Fleming v. Escort Inc. et al

Filing 336

MEMORANDUM DECISION. This matter has now been fully resolved. The Court will enter a separate Judgment as required by Rule 58(a).. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (krb)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
HOYT A. FLEMING,
Case No. CV 09-105-S-BLW
Plaintiff,
MEMORANDUM DECISION
v.
ESCORT, INC. and BELTRONICS
USA, INC.,
Defendants.

INTRODUCTION
Following a jury trial in this patent infringement case, the jury found that defendants
(collectively referred to as Escort) infringed certain claims of two patents held by plaintiff
Fleming, and awarded damages of $750,000. Some legal claims remained, and the Court
ordered further briefing that has now been received. In that briefing, Escort raises three legal
defenses to Fleming’s claims. For the reasons explained below, the Court rejects all three
defenses. The Court will also grant Fleming’s motion that Escort pay the $750,000 into an
escrow account, and will deny Escort’s motion to redact a portion of the transcript. The case is
now fully resolved, and the Court will issue a separate Judgment as required by Rule 58(a).
Reissued Patents
Both of Fleming’s patents were “reissued” pursuant to 35 U.S.C. § 251. Escort claims
that both patents are invalid because they were improperly reissued under that statute.
Determining whether a reissued patent violates § 251 is a question of law. See Medtronic Inc. v.
Guidant Corp., 465 F.3d 1360, 1373 (Fed. Cir. 2006).
To resolve this issue, the Court will first review the reissue process in this case. In
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2001, Fleming received his original patent, the ‘798 patent. Later, Fleming became aware of
another patent – the Ross patent – and new products on the market, made by Uniden, Cobra, and
Escort. In light of these discoveries, Fleming reviewed his ‘798 patent and realized that some of
its claims were too broad and others too narrow. More specifically, he decided to narrow some
claims because they might be invalid as written in light of the Ross patent, and he decided to
broaden other claims to encompass the new products on the market.
To make these changes, Fleming asked the PTO to reissue his ‘798 patent. He filed two
reissue applications, and the PTO granted both, resulting in the reissued patents ‘038 and ‘653.
Under the reissue statute, a patentee may surrender a patent and seek reissue if
“through error without any deceptive intent” he claimed “more or less than he had a right
to claim in the patent.” See 35 U.S.C. § 251. The statute “is remedial in nature, based on
fundamental principles of equity and fairness, and should be construed liberally.” MBO
Labs, Inc. v. Becton, Dickinson & Co., 602 F.3d 1306 (Fed. Cir. 2010). Notwithstanding its
remedial nature, the reissue statute has limits. “The reissue statute was not enacted as a panacea
for all patent prosecution problems, nor as a grant to the patentee of a second opportunity to
prosecute de novo his original application.” In re Weiler, 790 F.2d 1576, 1582 (Fed.Cir.1986).
For example, reissue claims are invalid when the patentee broadens the scope of a claim in
reissue to cover subject matter that he surrendered during prosecution of the original claims. See
Hester Indus., Inc. v. Stein, Inc., 142 F.3d 1472, 1480 (Fed.Cir.1998). A related limit is that an
“error” under § 251 cannot include the deliberate action of an inventor or attorney during
prosecution. See In re Serenkin, 479 F.3d 1359, 1362 (Fed.Cir. 2007). “The distinction is
between a genuine error, or mistake, and a deliberate, but subsequently found to be

