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

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LAW OFFICES One Arizona Center, 400 E. Van Buren Phoenix, Arizona 85004-2202 (602) 382-6000

Todd Feltus (#019076) SNELL & WILMER L.L.P. One Arizona Center 400 E. Van Buren Phoenix, AZ 85004-2202 Telephone: (602) 382-6308 Email: [email protected] Lawrence D. Graham (admitted pro hac vice) David A. Lowe (admitted pro hac vice) BLACK LOWE & GRAHAM PLLC 701 Fifth Avenue, Suite 4800 Seattle, WA 98104 Telephone: (206) 381-3300 Attorneys for Defendants K2, Inc. and Shakespeare Company Monofilament Division

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UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA DESERT EXTRUSION CORP., Plaintiff, v. K2, INC. and SHAKESPEARE COMPANY MONOFILAMENT DIVISION, Defendants. I. INTRODUCTION No. CIV 02-2180 PHX JAT SHAKESPEARE'S OPPOSITION TO DESERT EXTRUSION'S MOTION FOR MODIFICATION OF ORDER AND RELIEF FROM JUDGMENT

The Court's summary judgment of non-infringement was proper and should not be modified in any way. Desert Extrusion contends that the Court should have found

infringement under the doctrine of equivalents, but if the Court had done so, it would have been in violation of several controlling principles that limit the application of the doctrine of equivalents. Desert Extrusion overlooks those principles in seeking a modification of

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the judgment. In addition, the sua sponte ruling was appropriate. Desert Extrusion points to no authority that suggests the Court cannot render such a judgment, and does not point to any other facts, authority, or argument it would have offered if it had been given prior notice. Finally, Shakespeare agrees that the judgment does not fully resolve all issues in the case, but only with respect to Shakespeare's invalidity counterclaims and not with respect to remedies. II. THE ORDER UNDER THE DOCTRINE OF EQUIVALENTS WAS PROPER

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The Court properly held that the application of the doctrine of equivalents to the Exhibit 500 package would impermissibly expand the scope of the doctrine of equivalents beyond that allowed under the patent laws. Desert Extrusion mistakenly contends that the Court's ruling deprived it of its right to the doctrine of equivalents, in violation of Warner Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17 (1997). On the contrary, Desert Extrusion is still entitled to pursue the doctrine of equivalents and did so in this case. Every application of the doctrine of equivalents, however, even under Warner Jenkinson, is still limited by several controlling principles. These principles include prosecution history estoppel, the "all elements" rule, the specific exclusion principle, and the requirement that the doctrine of equivalents cannot be used in a manner that would encompass the prior art. A. THE FLAT BACKING SHEET AND CUP BACKING ARE NOT EQUIVALENT First, there are substantial differences between the flat backing sheet and formed back of the Exhibit 500 package. 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. Hilton Davis Chem. Co. v. WarnerJenkinson Co., 62 F.3d 1512, 1517-18 (Fed. Cir. 1995) (in banc), rev'd on other grounds, 520 U.S. 17 (1997). There are substantial differences between a flat backing sheet and a

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cup-shaped backing. By definition a "cup" is not flat--it has been formed into a shape. Even if the Shakespeare cup contains the trimmer line within the package, this is not the only function served by Shakespeare's package design. Shakespeare's use of the cup-shaped container increases manufacturing efficiencies and end-user product presentation. The way in which Shakespeare uses its cup-shaped container is also different from the way in which the flat backing sheet of claim 1 is used. Shakespeare aligns its corresponding "front" and "back" cup-shaped container and mates them together to form a cylindrical shaped package. This allows the package hang-tag used to display the package on display pegs to be centrally located between the front and back of the package. This cylindrical shape also alters the way in which in trimmer line fills the package. The resulting package is substantially different from the package produced using the flat backing sheet required by claim 1. B. THE ALL ELEMENTS RULE EXCLUDES A CUP SHAPED BACK Even if Desert Extrusion was correct in its assertion that the flat backing sheet and Shakespeare cup were not substantially different, the doctrine of equivalents in this case must be tempered by the "all elements rule" and the "specific exclusion" principle. The "all elements rule" provides that the doctrine of equivalents does not apply if it would vitiate an entire claim limitation. See Warner-Jenkinson, 520 U.S. at 29. The corollary to this rule is the "specific exclusion" principle. By defining the claim in a way that clearly excludes certain subject matter, the patent implicitly disclaimed the subject matter that was excluded and thereby bars the patentee from asserting infringement under the doctrine of equivalents. SciMed Life Sys. v. Advanced Cardiovascular Sys., 242 F.3d 1337, 1346 (Fed. Cir. 2001). Each of these prevents application of the doctrine of equivalents in a manner that would cover a cup-shaped backing.

