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ORDER - 1

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT TACOMA

PACTOOL INTERNATIONAL LTD., 

Plaintiff,

v.

KETT TOOL COMPANY, INC., et al.,

Defendants.

CASE NO. C06-5367BHS

ORDER DENYING PACTOOL’S

MOTION FOR SUMMARY

JUDGMENT AS TO CERTAIN OF

DEFENDANTS’ AFFIRMATIVE

DEFENSES 

This matter comes before the Court on Plaintiff PacTool International Ltd.’s

(“PacTool”) motion for summary judgment as to certain of Defendants’ affirmative

defenses (Dkt. 244). The Court has reviewed the briefs filed in support of and in

opposition to the motion and the remainder of the file and hereby denies the motion for

the reasons stated herein.

I. PROCEDURAL HISTORY

On June 29, 2006, PacTool filed a complaint against Defendant Kett Tool

Company, Inc. (“Kett”), alleging patent infringement. Dkt. 1. On April 8, 2010, PacTool

filed a First Amended Complaint (“FAC”) against Defendants Kett and H. Rowe

Hoffman alleging patent infringement. Dkt. 63. 

On July 14, 2010, Kett answered the FAC and asserted ten affirmative defenses. 

Dkt. 95. On December 6, 2010, Elizabeth Tu Hoffman, as Executor of the Estate of H.

Rowe Hoffman, (“Estate”) was substituted for H. Rowe Hoffman. Dkt. 121. On March

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ORDER - 2

21, 2011, the Estate answered the FAC and asserted twelve affirmative defenses. Dkt.

192.

On September 13, 2011, Pactool filed a motion for summary judgment as to certain

of Defendants’ affirmative defenses. Dkt. 244. On October 3, 2011, both defendants

responded. Dkts. 248 (Estate) & 251 (Kett). On October 7, 2011, Pactool replied. Dkt.

254.

II. DISCUSSION

A. Standard

Summary judgment is proper only if the pleadings, the discovery and disclosure

materials on file, and any affidavits show that there is no genuine issue as to any material

fact and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c).

The moving party is entitled to judgment as a matter of law when the nonmoving party

fails to make a sufficient showing on an essential element of a claim in the case on which

the nonmoving party has the burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 323

(1986). There is no genuine issue of fact for trial where the record, taken as a whole,

could not lead a rational trier of fact to find for the nonmoving party. Matsushita Elec.

Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (nonmoving party must

present specific, significant probative evidence, not simply “some metaphysical doubt”).

See also Fed. R. Civ. P. 56(e). Conversely, a genuine dispute over a material fact exists if

there is sufficient evidence supporting the claimed factual dispute, requiring a judge or

jury to resolve the differing versions of the truth. Anderson v. Liberty Lobby, Inc., 477

U.S. 242, 253 (1986); T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d

626, 630 (9th Cir. 1987).

The determination of the existence of a material fact is often a close question. The

Court must consider the substantive evidentiary burden that the nonmoving party must

meet at trial -, e.g., a preponderance of the evidence in most civil cases. Anderson, 477

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ORDER - 3

U.S. at 254; T.W. Elec. Serv., Inc., 809 F.2d at 630. The Court must resolve any factual

issues of controversy in favor of the nonmoving party only when the facts specifically

attested by that party contradict facts specifically attested by the moving party. The

nonmoving party may not merely state that it will discredit the moving party’s evidence at

trial, in the hopes that evidence can be developed at trial to support the claim. T.W. Elec.

Serv., Inc., 809 F.2d at 630 (relying on Anderson, 477 U.S. at 255). Conclusory,

nonspecific statements in affidavits are not sufficient, and missing facts will not be

presumed. Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 888-89 (1990).

B. Pactool’s Motion

Pactool moves for summary judgment on both Defendants’ affirmative defense of

invalidity and the Estate’s affirmative defenses of failure to state a claim, waiver, unclean

hands, and implied license. Dkt. 244 at 3-4.

