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Wi-Lan Inc. v. Lg Electronics, Inc.

United States District Court, Second Circuit

May 10, 2013

WI-LAN INC., Plaintiff,
v.
LG ELECTRONICS, INC. & LG ELECTRONICS U.S.A., INC., Defendants.

REPORT AND RECOMMENDATION

ANDREW J. PECK, Magistrate Judge.

To the Honorable Lewis A. Kaplan, United States District Judge:

Wi-Lan initiated this patent infringement action on January 19, 2010. (Dkt. No. 1: Compl.) On December 11, 2012, the Federal Circuit affirmed this Court's decision granting summary judgment to LG, dismissing Wi-Lan's patent infringement claims. Wi-Lan, Inc. v. LG Elecs., Inc., 10 Civ. 432, 2011 WL 3279075 (S.D.N.Y. Aug. 2, 2011) (Peck, M.J.), report & rec. adopted as modified, 2012 WL 760148 (S.D.N.Y. Mar. 7, 2012) (Kaplan, D.J.), affd per curiam, 493 F.Appx. 103 (Fed. Cir. 2012). Presently before the Court is LG's motion for an award of attorneys' fees and expenses pursuant to 35 U.S.C. § 285, Fed.R.Civ.P. 11 and the Court's inherent authority. (Dkt. No. 314: Notice of Motion.)

For the reasons set forth below, because this is not an "exceptional case" and Rule 11 does not apply, LG's motion should be DENIED.

BACKGROUND[1]

In May 2006, LG took a license from Wi-Lan permitting LG "to manufacture products within the scope' of [Wi-Lan's] '402 Patent, " following a Federal Communications Commission ("FCC") mandate requiring digital television receivers to be capable of receiving remotely transmitted content rating systems-a feature Wi-Lan claimed its patent covered. Wi-Lan, Inc. v. LG Elecs., Inc., 2011 WL 3279075 at * 10. Thereafter, LG consistently reported no royalty bearing sales. Wi-Lan, Inc. v. LG Elecs., Inc., 2011 WL 3279075 at *10. Wi-Lan filed suit, asserting contract-based and patent infringement claims. Wi-Lan, Inc. v. LG Elecs., Inc., 2011 WL 3279075 at *10 n.13. Wi-Lan subsequently terminated LG's license and withdrew its breach of contract claim. Id.

On August 2, 2011, this Court recommended granting summary judgment to LG dismissing Wi-Lan's patent infringement claim. Wi-Lan, Inc. v. LG Elecs., Inc., 2011 WL 3279075. Judge Kaplan adopted the Report & Recommendation, and the Federal Circuit affirmed. Wi-Lan Inc. v. LG Elecs., Inc., 10 Civ. 432, 2012 WL 760148 (S.D.N.Y. Mar. 7, 2012) (Kaplan, D.J.), aff'd per curiam, 493 F.Appx. 103 (Fed. Cir. 2012).

The Court's Summary Judgment Decision Dismissing Wi-Lan's Infringement Claim

Claim 7 of Wi-Lan's '402 Patent describes a method by which, inter alia, "informational schemes" are transmitted to, received and stored by digital television receivers. Wi-Lan, Inc. v. LG Elecs., Inc., 10 Civ. 432, 2011 WL 3279075 at *18 (S.D.N.Y. Aug. 2, 2011) (Peck, M.J.). The Court's construction of the term "informational scheme" was dispositive of Wi-Lan's infringement claim. Wi-Lan, Inc. v. LG Elecs., Inc., 2011 WL 3279075 at * 18 ("The parties dispute the meaning of virtually every term in Claim 7. But because construction of the term informational scheme' is dispositive of the issue of infringement, the Court proceeds to construction of that term." (citations omitted)); see also Wi-Lan, Inc. v. LG Elecs., Inc., 10 Civ. 432, 2012 WL 760148 at *3 (S.D.N.Y. Mar. 7, 2012) (Kaplan, D.J.) ("This Court agrees that the claim construction of informational scheme' is dispositive in this case.").

Wi-Lan argued that the scope of the term "informational scheme" was broad enough to include ratings information of which the receiver had no advance knowledge and ratings information that was preprogrammed into the receiver, whereas LG argued that the term excluded preprogrammed ratings information. Wi-Lan, Inc. v. LG Elecs., Inc., 2011 WL 3279075 at *19; see also Wi-Lan, Inc. v. LG Elecs., Inc., 2012 WL 760148 at *2 ("The most obvious-and central-distinction between [LG's] proposed construction and the one Wi-Lan offers is that [LG's] mandates that an informational scheme' under claim 7 should be comprised only of new information, rather than including as well content about which a receiver or device has advance knowledge.").

