Opinion
Case No. 4:17-cv-00273-SMR-SBJ
2023-03-16
G.W. LISK COMPANY, INC., Plaintiff, v. POWER PACKER NORTH AMERICA, INC. d/b/a Gits Manufacturing Company, Defendant.
Matthew David Callanan, Espnola F. Cartmill, Belin McCormick, P.C., Des Moines, IA, Candace M. Polster, Pro Hac Vice, Jason C. White, Pro Hac Vice, Nicholas A. Restauri, Pro Hac Vice, Morgan Lewis & Bockius LLP, Chicago, IL, Erika N.D. Stanat, Pro Hac Vice, Jessica Nicole Clemente, Pro Hac Vice, Harter Secrest & Emery LLP, Rochester, NY, Michael J. Berchou, Pro Hac Vice, Harter, Secrest & Emery LLP, Buffalo, NY, for Plaintiff. Jeffrey D. Harty, Allison Elizabeth Kerndt, Matthew A. McGuire, Nyemaster Goode PC, Des Moines, IA, Alan M. Fisch, Pro Hac Vice, Jeffrey M. Saltman, Pro Hac Vice, Joseph Edell, Pro Hac Vice, Lisa N. Phillips, Pro Hac Vice, R. William Sigler, Pro Hac Vice, Fisch Sigler LLP, Washington, DC, for Defendant.
Matthew David Callanan, Espnola F. Cartmill, Belin McCormick, P.C., Des Moines, IA, Candace M. Polster, Pro Hac Vice, Jason C. White, Pro Hac Vice, Nicholas A. Restauri, Pro Hac Vice, Morgan Lewis & Bockius LLP, Chicago, IL, Erika N.D. Stanat, Pro Hac Vice, Jessica Nicole Clemente, Pro Hac Vice, Harter Secrest & Emery LLP, Rochester, NY, Michael J. Berchou, Pro Hac Vice, Harter, Secrest & Emery LLP, Buffalo, NY, for Plaintiff. Jeffrey D. Harty, Allison Elizabeth Kerndt, Matthew A. McGuire, Nyemaster Goode PC, Des Moines, IA, Alan M. Fisch, Pro Hac Vice, Jeffrey M. Saltman, Pro Hac Vice, Joseph Edell, Pro Hac Vice, Lisa N. Phillips, Pro Hac Vice, R. William Sigler, Pro Hac Vice, Fisch Sigler LLP, Washington, DC, for Defendant. ORDER ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT STEPHANIE M. ROSE, CHIEF JUDGE
Plaintiff G.W. Lisk Company ("Lisk") brought this suit against Defendant Power Packer North America, Inc., which is doing business as Gits Manufacturing Company ("Gits"), alleging Defendant infringed on its patent. [ECF No. 1]. Plaintiff filed a Motion for Summary Judgment, seeking judgment on three of Defendant's affirmative defenses. [ECF No. 173]. For the reasons discussed below, Plaintiff's Motion for Summary Judgment is GRANTED.
I. BACKGROUND
A. Factual Background
The following facts are not disputed by the parties unless otherwise noted.
i. Daimler and Detroit Diesel Engagement
In 2002, Daimler issued a competitive bid seeking an "EGR valve on the Daimler Series 60 Engine." [ECF No. 199-3 at 11 (May 7, 2021 Revised Preliminary Disclosure of Asserted Claims and Infringement Contentions)]. It selected Gits and Lisk to jointly develop a control valve for Detroit Diesel Corporation ("Detroit Diesel"). Id. at 33 (Lisk Response to Interrogatory No. 8). Under this production model, Lisk developed a control valve that was part of the actuator for the desired engine. [ECF No. 199-3 at 45 (Tyler Depo.)]. This control valve was marked with the '821 patent number. Id. at 11. The Lisk valve was shipped to Gits, who used it to develop "the double acting actuator and the butterfly valve," i.e., the final product for the engine. Id. at 45.
