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MURATA MANUFACTURING CO., LTD. v. BEL FUSE INC.

May 25, 2004.

MURATA MANUFACTURING CO., LTD., Plaintiff,
v.
BEL FUSE INC. and BEL FUSE LTD., Defendants



The opinion of the court was delivered by: GERALDINE SOAT BROWN, Magistrate Judge

MEMORANDUM OPINION AND ORDER

Before the court are Plaintiff's Renewed Motion to Compel Bel Fuse Inc. to Produce Documents Identifying Customers [dkt 56] and Defendants' Motion For Protective Order that Defendant Not Be Required to Identify its Customers and to Preclude Plaintiff from Discussing this Litigation with Defendant's Customers [dkt 79]. The parties also have submitted supplemental briefs on the issues contained in their motions. [Dkt 85, 86.] For the reasons set forth below, Plaintiff's Motion is DENIED and Defendants' Motion is GRANTED.

Background

  This case concerns Murata's Patent No. 5,069,641 ("the `641 patent"). (Am. Compl. ¶ 7.) According to Murata, the patent claims a "modular jack," within which is a "printed board" containing an "electronic element for suppressing noise." (Murata's Br. Supp. Renewed Mot. Compel ("Pl.'s Br.") at 3). Murata has accused the defendants (collectively, "Bel Fuse") of infringing its `641 patent. (Id. at 4.) Murata defines the term "accused products" to mean Bel Fuse's modular jacks, including the "belMag" modular jack, although it is not clear whether all of Bel Fuse's modular jacks contain a noise suppression element. (Murata's Br. Supp. Second Mot. Compel: Financial Information, Ex, A, Murata's First Set Requests Prod. Bel Fuse, Definitions 5 and 6.) [Dkt 35.] Bel Fuse describes the item at issue as an integrated connector module or "ICM." (Bel Fuse Br. Supp. Mot. Protective Order ("Defs.' Br."), Decl. Dennis Ackerman ¶ 3). [Dkt 79.] The ICM or modular jack is useful in a variety of devices, such as computers, modems, routers, data network switches and telephones. (Pl.'s Br. at 3.) Bel Fuse sells ICMs on an active basis to between 50 and 100 U.S. customers, (Ackerman Decl. ¶ 7.) Murata states that it does not sell any product made according to the `641 patent. (Pl.'s Br. at 4.) However, Bel Fuse asserts that Murata licenses its patent to at least one company that markets items containing the patented feature. (Bel Fuse Suppl. Br. Supp. Mot. Protective Order at 1-2.) [Dkt 85.] Bel Fuse has filed affirmative defenses and counterclaims alleging, inter alia, that the claims of the `641 patent are invalid as obvious.

  Murata sought in discovery "[d]ocuments . . . showing all [Bel Fuse's] sales, by volume (in units and dollars), by price, by model, by date, and by customer of Modular Jacks to date." (Murata's First Set Requests Prod. Bel Fuse, Request 4.) In its present motion, Murata seeks the identity of Bel Fuse's ICM customers and the relative sizes of their purchases of ICMs. (PL's Br, at 1-2.) Murata knows some of Bel Fuse's customers because they are listed on Bel Fuse's website, and some of those customers are apparently also customers of Murata. But Murata does not know all of Bel Fuse's customers and does not know if the common customers purchase ICMs from Bel Fuse or the quantity of such purchases. Murata asserts that such information is relevant to commercial success and long-felt need, two of the "secondary considerations" of nonobviousness upon which Murata intends to rely to counter Bel Fuse's obviousness defense. (Pl.'s Br. at 2, 4.)*fn1 Bel Fuse has moved for a protective order requesting that it not be required to disclose the identity of its customers and that Murata be precluded from discussing any aspect of this litigation with any entity known to Murata to be an ICM customer of Bel Fuse. (Defs.' Mot. at 1.)

  Legal Background

  In order to determine obviousness, factual inquires must be made concerning: (1) the scope and content of the prior art; (2) the level of ordinary skill in the art; (3) the differences between the claimed invention and the prior art; and (4) secondary considerations of nonobviousness. Ruiz v. A.B. Chance Co., 234 F.3d 654, 662-63 (Fed. Cir. 2000) (citing Graham v. John Deere Co., 383 U.S. 1, 17-18 (1966)). If the alleged infringer succeeds in establishing a prima facie case of obviousness based on the first three factors, the burden of production shifts to the patent holder to offer objective indicia of nonobviousness, such as evidence of the commercial success of the invention (or alleged infringing product) or satisfaction of a long-felt need. Winner Intl. Royalty Corp. v. Wang, 202 F.3d 1340, 1350 (Fed. Cir. 2000); Pro-Mold & Tool Co., Inc. v. Great Lakes Plastics, Inc., 75 F.3d 1568, 1572 (Fed. Cir. 1996).

