OPTOLUM INC. v. CREE INC.

Filing 345

MEMORANDUM OPINION AND ORDER signed by JUDGE WILLIAM L. OSTEEN, JR. on 11/24/2021. For the foregoing reasons, Defendant's Motion for Judgment as a Matter of Law under Federal Rule of Civil Procedure 50(a) Regarding Lack of Willfulness (Doc. 323 ) is GRANTED. (Daniel, J)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
OPTOLUM, INC.,
Plaintiff,
v.
CREE, INC.,
Defendant.

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1:17CV687

MEMORANDUM OPINION AND ORDER
ON DEFENDANT’S MOTION FOR JUDGMENT AS A MATTER OF LAW
AS TO WILLFUL INFRINGEMENT
OSTEEN, JR., District Judge
This matter comes before the court on Defendant Cree,
Inc.’s Motion for Judgment as a Matter of Law under Federal Rule
of Civil Procedure 50(a) Regarding Lack of Willfulness, (Doc.
323). Plaintiff OptoLum, Inc., responded, (Doc. 330), and
Defendant replied, (Doc. 332). This court granted Defendant’s
motion. (Minute Entry 11/03/2021). This Order supplements this
court’s findings made in open court granting judgment as a
matter of law (“JMOL”) as to willful infringement and further
explains this court’s reasoning. Although these issues may be
moot as a result of the jury’s verdict, the parties are entitled
to consider this court’s reasoning in full for purposes of any
JMOL motion or appeal.

I.

BACKGROUND
Plaintiff sued Defendant for infringement of two of

Plaintiff’s patents, U.S. Patent Nos. 6,831,303 and 7,242,028
(the “Asserted Patents”). Plaintiff claims that Defendant
willfully infringed the Patents.
During Plaintiff’s case-in-chief, it presented evidence
through the testimony of several witnesses, including Joel Dry,
Charles McCreary, William Scally, and Brent York. Mr. Dry
testified that in 2003 he spoke at a roundtable discussion at
the Blue 2003 Conference. Mr. Dry testified that he showed his
BL-800 prototype during that discussion, and that John Edmond,
one of Cree’s founders, spoke with Mr. Dry about his prototype.
Mr. Dry testified that Mr. Edmond looked at the prototype, and
Mr. Dry discussed the prototype with Mr. Edmond. Mr. Dry also
testified that shortly before the Blue 2003 Conference, he
received a patent (the “‘536 Patent”) for the technology in his
prototype. Mr. Dry testified he would have mentioned that he had
received a patent at the conference because he was proud of
receiving a patent, but he would not have used the name or
number of the patent.
Mr. Scally testified about Cree’s failure in developing an
LED bulb and the importance of being first to market with an LED
bulb that looked like an incandescent bulb. Mr. York testified
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that he viewed OptoLum’s technology as revolutionary because
well-known companies were trying and failing to develop a
similar LED bulb. Finally, Plaintiff presented evidence of
direct infringement through Mr. McCreary, who testified he
believes that Cree’s products infringed the Asserted Patents.
At the close of Plaintiff’s case, Defendant moved for JMOL
as to willful infringement. (Doc. 323.) Defendant argues that
Plaintiff failed to meet its burden to establish willful
infringement. Following presentation of Defendant’s evidence,
this court granted Defendant’s motion to dismiss the willful
infringement claim.
II.