In August 2003, Lisk Regional Sales Manager Tim Johnson emailed Gits employee Shawn Lange to clarify that the partnership should not be understood to "offer[ ] any rights to our patented Hydraulic EGR Technology to Gits." [ECF No. 176-2 at 152 (August 2003 Letter to Gits)]. After Gits did not respond, Johnson again emailed Lange to explain, "[w]e do want to protect our patent, however, we have always said we are interested in discussing any competitive opportunities that are available in the marketplace." Id. at 151 (October 23, 2003 Letter to Gits). Lisk asserted this exchange provided Gits with sufficient notice of the '821 patent. [ECF Nos. 176-1 at 5; 199-3 at 11; 33 (Lisk Answer to Interrogatory Number Seven)]. There is no evidence in the record that the parties discussed this specific matter after this date.
ii. First Caterpillar Engagement
On or about December 5, 2007, Caterpillar approached Lisk sales representative, Robert Ellis, to discover whether "Lisk could supply any EGR valves for Caterpillar's Tier 4 program." [ECF No. 199-3 at 21 (Lisk Response to Interrogatory Number Twenty-Two)]. Over the course of several weeks, Tyler submitted several initial concept designs and drawings to Caterpillar to spur discussion on specific needs. Id. at 42. Lisk staffers followed up with Caterpillar to express continued interest in collaboration on a "long route EGR" system. Id. at 73-74 (Lisk Emails to Caterpillar). They also identified Lisk held the patents on technology needed to create the valve. Id. Caterpillar did not respond to Lisk. [ECF Nos. 176-1 (Lisk Appendix); 199 at 9-10; 199-3 (Gits Appendix)]. Nor did it tell Lisk it selected Gits to produce the relevant products and valves. [ECF No. 199-3 at 44].
Holley Performance Products was responsible for supplying Caterpillar's valves, which contained an actuator and valve body, but was transitioning away from the technology at this time. [ECF No. 199-3 at 89-90 (Amanda Heisel Depo.)].
In 2009, Caterpillar approached Gits and solicited it to supply the needed valves. [ECF No. 199-3 at 86 (Lilly Depo.)]. The valves had been designed by Caterpillar and produced by Holley Products, which means Gits had "no design input whatsoever." Id. Despite this lack of input, Gits decided to take over the valve production and began transitioning into this role in late spring and early summer of 2009. Id. (noting that Gits had accepted the contract to create the valves but had not begun production as of July 8, 2009).
On June 2, 2009, Lisk's Vice President of Sales - William W. Keifer - sent a formal letter to the President of Gits Manufacturing at the time, Daryl Lilly. [ECF No. 176-2 at 154]. The letter stated, "Lisk owns a patent on hydraulic actuation of EGR" and requested that "Gits refrain from selling any hydraulically actuated EGR concepts without prior Lisk approval." Id. It spelled out that if Gits found a client, Lisk would be entitled to "take the lead role in the program and we would find a fair and reasonable way to provide consideration for the opportunity presented by Gits." Id. Lisk has consistently maintained that this letter provided Gits with sufficient pre-suit notice of potential infringement. [ECF No. 199-3 at 33].
Keifer forwarded the letter to Daryl Lilly two days later. [ECF Nos. 176-2 at 153 (June 4, 2022 Email Chain); 199-3 at 84 (Lilly Depo.)]. Lilly did not remember whether he received this letter given his receipt of hundreds of emails a day. Id. at 85. He claims that if he had received the letter, he would have discussed its contents with a technical leader pursuant to internal policy. Id. There is no evidence in the record that Gits responded to the letter or the parties revisited this letter on a later date.
iii. Second Caterpillar Engagement
The next interaction occurred many years later. In June 2015, Lisk employees visited a museum dedicated to Caterpillar products. [ECF No. 176-2 at 104 (June 19, 2015 - Tyler Email)]. Lisk staff noticed that a Tier 4 engine valve was on display in the museum and appeared to contain a "hydraulic actuator to operate a butterfly valve." Id. at 109-110 (Pictures). Lisk staff discovered a plaque explaining that the displayed valve was part of a product sold by Caterpillar Id. at 134. This discovery led Jeffrey Tyler to email other Lisk staff with copies of the relevant materials, as well as the instruction "[w]e may want to have our patent attorney look into this considering we have two patents that they are infringing on at least some of the patent claims." Id. at 104.
