Candella, LLC et al v. Liown Electronics Co. Ltd. et al

Filing 755

ORDER granting 460 Motion for Summary Judgment. (Written Opinion) Signed by Judge Susan Richard Nelson on 2/6/2017. (ADC)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

Luminara Worldwide, LLC,

Case No. 14-cv-3103 (SRN/FLN)

Plaintiff,
v.
Liown Electronics Co. Ltd., Shenzhen
Liown Electronics Co. Ltd., Liown
Technologies/Beauty Electronics, LLC,
Boston Warehouse Trading Corp., Abbott
of England (1981), Ltd., BJ’s Wholesale
Club, Inc., Von Maur, Inc., Zulily, Inc.,
Smart Candle, LLC, Tuesday Morning
Corp., Ambient Lighting, Inc., The Light
Garden, Inc., and Central Garden & Pet
Co.,
Defendants.
–––––––––––––––––––––––––––––––––––
Shenzhen Liown Electronics Co. Ltd. and
Central Garden & Pet Co.,
Counterclaim Plaintiffs,
v.
Luminara Worldwide, LLC, QVC, Inc.,
Darice, Inc., Bed Bath & Beyond, Inc.,
Williams-Sonoma Stores, Inc., PC
Treasures, Inc., and Brookstone Stores,
Inc.,
Counterclaim Defendants.

ORDER ON DEFENDANT ABBOTT
OF ENGLAND (1981), LTD.’S
MOTION FOR SUMMARY
JUDGMENT

Joseph W. Anthony, Steven M. Pincus, Courtland C. Merrill, Cory D. Olson, Steven C.
Kerbaugh, and Daniel R. Hall, Anthony Ostlund Baer & Louwagie PA, 90 South Seventh
Street, Ste. 3600, Minneapolis, MN 55402; Jon E. Wright, Sterne Kessler Goldstein &
Fox, 1100 New York Ave NW, Ste. 600, Washington, DC 20005; Ryan S. Dean, Fish &
Tsang LLP, 2603 Main St., Ste. 1000, Irvine, CA 92614; for Plaintiff and Counterclaim
Defendant Luminara Worldwide, LLC.
Alan G. Carlson, Tara C. Norgard, Jonathan D. Carpenter, and Peter M. Kohlhepp,
Carlson, Caspers, Vandenburgh, Lindquist & Schuman, P.A., 225 South Sixth Street, Ste.
4200, Minneapolis, MN 55402; Thomas N. Millikan, Joseph P. Reid, Kenneth J. Halpern,
Yun Louise Lu, and Patrick J. McKeever, Perkins Coie LLP, 11988 El Camino Real, Ste.
350, San Diego, CA 92130, for Defendants and Counterclaim Plaintiffs Liown
Electronics Co. Ltd., Liown Technologies/Beauty Electronics, LLC, Shenzhen Liown
Electronics Co. Ltd., Boston Warehouse Trading Corp., Abbott of England (1981), Ltd.,
BJ’s Wholesale Club, Inc., Von Maur, Inc., Zulily, Inc., Smart Candle, LLC, Tuesday
Morning Corp., The Light Garden, Inc., and Central Garden & Pet Co.

SUSAN RICHARD NELSON, United States District Judge
This matter is before the Court on Defendant Abbott of England’s Motion for
Summary Judgment of Noninfringement [Doc. No. 460]. For the reasons set forth below,
Abbott’s Motion for Summary Judgment is granted.
I.

BACKGROUND
A. Facts
Abbott of England (“Abbott”) is a Canadian company, located in Canada, which

wholesales a variety of home décor products. (Decl. of Jody Abbott (“Abbott Decl.”) at
¶¶ 2–3 [Doc. No. 463].) Abbott sells exclusively to third-party retailers, not individual
consumers. (Id. at ¶ 4.) In August of 2011, Abbott began selling a line of flameless
candles (“Reallite”) manufactured by Defendant Liown that Plaintiff Luminara

