Chad Drown, Esq., James Poradek, Esq., Timothy E. Grimsrud, Esq., Kate Razavi, Esq., Luke Tomsich, Esq., Timothy Sullivan, Esq., Ari B. Lukoff, Esq., and David J.F. Gross, Esq., Faegre Baker Daniels LLP, Minneapolis, MN, on behalf of Global Traffic Technologies, LLC.
Jonathan D. Jay, Esq., Terrance C. Newby, Esq., and Nicholas S. Kuhlmann, Esq., Leffert Jay & Polglaze, P.A., Minneapolis, MN, on behalf of KM Enterprises, Inc., STC, Inc., Emtrac Systems, Inc., Kristopher Morgan, Andrew Morgan, and Rodney Morgan.
MEMORANDUM OPINION AND ORDER
ANN D. MONTGOMERY, District Judge.
On February 15, 2013, the undersigned United States District Judge heard oral argument on the parties' cross-motions for summary judgment and on the parties' motions to exclude expert testimony. For the reasons set forth below, Defendants' summary judgment motion is denied. Plaintiff's summary judgment motion is denied in part and granted in part. Plaintiff's motion to exclude is granted and Defendants' motion to exclude is denied.
A. Technology at Issue
By law and tradition, emergency vehicles are given priority on the road to respond as quickly as possible to calls for help. Emergency vehicles are equipped with flashing lights and sirens to alert drivers to their presence. When drivers see flashing lights or hear sirens from emergency vehicles, they must pull over, stop, and keep clear of intersections so the emergency vehicle can quickly and safely respond to a call.
Unfortunately, people on the road do not always hear the sirens or see the flashing lights and, especially at intersections, accidents do occur. Increasingly, municipal governments equip emergency vehicles with technology to enable improved response times and an increase in safety to both emergency personnel and the public. Also, more recently, municipal governments have decided to give certain public transportation vehicles priority for increased efficiency and to allow light rail transit to cross roadways safely.
Emergency vehicles and public transportation vehicles can now be equipped with a traffic preemption system ("TPS"). See Am. Compl. [Docket No. 30] Ex. B, United States Patent No. 5, 539, 398 (the "'398 Patent"), at 1:22-23. Emergency vehicles often need to cross intersections against a red light and with speed. Id. at 1:27-32. A TPS functions to either prolong a green light or switch a light from red to green to allow the equipped vehicle to proceed through the intersection safely. Id. at 1:41-45.
From their inception in the 1960s, TPS's have evolved significantly. TPS originally relied on, and some systems still rely on, an optical preemption system, whereby an emitter on top of a vehicle produces strobes of light directed at detectors mounted on or near traffic lights. Id. at 1:36-39 (citing U.S. Patent No. 3, 500, 078). These detectors then relay a signal to the intersection cabinet, which processes the signal and directs the traffic light to change from red to green. Id . Optical systems have several disadvantages, including that the vehicle needs a direct line of sight to the intersection for the strobe light to hit the detector; weather can also interfere with the transmission of the strobe light. Id. at 2:55-58, 3:42-43.
TPS developed to rely on a radio preemption system, which sends radio signals, rather than light beams, from the vehicle to the intersection. Id. at 2:65-67. Radio preemption systems do not require a direct line of sight, and are not as focused or directionally-oriented as the optical systems. Id. at 3:31-33. However, radio-based systems sometimes result in the unintended triggering of traffic signal systems at adjacent intersections. Id. at 3:5-11.
The third generation TPS uses integrated Global Positioning System ("GPS") technology to enable priority vehicles to pass unimpeded through selected intersections. Id. at 3:48-53.
Plaintiff Global Traffic Technologies ("GTT") is the owner by assignment of all right, title, and interest in the '398 Patent, which relates to TPS using GPS technology. See Am. Compl. ¶ 17. Defendants and Counterclaimants KM Enterprises, Inc. ("KME"), STC, Inc. ("STC"), Emtrac Systems, Inc. ("Emtrac"), Kristopher Morgan, Andrew Morgan, and Rodney Morgan (collectively, "Defendants") are all involved in some manner with the manufacture and sale of the Emtrac Priority Control System (also referred to as the "Accused Product").
