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Hologram USA, Inc. v. Pulse Evolution Corp.

United States District Court, D. Nevada

January 31, 2017

HOLOGRAM USA, INC., et al., Plaintiffs,
v.
PULSE EVOLUTION CORPORATION, et al., Defendants.

          ORDER

          Gloria M. Navarro, Chief Judge United States District Court

         Pending before the Court is the Partial Motion for Summary Judgment on Non-Infringement, (ECF No. 362), filed by Defendants/Counterclaimants Ian Christopher O'Connell, Musion 3D Ltd., and Musion Events Ltd. (“UK Defendants”). Plaintiffs Hologram USA, Inc., Uwe Maass, and MDH Hologram Limited (“Plaintiffs”) filed a Response, (ECF No. 378), and UK Defendants filed a Reply, (ECF No. 393).

         Also pending before the Court is UK Defendants' Partial Motion for Summary Judgment on Non-Infringement Based on the Doctrine of Equivalents, (ECF No. 376). Plaintiffs filed a Response, (ECF No. 398), and UK Defendants filed a Reply, (ECF No. 405).[1]

         I. BACKGROUND

         This case centers upon allegations that UK Defendants have infringed several of Plaintiffs' patents. In their Second Amended Complaint (“SAC”), Plaintiffs claim that they obtained the exclusive rights to patented technology that creates three-dimensional images which are virtually indistinguishable from real performers (“hologram technology”) in February 2014. (SAC ¶¶ 2, 10, ECF No. 188).

         Plaintiffs allege that UK Defendants offer to sell and have sold an infringing device, the Musion Eyeliner holographic projection systems (“Eyeliner Systems”), into the United States. (See e.g., id. ¶ 2); (Ex. O to Pls.' Mot. Compel at 3, ECF No. 306-5). Based on these allegations, the SAC states that UK Defendants directly and indirectly infringed three separate patents belonging to Plaintiffs: U.S. Patent Nos. 5, 865, 519 (“the '519 patent”); 7, 883, 212 (“the '212 patent”); and 8, 328, 361 (“the ‘361 patent) (collectively “the Asserted Patents”). (Id. ¶¶ 59-80). The SAC also sets forth claims for willful infringement, active inducement, contributory infringement, injunctive relief, intentional interference with prospective economic advantage, breach of fiduciary duty, false advertising, and unfair competition. (Id. ¶¶ 81-136).

         In the instant Motions, UK Defendants seek summary judgment on Plaintiffs' claims of infringement.

         II. LEGAL STANDARD

         A. Summary Judgment

         The Federal Rules of Civil Procedure provide for summary adjudication when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show 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(a). Material facts are those that may affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. See Id. “Summary judgment is inappropriate if reasonable jurors, drawing all inferences in favor of the nonmoving party, could return a verdict in the nonmoving party's favor.” Diaz v. Eagle Produce Ltd. P'ship, 521 F.3d 1201, 1207 (9th Cir. 2008) (citing United States v. Shumway, 199 F.3d 1093, 1103-04 (9th Cir. 1999)). A principal purpose of summary judgment is “to isolate and dispose of factually unsupported claims.” Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986).

         In determining summary judgment, a court applies a burden-shifting analysis. “When the party moving for summary judgment would bear the burden of proof at trial, it must come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted at trial. In such a case, the moving party has the initial burden of establishing the absence of a genuine issue of fact on each issue material to its case.” C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citations omitted). In contrast, when the nonmoving party bears the burden of proving the claim or defense, the moving party can meet its burden in two ways: (1) by presenting evidence to negate an essential element of the nonmoving party's case; or (2) by demonstrating that the nonmoving party failed to make a showing sufficient to establish an element essential to that party's case on which that party will bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 323- 24. If the moving party fails to meet its initial burden, summary judgment must be denied and the court need not consider the nonmoving party's evidence. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 159-60 (1970).

         If the moving party satisfies its initial burden, the burden then shifts to the opposing party to establish that a genuine issue of material fact exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). To establish the existence of a factual dispute, the opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient that “the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 631 (9th Cir. 1987). In other words, the nonmoving party cannot avoid summary judgment by relying solely on conclusory allegations that are unsupported by factual data. See Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989). Instead, the opposition must go beyond the assertions and allegations of the pleadings and set forth specific facts by producing competent evidence that shows a genuine issue for trial. See Celotex Corp., 477 U.S. at 324.

         At summary judgment, a court's function is not to weigh the evidence and determine the truth but to determine whether there is a genuine issue for trial. See Anderson, 477 U.S. at 249. The evidence of the nonmovant is “to be believed, and all justifiable inferences are to be drawn in his favor.” Id. at 255. But if the evidence of the nonmoving party is merely colorable or is not significantly probative, summary judgment may be granted. See Id. at 249-50.

         B. Patent Infringement Principles

         While claim construction is a question of law, infringement is a question of fact. Freedman Seating Co. v. Am. Seating Co., 420 F.3d 1350, 1357 (Fed. Cir. 2005). “Thus, summary judgment of non-infringement can only be granted if, after viewing the alleged facts in the light most favorable to the non-movant, there is no genuine issue whether the accused device is encompassed by the claims.” Pitney Bowes, Inc. v. Hewlett-Packard Co., 182 F.3d 1298, 1304 (Fed. Cir. 1999).

