W. Plastics, Inc. v. Dubose Strapping, Inc.

• Decision Date: 25 September 2018
• Docket Number: No. 5:15-CV-294-D,5:15-CV-294-D
• Citation: 334 F.Supp.3d 744
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: WESTERN PLASTICS, INC., Plaintiff, v. DUBOSE STRAPPING, INC., Defendant.

334 F.Supp.3d 744

WESTERN PLASTICS, INC., Plaintiff,

v.DUBOSE STRAPPING, INC., Defendant.

No. 5:15-CV-294-D

United States District Court, E.D. North Carolina, Western Division.

Signed September 25, 2018

Glenn E. Forbis, J. Bradley Luchsinger, Harness, Dickey & Pierce, P.L.C., Troy, MI, Anthony Paul DeRosa, Myers, Bigel, Sibley & Sajovec, P.A., Raleigh, NC, for Plaintiff.

Anthony J. Biller, Michael Best & Friedrich LLP, Raleigh, NC, G. Thomas Williams, McGarry Bair PC, Grand Rapids, MI, for Defendant.

ORDER

JAMES C. DEVER III, Chief United States District JudgeOn July 2, 2015, Western Plastics, Inc., ("WP" or "plaintiff") filed this action against DuBose Strapping, Inc., ("DuBose" or "defendant") alleging patent infringement [D.E. 1]. On September 8, 2017, DuBose moved for partial summary judgment [D.E. 49]. On October 9, 2017, WP moved for partial summary judgment on some of DuBose's defenses [D.E. 97]. As explained below, the court denies DuBose's motion for partial summary judgment, and grants in part and denies in part WP's motion for partial summary judgment.

I.

WP owns United States Patent No. 8,080,304 ("the '304 Patent"). Compl. [D.E. 1] ¶¶ 8–9. The '304 Patent, entitled "Multi-Layer Wrap," covers "a stretchable multi-layer metal coil wrap product" that WP sells commercially as Panacea Wrap ("Panacea"). Id. 8–11. In essence, Panacea consists of two thin plastic films that cling to each other with a mesh layer in between to restrict stretching and increase the durability of the wrap material. See [D.E. 52-1] 23; [D.E. 51] ¶ 14; [D.E. 1-1]. Customers use the product to wrap large rolls of metal coil produced in the metal industry inpreparation for transportation. See Compl. ¶ 12; [D.E. 51] ¶¶ 5–9. WP first sold Panacea during the first quarter of 2006. [D.E. 99] ¶ 64.

Thomas Clarke is the President of WP and is the sole inventor listed on the '304 Patent. [D.E. 99] ¶ 1. Clarke allegedly envisioned the idea for Panacea in 2005 following discussions with Globopro, [D.E. 99] ¶¶ 70–72, and he filed patent applications in Canada (on February 1, 2006) and the United States (on February 5, 2006). See [D.E. 52-1] 10; [D.E. 51] ¶¶ 10–11. On December 20, 2011, the '304 Patent was granted. Compl. ¶ 8. The United States Patent and Trademark Office considered thirty-six cited references and issued six Office Actions before granting the patent [D.E. 99] ¶¶ 27–28; see [D.E. 51] ¶¶ 79–147. The Patent Office also considered U.S. Patent No. 6,942,909 ("the Shirrell or '909 Patent") and U.K. Patent No. 2,348,633 ("the Orpen Patent") when evaluating the '304 Patent. See [D.E. 99] ¶ 30.¹

The '909 Patent is critical for both parties in this case. Jack Shirrell was the Vice President of Film Technology at Illinois Tool Works-Muller ("ITW-Muller") when the '909 Patent was granted on September 13, 2005. See [D.E. 99] ¶ 5; [D.E. 100-20]. Jeff Kellermann was the President of the Metals Group of Illinois Tool Works Fleetwood-Signode ("ITW-Fleetwood"), and the Shirrell Patent lists Kellermann as a co-inventor. See [D.E. 99] ¶ 4; [D.E. 100-20]. While working at ITW-Fleetwood, Kellermann was a customer of WP and purchased Panacea for resale [D.E. 99] ¶ 17. In January 2003, Shirrell filed for the '909 Patent and developed a prototype wrap product at a WP facility. See [D.E. 51 ¶¶ 51–55; [D.E. 99] ¶¶ 41–44. The parties dispute whether Shirrell's prototype product was ever commercially developed or sold as a product called "5G" or "5GF TamaNet." Compare [D.E. 51] ¶¶ 55–60, with [D.E. 99] ¶¶ 54–63. The parties also dispute whether the prototype is the same design as disclosed in the '909 Patent. See [D.E. 127] 6.

Kellermann is now DuBose's Chief Operating Officer. [D.E. 99] ¶ 3. In 2014, Kellermann began exploring options for using the Shirrell prototype to create a product to compete with Panacea. [D.E. 51] ¶¶ 152–53. DuBose was aware of the '304 Patent and sought legal advice before introducing a competing product. [D.E. 51] ¶¶ 154–60. In 2015, DuBose introduced "FlexStretch," a metal coil wrap comprised of "bale netting laminated in between layers of stretch film." [D.E. 51] ¶ 160; see Compl. ¶ 10.

