The opinion of the court was delivered by: Honorable Janis L. Sammartino United States District Judge
ORDER (1) GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT OF INFRINGEMENT; (2) DENYING DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION FOR INVALIDITY OF U.S. PATENT NO. 6,073,638 PURSUANT TO 35 U.S.C. § 102 AND UNDER THE DOCTRINE OF LACHES; AND (3) GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION FOR INVALIDITY OF U.S. PATENT NOS. 6,112,855 AND 5,806,629 AND NON-INFRINGEMENT OF U.S.PATENT NO. 5,806,629 AND NO LIABILITY UNDER THE DOCTRINE OF EQUITABLE ESTOPPEL (ECF Nos. 162, 172, 175)
Presently before the Court are Plaintiff Illinois Took Works, Inc. d/b/a Wynn's' ("ITW") motion for summary judgment of infringement, (ITW Mot. Summ. J. ("MSJ"), ECF No. 162), Defendant MOC Products Company's ("MOC") motion for summary adjudication for invalidity of U.S. Patent No. 6,073,638 ("the '638 Patent") pursuant to 35 U.S.C. § 102 and under the doctrine of laches, (MOC '638 MSJ, ECF No. 172), and MOC's motion for summary adjudication for invalidity of U.S. Patent Nos. 6,112,855 ("the '855 Patent") and 5,806,629 ("the '629 Patent") and non-infringement of the '629 Patent and no liability under the doctrine of equitable estoppel, (MOC '855 & '629 MSJ, ECF No. 175). Also before the Court are the associated oppositions and replies. The Court heard oral argument on February 9, 2012, and the matter was thereafter taken under submission. Having considered the parties' arguments and the law, the Court:
(1) DENIES ITW's motion for summary judgment for inducement of infringement of Claims 1 and 5 of the '638 Patent;
(2) GRANTS ITW's motion for summary judgment for infringement of Claim 3 of the '629 Patent;
(3) GRANTS ITW's motion for summary judgment for infringement of Claims 14--17 of the '855 Patent;
(4) DENIES MOC's motion for summary adjudication for invalidity of Claims 1--3 and 5--8 of the '638 Patent pursuant to 35 U.S.C. § 102(a);
(5) DENIES MOC's motion for summary adjudication as to the defense of laches;
(6) GRANTS MOC's motion for summary adjudication for invalidity of Claims 2 and 3 of the '629 Patent and Claims 1, 3--5, and 14--17 of the '855 Patent pursuant to § 102(b);
(7) DENIES MOC's motion for summary adjudication for invalidity of the '629 and '855 Patents pursuant to § 102(f);
(8) DENIES MOC's motion for summary adjudication for non-infringement of Claims 1--5, 14, and 15 of the '629 Patent;
(9) GRANTS MOC's motion for summary adjudication for invalidity of Claims 1, 4, 5, 14, and 15 of the '629 Patent pursuant to § 103; and
(10) DENIES MOC's motion for summary adjudication for no liability under the doctrine of equitable estoppel.
1. Factual and Procedural Background*fn1
ITW and MOC are competitors, and both develop and sell products for cleaning automotive parts, including but not limited to engines and transmissions. The patents in suit are the '638 Patent, concerning the cleaning of an automotive engine, and the '629 and '855 Patents, pertaining to a machine for flushing automatic transmission fluid ("ATF") from vehicles and its associated hoses and adapters.
