The opinion of the court was delivered by: VIRGINIA A. Phillips United States District Judge
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT [Motion filed on April 25, 2011]
Plaintiff Link Treasure Limited ("Plaintiff") filed this action for patent infringement, alleging that Defendant Baby Trend, Inc. ("Defendant") infringed two patents owned by Plaintiff relating to folding baby strollers. Defendant brought a counterclaim against Plaintiff for a declaratory judgment of non-infringement, invalidity, and unenforceability of the asserted patents. Before the Court is Defendant's motion for summary judgment or partial summary judgment on Plaintiff's claims and Defendant's counterclaim and affirmative defenses ("Motion"). The parties came before the Court for a hearing on July 18, 2011. After considering the arguments in support of and in opposition to the Motion, the Court GRANTS the Motion.
On August 18, 2006, Plaintiff and former co-plaintiff Discovery International Co., Ltd. ("Discovery") filed a complaint against Defendant in the Northern District of Georgia. (Link Treasure Ltd. v. Baby Trend, Inc., No. 06-1930 (N.D. Ga. filed Aug. 18, 2006), Doc. No. 1 (Compl.).*fn1 ) In the Complaint, Plaintiff accused Defendant of infringing two patents it owns by assignment: (1) U.S. Patent No. 5,876,057, issued on March 2, 1999, a utility patent entitled "Folding Device for a Stroller" (the "'057 patent"); and (2) U.S. Patent No. D430,826, issued on September 12, 2000, a design patent entitled "Frame of Three-Wheeled Stroller" (the "'826 patent"). (Compl. ¶¶ 1, 8-25.) On December 15, 2006, Plaintiff filed a First Amended Complaint ("FAC") against Defendant, asserting the same claims but removing Discovery as a party. (Doc. No. 27.)
On October 11, 2006, Defendant filed its answer and a counterclaim against Plaintiff seeking a declaratory judgment of non-infringement, invalidity, and unenforceability of the '057 patent and the '826 patent. (Doc. No. 6.) On June 18, 2007, the District Court in Georgia granted Defendant's Motion to Transfer Venue, transferring the case to this Court. (Doc. No. 57.)
On October 23, 2008, the Court held a Markman hearing regarding claim construction for certain terms in the '057 patent, and on November 13, 2008, the Court issued a Claim Construction Order. (Doc. No. 85 (Claim Constr. Order).) On October 22, 2009, Defendant filed a Notice of Stay and Filing of Bankruptcy Petition. (Doc. No. 104.) On January 27, 2010, the Court stayed the action pending resolution of Defendant's bankruptcy petition. (Doc. No. 105.) On February 8, 2011, the Court withdrew the reference to the Bankruptcy Court in part. (Doc. No. 106.)
On April 25, 2011, Defendant filed the Motion (Doc. No. 112), along with: (1) a statement of uncontroverted facts and conclusions of law ("SUF") (Doc. No. 112-1);
(2) a declaration of Danny Tsai ("Tsai Declaration"), attaching exhibits A through M, X, and Z (Doc. No. 112-2); (3) a declaration of Edward Lin ("Lin Declaration"), attaching exhibits N through W (Doc. No. 112-3); (4) a declaration of Deborah S. Mallgrave ("Mallgrave Declaration"), attaching exhibit Y (Doc. No. 112-4); and
(5) a request for judicial notice ("RJN")*fn2 (Doc. No. 113).
On May 23, 2011, Plaintiff filed its opposition to the Motion ("Opposition") (Doc. No. 114), along with:
(1) a statement of genuine issues ("SGI") and statement of uncontroverted material facts ("UMF") (Doc. No. 114-1); (2) a declaration of Harold J. Fassnacht ("Fassnacht Declaration"), attaching exhibits A through E (Doc. No. 114-2); and (3) a declaration from Ruby Wu ("Wu Declaration"), attaching Exhibit A (Doc. No. 114-3).
On May 27, 2011, Defendant filed its reply in support of the Motion ("Reply") (Doc. No. 115), along with evidentiary objections to the Fassnacht and Wu Declarations ("Defendant's Evidentiary Objections") (Doc. No. 116).
B. Evidentiary Objections
First, Defendant objects to both the Fassnacht and Wu Declarations because they do not satisfy the statutory requirement of 28 U.S.C. § 1746 that the statements within be sworn under penalty of perjury. (Def.'s Evidentiary Objections at 2.) Defendant also objects to the statements in the Wu Declaration as lacking foundation as to personal knowledge, and containing only conclusory statements, speculation, and hearsay. (Id. at 2-9.)
The Court sustains Defendant's objections to the Fassnacht and Wu Declarations on both grounds. First, compliance with the requirement of 28 U.S.C. § 1746 is mandatory, and neither Fassnacht nor Wu comply with its requirements by stating that their declarations are made under penalty of perjury. See, e.g., Schroeder v. McDonald, 55 F.3d 454, 460 n.10 (9th Cir. 1995) (accepting as valid a declaration that did not follow § 1746 with precision, but asserted that statement was made under penalty of perjury that the contents were true and correct). Defendant filed its objections on May 27, 2011, and therefore Plaintiff had ample notice of this deficiency, and could have remedied it by submitting sworn declarations. Plaintiff failed to do so.
