Honeywell International Inc. v. ICM Controls Corp.
Filing
338
ORDER: ICM's motion for summary judgment of invalidity of U.S. Patent No. 5,812,061, U.S. Patent No. 7,055,759, and U.S. Patent No. 6,478,574 [ECF No. 247 ] is granted with respect to U.S. Patent No. 6,478,574 and otherwise denied. ICM's motion for summary judgment of Honeywell's false advertising (false designation of origin) claim [ECF No. 241 ] is granted. ICM's motion for summary judgment of Honeywell's trade dress infringement claims [ECF No. 260 ] is granted. Honeywell's Daubert motion seeking to exclude testimony of Robert Stein, Leon Kaplan, and Adam Vaczek [ECF No. 273 ] is denied as to Mr. Stein on mootness grounds. It is denied without prejudice as to Dr. Kaplan as stated in this order. The motion is granted in part and denied in part as to Mr. Vaczek as stated in this order. ICM's Daubert motion to exclude the testimony of Akshay Rao [ECF No. 253 ] is denied as moot. ICM's Daubert motion to exclude the testimony of Justin Hughes [ECF No. 227 ] is granted. ICM's Daubert motion to exclude the reasonable royalty opinions of Carl Degen [ECF No. 266 ] is denied. ICM's Daubert motion to exclude miscellaneous testimony of David Schumacher, Carl Degen, and Thom as Gafford [ECF No. 234 ] is denied as to Mr. Schumacher and in part as to Mr. Gafford on mootness grounds. The motion is denied as to Mr. Degen and in part as to Mr. Gafford without prejudice so that objections to particular testimony may be raise d at trial, if appropriate. If Honeywell intends to pursue Count XVII of the amended complaint, it must file a brief within three weeks of the date of this order to address the issues identified with that count. ICM may file a responsive brief on the subject within two weeks of any such filing by Honeywell. (Written Opinion) Signed by Judge Joan N. Ericksen on August 27, 2014. (CBC)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Honeywell International Inc.,
Plaintiff,
v.
Civil No. 11-569 (JNE/TNL)
ORDER
ICM Controls Corp.,
Defendant.
Matthew L. Woods and Peter N. Surdo, Robins Kaplan Miller & Ciresi LLP, appeared for
Plaintiff Honeywell International Inc.
Allen W. Hinderaker, Heather J. Kliebenstein, and Tong Wu, Merchant & Gould PC, appeared
for Defendant ICM Controls Corp.
Plaintiff Honeywell International Inc.’s (“Honeywell”) amended complaint in this action
asserts 19 counts against Defendant ICM Controls Corp. (“ICM”) for alleged patent
infringement, copyright infringement, Lanham Act violations, and a violation of Minn. Stat. §
325D.44. ECF No. 32. Honeywell’s complaint alleges that ICM has been selling “direct
knockoffs” of four Honeywell combustion control products used for controlling heating
appliances. The relevant Honeywell products include two “oil primary controls”—R8184 and
R7184. An oil primary control controls the fuel oil for an oil-based furnace, water heater, or
boiler. The other two Honeywell products are gas ignition controls—S8610U and S8910U. A
gas ignition control controls the gas ignition of a gas furnace, water heater, or boiler. Honeywell
sells its gas ignition controls in the residential and light commercial replacement market, as
replacements for a variety of original equipment manufacturer (“OEM”) controls. It sells its oil
primary controls in the residential and light commercial markets, as OEM and replacement units.
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For each of Honeywell’s four products, the amended complaint identifies a corresponding
control product sold by ICM. Honeywell contends that the ICM 1510 Series corresponds to
Honeywell’s R7184, the ICM 1500 Series corresponds to Honeywell’s R8184, the ICM 290
corresponds to Honeywell’s S8610U, and the ICM 283 corresponds to Honeywell’s S8910U.
ECF No. 32 at 4-7. These ICM products form the target of Honeywell’s trade dress
infringement, false advertising, and state law claims. Honeywell alleges that certain installation
manuals and labels for ICM’s control products infringe its copyright interests. Honeywell also
asserts four patents against particular ICM control products and certain ICM thermostats used in
connection with combustion controls.
The case is before the Court on three summary judgment motions filed by Defendant
ICM, ECF Nos. 241, 247, 260, as well as motions filed by both parties to exclude the proposed
testimony of multiple expert witnesses for failure to meet the admissibility requirements of
Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579 (1993), ECF Nos. 227, 234, 253, 266,
273. The motions and their dispositions are as follows:
1. ICM’s motion for summary judgment of invalidity of U.S. Patent No. 5,812,061
(“’061 patent”), U.S. Patent No. 7,055,759 (“’759 patent”), and U.S. Patent No.
6,478,574 (“’574 patent”), ECF No. 247 – The motion is granted with respect to the
’574 patent and otherwise denied.
2. ICM’s motion for summary judgment of Honeywell’s false advertising (false
designation of origin) claim, ECF No. 241 – The motion is granted.
3. ICM’s motion for summary judgment of Honeywell’s trade dress infringement
claims, ECF No. 260 – The motion is granted.
4. Honeywell’s Daubert motion seeking to exclude testimony of Robert Stein, Leon
Kaplan, and Adam Vaczek, ECF No. 273 – The motion is denied on mootness
grounds as to Mr. Stein. It is denied without prejudice as to Dr. Kaplan. The motion
is granted in part and denied in part as to Mr. Vaczek.
5. ICM’s Daubert motion to exclude the testimony of Akshay Rao, ECF No. 253 – The
motion is denied as moot.
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6. ICM’s Daubert motion to exclude the testimony of Justin Hughes, ECF No. 227 –
The motion is granted.
7. ICM’s Daubert motion to exclude Carl Degen’s testimony on reasonable royalties for
the alleged patent infringement, ECF No. 266 – The motion is denied.
8. ICM’s Daubert motion to exclude miscellaneous testimony of David Schumacher,
Carl Degen, and Thomas Gafford, ECF No. 234 – The motion is denied as to Mr.
Schumacher and in part as to Mr. Gafford on mootness grounds. The motion is
denied as to Mr. Degen and in part as to Mr. Gafford without prejudice so that
objections to particular testimony may be raised at trial, if appropriate.
DISCUSSION
The standards applicable to summary judgment as well as to Daubert motions are well
established and well known. Summary judgment is proper “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.” Fed. R. Civ. P. 56(a). To support an assertion that a fact cannot be or is genuinely
disputed, a party must cite “to particular parts of materials in the record,” show “that the
materials cited do not establish the absence or presence of a genuine dispute,” or show “that an
adverse party cannot produce admissible evidence to support the fact.” Fed. R. Civ. P.
56(c)(1)(A)-(B). “The court need consider only the cited materials, but it may consider other
materials in the record.” Fed. R. Civ. P. 56(c)(3). In determining whether summary judgment is
appropriate, a court must view facts that the parties genuinely dispute in the light most favorable
to the nonmovant, Ricci v. DeStefano, 557 U.S. 557, 586 (2009), and draw all justifiable
inferences from the evidence in the nonmovant’s favor, Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 255 (1986).
Federal Rule of Evidence 702 governs the admissibility of expert testimony. It provides
that
A witness who is qualified as an expert by knowledge, skill, experience, training, or
3
education may testify in the form of an opinion or otherwise if:
(a) the expert’s scientific, technical, or other specialized knowledge will help the trier of
fact to understand the evidence or to determine a fact in issue;
(b) the testimony is based on sufficient facts or data;
(c) the testimony is the product of reliable principles and methods; and
(d) the expert has reliably applied the principles and methods to the facts of the case.
Fed. R. Evid. 702.
The factors that a district court may consider in making reliability and relevancy
determinations include: “(1) whether the theory or technique can be or has been tested; (2)
whether the theory or technique has been subjected to peer review or publication; (3) whether the
theory or technique has a known or potential error rate and standards controlling the technique’s
operation; and (4) whether the theory or technique is generally accepted in the scientific
community.” Russell v. Whirlpool Corp., 702 F.3d 450, 456-57 (8th Cir. 2012) (citing Daubert,
509 U.S. at 593-94). 1 But the “evidentiary inquiry is meant to be flexible and fact specific, and a
court should use, adapt, or reject Daubert factors as the particular case demands.” Unrein v.
Timesavers, Inc., 394 F.3d 1008, 1011 (8th Cir. 2005). As long as the expert’s proffered
opinions appear reliable and relevant, no single requirement for admissibility exists. Id.
The “traditional and appropriate means of attacking shaky but admissible evidence” are
“[v]igorous cross-examination, presentation of contrary evidence, and careful instruction on the
burden of proof.” Daubert, 509 U.S. at 596. The Daubert inquiry should therefore focus on
“principles and methodology” rather than on the “conclusions that they generate.” Daubert, 509
U.S. at 595. Similarly, the factual basis of an expert’s opinion generally “goes to the credibility
of the testimony, not the admissibility, and it is up to the opposing party to examine the factual
1
Honeywell’s complaint includes patent claims. While Federal Circuit law applies to
those claims, the admissibility of expert testimony related to them is generally governed by the
law of the regional circuit. See Research Corp. Techs. v. Microsoft Corp., 536 F.3d 1247, 1255
(Fed. Cir. 2008).
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basis for the opinion in cross-examination.” Bonner v. Isp Techs., 259 F.3d 924, 929-30 (8th Cir.
2001) (quoting Hose v. Chicago Northwestern Transp. Co., 70 F.3d 968, 974 (8th Cir. 1996)).
With these standards in mind, the Court turns to each of the motions.
1. ICM’s Motion for Summary Judgment of Invalidity of the ’061 Patent, the ’759
Patent, and the ’574 Patent
ICM seeks summary judgment of invalidity of three of the four patents 2 that Honeywell
has asserted against it in this action. ICM contends that claims 1-4 and 9 of the ’061 patent are
invalid for failure to meet the enablement and written description requirements of 35 U.S.C. §
112, first paragraph. 3 ECF No. 249 at 1. ICM alleges that claims 3,7, and 8 of the ’759 patent
are invalid for lack of an adequate written description. Id. For the ’574 patent, ICM takes the
position that claim 1 is invalid for indefiniteness, i.e. for failure to meet the definiteness
requirement of 35 U.S.C. § 112, second paragraph. Id. The relevant patent law and its
application to ICM’s contentions about each of the three patents are discussed next.
A. Legal framework for assessing ICM’s claims of invalidity
A patent is presumed valid and a party challenging its validity bears the burden of
establishing its invalidity. See 35 U.S.C. § 282(a). Invalidity must be established by clear and
convincing evidence. Ariad Pharms., Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1354 (Fed. Cir.
2010). The first paragraph of § 112 contains two separate description requirements: a written
description requirement and an enablement requirement. Id. at 1344. The second paragraph of §
112 requires a patent specification to conclude with one or more claims “particularly pointing out
and distinctly claiming the subject matter which the applicant regards as his invention.” 35
2
Asserted U.S. Patent No. 7,721,972 is not subject to the present motion.
The Leahy-Smith America Invents Act (“AIA”), Pub. L. 112-29, amended 35 U.S.C. §§
112 and 282 in minor respects not relevant here. The prior versions of those provisions apply to
the patents at issue in this case. Therefore, this order refers to the relevant paragraphs and text as
they existed prior to the AIA amendments.
3
5
U.S.C. § 112, ¶ 2. A patent claim that fails to meet the enablement, written description, or
definiteness requirements of § 112 is invalid. Id. § 282, ¶ 2(3).
To meet the enablement requirement, the specification must enable one of ordinary skill
in the art to practice the full scope of the claimed invention without undue experimentation.
MagSil Corp. v. Hitachi Global Storage Techs., 687 F.3d 1377, 1380 (Fed. Cir. 2012). The
specification need not “describe how to make and use every possible variant of the claimed
invention, for the artisan’s knowledge of the prior art and routine experimentation can often fill
gaps, interpolate between embodiments, and perhaps even extrapolate beyond the disclosed
embodiments, depending upon the predictability of the art,” but “when a range is claimed, there
must be reasonable enablement of the scope of the range.” AK Steel Corp. v. Sollac, 344 F.3d
1234, 1244 (Fed. Cir. 2003). Enablement is a question of law based on underlying factual
determinations. Takeda Pharm. Co. v. Zydus Pharms. USA, Inc., 743 F.3d 1359, 1369 (Fed. Cir.
2014).
To satisfy the written description requirement, the specification “must describe the
invention sufficiently to convey to a person of skill in the art that the patentee had possession of
the claimed invention at the time of the application, i.e., that the patentee invented what is
claimed.” LizardTech, Inc. v. Earth Res. Mapping, Inc., 424 F.3d 1336, 1345 (Fed. Cir. 2005);
Ariad, 598 F.3d at 1351 (noting that disclosure is the “hallmark of written description” and so
“possession as shown in the disclosure” is key). The test entails “an objective inquiry into the
four corners of the specification from the perspective of a person of ordinary skill in the art” as to
whether the specification “describe[s] an invention understandable to that skilled artisan and
show[s] that the inventor actually invented the invention claimed.” Ariad, 598 F.3d at 1351.
Although a question of fact, compliance with the written description requirement is amenable to
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summary judgment when no reasonable jury could find in favor of the nonmoving party.
PowerOasis, Inc. v. T-Mobile USA, Inc., 522 F.3d 1299, 1307 (Fed. Cir. 2008). The enablement
and written description requirements usually rise and fall together, LizardTech, 424 F.3d at 1345,
but they need not necessarily, see Ariad, 598 F.3d at 1352. Both are evaluated as of the effective
filing date of the patent. Id. at 1351; AK Steel, 344 F.3d at 1244.
The Supreme Court recently articulated the relevant standard applicable to the
definiteness requirement of the second paragraph of § 112. See Nautilus, Inc. v. Biosig
Instruments, Inc., 134 S. Ct. 2120, 2128-30 (2014). Under that standard, a patent’s claims, when
“viewed in light of the specification and prosecution history,” must “inform those skilled in the
art about the scope of the invention with reasonable certainty.” Id. Recognizing that some
“modicum of uncertainty” is the price to be paid for appropriate incentives for innovation, the
Supreme Court nonetheless confirmed that a patent “must be precise enough to afford clear
notice of what is claimed, thereby apprising the public of what is still open to them.” Id.
