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 CA Federal & State Cases, Combined
immersion AND sony
                                                   4 of 4 DOCUMENTS

                     IMMERSION CORPORATION, Plaintiff, v. SONY COMPUTER
                ENTERTAINMENT AMERICA, INC., SONY COMPUTER ENTERTAINMENT,
                         INC., and MICROSOFT CORPORATION, Defendants.

                                                    No. C 02-0710 CW

                  UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
                                          CALIFORNIA

                                                  2005 U.S. Dist. LEXIS 4777

                                                January 10, 2005, Decided



SUBSEQUENT HISTORY:               Motion granted by            Littenberg Krumholz & Mentlik, Westfield, NJ; Sonal N.
Immersion Corp. v. Sony Computer Entm't Am., Inc.,             Mehta, Redwood Shores, CA.
2005 U.S. Dist. LEXIS 4778 (N.D. Cal., Mar. 24, 2005)
                                                               For Sony Computer Entertainment America Inc., Sony
DISPOSITION: The Court denied defendant's motion               Computer Entertainment Inc, Counter-claimants:
for judgment as a matter of law and denied plaintiff's         Matthew D. Powers, Weil Gotshal & Manges LLP,
motion for judgment as a matter of law. The Court              Redwood Shores, CA; Douglas E. Lumish, Douglas E.
denied without prejudice plaintiff's motion for entry of       Lumish, Weil Gotshal & Manges LLP, Silicon Valley
judgment and a permanent injunction and denied                 Office, Redwood Shores Parkway, Redwood Shores,
defendant's motion to strike plaintiff's motion for entry of   CA.
judgment. The Court granted plaintiff's motion for
additional discovery but denied plaintiff's motion for         For Internet Services LLC, Cross-defendant: Ismail J.
damage. The Court granted plaintiff's motion for               Ramsey, Daralyn J. Durie, Mark A. Lemley, Keker &
pre-judgment interest. The Court denied plaintiff's            Van Nes LLP, San Francisco, CA.
motion for attorneys' fees and denied defendant's motion
for attorneys' fees. The Court granted plaintiff's motion      For Internet Services LLC, Counter-defendant: Daralyn
to strike.                                                     J. Durie, Ismail J. Ramsey, Keker [*2] & Van Nes LLP,
                                                               San Francisco, CA.
LexisNexis(R) Headnotes
                                                               For Internet Services LLC, Cross-claimant: Daralyn J.
                                                               Durie, Ismail J. Ramsey, Keker & Van Nes LLP, San
COUNSEL:        [*1]     For Immersion Corporation,            Francisco, CA.
Plaintiff: Morgan Chu, Andrei Iancu, Richard M.
Birnholz, Alan J. Heinrich, Christine Waterman Byrd,           JUDGES: CLAUDIA WILKEN, United States District
Eric Eugene Johnson, Esq., Richard Gregory Frenkel,            Judge.
Irell & Manella LLP, Los Angeles, CA; John Leo
Wagner, Irell & Manella LLP, Newport Beach, CA.                OPINIONBY: CLAUDIA WILKEN

For Sony Computer Entertainment America Inc., Sony             OPINION:
Computer Entertainment Inc, Defendants: Edward R.
                                                                  ORDER DENYING PARTIES' MOTIONS FOR
Reines, Matthew D. Powers, Eugene Y. Mar, Douglas E.
                                                               JUDGMENT AS A MATTER OF LAW AND
Lumish, Jeffrey G. Homrig, Matthew M. Sarboraria,
                                                               ADDRESSING OTHER MATTERS.
Weil Gotshal & Manges LLP, Redwood Shores, CA;
Gregory S. Gewirtz, Joseph S. Littenberg, Lerner David
                                                                                                               Page 2
                                            2005 U.S. Dist. LEXIS 4777, *


