Crane Sec. Techs., Inc. v. Ab, Civil Action No. 14-12428-LTS

• Decision Date: 26 January 2018
• Docket Number: Civil Action No. 14-12428-LTS
• Parties: CRANE SECURITY TECHNOLOGIES, INC. and VISUAL PHYSICS, LLC, Plaintiffs, v. ROLLING OPTICS AB, Defendant.
• Court: U.S. District Court — District of Massachusetts

CRANE SECURITY TECHNOLOGIES, INC.and VISUAL PHYSICS, LLC, Plaintiffs, v. ROLLING OPTICS AB, Defendant.

Civil Action No. 14-12428-LTS

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

January 26, 2018

ORDER ON MOTIONS FOR SUMMARY JUDGMENT (DOC. NOS. 325 & 331)

SOROKIN, J.

Plaintiffs Crane Security Technologies, Inc. and Visual Physics, LLC have moved for summary judgment of infringement by various RO products on the following 22 claims across five patents:

1. Claims 57, 58, 59, 76, 77, 78, 79 of Pat. No. 7,468,842 (the "'842 Patent);

2. Claims 62, 63, 73, 74, 76 of Pat. No. 8,009,360 (the "'360 Patent");

3. Claims 158 of Pat. No. 8,111,462 (the "'462 Patent);

4. Claims 56, 95, 96 of Pat. No. 8,120,855 (the "'855 Patent"); and

5. Claims 167, 175, 176, 177, 178, 181 of Pat. No. 8,254,030 (the "'030 Patent").

Defendant Rolling Optics AB has cross-moved for summary judgment on the following issues:

1. The term "a given plane" in all claims of the '360 and '030 Patents is indefinite, such that those claims are invalid;

2. The term "substantially regular array spacing" in claims 62 and 63 of the '360 Patent and claim 56 of the '855 Patent is indefinite, such that those claims are invalid;

3. Claims 62 and 63 of the '360 Patent are invalid as anticipated by the prior art;

4. The allegedly infringed claims of the '842 Patent are invalid under the on-sale bar;

5. RO's products have not infringed claims 62 and 63 of the '360 Patent (requiring "substantially regular array spacing");

6. RO's products have not infringed claims 177, 178, and 181 of the '030 Patent, claims 74 and 76 of the '360 Patent, or claim 67 of the '855 Patent (requiring "shaped posts");

7. RO has not actively induced infringement by third parties; and

8. Crane failed to provide RO with actual notice of infringement prior to December 6, 2012.

For the reasons below, the Court DENIES RO's motion for summary judgment with respect to its invalidity claims; ENTERS summary judgment in Crane's favor as to the validity of claims requiring "a given plane" and "substantially regular array spacing"; ALLOWS Crane's motion for summary judgment of infringement; DENIES RO's motion for summary judgment of non-infringement; DENIES RO's motion for summary judgment of no liability for active inducement of infringement; and DENIES RO's motion for summary judgment limiting damages accrual on the basis of any failure to provide actual notice of infringement.

I. FACTS

The following facts are undisputed. Plaintiff Crane Security Technologies, Inc. ("Crane Security") is a New Hampshire corporation with its principal place of business in Nashua, NewHampshire. Crane Security manufactures anti-counterfeiting technologies that attach to banknote papers and security devices. One such technology, central in this patent infringement action, is a micro-optics system that projects synthetically magnified images.

Plaintiff Visual Physics, LLC ("Visual Physics") is a Georgia corporation with its principal place of business in Alpharetta, Georgia. Visual Physics is both the wholly-owned subsidiary of Crane Security since 2008, Doc. No. 1 ¶ 3, and the exclusive owner of all five patents in suit, Doc. No. 34 at 2 n.2. Visual Physics licenses these patents to its parent, Crane Security.¹

Defendant Rolling Optics ("RO") is a Swedish nanotechnology company with an office and production facility near Stockholm, Sweden. It makes and sells micro-optic foils and delivers them to third-parties who turn the foils into labels for products. Doc. No. 34 at 2.

The patents-in-suit are the '842 Patent, issued on December 23, 2008; the '360 Patent, issued on August 30, 2011; the '462 Patent, issued on February 7, 2012; the '855 Patent, issued on February 21, 2012; and the '030 Patent, issued on August 28, 2012. Each of these patents is either a continuation-in-part or divisional from one patent, Pat. No. 7,333,268 (the "'268 Patent"), issued February 19, 2008. Each patent covers a structure comprising a planar array of image icons and a planar array of focusing elements, separated by an optical spacer or substrate. Doc. No. 155 at 2. The technology is described in detail in Crane Sec. Techs., Inc. v. Rolling Optics AB, 166 F. Supp. 3d 76, 79-80 (D. Mass. 2016) (the "Markman Order").

