Neonatal Product Group, Inc. v. Shields et al

Filing 180

MEMORANDUM AND ORDER granting 118 Motion for Partial Summary Judgment; granting 140 Motion to Strike ; denying 151 Motion to Strike. Signed by District Judge Daniel D. Crabtree on 08/24/2017. (cv)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
NEONATAL PRODUCT GROUP, INC.,
Plaintiff/Counterclaim
Defendant,
v.
Case No. 13-2601-DDC-KGS
JANICE M. SHIELDS,
PAUL W. SHIELDS, and ANGELE
INNOVATIONS, LLC,
Defendants/Counterclaimants,
v.
CRECHE INNOVATIONS, LLC,
MILLENNIUM MARKETING
GROUP, LTD., and
SCOTT A. NORMAN,
Counterclaim Defendants.
________________________________________
MEMORANDUM AND ORDER
This is a patent infringement dispute. On November 25, 2013, plaintiff Neonatal Product
Group, Inc. (“Neonatal”), doing business as Creche Innovations, LLC (“Creche”) filed this
lawsuit against Janice M. Shields and Paul W. Shields, individually and as trustees of the Shields
Family Trust, and Angele Innovations, LLC (collectively, “the Shields Defendants”). Doc. 1.
Neonatal seeks: (1) a declaratory judgment that Neonatal has not infringed U.S. Patent No.
6,417,498 (“the ’498 Patent”); and (2) a declaratory judgment that the Asserted Claims of the
’498 Patent are invalid. Doc. 49 ¶¶ 36–41; Doc. 143 at 19.
The device disclosed in the ’498 Patent is called the “Neonatal Substrate Warmer.” The
device automatically warms and vibrates baby bottles containing frozen or refrigerated breast

milk so that the milk thaws, warms, and mixes quickly and efficiently. Defendants Janice M.
Shields and Paul W. Shields invented the Neonatal Substrate Warmer and procured the ’498
Patent. Defendant Angele Innovations, LLC currently owns the ’498 Patent.
The Shields Defendants responded to the lawsuit by filing an Answer and Counterclaim
(Doc. 30). It asserted eight counterclaims against four counterclaim defendants: Neonatal,
Creche, Millennium Marketing Group, Ltd., and Scott Norman (collectively, “the Counterclaim
Defendants”). The eight counterclaims asserted against the Counterclaim Defendants include:
(1) patent infringement; (2) inducement of patent infringement; (3) breach of an Exclusive
License Agreement; (4) breach of a Patent Marketing Agreement; (5) tortious interference with
contract; (6) breach of fiduciary duty; (7) intentionally causing or assisting agent to violate duty
of loyalty; and (8) unjust enrichment. Doc. 143 at 20, ¶ 4(c) (Pretrial Order).
Neonatal and the Counterclaim Defendants1 have filed a Motion for Partial Summary
Judgment. Doc. 118. They seek summary judgment in favor of Neonatal’s claim for a
declaratory judgment of non-infringement. They also seek summary judgment against five of the
Shields Defendants’ counterclaims. For the reasons explained below, the court grants Neonatal’s
Motion for Partial Summary Judgment.
I.

Motions to Strike
Before considering the Motion for Partial Summary Judgment, the court addresses the

motions to strike filed by each party.
A. Neonatal’s Motion to Strike
Neonatal has filed a Motion to Strike. Doc. 140. It asks the court to strike certain
paragraphs of the Declaration of Drake L. Koch (Doc. 133-3) submitted by the Shields
Defendants in their Opposition to the Motion for Partial Summary Judgment. It also asks the

1
Going forward, the court refers to the four Counterclaim Defendants collectively as Neonatal.

2

court to strike certain paragraphs from the Shields Defendants’ Opposition to the Motion for
Partial Summary Judgment—paragraphs that are based on the portions of Mr. Koch’s
Declaration that, Neonatal contends, are improper.
Neonatal asserts that the court should strike this material because it contains new
infringement contentions that contradict and depart from the infringement contentions asserted
by the Shields Defendants. Neonatal contends that the Shields Defendants have argued,
improperly, in their Opposition to the Motion for Partial Summary Judgment that the alleged
infringing product contains a “heater block” consisting of both the outer metal shell of the
warmer and the orange foam insulation blanket wrapped around the cups of the warmer. But, in
their infringement contentions, the Shields Defendants asserted that the heater block consists
only of the foam insulation blanket.
On February 18, 2015, the court entered a Scheduling Order (Doc. 40) governing the first
phase of discovery and establishing certain deadlines. One of the deadlines required the parties
to disclose asserted claim and infringement contentions by May 1, 2015. Doc. 40 at 2.
Consistent with the Scheduling Order, the Shields Defendants served their Disclosures of
Asserted Claims and Infringement Contentions on May 1, 2015. Doc. 119-5 at 9–10. It
identified the “heater block” in a claim chart in two different sections. See Doc. 119-5 at 2–3 (§§
1.a., 10.a.). Section 1.a. recites: “The Penguin Single includes a heater block comprising at least
one void therein. Ex. A, 7–9, Claim 1.a.” Id. at 2 (§1.a.). Section 10.a. states: “The Penguin
Single includes a heater block comprising at least one well therein; Ex. A, 7–9, Claim 10.a.” Id.
at 3 (§ 10.a.). The illustrations referenced in the claims identify only the foam insulation blanket.
Id. at 14–15 (illustrations 7–9).

3

The Scheduling Order also provides that “[e]ach party’s ‘Infringement Contentions’ and
‘Invalidity Contentions’ shall be deemed to be that party’s final contentions.” Doc. 40 at 11.
The Scheduling Order permitted the parties to amend their infringement contentions in two ways.
Id. at 11–12. First, the Scheduling Order allows amendment without leave of court within 30
days after the court issues its Claim Construction Order. Id. at 11. Second, the Scheduling
Order allows the Shields Defendants to move for leave to amend or supplement their
infringement contentions outside the 30-day window on a showing of good cause. Id. at 12. The
Shields Defendants never amended their infringement contentions within the 30 days following
the court issuing its Claim Construction Order. Also, the Shields Defendants never moved the
court for leave to amend their infringement contentions.
Neonatal argues that the court should strike certain portions of Mr. Koch’s Declaration
and the Shields Defendants’ Opposition because they contradict the asserted infringement
contentions. For support, Neonatal relies on a Federal Circuit case that affirmed summary
judgment against a patent infringement claim. O2 Micro Int’l Ltd. v. Monolithic Power Sys.,
Inc., 467 F.3d 1355, 1367–70 (Fed. Cir. 2006). The case originated in the Northern District of
California. Id. at 1358. That court’s local rules for patent cases imposed requirements for
serving and amending infringement contentions, similar to the requirements imposed by the
Scheduling Order in this case. Id. at 1262–63. The plaintiff filed its infringement contentions as
the local rules required. Id. at 1360. Later, the plaintiff moved for leave to amend its
infringement contentions, but did so more than six months after the district court had issued its
claim construction ruling and more than three months after an expert’s deposition that revealed
the new facts supporting the amendment. Id. at 1361. The district court denied the motion for
leave to amend because plaintiff had delayed filing the motion and this delay, the court

4

concluded, amounted to a lack of diligence. Id. at 1361–62. The plaintiff also moved for leave
to supplement its expert reports to include the amended contentions. Id. at 1362. The district
court denied that motion as well. Id.
The Federal Circuit affirmed both rulings. Id. at 1366–69. It described the local patent
rules as “essentially a series of case management orders.” Id. at 1363. And, it recognized that
the rules were “designed specifically to ‘require parties to crystallize their theories of the case
early in the litigation’ so as to ‘prevent the “shifting sands” approach to claim construction.’” Id.
at 1364 (quoting Atmel Corp. v. Info. Storage Devices, Inc., No. C 95-1987 FMS, 1998 WL
775115, at *2 (N.D. Cal. 1998)). The Circuit also concluded that “[i]f the parties were not
required to amend their contentions promptly after discovering new information, the contentions
requirement would be virtually meaningless as a mechanism for shaping the conduct of
discovery and trial preparation.” Id. at 1366. The Circuit thus held that the local patent rules
were valid and consistent with the Federal Rules. Id. at 1366.
The Federal Circuit also concluded that the district court had not abused its discretion by
denying the plaintiff’s motions for leave to amend and to supplement its expert report because
plaintiff had delayed and otherwise acted with a lack of diligence. Id. at 1367–69. The Circuit
recognized that “the exclusion of evidence is often an appropriate sanction for the failure to
comply with [disclosure] deadlines.” Id. at 1369 (citations omitted). And, the Circuit found “no
abuse of discretion in this case, given the significance of the omitted material and [the plaintiff’s]
lack of diligence.” Id.
Neonatal urges the court to follow the Federal Circuit’s reasoning in O2 Micro.2 Similar
to the plaintiff in that case, the Shields Defendants here failed to assert a newly discovered

2
The Shields Defendants assert that O2 Micro is not binding on this court because it involves the
Federal Circuit’s interpretation of the local rules from the Northern District of California. Doc. 147 at 5

5

infringement contention in their required disclosures. But, unlike the O2 Micro plaintiff, the
Shields Defendants never have sought leave to amend their infringement contentions to include
their new infringement theory. Instead, they simply have asserted the new contentions in their
Opposition to Neonatal’s Motion for Partial Summary Judgment. This violates the court’s
Scheduling Order.
In their Opposition, the Shields Defendants argue that Neonatal has been well aware of
this theory because they asserted it over a year ago in their claim construction brief. The Shields
Defendants contend that their proposed construction of “heater block” as a “housing assembly”
placed Neonatal on notice that they were contending that the alleged infringing product contains
a “heater block” consisting of both the outer metal shell of the warmer and the orange foam
insulation blanket. Even if the court could find that this proposed claim construction—one that
the court ultimately rejected in its claim construction ruling—had placed Neonatal on notice of
the Shields Defendants’ summary judgment argument, the Shields Defendants still failed to
disclose it as one of their infringement contentions. And, the Shields Defendants cannot
circumvent their obligation to identify their infringement contentions by relying on a failed
proposed claim construction. Indeed, as Neonatal explains, the claim construction process and
the infringement analysis are two separate, distinct parts of a patent case. The claim construction

n.4. The court disagrees. “[A] procedural issue that is not itself a substantive patent law issue is
nonetheless governed by Federal Circuit law if the issue pertains to patent law, if it bears an essential
relationship to matters committed to our exclusive control by statute, or if it clearly implicates the
jurisprudential responsibilities of this court in a field within its exclusive jurisdiction.” O2 Micro Int’l
Ltd., 467 F.3d at 1364; see also Sprint Commc’ns Co. L.P. v. Comcast Cable Commc’ns, LLC , Nos. 112684-JWL, 11-2685-JWL, 11-2686-JWL, 2015 WL 11121849, at *1 n.5 (D. Kan. May 12, 2015) (“The
law of the Federal Circuit, rather than the Tenth Circuit, governs this particular discovery dispute which is
unique to patent law.”). Here, the dispute involves a procedure pertaining only to patent law—the timely
disclosure of infringement contentions. Thus, Federal Circuit law governs the dispute. And, although O2
Micro involved another district court’s local rules, those local rules contained requirements for disclosing
and amending infringement contentions that are virtually identical to the ones contained in the court’s
Scheduling Order in this case.