(internal quotation marks omitted). Patents are not directed to lawyers or the public generally,
but to those skilled in the relevant art. Id. Indefiniteness is, therefore, gauged from the
perspective of one of skill in the art as of the time of patent application. See id. at 2130.
Although an indefiniteness claim might have factual issues on which it depends, the
determination is “a legal conclusion that is drawn from the court’s performance of its duty as the
construer of patent claims.” See Datamize, LLC v. Plumtree Software, Inc., 417 F.3d 1342, 1347
(Fed. Cir. 2005).
B. ICM’s claim of lack of enablement and written description for claims 1-4 and 9 of the
’061 patent
ICM’s invalidity argument for the relevant claims of the ’061 patent focuses on the term
“value differentiator,” which first appears in the claims in independent claim 1. The ’061 patent
7
is titled “Sensor Condition Indicating System” and, in the words of the specification, the
invention “comprises apparatus for signaling the approximate numeric value encoded in a
variable input signal.” ’061 patent col. 2 ll. 62-64. In simplified terms, claim 1 of the patent
provides that the apparatus includes (a) a “value differentiator” that receives an input signal and
provides a “range signal,” reflecting which one of a set of predetermined, non-overlapping value
ranges the input signal falls within; and (b) a “signaling unit” that receives the range signal and
provides a human perceptible signal corresponding to the range signal received. Id. claim 1.
The specification describes using the claimed invention in a furnace or boiler to generate a light
or sound signal for signaling when the sensor that detects the presence of a flame in the furnace
or boiler is malfunctioning. Id. col. 1 l. 44 – col. 3 l. 11.
Based on the specification’s definition of the term “value differentiator,” the Court
previously construed the term as
a device that receives an input signal, categorizes the signal into one of a plurality of
preferably non-overlapping value ranges, and provides a range signal encoding one of a
predetermined finite set of indicator values, where each of the indicator values
corresponds to a single value range of the input signal.
ECF No. 67. In making both its enablement and written description arguments, ICM relies
heavily on the following paragraph from the specification as setting out a very broad scope of the
invention that is not adequately supported by the specification:
There are many different ways in which each of the components comprising the invention
may be implemented. While shown here as for the most part arising from instruction
execution by microprocessor 27, it is also possible to implement the invention as a
custom circuit. The reader should understand that the specific implementation disclosed
for these elements is likely one of literally hundreds, and that it is neither practical nor
statutorily required to disclose each and every one of them in order to achieve the scope
of patent protection to which I believe I am entitled. When a particular component not
having a known presence in the art is first mentioned, its function will be described and
my intent is to include any of these various embodiments within that description.
8
’061 patent col. 6 ll. 14-27. ICM contends that the specification only discloses using a
“microprocessor” or a “custom circuit” to function as the “value differentiator” of the claims, but
the claims cover all sorts of other unnamed mechanisms to act as a value differentiator.
Despite the patent’s assertion that hundreds of other implementations may exist, ICM has
not identified any that would fall within the scope of the term, but not be enabled or adequately
described by the specification. While the term “value differentiator” does connote a broad scope,
as it is effectively defined in functional terms, 4 ICM has not put forward adequate evidence to
support a summary judgment determination that its full scope is not enabled or adequately
described. Without a concrete example or description of the content allegedly covered but not
enabled and disclosed, the requisite input for an invalidity inquiry is absent. For the enablement
query of whether “undue experimentation” is required, the Federal Circuit has identified factors
to consider such as “(1) the quantity of experimentation necessary, (2) the amount of direction or
guidance presented, (3) the presence or absence of working examples, (4) the nature of the
invention, (5) the state of the prior art, (6) the relative skill of those in the art, (7) the
predictability or unpredictability of the art, and (8) the breadth of the claims.” In re Wands, 858
F.2d 731, 737 (Fed. Cir. 1988). And the adequacy of the written disclosure supporting “generic
claims” is evaluated by considering factors such as “the existing knowledge in the particular
field, the extent and content of the prior art, the maturity of the science or technology, and the
predictability of the aspect at issue.” Ariad, 598 F.3d at 1351 (internal quotation marks omitted).
ICM has not made a showing on any of these factors. Rather, it seeks a determination that
merely because the patent makes sweeping claims about the existence of many embodiments, not
specifically discussed, it should be deemed invalid under the first paragraph of § 112.
4
Neither party contends that the term should be construed as a means-plus-function
limitation and the Court makes no determination on that issue.
9
ICM does not cite any case in which a court has found a lack of enablement or written
description in the abstract, based on unspecified, theoretical embodiments. Rather, those § 112
issues are typically presented with reference to a dispute over the relevant support for a concrete
embodiment or genus. See, e.g., Sitrick v. Dreamworks, LLC, 516 F.3d 993, 999-1001 (Fed. Cir.
2008) (confirming lack of enablement of a claim covering integration of a user’s audio signal or
visual image into a pre-existing video game or movie, where the specification only taught the
integration into video games and not movies); Auto. Techs. Int’l, Inc. v. BMW of N. Am., Inc.,
501 F.3d 1274, 1285 (Fed. Cir. 2007) (affirming summary judgment of inadequate enablement of
a claim covering both mechanical and electronic side impact sensors, where specification only
adequately enabled the mechanical sensors); Synthes USA, LLC v. Spinal Kinetics, Inc., 734 F.3d
1332, 1341-45 (Fed. Cir. 2013) (affirming jury finding of inadequate written description of
generically claimed “openings,” deemed to cover “slots,” where specification only described
“grooves”); Regents of Univ. of Cal. v. Eli Lilly & Co., 119 F.3d 1559, 1568 (Fed. Cir. 1997)
(affirming determination of a lack of adequate written description for claims generically covering
“vertebrate” or “mammal” insulin cDNA, where the specification only described “rat” insulin
cDNA). In contrast, ICM has not identified any category of devices or applications that would
qualify as “value differentiators” but that have not been adequately described or enabled.
Without such an identification and a demonstration of the failure to meet the § 112 requirements,
ICM cannot prevail on summary judgment. The passage on which it relies appears to be little
more than a grandiose expression of the common hedging that appears in patent specifications to
assert that other embodiments, not specifically disclosed, are covered by the claims.
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C. ICM’s claim of lack of written description for claims 3,7, and 8 of the ’759 patent
ICM argues that claims 3, 7, and 8 of the ’759 patent are invalid for failing to meet the
written description requirement. The ’759 patent is titled “PDA Configuration of Thermostats”
and relates to “configuring, setting and adjusting of programmable thermostats of air
management systems.” ’759 patent col. 1 ll. 6-9. The claims refer to configuring thermostats
using a “portable configuring” apparatus or device and the specification discusses a PDA or
“personal digital assistant” as an example of such a portable apparatus. See id. col. 1 ll. 53-56.
According to the summary in the specification, the invention “makes it possible for one at a
convenient time at nearly any place to set and adjust” various parameters of an air management
system, such as temperatures, humidity, sensor selection, volume of air movement, etc. Id. col. 1
ll. 38-53.
For its argument of a lack of written description, ICM contends that the specification
does not describe a “transfer” of configuration information from one air management system to
another via the portable configuration apparatus, but claims 3, 7, and 8 refer to such a transfer.
Claim 3 provides as follows:
A configuring system comprising: a portable configuring apparatus; and wherein: the
portable configuring apparatus is connectable to each air management system of a
plurality of air management systems; and the portable configuring apparatus may transfer
a configuration of one air management system to another air management system of the
plurality of air management systems.
Claim 7 provides:
A configuring system, comprising: one or more air management systems each including a
local air management controller; and a portable configuring apparatus connectable to
each local air management controller, the portable configuring apparatus adapted to
transfer configuration information from at least one local air management controller to at
least one other local air management controller.
Claim 8 depends on claim 7.
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ICM contends that the specification only describes configuring a single thermostat using
the portable device. It notes that the concept of a “transfer” between systems was added during
prosecution. In particular, the original claims filed on August 18, 2003, did not refer to a
transfer, but an amendment dated July 23, 2004, added it. ECF No. 37-5 at 124-29, 193-99.
ICM also contends that the “transfer” element is missing from the specification such that
summary judgment of invalidity for failure to meet the written description requirement is
warranted. The Court disagrees.
While the specification’s detailed description focuses on configuration of a single
thermostat, see e.g., ’759 patent Figure 1, col. 6 l. 64 – col. 8 l. 6, the summary does include
content that could provide adequate written description support for the concept of transferring
configurations between systems. In a single passage, the summary notes that configuration
information from a controller of one system may be “uploaded to the PDA,” id. col. 1 ll. 59-61,
one “may configure, set and adjust” or do “other things” with the parameters, id. col. 2 ll. 1-6,
and “[t]hen one may take the PDA and go to the various thermostats, controllers, computers or
other air management system control devices and upload the programs specific to the respective
systems,” id. col. 2 ll. 6-9 (emphasis added). The reference to a plurality of thermostats and
systems that receive the configurations suggests that the configuration information previously
loaded onto the PDA from one system could be transferred from the PDA to a different system.
ICM does not point to any part of the specification in which the inventors suggest that
their invention does not cover transfers between systems of configuration information using the
PDA, such that the written description might fail to support the later-claimed subject matter. Cf.
Tronzo v. Biomet, Inc., 156 F.3d 1154, 1159 (Fed. Cir. 1998) (pointing to statements in the
specification distinguishing the conical shape of the invention from other shapes in the prior art
12
as evidence of a lack of written description to support a claim that covered other shapes). A
reasonable jury could conclude that the passage from the specification discussed above supports
a finding of adequate written description for the concept of a transfer. ICM, therefore, has not
met its burden of showing on summary judgment that claims 3, 7, and 8 are invalid for lack of
written description.
D. ICM’s claim of indefiniteness of claim 1 of the ’574 patent
ICM contends that claim 1 of the ’574 patent is indefinite based on an apparent, and
likely inadvertent, omission of some language. Claim 1 provides as follows:
In a burner control system having an igniter, motive means to direct fuel to be ignited,
a flame detector to determine the occurrence of combustion and a safety lockout
which, when activated, at least temporarily disables the system if fuel ignition does
not occur within a predetermined time after occurrence of a predetermined one of
energizing the igniter, energizing the motive means, and energizing both the igniter
and the motive means, which safety lockout may undesirably delay completion of a
system start-up sequence in certain predetermined situations where the system
requires priming before the motive means can produce a necessary fuel flow,
comprising:
switch means connected to the system and operable upon activation to produce a
signal; and
timing means connected to receive the signal and operable to extend the time
between occurrence of the predetermined one of energizing the igniter, energizing
the motive means and energizing both the igniter and the motive means, and the
imposing of the lockout condition to a value normally sufficient to allow priming
of the system.
’574 patent claim 1 (emphasis added). ICM notes that the structure of claim 1 makes it apparent
that some language is missing, likely just before the word “comprising.” The basic structure of
claim 1, as written, is “[i]n a burner control system…, comprising: switch means…; and timing
means….” ICM argues that the sentence lacks an “object” that comprises the “switch means”
and “timing means.” ECF No. 249 at 9-10.
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ICM points out that Honeywell has offered different phrases that could be the missing
language. ICM contends that those phrases vary in terms of the claim scope that they imply and
so the omitted language renders the claim indefinite. In connection with claim construction
proceedings, one of Honeywell’s experts, Mr. Thomas Gafford, opined that claim 1 of the ’574
patent is in so-called Jepson format and the missing language is “the improvement” or “the
invention.” ECF No. 49 ¶¶ 53-59. Jepson format refers to a distinctive form of claiming an
improvement to the prior art. See 37 C.F.R. § 1.75(e). ICM notes that Mr. Gafford now
contends that one of skill in the art would understand that the missing language is “a controller.”
See ECF No. 250-1 ¶ 146. ICM argues that the scope of the claim is not reasonably certain,
because in Jepson format the preamble would be limiting, see Kegel Co. v. AMF Bowling, 127
F.3d 1420, 1426 (Fed. Cir. 1997), while the use of “a controller” would result in the preamble
not being a limitation. ECF No. 249 at 10.
Whether or not the preamble is limiting if “a controller” were the missing language is
debatable. 5 Nonetheless, the Court need not decide the issue, because the scope of the claim
5
Although generally a preamble does not limit a claim, it “may be limiting when the claim
drafter chooses to use both the preamble and the body to define the subject matter of the claimed
invention.” Allen Eng’g Corp. v. Bartell Indus., 299 F.3d 1336, 1346 (Fed. Cir. 2002) (internal
quotation marks omitted). The Federal Circuit has explained that a preamble is limiting when it
“recites essential structure or steps, or if it is necessary to give life, meaning, and vitality to the
claim.” Catalina Mktg. Int’l v. Coolsavings.com, Inc., 289 F.3d 801, 808 (Fed. Cir. 2002)
(internal quotation marks omitted). Conversely, it is not limiting where the claim defines a
structurally complete invention in the claim body and the preamble merely states the purpose or
intended use of the invention. Id. As written, the body of claim 1 of the ’574 patent would have
little meaning without the preamble and it is debatable whether the addition of the term “a
controller” would materially change it. Moreover, the body refers back to elements set out in the
preamble—“the system” and “the predetermined one of energizing the igniter, energizing the
motive means and energizing both the igniter and the motive means”—and such references are
often a signal that the preamble is limiting. See Proveris Sci. Corp. v. Innovasystems, Inc., 739
F.3d 1367, 1372 (Fed. Cir. 2014) (“Additionally, when limitations in the body of the claim rely
upon and derive antecedent basis from the preamble, then the preamble may act as a necessary
component of the claimed invention.”) (internal quotation marks omitted).
