Olaf Soot Design, LLC v. Daktronics, Inc., et al

Filing 304

OPINION: For the reasons set forth above, Defendant's motions in limine are granted in part and denied in part. Likewise, Plaintiff's motions in limine are granted in part and denied in part. It is so ordered. (Signed by Judge Robert W. Sweet on 12/4/2018) (jca)

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ThankUNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

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OLAF SOOT DESIGN, LLC,
Plaintiff,
15 Civ. 5024
- against OPINION
DAKTRONICS, INC. and
DAKTRONICS HOIST, INC.,
Defendants.

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APPEARANCES:

Attorneys for Plaintiff
TROUTMAN SANDERS LLP
875 Third Avenue
New York, NY 10022
By:
James M. Bollinger, Esq.
Timothy P. Heaton, Esq.
Phoenix S. Pak, Esq.
Katherine Harihar, Esq.

Attorneys for Defendants
BLANK ROME LLP
405 Lexington Ave
New York, NY 10174
By:
Kenneth L. Bressler, Esq.
BLANK ROME LLP
717 Texas Avenue, Suite 1400
Houston, TX 77002
By:
Russel T. Wong, Esq.
Linh Bui, Esq.

(RWS)

Sweet, D.J.

Defendants Daktronics , Inc. and Daktronics Hoist, In c .
("Daktronics" or the "Defendants") move for five motions in
limine, requesting this Court:

1.

Preclude Plaintiff Olaf Sbbt Design, LLC (" OSD " or the

"Plaintiff") from arguing and presenting evidence on
literal infringement;

2.

Preclude Plaintiff from referring to the Vortek motor

bracket as a "bas e member";

3.

Preclude Plaintiff from speculating that Defendants,

or the Hoffend winch company ("Hoffend), copied the ' 485
patent;

4.

Preclude Plaintiff from stating or implying that

Defendant withheld discovery or produced documents in an
untimely manner, including that Defendant refused to
produce a 30 (b) (6) witness;

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5.

Preclude Plaintiff from presenting evidence or arguing

concerning the inter partes review and Daktronics'
withdrawal of its invalidity defense.

Def.'s Memo in Supp., ECF No. 158.

Plaintiff Olaf Soot Design , LLC ("OSD" or "Plaintiff")
moves for two motions in limine, requesting this Court:

1.

Exclude prior art references and related testimony

suggesting or related to the purported invalidity of the
'4 85 patent.

2.

Exclude Defendant from presenting, relying on, or

referring to the settlement agreement entered into between
Applied Technology ("ATI") and J.R. Clancy, Inc.

(" Clancy ")

(" Clancy Agreement").

For the reasons that follow,

Defendant's motions are

granted in part and denied in part. Plaintiff's motions are
granted in part and denied in part.

2

Prior Proceedings

The following factual background is set forth only as
necessary to resolve the instant motions. A comprehensive
factual background detailing the '485 patent, its individual
claims, this Court's claim constructions, and the 2016 denial of
Defendants' summary judgment motion can be found in prior
opinions of the Court. See Olaf Soot Design, LLC v. Daktronics,
Inc., 220 F. Supp. 3d 458,
denied, No. 15 Civ. 5024

462

(S.D.N.Y. 2016), reconsideration

(RWS), 2017 WL 2191612

(S.D.N.Y. May

17, 2017). Familiarity with these opinions, as well as the facts
of the case, is assumed.

The '485 patent covers a winch system designed to move
large theatre scenes on and off stage quickly and efficiently,
replacing the cumbersome counterweight systems of the past. Olaf
Soot Design, LLC v. Daktronics, Inc., 220 F. Supp. at 358.

On June 25, 2015, Plaintiff, an engineering and design
company specializing in the performing arts, brought this action
alleging patent infringement as to U.S. Patent No.

6,520,485

("the '485 Patent") against Defendants, two corporations engaged
in the manufacture and sale of theatre rigging equipment and
winch systems.
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On October 26, 2016, after hearing Plaintiff's motion for
claim construction and Defendants' motion for summary judgment,
the Court construed twelve c l aim constructions on the
Patent and denied Defendants'

'4 85

summary judgment motion on the

issue of non-infringement. ECF No. 72 .

