Free Response in Opposition to Motion - District Court of Arizona - Arizona

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Charles F. Hauff, Jr. (AZ Bar No. 014465) Douglas W. Seitz (AZ Bar No. 004258) SNELL & WILMER L.L.P. One Arizona Center 400 E. Van Buren Phoenix, AZ 85004-2202 Telephone: (602) 382-6000 Attorneys for Eberle Design, Inc. and Electronic Devices, Inc. UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA

Eberle Design, Inc., and Electronic Devices, Inc., Plaintiff/Counterdefendants, v. Reno A&E, Defendant/Counterplaintiff.

CIV 02 2575 PHX DGC (Lead) CIV 03 883 PHX DGC (Consolidated) EBERLE'S OPPOSITION TO RENO A&E'S "RENEWED" MOTION FOR JUDGMENT AS A MATTER OF LAW ON VALIDITY AND INFRINGEMENT OR, IN THE ALTERNATIVE, FOR A NEW TRIAL (ORAL ARGUMENT REQUESTED)

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Reno A&E ("Reno") has moved for JMOL on the issues of invalidity and infringement, or alternatively, for a new trial on the issue of "on-sale" invalidity. Reno's "renewed" motion for JMOL fails because Reno waived its right to bring a post-trial JMOL motion by failing to move for JMOL on any grounds at the close of all evidence. In any event, even if the Court reaches the substance of Reno's JMOL motion, the motion should be denied because there was ample support in the record for the jury's findings. Reno's motion for a new trial should similarly be denied. Reno's only additional

argument involves the Court's jury instruction regarding the on-sale bar. That instruction was proper, and certainly not prejudicial error. I. Reno's "Renewed" Motion for JMOL Is Procedurally Barred Under Rule 50, a renewed motion for JMOL is proper only if the moving party: (1) previously made a motion "specify[ing] the judgment sought and the law and the facts on
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which the moving party is entitled to the judgment" and (2) made that motion "at the close of all the evidence." Fed. R. Civ. P. 50(a)(2), 50(b). As to infringement, Reno never moved for judgment as a matter of law on that issue at any time before the case was submitted to the jury. That portion of Reno's motion must therefore be denied. See, e.g., Duro-Last, Inc. v. Custom Seal, Inc., 321 F.3d 1098, 1102, 1107-08 (Fed. Cir. 2003); Morante v. Am. Gen. Fin. Ctr., 157 F.3d 1006, 1010 (5th Cir. 1998). As to invalidity, Reno did move for JMOL at the close of Eberle's case, but that motion was denied. 9/6/05 Tr. 7-10. Although the Court noted that "Reno is free to make motions again at any point it deems appropriate in the trial," id. at 10, Reno did not move for JMOL on that issue (or any other issue) at the close of all the evidence. Ninth Circuit law governs this issue (see Mentor H/S, Inc. v. Medical Device Alliance, Inc., 244 F.3d 1365, 1374 (Fed. Cir. 2001)), and the Ninth Circuit strictly adheres to Rule 50(b)'s requirement that a party have moved for JMOL at the close of all the evidence. Farley Transp. Co. v. Santa Fe Trail Transp. Co., 786 F.2d 1342, 1346 (9th Cir. 1985) ("the requirement that the motion [for JMOL] be made at the close of all the evidence is to be strictly observed..."). In particular, a JMOL motion made at the close of the plaintiff's case is not enough to preserve a post-trial challenge to the sufficiency of the evidence. Id.; see also Janes v. Wal-Mart Stores Inc., 279 F.3d 883, 886-87 (9th Cir. 2002). As a matter of law, Reno has therefore waived its right to "renew" any JMOL motion. See Herrington v. Sonoma County, 834 F.2d 1488, 1500 (9th Cir. 1987) (holding that a movant who had failed to renew its motion at the close of all the evidence as required by Rule 50(b) waived its right to challenge the sufficiency of the evidence); Farley, 786 F.2d at 1345 n.1 (applying the "longstanding rule that a defendant's introduction of evidence after an unsuccessful motion for a directed verdict after the plaintiff's case `constitutes a waiver of the objection to the sufficiency of the evidence unless the motion is renewed at the time when all the evidence is in'" to preclude a defendant from seeking JNOV).
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II.

