William W. Caldwell

MEMORANDUM

I. Introduction

Presently before the court is a motion for partial summary judgment (Doc. 668), filed by Defendants First Quality Baby Products, LLC, First Quality Products, Inc., First Quality Retail Services, LLC, and First Quality Hygienic, Inc. (collectively "FQ"). FQ seeks summary judgment that FQ has not willfully infringed the Kellenberger Patent, the Melius Patent, or the Ungpiyakul Patent. Plaintiff Kimberly-Clark Worldwide, Inc. ("KC") opposes this motion (see Doc. 704). The parties have briefed the issues, and the motion is now ripe for our review. For the reasons set forth below, we will deny the motion.

II. Background

In February 2009, FQ filed a complaint in this court for a declaratory judgment of invalidity and non-infringement of the Kuepper Patent. We dismissed FQ's complaint for lack of subject matter jurisdiction. Prior to our dismissal, however, KC filed this patent infringement action in the U.S. District Court for the Northern District of Texas, and this action was then transferred from Texas to this court. Among other claims in this action, KC seeks enhanced damages for willful infringement of the Kellenberger, Melius, and Ungpiyakul Patents. In the pending motion, FQ argues that KC cannot prevail on its willful infringement claim and that summary judgment on this claim should be granted in favor of FQ.

III. Legal Standard

Rule 56(a) provides that summary judgment should be granted "if the movant shows that 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). We will examine the motion under the well-established standard. See, e.g., Meditz v. City of Newark, 658 F.3d 364, 369 (3d. Cir. 2011). "Once the moving party points to evidence demonstrating no issue of material fact exists, the non-moving party has the duty to set forth specific facts showing that a genuine issue of material fact exists and that a reasonable factfinder could rule in its favor." Id. (quoting Azur v. Chase Bank, USA, Nat'l Ass'n, 601 F.3d 212, 216 (3d Cir. 2010)). The court must credit the nonmovant's evidence and draw "all justifiable inferences" in its favor. Id.

A patentee raising a claim of willful infringement first bears the burden of showing "clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent." In re Seagate Tech., 497 F.3d 1360, 1371 (Fed. Cir. 2007) (en banc). If the patentee is able to satisfy this threshold burden of showing objective recklessness, it then must establish subjective recklessness. Specifically, it must show that the "objectively-defined risk [. . .] was either known or so obvious that it should have been known" to the party accused of willful infringement. Id.

IV. Discussion

FQ argues that it is entitled to summary judgment on the issue of willful infringement because KC cannot possibly satisfy its burden of demonstrating willful infringement by clear and convincing evidence. FQ primarily focuses on KC's inability to show objective recklessness, but in the alternative, FQ contends that KC is also unable to satisfy the subjective prong of the willful infringement test. Because the objective prong of the test is a threshold issue, we will begin by analyzing objective recklessness.

FQ notes that the standard for objective recklessness is "identical" to the standard for awarding attorneys' fees for baseless litigation, known as "objective baselessness[.]" iLOR, LLC v. Google, Inc., 631 F.3d 1372, 1377 (Fed. Cir. 2011). FQ insists that KC cannot meet this standard because it cannot prove that FQ's non-infringement defenses are objectively baseless. FQ maintains that its defenses, even if ultimately unsuccessful, were reasonable. The Federal Circuit has noted that "where an accused infringer relies on a reasonable defense to a charge of infringement[,]" the objective recklessness prong is typically not satisfied. Spine Solutions, Inc. v. Medtronic Sofamor Danek, Inc., 620 F.3d 1305, 1319 (Fed. Cir. 2010).

FQ points to the following three rulings to show that its defenses are not baseless. First, this court initially held the asserted claims of the Kellenberger and Melius Patents to be invalid for indefiniteness. We later reversed this decision, but nevertheless, FQ argues that our initial decision in FQ's favor proves that its position was not objectively baseless. Similarly, FQ notes that, in arbitration between KC and Procter & Gamble, two panels of arbitrators concluded that the Melius Patent claims were invalid. According to FQ, the arbitrators' decisions demonstrate that there are reasonable grounds for it to assert invalidity with respect to the Melius Patent. Finally, FQ argues that, although we denied FQ's motion for summary judgment of non-infringement of the Ungpiyakul Patent, we did so merely on the basis that a factual dispute remained to be resolved at trial, and thus, FQ's non-infringement defense was not objectively baseless.

We note, however, that as the party moving for summary judgment, FQ must do more than merely persuade us that its defenses were reasonable. Instead, FQ must establish that "there is no genuine dispute as to any material fact" and that FQ "is entitled to judgment as a matter of law"—in other words, that no reasonable fact-finder could find willful infringement. FED. R. CIV. P. 56(a).

In its brief in opposition, KC argues that a reasonable finder of fact could conclude that FQ engaged in willful infringement, and substantial evidence supports both the objective and subjective prongs of the test. Specifically, KC notes that FQ was aware of the Kellenberger, Melius, and Ungpiyakul Patents before it engaged in the allegedly infringing conduct. Furthermore, KC presents evidence that FQ was warned of the risk of infringing these patents, but according to KC, FQ disregarded the warnings and failed to make good faith efforts to avoid infringement.

Viewing the evidence in the light most favorable to KC, we conclude that a reasonable finder of fact could plausibly find willful infringement. We acknowledge that KC's burden of showing willful infringement by clear and convincing evidence is a difficult burden to satisfy. However, at the summary judgment phase, we must credit KC's evidence and draw all reasonable inferences in favor of KC. We conclude that the evidence, when viewed in this posture, could support findings of both objective recklessness and subjective willful infringement. Although FQ's arguments are also somewhat persuasive, we ultimately find them insufficient to prove that FQ is entitled to judgment as a matter of law. Specifically, the rulings cited by FQ tend to suggest that the non-infringement defenses asserted by FQ are not objectively baseless, and that reliance on such defenses is not objectively reckless, but they fall short of establishing that no reasonable fact-finder could reach the opposite conclusion. Therefore, summary judgment is not appropriate, and FQ's motion must be denied.

V. Conclusion

KC has come forward with evidence that, although FQ was warned of the risk of infringing KC's patents, it did not take precautions to avoid infringement. At this juncture, we must view this evidence in the light most favorable to KC. This leads us to conclude that a reasonable fact-finder could determine that FQ engaged in willful infringement. We have carefully considered FQ's arguments, which suggest that such a result is unlikely. However, these arguments fail to establish FQ's entitlement to judgment as a matter of law. Therefore, we must deny FQ's motion for summary judgment.

We will issue an appropriate order.

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William W. Caldwell

United States District Judge
KIMBERLY-CLARK WORLDWIDE, INC., Plaintiff

v. FIRST QUALITY BABY PRODUCTS, LLC, FIRST QUALITY PRODUCTS, INC., FIRST QUALITY RETAIL SERVICES, LLC, FIRST QUALITY HYGIENIC, INC., Defendants and Counterclaim Plaintiffs

v. KIMBERLY-CLARK CORPORATION, KIMBERLY-CLARK WORLDWIDE, INC., KIMBERLY-CLARK GLOBAL SALES, LLC, Counterclaim Defendants

ORDER

AND NOW, this 11th day of April, 2013, upon consideration of Defendants' motion for partial summary judgment (Doc. 668), and pursuant to the accompanying memorandum, it is ORDERED that said motion is DENIED.

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William W. Caldwell

United States District Judge