On May 17, 2017, Defendants' motion for reconsideration on
this Court's denial of summary judgment was denied. ECF No. 137.

On October 26 , 2017, Plaintiff's motion to amend its
complaint to add the claim of wil l ful infringement was granted .
ECF No. 17 6 .

On January 30 , 2018, Defendants moved for partial summary
judgment on the ground that they had not willfully infringed on
the '485 patent. Dkt . 200. The same day,

Plaintiff moved for

relief under Rule 37, alleging non-compliance with discovery
obligat i ons .

On February 22 , 2018 , in response to Plaintiff's Rule 37
motion,

Defendants cross -moved this Court for sanctions under 28

U.S.C. § 1927, requesting "costs and attorney's fees in

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responding to [Plaintiff's] Motion for Relief under Fed. R. Civ.
P. 37." Dkt. 223, at 1.

On July 18, 2018, this Court granted Defendant's motion for
partial summary judgment on the issue of willful patent
infringement, finding that Defendant had shown "by clear and
convincing evidence an absence of evidentiary support for the
essential element of knowledge" of Plaintiff's '485 Patent
("Summary Judgment Opinion"). ECF No. 258.

On August 1, 2018, Plaintiff moved to reconsider this
Court's Summary Judgment Opinion. ECF No. 261. And on November
27, 2018, this Court denied Plaintiff's motion to reconsider.
ECF No. 292.

Also on November 27, 2018, parties appeared for oral
argument on their motions in limine, at which point they were
marked fully submitted. See ECF Nos. 158, 159.

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A . Defendant ' s Motions

I. Defendant's motion to preclude Plaintiff from arguing and from
presenting evidence on literal infringement is granted .

In its 2016 Summary Judgment Opinion , this Court
held:
"[T]here is no l i teral infringement in this case
because evaluating the claim l anguage with the he l p of
the spec i fications , the ' 485 Patent described a base
member wi t h a horizonta l member . The Vortek winch does
•not have a base member and therefore is not literal l y
i nfr i nging . "

Summary Judgment Opinion at 72 .

There being no litera l infringement by the Vortek Product
of the only two independent c l aims of the ' 485 patent, the issue
of literal infringement i s no longer before the Court . See Bayer
AG v. Elan Pharm . Research Corp. , 2 1 2 F . 3d 1241 , 1247 (Fed . Cir.
2000) "If any claim l i mitation is absent from the accused
dev i ce , there is no li t eral infringement as a matter of law.")

According l y , the presentment of evidence on literal patent
infringement by Vortek of the ' 485 patent would be irrelevan t
and unduly prejudicial. For this reason , Defendant ' s motion is
granted .
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II . Defendant's motion to preclude Plaintiff from referring to the
Vortek motor bracket as a "base member" is granted.

In the Summary Judgment Opinion , it was noted that the ' 485
patent's specification " clearly envisioned connecting the
components of the base member together and not having them be
separate." Summary Judgment Opinion at 22. Because the Vortek
winch " does not have a base member , " however , it was concluded
that there was no literal infringement . Id . at 23 .

OSD con t ends that reference to the Vortek product ' s
ind i vidual end brackets as "bases " or "base members " is proper,
because "portions of the base member are brackets, which have
been determined by the Court to be components of the base
member ," and therefore "a bracket .

. is a base member. " Pls .'

Memo in Supp . at 10 . This does not follow and is likely to
confuse the jury into thinking that components of the Vortek ' s
base member are themselves "base members " when that is not the
case. See Summary Judgment Opinion at 7 ("Therefore there are at
least two components that comprise the [ 485 patent ' s] base
member") .

The motion in limine is granted.

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III.Defendant's motion to preclude Plaintiff from speculating that
Defendants, or Hoffend, copied the '485 patent is denied in
part.

Defendant submits "there is absolutely no evidence" of
copying with respect to Hoffend, and that any such arguments are
"pure speculation." Def. Memo in Supp. at 5. Not so.

