Arrows Up, LLC v. U.S. Silica Holdings, Inc. et al

Filing 106

MEMORANDUM AND ORDER (Signed by Judge Keith P Ellison) Parties notified.(arrivera, 4)

United States District Court
Southern District of Texas

ENTERED

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION

February 28, 2019
David J. Bradley, Clerk

ARROWS UP, LLC,

§
§
Plaintiff,
§
VS.
§ CIVIL ACTION NO. 4:17-CV-1945
§
U.S. SILICA HOLDINGS, INC., et al, §
§
Defendants.
§
MEMORANDUM & ORDER
Before the Court are the claim construction briefs filed by both parties in this patent
infringement suit. On February 13, 2019, the Court held a hearing, in accordance with Markman
v. Westview Instruments, Inc., 517 U.S. 370 (1996), during which the parties presented argument
in support of their proposed constructions. After considering the arguments of counsel, the
evidence, and the applicable law, the Court finds that the disputed claims of the patents-in-suit
should be construed as set forth herein.
I.

BACKGROUND
This is a patent infringement case concerning patents for bulk shipping containers. The

containers are specially designed to hold a large quantity of sand for fracking, with a spout at the
bottom for easy unloading. Plaintiff Arrows Up, LLC filed suit against Defendants on June 26,
2017. (Doc. No. 1). Plaintiff and Defendants were both in the business of producing bulk
shipping containers for granular materials like sand. (Doc. No. 30.) Plaintiff claims that it
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developed certain innovations in the containers, which it then patented, specifically,
1. A cube-like shape instead of the more common rectangular shape;
2. A base structure comprising a pallet that had openings suitable for the receipt of
forklift tines;
3. A lower sliding gate for removing material from the container;
4. External support elements to fortify the walls and enable the storage of heavier
contents; and
5. Stacking elements that permit the containers to be stacked one atop the other
without the use of spacers.
(Doc. No. 30 at 5.)
Plaintiff claims Defendants’ product began as rectangular shipping containers with
internal braces and hatches that swung open to release materials. (Doc. No. 30 at 3.) Defendants’
containers could not be stacked directly on top of each other, requiring spacers to be placed
between containers. (Doc. No. 30 at 3.) After the publication of Plaintiff’s patent application,
Plaintiff claims that Defendants updated their product to include protected elements of Plaintiff’s
design. (Doc. No. 30 at 5.) Plaintiff claims the new design included a cube shape, a base
designed for forklift tines, a lower sliding gate, external wall supports, and stacking elements.
(Doc. No. 30 at 5.) Plaintiff brings five counts of patent infringement, based on five separate
patents related to their container design. (Doc. No. 30.)
Defendants and Counter Claimant Sandy Creek Capital, LLC filed counterclaims against
Plaintiff and Counterclaim Defendants Arrows Up, Inc. and John Allegretti. (Doc. No. 83 at 35.)
Defendant Sandbox argues that it is the owner of Plaintiff Arrows Up’s patents, and that a
Sandbox employee is a co-inventor. Defendants bring counterclaims for (1) declaratory
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judgments of non-infringement of each of the patents-in-suit, (2) breach of an NDA, (3) breach
of a settlement agreement, (4) declaratory judgment of patent ownership, and (5) declaratory
judgments of invalidity and/or unenforceability of the patents-in-suit. (Doc. No. 83 at 49-75.)
Defendants claim that Plaintiff had no experience or customers in the frac sand industry
before 2014, instead focusing on lighter weight materials like golf balls. (Doc. No. 83 at 37.) In
2014, Defendant Sandbox and Plaintiff Arrows Up entered into a contract under which Plaintiff
would attempt to create a version of Defendant’s container out of plastic. (Doc. No. 83 at 37-39.)
The contract included an NDA and provisions that assigned all intellectual property arising out
of the relationship to Defendant Sandbox. (Doc. No. 83 at 38-39.) Pursuant to this agreement,
Defendant Sandbox sent Plaintiff technical drawings and product examples. (Doc. No. 83 at 39.)
Plaintiff produced a plastic version of the Sandbox container, but Defendant claims it did not live
up to expectations. (Doc. No. 83 at 41.) Defendant Sandbox told Plaintiff it would have to put
the plastic container project on hold. (Doc. No. 83 at 41.)
Defendants claim that at this time Plaintiff was being hounded by creditors. (Doc. No. 83
at 41-42.) They allege that, after it became clear that the relationship with Defendant Sandbox
would not provide a steady stream of income, Plaintiff decided, in violation of the contract, to
sell the plastic prototype it built for Defendant Sandbox. (Doc. No. 83 at 41.) According to
Defendants, Plaintiff filed new patent applications in October 2014 that it claimed were mere
continuations of previous applications from 2010, but in fact broadened the claim language to
intentionally cover Defendant Sandbox’s container design. (Doc. No. 83 at 42.)
Defendant Sandbox sued Plaintiff Arrows Up in state court in December of 2014. (Doc.
No. 83 at 44.) The parties entered into a settlement agreement. (Doc. No 83 at 44.) Defendants
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claim that Plaintiff continued to advertise its infringing product in violation of the settlement.
(Doc. No. 83 at 45.) Defendant Sandbox brought a new suit in state court in January of 2016.
(Doc. No. 83 at 46.) Plaintiff filed this suit in federal court for patent infringement in June of
2017. (Doc. No. 1.) Defendants claim that Plaintiff applied for several of the patents-in-suit the
same week it filed its federal complaint against Defendants. (Doc. No. 83 at 48.)
Defendants argue that Plaintiff filed this case not to protect its intellectual property, but
instead to retaliate against Defendants for suing Plaintiff in state court for breach of contract,
fraud, and conversion. (Doc. No. 83 at 2.) Defendants posit that Plaintiff was attempting to gain
leverage to force a settlement in the state court case. (Doc. No. 83 at 2.) The state court case
ended on October 2, 2018, after a jury found that Plaintiff Arrows Up was liable for breach of
contract and fraud. (Doc. No. 83 at 2.) The Court awarded Defendant Sandbox almost fifty
million dollars in damages, issued a declaratory judgment that the containers sold by Plaintiff
Arrows Up after January 2015 are the property of Defendant Sandbox, and ordered Plaintiff
Arrows Up to give the containers back to Sandbox. (Doc. No. 83 at 2.)
Defendants further claim that Plaintiff Arrows Up hired a publicity firm to make
misleading statements to stock analysts of Defendant U.S. Silica, with the aim of tanking
Defendant U.S. Silica’s stock price. (Doc. No. 83 at 3.) Defendants claim that Plaintiff’s patents
were filed with the intent to capture technology already in use by Defendant Sandbox. (Doc. No.
83 at 3.) Plaintiff had access to information about Defendant Sandbox’s products—including
blueprints and an example container—due to the prior contract between the parties, which
included a non-disclosure agreement. (Doc. No. 83 at 3.)