On July 2, 2015, WP filed a complaint against DuBose alleging direct and induced patent infringement in violation of 35 U.S.C. §§ 271(a) – (b) based on the sale of FlexStretch. See Compl. 1, 4–7; [D.E. 66] (dismissing induced infringement claim). DuBose answered on August 24, 2015, and filed four counterclaims against WP for: (1) noninfringement, (2) patent invalidity under 35 U.S.C. §§ 101 – 03, (3) inequitable conduct rendering the patent unenforceable, and (4) patent invalidity for improper inventorship. See [D.E. 14]; cf. [D.E. 66] (conceding infringement). On September 17, 2015, WP replied. [D.E. 16]. DuBose has since stipulated that FlexStretch infringes WP's '304 Patent. See [D.E. 66].

On October 12, 2015, the parties filed a joint discovery plan. [D.E. 18]. After a series of motions to amend, the court filed an amended scheduling order. [D.E. 30]. Under the final scheduling order, expert reports were due on October 25, 2016 (if party had burden of proof on issue) or November 23, 2016 (if party did not have burden of proof on issue). Id. The court set the close of discovery for May 9, 2017. [D.E. 33].

On May 31, 2017, the court held a Markman hearing. [D.E. 39]. The court construed four claim terms. [D.E. 42]. On the same day, the court ordered the parties to attend a settlement conference. [D.E. 43]. On July 11, 2017, the parties attended a settlement conference with Magistrate Judge Gates. See [D.E. 46, 47].

On September 8, 2017, DuBose moved for partial summary judgment, [D.E. 49], and filed a memorandum in support [D.E. 50], a statement of material facts [D.E. 51], and an appendix to the statement of material facts [D.E. 52]. DuBose sought summary judgment on its claims that either WP's patent was unenforceable or invalid [D.E. 49] 1. Alternatively, DuBose sought partial summary judgment on WP's claim for recovery of lost profits and WP's claim that DuBose willfully infringed WP's patent. Id. DuBose also filed two motions in limine and supporting memoranda to exclude and limit testimony from Robert Stoll and Christopher Schulte [D.E. 55, 56, 57, 58].

On October 9, 2017, WP moved for partial summary judgment concerning various defenses of DuBose [D.E. 97], and filed a memorandum in support [D.E. 98], a statement of material facts [D.E. 99], and an appendix to the statement of material facts [D.E. 100]. WP previously had filed motions in limine to exclude DuBose's expert witness Art MacCord [D.E. 61, 65] and to dismiss DuBose's invalidity claim [D.E. 60]. On September 10, 2017, WP also filed a motion entering a stipulation that DuBose had infringed WP's patent and dismissing WP's claim for induced infringement [D.E. 66].

On October 30, 2017, WP opposed DuBose's motion for summary judgment [D.E. 108] and filed a statement of material facts [D.E. 109, 115]. On the same day, DuBose opposed WP's motion for summary judgment [D.E. 110] and filed a statement of material facts [D.E. 111, 112]. Also on October 30, 2017, DuBose moved to strike, in part, the testimony of Dr. Robert Kimmel [D.E. 117] and filed a memorandum in support [D.E. 118]. On November 13, 2017, WP responded in opposition [D.E. 128]. On November 27, 2017, DuBose replied [D.E. 133].

On November 16, 2017, WP moved to strike from evidence Exhibit 36, [D.E. 52-39], a copy of U.S. Patent No. 5,104,714 ("the '714 Patent") [D.E. 131] and filed a memorandum in support [D.E. 132]. On November 30, 2017, DuBose responded in opposition [D.E. 134]. On December 12, 2017, WP replied [D.E. 135].

On June 29, 2018, the parties filed a joint statement on the status of the case [D.E. 138]. The parties listed as outstanding the following motions: (1) DuBose's motion for partial summary judgment [D.E. 49], (2) DuBose's motion in limine to exclude Schulte [D.E. 57], (3) WP's motion for partial summary judgment [D.E. 97], (4) DuBose's motion to strike Kimmel declaration [D.E. 117], and (5) WP's motion to strike the '714 Patent from evidence [D.E. 131].

II.

DuBose seeks to exclude WP's expert Christopher Schulte from testifying about damages. Rule 702 of the Federal Rules of Evidence governs the admission of expert testimony. Fed. R. Evid. 702 ; see Silicon Knights, Inc. v. Epic Games, Inc., No. 5:07-CV-275-D, 2011 WL 6748518, at *5 (E.D.N.C. Dec. 22, 2011) (unpublished). The proponent of the expert testimony must establish its admissibility by a preponderance of the evidence. See Cooper v. Smith & Nephew, Inc., 259 F.3d 194, 199 (4th Cir. 2001). A district court has broad latitude in determining the admissibility of proposed expert testimony. See United States v. Gastiaburo, 16 F.3d 582, 589 (4th Cir. 1994).

Expert testimony is appropriate when it "will help the trier of fact to understand the evidence or to determine a fact in issue." Fed. R. Evid. 702. A district court may permit a witness qualified as an expert to testify where "(1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the expert has reliably applied the principles and methods to the facts of the case." Id. Courts have distilled Rule 702's requirements into two crucial inquiries: whether the proposed expert's testimony is relevant and whether it is reliable. See Kumho Tire Co. v. Carmichael, 526 U.S. 137, 141, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999) ; Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 589, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993) ; United States v. Forrest, 429 F.3d 73, 80 (4th Cir. 2005). The trial court must perform the special gatekeeping obligation of ensuring that expert testimony meets both requirements. Kumho Tire, 526 U.S. at 147, 119 S.Ct. 1167.

"In making its initial determination of whether proffered testimony is sufficiently reliable, the court has broad latitude to consider whatever factors bearing on validity that the court finds to be...