Opinion
Case No. 1:16-cv-00449-DCN
2024-01-03
J.R. SIMPLOT COMPANY, Plaintiff, v. McCAIN FOODS USA, INC., Defendant. McCain Foods Limited, Plaintiff, v. J.R. Simplot Company, Defendant. J.R. Simplot Company, Plaintiff, v. Elea Vertriebs-und-Vermarktungsgesellschaft, mbH; Food Physics LLC, Third-Party Defendants.
Anthony David Brzozowski II, Pro Hac Vice, Brian M. Buroker, Pro Hac Vice, Gibson, Dunn & Crutcher LLP, Washington, DC, Vladimir J. Semendyai, Pro Hac Vice, Paul Hastings LLP, Washington, DC, Dana M. Herberholz, Jordan Lee Stott, Dorsey & Whitney LLP, Boise, ID, Brook Bernard Bond, Christopher J. Cuneo, Parsons Behle & Latimer, Boise, ID, Margaret Niver McGann, Pro Hac Vice, Parson Behle & Latimer, Salt Lake City, UT, for J.R. Simplot Company. John A. Marlott, Jones Day, Chicago, IL, Meredith M. Wilkes, Cleveland, OH, Michael G. Brady, Eberle Berlin, Boise, ID, Teague Ian Donahey, Anne Henderson Haws, Holland & Hart LLP, Boise, ID, for McCain Foods Limited. David B. Cochran, Pro Hac Vice, John C. Evans, Pro Hac Vice, Susan M. Gerber, Pro Hac Vice, Jones Day, Cleveland, OH, Meredith M. Wilkes, Cleveland, OH, Joshua R. Nightingale, Jones Day, Pittsburgh, PA, Michael G. Brady, Eberle Berlin, Boise, ID, Teague Ian Donahey, Anne Henderson Haws, Holland & Hart LLP, Boise, ID, for McCain Foods USA, Inc. Anthony David Brzozowski II, Pro Hac Vice, Brian M. Buroker, Pro Hac Vice, Gibson, Dunn & Crutcher LLP, Washington, DC, Vladimir J. Semendyai, Pro Hac Vice, Paul Hastings LLP, Washington, DC, Brook Bernard Bond, Christopher J. Cuneo, Parsons Behle & Latimer, Boise, ID, Dana M. Herberholz, Dorsey & Whitney LLP, Boise, ID, for J.R. Simplot Company.
Anthony David Brzozowski II, Pro Hac Vice, Brian M. Buroker, Pro Hac Vice, Gibson, Dunn & Crutcher LLP, Washington, DC, Vladimir J. Semendyai, Pro Hac Vice, Paul Hastings LLP, Washington, DC, Dana M. Herberholz, Jordan Lee Stott, Dorsey & Whitney LLP, Boise, ID, Brook Bernard Bond, Christopher J. Cuneo, Parsons Behle & Latimer, Boise, ID, Margaret Niver McGann, Pro Hac Vice, Parson Behle & Latimer, Salt Lake City, UT, for J.R. Simplot Company.
John A. Marlott, Jones Day, Chicago, IL, Meredith M. Wilkes, Cleveland, OH, Michael G. Brady, Eberle Berlin, Boise, ID, Teague Ian Donahey, Anne Henderson Haws, Holland & Hart LLP, Boise, ID, for McCain Foods Limited.
David B. Cochran, Pro Hac Vice, John C. Evans, Pro Hac Vice, Susan M. Gerber, Pro Hac Vice, Jones Day, Cleveland, OH, Meredith M. Wilkes, Cleveland, OH, Joshua R. Nightingale, Jones Day, Pittsburgh, PA, Michael G. Brady, Eberle Berlin, Boise, ID, Teague Ian Donahey, Anne Henderson Haws, Holland & Hart LLP, Boise, ID, for McCain Foods USA, Inc.
Anthony David Brzozowski II, Pro Hac Vice, Brian M. Buroker, Pro Hac Vice, Gibson, Dunn & Crutcher LLP, Washington, DC, Vladimir J. Semendyai, Pro Hac Vice, Paul Hastings LLP, Washington, DC, Brook Bernard Bond, Christopher J. Cuneo, Parsons Behle & Latimer, Boise, ID, Dana M. Herberholz, Dorsey & Whitney LLP, Boise, ID, for J.R. Simplot Company.
MEMORANDUM DECISION AND ORDER
David C. Nye, Chief United States District Court Judge
I. INTRODUCTION
Before the Court are numerous motions filed by the parties. These motions represent the culmination of years of legal work and revolve around summary judgment.
The J.R. Simplot Company ("Simplot") and McCain Foods Limited and McCain Foods USA, Inc.'s (collectively "McCain") filed cross-motions for summary judgment on the issues of infringement and invalidity. Dkts. 330, 334.
Virtually all the pending motions include briefing on matters the parties have designated confidential. As a result, most of the motions at issue were filed under seal with redacted versions for the public record. The Court will issue this decision under seal because it includes language and evidence deemed confidential. The parties will then have fourteen days from the date this decision issues to inform the Court of any necessary redactions. The Court will then file a redacted copy of its decision for the public record.
Relatedly, the Court has already GRANTED the various motions to seal the parties filed alongside the substantive motions. Dkt. 454.
Simplot and Third-Party Defendant Elea Vertriebs-und-Vermarktungsgesellschaft, mbH ("Elea") filed cross-motions for summary judgment on the issues of indemnity and the duty to defend. Dkt. 337, 335. Simplot and Third-Party Defendant Food Physics LLC ("Food Physics") have also cross-motioned for summary judgment on the same issues. Dkts. 346, 358.
Elea and Food Physics (collectively "Third-Party Defendants") also filed a motion for summary judgment against McCain on the issues of waiver and invalidity. Dkt. 364. Simplot joined in this motion (Dkt. 387) and McCain moved to strike Simplot's joinder as improper (Dkt. 419).
In addition to the seven motions for summary judgment mentioned, the parties filed various Daubert motions to exclude
the testimony of certain experts. Some of these motions are focused on opinions and testimony rendered in support of summary judgment; but most are in anticipation of trial. These motions include: Simplot's Motions to Exclude the testimony of McCain's Experts Steven C. Visser (Dkt. 352) and David A. Hass (Dkt. 355); McCain's Motions to Exclude the testimony of Simplot's experts Jacqueline H. Beckley (Dkt. 349) and Sudhir K. Sastry (Dkt. 353); and Third-Party Defendants' Motions to Exclude the testimony of Simplot's experts Thomas Pfeiffer (Dkt. 370) and Andre Jardini (Dkt. 376).
The Court held an all-day hearing on August 31, 2022, took all motions under advisement, and now issues the following decision. A complete list of the outcome of each motion can be found at the end of this decision. In sum, the Court finds the '540 Patent is invalid for indefiniteness, the question of infringement as to the '916 Patent and the '036 Patent must go before a jury for resolution, and Third-Party Defendants have a contractual duty to defend and indemnify Simplot.
The Court has included in this decision a ruling on ALL pending motions. This may or may not have been necessary. For example, insofar as the Court has found in favor of Simplot that McCain's patent is indefinite, an argument could be made that the other motions should simply be rendered moot. The Court feels, however, that affirmatively ruling on all motions—and all matters within the motions—is economical and efficient. To be blunt, the Court hopes to save time; not necessarily now (after all, this decision is quite long), but in the future. An appeal will undoubtedly follow this decision. If the Court is reversed on any issue, in whole or in part, the matter will be remanded. Regardless, the parties will benefit from having the Court's ruling on all matters, which could help with settlement negotiations, preparing for trial, and/or the co-pending litigation in Canada, the European Union, and before the United States Patent Trial and Appeal Board ("PTAB"). In sum, the Court will rule on all motions in its decision today.
II. BACKGROUND
A. Factual History
In this section of the decision, the Court will offer a high-level recitation of the facts and history of this dispute. It will review the lawsuit as a whole and the procedural history leading up to this point. Then, within the discussion on individual motions, the Court will delve deeper into the facts giving rise to those specific disputes.
On October 7, 2016, Simplot filed a Complaint in the District of Idaho against McCain alleging infringement of Simplot's U.S. Patent No. D640,036 ("the '036 Patent") titled "Spiral Potato Piece." The '036 Patent, issued June 21, 2011, is a design patent which Simplot alleges covers the ornamental features of its SIDEWINDERS French fry product. In its Complaint, Simplot also raised a claim for unfair competition and trade dress infringement related to McCain's TWISTED POTATO product. Id.
On February 21, 2017, McCain filed suit against Simplot in the Northern District of Illinois, alleging infringement of its patent, U.S. Patent No. D720,916 ("the '916 Patent") titled "Root Vegetable Product." District of Illinois Case No. 1:17-cv-01326. The '916 Patent, issued January 13, 2015, is a design patent which McCain alleges covers the ornamental features of its TWISTED POTATO French fry product. In that suit, McCain also accused Simplot of infringing one or more claims of U.S. Patent No. 6,821,540 ("the '540 Patent"). The '540 Patent, issued November 23, 2004, is a utility patent entitled "Process
Simplot believes McCain filed its lawsuit in Illinois in retaliation for Simplot's suit in Idaho.
for Treating Vegetables and Fruit Before Cooking" and protects McCain's use of Pulse Electric Field ("PEF") technology to soften fruits and vegetables before cutting them.
The devices Simplot uses—that McCain claims infringe the '540 Patent—were manufactured by a German research institution, Deutsches Institut fur Lebensmitteltechnik e.V ("DIL") and sold to Simplot by Elea, and later, Food Physics.
DIL is a German research institution formed in the 1980s as an association of food manufacturers and food equipment suppliers. Elea was founded in 2012, as a spin-off from DIL, to sell PEF-related machinery. Food Physics was formed in 2016, primarily as an exclusive distributor for Elea to sell PEF devices in the United States and Canada.
On August 9, 2017, the District of Illinois transferred the McCain lawsuit against Simplot to the District of Idaho (assigned Idaho Case No. 1:17-cv-00350-DCN) and, on November 9, 2017, the undersigned consolidated the two cases. Dkt. 40.
On July 11, 2018, the Court held a claim construction—or Markman—hearing to determine the construction of the disputed claim terms. Dkt. 65. In relation to the '540 Patent, the dispute revolved around: (1) whether the preamble was limiting; and (2) the construction of three disputed claim terms: "high electric field," "under conditions," and "almost zero." On August 16, 2018, the Court entered its Memorandum Decision and Order construing the disputed terms as follows:
Claim Term Court's Construction Preamble — "A process for treating the preamble is limiting and defined as "a vegetables and fruit before cooking in process for treating vegetables and/or fruit order to reduce their resistance to cutting" before cooking and cutting to make cutting easier" "high electric field" defined as "an electric field between 30 and 75 V/cm." "under conditions" defined as written "Almost zero or at least sufficiently low defined as written as to not amount to a preheating step"
Dkt. 69, at 29. Notably, the Court construed the term "high electric field" to mean a field of strength between 30 and 75 V/cm. Id. The Court also addressed the '916 Patent and the '036 Patent at that time and decided to leave the terms as written in the patents and "defined as shown in figures 1-7." Id.
Finally, it should be noted that the parties had already agreed on the construction of the terms "cooking" and "cutting" from the '540 patent as follows:
Claim Term Construction "cooking" "heating to prepare for consumption" "cutting" "slicing, or dividing into pieces, with a blade"
Dkt. 47, at 2-3.
Based upon the Court's construction that the term "high electric field" only encompassed a certain voltage range, Simplot moved for summary judgment of non-infringement (Dkt. 77) asserting it uses PEF technology on a scale outside of that disclosed range. McCain moved for reconsideration of the Court's claim construction order. Dkt. 70.
In a January 11, 2019 Order (Dkt. 86), the Court denied Simplot's motion for
summary judgment, granted McCain's motion for reconsideration, and reversed its construction of "high electric field" in favor of McCain's original proposed construction of the term: "an electric field strong enough to make the vegetable and/or fruit easier to cut." Dkt. 86 at 11. All other constructions remained the same. In short, after the Court's order granting reconsideration, the Court's construction of the claim terms was as follows:
Claim Term Court's Construction Preamble — "A process for treating the preamble is limiting and defined as "a vegetables and fruit before cooking in process for treating vegetables and/or fruit order to reduce their resistance to cutting" before cooking and cutting to make cutting easier" "high electric field" an electric field strong enough to make the vegetable and/or fruit easier to cut "under conditions" defined as written "Almost zero or at least sufficiently low defined as written as to not amount to a preheating step"
The Court reversed course because it felt Federal Circuit precedent required that it should not limit "high electric field" to the disclosed range or the preferred embodiments, but rather that the definition should focus on the purpose of the patent—making vegetables and/or fruits easier to cut. Id. at 9-11.
As part of both its original Decision and its Decision on Reconsideration, the Court declined to address Simplot's contention that several terms of the '540 Patent were indefinite, noting indefiniteness would instead be addressed at summary judgment. Dkt. 69 at 11, 22-23; Dkt. 86, at 10.
On July 8, 2019, Simplot filed a Third-Party Complaint against Elea and Food Physics, asserting that each had a duty to defend and indemnify Simplot against McCain's claims of infringement. Dkt. 113.
Various discovery motions (and related decisions) followed. Then, Simplot filed Motions for Summary Judgment against Elea and Food Physics on November 30, 2020. Dkts. 206, 208. In these Motions, Simplot asked the Court to rule on the matter of indemnity. Third-Party Defendants moved to continue those motions under Federal Rule of Civil Procedure 56(d) and the idea that further discovery would prove helpful in adjudicating the disputes. Dkt. 219. The Court ultimately agreed, finding it was better to wait until discovery was complete to rule on those particular issues. Dkt. 253, at 27-28.
Ultimately, fact and expert discovery came to an end and the parties filed their motions for summary judgment and Daubert motions.
B. Procedural History
The Court next addresses certain issues related to the pending motions.
First, the current round of motion practice encompasses over 120 separate docket entries. While some entries contain a single document, others contain multiple documents or exhibits (sometimes as many as 20 or 30). According to the Court's electronic filing system, the total number of pages filed in conjunction with these motions exceeds 17,000.
Second and relatedly, the Court granted the parties an opportunity to file briefs longer than the standard 20-page limit outlined in the local rules. See Dist. Idaho Loc. Civ. R. 7.1. In fact, it allowed double, and even triple, the limit in some circumstances. What's more, while there are some differences in the motions between certain parties, there is also significant
overlap. That is to say, in some instances, a party has had four, five, or even six times the regular allotment of briefing to set forth its position.
Frankly, the Court and Counsel could have coordinated better. As the Court has explained before, it has certain parameters that work best when the parties anticipate filing cross-motions. See Rhino Metals, Inc. v. Sturdy Gun Safe, Inc., 2020 WL 3052675, at *1 (D. Idaho June 8, 2020). Thus, while the Court afforded the parties each an opportunity to file motions—independent of each other—it appears (now having seen the briefs) that things could have been streamlined. For example, Simplot filed a Motion for Summary Judgment against Elea and Elea filed a Motion for Summary Judgment against Simplot. Those motions address the same issues. Thus, both sides got three briefs (and overlength briefs at that) to support their position, rather than the standard two. Moreover, Simplot and Food Physics filed cross-motions as well. Again, while minor differences exist between Elea and Food Physics, there is substantial overlap. Thus, as between Simplot and Third-Party Defendants, each party essentially had six briefs to address the relevant issues.
Third, the Court granted oral argument on all motions (which it does not always do) and allowed more time for oral argument than it normally would. The hearing in this matter was over six hours long.
The Court does not highlight the aforementioned information to imply anything negative. It worked with the parties to outline the briefing limits and the timing of the hearing. And it appreciates the parties' diligence and thoroughness. The Court points all of this out to indicate, among other things, that about everything that can be said on these topics has been said. The parties have had ample opportunity to brief and argue these matters. The monumental nature of the briefing and arguments—alongside the fact that the parties and their experts have reached differing conclusions—underscores the difficulty of the subject matter. The Court has endeavored to address all matters it deemed necessary to ensure justice in this case. It will rule on all motions—even when such is not necessary considering its rulings on other motions. See supra note 2.
The Court will now explain how the pending motions interact with one another.
On January 26, 2022, Simplot filed a Motion for Summary Judgment against McCain. Dkt. 330. In this Motion, Simplot contends it does not infringe the '540 Patent or the '916 Patent. Further, Simplot maintains the '540 Patent is invalid for indefiniteness. McCain moved that same day for summary judgment against Simplot, alleging Simplot does infringe the '540 Patent and the '916 Patent. Dkt. 334.
Simplot likewise moved for summary judgment against Elea and Food Physics. Dkts. 337, 346. In these motions, Simplot claims Elea and Food Physics were under a duty to indemnify and defend Simplot against McCain's lawsuit. As mentioned above, these are renewed motions. See Dkts. 206, 208. Elea and Food Physics filed their own Motions for Summary Judgment against Simplot on the same issues. Dkts. 335, 358.
Also that day, Third-Party Defendants moved for summary judgment against McCain. Dkt. 364. In this motion, Third-Party Defendants seek summary judgment on their affirmative defense that McCain is barred from asserting infringement against Simplot based upon principles of equitable estoppel and/or implied license. And, like Simplot, Third-Party Defendants argue the '540 Patent is invalid for indefiniteness.
Finally, each party filed Daubert motions to exclude the testimony of various experts. Simplot moved to exclude the testimony of McCain's experts Steven C. Visser (Dkt. 352) and David A. Hass (Dkt. 355). McCain moved to exclude the testimony
of Simplot's experts Jacqueline H. Beckley (Dkt. 349) and Sudhir K. Sastry (Dkt. 353). Third-Party Defendants also moved to exclude the testimony of Simplot's experts Thomas Pfeiffer (Dkt. 370) and Andre Jardini (Dkt. 376).
Simplot subsequently filed a Notice of Joinder in Third-Party Defendants' Motion for Summary Judgment against McCain. Dkt. 387. McCain then moved to strike Simplot's joinder as improper. Dkt. 419.
Simplot also filed a request that the Court take judicial notice of a March 23, 2022, decision and judgment issued by the District Court of the Hague in favor of Simplot and against McCain ("Hague Decision"), that relates to McCain's Rustic Twist French fry product. Dkt. 456. In that lawsuit, Simplot alleged the Rustic Twist violated one of its European patents. The Hague Decision shows that Simplot prevailed on its infringement claim with respect to the Rustic Twist French fry product. In its response to Simplot's request for judicial notice, McCain noted it was unsure why Simplot wanted the Court to know about the Hague Decision because, while related to the subject matter of this case, the Rustic Twist product is not at issue in this suit. Dkt. 458, at 2. In its reply, Simplot clarified it only wanted the Court to take judicial notice of the Hague Decision's existence, but not for any bearing on the case. Id. As a result, McCain did not object to the Court taking notice of the decision. Accordingly, under that shared understanding, the Court grants Simplot's request for judicial notice.
The Rustic Twist is sold throughout Europe.
Many months after the hearing, Simplot filed another Notice of Supplemental Authority. Dkt. 471. Therein, Simplot asks the Court to consider a May 18, 2023, United States Supreme Court case, Amgen Inc. et al. v. Sanofi et al., 598 U.S. 594, 143 S.Ct. 1243, 215 L.Ed.2d 537 (2023). That case dealt with, among other things, enablement—a hotly contested issue in this case. In its Notice, Simplot cited relevant commentary from the decision. See generally id. McCain filed a response to the Notice, arguing Simplot's quoted passages were taken out of context. Dkt. 472. McCain then offered argument in response. Id. Simplot replied, noting that it had not offered substantive argument in its Notice, but had only alerted the Court to the Supreme Court case and quoted passages it thought were relevant. Dkt. 473. The Court appreciates both parties' short briefs and will consider the Amgen case as part of its decision today.
As alluded to, the Court has been waiting until this stage of the proceedings to rule on numerous matters. Some of these topics include indefiniteness and indemnity—arguments Simplot raised years ago. The Court also held off ruling on requests by McCain and/or Third-Party Defendants to sever or bifurcate some matters until closer to trial. Dkt. 112, at 11; Dkt. 157, at 44. The Court consciously delayed ruling on these issues. It did not do so to lengthen the case unnecessarily; nor was it ambivalent to the associated time and expense involved. Instead, the Court waited to ensure the record was fully developed before making such critical decisions. The record has now been developed and the motions are ripe for adjudication.
III. ANALYSIS
The Court begins with the motions for summary judgment. Within these motions are numerous arguments and sub-arguments. In addition, some of the Daubert motions are directed at individuals whose testimony is relevant to these motions. Organizationally, this has been a challenge. Rather than rule on motions within motions, however, the Court has elected to address the motions for summary judgment first, followed by the various Daubert motions. That said, the Court made its "rulings" regarding the applicable Daubert motions at the outset so the parameters of the testimony and evidence it could consider when deciding the motions for summary judgment were clear.
Summary judgment is proper "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The Court's role at summary judgment is not "to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Zetwick v. Cnty. of Yolo, 850 F.3d 436, 441 (9th Cir. 2017) (cleaned up). Importantly, the Court does not make credibility determinations at this stage of the litigation. Such determinations are reserved for the trier of fact. Hanon v. Dataproducts Corp., 976 F.2d 497, 507 (9th Cir. 1992).
Any legal standards within the individual motions—for infringement, invalidity, indemnity etc.—will be discussed within the relevant motion.
In considering a motion for summary judgment, the Court must "view[ ] the facts in the non-moving party's favor." Zetwick, 850 F.3d at 441. To defeat a motion for summary judgment, the respondent need only present evidence upon which "a reasonable juror drawing all inferences in favor of the respondent could return a verdict in [his or her] favor." Id. (cleaned up). Accordingly, the Court must enter summary judgment if a party "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The respondent cannot simply rely on an unsworn affidavit or the pleadings to defeat a motion for summary judgment; rather the respondent must set forth the "specific facts," supported by evidence, with "reasonable particularity" that precludes summary judgment. Far Out Prods., Inc. v. Oskar, 247 F.3d 986, 997 (9th Cir. 2001).
The standard applicable to motions for summary judgment does not generally change if the parties file cross motions. See, e.g., Cady v. Hartford Life & Accidental Ins., 930 F. Supp. 2d 1216, 1223 (D. Idaho 2013). However, the Court must evaluate each party's motion on its own merits. Fair Housing Council of Riverside Cnty., Inc. v. Riverside Two, 249 F.3d 1132, 1136 (9th Cir. 2001).
A. Simplot's Motion for Summary Judgment against McCain (Dkt. 330)/McCain's Motion for Summary Judgment against Simplot (Dkt. 334)
Simplot and McCain's cross motions for summary judgment focus primarily on the '540 Patent. Simplot concentrates on the reasons the '540 Patent is invalid while McCain focuses on how Simplot infringed. The various responses and replies bring these two central points into focus. It is important to note that infringement and invalidity are two separate matters. See Medtronic, Inc. v. Cardiac Pacemakers, Inc., 721 F.2d 1563, 1583 (Fed. Cir. 1983) ("Though an invalid claim cannot give rise to liability for infringement, whether it is infringed is an entirely separate question capable of determination without regard to its validity."). Thus, the Court will review and analyze these issues independently. The '916 Patent and the '036 Patent are also discussed in the parties' briefs, but to a much lesser degree than the '540 Patent. For organizational purposes, the Court will first address the '540 Patent and turn afterwards to the design patents.
1. The '540 Patent
a. Background
Prior to the issuance of the '540 Patent, there was, generally speaking, only one method in the potato processing industry for preparing potatoes to be cut into French fries. That process involved preheating whole raw potatoes in a water bath before cutting and cooking them. The purpose of this heating process was to soften the potatoes enough to minimize their resistance to cutting and to avoid breakage when cut. The downside of this process, however, was that it took a great deal of water, a great deal of energy, and could prematurely cook the potatoes—which negatively affected their texture and color.
The process outlined in the '540 Patent solved this problem to a large degree. McCain employees Jean-François Cousin and Fabrice Desailly, in collaboration with Adeline Goullieux and Jean-Pierre Pain at the Université de Technologie Compiègne, patented a process by which potatoes were pre-treated using high energy electric fields as opposed to water. This process did not heat the potatoes as much as the water process had, made them easier to cut, and provided other benefits. As the Court has noted before, "[a]lthough McCain did not invent this technology [i.e., pulsed electric fields], it 'invented' and patented the process embodied in the '540 patent." Dkt. 69, at 3 (emphasis in original).
At the time the '540 patent issued in November 2004, McCain did not have a commercial embodiment of the claimed invention.
The Court recognizes this decision will generally be read by those with some degree of patent knowledge. As a result, many nuanced phrases and terms of art from patent law need no explanation. Nevertheless, the Court will explain certain phrases for those who may not be familiar with them. Here, the term "embodiment" is best understood by its lay definition of a tangible or visible form of an idea. That is to say, while McCain developed and patented an idea—a process or a way to do something—it did so in the abstract. Later, McCain worked with other individuals who developed and manufactured PEF devices. McCain asserts using these PEF devices in a specific way "embodies" what the '540 Patent protects.
The '540 Patent issued with six claims. McCain initially accused Simplot of infringing claims 1, 4, 5, and 6 of the '540 Patent. On June 13, 2019, however, McCain filed a statutory disclaimer of claims 3, 4, and 5. Dkt. 106, at 25. Accordingly, McCain's infringement claim against Simplot is now limited to Claim 1 and Claim 6 (individually, "Claim 1" and "Claim 6," and collectively, the "Asserted Claims") of the '540 Patent. Claim 1 recites:
A process for treating vegetables and fruit before cooking in order to reduce their resistance to cutting, characterized by the application of a high electric field directly to the vegetables and/or fruit under conditions such that the resulting increase in the temperature of the vegetables and/or fruit is almost zero or at least sufficiently low as to not amount to a preheating step.
Dkt. 330-10, at 5. Claim 6 is a dependent claim, meaning it is "dependent" on Claim 1 and has the same limitations outlined therein. Claim 6 is a more specific application of the process outlined in Claim 1 and is directed specifically at potatoes that are to be turned into French fries. It recites:
A process as claimed in any one of claims 1 to 5, characterized in that the process is applied to processing of potatoes prior to cutting the potatoes into strips for the purpose of producing French fries.
