Case 2:19-cv-00209-JRG Document 158 Filed 06/30/20 Page 1 of 128 PageID #: 5773
`
`1
`
`VS.
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
`THE HILLMAN GROUP, INC.
`)(
`
`)(
`CIVIL ACTION NO.
`)(
`2:19-CV-209-JRG
`)(
`MARSHALL, TEXAS
`)(
`JUNE 23, 2020
`)(
`9:03 A.M.
`)(
`CLAIM CONSTRUCTION HEARING
`BEFORE THE HONORABLE JUDGE RODNEY GILSTRAP
`UNITED STATES CHIEF DISTRICT JUDGE
`
`KEYME, LLC
`
`FOR THE PLAINTIFF: (See Attorney Attendance Sheet docketed
` in minutes of this hearing.)
`
`FOR THE DEFENDANT: (See Attorney Attendance Sheet docketed
` in minutes of this hearing.)
`
`COURT REPORTER:
`
`Shelly Holmes, CSR, TCRR
`Official Reporter
`United States District Court
`Eastern District of Texas
`Marshall Division
`100 E. Houston Street
`Marshall, Texas 75670
`(903) 923-7464
`
`(Proceedings recorded by mechanical stenography, transcript
`produced on a CAT system.)
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`1
`
`VS.
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
`THE HILLMAN GROUP, INC.
`)(
`
`)(
`CIVIL ACTION NO.
`)(
`2:19-CV-209-JRG
`)(
`MARSHALL, TEXAS
`)(
`JUNE 23, 2020
`)(
`9:03 A.M.
`)(
`CLAIM CONSTRUCTION HEARING
`BEFORE THE HONORABLE JUDGE RODNEY GILSTRAP
`UNITED STATES CHIEF DISTRICT JUDGE
`
`KEYME, LLC
`
`FOR THE PLAINTIFF: (See Attorney Attendance Sheet docketed
` in minutes of this hearing.)
`
`FOR THE DEFENDANT: (See Attorney Attendance Sheet docketed
` in minutes of this hearing.)
`
`COURT REPORTER:
`
`Shelly Holmes, CSR, TCRR
`Official Reporter
`United States District Court
`Eastern District of Texas
`Marshall Division
`100 E. Houston Street
`Marshall, Texas 75670
`(903) 923-7464
`
`(Proceedings recorded by mechanical stenography, transcript
`produced on a CAT system.)
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`Case 2:19-cv-00209-JRG Document 158 Filed 06/30/20 Page 2 of 128 PageID #: 5774
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`I N D E X
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`June 23, 2020
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`Appearances
`Hearing
`Court Reporter's Certificate
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`Case 2:19-cv-00209-JRG Document 158 Filed 06/30/20 Page 3 of 128 PageID #: 5775
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`COURT SECURITY OFFICER: All rise.
`THE COURT: Be seated, please.
`Good morning, counsel. This is the time set for
`claim construction in The Hillman Group versus KeyMe
`matter. This is Civil Case No. 2:19-CV-209.
`The Court will call for announcements at this
`
`time.
`
`What says the Plaintiff, The Hillman Group?
`MR. FINDLAY: Good morning, Your Honor. Eric
`Findlay on behalf of The Hillman Group. Also with me,
`Mr. John Williamson, Mr. Ryan O'Quinn, and Brian Craft, and
`we're ready to proceed.
`THE COURT: All right. Thank you.
`What's the announcement from Defendant, KeyMe?
`MR. DACUS: Good morning, Your Honor. Deron Dacus
`on behalf of Defendant, KeyMe. And here me is Dave Nelson,
`Jeff Nardinelli, Sean Pak, and Eric Huang, and we're ready
`to proceed, Your Honor.
`THE COURT: All right. Thank you.
`Counsel, as you're aware, I typically take up
`claim construction disputes on a term-by-term basis. I'm
`aware that the parties have made their desires known by way
`of email to the Court as to the groupings or order for the
`disputed terms to be considered and argued this morning. I
`plan to follow what you've requested. I see no problems
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`Case 2:19-cv-00209-JRG Document 158 Filed 06/30/20 Page 4 of 128 PageID #: 5776
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`4
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`with that.
