Safco Prods. Co. v. Welcom Prods., Inc., Civil No. 08–4918 (SRN/JJG).

• Decision Date: 01 July 2011
• Docket Number: Civil No. 08–4918 (SRN/JJG).
• Citation: 799 F.Supp.2d 967
• Parties: SAFCO PRODUCTS CO., Plaintiff, v. WELCOM PRODUCTS, INC., John Evanthes, Kerry Welsh, and Yan Jian Shunhe Industrial Co., Ltd., Defendants.
• Court: U.S. District Court — District of Minnesota

799 F.Supp.2d 967

SAFCO PRODUCTS CO., Plaintiff,

v.WELCOM PRODUCTS, INC., John Evanthes, Kerry Welsh, and Yan Jian Shunhe Industrial Co., Ltd., Defendants.

Civil No. 08–4918 (SRN/JJG).

United States District Court, D. Minnesota.

July 1, 2011.

Felicia J. Boyd, and Aaron A. Myers, Barnes & Thornburg LLP, Minneapolis, MN, for Plaintiff.

Dennis C. Bremer, and James R. Hietala, Carlson, Caspers, Vandenburgh & Lindquist, Minneapolis, MN; and Willmore F. Holbrow, III, Blakely, Sokoloff, Taylor & Zafman, LLP, Los Angeles, CA, for Defendants.

MEMORANDUM OPINION AND ORDER

SUSAN RICHARD NELSON, District Judge.

This matter is before the Court on Plaintiff Safco Products Co.'s motion for summary judgment (Doc. No. 161), Plaintiff's motion to exclude testimony and opinions (Doc. No. 157), and Defendant Welcom Products, Inc.'s motion for summary judgment (Doc. No. 166). For the reasons stated below, this Court grants in part and denies in part Safco's summary judgment motion, grants in part and denies in part Plaintiff's motion to exclude testimony and opinions, and grants in part and denies in part Welcom's summary judgment motion.

I. FACTUAL AND PROCEDURAL SUMMARY

In this design patent action, Safco, the current patent holder, seeks summary judgment of infringement against the foreign manufacturer, Defendant Yang Jian Shunhe Industrial Co.,¹ and the domestic seller, Defendant Welcom Products, Inc., a California corporation, of the accused product, the “Magna Cart MCX” pushcart. Welcom has asserted an invalidity defense of non joinder of an inventor and a Lanham Act counterclaim.

Many of the facts are disputed, but this much is clear. Safco is the current owner of U.S. Patent No. D522,708 (the '708 patent), having acquired it by assignment from Thaler International Co., Ltd., a Taiwanese company, in November 2007. The '708 patent originally issued on June 6, 2006 with Shih–Fang (a/k/a “Marvin”) Chang identified as the sole named inventor, and Thaler, a company established in 1996 by Chang and his father, identified as the assignee. (Doc. No. 1–1.)

As a design patent, the '708 Patent claims “[t]he ornamental design for a pushcart, as shown.” ( Id.) The specification consists of seven figures, showing seven different views of the pushcart. ( Id.) Safco uses the patented design in its model 4049 pushcart, which is marked with a notice of the '708 patent. Safco asserts its pushcarts are made in Taiwan and labeled accordingly.

Welcom sells various models of the “Magna Cart” pushcart, including the allegedly-infringing “MCX” version. Welcom acquires its pushcarts from Defendant Yang Jian Shunhe Industrial Co. (“Shunhe”), a Chinese manufacturing company. Shikun Jian is an engineer and the founder of Shunhe. Jian has designed and developed many different pushcarts for manufacture by Shunhe and sale by various entities worldwide.

The parties then part ways. Safco asserts that Marvin Chang's father designed Safco's model 4062 “Stow Away” (a/k/a “TP–2”) pushcart and that Thaler selected Shunhe to manufacture that cart, which Shunhe designated the FW–90B model. Based on the needs of the market, however, Safco also wanted to sell a smaller pushcart and asked Thaler to develop a pushcart similar to Wesco's “Mini Mover” pushcart. Safco claims that “Chang used the Wesco cart and the model 4062 cart as references to design” the new cart for Safco, which was eventually sold as the model 4049. (Doc. No. 163, at 5.)

Chang essentially claims he fully conceived of the design and then asked Jian only to implement it, such that conception was complete before Chang contacted Jian and, thus, any contributions by Jian would not be patentable. (Doc. No. 163, at 6 (“Chang was very specific in his direction to Jian for the new Safco cart design.”); id. at 9 (“Chang met with Jian and finished conveying the design to Jian so that Shunhe could create the production drawings. In October 2003, Shunhe created proposed production drawings capturing Chang's ideas and faxed them to Chang.... Chang approved [by phone] the drawings incorporating Chang's design.”).) In short, Safco contends that Jian's contribution is confined to assisting with the production drawings for what Thaler then had manufactured and sold as the 4049 pushcart—which Safco maintains are manufactured not by Shunhe in China, but rather in Taiwan—but that such contribution does not rise to the level of inventorship, or even co-inventorship. Moreover, Safco argues that because Jian thus had access to that design, he essentially stole Safco's intellectual property and used it to manufacture the Magna Cart MCX pushcart for Welcom.

