Nartron Corp. v. Borg Indak, Inc.

Decision Date26 January 2012
Docket NumberCase No. 06-10683
PartiesNARTRON CORPORATION, Plaintiff, v. BORG INDAK, INC., Defendant
CourtU.S. District Court — Eastern District of Michigan

Hon. Lawrence P. Zatkoff

OPINION AND ORDER

AT A SESSION of said Court, held in the United States Courthouse,

in the City of Port Huron, State of Michigan, on January 26, 2012

PRESENT: THE HONORABLE LAWRENCE P. ZATKOFF

UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

This matter is before the Court on:

1. Plaintiff's Motion for Summary Judgment on Defendant's Counterclaims in Count III (Shop Right) and Count IV (License) (Docket #95);
2. Plaintiff's Motion for Summary Judgment on the First Affirmative Defense (Patent Invalidity) and Counterclaim Count I (Declaratory Judgment of Patent Invalidity and Unenforceability) (Docket #96);
3. Plaintiff's Motion for Summary Judgment on Defendant's Fourth Affirmative Defense (Laches, Estoppel and Waiver) (Docket #97);
4. Plaintiff's Motion for Summary Judgment on Infringement by Defendant (Docket #100);1 5. Defendant's Motion for Partial Summary Judgment Based on the Lack of Infringement (Docket #101); and
6. Defendant's Motion to Dismiss on Summary Judgment Based on Co-Inventorship (Docket #102).

The parties fully briefed all six motions. The Court finds that the facts and legal arguments material to all the motions have been adequately presented in the parties' papers, and the decision process will not be aided by oral arguments. Pursuant to E.D. Mich. Local R. 7.1(f) (2), it is hereby ORDERED that the Motions be resolved on the briefs submitted.

II. BACKGROUND

In the mid-1990s, non-party Schukra of North America, Ltd. ("Schukra"), a Windsor, Ontario company, supplied automakers with lumbar support systems for power seats in automobiles. Schukra also was working to enhance the lumbar support system to incorporate a massage feature within the seat units it sold. In 1994, Schukra contracted with a company called Therm-O-Disc to develop a prototype massage control module, or controller, for the seat massage unit. On March 21, 1996, Schukra made a formal presentation of its prototype seat massage units to Delphi Interior and Lighting Systems ("Delphi"), a tier one supplier to General Motors. The prototype massage units were subsequently ride tested in Cadillac automobiles in June 1996. Delphi and Cadillac shortly thereafter offered to purchase a number of seat massage units for implementation into specific Cadillac models in the United States, provided said units could be timely "productionized" (i.e., made fully functional and manufactured to meet desired performance specifications). When Therm-O-Disc was unable to meet production demandsand/or deadlines, Schukra contracted with Plaintiff to productionize the massage control module for Schukra. In the words of Kevin Cherry ("Cherry"), Schukra's technical program manager for the massage control module project: "Plaintiff was responsible for the engineering work, and the manufacturing of the controller that was to control the massage unit" (emphasis added). One of the conditions to "productionizing" the massage control module was that the controller had to be transparent to the seat control mechanism already in place. As stated by Barry Jones ("Jones"), an employee of Delphi in 1996 and now Schukra's President:

[T]he massage control module must have NO impact on the existing seat memory module. [Plaintiff] must develop both driver (with memory) and passenger (no memory) massage modules.

(emphasis added).

Plaintiff successfully engineered a mechanism that satisfied Schukra's requirements when it designed a device it called the "transparency simulator," which consisted of a massage control module enhanced to not only maintain the higher priority of functions in the existing seat control but also include the enhanced massage control modules without interfering with the existing seat functions. Plaintiff also filed with the U.S. Patent and Trademark Office ("PTO") a patent application with respect to the massage control modules ("MCMs") it designed and the mechanistic implications this design had on an integrated seat massager unit. On April 11, 2000, the PTO issued Patent Number 6,049,748 (hereinafter, "the '748 Patent"). Todd Newman ("Newman"), David Shank ("Shank") and John Washeleski ("Washeleski"), each of whom was employed by Plaintiff and assigned his contribution or patent rights in the '748 Patent to Plaintiff, were identified as the "Inventors" of the '748 Patent. In order to supply seat massager units to Delphi and Cadillac, Schukra continued to contract with Plaintiff for the MCMs for anumber of years. Schukra hired Defendant in 2002 to replace Plaintiff as the sole supplier of the MCMs.

