IP: Scientific Evidence in Patent Litigation Spring 2013 Prof. Morris April 19, 2013 rev 0

KRUSE v CATERPILLAR - Summmary Judgment - 1 IP: Scientific Evidence in Patent Litigation Spring 2013 Prof. Morris April 19, 2013 rev 0 KRUSE v. CATERPILLAR - SUMMARY JUDGMENT and CLAIM CONSTRUCTION (to be discussed by Guest Speaker Alicia Shah, Esq.) UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA KRUSE TECHNOLOGY PARTNERSHIP, Plaintiff, v. CATERPILLAR, INC. Defendant, NO. CV 04-10435-GPS (FMOx) ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT October 5, 2008 After review of all the testimony and filings submitted, the Court DENIES [Caterpillar]'s [Motion for Summary Judgment], for the reasons below. I. BACKGROUND A. Factual Background [PO] Kruse Technology Partnership ["KTP"] California limited partnership located in Anaheim [has sued AI] Caterpillar Inc. ("Caterpillar")[,] a corporation organized and with its principal place of business in Illinois. KTP is the owner of three patents for an Internal Combustion Engine With Limited Temperature Cycle: U.S. Patent Nos. 5,265,562 (the '562 Patent); 6,058,904 (the '904 Patent); and 6,405,704 (the '704 Patent).... B. Procedural History {This section has been rearranged but wherever possible the text has been retained -RJM} 11/19/04 KTP's Complaint filed. 10/19/04 Caterpillar's Answer filed. 10/19/04 Caterpillar's Counterclaim filed. From {n1} Caterpillar amended its answer and counterclaim several times and KTP amended its answer to the counterclaim. Thereafter Trial set for March 2006 Feb 2006 Caterpillar files a motion for summary judgment ("MSJ"). Feb 23, '06 Judge vacates trial date because the MSJ brief and supporting papers cannot be ruled upon in the short time before trial (See Docket 149, Minutes). 11/29-30/06 Oral argument on the MSJ 12/15/06 Order for a hearing regarding claim construction Feb. & Nov' 07 Three days of evidentiary hearings on claim construction 02/13/08 Parties simultaneously file closing briefs. II. CLAIM CONSTRUCTION A. Engine Technology at Issue KTP has accused Caterpillar of infringement based on two categories of Caterpillar engines - the current Advanced Combustion Emissions Reduction Technology ("ACERT") engines and - the now-discontinued "Bridge" engines. In the 1980s, Douglas Kruse, the founder, managing partner, and majority shareholder of KTP [invented] a new concept for operating internal combustion engines by burning fuel in an engine in two phases. Mr. Kruse's idea involved a first "constant volume" phase and a second "constant temperature" phase. In 1989, Mr. Kruse formed [KTP] and began soliciting investors. In 1992, Kruse prepared and filed a patent application on his theoretical engine cycle. {What would you guess he did to avoid an onsale bar based on the contacts with investors? - RJM}... On December 14, 1992, the Patent and Trademark Office ("PTO") examiner... rejected his application's claims based on prior art U.S. Patent No. 2,917,031 to Nestorovic, a 1959 patent that taught injecting two portions of fuel. Like Mr. Kruse's proposal, Nestorovic disclosed a first injection of fuel that burns "at an essentially constant volume" [and] a second injection of "the main part of the fuel" that burns "at approximately constant pressure and constant temperature." {The judge cares about this prior art patent's DISCLOSURE, not its claims. He understands the most important slide of the seminar. -RJM} Accordingly, the PTO examiner rejected all eight of Mr. Kruse's application claims as anticipated by the Nestorovic patent. Mr. Kruse then amended his patent

KRUSE v CATERPILLAR - Summmary Judgment - 2 application, explaining the ways his engine differs from Nestorovic's concept. The PTO examiner agreed, finding: "Nestorovic nowhere discloses or suggests a heat input phase including a substantially isothermal combustion process." March 12, 1992 Amendment to the 919,916 application at p. 5. He added: "Nowhere does Nestorovic teach an isothermal process following an isochoric process, as disclosed and claimed in the present application; indeed, nowhere does Nestorovic even deal with the problems addressed by the applicant let alone evidence an understanding of the advantages that result from the combination of processes that are claimed." p. 6. Accordingly, the PTO examiner approved the [application] in its amended form. Following [the Notice of Allowance], Mr. Kruse filed several other applications based on the original patent application, two of which issued as the '904 and the '704 patents. In an attempt to profit from his patents, Mr. Kruse actively tried to license his patents to hundreds of third parties... According to Caterpillar every one of the third party organizations that Mr. Kruse approached rejected the licensing proposals and Mr. Kruse's technology. Caterpillar also declined to take a license. Caterpillar asserts that it developed its [accused] ACERT engines... through years of research and development by Ph.D.