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disadvantageous, choice.” Id.
Based on the trial testimony, the Court finds that Fleming made a genuine error rather
than a deliberate choice that later proved disadvantageous. The Court finds credible Fleming’s
testimony that he did not discover his drafting errors until almost two years after the ‘798 patent
issued. When the inventor has made a genuine mistake, there is nothing improper about seeking
a reissue to ensure that the patent covers a competitor’s products. Kingsdown Medical
Consultants, Ltd. v. Hollister Inc., 863 F.2d 867, 874 (Fed.Cir. 1988). Indeed, one of the most
commonly asserted “errors” in support of a broadening reissue is the failure of the patentee “to
appreciate the full scope of the invention during the prosecution of the original patent
application.” Hester, 142 F.3d at 1479. “This form of error has generally been accepted as
sufficient to satisfy the ‘error’ requirement of §251.” Id. That is the type of error that Fleming
committed here.
Escort argues that Fleming failed to explain how he “only came to appreciate his
inventions at some later time.” See Reply Brief (Dkt. No. 328) at p. 3. But Fleming did explain
this – he testified that in the process of checking for errors in his ‘798 patent, years after it
issued, he discovered for the first time the Ross patent and analyzed for the first time
competitor’s products that had just entered the market. It was these discoveries that led him to
“appreciate” the errors he had made in his ‘798 patent and prompted him to seek reissued
patents.
The Court cannot find merit in any of the arguments raised by Escort on this issue.
Escort has not identified anything in the record which undermines Fleming’s claim that these
were innocent errors, rather than a calculated decision intended to obtain some tactical

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advantage. And, Flemings’ testimony to that effect at trial was credible. Accordingly, the Court
finds that the ‘038 and ‘653 patents satisfy the requirements of 35 U.S.C. § 251.
Intervening Rights
Escort argues that it has established the defense of intervening rights. Under this defense,
Escort argues that it engaged in substantial research and development of its products before the
date of Fleming’s reissued patents, giving it certain intervening rights to engage in what would
otherwise be infringing conduct.
The Court disagrees. Intervening rights cannot arise where a party is found to infringe
original claims in a reissue patent. BIC Leisure Products, Inc. v. Windsurfing Int’l, Inc., 1 F.3d
1214, 1220 (Fed. Cir. 1993) (“The accused infringer may raise the defense of intervening rights
only when none of the infringed claims of the reissue patent were present in the original
patent.”); 35 U.S.C. § 252. It is undisputed that claims 3, 5, 6, and 7 in the ‘038 patent are
identical to claims 3, 5, 6, and 7 in the original ‘798 patent. Moreover, the jury found each of
those claims valid and infringed. See Special Verdict (Dkt. No. 304). Thus, as a matter of law,
Escort is not entitled to intervening rights.
Indefiniteness
Escort claims that the phrase “data received from the button” in the ‘653 patent is too
indefinite to be enforced. Indefiniteness is a purely legal issue. Star Scientific Inc. v. R.J.
Reynolds Tobacco Co., 655 F.3d 1364, 1372 (Fed. Cir. 2011).
A claim is indefinite “if the construction remains insolubly ambiguous, meaning it fails to
provide sufficient clarity about the bounds of the claim to one skilled in the art.” Id. “Absolute
clarity is not required to find a claim term definite.” Id. A claim “may be definite even when

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discerning the meaning is a ‘formidable [task] and the conclusion may be one over which
reasonable persons will disagree.’” Id. (quoting Source Search Tech., LLC v. LendingTree, LLC,
588 F.3d 1063, 1076 (Fed.Cir.2009)). Claims with meanings that are in dispute will be
interpreted in a Markman hearing, while other claims that have a plain and ordinary meaning are
definite in themselves and require no further elaboration or interpretation. See Pagemelding Inc.
v. Feeva Technology, Inc., 2009 WL 2588883 at *10 (N.D. Cal. Aug. 19, 2009).
In the present case, prior to the Markman hearing, Escort offered interpretations of 26
phrases from the two patents. Specifically, Escort claimed that the phrase “data received from
the button” contained in the ‘653 patent was indefinite and that it should be interpreted as
“information received in relation to use or operation of a user interface.” See Escort’s Claim
Construction Brief (Dkt. No. 37) at pp. 16-17. In support of this argument, Escort submitted the
testimony of Dr. Grindon who confirmed that the interpretation offered by Escort was proper.
See Dr. Grindon Report (Dkt. No. 37-7) at p. 23.
Judge Downes then held a Markman hearing and issued a decision interpreting only four
of the phrases, not including the phrase “data received from the button.” With regard to the
other 22 phrases, Judge Downes rejected Escort’s interpretations: “With regard to the other
interpretations sought by [Escort], the Court rejects them as they add unnecessary complexity to
terms that are used in their plain English sense.” See Memorandum Decision (Dkt. No. 56) at p.
3. In other words, Judge Downes rejected the interpretation offered by Escort of the phrase “data
received from the button” because it was a phrase that required no elaboration.
The Court agrees with Judge Downes’ analysis. The phrase is written in plain English
and requires no further interpretation. Pagemelding, 2009 WL at *10 (rejecting further

