Summit Imaging Counterclaims Against Philips Over Device 'Hacking' Claims

Case 2:19-cv-01745-JLR Document 41 Filed 05/18/20 Page 1 of 48
1 The Honorable James L. Robart
4
IN THE UNITED STATES DISTRICT COURT
5 FOR THE WESTERN DISTRICT OF WASHINGTON
AT SEATTLE
6
7 PHILIPS NORTH AMERICA LLC, a Civil Action No.: 2:19-cv-01745

8 Delaware Company; KONINKLIJKE
PHILIPS N.V., a Company of the DEFENDANTS’ ANSWER,
9 Netherlands; and PHILIPS INDIA, LTD., AFFIRMATIVE DEFENSES, AND
an Indian Company, COUNTERCLAIMS TO PLAINTIFFS’
10 SECOND AMENDED COMPLAINT
Plaintiffs,
11
vs.
12
SUMMIT IMAGING INC., a Washington
13 Corporation; LAWRENCE R NGUYEN, an
14 individual; and DOES 1-10, inclusive,
15 Defendants.
16
17 ANSWER
18 Defendants Summit Imaging Inc. (“Summit”) and Lawrence R. Nguyen (“Nguyen”)
19 (collectively “Defendants”), by and through their undersigned attorneys, answer Plaintiffs,
20 Philips North America LLC (“Philips USA”), Koninklijke Philips N.V.’s (“Philips N.V.”), and
21 Philips India Ltd. (“Philips India”) (collectively “Plaintiff” or “Philips”) Second Amended
22 Complaint as follows:
23 1. Defendants lack knowledge or information sufficient to form a belief as to the
24 truth of the allegations contained in paragraph 1 of the Second Amended Complaint, and on
25 that basis deny them.
26
27
DEFENDANTS’ ANSWER, AFFIRMATIVE DEFENSES
AND COUNTERCLAIMS TO SECOND AMENDED SEED INTELLECTUAL PROPERTY LAW GROUP LLP
COMPLAINT 701 FIFTH AVENUE, SUITE 5400
SEATTLE, WASHINGTON 98104-7092
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7 4. Denied.
8 5. Denied.
9 6. Defendants admit that Summit has created software called Adepto, but
10 otherwise deny the remaining allegations contained in paragraph 6 of the Second Amended
11 Complaint.
12 7. Defendants admit that Summit provides training to its customers, but otherwise
13 deny the allegations contained in paragraph 7 of the Second Amended Complaint.
14 8. Defendants admit that the quotations, “Legal solution for customers aware of the
15 issues around Licensing, Copyright, and Intellectual Property,” and “Alternative to OEM
16 diagnostics was unavailable,” appear in a slide in the presentation accessible through the link in
17 Paragraph 49 of the Second Amended Complaint. That presentation speaks for itself, and
18 Defendants deny all characterizations inconsistent therewith. Defendants deny the remaining
19 allegations contained in paragraph 8 of the Second Amended Complaint.
20 9. Defendants admit that this action is brought by Philips, and that Philips is
21 seeking the relief listed in Paragraph 9. Defendants deny that such relief is warranted. To the
22 extent further response is required, defendants deny each and every remaining allegation
23 contained in paragraph 9 of the Second Amended Complaint.
24
25
26
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1 THE PARTIES
10. Defendants admit that copies of certificates of copyright registration were
2
purportedly attached to the Second Amended Complaint as Exhibit A, and that the documents
3
in Exhibit A speak for themselves. Defendants lack knowledge or information sufficient to
4
form a belief as to the truth of the remaining allegations set forth in Paragraph 10 of the Second
5
Amended Complaint, and on that basis deny them.
6
11. Defendants lack knowledge or information sufficient to form a belief as to the
7
truth of the allegations contained in paragraph 11 of the Second Amended Complaint, and on
8
that basis deny them.
9
12. Defendants admit that copies of certificates of copyright registration were
10
purportedly attached to the Second Amended Complaint as Exhibit A, and that the documents
11
in Exhibit A speak for themselves. Defendants lack knowledge or information sufficient to
12
form a belief as to the truth of the remaining allegations set forth in Paragraph 12 of the Second
13
Amended Complaint, and on that basis deny them.
14
13. Admitted.
15
14. Defendants admit that Defendant Lawrence R. Nguyen is an individual residing
16
in Clyde Hill, Washington and that Nguyen is a principal owner, Chief Executive Officer, and
17
Chief Technology Officer of Summit, but otherwise deny the allegations contained in
18
Paragraph 14 of the Second Amended Complaint.
19
20
truth of the allegations contained in paragraph 15 of the Second Amended Complaint, and on
21
22
23
JURISDICTION AND VENUE
24
16. Defendants admit that the Second Amended Complaint purports to allege the
25
claims listed in Paragraph 16. Paragraph 16 otherwise states legal conclusions to which no
26
27
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1 response is necessary. To the extent any further response is required, Defendants deny each and
2 every remaining allegation and characterization of Paragraph 16.
3 17. Defendants admit that the Second Amended Complaint purports to allege claims
4 over which this Court has subject matter jurisdiction. Paragraph 17 otherwise states legal
5 conclusions to which no response is necessary. To the extent any further response is required,
6 Defendants deny each and every remaining allegation and characterization of Paragraph 17.
7 18. Defendants admit that Defendant Summit has its principal place of business in
8 this jurisdiction and that Defendant Nguyen resides in this jurisdiction. Defendants further
9 admit that this Court has personal jurisdiction over them. Paragraph 18 otherwise states legal
10 conclusions to which no response is necessary. To the extent any further response is required,
11 Defendants deny each and every remaining allegation and characterization of Paragraph 18.
12 19. Paragraph 19 states legal conclusions to which no response is necessary. To the
13 extent a response is necessary, Defendants do not challenge or contest that venue is proper in
14 this district. Defendants otherwise deny each and every remaining allegation and
15 characterization of paragraph 19.
16
17 BACKGROUND AND FACTS RELATED TO THIS ACTION

18
truth of the allegations set forth in Paragraph 20 of the Second Amended Complaint, and on
19
20
21
22
23
24
25
that basis deny.
26
27
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1 23. Defendants admit that Philips provides ultrasound imaging devices under the
2 “CX,” “HD,” “ClearVue,” “Sparq,” “VISIQ,” Xperius,” “Affiniti,” and “EPIQ” brand names
3 (collectively, Philips’ “Ultrasound Systems”). Defendants admit that Philips manufactures and
4 sells ultrasound transducers. Defendants otherwise lack knowledge or information sufficient to
5 form a belief as to the truth of the remaining allegations set forth in Paragraph 23 of the Second
6 Amended Complaint, and on that basis deny them.
8 truth of the allegations set forth in Paragraph 24 of the Second Amended Complaint, and on
16 27. Defendants admit that copies of certificates of copyright registration were
17 purportedly attached to the Second Amended Complaint as Exhibit A, and that the documents
18 in Exhibit A speak for themselves. Defendants lack knowledge or information sufficient to
27
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4 39. Defendants admit that Nguyen is the CEO and CTO of Summit and that Summit
5 is located in Woodinville, Washington, but otherwise deny the allegations contained in
6 paragraph 39 of the Second Amended Complaint.
7 40. Defendants admit that Defendant Summit sells service contracts to customers,
8 which include the repair and service of some of Philips’ Ultrasound Systems (as that term was
9 defined in paragraph 23 of the Second Amended Complaint), and that Summit advertises these
10 services. Defendants deny the remaining allegations contained in paragraph 40 of the Second
11 Amended Complaint.
12 41. Denied.
13 42. Defendants admit that Defendant Nguyen participated in the development of
14 Adepto software. Defendants further admit that in some instances a user of Adepto software
15 will remove a hard drive from the user’s ultrasound device so that the hard drive can be
16 attached to another computer that is running Adepto software. Defendants deny the remaining
17 allegations contained in paragraph 42 of the Second Amended Complaint.
18 43. Denied.
19 44. Defendants admit that Philips has not authorized Summit to distribute or make
20 copies of modified Philips’ Ultrasound Systems, but deny that it has done so and further deny
21 that any such authorization by Philips would be required to do so. Defendants further admit that
22 Summit has purchased some EPIQ ultrasound machines and software to run those systems, and
23 that these ultrasound machines and/or the software were sold to Summit without end-user
24 license agreements that purport to restrict the ability to make modifications to the purchased
25 products. Defendants deny the remaining allegations contained in paragraph 44 of the Second
26 Amended Complaint.
27
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1 45. Defendants admit that Defendant Summit provides copies of and training on the
2 use of Adepto software to its customers. Defendants deny the remaining allegations contained
3 in paragraph 45 of the Second Amended Complaint.
4 46. Denied.
5 47. Denied.
6 48. Defendants admit that a presentation was made by Defendant Nguyen and Mr.
7 Kyle Grozelle. Defendants admit that the quotations included in paragraph 48 reflect statements
8 that were made in the online presentation accessible through the link indicated in that
9 paragraph. Defendants admit that the figure in paragraph 48 reflects a slide in the presentation
10 accessible through the same link. The online presentation and slides accessible through the link
11 speak for themselves, and Defendants deny any statements or inferences in paragraph 48 that
12 are inconsistent therewith. Defendants deny any remaining allegations contained in paragraph
13 48 of the Second Amended Complaint.
14 49. The allegations contained in paragraph 49 of the Second Amended Complaint
15 characterize statements made in the presentation accessible through the link indicated in
16 Paragraph 48. The online presentation accessible through this link speaks for itself, and
17 Defendants deny any statements or inferences in paragraph 49 that are inconsistent therewith.
18 Defendants do not believe that any further response is required, but to the extent it is,
19 Defendant deny any other allegations in paragraph 49 of the Second Amended Complaint.
20 50. Denied.
21 51. Denied.
22 52. Denied.
23 53. Defendants admit that Defendant Summit provides copies of Adepto software to
24 its customers without charge. Defendants deny the remaining allegations contained in
26 54. Denied.
27
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1 55. Defendants deny the characterization contained in paragraph 55 of the Second

