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Cornell University v. Hewlett-Packard Co.

September 24, 2007

CORNELL UNIVERSITY, A NONPROFIT NEW YORK CORPORATION, AND CORNELL RESEARCH FOUNDATION, INC., A NONPROFIT NEW YORK CORPORATION, PLAINTIFFS,
v.
HEWLETT-PACKARD COMPANY, A DELAWARE CORPORATION, DEFENDANT.
HEWLETT-PACKARD COMPANY, A DELAWARE CORPORATION, COUNTERCLAIMANT,
v.
CORNELL UNIVERSITY, A NONPROFIT NEW YORK CORPORATION, AND CORNELL RESEARCH FOUNDATION, INC., A NONPROFIT NEW YORK CORPORATION, COUNTERDEFENDANTS.



The opinion of the court was delivered by: Hon. Norman A. Mordue, Chief District Judge

MEMORANDUM-DECISION AND ORDER

INTRODUCTION

Presently before the Court are five motions by defendant Hewlett Packard Company ("Hewlett Packard") for partial summary judgment. The Court further has before it three motions by plaintiffs Cornell University and Cornell Research Foundation, Inc. (collectively, "Cornell") to strike various submissions of Hewlett Packard. The motions were referred to United States Magistrate Judge David E. Peebles for a report and recommendation pursuant to 28 U.S.C. § 636(b)(1)(B) and Local Rule 72.3(c).

Magistrate Judge Peebles has issued an excellent and comprehensive Report and Recommendation (Dkt. No. 787) addressing the motions. The parties have submitted objections and responses to the objections. Pursuant to 28 U.S.C. § 636(b)(1)(C), this Court conducts a de novo review of those parts of a magistrate judge's report and recommendation to which a party specifically objects. For the reasons set forth below, the Court accepts and adopts the Report and Recommendation in its entirety. In discussing the issues, the Court assumes that the reader is familiar with the Report and Recommendation and the history of the case, including the claims- construction decision. See Cornell Univ. v. Hewlett-Packard Co., 313 F.Supp.2d 114 (N.D.N.Y. 2004).

THE MOTIONS

The following motions are presently before the Court:

1. Motion (Dkt. No. 688) by Hewlett Packard for partial summary judgment dismissing portions of Cornell's damages claims on the ground of laches.

2. Motion (Dkt. No. 689) by Hewlett Packard for partial summary judgment dismissing aspects of Cornell's damages claims on the ground of patent exhaustion.

3. Motion (Dkt. No. 690) by Hewlett Packard for partial summary judgment dismissing aspects of Cornell's patent infringement claims on the ground of non-infringement.

4. Motion (Dkt. No. 691) by Hewlett Packard for partial summary judgment dismissing certain of Cornell's patent infringement claims on the ground of patent invalidity.

5. Motion (Dkt. No. 692) by Hewlett Packard for partial summary judgment determining the royalty base.

6. Motion to strike (Dkt. No. 714) by Cornell relating to Hewlett Packard's motion (Dkt. No. 688) for partial summary judgment on the ground of laches.

7. Motion to strike (Dkt. No. 722) by Cornell relating to Hewlett Packard's motion (Dkt. No. 689) for partial summary judgment on the ground of patent exhaustion.

8. Motion to strike (Dkt. No. 739) by Cornell relating to Hewlett Packard's motion (Dkt. No. 692) for partial summary judgment determining the royalty base.

DISCUSSION

1. Motion (Dkt. No. 688) by Hewlett Packard for Partial Summary Judgment Dismissing Portions of Cornell's Damages Claims on the Ground of Laches

In its motion for partial summary judgment dismissing portions of Cornell's damages claims on the ground of laches, Hewlett Packard contends that Cornell's delay in pursuing its claims under the 115 patent despite its awareness of Hewlett Packard's allegedly infringing activities resulted in prejudice to Hewlett Packard such that Cornell's recovery should be restricted to damages incurred since the commencement of this action. In recommending denial of summary judgment on this issue, Magistrate Judge Peebles wrote:

The equitable doctrine of laches must be applied cautiously, in recognition of the fact that it serves to deny a party, wholly or in part, of the benefits of pressing an otherwise meritorious claim. These principles, when applied to the circumstances presented in this case, suggest that laches is best considered based upon a fully developed record. In light of this and my finding that there are genuine issues of material fact surrounding when plaintiffs knew or reasonably should have known to undertake the duty to inquire regarding infringement; whether all or some of the delay in filing suit is excusable; whether HP suffered economic and/or evidentiary prejudice as a result of the delay; and whether there are any other considerations that could potentially militate against invoking the equitable doctrine of laches, I recommend that HP's motion for partial summary judgment on the basis of laches be denied. (Citation omitted.)

Cornell agrees with Magistrate Judge Peebles' conclusion but objects to so much of the Report and Recommendation as may be read to "limit at trial the full assessment of facts concerning license negotiations as a justification for delay." The Court does not read Magistrate Judge Peebles' thorough discussion of the laches issue as imposing any such limitation.

Hewlett Packard objects to various aspects of the Report and Recommendation on this issue. On de novo review, this Court agrees with Magistrate Judge Peebles that Hewlett Packard has not established as a matter of law a delay in excess of six years giving rise to a presumption of laches. Nor has it established as a matter of law any other basis to apply the doctrine of laches to limit the time period for which Cornell may recover damages. Accordingly, the Court adopts Magistrate Judge Peebles' analysis and recommendation.

2. Motion (Dkt. No. 689) by Hewlett Packard for Partial Summary Judgment Dismissing Aspects of Cornell's Damages Claims on the Ground of Patent Exhaustion

Hewlett Packard moves for partial summary judgment on its patent exhaustion defense. The Federal Circuit has explained the doctrine of patent exhaustion as follows:

The law is well settled that an authorized sale of a patented product places that product beyond the reach of the patent. The patent owner's rights with respect to the product end with its sale, and a purchaser of such a product may use or resell the product free of the patent. This longstanding principle applies similarly to a sale of ...


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