Tokai Corp.. v. Easton Enterprises Inc.

• Decision Date: 01 April 2011
• Docket Number: 2010–1116.,Nos. 2010–1057,s. 2010–1057
• Citation: 632 F.3d 1358
• Parties: TOKAI CORP., Scripto–Tokai, Inc., and Calico Brands, Inc., Plaintiffs/Counterclaim Defendants–Appellants,v.EASTON ENTERPRISES, INC., a California Corporation (doing business as Easton Sales) and FLI, Inc., Defendants–Cross Appellants,andFun Line Industries, Inc. and Easton Enterprises, Inc., a Nevada Corporation, Counterclaimants–Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

632 F.3d 1358

97 U.S.P.Q.2d 1673

TOKAI CORP., Scripto–Tokai, Inc., and Calico Brands, Inc., Plaintiffs/Counterclaim Defendants–Appellants,

v.EASTON ENTERPRISES, INC., a California Corporation (doing business as Easton Sales) and FLI, Inc., Defendants–Cross Appellants,andFun Line Industries, Inc. and Easton Enterprises, Inc., a Nevada Corporation, Counterclaimants–Appellees.

Nos. 2010–1057

2010–1116.

United States Court of Appeals, Federal Circuit.

Jan. 31, 2011.Rehearing and Rehearing En Banc Denied April 1, 2011.

R. Joseph Trojan, Trojan Law Offices, of Beverly Hills, CA, argued for plaintiffs/counterclaim defendants-appellants. Of counsel was Dylan C. Dang.Konrad L. Trope, Chan Law Group LLP, of Los Angeles, CA, argued for defendants-cross appellants and counterclaimants-appellees. On the brief were Thomas T. Chan and Rex Hwang.Before NEWMAN, LOURIE, and BRYSON, Circuit Judges.Opinion for the court filed by Circuit Judge LOURIE. Dissenting opinion filed by Circuit Judge NEWMAN.LOURIE, Circuit Judge.

Tokai Corp., Scripto–Tokai, Inc., and Calico Brands, Inc., (collectively, “Tokai”) appeal from the decision of the United States District Court for the Central District of California granting a motion for summary judgment of invalidity for obviousness of U.S. Patents 5,697,775 (the “'775 patent”); 5,897,308 (the “'308 patent”); and 6,093,017 (the “'017 patent”). Tokai Corp. v. Easton Enters. Inc., No. 5:07–cv–00883 (C.D.Cal. Oct. 27, 2009) ( “SJ Order ”). Easton Enterprises, Inc. (d.b.a. Easton Sales) and Fun Line Industries, Inc. (collectively, “Easton”) cross-appeal from the court's claim construction order, Tokai Corp. v. Easton Enters. Inc., No. EDCV 07–883–VAP, 2009 WL 1582924 (C.D.Cal. June 2, 2009), and the court's order granting Tokai's motion to strike Easton's supplemental invalidity contentions, Tokai Corp. v. Easton Enters. Inc., EDCV 07–00883–VAP, 2009 WL 2047845 (C.D.Cal. July 8, 2009). Because the district court correctly granted summary judgment of invalidity, we affirm. As a result, we need not decide Easton's cross-appeal.

Background

Tokai owns the asserted patents, which relate to safety utility lighters having extended lighting rods (useful for lighting barbecue grills, for example). The asserted patents share a priority date of August 15, 1995. ¹ The claims of the asserted patents are directed to utility lighters with automatic child-safety mechanisms for preventing accidental ignition. Tokai competes with Easton in the market for safety utility lighters. Tokai asserts that it has sold more than 100 million safety utility lighters in the United States under one or more of its asserted patents. SJ Order, slip op. at 37. Tokai also contends that Easton has sold more than nine million such lighters.

In July 2007, Tokai sued Easton in the District Court for the Central District of California for infringing the asserted patents. Easton counterclaimed for invalidity. At issue are claim 1 of the '775 patent; claims 1, 10, and 13 of the '308 patent; and claims 1, 3, and 4 of the '017 patent.

The parties agree that the asserted claims substantially overlap. Each of the asserted independent claims describes a “lighting rod” ( i.e., a utility lighter) having a particular “safety device.” The differences among the asserted claims arise primarily in the safety-device portion of the claim. Claim 1 of the '775 patent exemplifies the asserted claims:

1. A safety device in a lighting rod, which lighting rod is provided with a rod-like top end portion and a main body, the rod-like top end portion being provided with a jetting nozzle for jetting out a gas, the main body being provided with:

i) a gas tank,

ii) a valve mechanism for opening and closing a path, through which the gas is supplied from the gas tank to the jetting nozzle,

iii) a piezoelectric unit for generating a discharge voltage for lighting the gas, and

iv) an operation member, which is capable of sliding, which has an operating section, and which drives the valve mechanism and the piezoelectric unit in order to carry out a lighting operation, the operating section of the operating member being exposed to the exterior of the main body,

the safety device comprising:

a) a locking member having an engagement section, which interferes with a portion of the operation member and thereby locks the lighting operation of the operation member, said locking member being capable of moving in a direction, that intersects with the direction along which the operation member moves, and

b) an urging member, which urges said locking member to a locking direction,

said locking member being movable to a lock releasing position against the urging force of said urging member,

wherein, with the locking member in the lock releasing position, the lighting operation is carried out by operating the operating section of the operation member, and said locking member automatically returns to the state of the locking as the operation member returns to its original position.

