Opinion
Civil Action No. AW-98-862.
April 26, 2000.
MEMORANDUM OPINION
Presently before the Court is Defendants' Partial Summary Judgment Motion that the Claims-In-Suit are Only Entitled to a Filing Date of February 13, 1992, and Defendants' Motion for Leave to Amend Pleadings to Include the Affirmative Defense and Counterclaim of Inequitable Conduct. Plaintiffs filed briefs in opposition, Defendants replied thereto, and Plaintiffs filed a surreply to the summary judgment motion. The motions are ripe for resolution. A hearing was held on these motions on April 19, 2000. See Local Rule 105.6 (D.Md.). Upon consideration of the briefs of the parties, the arguments of counsel at the hearing, and the entire record, for the reasons stated below, the Court will deny both motions.
FACTUAL BACKGROUND
This case concerns U.S. Patent No. 5,343,516, ("the '516 patent"), which describes a system in which caller ID information can be displayed on a TV screen. The patent was issued in 1994, and has since been assigned to Saskatchewan Government Growth Fund ("SGGF"). Thereafter, SGGF granted certain rights to Peter James. Plaintiffs believe that Defendants developed and are marketing technology that falls within the scope of the patent. Plaintiffs pray for a permanent injunction, the payment of damages, and an award of attorney's fees and costs.
The original complaint was filed on March 23, 1998. It was brought only by Plaintiff Peter James, and named three defendants: JVC Japan, US JVC Corp. ("JVC US"), and Echostar. The original complaint was amended on June 6, 1998 in which SGGF was added as a plaintiff. Then on March 4, 1999, a Second Amended Complaint was filed in which SCI Technology, Inc.'s ("SCI"), and three others, were added as defendants to the proceeding. SCI moved to dismiss the Second Amended Complaint against it for lack of personal jurisdiction and the Court denied that motion by an Order dated June 30, 1999. Thus, at present, the following are parties to the suit: Plaintiffs Peter James and Saskatchewan Government Growth Fund, Ltd. ("SGGF"), and Defendants Victor Company of Japan, Ltd. ("JVC Japan"), US JVC Corporation ("JVC US"), Echostar Communications Corporation ("Echostar"), Echostar Technologies Corporation ("ETC"), Echosphere Corporation ("Echosphere"), Houston Tracker Systems, Inc. ("HTS"), and SCI Technology, Inc. ("SCI").
Plaintiffs' Second Amended Complaint asserts a claim for infringement of the '516 patent. Plaintiffs contend that Defendants' satellite TV systems infringe claims 40, 41, and 45 of the '516 patent. The first application for the invention was filed on September 29, 1989 in Canada ("the Canadian application"). A corresponding application was filed in the U.S. Patent and Trademark Office ("PTO") on September 27, 1990. It was issued as U.S. Patent No. 5, 117, 452 ("the '452 patent"). A third application known as the "continuation-in-part" or "CIP application" was filed in the PTO on February 13, 1992. This CIP issued as the '516 patent. The '516 patent is assigned to Plaintiff SGGF and is the only patent being asserted in the instant case.
Defendants now move for a Court ruling that the effective date for the claims-in-suit is February 13, 1992. They also move for leave to amend the pleadings. With respect to the first motion, Defendants' main contention is that the most recently filed patent, the '516 patent is not entitled to the earlier filing date of the '452 patent because the subject matter of the '516 patent is not supported by the '452 patent. In other words, Defendants contend that the '516 claim is not entitled to the parent filing date (filing date of the '452 patent) because the written description of the '452 does not support claim 40 of the '516 patent under 35 U.S.C. § 112. Plaintiffs contend that the language of the '452 patent is broad enough to support the subject matter of the '516 patent. Both motions will be discussed below.
DISCUSSION
I. Standard for Summary Judgment
Rule 56 of the Federal Rules of Civil Procedure provides that summary judgement will be granted when no genuine dispute of material facts exists and the moving party is entitled to judgment as a matter of law. See Anderson v. Liberty Libby, Inc., 477 U.S. 242, 250 (1986). While the evidence of a nonmoving party is to be believed and all justifiable inferences drawn in his or her favor, a party cannot create a genuine dispute of material fact through mere speculation or compilation of inferences. See Deans v. CSX Transportation, Inc., 152 F.3d 327, 330-31 (4th Cir. 1998); Beale v. Hardy, 769 F.2d 213, 214 (4th Cir. 1985). To defeat such a motion, the party opposing summary judgment must present evidence of specific facts from which the finder of fact could reasonably find for him or her. Anderson, 477 U.S. at 252; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). "Summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed 'to secure the just, speedy, and inexpensive determination of every action." Celotex, 477 U.S. at 327 (citations omitted). In determining whether genuine and material factual disputes exist, the Court has reviewed the parties' respective memoranda and the many exhibits attached thereto, construing all facts, and all reasonable inferences drawn therefrom, in the light most favorable to the non-movant. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986).II. Defendants' Partial Summary Judgment Motion
Defendants move for an order granting partial summary judgment on the issue of the effective filing date of the claims-in-suit. They contend that such an order is warranted because patent claims in a continuing application must be supported in an earlier patent application if those claims are to be given an effective filing date earlier than its actual filing date. According to Defendants, the effective date of the filing of the claims-in-suit should be limited to the actual filing date of February 13, 1992.