1. Invalidity

A patent may be invalid if it is either anticipated or obvious. If “each and every

limitation is found either expressly or inherently in a single prior art reference,” then the

claim is invalid for anticipation. Sanofi–Synthelabo v. Apotex, Inc., 470 F.3d 1368, 1375

(Fed. Cir. 2006) (internal quotation marks omitted). A patent is invalid for obviousness 

if the differences between the subject matter sought to be patented and the

prior art are such that the subject matter as a whole would have been

obvious at the time the invention was made to a person having ordinary

skill in the art to which said subject matter pertains.

 35 U.S.C. § 103(a) (2006).

In this case, Pactool moves for summary judgment on Kett’s claim that the patents

in suit were anticipated. Dkt. 244 at 5. Pactool cites six prior art references that it claims

Kett has identified as “anticipatory” references. Id. Kett concedes that its claim for

anticipation is based on one prior art reference, which is U.S. Patent No. 5,901,447 issued

to Neil Dunning (“Dunning”). Dkt. 254 at 3. Kett argues that the other references

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ORDER - 4

support its contention that the patents in suit are obvious in light of these references. Id. 

Therefore, for the purposes of the instant motion, the Court will consider only whether

claims in the patents in suit are anticipated in light of Dunning.

Pactool argues that Dunning does not disclose two limitations that are contained in

the patents in suit: (1) the guide surfaces being in a common plane, and (2) the disclosed

gap distances. Dkt. 254 at 3-8. The Federal Circuit, however, has held that

“[a]nticipation is a question of fact, including whether or not an element is inherent in the

prior art.” Atlas Powder Co. v. Ireco, Inc., 190 F.3d 1342, 1346 (Fed. Cir. 1999). 

Moreover, “the question whether a claim limitation is inherent in a prior art reference is a

factual issue on which evidence may be introduced.” In re Schreiber, 128 F.3d 1473,

1477 (Fed. Cir. 1997).

Pactool fails to show that these issues are suitable for determinations as a matter of

law. The Dunning reference creates material questions of fact regarding whether it

anticipates the subject matter, either expressly or inherently, in the patents in suit. 

Therefore, the Court denies Pactool’s motion for summary judgment on Kett’s and the

Estate’s affirmative defense of invalidity due to anticipation.

2. 12(b)(6)

The Estate asserts the affirmative defense that at least one of Pactool’s causes of

action fails to state a claim upon which relief may be granted. Dkt. 192, ¶ 26. Pactool

argues that the Court should grant summary judgment on this defense. Dkt. 244 at 7. 

Pactool first argues that 

[t]he Estate has provided no evidence in support of this defense in response

to discovery requests served by PacTool. To the extent this defense is

understood by PacTool, it appears to be a Fed. R. Civ. P. 12(b) defense. The

Estate has never moved to dismiss as to that defense.

Id. (internal citation omitted). Pactool then contradicts its own argument by stating that 

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ORDER - 5

the Estate fully briefed the previous motion to dismiss for failure to state a claim and that

evidence is irrelevant for the issue of the sufficiency of a complaint. Dkt. 254 at 9-10. 

The basis for Pactool’s motion on this issue is unclear.

The Estate argues that it may file a motion to dismiss for failure to state a claim at

any time until trial has concluded. Dkt. 248 at 2-3 (citing Fed. R. Civ. P. 12(h)). The

Court agrees. Therefore, the Court denies Pactool’s motion for summary judgment on the

affirmative defense of failure to state a claim.

3. Waiver 

The equitable defense of waiver rests on a showing that the patent holder, with full

knowledge of the material facts, intentionally relinquished its rights to enforce its patents,

or that its conduct was so inconsistent with an intent to enforce its rights as to induce a

reasonable belief that such right has been relinquished. See Qualcomm Inc. v. Broadcom

Corp., 548 F.3d 1004, 1028 (Fed. Cir. 2008).

