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Crane Security Technologies, Inc. v. Rolling Optics AB

United States District Court, D. Massachusetts

August 23, 2018

CRANE SECURITY TECHNOLOGIES, INC. and VISUAL PHYSICS, LLC, Plaintiffs,
v.
ROLLING OPTICS AB, Defendant.

          ORDER ON POST-TRIAL MOTIONS (DOC. NOS. 491, 495, & 497)

          Leo T. Sorokin United States District Judge

         In this intellectual property dispute, Plaintiffs Crane Security Technologies, Inc. and Visual Physics, LLC (together, “Crane”) alleged that Defendant Rolling Optics AB (“RO”) infringed five of Crane's patents. RO moved to dismiss for lack of personal jurisdiction, and the Court denied that motion. Doc. No. 34. RO then asserted defenses and counterclaims for declaratory judgment of invalidity and non-infringement. The Court held a hearing pursuant to Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996), and issued an order construing five claim terms. See Crane Sec. Techs. Inc. v. Rolling Optics AB, 166 F.Supp.3d 76 (D. Mass. 2016) (the “Markman Order”). The parties subsequently filed motions for summary judgment. The Court entered summary judgment in favor of Crane as to infringement of Crane's patents by certain RO products made with technology retired in 2013 (the “old technology”) and with technology in place since 2013 (the “new technology”), [1] as well as to the validity of certain claim terms. See Crane Sec. Techs. Inc. v. Rolling Optics AB, 2018 WL 575697 (D. Mass. Jan. 26, 2018) (the “Summary Judgment Order”). The facts of this case are described in detail in the Markman Order and the Summary Judgment Order.

         Following a trial, the jury returned a verdict on May 9, 2018 in favor of Crane, finding that RO actively induced infringement by third parties, that Crane was entitled to damages for the direct and induced infringement in the amount of $119, 186, and that RO's infringement was willful. The jury also rejected RO's two remaining invalidity defenses. Doc. No. 475. Pending before the Court are RO's renewed motion for judgment as a matter of law, Doc. No. 495, Crane's motion for a permanent injunction, Doc. No. 497, and Crane's motion for enhanced damages and attorneys' fees, Doc. No. 491. For the reasons that follow, the Court ALLOWS in part and DENIES in part RO's motion for judgment as a matter of law and ALLOWS in part and DENIES in part Crane's motions for injunctive relief, enhanced damages, and attorneys' fees. The Court enjoins RO from future infringement of Crane's patents to the extent outlined herein and orders RO to pay Crane enhanced damages of $326, 244.

         I. RENEWED MOTION FOR JUDGMENT AS A MATTER OF LAW (DOC. NO. 495)

         RO renews its motion for judgment as a matter of law in its favor on the issues of active inducement, actual notice of infringement, and anticipation of Claims 62 and 63 of the ‘360 patent by the Matsumoto patent application (“Matsumoto”).

         A court may grant judgment as a matter of law after conclusion of a jury trial when the evidence “points so strongly and overwhelmingly in favor of the moving party that no reasonable jury could have returned a verdict adverse to that party.” Monteagudo v. Asociacion de Empleados del Estado Libre Asociado de Puerto Rico, 554 F.3d 164, 170 (1st Cir. 2009) (citations omitted). The Court examines “the evidence presented to the jury, and all reasonable inferences that may be drawn from such evidence, in the light most favorable to the jury verdict.” Cigna Ins. Co. v. Oy Saunatec, Ltd., 241 F.3d 1, 8 (1st Cir. 2001) (citations omitted).

         A. Active Inducement

         RO first contends that Crane failed to introduce evidence at trial sufficient to support a verdict that RO actively induced infringement with respect to each of the following products imported into the United States by third parties: (1) the Blu Giovello products, (2) the Luna di Luna products, (3) the Taittinger products, (4) the Hennessy products, (5) the UGG products, or (6) the Pierce Atwood business cards. The Court instructed the jury that, to prove active inducement of infringement, Crane was required to show (i) that RO aided, instructed, or otherwise acted with the intent to cause another party to import its foils or labels into the United States; (ii) that RO knew of, or showed willful blindness to the existence of, Crane's patents; and (iii) that RO knew, or showed willful blindness to the fact, that the induced acts constituted patent infringement.[2] Doc. No. 473. RO does not object to the instruction delivered and does not contend that it was unaware of Crane's patents.