Reno's Motion Ignores the Proper Standards of Review If the Court considers the merits of Reno's "renewed" motion for judgment as a

matter of law (which it should not), it may grant JMOL only if "there is no legally sufficient evidentiary basis for a reasonable jury to find for the party on that issue." Fed. R. Civ. P. 50(a)(1). Ninth Circuit law governs (Zodiac Pool Care, Inc. v. Hoffinger Indus., Inc., 206 F.3d 1408, 1416 (Fed. Cir. 2000)), and under Ninth Circuit law, the Court "should view all inferences in the light most favorable to the nonmoving party." Winarto v. Toshiba Am. Elec. Components, Inc., 274 F.3d 1276, 1283 (9th Cir. 2001). Thus, it "must accept the jury's credibility findings consistent with the verdict," it must "disregard all evidence favorable to the moving party that the jury is not required to believe," and it "may not substitute its view of the evidence for that of the jury." Id. (internal citations omitted). As to Reno's new trial motion, the Court "may grant a new trial only if the jury's verdict was against the clear weight of the evidence." Union Oil Co. of Cal. v. Terrible Herst, Inc., 331 F.3d 735, 742 (9th Cir. 2003). When the evidence was sufficient for a reasonable fact-finder to reach the verdict, a court should not find the jury's verdict against the clear weight of the evidence. Id. at 743. A trial court must uphold a jury's decisions regardless of whether it would have reached a different result because "[i]t is not the courts' place to substitute [their] evaluations for those of the juror." Id. (finding that the district court abused its discretion in granting a new trial because there was sufficient evidence in the record to support the jury's findings); see also Mentor H/S, Inc., 244 F.3d at 1374, 1376-78 (applying Ninth Circuit law to reverse the trial court's grant of a new trial on the issues of anticipation, obviousness and inequitable conduct because the trial court erred in finding that the jury verdicts were against the great weight of the evidence). Reno's motion does not even pay lip service to this settled law. Instead, Reno rehashes its failed jury arguments and recites the facts in the light most favorable to it. For example, Reno refers (at 3) to the February 1996 purchase orders as "ceremonial," ignoring Mr. Lamoureux's fax sent the day after the orders (Trial Exhibit 38) stating that

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they were "very serious." Similarly, Reno argues (at 9) that the evidence "conclusively showed" that the delivery of product in October was in response to August purchase orders, despite the fact that the October invoices (Trial Exhibit 109) themselves reflected fulfillment of the February purchase order. Throughout, Reno ignores unfavorable

evidence, substitutes its own view of disputed evidence, and disregards the legal requirement that the evidence be considered in the light most favorable to upholding the verdict. III. The Record Amply Supported the Jury's Finding as to the On-Sale Bar A party moving to invalidate a patent under the on-sale bar has the burden of proving that two conditions are satisfied before the critical date: (1) "the product must be the subject of a commercial offer for sale" and (2) "the invention must be ready for patenting." Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 67 (1998). Eberle came forward with more than sufficient evidence to support the jury's finding in its favor on the on-sale bar. The Court, therefore, should not disturb the jury's finding of invalidity. The on-sale bar has been before this Court throughout this litigation. Consistently, this Court has found that "there's a factual dispute between Eberle and Reno as to whether or not there was an offer for sale before April 24, 1996." (Transcript of Proceedings, October 22, 2004, Hearing on Motion for Partial Summary Judgment at p. 29; see also the Court's comments in denying Reno's previous motion for judgment as a matter of law on the on-sale bar issue: "And finally, on the on-sale bar, I think there's a square factual dispute as to whose version of the facts you accept, Reno's or Eberle's." (9/6/05 Tr. 9.)) A. The Jury's Finding of a Commercial Offer for Sale Before the Critical Date Was Well Supported by the Evidence

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Electromega faxed a purchase order to Reno on February 20, 1996, for 200 model 222C detectors for delivery during the week of March 11, 1996. (Trial Exhibit 40.) Mr. Lamoureux's cover letter stated that the detectors were "urgently required" and expressed the hope that Reno could meet the delivery date. Mr. Lamoureux followed up the

purchase order with a fax the next day saying that the order is "very serious" and seeking

