ADASA Inc. v. Avery Dennison On Corp.
| Decision Date | 14 September 2020 |
| Docket Number | Case No.: 6:17-cv-01685-MK |
| Parties | ADASA INC., Plaintiff, v. AVERY DENNIS ON CORPORATION, Defendant. |
| Court | U.S. District Court — District of Oregon |
Plaintiff brought this action alleging that Defendant infringed its patent in violation of 35 U.S.C. §§ 271(a), (b), (c), and (f). Second Am. Compl., ECF No. 112. Before the Court are: (1) Plaintiff's Motion for Summary Judgment (ECF No. 168) (2) Defendant's Motion for Summary Judgment of Non-Infringement and Alternative Motion for Judgment of Invalidity Under 35 U.S.C. §§ 101 and 103 (ECF No. 169), and (3) Defendant's Motion for Leave to File Sur-Reply (ECF No. 186).
The Court heard oral argument on July 8, 2020. ECF No. 194. In order to allow the parties to prepare for the jury trial scheduled in September 2020, the Court issued a letter on July 15, 2020 with its summary rulings of the summary judgment motions and the evidentiary issues raised by the parties in the motions. The jury trial was subsequently postponed due to COVID-19. The Court now issues this Opinion and Order to formally address the pending motions. The Court rules as follows:
Both parties' evidentiary objections are OVERRULED.
Defendant's Motion to File Sur-Reply is GRANTED (ECF No. 186) is GRANTED.
Plaintiff's Motion for Summary Judgment (ECF No. 168) is GRANTED except as to infringement of element F by the Commissioning Authority Schemas, which is DENIED.
Defendant's Motion for Summary Judgment of Non-Infringement (ECF No. 169) is DENIED.
Plaintiff, an Oregon corporation, is the owner of the United States Patent No. 9,798,967 (the " '967 Patent"). Am. Compl. Ex. A, the '967 Patent, ECF No. 71-1. The inventor of the '967 Patent is Clarke McAllister ("McAllister"). Id. The '967 Patent relates in part to systems for encoded and commissioned wireless radio frequency identification ("RFID") devices. Second Am. Compl. ¶ 8, ECF No. 112; Answer, ¶¶ 8, 11, ECF No. 114. In the RFID industry, and particularly for merchandise tracking applications, the memory bank of an RFID tag is encoded with an Electronic Product Code ("EPC"), which is an identifier for an item in the supply chainto uniquely identify that particular item. Second Am. Compl. ¶ 11, ECF No. 112; Answer ¶ 11, ECF No. 114. The EPC can be serialized in a format following an EPC tag data standard. Second Am. Compl. ¶ 11, ECF No. 112; Answer ¶ 11, ECF No. 114. One standard is known as Serialized Global Trade Item Number ("SGTIN"). Second Am. Compl. ¶ 11, ECF No. 112; Answer ¶ 11, ECF No. 114.
Where the SGTIN format is used for item identification, the EPC contains "object class" information and a "serial number." Second Am. Compl. ¶ 12, ECF No. 112; Answer ¶ 12, ECF No. 114. The "object class" information includes, among other things, a "company prefix," which identifies the brand owner and an "item reference number." Second Am. Compl. ¶ 12, ECF No. 112; Answer ¶ 12, ECF No. 114. The "item reference number" identifies the class of item offered by a brand owner. Second Am. Compl. ¶ 12, ECF No. 112; Answer ¶ 12, ECF No. 114. The "object class" section of SGTIN format uniquely identifies different classes of products sold by a particular brand owner. Second Am. Compl. ¶ 12, ECF No. 112; Answer ¶ 12, ECF No. 114. The companies or brand owners are responsible for assigning a unique serial number for each item of an object class. Second Am. Compl. ¶ 12, ECF No. 112; Answer ¶ 12, ECF No. 114. The combination of an object class and a unique serial number provides a unique object number contained in the EPC. Second Am. Compl. ¶ 13, ECF No. 112; Answer ¶ 13, ECF No. 114.
The '967 Patent teaches RFID transponder or inlay with RFID integrated circuit chip ("IC chip") having encoded memory structure that ensures uniqueness with the serial number portion of the code. Am. Compl. Ex. A, the '967 Patent, ECF No. 71-1. Specifically, the '967 Patent teaches an RFID IC chip memory structure by delineating a section using the leading bitsof the serial number section of the EPC binary encoding - referred to as the "most significant bits" ("MSB") in the '967 Patent. Am. Compl. Ex. A, the '967 Patent, ECF No. 71-1.
The '967 Patent claims priority through a chain of patent applications, including the U.S. Patent Application No. 12/124,768, filed on May 21, 2008 ("2008 Application"). Id. at 1:6-21. On Defendant's challenge of the priority date, this Court has held that "the '967 Patent is entitled to the priority date of the 2008 Application." Op. and Order 16, ECF No. 167.
