ULTRA-MEK, INC. v. UNITED FURNITURE INDUSTRIES, INC. et al
Filing
174
MEMORANDUM OPINION AND ORDER signed by JUDGE WILLIAM L. OSTEEN, JR on 3/30/2021; that Defendants' Motion for Summary Judgment, (Doc. 142 ), is DENIED. FURTHER that Plaintiff's Motion for Summary Judgment, (Doc. 134 ), is DENIED. (Sheets, Jamie)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
ULTRA-MEK, INC.,
)
)
Plaintiff and
)
Counter Defendant, )
)
v.
)
)
UNITED FURNITURE INDUSTRIES,
)
INC., OISEYS INTERNATIONAL,
)
INC., MAN WAH HOLDINGS LTD.,
)
JIANGSU YULONG SMART
)
TECHNOLOGY CO., LTD.,
)
REMACRO MACHINERY
)
TECHNOLOGY CO., LTD.,
)
TAIZHOU CHENGUANG VEHICLE CO., )
LTD., and MAN WAH (USA), INC.,
)
)
Defendants and
)
Counter Claimants. )
1:18CV281
MEMORANDUM OPINION AND ORDER
OSTEEN, JR., District Judge
This matter comes before the court on Plaintiff Ultra-Mek,
Inc.’s (“Plaintiff” or “Ultra-Mek”) Motion for Summary Judgment,
(Doc. 134). Also before the court is the Motion for Summary
Judgment, (Doc. 142), filed Defendants United Furniture
Industries, Inc. (“UFI”); Oiseys International, Inc. (“Oiseys”);
Man Wah Holdings Ltd. (“Man Wah Holdings”); Jiangsu Yulong Smart
Technology Co., Ltd. (“Jiangsu”); Remacro Machinery Technology
Co., Ltd. (“RMT”); Taizhou Chenguang Vehicle Co., Ltd. (“TZ
Vehicle”); and Mah Wah (USA), Inc. (“Man Wah (USA)”) (together
“Defendants”).
I.
FACTS AND PROCEDURAL HISTORY
A.
Statement of the Facts
Plaintiff Ultra-Mek, Inc., is the assignee and owner of two
patents: both patents describe a reclining chair with
reciprocating capability. (First Amended Complaint (“Am.
Compl.”) (Doc. 31) ¶¶ 22–25.) Both patents were invented by
D. Stephen Hoffman and Marcus L. Murphy. (Id. ¶¶ 23-24.) U.S.
Patent Number 8,016,348 (the “‘348 patent”) was filed on
July 24, 2009 and issued on September 13, 2011. (See id., Ex. A
(Doc. 31-1).) U.S. Patent Number 8,297,693 (the “‘693 patent”)
was filed on September 9, 2011 and issued on October 30, 2012.
(See id., Ex. B (Doc. 31-2).) The ‘693 patent is a continuation
of the ‘348 patent, and the parties agree that the patents are
generally identical in nature and scope. (See Defs.’ Opening
Claim Constr. Br. (Doc. 92) at 131; Pl.’s Corr. Opening Claim
Constr. Br. (Doc. 94) at 6.)
According to Plaintiff, Defendants are producing and
selling seating units that infringe upon the relevant patents
All citations in this Memorandum Opinion and Order to
documents filed with the court refer to the page numbers located
at the bottom right-hand corner of the documents as they appear
on CM/ECF.
1
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without Plaintiff’s permission. (Am. Compl. (Doc. 31) ¶ 26.)
Plaintiff further alleges that this infringement has continued
despite Defendants’ knowledge of the patents, while certain
Defendants have posted YouTube videos demonstrating how to
construct chairs using patented mechanisms. (Id. ¶¶ 28, 31, 34.)
Finally, Plaintiff alleges that certain Defendants violated a
permanent injunction issued in a prior case in this district by
importing and selling recliners covered by that injunction and
breached the settlement agreement in that case. (Id. ¶¶ 41–47,
66–67.)
B.
Procedural History
Defendants answered the Amended Complaint, denied that
their products infringe the subject patents, and brought
counterclaims against Plaintiff. (See generally Docs. 38, 39.)
Plaintiff moved for claim construction of certain disputed terms
in the subject patents, (Doc. 91), and the parties submitted a
consent motion for a claim construction, or Markman, hearing.
(See Doc. 90.) This court held a Markman hearing on August 14,
2019. (See Minute Entry 08/14/2019.) This court issued a
Memorandum Opinion and Order construing the disputed terms on
September 26, 2019. (Doc. 124.) Plaintiff filed a Motion for
Summary Judgment on April 9, 2020. (Doc. 134.) Defendants filed
their own Motion for Summary Judgment on the same day. (Doc.
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142.) Motions to Seal have also been filed by Plaintiff, (Docs.
137, 156, 164), and Defendants, (Docs. 145, 168) due to the
inclusion of financial and business information in the parties’
briefs. The court granted the motions to seal on March 22, 2021,
(Doc. 173).
II.
LEGAL STANDARD FOR SUMMARY JUDGMENT
Summary judgment is appropriate when “there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a); see Celotex
Corp. v. Catrett, 477 U.S. 317, 322–23 (1986). A factual dispute
is genuine when “the evidence is such that a reasonable jury
could return a verdict for the nonmoving party.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); see also First
Nat’l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 289–90
(1968) (stating that a dispute is not genuine for summary
judgment purposes when one party rests solely on allegations in
the pleadings and does not produce any evidence to refute
alternative arguments). This court’s summary judgment inquiry is
whether the evidence “is so one-sided that one party must
prevail as a matter of law.” Liberty Lobby, 477 U.S. at 252. The
moving party bears the initial burden of demonstrating “that
there is an absence of evidence to support the nonmoving party’s
case.” Celotex Corp., 477 U.S. at 325. If the “moving party
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discharges its burden . . . , the nonmoving party must come
forward with specific facts showing that there is a genuine
issue for trial.” McLean v. Patten Cmtys., Inc., 332 F.3d 714,
718-19 (4th Cir. 2003) (citing Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)). Summary
judgment should be granted “unless a reasonable jury could
return a verdict in favor of the nonmovant on the evidence
presented.” McLean, 332 F.3d at 719 (citing Liberty Lobby, 477
U.S. at 247–48).
