Opinion
Case No. LA CV19-6024 JAK (PLAx)
10-20-2021
RSA PROTECTIVE TECHNOLOGIES, LLC v. DELTA SCIENTIFIC CORPORATION
Sasha G. Rao, Maynard Cooper and Gale LLP, San Francisco, CA, Asheesh Paul Puri, Duane Kumagai, Maynard Cooper and Gale LLP, Los Angeles, CA, Jessica H. Zafonte, Pro Hac Vice, Joseph V. Saphia, Pro Hac Vice, Laura A. Chubb, Pro Hac Vice, Haug Partners LLP, New York, NY, for RSA Protective Technologies, LLC. David A. Dillard, Constantinos Marantidis, Kyle W. Kellar, Sami Irene Schilly, Lewis Roca Rothgerber Christie LLP, Glendale, CA, for Delta Scientific Corporation.
Sasha G. Rao, Maynard Cooper and Gale LLP, San Francisco, CA, Asheesh Paul Puri, Duane Kumagai, Maynard Cooper and Gale LLP, Los Angeles, CA, Jessica H. Zafonte, Pro Hac Vice, Joseph V. Saphia, Pro Hac Vice, Laura A. Chubb, Pro Hac Vice, Haug Partners LLP, New York, NY, for RSA Protective Technologies, LLC.
David A. Dillard, Constantinos Marantidis, Kyle W. Kellar, Sami Irene Schilly, Lewis Roca Rothgerber Christie LLP, Glendale, CA, for Delta Scientific Corporation.
Proceedings: (IN CHAMBERS) ORDER DENYING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT OF INFRINGEMENT, WILLFULNESS, AND ENHANCED DAMAGES (DKT. 97)
JOHN A. KRONSTADT, UNITED STATES DISTRICT JUDGE
I. Introduction
RSA Protective Technologies, LLC ("Plaintiff" or "RSA") brought this action against Delta Scientific Corporation ("Defendant" or "Delta") alleging infringement of U.S. Patent No. 8,215,865 ("the ’865 Patent"). Complaint, Dkt. 1. The ’865 Patent relates to a shallow-mount bollard system that protects buildings by preventing them from being rammed by vehicles.
Plaintiff seeks partial summary judgment concerning infringement, willfulness and enhanced damages. ("Motion" (Dkt. 97, Dkt. 104-3 (sealed version))). After the Motion was briefed (see "Opposition" (Dkt. 117); "Reply" (Dkt. 143, Dkt. 134-1 (sealed version))), it was determined that the Motion was one that is appropriate for decision without oral argument. See Fed. R. Civ. P. 78 ; Local Rule 7-15. For the reasons stated in this Order, the Motion is GRANTED as to infringement and DENIED as to the remaining issues.
The parties have filed a Joint Stipulation stating that no portion of the Order at Dkt. 171 should remain sealed. See Dkt. 175. Therefore, this Order is now filed unredacted.
II. Factual and Procedural Background
The ’865 Patent, which issued on July 10, 2012, claims priority from U.S. Patent No. 7,699,558, which in turn claims the benefit of six provisional patent applications filed in 2004 and 2005. See ’865 Patent, 7:7–37. The claimed bollard system in the ’865 Patent, "requires very little or no excavation for the base of the bollard system," which "can be partially or fully assembled prior to bringing it to the installation site." Id. , 7:30–33. The system "includes one or more bollards secured to a shallow mounting pad or base," that "is designed to [be] made of heavy materials, so as to have considerable mass." Id. , 2:33–39. "The major benefit in the physics of the bollard system of this invention, is that the striking forces from the crash vehicle are transmitted from the bollard down to the shallow mount pad" and "[t]he shallow mount pad is pushed down onto the soil (horizontal force backwards) instead of into the soil (vertical force downwards) as in the case of deep trench foundations." Id. , 2:41–48. In one embodiment, the bollards are "mounted on the framework for the pad or base of the anti-ram system," with "a rebar cage surrounding the framework for the pad or base." Id. , Fig. 4:Plaintiff alleges that Defendant's shallow mount bollards infringe, inter alia , the limitations of Claim 1 of the ’865 Patent. Dkt. 1 ¶ 23. Claim 1 discloses:
A bollard structure comprising:
at least one bollard; and
a base comprising opposed ends and a plurality of structural members which intersect and are tied together, for each bollard of the bollard structure at least one first structural member extending from a first of the opposed ends of the base to a second of the opposed ends of the base in a first direction intersecting with the opposed ends, and at least one structural member extending to intersect with the at least one first structural member;
each bollard being secured to at least one of the at least one first structural member and the at least one structural member of the base for the respective bollard and extending upwardly from the base so as to transmit forces applied to the at least one bollard to the base;
wherein the base is configured to be mounted in a shallow excavation with the at least one bollard extending above grade; and
wherein the at least one first structural member or the at least one structural member or both are configured or tied together to retain within the base supporting media introduced into the base when the base is mounted in the excavation such that the rotation is resisted of a bollard or bollards and the base from an impact against the bollard or bollards.
