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Vanguard Products Group, Inc. v. Diam USA

May 16, 2007

VANGUARD PRODUCTS GROUP, INC., AND TELEFONIX, INC., PLAINTIFFS,
v.
DIAM USA, INC. AND DIAM INTERNATIONAL, INC., DEFENDANTS.



The opinion of the court was delivered by: Elaine E. Bucklo United States District Judge

MEMORANDUM OPINION AND ORDER

Plaintiffs Vanguard Products Group, Inc. and Telefonix, Inc. (collectively "plaintiffs") claim defendants Diam USA, Inc. and Diam International Inc. (collectively "defendants" or "Diam") infringe all claims of U.S. Patent No. 6,799,994 ("the '994 Patent"), by making, using, importing, offering to sell and/or selling within the United States cord reel management devices ("the accused device"). Defendants have filed motions for summary judgment for noninfringement and patent invalidity, and a motion to bar plaintiffs' damages claim.*fn1 Plaintiffs have filed a motion for summary judgment for infringement. For the following reasons, plaintiffs' motion for summary judgment for infringement is granted, and defendants' motions are denied.

I.

This is a patent dispute among competitors who sell theft-reduction systems for the retail display and sale of electronics. These theft-reduction systems permit retailers to display electrically powered hand-held devices, such as camcorders or digital cameras, while simultaneously reducing the risk of theft. As described in the '994 patent abstract, the patent is for

A cord management apparatus that provides for the convenient management of cords associated with the retail display of small electronic devices, such as video cameras. The apparatus comprises a multi-conductor cable, a mounting member for mounting the electronic device, an adapter for connecting the cable to the electronic device, and a base member for removably holding the mounting member. The base member is fastened to a display rack or counter. A plurality of adaptors are provided so that the apparatus may be used with a wide variety of devices that may have different connection requirements.

Specifically, the invention is comprised of (1) a power source, (2) alarm box, (3) cord reel, (4) first (retractable) cable assembly, (5) mounting member, and (6) a second (modular) cable assembly to secure the displayed electronic device. (See Pl. Resp. to Def. Mot. at Exh. 4.) Power travels through the invention and into the displayed device in the same order in which the parts are identified.

This theft-reduction system works as a result of electronic signals. Power travels from the power source through the invention and into the displayed device, allowing customers to operate and evaluate the powered displayed device while extending it away from the display. Because there is an electronic signal from the alarm box to the displayed device, if a customer removes the device or cuts the retractable cable, an alarm sounds alerting store personnel. If a display is changed and a different device with different power requirements is placed in the display, the second cable assembly is replaced with a different cable assembly that has the appropriate power requirement for the newly displayed device. The remaining parts remain unchanged.

Plaintiffs consist of the technology company (Telefonix, Inc.) founded by Paul Burke, the inventor of patent '994, and the exclusive licensee of the patent with rights to sue for patent infringement (Vanguard Products Group, Inc.). Plaintiffs are in the business of selling their product to large retail stores such as Wal-Mart, Circuit City, Best Buy, and Sears. Defendants Diam, and their predecessors, were in the business of selling display furniture or fixtures with integrated security systems made by other companies, such as plaintiffs. Defendants claim that in 2002 they realized plaintiffs' system was inadequate, as it is limited to providing three voltage levels, whereas the market began to demand dozens of voltages to power the growing number of hand-held electronic devices. As a result, defendants decided to develop and manufacture their own technology, which they introduced in November 2002. Plaintiffs filed the complaint in this action in March 2005.

II.

