Willis Electric Co., Ltd. v. Polygroup Limited et al
Filing
748
ORDER. IT IS HEREBY ORDERED: 1. Plaintiff Willis Electric Co., Ltd.'s motion to exclude the expert testimony of Julie L. Davis 648 is DENIED. 2. Plaintiff Willis Electric Co., Ltd.'s motion for summary judgment 657 is GRANTED IN PART AND DENIED IN PART as addressed in Part II.A. of this Order. 3. Defendants Polygroup Limited (Macao Commercial Offshore), Polygroup Macau Limited (BVI), Polytree (H.K.) Co. Ltd. and Polygroup Trading Limited's motion to exclude the expert testi mony of Michele Riley 666 is DENIED. 4. Defendants Polygroup Limited (Macao Commercial Offshore), Polygroup Macau Limited (BVI), Polytree (H.K.) Co. Ltd. and Polygroup Trading Limited's motion to exclude the expert testimony of Dr. James Dick ens 675 is GRANTED IN PART AND DENIED IN PART as addressed in Part I.C. of this Order. 5. Defendants Polygroup Limited (Macao Commercial Offshore), Polygroup Macau Limited (BVI), Polytree (H.K.) Co. Ltd. and Polygroup Trading Limited's motion for summary judgment 689 is GRANTED IN PART AND DENIED IN PART as addressed in Part II.B. of this Order. (Written Opinion) Signed by Judge Wilhelmina M. Wright on 1/5/2023. (RJE)
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UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Willis Electric Co., Ltd.,
Case No. 15-cv-3443 (WMW/DTS)
Plaintiff,
ORDER
v.
Polygroup Macau Limited (BVI), Polytree
(H.K) Co. Ltd., and Polygroup Trading
Limited,
Defendants.
In this patent-infringement action, Plaintiff alleges that certain products sold by
Defendants infringe claims in five United States patents owned by Plaintiff. This matter
is now before the Court on the parties’ cross-motions to exclude expert testimony and for
summary judgment. (Dkts. 648, 657, 666, 675 and 689.) For the reasons addressed
below, the Court grants in part and denies in part the parties’ motions.
BACKGROUND
Plaintiff Willis Electric Co., Ltd. (Willis Electric) and Defendants Polygroup
Macau Limited (BVI), Polytree (H.K) Co. Ltd. and Polygroup Trading Limited
(collectively, Polygroup) are competitors in the field of artificial holiday trees.
Manufacturers in this field compete based on price, product quality and product
innovation. Willis Electric began manufacturing holiday lights in 1993 and expanded its
business to include pre-lit artificial holiday trees in 2008.
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In 2009, Jason Loomis, an expert in the field of decorative lighting, designed an
artificial holiday tree for GKI/Bethlehem Lighting Company.
Loomis’s design had
multiple trunk segments that included internal trunk wiring to provide electrical power to
light strings attached to the branches. Loomis filed a non-provisional patent application
on July 14, 2010, which issued as United States Patent No. 8,053,042 (Loomis Patent) on
November 8, 2011. The Loomis Patent describes trunk segments that mechanically and
electrically connect using a conventional plug and socket connector.
In mid-2010,
GKI/Bethlehem produced and sold trees embodying the technology described in the
Loomis Patent (GKI Tree).
Willis Electric alleges that, until 2010, its pre-lit holiday trees were “typical of the
industry,” as they were “big, bulky, complex, and difficult to assemble.” But in 2010,
Willis Electric began selling a “One Plug Tree.” The One Plug Tree design involves
“coaxially coupling” tree trunk portions.
Willis Electric filed patent applications
pertaining to the One Plug Tree and other related pre-lit artificial holiday tree designs.
Subsequently, Polygroup began selling an alleged “knockoff design” and applied for its
own patents.
Willis Electric commenced this patent-infringement lawsuit against Polygroup in
August 2015 and filed a first amended complaint in December 2015. The first amended
complaint alleges that Polygroup has infringed five of Willis Electric’s United States
patents pertaining to pre-lit artificial holiday trees.1 Four of the asserted patents pertain
1
Willis Electric also alleged infringement of a sixth patent, United States Patent
No. 9,044,056, which Willis Electric no longer asserts at the time of this motion.
2
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to Willis Electric’s One Plug Tree design: United States Patent No. 8,454,186 (the ’186
Patent); United States Patent No. 8,454,187 (the ’187 Patent); United States Patent No.
8,936,379 (the ’379 Patent); and United States Patent No. 8,974,072 (the ’072 Patent)
(collectively, the One Plug Tree Patents). A fifth asserted patent, United States Patent
No. 9,066,617 (the ’617 Patent), pertains to Willis Electric’s multi-positional locking
artificial tree trunk design.
The Court stayed these proceedings in November 2016 pending inter partes
review (IPR) proceedings before the Patent Trial and Appeal Board (PTAB). In those
proceedings, Polygroup filed more than a dozen IPR petitions challenging the validity of
the One Plug Tree Patents. In several of its IPR petitions, Polygroup referenced the
Loomis Patent. And Polygroup retained Loomis as a consultant and technical expert in
the IPR proceedings.
After the conclusion of IPR proceedings, Willis Electric filed the now-operative
second amended complaint in May 2019. The second amended complaint alleges that
Polygroup has infringed and continues to infringe the One Plug Tree Patents and the ’617
Patent. 2 In a December 2021 Order, the Court construed 10 disputed terms in the
asserted patent claims: five terms that appear in the One Tree Plug Patents and five terms
that appear in the ’617 Patent.
The parties now cross-move to exclude expert testimony and for summary
judgment. The Court addresses each motion in turn.
2
The second amended complaint also includes counts alleging anticompetitive
conduct, all of which have been dismissed. Only the counts alleging patent infringement
remain in dispute.
3
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ANALYSIS
I.
Cross-Motions to Exclude Expert Testimony
The parties cross-move for the exclusion of expert testimony. The admissibility of
expert testimony is an issue of law for the district court to decide and is governed by
Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509
U.S. 579 (1993). Rule 702 provides:
A witness who is qualified as an expert by knowledge, skill,
experience, training, or 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. “An expert may base an opinion on facts or data in the case that the
expert has been made aware of or personally observed.” Fed. R. Evid. 703. “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.” Id.
“The proponent of expert testimony must prove its admissibility by a
preponderance of the evidence.” Lauzon v. Senco Prods., Inc., 270 F.3d 681, 686 (8th
Cir. 2001). “Rule 702 reflects an attempt to liberalize the rules governing the admission
of expert testimony” and favors admissibility over exclusion. Id. (internal quotation
4
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marks omitted). Determinations as to the admissibility of expert testimony are within a
district court’s discretion. See Arkwright Mut. Ins. Co. v. Gwinner Oil, Inc., 125 F.3d
1176, 1182 (8th Cir. 1997).
A district court must ensure that testimony admitted under Rule 702 “is not only
relevant, but reliable.”
Daubert, 509 U.S. at 589.
When making this reliability
determination, a court may evaluate whether the expert’s method has been tested or
subjected to peer review and publication, the method’s known or potential rate of error
and the method’s general acceptance. Presley v. Lakewood Eng’g & Mfg. Co., 553 F.3d
638, 643 (8th Cir. 2009) (citing Daubert, 509 U.S. at 593–94). These factors are not
exhaustive, and a court must evaluate the reliability of expert testimony based on the
facts of the case. Id. A court also may consider “whether the expertise was developed
for litigation or naturally flowed from the expert’s research; whether the proposed expert
ruled out other alternative explanations; and whether the proposed expert sufficiently
connected the proposed testimony with the facts of the case.” Sappington v. Skyjack,
Inc., 512 F.3d 440, 449 (8th Cir. 2008) (internal quotation marks omitted).
When
weighing these factors, a district court must function as a gatekeeper to separate “expert
opinion evidence based on ‘good grounds’ from subjective speculation that masquerades
as scientific knowledge.” Glastetter v. Novartis Pharms. Corp., 252 F.3d 986, 989 (8th
Cir. 2001).
Expert testimony is not admissible if it is “speculative, unsupported by sufficient
facts, or contrary to the facts of the case,” Marmo v. Tyson Fresh Meats, Inc., 457 F.3d
748, 757 (8th Cir. 2006), such that it is “so fundamentally unsupported that it can offer no
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assistance to the jury,” Minn. Supply Co. v. Raymond Corp., 472 F.3d 524, 544 (8th Cir.
2006) (internal quotation marks omitted). But disputes about the factual basis of an
expert’s testimony ordinarily implicate the credibility—not the admissibility—of the
testimony. See Sappington, 512 F.3d at 450; Minn. Supply Co., 472 F.3d at 544. The
Court addresses, in turn, each challenged expert witness.
A.
Julie L. Davis
Willis Electric moves to exclude the opinions and testimony of Polygroup’s
damages expert, Julie L. Davis. Polygroup intends to offer Davis to rebut the opinions of
Willis Electric’s damages expert and to opine about the damages, if any, suffered by
Willis Electric if Willis Electric prevails on its patent-infringement claims. In particular,
Davis opines that Willis Electric cannot prove that it is entitled to lost profits and that
Willis Electric’s total damages based on a reasonable royalty, hypothetically negotiated
in 2013 and continuing until 2019, should be no more than $1,062,370.
If patent infringement is proved, “the court shall award the [patentee] damages
adequate to compensate for the infringement.” 35 U.S.C. § 284. The phrase “damages
adequate to compensate” in Section 284 “includes any foreseeable lost profits the patent
owner can prove.” Grain Processing Corp. v. Am. Maize-Prods. Co., 185 F.3d 1341,
1349 (Fed. Cir. 1999).
If a patentee cannot prove lost profits, the statute sets “a
reasonable royalty” as the damages floor. See 35 U.S.C. § 284. A reasonable royalty
typically is established “based on a hypothetical negotiation between the patentee and the
infringer when the infringement began.” Unisplay, S.A. v. Am. Elec. Sign Co., 69 F.3d
512, 517 (Fed. Cir. 1995). The hypothetical negotiation is intended “to ascertain the
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royalty upon which the parties would have agreed had they successfully negotiated an
agreement just before infringement began.” VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d
1308, 1326 (Fed. Cir. 2014) (internal quotation marks omitted).
A hypothetical reasonable royalty is calculated using the fifteen Georgia-Pacific
factors. ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 869 (Fed. Cir. 2010) (citing
Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y.
1970)).
Notably, the United States Court of Appeals for the Federal Circuit has
recognized that the Georgia-Pacific factors are “comprehensive (but unprioritized and
often overlapping).” Id. Courts “do not require that witnesses use any or all of the
Georgia-Pacific factors when testifying about damages in patent cases.” Whitserve, LLC
v. Comput. Packages, Inc., 694 F.3d 10, 31 (Fed. Cir. 2012). And failing to consider
every relevant Georgia-Pacific factor is distinct from presenting weak evidence in
support of a Georgia-Pacific factor, because the latter circumstance tends to implicate
weight and credibility. Cf. Wallace Comput. Servs., Inc. v. Uarco Inc., 887 F.2d 1095, 1
(Fed. Cir. 1989).
Here, when determining a reasonable royalty rate, Davis analyzed multiple
licensing arrangements pertaining to the Loomis Patent and product designs involving the
technology protected by the Loomis Patent. In doing so, Davis reviewed and considered,
among other evidence, deposition transcripts and exhibits, expert reports, documents
produced by the parties and publicly available information. Davis’s reasonably royalty
analysis also includes an extensive analysis of the Georgia-Pacific factors.
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Willis Electric argues that Davis’s reasonable royalty opinions nonetheless should
be excluded as unreliable because they predominantly rely on an agreement between
Loominocity, Inc. (Loominocity), and Belgravia Wood Limited (Belgravia), a Polygroup
subsidiary. Pursuant to that agreement, Belgravia would pay Loominocity an ongoing
royalty of $0.075 for each tree sold which contains a pole that practices the invention of
the Loomis Patent.
According to Willis Electric, the 2020 agreement between
Loominocity and Belgravia is not comparable to the license agreement that Polygroup
and Willis Electric hypothetically would have entered in 2013. Moreover, Willis Electric
contends, Davis rejects as incomparable the license agreements between Loominocity
and two other licensees—namely, GKI/Bethlehem Lighting Company (GKI) and Boston
Warehouse Trading Corporation (Boston Warehouse). Davis’s rejection of the GKI and
Boston Warehouse agreements is contrary to the record, Willis Electric maintains.
Willis Electric’s arguments largely implicate to the second Georgia-Pacific factor,
which involves evaluating “the rates paid by the licensee for the use of other patents
comparable to the patent in suit.” Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301,
1325 (Fed. Cir. 2009) (internal quotation marks omitted). When a party relies on other
licenses to establish a reasonable royalty, those other licenses must be “sufficiently
comparable to the hypothetical license at issue.” VirnetX, 767 F.3d at 1330 (internal
quotation marks omitted).
As such, the party relying on comparable licenses must
“account for differences in the technologies and economic circumstances of the
contracting parties.” Id. “Sufficient comparability is a threshold requirement for licenses
to be admissible.” Apple Inc. v. Wi-LAN Inc., 25 F.4th 960, 971–72 n.5 (Fed. Cir. 2022).
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When determining whether licenses are comparable, the Federal Circuit has
“never required identity of circumstances; on the contrary, [the Federal Circuit has] long
acknowledged that any reasonable royalty analysis necessarily involves an element of
approximation and uncertainty.” VirnetX, 767 F.3d at 1330 (internal quotation marks
omitted). Allegedly comparable licenses may be insufficient if they demonstrate “no
relationship to the claimed invention,” show no “discernible link to the claimed
technology,” involve “vastly different situations” or pertain to “subject matter . . . [that is]
not even ascertainable from the evidence.” Id. (internal quotation marks and brackets
omitted). But absent such circumstances, “the degree of comparability of the license
agreements” may instead be “a factual issue best addressed by cross examination and not
by exclusion.” Id. at 1331 (internal quotation marks and brackets omitted).
Willis Electric first argues that Davis’s reasonable royalty analysis is flawed
because it ignores the date—and the relevance of that date—of the hypothetical
negotiation. The parties agree, and Davis opines, that the hypothetical negotiation would
have occurred in or about June 2013. As such, Willis Electric’s contention that Davis
“ignores” the hypothetical negotiation date is contrary to the record. Nonetheless, Willis
Electric argues that Davis improperly relies on a purportedly comparable agreement
between Loominocity and Belgravia from 2020, more than six years after the date of the
hypothetical negotiation.