6

process is a question of law that requires the court to “constru[e] the patent” while the
infringement analysis is a question of fact requiring a “determin[ation] whether infringement
occurred.” Markman v. Westview Instr., Inc., 517 U.S. 370, 384 (1996) (citations omitted).
The Shields Defendants never dispute that their infringement contentions never disclosed
this theory. To the contrary, their infringement contentions only identify the “heater block” as
the foam insulation blanket. See Doc. 119-5 at 2–3, 14–15 (illustrations 7–9). Thus, the Shields
Defendants’ attempt to assert a new infringement contention violates the court’s Scheduling
Order establishing deadlines for disclosing and amending infringement contentions.
The Federal Rules of Civil Procedure authorize the court to impose any just sanction for a
party’s “fail[ure] to obey a scheduling or other pretrial order.” Fed. R. Civ. P. 16(f)(1)(C). Such
sanctions may include “prohibiting the disobedient party from supporting or opposing designated
claims or defenses, or from introducing designated matters in evidence.” Fed. R. Civ. P.
37(b)(2)(A)(ii). Here, the Shields Defendants have attempted to introduce a new infringement
theory in response to Neonatal’s Motion for Partial Summary Judgment—one that they never
asserted in their infringement contentions, as the Scheduling Order required them to do. The
court thus grants Neonatal’s Motion to Strike (Doc. 140), and strikes the portions of Mr. Koch’s
Declaration and the Shields Defendants’ Opposition to the Motion for Partial Summary
Judgment improperly changing their infringement contention that the “heater block” consists
only of the foam insulation blanket.
B. The Shields Defendants’ Motion to Strike
The Shields Defendants also have filed a Motion to Strike. Doc. 151. It seeks to strike
certain undisputed facts and arguments asserted in Neonatal’s Memorandum in Support of the
Motion for Partial Summary Judgment. Doc. 119. Neonatal filed the Memorandum on October

7

4, 2016. The Shields Defendants filed their Opposition on November 23, 2016. Doc. 133. In
some instances, the Opposition already raised the arguments that the Shields Defendants now
assert in their Motion to Strike. In other instances, the Opposition never raised these arguments.
Instead, the Shields Defendants waited to assert the omitted arguments until filing the Motion to
Strike on January 27, 2017 (Doc. 51)—more than one month after the briefing closed on the
Motion for Partial Summary Judgment.
Neonatal argues that the Shields Defendants asserted these arguments in an untimely
fashion and, in effect, filed an unauthorized surreply to the summary judgment motion. The
court agrees. The Shields Defendants already asserted some of these arguments and easily could
have asserted the others in their Opposition to the Motion for Partial Summary Judgment. But,
they waited until after the briefing closed to present them—some for a second time—in the
Motion to Strike.
Nevertheless, even if the court considered all the arguments advanced by the Shields
Defendants’ Motion to Strike, the arguments are meritless. The Shields Defendants ask the court
to strike portions of Neonatal’s Memorandum because, they contend, certain facts and argument
are irrelevant, misleading, and improper. But, the court only considers material facts on
summary judgment. See Fed. R. Civ. P. 56 (“The court shall grant summary judgment if the
movant shows that there is no genuine dispute as to any material fact and the movant is entitled
to judgment as a matter of law” (emphasis added)). And, in the Uncontroverted Facts recited
below, the court has included only those facts that it concludes are material.
The Shields Defendants also ask the court to strike portions of Neonatal’s Memorandum
that raise accord and satisfaction as an affirmative defense. The Shields Defendants assert that
Neonatal never preserved this affirmative defense in any of their Answers, and thus Neonatal

8

improperly raised the defense on summary judgment. The Shields Defendants already asserted
this argument in their Opposition to the Motion for Partial Summary Judgment. Doc. 133 at 27–
29. The court considers this argument and the Shields Defendants’ response to it in the summary
judgment analysis below. The court finds there was no reason to multiply the parties’ litigation
efforts or to inflate the number of motions the court must decide. The Shields Defendants did
not need to file a motion to strike the material from the Memorandum. For these reasons, the
court denies the Shields Defendants’ Motion to Strike (Doc. 151).
II.

Motions for Summary Judgment
The court now turns to consider Neonatal’s Motion for Partial Summary Judgment. Doc.

118.
A. Uncontroverted Facts
The following facts are either stipulated facts taken from the Pretrial Order (Doc. 144),
uncontroverted, or, where controverted, stated in the light most favorable to the Shields
Defendants, the parties opposing summary judgment. Scott v. Harris, 550 U.S. 372, 378 (2007).
The ’498 Patent, entitled “Neonatal Substrate Warmer,” was filed on April 12, 2001, and
issued on July 9, 2002. Janice M. Shields and Paul W. Shields are listed as inventors of the ’498
Patent. On August 19, 2010, Mr. and Ms. Shields transferred ownership of the ’498 Patent to the
Shields Family Trust Dated August 19, 2010 (“the Trust”).
On June 1, 2006, Mr. and Mrs. Shields entered into an Exclusive License Agreement with
Neonatal. Under the Exclusive License Agreement, the Shields Defendants granted Neonatal an
exclusive license in the ’498 Patent in exchange for ongoing royalty payments and other
consideration. In early 2013, Neonatal stopped making timely royalty payments under the

9

Exclusive License Agreement. So, on May 23, 2013, Mr. and Mrs. Shields terminated the
Exclusive License Agreement.
When the parties signed the Exclusive License Agreement, Neonatal believed that two of
its products—PENGUIN® milk-warming machines and THERMA-LINER™ bags—used the
’498 Patent. But, in mid-2013, Neonatal concluded that the ’498 Patent did not actually cover its
PENGUIN® machines and THERMA-LINER™ bags.
On September 27, 2013, Neonatal and Mr. and Mrs. Shields entered into a Letter of
Intent. With this Letter of Intent, they resolved their dispute about contested royalties under the
terminated Exclusive License Agreement. They also agreed in the Letter of Intent to negotiate in
good faith to try to agree to a new license agreement that would include Mr. and Mrs. Shields’
pending patent applications. Section 3.a. of this Letter of Intent required Neonatal to make a
wire-transfer payment to Mr. and Mrs. Shields on the day when the Letter of Intent was signed as
full payment for the 2013 1st Quarter royalties due under the terminated Exclusive License
Agreement. Neonatal made and Mr. and Mrs. Shields accepted the wire-transfer payment, as
required by section 3.a. of the Letter of Intent. Section 3.b. of the Letter of Intent required
Neonatal to make a second wire-transfer payment to Mr. and Mrs. Shields within 30 days of the
Letter of Intent’s execution (provided Mr. and Mrs. Shields disclosed certain intellectual
property specified in the Letter of Intent) as full payment for the portion of the 2013 2nd Quarter
royalties due under the terminated Exclusive License Agreement for product sales made before
the termination date of May 23, 2013. Neonatal made and Mr. and Mrs. Shields accepted the
wire-transfer payment, as required by section 3.b. of the Letter of Intent. Section 3.c. of the
Letter of Intent provides: “The parties acknowledge that no other royalty payments are due
under the terminated Exclusive License Agreement for product sales made prior to the May 23,

10

2013 termination.” Doc. 120-2 at 2. Section 5.d. of the Exclusive License Agreement provides:
“If the New License Agreement is not executed, [Neonatal] is not obligated to pay any royalties
pursuant to the Exclusive License Agreement for any product sales that occurred after May 23,
2013, but neither party will have waived any rights it had with respect to any obligations that
survived the termination of the Exclusive License Agreement, including Licensors’ right to sue
Licensees for patent infringement.” Id. Neonatal and Mr. and Mrs. Shields were unable to agree
on the terms of a new License Agreement.
The Asserted Claims of the ’498 Patent
Independent claim 1 of the ’498 Patent reads:3
A heating device comprising:
a heater block comprising at least one void therein;
at least one removable reservoir disposed within said at least one void of said
heater block; and
means for heating said at least one removable reservoir, said means for heating
being disposed between said at least one removable reservoir and said heater
block within each said at least one void.
Doc. 1-1 at 8 (col. 6 ll. 46–53). Claims 2–7 and claim 9 “depend from” claim 1, and each of
those claims incorporates all limitations of claim 1. Independent claim 10 of the ’498 Patent
reads:
A liquid container heating device for a liquid to a desired temperature, said liquid
container heating device using heat exchange of a heating fluid with a container,
said liquid container heating device comprising:
a heater block comprising at least one well therein;
at least one removable reservoir for receiving said heating fluid, said at least one
removable reservoir being disposed within said at least well of said heater
block; and

