Saint-Gobain Ceramics & Plastics, Inc. v. Ii-Vi Inc.
| Decision Date | 26 March 2019 |
| Docket Number | Case No. 5:18-cv-01798-CAS-SHKx |
| Court | U.S. District Court — Central District of California |
| Parties | SAINT-GOBAIN CERAMICS & PLASTICS, INC. v. II-VI INC. et al. |
Ryan James Malloy, Morrison and Foerster LLP, Los Angeles, CA, Jack W. Londen, Morrison and Foerster LLP, San Francisco, CA, for Saint-Gobain Ceramics & Plastics, Inc.
Amy J. Coles, Blank Rome LLP, Pittsburgh, PA, Cheryl S. Chang, Blank Rome LLP, Los Angeles, CA, Keith A. Rutherford, Blank Rome LLP, Houston, TX, Salvatore P. Tamburo, Blank Rome LLP, Washington, DC, for II-VI Inc.
Proceedings: (IN CHAMBERS) - DEFENDANTS' MOTION FOR SUMMARY JUDGMENT (Dkt. 36, filed October 1, 2018)
On August 24, 2018, plaintiff Saint-Gobain Ceramics and Plastics, Inc. ("Saint-Gobain") filed suit against defendants II-VI Inc. and II-VI Optical Systems, Inc. (collectively "II-VI" or "defendants"). Dkt. 1 ("Compl."). The complaint alleges three counts of patent infringement, in violation of 35 U.S.C. § 271, which arise out of defendants' alleged manufacturing and sale of single crystal sapphire sheets. Id. at ¶¶ 9–10. These sheets are used, for example, in the manufacture of windows for aircrafts. Id. Plaintiff filed a motion for preliminary injunction regarding the alleged patent infringement on the same day. Dkt. 7.
On October 1, 2018, defendants filed a motion to dismiss the complaint. Dkt. 36 ("MTD"). Defendants argued that plaintiff's case should be dismissed, pursuant to 28 U.S.C. § 1498, because defendants manufactured and sold the allegedly infringing sapphire sheets exclusively for the U.S. Government. Id. at 3. On October 10, 2018, defendants also filed an application to stay plaintiff's motion for a preliminary injunction, pending the Court's determination of defendants' motion to dismiss. Dkt. 55. Plaintiff filed an opposition to defendants' motion to dismiss on October 15, 2019. Dkt. 60 ("OTD"). Defendants filed a reply on October 22, 2019. Dkt. 74 ("RTD").
On October 16, 2018, the parties jointly filed a stipulation to continue the hearing on plaintiff's motion for a preliminary injunction to December 3, 2018. Dkt 63. The Court granted the stipulation on October 18, 2018. Dkt. 69.
On October 31, 2018, the Court converted defendants' motion to dismiss into a motion for summary judgment. Dkt. 91 (). The Court further directed the parties to conduct discovery and submit supplemental briefing on the applicability of § 1498 in this matter.
On November 15, 2018, the Court issued an order on the parties' joint stipulation for a temporary restraining order ("TRO"), enjoining defendants from producing sapphire single crystal sheets wherein the width is not less than 28 cm, and the thickness is not less than about 0.5 cm, in the United States. Dkt. 96 ( ) ¶ 1. However, the stipulated TRO does not enjoin activities permitted under § 1498. Id. The parties agree that the stipulated TRO will remain in place until the Court decides defendants' request to dismiss the case. Id. ¶ 2. The stipulation further provides that, if the Court does not dismiss the case in its entirety under § 1498, the hearing on the preliminary injunction will be reset, as will a schedule for discovery, and briefing for plaintiff's motion for a preliminary injunction. Id. In that event, the TRO will also remain in place until the Court rules on plaintiff's motion for a preliminary injunction. Id.
On February 19, 2019, defendants filed their supplemental briefing on the motion for summary judgment, dkt. 113 ("MSJ"), along with a statement of uncontroverted facts and conclusions of law, dkt. 114 ("SUF"), and supporting documents and declarations. Plaintiff filed its supplemental briefing on February 25, 2019, dkt. 121 ("OSJ"), along with a statement of disputed facts and conclusions of law, dkt. 121-2 ("DSUF"), and supporting documents and declarations. With leave of Court, defendants filed a reply to plaintiff's briefing on March 1, 2019. Dkt. 128 ("RSJ").
The Court held a hearing on March 4, 2019. The motion for summary judgment is now before the Court. Having carefully considered the parties' arguments, the Court finds and concludes as follows.
The following facts are not meaningfully disputed and are set forth for purposes of background. Unless otherwise noted, the court references only facts that are uncontroverted and as to which evidentiary objections have been overruled.
Plaintiff Saint-Gobain Ceramics & Plastics, Inc. ("Saint-Gobain") is part of the Saint-Gobain Group, one of the world's largest makers of industrial and construction materials. Compl. ¶ 2. Plaintiff is a Delaware corporation with its principal place of business in Pennsylvania. Id. ¶ 12. Plaintiff produces ceramic materials, including industrial crystals, grains and powders, refractories, and engineered ceramic components. Id. ¶ 1. These products and components are produced for and sold in various industrial markets, including oil and gas extraction, defense and military, and the aeronautical and aerospace industries. Id.