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A. PATENTS-IN-SUIT
1. Patent No. 9,617,065 (“065”) (Oct. 16, 2014) (Doc. No. 30-1)
This patent is a continuation of Application No. 13/249,688, which became Patent No.
8,887,914 (Sept. 30, 2011). Patent No. 8,887,914 was a continuation of Application No.
12/914,075, which became Patent No. 8,616,370 (Oct. 28, 2010).
2. Patent No. 9,758,993 (“993”) (June 23, 2017) (Doc. No. 30-2)
This patent is a continuation of Application No. 15/471,896, which became Patent No.
9,988,182. Patent No. 9,988,182 was a continuation of Patent No. 065.
3. Patent No. 9,783,338 (“338”) (June 26, 2017) (Doc. No. 30-3)
This patent is a continuation of Patent No. 993, which was a continuation of Patent No.
065.
4. Patent No. 9,796,504 (“504”) (June 27, 2017) (Doc. No. 30-4)
This patent is a continuation of Patent No. 338, which was a continuation of Patent No.
993.
5. Patent No. 9,828, 135 (“135”) (Oct. 19, 2017) (Doc. No. 30-5)
This patent is a continuation of Patent No. 504, which was a continuation of Patent No.
338.

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B. DISPUTED TERMS
The parties dispute the meaning of the following terms in the claims: (1) “tubular nesting
support”; (2) “generally rectangular tubular section”; (3) “nesting support positioned at the [] top
corner”; (4) “nesting support defining an opening extending through the nesting support”; (5)
“wedge-shaped bottom wall support;” (6) “compartment mounted on [and supported by] the
pallet”; (7) “interior bottom wall”; (8) “W-shaped corner section”; and (9) “approximately 80%.”
Defendants also argue that the terms “said compartment” and “the tubular nesting supports” are
impermissibly vague.
II.

APPLICABLE LAW
In patent law, “the claims define the metes and bounds of a patented invention in the

same way that a deed to property describes the borders between adjacent tracts of land.” Robert
J. Goldman, Schwartz’s Patent Law and Practice 190 (8th ed. 2015). Claim construction is a
question of law decided by the court. Markman v. Westview Instruments, Inc., 517 U.S. 370, 385
(1996).
Words in a claim are “generally given their ordinary and customary meaning,” defined as
the “meaning that the term would have to a person of ordinary skill in the art in question at the
time of the invention.” Phillips v. AWH Corp., 415 F.3d 1303, 1312-13 (Fed. Cir. 2005). The
exceptions to the ordinary meaning rule are (1) when the patent applicant acts as his own
lexicographer and explicitly defines the term, and (2) when the specification “reveal[s] an
intentional disclaimer, or disavowal, of claim scope by the inventor.” Id. at 1315-16.
Courts construing claim terms prioritize intrinsic evidence, defined as the patent
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document and its prosecution history, over extrinsic evidence, such as dictionaries and expert
testimony. Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996).
Specifically, “[t]he hierarchy of evidence to determine claim scope and meaning is (1) claim
language itself, read in light of the specification; (2) the specification; (3) the prosecution history,
if it is placed in evidence; and (4) extrinsic evidence.” Goldman, supra, at 166-67. If the intrinsic
evidence alone resolves any ambiguity in a claim term, the court should not look to extrinsic
evidence. Vitronics Corp., 90 F.3d at 1583.
Claims will be held invalid if they are so indefinite that they “fail to inform, with
reasonable certainty, those skilled in the art about the scope of the invention.” Nautilus, Inc. v.
Biosig Instruments, Inc., 572 U.S. 898, 901 (2010).
III.

ANALYSIS
A. “TUBULAR NESTING SUPPORT”
Plaintiff’s proposed construction for this term is “nesting support that is hollow.”

