Qualcomm Inc. v. Broadcom Corp.
Qualcomm Inc. v. Broadcom Corp.
2007 WL 1031373 (S.D. Cal. 2007)
March 21, 2007
Brewster, Rudi M., United States District Judge
Summary
The court found that Qualcomm had waived its rights to enforce the '104 and '767 patents against H.264 products by its silence in the face of a “clear duty to speak” to identify to the Joint Video Team (JVT) its intellectual property rights (IPR) related to the development of the H.264 standard. The court found that ESI was important to the case, as the non-disclosure of a participant's core patents in such a program could put the participant in a position in which it could literally block the use of the published H.264 standard by any company.
Additional Decisions
QUALCOMM INCORPORATED, Plaintiff,
v.
BROADCOM CORPORATION, Defendant
v.
BROADCOM CORPORATION, Defendant
No. Civ. 05CV1958-B(BLM)
United States District Court, S.D. California
March 21, 2007
Counsel
James R. Batchelder, Adam Arthur Bier, Christian E. Mammen, Lee Patch, Ryan Scher, Victoria Q. Smith, Day Casebeer Madrid and Batchelder, Kevin Kook Tai Leung, Law Office of Kevin Kook Tai Leung, Cupertino, CA, John Allcock, Kathryn Bridget Riley, Randall Evan Kay, Dla Piper US, Barry Jerome Tucker, David E. Kleinfeld, Heller Ehrman, San Diego, CA, Geoffrey M. Howard, Bingham McCutchen, San Francisco, CA, for Plaintiff.Alicia Hunt, Juliana Maria Mirabilio, Will L. Crossley, Wilmer Cutler Pickering Hale and Dorr, Washington, DC, Allen C. Nunnally, Donald R. Steinberg, John J. Regan, Kate Saxton, Louis W. Tompros, Stephen M. Muller, Vinita Ferrera, Wayne L. Stoner, William F. Lee, Wilmer Cutler Pickering Hale and Dorr, Boston, MA, Gregory C. Schodde, Jean Dudek Kuelper, Lawrence M. Jarvis, McAndrews Held and Malloy, Chicago, IL, James Sullivan McNeill, Robert S. Brewer, Jr., McKenna Long and Aldridge, San Diego, CA, Maria K. Vento, Mark D. Selwyn, Wilmer Cutler Pickering Hale and Dorr, Palo Alto, CA, for Defendant.
Brewster, Rudi M., United States District Judge
ORDER (1) FINDING IN FAVOR OF QUALCOMM ON BROADCOM'S COUNTERCLAIM OF INEQUITABLE CONDUCT; (2) FINDING IN FAVOR OF BROADCOM ON BROADCOM'S AFFIRMATIVE DEFENSE OF WAIVER; AND (3) SETTING HEARING FOR ORDER TO SHOW CAUSE
I. INTRODUCTION
*1 Before the Court are (1) Defendant Broadcom Corporation's (“Broadcom”) counterclaim against Plaintiff Qualcomm Incorporated (“Qualcomm”) that U.S. Patent No. 5,452,104 (Pl's Ex. 1) (“the '104 patent”) is unenforceable due to inequitable conduct; and (2) Broadcom's Third Affirmative Defense that the '104 patent and U.S. Patent No. 5,576,767 (Pl's Ex. 3) (“the '767 patent”) are unenforceable due to waiver. (Doc. No. 370.)
For the reasons set forth below, the Court hereby (1) FINDS IN FAVOR OF QUALCOMM and against Broadcom on Broadcom's counterclaim of inequitable conduct against the '104 patent; (2) FINDS IN FAVOR OF BROADCOM and against Qualcomm on Broadcom's affirmative defense of waiver against the '104 and the '767 patents, with the appropriate equitable remedy to be determined as outlined in Section III-B-9 below; and (3) SETS hearing on ORDER TO SHOW CAUSE for Wednesday, May 2, 2007, at 9:00 A.M., for which the parties may file briefs in accordance with the local rules so long as the Court receives the last brief no later than Wednesday, April 25, 2007, at 12:00 P.M.
II. BACKGROUND
Qualcomm filed the present suit against Broadcom for patent infringement of the '104 and '767 patents on October 14, 2005. (Doc. No. 1.) Chong U. Lee is the named inventor of the '104 patent, and Lee and Donald Pian are the named inventors of the '767 patent. See '104 patent at 1; '767 patent at 1. Qualcomm is the assignee of both the '104 and '767 patents. See '104 patent at 1; '767 patent at 1. Broadcom filed its First Amended Answer and Counterclaims on December 8, 2006, in which it alleged (1) a counterclaim that the '104 patent is unenforceable due to inequitable conduct; and (2) a Third Affirmative Defense that the '104 and '767 patents are unenforceable due to waiver. (Doc. No. 370 .)
A jury trial was held on the legal issues from January 9, 2007, to January 26, 2007. The jury unanimously returned a verdict (1) in favor of Broadcom and against Qualcomm of non-infringement of the '104 and '767 patents; and (2) in favor of Qualcomm and against Broadcom of validity and non-obviousness of the '104 and '767 patents. (Doc. No. 499.) The jury also unanimously returned an advisory verdict on the equitable issues, (1) finding in favor of Broadcom and against Qualcomm that the '104 patent is unenforceable due to inequitable conduct by clear and convincing evidence; and (2) finding in favor of Broadcom and against Qualcomm that the '104 and '767 patents are unenforceable due to waiver by clear and convincing evidence. (Id. at 14.)
The Court held an evidentiary hearing on the equitable issues of inequitable conduct and waiver on February 9, 2007.
III. DISCUSSION
A. THE COURT DOES NOT FIND BY CLEAR AND CONVINCING EVIDENCE THAT THE '104 PATENT IS UNENFORCEABLE DUE TO INEQUITABLE CONDUCT
Broadcom asserts that the '104 patent is unenforceable due to Qualcomm's inequitable conduct in not disclosing two articles to the PTO during the prosecution of the '104 patent: (1) D. Jacques Vaisey & Allen Gersho, Variable block-size image coding, 12 IEEE INT'L CONF. ACOUSTICS, SPEECH, AND SIGNAL PROCESSINGG ICASSP '87 1051 (1987) (Def's Ex. 5061) (“Vaisey”); and (2) Cheng-Tie Chen, Transform Coding of Digital Images Using Variable Block Size DCT with Adaptive Tresholding and Quantization, PROC. SPIE VOLUME 1349, APPLICATIONS OF DIGITAL IMAGE PROCESSING XIII, Nov. 1990, at 43 (Def's Ex. 5064) (“Chen '90”). (Def's Br. at 14.)
1. Standards of law
*2 “To hold a patent unenforceable due to inequitable conduct, there must be clear and convincing evidence that the applicant (1) made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information, and (2) intended to deceive the U.S. Patent and Trademark Office” (“PTO”). Cargill, Inc. v. Canbra Foods, Ltd., Nos.2006-1265, 2006-1302, 2007 WL 466248, at *2 (Fed.Cir. Feb.14, 2007) (citing Impax Labs., Inc. v. Aventis Pharm. Inc., 468 F.3d 1366, 1374 (Fed.Cir.2006)). Materiality can be found either under the current version of PTO Rule 56 or under the earlier “reasonable examiner” standard. Id. at *3 (citing Digital Control Inc. v. Charles Machine Works, 437 F.3d 1309, 1316 (Fed.Cir.2006)).
Under the current version of PTO Rule 56,
[I]nformation is material to patentability when it is not cumulative to information already of record or being made of record in the application, and
(1) It establishes, by itself or in combination with other information, a prima facie case of unpatentability of a claim; or
(2) It refutes, or is inconsistent with, a position the applicant takes in:
(I) Opposing an argument of unpatentability relied on by the Office, or
(ii) Asserting an argument of patentability.
A prima facie case of unpatentability is established when the information compels a conclusion that a claim is unpatentable under the preponderance of evidence, burden-of-proof standard, giving each term in the claim its broadest reasonable construction consistent with the specification, and before any consideration is given to evidence which may be submitted in an attempt to establish a contrary conclusion of patentability.
37 C.F.R. § 1.56(b) (2006). “A withheld reference may be highly material when it discloses a more complete combination of relevant features, even if those features are before the patent examiner in other references.” Semiconductor Energy Lab. Co., Ltd. v. Samsung Elecs. Co., Ltd., 204 F.3d 1368, 1374 (Fed.Cir.2000).