     Defendants Sony Computer Entertainment America,         denying Sony's motion for summary judgment as to
Inc., (SCEA) and Sony Computer Entertainment, Inc.,          invalidity, and granting in part and denying in part
(SCEI) (collectively Sony) renew, pursuant to Federal        SCEI's motion for summary judgment as to
Rule of Civil Procedure 50(b), their previous motions for    non-infringement. The Court granted Immersion's
judgment as a matter of law, on the grounds that no          motion for summary judgment as to Sony's affirmative
reasonable jury could have found that SCEI induced           defenses of inequitable conduct with respect to the 213
infringement of, or SCEA itself infringed, the               patent and granted in part and denied in part Immersion's
patents-in-suit. Sony also moves for judgment as a matter    motion regarding Sony's inequitable conduct defense
of law that Immersion failed to present evidence             with respect to the prosecution of the 333 patent.
sufficient for an award of damages. Plaintiff Immersion
Corporation (Immersion) opposes the motions, and
cross-moves for judgment as a matter of law on its                       n1 Immersion has settled its claims against
claims of indirect and willful infringement. Sony                    Defendant Microsoft Corporation.
opposes Immersion's motions.
                                                                         n2 The accused games were: A Bug's Life;
     Immersion also moves for an award of supplemental               Amplitude; Ape Escape; Atlantis: The Lost
damages, entry of judgment and issuance of a permanent               Empire; Bloody Roar 2; Cool Boarders 3; Cool
injunction, and an award [*3] of pre-judgment interest.              Boarders 4; Cool Boarders 2001; Crash Bash;
Sony opposes these motions, and moves to strike                      Crash Team Racing; Drakan: The Ancients' Gate;
Immersion's motion for entry of judgment and injunction              Emperor's      New     Groove;     Extermination;
as premature. Immersion opposes Sony's motion to                     FantaVision; Final Fantasy X; Formula One
strike.                                                              2001; The Getaway; Gran Turismo; Gran
                                                                     Turismo 2; Gran Turismo 3; Grand Theft Auto:
    Immersion moves for an award of attorneys' fees
                                                                     Vice City; Grand Theft Auto 3; Grind Session;
pursuant to 35 U.S.C. § 285. Sony opposes the motion,
                                                                     ICO; Jak & Daxter; Kinetica; Kingdom Hearts;
and cross-moves for its own award of attorneys' fees.
                                                                     Legend of the Dragoon; The Mark of Kri; Medal
Immersion opposes Sony's cross-motion.
                                                                     of Honor Frontline; Medievil 2; Metal Gear Solid
    Immersion moves to strike the September 15, 2004                 2; Monster's, Inc.; Sly Cooper and the Thievius
Declaration     of   Sonal     N.    Mehta     Attaching             Racoonus; SOCOM Navy Seals; Speed Punks;
Correspondence Re: Sony's Objections to and                          Spyro: Ripto's Rage; Spyro: Year of the Dragon;
Designations of Trial Exhibits. Sony does not oppose this            Stuart Little 2; Syphon Filter 2; Syphon Filter 3;
motion. The Court accordingly grants Immersion's                     Tony Hawk's Pro Skater 3; Twisted Metal: Black;
motion to strike.                                                    Twisted Metal 4; Twisted Metal: Small Brawl;
                                                                     Treasure Planet; and War of the Monsters.
     These matters were heard on December 10, 2004.
Having considered all of the papers filed by the parties
                                                              [*5]
and oral arguments on the motion, the Court denies the
parties' motions for judgment as a matter of law. The             From August 17 through September 21, 2004, a jury
Court denies without prejudice Immersion's request for       trial was held on Immersion's claims of infringement,
an injunction and entry of judgment, but orders              willful infringement and damages, and Sony's defenses
imposition of a compulsory license and pre-judgment          and counterclaims of invalidity of the patents-in-suit
interest as described below. The Court denies both           (other than inequitable conduct). At trial, Immersion
parties' motions for attorneys' fees.                        asserted claims 7, 41 through 46, 49, 50, 53 and 54 of the
                                                             213 patent and claims 14 through 18 of the 333 patent.
    BACKGROUND
                                                                  On September 21, 2004, a panel of eight jurors
     Immersion filed its original complaint against Sony
                                                             returned a unanimous verdict finding that the Playstation
on February 11, 2002, alleging [*4] that Sony and
                                                             consoles and Dualshock controllers in conjunction with
Microsoft Corporation infringed U.S. Patent Nos.
                                                             44 of the accused games were covered by the asserted
6,275,213 ('213 patent) and 6,424,333 ('333) owned by
                                                             claims of the 213 patent, and that 42 of the accused
Immersion. n1 The patents-in-suit are both entitled
                                                             games in conjunction with the consoles and controllers
"Tactile Feedback Man-Machine Interface Device" and
                                                             were covered by the asserted claims of the 333 patent. n3
address providing complex tactile sensations to users of
                                                             The jury found that SCEA had directly infringed both the
interactive computer applications. Immersion accused
                                                             213 and 333 patents, but that SCEI had not directly
Sony's Playstation consoles and DualShock controllers in
                                                             infringed. The jury found that SCEI had induced
conjunction with forty-seven Playstation computer
                                                             infringement of both patents, but that SCEA had not
games. n2 On March 2, 2004, the Court issued an order
                                                             induced infringement of the asserted claims. The jury
                                                                                                                 Page 3
                                             2005 U.S. Dist. LEXIS 4777, *


