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Exergen Corporation v. Kaz Usa, Inc.

United States District Court, D. Massachusetts

July 24, 2015

EXERGEN CORPORATION
v.
KAZ USA, INC

MEMORANDUM AND ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT ON KAZ'S LICENSE DEFENSE

RICHARD G. STEARNS, District Judge.

In this intellectual property suit, plaintiff Exergen Corporation accuses defendant Kaz USA, Inc., of infringing U.S. Patent Nos. 6, 292, 685 (the '685 patent) and 7, 787, 938 (the '938 patent). Kaz asserts as a defense, inter alia, that it is a licensee for the two patents-in-suit as the result of a 1993 patent license agreement entered between Exergen and Thermoscan, Inc. Kaz claims to be the successor-in-interest to Thermoscan's temperature measuring business. The parties have filed cross-motions for summary judgment on the license defense.[1]

BACKGROUND

The August 12, 1993, license agreement was part of a settlement of a lawsuit brought by Exergen against Thermoscan, alleging infringement of U.S. Patent No. 5, 199, 436. At the time of the agreement, Thermoscan manufactured and sold ear thermometers that used pyroelectric infrared sensors as transducers, while Exergen manufactured and sold ear thermometers made with thermopile transducers. The agreement, which is attached as exhibit D to the Scruggs declaration and exhibit HHH to the Underwood declaration, "grant[ed] to Thermoscan a non-exclusive license to make, use, sell and to have made all goods, and to practice all methods covered by each and every Licensed Patent in the Licensed Field." Thermoscan Agreement Art. II. Licensed Patents included

(i) any United States or foreign patent now owned by Exergen or which Exergen now has the power to license or under which Exergen now has the ability to direct or compel license; (ii) any patent which issues on an application which is now pending in the United States Patent and Trademark Office or any foreign patent office or which is filed on an invention made prior to the date of this Agreement now owned by Exergen or which Exergen now has the power to license or under which Exergen now has the ability to direct or compel license; or (iii) which issues on any continuation or division thereof or reissue or reexamination of any such patent.

Id. Art. I.A. The Licensed Field was defined as "the field of electronic or electromechanical instruments for measuring any temperature characterizing a living person or animal employing any transducer whatever, except for instruments employing an Excepted Transducer." Id. Art. I.C. The parties agree that the Excepted Transducers are essentially thermopiles. See id. Art. I.B. Kaz's accused thermometers - the Vicks Forehead Thermometer V977 and the Braun Forehead Thermometer FHT-1000 - both use thermopiles as transducers.

Although the license agreement excluded thermometers that employed thermopile transducers, these could be brought within the grant scope, "[i]f the relative economic or technical attractiveness of Excepted Transducers materially changes from circumstances existent at the time of execution of this Agreement such that it is no longer practicable for Thermoscan to market a product without an Excepted Transducer." Id. Art. VII.H. Under those circumstances,

the restriction in the license of Article II from using an Ex[c]epted Transducer shall not apply to Exergen's ambient compensation invention, claimed in claims 1-5 of said U.S. Letters Patent No. 5, 199, 436, claims 7-8 of U.S. Letters Patent No. 5, 012, 813, and claim 23 of U.S. Letters Patent No 4, 993, 419, and any claims of corresponding scope in any foreign counterparts, continuations, divisions, reissues, or reexaminations thereof.

Id.

The license agreement was not "assignable or transferable by Thermoscan to a third party without the written consent of Exergen except assignments... to the legal successor to Thermoscan's entire temperature measuring instruments business as a going concern." Id. Art. VII.I. In 1995, Gillette Corporation purchased Thermoscan, which was merged into a company called Gillette Thermometer, Inc. After the merger, Gillette Thermometer assumed the name Thermoscan, Inc. In December of 2006, Kaz acquired Thermoscan's intellectual property as a part of a stock and assets purchase from Braun GmbH, Gillette Home Diagnostics, Inc., and Braun Oral-B Ireland Ltd. In 2008, Kaz purchased all outstanding stock and merged with Thermoscan.

DISCUSSION

Summary judgment is appropriate when "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). "A genuine' issue is one that could be resolved in favor of either party, and a material fact' is one that has the potential of affecting the outcome of the case." Calero-Cerezo v. U.S. Dep't of Justice, 355 F.3d 6, 19 (1st Cir. 2004), citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-250 (1986). The moving party bears the burden of establishing that there is no genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-323 (1986). "The evidence of the non-movant is to be believed, and all justifiable inference are to be drawn in his favor." Anderson, 477 U.S. at 255.

A license, whether express or implied, is a defense to a claim of patent infringement. See Carborundum Co. v. Molten Metal Equip. Innovations, Inc., 72 F.3d 872, 878 (Fed. Cir. 1995). The alleged infringer has the burden of establishing this affirmative defense. Id. The interpretation of a license agreement, like all other contracts, is a question of the law for the court. See Eigerman v. Putnam Invs., Inc., 450 Mass. 281, 287 (2007).[2]

To assert a valid defense of license to Exergen's claims, Kaz must clear three hurdles. First, Kaz must prove that it was assigned the license as "the legal successor to Thermoscan's entire temperature measuring instruments business as a going concern." Thermoscan Agreement Art. VII.I. Second, Kaz must demonstrate that the two patents-in-suit fall within the definition of a Licensed Patent because they cover "an invention made prior to the date of th[e] Agreement [then] owned by Exergen" despite having been issued from an original patent application filed five years after the date of the Thermoscan agreement. Id. Art. I.A. Finally, Kaz must establish that its accused thermometers, which utilize thermopiles, fall within the Licensed Field because "the relative economic or technical attractiveness of Excepted Transducers [had] ...


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