Under the earlier “reasonable examiner” standard, “information is material where there is a substantial likelihood that a reasonable examiner would consider it important in deciding whether to allow the application to issue as a patent.” 37 C.F.R. § 1.56(a) (1991); see Cargill, 476 F.3d 1359, 2007 WL 466248, at *3. “Information concealed from the PTO may be material even though it would not invalidate the patent.” Li Second Family Ltd. P'ship v. Toshiba Corp., 231 F.3d 1373, 1380 (Fed.Cir.2000).
The intent element of inequitable conduct requires that “the involved conduct, viewed in light of all the evidence, including evidence indicative of good faith, must indicate sufficient culpability to require a finding of intent to deceive.” Cargill, 476 F.3d 1359, 2007 WL 466248, at *3 (quoting Impax Labs., 468 F.3d at 1374-75). Intent “rarely can be, and need not be, proven by direct evidence.” Id. Instead, an intent to deceive is “usually inferred from the facts and circumstances surrounding the conduct at issue.” Id.
*3 If a district court finds that the requirements of materiality and intent have been established by clear and convincing evidence, it must then “balance the equities to determine whether the patentee has committed inequitable conduct that warrants holding the patent unenforceable.” Id. (quoting Impax Labs., 468 F.3d at 1374-75). Under the balancing test, “[t]he more material the omission or the misrepresentation, the lower the level of intent required to establish inequitable conduct, and vice versa.” Id. (quoting Critikon, Inc. v. Becton Dickinson Vascular Access, Inc., 120 F.3d 1253, 1256 (Fed.Cir.1997)).
2. The Court finds no clear and convincing evidence that Lee or his attorneys failed to disclose material information to the PTO in the prosecution of the '104 patent
Materiality can be found either under the current version of PTO Rule 56 or under the earlier “reasonable examiner” standard. See Cargill, 476 F.3d 1359, 2007 WL 466248, at *3. Under PTO Rule 56, in order to be material, information must “not [be] cumulative to information already of record or being made of record in the application.” 37 C.F.R. § 1.56(b) (2006).
Here, the Court finds that Vaisey and Chen '90 were not material to the prosecution of the '104 patent, because they are cumulative of the prior art that was already disclosed to the PTO, including (1) Its'hak Dinstein et al., Variable block-size transform image coder, 38 IEEE TRANSACTIONS COMM. 2073 (1990) (Pl's Ex. 842) (“Dinstein”); and (2) Peter Strobach, Quadtree-structured recursive plane decomposition coding of images, 39 IEEE TRANSACTIONS SIGNAL PROCESSING 1380 (1991) (Pl's Ex. 843) (“Strobach”). See '104 patent at 1.
a. The Court finds that Chen '90 discloses adaptive block size, quadtrees, and discrete cosine transforms (“DCTs”) and that Vaisey discloses adaptive block size, quadtrees, and general transforms, of which DCTs are a type
Both parties' experts agree that Chen '90 teaches adaptive block size, quadtrees, and discrete cosine transforms (“DCT”). Qualcomm's expert Dr. Bystrom testified at trial:
Q So, Professor, is it fair to say that Chen ['90] and Vaisey had DCT adaptive block size and quad trees?
A Chen certainly did[.]
(Trial Tr., 177, Jan. 18, 2007.) Broadcom's expert Dr. Ramchandran testified at trial:
Q [Chen '90] [d]isclosed DCT, correct?
A It uses DCT.
Q Variable block size coding, correct?
A Correct.
Q Quadtrees, correct?
A Correct.
(Trial Tr., 68-69, Jan. 17, 2007.)
Both parties' experts also agree that, while Vaisey teaches adaptive block size and quadtrees, it only teaches general transforms and does not specifically mention DCTs, which are a type of transform. Dr. Bystrom testified at trial:
Well, Vaisey discusses transform coding, so it doesn't necessarily explicitly mention the DCT, but does include the quad tree and variable adaptive block size.
(Trial Tr., 172, Jan. 18, 2007.) She explains later that “Vaisey had adaptive block size and quad trees and had transform coding, one example of which is the DCT.” (Id. at 177.) Dr. Ramchandran testified at trial:
*4 Q So he's describing variable block size or adaptive block size?
A He's using adaptive block size. He's using quadtree segmentations motivated at using big blocks where they belong and little blocks where they belong.
(Trial Tr., 71, Jan. 17, 2007.) He further testified:
Q Now, does Doctor Vaisey describe the precise transform that he says you should use?
A He actually does not. He just mentions the use of general transforms and just leaves it at that.
Q And can we have DX-8073.
A Yes. So-but I do want to mention that the most popular transform that would have been most obvious to use at the time would have been the DCT. It was the most popular transform in image compression at the time.
(Id. at 72-73.)
b. The Court finds no clear and convincing evidence that Vaisey and Chen '90 are not cumulative of Strobach
Both parties' experts agree that Strobach teaches adaptive block size and quadtrees. Qualcomm's expert Dr. Bystrom asserts that Strobach also teaches DCTs, while Broadcom's expert asserts that Strobach teaches away from the use of DCTs. Dr. Bystrom testified at trial:
So, if we can go back to the first page. So, we saw in that paragraph that I just read that [Strobach is] disclosing variable block size, and then, now if we go to the bottom of that column-right there is fine-what we see is that a similar order recursive (phonetic) law exists in the case of the discreet cosign [sic] reference, and I'll spare you me reading the rest of this paragraph. But, he's also revealing or disclosing and actually discussing extensively transform coding and the discreet cosign [sic] transform. So, he's revealed variable block size. He's revealed the discreet cosign [sic] transform. And if we could possibly step to the next page following-stepping a little bit. We'll see Figure number 1 right there. As I said, he reveals or-excuse me-he reveals or discloses right in the title that he's considering quad trees, but we can see in Figure number 1 an explicit example of partitioning via quad tree and a quad tree example itself. So, he is disclosing the DCT and discussing extensively about the DCT and about variable block sizes and about quad trees and making use of these quad trees.
(Trial Tr., 174-75, Jan. 18, 2007.) Dr. Ramchandran testified at trial:
Well, you have to be very careful here because [Strobach] did not disclose an adaptive block size DCT. He actually described an adaptive block size quadtree segmentation, and then he took the entire image and did fixed block size DCTs on them. So I would not put a tick on this.
(Trial Tr., 230, Jan. 17, 2007.) He later qualified as follows:
Q Let me put up a second chart where [Qualcomm's counsel] was asking you about the prior art, and I want to ask you about the Strobach reference where he put a check mark. Do you agree with that check mark?
A The Strobach reference uses a quadtree, as I recall, that's correct, and I do not recall it using a DCT.
*5 Q In fact, what does it say about a DCT?
A The Strobach reference actually tells you that it's a way of doing quadtree segmentation for certain difference images, and it actually teaches away from the need for any transforms because of the clever nature in which he has done a quadtree segmentation, because the DCT in all transforms are typically used to remove redundancies that are already left over. He is very proud of a particular way of segmenting which essentially obviates the need. It says you don't need. There's no more correlations left. So you don't even need a transform. In fact, he compares what he does without a transform with the DCT operations with a fixed block size and concludes that there is no further advantage to doing a DCT on it.
(Id. at 248-49.) Therefore, Dr. Ramchandran admits that Strobach analyzes the use of fixed block size DCTs on images segmented by adaptive block size quadtree segmentation, even if Strobach ultimately advises against the use of DCTs.
Furthermore, as Dr. Bystrom testified, Strobach cites to Vaisey and a 1989 article by Chen, Cheng-Tie Chen, Adaptive transform coding via quadtree-based variable block size DCT, 3 Proc. IEEE INT'L CONF. ACOUSTICS, SPEECH, SIGNAL PROCESSINGG ICASSP '87 1854 (1989) (Def's Ex. 5063) (“Chen '89”):
Q Could we have the Strobach reference up, please?
A [ ... ] And I'd like to point out that-if you don't mind, I'd like to point out that reference 13 is Chen ['89] reference and reference 15 is actually Vaisey reference, a reference to Vaisey.
BY MR. PATCH:
Q Could we go to the reference section of the paper and make sure the jury has the opportunity to confirm that?
A Sure.
Q Could we see references 13 and 15, please?
A So, reference 13 is Chen 89 and reference 15 is the Vaisey reference.
