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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TYLER DIVISION
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`CIVIL ACTION NO. 6:15-CV-00163-JDL
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`MEMORANDUM OPINION AND ORDER
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`On March 9, 2015, Plaintiffs Chrimar Systems, Inc. d/b/a CMS Technologies and
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`Chrimar Holding Company LLC (“Chrimar”) filed the instant action against Defendant Alcatel-
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`Lucent Enterprises USA, Inc. (“ALE”). (Doc. No. 3.) In this action, Chrimar alleges
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`infringement of U.S. Patent Nos. 8,115,012 (“the ’012 Patent”), 8,902,760 (“the ’760 Patent”),
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`8,942,107 (“the ’107 Patent”), and 9,019,838 (“the ’838 Patent”) (“patents-in-suit”)). This case
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`proceeded through claim construction, dispositive motions and pretrial, and the trial between
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`Chrimar and ALE commenced on October 3, 2016. The following claims, defenses, and
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`counterclaims were presented to the jury: damages, invalidity based on derivation and improper
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`inventorship, fraud, and breach of contract. (Doc. No. 350.) At the close of evidence, the Court
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`provided ALE an opportunity to present additional evidence pertaining to ALE’s equitable
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`defenses.1 On October 7, 2016 the trial concluded and the jury returned a verdict as follows: (1)
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`1 ALE indicated they wanted to call Mr. Crayford—their technical expert—back on the stand to provide testimony
`on prosecution laches. Tr. at 1209:10–18. Chrimar objected that Mr. Crayford had not opined on prosecution history
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`1
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`CHRIMAR SYSTEMS, INC., CHRIMAR
`HOLDING COMPANY, LLC,
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`Plaintiffs,
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`v.
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`ALCATEL-LUCENT ENTERPRISE USA
`INC.,
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`Defendant.
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`Case 6:15-cv-00163-JDL Document 413 Filed 01/24/17 Page 2 of 12 PageID #: 17978
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`Claims 31, 35, 43, and 60 of the ’012 Patent were not invalid; Claims 1, 5, 72, and 103 of the
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`’107 Patent were not invalid; Claims 1, 59, 69, 72, and 145 of the ’760 Patent were not invalid,
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`and Claims 1, 7, and 26 of the ’838 Patent were not invalid; (2) the sum of money that would
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`fairly and reasonably compensate Chrimar for ALE’s infringement was $324,558.34; (3) ALE
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`did not prove by a preponderance of the evidence that Chrimar committed fraud against ALE;
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`and (4) ALE did not prove by a preponderance of the evidence that Chrimar breached a contract
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`with the IEEE. (Doc. No. 349.) After the conclusion of the trial, on November 10, 2016, ALE
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`filed a brief on equitable issues seeking judgment against Chrimar on: (1) equitable estoppel; (2)
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`waiver; (3) prosecution laches; and (4) inequitable conduct. (Doc. No. 377.) Chrimar filed a
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`response (Doc. No. 394), to which ALE filed a reply (Doc. No. 397), and Chrimar filed a sur-
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`reply (Doc. No. 399). The Court rules on these equitable defenses as set forth herein.
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`A. Equitable Estoppel
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`To prove equitable estoppel, the accused infringer must prove by a preponderance of the
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`evidence that: (1) “[t]he patentee, through misleading conduct, leads the alleged infringer to
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`reasonably infer that the patentee does not intend to enforce its patent against the alleged
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`infringer…”; (2) “[t]he alleged infringer relies on that conduct”; and (3) “[d]ue to its reliance, the
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`alleged infringer will be materially prejudiced if the patentee is allowed to proceed with its
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`claim.” A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 1028 (Fed. Cir. 1992)
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`(en banc).
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`In arguing Chrimar is estopped from enforcing the patents-in-suit, ALE argues first that
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`Chrimar misled the PoE industry by failing to disclose the patent family to the IEEE. (Doc. No.