3
The court has bolded the terms that are relevant to this Motion for Partial Summary Judgment.

11

at least one heating element for heating said heating fluid, said at least one heating
element being disposed between said at least one removable reservoir and said at
least one well of said heater block;
wherein said container is placed in said heating fluid, said at least one removable
reservoir, said at least one heating element heats said at least one removable
reservoir and said heating fluid, and said heating fluid in turn heats said
container, whereby said liquid within said container rendered suitably heated for
use.
Doc. 1-1 at 9 (col. 7 ll. 13–30). Claims 11, 13, 14, 16, and 17 “depend from” claim 10, and each
of those claims incorporates all limitations of claim 10.
The Court’s Claim Construction
On May 3, 2016, the court issued a Memorandum and Order construing the claim terms.
Doc. 101. The court construed “heater block” as “a solid piece of material, having at least one
flat side.” Id. at 11. The court construed “removable reservoir” as “a liquid-holding receptacle
designed to be removed.” Id. at 19. The court construed “void” as “an empty space formed in
the heater block.” Id. at 14. The court construed “well” as “a shaft formed in the heater block.”
Id. at 15.
The Shields Defendants’ Infringement Contentions
The Shields Defendants served their Disclosures of Asserted Claims and Infringement
Contentions (“Disclosures”) on May 1, 2015. Doc. 119-5. These Disclosures contend that the
limitations “removable reservoir,” “heater block,” “void,” and “well” are literally present in the
Accused Products. Id. at 7 (§ 4.a.). The Disclosures do not contend that the limitations
“removable reservoir,” “heater block,” “void,” and “well” are present in the Accused Products
under the doctrine of equivalents. Id. (§ 4.b.). The Shields Defendants never have amended
their Disclosures as a matter of right and never have moved for leave to amend their Disclosures.

12

The Ac
ccused Produ
ucts
In 2006, Millennium Mar
n
rketing Grou asked Dra Koch to design a mil warmer based
up
ake
lk
on the ’498 Patent. Mr. Koch is the designer responsible for the com
M
r
e
mmercial des
sign and
manufact
ture of what became kno as the si
own
ingle-bottle PENGUIN® warmer an the four-b
®
nd
bottle
PENGUI
IN® warmer Mr. Koch also designed the origin liner bag for the warm which l
r.
h
nal
g
mer,
later
became known as the THERMA-LINER® bag.
k
e
Both types of PENGUIN® warmers have an oute metal shel with seven flat sides. The
B
f
®
h
er
ll
n
metal she is made from stainles steel. The metal shell is rigid, and it supports the other
ell
fr
ss
e
d
compone of the PE
ents
ENGUIN® warmer.
w
Neonatal’s sin
N
ngle-bottle PENGUIN® warmer inc
P
®
cludes a sing cup locat on the top of
gle
ted
p
the unit that is design to receiv THERMA
t
ned
ve
A-LINER® b
bags when th warmer is in use. A
he
s
photogra portrays a single-bott PENGUI
aph
tle
IN® warmer as follows:
r

13

Doc. 119 at 2, ¶¶ 5–6. Neonata four-bot PENGUI
9-2
5
al’s
ttle
IN® warmer includes fo cups loca
our
ated
on the top of the unit that are des
p
t
signed to rec
ceive THERM
MA-LINER® bags when the warme is
®
n
er
in use. A photograph portrays a four-bottle PENGUIN® warmer as follows:
h
P
®

Id. at 3, ¶¶ 7–8. The Shields Def
¶
fendants con
ntend that the cups of the single-bottle and foure
e
bottle PE
ENGUIN® warmers constitute the “r
w
removable re
eservoir” in the Asserted Claims. D
d
Doc.
119-5 at 2–3 (§§ 1.b. 10.b.), id. at 11–13, 16 (illustration 1–5, 11).
.,
a
6
ns
Neonatal’s sin
N
ngle-bottle and four-bott PENGUI
a
tle
IN® warmer include in
rs
nsulation
blankets inside the un that are wrapped aro
nits
ound the cup of the war
ps
rmers. This
n
liable materi that is wr
ial
rapped aroun the exterio of
nd
or
insulation blanket is a spongy, pl
each cup in a PENGU
UIN® single
e-bottle or fo
our-bottle ma
achine. The Shields Defendants’
e
ment
tions identify each insula
y
ation blanket surroundin the cups a the
t
ng
as
infringem content
“heater block.” See Doc. 119-5 at 2–3 (§§ 1. 10.a.), id at 14–15 (i
b
D
a
.a.,
d.
illustrations 7–9).
The case of each single-b
T
bottle and fou
ur-bottle PEN
NGUIN® w
warmer is hol
llow and
contains some empty space. The hollow inte
y
e
erior of a sin
ngle-bottle PE
ENGUIN® warmer case
e
with the top cover rem
t
moved is de
epicted in the picture belo Mr. Ko designed the warmer to
e
ow.
och
d
rs
include th empty sp
his
pace.

14

Doc. 119 at 6, ¶ 16 As shown above, the interior spac of the cas contains th warmer’s
9-2
6.
n
ce
se
he
s
compone
ents, but it is otherwise unfilled. Neo
u
onatal’s Vic e President M
Mark A. Pet
theram opine
es
that: “If one were to knock on th exterior of the case, o ne could eas determin that it is
he
sily
ne
n
lock.” Id. at 5, ¶ 15.
t
hollow, not a solid bl
The PENGUI
T
IN® warmer user man never instructs a use to remove a cup from a
rs’
nual
er
warmer. Neonatal do not prov and neve has provid any instr
oes
vide
er
ded
ructions to u
users explain
ning
emove a cup from a warm
p
mer. Indeed the user m
d,
manual explai “There a no
ins:
are
how to re
serviceab parts or calibration th can be pe
ble
c
hat
erformed by the user” on the warmer Doc. 119
n
rs.
9-3
at 11. Th user manu also inclu
he
ual
udes the foll
lowing warn
nings:
WARNING - The eq
W
quipment utilizes con
u
ntrolled ove
ervoltage E
Equipment
te
echniques th require th equipmen to be grou
hat
he
nt
unded when
never normal mode or
l
co
ommon mod AC volta
de
ages or trans
sient voltage may occu The enc
es
ur.
closure is
gr
rounded thro
ough the gro
ounding cond
ductor of the power cord
e
d.
...
WARNING - To avoid personal inj
W
jury or death do not re
h,
emove the e
equipment
co
over.

15

Do not opera the equip
D
ate
pment witho the cove
out
er(s) properl installed. Normal
ly
Calibration is accomplished with the cover c
C
i
closed, and there are no userd
se
erviceable parts inside th equipmen so there is no need fo the operat to ever
he
nt,
or
tor
re
emove the co
over(s).
...
WARNING - Do not use the equipm in a man
W
e
ment
nner not spec
cified!
Id. at 12–
–13.
Neonatal does not recomm
N
mend that a user ignore these warnin
ngs. But, Dr
rake Koch
asserts, he designed the warmer so that the cu is remove easily wit commonly available h
h
t
s
up
ed
th
y
hand
tools. If a user choos to ignore Neonatal’s warnings an remove th cover of t case of a
ses
e
nd
he
the
ottle PENGU
UIN® warme the user must remove six screws with an Alle wrench. O
er,
m
e
en
single-bo
Once
the user has removed those six sc
h
d
crews, the us must lift the top cove off the wa
ser
er
armer, expos
sing
the various components of the wa
armer attach to the ex
hed
xterior surfac of the cup
ce
p.

The above-picture shows what a user would see a
T
r
after opening the warme Doc. 119-2 at
g
er.
10–11, ¶ 28. An oran foam ins
nge
sulation blan covers t exterior o the cup. M Koch as
nket
the
of
Mr.
sserts
that he fo
ollowed the teachings of the ’498 Pa
t
f
atent when he designed th warmers and used a
e
he
synthetic cork insulat material formed from a piece of silicone she Mr. Ko also desig
c
tive
l
f
eet.
och
gned
the warm with an insulative material that is molded to a desired sh
mers
m
i
o
hape by wra
apping the

16

insulative material ar
e
round the cu and joinin the ends to
up
ng
ogether with tape. The t
h
tape serves t
to
secure th ends of the insulation blanket and to fit the ins
he
e
sulation blan snugly a
nket
around the c
cup.
Mr. Koch exp
M
plains that on can remove the cup fr
ne
from the war
rmer by remo
oving four n
nuts
that conn the cup to the metal shell and un
nect
t
nplugging th wire connectors from the circuit b
he
board.
The follo
owing picture shows the cup, remove by using M Koch’s method:
ed
Mr.

Doc. 133 at 7, ¶ 23 The pictur below sho the top o the warme with the c removed
3-3
3.
re
ows
of
er
cup
d.
Mr. Koch designed th cup to fit into the circ
h
he
cular hole located on the top of the w
e
warmer, as
shown in this picture
n
e:

17

Doc. 133 at 12, ¶ 42.
3-3
4
Following Mr Koch’s rem
r.
moval metho the orang foam insu
od,
ge
ulation blank still rema
ket
ains
utside of the cup. Other components (that are de
s
escribed belo and show in the abo
ow
wn
ove
on the ou
picture) remain as we Mr. Koc asserts tha a user can remove the cup from th warmer
r
ell.
ch
at
n
e
he
without removing the other comp
r
e
ponents.
But, to remov the other components attached to the cup, one would start by removin
B
ve
c
e
t
ng
the orang foam insu
ge
ulation blank The user can remove the insulat
ket.
r
e
tion blanket from the ext
terior
surface of the cup by cutting the black zip-tie holding it i place4 and removing t tape that
o
y
e
in
d
the
t
secures it ends toget
ts
ther. Once removed, the insulation b
r
e
blanket is an uninterrupt piece of
n
ted
pliable material of co
m
onsistent wid
dth. See Doc 119-2 at 5 ¶¶ 13–14. After remov
c.
5,
ving the
insulation blanket, th user will see the heate blanket an thermistor Adhesive secures the
n
he
s
er
nd
r.
heater bla
anket to the exterior surf
face of the cup. And tw pieces of h
c
wo
heat-safe Ka
apton® polym
mide
film tape secure the thermistor to the exterior surface of t cup. The photograph below sho
e
t
o
r
the
h
ows
the orang heater bla
ge
anket, which is wrapped around, and adhesively secured to, t exterior
d
the
surface of the cup:
o

