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Server Technology, Inc. v. American Power Conversion Corporation

United States District Court, D. Nevada

June 18, 2014

SERVER TECHNOLOGY, INC., Plaintiff and Counterdefendant,
v.
AMERICAN POWER CONVERSION CORPORATION, Defendant and Counterclaimant.

ORDER

LARRY R. HICKS, District Judge.

Before the court is defendant American Power Conversion Corp.'s ("APC") motion for summary judgment. Doc. #545.[1] Plaintiff Server Technology, Inc. ("STI") filed an opposition to the motion (Doc. #548) and a supplemental opposition to the motion (Doc. #556). In response, APC filed a reply. Doc. #559.

I. Facts and Procedural History[2]

Plaintiff STI manufactures intelligent power distribution devices. Like STI, defendant APC manufacturers intelligent power distribution devices. Both STI and APC are direct competitors in the rack-mounted power distribution market.

In December 2006, STI brought the underlying patent infringement action alleging that APC's rack-mounted power distribution products - the AP7900 and AP8900 series of products - infringe two of STI's patents: United States Patent numbers 7, 043, 543 ("the 543 patent"), and 7, 702, 771 ("the 771 patent). Doc. #1. APC denied that its products infringe STI's patents and counterclaimed that STI's patents are invalid as a matter of law.

In April 2014, STI, in an attempt to reduce the issues for trial, offered APC a covenant not to sue on Claim 1 of the 543 patent. Thereafter, APC filed the present motion for summary judgment arguing that, as a result of STI's covenant not to sue, the court has been divested of subject matter jurisdiction over STI's remaining patent infringement claims concerning Claim 15 of the 543 patent and Claim 15 of the 771 patent. Doc. #545.

II. Legal Standard

Summary judgment is appropriate only when the pleadings, depositions, answers to interrogatories, affidavits or declarations, stipulations, admissions, and other materials in the record show that "there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). In assessing a motion for summary judgment, the evidence, together with all inferences that can reasonably be drawn therefrom, must be read in the light most favorable to the party opposing the motion. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Cnty. of Tuolumne v. Sonora Cmty. Hosp., 236 F.3d 1148, 1154 (9th Cir. 2001).

The moving party bears the initial burden of informing the court of the basis for its motion, along with evidence showing the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). On those issues for which it bears the burden of proof, the moving party must make a showing that is "sufficient for the court to hold that no reasonable trier of fact could find other than for the moving party." Calderone v. United States, 799 F.2d 254, 259 (6th Cir. 1986); see also Idema v. Dreamworks, Inc., 162 F.Supp.2d 1129, 1141 (C.D. Cal. 2001).

To successfully rebut a motion for summary judgment, the non-moving party must point to facts supported by the record which demonstrate a genuine issue of material fact. Reese v. Jefferson Sch. Dist. No. 14J, 208 F.3d 736, 738 (9th Cir. 2000). A "material fact" is a fact "that might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Where reasonable minds could differ on the material facts at issue, summary judgment is not appropriate. See v. Durang, 711 F.2d 141, 143 (9th Cir. 1983). A dispute regarding a material fact is considered genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Liberty Lobby, 477 U.S. at 248. The mere existence of a scintilla of evidence in support of the party's position is insufficient to establish a genuine dispute; there must be evidence on which a jury could reasonably find for the party. See id. at 252.

III. Discussion

It is well settled that a covenant not to sue for patent infringement can divest the court of subject matter jurisdiction over any and all claims that relate to that covenant, "because the covenant eliminates any case or controversy between the parties." Dow Jones & Co. v. Ablaise Ltd., 606 F.3d 1338, 1346 (Fed. Cir. 2010). The determination of "whether a covenant not to sue will divest the trial court of jurisdiction depends on what is covered by the covenant." Tech. Licensing Corp. v. Technicolor USA, Inc., 800 F.Supp.2d 1116, 1121 (E.D. Cal. 2011) (citing Dow Jones, 606 F.3d at 1346-47).

In its motion, APC argues that STI's covenant not to sue encompasses STI's remaining infringement claims and thus, the court has been divested of jurisdiction over those infringement claims. See Doc. #545. Specifically, APC argues the covenant not to sue on Claim 1 applies to all other claims in the 543 patent as well as all claims in the 771 continuation patent, and in particular, Claim 15 of both patents, because those claims relate to the same subject matter covered by Claim 1 of the 543 patent. See General Protecht Group, Inc. v. Leviton Manufacturing Co., Inc., 651 F.3d 1355, 1361-62 (Fed. Cir. 2011). However, in this action, STI offered APC two separate covenants not to sue. Thus, before the court can determine the scope of the covenant, the court must first determine which covenant is the operative covenant in this action.

On April 22, 2014, as part of its effort to reduce the issues for trial, STI offered APC an initial covenant not to sue on Claim 1 of the 543 ...


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