2 Amended Complaint that Defendants’ services are unlawful. Defendants otherwise lack
3 knowledge or information sufficient to form a belief as to the truth of the remaining allegations
4 set forth in Paragraph 55 of the Second Amended Complaint, and on that basis deny them.
5 56. Defendants admit that the term “OEM” may be an acronym that is used for
6 “Original Equipment Manufacturer.” Defendants lack knowledge or information sufficient to
9 57. Defendants admit that the quote, “passcodes that lock down [] service tools with
10 copyright, intellectual, and licensing issues that surround them,” reflects a statement made in
11 the online presentation accessible through the link in paragraph 48. The online presentation
12 accessible through this link speaks for itself, and Defendants deny any statements or inferences
13 in paragraph 57 that are inconsistent therewith. Defendants deny the remaining allegations
14 contained in paragraph 57 of the Second Amended Complaint.
15 58. Denied.
16 59. Denied.
17 60. Denied.
18 61. Denied.
20 truth of the remaining allegations set forth in Paragraph 62 of the Second Amended Complaint,
21 and on that basis deny them.
22 63. Denied.
23 64. Denied.
24 65. Denied.
25 66. Denied.
26 67. Denied.
27
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1 68. Denied.
2 69. Denied.
3 70. Denied.
4 71. Denied.
17 76. Denied.
18
19 FIRST CAUSE OF ACTION
20 Circumventing a Technological Measure – 17 U.S.C. § 1201
21 (All Plaintiffs Against All Defendants)
22 77. Defendants restate and re-allege their responses to all of the other paragraphs in
23 this Answer as though fully set forth herein.
27
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16 84. Denied.
17 85. Denied.
18 86. Denied.
19 87. Denied.
20 88. Denied.
21 89. Paragraph 89 states a legal conclusion to which no responses is necessary. To
22 the extent a response is necessary, Defendants deny the allegations set forth in Paragraph 89 of
23 the Second Amended Complaint.
24 90. Denied.
25 91. Denied.
26
27
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1 92. Paragraph 92 states a legal conclusion to which no responses is necessary. To

2 the extent a response is necessary, Defendants deny the allegations set forth in Paragraph 92 of
4 93. Denied.
5 94. Denied.
6 95. Denied.
7 96. Denied.
9 Adepto software. Defendants deny all remaining allegations contained in paragraph 97 of the
10 Second Amended Complaint.
11 98. Denied.
12 99. Defendants admit that Defendant Nguyen supervises the work of other
13 employees at Defendant Summit. Defendants deny all remaining allegations contained in
15 100. Paragraph 100 states a legal conclusion to which no response is necessary. To
16 the extent a response is necessary, Defendants deny the allegations contained in paragraph 100
17 of the Second Amended Complaint.
18 101. Paragraph 101 states a legal conclusion to which no response is necessary. To
19 the extent a response is necessary, Defendants deny the allegations contained in paragraph 101
20 of the Second Amended Complaint.
21 102. Denied.
22 103. Denied.
23 104. Denied.
24 105. Denied.
25 106. Denied.
26
27
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1 SECOND CAUSE OF ACTION
2 Modifying Copyright Management Information – 17 U.S.C. § 1202
9 109. Denied.
10 110. Denied.
14 112. Denied.
15 113. Paragraph 113 states legal conclusions to which no response is required.
16 Defendants otherwise lack knowledge or information sufficient to form a belief as to the truth
17 of the remaining allegations set forth in Paragraph 113 of the Second Amended Complaint, and
18 on that basis deny them.
25 116. Paragraph 116 states legal conclusions regarding copyright management
26 information to which no responses is required. To the extent a response is required, Defendants
27
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1 deny this allegation. Defendants lack knowledge or information sufficient to form a belief as to
2 the truth of the remaining allegations set forth in Paragraph 116 of the Second Amended
3 Complaint, and on that basis deny them.
9 118. Denied.
11 information and technological measures to which no responses is required. To the extent a
12 response is required, Defendants deny this allegation. Defendants lack knowledge or
13 information sufficient to form a belief as to the truth of the remaining allegations set forth in
14 Paragraph 119 of the Second Amended Complaint, and on that basis deny them.
15 120. Denied.
26 123. Denied.
27
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1 124. Denied.
2 125. Denied.
3 126. Denied.
4 127. Denied.
5 128. Denied.
6 129. Denied.
7 130. Denied.
8 131. Denied.
9 132. Defendants admit that Defendant Nguyen is a principal owner, Chief Executive
10 Officer, and Chief Technical Officer of Defendant Summit. Defendants otherwise deny the
11 remaining allegations contained in paragraph 132 of the Second Amended Complaint.
12 133. Defendants admit that Defendant Nguyen oversees and supervises employees of
13 Defendant Summit. Defendants otherwise deny the remaining allegations contained in
15 134. Denied.
16 135. Denied.
17 136. Denied.
19 Adepto software. Defendants otherwise deny the remaining allegations contained in paragraph
21 138. Denied.
22 139. Defendants admit that Defendant Nguyen supervises employees of Defendant
23 Summit. Defendants otherwise deny the remaining allegations contained in paragraph 139 of
25
26
27
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1 140. Paragraph 140 states legal conclusions to which no response is required. To the
2 extent a response is required, Defendants deny this allegation. Defendant otherwise deny the
3 remaining allegations in contained in Paragraph 140 of the Second Amended Complaint.
4 141. Paragraph 141 states legal conclusions to which no response is required. To the
5 extent a response is required, Defendants deny this allegation.
6 142. Denied.
7 143. Denied.
8 144. Denied.
9 145. Denied.
10 146. Denied
11
12 THIRD CAUSE OF ACTION
13 Trade Secret Misappropriation – 18 U.S.C. § 1836
26
27
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7 153. Denied.
8 154. Denied.
12 156. Denied.
13 157. Denied.
14 158. Denied.
15 159. Denied.
16 160. Denied.
17 161. Denied.
18 162. Denied.
19 163. Denied.
20 164. Denied.
21
22 FOURTH CAUSE OF ACTION
23 Trade Secret Misappropriation – RCW 19.108, et seq.
27
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16 171. Denied.
17 172. Denied.
21 174. Denied.
22 175. Denied.
23 176. Denied.
24 177. Denied.
25 178. Denied.
26 179. Denied.
27
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1 180. Denied.
2 181. Denied.
3 182. Denied.
4
5 FIFTH CAUSE OF ACTION
6 False Advertising – 15 U.S.C. § 1125(a)
10 184. Denied.
11 185. Denied.
12 186. Denied.
13 187. Denied.
14 188. Denied.
15 189. Denied.
16 190. Denied.
17 191. Defendants admit Adepto software does not modify or access “Ultrasound
18 System Software” (as that term is defined in paragraph 49 of the Second Amended Complaint)
19 in Philips’ Ultrasound Systems. Defendants otherwise lack knowledge or information sufficient
20 to form a belief as to the truth of the remaining allegations set forth in Paragraph 191 of the
21 Second Amended Complaint, and on that basis deny them.
22 192. Denied.
23 193. Denied.
24 194. Denied.
25 195. Denied.
26 196. Denied.
27
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1 197. Denied.
2 198. Denied.
3
4 SIXTH CAUSE OF ACTION
5 Unfair Competition in Violation of Washington’s Consumer Protection Act – RCW 19.86.020,