After additional investigation, Lisk sent a demand letter to James Buda, Chief Legal Officer of Caterpillar, on December 31, 2015. [ECF No. 176-2 at 122]. The letter identified Lisk as "the owner of US Patent 6,601,821." Id. It explained that Caterpillar appeared to use an "exhaust gas recirculation valve of concern." Id. The letter included a request for a "sample of the exhaust gas recirculation valve against which Lisk can perform a more comprehensive infringement analysis." It demanded a response by January 15, 2016. Id. at 123. No response was sent or received. Id.
On January 22, 2016, Lisk sent a demand letter to Daryl Lilly. [ECF No. 176-2 at 135]. It stated Lisk owned "US Patent 6,601,821" and "a Gits Manufacturing publication shows an exhaust gas recirculation valve for which the '821 patent appears to be relevant." Id. Like the letter sent to Caterpillar, the letter sent to Gits requested it send a representative sample for testing. Id. The reply deadline was February 12, 2016, but Gits never provided a response. Id. at 136.
On May 6, 2016, Lisk reached out to Actuant Corporation ("Actuant"), which is the parent company of Gits. [ECF Nos. 176-2 at 149 (July 15, 2016 Letter); 199-3 at 83]. Actuant responded on May 20, 2016, indicating it was investigating the concerns and would follow up by June 10, 2016. [ECF No. 176-2 at 149]. Lisk followed up on June 15, 2016 after receiving no response. Id. After more silence, Lisk filed suit and sent a copy of the complaint to Actuant. Id.
B. Procedural Background
On April 15, 2022, Plaintiff Lisk filed a Motion for Summary Judgment. [ECF Nos. 175; 176]. Lisk asks the Court to grant it summary judgment on three of Defendant Gits' affirmative defenses and a counterclaim. [ECF No. 176 at 5]. Specifically, it moves for summary judgment on Gits' "plea for a limitation on damages in view of the patent marking requirement, Gits' affirmative defense of equitable estoppel, and Gits' affirmative defense and counterclaims of patent invalidity under 35 U.S.C. §§ 102, 103." Id. at 5. Defendant partially resisted, clarifying that it would withdraw its marking and invalidity defenses, but maintaining the equitable estoppel defense. [ECF No. 199 at 22-23]. Plaintiff filed a reply. [ECF No. 203]. Based on these materials, the Motion is fully briefed and ready for review. For the reasons below, the Motion is GRANTED.
II. LEGAL STANDARD
The United States Court of Appeals for the Federal Circuit reviews a determination on equitable estoppel at the summary judgment stage in two steps. John Bean Techs. Corp. v. Morris & Assocs., Inc., 887 F.3d 1322, 1327 (Fed. Cir. 2018) (citing Scholle Corp. v. Blackhawk Molding Co., 133 F.3d 1469, 1471 (Fed. Cir. 1998)). First, it reviews de novo any finding of existence of genuine disputes of material fact, which is conducted using "the law of the regional circuit." Ferring B.V. v. Allergan, Inc., 980 F.3d 841, 850 (Fed. Cir. 2020) (citing Accenture Global Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1340 (Fed. Cir. 2013)). Second, it determines whether the district court abused its discretion in its substantive application of equitable estoppel. Radio Sys. Corp., v. Lalor, 709 F.3d 1124, 1130 (Fed. Cir. 2013) (citing A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 1028 (Fed. Cir. 1992) (en banc)).