Welcom, however, contends that Chang simply told Jian that he wanted a smaller version of the 4062, just a pushcart similar to the Wesco Mini Mover. Jian testified that he designed and manufactured what he designates as the FW–90S pushcart, and what Thaler and Safco sell as the 4049 model, and what Welcom sells as the Magna Cart MCX. Jian testified that his company, Shunhe, manufactured many pushcarts of various models for Thaler and Safco until 2008, when this litigation began and Chang allegedly asked Jian to not sell pushcarts to Welcom anymore.

Moreover, Jian testified that he asked Chang to apply for a U.S. patent on that design—with Jian named as sole inventor—as he had done with other customers to obtain Japanese and German patents on various pushcart designs. ² Shunhe thus marked the FW90S pushcarts it manufactured with notice that patent applications in the U.S. were pending as well as notice of the Chinese utility and design patents Jian obtained. Jian testified that he did not learn that Chang had in fact applied for what issued as the ' 708 patent in Chang's own name as sole inventor until sometime after it issued.

Having acquired the '708 patent from Thaler for $1.00 in November 2007, Safco, as patentee by assignment, filed this infringement action on August 12, 2008. Welcom raised an invalidity defense based on the alleged failure to name Jian as the true inventor (or at least a co-inventor).³ Welcom also asserted a counterclaim under the Lanham Act, alleging that Safco's pushcarts are not in fact manufactured in Taiwan, but rather originally emanate from China, and that Safco uses Taiwan solely as a shipping intermediary in order to evade a substantial U.S. tariff, imposed in December 2004, on most pushcarts manufactured in China.⁴

Safco, as the current patent holder, now moves for summary judgment of infringement and on Welcom's Lanham Act counterclaim for false designation of origin. (Doc. No. 161.) ⁵ Welcom moves for summary judgment of invalidity under 35 U.S.C. § 102(f) for failure to identify all true inventors and, in the alternative, for summary adjudication of co-inventorship, thereby also requesting a claim construction. (Doc. No. 166.) Finally, Plaintiff moves to exclude the testimony and opinions of two of Welcom's expert witnesses. (Doc. No. 157.)

II. DISCUSSION

Plaintiff frames the case in terms of infringement, as it would appear that the '708 patent plainly reads on the allegedly-infringing product and Defendants concede as much. In fact, as an isolated question of pure infringement, this Court would not dispute that the issue would be appropriate for summary adjudication. But the resolution of that question must await a determination of the underlying issue of inventorship, as Jian, the designer at Defendant Shunhe, claims to have invented, or at least co-invented, the subject matter of the '708 patent, such that the '708 patent should be declared invalid for non–joinder. See 35 U.S.C. § 102(f) (“A person shall be entitled to a patent unless—... (f) he did not himself invent the subject matter sought to be patented.”). Moreover, the inventorship question must also be addressed first because Welcom's counterclaim under the Lanham Act—contending that Safco's pushcart is not in fact manufactured in Taiwan, but rather in China by Shunhe—is enmeshed in the overall inventorship dispute.

Safco relies heavily on the principle that an issued patent is presumed valid, and that the burden of demonstrating otherwise entails a “clear and convincing” evidence standard. True enough as a matter of law. The presumption of validity accorded an issued patent requires one challenging inventorship as named in the patent to prove by clear and convincing evidence that the named inventor is not the true and sole inventor. Nartron Corp. v. Schukra U.S.A., Inc., 558 F.3d 1352, 1356 (Fed.Cir.2009) (“[A] party alleging non joinder [of a co-inventor in a patent infringement suit] ‘must meet the heavy burden of proving its case by clear and convincing evidence.’ ”).

Safco seems to argue, however, that this heightened standard of proof somehow evades the applicable summary judgment standard—in effect, that to defeat Safco's motion for summary judgment of infringement, Defendants must now prove invalidity by clear and convincing evidence. (Doc. No. 179, at 2 (contending that the burden is on Welcom “to demonstrate by clear and convincing evidence that somebody other than Chang invented the claimed design” (emphases in original)).) Accordingly, the Court turns to the nuances of that standard in the present procedural context.

A. Summary Judgment Standard

To defeat a motion for summary judgment, the non-movant must show that there is a “genuine dispute as to any material fact” and that the movant is not “entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a) (as amended December 1, 2010). The Federal Circuit has recognized, under the Supreme Court's guiding precedent, that “[w]hen 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.” Eli Lilly and Co. v. Barr Labs., Inc., 251 F.3d 955, 962 (Fed.Cir.2001) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).

Thus, a moving par...