Opinion
2:18-cv-07090-CAS-GJS
07-29-2024
DMF, Inc., Plaintiff, v. AMP Plus, Inc. d/b/a ELCO Lighting, and ELCO Lighting Inc., Defendants.
REDACTED FINDINGS OF FACT AND CONCLUSIONS OF LAW
CHRISTINA A. SNYDER UNITED STATES DISTRICT JUDGE
I. INTRODUCTION
The following issues were tried to the Court on June 25 and June 26, 2024. First, as to direct infringement, the only issue tried was whether the Accused Products practice the “coupled to” limitation of Claim 1 of U.S. Patent No. 9,964,266 (the “Asserted Patent” or the “'266 Patent”), and its dependent Claims 2, 4-8, and 13-16. See Docket No. 652 at 1. Second, as to indirect infringement, induced and contributory infringement were tried as to Claims 16 and 30. See Docket No. 782 at 5 (DMF stating it only intends to try indirect infringement as to Claims 16 and 30); Docket No. 662 at 1 (similar). Third, the damages issues were tried. Because summary judgment of infringement was granted as to Claims 17, 19, 21, 22, 26, and 28-30, it will be necessary to reach the damages issue even if no infringement is found as to Claims 1, 2, 4-8, and 13-16. Docket No. 499 at 17. However, it will not be necessary to reach the damages issue if all the claims of the '266 Patent for which infringement was or is found are invalidated. Fourth, the issue of invalidity was tried based on invalidity grounds 3, 6, and 10, each of which relates to obviousness and applies to all asserted claims. Docket No. 652 at 2.
There is no longer an issue as to Claim 25 because the parties agree that the elements of that claim were adjudicated on summary judgment. See Docket No. 652 at 1-2; Docket No. 782 at 5.
Attorneys Ben M. Davidson of Davidson Law Group and David Long of Ergoniq appeared on behalf of plaintiff DMF, Inc. (“DMF” or “Plaintiff”). Attorneys Guy Ruttenberg and Kevin Neal of Ruttenberg IP Law appeared on behalf of defendants AMP Plus, Inc. d/b/a ELCO LIGHTING and ELCO Lighting, Inc (“ELCO” or “Defendants,” generally, or “AMP Plus” and “ELI,” only when it is necessary to discuss both entities separately).
Based on the evidence and testimony presented at trial, the Court makes the following findings of fact and conclusions of law. To the extent any finding or conclusion is better characterized as a conclusion of law, or a finding of fact, it may be characterized accordingly.
II. JURISDICTION AND VENUE
1. This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1331, because these claims arise under the federal patent laws. 35 U.S.C. §§ 271, 281; 28 U.S.C. § 1338(a).
2. The Court has personal jurisdiction over the parties and venue is proper in this Court under 28 U.S.C. §§ 1391(b) and (c) and 1400(b), because Defendants reside in this District and maintain a regular and established place of business in this district.
III. FINDINGS OF FACT
A. Background
3. Plaintiff filed an action for patent infringement, among other claims, against Defendants on August 15, 2018. Docket No. 1. Plaintiff alleges that Defendants infringe the '266 Patent, which discloses a “Unified Driver and Light Source Assembly For Recessed Lighting.” Id. at 1. The '266 Patent claims priority to a provisional patent application filed on July 6, 2013. Id. ¶ 20. The '266 Patent issued on May 8, 2018. Id. ¶ 23. Plaintiff alleges that the LED Module claimed in '266 Patent was designed with “a low-profile heat conducting casting that could both house LED components and significantly dissipate heat from the LED light source, rather than stacking a conventional heatsink on top of a separate component housing.” Id. ¶ 16. Further, it is alleged that the claimed LED Module “could fit in traditional ‘cans' or other lighting fixtures, but also was small enough to fit into standard junction boxes without using a separate firebox, ‘can' or lighting fixture.” Id. Plaintiff's flagship products, which allegedly practice the '266 Patent, are the DRD2 LED Module products. Id. ¶ 28.
4. In March 2019, the Court issued a preliminary injunction enjoining Defendants from making, using, selling, or offering to sell “both the original version and the modified versions of [Defendants'] ELL LED Modules.” Docket No. 147 at 13.
5. In May 2019, Defendants filed an IPR petition seeking review of the '266 Patent before the PTAB. See Docket No. 244-2. The PTAB instituted the IPR in November 2019. Docket No. 325-2. In November 2020, the PTAB found Claim 17 unpatentable and Claims 1, 2, 4-11, 13-16, 19, 21, 22, 25, 26, and 28-30 not unpatentable. Id. The Federal Circuit affirmed the PTAB's decision except as to the decision that Defendants had not shown that Claim 22 was unpatentable. See AMP Plus, Inc. v. DMF, Inc., No. 2021-1595, 2022 WL 16844516, at *12 (Fed. Cir. Nov. 10, 2022). On remand, the PTAB held that Defendants failed to prove that Claim 22 was unpatentable. See AMP Plus, Inc. v. DMF, Inc., No. IPR2019-01094, 2023 WL 6811241 (P.T.A.B. Mar. 27, 2023), available at Docket No. 591-4 at 101. Defendants have appealed that decision.
6. The Court agreed to preside over a willfulness bench trial so the parties could consider the resulting findings of fact and conclusions of law in renewing settlement discussions. See Docket No. 675. Thus, the parties stipulated to a bench trial before the Court on the issue of willfulness. Docket Nos. 687, 688. On October 24, 2023, the matter came before this Court for a two-day bench trial concerning willfulness. The parties called as witnesses Chip Israel, Benjamin Ardestani, Brandon Cohen, Steve Cohen, James Benya, and Michael Danesh. Docket No. 696; see also Docket No. 712 (Benya Declaration). Additionally, the Court received deposition testimony of Richard Nguyen, James Keenley, and Michael Danesh in his capacity as a 30(b)(6) witness. Docket No. 696; see also Docket Nos. 707, 713, 714, 715, 725. Certain materials were also lodged post-trial. See Docket Nos. 705, 712, 720, 721, 726-28. After that bench trial, the Court entered judgment in favor of Defendants on Plaintiff's willfulness claim. Docket No. 739 at 21.
7. On June 25, 2024, the matter came before this Court again for a two-day bench trial concerning the remaining issues. Testimony, live or previously recorded, was presented from the following witnesses: James Benya, Alan Goedde, Steve Cohen, Michael Danesh, Eric Braitmayer, and Eric Bretschneider. See Docket No. 822 at 82-83. Certain additional materials were lodged after the trial had concluded. See Docket Nos. 797-803, 805-09, 814.
8. After trial, the parties filed proposed findings of fact and conclusions of law and responsive memoranda. See Docket Nos. 815, 816, 823, 824.
B. Evidentiary Issues
9. Defendants object to Plaintiff's use of Exhibits 313, 514, 515, and 1207. The Court's records indicate that these exhibits were not admitted during trial, even subject to a later motion to strike, so Plaintiff cannot rely on them now. These objections are SUSTAINED.
10. Defendants object to Plaintiff's lodging of Exhibits 314, 419, 450, 504, 506, 507, 509, 511, 512, and 513. However, because Plaintiff did not rely on these exhibits, the Court did not either and this objection is MOOT.
11. Defendants object to Chip Israel's testimony about copying and that ELCO is a commodity company. As to copying, Defendants' position is that Israel did not read the '266 Patent and did not compare the patented features to the prior art. These are irrelevant as to whether Defendants copied Plaintiff's product, or at best they go to the weight of the testimony. Defendants also object that Israel never viewed the internal components of the DRD2 or ELL modules. However, the testimony was that the witness did “look underneath the cap” but did not wholly “disassemble[] the unit.” TR1 at 67:11-15. The Court believes this goes to the weight of Israel's testimony rather than establishing that it lacks foundation. The objection to the testimony on copying is OVERRULED. As to whether ELCO is a commodity company, Israel's report did not analyze products other than those of DMF and ELCO. See TR1 at 55:4-56:8, 65:14-17. The Court is not persuaded that an expert needs to offer a detailed analysis of the components of a product before that expert can tell whether the product is of commodity grade or not. Again, this goes to the weight of the opinion. The objection to this testimony is also OVERRULED.
12. Defendants object to Exhibits 1061, 1062, 1063, 1078, 1078A, 1078C, 1615, 1616, 1617, 1801, 1802, 1803, 1804, which consist of expert reports, demonstratives, and interrogatory responses. Defendants' objection is OVERRULED IN PART and SUSTAINED IN PART. Expert reports and interrogatory responses cannot be used as substitutes for testimony that a party should have, but failed to, offer at trial. Likewise, demonstratives are not evidence. However, these materials may be used for other purposes, such as demonstrating that a certain argument was disclosed. Plaintiff's demonstratives may also be used as visual aids in their post-trial briefing, which is effectively a closing argument, without being admitted.
13. Defendants object to Plaintiff's cease-and-desist letter, which is Exhibits 503 and 159. This objection is OVERRULED. The Court agrees that the letter would be hearsay if used as evidence of the truth of the matters asserted in the letter, that is, that the Asserted Patent is valid and infringed by Defendants. However, the Court does not believe Plaintiff sought admission of the letter for this purpose.
14. Defendants' objection to Exhibit 1041 is OVERRULED IN PART and SUSTAINED IN PART. The document is hearsay, and it is not admissible under the business-records exception. Among other things, this exhibit was prepared immediately before Danesh's deposition for use in that deposition, rather than at or near the time of the relevant transactions or in the ordinary course of business. See Docket No. 806-1 at 11; see also id. at 13-15; Fed.R.Evid. 803(6). Danesh's trial testimony described the software used by Plaintiff to manage its records, but because it did not describe the preparation of Exhibit 1041, it does not warrant a different conclusion. TR4 at 89:1590:7. The fairness designations offered by Plaintiff are consistent with the view that this document was prepared in preparation for Danesh's deposition rather than the ordinary course of business. See Docket No. 809 at 16-25. Exhibit 1041 also does not satisfy another element of the business-records exception: Defendants have shown that its method and circumstances of preparation indicate a lack of trustworthiness. Fed. R. Evid. 803(6). Someone else other than Danesh prepared the original version of this document, although Danesh made a number of changes to the other person's methodology, and no testimony from the other person about the origin of the document was proffered. Docket No. 806-1 at 5, 7. The final version of Ex. 1041 was prepared overnight in between days of a deposition. Id. at 11. Based on these factors, and the totality of the circumstances, the Court is persuaded that this document falls outside the business-records exception. However, although the document itself is hearsay, the Court is persuaded that Goedde can rely on it in formulating his opinions as a summary of Danesh's testimony about Plaintiff's financials. See Fed.R.Evid. 703.
15. Defendants' objection to Exhibit 251 and the accompanying testimony by Colby Chevalier is OVERRULED. In that testimony, Chevalier was read a copy of a declaration he submitted and asked whether he agreed with all the statements therein. See Docket No. 800-1 at 36:12-15. Although the declaration itself might be hearsay, Chevalier's reiteration of the statements therein at his deposition does not present the same concerns. Also, the Court does not believe that the cited testimony reflects an expert opinion. Chevalier was a sales manager and director of project management for IMTRA Corporation, and he provided customer support for the products described in his testimony. He has sufficient personal knowledge to testify about the products IMTRA sold, why those products were designed to have the features they had, how the products were mounted and installed, and why those products were mounted and installed in that way, without relying on scientific or technical expertise of the kind governed by Fed.R.Evid. 702.
16. Defendants object to the Danesh deposition designations submitted by Plaintiff after trial. The Court agrees with Plaintiff that these designations were appropriate “fairness” designations. They concern the preparation of Exhibit 1041 (and a related exhibit) and are responsive to the Danesh deposition designations submitted by Defendants. This objection is therefore OVERRULED.
17. Defendants object to Exhibit 1800. It does not appear that Plaintiff relied on, or sought admission of, Exhibit 1800. Nor does the cited testimony discuss Exhibit 1800. See TR4 at 155-56. This objection is therefore MOOT.
18. Defendants object to Exhibits 9, 213, and 1652. Plaintiff did not rely on these exhibits, and neither has the Court. These objections are MOOT.
19. At trial, Defendants objected to Benya's testimony that Version 3 satisfied the “coupled to” limitation on the basis that this testimony exceeded Benya's expert report. This objection is OVERRULED. Benya's expert report offered an opinion that this limitation was satisfied as to the “ELCO ELL Modules.” Ex. 1061 ¶¶ 231-33. Benya defined the term “ELCO ELL LED Modules” as including Version 1, Version 2, and Version 3. Id. ¶ 193; see also id. ¶¶ 193-206. It is true that the expert report specifically addressed Version 2. Id. ¶ 233. However, that was a rebuttal to an interrogatory response made by Defendants with respect to Version 2; it does not support the inference that Benya would have separately addressed Version 3 had it fallen within the scope of his opinions. See id. For all these reasons, Benya's opinion was adequately disclosed.
20. Plaintiff objects to paragraphs 20, 73, 90, and 92 of Defendants' proposed findings on the basis that their Hatteras-alone obviousness theory was not disclosed. This objection is SUSTAINED. Defendants never identified a Hatteras-alone obviousness ground during the pretrial conferences as an issue for trial. Docket No. 626 at 2; Docket No. 652 at 2. Nor did Defendants raise a Hatteras-alone obviousness theory during the summary-judgment proceedings. Docket No. 499 at 18-19; see Docket No. 370 ¶¶ 133, 292-302, 433-37. Defendants raised a Hatteras-alone anticipation theory, but that theory was rejected, and it was an anticipation theory rather than an obviousness theory. Id. at 21. Defendants argue that the Court held Defendants had essentially made an obviousness argument based on Hatteras alone, which they had preserved. However, the Court did not hold that this argument was preserved. See generally id. Nor is it material that Defendants' remaining obviousness theories-namely, Grounds 3, 6, and 10-included Hatteras as one component. Those theories were materially different because they did not rely on Hatteras to cover all of the claim limitations and included different theories with respect to the motivation to combine. For all these reasons, Defendants may not now rely on a Hatteras-alone obviousness theory. However, as the Court explains elsewhere, those Hatteras-alone obviousness theories are not persuasive even if they are appropriately considered.
21. Plaintiff objects to paragraphs 1, 30, and 96-109 of Defendants' proposed findings on the basis that their indefiniteness theories were outside the scope of trial. These objections are SUSTAINED. As to the argument that “significantly dissipates” is indefinite, that issue was already rejected by the Court during claim construction. Docket No. 266 at 23. Defendants have not offered a basis for reconsidering that ruling. As to the argument that “plurality of elements” is indefinite, Defendants have failed to preserve their position. Contrary to Defendants' assertions, they did not raise this issue in their pretrial filings. See, e.g., Docket No. 459 at 34 (listing other terms Defendants contended were indefinite but not including this term and acknowledging that Defendants did not plan to pursue an indefiniteness defense at trial based on the Court's claim construction order); Docket No. 493-1 at 29-30 (same); Docket No. 626 at 2 (listing issues the parties intended to present at trail); Docket No. 652 at 2 (same); Docket No. 786 (never mentioning indefiniteness). Defendants have forefeited this argument many times over.
