TRAVIS R. MCDONOUGH, UNITED STATES DISTRICT JUDGE.
Before the Court are: (1) Defendant Tuftco Corp.'s ("Tuftco") motion to strike and for sanctions (Doc. 317); (2) Tuftco's motion for summary judgment (Doc. 450); and (3) Plaintiff Card-Monroe Corp.'s ("CMC") motion for summary judgment (Doc. 289). Having considered the record, the parties' written submissions, and their oral arguments at the hearing on July 14, 2017, the Court hereby
The three patents at issue concern certain carpet-tufting machines and methods. U.S. Patent No. 8,141,505 (the "`505 Patent"), entitled "Yarn Color Placement System," was issued by the United States Patent and Trademark Office ("PTO") on March 27, 2012. (Doc. 292-1, at 1-17.)
The invention, marketed as "ColorPoint," "generally relates to tufting machines, and in particular, to a system for coordinating the feeding and placement of yarns of different colors within a backing material passing through a tufting machine to enable formations of free-flowing patterns within a tufted article." (Id. at 12, col. 1:11-15.)
On February 8, 2016, the parties identified twelve claims to be severed for ongoing proceedings: Claims 8, 10, and 12 of the '505 Patent; Claims 21, 22, 24, 27, 28, and 30 of the '989 Patent; and Claims 1, 28, and 29 of the '703 Patent (together, the "Severed Claims"). (Doc. 169.) Claim 1 of the '703 Patent is the only machine claim at issue herein (the "Machine Claim"); the rest are method claims (the "Method Claims").
Claim 8 recites:
(Doc. 292-1, at 16, col. 10:39-61.)
Claim 10, which is dependent on Claim 8, recites:
(Id. at 16-17, cols. 10:66-11:2.)
(Id. at 17, col. 11:6-8.)
Claim 21 recites:
(Id. at 50, col. 21:28-49.)
(Id., cols. 21:50-22:3.)
(Id., col. 22:9-16.)
(Id., col. 22:25-45.)
(Id., col. 22:46-67.)
(Id. at 51, cols. 23:5-24:5.)
(Id. at 67, col. 9:17-51.) The '703 Patent's specification expands on the "control system" software recited in Claim 1. It provides:
(Id. at 64, col. 4:8-24.)
(Id. at 68, col. 12:4-30.)
(Id., col. 12:31-56.)
CMC accuses Tuftco of directly and indirectly infringing the Asserted Patents. Specifically, CMC alleges Tuftco created a competing — but infringing — technology, and then manufactured and sold products that perform that technology. According to CMC, Tuftco refers to this competing technology in multiple ways, including "Colortuft," "iTuft," "iTuft c," "Easy Pattern," and "Easy Mode."
During discovery, CMC's expert, Steven Berger, conducted inspections on five of the Accused Products, including: (1) a 1/10th gauge single-needle-bar machine sold to Lexmark; (2) a 1/10th gauge single-needle-bar machine sold to Signature; (3) a 1/12th composite gauge double-needle-bar machine with two staggered 1/6th gauge needle bars sold to J & J Industries; (4) a 1/10th gauge single-needle-bar machine sold to Shaw; and (5) a 1/10th composite gauge double-needle-bar machine with two staggered 1/5th needle bars, which Tuftco keeps in house as a sample machine (together, the "Inspected Machines").
CMC initiated this action on October 7, 2014, alleging infringement of the Asserted Patents. (Docs. 1, 127.) As is relevant here, Tuftco asserted affirmative defenses of non-infringement, invalidity, inequitable conduct, and patent misuse. (Doc. 128.) Tuftco also asserted counterclaims for: (1) non-infringement, invalidity, and unenforceability;
On November 4, 2016, the parties filed their motions for summary judgment. (Docs. 288, 289, 450.) On November 28, 2016, each party responded in opposition to the other's motion. (Docs. 319, 325, 445, 452.) Also on November 28, 2016, Tuftco filed a motion to strike and for sanctions. (Doc. 317.) On December 8, 2016, each party filed a reply in support of its motion. (Docs. 334, 336, 447, 453.) On December 15, 2016, CMC responded in opposition to Tuftco's motion to strike (Doc. 345), and Tuftco replied on December 22, 2016 (Doc. 352). These motions are now ripe for the Court's review.
The Court will first address Tuftco's motion to strike. Tuftco moves to strike the portions of CMC's summary judgment brief that exceed the Court's page limitation on memoranda accompanying summary judgment motions. (Doc. 317.) Specifically, Tuftco argues that CMC improperly incorporated into its brief over fifty pages from its expert's infringement report in contravention of the Court's order imposing a forty-page limit. (Id.) Tuftco cites a number of cases in support, including two from this district and one from the Sixth Circuit.
Unlike the cases cited by Tuftco, however, the document CMC "incorporates" is not argument or submissions by an attorney, but portions of an expert report. Cf., e.g., Cross v. Sbarro Am., Inc., No. 1:09-cv-275, 2011 WL 572415, at *4 (E.D. Tenn. Feb. 15, 2011) (sustaining an objection to a party's incorporation of an attached statement of undisputed facts). Under the Federal Rules of Civil Procedure, a party may support its motion for summary judgment by "citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials...." Fed. R. Civ. P. 56(c)(1)(A). Moreover, the importance of expert opinion at the summary judgment stage in patent litigation must not be ignored. See, e.g., Intellectual Sci. & Tech., Inc. v. Sony Elecs., Inc., 589 F.3d 1179, 1183 (Fed. Cir. 2009) ("To satisfy the summary judgment standard, a patentee's expert must set forth the factual foundation for his infringement opinion in sufficient detail for the court to be certain that features of the accused product would support a finding of infringement...."). CMC's memorandum simply points to other portions of the record, in context, without unnecessarily burdening the Court with in-bulk reproductions of such content. There is nothing inappropriate — much less sanctionable — about CMC's conduct. Accordingly, the Court finds that CMC has not improperly exceeded the page limitation and will
Tuftco moves for summary judgment that the Asserted Patents are invalid due to indefiniteness and anticipation. In the
CMC moves for summary judgment: (1) that the Severed Claims are valid with respect to anticipation, obviousness, indefiniteness, and ineligibility under 35 U.S.C. § 101; (2) that the Inspected Machines are representative of all Accused Products; (3) that Tuftco has directly infringed the Machine Claim and the Method Claims; (4) that Tuftco has indirectly infringed the Method Claims; and (5) on Tuftco's counterclaims and affirmative defenses of inequitable conduct, tortious interference, unfair competition, unfair trade practices, and patent misuse. (Doc. 289.)
Summary judgment is proper when "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). The Court views the evidence in the light most favorable to the nonmoving party and makes all reasonable inferences in favor of the non-moving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Nat'l Satellite Sports, Inc. v. Eliadis Inc., 253 F.3d 900, 907 (6th Cir. 2001).
The moving party bears the burden of demonstrating that there is no genuine dispute as to any material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Leary v. Daeschner, 349 F.3d 888, 897 (6th Cir. 2003). The moving party may meet this burden either by affirmatively producing evidence establishing that there is no genuine issue of material fact or by pointing out the absence of support in the record for the nonmoving party's case. Celotex Corp., 477 U.S. at 325, 106 S.Ct. 2548. Once the movant has discharged this burden, the nonmoving party can no longer rest upon the allegations in the pleadings; rather, it must point to specific facts supported by evidence in the record demonstrating that there is a genuine issue for trial. Chao v. Hall Holding Co., Inc., 285 F.3d 415, 424 (6th Cir. 2002).
At summary judgment, the Court may not weigh the evidence; its role is limited to determining whether the record contains sufficient evidence from which a jury could reasonably find for the non-movant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A mere scintilla of evidence is not enough; the Court must determine whether a fair-minded jury could return a verdict in favor of the non-movant based on the record. Id. at 251-52, 106 S.Ct. 2505; Lansing Dairy, Inc. v. Espy, 39 F.3d 1339, 1347 (6th Cir. 1994). If not, the Court must grant summary judgment. Celotex, 477 U.S. at 323, 106 S.Ct. 2548.
The standard of review when parties file cross-motions for summary judgment is the same as when only one party moves for summary judgment. Taft Broad. Co. v. United States, 929 F.2d 240, 248 (6th Cir. 1991). When there are cross-motions for summary judgment, the court must "evaluate each party's motion on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration." Id. In considering cross motions for summary judgment, the court is "not require[d]... to rule that no fact issue exists." Begnaud v. White, 170 F.2d 323, 327 (6th Cir. 1948).
Generally, patents are presumed valid, and the party challenging validity
Tuftco moves for summary judgment that: (1) Claim 1 of the '703 Patent is invalid for indefiniteness under 35 U.S.C. § 112, ¶ 6; and (2) the Severed Claims are invalid as anticipated. CMC moves for summary judgment on Tuftco's invalidity defenses and counterclaims, asserting that insufficient evidence exists to support: (1) indefiniteness under § 112, ¶ 2 and ¶ 6; (2) anticipation; (3) obviousness; and (4) ineligibility under § 101.
Tuftco counterclaims that all three Asserted Patents are invalid under 35 U.S.C. § 112. (Doc. 128, at 9.) Tuftco now moves for summary judgment specifically on Claim 1 of the '703 Patent, based on invalidity due to indefiniteness under 35 U.S.C. § 112, ¶ 6.
Both parties move for partial summary judgment under 35 U.S.C. § 112, ¶ 6. Whether a claim is subject to § 112, ¶ 6, is a matter of claim construction and, therefore, a question of law. Williamson v. Citrix Online, LLC, 792 F.3d 1339, 1346 (Fed. Cir. 2015). However, in construing a claim, the Court may make underlying findings of fact based on extrinsic evidence, such as expert testimony. Id. Pursuant to § 112, ¶ 6, a patent applicant may express an element of a claim "as a means or step for performing a specified function... and such claim shall be construed to cover the corresponding structure ... described in the specification and equivalents thereof." 35 U.S.C. § 112, ¶ 6. Though paragraph six allows means-plus-function language, those claims are "still subject to the [§ 112, ¶ 2] requirement that a claim `particularly point out and distinctly claim' the invention." In re Donaldson Co., Inc., 16 F.3d 1189, 1195 (Fed. Cir. 1994) (quoting § 112, ¶ 2). Accordingly, if a patentee uses generic language to claim function under § 112, ¶ 6, it must clearly identify and describe a corresponding structure in the specification for performing the claimed function. Williamson, 792 F.3d at 1351. If the patentee does not specify such structure, the claim is considered purely functional and invalid for indefiniteness. Ergo Licensing, LLC v. CareFusion 303, Inc., 673 F.3d 1361, 1363 (Fed. Cir. 2012).
Tuftco argues that Claim 1 of the '703 Patent is properly construed as a means-plus-function claim under § 112, ¶ 6, because it uses generic language — "control system" — to claim function. (Doc. 450, at 10-13.) According to Tuftco, because the patent specification fails to disclose sufficient structure as required of means-plus-function claims, Claim 1 is invalid for indefiniteness. (Id. at 13-15.)
Here, Claim 1 provides in pertinent part: "A tufting machine for forming pattern tufted articles including different color yarns therein, comprising: ...
The presumption is not overcome, because the language of Claim 1, read in light of the specification, recites sufficiently definite structure to avoid § 112, ¶ 6. Turning first to the term itself, Tuftco argues that, like the terms "mechanism," "element," or "device," "system" is a generic substitute for "means." In support, Tuftco cites Automotive Technologies International, Inc. v. Delphi Corp., a district court case from the Eastern District of Michigan which found that the phrase "a measurement system" indicates a means-plus-function limitation. No. 08-11048, 2009 WL 2960698, at *12-13 (E.D. Mich. Sept. 11, 2009). Although the Automotive Technologies court found that "`[s]ystem' is the same sort of generic term as `means,' `mechanism' and `device,'" other district courts, including courts with a heavy patent docket, have disagreed. See, e.g., Blitzsafe Tex., LLC v. Honda Motor Co., No. 2:15-cv-1274-JRG-RSP, 2016 WL 4762083, at *14 (E.D. Tex. Sept. 13, 2016) (finding "integration subsystem" to denote structure); Perdiem Co, LLC v. IndusTrack LLC, No. 2:15-cv-727-JRG-RSP, 2016 WL 3633627, at *37 (E.D. Tex. July 7, 2016) ("The term `system' as used here is different from the word `module' in Williamson."). Accordingly, Automotive Technologies does not persuade the Court that it should treat the phrase "control system" as a mere means-plus-function limitation.