(Trial Tr., 173-74, Jan. 18, 2007.) As both parties' experts assert, Chen '89 discloses extremely similar information to Chen '90. Dr. Ramchandran testified at trial:
Q And have you prepared a slide that shows the title and abstract of the Chen 1989 article?
A Yes. I think there's one slide I have on it.
Q Can I have DX-8070.
A Yeah. So this is the title slide of Chen's paper from one year before the paper we just discussed, and it's titled, “Adaptive Transform Coding by a Quadtree-Based Variable Block Size DCT.” In fact, if you just read the title, it has all the elements of the claim right there in the title. And the description of the algorithm in Chen's work is very, very close to what he did in 1990. Minute differences.
(Trial Tr., 69, Jan. 17, 2007.) Dr. Bystrom later testified as follows:
Q Have you heard Doctor Ramchandran testify that from his perspective, Chen 89 and Chen 90 were fundamentally the same information?
A Yes, and I agree with-agree with him on that.
(Trial Tr., 145, Jan. 18, 2007.)
Therefore, Strobach cites to Vaisey and Chen '89, which as Broadcom's expert admits is “very, very close” to Chen '90, and the Court finds no clear and convincing evidence that Strobach does not disclose adaptive block size, quadtrees, and DCTs. Accordingly, the Court FINDS no clear and convincing evidence that Vaisey and Chen '90 are not cumulative of Strobach.
c. The Court finds no clear and convincing evidence that Vaisey and Chen '90 are not cumulative of Dinstein
*6 Qualcomm's expert Dr. Bystrom presented unopposed testimony that Dinstein disclosed adaptive block size and DCT. Dr. Bystrom further testified that Dinstein disclosed quadtrees, with which Broadcom's expert Dr. Ramchandran disagreed. Dr. Bystrom testified at trial as to Dinstein:
So, a variable block size image code is proposed in reference 13, which is Vaisey. The image is partitioned into various sizes, 2 by 2, running from 2, 3, 4 and 5 of squares, and the partition is based on the quad tree presentation of the image. So, the use of quad tree imposes restrictions on possible locations of larger blocks. So, Dinsteen [sic] is really pointing out here DCTs, variable block sizes, and the use of quad trees, the fact that quad trees and all of these were actually widely used in the image compression arena and discussing some of the advantages and disadvantages of all of these through the rest of the introduction.
(Trial Tr., 176, Jan. 18, 2007.) Dr. Ramchandran testified:
Q And what about for Dinstein?
A Dinstein didn't do a quadtree.
Q All right.
A And Dinstein had adaptive-I don't recall the details, but I remember she was getting around quadtree because she didn't like it.
Q Okay.
A And I don't remember all the other details.
Q DCT?
A I don't know. I don't think he did it. I don't remember.
Q You don't remember?
A I don't remember, but I know for sure he didn't do a quadtree.
(Trial Tr., 232, Jan. 17, 2007.) As Dr. Ramchandran does not seem to recall many of the details of the Dinstein article, the Court is more persuaded by Dr. Bystrom's testimony.
Furthermore, like Strobach, Dinstein also cites to Vaisey. As Dr. Bystrom testified:
Q Can we have [Dinstein] up, please.
A [ ... ] So, a variable block size image coder is proposed in 13, and again, this is the Vaisey reference.
Q Could we go to the reference page and allow the jury to confirm that this is a pointer to Vaisey?
A This is the same Vaisey reference that we've been discussing.
(Trial Tr., 175-76, Jan. 18, 2007.)
Therefore, Dinstein cites to Vaisey, and the Court finds no clear and convincing evidence that Dinstein does not disclose adaptive block size, quadtrees, and DCTs. Accordingly, the Court FINDS no clear and convincing evidence that Vaisey and Chen '90 are not cumulative of Dinstein.
Since the Court has found no clear and convincing evidence that Vaisey and Chen '90 are not cumulative of Dinstein and Strobach, both of which were disclosed to the PTO during the prosecution of the '104 patent, the Court finds no clear and convincing evidence that Vaisey and Chen '90 are material information. Accordingly, the Court does not find that Lee and his attorneys failed to disclose material information to the PTO in not disclosing Vaisey and Chen '90, and the Court need not address the issue of intent.
Therefore, despite the jury's advisory verdict to the contrary, the Court FINDS no clear and convincing evidence of inequitable conduct in the prosecution of the '104 patent and FINDS IN FAVOR OF QUALCOMM and against Broadcom on Broadcom's counterclaim of inequitable conduct against the '104 patent.
B. THE COURT FINDS BY CLEAR AND CONVINCING EVIDENCE IN FAVOR OF BROADCOM ON BROADCOM'S AFFIRMATIVE DEFENSE OF WAIVER AGAINST THE '104 AND '767 PATENTS
1. Standards of law-Rambus and the duty of disclosure
*7 This case involves the law of waiver as a consequence of silence in the face of a duty to speak. A duty to speak can arise from a group relationship in which the working policy of disclosure of related intellectual property rights (“IPR”) is treated by the group as a whole as imposing an obligation to disclose information in order to support and advance the purposes of the group.
In the patent infringement suit Rambus, Inc., v. Infineon Technologies, AG, 318 F.3d 1081 (Fed.Cir.2003), the Federal Circuit considered the duty of disclosure Plaintiff Rambus, a designer of computer memory systems, owed to the Joint Electronic Devices Engineering Council (“JEDEC”), a standard-setting body for semiconductor technologies associated with the Electronic Industries Association (“EIA”). See id. at 1085. Both JEDEC and EIA have a written patent policy “encouraging the adoption of standards free of patented items or processes.” Id.
At least by 1993, the EIA/JEDEC patent policy required members to disclose patents and patent applications “related to” the standardization work of the committees. Id. The EIA/JEDEC patent policy manual stated:
EIA and JEDEC standards ... that require the use of patented items should be considered with great care ... [C]ommittees should ensure that no program of standardization shall refer to a product on which there is a known patent unless all the relevant technical information covered by the patent is known.
Id. at 1097. The manual also included a policy revision expressly adding “pending patent[s]” to the policy language. Seeid. The manual further stated:
The Chairperson ... must ... call attention to the obligation of all participants to inform the meeting of any knowledge they may have of any patents, or pending patents, that might be involved in the work they are undertaking. Appendix E (Legal Guidelines Summary) provides copies of viewgraphs that should be used at the beginning of the meeting to satisfy this requirement.
Appendix E of the manual read, in relevant part, as follows:
EIA/JEDEC PATENT POLICY SUMMARY
Standards that call for the use of a patented item or process may not be considered by a JEDEC committee unless all of the relevant technical information covered by the patent or pending patent is known to the committee, subcommittee, or working group.
Id. Appendix E also provided that patentees or applicants must agree to license others to use the patent “for the purpose of implementing the standard(s).” Id. Thus, the Federal Circuit found that Appendix E prohibited standards that “call for use of a patented item or process” unless all information “covered by the patent or pending patent” was known and a “license ... for the purpose of implementing the standard(s)” was available under reasonable terms. Id.
Although Rambus was not held liable for failing to reveal IPR because they were not related to the standards being developed by the study committee, the case is explicit in its treatment of the duty of members of the standards committee to share their IPR on related issues before the standards committee. Referring to the policy statements of JEDEC, the court stated significantly as follows:
*8 The language of these policy statements actually does not impose any direct duty on members. While the policy language advises JEDEC as a whole to avoid standards “calling for the use of” a patent and the manual obligates the chairperson to remind members to inform the meeting of any patents or applications relevant to the work of the committee, this court finds no language-in the membership application or manual excerpts-expressly requiring members to disclose information. There is no indication that members ever legally agreed to disclose information.
Nevertheless, because JEDEC members treated the language of Appendix E as imposing a disclosure duty, this Court likewise treats this language as imposing a disclosure duty ... That language links the disclosure duty to patents or applications whose claims cover the proposed JEDEC standard. Further, the JEDEC policy permitted adoption of a standard covered by a patent if the claimed technology was available under reasonable license terms. Thus, JEDEC's policy identifies the duty to disclose based on the scope of claimed inventions that would cover any standard and cause those who use the standard to infringe.
Id. at 1098.
