`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF WISCONSIN
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`OXBO INTERNATIONAL CORPORATION,
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`Plaintiff,
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`v.
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`H&S MANUFACTURING COMPANY, INC.,
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`Defendant.
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`OPINION & ORDER
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`15-cv-292-jdp
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`Plaintiff Oxbo International Corporation owns four patents on windrow mergers, and
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`it accuses its competitor, defendant H&S Manufacturing Company, Inc., of infringing them
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`with its Tri-Flex merger. H&S denies infringement and asserts that some of the asserted
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`claims are invalid. H&S also raises equitable defenses, based primarily on alleged assurances
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`from Oxbo that it would not sue H&S for infringement without warning.
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`Both sides have moved for summary judgment on infringement and on H&S’s
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`equitable defenses. Each side also seeks summary judgment on some more limited validity
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`issues. The parties also present several motions to strike parts of the other side’s evidence or
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`to supplement its own. The details of the court’s rulings are in the body of the opinion. But,
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`at a high level of summary, the rulings are largely favorable to Oxbo. The court concludes
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`that the undisputed facts show that the Tri-Flex merger infringes all but two of the asserted
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`claims; that the patents-in-suit are not invalid on any ground asserted by H&S; and that
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`H&S’s equitable defenses fail. There is a genuine dispute of material fact about whether the
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`Tri-Flex merger infringes claims 28 and 32 of the ’929 patent.
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`Oxbo International Corporation, Patent Owner
`Exhibit 2020
`H&S Manufacturing, Inc. v. Oxbo International Corporation
`IPR 2016-00950
`
`
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`Case: 3:15-cv-00292-jdp Document #: 392 Filed: 05/23/17 Page 2 of 60
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`BACKGROUND
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`A windrow merger is an agricultural implement that gathers mown hay into windrows,
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`or merges existing windrows into larger ones, so that the hay can be chopped or baled. Unlike
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`a hay rake, which drags hay into windrows, a windrow merger uses rotating tines to lift the
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`hay onto a conveyor that moves the hay to the windrow. This minimizes damage to the crop
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`and reduces contamination with dirt, rocks, or other debris.
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`Oxbo’s patents-in-suit describe improvements to windrow mergers that purport to
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`make them faster, more flexible, and more effective. Three of the patents-in-suit disclose and
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`claim a windrow merger with three pickup assemblies: U.S. Patent Nos. 7,310,929,
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`8,166,739, and 8,863,488, all for “Windrow Merging Apparatus” to Paul W. Dow, et al.
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`These patents share a common specification, and the court will refer to them together as the
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`“triple head patents.” The other patent-in-suit discloses and claims a windrow merger with a
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`trough configuration and a “rub rail” to facilitate the even flow of hay on the conveyor, which
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`helps create uniform windrows: U.S. Patent No. 8,511,052 for “Windrow Merger” to Steven
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`S. Dow, et al. We will refer to this patent as the “trough patent.”
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`Oxbo and H&S are competitors in the agricultural equipment market, and they both
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`make and sell windrow mergers, including triple head mergers. Oxbo alleges that H&S’s triple
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`head merger, the Tri-Flex, infringes the four patents-in-suit. Early in the case, H&S asserted
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`tort counterclaims against Oxbo and another party, but those matters have been resolved. At
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`this point, all that remains are Oxbo’s patent infringement claims and H&S’s counterclaims
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`and defenses.
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`One other notable procedural detail: during this litigation, H&S petitioned the Patent
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`Trial and Appeal Board for inter partes review of the validity of the ’929 patent and,
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`Oxbo International Corporation, Patent Owner
`Exhibit 2020
`H&S Manufacturing, Inc. v. Oxbo International Corporation
`IPR 2016-00950
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`
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`Case: 3:15-cv-00292-jdp Document #: 392 Filed: 05/23/17 Page 3 of 60
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`separately, the ’052 patent. PTAB declined to institute review. Dkt. 199-16 and Dkt. 235-1.