Moreover, the language of Claim 1, viewed in light of the specification, imparts structure to the term. Claim 1 specifies that the "control system" works "in cooperation with said at least one needle bar shifter" which receives a "series of transverse pattern shift steps" from the "control system." (Doc. 292-1, at 67, col. 9:34-37.) The "control system" is also "linked to and controls the backing feed rolls." (Id. at col. 9:43-44.) This claim language structurally connects the control system and other components of the claimed tufting machine. Moreover, the '703 Patent's specification goes so far as to provide a specific example of a "control system" ("The tufting machine control system 25 generally will comprise a tufting machine control such as a `Command Performance™ tufting machine control system as manufactured by Card-Monroe Corp.")
Notably, Tuftco does not offer any testimony or evidence to demonstrate that one of ordinary skill in the art would not understand the term "control system" to denote structure. (Doc. 450, at 10-13.) Meanwhile, there is evidence in the record that an ordinarily skilled artisan would understand "control system" as a name for structure. For example, CMC's expert concluded that "control system" is a common industry term that requires no construction. (Doc. 113-12, at ¶¶ 24-27.) Moreover, Tuftco itself appears to understand the structure of a "control system." In another section of its brief, Tuftco states "the type of `control system' that is referenced in [Claim 1] is the same type of `control system' that existed in conventional tufting machines that predated the Asserted Patents." (Doc. 450, at 22.) Finally, during a deposition, one of Tuftco's experts appeared to understand that CMC's "Command Performance" and Tuftco's "Encore" are "control systems" that are used for tufting machines. (Doc. 454-12, at 7.)
In short, Claim 1 provides far more description of the structure of the "control system" than a mere means-plus-function claim. For the foregoing reasons, the Court finds that Claim 1 of the '703 Patent is not a means-plus-function claim subject to 35 U.S.C. § 112, ¶ 6. Because Claim 1's use of the term "control system" does not render it a means-plus-function claim, Tuftco's motion for summary judgment that Claim 1 of the '703 Patent is invalid for indefiniteness under 35 U.S.C. § 112, ¶ 6, is
CMC moves for summary judgment on Tuftco's invalidity counterclaim that the Severed Claims are indefinite under 35 U.S.C. § 112, ¶ 2. Tuftco did not respond to CMC's motion with respect to § 112, ¶ 2. Tuftco did, however, argue that Claim 1 of the '703 Patent is indefinite with respect to the term "selected amount" in its own motion for summary judgment, though it did not move for summary judgment of invalidity under § 112, ¶ 2. (Doc. 450, 15-16.) Additionally, Tuftco's expert, Ian Slattery, opines that the Severed Claims are indefinite based on the following terms: (a) "desired stitch rate"; (b) "a gauge of the tufting machine"; (c) "by a selected amount"; (d) "a shift profile based upon a number of colors of yarn of the pattern" or "a number of colors" or "a number of different yarns" or "a desired number of yarns"; and (e) "an appearance of increased density." (Doc. 292-2, at 17-18.)
"Indefiniteness is a question of law...." Eli Lilly & Co. v. Teva Parenteral Meds., Inc., 845 F.3d 1357, 1370 (Fed. Cir. 2017). In determining whether a claim is indefinite, "general principles of claim construction apply...." Id. As such, the Court may make underlying findings of fact based on extrinsic evidence. Id. Because patents are presumed valid, "any fact critical to a holding on indefiniteness... must be proven by the challenger by clear and convincing evidence." One-E-Way, Inc. v. Int'l Trade Comm'n, 859 F.3d 1059, 1062 (Fed. Cir. 2017) (internal quotation omitted). To be definite under 35 U.S.C. § 112, a claim must "point[ ] out and distinctly claim[ ]" the invention. § 112, ¶ 2. "A lack of definiteness renders invalid `the patent or any claim in suit.'" Nautilus, Inc. v. Biosig Instruments, Inc., ___ U.S. ___, 134 S.Ct. 2120, 2125, 189 L.Ed.2d 37 (2014) (quoting § 282, ¶ 2(3)).
Claim 1 of the '703 Patent provides for forming tufts of yarns in the backing material:
(Doc. 292-1, at 67, col. 9:45-51 (emphasis added).) Slattery opines that the term is indefinite because it "provides no technique for determining the `selected amount[.]'" (Doc. 292-2, at 17.) Tuftco argues that because both CMC and its expert Steven Berger cannot define the term, it is indefinite. (Doc. 450, 15-16.) After a claim construction hearing the Court construed the term "selected" to mean "chosen in accordance with the pattern." (Doc. 220, at 19.) Though the Court was cautious to read a limitation into the Severed Claims, it found that this construction was not only consistent with the dictionary definition of "selected," but also supported by the claim language itself. (Id. at 18-19.)
Construing the term "by a selected amount" to mean "by an amount in accordance with the pattern" provides a technique for determining the "selected amount," i.e., the pattern. Moreover, the '703 Patent's specification makes clear that "a selected amount" is approximate to the number of colors in the pattern. For example, the specification provides that "[t]ypically, the operative or effective stitch rate run ... will be approximately equivalent to a desired or prescribed number of stitches per inch ..., multiplied by the number of colors being run in the programmed pattern." (Doc. 292-1, at 64, col. 3:2-6 (emphasis added); see also id. at 65, col. 5:31-34.) Further, it provides that the "effective stitch rate is substantially faster than conventional stitch rates (i.e., by a factor approximately equivalent to the number of colors being tufted) in order to provide sufficient density for the tufts being formed in the pattern fields to hide those color yarns not to be shown." (Id. at 66, col. 8:6-10 (emphasis added).) The specification, therefore, makes clear that the term "by a selected amount" should be a number approximating the number of colors in the pattern, adjusted to achieve
The term "desired stitch rate," or its synonyms "desired fabric stitch rate" and "prescribed stitch rate,"
(Id.)
The Court concludes that the term "desired stitch rate" does not have to be construed as "equal to the gauge of the tufting machine" to satisfy § 112, ¶ 2. The claim language and specifications clearly indicate that the term "desired stitch rate" is equivalent to the number of yarns per linear inch the designer wishes to be visible in the face of the pattern. For example, Claim 8 of the '505 Patent provides that the "desired fabric stitch rate ... comprises a number of stitches per inch desired for the patterned tufted article." (Doc. 291-1, at 16, col. 10:53-55.) The '505 Patent's specification confirms that "the number of high tufts (the colors that are visible in the finished tufted article), generally can be matched to the desired stitch rate for the tufting machine...." (Id. at 16, col. 9:26-29.)
Where a claim term is subjective, claim language and specifications can provide sufficient guidance to satisfy the definiteness requirement. Sonix Tech., 844 F.3d at 1378; Interval Licensing, 766 F.3d at 1371. Here, the language of the Severed Claims and their specifications provide objective boundaries for those skilled in the art. The specifications clarify that the end goal of the patented methods is a pattern with a full, consistent density across its face. For example, Claim 8 of the '505 Patent provides that high and low tufts are formed in the patterned tufted article "so as to substantially maintain density of the tufts of yarns being formed in the backing material...." (Id. at 16, col. 10:57-59.) The '505 Patent's specification provides that "the increased number of stitches per inch will provide sufficient enhanced density between the high and low tufts of the finished patterned tufted article to avoid a missing color or gap being shown or otherwise appearing in the patterned tufted article." (Id. at 13, col. 3:6-10.) Accordingly,
This term appears in Claims 1, 28, and 29 of the '703 Patent. Claim 1 provides for a machine with "at least one needle bar having a series of needles mounted at a spacing based on a gauge of the tufting machine...." (Doc. 292-1, at 67, col. 9:19-20.)
As a fact critical to a holding on indefiniteness, Tuftco must prove by clear and convincing evidence that those skilled in the art of tufting consider the gauge of each needle bar to be "a gauge of the tufting machine." See One-E-Way, 859 F.3d at 1062. Other evidence of record, including evidence intrinsic to the '703 Patent, establishes that no reasonable jury could conclude based on Slattery's opinion
The term "a shift profile based upon a number of colors of yarn of the pattern" appears in Claims 28 and 29 of the '703 Patent. The term "a number of colors" appears in Claims 21, 27, and 30 of the '989 Patent. The term "a number of different yarns" appears in Claims 22 and 28 of the '989 Patent. The term "a desired number of yarns" also appears in Claim 28 of the '989 Patent. Tuftco did not propose these terms as disputed claim terms before the claim construction hearing (Doc. 169), so the Court did not construe them. Slattery opines that these terms are indefinite because they "do[ ] not define whether it is the total number of different colors or yarns in the pattern or whether it is a number that does not exceed the number in the pattern." (Doc. 292-2, at 17.)
The claim language and specifications, however, demonstrate that these terms refer to the number of colors in the pattern being tufted. For example, Claim 21 of the '989 Patent provides for increasing the desired stitch rate by a multiple corresponding to "a number of colors of yarns used to form the patterned article." (Doc. 292-1, at 50, col. 21:47-49.) The '703 Patent specification states that the effective stitch rate is faster "by a factor approximately equivalent to the number of colors being tufted...." (Id. at 66, col. 8:6-8.) Accordingly, the terms "a shift profile based upon a number of colors of yarn of the pattern," "a number of colors," "a number of different yarns," and "a desired
This term appears in Claim 28 of the '703 Patent, which provides:
(Id. at 68, col. 12:24-30 (emphasis added).) Slattery opines that the term "does not have a reference point, and the method described in the patents appears to be to create square density, i.e., 10 stitches per inch on a 10th gauge tufting machine, which is a standard density...." (Doc. 292-2, at 18.)
In light of the specifications, the term "an appearance of increased density" does not fail to inform those skilled in the art about the scope of the invention with reasonable certainty. The 703 Patent's specification makes clear that the term refers to a face density that does not have missing colors or gaps as compared to patterns tufted with conventional methods — not to have a face density that is necessarily higher than standard density. For example, the specification provides that "the increased number of stitches per inch will provide sufficient enhanced density to the finished pattern tufted article to avoid a missing color or gap being shown or otherwise appearing in the patterned tufted article." (Id. at 64, col. 3:10-13.) Accordingly, the term "an appearance of increased density" informs those skilled in the art about the scope of Claim 28 of the '703 Patent with reasonable certainty.
The Court, therefore, concludes that the Severed Claims are not invalid for indefiniteness and will
Tuftco moves for summary judgment that: (1) the Severed Claims are invalid as anticipated by graphics tufting machines; (2) Claim 12 of the '505 Patent is invalid as anticipated by the Silhouette Carpet and the Thorn Carpet; and (3) Claim 1 of the '703 Patent is invalid as anticipated by conventional tufting machines. CMC cross-moves for summary judgment that the Severed Claims are not anticipated.
Whether a claim has been anticipated under 35 U.S.C. § 102 is a question of fact. ActiveVideo Networks, Inc. v. Verizon Commc'ns, 694 F.3d 1312, 1327 (Fed. Cir. 2012). A claim is invalid as anticipated under § 102 if a single prior art reference contains every claim limitation. Id.
Tuftco makes three arguments in regard to anticipation. First, Tuftco argues that the operation of a single needle bar on a graphics machine, as reflected in the "Medallion" rug, anticipates the Severed Claims. (Doc. 450, at 23-24.) Second, Tuftco argues that both the Silhouette Carpet, sold by Dixie Home, and the Thorn Carpet, produced by Tuftco, anticipated Claim 12 of the '505 Patent. (Id. at 16-19.) Finally, Tuftco insists that conventional tufting machines anticipate Claim 1 of the '703 Patent. (Id. at 19-22.) Tuftco is required to prove by clear and convincing evidence that every limitation of a claim was contained in a single prior art reference in order to prove anticipation. Zenith Elecs. Corp. v. PDI Commc'n Sys., Inc., 522 F.3d 1348,
Tuftco argues that the action of a one needle bar of a graphics machine,
(Doc. 450, at 24.) In support, Tuftco cites only to deposition testimony by Steve Frost, Tuftco's CEO, in which he describes the Medallion rug and the method used to produce it in response to a question about when Tuftco began experimenting with compressing stitch rates and displacing color. (Doc. 454-11, at 150-51, 155-57.) Frost's testimony regarding the Medallion rug states in its entirety:
(Id.)
