Int'l Gamco Inc. v. Multimedia Games Inc.

• Decision Date: 11 August 2010
• Docket Number: Case No. 04 CV 1053 JLS (AJB)
• Court: U.S. District Court — Southern District of California
• Parties: INTERNATIONAL GAMCO, INC., Plaintiff, v. MULTIMEDIA GAMES INC., Defendant.

732 F.Supp.2d 1082

INTERNATIONAL GAMCO, INC., Plaintiff,

v.MULTIMEDIA GAMES INC., Defendant.

Case No. 04 CV 1053 JLS (AJB).

United States District Court, S.D. California.

Aug. 11, 2010.

John P. Passarelli, Nicholas N. Clatterbuck, Kutak Rock LLP, Omaha, NE, Stephen L. Schreiner, Solomon Ward Seidenwurm & Smith, LLP, San Diego, CA, Paul Douglas Chancellor, Ocean Law, Simi Valley, CA, for Plaintiff.

Callie A. Bjurstrom, Michelle Ann Herrera, Peter K. Hahn, Luce Forward Hamilton and Scripps, San Diego, CA, for Defendant.

ORDER: (1) GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT OF NON-INFRINGEMENT; (2) DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT OF INVALIDITY

JANIS L. SAMMARTINO, District Judge.

Presently before the Court is Defendant and Counter Claimant Multimedia Games, Inc.'s ("MGAM") motion for summary judgment of non-infringement (Doc. No. 269.) and motion for summary judgment of invalidity. (Doc. No. 268.) Also before the Court is Plaintiff International Gamco, Inc.'s ("Gamco") and Counter Defendant Oasis Technology, Inc.'s ("Oasis") oppositions to both motions (Doc. Nos.293, 294), and MGAM's replies. (Doc. Nos.314, 321.) For the reasons stated below, the Court HEREBY GRANTS MGAM's motion for summary judgment of non-infringement and DENIES MGAM's motion for summary judgment of invalidity.

BACKGROUND

MGAM is a publicly traded company with its principal place of business located in Austin, Texas. (Lannert Decl. ISO MSJs, ¶ 1.) Gamco is a gaming company with its principal place of business in Omaha, Nebraska. The patent at issue in this case is United States Patent Number 5,324,035, filed December 1, 1992, entitled "Video Gaming System with Fixed Pool of Winning Plays and Global Pool Access." ( See Bjurstrom Decl. ISO MSJs, Ex. E (the "'035 Patent").) The '035 Patent was originally rejected by the United States Patent and Trademark Office ("USPTO") for anticipation and obviousness over prior art not at issue in this case.¹ ( See Bjurstrom Decl. ISO MSJs, Ex. F at 109-115; Passarelli Decl. ISO Opp., Ex. H at 224-25.) During an interview with the USPTO, the Patent Examiner cited another relevant prior art, United States Patent Number 4,494,197, referred to as the "Troy" patent. ( See Bjurstrom Decl. ISO MSJs, Ex. F at 116-127; see also Passarelli Decl., Ex. H at 238-39 (hereinafter "Preliminary Amendment").) Thereafter, Gamco submitted a Preliminary Amendment on January 10, 1994, amending eachclaim of the ' 035 Patent. ( Id.) The ' 035 Patent issued on June 28, 1994.

In 2002, MGAM was awarded the contract to provide a central lottery system (the "Central System" or "MGAM System") for the New York State Lottery ("NYSL"). (Lannert Decl. ISO MSJs, ¶ 4.) On May 25, 2004, Gamco filed its original complaint against MGAM for infringement of the '035 Patent based on the MGAM System for the NYSL.² (Doc. No. 1.) The operative complaint, the Third Amended Complaint, was filed on January 9, 2008. (Doc. No. 167.) A claim construction hearing was held before this Court on January 13, 2009. ( See Doc. Nos. 235, 252.)

The present motions for summary judgment were filed on February 23, 2010. ( See Doc. Nos. 268, 269.) Gamco filed oppositions to both motions on April 20, 2010. ( See Doc. Nos. 293, 294.) MGAM filed its replies to both oppositions on May 13, 2010. ( See Doc. Nos. 314, 321.) On May 25, 2010, the Court gave Gamco leave to file sur-replies to both motions for summary judgment and further granted MGAM leave to respond in opposition to these sur-replies. (Doc. No. 333.) All four briefs were timely filed. Furthermore, with its original reply, MGAM filed objections to the declarations of Gamco's expert witness under Federal Rules of Evidence 702 and 703 and Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 592-93, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993). The Court thereafter granted Gamco leave to respond to these objections and for MGAM to reply to Gamco's opposition. (Doc. No. 333.) Both briefs were timely filed. A hearing on all motions was held on Thursday, July 22, 2010 and the matter was thereafter taken under submission.

