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National Graphics, Inc. v. Brax Ltd.

United States District Court, E.D. Wisconsin

December 22, 2015

BRAX LTD, et al., Defendants

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[Copyrighted Material Omitted]

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          For National Graphics Inc, Plaintiff: Brad L Meyer, John P Fredrickson, Sarah M Wong, Michael T Griggs, Boyle Fredrickson SC, Milwaukee, WI.

         For Brax Ltd, Defendant: Joseph S Heino, LEAD ATTORNEY, Matthew R McClean, Patrick M Bergin, Davis & Kuelthau SC, Milwaukee, WI.

         For Dynamic Drinkware LLC, Defendant: Joseph S Heino, LEAD ATTORNEY, Aaron E Hall, Matthew R McClean, Patrick M Bergin, Davis & Kuelthau SC, Milwaukee, WI.

         For Service Litho-Print Inc, Defendant: Joseph S Heino, LEAD ATTORNEY, Matthew R McClean, Patrick M Bergin, Davis & Kuelthau SC, Milwaukee, WI; Joseph T Leone, Joseph A Ranney, DeWitt Ross & Stevens SC, Madison, WI.

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         William C. Griesbach, Chief United States District Judge.

         The parties in this infringement action have filed cross motions for summary judgment. The Plaintiff seeks summary judgment as to both validity and infringement, while the Defendants' motion limits itself to validity. This court previously addressed the patents in an April 24, 2014 Decision and Order addressing claim construction as well as validity and infringement of some of the claims. For the reasons given below, the motions for summary judgment will be denied in most respects.

         I. Analysis

         Summary judgment is proper " if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). Summary judgment of infringement or non-infringement can only be granted if, after viewing the alleged facts in the light most favorable to the non-movant, there is no genuine issue whether the accused device is encompassed by the claims. Fed.R.Civ.P. 56(c); Pitney Bowes, Inc. v. Hewlett-Packard Co., 182 F.3d 1298, 1304 (Fed. Cir. 1999). As for validity, because patents are presumed valid, " a moving party seeking to invalidate a patent at summary judgment must submit such clear and convincing evidence of facts underlying invalidity that no reasonable jury could find otherwise." SRAM Corp. v. AD--II Eng'g, Inc., 465 F.3d 1351, 1357 (Fed. Cir. 2006).

         II. Corresponding Patents

         A. Validity

         As relevant here, the '185 patent teaches a method of producing a corresponding lenticular image comprising the steps of:

providing an output device in connection with a computer;
receiving into the computer memory an interlaced image file;
converting the interlaced image file into an output having an output resolution;
varying the resolution of the output to define a varied output resolution;
and creating a corresponding lenticular image using the output at the varied output resolution;
wherein the varying is accomplished using a Mainscale Scan Adjustment (" MSA" ) clock.

(ECF No. 156-5.)

         " While the ultimate question of patent validity is one of law, there are a number of underlying inquiries that raise questions of fact. In addition to obviousness, these include anticipation, [and] prior public use or sale." Markman v. Westview Instruments, Inc., 52 F.3d 967, 989 n.1 (Fed. Cir. 1995) aff'd, 517 U.S. 370, 116 S.Ct. 1384, 134 L.Ed.2d 577 (1996).

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          The Defendants argue that claim 1 of the '185 patent is invalid as obvious and / or anticipated by prior art. The Defendants' expert, David Roberts, reviewed the patents and the prior art and concluded that correspondence between the resolution of the interlaced image and the pitch of the lenticular lens was well known in the art, and it was also well known that variable resolution output devices could produce correspondence. In addition, he opined that NGI's previous use of something called a Hell Scanner, and its more recent use of a Kodak Trendsetter, performed essentially the same function as its patented technology did. In short, he believes it would have been obvious to one skilled in the art to vary the resolution of variable output devices to produce a corresponding lenticular image, and in fact that is exactly what NGI had been doing itself for years prior to its patent application.

         1. Prior Use

         Before reaching the merits of the dispute, I must address NGI's arguments as to why the merits of the Defendants' prior use defense should not even be reached.

         a. Summary Judgment Already Granted

         NGI first argues that this court already granted summary judgment on the prior use defense, concluding that the Defendants had failed to produce sufficient evidence to allow a jury to find in their favor on it. Accordingly, it argues that the present round of summary judgment briefing was not an opportunity to re-litigate that issue. The Defendants respond, however, that the previous summary judgment motion was filed by NGI at a much earlier stage of discovery. They cannot be faulted, they argue, for the fact that the evidence was not fully developed at that time.

