American Technical Ceramics Corp. et al v. Presidio Components, Inc.
Filing
126
ORDER granting in part and denying in part 94 Motion for Summary Judgment; granting in part and denying in part 97 Motion for Summary Judgment. As set forth in the attached memorandum and order, defendant's motion for summary jud gment is GRANTED as to (1) plaintiffs' claim for damages for pre-suit infringement of the '547 Patent from 1999 onward and (2) plaintiff's claim for damages under 35 U.S.C. § 284 solely with respect to the '547 Patent. Defen dant's motion for summary judgment is denied in all other respects, although the denial of defendant's motion for summary judgment as to plaintiff's claim for infringement of the '547 Patent is denied without prejudice pending fur ther claim construction of the term "terminations."Plaintiff's motion for summary judgment is GRANTED as to (1) the defense of laches, without prejudice to defendant's ability to argue laches in opposing an ongoing royalty or an injunction should this action reach the remedial stage; (2) the defense of equitable estoppel; and (3) the defense of waiver solely with respect to the '547 Patent. Plaintiff's motion for summary judgment is DENIED as to the defense of waiver with respect to the '791 Patent. As further set forth in the attached memorandum and order, the parties are directed to confer and, within seven (7) days of entry of this order, submit a joint plan for claim construction proce edings with respect to the word "terminations" as recited in the '547 Patent, including a briefing scheudle and a statement as to whether a hearing is necessary. Because of the importance of further claim construction with respect to the word "terminations" in crystallizing the issues that may remain for trial, the court will not direct the parties to commence trial preparations at this time. Ordered by Judge Kiyo A. Matsumoto on 3/27/2018. (Flores, Diego)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
----------------------------------X
AMERICAN TECHNICAL CERAMICS CORP.
and AVX CORPORATION,
Plaintiffs,
MEMORANDUM & ORDER
-against-
14-CV-6544(KAM)(GRB)
PRESIDIO COMPONENTS, INC.,
Defendant.
----------------------------------X
MATSUMOTO, United States District Judge:
Plaintiffs American Technical Ceramics Corp. (“ATC”)
and AVX Corporation (“AVX,” and together with ATC, “plaintiffs”)
initiated the instant action by filing a complaint (“Compl.” or
the “complaint,” ECF No. 1) on November 6, 2014, alleging
infringement by defendant Presidio Components, Inc. (“Presidio”
or “defendant”) of the following patents held by plaintiffs:
United States Patent No. 6,144,547 (the “‘547 Patent”), United
States Patent No. 6,337,791 (the “‘791 Patent,” together with
the ‘547 Patent, the “patents-in-suit”), and United States
Patent No. 6,992,879 (the “‘879 Patent”). 1
(See generally
Compl.; see also Compl. Ex. 1, ECF No. 1-3 (annexing ‘547
Patent, ‘791 Patent, and ‘879 Patent).)
Plaintiffs seek damages
1
As discussed more fully in section “Discussion – I.B,” plaintiffs are
not proceeding with their action as to claims cancelled by the Patent and
Trademark Appeals Board of the United States Patent and Trademark Office,
specifically all claims of the ‘879 Patent and claim 1 of the ‘791 Patent.
(Plaintiffs’ Memorandum of Law in Support of Motion for Summary Judgment, ECF
No. 116-2, at 2 n.1.)
1
arising from the alleged infringement, judgment that Presidio
infringed the patents-in-suit, judgment that Presidio’s acts of
infringement are willful, an award of enhanced damages and
attorneys’ fees pursuant to 35 U.S.C. §§ 284 and 285, injunctive
relief prohibiting Presidio from engaging in further
infringement, an accounting,
costs.
and an award of interest and
(Compl. at 5-6.)
Defendant filed an answer and counterclaim (“Ans.” or
the “answer,” ECF No. 22) on January 5, 2015, in which it denied
having infringed plaintiffs’ patents, (see Ans. p. 2 ¶ 7-p. 5 ¶
26), 2 and asserted affirmative defenses including
noninfringement, invalidity of the patents-in-suit, laches,
equitable estoppel, and waiver.
(Id. p. 4 ¶ 27-p. 6 ¶ 34.)
Defendant also asserted two counterclaims, the first seeking a
declaratory judgment that defendant does not infringe the
patents-in-suit and the ‘879 Patent, (id. p. 7 ¶ 7-p. 11 ¶ 10),
and the second seeking declaratory judgment that the patents-insuit and the ‘879 Patent are invalid.
16.)
(Id. p. 11 ¶ 12-p. 12 ¶
Plaintiffs filed an answer denying the counterclaims on
January 29, 2015.
(ECF No. 23.)
Presently before the court are cross-motions for
summary judgment pursuant to Federal Rule of Civil Procedure
Because the numbered paragraphs in the answer restart on page six, the
court refers to both the paragraph number and the page on which the relevant
paragraph appears in citations to the answer.
2
2
(“Rule”) 56.
Plaintiffs’ motion, which defendant opposes, seeks
summary judgment in its favor as to defendant’s affirmative
defenses of laches, equitable estoppel, and waiver.
Motion, ECF No. 97.)
(Notice of
Defendant’s motion, which plaintiffs
oppose, seeks summary judgment in its favor that: (1) plaintiffs
failed to undertake patent marking, (2) the ‘879 Patent is
invalid, (3) plaintiffs cannot establish lost profit damages,
(4) this is not an “egregious” case warranting enhanced damages,
(5) the ‘547 Patent is indefinite, (6) defendant did not
infringe the ‘547 Patent, and (7) defendant did not infringe the
‘791 Patent.
(Motion for Summary Judgment, ECF No. 94.)
Background
I.
The Parties
ATC is a wholly-owned subsidiary of AVX.
(Claim
Construction Order (“Cl. Constr. Order”), ECF No. 79, at 2.)
ATC, AVX, and Presidio are manufacturers of electrical devices,
including capacitors, which are electronic components that store
and release energy within a circuit, and are used in a variety
of electrical systems, including consumer electronics.
(Id.)
Capacitors typically consist of two parallel conductive, usually
metal, plates separated by a non-conductive, insulating material
known as a “dielectric.”
(Id.)
The patents-in-suit relate to “multilayer ceramic
capacitors” (“MLCCs”), which are created through the combination
3
of multiple capacitors by stacking several layers of conductive
material and non-conductive, or dielectric, material.
2-3.)
3.)
Plaintiffs and defendant make and sell MLCCs.
(Id. at
(Id. at
Plaintiffs manufacture a product known as the Accu-P
capacitor.
Plaintiff AVX owns the ‘547 Patent and ATC is the
exclusive licensee.
Plaintiff ATC owns the ‘791 Patent.
Defendant manufactures products known as BB capacitors, which
plaintiffs contend practice and as such infringe the patents-insuit.
II.
Procedural History 3
A.
Claim Construction
Following briefing, the court held a claim
construction, or Markman, hearing on August 31, 2016, at which
the parties presented oral argument and expert testimony to
explain their proposed constructions of certain claims in the
patents-in-suit.
(Cl. Constr. Order at 3.)
On November 7,
The court notes that the parties’ respective briefs, exhibits, and
other materials relevant to the instant cross-motions for summary judgment
have been filed on the docket more than once. The parties initially sought
to file a significant number of documents, including certain memoranda of law
regarding the instant cross-motions and certain Local Rule 56.1 statements of
undisputed material facts, under seal in their entirety. At oral argument on
the instant cross-motions, the court directed the parties to meet and confer
regarding their respective papers and, for each document, either file an
unredacted version or establish good cause as to why the document, or any
portion thereof, should be redacted and/or remain under seal. The parties
subsequently narrowed the universe of documents they sought to redact, and,
at the court’s direction, filed a complete set of their moving papers.
Citations to the parties’ papers are to the most recently filed, complete set
of papers.
3
4
2016, the court entered its claim construction order, setting
forth how those disputed terms would be construed.
1.
The ‘547 Patent
Of particular relevance to defendant’s motion for
summary judgment, the court considered the term “substantially
L-shaped terminations,” which appears in all claims of the ‘547
Patent and describes the appearance and structure of the
terminations that devices practicing the ‘547 Patent would have.
The court concluded that the term was to be construed “in
accordance with its ordinary meaning, i.e., as a termination
that is substantially or largely L-shaped, but not wholly Lshaped.”
(Id. at 20-21.)
In reaching this construction, the
court rejected defendant’s argument that “substantially Lshaped” would not “sufficiently distinguish the structure from
U-shaped terminations,” and instead determined that
“[t]erminations having a U-shape are already excluded by the
ordinary meaning of substantially L-shaped, because a structure
with terminations that extend around the lateral sides of a
device body would not be L-shaped.”
(Id. at 20 (internal
quotation marks omitted).)
Also relevant to defendant’s motion, at the claim
construction stage, the court considered the ‘547 Patent’s
statement, recited in each of its claims, that the
“substantially L-shaped terminations” extend “negligibly over a
5
top surface” of the device body.
The court construed
“negligibly over a top surface” to mean “a small amount of
termination material is formed on a top surface of the device
body.”
(Id. at 22.)
In reaching this construction, the court
noted that “[b]y definition, the top configuration [of the
termination] must be smaller than the bottom configuration in
order for the top termination portion to extend ‘negligibly,’
and for the terminations as a whole to appear ‘substantially Lshaped.’”
(Id.)
The parties did not include the term
“terminations” in the Joint Disputed Claim Terms Chart, (see
generally Joint Disputed Claim Terms Chart (“JDTC”), ECF No. 481 (setting forth terms for which parties sought construction and
not including “terminations”)), and the parties agree that terms
“not specifically identified” in the chart should be “given
their plain and ordinary meaning.” 4
(Notice of Filing of Joint
Disputed Claim Terms Chart (“JDTC Notice”), ECF No. 48, at 1.)
The court also construed three other terms appearing
in the ‘547 Patent’s claims, (see Cl. Constr. Order at 11-16,
22-27), although the other construed terms are not at issue in
the motions presently before the court.
4
At the Markman Hearing, Dr. Stanley R. Shanfield, expert witness for
plaintiffs, described terminations as “the things at the ends of the
capacitor,” and Dr. Michael S. Randall, expert witness for defendant,
testified that the capacitor’s electrodes are connected to the termination
end. (Markman Hearing Transcript (“Markman Tr.”), ECF No. 80, at 23:1-10 and
98:17-20.)
6
2.
The ‘791 Patent
The court construed four terms in the ‘791 Patent’s
claims, (see generally Cl. Constr. Order at 27-37), although
none of the ‘791 Patent’s construed terms are at issue in
motions presently before the court.
B.
Inter Partes Review
A person who is not the owner of a patent may, under
certain circumstances, initiate an inter partes review and
petition the United States Patent and Trademark Office (“USPTO”)
to review the patent and cancel it as unpatentable.
311.
35 U.S.C. §
In June of 2015, defendant filed petitions for inter
partes review with the USPTO challenging the validity of the
‘547 Patent, the ‘791 Patent, and the ‘879 Patent.
(So-Ordered
Stipulation to Stay Proceedings, ECF No. 75, at 1-2.)
The
Patent Trial and Appeal Board (“PTAB”) of the USPTO granted the
petition with respect to certain claims of the patents, (id. at
2), and on September 14, 2016, pursuant to a so-ordered
stipulation, the instant action was stayed pending final written
decisions from PTAB.
(See generally id.)
On November 30, 2016, PTAB held claim 1 of the ‘791
Patent and all claims of the ‘879 Patent unpatentable, and on
December 1, 2016, PTAB found all challenged claims of the ‘547
patent patentable.
(Parties’ December 2016 Joint Status Letter
7
(“December 2016 Letter”), ECF No. 82, at 1.) 5
The stay in the
instant action was subsequently lifted, and the parties
proceeded with the instant motions.
C.
The Instant Motions
The parties filed their cross-motions for summary
judgment on August 2, 2017.
As set forth in defendant’s
memorandum of law in support of their motion for summary
judgment, (“Def. Mem.,” ECF No. 120-1), defendant seeks summary
judgment that: (1) plaintiffs failed to mark products practicing
the ‘547 Patent, and as such the patent marking statute bars
plaintiffs from recovering pre-complaint damages for the ‘547
Patent; (2) the ‘879 Patent is invalid as anticipated by prior
art; (3) plaintiffs cannot establish lost profit damages for the
‘547 and ‘791 Patents; (4) plaintiffs cannot establish enhanced
damages for the ‘547 and ‘791 Patents under 35 U.S.C. § 284; (5)
the ‘547 Patent is invalid for indefiniteness; and (6)
plaintiffs cannot establish infringement of the ‘547 or ‘791
Patents.
(See generally Def. Mem.)
Plaintiffs oppose
defendant’s motions, except that plaintiffs do not oppose
The parties have not submitted PTAB’s full decisions in connection with
the instant motion. A single page from the PTAB Final Written Decision
holding the ‘879 Patent unpatentable, containing PTAB’s conclusion and
certain decretal language, is attached as Exhibit L to the Expert Report of
Dr. Michael S. Randall (ECF No. 120-8). PTAB’s Final Written Decision
pursuant to 35 U.S.C. § 318(a) and 37 C.F.R. § 42.73 with respect to the ‘547
Patent (the “‘547 Decision”) was attached as Appendix E to Plaintiffs’ Motion
to Strike the Randall Report. (See Motion to Strike, ECF No. 85; Final
Written Decision, ECF No. 85-7.)
5
8
summary judgment as to availability for enhanced damages with
respect to infringement of the ‘547 Patent.
(See generally
Plaintiffs’ Memorandum of Law in Opposition to Defendant’s
Motion for Summary Judgment (“Pl. Opp.”), ECF No. 122.)
Plaintiffs’ motion for summary judgment seeks summary
judgment as to three equitable defenses asserted by defendant in
its answer as to the patents-in-suit.
As set forth in their
memorandum of law, (“Pl. Mem.,” ECF No. 116-2), plaintiffs seek
judgment that the defenses of laches, equitable estoppel, and
waiver are not available to defendant.
(See generally Pl. Mem.)
Defendant opposes the motion and contends that each of these
defenses should be available at least in part, though defendant
concedes that the laches defense is unavailable as to liability
and damages.
(See generally Defendant’s Opposition to
Plaintiffs’ Motion for Summary Judgment (“Def. Opp.”), ECF No.
117.)
Additionally, at oral argument, defendant stated that its
“equitable estoppel defense is not intended to be applicable to
the ‘547 Patent.”
(Transcript of Oral Argument (“Arg. Tr.”),
ECF No. 113, at 13:5-7.)