“The key element in setting a reasonable royalty . . . is the necessity [to] return to
the date when the infringement began.” Wang Labs., Inc. v. Toshiba Corp., 993 F.2d
858, 870 (Fed. Cir. 1993) (internal quotation marks omitted). However, “the hypothetical
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negotiation analysis permits and often requires a court to look to events and facts that
occurred thereafter and that could not have been known to or predicted by the
hypothesized negotiators.” Lucent, 580 F.3d at 1333 (internal quotation marks omitted).
Although a reasonable royalty analysis requires “consideration of a hypothetical
negotiation on the date of first infringement,” the analysis does not “automatically
exclud[e] evidence of subsequent events.” Harris Corp. v. Ericsson Inc., 417 F.3d 1241,
1257 (Fed. Cir. 2005).
Under the “book-of-wisdom doctrine,” evaluation of a hypothetical negotiation
may involve “looking to future events to avoid undercompensating patentees.”
Spectralytics, Inc. v. Cordis Corp., 650 F. Supp. 2d 900, 913 (D. Minn. 2009), vacated in
part on other grounds by 649 F.3d 1336 (Fed. Cir. 2011). And “the purpose of looking at
future events is ‘to bring out and expose to light the elements of value that were there
from the beginning.’ ” Id. (quoting Sinclair Refin. Co. v. Jenkins Petroleum Process Co.,
289 U.S. 689, 698 (1933)). As such, a jury may be “told that the hypothetical negotiators
would have employed the ‘book of wisdom,’ looking froward in time from the date of the
first hypothetical negotiation to account for all information that would have been relevant
to the parties in coming to and arriving at a deal.” Comcast IP Holdings I LLC v. Sprint
Commc’ns Co., 850 F.3d 1302, 1314 (Fed. Cir. 2017) (internal quotation marks omitted).
Here, Davis ties the 2020 agreement between Loominocity and Belgravia to the
June 2013 hypothetical negotiation by asserting that certain facts underlying the 2020
agreement would have been known and relevant to Polygroup during a hypothetical
negotiation in 2013. Specifically, Davis opines that the 2020 agreement represents the
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amount that would be paid for a “bare patent license” of the patented technology, as
opposed to unpatented features. Davis relies on evidence that product features unrelated
to Willis Electric’s patented technology are the primary factors that impact purchasing
decisions with respect to artificial holiday trees. Davis also reasons that, at the time of
the hypothetical negotiation, Polygroup had the ability to implement—at a cost of
$100,000 to $200,000—a non-infringing design that Polygroup began selling in 2019.
For these reasons, according to Davis, the amount that Polygroup would have been
willing to pay in 2013 is comparable to the amount that Belgravia actually paid as part of
its 2020 agreement with Loominocity to avoid the effort and costs associated with a redesign. On this record, there is a factual basis to support Davis’s opinion that the 2020
agreement is probative of the reasonable royalty that the parties hypothetically would
have negotiated in June 2013. 3 Willis Electric’s disagreement with Davis’s opinion
reflects a dispute about the weight and credibility of the facts underlying her opinion. For
these reasons, exclusion of Davis’s opinions on this basis is unwarranted.
Willis Electric also argues that Davis’s reliance on the 2020 agreement between
Loominocity and Belgravia is improper because Davis “ignored the litigation taint
underlying” that agreement. According to Willis Electric, the 2020 agreement is a
“sham” transaction that is not comparable to the hypothetical negotiation because it
occurred after this litigation commenced and conferred no benefit on Polygroup, which
had already acquired the Loomis Patent.
3
But potentially comparable licensing
Notably, Willis Electric’s damages expert also relies on three purportedly
comparable agreements that post-date the hypothetical negotiation.
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agreements “are almost never perfectly analogous to the infringement action,” and “the
fact that a license is not perfectly analogous generally goes to the weight of the evidence,
not its admissibility.” Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1227 (Fed. Cir.
2014).
Absent specific circumstances, the degree of comparability between license
agreements typically is a factual issue to be addressed by cross-examination.
See
VirnetX, 767 F.3d at 1330–31. Willis Electric’s arguments do not suggest that the 2020
agreement involved unrelated technology or vastly different business considerations. To
the contrary, the 2020 agreement involved the same licensee (Polygroup, via a
subsidiary) agreeing to license similar patented technology. Any material differences
between the circumstances of the 2020 agreement and the circumstances of the
hypothetical negotiation in 2013 can be addressed through cross-examination and the
presentation of contrary evidence, and the jury can “hear the expert testimony and decide
for itself what to accept or reject.” Id. at 1331 (internal quotation marks omitted). As
such, exclusion of Davis’s opinions on this basis is unwarranted.
Willis Electric also contends that Davis’s reasonable royalty analysis improperly
rejects comparable license agreements that Loominocity entered with GKI and Boston
Warehouse.
In her report, Davis characterizes these agreements as having “little
relevance” to Polygroup’s hypothetical negotiation with Willis Electric because the GKI
and Boston Warehouse agreements involved “licenses to an entire tree design as opposed
to licenses covering bare patent rights.” With respect to the GKI agreement, Willis
Electric identifies no evidence that fundamentally undermines the reliability of Davis’s
opinion that the GKI agreement is not comparable. The 2008 GKI agreement predates
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the 2009 provisional application for the Loomis Patent. And the record reflects that the
2008 GKI agreement and the 2010 amendment to that agreement involved the licensing
of “Product Designs,” including but not limited to patented technology. The Boston
Warehouse agreement, by comparison, provides for a royalty on products that would
infringe the Loomis Patent.
But the Boston Warehouse agreement nonetheless
contemplates royalties based on “each Licensed Product sold,” as opposed to royalties
tied directly to the Loomis Patent or limited to patented features. The Boston Warehouse
agreement also reflects that the royalty calculation was intended to “mirror[ ]” the
royalties calculated under the GKI agreement, which involved the licensing of tree
designs. Davis’s opinions distinguishing the GKI agreement and the Boston Warehouse
agreement have support in the record. Because the parties’ disagreement about the
comparability of the GKI agreement and the Boston Warehouse agreement are factual
disputes, exclusion of Davis’s opinions on this basis is unwarranted.
Willis Electric also argues that Davis should be precluded from offering any
opinion about non-infringing alternatives.
Davis opines that, “[a]t the time of the
hypothetical negotiation, Polygroup had the ability to implement its new non-infringing
design using the [Loomis Patent] that it began selling in October 2019.” This opinion has
no factual support, according to Willis Electric, because Loominocity had already granted
GKI an exclusive license to the Loomis Patent. However, as addressed above, the 2008
GKI agreement predates the 2009 provisional application for the Loomis Patent. And
both the 2008 GKI agreement and the 2010 amendment to that agreement involved the
exclusive licensing of particular “Product Designs,” not the licensing of the Loomis
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Patent itself. Moreover, Davis’s analysis considers other purportedly non-infringing
alternatives that Polygroup could have adopted at the time of the hypothetical
negotiation. For these reasons, Willis Electric has not established that exclusion of
Davis’s opinions on this basis is warranted.
In summary, Davis’s report reflects that she expressly considered the date of the
hypothetical negotiation and the relevant Georgia-Pacific factors, including the existence
of comparable license agreements and the possible availability of non-infringing
alternatives. Davis’s opinions as to these factors are tethered to evidence in the record,
and Willis Electric’s disagreement with these aspects of Davis’s opinions implicate the
weight and credibility of her opinions rather than their admissibility.
Because any
purported flaws in Davis’s reasonable-royalty analysis can be addressed through crossexamination and the presentation of contrary evidence, exclusion of Davis’s expert
opinions is unwarranted.
Accordingly, the Court denies Willis Electric’s motion to exclude the opinions and
testimony of Polygroup’s damages expert.
B.
Michele Riley
Polygroup moves to exclude the opinions and testimony of Willis Electric’s
damages expert, Michele Riley. Polygroup argues that Riley’s opinions as to lost profits
and a reasonable royalty are unreliable and untethered to the facts of the case.
To recover lost profits as opposed to a reasonable royalty, “a patent owner must
prove a causal relationship between the infringement and its loss of profits.” BIC Leisure
Prods., Inc. v. Windsurfing Int’l, Inc., 1 F.3d 1214, 1218 (Fed. Cir. 1993). In other
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words, “[t]he patent owner must show that ‘but for’ the infringement, [the patent owner]
would have made the infringer’s sales.” Id. The Federal Circuit has adopted the fourfactor Panduit test as one method for a patentee to establish entitlement to lost profits
damages. Rite-Hite Corp. v. Kelley Co., Inc., 56 F.3d 1538, 1545 (Fed. Cir. 1995) (citing
Panduit Corp. v. Stahlin Bros. Filore Works Inc., 575 F.2d 1152 (6th Cir. 1978)). This
test requires the patentee to establish (1) demand for the patented product, (2) the absence
of acceptable non-infringing alternatives, (3) the patentee’s manufacturing and marketing
capability to exploit the demand, and (4) the amount of profit that the patentee would
have made. Id. If a patentee does not prove entitlement to lost profits, the patentee is
entitled to a reasonable royalty, typically established based on a hypothetical negotiation.
Unisplay, 69 F.3d at 517. The Court addresses Polygroup’s challenges to Riley’s lost
profits and reasonable-royalty opinions in turn.
1.
Lost Profits Opinions
Polygroup argues that Riley’s lost profits analysis fails to properly account for
available non-infringing alternatives.
When considering the Panduit factors, the “requirement that patentees prove
demand for the product as a whole and the absence of non-infringing alternatives ties lost
profit damages to specific claim limitations and ensures that damages are commensurate
with the value of the patented features.” Mentor Graphics Corp. v. EVE-USA, Inc., 851
F.3d 1275, 1288 (Fed. Cir. 2017) (emphasis added). “Products lacking the advantages of
the patented invention can hardly be termed a substitute acceptable to the customer who
wants those advantages.” Id. at 1285–86 (internal quotation marks and brackets omitted).
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Determining whether a party has proven the absence of acceptable non-infringing
alternatives typically is a fact question for the jury to resolve. See id. at 1287.
In a two-supplier market, “it is reasonable to assume, provided the patent owner
has the manufacturing and marketing capabilities, that it would have made the infringer’s
sales.” State Indus., Inc. v. Mor-Flo Indus., Inc., 883 F.2d 1573, 1578 (Fed. Cir. 1989).
Under the two-supplier market test, a patentee must show (1) that the relevant market
contains only two suppliers, (2) that the patentee had the manufacturing and market
capability to make the sales that were diverted to the infringer and (3) the amount of
profit the patentee would have made from these diverted sales. Micro Chem., Inc. v.
Lextron, Inc., 318 F.3d 1119, 1124 (Fed. Cir. 2003). “In essence, the two-supplier
market test collapses the first two Panduit factors into one ‘two suppliers in the relevant
market’ factor.” Id.
The Federal Circuit has recognized other appropriate methods for proving lost
profits, including the market-share approach. State Indus., 883 F.2d at 1577. Under this
approach, a patentee recovers lost profits on a percentage of infringing sales that is equal
to the patentee’s market share. Id. at 1578. If a patentee can establish its share of the
market, combined with the other Panduit factors, the absence of acceptable substitutes
may become a “neutral factor.” Id.
Riley’s lost profits analysis addresses the Panduit factors, and she limits her
calculation to four specific customers. Applying the market-share approach, Riley’s
analysis accounts for sales lost to market competitors based on relative market share. But
the market-share approach cannot be applied automatically, because a patentee must
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prove both its market share and that it would have captured the infringing sales. See
Slimfold Mfg. Co. v. Kinkead Indus., Inc., 932 F.2d 1453, 1458 (Fed. Cir. 1991)
(affirming district court’s refusal to award lost profits damages based on market-share
approach because patentee failed to prove that consumers “specifically want a [product]
having the advantages of the [asserted] patent”). To prove market share, a patentee must
present “sound economic proof of the nature of the market and likely outcomes with
infringement factored out of the economic picture.” Grain Processing, 185 F.3d at 1350.
Polygroup argues that Riley, when assessing non-infringing alternatives under the
Panduit test, erroneously defines acceptable non-infringing alternative designs as designs
that are “easily and quickly assembled.” The market for a patented product typically
“includes other devices or substitutes similar in physical and functional characteristics to
the patented invention,” but excludes “alternatives with disparately different prices or
significantly different characteristics.”
Micro Chem., 318 F.3d at 1124 (internal
quotation marks omitted). According to Polygroup, ease of assembly is not an advantage
of Willis Electric’s patented features and, therefore, Riley’s definition of acceptable
alternatives (and, by extension, the relevant market) is incorrect.
However, Riley
provides detailed opinions, based on her examination of specific evidence, demonstrating
a connection between ease of assembly and Willis Electric’s patented inventions.
Because this is a factual dispute for the jury to resolve, exclusion of Riley’s opinions on
this basis is unwarranted.
Polygroup seeks to avoid this result by framing this factual dispute as a legal error.
According to Polygroup, on appeal from PTAB’s final written decision in the IPR
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proceedings, the Federal Circuit determined that ease of assembly is not a patented
advantage of Willis Electric’s patents. But Polygroup’s argument is flawed for several
reasons.
First, the Federal Circuit’s decision in Polygroup’s IPR appeal did not address the
same patent claims that are asserted in this case. See generally Polygroup Ltd. MCO v.
Willis Elec. Co., 2021-1401, 2021-1402, 2022 WL 1183332 (Fed. Cir. Apr. 20, 2022).
As each patent claim involves different features (and combinations thereof) that could
impact the ease of assembling an artificial tree, the Federal Circuit’s determinations do
not necessarily apply to the patent claims at issue in this case. Indeed, the Federal Circuit
affirmed PTAB’s conclusion that Polygroup failed to establish the unpatentability of
several patent claims that are asserted in this case. See Polygroup Ltd. MCO v. Willis
Electric Co., 759 F. App’x 934, 944 (Fed. Cir. 2019); see also id. at 936 (addressing
patent claims with features that “simplify tree assembly”).
Second, the Federal Circuit applied the “broadest reasonable interpretation”
standard when concluding that that certain claims in the ’186 Patent and the ’187 Patent
“permit the mechanical and electrical connections” between trunk portions to be “made
independently” in two separate steps. Polygroup Ltd. MCO, 2022 WL 1183332, at *4–5.
By contrast, district courts “do not assign terms their broadest reasonable interpretation.”
PPC Broadband, Inc. v. Corning Optical Commc’ns RF, LLC, 815 F.3d 734, 740 (Fed.
Cir. 2016) (citing Phillips v. Awtl Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc)).