LEGAL STANDARD

Federal Rule of Civil Procedure 56 permits a court to grant summary judgment where (1) the moving party demonstrates the absence of a genuine issue of material fact and (2) entitlement to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "Material," for purposes of Rule 56, means that the fact, under governing substantive law, could affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir.1997). For a dispute to be "genuine," a reasonable jury must be able to return a verdict for the nonmoving party. Anderson, 477 U.S. at 248, 106 S.Ct. 2505.

The initial burden of establishing the absence of a genuine issue of material fact falls on the moving party. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. The movant can carry his burden in two ways: (1) by presenting evidence that negates an essential element of the nonmoving party's case; or (2) by demonstrating that the nonmoving party "failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." Id. at 322-23, 106 S.Ct. 2548. "Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment." T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir.1987).

Once the moving party establishes the absence of genuine issues of material fact, the burden shifts to the nonmoving party to set forth facts showing that a genuine issue of disputed fact remains. Celotex, 477 U.S. at 324, 106 S.Ct. 2548. The nonmoving party cannot oppose a properly supported summary judgment motion by "rest[ing] on mere allegations or denials of his pleadings." Anderson, 477 U.S. at 256, 106 S.Ct. 2505. When ruling on a summary judgment motion, the court must view all inferences drawn from the underlying facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

"Summary judgment is as appropriate in a patent case as in any other case." Cabot Safety Intermediate Corp. v. Arkon Safety Equip., Inc., 44 F.Supp.2d 375, 376 (D.Mass. 1999) (quoting Avia Group Int'l Inc. v. L.A. Gear Cal., Inc., 853 F.2d 1557, 1561 (Fed.Cir.1988)). However, a determination of infringement is a question of fact. Insituform Techs., Inc. v. Cat Contracting, Inc., 161 F.3d 688, 692 (Fed.Cir.1998). Accordingly, summary judgment is proper only if the court finds that "no reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 255, 106 S.Ct. 2505; see also Lockheed Martin Corp. v. Space Systems/Loral, Inc., 324 F.3d 1308, 1318 (Fed.Cir.2003); CAE Screenplates Inc. v. Heinrich Fiedler GmbH & Co. KG, 224 F.3d 1308, 1319 (Fed.Cir.2000). Furthermore, a patent is presumed valid, see 35 U.S.C. § 282, so the invalidity of patent claims must be proven by clear and convincing evidence. See Apotex USA, Inc. v. Merck & Co., Inc., 254 F.3d 1031, 1036 (Fed.Cir.2001); WMS Gaming, Inc. v. Int'l Game Tech., 184 F.3d 1339, 1355 (Fed.Cir.1999).

DISCUSSION

I. Gamco's Expert Witness

MGAM objects to Gamco's expert witness Susan Spielman under the standard qualifying expert witnesses set forth in Federal Rules of Evidence 702 and 703 and Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993). (Doc. No. 323).

"A trial court can only consider admissible evidence in ruling on a motion for summary judgment." Orr v. Bank of Am., 285 F.3d 764, 773 (9th Cir.2002); Fed.R.Civ.P. 56(e)(1). Expert evidence therefore must meet the standard of relevance and reliability articulated in Daubert:

Faced with a proffer of expert scientific testimony ... the trial judge must determine ... whether the expert is proposing to testify to (1) scientific knowledge that (2) will assist the trier of fact to understand or determine a fact in issue. This entails a preliminary assessment of whether the reasoning or methodology underlying the testimony is scientifically valid and of whether that reasoning or methodology properly can be applied to the facts in issue.

509 U.S. at 592-93, 113 S.Ct. 2786; see also Fed.R.Evid. 702 (permitting expert to testify only if: "(1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods and (3) the witness has applied the principles and methods reliably to the facts of the case."); Fed.R.Evid. 703 (requiring the facts or data upon which the expert relies to be "of a type reasonably relied upon by experts in the particular field"). The Court has a gatekeeping responsibility to determine whether such expert testimony complies with Rules 702 and 703. Daubert, 509 U.S. at 592, 113 S.Ct. 2786; see also Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 148-49, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999).

Further, issues related to patent infringement and invalidity "are analyzed in great part from the perspective of a person of ordinary skill in the art, and testimony explaining the technical evidence from that perspective may be of great utility to the factfinder." Sundance, Inc. v. DeMonte Fabricating Ltd., 550 F.3d 1356, 1361-62 (Fed.Cir.2008). Accordingly, the Federal Circuit has held that a trial court abuses its discretion if it allows testimony from an expert witness who has "no skill in the pertinent art." Id. This, the Federal Circuit observed, "serves only to cause mischief and confuse the factfinder." Id. at 1362.

It is undisputed that Ms. Spielman has substantial experience with distributed computer networking systems. However, Ms. Spielman admittedly has no expertise or experience in the field of gaming or lottery systems. ( See Bjurstrom Decl. ISO Reply, Ex. X (Spielman Depo.) at 19:20-20:8; ...