UNITED STATES DISTRICT COURT DISTRICT OF NEW HAMPSHIRE
SignalQuest, Inc.
v. Civil No. 11-cv-392-JL Opinion No. 2016 DNH 035 Tien-Ming Chou, OneQue Corporation, and Bravotronics Corporation
MEMORANDUM ORDER
This patent infringement action relates to tilt and
vibration sensors. Defendants Tien-Ming Chou, OncQue
Corporation, and defendant and counter-claimant Bravotronics
Corporation, have moved for summary judgment that the patents
asserted in this action by plaintiff and counter-claim defendant
SignalQuest, Inc.,1 are invalid and that Bravotronics does not
infringe them. Specifically, the defendants contend that
SignalQuest’s patents are invalid because, during a recently-
concluded ex parte reexamination, SignalQuest cancelled a
dependent claim related to the shape of the embodiment of one
part of the invention, thus -- defendants contend -- disclaiming
that particular embodiment and invaliding the patent to the
extent SignalQuest contends the reissued claims cover that
embodiment. And even if the patents are valid, the defendants
argue, defendants do not infringe because they do not sell any of
the accused products in the United States.
1 U.S. Patent Nos. 7,067,748C1, 7,326,866C1, and 7,326,867C1. This court has jurisdiction pursuant to 28 U.S.C. §§ 1338
(patents) and 1331 (federal question). After hearing oral
argument, the court denies the defendants’ motion. As discussed
more fully below, SignalQuest has submitted evidence sufficient
to raise a question of material fact as to whether the defendants
have made offers to sell the accused infringing devices within
the United States. And the defendants have not demonstrated that
they are entitled to judgment of invalidity as a matter of law.
I. Applicable legal standard
Summary judgment is appropriate where “the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ.
P. 56(c). The movant bears the burden of showing the absence of
a genuine issue of material fact. See Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986). The opposing party may defeat such a
motion by presenting competent evidence of record demonstrating a
genuine issue of material fact. See Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 256 (1986). The court views the evidence
presented in the light most favorable to the non-moving party and
draws all reasonable inferences in that party’s favor. Id. at
255. But the court need not countenance “conclusory allegations,
improbable inferences, and unsupported speculation.”
2 Medina–Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st
Cir. 1990).
II. Background
In this case, SignalQuest has asserted three related patents
against the defendants. The defendants moved for summary
judgment that they do not infringe SignalQuest’s patents and that
said patents are invalid in light of positions taken by
SignalQuest before the United States Patent and Trademark Office
(“USPTO”) during reexamination.
SignalQuest’s patents describe an omnidrectional tilt and
vibration sensor. These sensors can be used to switch an
electrical circuit ON or OFF. Tilt the sensor one way, and a
free-moving conductive element comes in contact with two
terminals, completing a conductive path and turning the circuit
ON; tilt it another way, and the conductive element moves out of
contact with one or both of the terminals, disrupting the
conductive path and turning the circuit OFF.
The SignalQuest patents were granted on June 27, 2006, and
February 5, 2008. After SignalQuest amended its complaint in
this action to accuse the defendants of infringing these
patents,2 the USPTO instituted an ex parte reexamination of the
2 SignalQuest initially sought only a declaratory judgment that it did not infringe one of OncQue’s patents. See Complaint
3 same. All three patents survived reexamination, though not all
claims survived. SignalQuest cancelled some claims, rewrote or
amended others, and added still other claims. The court stayed
the instant action while the USPTO reexamined these patents.
After all three patents reissued in October 2014, the court
lifted that stay. The defendants then moved for summary judgment
and the court held a hearing on defendants’ motions on
January 26, 2016.3
III. Analysis
A. Non-infringement
The Patent Act provides that “whoever without authority . .
. offers to sell[] or sells any patented invention, within the
United States . . . infringes the patent.” 35 U.S.C. § 271(a).
