Kimberly-Clark Worldwide Inc v. First Quality Products Inc et al

Filing 803

MEMORANDUM AND ORDER - AND NOW, this 30th day of April, 2013, upon consideration of Defendants motion for partial summary judgment 671 , and pursuant to the accompanying memorandum, it is ORDERED that said motion is GRANTED in part and DENIED in par t as follows: 1. The motion is GRANTED in the following respects: a. Summary judgment that KC failed to comply with thepatent marking statute is GRANTED with respect to the Kellenberger Patent. KCs noncompliance with the patent marking statute preven ts it from recoveringdamages for infringement of the Kellenberger Patent that allegedly occurred between March 12, 2003 and March 11, 2009. However, KC may seek damages forinfringement alleged to occur between March 12, 2009 and September 15, 2009. b . Summary judgment that KC failed to comply with the patent marking statute is GRANTED with respect to the Melius Patent. KCs noncompliance with the patent marking statute prevents it from recovering damages for infringement of the Melius Patent that allegedly occurred between May 5, 2005 and March 11, 2009. However, KC may seek damages for infringement alleged to occur between March 12, 2003 and May 4, 2005, and from March 12, 2009 through the present.2. The motion is DENIED in all other respects. (See memo for complete details.) Signed by Honorable William W. Caldwell on 4/30/13. (am)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

KIMBERLY-CLARK WORLDWIDE, INC.,
Plaintiff

:
:

v.

CIVIL NO. 1:09-CV-1685
:

FIRST QUALITY BABY PRODUCTS, LLC,
FIRST QUALITY PRODUCTS, INC.,
FIRST QUALITY RETAIL SERVICES, LLC,
FIRST QUALITY HYGIENIC, INC.,
Defendants and
Counterclaim Plaintiffs
v.

:
:
:
:

KIMBERLY-CLARK CORPORATION,
KIMBERLY-CLARK WORLDWIDE, INC.,
KIMBERLY-CLARK GLOBAL SALES, LLC,
Counterclaim Defendants

:
:

MEMORANDUM
I.

Introduction
Presently before the court is a motion for partial summary judgment

(Doc. 671), filed by defendants First Quality Baby Products, LLC, First Quality
Products, Inc., First Quality Retail Services, LLC, and First Quality Hygienic, Inc.
(collectively “FQ”). FQ seeks summary judgment that Plaintiff Kimberly-Clark
Worldwide, Inc. (“KC”) failed to comply with the patent marking statute, and that a
portion of the patent infringement damages sought by KC are barred as a result.
KC has filed a brief in opposition to this motion (Doc. 703), and FQ has filed a reply
(Doc. 742), so the motion is now ripe for disposition. For the reasons that follow, we
will grant the motion in part and deny it in part.

II.

Background
In February 2009, FQ filed a complaint in this court for a declaratory

judgment, but we dismissed FQ’s complaint for lack of subject matter jurisdiction.
Prior to our dismissal, however, KC filed this patent infringement action in the U.S.
District Court for the Northern District of Texas, and this action was then transferred
from Texas to this court. Among other claims in this action, KC seeks damages for
infringement of the Kellenberger Patent, the Melius Patent, the Rajala ‘922 family of
patents, and the Rajala ‘887 Patent. In the pending motion, FQ seeks summary
judgment that KC did not comply with the patent marking statute for these patents,
and consequently, that KC cannot claim pre-complaint damages for infringement of
these patents.

III.

