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`Case 2:22-cv-00942-TL Document 30 Filed 12/09/22 Page 1 of 51
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`THE HONORABLE TANA LIN
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF WASHINGTON
`AT SEATTLE
`
`
`REALD SPARK, LLC,
`
`
`Plaintiff,
`
`
`
`v.
`
`
`MICROSOFT CORPORATION,
`
`
`Defendant.
`
`
`
`
`
`
`Case No. 2:22-cv-00942-TL
`
`DEFENDANT MICROSOFT
`CORPORATION’S ANSWER,
`AFFIRMATIVE DEFENSES, AND
`COUNTERCLAIMS TO PLAINTIFF’S
`COMPLAINT FOR BREACH OF
`CONTRACT, THEFT OF TRADE
`SECRETS, AND PATENT
`INFRINGEMENT
`
`JURY DEMANDED
`
`
`Defendant Microsoft Corporation submits its Answer, Affirmative Defenses, and
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`Counterclaims to Plaintiff RealD Spark, LLC’s Original Complaint. Microsoft denies each and
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`every allegation or characterization in the Complaint that is not expressly admitted herein. Any
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`factual allegation below is admitted only as to the specific admitted facts and not as to any
`
`purported conclusions, characterizations, implications, or speculations that Plaintiff may argue
`
`follows from the admitted facts. Microsoft further denies that Plaintiff is entitled to the relief
`
`requested or any other relief.
`
`I. SUMMARY OF THE ACTION
`
`1.
`
`This is a breach of contract, theft of trade secrets, and patent infringement suit
`
`MICROSOFT’S ANSWER TO PLAINTIFF’S
`COMPLAINT – Page 1
`(Case No. 2:22-cv-00942-TL)
`
`
`
`
`
`MORGAN, LEWIS & BOCKIUS LLP
`ATTORNEYS AT LAW
`1301 SECOND AVENUE, SUITE 2800
`SEATTLE, WASHINGTON 98101
`TEL +1.206.274.6400 FAX +1.206.274.6401
`
`

`

`Case 2:22-cv-00942-TL Document 30 Filed 12/09/22 Page 2 of 51
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`
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`relating to Microsoft’s unauthorized and unlicensed use of patented and/or proprietary RealD
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`technology in its products. Microsoft’s accused devices (“the Accused Products”) include the
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`Microsoft Surface product line, including the Microsoft Surface Pro X, certain Windows 10 (Build
`
`20175 and later) and Windows 11 products, and any other Microsoft products that incorporate its
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`“Eye contact” correction feature.
`
`ANSWER: Microsoft admits that the Complaint purports to set forth claims for breach of
`
`contract, theft of trade secrets, and patent infringement. Microsoft denies those claims and denies
`
`that Plaintiff is entitled to the relief requested or any other relief. Microsoft is otherwise without
`
`sufficient knowledge or information to form a belief as to the truth of the allegations set forth in
`
`this paragraph of the Complaint and therefore denies the same.
`
`II. PARTIES
`
`Plaintiff RealD Spark, LLC
`
`2.
`
`Plaintiff RealD Spark, LLC (“RealD”) is a private company incorporated in
`
`Delaware with its principal place of business at 1930 Central Avenue, Suite A-2, Boulder,
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`Colorado 80301.
`
`ANSWER: Microsoft is without sufficient knowledge or information to form a belief as
`
`to the truth of the allegations set forth in this paragraph of the Complaint and therefore denies the
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`3.
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`In October 2016, RealD spun out of RealD Inc. to focus on consumer display
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`technology. For almost two decades, RealD Inc. has been the creator of three-dimensional (“3D”)
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`imaging technologies for premium theater experiences. These technologies include both new
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`equipment—3D glasses, projectors, and screens necessary for optimum 3D viewing—as well as
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`new software that helps filmmakers create the immersive, 3D storytelling watched by moviegoers
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`around the world. See https://www.reald.com/realdcinema (last visited July 5, 2022);
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`https://variety.com/2019/film/news/reald-premium-cinema-options-1203372287/
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`(last visited
`
`July 5, 2022). RealD Inc.’s partnerships with AMC Theatres and Cinemark have made its
`
`MICROSOFT’S ANSWER TO PLAINTIFF’S
`COMPLAINT – Page 2
`(Case No. 2:22-cv-00942-TL)
`
`
`
`
`
`MORGAN, LEWIS & BOCKIUS LLP
`ATTORNEYS AT LAW
`1301 SECOND AVENUE, SUITE 2800
`SEATTLE, WASHINGTON 98101
`TEL +1.206.274.6400 FAX +1.206.274.6401
`
`