22. Plaintiff objects to paragraph 25 of Defendants' proposed findings on the basis that the alleged use of IMTRA Hatteras in a museum is based on evidence the Court excluded. This objection is SUSTAINED. The Court previously excluded the IMTRA documents first disclosed by Defendants in late 2023 and Bretschneider's opinions in reliance on them, based on Fed.R.Civ.P. 37(c). Docket No. 686 at 9. The reasoning underlying that ruling is incorporated here by this reference. See id. at 8-9. That ruling extended to the marine retrofit now relied on by Defendants. Compare Docket No. 674-2 ¶¶ 12-20 (supplemental expert report describing museum retrofit) with Docket No. 816 ¶ 25 (relying on the museum retrofit).
23. Plaintiff objects to paragraphs 14 and 34-39 of Defendants' proposed findings on the basis that they did not disclose their contention that the ELL Version 3 product does not meet the “coupled to” limitation. Defendants' response to Plaintiff's interrogatory asking for their non-infringement contentions did identify all three versions. Ex. 161 at 4-6. Thus, this is not a sufficient basis for excluding this evidence and this objection is OVERRULED.
24. Plaintiff objects to paragraphs 6-10, 12, 15, and 36 of Defendants' proposed findings on the basis that the “closer to” limitation has already been resolved on summary judgment. This objection is SUSTAINED. The Court already resolved the “closer to” limitation in granting partial summary judgment in favor of Plaintiff. Docket No. 499 at 9-10. The Court remains convinced that it did not err in resolving this issue, and Defendants have not sought, or provided a basis for, reconsideration. To the extent necessary, the Court's prior discussion of this issue, see id., is incorporated here by this reference.
25. Plaintiff objects to paragraphs 1, 41, 42, and 44 of Defendants' proposed findings on the basis that the commercial ELLs are outside the scope of the case. This objection is SUSTAINED. It is true that Plaintiff's complaint mentioned the commercial modules. See Docket No. 1 at ¶¶ 113, 115. However, Plaintiff almost immediately indicated that they would not assert infringement of the commercial modules. Ex. 1652 at 2, 9. Defendants later acknowledged that “there is no disagreement as to the fact that the Commercial ELL Modules are not accused in the Utility Patent case.” Docket No. 323 at 11. They also contended that the “Commercial ELL modules” were non-infringing alternatives because “DMF admits [they] do not infringe the '266 Patent.” Ex. 462 at 9. Elsewhere, Defendants characterized the “commercial version of [the] ELL modules . . . are not part of this case, and thus not relevant to the claims or defenses in this case.” Id. at 3-6, 8, 12.
It is not inconsistent to note that Plaintiff did not seek to admit Exhibit 1652 into evidence and to rely on that exhibit in addressing the issues here. In deciding “any preliminary question about whether . . . evidence is admissible . . . the court is not bound by evidence rules, except those on privilege.” Fed.R.Evid. 104(a). Even if this exhibit is hearsay, it is appropriately relied on to determine whether Plaintiff withdrew its allegations as to the commercial modules.
26. Plaintiff objects to paragraphs 58 and 59 of Defendants' proposed findings on the basis that Defendants never disclosed a non-infringement argument related to non-twist-and-lock trims. This objection is OVERRULED. Although Defendants' noninfringement contentions should have been more detailed, the Court is persuaded that Defendants' failure to better disclose their position that their products could have been used without a twist-and-lock trim was harmless. See Ex. 161 at 17-18. Moreover, although Plaintiff contends that Defendants admitted in their answer their products could only be used with ELL twist-and-lock trims, but Defendants' answer only admitted that their products could be admitted with those trims. See Docket No. 235 at ¶ 80.
27. Plaintiff objects to paragraph 60 of Defendants' proposed findings on the basis that Defendants never disclosed a non-infringement argument related to light fixtures greater than eight inches. Again, although Defendants' non-infringement contentions should have been more detailed, the Court believes this deficiency was harmless. See Ex. 161 at 18. Plaintiff's other arguments in support of this objection are arguments about the merits of Defendants' position, which does not bear on its admissibility. This objection is OVERRULED.
28. Plaintiff objects to paragraph 63 of Defendants' proposed findings on the basis that the “significantly dissipate heat” limitation was resolved on summary judgment. This objection is SUSTAINED. The Court already resolved the “dissipates heat” limitation in granting partial summary judgment in favor of Plaintiff. Docket No. 499 at 15-17. The Court remains convinced that it did not err in resolving this issue, and Defendants have not sought, or provided a basis for, reconsideration. To the extent necessary, the Court's prior discussion of this issue, see id., is incorporated here by this reference.
29. Plaintiff objects to paragraphs 65-67 of Defendants' proposed findings on the basis that Defendants did not disclose the non-infringement argument that indirect infringement was required for this claim. This objection is SUSTAINED. The parties only identified Claims 8, 16, and 30 as the claims for which an indirect-infringement analysis was required. See Docket No. 626 at 2; Docket No. 652 at 2. More fundamentally, both parties agreed that infringement of Claim 25 was resolved by the Court's summary-judgment order, and Defendants never offered a basis for reneging on that agreement. See Docket No. 652 at 1-2; Docket No. 782 at 5. Nor did Defendants preserve this issue by raising it in the proposed pretrial order. See generally Docket No. 493-1.
30. Plaintiff objects to paragraphs 76 and 84 of Defendants' proposed findings on the basis that they rely on expert testimony from Steve Cohen and Brandon Cohen. As to paragraph 76, the objection is SUSTAINED. Brandon Cohen offered the cited testimony at the willfulness trial as evidence of Defendants' state of mind as to infringement. However, because Brandon Cohen has not been accredited as an expert, he cannot give an infringement opinion in the manner of an expert. As to paragraph 84, the objection is OVERRULED. Here, Brandon Cohen is only testifying about how his company's products could be connected to a junction box. This requires no scientific or technical expertise, only familiarity with the Accused Products and with junction boxes. The Court believes this is an appropriate subject for lay witness testimony.
31. Plaintiff objects to paragraphs 79-81 of Defendants' proposed findings on the basis that Defendants never disclosed their contention that there are relevant differences in the “plurality of elements” limitation in different claims. This objection is SUSTAINED. Bretschneider's report analyzed both “sets” of “plurality of elements” limitations in the same manner. Ex. 266 ¶¶ 201-07. To the extent Bretschneider offered two separate analyses, one for each “set” of limitations, that analysis is inconsistent with Bretschneider's report and thus improper. However, the Court does not find Defendants' argument persuasive, even if it is appropriately considered.
32. In this Order, the Court relies only on admissible evidence. All objections to the evidence relied on this Order not already addressed are OVERRULED, at least for the limited purpose for which the Court uses the evidence.
C. Witness Credibility
33. The Court finds James Benya's testimony generally credible, based on a number of factors, including the depth of his experience in the relevant industry and in the relevant scientific field and his demeanor while testifying. The Court does not find that any health issues impaired the credibility of Benya's testimony. The Court finds that Benya was generally forthright on cross-examination. Although Defendants' counsel objected that Benya was being dilatory to impair their examination, the Court disagrees. Any delay in Benya's answers was very brief and was more appropriately attributable to his age and the nature of Defendants' counsel's questions, many of which were compound, vague and ambiguous, or both. In addition, although Defendants attempted to impeach Benya on a few occasions, the Court finds that the cited testimony reflected either no discrepancy or minor discrepancies between Benya's trial and deposition testimony. Defendants also criticize Benya for failing to sufficiently examine the Accused Products. However, although the Court finds that these criticisms have some limited merit, the Court finds that Benya's examination was generally sufficient. Both sides offered exhibits documenting the layout and design of the Accused Products, as well as offering the products themselves; Plaintiff did not need to rely on Benya's examination to establish that. Instead, Plaintiff relied on Benya primarily to explain that evidence, to provide background about the technology, and to provide testimony linking the other evidence to the infringement analysis. This reduces the significance of a firsthand examination of the Accused Products. This, however, does not mean that the Court was persuaded by every statement made by Benya; some of the specific points made by Benya are addressed more thoroughly elsewhere in this Order.
Defendants rely on a statement in the Court's findings and conclusions from the willfulness trial that little weight was given to Benya's testimony on infringement. Docket No. 739 ¶ 23. That determination is not inconsistent with the points expressed here. In the willfulness trial, the Court assumed infringement at the request of the parties and gave Benya's testimony no weight because infringement was not at issue. See id. The Court's previous findings and conclusions did not reflect a view that Benya did not testify in a credible manner.
34. However, the Court finds Alan Goedde's testimony largely not credible. First, although the Court has no doubt of Goedde's expertise as an economist, the Court does not find that Plaintiff offered persuasive evidence that Goedde had economic experience related to either this industry (broadly defined) or a similar one. This is certainly not fatal; among other things, Goedde is not expected to be a technical expert. However, Plaintiff offered insufficient evidence that Goedde was given sufficient information from other witnesses or sources about the relevant technology or the particular market in which the parties compete. The Court has also taken into consideration the fact that the individuals Goedde spoke to were generally affiliated with Plaintiff, which has an obvious interest in the outcome of this litigation. Taken together, these factors somewhat reduce the weight assigned to Goedde's testimony. Second, Goedde's demeanor while testifying somewhat undermined his credibility in that several of his answers were excessively argumentative or evasive. Third, Goedde made some implausible arguments during his testimony, including some that were inconsistent with his prior testimony. For example, Goedde refused to admit that his reasonable royalty calculation equated to 100 percent of Plaintiff's profits and claimed that the two values just happened to be the same. See TR3 at 159:23-162:2.
35. The Court reaches a similar conclusion as to the testimony of Steve Cohen, who was not a credible witness. Steve Cohen is ELCO's president. TR3 at 24:11-14. However, when questioned by Plaintiff's counsel, Cohen claimed not to recall events that one would reasonably expect he would recall, occasionally refusing to answer questions or make admissions unless confronted with a document. In addition, his answers were often evasive, argumentative, or implausible. Steve Cohen made some material admissions against interest, or other statements, on which the Court relies. However, the Court declines to credit most of Steve Cohen's testimony.
36. The Court finds Michael Danesh generally credible although it finds that the parties' examination of this witness frequently addressed irrelevant or immaterial issues.
37. The Court reaches a mixed conclusion about the credibility of Eric Bretschneider. On the one hand, the Court has a favorable impression of his experience and his demeanor while undergoing cross examination. On the other hand, some significant portions of his direct testimony were conclusory or generic. In addition, some significant portions of his direct testimony reflected Bretschneider agreeing with arguments made by Defendants' counsel (or agreeing with statements from the demonstratives) without offering opinion or analysis. Bretschneider also was not able to recall which prior art references were included in each of the obviousness combinations about which he was retained to give testimony. See TR4 at 143:23-144:8. This issue diminishes Bretschneider's credibility, albeit only slightly. For the foregoing reasons, the Court credits certain parts of Bretschneider's testimony but not others. It credits each of the portions relied on in this Order; it does not credit, or does not find material, the portions not relied on.
D. Invalidity
Technological Background
38. A junction box is a safe place to couple the wires to electrical power. TR4 at 153:19-22. One example of a junction box is a 4-0 junction box, which is disclosed in the patent. Id. at 153:23-25. The building codes require that the box be closed if a connection is made inside it. Id. at 154:1-7. To the extent the junction box contains any holes, the building codes limit the size of those holes. Id. at 154:8-11. The junction box limits air flow. Id. at 154:14-17.
39. One important consideration in designing an LED lighting device is dissipating the heat generated by the LED away from the LED, which is called thermal management. Id. at 149:24-150:4. The predominant manner for dissipating heat is through convection, that is, using air flow to carry away the heat; radiation is usually a secondary consideration. Id. at 150:5-9. Dissipation occurs via convection when air flows across the heat sink of a lighting device. Id. at 150:10-13. The amount of heat dissipated by convection depends on the area for the convective heat transfer, the temperature, and the rate of air flow. Id. at 150:14-18. When possible, a person skilled in the art would understand that thermal management systems should be designed with features that will minimize the resistance to air flow. Id. at 150:19-23.
Level of Ordinary Skill in the Art
40. The Court credits Bretschneider's testimony that a POSITA is an engineer with two or three years of experience in designing recessed LED lighting fixtures, including knowledge of the relevant standards applicable to recessed lighting fixtures, particularly LED lighting fixtures. TR4 at 121:20-25.
Scope and Content of the Prior Art
41. The Court finds that the IMTRA products relied on by Defendants, the Gifford reference, and the Kim reference are all prior art to the claimed invention. Indeed, this does not appear to be disputed. See, e.g., Docket No. 815 ¶¶ 38-50; see also Docket No. 816 ¶¶ 18-26 (reviewing the evidence).
42. Plaintiff proffered credible evidence that, before the DRD2 came on the market, there was no other product that could be recessed inside a junction box by pairing with the tabs of a junction box. TR1 at 75:5-9.
43. The IMTRA Hatteras product, as Bretschneider noted, was not designed to be mounted to a junction box, but to mount directly to the ceiling with screws. TR4 at 159:4-19. However, Bretschneider offered testimony that the IMTRA Hatteras product contains holes in the housing for screw mounting and that a POSITA would know that those holes could be aligned with the tabs in a standard junction box. Id. at 119:20-24. The Court does not find that Defendants have proven the IMTRA Hatteras product includes a plurality of elements positioned so as to align with corresponding tabs of a junction box. Although there was testimony that the Hatteras product could somehow be used with a junction box, that does not mean the Hatteras product has a plurality of elements positioned so as to align with the junction box. In addition, the holes of the IMTRA Hatteras product were not designed to be used with the tabs of any junction box. Even in its narrowest formulation, this limitation requires that the plurality of elements be “positioned . . . so as to align” with the corresponding tabs of the junction box not merely that the plurality of elements “happens to align” with the tabs or that the plurality of elements “could be made to align” with the tabs by a sufficiently skilled artisan. See, e.g., '266 Patent at Claim 26 (emphasis added). Even if the fact that the IMTRA Hatteras product's elements were not positioned for the purpose of aligning with a junction box is not dispositive, it weighs heavily against a finding that the Hatteras product meets the “so as to” portion of this limitation. In addition, Defendants have not corroborated Bretschneider's testimony with persuasive evidence of a junction box that would fit with the IMTRA Hatteras product. Cf. Docket No. 499 at 20 (reaching a similar determination at summary judgment, and finding that “[a] review of Imtra 2011 and Imtra Hatteras (as well as Imtra 2007) reveals no disclosure of arranging mounting holes of the disclosed recessed lighting product so as to align with the tabs of a standard junction box, and ELCO has presented no actual evidence of a specific standard junction box where the mounting holes would indeed align”). That finding remains supported by the present record: Bretschneider merely testified that it “would . . . be within the skill of a [POSITA] to figure out how to either create or use [the] holes [of the IMTRA Hatteras product] in a way that they could align with a standard junction box.” TR4 at 120:18-23. Accordingly, the Court finds this aspect of Defendants' position unpersuasive.