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would differ based on the replacement term selected under either scenario. If, as ICM contends,
use of “a controller” would not make the preamble limiting, then the scope of the claim differs if
“a controller” were chosen, as compared to if “the improvement” or “the invention” were
selected, because the Jepson format would render the preamble limiting. But even if the
preamble were limiting with use of “a controller,” the scope of the claim under the two options
differs. In particular, under a plain reading of the claim, the use of “improvement” or
“invention” would imply that the elements following the term “comprising”—the switch means
and the timing means—would not need to be part of the controller 6 component of the system,
while the choice of “controller” would restrict them to it.
A review of the intrinsic evidence shows that if the missing language is not “a
controller,” but is “the improvement” or “the invention,” the comprising elements would not be
constrained to the controller. According to the specification, the invention “relates to burner
systems and more particularly to an oil burner system and control that will, when needed,
provide for pumping of oil through the system in a manner to avoid going into safety lockout
without overriding the safety function.” ’574 patent col. 1 ll. 6-11. The patent describes a
typical prior art burner system, which includes a “primary controller.” Id. col. 1 ll. 13 – 52. A
reset button is provided to reset the controller after a safety lockout that typically occurs during
initial set-up and other service circumstances, but is not necessary. Id. col. 1 l. 52 – col. 2 l. 18.
The invention primarily improves on the prior art by providing a “pump priming” or “pump
6
The ’574 patent refers to a “primary controller” and “controller” interchangeably and
gives Honeywell’s R8184 product as an example. See, e.g., ’574 patent col. 1 ll. 33-34, col. 4 l.
36. The specification’s depictions of the controller are all as a distinct component of the system,
separate from other items that the preamble makes part of the “burner control system,” like the
“flame detector.” See id. col. 1 ll. 15-32. Honeywell has not argued that despite the
characterizations in the specification, the term controller lacks physical structure and refers only
to a function.
15
purging” mode. Id. col. 2 ll. 21 – 24. A service technician can place the primary control into
that mode using a predetermined technique, for example by pushing and releasing the reset
button during certain operation states. Id. col. 2 ll. 52-58. The mode allows the “safety switch
timing to be extended, for example, from 30 seconds to 4 minutes” so that the safety lockout may
be avoided. Id. col. 2 ll. 58-62.
The specification of the ’574 patent does not use the terms “switch means” or “timing
means” that appear in claim 1. But the function of the switch means in claim 1 as well as the
characterization of “a switch” in claim 10 indicate that the “reset button” described in the
specification is an example of a switch means. Significantly, for present purposes, the
specification does not describe the reset button as necessarily part of the controller, although it
allows for the possibility. See, e.g., id. Figure 1.
The ’574 patent also refers to a “restricted lockout feature” and cites a co-pending
application filed by the same inventors. Id. col. 2 ll. 31-37. A review of the patent resulting
from that application—U.S. Patent No. 6,413,078 (’078 patent)—shows that references in that
patent also support a conclusion that unless a claim specifically limits it, the reset mechanism or
switch means is not limited to the controller component of the burner control system. The ’078
patent refers to the control as an “oil primary.” ’078 patent col. 1 ll. 9-10. The background of
the invention of the ’078 patent notes that a “reset button is provided in association with the oil
primary.” Id. col. 1 ll. 31-33 (emphasis added). The italicized language suggests that the reset
button may or may not be part of the control. The detailed description of the ’078 patent
includes at least one reference that could be read as specifying it as a part of the control. Id. col.
3 ll. 26-28 (noting that “oil primary 20 includes a user-actuatable reset input, commonly in the
form of a reset button 26 connected to a switch”). Claim 1 calls for “a user reset connected as a
16
part of the oil primary,” while claim 3 calls for “a reset control operatively connected to receive
user reset commands.” (Emphasis added.)
Thus, the intrinsic evidence beyond the claim language does not constrain the “switch
means” in claim 1 of the ’574 patent to being part of the controller component of the burner
control system. The lack of such a constraint implies that if the missing language in the claim
were “the improvement” or “the invention,” the switch means, at a minimum, 7 would not be
limited to being part of the controller component of the system. But if the missing language in
the claim were “a controller,” it would be because the term “comprising” follows. The intrinsic
evidence shows that either option is a plausible one, as do the two submissions of Honeywell’s
expert. Since the two options entail differing limitations for the claim, the missing language in
claim 1 results in a lack of reasonable certainty as to its scope. 8 The claim is invalid for lack of
definiteness.
2. ICM’s Motion for Summary Judgment on Honeywell’s False Advertising (False
Designation of Origin) Claim
ICM seeks summary judgment on Honeywell’s claim for “false designation of origin” as
alleged in Count XVIII of the amended complaint. 9 With that count, Honeywell claims that ICM
advertises its combustion control products as “Made in the USA” when they do not actually
qualify as products made in the country. According to the reports of ICM’s experts, Adam
Vaczek and Robert Stein, a significant part of the manufacturing of the relevant products—
including the final assembly—occurs at a facility in Syracuse, NY. ECF No. 244-2: Ex. B at 667
In light of the determination as to the “switch means,” a similar analysis of “timing
means” is unnecessary.
8
Because more than one reasonable option for the missing language exists and the options
entail differing claim scopes, the defect cannot be corrected. See Novo Indus., L.P. v. Micro
Molds Corp., 350 F.3d 1348, 1354-57 (Fed. Cir. 2003).
9
ICM’s motion does not specifically identify the relevant count, but its arguments are
directed to Count XVIII.
17
68, Ex. D at 17-19. The conceptualization, design, testing, and other production activities also
occur there. ICM acknowledges that some foreign components are incorporated into the
products, but Mr. Stein puts the value of the foreign components at between 10.4 and 23.8
percent depending on the product and characterizes them as “commodity” components. 10 ECF
No. 244-2: Ex. D at 22. The report of Honeywell’s expert, Carl Degen, provides two other
calculations. See ECF No. 305-3: Ex. 10 at Figures 2 and 2A. It designates foreign “materials”
costs as ranging between 33.6 and 80.2 percent depending on the product. Id. at Figure 2. Once
labor and other costs are added in, the report places the foreign content of various ICM products
at between 19.4 and 52.9 percent. Id. at Figure 2A.
In light of the foreign content in ICM’s products, Honeywell alleges that ICM’s branding
of them as made in this country makes ICM liable to Honeywell under § 43(a) of the Lanham
Act, 15 U.S.C. § 1125(a)(1)(B). In relevant part, § 1125(a)(1)(B) provides for a civil action
against a person who uses “any false designation of origin” which “in commercial advertising or
promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her
or another person’s goods, services, or commercial activities,” by “any person who believes that
he or she is or is likely to be damaged by such act.” To establish a claim of false or deceptive
advertising under the Lanham Act, a plaintiff must show: “(1) a false statement of fact by the
defendant in a commercial advertisement about its own or another’s product; (2) the statement
actually deceived or has the tendency to deceive a substantial segment of its audience; (3) the
deception is material, in that it is likely to influence the purchasing decision; (4) the defendant
caused its false statement to enter interstate commerce; and (5) the plaintiff has been or is likely
to be injured as a result of the false statement, either by direct diversion of sales from itself to
10
He states that they are electronic components such as capacitors, resisters, and transistors.
ECF No. 244-2: Ex. D at 23.
18
defendant or by a loss of goodwill associated with its products.” United Indus. Corp. v. Clorox
Co., 140 F.3d 1175, 1180 (8th Cir. 1998). A false statement that forms the basis of a Lanham
Act claim typically falls into two categories: “(1) commercial claims that are literally false as a
factual matter; and (2) claims that may be literally true or ambiguous but which implicitly
convey a false impression, are misleading in context, or likely to deceive consumers.” Id.
“The standard for proving literal falsity is rigorous” and “only an unambiguous message
can be literally false.” Buetow v. A.L.S. Enters., 650 F.3d 1178, 1186 (8th Cir. 2011) (quoting
Time Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 144, 158 (2d Cir. 2007)) (internal
quotation marks omitted). A literal falsity argument fails when an advertisement can reasonably
be understood as conveying different messages. Id. Moreover, “[t]he Lanham Act doctrine of
literal falsity is reserved for an ad that is unambiguously false and misleading—‘the patently
false statement that means what it says to any linguistically competent person.’” Id. (quoting
Schering-Plough Healthcare Prods. v. Schwarz Pharma, Inc., 586 F.3d 500, 512 (7th Cir. 2009).
If a statement is literally false, no extrinsic evidence of consumer deception is required. Time
Warner Cable, 497 F.3d at 158; Schering-Plough, 586 F.3d at 512 (explaining that literal falsity
avoids the need for “costly consumer surveys”).
When a claim is not literally false, but misleading, proof that the advertising actually
conveyed the implied message and deceived a significant portion of the recipients “becomes
critical.” United Indus. Corp., 140 F.3d at 1182-83. The success of such a claim then typically
turns on the persuasiveness of a consumer survey. Id. The Eighth Circuit has gone so far as to
state that “unless a commercial claim is literally false, or a trier of fact has determined that a
competitor acted willfully with intent to deceive or in bad faith, a party seeking relief under this
19
section of the Lanham Act bears the ultimate burden of proving actual deception by using
reliable consumer or market research.” Id.
ICM contends that Honeywell cannot meet its burden to succeed on this claim because
the statement “Made in the USA” is too ambiguous to be literally false under the facts involved
and Honeywell lacks the requisite survey or market research evidence to establish the deception
element. ICM also points to the dictionary definition of “made” and the evidence of its activity,
including final processing and assembly, in Syracuse, NY to contend that its statement is not
false. Although ICM does not spend much time on literal falsity, Honeywell responds that the
statement is actually literally false—so much so that summary judgment should be granted in
Honeywell’s favor on the issue. Honeywell also includes an argument that even if it cannot
succeed on literal falsity at this stage, ICM should not win because Honeywell has enough
evidence of actual deception.
A. Literal falsity
The Court agrees with ICM that the phrase “Made in the USA” is not unambiguous
enough in the context of this case 11 for Honeywell to successfully establish a claim of literal
11
The Eighth Circuit has recognized that there is “some disagreement whether literal falsity
is a question of fact or a question of law for the court.” Buetow, 650 F.3d at 1185 n.5. The
Buetow opinion did not extensively discuss or decide the issue, but observed that “[t]he issue is
perplexing because consumer confusion is a fact intensive issue, but whether a contract or statute
is unambiguous is normally a question of law for the court.” Id. The literal falsity inquiry in
effect encompasses two determinations: whether the advertisement conveys an unambiguous
statement of fact and whether that statement is false. See id. Acknowledging the dual inquiries,
the Sixth Circuit found no conflict between the usual treatment of a statement’s ambiguity as a
matter of law and the determination of falsity as a question of fact. See American Council of
Certified Podiatric Physicians & Surgeons v. American Bd. of Podiatric Surgery, Inc., 185 F.3d
606, 615 n.2 (6th Cir. 1999). The undersigned agrees that while the ultimate determination of
literal falsity may require resolution of factual disputes such that it is properly viewed as a
question of fact, the determination of whether the statement at issue is sufficiently unambiguous
is an appropriate one for resolution as a matter of law. Moreover, the question of whether an
20
falsity. It is telling that despite the pervasive use of “Made in the USA” labels on products,
Honeywell does not point to a single case that has found the phrase unambiguous. The only case
dealing with a “Made in the USA” claim that Honeywell relies on is a 1996 opinion from the
United States District Court for the Eastern District of Wisconsin. See Master Lock Co. v.
Hampton Prods. Int’l Corp., Civ. No. 96-213, 1996 U.S. Dist. LEXIS 19780 (E.D. Wis. Dec. 2,
1996). The Master Lock opinion applied the Federal Trade Commission’s (“FTC”) guidelines
for “U.S. origin claims” to the Lanham Act claim in that case. See id. For a U.S. origin claim to
pass muster with the FTC, the standard that the Commission has traditionally applied and that a
1997 policy statement reaffirms is that “all or virtually all” of the advertised product must be
made in the United States. See FTC Enforcement Policy Statement on U.S. Origin Claims, 62
Fed. Reg. 63,756 (notice issued Dec. 2, 1997) (“FTC Policy Statement”). 12 But Master Lock
does not address the question of whether the phrase “Made in the USA” is unambiguous. See
1996 U.S. Dist. LEXIS 19780. And while an FTC policy statement is accorded due weight,
Beggs v. Rossi, 145 F.3d 511, 512-13 (2d Cir. 1998), a “Lanham Act plaintiff must show that the
advertisements are literally false or misleading to the public, not merely that the advertisements
violate FTC guidelines,” Millennium Imp. Co. v. Sidney Frank Importing Co., Civ. No. 03-5141,
2004 U.S. Dist. LEXIS 11871, at *18 (D. Minn. June 11, 2004) (internal quotation marks
ambiguous statement that would be false under any reasonable construction is not presented or
addressed by the present case.
12
The Federal Trade Commission Act gives the FTC the power to prevent “unfair methods
of competition in or affecting commerce and unfair or deceptive acts or practices in or affecting
commerce.” 15 U.S.C. § 45. Under the authorized proceedings, the Commission may issue an
order requiring a person or entity to cease and desist from a violation of the law found by the
Commission. See id. § 45(b). The Attorney General can seek civil penalties for a violation of an
order of the Commission after it becomes final and the district courts are empowered to grant
injunctions and equitable relief as appropriate in the enforcement of the Commission’s orders.
Id. § 45(l). The FTC has regulated what it calls “U.S. origin claims” pursuant to its general
authority under § 45. See FTC Policy Statement at 63,766.
21
omitted). Therefore, the Court will not convert the determination of whether ICM’s “Made in
the USA” statements are literally false into an inquiry of whether they meet the FTC guidelines.
Moreover, the FTC Policy Statement itself shows that the phrase “Made in the USA” is
not unambiguous enough to support a literal falsity theory for purposes of Honeywell’s Lanham
Act claim. The 1997 statement explains that “[a] product that is all or virtually all made in the
United States will ordinarily be one in which all significant parts and processing that go into the
product are of U.S. origin.” FTC Policy Statement at 63,768. A minimum threshold under the
standard is that “the final assembly or processing of the product must take place in the United
States.” Id. As part of that minimum threshold, the FTC requires that the product should have
been last “substantially transformed”—as that phrase is used by the U.S. Customs Service, see
19 C.F.R. §§ 134.1, 102.11—in the United States, because “consumer perception evidence”
indicated that the “country in which a product is put together or completed is highly significant
to consumers in evaluating where the product is ‘made.’” See id.
