Morpho Detection, Inc. v. Smiths Detection, Inc., No. 2:2011cv00498 - Document 253 (E.D. Va. 2012)
Court Description: OPINION AND ORDER re 58 MOTION for Summary Judgment Regarding Invalidity, Laches, Failure to Mark, and No Willfulness; ORDERED that summary judgment of invalidity based on obviousness is DENIED. Smiths' requests for partial summary judgment on the issues of laches, failure to mark, and lack of willful infringement are GRANTED. Signed by District Judge Mark S. Davis and filed on 11/21/2012. (rsim, )
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UNITED FILED STATES DISTRICT COURT EASTERN DISTRICT OF VIRGINIA Norfolk Division MORPHO DETECTION, NOV 2 1 2012 CLERK, U.S. DISTRICT COURT INC., . NORFOLK. VA Plaintiff, Civil Action No. 2:llcv498 SMITHS DETECTION INC., Defendant. OPINION AND ORDER This judgment matter filed is by before the defendant Court Smiths on a motion Detection Inc. for summary ("Smiths"). Smiths argues that a patent owned by plaintiff Morpho Detection, Inc. ("Morpho") is invalid as obvious. Alternatively, seeks partial summary judgment on the issues of to mark, October judgment and 22, lack 2012, of the motion. For evidence Court the is DENIED. judgment on However, willful infringement. a hearing on Smiths' summary discussed below, Smiths' reasons On invalidity based on obviousness Smiths' the issues of failure of held request for summary judgment of laches, Smiths laches, requests for partial failure to mark, summary and lack of willful infringement are GRANTED. I. FACTUAL AND PROCEDURAL BACKGROUND As discussed at length in this Court's Markman Opinion, No. 110, at issue in this case is a single patent owned ECF by Morpho titled Contraband," the "Materials patent *670 patent method, number Apparatus 6,815,670 are directed toward for the Detection ("'670"). The claims a detector apparatus, of of and that can be used to detect and identify trace amounts of contraband. called and Such an Ion patent expressly Mobility contraband detector purportedly unique Spectrometer that is found advancement alternating use of two, covers of a detector ("IMS"), in the the a prior '670 device type art. patent of The is the or more, dryers to provide a continuous or substantially continuous flow of clean dry air to aid in the detection of contraband. On September 2, infringement action detector devices '670 patent. "Davies render that Morpho's use filed multiple the instant is selling dryers and patent contraband infringe on the summary judgment motion asserts that the 5,405,781 ("'631") Morpho alleging that Smiths Smiths' patent" 3,513,631 2012, both of patent ("'781") and the "Seibert which predate Morpho's invalid as obvious. patent" '670 patent, Alternatively, Smiths argues that pre-complaint damages are barred in this case based on the doctrine of laches, mark its IMS dual-dryer and based on Smiths' detector with the '670 failure to patent number. Smiths also argues that this Court should find that there is no evidence of argument willful that the infringement '670 patent because is invalid Smiths has a credible as obvious. Smiths opposes summary judgment on all issues raised by Morpho, although Smiths concedes that it did not mark its IMS detector device, and therefore, Smiths' counsel asserts that Smiths does not seek any pre-Complaint damages. II. The Federal district court STANDARD OF REVIEW Rules "shall of Civil grant" Procedure summary provide judgment in that favor a of a movant if such party "shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of some law." alleged defeat an Fed. factual otherwise R. Civ. P. dispute 56(a). between properly The mere the supported existence parties motion "will for of not summary judgment; the requirement is that there be no genuine issue of material 247-48 fact." v. Liberty Lobby Inc., 477 U.S. 242, (1986). Once entry Anderson of a movant summary has properly judgment, the advanced non-moving evidence party supporting may not rest upon the mere allegations of the pleadings, but instead must set forth specific statements Corp. "the facts in illustrating v. Catrett, 477 a U.S. the form genuine 317, of issue 322-24 exhibits for (1986). and trial. At sworn Celotex that point, judge's function is not himself to weigh the evidence and determine the truth of the matter but is a genuine issue for trial." to determine whether there Anderson, 477 U.S. at 249. In doing so, the judge must construe the facts in the light most favorable to the non-moving party, determinations. Id. at 255. non-movant's favor, thinks but the a [non-movant] ruling the trial be favors fair-minded jury could summary judgment evidentiary standard merits [,] Id. at 252. . . existence insufficient" to overcome a plaintiff's defendant's Accordingly, colorable, or is probative, summary judgment may be granted." III. implicates mere the the Because a [t]he of other for . support merely verdict would in "is a the that evidence evidence return or proof of Id. side whether he of the summary judgment motion. one "necessarily on scintilla will unmistakably on the evidence presented." on substantive After viewing the evidence in the "the judge must ask himself not evidence whether and may not make credibility the apply at of a position well-founded if the non-movant's not significantly Id. at 249-50. DISCUSSION A. Invalidity Based on Obviousness A patent is invalid based on obviousness "if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which pertains." § 103(a). is 35 U.S.C. ultimately a legal said subject matter While the obviousness inquiry determination, it is predicated on underlying factual findings that are unique to each patent case. KSR Int'l Co. The v. following Teleflex four-factor Inc., test 550 U.S. guides 398, the obviousness "(1) the scope and content of the prior art, skill in the considerations, such unsolved and needs, Lock Co., John as the Co., 383 1237 of (Fed. 1, Because presumption of validity, (4) commercial U.S. factors") . and failure 616 F.3d 1231, Deere Graham art, 17-18 the evidence," 1314, & (noting (Fed. Nephew, that establish, of by to Cir. LLC v. 2011) . See Inc., 688 prove obviousness, clear and F.3d long v. but Master (hereinafter enjoys a "the statutory an alleged infringer "by clear MGA Entm't, Kinetic 1342, convincing felt is invalid as obvious must validity Innovention Toys, 1320 Smith presumption secondary (citing Graham v. (1966)) 35 U.S.C. § 282, the level of Wyers 2010) patent inquiry: relevant success, Cir. a (3) others." seeking to establish that a patent overcome any (2007). (2) the differences between the prior art and the claims at issue, ordinary 406-07 an and convincing Inc., 637 Concepts, 1360 (Fed. alleged evidence, Inc. Cir. a v. 