et seq.
6
10 200. Denied.
11 201. Denied.
12 202. Denied.
13 203. Denied.
14 204. Denied.
15 205. Denied.
16 206. Denied.
17 207. Denied.
18
SEVENTH CAUSE OF ACTION
19
20 Copyright Infringement – 17 U.S.C. §§ 101, 501 et. seq.
27
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4 form a belief as to the truth of the remaining allegations set forth in Paragraph 210 of the
5 Second Amended Complaint, and on that basis deny them.
10 extent a response is required, Defendants lack knowledge or information sufficient to form a
11 belief as to the truth of the allegations set forth in Paragraph 212 of the Second Amended
21 215. Denied.
22 216. Denied.
23 217. Denied.
24 218. Denied.
25 219. Denied.
26 220. Denied.
27
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1 221. Denied.
2 222. Denied.
3 223. Denied.
4 224. Denied.
5 225. Denied.
6 226. Denied.
7 227. Denied.
8 228. Denied.
9 229. Denied.
10 230. Denied.
11 231. Denied
13 Adepto software. Defendants otherwise deny the remaining allegations contained in paragraph
15 233. Denied.
16 234. Defendants admit that Defendant Nguyen supervises employees of Defendant
17 Summit. Defendants otherwise deny the remaining allegations contained in paragraph 234 of
19 235. Denied.
20 236. Denied.
21 237. Denied.
22 238. Denied.
23 239. Denied.
24 240. Denied.
25 241. Denied.
26
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1 PRAYER FOR RELIEF

Defendants deny that Plaintiffs are entitled to any relief whatsoever from Defendants or
2
this Court, either as requested in the Second Amended Complaint or otherwise.
3
4
* * *
5
6
AFFIRMATIVE DEFENSES
7
Without waiving any non-affirmative defenses that are not stated herein, and without
8
assuming the burden of proof of any defense where the law provides otherwise, Defendants
9
submit their affirmative and other defenses to the claims set forth in the Second Amended
10
Complaint as follows:
11
First Affirmative Defense:
12
Statute of Limitations
13
Some or all of Plaintiffs’ claims against Defendants are barred, in whole or in part, by
14
the relevant and applicable statutes of limitation. These statutes of limitation include, but may
15
not be limited to, the following: 17 U.S.C. § 507(b), 18 U.S.C. § 1836(d), RCW § 19.108.060,
16
RCW § 19.86.120, and/or RCW § 4.16.080. In addition, any of Plaintiffs’ claims under or based
17
on the Defend Trade Secrets Act are barred to the extent that they are based upon actions taken
18
before that Act became effective, May 11, 2016.
19
20
Second Affirmative Defense:
21
Unclean Hands
22
Some or all of Plaintiffs’ claims against Defendants are barred, in whole or in part,
23
because Plaintiffs comes to this Court with unclean hands. For example, Plaintiffs have
24
restricted access to diagnostic software in its ultrasound machines that it sells, and in the
25
process, have prevented its customers from performing repairs and maintenance on their
26
purchased ultrasound machines or obtaining such repairs and maintenance from third parties,
27
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1 including Summit. Plaintiffs use such restrictions in an anticompetitive effort to limit or prevent
2 independent service organizations and other competitors from providing effective service for
3 Plaintiffs’ ultrasound machines. At least some of the same restrictions used by Plaintiffs
4 underlie one or more of its claims in the Second Amended Complaint. Further examples of
5 Plaintiffs’ actions that support this affirmative defense are described in Defendants’
6 Counterclaims.
7
8 Third Affirmative Defense:

9 Copyright Misuse
10 Some or all of Plaintiffs’ claims against Defendants are barred because of Plaintiffs’
11 copyright misuse. Plaintiffs are attempting to improperly use its alleged copyright interest in
12 certain software to restrict access by independent service organizations and other competitors to
13 its ultrasound machines and thereby prevent these competitors from servicing and/or providing
14 maintenance for these machines. In doing so, Plaintiffs is seeking to unfairly restrict
15 competition and/or maintain or attempt to obtain a monopoly in the servicing and maintenance
16 of Philips ultrasound machines, rights that are not provided by the Copyright Act. Further
17 examples of Plaintiffs’ actions that support this affirmative defense are described in
18 Defendants’ Counterclaims.
19
20 Fourth Affirmative Defense:

21 Copyright Invalidity
22 Some or all of Plaintiffs’ claims are barred, in whole or in part, because one or more of
23 the copyrights asserted by Plaintiffs in this action are invalid. One or more of the copyrights
24 asserted by Plaintiffs are invalid because they extend to non-copyrightable subject matter and
25 because of Plaintiffs’ misuse of its copyrights.
26
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1 Fifth Affirmative Defense:

2 License
3 Some or all of Plaintiffs’ claims are barred, in whole or in part, because Defendants
4 have used, serviced, and/or performed maintenance on or related to Philips ultrasound
5 machines for which Defendant Summit and/or third parties held a valid license. In addition,
6 Defendants have provided software to one or more third parties to perform service for and/or
7 maintenance on ultrasound machines for which those third parties held a valid license to use or
8 operate. Defendants and/or the third parties obtained an express and/or implied license to use
9 and operate the ultrasound machines that they purchased. Such a license included the ability to
10 use and execute any associated software, including any valid, copyrighted works, needed to
11 operate and run such ultrasound machines.
12
13 Sixth Affirmative Defense:

14 Preemption
15 One or more of Plaintiffs’ claims are barred because they are preempted by one or more
16 of the Copyright Act and/or the Washington Uniform Trade Secrets Act (“WUTSA”). For
17 example, Plaintiffs’ claim for unfair competition under the Washington State Consumer
18 Protection Act depends, in whole or in part, upon the same actions underlying Plaintiffs’ claims
19 under the Copyright Act and the WUTSA. Accordingly, Plaintiffs’ CPA claim is preempted, in
20 whole or in part, by the Copyright Act and/or the WUTSA.
21
22 Seventh Affirmative Defense:

23 First Sale Doctrine
24 One or more of Plaintiffs’ claims are barred, in whole or in part, based on the first sale
25 doctrine. Defendant Summit purchased at least some of its software for use in Philips
26 ultrasound machines from AllParts Medical, a Philips subsidiary company. The purchase of this
27
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1 software did not include or require Defendant Summit to enter into any license or other
2 restrictions that would govern or limit Defendants’ use, operation, or modification of the
3 ultrasound machines and/or software that they purchased. In addition, on information and
4 belief, one or more of Defendant Summit’s customers purchased one or more ultrasound
5 machines and/or software operating such ultrasound machines, and that such purchases were
6 made in the absence of any license or further restrictions that would limit the use, operation,
7 modification, or maintenance of such ultrasound machines and/or software. Accordingly, any
8 rights that Plaintiffs may have had in any copyrighted work was extinguished by the sale of the
9 ultrasound system and/or software to Defendant Summit and/or to its customers.
10
11 Eighth Affirmative Defense:

12 Laches, Acquiescence, and/or Estoppel
13 One or more of Plaintiffs’ claims are barred, in whole or in part, by the equitable
14 doctrines of laches, acquiescence, and/or estoppel. Defendant Summit has been providing
15 service and maintenance for ultrasound machines manufactured and sold by Plaintiffs since at
16 least April 2006. Defendant Summit has consistently advertised its services within the relevant
17 market, which includes customers that have purchased ultrasound machines directly from
18 Plaintiffs or one of Plaintiffs’ subsidiaries. Defendant has advertised its Adepto software and its
19 capabilities since at least as early as 2014. Yet, while aware of Defendants’ activities, Philips
20 has continued to supply software for the operation of its ultrasound machines to Defendants
21 through its AllParts Medical subsidiary. Plaintiffs thus acquiesced and/or implicitly approved
22 of the activities of Defendants, approval which Defendants reasonably relied upon to their
23 detriment as Defendants devoted increasing resources towards building their business.
24
25
26
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1 Ninth Affirmative Defense:

2 Maintenance, Repair, and/or Authorization (17 U.S.C. § 117)
3 One or more of Plaintiffs’ claims are barred, in whole or in part, because any copies of
4 Plaintiffs’ allegedly copyrighted works made by Defendants were allowed and/or authorized
5 under one or more provisions of 17 U.S.C. § 117. Defendant Summit purchased copies of
6 software for one or more of its ultrasound machines from a Philips subsidiary, AllParts
7 Medical, and these purchases were made without requiring Defendant Summit to enter into any
8 license or otherwise agree to other restrictions that would limit the use or operation of these
9 ultrasound machines. Any alleged copy of or adaptation to the purchased software made by
10 Defendants was made in order to allow this software to operate with the ultrasound machines
11 and/or to allow for the permissible repair or maintenance of those ultrasound machines. Such
12 repair and/or maintenance was done by Defendants to test ultrasound system parts for quality
13 control and medical safety concerns and/or to repair such ultrasound system parts so that they
14 would work in accordance with their original specification(s).
15 In addition, to the extent that Plaintiffs’ claims implicate actions taken by customers of
16 Defendant Summit, those customers had also purchased and/or licensed their ultrasound
17 machines and corresponding software, and at least some of those purchases were made without
18 the customer entering into any license or other restrictions that would place further limitations
19 on the use or operation of these ultrasound machines. Further, any use of those ultrasound
20 machines by Defendants was performed under authorization from the third party customers to
21 repair and/or perform maintenance on them. Accordingly, any supposed copy of this software
22 was made by the customers in the course of an allowed use, maintenance, and/or repair of the
23 owned or leased ultrasound machines for quality control and/or medical safety concerns, and to
24 restore the customer’s ultrasound machines such that they would operate in accordance with
25 their original specifications.
26
27
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1 Tenth Affirmative Defense:

2 Fair Use (17 U.S.C. § 107)
3 Some or all of Plaintiffs’ claims are barred, in whole or in part, because of the doctrine
4 of fair use. To the extent Plaintiffs proves that Defendants violated any applicable law for
5 providing service and/or maintenance to one or more of Philips ultrasound machines (which
6 Defendants deny), any such use would constitute permissible fair use. Defendant Summit’s use
7 of any of Plaintiffs’ protected copyrighted works would be for the service and maintenance of
8 Philips’ ultrasound machines that Plaintiffs had already sold to the third parties. As a result,
9 Defendants’ actions for servicing and performing maintenance on these Philips’ ultrasound
10 machines would have no impact on the market for selling these Philips’ ultrasound machines.
11 Moreover, Defendants do not provide the third parties with any additional options or features
12 than those options and features that the third party had obtained upon purchasing the Philips’
13 ultrasound machines.
14 Eleventh Affirmative Defense:
15 Public Interest
16 Plaintiffs’ request for injunctive relief is barred because such relief is not in the public
17 interest, and would restrict the ability for hospitals and other medical service providers to
18 service and maintain their ultrasound machines. For example, such injunctive relief would
19 restrict the ability of these third parties to hire and engage competent, lower cost, and available
20 independent service organizations and other competitors to perform the servicing and
21 maintenance of Plaintiffs’ ultrasound machines. Such restrictions may result in unnecessary
22 delays in getting these ultrasound machines serviced and may even result some of the
23 ultrasound machines being taken offline until the needed servicing and maintenance can be
24 performed. Such restrictions may also result in artificially increased prices being charged to
25 hospitals and other health care providers as Plaintiffs restrict competition for servicing,
26
27
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1 maintaining, and repairing the ultrasound machines that they sell. Accordingly, such injunctive
2 relief would not be in the public interest.
3
4 Twelfth Affirmative Defense:

5 Lack of Standing
6 One or more of Plaintiffs’ claims are barred, in whole or in part, because Plaintiffs do
7 not own the Philips ultrasound machines that were allegedly used, serviced, and/or maintained
8 by Defendants and that underlie Plaintiffs’ claims for relief in this case. Instead, Defendant
9 Summit and/or the third party customers own the Philips’ ultrasound machines at issue in this
10 litigation. One or more of these Philips’ ultrasound machines and/or the software running on
11 them were purchased from Philips subsidiaries. Moreover, Philips did not retain any rights or
12 restrictions in these Philips ultrasound machines that would limit the ability for Defendants
13 and/or the third parties to use, service, and/or maintain the Philips ultrasound machines that
14 they purchased.
15
16 Thirteenth Affirmative Defense:

17 Illegal Actions
18 One or more of Plaintiffs’ claims are barred, in whole or in part, because Plaintiffs have
19 engaged in illegal actions related to one or more of the claims that Plaintiffs have asserted in
20 this case. For example, Plaintiffs have restricted access to the ultrasound machines that it sells
21 and/or licenses to third parties, and in the process, has improperly and illegally prevented these
22 third parties from performing repairs and maintenance on their purchased ultrasound machines.
23 Plaintiffs use these restrictions to limit the ability of its customers and of independent service
24 organizations and other competitors to provide service and maintenance for the purchased
25 and/or licensed ultrasound machines. Plaintiffs’ actions have resulted in reducing competition
26 in the market for providing service and maintenance for Plaintiffs’ ultrasound machines. These
27
Case No. 2:19-cv-01745 29 (206) 622-4900
1 actions may result in hospitals and other medical providers experiencing delays in having their
2 ultrasound machines serviced and/or in having maintenance performed, and may result in
3 hospitals or other medical providers taking ultrasound machines offline until such service
4 and/or maintenance can be performed. These actions may also result in hospitals and/or
5 medical providers paying increased costs for service and/or maintenance of their ultrasound
6 machines because of decreased competition. At least some of these same restrictions and anti-
7 competitive acts by Plaintiffs underlie one or more of its claims in the Second Amended
8 Complaint. Further examples of Plaintiffs’ actions that support this affirmative defense are
9 described in Defendants’ Counterclaims.
10
11 Reservation of Additional Affirmative Defenses

