Cobalt Boats, LLC v. Sea Ray Boats, Inc.

COBALT BOATS, LLC, Plaintiff, v. SEA RAY BOATS, INC. & BRUNSWICK CORP., Defendants.

Civil Action No. 2:15cv21

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Norfolk Division

December 11, 2018

OPINION & ORDER

This matter comes before the Court on Cobalt Boats, LLC's ("Plaintiff's" or "Cobalt's") Motion to Show Cause Why Brunswick Corporation Should Not be Held in Contempt of the Court's Permanent Injunction (the "Motion"). Doc. 427. A hearing for this matter took place on November 29, 2018. For the reasons stated below, the Court DENIES Plaintiff's Motion.

I. BACKGROUND

On June 21, 2017, a jury returned a verdict finding that the swim steps on Brunswick's boats (the "Litigated Design") infringed claims 4 and 5 of Cobalt Boats' '880 Patent. Doc. 338.¹ The jury found that Brunswick the Litigated Design infringed claim 4 of the '880 Patent both literally and under the doctrine of equivalents, and that Defendant had infringed 5 of Plaintiff's '880 Patent under the doctrine of equivalents only. Id. Claim 5 is an independent claim and Claim 4 depends on Claim 1 of the '880 patent. Claims 1, 4, and 5 are reproduced below:

• Claim 1: A retractable step for use with a boat in water comprising: a base having a recess; a pair of stationary arms, each of said arms coupled with said base; a pair of moveable arms, each of said moveable arms coupled with one of said stationary arms; a step having a top side and an underside, said step coupled with said moveable arms and capable of being rotated 180° between a stored position within said recess, wherein said underside is exposed, and a deployed position below the water surface, wherein said top side is exposed; and a spring biased locking mechanism configured to hold at least one of said moveable arms in a stationary position when said platform is in said deployed position and releasable to accommodate movement of said platform to said stored position.

• Claim 4: The retractable step of claim 1, wherein said step comprises a material characterized in that it is less dense than water.

• Claim 5: A deployable swim step for use with a boat in water comprising: a step having a top side and an underside; means for coupling said step with the boat, said coupling means configured to permit rotation of said step 180° from a stored positionabove the water surface, wherein said underside is exposed, and a deployed positionbelow the water surface, wherein said top side is exposed; and means for locking said coupling means in a stationary position when said step is in said deployed position, said locking means further configured to accommodate movement of said step to said stored position.

On July 21, 2018, Plaintiff moved for entry of a permanent injunction to enjoin Defendant from, in relevant part, "[m]aking, selling or offering for sale within the United States" the swim steps that were found to infringe the '880 patent, as well as any swim steps that amounted to "no more than a colorable variation" of those swim steps. Doc. 366 at 1-2. On July 31, 2017, Defendant e-mailed Plaintiff and advised that it was re-designing the swim step (the "Redesign"). Doc. 428-3. Defendant's e-mail attached drawings of the re-designed hinge assemblies and asked for Plaintiff to evaluate the Redesign "vis a vis the '880 Patent." Id. Plaintiff responded on August 2, 2017 and indicated that it would like to see a "3-D model or more comprehensive drawings" and asked to see a "working prototype/sample of hinge assemblies incorporated into a swim step for inspection." Id. Defendant replied on August 9, 2017 and advised that it would provide "additional drawings shortly" and that "a full platform would take additional time" but that it would contact Plaintiff as soon as it could. Id. Defendant also answered other questions about the redesign that were raised in Plaintiff's e-mail. See Doc. 428-3. On October 26, 2017, after obtaining an opinion from an independent counsel that Redesign did not infringe, Defendant sent a physical sample of the Redesign to Plaintiff. Doc. 434 at 9.

On October 31, 2017, the Court entered an Order GRANTING Plaintiff's Motion for entry of a Permanent Injunction, and specifically enjoined Defendant, "including its officers, directors, employees, agents, and anyone acting in concert or in privity with Brunswick" from:

"[m]aking, selling or offering for sale within the United States [A] any boats that have the swim step found by the jury to infringe the '880 Patent . . . [B] any boats that have a swim step used on Brunswick's Sea Ray 220 and 240 Sundeck models sold before March 2017 . . . [C] any boats that have a swim step that has a detent locking mechanism included in the hinge mechanism, regardless of the configuration of the detent locking mechanism or material used to create the locking mechanism . . . [D] any boats that have a swim step that is no more than a merely colorable variation of the swim step enjoined in Paragraphs A-C, above."