Legal Standard
“The court applies the same summary judgment standards
to patent infringement matters as it does to motions involving
other types of claims.”
Mich & Mich. TGR, Inc. v. Brazabra,
Corp., 128 F. Supp. 3d 621, 629 (E.D.N.Y. 2015), aff’d sub nom.
9
Mich & Mich TGR, Inc. v. Brazabra Corp., 657 F. App’x 971 (Fed.
Cir. 2016) (citations omitted).
“When deciding issues in a
patent case, a district court applies the law of the circuit in
which it sits to nonpatent issues and the law of the Federal
Circuit to issues of substantive patent law,” id. at 631
(citations omitted), as well as to procedural issues that are
“intimately involved in the substance of enforcement of the
patent right.”
Id.
(quoting Advanced Cardiovascular Sys., Inc.
v. Medtronic, Inc., 265 F.3d 1294, 1303 (Fed. Cir. 2001)).
Summary judgment is appropriate only where “the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law.”
Id. at 629
(quoting Fed. R. Civ. P. 56(c)).
“[T]he mere existence of some alleged factual dispute
between the parties will not defeat an otherwise properly
supported motion for summary judgment; the requirement is that
there be no genuine issue of material fact.”
Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (emphasis in
original).
For summary judgment purposes, a fact is material if
it “might affect the outcome of the suit under the governing
law,” and a dispute is genuine “if the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.”
10
Anderson, 477 U.S. at 248; accord Mich & Mich. TGR, 128 F. Supp.
3d at 629 (citations omitted).
Additionally, no genuine issue
of material fact exists “unless there is sufficient evidence
favoring the nonmoving party for a jury to return a verdict for
that party.
If the evidence is merely colorable, or is not
significantly probative, summary judgment may be granted.”
Anderson, 477 U.S. at 249-50 (citations omitted); accord Mich &
Mich. TGR, 128 F. Supp. 3d at 629 (citation omitted).
In ruling on a motion for summary judgment, the
court’s function is only to “determine whether there is a
genuine issue for trial,” not to “weigh the evidence and
determine the truth of the matter.”
Anderson, 477 U.S. at 249.
Further, the court must “view the evidence presented in a light
most favorable to the nonmoving party and . . . draw all
reasonable inferences in favor of the nonmoving party.”
Mich &
Mich. TGR, 128 F. Supp. 3d at 630 (quoting CA, Inc. v.
Simple.com, Inc., 780 F. Supp. 2d 196, 209 (E.D.N.Y. 2009))
(omission in quoted material).
“The movant has the burden of
showing that there is no genuine issue of [material] fact.”
Anderson, 477 U.S. at 256.
The nonmoving party “need only
present evidence from which a jury might return a verdict in his
favor” to defeat a motion for summary judgment, id. at 257,
though making such a showing requires “specific facts showing
that there is a genuine issue for trial,” not merely “that there
11
is some metaphysical doubt as to the material facts.”
Caldarola
v. Calabrese, 298 F.3d 156, 160 (2d Cir. 2002) (emphasis in
original) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586-87 (1986)).
The nonmoving party may
not rest only on the pleadings, and “[e]ach statement of
material fact by the movant or opponent must be followed by
citation to evidence which would be admissible, as required by
[Rule] 56(e) and Local Civil Rule 56.1(d).”
Mich & Mich. TGR,
128 F. Supp. 3d at 630 (citations omitted).
Discussion
I.
Defendant’s Motion for Summary Judgment
A.
Patent Marking
Defendant seeks to limit the availability of damages
to plaintiffs under the patent marking statute, codified at 35
U.S.C. § 287.
(Def. Mem. at 2-4.)
“The patent marking statute
limits recoverable damages where a patentee fails to mark her
patented products,” and “[w]here a patentee does not
appropriately mark her products, she may not recover damages for
infringement occurring before notice to the infringer.”
Power
Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 711
F.3d 1348, 1378 (Fed. Cir. 2013) (citing 35 U.S.C. § 287). 6
6
35 U.S.C. § 287(a) provides as follows:
Patentees, and persons making, offering for sale, or
selling within the United States any patented article for
or under them, or importing any patented article into the
United States, may give notice to the public that the same
12
The
statute is only triggered when articles that practice a patent
are actually sold into the marketplace, and does not limit
damages where a patent holder (or licensee) does not actually
sell products practicing the relevant patent into the
marketplace.
See Texas Digital Sys., Inc. v. Telegenix, Inc.,
308 F.3d 1193, 1220 (Fed. Cir. 2002) (“The recovery of damages
is not limited [by 35 U.S.C. § 287] where there is no failure to
mark, i.e., where the proper patent notice appears on products
or where there are no products to mark.” (citation omitted)),
abrogated on other grounds by Phillips v. AWH Corp., 415 F.3d
1303 (Fed. Cir. 2005).
Furthermore, the patent marking statute
does not limit damages for a period “during which the marking
statute is not triggered, even if it later is triggered and the
patentee fails to mark.”
WiAV Sols. LLC v. Motorola, Inc., 732
F. Supp. 2d 634, 640 (E.D. Va. 2010).
is patented, either by fixing thereon the word “patent” or
the abbreviation “pat.”, together with the number of the
patent, or by fixing thereon the word “patent” or the
abbreviation “pat.” together with an address of a posting
on the Internet, accessible to the public without charge
for accessing the address, that associates the patented
article with the number of the patent, or when, from the
character of the article, this can not be done, by fixing
to it, or to the package wherein one or more of them is
contained, a label containing a like notice. In the event
of failure so to mark, no damages shall be recovered by the
patentee in any action for infringement, except on proof
that the infringer was notified of the infringement and
continued to infringe thereafter, in which event damages
may be recovered only for infringement occurring after such
notice. Filing of an action for infringement shall
constitute such notice.
13
The Federal Circuit recently clarified parties’
relative burdens as to marking.
“[A]n alleged infringer who
challenges the patentee’s compliance with § 287 bears an initial
burden of production to articulate the products it believes are
unmarked ‘patented articles’ subject to § 287.”
Arctic Cat Inc.
v. Bombardier Recreational Prod. Inc., 876 F.3d 1350, 1368 (Fed.
Cir. 2017).
This initial burden of production, which is not a
burden of persuasion or proof, is a “low bar,” and the alleged
infringer “need only put the patentee on notice that he or his
authorized licensees sold specific unmarked products which the
alleged infringer believes practice the patent.”
Id.
“Once the
alleged infringer meets its burden of production, however, the
patentee bears the burden to prove the products identified do
not practice the patented invention.”
Id.
The patentee must
meet its burden of proving compliance by a preponderance of the
evidence.
Nike, Inc. v. Wal-Mart Stores, Inc., 138 F.3d 1437,
1446 (Fed. Cir. 1998). 7
The court acknowledges that some uncertainty as to the parties’
relative burdens of proof may have existed at the time briefing on the
instant motion closed, as the Arctic Cat case that clarified the issue was
not decided until December 7, 2017. 876 F.3d at 1350. Nevertheless, the
Federal Circuit decision in Nike, Inc., 138 F.3d 1437, which both parties
cite in their respective papers, (Def. Mem. at 2; Pl. Opp. at 3), states that
the burden of proving compliance with the patent marking statute is on a
plaintiff. See 138 F. 3d at 1446 (“The patentee bears the burden of proving
compliance by a preponderance of evidence.”). Prior Federal Circuit
precedent also clearly states that the burden of proof is on the plaintiff to
prove compliance with the patent marking statute. See Maxwell v. J. Baker,
Inc., 86 F.3d 1098, 1111 (Fed. Cir. 1996) (“As the patentee, Maxwell had the
burden of pleading and proving at trial that she complied with the statutory
[marking] requirements.” (citations omitted)) The court therefore concludes
7
14
Defendant contends that plaintiffs’ Accu-P capacitor
practices the ‘547 Patent such that the patent marking statute
is triggered.
(Def. Mem. at 3.)
Defendant has therefore “put
the patentee on notice that he or his authorized licensees sold
specific unmarked products which the alleged infringer believes
practice the patent” and met its burden of production as to
patent marking.
Arctic Cat, 876 F.3d at 1368.
There is no dispute that plaintiffs have offered for
sale and sold, and continue to offer for sale and sell, Accu-P
capacitors.
(Def. Mem. at 3; Defendant’s Statement of Material
Facts (“DSMF”), ECF No. 120-2, ¶ 11; Plaintiffs’ Statement of
Material Facts (“PSMF”), ECF No. 122-1, ¶ 11.)
Further,
plaintiffs do not contend that they actually marked any products
defendant has identified with the ‘547 Patent, or otherwise gave
notice of the ‘547 Patent to defendant, and instead contend that
the patent marking statute is wholly inapplicable here because
“disputed issues of fact exist as to whether the Accu-P products
practice the ‘547 Patent.”
(See Pl. Opp. at 2-6.)
Therefore,
to prevail on summary judgment as to patent marking, defendant
must establish that, when the record evidence is viewed in the
light most favorable to plaintiffs and all reasonable inferences
are drawn in their favor, no genuinely disputed material facts
that it is appropriate to decide defendant’s summary judgment motion as to
patent marking on the record before it.
15
remain and plaintiffs cannot meet their burden to establish by a
preponderance of the evidence that plaintiffs’ Accu-P capacitors
do not practice the ‘547 Patent.
Defendant argues that plaintiffs’ interrogatory
responses admit that various Accu-P products practice the ‘547
Patent.
(Def. Mem. at 3.)
Plaintiffs’ interrogatory responses
state that various Accu-P capacitors may, due to manufacturing
tolerances, practice one or more claims of the ‘547 Patent.
More specifically, due to manufacturing tolerances, Accu-P
capacitors in case sizes 0402 and 0201, which have been offered
for sale in the United States since 1999 and 2002, respectively,
“may embody at least one claim” of the ‘547 Patent.
(Plaintiffs’ Supplemental Responses to Interrogatories 2 and 10,
DSMF Ex. D, ECF No. 120-6, at 6)
The same is true for Accu-P
capacitors in case sizes 01005, which have been offered for sale
since at least July 2012.
(Id. at 7.)
Additionally, plaintiffs
state in a supplemental response to the same interrogatory that
“Accu-P capacitors in size 01005, 0201, or 0402 manufactured
with a B1 termination greater than 0.00 millimeters practice at
least one claim” of the ‘547 Patent.
(Id. at 8.)
Plaintiffs, for their part, point to evidence that, if
true, would establish that they do not measure the B1
termination size in the ordinary course of business and thus
lack sufficient knowledge to determine whether their Accu-P
16
products practice the ‘547 Patent.
(See Pl. Opp. at 4 (citing
interrogatory response and deposition testimony).)
Defendant also submits the expert report of Dr.
Michael S. Randall (the “Randall Report,” DSMF Ex. F, ECF No.
120-8), which includes an opinion that several Accu-P capacitors
practice numerous claims of the ‘547 Patent and notes that
plaintiffs have not submitted any rebuttal evidence.
at 3.)
(Def. Mem.
Dr. Randall concluded that the Accu-P capacitor with
part number 02015J1R0PBSTR practices claims 1-5, 10-13, and 18
of the ‘547 Patent, (Randall Report ¶ 603), and that the Accu-P
capacitors with part numbers 02013J2ROABSTR and 0201ZK6R8BBSTR
practice claims 1-5, 12, and 13 of the ‘547 Patent.
(Id.) 8
Dr.
Randall’s report sets forth the bases for these conclusions in
detail.
(See id. ¶¶ 603-39.)
Each of the capacitors Dr.
Randall analyzed has a size of 0201.
(Id. ¶ 603.)
Plaintiffs’ expert, Dr. Stanley R. Shanfield, has not
disputed Dr. Randall’s opinion that certain Accu-P capacitors
practice multiple claims of the ‘547 Patent.
15.)
(PSMF ¶ 15; DSMF ¶
Nor have plaintiffs submitted any evidence establishing
that the products at issue do not practice multiple claims of
the ‘547 Patent.
Instead, plaintiffs contend that Dr. Randall’s
opinion is “internally inconsistent in at least two ways.”
(Pl.
Dr. Randall did not analyze the 02013J2ROABSTR and 0201ZK6R8BBSTR
capacitors to determine whether they practice claims 10, 11, or 18. (Randall
Report ¶ 603.)
8
17
Opp. at 5.)
First, Dr. Randall’s report indicates that Dr.
Randall did not analyze Accu-P products in the width dimension
even though, in the context of seeking to establish
noninfringement by defendant’s BB capacitors, Dr. Randall states
that the products must be examined in the length and width
dimensions.
(Id. at 5-6.)
Second, Dr. Randall simultaneously
opines that the term “substantially L-shaped” is indefinite and
applies the term in opining that plaintiffs’ Accu-P products
practice the ‘547 Patent.
(Id. 6.)
In other words, in opposing
summary judgment on patent marking, plaintiffs submit arguments
about the weight of defendant’s evidence, rather than evidence
of their own to establish a genuine dispute of material fact
regarding defendant’s showing of unmarked patented articles
subject to 35 U.S.C. § 287.
Arctic Cat, 876 F.3d at 1368.
Merely calling into question the validity of Dr.
Randall’s opinion that plaintiffs’ products practice the ‘547
Patent, however, is insufficient to defeat summary judgment.
Here, defendant has put plaintiffs on notice of specific
products that defendant contends practice the ‘547 Patent.
Therefore, the burden has shifted to plaintiffs to “prove that
the products identified do not practice the patented invention.”
Arctic Cat, 876 F.3d at 1368.
Because a party opposing a
properly submitted motion for summary judgment “need only
present evidence from which a jury might return a verdict in
18
[its] favor” to prevail, Anderson, 477 U.S. at 257, plaintiffs
here need only come forward with evidence showing that a
reasonable finder of fact could conclude, by a preponderance of
the evidence that the products defendant has identified do not
practice the ‘547 Patent.
Making such a showing requires
“specific facts showing that there is a genuine issue for
trial.”
Caldarola, 298 F.3d at 160 (emphasis in original)
(quoting Matsushita Electric Industrial, 475 U.S. at 586-87).
Plaintiffs, however, have not come forward with any
evidence, and disputing the significance of the evidence with
which defendant has presented, including plaintiffs’ admissions
and the Randall Report, does not suffice to show existence of a
genuine issue for trial.
There is, therefore, no information in
the record upon which a reasonable finder of fact could
conclude, by a preponderance of the evidence, that the Accu-P
products do not practice the ‘547 Patent.