Defendant proposes instead, “rounded, elongated, and hollow nesting support.” Both parties
point to Figure 89 from Patent No. 065 as an exemplary embodiment of what the patentee
intended the phrase “tubular nesting support” to encompass. (Doc. No. 1-1 at 107.) The Court
finds Plaintiff’s construction overly broad; many hollow items are not “tubular.” In contrast, the
Court finds Defendant’s proposal too narrow. The nesting support depicted in Figure 89 does not
appear especially elongated, and any rounding is limited to the edges. Defendant’s suggested
construction brings to mind a pipe rather than the nesting support depicted in Figure 89. See e.g.,
Anchor Wall Sys., Inc. v. Rockwood Retaining Walls, Inc., 340 F.3d 1298, 1308 (Fed. Cir. 2003)
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(“[I]t is axiomatic that a claim construction that excludes a preferred embodiment . . . is rarely, if
ever, correct . . . .”). Thus, the Court adopts the following construction: “nesting support that is
hollow with rounded edges.”
B. “GENERALLY RECTANGULAR TUBULAR SECTION”
Plaintiff suggests that the Court construe this term as “approximately rectangular hollow
section.” Defendant proposes instead “generally rectangular rounded, elongated, and hollow
section.” This dispute between the parties once again centers on the word “tubular.” The Court,
consistent with its decision above, adopts the construction “generally rectangular hollow section
with rounded edges.”
C. “NESTING SUPPORT POSITIONED AT THE TOP CORNER”
Plaintiff suggests that no construction is necessary for this term, as it carries its plain and
ordinary meaning. Defendant argues that the term should be construed as “rounded, elongated,
and hollow nesting support positioned above the [] corner.”
Defendant’s argument is based on the prosecution history of a prior patent not currently
at issue, Patent No. 914. (Doc. No. 51-7.) That patent uses the phrase “nesting supports . . .
above the top wall.” (Doc. No. 51-7.) The patentee distinguished its patent from an existing
patent that placed corner caps below the top wall. However, the claim at issue in Patent No. 914
referenced the “top wall,” not the “top corner” as in this set of patents-in-suit. See Regents of
Univ. of Minn. v. AGA Med. Corp., 717 F.3d 929, 943 (Fed. Cir. 2013) (“In general, a
prosecution disclaimer will only apply to a subsequent patent if that patent contains the same
claim limitations as its predecessor.”); Saunders Grp., Inc. v. Comfortrac, Inc., 492 F.3d 1326,
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1333 (Fed. Cir. 2007) (“When the purported disclaimers are directed to specific claim terms that
have been omitted or materially altered in subsequent applications (rather than to the invention
itself), those disclaimers do not apply.”). The Court thus rejects Defendant’s argument. The
Court finds that no construction of this term is necessary.
D. “NESTING SUPPORT DEFINING AN OPENING EXTENDING THROUGH
THE NESTING SUPPORT”
Plaintiff argues the proper construction of this term is “nesting support in which there is
an opening.” Defendant proposes instead “rounded, elongated, and hollow nesting support
defining an opening extending through the nesting support.” The Court adopts the construction
“hollow nesting support with an opening extending throughout.”
E. “WEDGE-SHAPED BOTTOM WALL SUPPORT”
Plaintiff’s proposed construction for this term is “a support having a sloped surface such
that it supports a downwardly angled section of the bottom wall.” Defendant argues that the
Court need not construe this term, as it carries its plain and ordinary meaning. The Court agrees
with Defendant. The only potential ambiguity in the claim language is which “bottom wall” the
wedge supports, as there is both an “interior bottom wall” and an “exterior bottom wall.” A
person of ordinary skill in the art, however, would know that there is no need to support the
exterior bottom wall, which rests on the pallet. Therefore, it would be clear to a person of