Doc. 412 at 25, 26.

The Court further ordered the parties to "meet and confer" prior to either party pursuing a remedy for contempt, and ordered that:

If Brunswick, after the Effective Date, intends to make or sell or offer for sale any re-designed swim step, Brunswick must, prior to its market introduction, provide Cobalt with sufficient information about the new swim step design to allow Cobalt to determine whether it believes such new swim step design infringes the '880 Patent. If the parties cannot agree that the proffered swim step design is not an infringement of claim 4 or claim 5 of the '880 Patent, then the traditional burden to prove contempt of this Order shall remain on Cobalt. If Brunswick does not comply with the obligation to "meet and confer" or does not provide Cobalt sufficient information regarding any re-designed swim step for Cobalt to evaluate it for infringement of claim 4 or claim 5 of the '880 Patent, the burden to show that the redesigned swim step is not an infringement shall be on Brunswick in any motion for contempt by Cobalt, although Cobalt shall have the ultimate burden of persuasion on all other aspects of its motion for contempt.

Doc. 412 at 27 (emphasis added).² Prior to the Court's Permanent Injunction Order, Defendant had already introduced the boats containing the Redesign into the market for sale, and Defendant continued to do so after the Court entered the Order. Doc. 434 at 10. Between December 8, 2017 and March 13, 2018, the parties engaged in several communications to coordinate further inspection of Defendant's Redesign. See Docs 428-3, 428-4, 428-5. On March 20, 2018 and April 11, 2018, Defendant arranged for Plaintiff's Counsel and its expert, Mr. Dyer, to inspect boats both in and out of the water. Doc. 428-1.

II. PROCEDURAL HISTORY

On May 11, 2018, Cobalt filed the instant Motion and a Joint Motion for Discovery and Agreed Briefing Schedule. Docs. 427, 429. Pursuant to the Agreed briefing schedule, Defendant filed its response in opposition on July 27, 2018. Doc. 434. On August 24, 2018, Plaintiff filed its reply. On September 27, 2018, Defendant filed a Motion for Leave to file a Sur-Reply. Doc. 444. Plaintiff opposed Defendant's Motion for Leave to file a sur-reply on October 8, 2018. Doc. 445. Defendant replied on October 15, 2018. On November 14, 2018, the Court GRANTED Defendant's Motion for Leave to File Sur-Reply and ORDERED Plaintiff to file its Sur-Surreply, if any, on or before November 27, 2018. Doc. 447. On November 15, 2018, Defendant filed its sur-reply. Doc. 449. On November 27, 2018, Plaintiff filed its sur-surreply. Doc. 454. Plaintiff's Motion to Show Cause is now ripe for review.

III. LEGAL STANDARD

The Court has broad discretion to hold contempt proceedings. Tivo Inc. v. Echostar Corp., 646 F.3d 869, 881 (Fed. Cir. 2011). However, contempt "is a severe remedy, and should not be resorted to where there is a fair ground of doubt as to the wrongfulness of the defendant's conduct." Id. at 881-882. To show that a party is in contempt of an injunction, "the party seeking to enforce the injunction must prove both that the newly accused product is not more than colorably different from the product found to infringe and that the newly accused product actually infringes." Id. at 882.

Whether a newly accused product is "colorably different" from the product found to infringe is an exclusive step and differs from the inquiry of whether the product infringes. See Id. The "colorably different" step focuses on the "differences between the features relied upon to establish infringement and the modified features of the newly accused products" and asks whether any modified features amount to "significant" modifications. Id. In doing so, the court asks, "whether the newly accused product is so different from the product previously found to infringe that it raises 'a fair ground of doubt as to the wrongfulness of the defendant's conduct.'" Id. In examining whether two products are "colorably different", "[t]he analysis must focus . . . on those aspects of the accused product that were previously alleged to be, and were a basis for, the prior finding of infringement, and the modified features of the newly accused product." Id; see also Ncube Corp. v. SeaChange Intern. Inc., 732 F.3d 1346, 1351 (Fed. Cir. 2013) ("[T]he colorable-differences standard focuses on how the patentee in fact proved infringement, not what the claims require.").

If the new product is more than colorably different from than the product accused product that was previously alleged to infringe, then the Court need not inquire into whether the newly accused product infringes, and contempt is not appropriate. Id. However, "when a court concludes that there are no more than colorable differences between the adjudged infringing product and modified product, a finding that the newly accused product continues to infringe the relevant claims is additionally essential for a violation of an injunction against...