Case 1:19-cv-01334-CJB Document 724 Filed 05/01/24 Page 1 of 19 PageID #: 18109
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
`
`
`MIDWEST ENERGY EMISSIONS CORP.
`and MES Inc.,
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`
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`v.
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`ARTHUR J. GALLAGHER & CO., et al.,
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`)
`)
`)
`)
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`)
`)
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`PLAINTIFFS MIDWEST ENERGY EMISSIONS CORP.’S AND MES INC.’S
`RULE 37 MOTION TO STRIKE EVIDENCE RELATED TO DEFENDANTS’
`IMPLIED LICENSE DEFENSE AND FOR SUMMARY JUDGMENT
`
`Plaintiffs,
`
`Defendants.
`
`Case No. 1:19-cv-01334-CJB
`
`JURY TRIAL DEMANDED
`
`
`
`DATED: May 1, 2024
`
`OF COUNSEL:
`Bradley W. Caldwell
`Texas Bar No. 24040630
`bcaldwell@caldwellcc.com
`Justin T. Nemunaitis
`Texas Bar No. 24065815
`jnemunaitis@caldwellcc.com
`Warren J. McCarty, III
`Texas Bar No. 24107857
`wmccarty@caldwellcc.com
`Daniel R. Pearson
`Texas Bar No. 24070398
`dpearson@caldwellcc.com
`Adrienne R. Dellinger
`Texas Bar No. 24116275
`adellinger@caldwell.com
`Aisha M. Haley
`Texas Bar No. 24139895
`Email: ahaley@caldwellcc.com
`Richard A. Cochrane
`Texas Bar No. 24116209
`Email: rcochrane@caldwellcc.com
`CALDWELL CASSADY CURRY PC
`2121 N. Pearl Street, Suite 1200
`Dallas, Texas 75201
`Telephone: (214) 888-4848
`Facsimile:
`(214) 888-4849
`
`DEVLIN LAW FIRM LLC
`James M. Lennon (No. 4570)
`Email: jlennon@devlinlawfirm.com
`Peter Akawie Mazur (No. 6732)
`Email: pmazur@devlinlawfirm.com
`1526 Gilpin Avenue
`Wilmington, Delaware 19806
`Telephone: (302) 449-9010
`
`Attorneys for Plaintiffs Midwest Energy
`Emissions Corp. and MES Inc.
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`Case 1:19-cv-01334-CJB Document 724 Filed 05/01/24 Page 2 of 19 PageID #: 18110
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`TABLE OF CONTENTS
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`
`I.
`
`INTRODUCTION ................................................................................................................... 1
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`II. NATURE AND STAGE OF THE PROCEEDINGS .............................................................. 2
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`III. STATEMENT OF FACTS ...................................................................................................... 2
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`IV. SUMMARY OF ARGUMENT ............................................................................................... 3
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`V. LEGAL STANDARD ............................................................................................................. 3
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`A. Rule 37 Standard for Exclusion of Evidence ................................................................... 3
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`B. Rule 56 Standard for Summary Judgment ....................................................................... 4
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`VI. ARGUMENT .......................................................................................................................... 4
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`A. Defendants Should Not Be Permitted to Change Their Factual Theory of Implied
`License at Trial. ............................................................................................................... 4
`
`1. Defendants’ Discovery Responses Identified, at Most, a Single Implied
`License Theory........................................................................................................... 5
`
`2. Defendants’ Pretrial Disclosures Indicate that They Will Attempt Trial by
`Ambush. ..................................................................................................................... 6
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`B. Defendants Should Not Be Permitted to Present a Legally Erroneous Theory for
`Implied License. ............................................................................................................... 7
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`C. Defendants Cannot Meet Their Burden Based on Their Disclosed Theory of
`Implied License. ............................................................................................................. 11
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`VII. CONCLUSION ..................................................................................................................... 14
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`i
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`Case 1:19-cv-01334-CJB Document 724 Filed 05/01/24 Page 3 of 19 PageID #: 18111
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`TABLE OF AUTHORITIES
`
`CASES
`
`AMP Inc. v. United States
` 389 F.2d 448 (1968) .................................................................................................................. 10
`
`Carborundum Co. v. Molten Metal Equipment. Innovations, Inc.
