Milwaukee Elec. Tool Corp. v. Snap-On Inc.

• Decision Date: 22 September 2017
• Docket Number: Case No. 14–CV–1296–JPS
• Citation: 271 F.Supp.3d 990
• Parties: MILWAUKEE ELECTRIC TOOL CORPORATION, Metco Battery Technologies LLC, AC (Macao Commercial Offshore) Limited, and Techtronic Industries Co. Ltd., Plaintiffs, v. SNAP–ON INCORPORATED, Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

271 F.Supp.3d 990

MILWAUKEE ELECTRIC TOOL CORPORATION, Metco Battery Technologies LLC, AC (Macao Commercial Offshore) Limited, and Techtronic Industries Co. Ltd., Plaintiffs,

v.SNAP–ON INCORPORATED, Defendant.

Case No. 14–CV–1296–JPS

United States District Court, E.D. Wisconsin.

Signed September 22, 2017

Jason C. White, Maria Doukas, Sanjay K. Murthy, Morgan Lewis & Bockius LLP, Chicago, IL, Jessica Hutson Polakowski, Paul J. Stockhausen, Alexander B. Handelsman, David G. Hanson, James N. Law, Monica A. Mark, Reinhart Boerner Van Deuren SC, Milwaukee, WI, Jeffrey G. Killian, Morgan Lewis & Bockius LLP, Washington, DC, Scott D. Sherwin, Morgan Lewis & Bockius LLP, Milwaukee, WI, for Plaintiffs.

Amol A. Parikh, Joseph H. Paquin, McDermott Will & Emery LLP, Chicago, IL, Michael T. Piery, David R. Cross, Quarles & Brady LLP, Milwaukee, WI, Paul Devinsky, McDermott Will & Emery LLP, Washington, DC, Andrew M. Meerkins, George R. Dougherty, Hugh A. Abrams, Jonathon M. Studer, Peter F. O'Neill, Shook Hardy & Bacon LLP, Chicago, IL, Lynn H. Murray, Grippo & Elden, Chicago, IL, for Defendant.

ORDER

J.P. Stadtmueller, U.S. District Court

This is a patent case about lithium-ion batteries used in power tools. Before the Court are the parties' claim construction briefs and their cross-motions for summary judgment. For the reasons stated below, the Court adopts Plaintiffs' proposed claim construction in all respects. The Court further finds that Snap–On has not proffered sufficient undisputed facts to warrant summary judgment on the grounds of derivation or pre-suit damages. Likewise, Plaintiffs have not shown that the undisputed facts support application of assignor estoppel against Snap–On, although IPR estoppel does operate to bar some uses of some of Snap–On's prior art references. Finally, the Court determines that there is an insufficient factual basis for Snap–On's claim of invalidity, its inequitable conduct defense, and certain aspects of its anticipation defense, and so these will not be permitted to proceed to trial.

1. BACKGROUND

Plaintiffs assert infringement of the following claims against Snap-on: claims 1 and 8–10 of U.S. Patent No. 7,554,290 (the " '290 Patent"), claims 1, 4, 5, 7–13, and 16–19 of U.S. Patent No. 7,999,510 (the " '510 Patent"), and claims 1, 8–10, 12, and 13 of U.S. Patent No. 7,944,173 (the " '173 Patent"). Independent claim 1 of the '290 Patent, which is representative of its counterparts, recites

a battery pack for power a hand held power tool, the battery pack comprising:

a housing connectable to and supportable by the hand held power tool; and

a plurality of battery cells supported by the housing, the battery cells being capable of producing an average discharge current greater than or equal to approximately 20 amps, the battery cells having a lithium-based chemistry.

(Docket # 187–1 at 77). Further, later claims provide, in relevant part, that the pack's battery cells each have "a nominal voltage of 4.2 volts" and that they have "a capacity of approximately 3.0 ampere-hours [ ("Ah") ]." Id.

Because of the vast factual record presented, the Court will provide here a broad overview of the relevant background and timeline. Facts pertinent only to one narrow argument or another will be discussed at the appropriate juncture. This may lead to some repetition, but the Court has found no better way to fully and fairly treat each matter for decision.¹

Power-tool companies, including Plaintiff Milwaukee Electric Tool Corporation ("Milwaukee"), began manufacturing high-power cordless tools in the 1980s, and those power tools were traditionally powered by nickel-cadmium ("NiCd") or nickel-metal hydride ("NiMH") battery cells contained in battery packs. In the 1980s and 1990s, lithium-based battery technology emerged, and was initially used in low-power applications such as cell phones and laptop computers, later migrating to high-power applications such as electric automobiles and satellites.

Canadian battery manufacturer E–One Moli Energy (Canada) Ltd. ("Moli") was "a world leading manufacturer and researcher of lithium-ion ("Li-ion") batteries," and had a "large and accomplished world class team" that took on "pioneering roles in the advancement of lithium-ion technology." (Docket # 187–26 at 8–9). Like other battery makers, Moli initially focused on low-power applications, but by the early 2000s it was focused on high-power uses, including power tools, for which it developed battery cells.

