Barnes and Noble 2013 Annual Report Download - page 60

answered the counterclaims and asserted several affir-
mative defenses, including the defense that seven of the
patents-in-suit are unenforceable as a result of standard-
setting misconduct. As required by the District Court’s
Local Patent Rules, LSI and Agere served their Disclosure
of Asserted Claims and Infringement Contentions on
July 2, 2012. In that disclosure, LSI and Agere asserted
infringement of only six of the eleven patents they had
previously accused Barnes & Noble, Inc. and barnesand-
noble.com llc of infringing. On January 18, 2013, LSI and
Agere notified Barnes & Noble that they were dropping
another asserted patent. On May 20, 2013, LSI and Agere
filed amended counterclaims, alleging infringement of five
additional patents—U.S. Patent Nos. 8,041,394; 5,870,087;
5,568,167; 6,982,663 and 5,452,006. Barnes & Noble, Inc.
and barnesandnoble.com llc responded to these amended
counterclaims and asserted several affirmative defenses
on June 21, 2013. The District Court has set certain pretrial
dates in the case, including a claim construction hearing
beginning on March 24, 2014. The District Court has not
yet set a trial date in the case.
Deep9 Corporation v. Barnes & Noble, Inc. and
barnesandnoble.com llc
On January 1, 2011, Deep9 Corporation (Deep9) filed a
complaint against Barnes & Noble, Inc. and barnesand-
noble.com llc in the United States District Court for the
Western District of Washington. The complaint alleges that
Barnes & Noble, Inc. and barnesandnoble.com llc infringe
U.S. Patent Nos. 5,937,405 and 6,377,951. On February 1,
2011, Barnes & Noble, Inc. and barnesandnoble.com llc
filed an answer denying infringement and asserting several
affirmative defenses. At the same time, Barnes & Noble,
Inc. and barnesandnoble.com llc filed counterclaims seek-
ing a declaratory judgment that neither Barnes & Noble,
Inc. nor barnesandnoble.com llc infringes the patents-in-
suit and that each of the two patents-in-suit is invalid. The
District Court issued an order regarding claim construction
on January 10, 2012 and amended that order on January 24,
2012. On September 21, 2012, the District Court granted
Barnes & Noble, Inc. and barnesandnoble.com llc’s motion
for summary judgment of non-infringement as to both of
Deep9’s patents-in-suit, and entered judgment in favor
of Barnes & Noble, Inc. and barnesandnoble.com llc. On
October 16, 2012, Deep9 filed a notice of appeal to the
United States Court of Appeals for the Federal Circuit. After
the parties briefed the issues raised in Deep9’s appeal, the
Federal Circuit heard oral argument on May 8, 2013. On
May 13, 2013, the Federal Circuit issued a summary affir-
mance in which it affirmed the District Court’s judgment in
favor of Barnes & Noble, Inc. and barnesandnoble.com llc.
Technology Properties Limited et al. v. Barnes & Noble Inc.,
et al.
On July 24, 2012, Technology Properties Limited, LLC,
Phoenix Digital Solutions, LLC, and Patriot Scientific
Corporation (collectively, TPL) submitted a complaint to
the U.S. International Trade Commission (ITC), captioned
Certain Wireless Consumer Electronics Devices and
Components thereof, Inv. No. 337-TA-853, requesting that
the ITC institute an investigation pursuant to Section 337
of the Tariff Act of 1930, as amended. The complaint alleges
that the sale for importation into the United States, the
importation, and/or the sale within the United States after
importation of Barnes & Noble, Inc.’s NOOKTM products
infringe certain claims of U.S. Patent No. 5,809,336. The
complaint also asserts similar claims against the products
of 23 other Respondents. The complaint requests that the
ITC issue a permanent exclusion order and a permanent
cease-and-desist order with respect to these products. On
August 21, 2012, the ITC issued a Notice of Institution of
Investigation and delegated authority for factfinding on
the public interest to the Administrative Law Judge (ALJ)
hearing the case. On September 24, 2012, Barnes & Noble
filed a response to the complaint, denying that its products
infringe the ‘336 patent and denying that it has engaged in
any action that would constitute unlawful sale for importa-
tion into the United States, importation, or sale within
the United States after importation. Barnes & Noble also
asserted ten affirmative defenses. On February 12, 2013,
TPL entered into a stipulation in which it agreed that the
NOOK Simple Touch, NOOK Simple Touch with GlowLight,
NOOK HD, and NOOK HD+ are the only Barnes & Noble
products accused of infringement in the investigation;
therefore, the NOOK 1st Edition, NOOK Color, and NOOK
Tablet products are no longer accused of infringement in
the investigation. Fact discovery ended on February 22,
2013. Initial expert reports were submitted on March 27,
2013. Following a Markman hearing on March 5, 2013,
the ALJ issued a claim construction order on April 18,
2013. Expert discovery ended on May 1, 2013. On June
3-7, 2013 and June 10-11, 2013, the Administrative Law
Judge conducted a hearing in the action. The parties filed
their opening post-hearing briefs on June 28, 2013, and
filed their reply post-hearing briefs on July 10, 2013. The
Administrative Law Judge is scheduled to issue his final
initial determination on September 6, 2013. The target date
for ITC resolution of the investigation is January 6, 2014.
Also on July 24, 2012, TPL filed a complaint against Barnes
& Noble, Inc. in the United States District Court for the
Northern District of California. The complaint similarly
alleges that Barnes & Noble is infringing the ‘336 patent
58 Barnes & Noble, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued