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Raytheon Co. v. Cray, Inc.

United States District Court, W.D. Wisconsin

June 1, 2018

RAYTHEON COMPANY, Plaintiff,
v.
CRAY, INC., Defendant.

          OPINION AND ORDER

          WILLIAM M. CONLEY DISTRICT JUDGE.

         The court issues this order in advance of today's preliminary pretrial conference. During the previous conference with the parties on May 18, the court required the parties to meet and confer on the narrowing of claims, motion for summary judgment plan, and related issues, then file a joint report, which they have now done. (See dkt. #346.) The parties appear to have made significant headway in their meet and confer, leaving only three issues (the first two are related) for resolution. Those three issues are addressed below. Consistent with the June 3, 2019, trial date set by the court during the last conference, the court also adopts the parties' proposed summary judgment briefing schedule and proposes the additional deadlines subject to comment by the parties on today's call.

         I. The Parties' Disputes

         A. Defendant's counterclaims of unenforceability due to inequitable conduct and unclean hands on the ‘909 and ‘833 patents

         As set forth in the joint report and on the record during the last call, plaintiff Raytheon intends to dismiss with prejudice its claims of infringement of the ‘909 and ‘833 patents (the “Hardware Patents”). In the joint report, Raytheon also states that it will “provide Cray a covenant not to sue on those patents” and that the parties intend to submit a joint motion asking the court to enter an order dismissing those infringement claims with prejudice. (Joint Rept. (dkt. #346) 1-2.)

         Cray has asserted counterclaims seeking declaratory judgments that the ‘833 and ‘909 patents are unenforceable due to unclean hands and inequitable conduct. (Countercl. 9-12.) Raytheon argues that its decision to dismiss with prejudice its infringement claims on those patents and provide Cray with a covenant not to sue deprives this court of jurisdiction over Cray's counterclaims. (Joint Rept. (dkt. #346) 3-5.) Assuming Raytheon executes a covenant not to sue which contains language making “absolutely clear” that it will not sue Cray for infringement of the ‘833 and ‘909 patents, then the court agrees that Cray's counterclaims are moot. See Already LLC v. Nike, Inc., 568 U.S. 85, 95 (2013); Amana Refrigerator, Inc. v. Quadlux, Inc., 172 F.3d 852, 854-55 (Fed. Cir. 1999).

         As detailed in Raytheon's position statement, the Federal Circuit has recognized, in the context of considering attorney's fees under 35 U.S.C. § 285, that the dismissal of infringement claims, coupled with a covenant not to sue, divests this court of jurisdiction over counterclaims like that asserted by Cray. See Highway Equip. Co. v. FECO, Ltd., 469 F.3d 1027, 1033 n.1 (Fed. Cir. 2006) (explaining that covenant “eliminated the case or controversy pled in the patent-related counterclaims and deprived the district court of Article III jurisdiction with respect to those counterclaims” (citing Super Sack Mfg. Corp. v. Chase Packaging Corp., 57 F.3d 1054, 1058-59 (Fed. Cir. 1995) (“[A] patentee defending against an action for a declaratory judgment of invalidity can divest the trial court of jurisdiction over the case by filing a covenant not to assert the patent at issue against the putative infringer.”)); Monsanto Co. v. Bayer Bioscience N.V., 514 F.3d 1229, 1242 (Fed. Cir. 2008) (noting that covenant not to sue “may divest the court of jurisdiction over a declaratory judgment action regarding these patents”). Of course, this is arguably something of a pyrrhic victory since the question of inequitable conduct may remain in the case for the court to decide as a part of a later fee petition under § 285, including concomitant jurisdiction to decide whether the underlying patents are “unenforceable for inequitable conduct.” Monsanto, 514 F.3d at 1243.

         Even ignoring that the Federal Circuit decisions are controlling authority for this case, the cases cited by Cray are not to the contrary. While the plaintiff in Silicon Graphics, Inc. v. ATI Techs., Inc., 573 F.Supp.2d 1108, 1110 (W.D. Wis. 2008), aff'd, 607 F.3d 784 (Fed. Cir. 2010), “offered to enter into a covenant not to sue on the four remaining infringement claims, ” having withdrawn the infringement claims on the eve of trial, it appears that no such covenant was actually executed, and instead, the case went forward to trial on the counterclaims. As such, neither this court nor the Federal Circuit addressed whether a covenant not to sue for infringement rendered the counterclaims moot and divested the court of jurisdiction over the invalidity and unenforceability counterclaims. In Jovanovich v. Redden Marine Supply, Inc., No. C10-924-RSM, 2011 WL 4073197, at *3 (W.D. Wash. Sept. 13, 2011), the court simply found it retained jurisdiction over the question of unenforceability due to unclean hands under § 285, consistent with Monsanto.

         As such, assuming Raytheon dismisses its claims for infringement of the ‘833 and ‘909 patents with prejudice and enters into an “absolutely” clear covenant not to sue, then the court will dismiss without prejudice Cray's Counterclaims 9-12 for lack of subject matter jurisdiction.

         B. Raytheon's motion to dismiss Cray's counterclaims 11-15

         Dismissing Counterclaims 11-12 appears to largely moot this part of the parties' dispute as well, although a question remains as to whether the Eastern District of Texas ruled on Raytheon's motion with respect to Counterclaims 13-15, which concern unenforceability of the other two patents still in suit (the Software Patents). Cray maintains that the court denied Raytheon's motion to dismiss these counterclaims, while Raytheon asserts the court simply granted Cray's motion to sever and reserved on its motion to dismiss.

         Unfortunately, the record allows for either interpretation. A minute entry for a February 9, 2017, hearing states that “[t]he court will take up Plaintiff's Motion to Dismiss Cray, Inc.'s Amended Counterclaims 11-15 (Dkt. No. 128) on the briefs.” (Dkt. #218.) During a conference the following week, the court stated that it would “sever the claims that do not relate to the primary infringement issue” and set those for a trial after the trial on the infringement and invalidity claims. (Dkt. #224 at 3-4.) It is unclear whether in severing the claims, the court implicitly denied the motion to dismiss or continued to reserve on it. Moreover, there was no oral mention of the motion to dismiss during the hearing, not to mention no explanation for such a ruling or a subsequent written order.

         As such, this court will err on the side of fairness and deem the motion to dismiss still pending. Rather than take up that motion now, however, the court would prefer to simply address these counterclaims in the context of the parties' motion for summary judgment. As such, to the extent Raytheon did not move for summary judgment on these counterclaims, the court will expand the permissible scope of its summary judgment motion to include those arguments raised in its motion to ...


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