See ’865 Patent, Claim 1.
III. Analysis
A. Legal Standards
1. Summary Judgment
Summary judgment is appropriate when, viewing the evidence and drawing all reasonable inferences in the light most favorable to the nonmoving party, there are no genuine issues of material fact, and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a) ; Celotex Corp. v. Catrett , 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In considering a motion for summary judgment, a court "does not assess credibility or weigh the evidence, but simply determines whether there is a genuine factual issue for trial." House v. Bell , 547 U.S. 518, 559–60, 126 S.Ct. 2064, 165 L.Ed.2d 1 (2006). A fact is "material" if it "might affect the outcome of the suit under the governing law," such as those necessary to the proof of a defense or a claim, and a dispute as to a material fact is "genuine" if there is sufficient evidence for a reasonable trier of fact to decide in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Id. at 249–50, 106 S.Ct. 2505 (internal citations omitted).
"Summary judgment is as appropriate in a patent case as in any other." Barmag Barmer Maschinenfabrik AG v. Murata Mach., Ltd. , 731 F.2d 831, 835 (Fed. Cir. 1984). The moving party bears the initial burden of identifying those portions of the pleadings, discovery, and affidavits that demonstrate the absence of a genuine issue of material fact. Celotex Corp. , 477 U.S. at 323, 106 S.Ct. 2548. Once the moving party meets its initial burden, the nonmoving party must set forth, by affidavit or as otherwise provided in Rule 56, "specific facts showing that there is a genuine issue for trial." Anderson , 477 U.S. at 250, 106 S.Ct. 2505 (internal quotation marks omitted). If the non-moving party fails to produce evidence sufficient to show a genuine issue of material fact, "the moving party is entitled to a judgment as a matter of law." Celotex Corp. , 477 U.S. at 322–23, 106 S.Ct. 2548.
Mere allegations or denials are not sufficient to rebut the facts proffered by the moving party. Gasaway v. Nw. Mut. Life Ins. Co. , 26 F.3d 957, 959–60 (9th Cir. 1994). Nor can the nonmoving party establish the basis to deny a motion for summary judgment by proffering conclusory opinions from an expert. See, e.g., Soremekun v. Thrifty Payless, Inc. , 509 F.3d 978, 984 (9th Cir. 2007) ("Conclusory, speculative testimony in affidavits and moving papers is insufficient to raise genuine issues of fact to defeat summary judgment."); Arthur A Collins, Inc. v. Northern Telecom Ltd. , 216 F.3d 1042, 1047–48 (Fed. Cir. 2000).
