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Mass Engineered Design, Inc. v. Planar Systems, Inc.

United States District Court, D. Oregon

November 8, 2019

MASS ENGINEERED DESIGN, INC., Plaintiff,
v.
PLANAR SYSTEMS, INC., Defendant.

          John Mansfield, Harris Bricken, LLP, John J. Edmonds, Stephen F. Schlather, Shea N. Palavan, Brandon G. Moore, and Eric R. Carr, Collins Edmonds & Schlather, PLLC, Of Attorneys for Plaintiff.

          Jacob S. Gill, Stoll Stoll Berne Lokting & Shlachter, pc, Jenny W. Chen, Chen IP Law Group, Andrew T. Oliver, Amin, Turocy & Watson, LLP, Of Attorneys for Defendant.

          OPINION AND ORDER

          Michael H. Simon, United States District Judge.

         Plaintiff, Mass. Engineered Design, Inc. (“Mass”), brought this lawsuit against Defendant, Planar Systems, Inc. (“Planar”), alleging infringement of U.S. Patent No. RE36, 978 (the “978 Patent”) and U.S. Patent No. 8, 102, 331 (the “331 Patent”). A jury trial was held, beginning April 24, 2018 and ending May 8, 2018. The jury found that Planar was liable for direct infringement, active inducement, and as a contributory infringer, and that neither the 978 Patent nor the 331 Patent were invalid. The jury awarded Mass. money damages in the total amount of $1, 150, 000. The jury, however, was unable to reach a unanimous verdict on the question of whether Planar's infringement was willful. The Court declared a mistrial only on that question, and otherwise accepted the jury's verdict. The Court then scheduled a new jury trial solely on the question of willfulness. The Court held a two-day jury trial beginning July 9, 2018. The jury found for Planar, finding that Mass. had not proven that Planar's infringement was willful. The Court also held a two-day bench trial on Planar's claim that Mass. had engaged in inequitable conduct. The Court found in favor of Mass.

         Before the Court are three post-judgment motions: (1) Plaintiff's Motion for an Exceptional Case Finding and Attorney's Fees under 35 U.S.C. § 285 (ECF 441), in which Mass. seeks attorney's fees in the amount of $185, 000 for Planar's allegedly improper litigation conduct; (2) Defendant's Renewed Motion for Judgment as a Matter of Law, or, in the Alternative, for a New Trial (ECF 443); and (3) Defendant's Motion to Amend the Judgment and for New Trial Pursuant to Rule 59 (ECF 444). For the reasons that follow, all three post-trial motions are DENIED.

         STANDARDS

         A. Exceptional Case Status and Attorney's Fees Under 35 U.S.C. § 285

         Under 35 U.S.C. § 285, “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.” “[A]n ‘exceptional' case is simply one that stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.” Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554 (2014) (alteration added). A court “should determine whether a case is exceptional on a case-by-case basis, considering the totality of the circumstances.” ATEN Int'l Co. v. Uniclass Tech. Co., 932 F.3d 1371, 1373 (Fed. Cir. 2019). Such circumstances may include “frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.” Octane Fitness, 572 U.S. at 554 n.6 (quotation marks omitted).

         B. Judgment as a Matter of Law

         “The grant or denial of a motion for judgment as a matter of law is a procedural issue not unique to patent law, reviewed under the law of the regional circuit in which the appeal from the district court would usually lie.” Acco Brands, Inc. v. ABA Locks Mfr. Co., 501 F.3d 1307, 1311 (Fed. Cir. 2007). Thus, the Court follows Ninth Circuit law in evaluating Planar's motion for judgment as a matter of law.