GTT asserts Defendants have infringed its '398 Patent by making, using, selling, and installing traffic control management systems, namely the Emtrac Priority Control System, in violation of 35 U.S.C. § 271. Id . GTT also seeks to hold Rodney K. Morgan personally liable for the alleged infringement. Id. at ¶¶ 29-39. GTT alleges Morgan continued to sell the Emtrac Priority Control System under the Emtrac corporate name after the company had been dissolved as a corporate entity. Id. at ¶ 37. Thus, GTT claims Morgan is liable as a director of Emtrac under Illinois' Business Corporations Act, 805 Ill. Comp. Stat. 5/8.65(3). Id.
Defendants deny the Emtrac Priority Control System infringes GTT's '398 Patent, and Defendants seek a declaratory judgment of non-infringement and of invalidity. In addition, Defendants have filed a counterclaim against GTT for allegedly using unfair and illegal practices to prevent Defendants' Emtrac Priority Control System from competing in the market. See KME's Compl. ¶ 1. Specifically, Defendants claim GTT has violated the Lanham Act, 15 U.S.C. § 1125 et seq., by using images of Defendants' Emtrac Priority Control System to market GTT's Opticom GPS System. Id . Finally, Defendants also assert Minnesota state law claims for false advertising under Minn. Stat. § 325F.67 et seq., deceptive trade practices under Minn. Stat. § 325D.44 et seq., and a common law claim for tortious interference with prospective contractual relations. Id.
C. Procedural Posture
Defendants' Motion for Summary Judgment [Docket No. 123] ("Defs.' Mot. Summ. J.") seeks rulings that: (1) GTT cannot prove an invention date prior to the '398 Patent's filing date; (2) certain publications are prior art to GTT's patent; (3) GTT's patent is invalidated by a prior invention; (4) laches prevents GTT from bringing its case; (5) Defendants have not infringed directly, indirectly, or willfully; (6) the individual Defendants cannot be held personally liable; and (7) GTT falied to comply with the patent marking statute.
GTT filed its own Motion for Summary Judgment [Docket No. 126] ("GTT's Mot. Summ. J.") also seeking summary judgment on multiple issues. First, GTT seeks summary judgment that KME's two counterclaims, (1) KME's false advertising claim and (2) KME's tortious interference claim, fail as a matter of law. Second, GTT seeks summary judgment on patent issues, namely that: (1) Defendants' alleged prior art references are not actually prior art; and (2) Defendants' anticipation defenses fail.
GTT also filed a Motion to Exclude Expert Testimony [Docket No. 132] by Defendants' expert Dean Thompson ("GTT's Daubert Motion"). Similarly, Defendants filed a Motion to Exclude Testimony [Docket No. 160] by GTT's expert Donald Gorowsky ("Defs.' Daubert Motion").
D. GTT's Version of Invention and the '398 Patent
In early December 1992, Tim Hall and Steven Hamer discussed an idea for GPS-based traffic preemption system while on a flight returning from a business trip. Hall Decl. [Docket No. 137] ¶ 3; Hamer Decl. [Docket No. 139] ¶ 3. At the time, Hall and Hamer worked for Minnesota Mining and Manufacturing Company ("3M"). When they returned to work, Hall and Hamer discussed the idea with Mark Schwartz, also an employee of 3M. Schwartz suggested adding features to take advantage of differential GPS and improve the system's accuracy. Schwartz Decl. [Docket No. 138] ¶ 3; Hall Decl. ¶ 5; Hamer Decl. ¶ 5. On December 17, 1992, Hall recorded the inventors' idea in his 3M laboratory notebook. Hall Decl. ¶ 6; Drown Decl. Supp. GTT's Mot. Summ. J. [Docket No. 129] ("Drown Decl.") Ex. 3. By December 13, 1993, 3M had built a prototype that confirmed the invention worked as intended-namely, the prototype used GPS data to determine if a vehicle was within an allowed approach of an intersection and, if so, issued a preemption request. Schwartz Decl. ¶ 6-7; Drown Decl. Ex. 4. The inventors filed patent application number 178, 881 on January 7, 1994, on behalf of 3M. The inventors filed a continuation of this application on August 16, 1995, which matured into the '398 Patent, issued on July 23, 1996. '398 Patent at 1:4-5. In 2007, 3M divested its Traffic Safety Division. 3M sold the rights to the '398 Patent and the Opticom Priority Control Systems to TorQuest Partners, Inc., which formed GTT to manage the former 3M Traffic Safety Division. Drown Decl. Ex. 10.
