Nalco Co. v. Turner Designs, Inc.
| Decision Date | 17 October 2014 |
| Docket Number | Case No. 13–cv–02727 NC |
| Citation | 73 F.Supp.3d 1096 |
| Court | U.S. District Court — Northern District of California |
| Parties | Nalco Co., Plaintiff, v. Turner Designs, Inc., Defendant. |
Bryan Joseph Wilson, Alessa Yin–Chen Phang, Emily Heather Sheffield, Nicholas Ethan Ham, Morrison & Foerster LLP, Palo Alto, CA, Whitney Eileen McCollum, Morrison & Foerster LLP, San Francisco, CA, for Plaintiff.
Elizabeth Day, Marc Christopher Belloli, Ian Neville Feinberg, Feinberg Day Alberti & Thompson LLP, Menlo Park, CA, Peter Mikhail, Feinberg Day Alberti & Thompson LLP, Palo Alto, CA, for Defendant.
ORDER DENYING TURNER'S SUMMARY JUDGMENT MOTION
Turner moves for summary judgment on Nalco's patent infringement action. Nalco's patent, United States Patent No. 6,255,118, covers a method of testing industrial water systems. The Court must determine if a triable issue of material fact exists as to the following issues: (1) whether Turner induced third parties to infringe Nalco's patent, (2) whether Turner can be found liable for contributory infringement, and (3) whether Nalco's patent is invalid due to obviousness. Nalco alleges that Turner sells a device known as the Little Dipper to customers, the use of which infringes Nalco's patented process. The most significant issue in this motion is whether or not end users that purchased the Little Dipper directed or controlled certain water treatment companies to perform steps of the patent's claimed method. Without evidence of direction or control by the end user, Nalco's inducement and contributory infringement claims cannot survive.
Because a reasonable jury could find that the nature of the relationship between the end user and the water treatment company establishes the element of direction or control, the Court denies Turner's motion for summary judgment on the inducement issue. And because a genuine dispute of fact exists with regard to the contributory infringement and invalidity issues—as evidenced by dueling expert testimony—the Court will deny Turner's motion for summary judgment on those issues as well. Finally, because Turner's summary judgment motion as to the '118 patent's expiration date has no impact on the underlying infringement claims, the Court will not decide that issue at this time.
Turner and Nalco sell competing equipment used to test and treat industrial water systems. Dkt. No. 1 at ¶ 5, 9; Dkt. No. 69 at 7. On July 3, 2001, the U.S. Patent Office issued United States Patent No. 6,255,118 (“the ' 118 Patent”) entitled “Method for Using an All Solid-state Fluorometer
in Industrial Water System Applications.” Dkt. No. 1 at ¶ 6. On June 13, 2013, Nalco brought a complaint for patent infringement against Turner, alleging that Turner induced infringement of the '118 patent by encouraging customers to use its products, including but not limited to the “Little Dipper,” a fluorometer used to monitor chemical levels in the industrial water system, “in a manner that directly infringed, and continues to infringe the '118 patent.” See id. at ¶ 10. Nalco also alleged that Turner committed acts of contributory infringement by developing, manufacturing, and selling the Little Dipper to customers for use in performing the patented method. Id. at ¶ 12.
The method of the '118 patent consists of five steps or “limitations”: (a) providing the claimed fluorometer
; (b) providing an industrial water system; (c) using said fluorometer to detect; (d) programming said fluorometer ; and (e) controlling the dosage of treatment chemicals. Id. at 23.
According to Nalco, Turner did not directly infringe the '118 patent ; rather, it is the end users who, by using the Little Dipper in its industrial water systems, performed the five steps of the infringing method. Dkt. No. 104–3 at 4. End users, in this case, are businesses or companies that own an industrial water system. These industrial water systems require a water treatment system that can automatically monitor and control chemical additives. The end users contract with water treatment companies to install and maintain their water treatment systems. Dkt. 104–50 at ¶ 101. This installation process includes set up and calibration of the Little Dipper. Id. Nalco argues that all of the steps are either performed directly by the end user or by the water treatment company, under the direction or control of the end user. Dkt. No. 104–3 at 4–8.