Tuftco has not produced clear and convincing evidence that every limitation of the Severed Claims was contained in the actions of one needle bar of a graphics machine. "Typically, testimony concerning anticipation must be testimony from one skilled in the art and must identify each claim element, state the witnesses' interpretation of the claim element, and explain in detail how each claim element is contained in the prior art reference."
Here, Tuftco has failed to provide testimony from one skilled in the art that identifies each claim element of the Severed Claims and explains how each element is contained in the operation of one needle bar of a graphics machine. Similar to the alleged infringer in Schumer, in support of its anticipation argument, Tuftco merely cites deposition testimony from Steve Frost, its CEO, that describes the Medallion rug and how it was produced.
As noted, this conclusion does not apply to Claims 28 and 29 of the '703 Patent, which do not calculate an effective stitch rate by the number of colors in the pattern. Claim 28 provides that the effective stitch rate is "at least two times a prescribed stitch rate based upon a gauge of the tufting machine...." (Doc. 292-1, at 69, col. 12:25-27.) Claim 29 provides for an effective stitch rate "that is increased over a desired stitch rate ... that is based on a gauge of the tufting machine." (Id. col. 12:35-36.) Tuftco argues that one bar of a graphics machine tufting the Medallion rug accomplished the increased effective stitch rate required by these claims, because the needle bar stitched 12.8 stitches per inch, or twice the "desired stitch rate," which is based upon the gauge of the needle bar at 6.4 per inch.
However, the record reflects that the tufting industry considers the gauge of a graphics machine to be the composite gauge of both needle bars. For example, in a deposition, Tuftco's expert Lynne Paige referred to Tuftco's double-needle-bar machine as a "twelfth gauge." (Doc. 435, at 166, 167-68.) When asked whether the Medallion rug used an "enhanced stitch rate," she responded: "No. It had a twelve-point-eight stitch rate." (Doc. 454-11, at 263.) Further, Frost acknowledged "twelve-point-eight stitches per inch ... was twice the gauge of each needle bar at that time; but it was certainly not twice the composite gauge." (Id. at 150-51.) Tuftco does not provide any evidence that the gauge of one needle bar is considered a gauge of the tufting machine by those skilled in the art. See also supra Part III(b)(i)(2)(b). Accordingly, the "desired stitch rate" of Claims 28 and 29 of the '703 Patent would be based on the gauge of the machine, or approximately 12.8. An effective stitch rate of 12.8 in the Medallion rug is, therefore, not an "increased effective stitch rate" as contemplated by Claims 28 and 29.
The Medallion rug did not anticipate the Severed Claims. Accordingly, the Court will
Claim 12 of the '505 Patent provides: "The method of claim 8 and wherein the tufting machine is a 1/10th gauge tufting machine and the desired fabric stitch rate is
Tuftco argues that the Silhouette Carpet, sold by Dixie Home in 2004, anticipated Claim 12. Relying heavily on a selection of deposition testimony of CMC expert Steven Berger, Tuftco construes Claim 12's "approximately ten stitches per inch" as "eight to twelve" stitches per inch.
Tuftco has not demonstrated that a reasonable jury would have no legally sufficient basis to find that the Silhouette Carpet did not anticipate Claim 12. First, Tuftco relies on a definition of "approximately" that is inconsistent with this Court's claim-construction ruling. A court's construction of a claim defines the scope of a limitation and guides anticipation analysis. Toro Co. v. Deere & Co., 355 F.3d 1313, 1319 (Fed. Cir. 2004). Following a Markman hearing, this Court declined to construe "approximately" when modifying a numeric value, finding that the term should take its ordinary meaning. (Doc. 220, at 13-14.) Accordingly, Tuftco's premise that "approximately ten" equates to "eight to twelve" is inconsistent with the Court's construction ruling and should not be relied upon when considering an anticipation defense.
Second, as already noted, "testimony concerning anticipation must be testimony from one skilled in the art and must identify each claim element, state the witnesses' interpretation of the claim element, and explain in detail how each claim element is disclosed in the prior art reference." Schumer, 308 F.3d at 1315; see also ActiveVideo, 694 F.3d at 1329 (finding that where an expert fails to explain how a prior-art reference describes every limitation in a claim, no reasonable jury could conclude that the reference anticipates the claim). Tuftco's expert Ian Slattery's report neither identifies each element of Claim 12 nor explains how each element is contained in the Silhouette Carpet. (Doc. 292-2, at 12, 15-16.) When deposed, Slattery acknowledged that his report fails to explain how "every element is met by a single prior-art reference." (Doc. 454-11, at 288.) Though he opines broadly that the Severed Claims are "invalid due to anticipation" and that "[t]he Silhouette carpet... anticipates Claims 21 and 28 of the '989 Patent," his report never affirmatively states that the Silhouette Carpet anticipated Claim 12 in particular, much less explains in detail how each element of
Finally, it is undisputed that the Silhouette Carpet does not contain every limitation of Claim 12. Claim 12 incorporates Claim 8 of the '505 Patent, which requires "shifting the needle bar transversely according to a programmed shift profile for the pattern of the tufted article...." (Doc. 292-1, at 16, col. 10:44-45.) Tuftco does not claim to have evidence that a needle bar shifted to create the Silhouette Carpet. (See Doc. 450, at 18.) It merely argues, without the support of any legal authority, that the absence of needle bar shifting is "virtually meaningless" because the machine at issue had the capability to shift the needle bar.
Tuftco next argues that its Thorn Carpet, made in 2001, anticipates Claim 12. According to Tuftco, the Thorn Carpet was made on a 1/10th gauge machine, was created using a shiftable needle bar, and had an effective stitch rate of fifteen stitches per inch. (Doc. 450, at 19.) Even ignoring that an effective stitch rate of fifteen does not fall within the range of sixteen to twenty-four Tuftco identifies as the breadth of Claim 12, Tuftco fails to meet its burden of demonstrating that a reasonable jury would not have a legally sufficient basis to find for CMC. Tuftco relies exclusively on Slattery's report for facts underlying its argument. (Id.) As with the Silhouette Carpet, Slattery does not explain how the Thorn Carpet contains every limitation in Claim 12.
Moreover, there is evidence that the Thorn Carpet does not contain every limitation of Claim 12. First, the design file associated with the Thorn Carpet indicates an effective stitch rate of just twelve.
Tuftco again asks the Court to find anticipation even though it cannot meet its burden under binding precedent. Tuftco argues that Claim 1's first six limitations are contained in machines predating the Asserted Patents, leaving only the seventh limitation as the unanticipated "invention." According to Tuftco, because the seventh limitation contains elements that "are merely rudimentary software changes designed to slow down the backing speed in order to increase the stitch rate," Claim 1 of the '703 Patent is invalid as anticipated. (Doc. 450, at 22.)
Yet again, Tuftco cites no legal authority for its proposition that a prior-art reference need not contain every limitation of a claim in order to anticipate that claim. In contrast, Supreme Court and Federal Circuit precedent suggests that claims should not be separated into novel and non-novel elements and that a new combination of old components is patentable. See, e.g., Diamond v. Diehr, 450 U.S. 175, 188, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981) ("It is inappropriate to dissect the claims into old and new elements and then to ignore the presence of old elements in the analysis.... [A] new combination of steps in a process may be patentable even though all the constituents of the combination were well known and in common use before the combination was made."); Perricone v. Medicis Pharm. Corp., 432 F.3d 1368, 1378 (Fed. Cir. 2005) ("New uses of old products or processes are indeed patentable subject matter."). Tuftco has failed to establish an issue of material fact in support of its motion, much less to establish by clear and convincing evidence that every limitation of Claim 1 was contained in a single prior-art reference. Zenith Elecs. Corp., 522 F.3d at 1363. Accordingly, the Court will
CMC cross-moves for summary judgment of validity as to Tuftco's anticipation defense and counterclaim as to the Severed Claims. To be granted summary judgment that its patents are not invalid due to anticipation, CMC must show that Tuftco "failed to produce clear and convincing evidence on an essential element of [anticipation] upon which a reasonable jury could invalidate the patent." Eli Lilly & Co. v. Barr Labs., Inc., 251 F.3d 955, 962 (Fed. Cir. 2001).
CMC asserts Tuftco has not provided clear and convincing evidence of anticipation. Tuftco first responds that every Severed Claim was anticipated by the operation of one needle bar on its graphics machines. Even viewing the evidence in the light most favorable to Tuftco, for the same reasons explained above in Part III(b)(ii)(2)(a), Tuftco has not created a disputed issue of material fact that any single prior-art reference anticipated all
Tuftco next argues that Claims 21 and 27 of the '989 Patent are invalid as anticipated by the Colortec and Tufted Weaver machines.
Even viewing the evidence in the light most favorable to Tuftco, no reasonable jury could find anticipation of Claims 21 and 27 of the '989 Patent.
(Doc. 454-11, at 290-92.)
A court's construction of a claim guides anticipation analysis and defines the precise scope of a limitation. Toro Co., 355 F.3d at 1319. The Court's construction of "effective stitch rate" requires that the needles actually insert the yarns into the backing, not just "present" them. (Doc. 220, at 4.) Indeed, this requirement is implied in the term "stitch" itself. (Id.) Therefore, Slattery's report does not establish that the Colortec and Tufted Weaver machines use an "effective stitch rate" as the Court has interpreted that term in Claims 21 and 27. Because Tuftco presents no other evidence in support of its argument, no reasonable jury could find anticipation of Claims 21 and 27 of the '989 Patent. Accordingly, the Court will
Next, CMC moves for summary judgment of validity, asserting that there is no genuine issue of material fact and that the Severed Claims are not invalid for obviousness under 35 U.S.C. § 103.
Under 35 U.S.C. § 103, a patent is invalid if "the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains." "To invalidate a patent claim based on obviousness, a challenger must demonstrate by clear and convincing evidence that a skilled artisan would have been motivated to combine the teachings of the prior art references to achieve the claimed invention, and that the skilled artisan would have had a reasonable expectation of success in doing so." ActiveVideo, 694 F.3d at 1327 (internal quotation marks omitted).
Obviousness under § 103 is a question of law based on determinations of underlying facts. Id. The underlying factual determinations, often referred to as the Graham factors, include: 1) "the scope and content of the prior art[;]" 2) differences between the prior art and the claims
CMC asserts that it is entitled to summary judgment on the Severed Claims because Tuftco cannot prove obviousness by clear and convincing evidence based on the record. Tuftco responds that: (1) secondary considerations of non-obviousness should prevent summary judgment for CMC on all of the Severed Claims; and (2) Claims 21 and 27 of the '989 Patent are invalid as obvious.
Tuftco first argues that CMC should be denied summary judgment of validity on all Severed Claims. (Doc. 452, at 35-38.) However, Tuftco does not discuss the first three Graham factors of obviousness. (Id.) Instead, Tuftco's only explicit argument in favor of obviousness of all of the Severed Claims relies exclusively on the fourth Graham factor — secondary considerations. (Id.) Secondary considerations of non-obviousness involve objective indicia, such as commercial success, long-felt need, industry praise, failure of others, unexpected results, licensing, skepticism, and copying. Transocean Offshore Deepwater Drilling, Inc. v. Maersk Drilling USA, Inc., 699 F.3d 1340, 1349 (Fed. Cir. 2012). Tuftco argues that CMC should be denied summary judgment because these secondary considerations alone preclude a finding of non-obviousness. Tuftco points to record evidence that, over a period of three and a half years, the total amount of ColorPoint and ColorTuft fabrics produced by a large carpet manufacturer, a customer of the parties, amounted to less than .5% of its total carpet production. (Doc. 435, at 190-91.) Additionally, Tuftco cites evidence suggesting that two of CMC's customers rarely make ColorPoint fabrics with their ColorPoint machines and have had some technical issues with the machines. (See, e.g., id. at 188-89, 291.) Tuftco contends these facts establish ColorPoint is not a commercial success and that there was no long-felt need for the product, as contemplated in the fourth Graham factor.