A. Summary Judgment
"The basic inquiry is 'whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Diesel Mach., Inc., v. B.R. Lee Indus., Inc., 418 F.3d 820, 832 (8th Cir. 2005) (quotation omitted). "A dispute is genuine if the evidence is such that it could cause a reasonable jury to return a verdict for either party; a fact is material if its resolution affects the outcome of the case." Amini v. City of Minneapolis, 643 F.3d 1068, 1074 (8th Cir. 2011) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). The evidence is viewed "in the light most favorable to the nonmoving party" and all reasonable inferences that can be drawn from the record are construed in that party's favor. Pedersen v. Bio-Med. Applications of Minn., 775 F.3d 1049, 1053 (8th Cir. 2015) (citation omitted). "Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions." Anderson, 477 U.S. at 255, 106 S.Ct. 2505. To preclude entry of summary judgment, the non-movant must make a sufficient showing on every element for which it has the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
B. Equitable Estoppel
"The gravamen of estoppel . . . is misleading and consequent loss." Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. 663, 684, 134 S.Ct. 1962, 188 L.Ed.2d 979 (2014) (citation omitted) ("[d]elay may be involved but is not an element of the defense."). Three elements must be shown for equitable estoppel to limit a suit: "(1) the patentee, through misleading conduct (or silence), leads the alleged infringer to reasonably infer that the patentee does not intend to enforce its patent against the alleged infringer; (2) the alleged infringer relies on that conduct; and (3) the alleged infringer will be materially prejudiced if the patentee is allowed to proceed with its claim." High Point SARL v. Sprint Nextel Corp., 817 F.3d 1325, 1330 (Fed. Cir. 2016) (quoting Radio Sys., 709 F.3d at 1130). "[A] party advancing an estoppel defense must prove each of the elements." ABB Robotics, Inc. v. GMFanuc Robotics Corp., 52 F.3d 1062, 1064 (Fed. Cir. 1995) (citation omitted). "[T]he court must consider all evidence relevant to the equities." Aspex Eyewear Inc. v. Clariti Eyewear, Inc., 605 F.3d 1305, 1310 (Fed. Cir. 2010) (citation omitted).
III. ANALYSIS
A. Misleading Conduct or Silence
Lisk maintains there was no evidence its conduct "could have reasonably led Gits to infer that Lisk did not intend to enforce its patent against Gits" because the communications related to other products. [ECF No. 176 at 12]. Gits responds the communications as well as the "historical relationship between the parties" show it was reasonable it to conclude that Lisk would not enforce its patent. [ECF No. 199 at 19]. As discussed below, a jury could conclude that Lisk's conduct reasonably led Gits to believe that the '821 patent would not be enforced.
i. Governing Law
"Misleading 'conduct' may include specific statements, action, inaction, or silence when there was an obligation to speak." Aspex Eyewear, 605 F.3d at 1310 (quotation omitted). The inquiry is whether the patentee's "course of conduct reasonably gave rise to an inference" it would not enforce the patent. Aukerman, 960 F.2d at 1043; Radio Sys., 709 F.3d at 1130. The element may be met if the patent owner sent an alleged infringer a demand letter followed by "silence for over four and a half years." Radio Sys., 709 F.3d at 1130. This element can be shown by providing a party's prior accusation of a product "followed by its silence" upon being presented with a similar product. Scholle, 133 F.3d at 1472. "[A]ttempts to negotiate licenses . . . followed by a period of silence does not, in itself, constitute the necessary misleading conduct." Meyers v. Asics Corp., 974 F.2d 1304, 1308 (Fed. Cir. 1992).
Silence alone is insufficient because it "must be accompanied by some other factor which indicates that the silence was sufficiently misleading as to amount to bad faith." Hemstreet v. Comput. Entry Sys. Corp., 972 F.2d 1290, 1295 (Fed. Cir. 1992) (citation omitted) (emphasis in original). Knowledge of infringement and silence in enforcing the patent can bar future suits. High Point, 817 F.3d at 1331. If a patentee "threatened immediate or vigorous enforcement of its patent rights" and said nothing after an extended period, the suit may be barred under equitable estoppel. Aspex Eyewear, 605 F.3d at 1310 (quoting Meyers v. Brooks Shoe, Inc., 912 F.2d 1459, 1464 (Fed. Cir. 1990)).
ii. Impact of the Detroit Diesel Engagement
In 2003, Gits and Lisk both bid to produce a hydraulic control valve for Detroit Diesel. [ECF No. 199-3 at 33]. This bidding process led Detroit Diesel to assign creation of an actuator and control valve to Lisk, who then sent the items to Gits to develop into a final product. Id. at 45. During their relationship, Lisk provided a letter explaining that it never "offered any rights to our patented Hydraulic EGR Technology to Gits." [ECF No. 176-2 at 152 (August 2003 Letter to Gits)]. Gits did not respond. A jury could fairly draw inferences in favor of either party using this identified evidence.