Dkt. 330-10, at 5.
The language of the '540 Patent includes preferred voltage rangers and other conditions outlining how to best perform the protected process. The Court originally defined the term "high electric field" by a preferred voltage range of 30-75 V/cm. As noted, however, it reconsidered and later broadened the definition to encompass any range that served the '540 Patent's purpose of making vegetables and/or fruit easier to cut. Dkt. 86, at 11.
McCain asserts Simplot infringes the '540 Patent by using Third-Party Defendants' machines to PEF potatoes before they are cut and cooked. Simplot counters it does not infringe because it does not perform every step of the patent. Further, Simplot contends the '540 Patent is invalid for various reasons. The Court will analyze each argument in turn.
b. Infringement
"An infringement analysis entails two steps. The first step is determining the meaning and scope of the patent claims asserted to be infringed. The second step is comparing the properly construed claims to the device accused of infringing." Markman v. Westview Instruments, Inc., 52 F.3d 967, 976 (Fed. Cir. 1995) (en banc), aff'd, 517 U.S. 370, 116 S.Ct. 1384, 134 L.Ed.2d 577 (1996) (citations omitted). While claim construction is a question of law, see Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1451 (Fed. Cir. 1998) (en banc), infringement, whether literal or under the doctrine of equivalents, is a question of fact, see Bai v. L & L Wings, Inc., 160 F.3d 1350, 1353 (Fed. Cir. 1998).
In the present case, claim construction has already occurred; thus, the remaining question is one of fact: did Simplot infringe McCain's '540 Patent?
Where, as here, an asserted patent claim is directed to a method or process, "the patent is not infringed unless all the steps are carried out." Limelight Networks, Inc. v. Akamai Techs., Inc., 572 U.S. 915, 921, 134 S.Ct. 2111, 189 L.Ed.2d 52 (2014) ("Limelight Networks") (emphasis added). See also General Mills, Inc. v. Hunt-Wesson, Inc., 103 F.3d 978, 981 (Fed. Cir. 1997) ("Literal infringement requires that every limitation of the patent claim be found in the accused infringing device.").
Therefore, to establish infringement, the patent owner, McCain, must prove that "all steps of a claimed method are performed by or attributable to a single entity" Akamai Techs., Inc. v. Limelight Networks, Inc., 797 F.3d 1020, 1022 (Fed. Cir. 2015) (en banc) ("Akamai"). In this case, that entity is Simplot.
Interestingly, the main dispute between the parties at this point is whether Simplot performs the "cooking step" mentioned in
The Court states this is interesting because the primary focus for most of this case has been on the voltage range Simplot uses while PEFing potatoes, not the cooking step. To be sure, Simplot also contends that because the range at issue in the '540 Patent is essentially unbounded, it is invalid for indefiniteness; but it does not argue that because it uses a different range, it does not infringe. This is understandable, however, as McCain would likely respond by focusing on the Doctrine of Equivalents and argue that even though Simplot doesn't use the exact same voltage range, it still infringes in practice. McCain already indicated it would proceed in such a manner after the Court's original claim construction ruling. See Dkt. 71, at 6-8.
the '540 Patent after PEFing and cutting potatoes. McCain argues that Simplot— either individually, or jointly with endusers—performs a cooking step as part of its process. Simplot asserts it does not.
The Court begins by noting what is not in dispute. The parties agree that Simplot PEFs potatoes with a voltage range between 1,000 and 1,400 V/cm and that, by using this field strength, it makes the potatoes easier to cut. The parties also agree that Simplot's PEFing—even at that high range—does not result in a substantial increase in the temperature of the potato or otherwise amount to a pre-heating step. Finally, the parties agree that Simplot performs these steps before it cuts the potatoes. Thus, the only question about infringement is whether Simplot "cooks" the potatoes once they are PEFed and cut.
Claim 1 of the '540 Patent protects a "process for treating vegetables or fruit— in this case, potatoes—before cooking in order to reduce their resistance to cutting." Dkt. 330-10, at 5 (emphasis added). The parties' stipulated definition of cooking is: "heating to prepare for consumption." Dkt. 47, at 3. Combining these phrases illustrates that the patent protects a process of treating vegetables and fruit before they are heated to prepare for consumption.
After Simplot PEFs potatoes and cuts them into strips, it partially fries them in hot oil. This process is known as "parfrying." It is this process McCain asserts constitutes cooking and infringes the '540 Patent. In McCain's words, "the issue for th[e] Court to decide is whether, as a matter of law, parfrying is "cooking" in the context of the '540 Patent." Dkt. 410, at 12. In like manner, McCain contends that even if the Court does not find that Simplot itself performs a cooking step, it directs its users (i.e. consumers) to cook the product and, as a result, is liable for infringement under the theory of divided infringement.
Under the circumstances, the Court finds questions of fact remain which preclude summary judgment on whether Simplot itself performs a cooking step. That said, the Court finds that no reasonable factfinder could find in McCain's favor on the issue of divided infringement and conclude Simplot is jointly liable with users for cooking.
The Court will first address McCain's direct infringement accusations against Simplot and then delve into its divided infringement theory.
(i) Direct Infringement
In support of its contention that Simplot itself has infringed the '540 Patent by implementing a "cooking step," McCain begins by noting Simplot's internal documents explain that, as part of its "Potato Process Flow," it parfries its potatoes before freezing and shipping them to customers. Dkt. 371-2, at 15-28. Simplot's 30(b)(6) designee, James Englar confirmed as much. See Dkt. 363, at 12 (explaining potatoes are partially fried [Redacted]). McCain avows this heating constitutes "cooking," and that the inquiry should end there. McCain implies, therefore, that any cooking that occurs after PEFing and cutting, but prior to consumption, constitutes "cooking" within the parameters of the '540 Patent.
For its part, Simplot contends McCain's infringement argument is myopic and ignores the bigger picture. The point of cooking in the '540 Patent is to "prepare for consumption." Simplot explains that when it briefly parfries its potatoes, it is not preparing them for consumption, but rather, it is preparing them for freezing and shipping. In Simplot's words, its parfried products are not "ready-to-eat" but, rather, are "ready-to-cook" because an
end-user (typically a restaurant or consumer) must still "cook"—in the traditional sense of the word—the French fries for them to actually be ready for human consumption.
Although it argues Simplot's parfrying is cooking, McCain takes a different approach with its own products. When discussing whether its frozen products are pre-cooked on its website, it states that, while some of its products are "blanched or par-fried during manufacturing, this step does not cook the product," and the product is "not considered ready to eat." Dkt.332-6, at 91-92. McCain does not dispute this. Dkt. 410-1, at 9. McCain's inconsistent view of par-frying as "cooking" concerns the Court.
On a somewhat esoteric level, McCain's argument makes sense. Simplot is partially cooking the potatoes when it fries them. And that step is ultimately necessary for consumption: one cannot (or at least should not) eat potatoes until they have been cooked. Thus, it appears Simplot is "cooking"—albeit partially—for consumption—albeit at a later time. But Simplot's point is well taken that the parties agreed upon language "heating to prepare for consumption" most logically means closer in time to actual consumption. Simplot's products are parfried, frozen, and then can sit on a shelf for anywhere up to 24 months before being fully cooked to a stage that makes them edible. This chain of events (parfrying and freezing) does not constitute "preparing for consumption." And arguably, by McCain's definition, the PEFing process itself—which raises the temperature of the potato (even if only nominally above zero)—could be considered "heating" and/or "cooking." After all, neither party disputes PEFing raises the temperature, and neither party disputes this happens at some point prior to consumption.
In like manner, the fact that Simplot applies a high-pressure wash to peel its potatoes—[Redacted]—could constitute "heating" and therefore, cooking, under McCain's "any heat" definition.
McCain tries to tie its argument back to the '540 Patent, noting that the '540 Patent "describes products that are 'possibly immersed in frying oils, frozen, and packed,'" and argues Simplot is reading an improper limitation into the cooking step that is contrary to the parties agreed-upon construction of this claim term. Dkt. 410, at 13. The Court disagrees on both fronts.
First, the '540 Patent itself does not include the line McCain quotes. Instead, that line is part of the "Background of the Invention" section. Dkt. 330-10, at 4. In this section, the "traditional" process is explained as being a "sequence of automated stages, during which vegetable tubers or roots are washed, peeled, size-sorted, cut, blanched, dried, possibly immersed in frying oils, frozen, and packed." Id. The language continues, however, and outlines that "this typical process ha[d] a number of drawbacks"—hence the '540 Patent's new use of PEFing prior to any of those other steps. Thus, the Court rejects McCain's argument that a passing reference in the background section to the former method supports its argument regarding the current method.
Second, McCain's allegation that Simplot is trying to morph the parties agreed-upon definition of the term "cooking" goes both ways.
In order to reach either side's desired outcome, the Court must read into the definition (and claim) something that is not there. McCain wants to read into the parties' definition of cooking words that denote any heating is sufficient to infringe; or, more specifically, that any heating to prepare the food for consumption, at any point in the future, is sufficient. It could be
said then that McCain would prefer the definition of cooking to be: "any heating to prepare for consumption" or "heating to prepare for eventual consumption."
Simplot, on the other hand, wants to read in words that denote a product's need to be fully or completely cooked for consumption to qualify as infringement. For Simplot, then, a definition such as: "fully heating to prepare for consumption" or "complete heating to prepare for consumption" would make the most sense. Claim 1, however, does not say "fully cooked," "partially cooked," or contain any other modifying language. It simply states: "before cooking." And the parties' definition of "cooking" is simply: "heating to prepare for consumption." No modifiers are present there either.
Both sides cite to cases purporting to explain whether parfrying is cooking. Those cases are not helpful to the Court, however, because each turns on specific facts and depends largely on the individual terms of the applicable patent. Different applications of heat may qualify as parfrying (or even cooking) in one instance, but not another. Additionally, both parties have experts to support their varying positions on whether parfrying is cooking. Generally speaking, though, the experts simply point to the other parties' internal documents and expert reports and highlight inconsistencies. For example, McCain focuses on a Simplot document that explains "the oil partially cooks" the potatoes to support its argument that Simplot knows parfrying is cooking. Dkt. 374-2, at 15. Similarly, Simplot points to a portion of McCain's website that explains parfrying "prepares the product for [ ] cooking" and "blanch[ing] or par-fr[ying] ... does not cook the product," and contends McCain knows parfrying is not cooking. Dkt. 332-6, at 91-92.
The Court is, frankly, more persuaded by Simplot's position. It makes more logical sense against the backdrop of the '540 Patent and considering how the food service industry (and even McCain) appears to view parfrying. That said, Simplot has not conclusively shown that the definition of "cooking" should exclude all cooking except for that which takes place immediately prior to consumption. By the same token, McCain has not shown that the definition of cooking, within the '540 Patent, should include any and all cooking before consumption, however slight.
As noted, infringement is a question of fact. Bai, 160 F.3d at 1353. Given the competing evidence and opinions, the Court cannot decide infringement today. It is not clear that the term "cooking" includes any and all cooking or that the term precludes all but "fully" cooking. As such, the Court cannot enter summary judgment in favor of either party on this issue. A jury will have to hear the testimony and evidence and decide whether Simplot's parfrying amounts to cooking as contemplated in the '540 Patent.
The Motion—as applied to direct infringement—is denied with respect to both parties.
(ii) Divided Infringement
While the idea of divided infringement will take a little longer to explain, the outcome is much simpler than is the issue of direct infringement. McCain contends that, in the event the Court does not find Simplot itself directly infringed the '540 Patent, it can still find infringement because Simplot instructs its customers how
As explained in the following paragraph, divided infringement is technically a type of direct infringement. That said, the Court uses the terms separately for organization and stylistic purposes.
to cook its products and those additional steps are attributable to Simplot.
Direct infringement occurs when "all steps of a claimed method are performed by or attributable to a single entity." Akamai, 797 F.3d at 1022. However, when more than one actor is involved in performing the steps of the patented method, liability for direct infringement can be established under the doctrine of joint and divided infringement. In that event, the Court must determine whether the acts of one party are attributable to the other such that a single entity is responsible for the infringement. Id. Courts "will hold an entity responsible for others' performance of method steps in two sets of circumstances: (1) where that entity directs and controls the acts of others' performance, and (2) where the actors form a joint enterprise." Id. at 1022. McCain does not argue Simplot has formed a joint enterprise with its customers so situation (2) cannot apply. Thus, McCain must show Simplot "directs" or "controls" its customer's actions.
Direction and control, in turn, can be established in one of two ways. First, the patentee can present evidence that the accused infringer "acts through an agent (applying traditional agency principles) or contracts with another to perform one or more steps of a claimed method." Id. at 1022-23. Second, the patentee can present evidence that the accused infringer "conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance." Id. at 1023. Again, McCain does not contend a traditional agency relationship (scenario 1) is at play here, so it must show Simplot "conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance." Id. The Court finds McCain cannot meet this burden.
Simplot does not dispute that it explains how to fully cook its French fries to achieve optimal results to its customers. It does dispute, however, that by providing this explanation on its packaging it is granting customers some type of benefit or, on the flip side, that it is affirmatively denying or withholding some type of benefit from customers who do not follow the directions it provides.
For example, Simplot's product packaging states the amount of time, and at what temperature, a person should cook its frozen French fries to achieve the best results. These times and temperatures vary based upon whether the person is using a deep fryer, a convection oven, or another cooking source. Simplot outlines that following these steps will result in a safe and quality product. McCain argues these instructions are sufficient to show Simplot is conferring a benefit on its customer. That benefit, according to McCain, is "food safety and quality." Dkt. 334-1, at 28, 30.
Simplot does not dispute that, like all other manufactures of frozen potato products, it includes brief, simple cooking instructions for customers to follow on all its packaging. It points out, however, that "[m]ere guidance or instruction is insufficient" to establish divided infringement. Travel Sentry, Inc. v. Tropp, 877 F.3d 1370, 1379 (Fed. Cir. 2017). Because McCain has not provided any evidence that Simplot conditions the sale of its frozen potato products on how a customer ultimately decides to cook the product, and for the reasons outline below, the Court must agree.
First, most of Simplot's frozen potato products are sold to distributors. These distributors do not cook Simplot's products; instead, they sell them to restaurants
and other "operator" customers who cook them. Thus, the "chain" of liability grows longer. The Court is unwilling to impute liability to Simplot based upon how a customer—who bought a product from a distributor, who bought the product from Simplot—prepares the product. Such a finding is too attenuated.
Second, there is no evidence that Simplot has ever refused to sell its frozen potato products to customers (or distributors) who do not follow its cooking instructions, or that Simplot has ever offered an incentive to customers who do follow its cooking instructions. To the contrary, it is undisputed that Simplot does not impose any such restrictions or conditions on its customers. Further, Simplot does not supply customers with equipment to cook its products. The fact that customers purchase frozen potato products either directly or, most often, indirectly from Simplot does not place them under Simplot's "direction and control." Customers can freely choose what to do with Simplot's products. They may follow, modify, or completely ignore Simplot's cooking instructions without any influence or consequences from Simplot.
McCain, however, asserts the present situation is akin to the situations in three cases—Akamai, Eli Lilly, and Travel Sentry—and that these cases lead to the opposite conclusion. Simplot contends the circumstances are different and doubles-down on its interpretation of its actions vis-à-vis customers. The Court will briefly analyze each case.
1. Akamai
In Akamai, the Federal Circuit considered whether Defendant Limelight infringed Akamai's method patent for delivering content over the internet. Importantly, the question was when Limelight's customers not Limelight itself, performed the "tagging" and "serving" steps of the claimed method. 797 F.3d at 1024. The Federal Circuit noted that Limelight required customers to sign a contract before it would agree to deliver any content, and that the contract outlined steps the customers "must perform ... includ[ing] tagging and serving content" in order to use Limelight's services. Id. The fact that Limelight "required" and "condition[ed] customers' use of its content ... [based] upon its customers' performance of the tagging and serving method steps" led the Federal Circuit to conclude that Limelight "directed or controlled its customers' performance" of the patented steps. Id. at 1025.
Before continuing its analysis of Akamai, the Court will interject that McCain is muddying the waters a bit by comparing this case to the present circumstances. In Akamai, the patented step was tagging and serving. Limelight told its customers to do that. In the instant case, the '540 Patent is directed at PEF technology. Simplot is not directing its customers to do the PEFing. The '540 Patent protects a process before cooking. It doesn't protect a cooking process itself. So even if the Court were to conclude Simplot directed and controlled how its customers cooked its product, that misses the mark to a certain degree because the '540 Patent does not protect a cooking process. In a similar vein, the purported "benefit" Simplot is bestowing on its customers—of "food safety and quality"—does not flow from the '540 Patent itself. The benefit from the '540 Patent is cutting resistance and energy (water) savings. Dkt. 330-10, at 5. No customer is taking part in that activity (PEFing) or receiving that benefit (cutting resistance and energy savings). See Travel Sentry, 877 F.3d at 1380 (emphasizing "the importance of correctly identifying the relevant 'activity' or 'benefit' that is being conditioned upon the performance of one or more claim steps" and that "the context
of the claims and conduct ... will inform whether attribution is proper under Akamai's two-prong test"); NeuroGrafix v. Brainlab, Inc., 2020 WL 5642946, at *17 (N.D. Ill. Sept. 21, 2020) (the relevant "activity or benefit often involves the relationship between the patent at issue and the service provided by the defendant").
The Court returns to Akamai. The Federal Circuit ultimately concluded that "if Limelight's customers do not follow these precise steps, Limelight's service will not be available." 797 F.3d at 1025. It also noted that "customers do not merely take Limelight's guidance and act independently on their own," instead, they can "only avail themselves of [Limelight's] service upon their performance of the method steps." Id. No such comparison exists here.
If a customer does not follow the directions on Simplot's packaging, there is no indication Simplot would ever even know, let alone withhold future products or benefits from that customer. Furthermore, the so-called benefits of "food quality and safety" are not premised upon only performing the steps as outlined by Simplot. It is not difficult to imagine in this TikTok age of food trends that people have discovered innumerable ways to prepare food (especially common foods such as French fries) that differ from the instructions provided by the company and still achieve food quality and safety. This case presents the opposite of Limelight: Simplot's customers merely take its guidance and act independently on their own. They are not bound by Simplot's instruction, nor are they bound to Simplot in any way.
The Court finds Akamai is not helpful to McCain's position and does not support the conclusion that Simplot controls or directs its customers to the extent liability is shared.
2. Eli Lilly
In Eli Lilly & Co. v. Teva Parenteral Medicines, Inc., the Federal Circuit considered whether Teva, the manufacturer of a certain drug, induced physicians to infringe Eli Lilly's patented methods of administering that drug to patients after pretreatment with two common vitamins— folic acid and vitamin B12. 845 F.3d 1357 (Fed. Cir. 2017). Teva itself did not administer the drug; instead, physicians administered the drug to patients who were first required to "self-administer folic acid with guidance from physicians." Id. at 1361-62. Teva's labelling, for example, included requirements that the patient "must also take folic acid ... prior to and during your treatment." Id. at 1363. An expert noted it was the "physician's responsibility to initiate the supplementation of folic acid" and that this was an "absolute requirement" before treatment could begin. Id. at 1366. Another expert testified that he was not aware of any situation in which it would be appropriate to start the relevant drug treatment absent the required pretreatment of folic acid. Id. The Federal Circuit ultimately determined this was sufficient to attribute the claimed steps to the treating physicians.
The Court noted above that mere guidance and instruction is insufficient to establish infringement. Teva made a similar argument before the Federal Circuit. The Federal Circuit, however, noted that the "evidence regarding the critical nature of folic acid pretreatment and physicians' practices support[ed] a finding that physicians cross the line from merely guiding or instructing patients to take folic acid to conditioning pemetrexed treatment on their administration of folic acid." Id. at 1366 (emphasis added).
Like Akamai, Eli Lilly is distinguishable from the present situation. In Eli Lilly, patients could not receive a benefit
(the drug treatment) without engaging in the pretreatment (the patented steps). Here, Simplot's cooking instructions do not require Simplot's customers to do anything. They are recommendations, but they do not impose "absolute requirements" on customers like those outlined in Eli Lilly. To repeat, Simplot is ignorant of customers' cooking habits with respect to its products.
And again, the alleged benefit of "food safety and quality" has nothing to do with Simplot's services or the purpose of the '540 Patent—reducing resistance to cutting in fruits and/or vegetables. Simplot cannot withhold "safety and quality" from customers based on how they use Simplot's products. To be sure, customers may do that themselves (by over-cooking, under-cooking, trying a new method etc.) but those outcomes are not contingent on, or conditioned upon, anything Simplot did, does, or will do.
In short, Eli Lilly likewise does not support McCain's divided infringement theory.
3. Travel Sentry
Finally, in Travel Sentry, the Federal Circuit vacated the district court's order granting summary judgment of noninfringement because it determined there were disputes of material fact regarding whether the defendant, Travel Sentry, directed or controlled the Transportation Security Administration ("TSA") in performing steps of their patented method regarding "improving airline luggage inspection through the use of dual-access locks." 877 F.3d at 1371-72. The Circuit noted that Travel Sentry and TSA had entered a Memorandum of Understanding that imposed several obligations on each party. Id. at 1373-74. For example, the Memorandum of Understanding required Travel Sentry to provide TSA with passkeys and certified locks so that TSA's luggage screeners could open checked baggage without breaking the locks. Id. It also required Travel Sentry to provide training to TSA for using the passkeys and locks. Id. Putting these facts into its own formula from Akamai, the Court found that "if TSA does not follow the precise steps of identifying luggage bearing a Travel Sentry certified lock, and, where necessary, using the passkey provided by Travel Sentry to open said lock, then Travel Sentry's service will not be available." Id. at 1384 (cleaned up).
In other words, like the individuals in Akamai (and Eli Lilly for that matter) the TSA had to follow certain steps (patented steps) to ensure Travel Sentry performed its contractual obligations. That is not the same as what Simplot does here. Again, Simplot has no idea whether people follow its instructions when it comes to cooking. People may or they may not. But Simplot does not grant or withhold anything from a customer based upon whether its instructions are followed.
And to reiterate, "food quality and safety" is not a "benefit" that would be imparted to customers from the '540 Patent. The "benefit" of the '540 Patent takes place before cooking and is almost completely redeemed during the production phase. In other words, Simplot, McCain, and any others who PEF potatoes receive the prescribed benefit—less resistance to cutting and saved energy costs—prior to any customer becoming involved with the product.
In sum, Akamai, Eli Lilly, and Travel Sentry do not support McCain's position. Simplot does not control the cooking step customers perform. It provides instructions, but those are non-conditional, noninclusive, non-contingent, non-binding instructions. Customers are free to follow them or not. And Simplot does nothing
positive or negative—based upon a customer's choice.
The Court finds McCain cannot succeed on a divided infringement theory. No factual issues are in dispute on this specific issue. Thus, Summary Judgment is DENIED as to McCain and GRANTED in Simplot's favor on this issue of divided infringement.
(iii) Conclusion on Infringement
To be candid, the Court does not particularly like McCain's infringement argument. Its whole theory focuses on something that occurs after the "real" steps of the '540 Patent. What's more, the dispute hinges almost exclusively on the parties' agreed upon definition of cooking. But both sides want to read additional words into the definition that are not there even though they agreed to that definition (without modifiers) in the first place. This criticism aside, the Court cannot grant summary judgment to either side on McCain's contention that Simplot violates the "cooking" step of the '540 Patent when it parfries its products. Although this is a factual question that must go to a jury, the reality is a trial will never occur in light of the Court's finding of invalidity in the following section (i.e. Simplot cannot be liable for infringement because the '540 Patent is invalid). Nevertheless, the Court cannot find direct infringement or non-infringement under Rule 56 on this basis because material facts preclude it from doing so.
The Court understands that it construed the preamble of the '540 Patent as limiting and, as a result, the term "cooking" has patentable weight. It simply takes some mental gymnastics to square that with the concept of infringement which reviews the "steps" of the patented process to see if each is performed. Cooking isn't technically a step in this patent; it is a step after the '540 Patent's main steps have occurred. And it is only a "step" in that it is not supposed to be performed (i.e. one is not supposed to cook or "heat to prepare for consumption" any product after performing the other steps of the '540 Patent).
The Court does, however, find that McCain's theory of divided infringement is not plausible and GRANTS summary judgment to Simplot on that specific allegation.
c. Invalidity
Simplot asserts it is entitled to summary judgment on the matter of invalidity regarding the '540 Patent. It claims that under the Court's construction—as reconsidered at McCain's behest—the claims are now so broad as to render them invalid for indefiniteness.
According to Simplot, the claims of the '540 Patent now extend to applying any electric field to any fruit or vegetable under any condition so long as the fruit/vegetable becomes easier to cut with a "sufficiently low" temperature increase. Simplot's arguments in favor of its position fall into three general categories: anticipation, obviousness, and lack of specificity under 35 U.S.C. § 112. The Court will address each, including any sub-arguments, in turn.
(i) Invalid as Anticipated
A patent claim is invalid as anticipated under 35 U.S.C. § 102 "if each and every element appears, either expressly or inherently, in a single prior art reference." Schering Corp. v. Geneva Pharms., 339 F.3d 1373, 1379 (Fed. Cir. 2003). "Once an invention is in the public domain, it is no longer patentable by anyone." In re Hall, 781 F.2d 897, 898 (Fed. Cir. 1986). Accordingly, a patent claim is invalid as anticipated if the claimed invention was "patented or described in a printed publication" more than one year before the filing of a patent application in the United States. 35 U.S.C. § 102(b). Simplot argues three documents anticipated one or more claims of the '540 Patent and render it invalid as anticipated. Each will be analyzed.
Although Congress passed the Leahy-Smith America Invents Act ("AIA") in 2013, the pre-AIA versions of §§ 102-103 apply in this case because the '540 Patent application was filed before the AIA took effect.
As the Court will explain, these documents are all different things—one is an academic document, one is a patent, and one is an article from a food journal. The Court refers to these, and other publications, by a singular noun (usually the name) as is the standard practice when discussing prior art.