The Federal Circuit has made clear that "objective considerations of non-obviousness must be considered in every case." WBIP, 829 F.3d at 1328 (emphasis in original). This precedent, however, requires analysis of secondary considerations before holding a patent invalid. See, e.g., TriMed, Inc. v. Stryker Corp., 608 F.3d 1333, 1343 (Fed. Cir. 2010). Tuftco does not cite, and the Court is unaware of, any case law suggesting the inverse: that secondary considerations alone can defeat a motion for summary judgment that a patent is valid. Tuftco simply does not argue that all the Graham factors — properly weighed — could result in a factual finding supporting a legal ruling of obviousness. Given that "the strength of each of the Graham factors must be weighed in every case and must be weighted en route to the final determination of obviousness or non-obviousness," the Court finds that secondary considerations of non-obviousness, alone, cannot support a finding of obviousness.
Although Tuftco does not cite its expert's report in opposing summary judgment (Doc. 432, at 35-38; Doc. 452, at 35-38), the Court will consider it. With regard to obviousness, Slattery's report states in its entirety:
(Doc. 292-2, at 16-17.) Slattery fails to consider the Graham factors relevant to an obviousness inquiry. His report does not fully consider the scope and content of the Smith patent or any other prior art, explain the differences between prior art and the Severed Claims, expound the level of ordinary skill in the tufting industry, or consider relevant secondary considerations. See KSR, 550 U.S. at 406, 127 S.Ct. 1727. The Federal Circuit has repeatedly noted that conclusory statements that a patent is invalid do not raise a genuine issue of material fact, even if they mention alleged prior art. See, e.g., Creative Compounds,
Finally, with regard to Tuftco's assertion that Claims 21 and 27 of the '989 Patent are obvious, its evidentiary basis is unclear. Tuftco's argument regarding these claims is tacked onto its argument that Claims 21 and 27 are anticipated. (Doc. 452, at 26 ("If for any reason these claims are not deemed to be anticipated, they are nonetheless obvious under Section 103....").) Tuftco cites the text of the statute, 35 U.S.C. § 103, and states the four Graham factors, but offers no other argument. The Court will assume Tuftco is relying on the same evidence cited in its anticipation argument, i.e., Slattery's invalidity report. (Doc. 320, at 48-53.) As already noted, Slattery's report is insufficient to raise a genuine issue of material fact on the issue of obviousness, and, as such, Tuftco's argument that Claims 21 and 27 of the '989 Patent are obvious fails.
CMC has met its burden of demonstrating that it is entitled to summary judgment as a matter of law on validity of the Severed Claims with respect to obviousness, and Tuftco has not provided sufficient evidence of obviousness to prevent summary judgment. Accordingly, the Court will
Next, CMC moves for summary judgment that the Severed Claims are not invalid as ineligible under 35 U.S.C. § 101. Tuftco responds that the Severed Claims are invalid under § 101 because they attempt to patent the abstract idea of high-stitch-rate tufting, rendering them ineligible for patent protection.
Invalidity under 35 U.S.C. § 101 is a question of law. In re Comiskey, 554 F.3d 967, 975 (Fed. Cir. 2009). A patent may be obtained under § 101 for "any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof." 35 U.S.C. § 101. The Supreme Court and the Federal Circuit, however, have long recognized § 101's implicit exception that "[l]aws of nature, natural phenomena, and abstract ideas are not patentable." Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1334 (Fed. Cir. 2016) (quoting Ass'n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 133 S.Ct. 2107, 2116, 186 L.Ed.2d 124 (2013)). A two-step inquiry resolves whether a patent is ineligible under § 101. First the Court should "determine whether the claims at issue are directed to a patent-ineligible concept." Id. (quoting Alice Corp. v. CLS Bank Int'l, ___ U.S. ___, 134 S.Ct. 2347, 2355, 189 L.Ed.2d 296 (2014)). If the claims are directed toward such a concept, the Court should then "consider the elements of each claim both individually and `as an ordered combination' to determine whether the additional elements `transform the nature of
As for the first inquiry, neither the Supreme Court nor the Federal Circuit has established a definitive rule governing whether a claim is directed toward an "abstract idea." Id. Instead, a court should compare the claims at issue with claims found to be directed to an abstract idea in other cases. Id. For example, "fundamental economic and conventional business practices are often found to be abstract ideas...." Id. at 1335. A claim that merely involves an abstract idea, however, does not necessarily fail step one "because essentially every routinely patent-eligible claim involving physical products and actions involves a law of nature and/or natural phenomenon...." Id. (emphasis in original). Rather, the Court should consider "whether the claims ... focus on a specific means or method ... or are instead directed to a result or effect that itself is the abstract idea and merely invoke generic processes and machinery." McRO, Inc. v. Bandai Namco Games Am., Inc., 837 F.3d 1299, 1314 (Fed. Cir. 2016). In other words, "claims that amount to nothing significantly more than instruction to apply an abstract idea are not patent eligible." Ariosa Diagnostics, Inc. v. Sequenom, Inc., 809 F.3d 1282, 1285 (Fed. Cir. 2015) (emphasis in original).
Tuftco argues that the Severed Claims attempt to patent the abstract idea of high-stitch rate-tufting, rendering them ineligible for patent protection under § 101. (Doc. 452, at 29-35.) According to Tuftco, CMC's patents claim the idea of carpets manufactured with increased stitch rates and use conventional tufting methods to accomplish an increased stitch rate. In support, Tuftco relies heavily on Alice Corp. v. CLS Bank International, ___ U.S. ___, 134 S.Ct. 2347, 189 L.Ed.2d 296 (2014). In Alice, the Supreme Court held that "the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention." 134 S.Ct. at 2358. Similarly, Tuftco argues, the use of a conventional tufting machine to achieve higher stitch rates cannot transform the abstract idea of higher stitch rates into a patent-eligible invention. In other words, attempting to claim the abstract idea of high-stitch-rate tufting "while adding the words `apply it with a [conventional tufting machine]'" is not sufficient for patent eligibility. See id.
Tuftco's position stretches Alice's holding too far. The Supreme Court's holding in Alice was directed at step two of the § 101 inquiry and, therefore, necessarily requires that the claim at issue be directed at an abstract idea. Tuftco takes step one for granted and assumes that the Claims are directed to the idea of high-rate stitching, then focuses almost entirely on step two: whether the Claims contain an inventive concept sufficient to transform the idea of high-rate stitching into an eligible claim. Tuftco devotes substantial argument to discussing established methods for achieving relatively high stitch rates, but never bothers to establish step one of the § 101 inquiry.
Before considering step two, the Court must first determine whether the focus of the Severed Claims as a whole is directed to the idea of high-rate stitching. The Federal Circuit's decision in Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016), is helpful to the determination. In Enfish, the court considered whether patents claiming a logical model for a computer database were directed to an abstract idea. 822 F.3d at 1335-38. The Federal Circuit found that the claims were directed to "a specific improvement to the way computers operate, embodied in the self-referential table," not to the abstract idea of
Applying the Federal Circuit's principles here demonstrates that the Severed Claims are not directed toward the abstract idea of high-stitch-rate tufting. They do not claim the production of all carpets with relatively high stitch rates. Instead, they claim a specific way of achieving a high stitch rate — a manner of stitching far more yarns per longitudinal inch than in conventional tufting systems, then pulling yarns not wanted in the face of the pattern out of the backing or so low they cannot be seen. This results in a fabric where only the desired stitches in the face of the pattern can be seen and allows for greater precision in creating patterns. Moreover, like the claimed tables in Enfish, a tufting machine performing the Severed Claims "functions differently than conventional [tufting machines]." Id. Traditional techniques for achieving higher stitch rates are not coupled with the technique of pulling low or completely removing yarns that are not desired to be shown in the face of the pattern, while maintaining an increased surface density. Even if Tuftco correctly asserts that the Claims use conventional tufting machines,
Because the Claims are not directed to an abstract idea under step one of the § 101 analysis, the Court does not need to proceed to step two. Enfish, 822 F.3d at 1339. Accordingly, the Court will
In its response to CMC's motion for summary judgment, Tuftco argues that the Severed Claims are invalid due to a lack of enablement. In reply, CMC argues that the Court should not consider this argument because it is being raised for the first time in Tuftco's response brief. CMC notes that Tuftco did not raise this defense in its response to CMC's interrogatories (Doc. 292-4, at 4-6), its invalidity contentions (id. at 32-91), its expert reports (Doc. 292-2; Doc. 292-3, at 1-17), or its opening brief in support of its motion for summary judgment (Doc. 450).
Many district courts refuse to consider summary judgment arguments not made in a party's invalidity contentions. See, e.g., WCM Indus., Inc. v. IPS Corp., No. 2:13-cv-02019, 2015 WL 5821639, at *10 (W.D.
Tuftco has not shown that its failure to comply with Rule 26(e) "was substantially justified or is harmless." While this matter has been pending since October 2014, Tuftco's deadline to disclose expert testimony for its invalidity claims was August 19, 2016, and the discovery period ended on October 10, 2016. (Doc. 228.) Despite these deadlines, Tuftco raised its enablement argument for the first time in its response to CMC's motion for summary judgment, filed on November 28, 2016. (Doc. 319.) And it has offered no justification for this delay, either in its filings (Doc. 452, at 38-40) or in response to the Court's in-person questioning (Doc. 474, at 40-43). Indeed, Tuftco's enablement argument relies on deposition testimony taken before the end of the discovery period, so it is difficult to imagine a justification for the failure to supplement interrogatory responses or invalidity contentions. Moreover, Tuftco's untimely argument is not harmless. CMC had no notice that Tuftco would assert that CMC's patents were invalid due to lack of enablement until after not only the close of the discovery period but also the deadline for filing dispositive motions. Accordingly, the Court will not consider Tuftco's argument that the Asserted Patents are invalid due to a lack of enablement.
Even if the Court were to consider Tuftco's argument, it would still fail. "Enablement is a question of law ... based on underlying factual inquiries." Cephalon, Inc. v. Watson Pharm., Inc., 707 F.3d 1330, 1336 (Fed. Cir. 2013). To meet the enablement standard, a person of ordinary skill in the art, having read the specification, must be able to practice the invention without "undue experimentation." Id. Determining whether experimentation is undue involves weighing factual considerations such as:
Id. (quoting In re Wands, 858 F.2d 731, 737 (Fed. Cir. 1988)). However, "a reasonable amount of routine experimentation required to practice a claimed invention does not violate the enablement requirement." Id.; cf. White Consol. Indus., Inc. v. Vega Servo-Control, Inc., 713 F.2d 788, 791
In support of its lack of enablement argument, Tuftco notes that some Severed Claims require that tufts of yarn either be pulled low or removed from the backing. For example, Claim 24 of the '989 Patent provides for "controlling feeding of the yarns ... to pull such yarns low or remove them from the selected stitch locations." (Doc. 292-1, at 50, col. 22:14-16.) CMC's expert Steven Berger, however, testified that the "goal" of ColorPoint is to pull unwanted or unused yarns all the way out of the backing. (Doc. 320, at 56-57.) Wilton Hall, a named inventor of the Asserted Patents, similarly testified that "[i]f you're trying to pull something down really low, essentially, to not see it, it's basically pulling it out." (Doc. 454-12, at 98.) Charles Monroe, CMC's CEO, testified that with the ColorPoint method, "[f]or the most part, you're going to have to pull [the tufts] out of the backing or not leave them in the backing." (Doc. 320, at 43.) According to Tuftco, this deposition testimony "reveal[s] that pulling yarns low is not a viable option when creating ColorPoint-type fabrics under the Asserted Patents." (Doc. 452, at 39.)
Tuftco fails to raise a genuine issue of material fact concerning enablement. First, much of the testimony cited by Tuftco concerns ColorPoint, the commercial embodiment of the Severed Claims. The Federal Circuit has "repeatedly warned" against confining claims to their commercial embodiments. Phillips v. AWH Corp., 415 F.3d 1303, 1323 (Fed. Cir. 2005). Moreover, the '505 Patent's specification provides that:
(Doc. 292-1, at 64, col. 3:8-13.) Thus, the specification clarifies that the goal of the Severed Claims is to avoid a missing color or gap in the finished patterned tufted article, not necessarily to completely remove yarns from selected stitch locations. While avoiding a missing color or gap in the finished pattern may involve some amount of experimentation, Tuftco does not present any evidence — much less clear and convincing evidence — to show that the experimentation is "undue." As such, Tuftco's enablement argument fails.