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`377, at 3.) To establish this, ALE argues that Chrimar had a duty to disclose the patents-in-suit to
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`laches in his expert report. Tr. at 1209:19–1210:10. The Court directed the parties to meet and confer and submit the
`issue on the papers, which are the papers filed relevant to this Order. Tr. at 1210:16–1213:2.
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`2
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`Case 6:15-cv-00163-JDL Document 413 Filed 01/24/17 Page 3 of 12 PageID #: 17979
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`the IEEE via a letter of assurance. Id. at 4. Chrimar contests it owed any such duty to the IEEE.
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`(Doc. No. 394, at 4–6.)
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` “The existence of a disclosure duty is a legal question with factual underpinnings.”
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`Qualcomm Inc. v. Broadcom Corp., 548 F.3d 1004, 1012 (Fed. Cir. 2008) (citing Rambus Inc. v.
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`Infineon Techs. AG, 318 F.3d 1081, 1087 n.3 (Fed. Cir. 2003)). In deciding whether a duty to
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`disclose existed, the Court looks first to (1) whether the written policies impose disclosure
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`obligations; and (2) if it is understood that the policies impose such obligations. Qualcomm, 548
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`F.3d at 1012.
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`In ruling on summary judgment, this Court already addressed the issue of whether a duty
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`of disclosure was owed to the IEEE by Chrimar. As to the written policies, the Court reviewed
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`the relevant IEEE written policies as follows:
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`Turning first to the written policies, Section 6.3 of the IEEE-SA Standards Board
`Operations Manual provides: “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.” (Doc. No. 204-29, at 24.) Section 6.3.2 further provides that
`“[t]hrough the working group, the Sponsor chair shall request that known patent
`holders submit a statement either that the patent does not apply to the standard or
`that licenses will be made available without compensation or under reasonable
`rates, terms, and conditions.” Id. at 25. The operations manual further refers to the
`“patent policy” as set forth in clause 6 of the IEEE-SA Standards Board Bylaws.
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`(Doc. No. 255, at 13.)
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`The Court then turned to Section 6 of the Bylaws, which provides the following patent policy:
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`IEEE standards may include the known use of patent(s), including patent
`applications, if there is technical justification in the opinion of the standards-
`developing committee and provided the IEEE receives assurance from the patent
`holder that it will license applicants under reasonable terms and conditions for the
`purpose of implementing the standard. This assurance shall be provided without
`coercion and prior to approval of the standard (or reaffirmation when a patent
`becomes known after initial approval of the standard).
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`Id.
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`3
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`Case 6:15-cv-00163-JDL Document 413 Filed 01/24/17 Page 4 of 12 PageID #: 17980
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`Based on the analysis of these relevant policies, the Court concluded that “[t]hese written
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`policies appear to be directed to how the IEEE Board deals with patents and standard adoption
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`generally” and that it “is unclear to what extent the written policies place an affirmative duty on
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`patent holders through the black letter of the policy.” Id. at 14 (emphasis added). Therefore, the
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`Court concluded that “further testimony from the parties’ IEEE experts will be necessary for the
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`Court to fully resolve this question.” Id. These policies remain the relevant policies with the
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`Bylaws being asserted as the guiding policy.
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`Having now received the testimony of both side’s IEEE experts, the Court is not
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`convinced that the IEEE policies place any affirmative duties on patent holders. For example,
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`Chrimar’s IEEE expert, Mr. Camp, testified at length that the IEEE has a “request and
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`encourage” policy for submissions by patent holders who may have patents relevant to a standard
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`because the IEEE bylaws provide a “without coercion” policy and the IEEE has no control over
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`patent holders. Trial Transcript “Tr.” at 997:10–998:20; 1028:11–1029:25. Further, Mr. Camp
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`testified that the IEEE bylaws only govern “the board itself, the staff, and any officers of the
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`organization, such as committee chairs”—not patent holders. Tr. at 999:6–8. ALE’s expert Mr.
