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Judge Sweet Holds Knowledge of Patent at Issue Was Not “Acquired” During an Acquisition of One Who Knew

On July 18, 2018, Judge Sweet granted defendants Daktronics, Inc.'s and Daktronics Hoist, Inc.'s (collectively, "Daktronics") motion for summary judgment on the issue of willful infringement. As we wrote in a previous post, more than two years after plaintiff Olaf Sööt Design, LLC ("OSD") filed its complaint, Judge Sweet granted OSD leave to amend its complaint to add the willful infringement claim.

In moving for summary judgment, Daktronics asserted that there is no evidence that they knew of the '485 patent. OSD, in its opposition, pointed to what it characterized as "extensive evidence of knowledge" related to Daktronics' acquisition of the third-party Hoffend, which had actual knowledge of the '485 patent.

The court quickly disposed of OSD's argument that Hoffend's knowledge of the patent should be attributed to Daktronics, noting that it was not aware of any case law that would support such argument. Next, regarding OSD's argument that Daktronics would have acquired Hoffend's knowledge of the patent through the acquisition due diligence process, the court discounted such argument as "speculation," which cannot defeat summary judgment. Also belying this argument, the court found, was the fact that Daktronics received a representation and warranty that Hoffend "did not infringe any intellectual property rights," which helps explain why Daktronics did not inquire into existing patents. Finally, the court rejected OSD's argument that Daktronics should be imputed, on an agency-principal theory, to have the knowledge of its outside prosecution counsel, which became aware of the '485 patent in prosecuting a patent application for Daktronics; the court noted that it is not aware of any case law that would support such argument.

Case: Olaf Sööt Design, LLC v. Daktronics, Inc., No. 15-5024, Dkt. No. 258 (S.D.N.Y. July 18, 2018).