E. Defendants' Version of Prior Invention
Defendants argue that a combination of Defendants and other companies invented the first GPS-based system for a TPS, making the '398 Patent invalid under 35 U.S.C. § 102 (g).
According to Defendants, around 1986, Rodney Morgan and Brad Cross worked together inventing the first Emtrac TPS product (the "Early Emtrac System"), a radio-based TPS, which they sold through a company called Traffic Control Devices ("TCD"). Jay Decl. Supp. Defs.' Mot. Summ. J. ("Jay Decl.") [Docket No. 130] Ex. 1 ("Morgan Dep."), at 38:20-39:12. In 1990, Morgan licensed to Econolite Company ("Econolite") the right to sell the Early Emtrac System, patented under U.S. Patent No. 4, 914, 434 (the "'434 Patent"). Id . Ex. 62 ("Distribution and Licensing Agreement").
STC manufactured the Early Emtrac System for distributors TCD and Econolite. STC worked with distributors giving technical support and design enhancement services. Id . Ex. 5, at 7:21-14:2. Cross, one of the system's inventors, served as STC's Vice President from 1987 to 1990, and thereafter as its President. Id . On May 25, 1993, Cross sent Econolite employees Harrald Weiss and Gary Duncan a memorandum that described a proposed TPS system based on the idea that GPS technology could be used to improve the Early Emtac System. Id . Ex. 12 ("Cross Invention Memo"); Ex. 11 ("Ducan Dep."), at 40:12-41:15, 84:10-87:1; Ex. 13 ("Econolite Correspondence"). Throughout 1993 and 1994, Weiss, Duncan and Cross continued to exchange written correspondence regarding the feasibility of re-designing the Early Emtrac System to include GPS capability. Id . Ex. 13; Exs. 50-60. Around January 1995, Econolite decided it would no longer pursue an Emtrac system with GPS; instead, Traffic Control Corporation ("TCC"), and its President Gary Jones, expressed an interest in developing the GPSbased system. Id . Ex. 13, at 272. Econolite agreed to allow TCC to continue development of a GPS based preemption system. Id . TCC developed its GPS TPS system through its subsidiary, Midwest Traffic Products, Inc. ("Midwest"). Id . Ex. 11, at 24:19-26:1. Weiss learned Jones "had continued the development that had been discussed at Econolite, " which Weiss connected to the design work of Cross and STC. Id . Ex. 14 ("Weiss Dep."), at 89:13-90:20, 94:24-95:12; Ex. 11, at 33:10-20. Midwest commercialized its GPS TPS system, calling it Priority One, and obtained patent protection for it under U.S. Patent No. 5, 926, 113 (the "'113 Patent"), which issued in 1999, based upon an application filed May 5, 1995. In 1997, 3M sued Midwest alleging that the Priority One product infringed claims of the '398 Patent. See Compl. [Docket No. 1], Minn. Mining and Mfg. Co. v. Midwest Traffic Prods, Inc., Civ. No. 97-605 (DWF/AJB). 3M and Midwest settled the patent case and as part of their agreement, 3M received an assignment of patents owned by Midwest, including the '113 Patent. Id. at Consent Judgment [Docket No. 42], February 10, 1999.
F. Defendants' Version of Prior Art
Defendants argue, under 35 U.S.C. § 102(a), the '398 Patent is invalid because the invention was "described in a printed publication" before GTT's inventors conceived of the invention ultimately protected by the '398 Patent. Defendants offer two papers and the Cross Invention Memo, mentioned in Section II.E. above, as evidence of printed publications which preempt and invalidate the '398 Patent.