         “There are two types of infringement: literal infringement . . . and infringement under the doctrine of equivalents.” Pozen Inc. v. Par Pharm., Inc., 696 F.3d 1151, 1167 (Fed. Cir. 2012). “To establish literal infringement, every limitation set forth in a claim must be found in an accused product, exactly.” Southwall Techs., Inc. v. Cardinal IG Co., 54 F.3d 1570, 1575 (Fed. Cir. 1995). Alternatively, “[t]o find infringement under the doctrine of equivalents, any differences between the claimed invention and the accused product must be insubstantial.” Brilliant Instruments, Inc. v. GuideTech, LLC, 707 F.3d 1342, 1346-47 (Fed. Cir. 2013) (citing Graver Tank & Mfg. Co. v. Linde Air Products Co., 339 U.S. 605, 608 (1950)). “One way of proving infringement under the doctrine of equivalents is to show, for each claim limitation, that the accused product ‘performs substantially the same function in substantially the same way with substantially the same result as each claim limitation of the patented product.'” Id. at 1347 (quoting Crown Packaging Tech., Inc. v. Rexam Beverage Can Co., 559 F.3d 1308, 1312 (Fed. Cir. 2009)).

         Broad application of the doctrine of equivalents is limited, however, by prosecution history estoppel. Conoco, Inc. v. Energy & Envtl. Int'l, L.C., 460 F.3d 1349, 1363 (Fed. Cir. 2006). It does so “by barring an equivalents argument for subject matter relinquished when a patent claim is narrowed during prosecution.” Id. (citing Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 733-34 (2002)). The Federal Circuit has recognized two types of prosecution history estoppel: (1) amendment-based estoppel, which occurs when the patentee makes “a narrowing amendment to the claim, ” and (2) argument-based estoppel, which occurs when the patentee “surrender[s] claim scope through argument to the patent examiner.” Id. (citing Deering Precision Instruments, LLC v. Vector Distrib. Sys., Inc., 347 F.3d 1314, 1324 (Fed. Cir. 2003)).

         As to amendment-based estoppel, “[w]hen a patentee makes a narrowing amendment to a claim, the patent holder has the burden to demonstrate that the reason for the amendment was unrelated to patentability (e.g., to avoid prior art).” Id. (citing Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17, 33 (1997)). “When the record lacks explanation for the amendment, [courts] presume that the PTO had a substantial reason related to patentability for including the limiting element added by amendment.” Id. The presumption is rebuttable. See Id. at 1363-64.

         Regarding argument-based estoppel, the party invoking that doctrine must show “a clear and unmistakable surrender of subject matter.” Id. at 1364 (quoting Deering, 347 F.3d at 1326). Unlike with amendment-based estoppel, no presumption of surrender applies. Id. “The relevant inquiry is whether a competitor would reasonably believe that the applicant had surrendered the relevant subject matter.” Id. (quoting Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1457 (Fed. Cir. 1998) (en banc)). Whether amendment-based or argument-based estoppel is invoked, “[p]rosecution history estoppel is a legal question . . . .” Cybor Corp., 138 F.3d at 1460.

         III. DISCUSSION

         UK Defendants' two Motions seek partial summary judgement of non-infringement on different grounds. In their First Motion, UK Defendants contend that summary judgment is appropriate on Plaintiffs claims that UK Defendants infringe the Asserted Patents through: (1) direct infringement; (2) indirect contributory infringement; and (3) indirect induced infringement. (Defs.' First Mot. Summ. J. (“First MSJ”) 3:3-19, ECF No. 362). The second Motion seeks summary judgment on Plaintiffs' claims of infringement through the doctrine of equivalents. (See Defs.' Second Mot. Summ. J. (“Second MSJ”) 2:1-9, ECF No. 376). The Court considers each Motion in turn.

         A. First MSJ (ECF No. 362)

         1. Direct Infringement

         UK Defendants argue that Plaintiffs' claims of infringement fail “because the apparatuses identified in the infringement contentions were all sourced, constructed, and used outside of the United States.” (First MSJ 7:1-3). A person who, without a license, “makes, uses, offers to sell, or sells any patented invention within the United States or imports into the United States” is liable for direct patent infringement. 35 U.S.C. § 271(a). Direct infringement liability is therefore “limited to infringing activities that occur within the United States.” MEMC Elec. Materials, Inc. v. Mitsubishi Materials Silicon Corp., 420 F.3d 1369, 1375 (Fed. Cir. 2005).

         Plaintiffs argue in their Supplemental Response that new discovery conducted after UK Defendants filed the instant Motions has revealed five embodiments of the accused Eyeliner System that were sold to customers in the United States and installed in the United States, including:

(1) an Eyeliner System in a Reverse Setup with Mirror configuration for Artistry in Motion Holographic, Inc.'s (“AIM”) Demonstration Suite in West Palm Beach, Florida on or about November 2015;
(2) an Eyeliner System in a Reverse Setup with Mirror configuration for Fisher Price in East Aurora, New York on or about August 2014;
(3) an Eyeliner System in a Reverse Setup with Mirror configuration for Media Stage at the 2015 Emerge Americas Conference in ...

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