12 Defendants’ are continuing to investigate Plaintiffs’ claims, and discovery in this matter
13 is ongoing. Defendants, therefore, reserve the right to amend or add to its defenses after a
14 reasonable opportunity for appropriate discovery.
15
16
17 COUNTERCLAIMS
Defendants/Counterclaim-Plaintiffs Summit Imaging Inc. and Lawrence R. Nguyen
18
(collectively, “Summit” or “Defendants”), by and through their undersigned counsel, hereby
19
submit the following Counterclaims against Plaintiffs/Counterclaim-Defendants Philips North
20
America LLC, Koninklijke Philips N.V. and Philips India, Ltd. (collectively, “Philips” or
21
“Plaintiffs”).
22
23
NATURE OF THE CASE
24
1. This is an action by Defendants pursuant to Rule 13 of the Federal Rules of
25
Civil Procedure asserting against Plaintiffs counterclaims for violations of Section 2 of the
26
27
Case No. 2:19-cv-01745 30 (206) 622-4900
1 Sherman Antitrust Act and for a declaration of copyright unenforceability based on copyright
2 misuse.
3
4 THE PARTIES
2. Defendant Summit Imaging Inc. is a Washington corporation with its principal
5
place of business at 15000 Woodinville Redmond Rd. NE Ste. B800, Woodinville,
6
Washington, 98072-4502.
7
3. Defendant Lawrence R. Nguyen is an individual residing in Clyde Hill,
8
Washington.
9
4. On information and belief, Plaintiff Philips North America LLC is a Delaware
10
limited liability company, formerly known and doing business as Philips North America
11
Corporation (a Delaware Corporation), with a principal place of business in Andover,
12
Massachusetts.
13
5. On information and belief, Plaintiff Koninklijke Philips N.V. is a public limited
14
liability company organized and existing under the laws of the Netherlands, with a principal
15
place of business at High Tech Campus 5, Eindhoven Netherlands 5656 AE.
16
6. On information and belief, Plaintiff Philips India Ltd., formerly known and
17
doing business as Philips Electronics India Ltd., is a limited company organized and existing
18
under the laws of India, with a principal place of business in Bangalore, India.
19
20
JURISDICTION AND VENUE
21
7. This Court has subject matter jurisdiction over these counterclaims pursuant to
22
Rule 13 of the Federal Rules of Civil Procedure, 28 U.S.C. §§ 1331, 1337, 1338, 1367, 2201,
23
and 2202.
24
8. Plaintiffs have sued Defendants for violations of the Digital Millennium
25
Copyright Act (“DMCA”), 17 U.S.C. §§ 1201, 1202 et seq., and for copyright infringement
26
under 17 U.S.C. §§ 101, 501 et seq. Defendants deny that the copyrights asserted against
27
Case No. 2:19-cv-01745 31 (206) 622-4900
1 Defendants by Plaintiffs, and which form the basis of Plaintiffs’ DMCA claim, are
2 enforceable. There is therefore a substantial, actual, and continuing controversy under 28
3 U.S.C. § 2201 between Plaintiffs and Defendants as to the alleged enforceability of Plaintiffs’
4 asserted copyrights.
5 9. Venue is proper in this Court under 28 U.S.C. §§ 1391 and 1400(a) because
6 events and/or omissions relevant to the claims and counterclaims in this proceeding occurred
7 within this judicial district, and because Plaintiffs chose this venue to file its claims against
8 Defendants.
9 10. Plaintiffs have consented to personal jurisdiction in this Court by commencing
10 an action against Defendants therein, as alleged in Plaintiffs’ Second Amended Complaint
11 filed with this Court.
12
13 FACTUAL BACKGROUND
11. Summit Imaging Inc. was founded in 2006 and is headquartered in
14
Woodinville, Washington. The company provides maintenance, repair and related services for
15
medical equipment, including ultrasound and mammography equipment.
16
12. Summit Imaging Inc. is an independent service organization (“ISO”), meaning
17
that it specializes in servicing medical equipment manufactured and sold by other companies.
18
13. Nguyen is the founder, Chief Executive Officer and Chief Technical Officer of
19
Summit Imaging Inc.
20
14. Summit’s customers include healthcare facilities, such as hospitals, and other
21
individuals and entities throughout the United States and Canada who own and operate various
22
types of medical equipment, including ultrasound equipment.
23
15. Summit strives to provide the highest quality of service possible to its
24
healthcare industry clients. For example, Summit’s business model allows it to provide
25
exceptionally fast service to its customers. This is particularly valued by clients in the
26
27
Case No. 2:19-cv-01745 32 (206) 622-4900
1 healthcare industry who recognize that inoperative or malfunctioning medical equipment can
2 be both financially costly and can have a negative impact on patient outcomes. Summit’s
3 customers therefore highly value and prefer Summit because of its ability to minimize costly
4 downtimes of vital medical equipment.
5 16. Summit’s customers also highly value and prefer Summit because of the top-
6 quality customer support and diagnostic and repair services that Summit’s team of talented and
7 highly skilled employees are able to provide.
8 17. Summit’s customers also highly value and prefer Summit because of the lower
9 cost of Summit’s services relative to its original equipment manufacturer (“OEM”)
10 competitors in the service market.
11 18. Among the medical equipment serviced by Summit are ultrasound machines
12 manufactured by Philips (“Philips Ultrasound Machines”). The Philips Ultrasound Machines
13 are used in a variety of diagnostic and therapeutic imaging applications and are often used by
14 healthcare providers for quick and non-invasive evaluations of many different areas of the
15 human body.
16 19. The Philips Ultrasound Machines are expensive and complex equipment that
17 include both mechanical and computer software components. The Philips Ultrasound
18 Machines typically have a relatively long lifespan, but also require frequent maintenance,
19 repair, and other servicing in order to ensure they continue to operate and function properly.
20 On information and belief, purchasers of Philips Ultrasound Machines are not able to
21 accurately predict required maintenance or estimate long-term maintenance costs at the time of
22 purchase.
23 20. The software included on the Philips Ultrasound Machines is necessary for both
24 operating the equipment and for properly diagnosing, troubleshooting and correcting technical
25 issues and other problems that prevent the machines from functioning properly.
26
27
Case No. 2:19-cv-01745 33 (206) 622-4900
1 21. Philips has designed and implemented the software on the Philips Ultrasound
2 Machines so that Philips can control how the software is accessed and by whom it is accessed.
3 Philips regulates and restricts access to and operation of the software by individuals and
4 entities outside of Philips. This includes restricting access to and operation of the software by
5 healthcare facilities and other purchasers who own and operate Philips Ultrasound Machines
6 and by ISOs and other competing service providers, including Summit, who provide
7 maintenance and repair services for the Philips Ultrasound Machines.
8 22. Philips claims to own copyrights in much or all of the software that runs on the
9 Philips Ultrasound Machines and has asserted the copyrights against competitors who provide
10 maintenance and repair services on Philips Ultrasound Machines, including Summit.
11 23. In addition to manufacturing and selling the Philips Ultrasound Machines,
12 Philips also provides maintenance and repair services on the machines. Accordingly, Philips
13 directly competes with Summit and other ISOs and competing service providers for business in
14 the market for maintenance and repair services for Philips Ultrasound Machines.
15 24. Given Summit’s ability to deliver high-quality service for Philips Ultrasound
16 Machines efficiently and at low cost, healthcare facilities and other customers prefer to use
17 Summit for the repair and maintenance of Philips Ultrasound Machines.
18 25. Philips has recognized that consumers’ preference for Summit’s services in the
19 market for repair and maintenance services of Philips Ultrasound Machines will negatively
20 impact Philips’ ability to generate revenue in this market. Philips has therefore engaged in
21 anticompetitive conduct with the intent to increase its share of the market, control prices, and
22 exclude competitors from the market. As discussed below, Philips’ anticompetitive conduct
23 harms competition in the market, harms consumers in the market, and violates federal antitrust
24 laws. Philips’ improper conduct also constitutes misuse of Philip’s claimed copyrights because
25 it violates the policies underlying federal copyright protection by attempting to expand the
26 exclusive monopoly beyond that granted by the federal copyright laws.
27
Case No. 2:19-cv-01745 34 (206) 622-4900
1 FIRST COUNTERCLAIM: MONOPOLIZATION IN VIOLATION OF SECTION 2 OF

