Honeywell Int'l v. OPTO Elecs. Co.
| Decision Date | 20 April 2023 |
| Docket Number | Civil Action 3:21-CV-00506-KDB-DCK |
| Parties | HONEYWELL INTERNATIONAL INC.; HAND HELD PRODUCTS, INC.; AND METROLOGIC INSTRUMENTS, INC., Plaintiffs, v. OPTO ELECTRONICS CO., LTD., Defendant. |
| Court | U.S. District Court — Western District of North Carolina |
THIS MATTER is before the Court on Plaintiffs' (collectively “Honeywell”) and Defendant OPTO Electronics Co., LTD's (“OPTO”) (1) cross motions for Summary Judgment and Partial Summary Judgment on Plaintiff's claims (Doc. Nos 116, 132); (2) cross motions for Summary Judgment on Defendant's patent misuse counterclaim (Doc. Nos. 161 168); (3) Motions to Strike and exclude the testimony of one of each side's expert witnesses (Doc. Nos. 137, 173); and (4) discovery objections not resolved by the Court's recent Order (Doc. No. 154). The Court has carefully considered these motions, the parties' briefs and exhibits, and oral argument on the motions from the parties' counsel on April 13, 2023. In the manner and for the reasons discussed below, the Court will in part GRANT and in part DENY the motions for summary judgment, in part GRANT and in part DENY the Motions to Strike and affirm the discovery objections (Issues Nos. 6 and 8).
Applying governing Delaware law to the construction and interpretation of the parties' patent licensing agreement (“Agreement”), the Court finds that the disputed Section 1.4 definition of “2D Barcode Products” (on which the obligation to pay royalties depends) and the terms of Honeywell's entitlement to additional payments for pre-Agreement sales under Section 5.1 are not ambiguous. More particularly, the Court finds that Honeywell's reading of Section 1.4 of the Agreement is correct and partial summary judgment will be entered so construing the Agreement. With respect to Section 5.1, however, the Court finds that the Agreement should be construed as argued by OPTO. The additional payments on pre-Agreement sales described in Section 5.1 must be determined by an audit that must be “conducted” within one year of the “Effective Date” of the Agreement. There can be no genuine dispute that the audit performed here occurred, in whole or in part, outside the one-year period. Therefore, OPTO will be granted summary judgment on Plaintiffs' claim under Section 5.1.
Regarding the parties' cross motions for summary judgment on OPTO's patent misuse counterclaims, the Court will deny both motions. The Court finds that no party is entitled to summary judgment in their favor because there is neither the presence of patent misuse per se nor the absence of patent misuse as a matter of law on the disputed record before the Court. Therefore, the Court must decide the merits of OPTO's patent misuse counterclaim at trial.
As to the Motions to Strike, the Court finds that Honeywell's proffered expert witness David O. Taylor's proposed testimony is nothing more than legal argument and opinion as to the proper interpretation of the Agreement (which is the province of the Judge, the jury and trial counsel) and thus the motion to strike his testimony will be granted. However, the Court will deny Honeywell's motion to strike OPTO's expert Greg Adams' testimony. While the specific parameters and weight of his testimony will ultimately be decided at trial, the Court does not find that his testimony should be excluded, particularly where his testimony relates solely to the patent misuse counterclaim which will be decided by the Court rather than the jury.
Finally, on the two remaining discovery issues, even if the issues were not mooted because the Court finds that communications related to the Section 5.1 sales audit Honeywell relies on in seeking this discovery are no longer relevant, the Court will not permit the discovery, which appears to be nothing more than an attempt to discover OPTO's counsel's thoughts with respect to the merits of Honeywell's claims. Accordingly, OPTO's objections will be allowed and the remaining discovery requests will be denied.
Summary judgment is appropriate “if 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.” United States v. 8.929 Acres of Land in Arlington Cnty., Virginia, 36 F.4th 240, 252 (4th Cir. 2022) (quoting Fed.R.Civ.P. 56(a)); see United States, f/u/b Modern Mosaic, LTD v. Turner Construction Co., et al., 946 F.3d 201, 206 (4th Cir. 2019). A factual dispute is considered genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); 8.929 Acres of Land, 36 F.4th at 252. “A fact is material if it might affect the outcome of the suit under the governing law.” Id., (quoting Libertarian Party of Va. v. Judd, 718 F.3d 308, 313 (4th Cir. 2013)).
