Inline Plastics Corp. v. Easypak, LLC

Filing 86

District Judge Timothy S Hillman: ORDER entered granting 64 Motion FOR ENTRY OF JUDGMENT OF NON-INFRINGEMENT AND TO DISMISS DEFENDANT'S COUNTERCLAIMS. (Castles, Martin)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
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Plaintiff,
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v.
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EASYPAK, LLC,
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Defendant.
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INLINE PLASTICS CORP.,

CIVIL ACTION
NO. 11-11470-TSH

ORDER ON PLAINTIFF INLINE PLASTICS CORP.’S MOTION FOR ENTRY OF
JUDGMENT OF NON-INFRINGEMENT AND TO DISMISS DEFENDANT’S
COUNTERCLAIMS OR, IN THEALTERNATIVE, ENTER FINAL JUDGMENT ON
INLINE’S INFRINGEMENTCLAIM UNDER RULE 54(B) (Doc. No. 64)
January 24, 2014
HILLMAN, D.J.
Introduction
Plaintiff Inline Plastic Corp. ("Inline") filed its Complaint against Defendant EasyPak,
LLC ("EasyPak") for infringement of U.S. Patent No. 7,118,003 (the "'003 patent") (Count I) and
U.S. Patent No. 7,073,680 (the "'680 patent") (Count II). EasyPak answered the Complaint and
asserted Counterclaims seeking a declaratory judgment that the '003 patent (Count II) and '680
patent (Count I) are invalid. In January 2013, this Court issued its Markman Order (Doc. No.
47). The parties agree that, under the Markman Order, judgment of non-infringement of the '003
patent should enter. In its present motion, Inline asks this Court to enter judgment immediately
and dismiss EasyPak's Counterclaim regarding the '003 patent, without prejudice. EasyPak
opposes this request, arguing that the Court should wait to enter judgment of non-infringement of

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the '003 patent until after a determination of patent invalidity at either summary judgment or
trial. Inline has also granted EasyPak a covenant not to sue or hold liable EasyPak, or its
customers or distributors, based on any infringement of the '680 patent by the EasyPak product at
issue in this suit, identified by product identification number WT64-F-TE.1 As a result of this
covenant, Inline asks this Court to dismiss Count II of its Complaint and Count I of EasyPak's
Counterclaim for lack of subject matter jurisdiction. For the reasons set forth below, Inline's
motion is granted.
Discussion
Entry of Judgment on the '003Patent Claim and Counterclaim
As mentioned above, the parties agree, and the Court finds, that under this Court's claim
construction EasyPak is entitled to judgment on Count I of Inline's Complaint. When, after a
claim construction ruling, an infringement claim is resolved while an invalidity claim remains
unresolved, a district court may proceed in one of four ways. See Nystrom v. TREX Co., Inc.,
339 F.3d 1347, 1350-51 (Fed. Cir. 2003). First, the district court could proceed with the
unresolved invalidity claim until it has been disposed of on the merits. Id. at 1350. Second, the
district court could, in its discretion, enter judgment of non-infringement and dismiss the
invalidity counterclaim without prejudice. Id. at 1351; see also Liquid Dynamics Corp. v.
Vaughan Co., 355 F.3d 1361, 1371 (Fed.Cir.2004) ("A district court judge faced with an
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The wording of the covenant not to sue is as follows:
Inline unconditionally covenants not to sue or otherwise seek to hold EasyPak, LLC ("EasyPak") liable
based on its manufacture, having manufactured, importation, distribution, use, sale and/or offering for sale of its
tamper resistant/evident containers identified with the product identification number WT64-F-TE, that are described
in and the subject of Inline’s August 17, 2011 Complaint and/or February 24, 2012 infringement contentions, for
infringement of the '680 patent. Similarly, Inline would not sue or otherwise seek to hold EasyPak's customers or
distributors liable based on the importation, distribution, use, sale, and/or offering for sale of the tamper
resistant/evident containers identified with the product identification number WT64-F-TE, that are described in and
the subject of Inline’s August 17, 2011 Complaint and/or February 24, 2012 infringement contentions, for
infringement of the '680 patent.
Inline is the owner of the entire right and title to the '680 patent and makes this covenant on behalf of itself
and any successor-in-interest that Inline may have to the '680 patent, on whom it will be fully binding.
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invalidity counterclaim challenging a patent that it concludes was not infringed may either hear
the claim or dismiss it without prejudice, subject to review only for abuse of discretion."). Third,
the district court could expressly direct the entry of final judgment of fewer than all of the claims
under Fed.R.Civ.P. 54(b) if it finds there is no just reason for delay. Id. Finally, the district
court could certify the ruling for interlocutory appeal under 28 U.S.C. § 1292(b) if the court finds
the ruling "involves a controlling question of law as to which there is substantial ground for
difference of opinion and that an immediate appeal from the order may materially advance the
ultimate termination of the litigation." Id.
In this case, EasyPak requests that the Court proceed with the invalidity claim, while
Inline asks the Court to enter judgment immediately and dismiss the counterclaim without
prejudice, or, in the alternative, to direct the entry of judgment under Fed.R.Civ.P 54(b). In this
case, the Court finds that the '003 patents invalidity is not "plainly evident" and thus the best and
most efficient way to resolve this matter is to enter judgment of non-infringement on Count I of
Inline's Complaint and to dismiss Count II of EasyPak's Counterclaim without prejudice. See
Messerschmidt v. United States, 29 Fed. Cl. 1, 17 (Fed. Cl. 1993) aff'd, 14 F.3d 613 (Fed. Cir.
1993) ("The crucible of deciding validity at the trial level, therefore, appears to hinge on whether
the defendant presents sufficient evidence to render as 'plainly evident' the invalidity of the
patent-in-suit.").
Allowing EasyPak's invalidity claims to proceed at this time might result in the relitigation of those claims. As the Federal Circuit has explained, "[a] claim must be construed
before determining its validity just as it is first construed before deciding infringement."
Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1351 (Fed. Cir. 2001) (quoting
Markman v. Westview Instruments, Inc., 52 F.3d 967, 996 n. 7 (Fed.Cir.1995)). Claims must be