In February, 2010, Crane learned that "[a] Swedish company called Rolling Optics" had approached Hewlett Packard ("HP") and "solicited [] business there." Doc. No. 341-1 ¶ 90. Thefollowing month, Crane obtained a copy of a Swedish magazine, Inspire, that featured a sample of RO's micro-optic system on the cover. Based on its analysis of the sample, Crane concluded that RO's products infringed the patents-in-suit. Id. ¶ 91.

On April 26, 2010, Crane sent a letter to RO's then-CEO, Fredrik Blomquist, to "alert [him] to a possible patent infringement situation regarding the manufacture and sale of your optical products in relation to our UNISON patents." Crane's letter pointed specifically to RO's "film products [...] that produce three-dimensional images that appear to exist on a plane other than the surface of the film." Id. ¶ 89. On May 14, 2010, RO responded that the company was "not involved in any activities in conflict with [Crane's] patent rights[.]" Doc. No. 22-2 at 2.

Representatives from Crane and RO met in Stockholm on December 10, 2010. Doc. No. 341-1 ¶ 92. At the meeting, Scott Palm, Crane's representative, commented that "there may be conflicts or overlap of intellectual property." Id. At the end of the meeting, the parties discussed possibilities of collaboration. Three days after the meeting, Palm drafted a response to an inquiry from HP stating: "We have seen no evidence that [RO is] either producing or selling thin film authentication products. As a courtesy, earlier this year, when we became aware the [sic] Rolling Optics was conducting research in micro-optics, we advised them of our extensive intellectual property position in the field." Id. ¶ 94.

In or around November 2011, RO and Connecticut-based CMR Associates LLC ("CMR") began negotiating the production of 3D micro-optic foils for use in labels for UGG Australia footwear products. Doc. No. 15 ¶ 2. Between November 2011 and May 2012, RO made and delivered the foils to CMR. CMR took title in Sweden and arranged for the foils to be delivered to a converter in New York, which produced labels from the foils. Id. ¶ 4. CMR thenshipped these labels to China, where they were incorporated into UGG products. Id. RO completed its sale of foils for the UGG products on July 2, 2012. Doc. No. 341-1 ¶ 96.

Meanwhile, in February 2012, RO began working with France-based Société Jas Hennessy & Co., an affiliate of Moët Hennessy, USA, Inc., to produce labels for use in special edition Hennessy VSOP cognac bottles destined for the United States. Doc. No. 29 ¶ 3; Doc. No. 13 ¶ 17. RO completed this sale on July 13, 2012. Doc. No. 341-1 ¶ 96. By May 2013, Moët Hennessy had distributed in the United States 18,000 bottles with labels containing RO's films. Doc. No. 22-17 at 2.

On December 3, 2012, Crane wrote a letter to RO's CEO and to UGG. Doc. No. 22-1 at 2; Doc. No. 22 ¶ 3. The letter noted that "the UNISON patent family has expanded and continues to expand around the world" and enumerated all five of the patents-in-suit. Doc. No. 22-1 at 2. The letter also alleged RO as the source of the infringing labels and reminded the recipients of their receipt of the prior April 26, 2010 letter. Id. at 3.

Prior to 2013, RO produced its foils with a technology that formed icons as voids or recesses. Doc. No. 341-1 ¶ 25. In 2013, RO ceased using this technology and began instead to form icons by printing the inverse of recesses onto a substrate. Doc. No. 327-40 at 9-10.

Crane and Visual Physics filed this complaint on June 9, 2014. The Court held a hearing pursuant to Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996), on December 11, 2015 and issued the Markman Order, which construed five claim terms, on February 9, 2016. See Crane Sec. Tech., 166 F. Supp. 3d 76. Fact discovery closed on May 9, 2016. Expert discovery closed on November 11, 2016. The parties filed motions for summary judgment in April and May of 2017. The Court held a hearing on January 12, 2018, at the conclusion of which each side submitted a booklet of PowerPoint slides.

II. LEGAL STANDARD

Summary judgment is appropriate when "the movant shows that 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). "A 'genuine' issue is one that could be resolved in favor of either party, and a 'material fact' is one that has the potential of affecting the outcome of the case." Calero-Cerezo v. U.S. Dep't of Justice, 355 F.3d 6, 19 (1st Cir. 2004). The moving party bears the burden of establishing that there is no genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317 (1986). "The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986).

III. DISCUSSION

The Court addresses each of the parties' arguments below.

A. Invalidity

i. "A Given Plane"

RO moves for summary judgment of invalidity as to Crane's patent claims that use the term "a given plane,"² which RO argues is indefinite. Claim 1 of the '360 Patent is representative:

1. A synthetic magnification micro-optic system comprising:

(a) an array of image icons with a substantially regular array spacing between a substantial number of image icons within at least a portion of the image icon array; and

(b) an array of image icon focusing elements, the array of image icon focusing elements being disposed a substantially uniform distance from the array of imageicons and forming at least one synthetically magnified image of at least a portion of the image icons,

wherein at least a portion of the image icons are arranged in relation to at least a portion of the focusing elements in a

...