-led engineer teams with a sophisticated understanding of internal combustion engines. According to Caterpillar, the ACERT technology is a complicated combination of approaches that cost the company over half a billion dollars to develop. KTP asserts that within months of meeting with Mr. Kruse, and without his consent or knowledge, Caterpillar began exploring multiple fuel injections to reduce nitrogen oxide ("NOx"). cases it is improper to rely on extrinsic evidence." Id. at 1583 (citing Pall Corp. v. Micron Separations, Inc., 66 F.3d 1211, 1216 (Fed. Cir. 1995)). If necessary, however, the court may look to extrinsic evidence such as - dictionary definitions or - expert testimony. Id.; see also Markman, 52 F.3d at 980 (finding the Court may, in its discretion, receive extrinsic evidence in order to aid it in coming to a correct conclusion as to the true meaning of the language employed in the patent). In evaluating these sources, the Federal Circuit instructed that the "sequence of steps used by the judge in consulting various sources is not important; what matters is for the court to attach the appropriate weight to be assigned to those sources in light of the statutes and policies that inform patent law." Phillips v. AWH Corp., 415 F.3d 1303, 1324 (Fed. Cir. 2005)(en banc). C. Analysis In its MSJ, [Caterpillar] argues that [the asserted] claims are narrowly confined to an engine cycle operating "substantially" at the theoretical conditions identified in the [specification]: Claims 1-2 of the '562 Patent; Claim 9 of the '904 Patent; and Claims 1-3 of the '704 Patent. Accordingly, [Caterpillar] contends that [KTP's proffered] construction of the claims are wrong as a matter of law and, therefore, the Court should grant summary judgment. Specifically, [Caterpillar] alleges the [accused products] do not meet the following five limitations of [KTP]'s patent claims, literally or by an equivalent. B. Legal Standard {I chose not to delete this section so that you could see how much you already know. -RJM} "It is well-settled that, in interpreting an asserted claim, the court should look first to the intrinsic evidence of record." Vitronics Corps. v. Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996) (citing Markman v. Westview Instruments, Inc., 52 F.3d 967, 979 (Fed. Cir. 1995) (en banc). The Federal Circuit has identified three sources of intrinsic evidence: (1) the claims, (2) the specification, and (3) the prosecution history. "In most situations, an analysis of the intrinsic evidence alone will resolve any ambiguity in a disputed claim term. In such

KRUSE v CATERPILLAR - Summmary Judgment - 3 [AI's Contention #1]. Caterpillar's accused engines do not start combustion 'substantially at top dead center." Claim Term [KTP]'s Construction Caterpillar's Construction igniting said fuel/air mixture "when the piston is substantially at top dead center" [boldface in original] near or at, whether before or after, top dead center no more than 10 degrees from top dead center The Court construes this term consistent with [KTP]'s interpretation. The term 'substantially" is a term of degree and should not be interpreted as having a strict numerical limitation. Playtex Prods. Inc. v. Proctor & Gamble Co., 400 F.3d 901, 907 (Fed. Cir. 2005). The term 'substantially" is a meaningful modifier implying approximate rather than perfect. Id. Accordingly, [Caterpillar]'s attempt to insert a numerical limitation in this claim fails. While [Caterpillar] correctly points to the 'specification" language within [KTP]'s '562 Patent as guidance in interpreting this claim, it fails to completely cite the 'specification" language in the preferred embodiment section. The specification language clarifies that, as an "example under consideration," ignition from a spark plug "will typically be 5 degrees to 10 degrees before top dead center." ("562 Patent 6:26-28) (emphasis added). This numerical limitation is an example in the preferred embodiment. See, e.g., Deering Precision Instruments, LLC v. Vector Distrib. Sys., 347 F.3d 1314, 1323 (Fed. Cir. 2003) ("We, however, do not generally limit claims to the preferred embodiment."). This example is only one form of ignition 'substantially at top dead center." Accordingly, the intrinsic evidence supports [KTP]'s construction of this term. {n3: This construction is further supported when considering the argument addressed below that the '562 Patent is not limited to ignition by a spark plug or external force. See discussion infra.