Dr. Greens, Inc. v. Stephens et al, No. 3:2011cv00638 - Document 173 (S.D. Cal. 2015)
Court Description: ORDER Denying 130 Defendant Spectrum's Motion for Summary Judgment: The parties are directed to contact the Magistrate Judge within three business days to reset the case management dates previously vacated pending the Court's ruling on this motion. Signed by Judge John A. Houston on 9/25/15. (dlg)
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Dr. Greens, Inc. v. Stephens et al Doc. 173 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 DR. GREENS, INC., Case No. 11cv638 JAH (KSC) 11 Plaintiff, 12 13 14 15 16 ORDER DENYING DEFENDANT SPECTRUM’S MOTION FOR SUMMARY JUDGMENT v. JAMES MATTHEW STEPHENS, an individual, and SPECTRUM LABORATORIES, LLC, [Doc. No. 130] Defendants. 17 18 19 Related Counterclaims. 20 21 22 INTRODUCTION Pending before the Court is defendant Spectrum Laboratories, LLC’s motion for 23 summary judgment of direct infringement of defendant Spectrum’s ‘776 patent by 24 Plaintiff Dr. Greens (“Plaintiff”). Plaintiff opposes the motion. After a careful review of 25 the pleadings and relevant exhibits submitted by the parties along with the entire record 26 in this matter, and, after considering the oral argument presented at the hearing, this 27 Court DENIES defendant Spectrum’s motion for summary judgment in its entirety. 28 // 1 11CV638 Dockets.Justia.com BACKGROUND 1 2 A. Factual Background - ‘776 Patent 3 The patent-in-suit, U.S. Patent No. 7,192,776 (A>776 patent@), was issued on 4 March 20, 2007. The >776 patent claims a synthetic urine solution and method for 5 manufacturing said solution. A significant feature of the invention is the inclusion of 6 biocides to prevent the solution from undergoing sepsis (i.e., bacterial growth) and 7 decomposition. Through the use of biocides, the solution is able to maintain its viability 8 and utility (i.e., shelf-life). The solution also includes creatinine, a protein that occurs in 9 human urine and is accounted for in most current methods of urinalysis. The >776 10 patent was invented by James Matthew Stephens, who serves as a managing member of 11 defendant Spectrum, an assignee of the patent. 12 Plaintiff is a California corporation that markets and distributes a synthetic urine 13 product entitled Dr. Green’s Agent X (“Agent X”). Defendant Spectrum is its 14 competitor and markets a synthetic urine product entitled Quick Fix. 15 In June 2004, defendant Spectrum acquired a sample of Agent X sold as part of its 16 ongoing efforts to monitor the synthetic urine market. In 2012, Spectrum submitted the 17 Agent X sample for testing to Dr. Thanedar of Avomeen Analytical Services, a chemical 18 analysis laboratory. Following the commencement of the instant suit, Plaintiff submitted 19 their own sample of Agent X for testing to FAI Materials Testing Laboratory, Inc. The 20 parties’ laboratory tests of Agent X yielded different results. Among other things, 21 defendant Spectrum’s analysis demonstrated the presence of the biocide carbamic acid 22 methyl ester in the product, but Plaintiff’s analysis did not. 23 B. Markman Hearing 24 On August 13, 2014, a Markman hearing was held by this Court. Only two claim 25 terms from the ‘776 patent were at issue: “a biocide” and “carbamates.” In both 26 instances, the Court adopted defendant Spectrum’s proposed construction. Whereas 27 Plaintiff had argued that “a biocide” should be construed to mean “only one biocide,” 28 the Court held, in light of general patent parlance as well as the language of the patent 2 11CV638 1 and the prosecution history, that “a biocide” means “one or more biocides.” Moreover, 2 whereas Plaintiff had proposed a construction of “carbamates” that would have limited 3 them to compounds containing the monovalent ion NH2COO¯, the Court noted that 4 Plaintiff ended up withdrawing this limitation based on “subsequent research,” and held 5 that “carbamates” simply means “organic compounds derived from carbamic acid,” the 6 construction proposed by defendant Spectrum. 7 D. Procedural History 8 On March 29, 2011, Plaintiff filed a complaint against defendants Spectrum and 9 James Matthew Stephens seeking declaratory judgment of non-infringement and 10 invalidity of Defendants= >776 patent. Plaintiff also asserts claims for patent misuse, 11 federal statutory unfair competition, common law unfair competition, interference with 12 business relations, and interference with prospective economic advantage. 