` 72 F.3d 872 (Fed. Cir. 1995)..................................................................................................... 10
`
`Cheetah Omni LLC v. AT&T Servs., Inc.
` 949 F.3d 691 (Fed. Cir. 2020)................................................................................................... 10
`
`De Forest Radio Telephone & Telegraph Co. v. United States
` 273 U.S. 236 (1927) .................................................................................................................... 8
`
`Halsey v. Pfeiffer
` 750 F.3d 273 (3d Cir. 2014)........................................................................................................ 4
`
`High Point SARL v. Sprint Nextel Corp.
` 817 F.3d 1325 (Fed. Cir. 2016)............................................................................................... 8, 9
`
`Jacobs v. Nintendo of America, Inc.
` 370 F.3d 1097 (2004) ................................................................................................................ 10
`
`Konstantopoulos v. Westvaco Corp.
` 112 F. 3d 710 (3d Cir. 1997)....................................................................................................... 4
`
`LG Elecs., Inc. v. Bizcom Elecs., Inc.
` 453 F.3d 1364 (Fed. Cir. 2006)........................................................................................... 11, 13
`
`Meyers v. Pennypack Woods Home Ownership Ass’n.
` 559 F .2d 894 (3d Cir. 1977)................................................................................................... 4, 7
`
`NexStep, Inc. v. Comcast Cable Commc'ns, LLC
` No. CV 19-1031-RGA, 2021 WL 5356293 (D. Del. Nov. 17, 2021)......................................... 7
`
`Radio Sys. Corp. v. Lalor
` 709 F.3d 1124 (Fed. Cir. 2013)................................................................................................... 9
`
`Spindelfabrik Suessen-Schurr, Stahlecker & Grill GmbH v. Schubert & Salzer Maschinenfabrik
`Aktiengesellschaft
` 829 F.2d 1075 (Fed. Cir. 1987)................................................................................................. 10
`
`Stickle v. Heublein, Inc.
` 716 F.2d 1550 (Fed.Cir.1983)............................................................................................. 10, 11
`
`
`ii
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`Case 1:19-cv-01334-CJB Document 724 Filed 05/01/24 Page 4 of 19 PageID #: 18112
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`Wang Lab’ys, Inc. v. Mitsubishi Elecs. Am., Inc.
` 103 F.3d 1571 (Fed. Cir. 1997)....................................................................................... 9, 10, 12
`
`Winbond Elecs. Corp. v. Int'l Trade Comm'n
` 262 F.3d 1363 (Fed. Cir.), opinion corrected, 275 F.3d 1344 (Fed. Cir. 2001) ................ passim
`
`RULES
`
`Fed. R. Civ. P. 26 ...................................................................................................................... 5, 12
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`Fed. R. Civ. P. 26(a) ....................................................................................................................... 3
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`Fed. R. Civ. P. 26(a)(1)(A)(i) ......................................................................................................... 5
`
`Fed. R. Civ. P. 37 .................................................................................................................... 3, 4, 7
`
`Fed. R. Civ. P. 37(c)(1) ................................................................................................................... 3
`
`Fed. R. Civ. P. 56(a) ....................................................................................................................... 4
`
`
`
`
`iii
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`Case 1:19-cv-01334-CJB Document 724 Filed 05/01/24 Page 5 of 19 PageID #: 18113
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`I.
