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COINSTAR, INC. v. COINBANK AUTOMATED SYS.

January 26, 1998

COINSTAR, INC., Plaintiff,
v.
COINBANK AUTOMATED SYSTEMS, INC., Defendant.



The opinion of the court was delivered by: INFANTE

 I. INTRODUCTION

 Defendant CoinBank Automated Systems, Inc., ("CoinBank") has filed two motions for summary judgment, or in the alternative, summary adjudication of the issues, on the grounds that two models of its self-service coin counting machines (CBII and CBIII) do not infringe any claim of U.S. Patent No. 5,564,546 ('546 patent), either literally or under the doctrine of equivalents. Plaintiff Coinstar, Inc. ("Coinstar") opposes both motions, and brings a counter-motion for summary judgment that the CBII does infringe the '546 patent. For the reasons set forth below, the court hereby; (1) GRANTS in part and DENIES in part CoinBank's motion of non-infringement of the '546 patent by the CBII; (2) DENIES Coinstar's counter motion for summary judgment of infringement of the '546 patent by the CBII model; and (3) GRANTS CoinBank's motion for summary judgment of non-infringement of the '546 patent by CBIII models with solid input trays. *fn1"

 II. BACKGROUND

 Both Coinstar and CoinBank make, sell, lease, repair and maintain free-standing, self-service coin counting machines which are capable of accepting a large number of loose coins from members of the public, sorting and tallying the deposited coins, and dispensing vouchers or credit to the customer for the coins deposited. Coinstar places its machines in retail establishments, while CoinBank concentrates its products in banks.

 Coinstar is an assignee of U.S. Patent No. 5,564,546, which was issued on October 19, 1996. The '546 patent, entitled "Coin Counter/Sorter and Coupon/Voucher Dispensing Machine and Method," purports to have overcome the problem of accepting and sorting a "plurality" of coins from an untrained user (i.e., a customer). The patent and amendments note that previous devices have relied upon trained personnel to avoid introducing foreign material into coin sorting devices. The previous devices, unlike the method and apparatus covered by the '546 patent, "were not constructed to accommodate a situation in which ... 'untrained users are likely to empty their personal containers, such as old cans or bottles, directly into the hopper without first inspecting the coins. Thus, lint, tokens, and various other objects will probably accompany the coins into the machine.'" (citing '546 Patent, col.2:45-52) Amendment Under Transitional Provisions of Rule 129 (hereinafter "Amendment"), p. 12. To overcome this technical problem, the patent includes "a method of waste management" to separate debris and other foreign materials from valid coins "which is necessary to insure that the machine is not damaged during use." '546 Patent, col. 2:52-54. The waste management system is comprised of two separate and distinct cleaning steps in two separate locations of the machine.

 After the coins have been "cleaned," the coins are sorted in a modified, commercial sorter and any nonconforming coins are rejected and returned to the user. The coins are totaled, and the customer receives a voucher for the value of coins deposited.

 The '546 patent includes 41 claims. *fn2" The broadest independent claim of the patent, claim 1, contains a fundamental limitation (emphasized below) that is common to all of the claims of the patent and is the primary point of contention between the parties. Claim 1 reads as follows:

 
A method for untrained users to obtain a voucher for coins comprising the steps of:
 
(a) providing a kiosk having first means for discriminating among coin denominations;
 
(b) receiving, from said untrained user, in a first location of said kiosk, a plurality of coins of arbitrary denominations;
 
(c) performing a first step of cleaning said plurality of coins while said coins are in said first location by providing an opening through which debris may pass ;
 
(d) moving at least some of said coins from said first location to a second location in said kiosk;
 
(e) performing a second step of cleaning said coins, different from said first step of cleaning, while said coins are in said second location ;
 
(f) discriminating in said kiosk, said denominations of coins, using said first means, after said steps of performing a first step of cleaning and performing a second step of cleaning;
 
(g) determining the total amount of said coins; and
 
(h) dispensing, from said kiosk, a voucher in cash or merchandise for a value related to said total amount wherein said value is determined only after steps of receiving and determining. (Emphasis added.) *fn3"

 All independent claims encompass the two cleaning steps, either as method or apparatus claims.

 It is useful to discuss the '546 patent's preferred embodiment to understand how the device works. In its preferred embodiment, the patent identifies a hopper tray that is perforated on the bottom which allows small foreign objects to fall through the perforations instead of entering the coin sorting machine. Large foreign matter is removed by the user, and when the user is ready to begin using the machine, he or she presses the "go button," lifts the edge of the hopper tray, dumping the coins down into the entrance of the waste management chute. '546 Patent, Col.4:1-4; Col. 5:45-55; Col. 6:5-16. When the "go" button is activated, the coin sorter starts and a fan within the waste management chute is activated. The fan blows light weight debris out of the chute and away from the coin sorter mechanism. The bottom of the chute is a grooved, porous plate which allows liquid to fall through the plate and be collected. Magnetic strips are placed along the entrance and exit of the chute to extract any magnetic tokens. At the end of the chute, the coins are funneled into a commercially available sorter and counter, which accepts mixed coins and is able to detect foreign coins and slugs. '546 Patent, col.2:64-3:10; 4:48-60; 5:51-58.

