license agreement. When RCA first learned of Data General's new terminals in 1973, it promptly notified the defendant of the Cole patent and initiated negotiations for a license agreement. Between 1973 and 1981, when the agreement was finally signed, RCA diligently pursued Data General in an effort to license the Data General terminals. The parties met in person at least ten times during this period and also communicated by letter on numerous occasions. RCA's genuine effort to resolve its dispute with Data General through negotiations provides a justifiable excuse for the eleven year delay in commencing this suit. See 4 D. Chisum, Patents § 19.05.
Second, RCA's delay is excusable because RCA pursued its HLA infringement action from 1978 to 1984. RCA noticed Data General in 1978 of the HLA suit and also indicated that it would continue to pursue claims against unlicensed manufacturers using the Cole invention. It was reasonable for RCA to conserve litigation expenses by first testing the validity and scope of the Cole patent in HLA before seeking recovery against other potential infringers. See Mainland Industries v. Standal's Patents Ltd., 799 F.2d 746, 749 n.2, 230 U.S.P.Q. (BNA) 772 (Fed. Cir. 1986) (court implies that foreign patent litigation could be considered for purpose of determining excusable delay); 4 D. Chisum, Patents § 19.05. Shortly after the conclusion of the HLA appeal, RCA instituted the instant action for infringement and breach of license agreement.
In addition to rebutting the presumption of unreasonable delay, the Court also finds that RCA has rebutted the presumption of material prejudice due to the delay. First, RCA's decision to litigate the HLA action prior to this suit may have actually benefited Data General. Due to the similar issues raised in both actions, Data General was able to rely on the HLA record for extensive discovery and assistance in plotting its trial strategy. I conclude there was available to Data General sufficient testamentary and documentary evidence to defend this suit. Additionally, I find no evidence that RCA's filing of this suit altered the manner in which Data General conducted its business.
I, therefore, conclude that the defense of laches does not limit any damage recovery RCA could obtain if the Cole patent were valid.
B. Willful Infringement.
RCA seeks a trebling of any damage award on the ground that Data General willfully infringed the Cole patent. Assuming that the Cole patent were valid, the Court would still not find willful infringement on this record.
In order to show willful infringement, RCA must prove by clear and convincing evidence that under the totality of the circumstances, Data General had no reasonable basis for believing it had a right to engage in its course of conduct. See Machinery Corp. v. Gullfiber A.B., 774 F.2d 467, 472 (Fed. Cir. 1985); Shatterproof Glass Corp. v. Libbey-Owens Ford Co., 758 F.2d 613, 628 (Fed. Cir.), cert. dismissed, 474 U.S. 976, 88 L. Ed. 2d 326, 106 S. Ct. 340 (1985). In this case, Data General procured two legal opinions on the validity of the Cole patent and two legal opinions on the question of infringement. All these opinions supported Data General's belief that the Cole patent was either invalid or not infringed by Data General's terminals. In addition, during a portion of the period in which Data General allegedly infringed Cole, Data General was involved in license negotiations with RCA. These continued negotiations between 1973 and 1981 support a finding that Data General was trying in good faith to avoid infringement of the Cole claims. See King Instrument Corp. v. Otari Corp., 767 F.2d 853, 867, 226 U.S.P.Q. (BNA) 402 (Fed. Cir. 1985) (negotiations for a license agreement may support a finding that infringer acted in good faith). On this set of facts, I can ascertain no basis for a finding of willful infringement by Data General.
C. Breach of License Agreement.
RCA requests that its license agreement with Data General be declared rescinded or, in the alternative, requests that it receive damages to compensate for the defendant's alleged breach of the license agreement. RCA alleges that Data General materially breached the license agreement by failing to pay any royalties on its sale of digital-data display equipment. Data General states that it did not breach the agreement because it was only required to pay royalties on equipment "covered by any claim" of the Cole patent and, since Data General contended that its manufactured terminals were not covered by Cole, it concluded that no royalty payments were owed under the terms of the license agreement. The position Data General took was supported by the opinion of outside consultants. In Lear, Inc. v. Adkins, 395 U.S. 653, 673-74, 23 L. Ed. 2d 610, 89 S. Ct. 1902 (1969), the United States Supreme Court held that a licensee was not obligated to pay royalties under a license agreement if the underlying patent is declared invalid by a court.
Since the Court has concluded that the underlying patent is invalid, Data General has no duty to pay royalties under the license agreement. Absent a valid patent, RCA cannot support its contention that a material breach of the license agreement has occurred. Therefore, the Court must deny RCA's request that the agreement be declared rescinded or, in the alternative, that RCA be awarded damages for Data General's alleged breach of the agreement.
For the reasons discussed above, the Court concludes that the Cole patent was not obvious nor anticipated by the prior art. Further, the Court concludes that Data General has not proven RCA committed fraud on the HLA Court or before the PTO during the prosecution of the Cole patent. However, the Court does conclude that Data General has established that the Cole patent is invalid because it was "on-sale" more than one year before the filing of the patent application in violation of section 102(b).
If the patent were valid, the Court concludes that the Data General accused terminals would infringe claims 1 through 3 of Cole, but RCA has not shown willful infringement which would warrant an increased damage award, however, RCA would not be limited in its recovery by the doctrine of laches.
Finally, the Court concludes that neither recission of the license agreement between the parties or calculation of damages from the alleged breach of the agreement are appropriate.
An Order consistent with this Opinion will be entered.
Whereas, defendant Data General Corporation has filed a Revised identification of Objections to be Maintained and Motion to Strike exhibits introduced by plaintiff RCA Corporation at trial.
IT IS ORDERED this 15th day of July, 1988, that the Court issues the following rulings on defendant's objections:
[SEE APPENDIX "A " IN ORIGINAL]
[SEE APPENDIX "B " IN ORIGINAL]
[SEE APPENDIX "C " IN ORIGINAL]
1. PTX 572, 582; RCA484 Overruled
2. ACA1105-8 Overruled
3. RCA1118 Overruled
4. RCA1168 (Anders Dep.) pp. 22-33
136-42, and 158-62. Overruled
5. RCA1194, Seeberger Dep. 272 Overruled
6. RCA682-87, 689-90 Overruled
7. RCA830 Overruled
8. RCA1219, 1220 Overruled
9. PTX 413 Overruled
10. PTX 416; RCA1109, 1117 Overruled
11. RCA1160 Sustained
12. HLA 197 Sustained
13. PTX 288, 385; RCA21, 228, 229,
231, 232, 233, 240, 248. Sustained
14. PTX 1010 Overruled
15. RCA290, 344 Overruled
16. RCA1115 Overruled
17. RCA1218A-B, 1219, 1220 Overruled