         Judgment as a matter of law is proper if “the evidence permits only one reasonable conclusion, and that conclusion is contrary to the jury's verdict.” E.E.O.C. v. Go Daddy Software, Inc., 581 F.3d 951, 961 (9th Cir. 2009) (quotation marks omitted); see also Weaving v. City of Hillsboro, 763 F.3d 1106, 1111 (9th Cir. 2014) (explaining that judgment as a matter of law must be granted if it is clear that “the evidence and its inferences cannot reasonably support a judgment in favor of the opposing party”). Because a motion under Rule 50(b) is a renewed motion, a party cannot “raise arguments in its post-trial motion for judgment as a matter of law that it did not first raise in its Rule 50(a) pre-verdict motion.” Go Daddy Software, 581 F.3d at 961 (quotation marks omitted).

         In evaluating a motion for judgment as a matter of law, the Court must view all the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in that party's favor. Experience Hendrix, L.L.C., v. Hendrixlicensing.com, Ltd., 762 F.3d 829, 842 (9th Cir. 2014). The Court may not, however, make credibility determinations, weigh the evidence, or “substitute its view of the evidence for that of the jury.” Krechman v. City of Riverside, 723 F.3d 1104, 1110 (9th Cir. 2013) (quotation marks omitted). A jury's verdict must be upheld if it is supported by substantial evidence. Escriba v. Foster Poultry Farms, Inc., 743 F.3d 1236, 1242 (9th Cir. 2014); Johnson v. Paradise Valley Unified Sch. Dist., 251 F.3d 1222, 1227 (9th Cir. 2001). Substantial evidence is “such relevant evidence as reasonable minds might accept as adequate to support a conclusion[, ] even if it is possible to draw two inconsistent conclusions from the evidence.” Weaving, 763 F.3d at 1111 (quotation marks omitted).

         C. New Trial

         As with Rule 50 motions, Rule 59 motions in patent cases are governed by the law of the regional circuit. Chamberlain Grp., Inc. v. Techtronic Indus. Co., 935 F.3d 1341, 1350 (Fed. Cir. 2019). The Court “may grant a new trial only if the verdict is contrary to the clear weight of the evidence, is based upon false or perjurious evidence, or to prevent a miscarriage of justice.” Molski v. M.J. Cable, Inc., 481 F.3d 724, 729 (9th Cir. 2007) (quotation marks omitted); see also Shimko v. Guenther, 505 F.3d 987, 993 (9th Cir. 2007). Unlike a Rule 50 determination, the Court is not required to view the evidence in the light most favorable to the non-moving party. Experience Hendrix, 762 F.3d at 842. Rather, the Court “can weigh the evidence and assess the credibility of the witnesses.” Id. (citing Kode v. Carlson, 596 F.3d 608, 612 (9th Cir. 2010) (per curiam)). A judge should not award a new trial unless she is “left with the definite and firm conviction that a mistake has been committed.” France Telecom S.A. v. Marvell Semiconductor Inc., 2015 WL 925892, at *1 (N.D. Cal. Mar. 2, 2015) (quoting Landes Constr. Co. v. Royal Bank of Canada, 833 F.2d 1365, 1371-72 (9th Cir. 1987)).

         DISCUSSION

         A. Plaintiff's Motion for Reasonable Expenses, Including Attorney's Fees

         Mass argues that the Court should find that certain aspects of this case were litigated unreasonably, and thus Mass. is entitled to a portion of its attorney's fees. Mass. argues that particular arguments in certain motions were unreasonably litigated and resulted in Mass. having to incur unreasonable attorney's fees. Mass. also argues that Planar asserted before trial the defense of reliance on the opinion of counsel and a significant amount of prior art, causing Mass. to expend resources preparing to defend those issues, but then dropped the reliance of counsel defense shortly before trial and at trial only submitted a very limited number of prior art references to the jury. Mass. contends that this litigation conduct was unreasonable and makes this case exceptional. Mass. also notes that in a few of the Court's opinions and orders, the Court noted that some of Planar's arguments were “without merit.”[1]