In favor of Lisk, the email states, "[w]e are also open to discuss other possible opportunities that may be present in the market place." [ECF No. 176-2 at 152]. It further explains, "this does not imply we have offered any rights to our patented Hydraulic EGR technology to Gits Mfg." Id. The language of the email, when taken with Lisk's participation in a manufacturing process where Lisk kept its product separate from Gits' product, makes clear that Lisk did not approve of Gits using its patented technology. Id. The absolute silence after this email can be read as Lisk not following up because it believed it to be unnecessary. Id. In other words, one could find there was no misleading conduct during the Detroit Diesel engagement.
In favor of Gits, the parties engaged in a competitive bidding process to create a hydraulic actuator covered by the '821 patent. [ECF No. 199-3 at 33]. This required detailed collaboration between the two parties on actuators and valves, as well as the exchange of information. Id. These facts, when taken alongside Gits receiving this email during this parties' collaboration, would allow someone to conclude Lisk at least suspected, if not outright knew, Gits was infringing on its patent. The absence of follow up from Lisk after this initial contact could lead Gits to believe Lisk would not necessarily enforce its patent. In other words, a jury could conclude there might have been misleading conduct during and after the Detroit Diesel engagement.
iii. Impact of Caterpillar Engagement
In 2007, Caterpillar approached Lisk to ask whether "Lisk could supply any EGR valves for Caterpillar's Tier 4 program." [ECF No. 199-3 at 21]. Tyler submitted several concept designs and drawings to Caterpillar but received no response. Id. at 42. In 2009, Caterpillar approached Gits and asked it to supply the valves. Id. at 86. Gits decided to take over valve production and began the transition into this role in summer 2009. Id. During this time, Keifer sent a formal letter to Lilly explaining that "Lisk owns a patent on hydraulic actuation of EGR" and requested that "Gits refrain from selling any hydraulically actuated EGR concepts without prior Lisk approval." [ECF No. 176-2 at 154]. The engagement with Caterpillar provides a jury some facts from which it could fairly draw inferences in favor of either party.
For Lisk, it could find the letter was an invitation to negotiate based on its language that "[w]e will be continuing to discuss active programs with Gits" rather than traditional cease-and-desist language. [ECF No. 176-2 at 154]. The conclusion that the letter is an invitation to negotiate instead of a threat to sue is supported by evidence showing Gits did not maintain a litigation hold of relevant documents after receipt of this letter. [ECF No. 199-3 at 97 (Peters Depo.)]. Beyond this information, there is testimony that Lisk might have been unaware of Gits' engagement with Caterpillar, which would mean the letter was not intended to cover Gits' production of the Caterpillar products. [ECF Nos. 176-2 at 176 (Heisel Depo.) (stating "I don't even know who they are" in reference to Lisk); 199-3 at 44]. Based on these facts, a jury could find this letter was a generic invitation to negotiate and did not provide Gits a reasonable basis to believe Lisk would not enforce the '821 patent. Meyers, 974 F.2d at 1308.
A jury could find in favor of Gits as well. The letter Lisk sent to Gits states, "Lisk owns a patent on hydraulic actuation of EGR. We formally request that Gits refrain from selling any hydraulically actuated EGR concepts without prior Lisk approval." [ECF No. 176-2 at 154]. The actuation language, when considered in the context of the previous Detroit Diesel engagement, could be understood to refer to the same patent and style of products. Id. The phrase "refrain from selling any . . . concepts" can plainly interpreted as a demand to cease making sales. Id. Gits' receipt of this letter during its decision-making on whether to produce valves for Caterpillar could give rise to a belief that the letter referred to these valves it planned to sell. The letter, combined with the passage of six years before the parties' communicated on this matter again, could give rise to an inference Gits believed it could use the patent or that the patent would not be enforced by Lisk. High Point, 817 F.3d at 1331; Scholle, 133 F.3d at 1472; Radio Sys., 709 F.3d at 1130.
iv. Conclusion
The evidence shows Lisk worked with Gits and provided two separate instances of notice about the '821 patent, only to not follow up for several years each time. When taking the evidence in the light most favorable to Gits, there is a possibility that this conduct reasonably led it to believe the '821 patent would not be enforced. Thus, this element is sufficient to submit to a jury.
