Schwendimann v. Arkwright Advanced Coating, Inc.
| Decision Date | 25 September 2017 |
| Docket Number | Civil No. 11-820 (JRT/HB) |
| Parties | JODI A. SCHWENDIMANN, f/k/a JODI DALVEY Plaintiff, v. ARKWRIGHT ADVANCED COATING, INC. Defendant. ARKWRIGHT ADVANCED COATING, INC. Counterclaim Plaintiff, v. JODI A. SCHWENDIMANN, f/k/a JODI DALVEY and COOLER CONCEPTS, INC. Counterclaim Defendants. |
| Court | U.S. District Court — District of Minnesota |
David A. Davenport, Devan V. Padmanabhan, and Michelle E. Dawson, WINTHROP & WEINSTINE, PA, 225 South Sixth Street, Suite 3500, Minneapolis, MN 55402, for Jodi A. Schwendimann and Cooler Concepts, Inc.
Katherine J. Rahlin, Kurt J. Niederluecke, and Laura L. Myers, FREDRIKSON & BYRON, PA, 200 South Sixth Street, Suite 4000, Minneapolis, MN 55402, for Arkwright Advanced Coating, Inc.
Plaintiff Jodi Schwendimann brought this action against Arkwright Advanced Coating, Inc. ("AACI"), alleging that it infringed on six of Schwendimann's patents. AACI brought a counterclaim against Schwendimann and her company, Cooler Concepts, alleging that they infringed on two of AACI's patents. All of the patents at issue involve image-transfer sheets that can be used to transfer images onto a colored base, such as a T-Shirt, by applying heat.
The parties have completed discovery. The parties have brought motions in limine in advance of trial to resolve a number of evidentiary disputes. The Court issues this order to address the parties' motions in limine.
Schwendimann's companies, NuCoat and Cooler Concepts, manufacture and sell specialty paper products, including inkjet image transfer paper or sheets. Schwendimann alleges that AACI's 888 and 889 products infringe on six of Schwendimann's patents:
Cooler Concepts licenses these patents to MJ Solutions, a company owned in part by Schwendimann. (Decl. of Kurt J. Niederluecke ("Niederluecke Decl.") ¶ 24, Sealed Ex. 23, Sept. 6, 2017, Docket No. 515.)
AACI also produces inkjet image transfer paper or sheets, including the accused 888 and 889 products. AACI alleges that Schwendimann's products infringe on two of AACI's patents:
In 2008, Schwendimann brought an action against AACI's predecessor-in-interest, Océ (f.k.a. Arkwright, Inc.). See Complaint, Schwendimann v. Oce Imaging Supplies, Inc., Civil No. 08-162 (ADM/JSM) (D. Minn. January 16, 2008). During the pendency of that action, Océ sold its two patents to AACI and settled with Schwendimann. Schwendimann joined AACI as a party to the 2008 case in 2011 but voluntarily dismissed her action without prejudice a month later. The current case was filed in 2011.
On December 12, 2016, the Court issued an order for partial summary judgment with respect to a number of issues. (Mem. Op. and Order on Mots. for Summ. J. ("Summ. J.") at 38-39, Dec. 12, 2016, Docket No. 439.) Notably, the Court granted AACI's motion for partial summary judgment with regard to Schwendimann's infringement of AACI's '093 patent. (Id.) The Court also concluded that Schwendimann may argue her theory of lost profit damages at trial if she can establish that NuCoat and Cooler Concepts' profits "flow[] inexorably" to her. (Id. at 38.) However, the Court warned that the tax statuses of NuCoat and Cooler Concepts are insufficient to establish inexorable flow, and thus Schwendimann must present "contractual, structural, or historical evidence" showing that profits in fact flowed to her. (Id.)
Schwendimann moves under Fed. R. Evid. 402 to preclude AACI from presenting any theory of non-infringement based on its own patents. AACI does not intend to argue that its own patents give it an affirmative right to make or use products covered by its patents. Thus, the Court will grant Schwendimann's motion.
AACI intends to present its own patents as evidence that AACI's products do not melt below 220° C. The Court finds that the melting temperature of AACI's products, as illustrated by AACI's patents, is relevant to the issue of whether AACI's products infringe on Schwendimann's patents. Therefore, the Court's order does not prevent AACI from introducing its patents for purposes of showing that its products do not melt below 220° C. To reduce any prejudice that may result from the introduction of AACI's patents, Schwendimann is entitled to a limiting instruction that the existence of AACI's patents does not constitute a defense to infringement of Schwendimann's patents.