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interpretation of claim that was in “plain English” with an “ordinary meaning” that “speaks for
itself”). Accordingly, the Court finds no merit in Escort’s argument here.
Fleming’s Motion for Escrow or Injunction
Fleming asks the Court to order Escort to either place $750,000 in an escrow or, if an
escrow is not ordered, to enjoin Escort from selling the infringing products. Escort responded by
agreeing to place the money in escrow. The parties agreed to use the Huntington Bank as escrow
agent but cannot agree to the terms of the escrow. Escort seeks to modify the Bank’s standard
form to allow it (Escort) to withdraw the funds at any time.
Escort’s dispute over the escrow’s terms raises a question whether it has agreed to an
escrow at all. Regardless, the Court finds that Escort must place the $750,000 in escrow. The
testimony at trial revealed Escort’s precarious financial situation, and that fact justifies the
escrow. See Carter-Wallace Inc. v. Davis-Edwards Pharmacal Corp., 443 F.2d 867, 884 (2nd
Cir. 1971).
The Court approves the use of Huntington Bank as escrow agent. The Court further
agrees with Fleming that the escrow release provisions should be limited to the following
circumstances: (1) as jointly directed by Mr. Fleming and defendants (in the event of a
settlement or otherwise), and (2) as ordered by the Court. The Court rejects the modifications
sought by Escort.
The Court will consequently grant Fleming’s motion for an escrow and deny the request
for an injunction.
Escort’s Motion to Redact Transcript
Escort seeks to seal from public view certain portions of the trial transcript where

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Escort’s business and financial information were discussed. The matters were discussed on the
record during the public trial, and no attempt was made by Escort at that time to seal the
proceedings or otherwise protect the information from disclosure.
In determining whether to seal part of the judicial record, the Court “must base its
decision on a compelling reason and articulate the factual basis for its ruling, without relying on
hypothesis or conjecture.” Foltz v. State Farm, 331 F.3d 1122, 1135 (9th Cir. 2003). Escort has
the burden of providing “compelling reasons” for sealing, and there is a “strong presumption in
favor of access. Id. at 1135. This presumption applies even to documents that have been sealed
pursuant to a protective order. Id. “Unlike private materials unearthed during discovery, judicial
records are public documents almost by definition, and the public is entitled to access by
default.” Kamakana v. City of Honolulu, 447 F.3d 1172, 1180 (9th Cir. 2006).
In Apple, Inc. v. Samsung Electronics Co. Ltd., 2012 WL 4936595 (N.D. Cal. Oct. 17,
2012), Apple sought to seal from the public the evidence of its sales, revenues, cost, and profit
margins. The court refused, finding that this information was produced at a public trial. Id. at
*3. Once there has been public disclosure at trial, any interest in confidentiality lessens in light
of the public’s interest of understanding the judicial process. See TriQuint Semiconductor, Inc.
v. Avago Technologies Ltd., 2012 WL 1432519 (D. Ariz. April 25, 2012) (refusing to redact
sensitive business information produced at public trial). Certainly, there are instances where
sensitive information is “blurted out” at trial, or where similar circumstances requiring sealing.
Id. at *4. But that was not the case here – Escort purposely introduced the financial information
as part of its trial strategy.
For all of these reasons, the Court will deny Escort’s motion to redact.

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Conclusion
This matter has now been fully resolved. The Court will enter a separate Judgment as
required by Rule 58(a).

DATED: March 27, 2013

B. LYNN WINMILL
Chief Judge
United States District Court

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