2

Worldwide (“Luminara”) 1 alleges infringe on its United States patents. (See id. at ¶ 5.)
However, it was not until February 21, 2012, when Abbott received a cease and desist
letter from Luminara, that Abbott became aware of Luminara’s patents and its
infringement claims. (Id. at ¶ 6; Abbott Decl., Ex. A (“Cease and Desist Ltr.”) at 02773–
74 2 [Doc. No. 463-1].) Important here is the fact that Abbott only sells Reallite candles
to retailers in Canada and the United Kingdom (U.K.), not the United States. (Abbott
Decl. at ¶¶ 7–8.) Abbott contends that United States patent law does not prohibit it from
continuing to sell Reallite candles to Canadian and U.K. retailers and thus they did not
stop selling the Reallite product after receiving Luminara’s cease and desist letter. (See
Abbott Decl., Ex. B at 02775–76 [Doc. No. 463-1].)
B. Procedural History
Luminara sued Abbott for direct infringement and inducing infringement. (See
Third Amended Compl., Count I [Doc. No. 131].) However, Luminara subsequently
abandoned its direct infringement claim. (See Luminara’s Opp. to Abbott’s Mot. (“Mem.
in Opp.”) at 2, 5 n.1 [Doc. No. 525].) Abbott now moves for summary judgment on the
inducement claim because it alleges there is no evidence that it performed an inducing act
with the requisite intent, or that a relevant third-party directly infringed on Luminara’s
patents. (See Abbott’s Mem. of Law in Supp. of its Mot. (“Mem. in Supp.”) at 12–13

1

Luminara’s predecessor in interest was Candella LLC. The Court generally refers to
Luminara even where a particular act involved Candella.
2

For all exhibits attached to the Abbott Declaration, the Court cites to the last five digits
of the Bates number as they appear in the lower right hand corner of these documents.
3

[Doc. No. 462]; Abbott’s Reply Mem. of Law in Supp. (“Reply”) at 2–4 [Doc. No. 537].)
Luminara opposes Abbott’s motion and offers three pieces of evidence it alleges support
its inducement claim: (1) Abbott’s website, which supposedly “directs consumers to
locate United States retailers that sell the Reallite candles[,]” (2) a Facebook post by
Abbott in response to an inquiry about the availability of Reallite candles in the United
States, and (3) the purchase of a Reallite candle by a Luminara employee from one of
Abbott’s third-party Canadian retailers. (See Mem. in Opp. at 3–4.)
II.

DISCUSSION
A. Legal Standard
Summary judgment is proper if, drawing all reasonable inferences in favor of the

non-moving party, there is no genuine issue as to any material fact and the moving party
is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett,
477 U.S. 317, 322–23 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249–50
(1986); Morriss v. BNSF Ry. Co., 817 F.3d 1104, 1107 (8th Cir. 2016), cert. denied,
(U.S. Oct. 3, 2016).

“Summary judgment procedure is properly regarded not as a

disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a
whole, which are designed ‘to secure the just, speedy, and inexpensive determination of
every action.’” Celotex, 477 U.S. at 327 (quoting Fed. R. Civ. P. 1).
The party moving for summary judgment bears the burden of showing that the
material facts in the case are undisputed.

Id. at 323.

However, a party opposing

summary judgment “‘may not rest upon the mere allegation or denials of his pleading,
but ... must set forth specific facts showing that there is a genuine issue for trial,’ and
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‘must present affirmative evidence in order to defeat a properly supported motion for
summary judgment.’” Ingrassia v. Schafer, 825 F.3d 891, 896 (8th Cir. 2016) (quoting
Anderson, 477 U.S. at 256–57). “[T]he nonmoving party must ‘do more than simply
show that there is some metaphysical doubt as to the material facts.’” Conseco Life Ins.
Co. v. Williams, 620 F.3d 902, 910 (8th Cir. 2010) (quoting Matsushita Elec. Indus. Co.,
v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). Summary judgment is proper where
the non-moving party fails “‘to make a showing sufficient to establish the existence of an
element essential to that party’s case . . . .’” Walz v. Ameriprise Fin., Inc., 779 F.3d 842,
844 (8th Cir. 2015) (quoting Celotex, 477 U.S. at 322). While the moving party bears the
burden of showing that the facts are undisputed, a judge is not confined to considering
only the materials cited by the parties, and “it may consider other materials in the
record.” Fed. R. Civ. P. 56(c)(3).
Two other legal principles are important to the present matter.

First, “only

evidence that would be admissible at trial may be relied upon to counter a motion for
summary judgment.” Sokol & Associates, Inc. v. Techsonic Indus., Inc., 495 F.3d 605,
611 n.4 (8th Cir. 2007).

Statements containing double hearsay are not admissible

evidence and may not be relied upon. See Ward v. Int’l Paper Co., 509 F.3d 457, 462
(8th Cir. 2007); McKay v. U.S. Dep’t of Transp., 340 F.3d 695, 699 n.2 (8th Cir. 2003);
Erickson v. Farmland Indus., Inc., 271 F.3d 718, 728 (8th Cir. 2001). Second, attorney
statements and argument in briefing are not evidence and cannot create issues of fact.
See Stone Motor Co. v. Gen. Motors Corp., 293 F.3d 456, 467 n.6 (8th Cir. 2002); Exeter
Bancorporation, Inc. v. Kemper Sec. Grp., Inc., 58 F.3d 1306, 1312 n.5 (8th Cir. 1995).
5

B. Inducing Infringement
One who “actively induces infringement of a patent shall be liable as an infringer.”
35 U.S.C. § 271(b). “To prove inducement of infringement, the patentee must show that
the accused inducer took an affirmative act to encourage infringement with the
knowledge that the induced acts constitute patent infringement.”