`Consequently, we'll begin with "configured to
`replicate the tooth pattern of the blade of said key
`inserted in said key-receiving entry." We'll follow that
`by the 13th term, which is "configured to cut the selected
`key blank to duplicate the key tooth pattern of the master
`key"; followed by "configured to cut the determined bitting
`pattern into a key blank," Term 21; then Term 3, "at least
`one duplicate"; and then Term 22, "key duplication
`process"; and then Term 26, "duplicated key." That will be
`our first group, and we'll follow that order.
`We'll start with Term 1 -- Disputed Term 1,
`"configured to replicate the tooth pattern," et cetera.
`And let me hear from Plaintiff on this one first.
`MR. FINDLAY: May I approach, Your Honor?
`THE COURT: You may.
`Counsel, you may proceed when you're ready.
`MR. O'QUINN: Good morning, Your Honor. Ryan
`O'Quinn for the Plaintiff, The Hillman Group.
`And the parties have agreed to argue Claim Term
`Nos. 1, 3, 13, 21, 22, and 26, as Your Honor just listed as
`a group because they all center around pretty much the
`exact same dispute. And we called them the identicality
`disputes.
`THE COURT: That's probably a good way to say it.
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`Case 2:19-cv-00209-JRG Document 158 Filed 06/30/20 Page 5 of 128 PageID #: 5777
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`MR. O'QUINN: Okay. So, you know, you -- you have
`just read for us the -- the claim terms. The parties have
`made different proposed constructions based around those
`terms, but the differences boil down to one simple thing
`here on Slide 6. All of Hillman's proposed constructions
`were duplicating the bitting pattern of a key, replicating
`the bitting pattern of a key, or duplicating a key in
`general, boiling down to make a copy of that key.
`Whereas KeyMe's proposed construction of the same
`terms boiled down to making an identical copy. The only
`difference between the constructions, the only dispute
`between the parties is the superlative "identical" that
`KeyMe seeks to include.
`Now, the specifications of the three
`patents-in-suit make clear that the purpose of key
`duplication is to open a lock. And you can see this in the
`specification here on Slide 7 in the '474 patent.
`The point is to make a key that corresponds to the lock
`intended to receive the key blade.
`Key duplication is an art that's as old as
`preventing access, as old as doors, as old as locks. And
`the entire point in the field and the art of key
`duplication is making not a key that's an exact match of
`the customer or the person's existing key, it's making a
`key that will open the same lock as that first key.
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`And so it's well-known in the art that the -- the
`purpose of key duplication is to make accurate keys that
`will enter the same lock. It's not to per -- perfectly and
`identically duplicate that key.
`THE COURT: I understand the difference between
`code cutting and trace cutting, if that will help you --
`MR. O'QUINN: Okay, Your Honor.
`THE COURT: -- get us down to the bottom line.
`MR. O'QUINN: Perhaps, yes.
`The main portion of this -- of this dispute is the
`fact that the word "identical" does not appear in any of
`the specifications or in any of the claims. The '446 and
`'179 specifications do not contain the word "identical" at
`all. The '474 contains it only once in a completely
`irrelevant context that you see here.
`KeyMe refers in the briefing to the intrinsic
`record, but what they're referring to is random patents
`cited on the face of the patent that were submitted during
`prosecution. They were not raised during the prosecution
`with the USPTO. They were not used in any way to
`distinguish over a prior art rejection.
`The intrinsic record, the specification, the
`claims, the prosecution history, makes no mention of
`identicality. It makes a mention of making a copy only of
`the key.
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`Case 2:19-cv-00209-JRG Document 158 Filed 06/30/20 Page 7 of 128 PageID #: 5779
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`THE COURT: Let me ask you this, counsel.
`Defendants have made it clear in their briefing that
`they're not talking about identical on an atomic level,
`that we're not talking about the arrangement of protons and
`neutrons and electrons, that we're not talking about
`identical in the theoretical to the nth degree, that there
`are tiny differences and imperfections that would be
`recognized and permissible even within Defendant's notion
`of identicality.
`So if that's the case, what's the problem with it?
`MR. O'QUINN: That was actually where I was headed
`on my next slide, Your Honor, is if -- if KeyMe concedes
`that identical means there can still be minute differences,
`we're talking about minute technology, so where do we draw
`the line as to what is identical and what isn't? How do
`you know if you infringe a claim?