In addition, “the mere existence of some alleged factual
dispute between the parties will not defeat an otherwise
properly supported motion for summary judgment.” Liberty Lobby,
477 U.S. at 247-48. “[T]he non-moving party must do more than
present a scintilla of evidence in its favor.” Sylvia Dev. Corp.
v. Calvert Cnty., 48 F.3d 810, 818 (4th Cir. 1995). Ultimately,
“there is no issue for trial unless there is sufficient evidence
favoring the nonmoving party for a jury to return a verdict for
that party.” Liberty Lobby, 477 U.S. at 249.
When facing cross-motions for summary judgement, this court
reviews “each motion separately on its own merits to determine
whether either of the parties deserves judgment as a matter of
law.” Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003)
(citations and internal quotation marks omitted). “When
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considering each individual motion, the court must take care to
resolve all factual disputes and any competing, rational
inferences in the light most favorable to the party opposing
that motion.” Id. (citation and internal quotation marks
omitted).
III. ANALYSIS
A.
Claim Preclusion
Plaintiff moves for summary judgment on (1) UFI’s Third and
Fourth Counterclaims of Invalidity and First through Sixth
Affirmative Defenses; (2) Oiseys’ Third and Fourth Counterclaims
of Invalidity and First through Sixth Affirmative Defenses; and
(3) TZ Vehicle, Man Wah (USA), Man Wah Holdings, RMT, and
Jiangsu’s Third and Fourth Counterclaims of Invalidity and First
and Second Affirmative Defenses. (Doc. 134 at 1-2 n.1.)
Plaintiff’s motion for summary judgment centers around whether
claim preclusion applies in this case. A prior action involving
the same patents, Ultra-Mek, Inc. v. Man Wah (USA), Inc., No.
1:16-cv-00041-NCT-JLW (M.D.N.C. Jan. 15, 2016) (hereinafter “Man
Wah I”), yielded a settlement agreement, a stipulation of
dismissal, and Permanent Injunction, (Doc. 54-1), prohibiting
certain Man Wah parties from producing any “seating units and
mechanisms that perform substantially the same function in
substantially the same way to yield substantially the same
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result.” (Pl.’s Br. in Supp. of Summ. J. (“Pl.’s Br.”) (Doc.
135) at 7.) Plaintiff alleges that Defendants in this case are
all subject to claim preclusion regarding invalidity and these
affirmative defenses.
1.
Waiver of Claim Preclusion
Before assessing the merits of Plaintiff’s argument for
claim preclusion, this court will first address Defendants’
contention that Plaintiff has waived any claim preclusion
defense. (Defs.’ Opp’n to Pl.’s Mot. for Summ. J. (“Defs.’
Resp.”) (Doc. 152) at 11-12.) Defendants argue that under Fed.
R. Civ. P. 8(c), claim preclusion has not been timely pleaded
and therefore has been waived and cannot be argued at this
stage. (Id. at 11.) Defendants contend that Plaintiff could have
raised the argument “in its answers to any of Defendants’
counterclaims of invalidity”, or “in any of its interrogatory
responses,” rather than waiting until the summary judgment
stage. (Id.)
The Fourth Circuit has not laid out a precise rule for when
a preclusion defense must be raised, however, a party must at
minimum “raise its preclusion defenses ‘at the first reasonable
opportunity.’” Ga. Pac. Consumer Prods., LP v. Von Drehle Corp.,
710 F.3d 527, 533–34 (4th Cir. 2013) (quoting Aetna Cas. & Sur.
Co. v. Gen. Dynamics Corp., 968 F.2d 707, 711 (8th Cir. 1992)).
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Though few courts have more specifically interpreted Georgia
Pacific’s “first reasonable opportunity,” at least one court in
this Circuit has interpreted this language as asking whether the
party making a preclusion argument acted “in good faith and with
due diligence” to determine if preclusion was raised “within a
reasonable period.” HSBC Bank USA, Nat’l Ass’n v. Resh, Civil
Action No. 3:12-cv-00668, 2013 WL 6230670, at *5 (S.D. W. Va.
Dec. 2, 2013).
This court agrees with Plaintiff that the full account of
the facts and scope of this case, and therefore the full
argument that this claim has already been adjudicated, came to
light “only after” this court’s Markman Order. (Pl.’s Br. in
Reply to Defs.’ Opp’n to Pl.’s Mot. for Summ. J. (“Pl.’s Reply”)
(Doc. 162) at 5.) Moreover, in Georgia Pacific, the claim
preclusion argument at issue was first brought not only after
the judgment was entered, but after appeal. 710 F.3d at 528.
Those facts are hardly comparable to the present case, in which
Plaintiff raised its claim preclusion argument in April 2020,
(Doc. 134), in its first substantive filing after the Markman
Order was issued on September 26, 2019, (Doc. 124). No evidence
of bad faith on the part of Plaintiff has been presented, and
the argument was raised within a reasonable time after this
court’s Markman Order.
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Separately, regardless of timeliness, Plaintiff maintains
that its claim preclusion argument responds to Defendants’
invalidity counterclaim, which is itself a defense, 35 U.S.C.
§ 282 (1994), thereby making the claim preclusion argument “a
defense to a defense.” (Pl.’s Reply (Doc. 162) at 5.) This,
Plaintiff contends, means “waiver is not appropriate.” (Id.)
Though Plaintiff provides no authority protecting “a defense to
a defense” from waiver, this court finds that Plaintiff has
raised the issue within a reasonable period and has therefore
not waived its claim preclusion argument regardless.
2.
Legal Standard for Claim Preclusion
Claim preclusion ensures “that a right, question or fact
distinctly put in issue and directly determined by a court of
competent jurisdiction cannot be disputed in a subsequent suit
between the same parties.” Aliff v. Joy Mfg. Co., 914 F.2d 39,
42 (4th Cir. 1990) (alteration in original) (quoting S. Pac.
R.R. v. United States, 168 U.S. 1, 48–49 (1897)). In order to
determine whether claim preclusion requires a finding of
infringement, this court must assess several factors. Three
elements are needed to bar a claim on res judicata grounds: “(1)
a judgment on the merits in a prior suit resolving (2) claims by
the same parties or their privies, and (3) a subsequent suit
based on the same cause of action.” Id.; see also Montana v.
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United States, 440 U.S. 147, 153 (1979) (“Under res judicata, a
final judgment on the merits bars further claims by parties or
their privies based on the same cause of action.”).
a.
Judgment on the Merits in Prior Action
The first factor for the court’s consideration is whether
the prior action resulted in a final judgment. The Settlement
Agreement in Man Wah I resulted in a dismissal with prejudice.