found that the asserted claims of both patents were not       doctrine of equivalents by making, using, selling,
invalid due to anticipation, obviousness, or inadequate       offering for sale, and importing the accused products. n4
written description. The jury awarded Immersion $ 82
million [*6]       as a reasonable royalty for the
infringement of its patents. The jury found that neither                 n4 In its post-verdict reply brief, Immersion
SCEA nor SCEI had willfully infringed either patent. A               appears to abandon its request for JMOL that
bench trial on Sony's inequitable conduct defense with               SCEI directly infringed the 213 patent.
respect to the 333 patent is scheduled for January 5,                Accordingly, the Court denies this motion.
2005.
                                                                   Sony does not dispute that there was sufficient
                                                              evidence from which a rational jury could find that the
            n3 The jury found that the games Cool
                                                              use of a Playstation console, Dualshock controller, and
       Boarders 3, Cool Boarders 2001, and Formula
                                                              an accused game constitutes direct infringement
       One 2001 did not infringe the asserted claims of
                                                              whenever the player encounters the complex vibrations.
       the 213 patent and that Amplitude, Emperor's
                                                              Instead, Sony contends that, even if direct infringement
       New Groove, Gran Turismo 3, Grand Theft Auto:
                                                              is possible through use of the system, the sale of
       Vice City, and Grant Theft Auto 3 did not
                                                              Playstation system components does not directly infringe
       infringe the asserted claims of the 333 patent.
                                                              the patents. Sony further argues that the verdict is
       These findings were consistent with Immersion's
                                                              unsupported because there is no direct evidence that
       expert's conclusions. See Trial Ex. 992A,
                                                              SCEA actually used each game in an infringing [*9]
       Summary Chart Summarizing Dr. Colgate's
                                                              manner, i.e. encountered one of the events that result in
       Opinions on the Accused Games and Events
                                                              infringement. See Trial Exhibit 992A, Colgate Summary
       Listed by Claim for the 213 and 333 Patents
                                                              Chart (listing the events in the game that trigger accused
       (hereinafter Colgate Summary Chart).
                                                              vibrations, e.g., "A Bugs Life Mushroom Bouncing").
                                                                   Despite Sony's assertion to the contrary,
I. Cross-Motions for Judgment as a Matter of Law.             circumstantial evidence here was sufficient to permit a
                                                              rational jury to infer that SCEA directly infringed the
     A motion for judgment as a matter of law after the
                                                              patents-in-suit by use. Circumstantial evidence may be
verdict renews the moving party's prior Rule 50(a)
                                                              sufficient to prove direct infringement. Moleculon
motion for directed verdict at the [*7] close of all the
                                                              Research Corp. v. CBS, Inc., 793 F.2d 1261, 1272 (Fed.
evidence. Fed. R. Civ. P. 50(b). The post-trial motion
                                                              Cir. 1986); Metabolite Lab., Inc., v. Lab. Corp. of Am.,
may be raised only as to the same claims and upon the
                                                              370 F.3d 1354, 1364-65 (Fed. Cir. 2004). Shuhei
same grounds as the prior motion. Murphy v. City of
                                                              Yoshida, a SCEA vice president, testified that SCEA
Long Beach, 914 F.2d 183, 186 (9th Cir. 1990); Collins
                                                              tested all of the accused games in the United States, and
v. City of San Diego, 841 F.2d 337, 342 (9th Cir. 1988).
                                                              described the high standards and attention to detail of the
     Judgment as a matter of law after the verdict may be     testers, who use "game cheats" and other means to reach
granted only when the evidence and its inferences,            all levels of a game easily. Trial Tr. 1108-1115. Andrew
construed in the light most favorable to the non-moving       House, another SCEA executive vice-president, testified
party, permits only one reasonable conclusion as to the       that Sony set up "hundreds" of kiosks at one of the most
verdict. Where there is sufficient conflicting evidence, or   popular video game trade shows with a Playstation
if reasonable minds could differ over the verdict,            console, one or two Dualshock controllers, and a game to
judgment after the verdict is improper. See, e.g., Kern v.    play. Trial [*10] Tr. 1833:7-1834:1. Dr. James Colgate
Levolor Lorentzen, Inc., 899 F.2d 772, 775 (9th Cir.          testified that he had played all of the accused games, and
1990); Air-Sea Forwarders, Inc. v. Air Asia Co., 880          that infringing vibrations are "widespread" throughout
F.2d 176, 181 (9th Cir. 1989); Peterson v. Kennedy, 771       the games. Trial Tr. 712:4-14 and 708:17-18. From this
F.2d 1244, 1252 (9th Cir. 1985); L.A. Mem'l Coliseum          and other circumstantial evidence, the jury could
Comm'n v. NFL, 726 F.2d 1381, 1387 (9th Cir. 1984).           reasonably have inferred that it was more likely than not
                                                              that SCEA had used each game and encountered the
    A. Direct Infringement.
                                                              infringing vibration.
     Sony moves for judgment as a matter of law that
                                                                   Sony also argues that Immersion failed to provide
SCEA did not directly infringe the patents-in-suit, [*8]
                                                              proof as to user perception of the claimed vibration, a
literally or under the doctrine of equivalents. Immersion
                                                              limitation found in every claim. Sony notes that neither
moves for judgment as a matter of law that SCEI directly
                                                              Dr. Colgate nor Dr. Lin performed psychosocial tests of
infringed the patents-in-suit literally and under the
                                                              user perception, and that the jurors themselves did not
                                                                                                                    Page 4
                                               2005 U.S. Dist. LEXIS 4777, *