`For example, when I duplicate a key, I often have
`what's called burrs or flashes on that key. It's little
`metallic leftovers that are left over -- I can see them.
`They're not microscopic. And, in fact, I can cut my finger
`on them if I'm not careful. The key that I stuck into the
`machine to duplicate it doesn't have those, and so there
`are clear differences between the key that I put into the
`machine and the key that I got out of the machine.
`And with any engineering application, there's
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`Case 2:19-cv-00209-JRG Document 158 Filed 06/30/20 Page 8 of 128 PageID #: 5780
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`going to be tolerances. There's going to be allowed
`differences. And that's why Hillman's construction of a
`copy instead of an identical copy recognizes that position
`in the art.
`Indeed, no embodiment in the specification of any
`of these patents-in-suit requires or could achieve
`identicality. It simply is not possible to make a
`perfectly identical copy of two keys. And so KeyMe's
`proposed construction would exclude every embodiment in all
`three specifications.
`THE COURT: Tell me this, with regard to the
`accused products here, when a customer walks up to one of
`the Defendant's kiosks and sticks a key out of their pocket
`into the slot to receive that key, how is the decision made
`as to whether to trace cut that key to make the duplicate
`and in effect copy the key out of the customer's pocket as
`opposed to code cutting the key and using a pre-determined
`code that's transmitted to the device so that it's not a
`copy of the key that came out of the customer's pocket but
`a copy of the key when it was first made and put into the
`customer's pocket? How does the accused product know which
`method to pursue if I walk up and take the key to my front
`door at my house and stick it in the kiosk?
`MR. O'QUINN: We are still reviewing their code
`and their documents, Your Honor, and I also don't want to
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`Case 2:19-cv-00209-JRG Document 158 Filed 06/30/20 Page 9 of 128 PageID #: 5781
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`say anything in open court that would bar a protective
`order. But our understanding is the analytical system
`within the accused products makes a determination based on
`the cross section of the key, whether it's a key type that
`can readily be duplicated simply by code cutting or whether
`it requires more of a trace cut.
`THE COURT: Okay.
`MR. O'QUINN: And as Your Honor has mentioned
`already, there is code cutting disclosed in the
`specification of the '446 patent.
`KeyMe concedes that in its brief and concedes that
`its construction would exclude that disclosed embodiment.
`This is despite the claim not being limited in any fashion
`and despite code cutting being a long-standing form of key
`duplication.
`The '474 patent, similarly includes a disclosed
`embodiment of what's called optical tracing. It's more of
`an image processing technique where a photograph is taken
`of the bitting pattern, and the profile is then transferred
`to the cutting apparatus to make a copy of the key. That
`embodiment would also be excluded by KeyMe's construction
`of an identical copy.
`KeyMe's own technical tutorial, indeed, recognizes
`that code cutting is one way that that keys, quote, are
`traditionally made and duplicated. And they would now have
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`that written out of the claim interpretation for this
`lawsuit, mainly for attorney argument purposes.
`There's a non-infringement position and an
`invalidity position perhaps that they're trying to set up.
`But those of skill in this art have long recognized that
`there are many ways to duplicate a key.
`The patents here are not limited to mechanical
`tracing, and even if they were, mechanical tracing itself
`does not produce identical copies. It aims to create a
`copy that matches the keys so that it will operate the same
`lock. But a mechanically-traced duplicate key, as I
`mentioned, will not necessarily be identical. It could
`have those imperfections on it. It could have a different
`style of key. It could be a different length of the key
`blank that still has the same cross section. All of those
`are possibilities, and all of those are examples of
`non-identical duplicate keys.
`THE COURT: There's -- there's a portion of the
`briefing that seems to make much out of what happened in
`the Southern District of Ohio. Why don't you tell me about
`what happened in the Southern District of Ohio and whether
`it matters or doesn't matter in this case.
`MR. O'QUINN: We'll -- we will plan to discuss
`that later, but I can discuss that now because I was
`involved, as well.
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`In the Southern District of Ohio, this was before
`the Hillman/Minute Key merger, and Hillman had brought a
`declaratory judgment suit of non-infringement against
`Minute Key's patents, one patent of which was a related
`patent to the '446 patent-in-suit.