The relevant industry is a small one, and apparently "very incestuous." (Decl. of Sean Kneafsey in Supp. of ("ISO") Resp. in Opp'n to ITW MSJ ("Kneafsey Decl.") Ex. D, at 121, ECF No. 182-7 (deposition of Richard Scott ("Scott"), Wynn's technical manager)) ITW-in the instant case doing business as "Wynn's"-has a long and involved relationship with MOC. In 2006, ITW purchased Quantum Marketing, Inc. ("QMI"), a privately held Florida corporation that had purchased servicing equipment from MOC since 2003, and that developed one of the asserted prior art devices. (Decl. of William A. Crowe ISO Opp'n to MOC's Mot. to File First Am. Answer ("Crowe Decl.") ¶ 2, ECF No. 55-2)
Additionally, Michael Camacho ("Camacho"), one of the original inventors of the '638 Patent while working at Wynn's, eventually left Wynn's to become MOC's General Manager of Equipment Development. Then, at MOC he was responsible for engineering MOC's accused products, the Universal Induction Tool and the ATF Exchange Machine. (Decl. of Brian Arnold ISO ITW MSJ ("Arnold Decl.") Ex. 24, at 313, 322--23, ECF No. 191-24 (deposition transcript of Camacho)); (Camacho Decl. ISO Resp. in Opp'n to ITW MSJ ¶ 2, ECF No. 182-1) MOC's accused products have been in the marketplace since 2001, or at least since 2003. (Decl. of Mark Waco ISO Opp'n to ITW MSJ ("Waco Decl.") ¶¶ 4, 8, ECF No. 182-2); (Statement of Facts ISO ITW MSJ ¶¶ 33, 41, 60, ECF No. 162-1) ITW initiated this patent infringement suit against MOC on August 28, 2009. (Compl., ECF No. 1) The Court issued an Order on claim construction on May 12, 2011. (Order on Claim Construction, ECF No. 99) Subsequently, MOC filed five separate motions for summary adjudication, (ECF Nos. 121, 147, 149, 150, 153), which the Court Ordered be consolidated, (Order, Oct. 11, 2011, ECF No. 160). Accordingly, the Court now has before it MOC's two motions for summary adjudication, (ECF Nos. 172, 175), and ITW's motion for summary judgment, (ECF No. 162).
A. The '638 Patent -- Method and Apparatus for Cleaning an Automotive Engine
The '638 Patent is an "apparatus and method for cleaning the intake system of an internal combustion engine, such as an automatic engine." '638 Patent, at . The invention solves two problems that arise when cleaning engines with liquid non-aerosol cleaners: (1) non-uniform distribution of cleaner within the engine intake, and (2) puddling of the cleaner. The patent solves these problems by atomizing the liquid cleaner.
Essentially, the invention of the '638 Patent delivers a liquid cleaner into an automobile engine in an "atomized" spray form. The invention accomplishes this by using an "aspirator," which the Court previously construed as "a fitting through which liquid, and sometimes air, passes." (Order on Claim Construction 6, ECF No. 99) The aspirator is connected at one end to the cleaning fluid source and at the other end to the intake manifold of the engine. As the liquid cleaner and ambient air are simultaneously drawn into the aspirator by the intake manifold vacuum created by the engine, the cleaner is atomized, turning into a fine spray.
Most relevant here, Claim 1 of the '638 Patent claims a "service method for cleaning the intake system of an automotive internal combustion engine temporarily utilizing ambient air bleed and intake manifold vacuum of the operating engine to temporarily ingest a liquid cleaner in atomized form during said service." '638 Patent col.7 ll.9--13. Claim 5 covers a similar "method of substantially preventing puddling of liquid engine cleaner in the intake manifold of an internal combustion engine during a temporary service procedure to clean said intake manifold." '638 Patent col.8 ll.6--9.
B. The '629 Patent -- Apparatus and Method for Service of an Automotive Automatic Transmission
The '629 Patent is a "fail-safe transmission service machine [that] allows old ATF to be pumped out of a transmission while the vehicle engine runs, and responsively pumps a matching volume of new ATF into the transmission so that dry running of the transmission can not occur." '629 Patent, at . Essentially, the invention exchanges old and new fluid in an automatic transmission system without letting the system operate with insufficient fluid levels, otherwise known as "running dry." The invention achieves this goal by ensuring that equal amounts of old and new transmission fluid are exchanged.
Claim 2 of the '629 Patent claims a "fail-safe method of exchanging ATF in an automatic transmission," '629 Patent col.11 ll.66--67, including, among others, the following limitation: "including in said external ATF circulation loop only a single three-way valve in a first position communicating ATF in said external ATF circulation loop and in a second position opening said external ATF circulation loop and directing ATF from the transmission to waste," '629 Patent col.12 ll.3--7. Claim 3 of the patent claims a "fail-safe transmission fluid exchange machine for an automotive automatic transmission," including a similar limitation: a conduit for conducting ATF from said external ATF circulation loop, only a single three-way valve in a first position communicating ATF received via said first conduit from said external circulation loop to a second conduit, which second conduit returns ATF to said external ATF circulation loop, said only a single three-way valve in a second position thereof communicating ATF from said external ATF circulation loop to waste; a yieldably-biased back-drivable actuator which when actuated moves said only a single three-way valve from said first to said second position thereof and which when deactivated returns said only a single three-way valve to said first position by self-bias. '629 Patent col.12 ll.32--44.