Info-Hold, Inc. v.

Muzak LLC, 783 F.3d 1365, 1372 (Fed. Cir. 2015) (quotations omitted). “Accordingly,
inducement requires evidence of culpable conduct, directed to encouraging another’s
infringement, not merely that the inducer had knowledge of the direct infringer’s
activities.” DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1306 (Fed. Cir. 2006). “The
sale of a lawful product by lawful means, with the knowledge that an unaffiliated, third
party may infringe, cannot, in and of itself, constitute inducement of infringement.”
Takeda Pharm. U.S.A., Inc. v. W.-Ward Pharm. Corp., 785 F.3d 625, 630 (Fed. Cir.
2015) (quoting Dynacore Holdings Corp. v. U.S. Philips Corp., 363 F.3d 1263, 1276 n.6
(Fed. Cir. 2004)). There must also be proof of the alleged inducer’s knowledge of the
infringed patent at the time of inducement. Warsaw Orthopedic, Inc. v. NuVasive, Inc.,
824 F.3d 1344, 1347 (Fed. Cir. 2016).

“While proof of intent is necessary, direct

evidence is not required; rather, circumstantial evidence may suffice.” DSU Med., 471
F.3d at 1306 (citation omitted).
Important to the present matter, direct infringement is where one “makes, uses,
offers to sell, or sells any patented device, within the United States” without permission.
35 U.S.C. § 271(a). “It is the general rule under United States patent law that no
infringement occurs when a patented product is made and sold in another country.”
6

Microsoft Corp. v. AT & T Corp., 550 U.S. 437, 441, (2007). As discussed below,
Luminara failed to produce admissible evidence of Abbott’s specific intent to induce
infringement, or of any third-party direct infringement.

Thus, Abbott is entitled to

summary judgment.
1. Luminara’s Purchase of a Reallite Candle
In its opening briefing, Abbott argued that Luminara’s evidence of direct
infringement was insufficient because it consisted only of the vague and indefinite
testimony of two Luminara executives about Luminara’s purchase of a single Reallite
candle from one of Abbott’s third-party retailers. (See Mem. in Supp. at 5–8, 10–11.) In
that testimony, Luminara’s Director and General Counsel recalled that Luminara
purchased a Reallite candle from a third-party retailer and had it shipped to the United
States. (See Decl. of Thomas M. Millikan (“Millikan Decl.”) [Doc. No. 464], Ex 4.
(“Jacobson Depo.”) at 209–11 3, Ex. 5 (“Baer Depo.”) at 189–92 [Doc No. 464-1].)
However, they could not recall any details about this purchase (e.g., who made the
purchase, when it was made, how it was made, etc.). (See id.)
With its opposition briefing, Luminara offered new evidence about this purchase.
(See Decl. of Ryan Dean (“Dean Decl.”) [Doc. No. 526].) That evidence consists of the
declaration of an attorney (“Dean”) who represented Luminara in 2011. According to

3

When citing to depositions, the Court references the page numbers as they appear in
those documents.
7

Dean, based on his conversations with a Luminara executive 4 at the time, he believes
another Luminara employee (“Kaiden”) purchased a Reallite candle from a Canadian
retailer (“Ming Wo”) and had it shipped to the United States in October of 2011. (See id.
at ¶¶ 3–4, 6–7.) Dean alleges that Kaiden located Ming Wo as a source of Reallite
candles by using Abbott’s website and purchased the candle by calling Ming Wo directly.
(Id. at ¶ 3, 6.) A receipt detailing this purchase was attached to Dean’s declaration. (See
id. at ¶ 5, Ex. A (“Ming Wo Receipt”) [Doc. No. 527].) Luminara argues this is enough
evidence of third-party direct infringement to create a fact question and allow its
inducement claim to withstand summary judgment. (See Mem. in Opp. at 4, 6, 10.)
Abbott objects to Luminara’s new evidence of the Ming Wo purchase on three
grounds. First, it argues that this evidence was not produced during fact discovery and
that Abbott is prejudiced by its late disclosure. (Reply at 2, n.2.) Second, Abbott
contends that the evidence is inadmissible double hearsay and thus cannot be used to
create a fact question on summary judgment. (Id.) Third, Abbott argues that because the
sale predates Luminara’s February 2012 cease and desist letter, when Abbott first became
aware of Luminara’s patents and claims, that sale is not evidence of any intent to induce.
(Id. at 3.)
The 2011 Ming Wo purchase cannot serve as evidence of inducement for at least
two reasons. First, as Abbott points out, the evidence consists entirely of inadmissible

