The opinion of the court was delivered by: Michael P. McCUSKEY Chief U.S. District Judge
This case is before the court for ruling on the motions pending in this case. This court has carefully reviewed the arguments of the parties and the documents filed by the parties. Following this careful and thorough review, this court rules as follows: (1) the Motion for Summary Judgment of Inequitable Conduct (#103) filed by Defendant, Horizon Hobby, Inc. (Horizon) is DENIED; (2) the Cross Motion for Summary Judgment of No Inequitable Conduct (#109) filed by Plaintiff, Ripmax Ltd. (Ripmax) is GRANTED; (3) Horizon's Motion in Limine to Alter Order of Proofs (#123) is GRANTED; (4) Horizon's Motion in Limine to Preclude Evidence of Infringement, Damages, and Secondary Considerations of Nonobviousness based on Horizon's Products (#124) is GRANTED; (5) Ripmax's Motion in Limine Precluding Horizon's Use of Translations to Prove Inequitable Conduct (#126) is MOOT; (6) Ripmax's Motion in Limine Precluding Use of the Futaba Drivelink Manuals as Prior Art to the '128 Patent (#127) is DENIED; (7) Ripmax's Motion in Limine to Exclude Trial Exhibits 578 and 648 from the Jury (#140) is GRANTED; (8) Ripmax's Motion to Preclude Testimony by Thomas Fuja, Ph.D. Regarding Patent Prosecution Practice and Patent Office Procedure (#141) is MOOT; (9) Ripmax's Motion in Limine for Bench Trial on Issues of Unenforceability and Inequitable Conduct (#142) is MOOT; and (10) Horizon's Motion for Leave to Amend the Scheduling Order (#143) is MOOT. Horizon's Second Motion for Summary Judgment of Non-infringement (#101) remains pending.
On March 12, 2007, Ripmax filed its Complaint (#1) against Horizon in the United States District Court for the District of Connecticut. Ripmax alleged that it is a United Kingdom company having a principal place of business at 241 Green Street, Enfield, United Kingdom (UK). Ripmax alleged that Horizon is an Illinois corporation with its principal place of business at 4105 Fieldstone Road, Champaign, Illinois. Ripmax alleged that it is the owner of United States Patent No. 6,983,128 (the '128 patent), entitled "Radio Control Transmitter and Receiver," which was issued by the United States Patent and Trademark Office (PTO) on January 3, 2006 and assigned to Ripmax. Ripmax alleged that Horizon has been and still is infringing one or more claims of the '128 patent by making, using, offering for sale and selling Spektrum DSM products. Ripmax sought a permanent injunction, damages and attorney's fees. On May 14, 2007, Horizon filed its Answer, Affirmative Defenses, and Counterclaim (#17). In its Counterclaim, Horizon sought a declaratory judgment that the claims of the '128 patent are invalid and are not infringed by Horizon. Horizon also asked that Ripmax be enjoined from further charges of infringement or acts of enforcement based on the '128 patent against Horizon or its actual or prospective customers, suppliers, and anyone in privity with Horizon. In addition, Horizon asked this court to award it its attorney fees in defending this action. Ripmax filed its Answer to Counterclaim (#19) on June 4, 2007. On July 9, 2007, the district court in Connecticut granted Horizon's Motion to Transfer Venue. On July 16, 2007, the case was transferred to this court.
On June 10, 2008, Horizon filed a Motion for Summary Judgment (#60) and supporting exhibits. Horizon argued that it was entitled to summary judgment because: (1) it did not infringe the '128 patent; and (2) the '128 patent is invalid. On September 23, 2008, while the Motion for Summary Judgment was pending, Magistrate Judge David G. Bernthal entered an Order (#99). Judge Bernthal granted Horizon's Motion for Leave to File a First Amended Answer and Counterclaim (#66). Accordingly, on September 26, 2008, Horizon filed its First Amended Answer, Defenses and Counterclaim (#100). Horizon added, as a defense, an allegation that the "claims of the '128 patent are unenforceable due to inequitable conduct by the inventor(s), the assignee, the prosecuting attorney(s) and/or some combination of them and others substantively involved in prosecution of the application leading to the '128 patent" before the PTO. Horizon alleged that, but for Ripmax's intentional omissions of information, the PTO would never have issued the '128 patent. Horizon also added a Counterclaim for Declaratory Judgment seeking a declaration that the '128 patent is unenforceable due to Ripmax's inequitable conduct. On October 6, 2008, Ripmax filed a Reply to Horizon's First Amended Counterclaim (#105). Ripmax denied Horizon's allegations that Ripmax engaged in inequitable conduct in prosecuting the '128 patent.