(Pl.’s Br. (Doc. 135 at 7.) Plaintiff contends, and Defendants
do not dispute, that “a stipulation of dismissal with prejudice
is a final judgment on the merits.” (Id. at 23). See also FordClifton v. Dep’t of Veterans Affairs, 661 F.3d 655, 660 (Fed.
Cir. 2011) (“It is widely agreed that an earlier dismissal based
on a settlement agreement constitutes a final judgment on
the merits in a res judicata analysis.”).
b.
Privity of Parties
Claim preclusion also requires that the same parties be
involved in the action, or else parties in privity with those in
the original case. Gross v. Weingarten, 217 F.3d 208, 217 (4th
Cir. 2000) (“It is an axiom of collateral estoppel . . . that
the defendants can be bound . . . only if they were parties, or
in privity to a party.”); Comite de Apoyo a los Trabajadores
Agricolas (CATA) v. U.S. Dep’t of Labor, 995 F.2d 510, 514 (4th
Cir. 1993) (“Nor is Fairview in privity with DOL, such that it
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would be bound by our judgment as a non-party.”). In this pair
of cases, the parties partially differ. Man Wah I bound the
defendants “and [their] members, agents, representatives,
employees, successors, and assigns, and all others in active
concert or participation with them.” (Doc. 54-1 at 4.) Man Wah
Holdings, and RMT were all involved in the previous case. There
is no further need to demonstrate privity for those defendants
in analyzing claim preclusion.
Plaintiff argues that the Defendants new to this action are
in privity with the parties present in the previous case.
Privity between parties can be established if the new party is
“so identified in interest with a party [from the previous]
litigation that he represents precisely the same legal right in
respect to the subject matter involved.” Jones v. SEC, 115 F.3d
1173, 1180 (4th Cir. 1997) (internal quotation marks omitted).
“The concept of privity requires an alignment of interests and
not an exact identity of parties,” and thus the privity inquiry
“centers on the closeness of the relationship in question.”
Weinberger v. Tucker, 510 F.3d 486, 492 (4th Cir. 2007). This
court will assess the relevant Defendants separately to
determine whether they are in privity with the defendants in Man
Wah I. The new Defendants in this case include Jiangsu, TZ
Vehicle, UFI, and Oiseys.
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i.
Jiangsu
First, Plaintiff argues that Jiangsu is in privity with
parties from Man Wah I. Jiangsu is “under control of the same
management team” as both RMT and Man Wah Holdings. (Pl.’s Br.
(Doc. 135) at 8-9.) Plaintiff alleges that Jiangsu “is 80% owned
by RMT and 20% owned by Cheggung Yuan.” (Id. at 16.) RMT, in
turn, which itself was named in the Settlement Agreement of Man
Wah I, is “93% owned by Man Wah Industrial Co., Ltd. under Man
Wah Holdings Ltd.” (Id.) Plaintiff highlights that the corporate
board of Jiangsu includes the Chairman of Man Wah Holdings, a
second Man Wah Holdings director, and the general manager of
RMT. (Pl.’s Reply (Doc. 162) at 15-16.) The relationship between
Jiangsu and RMT/Man Wah Holdings is clearly incredibly close, if
not entirely that of full formal ownership. The parties’
interests with respect to this action appear to overlap almost
entirely – if not completely. Jiangsu appears to be in privity
for purposes of this case with Man Wah Holdings and RMT, both
parties to the previous action.
ii.
TZ Vehicle
TZ Vehicle is somewhat more removed from the Man Wah
Holdings organization than Jiangsu. However, TZ Vehicle is
nevertheless owned by the same family that owns and directs
Jiangsu and Oiseys. (Id. at 17.) In Universal Furniture, this
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court found that an individual defendant was in privity with a
prior corporate defendant because he was “the Vice President,
Chief Operating Officer, Secretary, Treasurer, and part owner”
of the prior corporate defendant. Universal Furniture Int’l,
Inc. v. Frankel, 835 F. Supp. 2d 35, 41 (M.D.N.C.
2011), aff’d, 538 F. App’x 267 (4th Cir. 2013). While Defendants
“do not concede” that TZ Vehicle is in privity with the parties
in Man Wah I, (Defs.’ Resp. (Doc. 152) at 27 n.8), they offer no
facts to counter Plaintiff’s explanation that TZ Vehicle is
closely identified with the Man Wah I settlement parties due to
“significant overlapping ownership and familial control,” (Pl.’s
Br. (Doc. 135) at 16), as well as shared counsel and
demonstrated common business interests, (id. at 17). Plaintiff
moved, in part, for summary judgment on the Third and Fourth
Counterclaims of Invalidity and the First and Second Affirmative
Defense of TZ Vehicle, Man Wah (USA), Man Wah Holdings, RMT, and
Jiangsu. (Pl.’s Br. (Doc. 135) at 1-2 n.1.)
All of these
parties were either in the prior action or are in privity to
those parties from the prior action. Thus, the claim preclusion
analysis with regard to these segments of the Motion for Summary
Judgment may proceed to the next prong. However, the analysis
cannot end there for Plaintiff’s other summary judgment
requests. Defendants’ brief focuses on UFI and Oiseys,
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contending that those two entities in particular are not in
privity with the Man Wah I parties.
iii. UFI
Both UFI and Oiseys are “separate entities that sold
products well before Man Wah I and were not involved in that
litigation.” (Defs.’ Resp. (Doc. 152) at 27.) UFI “has no
relationship with Man Wah or its subsidiaries aside from buying
components to integrate into its products,” and was “not a party
to the previous litigation or settlement agreement.” (Id.)
Plaintiff, on the other hand, argue that UFI is in privity
with the Man Wah I parties. UFI purchased the seating units at
issue from TZ Vehicle and Jiangsu, in what Plaintiff describes
as “a closely linked supply chain.” (Pl’s Br. (Doc. 135) at 20.)
The primary basis of Plaintiff’s argument is the existence of an
indemnification agreement between UFI and Jiangsu in the present
action. Id. at 21. No additional facts demonstrate when the
indemnification agreement was reached or what role Man Wah I may
have played in the signing of such a contract. Defendants allege
the indemnification agreement is a “boilerplate dealing[]” that
serves as a “standard supplier-buyer arrangement.” (Defs.’ Resp.
(Doc. 152) at 30.)
Plaintiff contends that indemnification in this instance
“supports a finding of privity in the context of claim
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preclusion or collateral estoppel.” (Pl.’s Br. (Doc. 135) at
21.) Plaintiff relies heavily on a case from the Northern
District of California, in which a court found that “[b]ecause
[the prior litigant] is contractually obligated to indemnify
defendants for any losses stemming from a finding of
infringement, the court finds that the parties are in privity.”