4

An individual named “Peter Smith” is identified as the source of Dean’s knowledge
about the purchase. (See Dean Decl. at ¶ 3.) Based on the Court’s familiarity with this
case, the Court assumes that Peter Smith is the same individual who was Candella’s CEO
in 2011. (See Doc. No. 520 at 4.)
8

double hearsay. Luminara offers Dean’s recollection of what he learned from a Luminara
executive about a purchase made by another individual, all for the purpose of establishing
that a third-party Canadian retailer in fact sold a Reallite candle into the United States.
This kind of inadmissible evidence cannot create the fact question necessary to save
Luminara’s inducement claim from summary judgment. See Ward, 509 F.3d at 462.
Second, even if evidence of the 2011 Ming Wo purchase were admissible, it does
not show that Abbott intended to induce third-party retailers to directly infringe by selling
Reallite candles into the United States. 5 The purchase occurred before Abbott was made
aware of Luminara’s patents and claims by the February 2012 cease and desist letter.
Until the alleged inducer has actual or constructive knowledge of the patent(s) at issue, it
cannot have the requisite specific intent to induce infringement. See Warsaw Orthopedic,
824 F.3d at 1347; Insituform Techs., Inc. v. Cat Contracting, Inc., 161 F.3d 688, 695
(Fed. Cir. 1998) (holding there was no inducement where the defendant did not learn of
the patent at issue until the complaint was filed because, “A crucial element of induced
infringement is that the inducer must have actual or constructive knowledge of the
patent.”).
2. Abbott’s Website
Luminara alleges that “Abbott’s website directs consumer to locate United States
retailers that sell the Reallite candles.” (Mem. in Opp. at 3.) It points to a screenshot
5

Luminara’s late disclosure of the Ming Wo purchase and the resulting prejudice to
Abbott might serve as an independent basis for striking this evidence. See Fed. R. Civ. P.
37(b), (c). However, the Court need not reach that issue because evidence of the Ming
Wo purchase is inadmissible double hearsay and does nothing to show Abbott had the
specific intent necessary for inducement.
9

from Abbott’s website that lists a retailer located in California. (See Abbott Decl., Ex. C
at 88382.) However, Abbott argues that Luminara fails to understand how Abbott’s
website works and thus misinterprets the results. (See Mem. in Supp. at 3–5; Reply at 3–
5.) Specifically, Abbott explains that it only sells Reallite candles to retailers who are
identified on Abbott’s website with the Reallite symbol. (Abbott Decl. at ¶¶ 9–11.) The
screenshot with the California retailer does not include the Reallite symbol. (See Abbott
Decl., Ex. C at 88382.) Luminara does not contest, nor offer any evidence to refute,
Abbott’s explanation of its website or the fact that Abbott only sells Reallite candles to
Canadian and U.K. retailers.
Abbott’s act of selling Reallite candles to Canadian and U.K. retailers does not
constitute direct infringement or inducement. See Microsoft Corp., 550 U.S. at 441;
Takeda Pharm. U.S.A., 785 F.3d at 630. Luminara produced no evidence that Abbott in
fact sells Reallite candles to retailers in the United States, or that Abbott’s website
encourages direct infringement by third-party retailers.

Luminara’s unsupported

assertions about Abbott’s website cannot save its inducement claim from summary
judgment. See Anderson, 477 U.S. at 256.
3. Abbott’s Facebook Comment
Luminara points to a comment Abbott posted on Facebook as evidence that Abbott
intended to induce infringement. (See Mem. in Opp. at 4.) In response to a consumer’s
Facebook inquiry about when Reallite candles would be available in the United States,
Abbott stated, “[W]e are definitely working on it! We will keep you posted! In the
meantime, you can look for a retailer in Canada that ships to the U.S. :)” (Abbott Decl.,
10