On October 7, 2008, this court entered an Opinion (#106) which granted, in part, and denied, in part, Horizon's Motion for Summary Judgment (#60). This court carefully considered all of the arguments raised by the parties and all of the documents presented by the parties. This court concluded that Horizon had shown that its products do not infringe the '128 patent, as properly construed, so that Horizon was entitled to summary judgment on the issue of infringement. This court concluded, however, that genuine issues of material fact remained as to the issue of the validity of the '128 patent.
In the meantime, on September 29, 2008, Horizon filed, under seal, a Motion for Summary Judgment of Inequitable Conduct (#103), with attached exhibits. On October 23, 2008, Ripmax filed, under seal, its Response to Horizon's Motion for Summary Judgment of Inequitable Conduct and Cross Motion for Summary Judgment of No Inequitable Conduct (#109), with attached exhibits, and additional exhibits (#110), also filed under seal. Horizon filed its Reply Memorandum in Support of its Motion for Summary Judgment and in Opposition to Plaintiff's Cross Motion for Summary Judgment (#112), under seal, on November 10, 2008. Horizon was later allowed to file a corrected copy of Exhibit AC in support of its Reply (#115).
On January 23, 2009, the parties appeared before this court for a final pretrial conference. This court vacated the jury trial scheduled for February 2, 2009. This court set the case for a final pretrial conference on May 15, 2009, at 1:30 p.m., and a jury trial on June 1, 2009. The final pretrial conference was subsequently rescheduled to May 12, 2009, at 1:30 p.m. Numerous pre-trial motions have been filed by the parties and are before the court for ruling.
I. CROSS MOTIONS FOR SUMMARY JUDGMENT ON ISSUE OF INEQUITABLE CONDUCT
The documents provided by the parties regarding the issue of inequitable conduct establish the following facts. Elliot Wright worked for Ripmax for approximately 18 years until he left in March 2008. In 2000, Wright disclosed to others his concept for a modified radio control system. At that time, Ripmax was owned by Clive Coote and Wright told Coote about the idea. A decision was made to seek a patent on the idea. On June 15, 2000, Wright sent a summary of his concept to David Weitzel, Ripmax's long time UK-based patent agent. The summary included a statement that the "receiver will never accept a signal from another transmitter." On August 1, 2000, Weitzel prepared and filed a UK patent application based upon Wright's description. The UK application disclosed a radio frequency transmitter and receiver directed to the remote operation of a model vehicle such as an airplane. The alleged inventive features of the patented receiver included: (1) a receiver specific "identifying code" keyed to the transmitted control signals to prevent the transmitter from controlling other receivers; (2) a processor for assessing the selectively formatted control data; and (3) a scanning tuner set in the receiver to locate open channels. In operation, the receiver scans the available frequency channels for a data transmission signal containing its unique code. Upon a "match," the receiver stops scanning and locks onto the transmitter control signals containing that receiver's unique code.
On July 31, 2001, Weitzel followed the UK application with an international patent application known as a Patent Cooperative Treaty (PCT) application. The PCT application allowed Ripmax to designate many different countries for later patent applications all stemming from this international case, including the United States. Wright testified that they filed a PCT "to save costs and to sort of spread the costs out over a longer period." During the prosecution of the PCT application, the European-based patent examiner located and identified to Ripmax two German patent references, DE 9319508 (DE '508) and DE 19502839 (DE '839). The patent examiner listed these two references on an International Search Report (ISR) which was mailed on December 4, 2001. Both of these references were marked with an "X" which meant "document of particular relevance; the claimed invention cannot be considered novel or cannot be considered to involve an inventive step when the document is taken alone." The ISR included one other reference marked with an "X," United States patent 5,499,388 (the Song '388 patent). An additional German patent reference, DE 19705502 (DE '502) was also listed and marked with an "A" which meant "document defining the general state of the art which is not considered to be of particular relevance."
Wright testified that he received the ISR in 2001 and talked to Joe Schamuhn in Ripmax's German office. Wright testified that he sent Schamuhn the information and eventually, around Christmas, he "finally got a rough translation back" from Schamuhn. Wright testified that he thought Schamuhn "may have just read it out over the phone to me and formed his own opinion, passed on to me." Wright testified that it was his recollection "that it turned out to be a device doing something totally different that was not relevant to our patent." Wright testified that he would have reported back to Weitzel regarding what the content was and would have "discussed any implications" with Weitzel. Weitzel testified that he does not speak German and that he did not recall getting translations for the German references listed in the ISR into an English form. Colin Straus, who has worked at Ripmax since 1987, testified that he could not remember seeing the ISR or the German references.
