Industrial Engineering & Development, Inc. v. Static Control Components, Inc.

45 F. Supp. 3d 1311, 2014 U.S. Dist. LEXIS 118140, 2014 WL 4206584
CourtDistrict Court, M.D. Florida
DecidedAugust 25, 2014
DocketCase No. 8:12-cv-691-T-24-MAP
StatusPublished
Cited by1 cases

This text of 45 F. Supp. 3d 1311 (Industrial Engineering & Development, Inc. v. Static Control Components, Inc.) is published on Counsel Stack Legal Research, covering District Court, M.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Industrial Engineering & Development, Inc. v. Static Control Components, Inc., 45 F. Supp. 3d 1311, 2014 U.S. Dist. LEXIS 118140, 2014 WL 4206584 (M.D. Fla. 2014).

Opinion

ORDER

SUSAN C. BUCKLEW, District Judge.

This cause comes before the Court on a Motion for Summary Judgment filed by Plaintiffs Industrial Engineering & Development Inc., Innovative Cartridge Technologies, Inc., Cartridge Corporation of America, Inc., American Imaging Cartridge, LLC, and Universal Imaging Holdings, LLC. (Dkt. 153) Defendant Static Control Components, Inc. opposes. (Dkt. 177) A hearing on Plaintiffs’ motion was held on August 12, 2014.

I. BACKGROUND

A. Patents-in-Suit

This patent case relates to printer chips used in remanufactured toner cartridges to enable printer-cartridge interoperation. Steven Miller, the president or managing member of each Plaintiff, (Dkt. 133), is the inventor or co-inventor of Plaintiffs’ patents-in-suit, which teach systems or methods for enabling a remanufactured printer toner cartridge to operate with a plurality of different printers. Each of Plaintiffs’ patents-in-suit is a continuation of U.S. Patent No. 7,136,608 (“the '608 patent”), titled “Removable Toner Cartridge Universal Adapter.”1

[1315]*1315U.S. Patent No. 7,286,774 (“the '774 patent”), titled “Universal Printer Chip,” is a continuation-in-part of the '608 patent. U.S. Patent No. 7,187,874 (“the '874 patent”), titled “Toner Cartridge Having A Printer-Detecting Universal Printer Chip,” is a divisional application claiming the benefit of the '608 patent. U.S. Patent No. 7,356,279 (“the '279 patent”), titled “Universal Imaging Cartridge,” is a continuation of the '774 patent. U.S. Patent No. 7,221,886 (“the '886 patent”), titled “Electrical connections for circuit boards on universal toner cartridges,” is a divisional application claiming the benefit of the filing date of the '608 Patent. U.S. Patent No. 7,551,859 (“the '859 patent”), titled “Multiple Region Printer Chip,” is a continuation-in-part of the '774 patent and the '874 patent.

Similarly, Static’s patents-in-suit teach systems and methods for printer cartridges that operate with multiple types of printers. U.S. Patent No. 7,088,928 (“the '928 patent”), and its continuation, U.S. Patent No. 7,254,346 (“the '346 patent”), are titled “Systems and Methods for Universal Imaging Components.”

B. Prior Litigation

In 2004 and 2005, before the issuance of the patents-in-suit, Static sued Miller and several entities related to Miller for, inter alia, copyright infringement.2 (Dkt. 153-5) Static alleged Miller copied Static’s computer code for printer chips intended for use with Lexmark T520/522 and T620/622 printer cartridges. (Id.) These lawsuits were consolidated and transferred to the Middle District of Florida in 2006.3

In March 2007, when several of Plaintiffs’ and Static’s patents-in-suit had been filed or had issued, the parties began settlement negotiations. On November 26, 2007, the parties to Static’s lawsuit, along with each Plaintiff in this lawsuit, executed a settlement agreement. On the same day, Static and Plaintiffs executed a cross-license agreement for the issued patents-in-suit,4 which was consideration for, and integral to, the settlement agreement:

In consideration for this Settlement Agreement and Release, and as an integral part hereof, the Parties have this day, contemporaneous with the execution of this Agreement, executed a Cross License Agreement of certain patents and technologies, a copy of which is attached hereto as Exhibit 3.