Instead, district courts “seek out the correct construction—the construction that most
accurately delineates the scope of the claimed invention—under the framework laid out
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in Phillips.” Id. In the claim construction order, this Court applied Phillips when
construing the disputed claim terms and observed that “an electrical connection can be
made ‘independent of’ the rotational orientation of the trunk portions if, regardless of
which of multiple rotational orientations is used to mechanically connect the tree trunk
portions, an electrical connection is made.”
Unlike the Federal Circuit’s “broadest
reasonable interpretation” analysis in the IPR appeal, under this Court’s claim
construction, Willis Electric’s patented invention requires an electrical connection and a
mechanical connection to occur in a single step, which could impact the ease of
assembling an artificial tree.
Third, the parties’ respective damages experts agree that the patented features at
issue provide ease-of-assembly benefits, and the experts disagree only as to the degree of
those benefits.
For instance, Polygroup’s damages expert opines that “the limited
benefits provided by the accused feature provide only minimal contribution to the success
of the accused products” and “only seconds are saved when assembling” artificial trees
with such features. These disagreements reflect factual disputes that implicate the weight
and credibility, not the admissibility, of Riley’s lost profits opinions.
Polygroup also contends that Riley’s lost profits opinions fail to demonstrate that,
but for any alleged infringement, Willis Electric would have captured Polygroup’s profits
at a rate equal to Willis Electric’s proportionate market share. According to Polygroup,
other factors—including Willis Electric’s performance as a supplier, retailer-driven price
competition and financial incentives to design around patents and economic conditions
such as labor shortages—would impact Willis Electric’s annual sales and profit margin.
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But Riley’s report accounts for various market conditions when purporting to reconstruct
the relevant market “but for” Polygroup’s alleged infringement.
Polygroup’s
disagreement with Riley’s analysis implicates the weight and credibility of the evidence
rather than its admissibility.
For all of these reasons, the Court denies Polygroup’s motion to exclude Riley’s
lost profits opinions and testimony.
2.
Reasonable Royalty Opinions
Polygroup also argues that Riley’s reasonable royalty opinions are unreliable and
untethered to the facts of this case.
As addressed above, if a patentee does not prove entitlement to lost profits, the
patentee is entitled to a reasonable royalty, typically established based on a hypothetical
negotiation. Unisplay, 69 F.3d at 517. The “hypothetical negotiation” is intended “to
ascertain the royalty upon which the parties would have agreed had they successfully
negotiated an agreement just before infringement began.” VirnetX, 767 F.3d at 1326
(internal quotation marks omitted). This hypothetical reasonable royalty is calculated
using the fifteen Georgia-Pacific factors. ResQNet.com, 594 F.3d at 869.
“When the accused infringing products have both patented and unpatented
features, measuring this value requires a determination of the value added by such
features.” Ericsson, 773 F.3d at 1226. “The essential requirement is that the ultimate
reasonable royalty award must be based on the incremental value that the patented
invention adds to the end product.” Id. “A patentee is only entitled to a reasonable
royalty attributable to the infringing features,” and a reasonable royalty must be
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“apportioned between the infringing and non-infringing features of the product.” Power
Integrations, Inc v. Fairchild Semiconductor Int’l, Inc., 904 F.3d 965, 977 (Fed. Cir.
2018). As such, when “multi-component products are accused of infringement, the
royalty base should not be larger than the smallest salable unit embodying the patented
invention.” Id.
Here, Riley opines that Polygroup’s accused product is “the smallest saleable
patent-practicing unit” and, consequently, Riley calculates a royalty base on a per-tree
basis. Polygroup does not dispute this characterization, and there is no evidence that subcomponents of an artificial holiday tree are sold separately. Nonetheless, Polygroup
contends that Riley’s analysis fails to further apportion value between the patented and
unpatented features of the accused products.
When a patentee’s “damages theory relies on the smallest salable unit as the basis
for calculating the royalty, the patentee must estimate what portion of that smallest
salable unit is attributable to the patented technology when the smallest salable unit itself
contains several non-infringing features.” Id. at 977. But because it may be difficult to
assign value to a feature that might not ever have been individually sold, “it is wellunderstood that this process may involve some degree of approximation and uncertainty.”
Virnetx, 767 F.3d at 1328. The Federal Circuit has held that “apportionment can be
addressed in a variety of ways, including by careful selection of the royalty base to reflect
the value added by the patented feature” or “by adjustment of the royalty rate so as to
discount the value of a product’s non-patented features.” Exmark Mfg. Co. v. Briggs &
Stratton Power Prods. Grp., LLC, 879 F.3d 1332, 1348 (Fed. Cir. 2018).
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Riley’s analysis purports to account for apportionment using the latter approach—
namely, by isolating the profit premium that Willis Electric and Polygroup obtained for
artificial trees with the patented features in comparison to similar trees without the
patented features.
Polygroup disagrees with Riley’s apportionment analysis largely
because Polygroup disputes the scope of the advantages of the patented features and the
extent to which the patented features are the driving force behind the purported profit
premium that Riley identifies.
But apportionment involves “some degree of
approximation and uncertainty.” Virnetx, 767 F.3d at 1328. Polygroup’s disagreement
with Riley’s apportionment analysis implicates the weight and credibility of the evidence,
not its admissibility. Moreover, as addressed above, Polygroup’s contention that “ease of
assembly” is not an advantage of the patented features is a factual dispute that is best
resolved by the jury.
The value of patented features also can be derived from an evaluation of
comparable licenses that accounts for differences in the technologies involved and the
economic circumstances of the contracting parties. Commonwealth Sci. & Indus. Rsch.
Org. v. Cisco Sys., Inc., 809 F.3d 1295, 1303 (Fed. Cir. 2015) (observing that, when “the
licenses employed are sufficiently comparable, this method is typically reliable because
the parties are constrained by the market’s actual valuation of the patent”).
Riley
employs a market approach by considering other purportedly comparable licensing
agreements, including licensing and manufacturing agreements between Willis Electric
and other third parties. This approach, also, presents disputed fact issues that implicate
weight and credibility rather than admissibility.
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Polygroup’s arguments additionally implicate the thirteenth Georgia-Pacific
factor, which pertains to the “portion of the realizable profit that should be credited to the
invention as distinguished from non-patented elements, the manufacturing process,
business risks, or significant features or improvements added by the infringer.” 318 F.
Supp. at 1120. Notably, the Federal Circuit has recognized that the Georgia-Pacific
factors are “unprioritized and often overlapping,” ResQNet.com, Inc., 594 F.3d at 869,
and witnesses are not required to “use any or all of the Georgia-Pacific factors when
testifying about damages in patent cases,” Whitserve, LLC, 694 F.3d at 31. Moreover,
failing to consider every relevant Georgia-Pacific factor is distinct from presenting weak
evidence in support of a specific Georgia-Pacific factor, because the latter circumstance
tends to implicate weight and credibility. Cf. Wallace Comput. Servs., Inc., 887 F.2d at 1.
Here, in addition to Riley’s quantitative-apportionment and market-approach
analyses addressed above, Riley extensively considers the Georgia-Pacific factors. In
doing so, Riley acknowledges that “under the hypothetical license agreement, Polygroup
would bear the business risk of manufacturing, marketing, and selling the Accused
Products” and, therefore, Riley concludes that the thirteenth Georgia-Pacific factor “has
a downward impact on the negotiated royalty rate.”
In summary, Polygroup’s disagreement with these aspects of Riley’s opinions
implicate the weight and credibility of her opinions rather than their admissibility.
Because any purported flaws in Riley’s analysis can be addressed through crossexamination and the presentation of contrary evidence, exclusion of Riley’s reasonable
royalty opinions is unwarranted.
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Accordingly, the Court denies Polygroup’s motion to exclude the opinions and
testimony of Willis Electric’s damages expert.
C.
Dr. James Dickens
Polygroup moves to exclude the opinions and testimony of Willis Electric’s
technical expert, Dr. James Dickens. According to Polygroup, Dr. Dickens misapplies or
ignores the relevant law and facts as to several issues. The Court addresses each of
Polygroup’s arguments.
1.
Non-Infringing Alternatives and Secondary Considerations
Polygroup first argues that Dr. Dickens’s opinions about non-infringing
alternatives and secondary considerations of non-obviousness are based on an incorrect
premise—namely, that a key advantage of Willis Electric’s patented invention is the ease
of assembling a pre-lit artificial holiday tree. Polygroup contends that this premise is
foreclosed by the Federal Circuit’s 2022 decision in the IPR proceedings. See Polygroup
Ltd., 2022 WL 1183332, at *4–5.
As addressed in Part I.B.1. of this Order, Polygroup’s arguments as to this issue
are unavailing for several reasons.
Moreover, the parties and their experts present
competing factual evidence and opinions pertaining to acceptable non-infringing
alternatives and secondary considerations of non-obviousness.
These disagreements
reflect factual disputes that implicate the weight and credibility, not the admissibility, of
Dr. Dickens’s opinions.
For these reasons, the Court denies Polygroup’s motion to exclude these aspects of
Dr. Dickens’s opinions.
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2.
Application of “Independent of” Claim Construction
Polygroup next argues that Dr. Dickens misapplies the Court’s construction of the
“independent of” claim limitation.
During claim construction, the parties disputed the meaning of the phrase “the
electrical connection being made independent of the rotational orientation of the first
tree/trunk portion relative to the second tree/trunk portion.” Variations of this disputed
phrase appear in the ’186 Patent (asserted claims 1, 10, 20 and 28) and the ’187 Patent
(asserted claims 1 and 7). The Court rejected Polygroup’s proposed construction of this
phrase and adopted Willis Electric’s proposed construction—namely, “an electrical
connection that can be made at any available arrangement of the first tree/trunk portion
relative to the second tree/trunk portion about a common vertical axis between the treetrunk portions.”
Polygroup contends that Dr. Dickens’s opinions misapply the Court’s claim
construction by suggesting that “any available arrangement” of tree trunk portions means
only those arrangements in which both a mechanical and electrical connection are made.
But Dr. Dickens’s opinions are consistent with this Court’s claim construction. Although
the Court did not separately define the phrase “any available arrangement,” the Court
observed in the claim construction order that “an electrical connection can be made
‘independent of’ the rotational orientation of the trunk portions if, regardless of which of
multiple rotational orientations is used to mechanically connect the tree trunk portions, an
electrical connection is made.” Polygroup’s technical expert similarly interprets the
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phrase “any available arrangement” to mean “any rotational orientation of the first and
second tree/trunk portions in which a mechanical connection can be made between them.”
As the parties’ summary judgment briefing reflects, Polygroup’s dispute as to this
issue pertains to whether “any available arrangement” of tree trunk portions includes an
arrangement in which the plastic “fins” of one trunk connector are positioned precisely to
rest on top of the “fins” of another trunk connector.
Polygroup’s technical expert
advocates for this position, but Dr. Dickens repeatedly testified that this scenario does not
involve an “available” connection as there is “not a mechanical connection just because
[the trunk connectors] touch.” And Dr. Dickens opines that, if the fins of one connector
rest on top of the fins of another connector, this arrangement will not form a stable
connection because the lower fins will yield.
These disagreements reflect factual
disputes that implicate the weight and credibility, not the admissibility, of Dr. Dickens’s
opinions.
For these reasons, the Court denies Polygroup’s motion to exclude this aspect of
Dr. Dickens’s opinions.
3.
Analysis of “Interference Fit” Claim Limitation
Polygroup argues that Dr. Dickens’s opinions about the “interference fit” claim
limitation ignore critical facts and do not reflect reliable scientific methods.
The asserted claims of the ’186 Patent and the ’379 Patent require that the trunk
connector “forms an interference fit” with the trunk body when inserted therein. The
Court did not construe this term, but the parties agreed in their joint claim construction
statement that an “interference fit” is “an engineered connection where two components
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or parts to be connected are manufactured to be of different dimensions such that when
one component is pressed into the other, they interfere and deform to force a connection.”
Dr. Dickens opines in his report and deposition testimony that, when he tested the
accused products, he had to push and exert force to slide the connector in and out of the
trunk body. Dr. Dickens also observed discoloration, markings and scratches on the
component parts that, in his opinion, demonstrate that the connectors in some of
Polygroup’s accused products have an “interference fit” with the trunk portions. And
Dr. Dickens testified that there are protrusions on the plastic connector that may cause an
interference fit with the trunk portion.
Polygroup contends that Dr. Dickens ignored Polygroup’s engineering drawings,
which provide the dimensions for the connectors and trunk bodies on Polygroup’s
products and, according to Polygroup, irrefutably establish that no interference fit occurs
between these components.
But Polygroup misrepresents the record.
Dr. Dickens
considered the engineering drawings and testified as to why, in his opinion, the drawings
do not prove the absence of an interference fit.
Although Polygroup suggests that
Dr. Dickens did not use reliable scientific methods, the record reflects that Dr. Dickens
based his opinions on his own expertise and observations, including his physical testing
and observations of the accused products. See Shuck v. CNH Am., LLC, 498 F.3d 868,
875 (8th Cir. 2007) (observing that a qualified expert’s “observations coupled with
expertise generally may form the basis of an admissible expert opinion”). Polygroup’s
disagreements implicate the weight and credibility, not the admissibility, of Dr. Dickens’s
opinions.
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The Court, therefore, denies Polygroup’s motion to exclude this aspect of Dr.
Dickens’s opinions.
4.
Analysis of “Detachably Connected” Claim Limitation
Polygroup contends that Dr. Dickens’s opinions about the “detachably connected”
claim limitation should be excluded because they are based on an incorrect legal standard.
Polygroup’s accused products must have wiring that is “detachably connected” to
infringe claim 7 of the ’186 Patent, claim 32 of the ’379 Patent and claim 5 of the ’072
Patent. According to Polygroup, after its accused products are assembled prior to sale,
the wiring is no longer “detachable” without first disassembling the product. Dr. Dickens
does not dispute this fact. Instead, Dr. Dickens relies on his ability to detach the wiring
after cutting the trunk bodies in half. According to Willis Electric and Dr. Dickens, a
product can infringe the “detachably connected” claim limitation even if the wiring is
detachable only before the product is assembled and sold to a consumer.
A “device does not infringe simply because it is possible to alter it in a way that
would satisfy all the limitations of a patent claim.” High Tech Med. Instrumentation, Inc.
v. New Image Indus., Inc., 49 F.3d 1551, 1555 (Fed. Cir. 1995). In High Tech, the patent
claim at issue was directed to a device comprising a camera “being rotatably coupled” to
a “body member” of the device. Id. at 1553. The district court found infringement
because the accused product had a camera that could be “rotatably coupled to the body
member when the set screws [were] loosened or removed.”