2012) infringer that F.3d must skilled artisan would have both been motivated to combine the prior art and have a reasonable expectation of success in doing so).1 1 While it remains appropriate to analyze any "teaching, suggestion, or motivation to combine elements from different prior art references," the Supreme Court's opinion in KSR made clear that such considerations are not rigid requirements, and the "overall inquiry must be expansive and flexible." Kinetic Concepts, 688 F.3d at 1360. Here, the stipulated, level and of the uncontested. As three factors Graham ordinary third discussed skill Graham below, reveals in the art is factor has therefore consideration that there are of been the disputes first as to material facts precluding the Court from finding that Smiths has demonstrated a prima facie case of obviousness, under a "clear and convincing" standard. the that Court viewing fourth assumes the facts Graham in a a factor, prima light which facie most Furthermore, case was favorable relies particularly on even if demonstrated, to Morpho, objective the evidence, reveals that Morpho may be able to rebut such prima facie case, thus precluding a finding of invalidity on summary judgment. 1. The first The First Graham Factor Graham factor involves scope and content of the prior art. the consideration of Here, the parties appear to dispute both whether the '631 patent is relevant prior art, what is taught by such art.2 the and Considering first whether the '631 patent is relevant art to the instant invention, such issue "is a fact question" "analogous." and Wyers, turns on whether 616 F.3d at 1237. a prior patent is The Federal Circuit has held that a prior patent is "analogous" if such patent "is from 2 In contrast, it is undisputed that the '781 patent is relevant prior art. The '781 patent covers an IMS contraband detector that utilizes a "two-stage" drying approach, whereby a first dryer, preferably a "chiller" the removes second Abstract. dryer, moisture which from the "includes air before a that suitable same air reaches absorbent." '781 the same field of endeavor [as the patent in suit] the problem field of addressed," endeavor, or the if regardless of falling outside the inventor's patent "still is reasonably prior pertinent to the particular problem with which the inventor is involved." Id. (emphasis added). pertinent" to because of the matter with which it deals, the commended itself problem.'" Clay, inventor's to an problem inventor's Innovention Toys, 966 F.2d 656, F.3d at 1238 A prior patent is "reasonably 659 if it "'is which, logically would have attention in considering his 637 F.3d at 1321 (Fed. Cir. one 1992)); (quoting In re see also Wyers, 616 (interpreting the United States Supreme Court's KSR opinion as directing the Federal Circuit to "construe the scope of analogous art broadly"). Here, the there appears to be a factual dispute as to whether '631 patent, same field of which covers endeavor contraband detectors. persuasive scope this of position the the fractionator," patent in at 658 'analogous' the create is on such point, '631 patent ("Whether a fact proceedings a genuine suit, is in the which covers Although Morpho appears to have the more counsel factual against contested issue on summary judgment. F.2d in as a "gas a reference question."). and based issue of on disputes making See in Accordingly, material fact, Clay, 966 art is prior at expert the to the a finding on In re the conflicting as this stage views Court that cannot conclude as a matter of law that the '631 patent is in the same "field or endeavor" as the '670 patent. The Court similarly finds as to whether the issue appears preponderance of there are factual disputes '631 patent is "reasonably pertinent" to the specific problem addressed this that to the by Morpho's favor '670 patent, Smiths. standard, evidence Notably, this although under Court a might conclude that there are sufficient undisputed facts to find that the '631 gas fractionator patent is "reasonably pertinent" the specific problem addressed by the '670 patent. heightened "clear and convincing" evidence to However, the standard applicable to invalidity determinations counsels against such a finding in this case at this time. As discussed in greater detail later in this Opinion, the primary "problem" addressed by the '670 patent appears to be the need for a reliable source of clean dry air that enables a contraband detector to effectively operate at a reasonable cost. The '670 patent solves this "problem" by employing alternating desiccant dryer tubes whereby the desiccant in the idle dryer is "recharged" Such solution desiccant line" through to 5:65-6:1 and heating eliminates eliminates either replace (indicating while the the or that the need need other to to recharge dryer routinely take the desiccant the replace detector desiccant. can operates. be See the "off '670 "recycled automatically by employing two dryer tubes as shown in Fig. 9"). The earlier '631 patent appears to offer a very similar solution to a very similar problem, as, in some embodiments, it utilizes two alternating desiccant dryers to "adsorb" moisture from a gas whereby a heater is used "to regenerate the spent desiccant at the conclusion such in of the drying invention appears the sense that cycle." somewhat it is '631 different aimed 1:49-55. Although '670 patent "fractionating at from the gas" by "continuously removing a first gas from a mixture thereof with a second gas," both the specification and the claims of the '631 patent expressly indicate that the "first gas" that is separated can be water vapor. '631 1:14-15, 2:22-29, and Claim 2. '631 patent goes on to discuss in its specification, in its figures, and assert apparatus that: (1) (2) through heat is regenerates idle. similar Such to its claims, a illustrate process and alternatively utilizes two sorbent beds; and alternating what in The is the inactive "dual dryer" found in the '670 such evidence sorbent bed while system appears patent it quite specification, figures, and claims. contrast In patent is Morpho's to "reasonably '670 patent, demonstrate look to to the that '631 pertinent" suggesting to the that problem the '631 addressed by Morpho advances expert statements seeking one patent skilled when in the seeking to relevant improve art would not upon detector dryer systems as they existed at the time. Morpho contends that the '631 patent is not "analogous" because it does not describe a dual-dryer system suitable for use in the contraband detection field since "a gas fractionator would typically be considered to be a device that separates (fractionates) nitrogen or oxygen from air." 27, ECF Nos. 66-67 gasses