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`Petrick testified that the bylaws “allow[] patent holders to participate and patent holders may
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`include the known use of patents and patent applications and they must provide an assurance on
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`that particular application.” Tr. at 741:15–22 (emphasis added). Thus, Mr. Petrick agrees that the
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`relevant IEEE policies permissively allow patent holders to participate—i.e. there is no forced
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`participation—and that similarly patent holders may include the known use of patent and patent
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`applications. Given the clear language of the IEEE patent policies and the testimony of the
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`experts at trial, the Court concludes that the policies themselves did not impose a duty of
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`disclosure on Chrimar as a patent holder.
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`4
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`Case 6:15-cv-00163-JDL Document 413 Filed 01/24/17 Page 5 of 12 PageID #: 17981
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`Further, there was insufficient evidence presented that the treatment of such policy
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`language by those involved with the IEEE imposed the duty ALE contends Chrimar had.
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`Rambus, 318 F.3d at 1098. Here, Mr. Petrick simply provided bare conclusions that Mr.
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`Austermann had a duty of disclosure based on alleged attendance at IEEE meetings in Ottawa
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`and La Jolla. Tr. at 770:10–771:8. The Court cannot find these conclusions credible without any
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`explanation as to how Mr. Austermann’s conduct would have given rise to an affirmative duty to
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`disclose the patents-in-suit where the plain language of the policies do not impose any
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`affirmative duty.
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`ALE points to the fact that Chrimar had attended a PatCom meeting (the committee
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`responsible for setting patent policies), that Chrimar had discussions with IEEE members, that
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`Chrimar had submitted letters of assurance pursuant to the patent policy, had received the
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`Bylaws via email, and was asked to submit a letter of assurance. (Doc. No. 377, at 4, citing DX-
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`208, DX-209A, DX-210, and DX-211.) But Chrimar’s knowledge of the Bylaws and voluntary
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`participation cannot give rise to an additional affirmative disclosure duty where Chrimar’s
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`conduct was consistent with what the Bylaws require. Again, Mr. Camp testified that even when
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`the IEEE sends out a letter requesting disclosure, like the one Chrimar received, it is a “request
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`and encouragement” because the Bylaws themselves state that “assurance shall be provided
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`without coercion.” Tr. at 997:10–998:20; 1028:11–1029:25; DX-247, at § 6. ALE provided no
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`evidence of other IEEE members or participants who complied with the IEEE policies in a
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`manner that is consistent with the duty it claims exists. Indeed, it may also very well be that the
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`jury in considering this exact evidence, similarly found that ALE had not proven by a
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`preponderance of the evidence that Chrimar had breached a contract to the IEEE or committed
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`5
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`Case 6:15-cv-00163-JDL Document 413 Filed 01/24/17 Page 6 of 12 PageID #: 17982
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`fraud. (Doc. No. 349.) Accordingly, the Court finds that, based on the evidence presented,
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`Chrimar did not owe a duty of affirmative disclosure to the IEEE.
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`Because Chrimar was under no affirmative duty to disclose the patents-in-suit to the
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`IEEE, ALE’s claim of equitable estoppel fails. However, even if Chrimar had had a duty to
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`disclose, ALE has not provided evidence of reliance or material prejudice. ALE indisputably did
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`not exist at the time the relevant standards were being considered and adopted and was not a
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`member of the IEEE. ALE argues that its “predecessors relied on Chrimar to tell the truth in its
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`letters of assurance.” (Doc. No. 377, at 6.) This statement is problematic for two reasons. First,
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`ALE provided no evidence that the information contained in Chrimar’s letter of assurance was
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`false or misleading. Rather, it was ALE’s argument that because Chrimar had sent a letter of
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`assurance on a patent from a different patent family, it had an affirmative obligation to send in a
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`letter on the patents-in-suit. Second, ALE provided no evidence at trial regarding its
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`predecessor’s interest and involvement in the IEEE or the PoE standard-setting process. As such,
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`ALE has failed to prove by a preponderance of the evidence that it relied on Chrimar’s
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`misleading conduct. Similarly, with respect to prejudice, ALE relies on economic prejudice
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`suffered by its predecessor from 2000 through 2013. (Doc. No. 377, at 6.) Once again, there was
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`no evidence presented by ALE with respect to its relationship to its predecessor such that a nexus
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`could be shown to establish material prejudice to ALE.