To summarize, defendant has satisfied its burden of
production and put plaintiffs on notice that defendant believes
plaintiffs have been selling products that practice the ‘547
Patent since 1999, when plaintiffs began selling Accu-P
capacitors in case size 0402.
Plaintiffs have failed to come
forward with any evidence from which a reasonable finder of fact
could determine that the products defendant identified do not
practice the ‘547 Patent.
Indeed, plaintiffs have admitted the
19
relevant Accu-P products have been sold since 1999 and may
practice the ‘547 Patent.
Defendant is therefore entitled to
summary judgment as to plaintiffs’ claim for pre-suit damages
for infringement of the ‘547 Patent from 1999 onward. 9
B.
Validity and Mootness
Defendant seeks summary judgment that the ‘879 Patent
was anticipated by prior art.
(Def. Mem. at 4.)
Plaintiffs
counter that defendant’s motion for summary judgment is moot as
to the invalidity of the ‘879 Patent because the USPTO cancelled
the patent in the inter partes review proceedings.
6.)
(Pl. Opp. at
The parties do not dispute that the ‘879 Patent was
cancelled in its entirety as part of the inter partes review
initiated by defendant.
(See December 2016 Letter, ECF No. 82,
at 1.)
When a patent is cancelled, suits based on it must be
dismissed.
See Fresenius USA, Inc. v. Baxter Int’l, Inc., 721
F.3d 1330, 1338 (Fed. Cir. 2013) (“[T]he 1928 amendment [to the
patent reissue statute] did nothing to change the rule that
The court notes that at oral argument, plaintiffs stated, that “[i]t
can’t be . . . that [defendant’s products] don’t infringe [the ‘547 Patent]
and the Accu-P[] [products] practice it.” (Arg. Tr., ECF No. 113, at 39:213.) In other words, if the relevant Accu-P products practice the ‘547
patent, the accused products infringe it, and if the Accu-P products do not
practice the ‘547 Patent, the accused products do not infringe it. In light
of this, it is unclear why plaintiffs oppose summary judgment on the patent
marking issue. The instant action is based on plaintiffs’ contention that
the accused products do infringe the ’547 Patent, yet in opposing defendant’s
motion for summary judgment, plaintiffs argue for an outcome that, under
their own theory of the case, is not consistent with their infringement
claim.
9
20
suits based on cancelled claims must be dismissed.”)
In the
Frenesius USA case, the Federal Circuit addressed a situation in
which an alleged infringer brought a declaratory judgment action
seeking invalidation of a patent.
Id. at 1331.
The patentee
counterclaimed for infringement and, while the litigation was
pending and on remand from a Federal Circuit affirmance of the
district court’s determination that the relevant patent claims
were not invalid, the USPTO determined that all asserted claims
were invalid.
Id. at 1331-32.
The district court nevertheless
entered judgment against the plaintiff/alleged infringer on the
defendant’s counterclaim, but on review, the Federal Circuit
vacated the district court judgment and remanded with
instructions to dismiss on the grounds that, “in light of the
cancellation of the asserted claims . . . [the patentee] no
longer ha[d] a cause of action.”
Id. at 1332.
The Federal Circuit’s decision in Frenesius USA makes
clear that, where a patent is invalidated, the patentee no
longer has a cause of action.
Id.
The court therefore agrees
with plaintiffs that the motion for summary judgment as to the
‘879 Patent’s invalidity is moot, but notes that plaintiffs have
not formally dismissed count 2 of the complaint, which alleges
infringement of the ‘879 Patent, or their claims for
infringement of claim 1 of the ‘791 Patent, which was also
invalidated in the inter partes review proceedings.
21
Defendant contends that its motion for summary
judgment as to the ‘879 Patent is not moot because
“[p]laintiffs’ enforcement of patent claims they knew were
invalid, because their own products anticipated those claims, is
relevant to Presidio’s claim that this lawsuit has been pursued
by [p]laintiffs in bad faith.” (Defendant’s Reply in Support of
Motion for Summary Judgment (“Def. Repl.”), ECF No. 124, at 2.)
The court notes that nothing in the cases defendant cites
suggests that summary judgment is appropriate where a patent has
been invalidated.
Instead, the cases cited by defendant concern
awards of attorneys’ fees for alleged improper conduct.
See Q-
Pharma, Inc. v. Andrew Jergens Co., 360 F.3d 1295, 1299 (Fed.
Cir. 2004) (reviewing denial of Rule 11 sanctions and attorneys’
fees, and determination as to whether case was exceptional under
35 U.S.C. § 285); Rohm & Haas Co. v. Crystal Chem. Co., 736 F.2d
688, 689 (Fed. Cir. 1984) (considering requests for fees and
costs on appeal pursuant to 35 U.S.C. § 285 and Fed. R. App.
Proc. 39, respectively).
Accordingly, the court will deny as moot this portion
of defendant’s motion for summary judgment because the ‘879
Patent and claim 1 of the ‘791 Patents are invalid.
Instead,
the court dismisses plaintiffs’ claim for infringement of the
‘879 Patent, and claim 1 of the ‘791 Patent because “suits based
on cancelled claims must be dismissed.”
22
Fresenius USA, 721 F.3d
at 1338 (Fed. Cir. 2013).
This dismissal is without prejudice
to defendant’s ability to raise any arguments relating to the
invalidity of the ‘879 Patent or claim 1 of the ‘791 Patent in
arguing that the instant action was brought in bad faith should
this action reach the stage in proceedings at which such an
argument would be appropriate.
C.
Lost Profits Damages
Defendant seeks summary judgment as to plaintiffs’
claim for lost profit damages.
(Def. Mem. at 4-11.)
“To
recover lost profits a patentee must show that ‘but for’
infringement it reasonably would have made the additional
profits enjoyed by the infringer.”
Micro Chem., Inc. v.
Lextron, Inc., 318 F.3d 1119, 1122 (Fed. Cir. 2003) (citing King
Instruments Corp. v. Perego, 65 F.3d 941, 952 (Fed. Cir. 1995);
accord BIC Leisure Prods., Inc. v. Windsurfing Int’l, Inc., 1
F.3d 1214, 1218 (Fed. Cir. 1993) (“To recover lost profits as
opposed to royalties, a patent owner must prove a causal
relation between the infringement and its loss of profits. The
patent owner must show that ‘but for’ the infringement, it would
have made the infringer’s sales.” (citing Water Technologies
Corp. v. Calco Ltd., 850 F.2d 660, 671 (Fed. Cir. 1988), cert.
denied, 488 U.S. 968 (1988))).
In proving lost profits damages, a patentee may use
“any method showing, with reasonable probability, entitlement to
23
lost profits ‘but for’ the infringement.”
F.3d at 1122 (citations omitted).
Micro Chemical, 318
Once the patentee establishes
the reasonableness of the inference that it has lost profits as
a “but for” result of infringement, “the burden shifts to the
infringer to show that the inference is unreasonable for some or
all of the lost profits.”
Id. (citation omitted).
Importantly,
“[a]n award of lost profits may not be speculative. Rather the
patent owner must show a reasonable probability that, absent the
infringement, it would have made the infringer's sales.”
BIC
Leisure Products, 1 F.3d at 1218 (citation omitted).
Courts generally recognize two methods for showing
“but for” causation: the four factor test articulated in Panduit
Corp. v. Stahlin Bros. Fibre Works, 575 F.2d 1152 (6th Cir.
1978) and the “two-supplier market” test.
F.3d at 1122.
Micro Chemical, 318
Under the Panduit test, “[t]o obtain as damages
the profits on sales he would have made absent the infringement,
i.e., the sales made by the infringer, a patent owner must
prove: (1) demand for the patented product, (2) absence of
acceptable noninfringing substitutes, (3) his manufacturing and
marketing capability to exploit the demand, and (4) the amount
of the profit he would have made.”
Panduit, 575 F.2d at 1156.
“[U]nder the two-supplier test, a patentee must show:
1) the relevant market contains only two suppliers, 2) its own
manufacturing and marketing capability to make the sales that
24
were diverted to the infringer, and 3) the amount of profit it
would have made from these diverted sales.”
F.3d at 1124 (citations omitted).
Micro Chemical, 318
The two-supplier test thus
essentially “collapses the first two Panduit factors into one
‘two suppliers in the relevant market’ factor.”
Id.
“The proper starting point to identify the relevant
market is the patented invention. The relevant market also
includes other devices or substitutes similar in physical and
functional characteristics to the patented invention. It
excludes, however, alternatives ‘with disparately different
prices or significantly different characteristics.’”
Id.
(quoting Crystal Semiconductor Corp. v. TriTech Microelecs.
Int’l, Inc., 246 F.3d 1336, 1356 (Fed. Cir. 2001)).
Importantly, “[i]f the patentee shows two suppliers in the
relevant market, capability to make the diverted sales, and its
profit margin, that showing erects a presumption of ‘but for’
causation.”
Id. at 1125.
Once the patentee establishes the existence of a twosupplier market and concomitant presumption of “but for”
causation, the “burden of going forward then shifts to the
infringer,” though the “burden of persuasion remains with the
patentee.”
Id.
In such a situation, the infringer “may rebut
the presumption [of ‘but for’ causation] by showing that the
patentee reasonably would not have made some or all of the
25
diverted sales ‘but for’ the infringement.”
Id.
For example,
the infringer may rebut the presumption by “showing that it sold
another available, noninfringing substitute in the relevant
market.”
This situation would arise where “infringing
Id.
supplier had two available alternatives: one infringing and the
other noninfringing.”
Id.
Turning to the parties’ contentions, and applying the
Panduit and Micro Chemical factors, defendant first argues that
plaintiffs have admitted that they lost sales to third parties,
and not solely to defendant, and as such cannot establish “but
for” causation.
(Def. Mem. at 5-6.)
Second, defendant argues
that the record establishes that there are noninfringing
alternatives in the relevant market.
(Id. at 6-11.)
Defendant first contends that plaintiffs have admitted
in responses to defendant’s interrogatories that plaintiffs lost
sales to a third party.
Defendant’s Interrogatory No. 10 asked
plaintiffs to “identify every sale lost due to competition with
the Accused Products” and, for each sale, the number of units
not sold and profits lost.
(Id. at 5-6; DSMF ¶¶ 24-25.)
Plaintiffs responded that “[t]he particular competitive market
for the ATC 550 series capacitors is the high-performance, broad
high-frequency capacitor market . . . for capacitors having an
insertion loss of less than .90 decibels at 40GHz.”
(Plaintiffs’ Supplemental Responses to Interrogatories 10 and 16
26
(“Pls. Supp. Resp. to Interrog. Nos. 10 & 16”), DSMF Ex. L, ECF
No. 120-14, at 4.)
Plaintiffs further responded that, although
plaintiffs “presently” had “no evidence regarding any
competition between the ATC 550 series capacitors and the
accused BB capacitors,” customers “[i]n other markets . . . may
have other options available to them . . . including general
purpose capacitors and capacitors from several competitors.”
(Id.)
Additionally, plaintiffs stated that in November 2013,
“ATC did not make a sale of a 550 series capacitor to JDSU
because JDSU decided to select a different capacitor,
potentially a general purpose capacitor from Murata or Kyocera.”
(Id. at 4-5 (emphasis added).)
In support of defendant’s second contention, that the
record establishes that there are noninfringing alternatives in
the market, defendant offers Dr. Randall’s opinion that the ‘791
and ‘547 Patents do not justify defining the relevant market by
capacitors meeting a specific performance threshold,
specifically “insertion loss of less than 90 decibels at 40GHz.”
(Def. Mem. at 6.)
Plaintiffs have not submitted any “technical
expert” rebuttal as to this opinion.
(Id.)
Proceeding on its own assumption that the relevant
market is not defined by the insertion loss performance
threshold, defendant cites to record evidence that, according to
defendant, establishes the presence of alternatives in the
27
market.
This evidence includes plaintiffs’ response to
Interrogatory No. 10, (Id. at 6-7), and Dr. Randall’s opinion
that plaintiff AVX’s GX capacitor is a noninfringing alternative
in the market.
(Id. at 7.)
Defendant also cites market sales
evidence and portions of Plaintiffs’ expert’s report suggesting
that Presidio BB capacitors manufactured without vias are a
noninfringing alternative, (id. at 7-8), and Dr. Randall’s
opinion that versions of the BB capacitor that plaintiffs have
not accused of infringement provide “excellent insertion loss
performance.”
(Id. at 8-9 (citing, in relevant part, DSMF ¶ 58
(“Plaintiffs did not provide an expert report rebutting or
responding to Dr. Randall’s opinion that these alternative
versions of Presidio’s BB capacitor provide excellent insertion
loss performance.”).)
Defendant’s first contention, that plaintiffs have
admitted they lost sales to third parties, is unavailing.
The
interrogatory response on which defendant relies clearly
differentiates the market for “high-performance, broad highfrequency capacitor[s],” which plaintiffs contend is the
relevant market for the instant action, from the market for
“general purpose capacitors.”
(See Pls. Supp. Resp. to
Interrog. Nos. 10 & 16 at 4-5.)
Plaintiffs have only admitted
that they lost sales to a purchaser who “potentially” selected a
“general purpose capacitor.”
(Id.)
28
Thus, the interrogatory
response is not an admission that plaintiffs lost sales in the
relevant market to a third party.
More importantly, plaintiffs adequately demonstrate
the existence of genuine disputes for trial with respect to
market definition and the presence of acceptable noninfringing
alternatives under Panduit and Micro Chemical.
As plaintiffs
note, the deposition testimony of Lambert Devoe, chief financial
officer and product manager for defendant Presidio, includes the
following exchanges:
Q: Your understanding is that no other capacitor
manufacturers are competitive with Presidio, ATC,
and AVX in the market for high-performance
broadband capacitors; correct?
A: Yes, that’s correct.
(Lambert Devoe Deposition Transcript (“L. Devoe Tr.”), Joint
Deposition Transcript Annex (“JDTA”), ECF No. 119, Appx. M, at
34:8-12.) 10
Q: Your understanding is that Presidio’s only
competitor with respect to Presidio’s Buried
Broadband capacitor is ATC; correct?
A: That’s more or less correct.
(Id. at 29:9-12.)
Q: Your understanding is that, if customers in
the market are not using Presidio’s Buried
Broadband capacitors, they’re using ATC’s or
10
The JDTA was filed as a stand-alone ECF entry: ECF No. 119 contains
only the JDTA index, filed as the main ECF document, and the relevant
transcripts, filed as exhibits/attachments to the main document. Therefore,
although each appendix to the JDTA has an individual ECF number within ECF
No. 119, the court does not cite each appendix’s individual number when
citing to the JDTA.
