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Eagle View Technologies, Inc. v. Xactware Solutions, Inc.

United States District Court, D. New Jersey, Camden Vicinage

December 20, 2018

Eagle View Technologies, Inc. et al., Plaintiffs,
Xactware Solutions, Inc. et al., Defendants.



         This is a patent infringement action brought by Eagle View Technologies and Pictometry International [together “Plaintiffs”] against Xactware Solutions and Verisk Analytics [together “Defendants”]. Before the Court is Defendants' motion for summary judgment [“the motion”] under Federal Rule of Civil Procedure [“Fed. R. Civ. P.” or “Rule”] 56(a) to equitably estop this infringement action. For the reasons below, this motion is DENIED.

         An appropriate Order accompanies this Opinion.

         1.0 Background and Procedure

         Plaintiffs are the owners of the patents at issue[1] that recite, among other things, business methods, systems, and computer readable storage media for providing a roof repair estimate. The claimed invention applies photogrammetric methods, that is, trigonometric calculations, to images of rooves in aerial photographs to compute roof measurements, in particular, roof pitch. Defendant Xactware Solutions, Inc., is a subsidiary of Defendant Verisk Analytics, and provides online technology tools and systems to insurance carriers, remodelers and construction service providers for determining replacement-cost. The parties have asserted they are competitors to each other (Doc. 15:¶1)[2].

         The Court assumes the parties' familiarity with the many proceedings in this litigation and summarizes only those events relevant to the motion. On 23 September 2015, plaintiffs filed their original complaint against defendants and on 30 November 2015, an amended complaint. Both of these (ECF Docs. 1 and 30) allege direct and indirect infringement under 35 U.S.C. § § 271(a) and (b) of at least one claim of each patent at issue. The case has proceeded through various milestones, including the Markman hearing and the Markman opinion (ECF Doc. 332). The parties have completed discovery, exchanged expert reports and disclosures, and submitted summary judgment motions aiming to dispose of certain issues or of the case itself, as well as motions in limine to exclude experts' testimony (“Daubert motions”). ECF Doc. 459 - 474. This is one of the summary judgment motions.

         2.0 Parties Contentions

         2.1 Defendants

         In seeking summary judgment that plaintiffs' infringement action should be equitably estopped, defendants assert plaintiffs' behavior over a years-long, contracted-for business relationship misled them into believing plaintiffs would not sue them for patent infringement. They further argue they invested substantial resources in their own roof analytics software in reliance on plaintiffs' behavior, which materially prejudices them and compels equitable estoppel of this action and dismissal.

         Defendants contend the following signal plaintiffs' commitment not to sue defendants for patent infringement (ECF Doc. 460:1-6): a six-year, contracted-for business relationship between the parties from 2008 and lasting through 2014, in which plaintiffs paid defendants a fee for each of their roof estimate reports sold through defendants' cost estimation platform. During that period, although plaintiffs occasionally communicated in writing that defendants may be infringing plaintiffs' patents, plaintiffs never sued for infringement, not even in the face of the parties' contract dispute nor when suing others for infringement. Plaintiffs also affirmatively represented in 2014 in the executed, merger contract between the parties that defendants did not infringe the relevant patents. Defendants further assert they invested in the development of their own roof estimate report products during the 6-year business relationship because they relied on plaintiffs' continued non-action. (ECF Doc. 460: 7). Defendants state there is no dispute of material fact in that plaintiffs' consistent behavior during the parties' business relationship completely misled defendants that plaintiffs would ever sue for infringement.

         2.2 Plaintiffs

         Plaintiffs argue defendants' equitable estoppel defense should be precluded under Fed.R.Civ.P. 37(c)(1) as defendants did not disclose the factual and legal bases for the defense with sufficient specificity in response to plaintiffs' interrogatories. ECF Doc. 600:1-2. Defendants argue in reply they included an equitable estoppel counterclaim in their answers and provided specific evidence to plaintiffs' interrogatories about equitable estoppel. ECF Doc. 521: 1.

         Plaintiffs' further contend that, during the parties' business relationship, they did not mislead defendants into believing they would not sue for infringement and that multiple documents and emails exchanged between the parties evidence plaintiffs' notify defendants of possible patent infringement. Plaintiffs argue that, since such communications occurred between the parties' C-level employees and during their contractual relationship, they cannot support an inference of misleading behavior. Further, plaintiffs argue, such communications demonstrate the existence of a genuine dispute of material fact about whether this action should be equitably estopped (ECF Doc. 500: 3-7) and necessarily dispel an inference of defendants' reliance on plaintiffs' inaction. ECF Doc. 500:7. Even if plaintiffs' behavior were deemed misleading, defendants cannot have been prejudiced by it as no temporal or causal nexus exists between defendants' supposed reliance on plaintiffs' behavior and defendants' actions in investing in its own roof estimation software. ECF Doc. 500: 8.

         3.0 Standards

         3.1 Summary Judgment

         Summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). An issue is “genuine” if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A factual dispute is “material” if it might affect the outcome of the case under governing law. Id.

         The movant bears the initial burden of proof to present those portions of the record it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). After the moving party has met its initial burden, “the adverse party's response, by affidavits or otherwise as provided in this rule, must set forth specific facts showing that there is a genuine issue for trial.” Fed. R. Civ. P. 56(e).

         Summary judgment is appropriate if the non-moving party fails to rebut by making a factual showing “sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322. The evidence introduced to defeat or support a motion for summary judgment must be capable of being admissible at trial. Callahan v. AEV, Inc., 182 F.3d 237, 252 n. 11 (3d Cir.1999) (citing Petruzzi's IGA Supermarkets, Inc. v. Darling-Delaware Co., 998 F.2d 1224, 1234 n. 9 (3d Cir.1993)).

         In evaluating whether there is a genuine dispute of material fact, the Court looks at the evidence in the light most favorable to the non-moving party and draws all reasonable inferences in their favor (Burns v. Pa. Dep't of Corr., 642 F.3d 163, 170 (3d Cir.2011)) but neither weighs the evidence nor makes credibility determinations. Those are for tasks for the fact finder. Petruzzi's IGA Supermarkets, 998 F.2d at 1230. Speculation, conclusory allegations, suspicions, or mere denials do not suffice to raise a genuine dispute of material fact. Jutrowski v. Township of Riverdale, 904 F.3d 280, 288-289 (3d Cir. 2018).

         3.2 Equitable Estoppel

         Equitable estoppel is recognized as a defense sufficient to defeat a patent infringement claim under 35 U.S.C. § 282(b) (A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 1028 (Fed.Cir.1992) (en banc), abrogated on other grounds by SCA Hygiene Products Aktiebolag, et al. v. First Quality Baby Products, LLC, et al., 137 S.Ct. 954 (2017)) and is a matter committed to the sound discretion of the trial judge. Id. In asserting this defense, the defendant has the burden of proving:

“(1) the patentee, through misleading conduct, led the alleged infringer to reasonably believe that the patentee did not intend to enforce its patent against the infringer;
(2) the alleged infringer relied on that conduct; and
(3) due to its reliance, the alleged infringer would be materially prejudiced if the patentee were permitted to proceed with its charge of infringement.” Aspex Eyewear, Inc. v. Clariti Eyewear, Inc., 609 F.3d 1305 ...

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