play the games. However, Dr. Colgate did testify that he        practice the invention because, e.g., the mass-moving
played all of the games and found them to practice every        actuators cannot "transmit" vibrations until the system is
limitation of the asserted claims. The jury could               operational. The Court finds that the verbs identified by
reasonably have based its decision on Dr. Colgate's             Sony describe the purpose and function of the system's
testimony. The jury could also have inferred from that          components when used, but do not require that the
the fact that Sony includes the infringing specialized          patented invention literally be in motion. This
vibrations in the accused games that users can perceive         less-strained approach avoids erroneous construction
those specialized vibrations.                                   [*13] of all claims to be "method" claims. Furthermore,
                                                                it is consistent with the text of the patent, which does not
     There is also a legally sufficient evidentiary basis
                                                                explicitly require a user and instead describes a "system"
from which a rational jury could conclude that SCEA
                                                                (claim 7) or "apparatus" (claim 43) as comprising certain
directly infringed the [*11] patents-in-suit by selling the
                                                                physical elements with certain purposes, as in an
Playstation system to its customers. Sony contends that,
                                                                "eccentric mass mounted on said shaft for transmitting
as a matter of law, SCEA cannot directly infringe claims
                                                                vibrations to said sensing body part." 213 patent,
7 and 43 of the 213 patent. n5 Claim 7 discloses a
                                                                19:10-11 (emphasis added). Therefore, claims 7 and 43
"system for providing a tactile sensation to a sensing
                                                                may be directly infringed by sale of the system or
body part, said system comprising" a means for
                                                                apparatus.
generating a variable state signal, a plurality of
mass-moving actuators, and a signal processor. 213                   Sony further argues that even if claims 7 and 43 can
Patent 19:5-19. Claim 43 discloses a "vibrotactile unit         be directly infringed by sale of the invention, SCEA sold
for generating tactile vibration sensations and in              mere components of the invention, not the entire system
communication with a host computer," the unit                   or apparatus, and therefore did not infringe the patents as
comprising a rotary motor with a shaft, an "eccentric           a matter of law. Sony relies heavily on the principle that
mass coupled to said shaft," a separate processor               "a patent on a combination is a patent on the assembled
"receiving a signal from said host computer, said signal        or functioning whole, not on the separate parts," quoting
used to correlate events within a graphical computer            Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518,
simulation running on said host computer. . . ." 213            528, 32 L. Ed. 2d 273, 92 S. Ct. 1700 (1972) (rejecting
Patent 22:50-23:2.                                              view that "substantial manufacture of constituent parts"
                                                                constitutes direct infringement where constituent parts
                                                                could be assembled into complete invention in less than
              n5 Claims 7 and 43 are apparatus claims; all      one hour). Sony also relies on [*14] Aro Mfg. Co. v.
         other asserted claims are method claims. Because       Convertible Top Replacement Co., 365 U.S. 336, 344, 5
         the Court finds that the jury's verdict is factually   L. Ed. 2d 592, 81 S. Ct. 599, 1961 Dec. Comm'r Pat. 635
         and legally supported with respect to the asserted     (1961) (holding that replacement of essential element of
         apparatus claims, it does not address Sony's           invention is not an infringing reconstruction of entire
         argument that SCEA's sales cannot directly             invention) and Decca Ltd. v. United States, 640 F.2d
         infringe the asserted method claims as a matter of     1156, 1168, 225 Ct. Cl. 326 (Ct. Cl. 1980) ("Direct
         law.                                                   infringement does not occur until a system [. . .] has been
                                                                constructed and is available for use"). However, the
 [*12]                                                          Federal Circuit subsequently has interpreted the language
                                                                of Deepsouth "to be narrowly construed as applicable
    While Sony correctly notes that the entire
                                                                only to the issue of the extraterritorial effect" of patent
Playstation system (console, controller and game) is
                                                                law. Paper Converting Mach. Co. v. Magna-Graphics
required to comprise the elements of the apparatus
                                                                Corp., 745 F.2d 11, 17 (Fed. Cir. 1984). In Paper
claims, it does not follow that only use and not sale of        Converting, a manufacturer directly infringed where it
the system constitutes direct infringement. Sony argues         constructed and tested an "operable assembly" that fell
that certain claim elements involving verbs in
                                                                short of the complete and entire patented combination.
present-participle form necessarily limit practice of the
                                                                Id. at 19-20. More recently, the Federal Circuit found a
invention to use; e.g., the system in claim 7 is comprised
                                                                manufacturer of a software program potentially liable for
in part of mass-moving actuators for "transmitting
                                                                direct infringement of a patent that disclosed an
vibrations," with each of the said mass-moving actuators        apparatus for playing fantasy football games on a
comprised of a shaft and eccentric mass for "rotating said      computer, including a "means for setting up individual
associated shaft." Defs.' Reply Br. at 4, n.4 (quoting
                                                                football franchises; means for drafting" [*15] players,
claim 7 of the 213 patent) (emphasis in brief). According
                                                                and so forth. Fantasy Sports Properties, Inc., v.
to Sony's interpretation, these and similar elements of
                                                                Sportsline.com, Inc., 287 F.3d 1108, 1111 (Fed. Cir.
claims 7 and 43 effectively require operation in order to
                                                                2002) (quoting patent). The elements of the patent
                                                                                                                Page 5
                                             2005 U.S. Dist. LEXIS 4777, *


included both "a computer" and "means" for playing a          judgment as a matter of law in favor of SCEI on the
game, yet the product manufactured by the accused             same issue.
infringer consisted only of software. A direct
                                                                   Sony's argument that the jury's finding of no
infringement analysis was nevertheless deemed
                                                              inducement of infringement by SCEA mandates
appropriate on the grounds that users needed only to
                                                              judgment as a matter of law in favor of SCEI on
activate "means that are already present in the underlying
                                                              inducement is not persuasive. The jury's findings are not
software," without having to modify code. Id. at 1118.
                                                              necessarily inconsistent. The jury could reasonably have
Contrary to Sony's assertion that the invention in Fantasy
                                                              found that SCEI as the parent company induced its
Sports was "just" software, there the accused "product
                                                              subsidiary SCEA to infringe directly by using the
[was] software installed on a computer that enables a
                                                              Playstation systems. All of Sony's other arguments with
user to play fantasy football games"; users could begin to
                                                              respect to the finding of inducement by SCEI merely
play after performing "a few simple steps." Id. at
                                                              reiterate Sony's position [*18] that there is no evidence
1118-19. The court rejected the defendants' argument
                                                              of any direct infringement and no evidence of intention
that only game customers could directly infringe the
                                                              by SCEA or SCEI to cause direct infringement.
patent, in part because, as in claims 7 and 43 of
Immersion's 213 patent, "there is no user participation' or        Immersion, on the other hand, moves for judgment
control' limitation in the claims . . . requiring that an     as a matter of law that no reasonable jury could have
accused fantasy football game be operated by any              found that SCEA did not also induce its customers to
specific entity. [*16] " Id. at 1119.                         infringe. Immersion argues that just as sufficient
                                                              evidence exists to support the jury's finding that SCEA
     Here, the jury could reasonably have found that
                                                              directly infringed, the evidence the jury heard about
SCEA sells a complete and operable system or apparatus
                                                              extensive Sony sales and customer support provides
rather than mere constituent parts, despite the fact that
                                                              sufficient circumstantial evidence that Sony customers
most of the consoles, controllers and games are sold
                                                              more likely than not directly infringed by playing the
separately. SCEA advertises and sells all the accused
                                                              games and encountering the infringing vibration effects.
products as part of the Playstation "system," e.g. Trial
                                                              See Moleculon Research Corp. v. CBS, Inc., 793 F.2d
Ex. 746, and frequently highlights compatibility between
                                                              1261, 1272 (Fed. Cir. 1986) (upholding district court
system elements. E.g., Trial Ex. 731 (Playstation.com
                                                              finding that patent-holder met burden of showing direct
advertisement); see generally Trial Exs. 813-864
                                                              infringement by puzzle customers with "circumstantial
(Playstation hardware and games). Playstation users need
                                                              evidence of extensive puzzle sales, dissemination of an
perform only a few simple steps to connect the consoles,
                                                              instruction sheet teaching the method of restoring the
controllers and games, after which the means to infringe
                                                              preselected pattern with each puzzle, and the availability
are present. Trial Ex. 340, PlayStation2 Instruction
                                                              of a solution booklet on how to solve the puzzle").
Manual. The instruction manual notes that the system
                                                              Immersion also argues that SCEA fulfilled the other
features "a vibration function when the function is
                                                              elements of inducement: that [*19] SCEA took actions
supported by the software title," and that the function can
                                                              that actually induced its customers' direct infringement
be set to either on or off. Id. at 11. One accused game
                                                              and that SCEA knew or should have known that taking
was sold already bundled with the hardware. Trial Tr.
                                                              those actions would induce direct infringement. See 35
1093:19-1094:14. A reasonable jury could therefore have
                                                              U.S.C. § 271(b); Metabolite Laboratories, Inc. v.
found that SCEA's actions were more than mere sale of
                                                              Laboratories Corp. of America, 370 F.3d 1354, 1365
constituent parts. The fact that consumers may use the
                                                              (Fed. Cir. 2004) (requiring proof of intent as element of
system [*17] in a non-infringing manner (e.g., they may
                                                              inducement).
choose to play non-infringing games or turn off the
vibration function) does not alter the direct infringement         However, the fact that the jury could reasonably
analysis. Cf. Dynacore Holdings Corp. v. U.S. Philips         have rendered a verdict that SCEA induced its customers
Corp., 363 F.3d 1263, 1276 (Fed. Cir. 2004) (discussing       to infringe the patents is not enough for Immersion to
circumstances in which sellers may be liable for indirect     meet its burden with respect to its motion for judgment
infringement based on goods lawfully sold with                as a matter of law. The grant or denial of a motion for
substantial non-infringing uses).                             judgment as a matter of law is "a procedural issue not
                                                              unique to patent law, reviewed under the law of the
    B. Indirect Infringement.
                                                              regional circuit in which the appeal from the district
     The jury   found that SCEI induced infringement of       court would usually lie." Summit Tech., Inc., v. Nidek
both the 213    and 333 patents, but that SCEA did not.       Co., Ltd., 363 F.3d 1219 (Fed. Cir. 2004) (citing
Sony moves      for adjudication that the jury's indirect     Riverwood Int'l Corp. v. R.A. Jones & Co., Inc., 324 F.3d
infringement     verdict in favor of SCEA warrants            1346, 1352 (Fed. Cir. 2003); BBA Nonwovens
                                                              Simpsonville, Inc. v. Superior Nonwovens, LLC, 303
                                                                                                                  Page 6
                                             2005 U.S. Dist. LEXIS 4777, *