STANDARD OF REVIEW
Under Federal Rule of Civil Procedure 50, after “a party

has been fully heard on an issue during a jury trial[,]” a party
may make a motion asking the court to enter judgment as a matter
of law. Fed. R. Civ. P. 50(a). This motion is made before a case
is submitted to the jury and, to grant the motion, requires a
finding that no reasonably jury could find for the opposing
party. Fed. R. Civ. P. 50(a)(2). “Judgment as a matter of law is
only appropriate if, viewing the evidence in the light most
favorable to the non-moving party, the court concludes that ‘a
reasonable trier of fact could draw only one conclusion from the
evidence.’” Corti v. Storage Tech. Corp., 304 F.3d 336, 341 (4th
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Cir. 2002) (quoting Brown v. CSX Transp., Inc., 18 F.3d 245, 248
(4th Cir. 1994)). “[I]f the nonmoving party [has] failed to make
a showing on an essential element of his case with respect to
which he had the burden of proof[,]” JMOL should be granted.
Wheatley v. Wicomico Cnty., 390 F.3d 328, 332 (4th Cir. 2004)
(internal quotation marks omitted) (quoting Singer v. Dungan, 45
F.3d 823, 827 (4th Cir. 1995)).
III. ANALYSIS
“Willful infringement is a question of fact.” Bayer
Healthcare LLC v. Baxalta Inc., 989 F.3d 964, 987 (Fed. Cir.
2021) (citation omitted). “To establish willfulness, the
patentee must show the accused infringer had a specific intent
to infringe at the time of the challenged conduct.” Id. (citing
Halo Elecs., Inc. v. Pulse Elecs., Inc., 579 U.S. 93, 136 S. Ct.
1923, 1933 (2016)). “As the Supreme Court stated in Halo, ‘[t]he
sort of conduct warranting enhanced damages has been variously
described in our cases as willful, wanton, malicious, bad-faith,
deliberate, consciously wrongful, flagrant, or – indeed –
characteristic of a pirate.’” Id. (quoting Halo Elecs., 136
S. Ct. at 1932). However, “[t]he concept of ‘willfulness’
requires a jury to find no more than deliberate or intentional
infringement.” Eko Brands, LLC v. Adrian Rivera Maynez Enters.,
Inc., 946 F.3d 1367, 1378 (Fed. Cir. 2020) (citation omitted).
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Willful infringement requires that the defendant (1) know of the
Asserted Patents; and (2) know that the defendant’s actions
constitute infringement. See Bench Walk Lighting LLC v. LG
Innotek Co., Civil Action No. 20-0051-RGA, 2021 WL 1226427, at
*15 (D. Del. March 31, 2021).
In Bayer Healthcare LLC v. Baxalta Inc., the Federal
Circuit upheld the district court’s grant of JMOL of no willful
infringement. 989 F.3d at 987. During trial, the district court
concluded that the plaintiff failed to present sufficient
evidence of the “state of mind” necessary for a finding of
willfulness. Id. According to the district court, there was no
dispute that the defendant was aware of the patent-at-issue and
that the plaintiff assumed that the defendant knew the accused
product infringed because it involved a similar item as the
patent-at-issue. Id. (“Bayer merely ‘assume[d] that [Baxalta]
knew [the accused product] infringed because it involved
pegylation at the B-domain of factor VIII.’”). However, the
district court concluded that this was not enough for a
reasonable juror to find that infringement was “either known or
so obvious it should have been known.” Id. (quoting Halo Elecs.,
136 S. Ct. at 1930).
On appeal, the plaintiff, Bayer, identified evidence that
purportedly satisfied the state of mind requirement for
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willfulness. Id. Bayer presented the following testimony:
testimony of the defendant’s witnesses concerning their
awareness of the patent application that issued the patent -atissue; and evidence that the defendant found out about the
plaintiff’s work that underpinned the patent-at-issue and
resolved a previous failure of the defendant’s product, and that
the defendant then consciously switched to using the same
ingredient as in the plaintiff’s product in the accused product.
Id. at 987-88. The Federal Circuit found that even accepting the
plaintiff’s evidence as true and weighing all inferences in
favor of the plaintiff, the record was insufficient to establish
that the defendant’s conduct rose to the level of bad-faith
behavior required for a finding of willful infringement. Id. at
988. The Federal Circuit characterized the evidence as merely
demonstrating the defendant’s knowledge of the patent -at-issue
and direct infringement of the asserted claims. Id. Therefore,
the Federal Circuit concluded “[k]knowledge of the asserted
patent and evidence of infringement is necessary, but not
sufficient, for a finding of willfulness. Rather, willfulness
requires deliberate or intentional infringement.” Id. (citing
Eko Brands, LLC, 946 F.3d at 1378).
This court finds that the evidence presented by Plaintiff
does not demonstrate as a matter of law that Cree willfully
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infringed the Asserted Patents. Plaintiff offered some evidence
that Defendant infringed the Asserted Patents through the
testimony of Mr. McCreary. But Plaintiff offered no evidence
that anyone at Cree was aware of the Asserted Patents at the
time of the creation of the accused products. Plaintiff argues
that knowledge of a parent patent is evidence of knowledge of
the Asserted Patents. (Doc. 330 at 6.) The evidence from
Mr. Dry’s testimony is that he likely mentioned he had received
a patent for the technology in the BL-800, but he would not have
mentioned the name or number of the patent. The ‘536 Patent,
which is the parent patent to the Asserted Patents, is the
