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W.Y. Industries, Inc v. Kari-Out Club LLC

July 30, 2012

W.Y. INDUSTRIES, INC., PLAINTIFF,
v.
KARI-OUT CLUB LLC, F/K/A KARI-OUT KLUB LLC, D/B/A KARI-OUT COMPANY, PERK-UP, INC., TRIPAK INDUSTRIAL USA LLC, JOHN DOES NUMBER 1-10, ABC COMPANIES NUMBER 1-10, DEFENDANTS.



The opinion of the court was delivered by: Wigenton, District Judge.

Before the Court is W.Y. Industries, Inc.'s ("W.Y." or "Plaintiff"), Motion for Partial Summary Judgment pursuant to Federal Rule of Civil Procedure 56 ("Motion"). This Court has jurisdiction pursuant to 35 U.S.C. § 271 et seq. and 28 U.S.C. § 1338(a). Venue is proper in this District pursuant to 28 U.S.C. § 1400(b). This Motion is decided without oral argument pursuant to Federal Rule of Civil Procedure 78. For the reasons stated below, this Court grants Plaintiff's Motion in part and denies it in part.

FACTUAL AND PROCEDURAL BACKGROUND*fn1

On October 30, 2008, W.Y. filed suit against Kari-Out Club LLC ("Kari-Out"), 52 Green Pond Road LLC, 1460 Chestnut Associates LLC,*fn2 Perk-Up, Inc. ("Perk-Up"), and Tripak Industrial USA LLC ("Tripak") (collectively "Defendants"). On December 9, 2008, W.Y. filed an Amended Complaint ("Am. Compl.") alleging that it is the holder of No. U.S. D469689 S, "Rectangular Stackable Container" ("the '689 patent") issued on February 2, 2003. (Am. Compl. ¶ 10.) (the '689 patent)

Plaintiff also alleged that "rectangular stackable containers which infringe the '689 Patent are offered for sale" on www.kariout.com ("the website") and that Kari-Out Company controls the website. (Id. ¶ 11.) Plaintiff further alleged that Kari-Out owns and operates the website, and that it also "manufactures and/or distributes infringing rectangular stackable containers from one or more locations in New Jersey." (Id. ¶ 12.) W.Y. also asserted that Perk-Up, which is doing business as Kari-Out, owns and/or operates the website, and also manufactures and/or distributes rectangular stackable containers which infringe the '689 Patent. (Id. ¶ 13.)

According to Plaintiff, Defendants "willfully and deliberately infringed" on the '689 patent and continue to do so even though they have knowledge of Plaintiff's rights. (Id. ¶¶ 29-30.) Consequently, W.Y. alleged that Defendants' conduct constitutes patent infringement (First Count) and willful patent infringement (Second Count). (Id. ¶¶ 19-27, 28-30.)

On January 12, 2009, Defendants filed their Answer and raised several affirmative defenses. (Defs.' Answer at 5, ¶¶ 1-6.) One of Defendants' affirmative defenses is that the '689 Patent was invalid because Plaintiff did not comply with the patentability requirements set forth in 35 U.S.C. §§ 101, 102, 103 and 112. (Id. at 5, ¶ 3.) Additionally, Defendants counterclaimed for declaratory judgment of invalidity*fn3 and noninfringment of the '689 patent.*fn4 (Id. at 7, ¶¶ 7-10.) Subsequently, on January 13, 2010, Defendants filed an Amended Counterclaim and asserted a Second Counterclaim for false marking in violation of 35 U.S.C. § 292. (Am. Countercl. ¶¶ 13-19.)

LEGAL STANDARD

Summary judgment is appropriate "if 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(a). The "mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247--48 (1986). A fact is only "material" for purposes of a summary judgment motion if a dispute over that fact "might affect the outcome of the suit under the governing law." Id. at 248. A dispute about a material fact is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. The dispute is not genuine if it merely involves "some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).

