Morris & Associates, Inc. v. Cooling & Applied Tech., Inc.

• Decision Date: 29 June 2011
• Docket Number: NO: 5:09-CV-00023-BR,: 5:09-CV-00023-BR
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: MORRIS & ASSOCIATES, INC., Plaintiff, v. COOLING & APPLIED TECHNOLOGY, INC., Defendant.

MORRIS & ASSOCIATES, INC., Plaintiff, v. COOLING & APPLIED TECHNOLOGY, INC., Defendant.

NO: 5:09-CV-00023-BR

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NORTH CAROLINA WESTERN DIVISION

Dated: June 29, 2011

ORDER

This matter is before the court on the 28 February 2011 Memorandum and Recommendation ("M&R") (DE # 116) of Magistrate Judge David W. Daniel regarding plaintiff Morris & Associates, Inc.'s ("Morris") motion for summary judgment as to defendant Cooling & Applied Techonology, Inc.'s ("CAT") four patent invalidity contentions. Judge Daniel recommends that summary judgment be granted in favor of Morris on two of the contentions and be denied on the other two contentions on the ground that genuine issues of material fact exist. Both parties have filed objections to the M&R and a response to the other party's objections.

I. BACKGROUND

The dispute in this action regards Morris's U.S. Patent No. 7,470,173 (the '173 patent). This patent issued on Morris's U.S. Non-Provisional Patent Application No. 11/762,142 (the '142 application) filed 13 June 2007, following Morris's U.S. Provisional Patent Application No. 60/813,203 (the '203 application), filed 13 June 2006. The '173 patent is entitled "Post Chill Decontamination Tank." The tank is used to treat and reduce the microbial contamination present on freshly slaughtered poultry. CAT's competing device, the KillCAT, uses a chill tanksystem with chemicals to reduce the bacterial contamination of processed poultry.

The court has previously found, as a matter of law, that CAT has infringed certain claims of the '173 patent. (9/20/10 Order, DE #97.) At issue now is the validity of the patent itself.¹

II. STANDARD OF REVIEW

The court is required to undertake a de novo determination of the portions of the M&R to which the parties object. See 28 U.S.C. § 636(b)(1). With regard to the entry of summary judgment, it should be granted in those cases "in which it is perfectly clear that no genuine issue of material fact remains unresolved and inquiry into the facts is unnecessary to clarify the application of the law." Haavistola v. Community Fire Co. of Rising Sun, Inc., 6 F.3d 211, 214 (4th Cir. 1993). In making this determination, the court draws all permissible inferences from the underlying facts in the light most favorable to the party opposing the motion. Id. "[E]ven though there may be no dispute about the basic facts, still summary judgment will be inappropriate if the parties disagree on the inferences which may reasonably be drawn from those undisputed facts." Morrison v. Nissan Co., 601 F.2d 139, 141 (4th Cir. 1979) (citations omitted).

When evaluating a motion for summary judgment, the court views the record evidence through the prism of the evidentiary standard of proof that would pertain at a trial on the merits. Under the patent statutes, a patent enjoys a presumption of validity, which can be overcome only through clear and convincing evidence. Thus, a moving party seeking to invalidate a patent at summary judgment must submit such clear and convincing evidence of invalidity so that no reasonable jury could find otherwise. Alternatively, a moving party seeking to have a patent held not invalid at summary judgment must show that the nonmoving party, who bears the burden of proof at trial, failed toproduce clear and convincing evidence on an essential element of a defense upon which a reasonable jury could invalidate the patent.

Eli Lilly & Co. v. Barr Labs., Inc., 251 F.3d 955, 962 (Fed. Cir. 2001) (citations omitted), cert. denied, 534 U.S. 1109 (2002).

III. PATENT INVALIDITY CONTENTIONS

A. Section 102(b)'s On Sale Bar

Pursuant to 35 U.S.C. § 102(b), a person is not entitled to a patent if "the invention was . . . on sale in this country, more than one year prior to the date of the application for patent in the United States." This bar

"applies when two conditions are satisfied before the critical date. First, the product must be the subject of a commercial offer for sale. . . . Second, the invention must be ready for patenting." The latter requirement may be satisfied in at least two ways: "by proof of reduction to practice before the critical date; or by proof that prior to the critical date the inventor had prepared drawings or other descriptions of the invention that were sufficiently specific to enable a person skilled in the art to practice the invention."

Elan Corp. v. Andrx Pharm., Inc., 366 F.3d 1336, 1340 (Fed. Cir. 2004) (quoting Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 67-68 (1998)) (omission in original). "The section 102(b) 'public use' [which is discussed below] and 'on sale' bars are not limited to sales or uses by the inventor or one under the inventor's control, but may result from activities of a third party which anticipate the invention, or render it obvious." In re Epstein, 32 F.3d 1559, 1563 (Fed. Cir. 1994) (citations omitted).