Morpho S.J. Opp. (emphasis added). such Brief Ex. as 3 at Such statement appears to be of somewhat limited force because the '631 patent by its own terms gas expressly indicates that "fractionating" can be "water the vapor." it contemplates Although the Court has doubts as to the strength of Morpho's evidence on such point, in light of the "clear and convincing" standard, the Court does not make the finding that the '631 patent is analogous prior art. In the addition to its expert's '631 patent is analogous, statement Morpho contends factual disputes as to what is taught by the is, whether "pressure such swing patent desorption discloses device," addressing as limited to teaching a device with a greater size, pressure, other are That than whether a it is flow rate, and than that compatible with an IMS contraband detector. The law is clear that art there '631 patent. anything as well that whether covers is a fact the determination of question, and in light what of the prior the factual disputes discussed above and the applicable clear and convincing evidence standard, this Court does 10 not resolve such issue at this time. content of See In re Mouttet, the prior art, 686 as F.3d at well as whether teaches away from the claimed invention, fact.").3 to 1330 ("The scope and the prior art are determinations of Accordingly, although the first Graham factor appears favor Smiths, on this record, it is appropriate to defer to the fact finder on such factor. 2. The Second Graham Factor The second Graham factor involves a comparison between the claims of the patent in suit and the relevant prior art. 3 As to the purported "compatibility issues" between the '631 patent and an IMS detector, Morpho has advanced some evidence indicating: (1) that a gas fractionator cannot produce a stream of dry air of sufficient quality to permit the effective operation of IMS contraband detectors; and (2) that the '631 patent is designed to be a larger size, operate at higher pressure, and produce a higher air flow rate than needed for an IMS contraband detector. In response, Smiths relies largely on the text of the '631 patent in an effort to demonstrate that such patent is scalable regarding size, flow rate, and pressure, and furthermore, that the '631 patent expressly contemplates being used for "drying . . . instrument air." '631 10:16-17. The Court does not resolve such issue because it appears that reasonable jurors could differ as to the weight to afford conflicting evidence associated with determining what the prior art covers and whether it is "analogous" to the patent in suit. That said, Smiths plainly has the stronger argument on such issue for the following reasons: (1) as this Court concluded in its Markman Opinion, the '670 patent is not limited to IMS detectors, which appears to undermine Morpho's compatibility argument regarding air quality; (2) even if the '670 patent were limited to IMS detectors, the '670 patent does not appear to include any limits as to the size of the apparatus, necessary flow rates, or pressure; (3) even if the '670 patent were limited to IMS detectors of a certain size, flow rate, or pressure, the discussion of the same parameters in the '631 patent only appears in preferred embodiments, and the '631 patent expressly indicates both that the claimed apparatus is scalable as to size, flow rate, and pressure, and that it can be scaled to be used for "drying . . instrument air." '631 10:16-17. Accordingly, Morpho's contention that the '631 patent is not "reasonably pertinent" to the problem addressed by the '670 patent based on compatibility issues does not appear to be particularly compelling. 11 Associated with such factor is consideration of whether there was sufficient motivation to combine the prior art references in the manner claimed by the patent in suit. 688 F.3d at 1366 See Kinetic Concepts, (indicating that even where the patent in suit is a combination of prior art references, an alleged infringer still needs "to proffer evidence indicating why a person having ordinary skill in the art would combine the references to arrive at the claimed invention"); 512 F.3d 1363, KSR, that source . 1374 "some . . Innogenetics, (Fed. Cir. kind of 2008) why v. Abbott (concluding, motivation [demonstrating] N.V. must a be person subsequent to shown of Labs., from ordinary some skill would have thought of either combining two or more references or modifying one to achieve omitted). Here, between the dual there the patented appears dryer system to be [invention]") substantial (and diagram) (citation similarities in the '631 patent and the dual dryer system (and diagram) in the patent in suit.4 Furthermore, the '670 patent's specification not only appears to closely mirror some of the language in the but the how '670 specification and claims include less detail as to the patent. dryer, '631 specification, dual dryers operate than can be found in the '631 Notably, other than the addition of an alternating dual the claims of the '670 patent do not appear to include 4 The Court assumes for the purposes of such analysis that the '631 patent is determined to be relevant prior art, even though the Court concludes above that such determination finder in this summary judgment context. 12 should be left to the fact any feature/advancement that is not found in prior detector patents, such as the '781 Davies patent.5 the contraband Accordingly, '670 patent may ultimately be determined to merely be the combination of two prior patents: patent and the Siebert gas the Davies contraband detector fractionator patent disclosing an alternating dual desiccant dryer. However, even if the '670 patent is determined to merely be a combination of two prior patents, the question remains whether a such patents sufficient motivation time of the patent to combine application. In existed at considering such the matter, this Court is precluded from relying on hindsight to determine the sufficiency of the Mylan Laboratories, Furthermore, motivation Inc., 464 in defining the to combine. F.3d 1286, 1290 "problem" that Alza Corp. (Fed. Cir. v. 2006). the patent in suit sought to address, the Court cannot rely solely on the design of the patent in suit, in a See Cir. given Mintz industry v. 2012) lest nearly every incremental breakthrough Dietz would & not Watson, qualify Inc., 679 for patent F.3d 1372, protection. 