The three-way valve disclosed in these two claims is yieldably-biased to its first position, but the control system allows the three-way valve to switch into its second position when activated. '629 Patent col.12 ll.10--13. Claims 2 and 3 also disclose a sensor that indicates when there is an adequate supply of new ATF. '629 Patent col.12 ll.15--25 (Claim 2); '629 Patent col.12
ll.46--55 (Claim 3). The control system will allow the three-way valve to move into its second position only when the sensor indicates that there is an adequate supply of new ATF.
To operate, the invention of the '629 Patent utilizes a "motor/pump unit," which the Court previously construed as "a part having a motor and a pump." (Order on Claim Construction 5, ECF No. 99) Claims 1, 14, and 15 each provide limitations whereby the old ATF flows via a "rotary motor" portion of the motor/pump unit to the waste. By doing so, the old ATF thereby drives a "rotary pump," which pumps in an equal volume of new ATF. '629 Patent col.11 ll.51--57 (Claim 1); '629 Patent col.17 ll.52--58 (Claim 14); '629 Patent col.18 ll.7--13 (Claim 15).
C. The '855 Patent -- Apparatus and Method for Cleaning an Automotive Automatic Transmission
The '855 Patent is a machine comprised of "a set of primary hoses, a set of intermediate hoses, and a set of plural pairs of complementary adapter fittings which in combination adapt the machine for convenient service of a wide variety of automobiles and their transmissions." '855 Patent, at  "This variability or flexibility of connection for the machine allows a very limited number of primary hoses, intermediate hoses, and adapters to interface the machine flexibly with a wide variety of different transmission, and the different vehicles in which these transmissions are installed." Id.
Most relevant to the instant motion, Claim 14 of the '855 Patent covers the combination of an ATF exchange machine with a set of plural pairs of adapters. '855 Patent col.19 ll.10--50, col.20 ll.1--6 (Claim 14). The machine includes a set of primary hoses with quick-disconnect coupling portions at one end, and a set of intermediate hoses with quick-disconnect coupling portions at both ends. '855 Patent col.19 ll.23--49. And, the machine has a set of plural pairs of adapters, each of which on one end is complementary to the quick-disconnect portions of the intermediate hoses, and on the other end is complementary to the other adapter and is adapted to connect to the vehicle. '855 Patent col.19 ll.50--51, col.20 ll.1--6.
Claims 15 through 17 of the '855 Patent depend on Claim 14, and include additional limitations on specifying the composition of the end termination portions of the adapters. Claim 15 covers termination portions complementary to a hose, '855 Patent col.20 ll.7--9, Claim 16 covers those complementary to a pipe thread, '855 Patent col.20 ll.10--12, and Claim 17 covers those complementary to a flare tube fitting, '855 Patent col.20 ll.13--15.
A. MOC's Universal Induction Tool
ITW moves for summary judgment that MOC induces service technicians to use its Universal Induction Tool to infringe the '638 Patent. In 2001, MOC began selling, distributing, and demonstrating at trade shows its Universal Induction Tool, an apparatus for cleaning the intake system of an automobile engine. (Waco Decl. ¶ 4, ECF No. 182-2) The device was designed and developed by Camacho. MOC's Universal Induction Tool utilizes an aspirator to atomize the cleaning fluid as it is introduced into the engine, thereby preventing potentially harmful puddling of the fluid. (Arnold Decl. Ex. 17, at 265, ECF No. 191-20 (deposition transcript of MOC's expert witness, Eduardo Betancourt)); (Arnold Decl. Ex. 8, ECF No. 191-14 (showing an image of MOC's website indicating that the Universal Induction Tool "[a]tomizes cleaning fluid")). To do so, MOC's device utilizes a metal nozzle that attaches to the intake manifold. (Arnold Decl. Ex. 24, at 328, ECF No. 191-24 (indicating that the metal nozzle on the Universal Induction Tool ingests air and liquid))
B. MOC's ATF Exchange Machine & Adapters
ITW moves for summary judgment that MOC's ATF Exchange Machine and adapters infringe the '629 and '855 Patents. MOC's ATF Exchange Machine was designed and developed by Camacho. (Decl. of Camacho ISO MOC '855 & '629 MSJ ("Camacho Decl.") ¶ 2, ECF No. 175-4) Like ITW's patented invention, the ATF Machine replaces old ATF with a substantially equal volume of new ATF while the engine is running. To accomplish this, "[u]sed ATF flows from the vehicle into the MOC machine and into a manifold . . . containing two, 3-way valves . . . and one, 2-way valve." Id. ¶ 3.