`
`INTRODUCTION
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`Defendants claim that the EERC granted them an implied license to the patents-in-suit
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`when it performed refined coal certification testing for the directly infringing CERT customer
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`power plants. ME2C maintains that this defense is meritless. That certification testing occurred
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`well after the EERC lost the right to license the patents, and in any event, the EERC’s test reports
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`do not grant any rights (in fact, they disclaim against that). The parties are nonetheless preparing
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`for a May 30 bench trial to resolve this dispute.
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`To that end, Defendants recently served their pretrial disclosures. These disclosures
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`indicate that, instead of trying their current theory, Defendants intend to advance new and
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`undisclosed theories to support their defense. They apparently intend to introduce evidence
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`related to EERC interactions with Chem-Mod, ME2C interactions with non-CERT customer
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`power plants, and internal ME2C discussions. This evidence is plainly not relevant to CERT’s
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`theory that the EERC granted them a license through CERT’s certification testing.
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`Moreover, Defendants proposed statement of law for the upcoming trial is filled with
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`legal errors. Most notably, they fail to cite the Federal Circuit’s controlling authority for implied
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`license: Winbond v. ITC, and instead mix and match concepts from cases involving implied
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`license, equitable estoppel, and patent exhaustion. Under the correct legal standard, Defendants
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`must prove that they relied on a party having authority to license the patents-in-suit to have
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`affirmatively granted them permission to engage in the infringing conduct. Defendants have not
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`articulated how they can meet that standard.
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`As a result, ME2C is forced to prepare for an upcoming trial where the Defendants
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`apparently intend to rely on factual assertions that were never disclosed during discovery, and
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`legal theories that are simply wrong. This creates significant prejudice for ME2C.
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`1
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`Case 1:19-cv-01334-CJB Document 724 Filed 05/01/24 Page 6 of 19 PageID #: 18114
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`Accordingly, ME2C requests an order preventing Defendants from offering evidence that
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`is outside the scope of their disclosed theory of implied license. Defendants had a fair
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`opportunity to develop their implied license defense and to disclose it during discovery. With
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`trial barely a month away, Defendants should be held to their discovery disclosures; this should
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`not be a trial by ambush. Finally, if the Court agrees with ME2C as to the applicable legal
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`standard for implied license, and it finds that Defendants may not present evidence or theories
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`that they failed to disclose during discovery, then, as a matter of law, Defendants cannot meet
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`their burden. ME2C also requests summary judgment as to Defendants’ implied license defense.
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`II.
`
`NATURE AND STAGE OF THE PROCEEDINGS
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`This case is set for a bench trial for Defendants’ implied license defense on May 30,
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`2024. The parties held a telephonic meet-and-confer on April 30, 2024, with a follow-up call on
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`May 1, 2024, on which Delaware counsel for each party was present. The parties discussed the
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`substance of this motion but were unable to reach resolution, hence Defendants oppose this
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`motion.
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`III.
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`STATEMENT OF FACTS
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`1.
`
`The EERC granted an exclusive license in the patents-in-suit to ME2C on January
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`15, 2009. Appx. 096, PTX-048. Under the terms of this agreement, ME2C—not the EERC—
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`had the right to license the patents-in-suit.
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`2.
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`The Defendants engaged the EERC for refined coal testing, but this testing did not
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`begin for the directly infringing power plants until well after the EERC no longer had any right
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`to license the patents-in-suit. See Appx. 275, DTX-1968 (CERT summary chart showing earliest
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`EERC testing for an infringing power plant occurred in 2014).
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`3.
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`The EERC did not grant a license in the patents-in-suit to Defendants. See Appx.
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`030, J. Green depo. at 134:8-15; 221:20-23.
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`2
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`Case 1:19-cv-01334-CJB Document 724 Filed 05/01/24 Page 7 of 19 PageID #: 18115
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`4.
