United States District Court, D. Minnesota
J. Gilbertson, David J. Wallace-Jackson, and Sybil Dunlop,
Greene Espel PLLP, for Plaintiff and Counter-defendant.
M. Lancaster, Ben D. Kappelman, and Kenneth E. Levitt, Dorsey
& Whitney LLP, and J. Thomas Vitt, Jones Day, for
Defendants and Counter-claimants.
MEMORANDUM OPINION AND ORDER
RICHARD NELSON, UNITED STATES DISTRICT JUDGE
Court now addresses Plaintiff's Motion in Limine No. 2 to
exclude evidence, testimony, exhibits, and argument related
to BankServ [Doc. No. 228]. For the reasons stated below, the
Court grants the motion in part and defers ruling in part.
September 25, 2013, Plaintiff filed a Complaint against
Defendants, alleging infringement of its United States Patent
No. 8, 311, 945 (“'945 patent”). (Compl.
[Doc. No. 1].) Patent ‘945 was issued to Plaintiff on
November 13, 2012. (Id., Ex. A [Doc. No. 1-1].) As
required by the Pretrial Schedule, Defendants served their
invalidity contentions on August 15, 2014. (See
Ernstene Aff. [Doc. No. 105] ¶ 2-3.) The case was
subsequently stayed while Defendants pursued a Covered
Business Method review with the Patent Trial and Appeal
Board. (See generally Order dated Sept. 18, 2014
[Doc. No. 50].) After the stay was lifted, Magistrate Judge
Thorson issued an amended pretrial scheduling order that
allowed Defendants to amend their invalidity contentions by
April 15, 2016, provided that they could demonstrate good
cause to do so. (Am. Pretrial Scheduling Order [Doc. No. 69],
moved to amend their invalidity contentions to include, among
other things, a system called BankServ. (See Mot.
for Leave to Amend Invalidity and Noninfringement Contentions
[Doc. No. 98].) Defendants describe BankServ as “an
electronic check conversion product offered by BankServ Check
Services between 1999 and at least 2002.” (U.S.
Bank's Opp'n to Solutran's Mots. in Lim. [Doc.
No. 265] (“Defs.' Mem. in Opp'n”), at
11.) The Magistrate Judge denied Defendants' motion,
finding that Defendants had not met their burden to show
diligence and that allowing amendment would be prejudicial to
Plaintiff. (Minute Entry dated Oct. 3, 2016 [Doc. No. 114].)
Defendants objected, and this Court affirmed the Magistrate
Judge's decision. (See Order dated Dec. 20, 2016
[Doc. No. 151].) Defendants concede that, because of the
Magistrate Judge's order, they cannot offer evidence of
BankServ's process to support their claims of patent
invalidity. (Tr. of Final Pretrial Conference [Doc. No. 284]
(“Tr.”), at 43.)
seek to admit evidence relating to BankServ for other
purposes, however, and Plaintiff has moved to exclude that
evidence. (Solutran's Mots. in Lim. [Doc. No. 228],
¶ 2.) Plaintiff has also expressed concern that some of
Defendants' exhibits appear to reference other prior art
that was not disclosed in Defendants' invalidity
contentions, which Defendants plan to use for other purposes
at trial. (See Tr., at 35-37.)
respond that even though BankServ was excluded for invalidity
purposes, it is still relevant and admissible for other
purposes at trial, such as to rebut allegations of copying
and to counter Plaintiff's damages claims. (Defs.'
Mem. in Opp'n, at 10-16.)
contend that they should be permitted to introduce evidence
of the BankServ system for four purposes: (1) to rebut
Plaintiff's argument that Defendants' infringement
was willful because they copied Plaintiff's patent
‘945; (2) to rebut Plaintiff's argument that
Defendants' copying of patent ‘945 shows that the
patent is nonobvious; (3) to counter Plaintiff's claim of
lost profits by showing that BankServ was an available
noninfringing alternative; and (4) in the reasonable royalty
analysis, to show that patent ‘945 lacked utility or
advantages over old modes or devices. (Defs.' Mem. in
Opp'n, at 11-13; Tr., at 45-48.)
first two purposes relate to copying. The first is moot,
because the Court has granted Defendant U.S. Bank's
Motion in Limine to Exclude Argument that Defendants'
Infringement was Willful [Doc. No. 235]. (See Order
dated Feb. 26, 2018 [Doc. No. 297].) The second purpose is
too closely related to Defendants' invalidity claims. If
Plaintiff offers evidence of copying to show nonobviousness,
it will be to counter Defendants' claim that patent
‘945 is invalid because it is obvious under 35 U.S.C.
§ 103. Thus, if Defendants use BankServ to rebut that
evidence and show that they did not copy Plaintiff's
patent, they would essentially be using it to show that
patent ‘945 is invalid for obviousness. This purpose
undermines the Magistrate Judge's order denying
Defendants' motion to amend their invalidity contentions.
The Court will not permit Defendants to introduce evidence of
the BankServ process or other nondisclosed prior art to rebut
accusations of copying.
make a stronger argument for admitting evidence related to
BankServ to counter Plaintiff's damages claims. Plaintiff
seeks to recover lost profits. Under the Panduit
standard, this requires Plaintiff to show the lack of an
available, noninfringing alternative process that Defendants
might have used instead of infringing the patent. See
Grain Processing Corp. v. Am. Maize-Products Co., 185
F.3d 1341, 1351 (Fed. Cir. 1999); SmithKline Diagnostics,
Inc. v. Helena Labs. Corp., 926 F.3d 1161, 1165 (Fed.
Cir. 1991). Defendants claim that BankServ's process was
an acceptable alternative to the process that infringed upon
Plaintiff's patent ‘945. (Defs.' Mem. in
Opp'n, at 13.) ...