Defendants seek summary judgment that they have not infringed
SignalQuest’s patents because they have not sold or offered any
of the accused products for sale in the United States after the
patents reissued and because intervening rights extinguish
(document no. 1). Two months later, SignalQuest amended its complaint to assert its own patents against Chou and OncQue. See First Amended Complaint (document no. 5). SignalQuest subsequently amended its complaint three more times. The Fourth Amended Complaint (document no. 76) is operative here. 3 At that hearing, the court also heard the parties’ arguments on their proposed constructions of claim terms in the SignalQuest patents. The court will construe those disputed terms in a separate order.
4 SignalQuest’s claims to pre-reexamination damages. See Mem.
(document no. 86-1) at 10. SignalQuest concedes no sale of the
accused products in the United States, but offers evidence that,
it submits, raises a question of material fact as to whether
defendants offered the accused products for sale both before and
after its patents reissued. The court agrees.
1. Post-reexamination offers for sale
SignalQuest submits that defendants have offered the accused
products for sale in the United States on at least two occasions
after the patents reissued.4 As evidence of this, SignalQuest
has offered a quotation for the defendants’ VBS-030600 product
sent to a North Carolina-based company in late 2014,5 see
Plaintiff’s Ex. 14, and a quotation for the same product sent to
International Assembly, a company based in Texas, on or around
March 25, 2015.6 Defendants concede that both quotations were
4 The last reexamination certificate issued on October 31, 2014. 5 SignalQuest suggests that this quotation was sent on December 30, 2014, but -- as defendants point out -- it appears to be dated November 2, 2014. For ease of reference, the court refers to it as the “November 2014 quotation.” 6 SignalQuest moved to supplement the summary judgment record to include this document on January 11, 2016, several months after it filed its objection to defendants’ summary judgment motion. Defendants assented to that motion and the court granted it. See document no. 103; Order of January 13, 2016.
5 sent, but argue that neither quotation rises to the level of an
“offer to sell” under § 271(a). Even if they did, defendants
contend, neither offer was made “within the United States,” as
that statute requires. Neither argument prevails. To the
contrary, both arguments highlight existing questions of material
fact on these issues that are sufficient to defeat defendants’
bid for summary judgment.
a. “Offers for sale”
Whether there has been an offer to sell under § 271(a) is
determined “according to the norms of traditional contract
analysis.” MEMC Elecs. Materials, Inc. v. Mitsubishi Materials
Silicon Corp., 420 F.3d 1369, 1376 (Fed. Cir. 2005) (quotations
omitted). Thus, an offer for sale occurs when “the defendant . .
. communicate[s] a manifestation of willingness to enter into a
bargain, so made as to justify another person in understanding
that his assent to that bargain is invited and will conclude it.”
Id. (quotations omitted). The terms of the offer must be
specific enough to enable “a binding contract simply by
acceptance.” Id. Defendants argue that neither the November
2014 nor March 2015 quotations amounts to an offer to sell the
accused product because each quotation requires the recipient to
do more than simply accept to complete a purchase.
6 First, defendants argue, both quotations are insufficiently
specific because they do not specify a quantity. Reply (document
no. 93) at 5; Response to Supp. (document no. 104) at 2. The
November 2014 quotation appears to quote a price per unit
depending on the desired volume. Similarly, the March 2015
quotation specifies an estimated annual usage quantity and a
price based on that estimate. To accept these offers, defendants
maintain, the recipient would have to do more than merely state
its acceptance; it would also have to indicate how many pieces it
wanted to buy. However, price quotations may “be regarded as
‘offers to sell’ under § 271 based on the substance conveyed in
the letters, i.e., a description of the allegedly infringing
merchandise and the price at which it can be purchased.” 3D Sys.
v. Aarotech Labs., Inc., 160 F.3d 1373, 1379 (Fed. Cir. 1998). A
reasonable jury could interpret these quotations, which indicate
the price per unit depending only on the purchaser’s desired
volume, as providing just such a description of the alleged
infringing product. Thus, the quotations may rise to the level
of an offer to sell under § 271(a) because they “justify another
person in understanding that his assent to that bargain is
invited and will conclude it.” MEMC, 420 F.3d at 1376 (internal
quotations omitted).