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`Because PTAB did not institute review on any ground for either patent, H&S is not estopped
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`under 35 U.S.C. § 315(e) from asserting any invalidity ground, and the IPR petitions have no
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`direct effect on this case. But the parties may be bound by the positions taken in the PTAB,
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`and the PTAB reasoning may be persuasive on issues now before the court.
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`The court has subject matter jurisdiction over this case pursuant to 28 U.S.C.
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`§ 1338(a) because it arises under United States patent law.
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`A. Motions to strike and to supplement the record
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`ANALYSIS
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`The court begins with the parties’ evidentiary motions, which affect the scope of the
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`evidence that the court will consider at summary judgment.
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`1. H&S’s motion to strike Chaplin supplemental report and Langer
`declaration; Oxbo’s motion to supplement the Chaplin report
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`H&S moves to strike Jonathan Chaplin’s August 15, 2016 supplemental report,
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`Dkt. 113, and Jake Langer’s related declaration, Dkt. 137. Dkt. 148. Chaplin is an Oxbo
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`expert. H&S contends that Chaplin’s August report offers new infringement opinions—based
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`on a new Tri-Flex inspection—disclosed months after the expert disclosure deadline and mere
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`weeks before the dispositive motion deadline. According to H&S, Oxbo could have—and
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`should have—disclosed the opinions in Chaplin’s initial report (April 2016), and the late
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`disclosure is not a proper supplementation, is not substantially justified, and is not harmless.
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`Langer’s declaration supports Chaplin’s report, and the court should strike it for the same
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`reasons.
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`Oxbo International Corporation, Patent Owner
`Exhibit 2020
`H&S Manufacturing, Inc. v. Oxbo International Corporation
`IPR 2016-00950
`
`
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`Case: 3:15-cv-00292-jdp Document #: 392 Filed: 05/23/17 Page 4 of 60
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`In response, Oxbo says that H&S did not disclose relevant non-infringement positions
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`until after Oxbo disclosed Chaplin’s initial report. Chaplin had every right to reply to the
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`previously undisclosed non-infringement theories. Regardless, Oxbo contends, Chaplin’s
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`August report “merely clarifies previous statements and fills minor gaps in his opinion.”
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`Dkt. 194, at 7. Oxbo requests, as an alternative to denying H&S’s motion to strike, that it be
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`allowed to supplement the Chaplin report. Dkt. 197.
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`This court allows two rounds of expert reports: proponent reports, where the plaintiff
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`should disclose its infringement opinions; and respondent reports, where the defendant may
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`defend against those opinions and offer its non-infringement opinions. Oxbo is not entitled
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`to a rebuttal report to reply to H&S’s non-infringement opinions. Yet that is precisely what
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`Chaplin’s August report does. Chaplin went back and inspected the Tri-Flex again to test “the
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`veracity” of H&S’s expert’s opinions. Dkt. 113, at 2. Such a supplementation would be
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`allowed only with the consent of the other side, or with leave of court.
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`Oxbo contends that the August supplementation was justified because H&S changed
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`its non-infringement theories after Chaplin disclosed his initial report. The court agrees in
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`part.
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`Oxbo does not explain why Chaplin could not have offered some of his August
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`opinions earlier. Chaplin knew that H&S had denied that the Tri-Flex provides a continuous
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`line of material pickup when he authored his initial report. And he knew that H&S had
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`proposed to construe the term “continuous line of material pickup” to mean “a pickup face
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`uninterrupted by gaps.” Although the only gaps that H&S had expressly cited by the time
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`Chaplin disclosed his initial report were between the merger heads, nothing prevented Chaplin
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`Oxbo International Corporation, Patent Owner
`Exhibit 2020
`H&S Manufacturing, Inc. v. Oxbo International Corporation
`IPR 2016-00950
`
`
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`Case: 3:15-cv-00292-jdp Document #: 392 Filed: 05/23/17 Page 5 of 60
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`from addressing the five-inch mid-head gaps as well. H&S was not perfectly forthcoming, but
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`Chaplin should have anticipated the mid-head gap issue.
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`But the “all material” issue was not timely disclosed by H&S. H&S contends that “as
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`long as Oxbo has asserted these claims, H&S has denied infringing them.” Dkt. 221, at 8.