Additionally, Defendant's objections to the Wu Declaration are well-taken. In her declaration, Wu does not state her job title, her job responsibilities, or why or how she has knowledge of the facts she asserts. Accordingly, the Wu Declaration is inadmissible under Federal Rule of Civil Procedure 56(c)(4) as lacking an adequate foundation. Accordingly, the Court does not rely upon the statements in either the Fassnacht or Wu Declarations to resolve the Motion.
The Court finds the following material facts are supported adequately by admissible evidence and are uncontroverted. They are "admitted to exist without controversy" for the purposes of these Motions. L.R. 56-3; see generally Fed. R. Civ. P. 56.
The '826 patent was filed on December 27, 1999, and assigned to Plaintiff. (SUF ¶ 1; UMF ¶ 1.) The "critical date," or "bar date," for purposes of an on-sale bar is thus December 27, 1998. (SUF ¶ 2; UMF ¶ 2.)
Lerado Group, Ltd. ("Lerado") is Plaintiff's parent company, and is
responsible for manufacturing strollers for Plaintiff.*fn3
(SUF ¶ 3; UMF ¶ 3.) Defendant is a California company,
located in Ontario, California. (SUF
¶ 4; UMF ¶ 4.) Before the critical date of December 27, 1998,
Defendant and Lerado were negotiating the sale of Lerado Model T-415
strollers ("T-415 Strollers") to Defendant.*fn4 (SUF ¶
5; UMF ¶ 5.) These negotiations took place in person and through
correspondence. (SUF ¶ 6; UMF ¶ 6.)
In mid-1998, Defendant's director Denny Tsai ("Tsai") visited the Lerado factory in China. (SUF ¶ 7; Tsai Decl. ¶ 3; UMF ¶ 7.) During that visit, Tsai was shown a sample of what he believes was the T-415 Stroller. (SUF ¶ 7; Tsai Decl. ¶ 3.) During the fall of 1998, employees at Lerado sent Tsai photographs and a sample of a T-415 Stroller, and he negotiated with managers at Lerado over the price of the strollers. (SUF ¶¶ 8, 10; Tsai Decl. ¶¶ 4-6; id., Ex. A, B, X; UMF ¶¶ 8, 10.)
In October and November 1998, Defendant and Lerado exchanged purchase order documents regarding Defendant's order of T-415 Strollers from Lerado ("Purchase Order Documents").*fn5 (SUF ¶ 9; Tsai Decl. ¶¶ 7-9.) On December 11, 1998, Defendant issued a letter of credit (the "Letter of Credit") in favor of Plaintiff for the purchase of T-415 Strollers. (SUF ¶ 11; UMF ¶ 11.)
On December 28, 1998, an independent safety testing company issued a "Certificate of Compliance" for the T-415 Stroller (identified in the Certificate as Defendant's 9210 Stroller). (SUF ¶ 12; UMF ¶ 12.*fn6 ) On January 25, 1999, Lerado issued a commercial invoice to Defendant (the "January 25, 1999, Invoice") stating a shipping vessel containing 4,500 T-415 Strollers would be sailing to Los Angeles on or about January 27, 1999. (Tsai Decl., Ex. I.)
A motion for summary judgment shall be granted when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986); see also Hodosh v. Block Drug Co., Inc., 786 F.2d 1136, 1141 (Fed. Cir. 1986) (holding summary judgment to be appropriate "in patent as in other cases"). The moving party must show that "under the governing law, there can be but one reasonable conclusion as to the verdict." Anderson, 477 U.S. at 250.
The initial burden is on the moving party to demonstrate that it is entitled to summary judgment. Margolis v. Ryan, 140 F.3d 850, 852 (9th Cir. 1998); In re Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir. 2010). The moving party bears the burden of identifying the elements of the claim or defense and evidence that it believes demonstrates the absence of an issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
Where the non-moving party has the burden at trial, however, the moving party need not produce evidence negating or disproving every essential element of the non-moving party's case. Celotex, 477 U.S. at 325. Instead, the moving party's burden is met by pointing out that there is an absence of evidence supporting the non-moving party's case. Id.; In re Oracle, 627 F.3d at 387.
The burden then shifts to the non-moving party to show that there is a genuine issue of material fact that must be resolved at trial. Celotex, 477 U.S. at 324; Anderson, 477 U.S. at 256. The non-moving party must make an affirmative showing on all matters placed in issue by the motion as to which it has the burden of proof at trial. Celotex, 477 U.S. at 322; Anderson, 477 U.S. at 252; see also Fed. R. Civ. P. 56(c); Barmag Barmer Maschinenfabrik AG v. Murata Mach., Ltd., 731 F.2d 831, 836 (Fed. Cir. 1984) ("The party opposing the motion must point to an evidentiary conflict created on the record at least by a counter statement of a fact or facts set forth in detail in an affidavit by a knowledgeable affiant. Mere denials or conclusory statements are insufficient.").