Doc. 119 at 13, ¶ 33.
9-2
3

4
This black zip- is visible in the picture above on pa 16.
T
-tie
e
age

18

Drake Koch designed the warmer with the thermistor so that one can set the warmer to a
desired stabilized temperature. The thermistor is connected to a circuit board attached to outer
shell of the warmer (shown in the upper left in the above picture). To remove the thermistor
from the exterior surface of the cup, the user must remove the Kapton® tape securing the
thermistor. If a user removes the thermistor from the exterior of the cup, Neonatal recommends
not reusing it, but instead replacing it because Neonatal has found the accuracy and reliability of
the thermistor to decrease if it is removed. Also, the Kapton® polymide film tape that secures
the thermistor to the cup is one-time use tape. A user would have to replace the tape if he or she
reassembled the unit.
To remove the heater blanket from the exterior surface of the cup, the user must either
dissolve the adhesive securing the heater blanket to the cup, or rip off the heater blanket from the
exterior surface of the cup. The latter option risks tearing the heater blanket. If the user removes
the heater blanket, he or she would have to supply new adhesive to reattach it. Also, Neonatal
recommends recalibration of the PENGUIN® warmer following reassembly. The heater blanket
and thermistor cooperatively control the temperature of the warming unit (via programming
logic). Recalibration of these components is necessary to ensure that the PENGUIN® warmer
warms neonatal substrate to the proper temperature so that it will not burn or scald a NICU
patient consuming the milk warmed by the unit. A user cannot perform this recalibration.
Neonatal never would recommend using a PENGUIN® warmer after a user has removed and
then reapplied the heater blanket or thermistor without first recalibrating the unit by Neonatal
qualified personnel. Otherwise, severe risk of injury to a baby or user exists.
To continue removing the components attached to the cup, a user next must remove a
weld securing an electrical grounding bracket to the exterior surface of the cup. The grounding

19

bracket is the metal bracket posit
b
tioned above the orange heater blank in the ph
e
ket
hotograph below.
Its center is where it is welded to the exterior surface of t cup.
r
o
r
the

Doc. 119 at 14–15, ¶ 39.
9-2
,
A grounding bracket is welded to the exterior sur
w
rface of each cup and ele
h
ectrically
connected to the cove and base of the PENG
er
o
GUIN® warm to provi a commo electrical
mer
ide
on
ground fo the unit. The purpose of groundin the cover and cup to t base of t PENGUI
or
e
ng
r
the
the
IN®
warmer is to prevent shock or ele
i
ectrocution when using a PENGUIN warmer i the electric
w
N®
if
cal
insulation on the unit fails for som reason. This is one r
n
t
me
reason why t user man warns u
the
nual
users
not to open the unit.
If a user remo
f
oved the wel securing and electrica connecti the groun
ld
a
ally
ing
nding bracke to
et
the exteri surface of the cup, he or she wou have to r
ior
o
e
uld
re-weld the b
bracket to the cup before
e
e
reusing th warmer. If the weld does not pro
he
ovide sufficie electrica conduction electrocuti
ent
al
n,
ion
or shock may result. For this rea
ason, Neonat never wo uld approve or certify use of a
tal
e
PENGUI
IN® warmer where a use has re-welded the gro
r
er
ound bracket to the cup b
t
because an u
unsafe
condition may exist that could pr
n
t
roduce electr
rocution and death.
d

20

A one-time-u zip-tie secures a dam
use
mper to the ex
xterior surfac of the cup The black zipce
p.
k
tie securi the damp to the ext
ing
per
terior surfac of the cup is shown in the photo b
ce
n
below:

Doc. 119 at 16, ¶ 42. The zip-t secures th damper to the exterio surface of the cup so t
9-2
4
tie
he
o
or
f
that
the damp can reduc relative movement of the cup in r
per
ce
m
f
relation to th cover whe the vibrati
he
en
ion
function of the warm is activate If a user removed th damper zi
mer
ed.
r
he
ip-tie, the us would ha to
ser
ave
he
o
or
f
supply a new zip-tie to reattach th damper to the exterio surface of the cup.
To continue removing the component attached to the cup, a user next wo
T
r
e
ts
o
ould have to
o
remove the vibrating mechanism attached to the bottom o the cup. T followin picture sh
g
m
of
The
ng
hows
the vibrating mechan
nism attached to the botto of the cu
d
om
up:

Doc. 119 at 17, ¶ 46.
9-2
4
Drake Koch designed the vibrating mechanism to be secured to the botto of the cup by
D
d
e
m
o
d
om
p
a polyme adhesive, allowing rem
er
moval and re
eplacement o the vibrati mechani without
of
ing
ism
damaging the vibratin mechanis cup, or polymer adh
g
ng
sm,
p
hesive. So, to remove the vibrating
o
e

21

mechanism, the user must tear off the bottom of the cup and remove the adhesive that secures it
in place.
If a user successfully removed all of these components from a PENGUIN® warmer, the
warmer no longer would work for its intended purpose. The user would have to reassemble the
unit to make the warmer operable. If a user successfully removed these components from a
PENGUIN® warmer and then reassembled the PENGUIN® warmer, Neonatal would not
recommend or certify that PENGUIN® warmer for use for at least three reasons:
(1) the unit’s temperature controls would need to be recalibrated by qualified
Neonatal personnel to ensure the unit’s warming function, which is provided
by the heater blanket and monitored and controlled by the thermistor, operated
properly such that the machine would suitably warm the milk without being so
hot such that it could scald or burn a user or a baby and break down the
warmed milk’s nutrients;
(2) the unit’s vibration controls would need to be recalibrated by qualified
Neonatal personnel to ensure the unit’s warming vibration operated properly
so the milk warmed in the machine would not contain hot spots that could
scald or burn a user or a baby and break down the warmed milk’s nutrients;
and
(3) proper grounding of the warmer’s components, including the cover, cup, and
base, would need to be verified to ensure a user could not be shocked or
electrocuted when using a PENGUIN® warmer if the electrical insulation on
the unit fails for some reason.
Doc. 119-2 at 17–18, ¶ 48.
Neonatal recommends that, if a user successfully removed these components from a
PENGUIN® warmer and then reassembled the PENGUIN® warmer with other component parts,
Neonatal personnel (or other trained biomedical technicians with the appropriate testing
equipment) would need to service the unit to perform the required calibrations and verifications
before a user operated the unit again. Also, if a user replaced any part of a PENGUIN® warmer,

22

Neonatal would require that the unit undergo quality and safety testing before placing the unit
back in service, allowing the unit could maintain its safety certification.
Mr. Norman’s Relationship to Neonatal
Counterclaim Defendant Scott A. Norman is the CEO of Neonatal. Mr. Norman has
engaged actively in Neonatal’s management. Mr. Norman knew the terms of the Exclusive
License Agreement.
The Parties’ Agreement About Infringement
The parties agree that, for purposes of an infringement analysis, the relevant structures
and components of a single-bottle Original PENGUIN® Warmer are identical to the
corresponding structures and components of a four-bottle Original PENGUIN® Warmer. The
parties thus agree that if a single-bottle Original PENGUIN® Warmer is found to infringe the
’498 Patent, a four-bottle Original PENGUIN® Warmer also infringes the ’498 Patent, and vice
versa. Also, the parties agree that if a single-bottle Original PENGUIN® Warmer is found not to
infringe the ’498 Patent, a four-bottle Original PENGUIN® Warmer also does not infringe the
’498 Patent, and vice versa.
The parties agree that, for purposes of the infringement analysis, the relevant structures
and components of a Deluxe PENGUIN® Warmer are identical to the corresponding structures
and components of an Original PENGUIN® Warmer. The parties thus agree that if the Original
PENGUIN® Warmers are found to infringe the ’498 Patent, the Deluxe PENGUIN® Warmers
also infringe the ’498 Patent, and vice versa. Also, the parties agree that if the Original
PENGUIN® Warmers are found not to infringe the ’498 Patent, the Deluxe PENGUIN®
Warmers also do not infringe the ’498 Patent, and vice versa.

23

B. Summary Judgment Standard
Summary judgment is appropriate if the moving party demonstrates that “no genuine
dispute” exists about “any material fact” and that it is “entitled to a judgment as a matter of law.”
Fed. R. Civ. P. 56(c). When it applies this standard, the court views the evidence and draws
inferences in the light most favorable to the non-moving party. Nahno-Lopez v. Houser, 625
F.3d 1279, 1283 (10th Cir. 2010). “An issue of fact is ‘genuine’ ‘if the evidence is such that a
reasonable jury could return a verdict for the non-moving party’ on the issue.” Id. (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). “An issue of fact is ‘material’ ‘if
under the substantive law it is essential to the proper disposition of the claim’ or defense.” Id.
(quoting Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998)).
The moving party bears “both the initial burden of production on a motion for summary
judgment and the burden of establishing that summary judgment is appropriate as a matter of
law.” Kannady v. City of Kiowa, 590 F.3d 1161, 1169 (10th Cir. 2010) (citing Trainor v. Apollo
Metal Specialties, Inc., 318 F.3d 976, 979 (10th Cir. 2002)). To meet this burden, the moving
party “need not negate the non-movant’s claim, but need only point to an absence of evidence to
support the non-movant’s claim.” Id. (citing Sigmon v. CommunityCare HMO, Inc., 234 F.3d
1121, 1125 (10th Cir. 2000)).
If the moving party satisfies its initial burden, the non-moving party “may not rest on its
pleadings, but must bring forward specific facts showing a genuine issue for trial [on] those
dispositive matters for which it carries the burden of proof.” Id. (quoting Jenkins v. Wood, 81
F.3d 988, 990 (10th Cir. 1996)); accord Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986);
Anderson, 477 U.S. at 248–49. “To accomplish this, the facts must be identified by reference to