(Settlement Agmt. ¶ 3.1) Pursuant to the cross-license agreement, Plaintiffs granted Static a non-exclusive, royalty-bearing license to practice certain technology that infringes on Plaintiffs’ '774, '874, and '886 patents or any patent claiming priority to those patents. (License Agmt. ¶ 2.1.2) Static likewise granted Plaintiffs a nonexclusive, royalty-bearing license to practice certain technology infringing on Static’s '928 and '346 patents. (Id. ¶ 2.1.1)

Further, the cross-license agreement contains a no-challenge clause, providing that “[n]o party shall file an action contesting the validity of patent rights ... owned by the other party.” (Id. ¶ 2.2.6)

C. Procedural History

On March 30, 2012, Plaintiffs initiated this lawsuit by filing a one-count complaint [1316]*1316alleging that Static breached the cross-license agreement by failing to pay royalties. (Dkt. 1) Static answered and asserted several affirmative defenses alleging, inter alia, that Plaintiffs’ patents-in-suit are “invalid for failure to satisfy one or more of the conditions of patentability specified in Parts II or III of Title 35 of the United States Code” (second affirmative defense) and unenforceable because Plaintiffs paid small entity maintenance or issue fees despite knowing that large entity fees were due (fourth affirmative defense). (Dkt. 25; see also Dkt. 91)

Static also alleged multiple counterclaims. Static’s first counterclaim for declaratory judgment alleges that Static has not infringed any valid claims of the patents-in-suit. (Dkt. 91 ¶¶ 17-20) Specifically, Static alleges there is a justiciable controversy concerning the validity of claim 53 of the '874 patent, claim 10 of the '279 patent, and claim 28 of the '859 patent. (Id.) In its second counterclaim for breach of the cross-license agreement, Static alleges that Plaintiffs breached the cross-license agreement by improperly assigning the '859 patent and licensing the patents-in-suit to third parties. (Id. ¶¶ 21-39) Its third counterclaim for breach of warranty alleges that Plaintiffs’ breached the cross-license agreement’s warranty that “Miller conceived, invented and developed” the licensed technology because “Miller knew he did not conceive of at least one claim in the '874 Patent, a claim to a cartridge chip that would work in multiple brands without using a switch.” (Id. ¶¶41, 44) Its fourth counterclaim for unenforceability alleges that Plaintiffs’ patents-in-suit are unenforceable because Plaintiffs paid small entity maintenance or issue fees despite knowing that the large entity fees were due. (Id. ¶¶ 47-61) Its fifth counterclaim for unenforceability alleges that Plaintiffs failed to pay the proper maintenance fees to .the United States Patent & Trademark Office (“PTO”), and asserts Static’s right to pay the proper fees and obtain ownership of Plaintiffs’ patents-in-suit under the cross-license agreement. (Id. ¶¶ 47-61)

Plaintiffs moved to dismiss Static’s first, third, and fourth counterclaims and to strike Static’s second and fourth affirmative defenses, contending these were invalidity challenges that were barred by the cross-license agreement’s no-challenge clause. (Dkt. 30) Static responded that the no-challenge clause was void under the public policy set forth in Lear v. Adkins, 395 U.S. 653, 89 S.Ct. 1902, 23 L.Ed.2d 610 (1969), because the cross-license agreement was not part of an agreement to settle patent litigation. (Dkt. 33) Static also argued that the terms of the no-challenge clause, if enforceable, did not bar any of its affirmative defenses and counterclaims.

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Bluebook (online)
45 F. Supp. 3d 1311, 2014 U.S. Dist. LEXIS 118140, 2014 WL 4206584, Counsel Stack Legal Research, https://law.counselstack.com/opinion/industrial-engineering-development-inc-v-static-control-components-flmd-2014.