7 Second, defendants contend that March 2015 quotation is not
an offer because the customer must select one of two proposed
products and it would “make no sense” to order both products.
But defendants admit that the recipient may, on the basis of the
quotation, decide to order the accused product and, as with the
November 2014 quotation, the quotation’s recipient need only
specify the quantity desired to complete the transaction. Obj.
to Supp. (document no. 104) at 1-2. That the recipient has the
option to purchase a different product instead is immaterial.
Thus, a question of fact exists as to whether the November 2014
and March 2015 quotations are “offers for sale” under the
statute.
b. “Within the United States”
And if they are offers, defendants argue that neither the
November 2014 nor March 2015 quotations are offers made “within
the United States,” as required by § 271(a) because the
quotations contemplated that the title transfer would occur in
Taiwan7 and because the real purchaser under the November 2014
quotation may be a contract manufacturer in China. Reply
(document no. 93) at 6-7; Obj. to Supp. (document no. 104) at 2.
7 Both the November 2014 and March 2015 quotations contain either the term “FOB Taiwan” or “ex works,” indicating as much.
8 These arguments implicate the territoriality limitations of
§ 271(a), which limits infringing offers for sale to those made
“within the United States.” 35 U.S.C. § 271(a).
In the context of offers for sale, “the location of the
contemplated sale controls whether there is an offer to sell
within the United States.” Transocean Offshore Deepwater
Drilling, Inc. v. Maersk Contractors USA, Inc., 617 F.3d 1296,
1309 (Fed. Cir. 2010) (“[A]n offer which is made in Norway by a
U.S. company to a U.S. company to sell a product within the U.S.,
for delivery and use within the U.S. constitutes an offer to sell
within the U.S. under § 271(a).”); see also Halo Elecs., Inc. v.
Pulse Elecs. Inc., 769 F.3d 1371, 1381 (Fed. Cir. 2014) (adopting
the reasoning of Transocean and concluding that offers arguably
made within the United States did not amount to infringement
under § 271(a) where the accused products were manufactured
abroad, and would have been shipped and delivered abroad).
Because the location of a sale is not limited to the location
where legal title passes, see Halo, 769 F.3d at 1378, it follows
that an “f.o.b” or “ex works” term in an offer for sale does not
conclusively establish that the sale would have occurred outside
of the United States.
SignalQuest has raised a question of material fact as to
where delivery under the sales contemplated by the November 2014
9 and March 2015 offers would have taken place. And these
questions of fact are fatal to defendants’ motion for summary
judgment. Specifically, the March 2015 quotation states, on its
face, “Departure: TW Taiwan” and “Destination: US United States.”
Taking this evidence in the light most favorable to the non-
moving party, it indicates that the parties at least contemplated
delivery of the accused products from Taiwan into the United
States. The November 2014 quotation presents a slightly more
complicated picture. As defendants point out, the real purchaser
may be a contract manufacturer in China rather than the North
Carolina company. Reply (document no. 93) at 9. Under Halo, an
offer made to a company based in the United States that
contemplates delivery in China of products manufactured in Taiwan
or China may very well lack sufficient contact with the United
States to constitute an offer for sale “within the United States”
under § 271(a). As defendants admitted at oral argument,
however, a question of fact remains as to whether that was the
case -- or whether the parties contemplated that the products
would be delivered to North Carolina, or some other location
within the United States. Accordingly, the court must deny
defendants’ motion for summary judgment of non-infringement after
the patents reissued.