A genuine issue of material fact will exist "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson, 477 U.S. at 248. In ruling on a motion for summary judgment, a court construes the evidence in the light most favorable to the non-moving party. Barlow v. Ground, 943 F.2d 1132, 1135 (9th Cir. 1991); In re Oracle, 627 F.3d at 387; Barmag Barmer, 731 F.2d at 836.
Plaintiff claims Defendant "has manufactured, used, sold or offered for sale at least one design of a baby stroller that infringes the '826 [p]atent" and "at least one design of a baby stroller that infringes the '057 [p]atent." (FAC ¶¶ 8-9.) Specifically, Plaintiff alleges Defendant's model number 9114 "Expedition Jogging Stroller," which Defendant sold in 2006, infringes both patents, and several other strollers Defendant created and sold might also infringe the two patents. (Opp'n at 6.)
Defendant argues it is entitled to summary judgment, or partial summary judgment, on multiple grounds. Regarding the '826 patent, Defendant first argues the patent is invalid based upon the "on-sale bar" codified in 35 U.S.C. § 102(b). (Mot. at 11-16.) Defendant next argues that even if the '826 patent is not invalid, its strollers do not infringe the '826 patent. (Id. at 16-21.) Regarding the '057 patent, Defendant first argues the patent is invalid as obvious under 35 U.S.C. § 103.
(Id. at 21-34.) Defendant next argues that even if the '057 patent is not invalid, its strollers do not infringe the patent. (Id. at 34-43.) Plaintiff disputes Defendant's arguments.
A. The '826 Patent: The On-Sale Bar
Defendant first argues the '826 patent is invalid based upon the on-sale bar because Plaintiff offered the product claimed in the '826 patent (i.e., the T-415 Stroller) for sale and the T-415 Stroller was ready for patenting before the critical date of December 27, 1998, one year before Plaintiff filed the '826 patent application. (Mot. at 11.) Plaintiff argues the on-sale bar does not apply because Plaintiff did not make an offer to sell the T-415 Strollers before the critical date, and even if it did make such an offer, those actions did not take place "in this country" as § 102(b) requires. (Opp'n at 12.)
A patent is presumed valid. See 35 U.S.C. § 282. Under the on-sale bar, however, an inventor may not patent an invention that has been "on sale" more than one year before the patent application is filed. 35 U.S.C. § 102(b); see also Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 57 (1998). "An invention is so barred when it was both the subject of a commercial offer for sale before vthe critical date and ready for patenting at the time of the offer." Atlanta Attachment Co. v. Leggett & Platt, Inc., 516 F.3d 1361, 1365 (Fed. Cir. 2008) (citing Pfaff, 525 U.S. at 67).
A party challenging the validity of a patent on the basis of the on-sale bar "must demonstrate by clear and convincing evidence that there was a definite sale or offer to sell" before the critical date. Group One, Ltd. v. Hallmark Cards, Inc., 254 F.3d 1041, 1045-46 (Fed. Cir. 2001); see also Microsoft Corp. v. i4i Ltd. P'ship, 564 U.S. __, 131 S.Ct. 2238, 2252-53 (2011) (affirming "clear and convincing evidence" as the standard of proof by which the party with the burden of persuasion must convince the factfinder of patent invalidity). Whether an invention was "on sale" within the meaning of § 102 is a question of law based upon underlying factual determinations. Keystone Retaining Wall Systems, Inc. v. Westrock, Inc., 997 F.2d 1444, 1451 (Fed. Cir. 1993) (internal citations omitted); Microsoft Corp., 131 S.Ct. at 2242-43 (citing Pfaff, 525 U.S. at 67-69).
The purpose of the on-sale bar is to balance the benefit of "prompt and widespread disclosure of inventions to the public" with the need to give the inventor a reasonable amount of time to determine whether a patent is worth developing further, while also "precluding attempts by the inventor or his assignee from commercially exploiting the invention more than a year before the application for patent is filed." W. Marine Elecs., Inc. v. Furuno Electric Co., Ltd., 764 F.2d 840, 845 (Fed. Cir. 1985).
2. Whether the T-415 Strollers Were Offered For Sale
Defendant argues it purchased the T-415 Strollers*fn7 when Tsai negotiated with Lerado and eventually accepted Lerado's offer to sell T-415 Strollers to Defendant. (Mot. at 11-13.) Plaintiff concedes Defendant and Lerado were negotiating over the T-415 Strollers, but argues that Lerado did not make a final offer of sale to Defendant, and thus Defendant could not have accepted it. (Opp'n at 16.) Plaintiff's assertions are belied by the evidence before the Court.
For an offer to satisfy the on-sale bar, the patent owner must make "an offer for sale in the contract sense" as "analyzed under the law of contracts as generally understood." Group One, 254 F.3d at 1046-47. "Only an offer which rises to the level of a commercial offer for sale, one which the other party could make into a binding contract by simple acceptance (assuming consideration), constitutes an offer for sale under § 102(b)." Id. at 1048. Here, there is no direct evidence of an offer of sale made by Lerado to Defendant to purchase the T-415 Strollers. There is, however, substantial circumstantial evidence in the form of ...