Fellowes, Inc. v. Michilin Prosperity Co., Ltd.
| Citation | 491 F.Supp.2d 571 |
| Decision Date | 22 June 2007 |
| Docket Number | Civil Action No. 2:06cv289. |
| Court | U.S. District Court — Eastern District of Virginia |
| Parties | FELLOWES, INC. Plaintiff, v. MICHILIN PROSPERITY COMPANY, LTD. and Intek America, Inc., Defendants. |
Benjamin Lee Kiersz, Sarah Rochelle Greene, William Paul Atkins, Robert M. Fuhrer, Pillsbury Winthrop Shaw Pittman LLP, McLean, VA, Frank Alwin Edgar, Jr., James Jarrett Reid, Kaufman & Canoles PC, Newport News, VA, for Plaintiff.
Gregory N. Stillman, Brent Lee Vannorman, Hunton & Williams, Norfolk, VA, Tyler Maddry, Robert Kinder, Hunton & Williams LLP, Washington, DC, William Jeffery Edwards, Hunton & Williams LLP, Richmond, VA, for Defendants.
This case concerns two patents related to paper shredders, U.S. Patent No. 6,260,780 (the "'780 patent") and U.S. Patent No. 7,040,559 (the '559 patent"). A jury trial was held before this Court from May 1, 2007, to May 14, 2007, on Plaintiff Fellowes, Inc.'s ("Fellowes'") claims that Defendants Michilin Prosperity Company, Ltd. ("Michilin"), and Intek America, Inc., ("Intek") (collectively "Defendants") infringed the '559 and '780 patents. Defendants counterclaimed that both patents were invalid because they were anticipated and obvious under 35 U.S.C. §§ 102 and 103, and contended that they did not "sell[]" or "offer[] to sell" the allegedly infringing products "within the United States," or "import[]" them "into the United States." 35 U.S.C. § 271(a). Defendants admitted infringement of the '559 patent, if it was valid, and denied infringement of the '780 patent. On May 18, 2007, the jury returned a verdict finding that Defendants did not prove that the '559 and '780 patents were anticipated or obvious. The jury was unable to reach a verdict as to whether Defendants infringed the '780 patent.1 Following the verdict, the parties renewed their motions pursuant to Federal Rules of Civil Procedure 56 and 50(b) for summary judgment, or judgment as a matter of law, on Fellowes' claim that the '780 patent was infringed. Defendants also moved for judgment as a matter of law that the '780 and '559 patents were invalid and, in the alternative, for a new trial. For the reasons stated herein, the Court FINDS, as a matter of law, that Defendants directly infringed claim 3 of the '780 patent, and claims 1, 14, 15, and 16 of the '559 patent, and induced infringement of both patents. The Court further FINDS, in accordance with the jury verdict, that U.S. Patent No. 6,260,780 and U.S. Patent No. 7,040,559 are both valid patents.
Fellowes is an Illinois corporation that manufactures paper shredders. It is the assignee of the '559 patent, which is entitled "Shredder With Lock For On/Off Switch," and the '780 patent, which is entitled "Paper Shredder Shaft." The '559 patent discloses an invention to discourage a shredder from being inadvertently turned on. At issue in the '780 patent is a "V-shaped" "spacer" for use in a "cross-cut shredder" that purportedly is better able to dislodge paper chips that fall into the spaces between the shredder's cutting blades and tend to jam the shredder, preventing its operation. The '559 patent was applied for on April 2, 2004, and issued by the United States Patent and Trademark Office (USPTO) on May 9, 2006. The '780 patent was applied for on August 26, 1999, and issued on July 17, 2001.
Michilin is a Taiwanese corporation that owns factories in China that manufacture several models of shredders. Intek, a corporation incorporated in California and based in Torrance, California, markets Michilin shredders to retailers in the United States. Fellowes contends that Michilin shredders with "Diamond Cut" disks infringe the "V-shaped" spacer claimed in the '780 patent, and that Michilin shredders with "Child Resistant Safety" (CRS) switches infringe the "switch lock" that locks the "on/off switch" claimed in the '559 patent.