Wright also testified that, regarding the Song '388 patent, it was his understanding that it was "describing a system that was the initial implementation of synthesized frequencies in radio control, and it is a way of tuning a receiver to a transmitter, so a way of the receiver finding the transmitter." Wright testified that he did not believe that the Song '388 patent referred "to any form of unique code."
Wright testified that a decision was made that the references in the ISR were not relevant to their patent application and that "we would not have proceeded with the application if we felt it was going to get turned down." Wright stated that he remembered going through the ISR with Weitzel and then he "was happy to carry on."
The PCT entered "national stage" in the United States on October 8, 2002, at which point prosecution of the U.S. patent application (the '510 application) was undertaken before the PTO. In 2003, Coote sold Ripmax to Nicholas Moss, and the pending patent applications were all turned over to the new owner as part of the transaction. Ripmax decided to drop the prosecution of all pending patent applications stemming from the PCT application, except for the '510 application in the U.S. Wright testified that this decision was made "[b]ecause it was becoming very expensive and the technology had not been adopted by Futaba" as they had hoped. Futaba was a Japanese modeling company that Ripmax had a relationship with as a distributor of Futaba's products. Wright testified that Ripmax was not able to interest Futaba in this technology. Wright stated that the decision to drop the patent applications was made within the first year after Moss purchased Ripmax as a cost saving measure. Straus testified that the foreign applications related to the '510 application were dropped to save cost, but that the U.S. application was preserved because of the vast importance of the U.S. market.
On November 19, 2004, the U.S. Examiner issued an office action, fully rejecting all of the claims of the patent based on prior art, U.S. patent 5,896,094 to Narisada (Narisada patent), independently discovered by the Examiner. The Narisada patent related to a remote keyless entry system for a car that uses a radio transmitter and receiver to open a car door lock remotely. The Examiner pointed out that the Narisada patent disclosed a radio control receiver for operating a plurality of devices each on a respective device channel, the receiver having data storage containing code unique to the receiver. Weitzel prepared arguments regarding the Narisada patent and passed them along to Ripmax's U.S. patent attorney, Michael Epstein, in early 2005. On May 5, 2005, Epstein filed Ripmax's response to the PTO. The response canceled claim 1, amended or canceled other claims and included a new claim 23. The response also included arguments directed at distinguishing the reference to the Narisada patent. The response stated that Narisada "does not anticipate the claimed subject matter." The response stated that "[n]ew claim 23, replacing claim 1, specifies, among other things, a radio control receiver for operating a plurality of devices in a model in accordance with respective control data each on a respective one of a plurality of device channels included within a radio channel." The response stated that "Narisada discloses a radio control receiver but not for operating a plurality of devices in accordance with received control data." The response also stated that "[c]laim 23 additionally specifies a [tuner] arranged to scan a plurality of radio channels" and that "[n]one of the embodiments disclosed in Narisada has such a [tuner]." The response set forth other bases for distinguishing Narisada and stated:
The invention is intended to meet the problems encountered by radio control modellers, caused by there being a limited number of channels available for control of their models: for example, around 80 in the UK. Various mechanical systems are used to avoid use of the same channel by two separate transmitters. Flying a channel-indicative pennant is one system. Use of a peg-board is another. The receiver is usually contained inside the model. Commonly, the receiver is tuned by a replaceable crystal, different radio channels being selected by different crystals. If a modeller finds that the channel to which the receiver of his model is set is already in use, s/he can either wait until the channel becomes available, or change the crystal in the receiver to select a channel which is not in use. The latter is often a cumbersome task involving partial dismantling of the model.
None of this is addressed by Narisada. The reference is concerned with a keyless entry system. In such systems, the channel is preset and cannot be altered in order to avoid repeated use of the same channel. Indeed, plural use is permissible, transmissions on the same channel being distinguished by their ID code. In the invention, reception by plural receivers on the same channel is not distinguished but avoided. This difference is significant because in the keyless entry system described by Narisada, the transmitter button is pressed and the command signal illustrated in Figure 2 is sent, once. Even if the command signal were repeated whilst the button remained pressed (there is no disclosure of that) the signal would cease when the button was released, say, when the lock operated. This is in contrast to the model-application claimed, where the transmitter is switched on and continuously transmits control data in repeated frames, representing the current state (e.g. position) of an input device (e.g. joystick) from frame to frame. In the keyless entry system the change of interference due to simultaneous transmissions on the same channel is low and the effect is inconsequential. In the radio control model case the consequence of interference caused by simultaneous transmissions on the same channel is catastrophic.
