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In Onboard Wi-Fi Case, Covenant Not To Sue Has Wide Range

By Laura Stafford on April 29, 2016
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WIFI-2Judge Jeffrey Alker Meyer of the District of Connecticut recently released an opinion that is significant to litigants on either side of a covenant not to sue. In a complex case with a host of claims and counterclaims asserted among the parties, the patentee’s grant of a covenant not to sue on the asserted patent effectively mooted many of the defendants’ counterclaims.

The patented technology, a WiFi technology system that drastically reduces the power absorbed by users of wireless communications devices, was invented by Mahin Tehrani, whose sons, Bijan and Saied Tadayon, were a patent agent and a patent attorney, respectively. After Bijan, the patent agent, helped Ms. Tehrani secure the patent, she assigned the patent to Bijan; Bijan and Saied proceeded to assert the patent against several bus companies, claiming that their onboard WiFi systems infringed the patent. The defendants in this case – DATTCO, a bus company, and Saucon, a provider of onboard WiFi services to DATTCO – lodged a number of counterclaims against the Tadayons and Tehrani, including counterclaims for invalidity, patent misuse, inequitable conduct, conspiracy to commit fraud, and a request for an exceptional case finding.

Subsequently, several claims of the asserted patent were rejected in reexamination. The Tadayon brothers then entered a broad covenant not to sue the defendants in this case, and sought to dismiss the defendants’ numerous counterclaims. The defendants opposed the motion and sought to press their numerous counterclaims against the Tadayons and Tehrani, covenant not to sue notwithstanding.

In considering the Tadayons’ motion, the Court focused heavily on the effect of the covenant not to sue on the potential remedies available to the defendants if they succeeded on their counterclaims. If the outcome of the counterclaim would be nothing more than a declaration that the patent was unenforceable, the Court reasoned, then the covenant not to sue rendered the counterclaim moot. Consequently, the counterclaims for patent invalidity, patent misuse, and inequitable conduct were mooted, because the defendants could no longer expect that this patent’s claims would be asserted against them. However, where the counterclaim would have resulted in damages – for example, the counterclaims for an exceptional case determination and for conspiracy to commit fraud – those counterclaims survived the covenant not to sue.

This case is important for defendants to keep in mind when considering the implications of a covenant not to sue. That covenant may have a broad scope and cover a significant number of potential counterclaims against a patent owner, particularly where the counterclaims do not grant a right to monetary relief.

The case is Saied Tadayon, Bijan Tadayon, and Mahin Tehrani v. Dattco Inc. and Saucon Techs., Inc., No. 3:12-cv-01610, in the District of Connecticut. A copy of the order can be found here.

Photo of Laura Stafford Laura Stafford

As a Litigation partner, Laura Stafford focuses her practice on complex business disputes, with a particular emphasis on bankruptcy litigation. Recently, she has had a lead role in representing the Financial Oversight and Management Board for Puerto Rico in litigation involving the restructuring…

As a Litigation partner, Laura Stafford focuses her practice on complex business disputes, with a particular emphasis on bankruptcy litigation. Recently, she has had a lead role in representing the Financial Oversight and Management Board for Puerto Rico in litigation involving the restructuring of Puerto Rico’s finances. In that capacity, she has, among other things, managed the claims reconciliation process while litigating numerous other adversary proceedings and contested matters.

Laura has litigated a range of matters in the federal courts, including serving on the successful trial teams in MobileMedia Ideas v. Apple and ADREA v. Barnes & Noble, as well as before the International Trade Commission. She is experienced in all stages of the litigation process, including pre-suit due diligence, discovery, summary judgment and trial.

In addition, Laura maintains an active and diverse pro bono practice, with a focus on immigration law and gun control issues. She has secured permanent residency for numerous unaccompanied minors immigrating to the United States.  She has also filed numerous amicus briefs in federal and state court supporting the constitutionality of legislation.

Prior to joining Proskauer, Laura worked for the New York County District Attorney’s Office as a paralegal in the Frauds Bureau.

Read more about Laura StaffordEmail
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  • Posted in:
    Intellectual Property
  • Blog:
    New England IP Blog
  • Organization:
    Proskauer Rose LLP
  • Article: View Original Source

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