In August and September of 2008, Plaintiff and the inventor McAllister worked to incorporate embodiments of McAllister's invention into an RFID encoding system as a project with Walmart, referred to as the "Ad Hoc Mode". Legaard Decl., Ex. E., McAllister Dep. 95:17-24, ECF No. 123-5; see Ex. G, Pl.'s Resp. to Def.'s Second Set of Interrogs. 3, ECF No. 123-7. Plaintiff introduced the Ad Hoc feature commercially in February 2009 and sold the encoders and software implementing the Ad Hoc Mode to Walmart on April 20, 2009. Id. at Ex. G, 3-4. Based on the finding that the 2008 Application discloses the claimed invention in the '967 Patent, this Court held that "the later-occurred Ad Hoc Mode sale cannot create an on-sale bar to the '967 Patent." Op. and Order 16, ECF No. 167.
Plaintiff alleges that Defendant, a third-party encoder, "makes, encodes, sells, and offers to sell RFID tags and labels for customers that are RFID transponders that comprise a substrate, an antenna, and an RFID IC chip coupled to the antenna." Second Am. Compl. ¶ 22, ECF No.112; see also, Pl.'s Mot. Summ. J., Ex. C, ¶ 22, ECF No. 168-5; Ex. D, ¶ 22, ECF No. 168-6; Ex. H, ¶ 19, ECF No. 168-11.
Plaintiff alleges direct infringement of claims 1-6, 12-15 of the '967 Patent by using the format of the '967 Patent in violation of 35 U.S.C. § 271(a). Id. ¶¶ 26-35, ECF No. 112. Plaintiff also alleges indirect infringement of the '967 Patent in violation of 35 U.S.C. §§ 271(b), (c) and (f). Id. ¶¶ 36-41.
Plaintiff's summary judgment motion has two parts. In the first part, Plaintiff moves for partial summary judgment on its claims of 35 U.S.C. §§ 271(a), (b) and (f). Pl.'s Mot. Summ. J., 10-24, ECF No. 168. Plaintiff also moves for summary judgment on Defendant's affirmative defenses of invalidity and inequitable conduct.2 Id. at 25-33. After Plaintiff filed a Reply to its summary judgment motion, Defendant filed a Motion for Leave to File Sur-Reply. Def.'s Mot. File Sur-Reply, ECF No. 186.
Defendant moves for summary judgment of non-infringement. Def.'s Mot. Summ. J. 8-11, ECF No. 169. Alternatively, Defendant moves for summary judgment of invalidity. Id. at 12-21.
Summary judgment is appropriate when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "Themovant has the burden of showing that there is no genuine issue of fact, but the plaintiff is not thereby relieved of his own burden of producing in turn evidence that would support a jury verdict." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). In determining a motion for summary judgment, "the judge must view the evidence in the light most favorable to the nonmoving party." McLaughlin v. Liu, 849 F.2d 1205, 1208 (9th Cir. 1988).
The Court starts with the three evidentiary issues raised in the parties' filings related to Plaintiff's Motion for Summary Judgment. First, Plaintiff objects to Mr. Blanchard's unsworn report and Mr. Sweeney's unsworn chart in support of Defendant's Response. Pl.'s Reply 7-8, ECF No. 179. For purposes of summary judgment, the Court overrules Plaintiff's objection.
The second and third evidentiary issues are raised by Defendant. Defendant objects to Dr. Engels' declaration in support of Plaintiff's Reply because the declaration is new. Def.'s Sur-Reply, ECF Nos. 186, 186-1. Additionally, Defendant files a Motion for Leave to File Sur-Reply as response to Plaintiff's submission of Dr. Engels' "new" declaration. Def.'s Mot. File Sur-Reply 2, ECF No. 186. Defendant also files a Sur-Reply. Def.'s Sur-Reply, ECF No. 187.
"[W]here new evidence is presented in a reply to a motion for summary judgment, the district court should not consider the new evidence without giving the non-movant an opportunity to respond." Provenz v. Miller, 102 F.3d 1478, 1483 (9th Cir. 1996); see also, e.g., Or. Nautral Desert Ass'n v. Cain, 17 F. Supp. 3d 1037, 1048 (D. Or. 2014) () (citation omitted).
Having reviewed the record, the Court finds that Dr. Engels' declaration is not new evidence. The Court overrules Defendant's objection to Dr. Engels' declaration. Nevertheless, for purposes of summary judgment, the Court grants Defendant's Motion for Leave to File Sur-Reply (ECF No. 186) and will consider Plaintiff's Sur-Reply (ECF Nos. 186-1, 187).
In its Motion for Summary Judgment of Non-Infringement, Defendant makes the alternative Motion for Summary Judgment of Invalidity under both 35 U.S.C. § 103 (non-obviousness) and 35 U.S.C. § 101 (subject matter) patentability. Def.'s Mot. Summ. J. 12-21, ECF No. 169. Because invalidity is a...
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