Minnesota Patent Litigation Wrap-Up — August 2019

Authored by: Ryan Petty, Ph.D.

This post continues our monthly summary of patent litigation in the District of Minnesota, including short summaries of various substantive orders issued in pending cases.

Ecolab Inc., v. Gurtler Chemicals, Inc., 14-cv-495 (JNE/SER) (D. Minn. Aug. 13, 2019)

Defendant Gurtler Chemicals moved for an award of attorney's fees under 35 U.S.C. § 285, which Judge Ericksen denied. In 2014, Plaintiff Ecolab sued Gurtler Chemicals for patent infringement. Gurtler Chemicals filed two requests for ex parte re-examination, and while the PTO reviewed the claims of the asserted patent, the district court stayed the case. The PTO rejected all claims of the asserted patent.

After the stay was lifted and Ecolab filed a motion to dismiss, Gurtler Chemicals filed a motion for attorneys' fees arguing that the case was exceptional because Ecolab's position was exceptionally weak, there was ample evidence of inequitable conduct, and Ecolab kept the case "hanging over Gurtler for as long as possible." In particular, Gurtler Chemicals argued that Ecolab's position was exceptionally weak based on a German prior art patent, which was cited in a European counterpart patent. Judge Ericksen disagreed, because patents are presumed valid upon issuance and the German prior art patent was cited on the face of the U.S. patent so the examiner was presumed to have considered it.

Next, Judge Ericksen found any evidence of inequitable conduct did not result in a finding that the case was exceptional. Importantly, Gurtler Chemicals never sought a finding of inequitable conduct. Judge Ericksen nevertheless considered the totality of the evidence. She found that Ecolab did not attempt to hide the full disclosure of the German prior art patent because Ecolab disclosed the German patent to the PTO during prosecution. Additionally, Ecolab had no responsibility to disclose the EPO reports to the PTO. Finally, though there were some additional references that Ecolab possibly should have disclosed to the PTO, Ecolab's failure to do so did not present exceptional circumstances considering what those references emphasized and the other references Ecolab disclosed.

Finally, Judge Ericksen found that Ecolab did not draw out the ex parte re-examinations simply because Ecolab did not expedite the re-examinations. She therefore denied the motion for attorneys' fees.

Polaris Industries, Inc. v. Arctic Cat Inc., 15-cv-4475 (JRT/TNL) (D. Minn. Aug. 15, 2019)[1]

Polaris filed a motion for estoppel of several prior art grounds it contended that Arctic Cat could have raised in the previous inter partes review between the two parties. Judge Tunheim granted in part and denied in part Polaris's motion.

Under 35 U.S.C. § 315(e)(2), a petitioner is estopped from bringing grounds that it raised or reasonably could have raised during IPR. Judge Tunheim estopped Arctic Cat from raising grounds 3, 4, 6, and 7 because he found they could have raised these grounds in their petition for IPR.

Judge Tunheim did not estop grounds 1, 2, and 5, which relied on physical vehicles. Judge Tunheim noted that an IPR petitioner may not raise a physical reference during IPR. Though Polaris argued that Arctic Cat could have used the manuals for the physical vehicles instead of the vehicles themselves during IPR, Judge Tunheim rejected this argument, following cases from the Northern District of Texas.

Red Rhino Leak Detection, Inc. v. Anderson Manufacturing Company, Inc., 17-cv-2189 (ECT/DTS) (D. Minn. Aug. 27, 2019)

Plaintiff Red Rhino Leak Detection sued Defendant Anderson Manufacturing for infringing its patent directed at light testers "to detect leaks in swimming pools." Anderson raised invalidity and non-infringement defenses. Judge Tostrud's order resolved disputes over expert testimony, claim construction, and summary judgment on invalidity and infringement.

First, Anderson moved to exclude Red Rhino's expert Glen Stevick under Daubert. Judge Tostrud rejected Anderson's challenge, noting that "Stevick's qualifications are extensive," as he had a Ph.D. in mechanical engineering. Dr. Stevick also had "over 35 years of professional experience as a mechanical engineer" and "designed or worked on leak-detection systems for a number of clients." Though Stevick did not have specific experience detecting leaks in swimming pools, "he has worked on leak-detection problems in other contexts, including gasoline tanks, pipes, and vessels." Judge Tostrud therefore found Dr. Stevick qualified as an expert and denied Anderson's Daubert motion.

Next, Judge Tostrud addressed claim construction. The parties disputed the meaning of four claim terms. In construing these claims, Judge Tostrud found that Red Rhino had not disclaimed claim scope during prosecution, one of Anderson's proposed constructions read out the preferred embodiment, the intrinsic evidence was more reliable than Anderson's cited extrinsic evidence, and the last disputed term was not invalid for indefiniteness.