SpeedTrack, Inc. v. Office Depot, Inc., No. C 07-3602 PJH, 2014
WL 1813292, at *6 (N.D. Cal. May 6, 2014). However,
“[w]hile indemnification is some evidence of privity,
indemnification alone does not mandate a finding of privity.”
Earth Res. Corp. v. United States, 44 Fed. Cl. 274, 286 (1999).
See also H&S Tool, Inc. v. Austerman, No. C-3-07-331, 2008 WL
420036, at *4 (S.D. Ohio Feb. 14, 2008). A more holistic
analysis of control is necessary, as “preclusion is appropriate
only if the putative agent’s conduct . . . is subject to the
control of the party who is bound by the prior adjudication.”
Taylor v. Sturgell, 553 U.S. 880, 906 (2008). The Fourth Circuit
has made clear that the test for privity “centers on the
closeness of the relationship in question.” Weinberger, 510 F.3d
at 492. Indemnification does not automatically guarantee such
closeness. Moreover, the agreement is between UFI and Jiangsu –
Jiangsu was not itself a party to Man Wah I, though it is in
privity with the Man Wah I parties for purposes of this action.
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Plaintiff argues the “interconnectedness” of Jiangsu and the
other defendants is “a coordinated effort by Man Wah,” (Pl.’s
Reply (Doc. 162) at 15), automatically making UFI closely linked
with all of the Man Wah organization due solely to the
indemnification agreement. However, Plaintiff provides few other
facts to support this theory of UFI’s closeness.
The only other fact connecting UFI to the Man Wah
organization is the shared legal counsel of UFI and the Man Wah
organization. However, privity “requires more than a showing of
parallel interest or use of the same attorney.” H&S Tool, 2008
WL 420036, at *4. See also Wills v. Arizon Structures Worldwide,
L.L.C., 824 F.3d 541, 546 (5th Cir. 2016) (finding no privity in
spite of shared counsel); Waddell & Reed Fin., Inc. v. Torchmark
Corp., 243 F. Supp. 2d 1232, 1255 (D. Kan. 2003) (no privity
found even though the entities “share common counsel” and shared
common ownership); Hartford Accident & Indem. v. Columbia Cas.
Co., 98 F. Supp. 2d 251, 257 (D. Conn. 2000) (“[W]hile the fact
that [the parties] have been represented by . . . the
same counsel is considered in the privity analysis, . . .
Hartford has not carried its burden of demonstrating that
Columbia is in privity with Continental.”). Indemnification and
shared counsel are substantial considerations in privity
analysis, but these two factors alone have been presented to the
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court as evidence of closeness. On the other hand, Defendants
point out that UFI is a separate entity that sold products “well
before Man Wah I”, and “has no relationship with Man Wah or its
subsidiaries aside from buying components to integrate into its
products.” (Defs.’ Resp. (Doc. 152) at 27.) No reasonable jury
could find that the high bar for finding privity between UFI and
the Man Wah I parties has been met at this stage in the
proceedings.
iv.
Oiseys
Plaintiff also argues that Oiseys is in privity with the
settlement parties from Man Wah I. The owner of Oiseys,
Plaintiff notes, is a director of Jiangsu, and the son of the
owner of Jiangsu. Due to this overlapping familial ownership,
Plaintiff contends Oiseys is in privity with Jiangsu. Plaintiff
further claims that since Jiangsu is in privity with the parties
from Man Wah I, Oiseys is in privity with those parties as well.
This court agrees that Jiangsu is in privity with the
parties from Man Wah I. See discussion infra III.A.2.b.i.
However, the weak link lies in Plaintiff’s attempt to link
Oiseys to Jiangsu. The primary overlap between the companies is
that Steven Yuan, the owner of Oiseys, is the son of Jiangsu’s
owner and serves as a director on Jiangsu’s board. (Pl.’s Br.
(Doc. 135) at 17.) Additionally, the CEO of Man Wah (USA)
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“attended a mediation” on behalf of Oiseys, Jiangsu, and the
other involved companies - other than UFI. (Id. at 18.)
A parent company and its subsidiary are in privity for
purposes of claim preclusion. Whitehead v. Viacom, 233 F. Supp.
2d 715, 721 (D. Md. 2002). However, Oiseys is not formally a
subsidiary of the Man Wah organization. On one hand, the use of
a common attorney does indicate that Oiseys has shared interests
with Jiangsu and the other Man Wah entities. However, while
Plaintiff has demonstrated that Oiseys is extensively linked
with the rest of the Man Wah organization, little evidence is
provided demonstrating the level of closeness of relationship
necessary for privity. Plaintiff relies on another case in which
this court found privity for purposes of collateral estoppel
under different circumstances.
[B]ased on the nature of Defendant’s participation in
the [prior litigation] and his role as an executive
officer and part owner of [the prior defendant
corporation], this court finds that Defendant’s
interests were aligned with those of [the prior
defendant corporation] such that the defense . . .
that was mounted also constituted representation of
Defendant’s legal right to contest . . . liability.
Universal Furniture, 835 F. Supp. 2d at 42. In Universal
Furniture, the relevant defendant had actively participated in
the prior litigation. Id. Oiseys itself played no role in Man
Wah I. Moreover, Oiseys has no ownership stake in any of the
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companies involved in the Man Wah I settlement. Rather, the
closest allegation is that the individual owner of Oiseys is a
director – with no alleged ownership stake – of Jiangsu.
Jiangsu, while almost entirely owned by Man Wah I parties, and
now involved in the sale of furniture, was not involved directly
in Man Wah I either. The link between Oiseys and the Man Wah I
parties is too attenuated to find privity for the purposes of
claim preclusion.
c.
Same Cause of Action
Finally, where privity exists, whether two causes of action
are identical for claim preclusion purposes depends on “whether
the claim presented in the new litigation arises out of the same
transaction or series of transactions as the claim resolved by
the prior judgment.” Laurel Sand & Gravel, Inc. v. Wilson, 519
F.3d 156, 162 (4th Cir. 2008) (internal quotation marks
omitted). In patent cases, “claim preclusion does not apply
unless the accused device in the action before the court is
‘essentially the same’ as the accused device in a prior action
between the parties that was resolved by a judgment on the
merits.” Acumed LLC v. Stryker Corp., 525 F.3d 1319, 1324 (Fed.
Cir. 2008).
