Sensormatic Electronics Corp. v. Tag Co. Us, LLC, Case No.: 06-81105-CIV.
| Decision Date | 19 December 2008 |
| Docket Number | Case No.: 06-81105-CIV. |
| Citation | 632 F.Supp.2d 1147 |
| Parties | SENSORMATIC ELECTRONICS CORP., Plaintiff, v. The TAG COMPANY US, LLC, et al., Defendants. |
| Court | U.S. District Court — Southern District of Florida |
Stephen Bernard Gillman, Shutts & Bowen, Miami, FL, Mark L. Levine, Mark S. Ouweleen, Sean Gallagher, Shayna S. Cook, Bartlit Beck Herman Palenchar & Scott, Chicago, IL, Sean C. Grimsley, Bartlit Beck Herman Palenchar & Scott, Denver, CO, for Plaintiff.
David Kenneth Friedland, Leslie Jean Lott, Lott & Friedland, Coral Gables, FL, Benjamin S. Shively, Enrico A. Mazzoli, George W. Cochran, Robert Ray Waters, Waters Law Group PLLC, Louisville, KY, Jason A. Poling, Olen Lee York, III, Waters Law Office PLLC, Huntington, WV, for Defendants.
THIS CAUSE is before the court following trial in this matter, held from August 12, 2008 to August 28, 2008 and from October 7, 2008 to October 9, 2008. Having reviewed the evidence admitted at trial and considered the arguments of counsel, the court now makes the following findings of fact and conclusions of law:
INTRODUCTION
1. Plaintiff Sensormatic Electronics Corporation ("Sensormatic")has brought this lawsuit against Defendants The TAG Company U.S. LLC ("TAG") and Phenix Label Company ("Phenix") for infringement of various claims of two of Sensormatic's patents, U.S. Patent No. 5,729,200 ("the '200 patent") and U.S. Patent No. 6,181,245 ("the '245 patent"). Sensormatic seeks permanent injunctive relief against TAG and Phenix.
2. TAG and Phenix have asserted counterclaims for invalidity and unenforceability of the '200 and '245 patents.
3. In addition to its patent infringement claims, Sensormatic has brought claims against TAG and former employee Dennis Gadonniex for misappropriation of trade secrets in violation of the Florida Uniform Trade Secrets Act; against Mr. Gadonniex for breach of contract and breach of fiduciary duty; and against TAG for aiding and abetting breach of fiduciary duty and violations of the Florida Deceptive and Unfair Trade Practices Act. Sensormatic seeks unjust enrichment relief for TAG's misappropriation of trade secrets, permanent injunctive relief for the remaining claims, and attorneys' fees for the breach of contract claim.
4. Sensormatic is a Nevada corporation with its principal place of business at One Town Center Road, Boca Raton, Florida 33486. Sensormatic designs and manufactures Electronic Article Surveillance ("EAS") systems, which are typically used to detect and deter shoplifting in retail stores. (PX 786, '200 patent, col. 11:14-16) This case involves disposable acousto-magnetic ("AM") EAS labels, which are affixed to retail merchandise.
5. TAG is a limited liability company organized under the laws of Florida and with its principal place of business at 6278 North Federal Highway # 318, Fort Lauderdale, Florida 33308. TAG sells AM EAS labels known as the Series 58 labels.
6. Phenix is a Kansas corporation with its principal place of business at 11610 South Alden Street, Olathe, Kansas 66062. Phenix manufactures AM EAS labels, including Series 58 labels, for sale by TAG.
7. Dennis Gadonniex is a resident of Bradenton, Florida. Gadonniex has been a consultant for TAG and is a former employee of Sensormatic.
8. Sensormatic filed this lawsuit against TAG and Phenix on November 29, 2006, alleging patent infringement of multiple Sensormatic patents.
9. On June 12, 2007, Sensormatic amended its complaint to add Gadonniex as a defendant and to add claims against TAG for misappropriation of trade secrets and deceptive and unfair trade practices. See DE # 45.
10. On August 12, 2008, the first day of trial in this case, the parties stipulated that TAG and Phenix have infringed the asserted claims of the '200 and '245 patents. See DE # 316. TAG and Phenix defended on the ground that the '200 and '245 patents are invalid and/or unenforceable.
11. This court has jurisdiction over Sensormatic's infringement claims and defendants' invalidity and unenforceability claims pursuant to 28 U.S.C. § 1331. The court has supplemental jurisdiction over Sensormatic's state law claims pursuant to 28 U.S.C. § 1367(a).
12. Venue is proper in this court pursuant to 28 U.S.C. § 1391(b)(2) because a substantial part of the events giving rise to the claim occurred in the Southern District of Florida.