Legal Standard
Rule 56(a) provides that summary judgment should be granted "if the

movant shows that 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). We will
examine the motion under the well-established standard. See, e.g., Meditz v. City of
Newark, 658 F.3d 364, 369 (3d. Cir. 2011). “Once the moving party points to
evidence demonstrating no issue of material fact exists, the non-moving party has
the duty to set forth specific facts showing that a genuine issue of material fact
exists and that a reasonable factfinder could rule in its favor.” Id. (quoting Azur v.
Chase Bank, USA, Nat’l Ass’n, 601 F.3d 212, 216 (3d Cir. 2010)). The court must
credit the nonmovant’s evidence and draw “all justifiable inferences” in its favor. Id.
2

The pending summary judgment motion challenges KC’s compliance
with the patent marking statute, 35 U.S.C. § 287(a). Under this statute, damages for
patent infringement are limited to infringement that occurred after the infringer
received notice of the infringement. The patentee may either provide the infringer
with actual notice of infringement, or provide constructive notice by marking the
number of the patent on “substantially all of its patented products[,]” in a
“substantially consistent and continuous” manner. American Medical Sys. v.
Medical Eng’g Corp., 6 F.3d 1523, 1537-38 (Fed. Cir. 1993). Compliance with the
marking statute is a question of fact, and the patentee bears the burden of proving
compliance. Maxwell v. J. Baker, Inc., 86 F.3d 1098, 1111 (Fed. Cir. 1996).

IV.

Discussion
As noted above, a patentee can recover damages for patent

infringement either from the time when it gave the infringer actual notice of
infringement, or from the time when it began consistently marking substantially all
products that practice the patent. In this case, it is undisputed that no actual notice
occurred until KC’s pleadings in this litigation (the original complaint and the
amended complaint) raised claims of infringement. In order to determine whether
KC may claim pre-complaint damages, in the absence of actual notice, we must
examine constructive notice by marking.
FQ argues that KC cannot show compliance with the patent marking
statute because it permitted other companies to practice the patents at issue and
cannot show that the other companies’ products were marked with the numbers of
3

the patents they practiced. Given these circumstances, FQ argues that KC cannot
show substantially consistent and continuous marking. When someone other than
the patentee practices the patent at issue and fails to mark its products, then “the
court may consider whether the patentee made reasonable efforts to ensure
compliance with the marking requirements[,]” under an approach known as a “‘rule
of reason’ approach[.]” Maxwell, 86 F.3d at 1111-12. In the subsections that follow,
we will separately discuss each patent and examine whether a reasonable factfinder could find compliance with the patent marking statute for that patent.

A.

Kellenberger Patent

KC seeks damages for infringement of the Kellenberger Patent from
March 12, 2003 until the patent expired on September 15, 2009. KC filed its
complaint accusing FQ of infringing the Kellenberger Patent on March 12, 2009.
Therefore, we must examine marking between March 12, 2003 and March 11, 2009.
FQ suggests that the following companies may have practiced the
Kellenberger Patent during this time frame: Procter & Gamble (“P&G”), McNeil-PPC,
Inc. (“McNeil”), and Paul Hartmann AG (“Hartmann”).1 Neither KC nor FQ has
provided evidence as to whether Hartmann or McNeil practiced the Kellenberger
Patent, or if so, whether their products that practiced the patent bore the patent
number. However, there is some evidence of record indicating that P&G practiced
1

KC admits that it entered into the following agreements with these companies.
On August 13, 2001, KC granted P&G immunity from suit under the Kellenberger
Patent. Later, on March 1, 2003, KC entered into a covenant not to sue Hartmann
and granted Hartmann immunity from suit under the Kellenberger Patent. And finally,
on January 14, 2005, KC granted McNeil a license under the Kellenberger Patent.
4