13 On August 15, 2011, defendant Spectrum filed an answer to Plaintiff=s complaint, 14 along with counterclaims for patent infringement and for violations of the Lanham Act, 15 15 U.S.C. ' 1125 (a)(1)(B); Ohio=s Deceptive Trade Practices Act; California=s Unfair 16 Competition Law; and malicious litigation under Ohio common law. Plaintiff filed an 17 answer to the counterclaim on September 23, 2011. Thereafter, defendants Stephens 18 and Spectrum separately filed motions to dismiss Plaintiff=s complaint. The Court 19 granted both motions to dismiss, allowing Plaintiff leave to amend. 20 Plaintiff subsequently filed an amended complaint seeking declaratory judgment 21 that it does not directly infringe, induce infringement, or contribute to infringement of 22 the >776 patent. Plaintiff also asserts claims for patent misuse, federal statutory unfair 23 competition, common law unfair competition, interference with business relations, and 24 interference with prospective economic advantage. Defendants separately filed answers, 25 along with counterclaims, to Plaintiff=s amended complaint on May 7, 2012. Defendant 26 Spectrum asserts counterclaims for patent infringement and for violations of the Lanham 27 Act, Ohio=s Deceptive Trade Practices Act, California=s Unfair Competition Law, and 28 unfair competition under Ohio common law. 3 11CV638 1 On January 22, 2013, the parties filed a joint claim construction chart and 2 Markman hearing statement. Plaintiff and defendant Spectrum filed their opening 3 Markman briefs on March 4, 2013 and their responses on March 18, 2013. A technical 4 tutorial was held before this Court on June 28, 2013. 5 On February 28, 2013, defendant Spectrum filed an unopposed motion for leave 6 to amend its preliminary infringement contentions, which this Court granted on July 11, 7 2013. Defendant Spectrum also filed a motion to amend its counterclaims, which this 8 Court granted on December 5, 2013. 9 Defendant Spectrum filed a motion for summary judgment on April 3, 2014, 10 which this Court denied without prejudice as premature on the ground that claim 11 construction issues had not yet been resolved in the instant case. The parties appeared 12 before this Court for a Markman hearing on August 13, 2014. 13 On September 11, 2014, defendant Spectrum renewed its motion for summary 14 judgment. The Court set a hearing date for November 17, 2014, which was continued 15 on defendant Spectrum’s motion to December 15, 2014. Plaintiff filed their response in 16 opposition to the motion on November 24, 2014 and defendant Spectrum filed a reply 17 on December 3, 2014. 18 After hearing the arguments of counsel on December 15, 2014, the Court 19 continued the hearing to February 17, 2015 to allow parties to file supplemental 20 briefing. On February 17, 2015, a second hearing was held on the motion. After hearing 21 the arguments of counsel, the Court took the matter under submission. DISCUSSION 22 23 I. Legal Standard 24 Determination of patent infringement is a two-step process: first, the court must 25 determine as a matter of law the meaning of the particular patent claim or claims at 26 issue; and second, it must consider whether the accused product infringes one or more of 27 the properly construed claims. Markman v. Westview Instruments, Inc., 517 U.S. 370, 28 384 (1996); see also Allen Eng’g Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1344 (Fed. 4 11CV638 1 Cir. 2002). The second inquiry is a question of fact and, like all civil cases, summary 2 judgment of infringement or noninfringement is only appropriate when no genuine 3 dispute of material fact exists. Irdeto Access, Inc. v. Echostar Satellite Corp., 383 F.3d 4 1295, 1299 (Fed. Cir. 2004), quoting Bai v. L & L Wings, Inc., 160 F.3d 1350, 1353 5 (Fed. Cir. 1998). 6 A fact is material when, under the governing substantive law, it could affect the 7 outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); 8 Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997). A dispute about a material fact 9 is genuine if Athe evidence is such that a reasonable jury could return a verdict for the 10 nonmoving party.@ Anderson, 477 U.S. at 248. 11 A party seeking summary judgment always bears the initial burden of establishing 12 the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 13 317, 323 (1986). The moving party may satisfy this burden in two ways: (1) by 14 presenting evidence that negates an essential element of the nonmoving party=s case or 15 (2) by demonstrating that the nonmoving party failed to make a showing sufficient to 16 establish an element essential to that party=s case on which that party will bear the 17 burden of proof at trial. Id. at 322-23. 