         The fact that the Court rejected some of Planar's legal arguments during this complex, hard-fought patent litigation does not mean that Planar unreasonably litigated this case to the point that it rises to the level of an exceptional case warranting an award of attorney's fees. See, e.g., ATEN, 932 F.3d at 1374 (“Though ATEN's lost profits theory was not strong enough to withstand summary judgment, ‘[a] party's position . . . ultimately need not be correct for them to not ‘stand[ ] out.'” (alterations in original) (quoting SFA Sys., LLC v. Newegg Inc., 793 F.3d 1344, 1348 (Fed. Cir. 2015))). The Court has considered Plaintiff's litigation conduct with respect to the strengths of its arguments and positions and does not find that they were “so objectively unreasonable or exceptionally meritless as to stand out from other cases.” Id.

         Regarding Planar's “shifting” positions on whether to use the defense of an opinion of counsel, the Court does not find this conduct to be objectively unreasonable. Planar's original counsel did not assert this defense. Planar's replacement counsel requested the ability to add this as a defense, based on the advice of counsel that HighGrade received. Planar argued that its original counsel had not provided adequate services and had perhaps engaged in malpractice. The Court allowed Planar to add this defense. After further discovery, learning more about Mass's infringement case, and learning more about the specifics of the advice of counsel, Planar's new counsel ultimately decided not to rely on this defense at trial and to exercise its statutory right not to have the advice of counsel disclosed at trial. This was not an unreasonable trial strategy, nor was it unreasonable for Planar's counsel to change tactics after learning more information.

         Regarding Planar's use of fewer prior art references at trial than before trial, the Court does not find this to stand out. Parties often assert arguments, propose exhibits, propose testimony, and propose witnesses before trial that do not end up being presented at trial. Planar contends that it did not submit to the jury all of the prior art references because it ran out of trial time. The parties had agreed to a set amount of hours per side and the Court monitored the trial time “chess clock” style. This is a reasonable explanation for why Planar presented fewer prior art references. Even if Planar had not ran out of trial time, however, it is not objectively unreasonable for litigants to shift strategies during trial and reduce the number of witnesses or the evidence presented. Additionally, the fact that Planar expended resources on expert testimony relating to the prior art references supports that Planar litigated those prior art references in good faith and not solely for the purpose of driving up Mass's expenses.

         Considering the totality of the circumstances, the Court finds that Mass. has not met its burden of proving that this was an exceptional case as that term is used in § 285. This case does not stand out from others with respect either to the strength of Planar's litigating position or the unreasonable manner in which Planar litigated this case. Accordingly, Mass's motion for attorney's fees is denied.

         B. Defendant's Motion for Judgment as a Matter of Law

         Defendant renews its motion for judgment as a matter of law on three grounds: (1) there was not substantial evidence presented at trial supporting the jury's findings regarding Plaintiff's contributory infringement claim; (2) there was not substantial evidence presented at trial supporting the jury's findings regarding Plaintiff's induced infringement claim; and (3) there was not sufficient evidence presented at trial to support the jury's damages award. Mass. objects to this motion on the merits, but also argues that the motion, and Planar's motion for a new trial under Rule 59, are untimely. Planar also moves for a remittur. The Court addresses each argument in turn.[2]

         1. Timeliness

         Mass argues that under Rule 6(b)(2) of the Federal Rules of Civil Procedure, the Court did not have any discretion to extend the deadline as established in Rules 50(b) and 59(b) for Planar to file its post-judgment motions. Mass. further argues that the “placeholder” motions filed by Planar are insufficient under Local Rule 7-1(c).

         Rule 6(b)(2) provides: “A court must not extend the time to act under Rules 50(b) and (d), 52(b), 59(b), (d), and (e), and 60(b).” Local Rule 7-1(c) provides: “Every motion must be supported by a legal memorandum. The legal memorandum must be combined in a single document with the motion. A legal memorandum exceeding 20 pages must have a table of contents and a table of cases and authorities with page references.”