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`The EERC did not affirmatively grant permission for Defendants to sell refined
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`coal to power plants using activated carbon. See, e.g., Appx. 030, J. Green Depo. at 134:8-15;
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`221:20-23 (explaining that CERT did not discuss patents, patent applications, or intellectual
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`property rights related to mercury capture with the EERC); Appx. 001 at 003, DTX-1691 (EERC
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`test report disclaiming any grant of intellectual property rights); Trial Tr. (EERC Representative
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`Tom Erickson) at 1114:6-17 (explaining that the EERC was not aware of Defendants selling
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`refined coal to power plants while the power plants were using activated carbon).
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`5.
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`CERT could not have relied on an EERC grant of permission to use ME2C’s
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`patents because it claims that it did not learn of the patents until this case was filed in 2019.
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`Trial Tr. (Jeff Green) at 951:24-952:11.
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`IV.
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`SUMMARY OF ARGUMENT
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`After the close of fact discovery, Defendants disclosed their implied license theory as
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`being based on the EERC’s performance of certification testing for infringing power plants. Even
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`if that late disclosure were adequate, it should at least limit Defendants to presenting evidence at
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`trial to support that theory rather than other, still undisclosed theories. Nonetheless, Defendants
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`contend that they may present any factual theory they want, and they also apparently intend to
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`introduce evidence based on erroneous legal contentions. ME2C requests that the Court exclude
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`any undisclosed factual theories under Rule 37, clarify the correct legal standard for implied
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`license, and grant summary judgment of no implied license.
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`V.
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`LEGAL STANDARD
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`A. Rule 37 Standard for Exclusion of Evidence
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`“If a party fails to provide information or identify a witness as required by Rule 26(a) or
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`(e), the party is not allowed to use that information or witness to supply evidence on a motion, at
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`a hearing, or at a trial, unless the failure was substantially justified or is harmless.” Fed. R. Civ.
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`3
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`Case 1:19-cv-01334-CJB Document 724 Filed 05/01/24 Page 8 of 19 PageID #: 18116
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`P. 37(c)(1). Third Circuit Courts consider five factors when deciding whether or not to preclude
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`evidence under Rule 37: (1) the prejudice to or surprise of the party against whom the evidence
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`is offered; (2) the ability of that injured party to cure the prejudice; (3) the likelihood of
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`disruption of trial; (4) the bad faith or willfulness involved in not complying with the disclosure
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`rules; and (5) the importance of the evidence to the proffering party. See Konstantopoulos v.
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`Westvaco Corp., 112 F. 3d 710, 719 (3d Cir. 1997) (citing Meyers v. Pennypack Woods Home
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`Ownership Ass’n. 559 F .2d 894, 904-05 (3d Cir. 1977)).
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`B. Rule 56 Standard for Summary Judgment
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`“The court shall grant summary judgment if the movant shows that there is no genuine
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`dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.
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`R. Civ. P. 56(a). “[A] court must view the evidence in the light most favorable to the non-
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`moving party and give that party the benefit of all reasonable inferences that can be drawn from
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`the evidence.” Halsey v. Pfeiffer, 750 F.3d 273, 287 (3d Cir. 2014) (citation omitted). “[A]n
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`inference based upon a speculation or conjecture does not create a material factual dispute
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`sufficient to defeat summary judgment.” Id. (citation omitted).
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`VI. ARGUMENT
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`A. Defendants Should Not Be Permitted to Change Their Factual Theory of
`Implied License at Trial.
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`In this case, Defendants refused to provide any explanation of their implied license theory
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`during discovery, and then provided only a single sentence description of their theory months
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`later. They nonetheless contend that they have an unlimited ability to introduce any evidence
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`that might support an implied license defense. Rule 37 states otherwise. With the May 30th trial
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`date looming, it is simply too late for Defendants to assert some new theory of implied license or
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`rely on evidence that was never identified as relevant to their implied license defense. ME2C is
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`4
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`Case 1:19-cv-01334-CJB Document 724 Filed 05/01/24 Page 9 of 19 PageID #: 18117
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`currently preparing its responsive pretrial disclosures, but it is severely prejudiced in doing so
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`given Defendants’ lack of disclosure for this defense. Thus, pursuant to Rule 37, ME2C
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`respectfully requests that Defendants be limited to presenting at trial the implied license theory
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`and evidence that they actually disclosed.
