First published in LES Insights

Abstract

A Texas court recently held that an infringer waived a license defense that components in the accused products were supplied by a licensed supplier by failing to raise the defense sufficiently before trial to allow the patent owner to respond to the defense, take discovery on the issue, file briefings with the court, and hold a hearing if necessary.

A Texas court recently held that Samsung waived its defense that accused products did not infringe the asserted patents because they contained licensed third-party components. Samsung did not sufficiently raise the defense until two months after the deadline for filing dispositive motions despite being aware of the license agreement and its relevance to the asserted claims.

Background

In 2014, Imperium filed a complaint alleging that Samsung’s mobile phones, tablets, and digital cameras infringed Imperium’s digital photography patents. Samsung served mandatory disclosures indicating that the accused products contained image sensors provided by Sony, and responded to interrogatories specifying exactly which products contained Sony image sensors. Imperium produced a 2013 Settlement and License Agreement with Sony that involved the patents.

On the last day for filing expert reports and dispositive motions such as motions for summary judgment, Imperium filed its technical expert report on patent infringement, which referred to the Sony image sensors included in Samsung’s products.

Nearly eight weeks later, after the deadline for filing motions had passed, Samsung asked the court for permission to file a motion that it was entitled to summary judgment because the accused products were licensed. Samsung argued that it should be allowed to file such a motion after the deadline because it was not previously aware that Imperium would rely on the licensed Sony image sensors to prove infringement until it received Imperium’s expert reports.

The court denied Samsung’s motion, finding that even before the deadline on which the expert report was filed, Samsung already knew, or should have known, most of the information it relied on to support its motion for permission to file for summary judgment. The court noted that half of the accused Samsung products had the licensed Sony image sensor component; Samsung was aware that the patent claims included "an image sensor coupled to a memory;" Samsung identified accused products that contain, as the only image sensor, a Sony image sensor; and Samsung had access to the Sony license agreement. In conclusion, the court found that even if Imperium "obscured" the fact that it is relying upon Sony image sensors, Samsung could have been aware of the potential relevance of the Sony license regarding almost half of the accused products long before Imperium’s expert report was filed, and that the timing of the filing was in the reasonable control of Samsung.

When Samsung raised the defense again during pre-trial conference, the court decided to take up the issue after trial because briefing the issues related to the Sony license would cause a significant delay to the proceedings. At trial, a jury determined that Samsung infringed multiple claims of the asserted patents.

Briefing the issue of the Sony license after trial, Samsung argued that the asserted claims require an image sensor, and that Imperium concealed its reliance on Sony’s image sensors throughout the litigation. In particular, Samsung argued that Imperium cited to generic image sensors in its claim charts rather than the specific Sony image sensors, and that Imperium’s expert testified in deposition that although an image sensor would likely be present in the accused product, it was not necessary to meet the claim limitations at issue.

Imperium argued that Samsung’s defense based on the Sony license was barred for lack of diligence in failing to disclose the theory. Imperium pointed out that in its response to the complaint, Samsung merely provided a boilerplate license defense, and later responded to interrogatories indicating that the accused products may be licensed under its membership in a standard setting alliance. Imperium also argued that it did not rely on Sony’s image sensors to establish infringement, and that its infringement theory allowed for the claim elements in question to be performed by components other than an image sensor.

The Imperium Decision

Noting that affirmative defenses must usually be raised in a party’s response to the complaint, the court nonetheless acknowledged that the defense could be asserted if the patent owner is not prejudiced in its ability to respond to the defense prior to trial. But the court found that evidence of prejudice existed because there was not sufficient time prior to trial for Imperium to respond to the defense, to take discovery on the issue, to file briefings with the court, and to hold a hearing if necessary.

The court also agreed with Imperium’s arguments that in answering the complaint, Samsung merely provided a boilerplate general license defense, and did not supplement its interrogatory responses to identify its defense, despite having access to the Sony license agreement and becoming aware of the issue.

The court noted that the parties’ disagreement about the necessity of an image sensor did not demonstrate that Imperium concealed its reliance on the Sony image sensors. Rather, Imperium’s continued insistence that infringement could occur without an image sensor justified Imperium’s claim charts and expert testimony.

Finding that Samsung failed to provide a reasonable explanation not to assert the Sony license until eight weeks after the deadline for filing dispositive motions and expert reports, the court determined that Samsung waived its license defense.

Strategy and Conclusion

This case demonstrates the value in asserting all available and reasonable affirmative defenses at the earliest opportunity. An unjustified delay in raising a defense may cause the defense to be waived if the other party is prejudiced by being unable to adequately address and respond to the defense.

Further Information

The Imperium decision is found here.