10 2. Pre-reexamination offers for sale
Defendants also seek summary judgment of non-infringement as
to any alleged offers for sale made before the SignalQuest
patents reissued on the grounds that the doctrine of intervening
rights extinguishes SignalQuest’s ability to recovery for those
alleged infringements. See Mem. at 10; Reply at 4-5. As
defendants have pointed out, the majority of the evidence that
SignalQuest has submitted as alleged offers for sale in the
United States predate the patents’ reissuance after
reexamination. See Plaintiff’s Exs. 9-13, 15-17. SignalQuest’s
evidence that defendants offered to send or sent samples to
United States companies similarly predates reissuance. See
Plaintiff’s Exs. 5-8, 18-20, 22.
Intervening rights “apply as a matter of judicial discretion
to mitigate liability for infringing such claims even as to
products made or used after the reissue if the accused infringer
made substantial preparations for the infringing activities prior
to reissue, often referred to as equitable intervening rights.”
Marine Polymer Techs., Inc. v. HemCon, Inc., 672 F.3d 1350, 1362
(Fed. Cir. 2012). They may be invoked where the patentee makes
“substantive changes to the scope of patent claims through post-
issuance procedures,” including ex parte reexamination
proceedings. Id. This analysis requires the court to “interpret
11 the scope of the claims as they existed pre- and
post-reexamination.” Yoon Ja Kim v. Earthgrains Co., 451 F.
App'x 922, 925 (Fed. Cir. 2011).
As SignalQuest has pointed out, certain claims in each
reissued patent are identical in scope to original dependent
claims in the respective original patents. For example,
independent claim 55 of the reissued ‘748 patent is identical to
the original, dependent claim 5, which incorporates the terms of
claims 1 and 4. Claim 49 of the reissued ‘867 patent and claim
42 of the reissued ‘866 patent are likewise dependent claims from
the original patents that were rewritten as independent claims in
the reissued patents, but include all of the limitations of the
original claims. Thus, their scope is identical to that of the
original claims. In response, the defendants argue only that the
reissued claims of the SignalQuest patents cannot be identical to
the original claims because SignalQuest cancelled all original
claims. Reply Mem. at 4-5. Where, as here, the evidence makes
clear that SignalQuest only cancelled the original claims that
the USPTO ultimately allowed on reissue “[t]o clean up the
numbering,” see, e.g., Defendants’ Ex. J at 34-35, those
cancellations do not affect the scope of the claims, see Kaufman
Co. v. Lantech, Inc., 807 F.2d 970, 978 (Fed. Cir. 1986)
(corrections for typographical or minor errors not
12 “substantive”). Accordingly, the defendants’ request for summary
judgment that SignalQuest is entitled to no pre-reexamination
damages is denied.
3. Bravotronics and Mr. Chou
Finally, the defendants also seek summary judgment that
Mr. Chou and Bravotronics do not infringe the SignalQuest
patents. Their failure to develop these arguments, and to timely
raise the latter, dooms this request.
As the parties moving for summary judgment, defendants bear
the burden of demonstrating a lack of dispute of material fact.
See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
Defendants’ bare and unsupported assertions that Mr. Chou was not
involved in making the offers discussed supra Parts III.A.1 and
III.A.2 fails to satisfy that standard. Such a mere “passing
allusion” to an argument does not allow this court to
meaningfully address the issue. See United States v. Zannino,
895 F.2d 1, 17 (1st Cir. 1990) (“Judges are not expected to be
mindreaders. Consequently, a litigant has an obligation to spell
out its arguments squarely and distinctly . . . .” (internal
citations and quotation marks omitted)), cert. denied, 494 U.S.
1082 (1990). Even had they developed this argument, defendants
argue only that Mr. Chou did not directly infringe the
13 SignalQuest patents. But SignalQuest has not alleged that he
did; rather, SignalQuest accuses Mr. Chou of indirect
infringement. See Fourth Amended Complaint (document no. 76) at
¶¶ 34-48. Defendants fail entirely to address the presence or
absence of any question of material fact as to whether or not
Mr. Chou indirectly infringed the SignalQuest patents under 35
U.S.C. § 271(b). Therefore, their motion must be denied as to
Mr. Chou.