18 Where the party moving for summary judgment does not bear the burden of proof 19 at trial, it may show that no genuine issue of material fact exists by demonstrating Athere 20 is an absence of evidence to support the non-moving party=s case.@ Id. at 325. The 21 moving party is not required to produce evidence showing the absence of a genuine issue 22 of material fact, nor is it required to offer evidence negating the nonmoving party=s 23 claim. Lujan v. National Wildlife Fed=n, 497 U.S. 871, 885 (1990); United Steelworkers 24 v. Phelps Dodge Corp., 865 F.2d 1539, 1542 (9th Cir. 1989). ARather, the motion may, 25 and should, be granted so long as whatever is before the District Court demonstrates 26 that the standard for the entry of judgment, as set forth in Rule 56(c), is satisfied.@ 27 Lujan, 497 U.S. at 885 (quoting Celotex, 477 U.S. at 323). If the moving party fails to 28 discharge this initial burden, summary judgment must be denied and the court need not 5 11CV638 1 consider the nonmoving party=s evidence. See Adickes v. S.H. Kress & Co., 398 U.S. 2 144, 159-60 (1970). 3 If the moving party meets the initial burden, the nonmoving party cannot defeat 4 summary judgment merely by demonstrating Athat there is some metaphysical doubt as 5 to the material facts.@ Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 6 574, 586 (1986); see also Anderson, 477 U.S. at 252 (AThe mere existence of a scintilla 7 of evidence in support of the nonmoving party=s position is not sufficient.@). Rather, the 8 nonmoving party must Ago beyond the pleadings and by her own affidavits, or by the 9 depositions, answers to interrogatories, and admissions on file, designate specific facts 10 showing that there is a genuine issue for trial.@ Celotex, 477 U.S. at 324 (quoting Fed. 11 R. Civ. P. 56(e)) (internal quotations omitted). 12 ADisputes over irrelevant or unnecessary facts will not preclude a grant of 13 summary judgment.@ T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass=n, 809 F.2d 14 626, 630 (9th Cir. 1987). AThe district court may limit its review to the documents 15 submitted for purpose of summary judgment and those parts of the record specifically 16 referenced therein.@ Carmen v. San Francisco Unified Sch. Dist., 237 F.3d 1026, 1030 17 (9th Cir. 2001). Therefore, the court need not Ascour the record in search of a genuine 18 issue of triable fact.@ Keenan v. Allen, 91 F.3d 1275, 1279 (9th Cir. 1996) (citing 19 Richards v. Combined Ins. Co., 55 F.3d 247, 251 (7th Cir. 1995)). 20 The court may not make credibility determinations, and inferences to be drawn 21 from the facts must be viewed in the light most favorable to the party opposing the 22 motion. Masson v. New Yorker Magazine, 501 U.S. 496, 520 (1991); see Anderson, 23 477 U.S. at 255; Matsushita, 475 U.S. at 587. 24 In the endeavor to establish the existence of a factual dispute, the opposing party 25 need not establish a material issue of fact conclusively in its favor. It is sufficient that 26 “the claimed factual dispute be shown to require a jury or judge to resolve the parties’ 27 differing versions of the truth at trial.” First Nat’l Bank of Ariz. v. Cities Service Co., 391 28 U.S. 253, 289-90 (1968); Giles v. General Motors Acceptance Corp., 494 F.3d 865, 872 6 11CV638 1 (9th Cir. 2007). Thus, the “purpose of summary judgment is to ‘pierce the pleadings 2 and to assess the proof in order to see whether there is a genuine need for trial.’ ” 3 Matsushita, 475 U.S. at 587 (quoting Fed. R. Civ. P. 56(e) Advisory Committee Note to 4 1963 amendments). 5 II. Analysis 6 A. 7 8 Evidentiary Issues i. Objections to Declarations Plaintiff objects to Dr. Shri Thanedar’s Declaration pursuant to Rules 702 and 9 703 of the Federal Rules of Evidence on the grounds that the testimony is unreliable and 10 lacks specialized knowledge. Defendant Spectrum objects to and moves to strike 11 portions of Stefanie Eick’s Declaration and Gary Eastman’s declaration on the grounds 12 that the declarations lack personal knowledge, is inadmissible hearsay, and improper 13 opinion testimony. 14 The Court found it unnecessary to consider the objected to portions of the 15 declarations in making its determination on the motion. As such, the parties’ objections 16 are DENIED AS MOOT. 17 18 ii. Requests for Judicial Notice Pursuant to Federal Rule of Evidence 201(b), Plaintiff requests that the Court 19 take judicial notice of two documents: United States Patent No. 5,534,649, entitled 20 “Process for Preparing Dialkyl Carbonates” and International Patent Application No. 21 WO2014/072803. Defendant Spectrum opposes the requests and argues taking judicial 22 notice of the truth of the documents’ contents is improper. 