Free Motion for New Trial - District Court of Arizona - Arizona

Stephen T. Sullivan (#016038) ROBERTS MLOTKOWSKI & HOBBES, P.C. 1850 North Central Avenue Suite 1140 Phoenix, Arizona 85004-4586 Telephone: (602) 956-6161 Attorneys for Plaintiff Desert Extrusion Corporation IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Desert Extrusion Corp., an Arizona corporation, Plaintiff, vs. K2, Inc., a California corporation, and Shakespeare Company Monofilament Division, a division of K2, Inc.; Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) No. CIV 02-02180-PHX-JAT PLAINTIFF'S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION UNDER RULES 59 AND 60 FOR MODIFICATION OF ORER AND RELIEF FROM JUDGMENT

I.

INTRODUCTION

With this motion, Plaintiff Desert Extrusion Corporation ("Desert Extrusion") seeks to have the Court modify its Order of September 23, 2005 (hereinafter the "Order") by withdrawing its sua sponte holding of summary judgment of noninfringement with respect to the method exemplified by Defendants' Exhibit 500, and to either grant Desert Extrusion's Motion for Summary Judgment of

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Infringement or simply allow this issue to proceed to trial. In essence, Desert Extrusion seeks a new trial on this infringement issue. For reasons that are set forth more fully herein below, Desert Extrusion respectfully submits that the Court has erred in its analysis of the doctrine of equivalents infringement issue. Because the legal procedures set out by the U.S. Supreme Court and the Court of Appeals for the Federal Circuit (hereinafter the "Federal Circuit") were not followed, the Court has been led to a legally erroneous and factually unsupported conclusion that summary judgment of non-infringement is warranted. Had the proper procedures been used, the Court would have concluded that summary judgment of infringement is warranted, or at the very least that the issue is subject to genuine issues of material fact and therefore is not amenable to summary disposition. In granting summary judgment to Defendants sua sponte, without benefit of any motion for such relief, the Court further erred not only in failing to view the evidence in a light most favorable to the non-moving party (now Desert Extrusion), but it also improperly failed to give Desert Extrusion proper and fair notice that the Court was considering such a grant, and thus failed to give it a fair opportunity to present evidence and be heard on this un-filed and, until the Order, unannounced motion. Desert Extrusion further seeks to have the Court vacate its Judgment of September 23, 2005 (hereinafter the "Judgment"). This is warranted in view of the errors with respect to the grant of summary judgment of non-infringement, as summarized herein above. In addition, however, entry of the Judgment was legally 2

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erroneous because issues remain before the Court, and thus the Order was not a "final judgment." The Court ruled in the Order itself, for example, that the method used by Defendants in making their Exhibit 501 package literally infringes claims 1, 2 and 4 of Desert Extrusion's U.S. Patent No. 6,109,005 (hereinafter the "'005 patent"), yet the issue of remedies, including a permanent injunction, remain outstanding. Thus, regardless of the Court's decision on the summary judgment portion of this motion, it must vacate the Judgment and permit the case to proceed for resolution of all remaining issues. II. A. THE COURT ERRED IN ITS GRANT OF SUMMARY JUDGMENT OF NON-INFRINGEMENT UNDER THE DOCTRINE OF EQUIVALENTS The Doctrine of Equivalents And The Analysis For Its Use The importance of the doctrine of equivalents cannot be overstated. It is the principal legal mechanism to prevent infringers from pirating a patented invention through technical avoidance schemes that in essence, and in fairness, amount to nothing more than a misappropriation of the patented invention. The vitality of this doctrine has been reaffirmed and clarified relatively recently by the U.S. Supreme Court in a series of opinions. Warner-Jenkinson Co., Inc. v. Hilton Davis Chem. Co., 520 U.S. 17, 117 S. Ct. 1040, 137 L.Ed.2d 146 (1996); Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd., 535 U.S. 722, 122 S. Ct. 1831, 152 L.Ed.2d 944 (2002). The legal test for determining whether there is infringement under the doctrine of equivalents is summarized in Desert Extrusion's Memorandum of Points 3

