Neonatal Prod. Grp., Inc. v. Shields

• Decision Date: 24 August 2017
• Docket Number: Case No. 13–2601–DDC–KGS
• Citation: 276 F.Supp.3d 1120
• Parties: NEONATAL PRODUCT GROUP, INC., Plaintiff/Counterclaim Defendant, v. Janice M. SHIELDS, Paul W. Shields, and Angele Innovations, LLC, Defendants/Counterclaimants, v. Creche Innovations, LLC, Millennium Marketing Group, Ltd., and Scott A. Norman, Counterclaim Defendants.
• Court: U.S. District Court — District of Kansas

276 F.Supp.3d 1120

NEONATAL PRODUCT GROUP, INC., Plaintiff/Counterclaim Defendant,

v.Janice M. SHIELDS, Paul W. Shields, and Angele Innovations, LLC, Defendants/Counterclaimants,

v.Creche Innovations, LLC, Millennium Marketing Group, Ltd., and Scott A. Norman, Counterclaim Defendants.

Case No. 13–2601–DDC–KGS

United States District Court, D. Kansas.

Signed August 24, 2017

Matthew B. Walters, Michael B. Hurd, Scott R. Brown, Todd A. Gangel, Hovey Williams LLP, Overland Park, KS, for Plaintiff/Counterclaim Defendants.

James J. Kernell, Kyle D. Donnelly, Erickson Kernell IP, LLC, Leawood, KS, for Defendants/Counterclaimants.

MEMORANDUM AND ORDER

Daniel D. Crabtree, United States District Judge

This is a patent infringement dispute. On November 25, 2013, plaintiff Neonatal Product Group, Inc. ("Neonatal"), doing business as Creche Innovations, LLC ("Creche") filed this lawsuit against Janice M. Shields and Paul W. Shields, individually and as trustees of the Shields Family Trust, and Angele Innovations, LLC (collectively, "the Shields Defendants"). Doc. 1. Neonatal seeks: (1) a declaratory judgment that Neonatal has not infringed U.S. Patent No. 6,417,498 ("the '498 Patent") ; and (2) a declaratory judgment that the Asserted Claims of the '498 Patent are invalid. Doc. 49 ¶¶ 36–41; Doc. 143 at 19.

The device disclosed in the '498 Patent is called the "Neonatal Substrate Warmer." The device automatically warms and vibrates baby bottles containing frozen or refrigerated breast milk so that the milk thaws, warms, and mixes quickly and efficiently. Defendants Janice M. Shields and Paul W. Shields invented the Neonatal Substrate Warmer and procured the '498 Patent. Defendant Angele Innovations, LLC currently owns the '498 Patent.

The Shields Defendants responded to the lawsuit by filing an Answer and Counterclaim (Doc. 30). It asserted eight counterclaims against four counterclaim defendants: Neonatal, Creche, Millennium Marketing Group, Ltd., and Scott Norman (collectively, "the Counterclaim Defendants"). The eight counterclaims asserted against the Counterclaim Defendants include: (1) patent infringement; (2) inducement of patent infringement; (3) breach of an Exclusive License Agreement; (4) breach of a Patent Marketing Agreement; (5) tortious interference with contract; (6) breach of fiduciary duty; (7) intentionally causing or assisting agent to violate duty of loyalty; and (8) unjust enrichment. Doc. 143 at 20, ¶ 4(c) (Pretrial Order).

Neonatal and the Counterclaim Defendants¹ have filed a Motion for Partial Summary Judgment. Doc. 118. They seek summary judgment in favor of Neonatal's claim for a declaratory judgment of non-infringement. They also seek summary judgment against five of the Shields Defendants' counterclaims. For the reasons explained below, the court grants Neonatal's Motion for Partial Summary Judgment.

I. Motions to Strike

Before considering the Motion for Partial Summary Judgment, the court addresses the motions to strike filed by each party.

A. Neonatal's Motion to Strike

Neonatal has filed a Motion to Strike. Doc. 140. It asks the court to strike certain paragraphs of the Declaration of Drake L. Koch (Doc. 133–3) submitted by the Shields Defendants in their Opposition to the Motion for Partial Summary Judgment. It also asks the court to strike certain paragraphs from the Shields Defendants' Opposition to the Motion for Partial Summary Judgment—paragraphs that are based on the portions of Mr. Koch's Declaration that, Neonatal contends, are improper.

Neonatal asserts that the court should strike this material because it contains new infringement contentions that contradict and depart from the infringement contentions asserted by the Shields Defendants. Neonatal contends that the Shields Defendants have argued, improperly, in their Opposition to the Motion for Partial Summary Judgment that the alleged infringing product contains a "heater block" consisting of both the outer metal shell of the warmer and the orange foam insulation blanket wrapped around the cups of the warmer. But, in their infringement contentions, the Shields Defendants asserted that the heater block consists only of the foam insulation blanket.