In the alternative to summary judgment of invalidity, Tuftco moves for partial summary judgment "limiting the `invention' in the Asserted Patents to the ColorPoint software." (Doc. 450, at 25-27.) Tuftco argues that, because the first six subsections and parts of the seventh subsection of Claim 1 of the '703 Patent claim preexisting technology,
Tuftco fails to demonstrate that it is entitled to summary judgment. First, Tuftco does not cite any legal authority for the proposition that the Court may enter an order limiting the "invention" in a patent or set of patents to a certain claim element. (Id.; Doc. 474, at 86-88.) Second, the Court has already noted that: 1) claims should not be separated into old and new elements; and 2) a new combination of old components is patentable. See supra Part III(b)(ii)(2)(c). Indeed, "inventions in most, if not all, instances rely upon building blocks long since uncovered, and claimed discoveries almost of necessity will be combinations of what, in some sense, is already known." KSR, 550 U.S. at 418-19, 127 S.Ct. 1727. Accordingly, the Court will
Tuftco seeks summary judgment of non-infringement of all of the Severed Claims. Additionally, Tuftco independently seeks summary judgment of non-infringement on Claims 1, 28, and 29 of the '703 Patent. CMC seeks summary judgment of infringement of the Machine Claim (Claim 1 of the '703 Patent) and the following Method Claims: (1) Claims 8, 10, and 12 of the '505 Patent; (2) Claim 28 of the '703 Patent; and (3) Claims 21 and 27 of the '989 Patent.
Under 35 U.S.C. § 271(a), "whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent." An infringement analysis involves two steps. "First, the court determines the scope and meaning of the asserted patent claims." Innovention Toys, LLC v. MGA Entm't, Inc., 637 F.3d 1314, 1318 (Fed. Cir. 2011). Better known as claim construction, the first step is a question of law. Id. at 1319. Next, the court "compares the properly construed claims to the allegedly infringing device to determine whether all of the claim limitations are present, either literally or by a substantial equivalent." Id. at 1318-19. "[I]nfringement, whether literal or under the doctrine of equivalents, is a question of fact." Id. at 1319. Summary judgment is proper "when no reasonable jury could find that every limitation recited in the properly construed claim either is or is not found in the accused device." Id. (internal quotation marks omitted).
An accused infringer is entitled to summary judgment if it shows "that the patentee failed to put forth evidence to support a finding that a limitation of the asserted claim was met by the structure in the accused devices." Johnston v. IVAC Corp., 885 F.2d 1574, 1578 (Fed. Cir. 1989).
Tuftco argues it is entitled to summary judgment of non-infringement on all Severed Claims because the Accused Products do not convert a programmed desired stitch rate to determine an effective stitch rate.
A district court may reconsider an interlocutory order where "there is (1) an intervening change of controlling law; (2) new evidence available; or (3) a need to correct clear error or prevent manifest injustice." Louisville, Jefferson Cty. Metro Gov't v. Hotels.com, L.P., 590 F.3d 381, 389 (6th Cir. 2009) (internal quotation omitted); see also Flexsys Am. LP v. Kumho Tire U.S.A., Inc., 726 F.Supp.2d 778, 786-87 (N.D. Ohio 2010) (construing a request to revisit a claim-construction ruling as a motion for reconsideration under Sixth Circuit law and applying the foregoing three factors). Further, "parties cannot use a motion for reconsideration to raise new legal arguments that could have been raised before [the order] was issued." Roger Miller Music, Inc. v. Sony/ATV Publ'g, LLC, 477 F.3d 383, 395 (6th Cir. 2007) (citation omitted). Accordingly, the Court will not consider Tuftco's arguments pertaining to the prohibition of patenting mental processes and prosecution history because they: (1) are not contemplated by the three situations in which a district court may reconsider an interlocutory order; and (2) were raised for the first time in Tuftco's motion for reconsideration (see Doc. 174, at 11-14; Doc. 182, at 4-6).
Tuftco's "new" evidence, being external to the patent and prosecution history, is extrinsic. See Phillips, 415 F.3d at 1317. Where the analysis of intrinsic evidence alone resolves ambiguity about a term, it is improper for the Court to consider evidence outside the patent and prosecution history. Kara Tech., Inc. v. Stamps.com Inc., 582 F.3d 1341, 1348 (Fed. Cir. 2009). Because the Court relied on claim language in construing the term "desired stitch rate" (Doc. 220, at 7), it is improper to reconsider that ruling based on the evidence Tuftco now provides. See id. ("While helpful, extrinsic sources ... cannot overcome more persuasive intrinsic evidence."); see also Chien-Lu Lin v. Twins Enter., Inc., No. CV 01-07390, 2002 WL 34455514, at *15 n.48 (C.D. Cal. Nov. 12, 2002) (considering admissions in a party's claim-construction chart as extrinsic evidence and refusing to consider it where claim terms were unambiguous).
Second, each piece of subsequently developed evidence Tuftco presents is an admission
Next, Tuftco seeks summary judgment on Claims 1, 28, and 29 of the '703 Patent, arguing that its machines do not perform critical elements of the '703 claims. Tuftco asserts that, given the prosecution history of the '703 Patent, the term "based on the gauge of the tufting machine" should be construed as "equal to the gauge of the tufting machine." (Doc. 450, at 27-34.)
Tuftco's argument fails for a number of reasons. First and foremost, Tuftco does not cite any evidence indicating that its products do not perform the elements of the '703 claims. In eight pages of argument, Tuftco does not make one evidentiary citation to the Accused Products. (Id.) As noted, to be entitled to summary judgment, Tuftco must show "that [CMC] failed to put forth evidence to support a finding that a limitation of the asserted claim was met by the structure in the accused devices." Johnston, 885 F.2d at 1578. Without any mention of the "accused devices," Tuftco fails to meet its burden on summary judgment.
Moreover, Tuftco's reading of the prosecution history is unconvincing. For example, Tuftco notes that the PTO rejected as indefinite a limitation that read: "the tufts of yarns are formed in the backing material at an increased effective process stitch rate based upon a desired stitch rate of the pattern tufted article multiplied by the number of different color yarns of the pattern...." (Doc. 292-4, at 113 (emphasis altered).) Tuftco argues the December 22, 2011 Office Action demonstrates that the PTO believed that "based upon" was indefinite "relative terminology." However, the PTO's issue with the original claim language was not necessarily the term "based upon," but that "desired stitch rate" — and by extension "effective process stitch rate" — was undefined and could be interpreted as any stitch rate, subjecting the claim to anticipation and indefiniteness concerns.
The amended language in Claim 1 of the '703 Patent provides that the effective stitch rate "is determined by increasing a prescribed stitch rate of the patterned tufted article that is based on the gauge of the tufting machine by a selected amount...." (Doc. 292-1, at 67, col. 9:46-49 (emphasis added).) The amended claim language ties the prescribed stitch rate to a
CMC moves for summary judgment of infringement on: (1) Claims 8, 10, and 12 of the '505 Patent; (2) Claims 1 and 28 of the '703 Patent; and (3) Claims 21 and 27 of the '989 Patent.
Before the Court turns to the infringement analysis, it will consider CMC's argument that the Inspected Machines, inspected by its expert Steven Berger in preparation of his expert report, are representative of all of the Accused Products. Tuftco does not respond (see Doc. 452) and acknowledged at the summary judgment hearing that the Inspected Machines are "typical" of the Accused Products (Doc. 474, at 80-81).
Next, the Court turns to Tuftco's double-needle-bar-machine argument, which is responsive to all claims at issue. Tuftco argues that the Severed Claims "require[] that a machine be capable of placing any color of yarn in any single pixel of the carpet." (Doc. 452, at 16.) Because double-needle-bar machines are incapable of placing each color of yarn in the pattern into any stitch location,
Tuftco's argument against infringement requires that each needle bar's ability to place each color of yarn in any stitch location be a limitation in the Severed Claims. See Playtex Prods., Inc. v. Procter & Gamble Co., 400 F.3d 901, 909 (Fed. Cir. 2005) ("For infringement to be found, the court must determine that every claim limitation is found in the accused device." (emphasis added)). None of the claims on which CMC has moved for summary judgment of infringement contains such a limitation. Though Claim 27 of the '989 Patent provides for multiple stitches "at selected stitch locations" (Doc. 292-1, at 50, col. 22:41-45), none of the evidence provided by Tuftco refutes that the double-needle-bar Accused Products make multiple stitches at certain stitch locations.
CMC first moves for summary judgment of infringement of Claim 1 of the '703 Patent. In its summary judgment motion, CMC appears to argue that all Accused Products infringe. (Doc. 442, at 28-29, 31-32.) However, at the summary judgement hearing, CMC clarified that it was not seeking summary judgment that the machine inspected at Lexmark (the "Lexmark Machine") infringes Claim 1.
CMC submits expert Steven Berger's infringement report in support of its motion, which conducts an element-by-element infringement analysis. (Doc. 454-9, at 60-61, 91-96.) Tuftco disputes infringement of the last limitation of Claim 1, which reads:
(Doc. 292-1, at 67, col. 9:43-51 (emphasis added).) First, Tuftco argues that, because the user makes the effective-stitch-rate calculation required by Claim 1, the Accused Products do not infringe. This argument requires that the Court construe Claim 1 to require that the effective-stitch-rate calculation be performed by the tufting machine.
Next, Tuftco argues that the Accused Products do not infringe Claim 1 because Tuftco does not instruct its customers that the desired or prescribed stitch rate — i.e., the number of tufts to be visible in the face of the pattern — must equal the gauge of the machine. Tuftco's argument requires that the Court construe the term "based on the gauge of the tufting machine" to mean "equal to the gauge of the tufting machine."
(Doc. 320, at 24.) Additionally, Tuftco notes that, unlike other claims at issue, the modifier "approximately" is not used, suggesting that the prescribed stitch rate is not approximate to the gauge, but equal to it.
When construing patent terms, the words of a claim "are generally given their ordinary and customary meaning...." Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996). But "the ordinary and customary meaning of a claim term is 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, 415 F.3d at 1313. In determining the meaning of claim terms, all sources of evidence are not equal. Intrinsic evidence — the patent claims, the specification, and the prosecution history — is given preference over extrinsic evidence — dictionaries, treatises,
The claim language, read in the context of the specification, does not require that the desired stitch rate be equal to the gauge of the tufting machine. See Kara Tech. Inc., 582 F.3d at 1347. For example, the '703 Patent's specification notes that a "typical desired stitch rate" in a conventional tufting system "generally has been matched to the gauge of the tufting machine, i.e., for a tenth gauge tufting machine, the stitch rate typically will be approximately ten stitches per inch...." (Doc. 292-1, at 65, col. 5:22-26.) Further, with regard to the present invention, it states that "for a tenth gauge machine generally run using a desired stitch rate of approximately ten stitches per inch," the effective stitch rate for a three-color pattern will be "approximately thirty stitches per inch...." (Id., col. 5:35-42.) The above language from the specification clarifies that the desired stitch rate, though "based on the gauge of the tufting machine," does not have to be equal to the gauge of the machine, just approximate to it. When the intrinsic evidence alone resolves ambiguity about a disputed claim term, as it does here, it is improper to consider extrinsic evidence, such as expert testimony. Id. at 1348; Vitronics, 90 F.3d at 1583. Accordingly, Berger's testimony does not overcome the claim language and specification.
Tuftco's argument regarding the absence of the modifier "approximately" is equally unavailing. While the other Severed Claims use "approximately" to define how the gauge of a tufting machine relates to the desired stitch rate, none uses "approximately" to modify the term "based upon." For example, Claim 12 of the '505 Patent provides: "wherein the tufting machine is a 1/10th gauge tufting machine and the desired fabric stitch rate is approximately ten stitches per inch." (Doc. 292-1, at 17, col. 11:6-8.) Moreover, the '703 Patent's specification makes clear that Claim 1 covers a machine tufting carpets at "desired stich rate" that is consistent with conventional tufting systems, where "for a tenth gauge tufting machine, [for example], the stitch rate typically will be approximately ten stitches per inch...." (Doc. 292-1, at 65, col. 5:24-26.) The fact that Claim 1 claims something broader than an exact number does not create a question about the scope of Claim 1. A person of ordinary skill in the art at the time of the invention would not construe "based on" as "equal to."