1. Call for Tender
Sometime prior to 1999, McCain prepared a document entitled "Call for Tender 1999 — Concerted Action in Electrical Engineering" ("Call for Tender"). McCain apparently submitted the Call for Tender to Electricite' de France ("EDF"). EDF is a public institution and French electrical power company. McCain submitted the document to EDF and sought its "expertise" in commercializing electric field technology. McCain submitted the Call for Tender specifically to EDF because [Redacted] Dkt. 332-17, at 6. McCain's proposed partnership with EDF [Redacted]. Id. McCain submitted the Call for Tender to EDF in 1998 [Redacted]. Id. at 9.
Simplot argues this makes the Call for Tender a printed publication and that it can use this as a prior art reference. McCain disagrees. The parties discuss the degree to which the Call for Tender anticipates any of the claims in the '540 Patent, but the Court never reaches that stage because it finds Simplot has not shown the Call for Tender is a printed publication.
The determination of whether a document is a "printed publication" under 35 U.S.C. § 102(b) involves a case-by-case inquiry into the facts and circumstances surrounding the reference's disclosure to members of the public. Because there are many ways in which a reference may be disseminated to the interested public, public accessibility has been called the touchstone in determining whether a reference constitutes a printed publication bar under 35 U.S.C. § 102(b). A reference will be considered publicly accessible if it was disseminated or otherwise made available to the extent that persons interested and ordinarily skilled in the subject matter or art exercising reasonable diligence can locate it.
Medtronic, Inc. v. Barry, 891 F.3d 1368, 1380 (Fed. Cir. 2018) (cleaned up).
In this case, it is not clear that interested persons could locate the Call for Tender, let alone that the general public could do so. After initially persuading the Court that the document was published in 1999, see Dkt. 295, at 15 n.6, Simplot now asserts the Call for Tender was submitted "on or about" December 8, 1998. The Court is not as concerned as McCain with the fact that 1998 is not 1999 (December 8, 1998, is, after all, very close to 1999), as it is with the idea that if Simplot does not even know when the document was published or where, how would anyone else? In fact, when asked about this document, '540 Patent co-inventor Fabrice Desailly testified that [Redacted]. Dkt. 413-3, at 9.
In short, Simplot cannot point to anything concrete illustrating the Call for Tender was published or publicly accessible. It simply believes that because the Call for Tender was not protected—and was at some point submitted to a public institution—this necessarily means it was publicly available. Simplot itself, however, must speculate when, if at all, the document was published, to whom it was published, and in what medium. There is no indication, however, that the Call for Tender
was published at all. Nor is there any evidence that anyone intended for the Call for Tender to be disseminated to the public.
The Court agrees with McCain in this instance. Simplot has not carried its burden to show the Call for Tender constitutes a printed publication. As a result, the document cannot serve as prior art to the '540 Patent.
2. Esthiaghi
Esthiaghi is a patent application that was published on December 16, 1999, titled "Method for treating sugar beet." Dkt. 332-3, at 48. Esthiaghi discloses a process for treating sugar beets with a "highly pulsed electric field" ("HPEF") before extraction and/or pressing them to obtain a high sugar yield. Simplot argues the steps outlined in Esthiaghi mirror those of Claim 1 of the '540 Patent and, therefore, anticipate the '540 Patent as a matter of law. McCain disagrees.
While it is true that Esthiaghi discloses "treating sugar beet[s] ... with an electric field," the purpose of the patent is different from the purpose of the '540 Patent. Id. To be sure, some similarities exist. For example, the process outlined in Esthiaghi led to "increase[d] permeability," the "smoother texture of the sugar beets," and more "suitability for pressing." Id. at 51, 57, 59, 65. No mention, however, is made of any resistance to cutting. Additionally, the PEF method utilized in Esthiaghi extracts sugar from beets. The sugarless beet pulp is then discarded. It is not used, cooked, or consumed. The application of PEF to extract juice or metabolites from a fruit or vegetable is completely different from using PEF to reduce cutting resistance in a solid product (like a potato) that will later be consumed. As the Court has mentioned before, PEF was known in the food processing industry prior to the issuance of the '540 Patent. The fact that Esthiaghi (and others) utilized this technology is, therefore, no surprise. But it does not follow that using PEF to extract sugar from beets would lend itself to reducing cutting resistance in potatoes.
Finally, while not binding on this Court, it is worth noting that Simplot made this same argument before the Patent Trial and Appeal Board ("PTAB") and it was rejected.
In sum, the Court finds the Claims in the '540 Patent are not anticipated by Esthiaghi.
3. Angersbach I
Angersbach I is a research article titled (as translated) "Application of High Intensity Electric Field Pulses as Pretreatment Method for Affecting Dehydration Characteristics and Rehydration Properties of Potato Cubes." It was published in the August 1997 version of the German journal Nahrung ("Food").
Angersbach discloses a process of treating potatoes with a "high intensity electric field pulse" ("HELP") to permeabilize cell membranes and treat plant material to facilitate the extraction of cell constituents and improve the juice yield in subsequent juicing. Angersbach used raw potato cubes as the test materials for this permeabilization, drying, and rehydration process.
As with Esthiaghi, Angersbach bears similarities to the '540 Patent but not to a sufficient degree to render it a prior art.
To begin, Angersbach discloses applying PEF after the potatoes have already been cut into cubes. What's more, Angersbach does not disclose that the PEF is applied to reduce cutting resistance; nor is there any indication that applying PEF in this manner achieves that result. To be sure, Angersbach discusses how PEF will loosen potato tissue, change the texture, and decrease the amount of force needed to penetrate
a potato. But this does not necessary translate into a finding of less cutting resistance.
The Court also notes that, similar to Esthiaghi, the PTAB rejected Simplot's argument that Angersbach was a prior art.
The Court finds Simplot has not carried its burden of persuasion. Angersbach does not anticipate the '540 Patent.
4. Conclusion on Anticipation from Prior Art
Simplot's three references are insufficient to support its anticipation from prior art conclusion. Simplot has not carried its burden in establishing that the Call for Tender is a printed publication or that a person skilled in the art would have even known where to find it. Simplot has also not shown that Esthiaghi or Angersbach I anticipate the '540 Patent. While all three publications discuss related technology, the Court cannot bridge the gap between those publications and the stated purpose of the '540 Patent—specifically its primary purpose of reducing resistance to cutting.
Before moving forward, now is a good time to introduce the concept of a skilled person in the art, as this concept plays a large role in the following sections.
An important element of any patent case is determining what a "person having ordinary skill in the art" would know or understand about a patent. Courts abbreviate this as PHOSITA, POSITA, or simply POSA. The Court will use the simplest abbreviation: POSA.
A POSA is a legal fiction first codified in the Patent Act of 1952. It permeates case-law and is even part of current patent statutes. See 35 U.S.C. § 103. Many of the tests in patent law—such as for anticipation, obviousness, and invalidity—consider what a POSA would think, recognize, or understand about a patent.
Widespread use of this term notwithstanding, there is no set definition of a POSA. The United States Court of Customs and Patent Appeals—now the Court of Appeals for the Federal Circuit—has stated that a POSA is someone who "brings certain background and training to the [problem at hand]." In re Nalbandian, 661 F.2d 1214, 1216 (C.C.P.A. 1981). Most of the time, a POSA has a bachelor's degree in the applicable field and is quite familiar with the relevant patent. See, e.g., Geospatial Tech. Assocs., LLC v. United States, 2019 WL 1085258, at *10 (Fed. Cl. Mar. 7, 2019) (explaining a POSA would be someone with a Bachelor of Science or five years' experience); Meridian Mfg., Inc. v. C & B Mfg., Inc., 340 F. Supp. 3d 808, 830 (N.D. Iowa 2018) (suggesting a POSA would be a person with 2-4 years of formal education or 5-7 years of experience); Allergan, Inc. v. Teva Pharms. USA, Inc., 2017 WL 4803941, at *25 (E.D. Tex. Oct. 16, 2017) (noting a POSA would be familiar with clinical trials and results and findings of research presented or published by those in the field).
In fact, before the PTAB, the parties agreed a POSA in this case would have a B.S. degree related to food process engineering and at least two years of experience with food processing. See J.R. Simplot Co. v. McCain Foods Ltd., 2018 WL 3216837, at *9 (P.T.A.B. June 29, 2018).
The Court explains that term here as it moves into obviousness and invalidity, but it rings true for prior art as well. Simplot has failed to show that a POSA would have been able to take the three publications and translate their teachings into the process outlined in the '540 Patent. This is an additional reason supporting the Court's finding that none of the three references are prior art and do not warrant a conclusion of anticipation. (ii) Invalid as obvious
Simplot next argues that the prior art means not only that the '540 Patent was anticipated, but also that it was obvious.
A patent claim is invalid as "obvious" where "the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains." 35 U.S.C. § 103(a). As the Federal Circuit has explained:
Obviousness is based on underlying factual findings, including (1) the level of ordinary skill in the art; (2) the scope and content of the prior art; (3) the differences between the claims and the prior art; and (4) secondary considerations of nonobviousness, such as commercial success, long-felt but unmet needs, failure of others, and unexpected results.
Prometheus Labs., Inc. v. Roxane Labs., Inc., 805 F.3d 1092, 1097 (Fed. Cir. 2015). The "test for obviousness is what the combined teachings of the references would have suggested to those having ordinary skill in the art." In re Mouttet, 686 F.3d 1322, 1332-33 (Fed. Cir. 2012). When a patent "simply arranges old elements with each performing the same function it had been known to perform and yields no more than one would expect from such an arrangement, the combination is obvious." KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 427, 127 S.Ct. 1727, 167 L.Ed.2d 705 (2007).
Simplot asserts the claims of the '540 Patent are obvious because it was known that PEF technology could be used on foods and, when done properly, that it would modify a food's genetic makeup rendering it softer and easier to cut. This may be true. The problem with this argument, however, is that Simplot does not show that any of the prior art indicated PEFing would reduce cutting resistance or that the technology could be used to replace the preheating step; at least none articulate these benefits in one fell swoop. Simplot mentions how a certain prior art—Hiller for example—teaches that changes in water turgidity cause changes in the fracture properties of a potato, or that Rastogi describes the softening of tissue from PEF treatment, but it never states that any one prior art displays all the requirements of the '540 Patent.
Hiller is a scientific journal article that reviewed the fracture behavior of potatoes in various stages. Dkt. 332/4, at 16-39.
Rastogi is a food science journal article that discussed PEFing carrots after they were cut into discs. Critically, nothing in the article discussed whether the discs were actually easier to cut. Dkt. 332-4, at 41-44.
Instead, Simplot employs an "in view of" argument, contending that the asserted claims are obvious if you look at one prior art in combination with another. The Court addresses these combinations below and why it finds each unpersuasive.
1. Esthiaghi in view of Hannah
Hannah is a U.S. Patent which teaches how to preheat raw peeled potatoes to make peeling and handling easier. It states, among other things, that this traditional preheating process: (1) "results in less breakage during handling and facilitates the potato cutting process" and (2) reduces "shattering of the potato product, which produces more broken pieces and irregular cuts, which in turn downgrade the potato product." See generally Dkt. 332-4, at 4-10.
Simplot first argues that when you combine Esthiaghi's "easier to cut" outcome with Hannah's preheating potatoes
step, you essentially get Claim 6 of the '540 Patent.
The Court has already rejected the comparison between Esthiaghi and the '540 Patent—specifically because Esthiaghi does not disclose cutting resistance. Further, however, the Court cannot simply rely on Simplot's naked assertion that a POSA "would have been motivated" to combine these two prior art forms.
At a minimum, both sides have presented evidence (from experts) regarding whether a POSA would have cobbled together these various combinations as Simplot suggests. Thus, even if the Court were to entertain Simplot's arguments, it could not grant summary judgment in its favor because McCain has submitted contrary evidence and "[w]hether an ordinarily skilled artisan would have been motivated to modify the teachings of a reference is a question of fact." WBIP, LLC v. Kohler Co., 829 F.3d 1317, 1327 (Fed. Cir. 2016).
2. Wang in view of Hannah
Wang is a dissertation directed to the impact that ohmic heating—running AC current through a food so heat is generated—has on the physical property of foods. It appears the dissertation is dated 1995, but the Court does not know when, if at all, the paper was published. Dkt. 332-4, at 50—Dkt. 332-5 at 7.
Simplot next argues that when you combine Wang's teachings that electric fields can be used in place of preheating with Hannah's teachings about preheating potatoes, you get the claims of the '540 Patent.
Wang, however, discussed cutting apples into cylinders, then using PEF technology to preheat those cylinders, and then pressing the juice out of those cylinders to get apple pomace. Again, this after cutting use of PEF technology to preheat the apple cylinders is not as similar to the '540 Patent as Simplot suggests.
There is nothing to indicate, beyond Simplot's assertion, that a POSA would have taken a process for using PEF to heat apple rounds after they had been cut, combine it with a process for preheating whole potatoes, and come up with PEFing potatoes to reduce their resistance to cutting (but not enough to heat them).
To a certain degree, one can never know if Simplot is right or not. Presumably, people often ponder what would happen if he or she were to combine various processes. But the fact that nobody did what McCain did until McCain did it indicates the combinations Simplot suggests were not so obvious. There is no evidence POSAs were toying with these combinations at any point prior to the introduction of the '540 Patent.
On the other hand, unless McCain developed this process completely in a vacuum, never knowing any prior art references, it did, in fact, combine other known processes. And the '540 Patent admits as much. McCain took an existing technology and applied it to a known process to make the process better. Whether, and to what degree, other processes, papers, dissertations, articles, and patents were consulted as part of that invention is unknown. Thus, the Court is not implying Simplot's arguments are without merit Afterall, the developers of the '540 Patent are undoubtedly POSAs, and they likely did what Simplot is suggesting. But the Court has no way to know that, and Simplot has not persuaded the Court today to make that finding.
3. Conclusion on Obviousness from Prior Art
Simplot has not carried its burden. This is a difficult question. Plainly speaking, it is not far-fetched to imagine a person taking various aspects from prior art and known creations, combining them, and making something new. Taking prior known methods and putting them together
is likely how many new methods come to be. At this stage in the history of the world, few things are truly new or original.
That said, from a legal standpoint, the Court cannot find that the prior art renders the claims of the '540 Patent obvious. Some of the prior art bears similarities to the claimed processes, but none, even in combination, suggests that "the subject matter as a whole would have been obvious at the time the invention was made[.]" 35 U.S.C. § 103(a).
The Court denies Simplot's motion on this ground.
(iii) Invalid for Indefiniteness under 35 U.S.C. § 112
Finally, Simplot asserts that the '540 Patent is invalid for indefiniteness. This is one of two arguments Third-Party Defendants bring in their Motion for Summary Judgment against McCain. The bulk of the Court's analysis will occur in this section, but mention will be made as it relates to Third-Party Defendants' Motion as well.
To satisfy the definiteness requirement, a patent specification must "conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the inventor ... regards as his invention." 35 U.S.C. § 112, ¶ 2. A claim fails this requirement when the intrinsic record "fail[s] to inform, with reasonable certainty, those skilled in the art about the scope of the invention." Nautilus, Inc. v. Biosig Instruments, Inc., 572 U.S. 898, 134 S.Ct. 2120, 189 L.Ed.2d 37 (2014). "The Federal Circuit has made clear that indefiniteness is a legal question that district courts may decide prior to trial." Pat. Holder, LLC v. Lone Wolf Distributors, Inc., 2018 WL 4643059, at *2 (D. Idaho Sept. 27, 2018). See also Personalized Media Commc'ns, LLC v. Int'l Trade Comm'n, 161 F.3d 696, 705 (Fed. Cir. 1998) ("A determination of claim indefiniteness is a legal conclusion that is drawn from the court's performance of its duty as the construer of patent claims.").
To satisfy the definiteness requirement "a patent must be precise enough to afford clear notice of what is claimed, thereby apprising the public of what is still open to them." Nautilus, 572 U.S. at 910, 134 S.Ct. 2120 (cleaned up). "[A]bsent a meaningful definiteness check, patent applicants face powerful incentives to inject ambiguity into their claims," and "competitors cannot avoid infringement, defeating the public notice function of patent claims." Id.; Halliburton Energy Servs., Inc. v. M-I LLC, 514 F.3d 1244, 1249 (Fed. Cir. 2008).
Simplot has been making its indefiniteness argument for some time now. Dkt. 57, at 20 (filed May 4, 2018). The Court, however, previously noted it was best to wait until summary judgment to have a fully developed record upon which to review this challenge. Dkt. 69 at 11, 22-23; Dkt. 86, at 10. Specifically, the Court wanted to review the testimony of witnesses —in particular POSAs—and their views on whether the claimed terms and associated definitions were sufficient to maintain definiteness. With the benefit of discovery and expert testimony, the Court finds the claims of the '540 Patent are indefinite.
Simplot focuses primarily on three things in support of its indefiniteness argument. First, it claims the term "high electric field"—as construed by the Court—(1) has no objective boundaries; (2) does not inform a POSA how to measure whether a field is high; and (3) renders the claim unintelligible. Simplot then asks the Court to restore its prior construction of the term. Second, Simplot asserts the term "under conditions" is indefinite for vagueness. Third, Simplot contends the terms "almost zero" and "sufficiently low" have
no objective boundaries. The Court will address each argument (and sub-argument) in turn.
1. "High Electric Field"
Simplot asserts the Court's construction of the term "high electric field" as "an electric field strong enough to make the vegetable and/or fruit easier to cut" renders the claims of the '540 Patent indefinite. The Court notes up front that claim construction is a task separate and apart from infringement and invalidity. That is to say, the Court may have construed a term a certain way during claim construction, but that does not exclusively dictate what should, or should not, happen when it comes to infringement or invalidity.
a. Objective Bounds
Simplot first argues the claims of the '540 Patent are indefinite because the '540 Patent does not disclose how "strong" an electric field must be to qualify as "strong enough" to make a vegetable and/or fruit "easier to cut," or what degree of "easiness" must be reached before cutting becomes truly "easier." In Simplot's estimation then, the '540 Patent has no "objective boundaries" and "fail[s] to inform, with reasonable certainty, those skilled in the art about the scope of the invention." Nautilus, 572 U.S. at 901, 134 S.Ct. 2120.
For its part, McCain believes this case is very similar to the final outcome in Nautilus. Upon remand from the Supreme Court, the Federal Circuit determined that the phrase "spaced relationship" was not indefinite because, even though the patent did not say how far apart "spaced" meant, the prosecution history demonstrated a POSA would be able to determine, "with reasonable certainty" the scope of the claim. Biosig Instruments, Inc. v. Nautilus, Inc., 783 F.3d 1374, 1384 (Fed. Cir. 2015). The Court does not share McCain's view. In this case, the prosecution history is not clear that POSAs would understand the disputed terms of degrees in a uniform matter. This is particularly so considering McCain does not want the examples it gave in the '540 Patent to limit the inquiry. Without those examples, however, the range is, quite literally, undefined and unbounded.
Courts have routinely found claims that include broad terms of degree indefinite. For example, in Jaguar Land Rover Ltd. v. Bentley Motors Ltd., the court held that the claim term "relatively high degree of wheel slip under braking" was indefinite because the specification did "not provide any objective bounds around what qualifies as a 'relatively high' degree of wheel slip, or whether the degree of wheel slip can become so high that it no longer qualifies as 'relatively high.'" 2020 WL 7010227, at *16 (E.D. Va. Oct. 14, 2020). Importantly, the specification of the patent at issue in that case provided three examples describing "different levels of wheel slip," but none of those examples provided "objective bounds for a POSA determining the meaning of the term" in the context of the asserted claim. Id.
In like manner, the Federal Circuit, in applying the "objective boundaries" test to terms of degree, found that if a person of ordinary skill in the art "cannot, without additional information," determine whether a term of degree is satisfied, the term is indefinite. GE Lighting Sols., LLC v. Lights of Am., Inc., 663 F. App'x 938, 940 (Fed. Cir. 2016) (holding that "elongated" is a term of degree and finding the claim indefinite).
In Bayer Intell. Prop. GmbH v. Warner Chilcott Co., LLC, a district court found certain claims invalid and noted that "words of degree" used in the patent, including "high" and "low" had "no standards against which to draw comparisons, and the patent offered no suggestions for how to measure these criteria." 2015 WL 1849015, at *1 (D. Del. Apr. 21, 2015), aff'd, 645 F. App'x 993 (Fed. Cir. 2016). Thus,
terms of degree are often found indefinite unless there are standards, comparisons, or suggestions in the patent that would help clarify what the patentee meant. See also Enzo Biochem. Inc. v. Applera Corp., 599 F.3d 1325, 1335 (Fed. Cir. 2010) (finding a term of degree was not indefinite where the patent provided "a general guideline and examples sufficient to enable a person of ordinary skill in the art to determine the scope of the claims"); In re Marosi, 710 F.2d 799, 803 (Fed. Cir. 1983) (holding that the patent "provided a general guideline and examples sufficient to enable a person of ordinary skill in the art to determine" a phrase of degree).
The '540 Patent's specifications provide some guidance regarding a range of voltage to be utilized during the PEF process. But that range is not necessarily "high." It is just a range. The voltage range the '540 Patent suggests is 30-75 V/cm. The problem, however, is that McCain did not want that range to be limiting on them in claim construction. The Court eventually agreed. But McCain cannot have it both ways— arguing during claim construction that the specifications are not limiting and should not unduly narrow the patent, but now alleging those same specifications are sufficiently detailed to inform a POSA what the meets and bounds of "high electric field" are.
McCain argues the disclosed range from the '540 Patent provides the necessary guidance for understanding what the term "high" means. The term, in its opinion, is not boundless as Simplot asserts. The Court disagrees. The range disclosed in the Patent of 30-75 V/cm pales in comparison to the range Simplot uses when it PEFs products (1,000-1,400 V/cm). Said differently, if a POSA was trying to utilize the '540 Patent, it stands to reason he or she would have considered 30-75 V/cm to be the objective boundaries of the Patent based upon the specifications and guidance, not a range 20 to 30 times higher. He or she would likely have thought 30-75 V/cm was "high" because that is the preferred range. But "high" as compared to what? It goes without saying, but 30-75 V/cm is "low" compared to the range Simplot employs. In any event, this demonstrates the problem with a term of degrees. Simplot, who would surely be considered a POSA, went substantially outside the "high" range of the disclosed guidance and still was able to achieve the same result as those outlined in the '540 Patent. This illustrates that without more specific direction, there is no way a person would know what "high" means within the confines of the '540 Patent and what the patented claims actually protect. Additionally, "high" cannot be unlimited. The term high is relative. Something is high (or low) as compared to, in relation to, or measured against, something else. Without something to compare it to, the term "high electric field" in the '540 Patent is, in essence, just an "electric field."
McCain's retort to the aforementioned arguments is that a POSA is supposed to do some experimenting and that "absolute precision" is not required. After all, McCain suggests, a POSA is someone skilled in the art. As someone who generally understands the science and process, a POSA could easily determine what "high" means with little effort. In like manner, McCain asserts a POSA could adapt the process to control the other variables to achieve the desired results. The Court has multiple problems with these assertions.
First, the quandary is not so much that exact precision is not required when it comes to writing patents, as it is that some boundaries are required. In other words, the Court agrees that a patent need not always explain terms of degrees with complete precision; but there must be something
"distinct," see 35 U.S.C. § 112, ¶ 2, that informs those who will read the patent —POSAs and the public—of what is protected by the patent and what is still open to invention and exploration. See Nautilus, 572 U.S. at 910, 134 S.Ct. 2120 ("[A]bsent a meaningful definiteness check... patent applicants face powerful incentives to inject ambiguity into their claims."). To avoid ambiguity, certain meets and bounds as guideposts are helpful, not instructions to simply "apply" a high electric field. See Alice Corp. Pty. v. CLS Bank Int'l, 573 U.S. 208, 221, 134 S.Ct. 2347, 189 L.Ed.2d 296 (2014) ("[T]ransformation into a patent-eligible application requires more than simply stating the abstract idea while adding the words 'apply it.'") (cleaned up). Here, it is very likely that two POSAs could reach differing conclusions about what "high" means. This outcome illustrates the lack of distinction and definiteness at play in the '540 Patent.
The Court's second concern is that, to reach McCain's understanding, a POSA would need to evaluate other variables— not just field strength—to determine what "high" means. McCain contends the term is not ambiguous or boundless because the definition explains the PEF strength must be "strong enough" to make a product easier to cut. It postures this quantifying language solves the question of whether "high" is ambiguous and puts parameters on the range. The Court understands McCain's argument, but as will be discussed below, it is circular in nature. Besides being circular, this addition is no less vague.
Different fruits and vegetables have different densities and require different field strengths to reduce their resistance to cutting. What's more, it is not clear what amount of "ease" must be present (and how to measure that ease) to ensure the product has, in fact, become "easier to cut." Questions abound. As McCain's own expert, Dr. John Floros, explained, it would take a lot of fine-tuning, adjusting, and balancing, to get the PEF strength and time correct. See generally Dkt. 332-10, at 203-07. To be sure, he postures all of that is just par for the course and that a POSA would have "known and understood" such factors and had no trouble undertaking these "routine and minimal experimentation[s]" to achieve the desired results. Id. at 204, 205. But this is the exact point. As Simplot's expert, Dr. Sudhir Sastry, explains: the '540 Patent does not "define or describe the 'high electric field,' nor does it disclose how an electric field should be selected, what types of electric fields should be used, [or] what conditions should be used when applying that electric field...." Dkt. 332-2, at 49. Sastry goes on to explain that the term "high" appears just four times in the '540 Patent and none of the references provide any indication of what it means. Id. at 61. Without any boundaries, there is no way for a POSA to know whether he or she is adhering to the '540 Patent's specifications, has stumbled upon a new combination that may or may not be covered by the '540 Patent, or has discovered something new altogether.