A. Effect of the January 13, 1992 Filing Date
The parties agree that the filing date of claims 41 and 45 should be limited to its actual filing date. They, however, disagree as to the filing date for claim 40. Under patent law, an inventor can file a series of patent applications for an invention. The later applications may claim the filing date of the first application to obtain an effective filing date that is earlier than the actual filing date under 35 U.S.C. § 119 and § 120. Such adoption of the earlier filing date is only allowed if the claimed subject matter of the later application is supported by the first application. See Augustine Medical, Inc. v. Gaymar Industries, Inc., 181 F.3d 1291 (Fed. Cir. 1999) (claims of a CIP application were not entitled to the earlier filing date of a parent application because the claims include a limitation not supported by the parent application); In re Chu, 66 F.3d 292 (Fed. Cir. 1995) (all claims containing the same limitation, i.e. placing a catalyst inside a bag filter, which was not disclosed in the parent application, were not entitled to the earlier filing date).
Defendants contend that the claimed subject matter of the patent at issue is not supported by its prior application and thus, the claims of the patent-in-suit are only entitled to the actual filing date of February 13, 1992, not the filing date of the prior application which is September 29, 1989. The issue of the filing date is important because that date determines what material qualifies as prior art (knowledge that is available, including what would be obvious from it, to a person of ordinary skill in an art). Once the prior art is identified, legal issues such as the validity of the patent-in-suit will be clarified. The critical prior art reference in this case is the U.S. Patent No. 5,054,055 ("Hanle"). Plaintiffs' contention is that Hanle, filed in October 1991, is not prior art because it was filed after the September 29, 1989 filing date of the Canadian application. But if the effective filing date is found to be February 13, 1992, then Hanle would qualify as prior art to the '516 patent and would constitute invalidating prior art.
B. The Patent Applications
Canadian Application and its Counterpart ('452 Patent)
The Canadian application and its counterpart are entitled "Computer Telecommunications Signalling Interface" and "Telephone Interface for a Computer Receiving and Transmitting Information During the Silent Interval Between Ringing" respectively. They disclose various devices relating to an interface for a computer system that receives a caller ID signal from an incoming telephone call and retransmits the signal to the computer for processing and display.
Defendants contend that '452 disclosed essentially an interface device placed between an incoming telephone line and a computer system. The caller ID information is displayed on a computer monitor. The external communications device is represented by a computer system. The language of the '452 patent refers to a standard external interface and notes the "preferred embodiment" of the invention (i.e. use of a personal computer). See Column 3, line 34. A relevant description of the '452 patent is that it disclosed an "external interface in the preferred embodiment, an RS-232 interface." Column 4, lines 40-41. The '452 patent also discloses "line interface means for interfacing the apparatus with the telephone line." Column 3, lines 16-18.
'516 Patent: Claim 40
The '516 patent is entitled "Computer Telecommunications Interface Device." The '516 patent contains the additional information that discloses the use of a television or VCR in lieu of a computer system to display the caller ID information to a user. According to Defendants, the '516 patent's use of a TV or VCR constitutes new subject matter not supported by the '452 patent. Claim 40 of this patent contains the terms "external communications device" and "external interface means." Claim 40 requires "at least one telephone line to an external communications device for use in telephone systems . . . [and] external interface means for interfacing the telephone interface with an external communications device." The '516 patent, Column 23, lines 4-21. The claim language is written in "means-plus-function" language. "Claims written in means-plus-function form are interpreted to cover the structure set forth in the specification and its equivalents." Kahn v. GM Corp., 135 F.3d 1472, 1476 (Fed. Cir. 1998). Defendants assert that a narrow interpretation of the language to the specific structure disclosed in the specification is warranted. Even under a narrow interpretation, however, Defendants are not entitled to partial summary judgment.
