Wasica Fin. GMBH v. Schrader Int'l, Inc.

• Decision Date: 14 January 2020
• Docket Number: C.A. No. 13-1353-LPS
• Citation: 432 F.Supp.3d 448
• Parties: WASICA FINANCE GMBH and BlueArc Finance AG, Plaintiffs, v. SCHRADER INTERNATIONAL, INC., et al. Defendants.
• Court: U.S. District Court — District of Delaware

432 F.Supp.3d 448

WASICA FINANCE GMBH and BlueArc Finance AG, Plaintiffs,

v.SCHRADER INTERNATIONAL, INC., et al. Defendants.

C.A. No. 13-1353-LPS

United States District Court, D. Delaware.

Signed January 14, 2020

UNSEALED ON JANUARY 21, 2020

Jeremy Douglas Anderson, Susan E. Morrison, Douglas Edward McCann, Fish & Richardson, P.C., Wilmington, DE, Frank E. Scherkenbach, Pro Hac Vice, Fish & Richardson, P.C., Boston, MA, Michael J. Kane, Pro Hac Vice, East Brunswick, Jason M. Zucchi, Pro Hac Vice, William R. Woodford, Pro Hac Vice, Fish & Richardson, P.C., Minneapolis, MN, for Plaintiff Wasica Finance GMbH.

Jeremy Douglas Anderson, Susan E. Morrison, Douglas Edward McCann, Fish & Richardson, P.C., Wilmington, DE, Frank E. Scherkenbach, Pro Hac Vice, Fish & Richardson, P.C., Boston, MA, William R. Woodford, Pro Hac Vice, Fish & Richardson, P.C., Minneapolis, MN, for Plaintiff BlueArc Finance AG.

Jeremy A. Tigan, Mary B. Graham, Morris, Nichols, Arsht & Tunnell LLP, Wilmington, DE, Bryan P. Collins, Pro Hac Vice, Robert M. Fuhrer, Pro Hac Vice, Pillsbury Winthrop Shaw Pittman LLP, McLean, VA, for Defendant Schrader International Inc.

Jeremy A. Tigan, Mary B. Graham, Morris, Nichols, Arsht & Tunnell LLP, Wilmington, DE, for Defendant Schrader-Bridgeport International Inc.

Jeremy A. Tigan, Morris, Nichols, Arsht & Tunnell LLP, Wilmington, DE, for Defendant Schrader Electronics Limited., Schrader Electronics Inc.

MEMORANDUM ORDER

HONORABLE LEONARD P. STARK, UNITED STATES DISTRICT JUDGE

Plaintiffs Wasica Finance GmbH and BlueArc Finance AG (together, "Wasica" or "Plaintiffs") have sued Defendants Schrader International, Inc., Schrader-Bridgeport International, Inc., Schrader Electronics Limited, and Schrader Electronics, Inc. (together, "Schrader" or "Defendants") for infringement of claim 6 of Wasica's U.S. Patent No. 5,602,524 ("the '524 patent"), which relates to devices for monitoring the air-pressure in the air chamber of pneumatic tires of vehicle wheels. (See '524 patent at 1:9-11)

Pending before the Court are the parties' summary judgment¹ and Daubert² motions, which were the subject of oral argument on November 21, 2019. (See D.I. 189 ("Tr.")) Having considered the parties' briefs and related filings, and having heard argument, IT IS HEREBY ORDERED that:

1. Wasica's motion for summary judgment of inter partes review estoppel (D.I. 133) is GRANTED.

After Wasica filed this infringement action in July 2013, Schrader and former defendant Continental Automotive Systems US, Inc. filed petitions for inter partes review ("IPR") in late-2013 and early-2014. (D.I. 134 at 2) The IPR petitions contended that the '524 patent's claims are invalid based on anticipation and obviousness. (See id. ) The Court granted Schrader's unopposed motion to stay this litigation during the pendency of the IPR proceedings. (D.I. 20) Ultimately, following review by the Patent Trial and Appeal Board ("PTAB") as well as the Federal Circuit, some claims of the '524 patent (including asserted claim 6) were found to be valid, while other claims were invalidated. See Wasica Fin. GmbH v. Cont'l Auto. Sys., Inc. , 853 F.3d 1272 (Fed. Cir 2017).

In the IPR proceedings, Schrader's invalidity arguments "focused primarily" on Italian Patent No. 1,219,753 ("Oselin"). Id. at 1277. The Federal Circuit ultimately determined that substantial evidence supported the PTAB's conclusion that claim 6 is patentable over Oselin. See id. at 1283-87.