Floros argues that Sastry "works hard not to understand the ['540 Patent]" but that a POSA "would not have read the '540 patent as Sastry does." Dkt. 332-10, at 195. The Court disagrees. Floros states the steps are easy, but it takes him the better part of sixteen pages to describe those steps. Id. at 194-209. As the Court will describe more fully below, if there were only a few variables, the Court could accept the idea that some discovery and experimentation is necessary. But there are simply too many variables in this case to overlook. McCain highlights Sastry's comment during his deposition that a POSA would know how to control each of these variables to "manage the heating cause by the application of an electric field," asserting this is some type of admission that POSAs would be able to easily understand the scope of the '540 Patent. Dkt. 408-14, at 5. But knowing how to control variables to achieve various results is not the same as understanding the full scope of what is legally protected by the patent itself.
It is true that a patent term is not indefinite if "a person of ordinary skill in the art could determine the specific amount without undue experimentation," Geneva Pharm., Inc. v. GlaxoSmithKline PLC, 349 F.3d 1373, 1383-84 (Fed. Cir. 2003) (emphasis added), but absent some "guidance as to what [a POSA] would interpret the claim to require," Honeywell Int'l, Inc. v. Int'l Trade Comm'n, 341 F.3d 1332, 1340 (Fed. Cir. 2003), the Court cannot find as McCain urges.
The standards surrounding definiteness can be "amorphous" and leave courts "without a reliable compass." See Nautilus, 572 U.S. at 912-13, 134 S.Ct. 2120. What one person, POSA, or Court may consider definite may differ from another. But the Court cannot tolerate imprecision at a level that risks diminishing the important public-notice function that definiteness serves and runs the risk of entering the experimentation "zone of uncertainty," against which the Supreme Court has long warned. See United Carbon Co. v. Binney & Smith Co., 317 U.S. 228, 236, 63 S.Ct. 165, 87 L.Ed. 232 (1942). Without some boundaries, the public is left in the dark.
While the Court ultimately sided with McCain in defining the terms of the '540 Patent broadly during claim construction, that does not mean it endorses terms that are indefinite. As noted, see supra at 918-19, the Court felt constrained under Federal Circuit precedent to change its ruling. Nevertheless, while the Court's modified construction better aligns with precedent as it relates to determining the appropriate definition of claim terms, that does not mean the definition (or the claims themselves) are saved from an indefiniteness challenge. Based upon the relevant caselaw and expert reports from the parties, the Court finds that a POSA could not, without undue information and experimentation, determine what "high electric field" actually means because it is completely lacking in any objective boundaries. This is one of the reasons the Court finds the term "high electric field" indefinite.
b. Measuring the field
As alluded to, Simplot also contends the claims of the '540 Patent are indefinite because there is no way to measure whether the "high electric field"—under whatever definition—is, in fact, high enough that it has made the fruits and/or vegetables "easier to cut." Here too, the Court agrees.
For a POSA to determine whether something is "easier to cut," he or she will have to measure not only the field strength of the electric field, but also the cutting resistance of any fruit or vegetable. McCain assets any POSA would know how to use a texturometer to measure the cutting resistance after a fruit or vegetable has been PEFed. Be that as it may, there is nothing in the patent to illustrate how much "easier" something needs to be to qualify as "easier to cut." As Sastry noted, there is "no manner, other than experimentation, for a [POSA] to determine whether the application of an electric field has made a product easier to cut." Dkt. 332-2, at 65. The term "easier to cut" is "subjective" and has "no commonly understood threshold" in the industry. Id.
McCain's own internal documents list [Redacted] Dkt. 332-20, at 18. None of these parameters are listed in the '540 Patent. In fact, there is nothing to help a POSA when it comes to this requirement.
While the voltage range of 30-75 V/cm was at least mentioned in the '540 Patent, there are no data-driven suggestions or requirements, no tests or measurements, or even any suggestions as to what "easier" looks like in this context. This term is completely arbitrary and subjective.
Furthermore, as will be explained below, the easiest way to determine if something is easier to cut is to cut it. But even then, that is a subjective analysis. There is no way to quantify this task under the '540 Patent. This is a second reason supporting the Court's indefiniteness conclusion as to the term "high electric field."
c. Unintelligible
Finally, Simplot argues that under the Court's new construction of the term "high electric field," the claims are circular, unintelligible, and thus, invalid. This is easiest to see when one inserts the Court's construction of the preamble and the term "high electric field" into Claim 1 as follows (Court's construction in bold):
A process for treating vegetables and/or fruit before cooking and cutting to make cutting easier, characterized by the application of an electric field strong enough to make the vegetable and/or fruit easier to cut directly to the vegetables and/or fruit under conditions such that the resulting increase in the temperature of the vegetables and/or fruit is almost zero or at least sufficiently low as to not amount to a preheating step.
Thus, the process for making a fruit or vegetable easier to cut is by applying an electric field that makes the fruit or vegetable easier to cut. This circular reasoning is inappropriate and essentially writes the term "high" out of the claim. The field does not need to be high or low, it must simply be "enough" to make the fruit or vegetable easier to cut. An interpretation of one term that renders another claim term superfluous, however, is not permitted. See, e.g., ACTV, Inc. v. Walt Disney Co., 346 F.3d 1082, 1090 (Fed. Cir. 2003) (finding district court construction of a term improperly relied on circular reasoning to another term and was not supported by the claim language or specification); Harris Corp. v. IXYS Corp., 114 F.3d 1149, 1152-53 (Fed. Cir. 1997) (rejecting a proposed construction that would "make the limitation entirely circular").
In sum, the Court finds the term "high electric field" is indefinite because it has no objective bounds and is virtually impossible to measure. What's more, when read in context, the terms become unintelligible and circular.
2. "Under Conditions"
Simplot next argues that the term "under conditions" in the phrase "under conditions such that the resulting increase in the temperature of the vegetables and/or fruit is almost zero or at least sufficiently low as to not amount to a preheating step" is invalid for indefiniteness.
Because the '540 Patent does not define "under conditions" and the Court chose to leave it "as written," Simplot claims a POSA would have to guess what "conditions" are required to accomplish the claimed invention. The Court agrees here as well.
The '540 Patent only mentions adjusting water conductivity. It does not mention any of the other conditions that need to be met to perform the claimed method. McCain argues, again, that a POSA would understand how to manipulate the various conditions to ensure the process worked as asserted. Yet, whether a POSA could manipulate various conditions does not change the fact that the '540 Patent does not even begin to explain how those conditions are to be measured. There is not even an exhaustive list in the '540 Patent
of what all those conditions are. As McCain's expert, Floros, himself explained:
Simplot takes issue with the Court previously listing five conditions it observed in the '540 Patent and states it is "unclear whether the Court intended to incorporate any or all of these five necessary conditions into its construction." Dkt. 332, at 45. The Court did not. That commentary was simply an observation by the Court that the '540 Patent "include[d] multiple conditions—not simply time." Dkt. 69, at 21. It did not intend for the five conditions listed to be anything other than examples in that specific context. The list was not exhaustive or incorporated into the Court's construction as to any definition.
[I]f you change anything in the process, if you increase the field strength or if you increase the conductivity of the water or if you reduce the time or if you have, you know, pulses that are different, you may have to test again to make sure that you're within reasonable parameters of both reducing the cutting resistance as well as not increasing the temperature too much.
Dkt. 367, at 313-14. Another thing Floros said strikes the Court as particularly notable. In response to a question about whether a high electric field "necessarily" makes a fruit or vegetable easier to cut, he said "not necessarily." Id. at 311. He expounded upon this thought by observing that "there are combinations of electric fields and conductivity and time that, even though you apply a high electric field, you may not see any reduced resistance." Id.
This type of "testing again" is too much for a POSA to undertake. Even if he or she was able to change conditions to the degree necessary to achieve the desired results, there must be an eventual stopping point. After all, one could presumably perform dozens or hundreds of experiments and eventually land on the desired outcome. But this is not the "reasonable certainty" that is required. If there was one condition that had to be modified, the Court would be more reluctant to find indefiniteness, but where there are at least five—or at least there are five conditions mentioned in the '540 Patent—the Court is of the opinion that that number of variables is too significant to overlook. See Halliburton, 514 F.3d at 1255 ("When a proposed construction requires that an artisan make a separate infringement determination for every set of circumstances in which the composition may be used, and when such determinations are likely to result in differing outcomes (sometimes infringing and sometimes not), that construction is likely to be indefinite."). The Court agrees that the term "under conditions" is indefinite.
Simple math illustrates that if a situation has five variables, there are 120 potential combinations of those variables. And where, as here, those variables have ranges in themselves (water conductivity, frequency, voltage, time, etc), the possible number of combinations is much greater.
3. "Almost Zero" and "sufficiently low"
Finally, Simplot asserts that the second part of the above-mentioned phrase is also indefinite. The '540 Patent requires PEF technology to be used in such a way so that "the resulting increase in the temperature of the vegetables and/or fruit is almost zero or at least sufficiently low as to not amount to a preheating step." Dkt. 330-10, at 5. Simplot asserts "almost zero" and "sufficiently low" are subjective and, therefore, indefinite. Again, the Court must agree.
McCain responds by noting once more that absolute precision is not required. But that is not the argument Simplot makes. It is not requiring absolute precision. But it wants something—some type of boundaries that are "precise enough to afford
clear notice of what is claimed, thereby apprising the public of what is still open to them." Nautilus, 572 U.S. at 910, 134 S.Ct. 2120 (cleaned up).
There is nothing within the '540 Patent distinguishing whether "almost zero" and/or "sufficiently low" is a matter of degrees or hundredths of degrees. A POSA could run tests, but presumably numerous ranges—depending on the fruit and/or vegetable and the other conditions —would not result in a pre-heating step and could be considered "almost zero."
Not to belabor the point, but the word "almost" itself is relative: a temperature increase of "almost zero" in one type of vegetable could be completely different than what constitutes "almost zero" for another. See Dkt. 332-2, at 51-52 (Sastry explaining differing field strengths result in differing rises in temperature in different vegetables). A POSA is then left to guess whether any increase in temperature is permissible or not. Without some guidance, however, a POSA (or the general public) could run afoul of the '540 Patent without even knowing it. Without some clear, concise language, the term is subjective and does not provide clear notice of what is protected.
The Court agrees these terms are also indefinite.
4. Written Claims and Enablement
Finally, Simplot claims the Asserted Claims lack a written description and lack enablement as a matter of law. As the applicable statute outlines:
The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor or joint inventor of carrying out the invention.
35 U.S.C. § 112, ¶ 1 (emphasis added). "Written description" and "enablement" are recognized invalidity arguments. As the phrases suggest, Simplot claims that, because of all of the variables discussed above, the '540 Patent lacks a sufficient written description and that because of that vagueness, it does not sufficiently enable someone to perform the claims without undue experimentation. Although the Court need not reach these arguments— having found invalidity based upon the fact that the terms are vague and have no objective bounds—the Court finds these final arguments solidify its conclusions.
First, a written description requires the specification to "clearly allow persons of ordinary skill in the art to recognize that the inventor invented what is claimed." Ariad Pharmaceuticals, Inc. v. Eli Lilly and Co., 598 F.3d 1336, 1351 (Fed.Cir.2010). "The purpose of this provision is to ensure that the scope of the right to exclude, as set forth in the claims, does not overreach the scope of the inventor's contribution to the field of art as described in the patent specification." Reiffin v. Microsoft Corp., 214 F.3d 1342, 1345 (Fed. Cir. 2000). A patent owner "cannot disclose
Deciding whether a written description is sufficient can take place at trial or at summary judgment. Although compliance with the written description is an issue of fact, "a patent can be held invalid for failure to meet the written description requirement, based solely on the language of the patent specification," because "it is in the patent specification where the written description requirement must be met." Univ. of Rochester v. G.D. Searle & Co., 358 F.3d 916, 927 (Fed. Cir. 2004) (affirming summary judgment of invalidity for inadequate written description).
and claim an invention narrowly and then, in the course of an infringement suit, argue effectively that the claims should be construed to cover that which is neither described nor enabled in the patent." N. Am. Vaccine, Inc. v. Am. Cyanamid Co., 7 F.3d 1571, 1577 (Fed. Cir. 1993).
As the Court previously explained in its original Markman decision, the specification of the '540 Patent discloses only two examples of applying a "high electric field" ("65 V/[cm] for 5s" and "45 V/cm for 3s"), and both are limited to potatoes. Nowhere in the specification did McCain disclose using an electric field outside the range of 30 to 75 V/cm or using PEF on anything other than a potato. What's more, McCain's expert has admitted that the examples do not work under all conditions. Dkt. 367, at 311. And while the Court did not feel it could redefine terms based solely upon those examples at the Markman stage of the case, that does not mean that the examples themselves are sufficient to place a POSA on notice of all that is claimed in the invention. There is nothing in the record to indicate that McCain thought this process would be utilized outside of those specific parameters. While McCain broadly asserted that experimentation could be utilized to achieve similar results, this does not mean McCain patented every possible iteration for reducing cutting resistance for all fruits and vegetables, using any and all electric fields, for any period of time, and under any and all conditions. "[A] broad claim is invalid when the entirety of the specification clearly indicates that the invention is of a much narrower scope." Cisco Sys., Inc. v. Cirrex Sys., LLC, 856 F.3d 997, 1008 (Fed. Cir. 2017).
Second, "claims are not enabled when, at the effective filing date of the patent, one of ordinary skill in the art could not practice their full scope without undue experimentation." Wyeth & Cordis Corp. v. Abbott Labs., 720 F.3d 1380, 1384 (Fed. Cir. 2013) (emphasis added). Whether a patent satisfies the enablement requirement "is a question of law based on underlying facts." Id. Relevant factors for assessing whether experimentation is "undue" are "(1) the quantity of experimentation necessary, (2) the amount of direction or guidance presented, (3) the presence or absence of working examples, (4) the nature of the invention, (5) the state of the prior art, (6) the relative skill of those in the art, (7) the predictability or unpredictability of the art, and (8) the breadth of the claims." In re Wands, 858 F.2d 731, 737 (Fed. Cir. 1988). The Court will not delve into these factors individually. Suffice it to say, as explained above, a POSA would have to undertake "substantial time and effort ... to reach the full scope of the claimed embodiments." Amgen Inc. v. Sanofi, Aventisub LLC, 987 F.3d 1080, 1088 (Fed. Cir. 2021). See also Amgen Inc. v. Sanofi, 598 U.S. 594, 610-613, 143 S.Ct. 1243, 215 L.Ed.2d 537 (2023) (discussing how a patentee cannot monopolize every aspect of a process without reasonable specifications; otherwise, there is a lack of enablement).
In sum, the extra experimentation required to ascertain the scope of the '540 Patent illustrates a lack of a sufficient written description and a lack of enablement. These findings solidify the Court's primary indefiniteness ruling and support a finding of invalidity.
5. Conclusion as to Invalidity
McCain cannot have it both ways: it cannot argue for a broad construction of claim terms in support of its infringement case, but then argue those same terms should be construed more narrowly to avoid invalidity. See Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1351 (Fed. Cir. 2001) ("A patent may not,
like a 'nose of wax,' be twisted one way to avoid anticipation [invalidity] and another to find infringement." (cleaned up)).
As the "construer of patent claims," the Court finds that Simplot has met its burden under 35 U.S.C. § 112. Personalized Media Commc'ns, LLC, 161 F.3d at 705. The '540 Patent is invalid for indefiniteness. The terms "high electric field," "under conditions," and "almost zero," and "sufficiently low" leave too much wiggle room—even for a POSA. The Court is not holding McCain to a heightened burden. Its own expert, Dr. Floros admits that some of the language is vague. Floros's solution, however, is to simply allow a POSA to do what he or she knows how to do: experiment and make sure everything lines up. This is a bridge too far.
McCain urges the Court not to analyze these phrases in isolation, but to view them in light of the claims as a whole. The Court has tried to do as McCain suggests. And as noted, if there were but one term in dispute, and that term had one or two variables, the Court could accept the idea that a POSA could do some experimentation to ascertain the bounds of the patent claims. But there are three problematic phrases here. Each phrase involves multiple variables. And each variable has ranges, terms of degrees, and varying meanings. Simply put, it would take a POSA a considerable amount of time and experimentation to understand the full scope of the '540 Patent and, specifically, what was protected by its reach. This is too much to ask a POSA to undertake. Moreover, the myriad variations do not reasonably apprise the public of what is covered by the patent and what is still open for exploration.
In addition to finding the disputed terms are indefinite under 35 U.S.C. § 112, ¶ 2, the Court finds the '540 Patent lacks a sufficient written description and enablement under 35 U.S.C. § 112, ¶ 1. McCain has essentially tried to patent all PEF ranges, for all fruits and vegetables under all conditions that result in its preferred embodiment. Such is improper.
The Court finds the '540 Patent invalid for indefiniteness. Simplot's Motion for Summary Judgment is GRANTED in this respect.
2. The '916 Patent
To some degree, the design patents have taken a back seat in recent years to the '540 Patent. Technically, however, they are what started it all.
a. Background
In its Complaint, Simplot accused McCain's Twisted Potato product of infringing Simplot's Sidewinders French fry product and its '036 Patent. Dkt. 1, at 9-11. The '036 Patent, issued June 21, 2011, is a design patent which Simplot alleges covers the ornamental features of the Sidewinder. Or, at least, that is what Simplot alleged at one time. More on that in a moment.
In its Complaint, McCain alleged Simplot's Sidewinder product infringes McCain's '916 Patent. The '916 Patent, titled "Root Vegetable Product" issued January 13, 2015, and is a design patent which McCain alleges covers the ornamental features of its Twisted Potato French fry product.
Simplot moved for summary judgment of non-infringement as to the '916 Patent. McCain did not cross-motion for summary judgment of infringement of the '916 patent and neither party has moved for summary judgment as it relates to the '036 Patent.
b. Legal Standard
"Design patent infringement is a question of fact, which a patentee must
prove by a preponderance of the evidence." Columbia Sportswear N. Am., Inc. v. Seirus Innovative Accessories, Inc., 942 F.3d 1119, 1129 (Fed. Cir. 2019) (cleaned up). Infringement is determined using the "ordinary observer" test: "[i]f, in the eye of an ordinary observer, giving such attention as a purchaser usually gives, two designs are substantially the same, if the resemblance is such as to deceive such an observer, inducing him to purchase one supposing it to be the other, the first one patented is infringed by the other." Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665, 670 (Fed. Cir. 2008) (quoting Gorham Mfg. Co. v. White, 81 U.S. (14 Wall.) 511, 528, 81 U.S. 511, 20 L.Ed. 731 (1871)).
This inquiry involves two steps: "(1) the court first construes the claim to determine its meaning and scope; (2) the fact finder then compares the properly construed claim to the accused design." Lanard Toys Ltd. v. Dolgencorp LLC, 958 F.3d 1337, 1341 (Fed. Cir. 2020). The Court has already construed the '916 Patent as "shown in figures 1-7"; therefore, the first part of the infringement test is complete. Dkt. 69, at 29.
c. Analysis
Because the '540 Patent has taken center stage, the parties briefs as it relates to the '916 Patent were relatively short—both sides spent a cumulative twelve pages on this issue—as compared to the other topics. The Court is not implying this was improper. It has enough information to rule on Simplot's motion. But it laments that the parties were unable to flesh out some of their arguments in greater detail because, as will be explained, their arguments are somewhat confusing.
Simplot asks the Court to grant summary judgment on McCain's claim that the Sidewinder product infringes the '916 Patent.
The dispute here boils down to three things. First, what is the embodiment of the '916 Patent and what other prior art exists? Second, are the product features similar? Third, should the Court award pre-suit damages? Candidly, the most difficult part of this analysis is keeping track of the various patents.
(i) Prior Art and the '243 Patent
McCain contends that Simplot has always asserted its Sidewinder product is the commercial embodiment of the '036 Patent. Simplot, however, claims the Sidewinder actually practices the design out-lined in another of its patent: U.S. Patent No. D723,243 ("the '243 Patent").
In its Complaint, Simplot asserted the '036 Patent "covers the ornamental features of Simplot's Sidewinders." Dkt. 1, at 8, 10. Based upon this, the Court previously held that the Sidewinder "embodies the '036 Patent." Dkt. 69, at 29. To be sure, Simplot couched its reference to the '036 Patent as being "at least one of" the "dozens of patents" Simplot has related to various potato product designs. Id. at 8. But the implication is clearly that the '036 Patent is best viewed as the Sidewinder product. Additionally, in introducing a visual in its Complaint, Simplot states, "McCain copied Simplot's patented Sidewinders design" and then shows the '036 Patent. Dkt. 1, at 9. Thus, the Court (and McCain) have operated under the assumption that the Sidewinder was the embodiment of the '036 Patent.
Simplot now asserts, however, that Sidewinders actually practice the '243 Patent. In support, Simplot repeatedly asserts that McCain's own expert, Dr. Steven C. Visser, admits as much. This is partially accurate.
Visser reviewed the confusing nature of Simplot's assertions and concluded that he "must accept that Simplot states that
the '243 patent was based upon the Sidewinder product." Dkt. 332-12, at 75. Importantly, Simplot made this statement in its Supplemental Interrogatory Responses in reference to an allegation of the '916 Patent's invalidity, and not in reference to the infringement of the '036 Patent. Nevertheless, it appears this is now Simplot's position. But Visser "accepting" Simplot's current representations is not quite the same as agreeing with Simplot or "admitting" that Sidewinders practice the '243 Patent. While Visser does state "the '243 is closer to the Sidewinder product than [is] the '036," he ultimately concludes that, in his opinion, "it was the '916 [ ] I found closest to the Sidewinder product." Dkt. 413-7, at 5.
This confusion and disagreement aside, Simplot's point is that because McCain apparently recognizes the Sidewinder practices the '243 Patent, it is "irrefutabl[e] [] that an ordinary observer, who is necessarily familiar with the '243 Patent, could not be deceived to believe that Sidewinders are the same as the design claimed in the '916 Patent." Dkt. 332, at 52. First, as noted, the Court disagrees that McCain's recognition of Simplot's current position is some type of overt omission rendering its claims against Simplot void. Second, while the Court will delve into product features momentarily, it finds Simplot's argument here to be misplaced. Even assuming another of Simplot patents is at issue, that does not automatically mean Simplot's product does not infringe McCain's patent.
The confusion as to which product embodies which patent is one of the reasons the Court cannot grant summary judgment to Simplot at this time. There are clearly disputed facts that must be weighed by a factfinder to reach a resolution.
To be sure, timing here is key. Simplot explains it doesn't really matter which of its patents covers the Sidewinder because the '036 Patent, the '243 Patent, and others, ALL came before the '916 Patent (as illustrated below).
Image materials not available for display.
Thus, according to Simplot, regardless of which Patent covers the embodiments present in the Sidewinder French fry product, all pre-date the '916 Patent. It
argues its product cannot validly embody one of its own earlier-filed patents and violate McCain's later patent at the same time. Afterall, the USPTO would not have issued McCain the '916 Patent unless it was substantially different from the prior art and the Sidewinder is based on one (or more) of those prior arts so, therefore, it logically cannot infringe the '916 Patent.
The Court is concerned with Simplot's seemingly changed position. But, as noted, it might not matter. Regardless of which patent the Sidewinder embodies, however, the question remains whether the product would confuse the ordinary observer into believing it is the embodiment of the '916 Patent.
(ii) Features
Simplot claims there are a variety of features present in the Sidewinder that are not part of the '916 Patent such as "ridged surfaces," "wavy edges," and "full revolution end views." Dkt. 332-15, at 36-37. Most importantly, however, Simplot asserts the '916 Patent includes a cored center and that no such feature exists in the Sidewinder product. For this reason, it contends ordinary observers would not confuse the two products.
McCain and Simplot's competing experts discuss whether a cored center is, or is not, present in the Sidewinder. Each blame the other for taking the visual images out of context. As will be discussed later, there are questions going to these experts' methods and opinions. But that is all fodder for cross-examination. Suffice it to say, there is no way the Court can grant summary judgment on this factual question at this stage of the case.
Design infringement is a question of fact. Given the parties' genuine disputes about the prior art and how it relates to McCain's infringement claim, it is up to the jury to assess the similarities and differences between the '916 Patent, the Sidewinder product, and the prior art.
(iii) Pre-suit Damages
Finally, Simplot claims that McCain is not entitled to pre-suit damages for any alleged infringement. Because the Court cannot say whether infringement occurred or not, it cannot say whether there are damages or not.
Simplot, however, presents a technical argument the Court will briefly address.
Under 35 U.S.C. § 287(a), presuit damages are available only if the patentee can establish "constructive notice by marking the article with the patent number, or actual notice to the infringer." SRI Int'l, Inc. v. Advanced Tech. Labs., Inc., 127 F.3d 1462, 1469 (Fed. Cir. 1997); see also Nike, Inc. v. Wal-Mart Stores, Inc., 138 F.3d 1437, 1446-48 (Fed. Cir. 1998) (holding "the marking requirement, § 287(a), applies to design patents whether remedy for infringement is sought under § 284 or § 289[.]"). The burden of proving constructive or actual notice under § 287(a) "at all times remains on the patentee." Arctic Cat Inc. v. Bombardier Recreational Prod. Inc., 876 F.3d 1350, 1367 (Fed. Cir. 2017).
Simplot claims McCain never marked any of its products with the '916 Patent, thus failing to satisfy the constructive notice requirement and that without notice, there can be no damages.
McCain counters it had no duty to mark because it had no products to sell. It confusingly claims there were "never any U.S.-bound products" except some "distressed product[s]" that were "sold" in the U.S., and because of this, no duty to mark arose. Dkt. 411, at 60. This does not make sense. McCain either sold products in the United States or it did not. There is nothing to suggest "distressed products" are
exempt from the marking requirements under§ 287(a). Thus, the Court agrees with Simplot that no pre-suit damages are likely.
The Court will not go so far as to grant summary judgment, however, because of McCain's confusing admission. It put the word sold in quotation marks and the testimony cited in support is not particularly enlightening. Specifically, McCain's 30(b)(6) deponent said that no Twisted Potato products were shipped in the United States after 2017 and then stated that a distressed product from "those productions" (presumably meaning the twisted potato product) was sold at a discount to a supplier in the United States. Dkt. 413-8, at 4-5.