The Federal Circuit agreed with the evidence provided by Infineon's arguments and witnesses of the JEDEC members' understanding of the JEDEC policy, which indicated that “the relevant disclosure duty hinges on whether the issued or pending claims are needed to practice the standard.” Id. at 1100. The Federal Circuit found that “[t]his construction accord[ed] with the primary JEDEC goal of adopting open standards that can be practiced without unreasonable license fees or terms.” Id. The court concluded that, on this record, “a reasonable jury could find only that the duty to disclose a patent or application arises when a license under its claims reasonably might be required to practice the standard.” Id.
Therefore, the Federal Circuit held that “Rambus's duty to disclose extended only to claims in patents or applications that reasonably might be necessary to practice the standard,” which “encompassed any patent or application with claims that a competitor or other JEDEC member reasonably would construe to cover the standardized technology.” Id. The Court concluded that “the disclosure duty operate[d] when a reasonable competitor would not expect to practice the standard without a license under the undisclosed claims.” Id. at 1100-01. Consequently, the Court specified that “the disclosure duty does not arise for a claim that recites individual limitations directed to a feature of the JEDEC standard as long as that claim also includes limitations not needed to practice the standard.” Id. at 1101. In Rambus, Rambus' intellectual property rights were not related to the standard, and thus no liability was imposed on Rambus. See id. at 1104-05.
2. Waiver of patent rights must be shown by clear and convincing evidence
*9 According to the Federal Circuit, “[t]he burden of establishing an affirmative defense is on the party raising the defense.” Jazz Photo Corp. v. Int'l Trade Comm'n, 264 F.3d 1094, 1102 (Fed.Cir.2004). Constitutional rights can be waived only “if it can be established by clear and convincing evidence that the waiver is voluntary, knowing, and intelligent.” Schell v. Witek, 218 F.3d 1017, 1023 (9th Cir.2000) (quoting Gete v. Immigration and Naturalization Serv., 121 F.3d 1285, 1293 (9th Cir.1997)). The Ninth Circuit has also held that California law demands a clear and convincing evidence standard in the waiver of insurance coverage rights. See Am. Cas. Co. of Reading, Pa. v. Krieger, 181 F.3d 1113, 1121 (9th Cir.1999).
Under 35 U.S.C. § 271 et seq., patentees have a right to enforce their patent rights against infringers. While the Federal Circuit has not yet addressed the standard that should be used in finding waiver of patent rights, the Northern District of California has upheld a Bankruptcy Court's application of a clear and convincing standard in such cases. See In re Read-Rite Corp., No. C-06-0364, 2006 WL 1214839, at *7 (N.D.Cal. May 5, 2006). Similarly here, since waiver of patent rights could result in the very serious consequence of rendering the patent completely unenforceable, the Court FINDS that waiver of patent rights must be proven by clear and convincing evidence.
3. Under Rambus, JVT participants' duty of disclosure only encompasses patents that reasonably may be necessary to practice the H.264 standard
In Rambus, although the JEDEC policy did not use the language “related to,” the Federal Circuit found that the parties consistently agreed that the JEDEC policy language required disclosure of patents “related to” the standardization work of the JC-42.3 committee. See Rambus, 318 F.3d at 1098. Based on the conduct of the JC-42.3 committee members, the Federal Circuit held that patents “related to” the standardization work only encompassed patents that “reasonably might be necessary to practice the standard.” Id. at 1099. The Court explained that “[t]o hold otherwise would contradict the record evidence and render the JEDEC disclosure duty unbounded. Under such an amorphous duty, any patent or application having a vague relationship to the standard would have to be disclosed.” Id. at 1101.
Similar to the “related to” language in Rambus, the IPR Policy and Guidelines of the Joint Video Team (“JVT”) described in more detail below refer to IPR information “associated with” any standardization proposal or “affecting the use” of JVT work. (Def's Ex. 5183 (“JVT ToR”) at 9, 12.) Therefore, following the reasoning of the Federal Circuit in Rambus, this Court FINDS that this language only requires JVT members to disclose patents that “reasonably might be necessary” to practice the H.264 standard. To hold otherwise would render the JVT disclosure duty inappropriately “unbounded,” “amorphous,” and “vague.”
4. The Joint Video Team (“JVT”) and its Intellectual Property Rights (“IPR”) Policy and Guidelines
*10 The JVT was formed in late 2001 as a joint project between two existing international standard-setting bodies: (1) the Video Coding Expert Group (“VCEG”) of the International Telecommunication Union Telecommunication Standardization Sector (“ITU-T”), and (2) the Moving Picture Experts Group (“MPEG”) of the International Organization for Standardization (“ISO”)/ International Electrotechnical Commission (“IEC”). (JVT ToR at 1; Trial Tr., 267, Jan. 17, 2007.)
Qualcomm and Broadcom have been active dues-paying members of the American National Standards Institute, the representative member body of both the ISO and the IEC for the United States, for many years prior to 2001. In fact, Qualcomm submitted information about digital cinema IPR to an MPEG Test Sub-group in approximately June 2001 at or about the time of the creation of a JVT working committee, which was tasked with the responsibility to research and develop an industry standard for video compression technology. (Pl's Ex.1931.)
The IPR referred to in the JVT Terms of Reference (“ToR”) encompass patents and copyrights. (JVT ToR at 8.) Section 3 of the ToR is entitled “IPR Policy and Guidelines.” (Id.) Subsection 3.2, entitled “Collection of IPR information during the standardization process,” reads as follows:
According to the ITU-T and ISO/IEC IPR policy, members/experts are encouraged to disclose as soon as possible IPR information (of their own or anyone else's) associated with any standardization proposal (of their own or anyone else's). Such information should be provided on a best effort basis.
For collecting such information, JVT has decided to use it's [sic] own Patent Declaration form-note that this is distinct from the ITU ISO IEC Patent Statement and Licensing Declaration that is to be submitted to the ISO Secretary General and ITU TSB Director when the contributed technology becomes part of the final standard.
Therefore, JVT requires all technical (algorithmic) proposals include the following:
Attached at the end of each technical contribution, a fully filled-out “JVT Patent Disclosure form” (as shown below). At the contribution stage, this form is for information only, and may be signed by an expert or left unsigned. The form must be included in the contribution to JVT.
Additionally, all submitted source code must include a written transfer of copyright in the form described in section 5 below.
Note that the submission of the JVT Patent Disclosure form at the proposal stage does not have the same formal status as the final IPR declaration to the ITU TSB and ISO/IEC, which must be done in the approval process for the ITU-T Recommendation and ISO/IEC International Standard.
Such information provided to the Chair | Rapporteur will be tabulated in a “IPR status list” (e.g. a simple Word table) of the information received. Information not currently relevant (e.g. if a proposed method was not accepted) will be removed from the “IPR status list” as early as possible. The “IPR status list” is a living document of the JVT.
*11 (Id. at 9) (emphasis omitted.)
The ToR contains a sample blank JVT Patent Disclosure Form. (Id . at 12-15.) The title of the Patent Disclosure Form contains the qualification “(Typically one per contribution and one per Standard | Recommendation).” (Id. at 12.) The introductory text of the form reads as follows:
This form provides the ITU-T | ISO/IEC Joint Video Coding Experts Group (JVT) with information about the patent status of techniques used in or proposed for incorporation in a Recommendation | Standard. JVT requires that all technical contributions be accompanied with this form. Anyone with knowledge of any patent affecting the use of JVT work, of their own or of any other entity (“third parties”), is strongly encouraged to submit this form as well.
This information will be maintained in a “living list” by JVT during the progress of their work, on a best effort basis. If a given technical proposal is not incorporated in a Recommendation | Standard, the relevant patent information will be removed from the “living list”. The intent is that the JVT experts should know in advance of any patent issues with particular proposals or techniques, so that these may be addressed well before final approval.
This is not a binding legal document; it is provided to JVT for information only, on a best effort, good faith basis. Please submit corrected or updated forms if your knowledge or situation changes.
This form is not a substitute for the ITU ISO IEC Patent Statement and Licensing Declaration, which should be submitted by Patent Holders to the ITU TSB Director and ISO Secretary General before final approval.
(Id.) (emphasis added.)
It is clear from the above that, like the Rambus case, the identification of participants' patents and pending applications is critical to the feasability and effectivity of industry standards so that the rights of IPR owners may be protected (1) by independently licensing or (2) by joining a pool of IPR available to be licensed on a non-exclusive, non-discriminatory basis to any who wish to practice the industry standard. If any owners of IPR refuse to license their IPR, such a position could either block adoption of a standard or require the standards organization to create a standard which does not practice the IPR, if such be possible. And, of course, the effectivity of industry standards could be substantially impaired if related undisclosed patents were revealed after publication of the standards internationally.