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confirmation of the delivery date. (Trial Exhibit 39.) That purchase order was an offer to buy, not an offer for sale. Nevertheless, Mr. Potter's February 21, 1996 response to the purchase order and the circumstances under which that letter was written clearly supported the jury's conclusion that Reno made a commercial offer for sale before the critical date. Mr. Potter's February 21, 1996 letter stated: Your PO #3569 for a quantity of 200 model 222C requires a delivery date for the week of March 11, 1996. I am sad to inform you that it will not be possible to deliver that order at the time you require shipment. We have custom components on order for the 222 detectors which require first article approval. Currently the first articles are scheduled to arrive in Reno the last week of April. After we give first article approval we are being quoted 8 weeks for delivery of production quantities. Based on this situation, we can provide you samples approximately the first part of May with production quantities available in mid July. We hope that these times can be shortened; however, I would not want to promise anything earlier and cause you a problem. (Trial Exhibit 38 (emphasis added.)) Mr. Potter admitted that this exhibit discussed providing "production quantities" of his "new LCD display vehicle detector" for delivery in mid-July 1996. (8/31/05 Tr. 87-88.) Under § 26 of the Restatement (Second) of Contracts § 26 (1981), An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it. Under that standard (on which the jury was instructed), the jury properly found that Mr. Potter's letter served as a counteroffer to the Electromega's purchase order, changing the time for delivery from the week of March 11 to mid-July. The letter clearly manifested a willingness to enter into a bargain: to fill the purchase order in mid-July if that timing was acceptable to Reno. Mr. Potter's statement that he would not want "to promise anything earlier" reflected a corollary promise of delivery in mid-July upon Electromega's acceptance of that later delivery date. The "we can provide you" and "promissory" language used by Mr. Potter was strongly indicative of an offer for sale. In Group One, Ltd. v. Hallmark Cards, Inc., 254
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F.3d 1041, 1048 (Fed. Cir. 2001), the Federal Circuit noted that it would not "always be easy to ascertain whether a set of interactions constitutes a commercial offer to sell" and that "no one phrase is necessarily controlling." The court observed, however, that Language suggesting a legal offer, such as "I offer" or "I promise" can be contrasted with language suggested more preliminary negotiations, such as "I quote" or "are you interested." Id. But, Mr. Potter did not send his letter in a vacuum. By its own terms, the letter was written in response to Electromega's purchase order for 200 detectors for delivery in the week of March 11, 1996. Thus, Mr. Potter and Reno knew that Electromega wanted to purchase the detectors -- the only issue was the delivery date. The letter clearly

