The opinion of the court was delivered by: JOHN A. NORDBERG
Defendant, Zenith Electronics, Inc. ("Zenith"), is the assignee of U.S. Patent Number 4,425,647 ("the '647 patent") which claims a system and a method of remote control of electrical devices such as television sets, video cassette recorders ("VCRs") and cable converter boxes. Plaintiff, Universal Electronics, Inc. ("Universal"), manufacturers and sells remote control transmitter devices that control electrical devices sold by a number of manufacturers, including Zenith. Universal makes products that execute the signaling protocol defined in the claims of the '647 patent.
Universal brought this action seeking a declaratory judgment that the '647 patent is invalid, unenforceable, and not infringed. Zenith responded by filing a counterclaim asking this Court to find that the '647 patent is valid,
enforceable and infringed by Universal. Before the Court is Universal's Motion for Partial Summary Judgment on the Issue of Non-Infringement. For the following reasons, the Motion is granted.
Universal manufactures and sells remote control devices that are used with a variety of electrical products. These remote control units require the user to input a code specific to the product or products the user wishes to control. This allows a consumer to control multiple devices, possibly supplied by different manufacturers. The system and method claimed in Zenith's '647 patent comprises a transmitter, a remote control unit, that forms a single word multibit code and transmits that code as single bits to a receiver, for example, a television, that acts in accordance with the coded function, for example changing channels. The claims of the '647 Patent require both a transmitter and a receiver, and do not extend to the transmitter by itself.
A. Standard on Motion for Summary Judgment
Summary judgment is appropriate when a court finds: "there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Pfaff v. Wells Electronics, Inc., 5 F.3d 514, 517 (Fed. Cir. 1993); Renovitch v. Kaufman, 905 F.2d 1040, 1044 (7th Cir. 1990). As the moving party, Universal bears the burden of showing that there is no genuine issue of material fact. See Carroll Touch, Inc. v. Electro Mechanical Sys., Inc., 3 F.3d 404, 413 (Fed. Cir. 1993). The Court resolves all doubts concerning whether issues of material fact exist in Zenith's favor and draws all reasonable inferences in favor of Zenith. See id. at 413. However, Zenith cannot rest its argument on mere denials. It must present evidence that would be sufficient for a reasonable jury to find in its favor. See id. Thus, when deciding this motion, the Court must consider the underlying evidentiary standard. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). In this case, Zenith bears the burden of establishing infringement by a preponderance of the evidence. See Advance Transformer Co. v. Levinson, 231 U.S.P.Q. 1, 18 (N.D. Ill. 1986), rev'd in part on other grounds, 837 F.2d 1081 (Fed. Cir. 1988).
In order to prove that Universal has infringed the '647 patent, Zenith must demonstrate either that Universal has directly infringed the Patent, under 35 U.S.C. § 271(a) (1988), has actively induced infringement, under 35 U.S.C. § 271(b) (1988), or has contributorily infringed, under 35 U.S.C. § 271(c) (1988).
Because Universal does not sell a receiving apparatus and its remote control transmitters do not carry out any receiving apparatus function, Zenith makes no contention that Universal has directly infringed the Patent. Rather, Zenith contends that Universal is liable for either contributory or induced infringement.
Universal sells its transmitters to owners of electrical devices, including owners of Zenith receivers which were sold with remote control transmitters. Owners of Zenith receivers seek Universal transmitters in three circumstances: (1) when the owner's Zenith transmitter breaks; (2) when the owner's Zenith transmitter is lost; and, (3) when the owner seeks to reduce "clutter".
Universal contends that none of its customers directly infringe the '647 patent either because Zenith granted those customers an implied license to practice the invention or because those customers are repairing the system they purchased from Zenith. Absent direct infringement, Universal cannot be liable for contributory or induced infringement. See Joy Technologies, Inc. v. Flakt, Inc., 6 F.3d 770, 774 (Fed. Cir. 1993). Universal also argues that, even if Zenith could show direct infringement of the '647 patent, it is not liable for contributory infringement because its remote control devices are staple articles of commerce that have substantial non-infringing use. Zenith argues that it did not grant the purchasers of its electronic equipment implied licenses, that those customers are not repairing the system but replacing a major component of the system, and that Universal's remote control devices are not staple articles of commerce.
Zenith may hold Universal liable for contributory or induced infringement only if it demonstrates that Universal's customers, the end users, directly infringe the '647 patent. Under 35 U.S.C. § 271 (a), a person is liable for direct infringement if that person "without authority makes, uses or sells any patented invention." Here, Zenith contends that Universal's customers, having Zenith receivers, directly infringe the '647 patent through the unauthorized "use" of Universal's transmitter. The unauthorized use of a patented item, even by a consumer, constitutes an infringement of the patent on that item. See, e.g., Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476, 480, 484, 12 L. Ed. 2d 457, 84 S. Ct. 1526 (1964) (indicating that the purchasers who use patented convertible tops to cars sold without "authority" directly infringe the patent under section 271(a)). At issue here, then, is whether Zenith's television set customers are "unauthorized" in their use of the '647 patent, when the patented remote control system in the Zenith television set is "used" through the Universal remote transmitter.
If Zenith demonstrates that certain of its customers are directly infringing the '647 patent through use of the Universal transmitter, it may then demonstrate Universal's liability by satisfying the requirements of either section 271(b) or 271(c). The Court now turns to consider the scope of a Zenith customer's "authorized" use under the '647 patent. A purchaser's use of the Universal transmitter with a Zenith receiver is "authorized" either if the purchaser has an "implied license" to do so, or if such use constitutes a "permissible repair."
Universal contends that Zenith has granted its customers an implied license to practice its patent by making an unrestricted sale of its non-patented remote control transmitter together with the remote control device in its television receiver. Therefore, Universal argues, Zenith's customers can practice the patented method using any remote control transmitter. If Zenith so granted its customers an implied license to practice the '647 invention, then those customers cannot infringe the '647 claims. See Met-Coil Sys. Corp. v. Korners Unlimited, Inc., 803 F.2d 684, 687 (Fed. Cir. 1986). Zenith, on the other hand, argues that its conduct in simply selling the television with its non-patented remote control transmitter, is insufficient to imply a license to practice its patented method with any other remote control transmitter.
The doctrine of non-infringement due to an implied license stems from the principle that "the authorized sale of an article which is capable of use only in practicing the patent is a relinquishment of the patent monopoly with respect to the article sold." United States v. Univis Lens Co., 316 U.S. 241, 249, 86 L. Ed. 1408, 62 S. Ct. 1088 (1942). Clearly, Zenith granted the purchasers of its television set remote control equipment a license to use the claimed remote system as sold. But, the issue here is whether Zenith granted its customers a license to practice the invention with replacement remote control transmitter units.
This is a question of law. See Met-Coil Sys. Corp. v. Korners Unlimited, Inc., 803 F.2d at 687.
Universal, as the alleged infringer, has the burden of proving that Zenith granted its customers an implied license. See Met-Coil, 803 F.2d at 687. To make this showing, Universal must establish that Zenith's remote control device in its television set has no non-infringing use and that the particular facts of Zenith's sale of the electronic equipment "'plainly indicate that the grant of a license should be inferred.'" See id. at 686; Bandag, Inc. v. Al Bolser's Tire Stores, Inc., 750 F.2d 903, 925 (Fed. Cir. 1984) (quoting Hunt v. Armour & Co., 185 F.2d 722, 729 (7th Cir. 1950)). Universal must show that Zenith's actions lead its customers to believe that they could use replacement remote control units. See ...