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Arbitron, Inc. v. Kiefl

August 13, 2010


The opinion of the court was delivered by: Honorable Paul A. Crotty, United States District Judge



This case involves a patent dispute between Plaintiff Arbitron, Inc. ("Arbitron") and Defendant John Barrett Kiefl ("Kiefl") over the inventorship of seventeen U.S. patents (the "Arbitron Patents").*fn1 The Arbitron Patents cover broadcast audience measurement device technology, including methods and systems for encoding and decoding radio broadcasts and apparatuses for collecting and analyzing information encoded in broadcasts.

Arbitron is a media and marketing research firm that measures radio audiences through technology called the Personal People Meter ("PPM"). The PPM detects an inaudible code embedded in radio broadcasts and identifies the date, time, and content of broadcasts. This allows Arbitron to measure audiences' listening activities. Arbitron holds a series of seventeen patents pertaining to the PPM, including U.S. Patent No.5,483,276 (the "'276 Patent"), filed in August, 1993.

Kiefl is a self-employed consultant specializing in the analysis of audience rating data. On January 19, 1991, Kiefl and a co-inventor filed patent application serial no. 07/792,929 (the "'929 Application"). Two years later, on January 19, 1993, they filed PCT Application No. PCT/CA93/00012 (the "'012 Application") claiming priority to the '929 Application (the '012 Application together with the '929 Application are the "Kiefl Applications"). The Kiefl Applications disclosed an invention called the "Person Meter." Using wireless technology and cellular telephony, the Person Meter, a portable audience measurement device, receives broadcast signals identifying channel selection and transfers the collected data to a central processing facility. On January 17, 1995, the '929 Application issued as U.S. Patent 5,382,970*fn2 (the "'970 Patent").

Kiefl and Arbitron worked independently; they had no contact until December, 1992, when Kiefl first solicited Arbitron to either license his Person Meter technology or enter into a business relationship with him. To that end, in early February, 1993, Kiefl and Arbitron executed two non-disclosure agreements (the "NDAs") covering the Kiefl Applications. The NDAs required Kiefl to provide written disclosures of the Kiefl Applications and related information to Arbitron's consultants. In exchange of these disclosures, Arbitron agreed to maintain the confidentiality of all of Kiefl's disclosures with the exception of information that was: (i) in the public domain; (ii) received from a third party not under a duty to Kiefl; (iii) known to Arbitron before the disclosure; or (iv) independently developed by Arbitron (Def.'s Second Am. Countercl. Exs. A, B.)

After signing the two NDA's, Kiefl disclosed the Person Meter technology to Arbitron's outside patent counsel, Eugene Flanagan III ("Flanagan"). At the same time, Kiefl also discussed the contents of the Kiefl Applications with an independent contractor designated by Arbitron. Flanagan then prepared a report for Arbitron regarding Kiefl's disclosures. Following these discussions and disclosures, on February 17, 1993, Arbitron informed Kiefl that it was not interested in forming a business relationship with him at that time. After several years later, on or about July, 2000, and again on April 19, 2001, Kiefl renewed contact with Arbitron to inquire whether Arbitron was interested in licensing the '970 Patent. On each occasion, Arbitron promptly advised Kiefl that it was not interested.

On August 2, 1993, six months after Kiefl's disclosures, Arbitron filed the patent application that would later mature into the '276 Patent. On March 16, 2004, Kiefl sent Arbitron a letter stating his belief that the disclosed Kiefl Applications contributed to the invention of Arbitron's patents in the audience measurement field. On April 7, 2004, Arbitron denied misappropriating Kiefl's inventions and assured Kiefl that Arbitron had developed its patents independently. On April 21, 2004, Kiefl wrote Arbitron another letter suggesting that two of the Arbitron Patents should reference Kiefl's '012 Application and that Arbitron should apply for reexamination of at least one of the Arbitron Patents. On May 7, 2004, Arbitron claimed that it would not apply for reexamination on Kiefl's request.

On October 10, 2006, Arbitron filed a lawsuit in the Eastern District of Texas against International Demographics, alleging infringement of its '276 patent. Arbitron Inc. v. Int'l Demographics, Inc., et al., 2009 WL 68875, at *1 (E.D. Tex. Jan 8, 2009). Arbitron argued that the '276 Patent contemplated cellular telephony as a means of transferring data and that the '276 Patent therefore includes cellular telephony. The Texas district court agreed with Arbitron and ordered that claim 17 of the '276 Patent be construed to incorporate cellular telephony. Id. at *9.

Since Kiefl's disclosures to Arbitron included cellular telephony technology and since the Texas district court incorporated cellular telephony into the '276 Patent, Kiefl maintains that he contributed to the '276 Patent and is entitled to joint inventorship. To that end, on April 8, 2009, Kiefl sent Arbitron a letter (the "Kiefl Letter") accusing Arbitron of (i) incorporating inventions disclosed in the Kiefl Applications into the Arbitron Patents, and (ii) violating the NDAs. The Kiefl Letter states that Kiefl was prepared to pursue a declaration of ownership and inventorship as to the Arbitron Patents, as well as breach of contract claims against Arbitron arising from the NDAs.

On April 22, 2009, Arbitron responded to the Kiefl Letter by filing the Complaint in this action. Arbitron's Complaint alleges five counts of declaratory judgment relief. Specifically, Arbitron asks the Court to declare: (1) that Arbitron is the rightful and sole owner in the Arbitron Patents; (2) that Arbitron did not breach the NDAs; (3) that Kiefl is equitably estopped from bringing any claims of inventorship or ownership in the Arbitron Patents; (4) that Kiefl is barred from bring any claims of inventorship or ownership of the Arbitron Patents under the doctrine of laches; and (5) that Kiefl is time-barred from bringing claims for breach of the NDAs arising from Arbitron Patents that have effective U.S. filing dates more than six years prior to April 22, 2009.

Kiefl answered Arbitron's Complaint on July 22, 2009, stating that he did not believe he was the inventor of any of Arbitron's seventeen patents, except for one, the '276 Patent. In fact, on October 27, 2009, Kiefl executed a waiver (the "Kiefl Waiver") of all breach of contract claims arising from the NDAs and all claims of inventorship or ownership of fourteen of the Arbitron Patents (the "Waived Patents") (Ex. A to Kiefl's Amended Answer, Dkt.# 28).*fn3 On December 2, 2009, Kiefl filed a Second Amended Answer and Third Amended Counterclaims (the "Counterclaims"). In the Counterclaims, Kiefl seeks: (i) a declaratory judgment of inventorship and ownership in the '276 Patent, and (ii) restitution under an unjust enrichment theory as to the monies and/or benefits Arbitron received from the '276 Patent.

On December 18, 2009, Kiefl moved for partial dismissal of Arbitron's Complaint under Fed. R. Civ. P. 12(b)(1) and 12(h)(3). Specifically, Kiefl argues that the Court lacks subject matter jurisdiction over Arbitron's claims for declaratory judgment: (i) as to the ownership and inventorship of all the Arbitron Patents except the '276 Patent; (ii) that Arbitron did not breach the NDAs; and (iii) that any claims under the NDAs is time-barred. On December 11, 2009, Arbitron moved under Fed. R. Civ. P. 12(b)(6) to dismiss Kiefl's Counterclaims for failure to state a claim. The Court GRANTS both motions.


I. Kiefl's 12(b)(1) Motion ...

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