Having construed Claim 1, the Court now turns to whether the Accused Products infringe. Tuftco asserts that the evidence cited by CMC fails to prove that the Accused Products base the prescribed stitch rate on the gauge of the machine. For example, Tuftco argues, one e-mail between Tuftco's Director of Marketing, Steve Martin, and one of its customers (Doc. 454-4, at 12) does not even mention the gauge of any machine, let alone instruct the customer to base the prescribed stitch rate upon it. Although the term "gauge" does not appear in the document, Martin clearly bases his stitches-per-inch calculation on the gauge of the machine. Martin informs the customer that the "[a]ctual, compressed stitch rate is typically 4X (4-colors), 5X (5-colors): 4-colors means 40 [stitches per inch] (160/ 10-cm) & 5-colors means 50 [stiches per inch] (200/ 10-cm)." (Doc. 454-4, at 12.) Martin's stitch-rate calculation takes the number of colors and multiplies them by ten, i.e., the
Finally, Tuftco argues that the Accused Products' prescribed stitch rate is not based on the gauge, but is up to customer discretion. Tuftco cites testimony from a number of its employees indicating that the number of yarns to display in the face of the carpet is decided by the customer. For example, Martin testified that stitch rate is at "customer discretion ... they can use whatever stitch rate they want to do." (Doc. 454-12, at 115.) Tuftco fails, however, to cite any evidence demonstrating that its customers actually use a prescribed stitch rate that is not either equivalent to the gauge of the machine or based on it. In an e-mail from Martin to Steve Frost, Tuftco's CEO, Martin states:
(Doc. 454-2, at 1.) Again, Tuftco offers no other explanation for arriving at forty stitches per inch — then thirty-two or thirty-six for a larger yarn size — other than multiplying the number of colors by a desired stitch rate that is based on the gauge of the machine. Though the prescribed stitch rate will vary based on yarn size and customer preference — just like with ColorPoint — this variance does not negate the relationship between the Accused Products' gauge and prescribed stitch rates. Simply asserting that the desired stitch rate of the Accused Products is not "based on the gauge of the tufting machine" as required by Claim 1 is insufficient to raise a genuine issue of material fact.
The Court now turns to whether CMC has met its burden on summary judgment. As already noted, CMC moves for summary judgment that four of the five Inspected Machines infringe Claim 1 — specifically, the machines inspected at: (1) Signature Hospitality Carpets; (2) J & J Industries; (3) Shaw Industries; and (4) Tuftco. CMC submits Steven Berger's expert report in support, which conducts an element-by-element analysis. (Doc. 454-9, at 60-61, 91-96.) Again, Claim 1 requires that the desired stitch rate be "based on the gauge of the tufting machine." The Court has already concluded that a person of ordinary skill in the art at the time of the invention would not construe "based on" as "equal to" when viewing the claim language in light of the '703 Patent's specification. Accordingly, a machine will infringe Claim 1 if the desired stitch rate of the pattern it produces is approximate to the gauge of the tufting machine.
No reasonable jury could conclude that the desired stitch rate of patterns made by three of the Inspected Machines was not based on the gauge of the machine. With respect to the 1/10th gauge single-needle-bar machine inspected at Signature, CMC's expert Steven Berger noted that, as required by Claim 1, the machine made a six-color pattern at an effective stitch rate of seventy-two stitches per inch and a desired stitch rate of twelve. (Doc. 454-9, at 60.) The resulting pattern displayed a face density of approximately twelve stitches per inch. (Id.) With respect to the 1/10th gauge single-needle-bar machine inspected at Shaw, Berger noted that, as required by Claim 1, the machine made a four-color pattern at an effective stitch rate of forty stitches per inch and a desired stitch rate of ten. (Id. at 61.) The resulting pattern displayed a face density of approximately ten stitches per inch. (Id.) With respect to the 1/10th composite gauge double-needle-bar machine inspected at Tuftco, Berger noted that, as required by Claim 1, the machine made a four-color pattern at an effective stitch rate of thirty-six stitches per inch and a desired stitch rate of approximately nine. (Id.) The resulting pattern displayed a face density of approximately nine stitches per inch. (Id.) Accordingly, CMC has met its burden with regard to these three machines.
However, a genuine issue of material fact exists with regard to the machine inspected at J & J (the "J & J Machine"). Berger noted that the 1/12th composite gauge double-needle-bar J & J Machine made a three-color pattern at an effective stitch rate of twenty-six stitches per inch and a desired stitch rate of approximately 8.66 stitches per inch. (Id. at 60-61.) The resulting pattern displayed a face density of approximately 8.5 stitches per inch. (Id. at 60.) Viewing this evidence in the light most favorable to Tuftco, a reasonable jury could conclude that a desired stitch rate of approximately 8.66 stitches per inch is not based on the J & J Machine's 1/12th gauge. This conclusion is consistent with the range of "based on the gauge of the machine" CMC provided at the summary judgment hearing. At the hearing, CMC clarified that it was not moving for summary judgment that the Lexmark Machine infringed Claim 1, because "[t]he desired stitch rate ... was, like, 7 1/2 on a tenth-gauge machine, and we're not claiming you can go that far." (Doc. 474, at 26.) If a desired stitch rate of 7.5 stitches per inch is not "based on" the gauge of a 1/10th gauge machine (a proportion of 0.75), then CMC is not entitled to summary judgment that a 8.66 desired stitch rate is based on the gauge of a 1/12th gauge machine (a proportion of 0.72).
Accordingly, the Court will
Next, CMC moves for summary judgment of infringement on six of the method claims — Claims 8, 10, and 12 of the '505 Patent, Claim 28 of the '703 Patent, and Claims 21 and 27 of the '989 Patent — asserting theories of direct infringement and induced infringement.
Direct infringement of method claims, like machine claims, is governed by 35 U.S.C. § 271(a), which states "whoever without authority makes, uses, offers to sell, or sells any patented invention ... infringes the patent." Sale of an accused product capable of performing the method, however, is not sufficient to prove infringement. Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1317 (Fed. Cir. 2009). Instead, the patentee must present evidence that the alleged infringer, or someone under its control, performed all of the steps of the claimed method. Id. A finding of direct infringement "can rest on as little as one instance of the claimed method being performed during the pertinent time period." Id.
CMC argues that the Accused Products perform every element of Claim 8 of the '505 Patent, as well as dependent Claims 10 and 12. In support, CMC submits Steven Berger's expert report on infringement, which compares the claims, element by element, to the operation of the Accused Products. Additionally, CMC cites photographs of samples made by Tuftco on its Colortuft/iTuft c, iTuft 5c, and iTuft 6c machines. (See Doc. 454-3 (single-needle-bar samples); Doc. 454-5, at 3-39 (double-needle-bar samples).) CMC cites these samples as evidence of direct infringement by Tuftco of all the method claims for which it seeks summary judgment. Tuftco does not dispute that it made these samples or maintain that they were produced in a manner inconsistent with how the Accused Products were made to operate. (See Doc. 452.) Accordingly, if CMC meets its burden of providing evidence that the Accused Products operate in a way that infringes the method claims, Tuftco is liable for direct infringement of the method claims for producing these samples. See Ricoh Co., Ltd. v. Quanta Comput. Inc., 550 F.3d 1325, 1336 (Fed. Cir. 2008) (upholding district court's decision to grant summary judgment of non-infringement where patentee did not present evidence that alleged infringer tested any accused products).
Tuftco does not dispute the first six limitations of Claim 8, but it does dispute that the Accused Products perform the seventh limitation, which provides:
(Doc. 292-1, at 16, col. 10:56-61 (emphasis added).) Specifically, Tuftco asserts that CMC failed to provide any evidence that the Accused Products feed the yarns in a fashion that tracks the shifting of the needles.
However, the Court concludes that CMC is not entitled to summary judgment on the double-needle-bar Accused Products. To find infringement, the Court "compares the properly construed claims to the allegedly infringing device to determine whether all of the claim limitations are present, either literally or by a substantial equivalent." Innovention, 637 F.3d at 1318-19. Claim 8 the '505 Patent limits itself to one needle bar: "a shiftable needle bar" and "shifting the needle bar...."
"A device that does not literally infringe a claim may nonetheless infringe under the doctrine of equivalents if every element in the claim is literally or equivalently present in the accused device." Sage Prods., Inc. v. Devon Indus., Inc., 126 F.3d 1420, 1423 (Fed. Cir. 1997). "A claim element is equivalently present in an accused device if only `insubstantial differences' distinguish the missing claim element from the corresponding aspects of the accused device." Id. (citation omitted). As an issue of fact, equivalence should be reserved for the fact finder unless no reasonable jury could find eqiuvalence. Id. Tuftco noted some of the differences between single-and double-needle-bar machines in connection with its argument that double-needle-bar machines are incapable of infringing the Severed Claims. See supra Part III(d)(iii)(2). For example, Steve Frost testified in a Rule 30(b)(6) deposition that double-needle bars are not capable of tufting "a single pixel of color in any longitudinal line of tufting" and, therefore, are incapable of the pinpoint accuracy of single-needle-bar machines. (Doc. 454-12, at 67-69.) Viewing the evidence in a light most favorable to Tuftco, a reasonable jury could find that using two needle bars is not substantially equivalent to using one based upon these differences. As such, the Court will
Turning to Claims 10 and 12 of the '505 Patent, which are dependent on Claim 8, CMC also submits Berger's report in support of its motion for summary judgment of Claims 10 and 12. Tuftco's only response revolves around its argument as to Claim 8, which the Court has rejected. Because CMC bears the burden at trial, however, CMC must make a prima facie showing of infringement to be entitled to summary judgment. Warner-Lambert, 418 F.3d at 1341 (citing Liberty
Given that Claims 10 and 12 are dependent on Claim 8 of the '505 Patent, however, they are also explicitly limited to one needle bar. The Court has already determined that there exists a genuine issue of material fact as to whether double-needle-bar machines infringe Claim 8. Accordingly, the Court will
Next, CMC moves for summary judgment that the Accused Products operate to infringe Claim 28 of the '703 Patent and submits Steven Berger's expert report in support. Tuftco responds only that, "[b]ecause Claim 28 of the '703 [Patent] is dependent upon Claim 1," CMC should be denied summary judgment for the reasons stated in connection with Claim 1. (Doc. 452, at 15 n.3.) A dependent claim is one that "contain[s] a reference to a claim previously set forth and then specif[ies] a further limitation of the subject matter claimed." 35 U.S.C. § 112(d). Claim 28 does not contain a reference to Claim 1 and, therefore, is not dependent on Claim 1. Accordingly, Tuftco has failed to respond
However, Claim 28 contemplates that the prescribed or desired stitch rate be "based upon a gauge of the tufting machine." In connection with its analysis of Claim 1 of the '703 Patent, the Court has already noted that there exists a genuine issue of material fact with regard to the Lexmark and J & J Machines. See supra Part III(d)(iii)(3). Specifically, the 1/10th gauge single-needle-bar Lexmark Machine tufted a pattern with a desired stitch rate of seven. (Doc. 454-9, at 60.) The 1/12th composite gauge double-needle-bar J & J Machine tufted a pattern with a desired stitch rate of approximately 8.66 stitches per inch. (Id.) A reasonable jury could find that these desired stitch rates are not "based upon a gauge of the tufting machine" as required by Claim 28.
Accordingly, the Court will
Next, CMC moves for summary judgment that the Accused Products operate to infringe Claims 21 and 27 of the '989 Patent. Other than its double-needle-bar argument, see supra Part III(d)(iii)(2), Tuftco does not respond. Still, CMC must make a prima facie showing of infringement to be entitled to summary judgment. Warner-Lambert, 418 F.3d at 1341; L & W, Inc., 471 F.3d at 1318.