ordinary skill in the art that the wedge supports the interior bottom wall, and the term needs no
construction.

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F. “COMPARTMENT MOUNTED ON [AND SUPPORTED BY] THE PALLET”
Plaintiff suggests that this term does not require construction. Defendant disagrees, and
proposes that the Court construe the term as “exterior walls of the compartment directly attached
to [and supported by] the pallet.” The patent “repeatedly and consistently” characterizes the
compartment as being directly attached to the pallet through fasteners or other forms of
attachment. GPNE Corp. v. Apple Inc., 830 F.3d 1365, 1370 (Fed. Cir. 2016) (“[W]hen a patent
‘repeatedly and consistently’ characterizes a claim term in a particular way, it is proper to
construe the claim term in accordance with that characterization.”). (Doc. No. 1-1 at 110-111,
133.) The Court accepts Defendant’s suggestion, and adopts the construction “exterior walls of
the compartment directly attached to and supported by the pallet.” See Outillage v. Penn Tool
Co., Inc., 2004 WL 5644803, at *4 (C.D. Cal. Mar. 22, 2004) (construing the term “mounted on”
to mean “fixed securely to, and in direct physical contact with, a support”).
G. “INTERIOR BOTTOM WALL”
Plaintiff argues that the Court need not construe this term, because it carries its plain and
ordinary meaning. Defendants propose that the Court construe this term as “inclined wall within
the compartment.” The Court finds that there is a potential ambiguity in this term, which might
refer to a wall distinct from, and interior to, the exterior bottom wall, or to the innermost side of
the exterior bottom wall. In light of this ambiguity, the Court cannot accept Plaintiff’s
suggestion. See O2 Micro Int’l Ltd. v. Beyond Innovation Tech. Co., Ltd., 521 F.3d 1351, 1361
(Fed. Cir. 2008) (“A determination that a claim term ‘needs no construction’ or has the ‘plain
and ordinary meaning’ may be inadequate when a term has more than one ‘ordinary’ meaning or
when reliance on a term’s ‘ordinary’ meaning does not resolve the parties’ dispute.”).
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The Court adopts Defendant’s suggestion, which places the interior bottom wall inside
the compartment. Plaintiff argues that the claim covers an embodiment in which the downwardly
angled sections are the only bottom wall, in addition to the embodiments shown in the patent,
which depicts an interior bottom wall composed of downwardly angled sections and an
additional exterior bottom wall that rests on top of the pallet. (Doc. No. 1-1 at 18.) However, the
Court cannot ignore the presence of the term “interior” in the claim. See e.g., Becton, Dickinson
& Co. v. Tyco Healthcare Grp., L.P., 616 F.3d 1249, 1257 (Fed. Cir. 2010) (“Claims must be
interpreted with an eye toward giving effect to all terms in the claim.” (quoting Bicon, Inc. v.
Straumann Co.¸441 F.3d 945, 950 (Fed. Cir. 2006))); Merck & Co., Inc. v. Teva Pharm. USA,
Inc., 395 F.3d 1364, 1372 (Fed. Cir. 2005) (“A claim construction that gives meaning to all the
terms of the claim is preferred over one that does not do so.”). Further, Patent No. 065 describes
the “bottom compartment” as including “a lower exterior bottom wall” and the “upper interior
bottom wall.” (Doc. No. 1-1 at 124.) This supports a reading of “compartment” that is not limited
to the space above the interior bottom wall, as suggested by Plaintiff.
The Court construes the term as “downwardly angled sections forming a wall inside the
compartment.” The phrase “downwardly angled sections” is taken from a definition of the
interior bottom wall provided in Patent No. 065. (Doc. No. 1-1 at 124.)
H. “W-SHAPED CORNER SECTION”
Plaintiff asks the Court to construe this term as “a corner section forming the shape of the
letter ‘W’”, while Defendant requests that the Court adopt the construction, “corner section
formed by the combination of two L-shaped corner sections of adjacent exterior walls.”
Defendant relies on an embodiment described in Patent No. 065, which states that “[e]ach L11