`Prior to the filing of that lawsuit, at the
`request of Walmart, a mutual customer, counsel for Hillman
`drafted a letter explaining a myriad of potential
`non-infringement positions and invalidity positions that
`they might pursue in a trial based on the innuendo that
`Minute Key had provided in the industry about whether
`Hillman's device infringed.
`So the letter that's being referred to in the
`briefing was before a case was ever filed. It was never
`accepted by a Court. There was never a Markman hearing in
`that Southern District of Ohio case. The patent
`infringement part of that case went away at an early stage,
`and it became an unfair competition Lanham Act case.
`So there was never a position that was adopted by
`a Court in that instance. Indeed, there was never claim
`construction briefing, and there was never any discovery
`that Hillman was able to take before it wrote the letter
`that KeyMe is raising in this brief.
`The '809 patent is a different patent. The claim
`language reads differently. If anything, it supports
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`Hillman's position in this case because a dependent claim
`in the '809 patent specifically claims mechanical tracing,
`and so if a dependent claim claims mechanical tracing, the
`Independent Claim 1 claims a broader scope.
`THE COURT: All right. What else do you have for
`me on this first term?
`MR. O'QUINN: The identicality dispute also would
`violate the claim construction canon of mooting dependent
`claims. I just gave one example.
`Another example is in the '446 patent, Dependent
`Claim 11 here on the screen on Slide 14. The kiosk of
`Claim 1 in the '446 patent includes a de-burring tool.
`Now, de-burring tool is a -- it's almost like a
`wheel of sandpaper in the kiosk box, and it can rub off
`those metal flashes and burrs that are by-products of the
`duplication process that I mentioned earlier. There would
`be no need for that de-burring wheel if the key was made
`identically and perfectly to begin with. And so if that's
`the construction that's adopted for Claim 1, this dependent
`claim becomes moot.
`Those of skill in the art, as I mentioned,
`understand that duplicate means to copy. The Professional
`Locksmith Dictionary has a definition of duplicate that's
`simple two words, to copy. And they don't use it in a --
`in a manner where the duplication process versus the
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`Case 2:19-cv-00209-JRG Document 158 Filed 06/30/20 Page 13 of 128 PageID #: 5785
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`duplicating of the key or the duplicate key are different.
`That's the position KeyMe is trying to make here
`is that duplicate, replicate, duplicate should mean one
`thing when it's a modifier of key and another thing when
`it's a modifier of bitting pattern. And that's not how
`people in the art understand it. It's simply to copy.
`And KeyMe's own patents make this clear because
`they in a figure here in their own patent refer to a
`duplicated key and a duplication process of a key here that
`is a non-identical copy of the original key on the left.
`So KeyMe, as well, understood that a duplicated
`key made by a duplication process need not be perfectly
`identical to the original key.
`THE COURT: Let me ask you this. If you -- if you
`take the position for purposes of argument that identical
`goes too far, doesn't just saying a copy not go far enough?
`Doesn't it need some clarification? I mean, what is a
`copy? Is it 51 percent the same, or is it 66 percent the
`same, or is it 91 percent the same?
`Just -- just like your argument on identicality
`that a minute discrepancy would open the door to disputes
`about what's minute or not, at the other end of the
`spectrum, if you just say copy, haven't you opened the door
`to disputes about how much similarity there needs to be to
`become a copy? I mean, isn't that the same argument at the
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`opposite end of the spectrum? Why is one better than the
`other.
`
`MR. O'QUINN: That's fair, Your Honor. And I
`think we can address that by the two things that have to
`happen for a copy of a key to meet the proposed function of
`the device and of the art.
`It needs to have the right cross section so that
`it can go into the lock to begin with. If you have a
`Kwikset key and your lock is a Schlage-brand lock, you're
`going to just get hit right at the opening because the
`cross section won't allow it in. That has to be one
`element.
`The other element is the bitting pattern has to
`match such that the tumblers are engaged and will all turn.
`If even a single tumbler out of the bits on that key
`doesn't turn, your key gets stuck in the lock and breaks
`off.
`
`So a copy meets the criteria where it will operate
`the lock, and I think that's the line we would draw. It
`needs to match the pattern so that it can perform the same
`function. If I have a pair of socks that match, one of
`them has a hole in it, they still work as socks, they're a
`match. They're not identical.