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"given the same meaning for purposes of both validity and infringement analysis." Id.
Therefore, the most efficient path is to enter judgment of non-infringement on Inline's Count I
and dismiss Count II of Easypak's Counterclaim, allowing Inline to immediately appeal the
Court's claim construction. If this Court's claim construction order is reversed, infringement and
invalidity can both be addressed under the correct claim construction.
Dismissal of the '680 Patent Claim and Counterclaim
Inline moves that Count II of its Complaint be dismissed, and agreed at oral argument
that it be dismissed with prejudice. Inline also asks this Court to dismiss Count I of EasyPak's
Counterclaim, which asks for a declaration of invalidity of the '680 patent, because there is no
longer an actual controversy between the parties in light of the covenant not to sue Inline has
granted EasyPak, the full text of which is reproduced in footnote 1 of this order. EasyPak
opposes the dismissal of its Counterclaim, because, it argues, the covenant to sue is not
unconditional.
Subject matter jurisdiction in a declaratory judgment suit depends on the existence, at all
stages of review, of "'a substantial controversy, between the parties having adverse legal
interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment,'
and the plaintiff bears the burden of proving the existence of such a controversy throughout the
litigation." Dow Jones & Co., Inc. v. Ablaise Ltd., 606 F.3d 1338, 1345 (Fed. Cir. 2010)
(quoting MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127, 127 S.Ct. 764 (2007)). A case
or controversy exists in a declaratory judgment action "where a patentee asserts rights under a
patent based on certain identified ongoing or planned activity of another party, and where the
party contends that it has the right to engage in the accused activity without a license." SanDisk
Corp. v. STMicroelectronics, Inc., 480 F.3d 1372, 1381 (Fed.Cir.2007). "Whether a covenant

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not to sue will divest the trial court of jurisdiction depends on what is covered by the covenant."
Revolution Eyewear, Inc. v. Aspex Eyewear, Inc., 556 F.3d 1294, 1297 (Fed. Cir. 2009).
In Revolution Eyewear, the Federal Circuit found that the district court retained subject
matter jurisdiction where the covenant not to sue did not bar future infringement actions if the
accused infringer again offered for sale the allegedly infringing articles. Id. at 1300; see also
Dow Jones & Co., 606 F.3d at 1347. In contrast, courts have found no controversy exists where
covenants not to sue have included past and future actions regarding the accused products. See,
e.g., Janssen Pharmaceutica, N.V. v. Apotex, Inc., 540 F.3d 1353, 1363 (Fed. Cir. 2008)
(dismissing declaratory judgment action based on covenant not to sue defendant, its customers,
or its distributors based upon manufacture, importation, manufacture, use, sale, or offering of
sale of risperdal oral solution for infringement of patents); Transwitch Corp. v. Galazar
Networks, Inc., 377 F. Supp. 2d 284, 293 (D. Mass. 2005) (dismissing claim based on covenant
not to sue, noting "covenant not to sue encompasses all of the accused products in this lawsuit");
CIVCO Medical Instruments Co. v. Protek Medical Prods., 231 F.R.D. 555, 557 n. 2 (S.D.Iowa
2005) (dismissing claim where the patentee covenanted not to sue "for infringement as to any
claims of the ′889 and ′499 patents based upon Protek's DirectorTM needle guide in its current
form.").
Here, the covenant not to sue protects EasyPak as well as its customers and distributors
from suit for infringement of the '680 patent based on any "manufacture, having manufactured,
importation, distribution, use, sale and/or offering for sale" the accused product. This language
protects EasyPak, and its customers and distributors, from suit for both past and future actions
for any infringement of the '680 patent by the product in suit. Inline cannot now, nor in the
future, assert rights under the '680 patent based on the product which is the subject of this

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litigation. Therefore, a case or controversy no longer exists and Count I of EasyPak's
counterclaim must be dismissed for lack of subject matter jurisdiction.
Conclusion
Inline's Motion for Entry of Judgment of Non-Infringement and to Dismiss Defendant's
Counterclaims is granted. In accordance with the foregoing, this Court orders that judgment of
non-infringement be entered on Count I of Inline's Complaint and that Count II of EasyPak's
Counterclaim be dismissed without prejudice. Further, this Court orders that Count II of Inline's
Complaint be dismissed with prejudice, and Count I of EasyPak's Counterclaim be dismissed for
lack of subject matter jurisdiction.

SO ORDERED

/s/ Timothy S. Hillman
TIMOTHY S. HILLMAN
UNITED STATES DISTRICT JUDGE

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