F.3d 1332, 1336 (Fed. Cir. 2002). In the Ninth Circuit,            The jury was instructed to calculate damages in the
the [*20] standard for JMOL, like the standard for            form of a reasonable royalty, and was told to consider the
summary judgment, requires that the Court find that           fifteen Georgia-Pacific factors in its determination. See
reasonable minds could come to only one conclusion            September 14, 2004 Final Jury Instructions at 24-26
with respect to elements of the verdict. See Kendall          (quoting Georgia-Pacific Corp. v. United States Plywood
Jackson Winery, Ltd. v. E. & J. Gallo Winery, 150 F.3d        Corp., 318 F.Supp. 1116, 1120 (S.D.N.Y. 1970)). The
1042 (9th Cir. 1998) (upholding district court's refusal to   jury found that Immersion was entitled to $ 82 million
enter JMOL in favor of plaintiff on trademark                 compensation for Sony's patent infringement. This award
infringement claim where genuine issues of fact existed       represented 1.37 percent of Sony's total United States
as to an element of claim). Immersion urges the Court to      sales of all Playstation consoles, DualShock controllers,
follow Minnesota Mining and Mfg. Co. v. Chemque, Inc.,        and accused games. It is less than the $ 299.3 million that
303 F.3d 1294, 1304-05 (Fed. Cir. 2002) and enter             Immersion's expert proposed based on a five percent
judgment as a matter of law based on a jury's conclusion      royalty rate on these sales, but more than the $ 9.4
that was in turn based on disputed evidence. In               million Sony proposal based on two percent of sales of
Minnesota Mining, the Federal Circuit reversed a district     the DualShock controllers [*23] only. See Trial Ex.
court's denial of JMOL on inducement where the jury           423A.
found that defendant Chemque directly infringed but did
                                                                    Sony contends that the jury's royalty award was
not also induce infringement; however, this holding is
                                                              unfounded because the jury improperly included in its
inapposite. The standard used in that context by the
                                                              royalty base sales of every accused console, controller,
Federal Circuit was whether the jury's failure to find
                                                              and game, when all of these units have non-infringing
inducement was "supported by substantial evidence." Id.
                                                              uses. For instance, the consoles and controllers may be
at 1304. Applying Ninth Circuit law, this Court instead
                                                              used with non-accused games that have no vibration
considers whether the evidence, [*21] construed in the
                                                              function; the consoles may be used with non-accused
light most favorable to SCEA, permits only one
                                                              third party controllers; and users of the accused games
reasonable conclusion as to inducement. In Minnesota
                                                              may turn the vibration function off. However, as
Mining, defendant Chemque did not even argue that it
                                                              described in Section IA, use is not a required element of
had not known that its customers would infringe,
                                                              all the asserted claims.
attempting instead to contest the jury's underlying
infringement finding as inconsistent, a position the               Sony's reliance on Jacobs v. Nintendo of America
Federal Circuit found to be barred by estoppel. Id. at        for the proposition that the jury's award was unfounded is
1305, 1302-1303. The Federal Circuit began its                unavailing. The non-infringing use doctrine articulated in
inducement analysis with the assumption "we must              Jacobs applies "when a patentee or its licensee sells an
accept that claim 9 is infringed," and found that             article and the question is whether the sale carries with it
Chemque failed to provide substantial evidence that it        a license to engage in conduct that would infringe the
had not committed the other elements of inducement. Id.       patent owner's rights." 370 F.3d 1097, 1100 (Fed. Cir.
at 1304. Here, in contrast, the elements of inducement        2004). Sony is clearly not an Immersion licensee.
are in dispute. For instance, the jury could reasonably
                                                                   Sony also argues that the award was unfounded due
have found that, despite Sony's knowledge of the patents,
Immersion failed to meet its burden to prove the              to the lack of direct proof of infringement. As concluded
necessary intent element of inducement, on the grounds        above, the jury could reasonably [*24] have found that
                                                              SCEA directly infringes based on circumstantial
that SCEA's good faith belief that its customers did not
                                                              evidence of its use and sale of the Playstation system.
infringe meant that SCEA was not aware, nor should it
have been aware, of its customers' infringing acts.               Even Sony's expert failed to gather direct data on
Therefore, the Court cannot enter judgment as a matter        actual use of the accused vibration function, instead
of law in favor of Immersion with respect [*22] to its        basing his calculations on sales of all controllers, some
claim of inducement of infringement by SCEA.                  of which may be used to play non-infringing games or
                                                              games with the vibration function turned off. Immersion
     For the foregoing reasons, the Court denies
                                                              did present evidence that nine of the top ten best-selling
Immersion and Sony's motions for judgment as a matter
                                                              Playstation games were accused, and that the number of
of law with respect to infringement.
                                                              accused games sold exceeds the number of consoles sold
    C. Damages.                                               by 15 million.
    Sony moves for judgment as a matter of law that               The jury could therefore reasonably use the entire
Immersion failed to present evidence that proved its          Playstation system as a royalty base. The jury may have
claim for damages to a reasonable certainty. Immersion        taken account of the fact that the Playstation system does
opposes this motion.                                          have non-infringing uses when it awarded a relatively
                                                                                                                  Page 7
                                            2005 U.S. Dist. LEXIS 4777, *