1378 (Fed. (indicating that technical advancement "often occurs through incremental steps toward greater goals," and that unless efforts are 5 The Davies taken to avoid the patent describes alternating dryers. Rather, distorting effect of the use of two dryers, Davies envisions use hindsight, but not two of a "chiller" to reduce the amount of water in the air before the same air passes into an absorbent dryer. In contrast, the '631 patent and '670 patent use two alternating desiccant dryers whereby air/gas is only dried by one of the dryers and the second dryer is "recharged" while not in use. 13 "marginal advances particularly in when retrospect retracing may the seem path deceptively already simple, blazed by the inventor"). In held Mintz, that the decided earlier district court this year, Federal the invention to define the problem that the invention solves." Id. lies by This is so because "[o]ften the inventive contribution in defining Stated error Circuit "us[ing] at 1377. committed the the differently, problem in "when a new someone revelatory is way." presented identical problem and told to make the patented Id. with invention, the it often becomes virtually certain that the artisan will succeed in making the invention." Here, framed or as the if the "problem" the '670 patent sought to remedy is the need need detectors, apparent, Id. to the to create reduce dual a more the dryer efficient/effective operating solution cost may not even to one skilled in the art. of be If, dryer, contraband immediately however, the problem is framed as designing a contraband detector capable of continuous, or near continuous, operation desiccant that never needs to be replaced, desiccant dryer system appears obvious. judgment, that arts] a Smiths must person of at the time that utilizes the dual regenerating To succeed on summary "prove by clear and convincing evidence ordinary of the skill in the [contraband detector invention" would have both recognized 14 the problem in the art as recognized by the inventors and found it obvious to invention. Id. Turning solve such problem in the manner claimed in the at 1377-78. to the materials address this question, Smiths' before the Court in order to statement of undisputed facts in its summary judgment brief reveals that "the need to use dry air with IMS detectors was publicly known before the invention date of each Asserted Claim." Smiths does not, Smiths S.J. however, assert Brief 4, that it was ECF Nos. 59-60. also publicly known, or well known within the art, that it was a necessity for contraband operation detectors and to never achieve require continuous replacement or near continuous desiccant. In other words, although various contraband detector patents, over time, may have invoked various ways to create the necessary flow of clean dry air, identifying the apparent long-term failure in the field/industry to design a contraband detector capable of both continual operation and operation without costly replacement desiccant may have itself been a significant breakthrough such that the design of a solution to such self-identified "problem" is not obvious, 679 F.3d at but 1377 for the benefit ("[T]he proper amnesia that 'forgets' of hindsight. analysis requires See Mintz, a form of the invention and analyzes the prior art and understanding of the problem at the date of invention."). 15 Having identified carefully what considered appear Court cannot conclude, to be the second material Graham and disputes, factual factor the based on a clear and convincing standard, that it would have been obvious to combine the prior art patents in the contraband patent highlighted 1374 (indicating from some detector by Smiths. that source" field "some as to with See kind why "gas fractionator" Innogenetics, of a the motivation skilled 512 must artisan F.3d be at shown "would have thought" to combine the prior art references). 3. The Third Graham Factor The parties agree that a person of "ordinary skill in the art" would chemical have "at least engineering, experience), and at a B.S. physics, least in or three mechanical chemistry years of work engineering, (or equivalent experience in designing pneumatics and gas purification systems for analytical instruments." Smiths S.J. 4. Brief 6; Morpho S.J. Opp. Brief 20. The Fourth Graham Factor The fourth Graham factor requires the Court to consider the objective indicia of nonobviousness. it Smiths asserts that: (1) is black letter law that such objective indicia must always be considered by the Court; such objective case of criteria obviousness," and can as (2) never it is black letter law that trump demonstrated 16 "a by strong prima analyzing the facie first three Graham factors. Wyers, 616 F.3d at 1246. The Court agrees with Smiths' first premise, but rejects its second. First, if both of the above district court would be required, premises were correct, a on penalty of reversal,6 to analyze the fourth Graham factor in all cases, yet such required analysis would frequently be entirely specious. Second, such a reading "prima facie" obviousness after of the law would meaningless, because consideration of unrebuttable. to Wyers the Third, clearly render a the finding first three and most phrase of Graham compelling, demonstrates that the factors case would law objective be subsequent evidence of nonobviousness can trump even a "strong" prima facie showing of obviousness. v. See Transocean Maersk Contractors USA, 2010) that ("While it is Offshore Inc., 617 Deepwater F.3d 1296, true that we have held in Drilling, 1305 (Fed. Inc. Cir. individual cases objective evidence of nonobviousness did not overcome the strong prima facie case-this is a case-by-case determination.") (emphasis added); see also KSR, 550 U.S. at 418-19 (indicating that a patent is not obvious merely because it is a combination of elements found in the prior art; consider "the effects of 6 See Transocean Contractors USA, the the district court Offshore Inc., court's failed demands rather, known Deepwater 617 F.3d 1296, 1305 to it the is necessary to design community Drilling, (Fed. Cir. Inc. 2010) v. Maersk (reversing grant of summary judgment because, inter alia, to consider the objective evidence of nonobviousness). 17 or present account of ordinary in the skill the inferences in Woodstream Corp., case, the marketplace," the such art would a evidence strong that creative 520 F.3d 1337, objective overcome and and prima steps court that employ"); 1344 of "a of Inc. v. 2008) nonobviousness case of take person Aqrizap, (Fed. Cir. facie a can ("In this simply cannot obviousness.") (emphasis added). In fact, not only has the Federal Circuit recalibrated the suggestion in Wyers that objective evidence of nonobviousness can never rebut a "strong"7 prima facie showing of obviousness, but it has repeatedly reaffirmed the power that such objective evidence may wield in the obviousness inquiry. 