In the civil action here, Schrader again challenges the validity of claim 6 based on obviousness combinations that include Oselin. (See, e.g. , D.I. 135 Ex. 4 at 21; Ex. 5 at 8-9) In particular, Schrader seeks at trial to prove that claim 6 is invalid as obvious based on Oselin in view of 14 other patents or printed publications and one physical product – a product associated with the Chevrolet Corvette referred to as "ZR-1 Sensors."³ While Oselin was used in the IPR, the other 14 patents and printed publications and the ZR-1 Sensors were not.⁴ (See D.I. 134 at 5-6)

The obviousness challenges Schrader seeks to present at trial fall into three categories: (1) Oselin in view of the ZR-1 Sensors, (2) Oselin in view of the ZR-1 Sensors and in further view of any one of the 14 patents or printed publications, and (3) the ZR-1 Sensors in view of Oselin. (See id. at 6) Wasica's motion seeks summary judgment that Schrader is estopped, pursuant to 35 U.S.C. § 315(e)(2), from raising any of the aforementioned obviousness combinations at trial. (See D.I. 134 at 1)

The Patent Act provides that a "petitioner in an inter partes review may request to cancel as unpatentable 1 or more claims of a patent only on a ground that could be raised under section 102 [obviousness] or 103 [anticipation] and only on the basis of patents and printed publications." 35 U.S.C. § 311(b). Section 315(e)(2), the estoppel provision, provides:

The petitioner in an inter partes review of a claim in a patent ... that results in a final written decision ... may not assert ... in a civil action ... that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.

References that an alleged infringer "reasonably could have raised" include "any references that were known to the petitioner or that could reasonably have been discovered by a skilled searcher conducting a diligent search." Parallel Networks Licensing, LLC v. IBM Corp. , 2017 WL 1045912, at *11 (D. Del. Feb. 22, 2017) (relying on 157 Cong. Rec. S1375 (daily ed. Mar. 8, 2011) (statement of Sen. Kyl)); see also f'real Foods, LLC v. Hamilton Beach Brands, Inc. , 2019 WL 1558486, at *2 (D. Del. Apr. 10, 2019).

Physical products cannot be raised during IPR proceedings. See Clearlamp, LLC v. LKQ Corp. , 2016 WL 4734389, at *9 (N.D. Ill. Mar. 18, 2016) ("[U]nlike in district court litigation, products cannot be offered as prior art during inter partes review."); see also D.I. 155 at 3 ("The ZR-1 Sensors are physical products, not ‘patents’ or ‘printed publications,’ and thus they could not have been used in any grounds before the PTAB under § 311(b)."); Tr. at 6, 13. However, patents or printed publications that relate to and describe a physical product can, like other patents and printed publications, be raised in an IPR. See, e.g. , Cobalt Boats, LLC v. Sea Ray Boats, Inc. , 2017 WL 2605977, at *4 (E.D. Va. June 5, 2017) (estopping former-petitioner from relying on prior art product manuals that reasonably could have been raised in IPR).

Schrader does not dispute that Oselin was previously raised in the IPR or that the other 14 patents or printed publications reasonably could have been raised during the IPR. (See D.I. 155 at 11; D.I. 176 at 2-3) Schrader also does not dispute that a 1990 article the parties refer to as "Siuru" (see D.I. 135 Ex. 5 at Attachment R) is a printed publication that discloses all of the relevant features of the ZR-1 Sensors and that Siuru reasonably could have been raised during the IPR. (See D.I. 134 at 16-19 (Wasica chart comparing Siuru to ZR-1 Sensors, which is unchallenged by Schrader, based on Schrader's expert, Dr. Williams, admitting that Siuru discloses each claim element allegedly shown by ZR-1 Sensors); D.I. 155 at 2)⁵

The parties' dispute (which the parties agree the Federal Circuit has not addressed) is whether an obviousness combination – whose only relevant difference from a prior IPR combination is the inclusion of a physical product as one component, where all the relevant features of that physical product had been disclosed in a patent or printed publication that reasonably could have been raised during the IPR – is estopped as a "ground" that "reasonably could have been raised" during the IPR. That is, does IPR estoppel extend to invalidity "grounds" that include a physical product when a patent or prior art publication – to which the physical product is entirely cumulative – was reasonably available during the IPR?

Wasica contends that Schrader is so estopped. Wasica observes that moving from a printed publication (such as a manual describing a device) in an IPR proceeding to a physical product (such as the device described in the manual) in litigation merely swaps evidentiary proofs supporting the same "ground" for invalidity that was raised or reasonably could have been raised during the IPR. To Wasica, evidence is a distinct concept from "ground," and the statute estops Schrader from proceeding on the Oselin-related "grounds" of invalidity even though the specific evidentiary basis (the ZR-1 Sensors themselves, as opposed to the Siuru printed publication disclosing those sensors) on which Schrader now proceeds was unavailable in the IPR.

Schrader counters that it is not estopped, reasoning that "ground" in § 315(e)(2) refers only to a precise invalidity combination based on patents and printed publications. Therefore, because the IPR statute does not allow challenges based on physical products, no "ground" including the ZR-1 Sensors could have been raised in the IPR, so no "ground" which now includes the ZR-1 Sensors is estopped.

In the Court's view, both parties' interpretations of the statutory scheme are reasonable. This conclusion is bolstered by the division amongst District Courts that have considered this (or a closely-related) question.⁶ In the absence of unambiguous statutory language and precedent from the Court of Appeals, the Court finds more persuasive the view that IPR estoppel applies in the circumstances presented here.

As Wasica observes, 35 U.S.C. § 312(a)(3) identifies as separate requirements to be included in an IPR petition "the grounds on which the challenge to each claim is based, and the evidence that supports the grounds for the challenge to each claim" (emphasis added). In this way, the Patent Act distinguishes between grounds and evidence. Since the estoppel provision, § 315(e)(2), applies to grounds , a petitioner is estopped from proceeding in litigation on those grounds ,...