} [AI's Contention #2]. Caterpillar's accused engines employ a first combustion process nowhere near (a) 'substantially constant volume" and (b) their second combustion is not a 'substantially constant temperature" process. (a) 'substantially constant volume" {From n4: This affects the '562 and '904 claims only} Claim Term KTP's Construction Caterpillar's Construction "wherein the combustion of the fuel/air mixture resulting from the fuel first introduced is a substantially constant volume process" [boldface in original] a combustion process wherein the volume is largely unchanged combustion starts just before and ends just after top dead center [The '562 patent] As for Claim 1 of the '562 Patent, the Court finds a mixture of these two interpretations best clarifies this specific term. It should read: "the combustion process starts just before and ends just after top dead center wherein the volume is largely unchanged." This is supported by the entire text of the claim [which] begins by... listing the engine components such as at least one cylinder and an associated piston for forming a combustion chamber, 'said piston having a top dead center position." ("562 Patent 12:35-41.) [The term to be construed] follows almost immediately thereafter. Thus, [the] language of Claim 1 supports this construction.

KRUSE v CATERPILLAR - Summmary Judgment - 4 [The '904 patent] [The '904's] Claim 1, however, should be construed in line with [KTP]'s interpretation because [that claim] does not include the same language as [claim 1 of] the '562 Patent. Thus, the Court construes this term in this patent to mean "a combustion process wherein the volume is largely unchanged." (b) "substantially constant temperature" Claim Term KTP's Construction Caterpillar's Construction "wherein the combustion as a result of the introduction of a second fraction is a substantially isothermal process" [boldface in original] a combustion process wherein the average cylinder temperature is largely unchanged the average cylinder temperature remains substantially constant throughout the entire combustion process, subject to only minor variations The ordinary reading of this term itself is as follows: the average cylinder temperature is substantially constant -- rather than fluctuating significantly -- as a result of the introduction of the second fraction of total fuel required for complete combustion. Thus, both [parties'] construction[s] of this term are too broad. The term should be construed as the "average cylinder temperature remains substantially constant after the second fraction of fuel is introduced." The text of this claim supports this construction, especially because [claim 1] differentiates between what happens in the combustion process when (1) the first fraction of fuel is introduced and (2) the second fraction of fuel is introduced. Moreover, this is also supported by [KTP]'s specification in Figure 8(b), that graphically displays the formula after the second fraction is introduced, showing the temperature remains relatively constant. Additionally, the prosecution history also addresses the uniqueness of two phases of combustion at issue in this patent, explaining that substantial isothermal process is what makes the '562 Patent unique from the Nestorovic patent. See March 12, 1993 PTO Amendment to Application No. 919,916, at p. 6. In the amended application, the Patent examiner writes: "Nowhere does Nestorovic teach an isothermal process following an isochoric process, as disclosed and claimed in the present application." Accordingly, [Caterpillar]'s construction that temperature must remain substantially constant throughout the "entire combustion process" extends too far. The same reasoning applies to the term for Claim 1 of the '904 Patent as well. The [claimed method] includes "a heat input phase comprising a substantially constant volume combustion process followed by a substantially isothermal combustion process." Thus, the Court construes the term to mean that the "average cylinder temperature remains substantially constant after the second fraction of fuel is introduced."