Id. at 1555 (internal
quotation marks omitted). The Federal Circuit reversed because the accused camera was
“not rotatable within its housing unless [it was] altered, at least to the extent of removing
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or loosening the set screws that secure the camera to the housing.” Id. at 1556. “The
question is not what a device might have been made to do, but what it was intended to do
and did do,” and the fact that “a device could have been made to do something else does
not of itself establish infringement.” Id. at 1555 (internal quotation marks and brackets
omitted).
Here, it is undisputed that Polygroup did not design its accused products to have
the internal wiring detached by a consumer during operation. Nor is there any evidence
in the record suggesting that any functional purpose would be served by a consumer
dismantling Polygroup’s artificial trees or that any consumer has done so.
To the
contrary, the evidence shows that Dr. Dickens had to permanently destroy Polygroup’s
artificial tree, by cutting the trunk body open, to detach the wiring assemblies. The
circumstances in this case are identical to the circumstances in High Tech in all material
respects. See id. at 1556 (observing that the alleged infringer did not design its camera to
rotate during operation and nothing in the record demonstrated that removing the set
screws would serve a functional purpose or that any user had done so during actual use).
The undisputed facts establish, contrary to Dr. Dickens’s opinion, that Polygroup’s
accused products do not contain “detachably connected” wiring as required by claim 7 of
the ’186 Patent, claim 32 of the ’379 Patent and claim 5 of the ’072 Patent.
Because Dr. Dickens’s opinions about the “detachably connected” claim limitation
are contrary to law, the Court grants Polygroup’s motion to exclude this aspect of
Dr. Dickens’s opinions.
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5.
Analysis of “Insertable” and “Securable” Claim Limitations
Polygroup argues that Dr. Dickens’s opinions about the “insertable into” and
“securable to” claim limitations should be excluded because they are based on an
incorrect legal standard.
Similar to the detachability of the wiring assemblies addressed above, Polygroup
argues that the trunk connectors in its accused products are inserted and secured into the
trunk bodies during assembly before they are sold and, therefore, are not designed to be
inserted or secured by a consumer. Willis Electric and Dr. Dickens do not dispute this
fact and instead rely on evidence that the trunk connectors in Polygroup’s accused
products are capable of being inserted and secured into the trunk bodies during assembly.
The Federal Circuit has distinguished between a claim that requires a particular
structure—such as “a camera ‘rotatably coupled’ to a body member”—and a claim that
only requires a capacity to perform a function—such as magnetic members “capable of
engaging” other magnetic members. Revolution Eyewear, Inc. v. Aspex Eyewear, Inc.,
563 F.3d 1358, 1369 (Fed. Cir. 2009) (distinguishing High Tech). The “rotatably coupled”
claim language in High Tech described a structure with a particular characteristic, and the
accused product in that case did not possess that characteristic unless the structure was
altered in an unintended manner. See id. By contrast, the “capable of engaging” claim
language in Revolution Eyewear described a product’s capacity to perform a function,
and that functional capacity was inherent in the accused product regardless of whether the
product was intended to perform that function and regardless of whether any customer
ever performed the function. See id. In the latter circumstance, because the accused
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product had the capacity to perform the claimed function, the Federal Circuit affirmed the
district court’s decision to grant summary judgment as to infringement. Id. at 1370.
Here, the claim language at issue requires a “trunk connector insertable into the
first trunk body . . . and securable to the first trunk body.” Unlike the “detachably
connected” claim language addressed above, claim 12 of the ’379 Patent does not
describe the characteristics of a structure. Rather, this claim describes a capability—
namely, the capacity to be inserted into and secured to a trunk body. There is no dispute
that the trunk connectors in Polygroup’s accused products possess that functional
capability, even if no consumer ever performs that function. These circumstances are
akin to the circumstances in Revolution Eyewear. See id. at 1369–70 (observing that,
when a claim requires the capacity to perform a function, it is “irrelevant” that the
accused products “are not actually used” in that manner so long as they possess the
functional capability).
However, in Revolution Eyewear, the Federal Circuit recognized a second factual
distinction with High Tech—namely, whether the accused product must be “altered in
any way” for it to be capable of the claimed function. Id. at 1370. In Revolution
Eyewear, no alteration of the accused product was necessary because the accused product
was “capable of engaging” magnetic members “as made and sold.” Id. It is undisputed
here that the trunk connectors in Polygroup’s accused products, after they are made and
sold, are no longer “insertable into” or “securable to” a trunk body without first
disassembling the products. For this reason, this case is factually distinguishable from
Revolution Eyewear. The undisputed facts establish, contrary to Dr. Dickens’s opinion,
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that Polygroup’s accused products, as made and sold, do not contain trunk connectors
that are “insertable into” or “securable to” trunk bodies as required by claim 12 of
the ’379 Patent.
Because Dr. Dickens’s opinions about the “insertable into” and “securable to”
claim limitations are contrary to law, the Court grants Polygroup’s motion to exclude
these aspects of Dr. Dickens’s opinions.
6.
Doctrine-of-Equivalents Opinions
Polygroup next argues that Willis Electric has waived any doctrine-of-equivalents
argument as to claims 4 and 10 of the ’187 Patent because Willis Electric failed to assert
this theory in its final infringement claim charts.
Consequently, Polygroup argues,
Dr. Dickens’s doctrine-of-equivalents opinions must be excluded.
Claim charts are “designed specifically to require parties to crystallize their
theories of the case early in the litigation so as to prevent the shifting sands approach to
claim construction.” O2 Micro Int’l Ltd. v. Monolithic Power Sys., Inc., 467 F.3d 1355,
1364 (Fed. Cir. 2006) (internal quotation marks omitted).
“These disclosures must
contain enough information to provide notice of the party’s infringement contentions and
defenses . . . .” QXMédical, LLC v. Vascular Sols., LLC, 408 F. Supp. 3d 996, 1016
(D. Minn. 2019) (internal quotation marks omitted). If a plaintiff violates a scheduling
order by failing to disclose the requisite infringement or invalidity contentions, the
plaintiff may be precluded from asserting the improperly disclosed theory on a motion for
summary judgment. See id. at 1016–17 (collecting cases).
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In this case, the Court issued a pretrial scheduling order on March 21, 2016. That
order, among other things, required Willis Electric to disclose a claim chart that identifies
“(1) which claim(s) of the patents they allege are being infringed; (2) which specific
products . . . allegedly infringe each claim; and (3) where each element of each claim
listed in (1) is found in each product listed in (2), including the basis for each contention
that the element is present.” The pretrial scheduling order also provides:
If any party contends that there is infringement of any claims
under the doctrine of equivalents, that party shall separately
identify this on the Claim Chart and, in addition to the
information required for literal infringement, that party shall
also explain each function, way, and result that is allegedly
equivalent, and why it contends that any differences are not
substantial.
Subsequently, after the stay in this case was lifted, the magistrate judge amended the
pretrial scheduling order several times. As relevant here, on November 16, 2020, the
magistrate judge imposed a deadline by which Willis Electric was required to disclose its
“Final Claim Chart.” That order amended several deadlines but expressly preserved all
other requirements of the original March 21, 2016 pretrial scheduling order, “including
limitations on discovery and guidance regarding how it should be conducted.”
Pursuant to the magistrate judge’s November 16, 2020 Order, Willis Electric
disclosed its “Final Infringement Claim Charts” in December 2020. The claim charts and
accompanying contentions identify several categories of Polygroup’s accused products,
labeled Group I, Group II, and Group III. Willis Electric’s contentions do not assert that
the Group I or Group II products literally infringe claim 4 or claim 10 of the ’187 Patent,
nor do Willis Electric’s contentions assert a doctrine-of-equivalents theory of
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infringement as to these claims. Indeed, Willis Electric’s contentions disavow any such
theory, stating that “Willis Electric does not currently believe that the appropriate
construction of any terms of any asserted claims necessitates a showing of infringement
under the doctrine of equivalents, as opposed to literal infringement.” Willis Electric did
not seek leave to amend these contentions thereafter.
Contrary to Willis Electric’s
infringement contentions, Willis Electric’s expert, Dr. Dickens, subsequently provided an
infringement opinion for claim 4 and claim 10 of the ’187 Patent as to the Group I and
Group II accused products.
A court may preclude a patentee from relying on an infringement theory that was
not disclosed in its infringement contentions as required by a scheduling order. See, e.g.,
Teashot LLC v. Green Mountain Coffee Roasters, 595 F. App’x 983, 987 (Fed. Cir. 2015)
(excluding doctrine-of-equivalents theory of infringement because it was not disclosed in
infringement contentions); O2 Micro, 467 F.3d at 1367–70 (affirming summary judgment
of noninfringement after ruling that district court did not err by excluding evidence
disclosed in violation of pretrial scheduling order); SanDisk Corp. v. Memorex Prods.,
Inc., 415 F.3d 1278, 1292 (Fed. Cir. 2005) (affirming a district court’s exclusion of
evidence pertaining to theories of infringement that were not disclosed as required by the
local patent rules and the court’s scheduling order); QXMédical, 408 F. Supp. 3d at
1016–17 (precluding party from presenting invalidity argument that had not been
disclosed as required by scheduling order). In addition, a district court may impose
sanctions on a party that fails to obey a discovery order, including by “prohibiting the
disobedient party from supporting or opposing designated claims or defenses, or from
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introducing designated matters in evidence.” Fed. R. Civ. P. 37(b)(2)(A)(ii).
District
courts also have inherent power “to impose sanctions short of dismissal for violations of
court orders.” State Farm Fire & Cas. Co. v. United States ex rel. Rigsby, 580 U.S. 39,
49 (2016); accord Nick v. Morgan’s Foods, Inc., 270 F.3d 590, 594 n.2 (8th Cir. 2001).
It is within a district court’s “wide discretion” to select the appropriate sanction to
impose. Nick, 270 F.3d at 595.
Here, it is undisputed that Willis Electric failed to disclose its doctrine-ofequivalents theory of infringement—or any theory of infringement—as to claim 4 and
claim 10 of the ’187 Patent with respect to the Group I and Group II accused products.
Moreover, Willis Electric expressly disavowed such a theory of infringement. On this
record, Willis Electric’s evidence in support of this theory of infringement warrants
exclusion.
Willis Electric attempts to avoid this result by arguing that Polygroup should have
remedied this situation by bringing a non-dispositive motion.
But Willis Electric’s
reliance on Bombardier Recreational Products Inc. v. Arctic Cat Inc. in support of this
effort, is misplaced. In Bombardier, the magistrate judge concluded that the patentee’s
expert’s report “did not constitute a change in infringement theory.” Civ. No. 12-2706
(JRT/LIB), 2017 WL 690186, at *4 (D. Minn. Feb. 21, 2017). Similarly, in Arctic Cat,
Inc. v. Bombardier Recreational Products Inc., the district court observed that, if the
defendant “considered Arctic Cat’s doctrine of equivalents contentions deficient, the
proper remedy would have been non-dispositive motion practice.” Civ. No. 12-2692
(JRT/LIB), 2018 WL 654218, at *6 n.13 (D. Minn. Jan. 2, 2018). But in Arctic Cat, the
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district court concluded that the plaintiff had provided a doctrine-of-equivalents
infringement contention that was “broad, but sufficient.” Id. at *6.
The decisions in Bombardier and Arctic Cat involve circumstances that are
factually distinguishable from this case. Here, not only did Willis Electric provide no
doctrine-of-equivalents infringement contention, Willis Electric also expressly disavowed
any such infringement theory. Polygroup had no basis to know that Willis Electric’s
December 2020 infringement contentions were incomplete until after Willis Electric
served Dr. Dickens’s expert report in 2022. Moreover, the burden was not on Polygroup
to guess that Willis Electric might seek to assert a new theory of infringement that it had
previously disavowed. Rather, the burden was on Willis Electric to seek leave to amend
its infringement contentions if Willis Electric wished to add new theories of infringement
after the deadline for disclosing such theories. See, e.g., Dane Techs., Inc. v. Gatekeeper
Sys., Inc., Civ. No. 12-2730 ADM/JJK, 2015 WL 12819180, at *5 (D. Minn. Jan. 20,
2015) (observing that “an expert report cannot introduce new infringement theories
without leave to amend on showing good cause”).
Willis Electric’s arguments are
unavailing.
Accordingly, the Court grants Polygroup’s motion to exclude this aspect of
Dr. Dickens’s opinions.
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7.
GKI Tree Cumulativeness Opinions
Polygroup argues that Dr. Dickens’s opinions about the GKI Tree product being
“cumulative” of the Loomis Patent should be excluded as contrary to law.
Dr. Dickens opines that the features of the GKI Tree product are cumulative of the
invention disclosed by the Loomis Patent. Willis Electric argues that these opinions are
relevant to the applicability of IPR estoppel. As addressed below in Part II.A.1. of this
Order, IPR estoppel cannot bar Polygroup from advancing invalidity theories of
anticipation or obviousness on the GKI Tree because a physical product is not a type of
prior art reference that can be raised in IPR proceedings. Because IPR estoppel is
inapplicable to this case, Dr. Dickens’s opinions pertaining to cumultaiveness are not
relevant to this issue.
Willis Electric argues in the alternative that, even if IPR estoppel does not apply,
Dr. Dickens’s cumulativeness opinions are relevant to whether certain asserted claims of
the One Plug Tree Patents are invalid as obvious in light of the GKI Tree. A jury “may
be instructed to evaluate whether the evidence [of invalidity] before it is materially new,
and if so, to consider that fact when determining whether an invalidity defense has been
proved by clear and convincing evidence.” Microsoft Corp. v. i4i Ltd., 564 U.S. 91, 111
(2011). Here, the Loomis Patent is identified in the One Plug Tree Patents as a prior art
reference that the PTO considered during prosecution.
As such, to the extent that
Dr. Dickens opines about the similarities between the Loomis Patent and the GKI Tree,
these opinions may be relevant to rebuffing Polygroup’s invalidity defense based on the
GKI Tree. Polygroup does not dispute the relevance of this evidence, but contends that
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Dr. Dickens’s opinions fail to address “whether the GKI Tree discloses materially more
than the disclosure of the” Loomis Patent. This argument implicates the weight and
credibility of Dr. Dickens’s cumulativeness opinions, however, not their admissibility.
Accordingly, the Court denies Polygroup’s motion to exclude these aspects of
Dr. Dickens’s opinions.