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and Authorities in Support of Its Motion for Summary Judgment of Patent Infringement (hereinafter Desert Extrusion's "Summary Judgment Memorandum"), e.g., at 5-6. It requires a determination of whether the portion of the accused device or method most closely resembling the missing claim limitation (in this case, the "backing sheet") constitutes an "insubstantial difference" relative to the claim limitation. In the context of this case, the issue becomes whether the "cup-shaped" and therefore non-flat backing sheet of Defendants' Exhibit 500 constitutes an "insubstantial difference" relative to the flat backing sheet of the patent claims. The issue of infringement under the doctrine of equivalents is a question of fact. Warner Jenkinson, 520 U.S. at 37-38 (Section IV); K2 Corp. v. Solomon S.A., 191 F.3d 1356, 1362 (Fed. Cir. 1999). The Federal Circuit expressly stated in Hilton Davis Chem. Co. v. Warner-Jenkinson Co., Inc., 62 F.3d 1512, 1518, 35 US.P.Q.2d (BNA) 1641 (Fed. Cir. 1995), rev'd on other grounds, Warner Jenkinson, supra, that any evidence bearing upon this determination is relevant and must be considered. The inquiry should focus on the extent to which the differences are or are not substantial, as viewed from the perspective of one of ordinary skill in the art. Hilton Davis, 62 F.3d at 1519, 35 U.S.P.Q.2d at 1645. Both the Supreme Court and the Federal Circuit reaffirmed the importance of considering the role or function performed by the claim limitation and corresponding structure, reaffirming the so-called "function-way-result" test of Graver Tank & Mfg. Co. v. Linde Air Prods. Co, 339 U.S. 605, 70 S. Ct. 854, 94 L.Ed.2d 1097 (1950). The Federal Circuit in Hilton Davis also expressly stated that 4

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evidence of copying portends that the differences are insubstantial, and thus that there is infringement under the doctrine. 62 F.3d at 1519, 35 U.S.P.Q.2d at 1645. B. The Court Erred In Its Doctrine Of Equivalents Analysis Desert Extrusion respectfully submits that the Court failed to adhere to this analytic framework and standard in reaching its holding that Defendants were entitled to summary judgment of non-infringement. The Court's doctrine of equivalents analysis for the accused method and Exhibit 500 product is set forth in the Order at page 11, where it states in relevant part: [B]ecause a formed, cup-shaped container is the opposite of the unformed, backing sheet described in the `005 Patent, the Court agrees with Defendants that this feature of the Exhibit 500 Package does not infringe on the `005 Patent's backing sheet limitation under the doctrine of equivalents. To hold otherwise would inappropriately expand the scope of claim 1 to encompass devices [that] are not flat, and thus not envisioned by the `005 Patent. (Emphasis added.) The Court's analysis does not address the function or role provided by the backing portion of the package according to the patented method, or in Defendants' method relating to Exhibit 500. Desert Extrusion presented evidence that included the Exhibit 500 package itself, which from a simple visual inspection demonstrates that both the flat backing sheet of the patent and the cup-shaped backing sheet of Exhibit 500 serve the same function or role, enclosing the back of the package to keep the line in. Desert Extrusion also submitted the highly probative if not dispositive testimony of Defendants' own Rule 30(b)(6) designate on this subject matter, Mr. Peter Brissette, who admitted that the backing was changed from the 5

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infringing flat backing sheet (Exhibit 501) to the cup-shaped backing sheet specifically to avoid literal infringement of the `005 patent. When pressed for any other reason for changing the backing portion from flat to cup-shaped, the only one Mr. Brissette could provide was that it helped to center the hang tag. (See, e.g., Brissette Dep'n, pages 50-52.) Desert Extrusion also submitted evidence that Defendants had copied the patented invention when it became clear that their outdated blister card product was unable to effectively compete with Desert Extrusion's new all-plastic package. Desert Extrusion believes that these facts and this evidence demonstrate, based largely on Defendants' own testimony, that the cup-shaped backing sheet is no more than an insubstantial difference with respect to the flat backing sheet recited in the patent claims. This change to the backing sheet was undertaken for no bona fide reason other than to create a technical non-infringement defense calculated to enable Defendants to pirate Desert Extrusion's patented invention. Instead of focusing on the role or function of the backing portion of the package, the evidence of copying, etc., the Court relied on its finding that Defendants' cup-shaped backing is the "opposite" of a flat backing. Based on this view, any shape other than flat would constitute the "opposite" of flat. The result is that Desert Extrusion is being entirely deprived of access to the doctrine of equivalents. The Court is holding in effect that only literal infringement can constitute an infringement. This is contrary to the express holding of the U.S.