44. Brandon Cohen expressed the opinion that the holes on the IMTRA Hatteras product aligned with the tabs of another device that he identified as a junction box. TR2 at 58:7-10. He explained this testimony by noting that the tabs of the junction box and the holes on the IMTRA could be used together by screwing the IMTRA in from under, putting a bracket on the product, using a different junction box entirely, or using trim. Id. at 75:9-20. Brandon Cohen's opinion that the tabs and holes aligned also rested on the reasoning that a line could be drawn between the holes of the junction box and the holes of the product when both pieces were held up in the air by a person; he also testified he was unaware of someone selling an IMTRA product to do that. TR2 at 65:166:16. The Court is not persuaded that two pieces “align” simply because one can draw a line between the holes of one and the holes of the other when they are held up in the air. In addition, although the Court found Brandon Cohen's testimony credible for purposes of the willfulness trial, that goes to Brandon Cohen's belief that the Asserted Patent was obvious, not whether the Asserted Patent actually is obvious. Although the Court agrees that Brandon Cohen's opinion is not inadmissible simply because it has been offered by a lay witness, the fact that Brandon Cohen has not been qualified as an expert in this matter, and the fact that Bretschneider did not offer an opinion substantially similar to Cohen's, substantially diminishes its weight. Also, Brandon Cohen's affiliation with a party to this matter is a factor that the Court has considered.
45. Brandon Cohen's opinion that the Asserted Patent “describe[s] the IMTRA product,” and his opinion that the Asserted Patent more readily describes the IMTRA product than Defendants' product, also does not alter the analysis. See TR2 at 39:6-10. In addition to the factors identified in the previous paragraph, this testimony is simply too general to be useful here, even though it was persuasive in evaluating willful infringement.
46. Braitmayer testified credibly that the Hatteras product disperses heat to the air behind it. See Docket No. 798-1 at 33-34. Braitmayer also testified credibly that the product had ridges to get more of the housing's surface area exposed to air and to enhance heat dissipation. Id. at 58. Bretschneider offered the opinion that Braitmayer was not a person of ordinary skill in the art and does not have the proper training and background to make “any informative statements or draw any correct opinions” about the thermal management of the IMTRA Hatteras product. TR4 at 159:25-160:5. However, the Court finds that this is diminishes the weight of Braitmayer's testimony only slightly; the Court is inclined to credit it. It is also significant that Braitmayer was the CEO and president of IMTRA and had been involved in the design of lighting products in the past, even though he had not taken courses in engineering. See Docket No. 798-1 at 10:2-18, 13:12-25.
47. Gifford disclosed a surface mounted light, and in particular, disclosed mounting a light to a junction box. TR4 at 116:22-24. However, no testimony was offered that Gifford disclosed mounting in the manner required by the claims, that is, via a plurality of elements positioned at the appropriate place on the device and aligning with the tabs of an appropriately sized junction box. Thus, the Court finds insufficient evidence that Gifford discloses this limitation. Even if it had, Defendants did not offer sufficiently persuasive evidence of a motivation to combine Gifford with the IMTRA Hatteras product, or other references. Bretschneider testified that a POSITA would combine the IMTRA Hatteras product with Gifford because both teach a ceiling mounted light source. TR4 at 117:4-8. Bretschneider also testified that a POSITA would know how to combine these references to create something that's going to mount to a junction box or inside a junction box because the housing of the IMTRA Hatteras product is very close in shape and format to the Gifford adapter. Id. at 121:8-14. Although this testimony carries some force, the Court ultimately does not find evidence of a motivation to combine under the clear-and-convincing evidence standard. As already noted, certain factors undermined Bretschneider's credibility as a witness. The fact that both are ceiling mounted light sources is insufficient: “assertions that the references were analogous art . . . without more, is an insufficient articulation for motivation to combine.” Sisvel Int'l S.A. v. Sierra Wireless, Inc., 82 F.4th 1355, 1364 (Fed. Cir. 2023). Bretschneider's testimony that the products were very close in shape and format comes closer to the mark, and if buttressed by appropriate detail and supporting evidence, might have been persuasive. However, as the testimony was presented, there was insufficient detail about how the products were similar in shape and format and how those similarities would have motivated a POSITA to combine the references to clearly convince the Court that an appropriate motivation to combine exists here.
48. The analysis as to the Kim reference is similar. The Court has not been able to locate any testimony suggesting that Kim could mount inside a junction box. But even if such testimony had been offered, there was certainly no testimony that Kim satisfied the “plurality of elements” limitation. In addition, Bretschneider again provided insufficient evidence of a motivation to combine. He testified that a POSITA would combine Kim with the IMTRA Hatteras product and/or other references because “it's a puck light,” which is “a common shape and format for a light source” and because it “was a module that was meant to plug into other things.” TR4 at 115:14-20. For similar reasons as before, the Court is not persuaded that a motivation to combine exists simply because the products are lights with the same general shape, without more. Moreover, although Bretschneider noted that the product was a module that could plug into other things, there was insufficient evidence that any of those “other things” would be relevant to the limitation at issue.
49. Defendants also rely on Chip Israel's testimony that the “different ways to secure a light fixture to a junction box such as using tabs” are “common industry knowledge.” TR1 at 58:7-10. The Court does find that securing a light fixture to a junction box is part of the prior art. However, the fact that something is known in the industry-or even commonly known-is not sufficient to show obviousness, without more. As explained elsewhere, Defendants have not made a sufficient showing that a POSITA would be motivated to use this industry knowledge to modify the IMTRA Hatteras product.
Differences Between the Claimed Invention and the Prior Art
50. Consistent with the foregoing, the Court finds that none of the prior art references relied on by Defendants discloses the “plurality of elements” limitation. The Court does find that the prior art includes generally securing a light fixture to a junction box.
Bretschneider's Obviousness Opinion
51. Bretschneider testified that a POSITA was “gonna take the concept of the [IMTRA Hatteras] product and then they're gonna design based on that concept,” and that a POSITA would “do it from scratch.” TR4 at 123:14-20. Bretschneider also testified that it would “take virtually no experimentation” to figure out how to align those holes with the appropriate mounting of a junction box. Id. at 123:21-25; accord, e.g., TR4 120:18-23, 121:3-14, 122:21-24 (noting that a POSITA would know how to align the holes on something like the IMTRA products with the appropriate junction box). Plaintiff criticizes Bretschneider for focusing on what a POSITA could do rather than what he or she would do. The Court does not rely on this basis for rejecting Bretschneider's testimony. However, for the other reasons stated in this Order and based on the other pieces of evidence cited here, the Court does not find Bretschneider's testimony sufficiently compelling to show obviousness by clear and convincing evidence.
52. As an additional reason for not crediting Bretschneider's obviousness opinion, the Court finds Bretschneider's opinion that a POSITA would be motivated to modify the IMTRA products to satisfy the “plurality of elements” limitation unpersuasive. For one thing, Bretschneider testified that lighting engineers are “looking for inspiration,” “[t]heir job is to come up with new designs for products,” and they go to trade shows “looking for that inspiration . . . [t]rying to get ideas for a new product.” TR4 121:15-122:20. The Court agrees with Plaintiff that this is a generic motivation that could apply to product designers and engineers in almost any industry. This alleged motivation to combine is unpersuasive because, among other things, it is not sufficiently tethered to the features of the IMTRA prior art. ActiveVideo Networks, Inc. v. Verizon Commc'ns, Inc. is instructive. 694 F.3d 1312, 1328 (Fed. Cir. 2012). There, the Federal Circuit affirmed the grant of a judgment of no obviousness as a matter of law because the defendant's expert's “testimony [was] generic and bears no relation to any specific combination of prior art elements.” This aspect of Bretschneider's testimony was also generic and unrelated to any specific prior art elements or combinations thereof. Moreover, ActiveVideo determined it was appropriate to grant a judgment of no obviousness as a matter of law; even if Bretschneider's analysis is not deficient enough to meet that standard, the Court now sits as a factfinder and has more leeway to reject evidence it finds insufficiently credible to satisfy the clear-and-convincing-evidence standard.
53. As an additional reason for not crediting Bretschneider's obviousness opinion, the Court finds that the IMTRA Hatteras could, and was designed to, simply be screwed into the ceiling. The Court does not find it has been proven by clear and convincing evidence that virtually no experimentation would be necessary to mount the IMTRA products in a standard junction box. But even if Bretschneider is correct that no experimentation would be necessary, the Court finds that the additional expense, time, labor, and materials necessary to mount the IMTRA Hatteras product in a junction box would still provide a POSITA with reason not to do so. Bretschneider's analysis assumes without credible supporting evidence that a POSITA would be “designing a product based on IMTRA and [would] want to mount it to a junction box” but is simultaneously “not going to know ahead of time how [the product is] installed.” TR4 at 145:8-12. The Court finds this line of reasoning implausible and, again, unsupported by corroborating evidence.
54. As an additional reason for not crediting Bretschneider's obviousness opinion, he agreed that a person of ordinary skill in the art would understand that changing the orientation and/or mounting location of a lighting fixture is not a trivial matter. Id. at 152:1-153:18. He also acknowledged that, for most fixtures, the orientation of an LED lighting device affects the air flow and subsequent dissipation of heat. Id. at 150:1-4. In addition, he conceded that changing the orientation of the fixture can also have a tremendous impact on the temperature. Id. at 150:5-7. Next, he testified that differences in mounting locations for an LED light can also impact heat dissipation. Id. at 150:8-10. Finally, he testified that a person of ordinary skill in the art would understand that changing the orientation or mounting location of a fixture could result in different and potentially unsafe operating temperatures. Id. at 150:11-24. The Court finds that, because the functioning and safety of the fixture depend significantly on its orientation and mounting location, differences between the claimed invention and the prior art that affect the device's orientation and mounting location are particularly significant.
55. The analysis in the preceding paragraph is not altered because Bretschneider also testified that the junction box itself would limit air flow and the insulation would block air flow altogether. TR4 at 158:11-17. Although Defendants are correct that Bretschneider never testified that concerns about air flow and heat dissipation would be significant for all devices, he never suggested that these concerns about air flow and heat dissipation would not apply to low-voltage devices like Hatteras. See id. at 158:9-25. In addition, this testimony does not address the heat dissipation issue. Nor is the analysis different because Bretschneider testified that the IMTRA Hatteras product disperses heat behind it and also to the front. Id. at 159:20-24. Even if changing the orientation or mounting location would not change the general direction(s) in which the IMTRA Hatteras product disperses heat, that does not undermine the Court's finding that a POSITA would not generally be motivated to alter the orientation or mounting location because other changes in heat dissipation could adversely affect the functioning or safety of the lighting system.
56. The Court is also unpersuaded that the history of recessed lighting products in any way supports Defendants' position that the claimed invention is obvious. See TR4 at 111:18-114:17. The fact that recessed lighting systems, even those with LEDs, are well known is not material. The fact that junction boxes are well known in the prior art is ultimately not material either. See TR4 at 118:16-119:9. Even if junction-box mounting in general was well known, it does not follow that the “plurality of elements” limitation was also well known. In addition, even when “all claim limitations are found in a number of prior art references, the burden falls on the challenger of the patent to show 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.” Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348, 1361 (Fed. Cir. 2007). The Court is not persuaded that Defendants have made those two showings.
57. Defendants rely on KSR Int'l Co. v. Teleflex Inc., but their reliance is misplaced. 550 U.S. 398 (2007). It is true that “[w]hen there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue the known options within his or her technical grasp.” Id. at 421. Defendant has shown, and the Court finds, that mounting a light in a junction box would be within the technical grasp of a POSITA. But Defendants have not shown that there was a problem with the IMTRA Hatteras reference (or other prior art): the IMTRA Hatteras could screw in and did not need to be mounted. Nor have Defendants shown that there was a design need or market pressure pointing in this direction. Even if a problem had existed, Defendants have not shown that there were a finite number of identified solutions a POSITA would be likely to use. Defendants have also not shown that mounting the light in a junction box would be “predictable” given the evidence that such a change could cause problems with air flow or thermal management.
58. For similar reasons, Defendants' reliance on Randall Manufacturing v. Rea is misplaced. 733 F.3d 1355 (Fed. Cir. 2013). Randall held that a “combination of familiar elements according to known methods, each performing the same function it had been known to perform, yielding predictable results” is obvious. Id. at 1363 (quoting KSR, 550 U.S. at 416-17) (cleaned up). The Court agrees with Defendants that mounting something inside a junction box may be a familiar element. However, Defendants have not convinced the Court that any “known method” encouraged combining junction-box mounting with the other aspects of the invention. As before, the Court is not persuaded that junction-box mounting would have yielded predictable results. And Plaintiff is correct that Defendants have not sufficiently shown that junction boxes were used for housing recessed lights or for other functions beyond mounting surface mounted lights below and into the room air. See, e.g., TR4 at 116:22-24 (describing prior art using a junction box for a surface mounted light).
59. As an additional reason for not crediting Bretschneider's obviousness opinion, the Court is persuaded by the Federal Circuit's analysis of this issue in the IPR proceedings. In those proceedings, Defendants raised a “challenge[] [to] the Board's finding that a skilled artisan would not have been motivated to modify the Imtra products to fit within a standard junction box.” AMP Plus, Inc. v. DMF, Inc., 2022 WL 16844516, at *4 (Fed. Cir. Nov. 10, 2022). The Federal Circuit affirmed the PTAB's analysis which “noted [that] the Imtra products contain screw holes and can be mounted directly to the ceiling.” Id. It also rejected Defendants' argument, and Bretschneider's analysis, “as reflecting ‘faulty reasoning' that ‘a POSITA would seek to incur additional expense in time, labor, and materials to mount an Imtra fixture in a junction box, rather than simply screw it into the ceiling.'” Id. (quoting AMP Plus, Inc. v. DMF, Inc., No. IPR2019-01094, 2020 WL 6811241, at *22 (P.T.A.B. Nov. 19, 2020)). This portion of the Federal Circuit's ruling does not control the outcome here. Stare decisis generally does not apply to points of fact (as opposed to points of law). See Natera, Inc. v. NeoGenomics Lab'ys, Inc., No. 2024-1324, 2024 WL 3381916, at *4 (Fed. Cir. July 12, 2024) (noting that “[o]bviousness is a question of law based on underlying factual determinations” and that “[w]hether a skilled artisan would have been motivated to combine references is a question of fact”); Mendenhall v. Cedarapids, Inc., 5 F.3d 1557, 1570 (Fed. Cir. 1993) (quoting 1B James W. Moore, Moore's Federal Practice, ¶ G401 (2d ed. 1993)) (holding stare decisis “deals only with law, as the facts of each successive case must be determined by the evidence adduced at trial”). In addition, the Court has already ruled IPR estoppel does not bar consideration of grounds 3, 6, and 10; that analysis is incorporated here by this reference. See Docket No. 558 at 5-9. However, the Court does find the Federal Circuit's analysis highly persuasive. Here, the Court is confronted with nearly the same issue addressed by the Federal Circuit. Plaintiff has presented credible evidence that the IMTRA Hatteras product, like the IMTRA products reviewed by the PTAB and the Federal Circuit, “was not designed to be mounted to a junction box, but to mount directly to the ceiling with screws[.]” TR4 at 159:5-8. The question is whether prior art designed in that manner renders the claimed invention obvious, and the Federal Circuit's line of reasoning in considering this issue is highly instructive now.