         As to the Blu Giovello, Taittinger, and Luna di Luna labels, Crane does not oppose RO's motion for judgment as a matter of law and does not oppose a corresponding reduction in the jury's damages award by $10, 438. Doc. No. 509 at 2 n. 2. The Court therefore ALLOWS RO's motion with respect to these products.[3]

         With respect to the Hennessy labels and the UGG labels sent to CMR, the Court finds that the evidence, viewed in the light most favorable to the verdict, supports a reasonable jury determination of active inducement of infringement. First, the trial evidence sufficiently supports the conclusion that RO understood, or at least was willfully blind, to the fact that the importation and use of its products in the United States infringed Crane's patents. RO's co-founder, Axel Lundvall, had extensive knowledge of Crane's patents throughout the development of RO's technology. He took note of the debut of Crane's technology on the Swedish kroner in 2006. See Doc. No. 481 at 54-55. He learned of the application for the parent patent to Crane's patents-in-suit in 2007, upon the rejection in Sweden of Lundvall's own patent application. Id. at 55-56. Lundvall testified at trial that, after that 2007 rejection, he reviewed Crane's parent patent application and concluded that “so long as we could stay over 50 microns, we didn't have to mind-or bother about that patent.” Id. at 58 (referring to the diameter of the lenses in the micro-optic system). The record contains no particular support for that distinction. Lundvall also became aware of the ‘842 patent by 2009. Id. at 68-69. In an internal Discussion Paper dated April 2012, Lundvall remarked of the parent patent and the ‘842 patent: “The applications … are some of the most detailed and comprehensive seen in the patent process and all that can be done is to raise your hat for a job well done.” Trial Ex. 60. RO conducted further inspection of Crane's products in late 2013 and early 2014, when Lundvall asked a RO employee to look at a Crane-made HP label to “determine how [Crane's] lenses are manufactured.” Trial Exs. EQ and ER.

         For most of the period of its infringement of Crane's patents, including after receiving two notice letters of potential infringement from Crane, RO operated without obtaining any legal opinion as to whether its products infringed Crane's patents. Even after receiving legal advice to stop its activities, RO continued to send infringing products to the United States. The evidence does not support RO's contention that it had a good faith belief that its products did not infringe Crane's patents or that it was merely indifferent to the risk of infringement. Rather, the jury heard sufficient evidence at trial reasonably to infer that RO was at least willfully blind to the fact that importation of its products into the United States infringed Crane's patent rights-that is, that RO subjectively believed that there was a high probability that the patents would be infringed and that RO deliberately avoided learning of the probable infringement.

         Second, the evidence at trial supports a reasonable inference that RO sold these foils or labels with more than mere knowledge that they would be imported into the United States. RO argues that it did no more. However, each of these product sales involved other indicia of inducement sufficient to support the verdict. Cognac labels that RO sent to Hennessy and that were imported into the United States expressly indicated “USA.” Doc. No. 480 at 66-67 (Lundvall testimony acknowledging “there are some evidence that show that we had artwork in our possession that said USA on it”). The jury could reasonably infer that RO had manufactured and sold the Hennessy label with the intent to cause the Hennessy products to be sold in the United States. While CMR purchased labels from RO in Sweden and imported them into the United States, RO also sent free samples to CMR, a U.S. company. Id. at 57. This additional conduct supports a reasonable inference that RO acted with the intent to promote the sale by CMR of products bearing RO labels in the United States. The evidence of active inducement is stronger with the new technology that RO provided to its counsel, Pierce Atwood, for its business cards. RO provided these cards in lieu of payment of certain legal fees. The jury could infer that RO negotiated with Pierce Atwood for this alternative form of payment and caused the importation into the United States of these RO products for use by attorneys primarily located and conducting business in the United States. With each of these three products, no additional “communication between the alleged inducer and the third-party direct infringer” was needed, Power Integrations, Inc. v. Fairchild Semiconductor Int'l, Inc., 843 F.3d 1315, 1331 (Fed. Cir. 2016); the circumstances of the sales themselves permit a reasonable inference that RO induced the third party's infringement.