`THE COURT: Well, keys wear out. And if I take a
`key out of my pocket that is on the verge of not
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`Case 2:19-cv-00209-JRG Document 158 Filed 06/30/20 Page 15 of 128 PageID #: 5787
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`functioning because it's so worn and I put it in one of
`these accused products and for whatever reason the kiosk
`decides to trace cut instead of code cut, then I got a copy
`of the key that came out of my pocket. And if it's not
`working very well because it's just about worn out, the
`copy I get doesn't work very well either because it's in
`the same position.
`I mean, there again, if you're talking about a
`functionality analysis to determine what's a copy and
`what's not, then you may have problems with the -- the
`creation of the duplicate key to begin, especially if
`you're duplicating one that's on the borderline of not
`functioning because it's so worn. And that happens in the
`real world.
`MR. O'QUINN: It does. I've cut a lot of these
`keys in the last few years. I would offer from your
`hypothetical that the reason your key might be worn is that
`the interior of your lock might be worn. And so if you
`were to get a brand new spanking sharp peak key, it may not
`operate your lock. And even though it may have, you know,
`a perfect -- a trace copy, perfect in the manner it may be,
`might have some of those wear marks and rounded edges that
`your original key has, that's what fits your lock like a
`glove, and that's what makes it work.
`THE COURT: All right. What else on this term?
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`Case 2:19-cv-00209-JRG Document 158 Filed 06/30/20 Page 16 of 128 PageID #: 5788
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`MR. O'QUINN: This is all I have, Your Honor.
`THE COURT: Let me hear a response from the
`Defendant.
`MR. NELSON: Good morning, Your Honor. Dave
`Nelson on behalf of Defendant, KeyMe.
`THE COURT: Good morning. Please proceed.
`MR. NELSON: Thank you, sir. So if I we could
`start with Slide 6 --
`MR. DACUS: Your Honor, may I approach with the
`slides?
`THE COURT: You may.
`MR. NELSON: Oh, I apologize, Your Honor. It's
`been too long since I've been in court. I keep forgetting
`things.
`
`THE COURT: Well, we'll endeavor to knock-off the
`
`rust.
`
`MR. NELSON: Thank you.
`THE COURT: Go right ahead.
`MR. NELSON: And I'll let Mr. Dacus finish here.
`So we agree with -- with counsel for Plaintiff
`that the issue really does come down to the same thing for
`all these terms. And -- and particularly the terms are the
`three sets that are configured to replicate the tooth
`pattern of the blade of said key inserted in the receiving
`entry. That's Term 1.
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`Case 2:19-cv-00209-JRG Document 158 Filed 06/30/20 Page 17 of 128 PageID #: 5789
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`Term 13, configured to cut the selected key length
`to duplicate a key tooth pattern of the master key.
`And then Claim 20 -- or Term 21, configured to cut
`the determined bitting pattern into a key blank.
`Those are the terms that really come down to the
`question are the claims limited to trace cutting. Your
`Honor, the other three terms, as we covered in the
`briefing, are really not relevant to the dispute between
`the parties. You know, in terms of duplicating a key, Your
`Honor has already noted there are many ways to duplicate a
`key. We don't have any dispute with that. But that's not
`the issue.
`These claims and these patents are specific to
`particular ways of duplicating the keys. And in our
`position and what we've tried to convey through our claim
`construction and tried to be very clear about in the
`briefing is that these claims are limited to trace cutting.
`So the -- the question -- and you heard a lot of
`argument from counsel for the Plaintiff -- is, well, all
`you're really trying to do is duplicate a key, and there
`are many ways to duplicate a key, and that's all these
`claims are. But that's not right.
`These claims are very specific in how you
`duplicate a key, and those are the terms, the three terms,
`1, 13, and 21, that I just read for Your Honor for the
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`Case 2:19-cv-00209-JRG Document 158 Filed 06/30/20 Page 18 of 128 PageID #: 5790
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`record, those have very specific language about replicating
`the tooth pattern, replicating the bitting pattern. The
`parties agree that bitting pattern and tooth pattern refer
`to the same thing. There's, in fact, an agreed upon
`construction provided to Your Honor that says that.
`So that's what we tried to focus on. It is -- and
`it's the tooth pattern -- I'll just take those two for now.