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`But H&S cites nothing to show that it had disclosed to Oxbo its contention that the Tri-Flex
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`does not transport “all material” because of incidental crop loss at any time before it
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`disclosed its report. That is a new non-infringement position that Oxbo should be allowed to
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`address with expert evidence.
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`Oxbo was also justified in supplementing Chaplin’s opinion regarding whether the Tri-
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`Flex can merge with only its center assembly with both outer assemblies retracted. (The court
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`will discuss this issue in greater detail later in this opinion.) The court will not strike
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`Chaplin’s August opinion regarding center assembly merging because H&S has continued to
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`update the record with new information on that issue. Late-in-the-case developments have
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`caused difficulties for both the parties and the court, because the court cannot decide the
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`issue at summary judgment. See infra Section D.3.a.
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`So H&S’s motion to strike, Dkt. 148, is denied with respect to Chaplin’s
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`supplementation on center assembly merging and the “all material” non-infringement
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`argument. Chaplin’s August opinions regarding the Tri-Flex “gaps” are untimely.
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`Oxbo’s contingent motion to supplement, Dkt. 197, is moot as to the portions of
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`Chaplin’s August report that the court has allowed. And Oxbo’s contingent motion is denied
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`in all remaining respects, for two reasons. First, as explained, Oxbo has not demonstrated that
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`it should be allowed to supplement Chaplin’s “gap” opinions. Second, the court will not
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`strike H&S’s expert’s “gap” opinions. Although H&S did not explicitly disclose its position
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`Oxbo International Corporation, Patent Owner
`Exhibit 2020
`H&S Manufacturing, Inc. v. Oxbo International Corporation
`IPR 2016-00950
`
`
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`Case: 3:15-cv-00292-jdp Document #: 392 Filed: 05/23/17 Page 6 of 60
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`that the five-inch mid-head gaps mean that the Tri-Flex does not provide a continuous line of
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`material pickup, it did disclose sufficient information about its infringement position to allow
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`Chaplin to fully opine on the issue when he authored his initial report.
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`2. Oxbo’s motion to strike H&S’s “new” non-infringement position
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`This motion is also related to the center assembly merging issue. After summary
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`judgment briefing closed, H&S acknowledged that four next-gen touchscreen prototype Tri-
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`Flex mergers infringed claims 28 and 32 of the ’929 patent as a result of an unintended
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`software glitch. Dkt. 252. H&S contends that these touchscreen prototypes operated
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`differently than all other models in this respect. Oxbo moves to strike H&S’s contention,
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`arguing that it constitutes a new non-infringement position. Before the late submission, H&S
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`had never contended or produced any documents showing that the touchscreen and push-
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`button models functioned any differently. And apparently Oxbo had intended to build an
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`infringement case on its testing of the prototypes.
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`The court is not convinced that H&S’s concession qualifies as a new non-infringement
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`position. H&S disclosed new factual information learned in the course of litigation. A party
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`cannot reasonably be held to theories that new facts show to be wrong. But in light of the
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`factual developments, it is appropriate to allow Oxbo to use the February 2017 Chaplin
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`supplement. Dkt. 293. The new report is substantially justified because, as discussed above,
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`the center assembly issue has been a moving target. Before H&S’s concession, Oxbo had no
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`reason to think that it would need to separately inspect and analyze the push-button mergers
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`and the touchscreen mergers. It had no reason to believe that the two interfaces operated
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`differently and, as a result, it had no reason to suspect that its videos of and opinions
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`regarding the touchscreen merger were not sufficient to prove infringement by all models.
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`Oxbo International Corporation, Patent Owner
`Exhibit 2020
`H&S Manufacturing, Inc. v. Oxbo International Corporation
`IPR 2016-00950
`
`
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`Case: 3:15-cv-00292-jdp Document #: 392 Filed: 05/23/17 Page 7 of 60
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`The court is certainly not inclined to entertain new non-infringement positions or
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`arguments raised for the first time after the summary judgment deadline. But the center
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`assembly issue has presented difficult questions and had muddled the record more than
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`usual. The court will deny the motion to strike but will allow Oxbo to submit the February
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`Chaplin report.