Defendants’ request that the court grant summary judgment of
non-infringement as to Bravotronics is equally easily disposed
of. The court does not consider arguments, such as this one,
made for the first time in reply. Attorneys Liab. Prot. Soc'y,
Inc. v. Whittington Law Associates, PLLC, 961 F. Supp. 2d 367,
374 (D.N.H. 2013). Even if it did, SignalQuest has introduced
unrebutted evidence from which a reasonable jury may infer that
the accused product was marketed under both the Onceque and
Bravotronics names, see Plaintiff’s Exs. 2 and 3; document no.
105, raising a question of material fact as to which of these
defendants, or both of them, offered the accused products for
sale. Accordingly, the court denies defendants’ motion for
summary judgment of non-infringement as to Bravotronics.
14 B. Invalidity
The defendants also seek summary judgment of invalidity.
They contend that the SignalQuest patents are invalid to the
extent (and only to the extent) that SignalQuest asserts that the
reissued claims cover a “square-shaped embodiment.” See Mem.
(document no. 86-1) at 7-10. This is so, defendants argue, based
on SignalQuest’s actions during reexamination. For the reasons
discussed below, the court does not find this a convincing
invalidity argument.
During reexamination, the examiner concluded that several of
the previously-issued claims of the SignalQuest patents were
invalid as obvious in light of various combinations of prior
art.8 In response, SignalQuest submitted evidence of the
commercial success of its SQ-SEN-200 product for the examiner’s
consideration. Accepting that the SQ-SEN-200 embodied the
invention in the claims under examination, the examiner cited
consumers’ praise of the SQ-SEN-200's superior omnidirectional
sensitivity and operation longevity as the basis for his
conclusion that “it was the advantages provided by the recited
8 Specifically, the examiner determined that claims 1-9, 12- 14, 16, 18, 19, and 21 of the ’748 patent; claims 1-8, 10, 12-17, and 19 of the ’866 patent; and claims 1-8, 10, 13-16, 22, 23, and 25 of the ’867 patent were obvious in light of various combinations of prior art.
15 features of the claimed invention that was responsible for the
SQ-SEN-200 products[’] commercial success in the market.” Mot.
for Summary Judgment Ex. F (document no. 86-8) at 21-22.
Accordingly, the examiner found the requisite nexus between
certain of the claims9 and the SQ-SEN-200 product’s commercial
success and concluded that the commercial success evidence was
sufficient to overcome the prima facie case for obviousness as to
those claims. The examiner thus withdrew his obviousness
rejection of these claims. At the same time, the examiner
maintained his obviousness objection to claims that he did not
find embodied by the SQ-SEN-200 product. These included, among
others, claim 14 of the ’748 patent, claim 15 of the ’866 patent,
and claim 16 of the ’867 patent. In each patent, this dependant
claim recited “[t]he sensor of claim 1, wherein the electrically
insulative element . . . is square-like in shape.”
Though SignalQuest argued to the USPTO that these claims
should be allowed because they depended from allowable claims,
the examiner found that SignalQuest failed to traverse the
obviousness objection as to these three claims because
SignalQuest did not submit any evidence of commercial success
9 Claims 1, 2, 4-9, 12, 13, 16, 18, 19, 22-30, 32-40, and 42- 56 of the ‘748 patent; claims 1-8, 10, 12-14, 16, 17, 20-28, 30- 38, and 40-43 of the ‘866 patent; and claims 1-3, 5-8, 11, 13-15, 22, 23, and 25-35 of the ‘867 patent.
16 specifically as to those claims. Mot. for Summary Judgment Ex. F
(document no. 86-8) at 29-30; Ex. G (document no. 86-9) at 26-27;
Ex. H (document no. 86-10) at 26. SignalQuest initially appealed
this finding, but subsequently withdrew those appeals and
cancelled those dependent claims entirely.