29
AVX’s broadband capacitors; correct?
A: Yes, that’s correct.
(Id. at 30:3-7.)
Q: So your understanding is that no other
capacitor manufacturers are – are competitive
with Presidio, ATC, and AVX in the market for
high-performance Buried Broadband capacitors;
correct?
A: Yes, that’s correct.
(Id. at 31:3-8.)
Mr. Devoe also testified that he does not believe that
other companies, specifically Murata, Passive Plus, and DLI,
compete in the market for high-performance broadband capacitors,
(Id. at 31:9-32:5), which plaintiffs contend is the relevant
market.
Plaintiffs have therefore presented evidence of the
defendant’s concession that the relevant market is comprised of
two suppliers, the plaintiffs and defendant, and thus have
submitted sufficient evidence to satisfy the first factor of
Micro Chemical.
The record also contains deposition testimony, albeit
from AVX’s senior vice president and general counsel, Mr. Evan
Slavitt, that the market served by the particular patents
involved in this case is one in which “[t]here are customers who
need very good broadband products . . . that perform at a
variety of frequencies[] and . . . act the same way in each of
those frequencies.”
C, at 29:12-30:2.)
(Slavitt Deposition Transcript, JDTA Appx.
Mr. Slavitt also testified that the
30
capacitors in this market are “too expensive to use for regular
stuff,” and that “nobody who doesn’t need an Ultra Broadband
capacitor would put one into something that’s inexpensive,
[be]cause the[y’]re just too expensive.”
(Id. at 30:3-18.)
At the summary judgment stage, the court must view all
evidence in the light most favorable to the nonmovant and draw
all reasonable inferences in the nonmovant’s favor.
E.g., Mich
& Mich. TGR, 128 F. Supp. at 3d 630 (citation omitted).
Here,
the record evidence would enable a reasonable finder of fact to
conclude that the relevant market, which is determined based on
the products’ prices and functional characteristics, Micro
Chemical, 318 F.3d at 1124, is the market for high-performance
capacitors and that plaintiffs and defendant are the only
suppliers in the relevant market.
This, in turn, would give
rise to a presumption of “but for” causation so long as
plaintiffs can establish “capability to make the diverted sales,
and its profit margin,” Micro Chemical, 318 F.3d at 1125, and
defendant does not challenge plaintiffs’ ability to make such a
showing.
Pointing out plaintiffs’ failure to rebut Dr.
Randall’s “technical expert” opinion does not suffice to meet
defendant’s burden as the moving party, as defendant does not
cite, and the court cannot locate, any authority indicating that
the market definition inquiry must be resolved with reference to
31
“technical expert” evidence such that plaintiffs’ reliance on
other forms of evidence is fatal.
Additionally, a reasonable
finder of fact may choose to assign little weight to Dr.
Randall’s opinion regarding market definition.
At this stage,
the court’s role is only to “determine whether there is a
genuine issue for trial,” not to “weigh the evidence and
determine the truth of the matter,” Anderson, 477 U.S. at 249,
and here, there is a genuine issue of material fact for trial.
Further, the record reveals genuine disputes of
material fact as to the existence of noninfringing alternatives
in the market.
Plaintiffs’ expert, Dr. Craig D. Hillman, has
prepared a report (the “Hillman Report,” DSMF Ex. M, ECF No.
120-15), in which he opines that Presidio BB capacitors without
vias “possess degraded insertion loss performance or insertion
loss performance similar to that of general purpose or low-cost,
low-performance ‘jellybean’ capacitors” and that their “surface
pads . . . have poor adhesion, which means that they can easily
peel away or come off the dielectric body.”
Hillman Report ¶¶ 83-84.)
(Pl. Opp. at 12;
Dr. Hillman thus opines that
Presidio’s BB capacitors without vias would not be “suitable or
acceptable” noninfringing alternatives.
(Hillman Report ¶ 84.)
Dr. Hillman further opines that redesigning BB
capacitors’ terminations so that they are not “substantially Lshaped,” and thus noninfringing, would degrade the capacitors’
32
performance and they would therefore be unacceptable in the
relevant market.
(Hillman Report ¶ 52; see also Hillman Report
¶¶ 53-60 (discussing testing of BB capacitors with surface pads,
which plaintiffs contend are part of the termination, removed so
that the terminations are no longer “substantially L-shaped”).)
Defendant questions Dr. Hillman’s methodology and
contends that his opinion is contradicted by five years of sales
of BB capacitors without complaint of failure.
4-5.)
(Def. Repl. at
The court anticipates that defendant will make these
arguments at trial, however, at this stage, it is not for the
court to weigh the evidence, but only to determine whether a
genuine issue exists for trial.
Such an issue exists here.
Finally, defendant contends that plaintiffs offer a
broadband capacitor known as the GX capacitor, and have
“admitted that the GX capacitor is acceptable to the market,”
and that the GX capacitor does not infringe plaintiffs’ patents.
(Def. Repl. at 4 (citing, in relevant part, DSMF ¶¶ 42-45).)
The relevant paragraphs of defendant’s statement of undisputed
material facts, however, do not support its conclusion.
Instead, the paragraphs to which defendant cites only establish
that AVX offers for sale and sells the GX capacitor, (DSMF ¶
42), that plaintiffs have not offered any evidence that the GX
is not acceptable to the market, (DSMF ¶ 43), that defendant’s
expert, Dr. Randall, has opined that the GX does not practice
33
any of the asserted claims, (DSMF ¶ 44), and that plaintiffs did
not rebut Dr. Randall’s opinion.
(DSMF ¶ 45.)
Plaintiffs have admitted only that they have not
offered evidence that the GX capacitor is not acceptable to the
market.
They have not admitted that the GX capacitor is in fact
acceptable to the market.
Plaintiffs have presented a genuine
issue of fact as to whether the relevant market is comprised of
two suppliers, the plaintiffs and the defendant.
If plaintiffs
ultimately establish a two-supplier market, it will not be their
burden to establish that the GX capacitor is not acceptable.
Micro Chemical, 318 F.3d at 1125 (“If the patentee shows two
suppliers in the relevant market, capability to make the
diverted sales, and its profit margin, that showing erects a
presumption of ‘but for’ causation.”).
Instead, in that
scenario, it would be for defendant to establish that there is a
noninfringing alternative in the market.
Id.
Further, even if
the GX capacitor were a noninfringing alternative in the market,
plaintiffs, not defendant, sell the GX capacitor, and it is
therefore not clear that defendant could rely on the GX
capacitor to establish the presence of a noninfringing
alternative in the market.
See id. (noting that a defendant may
rebut the presumption of but for causation by “showing that it
sold another available, noninfringing substitute in the market”
(emphasis added)).
34
Defendant’s argument that Dr. Randall’s opinion that
BB capacitors could be redesigned to avoid using “substantially
L-shaped terminations,” (Def. Mem. at 10-11), and that defendant
is therefore entitled to summary judgment as to lost profit
damages, does not suffice to establish that summary judgment is
appropriate for these same reasons.
Even assuming that Dr.
Randall is correct (and plaintiffs dispute his opinion), there
is a genuine dispute as to whether the relevant market is a twosupplier market.
If it is, defendant must rebut the presumption
of “but for” causation by, for example, “showing that it sold
another available, noninfringing substitute in the market.”
Micro Chemical, 318 F.3d at 1125 (emphasis added).
And, as
noted above, plaintiffs dispute Dr. Randall’s opinion as to
defendant’s ability to redesign its BB capacitors such that they
would be noninfringing alternatives acceptable to the market.
In disputing Dr. Randall’s opinion, plaintiffs point to issues
with Dr. Randall’s opinion itself, as well as to Dr. Hillman’s
opinion that the modifications Dr. Randall proposes would result
in an inferior product.
(Pl. Opp. at 11-16 (citing, inter alia,
Rebuttal Report of Dr. Craig Hillman (“Hillman Rebuttal”), DSMF
Ex. N, ECF No. 120-16, ¶ 2).)
Consequently, there is a dispute
as to whether a noninfringing product was “available or on the
market at the time of infringement.”
35
Grain Processing Corp. v.
Am. Maize-Prod. Co., 185 F.3d 1341, 1349 (Fed. Cir. 1999)
(citation omitted).
Accordingly, genuine issues of material fact remain
for trial, and the court will deny defendant’s motion for
summary judgment as to lost profit damages. 11
D.
Enhanced Damages
Defendant seeks summary judgment that enhanced damages
under section 284 of the Patent Act are not available to
plaintiffs in the instant action.
(Def. Mem. at 11-13.)
“Section 284 of the Patent Act provides that, in a case of
infringement, courts ‘may increase the damages up to three times
the amount found or assessed.’”
Halo Elecs., Inc. v. Pulse
Elecs., Inc., 136 S. Ct. 1923, 1928 (2016) (quoting 35 U.S.C. §
284).
The language of section 284 “contains no explicit limit
or condition,” and the Supreme Court has emphasized that the
“word ‘may’ clearly connotes discretion.”
Id. at 1931 (quoting
Martin v. Franklin Capital Corp., 546 U.S. 132, 136 (2005)).
District courts therefore “enjoy discretion in deciding whether
to award enhanced damages, and in what amount[, b]ut through
The court notes that because the court grants defendant summary
judgment with respect to the applicability of the patent marking statute to
limit pre-suit damages for infringing the ‘547 Patent, the patent marking
statute may serve to limit all damages, including lost profit damages. See
35 U.S.C. § 287(a) (“In the event of failure to so mark, no damages shall be
recovered by the patentee in any action for infringement, except on proof
that the infringer was notified.” (emphasis added)). Nevertheless, the
parties have not submitted argument on this issue, and the court will not
decide it at this stage.
11
36
nearly two centuries of discretionary awards and review by
appellate tribunals, the channel of discretion has narrowed, so
that such damages are generally reserved for egregious cases of
culpable behavior.”
Id. at 1932 (internal quotation marks and
citations omitted).
To summarize, “[s]ection 284 allows district courts to
punish the full range of culpable behavior,” but does not
require enhanced damages in every case where there is a “finding
of egregious misconduct.”
Id. at 1933.
Further, district
courts should generally reserve awards of enhanced damages under
35 U.S.C. § 284 “for egregious cases typified by,” but not
strictly limited to, “willful misconduct.”
34.
136 S. Ct. at 1933-
Finally, “[a]s with any exercise of discretion, courts
should continue to take into account the particular
circumstances of each case in deciding whether to award damages,
and in what amount.”
Id. at 1933.
Given that the facts of this case have yet to be fully
developed at trial, granting summary judgment on an issue with
respect to which the court has discretion and must take into
account the full circumstances of the case is inadvisable.
Furthermore, the relevant circumstances would include
defendant’s subjective state of mind, see Halo Electronics, 136
S. Ct. at 1926 (“Culpability . . . is generally measured against
the actor’s knowledge at the time of the challenged conduct.”),
37
and “where subjective issues regarding a litigant’s state of
mind, motive, sincerity or conscience are squarely implicated,
summary judgment would appear to be inappropriate and a trial
indispensable.”
Patrick v. LeFevre, 745 F.2d 153, 159 (2d Cir.
1984) (citations omitted); accord Equal Employment Opportunity
Commission v. United Health Programs of America, Inc., 213 F.
Supp. 3d 377, 398 (E.D.N.Y. 2016) (citations omitted).
Nevertheless, plaintiffs do not oppose Presidio’s
motion for summary judgment that Presidio did not willfully
infringe the ‘547 Patent.
(Pl. Opp. at 16.)
Accordingly, the
court will grant defendant’s motion for summary judgment as to
plaintiffs’ claim for enhanced damages under 35 U.S.C. § 284
with respect to infringement the ‘547 Patent.
With respect to the ‘791 Patent, defendant contends
that the facts of this case are “nothing like” those in cases in
which courts have awarded enhanced damages under 35 U.S.C. §
284.
Defendant notes that “[p]laintiffs have not identified a
single fact, piece of evidence, or witness that could support a
claim of egregious conduct,” (Def. Mem. at 12), and that “only a
few months after [p]laintiffs first notified Presidio of their
allegations of infringement, Presidio removed vias from any of
the accused products that incorporated that feature.”
Mem. at 13.)
(Def.
Defendant also cites the Supreme Court’s Halo
Electronics decision, in which the Supreme Court observed that
38
“culpability is generally measured against the actor’s knowledge
at the time of the challenged conduct,” 136 S. Ct. at 1933
(citation omitted), and argues that “there is no evidence that
Presidio compared any of the asserted claims of the ‘791
[P]atent to the accused products and formed an opinion that
Presidio likely was infringing.”
(Def. Mem. at 13.)
Plaintiffs, however, assert that undisputed evidence
in the record demonstrates that defendant has had a copy of the
‘791 Patent since 2002.
(Pl. Opp. at 18 (citing Defendant’s
Response to Interrogatory No. 8, Declaration of Peter Snell in
Opposition to Defendant’s Motion (“Snell Opp. Decl.”), ECF No.
122-2, Ex. 9, ECF No. 122-11, at 27 (“Presidio was aware of the
‘791 patent no later than May 6, 2002.”) and Alan Devoe
Deposition Transcript (“A. Devoe Tr.”), JDTA Appx. A, at 105:1925 (testifying, as Rule 30(b)(6) witness, that defendant first
became aware of the ‘791 Patent in 2002).)
Plaintiffs also note
evidence establishing that, in 2008, Mr. Lambert Devoe, who
plaintiffs characterize as defendant’s co-owner and the manager
of the BB capacitor product line, received an email marked “high
importance” with the subject line “Personal: (2) ATC Patents”
that attached the cover page of the ‘791 Patent.
(Pl. Opp. at
19; L. Devoe Tr., JDTA Appx M at 113:22-115:21.)
Viewing this evidence in the light most favorable to
plaintiffs and drawing all inferences in their favor, the court
39
cannot conclude at the summary judgment stage that a finding
that defendant did not act with sufficient culpability to
warrant enhanced damages under 35 U.S.C. § 284 would be an
appropriate exercise of the court’s discretion.
Accordingly,
the court denies defendant’s motion for summary judgment as to
plaintiffs’ claim for enhanced damages under 35 U.S.C. § 284
with respect to infringement of claim 2 of the ‘791 Patent.
E.
Definiteness
Defendant seeks summary judgment that the ‘547 Patent
is invalid for indefiniteness because there is no reasonably
certain standard for determining what constitutes a
“substantially L-shaped termination,” or what constitutes a
“negligible” amount of termination on the top surface of a
capacitor.