24

affidavits, deposition transcripts, or specific exhibits incorporated therein.” Adler, 144 F.3d at
670 (citing Thomas v. Wichita Coca-Cola Bottling Co., 968 F.2d 1022, 1024 (10th Cir. 1992)).
In an action for patent infringement, the party asserting infringement bears “the burden of
proving infringement by a preponderance of the evidence.” Kegel Co., Inc. v. AMF Bowling,
Inc., 127 F.3d 1420, 1425 (Fed. Cir. 1997). Thus, to survive Neonatal’s summary judgment
motion, the Shields Defendants must show that “the evidence is such that a reasonable jury could
return a verdict for [them].” Anderson, 477 U.S. at 248.
Summary judgment is not a “disfavored procedural shortcut.” Celotex, 477 U.S. at 327.
Instead, it is an important procedure “designed ‘to secure the just, speedy and inexpensive
determination of every action.’” Id. (quoting Fed. R. Civ. P. 1).
C. Analysis
Neonatal seeks summary judgment on its claim for a declaratory judgment of noninfringement. Neonatal also moves for summary judgment against five of the Shields
Defendants’ counterclaims: (1) patent infringement (Count I); (2) inducement of patent
infringement (Count II); (3) breach of an Exclusive License Agreement (Count III); (4) tortious
interference with contract (Count V); and (5) unjust enrichment (Count VIII). The court
addresses each claim, in turn, below.
1. Has Neonatal Infringed the ’498 Patent?
Neonatal asserts that it has not infringed the ’498 Patent because the Accused Products
(the PENGUIN® milk-warming machines) lack all of the Asserted Claims’ required limitations
of a “heater block,” a “removable reservoir,” and either a “void” or a “well.” The court
determines whether an accused product infringes the claims of a patent using a two-step inquiry.
Elbex Video, Ltd. v. Sensormatic Elecs. Corp., 508 F.3d 1366, 1370 (Fed. Cir. 2007). In the first

25

step, the court construes the claims, as a matter of law, to determine their scope and meaning.
Id.; Markman v. Westview Instruments, Inc., 52 F.3d 967, 976 (Fed. Cir. 1995), aff’d, 517 U.S.
370 (1996). Here, the court construed the disputed claim terms in its May 3, 2016 Memorandum
and Order. Doc. 101. So, having construed these claim limitations as a matter of law, the court
proceeds to the second step of the infringement analysis.
In step two, the court compares the properly construed claims to the accused product.
Elbex Video, Ltd., 508 F.3d at 1370. The second step is the infringement determination, and it is
a question of fact. Bai v. L & L Wings, Inc., 160 F.3d 1350, 1353 (Fed. Cir. 1998). “To prove
infringement, the patentee must show that the accused device meets each claim limitation, either
literally or under the doctrine of equivalents.” Playtex Prods., Inc. v. Procter & Gamble Co.,
400 F.3d 901, 906 (Fed. Cir. 2005).
The Shields Defendants assert that Neonatal’s PENGUIN® warmers literally infringe the
’498 Patent.5 “Literal infringement requires that each and every claim limitation be present in
the accused product.” Abraxis Bioscience, Inc. v. Mayne Pharma (USA) Inc., 467 F.3d 1370,
1378 (Fed. Cir. 2006). “Any deviation from the claim precludes . . . a finding [of literal
infringement].” Telemac Cellular Corp. v. Topp Telecom, Inc., 247 F.3d 1316, 1330 (Fed. Cir.
2001). Thus, a court properly may decide a “literal infringement issue . . . upon summary
judgment when no genuine issue of material fact exists, in particular, when no reasonable jury
could find that every limitation recited in the properly construed claim either is or is not found in
the accused device.” Bai, 160 F.3d at 1353; see also TechSearch, LLC v. Intel Corp., 286 F.3d
1360, 1369 (Fed. Cir. 2002) (“Summary judgment is appropriate when it is apparent that only
one conclusion as to infringement could be reached by a reasonable jury.”).

5
The Shields Defendants never have contended that the limitations “heater block,” “removable
reservoir,” “void,” or “well” are infringed under the doctrine of equivalents. Doc. 119-5 at 7 (§ 4.b.).
The Shields Defendants only allege literal infringement of these four limitations. Id. at 7 (§ 4.a.).

26

Applying this governing legal standard, the court considers whether each of the required
limitations of a “heater block,” a “removable reservoir,” and either a “void” or a “well” is found
in the Accused Products (the PENGUIN® milk-warming machines). If the Accused Products
lack any one of these required limitations, the Shields Defendants’ infringement claim fails as a
matter of law.
a. “Heater Block”
All of the Asserted Claims of the ’498 Patent include “a heater block comprising at least
one [void or well] therein.” Doc. 1-1 at 8 (col. 6 ll. 47); Doc. 1-1 at 9 (col. 7 ll. 17). The court
has construed “heater block” as “a solid piece of material, having at least one flat side.” Doc.
101 at 11. As the court noted in its Claim Construction Order, the specification describes that
the heater block is “preferably composed of an insulative type of material such as cork, synthetic
cork, or a thermoset polymer” or alternatively “of a thermoplastic or ceramic material.” Doc.
101 at 9 (citing Doc. 1-1 at 7 (col. 4 ll. 14–16)). The specification also describes a heater block
as something that is manufactured “preferably by cutting a block of cork from raw stock and
machining necessary features therein” or, alternatively, “a synthetic cork or thermoset polymer
material can be molded to the desired shape and features of the heater block 30.” Id. (citing Doc.
1-1 at 7 (col. 4 ll. 17–22)).
The Shields Defendants’ infringement contentions identify the insulation blanket
surrounding the cups in the warmers as the “heater block.” See Doc. 119-5 at 2–3 (§§ 1.a.,
10.a.); id. at 14–15 (illustrations 7–9). The uncontroverted facts establish that the insulation
blanket is a not a solid piece of material. The insulation blanket is composed of a spongy, pliable
material that is wrapped around the exterior of each cup in a PENGUIN® single-bottle or fourbottle warmer. It is secured in place with a piece of tape joining the ends of the insulation

27

blanket and a black zip-tie. So, the insulation blanket is not solid bec
a
z
t
n
cause its end are not fu
ds
used
or molde together, but, instead, merely are secured by ta
ed
b
s
ape. Also, w
when remove from the cup,
ed
the insula
ation blanket is an uninte
errupted piece of pliable material of consistent w
e
f
width. See D
Doc.
119-2 at 5, ¶¶ 13–14. One can la the insula
.
ay
ation materia flat as show in the pic
al
wn
cture below:
:

Doc. 119 at 5, ¶ 13 Thus, the insulation blanket has n defined sh
9-2
3.
no
hape because one can
e
manipula the shape of the insul
ate
e
lation blanke when rem
et
moved from th cup. For all of these
he
reasons, the uncontro
t
overted facts establish th the insula
s
hat
ation blanket is not a “a solid piece o
t
of
material, having at le one flat side.”
east
n
osition to Neonatal’s Motion for Part Summary Judgment, the Shields
tial
ry
,
s
In their Oppo
Defendan appear to have aband
nts
o
doned their in
nfringement contention identifying t insulatio
t
the
on
blanket as the “heater block.” In
a
nstead, the Sh
hields Defen
ndants appea to argue th the
ar
hat
PENGUI
IN® warmer outer met shell and insulation b
r’s
tal
blanket toget
ther form the “heater blo
e
ock.”
Doc. 133 at 25. But, as described above, the Shields Def
3
d
fendants nev identified this theory in
ver
d
y
their infr
ringement co
ontentions. See supra Pa I.A. And Neonatal a
S
art
d,
asserts that th court can
he
nnot
consider it now.

28

Even if the court considers the Shields Defendants’ new infringement contention, the
uncontroverted facts also fail to establish that the outer metal shell of a PENGUIN® warmer and
the insulation blanket together form a “heater block,” as the court has construed that limitation.
The outer metal shell is not a “solid piece of material.” Instead, the case of a PENGUIN®
warmer is hollow and contains some empty space. Mr. Koch designed the warmers to include
this empty space and while this space contains some of the warmer’s components, it is otherwise
unfilled. So, the outer metal shell of the case is not a “solid piece of material.” And,
importantly, the outer metal shell and the insulation blanket together do not consist of a “solid
piece of material.” They are two separate and unconnected components of the warmer. So, they
cannot consist of one “solid piece of material.”
In sum, the court concludes that the Accused Products do not include a “heater block,”
which is one of the required elements of the Asserted Claims made by the ’498 Patent. So, the
Accused Products do not include “each and every claim limitation” as they must to provide a
basis for a finding of literal infringement. The court thus concludes as a matter of law that the
undisputed facts preclude the Shields Defendants from establishing literal infringement.
b. “Removable Reservoir”
The court also concludes that the Accused Products lack another element of the Asserted
Claims of the ’498 Patent. The Asserted Claims of the ’498 Patent include “at least one
removable reservoir” “disposed within” either the void or well of the heater block. Doc. 1-1 at 8
(col. 6 ll. 48–49); Doc. 1-1 at 9 (col. 7 ll. 19–20). The court has construed “removable reservoir”
as “a liquid-holding receptacle designed to be removed.” Doc. 101 at 19.
The Shields Defendants assert that the cups of the single-bottle and four-bottle
PENGUIN® warmers constitute the “removable reservoir” in the Asserted Claims. Doc. 119-5

29

at 2–3 (§§ 1.b., 10.b.), id. at 11–13, 16 (illustrations 1–5, 11). They contend that the cups are
removable because a user can remove a cup by unscrewing the six screws securing the top of the
warmer’s metal case, opening the metal case, removing the four nuts securing the cup to the top
of the case, and unplugging the wire connectors from the circuit board. Mr. Koch explains that
he designed the cup so that a user easily could remove it using common hand tools. Mr. Koch
also assets that a user need not remove any other components from the cup—like the insulation
blanket, the heater blanket, or the thermistor—to remove the cup from the warmer. But, Mr.
Koch also testified that these other components are all part of the warmer. Doc. 141-4 at 6–7
(Koch Dep. 160:6–161:1, 162:22–163:14). So, a user cannot remove the cup from the warmer
without removing these components.6
As described in the Uncontroverted Facts section, one can remove the cup from the
warmer, but the process involves ignoring warnings in the user manual and destroying certain
components of the warmer. The user manual specifically instructs the user not to remove the
equipment cover and not to use the equipment in a manner not specified. If a user ignored these
warnings and unscrewed the top of the warmer, the user would need to remove several
components before removing the cup. First, the user must remove the orange foam insulation
blanket covering the exterior of the cup by cutting the black zip-tie holding it in place and
removing the tape that secures its ends together. Next, the user must remove the heater blanket
by dissolving the adhesive that secures it to the cup’s exterior or by ripping it off of the cup’s

6
If the Shields Defendants assert that the cup only must be removable from the heater block—not
the entire warmer—the undisputed facts also fail to establish that the cup is designed to be removed from
the heater block. The Shields Defendants’ infringement contentions identify the insulation blanket
surrounding the cups in the warmers as the “heater block.” In Mr. Koch’s explanation of how a user can
remove the cup, he contends that the user need not remove the insulation blanket from the cup. So, in his
example, the cup is not removed from the “heater block.” Also, and as explained above, for a user to
remove the insulation blanket, he or she must destroy the black zip-tie surrounding the insulation blanket
and remove the tape securing the ends together. The cup thus is not “designed to be removed” from the
“heater block” because removal involves destruction of some components.