Beyond that threshold the FTC considers other factors, “including but not limited to the
portion of the product’s total manufacturing costs that are attributable to U.S. parts and
processing; and how far removed from the finished product any foreign content is.” Id. The
statement does not spell out a fixed proportion for domestic and foreign manufacturing costs that
delineates the line between products that can and cannot be properly tagged as made in the
country. “Rather, the Commission will conduct this inquiry on a case-by-case basis, balancing
the proportion of U.S. manufacturing costs along with the other factors discussed herein, and
taking into account the nature of the product and consumers’ expectations in determining
whether an enforcement action is warranted.” Id. at 63,769. Thus the FTC guidelines recognize
22
that the propriety of a “Made in the USA” claim will be product and context specific, beyond the
threshold consideration of whether final assembly or processing occurs in the country.
Therefore, even under the FTC guidelines, the Court does not find the disputed phrase
sufficiently unambiguous for a determination of literal falsity in this case. And potential other
articulations of what it means for a product to be “Made in the USA” exist. ICM points to a
dictionary definition of the word “made” as “built, formed, or shaped in a specified way” to
support its position that the definition entails that “Made in the USA” covers products built in the
country even if they incorporate foreign components. Other federal regulations embody
conceptions of what it means for a product to be made in a country. For example, the regulations
applicable to a determination of whether “iron, steel, and manufactured goods” are “produced in
the United States” for purposes of section 1605(a) of the American Recovery and Reinvestment
Act of 2009 (“ARRA”), Pub. L. 111-5, 13 include within the definition of a domestic
manufactured good “a manufactured good that consists in whole or in part of materials from
another country” that “has been substantially transformed in the United States into a new and
different manufactured good distinct from the materials from which it was transformed.” 2
C.F.R. § 176.160(a). Similarly, the customs regulations applicable to imported goods
incorporate a concept of “substantial transformation” in defining the foreign “country of origin”
of a good. See 19 C.F.R. §§ 134.1, 102.11. Such characterizations show that a statement that a
product is made in a particular country does not have a universal and definitive meaning. In
other words, the phrase “Made in the USA” is not unambiguous enough that Honeywell may
13
Section 1605(a) of the ARRA allows the use of funds made available by the Act for
certain public projects, with some exceptions, only if “all of the iron, steel, and manufactured
goods used in the project are produced in the United States.”
23
pursue a theory of literal falsity in this case, where there appears to be no dispute that the final
processing and assembly of the products occur in the United States. 14
B.
Deception in the absence of literal falsity
With the literal falsity avenue foreclosed, Honeywell cannot prevail on its false
advertising claim because it lacks adequate evidence to establish the element of deception under
an alternative theory. As the Eighth Circuit has confirmed, under the present circumstances,
Honeywell bears the burden of proving deception with reliable consumer or market research. 15
United Indus. Corp., 140 F.3d at 1182-83. In particular, Honeywell would need to provide
evidence of “what the person to whom the advertisement is addressed finds to be the message,”
Time Warner Cable, 497 F.3d at 158, such that a determination of deception is possible in light
of the actual content and processing of ICM’s products. Honeywell has not proffered reliable
consumer or market research as to what the relevant purchasers understand by the phrase “Made
in the USA,” and that ICM’s claim actually deceives or has a tendency to deceive them given the
actual facts about ICM’s products.
Instead Honeywell primarily relies on the opinion of Dr. Akshay Rao, who is a Professor
of Marketing at the University of Minnesota’s Carlson School of Management. See ECF No.
256-1: Ex. B. 16 Honeywell cites Dr. Rao’s opinion in which he says that “contractors,” who the
14
The amended complaint only identifies the phrase “Made in the USA” as the basis for the
Lanham Act claim of Count XVIII. The ICM marketing materials included in Honeywell’s
submissions show variations of “100% American Made” and “American Made” in addition to
references to “Made in the USA.” Honeywell does not draw a distinction between the different
phrases and has not made any persuasive argument about why they should be treated differently.
15
The amended complaint does not allege willfulness or bad faith of the type referenced in
United Industries, see 140 F.3d at 1182-83, in connection with Count XVIII and Honeywell has
made no showing on the subject.
16
ICM filed a Daubert motion seeking to exclude the testimony of Dr. Rao. His opinion is
discussed here without regard to its admissibility, because even if it were admitted, Honeywell’s
evidence falls short of meeting the requisite standard.
24
parties treat as the relevant consumers, “are likely to believe” that a “Made in the USA” claim
“implies that 100% of the product and its components are manufactured” in the United States.
Id. ¶ 30. As support, Dr. Rao cites the deposition testimony of Charisse Barber, which
Honeywell also cites as evidence in its opposition to the present motion. Id.; ECF No. 303/304
at 16. Although not specifically identified, Ms. Barber appears to be involved in sales for
Honeywell. She testified to a discussion with a contractor or contractors about the meaning of
“Made in the USA” and stated that “[t]hey believe that the product is, you know, ultimately a
hundred percent made in – in the United States, all of its components are made here.” ECF No.
305-3: Ex. 13 at 98-99. After referring to ICM’s promotional efforts, Dr. Rao concludes that
based on ICM’s claims “contractors are likely to infer that 100% of the product, parts and labor
are manufactured” in the country. ECF No. 256-1: Ex. B ¶ 30. Honeywell, however, has not
made any showing that Dr. Rao conducted any research of actual contractors or that he has any
relevant experience with such contractors. He only theorizes about what contractors “are likely
to believe” and “likely to infer.” Id. Dr. Rao’s testimony, even combined with Barber’s
deposition testimony, does not amount to “reliable consumer or market research” on what
contractors understand by the phrase “Made in the USA” and whether they would find ICM’s
use of that phrase for its products misleading.
Honeywell also points to studies by the FTC about general consumers’ perception of the
phrase in connection with its 1997 Policy Statement. But those studies, performed in 1991 and
1995, see Request for Public Comment on Proposed Guides for the Use of U.S. Origin Claims,
62 Fed. Reg. 25,020, 25,035-37 (May 7, 1997), cannot get Honeywell over the summary
judgment hurdle since they do not address what a contractor in the present-day understands by
the phrase and whether that understanding is inconsistent with ICM’s use of it. Moreover, in
25
summarizing its conclusions based on those various studies, the Commission found that “the
consumer perception data indicate that many consumers may have only a general sense of what
the phrase ‘Made in USA’ means rather than a highly refined view of how ‘Made in USA’
should be interpreted, i.e., whether a ‘Made in USA’ claim should be evaluated in terms of costs,
processing, or in another manner.” Id. at 25037. The FTC Policy Statement itself acknowledges
that beyond the minimum threshold requirement of final processing or assembly in the country, a
customer’s understanding of the accuracy of a U.S. origin claim would depend on the product
and the type of content that was foreign sourced. Thus, the FTC material does not amount to
market evidence by which ICM can establish its Lanham Act claim. Honeywell lacks sufficient
evidence of deception from the relevant consumer group about the relevant products for the
Court to allow Honeywell to proceed with its claim for false designation of origin. Count XVIII
must be dismissed. See Am. Italian Pasta Co. v. New World Pasta Co., 371 F.3d 387, 390 (8th
Cir. 2004) (confirming that “[t]he failure to establish any element of the prima facie case is
fatal”).
3. ICM’s Motion for Summary Judgment on Honeywell’s Trade Dress
Infringement Claims
ICM seeks summary judgment on four counts of the amended complaint in which
Honeywell alleges infringement under Section 43(a) of the Lanham Act, 15 U.S.C. §
1125(a)(1)(A), of its trade dress interests in four control products. Provided that the requisite
conditions are met, the Lanham Act creates protection for a product’s “trade dress,” which
encompasses the packaging or “dressing” of a product as well as its design. See TrafFix Devices
v. Mktg. Displays, 532 U.S. 23, 28 (2001). Protected trade dress may be registered or
unregistered. Wal-Mart Stores v. Samara Bros., 529 U.S. 205, 209-10 (2000). Honeywell’s
claimed trade dress for each of its four products is unregistered. To establish a claim for
26
unregistered trade dress infringement, a plaintiff must demonstrate that the claimed trade dress
(1) is distinctive; (2) is nonfunctional; and (3) its imitation would likely cause confusion for
consumers as to the source of the product. Gateway, Inc. v. Companion Prods., 384 F.3d 503,
507 (8th Cir. 2004). ICM contends that Honeywell cannot meet its burden of establishing the
nonfunctionality of its claimed trade dress.
Images of the four Honeywell products 17 at issue are shown below:
S8610U
R8184
S8910U
R7184
For each Honeywell product that forms the basis for the trade dress claims, the amended
complaint alleges that the product “has a distinct look and feel that includes without limitation
the following elements, either alone or in combination:” and lists a series of elements. ECF No.
17
The controls are installed on a 4 inch by 4 inch junction box.
27
32 ¶¶ 33, 52, 65, 81. Honeywell’s brief opposing ICM’s motion on the trade dress claim initially
characterizes the trade dress for each product as being comprised of the same set of elements
“either alone or in combination.” See ECF No. 310/311 at 1-6. By the end of the brief, however,
it is unclear whether Honeywell asserts a trade dress interest in anything less than a combination
of the listed elements. See id. at 22-23. At the hearing on the motion, Honeywell confirmed that
its claimed interest is in the combination of the identified elements.
The elements identified in the amended complaint and briefing for each of the four
products are similar in nature. As a representative example, the elements listed for the R8184 are
as follows:
•
•
•
•
•
•
a gray case;
a raised and ridged circular bezel formed out of the case, located on the left
side of the “face” of the product;
a red circular reset button set inside the raised/ridged bezel;
a black-and-white label with an orange warning bar immediately to the right
of the red button;
an LED indicator light nestled in the housing and located between the
thermostat and flame-sensor connections along the right side of the unit; and
the location and order of the thermostat and flame sensor quick-connect
terminals on the right side of the unit.
ECF No. 32 ¶ 52; ECF No. 310/311 at 4-5.
At the outset, the Court acknowledges the striking similarity between the Honeywell
products at issue and the corresponding ICM products that Honeywell alleges infringe its trade
dress. As an example, the Honeywell R8184 and the ICM counterparts are shown below:
28
Honeywell R8184
ICM 1500 Series
But “[t]rade dress protection must subsist with the recognition that in many instances there is no
prohibition against copying goods and products.” TrafFix, 532 U.S. at 29. And, as a general
matter, “unless an intellectual property right such as a patent or copyright protects an item, it will
be subject to copying.” 18 Id. The Supreme Court has also cautioned against misuse or overextension of trade dress. Id. Particular caution is warranted when extending protection to
product designs and configurations. See Yurman Design, Inc. v. PAJ, Inc., 262 F.3d 101, 114-15
(2d Cir. 2001); see also Aromatique, Inc. v. Gold Seal, 28 F.3d 863, 873 (8th Cir. 1994) (“Our
society is better served if functional containers (as well as product designs and highly descriptive
or generic terms) remain available for use among competitors. To the extent this causes a
modicum of confusion of the public, it will be tolerated.”) (quoting In re Water Gremlin Co., 635
F.2d 841, 844 (C.C.P.A. 1980)); Leatherman Tool Group, Inc. v. Cooper Indus., 199 F.3d 1009,
1013 (9th Cir. 1999) (“Several other courts have noted that it is, and should be, more difficult to
claim product configuration trade dress than other forms of trade dress.”).
The Lanham Act assigns the party asserting trade dress protection the burden of
18
The present complaint includes both patent and copyright claims related to some of the
same products that are the subject of the trade dress infringement claims.
29
establishing that unregistered trade dress is not functional. See 15 U.S.C. § 1125(a)(3); Secalt
S.A. v. Wuxi Shenxi Constr. Mach. Co., 668 F.3d 677, 683 (9th Cir. 2012) (“Under the Lanham
Act, Congress imposes a presumption of functionality, and plaintiff bears the burden of proving
nonfunctionality.”). The line between functionality and nonfunctionality “is not brightly drawn.”
Dippin’ Dots, Inc. v. Frosty Bites Distrib., LLC, 369 F.3d 1197, 1203 (11th Cir. 2004) (internal
quotation marks omitted); see also Eppendorf-Netheler-Hinz Gmbh v. Ritter Gmbh, 289 F.3d
351, 355-56 (5th Cir. 2002) (observing that “the definition of ‘functionality’ has not enjoyed
such clarity”). In TrafFix the Supreme Court provided some guidance on the subject. It
confirmed that the “traditional rule” on functionality continues to apply. TrafFix¸ 532 U.S. at
33-35. That rule, articulated in Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S.
844, 850 n.10 (1982), provides that “[i]n general terms, a product feature is functional if it is
essential to the use or purpose of the article or if it affects the cost or quality of the article.”
In Qualitex Co. v. Jacobson Products Co., 514 U.S. 159, 165 (1995), the Supreme Court
expanded on the language from Inwood, saying “‘in general terms, a product feature is
functional,’ and cannot serve as a trademark, ‘if it is essential to the use or purpose of the article
or if it affects the cost or quality of the article,’ that is, if exclusive use of the feature would put
competitors at a significant non-reputation-related disadvantage.” The appellate court decision
under review in TrafFix had incorrectly interpreted the additional Qualitex language regarding a
“non-reputation-related disadvantage”—at times referred to as the “competitive necessity” test—
as creating a “necessary test” for, or a “comprehensive definition” of, functionality. TrafFix, 532
U.S. at 32-33. In reversing the appellate court, the Supreme Court confirmed that Qualitex did
not change the traditional nonfunctionality inquiry and “competitive necessity” is a proper
30
consideration in cases of “aesthetic functionality.” 19 Id.; Groeneveld Transp. Efficiency, Inc. v.
Lubecore Int’l, Inc., 730 F.3d 494, 505-07 (6th Cir. 2013).
