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Peerless Industries, Inc. v. Crimson AV, LLC

United States District Court, N.D. Illinois, Eastern Division

March 31, 2017

PEERLESS INDUSTRIES, INC., Plaintiff,
v.
CRIMSON AV LLC, and VLADIMIR GLEYZER. Defendants.

          OPINION AND ORDER

          Hon. Joan H. Lefkow Judge

         Peerless Industries, Inc. filed suit against Crimson AV LLC and Vladimir Gleyzer (together, Crimson) alleging patent infringement.[1] On summary judgment, the court found Crimson liable for infringing certain claims of U.S. Patent No. 7, 823, 850 (the '850 Patent), which is owned by Peerless. (Dkt. 330.) The case then proceeded to trial on Crimson's three invalidity defenses, and the jury found the '850 Patent (1) was obvious as to all claims at issue; (2) was anticipated as to certain claims; and (3) failed to disclose best method. (Dkt. 613.) The court entered a judgment affirming the same. (Dkt. 612.)

         Peerless now renews its motion for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50(b) as to the invalidity of its patent and, in the alternative, a motion for a new trial pursuant to Federal Rule of Civil Procedure 59. (Dkt. 623.) The facts surrounding the case are well-known to the parties and will only be repeated here as necessary.[2] For the following reasons, Peerless's motion is granted in part and denied in part.

         LEGAL STANDARD

         Under Federal Rule of Civil Procedure 50(b), judgment as a matter of law may be entered where “there is no legally sufficient evidentiary basis for a reasonable jury to find for [a] party on [an] issue.” Kossman v. Ne. Ill. Reg'l Commuter R.R. Corp., 211 F.3d 1031, 1036 (7th Cir. 2000) (quoting Fed.R.Civ.P. 50) (internal quotation marks omitted) (alterations in original). After reviewing the record and drawing all reasonable inferences in the light most favorable to the non-moving party, the court must determine whether the verdict is supported by sufficient evidence. Id.; Tincher v. Wal-Mart Stores, Inc., 118 F.3d 1125, 1129 (7th Cir. 1997). In doing so the court will not make credibility determinations or weigh the evidence. Schandelmeier-Bartels v. Chicago Park Dist., 634 F.3d 372, 376 (7th Cir. 2011). The court will only overturn a jury verdict if it concludes that “no rational jury could have found for the [non-moving party].” Collins v. Kibort, 143 F.3d 331, 335 (7th Cir. 1998) (internal quotation marks omitted).

         Rule 59(a)(1) states that “[t]he court may, on motion, grant a new trial on all or some of the issues-and to any party-as follows: (A) after a jury trial, for any reason for which a new trial has heretofore been granted in an action at law in federal court[.]” Fed.R.Civ.P. 59(a)(1). When deciding whether to grant a new trial, the court “must determine whether the verdict is against the weight of the evidence, the damages are excessive [or insufficient], or if for other reasons the trial was not fair to the moving party.” Shick v. Ill. Dep't of Human Servs., 307 F.3d 605, 611 (7th Cir. 2002) (brackets in original) (internal quotation marks omitted). “The misconduct of counsel . . . justifies a new trial where that misconduct prejudiced the adverse party.” Davis v. FMC Corp., Food Processing Mach. Div., 771 F.2d 224, 233 (7th Cir. 1985) (internal quotation marks omitted). A court should grant a new trial based on the erroneous admission or exclusion of evidence only if that error “had a substantial influence over the jury, and the result reached was inconsistent with substantial justice.” Agushi v. Duerr, 196 F.3d 754, 759 (7th Cir. 1999) (internal quotation marks omitted).

         ANALYSIS

         I. The Clear and Convincing Standard Applies to Claims of Invalidity

         Because a patent is presumed valid, the evidentiary burden to show facts supporting a conclusion of invalidity is clear and convincing evidence. Transclean Corp. v. Bridgewood Servs., Inc., 290 F.3d 1364, 1370 (Fed. Cir. 2002) (citing WMS Gaming, Inc. v. Int'l Game Tech., 184 F.3d 1339, 1355 (Fed. Cir. 1999)). Accordingly, when evaluating a motion for judgment as a matter of law following a trial, the court “must determine whether the jury had substantial evidence upon which to conclude that [the defendant] met its burden of showing invalidity by clear and convincing evidence.” Koito Mfg. Co. v. Turn-Key-Tech, LLC, 381 F.3d 1142, 1149 (Fed. Cir. 2004). See also Verizon Servs. Corp. v. Cox Fibernet Virginia, Inc., 602 F.3d 1325, 1337-38 (Fed. Cir. 2010) (quoting U.S. Surgical Corp. v. Ethicon, Inc., 103 F.3d 1554, 1563 (Fed.Cir.1997) (“In reviewing the jury verdict of obviousness, we review . . . whether there was substantial evidence whereby a reasonable jury could have reached its verdict upon application of the correct law to the facts, recognizing that invalidity must be proved by clear and convincing evidence.”); Princeton Biochemicals, Inc. v. Beckman Coulter, Inc., 411 F.3d 1332, 1336 (Fed. Cir. 2005) (“Regarding the obviousness issue in this case, this court must determine whether the jury had substantial evidence upon which to conclude that [the defendant] met its burden of showing invalidity by clear and convincing evidence.”).