In sum, there are conflicting facts on this subject and because "compliance with § 287 is a question of fact" the Court cannot formally grant summary judgment on this argument at this time. Arctic Cat Inc., 876 F.3d at 1366.
(iv) Invalid as Anticipated
In light of its position that the Sidewinder practices the '243 Patent, Simplot claims the '916 Patent is invalid because it practices the prior art; i.e. it is invalid as anticipated by one of more of Simplot's other products/patents. Similar to its comments above, the Court has very little briefing on this issue and because factual issues abound, it cannot find the '916 Patent invalid.
"Anticipation cannot be proved by merely establishing that one 'practices the prior art.'" Zenith Elecs. Corp. v. PDI Commc'n Sys., Inc., 522 F.3d 1348, 1363 (Fed. Cir. 2008). Anticipation requires clear and convincing evidence that a single prior art reference is "identical in all material respects" to the claimed invention. Door-Master Corp. v. Yorktowne, Inc., 256 F.3d 1308, 1312 (Fed. Cir. 2001). The Court does not have that level of detail and argument here.
(v) Conclusion
Factual disputes preclude summary judgment on whether Simplot infringed the '916 Patent. There are questions about the prior art, visual likeness, and damages. These issues must be presented to a jury for resolution. Simplot's Motion for Summary Judgment as to non-infringement of the '916 Patent is DENIED. As mentioned, neither party moved for summary judgment as it relates to the '036 Patent. Accordingly, the parties' claims regarding the competing design patents—the '916 Patent and the '036 Patent—must go to trial.
B. Third-Party Defendants Motion for Summary Judgment against McCain (Dkt. 364)
1. Introduction
Simplot and Elea, and Simplot and Food Physics, have cross-motioned against each other on the issues of indemnity and the duty to defend. Because Elea and Food Physics are two separate entities the Court will discuss those two motions, separately, below.
That said, Elea and Food Physics collectively —as Third-Party Defendants—have also moved for summary judgment against McCain. Dkt. 364. They assert McCain's infringement claims against Simplot are barred under the doctrine of equitable estoppel and/or because the Third-Party Defendants had an implied license from McCain. They also assert the '540 Patent is invalid for indefiniteness. Insofar as the Court has already determined the '540 Patent is invalid for indefiniteness, it will not repeat that analysis here. Suffice it to say, the Court finds the terms of the '540 Patent do not provide a POSA with any objective boundaries. Therefore, the Court
will only address the Third-Party Defendants estoppel and license arguments at this time.
Again, however, the question is why? Why is the Court addressing a matter that is essentially moot? After all, if the '540 Patent is invalid, then whether estoppel applies and/or whether Third-Party Defendants had an implied license from McCain is irrelevant. First, as noted above, see supra note 2, the Court will rule on all motions today so that the parties have an accurate picture of this case moving forward —whatever form that may take. Second, the issues of estoppel and license are related to the motions for summary judgment between Simplot and Elea, and Simplot and Food Physics, and a ruling on these matters will aid the Court in its discussion on those motions. In sum, the Court will review, and rule on, all arguments within Third-Party Defendants' Motion.
2. Background
Sometime in roughly 2005-2006, McCain [Redacted] [Redacted]
[Redacted]
During this work, Third-Party Defendants claim that Jean-Francois Cousin—a named inventor of the '540 patent and a McCain [Redacted]. In particular, Third-Party Defendants contend [Redacted]
According to Third-Party Defendants, [Redacted].
McCain does not deny this. However, it asserts it did not owe anyone a duty to express agreement or disagreement with a graduate student's opinion regarding the scope of a patent that student did not develop.
Eventually, [Redacted]. The patent application —dated March 24, 2006—mirrors the '540 Patent in most respects except that it discloses a range of 0.5 to 5 kV/cm and calls the process "pulsed electric field technology." See generally id. It is Third-Party Defendants position that McCain knew the '540 Patent only covered MEF technology; otherwise, why apply for a patent substantially similar, but specifically call it "pulsed electric field technology"?
Third-Party Defendants, [Redacted]. The referenced document, however, appears to claim "0.5 to 5 kV/cm." Dkt. 367, at 335. This difference is not material to the Court's decision today.
[Redacted]
In January of 2009, [Redacted].
At that time, DIL had not yet begun to manufacture PEF devices for the treatment of fruits and vegetables. McCain's [Redacted] encouraged DIL to enter this business. In 2010, DIL sent [Redacted]
Since 2011, [Redacted]
Prior to this litigation, McCain has never accused DIL, Elea, or Food Physics of infringement of the '540 Patent. Additionally, as of today's date, McCain has never sued (or suggested infringement against) any other customers of DIL-manufactured PEF devices. This is so, despite McCain knowing that since at least 2013 Third-Party Defendants had sold the devices to customers in the United States—including Simplot. Third-Party Defendants claim that if McCain had ever asserted the DIL-manufactured PEF devices infringed the '540 patent, Elea would have either refused to sell PEF devices in the United States or negotiated an express license from McCain. Similarly, given the fact that Food Physics was established with the primary purposes of selling DIL-manufactured PEF devices to potato processing companies in the United States and Canada, if McCain had ever asserted that DIL's PEF devices infringed the '540 patent,
Third-Party Defendants assert Food Physics likely would never have been formed.
As noted above, the Court allowed Simplot to bring Third-Party Defendants into this case some two years after its inception. Dkt. 113. Simplot has asked that Third-Party Defendants indemnify and defend it against McCain's attacks. So far, Third-Party Defendants have refused. Those issues will be dealt with in the following section; however, the Court notes here what it has in the past: as the case has progressed, it has created some interesting alliances and divisions between the various parties.
Relevant here is the fact that Third-Party Defendants have elected to oppose McCain at this stage of the case by asking the Court to rule on its affirmative defenses (against McCain) and to declare the '540 Patent invalid.
McCain opposes the Third-Party Defendants' Motion on procedural and substantive grounds. Simplot has joined Third-Party Defendants' Motion. Dkt. 387. McCain moved to strike Simplot's joinder, arguing it was improperly filed and that Simplot is simply trying to increase its arguments against McCain (and skirt the Court's page limits) by "joining" in Third-Party Defendants' filings. Dkt. 419. The Court finds the simple fact that Simplot "joined" Third-Party Defendants' arguments is allowed. It will DENY McCain's Motion to Strike and give Simplot's joinder the weight it deems appropriate.
Simplot did not offer an extensive explanation of its joinder. It did not present new arguments or re-argue anything from its own motions. It simply said that Third-Party Defendants' reasons for summary judgment apply to it as well. Dkt. 387. To be sure, Simplot filed a lengthy brief against McCain when McCain challenged Simplot's joinder, but that response deals more with the procedure of joinder, not the substantive reasons Simplot seeks to join Third-Party Defendants' Motion in the first place.
3. Discussion
At the outset, the Court must discuss whether Third-Party Defendants can bring this motion; in fact, whether they can bring affirmative defenses against McCain at all.
McCain has not asserted a claim against Third-Party Defendants in this lawsuit. It has not accused Third-Party Defendants' devices of direct infringement either. McCain is accusing Simplot of using the patented method outlined in the '540 Patent. And it asserts Simplot does this with Third-Party Defendants' devices. But because McCain is not asserting a direct claim against Third-Party Defendants or their actual devices, any affirmative defenses Third-Party Defendants can assert are limited. Federal Rule of Civil Procedure 14(2)(c) outlines that a third-party defendant can "assert against the plaintiff any defense that the third-party plaintiff has to the plaintiff's claim." Thus, Third-Party Defendants' defenses are limited to those defenses that Simplot can assert against McCain.
According to McCain, Third-Party Defendants' defenses based on the doctrines of equitable estoppel and implied license go to their conduct in building and selling the devices Simplot purchased, and not to Simplot's infringement of McCain's patented method. In other words, McCain claims Third-Party Defendants can only assert defenses Simplot would assert and the defenses they are trying to assert here are defenses only they could bring and only if they were engaged in direct litigation with McCain themselves. The Court disagrees.
Third-Party Defendants' Answer in this case, including its affirmative defenses, is broadly worded, and fairly put McCain on notice of its position long ago. For example, Third-Party Defendants contend
"McCain's infringement claims are barred, in whole or in part, by the doctrines of license, implied license, acquiescence, waiver and/or estoppel." Dkt. 128, at 12. Importantly, Third-Party Defendants argue the principles of equitable estoppel and implied license extend to their customers, including Simplot. Such a position is an accurate reflection of the law. See Forest Labs., Inc. v. Abbott Labs., 1999 WL 33299123, at *23 (W.D.N.Y. June 23, 1999), aff'd, 239 F.3d 1305 (Fed. Cir. 2001) (discussing the idea that estoppel applies to customers because "to hold otherwise would significantly undercut, if not wholly vitiate, the purpose of equitable estoppel" and result in "the law [taking] away from [the party asserting the defense] with one hand what it gave to [that same party] with the other").
Because these equitable defenses extend to Simplot, the Court agrees as a matter of procedure that Third-Party Defendants can assert them in Simplot's stead under Rule 14(a)(c)(2). The Court next turns to the merits of the motion and Third-Party Defendants' arguments that the doctrines of estoppel and implied license bar McCain's infringement claims as a matter of law.
a. Estoppel
As described, [Redacted]. There is also nothing in the record to indicate that McCain ever mentioned concerns about the '540 Patent and/or Simplot's use of PEF machines to either of the Third-Party Defendants or any of their employees.
Third-Party Defendants assert such prior actions estop McCain from now claiming infringement. Three elements are required to prove estoppel:
The first is that the patentee, through misleading conduct, leads the alleged infringer to reasonably infer that he does not intend to enforce the patent against the alleged infringer. The conduct may include specific statements, action, inaction, or silence where there was an obligation to speak. The second element is that the alleged infringer relies on the patentee's conduct. The final element is that due to the reliance, the alleged infringer will be materially prejudiced if the patentee is permitted to proceed with its infringement suit. Being an equitable doctrine, estoppel is committed to the sound discretion of the trial judge whose decision we review under the abuse of discretion standard.
ABB Robotics, Inc. v. GMFanuc Robotics Corp., 52 F.3d 1062, 1063 (Fed. Cir. 1995).
The biggest dispute between the parties as to estoppel comes down to one issue: silence. Was McCain's silence acquiescence? Was McCain's silence "misleading" enough that Third-Party Defendants (and by extension Simplot) understood that McCain did not intend to enforce the '540 Patent as applied to PEF devises sold by Third-Party Defendants and bought by Simplot? The Court finds Third-Party Defendants cannot meet their burden. At the very least, there are disputed facts that cannot be resolved on summary judgment.
To begin, mere silence is not enough. Silence can only be held against a person or entity if the person or entity had a duty to speak. A.C. Aukerman Co. v. R.L. Chaides Const. Co., 960 F.2d 1020, 1043 (Fed. Cir. 1992) (en banc) ("Silence alone will not create an estoppel unless there was a clear duty to speak."). The Court understands Third-Party Defendants' position. McCain did not do anything to dissuade them from improving PEF technology, building PEF Systems, and selling PEF devices. In fact, McCain encouraged these actions. But McCain also did not do anything to indicate it would not enforce and defend its patent—if and when doing so became necessary. The fact that [Redacted] does not lead to the conclusion that McCain wouldn't ever try to enforce its patent. In other words, [Redacted] is not conclusive evidence that McCain wouldn't seek to enforce its '540 Patent rights in the future.
McCain's point is well-taken that if it provided any encouragement to Third-Party Defendants, it was so that it could practice its own patented method. Now, this explanation is undercut by the fact that McCain knew Third-Party Defendants were selling PEF devices to other customers, including Simplot, but those arguments are for cross-examination and must be weighed by a jury. In addition, just as Third-Party Defendants point to McCain's actions as indicative of some type of abandonment, McCain points to Third-Party Defendants interactions—alone, and in conjunction with Simplot—as evidence that both entities planned to move forward regardless of McCain's position on the enforceability of the '540 Patent.
Specifically, McCain points to conversations within Elea, Food Physics, and Simplot where individuals discussed whether the PEF Systems infringed the '540 Patent and decided to press forward nonetheless.
In sum, the Court cannot find as a matter of law that Third-Party Defendants have met their burden in establishing McCain should be estopped from alleging patent infringement based upon its behavior, specifically its silence. At a minimum, there are questions of fact precluding summary judgment at this time.
b. Implied License
Related to the above, Third-Party Defendants claim they have an implied license from McCain to make, use, offer to sell, sell, and/or import PEF devices in the United States.
An implied license "signifies a 'patentee's waiver of the statutory right to exclude others from making, using or selling the patented invention.'" Wang Labs. v. Mitsubishi Elecs. Am., 103 F.3d 1571, 1580 (Fed. Cir. 1997). As explained in Wang Labs., "the primary difference between the estoppel analysis in implied license cases and the analysis in equitable estoppel cases is that implied license looks for an affirmative grant of consent or permission to make, use, or sell." Id. at 1580. Thus, an implied license by equitable estoppel requires proof that:
(1) the patentee, through statements or conduct, gave an affirmative grant of consent or permission to make, use, or sell to the alleged infringer; (2) the alleged infringer relied on that statement or conduct; and (3) the alleged infringer would, therefore, be materially prejudiced if the patentee is allowed to proceed with its claims.
Winbond Elecs. Corp. v. ITC, 262 F.3d 1363, 1374 (Fed. Cir. 2001). With respect to the first element, Winbond further explained that "the alleged infringer must have knowledge of the patentee and its patent and must reasonably infer that the patentee acquiesced to the alleged infringing activity for some time." Id.
Third-Party Defendants assert that the undisputed evidence outlined above, specifically McCain's silence, establishes they had an implied license from McCain to make, use, offer to sell, sell, and/or import PEF devices in the United States, and that this license serves as a complete bar to McCain's claims of infringement. For the same reasons the Court cannot find in favor of Third-Party Defendants on their estoppel claim, it cannot find in their favor on their implied license claim. There are simply too many competing versions of the facts. Third-Party Defendants have not carried their burden at this stage of the
case. This is an issue of fact that must be presented to a jury for resolution.
c. Conclusion
Third-Party Defendants' Motion for Summary Judgment is GRANTED in PART and DENIED in PART. It is granted as to invalidity and denied in all other respects.
C. Simplot's Motion for Summary Judgment against Elea (Dkt. 337)/Elea's Motion for Summary Judgment against Simplot (Dkt.335)
Simplot and Third-Party Defendants have filed cross-motions on the issue of indemnity and the duty to defend. While the arguments largely overlap, there is a threshold issue the Court must take up regarding the Motions involving Elea— namely which law applies: German law or Idaho law. The Court, therefore, begins with a choice of law analysis. It will then discuss the competing arguments between Simplot and Elea and, in the final section, discuss how those same arguments apply to Food Physics.
1. Background
In January 2013, Simplot entered an Equipment Furnish Only Purchase Contract (the "Purchase Contract") with Elea to purchase five PEF systems. Dkt. 337-4. Simplot subsequently purchased those systems (the "PEF Systems") and installed them in three of its facilities. Elea advertised that the PEF Systems were designed for processing "tubers, roots, vegetables and fruits," and helped Simplot with the installation of the PEF Systems. Simplot has used the PEF Systems for their intended purpose and in accordance with their factory settings to process potatoes since they were installed.
Included in the Purchase Contract are numerous provisions. For example, in Clause 17, Elea warranted that the PEF Systems, and Simplot's use of those systems, would not infringe any patent. Id. at 8. Elea went on further, promising that if the PEF Systems, or Simplot's use of those systems, was "covered by a patent," it would, "at its sole expense," provide Simplot "the right to use" the PEF Systems and pay "all royalties and license fees" necessary to obtain that right for Simplot. Id. Finally, Elea promised that if a third party sued Simplot for patent infringement based on Simplot's use of the PEF Systems, it would, at its own expense, "defend, save harmless, and indemnify Simplot against all losses, damages, liabilities, costs, and expenses (including but not limited to reasonable attorney's fees)" and that it would "otherwise dispose of" the lawsuit. Id.
As noted, McCain sued Simplot for patent infringement in the Northern District of Illinois on February 21, 2017. Simplot notified Elea of the McCain Lawsuit within three days of its filing and within two days of being served with the complaint. In the weeks that followed, representatives of Simplot discussed the McCain lawsuit with representatives of Elea.
On November 2, 2017—before the cases were consolidated and before McCain served its infringement contentions identifying the accused products—Simplot submitted a formal, written demand for defense and indemnity on Elea. Elea refused to defend or indemnify Simplot based upon its reading of certain terms in the Purchase Contract.
As a result, Simplot moved for leave to file a third-party complaint against Elea for breaching its duties under the Purchase Contract. Dkt. 88. The Court granted that motion (Dkt. 112), and Simplot filed its Third-Party Complaint (Dkt. 113) in July 2019. On October 7, 2019, Elea filed its Answer, denying any duty to defend or indemnify Simplot. Of note, Elea has yet to reimburse Simplot for any of the attorneys' fees and costs it has incurred thus far in defending against McCain's '540 Patent Infringement Claim.
2. Discussion
a. Governing Law
As a threshold matter, the Court must determine which law applies to the Purchase Contract between Simplot and Elea.
Simplot recognizes that the Purchase Contract contains a choice-of-law provision, Clause 29.2, outlining that German law applies to the interpretation of the agreement. Dkt. 337-4, at 10. That said, Simplot contends because German law and Idaho law are substantially similar, the Court should use Idaho law because absent a contrary showing, "it is presumed that foreign law is the same as the law of the forum." United States v. Westinghouse Elec. Corp., 648 F.2d 642, 647 n.1 (9th Cir. 1981), overruled on other grounds by FTC v. Actavis, 570 U.S. 136, 158, 133 S.Ct. 2223, 186 L.Ed.2d 343 (2013).
But this reasoning begs the question: why wouldn't the Court use German law because it is, as Simplot admits, similar to Idaho law and the listed choice of law within the contract?
Elea notes the matter is not as simple as Simplot suggests. German law and Idaho law are similar in many respects, but there are nuances as well. More importantly, however, Elea argues that absent some indication it waived its rights under German law, there is no reason to deviate from the contract that clearly outlines German law applies. The Court agrees with Elea.
Idaho allows parties to choose the applicable law governing their transactions. Idaho Code § 28-1-301(a). And, as the Court has noted before, "in contract cases, courts generally defer to the parties' agreed upon choice of law." Melaleuca, Inc. v. Kot Nam Shan, 2018 WL 1952523, at *5 (D. Idaho Apr. 24, 2018). Simplot and Elea agreed that German law would govern the Purchase Contract. Elea has not waived its rights under German law, nor has it acquiesced to the application of Idaho law. Simplot cannot refute these facts. The Court will, as explained below, give the other terms of the Purchase Contract their literal meaning (as Simplot requests). There is no reason not to do so with the choice of law provision as well. The Court concludes German law applies to the Purchase Contract and will interpret the Purchase Contract with that in mind.
This conclusion notwithstanding, both sides admit the law is very similar between Germany and Idaho as it relates to these issues. Both cite cases, sources, explanations, and interpretations from Germany and Idaho (or the United States). The Court will do likewise —to explain certain concepts—while still recognizing that German law ultimately rules the day.
b. Interpretation of Foreign Law
Federal Rule of Civil Procedure 44.1 outlines how a Court should analyze and interpret foreign law. That rule states, in its entirety:
A party who intends to raise an issue about a foreign country's law must give notice by a pleading or other writing. In determining foreign law, the court may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence. The court's determination must be treated as a ruling on a question of law.
To begin, Elea put Simplot on notice of its intent to rely on German law in its
Answer and interrogatory responses. See, e.g., Dkt. 128, at 10-11. So, the first part of Rule 44.1 is of no concern today.
Next, the Court is tasked with reviewing the relevant foreign law and how it applies to the instant action. It may utilize a variety of means to accomplish this task. Id. See also G & G Prods. LLC v. Rusic, 902 F.3d 940, 950 (9th Cir. 2018) ("Rule 44.1's requirements are intended to be 'flexible and informal' so as to 'encourage the court and counsel to regard the determination of foreign law as a cooperative venture requiring an open and unstructured dialogue among all concerned.'" (citing 9A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2444 (3d ed. 2008))).
Here, the parties have provided expert reports, opinions, and translations of the applicable German law and how they relate to the various issues before the Court. The Court appreciates these efforts. It aids the Court in this "cooperative venture" of trying to determine the appropriate application of German law to the facts of this case. To be sure, the Court is not bound by these experts' interpretations or suggestions. But the purpose of those undertakings is to assist the Court. The Court moves next to Simplot's arguments about the duty to defend and the duty to indemnify.
The duty to defend exists in both Idaho and German law.
In Germany, the indemnitor/insurer is required to "release the policy holder from any claims asserted by a third party on the basis of the policyholder's responsibility for a fact arising during the period of insurance," and to "cover the judicial and extra-judicial costs arising from claim" asserted by such a third party. Insurance Contracts Act of 23 November 2007 (Versicherungsvertragsgesetz, WG), §§ 100, 101(a). Similarly, in Idaho, the duty to defend requires the indemnitor/insurer to "immediately step in and defend the suit" if there is an "arguable potential" that the suit includes a covered claim. Kootenai Cnty. v. W. Cas. & Sur. Co., 113 Idaho 908, 750 P.2d 87, 90 (1988).
In its Motion for Summary Judgment, Simplot argues summary judgment is appropriate on the question of whether Elea breached the Purchase Contract because Elea had a duty to defend and indemnify Simplot once McCain filed suit. Simplot also seeks summary judgment on each of Elea's affirmative defenses. Elea, in turn, argues that Simplot is not entitled to relief based upon its affirmative defenses.
In its Motion for Summary Judgment, Elea focuses mostly on whether the language of the Purchase Contract is enforceable. It again brings up its various defenses. Because Elea's affirmative defenses go to both the duty to defend and the duty to indemnify—and because they permeate both motions—it is organizationally cleaner to address the issues against the backdrop of those defenses as opposed to reiterating them twice: once in opposition to Simplot's duty to defend argument and again in opposition to Simplot's duty to indemnify argument.
The primary issue here is Clause 17 of the Purchase Contract. Clause 17 contains the duty to defend and indemnify language at the heart of these competing motions. Dkt. 337-4, at 8. This is a standard business clause of Simplot's creation. Simplot argues there is no ambiguity in the provisions of Clause 17 and that Elea simply failed to perform. Elea contends there are numerous reasons Clause 17 cannot be enforced and/or that Simplot is estopped from trying to enforce Clause 17 in this suit. The Court turns next to the parties' respective arguments. c. First Affirmative Defense
Elea's First Affirmative Defense has five subparts. It asserts each of Simplot's claims are barred by "waiver, forfeiture, laches, and estoppel, and by Simplot's failure to give timely notice of its demand for indemnity." Dkt. 128, at 10. The Court reviews each subpart in turn.
(i) Laches
Elea mentions this legal principle twice in passing—simply as part of the list out-lined above. It does not expound upon it in any way. As such, it appears Elea has abandoned this portion of its defense. Simplot asks for summary judgment on this defense and given Elea's failure to offer any argument supporting its laches affirmative defense, the Court agrees.
(ii) Estoppel
Similarly, Simplot contends Elea does not mention estoppel in any meaningful way. While Elea does mention estoppel more than laches, Simplot accurately highlights that Elea's estoppel argument is not substantive. That said, Elea uses this phrase in conjunction with waiver so the Court will address those arguments as part of that discussion. As a legal matter, however, the Court cannot say Elea has abandoned its estoppel defense; it has simply combined it with another.
(iii) Timeliness and Forfeiture
Again, Simplot argues Elea never fleshes out its forfeiture defense. It is true Elea does not do so as a stand-alone defense. Elea includes its forfeiture argument, however, as part of its timeliness argument and more generally as part of its contention that Simplot "forfeited" its right to enforce the contract because of certain actions. The Court considers Elea's forfeiture argument in those contexts.
Elea argues that under Section 242 of the German Civil Code ("BGB") and Section 377 of the German Commercial Code ("HGB"), Simplot forfeited its right to enforce Clause 17 because it failed to provide prompt notice to Elea that it intended to invoke that clause.
Elea maintains that while Simplot notified it McCain had filed suit, it did only that: provided notice. Simplot did not ask for indemnification at that time. It simply told Elea that McCain had filed a lawsuit.
While this appears to be an accurate representation of how events transpired, Elea does not point to anything in German law stating such an approach is wrong—at least with respect to timing. There is nothing in the BGB or HGB outlining a formal timeframe for requesting enforcement of a contract provision. In fact, at least one case interpreting Section 242 of the BGB explains that legal claims asserted within two years of accrual are not time-barred even due to inactivity on the part of the entitled party. Dkt. 337-16, at 13, 60; cf. BGH of 20 October 1988, BGHZ vol. 105, pp. 290-299. Thus, it appears German law does not dictate a timeline and, therefore, Simplot's timing is not reason alone to find it forfeited its right to seek Elea's defense.
In response, Elea pivots slightly and states that the problem here is not just that Simplot didn't ask Elea to formally step in for many months after the lawsuit started, but also that the issue involved a "defective" product, and because of this, Simplot was obligated to tell Elea much sooner.
This topic is the subject of Elea's second affirmative defense, but brief mention is necessary here. In short, Elea claims that sellers are not liable if the buyer is aware of a "known defect" in the product they are purchasing. Elea claims patent infringement is a "known defect" and because Simplot knew the PEF Systems could infringe McCain's '540 Patent, it knew it was buying a "defective" product
and thus, should have told Elea sooner that it might require Elea's assistance to defend it against infringement claims. As the Court will discuss below, this is a strained reading of the "known defect" language under German law.
In any event, this does not change the Court's conclusion regarding timing and forfeiture. Simplot may not have asked Elea to indemnify it until a few months after the lawsuit began, but there can be no doubt Elea was well-aware of the lawsuit and also knew it had a contract requiring indemnification with Simplot. It is not entirely clear what timeframe, if any, is applicable to this claim. But what is clear is that German law does not preclude the timing that occurred here. Accordingly, the Court grants Simplot summary judgment on Elea's timeliness and forfeiture affirmative defense.
