Knapp Logistics & Automation, Inc. v. R/X Automation Solutions, Inc.

Filing 88

ORDER granting 44 Motion for Partial Summary Judgment; denying 48 Motion for Order; granting 49 Motion to Dismiss; denying 82 Motion for Leave; denying 86 Motion for Leave. by Judge R. Brooke Jackson on 4/16/2015.(tscha, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge R. Brooke Jackson
Civil Action No 14-cv-00319-RBJ
KNAPP LOGISTICS & AUTOMATION, INC.,
Plaintiff,
v.
R/X AUTOMATION SOLUTIONS, INC.,
Defendant.

ORDER

This order addresses three summary judgment motions and defendant’s recent motion to
amend its Answer and Counterclaim.
BACKGROUND
The Court described the background to this lawsuit in its Claim Construction Order
issued on March 16, 2015. ECF No. 79. Briefly, Knapp Logistics & Automation, Inc. is the
assignee of US Patent No. 8,601,776, providing systems and methods of automated dispensing,
prescription filling and packaging of pills. The invention is intended to fill a need for an
automated tablet dispensing system that provides “high security, controlled and reduced
replenishment, efficiency, and ease of use.” Patent, ECF No. 58-1, at 1:44–47. The present
dispute focuses on the component of the system known as an Automated Tablet Dispenser or
“ATD.” Knapp alleges that R/X Automation Solutions, Inc. (“RXAS”) is marketing an ATD
that infringes at least 11 of the claims in the ‘776 patent. RXAS denies infringement and
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counterclaims for a declaration of invalidity of both the ‘776 patent and another Knapp patent,
U.S. Patent No. 8,141,330 (the ‘330 patent). ECF No. 12.
The patent has one independent claim and 19 dependent claims. Claim 1, the
independent claim, reads as follows:
“What is claimed is:
1. A system for automated tablet dispensing comprising:
a counter configured to count tablets, the counter comprising:
[1] a secure door;
a sensor configured to count the tablets; and
[2] a hopper assembly configured to receive the tablets
through the secure door and transfer the tablets to the
sensor; and
[3] a closed canister removably engaged with the secure door
of the counter and configured to hold the tablets for
delivery through the secure door of the counter and into
the hopper assembly;
wherein [4] the counter is configured to count the tablets when
the secure door of the counter is open and closed.”
The Court added the bolding and the numbers to identify more easily the terms that were
construed in the Claim Construction Order.
PENDING MOTIONS
RXAS’s Motion for Partial Summary Judgment
RXAS moves for a partial summary judgment of non-infringement as to its pill counting
product versions that include a feature whereby pill counting takes place only when the counter
door is in a fully opened position. ECF No. 44. RXAS primarily focuses on its “Product C”
version (in the form that it was presented to Knapp’s counsel and expert for inspection on June
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16, 2014). RXAS contends that it is beyond any genuine dispute that in Product C and
apparently some other versions of the RXAS product line, a sensor disables the pill counter when
the counter door is closed or even slightly closed. Because the counter in the independent claim
(and therefore each dependent claim) in Knapp’s ‘776 patent is “configured to count the tablets
when the secure door of the counter is opened and closed,” RXAS argues that those of its
products that can count only when the counter door is open necessarily cannot infringe the ‘776
patent.
In response, Knapp primarily argues that the motion was prematurely filed and should not
be decided until the Court construes disputed terms and Knapp has had an opportunity for full
discovery. See generally Opposition Brief, ECF No. 47. See also ECF No. 48 (Knapp’s Motion
for Rule 56(D) Relief, essentially a recasting of its opposition brief). In its preliminary
Infringement Contentions, however, Knapp argued that the sensor in Product C serves no
purpose other than as an attempt to design around the ‘776 patent; that it actually impedes the
function of the counter; and that it can easily be disabled either mechanically or by a minor
adjustment to the software. ECF No. 44-2 at 5, 14–15.
The Court has now issued its Claim Construction Order. ECF No. 79. Pertinent to the
pending motion is its construction of the term, “the counter is configured to count the tablets
when the secure door of the counter is open and closed.” Knapp had proposed “the counter
counts the tablets when the secure door of the counter is both open and closed unless selectively
discontinued by a user or electronic computer program.” RXAS proposed “a counter that is able
to count both when its secure door is open and when its secure door is closed, where ‘open’
means that secure door position that allows for emptying of tablets from the canister into the
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counter and where ‘closed’ means that secure door position which blocks entirely the passage of
tablets from the canister to the counter.” The Court concluded that a person of ordinary skill in
the relevant art would construe the term, consistent with its plain wording, to mean that “the
counter is able to count the tablets both when the secure door is open and when it is closed.”
ECF No. 79 at 19-20.
All elements of a claim must be present in a product, either literally or under the doctrine