The "external interface" language represents the means portion, and the language "for interfacing the telephone interface" represents the function portion. The external communications device is the television or VCR. See Figure 11 of the '516 patent. To illustrate their point that the '516 patent is not covered by '462, Defendants substitute the terms "television or VCR, or an equivalent thereof" with the corresponding structures — in place of the means sections. This substitution, they claim, shows that the '516 patent includes structures such as infrared modulator, television, or VCR-structures that were never disclosed in the '452 patent.
Case Law on Effective Filing Dates
There are numerous cases that have resolved issues of whether a patent was entitled to an earlier filing date. The central issue is whether the parent patent/application fulfills the "written description requirement" for the '516 patent under 35 U.S.C. § 112, ¶ 1. In Vas-Cath, Inc. v. Mahurkar, 935 F.2d 1555 (Fed. Cir. 1991), the Court dealt with this issue of whether the parent application provides adequate support for later-filed claims at issue. The test for support is "whether the disclosure of the application relied upon 'reasonably conveys to the artisan that the inventor had possession at that time of the later claimed subject matter.'" See id. at 1563 (citations omitted). Drawings alone may suffice to fulfill the written description requirement. Id. Whether this test is met is a question of fact. See id.; In re Driscoll, 562 F.2d 1245, 1250 (C.C.P.A. 1977) ("[E]ach case must be decided on its own facts. Thus, the precedential value of cases in this area is extremely limited.").
Under Vas-Cath, the '452 patent need not disclose every possible embodiment covered by claim 40. See Vas-Cath, 935 F.2d at 1563 n. 6 ("A specification may, within the meaning of 35 U.S.C. § 112 ¶ 1, contain a written description of a broadly claimed invention without describing all species that claim encompasses.") (citing Utter v. Hiraga, 845 F.2d 993, 998 (Fed. Cir. 1988), superseded on other grounds, Kubota v. Shibuya, 999 F.2d 517, 521-23 (Fed. Cir. 1993). Ultimately, the Vas-Cath Court declined to grant summary judgment on the issue of whether the subject matter requirement was met where prior art catheters used circular tubes and an updated patent utilized semi-circular tubes. Also, in In re Rasmussen, 650 F.2d 1212, 1214 (C.C.P.A. 1981), the Court held that "[b]roadening a claim does not add new matter to the disclosure." "Disclosure is that which is taught, not that which is claimed." Id. The Court believed that the earlier filing "taught" the later claim.
Defendants rely heavily on Tronzo v. Biomet, Inc., 156 F.3d 1154, 1157-59 (Fed. Cir. 1998), which held that an earlier application that disclosed only one shape for an artificial joint did not provide support for a claim that generically encompassed a variety of shapes disclosed in a later application. It is important to note, however, that even this case instructs that "the issue of whether the written description requirement as been satisfied is a question of fact. . . ." Tronzo, 156 F.3d at 1158. See also Wang Labs., Inc. v. Toshiba Corp., 993 F.2d 858, 865 (Fed. Cir. 1993). This principle is key to a resolution of the instant motion because it instructs that the Court cannot at this point rule as a matter of law on the filing date if there are material factual disputes to be resolved by the fact-finder. In Tronzo, the Court ultimately concluded that the substantial evidence such as the specific and exclusive language in the initial application, did not support the conclusion that claims were entitled to the parent application's filing date. The facts of this case, however, are distinguishable from the instant case. In the instant case, the '452 patent leaves room for "other external devices." In Tronzo, the new application included affirmative language to distinguish the prior art as inferior and asserted the advantages of the new claim structure. No such distinction is obvious in the instant case.
Defendants argue that the term "other external devices" found in the language of the '452 patent, refers to other items of hardware such as a printer. However, upon a reading of the language, the Court cannot discern such a limitation. In fact, as explained in Chart I of the Callele declaration, the '516 patent describes a plurality of different external communications devices that may be used in different embodiments of the invention. Plaintiffs also argue that the term "external communications device" is not a "means" element and thus certain limitations in the specification should not be read into the claim. Regardless of the applicability of the means-plus-function test, Plaintiffs prevail with respect to the instant summary judgment motion. Both parties spend considerable time citing cases with specific facts and distinguishing those that support a position contrary to their own. A reading of the cases emphasizes the over-arching principle the fact that the subject matter standard and the application of the written description requirement is an extremely fact-specific inquiry , and the Court finds it difficult to resolve these issues at this point as a matter of law.
Analysis
Although Defendants argue that there is no genuine issue of material factual dispute concerning the filing date to which the claims-in-suit are entitled, the Court finds that there are several material factual disputes. The Court must examine the claims individually to determine if the later claim deserves the benefit of the earlier filing date. If the subject matter of the claim at issue in this motion (Claim 40) is supported by the '452 patent, then this claim may be entitled to an effective filing date of September 29, 1989. However, if the subject matter of the claims is not supported by the earlier application, then these claims are only entitled to the February 13, 1992 actual filing date.