60. The Court acknowledges it previously concluded that “the Imtra Hatteras product is substantively, germanely different for grounds 3, 6, and 10 ....” Docket No. 558 at 9. However, this conclusion does not have the broad scope Defendants contend. The Court only concluded that the IMTRA Hatteras product was different because it “is a single prior art reference that requires no combination,” not because the analysis of the “plurality of elements” limitation was different. The Court finds that, with respect to the “plurality of elements” limitation, Defendants' present obviousness arguments are not materially different than those rejected by the PTAB and Federal Circuit during the IPR proceedings. Bretschneider was unable to identify a difference between those two arguments, which supports the view that they are not materially different:
Q. Okay. Did you disclose in your opinion in your report anything that the IMTRA Hatteras product would do to solve the faulty reasoning that the Federal Circuit identified here in the IPR?
A. Well, the faulty reasoning is [on the part of] the Federal Circuit in my opinion because the Federal Circuit is saying that the additional expense, time, labor and materials to mount the IMTRA fixture to a junction box seems to imply that I'm going to add material to IMTRA, and then add additional screw holes to IMTRA to make it mount to a junction box. ....
Q.... I'm going to change my question. As you sit here right now, do you know if your report identified any reason why the IMTRA Hatteras physical product would show anything different to change the Federal Circuit's decision?
A. Uh, since you're not giving me the time, no, I don't.
Q. And by the time is you need time to review your report; correct?
A. If you gave me the time to review my report, I might be able to give you a different answer.
Q. So I just want to be clear, as you sit here now, you don't know whether or not your report identifies anything different about the physical IMTRA Hatteras product as compared to the IMTRA 2011 that might change the Federal Circuit's decision. Is that true?
A. I'll say you haven't given me time to refresh my memory.TR4 at 144:21-147:19.
Miscellaneous
61. Defendants argue that Plaintiff and its witnesses are unable to explain how the Hatteras product differs from the claimed invention. This argument is unpersuasive. First, it is Defendants' burden to show that the Hatteras product renders the claimed invention obvious, not Plaintiff's burden to identify differences. Second, the testimony relied on generally asked the witness whether the Asserted Patent and Hatteras product had certain similarities, rather than challenging the witness to identify differences between the two. Danesh Depo. at 374:24-380:14. Finally, the witness noted that he was unfamiliar with the devices he was being shown. See, e.g., Id. at 376:7-14.
62. Defendants have noted that the U.S. Patent and Trademark Office did not consider the IMTRA Hatteras prior art. “[N]ew evidence supporting an invalidity defense may ‘carry more weight' in an infringement action than evidence previously considered by the PTO.” Microsoft Corp. v. I4I Ltd. P'ship, 564 U.S. 91, 110 (2011). The Court has considered this factor. However, given the other evidence and the difficulty of Defendants' burden of proof, the Court does not find that this factor significantly changes the result of the analysis.
63. The parties dispute how important the “plurality of elements” limitation was in obtaining the Asserted Patent, with Defendants contending that the “closer to” limitation was far more significant. Compare Docket No. 816 ¶¶ 5-10 with Docket No. 824 at 12-14. Neither party has cited authority giving more or less weight to a claim limitation in the obviousness analysis depending on how much the examiner analyzed it. This is especially true, where all parties agree that the USPTO did not consider the prior art Defendants rely on during prosecution. The Court's analysis would be the same no matter which limitation was more significant to the examiner.
E. Infringement
“Coupled To” Limitation
64. Claim 1 requires that “the light source module and the driver [be] positioned inside the first cavity while being coupled to the heat conducting closed rear face of the unified casting ....” '266 Patent at Claim 1.
65. At trial, Benya reviewed an ELL Version 1 light source. TR3 at 28:22-25. He testified that screws go through holes in the reflector through the driver enclosure and all the way down into the closed rear face. Id. at 30:7-14. He testified that when the screws were tightened up, all the elements were held in place. Id. at 30:13-14. As to the light source module, he testified that the light source module was sitting in below the reflector and on top of the thermal paste, both of which were part of the “stack” of elements held together by the screws. See id. at 29:10-20. As to the driver, Benya noted that the driver enclosure was coupled to the rear face and that the driver was coupled to the driver enclosure. Id. at 30:21-31:9. Benya testified that the Version 2 product was “essentially” Version 1 with a cap and was not materially different. Id. at 32:10-33:1. Benya also testified that, like Version 2, none of the changes introduced in Version 3 were material to the “coupled to” limitation. Id. at 34:11-35:6.
66. Defendants argue that Benya's analysis does not apply to Version 3, but the cited testimony does not support their position. In the cited portion of the transcript, Benya stated that he understood Version 3 involved “a little bit of changing . . . that . . . eliminates the . . . need for paste,” so he “would admit that in Version 3, paste is possibly not used,” explaining that he was “not sure because [he would] have to take one apart and see if there is any paste there. TR3 at 74:11-18. However, the reasoning supporting Benya's analysis does not rely on the presence of thermal paste. Indeed, by removing one of the elements in the “stack,” the coupling between the rear face and the driver enclosure and light source module is arguably even more direct. Ultimately, although Benya's concession that he did not personally disassemble a Version 3 module slightly diminishes the credibility of his testimony, the Court still credits it because he looked at a Version 3 module disassembled by someone else. See id. at 74:21-25:1, 89:16-20, 98:3-7. It is also significant that Defendants have not explained what new information Benya would have obtained by disassembling the module himself. The Court is also unpersuaded that differences between the Version 3 module and the prior versions leaves Benya with no foundation to opine about whether Version 3 infringes. Again, Benya examined the Version 3. Although Version 3 is different in that the LED's position was altered to avoid the “closer to” limitation, no evidence in the record suggests that this difference was material to the “coupled to” analysis. Indeed, the Court finds the evidence that the relevant portions of the Version 3 module were joined by screws to be entitled to greater weight than the relative positions of the portions in applying this limitation.
67. Defendants also object that Benya did not study the electronics of the driver and did not analyze whether the isolation of the driver through the potting material helps the module generate more lumens. See TR3 at 81:16-20, 85:14-19. Although the Court has considered this factor, it does not assign it much weight. In evaluating whether the driver is coupled to the rear face, the Court finds that the relationship between the driver (and its enclosure) and the casting is more important than the internal structure of the driver. Accordingly, this critique does not alter the result of the analysis.
68. The parties dispute whether the reasoning underlying Bretschneider's analysis of the “coupled to” limitation as applied to the IMTRA Hatteras product supports Plaintiff's position. Compare Docket No. 815 ¶ 65 with Docket No. 823 at 8. The Court does not believe Bretschneider's analysis, which concerned another device, is ultimately material here.
69. Defendants presented testimony that the driver in the Accused Products is surrounded by a potting compound or epoxy which is then enclosed in a plastic casing. See TR2 at 43:17-21; TR3 at 84:13-19. Ultimately, the Court finds this argument unpersuasive because, even if the driver is not directly coupled to the rear face, it is coupled to its enclosure, which is in turn coupled to the rear face. Nor is the Court persuaded that the presence of potting compound or epoxy between the driver and its casing makes a material difference. The potting material only homogenizes the heat distribution throughout the circuitry of the driver, rather than disrupting the coupling between the rear face and the driver. See TRI at 117:24-118:1. Assuming without finding that the driver uses the potting material for heat distribution and is thereby thermally de-coupled from the casing, the Court finds, for the reasons already stated, that thermal coupling is not required. Defendants respond that the plastic casing and the potting material are not embodiments shown in the patent: however, this criticism does not significantly diminish the force of the Court's reasoning because patent claims are not limited to the disclosed embodiments.
For the same reason, the Court does not believe it is material whether Benya appropriately compared the casing in the Accused Product to tire “enclosure” recited in Claim 6 of the Asserted Patent.
Indirect Infringement
70. The Court credits Benya's testimony that safety codes, and the appearance of the ELCO ELL Module, require the use of a trim with that product. TR3 at 39:2440:4. However, Benya did not testify more specifically that an infringing trim, that is, a trim meeting the additional requirements or Claim 16, would be required by any code. The Court also finds that Defendants' catalog shows only 4 inch and 6 inch trims and housings being used with ELL modules. See, e.g., Ex. 470 at 3, 9, 11, 15, 17-21. The Court also finds that Defendants' records reflect sales of 4 inch housings and 6 inch twist and lock trims. See Ex. 439; see also Ex. 470 at 11 (explaining product codes); Ex. 510 at 2 (same). Plaintiff has proffered a number of invoices showing that Defendants sold their modules together with twist-and-lock trims, 4-6 inch housings, and junction boxes. See Ex. 478. However, Plaintiff has not addressed whether any portions of these catalogs or records (and if so, which) come from the relevant time period after Defendants became aware of the Asserted Patent.
71. During the preliminary-injunction proceedings, Steve Cohen declared that Defendants earned "about (Redacted) of the total profits from the ELL module sales" attributable to trims and accessories that customers purchase in connection with the ELL modules. Ex. 611 ¶ 19.
72. Although Steve Cohen claimed (i) that he did not know whether any customers used the housings at issue with the ELL Module or (ii) that he believed there was a very low probability of this, the Court does not credit this testimony in light of the Court's concerns about Steve Cohen's credibility. TR4 at 70:5-15. Indeed, Steve Cohen was confronted at trial with a prior inconsistent statement he made to a manufacturer, wherein Steve Cohen stated that only a small part of Defendants' sales were associated with retrofit applications not involving the use of housings or other accessories. See TR4 at 62:3-68:23. The Court does not find Steve Cohen's denials of the inconsistency or of the accuracy of his prior statement persuasive.
73. Benya “did not offer an opinion” that the “ELL Module can't be used . . . with a trim that's not twist and lock.” TR3 at 53:6-11. Indeed, he recognized that the module can be used with a “push-in” holding mechanism instead. Id. at 56:11-17.
74. Benya did not analyze whether the Accused Products could be used with a light fixture that is nine inches. TR3 at 60:9-11. The Court does not find this evidence material. However, the Court does find it material that Benya did not proffer testimony quantifying how many of the Accused Products were used with a junction box or with a light fixture between four and eight inches. Id. at 68:12-22.
75. The Court credits Defendants' evidence that the ELL modules have holes that would make them adaptable to some other trims that were available. See TR1 at 123:4-6.
76. The Court generally credits the evidence proffered by Defendants that many of the sales of the ELL module were for use in retrofits and that, in a retrofit application, an already-installed trim would be used rather than one of the infringing trims Plaintiff has identified. See TR3 at 65:5-11, 66:21-24, 67:7-14, 98:8-13.
77. The Court finds that Defendants were on notice of the Asserted Patent on August 3, 2018 but lacked knowledge of the Asserted Patent before that date. See Docket No. 739 ¶ 56. After Plaintiff filed the Complaint in this action, Defendants continued to advertise twist-and-lock trims to be used with the ELL LED Module. TR4 at 39:3-6. Also, in a response to this litigation, Defendants noted that their products “can be installed in recessed housings or [j]unction boxes.” See Ex. 1211. That response denied infringement but did not explain the basis for Defendants' non-infringement position. See id. Defendants' answer and counterclaims are similar, denying infringement without more detailed analysis. See Docket No. 15; Docket No. 18. The Court is not persuaded that the absence of a sufficiently detailed non-infringement analysis in these documents carries much, if any, weight. Given that notice pleading requires only admissions or denials in answers to complaints, the Court would not expect Defendants to set forth a factual basis for their denials in their answer. See Fed.R.Civ.P. 8(b). Likewise, Defendants' public response to the lawsuit was a brief, non-legal document, and the Court is not persuaded that, if Defendants believed they did not infringe, they would necessarily have elaborated on their position in this response.
78. The Court credits Brandon Cohen's testimony that Defendants did not believe their product infringed the Asserted Patent. See TR2 at 42:24-43:25. The fact that Defendants were not successful in persuading the Court of their position is a separate inquiry from whether they knew they infringed. The Court has considered the fact that Defendants did not disclose this non-infringement position before being enjoined. However, given the short period of time between the Defendants becoming aware of the Asserted Patent and the date Defendants were enjoined, the Court assigns this factor limited weight. Furthermore, Plaintiff has not identified an occasion where Defendants had sufficient opportunity and motive to state their non-infringement position such that their failure to make a non-infringement argument at that time would suggest Defendants knew they infringed (or were willfully blind to the possibility of infringement). For the reasons explained elsewhere, Defendants' letter to its sales representatives and its answer do not meet this standard. Defendants' preliminary injunction briefing presents a closer issue, but under the totality of the circumstances, the Court has not been persuaded that its position should change.
The Court believes the relevant time period is between Defendants' knowledge of the patent and the filing of the Complaint. Nationwide, “[d]istrict courts are split on whether the alleged inducer must have had knowledge of the patent prior to the filing of the original complaint.” GoTV Streaming, LLC v. Netflix, Inc., No. 222CV07556RGKSHK, 2023 WL 2627016, at *2 (C.D. Cal. Feb. 16, 2023). At least in this District, however, a claim for willful or induced infringement generally cannot be based on a defendant's mere refusal to stop the allegedly infringing conduct after the lawsuit is filed. “[A] plaintiff must allege in an original complaint that the alleged inducer had knowledge of the patent-in-suit prior to filing,” because “[t]he purpose of a complaint is to obtain relief [for] an existing claim and not to create a claim.” Id. (quoting Ravgen, Inc. v. Quest Diagnostics Inc., 2022 WL 2047613, at *2-3 (C.D. Cal. Jan. 18, 2022)). In addition, “ambushing defendants with willful infringement claims instead of typical cease-and-desist letters would effectively deny defendants the opportunity to meaningfully evaluate and potentially cease the allegedly infringing conduct in order to avoid liability for induced infringement or willful infringement.” Id. “It seems beyond the pale to expect every patent defendant to ‘cease all allegedly infringing conduct once a complaint is filed' to force them to avoid enhanced damages ....” Id. (quoting Ravgen, 2022 WL 2047613, at *3). Thus, “to state a claim for induced infringement, a plaintiff must allege that the alleged inducer had knowledge of the patent-in-suit prior to filing the action, regardless of whether that allegation is made in an original complaint or an amended complaint.” Id. The analysis is the same as to both willful and induced infringement. See id. at *2 n.1 (noting that “[b]oth willful infringement and induced infringement require knowledge of the patent” and noting that Ravgen's “analysis of willful infringement mirrored its analysis of induced infringement”). However, notwithstanding the foregoing, the Court's analysis here gives Plaintiff the benefit of the doubt and assumes that the relevant time period is between Defendants' knowledge of the patent and the date the possibility of infringement stopped due to the injunction.