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The Federal Circuit has applied these rules in an analogous case. In Sage Products, Inc. v. Devon Industries, Inc., 126 F.3d 1420 (Fed. Cir. 1997), the Court observed that the claim: defines a relatively simple structural device. No subtlety of language or complexity of the technology, nor any subsequent change in the state of the art, such as later-developed technology, obfuscated the significance of this limitation at the time of its incorporation into the claim. . . . If Sage desired broad patent protection for any container that performed a function similar to its claimed container, it could have sought claims with fewer structural encumbrances. . . . As between the patentee who had a clear opportunity to negotiate broader claims but did not do so, and the public at large, it is the patentee who must bear the cost of its failure to seek protection for this foreseeable alteration of its claimed structure. Id. at 1425. In a later application of the Sage decision, the Federal Circuit held that when the literal meaning of a claim term excludes a structural feature that is the opposite of that meaning, that opposite structure cannot be found to infringe under the doctrine of equivalents. SciMed, 242 F.3d at 1346; see also Ethicon Endo-Surgery, Inc. v. U.S. Surgical Corp., 149 F.3d 1309, 1317 (Fed. Cir. 1998) (subject matter is "specifically excluded" from coverage under the doctrine of equivalents if its inclusion is "inconsistent with the language of the claim"); e.g., Moore, U.S.A., Inc. v. Standard Register Co., 229 F.3d 1091, 1106 (Fed. Cir. 2000) ("it would defy logic to conclude that a minority--the very antithesis of a majority--could be insubstantially different from a claim limitation requiring a majority, and no reasonable juror could find otherwise."); Eastman Kodak Co. v. Goodyear Tire & Rubber Co., 114 F.3d 1547, 1561 (Fed. Cir. 1997). In a similar fashion, allowing the "flat" backing sheet requirement to be interpreted as equivalent to a non-flat, cup-shaped container would vitiate the entire "backing sheet" claim limitation in violation of the "all elements rule." It would also violate the "specific exclusion" principle by allowing Desert Extrusion to claim subject matter that is, under the Court's claim construction, the exact opposite of flat, and clearly excluded by the

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language of the claim. The absence of correspondence between the Exhibit 500 package and this single claim 1 limitation mandates a conclusion of non-infringement. C. A FINDING OF EQUIVALENTS WOULD ERRONEOUSLY ENCOMPASS THE PRIOR ART The scope of equivalents given to a claim is also a function of the prior art. This is because a patentee should not be able to obtain, under the doctrine of equivalents, coverage which he or she could not lawfully have obtained from the Patent Office by literal claims. Wilson Sporting Goods Co. v. David Geoffrey & Assoc., 904 F.2d 677, 684 (Fed. Cir. 1990). In other words, there can be no application of the doctrine of equivalents if doing so would make the claims invalid in view of the prior art. Shakespeare advanced this position in its summary judgment opposition, and respectfully incorporates that argument by reference. In summary, a finding that the Shakespeare package infringes claim 1 under the doctrine of equivalents would broaden the scope of the claim such that it would necessarily encompass the prior art Rayvex, Arnetoli, and Speed France packages, each of which includes every limitation of claim 1 except for the flat back. Because the asserted range of equivalents would encompass the prior art packages, the scope of equivalents sought by Desert Extrusion is too broad and therefore not allowable. Wilson Sports, 904 F.2d at 686. Consequently, the Shakespeare packages cannot infringe claim 1 under the doctrine of equivalents as a matter of law. III. THE COURT DID NOT ERR IN GRANTING A SUA SPONTE RULING

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The Court properly entered a sua sponte judgment against Desert Extrusion. Desert Extrusion contends that it was prejudiced because it did not have an opportunity to fully address the issues. Under controlling Ninth Circuit precedent, however, a district court may enter a sua sponte summary judgment against a moving party so long as the moving party has had a "full and fair opportunity to ventilate the issues involved in the matter." Gospel Missions of Am. v. City of L.A., 328 F.3d 548, 553 (9th Cir. 2003); Cool Fuel, Inc.