(iv) Waiver
Waiver is, arguably, the most important aspect of Elea's First Affirmative Defense. First, Elea argues that Clause 17 is not enforceable because it is a standard business clause. Second, it contends Simplot has waived the ability to enforce Clause 17 because of its actions. Again, the Court addresses each argument in turn.
1. Standard Clause
Section 305, subsection (1) of the BGB outlines that "standard business terms are all contract terms pre-formulated for more than two contracts which one party to the contract (the user) presents to the other party upon the entering into of the contract." Dkt. 337-16, at 131; Dkt. 345, at 365. That section goes on to say that "contract terms do not become standard business terms to the extent that they have been negotiated in detail between the parties." Id. The reason this is important is because Germany has determined these types of boilerplate, non-negotiable terms should be struck down because they are typically unfavorable to non-drafting party. Elea asserts that because Clause 17 is one of Simplot's standard contract terms, it must be struck down. The Court disagrees.
First, it seems the purpose behind Section 305 is the idea that one party (typically the party in a more powerful position) could include disadvantageous provisions within a contract and the non-drafting party would simply have to accept them. Commentary regarding Section 305 suggests that when the non-drafting party can introduce its own proposals, however, the clauses are not considered "standard." In short, Germany appears to encourage robust discussion about contract terms.
BGH, 20 January 2016, NJW 2016, at 1230-1233. See also, Basedow in Münchener Kommentar zum BGB, 8th edition 2019, Sec. 305 BGB, para 21 (discussing whether the user has "imposed" the clause on the other party must be a consideration); Stadler in Jauernig, Burgerliches Gesetzbuch, 18th edition 2021, Sec. 305 BGB, para 6 (stating this requirement is mostly a concern with contracts drafted by third parties).
In this case, Simplot does not wield uneven power over Elea. It is a bigger company to be sure, but it did not demand that Elea sign the contract at all costs. As Nick Speakman, CEO of Food Physics, himself explained, Elea worked with Simplot to negotiate, modify, edit, and revise the terms of the contract. Dkt. 342-8, at 9-12. See also Dkt. 342-9, at 5, 7-9; Dkt. 342-10, at 6-7 (other individuals discussing negotiations surrounding the Purchase Agreement). The Purchase Contract was not a unilateral, boilerplate contract that Simplot threw out demanding agreement; it was a mutually negotiated contract.
Second and relatedly, Elea had the opportunity, and did, propose revisions to the Purchase Contract. Dkt. 342-8, at 16. It did not bring any concerns to Simplot about
Clause 17. But just because Elea did not bring any concerns to Simplot about the language of Clause 17 does not mean this is now a standard business clause that must be stricken. Elea had the chance to modify this clause, it simply chose not to. Elea doubles down claiming that while it may have negotiated some clauses, that does not mean it negotiated every paragraph—seeming to suggest this defeats Simplot's argument. But this is a stretch in the absence of any information to suggest Elea was obligated or forced to accept Clause 17.
Third and finally, the argument that, unless the parties to a contract negotiate every single provision, those provisions then become boilerplate does not make logical sense. For example, a person seeking to avoid the terms of a contract could simply accept the contract the other side presented and later claim that because it did not "negotiate" all the contract terms, it is exempt from performance. This, of course, cannot be. Furthermore, it stands to reason that many terms—whether called "boilerplate" or just "customary"—would apply in many circumstances and would not require revisions. A party should not have to change a word or two of every customary and necessary clause just to ensure each does not become "standard" and unenforceable.
In short, the Court is not persuaded that Clause 17 is a "standard business term" rendering enforcement unavailable. The Court's sense after reviewing the record is that the German government seeks to prohibit a power-imbalance when it comes to negotiating contracts. But that does not seem to be an issue in this case. Both parties are sophisticated, both engaged in negotiations about the contract, and both agreed with full knowledge of the terms of that contract. To unravel the contract now would contravene the parties' agreement and go against general public policy—in Germany and the United States.
As a final matter, Elea's feigned shock about Clause 17 rings hollow when one considers that Elea included that very same provision in a subsequent contract with another customer to provide that customer with "peace of mind." See Dkt. 342-11, at 2, 12.
The Court finds Elea's "standard contract" argument unavailing and will grant Simplot summary judgment in this regard.
2. Waiver by actions
This argument is a bit more difficult. Elea asserts that various Simplot representatives told various Elea representatives Simplot would not seek to involve Elea in the instant lawsuit. As a result, Elea claims Simplot has waived its opportunity to involve them now.
Between February 25, 2017, and November 2, 2017, multiple Simplot representatives—including James Englar (Senior Director of New Markets at Simplot), Dr. Vid Mohan-Ram (Chief Intellectual Property Counsel at Simplot), and various attorneys with Simplot's retained law firm of Parsons Behle and Latimer (specifically Dana Herberholz)—had several meetings and email conversations with Elea and Food Physics regarding this lawsuit. During such contacts, Elea claims these individuals made it clear that Simplot was not pursuing indemnification. Elea outlines a few meetings and communications that deserve specific analysis.
In March of 2017, Herberholz sent "litigation hold" letters to Elea and Food Physics. In those communications, Herberholz noted that "failure to comply with this request may have legal consequences and would also negatively impact Simplot's ability to defend itself in the lawsuit." Dkt. 338, at 108 (emphasis added). In May of 2017, Mohan-Ram sent an email to Töpfl indicating that Simplot wanted help understanding the PEF machines as it was drafting certain documents for use in this lawsuit. Mohan-Ram did not indicate Simplot would be seeking anything other than technical support from Elea. Similarly, in June of 2017, Herberholz sent an email to Elea's German counsel about this case. In relevant part, Herberholz said that Simplot was "requesting technical assistance from Elea so that it can defend itself in the lawsuit." Dkt. 343, at 147 (emphasis added).
On August 1, 2017, many of the above-named individuals, included Mohan-Ram, Englar, and Herberholz, met with various Food Physics representatives to discuss this lawsuit. When Speakman expressed concerns about this lawsuit, Mohan-Ram purportedly assured him that Simplot just wanted cooperation and support and didn't intend to enforce any contractual obligations against either Elea or Food Physics.
On August 8, 2017, Speakman attended a meeting at Parsons Behle and Latimer's office in Boise, Idaho. During that meeting, indemnity apparently was never discussed. And while the specific term "indemnity" was not raised, Mohan-Ram purportedly told Speakman that Simplot did not intend to drag them into this fight or enforce any contractual obligations.
This cuts both ways. Elea claims the absence of any discussion illustrates Simplot did not want them to step in and defend. Simplot, however, claims this could also illustrate they did not oppose Elea stepping in and defending, and that silence should not be construed as acquiescence.
On August 16, 2017, Töpfl from Elea, and Volker Heinz from DIL, met in Buenos Aires, Argentina, with Mark Currie (of Simplot) and other Simplot representatives to discuss the possible use of DIL's technology in a plant being built there. During the meeting, Currie and Töpfl discussed this lawsuit. Töpfl briefly discussed the prior art to the patents, and Currie purportedly assured Töpfl that Simplot would not seek to enforce the indemnification provision of the contract, but stated Simplot wanted Töpfl to continue providing technical and scientific support.
Elea asserts all these events, individually and collectively, give rise to waiver. The Court disagrees. First, it is questionable that these individuals said these things. While some of the conversations are documented (e.g. emails); others are not and cannot be independently verified. Second, even assuming individuals said the things they are purported to have said, the Purchase Contract does not allow oral modifications. Third, even if the Court were to construe the contract language as Elea suggests and allow oral modifications, most of the individuals who purportedly made the aforementioned statements cannot bind Simplot per the explicit terms of the contract.
a. Hearsay
To begin, these conversations are all essentially hearsay. And while various people have testified to what they remember, their stories are inconsistent. The Court is not implying anyone is lying. But these conversations appear to have been in passing many years ago. Memories fade. And all parties were not present at all times. For example, it is undisputed that Elea was not represented at the meeting in Boise, Idaho, on August 8, 2017. Speakman was in attendance, but he was (and is) the CEO of Food Physics, not Elea.
Furthermore, as it relates to the meeting in Boise, Speakman testified "there was no mention of indemnification of any
type," that Simplot was merely seeking "information," and that he attended that meeting merely to "provide information" to Simplot. Dkt. 342-8 at 20-21, 28-29. During the meeting, the issue of indemnity "was not a topic that was discussed" and "never really came up." Id. at 27, 29. There was also no mention of any "waiver." Id. at 29. When specifically asked if Mohan-Ram ever told Speakman that Simplot was waiving its indemnity rights against Elea or Food Physics, Speakman testified, "I don't recall that he did." Id. at 30.
Similarly, when questioned about the August 16, 2017, meeting in Argentina, Töpfl confirmed that Currie never discussed "waiver," never told Elea that Simplot was waiving its indemnity rights, and that there was no writing or follow up to the meeting to memorialize the alleged waiver. Dkt. 342-7, at 41-42. Instead, Töpfl testified that the "gist" of Currie's comments at the meeting was that Simplot would only seek technical support from Elea. Id. at 38-39.
The email conversations, on the other hand, say what they say. But even taking these emails and all the verbal conversation in the light most favorable to Elea—that Simplot never planned on involving Elea and only wanted technical support—such does not rise to a full-blown waiver of any contractual rights. There is no conversation or email Elea can point to in which Simplot affirmatively stated it would not seek indemnification or definitively waived its right to make such a request.
b. Oral Modifications
Second, even assuming arguendo any of the emails or conversations could be construed as Simplot affirmatively waiving its right to enforce Clause 17, it would not matter because oral modifications are not allowed under the express terms of the Purchase Contract.
Specifically, Clause 29.5 of the Purchase Contract is a No Oral Modifications ("NOM") Clause which states, in relevant part, that "the Agreement shall not be modified or altered except in writing signed by the Parties." Dkt. 342-15, at 12. Clause 13 of the Purchase Contract also states that: "in no case shall oral communications be effective to change or modify this Agreement." Id. at 8.
Elea tries to get around these provisions by first arguing that these are "standard contract clauses"—like Clause 17—and, as such, cannot be enforced because it did not negotiate their terms. Pursuant to the Court's analysis above, this argument is rejected. Elea had opportunity to negotiate these terms and they are enforceable.
Elea also argues that under German law, a NOM clause in unenforceable unless the parties expressly agree that the NOM clause itself may not be orally modified or waived. This is known as a "double-in-writing" requirement. Not only is this concept circular, but it is not clear that this is an absolute "requirement." German courts have upheld these provisions, but that does not mean every contract must include one to be valid and enforceable. Again, however, even assuming this was the law, the Purchase Contract has two clauses (Clause 29.5 and Clause 13) that discuss the fact that all changes must be "in writing" and that the contract cannot be orally modified. While not the standard doublein-writing format, the Court agrees with Simplot's German law expert, Thomas Pfeiffer, that these two provisions satisfy the double-in-writing requirement under German law. Dkt. 337-16, at 109. c. Authorization to Modify
BGH, 17 September 2009, Multimedia Recht ("MMR" — a law journal) 2010, at 336-338; BGH, 2 June 1976, BGHZ vol. 66, at 378-384.
Finally, even if the Court were to assume the language from the emails or in-person meetings constituted a waiver and that oral modifications were allowed under the Purchase Contract, Elea would still have a final hurdle to overcome. The Purchase Contract specifically says that only six people are given the authority to modify the contract. Dkt. 337-4, at 7. The only person from any of the above-mentioned interactions on that list is Currie. Id. Furthermore, this provision of the contract specifically outlines that any change "must be in writing and must be signed by one of the above-names individuals" and reiterates that "in no case shall oral communications be effective to change or modify this Agreement." Id. There is no indication Currie ever represented, even orally, that Simplot would not seek indemnification from Elea, let alone that he ever signed a written communication waiving indemnification.
In short, the communications outlined above cannot constitute a waiver of Simplot's right to seek indemnification because: 1) it is largely disputed what was actually said during such communications; 2) even if the Court assumes someone said something akin to waiver, that is irrelevant because oral modifications are not allowed under the contract; and 3) even if the Court accepts what was purportedly said as quasi-waiver and accepts the idea that oral modification were allowed, Elea still would not prevail because any changes have to be signed by those in authority, Currie is the only individual deemed to have authority to modify the contract who was involved in such communications, and Currie never appears to have represented that Simplot would waive indemnity. Such circumstances, frankly, present too many hoops to jump through to get to the place Elea wants.
Lastly, Elea argues that German law recognize the doctrine of apparent authority—i.e. that an individual with "apparent authority" can bind a principle. The Court is not persuaded by this argument either. To begin, apparent authority is largely irrelevant because the Purchase Contract specifically identified those who had authority to make modifications. There is no need to guess as to who had apparent authority when one can easily see who had actual authority. What's more, Elea does not analyze this argument in any detail. It simply says that Mohan-Ram falls into this category. Dkt. 403, at 28. The Court understands Mohan-Ram's position within Simplot to be one of great importance, but it does not know what authority—perceived or real—the position holds. Elea's bare conclusion that Mohan-Ram can (or should) bind Simplot is not enough.
In sum, the Court finds Simplot has met its burden as to the bulk of the categories within Elea's first defense. Again, some of the categories (laches) were not argued and others (forfeiture) seem to be connected to other arguments. But as to the primary argument, the Court finds Simplot's request is not time-barred and that it did not waive or forfeit its ability to seek indemnification from Elea under either the terms of the contract or based on its purported statements or behavior.
d. Second Affirmative Defense — Provocation and Known-Defect
In its second affirmative defense, Elea argues it is excused from its duty to defend Simplot "to the extent that" Simplot "provoked McCain," and because Simplot—like Elea—knew about the '540 Patent before it signed the Purchase Contract. Dkt. 128, at 10-11. Both arguments are somewhat nuanced and will be addressed in turn. (i) Provocation
Elea asserts that Simplot's claims are barred "in whole or in part by the doctrines of unclean hands, unjust enrichment, unconscionability, and/or assumption of risk to the extent that Simplot acted knowingly and deliberately provoking McCain despite Simplot's knowledge of the '540 patent and the scope of its claims." Id.
The fact that Elea prefaced this defense with "to the extent that" indicates it rests on unsure footing. Pollitt v. CSN Int'l, 2007 WL 294249, at *8 (D. Idaho Jan. 29, 2007) ("Facts alleged on understanding, such on belief or on information and belief, are not sufficient to create a genuine issue of fact." (citing Cerrnetek, Inc. v. Butler Avpak, Inc., 573 F.2d 1370, 1377 (9th Cir. 1978))).
Even if Elea were able to prove that Simplot "knowingly and deliberately provoked McCain," Elea's defense fails as a matter of law. Neither Idaho, nor German law, prevents intellectual property owners from enforcing their rights against infringers when there is a risk of "provoking" a countersuit. In his opening report, Pfeiffer confirmed there is no authority under German law to support Elea's provocation defense. Dkt. 337-16, at 16. Elea did not dispute this. In fact, Elea's German law expert did not address Elea's "provocation" defense in his reports at all, much less identify any authority showing that such a defense withstands summary judgment here. Thus, the Court finds this argument unpersuasive and grants Simplot summary judgment on the same.
(ii) Known-Defect
Section 442 of the BGB provides that "[t]he rights of the buyer due to a defect are excluded if he has knowledge of the defect at the time the contract is entered into." Dkt. 337-16, at 23. This restriction on a seller's liability is triggered if the buyer knows of an alleged defect.
Elea claims that the PEF Systems it sold Simplot (and others) are "defective" because they may implicate liability under the '540 Patent. In other words, Elea claims it was selling a defective product, Simplot knew the product was defective, and because it knew it was defective, Simplot must take on all subsequent liability and Elea is off the hook. This argument is a stretch.
Also, this position conflicts with Third-Party Defendants' overall position that Simplot has not infringed the '540 Patent. Again, this case has made for strange bedfellows at various times.
Simplot and Elea fight about whether a legal defect, such as infringement, falls within the gambit of Section 442's "defect" language. Frankly, the Court does not know. This is confusing and both sides mold the interpretation of "defect" to fit their arguments.
But even assuming infringement is a "defect," Elea cannot prove the defect was "known" to Simplot at the time it entered into the Purchase Contract. Simplot does not dispute that it knew about the '540 Patent's existence at the time it signed the Purchase Contract. But that, in and of itself, is not dispositive. First, nobody—neither Simplot, McCain, Elea, nor anyone else—had a commercial application of the '540 Patent at the time the Purchase Contract was signed. Second, there were varying opinions about whether the '540 Patent applied to PEF or MEF technology. Third, and most importantly, the Purchase Agreement specifically stated that Elea, not Simplot, "represent[ed] and warrant[ed] that the [PEF Systems] do not infringe any patent." Dkt. 342-15, at 9. Thus, Elea cannot show that Simplot knew
about any potential defect. This is especially true since there was not then, nor is there even now, any Court finding that any PEF system infringes the '540 Patent.
Elea tries to tie Simplot's hands by noting that a Simplot Australia employee told others via email that she thought the '540 Patent could be an issue. But this employee was simply one person expressing her opinion to another. She is not a patent attorney, and she is not one of the six people listed as having authority in the Purchase Contract. There is also no indication that her conversation went further than her "initial thoughts." In any event, thoughts from one person cannot serve as the basis for a finding that Simplot (as a company) knew the '540 Patent was going to be implicated when it purchased the PEF Systems from Elea. What's more, numerous individuals, including Töpfl and Speakman, assured Simplot that there was no infringement of their technology. See, e.g., Dkt. 343, at 202-203, 250, 252-53. Now, just as the Court is not holding Simplot to purported oral representations about indemnification, it will not hold Elea's feet to the fire here either—at least with respect to hearsay statements that its technology did not infringe any patent. Nevertheless, regardless of what was said, and in what context, this supports the idea that Simplot was never in a position to "know," or even suspect, that the PEF Systems it was purchasing from Elea were going to trigger infringement claims by McCain.
In short, Elea's Second Affirmative Defense is a strained interpretation of Section 442. The Court finds Simplot has met its burden.
e. Third Affirmative Defense
Elea's Third Affirmative Defense provides, in pertinent part, that Simplot's claims "are barred, in whole or in part, because Simplot has failed to act reasonably in litigating against McCain and has failed to mitigate its damages." Dkt. 128, at 11.
The Court is not persuaded by this argument. If Elea wanted to see the litigation proceed differently, it could have stepped in and defended. But now, having refused to do so, it is in no position to second-guess Simplot's actions. See, e.g., J.R. Simplot Co. v. Chevron Pipeline Co., 2010 WL 11619341, at *1 (D. Utah Apr. 29, 2010) (explaining that a party "cannot accuse [the other] of failing to mitigate after refusing to accept its duty to defend"). For what it is worth, the Court notes this has been an extremely complicated case, which has taken years of litigation. The Court also changed things on the parties when it reconsidered claim construction. Moreover, other companies (and countries) got involved, the parties tried to mediate, and the stakes are high. The fact that it has taken a long time to get to this point, and that Simplot has not prevailed on every argument it has made, is the nature of litigation. But the strategy Simplot has employed was within its purview.
Further, Section 254 BGB—the subsection of German law Elea references in support of this defense—does not seem to apply. Section 254 is a contributory negligence statute. There is no indication that defending a lawsuit or pursuing a legal position constitutes negligence. Even if it did, this is a patent infringement and breach of contract case, not a tort action. And this lawsuit didn't always exist. It would be exceptional indeed to find Simplot contributorily negligent when it began purchasing PEF Systems from Elea during a time when there was no indication doing so would result in litigation.
f. Fourth Affirmative Defense
In its Fourth Affirmative Defense, Elea requests that Simplot's third-party claims
be severed and/or bifurcated from the underlying liability claims as "premature." The Court has already addressed Elea's request for severance and bifurcation. Dkts. 157, 309.
Elea claims that if the Court finds the '540 Patent invalid, there is no money judgment against Simplot and, therefore, no money judgment against Elea. Elea argues its involvement in this lawsuit has been extremely burdensome because it was (until now) undetermined whether Simplot had even infringed the '540 Patent in the first place. This may be true, but that should not have stopped Elea from stepping in to defend Simplot at the outset consistent with the express terms of the Purchase Contract. Regardless of the outcome, Elea is still bound by its contractual obligations.
In any event, while the Court agrees in principle with Elea's position about taking up certain claims in a certain order, it has already ruled on severance and bifurcation. And ultimately, that issue is of no consequence considering the Court's decision on invalidity today. What's more, these concepts are not really "defenses" to a claim that could bar Elea's liability to Simplot—they are procedural tools unrelated to the elements of Simplot's claims. Thus, whether summary judgment can be granted on this "defense" is suspect.
3. Conclusion
The Purchase Agreement is clear. Elea had a duty to defend Simplot. Clause 17 is not a standard business clause because Elea had a say in the drafting of the Purchase Contract. Simplot may not have asked for indemnification right away, but its indemnification request was not untimely. Simplot also may have said things about not involving Elea, but it never affirmatively relinquished its ability to make that request. Notably, many of those statements were hearsay and/or were not made by those having authority to alter the terms of the contract. But even assuming the representations before the Court are accurate and those statements had been made by someone in authority, they were not reduced to writing—a specific condition of the contract. And, even if the Court accepts all of Elea's facts as true, it still cannot overcome the express terms of the contract. Simply put, Elea breached its contractual duty and Simplot is entitled to summary judgment against Elea on the issues of indemnity and the duty to defend.
Simplot's Motion (Dkt. 337) is GRANTED. Elea's Motion (Dkt. 335) is DENIED.
D. Simplot's Motion for Summary Judgment against Food Physics (Dkt. 346)/Food Physics' Motion for Summary Judgment against Simplot (Dkt. 358)
The same general legal principles outlined above apply to this motion as well. The primary difference, of course, is this contract is governed by Idaho law. The Court will not repeat its analysis from the preceding section here. It will, however, briefly review the facts and relevant analysis under Idaho law.
In January of 2017, Simplot entered into an Equipment Furnish Only Purchase Contract with Food Physics to purchase a "SmoothCut" PEF system. Later that year, Simplot installed the system in its production facility in Moses Lake, Washington.
Similar to the Purchase Contract between Simplot and Elea, the agreement between Simplot and Food Physics contained the same patent indemnification paragraph ("paragraph 17") outlining that Food Physics would "defend, save harmless, and indemnify Simplot ... based on a claim that the Equipment ... constitutes
an infringement of any United States patent[.]" Dkt. 346-4, at 7.
As noted above, Idaho law is well settled that the duty to defend requires the indemnitor/insurer to "immediately step in and defend the suit" if there is an "arguable potential" that the suit includes a covered claim. Kootenai Cnty., 750 P.2d at 90. The duty "arises upon the filing of a complaint whose allegations, in whole or in part, read broadly, reveal a potential for liability that would be covered by the insured's policy." Hoyle v. Utica Mut. Ins. Co., 137 Idaho 367, 48 P.3d 1256, 1260-61 (2002). The duty to defend is separate, unrelated, and much broader than the duty to indemnify. Black v. Fireman's Fund Am. Ins. Co., 115 Idaho 449, 767 P.2d 824, 830-31 (Idaho Ct. App. 1989).
McCain's lawsuit triggered Food Physics' duty to defend Simplot because the allegations had an "arguable potential" to implicate the terms of their contract. Food Physics' affirmative defenses fail for the same reasons articulated above in regard to Elea's affirmative defenses: Simplot gave Food Physics timely notice of McCain's lawsuit, Simplot did not waive or forfeit its right to seek a remedy under the terms of the contract (even if it initially did not seek those remedies), and any representations made orally were not binding.
Food Physics claims it has not formally "breached" its contractual duty since there is no timeframe contained within paragraph 17 and this lawsuit is ongoing. This is, to some degree, an argument of semantics. While it is true that Food Physics can "jump in" now and defend (i.e. pay for Simplot's defense), that does not mean it did not breach its initial duty. The Court finds Food Physics (and Elea) had a duty to defend once Simplot formally asked it to defend many years ago. From a summary judgment standpoint, the Court finds there are no disputed material facts that could change its conclusion about the contract provisions.
And as above, Food Physics' "known-loss," "known-risk," and/or "known-defect" defenses lacks merit.
In sum, the Court finds its conclusions as to Simplot's actions vis-á-vis Elea apply to Simplot's actions vis-á-vis Food Physics. Nothing that occurred between these two parties prevented Simplot from seeking to enforce paragraph 17 and Food Physics' defenses cannot save it from its duty. Simplot's Motion (Dkt. 346) is GRANTED. Food Physics' Motion (Dkt. 358) is DENIED.
E. Daubert/Rule 702 Motions
The Court moves next to the various motions to exclude filed by the parties. Some of the motions are directed towards matters currently before the Court, others are in preparation for trial. And again, some are superfluous considering the Court's rulings above on certain matters. Nevertheless, the Court will continue to rule on all motions so the parties know the Court's position as they move forward.
1. Legal Standard
The extent to which experts may render an opinion is addressed under the well-known standard established in Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), and its progeny, and now set forth in Rule 702 of the Federal Rules of Evidence. See Moore v. Deer Valley Trucking, Inc., 2014 WL 4956241, at *1 (D. Idaho Oct. 2, 2014).
Rule 702 establishes several requirements for the admission of expert opinion and testimony. First, the evidence offered by the expert must assist the trier of fact either to understand the evidence or to determine a fact in issue. Primiano v. Cook, 598 F.3d 558, 563 (9th Cir. 2010); Fed. R. Evid. 702. "The requirement that the opinion testimony assist the trier of
fact goes primarily to relevance." Id. (internal quotation marks and citation omitted).
Additionally, an expert witness must be sufficiently qualified to render his or her opinion. Id. If specialized knowledge will assist the trier of fact in understanding the evidence or determining a fact in issue, a witness qualified by knowledge, skill, experience, training, or education may offer expert testimony where: (1) the opinion is based upon sufficient facts or data, (2) the opinion is the product of reliable principles and methods; and (3) the witness has applied those principles and methods reliably to the facts of the case. Fed. R. Evid. 702; Daubert, 509 U.S. at 592-93, 113 S.Ct. 2786; Kumho Tire Co. v. Carmichael, 526 U.S. 137, 147, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999). This inquiry is a flexible one. Primiano, 598 F.3d at 564. Ultimately, a trial court must "assure that the expert testimony both rests on a reliable foundation and is relevant to the task at hand." Id. (internal quotation marks and citation omitted).