The ATF Machine functions in several different "modes," including "service mode," "top off mode," "drain trans pan mode," "loop mode," and "drain used fluid mode." (See Kneafsey Decl. Ex. H, ECF No. 182-11) Most relevant here are "loop mode" and "service mode."
In loop mode, MOC's ATF Machine conducts ATF from the vehicle via a conduit connected to a three-way valve in a "first" or "closed" position. When the ATF reaches the three-way valve in its first/closed position, it is communicated to a second conduit that returns the fluid to the vehicle. (Id. at 4) Thus, in loop mode, MOC's ATF Exchange Machine does not allow the escape of any of the used transmission fluid, instead running it directly back into the automatic transmission system.
By contrast, in service mode, the ATF Exchange Machine conducts ATF from the vehicle via a conduit connected to the same three-way valve, but in service mode the valve is in its "second" or "open" position. When the ATF reaches the three-way valve in its second/open position, the fluid is communicated to a used fluid tank or "waste" container. As this is happening, the ATF Exchange Machine simultaneously replaces the used ATF with new transmission fluid. (Id. at 1) Thus, in service mode, MOC's ATF Exchange Machine simultaneously removes old ATF and replaces it with an equal volume of new ATF, ensuring that the vehicle transmission never runs dry.
To operate, MOC's ATF Exchange Machine utilizes a "dual-pump design run by a high-powered electric motor." (Camacho Decl. ISO MOC '855 & '629 MSJ ¶ 10, ECF No. 175-4) The electric motor causes the machine's double pumps to rotate, one pumping out old ATF while the other pumps in new ATF. (Id.)
Finally, MOC's ATF Exchange Machine includes a set of primary and a set of intermediate hoses, and uses a set of plural pairs of complementary adapter fittings. (See Arnold Decl. Ex. 33, at 1, ECF No. 197-9 (ATF-Exchanger-Service Procedures)); (Arnold Decl. Ex. 19, at 27--34, ECF No. 191-21 (expert report)) The adapters have end portions complementary to a hose, a pipe thread, or a flare tube fitting. (Id. Ex. 19, at 34, ECF No. 191-21)
Federal Rule of Civil Procedure 56 permits a court to grant summary judgment where
(1) the moving party demonstrates the absence of a genuine issue of material fact and
(2) entitlement to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). "Material," for purposes of Rule 56, means that the fact, under governing substantive law, could affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997). For a dispute to be "genuine," a reasonable jury must be able to return a verdict for the nonmoving party. Anderson, 477 U.S. at 248.
The initial burden of establishing the absence of a genuine issue of material fact falls on the moving party. Celotex, 477 U.S. at 323. The movant can carry his burden in two ways: (1) by presenting evidence that negates an essential element of the nonmoving party's case; or (2) by demonstrating that the nonmoving party "failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." Id. at 322--23. "Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment." T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987).