The central question determining the application of claim
preclusion where privity exists centers around whether the
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devices in Man Wah I are ‘essentially the same’ as the devices
in the present action. “While the court looks to Fourth Circuit
law as to general principles of claim preclusion . . . , whether
two patent infringement claims are identical is an issue
specific to patent law and, thus, must be governed by legal
principles established by the Federal Circuit.” SV Int’l, Inc.
v. Fu Jian Quanyu Indus. Co., 820 F. Supp. 2d 677, 683–84
(M.D.N.C. 2011). Devices are considered essentially the same
“where the differences between them are merely ‘colorable’
or ’unrelated to the limitations in the claim of the
patent.’” Acumed, 525 F.3d at 1324.
Plaintiff argues that the accused products in the two cases
are essentially the same, noting that “both cases involve
seating units that are the same, or at most, colorable
imitations of each other.” (Pl.’s Br. (Doc. 135) at 23.)
Plaintiff paints the products with a broad brush, noting that
both cases deal with “seating units capable of reclining between
three positions: an upright position, an intermediate ‘TV’
position, and a fully reclined position.” (Id. at 23-24.)
Furthermore, Plaintiff argues, the accused products in both
cases “have the same components: a seat, a backrest, a base
unit, and an extendable ottoman.” (Id. at 24.) The similarities
also extend to the use of “reclining mechanisms that include[] a
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linear actuator to provide the force required for the seating
unit to recline between the three aforementioned positions.”
(Id. at 26.) Plaintiff’s expert backs up this analysis,
submitting that “[i]n comparing the functions of the Asserted
Patents or the 4152 unit to that of the RMT mechanism, the units
perform substantially the same function in substantially the
same way to achieve substantially the same result.” (Technical
Report, Author: Rufus R. Brown, II (“Brown Report”) (Doc.
136-10) at 44.)
Defendants, on the other hand, argue that “there are
material differences between [the RMT mechanism at issue in Man
Wah I] and the mechanisms accused here.” (Defs.’ Resp. (Doc.
152) at 13.) Defendants highlight two specific differences
between the designs: first, the differing movement and
positioning of the ottoman in the “TV position,” (id. at 15),
and second, differing linkage components in the two chairs, (id.
at 19-20). Though Plaintiff’s expert counts the mechanisms’
similarities, (Brown Report (Doc. 136-10), Defendants present
the expert report of Dr. Kimberly Cameron in contrast, (Expert
Report of Dr. Kimberly Cameron (“Cameron Report”), (Doc. 152-5).
Dr. Cameron highlights a multitude of allegedly material
differences between the products in this case and the RMT
mechanism at issue in the Man Wah I products. She ultimately
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concludes that “the RMT Mechanism is substantially different
from the 4152 mechanism.” (Cameron Report (Doc. 152-5) ¶ 177.)
Where there is substantive dispute, the question of whether
accused products are “essentially the same” is a question of
fact typically left to the factfinder, rather than determined as
a matter of law. See Foster v. Hallco Mfg. Co., 947 F.2d 469,
480 (Fed. Cir. 1991) (at summary judgment, court found “it
inappropriate to rule on the evidence of ‘material differences’
in the first instance and [instead] leave it to the trial court
to determine whether this suit is based on a different claim”);
Certusview Techs., LLC v. Usic, LLC, Case No. 2:14cv373, 2014 WL
12591937, at *9 (E.D. Va. Dec. 15, 2014) (denying motion to
dismiss, where “the parties dispute whether the products at
issue in this case are essentially the same as those involved in
the [prior] action”, deeming it a “factual dispute”). At this
stage, this court could only grant summary judgment if no
reasonable jury could find that the products are colorably
different. This court does not believe Plaintiff’s arguments
have met that standard.
Defendants have alleged ample differences between the
products to create a genuine issue of material fact for a jury.
Thus, even though some Defendants are in privity with the Man
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Wah I parties, this court will deny Plaintiff’s Motion for
Summary Judgment.
B.
Infringement Claim
Defendants’ motion for summary judgment first seeks
judgment on questions of infringement, asking the court to find
that “Defendants have not infringed any of claims 7-11, 13, and
14 of the asserted ‘348 patent and claims 1, 2, and 4-9 of the
asserted ‘693 patent.” (Doc. 142.) A plaintiff may prove direct
infringement by proving either literal infringement or
infringement under the doctrine of equivalents. Cross Med.
Prods., Inc. v. Medtronic Sofamor Danek, Inc., 424 F.3d 1293,
1310 (Fed. Cir. 2005).
Under the doctrine of equivalents, “a product or process
that does not literally infringe upon the express terms of
a patent claim may nonetheless be found to infringe if there is
‘equivalence’ between the elements of the accused product or
process and the claimed elements of the patented invention.”
Warner–Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17, 21
(1997). The Supreme Court has held that the doctrine of
equivalents must be applied in a precise manner, holding that
“[e]ach element contained in a patent claim is deemed material
to defining the scope of the patented invention, and thus the
doctrine of equivalents must be applied to individual elements
- 23 -
of the claim, not to the invention as a whole.” Id. at 29. The
court therefore “must consider each element of the allegedly
infringed claim to determine whether there is equivalence
between each of those elements and the accused device or
method.” N5 Techs. LLC v. Capital One N.A., 56 F. Supp. 3d 755,
760 (E.D. Va. 2014). “If there is not equivalence between the
accused device or method and any one element of the patent claim
in issue, then there is no infringement under the doctrine of
equivalence.” Id. at 760–61.
Defendants argue that the accused products do not meet the
opposed-ends limitation, even under the doctrine of equivalents,
written in the ‘348 patent as follows:
[w]herein the power actuating unit includes opposed
first and second ends, and wherein the first end of
the power actuating unit moves forwardly as the
seating unit moves from the upright position to the TV
position, and wherein the second end of the power
actuating unit moves rearwardly when the seating unit
moves from the TV position to the fully reclined
position.
(‘348 Patent (Doc. 101-1) col. 7 lines 9-15.) Defendants argue
that the accused products do not possess an actuating unit with
“opposed first and second ends,” and even if they do, those
opposed ends do not move as specified in the patent. (Defs.’ Br.
(Doc. 143) at 14.) The actuating unit used on the accused
products is instead a “carriage-style” actuator, which
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Defendants allege is completely different from the actuating
unit envisioned by the patent. (Id.)
“To establish literal infringement, every limitation set
forth in a claim must be found in an accused product, exactly.”
Southwall Techs., Inc. v. Cardinal IG Co., 54 F.3d 1570, 1575
(Fed. Cir. 1995). This does not apply here: the carriage-style
actuator does not have literal opposed ends in the format
envisioned by the patent. However, Plaintiff primarily relies on
an infringement theory based on the doctrine of equivalents.