the Kellenberger Patent without marking its products with the patent number.
Specifically, Stephen Goldman, FQ’s expert, tested 14 packages of P&G diapers,2
dated from July 21, 2007 to January 25, 2009, none of which bore the Kellenberger
Patent number, and Goldman concluded that these products practiced at least claim
1 of the Kellenberger Patent.
KC emphasizes that FQ’s evidence of P&G practicing the Kellenberger
Patent is limited. A de minimis number of unmarked products will not preclude a
court from concluding that a patentee complied with the patent marking statute. See
Funai Elec. Co., Ltd. v. Daewoo Elecs. Corp., 616 F.3d 1357, 1374-75 (Fed. Cir.
2010); Maxwell, 86 F.3d at 1111-12. KC argues that the results of testing 14
individual packages should not be extrapolated to any other P&G products, and a
reasonable jury could conclude that 14 packages of P&G diapers are a de minimis
quantity of unmarked products. KC also notes that the tested products were all
made within a period of less than two years, and there is no evidence about
products made at other times between March 12, 2003 and March 11, 2009. KC
cites one of our sister District Courts’ opinions for the proposition that even if
marking is not proper at all periods of time, an infringer may be liable for damages
for a period of time in which proper marking occurred. See Metrologic Instruments,
Inc. v. PSC, Inc., No. 99-4896, 2004 WL 2851955 at *21 (D.N.J. Dec. 13, 2004).

2

It appears that testing a larger sample of P&G’s diapers may not have been
feasible. According to FQ, Goldman tested “every sample of P&G products available
to First Quality that was manufactured and sold” during the relevant time frame. (Doc.
742 at 12).
5

Another issue raised by KC is the question of which party should bear
the burden of showing the existence of patented articles that should have been
marked. KC cites Laitram Corp. v. Hewlett-Packard Co., 806 F. Supp. 1294, 129697 (E.D. La. 1992), and argues that the best approach is to place the burden on the
accused infringer to identify what products, if any, practice the patent, and then to
shift the burden to the patentee to show either that the products were marked or that
they are not covered by the patent. In response to this point, FQ argues that the
Laitram court’s approach is “the exception rather than the rule, and has been
criticized as such.” DR Sys., Inc. v. Eastman Kodak Co., 08-CV-0669, 2009 WL
2632685, at *4 (S.D. Cal. Aug. 24, 2009) (citing 4 Robert A. Matthews Jr., Annotated
Patent Digest § 30:148). We conclude that the Laitram court’s approach should be
rejected, and KC should fully bear the burden to prove compliance with the patent
marking statute.
KC contends that it marked its own products with the Kellenberger
Patent number, and FQ neither concedes nor disputes this point. For purposes of
ruling on the pending motion, we must consider the evidence in the light most
favorable to KC, and therefore, we will assume that all of KC’s own products were
marked with the number(s) of the patent(s) they practiced. However, we find this
evidence insufficient to support a finding that, in the market as a whole, products
practicing the Kellenberger Patent were substantially consistently and continuously
marked with the patent number. To the contrary, in light of the other evidence
described below, such a conclusion would be unreasonable.

6

It is undisputed that three other companies, including KC’s largest
competitor, P&G, were licensed or otherwise given carte blanche to practice the
Kellenberger Patent. Of these three, only Hartmann was contractually obligated to
mark the Kellenberger Patent number on its products that practice the patent. P&G
and McNeil were under no such obligation, because KC was unable to secure such
an agreement from P&G or McNeil.3 Moreover, FQ has come forward with
evidence, from a sampling of P&G’s diapers, showing that each tested product
practiced the Kellenberger Patent, but none were marked with the patent number.
Although KC invites us to dismiss the sampling as a de minimis number of
unmarked products, it offers no reasonable basis for a fact-finder to infer that the
tested diapers were not a fair, representative sample of the billions of dollars worth
of diapers sold by P&G.
In light of this evidence, we find no basis upon which a reasonable
finder of fact could find that KC complied with the patent marking statute with
respect to the Kellenberger Patent. Therefore, FQ is entitled to summary judgment
on this issue, and KC’s potential damages for infringement of the Kellenberger
Patent will be limited to the period of time between March 12, 2009, when KC
provided FQ with actual notice of its infringement claim, and September 15, 2009,
the date on which the Kellenberger Patent expired.
3

KC expressed interest in including marking requirements in its agreements
with P&G and McNeil, but it did not succeed in negotiating these terms. KC contends
that, because it made reasonable efforts to negotiate marking requirements, a
reasonable jury could find compliance with the patent marking statute. However, we
conclude that KC’s unsuccessful negotiating efforts are insufficient to satisfy the
statute, and we reject this argument.
7

B.