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`1.
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`Defendants’ Discovery Responses Identified, at Most, a Single Implied
`License Theory.
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`On June 22, 2021, ME2C served the following Interrogatory:
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`COMMON INTERROGATORY NO. 10:
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`
`State in detail all factual and legal bases for your equitable or jurisdictional defenses
`(regardless of whether you pleaded them or intend to plead them as affirmative
`defenses or counterclaims) and describe how and the extent to which you contend
`those defenses affect ME2C’s ability to recover damages, an injunction, or other
`relief in this action.
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`Appx. 120 at 157. Defendants declined to provide a substantive response. Later, on September
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`29, 2022—the day discovery closed—Defendants amended their response to incorporate by
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`reference their forthcoming answer to ME2C’s Fourt Amended Complaint. Id. at 158. On
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`January 26, 2023, for the first time and well after the close of discovery, Defendants disclosed a
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`specific implied license theory, recited in its entirety below:
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`16. Defendants plead the defense of implied license based on the actions and
`conduct of ME2C’s predecessor-in-interest EERC (and/or the EERCF) with respect
`to the certification of refined coal for combustion at the power plants accused of
`directly infringing the asserted patents.
`
`
`Dkt. No. 515 at 101. This paragraph was missing from all prior Answers. See, e.g., Dkt. 345 at
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`p. 100, ¶ 13. Thus, the only facts disclosed by Defendants as giving rise to an implied license is
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`conduct by the EERC related to the certification of refined coal for power plants accused of
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`directly infringing the asserted patents.
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`
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`Similarly, pursuant to Rule 26, Defendants were required to disclose any witnesses likely
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`to have discoverable information that Defendants may use to support their defenses. Fed. R. Civ.
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`5
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`Case 1:19-cv-01334-CJB Document 724 Filed 05/01/24 Page 10 of 19 PageID #: 18118
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`P. 26(a)(1)(A)(i). Defendants did not identify any witnesses as specifically relevant to their
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`implied license defense. Defendants did identify Jeff Green as at least having knowledge of
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`refined coal certification testing, although still not express or implied licenses:
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`
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`Appx. 284 at 286. Defendants also designated Jeff Green as their 30(b)(6) witness for facts
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`underlying their equitable defenses. See Ex. Appx. 030, J. Green Depo. at 12:8-14.
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`2.
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`Defendants’ Pretrial Disclosures Indicate that They Will Attempt Trial by
`Ambush.
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`
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`On April 1, 2024, the parties stipulated that the upcoming bench trial will go forward
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`only as to Defendants’ defense of implied license. Dkt. No. 712. On April 22, 2024, Defendants’
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`served their pretrial disclosures. Defendants identified a single fact witness, Jeff Green, and a
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`single fact dispute to be litigated at trial:
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`Whether the CERT Defendants could infer consent to make, use, and sell refined
`coal to power plants based upon any language used or conduct by the patentee or
`its predecessor-in-interest the EERC, on which CERT acted.
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`Appx. 254. This vague statement is much broader than the specific implied license theory
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`Defendants’ had previously disclosed.
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`Further, Defendants identified testimony and exhibits that are completely irrelevant to—
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`and outside the scope of—their disclosed implied license theory. During the meet and confer
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`process, Defendants agreed that the “core” of their implied license theory was based on EERC
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`6
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`Case 1:19-cv-01334-CJB Document 724 Filed 05/01/24 Page 11 of 19 PageID #: 18119
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`certification testing, but they nonetheless maintained that they could introduce other evidence
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`that has nothing to do with that theory. For example, Defendants apparently intend to rely on
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`testimony regarding Chem-Mod’s interactions with the EERC before it became involved with
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`CERT, testimony from inventor John Pavlish regarding his suspicions of Chem-Mod
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`infringement, and internal documents from ME2C regarding investigation of potential
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`infringement leading up to this lawsuit. See, e.g., Appx. 256 - 267. Defendants also propose
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`introducing evidence related to ME2C and EERC interactions with power plants that were never
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`CERT customers. Id. None of this evidence is relevant to whether the EERC granted a license to
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`Defendants by conducting refined coal testing for infringing power plants.