(Def. Mem. at 14-23.)
“[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.,
134 S. Ct. 2120, 2124 (2014).
Further, patents enjoy a
“presumption of validity, a presumption not to be overthrown
except by clear and cogent evidence.”
Microsoft Corp. v. I4I
Ltd. P’ship, 564 U.S. 91, 101 (2011) (quoting Radio Corp. of
America v. Radio Engineering Laboratories, 293 U.S. 1, 2
40
(1934)); see also 35 U.S.C. § 282(a) (providing that a patent
and each of its claims “shall be presumed valid,” and “[t]he
burden of establishing the invalidity of a patent or any claim
thereof shall rest on the party asserting such invalidity.”).
Thus, invalidity, including by reason of indefiniteness, must be
proven by clear and convincing evidence.
Microsoft, 564 U.S. at
95.
Although indefiniteness is ultimately a question of
law, Teva Pharm. USA, Inc. v. Sandoz, Inc., 789 F.3d 1335, 1341
(Fed. Cir. 2015) (quoting Wellman, Inc. v. Eastman Chem. Co.,
642 F.3d 1355, 1365-66 (Fed. Cir. 2011)), “[t]he sufficiency of
a patent’s written description is a question of fact.”
Scanner
Techs. Corp. v. Icos Vision Sys. Corp., N.V., 253 F. Supp. 2d
624, 633 (S.D.N.Y. 2003) (citing Amgen Inc. v. Hoechst Marion
Roussel, Inc., 314 F.3d 1313, 1330 (Fed. Cir. 2003) and Enzo
Biochem, Inc. v. Gen-Probe Inc., 296 F.3d 1316, 1324 (Fed. Cir.
2002)), adhered to on reconsideration, No. 00-CV-4992(DC), 2003
WL 1961565 (S.D.N.Y. Apr. 28, 2003); see also Teva
Pharmaceuticals, 789 F.3d at 1342 (“Understandings that lie
outside the patent documents about the meaning of terms to one
of skill in the art or the science or state of the knowledge of
one of skill in the art are factual issues.”).
In arguing that the ‘547 Patent is indefinite,
defendant devotes significant argument, and defendant’s expert
41
expounds expansively, on the existence of various capacitor
termination shapes and the difficulty of determining whether a
termination is or is not L-shaped, as well as the difficulty of
distinguishing between L-shaped terminations and those with
other shapes, such as U-shaped terminations.
(See Def. Mem. at
15-19; Randall Report, DSMF Ex. F, ECF No. 120-8, ¶¶ 547-83.)
Defendant and its expert raise similar arguments and opinions
regarding the purported lack of a reasonably certain standard
for determining what constitutes a “negligible” amount of
termination on the top surface of a capacitor.
at 19-23; Randall Report ¶¶ 585-602.)
(See Def. Mem.
Importantly, all of
defendant’s arguments go to the sufficiency of the relevant
descriptions in the ‘547 Patent.
However, plaintiffs have submitted the expert report
of Dr. Stanley R. Shanfield, which opines that a person of skill
in the art would understand the term “substantially L-shaped
terminations” and be able to determine whether specific
terminations are substantially L-shaped.
(Shanfield Report,
DSMF Ex. G, ECF No. 120-9, ¶¶ 199-201.)
This alone creates a
disputed issue of material fact as to the sufficiency of the
written description because a reasonable finder of fact could
conclude, taking into account both Dr. Shanfield’s opinion and
Dr. Randall’s opinion, that defendant cannot prove
indefiniteness by clear and convincing evidence.
42
See Scanner
Techs., 253 F. Supp. 2d at 633 (“[I]f there is conflicting
evidence as to what one of ordinary skill in the art would have
known, resolution of that conflict is not appropriate on a
motion for summary judgment.” (quoting Levi Strauss & Co. v.
Golden Trade, S.r.L., No. 90-CV-6291 (RPP), 1995 WL 710822, at
*11 (S.D.N.Y. Dec. 1, 1995))).
Furthermore, the ‘547 Patent was challenged as part of
the inter partes review proceedings that defendant initiated,
and the PTAB concluded that defendant had failed to show, by a
preponderance of the evidence, that the challenged claims were
unpatentable.
(‘547 Decision, ECF No. 85-7, at 2.)
Although
the inter partes review challenge focused on the challenged
claims’ alleged obviousness, (id. at 7-20), the PTAB’s opinion
necessarily involved construction and application of the terms
“substantially L-shaped” and “negligibly over the top surface.”
(See id. at 3-8 (construing ‘547 Patent’s terms.)
This court
also previously construed these terms in its claim construction
order.
(Cl. Constr. Order at 16-22.)
Defendant does not
explain how the court and PTAB were both able to construe these
terms, yet any reasonable finder of fact must conclude that they
are indefinite on a clear and convincing evidence standard. 12
The court refers to the PTAB proceedings only to note that the PTAB was
able to understand the relevant claims in the ‘547 Patent. Nothing in this
order should be taken as a conclusion that 35 U.S.C § 315(e)(2) bars
defendant, as petitioner in the inter partes review proceeding, from arguing
indefiniteness. Section 315(e)(2) can only apply to bar invalidity arguments
12
43
The record before the court demonstrates the existence
of a genuine dispute of material fact as to the sufficiency of
descriptions in the ‘547 Patent.
Accordingly, the court denies
defendant’s motion for summary judgment as to the invalidity of
the ‘547 Patent based on indefiniteness.
F.
Noninfringement
Defendant seeks summary judgment of noninfringement as
to both the ‘547 Patent and the ‘791 Patent.
Subject to certain exceptions not applicable here,
patent infringement consists of “mak[ing], us[ing], offer[ing]
to sell, or sell[ing] any patented invention” without authority.
35 U.S.C. § 271(a).
“A two-step process is used in the analysis
of patent infringement: first, the scope of the claims are
determined as a matter of law, and second, the properly
construed claims are compared to the allegedly infringing device
to determine, as a matter of fact, whether all of the
limitations of at least one claim are present, either literally
or by a substantial equivalent, in the accused device.”
Mich &
Mich. TGR, 128 F. Supp. 3d at 631 (quoting Teleflex, Inc. v.
Ficosa N. Am. Corp., 299 F.3d 1313, 1323 (Fed. Cir. 2002)).
on “ground[s] that the petitioner raised or reasonably could have raised
during that inter partes review.” The grounds for invalidity that can be
raised in inter partes review are specified in 35 U.S.C. § 311, and from that
section and those to which it refers, it appears that definiteness is outside
the scope of inter partes review.
44
1.
Special Considerations for Summary Judgment in
Patent Infringement Cases
“‘Infringement is itself a fact issue,’ [and]
therefore courts have repeatedly emphasized that patent claims
‘are ones in which issues of fact often dominate the scene and
summary judgment is allowed only with great caution.’”
Mich &
Mich. TGR, 128 F. Supp. 3d at 630 (quoting SRI Int. v.
Matsushita Elec. Corp. of America, 775 F.2d 1107, 1116 (Fed.
Cir. 1985) and Acrison, Inc. v. Schenck Corp., 973 F.Supp. 124,
126 (E.D.N.Y. 1997)).
Nevertheless, summary judgment is appropriate if “no
genuine issue of material fact exists and no expert testimony is
required to explain the nature of the patented invention or the
accused product or to assist in their comparison,” id. at 629
(citing Amhil Enterprises Ltd. v. Wawa, Inc., 81 F.3d 1554,
1557-58 (Fed. Cir. 1996)), and if “no reasonable jury could find
that every limitation recited in a properly construed claim
either is or is not found in the accused device either literally
or under the doctrine of equivalents.”
Id. at 631 (quoting
Spiel Associates, Inc. v. Gateway Bookbinding Sys., Ltd., No.
03-CV-4696, 2010 WL 546746, at *6 (E.D.N.Y. Feb. 16, 2010)).
Here, because plaintiffs do not argue infringement
under the doctrine of equivalents (DSMF ¶ 143; PSMF ¶ 143),
summary judgment will be appropriate only if “no reasonable jury
45
could find that every limitation recited” in the relevant claims
is literally present in the accused products.
Id. at 631
(citation omitted).
2.
The ‘547 Patent
Defendant seeks summary judgment that the accused
devices do not infringe the ‘547 Patent as they do not
incorporate “substantially L-shaped terminations” or
“terminations . . . extending negligibly” on or over “a top
surface” of the device body. 13
(Def. Mem. at 23-31.)
All claims
of the ‘547 Patent require the presence of both of these
limitations.
(DSMF ¶ 130, 159; PSMF ¶ 130, 159.)
The parties’ briefing makes clear that the proper
construction of “termination” is critically important to, if not
dispositive of, this portion of defendant’s motion for summary
judgment.
For instance, in arguing that the accused products do
not have “substantially L-shaped terminations,” defendant
contends that plaintiffs’ infringement theory is contingent on
external electrodes, or surface pads, which are located on the
bottom of the accused products, forming part of the device
termination and thereby constituting the lower portion of the
Claims 1-11 of the ‘547 Patent require terminations extending
“negligibly over a top surface of said device,” while claims 12-18 require
terminations extending “negligibly on a top surface of said device.” (‘547
Patent, ECF No. 1-3, at 6:12-18, 7:4-8.) Although plaintiffs note this
differing language, (PSMF ¶ 159), they do not contend that “over” and “on”
have materially different meanings.
13
46
“L.”
(Def. Mem. at 25-27.)
Defendant further contends that the
record establishes that surface pads cannot be considered part
of the termination and directs the court to the deposition
testimony of two of plaintiffs’ engineers, as well as to Dr.
Randall’s expert report in support of this contention.
Mem. at 26-27.)
Defendant also argues that the accused devices
have U-shaped terminations, not L-shaped ones.
23-25.)
(Def.
(Def. Mem. at
In advancing this argument, defendant implicitly
contends that the “dipping process used for all of the accused
devices,” which is not used to apply surface pads, constitutes
the sole means for applying terminations, at least with respect
to the accused products.
(See Id.)
Plaintiffs, for their part, do not challenge
defendant’s assertion that their infringement theory is
contingent on surface pads constituting a portion of the
termination structure.
Instead, plaintiffs contend that “[t]he
surface pads or external electrodes of the accused . . .
capacitors are terminations,” (PSMF ¶ 144), and point to the
report of Dr. Hillman in which he opines that the combined
structure including dipped end terminations and surface pads
forms the capacitor’s termination structure.
(Pl. Opp. at 30
(citing, in relevant part, Hillman Report DSMF Ex. M, ECF No.
120-15, ¶¶ 40, 41, 51, 64).)
Determining which of these
47
arguments should prevail requires an operable definition of
“terminations.”
The proper construction of “terminations” is also
critically important to determining whether the accused devices’
terminations extend “negligibly over a top surface.”
As the
court stated in its claim construction order, “[b]y definition,
the top configuration must be smaller than the bottom
configuration in order for the top termination portion to extend
‘negligibly,’ and for the terminations as a whole to appear
‘substantially L-shaped.’”
(Cl. Constr. Order at 22.)
As noted
above, surface pads are situated on the bottom of the accused
products’ device body, and thus, a comparison of the top and
bottom termination configurations of the accused devices
necessarily requires clarity as to whether surface pads are part
of the termination structure.
Although the court has not previously construed
“terminations,” the parties’ briefing makes clear that the court
must do so in order to adjudicate defendant’s motion for summary
judgment.
See O2 Micro Int’l Ltd. v. Beyond Innovation Tech.
Co., 521 F.3d 1351, 1360 (Fed. Cir. 2008) (“When the parties
raise an actual dispute regarding the proper scope of these
claims, the court, not the jury, must resolve that dispute.”
(citation omitted)); see also Vivid Techs., Inc. v. Am. Sci. &
Eng’g, Inc., 200 F.3d 795, 803 (Fed. Cir. 1999) (stating that
48
the court must construe those terms that are in controversy to
the extent necessary to resolve the controversy); Markman v.
Westview Instruments, Inc., 517 U.S. 370, 372 (1996) (“We hold
that the construction of a patent, including terms of art within
its claim, is exclusively within the province of the court.”).
Importantly, the court must construe “terminations” “objectively
and without reference to the accused device[s].”
200 F.3d at 803.
Vivid Techs.,
After the court has “properly construed,” that
is, “determined as a matter of law,” the meaning of
“terminations” as recited in the ‘547 Patent, the court can then
determine whether the limitations at issue are present in the
accused devices.
Teleflex, 299 F.3d at 1323.
As the court has noted, at the initial claim
construction stage, the parties did not include “terminations”
on their Joint Disputed Claims Chart, (see JDTC, ECF No. 48-1),
and agreed that terms not appearing on that chart should be
“given their plain and ordinary meaning.”
48 at 1.)
(JDTC Notice, ECF No.
The record, however, contains very little information
as to the plain and ordinary meaning of “terminations,” in
capacitors.
Indeed, neither party has suggested a “plain and
ordinary meaning,” nor has either party directed the court to
any information that would aid in the objective construction of
“terminations,” even as the parties spar over whether the
49
accused products’ surface pads fall within the (undefined) plain
and ordinary meaning of terminations.
Additionally, the court is aware of only two items of
information in the record, both from the Markman hearing, that
shed any light on the objective “plain and ordinary meaning” of
“terminations”: Dr. Shanfield’s statement that terminations are
“the things at the ends of the capacitor,” (Markman Tr., ECF No.
80, at 23:1-10), and Dr. Randall’s testimony that electrodes are
connected to the termination end.
(Id. at 98:17-20.)
The
parties have therefore put the proverbial cart, i.e.,
determining whether the accused products practice a limitation,
before the horse, i.e., properly construing that limitation.
On this record, the court is not inclined to supply
and apply an objective “plain and ordinary meaning” for
“terminations” without first giving the parties another
opportunity to elucidate their respective positions regarding
that meaning.
Although the court has “wide latitude” with
respect to claim construction such that it “may approach the
task in any way that it deems best,” Ballard Med. Prods. v.
Allegiance Healthcare Corp., 268 F.3d 1352, 1358 (Fed. Cir.
2001), the Federal Circuit has not looked favorably on at least
one instance in which a district court has decided a claim
construction issue without affording litigants the opportunity
to be heard on claim construction, even where the parties had
50
previously stipulated regarding the proper construction of the
claim at issue and later disputed the term.
See TNS Media
Research, LLC v. Tivo Research & Analytics, Inc., 629 F. App’x
916, 939 (Fed. Cir. 2015) (vacating award of summary judgment
where district court sua sponte decided case determinative claim
construction issue without input from either party and
collecting cases). 14
Additionally, Federal Circuit precedent indicates that
summary judgment is inappropriate absent a “focused and
systematic claim-construction analysis” by the district court.