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`3. Oxbo’s motion to strike Foley, Rottier, and Kelber
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`Oxbo moves to strike David Foley’s declaration, Dkt. 126, portions of Kurt Rottier’s
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`declaration, Dkt. 128, and portions of Vincent Kelber’s declaration, Dkt. 129. Dkt. 163. In
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`short, these declarations offer digital animations that demonstrate operations that the Tri-
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`Flex cannot perform, including certain conveyor movements and center assembly merging.
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`Oxbo argues that the declarations are late-disclosed expert reports. Foley calls himself a
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`retained expert and has created the animations. Dkt. 126, ¶¶ 1, 5 (“I was asked to prepare
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`computer-animated graphics of the Tri-Flex, including depictions of the merger head
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`assemblies when they are moved from the extended use position to the retracted travel
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`position and of certain operations involving the conveyors on these assemblies, which the Tri-
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`Flex is not capable of performing.”). Rottier and Kelber purport to confirm that Foley’s
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`animations are accurate. Dkt. 128, ¶¶ 5-9 and Dkt. 129, ¶ 10.
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`The court can consider and decide the relevant conveyor movement issues without
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`referring to these submissions, because the information is elsewhere in the record, including
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`in H&S’s expert reports. The court will deny the motion as moot for purposes of summary
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`judgment. The parties should inform the court whether the controversy needs to be resolved
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`before trial.
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`Oxbo International Corporation, Patent Owner
`Exhibit 2020
`H&S Manufacturing, Inc. v. Oxbo International Corporation
`IPR 2016-00950
`
`
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`Case: 3:15-cv-00292-jdp Document #: 392 Filed: 05/23/17 Page 8 of 60
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`4. Oxbo’s motion to strike portions of H&S’s summary judgment briefing
`regarding equitable defenses
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`Oxbo moves to strike portions of H&S’s summary judgment briefing regarding H&S’s
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`equitable defenses. Dkt. 222. Oxbo served H&S with an interrogatory seeking “the factual
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`and legal bases for Defendant’s affirmative defenses that Plaintiff’s claim is barred by the
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`doctrine of laches, equitable estoppel, acquiescence, implied license, unclean hands, and/or
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`prosecution history estoppel.” Dkt. 223-1, at 11. H&S answered the interrogatory and
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`supplemented its answer three times. See Dkt. 223-2; Dkt. 223-3; Dkt. 223-4; Dkt. 223-5.
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`Now, according to Oxbo, H&S has argued new facts to support its equitable defenses in its
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`summary judgment briefing. Dkt. 222, at 3-4.
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`At summary judgment, H&S contends that (1) its decision not to file a declaratory
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`judgment action against Oxbo satisfies the reliance element of equitable estoppel and laches;
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`(2) increased Tri-Flex sales and approximately $60,000 in patent procurement expenses
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`satisfy the harm element of equitable estoppel and laches; (3) Oxbo’s internal discussions
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`regarding potential infringement indicate that Oxbo misled H&S; (4) its equitable estoppel
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`defense applies to all four patents-in-suit; and (5) Oxbo’s suit is barred by unclean hands
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`because the litigation is a sham. But H&S did not include these facts in response to Oxbo’s
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`contention interrogatory on the affirmative defenses.
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`These additional bases were untimely disclosed. Oxbo was entitled to learn the bases
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`for H&S’s equitable defenses through contention interrogatories, which H&S had a duty to
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`timely supplement. And H&S’s failure to fully disclose the factual bases for its equitable
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`defenses inhibits Oxbo’s ability to challenge those defenses at summary judgment. It is not
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`Oxbo International Corporation, Patent Owner
`Exhibit 2020
`H&S Manufacturing, Inc. v. Oxbo International Corporation
`IPR 2016-00950
`
`
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`Case: 3:15-cv-00292-jdp Document #: 392 Filed: 05/23/17 Page 9 of 60
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`enough to disclose the underlying factual information during discovery (such as during a
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`deposition) without disclosing the intent to use those facts to support an equitable defense.