As this Court instructed the jury as to waiver,
In this case, Broadcom has raised the affirmative defense that Qualcomm waived its rights to enforce the 104 and 767 patents. In order to prove waiver, Broadcom must show by clear and convincing evidence either that Qualcomm, with full knowledge of the material facts, intentionally relinquished its rights to enforce the 104 and 767 patents or that its conduct was so inconsistent with an intent to enforce its rights as to induce a reasonable belief that such right has been relinquished.
*12 Intent to relinquish rights may be shown by Qualcomm's statements or conduct. Mere silence or inactivity does not constitute a waiver unless there is an obligation to speak or otherwise take action. A participant in a standards setting body may have a duty to disclose relevant patents if the participants as a whole consider the standards setting body to impose such a duty, even if the duty to disclose is not expressly stated in the written policies of the standards setting body.
The duty to disclose owned patents or applications or to inform of known patents owned by others arises when intellectual property involved reasonably might be necessary to practice the standard under study. In other words, the duty would arise when a participant in the standards setting body reasonably would not expect a competitor to practice the industry standard without a license under the patent.
The defense of waiver, therefore, requires you to focus on the mental attitude of the party alleged to have waived its rights, in this case Qualcomm. You must consider whether Broadcom has proven by clear and convincing evidence that Qualcomm knowingly violated a duty to disclose its 104 and/or 767 patents to the Joint Video Team, the JVT, or its parent organization during the JVT's preparation and eventual adoption of a video compression industry standard known as the H.264 standard. Detrimental reliance on the part of Broadcom or prejudice suffered by Broadcom is not an element of waiver.
(Trial Tr., 8-9, Jan. 26, 2007.)
5. Like Rambus, the Court finds clear and convincing evidence that JVT participants treated the JVT IPR Policies as imposing a duty to disclose
Similar to Rambus, the JVT IPR Policy and Guidelines provide no express requirement to disclose patents unless a member submits a technical proposal. (JVT ToR at 9.) Instead,
members/experts are encouraged to disclose as soon as possible IPR information (of their own or of anyone else's) associated with any standardization proposal (of their own or anyone else's). Such information should be provided on a best effort basis.
(Id.)
Furthermore, like Rambus, in addition to the written guidelines, JVT participants also learned of the patent disclosure policy from attendance of JVT meetings. Gary Sullivan, chairman of the JVT, testified at trial by way of his video deposition that he discussed the JVT's IPR policies at every meeting, which was recorded in every meeting report:
Q Now, was there a practice that you followed when you chaired JVT meetings with respect to announcing IPR disclosure obligation?
A Yes.
Q What was that practice?
A At every meeting, I would summarize the policies and make people aware that we had policies that we were required to follow, help people find information about those policies and ask if there was any additional reports that needed to be submitted to notify us of patent rights that apply to the standard, and we would record that-those reminders in every meeting report.
*13 Q And the policies and reports that you're referring to in that answer, are they intellectual property rights, so-called IPR that is referred to in the documents we've been through so far?
A Yes.
Q Now, I would like to direct your attention to Exhibit 4 under the bold heading of “IPR Policy,” the second paragraph, and in particular the second sentence. And I'm going to read it to you. It says, “The chair will summarize the IPR policy at each meeting and will ask the members at that time if anyone present is aware of IPR that should be reported, and any reports made verbally at that time will be recorded in a meeting output document (either in the meeting report or a group-approved IPR status report).” Do you see that sentence?
A Yes.
Q Is that the practice that you follow at each meeting of the JVT which you chair?
A Yes.
(Trial Tr., 43-44, Jan. 18, 2007.)
Qualcomm's employee Dr. Sagetong, whose role it was to monitor the JVT, confirmed Mr. Sullivan's practice at trial:
Q Now, you told us that you attended a series of JVT meetings. At each meeting, Mr. Sullivan-Doctor Sullivan spoke at the outset, correct?
A Yes.
Q And at each meeting, he reiterated the policy on disclosure of patents, correct?
A Yes.
(Trial Tr., 26, Jan. 24, 2007.) Dr. Yiliang Bao, another Qualcomm employee who attended JVT meetings on behalf of Qualcomm, testified at trial that Sullivan would “usually” remind the participants to “provide the patent disclosure form along with the technical contribution” and “to check the patent policies of the parent bodies” at these meetings. (Id. at 66.)
Conveniently, when asked if Mr. Sullivan “encouraged people to comply with the policy” at each meeting, Dr. Sagetong testified that he “didn't pay attention to all what [sic] he [Sullivan] was saying.” (Id.) Conveniently again, Ms. Raveendran, another Qualcomm employee who admitted attending one JVT meeting, testified that she had arrived late at that meeting and therefore “probably” missed Mr. Sullivan's introduction and description about the disclosure of patents:
Q Now, let's go to your involvement on the ad hoc membership list. You do know Gary Sullivan, correct?
A I know him as the chair of JVT now.
Q And the JVT meeting you attended was chaired or co-chaired by him, correct?
A The one I attended in July 2005, he was co-chairing that JVT session, yes.
Q And you were there when he began the meeting, correct?
A No. I walked in in the middle of the session.
Q Did you miss the introduction and the description about the disclosure of patents?
A Probably. I don't recall.
(Id. at 52.) Ms. Raveendran had been designated in 2001 by higher management at Qualcomm to “monitor” the meetings of the JVT Committee, and Qualcomm ultimately produced twenty-one emails from the Committee to Ms. Raveendran dated from September 2002 through at least March 2003. (Trial Tr., 80-81, Jan. 18, 2007; Trial Tr., 198-200, Jan. 24, 2007; Def's Exs. 5844-64.)
*14 Similar to Rambus, despite the language of the IPR policy merely encouraging participants to disclose patents to the JVT, the issue before the Court is whether JVT participants treated the IPR Policy as imposing a duty of disclosure. Mr. Sullivan testified at trial that JVT participants sometimes submitted disclosures without an accompanying technical proposal:
Also, the JVT disclosure form is filed often for things that are not even included in the standard. For example, if somebody brings a proposal for something they want adopted into the standard, they would attach the patent disclosure form to the disclose the fact that they had a patent on their proposal, but if their proposal was not adopted into the draft, then their patent may not apply to the draft standard after that takes place. So the reporting in the inside of the JVT is considered sort of an informal best-effort basis.
Also, people can and sometimes have submitted a disclosure form by itself without a proposal attached to it to report that they believe they have a patent-patent rights that apply to the draft standard or patent rights that apply to somebody else's proposal.
If they see someone else submitting a proposal, they think they have patent rights on that proposal-I think we've had a couple of occasions where someone would submit a patent disclosure form saying that they believe they have a patent on someone else's proposed technique.
(Trial Tr., 33-34, Jan. 18, 2007.)
He further testified that JVT participants sometimes submitted disclosures directly to the JVT before filing formal disclosures with the JVT's parent bodies:
Q Were there, in fact, instances of IPR disclosures that were made first to the JVT and subsequently to the parent organizations on a document such as Exhibit 19?
A Yes. I believe there were a number of cases where we would get an IPR report in JVT, and it was understood that is not a substitute for reporting the information formally to the parent bodies. A formal report needed to be filed before the standard was finalized.
Q And were formal reports like you described, in fact, filed?
A Oh, yes.
Q And could you, by way of illustration, name some companies who made such formal reports in connection with the H.264 standard?
A Well, Microsoft did. I think there were tens of companies that did. I don't remember for sure who it was-did exactly.
(Id. at 41-42.)
Furthermore, after reviewing “hundreds” of JVT documents, Qualcomm's own Dr. Sagetong admitted to reviewing at least one patent disclosure form that was not attached to or referencing a technical proposal. (Trial Tr., 20, Jan. 24, 2007.)
Accordingly, the Court FINDS that JVT members treated the JVT IPR Policy as imposing a duty of disclosure.
6. The Court finds clear and convincing evidence that the '104 and '767 patents reasonably may be essential to the practice of the H.264 standard.
Qualcomm's H.264 expert Dr. Richardson testified at trial that the '104 patent was essential to the practice of the H.264 standard:
*15 Q All right. Let's now turn to the analysis you did on infringement of the 104 patent. And let's start with the H.264 standard that you address in your book.