The moving party must show that if the evidentiary material of record were reduced to admissible evidence in court, it would be insufficient to permit the nonmoving party to carry its burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). Once the moving party meets its initial burden, the burden then shifts to the non-movant who must set forth specific facts showing a genuine issue for trial and may not rest upon the mere allegations, speculations, unsupported assertions or denials of its pleadings. Shields v. Zuccarini, 254 F.3d 476, 481 (3d Cir. 2001). "In considering a motion for summary judgment, a district court may not make credibility determinations or engage in any weighing of the evidence; instead, the non-moving party's evidence 'is to be believed and all justifiable inferences are to be drawn in his favor.'" Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004) (quoting Anderson, 477 U.S. at 255).

The nonmoving party "must present more than just 'bare assertions, conclusory allegations or suspicions' to show the existence of a genuine issue." Podobnik v. U.S. Postal Serv., 409 F.3d 584, 594 (3d Cir. 2005) (quoting Celotex Corp., 477 U.S. at 325). Further, the nonmoving party is required to "point to concrete evidence in the record which supports each essential element of its case." Black Car Assistance Corp. v. New Jersey, 351 F. Supp. 2d 284, 286 (D.N.J. 2004). If the nonmoving party "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which . . . [it has] the burden of proof," then the moving party is entitled to judgment as a matter of law. Celotex Corp., 477 U.S. at 322-23.

DISCUSSION

1. Invalidity of the '689 Patent "A patent may not be obtained . . . if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains." 35 U.S.C. § 103(a). An alleged infringer who raises the affirmative defense of patent invalidity "has the ultimate burden of persuasion to prove invalidity by clear and convincing evidence, as well as the initial burden of going forward with evidence to support its invalidity allegation." Titan Tire Corp. v. Case New Holland, Inc., 566 F.3d 1372, 1376 (Fed. Cir. 2009) (citing Tech. Licensing Corp. v. Videotek, Inc., 545 F.3d 1316, 1327 (Fed. Cir. 2008)). According to the Supreme Court, the obviousness inquiry requires a court to "determine whether there was an apparent reason to combine the known elements in the fashion claimed by the patent at issue." KRS Int'l Co. v. Teleflex Inc., 550 U.S. 398, 418 (2007). See also Titan Tire Corp., 566 F.3d at 1380 ("[T]he ultimate inquiry [in a claim for obviousness in a design patent] is whether the claimed design would have been obvious to a designer of ordinary skill who designs articles of the type involved.") (internal quotation marks and citation omitted). "The question of what the prior art teaches is a question of fact . . . ." In re Borden, 90 F.3d 1570, 1576 (Fed. Cir. 1996) (citing In re Bell, 991 F.2d 781, 784 (Fed. Cir. 1993)).

Establishing "whether one of ordinary skill would have combined teachings of the prior art to create the same overall visual appearance as the claimed design" involves a two-step process. Apple, Inc. v. Samsung Elecs. Co., 678 F.3d 1314, 1329 (Fed. Cir. 2012) (internal quotation marks and citation omitted). First, there must be "a single reference[, the primary reference], a something in existence, the design characteristics of which are basically the same as the claimed design." Durling v. Spectrum Furniture Co., 101 F.3d 100, 103 (Fed. Cir. 1996) (internal quotation marks and citation omitted). Second, "other references may be used to modify [the primary reference] to create a design that has the same overall visual appearance as the claimed design." Apple, Inc., 678 F.3d at 1329 (alterations in original) (quoting Durling, 101 F.3d at 103). The "secondary references[, however,] may only be used to modify the primary reference if they are so related [to the primary reference] that the appearance of certain ornamental features in one would suggest the application of those features to the other." Durling, 101 F.3d at 103 (alteration in original) (internal quotation marks and citation omitted). Additionally, "the teachings of prior art designs may be combined only when the designs are 'so related that the appearance of certain ornamental features in one would suggest the application of those features to the other.'" In re Borden, 90 F.3d at 1575 (emphasis added) (quoting In re Glavas, 230 F.2d 447, 450 (C.C.P.A. 1956)).

In Int'l Seaway Trading Corp. v. Walgreens Corp., the court instructed that [f]or design patents, the role of one skilled in the art in the obviousness context lies only in determining whether to combine earlier references to arrive at a single piece of art for ...


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