manifested Mr. Potter's willingness to make the sale, and all Electromega had to do was indicate assent to the later delivery date. Reno argues (at 3) that "[o]ffers to buy from Electromega are irrelevant under § 102(b)." Not so: offers to buy can set the stage for an acceptance or counteroffer, either of which constitutes putting the invention on sale. In Pfaff, the inventor had prepared detailed engineering drawings of his computer chip socket invention. 525 U.S. at 58. Before the critical date, Texas Instruments (a third party) provided the inventor with a written order for over 30,000 of his new sockets. Id. In accord with the inventor's normal practice, he had not made any prototypes before offering his invention for commercial sale. Id. After receiving the purchase order, the inventor set out to make the device in commercial quantities and effectively accepted the offer. Id. The Supreme Court held that the invention was on sale: In this case the acceptance of the purchase order prior to [the critical date], makes it clear that such an offer had been made, and there is no question that the sale was commercial rather than experimental in character. Id. at 67. In our case, Mr. Potter did not accept Electromega's exact terms, but he counteroffered Electromega's "serious offer" by proposing a later delivery date. Contrary to Reno's suggestion (at 3, 6), no particular form or formality was required and no
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inventory needed to be on hand for Mr. Potter's letter to constitute a commercial offer for sale. Article 2 of the U.C.C. did away with requirements of commercial formality, and Pfaff repudiated the outmoded "on-hand" doctrine. 525 U.S. at 67-68. Likewise, no price term was required. See U.C.C. § 2-305; see also Trial Exhibit 258 (August purchase order from Electromega that Mr. Potter claims to have accepted, stating price "TBA"). Furthermore, although an offer of sale need not result in a completed sale for the on-sale bar to apply, see Scaltech, Inc. v. Retec/Tetra, LLC, 269 F.3d 1321, 1328 (Fed. Cir. 2001), evidence of a completed sale is strong evidence of a previous offer for sale. In this case, Reno's own shipping invoices for 100 Model C Detectors on October 17, 1996 and another 100 Model C Detectors on October 25, 1996 stated on their faces that the product was being shipped pursuant to the February 20, 1996 purchase orders. Those shipping invoices were thus further evidence that Reno had offered to fulfill the February 20, 1996 purchase orders, subject only to a change in the delivery date. Mr. Potter's February 21, 1996 letter evidences when that offer took place--well before the critical date of April 24, 1996. Reno's argument (at 9) that its evidence "conclusively showed" that the October deliveries were made in response to August purchase orders ignores the February 20, 1996 order dates on the invoices themselves, and Mr. Potter's admission that the August invoice arose out of substituting Model C Detectors for the February purchase order for 292 Detectors and had nothing to do with the other February purchase order for 222C Detectors. (8/31/05 Tr. 107.) Reno's alternative position that the October delivery "must be construed" as the first acceptance of the February purchase order fails because it simply ignores Mr. Potter's February 21, 1996 letter, which responded to the original purchase order by requesting only one change--that the delivery date be extended from mid-March to mid-July. In discussing the on-sale bar issues in the context of Eberle's unenforceability defense and Reno's JMOL motion on that defense, the Court specifically recognized that the jury was entitled to find a true commercial offer for sale:
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[THE COURT:] Let's assume hypothetically that the jury retires to deliberate and they conclude that there absolutely was a sale. Let's say they look at the October shipping invoice and its recitation of the February 20th Purchase Orders and they say we don't accept the claim that this is ceremonial. This was a contract. There was absolutely a sale, and we think Mr. Potter knew it. MR. BUNSOW: Right. THE COURT: And if -- I'm obviously not saying they're going to go that way. MR. BUNSOW: Sure. THE COURT: I don't know if they will. But if they were to view -- to reach that conclusion, I think I would have to conclude that conclusion has some evidentiary support.

(9/1/05 Tr. 314-315.) The jury was properly instructed on the issue, and the evidence strongly supported its conclusion that Reno had made a commercial offer for sale more than one year before applying for a patent. B. The Case Law Cited by Reno Is Inapposite.

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In an effort to distract the Court from the unfavorable facts, Reno spends the bulk of its brief discussing the Federal Circuit's decisions in Group One, 254 F.3d 1041, Linear Technology Corp. v. Micrel, Inc., 275 F.3d 1040 (Fed. Cir. 2001), and Minn. Mining & Mfg. Co. v. Chemque, Inc., 303 F.3d 1294 (Fed. Cir. 2002). Those decisions do not help Reno because the facts there differed radically from the facts here. In Group One, the patent applicant, Group One, informed Hallmark of a machine it had developed to curl and shred ribbon and wrote: "We could provide the machine and/or the technology and work on a license/royalty basis." 254 F.3d at 1044. The district court found that language not to be a commercial offer for sale because it did not discuss quantity, time for delivery, or price, but nevertheless held that the on-sale bar applied under earlier case law that did not require a true offer under contract law principles. Id. at 1047-1049. The Federal Circuit reversed on grounds that a true commercial offer to sell was required and the parties agreed that no such offer had been made. Id. at 1049. Here, this Court instructed the jury according to the law set out in Group One and the facts were
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quite different.