 The CoinBank models accused of infringing the '546 patent, the CBII and CBIII, perform the same function as Coinstar's machines, but with a few differences. The CBII apparently employs a similar hopper-tray device as the '546 patent's preferred embodiment (i.e., a tray with perforations on the bottom). Once the coins are placed into the tray, the user lifts the tray at one end and the contents are poured into the interior of the machine. Korman Decl. P 12. The coins fall into a conveyer belt that transports the coins to the coin discriminator, which is located toward the back of the machine. Id. at P 16. Some of the CBII and CBIII models may have a "blocker" plate at the end of the conveyer belt which narrows the entrance to the coin sorter. CoinBank's president asserts that this blocker plate has been removed because larger objects would get stuck at the plate and jam the machine, but Plaintiff's counsel declares that she inspected a CBIII machine at CoinBank's facilities in Los Angeles that had a blocker plate at the end of the conveyer belt. Korman Depo., p. 129, 130; Declaration of Anne Van Buskirk. The CBIII, which was introduced after this lawsuit was filed, has the same conveyer belt transport system, but has a solid input tray (i.e., without any perforations, holes, or openings in the bottom). When the end of the tray is lifted to deposit the coins inside the machine, there is a 3/4 to 1 inch opening wherein the coins can slide onto the conveyer belt. Korman Depo., p. 125.

 At issue in the underlying motions for summary judgment is whether CoinBank's self-service coin-sorting machines infringe the '546 patent by including the two separate and distinct cleaning steps set forth in (c) and (e) of claim 1, which are also encompassed in all of the independent claims. CoinBank asserts that the CBII does not employ a second cleaning step, and that the CBIII does not contain any cleaning steps as set forth in the claims of the patent. Coinstar contends that it is entitled to summary judgment in its favor that the CBII infringes the patent-in-suit, and that disputed issues of material fact preclude a finding of non-infringement by the CBIII under either literal infringement or the doctrine of equivalents.

 III. SUMMARY JUDGMENT STANDARDS

 Summary judgment is proper "if 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 a judgment as a matter of law." Rule 56(c), Fed.R.Civ.P. The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986). However, the moving party has no burden to negate or disprove matters on which the non-moving party will have the burden of proof at trial. The moving party need only point out to the court that there is an absence of evidence to support the non-moving party's case. Celotex, 477 U.S. at 325, 106 S. Ct. at 2554.

 The burden then shifts to the non-moving party to "designate 'specific facts showing that there is a genuine issue for trial.'" Id. at 324, 106 S. Ct. at 2553 (quoting Rule 56(e)). To carry this burden, the non-moving party must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986). "The mere existence of a scintilla of evidence . . . will be insufficient; there must be evidence on which the jury could reasonably find for the [non-moving party]." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S. Ct. 2505, 2512, 91 L. Ed. 2d 202 (1986). Evidence that "is merely colorable, or is not significantly probative," is not sufficient to avoid summary judgment. Id. at 249-250, 106 S. Ct. at 2511.

 Summary judgment cannot be granted where a genuine dispute exists as to any material fact. Rule 56(c), F.R.Civ.P. A "material" fact is one which might affect the outcome of the case under the applicable law. Anderson, 477 U.S. at 248, 106 S. Ct. at 2510. A dispute about a material fact is genuine if a reasonable jury could return a verdict for the non-moving party. Id. In deciding a motion for summary judgment, the evidence is viewed in the light most favorable to the non-moving party, and all justifiable inferences are to be drawn in its favor. Id. at 255, 106 S. Ct. at 2513. Moreover, "credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge [when] he is ruling on a motion for summary judgment." Id.

 IV. REQUEST FOR JUDICIAL NOTICE

 CoinBank requests judicial notice pursuant to Rule 201, Fed.R.Evid., of the authenticity of several documents, including copies of U.S. Patent 5,564,546 and U.S. Patent 4,383,540, and copies of documents from the file history of the '546 patent consisting of the Amendment filed on October 5, 1996, and the declaration of Dan Gerrity, filed in support of the '546 patent application.

 Judicial notice of matters of public record, including administrative records and procedures, are appropriate pursuant to Rule 201, Federal Rule of Evidence. Mack v. South Bay Beer Distributors, Inc., 798 F.2d 1279, 1282 (9th Cir.1986) Therefore, CoinBank's request for judicial notice is GRANTED.

 V. DISCUSSION

 A. The Law of Patent Infringement

 Pursuant to 35 U.S.C. ยง 271(a), "whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent." Determining infringement of a patent requires a two-step analysis. "First, the claim must be properly construed to determine its scope and meaning. Second, the claim as properly construed must be compared to the accused device or process." Carroll Touch. Inc. v. Electro. Mechanical Sys., 15 F.3d 1573, 1576 (Fed. Cir. 1993). Interpreting the scope of claims is a question of law, while comparing ...


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