Finally, Judge Tostrud ruled on counterclaims for summary judgment on infringement, non-infringement, and invalidity. Red Rhino claimed direct, induced, and contributory infringement, while Anderson claimed non-infringement and invalidity. By rejecting Anderson's proposed claim constructions, Judge Tostrud also rejected Anderson's motion for summary judgment on non-infringement, finding no genuine issue of material fact as to whether Anderson's device fell within the claims of the asserted patent. Anderson also moved for summary judgment of invalidity. Red Rhino admitted that the identified prior art partially read on claim 1, but added that the asserted patent contained additional requirements not found in the prior art, such as a "threaded rod extending through [the device's] housing" that terminated in a suction cup anchor. Specifically, Red Rhino argued that the prior art possessed a threaded "tube" and not a "rod." Looking to the specification, Judge Tostrud found that if "rod" in the asserted patent and the tube in the prior art were the same component, this would create a second inlet resulting in a faulty leak-detection system. Accordingly, the term "rod" used in the asserted patent was "solid, not hollow" and the prior art did not anticipate claim 1.

On induced infringement, Judge Tostrud noted that Red Rhino had pointed to no evidence of the requisite specific intent for induced infringement in its opening brief. Instead, Red Rhino's evidence was "improperly offered for the first time in its reply brief" and would not be considered. Red Rhino was therefore not entitled to summary judgement on the issue of induced infringement. Similarly, Red Rhino failed to cite any evidence that Anderson knew of the asserted patent in its opening brief, a requisite showing for contributory infringement. Accordingly, Judge Tostrud also denied summary judgement on contributory infringement.

Benjamin L. Larson v. SoundSkins Global, Compustar Australia Pty Ltd, 18-cv-3190 (WMW/LIB) (D. Minn. Aug. 15, 2019)

Defendant Compustar Australia moved to dismiss for insufficient process or lack of personal jurisdiction and Defendant Mobile Marine & Car Audio d/b/a Lakes Audio moved to dismiss under Rule 12(b)(6). Compustar also sought attorney fees and costs. Judge Wright granted Compustar's motion to dismiss, denied their motion for attorneys' fees and costs, and denied Lakes Audio's motion to dismiss.

Plaintiff Benjamin Larson sued the defendants for patent infringement. Larson's attorney sent the complaint to Compustar's trademark attorney, Ruth Khalsa, who advised Larson's attorney that she was not authorized to accept service of process on behalf of Compustar, an Australian company. Compustar's local counsel in Minnesota, Alan Anderson, also sent a letter to Larson's attorney again asserting that neither Khalsa nor he could accept service on behalf of Compustar. Compustar asserted that it did not authorize its United States-based attorneys to accept service of process. Judge Wright noted that, while attorneys may generally act as agents for their clients, authority to accept service of process under Rule 4 must be express or implied by conduct. Here though, Compustar's attorneys repeatedly stated that they were not authorized to receive service of process, to which Compustar's president further attested. Mere knowledge of the lawsuit was not enough, and so Judge Wright dismissed the suit against Compustar for insufficient service of process under Rule 12(b)(5).

Compustar also moved for attorneys' fees and costs under 35 U.S.C. § 285. Judge Wright noted that the statute only provides for an award of attorneys' fees in "exceptional" patent cases. Compustar asserted this case was exceptional due to a failure by Larson "to conduct a reasonable pre-suit investigation." In reviewing the cases cited by Compustar, Judge Wright noted that each involved extensive litigation with a detailed record, while the present case's record was limited due to the early stage of proceedings. She found that, while Laron's attempts to serve Compustar may not have been in good faith, the record did not "establish that Larson's pre-suit investigation was unreasonable or exceptionally inadequate." Accordingly, Judge Wright denied Compustar's motion for attorneys' fees and costs.

Larson also sued Lakes Audio, a Minnesota corporation, for infringement of the same patents. Lakes Audio, in its motion to dismiss under Rule 12(b)(6), asserted that Larson's complaint "alleges only vague and conclusory allegations" insufficient to support a claim. Judge Wright acknowledged that the complaint was "not detailed," but it nevertheless identified the accused infringing product by name, identified a representative claim from the patent, and alleged the product infringed that and other claims. The allegations were therefore "sufficient to place an infringer on notice of the alleged infringement" and Judge Wright denied the motion to dismiss for failure to state a claim.

[1] Fish & Richardson represents the Arctic Cat entities in this case.

Authors: Ann Motl, Ryan Petty