B. Reliance on Conduct
Lisk claims that "Gits has not identified any evidence that Gits relied on any of Lisk's conduct" in a manner that would make equitable estoppel appropriate. [ECF No. 176 at 16]. Gits asserts it would not have sought out Caterpillar's business if it knew there was a chance it could or would be sued. [ECF No. 199 at 20]. As discussed in more detail below, there is no evidence suggesting that Gits relied on the communications from Lisk when deciding whether to accept the Caterpillar contract. Thus, this element only supports a finding in favor of Lisk.
The second element of equitable estoppel is reliance on the misleading conduct. Mabus v. Gen. Dynamics C4 Sys., Inc., 633 F.3d 1356, 1360 (Fed. Cir. 2011). To meet this element, the infringer "must show that, in fact, it substantially relied on the misleading conduct of the patentee in connection with taking some actions." Aukerman, 960 F.2d at 1042-43 (noting a relationship between the parties or communication that "lulls the infringer into a sense of security in going ahead with [their conduct]" is sufficient); Gasser Chair Co., Inc. v. Infanti Mfg. Corp., 60 F.3d 770, 779 (Fed. Cir. 1995) (same). This element does not require an infringer to "prove precisely what alternative paths it would have taken, or that every . . . decision was based on reliance on [the patentee's] silence." Aspex Eyewear, 605 F.3d at 1312. It is sufficient for the infringer to consider the patentee's silence as approval of their conduct or change conduct because of this understanding of the situation. Id.
The record shows Gits had no knowledge of the letters sent by Lisk. During his deposition, Daryl Lilly explained that he actively used the addresses to which Lisk sent its emails and letters. [ECF No. 199-3 at 84]. When asked whether he received the repeated communications from Lisk, he states, "I don't specifically remember the communication, no." Id. Lilly described the reason that he did not receive or recognize this email, which was because he "received tens of thousands of emails and the business . . . here was a minute drop in the bucket." Id. at 85. In addition, Lilly averred that if he had received this email, he would have reached out to the "head technical person at the time in the company" but that this did not happen. Id.
Despite this testimony, Gits insists that its reliance on the letter can be shown through a decision to work with Caterpillar. [ECF No. 199 at 20]. It explains it would not have worked with Caterpillar "if it believed that Lisk would assert infringement claims six years later." Id. Gits does not provide any information that it received the letter, had internal discussions about the letter in the context of the Caterpillar contract, or alternatives it considered to Caterpillar because of the letter. Id. Without this evidence, it has "conclusory assertions" that are insufficient to carry its burden of showing substantial reliance on Lisk's conduct. Meyers, 974 F.2d at 1309 (reversing a grant of summary judgment on equitable estoppel because there was no evidence of reliance); Hemstreet, 972 F.2d at 1294-95 (discussing the "total absence in the record of any showing by [infringer] that its activities were in reliance" on the patentee's actions) (emphasis in original); High Point, 817 F.3d at 1331 (affirming a grant of summary judgment because of "unrebutted deposition testimony . . . indicating that Sprint had several options when building its network and that Sprint would have acted differently if the threat of litigation was a possibility").
In short, there is no genuine dispute of material fact on the reliance element because the record shows Gits was entirely unaware of the letter and did not consider it in its actions. Summary judgment for Lisk is appropriate on this element. Aspex Eyewear, 605 F.3d at 1312 (infringer must show it "took into account" the misleading conduct to survive summary judgment).
C. Prejudice
Lisk contends Gits cannot show that prejudice occurred based on Lisk's conduct. [ECF No. 176 at 16]. Gits responds it suffered both evidentiary and material prejudice because of Lisk's conduct. [ECF No. 199 at 21]. As discussed below, Gits has not provided sufficient evidence suggesting that it suffered economic or material prejudice because of the actions taken by Lisk.