THE SHERMAN ANTITRUST ACT (15 U.S.C. § 2)
2
26. Summit repeats and re-alleges each allegation set forth in the preceding
3
paragraphs of these counterclaims as if fully set forth herein.
4
27. Purchasers of Philips Ultrasound Machines require various maintenance and
5
repair services on their systems over the course of the useful life of the systems. The
6
provision of these maintenance and repair services on Philips Ultrasound Machines within the
7
United States constitutes a relevant market for purposes of Section 2 of the Sherman Antitrust
8
Act (“Philips Ultrasound Machine Service Market”).
9
28. On information and belief, Philips holds a dominant share of the Philips
10
Ultrasound Machine Service Market. Recent data from 2018 shows that original equipment
11
manufacturers (“OEM”) typically account for greater than 76% of the revenue generated in
12
service aftermarkets for specialized medical equipment, including ultrasound machines. As
13
the single OEM in the relevant market, Philips’ share of the relevant market is, on information
14
and belief, at least, 76% of the market.
15
29. Summit is an ISO that directly competes with Philips in the Philips Ultrasound
16
Machine Service Market.
17
30. On information and belief, there are a relatively small number of competitors in
18
the Philips Ultrasound Machine Service Market. On information and belief, most of the
19
competitors are ISOs that are smaller in size and have more limited financial resources
20
compared to Philips.
21
31. There are numerous barriers to entry in the Philips Ultrasound Machine Service
22
Market. On information and belief, these barriers arise from economic factors, including high
23
costs to enter and participate in the market, as well as other factors, including the high level of
24
technical skill and knowledge of the Philips Ultrasound Machines required to enter and
25
participate in the market.
26
27
Case No. 2:19-cv-01745 35 (206) 622-4900
1 32. Barriers to entry also arise from the market power associated with the Philips
2 brand name. Barriers to entry are also caused by Philips’ ability to control and restrict access
3 to the software on the Philips Ultrasound Machines and by Philips’ conduct regarding its
4 enforcement and/or threatened enforcement of intellectual property rights, including
5 copyrights, that it claims to own related to the Philips Ultrasound Machines.
6 33. Philips has monopoly power in the Philips Ultrasound Machine Service Market
7 and has acquired that power and/or maintained that power through its anticompetitive
8 conduct, including its improper refusal to deal with other parties, including competitors such
9 as Summit.
10 34. Philips’ anticompetitive conduct includes its refusal to give competitors access
11 to an essential facility needed to compete in the Philips Ultrasound Machine Service Market.
12 In particular, Philips maintains control over the access to and operation of software installed
13 and run in connection with the Philips Ultrasound Machines. Certain aspects of the software
14 are vital to competition in the Philips Ultrasound Machine Service Market because they
15 provide access to tools that are essential for diagnosing, troubleshooting and correcting
16 technical problems or issues with Philips Ultrasound Machines (“Philips Diagnostic
17 Software”).
18 35. For example, a Philips Ultrasound Machine may display an error code during
19 operation indicating that the machine is not functioning properly. The error code indicates to
20 the operator of the machine that the machine will likely need some type of maintenance or
21 repair service in order to correct the problem that is causing the machine to not function
22 properly. However, the error code does not give the operator any indication of what the
23 specific problem with the machine might be. The operator therefore will not know what part
24 of the machine needs to be fixed or how to fix it.
25 36. On information and belief, among the functions of Philips Diagnostic Software
26 are identifying the error code and providing tools that will allow the operator of the machine
27
Case No. 2:19-cv-01745 36 (206) 622-4900
1 to troubleshoot and identify a specific problem or technical issue with the machine that caused
2 the error code and that needs to be repaired. On information and belief, there is no means
3 other than the Philips Diagnostic Software for determining from a particular error code on a
4 Philips Ultrasound Machine a particular problem or technical issue with the machine that
5 needs to be repaired.
6 37. On information and belief, the Philips Diagnostic Software also collects and
7
displays data regarding various sensors and related components used in the Philips Ultrasound
8
Machines, including various thermal and electrical sensors. This sensor data is critical to the
9
proper diagnosis and repair of certain technical problems that commonly arise over the life of
10
11 the Philips Ultrasound Machines and cause them to malfunction or fail to operate. For example
12 and on information and belief, the Philips Diagnostic Software may generate and display
13 temperature sensor data when a component of a Philips Ultrasound Machine overheats.

14
Without the temperature sensor data, a technician will otherwise not know that a part in the
15
system has overheated and therefore will not be able to provide proper diagnostic and repair
16
services.
17
38. On information and belief, there is no other means to access and/or view the
18
19 sensor data other than the Philips Diagnostic Software.
20 39. For at least these reasons, the Philips Diagnostic Software is necessary and vital
21 to providing repair and maintenance services for Philips Ultrasound Machines and constitutes
22
an essential facility in the Philips Ultrasound Machine Service Market.
23
40. On information and belief, Philips does not and will not provide access to the
24
Diagnostic Software to competitors in the Philips Ultrasound Machine Service Market,
25
26 including Summit.
27
Case No. 2:19-cv-01745 37 (206) 622-4900
1 41. Philips has never granted access to the Philips Diagnostic Software to Summit.
2 Furthermore, Philips’ belief that Summit has accessed the Philips Diagnostic Software without
3 authorization appears to form part of the basis of Philips’ claims against Summit in this lawsuit.
4 42. Philips’ refusal to provide access to the Philips Diagnostic Software to Summit
5
prevents Summit from performing certain maintenance and repair services for its customers on
6
Philips Ultrasound Machines in the Philips Ultrasound Machine Service Market.
7
43. Philips’ refusal to provide access to the Philips Diagnostic Software to Summit
8
9 significantly impairs Summit’s ability to perform certain maintenance and repair services for its
10 customers on Philips Ultrasound Machines in the Philips Ultrasound Machine Service Market.
11 44. The Philips Diagnostic Software cannot be practically or economically

12
duplicated. Moreover, Philips has threatened and initiated legal action against Summit as a
13
result of Summit’s attempts to find ways to work around its lack of access to the Philips
14
Diagnostic Software, including the present lawsuit filed by Philips against Summit in this
15
Court. On information and belief, Philips has similarly threatened or initiated such legal action
16
17 against other competitors in the Philips Ultrasound Machine Service Market.
18 45. At least because the Philips Diagnostic Software cannot be practically or

19 economically duplicated, and because Philips threatens or initiates legal action against
20
competitors, including Summit, who attempt to develop lawful means to work around a lack of
21
access to the Philips Diagnostic Software, there are no alternatives to the Philips Diagnostic
22
Software in the Philips Ultrasound Machine Service Market.
23
24 46. Philips has no legitimate business justification for denying Summit or any other
25 competitor access to the Philips Diagnostic Software. Access to and use of the Diagnostic
26 Software by Summit and other competitors would not interfere with Philips’ ability to use the
27
Case No. 2:19-cv-01745 38 (206) 622-4900
1 software or interfere with Philips’ ability to conduct its business. By contrast, by denying
2 access to and use of the Diagnostic Software by Summit and other competitors Philips harms
3 health care providers who need to service their machines, and their patients who depend on
4 them for good health care outcomes.
5
47. Philips has the ability to eliminate competition in the Philips Ultrasound
6
Machine Service Market by refusing to allow competitors and potential competitors in the
7
market to access and use the Philips Diagnostic Software.
8
9 48. As a result of Philips’ denial of access to the Philips Diagnostic Software to
10 Summit and other competitors in the Philips Ultrasound Machine Service Market, consumers in
11 the market are coerced to deal directly with Philips for repair and maintenance services of
12
Philips Ultrasound Machines. On information and belief, many, if not all of these customers
13
would prefer to work with Summit or other competitors instead of Philips.
14
49. Philips’ refusal to deal with Summit and other competitors in the Philips
15
Ultrasound Machine Service Market, at least including Philips’ denial of access to Philips
16
17 Diagnostic Software by Summit and other competitors, constitutes anticompetitive conduct,
18 whether or not Philips Diagnostic Software is an essential facility.

19 50. Philips has willfully and intentionally engaged in such anticompetitive conduct
20
in order to improperly acquire and/or maintain monopoly power in the Philips Ultrasound
21
22
51. Philips has also engaged in anticompetitive conduct with respect to its
23
24 enforcement or threatened enforcement of its purported copyrights for the purpose of acquiring
25 and/or maintaining monopoly power in the Philips Ultrasound Machine Service Market.
26
27
Case No. 2:19-cv-01745 39 (206) 622-4900
1 52. Philips claims to own various rights, including copyrights, in the software
2 installed on the Philips Ultrasound Machines, including the Philips Diagnostic Software.
3 53. Despite any valid copyrights or other exclusionary rights that Philips holds in
4 such software, including in the Philips Diagnostic Software, Philips improperly utilizes such
5
rights in a manner that is anticompetitive and harms competition in the Philips Ultrasound
6
7
54. On information and belief, Philips refuses to license its copyrights in the Philips
8
9 Diagnostic Software to other parties, including Summit and other competitors in the Philips
10 Ultrasound Machine Service Market. On information and belief, Philips refuses to license its
11 purported copyrights in the software as a means to improperly expand the exclusive monopoly
12
granted by the copyrights and to exclude competition in the Philips Ultrasound Machine
13
Service Market. At least because this market is a single-brand market and because, as discussed
14
above, the Philips Diagnostic Software is necessary to compete in the Philips Ultrasound
15
Machine Service Market, Philips’ refusal to license its purported copyrights is anticompetitive
16
17 and has a harmful effect on competition in the relevant market.
18 55. Philips has no valid business justification for refusing to license its copyrights in
19 software that is necessary to compete in the Philips Ultrasound Machine Service Market.
20
Instead, Philips intentionally refuses to license its copyrights as a means to exclude competition
21
in the relevant market and to acquire and/or maintain monopoly power in the relevant market.
22
56. As a result of Philips refusal to license the Philips Diagnostic Software to
23
24 Summit and other competitors in the Philips Ultrasound Machine Service Market, consumers in
25 the market are coerced to deal directly with Philips for repair and maintenance services of
26
27
Case No. 2:19-cv-01745 40 (206) 622-4900
1 Philips Ultrasound Machines. On information and belief, many, if not all of these customers
2 would prefer to work with Summit or other competitors instead of Philips.
3 57. Similarly, Philips enforcement or threatened enforcement of its copyrights in its