79. Plaintiff claims that Steve Cohen's purported inability to understand the '266 Patent constitutes willful blindness to the infringing nature of Defendants' activities. See TR4 at 50:19-51:19. The Court disagrees: although the Court has misgivings about Steve Cohen's testimony, his response that he did not understand the patent because he did not speak English well and was not a patent lawyer does not establish either of the elements of willful blindness.
F. Damages
80. The Court finds the majority of the parties' damages evidence not credible, based on the Court's evaluation of the relevant witness' testimony, based on the witness' lack of personal knowledge or based on concerns about the information the witness was able to glean from other sources, or based on the testimony's lack of corroboration by authenticated financial records introduced at trial. For example, the Court incorporates by this reference its discussion of Goedde's credibility.
81. The Court credits the testimony proffered by Plaintiff about Defendants' sales and profits. The record reflects that Defendants sold 4,566 modules (2,872 in 2018 and 1,694 in 2019) and that Defendants earned an average profit of $22.24 in 2018 and $26.35 in 2019 (or $17.80 and $21.08, respectively, if only the modules themselves are considered and the trims and housings are excluded). See TR3 at 145:8-147:25, 226:824; Exs. 478, 611, 1078C. The Court does not credit the testimony about Plaintiff's profits. Although Goedde was permitted to rely on Ex. 1041 in formulating his opinion, that document is hearsay and cannot be relied on to prove that Plaintiff actually made the sales described in that document. Even if Ex. 1041 were admitted, and it was determined that Plaintiff earned an average profit of $37.11 in 2018 and $42.14 in 2019, the outcome of the Court's analysis would be the same.
Although Ex. 1078C is an expert report and not itself evidence, the Court relies on it as a summary of Goedde's testimony and of Ex. 478 and the other evidence in the record.
82. The Court does not credit the evidence proffered by Plaintiff about the DRD2 product's commercial success. See TR3 at 118:15-21. Goedde lacked personal knowledge of Plaintiff's sales numbers, and although he could rely on hearsay evidence in rendering his opinion, that evidence cannot be introduced for the truth of the matter asserted. No witness with personal knowledge about the DRD2 product's commercial success testified, and the evidence Goedde relied on was unsubstantiated.
83. The Court does not credit most of the testimony proffered by Plaintiff about the value of the claimed invention. Although Goedde and Benya opined that the claimed invention was valuable, the Court declines to credit these opinions because, among other things, their reasoning was not adequately explained. Indeed, most of the cited testimony had little to do with the value of the claimed invention. See, e.g., TR2 at 112:2-113:3, 114:7-12, 127:2-136:25, 138:24-143:17; TR3 at 35:7-38:18, 143:7-144:13.
84. The Court credits some of the testimony proffered by Plaintiff about the innovativeness of the invention. Plaintiff offered credible testimony that the DRD2 was innovative insofar as it eliminated the need to build fireboxes, provided versatility of installation, and more generally had advantages over the prior art. TR1 at 32:14-33:2, 34:17-35:8. However, although Plaintiff offered testimony that the OneFrame system, of which the DRD2 module is one part, won an award, there was insufficient testimony linking the award to any patented feature. TR1 at 71:4-18. Although the Court credits Plaintiff's testimony that the DRD2 module was an essential part of the OneFrame system and that the OneFrame system would not have functioned without the module, Plaintiff has still not sufficiently shown that the award was motivated by any patented feature. Id.; Id. at 77:8-17.
For example, Goedde used a demonstrative slide citing material-apparently taken from the Complaint-suggesting that the OneFrame won the award, at least in part, because it eliminated the need for costly fire-boxing. See Ex. 1804 at 7. However, the demonstrative slide was not evidence, the Complaint is not evidence, and there was no testimony from a witness with personal knowledge of the OneFrame and DRD2 on these issues.
85. The Court credits the testimony that Plaintiff has a policy not to license its technology. TR3 at 122:15-22; TR4 at 81:19-82:5.
86. The Court credits the testimony that the parties are competitors. See, e.g., TR3 at 118:10-20. Steve Cohen's denial of this fact was not credible, especially given the similarities in the parties' products. See TR4 at 75:16-21. Defendants' contention that the ELL modules did not represent a significant portion of their overall sales does not alter this finding. Two companies can be competitors in one arena even if they do not compete in others and even if those other arenas are more significant. However, the fact that the parties are competitors does not persuade the Court that every sale made by Defendants is a sale lost to Plaintiff.
87. The Court does agree that licensing to Defendants could have some effects on Plaintiff's sales and customer relationships, although the Court finds that Goedde somewhat exaggerated the severity of these risks. See, e.g., TR3 at 131:24-132:14, 143:7-22, 182:8-24. The Court also notes that Goedde's opinion was not corroborated by evidence supporting the contention that customers would not return to Plaintiff after trying Defendants' products. In general, the Court is also skeptical that, once a customer leaves, they are gone for good.
88. The analysis is similar as to Chip Israel's testimony. See TR1 at 40:1542:6.
89. The analysis is similar as to Danesh's testimony that he would not have accepted a royalty from Defendants less than Plaintiff's own profits. See TR4 at 81:1182:3. The Court does agree that selling the DRD2 did enhance Plaintiff's marketplace stature, but it finds that the dangers of licensing to Defendants were not as severe as Danesh's testimony might suggest. The Court is also mindful that the adversarial, after-the-fact nature of the litigation process can shape witness' views of what offers they would or would not have accepted at the time of the hypothetical negotiation.
90. Along the same lines, the Court does not credit the evidence that Defendants would be willing to pay a high royalty to “open doors” with new customers. For one thing, Plaintiff's damages expert was unable to identify any customers not already purchasing Defendants' other products. TR3 at 195:8-11. Plaintiff's damages expert also could not identify any of Defendants customers who increased their purchases from Defendants as a result of the sale of the Accused Products. Id. at 195:1620. Moreover, the Court is mindful that more than 90% of Defendants' sales were to customers who started purchasing the Accused Products before the '266 Patent issued, and thus not as a result of any infringing conduct. See id. at 190:15-193:20. In general, Goedde's analysis of derivative and convoyed sales appears speculative and insufficiently tethered to the facts of the parties' businesses.
91. The Court does not credit the testimony that Plaintiff was a “specification grade company” while Defendants were a “commodity grade company.” Goedde generally asserted this without providing persuasive evidence or reasoning to show that it was true. See, e.g., TR3 at 130:17-131:1, 139:24-140:7. Chip Israel's testimony was similar. TR1 at 30:24-31:17. In addition, as already noted, there is insufficient evidence that Defendants' infringing conduct did or would cause them to make sales of other products.
92. The Court does not rely on the testimony of Keenley, but even if it did, that testimony would confirm the Court's view that there is insufficient evidence that Defendants used the Accused Products to get other large sales. Keenley was Defendants' outside sales representative, and he did not believe that selling the Accused Products would help Defendants obtain large sales. See Keenley Depo. at 62:10-19. He also testified that he did not believe customers in Southern California would consider it for sales worth hundreds of thousands of dollars, and “didn't even see the value to it and the benefit.” Id. Even if Keenley believed he was getting “huge quotes” from some customers who had previously purchased from Plaintiff, that is not itself sufficient to undermine his other testimony-at least, not under these facts. See Docket No. 725 at 58-62, 67-68. Moreover, although Plaintiff argues Keenley agreed Defendants were trying to “break into” Plaintiff's customers through the infringing conduct, Keenley only agreed that it would be a significant win for him if Defendants were able to sell to Walters. See id. at 58. The Court is not persuaded this testimony is material.
93. Notwithstanding the foregoing, the Court agrees with Plaintiff that the infringing conduct did permit Defendants to make some amount of additional sales of trims and housings to be used with the modules, although there was not sufficient evidence to quantify the extent of this effect. See TR1 at 180:16-19; TR3 at 118:6-14, 232:9-233:8.
94. The Court does not find it to be material whether Defendants copied Plaintiff's marketing catalog or not, or whether those marketing materials made Defendants appear innovative. Nor is the Court persuaded that the marketing materials would have actually made Defendants appear innovative.
95. The Court finds that the ELCO commercial modules are a non-infringing alternative to the infringing residential modules, but that they have a significant disadvantage. Cf. TR3 at 141:10-143:6. The significant disadvantage was that the driver was outside the can; as a result, and because the driver is a heat source, a fire box had to be used. Id. at 142:2-4. However, although the demand for these modules was much smaller than for the residential modules, sales of the commercial modules were still a significant fraction of the sales of the residential modules. Id. at 143:1-4 ($185,000 for the residential modules vs. $27,000 for the commercial modules).
Neither party has addressed whether the ELCO commercial modules were available prior to the date of first infringement, but the Court assumes they are.
96. The Court also notes that, as Defendants continued to develop their modules, the features started to diverge from those of the DRD2 module, including different LEDs, changed potting, an aluminum reflector, a lack of grounding wire, different housing units, higher energy efficiency, and a higher lumen output. See Docket No. 739 ¶ 40. Although these changes do not weigh against a finding of infringement, they do affect the extent to which Defendants made use of the patented invention and the portion of realizable profit attributable to significant features or improvements added by Defendants.
97. The Court does not credit Goedde's testimony that Defendants “poisoned the market for a price rise” and prevented Plaintiff from raising prices even after Defendants exited the market. See TR3 at 129:5-17, 130:8-16, 186:1-3, 186:23-187:6, 188:21-24, 189:10-14.
98. In addition, the Court has previously excluded testimony with respect to whether Defendants' pre-patent product rollout harmed DMF on the basis that damages are unavailable for this time period. Docket No. 652 at 9. The Court does not rely on any such evidence.
99. The Court does not credit the evidence proffered by Plaintiff that Defendants would raise their selling price after entering the license produced by the hypothetical negotiation. This is based on the Court's view of Goedde's credibility as well as the common-sense reasoning that Defendants would be resistant to significantly changing their pricing strategy in the hypothetical negotiation. However, the Court does not agree with Defendants that, in all cases, there must be “credible economic evidence to show the decrease in sales, if any, that would have occurred at the higher hypothetical price.” See Crystal Semiconductor Corp. v. TriTech Microelecs. Int'l, Inc., 246 F.3d 1336, 1359 (Fed. Cir. 2001). The reasoning in Crystal Semiconductor applied to a lost-profits analysis rather than a reasonable-royalty one. However, to the extent Plaintiff offered a lost-profits or price-erosion theory, the Court would agree with Defendants that the absence of credible economic evidence about price elasticity would compel rejection of those theories.
100. The Court agrees with Defendants that Goedde incorrectly assumed that a royalty base could not be used without a pre-existing royalty. TR3 at 173:13-175:1.Defendants are correct that “the classic way to determine the reasonable royalty amount is to multiply the royalty base . . . by the royalty rate,” although Plaintiff is also correct that other methodologies can be used. See Whitserve, LLC v. Comput. Packages, Inc., 694 F.3d 10, 27 (Fed. Cir. 2012). In any event, Goedde's incorrect assumption is one more factor undermining the probative value of his testimony. However, the Court does not agree that the weight of Goedde's opinion is diminished by his inability to quantify the impact of any particular Georgia Pacific factor. See id. at 168:19-169:6. The Federal Circuit only requires “some explanation of both why and generally to what extent the particular factor[s] impact[] the royalty calculation . . . .” Exmark Mfg. Co. Inc. v. Briggs & Stratton Power Prod. Grp., 879 F.3d 1332, 1350 (Fed. Cir. 2018) (emphasis added).
The Court notes, however, that identification of a royalty base and rate is not the only way to compute a reasonable royalty.
101. On many occasions, the parties have made conclusory assertions about the evidence or the conclusions to be drawn from it, citing a large number of exhibits and/or voluminous portions of the trial transcript, without explaining which materials support their assertions and why. To the extent the parties have made arguments or cited evidence not discussed in this Order, the Court finds and concludes that the relevant evidence is not relevant, not credible, not material, not admissible, forfeited or waived, redundant, or some combination thereof.
IV. CONCLUSIONS OF LAW
A. Obviousness
102. A patent claim is invalid as obvious under 35 U.S.C. § 103 “if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains.” 35 U.S.C. § 103. “An obviousness determination requires finding that a person of ordinary skill in the art would have been motivated to combine or modify the teachings in the prior art and would have had a reasonable expectation of success in doing so.” Regents of Univ. of California v. Broad Inst., Inc., 903 F.3d 1286, 1291 (Fed. Cir. 2018) (citation omitted). Obviousness is a question of law. KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 427 (2007). However, “[w]hether a person of ordinary skill in the art would have been motivated to modify or combine teachings in the prior art, and whether he would have had a reasonable expectation of success, are questions of fact.” Id.
103. In addition, certain factual inquiries known as the Graham factors underlie this determination: “(1) the scope and content of the prior art, (2) the differences between the claimed invention and the prior art, (3) the level of ordinary skill in the art, and (4) objective evidence of non-obviousness, such as commercial success, long-felt but unsolved need, failure of others, copying, and unexpected results.” Apple Computer, Inc. v. Articulate Sys., Inc., 234 F.3d 14, 26 (Fed. Cir. 2000) (citing Graham v. John Deere Co., 383 U.S. 1, 17-18 (1966)). The question of obviousness requires an “expansive and flexible approach” in which courts are invited, where appropriate, to look at any instructive secondary considerations that are contained in the fourth Graham factor. KSR, 550 U.S. at 415.
104. “For objective evidence of secondary considerations to be relevant, there must be a nexus between the merits of the claimed invention and the objective evidence.” Volvo Penta of the Americas, LLC v. Brunswick Corp., 81 F.4th 1202, 1210 (Fed. Cir. 2023). “A showing of nexus can be made in two ways: (1) via a presumption of nexus, or (2) via a showing that the evidence is a direct result of the unique characteristics of the claimed invention.” Id. “A patent owner is entitled to a presumption of nexus when it shows that the asserted objective evidence is tied to a specific product that ‘embodies the claimed features, and is coextensive with them.'” Id. (quoting Brown & Williamson Tobacco Corp. v. Philip Morris, Inc., 229 F.3d 1120, 1130 (Fed. Cir. 2000)). “When a nexus is presumed, ‘the burden shifts to the party asserting obviousness to present evidence to rebut the presumed nexus.'” Id. (quoting same). “The inclusion of noncritical features does not defeat a finding of a presumption of nexus.” Id. In addition, “even absent a presumption of nexus, ‘the patent owner is still afforded an opportunity to prove nexus by showing that the evidence of secondary considerations is the ‘direct result of the unique characteristics of the claimed invention.'” Id. (quoting Fox Factory, Inc. v. SRAM, LLC, 944 F.3d 1366, 1373-74 (Fed. Cir. 2019)).