617 F.3d showing at 1305-06 of (indicating that obviousness was made See Transocean, even where based on the a prima facie combination of prior art within the same field of endeavor, summary judgment of obviousness disputes was improper regarding the because objective "[i]f evidence all of resolve the in factual favor of 7 This Court notes that several post-KSR Federal Circuit opinions devote little, if any, focus to the statutory presumption of validity, or to the fact that a finding of obviousness may only be made based on clear and convincing evidence. See, e.g., Transocean, 617 F.3d at 1303 (discussing the four Graham factors but failing to discuss either a patent's presumption of validity or the "clear and convincing evidence" standard applicable to the obviousness inquiry). However, in light of the applicability of such standard to all obviousness cases, it appears that every "prima facie" case of obviousness would in a sense be "strong" since a prima facie showing requires "clear and convincing evidence" demonstrating that the subject patent is invalid as obvious. Accordingly, affixing the label "strong" to a prima facie showing appears to offer little clarity as to whether such showing can be overcome in any given case based on objective evidence of nonobviousness. 18 [the plaintiff] it has presented a strong basis for rebutting the prima facie case") (emphasis added); Mintz, 679 F.3d at 1378 (quoting Pharm. Ortho-McNeil 1358, 1365 (Fed. Cir. 2008)) 'may often be the most v. nonobviousness Concepts, in 688 the F.3d at Mylan Inc., 520 probative and cogent (emphasis (explaining that evidence added); is a battle of scientific obviousness of the invention"). & Watson, provided decided the earlier "objective indicia following experts Most notably, this detailed year, the discussion regarding Federal of the objective substantial dimension when first unveiled. These objective criteria thus help turn back the clock and place the claims in the context that led to their advance, endeavor, often occurs toward greater goals. like much of human through incremental steps These marginal advances in 19 the Circuit These objective guideposts are powerful tools for courts faced with the difficult task of avoiding subconscious reliance on hindsight. These objective criteria help inoculate the obviousness analysis against hindsight. The objective indicia guard against slipping into use of hindsight and to resist the temptation to read into the prior art the teachings of the invention in issue. This built-in protection can help to place a scientific advance in the proper temporal and technical perspective when tested years later for obviousness against charges of making only a minor incremental improvement. That which may be made clear and thus 'obvious' to a court, with the invention fully diagrammed and aided by experts in the field, may have been a breakthrough of Technical . . in Mintz v. Dietz factors of nonobviousness: invention. of Kinetic of nonobviousness serve a particularly important role [when] there F.3d (indicating that "objective indicia record'") 1370 Labs., retrospect may seem deceptively simple, particularly when retracing the path already blazed by the inventor. For these reasons, this court requires consideration of these objective indicia because they provide objective evidence of how the patented device is viewed in the marketplace, by those directly interested in the product. Mintz, 679 F.3d at omitted). 1378 (internal quotation marks and citations Accordingly, three Graham factors obviousness, even support where consideration a "strong" prima of facie the first finding of it is necessary to assess the objective factors and determine whether they outweigh such prima facie case. Morpho advances evidence implicating several types of objective indicia of nonobviousness that, viewed in a light most favorable to Morpho, are sufficient finding favorable to Smiths on the First, Morpho produced detectors sold often every week that some as expensive in operating cost. the evidence 1990s and that such customers Morpho S.J. first any three Graham factors. replacement desiccant complained Opp. counterbalance commercialized required that to Brief Ex. was about 1 at contraband desiccant as sufficiently the ongoing 14-17. Such evidence suggests a "long-felt need" in the industry to improve upon the manner in which contraband necessary flow of clean dry air.8 detectors produced the Notably, according to Smiths' 8 In addition to the cost of replacing the desiccant, and the fact that the detector could not be used while desiccant was being replaced, the record reveals that contamination issues can arise during replacement, which would then require the detector to be taken off-line for a more extended period of time. Morpho S.J. Opp. Brief Ex. 1 at 16-17. 20 scientists, cost of although there were complaints in the past about the the consumable at the time." Second, advances to and need contraband associated to of the detectors. Cir. with demonstrates invention, See Capsule In Patent "no other that a 676 find a tried but Morpho cites to patent issued 1995, which attempted to a reliable flow of clean to eliminate the need to 5,475,217 it that ("'217") the inherent result from the air. replace of patented satisfy According Morpho's expert's interpretation of the '217 patent, attempted in 1082 when the address dry . to challenges in miniaturizing IMS detectors that for . for number 1063, evidence . failed solution Hydrochloride objective existed Morpho desiccant F.3d probative demand others to consumable that demand"). need solution need," Cyclobenzaprine "particularly that others" Litiq., (noting both in was "long-felt the re is and of replace 2012) nonobviousness the "failure regularly Extended-Release (Fed. there Id^ at 17. evidence the desiccant, the to such patent desiccant by greatly reducing the size of the air sample that was tested by the contraband detector. However, such required reducing that it effectively design the negatively detect Morpho S.J. was apparently air sample Opp. impacted trace amounts 21 not size by Brief Ex. feasible such a the detector's of contraband. 3 at because large it degree ability Id. 61. at to 62. Similarly, Morpho introduced evidence indicating that the Davies patent, solve issued the in 1995 consumable to Smiths' desiccant predecessor, problem by attempted using a dryer (i.e., one chiller and one desiccant dryer). 