See Frans Nooren Afdichtingssystemen B.V. v. Stopaq Amcorr Inc.,
744 F.3d 715, 721, 725 (Fed. Cir. 2014) (vacating award of
summary judgment and remanding to district court for further
claim construction where there was “insufficient exploration in
the record . . . of too many questions of apparent relevance to
identifying a proper construction of the limitation.”).
The
record here precludes a “focused and systematic” analysis
The circumstances in which the district court found itself in TNS Media
Research are somewhat similar to the circumstances here. In that action
during claim construction, the parties agreed to construe a limitation term
in a certain way. 629 F. App’x at 938. At the summary judgment stage,
however, the parties “contested whether they actually agreed how [the
limitation term] should be construed,” specifically by disputing whether a
term in their stipulated construction should itself be defined. Id. “In
order to resolve [the] summary judgment motion, the district court decided to
further construe the parties’ stipulated construction. It then applied this
second construction to the disputed . . . [p]roducts, without further input
from the parties.” Id. The Federal Circuit found this procedure improper.
Id. Although the Federal Circuit’s decision in TNS Media Research was not
selected for publication in the Federal Reporter, it nevertheless gives the
court significant pause as to the propriety of construing “terminations”
without first inviting the parties to weigh in more directly on the issue.
14
51
regarding the proper construction of “terminations,” and, as
suggested above, raises the distinct possibility that any effort
at such an analysis would be improper.
See TNS Media Research,
629 F. App’x at 939 (vacating grant of summary judgment
“[b]ecause the district court improperly construed the parties’
stipulation and [decided] summary judgment based on that
construction, without affording [either party] notice or
opportunity to present argument about the appropriate
construction”).
In summary, the instant action has given rise to an
occurrence that the Federal Circuit describes as “frequent” in
patent litigation: the parties have stipulated to a construction
of a term, only to for it to become clear that “a further
construction is necessary.”
GE Lighting Sols., LLC v. AgiLight,
Inc., 750 F.3d 1304, 1310 (Fed. Cir. 2014).
In light of the
importance of the word “terminations” and the paucity of
information in the record that could guide the court in
determining its “plain and ordinary meaning,” the court will
avail itself of its “wide latitude” with respect to claim
construction and decline to decide the issue in connection with
the instant motion.
The court will therefore deny defendant’s motion for
summary judgment of noninfringement with respect to the ‘547
Patent.
The proper construction of “terminations” as recited in
52
the ‘547 Patent’s limitations is an issue of law, Markman, 517
U.S. at 372, and absent such construction, the court cannot
conclude that defendant is entitled to judgment as a matter of
law.
As set forth above, the court cannot properly construe
“terminations” on the record before it, and denies defendant’s
motion on noninfringement of the ‘547 Patent without prejudice
to defendant’s ability to renew its motion either following, or
concurrently with, the aforementioned supplemental claim
construction proceedings, as the parties may agree and subject
to the court’s approval. 15
The parties are directed to confer
and, within seven (7) days of entry of this order, submit a
joint letter to the court setting forth a joint plan for claim
construction proceedings with respect to the word “terminations”
The court notes that defendant also moves for summary judgment of
noninfringement of the ‘547 Patent, based on its contention that the presence
of termination material on the lateral sides of the accused products’ device
bodies precludes a finding that the accused products’ terminations are
“substantially L-shaped.” (Def. Mem. at 24-25.) The court previously
rejected defendant’s effort to add to the “substantially L-shaped” limitation
“further clarifying language that ‘terminations that extend around the
lateral sides of the device body[] are excluded.” (See Cl. Constr. Order at
17-20.) In rejecting defendant’s proposed language, the claim construction
order states that “[t]erminations having a U-shape are already excluded by
the ordinary meaning of ‘substantially L-shaped,’ because a structure with
‘terminations that extend around the lateral sides’ of a device body would
not be L-shaped.” (Id. at 20.) In other words, terminations extending onto
the lateral sides of a device body are excluded by the ordinary meaning of
“substantially L-shaped” to the extent the presence of termination material
on the lateral sides of the device renders the termination other than
“substantially L-shaped,” but only to that extent. The court therefore
declines to award summary judgment to defendant based on the mere presence of
termination material on the lateral sides of the accused devices. The term
“terminations” must be construed before the court can determine whether there
are material disputes in the evidence as to the shape of the accused devices’
terminations. The court reiterates that this denial of summary judgment is
without prejudice to defendant’s ability to renew its motion as to
noninfringement of the ‘547 Patent as set forth in this order.
15
53
as recited in the ‘547 Patent, including a briefing schedule and
a statement as to whether a hearing is necessary.
3.
The ‘791 Patent
Defendant’s motion for summary judgment regarding
noninfringement of the ‘791 Patent is focused on the sole claim
remaining at issue, claim 2.
Defendant characterizes that claim
as requiring first and second dielectric layers, and requiring
that those layers be coextensive in length as well as in width.
(DSMF ¶ 167.)
Plaintiffs dispute defendant’s characterization
and assert that the claim requires that “the first dielectric
layer of the capacitor . . . have a length dimension that is coextensive with the length dimension of a second dielectric layer
of that capacitor and [that] the first dielectric layer . . .
also have a width dimension that is co-extensive with a width
dimension of that second dielectric layer.”
(PSMF ¶ 167.)
These statements appear to employ different words to convey the
same concept.
Defendant seeks summary judgment of noninfringement of
the ‘791 Patent based on its assertion that plaintiffs’ evidence
is insufficient as a matter of law to demonstrate that the
coextensive length and width limitations are present in the
accused products.
(Def. Mem. at 31.)
In support of its
assertion, defendant cites several exhibits in plaintiffs’
expert that depict both side cross-section views and end cross54
section views of BB capacitors, but with respect to each
exhibit, the side view and the end view depict different
capacitor units.
(Id. at 31-32.)
With respect to the
individual capacitor depicted in the side view, there is no
evidence regarding the width of its dielectric layers, and with
respect to the individual capacitor depicted in the end view,
there is no evidence regarding the length of its dielectric
layers.
(Id.)
Defendant also includes a side cross section of a
Presidio BB capacitor in size 0302, which was initially
presented by plaintiffs’ expert and then annotated by Dr.
Randall.
(Id. at 33-34.)
The relevant image is as follows:
(Id. at 34.)
55
In this image, the first dielectric layer is depicted
in light blue and labeled with the number “1,” and the second
dielectric layer is shaded in depicted and labeled with the
number “5.”
(Id.)
As can be seen above, the relevant layers do
not appear to have the same width.
Defendant submits that the
same is true for each of the four exhibits to the Hillman
Report, and that the Randall Report includes further exhibits
establishing that either the lengths or the widths of the first
and second dielectric layers are not equal.
(Def. Mem. at 34-
35.)
In opposition to defendant’s motion, plaintiffs offer
sufficient evidence to create a genuine issue of fact for trial
and enable a reasonable finder of fact to determine that
Presidio’s BB capacitors do practice the ‘791 Patent.
As
plaintiffs note, in discovery, plaintiffs presented defendant
with an image of a Presidio BB capacitor and defendant
“[a]dmitted” that the length and width dimensions of its first
and second dielectric layers were coextensive.
(Pl. Opp. at 34;
Excerpts of Response to Request for Admission No. 50, Snell Opp.
Decl. Ex. 18, ECF No. 122-20 at 20-21.)
Plaintiffs also offer Dr. Hillman’s report and
rebuttal report, which provide sufficient evidence for a
reasonable finder of fact to conclude that the accused products
practice the ‘791 Patent for two reasons.
56
First, Dr. Hillman’s
report includes analysis that, viewed in the light most
favorable to plaintiffs, would establish that the relevant
dielectric layers in the accused products are coextensive.
As
an example, the following image of a side cross-section of a
Presidio BB capacitor would support a finding of coextensiveness
in the length dimension:
(Pl. Opp. at 35 (citing Hillman Report, DSMF Ex. M, ECF No. 12015, Ex. 32 at 6).)
The portion of the Hillman Report to which plaintiffs
cite also includes a similarly annotated end cross-section of a
Presidio BB capacitor, which would support a finding of
coextensiveness in the width dimension.
Specifically, it
includes the following image of the width dimension, in which
the first and second dielectric layers in a Presidio BB
capacitor are shaded in blue (1) and green (5):
57
(Hillman Report Ex. 32 at 6.)
Second, Dr. Hillman’s rebuttal report includes
opinions that, viewed in the light most favorable to plaintiffs,
raises a disputed material fact as to Dr. Randall’s
coextensiveness analysis, thus preventing Dr. Randall’s from
serving as the basis for granting summary judgment based on
coextensiveness of dielectric layers.
Of particular relevance
to the instant motion, Dr. Hillman disputes the manner in which
Dr. Randall positioned line markers in analyzing the dielectric
layers’ length and width.
(Hillman Rebuttal, DSMF Ex. N, ECF
No. 120-16, ¶ 3.)
Dr. Hillman also opines that Dr. Randall’s methodology
is flawed because Dr. Randall improperly relies on “localized
imperfections in the images that are not characteristic of the
capacitors” in determining coextensiveness, and “point[s] to
regions too close to the corners or vertices of the capacitor to
be indicative of the actual length and width of the dielectric
58
layers.”
(Id.)
Further, in support of each of his contentions,
Dr. Hillman identifies specific diagrams or images in Dr.
Randall’s analysis.
(Id.)
Dr. Hillman also states that he
“further polished and reimaged” at least certain capacitors
identified in his initial report to “confirm that Dr. Randall
only identifies localized imperfections in [the] original
images.”
(Hillman Rebuttal ¶ 3 and Ex. 2.)
The court also notes that Dr. Randall, who is
defendant’s expert, gave deposition testimony that a reasonable
finder of fact could conclude undermines Dr. Randall’s opinion
as to coextensiveness in light of Dr. Hillman’s rebuttal report.
Dr. Randall testified as follows:
Q: Do you agree that when multi-layer capacitors
are cut longitud[inal]ly and transversely during
the manufacturing process, all of their
dielectric layers will be coextensive in length
and width?
A: If done properly, yes.
(Randall June 13, 2017 Deposition Transcript, JDTA Appx. J at
68:2-7.)
Additionally, for purposes of defeating a motion for
summary judgment, plaintiffs more than sufficiently address
defendant’s efforts to cast doubt on Dr. Hillman’s methodology.
Plaintiffs state that Dr. Hillman “analyzed the length and width
dimensions of the dielectric layers by polishing a first
capacitor in the length dimension and polishing a different
59
capacitor of the same type (i.e., same lot) in the width
dimension.”
16
(Pl. Opp. at 34.)
In other words, to analyze the
length, Dr. Hillman polished off an end portion of the width
dimension, thereby destroying a portion of the width dimension.
Similarly, to analyze the width dimension, Dr. Hillman polished
off an end portion of the length dimension, thereby destroying a
portion of the length dimension.
Plaintiffs also point to
testimony from defendant’s expert that confirms the viability of
this explanation.
Specifically, when deposed, Dr. Randall
testified as follows:
Q: After Chip 1 was grinded and polished in the
lengthwise direction to analyze coextensiveness
in the length direction, it would not have been
possible to then grind and polish that same Chip
1 capacitor in the widthwise direction to analyze
coextensiveness in the width direction, correct?
A: For both sides of the width, that is correct.
To determine whether it’s not coextensive, at
least with respect to one side, you could. But
only for that. So you couldn’t understand that
the entire width is coextensive. It’s been
destroyed.
Q: You did not analyze the length and width of
the bottom two dielectric layers of the same
capacitor anywhere in your reports in this case,
correct?
A: No. I didn’t believe I needed to.
(Randall July 18, 2017 Deposition Transcript, JDTA Appx. L at
354:3-24.)
Plaintiffs do not actually cite, and the court cannot locate, any
statement in Dr. Hillman’s reports or the transcript of his deposition
establishing that this is actually how Dr. Hillman conducted his analysis,
but defendant does not dispute this contention.
16
60
Plaintiffs have responded to defendant’s argument that
their plaintiffs’ evidence is flawed with an explanation of the
process by which capacitor units were compared, and which finds
support in the deposition testimony of defendant’s expert
witness.
Moreover, plaintiffs’ explanation addresses
defendant’s contention that plaintiffs’ failure to submit
evidence regarding the coextensiveness of the length and width
dimensions of the first and second dielectric layers in any
single, individual capacitor unit is fatal to plaintiffs’
infringement case with respect to the ‘791 Patent.
In summary, the court concludes that whether the
accused products in fact contain first and second dielectric
layers that are coextensive in the length and width dimensions
remains genuinely disputed.
Plaintiffs’ expert opinion provides
evidence upon which a reasonable finder of fact could find that
the accused products do contain such coextensive layers, and
thus practice the limitation of claim 2 of the ‘791 Patent that
is at issue in the instant motion.
The record also contains a
viable explanation of plaintiffs’ failure to submit both side
and end cross-section views of any single, individual capacitor
unit, and a viable rebuttal of Dr. Randall’s expert opinion.
Accordingly, defendant’s motion for summary judgment of
noninfringement with respect to claim 2 of the ‘791 Patent is
denied.
61
II.
Plaintiffs’ Motion for Summary Judgment as to Equitable
Defenses
Plaintiffs seek summary judgment as to defendant’s
asserted equitable defenses of laches, equitable estoppel, and
waiver.
Equitable defenses are “highly fact intensive and not
typically amenable to summary judgment,” Gucci Am., Inc. v.
Guess?, Inc., 843 F. Supp. 2d 412, 420 (S.D.N.Y. 2012) (citing
U.S. Bank N.A. v. Ables & Hall Builders, 582 F.Supp.2d 605, 611
(S.D.N.Y. 2008)), but summary judgment as to an affirmative
defense is appropriate where the moving party establishes that
there is no genuine disputed issue of material fact as to any
element of the defense and the moving party is entitled to a
judgment as a matter of law.
See, e.g., A.C. Aukerman Co. v.
R.L. Chaides Const. Co., 960 F.2d 1020, 1039 (Fed. Cir. 1992)
(discussing summary judgment standard as applied to equitable
defenses), abrogated by SCA Hygiene Prod. Aktiebolag v. First
Quality Baby Prod., LLC, 137 S. Ct. 954 (2017); Wanlass v. Gen.