30

exterior. The user next must remove the thermistor by cutting or removing the single use
Kapton® tape securing the thermistor to the cup. Next, the user must remove a weld securing an
electrical grounding bracket to the exterior surface of the cup. The user next must remove a ziptie that secures the damper to the cup’s exterior. Finally, the user must remove the vibrating
mechanism by removing the polymer adhesive securing it at the bottom of the cup. After
removing all of these components, the user could remove the cup from the warmer. But, without
these components, the warmer no longer would work for its intended purpose. To make it
operate again, the user would have to reassemble the unit, including supplying new zip-ties and
adhesives. But, even after reassembly, Neonatal would not place the unit in service until
Neonatal personnel (or other trained biomedical technicians with appropriate testing equipment)
had performed the required calibrations and verifications on the unit. Also, Neonatal would
require the unit to undergo quality and safety testing before placing the unit back in service, so
the unit could maintain its safety certification.
The court concludes that the process required to remove the cup, as described above, does
not make it a “removable reservoir” as the court has construed that limitation. Indeed, as one
court has concluded, “[t]he common, ordinary meaning of removable . . . does not include
breaking what is meant to be a permanent connection.” Little Giant Pump Co. v. Diversitech
Corp., 505 F. Supp. 2d 1107, 1111 (W.D. Okla. 2007); see also K-2 Corp. v. Salomon S.A., 191
F.3d 1356, 1365 (Fed. Cir. 1999) (concluding that “[a] rivet or a laminate . . . is meant to remain
permanent, unremovable unless one is bent on breaking the permanent structure apart.”). Here,
the cup is removable only by destroying other components of the warmer. Giving this meaning
to the word removable would make almost any connection a removable one no matter its
consequences. Like the court in Little Giant Pump Co., the court concludes that the cup “cannot

31

be [removed] if it is attached using fasteners that are meant to be permanent and not removed,”
and so it “cannot meet the . . . claim limitation.” 505 F. Supp. 2d at 1111 (granting summary
judgment against a literal infringement claim because the accused device did not literally
infringe a patent as a matter of law when it lacked one of the claim limitations—“removably
supported”). Because the Accused Products lack a “removable reservoir,” they do not literally
infringe the Asserted Claims of the ’498 Patent as a matter of law.
c. “Void” or “Well”
The court also concludes that the Accused Products lack two other required elements of
the Asserted Claims of the ’498 Patent. Claim 1 of the ’498 Patent and its dependent Asserted
Claims require that the “heater block” comprise “at least one void therein.” Doc. 1-1 at 8 (col. 6
ll. 47). The court has construed “void” as “an empty space formed in the heater block.” Doc.
101 at 14. Claim 10 of the ’498 Patent and its dependent Asserted Claims require that the
“heater block” comprise “at least one well therein.” Doc. 1-1 at 9 (col. 7 ll. 17). The court has
construed “well” as “a shaft formed in the heater block.” Doc. 101 at 15.
As already explained, the Shields Defendants’ infringement contentions identify the
insulation blanket surrounding the cups in the warmers as the “heater block.” See Doc. 119-5 at
2–3 (§§ 1.a., 10.a.), id. at 14–15 (illustrations 7–9). This insulation blanket has no empty space
or shaft formed within it. Instead, it is a spongy, pliable material of consistent width. See Doc.
119-2 at 5, ¶¶ 13–14. It has no defined shape, and it can be laid flat when removed from the cup.
The Shields Defendants contend that a void or well is formed in the “heater block” when
the insulation blanket is wrapped around the exterior of the cup. Doc. 133 at 27. But the
undisputed facts cannot abide this conclusion. Wrapping the insulation blanket around the cup
does not create a void or well “formed in the heater block.” Indeed, the specification requires

32

that the “void or well 38 [be] machined or formed in the heater block 30.” Doc. 1-1 at 7 (col. 4
ll. 38–40). The specification also requires that the material forming the heater block “be molded
to the desired shape and features of the heater block 30.” Id. (col. 4 ll. 20–22). When one wraps
the insulation blanket around the cup, no well or void is machined or molded in the insulation
blanket. This process may produce an empty space, but it is not an empty space or shaft “formed
in the heater block,” as this limitation requires.
If the Shields Defendants assert that the outer metal case of the warmer is the “heater
block” (a theory never disclosed by their infringement contentions), their infringement claim still
would fail. With this theory, the Shields Defendants assert that the hollow space within the
metal case constitutes a “void” or “well.” But, neither is this hollow space “formed in the heater
block” because it is not machined or molded into the outer metal case. Instead, the empty space
exists simply because of the way the various components are connected together to construct the
warmer.
The empty space in the metal case also cannot constitute a “well” because it includes no
“shaft formed in the heater block.” A “shaft” is “something suggestive of the shaft of a spear or
arrow especially in long slender cylindrical form.” Shaft, Merriam-Webster Online Dictionary,
https://www.merriam-webster.com/dictionary/shaft (last visited August 24, 2017) (emphasis
added). The empty space in the metal case is not long, not slender, and not cylindrical. Instead,
it is comprised of the empty space in the rectangular metal case that surrounds the cup and its
various attached components. The hole in the top of the case also does not comprise a “well”
because the empty space there is wide and flat—and only as long as the thickness of the case’s
thin metal shell.

33

For all these reasons, the court concludes that the Accused Devices contain no “well” or
“void” as the Asserted Claims of the ’498 Patent require. Without the required elements, the
Accused Devices cannot literally infringe the Asserted Claims of ’498 Patent as a matter of law.
The court thus grants summary judgment against the Shields Defendants’ patent infringement
counterclaim (Count I). The court also grants a reciprocal summary judgment for Neonatal on its
claim for a declaratory judgment of non-infringement.
2. Has Neonatal Breached the License Agreement?
Neonatal next moves for summary judgment against the Shields Defendants’
counterclaim for breach of an Exclusive License Agreement (Count III). The Shields Defendants
assert that Neonatal breached the Exclusive License Agreement when it stopped making royalty
payments in early 2013. But, Neonatal argues, an accord and satisfaction bars this claim because
the parties resolved their dispute about the royalty payments on September 27, 2013, when they
executed the Letter of Intent.
Before turning to the substance of Neonatal’s argument, the court must decide if it even
can consider this defense. The Shields Defendants assert that Neonatal has waived the
affirmative defense of accord and satisfaction because it never pleaded it in its Answer to the
Shields Defendants’ Counterclaim. Neonatal concedes that it never pleaded this affirmative
defense, but it contends that it still may assert the defense because the Shields Defendants have
had notice of the defense and an opportunity to challenge it.
To support their waiver argument, the Shields Defendants cite the requirement of Rule
8(c)(2). It requires a party “pleading to a preceding pleading [to] set forth affirmatively all
matters which the pleading party intends to use as an avoidance or affirmative defense.” Radio
Corp. of Am. v. Radio Station KYFM, Inc., 424 F.2d 14, 17 (10th Cir. 1970) (citing Fed. R. Civ.

34

P. 8(c)). “If such defenses are not affirmatively pleaded, asserted with a motion under Rule
12(b) or tried by the express or implied consent of the parties, such defenses are deemed to have
been waived and may not thereafter be considered as triable issues in the case.” Id. In Radio
Corp., the Tenth Circuit held that a defendant’s failure to raise an affirmative defense before trial
waived the right to a jury instruction on this affirmative defense. Id. The Circuit noted,
however, that it was “not holding that if a party fails to raise an affirmative defense in his
original responsive pleadings he is forever barred from raising it. Normally the proper remedy is
to move for leave to amend under Rule 15 of the Federal Rules of Civil Procedure.” Id. at 17
n.4.
Indeed, the Circuit has affirmed results relying on an affirmative defense where the
responsive pleadings never asserted the affirmative defense. These cases reason that a trial court
has discretion to allow amendments to the pleadings if the opposing party fails to establish
prejudice. See, e.g., Creative Consumer Concepts, Inc. v. Kreisler, 563 F.3d 1070, 1076 (10th
Cir. 2009) (holding that a district court did not err by allowing a party to supplement its brief and
present evidence of an affirmative defense because the opposing party “had notice of the defense
. . . and, therefore, suffered no prejudice from [the] failure to comply with Rule 8(c)”); Ahmad v.
Furlong, 435 F.3d 1196, 1201–03 (10th Cir. 2006) (holding that a defendant may raise an
affirmative defense for the first time in a summary judgment motion if the delayed assertion did
not prejudice the plaintiff); Marino v. Otis Eng’g Corp., 839 F.2d 1404, 1408 (10th Cir. 1988)
(holding “no trial by ambush” existed when the trial court allowed a defendant to present
evidence of contributory negligence (but refused to give an jury instruction) because plaintiff
was advised of the affirmative defense at least three months before trial).

