, making, using, offering for sale, selling, and/or
`
`importing wireless access points, which, on information and belief, include PoE
`
`functionality.
`
`22. ChriMar brought suit against AMX, LLC, in the Eastern District of
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`Texas, Case No. 6:13-cv-881, on November 8, 2013, alleging infringement of the
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`'012 Patent, for among other things, making, using, offering for sale, selling, and/or
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`importing wireless access points, which, on information and belief, include PoE
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`functionality.
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`23. ChriMar brought suit against Grandstream Networks, Inc., in the
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`Eastern District of Texas, Case No. 6:13-cv-882, on November 8, 2013, alleging
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`infringement of the '012 Patent, for among other things, making, using, offering for
`
`sale, selling, and/or importing IP telephones and wireless network cameras, which,
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`on information and belief, include PoE functionality.
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`24. ChriMar brought suit against Samsung Electronics Co, Ltd., Samsung
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`Electronics America, Inc. and Samsung Telecommunications in the Eastern
`
`District of Texas, Case No. 6:13-cv-883, on November 8, 2013, alleging
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`infringement of the '012 Patent, for among other things, making, using, offering for
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`sale, selling, and/or importing IP telephones, which, on information and belief,
`
`include PoE functionality.
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`25. ChriMar's website, www.cmspatents.com, confirms that ChriMar's
`
`licensing and enforcement campaign targets products with PoE functionality for
`
`allegedly infringing ChriMar's patents, including the '012 and '250 Patents.
`
`ChriMar's website includes a number of public statements concerning ChriMar's
`
`licensing of the '012 and '250 Patents. Specifically, ChriMar publicly states on that
`
`website that its licensing campaign involves the '012 and '250 Patents, and targets
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`"PoE equipment." ChriMar states on that website that it "is engaged in active
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`licensing with vendors of PoE equipment. Licenses for our patents are being
`
`offered to manufacturers and resellers of PoE equipment."10 This same page
`
`specifically identifies the '012 Patent, the '250 Patent, and the '622 Patent as U.S.
`
`Patents awarded to ChriMar. Additionally, ChriMar lists Avaya, Inc. as a licensee
`
`to the '012 Patent and '250 Patent under the heading "PoE Licensees and Products
`
`Include:".11 As alleged above, Avaya was previously a named party to '250 Patent
`
`litigation, when that action was pending in Delaware prior to transfer, but was
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`dismissed after Avaya entered into a licensing agreement with ChriMar, which
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`ChriMar publicly states includes a license to the '012 Patent. Further, ChriMar's
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`website describes ChriMar's "EthernetConnect Program," which ChriMar states
`
`"allows for certain vendors of PoE products to receive special terms under the
`
`Patent Licensing Program, the EtherLock Reseller Program and/or the EtherLock
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`OEM Program."12 Finally, ChriMar's website www.cmstech.com includes the
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`statement that "CMS Technologies is the innovator in putting a DC current signal
`
`to the 802.3i connection. In April of 1995 CMS received a US Patent for
`
`impressing a DC current signal onto associated current loops . . . . The IEEE
`
`802.3af Standards Committee now refers to this important technique as Power over
`
`
`10. EthernetConnect
`(emphases added).
`11. www.cmspatents.com/licensees.html.
`12. EthernetConnect Program, http://www.cmspatents.com/index.html.
`
`Program,
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`http://www.cmspatents.com/index.html
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`
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`Ethernet."13 ChriMar's actions and statements all make clear that ChriMar is
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`targeting products with PoE functionality for allegedly infringing ChriMar's
`
`patents, including the '012 and '250 Patents.
`
`C.
`
`STANDARDS IN GENERAL
`
`26. A technical standard is an established set of specifications or
`
`requirements that either provides or is intended to provide for interoperability
`
`among products manufactured by different entities. Once a standard is established,
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`competing manufacturers can offer their own products and services that are
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`compliant with the standard.
`
`27.
`
`"Industry standards are widely acknowledged to be one of the engines
`
`driving the modern economy." (See U.S. Dep't of Justice and U.S. Fed'l Trade
`
`Comm'n, Antitrust Enforcement and Intellectual Property Rights: Promoting
`
`Innovation and Competition (2007) at 33.) Standards, such as those related to
`
`Power over Ethernet-enabled products, allow U.S. enterprises to create data and
`
`voice communications networks knowing that the different elements of the
`
`network will work together. Standards help drive innovation by making new
`
`products available and insuring interoperability of components.
