The opinion of the court was delivered by: WILLIAM PAULEY, District Judge
Plaintiff AT&T Corp. ("AT&T") brings this patent infringement
action against Microsoft Corporation ("Microsoft"), alleging that certain
of Microsoft's products containing speech codecs*fn1 infringe its United
States Reissue Patent No. 32,580 (the "580 patent"). Those accused
products include, among others, Microsoft's NetMeeting video conferencing
software, which is available in certain editions of Microsoft's Windows
operating system. Microsoft denies infringement of the 580 patent and
seeks dismissal of the complaint together with a declaratory judgment of
noninfringment, invalidity and unenforceability of the 580 patent.
See AT&T Corp. v. Microsoft Corp., 01 Civ. 4872 (WHP), 2003
WL 21459573 (S.D.N.Y. June 24, 2003). Familiarity with this Court's prior
Memoranda and Orders is presumed.*fn2
Currently before this Court is AT&T's motion for partial summary
judgment on Microsoft's affirmative defenses of equitable estoppel and
implied license. For the reasons set forth below, AT&T's motion for
partial summary judgment is granted.
I. Summary Judgment Standard
Rule 56(c) of the Federal Rules of Civil Procedure provides that
summary judgment "shall be rendered forthwith if the pleadings,
depositions, answers to interrogatories and admissions on file, together
with the affidavits, if any, show there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as a
matter of law." Fed.R.Civ.P. 56(c); accord Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986); Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 247 (1986). The burden of demonstrating the
absence of any genuine dispute as to a material fact rests with the
moving party. See, e.g., Adickes v. S.H. Kress &
Co., 398 U.S. 144, 157 (1970);
Grady v. Affiliated Cent., Inc., 130 F.3d 553, 559 (2d
Cir. 1997). The movant may meet this burden by demonstrating a lack of
evidence to support the nonmovant's case on a material issue on which the
nonmovant has the burden of proof. Celotex, 477 U.S. at 323.
To defeat a summary judgment motion, the nonmoving party must do "more
than simply show that there is some metaphysical doubt as to the material
facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586 (1986). Indeed, the nonmoving party must "set forth
specific facts showing that there is a genuine issue for trial."
Fed.R.Civ.P. 56(e); accord Matsushita Elec., 475 U.S. at 587. In
evaluating the record to determine whether there is a genuine issue as to
any material fact, the "evidence of the nonmovant is to be believed and
all justifiable inferences are to be drawn in his favor." Liberty
Lobby, 477 U.S. at 255.
"Equitable estoppel may be imposed in a patent case when a patentee
induces another party to believe that it will not sue that party for
infringement." Forest Labs., Inc. v. Abbott Labs.,
339 F.3d 1324, 1329 (Fed. Cir. 2003). To prove the affirmative defense of
equitable estoppel, an alleged infringer must establish by a
preponderance of the evidence that: (1)
"[t]he patentee, through misleading conduct*fn3, led the alleged
infringer to reasonably infer that it did not intend to enforce its
patent against the alleged infringer"; (2) "[t]he alleged infringer
relie[d] on that conduct"; and (3) "[d]ue to its reliance, the alleged
infringer will be materially prejudiced if the patentee is allowed to
proceed with its infringement claim." A.C. Aukerman Co. v. R.L.
Chaides Constr. Co., 960 F.2d 1020, 1028, 1046 (Fed. Cir. 1992) (en
bane); accord Ecolab, Inc. v. Envirochem, Inc., 264 F.3d 1358,
1371 (Fed. Cir. 2001); Hemstreet v. Computer Entry Svs. Corp.,
972 F.2d 1290, 1294 (Fed. Cir. 1992).
Even assuming arquendo that AT&T engaged in a course of
misleading conduct which reasonably gave rise to an inference that it was
not going to enforce the 580 patent against Microsoft, summary judgment
is appropriate because Microsoft did not have knowledge of AT&T's 580
patent at the time it incorporated the accused codecs into its software.
See AT&T Corp. v. Microsoft Corp., 290 F. Supp.2d 409
(S.D.N.Y. 2003) (holding that AT&T notified Microsoft of its possible
infringement in April 1999, long after the infringing codecs were
incorporated into Microsoft's allegedly infringing software); MS
Opp. at 22; Transcript of Oral Argument, dated December 22, 2003
("Tr.") at 86. It is axiomatic that to assert equitable estoppel, the
alleged infringer must have been aware of the patent at issue when it
undertook its infringing activities. See, e.g., Auckerman, 960
F.2d at 1042; Winbond Elecs. Corp. v. I.T.C., 262 F.3d 1363,
1374 (Fed. Cir. 2001). Indeed, the Federal Circuit has held that "[i]t is
clear . . . that [to assert] equitable estoppel the alleged infringer
cannot be unaware as is possible under laches of the
patentee and/or its patent." Auckerman, 960 F.2d at 1042.
Microsoft concedes that it cannot establish knowledge of AT&T's 580
patent at the time it incorporated the accused codec into its software.
(Tr. at 86 ("I will state for the record, Microsoft did not know of the
`580 patent until it received a letter from AT&T in April of 1999.");
MS Opp. at 22 ("Should . . . the Court determine that knowledge of the
patent is a threshold requirement for estoppel, AT&T's motion should
be granted . . . because it is undisputed that Microsoft lacked
knowledge of the 580 patent before April 1999.").)
Specifically, Blake Irving, Microsoft's corporate designee responsible
for development of its NetMeeting software, disclaimed knowledge of
AT&T's 580 patent at the time of the alleged infringement:
Q: Besides the agreement with Intel was there
anything else that gave Microsoft the belief that
it wouldn't have any patent exposure from shipping