63; '781 patent. prolong eliminate the these of the to need notable that the of two-stage Id. at 62- Although the Davies concept would conceivably life the to consumable routinely desiccant, replace the it did desiccant. not It is '631 Siebert patent was in existence when both alternative "advancements" inventor incorporated what were Smiths now patented, asserts yet neither is the "obvious" dual regenerative dryer system. In addition internal documents that 1997, to in the from above, Smiths' approximately research one application was filed, Smiths' Morpho year has also presented scientists indicating before the '670 patent scientists continued to work on improving the air purification system in its detectors, but a dual dryer regenerative system was apparently not vetted or even documented as a potential solution. 9. As indicated above, long preceded technology, "advancements" such yet in Kinetic Concepts, 1379) Morpho S.J. Brief Ex. the Siebert gas fractionator '631 patent interim developments was not the field 688 Opp. F.3d at in contraband detector incorporated of 1370 contraband into any such detectors. See (quoting Mintz, 679 F.3d at (indicating that merely because technology "'can be easily 22 understood does not mean that it will satisfy the legal standard of obviousness,'" and that objective evidence is most important when considering "simple" technology because "'once the problem and solution appear together in the patent disclosure, the advance seems self-evident'"). Third, light Morpho has presented evidence that, most favorable to praise and commercial Techs., Inc., Morpho, success. 599 F.3d 1343, a competitor's demonstrates See 1352 "contemporaneous when viewed in a both Power-One, (Fed. Cir. Inc. 2010) reaction to [an] industry v. Artesyn (noting that invention" of launching its own infringing product, as well as the industry's reaction as a invention"). whole, can "demonstrate the Morpho highlights Smiths' unobviousness of internal documents the from 2003 indicating that "reduced consumable costs" had at that time become a "market purification" Morpho S.J. document was Opp. from requirement" a and solution Brief Ex. Smiths to 16 at dated that meeting 163. 2003 "regenerating An such requirement. additional indicates air that internal "[f]rom a competitive point of view there is a strong necessity to remove drierite system is as consumable necessary)." Similarly, that a a Smiths' regenerative advancement in the Id. (i.e. Ex. document air regenerating 17 at from 2004 purification contraband 103488 23 purification (emphasis added). appears was detector air such industry to demonstrate a successful that Smiths' created a project to provide a "replacement module" to retrofit previously sold detectors such that consumable desiccant would not need to be routinely replaced.9 Id. Ex. 15 at 24536. document indicates that the high cost of desiccant was causing customers desiccant, the to Id.; customers owning concerned with consumables," per impacting Smiths elsewhere to see Smiths' the and day, that customer's Ex. 28 to "are becoming detectors that, id. in reputation in now some refill costs 2003, 11 of are desiccant" Ex. cheaper (indicating cycle activities); indicating 16889 life because time at detectors ongoing "down documents id. not only purchase but may be negatively impacting Smiths' industry. hours turn Such is at very these needed 24 negatively 79 Smiths that was (internal starting to lose sales to Morpho's detector based on a number of factors even though Smiths' detector was more sensitive, meeting with consumers, that customers machine had will the a Smiths' buy lowest whatever cost, and that after sales representative believed government approved detection factoring in long-term the operating costs). 9 At this stage in the proceedings, the Court rejects Smiths' assertion that Morpho has failed to demonstrate a sufficient nexus between the regenerative air purification system and Morpho's success in the industry. To the contrary, Smiths' own internal documents appear to demonstrate not only that such advancement was giving Morpho an edge in the marketplace, but that such advancement was so integral that Smiths sought to retrofit its previously sold detectors with such technology. See, e.g., Morpho S.J. Opp. Brief Ex. 15 at 24536. 24 Fourth, although there is stark disagreement as to whether "copying" occurred in this case, when the evidence is viewed in a light most significant favorable evidence to that Morpho, Smiths it may appears have there directly Morpho's commercialized dual drier technology. is copied It is plain from Morpho's evidence that Morpho was the first to commercialize a dual regenerative dryer IMS contraband detector, introduced exhibits demonstrating recognized Morpho's detector that, with in such and Morpho has late 2003, capability Smiths as meeting more customer needs than Morpho's product and that Morpho would likely take a greater market share. Morpho S.J. Opp. Brief Ex. 16 "Market at 163-64. Included among the Requirements," as identified by Smiths, was "reduced consumable costs" achieved by "regenerating air purification." Id. Smiths identified on its "Product/Technology Road Map" for the next six to eight months a "regenerating Morpho's air evidence, purification" system. Id. According Smiths purchased a contraband detector to from Morpho during this six to eight month time frame and presumably used it to help design Smiths' at Exs. 21-24. evidence challenges Therefore, supports Morpho's a regenerative dryer system. when finding objective of viewed in Morpho's copying. evidence of the remainder of Morpho's objective evidence, 25 favor, Although copying, Id. as the Smiths well as resolution of such disputed facts, and the inferences such evidence, is for the jury, that should be drawn from not for this Court. 5. Summary of Obviousness Analysis As discussed question, in detail above, although a relatively close the Court concludes that factual disputes preclude a finding that the first three Graham factors establish a prima facie case of obviousness. in Transocean and Mintz, Furthermore, even if this facie case was demonstrated by Smiths, in a light most favorable to similar to the scenario Court held that a prima considering the evidence Morpho, there are more than sufficient objective indicia of nonobviousness to preclude entry of summary judgment. Although the apparent similarities between the '631 patent's dual dryer system and the '670 patent's dual dryer system at least suggest that relevant prior art was combined in a predictable manner to achieve an expected result, ruling as a matter of law, standard, indicia Drilling, WL on a clear and convincing evidence is precluded based on the of nonobviousness. See strength of the objective Transocean Inc. v. Maersk Contractors USA, 5519361, "Transocean at *5, II") (Fed. (reversing Cir. the Nov. Offshore Inc., 15, district Deepwater F.3d , 2012 2012) (hereinafter court's post-verdict judgment as a matter of law ("JMOL"), which found the patent in suit invalid jury could as obvious, have found based that 26 on the the fact that objective a reasonable evidence of nonobviousness Circuit law evidence mandates of evidence could F.3d have Mintz, prima case-by-case operate and to at 1378) been facie case). analysis here, trump Kinetic Concepts, nonobviousness to a the nonobviousness, obviousness. 