105. Defendants' obviousness case depends on three combinations of prior art references, denoted 3, 6, and 10. Combination 3 consists of the Imtra Hatteras product and the Imtra 2007 catalog. See Docket No. 782 at 22-25. Combination 6 consists of the Imtra 2011 catalog, the Imtra 2007 catalog, the Gifford patent (U.S. Patent No. 9,366,418), and the Imtra Hatteras product. Id. at 25-27. Combination 10 consists of the Imtra 2011 catalog, the Imtra Hatteras product, and the Kim patent (U.S. Patent No. 9,226,661). Id.
106. With respect to these challenges, the parties' dispute focuses on the “plurality of elements” limitation.
107. Defendants have argued that the “plurality of elements” limitations should be considered in two groups. Claim 1 requires that the “unified casting include[] a plurality of elements positioned proximate to the open front face so as to align with corresponding tabs of a standard junction box and thereby facilitate holding the unified casting up against the standard junction box when the unified casting is installed in the standard junction box.” '266 Patent at Claim 1. Claims 19, 21, 25, and 26 require that “the substantially heat conducting unified casting include[] a plurality of elements positioned on the unified casting so as to align with corresponding tabs of a standardsized junction box.” Id. at Claims 19, 21, 25, 26 (underlined portions only present in some claims). Defendants argued that these latter claims only require holes that happen to align with any standard-sized junction box, whereas Claim 1 requires more.
Claim 26 refers to “the” standard-sized junction box, rather than “a” standard-sized junction box, but this is not material.
108. The Court is not persuaded that any difference between these claims is material to the obviousness analysis. No material part of the witnesses' testimony, or the parties' arguments, relied on whether the plurality of elements were positioned proximate to the open front face or whether the plurality of elements would hold the unified casting up against the standard junction box. Nor is the Court persuaded that Claim 1 requires that the claimed device actually be recessed in a junction box. Claim 1 is a system claim that does not claim the junction box as part of the system. Also, it is not a method claim reciting the step of recessing the apparatus inside a junction box. Whether the prior art is recessed in a junction box is significant because the effect of all the “plurality of elements” limitations is to create a system that can be installed inside a junction box. However, the Court's analysis does not assume that being recessed in a junction box is itself a requirement of either set of “plurality of elements” limitations. It is therefore appropriate to analyze all of these claims together. Furthermore, because the Court's analysis does not rest on any of the features distinguishing Claim 1 from the others, the Court notes that the result of its analysis would be the same even if it agreed with Defendants about the distinction between these claims.
109. The Court has considered the scope and content of the prior art, as well as the relevant differences between the prior art and the claimed invention, as further explained in the findings of fact. Defendants only relied on the IMTRA Hatteras product to satisfy the “plurality of elements” limitation. See, e.g., Ex. 1701 at 24, 49, 51 (demonstrative used by Bretschneider during testimony). As explained in the findings of fact, the Court finds and concludes that Defendants have not shown by clear and convincing evidence that the IMTRA Hatteras product satisfies this limitation. In any event, the Court also finds and concludes that Defendants have not shown by clear and convincing evidence that any of the other prior art references mentioned during the trial satisfy this limitation.
110. Even if the Court were to find that the “plurality of elements” limitation was disclosed by one of the references here, the Court finds that Defendants have not made a sufficient showing of a motivation to modify or combine any of the references they have relied upon. Nor does the Court find that a person of ordinary skill in the art would have had a reasonable expectation of success in doing so.
111. The Court has considered the level of ordinary skill in the art, and has noted that a POSITA would have only two or three years of experience.
112. Neither party presented evidence at trial of any objective evidence of obviousness other than Plaintiff's copying arguments. Moreover, it is not necessary to address Plaintiff's copying arguments. Even if Defendants had not copied Plaintiff's product, the claims would not be obvious, for the reasons already explained. The Court is also concerned about the sufficiency of the evidence of a nexus between the copying and the claimed invention and about the consistency between Benya's trial testimony on this point and his expert report.
113. After considering all the factors listed here, and considering the totality of the circumstances, whether cited in this document or not, the Court finds and concludes that Defendants have not shown that the “differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains.” 35 U.S.C. § 103.
114. It is also not necessary to address Plaintiff's alternative argument, that even if other claims are obvious, Bretschneider's obviousness analysis fails as to Claim 6 because it treats the reflector as the inner enclosure.
115. Plaintiff urges the Court to reconsider its prior determination on IPR estoppel and hold that Defendants are now estopped from raising the obviousness challenges at issue. The Court declines this invitation as it did not err in rejecting Plaintiff's position. The Court's analysis of that issue is incorporated here by this reference. See Docket No. 558 at 5-9. In any event, this issue is moot because Plaintiff has succeeded in defeating Defendants' obviousness challenges.
116. Because Defendants have failed to carry their burden with respect to the “plurality of elements” limitation, it is unnecessary to determine whether Defendants have carried their burden with respect to the other elements.
B. Indefiniteness
117. “[A] patent claim is indefinite if, when ‘read in light of the specification delineating the patent, and the prosecution history, [the claim] fail[s] to inform, with reasonable certainty, those skilled in the art about the scope of the invention.'” BASF Corp. v. Johnson Matthey Inc., 875 F.3d 1360, 1365 (Fed. Cir. 2017) (quoting Nautilus, Inc. v. Biosig Instruments, Inc., 134 S.Ct. 2120, 2124 (2014)). “‘Reasonable certainty' does not require ‘absolute or mathematical precision.'” Id. (quoting Biosig Instruments, Inc. v. Nautilus, Inc., 783 F.3d 1374, 1381 (Fed. Cir. 2015)).
118. As the Court noted in connection with the evidentiary matters, it finds and concludes that Defendants' challenge to the term “significantly dissipates” has already been resolved (and need not be addressed again here), and it further finds and concludes that Defendants have forefeited and/or waived their challenge to the term “plurality of elements” several times over.
119. Even if the Court were to consider Defendants' indefiniteness challenges on the merits, the result would be the same.
120. The Court finds and concludes that it did not err in determining that “significantly dissipates” is not indefinite, and its analysis of that issue is incorporated by this reference. See, e.g., Docket No. 266 at 20-24.
121. Defendants' indefiniteness position is also unpersuasive as to the term “plurality of elements.” The thrust of Defendants' argument is that there are hundreds of standard junction boxes, that those junction boxes have mounting tabs in different locations or different distances apart, and that a POSITA would not know all the different sizes of junction boxes. See Docket No 816 ¶¶ 107-09. This does not preclude the scope of these claims from being ascertained with reasonable certainty. Simply put, “breadth is not indefiniteness.” SmithKline Beecham Corp. v. Apotex Corp., 403 F.3d 1331, 1341 (Fed. Cir. 2005) (cleaned up). The fact that the scope of the claim covers many junction boxes, and the fact that a POSITA might have to consult documents rather than their own memory to locate the junction boxes, is not sufficient. This is especially so given that Defendants must prove indefiniteness by clear and convincing evidence.
122. After considering all the factors listed here, and considering the totality of the circumstances, whether cited in this document or not, the Court finds and concludes that Defendants have not show any claim to be indefinite.
C. Direct Infringement
123. “To prevail, the plaintiff must establish by a preponderance of the evidence that the accused device infringes one or more claims of the patent either literally or under the doctrine of equivalents.” Bayer AG v. Elan Pharm. Rsch. Corp., 212 F.3d 1241, 1247 (Fed. Cir. 2000). “[A] determination of patent infringement is a two-step analysis.” Genentech, Inc. v. Wellcome Found. Ltd., 29 F.3d 1555, 1561 (Fed. Cir. 1994). “First, a claim must be interpreted to determine its proper scope and meaning; second, it must be determined whether an accused device or process is within the scope of the properly interpreted claim.” Id.
124. “To establish literal infringement, every limitation set forth in a claim must be found in an accused product, exactly.” Southwall Techs., Inc. v. Cardinal IG Co., 54 F.3d 1570, 1575 (Fed. Cir. 1995). “Under the doctrine of the equivalents, ‘a product or process that does not literally infringe . . . the express terms of a patent claim may nonetheless be found to infringe if there is ‘equivalence' between the elements of the accused product or process and the claimed elements of the patented invention.'” Duramed Pharms., Inc. v. Paddock Lab'ys, Inc., 644 F.3d 1376, 1380 (Fed. Cir. 2011) (quoting Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17, 21 (1997)).
125. “[A] patent is infringed if a single claim is infringed.” Grober v. Mako Prod., Inc., 686 F.3d 1335, 1344 (Fed. Cir. 2012). In addition, “[o]ne may infringe an independent claim and not infringe a claim dependent on that claim. The reverse is not true. One who does not infringe an independent claim cannot infringe a claim dependent on (and thus containing all the limitations of) that claim.” Wahpeton Canvas Co. v. Frontier, Inc., 870 F.2d 1546, 1552 (Fed. Cir. 1989).
Claim 1 and Its Dependents: “Coupled To” Limitation
126. Here, Claim 1 requires that “the light source module and the driver [be] positioned inside the first cavity while being coupled to the heat conducting closed rear face of the unified casting ....” '266 Patent at Claim 1.
127. Benya argued that “coupled together” suggests that multiple elements can be coupled together somehow, such as electrically or thermally, but need not be touching. TR3 at 23:17-23. He also argued that the light source module may be coupled to the casting using any connecting mechanism, including resins, clips, screws, bolts, or clamps. Id. at 25:24-26:3.
128. Although the Court believes these are points for claim construction rather than factual matters, the Court mostly agrees with Benya. As the Court noted at the summary-judgment stage, “the plain meaning of the phrase ‘coupled to' is not limited to ‘only one thing being coupled to one other thing.'” Docket No. 499 at 15. However, the Court notes that not “any and all indirectly-attached, fixed components will necessarily be ‘coupled.'” Id. The Court incorporates its prior guidance about the meaning of “coupled to” via this reference. Likewise, the '266 Patent indicates that “any connecting mechanism,” including “resins, clips, screws, bolts, or clamps,” will do. '266 Patent at 5:31-48. This supports the Court's view that the “coupled to” can be satisfied by any connecting mechanism.
129. For similar reasons, the Court does not believe it is material that the items at issue are not thermally or electrically coupled. The reference to clips, screws, bolts, and clamps and to “connecting mechanisms” suggests that ordinary, “mechanical” coupling is sufficient and thermal or electric coupling is not required. This is also consistent with the plain and ordinary meaning of coupling, and the Court is not persuaded to deviate from that meaning.
For example, the specification does not even mention items like thermal paste or wires, which might suggest that the form of coupling referred to was thermal or electric in nature.
130. Having heard the evidence and developed a full factual record on this issue, the Court finds that the light source module and driver are coupled to the closed rear face in all three versions of the ELCO ELL Module. There are screws inserted through holes in the reflector and driver housing into holes in the closed rear face mounting post, and these screws sandwich and hold in place the LED and driver housing between the reflector base and mounting post. This provides coupling, albeit indirect coupling, between the light source module and driver, on the one hand, and the closed rear face, on the other. Applying the plain and ordinary meaning of “coupled to,” it does not appear significant that the driver sits inside the driver enclosure rather than being directly coupled to the rear face or that additional elements are in the “stack” of elements coupled by the screws. Other factors supporting this finding include: the fact that Plaintiff offered expert testimony on this issue while Defendants did not; the fact that Benya was generally a credible witness; and the fact that Brandon Cohen is not an expert witness and is affiliated with a party.
Claim 1 and Its Dependents: Other Issues
131. Defendants now argue that they do not infringe Claim 1's “plurality of elements” limitation, or that Plaintiff cannot show damages related to this limitation, because this limitation requires use of a junction box and Plaintiff has not identified how many of the Accused Products were used with a junction box. For similar reasons, Defendants argue that they do not infringe Claim 8's limitation requiring “[t]he standard junction box having a closed rear end, an open front end, and a sidewall surrounding a second cavity, wherein: the heat conducting closed rear face of the unified casting has a second dimension across the closed rear face that is less than 3½ inches; and the unified casting, with the light source module, the driver and the reflector therein, are substantially contained within the second cavity of the standard junction box.” '266 Patent at Claim 8.
132. As to Claim 1, the Court has already rejected the position that the “plurality of elements” limitation requires that the lighting manufacturer install the product in a junction box before the lighting system can infringe.
133. As to Claim 8, this limitation was already resolved at summary judgment. Docket No. 536 at 4 ¶ 14. Defendants cannot obtain a summary-judgment do-over four years later at this stage in the proceedings.
134. Even if Defendants evaded these obstacles, Plaintiff's inability to quantify how many of the Accused Products were used with a junction box, and the concession that retrofit applications of the ELL Module would not use a junction box, does not preclude a finding of infringement and damages. See TR3 at 60:20-23, 67:15-19, 68:1216. These facts go instead to the amount of damages.
Claim 25: “Coupled to a Building”
135. Defendants now argue that, even though infringement of Claim 25 was found at the summary-judgment stage, Plaintiff must prove that the module was coupled to a building. Defendants also argue that Benya testified that Defendants did not themselves install modules in any building. TR3 at 68:23-69:6. For one thing, as noted in the evidentiary matters, Plaintiff has waived these issues. In addition, “the [patent] statute obviates the need to show the fact of damage when infringement is admitted or proven.” Lindemann Maschinenfabrik GmbH v. Am. Hoist & Derrick Co., Harris Press & Shear Div., 895 F.2d 1403, 1407 (Fed. Cir. 1990).
136. Moreover, the relevant limitation comes from the following text: “the system further comprises a plurality of wires connected to the driver and connected to a first connector of a pair of complimentary keyed or interlocking connectors, such that in operation the first connector is coupled to a second connector of the pair of complimentary keyed or interlocking connectors, wherein the second connector is coupled to electricity from an electrical system of a building in which the compact recessed lighting system is installed.” '266 Patent at Claim 22 (emphasis added). The Court agrees with Plaintiff that the infringing system only needs to be connected to a building when in operation, but a system may infringe the patent even when not in use. Indeed, this is a system claim, not a method claim with a step for operating or using the module.
137. For all these reasons, Defendants' position is unpersuasive.
Commercial Products
138. As noted above in connection with the evidentiary matters, the commercial products are out of the case. It is therefore unnecessary to address them in connection with this trial.