Prejudice for the purposes of equitable estoppel "may be a change of economic position or loss of evidence." Aukerman, 960 F.2d at 1043 (citing Advanced Hydraulics, Inc. v. Otis Elevator Co., 525 F.2d 477, 482 (7th Cir. 1975)). "Economic prejudice means 'a change in the [defendant's] economic position . . . during the period of delay that would not have occurred had [plaintiff] sued earlier." Repros Therapeutics, Inc. v. Fisch, No. H-13-2266, 2014 WL 12600160, at *10 (S.D. Tex. Dec. 23, 2014) (quoting Ecolab, Inc. v. Envirochem, Inc., 264 F.3d 1358, 1371-72 (Fed. Cir. 2001)). Business decisions "to capitalize on a market opportunity" are not economic prejudice. Ardisam, Inc. v. Ameristep, Inc., 302 F. Supp. 2d 991, 998 (W.D. Wis. 2004) (quoting Ecolab, 264 F.3d at 1372). Fading of witness memories and failure to issue a litigation hold, which would have preserved materials, are sufficient to show evidentiary prejudice. Magna Mirrors of Am. v. 3M Co., No. 07-10688, 2013 WL 2940916, at *11 (E.D. Mich. June 14, 2013). Prejudice requires an infringer prove their actions "were in [some] way related to actions taken by the patentee." ABB Robotics, 52 F.3d at 1065.
Beginning with economic prejudice, Gits maintains it suffered prejudice because it "took over manufacture of the accused valve from Holley [ ] in 2009." [ECF No. 199 at 21]. There is no affirmative evidence, either in the form of communications between Caterpillar and Gits or Gits' internal materials, to support a finding this decision was "related to actions taken by the patentee." See ABB Robotics, 52 F.3d at 1065. To the extent non-conclusory evidence exists on this matter, it suggests Caterpillar and Gits were entirely unaware of Lisk and the letter sent in June 2009, respectively. [ECF Nos. 176-2 at 176 (Heisel Depo.); 199-3 at 84]. The only conclusion that can be reached with this evidence is Caterpillar and Gits were unaware of this patent and they entered a contract independent of this dispute. [ECF No. 199-3 at 86]. This is not economic prejudice, but rather a business decision to capitalize on a market opportunity. Ecolab, 264 F.3d at 1372 (economic decisions that are merely business decisions "to capitalize on a market opportunity" are not economic prejudice.).
The Court rejects Gits' second economic prejudice contention that Lisk waited for damages to accumulate because it lacks evidence to support the allegation.
On evidentiary prejudice, Gits asserts it suffered because it did not maintain the relevant files and the memories of witnesses faded. [ECF No. 199 at 21]. The evidence shows Gits had a standard two-year document retention policy in the absence of a litigation hold. [ECF No. 199-3 at 97]. This means that documents related to the infringement dispute, which Gits could have presumably used to defend itself, were destroyed many years ago. Id. It is also undisputed the memories of witnesses have faded. Id. at 84-85 (discussion on the difficulty of Lilly remembering whether the letter was received by Gits).
While certainly unfortunate, there is no evidence linking these problems to Lisk's conduct. This is because, as the Court has repeatedly noted, Gits' evidence shows it was entirely unaware of the letter, which makes it difficult, if not impossible, to draw an inference in its favor. Without any evidence that would suggest Lisk's conduct is the cause of this prejudice rather than anything else, the Court cannot find there is sufficient dispute to submit the issue to a jury. The materials show that evidentiary prejudice exists and there is nothing besides speculation to suggest it is the result of Lisk's conduct.
D. Summary
As discussed above, the evidence provides a sufficient basis for a jury to return a verdict for each party on the first element. The evidence leaves no dispute on whether Gits substantially relied on Lisk's conduct or suffered prejudice because of said conduct.
IV. CONCLUSION
For the reasons discussed above, the Motion for Summary Judgment is GRANTED.
IT IS SO ORDERED.