Reliability and relevance, however, must be distinguished from problems with expert opinions that amount to impeachment and, consequently, do not warrant exclusion. See City of Pomona v. SQM N. Am. Corp., 750 F.3d 1036, 1044 (9th Cir. 2014) (stating that, under Daubert, "[t]he judge is 'supposed to screen the jury from unreliable nonsense opinions, but not exclude opinions merely because they are impeachable.'" (quoting Alaska Rent-A-Car, Inc. v. Avis Budget Grp., Inc., 738 F.3d 960, 969 (9th Cir. 2013))). Thus, "[a]s Daubert confirmed, '[v]igorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence.'" United States v. Wells, 879 F.3d 900, 933 (9th Cir. 2018) (quoting Daubert, 509 U.S. at 596, 113 S.Ct. 2786).
2. Discussion
a. McCain's Motion to Exclude the testimony of Simplot's expert Sudhir K. Sastry (Dkt. 353)
Simplot hired Dr. Sudhir K. Sastry as an expert to provide technical opinions on the '540 Patent. Sastry opines on many topics over the course of his two reports. While McCain undoubtedly disagrees with many of those opinions, it only moved to exclude "certain testimony" proffered by Sastry. Dkt. 356, at 6. The testimony McCain wants excluded revolves around Sastry's opinions about: (1) prior art and obviousness, (2) Claim 6, and (3) certain off the record conversations. The Court will address each in turn.
Sastry's opening and rebuttal report (and supporting documents) total roughly 300 pages.
In addition, McCain clarified at the hearing that its motion is geared towards trial, not summary judgment.
(i) Prior Art and Obviousness
McCain argues that Sastry's opinions on Prior Art and Obviousness should be excluded because they lack support. A quick review of one aspect of this case's history is important for understanding this argument.
On December 19, 2017, Simplot served its invalidity contentions on McCain. Those contentions included several charts that quote limitations from the asserted patent claims and passages from the asserted prior art references.
On December 27, 2017, Simplot sought inter partes review ("IPR") of the '540 Patent before the PTAB. With its petition,
Simplot submitted the declaration of its then-proffered expert, Dr. Gustavo Barbosa-Cánovas. The PTAB rejected Simplot's and Dr. Barbosa-Cánovas' arguments on June 29, 2018, denying institution of the requested IPR. Simplot sought reconsideration of the PTAB's denial. On October 1, 2018, the PTAB denied Simplot's request for rehearing. Sometime in early 2019, Simplot replaced Dr. Barbosa-Cánovas with Sastry. On July 9, 2021, Simplot served Sastry's Initial report regarding the '540 Patent.
McCain asserts Sastry's report—or at least the portions of the report detailing prior art, obviousness, and anticipation—is wholly unsupported because it simply contains the same charts submitted with Simplot's invalidity contentions before Sastry was retained. McCain alleges Sastry did not analyze these principles or do any of his own work, but simply adopted Simplot's counsel's work (or Simplot's prior expert's work) and "blindly stamped his 'expert' seal of approval" on the opinions. Dkt. 356, at 16.
Simplot's response is that Sastry's report complies with Federal Rule of Evidence 26 and that any problems McCain has with the opinions goes to the weight of the evidence and can be fleshed out during cross-examination at trial. The Court agrees.
For example, one of McCain's biggest concerns is that Sastry did not discuss the PTAB's rejection of the arguments he now supports, nor did he discuss the PTAB's contrary analysis. The Court understands McCain's concerns, but PTAB findings are not binding on this Court. See Va. Innovation Scis., Inc. Samsung Elecs. Co., Ltd., 2014 WL 1775573, at * 14 (E.D. Va. Jan. 8, 2014), vacated on other grounds, 614 F. App'x 503 (Fed. Cir. 2015) (explaining that "prior final PTO decisions affirming patentability are not controlling in a subsequent validity challenge in [the district court]" and "a decision by the PTO regarding whether to institute IPR certainly does not have binding effect on the [district court]"). Thus, just because the PTAB ruled one way, does not mean that Simplot or Sastry are foreclosed from continuing to take a certain position before this Court. And, the degree to which Sastry discusses the PTAB's findings is, again, a matter of weight not admissibility.
To be sure, an expert cannot "waltz into the courtroom and render opinions unless those opinions are based upon some recognized scientific method and are reliable and relevant under Daubert." Robertson Transformer Co. v. General Electric Co., 2016 WL 4417019, *4 (N.D. Ill. Aug 19, 2016). But unless it is clear the challenged testimony is methodically flawed, the Court must allow it to go to the factfinder. Elosu v. Middlefork Ranch Inc., 26 F.4th 1017, 1024 (9th Cir. 2022) ("If the proposed testimony meets the thresholds of relevance and reliability, its proponent is entitled to have the jury decide upon its credibility, rather than the judge.") (cleaned up).
The problem with McCain's argument is the charts at issue outlining the prior art are clearly relevant and there are no indications Sastry's opinions based upon said charts are unreliable. He does not discuss his findings in depth, but he does discuss them. Of course, McCain disagrees with Sastry's analysis, as did the PTAB. In fact, the Court found against Simplot on the prior art issue as outlined above. But this does not mean Sastry is unqualified to offer his opinion on this topic. Just because Simplot used these charts before does not mean it is precluded from using them now.
Ultimately, the Court finds that Sastry's opinions regarding prior art, anticipation, and obviousness are admissible. That Sastry
utilized charts Simplot already created and performed less analysis on those topics than other topics goes to the weight of the evidence, not its admissibility. Because the Court rejected Simplot's prior art, anticipation, and obviousness arguments as a whole (and did not rely on Sastry's testimony therein) there is no need to delve into this issue further.
(ii) Claim 6
McCain next asserts that Sastry should be precluded from discussing Claim 6 because he did not disclose any reasons supporting his opinion that Simplot does not infringe that claim.
This is not all that surprising, however, considering Claim 6 is a dependent claim. That is, Claim 6 holds all the limitations of Claim 1 and Sastry clearly states that Simplot does not infringe Claim 1. Thus, by extension, Sastry's opinion is that Simplot does not infringe Claim 6. Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318, 1328 n.5 (Fed. Cir. 2008) ("A conclusion of noninfringement as to the independent claims requires a conclusion of noninfringement as to the dependent claims.").
Again, any lack of explanation—perceived or real—goes to the weight of Sastry's testimony, which must be assessed by a factfinder.
(iii) Off the Record Conversations
Finally, McCain asks the Court to preclude Sastry from providing opinions concerning whether Simplot "cooks" its products that were obtained via conversations he had "off-the-record" with two people because it did not have a chance to cross-examine the individuals. The individuals are Simplot's 30(b)(6) witness James Englar, and another Simplot employee, Kevin Browning.
First, some of the purportedly improper conversations were not "off-the-record" as McCain asserts. In its motion, McCain contends Sastry relied on "selective parts of [ ] Englar's deposition testimony, as embellished by off-the-record interviews." Dkt. 356, at 21. Thus, some of the information came from deposition testimony. McCain could have cross-examined Englar (or Sastry) on any topic of its choosing. That it did not do so is not Simplot's fault or a reason to exclude Sastry's opinions.
Second, an expert can form his or her opinion based upon a variety of sources and "[w]hether the source of his facts are credible and reliable may be drawn out on cross-examination and will go to the weight of his opinion, not its admissibility." Adams v. United States, 2009 WL 2515848, at *2 (D. Idaho Aug. 11, 2009). McCain's own cited caselaw explicitly states that it is "not categorically inappropriate for experts to rely on witness interviews." Robertson Transformer, 2016 WL 4417019, at *5. And, referring back to point number one, if McCain had a problem with Sastry's use of those conversations, it should have challenged him about those matters during his deposition.
(iv) Conclusion
The Court relied on Sastry's opinions on certain topics in reaching some of its decisions above. None of those topics, however, are contested in McCain's current motion to exclude. This aside, the Court will not exclude Sastry's opinions on prior art, Claim 6, or cooking based on "outside" conversations, because McCain's challenges go to the weight that should be given to Sastry's testimony. But the admissibility requirement is met. Sastry's opinions are supported by analysis and explanation. While such explanations and analysis are at times brief, brevity is not the same as an "analytical gap between the data and the opinion proffered," requiring
that the Court exclude the testimony. See Gen. Elec. Co. v. Joiner, 522 U.S. 136, 146, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997).
McCain's Motion to Exclude Sastry's testimony (Dkt. 353) is DENIED.
b. McCain's Motion to Exclude the testimony of Simplot's expert Jacqueline H. Beckley (Dkt. 349)
Simplot retained Jacqueline H. Beckley to opine on the design patents. In this motion, McCain does not challenge Beckley's qualifications, but argues instead that her analysis is irrelevant and unreliable. McCain's criticisms fall into two categories, each of which will be addressed below.
(i) Kano Analysis and the Ordinary Observer
As part of her analysis, Beckley utilized an analysis method referred to as the "Kano Analysis." Beckley used this as a framework for assessing the importance of certain product attributes when looking at the '916 and the '036 Patents. McCain argues Beckley's use of this tool is erroneous, unreliable, and fatally flawed. Dkt. 349-1, at 9. McCain's biggest concern appears to be that the Kano Analysis considers design factors that might not be at issue in this specific case. It is concerned this "extra" information is irrelevant and will confuse a jury.
It appears this method comes from a scientific journal. See Dkt. 349-5, at 10 (citing "Kano's Methods for Understanding Customer-defined Quality" (Fall 1993), Charles Berger, et al., Center for Quality of Management Journal, Volume 2, Number 4).
Simplot argues McCain does not have any authority to support its contention that the Kano Analysis is impermissible. The Court agrees. There is nothing to indicate this method or style of analysis is flawed in and of itself. It appears to be used in evaluating commercial food products. The parties can argue whether it is the best method or the worst method, but there is nothing preventing Beckley from using it as far as the Court can tell. McCain does not provide anything besides its own argument on this issue. This is, therefore, an argument about weight, not admissibility.
More importantly, Simplot asserts that even if the Kano Analysis is "broader than necessary ... that is not grounds for unreliability and exclusion[.]" Dkt. 397, at 12. Again, the Court agrees. It does appear that the Kano Analysis can include a discussion about features not at issue in this case. For its part, Simplot argues Beckley does not use any of those inapplicable design attributes when discussing the '916 or '036 Patents. But even if she did, that would go to the weight of her testimony, not its admissibility.
As part of her Kano Analysis, Beckley discusses the "ordinary observer." She discusses end consumers as persons who fall into that category. McCain claims this error renders her opinions invalid. Simplot disagrees and contends McCain is missing the mark.
The Court briefly discussed this concept above, see Section III(A)(2)(b), but must do so in more depth now to understand the parties' competing arguments.
Additionally, this argument plays a large role in Simplot's Motion to Exclude McCain's expert Carl Visser.
An ordinary observer is "a person who is either a purchaser of, or sufficiently interested in, the item that displays the patented designs and who has the capability of making a reasonably discerning
decision when observing the accused item's design whether the accused item is substantially the same as the item claimed in the design patent." Arminak & Assocs., Inc. v. Saint-Gobain Calmar, Inc., 501 F.3d 1314, 1323 (Fed. Cir. 2007), abrogated in part by Egyptian Goddess, 543 F.3d 665. An ordinary observer could, hypothetically, be a lay person—if they are a purchaser of the item. In this case, however, the parties are largely in agreement that an ordinary observer would not include a lay person, or end customer.
In interrogatory responses, Simplot said that an ordinary observer in this case "would be familiar with the prior art, including those shown on the face of the '036 Patent, and would be 1) an operator purchaser of frozen potato products; 2) a person having experience marketing the sale of food products or investigating consumer perception of food products; or 3) a person having equivalent experience." Dkt. 349-7, at 4. As will be discussed in the following section regarding McCain's expert Visser, Simplot also, however, "accepts" Visser's definition of an ordinary observer as being "restaurant and other food service buyers who purchase cases of fries," including "food service distributors," or someone of equivalent experience. Dkt. 369, at 8. Thus, Simplot's definition contains a fairly large group of people, but does not appear to include end consumers.
A problem within the problem is whether the parties' definitions of "end consumers" includes lay people or just a generic "final buyer" and whether that final buyer is a lay person or a restaurant purchaser (for example).
McCain appears to agree that lay persons are not the ordinary observers at issue here. Case in point: it argues Beckley's analysis of how end consumers view the design products renders her opinions unreliable because they are not ordinary observers. But as part of their opposition to Simplot's motion to exclude McCain's expert (Visser) for not being an ordinary observer, McCain contends that by Beckley's definition he (Visser) is one. In other words, McCain does not want Beckley to include end consumers in the definition of ordinary observers, but then relies, in part, on her taking that approach to justify its expert's opinions.
The parties' wavering positions notwithstanding, the question here is whether Beckley's inclusion of customers in her definition of ordinary observers was erroneous and warrants exclusion of her opinions. The Court finds it was not. First, even if end consumers are not part of an ordinary observer in this case, their perception is still important because it informs the (real) ordinary observer's perception and opinion. In other words, consumer preferences influence the purchasing decisions of operators and distributors. More importantly, Beckley's definition of an ordinary observer includes—in addition to a consumer—a commercial food establishment, a distributor, a non-commercial food establishment, or a person with equivalent experience. Thus, her opinions about what an ordinary observer would think are not limited to end consumers.
In short, the Court will not exclude Beckley's opinions simply because she included consumers in a broader definition. There may be questions of weight, but at this stage, Beckley's opinions are relevant and reliable.
(ii) Reliable Methodology or Data
McCain's remaining arguments for excluding Beckley's testimony are largely technical in nature. McCain argues she did not take part in selecting the samples—of the Sidewinder and/or Twisted Potato products—used in the analysis; did not
participate in photographing the samples; ignored prior art references; did not know the answers to certain questions about the patents and their use; and relied on counsel (or her reports) to answer certain questions during her deposition. Each of these objections go to weight, not admissibility.
It is undisputed that Beckley conducted a visual analysis of the accused French fry products and compared those products to the asserted design patents. She analyzed the differences—or, in the case of the Twisted Potato and the '036 Patent, the lack thereof. The degree to which she was involved in the preparation for that—selecting samples, taking pictures etc.—may be relevant to how much weight her testimony should be given, but those factors alone do not warrant exclusion. What's more, experts are allowed to render opinions on "facts or data in the case that the expert has been made aware of or personally observed." Fed. R. Evid. 703. Thus, Beckley's level of involvement with the samples is not reason to exclude those opinions.
Similarly, Beckley's level of familiarity with the prior art, patent law, and how Simplot and/or McCain use their patents in manufacturing is, again, a question of credibility. For example, her opinions on prior art may, arguably, be light, but they are included in her report. Dkt. 349-5, at 22-23, 93-95. McCain can attack those opinions on cross-examination.
Finally, that Beckley consulted with Simplot's attorney during her deposition and/or referred to her reports does not mean she is not adequately familiar with her opinions as to render them reliable. Referring to reports in a technical case makes logical sense and any failure to respond to questions is, again, a question of credibility as opposed to admissibility.
(iii) Conclusion
Beckley used a different analysis than McCain's expert. She also used a different interpretation of certain terms. Further, Beckley was not involved to the same degree as Visser (or others) in certain aspects of expert discovery. But none of these facts mean Beckley's opinions must be excluded. The question is not whether she went about it a different way—or even the "right" way or "wrong" way—but whether the way she went about reaching her conclusions is reliable. The Court finds that it was. It makes no comment on Beckley's ultimate conclusions. And McCain's disagreement with Beckley's conclusions does not render her analysis deficient to the level of exclusion.
McCain's Motion (Dkt. 349) is DENIED.
c. Simplot's Motion to Exclude the testimony of McCain's Expert Steven C. Visser (Dkt. 352)
Similar to the above, McCain hired Steven C. Visser to render opinions on the dueling design patents at issue in this case. And, as above, Simplot takes issue with his conclusions. Simplot challenges Visser's opinions in three primary ways.
(i) Food Design Expert
First, Simplot argues Visser is unqualified because, while he is an industrial design expert, he is not a food design expert. The Court does not find this factor warrants exclusion. The patents at issue here are design patents. Visser is an expert in design. He has relevant experience in designing, analyzing, comparing, and teaching about three-dimensional shapes. Thus, as McCain points out, it doesn't really matter whether the product is made of
wood, plastic, or potatoes, Visser has the expertise to opine on design features.
Simplot takes this argument one step further, arguing Visser is not qualified to speak as an ordinary observer. This argument gives the Court pause. In other words, Visser may be an expert in design, but that does not necessarily mean he is an expert in how an ordinary observer would view and analyze the competing designs.
As noted above, an ordinary observer in this case is probably not an end customer or lay person. Simplot asserts that Visser knows he is not an ordinary observer based upon an answer during his deposition where he stated that an ordinary observer would probably pay "a higher level of attention than, for example, myself[.]." Dkt. 369-6, at 29. Context aside, the Court does not view this as a searing admission as does Simplot. McCain's response to this whole argument is that Beckley included consumers in her definition and Visser is—at the very least—a consumer, so he is also an ordinary observer. Leaving aside the fact that McCain argued against such a definition in opposing Simplot's motion, the question is whether Visser's opinions on designs themselves are relevant to how an ordinary observer would view the differences, or lack thereof. This is a tough question.
While his opinions on the design features and differences between the competing products and patents may be interesting and insightful, if Visser does not know how an ordinary observer would view such differences, it will be difficult for a jury to take anything meaningful from his analysis. But again, this goes to weight. Simplot can flesh out in cross-examination the degree to which Visser's opinions take into account how an ordinary observer would view the data, but the Court will not preemptively exclude them at this time.
(ii) Legal Standard and Prior Art
Second, Simplot argues Visser uses an incorrect legal standard and misconstrues prior art in his analysis.
With respect to its argument regarding the incorrect legal standard, Simplot avers Visser muddies Egyptian Goddess because he analyzes whether the Twisted Potato product is "closer to" the '916 Patent over the '036 Patent, instead of asking whether the Twisted Potato product is "substantially the same" as the '036 Patent. McCain counters that Egyptian Goddess contradicts Simplot's position, and that Simplot does have the burden to prove whether the "accused design [is] closer to the claimed design." 543 F.3d at 682.
To some extent this is a matter of semantics. Both phrases are used in Egyptian Goddess. Id. at 682, 668. It is clear the "substantially similar" test is the primary way to show infringement in a design patent case. But Visser's reference to a "closer to" test as part of his analysis is not fatal to his opinions.
Next, Simplot argues Visser's reliance on subsequent art, as opposed to prior art, warrants exclusion. Not only did Visser consider the prior art, see Dkt. 369-1, at 23, but, regardless, later issued patents are relevant to the question of infringement. RNA Corp. v. Procter & Gamble Co., 747 F. Supp. 2d 1008, 1019 (N.D. Ill. 2010) (holding a separate design patent on an accused product lent "support to the lack of infringement"). This argument is not persuasive.
Again, while these disagreements may go to credibility and how much weight a finder of fact should give Visser's specific opinions, none are so heinous as to require exclusion.
(iii) Legal Conclusions
Finally, Simplot argues Visser impermissibly gives opinions, legal in nature, relative to patent differentiation, double
patenting, patent misuse, and antirust. It asks the Court to exclude the same. The Ninth Circuit has long held that issues regarding "matters of law [are] for the court's determination" and are "inappropriate subjects for expert testimony." Aguilar v. Int'l Longshoremen's Union Local No. 10, 966 F.2d 443, 447 (9th Cir. 1992).
Simplot also argues Visser proffers opinions that refer to, and implicate, the opinions of both Simplot and the USPTO. Simplot implies these opinions are "legal" and wants them excluded. McCain did not respond to this specific request. Caselaw supports Simplot's argument. See Abbott Biotechnology Ltd. v. Centocor Ortho Biotech, Inc., 2014 WL 7330777, at *8 (D. Mass. Dec. 19, 2014) ("That is not permissible; she may not speculate as to what the examiner did or did not think .... Speculation about the thought processes or reasoning of the examiner is inadmissible."). In the event McCain believes these opinions are valid, it may revisit this before trial; otherwise, the opinions are excluded.
McCain does not agree that these opinions are legal in nature. But it does agree that it did not offer Visser as a legal expert and that he will not testify on those topics. Thus, Simplot's request on this point is GRANTED.
McCain does not specifically list Visser's opinions about patent differentiation as one of the areas it is conceding. The Court's broad holding—that legal opinions are for the Court—would apply to that topic as well. If McCain left patent differentiation out on purpose and wants Visser to testify on this topic, it will need to revisit this before trial; otherwise, Visser's opinions on this topic are excluded.
(iv) Conclusion
The Court understands some of Simplot's arguments regarding the conclusions Visser reaches and whether those would be helpful to a jury. But again, the Court cannot concern itself with conclusions at this stage. Visser is qualified. And his opinions are relevant and based upon acceptable methodology. How persuasive they will be remains to be seen. But the Court will not exclude them at this time, except with respect to those related to legal conclusions as agreed to by McCain.
Simplot's Motion (Dkt. 352) is GRANTED in PART and DENIED in PART as outlined above.
d. Third-Party Defendants' Motion to Exclude the testimony of Simplot's expert Thomas Pfeiffer (Dkt. 370)
Simplot retained Professor Thomas Pfeiffer to opine on German law. In addition to explaining German law in general, Pfeiffer discusses his opinions on how German law applies to the dispute between Simplot and Third-Party Defendants.
Third-Party Defendants now ask the Court to exclude certain aspects of Pfeiffer's testimony, asserting he relied on incorrect factual assumptions and failed to provide the Court will full translations of all documents upon which he relied. They argue Pfeiffer's testimony will confuse a jury and should be narrowed. They also argue Pfeiffer should not have gone so far as to opine on how the law applies to this specific case. Simplot opposes the motion on procedural, and substantive, grounds.
(i) Procedure
First, Simplot notes that none of the parties in this case anticipated that the German law experts would be testifying before a jury. Simplot also argues Daubert and Rule 702 do not apply to challenges of this nature. The Court tends to agree.
The purpose of foreign law experts under Federal Rule of Civil Procedure 44.1 is to help the Court in a "cooperative venture." See supra Section III(C)(2)(b). The Court can use the information experts
present, ignore it, or even do research of its own. And the rule is explicit in that the information need not be "admissible" for the Court to consider it. Fed. R. Civ. P. 44.1 ("[t]he court may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence."). The Advisory Committee Notes emphasize why this is the case:
[T]he ordinary rules of evidence are often inapposite to the problem of determining foreign law and have in the past prevented examination of material which could have provided a proper basis for the determination. The new rule permits consideration by the court of any relevant material, including testimony, without regard to its admissibility under Rule 43.
FED. R. C IV. P. 44.1, 1966 Advisory Committee Notes (emphasis added). See also 9A Fed. Prac. & Proc. Civ. § 2444 (3d ed. 2019) ("One of the objectives of Rule 44.1 was to abandon the fact characterization of foreign law and to make the process of determining alien law identical with the method of ascertaining domestic law to the extent that it is possible to do so. Thus, the trial court's freedom of inquiry no longer is encumbered by any restraint on its research or by the rules of admissibility."). Thus, any perceived defects in Pfeiffer's report must be viewed through this less-ridged lens.
Furthermore, while the broader idea underpinning Daubert and/or Rule 702 is assuredly relevant—that is to say, those who present before the Court should be qualified and their testimony must be reliable and relevant—those specific standards do not apply. See, e.g., Adria MM Prods., Ltd. v. Worldwide Ent. Grp., Inc., 2018 WL 6505914, at *2 (S.D. Fla. Aug. 27, 2018) ("[T]he Daubert analysis is inapplicable to the testimony of an expert on foreign law advanced under Rule 44.1."); Domenico Taglieri v. Michelle Monasky, 2016 WL 10950694, at *2 (N.D. Ohio Oct. 28, 2016) ("[C]ourts consider expert reports under Fed. R. Civ. P. 44.1, even where the report would not satisfy Fed. R. Evid. 702 or Daubert."). Thus, the Court need not delve into this disagreement further. The Court can give Pfeiffer's report and analysis whatever weight it deems appropriate without regard for Daubert and Rule 702.
For what it is worth, even assuming those standards applied, the Court would still not exclude Pfeiffer's testimony and report. He is very qualified—Third-Party Defendants do no dispute this (Dkt. 436, at 7)—and his opinions are relevant and reliable.
The bigger question in the Court's mind is whether Pfeiffer can offer "legal conclusions." Third-Party Defendants assert that Pfeiffer went too far by reaching conclusions as to certain aspects of this case. For its part, Simplot contends Pfeiffer went no further than Third-Party Defendants' own expert did and that there is no reason to exclude Pfeiffer's opinions.
Some courts appear to lean against giving a foreign law expert's opinion on legal matters credence. See, e.g., Siswanto v. Airbus Americas, Inc., No. 15-CV-5486, 2016 WL 7178460, at *5 (N.D. Ill. Dec. 9, 2016) (disregarding part of foreign law expert's report that went "beyond providing an analysis of Indonesian law and [was] offered to assist the fact finder ..."). Other Courts, however, are not as concerned. See, e.g., Fabricant v. Elavon, Inc., No. 2:20-CV-02960-SVW-MAA, 2021 WL 1593238, at *3 (C.D. Cal. Mar. 8, 2021) ("[A] court is free to consider a foreign law expert's opinion even on ultimate legal conclusions."). Wright and Miller summarize: "Although courts do not strike experts who offer legal conclusions, the purpose of an expert witness in foreign law is to aid the court in determining the content
of the applicable foreign law, not to apply the law to the facts of the case." § 2444 Proof of Foreign Law, 9A Fed. Prac. & Proc. Civ. § 2444 (3d ed.).
The Court understands the concern. Experts, especially paid experts, could interpret facts and apply the foreign law in such a way as to benefit the party that hired him or her.