II.
Cross-Motions for Summary Judgment
The parties also cross-move for summary judgment. Summary judgment is proper
when the record before the district court establishes that there is “no genuine dispute as to
any material fact” and the moving party is “entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a). A genuine dispute as to a material fact exists when there is evidence
that, if believed, would permit a reasonable jury to return a verdict for the nonmoving
party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When considering a
motion for summary judgment, a district court construes the evidence in the light most
favorable to the nonmoving party and draws all reasonable inferences in that party’s
favor. See Windstream Corp. v. Da Gragnano, 757 F.3d 798, 802–03 (8th Cir. 2014).
The party asserting that a fact is genuinely disputed must cite “particular parts of
materials in the record” that support the assertion. Fed. R. Civ. P. 56(c)(1)(A); accord
Krenik v. County of Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995).
Willis Electric seeks partial summary judgment as to Polygroup’s invalidity
defense. Polygroup seeks summary judgment as to invalidity, non-infringement and lost
profits. The Court addresses each motion in turn.
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A.
Willis Electric’s Motion for Summary Judgment
Willis Electric contends that Polygroup’s invalidity defenses, as asserted with
respect to the One Plug Tree Patents, fail as a matter of law.4
Issued patents are “presumed valid.”
35 U.S.C. § 282(a).
“The burden of
establishing invalidity of a patent or any claim thereof shall rest on the party asserting
such invalidity.” Id. A party asserting that a patent is invalid must establish invalidity by
clear-and-convincing evidence. Microsoft Corp., 564 U.S. at 111. In doing so, the party
asserting invalidity “bears a heavy burden of persuasion.” Id. at 101 (internal quotation
marks omitted).
Polygroup contends that the One Plug Tree Patents are invalid on four bases:
obviousness under 35 U.S.C. § 103, anticipation under 35 U.S.C. § 102, claiming abstract
ideas under 35 U.S.C. § 101 and indefiniteness under 35 U.S.C. § 112. Willis Electric
argues that Polygroup is estopped from asserting invalidity defenses of anticipation and
obviousness based on the GKI Tree.
Willis Electric also argues that Polygroup’s
“abstract ideas” defense has been waived or, in the alternative, fails as a matter of law.
And Willis Electric contends that Polygroup has presented insufficient evidence to
support its indefiniteness defense. Each argument is addressed in turn.
4
Willis Electric’s motion pertains to—and the Court’s analysis of that motion is
limited to—the following asserted claims of the One Plug Tree Patents: claims 15 and 17
of the ’186 Patent; claims 4, 10 and 13 of the ’187 Patent; claims 12, 15 and 32 of the
’379 Patent and claim 5 of the ’072 Patent.
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1.
Anticipation or Obviousness (35 U.S.C. §§ 102, 103)
Willis Electric argues that statutory and common law estopp Polygroup from
arguing that the asserted claims of the One Plug Tree Patents are anticipated or obvious
based on the GKI Tree because these defenses reasonably could have been raised during
IPR proceedings.
“A patent is invalid for anticipation if a single prior art reference discloses each
and every limitation of the claimed invention.” Schering Corp. v. Geneva Pharms., Inc.,
339 F.3d 1373, 1377 (Fed. Cir. 2003); accord 35 U.S.C. § 102(a)(1) (providing that a
person is not entitled to a patent if “the claimed invention was patented, described in a
printed publication, or in public use, on sale, or otherwise available to the public before
the effective filing date of the claimed invention”). A patent is invalid for obviousness
“if the differences between the claimed invention and the prior art are such that the
claimed invention as a whole would have been obvious before the effective filing date of
the claimed invention to a person having ordinary skill in the art to which the claimed
invention pertains.” 35 U.S.C. § 103(a).
A petitioner in IPR proceedings “may request to cancel as unpatentable [one] or
more claims of a patent only on a ground that could be raised under section 102 or 103
and only on the basis of prior art consisting of patents or printed publications.” 35 U.S.C.
§ 311(b). A petitioner in IPR proceedings “may not assert . . . in a civil action . . . that
the [patent] claim is invalid on any ground that the petitioner raised or reasonably could
have raised during that inter partes review.” 35 U.S.C. § 315(e)(2); accord Cal. Inst. of
Tech. v. Broadcom Ltd., 25 F.4th 976, 989 (Fed. Cir. 2022).
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Willis Electric contends that Polygroup reasonably could have challenged the
validity of the One Plug Tree Patents on anticipation and obviousness grounds based on
the Loomis Patent during the IPR proceedings and, therefore, Polygroup is estopped from
asserting these invalidity defenses in this case based on the GKI Tree, which is an
embodiment of the Loomis Patent. Polygroup does not dispute that it reasonably could
have raised anticipation or obviousness grounds for invalidity on the basis of the Loomis
Patent during the IPR proceedings.
Nor does Polygroup dispute that it knew or
reasonably could have known about the GKI Tree when Polygroup petitioned for IPR.
But Polygroup contends that it could not have relied on the GKI Tree as prior art during
the IPR proceedings because the GKI Tree is a physical product as opposed to a patent or
printed publication.
Undisputedly, physical products “cannot be raised during IPR proceedings.”
Wasica Fin. GmbH v. Schrader Int’l, Inc., 432 F. Supp. 3d 448, 453 (D. Del. 2020);
accord 35 U.S.C. § 311(b) (providing that validity challenges in IPR proceedings may be
asserted “only on the basis of prior art consisting of patents or printed publications”). For
this reason, some district courts have concluded that “IPR estoppel does not apply to
device art, because a petitioner cannot use an IPR to challenge the validity of a patent
claim . . . based on prior art products or systems.” IOENGINE, LLC v. PayPal Holdings,
Inc., __ F. Supp. 3d ___, 2022 WL 2800861, at *31 (D. Del. 2022) (emphasis added)
(internal quotation marks omitted). “However, some [district] courts have estopped
defendants from asserting device art when ‘the physical product is entirely cumulative’ of
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the prior art raised in the IPR, i.e., when the product is ‘materially identical’ to the prior
art reference raised in the IPR.” Id. (quoting Wasica, 432 F. Supp. 3d at 454–55).
Neither the Supreme Court of the United States nor the Federal Circuit has
resolved the division among the district courts that have considered this question. See
Chemours Co. FC, LLC v. Daikin Indus., Ltd., Civ. No. 17-1612 (MN), 2022 WL
2643517, at *2 (D. Del. July 8, 2022) (recognizing the split in persuasive decisions from
district courts as to this issue and the absence of binding appellate precedent). Absent
any binding precedent, some courts have relied on statutory interpretation to resolve this
issue. See, e.g., Medline Indus., Inc. v. C.R. Bard, Inc., No. 17 C 7216, 2020 WL
5512132, at *3–4 (N.D. Ill. Sept. 14, 2020). This Court will follow suit so as to rationally
tether its analysis to the text of the applicable statute.
Under Section 315(e)(2), IPR estoppel applies to any invalidity “ground that the
petitioner raised or reasonably could have raised during” the IPR. 35 U.S.C. § 315(e)(2)
(emphasis added). The Patent Act does not define the term “ground.” See 35 U.S.C.
§ 100 (defining terms). Black’s Law Dictionary defines “ground,” when used as a noun,
as the “reason or point that something (as a legal claim or argument) relies on for
validity.” Black’s Law Dictionary 819 (10th ed. 2014).
Consistent with this definition, the Federal Circuit repeatedly has characterized
specific prior art references (or combinations thereof) as distinct “grounds” that may be
asserted in IPR proceedings. See, e.g., Cal. Inst. of Tech., 25 F.4th at 991 (observing that
“the prior art references that [defendants] sought to raise in the district court” were
“contested grounds [that] reasonably could have been included in . . . the IPR” and
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affirming district court’s decision barring defendants “from raising invalidity challenges
based on these prior art references” (emphasis added)); Koninklijke Philips N.V. v.
Google LLC, 948 F.3d 1330, 1335–36 (Fed. Cir. 2020) (observing that PTAB “instituted
inter partes review on three grounds of unpatentability,” and characterizing each
“ground” as a distinct prior art reference or combination of prior art references).
For these reasons, the Court interprets the term “ground” in the IPR estoppel
provision of 35 U.S.C. § 315(e) to mean a specific prior art reference or combination
thereof. See, e.g., Medline Indus., 2020 WL 5512132, at *4 (reaching same conclusion
based on analysis of statutory text). Under this interpretation, IPR estoppel applies to any
specific prior art reference or combination of such references that the IPR petitioner
“raised or reasonably could have raised during” the IPR. 35 U.S.C. § 315(e)(2). Because
a physical product is not a type of prior art reference that can be raised in IPR
proceedings, IPR estoppel cannot bar Polygroup from advancing invalidity theories of
anticipation or obviousness based on the GKI Tree.
Willis Electric seeks to avoid this result, arguing that this Court should apply the
district court’s reasoning in Wasica Financial GmbH v. Schrader International, Inc. In
Wasica, the district court applied IPR estoppel to prevent the defendant from relying on a
physical product that was “materially identical” to and “entirely cumulative” of a patent
or printed publication that the defendant could have raised during the IPR proceeding.
432 F. Supp. 3d at 453, 455.
The court in Wasica reasoned that “the Patent Act
distinguishes between grounds and evidence” and, therefore, IPR estoppel “applies to
grounds . . . even if the evidence used to support those grounds was not available to be
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used in the IPR.” Id. at 454. But, as the court in Medline Industries, Inc. v. C.R. Bard,
Inc. observed, “such an interpretation stretches the meaning of the term ‘ground’ in the
IPR estoppel provision too far,” because “[i]f Congress had wanted to estop an IPR
petitioner from pursuing invalidity grounds that relied upon a physical product in a
particular situation, . . . it could have provided language to that effect.” 2020 WL
5512132, at *4. Moreover, the court in Wasica did not engage in a close analysis of the
statutory text and, for this reason, other courts have rejected the holding in Wasica and
instead followed the holding in Medline and other decisions “that have adhered more
closely to the statutory language.” Chemours Co., 2022 WL 2643517, at *2. For these
reasons, the Court declines to follow the reasoning in Wasica.5
Willis Electric argues, in the alternative, that the common-law doctrines of claim
preclusion and issue preclusion should bar Polygroup from asserting an invalidity defense
based on anticipation or obviousness in light of the GKI Tree. Res judicata, also known
as claim preclusion, “precludes the relitigation of a claim on grounds that were raised or
5
Even if this Court were to apply the reasoning in Wasica, Willis Electric would
fare no better. In Wasica, the district court held that IPR estoppel could apply to a
physical product only if the product is “materially identical” to and “entirely cumulative”
of a patent or printed publication. 432 F. Supp. 3d at 453, 455. The patent owner who
invokes IPR estoppel has the burden to demonstrate that estoppel applies. See Ironburg
Inventions Ltd. v. Valve Corp., 418 F. Supp. 3d 622, 630 (W.D. Wash. 2019). Here,
Willis Electric has not demonstrated that the GKI Tree is materially identical to or
entirely cumulative of the Loomis Patent. Although Willis Electric cites evidence
vaguely suggesting that the GKI Tree embodies the Loomis Patent, that fact alone does
not establish that the GKI Tree is materially identical to the Loomis Patent. For instance,
a product may embody a patented invention yet also include additional unpatented
features that are material to an invalidity analysis. Cf. Fox Factory, Inc. v. SRAM, LLC,
813 F. App’x 539, 542 (Fed. Cir. 2020) (observing that “a product is not coextensive with
a claimed invention simply because it falls within the scope of the claim”).
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could have been raised in the prior action.” Lane v. Peterson, 899 F.2d 737, 741 (8th Cir.
1990). 6 Issue preclusion bars a party from relitigating an issue that was actually
adjudicated in previous litigation between the same parties. Sandy Lake Band of Miss.
Chippewa v. United States, 714 F.3d 1098, 1102 (8th Cir. 2013). But neither preclusion
doctrine will bind a party that did not have a full and fair opportunity to litigate the matter
in the earlier proceeding.
See Simmons v. O’Brien, 77 F.3d 1093, 1095–96 (8th Cir.
1996); Plough v. W. Des Moines Cmty. Sch. Dist., 70 F.3d 512, 517 (8th Cir. 1995). As
addressed above, Polygroup did not have a full and fair opportunity to litigate the issue of
invalidity based on the GKI Tree in the IPR proceedings because an IPR petitioner cannot
rely on a physical product as a prior art reference in such proceedings. For this reason,
the Court rejects Willis Electric’s alternative argument based on claim preclusion and
issue preclusion.
Accordingly, the Court denies Willis Electric’s motion for summary judgment as
to Polygroup’s invalidity defense based on anticipation and obviousness.
2.
Abstract Ideas (35 U.S.C. § 101)
Willis Electric next argues that Polygroup waived its defense that the asserted
claims of the ’186 Patent and the ’187 Patent are invalid under 35 U.S.C. § 101 for
claiming abstract ideas. According to Willis Electric, Polygroup waived this defense by
6
Issues unique to patent cases are governed by Federal Circuit precedent. Aspex
Eyewear, Inc. v. Zenni Optical Inc., 713 F.3d 1377, 1380 (Fed. Cir. 2013). However,
with respect to procedural issues that are not unique to the Federal Circuit’s exclusive
jurisdiction over patent matters, such as issue preclusion, the law of the regional circuit
applies. Dana v. E.S. Originals, Inc., 342 F.3d 1320, 1323 (Fed. Cir. 2003).
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failing to include this defense in its pleadings. In the alternative, Willis Electric argues
that this defense fails as a matter of law.
The Patent Act defines the subject matter that is eligible for patent protection:
“Whoever invents or discovers any new and useful process, machine, manufacture, or
composition of matter, or any new and useful improvement thereof, may obtain a patent
therefor, subject to the conditions and requirements of this title.” 35 U.S.C. § 101. The
Supreme Court has “long held that this provision contains an important implicit
exception: Laws of nature, natural phenomena, and abstract ideas are not patentable.”
Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208, 216 (2014) (internal quotation
marks omitted).
A defendant “must affirmatively state any avoidance or affirmative defense” in its
answer to a complaint. Fed. R. Civ. P. 8(c)(1). The Patent Act requires that any
invalidity defense, including an invalidity defense under Section 101, “shall be pleaded.”