`

`Case 2:22-cv-00942-TL Document 30 Filed 12/09/22 Page 3 of 51
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`technology a staple of 3D cinema, with more than 30,000 installed screens in 75 countries.
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`https://www.reald.com/news/reald-and-cinemark-renew-3d-agreement-through-2022 (last visited
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`July 5, 2022). Over two billion people have watched a RealD Inc. 3D movie.
`
`ANSWER: Microsoft is without sufficient knowledge or information to form a belief as
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`to the truth of the allegations set forth in this paragraph of the Complaint and therefore denies the
`
`same.
`
`4.
`
`RealD Inc.’s efforts to create revolutionary visual experiences are not limited to its
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`cinematic origins. For instance, NASA used RealD Inc.’s 3D technologies to pilot the Mars Rover.
`
`https://www.businesswire.com/news/home/20110215005554/en/Oakley-3D-Glasses-Gain-
`
`RealD%C2%AE-Certification (last visited July 5, 2022). RealD took this imaging expertise and
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`expanded into the fields of advanced directional displays and gaze correction. RealD’s
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`developments in these fields are used in laptops, computers, and mobile phones, as well as in the
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`automotive/infotainment and point-of-sale sectors. For example, RealD’s display technology is
`
`incorporated
`
`into
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`many
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`Hewlett
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`Packard
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`laptop
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`computers.
`
`See
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`https://www.prnewswire.com/news-releases/reald-me-and-hp-partner-to-launch-reflective-
`
`privacy-technology-on-notebooks-with-sure-view-reflect-300982045.html (last visited July 5,
`
`2022). With years of experience, RealD continues to shape the digital world today.
`
`ANSWER: Microsoft is without sufficient knowledge or information to form a belief as
`
`to the truth of the allegations set forth in this paragraph of the Complaint and therefore denies the
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`Defendant Microsoft
`
`5.
`
`On information and belief, Defendant Microsoft is a Washington corporation with
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`its principal place of business at One Microsoft Way, Redmond, Washington 98052. Microsoft is
`
`a multinational technology company that produces computer software and consumer electronics.
`
`Microsoft also owns and operates social media and video conferencing applications such as
`
`LinkedIn and Skype.
`
`MICROSOFT’S ANSWER TO PLAINTIFF’S
`COMPLAINT – Page 3
`(Case No. 2:22-cv-00942-TL)
`
`
`
`
`
`MORGAN, LEWIS & BOCKIUS LLP
`ATTORNEYS AT LAW
`1301 SECOND AVENUE, SUITE 2800
`SEATTLE, WASHINGTON 98101
`TEL +1.206.274.6400 FAX +1.206.274.6401
`
`