[AI's Contention #3]. Caterpillar's accused engines use "auto-ignition" instead of "igniting" the fuel/air mixture with a spark plug or other ignition device. KRUSE v CATERPILLAR - Summmary Judgment - 5 Claim Term KTP's Construction Caterpillar's Construction "igniting said fuel/air mixture" [boldface in original] initiating combustion of the fuel/air mixture an action by a spark plug or external source to initiate combustion of the fuel/air mixture The Court agrees with [KTP] that the text of the '562 Patent does not limit the ignition to a spark plug or external force and exclude "auto ignition." Notwithstanding [Caterpillar]'s strong arguments to the contrary, the language of Claim 1 simply does not include that limitation, while Claims 5 through 8 do. See also Claim 5 for '704 Patent. Thus, the plain language of Claim 1 does not include this limitation... {This is the doctrine of claim differentiation again. You saw it in Judge Grewal's decision in SSI v. TEK. -RJM} Granted, [Caterpillar] is correct that some [places in the '562 specification] appear to infer [sic: imply the existence of] an external source of ignition, such as a spark plug. "It will become evidence to those skilled in the art that the advantages of the invention may be realized with two-cycle spark ignition engines, as well as Wankel rotary-type engines and those that are turbo- or super charged." (4:50-55) But the embodiment also specifically incorporates the invention into other engine types using auto ignition, such as the Otto and Diesel types of engines. (11:33-36.) [Caterpillar] also argues that the "prosecution history" shows that the term is limited to ignition by a spark plug. [Caterpillar] cites prosecution history of a different international patent, not the '562 Patent. [Caterpillar] claims the terms were identical. While this argument may have some merit, the plain language of the '562 Patent text governs. The prosecution history of the '562 Patent does not reflect this limitation. Accordingly, the Court agrees with [KTP]'s construction of this term. [I have omitted the iscussion of terms found only in the '704 patent.] IV. MOTION FOR SUMMARY JUDGMENT [Caterpillar] argues that under its proposed construction of the terms, the Court should grant summary judgment. Alternatively, [Caterpillar] argues that the patents are invalid. As the analysis below shows, the Court finds that [KTP] has raised a genuine issue of material fact as to the patent claims, even the ones construed in favor of [Caterpillar]. Moreover, [Caterpillar] has failed to show by clear and convincing evidence that [KTP]'s patent claims are invalid. A. Legal Standard {This judge's words and citations differ from those of Judge Grewal but the concepts should be familiar. -RJM} Summary judgment is appropriate if there is "no genuine issue as to any material fact." Fed. R. Civ. P. 56. A factual dispute is 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). As to materiality of the facts, substantive law identifies which facts are material. The moving party in a summary judgment motion bears the burden of showing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party makes this initial showing, the burden shifts to the nonmoving party to "designate specific facts showing there is a genuine issue for trial." Id. at 324 (internal citation omitted). The nonmoving party must produce evidence that could cause a reasonable juror to disagree as to whether the facts claimed by the moving party are true. When analyzing whether a patent is valid, [Caterpillar]'s burden is even higher [because] [Caterpillar] must show that the patent is invalid by clear and convincing evidence. See Budde v. Harley-Davidson, Inc., 250 F.3d 1369, 1376-77 (Fed. Cir. 2001) (explaining that patent claims are afforded a statutory presumption of validity so overcoming this presumption requires clear and convincing evidence). Construing the terms of the patent claims are required to help the Court interpret whether the patents are valid. See discussion supra. B. Analysis 1. MSJ Applied to Construed Claims a. When Piston is Substantially at Top Dead Center Because the Court agrees with [KTP] that [Caterpillar] cannot insert a numerical limitation into the term "substantially at top dead center," the Court [adopts KTP's construction]:

KRUSE v CATERPILLAR - Summmary Judgment - 6 "near or at, whether before or after, top dead center." [which means that there is a genuine issue of fact as to infringement.] b. Wherein the combustion of the fuel/air mixture resulting from the fuel first introduced is a substantially constant volume process [The Court constues this term of] Claim 1 of the '562 Patent... as: "the combustion process starts just before and ends just after top dead center wherein the volume is largely unchanged." In light of the factual dispute as to the start of the combustion process as well as the change in volume during the first introduction of fuel, the Court finds a genuine issue of material fact exists... [Caterpillar]'s argument regarding the change in volume with respect to the top dead center, while persuasive, fail to satisfy the summary judgment standard... Because the term in Claim 1 of the '904 Patent should be construed even more broadly (i.e., "a combustion process wherein the volume is largely unchanged"), the Court agrees that a genuine issue of material fact exists. c. Wherein the combustion as a result of the introduction of the second fraction is a substantially isothermal process The term should be construed as the "average cylinder temperature remains substantially constant after the second fraction of fuel is introduced." As noted above, the constant temperature requirement of the '562 Patent and the '904 Patent, [Caterpillar]'s arguments and evidence is more persuasive. While the evidence appears to favor the conclusion that Caterpillar [accused] engines... all have substantial temperature changes after the second fraction of fuel is introduced, [KTP] has submitted expert testimony challenging this argument. Accordingly, the Court finds a genuine issue of material fact exists as to this term. d. Igniting said fuel/air mixture The Court agrees with [KTP]'s construction of this term (i.e., initiating combustion of the fuel/air mixture). Accordingly, [Caterpillar]'s arguments that its engines do not infringe because they do not use a spark plug or other external source to ignite combustion of the fuel fail. 2. MSJ on Validity As noted above, [Caterpillar] carries a heavier burden here in attempting to prove invalidity. First, Caterpillar asserts KTP's '562 and '904 Patents are invalid because of the existence of the Nestorovic patent as prior art. Caterpillar argues that even under KTP's claim interpretations, every limitation of the asserted '562 and '904 patent claims reads on Nestorovic, and those patent claims thus are invalid for anticipation. Second, Caterpillar asserts KTP's '704 Patent is invalid based on (1) anticipation of prior art under 35 U.S.C. ' 102(b), (2) violating 35 U.S.C. ' 112. a. Are the [asserted claims of the] '562 and the '904 Patents Invalid Because the Nestorovic Patent Anticipates [Them]? Caterpillar argues that the Nestorovic patent is [invalidating] prior art to KTP's '562 and '904 Patents because, like those patents, Nestorovic discloses a method of operating an internal combustion engine using multiple fuel injections and an essentially constant volume combustion followed by an essentially constant temperature (isothermal) combustion. Specifically, according to [Caterpillar], the Nestorovic patent discloses...: (1) forming a predetermined fuel/air mixture; (2) igniting the first fuel fraction; (3) introducing a second fuel fraction; (4) a constant volume combustion process; (5) a constant temperature combustion process; (6) direct injection of fuel. [KTP] responds that the Nestorovic patent was the central focus of PTO proceedings and, after careful consideration, the PTO concluded that the Nestorovic patent did not anticipate or even render obvious and of the claims of the '562 and '904 Patents. [KTP] argues that [Caterpillar] is trying to overturn the decision of the PTO, but fails to present clear and convincing evidence of how the PTO's decision was in error. Moreover, [KTP] points out KTP's engines work in a different way than Nestorovic's. For example, Nestorovic fails to disclose the claimed step of "forming a predetermined fuel/air mixture by introducing a predetermined fraction of the total fuel required for complete combustion of the process air in the combustion chamber." Nestorovic combusts the fuel immediately when it is first injected into the cylinder. Nestorovic describes injecting only fuel at top dead center, and burning it instantaneously at top dead center. On the other hand, [KTP] states the Kruse inventions are fundamentally different because the fuel is introduced well before top

