SAN FRANCISCO (CN) – A federal judge has denied LSI Corp.’s motions to dismiss Barnes & Noble’s defenses in an ongoing courtroom battle that will ultimately determine whether the nation’s largest bookseller will have to pay the chipmaker royalties on sales of the Nook digital reader.
In July 2011, Barnes & Noble sued LSI after the chipmaker have the bookstore notice of its intent to pursue patent infringement claims related to the Nook’s 3G, WiFi and audio technology.
LSI moved for dismissal, which was denied, then filed a series of counterclaims related to 11 different patents.
Barnes & Nobles responded with eight affirmative defenses to the counterclaim, namely non-infringement, invalidity, unenforceability, persecution history estoppel/judicial estoppel, no injunctive relief, license and failure to state a claim.
In his 28-page order, Judge Edward Chen of California’s Northern District in San Francisco found that Barnes and Noble had sufficiently pleaded facts sufficient to state a claim for relief under the grounds of unenforceability, including: estoppel, fraud, waiver, implied waiver, unclean hands, patent exhaustion, implied license and other equitable doctrines.
Chen stated that the bookstore had adequately pleaded factual allegations of misconduct by Lucent, LSI’s predecessor, which included failure to disclose rules of standard-setting organizations (SSOs.). Chen added that the conduct could be imputed for the purposes of the bookstore’s defense under unenforceability.
“Indeed, a contrary holding would result in a perverse policy outcome – a culpable patentee would effectively immunize itself by selling the patent to an assignee free of any encumbrance which would otherwise attach – and obtain full value therefore,” Chen wrote.
The court, however, granted LSI’s motion to strike as to the bookstore’s affirmative defenses for laches and judicial estoppel.
Chen noted that Barnes and Noble conceded that it “had not alleged any facts specific to laches at this time.”
But the bookstore argued discovery was necessary first.
“Simply put, there is no excuse not to allege this defense with some degree of specificity,” Chen wrote. “Indeed, at the argument herein, plaintiffs admitted this defense was asserted only as a placeholder.”
“With respect to the judicial estoppel claim, defendants are correct that plaintiffs must identify a factual basis for their defense so as to give defendants fair notice of the claim. Such a claim would be based on public statements made to a court. There is no reason why plaintiffs should not allege such facts,” Chen wrote.
The judge continued: “However, with respect to the prosecution history defense, defendants’ failure to identify which claims of each patent plaintiff have allegedly infringed makes it impossible for plaintiffs to plead facts supporting this defense at this stage of the litigation.”