Elec. Co., 148 F.3d 1334, 1337 (Fed. Cir. 1998) (discussing
summary judgment standard where defendant in patent infringement
action sought summary judgment in its favor on a laches
defense); see also Dunkin’ Donuts Franchised Restaurants LLC v.
Tim & Tab Donuts, Inc., No. 07-CV-3662(KAM)(MDG), 2009 WL
2997382, at *4-5 (E.D.N.Y. Sept. 15, 2009) (discussing summary
62
judgment standard where plaintiffs sought summary judgment as
to, inter alia, defendant’s affirmative defenses).
“However, when there are disputed underlying factual
elements, summary judgment is inappropriate unless the movant
would prevail even on the non-movant’s view of the facts.”
Aspex Eyewear Inc. v. Clariti Eyewear, Inc., 605 F.3d 1305, 1310
(Fed. Cir. 2010) (citing Anderson, 477 U.S. at 247-48)
(reviewing summary judgment that patentee was equitably estopped
from pursuing infringement claim).
A.
Laches
Plaintiffs seek summary judgment that defendant may
not assert laches as a matter of law.
(Pl. Mem. at 1.)
“Laches
is a defense developed by courts of equity to protect defendants
against unreasonable, prejudicial delay in commencing suit.”
SCA Hygiene, 137 S. Ct. at 960 (internal quotation marks and
citation omitted).
As an equitable defense, laches is
“committed to the sound discretion of the district court.”
Aukerman, 960 F.2d at 1032 (citations omitted).
A.C.
To establish a
laches defense, a defendant “must show that plaintiffs had
knowledge of defendant’s [challenged conduct], that plaintiff[s]
inexcusably delayed in taking action with respect thereto, and
that defendant[] will be prejudiced by permitting plaintiffs
inequitably to assert [their] rights at this time.”
Citibank,
N.A. v. Citytrust, 644 F. Supp. 1011, 1012 (E.D.N.Y. 1986)
63
(quoting Cuban Cigar Brands, N.V. v. Upmann International, Inc.,
457 F. Supp. 1090, 1096 (S.D.N.Y. 1978), aff’d, 607 F.2d 995 (2d
Cir. 1979)).
Plaintiffs contend that the Supreme Court’s decision
in SCA Hygiene Products Aktiebolag v. First Quality Baby
Products, LLC, 137 S. Ct. 954 (2017), is controlling and bars
defendant’s laches defense.
(Pl. Mem. at 1, 3-4.)
Defendant,
for its part, contends that plaintiffs’ reading of SCA Hygiene
is overbroad as that case stands only for the proposition that
“[l]aches cannot be invoked as a defense against a claim for
damages brought within [35 U.S.C.] § 286’s 6-year limitations
period.”
(Def. Opp. at 2 (quoting SCA Hygiene, 137 S. Ct. at
967 (syllabus)) (emphasis added by defendant).)
Defendant
therefore asserts that laches remains available as a defense to
claims for equitable relief, which defendant contends include
claims seeking an award of ongoing royalties or for a permanent
injunction.
(Id. at 3 (quoting SCA Hygiene Prods. Aktiebolag v.
First Quality Baby Prods., 807 F.3d 1311, 1332 (Fed. Cir. 2015)
and eBay Inc. v. MercExchange, LLC, 126 S. Ct. 1837, 1838 (2006)
(syllabus)).)
Neither party argues that any material facts are in
dispute as to the availability of laches as a defense – instead,
the question before the court is whether the laches defense is
available as a matter of law.
64
In SCA Hygiene, the Supreme Court held that its
reasoning in Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct.
1962, 1967 (2014), in which the court held that “laches cannot
preclude a claim for damages incurred within the Copyright Act’s
3 year limitations period . . . applies to a similar provision
of the Patent Act, 35 U.S.C. § 286,” 137 S. at Ct. 959, and
consequently, “[l]aches cannot be interposed as a defense
against damages where the infringement occurred within the
period prescribed by § 286.”
Id. at 967.
The Supreme Court’s
decision in SCA Hygiene therefore clearly precludes defendant
from raising a laches defense as to damages within the
limitation period set forth in 35 U.S.C. § 286.
Although SCA Hygiene did not expressly address the
continued vitality of laches as a defense to equitable relief,
the Petrella court did, although briefly, and wrote that “in
extraordinary circumstances, laches may bar at the very
threshold the particular relief requested by the plaintiff.
a plaintiff’s delay can always be brought to bear at the
And
remedial stage, in determining appropriate injunctive relief,
and in assessing the ‘profits of the infringer . . .
attributable to the infringement.’”
1967 (quoting 17 U.S.C. § 504(b)).
Petrella, 134 S. Ct. at
In keeping with these
decisions, the court finds that, should this case reach the
65
remedial stage, defendant may argue delay by plaintiffs in
opposing injunctive relief.
The availability of laches as a defense to a claim for
royalties presents a more difficult question.
The Petrella
court noted that the Copyright Act provides for recovery of
profits as a remedy for copyright infringement and that “[l]ike
other restitution remedies, ‘recovery of profits is not easily
characterized as legal or equitable,’ for it is an ‘amalgamation
of rights and remedies drawn from both systems.’”
Petrella 134
S. Ct. at 1967 n.1 (quoting Restatement (Third) of Restitution
and Unjust Enrichment § 4, comment (b)).
The Petrella court
further wrote that “[g]iven the ‘protean character’ of the
profits-recovery remedy, we regard as appropriate its treatment
as ‘equitable’ in this case,” id. (quoting Restatement (Third)
of Restitution and Unjust Enrichment § 4, comment (c)), but
provided no further guidance as to how other, potentially
similar, remedies such as an award of ongoing royalties should
be treated in other cases.
Here, however, plaintiffs stated on
the record at oral argument that they did not believe that
awarding plaintiffs summary judgment as to laches would preclude
defendant from raising plaintiffs’ “alleged undue delay in
filing suit” with respect to a potential ongoing royalty award,
should these proceedings reach that stage.
No. 113 at 5:6-22.)
66
(See Arg. Tr., ECF
Accordingly, the court will grant plaintiffs’ motion
for summary judgment as to the laches defense to liability and
damages, except for ongoing royalties based on plaintiffs’
concession, within the limitations period in 35 U.S.C. § 286.
Should this action reach the remedial stage, however, defendant
may assert laches, or “undue delay,” as against an award of an
ongoing royalty or injunctive relief.
B.
Equitable Estoppel
Plaintiffs also seek summary judgment as to
defendant’s equitable estoppel defense on the grounds that
defendant cannot prove the elements of the defense.
at 1.)
(Pl. Mem.
At oral argument, on the instant motion, defendant
stated that its “equitable estoppel defense is not intended to
be applicable to the ‘547 Patent.”
(Arg. Tr. at 13:5-7.)
The
court therefore only addresses equitable estoppel as to the ‘791
Patent.
As with laches, “the applicability of equitable
estoppel is ‘committed to the sound discretion of the trial
judge.’”
Radio Sys. Corp. v. Lalor, 709 F.3d 1124, 1130 (Fed.
Cir. 2013) (quoting A.C. Aukerman, 960 F.2d at 1028); see also
Aspex Eyewear, 605 F.3d at 1310 (“A summary judgment of
equitable estoppel is reviewed for an abuse of discretion.”
(citation omitted)).
An accused infringer must establish three
elements to establish an equitable estoppel defense:
67
(1) the patentee, through misleading conduct (or
silence), leads the alleged infringer to
reasonably infer that the patentee does not
intend to enforce its patent against the alleged
infringer; (2) the alleged infringer relies on
that conduct; and (3) the alleged infringer will
be materially prejudiced if the patentee is
allowed to proceed with its claim.
Radio Sys. Corp., 709 F. 3d at 1130 (citing A.C. Aukerman, 960
F.2d at 1028).
A party asserting equitable estoppel must establish
each of the three elements by a preponderance of the evidence,
and silence alone will not give rise to equitable estoppel.
Ferring B.V. v. Allergan, Inc., 253 F. Supp. 3d 708, 716
(S.D.N.Y. 2015) (quotations and citations omitted).
Therefore,
summary judgment in plaintiffs’ favor will be appropriate if,
viewing the record in the light most favorable to defendant, no
genuinely disputed issues of material fact remain and the court
could find that defendant cannot establish any of the three
elements by a preponderance of the evidence.
As noted above, although the applicability of
equitable defenses, including equitable estoppel, lies within
the sound discretion of the court, the defenses are nevertheless
“highly fact intensive and not typically amenable to summary
judgment.”
Gucci America, 843 F. Supp. 2d at 420; see also
Intelligent Digital Sys., LLC. v. Beazley Ins. Co., 906 F. Supp.
2d 80, 95 (E.D.N.Y. 2012) (“[Equitable e]stoppel is usually a
68
question of fact inappropriate for summary judgment.” (citations
omitted)); Mabus v. Gen. Dynamics C4 Sys., Inc., 633 F.3d 1356,
1365 (Fed. Cir. 2011) (“The issue of equitable estoppel is an
equitable determination, based on underlying findings of
fact.”)).
Defendant contends that plaintiffs misled it “through
(1) statements made by [p]laintiffs during a patent infringement
lawsuit involving the products accused of infringement in this
case, i.e., Presidio’s BB capacitors, and (2) [p]laintiffs’
five-year long silence and inaction thereafter, despite having
extensively analyzed Presidio’s BB capacitors and formed a
belief that those products infringe.”
(Def. Opp. at 4.)
The specific statements to which defendant refers
arise from the testimony of Ms. Kathleen Kelly, then a Vice
President at ATC, in Presidio Components Inc. v. American
Technical Ceramics Corp., No. 08-CV-335(IEG) (S.D. Cal.)
(“Presidio I”).
Ms. Kelly testified in December 2009 and stated
that ATC follows a “live and let live” policy with respect to
its intellectual property, and further stated that “one of
Presidio’s products actually infringes our Monsorno BMC patents
and we’ve never filed suit.” 17
(Def. Opp. at 6; Defendant’s
Response to Plaintiffs’ Statement of Material Facts (“RSMF”),
A “BMC” is a “buried (electrically isolated) layer capacitor,” which is
“generally regarded to be equivalent to two capacitors arranged in series
with each other.” ‘791 Patent, ECF No. 1-3, at 2:34-46.
17
69
ECF No. 117-1, ¶ 27 (quoting and citing Kelly Presidio I
Testimony (“Kelly Tr.”), RSMF Ex. 14, ECF No. 117-8, at 26:1422).)
Although not highlighted by defendant, Ms. Kelly also
testified that this policy was “set by [ATC’s] founder.”
(Kelly
Tr. at 26:14-22.)
To contextualize the significance of this statement,
defendant notes that the ‘791 Patent lists Richard Monsorno as
the inventor.
3, at 1.)
(Def. Opp. at 5; see also ‘791 Patent, ECF No. 1-
Defendant further notes that plaintiffs have conceded
that they purchased and acquired defendant’s BB capacitors no
later than November 2001.
(Def. Opp. at 4-5; RSMF ¶ 19 (citing
Plaintiffs’ Response to Interrogatory No. 4, RSMF Ex. 8, ECF No.
117-2).)
Furthermore, defendant contends that plaintiffs
repeatedly analyzed the defendant’s BB capacitors, including in
each year between 2001 and 2005.
(Def. Opp. at 5; RSMF ¶ 20
(citing RSMF Ex. 9, ECF No. 117-3 (documents appearing to
indicate that testing took place, including notes and test
results)).) 18
Defendant also directs the courts to evidence
indicating that, as early as 2004, plaintiffs formed a belief
that defendant’s capacitor infringed certain patents held by
plaintiffs, particularly a patent invented by Mr. Richard
18
Defendant characterizes these documents as exhibits to the deposition
of John Mruz, one of plaintiffs’ engineers, but the portions of the
deposition authenticating these exhibits do not appear to have been
submitted.
70
Monsorno.
(Def. Opp. at 5; RSMF ¶ 22 (citing RSMF Ex. 11, ECF
No. 117-5 (consisting of internal ATC communications and
including a statement from Mr. John Mruz, then an ATC employee,
that Presidio “use[s] our patented BMC configuration” to achieve
certain performance in certain capacitors)).)
Finally, defendant notes that ATC asserted “several
counterclaims” in the Presidio I case, but did not assert a
patent infringement counterclaim against Presidio’s BB
capacitors during the Presidio I litigation.
(RSMF ¶ 26 (citing
RSMF Ex. 13, ECF No. 117-7 (consisting of excerpts of court
orders in Presidio I)).)
Defendant contends that taken
together, Ms. Kelly’s testimony, the record evidence to which
defendant refers, and ATC’s failure to assert counterclaims in
the Presidio I litigation amount to a statement and inaction by
plaintiffs rising to the level of misleading conduct or silence
sufficient to establish the first element of an equitable
estoppel defense.
Defendant, however, ignores that the first element of
equitable estoppel requires that defendant establish more than
misleading conduct or silence by the patentee.
In addition to
showing misleading conduct or silence, a party asserting
equitable estoppel must also establish that the misleading
conduct or silence “le[d] the alleged infringer to reasonably
infer that the patentee does not intend to enforce its patent
71
against the alleged infringer.”
Radio Sys. Corp., 709 F.3d at
1130 (quoting A.C. Aukerman, 960 F.2d at 1028).
The record is devoid of any evidence that Ms. Kelly’s
statements at the Presidio I trial actually had such an effect
on defendant.
At oral argument, defendant’s counsel stated that
defendant’s response to an interrogatory established defendant’s
evidentiary basis for reliance.
(See Arg. Tr. at 15:14-18:24
(containing argument by defendant that its response to an
interrogatory, annexed as Exhibit 16 to the RSMF, forms the
evidentiary basis for defendant’s reliance on the Kelly
testimony).)
The court does not agree.
The interrogatory in
question requests that defendant “describe in detail the factual
bases” for its affirmative defenses, and the response does not
mention Ms. Kelly’s testimony at the Presidio I trial.
(See
Defendant’s Response to Interrogatory No. 7 (“Def. Resp. to
Interrog. No. 7”), RSMF Ex. 16, ECF No. 117-10, at 21-26.)
Further, the response identifies Mr. Alan Devoe and Mr. Lambert
Devoe as the persons most knowledgeable about defendant’s
affirmative defenses.
(Id. at 22-23.)
Plaintiffs deposed both
Alan and Lambert Devoe, (see generally A. Devoe Tr., JDTA Appx.
A and L. Devoe Tr., JDTA Appx. M), yet the record before the
court reflects no reference to Ms. Kelly’s testimony at the
Presidio I trial in either deposition.
