Malibu Boats, LLC v. Nautique Boat Co.

122 F. Supp. 3d 722, 2015 U.S. Dist. LEXIS 109754
CourtDistrict Court, E.D. Tennessee
DecidedJanuary 28, 2015
DocketNo. 3:13-CV-656-TAV-HBG
StatusPublished
Cited by1 cases

This text of 122 F. Supp. 3d 722 (Malibu Boats, LLC v. Nautique Boat Co.) is published on Counsel Stack Legal Research, covering District Court, E.D. Tennessee primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Malibu Boats, LLC v. Nautique Boat Co., 122 F. Supp. 3d 722, 2015 U.S. Dist. LEXIS 109754 (E.D. Tenn. 2015).

Opinion

MEMORANDUM OPINION AND ORDER

THOMAS A. VARLAN, Chief Judge.

• This civil action is before the Court on ten motions by the parties, including defendant’s motion to reconsider staying the case, defendant’s three motions for claim interpretation, the parties’ motions for summary judgment of infringement and noninfringement, and the parties’ motions for summary judgment of invalidity and no invalidity. The Court held a hearing on the pending motions- on.'December 16, 2014, -during which the Court heard oral argument from the parties.

1. Background1

■ This dispute involves, several patents for technology intended to modify the wake of a recreational boat,to-make the wake suitable for surfing, whereby a person trails the boat and uses a board to surf the boat’s wake [Doe. 42 p. 1]. Plaintiff, a boat manufacturer headquartered in Tennessee, holds three patents for the-technology and method used to implement the technology: U.S. Patent No. 8,534,214, issued September 17, 2013, U.S. Patent No. 8,539,897, issued September 24, 2013, and U.S. Patent No. 8,578,873,' issued November 12, 2013 [Id. at 1-2]. The Court will refer to each-patent, as the parties do, by the last three digits of the patent ■ number — '214, '897, or '873.- - " < ■ •

The '214 patent depicts pivoting fins along the centerline of the boat, while the '897 and '873 patents depict tabs attached to the boat’s transom [Compare Doc. 25-2, with Docs. 25-1, 25-3]. In June 2012, the latter system was released as “Surf Gate” [Doc. 42 p. 3]. Surf Gate is a .mechanical system that changes the shape and direction of a .bqat’s wake, using installed structures known as “water diverters” at the boat’s stern [Id. at 2].2 Installing these water diverters, and allowing the boat’s [726]*726driver to control them from the helm of the boat, enables the boat’s wake to be manipulated based on water conditions or the wake surfer’s preferences [Id.].

With Surf Gate, the boat’s driver can create a surfable wake at the touch of a button and transfer the wake from one side to the other [Id. at 3]. Passengers may sit anywhere on the boat as there is no need for uneven weight distribution [Id.]. Plaintiff asserts that Surf Gate, upon its release into the market as a $3,000 option, was purchased by everyone who purchased á Malibu Wakesetter boat [Id.].

In early 2013, defendant Nautique, a Florida boat manufacturer that directly competes with plaintiff around the country, announced its Nautique Surf System, a system similar to Surf Gate that allows for wake modification [Id.]. In describing its system, defendant contends that unlike plaintiffs and other competitors’ systems, the Nautique Surf System uses interceptors that deploy directly into the flow of water, rather than tabs that extend at an angle away from the flow of water [Id.].

On September 17, 2013, the day the '214 patent was issued, plaintiff filed an infringement action in the United States District Court for the Central District of California [Id. at 4]. Plaintiff voluntarily dismissed the case on October 31, 2013, and filed the present action in this Court on the same day [Id.]. On November 1, 2013, defendant filed a declaratory action in the United States District Court for the Middle District of Florida, seeking a declaratory judgment of noninfringement or invalidity as to plaintiffs patents [Id.]. This Court later issued an order granting plaintiffs motion to enjoin the later-filed Florida action and denying defendant’s request to transfer this case to the Middle District of Florida [Id. at 4 n. 3].

Soon after filing its complaint, plaintiff moved for preliminary injunctive relief as to the '897 patent only [Doc. 70 p. 2]. After extensive briefing by the parties and a hearing on January 6, 2014, the Court denied the motion in a memorandum opinion and order entered February 4, 2014 [Id.]. The Court analyzed, among other issues, the meaning of the patents’ terms “side strake,” “substantially perpendicular,” and “surf wake” [Doc. 42 p. 10-20], The Court found that “side strake” means the exterior side surface of the hull and that “substantially perpendicular” means approximately perpendicular [Id. at 10-18]. Rejecting Nautique’s argument that the term “surf wake” is indefinite, the Court construed the term as a wake created by the extension of a water diverter which is substantially smoother, larger, and with a higher peak than a non-enhanced wake [Id. at 18-20]. In assessing the validity of the '897 patent, the Court found that Nau-tique had raised a question of validity in light of an existing patent named Svensson but that Malibu would likely overcome that challenge as to certain claims [Id. at 24-26], Although the Court found that Malibu would likely succeed on the merits of its patent infringement claim, the Court denied the injunction based on the lack of irreparable harm [Id. at 22, 37-38].

A few months later, on June 27, 2014, defendant filed its petition for inter partes review with the Patent Trial and Appeal Board (“PTAB”) of the United States Patent and Trademark Office pursuant to 35 U.S.C. § 311, asserting that the '897 patent’s claims are unpatentable because of prior art [Doc. 70 p. 2]. Defendant requested a stay of this patent infringement litigation pending resolution of its petition to PTAB [Id. at 1]. On August 6, 2014, the [727]*727Court denied the- motion, reasoning, in part, that while the inter partes review process “has some potential to clarify some of the issues in this case, ... that potential is speculative at best until the petition is granted” [Id. at 8].

Then, on November 26, 2014, the PTAB issued a decision granting inter partes review of certain claims of Malibu’s '897 patent [Doc. 150-1]. The PTAB analyzed the terms “surf wake” and “substantially perpendicular” and found a reasonable likelihood that Nautique would prevail on its assertion that Claims 1-5, 8-11, 13 — 16, and 18-20 of Malibu’s '897 patent are anticipated by Svensson — an existing patent for a system that operates similarly to the systems at issue in this case [Id. at 9-10, 12-14, 23]. In light of the PTAB’s decision, Nautique asks the Court to reconsider staying this litigation pending a final determination by the PTAB [Doc, 150].

II. Motion tó Stay

The decision to stay litigation lies within the discretion of the district court, representing its power to control the disposition of cases on its docket. See Landis v. N. Am. Co., 299 U.S. 248, 254, 57 S.Ct. 163, 81 L.Ed. 153 (1936). But “ ‘a court must tread carefully in granting a stay of proceedings, since a party has a right to a determination of its rights and liabilities without undue delay.’ ” Procter & Gamble Co. v. Team Techs., Inc., No. 1:12-cv-552, 2013 WL 4830950, at *1 (S.D.Ohio Sept. 10, 2013) (quoting Ohio Envtl. Council v. U.S. Dist. Court, 565 F.2d 393, 396 (6th Cir.1977)).

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122 F. Supp. 3d 722, 2015 U.S. Dist. LEXIS 109754, Counsel Stack Legal Research, https://law.counselstack.com/opinion/malibu-boats-llc-v-nautique-boat-co-tned-2015.