4 software also constitutes anticompetitive conduct. For example, Summit’s own proprietary
5
software that is the subject of Plaintiffs’ claims asserted in its Second Amended Complaint, has
6
a commercially significant, useful and lawful purpose and does not circumvent any purported
7
technological measure that Philips might include in its software, falsify or remove any
8
9 purported copyright management information, or otherwise violate the DMCA or infringe the
10 Philips’ Copyrights in any way. Nevertheless, Philips has asserted DMCA and copyright
11 infringement claims against Summit in an attempt to preclude Summit from providing repair
12
and maintenance services for Philips Ultrasound Machines in the Philips Ultrasound Machine
13
Service Market, which falls outside of the scope of the limited monopoly granted by the
14
Copyright Act in connection with Philips’ Copyrights.
15
58. Because Philips is not motivated by a desire to protect its copyrights and/or
16
17 other rights, but rather is seeking to exclude competition in the Philips Ultrasound Machine
18 Service Market, Philips’ claims for violations of the DMCA and copyright infringement against
19 Summit are anticompetitive. Philips engages and has engaged in this conduct in furtherance of
20
its scheme to improperly acquire and/or maintain monopoly power in the Philips Ultrasound
21
22
59. Philips knows and intends that its conduct, as described above, is
23
24 anticompetitive. Furthermore, Philips knows and intends that the consequence of its conduct
25 will allow it to improperly control prices and/or exclude competition in the relevant market,
26 and thereby acquire and/or maintain monopoly power in the relevant market.
27
Case No. 2:19-cv-01745 41 (206) 622-4900
1 60. Philips’ anticompetitive conduct, as described above, has the effect of excluding
2 competition in the Philips Ultrasound Machine Service Market, eliminating consumer choice in
3 the relevant market, and raising prices in the relevant market. Philips has intentionally engaged
4 in this conduct in order to improperly acquire and/or maintain monopoly power in the Philips
5
Ultrasound Machine Service Market.
6
61. Summit has suffered antitrust injury and damage to their business as a result of
7
Philips anticompetitive conduct. For example, Summit has incurred high costs in attempting to
8
9 develop alternatives to the Philips software it is unable to access or use, including the Philips
10 Diagnostic Software, so that it can compete in the Philips Ultrasound Machine Service Market.
11 These costs include higher operating costs, as well as the expenditure of significant time and
12
effort by Summit’s employees that could have otherwise and more economically been devoted
13
to other aspects of Summit’s business. Summit would not have incurred these costs but for
14
Philips’ anticompetitive conduct.
15
62. Summit has also suffered antitrust injury in the form of lost customers as a result
16
17 of Philips’ anticompetitive conduct because, on information and belief, Philips’ conduct
18 coerces customers, who would otherwise choose Summit, to use Philips for maintenance and
19 repair services of Philips Ultrasound Machines in the Philips Ultrasound Machine Service
20
Market.
21
63. Summit has also suffered antitrust injury in the form of lost revenue as a result
22
of Philips’ anticompetitive conduct because, on information and belief, lacking access to
23
24 Philips Diagnostic Software has deprived Summit of the ability to successfully diagnose certain
25 issues with Philips Ultrasound Machines or made such diagnoses more difficult and time-
26 consuming.
27
Case No. 2:19-cv-01745 42 (206) 622-4900
1 64. Summit has also suffered antitrust injury as a result of needing to spend money,
2 time and effort defending against Philips’ claims in this lawsuit, which Philips has brought in
3 order to further its scheme of excluding competition in the Philips Ultrasound Machine Service
4 Market.
5
6
SECOND COUNTERCLAIM: ATTEMPTED MONOPOLIZATION IN VIOLATION
7 OF SECTION 2 OF THE SHERMAN ANTITRUST ACT (15 U.S.C. § 2)
8 65. Summit repeats and re-alleges each allegation set forth in the preceding
9 paragraphs of these counterclaims as if fully set forth herein.
10 66. To the extent that Philips has not already acquired monopoly power in the
11 Philips Ultrasound Machine Service Market, there exists a dangerous probability that Philips
12 will acquire monopoly power as a result of its anticompetitive and exclusionary conduct, as
13 described above.
14 67. Philips has engaged in the anticompetitive and exclusionary conduct described
15 above with the specific intent to exclude competition in the Philips Ultrasound Machine
16 Service Market, raise prices in the Philips Ultrasound Machine Service Market, and acquire
17 monopoly power in the Philips Ultrasound Machine Service Market.
18 68. As a result of Philips’ anticompetitive and exclusionary conduct in the Philips
19 Ultrasound Machine Service Market, as described above, Summit has suffered antitrust injury
20 and damage to its business, including incurring higher operating costs, lost customers, and
21 being forced to expend significant money, time and effort defending against Philips’ lawsuit,
22 as described above.
23
THIRD COUNTERCLAIM: DECLARATION OF COPYRIGHT
24 UNENFORCEABILITY FOR COPYRIGHT MISUSE
25 69. Summit repeats and re-alleges each allegation set forth in the preceding
26 paragraphs of these counterclaims as if fully set forth herein.
27
Case No. 2:19-cv-01745 43 (206) 622-4900
1 70. Philips claims to own copyrights in software used in connection with certain
2 Philips Ultrasound Machines, namely those identified by Philips in its Second Amended
3 Complaint (“Philips Copyrights”).
4 71. Philips has asserted, based on its purported rights in the Philips Copyrights,
5 claims for violations of the DMCA and for copyright infringement against Defendants in the
6 present litigation. Defendants deny that the Philips Copyrights are enforceable. Accordingly,
7 there is a substantial, actual, and continuing controversy under 28 U.S.C. § 2201 between
8 Philips and Summit as to the alleged enforceability of the Philips Copyrights.
9 72. On information and belief, the Philips Copyrights cover copyrightable aspects
10 of the software installed on certain Philips Ultrasound Machines, including Philips Diagnostic
11 Software.
12 73. Philips has designed and implemented the software on Philips Ultrasound
13 Machines such that it is not possible to fully and effectively perform diagnostic, repair, and
14 maintenance services on the machines without access to and use of the Philips Diagnostic
15 Software.
16 74. On information and belief, Philips improperly uses its claimed copyrights in the
17 Philips Diagnostic Software to exclude competition in the market for repair and maintenance
18 services of Philips Ultrasound Machines by restricting access to the Philips Diagnostic
19 Software, at least by the enforcement or threatened enforcement of Philips Copyrights, such
20 that Summit and other competitors in the Philips Ultrasound Machine Service Market are not
21 able to provide repair and maintenance services for Philips Ultrasound Machines, as described
22 above.
23 75. On information and belief, Philips further attempts to exclude competition in
24 the market for repair and maintenance services for Philips Ultrasound Machines by refusing
25 to license the copyrights covering the Philips Diagnostic Software, to Summit and other
26
27
Case No. 2:19-cv-01745 44 (206) 622-4900
1 competitors in the Philips Ultrasound Machine Service Market such that they are not able to
2 provide repair and maintenance services for Philips Ultrasound Machines, as described above.
3 76. Summit’s own proprietary software that is the subject of Plaintiffs’ claims
4 asserted in its Second Amended Complaint, has a commercially significant, useful and lawful
5 purpose and does not circumvent any purported technological measure that Philips might
6 include in its software, falsify or remove any purported copyright management information,
7 or otherwise violate the DMCA or infringe the Philips’ Copyrights in any way. Nevertheless,
8 Philips has asserted DMCA and copyright infringement claims against Summit in an attempt
9 to prevent Summit from effectively competing in the Philips Ultrasound Machine Service
10 Market, including by using Summit’s own proprietary software. Thus, Philips is attempting to
11 leverage the limited monopoly granted by the Copyright Act in connection with Philips’
12 Copyrights to areas outside of that monopoly, including the provision of repair and
13 maintenance services for Philips Ultrasound Machines.
14 77. Philips’ conduct with respect to its copyrights has the effect of improperly
15 extending the limited monopoly granted by Philips’ purported copyrights in its software,
16 including in the Philips Diagnostic Software, to areas outside the granted copyrights at least
17 because it prevents Summit and other competitors from providing repair and maintenance
18 services for Philips Ultrasound Machines or otherwise effectively competing in the Philips
19 Ultrasound Machine Service Market.
20 78. Philips’ conduct with respect to its copyrights is anticompetitive and in
21 violation of federal antitrust laws.
22 79. Philips’ conduct with respect to its copyrights violates the public policy
23 underlying federal copyright laws.
24 80. By seeking to improperly extend the grant of the limited monopoly granted by
25 Philips’ copyrights, Philips has misused its copyrights.
26
27
Case No. 2:19-cv-01745 45 (206) 622-4900
1 81. Summit has suffered direct harm and damage to its business as a result of
2 Philips’ misuse of its copyrights.
3 82. Summit is therefore entitled to a declaratory judgment finding that Philips’
4 asserted copyrights are unenforceable until Philips discontinues its conduct that constitutes
5 misuse of the copyrights.
6
7 RELIEF REQUESTED
Having answered Plaintiffs’ Second Amended Complaint and asserted its
8
counterclaims, defendants pray for judgment as follows:
9
A. That Plaintiffs takes nothing by its Second Amended Complaint;
10
B. That the Court dismiss each and every claim in Plaintiffs’ Second Amended
11
Complaint with prejudice, and that all relief requested by the Plaintiffs be denied;
12
C. That the Court enter judgment declaring that Plaintiffs have committed acts of
13
anticompetitive and exclusionary conduct in violation of Section 2 of the Sherman Antitrust
14
Act (15 U.S.C. § 2);
15
D. That the Court enter judgment declaring that Plaintiffs’ actions with respect to
16
its claims under the DMCA to be a misuse of copyrights thereby making any copyright
17
purportedly protected through enforcement of the DMCA unenforceable so long as the misuse
18
of those copyrights continues;
19
E. That the Court enter judgment declaring that Plaintiffs’ actions with respect to
20
its claims for copyright infringement to be a misuse of copyrights thereby making any such
21
asserted copyright unenforceable so long as the misuse of those copyrights continues;
22
F. That the Court award Defendants their actual damages in an amount to be
23
determined at trial;
24
G. That the Court award Defendants treble damages pursuant to 15 U.S.C. § 15;
25
26
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Case No. 2:19-cv-01745 46 (206) 622-4900
1 H. That the Court award Defendants prejudgment interest and attorneys’ fees and
2 other costs of litigation pursuant to 15 U.S.C. § 15;
3 I. That the Court enter a permanent injunction pursuant to 15 U.S.C. § 26 barring
4 Plaintiffs from continuing their anticompetitive and exclusionary conduct;
5 J. That the Court award defendants its reasonable attorneys’ fees, costs, and
6 expenses incurred in this action and other relief, both legal and equitable, to which it is entitled
7 under 15 U.S.C. § 285 or other applicable law; and
8 K. That defendants be awarded such other and further relief as is just and proper in
9 law or in equity.
10
//
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Case No. 2:19-cv-01745 47 (206) 622-4900
1 DEMAND FOR JURY TRIAL

