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THOMSON CONSUMER ELECS., INC. v. INNOVATRON

April 30, 1998

THOMSON CONSUMER ELECTRONICS, INC., Plaintiff/Counterclaim Defendant,
v.
INNOVATRON, S.A., Defendant and Counterclaimant v. THOMSON MULTIMEDIA, S.A., Counterclaim Defendant, v. THOMSON TELEVISIONES DE MEXICO, S.A. DE CV, Counterclaim Defendant.



The opinion of the court was delivered by: GREEN

MEMORANDUM OPINION AND ORDER

 Plaintiff and Counterclaim Defendants (collectively "Thomson") seek in this action a declaration of non-infringement or patent invalidity. Innovatron has counterclaimed for injunctive and legal relief for alleged patent infringement.

 The technology at issue involves the Direct Satellite System ("DSS") used by certain direct-to-home or direct broadcast satellite television broadcasters. The DSS consists of components made by a number of manufacturers. Thomson manufactures, inter alia, the satellite receiver or dish. Thomson inserts a "smart card" which allows the dish to receive and translate encrypted transmissions. The "smart card" is imported by Thomson into the United States and is made by News Digital Systems ("NDS").

 Defendant Innovatron ("Innovatron") is a French company with rights in U.S. patent # 4,404,464 ("'464 patent"), issued in 1983 and entitled "Method and Apparatus for Electrically Connecting a Removable Article, in Particular a Portable Electronic Card." Innovatron alleges that the smart cards imported by Thomson infringe the '464 patent.

 A. Parallel Proceedings

 The parties are engaged in parallel or overlapping proceedings to resolve this dispute. The first proceeding, near final resolution, is pending before the International Trade Commission ("ITC"). Innovatron filed a complaint before the ITC seeking an order blocking Thomson's continued importation of the NDS smart cards. A trial before an ITC Administrative Law Judge ("ALJ") was held from September 29, 1997 to October 7, 1997. The issues before the ALJ were whether the '464 patent is valid and whether Thomson's importation of the NDS smart cards infringes the '464 patent. The ALJ released his final initial determination on March 24, 1998 finding the '464 patent valid and Thomson's importation to be a violation of 19 U.S.C. § 1337. The ITC will decide whether to review that determination by May 28, 1998 and its target date for completion of the investigation is July 20, 1998. See 63 Fed. Reg. 17445 (Apr. 9, 1998).

 Regardless of the final outcome before the ITC, its determination will not formally have preclusive effect in the instant action. See Texas Instruments Inc. v. Cypress Semiconductor Corp., 90 F.3d 1558, 1568-69 (Fed. Cir. 1996). However, if there is appellate review of the ITC's claim construction in this dispute, that will certainly have a pronounced effect, and in practical terms the stare decisis effect of appellate review of the ITC construction would have near-preclusive effect with respect to any review of this Court's construction. See id. at 1569.

 B. Pending Motions

 A number of motions have been filed in this case recently. This Memorandum Opinion and Order will resolve (1) Thomson's Motion to Clarify and Establish Ground Rules for the Markman Hearing; (2) Thomson's Motion for Expedited Briefing; (3) Magistrate Judge Kay's recommendation that Innovatron's Motion for Sanction be denied; and (4) Thomson's Appeal from Magistrate Judge Kay's Discovery Order. The pending motion to bifurcate shall be addressed in a separate order.

 1. Motion for Sanctions

 Some of these can be dispatched in short order. As to Magistrate Judge Kay's report and recommendation to deny Innovatron's motion for sanctions, the Court accepts and agrees with that for the reasons stated therein; Innovatron's motion will be denied.

 2. Appeal from Magistrate Judge's Order Compelling Discovery

 As to Thomson's Appeal from Magistrate Judge Kay's Discovery Order, that too shall be denied. While this Court certainly took the parties at their word at the initial scheduling conference when they advised that they would proceed in as efficient a manner as possible by using materials from the proceeding held before the ITC, a basic principle must be recognized -- this civil action is independent from the ITC proceeding and the rules governing the scope of civil actions in the federal courts are the appropriate guideposts here. It was for this reason that this Court allowed additional parties to be added to this proceeding, and it is for this reason that Magistrate Judge Kay's Order must be affirmed.

 To the extent that Thomson argues that Innovatron is estopped from seeking discovery about the two new products or has waived its right to do so by virtue of its counsel's comments at the initial scheduling conference identifying the commonalities between this lawsuit and the ITC proceeding, that argument is unpersuasive. At the scheduling conference, this Court did not understand Innovatron to be stipulating to a replay of the ITC ...


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