The two papers cited by Defendants as prior art were prepared by Horst Gerland, with co-authorship on one by William T. Bradfield. Gerland, a civil engineer, worked in Germany's transportation industry. According to Defendants, Gerland invented a GPS-based TPS system before GTT's patented invention. Jay Decl. Ex. 17 ("Gerland Dep."), at 13:24-18:20. In 1991, Gerland accepted a consulting position with Gesellschaft fuer Systemtechnik und Informatik ("GSI") in Salem, Germany. Id . In February 1993, Gerland, for GSI, and Bradfield, a general manager of public sector systems for Bell Atlantic Systems Group, Inc. ("Bell Atlantic"), coauthored a document titled "Intelligent Transportation System" (the parties refer to this as the "Bradfield Paper"). Id . Ex. 18. Gerland testified the marketing paper was sent to multiple United States transit agencies to solicit business. Id . Ex. 17, at 46:6-47:8. Defendants' expert, Scott Andrews, claims the Bradfield Paper discloses the limitations of all asserted claims of the '398 Patent. Id . Ex. 19 ("Andrews' Expert Report"), at 85-114.
In October 1993, Gerland attended a vehicle navigation systems conference in Ottawa, Canada. Id . Ex. 17, at 90:16-22. Gerland spoke at the conference about GSI's GPS TPS system (the "Saarbruken System"), and also presented a technical paper about it entitled, "ITS, Intelligent Transportation Systems" (the "Gerland Paper"). Id. at 93:19-94:20; Ex. 20. Defendants claim the paper was distributed, publicly available, and discloses all asserted claims of the '398 Patent. Defs.' Mem Supp. Mot. Summ. J. at 9, ¶ 20.
G. Defendants' Version of Competition
At the same time that the parties were competing to develop a GPS-based TPS, they were also still selling older, optical- and radio frequency-based TPS devices. Morgan developed a radio frequency-based preemption and priority system (the "RF Emtrac System"), and in 1988 he marketed it under his '434 Patent. KME Compl. ¶¶ 10, 14-15. The RF Emtrac System competed against what was then 3M's Opticom System, an optical traffic preemption system. Id. at ¶¶ 12, 15. By 1990, the original RF Emtrac System had surpassed the Opticom System in sales. Id. at ¶ 15. In 1991, Econolite, which had been distributing 3M's Opticom System, approached Morgan seeking to become the exclusive distributor for the RF Emtrac System. Id. at ¶ 16. Econolite eventually ceased distribution of the Opticom System and began exclusively selling, marketing, producing, and maintaining the RF Emtrac System. Id . Econolite and Morgan also agreed that Econolite would license and maintain the '434 Patent and any intellectual property related to the Emtrac System. Id.
According to Defendants, in 1993, while working with Econolite on the RF Emtrac System, Morgan's co-inventor, Cross, designed a further improved system for including GPS capabilities in the RF Emtrac System. Id. at 17. The GPS capabilities were not added to the RF Emtrac System in 1993 because, at that time, the GPS system performance was inadequate. Id. at ¶ 18.
3M, predecessor to GTT, first sold an Opticom System with GPS (referred to as the "Opticom GPS System") in 2001 or 2002. Defs.' Mem. Supp. Mot. Summ. J. 10 (citing Jay Decl. Exs. 8 and 21). Morgan testified that in 2004 GPS functionality was added to commercially available Emtrac Systems. Id. at 11 (citing Ex. 1, at 57:16-58:10). Defendants' cited exhibits do not explain how this added GPS functionality worked, who sold these first Emtrac systems with GPS, or whether any sales were actually made.
But, in April 2005, Morgan formed Emtrac Systems, Inc. to sell Emtrac Priority Control Systems manufactured by STC. Ans. [Docket No. 11] ¶ 18; GTT's STC Compl. ¶ 1. Emtrac Systems, Inc. was involuntarily dissolved on September 11, 2009. Am. Compl. ¶ 3. On July 18, 2007, KME, which is currently in business, was formed as a seller and distributor of Emtrac Systems. KME Compl. ¶ 10. Since about 2004, 3M, which became GTT, began selling Opticom GPS Systems and competed in the market with Emtrac's GPS Systems.