2. Infringement
Determining patent infringement is a two-step process. Cybor Corp. v. FAS Techs., Inc. , 138 F.3d 1448, 1454 (Fed. Cir. 1998). "First, the court determines the scope and meaning of the patent claims asserted, and then the properly construed claims are compared to the allegedly infringing device." Id. (citations omitted). "Whether an accused device or method infringes a claim either literally or under the doctrine of equivalents is a question of fact." Schoell v. Regal Marine Indus., Inc. , 247 F.3d 1202, 1207 (Fed. Cir. 2001). Because the ultimate burden of proving infringement rests with the patentee, an accused infringer may establish that summary judgment is proper "either by providing evidence that would preclude a finding of infringement, or by showing that the evidence on file fails to establish a material issue of fact essential to the patentee's case." Novartis Corp. v. Ben Venue Labs., Inc. , 271 F.3d 1043, 1046 (Fed. Cir. 2001). If the moving party meets this initial requirement, the burden shifts to the party asserting infringement to set forth, by declaration or as otherwise permitted under Fed. R. Civ. P. 56, "specific facts showing that there is a genuine issue for trial." Anderson , 477 U.S. at 248, 106 S.Ct. 2505. 3. Willfulness, Enhanced Damages, and Attorney's Fees
Section 284 of the Patent Act provides for the award of treble damages if certain requirements are met. 35 U.S.C. § 284. But "[a]wards of enhanced damages under the Patent Act over the past 180 years establish that they are not to be meted out in a typical infringement case," but instead are "designed as a ‘punitive’ or ‘vindictive’ sanction for egregious infringement behavior." Halo Elecs., Inc. v. Pulse Elecs., Inc. , 579 U.S. 93, 136 S. Ct. 1923, 1932, 195 L.Ed.2d 278 (2016). Enhanced damages may be appropriate, "in a case of willful or bad-faith infringement." Id. at 1930 ; cf. Exergen Corp. v. Kaz USA, Inc. , 725 F. App'x 959, 971–72 (Fed. Cir. 2018) ("blanket rule" that jury must consider willfulness "before the district court may exercise its discretion to enhance damages under § 284 ... is directly contrary to the Supreme Court's mandate"). The party seeking enhanced damages must prove it is entitled to such damages by a preponderance of the evidence. Halo , 136 S. Ct. at 1934.
Halo rejected the test for enhanced damages previously adopted by the Federal Circuit, which considered two prongs: "objective recklessness" and a subjective assessment. The Supreme Court explained that "[t]he subjective willfulness of a patent infringer, intentional or knowing, may warrant enhanced damages, without regard to whether his infringement was objectively reckless." Id. at 1933. Halo concluded that, as a discretionary matter, " Section 284 allows district courts to punish the full range of culpable behavior," but courts are not required to imposed enhanced damages in all cases of "egregious misconduct." Id. at 1933. Rather, courts should consider "the particular circumstances of each case in deciding whether to award damages, and in what amount." Id. This is "[c]onsistent with nearly two centuries of enhanced damages under patent law, however, such punishment should generally be reserved for egregious cases typified by willful misconduct." Id. at 1934. The Federal Circuit has not "interpret[ed] Halo as changing the established law that the factual components of the willfulness question should be resolved by the jury." WBIP, LLC v. Kohler Co. , 829 F.3d 1317, 1341 (Fed. Cir. 2016).
In patent cases, the prevailing party may recover reasonable attorney's fees if the case is "exceptional." See 35 U.S.C. § 285. An exceptional case is "simply one that stands out from others regarding the substantive strength of a party's litigating position (considering both governing law and the facts of the case) or the unreasonable manner the case was litigated." Octane Fitness, LLC v. ICON Health & Fitness, Inc. , 572 U.S. 545, 134 S. Ct. 1749, 1756, 188 L.Ed.2d 816 (2014). "The prevailing party may prove the existence of an exceptional case by showing: inequitable conduct before the PTO; litigation misconduct; vexatious, unjustified, and otherwise bad faith litigation; a frivolous suit or willful infringement." Epcon Gas Sys., Inc. v. Bauer Compressors, Inc. , 279 F.3d 1022, 1034 (Fed. Cir. 2002).
B. Application
Based on conduct by Defendant that Plaintiff characterizes as "egregious," Plaintiff seeks partial summary judgment of infringement, willfulness and enhanced damages. These arguments are considered in that sequence.
1. Infringement
Plaintiff argues that summary judgment as to infringement is warranted because "Delta conceded that it will not contest infringement of the asserted claims if they are found to be valid and enforceable." Dkt. 104-3 at 15. Therefore, Defendant agrees that "summary adjudication as to infringement by the accused products is appropriate, and partial summary adjudication as to infringement in favor of RSA should be granted." Id.