The '452 patent was actually filed on September 27, 1990, but it claimed priority to its Canadian counterpart that was filed on September 29, 1989. Defendants argue that even if the Court rejects the 1992 filing date argument, it should instead declare the 1990 date as the earliest possible effective date rather than the 1989 date. The supplemental surreplies filed by the parties discuss the issue of whether the 1989 or 1990 date is proper if Defendants' motion is denied. Defendants argue that Plaintiffs did not claim priority to the Canadian patent application and did not cure that failure. They claim that at best, the claims would be entitled to the September 27, 1990 date, not the earlier filing date of the foreign application. Under 35 U.S.C. § 119, to claim foreign priority the applicant must (1) file a claim for priority, and (2) file a certified copy of the priority documents. Plaintiffs contend that priority was claimed and a certified copy of the Canadian application was filed in the USPTO on Aug. 15, 1991. Upon a reading of Exhibit 2 of Plaintiffs' Memorandum in Surreply to Address Defendants' Supplemental Memorandum, and in consideration of the arguments presented at the motions hearing, it appears to the Court that the two requirements were met and thus, the major dispute here is between the 1992 date and the 1989 date.
The CIP application is an application filed during the lifetime of an earlier application by the same applicant, repeating some substantial portion or all of the earlier application and adding matter not disclosed in the earlier application. See MPEP § 201.08. Defendant argues that the '516 patent's prosecution history contains and claims new matter not disclosed or supported in prior related applications. "Subject matter that arises for the first time in the CIP application does not receive the benefit of the filing date of the parent application." Augustine Medical, 181 F.3d at 1302 (emphasis added). To decide the issue of subject matter commonality, "a court must examine whether the 'disclosure of the application relied upon reasonably conveys to the artisan that the inventor had possession at the time of the later claimed subject matter.'" Id. As discussed earlier, to determine when a subject matter first appeared, courts employ the written description requirement under 35 U.S.C. § 112. See Waldemar Link GimbH Co. v. Osteonics Corp., 32 F.3d 556, 558-59 (Fed. Cir. 1994). Section 112 requires that the specification contain "a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains . . . to make and use the same. . . . 35 U.S.C. § 112; 37 C.F.R. § 1.51(b).
Defendants argue that the '452 patent failed to meet the requirements of Section 112 to adequately support the subject matter of the '516 patent. Plaintiffs directly refute the factual assertions adopted by Defendants. There is definitely a genuine issue of material fact with respect to whether the subject matter claimed in the claims-in-suit of the '516 patent is supported by the subject matter in the '452 patent. The positions of both parties are arguable. For example, the only specific type of interface mentioned in the '452 does appear to be a computer interface. There are numerous references to the "computer system" component of the invention. Defendants argue that because there is not one reference to a television or VCR in the '452 patent, then there is no support for the '516 patent. However, in other portions of the '452 patent, a "standard external interface" is mentioned, suggesting that a computer is not the only interface option. Column 2, line 34. The '452 patent also makes reference to the "preferred embodiment of the invention." Column 3, line 46. This language suggests that other equivalent options, besides a computer interface, are contemplated by the patent. "Although the exact terms need not be used [in the earlier application] . . ., the specification must contain an equivalent description of the claimed subject matter." Lawrence B. Lockwood v. American Airlines, Inc., 107 F.3d 1565, 1572 (Fed. Cir. 1997). See also In re Hayes Microcomputer Products Patent Lit., 982 F.2d 1527, 1535 (Fed. Cir. 1992) (patentee is "not required to disclose every means for implementing the stated function of the claim"); Regents of Univ. of Cal. v. Eli Lilly Co., 119 F.3d 1559, 1568 (Fed. Cir. 1997) (holding that "every species in a genus need not be described in order that a genus meet the written description requirement."). Yet, speculation as to the modification that the inventor might have envisioned, but failed to disclose is not sufficient. Id.
Also, the general diagram models of the interface and power supply of the two patents appear to be very similar. The fact that one component in the construction of the model has changed cannot, as a matter of law, remove the '516 patent from the '452 patent's scope. The Court simply cannot rule as a matter of law that the '516 patent is not an embodiment of the '452 patent. See '516 patent, Column 15, line 50 ("[A] further embodiment of the invention is as an interface to an intelligent household appliance such as a VCR or television."). Even these two mechanisms, TV and VCR, are not offered as exclusive embodiments. The '516 also identifies other items such as modems, fax machines, and personal computers, and is thus, is not limited to use of a TV or VCR. See Column 18, lines 20-24. The Court would be hard-pressed to find a case that is a better example of one riddled with material factual discrepancies.