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Supreme Court that the doctrine of equivalents continues to be available under U.S. patent law. Warner Jenkinson, supra. The Court further errs when it states in the Order at 11 that "[t]o hold otherwise would inappropriately expand the scope of claim 1 to encompass devices [that] are not flat, and thus not envisioned by the `005 Patent." The Court thus has imposed a legally erroneous requirement that, as a precondition to access to the doctrine of equivalents, the patentee must have envisioned the technical avoidance scheme the infringer later adopts. To the contrary, the doctrine of equivalents was created to address situations in which an infringer, with the patent and its prosecution history as a guide, finds a technical ground for avoidance that is not set forth in those documents and therefore presumptively was not envisioned by the patentee. Significantly, the U.S. Supreme Court in Warner Jenkinson specifically considered and rejected this argument in Section III.C of its opinion. 520 U.S. at 37, 117 S. Ct. at 1052-53, 137 L.Ed.2d at 165-66. C. The Court Erred In Its Sua Sponte Grant of Summary Judgment of Non-Infringement In Favor Of Defendants The Court further erred in several respects when it ruled sua sponte that Defendants were entitled to summary judgment of non-infringement. First, the doctrine of equivalents analysis used by the Court was legally erroneous, as explained herein above. Secondly, when the Court chose to consider granting summary judgment of non-infringement to Defendants, the proceeding became tantamount to a motion by 7

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Defendants for summary judgment. That being the case, the Court was legally bound to view all of the evidence in a light most favorable to the non-moving party, which in this instance became Desert Extrusion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 91 L.Ed.2d 202 (1986) ("The evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor."). It is clear from the Order that the Court did not adopt this approach. Moreover, summary judgment of non-infringement was legally available to Defendants under Rule 56 only if there were no genuine issues of material fact, and Defendants were entitled to judgment on this issue as a matter of law. The Court's grant was proper only if no reasonable juror, presented with the facts of this case, could find in favor of Desert Extrusion on this infringement issue. Anderson, 477 U.S. at 248, 106 S. Ct. 2510, 91 L.Ed.2d at 211-212. In the words of the Supreme Court, "[i]f reasonable minds could differ as to the import of the evidence, ... a verdict should not be directed." 477 U.S. at 250-51, 106 S. Ct. 2511, 91 L.Ed.2d at 213. The Court may not weigh and balance the evidence and substitute its own factual finding for that of the jury. Based on the evidence Desert Extrusion presented to the Court as summarized in its Summary Judgment Memorandum and herein above, and viewing this evidence in a light most favorable to Desert Extrusion, there are at the very least genuine issues of material fact that preclude summary judgment in favor of Defendants. These issues include, for example, the role and function of the backing portion as claimed in the `005 patent and as is found in the Exhibit 500 8

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product, whether and the extent to which Defendants copied Desert Extrusion's invention, whether there is any substance to Defendants' argument regarding centering of the hang tag, and whether this hang tag difference, if there is one, is "substantial" or "insubstantial," and the like. These issues, to the extent the evidence does not mandate a holding of infringement, are sufficiently material and Desert Extrusion's evidence is sufficiently probative, particularly when the evidence is viewed in favor of Desert Extrusion, as to legally preclude summary judgment of non-infringement to Defendants. The Court's grant of summary judgment to Defendants on this issue was against the great weight of the evidence and was impermissible under Rule 56. D. The Sua Sponte Grant Of Summary Judgment Of Non-Infringement Denied Desert Extrusion Fair And Adequate Notice and an Opportunity to Defend The Court granted Defendants summary judgment of non-infringement sua sponte. Defendants did not move for summary judgment, and no oral argument was held on the Court's grant or on Plaintiff's summary judgment motion. Desert Extrusion learned for the first time that the Court was even considering a grant of summary judgment of non-infringement to Defendants when it obtained the Order and Judgment. Desert Extrusion respectfully objects to the lack of notice it was given regarding the Court's consideration of this ruling, and to the lack of fair opportunity to address it and defend against it. Under Fed. R. Civ. P. 56(c), Desert Extrusion is entitled to at least ten days notice prior to a hearing on the motion, i.e., to prepare 9