Differences in structure that prevent a finding of literal
infringement do not prevent a finding of infringement under the
doctrine of equivalents. See Remington Arms Co. v. Modern
Muzzleloading, Inc., No. 2:97CV00660, 1999 WL 281341, at *6
(M.D.N.C. Feb. 9, 1999) (“[D]ifferences in structure between
Plaintiff’s 700 ML and Defendant’s DISC Rifle does not impede a
finding of infringement under the doctrine of equivalents.”).
The doctrine of equivalents instead requires that, with regard
to each element of the patent claim, “two devices do the same
work in substantially the same way, and accomplish substantially
the same result, they are the same.” Graver Tank & Mfg. Co. v.
Linde Air Prods. Co., 339 U.S. 605, 608 (1950). This is what
Defendants correctly call the “function-way-result test.”
(Defs.’ Br. (Doc. 143) at 16.) Defendants argue that the
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existence of only one carriage-style actuator excludes the
possibility of any infringement, since the carriage-style
actuator is “substantially different, both in design and in the
way [it] move[s] a load, from the actuating units required by
the Claims-at-Issue.” (Id. at 20.) Indeed, even “[w]here an
accused device performs substantially the same function to
achieve substantially the same result but in a substantially
different manner, there is no infringement under the doctrine of
equivalents.” Dolly, Inc. v. Spalding & Evenflo Cos., 16 F.3d
394, 400 (Fed. Cir. 1994).
However, Plaintiff presents evidence supporting its
contention that the mechanism does, in fact, perform
substantially the same function in substantially the same way to
achieve substantially the same result. Plaintiff’s expert
identifies two distinct endpoints on the actuator to meet the
opposed ends requirement. (Brown Report (Doc. 136-10) at 13.) He
describes the “second end” of the actuator moving “rearwardly,
in substantially the same way.” (Expert Report of Rufus Brown
Responding to Expert Report of Dr. Kimberly Cameron Concerning
Infringement (Doc. 136-19) ¶ 42.) As Plaintiff notes, by
contending this argument is an attempt at further claim
construction, the claim as defined does not require further
specificity as to what constitutes an opposed end – the
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“positional limitation” Defendants “attempt to impose” is not
inherent in the patent or discussed in this court’s Markman
Order. (Pl.’s Br. in Opp’n to Defs. Mots. for Summ. J.
(“Pl.’s’
Resp.”) (Doc. 154) at 14.) Moreover, Plaintiff identifies the
carriage – identified by Plaintiff’s expert as the second end moving “rearwardly,” as required by the patent. Plaintiff argues
that “the first end of the actuating unit moves forward when the
seating unit moves from the upright to the TV position,” while
“the second end of the actuating unit moves rearwardly” when the
chair adjusts “[f]rom the TV position to the fully reclined
position.” (Id. at 18.) Plaintiff’s characterization is in line
with the patent’s claims and construction.
While the claim construction phase of an infringement claim
is a matter of law for the court, “[w]hether a claim encompasses
an accused device, either literally or under the doctrine of
equivalents, is a question of fact.” Zelinski v. Brunswick
Corp., 185 F.3d 1311, 1315 (Fed. Cir. 1999). This means that in
the summary judgment context, “[w]hether a claim
is infringed under the doctrine of equivalents may be decided
on summary judgment if no reasonable jury could determine that
the limitation and the element at issue are equivalent.” Id. at
1317. Here, Plaintiff and Defendants present opposing
characterizations of the mechanism – it is not this court’s role
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to weigh the credibility of each factual contention regarding
the accused products. A reasonable jury could feasibly find
equivalence based on the evidence presented, and this court will
therefore deny the motion for summary judgment on the issue of
infringement.
C.
Limitation of Damages
Defendants request that the court limit the damages
available against them on multiple bases, ranging from critiques
of Plaintiff’s expert to denials of proper notice.
1.
Reliability of Plaintiff’s Damages Witness
Defendants’ first argument critiques the testimony of
Plaintiff’s expert, Mr. Graham D. Rogers, and his methodology in
calculating damages. (Defs.’ Reply in Supp. of Mots. for Summ.
J. (“Defs.’ Reply”) (Doc. 167) at 16.) Rule 702 provides that
testimony by an expert witness must be “based on sufficient
facts or data” and be “the product of reliable principles and
methods.” Fed. R. Evid. 702(a)-(d); see also Bresler v.
Wilmington Tr. Co., 855 F.3d 178, 195 (4th Cir. 2017). A
challenge to a witness’ reliability under Rule 702 is governed
by Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993).
Daubert analysis, typically raised in a motion to exclude expert
testimony rather than a motion for summary judgment, requires
two analytical determinations. First, “whether an expert’s
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testimony reflects ‘scientific knowledge,’ [and is] “‘derived by
the scientific method,’” and second, “whether the expert’s
testimony is ‘relevant.’” Doe v. Ortho-Clinical Diagnostics,
Inc., 440 F. Supp. 2d 465, 469 (M.D.N.C. 2006) (quoting Daubert,
509 U.S. at 590, 597)).
Defendants do not make a formal Daubert argument regarding
Plaintiff’s expert, Mr. Rogers, and this court does not believe
an exhaustive Daubert analysis is necessary here. Defendants
claim Mr. Rogers’ estimation of the “lump-sum up front payment
. . . based on anticipated future sales” is inaccurate, arguing
his comparator for anticipated sales was inappropriate. (Defs.’
Reply (Doc. 167) at 16-17.) Though Defendants provide their own
analysis critiquing Mr. Rogers’ approach, they do not provide a
countervailing expert to discount his methodology. Defendants
also provide no contrary evidence of differing sales
projections. (Id. at 17.) Mr. Rogers’ report relies on, as
Plaintiff points out, “actual sales data,” and provides
substantial explanation of his methods. In terms of their
challenge to his methodology, Defendants appear to be
challenging the use of certain values based on the license with
Leggett & Platt. (Defs.’ Br. (Doc. 143) at 28-29.) This
objection is to the particular values Mr. Rogers used in his
calculations, rather than the actual methodology employed – and
- 29 -
assessing “the values [the expert] chose to assign to certain
variables” is a matter of weight and credibility, not
admissibility. Bresler, 855 F.3d at 195. Mr. Rogers’ testimony
will not be excluded on the basis of this summary judgment
motion.
2.
Pre-Action Notice
Defendants also argue that this court should limit the
damages available against them due to a lack of notice regarding
potential infringement prior to the initiation of this action.