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`Although the court will grant Oxbo’s motion, the court will also evaluate these new
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`bases on their merits. As explained below, even with the untimely disclosed factual bases,
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`H&S’s equitable defenses fail. See infra Section C.
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`With the evidentiary motions decided, the court turns to the merits.
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`B. Basic legal principles
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`In patent cases, as in civil cases generally, summary judgment is appropriate if a
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`moving party “shows that there is no genuine dispute as to any material fact and the movant
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`is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). When, as here, the parties
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`have filed cross-motions for summary judgment, the court “look[s] to the burden of proof
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`that each party would bear on an issue of trial; [and] then require[s] that party to go beyond
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`the pleadings and affirmatively to establish a genuine issue of material fact.” Santaella v.
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`Metro. Life Ins. Co., 123 F.3d 456, 461 (7th Cir. 1997). If either party “fails to make a
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`showing sufficient to establish the existence of an element essential to that party’s case, and
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`on which that party will bear the burden at trial,” summary judgment against that party is
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`appropriate. Mid Am. Title Co. v. Kirk, 59 F.3d 719, 721 (7th Cir. 1995) (quoting Tatalovich v.
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`City of Superior, 904 F.2d 1135, 1139 (7th Cir. 1990)). “As with any summary judgment
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`motion, this [c]ourt reviews these cross-motions ‘construing all facts, and drawing all
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`reasonable inferences from those facts, in favor of . . . the non-moving party.’” Wis. Cent., Ltd.
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`v. Shannon, 539 F.3d 751, 756 (7th Cir. 2008) (quoting Auto. Mechs. Local 701 Welfare &
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`Pension Funds v. Vanguard Car Rental USA, Inc., 502 F.3d 740, 748 (7th Cir. 2007)). “Only
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`disputes over facts that might affect the outcome of the suit under the governing law will
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`Oxbo International Corporation, Patent Owner
`Exhibit 2020
`H&S Manufacturing, Inc. v. Oxbo International Corporation
`IPR 2016-00950
`
`
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`Case: 3:15-cv-00292-jdp Document #: 392 Filed: 05/23/17 Page 10 of 60
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`properly preclude summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
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`(1986).
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`The court applies a two-step analysis to evaluate both infringement and invalidity;
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`each begins with claim construction. See, e.g., Kemco Sales, Inc. v. Control Papers Co., 208 F.3d
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`1352, 1359 (Fed. Cir. 2000) (infringement); Smiths Indus. Med. Sys., Inc. v. Vital Signs, Inc.,
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`183 F.3d 1347, 1353 (Fed. Cir. 1999) (invalidity). In deciding motions for summary
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`judgment in a patent case, the court bears in mind that defendants have the burden to show
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`invalidity by clear and convincing evidence and that plaintiffs have the burden to prove
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`infringement to a preponderance of the evidence. High Point Design LLC v. Buyer’s Direct, Inc.,
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`621 F. App’x 632, 638, 640 (Fed. Cir. 2015).
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`“The purpose of claim construction is to ‘determin[e] the meaning and scope of the
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`patent claims asserted to be infringed.’” O2 Micro Int’l Ltd. v. Beyond Innovation Tech. Co., 521
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`F.3d 1351, 1360 (Fed. Cir. 2008) (quoting Markman v. Westview Instruments, Inc., 52 F.3d
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`967, 976 (Fed. Cir. 1995), aff’d, 517 U.S. 370 (1996)). A patent’s claims define the scope of
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`the invention, and thus the scope of the patentee’s right to exclude others from practicing
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`that invention. Phillips v. AWH Corp., 415 F.3d 1303, 1312 (Fed. Cir. 2005) (en banc).
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`Claim language receives its “ordinary and customary meaning,” which “is the meaning that
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`the term would have to a person of ordinary skill in the art in question at the time of the
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`invention, i.e., as of the effective filing date of the patent application.” Id. at 1313.
