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District Court Grants Motion for Summary Judgment on Laches Defense Where Defendant Could Not Establish Prejudice from Plaintiff’s Delay in Filing Suit

The court explained the facts as follows: The defendant, CrestaTech, was founded by Mihai Murgulescu and George Haber in 2005. Its initial products included a receiver for satellite radio and a television platform. CrestaTech entered the television tuner market in September 2011, when it acquired the assets of Xceive Inc., a company developing and selling television tuners. Among the assets that CrestaTech acquired was the XC5000 series of television tuner products–now the accused products in this suit–which Xceive had developed prior to its acquisition in September 2011. Xceive had been selling the XC5000 since at least January 2007.

The plaintiff, Silicon Labs, began in Austin, Texas, in 1996. In the twenty years since, the company has developed and sold a variety of silicon-based TV tuners, with many name-brand TV sets now Xceive representing that it intended to acquire or merge with Xceive. Silicon Labs performed due diligence in evaluating Xceive and the now-accused products. As part of this process, Silicon Labs and its CEO, Tyson Tuttle, executed a Non-Disclosure Agreement and were provided with a set of Xceive confidential and proprietary documents and items. Among those items was an Evaluation Kit for the XC5000, including a number of XC5000 evaluation boards, on which Silicon Labs performed “extensive tests.”

In September 2011, CrestaTech decided to purchase certain assets of Xceive, including the XC5000 products and corresponding patents. At that time CrestaTech was aware of the due diligence that Silicon Labs had performed on Xceive. In February 2014, CrestaTech initiated an ITC complaint against Silicon Labs, asserting that Silicon Labs and several of its customers infringed three CrestaTech-held patents related to television tuners. A few months later, in July 2014, Silicon Labs responded with this suit.

As one of its defenses, CrestaTech contended that Silicon Labs’ pre-suit damages claims are barred by laches, asserting that a rebuttable presumption of laches arises “upon proof that the patentee delayed filing suit for more than six years after actual or constructive knowledge of the defendant’s alleged infringing activity.” CrestaTech asserted that Silicon Labs unreasonably delayed in bringing its claims more than six years after its extensive diligence of the XC5000 products should have put it on notice of that those products and others like them infringe the asserted patents.

Based on these facts, the district court found that summary judgment on the issue of laches was appropriate in favor of Silicon Labs. “First, unlike in many of the published cases finding that laches could apply, the particular operations of the accused products–in particular, the primary XC5000 product–were neither open nor notorious. In fact, CrestaTech does not even seriously make this claim, focusing instead on Silicon Labs’ investigation of the product as part of its 2007 proposed acquisition of XCeive.”

The district court also concluded that “even if Silicon Labs’ investigation did give it enough insight that should have prompted either further investigation of infringement or the filing of a suit–a fact very much in genuine dispute–there is no genuine dispute about the NDA. In particular, there is no genuine dispute that Silicon Labs would have violated the Confidentiality Agreement with Xceive if it had undertaken the detailed technical analysis necessary to determine if the 2007 XC5000 was infringing. The Confidentiality Agreement expressly limited Silicon Labs’ use of Xceive’s information and test samples to the ‘Purpose’ of ‘discussing a possible business relationship’ between Silicon Labs and Xceive.”

The district court concluded that “[p]atent law–and particularly an equitable doctrine such as laches–does not require Silicon Labs to breach contracts by entering into a Confidentiality Agreement to surreptitiously obtain materials in support of a patent infringement action.”

As a third reason to support its ruling, the district court also found that “even if Silicon Labs could be held to have had a duty to investigate based on its 2007 Xceive diligence, there is no dispute that until October 21, 2013, Silicon Labs was involved in extensive patent litigation with MaxLinear, a much larger player in the silicon tuner market than Xceive or CrestaTech. . . . This is not a case in which CrestaTech was duped into believing that Silicon Labs would not protect its intellectual property.”

Finally, the district court concluded that “even if Silicon Labs unreasonably delayed, there is no genuine dispute that CrestaTech suffered no real prejudice as a result. Material prejudice to adverse parties resulting from the plaintiff’s delay is essential to the laches defense. Such prejudice may be either economic or evidentiary.” Here, although the district court did not specifically address the presumption of prejudice, the district court concluded that CrestaTech had shown neither.

Accordingly, the district court granted summary judgment and eliminated the laches defense.

Silicon Laboratories, Inc. v. Cresta Technology Corp., Case No. 14-cv-03227-PSG (N.D. Cal. Feb. 22, 2016)

The authors of are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. For more information about this case, contact Stan Gibson at 310.201.3548 or