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`For these reasons, the Court finds that ALE did not prove by a preponderance of the
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`evidence that Chrimar is equitably estopped from enforcing the patents-in-suit based on its
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`interactions with the IEEE.
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`B. Waiver
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`6
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`Case 6:15-cv-00163-JDL Document 413 Filed 01/24/17 Page 7 of 12 PageID #: 17983
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`ALE relies on the same evidence and argument to contend that Chrimar has waived its
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`rights to enforce the patents-in-suit and any related patents. (Doc. No. 377, at 7–8.) For the same
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`reasons explained above with respect to equitable estoppel, the Court finds that ALE has failed to
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`prove by a preponderance of the evidence that Chrimar has waived its rights to enforce the
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`patents-in-suit.
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`C. Prosecution Laches
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`ALE relies on Symbol II to argue that “the equitable doctrine of laches may be applied to
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`bar enforcement of a patent that issued after unreasonable and unexplained delay in prosecution
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`even though the patent applicant complied with pertinent statutes and rules.” (Doc. No. 377, at
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`8–9, citing Symbol Techs. Inc., v. Lemelson Med., Educ. & Research Found., LP, 277 F.3d 1361,
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`1368 (Fed. Cir. 2002). ALE argues that the prosecution of the patents-in-suit started in 1998 and
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`extended over 17 years, during which the IEEE standards were implemented and ALE was
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`locked into use of the standard based on industry-wide adoption. (Doc. No. 377, at 9–10.)
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`Chrimar argues that ALE cites to no evidence to support this defense and instead relies on cases
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`that “involve patents that were governed by the pre-GATT term-limits provisions that were
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`enacted in the early 1990s.” (Doc. No. 394, at 16.)
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`As an initial matter, the Court has previously noted the oddity of this case:
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`Chrimar contends that all of the patents-in-suit are standard essential patents. Yet,
`the progression of the patents-in-suit and the IEEE PoE standard adoption is
`perplexing. Chrimar maintains
`that
`it filed Provisional Application No.
`60/081,279 on April 10, 1998 (“the Provisional Application”). (Doc. No. 204-3.)
`Chrimar next maintains
`that
`it
`filed Non-Provisional Application No.
`PCT/US99/07846 on April 8, 1999 (the ’430 Patent Application), claiming
`priority to the Provisional Application. Chrimar maintains that the ’430 Patent
`Application was unpublished until it issued as U.S. Patent No. 6,650,622 (“the
`’622 Patent”) on November 18, 2003. Chrimar maintains that each of the patents-
`in-suit claims priority to the ’622 Patent, the ’430 Patent Application, and the
`Provisional Application. (Doc. No. 204, at ¶ 35.) The IEEE adopted the 802.3af
`standard in June 2003, and the patents-in-suit issued on April 10, 2012, January
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`7
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`Case 6:15-cv-00163-JDL Document 413 Filed 01/24/17 Page 8 of 12 PageID #: 17984
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`27, 2015, December 2, 2014, and April 28, 2015, respectively. ¶ While Chrimar
`maintains that the patents-in-suit are standard essential and claim priority to the
`’430 Patent Application, Chrimar also maintains that the claims that arose from
`the ’430 Patent Application are not essential to the standard. In other words,
`Chrimar claims priority to an application that existed prior to the adoption of the
`IEEE 802.3 standard that Chrimar claims is not essential to that standard, but that
`gave rise to the claims of the patents-in-suit that are allegedly standard essential.
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`(Doc. No. 255, at 15–16.)