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`Sometimes “the ordinary meaning of claim language . . . may be readily apparent even to lay
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`judges, and claim construction in such cases involves little more than the application of the
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`widely accepted meaning of commonly understood words.” Id. at 1314. But sometimes the
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`ordinary and customary meaning of a claim term is not manifestly clear. If that term is
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`Oxbo International Corporation, Patent Owner
`Exhibit 2020
`H&S Manufacturing, Inc. v. Oxbo International Corporation
`IPR 2016-00950
`
`
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`Case: 3:15-cv-00292-jdp Document #: 392 Filed: 05/23/17 Page 11 of 60
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`disputed and material to an issue in the case, the court must construe that term to establish
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`its meaning.
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`When construing a disputed term, the court must start with the claim language itself,
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`which provides substantial guidance. Id. at 1314-15. But the court reads the claim language
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`“not only in the context of the particular claim in which the disputed term appears, but in
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`the context of the entire patent, including the specification” and its prosecution history. Id. at
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`1313. The patent and its prosecution history, related patents and their prosecution histories,
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`and the prior art that is cited or incorporated by reference in the patent-in-suit and its
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`prosecution history constitute the patent’s intrinsic evidence. Id. at 1314. Of these sources,
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`“the specification ‘is always highly relevant to the claim construction analysis. Usually, it is
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`dispositive; it is the single best guide to the meaning of a disputed term.’” Id. at 1315
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`(quoting Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996)).
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`The court may also consider extrinsic evidence, which refers to all other types of
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`evidence, including inventor testimony, expert testimony, documentary evidence of how the
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`patentee and alleged infringer have used the claim terms, dictionaries, treatises, and other
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`similar sources. Id. at 1317-18. However, extrinsic evidence is less reliable and less useful in
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`claim construction than the patent and its prosecution history. Id. Intrinsic evidence trumps
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`any extrinsic evidence that would contradict it. Id. at 1314-16.
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`For summary judgment purposes, Oxbo accepts H&S’s contention that a person of
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`ordinary skill in the art is “someone with a Bachelor of Science in Mechanical Engineering or
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`an equivalent degree, and having approximately 3 years [sic] experience designing agricultural
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`equipment of associated/equivalent components or systems. Alternatively, a person of
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`ordinary skill may lack the above-referenced engineering bachelor degree but may have at
`
`Oxbo International Corporation, Patent Owner
`Exhibit 2020
`H&S Manufacturing, Inc. v. Oxbo International Corporation
`IPR 2016-00950
`
`
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`Case: 3:15-cv-00292-jdp Document #: 392 Filed: 05/23/17 Page 12 of 60
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`least five years combined education/experience related to the design, construction,
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`modification and/or
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`fabrication of agricultural equipment of associated/equivalent
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`components or systems.” Dkt. 116, at 11 n.3. The court will also accept it.
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`C. H&S’s equitable defenses
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`Oxbo moves for summary judgment on all of the equitable defenses that H&S
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`asserted in its responsive pleading and maintained since then: equitable estoppel, laches,
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`implied license, and unclean hands. Dkt. 119. For its part, H&S moves for summary
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`judgment on only its equitable estoppel defense. H&S contends that disputes of fact preclude
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`summary judgment on its laches and unclean hands defenses. H&S abandons its implied
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`license defense. The facts material to H&S’s equitable defenses are not genuinely disputed, so
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`the equitable defenses are amenable to resolution on the parties’ motions for summary
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`judgment.
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`1. Material facts
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`In mid-2011, H&S made prototype Tri-Flex mergers available for demonstration to
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`customers. So DS Farms, one of H&S’s customers, tested one of the Tri-Flex prototypes.
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`Soon after, an Oxbo salesperson, Doug Anderson, visited the farm to try to sell an Oxbo
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`triple head merger. When the owners of DS Farms told Anderson that they intended to buy a
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`Tri-Flex, Anderson said that Oxbo has patent rights and that H&S had copied Oxbo. One of
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`the farm’s owners, Matt Danzinger, relayed Anderson’s comments to H&S. Anderson does
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`not recall any of this, and he does not believe that he said anything about Oxbo’s patent
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`rights. And neither farm owner recalls exactly what Anderson said. But the details are not
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`material: all that matters is that H&S perceived the incident as an accusation of infringement
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`and that it prompted what happened next.