An infringement analysis involves two steps. J & M Corp. v. Harley-Davidson, Inc., 269 F.3d 1360, 1366 (Fed. Cir. 2001). First, a court must determine as a matter of law the scope and meaning of the claims through claim construction. Id. Second, the construed claims must be compared to the allegedly-infringing device. Id. Summary judgment is appropriate where the record shows that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Lexington Ins. Co. v. Rugg & Knopp Inc., 165 F.3d 1087, 1090 (7th Cir. 1999); FED. R. CIV. P. 56(c). I must construe all facts in the light most favorable to the non-moving party and draw all reasonable inferences in favor of that party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

A. Claim Construction

In claim construction, the terms of the claim must be given the ordinary and customary meaning that the terms would have to a person of ordinary skill in the art at the time of the filing date of the patent application. Phillips v. AWH Corp., 415 F.3d 1303, 1313 (Fed. Cir. 2005). In construing claims, I must first examine the intrinsic evidence, i.e., "the patent itself, including the claims, the specification and, if in evidence, the prosecution history." Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996). The specification of a claim provides the "primary basis" for construing disputed claim language, because it contains the inventor's statutorily required "full" and "exact" description of the claimed invention. Phillips, 415 F.3d at 1315-16 (citations omitted) (specification "is the single best guide to the meaning of a disputed term").

The patent's prosecution history should also be considered, if in evidence. Id. at 1317. This generally consists of the complete record of the proceedings before the Patent and Trademark Office ("PTO") and the prior art cited during the patent's examination. Id. Like the specification, "the prosecution history can often inform the meaning of the claim language by demonstrating how the inventor understood the invention." Id. However, the prosecution history is not conclusive; as it "represents an ongoing negotiation between the PTO and the applicant, rather than the final product of that negotiation, it often lacks the clarity of the specification and thus is less useful." Id.

I may also consider extrinsic evidence during the claim construction process. Extrinsic evidence "consists of all evidence external to the patent and prosecution history, including expert and inventor testimony, dictionaries, and learned treatises." Id. (quoting Markman v. Westview Instruments, Inc., 52 F.3d 967, 980 (Fed. Cir. 1995)). While I may rely upon extrinsic evidence, it is "less significant than the intrinsic record in determining the legally operative meaning of the claim language." Id. at 1317 (quotations omitted). Generally, courts may consult dictionaries and technical treatises "so long as the dictionary definition does not contradict any definition found in or ascertained by a reading of the patent documents." Id. at 1322-23 (quotations omitted).

The '994 patent has two independent claims and nine dependent claims. The terms presented for construction are "electrically coupled" and "via the modular connector," which are present in each of the independent claims numbered 1 and 8. Claim 1 states:

1. A cable management apparatus for use with a plurality of electronic devices, comprising: a first cable assembly having a length, a modular connector, and a plurality of electrical conductors; a reel that retractably stores at least a portion of the length of the first cable assembly; a mounting member adapted to receive an end of the first cable assembly and at least one of the plurality of electronic devices; and a second cable assembly from a plurality of cable assemblies associated with the plurality of electronic devices, wherein the second cable assembly is adapted to electrically couple the[sic] at least one of the plurality of electronic devices to the end of the first cable assembly, and wherein the first cable assembly is configured to be electrically coupled to each of the plurality of cable assemblies via the modular connector. '994 Patent, col. 7, cl. 1 (emphasis added). Claim 8 states:

8. A cable management system, comprising: a plurality of retractable cable assemblies, each of which includes a length, a modular connector, a multi-conductor cable, and a retractable reel on which at least a portion of the length at the multi-conductor cable is wound; and a plurality of modular cable assemblies, each of which is associated with at least one of a plurality of electronic devices and each of which includes a first end adapted to be electrically coupled to the multi-conductor cable and a second end adapted to be electrically coupled to one or more of the plurality of electronic devices, wherein each of the plurality of retractable cable assemblies is configured to be electrically coupled to each of the plurality of modular cable assemblies via the modular connector. '994 Patent, col. 8, cl. 8 (emphasis added).*fn2 Neither "electrically coupled" nor "modular connection" appear in the patent specification. Both were added during the prosecution of the patent.

1. "Electrically Coupled"

Defendants ask me to construe "electrically coupled" as "directly, electrically connected currents or circuits where each current or circuit always has equal electrical potential (voltage)." Plaintiffs seek a broader construction of the terms to mean "electrically connected," but not requiring ...


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