Reading TrafFix and Qualitex together confirms that “the test for functionality proceeds
in two steps.” Au-Tomotive Gold, Inc. v. Volkswagen of Am., Inc., 457 F.3d 1062, 1072 (9th Cir.
2006); accord Louboutin v. Yves Saint Laurent Am. Holding, Inc., 696 F.3d 206, 219-20 (2d Cir.
2012). First, the traditional nonfunctionality inquiry as stated in Inwood is made. If no
functionality is found under it, a second inquiry is made as to whether competitors would
nonetheless be at a significant non-reputation-related disadvantage. See TrafFix, 532 U.S. at 3233. But “[w]here the design is functional under the Inwood formulation there is no need to
proceed further to consider if there is a competitive necessity for the feature.” Id.
Consistent with the treatment of the concept by other courts, the Eighth Circuit has
traditionally used the notion of an “arbitrary embellishment” when discusing the concept of
nonfunctionality of trade dress. See Gateway, 384 F.3d at 508. More specifically, the notion is
that “trade dress is nonfunctional ‘if it is an arbitrary embellishment primarily adopted for
purposes of identification and individuality. But if the trade dress is an important ingredient in
the commercial success of the product, it is clearly functional.’” Id. (quoting Prufrock, Ltd. v.
19
In TrafFix the Supreme Court characterized Qualitex as involving an aesthetic
functionality inquiry. TrafFix, 532 U.S. at 33. The claimed trade dress in Qualitex was for a
green-gold color of press pads used in dry cleaning presses and the main question under
consideration was whether the Lanham Act permits a color to serve as a trademark. Qualitex,
514 U.S. at 160-62. Even though the green-gold color did not have “any bearing on the use or
purpose of the product or its cost or quality,” see TrafFix, 532 U.S. at 33, the defendant had
raised a concern that allowing color to be protected created a risk that if various competitors
were allowed to use different colors as trade dress, the supply of usable colors would be depleted
such that other competitors would be at a significant disadvantage, see Qualitex, 514 U.S. at 168.
The Supreme Court rejected that argument on the ground that the trademark doctrine of
“functionality” would protect against the risk, id. at 169-70, and ultimately confirmed trade dress
protection for the green-gold color at issue, id. at 174, presumably because the nature of the color
did not present a “color depletion” problem.
31
Lasater, 781 F.2d 129, 133 (8th Cir. 1986)); see also Eppendorf-Netheler-Hinz, 289 F.3d at 355
(“[T]rade dress protection extends only to incidental, arbitrary or ornamental product features
which identify the source of the product.”); Antioch Co. v. W. Trimming Corp., 347 F.3d 150,
158 (6th Cir. 2003) (“[I]n order to receive trade dress protection for the overall combination of
functional features, those features must be configured in an arbitrary, fanciful, or distinctive
way.”).
For each controller product, a review of the elements identified by Honeywell as making
up its trade dress shows that they relate to certain characteristics of components on the external
body of the controllers. There does not appear to be any dispute that the components themselves
serve a function. For example, for the R8184, the case serves to protect the internal components,
the reset button is used to reset the device, the raised bezel protects the button, the label provides
information (including manufacturer identity) or warnings, and the LED light operates as an
indicator. For each product, Honeywell witnesses confirmed that all of the external components
have a function. ECF No. 263: Ex. A at 81:13-82:18 (R7184), Ex B at 67:5-10 (R8184), Ex. C at
78:4-88:20 (S8910U), 89:4-98:14 (S8610U). But what Honeywell contends forms its trade dress
is not the components in and of themselves, but certain characteristics, such as the gray color of
the case, the red color of the reset button, and the location relative to each other of the various
components on the external body of the unit. All of the elements identified by Honeywell for
each of the four products at issue can be categorized as relating to shape, color, or configuration.
Thus the question before the Court is whether Honeywell has proffered sufficient evidence from
which a reasonable jury could find that it has met its burden of overcoming the presumption of
functionality of its claimed trade dress at both stages of the requisite inquiry.
32
A. Is the claimed trade dress essential to the use or purpose of the product or does it
affect the product’s cost or quality?
For the shapes, colors, and configurations of its products, Honeywell has not made a
showing that they are not functional under the traditional Inwood test—that the claimed trade
dress is not essential to the use or purpose of the product and does not affect its cost or quality.
Instead, Honeywell has focused exclusively on the competitive necessity approach, and has
sought to establish the availability of alternative design choices. While the existence of
alternative designs may still be relevant to the primary inquiry of functionality, Valu Eng’g, Inc.
v. Rexnord Corp., 278 F.3d 1268, 1276 (Fed. Cir. 2002), TrafFix makes clear that treating the
competitive necessity test as the sole and comprehensive gauge—without consideration of the
purpose, use, cost, and quality aspects relevant to the primary inquiry—is error. But that is what
Honeywell has done.
In its brief, Honeywell quotes the formulation of the nonfunctionality standard from
Qualitex and uses the reference to an absence of a “significant non-reputation-related
disadvantage” to frame its argument and presentation of evidence. See ECF No. 310/311 at 17.
Honeywell first proffers testimony of its witnesses that repeatedly uses the buzzword “arbitrary”
in describing the shape, color, and configuration of its products. See id. at 1-6. But a review of
the cited testimony shows that the witnesses consistently used the term “arbitrary” to merely
mean that multiple options exist for the particular shape, color, or configuration at issue. For the
S8610U and S8910U products, Honeywell relies on the testimony of its corporate witness, John
Cueva, that various features are “arbitrary.” Id. at 2-4. Mr. Cueva confirmed that when he used
the term “arbitrary features,” he meant that “they could have readily been designed differently.”
ECF No. 312-4 at 45-46. For the R8184 and R7184, Honeywell primarily relies on the
testimony of another corporate witness, Richard Simons. ECF No. 310/311 at 4-6. He also used
33
the term “arbitrary” and his testimony shows he meant that it was merely not a necessary design
choice and other options existed. See ECF 312-10 at 319 (“It’s red, arbitrary as well. It could
have been located in different areas. It could have been different colors.”).
Honeywell next contends that “ICM’s experts agree competitors would not be at a
‘significant non-reputation-related disadvantage’ by not using the trade dress.” ECF No.
310/311 at 6-7. In support, it cites testimony of an ICM expert that the appearance of the control
products at issue does not influence customer demand. Honeywell also cites the testimony of an
ICM corporate witness that confirms the potential for alternative designs as long as they meet the
“form, fit and functional” constraints of serving as a replacement control. Id. Again, the
testimony shows no more than the possibility of alternative designs. Moreover, the expert’s
statement that the external appearance of the product does not drive consumer demand confirms
what the plain appearance of the devices suggest—that they are nondescript pieces of technical
equipment, purchased solely for the function that they serve. That fact cuts against a finding of
nonfunctionality of the product design. See Clamp Mfg. Co. v. Enco Mfg. Co., 870 F.2d 512, 516
(9th Cir. 1989) (“If the utilitarian aspects of the product are its essence, only patent law protects
its configuration from use by competitors.”).
Honeywell then points to the testimony of two of its own expert witnesses on
nonfunctionality. But those experts also opine primarily on the competitive necessity of the
designs under the Qualitex formulation, without reference to the requisite use, purpose, cost, and
quality considerations. The first paragraph on nonfunctionality in the expert report of David
Schumacher states:
The external appearance of the Honeywell controls is not “functional.” A competitor
with a differently-shaped enclosure would not be at a non-reputational-related
disadvantage for using its own appearance of a combustion control rather than
Honeywell’s.
34
ECF No. 312-17 ¶ 175. In his reply expert report, Mr. Schumacher states that he has “been
informed that a functional feature is one the exclusive use of which would put competitors at a
significant non-reputation-related disadvantage.” ECF No. 312-18 ¶ 12. While he lists other
legal principals related to functionality, such as those referring to an “arbitrary flourish” or
“arbitrary, incidental, or ornamental aspects,” he does not refer to the primary standard of
whether the asserted trade dress is essential to the purpose and use of the products and whether it
affects their cost or quality. Id. ¶¶ 13-15.
The rebuttal report of another Honeywell expert, Mr. Thomas Gafford, states the same
definition of a functional feature and other similar legal principles as Mr. Schumacher’s report,
but also omits the main inquiry. ECF No. 312-20 ¶¶ 53-58. The submitted portion of Mr.
Gafford’s initial expert report does not identify the legal principles applied or the meaning used
for the terms “arbitrary” and “nonfunctional” in reaching his opinion that those terms describe
Honeywell’s product designs. ECF No. 312-19 ¶¶ 134-180. But after conclusory statements that
the shape, color, and configuration aspects of the products are “arbitrary and nonfunctional” and
there is no “technical or functional need” for ICM’s products to have the same shape, color, and
configuration details, id. ¶¶ 135-43, the discussion in his expert report on nonfunctionality
confirms that his approach is consistent with Honeywell’s overarching approach of establishing
the availability of alternative designs to attempt to meet its burden on nonfunctionality, id. ¶¶
144-80. He points out replacement controllers from other manufacturers that can be used like the
products at issue but that have different external appearances, points out ICM’s alternative
designs, and points to hypothetical alternative designs of cases that ICM could use. Id. He
observes that the availability of these different sets of “alternative designs demonstrate the
arbitrary nature of the shape of Honeywell and ICM’s products.” Id. at 102, 105-106. Thus,
35
Honeywell’s experts, like its other witnesses, gauge nonfunctionality based on the availability of
alternative designs.
Honeywell lastly proffers the evidence of other competitors’ controls that do not appear
as similar to its products as ICM’s products do, but that are functionally interchangeable. ECF
No. 310/311 at 10-16. Honeywell points to this evidence of “myriad competitive controls that
exhibit a wide variety of trade dress” as demonstrative of the nonfunctionality of Honeywell’s
designs. Id. at 16. But again that evidence only shows the possibility of other designs.
Thus, Honeywell’s entire submission to meet its burden on nonfunctionality is directed at
establishing that competitors would not be at a “significant non-reputation-related disadvantage”
if its claimed trade dress were protected. The approach effectively treats the competitive
necessity test as a “comprehensive definition” of functionality. But TrafFix confirms the
inappropriateness of that treatment. 20
20
In Insty*Bit v. Poly-Tech Indus., 95 F.3d 663, 673-74 (8th Cir. 1996), the Eighth Circuit
determined that the use of alternative designs for a “quick-change drill chuck” by competitors
could support a nonfunctionality determination under the facts of that case, such that the question
should have gone to a jury. The primary focus of the opinion, however, was the district court’s
treatment of the “likelihood of confusion” element of the trade dress claim and nonfunctionality
is summarily addressed in a single paragraph. But more importantly, Insty*Bit predates the
Supreme Court’s opinion in TrafFix. The appellate decisions since TrafFix that discuss
functionality in the context of trade dress claims analogous to those asserted by Honeywell here
consistently show that a mere combination of functional components with nondescript or
common colors, shapes, and configurations does not meet the requisite standards. See, e.g.,
Groeneveld, 730 F.3d at 504-505 (overall appearance of a grease pump); Secalt S.A., 668 F.3d at
681-83 (external design elements of a traction hoist); Eppendorf-Netheler-Hinz, 289 F.3d at 353354 (external elements of disposable pipette tips). While the Groeneveld and Eppendorf
opinions specifically discuss evidence of the functions served by the design elements at issue,
they are decisions overturning jury determinations of nonfunctionality, i.e. they were rendered
after jury trials in which both sides presented evidence. Groeneveld, 730 F.3d at 505;
Eppendorf-Netheler-Hinz, 289 F.3d at 357-58. Here ICM had no burden to come forward with
evidence of functionality of the design elements. See Celotex Corp. v. Catrett, 477 U.S. 317,
322 (1986) (confirming that summary judgment is proper “against a party who fails to make a
showing sufficient to establish the existence of an element essential to that party’s case, and on
which that party will bear the burden of proof at trial” even in the absence of an affirmative
36
Critically missing from the evidence that Honeywell puts forward in its opposition to
ICM’s motion is a demonstration that its claimed trade dress is not essential to the use or purpose
of the products and does not affect their cost or quality. While Honeywell emphasizes the
interchangeability of other competitors’ designs, ECF 310/311 at 9-16, and points to the
“feasibility” of alternative designs, id. at 7, it does not put forward evidence that those designs do
not have cost or quality consequences that the Honeywell designs avoid. 21
While Honeywell
includes a reference to the testimony from an ICM witness that a redesigned mold for the cases
for the relevant ICM controllers would range from $12,500 to $20,000, ECF 310/311 at 7-8,
those figures say nothing about how the costs to actually make, store, ship, 22 or otherwise
process the reshaped cases would compare to the same costs for the Honeywell designs.
Honeywell similarly cites the reference in Mr. Schumacher’s report to the same ICM testimony,
but the expert only confirms that it would not be expensive to shift to a new shape. He says
nothing about how the actual manufacturing and other costs of a differently-shaped product
would compare to the Honeywell design. ECF No. 310/311 at 8; ECF No. 312-17 ¶ 201.
Honeywell also does not put forward any evidence that the design elements were selected with
an eye to identification and individuality rather than utility. The failure to proffer evidence that
meets the primary nonfunctionality inquiry warrants summary judgment.
showing of evidence from the nonmoving party negating the element); see also Secalt, 668 F.3d
at 686 (observing the absence of “any evidence that these functional aspects of the trade dress
were adorned with arbitrary, ornamental embellishments” in affirming summary judgment for
failure to establish nonfunctionality).
21
During his deposition as a Honeywell corporate witness, Mr. Cueva testified that
“typically our standardized designs are our lowest cost designs.” ECF No. 263: Ex. C at 93:2-4.
Honeywell does not proffer any evidence on whether or not its designs at issue are lowest cost or
represent design choices that actually increase costs.
22
For example, some of the hypothetical designs for the controller housings proposed by
Honeywell change a straight length to a rounded shape. See ECF No. 312-19 at 106-107. It
seems likely that storage and transport space would be more efficiently utilized with a straight
rather than curved edge such that the hypothetical design could be costlier.