         Crimson argues that because certain prior art relevant to its obviousness and anticipation arguments was not before the Patent and Trademark Office when the '850 Patent was prosecuted, no presumption of validity should attach; therefore, its burden to establish invalidity was lower. This is incorrect. Although “new evidence may carry more weight, ” the clear and convincing standard applies to all allegations of invalidity. Microsoft Corp. v. i4i Ltd. P'ship, 564 U.S. 91, 110, 131 S.Ct. 2238, 180 L.Ed.2d 131 (2011). Accordingly, the court reviews each invalidity argument under the clear and convincing standard.

         II. Invalidity

         A. Prior Art

         Peerless argues that Crimson did not introduce clear and convincing evidence that either the TRK50B bracket or the VMPL2 bracket qualified as prior art under 35 U.S.C. § 102(a).[3]Under the statute, each bracket would be prior art if it were “known or used by others in this country” prior to the invention of the Peerless bracket.[4] 35 U.S.C. § 102(a).[5] “Known or used by others in this country” means knowledge or use that is accessible to the public. Carella v. Starlight Archery & Pro Line Co., 804 F.2d 135, 139 (Fed. Cir. 1986) (citations omitted). William Lam, one of three inventors listed on the '850 Patent, testified that he invented the Peerless bracket in approximately early 2005. (Trial Tr. 498:25-500:12.)

         To establish that the TRK50B was accessible to the public prior to Lam's invention, Crimson introduced a print-out of an Amazon.com page that stated the TRK50B was available on Amazon.com as of September 14, 2004. The page, which was hearsay, was admitted under Federal Rule of Evidence 807. (See dkt. 548 at 5-6 (denying motion in limine to exclude the print-out).) Additionally, Vladimir Gleyzer testified that a physical TRK50B bracket, admitted into evidence and examined by the jury, appeared to be identical to the TRK50B depicted on the print-out. While the court concedes that the admission of the evidence was questionable and Crimson's evidence was minimal, Peerless offered no evidence indicating that the TRK50B was not the item shown on the Amazon print-out or that the date shown on it was unreliable.[6] The jury was instructed on the relevant law (trial tr. 1321:11-24), and it found the TRK50B to be prior art. The court cannot reweigh the evidence introduced at trial, and, therefore, will not disturb the jury's conclusion that the TRK50B is prior art.

         To establish that the VMPL2 was accessible to the public prior to Lam's invention, Crimson introduced a cut-sheet[7] for the bracket dated July 15, 2004. At trial, Peerless objected to the exhibit for lack of foundation, which the court overruled after Lam identified it.[8] Additionally, Vladimir Gleyzer testified that the VMPL2 was examined at Peerless at least as early as September 2004. (Trial Tr. 1235:10-1236:9.) Again, Peerless offered no rebuttal evidence. For the reasons given above, the court will not disturb the jury's conclusion.

         B. Obviousness

         At trial, the jury found that the '850 Patent was obvious in light of the TRK50B and the VMPL2. A patent is invalid “if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains.” 35 U.S.C. § 103(a); In re Cyclobenzaprine Hydrochloride Extended-Release Capsule Patent Litig., 676 F.3d 1063, 1068 (Fed. Cir. 2012). Indeed, an invention must represent enough of a qualitative advance over earlier technology to justify the granting of a patent. See Graham v. John Deere Co., 383 U.S. 1, 9, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966).

         “Obviousness is a question of law based on underlying factual findings: (1) the scope and content of the prior art; (2) the differences between the claims and the prior art; (3) the level of ordinary skill in the art; and (4) objective considerations of nonobviousness.” In re Capsule Patent Litig., 676 F.3d at 1068 (citing Graham, 383 U.S. at 17-18). These factual findings are known as the Graham factors. A party seeking to invalidate a patent as obvious must demonstrate, by clear and convincing evidence, “‘that a skilled artisan would have had reason to combine the teaching of the prior art references to achieve the claimed invention, and that the skilled artisan would have had a reasonable expectation of success from doing so.'” Id. at 1068- 69 (quoting Procter & Gamble Co. v. Teva Pharms. USA, Inc., 566 F.3d 989, 994 (Fed. Cir. 2009)). District courts must consider the underlying factual findings first before deciding whether to invalidate a patent in order to avoid the tendency to depart into “the tempting, but forbidden zone of hindsight.” Loctite Corp. v. Ultraseal Ltd., 781 F.2d 861, 873 (Fed. Cir. 1985) overruled on other grounds by Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059 (Fed. Cir. 1998).

         The court first reviews the Graham factors established at trial.[9]

         1. Scope and Content ...


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