`
`28. Technical standards serve an
`
`important
`
`role
`
`in developing
`
`technologies and have the potential to encourage innovation and promote
`
`
`13. www.cmstech.com/power.htm.
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`
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`competition. As the technical specifications for most standards are published and
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`broadly available, entities interested in designing, manufacturing and producing
`
`products that comply with a standard are more willing to invest heavily in the
`
`development of such products because they will operate effectively and be
`
`compatible with other products from third parties so long as their products are
`
`compliant with the published technical standard.
`
`29. One goal of a typical standards setting body is to create a standard that
`
`everyone in the industry can practice without the threat of patent infringement
`
`lawsuits that would prevent a company from practicing the standard. In
`
`furtherance of this goal, most standard setting organizations have adopted
`
`intellectual property rights policies to address the problems that may arise from
`
`patent hold-up. A patent hold-up situation can occur where, after a standard is set
`
`and compliant products are being manufactured/sold, a patentee then claims rights
`
`to the technology covered by the standard. Typically, the royalty that a patentee
`
`may obtain from a patent license for its technology is limited in part by the
`
`availability of alternative technical approaches to perform that function. However,
`
`if an issued standard requires the use of that patented technology, other
`
`technological approaches are generally no longer available substitutes and will no
`
`longer serve to limit the patentee's ability to demand royalties far in excess of what
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`is warranted by the intrinsic value of the technology. This is compounded because
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`companies who have designed, had made and sold standards-compliant products,
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`such as Cisco, invest significant resources in developing innovative, new products
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`that also comply with the technical standard. Even if there were an alternative
`
`standard, the costs and disruption associated with switching is typically
`
`prohibitively expensive. Such high switching costs result in "lock-in" where
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`companies become locked into manufacturing and selling products that are in
`
`compliance with the standard. Indeed, the public comes to rely upon standards-
`
`compliant equipment which can make it prohibitively difficult to subsequently
`
`switch to alternative, non-infringing substitutes once the standard has been issued.
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`The high cost of switching applies to all elements of the standard regardless of how
`
`small the marginal contribution of the element would be (if not required by the
`
`standard) to the functionality of a standard compliant product.
`
`30. To address these concerns, standard setting organizations typically
`
`have policies that set forth requirements concerning, among other things: (a) the
`
`timely and prompt disclosure of intellectual property such as patents or patent
`
`applications that may claim any portion of the specifications of the standard in
`
`development (i.e., are believed to be infringed by implementing the standard (also
`
`sometimes referred to as "Essential Patent Rights")); and (b) a process of assurance
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`by which members or participants in the standard setting organization who hold
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`purported Essential Patent Rights commit to licensing those rights on RAND terms
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`or at minimum indicate that they will not provide such licenses to any Essential
`
`Patent Rights.
`
`31.
`
`The timely disclosure of any arguably Essential Patent Rights and
`
`whether the holder of those rights will license those rights on RAND terms by
`
`individuals participating in the standard setting organization is critical so that those
`
`participating in the development of the standard may evaluate any and all technical
`
`proposals with knowledge of the potential licensing costs that might be incurred by
`
`anyone developing standards-compliant products.
`
`32. Any non-disclosure of arguably Essential Patent Rights and/or breach
`
`of RAND commitments, as ChriMar has done here, undermine the safeguards that
`
`standard setting organizations put in place to guard against abuse and to prevent
`
`patent hold-up. By seeking to unfairly exploit intellectual property rights to
`
`technology by permitting a standard to be issued with non-disclosure of arguably
`
`Essential Patent Rights and/or breach of RAND commitments, the intellectual
`
`property owner violates the industry practice and the very commitment that led to
`
`incorporation of that technology in the first place.
`
`33.
`
`Failure to disclose Essential Patent Rights, as ChriMar has done here,
`
`also may lead to anti-competitive patent hold-up, where after the industry and the
`
`public have become locked-in to the standard, the patentee seeks to extract
`
`exorbitant, unreasonable or otherwise improper royalties through its improperly
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`
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`obtained power over the market for the technology for the standards-compliant
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`equipment.