679 outweighed a the objective disputed the of objective prima facie 688 F.3d at 1370 ("Evidence of Federal case of (quoting Mintz, objective indicia of 'may often establish that an invention appearing obvious in 679 F.3d at 1378 light of the prior (indicating that art was not.'"); "[s]imply because the technology can be easily understood does not mean that it will satisfy Smiths' the legal standard of obviousness"). motion seeking summary judgment of Accordingly, invalidity based on obviousness is denied as this Court cannot at this time conclude "that the [disputed] claims would have been obvious as a matter of law." Transocean, 617 F.3d at 1305;10 see Anderson, 477 U.S. at 253 (indicating that "a higher burden of proof," such as the 10 Notably, in Transocean, the prior art that was combined was from the same field rigs). of endeavor However, as the patent notwithstanding in such suit fact, (i.e., the oil drilling Federal Circuit concluded that summary judgment was improper because if all factual disputes were resolved in the plaintiff's favor, have "a strong obviousness. basis Transocean, for 617 rebutting F.3d at the 1305. the plaintiff would prima Here, facie case" although the of '631 gas fractionator patent may be found to be relevant to the problem being addressed in the '670 patent, the '631 patent does not appear to be within the same specific field of endeavor (i.e., contraband detectors). Accordingly, the motivation to combine in this case may ultimately prove to be weaker than it was in Transocean. Furthermore, even if such motivation is deemed equivalent to or greater than that in Transocean, the objective indicia in this case still have the potential to establish that the industry's long-term failure to incorporate a regenerative dryer into a contraband detector renders such advancement "obvious" only when viewed in hindsight. 27 "clear and convincing" evidence standard "should have a corresponding effect on the judge when deciding whether to send the case to the jury"). B. Generally, defense of for laches demonstrate two a in Laches defendant a patent elements: to successfully infringement "(1) [plaintiff] invoke context, delayed the it must filing suit for an unreasonable and inexcusable length of time from the time it knew or reasonably [defendant], and (2) should the have delay known of operated to injury of [defendant]." Hearing Components, 600 does F.3d 1357, not 1375 file plaintiff (Fed. suit for "has Cir. more actual or defendant's potentially presumption that inexcusable, 2010). than F.3d 1334, 1337 Here, infringing plaintiff's (Fed. Cir. Smiths has the However, six prejudice years delay Shure Inc., from when such of the knowledge "is v. Gen. or if a plaintiff activities," Wanlass claim against Inc. v. constructive and prejudicial." the its there is a unreasonable, Elec. Co., 148 1998). introduced evidence demonstrating that Smiths was openly marketing and selling its allegedly infringing product more than six years prior to Morpho filing suit. id. a at 1338 (indicating that patentees have "duty to See police their rights" and that claimed "ignorance of infringement" will not insulate a patentee when a 28 competitor pervasively, openly and notoriously sells an infringing product since such activities "give rise to a duty to investigate whether there is infringement"). Furthermore, Morpho documents, as well admission, suit, revealing Morpho activities. was has introduced internal as Morpho's responses to requests for that more aware Smiths S.J. Smiths of than six Smiths years prior to "potentially" Brief and Rebuttal Brief, filing infringing Exs. E, H, J. Accordingly, Smiths has demonstrated that the laches presumption applies in this case, which then "shifts to [Morpho] the burden of producing evidence that would show either that [Morpho's] delay was reasonable under the circumstances or that [Smiths] suffered neither Components, economic nor evidentiary prejudice." Hearing 600 F.3d at 1375. Morpho has not presented evidence in an effort to rebut the presumption that the defense of laches case. shift Rather, the establish Morpho burden that the and is applicable in this argues that Smiths that Smiths has delay was did not failed unreasonable and effectively to otherwise caused Smiths j prejudice. ECF No. Smiths Morpho S.J. Opp. 147. has constructive However, as demonstrated knowledge Brief 27-28; discussed that of above, Morpho, Smiths in fact shifted to Morpho. As 29 having at a found that minimum, had potentially activities more than six years prior to is S.J. Hearing Tr. 58, infringing filing suit, the burden Morpho fails to rebut the applicable presumption of undue delay, summary judgment on this issue is entered in favor of Smiths.11 C. Failure to Mark A patentee's "failure to mark" its patented the applicable recovering patent damages "'affirmative number from an precludes alleged communication of the Co. Ltd., (quoting Amsted Indus. 505 F.3d 1371, Inc. v. prior from to the charge specific infringement'" regarding a specific product. v. Iwasaki Elec. patentee infringer a product with of U.S. Philips Corp. 1375 (Fed. Cir. 2007) Buckeye Steel Castings Co., 24 F.3d 178, 187 (Fed. Cir. 1994)); see Gart v. Logitech, Inc., 254 F.3d § 287(a)) 1334, 1345 (Fed. Cir. 2001) (citing 35 U.S.C. (indicating in a failure to mark context that "the amount of damages [a] patentee can recover in an infringement suit is statutorily limited to those acts of infringement that occurred after" notice action for of infringement infringement shall is provided). constitute such "Filing of notice." an U.S. Philips Corp, 505 F.3d at 1375 (quoting 35 U.S.C. § 287(a)). 11 Morpho conceded in its brief in opposition to summary judgment and at oral argument that it is not seeking pre-filing damages. Morpho contends that such concession eliminates rule on the laches issue because Smiths' favor on such issue is the the need for the Court to the only effect of a ruling in preclusion of pre-filing damages. Morpho, however, failed to enter into a formal stipulation with Smiths nor cite case law indicating that Morpho's concession in a brief or oral concession at a hearing rendered the laches issue moot. Accordingly, the Court deemed it appropriate to address and resolve the pending laches dispute. 