37
Moreover, common experience confirms the functionality of many of the elements that
make up Honeywell’s claimed trade dress. For example, although alternatives may be possible,
black and gray are common choices for housings for technical equipment, especially equipment
meant to be in the background, so that they do not stand out. See Brunswick Corp. v. British
Seagull Ltd., 35 F.3d 1527, 1531-32 (Fed. Cir. 1994) (confirming the functionality of the use of
black for boat engines as the color black “exhibits both color compatibility with a wide variety of
boat colors and ability to make objects appear smaller” and distinguishing that use of a color
from the nonfunctional use of pink for fibrous glass insulation). Likewise, the red of stop signs
and orange of road-work signs suggest that those colors help draw attention, so their use for an
important button or warning label serves a function. Common sense also suggests
manufacturing, storage, and transportation efficiencies of simple shapes, such as a generally
rectangular shape for the overall product or for a round button.
Additionally, the evidence proffered reflects that some constraints for the product
designs are created by where the controllers are mounted, the wiring needed, and the install
space. See ECF 310/311 at 7. Honeywell has not put forward evidence of the nature of the
space, mounting, and wiring requirements, such that a fact-finder could determine that those
constraints do not make its product configurations and shape functional. By focusing solely on
showing that alternative designs are possible, Honeywell has avoided the primary
nonfunctionality inquiry. But the controllers at issue are little more than a set of “individual
functional components” that have been “combined in a nonarbitrary manner to perform an
overall function.” Groeneveld, 730 F.3d at 505. In such a scenario, “the producer cannot claim
that the overall trade dress is nonfunctional.” Id.; Secalt, 668 F.3d at 684 (noting that the
plaintiff’s “fundamental misunderstanding—which infects its entire argument—is that the
38
presumption of functionality can be overcome on the basis that its product is visually
distinguishable from competing products”). Summary judgment against Honeywell is
appropriate.
B. Would competitors be at a significant non-reputation related disadvantage?
Even if the Court were to assume that Honeywell had actually proffered sufficient
evidence that the claimed design elements were not essential to the use or purpose of the
products and did not impact their cost or quality, Honeywell cannot meet its burden to show that
the basic colors and shapes, as well as their nondescript combination do not put competitors at a
non-reputation related disadvantage. See Jay Franco & Sons, Inc. v. Franek, 615 F.3d 855, 860
(7th Cir. 2010) (“Granting a producer the exclusive use of a basic element of design
(shape, material, color, and so forth) impoverishes other designers’ palettes.”). While shape,
color, and configuration may certainly qualify as valid marks, the types of shapes, colors, and
configurations claimed by Honeywell differ fundamentally in nature from those in cases where
protection was found or considered a possibility. The eccentric use of green-gold on a laundry
press pad, Qualitex, 514 U.S. at 160-61, the unexpected placement of red on a shoe’s outsole that
contrasts with the upper part, Louboutin, 696 F.3d at 227-28, 23 or the purposefully-striking
contours of a Ferrari, Ferrari S.P.A. Esercizio Fabriche Automobili E Corse v. Roberts, 944 F.2d
1235, 1246 (6th Cir. 1991), are sufficiently unusual or “arbitrary” 24 that preventing others from
23
In Louboutin, the Second Circuit declined to address the functionality of the design, but
implicitly left open the possibility of its nonfunctionality. 696 F.3d at 228.
24
While Honeywell’s witnesses all describe the shape, color, and configuration of its
products as “arbitrary,” the Lanham Act cases show that their use does not correspond to the way
the cases use the term in connection with the doctrine of functionality. Rather, the reference to
“arbitrary” in the cases is linked to the concept of a design element “primarily adopted for
purposes of identification and individuality.” See Gateway, Inc., 384 F.3d at 508. The type of
trade dress at issue in Qualitex, Louboutin, and Ferrari confirms that “arbitrariness” in the
context of the doctrine of functionality refers to design elements purposefully introduced not for
39
copying those elements may not pose an unfair disadvantage to competitors. In contrast,
although Honeywell has shown that design variations are possible, it has not shown that they are
sufficiently great in number—especially in light of the size, installation space, and wiring
constraints for controllers—that they would not significantly disadvantage competitors.
Rather than establishing the absence of a competitive disadvantage, the materials before
the Court raise concerns about the foreseeable disadvantages from recognizing trade dress
protection of the sort Honeywell requests. For example, while Honeywell relies on the closeness
of the resemblance between Honeywell’s and ICM’s products and introduces images of other
competitors’ products that differ, some do not differ so significantly as to make it clear that no
concern of an infringement claim would exist. The images of Honeywell’s S8610U with the
corresponding ICM product and some of the products of other competitors that Honeywell
submitted show that the level of differentiation in appearance varies:
any utilitarian purpose but rather to distinguish the product. See also Gateway Inc., 384 F.3d at
508 (black and white cow spots on computers); Frosty Treats, Inc. v. Sony Computer Entm’t
Am., Inc., 426 F.3d 1001, 1003, 1007 (8th Cir. 2005) (“Safety Clown graphic” on an ice cream
truck).
40
Even for the hypothetical alternatives to ICM’s designs that Honeywell’s expert, Mr. Gafford,
created, he disclaims any “opinion as to whether or not these would be acceptable to Honeywell
as a matter of trade dress protection.” ECF No. 312-19 ¶¶ 163, 165.
To accept Honeywell’s contention that it is entitled to the trade dress protection it seeks
for the basic shapes, colors, and configurations of the undeniably functional components of its
controller products just because other shapes, colors, and configurations exist, would mean that
the overall appearance of practically any everyday appliance or piece of generic equipment
would meet the nonfunctionality test, because as long as the item is large enough or has at least a
few external components, some variation in the configuration is bound to be possible. And if
Honeywell’s design qualifies for trade dress protection, then so would analogous unregistered
designs belonging to other competitors. It does not take much stretching to envision the undue
burden that new entrants would then face to steer clear of the first few such combinations to
receive protection. 25 That burden seems especially onerous when imposed on suppliers of
technical equipment for mundane applications that are purchased almost exclusively, if not
entirely, for the functionality that they provide. This is exactly the type of scenario in which the
protections of the “competitive necessity” prong of the functionality doctrine come into play.
See Valu Eng’g, 278 F.3d at 1277 (noting that “the effect upon competition is really the crux of
the functionality inquiry”) (internal quotation marks omitted). When functional components are
merely pulled together in a nondescript manner, the fact that they do have an appearance and that
other appearances are possible, is not sufficient by itself to support a determination of
nonfunctionality. Honeywell’s controllers certainly have “an exterior appearance, as every
25
For example, if Honeywell can protect having the “thermostat and flame sensor quickconnect terminals on the right side” of the R8184 unit, then other competitors would be forced to
use one of the other three sides of a rectangular unit, and once those run out, other competitors
would be at a serious disadvantage.
41
object must; but there is no evidence that anything about the appearance exists for any
nonfunctional purpose.” See Secalt, 668 F.3d at 684.
While the copying of the product of another’s efforts might offend traditional
sensibilities, as the Supreme Court has confirmed, it is generally acceptable in the absence of
patent or copyright protection. TrafFix, 532 U.S. at 29; see also Clamp Mfg., 870 F.2d at 516
(“The requirement of nonfunctionality is based ‘on the judicial theory that there exists a
fundamental right to compete through imitation of a competitor’s product, which right can only
be temporarily denied by the patent or copyright laws.’”) (quoting In re Morton-Norwich
Products, Inc., 671 F.2d 1332, 1336 (C.C.P.A. 1982)). Moreover, a party may seek trade dress
registration or a design patent and benefit from the presumptions they create in an infringement
action. But here Honeywell bears the “heavy burden of showing” that its asserted unregistered
trade dress “is not functional, for instance by showing that it is merely an ornamental, incidental,
or arbitrary aspect of the device.” TrafFix, 532 U.S. at 30. Summary judgment is appropriate in
light of Honeywell’s failure to come forward with sufficient evidence to do so. 26
26
Counts XIII – XVI of Honeywell’s amended complaint assert trade dress infringement
under 15 U.S.C. § 1125(a)(1)(A). Count XVII alleges false advertising under subsection
(a)(1)(B) of § 1125 based on the same facts and grievance that formed the basis for the trade
dress infringement claim. In particular, Honeywell alleges that the “false impression, fostered by
ICM, that ICM’s products are in fact affiliated with, the same as, sponsored by, manufactured by
or condoned by Honeywell is false” and therefore amounts to “false advertising” under
subsection (a)(1)(B). The Court questions the propriety as a legal matter of asserting a claim that
is in effect one for trade dress infringement under subsection (a)(1)(B) and of construing a
product’s appearance as a “statement of fact” that can form the basis for a claim under subsection
(a)(1)(B). If Honeywell intends to pursue Count XVII further, it must submit a brief with legal
authority for its position that Count XVII states a claim on which relief can be granted, within
three weeks of the date of this order. ICM may make its own submission on the subject within
two weeks from any such filing by Honeywell.
42
4. Honeywell’s Daubert Motion
With its Daubert motion, Honeywell seeks exclusion of the testimony of three ICM
experts: Robert Stein, Leon Kaplan, and Adam Vaczek.
A. Mr. Robert Stein’s report related to the false designation of origin claim
Mr. Stein formerly worked as a United States Customs Broker and currently serves as
Vice President of Customs and Trade Compliance at Mohawk Global Logistics. He submitted
an expert report relating to Honeywell’s false advertising claim based on ICM’s marketing of its
products as “Made in the USA.” In light of the Court’s dismissal of that claim, Honeywell’s
motion with respect to Mr. Stein will be denied as moot.
B. Dr. Leon Kaplan’s survey on heating, ventilation, and air conditioning (“HVAC”)
contractor purchasing behavior
Dr. Kaplan of Princeton Research & Consulting Center, Inc. submitted a report at ICM’s
request that is titled “HVAC Contractor Purchasing Behavior Study.” ECF No. 276-6: Ex. G. In
responding to Honeywell’s motion to exclude Dr. Kaplan’s testimony, ICM represents that his
study relates to “any equitable award of a disgorgement of profits, assuming trade dress
infringement or false advertising, under 15 U.S.C. § 1117 or, assuming copying infringement,
under 17 U.S.C. § 504(b).” ECF No. 307 at 32. With its motion, Honeywell mainly argues that
Dr. Kaplan’s conclusions drawn from his study are not grounded in any accepted principle of
trade dress law. Honeywell also argues that Dr. Kaplan’s opinions addressing the relative
importance of HVAC contractors’ product-purchasing considerations are not relevant to the trade
dress, copyright, and “Made in the USA” false advertising claims. The dismissal of those claims
other than the copyright claims has largely rendered Honeywell’s motion moot. And since ICM
does not seek to present the study to the jury, but to the Court in connection with the
determination of any equitable damages award, Honeywell’s arguments as to Dr. Kaplan’s
43
opinions will not be considered at this time. The part of Honeywell’s motion directed at Dr.
Kaplan’s testimony will be denied without prejudice.
C. Mr. Adam Vaczek’s proposed testimony related to the copyright infringement claims
Mr. Vaczek submitted an expert report in connection with ICM’s opposition to
Honeywell’s claim that the installation manuals and product labels of ICM’s accused products
infringe Honeywell’s copyright interests. ECF No. 276-1. Mr. Vaczek has over 30 years of
experience in the HVAC industry, which is the relevant one for the products at issue. As a
service technician for over 20 years, he worked on troubleshooting, repairing, and replacing
various types of HVAC equipment, including furnaces, boilers, and heaters. In 2001 he became
the Service Manager for a large mechanical contractor. He has had considerable experience
purchasing controls and extensive exposure to installation manuals and product labels in
connection with his work.
Mr. Vaczek’s report has two sections. In section A of his report, Mr. Vaczek states that
he has “been asked to provide [his] opinion regarding the content of certain Honeywell product
manuals and labels, namely whether they contain factual information necessary for contractor
use, methods of operation, standard industry concepts and words, or common directives that can
only be written a few ways.” Id. at 6. He summarizes his opinion as follows:
It is my opinion that Honeywell’s manuals and labels for the controls at issue contain
little, if any content that is unique to Honeywell or that is not determined by the features
or functions of the controls themselves. The organization of the information contained in
the manuals and labels is standard industry information, common directives, fact-based
communications, methods of operation and universally shared graphics. Many of the
instructions and methods, use simple ways to convey factual messages.
Id.
In the lengthy analysis portion of section A, Mr. Vaczek reviews the Honeywell manuals
and labels at issue. For each manual, he describes the purpose, assesses the chapter headings,
44
and then analyzes the chapter content. He generally concludes that the chapter headings and
organization follow a format that is typical of other manufacturers and not “unique” to
Honeywell. He reviews the chapter content to conclude that the content is factual, is necessitated
by the features or functions of the control, and contains concepts or language standard in the
industry. For each label, he describes the purpose and reviews the size, layout, and content to
conclude that they are functional and standard in the industry.
In section B of his report, Mr. Vaczek states that he has “been asked to provide opinions
regarding the differences and areas of intersection” between Honeywell and ICM’s manuals and
labels at issue. Id. at 100. He then goes on to consider each set of corresponding ICM and
Honeywell materials to “identify differences and areas of intersection, and the reasons for these
differences and areas of overlap.” Id. For each set, he reviews the sections and identifies
differences. Id. at 100-142. He also discusses the similarities to explain his opinion that they
result from the features, functions, and mechanics of the products or are attributable to industry
standards and best practices.