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` The Pennypack factors support exclusion of this evidence: (1) ME2C is severely
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`prejudiced in attempting to prepare for trial against an amorphous and undisclosed defense;
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`(2)and (3) because trial is a month away, exclusion is the only practical solution to prevent this
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`prejudice; (4) Defendants’ failure to disclose its alternative theories or other evidence is willful
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`given the complete lack of disclosure during discovery; and (5) Any evidence outside of
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`Defendants disclosed theory cannot be important given that they could not identify it during
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`discovery. See, e.g. NexStep, Inc. v. Comcast Cable Commc'ns, LLC, No. CV 19-1031-RGA,
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`2021 WL 5356293 at *3 (D. Del. Nov. 17, 2021) (explaining that the Pennypack factors
`
`supported exclusion of undisclosed damages theory). Thus, pursuant to Rule 37, Defendants
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`should be limited to asserting that the EERC’s certification testing granted them an implied
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`license to the patents-in-suit.
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`B. Defendants Should Not Be Permitted to Present a Legally Erroneous Theory
`for Implied License.
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`Defendants have been similarly obscure with respect to their legal theories for the
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`upcoming trial. According to Defendants’ Statement of Legal Issues, they believe they are
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`7
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`Case 1:19-cv-01334-CJB Document 724 Filed 05/01/24 Page 12 of 19 PageID #: 18120
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`entitled to a finding of implied license via equitable estoppel or legal estoppel. Appx. 239.
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`However, Defendants conflate the Court’s equitable power to imply a license with the
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`affirmative defense of equitable estoppel. Indeed, they rely heavily on Highpoint SARL—which
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`is an equitable estoppel case1 not an implied license case—and they fail to mention the Federal
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`Circuit’s specific differentiation of these defenses. Moreover, they also fail to cite the
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`controlling Federal Circuit case on this defense, Winbond Elecs. Corp. v. Int'l Trade Comm’n,
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`262 F.3d 1363, 1374 (Fed. Cir.), opinion corrected, 275 F.3d 1344 (Fed. Cir. 2001).2
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`Ultimately, if Defendants rely on evidence at trial that is irrelevant under the correct legal
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`standard, the risk of undue prejudice is reduced by the fact that this will be a bench trial.
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`However, both sides and the Court would benefit from understanding the law applicable to the
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`upcoming trial. This is particularly true here where Defendants have provided such limited
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`disclosure of their theories for this defense.
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`Defendants’ first proposed legal theory is that they are entitled to an implied license by
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`equitable estoppel. As explained in Winbond, An implied license by equitable estoppel requires
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`
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`1 High Point does state: “The effect of equitable estoppel is a license to use the invention
`that extends throughout the life of the patent.” High Point SARL v. Sprint Nextel Corp., 817 F.3d
`1325, 1331 (Fed. Cir. 2016). But this was merely to contrast the remedy for equitable estoppel,
`i.e., a complete defense to infringement, with the remedy for laches, i.e., reduction in damages.
`
`2 Defendants also cite De Forest Radio Telephone & Telegraph Co. v. United States,
`273 U.S. 236, 241 (1927), but that case is even less relevant to the present case. In that case,
`De Forest and AT&T each had the right to license a set of patents. During World War I, the United
`States needed a large volume of patented articles, and it requested permission from AT&T to use
`third-party manufacturers to prepare them. AT&T granted permission, subject to later to be
`determined payment terms in light of its patent rights, and furnished the necessary blueprints for
`the third parties to make the articles. Id.at 239. De Forest later sued the United States claiming
`patent infringement. The Supreme Court disagreed. It found that although there was no formal
`license agreement signed, AT&T had licensed the US, and thus any dispute over payment would
`need to be resolved under contract law, not as patent infringement. Id. at 242. Here Defendants
`have identified no grant of permission or theory of contract formation towards a license.