         I am satisfied that, given the somewhat unusual circumstances of this case, the better practice is to reach the merits rather than become bogged down in procedural details, particularly when no suggestion of prejudice has been raised. The fact is that the evidence upon which the Defendants now rely had not been fully available in 2014, and the previous ruling came in the context of claim construction and partial summary judgment motion filed by NGI, a motion that did not give the Defendants a full opportunity to advance their defenses.

         b. Public Use of Trendsetter

         Under 35 U.S.C. § 102(b), " [a] person shall be entitled to a patent unless ... the invention was in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States...." 35 U.S.C. § 102(b).

We look to the totality of the circumstances when evaluating whether there has been a public use within the meaning of section 102(b). The totality of the circumstances is considered in conjunction with the policies underlying the public use bar. The circumstances may include: the nature of the activity that occurred in public; the public access to and knowledge of the public use; whether there was any confidentiality obligation imposed on persons who observed the use; whether persons other than the inventor performed the testing; the number of tests; the length of the test period in relation to tests of similar devices; and whether the inventor received payment for the testing.

Netscape Commc'ns Corp. v. Konrad, 295 F.3d 1315, 1320 (Fed. Cir. 2002) (citations omitted).

         NGI argues that the Creo/Kodak Trendsetter was not used " publicly" because the third party who used it (a company called Travel Tags) was using it in a confidential and propriety fashion, not shared with anyone outside of that company

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except under a non-disclosure agreement. The Defendants respond that although confidentiality might be an exception to the " on sale" bar on patentability, 35 U.S.C.A. § 102(a)(1), it is not an exception to the public use bar, which is the defense the Defendants are relying on. That is, even if the third party took steps to keep its use of the Trendsetter private, that would not render that use a non-public use. The point of the public use bar is to prevent B from patenting a product or method that A had already been using, and thus it does not matter whether A kept its own use a secret. " Public" does not mean the use had to be openly known, but merely that the use was by someone other than the inventor or his agents.

Public use includes " any use of [the claimed] invention by a person other than the inventor who is under no limitation, restriction or obligation of secrecy to the inventor." " The public use bar serves the policies of the patent system, for it encourages prompt filing of patent applications after inventions have been completed and publicly used, and sets an outer limit to the term of exclusivity."

Netscape Commc'ns Corp. v. Konrad, 295 F.3d 1315, 1320 (Fed. Cir. 2002) (citations omitted).

          Netscape does not stand for the proposition that a completely private use by a third party could be viewed as an invalidating " public use," however. " [W]hen an asserted prior use is not that of the applicant, § 102(b) is not a bar when that prior use or knowledge is not available to the public." Woodland Trust v. Flowertree Nursery, Inc., 148 F.3d 1368, 1371 (Fed. Cir. 1998). In W.L. Gore & Associates, Inc. v. Garlock, Inc., for example, the court found no public use when the claimed invention was used by third parties pursuant to a confidentiality agreement. 721 F.2d 1540, 1550 (Fed. Cir. 1983) (" It was error to hold that Budd's activity with the Cropper machine . . . was a " public" use of the processes claimed in the '566 patent, that activity having been secret, not public." ) And in Baxter Int'l, Inc. v. COBE Labs., Inc., the court found that a lack of confidentiality was crucial to its finding of a public use. 88 F.3d 1054, 1059 (Fed. Cir. 1996) (" Suaudeau's lack of effort to maintain the centrifuge as confidential coupled with the free flow into his laboratory of people . . . who observed the centrifuge in operation and who were under no duty of confidentiality supports only one conclusion: that the centrifuge was in public use." ) The court went on to find that, " [a]s between a prior inventor who benefits from a process by selling its product but suppresses, conceals, or otherwise keeps the process from the public, and a later inventor who promptly files a patent application from which the public will gain a disclosure of the process, the law favors the latter." Id.

         Here, Travel Tags' Rule 30(b)(6) witness testified that his company considered its process to be confidential, and did not disclose it to customers or third parties, except possibly when a nondisclosure agreement would govern. (ECF No. 167-4 at 121-122.) That evidence is unrebutted. Accordingly, I must conclude that Travel ...

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