`

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`Case 2:22-cv-00942-TL Document 30 Filed 12/09/22 Page 4 of 51
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`
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`ANSWER: Admitted.
`
`6.
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`On information and belief, Microsoft (including its subsidiaries) directly and/or
`
`indirectly develops, designs, manufactures, uses, distributes, markets, offers to sell, and/or sells
`
`the Accused Products in the United States, including in this District, and otherwise purposefully
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`directs infringing activities to this District in connection with its software and devices.
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`ANSWER: Microsoft admits that it develops, designs, manufactures, uses, distributes,
`
`markets, offers to sell, and/or sells various products in the United States, including this District.
`
`Microsoft denies that it has committed any acts of infringement in this District or elsewhere.
`
`Microsoft denies the remaining allegations set forth in this paragraph of the Complaint.
`
`
`
`III. JURISDICTION AND VENUE
`
`7.
`
`This is an action containing claims for patent infringement arising under the patent
`
`laws of the United States, Title 35, U.S.C. § 271. This Court has exclusive subject matter
`
`jurisdiction over those claims pursuant to 28 U.S.C. §§ 1331, 1367, and/or 1338.
`
`ANSWER: Microsoft admits that this purports to be an action for alleged patent
`
`infringement arising under the patent laws of the United States, Title 35, U.S.C. § 271, but denies
`
`that Plaintiff’s claims of patent infringement have merit. Microsoft admits that the Complaint is
`
`based on the patent laws of the United States and asserts subject matter jurisdiction under 28 U.S.C.
`
`§§ 1331, 1367, and/or 1338. Microsoft otherwise denies the allegations set forth in this paragraph
`
`of the Complaint.
`
`8.
`
`This action further arises under the laws of the United States, namely the Defend
`
`Trade Secrets Act (“DTSA”) codified at 18 U.S.C. § 1836 et seq. This Court therefore has subject
`
`matter jurisdiction of those claims pursuant to 28 U.S.C. § 1331.
`
`ANSWER: Microsoft admits that this purports to be an action for alleged trade secret
`
`misappropriation arising under the Defend Trade Secrets Act (“DTSA”) codified at 18 U.S.C. §
`
`1836 et seq., but denies that Plaintiff’s claims of trade secret misappropriation have merit.
`
`MICROSOFT’S ANSWER TO PLAINTIFF’S
`COMPLAINT – Page 4
`(Case No. 2:22-cv-00942-TL)
`
`
`
`
`
`MORGAN, LEWIS & BOCKIUS LLP
`ATTORNEYS AT LAW
`1301 SECOND AVENUE, SUITE 2800
`SEATTLE, WASHINGTON 98101
`TEL +1.206.274.6400 FAX +1.206.274.6401
`
`

`

`Case 2:22-cv-00942-TL Document 30 Filed 12/09/22 Page 5 of 51
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`Microsoft admits that this Court would have subject matter jurisdiction over actions arising under
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`18 U.S.C. §1836 pursuant to 28 U.S.C. §1331. Microsoft otherwise denies the allegations set forth
`
`in this paragraph of the Complaint.
`
`9.
`
`This action also arises under the laws of the State of Washington, namely the
`
`Washington Uniform Trade Secrets Act. This Court has subject matter jurisdiction pursuant to 28
`
`U.S.C. § 1367 because the actions giving rise to those claims under applicable state law are the
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`same and/or related to the actions giving rise to the asserted claims under federal law. As such, the
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`claims are so related that they form part of the same case or controversy under Article III of the
`
`United States Constitution.
`
`ANSWER: Microsoft admits that this purports to be an action for alleged trade secret
`
`misappropriation arising under the laws of the State of Washington, namely the Washington
`
`Uniform Trade Secrets Act, but denies that Plaintiff’s claims of trade secret misappropriation have
`
`merit. Microsoft admits that this Court would have subject matter jurisdiction over actions arising
`
`under 28 U.S.C. § 1367, but otherwise denies the allegations set forth in this paragraph of the
`
`Complaint.
`
`10.
`
`The Court has personal jurisdiction over Defendant because it either currently
`
`resides in the State of Washington, has a regular and established place of business within the State
`
`of Washington, has had minimum contacts with the State of Washington sufficient to confer the
`
`Court with general personal jurisdiction, or has committed acts within the State of Washington
`
`giving rise to the claims asserted herein. Defendant, in a Non-Disclosure Agreement entered into
`
`with RealD Inc. and its affiliates, agreed that jurisdiction and venue are proper in the state of
`
`Washington.
`
`ANSWER: Admitted except as to the characterization that Plaintiff’s claims have any
`
`merit, which Microsoft denies.
`
`11.
`
`Venue is proper in the Western District of Washington under 28 U.S.C. § 1400(b)
`
`as Microsoft resides and has a regular and established place of business in this judicial district, and
`
`MICROSOFT’S ANSWER TO PLAINTIFF’S
`COMPLAINT – Page 5
`(Case No. 2:22-cv-00942-TL)
`
`
`
`
`
`MORGAN, LEWIS & BOCKIUS LLP
`ATTORNEYS AT LAW
`1301 SECOND AVENUE, SUITE 2800
`SEATTLE, WASHINGTON 98101
`TEL +1.206.274.6400 FAX +1.206.274.6401
`
`