Judge Daniel found that genuine issues of material fact exist as to (1) whether the OzCAT, KillCAT's predecessor, was the subject of a commercial offer sale by virtue of a 31 May 2005 document from CAT to Tyson Foods, Inc. ("Tyson") and (2) whether CAT made asufficiently enabling disclosure of the OzCAT at a 22 March 2005 meeting with Tyson so as to qualify the OzCAT as "ready for patenting" under § 102(b). Based on these conclusions, Judge Daniel recommends that Morris's motion for summary judgment as to § 102(b)'s on sale bar be denied.

Although Morris states that it disagrees with Judge Daniel's conclusion regarding the commercial offer for sale, it lodges an objection only to his conclusion regarding the "ready for patenting" prong. (Pl.'s Obj., DE # 118, at 3.) In reaching his conclusion that a genuine issue of material fact exists as to whether the OzCAT was ready for patenting, Judge Daniel recognized that the parties relied upon oral testimony about the 22 March 2005 meeting.

In support of its position, Defendant relies on the testimony of Michael E. Miller, Defendant's present CEO, who was Defendant's President in 2005; Michael Freer, a Tyson Engineer; Chris Graves, Tyson's Clarksville Complex Manager; and Steven L. Williams, a CAD draftsman employed by Defendant. In sum, Miller stated that, at the March 22, 2005 meeting between Tyson and Defendant, Tyson explained its requirements for what became known as the OzCAT:

The dip tank would use ozonated water. Instead of a conventional dip tank that used shackles or conveyors to lift the poultry carcasses out of the tank, the dip tank would be formed from an unloader section of a FatCAT chiller with a paddle wheel unloader but without the auger. As with the FatCAT chiller, an entrance wall would be added to define a chamber for holding a liquid with an antimicrobial chemical. Such a dip tank would have the advantages of a smaller footprint and improved mechanical reliability. Since the poultry carcasses would tend to float across the top of the tank, it was also decided to add a partition or baffle that was open at the bottom and that extended across the top of the tank so that the poultry carcasses would be forced to the bottom of the tank before being lifted up and out of the tank by the paddle unloader.. . . .

Defendant contends that Miller's testimony is corroborated by that of (1) Freer, who testified in his deposition that the March 22, 2005 meeting was prompted by an idea by a Roger Turney of Tyson for a chiller unloader section that would be placed after the final chill and would not have belts, and that at the March 22, 2005 meeting it was discussed that a divider extending across the top of the tank would be needed; (2) Graves, who testified at his deposition that the March 22, 2005 meeting was to discuss what kind of options or ideas Defendant had and that at that meeting they "kind of came up with the idea or application for the OzCAT, KILLCAT, type scenario[,]" and (3) Williams, who stated in his affidavit that, in late March or early April, Miller explained to him a project that entailed "a dip tank to follow an existing FatCAT chiller," which included the same details stated by Miller above, and that Miller asked him to prepare drawings of the dip tank based on that description. Plaintiff also relies on the deposition testimony of Tyson representatives Freer and Graves to support its position that no enabling disclosure could have been or was, in fact, made at the March 22, 2005 meeting. See Pl.'s Mem. at 5, ¶¶ 5, 10-12 (Freer testified that the purpose of the meeting was to discuss "possibilities" of using ozone as an anti-microbial on birds exiting the chiller and that the meeting was "strictly a conversation" with no notes or drawings; Graves testified that "there were more questions than anything" in the discussion about the different ways ozone could be used.).

(M&R at 10-12 (alteration in original) (most citations omitted).)

Judge Daniel ultimately found that this competing testimony as to the content of the discussion at that meeting creates a genuine issue of material fact about whether there was a sufficiently enabling disclosure of the OzCAT at the meeting. (Id. at 12.) Morris argues that CAT, as a matter of law, cannot rely on the uncorroborated testimony of the four "interested" witnesses to show that the OzCAT was ready for patenting (and thereby invalidating the '173 patent).

While not entirely clear, most courts now recognize that corroboration of oral testimony on the issue of patent invalidity is required irrespective of whether the witness is "interested."See, e.g., Netscape Commc'ns Corp. v. Valueclick, Inc., 704 F. Supp. 2d 544, 554 (E.D. Va. 2010) ("[A]lthough the witness's interest in the litigation is irrelevant to whether the corroboration requirement applies in the first instance under Finnigan [Corp. v. Int'l Trade Comm'n, 180 F.3d 1354 (Fed. Cir. 1999)], the witness's interest is relevant to the sufficiency of corroboration."); Trading Techs. Int'l, Inc. v. eSpeed, Inc., 513 F. Supp. 2d 969, 977 (N.D. Ill. 2007) (...