`
`THE HISTORY OF THE IEEE'S POWER OVER ETHERNET
`D.
`STANDARDS
`
`34. The IEEE is a standards setting organization for a broad range of
`
`disciplines, including electric power and energy, telecommunications, and
`
`consumer electronics. In or about March 1999, there was a call for interest in the
`
`IEEE 802.3 working group — which sets standards for physical layer and data link
`
`layer's media access control (MAC) of wired Ethernet — to begin developing what
`
`would become the IEEE 802.3af Data Terminal Equipment (DTE) Power via
`
`Media Dependent Interface (MDI) Enhancement to the IEEE 802.3 standard ("the
`
`IEEE 802.3af amendment"). A task force was formed to field technical proposals
`
`from the industry and to create a draft standard to present to the IEEE 802.3
`
`working group. As part of this process, the task force held a number of meetings
`
`and received input from multiple industry participants.
`
`35.
`
`In or about November 2004, there was a call for interest in the IEEE
`
`802.3 working group to begin what would become the IEEE 802.3at Data Terminal
`
`Equipment (DTE) Power via Media Dependent Interface (MDI) Enhancement to
`
`the IEEE 802.3 standard ("the IEEE 802.3at amendment"). Subsequently, a task
`
`force was formed to field technical proposals from the industry and to create a
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`draft standard to present to the IEEE 802.3 working group. As part of this process,
`
`the task force held a number of meetings and received input from multiple industry
`
`participants.
`
`36. The IEEE 802.3af amendment allows for the supply of data and power
`
`over Ethernet cables to certain devices such as VoIP phones, switches, wireless
`
`access points ("WAPs"), routers, and security cameras. Generally, the IEEE
`
`802.3af amendment defines the electrical characteristics and behavior of both
`
`Power Sourcing Equipment ("PSE"), which provide up to 15.4 watts of power, and
`
`Powered Devices ("PD"), which draw power. The IEEE 802.3at amendment is a
`
`standard meant to enhance the capabilities provided by the IEEE 802.3af
`
`amendment by allowing a PSE to provide power in excess of 30 watts to a PD.
`
`37. The success of the IEEE's standards-setting process depends on the
`
`disclosure by participants as to whether they possess any patents or applications
`
`which they believe may be infringed by any proposed standard and whether the
`
`participant is willing or unwilling to grant licenses on RAND terms. As such, the
`
`IEEE has a "patent disclosure policy" that requires participants in the standards
`
`setting process to disclose patents or patent applications they believe to be
`
`infringed by the practice of the proposed standard. This policy is set forth in the
`
`IEEE-SA Standards Board Bylaws and the IEEE-SA Standards Board Operations
`
`Manual. Further, the IEEE's patent disclosure policy requires members and
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`participants to disclose intellectual property rights through a "Letter of Assurance."
`
`See, e.g., IEEE, IEEE-SA Standards Board Operations Manual 22 (1998) ("Patent
`
`holders shall submit letters of assurance to the IEEE Standards Department (to the
`
`attention of the Staff Administrator, Intellectual Property Rights) before the time of
`
`IEEE-SA Standards Board review for approval."); see also IEEE, IEEE-SA
`
`Standards Board Bylaws 12 (1998). The IEEE patent disclosure policy also
`
`requires those submitting a Letter of Assurance to affirmatively elect whether or
`
`not it would "enforce any of its present or future patent(s) whose use would be
`
`required to implement the proposed IEEE standard against any person or entity
`
`using the patent(s) to comply with the standard," or provide a license "to all
`
`applicants without compensation or under reasonable rates, with reasonable terms
`
`and conditions that are demonstrably free of any unfair discrimination." IEEE,
`
`IEEE-SA Standards Board Bylaws 12 (1998).
`
`38. The IEEE 802.3af amendment was set on or around June 18, 2003,
`
`and the IEEE 802.3at amendment was set on or around September 11, 2009.