Electromega's purchase order and Mr. Potter's February 21, 1996

response did specify the product, the quantity, and the time for delivery. Those terms were clearly sufficient for the formation of a contract under § 2-204 of the U.C.C. Linear Technology offers no support to Reno, either. 275 F.3d 1040. Unlike the defendant there, Eberle relied on specific evidence of sales activity involving a particular customer, not simply internal communications or development of general marketing materials. The Federal Circuit also held that LTC's handling of unsolicited pre-criticaldate purchase orders did not amount to an offer for sale before the critical date, but LTC's and Reno's handling of the unsolicited purchase orders could not have been more different. Id. at 1054. When LTC received the unsolicited purchase orders, it generated a confirmation sheet which stated "WILL ADVISE," "NEW PRODUCT, NOT RELEASED," WILL ADVISE WILL ADVISE ON PART # ORDERED-NOT BOOKED." Id. at 1053. The Federal Circuit noted that the unsolicited purchase orders constituted offers to buy, but held that the confirmations did not manifest the required intent by LTC to accept the offer, especially when contrasted to LTC's unambiguous acceptance of orders for other parts that had already been released. Id. at 1053-1054. In contrast to LTC's "will-advise, not-booked" response, Reno responded to the unsolicited purchase order by stating that while it could not meet the specified delivery date, it would sell with a later delivery date. Id. As discussed above, Reno's response was clearly a counteroffer to sell pursuant to the terms of the purchase order with a modified delivery date, as confirmed by the delivery invoice which identified the order as being filled pursuant to the original purchase order. Finally, the patentee in Minnesota Mining and Manufacturing merely provided samples to customers and discussed possible pricing internally. 303 F.3d at 1308. The Federal Circuit naturally held that that conduct did not amount to a commercial offer for sale. Id. at 1308-1309. Those holdings are simply not relevant to this case. Contrary to Reno's suggestion, the Federal Circuit is hardly reluctant to invalidate patents under the on-sale bar. See, e.g., Enzo Biochem, Inc. v. Gen-Probe Inc., 424 F.3d
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1276 (Fed. Cir. 2005) (affirming summary judgment); Scaltech, Inc., 269 F.3d 1321 (same); Robotic Vision Sys., Inc. v. View Eng'g, Inc., 249 F.3d 1307 (Fed. Cir. 2001) (affirming trial result); Crystal Semiconductor Corp. v. TriTech Microelecs. Int'l, Inc., 246 F.3d 1336 (Fed. Cir. 2001) (vacating JMOL of no on-sale bar); Zacharin v. United States, 213 F.3d 1366 (Fed. Cir. 2000) (affirming the trial result); STX, LLC v. Brine, Inc., 211 F.3d 588 (Fed. Cir. 2000) (affirming summary judgment); Vanmoor v. Wal-Mart Stores, Inc., 201 F.3d 1363 (Fed. Cir. 2000) (same); Brasseler, U.S.A. I, L.P. v. Stryker Sales Corp., 182 F.3d 888 (Fed. Cir. 1999) (same); Weatherchem Corp. v. J.L. Clark, Inc., 163 F.3d 1326 (Fed. Cir. 1998) (affirming the trial result). Every case is unique, but the facts here (viewed as they must be in the light most favorable to Eberle) supported this jury's finding of a commercial offer for sale. C. The Evidence Supported the Finding that the Alleged Invention Was "Ready for Patenting" When Offered for Sale Before the Critical Date

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Clear and convincing evidence also supported the jury's finding that the claimed inventions were "ready for patenting" long before the critical date. In arguing otherwise, Reno misstates the law and ignores the evidence. As a matter of law, an invention is "ready for patenting" if the inventor has conceived the entire invention such that he could draft a patent application enabling one of skill in the art to practice the invention. Pfaff, 525 U.S. at 66-68. "Ready for patenting" does not mean that embodiments of the invention must have been technically perfected or ready for production or sale. Id. As this Court properly instructed the jury, it is well settled that a "product may be ready for patenting even if it is not ready for commercial production or has not been technically perfected." Furthermore, Reno is wrong in

suggesting that the only two ways of proving readiness for patenting are showing actual reduction to practice or a single set of drawings or descriptions that would enable one of skill in the art to practice the invention. See Pfaff, 525 U.S. at 67 ("Th[e] condition may be satisfied in at least two ways..." (emphasis added)). The test is the inventor's ability to provide an enabling disclosure, not whether an enabling written disclosure already existed. Id. at 67-68. And the requisite proof depends in each case on how much
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information a skilled artisan would need to practice the particular invention. Id. The claimed invention here was a simple concept: add a variable visual display to a vehicle detector. Reno conceded that visual displays such as LCDs were known

technology. Vehicle detectors were also concededly known technology, as were each of the diagnostic parameters to be displayed. Even assuming that combining these known technologies was inventive, it took very little for Reno to describe that combination in a way that would enable one skilled in the art to practice the invention. The evidence of Reno's ability to prepare an enabling patent application before the critical date was overwhelming, including both testimony and extensive documentation. The testimony showed that Reno had the idea of a vehicle detector with an LCD display by October 1995. (8/31/05 Tr. 113, 238.) By late December 1995, Standish Industries had prepared a schematic for Reno showing a variable LCD display for a vehicle detector that was nearly identical to that shown in the '964 Patent. The schematic bore a