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`Oxbo International Corporation, Patent Owner
`Exhibit 2020
`H&S Manufacturing, Inc. v. Oxbo International Corporation
`IPR 2016-00950
`
`
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`Case: 3:15-cv-00292-jdp Document #: 392 Filed: 05/23/17 Page 13 of 60
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`After hearing about the incident, H&S’s president at the time, Chris Heikenen, called
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`Paul Dow, an Oxbo vice president and part-owner, sometime in August 2011. Dow recalls
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`that Heikenen told him that an Oxbo salesperson had told someone that Oxbo was going to
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`sue H&S for infringement. Dow apologized for the salesperson’s statements, told Heikenen
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`that no one at Oxbo should be making allegations of infringement of Oxbo’s patents, and
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`said that he would see that it did not happen again. Dkt. 100 (Dow Dep. 232:13-239:13).
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`Heikenen’s recollection is substantially consistent with Dow’s, although Heikenen adds two
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`details. First, according to Heikenen, he warned Dow that if allegations of infringement
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`persisted, H&S would file a declaratory judgment action, which would cause both parties to
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`spend a great deal on legal fees. Dkt. 103 (Heikenen Dep. 215:25-216:20). Second,
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`Heikenen says that at the end of the call, they agreed to call each other rather than spending
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`money on attorneys right away. Id. at 216:16-25. As Heikenen understood the conversation,
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`Dow said that he would call H&S before filing suit if an infringement issue arose. Id. at
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`215:21-25. (Dow did not recall these details, but on Oxbo’s motion for summary judgment,
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`the court views the facts in the light most favorable to H&S.)
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`Both Dow and Heikenen agree that during the call Dow said nothing—one way or the
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`other—about whether H&S infringed any Oxbo patent. Nor did Dow promise that Oxbo
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`would not sue H&S for patent infringement. Dkt. 176, ¶ 30. After the August 2011 phone
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`conversation, no one from Oxbo contacted H&S about patent infringement concerns before
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`Oxbo filed this suit in 2015.
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`2. Equitable estoppel
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`Both sides move for summary judgment on H&S’s equitable estoppel defense. To
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`prevail on this defense, H&S must adduce evidence showing that: (1) Oxbo, “through
`
`Oxbo International Corporation, Patent Owner
`Exhibit 2020
`H&S Manufacturing, Inc. v. Oxbo International Corporation
`IPR 2016-00950
`
`
`
`Case: 3:15-cv-00292-jdp Document #: 392 Filed: 05/23/17 Page 14 of 60
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`misleading conduct, led the alleged infringer to reasonably believe that the patentee did not
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`intend to enforce its patent against the infringer;” (2) H&S “relied on that conduct;” and
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`(3) as a result of that reliance, H&S “would be materially prejudiced if [Oxbo] were
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`permitted to proceed with its charge of infringement.” Aspex Eyewear Inc. v. Clariti Eyewear,
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`Inc., 605 F.3d 1305, 1310 (Fed. Cir. 2010). “Misleading ‘conduct’ may include specific
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`statements, action, inaction, or silence when there was an obligation to speak.” Id. The court
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`considers all evidence relevant to the equities. Id.
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`H&S contends that Dow’s August 2011 “assurances” followed by four years of silence
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`led H&S to reasonably believe that Oxbo would not enforce its patent rights against it. H&S
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`contends that Oxbo accused H&S of infringement, profusely apologized and promised that it
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`would not happen again, then allowed H&S to divert “the vast majority of its marketing and
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`engineering resources away from its core products to focus on” the Tri-Flex, and “flipped” on
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`H&S after it began experiencing success in the market. Dkt. 158, at 3. But H&S’s
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`characterization is not supported by the evidence.
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`We’ll start with the first part of the story, the purported accusation. H&S contends
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`that “there is no dispute that Oxbo accused the H&S Tri-Flex of patent infringement in
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`2011.” Id. at 7. But that is nowhere supported in the record. Dow, on behalf of Oxbo, did not
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`make any statements about whether H&S infringed. And the comments by Anderson, the
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`Oxbo salesperson (even if those could be established by some admissible evidence), cannot
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`constitute an accusation of infringement because, as Dow made clear to Heikenen, the
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`salesperson was not authorized to speak for Oxbo on such matters.