low royalty rate of 1.37 percent. The jury also may have     30, 2004 and awarding supplemental damages on those
calculated damages using a higher rate but a smaller         infringing sales.
royalty base. For these reasons, the Court denies Sony's
                                                                  The sales data and expert testimony available to the
motion for judgment as a matter of law with respect to
                                                             jury from which to calculate damages included only
the jury's damages award.
                                                             Playstation sales up to June 30, 2004. Therefore, the
    D. Willful Infringement                                  Court finds that Immersion is entitled to compensation
                                                             based on Sony's sales of infringing systems from July 1
    Immersion moves for judgment as a matter of law
                                                             onward. The cases cited by Sony [*27] suggesting that
that SCEI and SCEA willfully infringed the
                                                             such an award is unavailable are inapposite, because
patents-in-suit. Sony opposes this motion. [*25]
                                                             continued payments on sales after June 30 will not be
     In order to prove that SCEI or SCEA willfully           punitive and will be proved upon Sony's production of
infringed the patents, Immersion would have had to           up-to-date sales data. See, e.g., Beatrice Foods v. New
prove that it was highly likely that SCEI and SCEA had       England Printing and Lithographing Co., 923 F.2d 1576
"no reasonable basis" for believing that their products do   (Fed. Cir. 1991) (rejecting district court's award of treble
not infringe or that the patents were invalid. See Final     damages in order to enhance what it thought was
Jury Instructions at 14. The jury was instructed to          inadequate compensation); Oscar Mayer Foods Corp. v.
consider five factors, including whether SCEI or SCEA        Conagra, Inc., 869 F. Supp. 656 (W.D. Wisc. 1994)
intentionally copied an Immersion product and whether        (rejecting plaintiff's request for supplemental pre-trial
they had a good faith belief that the patents were invalid   damages as not proved and therefore an invasion of jury's
or not infringed. Id.                                        role). In lieu of awarding Immersion supplemental
                                                             damages for the period from July 1 to the present, 2004,
     Contrary to Immersion's characterization (see Pl.'s     the Court imposes a compulsory license and orders Sony
Reply Supp. Pl.'s Mot. JMOL at 9 n.3), the jury had          to pay Immersion a 1.37 percent compulsory license fee
ample evidence to support its finding of no willful
                                                             based on sales from July 1, 2004, until judgment enters.
infringement. Shinichi Okamoto, former Sony Chief
                                                             These fees will be paid directly to Immersion; no escrow
Technology Officer responsible for development of the
                                                             account will be required. In order to enable Immersion to
Playstation consoles and DualShock controllers, testified    calculate the fee, the Court granted Immersion's request
that Sony developed the Playstation products without         for supplemental discovery. Sony was ordered to provide
copying       Immersion's     technology.    Trial    Tr.
                                                             Immersion with its sales data from June 30, 2004 until
1551:7-1553:11, 1593:8-1594:5. The jury heard Sony's
                                                             [*28] September 30, 2004 within ten days of the
vigorous defenses of non-infringement and invalidity. A
                                                             December 10 hearing, that is, by December 27, 2004. If
jury could reasonably have found that Immersion failed
                                                             Sony has not already provided this data it must do so
to prove that it was highly likely that SCEI and SCEA        within three days of the date of this order, and pay the
willfully infringed the 213 and 333 patents.                 license fee on those sales forthwith. Sony shall continue
     For [*26] the foregoing reasons, the Court denies       to provide Immersion with its sales data, and pay the
Immersion's motion for judgment as a matter of law on        license fee, ten days after the close of each quarter for as
the issue of willful infringement.                           long as the compulsory license remains in effect.
                                                                 B. Injunction and Entry of Judgment.
II. Supplemental Damages, Permanent Injunction, and
Pre-Judgment Interest.                                            Immersion correctly notes that injunctive relief is
                                                             the "general rule [to remedy infringement] . . . absent a
     Immersion moves for additional discovery and an
                                                             sound reason for denying it." Richardson v. Suzuki Motor
award of supplemental damages, pre-judgment interest,
                                                             Co., Ltd., 868 F.2d 1226, 1246-47 (Fed. Cir. 1989)
entry of judgment and an immediate permanent
                                                             (reversing trial court's denial of injunction against
injunction against Sony's manufacture, use, sale, and        defendant Suzuki's sale of motocross bicycles and noting
import of Sony Playstation consoles, Dualshock               that appeal process would take "several years" and patent
controllers, and infringing games. Sony opposes an
                                                             expired in four years); see also W.L. Gore & Assoc. v.
award of supplemental damages or pre-judgment interest,
                                                             Garlock, Inc., 842 F.2d 1275, 1281 (Fed. Cir. 1988)
opposes entry of judgment as premature and opposes any
                                                             (directing district court to enter injunction against sale of
injunction, proposing instead that the Court order a
                                                             packing material); Eli Lilly & Co. v. Medtronic, Inc., 696
compulsory license.                                          F. Supp. 1033, 7 U.S.P.Q.2d 1439, 1445 (E.D. Pa. 1988),
    A. Supplemental Damages.                                 rev'd on other grounds, 872 F.2d 402 (Fed. Cir. 1989)
                                                             [*29] (entering permanent injunction against sale of
    Immersion seeks an order directing Sony to provide       defibrillator). Nevertheless, the decision to award
updated sales data on the infringing products since June     injunctive relief is clearly left to the Court's discretion.
                                                                                                                    Page 8
                                              2005 U.S. Dist. LEXIS 4777, *