23 The Court found it unnecessary to consider the documents that are the subject of 24 Plaintiff’s requests in making its determination on the motion. As such, Plaintiff’s 25 requests for judicial notice are DENIED AS MOOT. 26 // 27 // 28 // 7 11CV638 1 B. Defendant’s Motion for Summary Judgment 2 Defendant Spectrum moves for summary judgment on the grounds that the 3 synthetic urine products sold by Plaintiff literally meets the limitations of independent 4 claim 1 and dependent claims 2, 3, and 4 of the ‘776 patent. 5 Plaintiff argues, among other things, that “the evidence before the Court is 6 insufficient to determine that no genuine issue of material fact remains as to whether the 7 alleged Agent X sample relied on by [defendant] Spectrum here is a true and correct 8 representation of the accused product sold by Dr. Greens in 2004” and this Court agrees. 9 See Doc. No. 151 at 7. 10 In order to test Agent X for direct infringement, defendant Spectrum obtained a 11 sample of a 2004 box of Agent X. Kusala Decl. ¶13, Doc. No. 101-2 at 3. Once 12 obtained, defendant Spectrum performed an inspection of Agent X consistent with its 13 regular business practice of examining competitor’s products. Kusala Decl. ¶¶12, 14, 14 Doc. No. 101-2 at 3-4. Specifically, defendant Spectrum personnel opened the black 15 box and observed the following contents inside of the box: a capped plastic bottle 16 holding a liquid, an instruction sheet dated June 2004, a heat pad, and a rubber band. 17 Kusala Decl. ¶15, Doc. No. 101-2 at 4. Defendant Spectrum asserts they did not open 18 the capped plastic bottle during this time. Kusala Decl. ¶16; Doc. No. 101-2 at 4. The 19 contents, including the capped plastic bottle were placed back inside the box. Kusala 20 Decl. ¶¶14-16, Doc. No. 101-2 at 3. In 2008, when defendant Spectrum moved to a 21 new office, defendant Spectrum moved the box of Agent X to a secure location in the 22 new office. Kusala Decl. ¶14-16, Doc. No. 101-2 at 3. The box remained in its new 23 location until September 28, 2012 when the Agent X sample was sent for testing. Kusala 24 Decl. ¶19-20, Doc. No. 101-2 at 4; see also Thanedar Decl. ¶6, Doc. No. 101-3 at 2-3. 25 In opposition, Plaintiff asserts that in 2004 Agent X was only sold in a powder 26 form, and was not premixed with a liquid. Green Decl. ¶3-4, Doc. No. 139-2 at 2. 27 Plaintiff asserts that the black box of Agent X sold by Plaintiff contained the following 28 contents: a small vial of powdered synthetic urine, an instruction sheet, a heating pad, a 8 11CV638 1 rubber band, and an empty 3 ounce plastic bottle with a temperature strip and flip-top 2 cap. Green Decl. ¶7, Doc. No. 139-2 at 3. 3 Plaintiff contends that although they currently sell a liquid form of Agent X, the 4 product was not introduced on the market until March 2005. Green Decl. ¶8, Doc. No. 5 139-2 at 3. As opposed to the black box entitled Agent X which contains the powder, 6 Plaintiff contends that the liquid form of Agent X is sold in a grey box and labeled 7 “Agent-X Premixed.” Green Decl. ¶8, Doc. No. 139-2 at 3. As sold, the grey box 8 contains the following items: a 3 ounce bottle of liquid synthetic urine with a 9 temperature strip and flip-top cap, a heating pad, rubber band, and instruction sheet. 10 Green Decl. ¶8, Doc. No. 139-2 at 3. 11 Accordingly, Plaintiff asserts that the liquid Agent X sample tested by defendant 12 Spectrum could not have been produced by Plaintiff because the product did not exist at 13 the time. Green Decl. ¶7, Doc. No. 139-2 at 3. Additionally, Plaintiff argues that that 14 the sample was tampered with and its chain of custody is questionable. See Doc. No. 15 139 at 4-5, 9-10. With respect to the sample’s chain of custody, Plaintiff argues that 16 defendant Spectrum has not established the following facts: who and where defendant 17 Spectrum “obtained” the alleged Agent X box from, who first opened the box, who had 18 access to the box after it was opened, and who first inspected the contents of the box. 19 See Doc. No. 139 at 7. Plaintiff also argues that a gap in the chain of custody exists 20 because Fran Kusala, the employee defendant Spectrum relies on to testify to the 21 sample’s chain of custody, did not work for defendant Spectrum from December 31, 22 2004 to December 31, 2007. Id. at 6-7. 