Plaintiff filed bankruptcy on December 19, 2002, and emerged from bankruptcy on January 25, 2006. Plaintiff then filed this lawsuit on February 16, 2006, alleging that Defendant infringed protected claims of the '748 Patent (namely claims 1 and 7) when Defendant began manufacturing and supplying massage control modules to Schukra in Plaintiff's stead. More specifically, Plaintiff seeks to enforce intellectual property rights it believes cover the two types of MCMs defined in the '748 Patent: (1) a memory MCM for power seats that record positioning data into computer memory so the driver may recall his preferred seatback angle and distance from the steering wheel, and (2) a non-memory MCM that provides massage functionality for power seats that do not record or recall seat positioning.

At the dispositive motion cut-off deadline, the parties filed the motions identified at the outset of this Opinion. Previously, the Court granted Defendant's motion for summary judgment based on Plaintiff's failure to name one of the alleged co-inventors of the '748 Patent on its patent application (Docket #166). The alleged co-inventor was Joseph Benson ("Benson"), a mechanical engineer for Schukra who claimed to have contributed to a number of claims in the '748 Patent, including claims 1, 2, 11, 12, 14 and 15. The Court held that Benson was a co-inventor based on his contributions to claim 11 and dismissed Plaintiff's cause of action. The Federal Circuit Court of Appeals later reversed this Court's ruling that Benson was a co-inventor on claim 11 of the '748 Patent, and the Federal Circuit remanded the case to this Court. Nartron Corp. v. Schukra U.S.A., Inc., 558 F.3d 1352 (Fed. Cir. 2009).

III. LEGAL STANDARD

The court shall grant summary judgment 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." Fed. R. Civ. P. 56(a). See also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) ("[T]he plain language of Rule 56[] mandates the entry of summary judgment . . . against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial."). A party must support its assertions by:

(A) citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials; or
(B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.

Fed. R. Civ. P. 56(c)(1). "The court need consider only the cited materials, but it may consider other materials in the record." Fed. R. Civ. P. 56(c)(3).

The moving party bears the initial burden of demonstrating the absence of any genuine dispute as to a material fact, and all inferences should be made in favor of the nonmoving party. Celotex, 477 U.S. at 323. The moving party discharges its burden by "'showing'—that is, pointing out to the district court—that there is an absence of evidence to support the nonmoving party's case." Horton v. Potter, 369 F.3d 906, 909 (6th Cir. 2004) (citing Celotex, 477 U.S. at 325)).

Once the moving party has met its initial burden, the burden then shifts to the nonmoving party, who "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). "[T]he mere existence of a scintilla of evidence in support of the [nonmoving party's] positionwill be insufficient [to defeat a motion for summary judgment]; there must be evidence on which the jury could reasonably find for the [nonmoving party]." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).

IV. ANALYSIS REGARDING CO-INVENTORSHIP
A. Applicable Law

Where a patent has been issued, there is a presumption that the named inventors are the true and only inventors. 35 U.S.C. § 282. The burden of showing misjoinder or nonjoinder of inventors must be proved by clear and convincing evidence. Hess v. Advanced Cardiovascular Systems, Inc., 106 F.3d 976, 980 (Fed. Cir. 1997). "35 U.S.C. § 256 provides that a co-inventor omitted from an issued patent may be added to the patent by a court 'before which such matter is called into question.'" Ethicon, Inc. v. United States Surgical Corp., 135 F.3d 1456, 1461 (Fed. Cir. 1998). The only named co-inventors of the '748 Patent are Newman, Shank and Washeleski. As noted above, Defendant has asserted that Benson was a co-inventor as to claims 1, 2, 11, 12, 14 and 15. In order to prevail on that argument, Defendant must, by clear and convincing evidence, overcome the presumption that Benson is not a co-inventor.

To date, only Defendant's assertion regarding claim 11 has been decided on the merits. As noted above, the Federal Circuit held that Benson was not a co-inventor as to claim 11. Like this Court, however, the Federal Circuit did not express any opinion as to the other claims of the '748 for which Defendant asserted Benson was a...

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