`
`8
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`

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`Case 1:19-cv-01334-CJB Document 724 Filed 05/01/24 Page 13 of 19 PageID #: 18121
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`the accused infringer to prove: “(1) the patentee, through statements or conduct, gave an
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`affirmative grant of consent or permission to make, use, or sell to the alleged infringer; (2) the
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`alleged infringer relied on that statement or conduct; and (3) the alleged infringer would,
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`therefore, be materially prejudiced if the patentee is allowed to proceed with its claim.” Winbond
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`Elecs., 262 F.3d at 1374 (emphasis added). The Federal Circuit further explained:
`
`The first element requires the patentee to communicate that the accused infringer
`will not be disturbed by the plaintiff patentee in the activities in which the former
`is currently engaged. Thus, for this form of estoppel, the alleged infringer must
`have knowledge of the patentee and its patent and must reasonably infer that the
`patentee acquiesced to the allegedly infringing activity for some time.
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`Winbond Elecs., 262 F.3d at 1374 (emphasis added, internal citations omitted). In contrast to an
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`implied license, equitable estoppel is a defense to infringement that focuses on misleading
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`conduct from the patentee. “The primary difference between the estoppel analysis in implied
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`license cases and the analysis in equitable estoppel cases is that implied license looks for an
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`affirmative grant of consent or permission to make, use, or sell: i.e., a license.” See Wang
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`Lab’ys, Inc. v. Mitsubishi Elecs. Am., Inc., 103 F.3d 1571, 1581 (Fed. Cir. 1997). Thus,
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`Defendants’ reliance on the equitable estoppel test identified in Wang and High Point SARL v.
`
`Sprint Nextel Corp. is simply misplaced.3
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`Defendants’ alternative legal theory is that they are entitled to an implied license by legal
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`estoppel. Implied license by legal estoppel “is merely shorthand for saying that a grantor of a
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`
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`3 Defendants stipulated that they are not asserting an equitable estoppel defense, but that
`defense is even less relevant to the current case. Equitable estoppel occurs when an accused
`infringer relies on representations from a patentee that it will not enforce a patent claim. Those
`representations typically must occur after the patent claim is enforceable, i.e., after it issues. Radio
`Sys. Corp. v. Lalor, 709 F.3d 1124, 1131 (Fed. Cir. 2013) (affirming finding of equitable estoppel
`for earlier issued patent, but reversing as to a later-issued patent that had different claim scope).
`Because the patents-in-suit issued shortly before or after this case was filed, Defendants cannot
`prove equitable estoppel.
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`9
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`Case 1:19-cv-01334-CJB Document 724 Filed 05/01/24 Page 14 of 19 PageID #: 18122
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`property right or interest cannot derogate from the right granted by his own subsequent acts.”
`
`Spindelfabrik Suessen-Schurr, Stahlecker & Grill GmbH v. Schubert & Salzer Maschinenfabrik
`
`Aktiengesellschaft, 829 F.2d 1075, 1080 (Fed. Cir. 1987). This doctrine allows a Court to extend
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`an express license to cover related patents, e.g., continuations of an expressly licensed patent.
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`See Cheetah Omni LLC v. AT&T Servs., Inc., 949 F.3d 691, 696 (Fed. Cir. 2020). For a finding
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`of implied license through legal estoppel, the accused infringer must prove that the patentee
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`“licensed or assigned a right, received consideration, and then sought to derogate from the right
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`granted.” Winbond Elecs., 262 F.3d at 1375. Indeed, the primary cases Defendants rely on for
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`this theory both involved courts extending an express license to cover additional related activities
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`or patents. See AMP Inc. v. United States, 389 F.2d 448, 453 (1968); Jacobs v. Nintendo of
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`America, Inc., 370 F.3d 1097 (2004).