The court must presume that the reissued claims of the
SignalQuest patents are valid. 35 U.S.C. § 282; see also
Kaufman, 807 F.2d at 974 (the presumption of validity is accorded
to reexamined patents). “The burden of establishing invalidity
of a patent or any claim thereof shall rest on the party
asserting such invalidity.” 35 U.S.C. § 282. In the summary
judgment context, it is incumbent on defendants make a prima
facie showing of obviousness-based invalidity. See Freedman
Seating Co. v. Am. Seating Co., 420 F.3d 1350, 1363 (Fed. Cir.
2005). And here, the defendants do not even begin to make such a
showing. At oral argument, defendants clarified their belief
that they had done so by submitting the prosecution history to
the court. But that prosecution history resulted in the issuance
of a valid patent. Defendants do not ask the court to determine
the validity of the patent in the face of any specific prior art;
nor have they proferred any alleged prior art on which the court
17 may base a determination of invalidity.10 Rather, defendants ask
the court to read the examiner’s obviousness objection as to one
dependent claim into all of the patents’ claims if (and only if)
those claims are read to cover an embodiment with a square-shaped
electronically insulative element. See Mem. at 7-10; Reply at 1-
4. Absent any actual invalidity argument from the defendants,
the court accordingly presumes the SignalQuest patents to be
valid at this stage of the litigation.
The court is not in a position to otherwise determine the
patents’ validity on this record. To the extent that the
defendants have attempted to dress a prosecution history estoppel
10 As a result, defendants’ reliance on Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008) is misplaced. There, the district court performed its own obviousness analysis and denied defendants’ motion for judgment of invalidity as a matter of law, finding, inter alia, that plaintiff had presented evidence of commercial success sufficient to support the jury’s verdict that the claims were not obvious. Muniauction, Inc. v. Thomson Corp., 502 F. Supp. 2d 477, 491 (W.D. Pa. 2007) rev'd in part, vacated in part, 532 F.3d 1318 (Fed. Cir. 2008). The Court of Appeals for the Federal Circuit subsequently held that evidence of commercial success submitted by the plaintiff -- an “Innovations in American Government” award to the City of Pittsburgh for use of the claimed system -- “lack[ed] the required nexus with the scope of the claims” because the associated press coverage “focuse[d] on the availability of maturity-by-maturity bidding . . . as compared to the conventional all-or-none bidding” where both asserted independent claims included both systems. Muniauction, 532 F.3d at 1328. Here, it was the examiner who found certain claims to be obvious in light of the prior art and, subsequently, found the requisite nexus between SignalQuest’s product and the reissued claims. No prior art is before the court on this motion.
18 argument in the trappings of an invalidity summary judgment
motion, the court denies that motion and will address the
prosecution history estoppel issue where it properly belongs --
in the context of determining the proper scope of the patent’s
claims. Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535
U.S. 722, 733 (2002) (“Estoppel is a rule of patent construction
that ensures that claims are interpreted by reference to those
that have been cancelled or rejected.” (internal quotations
omitted)); Trading Techs. Int'l, Inc. v. eSpeed, Inc., 595 F.3d
1340, 1357 (Fed. Cir. 2010) (“Prosecution history estoppel
applies at the time of infringement to determine whether the
applicant surrendered claim scope during prosecution.”).
IV. Conclusion
For the foregoing reasons, the defendants’ motion for
summary judgment11 is DENIED.
SO ORDERED.
____________________________ Joseph N. Laplante United States District Judge
Dated: February 23, 2016
cc: Brian David Thomas, Esq. Peter Anthony Nieves, Esq.
11 Document no. 86.
19 Robert R. Lucic, Esq. Mark C. Rouvalis, Esq. Nicholas F. Casolaro, Esq. Timothy N. Trop, Esq.