In this case, Pactool argues that the defense is frivolous and that the Estate has

failed to allege any facts demonstrating that Pactool effectively waived its patent rights. 

Dkt. 254 at 10. The Estate, however, cites a letter currently in the record that creates a

material question of fact whether Pactool’s conduct was inconsistent with an intent to

enforce its rights. Dkt. 248 at 8 (citing Dkt. 160-2). The Court agrees with the Estate. 

Therefore, the Court denies Pactool’s motion for summary judgment on the Estate’s

waiver defense.

4. Unclean Hands

The Estate asserts the affirmative defenses of unclean hands and inequitable

conduct. Pactool moves for summary judgment arguing that (1) the defenses are

redundant and (2) “unclean hands, when applied to conduct before the Patent Office, is

inequitable conduct.” Dkt. 254 at 10-11 (citation omitted; emphasis in original). Both of

Pactool’s arguments are without merit in light of the recent Federal Circuit case

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ORDER - 6

Therasense, Inc. v. Becton, Dickinson and Co., 649 F.3d 1276 (Fed. Cir. 2011). In

Therasense, the court stated as follows:

unclean hands cases before the Supreme Court dealt with particularly

egregious misconduct, including perjury, the manufacture of false evidence,

and the suppression of evidence. Moreover, they all involved deliberately

planned and carefully executed schemes to defraud not only the [Patent and

Trademark Office (“PTO”)] but also the courts. As the inequitable conduct

doctrine evolved from these unclean hands cases, it came to embrace a

broader scope of misconduct, including not only egregious affirmative acts

of misconduct intended to deceive both the PTO and the courts but also the

mere nondisclosure of information to the PTO. Inequitable conduct also

diverged from the doctrine of unclean hands by adopting a different and

more potent remedy—unenforceability of the entire patent rather than mere

dismissal of the instant suit.

Id. at 1287 (internal citations and quotations omitted).

First, it is clear that unclean hands and inequitable conduct are not redundant

defenses as the latter has “diverged” from the former. Second, there is no support for

Pactool’s proposition that allegations of misconduct in dealings with the PTO may only

support the defense of inequitable conduct. For example, failure to disclose perjury to the

PTO supports the defense of unclean hands and dismissal of the action. Precision

Instrument Manufacturing Co. v. Automotive Maintenance Machinery Co., 324 U.S. 806,

818-819 (1945).

Therefore, the Court denies Pactool’s motion for summary judgment on the

Estate’s affirmative defense of unclean hands.

5. Implied License

“An implied license signifies a patentee’s waiver of the statutory right to exclude

others from making, using, selling, offering to sell, or importing the patented invention.”

Winbond Elecs. Corp. v. ITC, 262 F.3d 1363, 1374 (Fed. Cir. 2001) (citing Wang Lab.,

Inc. v. Mitsubishi Electronics Am., Inc., 103 F.3d 1571, 1580 (Fed. Cir. 1997)). The

Supreme Court has stated that: 

any language used by the owner of the patent, or any conduct on his part

exhibited to another from which that other may properly infer that the

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ORDER - 7

owner consents to his use of the patent in making or using it, or selling it,

upon which the other acts, constitutes a license and a defense to an action

for a tort.

De Forest Radio Tel. Co. v. United States, 273 U.S. 236, 241 (1927).

In this case, the Estate has shown that there exists a material question of fact

whether Pactool’s conduct and business relationship with Kett and Mr. Hoffman could

give rise to an implied license. See, e.g., Dkt. 160-2. Therefore, the Court denies

Pactool’s motion for summary judgment on the Estate’s affirmative defense of implied

license.

III. ORDER

Therefore, it is hereby ORDERED that Pactool’s motion for summary judgment 

as to certain of Defendants’ affirmative defenses (Dkt. 244) is DENIED.

DATED this 7th day of November, 2011.

A 

BENJAMIN H. SETTLE

United States District Judge

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