Defendant acknowledges that it "has stated that if the ’865 Patent is found to be valid and enforceable, that it will not contest infringement." Dkt. 117 at 1; see also Dkt. 117-1, ¶ 6 ("Undisputed that Delta conceded that it will not contest infringement of the asserted claims if they are found to be valid and enforceable.").
Based on Defendant's concession that it will not challenge infringement, partial summary judgment of infringement is appropriate and is entered in favor of Plaintiff. Cf. Immunex Corp. v. Sandoz Inc. , 964 F.3d 1049, 1053 (Fed. Cir. 2020) (where party stipulates to infringement, only invalidity proceeds to trial).
2. Willfulness
a. The Positions of the Parties
Plaintiff argues that there is no genuine dispute of fact as to whether Defendant's behavior was sufficiently egregious to constitute willful infringement. Dkt. 104-3 at 15. First , Plaintiff argues that Defendant engaged in intentional copying. Id. Plaintiff notes that its shallow-mount bollards were publicly available by early 2005 and were identified as having been certified by the Department of State, which Defendant admits "would have been important competitive information." Id. at 16. Plaintiff contends that Defendant's lack of "independent development" evidence, the similarity of Defendant's product to the patented design, and the admission by Defendant's President "that it was plausible that Delta copied RSA's invention," all support a finding of intentional copying and willfulness. Id.
Second , Plaintiff argues that "Delta was aware of the ’865 patent by at least August 2018 (about a year prior to this lawsuit)," and "[b]ased on that alone, willful infringement should be found." Id. at 17. Plaintiff contends that Defendant was also "likely aware" of the ’865 Patent even earlier because Defendant cited Plaintiff's ’558 Patent (from which the ’865 Patent is a continuation) when Defendant was trying to obtain its own similar patent. Id.
Third , Plaintiff contends that "Delta has not produced evidence of a good-faith belief of non-infringement or invalidity at any point in time." Id. at 17. Plaintiff observes that, although Defendant commissioned an invalidity study, was aware of the ’865 Patent as prior art at the time of its own patent application, and sought advice of counsel, Defendant has never presented any related information suggesting good faith. Id. at 18-19. Moreover, Plaintiff argues that Defendant's invalidity positions are untenable, and it admitted infringement. Id.
Finally , Plaintiff argues that Defendant admits it had an "easy solution" to modify some of its current products to be competitive with the Plaintiff's patented design, but Defendant elected not to pursue that alternative and, therefore, willfully infringed. Id. at 19.
Defendant responds that, "[c]onsidering ‘all the circumstances’ and construing the evidence in the light most favorable to Delta as the nonmoving party, it is clear that the jury could find that Delta did not willfully infringe the ’865 Patent." Dkt. 117 at 3. First , Defendant notes "[t]here is no evidence of copying in this case." Id. at 4. Plaintiff did not sue Defendant until ten years after development of the accused products, and the inventor was no longer available, but Defendant maintains that this does not mandate a finding of copying. Id. Moreover, Defendant contends that the design of the shallow-mount bollard system in the ’865 Patent is "incredibly simple," and Defendant had been using tubular steel and "rebar cages and concrete to add weight and stability to its barrier structures for years before developing the accused products." Id. at 4-5. Defendant argues these facts support a finding of independent design. Id. at 5. Defendant also relies on the absence of any evidence that Defendant's employees saw Plaintiff's products, noting that the Department of State document does not contain images. Id. That Defendant's then-President "half-heartedly agreed" that various scenarios posed by opposing counsel were "plausible" does not constitute evidence of copying. Id.
Second , Defendant argues that being aware of the ’865 Patent in 2018 is insufficient to demonstrate willfulness, especially when there is no evidence that Defendant knew of the patent prior to that date. Id. at 6. Defendant argues that knowledge of the parent application does not establish knowledge of the relevant patent. Id. Defendant observes that its knowledge of the ’865 Patent in 2018 also does not prove willfulness because its knowledge was the result of a different lawsuit in which Defendant was not a party and its products were not at issue. Id.