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`Thus, while the Court notes the unusual circumstances of this case, there is no equitable
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`basis for it to render judgment on these facts. Indeed, Chrimar is correct in that the term of the
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`patents-in-suit are subject to a 20 year limit from “the date on which the earliest such application
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`was filed.” 35 U.S.C. § 154(a)(2). These provisions, which provide the counterbalance of
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`limiting the life of a patent that undergoes a lengthy prosecution (by starting the term from the
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`first filed application), alleviate the need for the equitable remedy ALE promotes based on a
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`delayed prosecution. Here, there is no evidence cited by ALE that there was any unreasonable or
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`unexplained delays in prosecution or any conduct by Chrimar to support such a delay.
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`ALE did submit an additional declaration from its expert, Ian Crayford, setting forth
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`opinions on this equitable remedy. (Doc. No. 376-1.) Mr. Crayford’s declaration simply goes
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`over the timeline of the prosecution of the patents-in-suit and concludes that Plaintiffs have
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`claimed a “relatively simple concept in thousands of different ways throughout the prosecution
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`history,” and that “[t]he seventeen year prosecution history has allowed Plaintiffs to morph their
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`claims to attempt to cover the IEEE 802.3af and 802.3at PoE standards.” Id. at ¶ 21. Mr.
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`Crayford also opines that he understands that Chrimar “had knowledge of the IEEE 802.3af PoE
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`standard in the early 2000s, before prosecution of the claims that issued in the patents-in-suit
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`began.” Id. But other than these conclusions provided by their expert, ALE has provided no
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`evidence of Chrimar’s knowledge or its conduct with respect to the prosecution of the patents-in-
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`8
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`Case 6:15-cv-00163-JDL Document 413 Filed 01/24/17 Page 9 of 12 PageID #: 17985
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`suit that would warrant barring Chrimar from enforcing its rights to the patents-in-suit. The
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`Court is unaware of any equitable remedy that would suggest the patents-in-suit should be held
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`to be unenforceable and ultimately finds the evidence insufficient here. Finally, for the same
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`reasons that were discussed above, ALE has not shown by a preponderance of the evidence that
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`it was prejudiced by these actions.
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`For these reasons, the Court finds that ALE did not prove by a preponderance of the
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`evidence that Chrimar is equitably estopped from enforcing the patents-in-suit based on
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`prosecution laches.
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`D. Inequitable Conduct
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`Lastly, ALE argues that the patents-in-suit are unenforceable as a result of inequitable
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`conduct. (Doc. No. 377, at 11.) Specifically, ALE contends that to secure allowance of the ’250
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`Patent during reexamination, the named inventors submitted a false declaration to the PTO to
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`swear behind certain prior art. (Doc. No. 377, at 11.) Chrimar argues that ALE assumes the
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`declaration is false and therefore assumes it was material and the alleged falsity was intentional.
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`(Doc. No. 394, at 21.) Chrimar argues that ALE has not met its burden on proving materiality or
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`intent to deceive. Id. at 21–22.
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`“To prevail on the defense of inequitable conduct, the accused infringer must prove that
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`the applicant misrepresented or omitted material information with the specific intent to deceive
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`the PTO.” Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1287 (Fed. Cir. 2011)
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`(en banc). Intent and materiality are separate elements. Id. at 1290. To establish intent, the
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`accused infringer must show that a specific intent to deceive is “the single most reasonable
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`inference” supported by the evidence. Id. To establish materiality, the accused infringer must
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`generally show that the patent would not have been granted but for the applicant’s inequitable
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`9
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`Case 6:15-cv-00163-JDL Document 413 Filed 01/24/17 Page 10 of 12 PageID #: 17986
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`conduct. Id. at 1291. Both intent and materiality must be established by clear and convincing
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`evidence. Id. at 1287.