The response also stated that "none of the remaining references cited, but not applied by the Examiner, teaches the features missing from Narisada as explained above in relation to anticipation."
It is undisputed that Ripmax was aware of its disclosure obligation to the PTO during the prosecution of the '510 application. It is also undisputed that Ripmax did not submit a single prior art reference to the U.S. Examiner during the prosecution of the '510 application. Epstein testified that he did not request an English translation of the German references in the ISR and never saw an English translation of the German references. Moss, who became the managing director of Ripmax in 2003, testified that he had never seen the ISR or the German references.
The U.S. Examiner accepted Ripmax's arguments and the '128 patent was issued on January 3, 2006. Horizon has provided this court with the complete file history, certified by the PTO, related to the '510 application which became the '128 patent. The file includes: a copy of DE '508, in German; a copy of DE '839, in German; a copy of DE '502, in German; and a copy of the ISR which listed those references.*fn1 The file also includes a list of six U.S. patent references, including the Narisada patent.
B. SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). In making this determination, the court must construe the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in favor of that party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Burwell v. Pekin Cmty. High Sch. Dist. 303, 213 F. Supp. 2d 917, 929 (C.D. Ill. 2002). When this court considers cross motions for summary judgment, this court must review the record construing all inferences in favor of the party against whom the motion under consideration is made. See Mote v. Aetna Life Ins. Co., 502 F.3d 601, 606 (7th Cir. 2007); see also Lawrence v. Life Ins. Co. of N. Am., 2007 WL 2410180, at *5 (N.D. Ill. 2007) (cross motions for summary judgment demand a "dual perspective"). "[S]ummary judgment must be granted when, drawing all reasonable inferences in favor of the non-movant, there is no genuine issue as to any material fact and no reasonable jury could return a verdict for the non-movant." Innogenetics, N.V. v. Abbott Labs., 512 F.3d 1363, 1378 (Fed. Cir. 2008).
"To find a patent unenforceable for inequitable conduct, there must be clear and convincing evidence that the applicant (1) made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information, and (2) intended to deceive the PTO." Research Corp. Techs., Inc. v. Microsoft Corp., 536 F.3d 1247, 1252 (Fed. Cir. 2008). "Inequitable conduct is an offense against the PTO and the public" and "is committed most commonly by intentional failures to submit material references to an examiner, or by making knowing false or misleading statements to the examiner, such that it can confidently be said that by deceitful intent the patent prosecution process has been subverted." Akron Polymer Container Corp. v. Exxel Container, Inc., 148 F.3d 1380, 1383 (Fed. Cir. 1998). The issues of materiality and intent are fact-driven. McKesson Info. Solutions, Inc. v. Bridge Med., Inc., 487 F.3d 897, 902 (Fed. Cir. 2007). However, the Federal Circuit has "consistently treated inequitable conduct as an equitable defense that may be adjudicated by the trial court without a jury." Agfa Corp. v. Creo Prods., Inc., 451 F.3d 1366, 1375 (Fed. Cir. 2006). "Inequitable conduct is an equitable defense to patent infringement most appropriately reserved for the court." Rothman v. Target Corp., 556 F.3d 1310, 1322 (Fed. Cir. 2009).
"The first prong, materiality, is a required element of the inequitable conduct analysis." Research Corp., 536 F.3d at 1252 (emphasis in original). The materiality of information withheld during prosecution of a patent application may be judged by the "reasonable examiner" standard. McKesson, 487 F.3d at 913, citing Digital Control, Inc. v. Charles Mach. Works, 437 F.3d 1309, 1316 (Fed. Cir. 2006). The materiality of prior art turns on whether "a reasonable examiner would consider it important in deciding whether to allow the application to issue as a patent." Rothman, 556 F.3d at 1323, quoting Symantec Corp. v. Computer Assocs. Int'l, Inc., 522 F.3d 1279, 1297 (Fed. Cir. 2008) The Federal Circuit has made clear that, under the reasonable examiner standard, "material prior art need not necessarily present a prima facie case of unpatentability." Agfa Corp., 451 F.3d at 1373, citing Digital Control, 437 F.3d at 1315. In 1992, 37 C.F.R. § 1.56 was revised to more clearly articulate the materiality standard. Rothman, 556 F.3d at 1323. Revised Rule 56 provides:
[I]nformation is material to patentability when it is not cumulative to information already of record or being made of record in the application, and (1) [i]t establishes, by itself or in combination with other ...