To what extent have you formed any opinions about the relationship between the 104 patent on the one hand and the H.264 standard on the other?
A Well, in my opinion, the 104 patent-the claims of the patent map onto the H.264 standard, so that devices or systems that practice H.264 actually practice claims of the 104 patent.
(Trial Tr., 62, Jan. 11, 2007.) It is beyond dispute that Qualcomm conducts significant research and development on the compression and improvement of video communications and that it has been so devoted for many years prior, during, and after the work done by the JVT on video compression standards technology. The Court is persuaded by Dr. Richardson's extensive testimony that practicing the H.264 standard necessarily reads on the '104 patent. (Trial Tr., Jan. 11 and 24, 2007).
Likewise, sufficient evidence was presented at trial to persuade the Court that the '767 patent is reasonably essential to practice the H.264 standard. Dr. Richardson testified that the '767 patent describes an encoder choice that is an option of the H.264 standard:
Q Now, it's also true that the only people that you have ever heard say that the 767 patent is essential to H.264 worked for Qualcomm, correct?
A To be honest, I wouldn't actually agree with the statement that the 767 patent is essential to H.264.
Q So it's not?
A What is the question, please?
Q I'm sorry. Let me restate it fully. Is the 767 patent essential to the practice of H.264?
A You recall that earlier I described the 767 patent. The 767 patent describes the way an encoder may choose to encode blocks in different ways. Now, such a choice is supported by H.264, but H.264 does not specify the choices that an encoder has to make. So that choice is really an implementation issue. It's an optional choice in my opinion.
(Trial Tr., 123-24, Jan. 11, 2007.) More emphatically, Qualcomm employee Yuriy Reznik sent an email to Qualcomm employees Harinath Garudadri, Phoom Sagetong, and Hyukjune Chung in July 2005 describing the '767 patent as a “core patent relevant to H.264”:
To the best of my understanding Qualcomm has a core patent relevant to H.264, MPEG-4 AVC[1] and their extensions.
This patent is the patent # 5,576,767 issued in 1996, and essentially covering all hybrid transform-DPCM video codecs[2] with variable transform sizes. This is clearly a case with H.264 and H.264 FRX codecs whose block sizes are either 4x4, 8x8, or 16x16.
(Pl's Ex. 616 at 1.) Dr. Sagetong testified at trial that he interpreted Mr. Reznik to be suggesting that the '767 patent is essential to the H.264 standard:
Q And so he [Reznik] suggests back in 2005 that it's the 767 patent that's essential to H.264, correct?
A. Yes.
(Trial Tr., 30, Jan. 24, 2007.) As Dr. Sagetong further testified, he is in corporate research and development at Qualcomm and is assigned to “monitor what's going on in JVT,” Mr. Garudadri is his technical manager, and Mr. Reznik and Mr. Chung are his colleagues. (Id. at 22-23.)
*16 Therefore, the Court FINDS by clear and convincing evidence that the '104 and '767 patents reasonably may be essential to the practice of the H.264 standard.
7. The Court finds clear and convincing evidence that Qualcomm participated in the JVT from as early as September 2002 to at least July 2006
Christine Irvine, Qualcomm's original Federal Rule of Civil Procedure 30(b)(6) witness testified through her July 6, 2006, deposition as follows:
Q Are you the person at Qualcomm most knowledgeable about the attendance or participation by any Qualcomm principal, employee or representative at any H.264 standards committee meetings?
A I believe I am.
Q Are you the person at Qualcomm most knowledgeable about Qualcomm's knowledge regarding the development of the H.264 standard?
A I believe I am.
Q And are you the person at Qualcomm most knowledgeable about any actions taken by Qualcomm or any of its principals, employees or representatives as a result of Qualcomm's knowledge regarding the development of the standard?
A I believe I am.
Q Is Qualcomm a member of the JVT?
A No, Qualcomm is not.
Q Has Qualcomm ever attended any meetings of the JVT?
A Qualcomm is not aware of any attendance to any JVT meetings.
Q Has Qualcomm ever hosted any meeting of the JVT?
A Qualcomm's not aware of hosting a JVT meeting.
Q Okay. Has Qualcomm made any submissions to the JVT?
A No, Qualcomm has not made any submissions to the JVT that Qualcomm is aware of.
Q When did Qualcomm first become aware of the development of the H.264 standard?
A Approximately 2001 in trade journals.
(Trial Tr., 79-81, Jan. 18, 2007.) However, Ms. Irvine immediately thereafter put the above “non-awareness” implication in context by her continuing deposition testimony as follows:
Q Were you aware in 2001 that the H.264 standard was being developed?
A I was aware at some point in time that the standard was being developed. I believe it was approximately 2001.
Q How did you become aware that the H.264 standard was being developed?
A While in Australia for an MPEG meeting, a JVT representative was in attendance and stated that they were working on a standard.
Q Who was that JVT representative?
A Gary Sullivan.
Q Were any other Qualcomm representatives present at that MPEG meeting?
A Yes.
Q Who?
A Viji Raveendran and Jim Determan.
(Id. at 80-81.)
Furthermore, many of Ms. Irvine's above representations were directly contradicted by Scott Ludwin, Qualcomm's second Rule 30(b)(6) witness. Mr. Ludwin confirmed through his deposition of August 17, 2006, that at least four Qualcomm employees had attended at least ten JVT meetings beginning from December 2003 to July 2006. (Trial Tr., 113-14, Jan. 18, 2007; Pl's Ex. 845 at 2-3.) Mr. Ludwin also confirmed that Viji Raveendran, a Qualcomm engineer, was listed by her Qualcomm email address as a member of a JVT ad hoc working group for “AVC Verification Tests” as early as December 2002. (Trial Tr., 115-17, Jan. 18, 2007; Def's Ex. 5836.) The Ad Hoc Group's purpose was “to evaluate the coding efficiency of the AVC in comparison with MPEG-4 part 2 and MPEG-2 part 2 by the following task leading to the final verification test.” (Def's Ex. 5836 at 1.) Mr. Ludwin further confirmed that Qualcomm had submitted at least five technical proposals to the JVT from January 2006 to July 2006. (Trial Tr., 113, Jan. 18, 2007; Pl's Ex. 845 at 2.)
*17 Ms. Raveendran also contradicted some of Ms. Irvine's assertions. A senior staff engineering manager at Qualcomm, Ms. Raveendran testified by way of her July 18, 2006, deposition that she knew of at least one submission Qualcomm had made to the JVT:
Q Has Qualcomm ever made any submission at-any written submission for consideration at any meeting of the JVT?
A Yes.
Q How many submissions do you know of that Qualcomm has made to the JVT?
A One.
Q What did that submission relate to?
A This was to scalable video coding.
(Trial Tr., 121-22, Jan. 18, 2007.)
At trial, Ms. Raveendran confirmed her own participation in the JVT:
Q Did you have any personal involvement with JVT?
A I attended one of their meetings when they were working on the scalable video coding effort....
Q I believe it was in your deposition that you testified that you attended a JVT meeting in Poznan, Poland, in July of 2005; is that correct?
A Yes.
Q Why were you at the JVT meeting in Poland in 2005?
A To monitor this error resilience work in scalable video coding....
Q Have you participated in any other JVT meeting other than the one in Poznan, Poland
A No.
(Trial Tr., 41-42, Jan. 24, 2007.) However, she qualified that she was in Poland “primarily attending [other] MPEG meetings” and did not “actively participate,” make a technical contribution, or vote at the JVT meeting. (Id. at 42.)
Ms. Raveendran confirmed that her email address was on the email list printed in the December 2002 JVT Ad Hoc Group on AVC Verification Test report, but testified that she “was not involved in this” or “any JVT ad hoc group.” (Id. at 43-45; Def's Ex. 5836.) She then testified as follows:
Q Ms. Raveendran, did you place your e-mail address on this list?
A No.
Q Do you have any understanding as to how it is that your e-mail address appears on such a list?
A The list is pretty vast. From what I can see is because Vittorio Baroncini is the first author, he knew me as a-as someone who is trained in compression artifacts and an expert viewer. So because the primary goal of this ad hoc was to evaluate compression technologies, he probably added my name. Chairs can do that. Chairs of ad hoc groups can add people to their list.
Q Did you ever send mail to this e-mail list?
A No.
Q Do you have any knowledge of having read mail that came back to you from this e-mail list?