Honeywell makes three arguments in seeking exclusion of Mr. Vaczek’s report. First,
Honeywell contends that because Mr. Vaczek does not consider himself a copyright expert and
admitted that he would not be opining on copyrightability of the works, his report should be
excluded. Since an expert need not opine on the ultimate legal question at issue, the Court
interprets Honeywell’s challenge as directed at the relevance of Mr. Vaczek’s proposed
testimony. Second, Honeywell contends that Mr. Vaczek’s opinions are not grounded in any
analysis of the “originality” of Honeywell’s registered works. Third, Honeywell contends that
45
because ICM did not provide any discovery on how the manuals were created, Mr. Vaczek
should not be allowed to provide an explanation of why they resemble Honeywell’s materials. 27
In order to assess Honeywell’s arguments, a review of the relevant copyright law is
necessary. To establish copyright infringement, two elements must be proven: “(1) ownership of
a valid copyright, and (2) copying of constituent elements of the work that are original.” Feist
Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991). “Original, as the term is used in
copyright, means only that the work was independently created by the author (as opposed to
copied from other works), and that it possesses at least some minimal degree of creativity.” Id.
at 345. The infringement requirement of “copying” of original elements “may be established (1)
by direct evidence or (2) by showing that the defendants had access to the copyrighted materials
and showing that substantial similarity of ideas and expression existed between the alleged
infringing materials and the copyrighted materials.” Rottlund Co. v. Pinnacle Corp., 452 F.3d
726, 731 (8th Cir. 2006).
A determination of substantial similarity involves a two-step analysis, called the
“extrinsic test” and the “intrinsic test.” Frye v. YMCA Camp Kitaki, 617 F.3d 1005, 1008 (8th
Cir. 2010). For the extrinsic test, “similarity of ideas is analyzed extrinsically, focusing on
objective similarities in the details of the works.” Id. If substantial similarity in ideas exists,
then under the intrinsic test, “similarity of expression” is evaluated and depends on the “response
of the ordinary, reasonable person to the forms of expression.” Id.
The extent of similarity required may be impacted by the factual nature of the work,
because a fact is not copyrightable in and of itself, although an original expression of a fact
generally is copyrightable. See Feist Publ’ns., 499 U.S. at 349-50; Applied Innovations, Inc. v.
27
The third argument does not raise a Daubert concern. Nonetheless, it is rendered moot by
the limitation being placed on Mr. Vaczek’s testimony and will not be addressed further.
46
Regents of Univ. of Minn., 876 F.2d 626, 636 (8th Cir. 1989) (“Because authors who wish to
express ideas in factual works are usually confined to a narrow range of expression, similarity of
expression may have to amount to verbatim reproduction or very close paraphrasing before a
factual work will be deemed infringed.”) (internal quotation marks omitted). But “factual
works” can encompass works that involve minimal creativity to ones that implicate considerable
creativity, so the quantum of similarity needed varies accordingly. See Jacobsen v. Deseret Book
Co., 287 F.3d 936, 944 (10th Cir. 2002) (noting “the differences between ‘sparsely embellished
maps and directories’ and ‘elegantly written biography’”).
Additionally, a copyrighted work may include elements that are not protected. Feist
Publ’ns, 499 U.S. at 348-49; see also X-It Prods., L.L.C. v. Walter Kidde Portable Equip., Inc.,
155 F. Supp. 2d 577, 609-10 (E.D. Va. 2001) (referring to individual elements of a copyrightable
label that may not be protectable). The doctrines of merger and scenes a faire may also limit the
scope of protection. See Frye, 617 F.3d at 1008 (describing the scenes a faire doctrine as
limiting protection when “incidents, characters or settings which are as a practical matter
indispensable, or at least standard, in the treatment of a given topic”); Toro Co. v. R & R
Products Co., 787 F.2d 1208, 1212 (8th Cir. 1986) (explaining that under the doctrine of merger,
“copyright protection will be denied to even some expressions of ideas if the idea behind the
expression is such that it can be expressed only in a very limited number of ways”); Oracle Am.,
Inc. v. Google Inc., 750 F.3d 1339, 1359-63 (Fed. Cir. 2014) (explaining both doctrines).
The substance of Mr. Vaczek’s report is not admissible in its entirety. In Rottlund, the
Eighth Circuit confirmed that expert opinion evidence may be considered in connection with the
extrinsic test for substantial similarity, because it “depends on such objective criteria as the type
of artwork involved, the materials used, the subject matter, and the setting for the subject.” 452
47
F.3d at 731. But “[e]xpert opinion and analytical dissection are not appropriate to establish or
rebut similarity of expression” under the intrinsic test. Id. Section B of Mr. Vaczek’s report runs
directly into this proscription on expert testimony stated in Rottlund. It conducts an “analytical
dissection” aimed at rebutting similarity of expression. 28 See, e.g., ECF 276-1 at 101 (“The
visual impression of these two manuals is different.”), 102 (“The chapters in the S8610U manual
and sections in the ICM290 manual differ in length, width and layout.”), 103 (“The ICM290 and
Honeywell S8610U manuals contain different content and overlapping content is presented
differently.”). While section B may contain some admissible content, it is too intertwined with
the impermissible content and will be excluded in its entirety. Moreover, section A already
largely covers that content and is admissible in relevant part.
Section A of the report contains material relevant to the question of the strength and
scope of the protected elements in Honeywell’s labels and manuals, including to the application
of the merger and scenes a faire defenses pled by ICM 29 in its answer to Honeywell’s amended
complaint. In particular, the section identifies various pieces of information that need to be
contained in the manuals and labels in light of the product functions, product features, and
industry expectations. 30 This information is especially relevant as some of the registrations of
the items at issue reflect that the copyright interest is in the compilation of the information.
Section A of the report also identifies the content that is factual in nature. While the factual
28
ICM generally contends that Mr. Vaczek’s testimony is relevant to the extrinsic test. But
the analysis in section B only identifies differences in how the content is displayed or presented,
i.e. in the expression of the content.
29
Although the typical scenarios in which scenes a faire is raised differ from the present
context, the question of the applicability of the doctrine here has not been presented to the Court.
The determination of relevance is based on the pleading of the defense.
30
Honeywell notes that Mr. Vaczek could not identify any formal industry standards that
apply. Industry conventions, even in the absence of formal standards, might be relevant to the
scenes a faire considerations. Nonetheless, the absence of such standards is a legitimate factor to
be considered and may be a shortcoming that can be exposed in cross-examination.
48
nature of a work does not preclude copyright protection, it may affect the strength and scope.
Mr. Vaczek’s experience gives him specialized knowledge about the functional, technical, and
other requirements for content included on the labels and in the manuals at issue, which will be
helpful to the jury. In light of the applicable legal principles discussed above, section A of the
report includes content that passes muster under Daubert.
But the section also consistently includes statements to the effect that there are “limited
ways” to say something, the words used are “simple ways to convey the message,” or the
language uses the “most basic words.” See, e.g., 276-1 at 10, 12, 14. Honeywell points out that
Mr. Vaczek lacks any experience drafting manuals or labels. While he may have reviewed many
such materials, his credentials do not reflect any special expertise in matters of linguistics.
Accordingly, while he may share his knowledge about the necessity and typicality of particular
content, including whether technical characteristics are generally expressed in a particular
manner, he may not opine on whether there are limited forms of expression for the content or
whether a particular expression is the most basic or simple one.
Finally, the Court agrees with Honeywell that the manner in which Mr. Vaczek’s report
uses the term “unique” and the extent to which the factual nature of the material is emphasized
create some risk of misleading the jury as to the applicable legal standards. But that risk will be
more appropriately managed through the use of proper jury instructions rather than exclusion of
his testimony in its entirety. ICM’s counsel is forewarned that the Court will be vigilant as to the
manner of presentation of Mr. Vaczek’s testimony.
5. ICM’s Daubert Motions
ICM filed four Daubert motions. Each will be considered in turn.
49
A. Dr. Akshay Rao’s report for the false designation of origin and trade dress claims
ICM seeks to exclude the testimony of Dr. Akshay Rao, a professor of marketing at the
University of Minnesota’s Carlson School of Business. He submitted an expert report in which
he describes his “assignment” as opining on whether a product’s visual characteristics could
result in customer confusion about the company of origin, whether a “Made in the USA” claim
could influence customer preferences and purchase decisions, and whether a market survey is
necessary to establish valid conclusions on either of those topics. The dismissal of the relevant
trade dress and false advertising claims renders his proposed testimony moot. As such, ICM’s
motion will be denied.
B. Professor Justin Hughes proposed testimony related to the copyright claims
ICM seeks to exclude the testimony of Professor Justin Hughes, who provided an expert
report in response to Honeywell’s request that he “review and respond” to the report of ICM’s
expert, Adam Vaczek. ECF No. 230-1 at 3. Professor Hughes is a professor of law at Cardozo
Law School, where he teaches various copyright and other courses. Professor Hughes has
impressive qualifications in and experiences with intellectual property law, including serving as
an Attorney-Advisor in the U.S. Patent and Trademark Office and as a Senior Advisor to the
Under Secretary of Commerce for Intellectual Property at the U.S. Department of Commerce.
Professor Hughes’ report evaluates Mr. Vaczek’s report from the perspective of what he
considers to be the applicable legal standards. In section II of his report, the first substantive
section, Professor Hughes explains that Honeywell’s manuals and labels are registered and then
discusses the law that creates a presumption of copyrightability for registered works and the
standards that must be met to overcome the presumption. Id. at 3-6. In section III of his report,
he reviews the law to confirm that manuals and labels are categories of works protectable under
50
copyright law. Id. at 7-8. Section IV discusses particular aspects of Mr. Vaczek’s report to
argue that none of them preclude copyrightability of the manuals and labels at issue. In
particular, he explains that (1) facts and data do not prevent copyrightability; (2) analysis of
“concepts” is not relevant to copyrightability; (3) “uniqueness” is not relevant to
copyrightability; and (4) use of common expressions and terms do not prevent copyrightability.
Id. at 9-16. Section V explains copyright law’s “merger” doctrine and argues why the content in
Mr. Vaczek’s report does not or should not actually result in a determination of merger. Id. at
16-20. Finally, section VI of the report argues why the content in Mr. Vaczek’s report does not
or should not establish a fair use defense. Id. at 20-22.
ICM objects to Professor Hughes’ proposed testimony as impermissibly directed at
advising the jury on matters of the applicable copyright law and its application. An elemental
and established procedural tenet applicable to jury trials is that “the law is given to the jury by
the court and not introduced as evidence” and it is “the function of the jury to determine the facts
from the evidence and apply the law as given by the court to the facts as found by them from the
evidence.” See United States v. Gleason, 726 F.2d 385, 388 (8th Cir. 1984); see also United
States v. Klaphake, 64 F.3d 435, 438 (8th Cir. 1995) (“As a general rule, ‘questions of law are
the subject of the court’s instructions and not the subject of expert testimony.’”). Although
Federal Rule of Evidence 704(a) confirms that expert testimony is not objectionable merely
because it “embraces an ultimate issue,” a court “must guard against invading the province of the
jury on a question which the jury was entirely capable of answering without the benefit of expert
opinion.” Robertson v. Norton Co., 148 F.3d 905, 908 (8th Cir. 1998) (internal quotation marks
omitted).
51
Honeywell contends that Professor Hughes’ report merely states his understanding of the
law that guides his analysis of Mr. Vaczek’s report and he does not intend to instruct the jury on
the law. But the analysis that Professor Hughes proffers is inextricably linked with his
articulation of the nature of copyright law and his opinion about its correct application. The
entire thrust of his analysis is an identification of the copyright law that should apply and an
assessment that Mr. Vaczek’s opinions disregard the law or are irrelevant in light of it. To allow
him to testify in the manner proposed by his report would be to allow him to impermissibly
invade the province of the Court and the jury.
Stated another way, the proposed testimony does not meet the expert-qualification and
helpfulness requirements of Federal Rule of Evidence 702. While Professor Hughes
undoubtedly has significant legal expertise, that expertise alone cannot qualify him to testify on
questions at issue in this case. See Gable v. NBC, 727 F. Supp. 2d 815, 833-35 (C.D. Cal. 2010)
(excluding Professor David Nimmer’s testimony on substantial similarity because he was not a
literary expert, despite being an eminent copyright expert). Honeywell has not shown that
Professor Hughes has HVAC technical or industry expertise such that he might challenge Mr.
Vaczek’s opinions about the extent to which functional and other requirements drive the content
of the manuals and labels at issue. Neither has Honeywell shown that he has expertise related to
technical writings that may be relevant. Moreover, his report does not suggest that he would
testify on any topics other than the alleged legal impropriety or irrelevance of Mr. Vaczek’s
testimony. But it is the Court’s role to advise the jury about the applicable law and to police the
acceptability of other experts’ testimony. Once Professor Hughes’ proposed testimony on those
subjects is excluded, his report does not have much that he would offer the jury. Exclusion of his
testimony is warranted.
52
C. Mr. Carl Degen’s reasonable royalty opinions for the patent infringement claims
Mr. Degen provided an expert report addressing his opinions on the reasonable royalties
to which Honeywell would be entitled for ICM’s alleged infringement of the asserted Honeywell
patents. ICM seeks to exclude those opinions. ICM primarily contends that Mr. Degen’s
reasonable royalty analysis fails to meet the Daubert standards because it violates the so-called
“entire market value rule.”
Upon a showing of infringement, a patentee is entitled, at a minimum, to a reasonable
royalty in damages. See 35 U.S.C. § 284. A reasonable royalty calculation entails multiplying a
royalty base—the “revenue pool implicated by the infringement”—by a royalty rate—the
“percentage of that pool ‘adequate to compensate’ the plaintiff for that infringement.” See
Cornell Univ. v. Hewlett-Packard Co., 609 F. Supp. 2d 279, 286 (N.D.N.Y 2009). “Where small
elements of multi-component products are accused of infringement,” using the revenues for the
entire product as the royalty base entails “considerable risk that the patentee will be improperly
compensated for non-infringing components of that product.” LaserDynamics, Inc. v. Quanta
Computer, Inc., 694 F.3d 51, 67 (Fed. Cir. 2012). Therefore, generally royalties are not based
“on the entire product, but instead on the ‘smallest salable patent-practicing unit.’” Id. (quoting
Cornell Univ., 609 F. Supp. 2d at 283, 287-88). “The entire market value rule is a narrow
exception to the general rule that royalties are awarded based on the smallest salable patentpracticing unit.” Versata Software, Inc. v. SAP Am., Inc., 717 F.3d 1255, 1268 (Fed. Cir. 2013).
Under the rule, a patentee may use the revenues of “an entire multi-component product,” if it can
demonstrate “that the patented feature drives the demand” for the whole product.