On February 18, 2015, the court entered a Scheduling Order (Doc. 40) governing the first phase of discovery and establishing certain deadlines. One of the deadlines required the parties to disclose asserted claim and infringement contentions by May 1, 2015. Doc. 40 at 2. Consistent with the Scheduling Order, the Shields Defendants served their Disclosures of Asserted Claims and Infringement Contentions on May 1, 2015. Doc. 119–5 at 9–10. It identified the "heater block" in a claim chart in two different sections. See Doc. 119–5 at 2–3 (§§ 1.a., 10.a.). Section 1.a. recites: "The Penguin Single includes a heater block comprising at least one void therein. Ex. A, 7–9, Claim 1.a." Id. at 2 (§ 1.a.). Section 10.a. states: "The Penguin Single includes a heater block comprising at least one well therein; Ex. A, 7–9, Claim 10.a." Id. at 3 (§ 10.a.). The illustrations referenced in the claims identify only the foam insulation blanket. Id. at 14–15 (illustrations 7–9).

The Scheduling Order also provides that "[e]ach party's 'Infringement Contentions' and 'Invalidity Contentions' shall be deemed to be that party's final contentions." Doc. 40 at 11. The Scheduling Order permitted the parties to amend their infringement contentions in two ways. Id. at 11–12. First, the Scheduling Order allows amendment without leave of court within 30 days after the court issues its Claim Construction Order. Id. at 11. Second, the Scheduling Order allows the Shields Defendants to move for leave to amend or supplement their infringement contentions outside the 30–day window on a showing of good cause. Id. at 12. The Shields Defendants never amended their infringement contentions within the 30 days following the court issuing its Claim Construction Order. Also, the Shields Defendants never moved the court for leave to amend their infringement contentions.

Neonatal argues that the court should strike certain portions of Mr. Koch's Declaration and the Shields Defendants' Opposition because they contradict the asserted infringement contentions. For support, Neonatal relies on a Federal Circuit case that affirmed summary judgment against a patent infringement claim. O2 Micro Int'l Ltd. v. Monolithic Power Sys., Inc. , 467 F.3d 1355, 1367–70 (Fed. Cir. 2006). The case originated in the Northern District of California. Id. at 1358. That court's local rules for patent cases imposed requirements for serving and amending infringement contentions, similar to the requirements imposed by the Scheduling Order in this case. Id. at 1362–63. The plaintiff filed its infringement contentions as the local rules required. Id. at 1360. Later, the plaintiff moved for leave to amend its infringement contentions, but did so more than six months after the district court had issued its claim construction ruling and more than three months after an expert's deposition that revealed the new facts supporting the amendment. Id. at 1361. The district court denied the motion for leave to amend because plaintiff had delayed filing the motion and this delay, the court concluded, amounted to a lack of diligence. Id. at 1361–62. The plaintiff also moved for leave to supplement its expert reports to include the amended contentions. Id. at 1362. The district court denied that motion as well. Id.

The Federal Circuit affirmed both rulings. Id. at 1366–69. It described the local patent rules as "essentially a series of case management orders." Id. at 1363. And, it recognized that the rules were "designed specifically to 'require parties to crystallize their theories of the case early in the litigation' so as to 'prevent the "shifting sands" approach to claim construction.' " Id. at 1364 (quoting Atmel Corp. v. Info. Storage Devices, Inc. , No. C 95-1987 FMS, 1998 WL 775115, at *2 (N.D. Cal. 1998) ). The Circuit also concluded that "[i]f the parties were not required to amend their contentions promptly after discovering new information, the contentions requirement would be virtually meaningless as a mechanism for shaping the conduct of discovery and trial preparation." Id. at 1366. The Circuit thus held that the local patent rules were valid and consistent with the Federal Rules. Id. at 1366.

The Federal Circuit also concluded that the district court had not abused its discretion by denying the plaintiff's motions for leave to amend and to supplement its expert report because plaintiff had delayed and otherwise acted with a lack of diligence. Id. at 1367–69. The Circuit recognized that "the exclusion of evidence is often an appropriate sanction for the failure to comply with [disclosure] deadlines." Id. at 1369 (citations omitted). And, the Circuit found "no abuse of discretion in this case, given the significance of the omitted material and [the plaintiff's] lack of diligence." Id.

Neonatal urges the court to follow the Federal Circuit's reasoning in O2 Micro .² Similar to the plaintiff in that case, the Shields Defendants here failed to assert a newly discovered infringement contention in their required disclosures. But, unlike the O2 Micro plaintiff, the Shields Defendants never have sought leave to amend their infringement contentions to include their new infringement theory. Instead, they simply have asserted the new contentions in their Opposition to Neonatal's Motion for Partial Summary Judgment. This violates the court's Scheduling Order.

In their Opposition, the Shields Defendants argue that Neonatal has been well aware of this theory because they asserted it over a year ago in their claim construction brief. The Shields Defendants contend that their proposed construction of "heater block" as a "housing assembly" placed Neonatal on notice that they were contending that the alleged infringing product contains a "heater block" consisting of both the outer metal shell...