35

In these cases, the Circuit has recognized the “general rule” that a “party waives its right
to raise an affirmative defense at trial when the party fails to raise the defense in its pleadings.”
Creative Consumer Concepts, Inc., 563 F.3d at 1076 (citing Hassan v. U.S. Postal Serv., 842
F.2d 260, 263 (11th Cir. 1988)). But, when “considering this rule, [the court] must keep in
perspective that ‘the liberal pleading rules established by the Federal Rules of Civil Procedure
apply to the pleading of affirmative defenses.’” Id. (quoting Hassan, 842 F.2d at 263). Thus, a
court “must avoid hypertechnicality in pleading requirements and focus, instead, on enforcing
the actual purpose of the rule.” Id. (quoting Hassan, 842 F.2d at 263). The purpose of Rule 8(c)
is “that of putting ‘plaintiff on notice well in advance of trial that defendant intends to present a
defense in the nature of an avoidance[.]’” Marino, 839 F.2d at 1409 (quoting State Distribs.,
Inc., v. Glenmore Distilleries Co., 738 F.2d 405, 410 (10th Cir. 1984)). So, “[w]hen a plaintiff
has notice that an affirmative defense will be raised at trial, the defendant’s failure to comply
with Rule 8(c) does not cause the plaintiff any prejudice.” Creative Consumer Concepts, Inc.,
563 F.3d at 1076 (quoting Hassan, 842 F.2d at 263). “And, when the failure to raise an
affirmative defense does not prejudice the plaintiff, it is not error for the trial court to hear
evidence on the issue.” Id. (quoting Hassan, 842 F.2d at 263).
Here, the Shields Defendants sustained no prejudice. In its original and Amended
Complaint, Neonatal asserted that the parties had entered into a Letter of Intent on September 27,
2013, that “resolved their dispute over contested royalties under the terminated Exclusive
License Agreement and agreed to negotiate in good faith in an attempt to enter into a new license
agreement that would include pending patent applications . . . .” Doc. 1 at 4, ¶ 19; Doc. 49 at 5,
¶ 22; Doc. 166 at 3, ¶ 22. The Shields Defendants admitted this allegation in their original and
Amended Answers. Doc. 30 at 3, ¶ 19; Doc. 52 at 3, ¶ 22. Indeed, Mr. and Mrs. Shields are

36

parties to the Letter of Intent, and thus they knew about its existence and terms since the day they
signed it.7 Under similar circumstances, our court has allowed a party to assert an affirmative
defense not raised in a responsive pleading when the opposing party had “fair notice” of the
defense based on defendant’s factual denials in an answer and disclosure of the defense in the
pretrial order. Ackley v. Dep’t of Corrs., 844 F. Supp. 680, 685 (D. Kan. 1994). This is the
situation here. The Shields Defendants had fair notice of the accord and satisfaction affirmative
defense.
Indeed, the Shields Defendants never argue in their Opposition that they lacked notice of
this defense. And they never argue that they have sustained prejudice because Neonatal omitted
the defense from its pleadings. Instead, the Shields Defendants urge the court to apply a rigid
construction of Rule 8(c) and hold that Neonatal is barred from asserting this defense. But, this
approach conflicts with Tenth Circuit precedent and the liberal pleading rules of the Federal
Rules of Civil Procedure. See Ackley, 844 F. Supp. at 685 (concluding that plaintiff’s
interpretation of Rule 8(c) was “too stringent” and refusing to bar an affirmative defense when
plaintiff had “fair notice” of the defense). Because the court concludes that Neonatal’s assertion
of this affirmative defense does not prejudice the Shields Defendants, the court considers the
accord and satisfaction affirmative defense.
In Kansas,8 accord and satisfaction “is an affirmative defense and must be proven by a
preponderance of the evidence.” EF Hutton & Co. v. Heim, 694 P.2d 445, 451 (Kan. 1985).

7
Neonatal also has attempted to preserve this affirmative defense in the Pretrial Order (although
the Shields Defendants have objected to its late disclosure). Doc. 144 at 20 & nn. 7, 8, § 4.d.1. (Pretrial
Order). The court recognizes, however, that the court filed the Pretrial Order after the parties briefed
Neonatal’s pending Motion for Partial Summary Judgment.
8

The Shields Defendants’ counterclaim for breach of the Exclusive License Agreement is
governed by Kansas law under that Agreement’s choice of law clause. Doc. 144 at 2, ¶ 1.d (Pretrial
Order).

37

Accord and satisfaction requires “an offer in full satisfaction of an obligation, accompanied by
such acts and declarations or made under such circumstances that the party to whom the offer is
made is bound to understand that if he accepts the offer, it is in full satisfaction of and discharges
the original obligation.” Id. Put another way, “[a]n accord is a contract between creditor and
debtor for the settlement of the claim by some performance other than that which is due.
Satisfaction takes place when the accord is performed.” Thompson v. Meyers, 505 P.2d 680, 685
(Kan. 1973) (quoting Lighthouse for the Blind v. Miller, 86 P.2d 508, 508 Syl. ¶ 1 (Kan. 1939)).
The Kansas Supreme Court has described an accord and satisfaction “as an adjustment of a
disagreement as to what is due from one party to another through payment of an agreed amount,”
and requires that it is “consummated by a meeting of the minds and accompanied by sufficient
consideration.” Id.
Here, the undisputed facts establish that Neonatal and Mr. and Mrs. Shields entered into a
Letter of Intent. This letter, effective on September 27, 2013, resolved the parties’ dispute over
contested royalties under the terminated Exclusive License Agreement. The Letter of Intent
required Neonatal to make two payments: (1) the first one due the day the Letter of Intent was
signed as full payment for 2013 1st Quarter royalties due under the terminated Exclusive License
Agreement; and (2) the second one due within 30 days of the Letter of Intent’s execution as full
payment for the portion of the 2013 2nd Quarter royalties due under the terminated Exclusive
License Agreement for product sales made before the termination date of May 23, 2013.
Neonatal made, and Mr. and Mrs. Shields accepted, both payments required by the Letter of
Intent.
Section 3.c. of the Letter of Intent agrees: “The parties acknowledge that no other royalty
payments are due under the terminated Exclusive License Agreement for product sales made

38

prior to the May 23, 2013 termination.” Doc. 120-2 at 2. So, by the terms of their agreement,
the parties agreed that Neonatal did not owe any royalty payments other than the two specified
by the Letter of Intent.
The parties also agreed in the Letter of Intent to negotiate in good faith in an attempt to
enter into a new license agreement that would include Mr. and Mrs. Shields’ pending patent
applications. Neonatal and Mr. and Mrs. Shields never agreed on the terms of a new license
agreement. The parties’ Letter of Intent anticipated that this possibility. It expressly addresses
the parties’ rights and obligations in that circumstance. Section 5.d. of the Exclusive License
Agreement provides: “If the New License Agreement is not executed, [Neonatal] is not
obligated to pay any royalties pursuant to the Exclusive License Agreement for any product sales
that occurred after May 23, 2013, but neither party will have waived any rights it had with
respect to any obligations that survived the termination of the Exclusive License Agreement,
including Licensors’ right to sue Licensees for patent infringement.” Id. So, under this section,
Neonatal owed no obligation to pay any royalties under the Exclusive License Agreement for
any product sales occurring after May 23, 2013, but the Shields Defendants expressly reserved
their right to sue Neonatal for patent infringement.
On these undisputed facts, the Letter of Intent’s provisions governing royalty payments is
an accord. And, Neonatal’s payment of the agreed-upon amounts is a satisfaction. The court
thus concludes that no reasonable jury could conclude from the undisputed facts that Neonatal is
liable for breaching the Exclusive License Agreement because the Letter of Intent produced an
accord and satisfaction discharging Neonatal’s royalty payment obligations under the Exclusive
License Agreement.

39

The Shields Defendants assert that the Letter of Intent did not produce an accord and
satisfaction because the agreement was not “consummated by a meeting of the minds,” as
Kansas law requires. EF Hutton & Co., 694 P.2d at 451. To support this argument, the Shields
Defendants cite Mrs. Shields’ deposition testimony. Neonatal responds that the court can rely on
this testimony only “[i]n the absence of documents or acts directly evidencing a ‘meeting of the
minds’” between the parties. FDIC v. Addleman, 750 P.2d 1037, 1040 (Kan. 1988). Here, no
such absence exists. To the contrary, the Letter of Intent provides in its very first sentence that
the parties have entered it “in order to set forth their collective intent as to the matters provided
herein.” Doc. 120-2 at 1. The Letter of Intent also provides that: “Both parties believe the other
party breached material provisions of the terminated Exclusive Agreement and these alleged
breaches have not been cured” but “[t]he parties now wish to settle their disputes under the
terminated Exclusive License Agreement and negotiate it in good faith in an attempt to execute a
New License Agreement . . . .” Id. The Letter of Intent thus explicitly identifies the parties’
intent. And that intent demonstrates a meeting of the minds.
In any event, the testimony by Ms. Shields does not help the Shields Defendants’
argument. It only provides more evidence that a meeting of the minds occurred. Although Ms.
Shields testified that she did not “think” the Letter of Intent resolved the dispute over royalty
payments, she also conceded that the parties “were trying to work together again” and that she
signed the agreement “to get the money.” Doc. 133 at 30–31 (citing Doc. 133-4 at 8–10 (Shields
Dep. 227:18–24, 229:19–25)). Kansas law does not permit a party to sign an agreement as plain
as this one to “get the money” only to renounce the agreement they have signed. Ms. Shields’
testimony evidences an accord and satisfaction. The parties agreed to resolve their royalty