LaserDynamics, 694 F.3d at 67; see also Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1549 (Fed.
Cir. 1995) (explaining the background and history of the entire market value rule).
53
The products accused of infringing Honeywell’s four patents are a thermostat product and
some of the ICM gas ignition and oil primary control products. ICM contends that Mr. Degen’s
analysis violates the entire market value rule, because he used the entire value of the accused
products without considering whether the patented features drove demand for the whole product.
But the entire market value rule is a “narrow exception” to the “smallest salable patent-practicing
unit” rule. LaserDynamics, 694 F.3d at 67. Honeywell contends that the accused thermostats
and controls are the smallest salable patent-practicing unit. While it is Honeywell’s burden to
sufficiently tie a damages expert’s testimony to the facts of a case, Uniloc USA, Inc. v. Microsoft
Corp., 632 F.3d 1292, 1315 (Fed. Cir. 2011), and it must establish the admissibility of expert
testimony by a preponderance of the evidence, Daubert, 509 U.S. at 593 n.10, the Court
concludes that Honeywell has done so. Honeywell has adequately shown that Mr. Degen’s
analysis is not deficient for treating the accused products as the smallest salable patent-practicing
unit rather than as a multi-component product subject to the entire market value rule. See ECF
No. 299 at 10-13 (describing the patents at issue and their relationship to the accused products).
Although ICM challenges Honeywell’s assertion that the accused products constitute the
smallest salable patent-practicing unit, ICM has not identified a smaller component within the
accused products that should be deemed to practice the invention such that use of the whole
product is so improper as to warrant exclusion. 31 Neither is any such smaller component readily
apparent. The absence of a readily-apparent severable component, whether physical or
otherwise, distinguishes this case from those in which a violation of the entire market value rule
31
The accused thermostats appear to vary in terms of complexity and price. For them ICM
contends that Mr. Degen should have used the price of the most basic model in calculating the
total royalty base. ECF No. 268 at 4-5. Honeywell’s response articulates reasons for not doing
so, and while the matter may be a dispute presented to the jury, the position adopted by Mr.
Degen on it is not so unsupported as to warrant exclusion of his opinion.
54
has been found. See, e.g., LaserDynamics, 694 F.3d at 56-57, 68-69 (determining that a laptop
could not form the royalty base, when an optical disc drive within the laptop infringed); Lucent
Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1337 (Fed. Cir. 2009) (describing the infringing
“date-picker tool in Outlook” as “but a very small component of a much larger software
program”); Imonex Servs. v. W.H. Munzprufer Dietmar Trenner GmbH, 408 F.3d 1374, 1376,
1380 (Fed. Cir. 2005) (concluding that infringement by a coin selector device that differentiated
between coins of different diameters could not be the basis for royalties on the entire laundry
machines that included the devices). Mr. Degen’s use of the accused products as the smallest
salable patent-practicing unit does not warrant exclusion of his opinion.
ICM alternatively argues that even if the accused products are deemed the smallest
salable patent-practicing unit, Mr. Degen’s opinion does not pass muster because the products
have multiple features and he failed to apportion the value of the products between the various
features. ICM points to several district court opinions contending that they show that even when
a patentee identifies the smallest salable unit, further apportionment is necessary between
infringing and noninfringing features. 32 ECF No. 268 at 17-18. A review of the facts at issue in
32
Honeywell cites a competing set of district court cases in which no further apportionment
occurred. See Internet Machs. LLC v. Alienware Corp., Civ. No. 16-23, 2013 U.S. Dist. LEXIS
115723, at *43-45 (E.D. Tex. June 19, 2013) (finding it appropriate to use “switch sales” as the
royalty base because the “switch” was the “smallest salable patent-practicing unit” and rejecting
an argument that further apportionment was needed because “the switches contain non-patented
features”); Tomita Techs. USA, LLC v. Nintendo Co., Ltd., Civ. No. 11-4256, 2013 U.S. Dist.
LEXIS 116486, at *21-22 (S.D.N.Y. Aug. 14, 2013) (finding the entire market value rule not
implicated where the component used as the base was the smallest salable patent-practicing
unit); Summit 6 LLC v. Research in Motion Corp., Civ. No. 11-367, 2013 U.S. Dist. LEXIS
95164, at *33 n.11 (N.D. Tex. June 26, 2013) (noting that use of the “entire Samsung device” for
the royalty base was appropriate “[b]ecause only the device can practice the patent and no other
smaller component is even able to practice the patent”); Broadcom Corp. v. Emulex Corp., Civ.
No. 09-1058, 2011 U.S. Dist. LEXIS 154416, at *17-19 (C.D. Cal. Dec. 13, 2011) (finding that
sufficient evidence supported the jury’s implicit determination that the “chips” rather than the
55
those cases shows that they presented scenarios in which even though the infringing component
may have only been sold as part of a larger product offering, it was plausibly capable of being,
and reasonably should have been, severed further. See Rembrandt Soc. Media, LP v. Facebook,
Inc., Civ. No. 13-158, 2013 U.S. Dist. LEXIS 171127, at *22-28 (E.D. Va. Dec. 3, 2013)
(finding that allowing the patentee to use the “entire value of [Facebook’s] Timeline, News Feed,
Groups, and Photo/Video Sharing—all of which can be used independently without infringing—
while not using the value of BigPipe and Audience Symbol—the features that actually cause the
alleged infringement—would be a mistake of the same kind as allowing Rembrandt’s expert to
use the entire value of Facebook”); Network Prot. Scis., LLC v. Fortinet, Inc., Civ. No. 12-1106,
2013 U.S. Dist. LEXIS 138890, at *3-4 (N.D. Cal. Sept. 26, 2013) (finding it improper to use the
FortiOS software and the hardware on which it was installed as the royalty base, even though
they were always sold together, when only the software infringed); Dynetix Design Solutions,
Inc. v. Synopsys, Inc., Civ. No. 11-5973, 2013 U.S. Dist. LEXIS 120403, at *7-12 (N.D. Cal.
Aug. 22, 2013) (observing that the “DLP is an optional feature in the VCS product,” which was
the product sold, and “the patented feature is just one component of DLP”).
These cases are consistent with the Federal Circuit’s guidance that it is the “general rule
that royalties are awarded based on the smallest salable patent-practicing unit.” Versata, 717
F.3d at 1268 (emphasis added). They do not state a rule to the effect that after reaching the
smallest salable patent-practicing unit, further apportionment is always necessary. They merely
confirm that even when a patentee claims that a packaged or multi-component product is the
smallest unit sold, a reasonableness check should occur to determine whether further
apportionment of the royalty base is appropriate, before applying the allocation of value that the
“SerDes cores” were the “smallest saleable unit[s]” sold by the infringer and denying judgment
as a matter of law despite evidence that other merchants sold the individual SerDes cores).
56
royalty rate embodies. In other words, there must be a close enough relationship between the
smallest salable infringing unit and the claimed invention. 33 See LaserDynamics, 694 F.3d at 67.
To the extent ICM believes that Mr. Degen’s computations would overcompensate
Honeywell for any infringement found, it will be able to make its case at trial. For purposes of
determining whether his testimony is admissible, however, the Court does not find Mr. Degen’s
analysis deficient on account of a violation of the entire market rule. 34 The facts before the
Court do not reflect that a far more logical smaller infringing unit exists such that it was Daubert
error to use the accused products for the royalty base. While in some cases the nature of the
accused product and the patented invention may make an expert’s failure to further apportion the
royalty base beyond the product sold grounds for exclusion, this is not one of them.
D. Miscellaneous testimony of Messrs. David Schumacher, Carl Degen, and Thomas
Gafford
With this motion directed at Messrs. David Schumacher, Carl Degen, and Thomas
Gafford, ICM does not seek to preclude them from testifying. Rather it identifies individual
paragraphs of their expert reports that it contends should be excluded. ICM primarily argues that
33
The Cornell opinion cited in LaserDynamics, see 694 F.3d at 67, confirms that a “close
relationship” to the claimed invention does not mean that the smallest salable unit cannot be used
as the royalty base merely because it includes other features or functionality. In discussing the
facts involved, the Cornell opinion noted that “the parties do not dispute that the [patent at issue]
reads on just one component of the instruction reorder buffer (IRB),” and “the claimed invention
is a small part of the IRB, which is a part of a processor, which is part of a CPU module, which
is part of a ‘brick,’ which is itself only part of the larger server.” 609 F. Supp. 2d at 283. The
opinion chastised the plaintiffs’ counsel for not abandoning a “royalty base claim encompassing
a product with significant non-infringing components” and noted that “[t]he logical and readily
available alternative was the smallest salable infringing unit with close relation to the claimed
invention—namely the processor itself.” Id. at 287-88. Thus, even though the IRB was one
aspect of the processor, the royalty base did not need to be further apportioned.
34
ICM’s Daubert motion does not contend that the royalty rates Mr. Degen used should be
a basis for exclusion and so this order does not evaluate them.
57
the challenged testimony does not meet the helpfulness requirement of Rule 702 as it merely
summarizes record evidence, states conclusory opinions, or invades the province of the jury.
The challenged portions of Mr. Schumacher’s testimony relate to the trade dress and
“Made in the USA” false advertising claims. The part of ICM’s motion directed at Mr.
Schumacher’s testimony is moot. It will be denied on those grounds.
ICM seeks to exclude paragraphs 5-24 of Mr. Degen’s initial damages report. 35 The
challenged portion of the initial report is titled “Background” and outlines summary information
about Honeywell, Honeywell’s products at issue, Honeywell’s sales and marketing of the
products, the patents at issue, ICM, and Honeywell’s claims. The section states Mr. Degen’s
understanding of those various items and identifies conversations, record evidence, and other
resources as the source of the different pieces of information.
ICM suggests that the “Background” section is “an improper attempt to present, under the
guise of an expert, selected testimony from the factual record and get inadmissible evidence
before the jury that is not subject to cross examination.” ECF No. 236 at 22. The challenged
background section appears to merely provide context and state certain understandings that
frame Mr. Degen’s damages opinion. Moreover, Federal Rule of Evidence 703 protects against
the concern ICM raises. It provides:
An expert may base an opinion on facts or data in the case that the expert has been made
aware of or personally observed. If experts in the particular field would reasonably rely
on those kinds of facts or data in forming an opinion on the subject, they need not be
admissible for the opinion to be admitted. But if the facts or data would otherwise be
inadmissible, the proponent of the opinion may disclose them to the jury only if their
probative value in helping the jury evaluate the opinion substantially outweighs their
prejudicial effect.
35
ICM also challenges paragraph 7 of his reply report, but since only the individual
paragraph without much context is provided, the Court lacks sufficient information to rule on
objection.
58
Fed. R. Evid. 703. Presumably Honeywell will present fact witnesses for the type of information
included in the background section of Mr. Degen’s report. But to the extent it attempts to
introduce inadmissible evidence through Mr. Degen, ICM may raise an appropriate objection
during trial and the Court will consider it under the applicable rules.
Mr. Gafford is one of Honeywell’s technical experts, whose proposed testimony relates to
Honeywell’s patent infringement claims, as well as aspects of its trade dress and copyright
claims. ICM objects to a handful of paragraphs from the 214 paragraphs of his opening report
and 283 paragraphs of his rebuttal report on two grounds. First, ICM contends that some of the
paragraphs of Mr. Gafford’s reports impermissibly summarize factual evidence. ECF No. 236 at
24. As with Mr. Degen’s testimony, to the extent Honeywell attempts to use Mr. Gafford to
introduce inadmissible fact testimony, ICM can make an appropriate objection at trial. Second,
ICM objects to certain testimony regarding “copying” of ICM’s manuals and labels as
impermissibly invading the province of the jury. The challenged paragraphs are included in a
section of Mr. Gafford’s rebuttal report that responds to “Vaczek Chapters 12-18.” Those
chapters form section B of Mr. Vaczek’s report, which the Court has excluded. Presumably Mr.
Gafford will no longer be testifying to that content. ICM’s request related to limitation of
Messrs. Degen and Gafford’s testimony will be denied without prejudice.
CONCLUSION
Based on the files, records, and proceedings herein, and for the reasons stated above, IT
IS ORDERED THAT:
1. ICM’s motion for summary judgment of invalidity of U.S. Patent No. 5,812,061, U.S.
Patent No. 7,055,759, and U.S. Patent No. 6,478,574 [ECF No. 247] is granted with
respect to U.S. Patent No. 6,478,574 and otherwise denied.
2. ICM’s motion for summary judgment of Honeywell’s false advertising (false
designation of origin) claim [ECF No. 241] is granted.
59
3. ICM’s motion for summary judgment of Honeywell’s trade dress infringement claims
[ECF No. 260] is granted.
4. Honeywell’s Daubert motion seeking to exclude testimony of Robert Stein, Leon
Kaplan, and Adam Vaczek [ECF No. 273] is denied as to Mr. Stein on mootness
grounds. It is denied without prejudice as to Dr. Kaplan as stated in this order. The
motion is granted in part and denied in part as to Mr. Vaczek as stated in this order.
5. ICM’s Daubert motion to exclude the testimony of Akshay Rao [ECF No. 253] is
denied as moot.
6. ICM’s Daubert motion to exclude the testimony of Justin Hughes [ECF No. 227] is
granted.
7. ICM’s Daubert motion to exclude the reasonable royalty opinions of Carl Degen
[ECF No. 266] is denied.
8. ICM’s Daubert motion to exclude miscellaneous testimony of David Schumacher,
Carl Degen, and Thomas Gafford [ECF No. 234] is denied as to Mr. Schumacher and
in part as to Mr. Gafford on mootness grounds. The motion is denied as to Mr. Degen
and in part as to Mr. Gafford without prejudice so that objections to particular
testimony may be raised at trial, if appropriate.
9. If Honeywell intends to pursue Count XVII of the amended complaint, it must file a
brief within three weeks of the date of this order to address the issues identified with
that count. ICM may file a responsive brief on the subject within two weeks of any
such filing by Honeywell.
Dated: August 27, 2014
s/Joan N. Ericksen
JOAN N. ERICKSEN
United States District Judge
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