`

`Case 2:22-cv-00942-TL Document 30 Filed 12/09/22 Page 6 of 51
`
`
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`this judicial district is where Microsoft has committed acts of infringement.
`
`ANSWER: Microsoft admits that venue is proper in this District under 28 U.S.C. § 1400(b)
`
`for purposes of this litigation. Microsoft denies that it has committed any acts of infringement in
`
`this District or elsewhere.
`
`IV. FACTUAL ALLEGATIONS
`
`REALD’S HISTORY OF INNOVATION
`
`12.
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`RealD Inc. has spent almost twenty years developing cutting-edge imaging and
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`visual experiences for the digital age. From revolutionary light-efficient laser projectors and
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`filmmaking software to transformational privacy displays, RealD Inc. and RealD have been, and
`
`remain, at the forefront of imaging industry.
`
`ANSWER: Microsoft is without sufficient knowledge or information to form a belief as
`
`to the truth of the allegations set forth in this paragraph of the Complaint and therefore denies the
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`13.
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`In 2003, RealD Inc. developed its core polarization management technologies that
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`permeate both its cinematic and display product offerings. Over the coming years, RealD Inc.
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`implemented its new technologies on the big screens of theaters and the small screens of
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`computers, laptops, and mobile devices. RealD also adapted the technology to provide privacy on
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`these small screens by adjusting luminance, polarization, backlighting, and reflectivity to prevent
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`others from viewing the screens of other computer users. In 2018, RealD unveiled its “Privacy
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`Guard” product in Lenovo laptops. And in 2020, RealD provided an enhanced privacy product
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`called “SureView Reflect” in HP’s Dragonfly laptops, which later expanded to multiple HP PCs,
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`laptops, and chromebooks in multiple screen sizes. Currently, RealD is exploring the application
`
`of these ideas into vehicle infotainment systems and point-of-sale kiosks.
`
`ANSWER: Microsoft is without sufficient knowledge or information to form a belief as
`
`to the truth of the allegations set forth in this paragraph of the Complaint and therefore denies the
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`same.
`
`MICROSOFT’S ANSWER TO PLAINTIFF’S
`COMPLAINT – Page 6
`(Case No. 2:22-cv-00942-TL)
`
`
`
`
`
`MORGAN, LEWIS & BOCKIUS LLP
`ATTORNEYS AT LAW
`1301 SECOND AVENUE, SUITE 2800
`SEATTLE, WASHINGTON 98101
`TEL +1.206.274.6400 FAX +1.206.274.6401
`
`

`

`Case 2:22-cv-00942-TL Document 30 Filed 12/09/22 Page 7 of 51
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`REALD AND MICROSOFT
`
`14.
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`As part of RealD’s mission to create the ultimate visual experience across all
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`consumer electronics, RealD set its sights on video conferencing. More specifically, RealD set out
`
`to develop imaging technology that adjusts the gaze of video conference participants so that it
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`appears the participants are looking directly into the camera instead of at the device screen. RealD
`
`refers to this innovative technology as “SocialEyes” (a play on words of “Socialize”).
`
`ANSWER: Microsoft is without sufficient knowledge or information to form a belief as
`
`to the truth of the allegations set forth in this paragraph of the Complaint and therefore denies the
`
`same.
`
`15.
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`RealD worked tirelessly to research, develop, and refine SocialEyes. During the
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`development process, RealD invested significant time and resources into creating the proprietary
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`formulas, algorithms, methodologies, and products that underlie SocialEyes. For example, RealD
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`collected and analyzed large quantities of data through costly and time-consuming in-person tests
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`focused on image recognition. These development efforts were led by Eric Sommerlade, Vice
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`President of Software & Computer Vision at RealD, who oversaw the team of employees that
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`designed, developed, and deployed SocialEyes.
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`ANSWER: Microsoft admits that Eric Sommerlade worked at RealD in connection with
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`SocialEyes. Microsoft is without sufficient knowledge or information to form a belief as to the
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`truth of the allegations set forth in this paragraph of the Complaint and therefore denies the same.
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`16.
`
`After developing SocialEyes, RealD contacted Microsoft to see if it was interested
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`in including SocialEyes in its products. Microsoft was enthusiastic about the prospect and sought
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`to learn more about the technology. Before engaging in any detailed discussions about SocialEyes,
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`RealD Inc. and its affiliates and Microsoft and its affiliates entered into a Non-Disclosure
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`Agreement (“NDA”) (attached as Exhibit A), which was executed on July 20, 2016.
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`ANSWER: Microsoft admits that RealD contacted it regarding SocialEyes, that Microsoft
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`asked to learn more about SocialEyes, and that Exhibit A appears to be a true and correct copy of
`
`MICROSOFT’S ANSWER TO PLAINTIFF’S
`COMPLAINT – Page 7
`(Case No. 2:22-cv-00942-TL)
`
`
`
`
`
`MORGAN, LEWIS & BOCKIUS LLP
`ATTORNEYS AT LAW
`1301 SECOND AVENUE, SUITE 2800
`SEATTLE, WASHINGTON 98101
`TEL +1.206.274.6400 FAX +1.206.274.6401
`
`