  When a patent holder asserts that commercial success supports its contention of nonobviousness, there must be a sufficient relationship between the commercial success and the patented invention. Demaco Corp. v. F. Von Langsdorff Licensing Ltd., 851 F.2d 1387, 1392 (Fed. Cir. 1988). "The term `nexus' is often used, in this context, to designate a legally and factually sufficient connection between the proven success and the patented invention, such that the objective evidence should be considered in the determination of nonobviousness." Id. The burden of proof as to the nexus resides with the patent holder, and, as such, the patent holder must come forward with evidence sufficient to constitute a prima facie case of nexus. Id. A prima facie case of nexus is generally established when the patent holder "shows both that there is commercial success, and that the thing (product or method) that is commercially successful is the invention disclosed and claimed in the patent." Id.*fn2 The analysis becomes more complex when the patented invention is only a component of the commercially successful product. Id.

  However, if the marketed product embodies the claimed features, and is coextensive with them, a nexus is presumed and the burden shifts to the party asserting obviousness (the alleged infringer) to present evidence to rebut the presumed nexus. Brown & Williamson Tobacco Corp. v. Philip Morris Inc., 229 F.3d 1120, 1130 (Fed. Cir. 2000). The alleged infringer may rebut the presumed nexus by showing that the product's commercial success was attributable to factors unrelated to the technology claimed in the patent, such as advertising, packaging, or superior workmanship. Id. See also J.T. Eaton & Co., Inc. v. Atlantic Paste & Glue Co., 106 F.3d 1563, 1571 (Fed. Cir. 1997).

  The effect of all of this is that secondary considerations of nonobviousness may become relevant if Murata shows that Bel Fuse's product infringes Murata's patent, Bel Fuse asserts the defense of obviousness, and there is a question as to the nexus between the commercial success of Bel Fuse's product and the infringing features of the product.

  Parties' Arguments

  The heart of the controversy is that Murata does not simply want the names of Bel Fuse's customers, Murata wants to contact those customers and depose them for this litigation.*fn3 Murata argues that testimony of customers' reasons for purchasing the claimed invention is highly relevant to commercial success or whether the invention satisfied a long-felt need, and that, indeed, it is reversible error for a district court to fail to consider customer testimony on the issue of obviousness. (Pl.'s Br. at 2, 4-6.) Murata suggests that sales and market share evidence may not be sufficient to establish the required nexus between the commercial success of Bel Fuse's product and the patented features of the product, and that it would be unfairly prejudiced if Bel Fuse were permitted to "hide" evidence of commercial success and long-felt need since it was Bel Fuse's decision to raise the obviousness defense. (Pl.'s Br. at 2, 6.) Balanced against those arguments is Bel Fuse's concern, supported by the declaration of Bel Fuse's Vice President of Operations, Dennis Ackerman, that any contact by Murata with Bel Fuse's ICM customers will have a "catastrophic" effect on Bel Fuse in the marketplace. (Ackerman Decl. ¶ 9.) Bel Fuse asserts that, given the market for ICMs, it would be easy for its customers to stop buying ICMs from Bel Fuse if the customer is served with a subpoena requiring it to appear for deposition or produce documents concerning its purchases from Bel Fuse. (Defs.' Br. at 9-10.)*fn4 Mr. Ackerman asserts that ICMs have become fungible commodities in the connector industry, and that there are several connector suppliers who offer ICMs very similar to those sold by Bel Fuse and at competitive prices. (Ackerman Decl. ¶ 5.) Bel Fuse further argues that "[i]t has taken considerable effort, time and money for [Bel Fuse] to have acquired these customers, and if the list of [Bel Fuse's] ICM customers were publicized to [Bel Fuse's] competitors, it would seriously harm [Bel Fuse] from a competitive standpoint." (Defs.' Br. at 8) (citing Ackerman Decl. ¶ 3.)

  Murata responds that Bel Fuse's customers are "sophisticated companies" who will not engage in a "mass customer flight" upon learning that Bel Fuse has been sued for patent infringement. (Pl.'s Br. at 10-11.) It argues that customers such as Cisco, which is identified on Bel Fuse's website, "receive Rule 45 subpoenas on a regular basis" and "will know that the resolution of this litigation . . . will protect them from suit by Murata." (Murata's Opp'n Bel Fuse's Mot. and Reply Supp. Renewed Mot. Compel ("Pl.'s Reply") at 7,) [Dkt 75.] Murata claims that, in any event, Bel Fuse's customers already know (or will know) of the lawsuit based on a disclosure in Bel Fuse's annual report, and they are already "involved" in the litigation as they are potential witnesses with discoverable information. (Pl.'s Br. at 11; Pl.'s Reply at 8.) Murata further argues that Bel Fuse should not be concerned that it will steal Bel Fuse's sales or try to gain a competitive advantage because it does not compete in the relevant market. (Pl.'s Br. at 11; Pl's Reply at 5.) Lastly, Murata argues that Bel Fuse's concerns should be alleviated by the Confidentiality Order already in place. (Pl.'s Reply at 2.)

  Bel Fuse replies that the Confidentiality Order does not preclude Murata from serving subpoenas on Bel Fuse's customers, which is one of its main concerns. (Defs.' Reply at 7.) It further argues that, although some of Bel Fuse's customers may know of the lawsuit, they are not "actively involved," and will only be so if Murata succeeds in pursuing its "subpoena-serving campaign." (Id. at 6-7.) Bel Fuse also argues that the fact that Murata is not a competitor is irrelevant to its concerns regarding its loss of customers, who are free to take their business to the other competitors in the market should they see reason to do ...


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