Fellowes alleges that Defendants directly infringed both patents by offering to sell, selling, and importing the CRS and Diamond Cut shredders (collectively, "the accused shredders" or "accused products") in violation of 35 U.S.C. § 271(a), and induced infringement of both patents in violation of 35 U.S.C. § 271(b). Defendants stipulated that the CRS shredders infringe the '559 patent, but contended that the Diamond Cut shredders did not infringe the '780 patent, and that both patents were invalid under 35 U.S.C. §§ 102 and 103. On May 11, 2007, at the conclusion of all the evidence but before submission of the case to the jury, both parties moved for judgment as a matter of law as to infringement and validity.2 The defendants contended that they did not "offer [] to sell," "sell[]," or "import" any goods "within the United States" primarily because goods were shipped "Free on Board China" or "FOB China."3 § 271(a). The Court denied the motions except that it ruled, as a matter of law, that Defendants "offered to sell" the accused shredders in the United States during the terms of the '559 and '780 patents under § 271(a). The Court ruled that since the Defendants learned of the existence of the patents on approximately May 23, 2006, they induced infringement of both patents under § 271(b) as of that date, assuming they were directly infringed.4 Following the jury's verdict, all parties filed motions pursuant to Rules 50(b), 56(c), and 59 for judgment as a matter of law, summary judgment, and/or a new trial on infringement of the '780 patent and on the validity of both patents.
Pursuant to Federal Rule of Civil Procedure 50(a), judgment as a matter of law prior to submission of the case to the jury is appropriate when "a party has been fully heard on an issue during a jury trial and the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue...." Fed.R.Civ.P. 50(a)(1). A renewed motion for judgment as a matter of law pursuant to Rule 50(b) is governed by the same standard. Fed.R.Civ.P. 50(b); see Cline v. Wal-Mart Stores, Inc., 144 F.3d 294, 301 (4th Cir.1998). To determine whether to grant a motion for judgment as a matter of law, the Court "must examine the evidence in the light most favorable to the non-moving party and determine `whether a reasonable trier of fact could draw only one conclusion from the evidence.'" Brown v. CSX Transp., Inc., 18 F.3d 245, 248 (4th Cir.1994) (quoting Townley v. Norfolk & W. Ry. Co., 887 F.2d 498, 499 (4th Cir.1989)).
A motion for a new trial pursuant to Rule 59(a) should only be granted if "1) the verdict is against the clear weight of the evidence, 2) is based on evidence which is false, or 3) will result in a miscarriage of justice...." Dennis v. Columbia Colleton Med. Ctr., Inc., 290 F.3d 639, 650 (4th Cir.2002); see Fed.R.Civ.P. 59(a).
Under 35 U.S.C. § 271(a), "whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent." 35 U.S.C. § 271(a).
An "offer to sell" is defined "according to the norms of traditional contractual analysis." Rotec Indus., Inc. v. Mitsubishi Corp., 215 F.3d 1246, 1255 (Fed.Cir.2000); see 35 U.S.C. § 271(i) (). Thus, the defendant must "communicate[] a `manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.'" Rotec Indus., 215 F.3d at 1257 (quoting Restatement (Second) of Contracts § 24 (1979)). A sale is defined with reference to its ordinary meaning, i.e. NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282, 1319 (Fed.Cir.2005) (citing Black's Law Dictionary 1337 (7th ed.1999)).
"It is well established that the reach of Section 271(a) is limited to infringing activities that occur within the United States." MEMC Elec. Materials Inc. v. Mitsubishi Corp., 420 F.3d 1369, 1375 (Fed.Cir.2005). The situs of infringement is determined according to the places of contracting and performance, not solely the place where legal title passes. See N. Am. Philips v. Am. Vending Sales, Inc., 35 F.3d 1576, 1579-80 (Fed.Cir.1994) (). The location of passage of title, standing alone, without more, does not determine where a "sale" or "offer to sell" occurs for purposes of § 271(a). See MEMC Elec., 420 F.3d at 1377 (); SEB, S.A. v. Montgomery Ward & Co. Inc., 412 F.Supp.2d 336, 340 (S.D.N.Y.2006) (); Cybiotronics, Ltd. v. Golden Source Elecs., Ltd., 130 F.Supp.2d 1152, 1176 (C.D.Cal.2001) (). The documentary evidence clearly shows that most of the accused shredders were sold "FOB China," meaning title to the shredders and risk of loss passes to the purchaser in China.
Fellowes put on an abundant amount of evidence at trial as to Michilin and Intek's sales activities...
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