35 U.S.C. § 282(b). And the Federal Circuit has characterized an invalidity defense
under Section 101 as an affirmative defense. See, e.g., Intell. Ventures I LLC v. Erie
Indem. Co., 850 F.3d 1315, 1324 (Fed. Cir. 2017). “Generally, failure to plead an
affirmative defense results in a waiver of that defense.” First Union Nat’l Bank v. Pictet
Overseas Tr. Corp., 477 F.3d 616, 622 (8th Cir. 2007) (citing Fed. R. Civ. P. 8(c)). But
if “an affirmative defense is raised in the trial court in a manner that does not result in
unfair surprise, . . . technical failure to comply with Rule 8(c) is not fatal.” Id. (internal
quotation marks omitted).
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Polygroup does not dispute that it failed to plead an invalidity defense under
Section 101 in its answers to Willis Electric’s complaint, first amended complaint and
second amended complaint.
Polygroup argues that it should be excused from this
technical failure because Polygroup put Willis Electric on notice of this defense in
Polygroup’s September 2016 prior art statement. In that document, which is more than
1,100 pages long, Polygroup included one vague statement about invalidity under
Section 101: “In addition, or in the alternative, some or all of the Asserted Claims may
fail to satisfy the requirements for patentability under 35 U.S.C. § 101 . . . .” Thereafter,
in February 2020, Polygroup filed an answer to Willis Electric’s second amended
complaint, but again failed to plead an invalidity defense under Section 101. In these
circumstances, Polygroup has not demonstrated that it raised this defense in a manner that
would not result in unfair surprise to Willis Electric. A single vague and equivocal
reference to Section 101 in a lengthy prior art statement, which Polygroup seemingly
abandoned in a subsequent pleading and did not mention again until serving expert
reports, is insufficient to put Willis Electric on fair notice of this defense. As such,
Polygroup has not established that it should be excused from its failure to plead this
affirmative defense.
The Court grants Willis Electric’s motion for summary judgment as to
Polygroup’s invalidity defense under 35 U.S.C. § 101 based on Polygroup’s waiver of
that defense.
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3.
Indefiniteness (35 U.S.C. § 112)
Willis Electric next argues that Polygroup has presented insufficient evidence to
establish that the asserted claims of the ’186 Patent and the ’187 Patent are invalid as
indefinite under 35 U.S.C. § 112.
A patent specification must “contain a written description of the invention, and of
the manner and process of making and using it, in such full, clear, concise, and exact
terms as to enable any person skilled in the art to which it pertains . . . to make and use
the same.” 35 U.S.C. § 112(a). “Whether a patent claim is supported by an adequate
written description is a question of fact.” Vasudevan Software, Inc. v. MicroStrategy,
Inc., 782 F.3d 671, 682 (Fed. Cir. 2015) (internal quotation marks omitted). A patent
specification also must “conclude with one or more claims particularly pointing out and
distinctly claiming the subject matter which the inventor . . . regards as the invention.”
35 U.S.C. § 112(b). “[A] patent is invalid for indefiniteness if its claims, read in light of
the specification delineating the patent, and the prosecution history, fail to inform, with
reasonable certainty, those skilled in the art about the scope of the invention.” Nautilus,
Inc. v. Biosig Instruments, Inc., 572 U.S. 898, 901 (2014). “[A] patent must be precise
enough to afford clear notice of what is claimed, thereby appris[ing] the public of what is
still open” to the public. Id. at 909 (internal quotation marks omitted).
It is a defendant’s burden to overcome the presumption of patent validity and
prove invalidity by clear-and-convincing evidence. 35 U.S.C. § 282(a); Microsoft Corp.,
564 U.S. at 111. And a party opposing summary judgment may not “rest on mere
allegations or denials but must demonstrate on the record the existence of specific facts
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which create a genuine issue for trial.” Krenik, 47 F.3d at 957 (internal quotation marks
omitted).
Willis Electric contends that Polygroup has no evidence to demonstrate that any
specific term in the asserted claims of the ’186 Patent and the ’187 Patent are invalid
under Section 112. Polygroup counters that these claims include functional language—
namely, the “independent of” claim limitation—that lacks a corresponding structure for
performing the claimed function. In support of this argument, Polygroup relies on the
patents and the opinions of Polygroup’s invalidity expert, Dr. Martens. Willis Electric
counters that Dr. Martens’s analysis of this issue is not legally sound.
Apparatus patent claims “are not necessarily indefinite for using functional
language.” UltimatePointer, L.L.C. v. Nintendo Co., 816 F.3d 816, 826 (Fed. Cir. 2016)
(quoting Microprocessor Enhancement Corp. v. Tex. Instruments Inc., 520 F.3d 1367,
1375 (Fed. Cir. 2008)).
“If an apparatus claim is clearly limited to an apparatus
possessing the recited structure and capable of performing the recited functions, then the
claim is not invalid as indefinite.” Id. (internal quotation marks and brackets omitted).
When determining whether an apparatus claim possesses a structure capable of
performing the recited functions, the claim language is viewed in light of the written
description. See Med. Instrumentation & Diagnostics Corp. v. Elekta AB, 344 F.3d 1205,
1211 (Fed. Cir. 2003).
In his expert report, Dr. Martens opines that “the generic ‘trunks’ and ‘connectors’
identified in the claims do not provide adequate corresponding structure that explains or
limits how these generic structures perform the claimed function”—that function being,
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namely, the ability to make an electrical connection “independent of” the rotational
orientation of the trunk portions. The Court construed this disputed functional language
in its claim construction order as follows:
The Court rejects Polygroup’s proposed construction of this
phrase and adopts Willis Electric’s proposed construction of
this phrase—namely, “an electrical connection that can be
made at any available arrangement of the first tree/trunk
portion relative to the second tree/trunk portion about a
common vertical axis between the tree-trunk portions.”
According to Dr. Martens, the asserted patent claims fail to provide a corresponding
structure to perform this function.
Significantly, Dr. Martens’s indefiniteness opinion does not address the terms
“coaxial trunk connectors” and “coaxial electrical contact set,” which appear in claim 15
of the ’186 Patent and claims 4, 10 and 13 of the ’187 Patent.7 The Court construed these
terms in its claim construction order as follows:
The Court adopts Willis Electric’s proposed construction of
“coaxial trunk connectors”—namely, “connectors capable of
making an electrical connection between trunk sections and
that include a set of electrical contacts that permit the
electrical connection to be made about a common vertical
axis of the trunk sections.” And the Court adopts Polygroup’s
proposed construction of “coaxial contact sets”—namely, “a
set of electrical contacts that share a common vertical axis.”
The Court also construed the related claim terms “trunk electrical connector/trunk
connector” and “trunk connector assembly” as follows:
7
Dr. Martens briefly references the “coaxial trunk connectors” term in his report,
but he does not opine that this term is indefinite or insufficiently describes a structure
capable of performing the claimed function.
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The Court construes the terms “trunk electrical connector,”
“trunk connector,” and “trunk connector assembly” to mean
“an assembly that is capable of making an electrical
connection between trunk/tree portions.”
Both the ’186 Patent and the ’187 Patent include multiple figures and written
descriptions of these physical structures—namely, trunk connectors, coaxial trunk
connectors and coaxial contact sets. For instance, the figures and specifications depict
and describe “male” and “female” counterpart connectors and contact sets that form
coaxial electrical connections when two trunk portions are mechanically coupled along a
common vertical axis. Willis Electric’s technical expert, Dr. Dickens, opines that an
“electrical contact set [is] of a coaxial nature when it has an electrical contact generally at
a center point of the connector and another contact at a location around the center point
such that the electrical contacts mate . . . no matter at what rotational orientation the
[mechanical] connectors mate.” Dr. Martens opines that the asserted patents describe
“generic” structures involving “conventional parts arranged in conventional ways.” But,
as Dr. Dickens counters, the asserted patents describe a “novel combination or
arrangement” of trunk portions that contain “electrical connectors of the described
coaxial nature that allow for an electrical connection to be made at any rotational
orientation at which a mechanical connection is made without having to separately align
and connect electrical prongs to create [an] electrical connection.” The only evidence on
which Polygroup relies for its indefiniteness argument—namely, the asserted patents and
the anticipated opinion testimony of Dr. Martens—does not establish that the asserted
patents fail to disclose a structure capable of performing the recited functions.
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In summary, although it is Polygroup’s burden to overcome the presumption of
patent validity and prove invalidity by clear-and-convincing evidence, Polygroup has not
presented clear-and-convincing evidence establishing that the asserted claims of the ’186
Patent or the ’187 Patent are invalid as indefinite under 35 U.S.C. § 112. Accordingly,
the Court grants Willis Electric’s motion for summary judgment as to Polygroup’s
invalidity defense based on alleged indefiniteness under 35 U.S.C. § 112.
B.
Polygroup’s Motion for Summary Judgment
Polygroup moves for summary judgment as to invalidity, non-infringement and
lost profits. Polygroup also seeks dismissal of two named defendants, arguing that these
defendants are holding companies that do not sell any products accused of infringement.
The Court addresses each argument in turn.
1.
Invalidity
Polygroup argues that certain asserted claims of the One Plug Tree Patents are
invalid as obvious in light of a prior art product—namely, the GKI Tree. Polygroup also
argues that both asserted claims of the ’617 Patent are invalid as anticipated by a prior art
product—namely, the Wesley Pine Tree.
a.
Invalidity for Obviousness (35 U.S.C. § 103).
Polygroup contends that certain asserted claims of the One Plug Tree Patents are
invalid as obvious in light of the GKI Tree. Specifically, Polygroup argues that the
following asserted patent claims are invalid as obvious: claims 7, 15 and 17 of the ’186
Patent; claims 4, 10 and 13 of the ’187 Patent; claims 12, 15 and 32 of the ’379 Patent
and claim 5 of the ’072 Patent.
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A patent is invalid for obviousness “if the differences between the claimed
invention and the prior art are such that the claimed invention as a whole would have
been obvious before the effective filing date of the claimed invention to a person having
ordinary skill in the art to which the claimed invention pertains.” 35 U.S.C. § 103.
Determining whether a patent is invalid for obviousness requires considering “the scope
and content of the prior art,” any “differences between the prior art and the claims at
issue,” “the level of ordinary skill in the pertinent art” and “[s]uch secondary
considerations as commercial success, long felt but unsolved needs, [and] failure of
others.” KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 406 (2007) (internal quotation
marks omitted). Other relevant considerations include the “the effects of demands known
to the design community or present in the marketplace” and “background knowledge
possessed by a person having ordinary skill in the art.” Id. at 418. The party seeking to
invalidate a patent based on obviousness must establish this affirmative defense by clearand-convincing evidence. Microsoft Corp., 564 U.S. at 96–97.
The initial considerations in the obviousness analysis are “the scope and content of
the prior art” and, relatedly, any “differences between the prior art and the claims at issue.”
KSR Int’l, 550 U.S. at 406. These considerations are factual inquiries. Circuit Check Inc.
v. QXQ Inc., 795 F.3d 1331, 1335 (Fed. Cir. 2015). Willis Electric’s expert Dr. Dickens
opines that the GKI Tree is materially different from the inventions claimed in One Plug
Tree Patents because the GKI Tree lacks coaxial trunk connectors, an “interference fit”
between certain components, detachable wiring and coaxial contact sets. To be sure,
some of Dr. Dickens’s opinions about the differences between the GKI Tree and the
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inventions claimed in the One Plug Tree Patents involve discrediting Polygroup’s
contrary evidence, including the opinions of Dr. Martens. But the burden to prove
invalidity by clear-and-convincing evidence rests with Polygroup. Microsoft Corp., 564
U.S. at 96–97. A jury reasonably could believe Dr. Dickens, and disbelieve Dr. Martens,
about the similarities and differences between the GKI Tree and the inventions claimed in
the One Plug Tree Patents.
In addition, it is undisputed that the GKI Tree is materially different from the
inventions claimed in the One Plug Tree Patents in at least one way: the GKI Tree
undisputedly did not have coaxial contact sets. Polygroup contends that it would have
been obvious for a person skilled in the art to substitute the DC connector in the GKI
Tree with a coaxial AC connector. A party seeking to invalidate a patent based on
obviousness must establish, by clear-and-convincing evidence, that “a skilled artisan
would have been motivated to combine the teachings of the prior art references to achieve
the claimed invention, and that the skilled artisan would have had a reasonable
expectation of success in doing so.” InTouch Techs. Inc. v. VGO Commc’ns, Inc., 751
F.3d 1327, 1347 (Fed. Cir. 2014) (internal quotation marks omitted).
An expert’s
testimony as to obviousness must provide more than “a conclusory statement that a
person of ordinary skill in the art would have known . . . how to combine any number of
[prior art] references to achieve the claimed inventions.” ActiveVideo Networks, Inc. v.
Verizon Commc’ns, Inc., 694 F.3d 1312, 1327 (Fed. Cir. 2012).
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conclusory statement is “fraught with hindsight bias,” an expert must provide a factual
basis for such a conclusion.8 Id.
Dr. Martens opines that a person of ordinary skill in the art would have reason
modify the GKI Tree to include a coaxial electrical connector. In support of this opinion,
Dr. Martens observes that such connectors were widely known and available and that a
person “of skill with this knowledge would find it obvious that . . . one connector could
be replaced by another.” In addition to the availability of the component parts, a skilled
artisan “may have other reasons” for making such a modification to the GKI Tree, such
as “improving ease of manufacturing and mitigating mechanical wear-and-tear.” In
short, Dr. Martens’s opinions about motivation to combine are based on the facts that the
component parts were known and readily available, and that the modification would
improve the manufacturing process and reduce mechanical wear-and-tear.
In response, Dr. Dickens does not dispute that “a wide range of various types of
electrical connectors were available and known.” But he opines that implementing such a
modification to the GKI Tree “would have required experimentation” and would not be
as simple as Dr. Martens suggests, because the components “must be physically and
electrically compatible with the other components.” According to Dr. Dickens, a skilled
artisan “would have had to go through numerous steps to attempt to design, create, and
8
An expert can “guard against this hindsight bias by appropriately considering all
objective evidence of nonobviousness,” including but not limited to the commercial
success of the patentee’s product or service, industry praise or licenses. InTouch Techs.,
751 F.3d at 1352. Both Dr. Dickens and Dr. Martens address these factors in their
respective expert reports. As such, a genuine issue of material fact exists as to these
factors.
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manufacture a custom coaxial connector that could work for that type of tree,” which
could have required “months of work and time, and hundreds of thousands of dollars to
complete.” And Dr. Dickens details the complexity of this process, opining that a skilled
artisan would not have been motivated to undertake such a process. Dr. Dickens also
explains in detail why he disagrees with Dr. Martens’s opinion that improving the
manufacturing process and reducing mechanical wear-and-tear would have been
significant motivating factors. These competing opinions present a genuine dispute of
material fact as to whether a person of ordinary skill in the art would have been motivated
to modify the GKI Tree and whether that person would have had a reasonable expectation
of success in doing so.
