Friday, November 14, 2008

D. Del.: "Sustainable, Reasonable" Defenses Enough to Negate Willfulness

Honeywell International Inc. v. Universal Avionics Systems Corp., No. 02-359-MPT, November 12, 2008

Honeywell sued Universal over five patents dealing with aviation warning systems. After trial and appeal to the CAFC, the case was remanded. On remand, Universal filed a motion for summary judgment of no willful infringement.

Honeywell opposed the motion for a number of reasons:

-- Universal admitted that it knew of Honeywell's patent when it released its own system ("TAWS");

-- Universal claimed that a noninfringement opinion was obtained (pre-litigation), but no written record existed to corroborate the findings, and no explanation could be given why no legal issues existed with the patent;

-- During earlier negotiations with a 3rd party (Collins), Universal was asked for, but did not provide, a noninfringement opinion letter. Universal did agree to indemnify for patent infringement.

Universal countered that (1) Honeywell had, and failed to meet, the burden of establishing willful infringement by clear and convincing evidence, and (2) the defenses raised by Universal during litigation showed that they behaved in an objectively reasonable manner.

The district court agreed with Universal:

The unrefuted testimony . . . shows that before going to market with the TAWS product, Universal performed a patent review which included technical and legal analyses . . . After consulting with patent counsel, Universal understood that no legal issues arose in relation to TAWS for any patent that was reviewed. That understanding is confirmed by Glaze's uncontroverted testimony that further implementation of the TAWS product by Universal would not have continued if the system infringed a third party's patent. A prelitigation patent review may be more relevant to the second prong of the Seagate test (whether the alleged infringer knew or should have know of the objectively-defined risk of infringement); however, performing a patent review before entering the market with a new device evidences that Universal's conduct was not reckless. Further, knowledge of a patent does not mean willfulness.

During the licensing discussions between Universal and Collins, Honeywell filed the present action. Since this litigation followed on the heels of Collins' request for an opinion of counsel on infringement, the court does not see how Universal not producing such a letter constitutes objective recklessness or an admission of infringement. Production of such a letter to a third party would operate as a waiver of the attorney client privilege, and could directly effect litigation strategy . . . Universal's indemnification offer refutes the second prong of Seagate, that it knew, believed or should have known that TAWS could infringe.

[T]he present matter is not just at the first summary judgment stage, but has undergone a summary judgment, trial and post trial review by this court, as well as, a review by the Federal Circuit. The legal issues in the case have already been vetted by two courts. This court, under its claim construction, found that Universal did not infringe. It also held that a number of the patent claims were anticipated. Such findings validate that Universal had legitimate defenses to Honeywell's infringement claims. Although this court did not agree with Universal on its other invalidity defenses, an exhaustive analysis was required, particularly of the onsale and public use bars, to reach a conclusion. This court's analysis of Universal's defenses to the patents show that its arguments were "substantial, reasonable, and far from the sort of easily-dismissed claims that an objectively reckless infringer would be forced to rely upon."
Motion for summary judgment granted

Read/download the opinion here

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