The Court examined the specification and prosecution history, including a thorough review of the inventor's statements as to the claim's scope. Wi-Lan, Inc. v. LG Elecs., Inc., 2011 WL 3279075 at * 19-22. In numerous instances, the inventor distinguished prior art on the basis that it required preprogrammed information and was incapable of accommodating new ratings information of which the receivers had no advance knowledge. Id . The Court concluded:

In this case, the specification and prosecution history both reveal a clear intent to exclude from Claim 7's scope "informational schemes" that are preprogrammed into a receiver at the time of manufacture...
Having thus distinguished the prior art, Wi-Lan cannot now argue that its method patent covers blocking systems that merely use preprogrammed "informational schemes" to selectively block unwanted programs.
Such a broad interpretation of claim scope would run counter to the stated purpose of the invention and the clear statements of the inventor as to what the '402 Patent does not do....
Accordingly, Claim 7 should be construed to exclude "informational schemes" programmed into the receiver at the time of manufacture. The claim term "informational scheme" should be construed as a "set of kinds of ratings information transmitted about a program... and of which the receiver has no advance knowledge."

Wi-Lan, Inc. v. LG Elecs., Inc., 2011 WL 3279075 at *19, *21-22 (citations omitted).[2]

Having so construed the claim, the Court went on to find that there was no evidence of infringement. Wi-Lan, Inc. v. LG Elecs., Inc., 2011 WL 3279075 at *22-26; see also Wi-Lan, Inc. v. LG Elecs., Inc., 2012 WL 760148 at *3 ("If Wi-Lan's understanding of the term-which allows a device to have advance knowledge of an informational scheme it receives-is correct, then LG has infringed the patent and is not entitled to summary judgment. If, however, LG's construction of the term is correct-that is, if the device may not have advance knowledge of the informational scheme it is receiving-then there has been no infringement of the '402 patent, and LG is entitled to summary judgment.").

The August 2012 PTO Reexamination Certificate

Prior to summary judgment, the United States Patent & Trademark Office ("PTO") granted a request for an ex parte reexamination of the '402 Patent based on prior art and, on July 29, 2010, "the PTO issued a non-final rejection of claims 7-15 of the '402 Patent on the grounds that they are anticipated' by prior art." Wi-Lan, Inc. v. LG Elecs., Inc., 10 Civ. 432, 2011 WL 3279075 at *7 (S.D.N.Y. Aug. 2, 2011) (Peck, M.J.). Wi-Lan argued to the PTO that the prior art was distinguishable in that "it describes a system that can only utilize a single informational scheme.' See id. "Wi-Lan also proposed adding new claims to the '402 Patent to further define the claimed invention.'" See id.

After summary judgment but prior to the Federal Circuit's decision on appeal, the PTO concluded its ex parte reexamination and issued a Reexamination Certificate on August 21, 2012. (Dkt. No. 326: Wi-Lan Opp. Br. at 6; Dkt. No. 327: Holohan Aff. Ex. 2: 8/21/12 Ex Parte Reexamination Certificate.) In addition to confirming the patentabilty of the challenged claims, the Reexamination Certificate added thirty-three new claims, several of which refer to preprogrammed information in connection with the "informational schemes" described in claim 7:

33. The method of claim 7 wherein at least one of said first or second configuration information is pre-configured in said memory.
35. The method of claim 7 wherein one of said received first and second configuration information describes said first or second informational scheme that has been previously stored in a persistent memory.

(Holohan Aff. Ex. 2: 8/21/12 Ex Parte Reexamination Certificate ¶¶ 33, 35; see also id. ¶¶ 38(j), 38(k), 46(c), 48; Wi-Lan Opp. Br. at 6-8.)

The Federal Circuit's Oral Argument And Affirmance

On March 16, 2012, Wi-Lan appealed (Dkt. No. 294: Notice of Appeal), and the Federal Circuit heard oral argument on December 5, 2012 (Dkt. No. 327: Holohan Aff. Ex. 4: 12/5/12 Fed. Cir. Oral Argument Transcript ("T.")). The panel focused on claim construction. (Holohan Aff. Ex. 4: T. 37-38: "Yeah, but I'm trying to get at the claim construction, not at whether or not there's an absence of an infringement because there's only one set of information being passed instead of two.") In so doing, the panel stated that it was "still trying... to decide" whether the district court's claim construction was supported:

I'm still trying to have you help both your sides help us to decide whether or not this claim construction in the face of a clear definition in the statute - I mean in the spec, ...

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