See Limelight Networks, Inc. v. XO Commc’ns, LLC, 241 F. Supp.
3d 599, 608 (E.D. Va. 2017) (“To seek damages for patent
infringement occurring before the initiation of a lawsuit, a
patentee must have placed the allegedly infringing party on
notice about the patent’s existence.”). Notice can be provided
in two separate ways: “[a] patentee can place others on notice
either constructively, by marking its patented articles with a
patent number, or actually, by specifically communicating the
existence of the patent.” Id.
Whether notice of potential infringement has been properly
provided under 35 U.S.C. § 287(a) is typically a matter for the
jury – however, Defendants request summary judgment declaring
notice was not provided prior to the suit. Since “compliance
with the marking statute is a question of fact,” in order to
- 30 -
receive summary judgment, Defendants need to demonstrate that
“no reasonable jury could find that the patentee either has or
has not provided . . . notice to the ‘particular defendants by
informing them of his patent and of their infringement of it.’”
Banner Pharmacaps Inc. v. Perrigo Co., No. 1:04 CV 492, 2005 WL
2136927, at *7 (M.D.N.C. Aug. 1, 2005) (quoting Amsted Indus.
Inc. v. Buckeye Steel Castings Co., 24 F.3d 178, 187 (Fed. Cir.
1994)).
a.
Marking
In lieu of actual notice, constructive notice can be
provided via marking of products. 35 U.S.C. § 287 provides that:
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 is patented . . . by fixing thereon the
word “patent” . . . . 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.
35 U.S.C. § 287(a).
Therefore, if a “patentee makes or sells a patented article
and fails to mark in accordance with § 287, the patentee cannot
collect damages until it either begins providing notice or sues
the alleged infringer — the ultimate form of notice — and then
- 31 -
only for the period after notification or suit has occurred.”
Arctic Cat Inc. v. Bombardier Recreational Prods. Inc., 950 F.3d
860, 864 (Fed. Cir.), cert. dismissed, ____ U.S. ____, 141
S. Ct. 753 2020).
At no point do Defendants allege that Plaintiff failed to
mark its products. In fact, Plaintiff maintains that all
relevant products were marked by both Plaintiff and its
licensee, (Pl.’s Resp. (Doc. 154) at 7), and no facts are
presented to the contrary. Defendants instead allege Plaintiff
has failed to present evidence demonstrating that “both that its
licensee’s products were continuously marked and that it made
reasonable efforts to ensure its licensee’s compliance with
§ 287(a).” (Defs.’ Reply (Doc. 167) at 14.)
Defendants are correct that “[t]he burden of proving
compliance with marking is and at all times remains on the
patentee.” Arctic Cat Inc. v. Bombardier Recreational Prods.
Inc., 876 F.3d 1350, 1367 (Fed. Cir. 2017). However, “an 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.”
Id. at 1368. In other words, before a plaintiff bears the burden
to present evidence of marking, the defendants “shoulder[] only
a burden of production to identify unmarked products that [they]
- 32 -
allege[] should have been marked.” Id. at 1369 (emphasis added).
Though this bar is low, at no point do Defendants meet it: they
fail to actually allege that any products were unmarked. The
purpose of this rule is to prevent “gamesmanship” - which
appears to be Defendants’ strategy by carefully avoiding the
allegation that any relevant products were, in fact, unmarked.
Id. at 1368. The court will not prohibit pre-action damages on
this ground at summary judgment, as Plaintiff maintains all
relevant products are marked and Defendants have not properly
challenged Plaintiff’s compliance with § 287.
b.
Actual Notice
Defendants also seek summary judgment preventing pre-action
damages on the basis that Plaintiff “is not entitled to any
damages for sales of the accused products prior to the date
Plaintiff first provided written notice of its infringement
allegations.” (Doc. 142.) Plaintiff argues that Defendants were
on notice because of Man Wah I, which involved similar
infringement allegations regarding the same patents. Plaintiff
argues that Man Wah I served to put Defendants on notice about
potential infringement for the products at issue in the present
case, in addition to the specific products covered in that
action. Indeed, “[i]f a patentee’s initial notice is
sufficiently specific to accuse one product of infringement,
- 33 -
‘ensuing discovery of other models and related products may
bring those products within the scope of the notice.’” K-TEC,
Inc. v. Vita-Mix Corp., 696 F.3d 1364, 1379 (Fed. Cir. 2012)
(quoting Funai Elec. Co. v. Daewoo Elecs. Corp., 616 F. 3d 1357,
1373 (Fed. Cir. 2010); see also Iron Oak Techs., LLC v. Fujitsu
Am., Inc., No. 3:16-cv-3319-M, 2018 WL 6593709, at *3 (N.D. Tex.
Dec. 14, 2018) (“[O]nce a patentee provides notice of
infringement with respect to one product, other models and
related products may be found to be within the scope of the
notice.”).
The parties here disagree whether the initial action dealt
with infringement that was sufficiently similar to the
currently-alleged infringement such that notice was provided at
the time of that case. The court’s role here is the same as that
on the question of claim preclusion similarity to Man Wah I. See
discussion infra III.A.2.c. Given the factual dispute on this
issue, and the high standard of summary judgment, this court is
not in a position to rule that no reasonable jury could find
adequate notice existed: this question comes down to the level
of similarity of the products, which is ultimately an issue of
fact. See MLC Intell. Prop., LLC v. Micron Tech., Inc., Case No.
19-cv-03345-EMC, 2019 WL 4963253, at *10 (N.D. Cal. Oct. 8,
2019) (“Nevertheless, at this early juncture in the litigation,
- 34 -
the Court cannot [come to a conclusion] as a matter of law
. . . . [W]hether the [new] products are sufficiently similar
for notice purposes is a question of fact for the jury to
decide.”); Novo Nordisk A/S v. Becton Dickinson & Co., 96
F. Supp. 2d 309, 320 (S.D.N.Y. 2000) (“Even where the notice
given went to a merely related product class, such notice may be
sufficient and the question of adequate notice must go to the
jury.”).
D.
Reasonableness of Royalties
Defendants next allege that Plaintiff “cannot meet its
burden of providing a reasonable royalty because Mr. Rogers’s
reasonable royalty analysis is unreliable and based on ‘mere
speculation or guess.’” (Defs.’ Br. (Doc. 143) at 29.) First and
foremost, as with many of the issues raised in these summary
judgment motions, the credibility of expert testimony is
fundamentally a question for the factfinder. The Federal Circuit
has made clear that “[t]he degree of comparability [between two]
license agreements as well as any failure on the part of [the]
expert to control for certain variables are factual issues best
addressed by cross examination and not by exclusion.”