shaped corner section of each panel of each exterior wall is configured to mate with the L-shaped
corner of an adjacent exterior wall.” (Doc. No. 1-1 at 125.). However, the patent goes on to state
that “it should be appreciated that one or more of the corners can be configured differently.”
(Doc. No. 1-1 at 125.) Therefore, the Court will not limit the term to this particular embodiment.
See Innova/Pure Water, Inc. v. Safari Water Filtration Sys., Inc., 381 F.3d 1111, 1117 (Fed. Cir.
2004) (“[E]ven where a patent describes only a single embodiment, claims will not be read
restrictively unless the patentee has demonstrated a clear intention to limit the claim scope using
words or expressions of manifest exclusion or restriction.” (internal quotation marks omitted)).
The Court finds that no construction of the term is necessary.
I. “APPROXIMATELY 80%”
Plaintiff argues that no construction is necessary. Defendant suggests that the Court
construe this term as “78-80%,” because the various examples throughout the claim fall within
this range. The Court finds that the examples given in the claim are not intended to limit the
construction of this term. See Pall Corp. v. Micron Separations, Inc., 66 F.3d 1211, 1217-18
(Fed. Cir. 1995) (“The use of the word ‘about,’ avoids a strict numerical boundary to the
specified parameter.”); Raytheon Co. v. Indigo Sys. Corp., 682 F. Supp. 2d 717, 729-30 (E.D.
Tex. 2010) (“The patentee chose to claim his invention without mathematical precision, so the
court will not construe this term with mathematical precision except to the extent the intrinsic
record provides clear guidance.”). The term carries its plain and ordinary meaning, and no
construction is necessary.

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J. “SAID COMPARTMENT”
This term is reasonably definite when viewed in the context of the claim as a whole. The
formatting of the claim lines this term up with an immediately preceding description of a
“compartment.” Thus, a person with ordinary skill in the art would know to which compartment
this term is referring.
K. “THE TUBULAR NESTING SUPPORTS”
This term is reasonably definite. The additional descriptor (“tubular”) would not impede
a person of ordinary skill in the art from determining which nesting supports are being discussed.
IV.

CONCLUSION
The disputed terms in the patents-in-suit are construed as set forth in this Order.
IT IS SO ORDERED.
SIGNED at Houston, Texas, on this the 28th day of February, 2019.

HON. KEITH P. ELLISON
UNITED STATES DISTRICT JUDGE

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