Whether the '516 patent is entitled to the earlier filing date is a factual determination left to the fact finder. The Court is not in a position to limit claim 40 of the '516 patent to its actual filing date of February 13, 1992. The Court notes that the U.S. Patent and Trademark Office agreed with Callele that Claim 40 was entitled to the earlier filing date. While the PTO opinion is not dispositive, the Court does consider this opinion as it was rendered by an agency specializing in the issues implicated in this case. In addition, the declarations of the experts in this case give rise to genuine disputes of material fact which preclude summary judgment as to whether the '516 patent is entitled to the benefit of the earlier filing date. Contrary to Defendant's reply brief, the parties do not agree that the '452 patent only discloses the computer embodiments or that the '452 patent does not support the TV embodiment. Quite to the contrary, the parties appear to disagree about almost every material fact presented. Because there is a material factual dispute as to whether the claims-in-suit are entitled to the earlier filing date, summary judgment is improper and the Court will deny Defendants' Partial Motion for Summary Judgment as to the filing date.
III. Defendants' Motion for Leave to Amend Pleadings to Include Defense and Counterclaim
All Defendants move for leave of Court to amend pleadings to include the affirmative defense and counterclaim of inequitable conduct under Fed.R.Civ.P. 8(c), 9(b), 15(a) and Local Rule 103. Defendants represent that they sought the consent of Plaintiffs for the proposed amendment, but such consent was not given. Defendants claim they have gathered evidence which shows that prior art documents were sent to investors prior to the filing of the '516 patent and prior to the filing of the U.S. parent patent application, the '452 patent. Defendants claim the patentees intentionally failed to disclose material prior art to the PTO with the intent to mislead and deceive the PTO. Defendants contend that the proposed amendment is neither untimely, nor prejudicial as the significance of the documents only became clear after additional discovery took place, including technical expert review and deposition testimonies.
Plaintiffs note that the deadline for filing amended pleadings was February 10, 1999 as set by the Court. They assert that the document upon which Defendants' amendment is based was produced to them over a year ago (March 1999 at the latest). Plaintiffs represent to the Court that Defendants did not question the person accused of the inequitable conduct, Mr. Callele, about this matter during his deposition in September 1999. The Court concludes that the interests of justice would not be served by a grant of leave to amend.
Rule 15(a) gives the Court broad discretion to allow amendments to pleadings as justice requires. This motion should be denied if the Court finds factors such as undue delay, bad faith, or dilatory motive that would cause undue prejudice to the non-movant. The proposed affirmative defense of inequitable conduct, if proven, would render the patent unenforceable. See Kingsdown Medical Consultants, Ltd., 863 F.2d 867, 872 (Fed. Cir. 1988), aff'd, 968 F.2d 1227 (Fed. Cir. 1992); Molins PLC v. Textron, Inc., 48 F.3d 1172, 1178 (Fed. Cir. 1995). The Court finds it hard to believe that such a potent defense only recently became apparent to Defendants. There is no indication that it sprung from the collection of any new evidence. Defendants' representation that they needed time to get their experts to review the evidence before asserting the defense does not justify the delay of a year in asserting this claim. Allowing an amendment to assert the defense of inequitable conduct at this time would cause undue prejudice to Plaintiffs. In addition to a showing of prejudice, untimeliness of the motion is a factor to consider when determining whether to grant a motion to amend pleadings. See Pittston Company v. United States, 199 F.3d 694, 706 (4th Cir. 1999); Deasy v. Hill, 833 F.2d 38, 41 (4th Cir. 1987); Sweetheart Plastics, Inc. v. Detroit Forming, Inc., 743 F.2d 1039, 1044-45 (4th Cir. 1984). The expert discovery period ends on April 28, 2000. This case should be set for trial as soon as possible, and any additional discovery time would cause a delay in trial. Having found that the amendment would unduly prejudice Plaintiffs, the Court will deny Defendants' request for leave to file the amended pleadings, allowing the affirmative defense and counterclaim that the claims of the '516 patent are unenforceable due to inequitable conduct.
CONCLUSION
For the foregoing reasons, the Court concludes that genuine issues of material fact exist with respect to the proper effective filing date for Claim 40 of the '516 patent. Furthermore, the Court finds that permitting Defendants to amend their pleadings to raise the defense of inequitable conduct will unduly prejudice Plaintiffs. Accordingly, the Court will deny Defendants' motions. An Order consistent with this opinion will follow.