H. Defendants' Version of Delayed, Untimely Suit
Defendants claim that an Emtrac system with GPS was first sold in about 2004. Jay Decl. Ex. 1, at 57:16-58:10. The chronology supporting their argument that 3M and then GTT were on notice of possible infringement by Defendants is the following. Schwartz, then still working for 3M, learned that an Emtrac system was using GPS technology no later than March 2005. Id . Ex. 22 ("Schwartz Dep."), at 77:14-78:14. In February 2006, Schwartz and others were advised by 3M Canada that the City of Coquitlam, Canada, intended to purchase and install an Emtrac system that used GPS technology. Id. at 99:11-100:6. GTT was formed in 2007 by employees from 3M's Traffic Safety Division, including: Tim Hall, Steve Hamer and Mark Schwartz, the co-inventors named on the '398 Patent; Pat Cosgrove, a technical services engineer; and business manager Richard Sachse, who became GTT's President. In 2007, Schwartz received additional technical information regarding the Emtrac systems. Id. at 77:14-84:9; Exs. 69-71. The Opticom GPS System's co-inventor Hall prepared quarterly reports regarding Emtrac to be presented at GTT's board of director meetings. Id . Ex. 8, at 70:5-73:14; Ex. 26, at GTT00208076. Beginning no later than April 2008, GTT held a "Business Team" meeting where Emtrac and several other competitors were discussed. Id . Ex. 27, at GTT 9549-9550. Finally, in August 2009, GTT's management "was assigned [the task of] defin[ing] what features GTT, LLC would need to add to its existing products to compete more effectively with Emtrac." Id . Ex. 65 (GTT Board Meeting Minutes).
GTT filed suit against Emtrac on September 30, 2010. GTT brought STC, the manufacturer, into the suit on December 22, 2011. Defendants argue GTT was on notice of possible patent infringement as early as March 2005, and yet GTT delayed until 2010 to file suit. Defendants argue that the delay eroded evidence and dimmed witness memories; therefore, Defendants conclude the delay has been too long and laches should bar prosecution of this case.
I. GTT's Version of Timely Suit
According to GTT, Defendants did not start infringing on GTT's patent until 2007 when Defendants sold the infringing Emtrac Priority Control System which used GPS. GTT's Br. Opp'n to Defs.' Mot. Summ. J. 15. Previous versions of the Emtrac system did not violate the patent. Id. at 15-16. Defendants' 1980's version "used an electronic compass, not a GPS device." Id . Between 2004 and 2006, GTT alleges, Defendants sold an Emtrac system that swapped out the electronic compass for a GPS compass. Id . (citing Decl. Timothy E. Grimsrud Supp. GTT's Opp'n to Defs' Mot. Summ. J. [Docket No. 172] Ex. 16 ("Supplemental Answers of Defs. to First Set of Interrogatories"), at 13, and Ex. 2 ("Morgan Dep."), at 63). GTT argues that this device did not infringe its patent, either. The product that GTT accuses of infringement is the "Emtrac GPS System" which was introduced in 2007. Jay Decl. Ex. 15, at 28-29 (citing STC sales information). GTT claims it reasonably investigated the Accused Product and corresponded with Defendants about alternative solutions, such that after three years of due diligence, GTT filed suit in 2010.
J. Defendants' Version of Tortious Interference and False Advertising
Defendants claim customers and distributors preferred the cost, design, and functionality of the Emtrac GPS System over GTT's Opticom GPS System. KME Compl. ¶ 23. Defendants claim GTT threatened Defendants and customers who bought the Emtrac systems, by telling them that Defendants were in violation of GTT's patent and that GTT would sue them for false advertising if they published positive reviews of the Emtrac system. Id. at ¶ 27.
Defendants also aver GTT issued a misleading press release announcing GTT's suit against Defendants, on October 1, 2010. Id. at ¶ 39. Defendants assert GTT contacted KME's prospective customers and/or distributors in an effort to convince them to stop doing business with Defendants because of the alleged patent infringement. Id. at ¶¶ 46-48. Finally, Defendants claim GTT falsely advertises its products and experience on GTT's website. Id. at ¶ 49. GTT's website advertises its Opticom GPS System using a video in ...