30 Here, 2011. Morpho Morpho detectors mark from such filed concedes 2005 products Furthermore, the Morpho instant that it through with lawsuit sold concedes 2, IMS contraband 1, but failed number that September patented September the on 2011, of it the did affirmative notice or specific charge of '670 not to patent. provide any infringement regarding any detector sold by Smiths prior to the filings of the instant suit. issue Accordingly, is granted summary in favor judgment on of Smiths, the "failure and Morpho to mark" is precluded from recovering any damages for infringement occurring prior to September 2, 2011. D. To establish willful of enhanced damages, 1371 (Fed. infringement, requires "objective recklessness." 1360, Willfulness Cir. which permits a patentee to make a showing of In re Seagate Tech., LLC, 2007) . To satisfy recovery such 497 F.3d standard, a patentee must demonstrate "by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted "The state of infringement of a valid mind of the accused infringer is this [threshold] that such objective inquiry." objective standard is met, Id. the patent." not Id. relevant to If it is determined patentee must then demonstrate that the accused infringer either knew of such risk, 31 or that the risk was "so obvious to the accused infringer." Smiths' summary finding that Morpho's '670 patent. it should have been known Id. judgment judgment that motion Smiths did Smiths seeks not entry "willfully contends that of summary infringe" because on it has a strong argument that Morpho's patent is invalid, even if a jury concluded that such patent was valid and Smiths is infringing, the a evidence result of does Smiths' not support good faith Fiber Technologies 674 Inc. F.3d 1365, v. (AFT) 1377 Medtronic (Fed. Cir. 2010)) invalidity Trust (Fed. v. Cir. Sofamor finding J & L 2012) Danek USA, of willfulness claim. See Fiber Services, as a Advanced Inc., (quoting Spine Solutions, Inc., 620 F.3d 1305, 1319 (noting the objective prong of the willfulness inquiry "'tends not to be met where an accused infringer relies on a reasonable defense to a charge of infringement.'"). Morpho offers little to counter Smiths' position, arguing that there are factual disputes as to whether Smiths purchased a contraband detector from Morpho in early 2004 for the purpose of directly copying such technology. such copying occurred, contraband detectors Morpho were not However, admits "marked." that even in assuming that early Furthermore, 2004 its the '670 patent did not even issue until November of 2004, several months after Smiths purchased one admits that of Morpho's detectors. Morpho also it has yet to uncover any evidence that Smiths was 32 aware of suit. the '670 patent prior to the Morpho S.J. Opp. Brief 9 n.27. filing of the Accordingly, instant even if the Court assumes that Smiths "copied" Morpho's technology in 2004, such act could not be deemed "reckless" as neither Smiths, reasonable artisan, would have been on notice that the dryer configuration was protected by a valid patent. Ltd. P'ship 2010) aff'd, at 1371) of the v. Microsoft 131 S. Ct. Corp., 2238 598 (2011) F.3d 831, 860 nor a dual See i4i (Fed. (quoting Seagate, Cir. 497 F.3d ("Infringement is willful when the infringer was aware asserted objectively patent, high but likelihood nonetheless that its 'acted despite actions an constituted infringement of a valid patent.'". As to Smiths' alleged instant lawsuit was to Smiths' filed, contention infringement occurring after the Morpho offers no compelling response that Smiths has relied on belief that the '670 patent is invalid as obvious. a good faith After suit was filed, Smiths was in a position where it was already selling the allegedly infringing product, and this Court must assess objectively whether continued sales presented a "high likelihood that [Smiths'] patent." actions constituted infringement of a Seagate Tech., 497 F.3d at 1371 (emphasis added). valid The detailed analysis in Part III.A above supports Smiths' assertion that it has a good invalidity argument. faith, and Although this 33 potentially Court meritorious, concluded above that factual disputes preclude a finding of invalidity at this time, the Court's ruling close call as on such issue resulted rejected appropriate a relatively to whether the first three Graham factors support a prima facie finding of obviousness. Court from Smiths' weight nonobviousness, to legal attribute Smiths' Furthermore, although the proposition to the legal position on regarding objective the factors of such point was well- founded in the sense that it is based on the plain language of published Federal Circuit decisions. 5519361, at *11 (indicating Cf. Transocean II, 2012 WL that although the case-specific objective factors of nonobviousness were sufficient to outweigh the prima facie case of obviousness, the Federal Circuit has "rarely held that objective evidence is sufficient to overcome a prima facie case of obviousness"). question that potentially Smiths formed meritorious became aware of the In sum, a argument Accordingly, reasonable, of there is no good invalidity faith, after and Smiths '670 patent. regardless of when Smiths actually became aware of Morpho's '670 patent and Smiths' potential infringement of such patent, Smiths' good faith belief that Morpho's patent is invalid as obvious precludes a finding of willful infringement. See Spine Solutions, 620 F.3d at 1319 (reversing the district court's denial of the defendant's JMOL motion seeking a finding of no willful infringement because 34 the defendant "raised a substantial suit and evidence question that to as even to the though support the obviousness" "the jury's record of the contains implicit finding patent substantial that skill in the art would not have found the combination art] obvious, [the defendant] was not relying on [an obviousness] defense"). in objectively one of [of prior reckless in Accordingly, even if all disputed facts are resolved in Morpho's favor, such facts would not support a finding of "willful" infringement. See Drewitt, 999 IF.2d at 778 (indicating that summary judgment is appropriate when a fair-minded jury could not return a verdict for the non- movilng party on the evidence presented) . Summary judgment is therefore granted in favor of Smiths on this issue. IV. For the reasons set CONCLUSION forth above, invalidity based on obviousness is DENIED. summary Smiths' partial summary judgment on the issues of laches, mark, judgment of requests for failure to and lack of willful infringement are GRANTED. The Clerk is REQUESTED to send a copy of this Opinion and Order to all counsel of record. It is SO ORDERED. aflftft- /s/ Mark S. UNITED STATES Norfolk, Virginia November ot | , 2012 35 Davis DISTRICT JUDGE
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