Innovative Memory Sys. v. Micron Tech.

INNOVATIVE MEMORY SYSTEMS, INC., Plaintiff, v. MICRON TECHNOLOGY, INC., Defendant.

C. A. No. 14-1480-RGA

United States District Court, D. Delaware

September 29, 2022

REPORT AND RECOMMENDATION AND ORDER

THE HONORABLE JENNIFER L. HALL UNITED STATES MAGISTRATE JUDGE

Plaintiff Innovative Memory Systems, Inc. (“IMS”) alleges that certain flash memory products sold by Defendant Micron Technology, Inc. (“Micron”) infringe IMS's U.S. Patent Nos. 7,000,063 (“'063 patent”) and 6,901,498 (“'498 patent”). Trial is currently scheduled for November 14, 2022.

Pending before the Court are three motions raising a total of eight distinct disputes: (1) IMS seeks partial summary judgment that IPR estoppel prevents Micron from relying on a particular piece of prior art (D.I. 291); (2) Micron seeks summary judgment that (a) the asserted claims of the '063 patent are invalid under 35 U.S.C. § 101, (b) that the asserted claims of the '063 patent are either not infringed or invalid, (c) that the asserted claims of the '498 patent are not infringed, (d) that IMS is not entitled to pre-suit damages for infringement of the '498 patent, (e) that IMS is not entitled to damages for all worldwide sales of Micron's products, and (f) that Micron cannot be held liable for the infringing acts of its subsidiaries (D.I. 288); and (3) Micron seeks to exclude certain testimony from IMS's damages experts (D.I. 285). I heard oral argument on all pending motions on August 16, 2022. (“Tr. .”)

As explained below, I recommend that (1) IMS's motion for partial summary judgment (D.I. 291) be GRANTED and (2) Micron's motion for summary judgment (D.I. 288) be GRANTED-IN-PART and DENIED-IN-PART. I also order that Micron's motion to exclude (D.I. 285) is GRANTED.

I. LEGAL STANDARDS

A. Summary Judgment

A party may move for summary judgment under Federal Rule of Civil Procedure 56. Summary judgment must be granted where “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 burden is on the movant to demonstrate the absence of a genuine issue of material fact. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 585-86 (1986).

“An assertion that a fact cannot be-or, alternatively, is-genuinely disputed must be supported either by ‘citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials,' or by ‘showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.'” Resop v. Deallie, No. 15-626-LPS, 2017 WL 3586863, at *2 (D. Del. Aug. 18, 2017) (quoting Fed.R.Civ.P. 56(c)(1)(A) & (B)). A factual dispute is only genuine if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The Court must “draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence.” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000).

B. Daubert

In Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 597 (1993), the Supreme Court held that Federal Rule of Evidence 702 creates “a gatekeeping role for the [trial] judge” in order to “ensur[e] that an expert's testimony both rests on a reliable foundation and is relevant to the task at hand.” Rule 702 provides:

A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if: (a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case.

Fed. R. Evid. 702. As the Third Circuit has explained,

Rule 702 embodies a trilogy of restrictions on expert testimony: qualification, reliability and fit. Qualification refers to the requirement that the witness possess specialized expertise. We have interpreted this requirement liberally, holding that “a broad range of knowledge, skills, and training qualify an expert.” Secondly, the testimony must be reliable; it “must be based on the ‘methods and procedures of science' rather than on ‘subjective belief or unsupported speculation'; the expert must have ‘good grounds' for his o[r] her belief. In sum, Daubert holds that an inquiry into the reliability of scientific evidence under Rule 702 requires a determination as to its scientific validity.” Finally, Rule 702 requires that the expert testimony must fit the issues in the case. In other words, the expert's testimony must be relevant for the purposes of the case and must assist the trier of fact. The Supreme Court explained in Daubert that “Rule 702's ‘helpfulness' standard requires a valid scientific connection to the pertinent inquiry as a precondition to admissibility.”

By means of a so-called “Daubert hearing,” the court acts as a gatekeeper, preventing opinion testimony that does not meet the requirements of qualification, reliability and fit from reaching the jury.