The Court finds that, based on element-by-element analysis submitted in Berger's report (Doc. 454-9, at 107-08, 111-12), CMC has established it is entitled to summary judgment that the Accused Products infringe Claims 21 and 27 of the '989 Patent. See Intellectual Sci., 589 F.3d at 1183. Specifically, to show the Accused Products control the yarn feed to retain a desired yarn tuft in the face of the pattern, as required by Claim 21, and stitch multiple stitches at selected stitch locations, as required by Claim 27, Berger provides: (1) an e-mail from Steve Martin, Tuftco's Director of Marketing, stating that one out of the four colors in a pattern is "tufted into the carpet face whilst the other colors are hidden (burden) beneath the surface or may be pulled all the way out of the primary backing, dependent
Induced infringement is governed under 35 U.S.C. § 271(b), which provides that "[w]hoever actively induces infringement of a patent shall be liable as an infringer." To prevail on an inducement claim, "the patentee must show direct infringement, and that the alleged infringer knowingly induced infringement and possessed specific intent to encourage another's infringement." Toshiba Corp. v. Imation Corp., 681 F.3d 1358, 1363 (Fed. Cir. 2012) (internal quotation marks omitted). Therefore, liability for induced infringement may arise only where there is direct infringement by a third party. Id. at 1364; Limelight Networks, Inc. v. Akamai Techs., Inc., ___ U.S. ___, 134 S.Ct. 2111, 2117, 189 L.Ed.2d 52 (2014). "To satisfy the direct infringement requirement, the patentee must either point to specific instances of direct infringement or show that the accused device necessarily infringes the patent in suit." Toshiba, 681 F.3d at 1364. If an accused product can be used in a non-infringing manner, the product does not necessarily infringe the method claim. ACCO Brands, Inc. v. ABA Locks Mfr. Co., 501 F.3d 1307, 1313 (Fed. Cir. 2007).
CMC moves for summary judgment that Tuftco has indirectly infringed the method claims by inducing its customers to directly infringe them. In support, CMC provides evidence that: (1) "[t]he Accused Products were specifically configured to run the infringing Colortuft/iTuft c method"; (2) "Tuftco actually developed `Colortuft software' for its machines to facilitate the process of using the infringing method"; (3) "Tuftco trained customers regarding how to run the infringing Colortuft/iTuft c method"; (4) "Tuftco created user's manuals that provided detailed instructions for using the infringing Colortuft/iTuft c method"; and (5) "Tuftco sent numerous other documents to customers describing how the infringing Colortuft/iTuft c method works." (Doc. 442, at 33.)
CMC fails to show there is no issue of material fact as to whether the patent was directly infringed by Tuftco's customers. First, CMC does not assert that the Accused Products cannot be used in a non-infringing manner, precluding a finding that the Accused Products necessarily infringe. Id. Second, CMC does not "point to specific instances of direct infringement" by customers. Toshiba, 681 F.3d at 1364. Instead, CMC cites only circumstantial evidence indicating that Tuftco's customers likely infringed. For example, although Tuftco's user manuals instructed its customers to use the Accused Products in an infringing manner, those manuals do not provide direct evidence that those customers
Moreover, Tuftco provides evidence that raises a material question of fact as to infringement of at least six of the Accused Products. A representative from a Tuftco customer testified in a deposition that the company only used one of the seven machines it purchased from Tuftco to make "Colortuft carpet." (Doc. 435, at 196.) Based on this evidence, a reasonably jury could conclude that this customer never directly infringed with the other six machines. Accordingly, the Court will
Tuftco seeks summary judgment on the following damages issues: (1) whether CMC is entitled to lost profits related to Tuftco's double-needle-bar machine sales; (2) whether CMC is entitled to damages for infringement of the '703 Patent related to foreign sales; (3) whether CMC is entitled to damages for infringement of the '703 Patent related to sales Tuftco made before the '703 Patent issued; and (4) whether CMC's damages for induced infringement, if any, must be restricted if CMC fails to establish direct infringement for any given sale.
First, Tuftco moves for summary judgment that CMC is not entitled to lost-profits damages on the double-needle-bar Accused Products, arguing that CMC cannot establish the requisite "but for" causation to obtain lost profits. The availability of lost profits is a question of law. Siemens Med. Sols. USA, Inc. v. Saint-Gobain Ceramics & Plastics, Inc., 637 F.3d 1269, 1287 (Fed. Cir. 2011). "To recover lost profits a patentee must show that `but for' infringement it reasonably would have made the additional profits enjoyed by the infringer." Micro Chem., Inc. v. Lextron, Inc., 318 F.3d 1119, 1122 (Fed. Cir. 2003). There are multiple methods by which a patentee may show "but for" causation. Id. One of which is the Panduit method, whereby "the patent owner must prove (1) a demand for the patented product, (2) an absence of acceptable noninfringing substitutes, (3) the manufacturing and marketing capability to exploit the demand, and (4) the amount of profit the patent owner would have made."
CMC makes a prima facie case of "but for" causation in its expert report of David A. Kennedy. (Doc. 435, at 44-66.) With regard to the first Panduit factor, "demand for the patented product" contemplates not only products covered by the asserted patent, but also similar products that are in direct competition. Presidio Components, Inc. v. Am. Tech. Ceramics Corp., 702 F.3d 1351, 1360 (Fed. Cir. 2012). Additionally, as demand for the patented and infringing products are interchangeable, "evidence of sales of the infringing product may suffice to show Panduit's first factor." BIC Leisure Prods., Inc. v. Windsurfing Int'l, Inc., 1 F.3d 1214, 1218 (Fed. Cir. 1993). The Court has already determined that the single-and double-needle-bar Accused Products infringe Claims 21 and 27 of the '989 Patent and that at least some Accused Products infringe Claims 1 and 28 of the '703 Patent. See supra Parts III(d)(iii)(3), III(d)(iii)(4)(ii)-(iii). Accordingly, those Accused Products are covered by the Asserted Patents. As for Claims 8, 10, and 12 of the '505 Patent, CMC has submitted evidence that the double-needle-bar Accused Products are sufficiently similar to the single-needle-bar Accused Products to be in direct competition. Presidio, 702 F.3d at 1360. For example, Jeff Smith, a Tuftco employee, testified that double-needle-bar Accused Products use the same "Colortuft technique" as the single-needle-bar Accused Products. (Doc. 454-12, at 124.) As such, demand under the first Panduit factor includes demand for double-needle-bar machines. Kennedy outlines the sales of not only ColorPoint machines, but also the infringing Accused Products in his report (Doc. 435, at 45-50), satisfying the first factor under Panduit.
The second Panduit factor requires demonstrating an absence of acceptable noninfringing substitutes. "[I]f purchasers are motivated to purchase because of particular features available only from the patented product, products without such features — even if otherwise competing in the marketplace — would not be acceptable noninfringing substitutes." Standard Havens Prods., Inc. v. Gencor Indus., Inc., 953 F.2d 1360, 1373 (Fed. Cir. 1991). Kennedy's report outlines the differences between the infringing Accused Products and non-infringing alternative substitute products, namely Tuftco's Colortron and Colortec machines. (Doc. 435, at 60-63.) Specifically, Kennedy provides evidence that: (1) Colortron machines are more expensive to operate and are typically limited to making "high end/price oriental style rugs and similar specialty tufted fabrics" (id. at 61); (2) Colortec machines are only capable of tufting cut-pile carpets, cannot create patterns with single-pixel precision, and have gauge limitations, unlike the Accused Products (id. at 62); and (3) Tuftco has had more success in selling the Accused Products than the Colortron and Colortec machines (id. at 60-61, 63). As such, CMC has provided sufficient evidence of a lack of acceptable noninfringing substitutes.
The third factor requires a showing of manufacturing and marketing capability to exploit demand. Kennedy provides a detailed analysis of CMC's production levels, facilities, and manufacturing processes during the infringement period. (Id. at 52-60.) Based on this analysis, he concludes that CMC had the capability to produce and sell enough tufting machines to replace Tuftco's sales of the Accused Products.
Tuftco mischaracterizes Federal Circuit precedent. Poly-America and Wechsler recognized the general rule that "if the patentee is not selling a product, by definition there can be no lost profits." Wechsler, 486 F.3d at 1293; Poly-America, 383 F.3d at 1311; see also Rite-Hite, 56 F.3d at 1548. However, where a patentee sells its own patented products, this rule does not apply. Rite-Hite, 56 F.3d at 1548 (finding that the general rule did not apply because "Rite-Hite did sell its own patented products"). In Poly-America, the patent owner attempted to claim lost profits of products sold by its sister corporation and licensee. 383 F.3d at 1310-11. The court concluded that lost profits were unavailable because the patent owner itself did not sell any patented products — all sales were made by its sister corporation, a separate entity. Id. Similarly, in Wechsler, it was undisputed that the patentee did not produce or sell any product until after the period of infringement ended. 486 F.3d at 1293. Tuftco does not dispute that CMC sold single-needle-bar machines during the relevant infringement period. Accordingly, because CMC sold its own patented products, Poly-America and Wechsler are inapposite.
Moreover, Tuftco mischaracterizes the third Panduit factor. CMC is not required to show it can meet demand for the allegedly infringing product; instead, CMC must establish its capability to exploit demand for the patented product. Siemens, 637 F.3d at 1287. Moreover, the Court has already noted that "demand for the patented product" contemplates not only products covered by the asserted patents, but also similar products in direct competition. Presidio, 702 F.3d at 1360. In other words, demand under Panduit is not confined to one specific product. In connection with its analysis of the first Panduit factor, the Court has already concluded that the double-needle-bar Accused Products either: (1) infringe the Severed Claims; or (2) are sufficiently similar to the patented product to be in direct competition. In any case, CMC presents evidence that it did in fact offer ColorPoint double-needle-bar machines for sale during the relevant time period. For example, one May 2016 invoice to a customer from CMC itemizes a double-needle-bar tufting machine — a 1/12th composite gauge with two 1/6th gauge needle bars — "with ColorPoint capability." (Doc. 435, at 5.) Accordingly, the Court finds that CMC has satisfied the third Panduit factor.
Finally, under the fourth factor, CMC must establish the amount of profit it would have made but for the infringing product. Tuftco does not dispute the fourth Panduit factor in its summary judgment
For the foregoing reasons, CMC has established a prima facie case of "but for" causation.
Next, Tuftco moves for summary judgment excluding damages from Tuftco's foreign sales of Accused Products in the event CMC is awarded damages for infringement of the '703 Patent. Under 35 U.S.C. § 271(a), "whoever without authority makes, uses, offers to sell, or sells any patented invention within the United States ... infringes the patent." (Emphasis added). Assuming the jury finds that the Accused Products infringe, Tuftco's activities in the United States, i.e., making the Accused Products, would be sufficient to support a finding of infringement and consequently an award of damages.
Tuftco argues that a recent Federal Circuit case, Power Integrations, Inc. v. Fairchild Semiconductor International, Inc., compels a different result. 711 F.3d 1348 (Fed. Cir. 2013). In Power Integrations, the Federal Circuit rejected a patentee's argument that they were entitled to compensation for the accused infringer's foreign sales, based on the presumption against extraterritorial reach of U.S. patent law. Id. at 1370-72. Power Integrations, however, is distinguishable from the case at hand. There, the accused infringer's actions within the United States included, at most, "direct sales or offers to sell infringing parts in the United States, the manufacturing of infringing parts in the United States and offers for sale from the United States that result in actual sales abroad...." Power Integrations, Inc. v. Fairchild Semiconductor Intern., Inc., 589 F.Supp.2d 505, 509 (D. Del. 2008), vacated on other grounds, 711 F.3d 1348 (Fed. Cir. 2013). After trial, the district court found that the jury had "clearly adopted" the measure of damages provided by the patentee's damages expert, who admitted on cross-examination "that he did not quantify an amount of damages based on any offer for sale by [the alleged infringer] in the United States." 711 F.3d at 1372. Accordingly, the district court determined that the jury's damages award was based not on the accused infringer's domestic activities, i.e., the offers for sale, but instead on their worldwide sales, and granted remittitur. Id. at 1370-71.