In addition, Dr. Dickens and Dr. Martens present competing opinions as to the
secondary considerations for an obviousness analysis.
These objective secondary
considerations include commercial success, long felt but unsolved needs and the failure
of others. KSR Int’l, 550 U.S. at 406. A court must always consider such evidence, when
presented, as part of the obviousness analysis. Transocean Offshore Deepwater Drilling,
Inc. v. Maersk Drilling USA, Inc., 699 F.3d 1340, 1349 (Fed. Cir. 2012). “Objective
evidence of no obviousness is an important component of the obviousness inquiry
because evidence of secondary considerations may often be the most probative and
cogent evidence in the record,” and such evidence “may often establish that an invention
appearing to have been obvious in light of the prior art was not.” Id. (internal quotation
marks omitted).
Dr. Dickens opines about the commercial success of products
embodying the One Plug Tree Patents, industry adoption, industry praise and the failure
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of and copying by others. In addition, Willis Electric’s damages expert opines about
commercial success, licensing and industry praise. And Willis Electric cites evidence
from fact witnesses, such as buyers for retailers, pertaining to these factors. For these
reasons, there are genuine disputes of material fact as to the secondary considerations for
the obviousness analysis.
In summary, because numerous disputes of material fact exist, the Court denies
Polygroup’s motion for summary judgment as to invalidity based on obviousness under
35 U.S.C. § 103.
b.
Invalidity for Anticipation (35 U.S.C. § 102)
Polygroup contends that claims 4 and 11 of the ’617 Patent are anticipated by a
prior art product—the Wesley Pine Tree—and, therefore, invalid under 35 U.S.C. § 102.
“A patent is invalid for anticipation if a single prior art reference discloses each
and every limitation of the claimed invention.” Schering Corp., 339 F.3d at 1377. The
disclosure of a claim limitation in a prior art reference may be either express or inherent.
SRI Int’l, Inc. v. Cisco Sys., Inc., 930 F.3d 1295, 1306 (Fed. Cir. 2019). Whether a patent
claim is invalid based on anticipation “is a question of fact.” ClearValue, Inc. v. Pearl
River Polymers, Inc., 668 F.3d 1340, 1343 (Fed. Cir. 2012).
As an initial matter, Willis Electric argues that the Wesley Pine Tree is not prior
art because Polygroup relies on photographs and illustrations of this product that were
created in 2016, after the effective filing date of the ’617 Patent.9 A physical product is
9
It is undisputed that the critical date of the ’617 Patent is in 2011, when the
patentee filed the provisional patent application.
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prior art if it was “in public use, on sale, or otherwise available to the public before the
effective filing date of the claimed invention.”
35 U.S.C. § 102(a)(1).
A patent
challenger must prove, by clear-and-convincing evidence, that alleged prior art predates
the patent’s effective filing date. ATEN Int’l Co. v. Uniclass Tech. Co., 932 F.3d 1364,
1368 (Fed. Cir. 2019). Willis Electric argues that photographs and illustrations of the
Wesley Pine Tree were created after the effective filing date of the ’617 Patent. But these
photographs and illustrations are not the prior art on which Polygroup relies. Rather,
Polygroup contends that the Wesley Pine Tree—the physical product itself—is the prior
art that anticipates the ’617 Patent. Polygroup presents undisputed evidence that the
Wesley Pine Tree was sold in 2008 and 2009, before the effective filing date of the
’617 Patent. And Polygroup presents evidence that the photographs on which it relies
depict the same structure as the Wesley Pine Tree products sold in 2008 and 2009. As
such, there is no genuine dispute as to whether the Wesley Pine Tree is prior art.
To invalidate the ’617 Patent, the Wesley Pine Tree must disclose “each and every
limitation of the claimed invention.” Schering Corp., 339 F.3d at 1377. Here, the parties
dispute whether the Wesley Pine Tree discloses a “plurality of ribs.” Asserted claims 4
and 11 of the ’617 Patent depend on claim 1, which requires that “the inner wall” of the
coupling mechanism “further compris[es] a plurality of ribs.” The parties’ dispute
pertains to whether the Wesley Pine Tree discloses the same “plurality of ribs” depicted
in Figure 9 of the ’617 Patent, as shown below:
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’617 Patent, Fig. 9
Wesley Pine Tree coupling mechanism
The Court did not construe the claim term “plurality of ribs.” A commonly
understood meaning of “rib” is “an elongated ridge.” See Merriam-Webster’s Collegiate
Dictionary 1071 (11th ed. 2014); see also id. at 1072 (defining “ridge” as “an elevated
body part or structure,” “an elongated crest or linear series of crests,” or “a raised strip”).
Consistent with this commonly understood meaning, the ’617 Patent describes “ribs” or
“rib-like projections” that form channels in the coupling mechanism that mirror the shape
of corresponding “ridges” in another trunk portion. And figures in the ’617 Patent clearly
depict ribs as ridges or raised strips, such as the ribs labeled in Figure 4 with numbers 156
and 159, as shown below:
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Polygroup maintains that the internal hexagonal surfaces of the coupling
mechanism in the Wesley Pine Tree can be considered a “plurality of ribs” because they
are identical to the internal hexagonal surfaces of the coupling mechanism in Figure 9 of
the ’617 Patent. But Dr. Dickens disagrees. At his deposition, Dr. Dickens testified that
“Figure 9 . . . has these structures coming in a double line,” meaning that the corners of
the hexagonal shape do not come to a “point,” but instead the inside surface is “sticking
out inward.” Indeed, the specification of the ’617 Patent describes Figure 9 as having
“radially-extending ribs 230 that are substantially flat along the inner surface 232, but
form channels that mirror the shape of the vertices of the edges around second trunk
portion 204 in a hexagonal shape.” As shown below, and consistent with Dr. Dickens’s
testimony, the corners of this hexagonal shape do not come to a point on either the
insertable portion of Figure 8 or the inner cavity of Figure 9:
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In contrast, it is undisputed that the flat surfaces of the hexagonal inner cavity of the
Wesley Pine Tree’s coupling mechanism meet at points:
For this reason, Willis Electric has presented evidence from which a jury reasonably
could find that the Wesley Pine Tree does not disclose every limitation of asserted claims
4 and 11 of the ’617 Patent.
Accordingly, the Court denies Polygroup’s motion for summary judgment as to
invalidity based on anticipation under 35 U.S.C. § 102.
2.
Non-Infringement
Polygroup moves for summary judgment of non-infringement as to the asserted
claims of the One Plug Tree Patents and the ’617 Patent.
Whoever “without authority makes, uses, offers to sell, or sells any patented
invention, within the United States . . . during the term of the patent,” infringes that
patent. 35 U.S.C. § 271(a). A district court employs a two-step analysis when making a
patent-infringement determination. See Markman v. Westview Instruments, Inc., 52 F.3d
967, 976 (Fed. Cir. 1995). First, the district court construes the asserted claims of the
patent to ascertain their meaning and scope. Id. Second, the fact finder compares the
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construed claims to the accused product. Id. Because the Court previously construed the
disputed claim terms in this case, only step two is now at issue. Summary judgment of
non-infringement is appropriate if, after resolving all reasonable factual inferences in
favor of the patentee, “no reasonable jury could find infringement.” Absolute Software,
Inc. v. Stealth Signal, Inc., 659 F.3d 1121, 1130 (Fed. Cir. 2011).
“A patentee may prove infringement by any method of analysis that is probative of
the fact of infringement, and circumstantial evidence may be sufficient.” Am. Med. Sys.
v. Laser Peripherals, LLC, 712 F. Supp. 2d 885, 895 (D. Minn. 2010) (quoting Martek
Biosciences Corp. v. Nutrinova, Inc., 579 F.3d 1363, 1372 (Fed. Cir. 2009)). As such, a
“district court should approach a motion for summary judgment on the fact issue of
infringement with great care.” Cole v. Kimberly-Clark Corp., 102 F.3d 524, 528 (Fed.
Cir. 1996).
According to Polygroup, the undisputed evidence establishes that its accused
products do not infringe the asserted patents because the accused products lack seven
features claimed in the asserted patents. Willis Electric counters that genuine disputes of
material fact exist as to each of these issues. The parties also dispute whether Willis
Electric waived its doctrine-of-equivalents theory of infringement as to claims 4 and 10
of the ’187 Patent. The Court addresses each argument in turn.
a.
Electrical Connection Independent of Rotational Orientation
The parties first dispute whether Polygroup’s accused products have “an electrical
connection that can be made at any available arrangement of the first tree/trunk portion
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relative to the second tree-trunk portion,” as required by several asserted claims of the
’186 Patent and the ’187 Patent.
It is undisputed that Polygroup’s accused products have trunk connectors that
include twelve plastic “fins” around their perimeter, as depicted below:
Polygroup contends that, in its accused products, an electrical connection cannot be made
at “any available arrangement” of two trunk portions because if the “fins” of one
connector are positioned precisely to rest on top of the “fins” of another connector, the
two trunk portions will be mechanically coupled but not electrically connected. In other
words, there are available arrangements of the trunk portions in Polygroup’s products that
do not permit an electrical connection to be made.
In support of this argument,
Polygroup relies on the opinions of its expert, Dr. Martens.
Willis Electric counters this argument by relying on the opinions of its expert,
Dr. Dickens.
He repeatedly testified that the fins in the connectors of Polygroup’s
accused products prevent a mechanical connection from occurring if one set of fins is
resting on top of another set of fins, and that it is “not a mechanical connection just
because they touch.” Dr. Dickens explained that “those ribs are quite flimsy” and “there
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is no way the plastic on that section is going to handle [the] weight” of the tree. For this
reason, according to Dr. Dickens, if the fins of one connector rest on top of the fins of
another connector it will not form a stable connection, the lower fins will yield and the
top portion will slide down into place and form an electrical connection. Polygroup
characterizes this opinion as factually unsupported speculation. But a qualified expert’s
“observations coupled with expertise generally may form the basis of an admissible
expert opinion.”
Shuck v. CNH Am., LLC, 498 F.3d 868, 875 (8th Cir. 2007).
Dr. Dickens’s testimony reflects that he relied on his expertise and observations,
including his experience assembling similar artificial trees. As such, there is a genuine
dispute of material fact as to whether Polygroup’s accused products have “an electrical
connection that can be made at any available arrangement of the first tree/trunk portion
relative to the second tree-trunk portion.”
For this reason, the Court denies Polygroup’s motion for summary judgment of
non-infringement on this basis.
b.
Coupling of Trunk Bodies/Trunk Walls
The parties next dispute whether “coupling” occurs between the trunk bodies or
the trunk walls of Polygroup’s accused products, as required by the asserted claims of the
’186 Patent, the ’187 Patent and the ’072 Patent.
In its accused products, Polygroup argues, “the coupling or connection between
trunk portions occurs at the connectors, not between the trunk bodies or trunk walls.” In
support of this contention, Polygroup relies on the opinions of Dr. Martens and design
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drawings, which reflect that the trunk portions do not physically touch but instead have a
gap of at least 0.25 millimeters.
As an initial matter, it is unclear why Polygroup believes that “coupling” trunk
portions requires the trunk portions to be touching or in physical contact. The term
“coupling” is commonly understood to mean “the act of bringing or coming together” or
“a device that serves to connect the ends of adjacent parts or objects.” See MerriamWebster’s Collegiate Dictionary 286 (11th ed. 2014). The plain meaning of “coupling”
does not require physical contact or touching. Consistent with this plain meaning, the
Court construed “coupling mechanism” to mean, in part, a “hollow structure for joining
two trunk portions.” And the Court rejected a construction that would require a coupling
mechanism to create a “snug” or “secure” fit between trunk portions. Polygroup has
identified nothing in the specifications of the asserted patents suggesting that “coupling”
requires physical contact or touching. Indeed, the word “touch” appears nowhere in the
asserted patents.
Even if physical touching or contact were required, Dr. Dickens provides three
reasons why, in his opinion, the trunk bodies in Polygroup’s accused products satisfy this
claim limitation. Based on his review of the relevant design drawings, his physical
inspection of the products, and his expertise, Dr. Dickens opines that the trunk bodies
“touch, absolutely,” because “necking occurs at the top of the first trunk portions, the
alleged gap on which Dr. Martens relies does not account for paint and surface finishing,
and trunk bodies cannot remain perfectly vertical as would be required to maintain a gap
as small as 0.25 millimeters.” Polygroup again characterizes this opinion as factually
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unsupported speculation. But a qualified expert may rely on “observations coupled with
expertise,” which Dr. Dickens has done here. Shuck, 498 F.3d at 875. As such, a
genuine dispute of material fact exists as to this issue.
Accordingly, the Court denies Polygroup’s motion for summary judgment of noninfringement on this basis.
c.
Interference Fit
The parties next dispute whether the connectors in Polygroup’s accused products
have an “interference fit” with the trunk portions, as required by the asserted claims of
the ’186 Patent and the ’379 Patent.
The asserted claims of the ’186 Patent and the ’379 Patent require that the trunk
connector “forms an interference fit” with the trunk body when inserted therein. The
Court did not construe this term, but the parties agreed in their joint claim construction
statement that an “interference fit” is “an engineered connection where two components
or parts to be connected are manufactured to be of different dimensions such that when
one component is pressed into the other, they interfere and deform to force a connection.”
According to Polygroup, when a connector is inserted into the trunk of Polygroup’s
accused products, “a gap exists and there is neither interference nor deformation to force
a connection.”
In support of this argument, Polygroup relies on declarations from
Dr. Martens and a Polygroup engineer. Dr. Martens bases his opinions on his review of
the engineering drawings and measurements as well as his inspection of an example of
the product.
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Contrary to Polygroup’s evidence, Dr. Dickens opines in his report and deposition
testimony that, when he tested the accused products, he had to push and exert force to
slide the connector in and out of the trunk body. Dr. Dickens also observed discoloration,
markings and scratches on the component parts that, in his opinion, demonstrate that the
connectors in some of Polygroup’s accused products have an “interference fit” with the
trunk portions.
And Dr. Dickens testified that there are protrusions on the plastic
connector that may cause an interference fit with the trunk portion. Polygroup vigorously
disagrees with Dr. Dickens’s observations and opinions. But Polygroup’s disagreements
implicate the weight and credibility of Dr. Dickens’s opinions. It is the role of the jury,
not the Court, to make credibility determinations and weigh the evidence. On this record,
there is a genuine dispute of material fact as to whether the connectors in some of
Polygroup’s accused products have an “interference fit” with the trunk portions.