Third , Defendant disputes Plaintiff's argument that a good faith defense cannot be presented. Defendant argues that "[a] jury could clearly find that Delta had a ‘good faith belief’ it was not infringing – when it began selling the accused products, the ’865 Patent had not even been filed, let alone granted." Id. at 6. Defendant observes there is no authority requiring an opinion of counsel to respond to a claim of willfulness, and merely pointing to an absence of such an opinion is insufficient to carry the burden of the moving party. Id. at 7. Moreover, Defendant argues that it has offered "numerous valid defenses" in this case, and "[t]he weakness of the ’865 Patent has now been highlighted by the Patent Trial and Appeal Board's Decision to Institute Inter Partes Review of the ’865 Patent, issued on Friday, February 5, 202[1]." Id.
Finally , in response to Plaintiff's suggestion that Defendant should have implemented an "easy" workaround, Defendant notes that it "has begun development of an alternative shallow excavation bollard design." Id. at 7. Although Defendant "believes the ’865 Patent is invalid, it has still developed a new and better product – and did so after it learned of the ’865 Patent," which Defendant argues cuts against willfulness. Id.
In its reply, Plaintiff contends that Defendant's failure to proffer documentary evidence of independent design shows that there is no genuine factual dispute on this issue. Dkt. 134-1 at 3. Plaintiff disputes Defendant's argument that similar technology already existed so the design was likely independent. Thus, Plaintiff contends that, if existing products filled the same need, Defendant would have had no need to create the infringing product. Id. Plaintiff relies on the Department of State document to show that "the likely conclusion is that Delta was aware of RSA's shallow-mount bollards as early as February 2005," so the passage of time is irrelevant. Id. at 4. Plaintiff reiterates that Defendant's knowledge of the ’865 Patent at least as early as 2018 supports willfulness. Id. at 5. Further, Plaintiff argues that it is unreasonable for Defendant to suggest its invalidity defenses have a good faith basis. Id. Plaintiff contends that these defenses cite already-known prior art and adds that Defendant's reexamination bid failed. Id. at 6. Plaintiff also seeks an adverse inference of bad faith because Defendant withheld the advice of counsel it received. Id. at 7. Even if Defendant was making the accused products before the ’865 Patent issued, Plaintiff contends this does not preclude a finding of willfulness. Id. Plaintiff reiterates that Defendant admits it could have designed around the patent. Id. at 8.
b. Analysis
The following factors, some of which the parties address, guide the totality of the circumstances analysis concerning enhanced damages: "(1) whether the infringer deliberately copied the ideas or design of another; (2) whether the infringer, when he knew of the other's patent protection, investigated the scope of the patent and formed a good-faith belief that it was invalid or that it was not infringed; [ ] (3) [the nature of] the infringer's behavior as a party to the litigation;" "(4) Defendant's size and financial condition;" "(5) Closeness of the case;" "(6) Duration of defendant's misconduct;" "(7) Remedial action by the defendant;" "(8) Defendant's motivation for harm;" and "(9) Whether defendant attempted to conceal its misconduct." Read Corp. v. Portec, Inc. , 970 F.2d 816, 827 (Fed. Cir. 1992). A review of the relevant factors demonstrates that genuine issues of fact remain as to willfulness.
First , there is a factual dispute as to whether there was intentional copying and a lack of independent design. Plaintiff relies on testimony by Defendant's former president -- in response to a hypothetical -- that it was "plausible" that Defendant copied Plaintiff's invention. This is not sufficient to show an admission. Indeed, he testified that he did not know the product development history, and he did not know "if that's factual." See Dkt. 103-2 (Exhibit 19 – Dickinson Depo.) at 122:15–125:4. Plaintiff relies on this testimony as proof of intentional copying and lack of independent design. However, that a witness responds to a hypothetical with uncertainty does not support a finding of the absence of a genuine issue of fact. Defendant's former president did not have contemporaneous knowledge as to the events underlying the hypothetical question, and testified that the question apparently involved factual matters. Drawing all inferences in favor of the non-moving party, this is not sufficient to show the absence of a genuine issue of fact.