40

dispute by entering the Letter of Intent, and Neonatal satisfied its obligations by making the
required payments.
The Shields Defendants also argue that they reserved a right to assert a claim for unpaid
royalty payments under section 5.d. of the Letter of Intent. But the words in this provision
cannot support the meaning they attribute to it. Section 5.d. preserved the Shields Defendants’
right to assert claims that survive the agreement, including a patent infringement claim against
Neonatal. But, this section explicitly extinguishes Neonatal’s obligation to pay any royalties
under the Exclusive License Agreement for any product sales occurring after May 23, 2013.
In sum, the undisputed evidence establishes that the Letter of Intent produced an accord
and satisfaction that discharged Neonatal’s obligations to pay royalties under the Exclusive
License Agreement. The Shields Defendants’ counterclaim for breach of the Exclusive License
Agreement based on Neonatal’s failure to make royalty payments thus fails as a matter of law.
The court grants summary judgment against Count III of the Shields Defendants’ Counterclaim.
3. Has Scott Norman Induced Patent Infringement?
Count II of the Shields Defendants’ Counterclaim asserts a claim against Scott Norman,
Neonatal’s CEO, for inducing patent infringement under 35 U.S.C. § 271(b). Neonatal seeks
summary judgment against this counterclaim, asserting that Mr. Norman is not liable for
inducing patent infringement when no infringement has occurred. See Limelight Networks, Inc.
v. Akamai Techs., Inc., 134 S. Ct. 2111, 2117 (2014) (“[L]iability for induced infringement
[under 35 U.S.C. § 271(b)] must be predicated on direct infringement.”); see also Akamai Techs.,
Inc. v. Limelight Networks, Inc., 692 F.3d 1301, 1308 (Fed. Cir. 2012), rev’d on other grounds
by 134 S. Ct. 2111 (2014) (“[I]nducement gives rise to liability only if the inducement leads to
actual infringement . . . there is no such thing as attempted patent infringement.”). These

41

authorities control the decision on Count II. Because the court concluded in Part II.C.1 above
that Neonatal has not infringed the ’498 Patent, Mr. Norman cannot incur liability for inducing
patent infringement as a matter of law. The court thus grants summary judgment against Count
II of the Shields Defendants’ Counterclaim.
4. Has Scott Norman Tortiously Interfered with a Contract?
Count V of the Shields Defendants’ Counterclaim asserts that Mr. Norman tortiously
interfered with a contract by directing Neonatal and Creche to breach the Exclusive License
Agreement. In Kansas,9 “a person who, without justification, induces or causes a breach of
contract will be answerable for any damages caused thereby.” Burcham v. Unison Bancorp, Inc.,
77 P.3d 130, 150 (Kan. 2003). “A claim for tortious interference with a contractual relationship
requires the existence of a valid and enforceable contract at the time of the interference between
the plaintiff and a third party.” Macke Laundry Serv. Ltd. P’ship v. Mission Assocs., Ltd., 873
P.2d 219, 225 (Kan. Ct. App. 1994) (emphasis added).
Kansas law is well settled. An “official of a corporation, acting for the corporation, and
within the scope of his or her representation of the corporation, cannot be liable for tortious
interference with a contract the corporation could legally act on.” Diederich v. Yarnevich, 196
P.3d 411, 418 (Kan. Ct. App. 2008) (citing Clevenger v. Catholic Social Serv. of Archdiocese,
901 P.2d 529, 533 (Kan. Ct. App. 1995)). In these situations, “[i]t is the corporation acting,” not
the director or officer. Id. But, if “an employee is motivated entirely by personal reasons such
as malice or spite or by a desire to accomplish some unlawful purpose and does not have for its
purpose the furtherance of the employer’s business,” that employee acts outside the scope of his
employment and can be incur liability for tortious interference. Williams v. Cmty. Drive-In

9
The Shields Defendants’ counterclaim for tortious interference with a contract is governed by
Kansas law under the doctrine of lex loci delecti. Doc. 144 at 2, ¶ 1.d (Pretrial Order).

42

Theater, Inc., 520 P.2d 1296, 1301–02 (Kan. 1974); see also Battenfeld of Am. Holding, Inc. v.
Baird, Kurtz & Dobson, No. 97-2336-JWL, 1999 WL 232915, at *4 (D. Kan. Feb. 5, 1999)
(“Kansas does not recognize a claim for tortious interference with contract against an agent or
employee of one of the contracting parties, unless there is some suggestion that the agent or
employee was acting in his or her individual capacity or for his or her individual advantage.”).
Here, Neonatal and Mr. and Mrs. Shields signed the Exclusive License Agreement. As
CEO, Mr. Norman served as Neonatal’s officer. And, nothing in the summary judgment record
shows that Mr. Norman acted on behalf of anyone other than Neonatal during the times relevant
to this dispute. Indeed, the Shields Defendants assert in their Second Amended Answer and
Counterclaims that “Neonatal benefited from . . . ceasing to make royalty payments under the
Exclusive License Agreement to Janice and Paul Shields.” Doc. 166 at 11, ¶ 50. So, according
to the Shields Defendants’ allegations, Mr. Norman was acting to further Neonatal’s interest.
And, the Shields Defendants have adduced no evidence that Mr. Norman acted in his personal
capacity or with malice or spite to make him liable for tortious inference. On this record, no
reasonable jury could find Mr. Norman liable for tortious interference. The court thus grants
summary judgment against Count V of the Shields Defendants’ Counterclaim.
5. Was Neonatal Unjustly Enriched?
Count VIII of the Shields Defendants’ Counterclaim asserts that Neonatal and Creche
were unjustly enriched by profits and royalties from sales of PENGUIN® warmers. To support
this counterclaim, the Shields Defendants rely on the same factual contentions they rely on to
support their counterclaim for breach of the Exclusive License Agreement—that Neonatal
retained profits and royalty payments from sales of PENGUIN® machines and products covered

43

by the Exclusive License Agreement. Doc. 144 at 19, ¶ 31 (Pretrial Order); Doc. 166 at 17, ¶¶
110–111 (Second Amended Answer and Counterclaims).
Neonatal asserts that the same accord and satisfaction defense bars the Shields
Defendants’ unjust enrichment counterclaim, just as it did for their counterclaim for breach of
the Exclusive License Agreement. The court agrees. In Kansas,10 unjust enrichment has three
elements: “(1) a benefit conferred; (2) an appreciation or knowledge of the benefit by the one
receiving the benefit; and (3) the acceptance or retention of the benefit under such circumstances
as to make it inequitable to retain the benefit without payment of its value.” In re Estate of
Sauder, 156 P.3d 1204, 1220 (Kan. 2007). Here, the summary judgment facts establish that the
parties resolved their dispute over unpaid royalties by agreeing to the Letter of Intent. No
reasonable jury could conclude that the enrichment Neonatal received resulted from an explicit,
written agreement, i.e., the Letter of Intent signed by the Shields Defendants. Or, to say it more
bluntly, enrichment derived from a bargained for and mutually agreed contract is not, as a matter
of law, unjust. The Shields Defendants’ unjust enrichment claim fails as a matter of law.
The Shields Defendants take a different tack in their Opposition. They argue that their
unjust enrichment counterclaim is independent of their counterclaim for breach of the Exclusive
License Agreement. Instead, they contend, their unjust enrichment counterclaim asserts that it is
inequitable to allow Neonatal to “benefit from the ’498 Patent by selling the machine disclosed
in the patent and marking the machine with that number, while refusing to pay royalties to the
patent owner.” Doc. 133 at 35. Neonatal asserts that the Shields Defendants have changed their
theory supporting the unjust enrichment counterclaim, and the new theory merely duplicates

10
Under the doctrine of lex loci delecti, Kansas law also governs the Shields Defendants’
counterclaim for unjust enrichment. Doc. 144 at 2, ¶ 1.d (Pretrial Order).

44

their patent infringement counterclaim. And, they assert that such a claim is preempted by
federal law.
Indeed, one cannot rely on state law to “create a collateral set of rights available as an
adjunct or expansion to patent rights.” Waner v. Ford Motor Co., 331 F.3d 851, 856 (Fed. Cir.
2003). And, as the Federal Circuit has held, “any attempt to obtain a patent-like royalty for the
making, using, or selling of a product in the public domain under the rubric of state unjust
enrichment law is preempted.” Ultra-Precision Mfg., Ltd. v. Ford Motor Co., 411 F.3d 1369,
1382 (Fed. Cir. 2005) (affirming dismissal of an unjust enrichment claim asserting that defendant
received an unjust benefit from use of technical information that plaintiff gave defendant because
“federal patent law preempt[ed] [the] unjust enrichment claim, as pled”); see also Veto Pro Pac,
LLC v. Custom Leathercraft Mfg. Co., Inc., No. 3:08-cv-00302(VLB), 2009 WL 276369, at *2
(D. Conn. Feb. 5, 2009) (concluding that an unjust enrichment claim was “completely
preempted” because it simply incorporated the allegations of two patent infringement claims).
To the extent the Shields Defendants use their unjust enrichment theory to enforce rights under
federal patent law, this federal law preempts the state law claim. And, to the extent they use
their unjust enrichment counterclaim to recover royalties owed under the Exclusive License
Agreement, their counterclaim is barred by accord and satisfaction.
III.

Conclusion
For the reasons explained above, the court grants summary judgment for Neonatal on its

declaratory judgment claim. The court enters a declaratory judgment that Neonatal has not
infringed the ’498 Patent. The court also grants summary judgment against the Shields
Defendants’ counterclaims for patent infringement (Count I), inducement of patent infringement

45

(Count II), breach of an Exclusive License Agreement (Count III), tortious interference with
contract (Count V), and unjust enrichment (Count VIII).
IT IS THEREFORE ORDERED BY THE COURT THAT Neonatal and the
Counterclaim Defendants’ Motion for Partial Summary Judgment (Doc. 118) is granted.
IT IS FURTHER ORDERED THAT Neonatal and the Counterclaim Defendants’
Motion to Strike (Doc. 140) is granted.
IT IS FURTHER ORDERED THAT the Shields Defendants’ Motion to Strike (Doc.
151) is denied.
IT IS SO ORDERED.
Dated this 24th day of August, 2017, at Topeka, Kansas.
s/ Daniel D. Crabtree
Daniel D. Crabtree
United States District Judge

46