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`Here, ALE’s defense of inequitable conduct relies entirely on the declaration submitted
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`by Messrs. John Austermann and Marshall Cummings to the USPTO to swear behind certain
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`prior art. (DX-085.) That declaration states in relevant part:
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`6. We designed circuity that was utilized in conjunction with a system and method
`for performing the claimed subject matter prior to the critical date. Evidence of
`our circuit design is attached as Exhibits B1–B17. (Note: Sheet 6 of 18 is not
`currently available) The dates in Exhibit B have been redacted but they are prior
`to the critical date. The circuit boards were ordered from a company called
`American Broadband, Inc. A copy of an invoice from American Broadband, Inc.
`is attached as Exhibit C. The dates in Exhibit C have been redacted but they are
`prior to the critical date.
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`(DX-085, at ¶ 6.)
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`ALE further cites to the testimony of Clyde Boenke stating that Messrs. Austermann and
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`Cummings did not design the circuitry in question. (Doc. No. 377, at 12, citing Tr. at 911:8–21.)
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`Thus, it is ALE’s argument that the declaration was unmistakably false because Clyde Boenke
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`created the circuit schematics attached to the declaration. Id. The Court finds that Mr. Boenke’s
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`testimony in conjunction with the declaration does not provide clear and convincing evidence of
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`materiality. Indeed, the declaration itself states that the “circuit boards were ordered from a
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`company called American Broadband, Inc.” (DX-085.) American Broadband, Inc. is Mr.
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`Boenke’s company and the fact that the circuit boards came from American Broadband, Inc. was
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`disclosed to the PTO via the declaration. DX-085; Tr. at 873:15–18. Thus, there is no indication
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`that the declaration was “unmistakably false.” See Therasense., 649 F.3d at 1292 (“When the
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`patentee has engaged in affirmative acts of egregious misconduct, such as the filing of an
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`unmistakably false affidavit, the misconduct is material.”)
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`10
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`Case 6:15-cv-00163-JDL Document 413 Filed 01/24/17 Page 11 of 12 PageID #: 17987
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`Even if ALE had proven materiality by clear and convincing evidence, there is a dearth of
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`evidence regarding an intent to deceive. “[T]o meet the clear and convincing evidence standard,
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`the specific intent to deceive must be the single most reasonable inference able to be drawn from
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`the evidence.” Therasense., 649 F.3d at 1290 (internal quotations omitted). To draw this
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`inference, ALE argues that Chrimar failed to cure any false statements in the declaration, that
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`Mr. Boenke designed the circuits, that there is no evidence that the named inventors did any
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`circuit design, and that the inventors have a habit of deceiving their patent attorney. (Doc. No.
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`377, at 12.) Regarding the declaration, again, ALE’s arguments rely on the assumption that the
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`statements were false such that Chrimar would have needed to correct the declaration because
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`Mr. Boenke designed the circuit schematics and the named inventors did not. But as discussed
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`above, the declaration is not unmistakably false. While the declaration states “[w]e designed
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`circuity…” it very clearly states that the attached “circuit boards were ordered from a company
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`called American Broadband, Inc.”—Mr. Boenke’s company. Perhaps this language in the
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`declaration could have been worded better; however, the following language disclosing
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`American Broadband, Inc.’s work and attached circuit schematics does not lead to the single
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`inference that this statement was made with the specific intent to deceive. Further considering
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`the inventor’s statements to their patent attorneys and the testimony provided at trial does not
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`lead to the single inference that this statement was made with the specific intent to deceive. As
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`such, ALE has failed to prove an intent to deceive by clear and convincing evidence.
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`For these reasons, the Court finds that ALE has failed to meet its burden on proving
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`inequitable conduct.
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`CONCLUSION
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`11
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`Case 6:15-cv-00163-JDL Document 413 Filed 01/24/17 Page 12 of 12 PageID #: 17988
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` For the reasons stated herein, the Court finds that ALE has failed to meet its burden in
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`proving equitable estoppel, waiver, prosecution laches, and inequitable conduct. Judgment will
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`issue as a separate order.
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` So ORDERED and SIGNED this 24th day of January, 2017.
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`12
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