See 35 U.S.C. § 283 (courts "may grant injunctions in          (1983) (holding that district court has general authority
accordance with the principles of equity" to prevent           to award pre-judgment interest as an ordinary matter).
violation of patent rights); Roche Prods. v. Bolar Pharm.      Courts are afforded discretion to decide the interest rate
Co., 733 F.2d 858 (Fed. Cir. 1984), superceded by              to be used. Studiengesellschaft Kohle, m.b.H. v. Dart
statute on other grounds, (refusing to order district court    Indus., Inc., 862 F.2d 1564, 1580 (Fed. Cir. 1988).
to enter permanent injunction and noting that adequacy
                                                                    Sony argues that the jury must have included interest
of money damages could obviate need for equitable
                                                               in its $ 82 million award. But just as the jury's damages
relief).
                                                               award was necessarily based on sales only up to June 30,
     Immersion presents no evidence that it will suffer        the expert testimony the jury heard regarding damages
actual irreparable harm if an injunction does not issue        did not include a calculation of interest owed. The Court
immediately. Immersion is not a direct competitor of           finds that an award of pre-judgment interest is therefore
Sony. Immersion has previously stated its intention to         appropriate, and can be fairly calculated over time by
license its patents freely. The Federal Circuit has held       assuming that the [*32] jury's damage award was
that evidence showing that the patent holder is willing to     determined based on sales of Sony's Playstation
license its patent rights "suggests that any injury suffered   consoles, DualShock controllers and infringing games.
by [the patent holder] would be compensable in damages         The 1.5 percent per month interest rate Immersion
assessed as part of the final judgment in the case." High      suggests is inappropriate because it is punitive rather
Tech Med. Instrumentation, Inc. v. New Image Indus.,           than compensatory, while Sony's proposition of the
Inc., 49 F.3d 1551, 1557 (Fed. Cir. 1995) [*30]                Treasury bill rate assumes an unnecessarily low
(reversing grant of preliminary injunction). Here, money       estimation of the returns Immersion would have earned if
damages will provide an adequate remedy for                    a royalty agreement had been in place. Accordingly, the
Immersion's injury, at least for the present.                  Court awards Immersion pre-judgment interest at the
                                                               prime rate. Interest for each quarter's sales will begin to
     Thus, in lieu of an injunction at this time, as noted
                                                               accrue at the end of that quarter based on that quarter's
above, the Court imposes a compulsory license and
                                                               Sony sales data, calculated at the prime rate as of the end
orders that Sony pay Immersion a fee of 1.37 percent on
                                                               of that quarter. Thereafter, the interest will be
sales of all Playstation consoles, Dualshock controllers
                                                               compounded annually.
and games found by the jury to infringe. For the reasons
discussed above, the license will be effective as of July
                                                               IV. Attorneys' Fees.
1, 2004, and will continue until the date of judgment. At
that time, pursuant to Federal Rule of Civil Procedure              Immersion moves for a determination pursuant to 35
62(c), the Court will enter a permanent injunction, which      U.S.C. § 285 that this is an "exceptional case" and
it may stay pending appeal, in which case the                  therefore it is entitled to attorneys' fees, and for an award
compulsory license will remain in effect. Sony will be         pursuant to Federal Rule of Civil Procedure 37(c)(2) of
enjoined from manufacturing, using, selling, and               reasonable attorneys' fees incurred proving matters that
importing the infringing Sony Playstation system,              Sony should have admitted in response to Immersion's
including Playstation consoles, Dualshock controllers,         requests for admissions (RFAs). Sony opposes this
and the infringing games. This could be accomplished by        motion, and counter-moves [*33] for an award of
removing the software library that enables the infringing      attorneys' fees pursuant to § 285 with respect to
vibration and disabling the vibration function on the          Immersion's claims of infringement of U.S. Patent No.
controllers and in the games. The Court will not require a     5,889,672 ('672 patent). Immersion opposes that motion.
recall, but Sony will pay the license fee on all products
                                                                    Immersion argues that Sony engaged in a pattern of
placed in [*31] the stream of commerce.
                                                               repeated misconduct that increased the cost of litigation,
   Entry of judgment is premature at this time because         including discovery abuses, late production of
Sony's defense of inequitable conduct is still pending.        documents, and frivolous defenses and refusals to reply
                                                               fully and candidly to requests for admissions.
    C. Pre-Judgment Interest.
                                                                   Title 35 U.S.C. § 285 provides that the court in
     Finally, Immersion asks the Court to award
                                                               "exceptional cases may award reasonable attorney fees to
pre-judgment interest.
                                                               the prevailing party" in a patent case. See Reactive
    Patent claimants are entitled to compensatory              Metals and Alloys Corp. v. ESM, Inc., 769 F.2d 1578,
damages that are no less than a reasonable royalty             1582-83 (Fed. Cir. 1985) (noting that district court
"together with interest and costs as fixed by the court."      decision to award attorneys' fees is reviewable for abuse
35 U.S.C. § 284; see General Motors Corp. v. Devex             of discretion). The types of conduct which can form a
Corp., 461 U.S. 648, 76 L. Ed. 2d 211, 103 S. Ct. 2058         basis for finding a case exceptional include "willful
                                                                                                                   Page 9
                                               2005 U.S. Dist. LEXIS 4777, *