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`H&S also points to internal communications between Dow and Oxbo management,
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`including Oxbo’s CEO Gary Stitch, in which Dow indicated that the Tri-Flex was “very
`
`Oxbo International Corporation, Patent Owner
`Exhibit 2020
`H&S Manufacturing, Inc. v. Oxbo International Corporation
`IPR 2016-00950
`
`
`
`Case: 3:15-cv-00292-jdp Document #: 392 Filed: 05/23/17 Page 15 of 60
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`similar” to Oxbo’s models and that it may infringe the ’052 patent. H&S contends that this
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`conduct makes Dow’s August 2011 conduct “particularly misleading.” Id. at 8. H&S argues
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`that Oxbo’s refusal to tell H&S that it believed that it infringed—a point which cuts
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`decisively against H&S’s contention that Oxbo did accuse H&S of infringement—“certainly
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`gives rise to an inference that any claim against H&S was abandoned.” Id. at 9. But both
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`sides agree that Dow made no representations to Heikenen about whether Oxbo thought
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`H&S infringed Oxbo’s patents. And Heikenen was careful not to ask that question: Heikenen
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`did not believe that he would get an assurance of non-infringement, and he would be in a
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`“very difficult situation” if Dow had said that yes, H&S infringed. Dkt. 295 (Transcript of
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`hearing on Oxbo’s motion for sanctions, at 19:8-18). So contrary to H&S’s contention, Dow
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`offered no assurances that Oxbo would not enforce its rights. A fairer description of the call
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`would be that Heikenen hectored Dow into an apology with threat of litigation started by
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`H&S, and that both sides studiously avoided discussing Oxbo’s actual view of whether the
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`Tri-Flex infringed. The bottom line is that the call with Dow gave Heikenen no reason to
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`believe that Oxbo had decided not to enforce its patent rights against H&S.
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`Without a clear statement from Oxbo regarding infringement one way or another,
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`H&S cannot rely on the four years of silence to support its equitable estoppel defense. H&S
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`cites no case in which silence alone, unaccompanied by a clear statement of infringement, was
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`sufficient to establish an equitable estoppel defense. “[I]ntentionally misleading silence arises
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`when a patentee ‘threatened immediate or vigorous enforcement of its patent rights but then
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`did nothing for an unreasonably long time.’” Aspex, 605 F.3d at 1310 (quoting Meyers v. Asics
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`Corp., 974 F.2d 1304, 1309 (Fed. Cir. 1992)). Silence alone cannot give rise to estoppel. Id.
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`at 1311. In Aspex, the court determined that the patentee was equitably estopped from
`
`Oxbo International Corporation, Patent Owner
`Exhibit 2020
`H&S Manufacturing, Inc. v. Oxbo International Corporation
`IPR 2016-00950
`
`
`
`Case: 3:15-cv-00292-jdp Document #: 392 Filed: 05/23/17 Page 16 of 60
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`asserting infringement after: (1) the patentee threatened an infringement suit, (2) the accused
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`infringer responded that its products did not infringe, (3) the patentee did not say anything
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`in response, and (4) three years went by before the patentee filed suit. Id. at 1310. Those are
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`not the facts here.
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`So, at best, H&S might be able to show that Dow broke his promise to call Heikenen
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`before filing suit. But whether Dow actually made such a promise is not material, because the
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`promise is not specific enough to induce H&S’s reasonable reliance. Nothing in that promise
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`would have prevented Oxbo from suing when it did, so long as the suit was preceded by a
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`warning telephone call. H&S pressed on with the development and sales of the Tri-Flex
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`without any assurance that Oxbo would not sue for infringement, at a time of Oxbo’s own
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`choosing. Based on the undisputed material facts, H&S cannot establish misleading conduct
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`by Oxbo that gave rise to a reasonable belief that Oxbo would not enforce its patent rights.
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`Oxbo is entitled to summary judgment on H&S’s equitable estoppel defense.
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`3. Laches
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`H&S’s