'775 patent col.24 l.59–col.25 l.28 (emphases added). As illustrated by the relevant portions of figures 8A and 8B of the '775 patent, the claimed utility lighter has a trigger (“operation member” 120) and a safety device, which comprises a “locking member” (125) and a spring (“urging member” 26). To operate the lighter, the user depresses the locking member against the force of the spring and pulls the trigger. When the user releases the locking member, the spring automatically returns the locking member to its initial position, where the trigger is blocked from inadvertent actuation.

Image 1 (4.51" X 3.6") Available for Offline Print

In June 2009, the district court issued a claim construction order, after which Easton stipulated that its accused utility lighters infringe all but one of the asserted claims as construed by the court.² SJ Order, slip op. at 3.

In September 2009, Tokai moved for summary judgment on Easton's counterclaim of invalidity for obviousness, and Easton filed a cross-motion for summary judgment for obviousness of the asserted patents over four prior art references. In opposition to Easton's motion, Tokai submitted expert declarations from Dr. Jones (the “Jones declaration”) and Mr. Sung (the “Sung declaration”). Easton objected to the declarations, and the district court sustained Easton's objection. SJ Order, slip op. at 6–7. The district court noted that Tokai failed to submit written reports from Jones and Sung during expert discovery and that, as a result, Easton was denied an opportunity to depose these witnesses on the subject matter of their expert declarations. The court thus declined to consider either declaration in resolving the parties' summary judgment motions.

On the issue of invalidity, the district court determined that there existed no genuine issue of material fact as to the obviousness of the asserted claims over the four prior art references asserted by Easton: U.S. Patents 5,326,256 (“Shike”); 5,199,865 (“Liang”); 5,090,893 (“Floriot”); and 4,832,596 (“Morris”). In doing so, the court applied the four-factor analysis for obviousness under 35 U.S.C. § 103, as set forth in Graham v. John Deere Co., 383 U.S. 1, 17–18, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966). First, the court found no genuine issue of material fact regarding the scope and content of the asserted prior art references. SJ Order, slip op. at 18–22. Secondly, the court found no material dispute regarding the differences between the prior art and the claimed invention. Id. at 23–33. The court found that, with the exception of a single aspect of claims 10 and 13 of the '308 patent (discussed further infra ), each element of the asserted claims was disclosed in the asserted prior art. Id. at 23. Third, with regard to the level of skill in the art, the district court noted that the parties disagreed sharply. The court determined, however, that the dispute was immaterial, as the court's conclusion on obviousness was the same under either party's asserted level of skill. Id. at 36. Finally, the court evaluated Tokai's alleged objective indicia of nonobviousness. Tokai asserted that its commercial success supported patentability, but the court found no nexus between the sales data and the merits of the invention beyond what was available in the prior art. Id. at 38–39. The court also found unpersuasive Tokai's asserted evidence that Easton copied the claimed inventions. Id. at 40. Based on its analysis of the Graham factors, the district court concluded that the asserted claims would have been obvious to one of ordinary skill in the art as of the priority date of the asserted patents and entered final judgment on October 23, 2009.

Tokai timely appealed from the district court's exclusion of its expert declarations and from the district court's grant of summary judgment of invalidity of the asserted claims. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

Discussion

A. The District Court Did Not Abuse Its Discretion by Excluding the Expert Evidence

We review a district court's decision to exclude evidence under the law of the regional circuit. Del. Valley Floral Grp., Inc. v. Shaw Rose Nets, LLC, 597 F.3d 1374, 1379 (Fed.Cir.2010). The Ninth Circuit, the pertinent regional circuit in this case, reviews a district court's decision to exclude evidence on summary judgment for abuse of discretion. Wong v. Regents of Univ. of Cal., 410 F.3d 1052, 1060 (9th Cir.2005).

Tokai argues that the district court abused its discretion by excluding the Jones and Sung declarations. With regard to the Sung declaration, Tokai argues that the court failed to find that Sung was exempt from the written report requirement of Federal Rule of Civil Procedure 26(a)(2)(B). Specifically, Tokai asserts on appeal that Rule 26(a)(2)(B) permits Sung, as an employee of Tokai, to offer an expert declaration without an accompanying written report. Tokai further argues that its failure to submit written expert reports for...