Accordingly, the Court denies Polygroup’s motion for summary judgment of noninfringement on this basis.
d.
Detachably Connected Wiring
The parties next dispute whether the wiring in Polygroup’s accused products are
“detachably connected,” as required by claim 7 of the ’186 Patent, claim 32 of the
’379 Patent and claim 5 of the ’072 Patent.
According to Polygroup, after its accused products are assembled prior to sale, the
wiring is no longer “detachable” without first disassembling the product. Willis Electric
does not dispute this fact and relies on evidence that the wiring in Polygroup’s accused
products is detachable before the wiring is inserted into the trunk portion during assembly
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and remains detachable after assembly if the trunk portion is disassembled. According to
Willis Electric, a product can infringe the “detachably connected” claim limitation even if
the wiring is detachable only before the product is assembled and sold to a consumer.
As addressed above in Part I.C.4. of this Order, a “device does not infringe
simply because it is possible to alter it in a way that would satisfy all the limitations of a
patent claim.” High Tech, 49 F.3d at 1555. “The question is not what a device might
have been made to do, but what it was intended to do and did do,” and the fact that “a
device could have been made to do something else does not of itself establish
infringement.” Id. (internal quotation marks and brackets omitted).
Here, it is undisputed that Polygroup did not design its accused products to have
the internal wiring detached by a consumer during operation. Nor is there any evidence
in the record suggesting that any functional purpose would be served by a consumer
dismantling Polygroup’s artificial trees or that any consumer has done so.
To the
contrary, Willis Electric had to permanently destroy Polygroup’s artificial tree, by cutting
the trunk body open, to detach the wiring assemblies. The circumstances in this case are
identical to the circumstances in High Tech in all material respects. See id. at 1556
(observing that alleged infringer did not design its camera to rotate during operation and
nothing in the record demonstrated that removing the set screws would serve a functional
purpose or that any user had done so during actual use). The undisputed facts establish
that Polygroup’s accused products do not contain “detachably connected” wiring as
required by claim 7 of the ’186 Patent, claim 32 of the ’379 Patent and claim 5 of the
’072 Patent.
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Accordingly, the Court grants Polygroup’s motion for summary judgment of noninfringement as to claim 7 of the ’186 Patent, claim 32 of the ’379 Patent and claim 5 of
the ’072 Patent on this basis.
e.
Insertable/Securable Trunk Connectors
The parties next dispute whether the trunk connectors in Polygroup’s accused
products are “insertable” or “securable” into the trunk bodies, as required by claim 12 of
the ’379 Patent.
Similar to the detachability of the wiring assemblies addressed above, Polygroup
argues that the trunk connectors in its accused products are inserted and secured into the
trunk bodies during assembly before they are sold and, therefore, are not designed to be
inserted or secured by a consumer. Willis Electric does not dispute this fact and relies
solely on evidence that the trunk connectors in Polygroup’s accused products are capable
of being inserted and secured into the trunk bodies during assembly.
The Federal Circuit has distinguished between a claim that requires a particular
structure—such as “a camera ‘rotatably coupled’ to a body member”—and a claim that
only requires a capacity to perform a function—such as magnetic members “capable of
engaging” other magnetic members.
(distinguishing High Tech).
Revolution Eyewear, 563 F.3d at 1369
The “rotatably coupled” claim language in High Tech
described a structure with a particular characteristic, and the accused product in that case
did not possess that characteristic unless the structure was altered in an unintended
manner. See id. By contrast, the “capable of engaging” claim language in Revolution
Eyewear described the capacity to perform a function, and that functional capacity was
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inherent in the accused product regardless of whether the product was intended to
perform that function and regardless of whether any customer ever performed the
function. See id. In the latter circumstance, because the accused product had the capacity
to perform the claimed function, the Federal Circuit affirmed the district court’s decision
to grant summary judgment as to infringement. Id. at 1370.
Here, the claim language at issue requires a “trunk connector insertable into the
first trunk body . . . and securable to the first trunk body.” Unlike the “detachably
connected” claim language addressed above, claim 12 of the ’379 Patent does not
describe the characteristics of a structure.
Rather, this claim language describes a
capability—namely, the capacity to be inserted into and secured to a trunk body. There is
no dispute that the trunk connectors in Polygroup’s accused products possess that
functional capability, even if no consumer ever performs that function.
These
circumstances are akin to the circumstances in Revolution Eyewear. See id. at 1369–70
(observing that, when a claim requires the capacity to perform a function, it is “irrelevant”
that the accused products “are not actually used” in that manner so long as they possess
the functional capability).
However, in Revolution Eyewear, the Federal Circuit recognized a second factual
distinction with High Tech—namely, whether the accused product must be “altered in
any way” for it to be capable of the claimed function. Id. at 1370. In Revolution
Eyewear, no alteration of the accused product was necessary because the accused product
was “capable of engaging” magnetic members “as made and sold.” Id. It is undisputed
here that, after they are made and sold, the trunk connectors in Polygroup’s accused
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products are no longer “insertable into” or “securable to” a trunk body without first
disassembling the products. For this reason, this case is factually distinguishable from
Revolution Eyewear. The undisputed facts establish that Polygroup’s accused products
do not contain trunk connectors that are “insertable into” or “securable to” trunk bodies
as required by claim 12 of the ’379 Patent.
Accordingly, the Court grants Polygroup’s motion for summary judgment of noninfringement as to claim 12 of the ’379 Patent on this basis.
f.
Wires that Extend Between Ends of First Trunk Portion
The parties next dispute whether the wires in Polygroup’s accused products
“extend[ ] between a first end of the first trunk portion and a second end of the first trunk
portion,” as required by claim 7 of the ’186 Patent. In light of the Court’s conclusion in
Part II.B.2.d. of this Order, the Court need not address this issue because Willis Electric
cannot establish infringement of claim 7 of the ’186 Patent as a matter of law.
g.
Electrical Connection Along the Central Vertical Axis
The parties next dispute whether Polygroup’s accused products have electric
contacts that make “an electrical connection . . . at a point along the central vertical axis,”
as required by claim 4 of the ’187 Patent.
According to Polygroup, its accused products have electrical contacts that make an
electrical connection off-center as opposed to making the connection along the central
vertical axis.
In support of this argument, Polygroup relies on the declaration of
Dr. Martens, who opines that “[b]ecause the centermost cylindrical electrical contact of
the first trunk portion is located off the central vertical axis, it cannot make contact with
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the center pin electrical contact of the second trunk portion at a point along the central
vertical axis.” Dr. Martens relies on the following images to depict how the electrical
connection (annotated in blue) occurs off-center:
According to Willis Electric, the opinions of Dr. Martens conflate physical contact with
electrical connection. As Dr. Dickens testified, “[e]lectrical connection is not—does not
mean contact. Electrical connection is any structure that allows the current to flow
through it.” As such, Dr. Dickens opines that although the physical contact might be offcenter, “the [electrical] current is allowed to flow right in, right into the middle and right
up through the—the center of it. And that is an electrical connection that’s made when
you allow the electrons to flow through that entirety of metal structure.” Although the
parties did not seek a construction of the claim term “electrical connection,”
Dr. Dickens’s testimony is consistent with the specification of the ’187 Patent, which
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depicts electrical contacts akin to those depicted in Dr. Martens’s declaration. On this
record, there is a genuine dispute of material fact as to this issue.
Accordingly, the Court denies Polygroup’s motion for summary judgment of noninfringement on this basis.
h.
Doctrine of Equivalents
Polygroup next argues that Willis Electric has waived any doctrine-of-equivalents
argument as to claims 4 and 10 of the ’187 Patent because Willis Electric failed to assert
this theory in its final infringement claim charts. The Court agrees for the reasons
addressed in Part I.C.6. of this Order. Accordingly, the Court grants Polygroup’s motion
for summary judgment of non-infringement as to claim 4 and claim 10 of the ’187 Patent
with respect to the Group I and Group II accused products.
3.
Lost Profits
Polygroup next argues that Willis Electric cannot prove that it is entitled to lost
profits damages.
If patent infringement is proved, “the court shall award the [patentee] damages
adequate to compensate for the infringement.” 35 U.S.C. § 284. The phrase “damages
adequate to compensate” in Section 284 “includes any foreseeable lost profits the patent
owner can prove.” Grain Processing, 185 F.3d at 1349. If a patentee cannot prove lost
profits, the statute sets “a reasonable royalty” as the damages floor. See 35 U.S.C. § 284.
To recover lost profits as opposed to a reasonable royalty, “a patent owner must
prove a causal relationship between the infringement and its loss of profits.”
BIC
Leisure, 1 F.3d at 1218. In other words, “[t]he patent owner must show that ‘but for’ the
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infringement, it would have made the infringer’s sales.” Id. The Federal Circuit has
adopted the four-factor Panduit test as one method for a patentee to establish entitlement
to lost profits damages. Rite-Hite, 56 F.3d at 1545 (citing Panduit Corp., 575 F.2d at
1152). This test requires the patentee to establish (1) demand for the patented product,
(2) the absence of acceptable non-infringing alternatives, (3) the patentee’s
manufacturing and marketing capability to exploit the demand, and (4) the amount of
profit that the patentee would have made. Id.
When considering the Panduit factors, the “requirement that patentees prove
demand for the product as a whole and the absence of non-infringing alternatives ties lost
profit damages to specific claim limitations and ensures that damages are commensurate
with the value of the patented features.” Mentor Graphics, 851 F.3d at 1288 (emphasis
added). “Products lacking the advantages of the patented invention can hardly be termed
a substitute acceptable to the customer who wants those advantages.” Id. at 1285–86
(internal quotation marks and brackets omitted). Determining whether a party has proven
the absence of acceptable non-infringing alternatives typically is a fact question for the
jury to resolve. See id. at 1287.
Polygroup argues that Willis Electric’s damages expert, when assessing noninfringing alternatives under the Panduit test, erroneously defines acceptable noninfringing alternative designs to be designs that are “easily and quickly assembled.”
According to Polygroup, ease of assembly is not an advantage of Willis Electric’s
patented features and, therefore, Willis Electric’s definition of acceptable alternatives is
incorrect. However, Willis Electric’s damages expert provides detailed opinions, based
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on her examination of evidence, demonstrating a connection between ease of assembly
and the patented inventions. Because this is a factual dispute for the jury to resolve,
summary judgment as to this issue is unwarranted.
Polygroup tries to avoid this result by framing this factual dispute as a legal error.
According to Polygroup, on appeal from PTAB’s final written decision in the IPR
proceedings, the Federal Circuit determined that ease of assembly is not a patented
advantage of Willis Electric’s patents. But, as addressed in Part I.B.1. of this Order,
Polygroup’s arguments as to this issue are unavailing for several reasons. And these
disagreements reflect factual disputes that preclude summary judgment.
The Court, therefore, denies Polygroup’s motion for summary judgment as to lost
profits.
4.
Holding Company Defendants
Finally, Polygroup seeks summary judgment as to Defendants Polygroup Macau
Limited (BVI) and Polytree (H.K) Co. Ltd., arguing that there is no evidence that these
holding companies engaged in any infringing conduct.
Willis Electric’s second amended complaint alleges two types of indirect
infringement: induced infringement and contributory infringement. “Whoever actively
induces infringement of a patent shall be liable as an infringer.” 35 U.S.C. § 271(b). An
induced-infringement claim requires the defendant to know that the induced acts result in
patent infringement. Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 765–66
(2011). In addition, the plaintiff must establish that it was the defendant’s specific intent
to encourage another’s infringement. DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1306
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(Fed. Cir. 2006). Liability for contributory infringement “requires proof that (1) the
defendant had knowledge of the patent in suit, (2) the defendant had knowledge of patent
infringement, and (3) the accused product is not a staple article or commodity of
commerce suitable for a substantial noninfringing use.” Bio-Rad Labs., Inc. v. Int’l
Trade Comm’n, 998 F.3d 1320, 1335 (Fed. Cir. 2021) (quoting Commil USA, LLC v.
Cisco Sys., Inc., 575 U.S. 632, 639 (2015)); accord 35 U.S.C. § 271(c).
When moving for summary judgment, the “moving party bears the burden of
brining forward sufficient evidence to establish that there are no genuine issues of
material fact and that the movant is entitled to judgment as a matter of law.” Shelter Ins.
Cos. v. Hildreth, 255 F.3d 921, 924 (8th Cir. 2001). Polygroup’s failure to address the
elements of induced or contributory infringement does not satisfy this burden. Moreover,
Willis Electric identifies evidence that senior officers at the Polygroup holding
companies knew about the asserted patents and the alleged infringement of those patents.
As such, genuine disputes of material fact exist with respect to this issue.
Accordingly, the Court denies Polygroup’s motion for summary judgment on this
basis.
ORDER
Based on the foregoing analysis and all the files, records and proceedings herein,
IT IS HEREBY ORDERED:
1.
Plaintiff Willis Electric Co., Ltd.’s motion to exclude the expert testimony
of Julie L. Davis, (Dkt. 648), is DENIED.
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2.
Plaintiff Willis Electric Co., Ltd.’s motion for summary judgment, (Dkt.
657), is GRANTED IN PART AND DENIED IN PART as addressed in Part II.A. of
this Order.
3.
Defendants Polygroup Limited (Macao Commercial Offshore), Polygroup
Macau Limited (BVI), Polytree (H.K.) Co. Ltd. and Polygroup Trading Limited’s motion
to exclude the expert testimony of Michele Riley, (Dkt. 666), is DENIED.
4.
Defendants Polygroup Limited (Macao Commercial Offshore), Polygroup
Macau Limited (BVI), Polytree (H.K.) Co. Ltd. and Polygroup Trading Limited’s motion
to exclude the expert testimony of Dr. James Dickens, (Dkt. 675), is GRANTED IN
PART AND DENIED IN PART as addressed in Part I.C. of this Order.
5.
Defendants Polygroup Limited (Macao Commercial Offshore), Polygroup
Macau Limited (BVI), Polytree (H.K.) Co. Ltd. and Polygroup Trading Limited’s motion
for summary judgment, (Dkt. 689), is GRANTED IN PART AND DENIED IN PART
as addressed in Part II.B. of this Order.
Dated: January 5, 2023
s/Wilhelmina M. Wright
Wilhelmina M. Wright
United States District Judge
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