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v. Connett, 685 F.2d 309, 312 (9th Cir. 1982). Contrary to Desert Extrusion's assertion, the question is not one of notice that a judgment may issue, but rather a fair opportunity to ventilate the issues. The issues that form the basis of the judgment were fully and fairly presented in the summary judgment motion, making the judgment proper. Desert Extrusion argues that it would have submitted additional evidence on the matter if it had known that judgment might be rendered against it, but fails to identify any such evidence that it would have submitted. The reason for the lack of proffer is clear: there is no such additional evidence. The issues presented in Desert Extrusion's motion for summary judgment are identical to those it would have raised in defending against a motion for non-infringement that might have been brought by Shakespeare. It involves precisely the same law, the same facts, and the same arguments. Desert Extrusion cannot articulate anything it would have done differently because it would not have done anything differently. Desert Extrusion further contends that the standard for granting summary judgment differs depending on who was the moving party, and that it did not gain the benefit of having all material facts construed in its favor. What Desert Extrusion overlooks is that the judgment was based on a determination of the permissible scope of equivalents, which is a question of law, not fact. E.g., Streamfeeder, LLC v. Sure-Feed Sys., Inc., 175 F.3d 974, 981 (Fed. Cir. 1999) (as to encompassing the prior art); Cybor Corp. v. FAS Techs., 138 F.3d 1448, 1460 (Fed. Cir. 1998) (as to prosecution history estoppel); Seachange Int'l, Inc. v. C-Cor Inc., 413 F.3d 1361, 1378 (Fed. Cir. 2005) (as to all elements rule, and therefore the specific exclusion principle). For that reason, there are no relevant facts that should have been construed in Desert Extrusion's favor, and no error of law was committed.

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IV.

THE FINALITY OF THE JUDGMENT

Desert Extrusion argues that it is entitled to remedies for the finding of infringement by the Exhibit 501 package. That assertion is particularly startling considering that Shakespeare and Desert Extrusion entered into an agreement that allowed Shakespeare to lawfully sell 50,000 units of that form of package. Shakespeare

respectfully incorporates by reference the evidence submitted with its summary judgment opposition establishing the existence of that agreement. Even though Desert Extrusion has never had any reason to believe that Shakespeare sold more than that amount, it has accused Shakespeare of doing so in this lawsuit and, specifically, in its present motion. Despite having the benefit of complete discovery, there is still no basis to contend that Shakespeare sold more than 50,000 units. It would be wholly improper for Desert Extrusion to seek and obtain an order permanently enjoining Shakespeare from selling products that it is contractually allowed to sell. Likewise, a further request for monetary damages for the sale of products that were the subject of a prior agreement between the parties can only be made in bad faith. Under the facts here, which are fully known to Desert Extrusion, Shakespeare presumes that Desert Extrusion will withdraw its claim for remedies related to the Exhibit 501 package. In the event Desert Extrusion does not do so, and continues to urge that the Court should modify its ruling in order to consider damages, Shakespeare requests an opportunity to seek attorneys' fees for defending such a request. See Brasseler, U.S.A. I, L.P. v. Stryker Sales Corp., 267 F.3d 1370, 1383 (Fed. Cir. 2001) (attorneys' fees may be awarded for bad faith litigation). Finally, Shakespeare agrees that the summary judgment order did not resolve all pending claims. Shakespeare has asserted counterclaims seeking a declaratory judgment that the patent-in-suit is obvious and therefore invalid in view of several prior art references. Although the Court did not reach the issue of patent validity in its summary

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judgment order, a consideration of patent validity would be required before any remedies are imposed. Even if the Court had found that there was no infringement at all, it would have an obligation to consider the merits of Shakespeare's counterclaims for patent invalidity. See Intellectual Property Development, Inc. v. UA-Columbia Cablevision of Westchester, Inc., 336 F.3d 1308, 1317 (Fed. Cir. 2003); Intermatic Inc. v. Lamson & Sessions & Co., 273 F.3d 1355, 1368 (Fed. Cir. 2001) vacated and remanded on other grounds. Accordingly, Shakespeare agrees that additional issues remain, particularly if there is to be any remedy imposed. CONCLUSION The Court's summary judgment of non-infringement was proper and should not be modified in any way. Shakespeare agrees, however, that the judgment does not fully resolve all issues in the case in that it did not address Shakespeare's invalidity counterclaims. DATED this ___ day of October, 2005. SNELL & WILMER L.L.P.

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s/ Todd Feltus Todd Feltus One Arizona Center 400 E. Van Buren Phoenix, AZ 85004-2202 Lawrence D. Graham, WSBA No. 25,402 David A. Lowe, WSBA No. 24,453 BLACK LOWE & GRAHAM PLLC 701 Fifth Avenue, Suite 4800 Seattle, WA 98104 Attorneys for Defendants K2, Inc. and Shakespeare Monofilament Division

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ORIGINAL AND ONE COPY of this foregoing filed this 20th day of October, 2005. COPY th the foregoing hand delivered of this 20 day of October, 2005 to: Stephen T. Sullivan, Esq. Tish L. Berard, Esq. SULLIVAN LAW GROUP 1850 N. Central Avenue, Suite 1140 Phoenix, AZ 85004-6161 Attorneys for Desert Extrusion Corp. s/ Lorrie Moser

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