         Rule 50 requires that renewed motions for judgment as a matter of law be filed 28 days after the judgment is entered. Fed.R.Civ.P. 50(b). Rule 59 has the same time requirement for motions for a new trial. Fed.R.Civ.P. 59(b). The Court entered judgment on December 4, 2018, making the motions due January 2, 2019 (January 1, 2019, 28 days from December 4, 2018, was a court holiday). The parties, however, each proposed a post-judgment briefing schedule that included initial motions to be filed by Planar (and Mass, for attorney's fees) after the 28-day period. Mass. proposed that post-judgment motions be filed by January 11, 2019, and Planar proposed that such motions be filed by January 29, 2019. These proposed deadlines took into consideration the holidays and pre-planned attorney vacations. The Court set the deadline for January 29, 2019.

         In light of the requirement that motions under Rule 50(b) and 59(a) must be filed within 28 days from the entry of judgment, Planar filed a motion on January 2, 2019. ECF 433. This motion outlined in a few pages Planar's arguments supporting its Rule 50(b) and 59(a) motions. This motion also stated that by January 29, 2019, the deadline set by the Court, Planar would both fully confer with Mass. and file a more complete memorandum in support of the motions, to comply with Local Rule 7-1(a) and (c). Planar's motion generally described the grounds on which it challenged the jury's verdict and on which Planar it requested a new trial.

         The Court accepts Planar's initial filing as containing sufficient particularity and reasonable specificity to comply with the Federal Rules of Civil Procedure and the Local Rules. See, e.g. United States v. Bills, 2018 WL 6697180, at *2 (N.D. Ill.Dec. 20, 2018) (“The Court finds this [Rule 59(e)] Motion sufficiently identifies the relief sought and sets forth the Government's argument in support of such relief with reasonable specificity. The Court, therefore, will consider the Motion and supporting briefs, despite their piecemeal filing.” (citation omitted)). Additionally, to the extent Planar's January 2, 2019 motion did not fully comply with Local Rule 7-1(c), the Court finds that an exception to Local Rule 7-1(c) is appropriate in this case. Both parties requested deadlines beyond the 28-day period (albeit different deadlines) and the Court granted the request and extended the deadline for the substantive memoranda supporting the post-judgment motions. It is inequitable for Mass. to request a briefing schedule outside the 28-day period and then argue under Local Rule 7-1(c) that the motions should be denied because the full supporting memorandum was filed outside the 28-day period.

         2. Contributory Infringement

         Planar argues that the jury's finding of contributory infringement was not supported by substantial evidence. Specifically, Planar argues that Mass. failed to show that: (a) Planar's products did not have a substantial, noninfringing use with respect to the “integral arm” requirement of claims 1, 4, and 10 of the 331 Patent; (b) Planar's products tended to “wrap around” the user as required in claims 1, 4, and 10 of the 331 Patent; (c) Planar's “old” model of triple monitor stand was sold after the 331 Patent issued; and (d) any user had any preference of a “desired degree” to which Planar's monitor stands would allow the monitors to be adjusted, as required under the 978 Patent. Each argument is addressed in turn.

         a. Integral arm

         The patent code provides, in relevant part, that “[w]hoever . . . sells . . . a component of a patented machine . . ., constituting a material part of the invention, . . . and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer.” 35 U.S.C. § 271(c). “A substantial noninfringing use is any use that is not unusual, far-fetched, illusory, impractical, occasional, aberrant, or experimental.” Nalco Co. v. Chem-Mod, LLC, 883 F.3d 1337, 1357 (Fed. Cir. 2018) (quotation marks omitted). Planar asserts that it presented evidence that its allegedly infringing monitor stands were used with the arms separated, and thus were not infringing.