Schwendimann moves under Fed. R. Evid. 402 to exclude AACI from presenting argument or testimony that AACI's 888 Product is a single layer. Whether the 888 Product is comprised of one or more layers is a central issue in this litigation and will be resolved through the presentation of evidence at trial. The Court will thus deny Schwendimann's motion.
Schwendimann moves to prevent AACI from (1) arguing that she is per se excluded from pursuing lost profit damages as a matter of law and (2) introducing particular evidence relevant to the issue of lost profits.
Both Schwendimann and AACI have brought motions relating to whether Schwendimann should be allowed to argue her theory of lost profit damages. In its summary judgment motion, the Court concluded that Schwendimann may pursue lost profit damages if "Schwendimann establishes that NuCoat and Cooler Concepts' profits flowed inexorably to her." (Summ. J. at 35-36.) The Court will grant Schwendimann's motion to the extent that it seeks to exclude AACI from arguing that Schwendimann is per se ineligible for lost profit damages as a matter of law.
The Court notes, however, that Schwendimann must present "contractual, structural, or historical evidence" showing that her companies' profits inexorably flow to her. Much of the evidence submitted to the Court thus far has related to the tax statuses of Schwendimann's companies, which the Court has previously found insufficient to establish inexorable flow. If Schwendimann fails to produce contractual, structural, or historical evidence at trial, her theory of lost profit damages will be subject to dismissal.
Schwendimann moves to exclude various pieces of evidence that AACI intends to introduce to show that her companies' profits do not inexorably flow to her. The Court finds that the evidence Schwendimann seeks to exclude is relevant to the issue of lost profit damages because it is contractual, structural, or historical evidence probative of whether her companies' profits flowed to her. Moreover, the Court is persuaded thatSchwendimann will have the opportunity to challenge this evidence through the presentation of other evidence and witnesses at trial. Thus, the Court will deny Schwendimann's motion to the extent that it seeks to exclude specific evidence related to lost profits.
Both parties have brought motions related to the start date for calculating damages. The Court must decide whether the '311 Patent is substantially identical to the '623 Patent.
"An original patent cannot be infringed once a reissue patent has issued, for the original patent is surrendered." Seattle Box Co. v. Indus. Crating & Packaging, 731 F.2d 818, 827 (Fed. Cir. 1984). But the surrender of the original patent does not affect any cause of action pending or existing at the time of reissue if the reissued patent is "substantially identical" to the original patent. 35 U.S.C. § 252. "'Identical' does not mean verbatim." Laitram Corp. v. NEC Corp., 952 F.2d 1357, 1361 (Fed. Cir. 1991). The scope of the claim must be identical; identical words need not be used. Slimfold Mfg. Co., Inc. v. Kinkead Indus., Inc., 810 F.2d 1113, 1115 (Fed. Cir. 1987). For purposes of assessing whether the claims are substantially identical, the scope of the claim "cannot be interpreted in a vacuum and must be interpreted in light of the particular facts, including the prior art, the prosecution history, other claims, and any other pertinent information." Westvaco Corp. v. Int'l Paper Co., 991 F.2d 735, 742 (Fed. Cir. 1993) (citations omitted).
The '311 Patent was reissued as the '623 Patent on July 6, 2010. The Court finds that the original '311 Patent is not substantially identical to the '623 Patent. In the specification of the '311 Patent, Figure 5 showed the release layer comprised of one layer. In the '623 Patent, Figure 5 was changed to show the release layer comprised of two layers. At claim construction, the Court based its construction of "release layer" on Figure 5, stating that "the specification [of the '623 Patent] demonstrates compositional separation between the discrete parts that comprise the release layer." (Mem. Op. and Order ("Claim Construction") at 26-28, December 2, 2015, Docket No. 354.) The Court's claim construction order demonstrates that the scope of the claims in the '311 Patent and the '623 Patent are not substantially identical. See Westvaco Corp, 991 F.2d at 741-42.
The Court will deny Schwendimann's motion and conclude that Schwendimann is only entitled to argue for damages dating from July 6, 2010, the issue date of the '623 Patent.
Schwendimann moves under Fed. R. Evid. 402 and 403 to exclude references to the Court's summary judgment finding that Schwendimann infringed on AACI's '093 Patent. The Court finds that the previous finding of infringement is relevant to the issue of whether Schwendimann willfully infringed on the '093 Patent. Thus, the Court will deny Schwendimann's motion.
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