The party seeking summary judgment bears the initial burden of demonstrating the absence of a genuine issue of material fact through citations to the pleadings, depositions, answers to interrogatories, admissions, or affidavits in the record. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (when the nonmoving party “has failed to make a sufficient showing on an essential element of [his] claim with respect to which [he] has the burden of proof,” summary judgment is warranted); United States ex rel. Gugenheim v. Meridian Senior Living, LLC, 36 F.4th 173, 178 (4th Cir. 2022). If the movant satisfies his initial burden to demonstrate “an absence of evidence to support the nonmoving party's case,” the burden shifts to the nonmovant to “present specific facts showing that there is a genuine issue for trial.” 8.929 Acres of Land, 36 F.4th at 252, quoting Humphreys & Partners Architects, L.P. v. Lessard Design, Inc., 790 F.3d 532, 540 (4th Cir. 2015). “The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. Hixson v. Moran, 1 F.4th 297, 302 (4th Cir. 2021). Rather, the nonmoving party must establish that a material fact is genuinely disputed by, inter alia, “citing to particular parts of the materials of record” and cannot rely only on “conclusory allegations, mere speculation, the building of one inference upon another, or the mere existence of a scintilla of evidence.” Fed.R.Civ.P. 56(c)(1)(A); 8.929 Acres of Land, 36 F.4th at 252, quoting Dash v. Mayweather, 731 F.3d 303, 311 (4th Cir. 2013).
Still, summary judgment is not intended to be a substitute for a trial of the facts. Anderson, 477 U.S. at 249. In determining if summary judgment is appropriate, “courts must view the evidence in the light most favorable to the nonmoving party and refrain from weigh[ing] the evidence or mak[ing] credibility determinations.” Variety Stores, Inc. v. Wal-Mart Stores, Inc., 888 F.3d 651, 659 (4th Cir. 2018) (internal quotation marks omitted) (quoting Lee v. Town of Seaboard, 863 F.3d 323, 327 (4th Cir. 2017). “Summary judgment cannot be granted merely because the court believes that the movant will prevail if the action is tried on the merits.” Jacobs v. N.C. Admin. Office of the Courts, 780 F.3d 562, 568-69 (4th Cir. 2015) (). In the end, the relevant inquiry on summary judgment is “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Anderson, 477 U.S. at 251-52. “When faced with crossmotions for summary judgment, the court must review each motion separately on its own merits to determine whether either of the parties deserves judgment as a matter of law.” Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003) (internal quotation and citation omitted).
Honeywell and OPTO, a Japanese company, are competitors in the market for bar code scanning equipment and technology. In 2020, the Parties purported to settle extensive patent litigation at the U.S. International Trade Commission and in the United States District Court for the District of Delaware through a patent licensing agreement. The parties agree that the Agreement is governed by and to be construed under the laws of the State of Delaware (as well as applicable federal law). In brief summary, Honeywell claims that OPTO[1] has breached the Agreement by misstating the amount of OPTO's pre-Agreement sales of certain alleged “2D” barcode scanning products and failing to pay ongoing royalties on those products. OPTO has filed counterclaims for unfair trade practices and patent misuse, alleging that Honeywell is using the Agreement to unlawfully seek royalties on features of products for which they do not have patent protection. Each side denies the other's claims.
In their respective motions for summary judgment on Honeywell's affirmative claims, (Doc. Nos. 116, 132), the parties urge the Court with equal ardor to find that the core dispute in the case - identifying the products on which royalties must be paid under the Agreement - must be answered in their favor based on the “unambiguous” language of the Agreement. Specifically, the parties ask the Court to construe the meaning of Section 1.4 of the Agreement, which defines “2D Barcode Products” as follows:
The term ‘2D Barcode Products' shall mean any device or article of manufacture that is operable to decode at least one or more two-dimensional barcode symbologies into human-readable text. Two-dimensional (‘2D') barcode symbologies include, but are not limited to, any two-dimensional barcode symbology defined by one or more standards settings organizations such as the International...
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