         Mass presented evidence and argued at trial that Planar's purported noninfringing use of the monitor stands with arms separated was illusory, impractical, and, at most, occasional. Mass. showed a video of its expert, Dr. John Akin, testing a configuration with arms separated and showing the instability of that configuration. Dr. Akin also performed a similar demonstration in court and testified that using the monitor stands with the arms separated was unsafe, dangerous, and presented a tipping hazard. Dr. Akin further testified that the separated-arm configuration that Planar claimed, in which one monitor was in portrait mode and one was in landscape mode and the top or the bottom of the monitors was aligned, was not a configuration he had ever seen in his 50 years in a computer-aided science environment. Mass. also submitted Planar's product specifications and assembly instructions, which provided instructions for locking the two arms together as one integral unit and showed images of the arms together. Some later instructions also, however, provided an optional configuration with arms separated and some included an image of that configuration. Mass. argued that those later instructions were produced after this lawsuit was filed, in an effort to avoid liability. The jury also had the allegedly infringing monitor stands along with some monitors in the jury room.

         Planar asserts that Dr. Akin's configuration with arms separated is not the configuration shown in the assembly instructions or a normal configuration with arms separated, but is instead an improper assembly with the monitor mount attached to the arm (in contravention to the instructions), no monitor attached, and the arms tilted so far back that the stand could do nothing but fall over. Planar asserts that with a normal arms-separated configuration and monitors attached, the monitor stands are stable.

         Planar presented the testimony at trial of Ming-Hsien Huang, president of HighGrade Technology Co, Ltd. (“HighGrade”). HighGrade is the indemnitor of Planar and manufacturer of the allegedly infringing products. Mr. Huang testified that the products are manufactured to be able to work with the arms separated and he has never received a complaint that the monitor stands are unstable with the arms separated. Mr. Huang also testified that he had seen “a lot of uses with doctors and in the office, and [the monitor stands are] used the way [they were] designed.” He explained that these uses included with the arms separated and the monitors split, with one in portrait orientation and one in landscape orientation. Planar also presented the expert testimony of Dr. Raymond Yee, who had purportedly followed Planar's assembly instructions and tested arms-separated configurations that had monitors attached. Dr. Yee testified that the configurations he tried were stable and safe. Planar also notes that Mass's owner Jerry Moscovitch testified that he would not expect someone to put Planar's products together in the manner shown by Dr. Akin, because people would not “set it up so it would fall over” and may instead put them “together in the correct manner.”[3]

         Viewing the evidence in the light most favorable to Mass. and drawing all inferences in Mass's favor, the Court does not find that that the “evidence permits only one reasonable conclusion, and that conclusion is contrary to the jury's verdict.” Go Daddy, 581 F.3d at 961. The jury was presented with conflicting evidence and experts with contradicting opinions. The jury also had the physical items in the jury room to test. The jury was given an instruction on contributory infringement that included the requirement that there be no substantial, noninfringing use. Substantial, noninfringing use was defined to the jury as use that is not “occasional, farfetched, impractical, experimental, or hypothetical.” There was substantial evidence supporting the jury's implicit finding that Planar's purported noninfringing use was occasional, farfetched, impractical, experimental, or hypothetical.

         b. Wrap around the user

         Planar argues that its products cannot infringe the 331 Patent because the products only hold monitors of less than 24 or 32 inches, the monitors necessarily will sit in front of a user regardless of how the support arms are bowed, and thus they do not “wrap around” the user. Planar appears to interpret the claims of the 331 Patent to require the monitors to literally surround, or at least be beside the user or otherwise break the plane in front of the user. Planar's interpretation of “tends to wrap around the user” is too limiting and contrary to the 331 Patent. The 331 Patent discusses “wrapping around” the user in the specification and in claims 1 and 9. The patent provides:

The slightly bowed configuration of the horizontal support arm further helps to place the LCD screens 14, 16 and 18 in a manner such that the screens “wrap around” the user and further enhance the ease with which each screen may be viewed. The radius of curvature is preferably within a range of about 24”-36”, and more preferably about 30”, which has been found to ergonomically maximize the convenience to the user in viewing the LCD screens
* * *
the support arm is a) bowed at the front of the support arm so that in use the support arm tends to wrap around a user positioned in ...

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