A No, not that I can recall.
(Trial Tr., 46, Jan. 24, 2007.) However, as she admitted in cross-examination, her email address also appears on the list published with the March 2003 report for the same ad hoc group. (Id. at 53-55; Def's Ex. 5837.)
Finally, it was not until Ms. Raveendran's cross examination on one of the last days of trial, January 24, 2007, that she revealed that emails sent to her as a result of her being on the Ad Hoc Group email list had been pulled from her computer in preparation for her testimony:
*18 Q Did you receive mailings from the ad hoc committee identified in this exhibit?
A During the preparation for this testimony, there were some e-mails pulled out of my e-mail box. E-mail archive.
Q Were they produced to Broadcom?
A I don't know.
Q All right. But during the preparation for your testimony in this case, e-mails to you as a result of your being on this list were pulled out of your e-mail box, correct?
A Yes.
(Trial Tr., 53, Jan. 24, 2007). This court testimony came less than a week after Qualcomm's counsel represented to this Court at side bar on January 18, 2007, that “there's no evidence that any e-mail was actually sent to this list. This is just a list of e-mail ... addresses. There's no evidence of anything being sent.” (Trial Tr., 92, Jan. 18, 2007.)
After these emails were finally produced to Broadcom and to the Court during the lunch recess on January 24, Ms. Raveendran retook the stand to confirm that she had received at least twenty-one emails from the JVT ad hoc group dated September 2002 through March 2003. (Trial Tr., 198-200, Jan. 24, 2007; Def's Exs. 5844-64.)
Moreover, as discussed above, another Qualcomm engineer Dr. Sagetong testified at trial that his “main role [was] to learn and to monitor what's going on in JVT groups, to learn the JVT activities and to make contact with other JVT folks.” (Trial Tr., 12, Jan. 24, 2007.) He stated that he attended at least seven JVT meetings from December 2003 to January 2006. (Id. at 11.) He further testified:
Q Now, when you were attending JVT meetings, did you do anything to compile or collect documents relating to the JVT?
A Yes.
Q Okay. And tell the jury what you did in that regard, please.
A After first meeting, I download all the previous JVT meetings back to the first one in December 2001 to my-to Qualcomm computer. And then after every single meeting, I just download the document for each meeting.
(Id. at 13.)
Dr. Sagetong admitted that he uploaded these documents to the Qualcomm server after downloading them, making them available to anyone at Qualcomm. (Id. at 16.) He further admitted that Qualcomm submitted a technical proposal to the JVT in January 2006 and that Mr. Reznik, another Qualcomm employee, had attended JVT meetings with him beginning in 2005. (Id. at 19, 28.)
Yet another Qualcomm employee Dr. Yiliang Bao admitted that he participated in JVT meetings on behalf of Qualcomm beginning in January 2006 and that he submitted five technical proposals to the JVT on Qualcomm's behalf in 2006. (Id. at 61-64.) He attached patent disclosure forms for his proposals, but the '104 and '767 patents were not among them. (Id. at 77.)
Finally, Mr. Sullivan, chairman of the JVT, testified through his video deposition at trial that Qualcomm sponsored the ninth meeting of the JVT in San Diego in September 2003, which entailed making a financial donation of “around a few thousand dollars” to pay for a harbor boat cruise and commemorative shirts. (Trial Tr., 53-55, Jan. 18, 2007.) Broadcom submitted into evidence one of these commemorative shirts at trial, which listed Qualcomm as a sponsor on its sleeve. (Def's Ex. 5265.)
*19 Based on the testimony of Mr. Ludwin, Ms. Raveendran, Dr. Sagetong, Mr. Sullivan, and Dr. Bao and the totality of the evidence, the Court FINDS clear and convincing evidence that Qualcomm participated in the JVT as early as September 2002 and filed technical proposals attaching patent disclosure forms but not including either the '104 or the '767 patents.
8. The Court finds clear and convincing evidence that Qualcomm had knowledge that the '104 and '767 patents reasonably might be necessary to the practice of the H.264 standard since at least 2002 and July 2005 respectively
As discussed above, the Court finds clear and convincing evidence that the '104 and '767 patent may be essential to the practice of the H.264 standard. Therefore, the issue before this Court is whether Qualcomm had knowledge that the '104 and '767 patents may reasonably be essential to the practice of the H.264 standard while it was a member of the JVT. Qualcomm is assignee of the '104 and '767 patents, which were invented by Qualcomm employees, prosecuted by Qualcomm attorneys, and issued by the patent office on September 19, 1995 and November 19, 1996, respectively. ('104 patent at 1; '767 patent at 1.)
It is axiomatic under the law that a person is responsible for being aware of his/her property, including intellectual property. Corollary to that responsibility is the duty to police his/her patent portfolio in order to protect this property. See, e.g., Wanlass v. Gen. Elec. Co., 148 F.3d 1334, 1338-40 (Fed.Cir.1998) and cases cited therein. Qualcomm is responsible for being aware of its intellectual property, especially as in this case, in which the patents in issue were invented and prosecuted by Qualcomm employees in the course of their employment for Qualcomm, were issued within six years prior to the JVT study in the exact field of the patents' technology, and were assigned to Qualcomm. (Trial Tr., 51-52 and 168, Jan. 10, 2007; Trial Tr., 106-07, Jan. 11, 2007; '104 patent at 1; '767 patent at 1.)
This is especially reasonable in this case, since the H.264 standard for the technology of video compression is extremely critical to multiple electronic devices of international importance. Qualcomm is one of the major research and development companies in this extremely lucrative market.
As a matter of fact, Broadcom has shown by clear and convincing evidence that Qualcomm participated in the work of the JVT, monitored it with at least four staff engineers, received its correspondence, knew of the area of study, filed at least five study proposals with required IPR forms attached, and knew about its own valuable IPR central to both the resulting H.264 standard versions published in 2003 and 2005, respectively. Yet the '104 and '767 patents were not revealed by Qualcomm before this lawsuit was filed against Broadcom in October 2005 for producing products which are H.264 compliant.
Shortly after the issuance of the '104 and '767 patents, Qualcomm designed a product implementing an audio compression system based on the '104 patent. Qualcomm's expert Dr. Richardson described the product, known as the QDEC-1000, in the following testimony:
*20 Q Well, you understand that the QDEC-1000 was the product that implemented the DCT described in Doctor [Chong] Lee's paper. Did you know that?
A I recall the fact that that product implements a system such as the one described in the paper and the ['104] patent.
(Trial Tr., 126-27, Jan. 11, 2007.) Qualcomm employee Christine Irvine amplified at trial by deposition on the QDEC-1000 as follows:
Q Was the QDEC-1000 ever sold?
A I believe so.
Q To whom?
A Technical or Digital Cinema.
(Trial Tr., 84-85, Jan. 18, 2007.) Dr. Chong Lee, currently Vice-President of Technology at Qualcomm and sole named inventor of the '104 patent, also confirmed at trial regarding the time period from 1988 to 1995:
Q And during that period of time, you don't know of any product using your 104 invention that was developed by Qualcomm and then offered for sale to anyone, correct?
A No, that's incorrect. We did offer it for sale.
Q To Darpa.
A No, beyond Darpa.
Q To?
A Hollywood movie industries in the form of electronic cinema solution, which is designed to deliver high-quality images to theaters directly using the invention.
(Trial Tr., 135, Jan. 10, 2007.) Dr. Lee further testified:
Q Now, you had a co-inventor on this one [the '767 patent], Donald Pian (phonetic), correct?
A That's correct.
Q And he worked with you on this project, correct?
A He worked with me on the Darpa project.
(Id. at 168.)
Yet ironically, Dr. Bao, a Qualcomm employee who attended JVT meetings on behalf of Qualcomm, testified at trial that he had not heard of the '104 or '767 patents before the inception of the present lawsuit. (Trial Tr., 70, Jan. 24, 2007.) Qualcomm employee Dr. Sagetong, monitor for Qualcomm of the JVT, testified that he was not aware of the '104 patent during the time that he was attending JVT meetings. (Id. at 24.) However, while he was monitoring the JVT, he admitted that he received an email from his colleague Mr. Reznik in July 2005, which alerted him and his supervisor of the importance of the '767 patent to the H.264 standard as follows:
To the best of my understanding Qualcomm has a core patent relevant to H.264, MPEG-4 AVC and their extensions.