In June 2001, Mark Reid ("Reid"), a Moli employee, prepared a presentation for toolmaker Bosch called the "Bosch 24V Power Tools Presentation." In the presentation, Reid showcased Moli's Li-ion battery packs. Two videos embedded in the presentation show a Moli employee using a Bosch reciprocating saw retrofitted with Moli Li-ion cells cutting steel pipe and wood. The presentation goes on to describe the benefits of replacing NiCd battery cells with Li-ion ones, including increased power, reduced weight, and longer shelf life. The presentation also depicted common NiCd battery pack features, including a housing, connectability of the pack to the tool, and a locking assembly.

On July 25, 2001, a sales representative of Moli wrote to Milwaukee, attaching a modified version of the Bosch presentation, as well as a "Power 2000" presentation created by Moli scientist Ulrich von Sacken ("von Sacken"), which described Moli's Li-ion cells and promoted their ability to provide cost-effective power for high-power applications. Moli's sales representative also visited the company in July 2001 to introduce Milwaukee to the Moli cells.

A month later, on August 27, 2001, Milwaukee product manager David Selby ("Selby") met with a Moli representative. In an email to his colleagues the next day, he said that during the meeting he heard "disturbing news." (Docket # 187–33 at 2). Moli had apparently reported to him that it was working with other power tool manufacturers to develop Li-ion battery packs. Id. He said that Milwaukee nevertheless wanted to evaluate sample packs, and he set up a second meeting for September 18, 2001.

Moli provided two sample battery packs on September 24, 2001. Jan Reimers ("Reimers"), a Moli scientist, stated that the packs' designated discharge currents, such as "20A"—meaning "20 amps"—denoted "the maximum current that the cell can be discharged at and still return >70% of the rated capacity." (Docket # 187–3 at 2). The battery packs sent in September 2001 were designated 15A.

At this point, it is helpful to foreshadow one of the forthcoming claim construction disputes. As noted above, independent claim 1 of the '290 Patent and independent claims 1, 9, 10, 12, 16, and 18 of the '510 Patent recite "the battery cells being capable of producing an average discharge current greater than or equal to approximately 20 amps." This is known as the "20 Amp Limitation."² Much of the parties' disagreement regarding construction of the 20 Amp Limitation revolves around how to test it—in particular, how to measure the "average discharge current" of a battery pack. The facts regarding cell testing and development, discussed further below, will feature prominently in resolving that and other disputes.

As noted above, Moli created two prototype packs, each comprised of a housing and a plurality of five Li-ion 15A cells connected in series. One of the named inventors of the patents-in-suit, Gary Meyer ("Meyer"), a Milwaukee employee, tested the prototype packs during the period of September 26 through October 11, 2001. First, he used a constant-current discharge test, in which the pack was configured to discharge at a constant current of 20 amps to see if it could provide this current over its entire capacity without failing. Moli's prototype packs failed this test, as they were able to deliver 20 amps only for a short time, delivering just a fraction of their entire rated capacity of 3.0 Ah before experiencing voltage crash, ending the test. (Docket # 201 ¶ 41).

Meyer also performed a cutting test, in which he attached a prototype pack to a circular saw and made cuts through wood. The prototype pack was observed to produce an average discharge current of 26.19 amps. However, the results showed that the actual performance of the pack ranged from over 50 amps to near zero during the course of the test. The pack was able to power the circular saw to make 34–37 cuts. Nevertheless, Meyer saw the test as a failure and concluded that the prototype pack was "unsuitable for use with a power tool requiring high discharge currents" because "the temperature of the Pack rapidly increased above acceptable levels" and the voltage of the pack fell below acceptable levels during the cuts. (Docket # 187–17 at 74–75). Indeed, as Meyer saw it, the test essentially destroyed the pack. (Docket # 201 ¶¶ 36–37).

In addition, Meyer performed a pulsed current discharge test. During that test, the prototypes were able to deliver at least one period of constant-current discharge of 20 amps of a little over three minutes. The packs were still not able to deliver that current for their entire rated capacity.

As it will be important later in considering Snap–On's inequitable conduct defense, it should be noted here that in 2009, during the prosecution of the '290 Patent, Plaintiffs disclosed the test results of this initial testing of the prototype packs. The results were submitted as an attachment to a declaration Meyer submitted to the United States Patent and Trademark Office ("PTO"). The PTO considered these results before granting the patent. In fact, the examiner first mistakenly believed the test results from the prototype packs were results of Plaintiffs' testing of the claimed packs and rejected the application on the basis that the results showed an inoperative and unsafe invention. When Plaintiffs informed the examiner that the prototype packs were not theirs but were the early Moli prototypes, the examiner reversed his decision and granted the '290...