of equivalents, for the product to infringe. See Pennwalt Corp. v. Durand-Wayland, Inc., 833
F.2d 931, 952–54 (Fed. Cir. 1987) (adopting the “all elements” rule”). This is sometimes also
called the “all limitations” rule. See, e.g., Freedman Seating Co. v. American Seating Co., 420
F.3d 1350, 1358 (Fed. Cir. 2005). Regardless, the inquiry is: “Does the accused product or
process contain elements identical or equivalent to each claimed element of the patented
invention?” Warner-Jenkinson Co., Inc. v. Hilton Davis Chemical Co., 520 U.S. 17, 40 (1997).
As represented to this Court by RXAS and confirmed by the Affidavit of its President,
Tim Chambers [ECF No. 44-3 at ¶4], RXAS’s “Product C” can count pills only when the
counter door is fully open. There is no genuine dispute about that fact. As such, that version and
any other versions of RXAS’s product line with the same limitation do not infringe on the ‘776
patent, under which counting can occur when the counter door is open and when it is closed.
This conclusion is consistent with Knapp’s own representations to the Patent Office
found in the prosecution history. For example, in letter dated October 2, 2013, responding to a
non-final office action concerning U.S. Application No. 13/398,979, Knapp’s patent counsel
distinguished the Lion prior art as follows:
In contrast to the claimed system for automated tablet dispensing, the system 2 of
Lion does not include a counter including a secure door, a sensor configured to
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count the tablets, and a hopper assembly configured to receive the tablets through
the secure door and transfer the tablets to the sensor, wherein the counter is
configured to count the tablets when the secure door of the counter is open and
closed, as recited in Claim 25. Although the iris aperture 52 of the base-port
subunit 44 may be considered a door of the housing 4, the housing 4 of Lion
certainly is not configured to count the pills 26 when the iris aperture 52 is closed.
Instead, the housing 4 of Lion is configured to count the pills 26 only when the
iris aperture 52 is open. See Col. 8, lines 28 - col. 9, line 32; Figs. llA-12.
ECF No. 52-1 at 7 (document page 10).
And, in a letter responding to final office action concerning U.S. Application No.
13/410,959, dated February 26, 2014, Knapp’s patent counsel stated,
Independent Claims 12, 21, and 31 of the present application each recite that “the
counter operates to count the tablets with the canister engaged and removed.
Independent Claim 1 of Henkel [the ‘776 patent] recites that “the counter is
configured to count the tablets when the secure door of the counter is open and
closed.” In applying the infringement test to these claims, one may consider a
hypothetical system including a canister that is removably engaged with a
counter, wherein the counter is specifically configured to stop counting either
when a secure door of the counter is open or when the secure door of the counter
is closed. This hypothetical system could literally infringe independent Claims
12, 21, and 31 of the present application but could not literally infringe claim 1 of
Henkel.
ECF No. 52-2 at 10 (document page 13).
The concerns expressed in Knapp’s Infringement Contentions do not change this result.
Whether the sensor in Product C was created to design around Knapp’s patent is not a material
fact. See Slimfold Manufacturing Co., Inc. v. Kinkead Industries, Inc., 932 F.2d 1453, 1457
(Fed. Cir. 1991) (“Designing around patents is, in fact, one of the ways in which the patent
system works to the advantage of the public in promoting progress in the useful arts, its
constitutional purpose.”). Knapp is concerned that Product C or similar versions might be
modified to allow pill counting to occur with the counter door closed. The short answer is that if
RXAS modifies a product in that manner, the Court’s non-infringement order would not apply to
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the modified product. Moreover, “that a device is capable of being modified to operating in an
infringing manner is not sufficient, by itself, to support a finding of infringement.” Telemac
Cellular Corp. v. Topp Telecom, Inc., 247 F.3d 1316, 1330 (Fed. Cir. 2001). 1
Application of the “all elements” or “all limitations” rule is a matter of law. See, e.g.,
Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd., 234 F.3d 558, 586 (Fed. Cir. 2000).
I conclude that there is no genuine dispute of fact that is material to the application of the rule
with respect to RXAS’s product versions wherein pill counting cannot occur unless the counter
door is fully opened. Although Knapp had not completed discovery when the pending motion
was filed and briefed, discovery could not generate facts that would create a genuine dispute
requiring resolution by trial. Accordingly, RXAS’s motion for partial summary judgment is
granted.
Knapp’s Motion for Rule 56(d) Relief
Here Knapp again asks the Court to defer consideration of RXAS’s motion for partial
summary judgment until the conclusion of claim construction and discovery. ECF No. 48. The
Court did defer consideration of RXAS’s motion until after it issued its Claim Construction
Order. The Court has found that there is no genuine issue of material fact that would preclude
summary disposition with respect to RXAS’s products that can count pills only when the counter
door is fully open. Therefore, to the extent motion is not moot, it is denied.