`

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`Case 2:22-cv-00942-TL Document 30 Filed 12/09/22 Page 8 of 51
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`
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`a Non-Disclosure Agreement (“NDA”) executed between RealD, Inc. and Microsoft on July 20,
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`2016. Microsoft denies the remaining allegations set forth in this paragraph of the Complaint.
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`17.
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`The NDA offers protections for both parties’ confidential information. In particular,
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`the NDA specifies that the parties can “use and disclose the other’s confidential information only
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`for purposes of our business relationship with each other.” Ex. A at 2. “Confidential Information”
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`is defined in the NDA as “non-public information, know-how and trade secrets in any form that:
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`[(1)] Are designated as ‘confidential’; or [(2)] A reasonable person knows or reasonably should
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`understand to be confidential.” Id. at 1–2.
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`ANSWER: Admitted.
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`18.
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`Relying on the protections of the NDA and the parties’ mutual understanding that
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`each party’s confidential information was protected from unauthorized use or disclosure, RealD
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`shared confidential information about SocialEyes with Microsoft including, without limitation, the
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`following high-level groups of trade secrets:
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`
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`Image recognition algorithms for different types of faces, lighting, eye color, and
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`eyeglasses;
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` Datasets to support SocialEyes’ image recognition methods;
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` Know-how resulting from RealD’s lengthy and costly R&D process used to
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`develop SocialEyes and its corresponding datasets;
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` Negative know-how that resulted from RealD’s lengthy and costly R&D process
`
`that was used to develop SocialEyes and its corresponding datasets; and
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` Source code that contained and implemented the aforementioned trade secrets.
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`ANSWER: Microsoft admits that RealD provided certain information to Microsoft
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`regarding the SocialEyes product, but denies that RealD provided any trade secret information to
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`Microsoft. Microsoft denies any remaining allegations set forth in this paragraph of the Complaint.
`
`19.
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`RealD’s trade secrets and intellectual property made its vision to improve the video
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`conferencing experience a reality. SocialEyes adjusts the apparent gaze of video conference
`
`MICROSOFT’S ANSWER TO PLAINTIFF’S
`COMPLAINT – Page 8
`(Case No. 2:22-cv-00942-TL)
`
`
`
`
`
`MORGAN, LEWIS & BOCKIUS LLP
`ATTORNEYS AT LAW
`1301 SECOND AVENUE, SUITE 2800
`SEATTLE, WASHINGTON 98101
`TEL +1.206.274.6400 FAX +1.206.274.6401
`
`