13. An acousto-magnetic electronic article surveillance ("AM EAS") system is generally used to deter and detect the theft of retail merchandise. A typical AM EAS system consists of two components: (1) "markers" or "labels," which are affixed to retail products and designed to interact with a magnetic field placed at the store exit, and (2) "pedestals," which both create the magnetic field and detect markers that have not been deactivated at the checkout register. (PX 786, '200 patent, col. 1:16-33; Patterson, Tr. 102:3-21).
14. Markers have magnetic properties that cause an alarm to sound if they are brought within the magnetic field created by the pedestals without having first been deactivated. (PX 786, col. 1:17-20; Patterson, Tr. 104:2-20). The marker is typically deactivated by a store employee at the time of purchase. After being deactivated, the marker may be brought through the magnetic field without sounding an alarm. (PX 786, col. 1:23-26; Patterson, Tr. 112:22-114:1)
15. The markers themselves consist of two principal components—a "resonator" and a "bias," both of which sit inside a plastic housing. (PX 786, col. 1:27-33; Patterson, Tr. 105:5-23)
16. The resonator is formed from a magnetostrictive metallic material which resonates (or vibrates) at a particular frequency when exposed to the alternating magnetic field created by the pedestals. (PX 786, col. 1:45-50; Patterson, Tr. 106:1-14, 106:24-107:10).
17. The bias element is formed from a semi-hard metallic material which, when fully magnetized, causes the resonator to vibrate at a frequency detectable by the pedestals in response to an alternating magnetic field generated by the pedestals. (PX 786, col. 1:60-2:5; Patterson, Tr. 111:18-112:21) The standard frequency in the industry is 58 kHz. (Bulson, Tr. 2312:24-25)
18. When the bias element is demagnetized (e.g., by a checkout clerk upon payment for the merchandise), the resonator vibrates at a higher frequency than can be detected by the pedestals. Thus, after demagnetization of the bias, the marker can pass through the field generated by the pedestals without sounding an alarm. (PX 786, col. 1:60-2:5; Patterson, Tr. 113:22-114:13)
19. In the fall of 1995, Sensormatic's Dr. Kevin Coffey and Dr. Richard Copeland conceived of the idea of using a low-coercivity bias material that exhibited "abrupt characteristics." (DX 155, 11/28/95 Coffey memo, at 3; DX 256, Invention Disclosure (Ex. A) at 3 ("new abrupt magnet"); PX 786, col. 4:45-59; Coffey, Tr. 351:5-352:6, 389:24-390:3; Copeland, Tr. 1445:3-24) "Coercivity" refers to the measure of the strength of an opposing magnetic field (measured in Oersted or Oe) that is needed to reduce the magnetization of a metal, such as the bias element, from full magnetization to zero in the presence of the field. (Patterson, Tr. 121:3-6) The abrupt magnetization and demagnetization characteristics of the label were designed to allow "label activation and label deactivation" with "much lower field levels." (DX 256, Invention Disclosure (Ex. A) at 5)
20. On August 28, 1996, Drs. Coffey and Copeland filed an application for what became the '200 patent. (PX 786) The '200 patent was granted on March 17, 1998. (Id.)
21. The '200 patent application disclosed four prior art references, each of which are cited on the face of the patent: the Anderson '489 patent, the Anderson '490 patent, the Liu '140 patent and the Lian '230 patent. (PX 786)
22. The Examiner initially rejected all 47 claims in the '200 application on the ground that the specification would not enable a person reasonably skilled in the art to make and/or use the invention, as required by 35 U.S.C. § 112, first paragraph. (PX 86, May 16, 1997 Office Action) Sensormatic "traversed" and argued that the rejection was incorrect because, among other things, persons of ordinary skill in the art could make the claimed material based upon the desired properties that are specified in the '200 patent's claims. (PX 86, Aug. 22, 1997 Response to Office Action) The Examiner subsequently withdrew his rejection and allowed all 47 claims as originally written, with a few minor edits to the specification. (PX 86, Sept. 25, 1997 Notice of Allowability)
23. On December 1, 2005, the firm of Defendants' testifying expert, Dr. Gordon Fish, filed a Request for Re-examination with the PTO. (PX 922, Dec. 1, 2005 Request for Re-examination; Fish, Tr. 2098:17-25)
24. On February 9, 2006, the PTO granted Defendants' Request for Re-examination, finding that there was "a substantial new question of patentability . . . with respect to the instant claims" under 35 U.S.C. § 102-103. (PX 922, Feb. 9, 2006 Office Action p. 3)
34. The PTO rejected original Claim 4. (PX 922, Nov. 9, 2006 Office Action) Sensormatic then amended claim 4 to include the additional limitation set forth in dependent claim 5 and cancelled claim 5. (PX 922, Jan. 3, 2007 Summary of Interview; Response to Nov. 9, 2006 Office Action)
35. On Feb. 12, 2008, the PTO issued a Re-examination Certificate. (PX 816) In all, 42 of the 47 claims withstood re-examination as originally written; two claims were cancelled; and three claims were amended. (Id.)
36. The '245...
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