         Accordingly, the Court DENIES RO's motion with respect to the Pierce Atwood cards and the labels sent to CMR and Hennessy.

         B. Actual Notice of Infringement

         Second, RO claims that it is entitled as a matter of law to judgment that Crane's April 2010 letter did not convey to RO actual notice of infringement for purposes of the accrual of damages. The Court previously denied RO's request for summary judgment on this issue. In its Summary Judgment Order, the Court noted that “[a] reasonable factfinder could conclude that [the] statements” in the April 2010 letter “provided a charge of infringement and sufficiently specific product identification for purposes of actual notice.” Crane, 2018 WL 575697 at *16.

         In its motion for judgment as a matter of law, RO recycles its summary judgment arguments, which the Court rejects again here. Additionally, RO urges that the testimony at trial revealed that Crane was not aware of whether RO's products actually infringed its patents, such that no reasonable jury could find that the April 2010 letter contained the requisite, specific charge of infringement. Compare Doc. No. 479 at 119-120 (Crane executive William Westervelt's testimony that, upon investigating a sample of RO's technology, “we believe[d] that it was possible that it infringed part of our intellectual property”) with id. at 137-138 (Westervelt's testimony acknowledging he had not formed a conclusion about whether the RO product infringed Crane's patent at that time). Even assuming, without deciding, that Crane's subjective belief of RO's infringement at the time bears on whether Crane effectuated actual notice, the Court draws all reasonable inferences in favor of the verdict and finds that the trial testimony was sufficient to support a conclusion that Crane believed that RO infringed its patents at the time that it sent the April 2010 letter. Thus, the Court DENIES RO's motion for judgment on this issue of actual notice of infringement.

         C. Anticipation by Matsumoto

         Third, RO moves for judgment as a matter of law that the Matsumoto patent application anticipated claims 62 and 63 of the ‘360 patent, such that those claims are invalid. In the Summary Judgment Order, the Court summarized the contradictory evidence in the reports of RO's expert Leger and Crane's expert Barbastathis and concluded that a genuine issue of fact remained as to whether the Matsumoto reference discloses (i) “the production of an array with substantially regular spacing” and/or (ii) “the disposition of picture elements and lenses at a uniform distance.” Crane, 2018 WL 575697 at *9. RO now alleges various deficiencies with Barbastathis's rebuttal testimony on these two claim terms. However, the alleged deficiencies merely mirror the arguments that RO made at the summary judgment stage. At trial, the jury was entitled to evaluate the credibility of each expert witness in the face of conflicting expert testimony. Kinetic Concepts, Inc. v. Smith & Nephew, Inc., 688 F.3d 1342, 1362 (Fed. Cir. 2012) (citation omitted). The Court thus does not resolve the conflicting expert testimony here, as the expert evidence on Matsumoto's anticipation of these two claim terms did not “point[] so strongly and overwhelmingly in favor of [RO] that no reasonable jury could have returned a verdict” rejecting RO's anticipation claim. See Monteagudo, 554 F.3d at 170. The Court accordingly DENIES RO's motion for judgment on the issue of anticipation by the Matsumoto reference.

         II. PLAINTIFF'S MOTION FOR ENHANCED DAMAGES AND ATTORNEYS' FEES (DOC. NO. 491)

         Crane seeks enhanced damages under 35 U.S.C. § 284 and attorneys' fees under 35 U.S.C. § 285. Crane highlights the jury's finding of willful infringement and stresses that RO knowingly copied Crane's patented design, continued infringing activities despite Crane's written notices and the filing of this suit, and never possessed any good-faith belief in either non-infringement or invalidity. Doc. No. 492 at 1. Crane also maintains that, after the Court issued its Markman Order, RO “filed a string of meritless motions, shifted and re-litigated its claim construction ...


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