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an appropriate defense. In this case, there was no hearing, and Desert Extrusion received no notice prior to receiving the Order itself that the Court was entertaining a motion on behalf of Defendants for summary judgment of non-infringement, or the grounds upon which the motion was contemplated. Desert Extrusion has been prejudiced by this lack of notice and opportunity to address the motion. It was not informed, for example, of the grounds, arguments or line of reasoning used by the Court, which it would have been had the motion actually presented and briefed. Desert Extrusion therefore was denied notice and a fair opportunity to prepare for and rebut them. If it had been given such notice, it could have submitted additional evidence to demonstrate that, even if the Court concluded Desert Extrusion was not entitled to summary judgment of infringement, genuine issues of material fact precluded a holding of summary judgment that there was no infringement. III. THE ORDER WAS NOT A "FINAL JUDGMENT" AND THE JUDGMENT THEREFORE SHOULD BE VACATED Desert Extrusion respectfully requests that the Court vacate the Judgment because, regardless of the Court's action on the Rule 56 issues addressed herein above, other issues remain in the case for disposition and thus the Order is not a "final judgment." A judgment is "final" under 28 U.S.C. Section 1291 only when it "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Catlin v. United States, 324 U.S. 229, 233 (1945). There is a strong policy in favor of finality as a prerequisite to appeal, and against piecemeal 10

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appellate review. Osterneck v. Ernst & Whinney, 489 U.S. 169, 177 (1989); Spraytex Inc. v. DJS&T, 96 F.3d 1377, 40 U.S.P.Q.2d (BNA) 1145, 1149 (Fed. Cir. 1996). In the Order, the Court held on summary judgment that the method used by Defendants in making their package exemplified by Exhibit 501 infringed claims 1, 2 and 4 of the `005 patent. The Order did not, however, address the issue of remedies. Under 35 U.S.C. § 283, for example, the Court is authorized to issue an injunction against further infringement, and to prevent the violation of any right secured by a patent. Desert Extrusion in its Complaint expressly requested injunctive relief, yet this request has not been addressed by the Court and remains an outstanding issue. Given this, the Order was not a final judgment and the Judgment dismissing the case based upon it was unwarranted and legally erroneous. Desert Extrusion therefore requests that it be vacated, and that the district court proceeding continue accordingly. IV. CONCLUSION

Desert Extrusion believes it has demonstrated, through admissible evidence, entitlement to summary judgment of infringement for the Exhibit 500 method. It requests that the Court reconsider the Summary Judgment Motion and modify its Order to grant this summary disposition. Even if the Court disagrees, Desert Extrusion has come forth with sufficient evidence to demonstrate that genuine issues of material fact preclude a grant of 11

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summary judgment of non-infringement. This is particularly true if the evidence is viewed in a light most favorable to Desert Extrusion, as the Court must do legally. The Order therefore at the very least should be modified to withdraw the grant of summary judgment of non-infringement. In any event, the Judgment must be vacated given that issues remain in the case and therefore there has been no final order which serves as a prerequisite to dismissal. RESPECTFULLY SUBMITTED this 7th day of October, 2005. ROBERTS, MLOTKOWSKI & HOBBES

By

S / Stephen T. Sullivan Stephen T. Sullivan 1850 North Central Avenue Suite 1140 Phoenix, Arizona 85004-4586 Telephone: (602) 956-6161 Facsimile: (602) 956-6262 Attorneys for Plaintiff Desert Extrusion Corporation

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CERTIFICATE OF SERVICE It is hereby certified that PLAINTIFF'S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION UNDER RULES 59 AND 60 FOR MODIFICATION OF ORDER AND RELIEF FROM JUDGMENT was served upon Defendants at the address listed below on this 7th day of October, 2005: By first class mail, postage prepaid, to: Lawrence D. Graham, Esq. David A. Lowe, Esq. BLACK LOWE & GRAHAM PLLC 701 Fifth Avenue, Suite 4800 Seattle, WA 98104 Facsimile: (206) 381-3301 Todd Feltus, Esq. SNELL & WILMER LLP One Arizona Center 400 E. Van Buren Phoenix, Arizona 85004-2202

S / Stephen T. Sullivan

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