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Knapp attempted to address this issue through claims construction, proposing that the term “the counter
is configured to count the tablets when the secure door of the counter is open and closed” means “the
counter counts the tablets when the secure door of the counter is both open and closed unless selectively
discontinued by a user or electronic computer program.” (emphasis added). The Court did not adopt that
construction.

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Knapp’s Motion to Dismiss RXAS’s Second Counterclaim
Count Two of RXAS’s First Amended Answer with Amended Counterclaims seeks a
declaration of invalidity of Knapp’s U.S. Patent No. 8,141,330 (the ‘330 patent). ECF No. 45 at
11-13. Knapp argues that it has not alleged, nor will it ever allege, that RXAS has infringed the
‘330 patent. Therefore, it seeks dismissal of the second count pursuant to Rule 12(b)(6) on the
basis that there is no actual controversy that would permit the Court to issue a declaration of
invalidity under the Declaratory Judgment Act, 28 U.S.C. § 2001(a). ECF No. 49. RXAS has
not responded directly to this motion, but it did respond to Knapp’s essentially identical motion
which sought dismissal of the same counterclaim in RXAS’s original Answer and
Counterclaims. ECF No 27 (responding to ECF No. 18). I have reviewed, therefore, ECF No.
49, 18, 19 (exhibits), 27 and 34 (Knapp’s reply to No. 18). Having done so, I agree with Knapp.
In the Second Count of the amended counterclaim, RXAS alleges, “upon information and
belief,” that the ‘330 patent is invalid or unenforceable by reason of prior art. ECF No. 45 at
¶52. RXAS goes on to list, still upon information and belief, purported instances of sales, offers
to sell or public disclosures by Knapp constituting such prior art. Id. But those allegations, even
if presumed true for purposes of the pending motion, beg the question of whether there is an
actual controversy between Knapp and RXAS concerning the ‘330 patent. ‘“Basically, the
question in each case is whether the facts alleged, under all the circumstances, show there is a
substantial controversy, between parties having adverse legal interests, of sufficient immediacy
and reality to warrant the issuance of a declaratory judgment.’” MedImmune, Inc. v. Genetech,
Inc., 549 U.S. 118, 126 (2007) (quoting Maryland Casualty Co. v. Pacific Coal & Oil Co., 312
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U.S. 270, 273 (1941)). On that subject RXAS alleges no facts, only that “[t]he validity of the
‘330 Patent is germane to the determination of validity of the ‘776 Patent that claims priority to
it.” Id. at ¶50.
RXAS’s Response to plaintiff’s motion points out that its Fifth Affirmative defense
asserts that the ‘776 patent is invalid or unenforceable because the ‘330 patent, as the “parent
patent,” is invalid or unenforceable. ECF No. 27 at 2. Specifically, the Fifth Affirmative
defense asserts that the alleged invalidity of the ‘330 patent “effects a change in the priority
claim of the ‘776 Patent that renders it invalid.” ECF No. 45 at 8–9. RXAS has not shown this
Court, however, why it cannot assert this defense without obtaining a declaratory judgment that
the ‘330 patent is invalid.
At bottom, RXAS has not shown that it has standing to seek such a judgment when
Knapp has disclaimed any intention of asserting that RXAS’s products infringe on the ‘330