Turner disagrees. It asserts that step (a) and step (d) are not performed by anyone. Dkt. No. 95–4 at 4 n.2. However, taking the analysis put together by Nalco's expert, Dr. Vaughn Astley, as true for the purposes of the present motion, Turner argues that these two steps, in addition to steps (c) and (e), are performed by the water treatment companies. Id . at 4. For step (b), the end user provides the industrial water system. Id. The chart below summarizes the disagreement between Turner and Nalco over what entities perform which steps:
| Method of the '118 Patent | Entity or Entities Performing the Method Step according to Turner | Entity or Entities Performing Method Step according to Nalco |
| (a) providing the claimed fluorometer | Water treatment company | End user or water treatment company |
| (b) providing an industrial water system | End user | End user |
| (c) using said fluorometer to detect | Water treatment company | End user |
| (d) programming said fluorometer | Water treatment company | End user or water treatment company |
| (e) controlling the dosage of treatment chemicals | Water treatment company | End user |
See D kt No. 95–4 at 4; Dkt. No. 104–3 at 4–8; 14–16.
In response to Nalco's complaint, Turner brought counterclaims for declarations of non-infringement of the '118 patent and invalidity. Dkt. No. 49 at ¶¶ 8–18. As to its invalidity claims, Turner points to the following prior art: U.S. Pat. No. 4,992,380 (“the '380 patent”) titled “Continuous On–Stream Monitoring of Cooling Tower Water,” which was filed on October 14, 1988, and issued on February 12, 1991, and makes reference to “any fluorometer
.” Dkt. No. 96–8 ('380 patent at 15:5–18). As explained later, the parties disagree over how that term impacts the invalidity issue. See Section III.C.ii.
Turner now moves for summary judgment on Nalco's claims of inducement and contributory infringement. In addition, Turner seeks summary judgment declaring the '118 patent invalid due to obviousness. Finally, Turner seeks summary judgment declaring the patent's expiration date to be September 23, 2016.
Summary judgment is properly granted only where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Bubble Room, Inc. v. United States, 159 F.3d 553, 561 (Fed.Cir.1998) (citing Fed.R.Civ.P. 56 ). A fact is material when, under governing substantive law, it 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). A dispute about a material fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Bubble Room, 159 F.3d at 561 (citing Anderson, 477 U.S. at 247, 106 S.Ct. 2505 ). Bald assertions that genuine issues of material fact exist are insufficient. Galen v. Cnty. of L.A., 477 F.3d 652, 658 (9th Cir.2007).
The moving party bears the burden of establishing the absence of any genuine issue of material fact. Bubble Room, 159 F.3d at 561 (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970) ; Anderson, 477 U.S. at 247, 106 S.Ct. 2505 ). Once the moving party meets its initial burden, the nonmoving party must go beyond the pleadings and, by its own affidavits or discovery, set forth specific facts showing that a genuine issue of fact exists for trial. Fed.R.Civ.P. 56(c) ; Ruffin v. Cnty. of L.A., 607 F.2d 1276, 1280 (9th Cir.1979). “The court must afford all reasonable inferences and construe the evidence in the light most favorable to the non-moving party.”
Vita– Mix Corp. v. Basic Holding, Inc., 581 F.3d 1317, 1323 (Fed.Cir.2009).
Turner first argues that Nalco failed to produce evidence that Turner induced end users to infringe patent '118. See 35 U.S.C. § 271(b) (). In order to find liability under a theory of inducement, the patentee must establish: (1) evidence of direct infringement, Limelight Networks, Inc. v. Akamai Techs., Inc., ––– U.S. ––––, 134 S.Ct. 2111, 2117, 189 L.Ed.2d 52 (2014) (), and (2) that “the defendant, with knowledge of the patent, actively and knowingly aided and abetted such direct infringement.” Meyer Intellectual Props. Ltd. v. Bodum, Inc., 690 F.3d 1354, 1366 (Fed.Cir.2012) (citing DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1305 (Fed.Cir.2006) (en banc)). To prove the second part, the patentee must show the alleged infringer “possessed specific intent to encourage another's infringement.” ACCO Brands, Inc. v. ABA Locks Mfr. Co., 501 F.3d 1307, 1312 (Fed.Cir.2007).
Direct infringement claims are governed by 35 U.S.C. § 271(a), which states, “whoever without authority makes, uses, offers to sell, or sells any patented invention ... during the term of the patent therefor, infringes the patent.” A finding of direct infringement in method patent claims such as this one requires a party to perform or use each and every step or element of a claimed method. Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1317 (Fed.Cir.2009).
Nonetheless, in instances where more than one entity performs the steps under a patent, if a single party exercises “control or direction” over the performance of each step of the claimed method, including those it did not itself perform, it can be held liable for direct infringement. Move, Inc. v....
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