infringement, inequitable conduct before the PTO,               attorneys' fees to "the prevailing party" in exceptional
misconduct during litigation, vexatious or unjustified          cases. In order to be a prevailing party, the Federal
litigation, and frivolous suit." Beckman Instruments, Inc.      Circuit has recently ruled that "one must receive at least
v. LKB Produkter AB, 892 F.2d 1547, 1551 (Fed. Cir.             some relief on the merits." Inland Steel Co. v. LTV Steel
1989) (affirming district court award of attorneys' fees        Co., 364 F.3d 1318, 1320 (Fed. Cir. 2004). While
[*34] where defendant engaged in vexatious conduct              Immersion may be estopped from reasserting its 672
and repeatedly violated permanent injunction). When the         patent infringement claims against Sony, this estoppel
alleged misconduct relates to the discovery process,            does not constitute "relief on the merits." None of the
courts rarely grant attorneys' fees pursuant to § 285           cases Sony cites suggests that a defendant against whom
absent a serious breach, such as dishonest responses or         a verdict has been entered is entitled to prevailing party
failure to comply with discovery orders. See White              status as to a claim that was voluntarily dropped from the
Consolidated Industries, Inc. v. Vega Servo-Control,            case by the plaintiff.
Inc., 713 F.2d 788, 791 (Fed. Cir. 1983) (upholding
                                                                     Accordingly, both parties' motions for attorneys' fees
denial of request for attorneys' fees pursuant to § 285
                                                                are denied.
and Rule 37(c) despite allegedly "egregious" failure to
disclose information); Arbrook, Inc. v. Am. Hosp. Supply            CONCLUSION
Corp., 645 F.2d 273, 279 (5th Cir. 1981) ("we reject the
                                                                    For the foregoing reasons, the Court DENIES Sony's
contention that the plaintiffs' alleged improper conduct
                                                                motion for judgment as a matter of law and DENIES
during discovery supports a fee award. Assuming such
                                                                Immersion's motion for judgment as a matter of law
improprieties took place, the proper remedy lies under
                                                                (Docket No. 1223).
Fed. R. Civ. P. 37 and not under § 285.").
     The Court is disturbed by the discovery conduct in              The Court DENIES without prejudice Immersion's
this case. The proper remedy for discovery abuses,              motion for entry of judgment and a permanent injunction
                                                                (Docket No. 1309), and DENIES Sony's motion to strike
however, is sanctions pursuant to Federal Rule of Civil
                                                                Immersion's motion for entry of judgment (Docket No.
Procedure 37. Immersion sought such sanctions only
                                                                1359). Instead, the Court imposes a compulsory license
once and was denied. Furthermore, it appears that both
parties participated in this misconduct to at [*35] least       on Sony as described [*37] above. The Court GRANTS
some extent; in granting a motion to compel by Sony,            Immersion's motion for additional discovery but
                                                                DENIES Immersion's motion for damages based on Sony
Magistrate Judge Brazil noted generally that he was
                                                                sales as of July 1, 2004 (Docket No. 1332), in favor of
"extremely DISAPPOINTED by the present inability of
                                                                compensation by way of the compulsory license. The
counsel to professionally resolve discovery disputes."
                                                                Court GRANTS Immersion's motion for pre-judgment
February 3, 2004 Order Granting Defs.' Mot. Compel
(emphasis in the original). The Court finds that Sony's         interest (Docket No. 1314). The Court DENIES
discovery conduct and willful delays do not render this         Immersion's motion for attorneys' fees (Docket No.
                                                                1410) and DENIES Sony's motion for attorneys' fees
case "exceptional" under § 285. Nor do the numerous
                                                                (Docket No. 1427).
defenses asserted by Sony warrant an award of attorneys'
fees. See Stickle v. Heublein, Inc., 716 F.2d 1550 (Fed.            The Court GRANTS Immersion's motion to strike
Cir. 1983) (finding that "disclosure [of] the entire litany     (Docket No. 1270) the September 15, 2004 Declaration
of defenses commonly asserted in patent cases" does not         of Sonal N. Mehta. The Mehta Declaration (Docket No.
constitute vexatious litigation).                               1262) shall be stricken from the record and Sony shall
                                                                resubmit only email correspondence sent to the Court
     Similarly, Sony's refusals to admit certain facts in its
                                                                during trial.
responses to Immersion's RFAs do not warrant attorneys'
fees. Sony's refusals and its justifications thereof were           IT IS SO ORDERED.
aggressively unhelpful, but this Court cannot say they
were entirely unreasonable, because they were based on          Dated: January 10, 2005
the arguments Sony did present as a defense, e.g. the
existence of non-infringing uses.                                   CLAUDIA WILKEN

     On the other hand, Sony is clearly not entitled to             United States District Judge
attorneys' fees. Title 35 U.S.C. § 285 [*36] limits
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