One specific product that plaintiff produces is single crystal sapphire sheets. Plaintiff explains that sapphire is the "material of choice for engineers faced with design challenges of extreme conditions—such as those found in high-temperature, high-pressure, or harsh chemical and physical environments." Id. ¶ 7. Sapphire is chemically inert, rendering it durable and capable of withstanding harsh chemicals. Id. It is also relatively unique in its ability to transmit ultraviolet, visible, and infrared light, as well as microwaves. Id. Manufacturers "grow" single sapphire crystal sheets by drawing molten material through a die in a crucible. Id. ¶ 18.
In this action, plaintiff asserts three patents, obtained from the United States Patent and Trademark Office, that relate to the production of single crystal sapphire sheets. Id. ¶ 7. First, plaintiff asserts United States Patent No. RE43,469 (the "'469 Patent"), a patent with apparatus claims titled "Single crystals and methods for fabricating same." Id. ¶ 4; see Compl, Ex. A. Plaintiff alleges that the '469 Patent covers a single crystal sapphire sheet that is wider and thicker than sheets that were produced by prior methods. Id. ¶ 18. Specifically, the '469 Patent purports to address issues caused by non-uniform temperatures (a "thermal gradient") across molten, sapphire material. Id. Second, plaintiff asserts United States Patent No. 9,926,645 (the "'645 Patent"), titled "Method of forming a single crystal sheet using a die having a thermal gradient along its length." Id. ¶ 5; see Compl. Ex. B. Finally, plaintiff asserts United States Patent No. 9,963,800 (the "'800 Patent"), titled "Method of making a sapphire component including machining a sapphire single crystal." Compl. ¶ 6; see Compl., Ex. C. The '645 Patent and the '800 Patent claim methods for forming sapphire components from sapphire crystals. Compl. ¶ 19. These three patents are collectively referred to as the "Sapphire Patents," and plaintiff alleges that together, these patents "claim sapphire single crystal sheets that are larger than could be successfully manufactured before Saint-Gobain's invention as well as methods of making and finishing the sheets." Id. ¶ 7.
Plaintiff produces large, sapphire, single crystal sheets that are used for "an extraordinarily demanding window application," required by Lockheed Martin ("Lockheed") for installment in the F-35 Joint Strike Fighter, a fighter jet that Lockheed manufactures for the United States Government, pursuant to a U.S. Government Prime Contract. DSF ¶ 1.1 Lockheed allegedly purchases the sapphire sheets to be used in the window application for many tens of thousands of dollars per sheet. Compl. ¶ 8. Plaintiff alleges that in 2004 – 2005, it was the sole supplier of large sapphire single crystal sheets for Lockheed. Id. ¶ 20.
Defendant II-VI Inc. is a Pennsylvania corporation with its principal place of business in Pennsylvania. Id. ¶ 12. Defendant II-VI Optical Systems, Inc. is a wholly owned subsidiary of II-VI Inc. It is a California corporation with its principal place of business in California. Id. ¶ 13. II-VI Inc. and II-VI-Optical Systems are collectively referred to as "II-VI" or "defendants."
Defendants participate in the supply chain for the sapphire window application that Lockheed purchases, though their role has evolved over the years. Initially, the parties represent that defendants crafted the window applications that were inserted into the F-35 Fighters after receiving the raw-material, single crystal sapphire sheets that plaintiff grew and sold to Lockheed. However, in 2015, defendants purchased one or more sapphire furnaces in order to produce their own sapphire single crystal sheets. Id. ¶ 20. Thereafter, defendants excluded plaintiff from the supply chain because defendants began producing sapphire single crystal sheets and then "machin[ing] them into windows by grinding, lapping, polishing and/or removing bulk material from them"—without purchasing the raw materials from plaintiff. Id. Defendants admit that they "purchased the furnace to replace [plaintiff] as the supplier of the raw materials." RTD at 7. Defendants also sell these window applications to Lockheed. DSUF ¶ 1.
Accordingly, plaintiff alleges that "II-VI now competes directly with Saint-Gobain, supplying sapphire single sheets to [Lockheed] and thereby diverting sales to itself that Saint-Gobain would otherwise have made." Compl. ¶ 9. Importantly, plaintiff also alleges that by producing the raw-material,...
To continue reading
Request your trial
-
Arbutus Biopharma Corp. v. Moderna, Inc.
...1990). A section 1498 affirmative defense is a highly factual determination. Saint-Gobain Ceramics & Plastics, Inc. v. II-VI, Inc., 369 F.Supp.3d 963, 970 (C.D. Cal. 2019). A defendant bears the burden of establishing that “(1) the [infringing use is ‘for the Government' and (2) the [infrin......