patent Mr. Dry received shortly before Blue 2003.
Even assuming that the limited evidence of Cree’s knowledge
of the ‘536 Patent is sufficient to demonstrate knowled ge of the
Asserted Patents, Plaintiff presented no evidence that Cree’s
accused products were created by deliberate or reckless
infringement as opposed to innocent independent development. For
example, Plaintiff offered no evidence that Defendant’s interna l
documents bear similarities to the Asserted Patents and
Plaintiff’s internal documents. See Simo Holdings Inc. v. Hong
Kong uCloudlink Network Tech. Ltd., 396 F. Supp. 3d 323, 334
(S.D.N.Y. 2019) (finding the jury’s finding of willfulness was
supported by sufficient evidence where the defendant was at
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least familiar with the parent patent, the defendant’s internal
documents were similar to the asserted patent and the
plaintiff’s internal documents, and one of the defendant’s
employees was hired from the plaintiff and took several of the
plaintiff’s confidential files with him). Nor did Plaintiff
offer evidence of any prior disputes over the Asserted Patents
or licenses between OptoLum and Cree. See Mondis Tech. Ltd. v.
LG Elecs., Inc., 407 F. Supp. 3d 482, 502 (D.N.J. 2019), appeal
dismissed, 6 F.4th 1379 (2021) (denying JMOL on no willfulness
where “the parties had been litigating and negotiating licenses
regarding the [asserted] patents” and the parties had entered
settlement agreements regarding the defendant’s infringement of
other patents owned by the plaintiff”). Similarly, Plaintiff
offered no evidence of any statement of Cree that it planned to
copy the Asserted Patents. See Tinnus Enters., LLC v. Telebrands
Corp., 369 F. Supp. 3d 704, 731 (E.D. Tex. 2019) (denying JMOL
as to willfulness because “the jury heard sufficient evidence of
[the defendant’s] willful infringement, including emails between
[the defendant’s] employees and an outside consultant describing
how [the defendant] planned to copy Plaintiff’s product”). Nor
did Plaintiff offer evidence of prior business dealings between
Cree and OptoLum to support an inference that Cree should have
believed it required a license from OptoLum. See Georgetown Rail
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Equip. Co. v. Holland L.P., 867 F.3d 1229, 1245 (Fed. Cir. 2017)
(upholding the district court’s finding that substantial
evidence supported the jury verdict where the jury heard
evidence of the defendant’s awareness of the patent -at-issue,
and evidence of the parties’ prior business dealings could
reasonably lead the defendant to believe it needed to obtain a
license from the plaintiff to avoid infringement). In sum,
Plaintiff offered no evidence of prior business dealings or
circumstantial evidence of Cree copying the technology in the
Asserted Patents. See KAIST IP US LLC v. Samsung Elecs. Co., 439
F. Supp. 3d 860, 884 (E.D. Tex.), appeal dismissed, 2020 WL
9175080 (Fed. Cir. Sept. 3, 2020) (denying JMOL on willfulness
where the plaintiff presented evidence that the defendant was
aware of the patent-at-issue, and that the parties had prior
business dealings from which the jury could infer that the
defendant should have believed it needed a license).
Plaintiff relies in part on Cree’s incentive to develop a
product for purposes of profitability and brand development,
coupled with Mr. York’s testimony that the only technology that
enabled the Cree bulb, as evidence that requires a jury
determination of willfulness. (Doc. 330 at 8.) This court
disagrees. First, while financial gain might provide a motive,
it does not support an inference of willful infringement. This
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court declines to find that motive to profit, standing alone,
provides a reasonable inference of willful infringement. Second,
Mr. York’s testimony that OptoLum’s invention is the only
technology which enabled the success of the accused product,
while evidence of infringement, is not sufficient to create an
issue of fact for willful infringement. Although circumstantial
evidence can, and often is, necessary to establish knowledge and
intent, those circumstances must be sufficient to establish
Cree’s state of mind as to a willful or deliberate infringement
of either the ‘303 or the ‘028 Patents at the time of the
challenged conduct. See Halo Elecs., 136 S. Ct. at 1933
(citations omitted) (“[C]ulpability is generally measured
against the knowledge of the actor at the time of the challenged
conduct.”); see also Bayer Healthcare, 989 F.3d at 988 (holding
that evidence knowledge of the patents-at-issue and evidence the
defendant infringed is sufficient but not necessary to
establishing willful infringement). Taking the evidence in the
light most favorable to Plaintiff, although Plaintiff may have
established Cree knew of the Asserted Patents and that Cree
infringed the Asserted Patents, Plaintiff cannot point to any
evidence that supports a finding of willfulness. Neither Cree
wanting to be first to market nor Cree wanting to build its
brand from the success of the accused products is evidence of
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bad-faith behavior. Accordingly, this court will grant
Defendant’s JMOL as to willful infringement.
IV.

CONCLUSION
For the foregoing reasons,
IT IS HEREBY ORDERED that Defendant’s Motion for Judgment

as a Matter of Law under Federal Rule of Civil Procedure 50(a)
Regarding Lack of Willfulness, (Doc. 323), is GRANTED.
This the 24th day of November, 2021.

__________________________________
United States District Judge

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