23 In reply, defendant Spectrum argues that there is no evidence that any tampering 24 occurred and Plaintiff’s assertion to the contrary is mere speculation and does not create 25 a genuine issue of material fact. See Doc. No. 156 at 5. Even if tampering did occur, 26 defendant Spectrum argues that Plaintiff lacks evidence that tampering would have 27 introduced the carbamate biocide into Agent X. Id. Defendant Spectrum also contends 28 that there is no evidence of a broken chain of custody. See Doc. No. 146 at 3. 9 11CV638 1 Specifically, defendant Spectrum argues that Kusala was employed by defendant at all 2 material times: the time it acquired Agent X in 2004 and again in 2008 when it relocated 3 to a new office. See Doc. No. 146 at 3.1 4 After commencement of the instant suit, Plaintiff located in its warehouse a vial of 5 the accused product which had not been sold in several years and observed that the 6 sample appeared to be clumped and contaminated by humidity. See Green Decl. ¶21, 7 Doc 139-2 at 5-6. Plaintiff asserts that these observations are in part due to the two 8 year shelf-life of the product, which is the standard for the industry and the shelf-life of 9 defendant Spectrum’s Quick Fix synthetic urine product. See Green Decl. ¶14, Doc 13910 2 at 4. As such, Plaintiff argues that the results from Dr. Thanedar’s tests of the alleged 11 Agent X sample, which sat on a shelf for more than seven years and was exposed to the 12 elements, are not reliable. See Doc. No. 139 at 10. 13 In reply, defendant Spectrum argues that Plaintiff does not specify what effect the 14 expiration of the accused product’s shelf life had on the product, if any. See Doc. No. 15 146 at 5. Specifically, defendant Spectrum points out that Plaintiff has not argued that 16 the expiration of the shelf-life could have resulted in the added presence of carbamic acid 17 methyl ester into the product. Id. Defendant Spectrum goes on to argue that Plaintiff’s 18 testimony does not counter Dr. Thanedar’s observation that the sample he tested 19 showed no signs of spoliation. Id. 20 Here, the evidence presented by the parties makes clear that defendant Spectrum 21 obtained the black box of Agent X without the words “Premixed” on the outside of the 22 box. The record evidences that the box of Agent X that defendant Spectrum obtained 23 included a liquid sample and subsequently, defendant Spectrum tested the liquid sample 24 to establish its infringement claim. The record also shows that the box itself was moved 25 26 27 28 1 During oral argument, Plaintiff asserted that the chain of custody is broken on this fact alone in that defendant Spectrum has not presented any witnesses with personal knowledge of the storage and integrity of defendant Spectrum’s sample for the three year period during Kusala’s absence. 10 11CV638 1 when defendant Spectrum moved to a new office location in 2008 and there is no 2 evidence that anyone has personal knowledge regarding the safe keeping or integrity of 3 the box for the three year period prior to the move when Kusala did not work for 4 defendant Spectrum. Lastly, the record shows that industry standards calls into question 5 the integrity of the accused product. 6 Having considering all of the evidence, and all reasonable inferences to be drawn 7 therefrom, in the light most favorable to the non-moving party, the Court finds there are 8 genuine issues of material facts that defeat granting summary judgment in this case, 9 including, without limitation, the reliability of the test results of the accused product, 10 shelf-life of the products, defendant Spectrum’s chain of custody, and credibility 11 determinations. These issues must be determined by the trier of fact. Defendant 12 Spectrum’s motion for summary judgment is DENIED.2 CONCLUSION AND ORDER 13 14 For the foregoing reasons, IT IS HEREBY ORDERED that: 15 1. Defendant Spectrum’s motion for summary judgment is DENIED [doc. no. 130]; and 16 17 2. The parties are directed to contact the Magistrate Judge within three business 18 days to reset the case management dates previously vacated pending the 19 Court’s ruling on this motion. 20 Dated: September 25, 2015 21 ______________________________ 22 JOHN A. HOUSTON United States District Judge 23 24 25 26 2 27 28 Because a genuine issue exists as to the threshold question of the authenticity and integrity of the accused Agent X product, the Court will not address Defendant’s other arguments, including its infringement claim, premised on the authenticity of the same product. 11 11CV638
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