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`Regardless of the avenue asserted for an implied license, a patent license may only be
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`implied based on the conduct of a party with the right to grant a license. See Wang Lab’ys, Inc.
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`v. Mitsubishi Elecs. Am., Inc., 103 F.3d 1571, 1580 (Fed. Cir. 1997) (“In patent law, an implied
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`license merely signifies a patentee’s waiver of the statutory right to exclude others from making,
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`using, or selling the patented invention.”); see also Carborundum, 72 F.3d at 878 (explaining
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`that the effect of a license is the same whether express or implied).
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`In addition, an accused infringer must prove that there is a “nexus between the patentee’s
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`purported waiver and the infringing action.” Stickle v. Heublein, Inc., 716 F.2d 1550, 1559
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`(Fed.Cir.1983). In Stickle, the accused infringer argued that the original owner of a patent had
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`implied a license to practice the patent. However, the accused infringer did not actually begin
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`infringing until after the original patent owner passed away. The Federal Circuit found that there
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`could be no implied license because the accused infringer failed to identify any authorizing
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`10
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`Case 1:19-cv-01334-CJB Document 724 Filed 05/01/24 Page 15 of 19 PageID #: 18123
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`conduct from the actual patent owner, and the conduct of the predecessor in interest was too far
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`removed in time from the infringement. Id.
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`Finally, even if an accused infringer proves all of the elements for implied license listed
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`above, an implied license cannot be found where the alleged licensor provided an express
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`disclaimer. See LG Elecs., Inc. v. Bizcom Elecs., Inc., 453 F.3d 1364, 1369 (Fed. Cir. 2006).
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`C. Defendants Cannot Meet Their Burden Based on Their Disclosed Theory of
`Implied License.
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`If the Court agrees that Defendants should be limited to presenting the factual implied
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`license theory that they disclosed, and that Winbond provides controlling authority for
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`Defendants’ proposed legal theories, then they will not be able to meet the burden of proof for
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`this defense. Indeed, during the meet and confer process, Defendants claimed that their defense
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`was viable based on clear errors of law. For example, they contend that (i) an implied license
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`can arise based on the conduct of a party that lacks the right to grant a license, (ii) there is no
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`requirement for an infringer to have knowledge of the patentee and its patent; and (iii) there is no
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`requirement that the patentee gave an affirmative grant of consent or permission. As explained
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`above, each of these positions is incorrect.
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`While the deadline for summary judgment has passed, good cause exists to consider
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`summary judgment now as the parties only recently stipulated as to which of Defendants half
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`dozen equitable defenses would be tried, and Defendants provided their pretrial disclosures for
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`this defense just last week. Further, neither the parties nor the Court should be burdened with a
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`trial when there is simply no legal basis for the asserted defense.
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`The Court should enter summary judgment of no implied license by equitable estoppel
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`based on a number of independent flaws in Defendants’ position. First, Defendants must prove
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`that a party with the power to license the patents communicated permission to the accused
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`11
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`Case 1:19-cv-01334-CJB Document 724 Filed 05/01/24 Page 16 of 19 PageID #: 18124
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`infringer. See Winbond Elecs., 262 F.3d at 1374-75; Wang, 103 F.3d at 1580. According to
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`Defendants, the EERC provided that permission by performing certification testing for the
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`infringing power plants. However, CERT did not begin testing refined coal at the EERC for the
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`infringing power plants until well after 2009. Trial Tr. (Jeff Green) at 951:6-6 (“When did these
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`companies start supplying refined coal to power plants? A. That would have been in the latter
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`half of 2011.”); Appx. 275, DTX-1968 (CERT summary chart showing earliest EERC testing for
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`an infringi