`
`39. Power over Ethernet devices that are compliant with the IEEE 802.3af
`
`and/or IEEE 802.3at amendments to the IEEE 802.3 standard include network
`
`switches that supply data and Power over Ethernet to devices such as VoIP phones,
`
`switches, WAPs, routers, and security cameras (previously referred to as "Power
`
`over Ethernet-enabled products."). This allows buildings and other physical
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`infrastructure to be designed so that electrical plugs do not need to be located near
`
`where network devices are used. Moreover, because Power over Ethernet-enabled
`
`switches that distribute power using Power over Ethernet are often supported by
`
`uninterruptible power supplies or other redundant power sources, the use of Power
`
`over Ethernet permits devices like VoIP phones to continue to receive power from
`
`a Power over Ethernet switch in the event of power outages. The availability of
`
`this method of delivering power has driven government and private enterprise to
`
`design not only their networks, but also their physical infrastructure around Power
`
`over Ethernet-enabled products.
`
`DELIBERATE
`E. CHRIMAR'S
`FALSE
`OF
`AND
`MISREPRESENTATION
`CONCERNING
`ITS PURPORTED ESSENTIAL
`PROPERTY
`
`NON-DISCLOSURE,
`COMMITMENTS
`INTELLECTUAL
`
`40. ChriMar illegally exploited the IEEE standard setting process with
`
`respect to the IEEE 802.3af and 802.3at amendments by deliberately failing to
`
`disclose to the IEEE (a) the '012 Patent or its applications,14 (b) ChriMar's belief of
`
`their applicability to the 802.3af or 802.3at amendments to the IEEE 802.3
`
`standard and/or (c) ChriMar's unwillingness to license the '012 Patent or its
`
`applications on RAND terms, in order to intentionally and knowingly induce the
`
`
`14. The phrase "the '012 Patent or its applications" as used throughout Cisco's
`Complaint refers to U.S. Patent No. 8,155,012 or any application to which it may
`purport
`to claim priority,
`including without
`limitation Application Nos.
`12/239,001, 10/668,708, 09/370,430, PCT/US99/07846, or Provisional Application
`No. 60/081,279.
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`
`
`IEEE 802.3 working group to set the IEEE 802.3af and IEEE 802.3at amendments
`
`to the IEEE 802.3 standard based upon technology that is purportedly covered by
`
`ChriMar's intellectual property.
`
`41.
`
`John Austermann, III, President and Chief Executive Officer of
`
`ChriMar and named inventor on the '012 Patent and its applications, attended
`
`certain IEEE meetings regarding the setting of the IEEE 802.3af and IEEE 802.3at
`
`amendments. The IEEE conducted a "call for patents" at each meeting attended by
`
`Mr. Austermann. During the meetings leading up to the setting of the IEEE
`
`802.3af and IEEE 802.3at amendments, Mr. Austermann, on behalf of ChriMar,
`
`made presentations at least at the July 11-12, 2000 IEEE 802.3af task force
`
`meeting in La Jolla, California, as well as the January 26-27, 2005 PoE-Plus Study
`
`Group. Mr. Austermann failed to disclose the '012 Patent or its applications to the
`
`IEEE. Mr. Austermann also failed to disclose to the IEEE any belief that any
`
`proposals for the IEEE 802.3 standard would be covered by the '012 Patent or its
`
`applications.
`
`42. Further, ChriMar submitted a Letter of Assurance to the IEEE on or
`
`about December 3, 2001, which disclosed only U.S. Patent No. 5,406,260. See
`
`Letter from John Austermann, ChriMar Systems, Inc., to Secretary, IEEE-SA
`
`Standards Board Patent Committee (Dec. 3, 2001), ("Letter of Assurance")
`
`available
`
`at
`
`http://standards.ieee.org/about/sasb/patcom/loa-802_3af-chrimar-
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`03Dec2001.pdf. In this letter, ChriMar promised to "grant a license to an
`
`unrestricted number of applicants on a world-wide non-discriminatory basis." Id.
`
`at 1. ChriMar, however, did not identify the '012 Patent or its applications in its
`
`December 3, 2001 letter.
`
`43. ChriMar failed to disclose to the IEEE the '012 Patent or its
`
`applications. ChriMar failed to disclose that the '012 Patent or its applications
`
`covered any proposals for the IEEE 802.3af standard. ChriMar failed to disclose to
`
`the IEEE that the '012 Patent or its applications covered any proposals for the IEEE
`
`802.3at standard. ChriMar failed to disclose to the IEEE its unwillingness to
`
`license the '012 Patent on RAND terms.
`
`44. Pursuant to IEEE standards policies applicable to ChriMar, in light of
`
`ChriMar's attendance at that IEEE meeting and ChriMar's belief as to