72
Additionally, although defendant asserts that its
principals were in the courtroom during Ms. Kelly’s testimony,
the court cannot locate any evidentiary support for this
assertion in the record.
Neither Alan nor Lambert Devoe
submitted a declaration stating that they were in the courtroom
and heard Ms. Kelly’s testimony in December 2009 and relied on
her “live and let live” statement to infer that ATC would not
enforce its ‘791 Patent.
These same evidentiary shortfalls preclude a finding
that defendant actually relied on any misleading statement or
action.
Defendant points to a number of activities that it
contends it undertook in reliance on its belief that plaintiffs
would not enforce their rights in the ‘791 Patent, including
investments in product development and marketing, expansion of
manufacturing capabilities, and entry into building leases.
(Def. Opp. at 9; RSMF ¶ 29 (citing Def. Resp. to Interrog. No.
7.)
As noted, defendant submits no evidence establishing that
it was actually led to infer that plaintiffs would not enforce
their rights with respect to the ‘791 Patent, and therefore,
defendant cannot establish that it relied on such an inference.
Along similar lines, there is no evidentiary link
between, on the one hand, defendant’s own activities which
purportedly establish reliance and, on the other hand,
plaintiffs’ asserted statement and inaction on which defendant
73
claims it relied.
More specifically, defendant submits no
evidence that can support a conclusion that defendant’s
investment and expansion activity was undertaken in direct
reliance on Ms. Kelly’s Presidio I testimony.
In sum, even on defendant’s view of the facts, a
critical evidentiary link necessary to establish an equitable
estoppel defense is missing.
Thus, although the record contains
some circumstantial evidence that might be helpful to an
equitable estoppel claim, plaintiffs have not come forward with
sufficient evidence to enable a reasonable finder of fact to
conclude that they can establish the first two elements of
equitable estoppel by a preponderance of the evidence.
Accordingly, the court will, in an exercise of its discretion,
grant plaintiffs’ motion for summary judgment as to the
equitable estoppel defense.
C.
Waiver
Waiver is also within the trial court’s discretion.
See Qualcomm Inc. v. Broadcom Corp., 548 F.3d 1004, 1019 (Fed.
Cir. 2008) (citing A.C. Aukerman, 960 F.2d at 1028) (“We review
a district court’s judgment on the equitable defense of waiver
for an abuse of discretion.”).
The Federal Circuit has
suggested the applicability of two equitable doctrines of waiver
in patent actions: “true waiver” and “implied waiver.”
Qualcomm
Inc. v. Broadcom Corp., 548 F.3d 1004, 1020 (Fed. Cir. 2008).
74
Implied waiver applies where a patent owner has intentionally
failed to disclose the existence of a patent “in the face of a
duty to speak,” and is inapplicable to the instant action.
Id.
at 1021; see also (Pl. Mem. at 13 n.2.)
The Federal Circuit in Qualcomm further suggested, but
does not appear to have expressly endorsed the view, that “true
waiver” consists of a “voluntary or intentional relinquishment
of a known right.”
Id. at 1019.
Additionally, in Qualcomm, the
district court’s advisory jury instruction stated that
[i]n order to prove waiver, Broadcom must show by
clear and convincing evidence either that
Qualcomm, with full knowledge of the material
facts, intentionally relinquished its rights to
enforce the . . . patents [at issue] or that its
conduct was so inconsistent with an intent to
enforce its rights as to induce a reasonable
belief that such right has been relinquished.
Id. at 1020 (emphasis and citation omitted).
The Federal Circuit did not take issue with this
“formulation of the law of waiver.”
Id.
Additionally, although
the Federal Circuit does not appear to have expressly ruled on
the standard of proof required for waiver, it has upheld a
finding of implied waiver where there was “clear and convincing
evidence.”
See id. at 1021-22.
With respect to waiver, plaintiffs contend that the
undisputed facts demonstrate that they did not discover the
alleged infringement of the patents-in-suit until “shortly
75
before this lawsuit was filed,” (Pl. Mem. at 13.)
Consequently,
plaintiffs cannot have knowingly and intentionally relinquished
their rights with respect to their patents-in-suit.
As noted above, however, evidence in the record, when
viewed in the light most favorable to defendant, could establish
that plaintiffs had knowledge of the alleged infringement of the
‘791 Patent as early as 2004.
Specifically, defendant cites an
April 2004 e-mail in which, Mr. Mruz, then an ATC employee,
stated that one of defendant’s products uses plaintiffs’
“patented BMC configuration” to achieve certain performance in
capacitors.
(Def. Opp. at 5, 10; RSMF ¶ 22 (citing RSMF Ex. 11,
ECF No. 117-5 (including Mruz e-mail referencing “BMC
configuration”)).)
Mr. Mruz also sent a separate e-mail in
March 2004, in which he states that “Rich Monsorno’s BMC
Structure is used inside” Presidio’s latest broadband capacitor
product.
(RSMF Ex. 11, ECF No. 117-5 (including Mruz e-mail
with quoted language).)
Plaintiffs assert that, in the 2004 e-mails, Mr. Mruz
was referring to a BMC structure as disclosed by a different
Monsorno patent and not the ‘791 Patent, but plaintiffs’
evidence leaves significant room for dispute.
For instance,
plaintiffs assert that in the Presidio I litigation, Mr. Mruz
“testified that the term ‘BMC’ refers to ATC’s U.S. Patent No.
5,576,926, not the ‘791 Patent.”
76
(Plaintiffs’ Counter-Statement
of Material Facts (“CSMF”), ECF No. 118-1 ¶ 22.)
A review of
Mr. Mruz’s trial testimony, however, indicates that Mr. Mruz
testified that U.S. Patent No. 5,576,926 (the “‘926 Patent”)
discloses a BMC structure, not that the term “BMC structure” can
only refer to the ‘926 Patent.
(See Mruz Presidio I Testimony,
Snell Reply Declaration (“Snell Reply Decl.”), ECF No. 118-2,
Ex. 18, ECF No. 118-4, at 116:1-4 (“In fact, what we found was
the integration of an interdigitated plate MLC structure with a
BMC structure that was patented by ATC, Richard Monsorno, in
1996, U.S. Patent Number 5,576,926.”).)
Defendant, however,
cites the ‘791 Patent and notes that, like the ‘926 Patent, the
‘791 Patent lists Monsorno as its inventor.
(RSMF ¶¶ 22-23.)
Additionally, the ‘791 Patent also involves a capacitor with a
BMC structure.
(‘791 Patent, ECF No. 1-3, at 2:34-46 (referring
to BMC structure in describing “preferred embodiments”).)
Plaintiffs further assert that “[c]ontemporaneous
documents also confirm that [Mr. Mruz] was referring to the ‘926
Patent” in his email.
19).)
(CSMF ¶ 22 (citing Snell Reply Decl. Ex.
The documents to which plaintiffs cite, however, are Mruz
e-mails that were exchanged in April and May of 2003, nearly a
full year before the March-April 2004 Mruz e-mails on which
defendant relies.
(Compare Snell Reply Decl. Ex. 19, ECF No.
118-5 (e-mails dated April and May 2003 with RSMF Ex. 11, ECF
No. 117-5 (e-mails dated March and April 2004).)
77
Additionally,
although the 2003 e-mails and one of the 2004 e-mails involving
Mr. Mruz do reference the “HubCap” product line, (id.), this
common subject matter does not conclusively establish that Mr.
Mruz’s references to ATC’s patented BMC structure in the 2004 emails were to the ‘926 Patent.
Finally, plaintiffs cite to Mr. Mruz’s deposition
testimony and assert that it establishes that Mr. Mruz did not
know of the ‘791 Patent and had not analyzed it while he was
employed by ATC.
(CSMF ¶ 22.)
Although this appears to
accurately characterize the substance of Mr. Mruz’s deposition
testimony, 19 the testimony, and the evidence regarding waiver
generally, must nevertheless be viewed in the light most
favorable to the defendant.
So viewing the evidence relevant to
the waiver issue, plaintiffs have merely demonstrated the
existence of a genuine dispute of material fact as to whether
plaintiffs in fact formed a belief in 2004 that defendant was
infringing the ‘791 Patent.
In the cited portion of Mruz’s deposition testimony, he is presented
with an “Exhibit 9,” which the transcript indicates is a patent. (Mruz
Deposition Transcript, JDTA Appx. I, at 187:23-188:7.) Mruz testifies that
he had never seen the patent prior to his deposition, and that he had never
looked at the patent’s claims, its specification, or the figures disclosed in
it. (Id. at 187:23-188:13.) Plaintiffs’ counsel then asks Mruz if he “ha[d]
any knowledge of this ATC U.S. [P]atent [N]umber 6,337,791 when [he] w[as] at
ATC,” and Mruz responds that he did not. (Id. at 188:14-17.) “Exhibit 9”
therefore appears to be the ‘791 Patent, but the court cannot conclusively
determine whether Exhibit 9 is actually the ‘791 Patent because the excerpted
testimony does not contain any express identification of Exhibit 9 as the
‘791 Patent, nor is Exhibit 9 before the court.
19
78
Viewed in the light most favorable to defendant,
evidence before the court could also establish that plaintiffs
had, at least prior to the instant action, a corporate policy,
set by ATC’s founder, of not enforcing its patent rights.
generally Kelly Tr., RSMF Ex. 14, ECF No. 117-8.)
(See
Taken
together, this record evidence precludes a finding, at the
summary judgment stage, that defendant cannot establish that
plaintiffs knowingly and intentionally relinquished their rights
with respect to the ‘791 Patent.
The evidence before the court as to the ‘547 Patent
leads the court to a different conclusion.
The existing law on
waiver strongly suggests that a party’s knowledge forming the
basis for waiver must be actual and full.
See Qualcomm, 548
F.3d at 1019-20 (quoting district court advisory jury
instruction stating that defendant asserting waiver must prove,
in relevant part, that plaintiff “with full knowledge of the
material facts, intentionally relinquished its rights to enforce
the . . . patents [at issue] or that its conduct was so
inconsistent with an intent to enforce its rights as to induce a
reasonable belief that such right has been relinquished”
(emphasis and citation omitted)).
Although defendant submits evidence that could
affirmatively controvert plaintiffs’ assertion that they were
unaware of the alleged infringement of the ‘791 Patent until
79
just prior to the initiation of the instant action, defendant
does not submit any such evidence with respect to the ‘547
Patent.
Instead, the evidence to which defendant points in
opposing summary judgment on waiver relates to capacitors with a
“BMC structure” and those covered by a “Monsorno patent.”
Def. Opp. at 10.)
(See
The ‘547 Patent, however, does not
incorporate a BMC structure and lists “Retseptor” as the
inventor.
(See generally ‘547 Patent and compare ‘547 Patent
(containing no reference to BMC structure) with ‘791 Patent at
2:34-46 (referring to BMC structure).)
Further, Ms. Kelly’s
Presidio I testimony, taken in the light most favorable to
defendant, could support an inference that plaintiffs believed
defendant was infringing multiple of their patents, including
perhaps the ‘547 Patent.
(see Kelly Tr. at 26:14-22 (“As an
example, one of Presidio’s products actually infringes on our
Monsorno BMC Patents.” (emphasis added)).)
However, it would
not be reasonable to infer from Ms. Kelly’s testimony that
plaintiffs specifically believed defendant was infringing the
‘547 Patent.
There is therefore no evidence in the record that
would enable a reasonable finder of fact to conclude that
plaintiffs, with full knowledge of the import of their actions,
voluntarily relinquished any right or rights as to the ‘547
Patent.
80
In an exercise of its discretion, the court grants
summary judgment to plaintiff, precluding defendant from
asserting a waiver defense with respect to the ‘547 Patent.
Conclusion
For the foregoing reasons, defendant’s motion for
summary judgment is GRANTED in part and DENIED in part.
Specifically:
(1)
Defendant’s motion for summary judgment is GRANTED as
to plaintiffs’ claim for damages for pre-suit infringement
of the ‘547 Patent from 1999 onward.
(2)
Defendant’s motion for summary judgment is DENIED as
moot with respect to plaintiffs’ claim for infringement of
the ‘879 Patent, which has been invalidated by PTAB and as
such is a nullity.
This denial is without prejudice to
defendant’s ability to raise issues related to the ‘879
Patent in arguing plaintiffs’ bad faith in bringing the
instant action.
Plaintiffs’ claims for infringement of the
‘879 Patent and of claim 1 of the ‘791 Patent are
DISMISSED.
(3)
Defendant’s motion for summary judgment is DENIED as
to plaintiffs’ claim for lost profit damages.
(4)
Defendant’s motion for summary judgment is GRANTED as
to plaintiffs’ claim for damages under 35 U.S.C. § 284 with
respect to the ‘547 Patent, but DENIED as to plaintiffs’
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claim for damages under 35 U.S.C. § 284 with respect to the
‘791 Patent.
(5)
Defendant’s motion for summary judgment is DENIED as
to defendant’s claim that the ‘547 Patent is indefinite.
(6)
Defendant’s motion for summary judgment is DENIED as
to plaintiffs’ claim for infringement of the ‘547 Patent
pending further claim construction of the term
“terminations” and without prejudice to defendant’s ability
to renew its motion as to infringement of the ‘547 Patent.
(7)
Defendant’s motion for summary judgment is DENIED as
to plaintiffs’ claim for infringement of the ‘791 Patent.
Additionally, plaintiffs’ motion for summary judgment
as to defendant’s equitable defenses is GRANTED in part and
DENIED in part.
(1)
Specifically:
Plaintiffs’ motion for summary judgment as to the
defense of laches is GRANTED, without prejudice to
defendant’s ability to argue laches in opposing an ongoing
royalty or an injunction should this action reach the
remedial stage.
(2)
Plaintiffs’ motion for summary judgment as to the
defense of equitable estoppel is GRANTED.
(3)
Plaintiffs’ motion for summary judgment as to the
defense of waiver is DENIED with respect to the ‘791 Patent
and GRANTED with respect to the ‘547 Patent.
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As set forth herein, the parties are directed to
confer and, within seven (7) days of entry of this order, submit
a joint letter to the court setting forth a joint plan for claim
construction proceedings with respect to the word “terminations”
as recited in the ‘547 Patent, including a briefing schedule and
a statement as to whether a hearing is necessary.
Because of
the importance of further claim construction with respect to the
word “terminations” in crystallizing the issues that may remain
for trial, the court will not direct the parties to commence
trial preparations at this time.
SO ORDERED.
Dated:
March 27, 2018
Brooklyn, New York
________ /s/____________
Kiyo A. Matsumoto
United States District Judge
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