Second , there are disputed issues of material fact concerning the extent of Defendant's knowledge of the ’865 Patent prior to the filing of this action, as well as the relevance of that knowledge to Defendant's activities. Plaintiff relies on a letter from the City of New York concerning non-Delta products to show both that Defendant became aware of the patent, and as a result, should have known that it was infringing. See, e.g. , Dkt. 103-2 (Exhibit 19) at 128:3–15; Dkt. 100-6 (Exhibit 38 – Dickinson Depo., Ex. 11); Dkt. 100-6 (Exhibit 39 – Barnes Depo.) at 34:24–35:8, 36:17–37:1, 39:8–18. The letter shows that Defendant became aware of the ’865 Patent in August 2018 in the context of the Port of New York matter. Defendant admits that it forwarded the letter to an attorney in which it sought advice. However, drawing all inferences in favor of Defendant, these facts do not conclusively demonstrate pre-suit knowledge concerning Defendant's own potential infringement such that this factor conclusively tips in favor of willfulness. A jury could conclude that the letter referencing non-Delta products did not give rise to a known legal duty that Defendant then elected to violate. The outcome is not different because Defendant sought the advice of counsel; different inferences may be drawn from the evidence of that action.
Third , there is a disputed issue of material fact concerning Defendant's litigation strategy. Drawing all inferences in favor of Defendant as the non-moving party, that Defendant filed various motions and advanced certain prior art combinations to support its invalidity defense, is not sufficient to establish the absence of a triable issues as to willfulness. A jury could conclude that such actions and positions are common in patent litigation.
Finally , there is a disputed issue of material fact concerning Defendant's alternative-design development. Plaintiff argues that Defendant should have started the development of alternative designs much earlier. Defendant argues that its ongoing re-design activities, with a new bollard design currently in the certification process, are sufficient to demonstrate that it did not act in bad faith. See, e.g. , Dkt. 131-1, ¶ 72. Once again, this evidence shows a genuine issue of fact.
Based on the foregoing, the Motion is DENIED with respect to willfulness.
3. Enhanced Damages and Attorney's Fees
Plaintiff contends that the relevant factors tip in favor of an award of enhanced damages. Dkt. 104-3 at 20. Plaintiff notes that Defendant has known of the ’865 Patent since no later than 2018. Id. Plaintiff reiterates that "the evidence that exists points to Delta having plausibly copied RSA's patented invention." Id. at 21–22. Next, Plaintiff argues there is no evidence that Defendant "investigated the scope of the patent and formed a good-faith belief that it was invalid or that it was not infringed," Defendant has not provided the opinion it received from counsel upon learning of the ’865 Patent, and Defendant has admitted infringement. Id. at 22–23. Plaintiff argues that Defendant also engaged in "bad litigation conduct" because it "filed two baseless motions to amend and failed to properly prepare two 30(b)(6) witnesses." Id. at 23. Plaintiff argues that Defendant's failure to take remedial design action once it knew of the ’865 Patent further supports enhanced damages. Id. at 24. Due to this conduct, Plaintiff argues that the case is exceptional, and an award of attorney's fees is warranted. Id. at 24–25.
Defendant responds that, "[f]or at least the reasons discussed above [concerning willfulness], RSA has not shown that is entitled to summary adjudication of willfulness, and th[e] question [of enhanced damages] should plainly go to the jury." Dkt. 117 at 8. As to Plaintiff's alleged "afterthought request" for attorney's fees, Defendant argues that fees are unwarranted because it "has valid defenses and is entitled to pursue them;" its "litigation tactics have [ ] been proper, and RSA's dislike for Delta's invalidity and unenforceability theories does not render them unreasonable;" and "RSA [has] fail[ed] to comply with the Court's Standing Order regarding Motions for Attorney's Fees." Id. at 8 (citing Standing Order, Dkt. 14 at 18 of 86).
In its reply, Plaintiff argues that Defendant's cursory response "equates to agreement with RSA's claim" for enhanced damages and fees and its request should be granted. Dkt. 134-1 at 8.
The same genuine issues of material facts discussed with respect to willfulness also preclude summary judgment as to an award of enhanced damages and attorney's fees. Therefore, the Motion is DENIED with respect to the claims for enhanced damages and an award of attorney's fees.
IV. Conclusion
For the reasons stated in this Order, the Motion is GRANTED as to infringement and DENIED as to the remaining issues.