Ex. C at 88384.) Abbott posted this comment on January 17, 2012, before it received the
February 2012 cease and desist letter. 6
As previously described, Abbott does not sell Reallite candles directly to retailers
or consumers in the United States. Abbott’s comment that it was “working on” making
Reallite candles available in the United States and its suggestion that consumers look for
Canadian retailers who shipped to the United States is not the sort of specific intent to
cause direct infringement required for inducement. See Info-Hold, 783 F.3d at 1372.
This is especially true since, when the comment was made, Abbott was unaware of
Luminara’s patents and claims. See Warsaw Orthopedic, 824 F.3d at 1347; Insituform
Techs., 161 F.3d at 695; Proxyconn Inc. v. Microsoft Corp., No. SACV 11-1681 DOC
ANX, 2012 WL 1835680, at *5 (C.D. Cal. May 16, 2012) (“[A] defendant can not be
held liable because it induced or contributed to another’s acts before the defendant had
knowledge [of the relevant patents and the instances of direct infringement], because to
do so effectively holds a defendant liable for acts it did without knowledge.”).
4. The Arguments of Luminara’s Counsel
Luminara argues that “Abbott cannot rely on [the fact that Luminara purchased the
Reallite candle from Ming Wo before Abbott knew of Luminara’s patents] to disprove
inducement” because “whether it was the only sale is a disputed fact.” (Mem. in Opp. at
10–11.) Luminara claims that “the evidence suggests” that this was not the only sale, but
6

Although the Facebook post does not specifically state in what year it was made, the
post appears under a caption announcing a 2012 Reallite candle launch and is attached to
a letter from Luminara’s counsel to Abbott dated March 12, 2012. (See Abbott Decl., Ex.
C at 88378, 88384.) Logic dictates that the post was made no later than January 17,
2012.
11

cites no evidence in support of this position. (Id. at 11.) Luminara also contends that
“Abbott continued and still continues to sell the Reallite candles to retailers distributing
in the United States and refers customers to those retailers.” (Id. (emphasis original).)
Abbott argues that Luminara failed to produce any admissible evidence of sales into the
United States as required to establish Abbott’s intent to induce infringement, or direct
infringement by third-parties. (See Reply at 3, n.4.)
Abbott is correct; Luminara bears the burden of producing admissible evidence of
Abbott’s specific intent to induce infringement and the direct infringement of Luminara’s
patents by third-parties. Luminara has failed to do so. The law is clear that Abbott could
not intend to induce infringement until it knew of Luminara’s patents. Luminara’s only
evidence of Abbott’s intent, the January 2012 Facebook comment, came before Abbott
had this knowledge. The fact that Abbott continues to sell Reallite candles to retailers in
Canada and the U.K. is not evidence of intent to encourage direct infringement. See
Takeda Pharm. U.S.A., 785 F.3d at 630–31; Nichia Corp. v. Seoul Semiconductor Co.,
No. C-06-0162 MMC, 2007 WL 2428040, at *4 (N.D. Cal. Aug. 22, 2007), as amended
(Sept. 25, 2007) (“To the extent [the plaintiff’s inducement] claim is based on the theory
[a third-party] sold products containing [the allegedly infringing device] to a subsidiary,
which, in turn, sold or offered to sell those products in the United States, [the plaintiff]
offers insufficient evidence that [the defendant] took any action to assist or otherwise
encourage [the third-party’s] sales to its subsidiary.”). For the inducement claim to
survive, Luminara needed to produce evidence of Abbott’s specific intent to cause direct
infringement, i.e. an affirmative act aimed at inducing infringement. See Info-Hold, 783
12

F.3d at 1372. Abbott’s mere knowledge that retailers may subsequently sell Reallite
candles into the United States is not evidence of its intent to induce infringement. See
DSU Med., 471 F.3d at 1306.
Moreover, Luminara was required to produce evidence of direct infringement by a
relevant third-party (i.e., one of the retailers who purchased Reallite candles from
Abbott). Abbott’s website does not allow consumers to specifically locate Canadian
retailers that ship Reallite candles to the United States, nor does it show that there are
United States retailers that purchase Reallite candles from Abbott. Luminara’s evidence
that it allegedly purchased a single Reallite candle from a Canadian retailer is
inadmissible double hearsay. The arguments of Luminara’s counsel that “the evidence”
suggests there were other sales—when it points to no specific evidence and the Court can
find none in the record—do not create an issue of fact such that its claim survives
summary judgment. See Stone Motor, 293 F.3d at 467 n.6; Exeter Bancorporation, 58
F.3d at 1312 n.5.
III.

ORDER
Based on the foregoing, and all the files, records, and proceedings herein, IT IS

HEREBY ORDERED that:
1. Defendant Abbott of England (1981) Ltd.’s (“Abbott”) Motion for Summary
Judgment [Doc. No. 460] is GRANTED and Plaintiff’s inducing patent
infringement claim against Abbott is DISMISSED WITH PREJUDICE.

Dated: February 6, 2017

s/ Susan Richard Nelson
SUSAN RICHARD NELSON
United States District Judge
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