That said, providing their opinion is, frankly, one of the reasons these specific experts are here: to help the Court "determine" foreign law. It would be odd indeed to let Pfeiffer describe a German law or the German legal process on a particular topic and then halt his analysis there. The Court is not abdicating its role, but an expert on foreign law encompasses more than just translating the law or explaining what the law is. A law's interpretation can sometimes be different than its application. Having an expert interpret and explain a foreign law; detail how it is different from, or similar to, an American law; and then explain how it applies in the "real world" (even to the facts of a case) is all subsumed in an expert's duty to help the Court in "determining" foreign law.
In sum, the Court finds rule 44.1 is flexible and the Court has considerable discretion in how much weight to give to any information provided by foreign law experts. This information is not going to go before a jury and Daubert/ Rule 702 do not apply.
(ii) Substance
When the above procedural disagreements are set aside, Third-Party Defendants simply disagree with Pfeiffer.
To be sure, they contend his analysis disregards certain facts or conflates various issues. But these disagreements are not reason enough to disregard Pfeiffer's opinions. That Third-Party Defendants disagree with Pfeiffer's analysis (and conclusions) is not surprising. But the Court is well-equipped to parse through the testimony, give the weight it deems appropriate to each expert and witness, and reach a rational conclusion. The Court will not limit Pfeiffer's opinions just because the matter is contested.
The one area the Court will address is translations. Third-Party Defendants argue that Pfeiffer failed to provide translations for all the German-Language materials he relied upon, rendering his opinions difficult to verify. Simplot avers copies were not necessary, but that, if the Court would like, it can submit any translations the Court desires.
The Court can appreciate Third-Party Defendants' point. Candidly, the Court does not need the various, and voluminous, foreign language documents that all parties submitted in this case. To be sure, a complete record is necessary. But the Court does not need German (or French) copies of every document. It needs English copies. Thus, to that end, it would have been helpful to have English copies of the documents Pfeiffer relied upon in reaching his conclusions.
Nevertheless, the failure to provide the English copies is not fatal to Pfeiffer's opinions. Again, that is the point of an expert: to explain a certain topic. Pfeiffer's testimony, report, and explanation is the most important aspect, not the underlying document itself. The Court assume that: (1) the expert is accurately representing what the underlying document stands for (again, the Court does not speak these languages); or, if not (2) the opposing side will point that out. Third-Party Defendants did that here. More on that in a moment. But the fact that Pfeiffer did not include translations of all the underlying documents he reviewed does not warrant exclusion. Third-Party Defendants also take specific issue with Pfeiffer's statements regarding two cases. The Court will briefly discuss the assertion that Pfeiffer's opinions contradict the translations.
Third-Party Defendants assert Pfeiffer misinterpreted two cases: one discussing the forfeiture defense (BGH of October 20, 1988, BHGZ vol 105, pp. 290-299) and one discussing liability for defective products (BGH, 20 December 1978, NJW 1979, pp. 713-714).
First, in this decision, the Court favorably cites Pfeiffer's explanation of BGH of October 20, 1988, but used the "correct" translation as offered by Third-Party Defendants. Dkt. 337-16, at 60. Pfeiffer's summary that Third-Party Defendants allege is an inaccurate interpretation, however, does not change the Court's holding. The bottom line is that when it comes to forfeiture, timing alone cannot support that defense.
Second, the Court cited Pfeiffer favorably regarding BGH, 20 December 1978. Third-Party Defendants argue Pfeiffer's discussion about the breadth of Section 442 is flawed since he said that section was not even applicable under BGH, 20 December 1978, because that case explained that a defect must be known. Third-Party Defendants argue the case actually uses the phrase "possibility" of a defect. Without getting into the weeds of this issue, the Court again notes that, even under this "correct" translation or reading of the case—which the Court is not implying was lost on Pfeiffer—its analysis above would not change. The regulation itself discusses knowledge. And the Court's conclusion that Third-Party Defendants interpretation was unconvincing was not solely based upon the "knowledge" concept. The Court was equally concerned with the idea that a potentially infringing product can be labeled "defective."
In sum, both substantive concerns Third-Party Defendants raise comprise a portion of the Court's analysis on that relevant topic and their interpretations that differ from Pfeiffer do not disqualify his opinions or change the Court's analysis.
(iii) Conclusion
From a procedural standpoint, Rule 44.1 gives the Court broad discretion in determining how much weight to give foreign law experts. Daubert and Rule 702 do not apply. The Court also finds that Pfeiffer can provide his opinion on "legal" or "factual" questions and the Court will give those opinions the weight it deems appropriate—as it does with all experts.
Substantively, the Court will not strike Pfeiffer's report simply because he did not include the full translations of documents upon which he relied. Furthermore, while Third-Party Defendants' interpretation of some of Pfeiffer's opinions differs, the Court will not exclude those opinions. To the extent the Court relied on Pfeiffer's opinions and conclusions today, most of those instances are not at issue in this motion. And, as it applies to the two instances Third-Party Defendants raise, the Court finds the slight nuances do not alter its analysis.
Again, Third-Party Defendants did not move to wholesale exclude Pfeiffer. They only asked that certain portions be excluded.
Third-Party Defendants' Motion to Exclude Pfeiffer (Dkt. 370) is DENIED.
e. Simplot's Motion to Exclude the testimony of McCain's expert David A. Hass (Dkt. 355)
While a discussion about damages in the form of a royalty—at least as it
relates to the '540 Patent—is superfluous considering the Court's invalidity finding, it will nonetheless address this motion briefly.
McCain retained David A. Hass as an expert to opine on the proposed royalty damages in this case, i.e. what Simplot would owe McCain were Simplot liable for its use of the '540 Patent over the past decade. Simplot alleges that Hass's testimony must be excluded for two reasons. Before discussing those reasons, the Court notes that Simplot is not challenging Hass's opinions related to the '916 Patent. Thus, the only dispute is whether his opinions regarding damages associated with the '540 Patent are admissible.
Simplot's disagreements fall into two categories: apportionment and the "Book of Wisdom." By way of background, the Court notes that Simplot paid Third-Party Defendants approximately [Redacted] to purchase PEF systems for use in the United States and Canada in January of 2013. At that time, Simplot estimated that the cost savings associated with the implementation of the PEF systems would likely be [Redacted] per pound of potatoes. Hass claims that Simplot's actual cost savings from 2013 to 2021 was [Redacted] per pound of potatoes. Based upon a variety of other calculations and factors, Hass assigned a royalty amount ranging from [Redacted] per pound to McCain. Applying this range to Simplot's [Redacted] pounds of accused frozen potato products during the damages period, Hass asserts the royalty should be between [Redacted].
(i) Apportionment
Simplot first takes issue with Hass's calculation alleging that he did not take into account any other changes at Simplot's factories during the same timeframe, essentially attributing all cost savings to the PEF systems. They assert this flawed methodology led to flawed results. The Court tends to agree. But this can be raised in cross-examination.
"To be admissible, expert testimony opining on a reasonable royalty rate must carefully tie proof of damages to the claimed invention's footprint in the market place." Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1317 (Fed. Cir. 2011) (cleaned up). Because such a calculation is often difficult, Courts have held that the "requirement for valuing the patented technology can be met if the patentee adequately shows that the defendant's infringement allowed it to avoid taking a different, more costly course of action." Prism Techs. LLC v. Sprint Spectrum L.P., 849 F.3d 1360, 1376 (Fed. Cir. 2017). "A price for a hypothetical license may appropriately be based on consideration of the costs and availability of non-infringing alternatives and the potential infringer's cost savings." Id. (cleaned up).
Simplot argues Hass's calculations are not limited to the sole purpose of the '540 Patent—to reduce resistance to cutting—and that he essentially groups all benefits into that specifically disclosed improvement. Simplot also explains in detail other cost saving measures it has taken over the past decade, such as recycling water at production facilities, and asserts Hass did not delineate between the costs associated with those unrelated benefits. This is difficult to unravel.
First, there is no dispute that the '540 Patent is geared towards reducing cutting resistance; but the process to accomplish that goal (by using less water, less time etc.) reaps additional benefits. It is thus hard to separate the "cutting" benefit of the '540 Patent from the other benefits. The Court is not persuaded by this argument.
Second, however, McCain cannot ignore the other cost saving measures Simplot
has taken and it should not reap a royalty based off those unrelated endeavors. The problem: nobody knows how to calculate those. Simplot blames McCain for not taking them into account and McCain blames Simplot for not producing documentation explaining how those other benefits should be valued. Thus, it would be up to a finder of fact to weigh the competing testimony and evidence to determined which benefits are attributable to the '540 Patent and which are attributable to Simplot's other actions.
(ii) Book of Wisdom
Relatedly, Simplot criticizes Hass's calculation because it is largely based on actual savings as opposed to hypothetical or anticipated savings.
When trying to determine a reasonable royalty, the inquire looks to the status quo before the alleged infringement began. It looks to the "hypothetical negotiation" between the parties. The basic question posed in a hypothetical negotiation is: if, on the eve of infringement, a willing licensor and licensee had entered into an agreement instead of allowing infringement of the patent to take place, what would that agreement be?" LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51, 76 (Fed. Cir. 2012). See also Wordtech Sys. v. Integrated Networks Solutions, Inc., 609 F.3d 1308, 1319 (Fed. Cir. 2010) ("The hypothetical negotiation attempts to ascertain the royalty upon which the parties would have agreed had they successfully negotiated an agreement just before infringement began, and necessarily involves an element of approximation and uncertainty." (cleaned up)).
Because the whole idea of a hypothetical negotiation is difficult to wrap one's mind around, courts have sometimes looked at post-infringement information to aid in any determination. Using this type of information has become known as using the "Book of Wisdom." This phrase originated in Sinclair Refining Co. v. Jenkins Petroleum Process Co., in which Justice Cardozo referred to such post hoe information as the "Book of Wisdom." 289 U.S. 689, 698, 53 S.Ct. 736, 77 L.Ed. 1449 (1933). Scholars and others have written heavily on this concept and whether, if at all, it should be used.
On the one hand, it makes some sense to see how things played out in real life when determining a reasonable royalty. Afterall, "besides being hypothetical, [this exercise] asks about a comparative business prediction in an uncertain, complex world, and many variables may affect the hypothetical forecast, including costs and availability of non-infringing alternatives, the patented technology's role in the firm's (expected) overall business, and the (expected) actions of competing firms in the market." Aqua Shield v. Inter Pool Cover Team, 774 F.3d 766, 771-72 (Fed. Cir. 2014). It is not difficult to see why hypothetical outcomes from negotiations that never took place are difficult to pin down and why using actual events and outcomes can be helpful.
On the other hand, using post-hoc information can be dangerous. Such is the case here. McCain claims that Simplot seriously underestimated its potential cost savings when it speculated that it would save somewhere between [Redacted] per pound. But even if Simplot low-balled its estimates a decade ago, McCain only knows that now. For all the parties knew, PEF technology was going to be a flop. It turned out it was the opposite, but McCain should not be able to hold Simplot over a barrel now just because Simplot ended up saving a lot more money than it originally thought. But coming full circle, using the Book of Wisdom prevents the hypothetical negotiation method from limiting the parties before the patent has "proven its worth." Honeywell Int'l, Inc. v. Hamilton
Sundstrand Corp., 378 F. Supp. 2d 459, 465 (D. Del 2005). Now that Simplot and McCain know what the technology is worth, it would seem unfair to limit McCain's potential recovery.
The bottom line is the Book of Wisdom is used in these types of cases. Reliance on its methodology has not been rejected by the Federal Circuit. See Aqua Shield v. Inter Pool Cover Team, 774 F.3d at 770. And while this Court believes the Book of Wisdom is difficult to utilize, it will not exclude Hass's testimony solely because he utilized that tool.
(iii) Conclusion
The Court agrees with Simplot that Hass's opinions have some holes in them. But it cannot reach the ultimate opinions at this stage; it must only address methodology. And while methodology leads to opinions, the Court cannot say that Hass's methodology is so flawed as to require its exclusion. In performing its gatekeeping function, a district court "is not tasked with deciding whether [the expert] is right or wrong, just whether his testimony has substance such that it would be helpful to a jury." Alaska Rent-A-Car, 738 F.3d at 969-70. Simplot's disagreements go to the weight of Hass's testimony, not its admissibility. The Motion (Dkt. 355) is DENIED.
f. Third-Party Defendants' Motion to Exclude the testimony of Simplot's expert Andre Jardini (Dkt. 376).
Simplot hired Andre Jardini to review its billings and to opine on an amount representing how much money Simplot has spent thus far on legal fees (and that it would presumably pass on to Third-Party Defendants). Third-Party Defendants move to exclude Jardini's testimony for various reasons. The Court notes at the outset that this is not a motion for attorney fees. It is a Daubert motion. This distinction is important because, while the Court will rule on various issues today, it is not affirmatively awarding Simplot any sum of money.
(i) Legal Market
Third-Party Defendants first complain that Jardini's testimony is unreliable and must be excluded because he improperly concludes that Simplot's national counsel from Gibson, Dunn & Crutcher ("Gibson") can charge their California rates in this case. The Court agrees this is an incorrect interpretation of the relevant law.
"Generally, when determining a reasonable hourly rate, the relevant community is the forum in which the district court sits." Camacho v. Bridgeport Fin., Inc., 523 F.3d 973, 979 (9th Cir. 2008) (citing Barjon v. Dalton, 132 F.3d 496, 500 (9th Cir. 1997)). In addition, the court must consider the "rate prevailing in the community for similar work performed by attorneys of comparable skill, experience, and reputation." Barjon, 132 F.3d at 502 (quoting Chalmers v. City of Los Angeles, 796 F.2d 1205, 1210-11 (9th Cir. 1986)).
Here, Jardini claims that Gibson's rates—of up to [Redacted] for attorneys and up to [Redacted] for paralegals—is allowed because the forum is nation-wide (because this is a national case) and those rates are what Simplot was actually willing to pay. Both assertions are incorrect.
While this case may be "national" in the sense that it involves parties, attorneys, and facts from around the country—and patents which are governed by federal law—the relevant forum is, nonetheless, the District of Idaho. As such, the rates should reflect market conditions in Idaho. Now, this does not mean that Third-Party Defendants recitation of current rates is accurate. They assert that fees in the neighborhood of $280 for partners and $170 for paralegals reflects the market in Boise, Idaho. This may or may not be true.
The Court recently chastised a party for basing their attorney fee request on rates from Portland, Oregon, when the "relevant community [ ] he should have based his calculations [on] is Boise, Idaho, where the forum district is located." Nw. Bldg. Components, Inc. v. Adams. 2023 WL 4628196, at *6 (D. Idaho July 18, 2023) (cleaned up) (emphasis in original).
Over five years ago, the Court awarded an experienced partner at Holland and Hart's Boise office $435 per hour. Nelson-Ricks Cheese Co., Inc. v. Lakeview Cheese Co., LLC, No. 4:16-CV-00427-DCN, 2018 WL 2248588, at *2 (D. Idaho May 15, 2018).
It also awarded an experienced paralegal $190 per hour. See id.
Judge Winmill noted over seven years ago that the Holland and Hart's Boise office charges between $195 and $495 for attorneys based upon their experience and between $180 and $205 for paralegals. Balla v. Idaho State Bd. of Correction, No. CV-81-1165-S-BLW, 2016 WL 6762651, at *12 (D. Idaho Feb. 1, 2016).
More recently, the Court awarded a newer partner at Stoel Rives in Boise $330 per hour. Dickinson Frozen Foods, Inc. v. FPS Food Process Sols. Corp., 2021 WL 2444157, at *15-16 (D. Idaho June 15, 2021).
Again, in that case the Court found $190 per hour for paralegal fees was reasonable. Id.
Before the Court continues, it reminds the parties that this is not a motion for attorney's fees. The Court does not have the credentials and experience of all Gibson's attorneys at its disposal. But the Court's point is that it would not be unreasonable for Gibson's attorneys to request amounts above $400 per hour (and paralegals above $170). The Court would not, however, entertain requests for fees that amount to double or triple the applicable Boise rates.
For example, District Judge B. Lynn Winmill recently reduced an out-of-state attorney's $650-$705 rate to $450 to better reflect the Boise market rate for attorneys with similar experience and background. Composite Res., Inc. v. Rood, 2023 WL 2354831, at *4 (D. Idaho Mar. 3, 2023).
Furthermore, there is no indication that national counsel was needed in this case. To be sure, this is a complicated patent dispute. Notably, all parties in this case retained national counsel. But Simplot has not explained that it needed to obtain national counsel because there were no other options locally. And even if that were the case, the Court could still reduce the rates.
For example, United States Magistrate Judge Candy W. Dale recently found that while out-of-state counsel was necessary because of their expertise in the subject field, a reduction to the requested rates were still necessary to reflect market conditions. See F.V. v. Jeppesen, No. 1:17-CV-00170-CWD, 2022 WL 2065060, at *8 (D. Idaho June 8, 2022) (reducing a California attorney's rate of $650-$675 per hour to $410 per hour).
Finally, Simplot argues that it already paid Gibson the rates it billed so that illustrates this is the "going rate." The Court understands the conundrum. If Simplot is willing to pay a certain rate, isn't that inherently the "market rate," and doesn't that necessarily mean they should be reimbursed at that rate? But as the
What's more, it is odd that Third-Party Defendants are (quite possibly) paying their lawyers from Washington D.C. rates much higher than those it would pay in Boise, Idaho, but are now required to only pay Simplot's California attorneys at Boise rates. Unfortunately, there is no way around this disparity.
Ninth Circuit has long held, the "determination of a reasonable hourly rate is not made by reference to rates actually charged[.]" Chalmers v. City of Los Angeles, 796 F.2d 1205, 1210 (9th Cir. 1986), opinion amended on denial of reh'g, 808 F.2d 1373 (9th Cir. 1987). Thus, the Court determines the applicable rate without considering what Gibson actually billed Simplot.
In sum, Jardini was wrong to use Gibson's California rates. The Court would exclude his testimony utilizing that erroneous standard. This portion of the Motion is GRANTED.
(ii) Redactions/Separation of Billing/Expert Fees
Third-Party Defendants' remaining arguments are highly technical in nature. But the Court cannot say that Jardini erred in his calculations at this stage.
Third-Party Defendants assert that some of Simplot's bills are so heavily redacted it is almost impossible to verify what was being billed. For example, Third-Party Defendants contend entries related to Simplot's experts are so vague they cannot tell what certain expert fees were for. They also contend Simplot has not delineated between the patents at issue. Again, while this is not a motion for attorney's fees where the Court will dive into the arguments in detail, it will note a few things.
First, the excessive redactions were necessary because of the unique relationships at issue in this case. As the Court has already explained, the twists and turns of this case have created unique alliances between the parties. Relevant here, while Third-Party Defendants are aligned with Simplot against McCain, they obviously oppose Simplot's efforts to bring them into the case. Thus, heavy redactions were necessary for Simplot to protect entries dealing with work product and attorney client matters. This case is ongoing. Simplot is actively fighting against Third-Party Defendants in some aspects of the litigation. It is, therefore, understandable why Simplot had to redact some entries in a significant manner before turning them over.
Second, while it does appear Simplot delineated between the patents, the Court cannot tell for sure (because of the redactions). The Court would approve of an apportionment system similar to that outlined in Finjan where the Court awarded percentages based upon the number of patents at issue. See Finjan, Inc. v. Juniper Network, Inc., 2021 WL 3674101, at *8 (N.D. Cal. May 20, 2021), report and recommendation adopted sub nom Finjan, Inc. v. Juniper Networks, Inc., 2021 WL 3140716 (N.D. Cal. July 26, 2021), aff'd sub nom. Finjan, LLC v. Juniper Networks, Inc., 2022 WL 17576350 (Fed. Cir. Dec. 12, 2022) (holding, for example, that an entry appearing to encompass work done on two patents, one of which was not at issue, was recoverable at 50%). Again, the Court cannot be sure at this stage whether the entries are sufficient to differentiate between the patents.
Finally, the Court does not like the idea that Jardini's reasoning that the expert fees in this case—specifically work performed by Intensity, LLC—was appropriate is based upon Simplot's counsel simply saying those fees were necessary. Again, because of redactions, the Court itself does not know what those fees are for. Thus, the Court cannot make a final ruling at this time.
Simplot's retort to all Third-Party Defendants' complaints with Jardini's testimony is that these issues will be borne out through vigorous cross-examination and that none go to his methodology. The Court agrees for the most part. Clearly, Jardini's methodology that utilized the
non-Boise market is incorrect and must be excluded. As for his remaining conclusions, however, the Court does not know. Simplot suggests the Court could review all of its billings in camera. The Court is not inclined to do so. Simplot also proposes a separate and confidential damages proceeding. The Court is in favor of this.
The question, of course, is when. What the parties elect to do following receipt of this decision will determine if, or when, such a hearing is necessary.
(iii) Conclusion
This is not a motion for attorney's fees. The Court is not awarding anything to Simplot today. But the Court does find that Jardini's reliance on a market rate outside of Boise is erroneous. All other calculations and conclusions remain to be determined. Nevertheless, the Court will not exclude Jardini's testimony in those other areas at this time. Third-Party Defendants' Motion is GRANTED in PART and DENIED in PART as outlined.
IV. CONCLUSION
The Court does not know what precipitated this lawsuit. Comments have been made over the years that one party or the other filed suit in retaliation for certain actions taken by the other. Now, the Court is in the business of litigation. However, when an individual or party sues another to retaliate, to intimidate, or to coerce a desired outcome, the rule of law has been weaponized and moves from a means of protection to a means of aggression.
The Court is not implying there were not (or still are not) valid legal arguments on both sides of these debates. However, this litigation has taken over seven years. It has necessitated the involvement of numerous parties (including international parties) and has incurred millions of dollars in attorney's fees.
Reasonable minds can disagree on these issues. Case-in-point: there are extremely capable attorneys in this case, all specialists in this complex field, who disagree. There are also very knowledgeable and qualified experts that disagree on certain matters. The subject matter is technical and difficult. The questions and arguments presented were difficult as well. The attorneys have served their clients well. Where this case goes from here is up to the parties. Some of the questions may warrant review.
The Court has wrestled with this decision, or at least certain aspects of this decision, for some time. And it may come as little solace to any party that lost a particular motion, but the Court tried to review all materials that were submitted to reach a fair and informed conclusion. It did not cite to every deposition, every report, every translation, and every argument today. But it need not. The Court has focused on the issues it deemed most critical and ruled accordingly.
The bottom line is this: As a matter of law, the '540 Patent is invalid for indefiniteness. The terms are too broad and do not properly inform a POSA as to the parameters of the claimed invention. As a result, the public is not properly on notice of what is claimed in the '540 Patent and what is still open for protection and invention. Simplot carried its burden on this legal question. The same, however, cannot
To reiterate, some of the issues today were legal; others were factual. Where there were disagreements on legal issues (invalidity for example) the Court was permitted to weigh the competing testimony and expert opinions to reach a legal answer. It could not do the same, however, for matters where material facts were in dispute (such as infringement). Thus, the Court could reach a conclusion on invalidity without invading a jury's purview, but not on infringement.
be said of the '916 and '036 Patents. Factual disagreements exist which prevent granting summary judgment in favor of either side. The resolution of these design patents can only be achieved via trial.
Third-Party Defendants had (and have) a duty to indemnify and defend Simplot per the explicit terms of the respective contracts.
And finally, the parties' competing motions to exclude experts are largely based upon disagreements that can be fleshed out via cross-examination.
The Court will allow the parties time to digest this opinion. Within fourteen days, however, the parties must submit their respective positions regarding material in this opinion that should remain under seal so that a redacted copy can be filed on the public docket. See supra note 1. The Court will also notice up a telephonic scheduling conference (to be held within 45 days) wherein the parties and the Court will discuss trial dates for the design patents.
V. ORDER
1. Simplot's Motion for Summary Judgment against McCain (Dkt. 330) is GRANTED in PART and DENIED in PART. It is DENIED as to direct infringement and GRANTED as to divided infringement. It is DENIED as to invalidity for anticipation and obviousness and GRANTED as to invalidity for indefiniteness. The '540 Patent is invalid for indefiniteness under 35 U.S.C. § 112. Simplot's Motion is denied as to the '916 Patent. The '916 Patent and the '036 Patent must proceed to trial.
2. McCain's Motion for Summary Judgment against Simplot (Dkt. 334) is DENIED.
3. Simplot's Motion for Summary Judgment against Elea (Dkt. 337) is GRANTED. Elea breached the Purchase Contract because it had a duty to indemnify and/or defend Simplot.
4. Elea's Motion for Summary Judgment against Simplot (Dkt. 335) is DENIED.
5. Simplot's Motion for Summary Judgment against Food Physics (Dkt. 346) is GRANTED. Food Physics breached the Purchase Contract because it had a duty to indemnify and/or defend Simplot.
6. Food Physics' Motion for Summary Judgment against Simplot (Dkt. 358) is DENIED.
7. Third-Party Defendants' Motion for Summary Judgment against McCain (Dkt. 364) is GRANTED in PART and DENIED in PART. It is GRANTED as to the invalidity of the '540 Patent and DENIED as to the concepts of estoppel and implied license.
8. McCain's Motion to Strike Simplot's Joinder (Dkt. 419) is DENIED.
9. Simplot's Motion to Exclude the testimony of McCain's Expert Steven C. Visser (Dkt. 352) is GRANTED in PART and DENIED in PART, as outlined above.
10. Simplot's Motion to Exclude the testimony of McCain's David A. Hass (Dkt. 355) is DENIED.
11. McCain's Motion to Exclude the testimony of Simplot's expert Jacqueline H. Beckley (Dkt. 349) is DENIED.
12. McCain's Motion to Exclude the testimony of Simplot's expert Sudhir K. Sastry (Dkt. 353) is DENIED.
13. Third-Party Defendants' Motion to Exclude the testimony of Simplot's expert Thomas Pfeiffer (Dkt. 370) is DENIED.
14. Third-Party Defendants' Motion to Exclude the testimony of Simplot's expert Andre Jardini (Dkt. 376) is GRANTED in PART and DENIED in PART, as outlined above.
15. The Court will set a status conference at its earliest convenience for the purpose of selecting a trial date for the remaining claims.