patent. Basically, RXAS is seeking a gratuitous declaration about its competitor’s patent even
though that patent is causing RXAS no actual injury. Courts are not empowered to grant such
relief. Knapp’s motion is granted.
RXAS’s Motion for Leave to Amend its Answer and Counterclaim
RXAS seeks leave to file a second amended answer and counterclaim. ECF No. 82. It
filed the same motion again a day later, differing only in the lawyer who signed the certificate of
service. ECF No. 86. The substance of the motion(s) is RXAS’s contention that, in light of this
Court’s construction of disputed terms in its Claim Construction Order, it is now apparent (to
RXAS) that Knapp has engaged in “inequitable conduct.” ECF No. 82 at 2. The proposed
amendments take the form of a modified Seventh Affirmative Defense concerning patent misuse;
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a new Eighth Affirmative Defense asserting that the ‘330 and ‘776 patents are invalid and
unenforceable due to inequitable conduct; modifications of its first, second, third and fourth
counterclaims; and corresponding modifications of its prayer for relief. ECF No. 82-1 at 6–22,
24.
RXAS represents that counsel have conferred, and that Knapp opposes the motion. ECF
No. 82 at 1. As of the date of this Order Knapp has not responded to the motion, nor has its time
to respond yet expired. It need not respond, because the Court now denies the motion to amend
without prejudice. It does so because the portions of the amended pleading that seek a
declaration of invalidity or unenforceability of the ‘330 patent are futile for the reason expressed
earlier in this order. RXAS may file another motion for leave to amend after counsel again
confer in compliance with Local Rule 7.1A. Counsel should bear in mind that courts freely grant
leave to amend pleadings when justice so requires. Fed. R. Civ. P. 15(a)(1). Permitting
amendment of a pleading is quite different from a finding that a claim or defense does or does
not have merit.
ORDER
1. RXAS’s Motion for Partial Summary Judgment [ECF No. 44] is GRANTED. The
Court dismisses plaintiff’s claim of patent infringement insofar as it relates to RXAS’s product
version C and other versions wherein pills cannot be counted unless the counter door is fully
open.
2. Knapp’s Motion for Rule 56(d) relief [ECF No. 48] is DENIED.
3. Knapp’s Motion to Dismiss RXAS’s Second Counterclaim [ECF No. 49] is
GRANTED.
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4. RXAS’s Motion for Leave to Amend its Answer and Counterclaim [ECF No. 82] is
DENIED. The voluminous exhibits filed in support of this denied motion (and ECF No. 86) may
remain “restricted.” However, without going through all of them, the Court notes that some of
them do not appear, on their face, to merit restricted status, and others cannot be opened and
instead generate an “out of memory” message when an attempt to open them is made. Before
filing another motion to amend and tendered amended pleading, please consider carefully which
documents necessarily must be attached as exhibits, and of those, which contain truly private and
confidential information as to which public access should be denied.
5. RXAS’s duplicative Motion for Leave to Amend its Answer and Counterclaim [ECF
No. 86] is DENIED.
DATED this 16th day of April, 2015.
BY THE COURT:

___________________________________
R. Brooke Jackson
United States District Judge

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