KRUSE v CATERPILLAR - Summmary Judgment - 7 dead center, and early enough to form the claimed "mixture" before it ignites. Nestorovic describes introducing a mixture of both fuel and air, but this is later in the cycle and only in connection with the second combustion event. In contrast, the Kruse patents claim the second combustion results only from "introducing... a second fraction of the total fuel." Nowhere do the patents claim or suggest introducing more air after combustion commences. In sum, Nestorovic teaches injecting only fuel first, then a mixture of air and fuel second. This is [the] opposite of what Kruse claims -- a mixture first, and only fuel second. Unresolved factual questions about the relationship between the Nestorovic engine and the KTP engine mean invalidity cannot be proven by "clear and convincing evidence" and therefore [KTP]'s arguments against summary judgment prevail on this point. c. Are Claims 2-3 of the '704 Patent Invalid for Indefiniteness? {I have deleted the other discussions of the '704 claims but include this in case anyone wants to know the basic law of indefiniteness. The sentence in boldface is the important one. (It is also the one Judge Grewal quoted to us in chambers, as those who were there may recall, with the addition before the comma of the words "so that a person of ordinary skill could understand them." Indefiniteness arguments rarely succeed. - RJM} Caterpillar argues that Claims 2-3 of KTP's '704 Patent are invalid for indefiniteness pursuant to 35 U.S.C. ' 112... with respect to the term "substantially defined by" in the following language: "maximum combustion temperature is substantially defined by an isothermal line on a pressure-volume diagram for a cylinder and cycle." According to 35 U.S.C. ' 112, a patent specification "shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention." 35 U.S.C. ' 112. [Caterpillar] states that this "definiteness" requirement means that a claim must have a clear and definite meaning when construed in light of the complete patent document and prior art. Standard Oil Co. v. American Cyanamid Co., 774 F.2d 448, 452-53 (Fed. Cir. 1985). With that definiteness requirement in mind, [Caterpillar] argues that nowhere in the '704 patent is there any kind of description discussing, or drawings illustrating, the criteria for determining whether a "maximum combustion temperature is substantially defined by an isothermal line on a pressure-volume diagram" as required by Claims 2 and 3. Thus, according to [Caterpillar], there are no objective criteria for determining how much an accused engine's maximum combustion temperature plotted on a pressure-volume diagram may vary from an isothermal line on the same diagram and still be considered to be "substantially defined by" the isothermal line. [Caterpillar] claims such criteria would be necessary to distinguish the claimed inventions from the prior art. [Caterpillar] asserts that [KTP]'s proposed interpretation of "substantially defined by an isothermal line" as meaning "largely defined by a constant temperature line" is not helpful because it merely replaces the hopelessly vague "substantially defined by" with the equally vague, "largely defined by."... [KTP] responds that a claim is not indefinite merely because it is not subject to a precise mathematical definition or because it might pose a difficult issue of claim construction. See Bancorp Servs., L.L.C. v. Hartford Life Ins. Co., 359 F.3d 1367, 1371 (Fed. Cir. 2004). In other words, according to [KTP], if the disputed claim terms can be construed, they are not indefinite. See Tulip Computers Int"l B.V. v. Dell Computer Corp., No. 00-981 2002 U.S. Dist. LEXIS 25094, at *11 (D. Del. 2002). [KTP] argues that the terms of the '704 patent are straightforward and are capable of being construed by the Court. [KTP] asserts that the claim at issue simply means "the maximum average cylinder temperature is largely defined by a constant temperature line on a pressure-volume diagram." [KTP] maintains that the actual temperature can vary above or below the line, but overall the temperature is defined by the constant temperature line. Furthermore, [KTP] states that there is a statutory presumption of validity and deference is due to the PTO which examined the claims for definiteness and "close questions of indefiniteness... are properly resolved in favor of the patentee." Bancorp, 359 F.3d at 1372. In light of this presumption and deference in favor of validity, invalidity cannot be proven by "clear and convincing evidence" and therefore the Court DENIES summary judgment on this issue. V. CONCLUSION In light of the above claim construction and subsequent analysis, the Court DENIES [Caterpillar]'s MSJ. IT IS SO ORDERED.