Defendants demand a jury on all issues so triable in accordance with Fed. R. Civ. P.
2
38(b).
3
4
DATED this 18th day of May, 2020.
5
6
Respectfully submitted:
7
8 /s/Marc C. Levy
E. Russell Tarleton, WSBA No. 17006
9 Marc C. Levy, WSBA No. 19203
10 Jeffrey E. Danley, WSBA No. 52747
Thomas A. Shewmake, WSBA No. 50765
11 SEED IP LAW GROUP LLP
701 Fifth Ave., Suite 5400
12 Seattle, WA 98104
Telephone: 206-622-4900
13
Facsimile: 206-682-6031
14 RussT@seedip.com
MarcL@seedip.com
15 JeffD@seedip.com
TomShewmake@seedip.com
16
Attorneys for Defendants
17
Summit Imaging Inc. and
18 Lawrence R. Nguyen
19 7366891_1
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Case No. 2:19-cv-01745 48 (206) 622-4900

Summit Imaging Counterclaims Against Philips Over Device 'Hacking' Claims

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Summit Imaging Counterclaims Against Philips Over Device 'Hacking' Claims

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Case 2:19-cv-01745-JLR Document 41 Filed 05/18/20 Page 1 of 48

1 The Honorable James L. Robart

7 PHILIPS NORTH AMERICA LLC, a Civil Action No.: 2:19-cv-01745

18 Defendants Summit Imaging Inc. (“Summit”) and Lawrence R. Nguyen (“Nguyen”)

19 (collectively “Defendants”), by and through their undersigned attorneys, answer Plaintiffs,

23 1. Defendants lack knowledge or information sufficient to form a belief as to the

25 that basis deny them.

1 2. Defendants lack knowledge or information sufficient to form a belief as to the

17 BACKGROUND AND FACTS RELATED TO THIS ACTION

1 30. Defendants admit that copies of certificates of copyright registration were

1 38. Defendants lack knowledge or information sufficient to form a belief as to the

1 55. Defendants deny the characterization contained in paragraph 55 of the Second

19 FIRST CAUSE OF ACTION

20 Circumventing a Technological Measure – 17 U.S.C. § 1201

21 (All Plaintiffs Against All Defendants)

1 79. Defendants lack knowledge or information sufficient to form a belief as to the

1 92. Paragraph 92 states a legal conclusion to which no responses is necessary. To

1 SECOND CAUSE OF ACTION

2 Modifying Copyright Management Information – 17 U.S.C. § 1202

3 (All Plaintiffs Against All Defendants)

12 THIRD CAUSE OF ACTION

13 Trade Secret Misappropriation – 18 U.S.C. § 1836

14 (All Plaintiffs Against All Defendants)

1 151. Defendants lack knowledge or information sufficient to form a belief as to the

22 FOURTH CAUSE OF ACTION

23 Trade Secret Misappropriation – RCW 19.108, et seq.

24 (All Plaintiffs Against All Defendants)

1 166. Defendants lack knowledge or information sufficient to form a belief as to the

5 FIFTH CAUSE OF ACTION

6 False Advertising – 15 U.S.C. § 1125(a)

7 (All Plaintiffs Against All Defendants)

4 SIXTH CAUSE OF ACTION

5 Unfair Competition in Violation of Washington’s Consumer Protection Act – RCW 19.86.020,

7 (All Plaintiffs Against All Defendants)

20 Copyright Infringement – 17 U.S.C. §§ 101, 501 et. seq.

21 (All Plaintiffs Against All Defendants)

1 210. Defendants admit that copies of certificates of copyright registration were

1 PRAYER FOR RELIEF

8 Third Affirmative Defense:

20 Fourth Affirmative Defense:

1 Fifth Affirmative Defense:

13 Sixth Affirmative Defense:

22 Seventh Affirmative Defense:

11 Eighth Affirmative Defense:

1 Ninth Affirmative Defense:

1 Tenth Affirmative Defense:

4 Twelfth Affirmative Defense:

16 Thirteenth Affirmative Defense:

11 Reservation of Additional Affirmative Defenses

1 FIRST COUNTERCLAIM: MONOPOLIZATION IN VIOLATION OF SECTION 2 OF

13 temperature sensor data when a component of a Philips Ultrasound Machine overheats.

19 sensor data other than the Philips Diagnostic Software.

11 44. The Philips Diagnostic Software cannot be practically or economically

17 against other competitors in the Philips Ultrasound Machine Service Market.

18 45. At least because the Philips Diagnostic Software cannot be practically or

9 48. As a result of Philips’ denial of access to the Philips Diagnostic Software to

17 Diagnostic Software by Summit and other competitors, constitutes anticompetitive conduct,

18 whether or not Philips Diagnostic Software is an essential facility.

17 and has a harmful effect on competition in the relevant market.

2 would prefer to work with Summit or other competitors instead of Philips.

3 57. Similarly, Philips enforcement or threatened enforcement of its copyrights in its

17 of Philips’ anticompetitive conduct because, on information and belief, Philips’ conduct

9 paragraphs of these counterclaims as if fully set forth herein.