Once the moving party establishes the absence of genuine issues of material fact, the burden shifts to the nonmoving party to set forth facts showing that a genuine issue of disputed fact remains. Celotex, 477 U.S. at 324. The nonmoving party cannot oppose a properly supported summary judgment motion by "rest[ing] on mere allegations or denials of his pleadings." Anderson, 477 U.S. at 256. When ruling on a summary judgment motion, the court must view all inferences drawn from the underlying facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
As an initial matter, in their motions the parties dispute whether-assuming the Court grants summary judgment in MOC's favor as to its invalidity arguments-it need reach the issue of infringement. While it is true that "an invalid claim cannot give rise to liability for infringement, whether it is infringed is an entirely separate question capable of determination without regard to its validity." Medtronic, Inc. v. Cardiac Pacemakers, Inc., 721 F.2d 1563, 1583 (Fed. Cir. 1983). Indeed, the Federal Circuit has indicated that the "better practice" is to decide both issues "[b]ecause both validity and infringement involve construction of a claim, and because the construction must be the same in determining both." Id.; see also Mentor Graphics Corp. v. Quickturn Design Sys., C00-1030, 2003 U.S. Dist. LEXIS 16195, at *9--10 (N.D. Cal. July 30, 2003) ("[T]he Federal Circuit has made it clear that infringement and invalidity should both be decided on the merits when raised, especially when invalidity is asserted as a counterclaim rather than an affirmative defense."). Accordingly, the Court will consider both issues here.
A. Inducement of Infringement
Under 35 U.S.C. § 271(b), "[w]hoever actively induces infringement of a patent shall be liable as an infringer." 35 U.S.C. § 271(b). "To prevail on inducement, the patentee must show, first that there has been direct infringement, and second that the alleged infringer knowingly induced infringement and possessed specific intent to encourage another's infringement." Kyocera Wireless Corp. v. ITC, 545 F.3d 1340, 1353--54 (Fed. Cir. 2008) (internal quotation marks omitted).
(1) Direct Third-Party Infringement
Liability for inducement of infringement cannot lie where there has been no direct infringement. Dynacore Holdings Corp. v. U.S. Phillips Corp., 363 F.3d 1263, 1272 (Fed. Cir. 2004). Here, ITW argues and MOC does not dispute that when a technician performs a service on an automobile using MOC's accused infringing device-the Universal Induction Tool-Claims 1 and 5 of the '638 Patent are infringed. (See Resp. in Opp'n to ITW MSJ 1--4, ECF No. 182 (opposing summary judgment of infringement only on the bases that (1) the '638 patent cannot be infringed because it is invalid and (2) it is a disputed fact whether MOC knew that the induced acts constituted patent infringement))*fn2 Because the Court finds that there is a genuine issue of fact as to the knowledge element, however, summary judgment as to the inducement of infringement claim is not appropriate.
(2) Knowledge of Third-Party Direct Infringement "[T]he specific intent necessary to induce infringement 'requires more than just intent to cause the acts that produce direct infringement. Beyond that threshold knowledge, the inducer must have an affirmative intent to cause direct infringement.'" Kyocera Wireless, 545 F.3d at 1354 (quoting DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1306 (Fed. Cir. 2006) (en banc)). The Supreme Court recently explained that "induced infringement under § 271(b) requires knowledge that the induced acts constitute patent infringement." Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060, 2068 (2011). The Court further held that under this standard actual knowledge is not required, but that the doctrine of willful blindness applies to inducement of infringement claims such that a defendant may not avoid inducement liability by deliberately avoiding actual knowledge that the acts it induces constitute patent infringement. Id. at 2069. For the doctrine to apply, "(1) the defendant must subjectively believe that there is a high probability that a fact exists and (2) the defendant must take deliberate actions to avoid learning of that fact." Id. at 2070; see also id. at 2070--71 (comparing willful blindness to recklessness and negligence and stating that "[u]nder this formulation, a willfully blind defendant is one who takes deliberate actions to avoid confirming a high probability of wrongdoing and who can almost be said to have actually known the critical facts").
In determining whether Defendants possessed such intent, "direct evidence is not required; rather, circumstantial evidence may suffice." MEMC Elec. Materials, Inc. v. Mitsubishi Materials Silicon Corp., 420 F.3d 1369, 1378 (Fed. Cir. 2005) (internal quotation marks omitted). Indeed, "[t]he requisite intent to induce infringement may be inferred from all of the circumstances." Water Techs. Corp. v. Calco, Ltd., 850 F.2d 660, 669 (Fed. Cir. 1988).
Neither party disputes that MOC knew of the existence of the '638 Patent. In fact, Camacho, MOC's General Manager of Equipment Development, is named as an inventor on the patent. Less clear, however, is whether MOC knew-or was willfully blind to the fact-that the acts it induced service technicians to perform by ...