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"DRAWN BY" date of December 20, 1995, and a "RELEASED FOR PRODUCTION" approval date of February 2, 1996. (Trial Exhibit 23.) That drawing was limited to the display itself, but by February 13, 1996, Reno itself had prepared detailed written documentation of the features and general design of the Model C, including specifications for software and hardware of the underlying detector. (Trial Exhibit 56; see also 8/31/05 Tr. 129.) The final page of that document was a circuit diagram essentially similar to Figure 1 of the '964 Patent. Furthermore, although the Standish Industries design did not show percentage change in inductance (%L), Reno had clearly thought of modifying the original design to incorporate that parameter, and its Model C documentation from February 1996 specifically discussed it. Co-inventor Seabury testified that Reno made no significant or fundamental changes to the display design after January 1996. (9/1/05 Tr. 148-54.) At that time, he understood that the display could be successfully coupled to a detector circuit, that it could show selected function states and the identification and actual values of a vehicle detector parameter, and that its programmable switches could be used to select and

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display parameters. (9/1/05 Tr. 156-158.) Mr. Seabury's testimony was corroborated by a drawing dated February 26, 1996 entitled "MODEL C FRONT PANEL OVERLAY." (Trial Exhibit 51.) Likewise, a brochure dated March 11, 1996, illustrated both manuallyactivatable switches and a variable display used to show a function state ("DELAY"), a vehicle detector parameter ("FREQ"), and the value of that parameter. (Trial Exhibit 178.) The brochure also disclosed features such as adjustable sensitivity and loop frequency, front-panel programmability and a bar graph indicating loop inductance change. The correspondence between Mr. Potter and Electromega confirms that the invention was ready for patenting before the critical date and while his offer to sell Model C's remained outstanding. After receiving prototypes, Mr. Potter wrote to Electromega on April 22, 1996 that "[t]he Model C unit looks even better than we had hoped for when we released the design" and that "[w]e have been able to verify that the LCD is 100% functional." (Trial Exhibit 35.) According to Mr. Potter himself, Reno had only "some small minor design changes on the circuit board to make before production starts." Id. Reno's after-the-fact arguments that the statement referred only to the pin connections, is belied by the very next statement in the April 1996 letter: "This new design is definitely going to change the way everyone thinks about loop detectors and what they should be capable of doing !!" Simply put, Mr. Potter knew his design would work and he shared that fact with his customers. Reno's arguments to the contrary miss the mark. For the most part, it rehashes its jury arguments and tries to poke holes in individual pieces of evidence, ignoring the overall combination. For example, it attacks Mr. Seabury's credibility, but his testimony was well corroborated and the jury was entitled to believe him rather than Mr. Potter. It likewise does not matter that no single drawing or document showed every element of every claim. The documents in combination showed that Reno had a complete conception of the invention and was able to explain how to practice that simple invention long before the critical date. That is all the law requires. See Vanmoor, 201 F.3d at 1366 ("Vanmoor also erroneously argues that the accused cartridges were not ready for patenting because

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no single piece of evidence presented at trial would enable a patent attorney to draft the '331 patent. This is not the test under Pfaff..."). The fact that Reno's own product was not final and ready for sale is of no moment. Reno's software may still have been under development, but the patent did not cover the details of software programming. The patent claims covered the concept of adding a visual display to a vehicle detector to show certain states and values, and that claimed concept was fully developed and ready for patenting before the critical date. See, e.g., Weatherchem, 163 F.3d at 1334 (invention ready for patenting "even though Weatherchem continued to fine-tune features not claimed in the patent."). Reno likewise argues that it was still refining and testing its detection circuitry, but the concept of using an LCD or other visual display could easily have been used with prior art circuits that were known to work even though Reno was struggling with its own new design. Ultimately, Reno argues that the invention was not ready for patenting because it was still experimenting with its product. But "experimentation" arguments are relevant only to show that sales activity was primarily experimental rather than commercial. See Pfaff, 525 U.S. at 67. Reno's sales activity with Electromega was plainly for a