`

`Case 2:22-cv-00942-TL Document 30 Filed 12/09/22 Page 9 of 51
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`participants, so that it appears they are looking directly into the camera instead of at the device
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`screen. Since eye contact can be realistically maintained with this innovative technology, the
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`technology makes the video conference experience more vivid, engaging, and personal for all
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`parties concerned. In addition, the technology substantially mitigates various psychological issues
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`that often accompany prolonged or repeated video conferences. For example, studies show that
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`“Zoom Fatigue” results from video participants having to pay closer attention to non-verbal cues
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`as compared to an in-person conversation. This fatigue results in participants expending increased
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`mental and cognitive energy, which exhausts the participant more quickly and can cause
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`headaches, migraines, eye strain, and other physical and emotional symptoms.
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`ANSWER: Microsoft is without sufficient knowledge or information to form a belief as
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`to the truth of the allegations set forth in this paragraph of the Complaint and therefore denies the
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`20.
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`Recognizing the potential for SocialEyes, RealD took steps to keep its proprietary
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`technology confidential. For example, RealD team members were under obligations not to disclose
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`RealD’s trade secrets or other confidential information. In addition, RealD limited access to its
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`trade secrets and disclosed its confidential information only to those employees working on
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`development of the technology. RealD also employed secure information-management and both
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`physical and digital security protocols. Lastly, RealD required its employees, contractors, clients,
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`and vendors to enter into confidentiality agreements, and RealD did not disclose confidential
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`information to third parties except under the protections of confidentiality agreements.
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`ANSWER: Microsoft is without sufficient knowledge or information to form a belief as
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`to the truth of the allegations set forth in this paragraph of the Complaint and therefore denies the
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`same.
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`21.
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`Beginning in late 2016, RealD began demonstrating SocialEyes to Microsoft under
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`the protection of the NDA and with the hope that Microsoft would ultimately license or acquire
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`RealD’s technology. Over the next several months, RealD spoke with Microsoft personnel about
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`MICROSOFT’S ANSWER TO PLAINTIFF’S
`COMPLAINT – Page 9
`(Case No. 2:22-cv-00942-TL)
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`
`
`
`
`MORGAN, LEWIS & BOCKIUS LLP
`ATTORNEYS AT LAW
`1301 SECOND AVENUE, SUITE 2800
`SEATTLE, WASHINGTON 98101
`TEL +1.206.274.6400 FAX +1.206.274.6401
`
`

`

`Case 2:22-cv-00942-TL Document 30 Filed 12/09/22 Page 10 of 51
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`SocialEyes and shared confidential information with them related to the technology. RealD shared
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`this information with Microsoft so that Microsoft could evaluate RealD’s technology. At all times,
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`RealD’s disclosure of confidential information was protected by the executed NDA.
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`ANSWER: Microsoft admits that RealD demonstrated a version of SocialEyes to
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`Microsoft in 2016. Microsoft admits that RealD provided information to Microsoft regarding the
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`SocialEyes product after an NDA was executed. Microsoft denies that RealD shared any trade
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`secrets with Microsoft. Microsoft denies the remaining allegations set forth in this paragraph of
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`the Complaint.
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`22.
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`During the parties’ discussions, Microsoft repeatedly voiced its interest in
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`SocialEyes. After several months of communicating about the technology and its benefits,
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`Microsoft asked RealD to install SocialEyes on one of its products. Encouraged by the promise of
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`securing a license with such a large and important business partner, RealD obliged, and SocialEyes
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`demonstration software was installed on a Surface Pro 4 tablet.
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`ANSWER: Microsoft admits that it met with RealD over several months to evaluate
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`SocialEyes. Microsoft admits that RealD installed a demonstration version of SocialEyes on a
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`Surface Pro 4 tablet . Microsoft denies the remaining allegations set forth in this paragraph of the
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`Complaint.
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`23.
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`In March 2019, despite all of the interest Microsoft previously voiced about
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`SocialEyes, Microsoft cut off talks with RealD.
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`ANSWER: Microsoft admits that it ended talks with RealD in or around March of 2019.
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`Microsoft denies the remaining allegations set forth in this paragraph of the Complaint.
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`24.
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`RealD eventually became aware that Microsoft had hired several former RealD
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`employees that worked on SocialEyes, including the SocialEyes team leader, former Vice
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`President of Software & Computer Vision, Eric Sommerlade.
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`ANSWER: Microsoft admits that several former RealD employees that worked on
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`SocialEyes, including Eric Sommerlade, were hired by Microsoft after they were fired by RealD.
`
`MICROSOFT’S ANSWER TO PLAINTIFF’S
`COMPLAINT – Page 10
`(Case No. 2:22-cv-00942-TL)
`
`
`
`
`
`MORGAN, LEWIS & BOCKIUS LLP
`ATTORNEYS AT LAW
`1301 SECOND AVENUE, SUITE 2800
`SEATTLE, WASHINGTON 98101
`TEL +1.206.274.6400 FAX +1.206.274.6401
`
`