`It's the tooth pattern of the master key that's inserted
`into the machine. And the -- and the claims are very
`specific. It's not, oh, of some factory replica of that or
`how it used to be before you had it in your pocket and
`carried around other things in there and wore down the key.
`Whatever it was, as Your -- as Your Honor mentioned, that's
`what is being replicated, whatever that tooth pattern is or
`that bitting pattern of the key that is placed in the
`machine. The claims are very, very specific on that.
`Now -- so what I hear as the main argument in
`response is, well, there's code cutting. We mentioned code
`cutting in the patent. And what I've seen in the briefing
`is that there is a -- we would read that out of the claim
`with the Defendant's construction.
`But, in fact, it's quite the opposite, Your Honor,
`because if we -- we look -- and I have a replication here
`of the '446, '179, '474, the three patents at issue with
`Claim 1, of all of these. And I want to focus in on the
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`Case 2:19-cv-00209-JRG Document 158 Filed 06/30/20 Page 19 of 128 PageID #: 5791
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`highlighted elements that I have in -- in each of these
`here.
`
`So let's look at the '446 and that next to the
`last element. The way the element reads is a key
`duplicating system within said kiosk configured to
`replicate the tooth pattern of the blade of said key
`inserted in said key-receiving entry, on the blade of said
`extracted key blank.
`So said key refers back up -- the antecedent basis
`reference, if we trace that all the way back, is the key
`that's inserted in, right? It's not a key like that. It's
`not some other key that's back in the factory that matches
`the code of that key. It's that key.
`Now, similarly, we have in the '179, automatically
`cutting by the key -- key duplicating machine the selected
`key blank to duplicate a key tooth pattern of the master
`key, so, again, a very specific way to do it referring back
`to that master key.
`Now, in the '474, similar -- if we look at the
`first reference here, we have consisting of a bitting
`pattern of the existing key, the existing key, once again,
`referring to the key that's inserted into the machine. And
`if we drop down, it says: Cut the determined bitting
`pattern into a key blank. In other words, the bitting
`pattern of that key that's inserted into the kiosk.
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`With Plaintiff's proposed construction, at least
`the way this is argued in the briefs, Your Honor, and I
`think Your Honor's question right from the beginning gets
`right to the heart of the matter, you're really removing a
`lot of this claim language, not giving credit to it,
`because --
`THE COURT: So, in other words, are you telling me
`that while code cutting may be in the specification, it's
`not really in the applicable claim language of these
`asserted claims?
`MR. NELSON: That's correct, Your Honor. That's
`correct.
`THE COURT: That's how you're getting around the
`code cutting?
`MR. NELSON: Yes, exactly.
`THE COURT: All right.
`MR. NELSON: And, in fact -- and I -- and I
`will -- I think the very next thing I'll get to here, the
`code cutting, the description that's cited by the -- the
`Plaintiff, if you actually look at that, and we'll go
`through the language. First of all, it's in the very last
`paragraph of the patent, Your Honor, one of those catch-all
`paragraphs, as I'm sure Your Honor's done more patent cases
`than any of us in the room here knows, those are kind of
`throw-ins at the end and says, well, I know I described a
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`Case 2:19-cv-00209-JRG Document 158 Filed 06/30/20 Page 21 of 128 PageID #: 5793
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`particular way of doing this in the embodiments of my
`invention, but there's a whole bunch of other ways you can
`do it, maybe, right? That's -- that's where it appears.
`But then it's even worse than that from -- well,
`not from my perspective, but from the Plaintiff's
`perspective because the code cutting that's described there
`is actually described to be a -- something different than
`the -- the invention that's claimed in the patent. So
`let's -- let's go through that.
`THE COURT: One thing I want you to do, counsel,
`is I want you to address and respond to Plaintiff's
`argument about identical or identicality not being in the
`intrinsic record here. And that, in essence, the argument
`is that it's an imported limitation.
`And so whether we're talking about code cutting or
`trace cutting or some other physical means by which a
`duplicate is made, at a higher level, the Plaintiffs made
`an argument that your inclusion of the concept of
`identicality is just not supported by the intrinsic record.
`And I need you to respond to that.
`MR. NELSON: Yes, Your Honor.
`And so if I could go back to -- and I'll
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