Melius Patent

KC seeks damages for infringement of the Melius Patent from March
12, 2003 through the present. KC filed its complaint accusing FQ of infringing the
Melius Patent on March 12, 2009. Therefore, we must examine marking between
March 12, 2003 and March 11, 2009.
FQ concedes that, between March 12, 2003 and May 4, 2005, the
patent marking statute does not preclude the infringement damages sought by KC.
However, on May 5, 2005, KC granted P&G immunity from suit under the Melius
Patent, without requiring P&G to mark its products with the Melius Patent. FQ
contends that after this date, KC cannot prove compliance with the patent marking
statute, because P&G practiced the Melius Patent without marking its products with
the patent number. In support of this contention, FQ points to Goldman’s testing
(described above). Goldman concluded that, based on his testing, P&G’s products
practiced at least claim 55 of the Melius Patent, but the products were not marked
with the Melius Patent number.
The evidence concerning the Melius Patent essentially parallels the
evidence concerning the Kellenberger Patent, discussed above. Therefore, for the
same reasons set forth above, we conclude that FQ is entitled to summary
judgment, and KC will be unable to recover damages for infringement of the Melius
Patent that occurred between May 5, 2005 and March 11, 2009. However, KC may
be able to recover damages for infringement of the Melius Patent between March
12, 2003 and May 4, 2005, and from March 12, 2009 through the present.
8

C.

Rajala ‘922 Family of Patents

KC seeks damages for infringement of the Rajala ‘922 family of
patents from October 16, 2008 through the present. KC provided FQ with actual
notice of its infringement claim on September 21, 2009, when it provided FQ with a
copy of its amended complaint raising this claim. Therefore, we must examine
marking between October 16, 2008 and September 20, 2009.
FQ argues that, during this time frame, Hartmann and/or SCA
Personal Care, Inc. (“SCA”) may have practiced the Rajala ‘922 family of patents, as
they were licensed to do,4 but failed to mark their products with the appropriate
patent numbers. Neither KC nor FQ has provided evidence as to whether SCA
practiced the Rajala ‘922 family of patents, or if so, whether its products that
practiced the patents bore the patent numbers. There is some evidence suggesting
that Hartmann’s products practiced the Rajala ‘922 family of patents and were not
marked with the patent numbers; however, this evidence post-dates the time frame
that is relevant to our marking inquiry.5

4

KC licensed Hartmann to practice the Rajala ‘922 family of patents on
November 1, 2004, and KC licensed SCA to practice these patents on May 27, 2008.
5

Early in 2011, or around that time, it came to KC’s attention that four
packages of Hartmann’s products, which KC believed practiced the Rajala ‘922 family
of patents, were not marked with KC’s patent numbers. Daniel Gardner, FQ’s expert,
inspected KC’s products (which were marked with the Rajala ‘922 family of patents)
and Hartmann’s products (which were not so marked), and he concluded that the
products were all designed with the same features corresponding to the asserted
claims of the Rajala ‘922 family of patents.
9

We conclude that the evidence, when viewed in the light most
favorable to KC, could support a finding that KC complied with the patent marking
statute with respect to the Rajala ‘922 family of patents. We find it significant that
KC’s agreements with Hartmann and SCA contractually required them to mark the
Rajala ‘922 family of patents on their products that practice those patents. Under a
rule of reason approach, a reasonable fact-finder could conclude that KC made
reasonable efforts to ensure compliance with the patent marking statute by including
a marking requirement in its licensing agreements.6 Therefore, FQ’s motion for
summary judgment that KC failed to comply with the patent marking statute will be
denied with respect to the Rajala ‘922 family of patents.

D.

