Free Letter - District Court of Delaware - Delaware

Case 1 :04-cv-01536-JJF Document 71 -2 Filed 07/20/2006 Page 1 of 3
H O G & Hogan & Hartson up
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Suite 1400
Los Angeles, CA 90067
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July 20, 2006
BY E-FILE
The Honorable Kent A. Jordan
United States District Court
for the District of Delaware
U.S. Courthouse
844 King Street
Wilmington, Delaware 19801
Re: Honeywell International, Inc., er al., v. Apple Computer, Inc., et al,,
D. Del., C.A. No. 04-1338-KAJ
Honeywell International Inc. , et al. v. Audiovox Communications
Corp., et al. D. Del., C.A. No. 04-1337-KAJ
Optrex America, Inc. v. Honeywell International Inc., etal.,
D. Del., C.A. No. 04-1536-KAJ
Dear Judge Jordan:
We write on behalf of Defendants Seiko Epson Corp. and Sanyo Epson Imaging
Devices (collectively referred to herein as “SEC"), in further response to Honeywell’s
letter to the Court dated July 14, 2006. SEC joins in the joint letter being filed today on
behalf of the Manufacturer Defendants, but writes separately to further address a specific
issue that has been raised concerning its foreign sales of LCD products.
Based on Honeywell’s recent responses to SEC’s interrogatories and the parties’
subsequent meet and confer, SEC has prepared a motion for partial summary judgment as
to certain categories of LCD products which are sold exclusively outside the United
States. SEC anticipates filing its motion within the next few days. Accordingly, just as
Honeywell has requested "the opportunity to brief fully the legal and factual arguments,"
SEC similarly requests the opportunity to fully brief this issue prior to a final
determination by the Court.
Honeywell has not restricted the scope of its claims or its discovery requests to
LCD products which even arguably could be considered infringing. This issue arises in
several different contexts, one of which involves foreign sales. Honeywell seeks to
extend this ever-expanding lawsuit to encompass all of SEC’s sales anywhere in the
worlaf regardless of whether those products ever reach the U.S. market, and irrespective
of whether SEC induces the subsequent use or sale of those products in the United States.
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Case 1:04-cv-01536-JJF Document 71-2 Filed 07/20/2006 Page 2 of 3
The Honorable Kent A. Jordan
July 20, 2006
Page 2
SEC sells or ships a limited number of LCD products to customers in the U.S.
(SEC’s "U.S. sales"). However, a large percentage of SEC’s LCDs are sold to customers
outside the U.S. (SEC’s "foreign sales"). These LCDs are manufactured in Asia; sold by
SEC in Japan to customers in Asia, Europe, and elsewhere; and shipped directly from the
manufacturer in Asia to the foreign customers. Those foreign customers then incorporate
the LCDs in "end products" that may be sold anywhere in the world, in the customers’
discretion.
SEC’s foreign sales do not infringe Honeywell’s patent. Those sales only give
rise to liability if SEC induces its foreign customers to subsequently sell the LCD
products in the United States. However, if those products never reach the U.S. market,
there can be no claim for patent iniringement, even by inducement. Accordingly, there is
no legal basis for extending discovery to LCD products sold abroad unless Honeywell
can articulate a good faith basis for asserting that certain products reach the U.S. market.
Even as to LCD products that reach the U.S., however, Honeywell cannot state a
claim against SEC for inducing infringement. To prove inducement, Honeywell contends
that SEC sells to its foreign customers "knowing" that some of those LCDs will be used
in products sold in the U.S. However, such knowledge is insufficient to support a claim
of inducement as a matter of law.
A claim of inducement must be supported by evidence that SEC encouraged or
promoted the use or sale of its LCD products in the U.S. and that SEC intended to induce
infringement inthe U.S. In response to SEC’s discovery, Honeywell failed to identify
even a single act by which SEC encouraged any foreign customer to use or sell LCD
products in the U.S. Nor has Honeywell alleged any facts which — even if true — would
support a claim that SEC possessed the required intent to induce its foreign customers to
7 use or sell LCDs in the U.S.
Honeywell will undoubtedly assert that it requires discovery to develop such
evidence. However, this puts the proverbial cart before the horse. Unfettered discovery
is not justified for the ostensible purpose of trying to develop a claim that has no existing
basis and which cannot be asserted in good faith. This is the classic definition of a
"fishing expedition." Where Honeywell’s discovery responses demonstrate that
Honeywell lacks a current, good faith basis for accusing SEC of infringement as to
certain products, discovery should not be permitted.
A related issue is that SEC did not even learn of the ‘371 patent until May of
2004. It is well-settled that a defendant cannot possess the required intent to induce
infringement by another unless the defendant has knowledge of the patent. For this
independent reason, SEC cannot have induced infringement of the ‘371 patent prior to
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Case 1:04-cv-01536-JJF Document 71-2 Filed 07/20/2006 Page 3 of 3
The Honorable Kent A. Jordan
July 20, 2006
Page 3
May 2004 as a matter of law. Accordingly, SEC’s foreign sales prior to that date cannot
be the proper subject of discovery.
As mentioned previously, SEC does sell or ship a limited number of LCD
products to U.S. customers. SEC is fully willing to provide discovery concerning those
LCD products, if they have otherwise been properly accused of infringement, and subject
to resolution of other objections that may apply. However, SEC should not be compelled
to litigate infringement as to LCD products that it lawfully sells to foreign customers
outside the U.S., when those sales are beyond the scope of U.S. patent law.
SEC intends to fully brief these issues in support of its upcoming motion for
partial summary judgment as to its foreign sales. Accordingly, SEC respectfully suggests
that final resolution of the scope of discovery as to foreign sales should await
consideration of this briefing.
Respectfully,
Robert J. Benson
for Hogan & Hartson LLP
cc: All Local Counsel of Record — by ECF
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