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`Case 2:22-cv-00942-TL Document 30 Filed 12/09/22 Page 11 of 51
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`25.
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`Upon learning that Dr. Sommerlade was employed by Microsoft, RealD contacted
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`Microsoft to (i) ask about resuming licensing negotiations, and (ii) to alert Microsoft that it risked
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`misappropriating RealD’s intellectual property. Microsoft declined to resume negotiations and
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`instead told RealD that it “ha[d] instead opted to evaluate a different technology altogether.”
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`Microsoft also informed RealD that it was taking “steps to protect [RealD’s] IP[.]” For example,
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`Microsoft reassured RealD that it “made clear to Dr. Sommerlade that he [was] not permitted to
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`use any RealD intellectual property in the course of his work, absent an express license from
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`RealD.” Microsoft also told RealD that it instructed the employees on Dr. Sommerlade’s team “not
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`to solicit any advice or information regarding RealD’s SocialEyes product.” In light of Microsoft’s
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`representations, RealD reasonably understood that Microsoft was proactively taking steps to
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`ensure that RealD’s trade secrets remained confidential and were not used or disclosed absent an
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`express license from RealD.
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`ANSWER: Microsoft is without sufficient knowledge or information to form a belief as
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`to the truth of the allegations set forth in this paragraph of the Complaint regarding RealD’s
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`knowledge and therefore denies the same. Microsoft admits that RealD contacted Microsoft on or
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`around February 12, 2019 to inquire about resuming licensing negotiations. Microsoft admits that
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`it informed RealD that it “ha[d] instead opted to evaluate a different technology altogether,” that
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`Microsoft was taking “steps to protect [RealD’s] IP[.],” that Microsoft “made clear to Dr.
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`Sommerlade that he [was] not permitted to use any RealD intellectual property in the course of his
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`work, absent an express license from RealD,” and that Microsoft informed Dr. Sommerlade’s team
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`“not to solicit any advice or information regarding RealD’s SocialEyes product.” Microsoft denies
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`the remaining allegations set forth in this paragraph of the Complaint.
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`26.
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`However, upon information and belief, it now appears that Microsoft did not follow
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`through with its promises. Microsoft’s patent applications indicate that its “competing” product is
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`actually an unauthorized implementation of both RealD’s patented technology and its underlying
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`trade secrets and confidential information.
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`MICROSOFT’S ANSWER TO PLAINTIFF’S
`COMPLAINT – Page 11
`(Case No. 2:22-cv-00942-TL)
`
`
`
`
`
`MORGAN, LEWIS & BOCKIUS LLP
`ATTORNEYS AT LAW
`1301 SECOND AVENUE, SUITE 2800
`SEATTLE, WASHINGTON 98101
`TEL +1.206.274.6400 FAX +1.206.274.6401
`
`

