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Cummins-Allison Corp. v. Glory Ltd.

February 12, 2007

CUMMINS-ALLISON CORP., PLAINTIFF,
v.
GLORY LTD., GLORY SHOJI CO., LTD., AND GLORY (U.S.A.), INC., DEFENDANTS.



The opinion of the court was delivered by: Judge Virginia M. Kendall

MEMORANDUM OPINION AND ORDER

Plaintiff Cummins-Allison Corp. ("Cummins") has sued Glory Ltd. and its affiliate organizations ("Glory") for patent infringement of its U.S. Patents Nos. 5,285,196 ("the '196 Patent") and 6,459,806 ("the '806 Patent"). Glory moves for summary judgment on grounds that both patents are invalid because the patent applications failed to comply with 35 U.S.C. § 102(b). Because Glory has not shown by clear and convincing evidence that the public use was not experimental, Glory's Motion for Summary Judgment Declaring the Patents in Suit Invalid Under 35 U.S.C. § 102(b) for Public Use is denied.

Statement of Facts

Cummins is a corporation based in Indiana and Illinois; Glory Ltd. is a Japanese corporation, while Glory (U.S.A.), Inc. is a California Corporation. Cummins' Response to Glory's Statement of Material Facts (hereafter "Cummins Resp.") at ¶¶ 1-2. Glory has designed, manufactured, and marketed money-handling equipment of various forms, including desk-top devices for currency counting and currency discrimination. Id. at ¶ 3. Cummins holds several patents for desk-top currency counting and discrimination devices, two of which are the '196 Patent and the '806 Patent. Id. at ¶ 4. Both the '196 and the '806 Patents were effectively filed May 19, 1992. Id. at ¶ 7.

In 1985, Cummins requested a proposal from Aaron Bauch regarding correlation algorithms that were capable of accurately denominating U.S. currency. Id. at ¶ 8. By August 1986, Cummins had built a prototype circuit board for its Currency Recognition Unit ("CRU"). Id. at ¶ 9. By September 1990, Cummins had built and tested a laboratory model of the CRU. Id. at ¶ 11. By the end of 1990, Cummins had built two prototype CRUs. Id. at ¶ 15. On January 15, 1991, Cummins conducted an in-house test of its two prototype CRUs, operated by a professional teller from Glenview State Bank. Id. at ¶ 17. The machines operated in two modes: the "read" mode and the "stranger" mode. The parties dispute the extent of the problems that these two prototype machines exhibited in each of the modes during testing, and whether one or both modes exhibited significant or minor rates of error. Id. at ¶¶ 11, 13, 15, 16.

On January 21, 1991, Cummins ran a test of its CRU machines at Glenview State Bank. Id. at ¶ 20. By January 23, 1991, Cummins had decided to build twenty more machines, five in February 1991, and five in April 1991. Id. at ¶ 23. Cummins conducted additional tests on the two prototypes on January 29, 1991. Id. at ¶¶ 25-27. By January 31, 1991, an internal Cummins' memo indicated that at least one patent application involving the CRU was ready for filing; Cummins claims that this memo concerned a different patent than the patents-in-suit. Id. at ¶ 28. On February 28, 1991, an internal Cummins' memo stated that Cummins planned to produce the discriminator starting July 1, 1991; Cummins' head of the CRU development project, Douglas Mennie, testified that the February 28, 1991 memo set goals rather than deadlines. Id. at ¶ 31.

Between February and April of 1991, Cummins installed CRU "beta-test" machines at four locations. Id. at ¶ 32. Employees at the four locations testified that the machines worked with little or no problems, while employees from Cummins who witnessed the on-site testing testified that the tests were not considered routinely successful. Id. at ¶ 33. The parties dispute whether visitors could view the machines on location in operation. Id. at ¶ 34. Cummins employees were instructed to speak with the responsible persons at each test site and explain the need for confidentiality concerning each of the testing machines, but Cummins does not have signed confidentiality agreements from any of the sites. Id. at ¶ 38.

Cummins and Glory dispute the import of the testimony of several employees from the on-site locations where the CRC machines were tested. These employees from the locations testified that they believed the machines were being tested for purchase, were on-site for commercial use, or were already part of ordinary operations at the commercial location. Id. at ¶¶ 39-43. Some employees from the locations testified that they were not aware of confidentiality restrictions on the machines' use at the time they were on location. Finally, some employees testified that the machines were left unattended, moved from their original locations, or used by untrained personnel - cited by Glory as evidence that Cummins lacked control of its machines while they were on location. Id. at ¶¶ 47-52. Cummins disputes both the accuracy of the employees' memory and provides documentation and testimony from its employee, Per Torling, an inspector monitoring the on-site beta testing, who disputes the on-site employees' testimony. Id; see Adli Decl. Ex. 17 (Decl. of Per Torling).

Standard of Review

Summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). In determining whether a genuine issue of fact exists, the Court must view the evidence and draw all reasonable inferences in favor of the party opposing the motion. Bennington v. Caterpillar Inc., 275 F.3d 654, 658 (7th Cir. 2001); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). The Court, however, will "limit its analysis of the facts on summary judgment to evidence that is properly identified and supported in the parties' [Local Rule 56.1] statement." Bordelon v. Chicago Sch. Reform Bd. Of Trustees, 233 F.3d 524, 529 (7th Cir. 2000). Where a proposed statement of fact is supported by the record and not adequately rebutted, the court will accept that statement as true for purposes of summary judgment. See Drake v. Minnesota Mining & Mfg. Co., 134 F.3d 878, 887 (7th Cir. 1998) ("Rule 56 demands something more specific than the bald assertion of the general truth of a particular matter[;] rather it requires affidavits that cite specific concrete facts establishing the existence of the truth of the matter asserted."). An adequate rebuttal requires a citation to specific support in the record, an unsubstantiated denial is not adequate. See Albiero v. City of Kankakee, 246 F.3d 927, 933 (7th Cir. 2001).

Discussion

Title 35 of the United States Code, Section 102(b) bars a person from acquiring a patent if "the invention was . . . in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States." A patentee loses its right to patent an invention if it fails to file a patent application within one year of the date that an invention is both: (1) "ready for patenting;" and (2) "in public use" or "on sale." See 35 U.S.C. § 102(b), explained in Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 60 (1998). In the context of public use, "evidence of experimental use may negate either the 'ready for patenting' or 'public use' prong." Invitrogen Corp. v. Biocrest Mfg., L.P., 424 F.3d 1374, 1379-80 (Fed. Cir. 2005). In this case, the "Critical Date" for purposes of the public use bar is May 19, 1991, one year prior to the agreed date on which Cummins filed its applications for the '196 and '806 Patents.

Whether a patent is invalid on grounds of public use is a question of law based on the underlying facts. Netscape Communications Corp. v. Konrad, 295 F.3d 1315, 1320 (Fed. Cir. 2002). "A patent is presumed valid. Overcoming the presumption requires a showing of facts proved by clear and convincing evidence." Invitrogen, 424 F.3d at 1378 (internal citations omitted); see also Finnigan Corp. v. Int'l Trade Comm., 180 F.3d 1354, 1365 (Fed. Cir. 1999) ...


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