In

Plaintiff's motion for leave to amend its complaint, for example
(granted in October 2017

(ECF No . 176)), it is alleged that

Hoffend filed an accelerated application with the USPTO 1 which
included a brochure of the Olaf winch product. ECF No. 1 48 at 4
(noting Hoffend's inclusion in his patent application of "a
brochure on the OSD winch"). Plaintiff also alleges that "during
the course of the prosecution of [H offend 's] winch patent
applications, the ' 485 Patent was also repeatedly cited" and
that Hoffend incorporated , among other things,

Plaintiff's

"fixed screw approach for moving the drum la tera ll y " into his
invention. See, e.g., Def.'s Memo . in Supp . at 12, ECF No. 169.

While "pure speculation" of copying by Hoffend would be
unduly prejudicial and therefore excluded at trial, Plaintiff
has alleged more than that. Def. Memo. in Supp. at 5; see
1
This patent application issued as the ' 622 patent,
which was prosecuted by Hoffend. See Defendant's Opp. at 7-8,
Dkt No. 47.
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Georgetown Rail Equip. Co. v. Holland L.P., 867 F.3d 1229, 1245
(Fed. Cir. 2017) (allowing evidence of copying at trial that was
supported by "circumstantial evidence").

In light of the evidence so far presented with respect to
Hoffend, the motion in limine to preclude testimony that he
copied the '485 patent is denied.

There being no evidence supporting the position that
Defendant Daktronics "copied" the '485 patent, the motion in
limine to preclude such testimony as speculative and unduly

prejudicial is granted.

IV. Defendant's motion to preclude Plaintiff from stating or
implying Daktronics withheld discovery or refused to produce a
witness is granted

Even if evidence of untimely document production or
improperly withheld discovery was relevant to the underlying
issue of patent infringement-and it is not-such evidence would
be inadmissible under Rule 403. Fed. R. Evict. 403

("The court

may exclude relevant evidence if its probative value is
substantially outweighed by a danger of one or more of the

. ,, ) .

following: unfair prejudice
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Evidence of discovery misconduct by Defendant has little to
no probative value in a patent infringement case. The undue
prejudice associated with such evidence, on the other hand,

is

clear. For that reason, the motion in limine to preclude
evidence of discovery misconduct is granted.

On this basis, Defendant's sixth motion in limine, to
preclude Plaintiff from "telling the jury that Daktronics
refused to offer a corporate witness," is also granted. The
relevance of such testimony is low and its potential to
prejudice high. Moreover, if Plaintiff had an issue with
Defendant's refusal to provide the requested 30(b) (6) witness,
it could have sought appropriate relief.

The motion in limine is granted.

V. Defendant's motion to preclude inter partes review and withdrawal
of invalidity defense evidence is granted.

Defendant's petition at the Patent Trial and Appeal Board
(PTAB)

for inter partes review of the '485 patent was directed

at its validity, and had nothing, as far as the Court can tell,

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to do with the issue of infringement. See Def.'s Memo in Supp. at
6.

Plaintiff contends that introduction of the inter partes
review evidence serves the purpose of discrediting certain of
Defendant's witnesses. Pls.'s Memo in Supp. at 20. But the
likelihood of such evidence to confuse the jury and prejudice
Defendant is high. The issue before the PTAB was validity of the
'485 patent. Validity is not at issue here and the jury could
confuse Defendant's failure before the PTAB as evidence of
infringement.

With respect to the introduction of evidence of patent
validity more generally, an issue no longer before the Court,
the motion in limine is granted. While there may be value in
telling the jury "the story" of this case, including Defendant's
strategic decision to assert, but later withdraw, invalidity as
a defense, the danger of wasting time and needlessly presenting
cumulative evidence is high. See Fed. R. Evid. 403.

Defendant's motion in limine to exclude evidence of its
failed inter partes review and its decision to withdraw the
invalidity defense is granted.

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B. Plaintiff's Motions

I. Plaintiff's motion to exclude purported prior art references and
related testimony is granted

Plaintiff contends that references to the prior art in this
case are irrelevant and unduly prejudicial. Pl.'s Memo. in Supp.
at 5. According to Plaintiff, prior art references would be
useful only to establish patent validity and "have no bearing on
Daktronics' remaining non-infringement defense." Id.

A presentation of such by Defendant, for example, designed
to sow doubt as to the novelty of the '4 85 patent's underlying
technology, cou l d indeed confuse the issues in this case .
Because validity is not at issue, such evidence is likely to
confuse. It is of little to no probative value in a patent
infringement case. See Tate Access Floors v. Interface
Architectural Res., 279 F.3d 1357, 1367 (Fed. Cir. 2002)

The motion in limine is granted.