`

`Case 2:22-cv-00942-TL Document 30 Filed 12/09/22 Page 12 of 51
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`
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`ANSWER: Denied.
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`27. More specifically, on information and belief, in or around October 2019, Microsoft
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`misappropriated RealD’s confidential information by incorporating SocialEyes into Microsoft’s
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`Surface product line, including the Surface Pro X—a product within the same family of products
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`as the Surface Pro 4 in which the SocialEyes demonstration software was installed months earlier.
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`See, e.g., https://www.youtube.com/watch?v=dmaioTs0NH8 (at 50:00–53:25, Microsoft Surface
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`Pro X Launch Event, Oct. 2, 2019) (demonstrating the Surface Pro X’s “Eye Contact” gaze
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`correction feature) (last visited July 5, 2022). Around this time, Microsoft also filed a patent
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`application directed to RealD’s SocialEyes technology, and it listed ex-RealD employees Eric
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`Sommerlade and Alexandros Neophytou as inventors.
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`ANSWER: Microsoft admits that it offers the Surface Pro X as a part of the Surface
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`product line. Microsoft denies that any Microsoft product or feature incorporates SocialEyes in
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`part or in full. Microsoft admits that the referenced YouTube video is a Microsoft Surface
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`presentation from October 2, 2019. Microsoft admits that it filed a patent application listing Eric
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`Sommerlade and Alexandros Neophytou as inventors on September 30, 2019, but denies that this
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`application has any relation to RealD’s purported SocialEyes technology. Microsoft denies the
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`remaining allegations set forth in this paragraph of the Complaint.
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`28.
`
`Since October 2019, Microsoft has expanded its unauthorized and unlicensed use
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`of
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`RealD’s
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`patented
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`and/or
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`proprietary
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`technology.
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`See,
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`e.g.,
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`https://www.youtube.com/watch?v=0vsh1KZ1yws (at 1:05–1:18, Microsoft Windows powers the
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`future of hybrid work, April 5, 2022) (demonstrating the Windows 11 “Eye Contact” gaze
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`correction feature) (last visited July 5, 2022); https://www.microsoft.com/en-us/microsoft-
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`365/blog/2022/04/05/new-experiences-in-windows-11-and-windows-365-empower-new-ways-
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`of-working/
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`(last
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`visited
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`July
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`5,
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`2022);
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`https://blogs.windows.com/windowsexperience/2022/04/05/windows-powers-the-future-of-
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`hybrid-work/ (last visited July 5, 2022).
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`MICROSOFT’S ANSWER TO PLAINTIFF’S
`COMPLAINT – Page 12
`(Case No. 2:22-cv-00942-TL)
`
`
`
`
`
`MORGAN, LEWIS & BOCKIUS LLP
`ATTORNEYS AT LAW
`1301 SECOND AVENUE, SUITE 2800
`SEATTLE, WASHINGTON 98101
`TEL +1.206.274.6400 FAX +1.206.274.6401
`
`

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`Case 2:22-cv-00942-TL Document 30 Filed 12/09/22 Page 13 of 51
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`ANSWER: Denied.
`
`V. MICROSOFT HARMED REALD
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`29. Microsoft’s theft of RealD’s trade secrets have damaged RealD’s ongoing business
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`and its ability to win new customers going forward. On information and belief, at the most basic
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`level, Microsoft’s misappropriation of SocialEyes has deprived RealD of the licensing fees that
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`Microsoft or others would have paid to license the SocialEyes technology. On information and
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`belief, RealD was the only company that developed a marketable version of SocialEyes and thus
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`it should have enjoyed a competitive advantage for licensing its technology in the marketplace.
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`On information and belief, Microsoft’s misappropriation of SocialEyes has vastly reduced RealD’s
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`competitive advantage for licensing the SocialEyes technology to Microsoft and others.
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`ANSWER: Denied.
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`30. Microsoft’s further dissemination of RealD’s trade secrets has caused and will
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`continue to cause irreparable harm to RealD. As a result of its misappropriation, Microsoft has
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`been able to release products, including the Accused Products, that incorporate RealD’s
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`proprietary SocialEyes technology. Microsoft will continue to benefit from the sale of these
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`products, including the Accused Products that incorporate RealD’s technology. Microsoft cannot
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`be allowed to continue to use RealD’s trade secrets to sell its products and services in a global
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`market without compensating RealD.
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`ANSWER: Denied.
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`COUNT ONE: BREACH OF CONTRACT
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`31.
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`Plaintiff realleges and incorporates by reference the allegations of paragraphs 1–30
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`of this Complaint.
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`ANSWER: Microsoft repeats and incorporates by reference each of the answers in the
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`foregoing paragraphs as if fully set forth herein.
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`32.
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`The NDA was a valid and binding contract between Microsoft and RealD Inc. and
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`MICROSOFT’S ANSWER TO PLAINTIFF’S
`COMPLAINT – Page 13
`(Case No. 2:22-cv-00942-TL)
`
`
`
`
`
`MORGAN, LEWIS & BOCKIUS LLP
`ATTORNEYS AT LAW
`1301 SECOND AVENUE, SUITE 2800
`SEATTLE, WASHINGTON 98101
`TEL +1.206.274.6400 FAX +1.206.274.6401
`
`

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`Case 2:22-cv-00942-TL Document 30 Filed 12/09/22 Page 14 of 51
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`its affiliates. RealD is an affiliate of RealD Inc.
`
`A