Schneider ex rel. Estate of Schneider v. Fried, 320 F.3d 396, 404-05 (3d Cir. 2003) (footnote and internal citations omitted).^[1]

Rule 702 “has a liberal policy of admissibility,” Pineda v. Ford Motor Co., 520 F.3d 237, 243 (3d Cir. 2008), as “the question of whether the expert is credible or the opinion is correct is generally a question for the fact finder, not the court,” Summit 6, LLC v. Samsung Elecs. Co., Ltd., 802 F.3d 1283, 1296 (Fed. Cir. 2015). “Vigorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence.” Daubert, 509 U.S. at 596.

II. RECOMMENDATIONS ON THE PARTIES' SUMMARY JUDGMENT MOTIONS

A. IPR Estoppel

I will first assess IMS's motion for partial summary judgment. IMS contends that Micron is estopped under 35 U.S.C. § 315 from relying on U.S. Patent No. 5,235,585 (“Bish”) as prior art against the '498 patent. I agree.

Section 315(e) governs inter partes review (IPR) estoppel, which prevents IPR petitioners from raising arguments in federal court that reasonably could have been raised during the IPR. The statute provides, in pertinent part:

(e) Estoppel.- . . . (2) Civil actions and other proceedings.-The petitioner in an inter partes review of a claim in a patent . . . that results in a final written decision . . . may not assert . . . in a civil action . . . that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.

35 U.S.C. § 315(e)(2).

Micron was the petitioner in an IPR involving the '498 patent, but it did not raise Bish in the IPR. The Patent Trial and Appeal Board (PTAB) initially invalidated the claims that are currently asserted in this action, but the Federal Circuit vacated that portion of the PTAB's decision because its claim construction was erroneous. Innovative Memory Sys., Inc. v. Micron Tech., Inc., 781 Fed.Appx. 1013, 1018 (Fed. Cir. 2019). On remand, the PTAB found the currently asserted claims patentable. Micron Tech., Inc. v. Innovative Memory Sys., Inc., No. IPR2016-00330, 2020 WL 1581565 (P.T.A.B. Apr. 1, 2020). Micron did not appeal the PTAB's decision.

Micron now wants to make an obviousness argument in this Court that relies on Bish. IMS says that Micron is estopped under § 315(e)(2) from relying on Bish because Micron could have raised that reference in the IPR. Micron says that it did not previously know about Bish and that a skilled searcher could not have found it prior to the IPR. The parties agree that IMS (as the patentee asserting estoppel) has the burden of establishing that the requirements of § 315(e)(2) have been met.

IPR estoppel clearly extends at least to arguments about references that the IPR petitioner knew about when it filed its petition, even if the petition did not rely on those references. Cal. Inst. of Tech. v. Broadcom Ltd., 25 F.4th 976, 991 (Fed. Cir. 2022). But I am not aware of, and the parties did not cite, any clear guidance from the Federal Circuit about how to determine whether an IPR petitioner “reasonably could have raised” an argument about a reference that the petitioner now claims it didn't know about at the time of the IPR. Several courts, including courts in this district, have said that an IPR petitioner reasonably could have raised a particular piece of prior art where “a skilled searcher conducting a diligent search” would have found it. TrustID, Inc. v. Next Caller Inc., No. 18-172-MN, 2021 WL 3015280, at *1 (D. Del. July 6, 2021); f'real Foods, LLC v. Hamilton Beach Brands, Inc., No. 16-41-CFC, 2019 WL 1558486, at *1 (D. Del. Apr. 10, 2019); Parallel Networks Licensing, LLC v. IBM Corp., No. 13-2072-KAJ, 2017 WL 1045912, at *11 (D. Del. Feb. 22, 2017), aff'd, 721 Fed.Appx. 994 (Fed. Cir. 2018) (affirming under Fed. Cir. R. 36); see also Apotex Inc. v. Wyeth LLC, No. IPR2015-00873, 2015 WL 5523393, at *4 (P.T.A.B. Sept. 16, 2015) (“What a petitioner ‘could have raised' was broadly described in the legislative history of the America Invents Act (‘AIA') to include prior art which a skilled searcher conducting a diligent search reasonably could have been expected to discover.” (quoting ...