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II.

Plaintiff's motion to exclude the Clancy Agreement and related
testimony is denied.

In 2003, Clancy entered into an exclusive license agreement
with an OSD subsidiary, ATI, under which periodic payments and
royalties would be paid by Clancy to ATI for an exclusive right
to use the '485 patent. See Clancy Agreement, ECF No. 160, Ex.
13. Soon after the relationship between Clancy and ATI soured
due to non-payment of royalties and periodic payments, ATI sued
Clancy for breach of contract. Pls.' Memo. in Supp. at 6.
Following a partial summary judgment grant in ATI's favor,
Clancy and ATI agreed to settle the claims and entered into the
Clancy Agreement for that purpose. Id. The agreement provided for
a one-time payment of $65,000 by Clancy to ATI in exchange for a
release from ATI's claims that Clancy breached the license
agreement or infringed upon the '485 patent. Id.

("ATI and Soot

hereby release, hold harmless and forever discharge J.R. Clancy
. from all claims, including but not limited to
infringement of US Patent No. 6,520,485").

Defendant cites TransCore, LP v. Elec. Transaction
Consultants for the position that the Clancy Agreement, which
released Clancy from claims of infringement of the '485 patent,
is akin to a patent license. 563 F.3d at 1276 (Fed. Cir. 2009).
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In that case, the Federal Circuit recognized that the difference
between a covenant not to sue and a license to practice is "one
of form, not substance-both are properly viewed as
'authorizations.'" See id.

(collecting cases). Defendant seeks

to introduce the terms of the Clancy Agreement, and its release
from liability for claims of infringement of the '4 85 patent,
for the purpose of determining damages in this case. See
November 27, 2018 Oral Argument Transcript at 25:20-21 ("Oral
Arg. Tr.").

According to Plaintiff, the Clancy Agreement is "minimally
probative to the determination of a reasonable royalty for use
of the '485 patent." Id. at 9. Plaintiff contends that there is
"nothing about this release that has anything to do with what a
hypothetical negotiation would look like." Oral Arg. Tr. 28 :1012.

As the Federal Circuit recognized in TransCore and the
cases cited therein, however, a promise not to sue for patent
infringement is, in essence, a license agreement. See TransCore,
563 F.3d at 1276; see also e.g., Hilgraeve Corp. v. Symantec
Corp., 265 F.3d 1336, 1346 (Fed. Cir. 2001)

("This court has

stated that 'licenses are considered as nothing more than a
promise by the licensor not to sue the licensee.'") (quoting Jim
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Arnold Corp. v. Hydrotech Sys., Inc., 109 F.3d 1567, 1577 (Fed.
Cir. 1997).

Plaintiff's view that the Clancy Settlement is a "clear
outlier compared to the other OSD settlement and licensing
agreements" does not support its motion in limine. Pls.' Memo.
in Supp. at 8. That argument, along with the contention that the
settlement does not represent the '485 patent's value because it
was entered into early in the litigation, and therefore should
not have been relied upon by Defendant's expert, goes to the
weight, not admissibility, of the evidence. See Dial Corp. v.
News Corp., 165 F.Supp.3d 25, 42 (S.D.N.Y. 2016) ("parties' many
disagreements over the expert's methodologies go to the weight,
not admissibility").

The Clancy Settlement may not be of great probative value,
but its import is clear. Evidence tending to establish the
monetary value of the '485 patent is plainly relevant and
probative. That a third-party paid an agreed-upon price, first
for the exclusive right to use the '485 patent, and second for
the right not to be sued for future uses of the same, is
relevant and probative. Plaintiff is free to present
countervailing expert evidence tending to limit the weight of
the Clancy Settlement and Defendant's expert opinion. The jury
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is free to ascribe the appropriate weight to each party's
valuation of the '485 patent.

The motion in limine is denied.

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Conclusion

For the reasons set forth above, Defendant's motions in

limine are granted in part and denied in part. Likewise,
Plaintiff's motions in limine are granted in part and denied in
part.

It is so ordered.

New York, NY
December
2018

tf,

U.S.D.J.

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