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commercial purpose, and the fact that Reno's product was undergoing further refinement does not affect whether the invention was ready for patenting. See, e.g., STX, 211 F.3d at 591 (fact that initial embodiments offered did not exhibit all desired characteristics was irrelevant; later fine-tuning did not undermine readiness for patenting). D. The Jury Properly Found that All the Asserted Claims Were Invalid

The jury's verdict form specifically addressed whether each of the asserted claims was invalid under the on-sale bar. Indeed, the jury specifically asked whether it should consider each claim individually and was told it should. (Tr. 9/12/05 at 11-14.) The evidence easily supported its finding that all the claims were invalid. The parties stipulated that "Reno A & E's Model C detector is covered by the claims of the `964 patent." (Tr. 8/30/05 at 4.) Furthermore, the evidence showed that Reno's pre-critical-date sales activities related to what became the Model C product (with

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an LCD display). (See, e.g., Trial Exhibits 38, 34; 8/31/05 Tr. 140.) It follows that the inventions described in all the asserted claims were on sale. Reno argues that the on-sale bar defense failed as to certain claims because the %L parameter was not in the Standish drawing. (Trial Exhibit 23.) But as the '964 Patent itself makes clear, %L was a well-known parameter relating to the well-known vehicle detection technique of finding a sufficient negative change in loop in distance (-L/L). (See '964 Patent, Col. 7, line 45.) Furthermore, as discussed above, Reno had clearly conceived of including this parameter in a detector display long before the offer to Electromega. Indeed, Reno had Standish revise the initial display design precisely so that it could include this parameter in the display. (See, e.g., 9/1/05 Tr. 148-149.) The Model C Documentation dated February 13, 1996 specifically described using the measure of sensitivity reflecting "L%." (Trial Exhibit 56.) Indeed, the chart from the patent is identical to the chart set forth in the pre-critical date Model C Documentation:

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The

claims

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referring to that parameter were thus "ready for patenting" by February 1996, and in that same month Reno offered for sale a product containing that feature. In any event, it is well settled that Section 102(b) invalidates not only inventions on sale or in public use before the critical date, but also obvious variations of such inventions. See, e.g., Netscape Comms. Corp. v. Konrad, 295 F.3d 1315, 1321 (Fed. Cir. 2002); ROBERT L. HARMON, PATENTS AND THE FEDERAL CIRCUIT § 3.4(c) at 122 (7th ed. 2005) ("To invoke the on-sale bar a defendant must prove that the complete claimed invention is embodied in or obvious in view of the thing sold or offered for sale before the critical date."). Even if %L was not included in a design on sale before the critical date, the jury was entitled (indeed, would have been compelled) to find that adding that feature was an obvious variation, invalidating those claims under the on-sale bar as well. IV. The Court's Jury Instruction Regarding the On-Sale Bar was Proper and Certainly Not Prejudicial Error A. The Standard of Review Under Rule 59 for Jury Instructions

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Federal Circuit law governs whether a jury instruction on an issue of patent law is erroneous and requires a new trial. Sulzer Textil A.G. v. Picanol N.V., 358 F.3d 1356, 1362-1363 (Fed. Cir. 2004). Under Federal Circuit law, trial courts have discretion in formulating the text of their patent law instructions: "the particular form and precise nature of jury instructions are matters within the sound discretion of the district court." Id. at 1366. On appeal, the correctness of a jury instruction is reviewed "to determine whether, on the whole, the jury instructions were adequate to ensure that the jury fully understood the legal issues for each element of the case." Brooktree Corp. v. Advanced Micro Devices, Inc., 977 F.2d 1555, 1570 (Fed. Cir. 1992) (emphasis added). For a jury verdict to be set aside on the grounds of an erroneous jury instruction, the moving party must demonstrate that: (1) the instructions were legally erroneous; and (2) the error had prejudicial effect. Sulzer, 328 F.3d at 1363. In considering whether the erroneous instruction is prejudicial, "the full trial record and the jury instructions in their entirety must be examined because `instructions take on meaning from the context of what
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happened at trial, including how the parties tried the case and their arguments to the jury.'" Sulzer, 358 F.3d at 1363 (quoting Hilton Davis Chem. Co. v. Warner-Jenkinson Co., 62 F.3d 1512, 1522 (Fed. Cir. 1995)); see also id. at 1364 (erroneous instruction was harmless error because the jury instructions, when considered in their entirety and in the context of the trial as a whole, presented the correct standard of infringement to the jury). The burden remains, at all times, on the moving party to satisfy its burden of demonstrating prejudice. Mere speculation and conclusory argument will not suffice. See, e.g., id. at 1364 (finding the movant's unsupported assertion that "it is virtually certain" that the jury arrived at its verdict because of the erroneous instruction to be insufficient to establish that had the one misstatement not been part of the instructions, the result would have been different). B. Reno Has Shown No Error, Much Less Prejudicial Error