ELCO Lighting, Inc. (“ELI”)
139. Plaintiff proffered evidence that ELI is owned by Steve Cohen and shares the same address as its codefendant. TR4 at 19:2-4, 31:24-32:21. Plaintiff also showed, that in at least a few instances, “ELCO Lighting Inc.” was present on the Defendants' website, which Steve Cohen argued was a typing error. Id. at 16:14-25, 18:15-19:1. The Court credits Plaintiff's evidence but also credits Steve Cohen's explanation. In addition, the Court finds from the evidence in the record that ELCO Lighting was a d/b/a used by AMP Plus, Inc. See, e.g., TR3 at 215:22-25, 216:15-19. The presence of this name on the website, even accompanied by “Inc.,” does not necessarily indicate that an entity other than AMP Plus, Inc. was engaging in potentially infringing conduct.
140. Steve Cohen testified that ELI had never done any business. TR4 at 19:5-7. Plaintiff cited evidence that ELI submitted filings to the California Secretary of State indicating that it conducts business in the lighting industry. Id. at 23:18-24, 24:11-16. The Court does not credit Steve Cohen's testimony but credits Plaintiff's evidence.
141. However, none of these pieces of evidence do much to show that ELI engaged in potentially infringing conduct. Even if an entity is owned by those who engage in infringing conduct, shares their address, or is somehow doing business in the lighting industry, that does not mean that entity is itself infringing. Ultimately, the Court does not find Plaintiff has proven that ELI engaged in potentially infringing conduct.
142. After considering all the factors listed here, and considering the totality of the circumstances, whether cited in this document or not, the Court finds and concludes that Plaintiff has shown direct infringement of Claims 1, 2, 4-8, and 13-15 by AMP Plus.
D. Indirect Infringement
143. “Induced infringement under 35 U.S.C. § 271(b) requires proof of underlying direct infringement, as well as proof that (1) ‘the defendant knew of the patent,' (2) the defendant knew or should have known that ‘the induced acts constitute patent infringement,' and (3) the defendant ‘possessed specific intent to encourage another's infringement.'” Bio-Rad Lab'ys, Inc. v. Int'l Trade Comm'n, 998 F.3d 1320, 1335 (Fed. Cir. 2021) (quoting Sanofi, LLC v. Watson Labs. Inc., 875 F.3d 636, 643-44 (Fed. Cir. 2017)). “Contributory infringement under 35 U.S.C. § 271(c) requires proof that (1) the defendant had ‘knowledge of the patent in suit,' (2) the defendant had ‘knowledge of patent infringement,' and (3) the accused product is not a staple article or commodity of commerce suitable for a substantial noninfringing use.” Id. (quoting Commil USA, LLC v. Cisco Sys., Inc., 575 U.S. 632 (2015)).
144. “The intent element requires ‘knowledge that the induced acts constitute patent infringement,' which can be established by a proper finding of ‘willful blindness.'” Roche Diagnostics Corp. v. Meso Scale Diagnostics, LLC, 30 F.4th 1109, 1118 (Fed. Cir. 2022) (quoting Tec-Sec, 978 F.3d at 1286). “Willful blindness is a standard of ‘limited scope that surpasses recklessness and negligence.'” Id. (quoting same). After all, “[w]illful blindness . . . is characterized by ‘two basic requirements: (1) The defendant must subjectively believe that there is a high probability that a fact exists and (2) the defendant must take deliberate actions to avoid learning of that fact.'” Id. (quoting Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 765-66 (2011)).
145. Inducement can be found based on circumstantial evidence, and “[i]nducement can be found where there is ‘[e]vidence of active steps taken to encourage direct infringement,' which can in turn be found in ‘advertising an infringing use or instructing how to engage in an infringing use.'” Vanda Pharms. Inc. v. W.-Ward Pharms. Int'l Ltd., 887 F.3d 1117, 1129 (Fed. Cir. 2018) (quoting Takeda Pharm. U.S.A., Inc. v. W.-Ward Pharm. Corp., 785 F.3d 625, 630-31 (Fed. Cir. 2015)).
146. “[A] belief as to invalidity cannot negate the scienter required for induced infringement.” Commil, 575 U.S. at 645 (2015). The parties do not cite comparable authority about the scienter requirement of contributory infringement.
147. In the post-trial submissions, Defendants seem to argue that indirect infringement can be proven only if the Accused Products can only be used with the twist-and-lock trim, a junction box, or a 4”-8” light fixture. By contrast, Plaintiff seems to argue that indirect infringement can be proven as long as the Accused Products were mostly or typically used with those accessories. The Court does not find either position persuasive. In conducting its analysis, the Court follows the wording of the statute: induced infringement requires active inducement with the appropriate state of mind and contributory infringement requires the absence of a substantial noninfringing use.
148. The Court does not conclude that the test for intent to induce infringement is whether the defendant's belief in non-infringement is reasonable. The Federal Circuit has held that it is sufficient to affirm a jury verdict of induced infringement when “the plaintiff establish[es] that [the] defendant's asserted belief in non-infringement was unreasonable.” Warsaw Orthopedic, Inc. v. NuVasive, Inc., 824 F.3d 1344, 1351 n.2 (Fed. Cir. 2016). However, the Federal Circuit did not merge the reasonableness and intent inquiries. Rather, the Federal Circuit held that “a reasonable jury could have concluded that [the defendant's] non-infringement position was objectively unreasonable and that [the defendant] must have known that [the accused product] meets the limitations of the claims of the [asserted] patent.” Id. This was sufficient for “[a] reasonable jury [to] have inferred that [the defendant] must have known, or was willfully blind to the fact” of infringement. Id. In short, an unreasonable non-infringement position can support a finding of intent to induce infringement, but it does not require it. Assuming without deciding that Defendants' non-infringement position was unreasonable, the Court concludes that there was insufficient evidence of intent to induce infringement.
149. The Court previously determined that Claim 16 was infringed when the Accused Products were used with a twist-and-lock trim and that Claim 30 was infringed when the Accused Products were used with a standard-sized junction box or 4-8 inch housing. See Docket No. 499 at 17; Docket No. 536 at 5; '266 Patent at Claims 16, 30; see also Docket No. 815 ¶ 69; Docket No. 816 ¶ 49. Claim 16 requires “a trim directly coupled to the unified casting, for covering a hole in a ceiling or wall of a building in which the compact recessed lighting system is placed, wherein the trim connects to the unified casting via the at least one twist-and-lock connector.” '266 Patent at Claim 16. Claim 30 requires “an enclosure to substantially contain the unified casting, wherein the enclosure comprises one of: the standard-sized junction box; and a 4-8 inch recessed lighting feature.” Id.at Claim 30.
150. As explained further in the findings of fact, the Court concludes that Plaintiff showed underlying direct infringement of Claims 16 and 30 occurred during the relevant time period. The key facts supporting this conclusion include, but are not limited to: Defendants' sales of trims, housings, and junction boxes, especially when those sales occurred with the ELCO ELL Modules; Steve Cohen's testimony about the profits earned from accessories associated with the modules; Steve Cohen's statement to a manufacturer; Defendants' statement that their products can be installed in recessed housings or junction boxes; and Benya's testimony that some kind of trim would be necessary to use the ELL Module.
151. As explained further in the findings of fact, the Court concludes that Plaintiff showed Defendants knew of the '266 Patent, at least as of August 3, 2018. The key facts supporting this conclusion include, but are not limited to: Plaintiff's cease-and-desist letter and Complaint, which identified the '266 Patent to Defendants and accused them of infringement.
152. As explained further in the findings of fact, the Court concludes that Plaintiff did not show Defendants knew or should have known that the induced acts constituted infringement of Claims 16 or 30, and did not show they possessed specific intent to encourage another's infringement. In reaching this conclusion, the Court has considered the availability of “willful blindness” as a tool for proving knowledge. The key facts supporting this conclusion include, but are not limited to: Defendants' statements consistently denying infringement; Brandon Cohen's credible testimony that Defendants did not know they infringed; the evidence that the ELCO ELL modules could be used with other trims; and the evidence that a substantial number of Defendants' sales were for retrofit applications.
153. As explained further in the findings of fact, the Court concludes that Plaintiff did not show Defendants had knowledge of patent infringement or that the Accused Products were not suitable for a substantial noninfringing use. The key facts supporting this conclusion include, but are not limited to: Defendants' statements consistently denying infringement; Brandon Cohen's credible testimony that Defendants did not know they infringed; the evidence that the ELCO ELL modules could be used with other trims; and the evidence that a substantial number of Defendants' sales were for retrofit applications.
154. To the extent that a belief of invalidity can negate the scienter required for contributory infringement, that is an additional reason for rejecting Plaintiff's position on that issue. See, e.g., Docket No. 739 ¶¶ 31, 45 (noting Defendants presented credible evidence as to their belief of invalidity).
155. After considering all the factors listed here, and considering the totality of the circumstances, whether cited in this document or not, the Court finds and concludes that Plaintiff has shown neither induced nor contributory of infringement of neither Claim 16 nor Claim 30.
156. It is unnecessary to address Defendants' alternative argument that Plaintiff has failed to show causation. However, the Court does not agree with Defendants' position that the record affirmatively proves the absence of causation.
157. It is unnecessary to address Defendants' position that the Court's finding of no willfulness precludes a finding of indirect infringement.
158. It is also unnecessary to address Defendants' position that there was no underlying direct infringement because there was no evidence that anyone used the Accused Products with a “twist and lock” trim, a junction box, or a 4-8 inch housing or light fixture. Indeed, the fact that Defendants sold the Accused Products with these accessories is sufficient evidence to warrant the inference that someone engaged in acts of direct infringement.
159. It is unnecessary to address Defendants' alternative position that the trims, housings, and/or junction boxes need to be a material part of the invention but are not.
160. It is unnecessary to address Defendants' alternative position that the Version 2 module somehow cannot contributorily infringe because it has a cap.
The Court is skeptical of this argument. Even if the cap is not part of the unified casting, Defendants have not shown that the unified casting would not dissipate sufficient heat during operation.
E. Damages
161. Upon a finding of infringement, “the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer.” 35 U.S.C. § 284. “The most common method for determining a reasonable royalty is the hypothetical negotiation approach, which ‘attempts to ascertain the royalty upon which the parties would have agreed had they successfully negotiated an agreement just before infringement began.'” Virnetx, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1326 (Fed. Cir. 2014) (quoting Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1324 (Fed. Cir. 2009)). “A reasonable royalty may be a lump-sum payment not calculated on a per unit basis, but it may also be, and often is, a running payment that varies with the number of infringing units.” Id. “In that event, it generally has two prongs: a royalty base and a royalty rate.” Id.
162. “No matter what the form of the royalty, a patentee must take care to seek only those damages attributable to the infringing features.” Id. “[W]here multicomponent products are involved, the governing rule is that the ultimate combination of royalty base and royalty rate must reflect the value attributable to the infringing features of the product, and no more.” Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1226 (Fed. Cir. 2014). “When the accused infringing products have both patented and unpatented features, measuring this value requires a determination of the value added by such features.” Id. Thus, “a patentee may assess damages based on the entire market value of the accused product only where the patented feature creates the basis for consumer demand or substantially creates the value of the component parts.” Virnetx, 767 F.3d at 1326 (cleaned up). Also, “when a sufficiently comparable license is used as the basis for determining the appropriate royalty, further apportionment may not necessarily be required.” Vectura Ltd v. Glaxosmithkline LLC, 981 F.3d 1030, 1040 (Fed. Cir. 2020).
163. “A reasonable royalty can be calculated from an established royalty, the infringer's profit projections for infringing sales, or a hypothetical negotiation between the patentee and infringer based on the factors in Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F.Supp. 1116, 1120 (S.D.N.Y.1970).” Wordtech Sys., Inc v. Integrated Networks Sols., Inc., 609 F.3d 1308, 1319 (Fed. Cir. 2010). “These factors include: (1) royalties the patentee has received for licensing the patent to others; (2) rates paid by the licensee for the use of comparable patents; (3) the nature and scope of the license (exclusive or nonexclusive, restricted or nonrestricted by territory or product type); (4) any established policies or marketing programs by the licensor to maintain its patent monopoly by not licensing others to use the invention or granting licenses under special conditions to maintain the monopoly; (5) the commercial relationship between the licensor and licensee, such as whether they are competitors; (6) the effect of selling the patented specialty in promoting sales of other products of the licensee; (7) the duration of the patent and license term; (8) the established profitability of the product made under the patent, including its commercial success and current popularity; (9) the utility and advantages of the patent property over old modes or devices; (10) the nature of the patented invention and the benefits to those who have used the invention; (11) the extent to which the infringer has used the invention and the value of that use; (12) the portion of profit or of the selling price that may be customary in that particular business to allow for use of the invention or analogous inventions; (13) the portion of the realizable profit that should be credited to the invention as opposed to its non-patented elements; (14) the opinion testimony of qualified experts; and (15) the results of a hypothetical negotiation between the licensor and licensee.” Powell v. Home Depot U.S.A., Inc., 663 F.3d 1221, 1240 n.3 (Fed. Cir. 2011).
164. “[A] patent owner participating in a hypothetical negotiation would consider the profits on sales it might lose as a result of granting a license.” Asetek Danmark A/S v. CMI USA Inc., 852 F.3d 1352, 1362 (Fed. Cir. 2017). At least under some circumstances, “a patent owner would be ‘unlikely' to be ‘interested in' accepting a royalty rate lower than its profit margin on the patented products.” Id. (quoting Mitutoyo Corp. v. Cent. Purchasing, LLC, 499 F.3d 1284, 1292 (Fed. Cir. 2007)). “There is no rule that a royalty be no higher than the infringer's net profit margin.” Golight, Inc. v. Wal-Mart Stores, Inc., 355 F.3d 1327, 1338 (Fed. Cir. 2004) (quoting State Indus., Inc. v. Mor-Flo Indus., Inc., 883 F.2d 1573, 1580 (Fed. Cir. 1989)). The “royalty need not be less than [the] price of [the] infringing unit.” Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1555 (Fed. Cir. 1995) (affirming award based on one-half the patentee's profit margin).
165. “The statute does not require an award of damages if none are proven that adequately tie a dollar amount to the infringing acts.” TecSec, Inc. v. Adobe Inc., 978 F.3d 1278, 1291 (Fed. Cir. 2020). For example, “a patent owner may waive its right to a damages award when it deliberately abandons valid theories of recovery in a singular pursuit of an ultimately invalid damages theory.” Promega Corp. v. Life Techs. Corp., 875 F.3d 651, 666 (Fed. Cir. 2017). On the other hand, “a patentee's failure to show that its royalty estimate is correct is insufficient grounds for awarding a royalty of zero.” Info-Hold, Inc. v. Muzak LLC, 783 F.3d 1365, 1372 (Fed. Cir. 2015). The statute “requires the district court to award damages ‘in an amount no less than a reasonable royalty' even if the plaintiff[] has no evidence to proffer.” Id. In Info-Hold, for example, because the district court properly excluded the plaintiff's damages expert, the appropriate course was for “the district court [to] consider the Georgia-Pacific factors ‘in detail, and award such reasonable royalties as the record evidence will support.'” Id. (quoting Dow Chem. Co. v. Mee Indus, Inc., 341 F.3d 1370, 1381 (Fed. Cir. 2003)).