Federal Circuit precedent before and after Power Integrations supports this conclusion. For example, the Federal Circuit in Railroad Dynamics, Inc. v. A. Stuki Co. approved a damages award that included royalties for foreign sales of accused products. 727 F.2d 1506, 1519 (Fed. Cir. 1984). The court reasoned that "[w]hen [the accused infringer] made the [accused products] in this country, it infringed [the claim at issue]. Whether those [accused products] where sold in the U.S. or elsewhere is therefore irrelevant...." Id.; see also Goulds' Mfg. Co. v. Cowing, 105 U.S. 253, 254-58, 26 S.Ct. 987 (1881) (calculating lost profits to include infringing products sold in Canada but manufactured in the United States); Dowagiac Mfg. Co. v. Minn. Moline Plow Co., 235 U.S. 641, 650, 35 S.Ct. 221, 59 S.Ct. 398 (1915) (distinguishing Goulds' on the basis that "while [the accused products] were made in the United States, they were not made by the defendants"); Brown v. Duchesne, 60 U.S. (19 How.) 183, 196, 15 S.Ct. 595 (1856) ("If [the accused product sold at sea] had been manufactured on [a ship's] deck while she was lying in the port of Boston ... [the defendant] would undoubtedly have trespassed upon the rights of the plaintiff, and would have been justly answerable for the profit and advantage he thereby obtained.").
In WesternGeco L.L.C. v. ION Geophysical Corp., decided after Power Integrations, the Federal Circuit noted that Supreme Court case law suggests "that profits for foreign sales of the patented items themselves are recoverable when the items in question were manufactured in the United States and sold to foreign buyers by the U.S. manufacturer." 791 F.3d 1340, 1352 (Fed. Cir. 2015) (citing Goulds', 105 U.S. at 254; Dowagiac, 235 U.S. at 642-43, 35 S.Ct. 221; Duchesne, 60 U.S. at 196), vacated on other grounds, ___ U.S. ___, 136 S.Ct. 2486, 195 L.Ed.2d 820 (2016).
Though Carnegie concerned method claims, the principle also applies to machine claims. With § 271(a), Congress intended to reach "making or using or selling in the United States...." Id. at 1306. Case law does not support the proposition that Tuftco must make and sell the Accused Products in the United States to be liable for infringement damages. Accordingly, the Court will
Next, Tuftco moves for summary judgment excluding damages for sales that occurred prior to the issuance of the '703 Patent in the event CMC is awarded damages. Generally, a patent does not have retroactive effect, and damages are available only for infringement "during the term of the patent." 35 U.S.C. § 271(a). Under 35 U.S.C. § 154, however, a patentee may recover reasonable royalties from anyone who infringes the patent "beginning on the date of publication of the application for such patent...." § 154(d)(1). This provisional right only applies when "the invention as claimed in the patent is substantially identical to the invention as claimed in the published patent application." § 154(d)(2). Whether the patent and published application are substantially identical is a question of law and requires a comparison of the scope of the claims in light of the issued claim language, prosecution history, and prior art. Laitram Corp. v. NEC Corp., 163 F.3d 1342, 1346-47 (Fed. Cir. 1998). "[I]n determining whether substantive changes have been made, we must discern whether the scope of the claims are identical, not merely whether different words are used." Id. at 1346. Where an amendment narrows a claim in order to distinguish prior art, the change is substantive. Id. at 1348; Bloom Eng'g Co. v. N. Am. Mfg. Co., 129 F.3d 1247, 1251 (Fed. Cir. 1997).
Considering Claim 1 of the '703 Patent in light of the prosecution history, the Court finds that the application language was amended to distinguish the patented machine from prior art.
(Id.) Because the effective-stitch-rate calculation in Claim 1 of the '703 Application was indefinite, it "contain[ed] no further limiting structure." (Id. at 167.) The PTO concluded that the Burgess et al. Patent (U.S. Patent 5,566,630) (the "Burgess Patent") in combination with another reference rendered Claim 1 of the '703 Application obvious, because the Burgess Patent "discloses all the structure as claimed" and "is considered fully capable of providing" the effective stitch rate as written. (Id. at 167-68.)
Comparatively, Claim 1 of the '703 Patent provides that the effective stitch rate "is
The Court notes, however, that Tuftco has not provided any argument as to pre-issuance damages of the other Severed Claims, and, therefore, summary judgment is limited to the extent pre-issuance damages arise from Claim 1 of the '703 Patent. See Innovention Toys, LLC v. MGA Entm't, Inc., 611 Fed.Appx. 693, 700 (Fed. Cir. 2015), vacated on other grounds, ___ U.S. ___, 136 S.Ct. 2483, 195 L.Ed.2d 820 (2016).
Next, Tuftco seeks summary judgment limiting CMC's damages for induced infringement, if any, to Accused Products for which CMC can establish direct infringement by the customer. The grounds for Tuftco's motion are unclear. To the extent that Tuftco seeks to restrict a summary judgment grant of damages, the Court has already determined that summary judgment of induced infringement should be denied. If this is the case, Tuftco's motion will be
CMC moves for summary judgment on Tuftco's affirmative defense and counterclaim that the Asserted Patents are unenforceable due to inequitable conduct. A successful claim of inequitable conduct "renders the entire patent unenforceable." Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1288 (Fed. Cir. 2011). To prevail, an accused infringer must prove by clear and convincing evidence that the patent applicant: (1) "misrepresented or omitted material information" (2) "with the specific intent to deceive the PTO." Id. at 1287. Given the consequences of a low burden to prove inequitable conduct, among them "increased adjudication cost and complexity, reduced likelihood of settlement, burdened courts, strained PTO resources, increased PTO backlog, and impaired patent quality," the Federal Circuit has recently raised the burden for both prongs. Id. at 1290. Materiality is generally established by "but-for materiality" — in other words, "the court must determine whether the PTO would have allowed the claim if it had been aware of the undisclosed reference." Id. at 1291. As for intent, the Federal Circuit has stressed that negligence or even gross negligence is not sufficient. Id. at 1290. Instead, an accused infringer must "prove by clear and convincing evidence that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it." Id. Though intent may be inferred from circumstantial evidence, "to meet the clear and convincing evidence standard, the specific intent to deceive must be the single most reasonable inference able to be drawn from the evidence." Id. (internal quotation marks omitted). "[W]hen there are multiple reasonable inferences that may be drawn, intent to deceive cannot be found." Id. at 1290-91.
Tuftco alleges that the Asserted Patents are unenforceable due to CMC's inequitable conduct in three respects. First, Tuftco asserts CMC diverted the PTO's attention from two prior art references — U.S. Patent Nos. 6,244,203 and 6,502,521 (together "Morgante 203/521"), and U.S. Patent No. 7,426,895 ("Smith 895") — by burying them among a large number of references. (Doc. 128, at 10-14.) Second, Tuftco asserts CMC improperly failed to disclose U.S. Patent No. 5,392,723 ("Kaju 723") and the operation of machines covered by Kaju 723, specifically Colortec tufting machines. (Id.) Finally, Tuftco argues — for the first time in its response to CMC's motion for summary judgment — that CMC's disclosure of a "long-outdated version of a NedGraphics manual" establishes inequitable conduct. (Doc. 452, at 41.)
Tuftco's first argument that CMC deliberately buried the Morgante 203/521 and Smith 895 references fails. It is well established that "[a]n applicant cannot be guilty of inequitable conduct if the reference was cited to the examiner...." Fiskars, Inc. v. Hunt Mfg. Co., 221 F.3d 1318,
Tuftco's argument regarding Kaju 723 fails as well. Tuftco presents evidence that: (1) CMC did not disclose Kaju 723; (2) that disclosure of Kaju 723 was material given the similarities between the patents; and (3) that one of the named inventors of the Asserted Patents worked at Cobble, the company that obtained the Kaju 723 Patent, and therefore knew or should have known about the reference. (Doc. 452, at 41.) Even viewing this evidence in the light most favorable to Tuftco, it has failed to present clear and convincing evidence to allow a reasonable jury to conclude that the Asserted Patents' inventors intended to deceive the PTO.
For the same reasons, Tuftco's argument with regard to the older version of the NedGraphics manual fails. Setting aside the problems with Tuftco raising this argument for the first time in its summary judgment response, Tuftco asserts only that "[b]y intentionally submitting an older version of the NedGraphics manual to the PTO, CMC avoided any possibility that the PTO would realize that the capabilities of newer versions of that software would have rendered the ColorPoint `invention' unpatentable." (Doc. 452, at 41.) Citing its 35 U.S.C. § 101 argument, Tuftco appears to assert that, but-for CMC's nondisclosure, the PTO would have realized that the Asserted Patents attempt to patent the abstract idea of high-rate stitching. (Id.) First, given that the Court has rejected Tuftco's § 101 argument, see supra Part III(b)(iv), Tuftco's ability to establish that the PTO would not have issued the Patents if it had been aware of the updated manuals is questionable. Moreover, Tuftco produces no evidence of intent, and, as the Court already noted, the fact finder may not infer intent "solely from the fact that information was not disclosed...." Optium, 603 F.3d at 1321. Accordingly, the Court will
Next, CMC moves for summary judgment on Tuftco's affirmative defense and counterclaims of tortious interference, unfair competition, and unfair trade practices. Tuftco's claims for tortious interference, unfair competition, and unfair trade practices arise under Tennessee law. The Federal Circuit has recognized, however, that "federal patent law preempts state-law tort liability for a patentholder's good faith conduct in communications asserting infringement of its patent and warning
Tuftco asserts that it will be significantly prejudiced if CMC is allowed to raise the defense of federal preemption for the first time in its summary judgment motion. (Doc. 452, at 45.) CMC, however, raised the defense multiple times before its summary judgment motion, including in various motions to dismiss (Doc. 16, at 14-15; Doc. 29, at 18-19; Doc. 33, at 18-19) and in its affirmative defenses to Tuftco's counterclaims (Doc. 129, at 8). Accordingly, there is no good reason to preclude CMC from moving for summary judgment on this defense.
Next, Tuftco argues that whether CMC threatened one or more of Tuftco's customers in order to interfere with Tuftco's sales is a genuine issue of material fact precluding summary judgment. (Doc. 452, at 42-44.) In support, Tuftco cites deposition testimony from Steve Frost regarding an e-mail from a representative from Atlas Carpet Mills, Inc., a former customer of Tuftco. (Doc. 454-12, at 77-79.) Frost testified that the Atlas representative stated "he was very fearful of being involved in litigation if he purchased a machine from Tuftco" after having a conversation about "the CMC patent on ColorPoint." (Id. at 78.) Though Frost's deposition testimony could establish that CMC was indeed "asserting infringement of its patent and warning about potential litigation," it fails to create an issue of material fact as to whether CMC was communicating in bad faith. See Globetrotter, 362 F.3d at 1374. Moreover, Tuftco points to nothing to indicate that CMC's alleged infringement allegations were so unreasonable as to be objectively baseless. And, for the same reasons the Court will grant CMC summary judgment of validity and will deny Tuftco summary judgment of non-infringement, any argument that CMC's claims are objectively baseless is suspect. See id. at 1375. Accordingly, the Court will
Finally, CMC moves for summary judgment on Tuftco's patent-misuse claim. Patent misuse, an equitable defense to patent infringement, bars a patentee from leveraging its patent in a manner that has anti-competitive effects — in other words "[using] patent power to impose overbroad conditions ... that are `not within the reach of the monopoly granted by the Government.'" Princo Corp. v. Int'l Trade Comm'n, 616 F.3d 1318, 1331 (Fed. Cir. 2010) (quoting Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 136-38, 89 S.Ct. 1562, 23 L.Ed.2d 129 (1969)). The doctrine typically encompasses practices such as requiring purchase of an unpatented product as a licensing condition or demanding royalty fees after a patent has expired. Id. at 1327. Where the patentee claims rights that are reasonably within the patent grant, however, a patent-misuse claim fails. Id. at 1328. Moreover, though a judicially created defense, Congress chose to cabin the defense in enacting 35 U.S.C. § 271(d). Id. at 1329-30. Section 271(d) provides that "[n]o patent owner otherwise entitled to relief for infringement or contributory infringement of a patent shall be denied relief or deemed guilty of misuse ... by reason of his having
Here, CMC's conduct falls squarely within its rights under its patents. Even if CMC "threatened litigation" as Tuftco claims, CMC has the statutory right to seek to enforce its patent rights against infringement. See § 271(d). As already noted, Tuftco has failed to raise a genuine issue of material fact as to whether this action was done in bad faith. See supra Part III(g). Accordingly, the Court will
For the foregoing reasons, the Court hereby
CMC's motion for summary judgment (Doc. 289) is