Rajala ‘887 Patent

KC seeks damages for infringement of the Rajala ‘887 Patent from
September 23, 2003 through the present. KC provided FQ with actual notice of its
infringement claim on September 21, 2009, when it provided FQ with a copy of its
amended complaint raising this claim. Therefore, the relevant time period for us to
examine is from September 23, 2003 to September 20, 2009.

6

We also note KC’s assertion that, after learning of Hartmann’s failure to mark
at least four packages of products, it took reasonable steps to ensure compliance with
the marking requirement. FQ admits that KC engaged in discussions with Hartmann,
but FQ suggests that more may be required to show compliance with the marking
statute. For purposes of ruling on the pending motion, we must view the evidence in
the light most favorable to KC, and in this light, we conclude that a reasonable factfinder could find KC’s efforts sufficient to satisfy the statute.
10

FQ concedes that, between September 23, 2003 and May 26, 2008,
the patent marking statute does not preclude the damages sought by KC.7
However, FQ contends that KC cannot show compliance with the patent marking
statute beginning on May 27, 2008, when KC licensed SCA to practice the Rajala
‘887 Patent. Neither party has provided evidence as to whether SCA practiced the
Rajala ‘887 Patent, or if so, whether its products that practiced the patent bore the
patent number. However, under its agreement with KC, SCA was contractually
required to mark the Rajala ‘887 Patent number on products that practice the patent.
As explained above, we conclude that this evidence could support a finding that KC
complied with the patent marking statute. Therefore, FQ is not entitled to summary
judgment with respect to the Rajala ‘887 Patent.

V.

Conclusion
For the reasons set forth above, we conclude that FQ’s motion should

be granted with respect to the Kellenberger and Melius Patents, but denied with
respect to the Rajala ‘922 family of patents and the Rajala ‘887 Patent. We will
issue an appropriate order.

/s/ William W. Caldwell
William W. Caldwell
United States District Judge
Date: April 30, 2013
7

KC contends that it has not practiced the Rajala ‘887 Patent, and FQ does not
dispute this point. Therefore, it appears that KC has no obligation to mark any of its
own products with this patent number.
11

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

KIMBERLY-CLARK WORLDWIDE, INC.,
Plaintiff

:
:

v.

CIVIL NO. 1:09-CV-1685
:

FIRST QUALITY BABY PRODUCTS, LLC,
FIRST QUALITY PRODUCTS, INC.,
FIRST QUALITY RETAIL SERVICES, LLC,
FIRST QUALITY HYGIENIC, INC.,
Defendants and
Counterclaim Plaintiffs
v.

:
:
:
:

KIMBERLY-CLARK CORPORATION,
KIMBERLY-CLARK WORLDWIDE, INC.,
KIMBERLY-CLARK GLOBAL SALES, LLC,
Counterclaim Defendants

:
:

ORDER
AND NOW, this 30th day of April, 2013, upon consideration of
Defendants’ motion for partial summary judgment (Doc. 671), and pursuant to the
accompanying memorandum, it is ORDERED that said motion is GRANTED in part
and DENIED in part as follows:
1.

The motion is GRANTED in the following respects:
a.

Summary judgment that KC failed to comply with the
patent marking statute is GRANTED with respect to the
Kellenberger Patent. KC’s noncompliance with the
patent marking statute prevents it from recovering
damages for infringement of the Kellenberger Patent that
allegedly occurred between March 12, 2003 and March
11, 2009. However, KC may seek damages for
infringement alleged to occur between March 12, 2009
and September 15, 2009.

b.

2.

Summary judgment that KC failed to comply with the
patent marking statute is GRANTED with respect to the
Melius Patent. KC’s noncompliance with the patent
marking statute prevents it from recovering damages for
infringement of the Melius Patent that allegedly occurred
between May 5, 2005 and March 11, 2009. However,
KC may seek damages for infringement alleged to occur
between March 12, 2003 and May 4, 2005, and from
March 12, 2009 through the present.

The motion is DENIED in all other respects.

/s/ William W. Caldwell
William W. Caldwell
United States District Judge