166. Ultimately, “[t]he methodology of assessing and computing damages under 35 U.S.C. § 284 is within the sound discretion of the district court.” Bayer Healthcare LLC v. Baxalta Inc., 989 F.3d 964, 985 (Fed. Cir. 2021) (quoting TWM Mfg. Co. v. Dura Corp., 789 F.2d 895, 898 (Fed. Cir. 1986)). This approach “necessarily involves an element of approximation and uncertainty.” Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1325 (Fed. Cir. 2009).
167. The Court concludes that it would not be appropriate to enter a damages award of $0. The Court agrees with the authorities relied on by Defendants that, in some cases, such an award is appropriate. However, the Court is not persuaded that this case is extreme enough to justify that relief. For example, Plaintiff did not engage in “a singular pursuit of an ultimately invalid damages theory” that left the Court with no way to adequately tie a damages award to the facts of the case. See Promega, 875 F.3d at 666. Nor is this “a case completely lacking any evidence on which to base a damages award . . . .” See TecSec, 978 F.3d at 1291 (quoting Apple Inc. v. Motorola, Inc., 757 F.3d 1286, 1328 n.7 (Fed. Cir. 2014), overruled on other grounds by Williamson v. Citrix Online, LLC, 792 F.3d 1339 (Fed. Cir. 2015)).
168. In addition, “the statute requires the court to award damages ‘in no event less than a reasonable royalty.'” Apple, 757 F.3d at 1327. Because the “statute is unequivocal that the district court must award damages in an amount no less than a reasonable royalty,” “[i]f a patentee's evidence fails to support its specific royalty estimate, the fact finder is still required to determine what royalty is supported by the record.” Id. at 1327-28 (quoting Dow Chem. Co. v. Mee Indus., Inc., 341 F.3d 1370, 1381-82 (Fed. Cir. 2003)). Moreover, “[t]he requirement to determine actual damages is not diminished by difficulty of determination.” Id. at 1328 (quoting Del Mar Avionics, Inc. v. Quinton Instrument Co., 836 F.2d 1320, 1327 (Fed. Cir. 1987)). Even “if the record evidence does not fully support either party's royalty estimate, the fact finder must still determine what constitutes a reasonable royalty from the record evidence.” Id. However, when “the patentee's proof is weak, the court is free to award a low, perhaps nominal, royalty, as long as that royalty is supported by the record.” Id.
169. In reaching the following conclusions about the amount of an appropriate reasonable royalty, the Court assumes that Plaintiff was a willing licensor, Defendants were willing licensees, and that both sides were negotiating on or around May 8, 2018, the issue date of the '266 Patent. California Inst. of Tech. v. Broadcom Ltd., 25 F.4th 976, 994 (Fed. Cir. 2022), cert. denied sub nom. Apple Inc. v. California Inst. of Tech., 143 S.Ct. 2658 (2023) (“It is well settled that a reasonable royalty is what a willing licensor and a willing licensee would have agreed to at a hypothetical negotiation just before infringement began.”). However, the Court relies on information after that date, such as the parties' use of the relevant technology. See Sinclair Rfg. Co. v. Jenkins Co., 289 U.S. 689, 697-98 (1933) (“The use that has been made of the patented device is a legitimate aid to the appraisal of the value of the patent at the time of the breach,” and this “is a book of wisdom that courts may not neglect” because there is “no rule of law that sets a clasp upon its pages, and forbids us to look within.”); Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1333-34 (Fed. Cir. 2009) (“Usage (or similar) data may provide information that the parties would frequently have estimated during the negotiation”). Indeed, applying the hypothetical-negotiation methodology “permits and often requires a court to look to events and facts that occurred thereafter and that could not have been known to or predicted by the hypothesized negotiators.” Fromson v. Western Litho Plate & Supply Co., 853 F.2d 1568, 1575 (Fed. Cir. 1988). However, the Court is equally mindful of the Federal Circuit's guidance that “the profits . . . actually earned during the period of infringement [are not] a royalty cap,” that what is required is a “hypothetical inquiry into what the parties would have anticipated, looking forward when negotiating” rather than “a backward-looking inquiry into what turned out to have happened.” Aqua Shield v. Inter Pool Cover Team, 774 F.3d 766, 772 (Fed. Cir. 2014).
170. Consistent with the Federal Circuit's guidance, the Court does not apply the Georgia-Pacific factors mechanically and does not address irrelevant factors. Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1230 (Fed. Cir. 2014). However, the following factors are relevant, or at least worth noting.
171. Based on the Court's findings of fact, the Court finds that Plaintiff had an established policy of maintaining its patent monopoly by not licensing others to use the invention. This factor would significantly increase the royalty.
172. Based on the Court's findings of fact, the Court finds that Plaintiff and Defendants were competitors, which would significantly increase the royalty.
173. Based on the Court's findings of fact, the Court finds that the short duration of the license, that is, less than two years would significantly decrease the royalty. Indeed, the Court does not find that the hypothetical license would have long-term effects on the market.
174. Based on the Court's findings of fact, the Court finds that Defendants' infringing conduct permitted to sell a substantial number of other accessories, including trims and housings, along with the Accused Products. However, the Court also finds that a substantial number of sales of the Accused Products were not linked to any sales of other accessories. The Court also finds that the profits Defendants made by selling the accessories was a small fraction of the profits they made by selling the modules.This factor would significantly increase the royalty. The Court further finds that the hypothetical license would have had some effect on Plaintiff's customer relationships and marketplace, but the Court does not find that Plaintiff has provided sufficient evidence to adequately quantify the effect of this factor, and the Court does not find that this factor would substantially increase the royalty.
See Ex. 611 ¶ 19 (about of total profits from the modules attributable to trims and accessories).
175. Based on the Court's findings of fact, the Court does not find much persuasive evidence of the established profitability of the product made under the patent, and only somewhat more persuasive evidence of the utility and advantages of the patent property over old modes and devices. In particular, the Court notes the evidence that there was a substantial market for the non-infringing commercial modules, even if that market was significantly smaller than that for the infringing modules. These factors are neutral and do not affect the Court's calculation of a royalty.
See TR3 at 143:1-4 ($185,000 for the residential modules vs. $27,000 for the commercial modules).
176. Based on the Court's findings of fact, the Court finds that Defendants added a number of non-patented features and that those features added substantial value to the product through higher energy efficiency and a higher lumen output. This factor would substantially decrease the royalty.
177. Based on the Court's findings of fact, the Court finds no persuasive evidence of royalties received by Plaintiff or rates paid by Defendants for the '266 Patent or comparable patents. Similarly, the Court finds no evidence of an established or customary royalty rate.
178. Based on the Court's findings of fact, the Court finds that Goedde's opinion has minimal probative value.
179. Based on all of the foregoing, and all the evidence in the record, whether or not cited, the Court finds and concludes that the modules rather than the full assemblies, that is, the Accused Products without the trims and housings, represents the smallest salable patent practicing unit. However, the Court still considers the effect of selling the modules in promoting sales of the trims and housings in setting the royalty.
180. Based on all of the foregoing, and all the evidence in the record, whether or not cited, the Court finds and concludes that Defendants' actual profits are a reasonable estimate of the profits the parties would anticipate during the hypothetical negotiation, and further finds and concludes that 63% of those profits are attributable to the patented features rather than any other components.
The Court notes that it is not possible to apportion profits with mathematical precision, but the Court is persuaded that 60% would be slightly too low and 66.7% would be slightly too high. After reviewing all of the evidence, the Court is persuaded that 63% is an appropriate apportionment.
181. Based on all of the foregoing, and all the evidence in the record, whether or not cited, the Court finds and concludes that the parties to the hypothetical negotiation would agree on a royalty of $3.25 per module for 2018 and $3.90 per module for 2019.
As before, these numbers are not the result of a formulaic calculation, but rather reflect the Court's evaluation of the weight of the evidence and the credibility of the witnesses.
182. Accordingly, the reasonable royalty awarded to Plaintiff is $15,940.60.
V. TIME LIMITS
183. The Court sua sponte considers whether it erred in holding the parties to the trial time limits it announced before the commencement of the willfulness trial. It did not.
184. The Court has authority to impose reasonable time limits on the parties' trial presentations under several provisions of the Federal Rules of Civil Procedure and Federal Rules of Evidence. See Fed.R.Civ.P. 16(c) (“At any [pretrial] conference . . . the judge may take appropriate action, with respect to . . . (4) the avoidance of unnecessary proof and of cumulative evidence, and limitations or restrictions on the use of testimony under Rule 702 of the Federal Rules of Evidence; . . . (15) an order establishing a reasonable limit on the time allowed for presenting evidence; and (16) such other matters as may facilitate the just, speedy, and inexpensive disposition of the action.”); Fed.R.Evid. 611(a) (“The judge shall exercise reasonable control over the mode and order of interrogating witnesses and presenting evidence so as to (1) make the interrogation and presentation effective for the ascertainment of the truth, (2) avoid needless consumption of time, and (3) protect witnesses from harassment or undue embarrassment.”). Furthermore, “[t]he case law makes clear that where a district court has set reasonable time limits and has shown flexibility in applying them, that court does not abuse its discretion. Moreover, to overturn a jury verdict based on a party's failure to use its limited time for witness cross-examination would be to invite parties to exhaust their time limits without completing cross-examination, then appeal on due process grounds.” Amarel v. Connell, 102 F.3d 1494, 1513-15 (9th Cir. 1996).
185. “There is an unnamed party in every lawsuit-the public.” United States v. Reaves, 636 F.Supp. 1575, 1578 (E.D. Ky. 1986). “Public resources are squandered if judicial proceedings are allowed to proliferate beyond reasonable bounds.” Id. “The public's right to a ‘just, speedy, and inexpensive determination of every action' is infringed, if a court allows a case, civil or criminal, to preempt more than its reasonable share of the court's time.” Id. (quoting Fed.R.Civ.P. 1).
186. Moreover, “[a] court cannot rely on the attorneys to keep expenditures of time in trying a case within reasonable bounds.” Id. For one thing, “[i]f [an attorney] believes he can win [the] case by proliferating the evidence of the favorable, but relatively uncontested matters so that the weaker aspects of the case will be camouflaged, it is asking too much of our fallen nature to expect him voluntarily to do otherwise.” Id. For another, “[a]dvocates tend to confuse quantity of evidence with probative quality.” Id. at 1579. “Nothing lulls an attorney to the passage of time like the sound of his or her own voice.” Id. “Few attorneys can tell you what time it is without describing how the clock was made.” Id. And it is typically the case that “an attorney is willing to suffer through the presentation of his opponent, however redundant, if only he can have equal time.” Id. “It has become apparent that courts must recognize that it is they, rather than the attorneys, who have a more objective appreciation of the time a case requires when balancing its needs against the exigencies of the court's docket.” Id. Few cases exemplify these principles better than this one.
187. Thus, the Court found it necessary to impose a reasonable time limit on the trial proceedings in this matter. On July 7, 2023, well in advance of the first trial, the Court indicated it would permit each side 8-10 hours to try its case. See Docket No. 626 at 2. In imposing this restriction, the Court considered numerous factors, including the following. First, a large number of issues had been resolved via summary judgment, IPR estoppel, or other means. Only a very narrow set of issues remained to be tried. See Id. Second, the Court considered that the narrow issues remaining for trial did not require the parties to present extensive technical testimony. Indeed, at trial, the parties presented relatively little testimony providing background about the relevant technology. Third, the Court reviewed the parties' witness lists and found them littered with testimony likely to be cumulative or irrelevant. See Docket Nos. 445, 454. The Court also received updated, more detailed witness lists after setting its trial time limit, but those witness lists only reinforced its determination that 8-10 hours per side was more than reasonable. See Docket Nos. 642, 643. Fourth, in the years that this case has been pending, the Court has become intimately familiar with the parties, their litigating positions, and their manner of litigating, including through the summary-judgment briefing, the Markman briefing, the preliminary-injunction briefing, and the parties' numerous other filings. The Court considered the parties' strong and roughly equal tendency to over-litigate every issue in determining that a trial time limit was necessary, and in setting that limit. The Court has also considered that both parties' litigation strategy has been to introduce reams of evidence regardless of relevance, make every conceivable argument regardless of merit, and hope something persuades the Court to rule in their favor. Because of the Court's familiarity with the issues remaining for trial, the Court also found it was in a particularly strong position to know how long the parties would need to try the case. Fifth, the Court considered its own docket load, and the public interest in the speedy disposition of all cases, in setting a time limit.
188. Future events vindicated the Court's determination. At both trials, both parties' presentations were meandering and inefficient and focused primarily on issues that were irrelevant or far less significant than the time spent on them would warrant. For example, although the first trial was supposed to be a short one addressing a relatively minor issue in the case-that of willfulness-the parties spent more than 7 hours each on that issue. As another example, the direct examination of Steve Cohen, and the cross examinations of James Benya and Alan Goedde, were particularly inefficient. Finally, the events of the June 25 trial would support the view that Defendants were indifferent to the time limits with the hope of running out the clock and winning a time extension from this Court or on appeal, even though the Defendants had plenty of notice about the time limits. See TR3 at 248:1-24. Despite all this, and perhaps against the Court's better judgment, it was flexible with the time limits. It increased the time limit of 8-10 hours to 10 hours per side after the first trial. Docket No. 741 at 1. Then, on the second day of the second trial, it allocated each side an additional 75 minutes to conclude its presentation. TR4 at 5:1-3.
Although most witnesses under cross examination are not wholly cooperative with the examining attorney, the Court does not find that Benya or Goedde were so uncooperative as to warrant granting Defendants additional time, as explained elsewhere.
189. Based on all of the foregoing, the Court concludes it did not err in setting a reasonable time limit and ultimately holding the parties to it, especially because of the narrow issues remaining for trial, because of the parties' behavior at trial and throughout the case, the Court's flexibility in applying the time limit, and the abundant notice the parties had of the Court's expectations about trial time.
VI. CONCLUSION
In accordance with the foregoing, the Court orders as follows:
1. Judgment in favor of DMF on invalidity, judgment against AMP Plus on infringement of Claims 1, 2, 4-8, and 13-15, judgment in favor of AMP Plus on
infringement of Claims 16 and 30, and judgment in favor of ELI on infringement of Claims 1, 2, 4-8, 13-16, and 30 is appropriate.
2. The amount of damages awarded in favor of DMF and against AMP Plus is $15,940.60.
3. The Court enters its findings of fact and conclusions of law as stated herein. Within 7 days, Plaintiff shall file a proposed Judgment. Within 7 days of filing the proposed Judgment, Defendants shall file any objections thereto.
4. Within 14 days of this order, the parties shall file a Joint Report setting forth their respective and/or collective positions concerning a proposed timeline for any remaining matters.
IT IS SO ORDERED.