This patent is the patent # 5,576,767 issued in 1996, and essentially covering all hybrid transform-DPCM video codecs with variable transform sizes. This is clearly a case with H.264 and H.264 FRX codecs whose block sizes are either 4x4, 8x8, or 16x16.
(Id. at 22; Pl's Ex. 616 at 1.) Since the email was also sent to Dr. Sagetong's supervisor Mr. Garudadri, Dr. Sagetong did not respond to Mr. Reznik's email, characterizing it as “not my responsibility.” (Trial Tr., 23-24, Jan. 24, 2007.)
Ms. Raveendran, another monitoring member of the Qualcomm Digital Media Group who admitted attending one JVT meeting, testified at trial that she received at least twenty-one emails from the JVT ad hoc group email list concerning the development of the H.264 standard. (Trial Tr., 198-200, Jan. 24, 2007; Def's Exs. 5844-64.)
*21 As for the '104 patent, she testified at trial, “And I saw the front page [of the '104 patent] on a colleague's desk, and I was-I went there for a consultation, and I saw the words ‘adaptive block size DCT and DQT’ on the front page.” (Trial Tr., 34, Jan. 24, 2007 .) She testified that “[t]he words ABS kind of stood out for me” based on her MPEG-related research, but qualified, “I did not review the patent. It was on-it was laying on my colleague's desk, and I just saw the front page. I never picked it up.” (Id. at 34, 37) However, in Ms. Raveendran's earlier deposition, which was read into evidence at trial on January 18, 2007, she testified slightly differently:
Q Ms. Raveendran, you've been handed what has been marked as Raveendran Exhibit Number 7. This is a multipage document, a United States patent, and at the top right it indicates Patent Number 5,452,104. Do you have that document?
A Yes.
Q Have you seen this document before?
A I have seen the front page. I haven't seen the entire document.
Q When did you first see this document?
A During my work at Qualcomm Digital Media, somewhere in that time frame.
Q And that would be sometime between 1999 and 2002?
A Yes.
Q But you've never read the full document, Raveendran Exhibit Number 7?
A No, I haven't reviewed it thoroughly.
(Trial Tr., 122-23, Jan. 18, 2007.) Thus, while she testified at trial that she did not review the '104 patent, she admitted during deposition that she hadn't “reviewed it thoroughly,” which suggests to the Court that Ms. Raveendran did review the '104 patent, just not “thoroughly.” Ms. Raveendran also testified at deposition that she first saw the '104 patent “sometime between 1999 and 2002.” (Id. at 122.) The '104 and '767 patents are central to the field of specialization of Ms. Raveendran, no doubt one reason why she was ordered by higher management at Qualcomm to monitor the work of the JVT.
The Court observes that all of this involvement, and lack of recollection, by some of the above scientists for Qualcomm is in the context of a co-employment relationship of the scientists with the inventor of the '104 patent Dr. Lee, now the Vice-President of Technology at Qualcomm.
From this testimony and evidence, the Court FINDS clear and convincing evidence that Qualcomm had knowledge that the '104 and '767 patents were related to the H.264 standard since at least 2002 and July 2005 respectively and therefore might be reasonably necessary to practice the H.264 standard.
Accordingly, under Rambus, the Court FINDS clear and convincing evidence that Qualcomm had a duty to disclose the '104 and '767 patents to the JVT since at least 2002 and July 2005 respectively. The JVT formed in late 2001, published the first version of the H.264 standard in May 2003, and published the most recent version in March 2006. (Trial Tr., 267, Jan. 17, 2007; Pl's Ex. 492 at 1; Pl's Ex. 493 at 1.) Qualcomm filed the present action for patent infringement on October 14, 2005. (Doc. No. 1.) However, it was not until April 25, 2006, six months after the commencement of this lawsuit, that Qualcomm filed an IPR disclosure form with the ITU-T and ISO/IEC regarding the H.264 standard, declaring that Qualcomm “holds granted patents and/or pending applications, the use of which would be required to implement” the H.264 standard. (Pl's Ex. 36 at 3-4.) Even this disclosure did not identify any patent, let alone the '104 and '767 patents.
*22 The policy of the JVT Standards Study Committee was to draft a technical standard to optimize and maximize the excellence and compatibility of electronic structures to enable companies the world over to produce high-quality video compression products with interchangeable properties so that mankind could enjoy the technology to the utmost. To this end, the JVT sought to minimize impact on intellectual property and, where it could not be avoided, to facilitate a license pooling system[3] for sharing royalties for impacted inventions. The participants in the JVT project shared the aims and policies of the JVT and considered themselves obligated to identify IPR owned or known by them, whether or not they made technical proposals for study.
The non-disclosure of a participant's core patents in such a program could put the participant in a position in which it could literally block the use of the published H.264 standard by any company unless the company obtained a separate license from the participant. Such an undesirable consequence is likely one factor behind the basis for the Federal Circuit ruling in Rambus, which the Court applies in this case.
THEREFORE, on the basis of the law and the totality of the circumstances herein, Court FINDS by clear and convincing evidence that Qualcomm waived its rights to enforce the '104 and '767 patents against H.264 products by its silence in the face of a “clear duty to speak” to identify to the JVT its IPR related to the development of the H.264 standard, specifically the '104 and '767 patents.
Thus, in accord with the jury's advisory verdict, the Court FINDS IN FAVOR OF BROADCOM and against Qualcomm as to Broadcom's affirmative defense of waiver against the '104 and '767 patents, subject to the appropriate equitable remedy as to persons producing H.264 compliant products, as set forth in Section III-B-9 below.
9. The Court sitting in equity determines the remedy for violation of an equitable duty.
Inequitable conduct by an inventor and his/her agents before the PTO may result in a decree of unenforceability of the patent, but the remedy depends on equitable considerations arising from the circumstances involved. See Ferring B.V., et al. v. Barr Labs., 437 F.3d 1181, 1186 (Fed.Cir.2006) (holding that the second step in the inequitable conduct analysis is “a weighing of the materiality and intent in light of all the circumstances to determine whether the applicant's conduct is so culpable that the patent should be held unenforceable”) (quoting Dayco Prods., Inc. v. Total Containment, Inc., 329 F.3d 1358, 1363 (Fed.Cir.2003)). In that context, the Court here considers with respect to waiver the extent of the materiality of the omitted information and the circumstances surrounding the omissions in connection with the proceedings in the JVT.
The Court is unable to find case guidance for an equitable remedy to a finding of waiver by a patentee or assignee, but it appears to the Court that the remedy should not be automatic, but should be fashioned to give a fair, just, and equitable response reflective of the offending conduct. In this case, the theoretical remedies that appear vary from total unenforceability of the patents to no sanction of any kind.
*23 The Court sees the obvious connection between the '104 and '767 patents and H.264 compliant products. Therefore, the Court is inclined to consider a remedy consisting of (1) independent unenforceability of the '104 and '767 patents against any H.264 compliant products, and (2) inclusion of the '104 and '767 patents in the MPEG LA patent pool, which receives royalties from H.264 compliant producers that are divided between all owners of patents related to the H.264 standard who are members of the pool. The extent of Qualcomm's share of the royalties based on the '104 and '767 patents would be determined in accordance with procedures in effect in the MPEG LA pool.
There may be other fair and just remedies not apparent to the Court. The Court therefore schedules an ORDER TO QUALCOMM TO SHOW CAUSE why the Court should not decree the above-described remedy for the waiver found in this case. Hearing on this matter is scheduled for Wednesday, May 2, 2007, at 9:00 A.M. Counsel may brief the issue in accordance with the local rules, so long as the Court receives the last brief no later than Wednesday, April 25, 2007 at 12:00 P.M.
IV. CONCLUSION
For the reasons set forth above, the Court hereby (1) FINDS IN FAVOR OF QUALCOMM and against Broadcom on Broadcom's counterclaim of inequitable conduct against the '104 patent; (2) FINDS IN FAVOR OF BROADCOM and against Qualcomm on Broadcom's affirmative defense of waiver against the '104 and the '767 patents, with the appropriate equitable remedy to be determined as outlined in Section III-B-9 above; and (3) SETS hearing on ORDER TO SHOW CAUSE for Wednesday, May 2, 2007, at 9:00 A.M., for which the parties may file briefs in accordance with the local rules so long as the Court receives the last brief no later than Wednesday, April 25, 2007, at 12:00 P.M.
IT IS SO ORDERED.