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Reno argues that the Court's on-sale bar instruction was flawed because it did not include the word "definite" before the phrase "commercial offer for sale." As the Court correctly observed in rejecting Reno's similar arguments during discussions about the jury instructions (9/8/05 Tr. 235), the term "definite" is not present in the Federal Circuit Bar Association's Model Patent Jury Instruction. The Court's decision to follow the Model Rule in this respect was not legally erroneous. Moreover, while Reno argues that

instruction given was contrary to Pfaff, the word "definite" was not part of Pfaff's enumeration of the test: "First the product must be the subject of a commercial offer for sale." Pfaff, 525 U.S. at 67. The word "definite" has appeared in some Federal Circuit decisions, but that does not mean that omitting it left the jury adrift. When viewed in its totality, the Court's on-sale bar instruction fairly addressed Reno's purported concerns. Specifically, the instruction stated: A formal offer is defined as the manifestation of willingness to enter into a bargain, made in such a way that the person receiving the offer understands that his agreement to the bargain is invited and will result in a binding contract. A manifestation of willingness to enter into a bargain is not an offer if the person receiving it knows or has reason to know that the person

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making it does not intend to conclude a bargain until he has made a further manifestation of intent. Reno's argument that "the jury was left free to hold the asserted claims invalid merely upon finding any general offer by Reno or confusing marketing or promotional activity" is specious at best. The jury understood, from the Court's instructions, Reno's closing arguments, and the trial proceedings as a whole that it had to find a specific offer for sale and not merely generalized commercial activity. As discussed above, the jury was

certainly entitled, if not compelled, to find such an offer and to invalidate the claims in suit. V. Reno's Motion Regarding Infringement Should Also Be Denied Reno cannot move for JMOL of infringement now because it failed to move for JMOL on that ground at the close of all evidence (or at any time previously). In any event, even if the motion were procedurally proper, it should be denied because one cannot infringe an invalid patent. See Weatherchem Corp., 163 F.3d at 1335 (citing Lough v. Brunswick Corp., 86 F.3d 1113, 1123 (Fed. Cir. 1996)). If the judgment of invalidity is set aside and a new trial is ordered, Reno may make an appropriate dispositive motion at the appropriate time. VI. Conclusion For the foregoing reasons, Reno's "renewed" motion for judgment as a matter of law and its motion for a new trial should be denied in their entirety. DATED this 1st day of December, 2005. SNELL & WILMER L.L.P. By: /s/ Charles F. Hauff, Jr. Charles F. Hauff, Jr. Douglas W. Seitz Attorneys for Plaintiff/Counterdefendants Eberle Design, Inc. and Electronic Devices, Inc.

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CERTIFICATE OF SERVICE I hereby certify that on December 1, 2005, I electronically transmitted the foregoing Eberle's Opposition to Reno A&E's "Renewed" Motion for Judgment as a Matter of Law on Validity and Infringement or, in the Alternative, For a New Trial to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF participants: Michael D. Rounds, Esq. WATSON & ROUNDS 5371 Kietzke Lane Reno, Nevada 89511 Henry C. Bunsow, Esq. HOWREY, SIMON, ARNOLD & WHITE 525 Market Street Suite 3600 San Francisco, CA 94105 George C. Chen, Esq. BRYAN CAVE Two North Central Avenue, Suite 2200 Phoenix, AZ 85004-4406

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DATED this 1st day of December, 2005. SNELL & WILMER L.L.P. By: /s/ Charles F. Hauff, Jr. Charles F. Hauff, Jr. Douglas W. Seitz Attorneys for Plaintiff/Counterdefendants Eberle Design, Inc. and Electronic Devices, Inc.

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