ActiveVideo Networks, Inc. v. Verizon Commc’ns, Inc., 694 F.3d
1312, 1333 (Fed. Cir. 2012). See also i4i Ltd. P’ship v.
Microsoft Corp., 598 F.3d 831, 856 (Fed. Cir. 2010)
- 35 -
(“[Q]uestions about what facts are most relevant or reliable to
calculating a reasonable royalty are for the jury.”).
Moreover, Mr. Rogers’ opinion, regardless of its
credibility, does not appear to be based on mere “guess” as
Defendants argue – he provides substantial analysis explaining
his calculations, including an adjustment for non-exclusivity
that affects the upfront payment. (Doc. 144-20 at 53.) The
starting point of Mr. Rogers’ analysis is the license with
Leggett & Platt, which Defendants contest is an inappropriate
comparator. (Defs.’ Br. (Doc. 143) at 29.) Certainly, “[w]hen
relying on licenses to prove a reasonable royalty, alleging a
loose or vague comparability between different technologies or
licenses does not suffice.” LaserDynamics, Inc. v. Quanta
Computer, Inc., 694 F.3d 51, 79 (Fed. Cir. 2012). However, Mr.
Rogers attests that he “searched the publicly available, feebased, RoyaltySource® database in an effort to identify
agreements relating to technology most similar to the Patentsin-Suit” and ultimately concluded that Leggett & Platt was the
best comparator, in spite of its larger size, because
“Defendants and Leggett & Platt are similar types of companies .
. . and compete against each other in domestic and international
markets.” (Doc. 144-20 at 17-18.) It was also Mr. Rogers’ expert
opinion that “the Leggett & Platt License Agreement establishes
- 36 -
Ultra-Mek’s desired licensing format that follow-on licensees,
if any, would be pressed to accept.” (Id. at 27.) Plaintiff
notes that Defendants have failed to provide any expert
testimony to counter Mr. Rogers’ approach to assessing what
royalties and upfront payment may be appropriate. (Pl.’s Resp.
(Doc. 154) at 30.) Of course, the lack of an expert alone does
not disqualify Defendants’ argument. See, e.g., ResQNet.com,
Inc. v. Lansa, Inc., 594 F.3d 860, 872 (Fed. Cir. 2010) (“This
court should not sustain a royalty award based on inapposite
licenses simply because [the defendant] did not proffer an
expert to rebut [the other party’s expert].”). However, the
analysis provided by Mr. Rogers clearly goes beyond a “loose . .
. comparability” to Leggett & Platt. LaserDynamics, Inc., 694
F.3d at 79. The license with Leggett & Platt, according to Mr.
Rogers, bears substantial similarities to a theoretical license
with Defendants – the companies are direct competitors, and the
greater market size of Leggett & Platt was noted and allegedly
taken into account by Mr. Rogers’ report. Beyond the basic
similarity presented here, further interrogation of the
similarity of the licenses is best left to the factfinder.
E.
Liability of Man Wah (USA)
Finally, Defendants seek summary judgment dismissing Man
Wah (USA) from the case “as there is no evidence that Man Wah
- 37 -
(USA) made, used, offered for sale, or sold any of the accused
products.” (Doc. 142.) Plaintiff’s Complaint, (Am. Compl (Doc.
31)), alleges that “Man Wah Holdings, RMT, Man Wah (USA), and
other companies are effectively operating as a single entity
known as the ‘Man Wah Group.’” (Id. ¶ 11.)
Regarding Counts I and II, the infringement counts,
Plaintiff’s Final Disclosure of Asserted Claims and Infringement
Contentions includes the allegation that certain Defendants,
while they may not have directly sold the Accused Products,
still contributed to that infringement. (Doc. 136-18 at 3.)
Plaintiff argues that Defendants were either selling the
products themselves or “inducing or contributing others to
manufacture, use, sell, and/or offer for sale in the United
States and/or importing into the United States” the Accused
Products. (Id. at 4.) In this vein, Plaintiff has amply alleged
the overlapping business structure of Man Wah (USA) and the
other Man Wah entities. Plaintiff also alleges that Man Wah
(USA) “arranges” the sale of furniture for other Man Wah
corporations, though further evidence of that has not been
placed on the record in this case. (Pl.’s Resp. (Doc. 154) at
32.) A reasonable jury could find evidence that Man Wah (USA)
indirectly infringed the patents at issue by, at the very least,
- 38 -
contributing to others offering the products for sale in the
United States.
Counts III and IV, which deal with the alleged breach of
the Settlement Agreement, allege that Man Wah (USA) “promised in
the March 2017 settlement agreement that [it] and none of [its]
affiliates” would infringe again, yet Man Wah Holdings and
affiliates in fact “carried out such actions” as alleged in this
complaint. (Am. Compl. (Doc. 31) ¶ 91.) Plaintiff also argues
that Man Wah (USA) participated directly in “substantive
business functions” and “decision-making” for Man Wah Holdings
due to its “overlapping ownership and business functions.”
(Pl.’s Resp. (Doc. 154) at 32.) The record demonstrates that the
CEO of Man Wah (USA), William Guy Ray (“Mr. Ray”), had full
authority to settle on behalf of the entire Man Wah
organization, which included all Defendants except UFI. (Doc.
107 at 3, 5.) Moreover, as the CEO of Man Wah (USA), Mr. Ray has
openly stated he is “actively involved in” everything from
“developing global strategies” to “decisions about new
products.” (Doc. 108 at 1-2.) Mr. Ray also indicates that these
decisions are made “[f]or the entire Man Wah organization
worldwide.” (Id. at 1.) Summary judgment is not appropriate
here, as a reasonable jury could disagree with Defendants that
“Man Wah (USA) was not involved in the sales of the Accused
- 39 -
Products”, (Defs.’ Br. (Doc. 143) at 31), due to its overlapping
business functions with Man Wah Holdings, as well as the
extensive control its CEO possessed over the products released
by the broader Man Wah organization.
IV.
CONCLUSION
For the reasons set forth herein,
IT IS THEREFORE ORDERED that Defendants’ Motion for Summary
Judgment, (Doc. 142), is DENIED.
IT IS FURTHER ORDERED that Plaintiff’s Motion for Summary
Judgment, (Doc. 134), is DENIED.
This the 30th day of March, 2021.
_______________________________________
United States District Judge
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