UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF NEW HAMPSHIR E

HVpertherm, Inc .

V .

American Torch Tip CompanV

Civil No . 05-cv-373-JD

O R D E R

Hypertherm, Inc ., filed eight motions in limine to preclude

ATTC from offering testimony, evidence, and argument related to

certain topics . ATTC moves in limine to exclude evidence of

decisions reached in other litigation between the parties . The

motions are addressed as follows .

I . The Court's Prior Ruling s

Hypertherm asks the court to order ATTC not to offer

evidence on matters that have been decided by previous orders .

In particular, Hypertherm seeks to preclude evidence that is

contrary to issues resolved in the court's orders issued on July

24, 2008 ; August 6, 2008, and December 29, 2008 . ATTC objects

that Hypertherm's motion is overbroad and insufficiently specific

to permit a ruling . In particular, ATTC argues that evidence

about the Whitney electrode, which was the subject of the August

6, 2008, order, is relevant and admissible in connection with its

defenses to the willful infringement claim .

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Issues that have been decided in prior orders are resolved

and cannot be revisited at trial . The court generally agrees

with ATTC that Hypertherm's motion is not sufficiently specific

to be addressed in the absence of a trial context . However, with

respect to the Whitney electrode, the court excluded evidence of

sales offered by ATTC in opposition to Hypertherm's motion for

summary judgment because ATTC failed to disclose the evidence in

response to Hypertherm's discovery requests . ATTC had disclosed

a confidential engineering drawing of the Whitney electrode,

which evidence remains in the case .

ATTC argues that it should be allowed to use all of the

Whitney electrode evidence, including the sales evidence, to

defend against Hypertherm's claim of willful infringement .

Hypertherm contends that because ATTC did not disclose the sales

invoices in response to its discovery requests, that evidence

cannot be used for any purpose . Hypertherm also contends that

the drawing is now irrelevant because the court ruled in

Hypertherm's favor on the anticipation defense .

The sales invoices that were excluded by the August 6,

2008, order are inadmissible for any purpose at trial . The

affirmative defense of anticipation is no longer an issue in the

case . At this stage, ATTC has not demonstrated that evidence of

the Whitney drawing will be admissible at trial . Whether the

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drawing is relevant to an issue other than anticipation cannot be

resolved without the trial context in which it might be offered .

Therefore, Hypertherm's motion is granted as to the evidence

of sales of the Whitney electrode . To the extent circumstances

arise at trial in which ATTC contends evidence of the Whitney

electrode drawing is admissible, the issue will be addressed at

in the appropriate trial context . Before introducing that

evidence at trial, however, ATTC shall make an offer of proof at

sidebar, and the court will rule on admissibility .

II . Claim Constructio n

Hypertherm moves in limine to preclude ATTC from introducing

evidence at trial of claim construction that is inconsistent with

the court's ordered claim construction, that presents the

parties' positions on claim construction, that addresses claim

construction for an additional term or terms, and that relates to

the relative importance of claim elements in the patents-in-suit .

In response, ATTC agrees that the parties are barred from taking

positions that are inconsistent with the court's claim

construction . ATTC argues, however, that evidence about the

claim construction process is relevant to issues of noninfringement and patent invalidity . ATTC contends that jurors

would be assisted by considering evidence explaining the meanin g

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of a claim term for the purpose of comparing prior art and

accused products to the asserted claims of the patents-in-suit .

ATTC also argues that it should be allowed to point out to the

jury that Hypertherm is taking a position on claim construction

that is inconsistent with its position during the claim

construction process . In addition, ATTC proposes to introduce

evidence at trial for the interpretation of claims that have not

yet been construed .

"Claim construction is a question of law ." iLOR, LLC v .

Google, Inc . , 550 F .3d 1067, 1070 (Fed . Cir . 2008) . The court

has construed the claims in dispute . To the extent any other

claim construction issue, however unlikely, might arise, it would

not require evidence to be presented to the jury . Therefore, no

"evidence" related to claim construction will be permitted at

trial . Although an evidentiary ruling can rarely be made in a

vacuum, ATTC offers no basis to conclude that evidence of the

claim construction process would be admissible .

Extensive time and resources have been spent on claim

construction in this case . The parties have had more than ample

time to raise claim construction issues, which was the principle

purpose of the Markman hearing held on January 16, 2008 . The

court's claim construction order issued on January 29, 2008 .

ATTC moved for reconsideration of the claim construction order ,

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which was granted as to one term and otherwise denied on March

20, 2008 . Nevertheless, the parties raised additional claim

construction issues in the context of summary judgment motions,

which were resolved on February 3, 2009 . Raising additional

claim construction issues as trial approaches or at trial

suggests questionable and dilatory tactical maneuvers that would

be likely to interfere with the orderly progress of the case and

the trial .

Hypertherm's motion is granted .

III . Unenforceabilitv Defens e

ATTC initially raised an affirmative defense against

Hypertherm's infringement claims that the patents-in-suit were

unenforceable . On November 13, 2007, the parties filed a

stipulation of dismissal of the affirmative defense of

unenforceability . Hypertherm moves to preclude ATTC and its

witnesses from offering any evidence or testimony about

unenforceability of the patents-in-suit and about criticisms of

the patent office .

ATTC responds that Hypertherm's motion is too broad and too

vague to support the order it seeks but represents that it will

not introduce evidence pertaining to its unenforceability defense

or evidence for the purpose of criticizing the patent office . I t

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contends, however, that evidence that could be pertinent to

unenforceability, such as prior art that ATTC believed

invalidated the patents-in-suit, could be relevant to counter

Hypertherm's willful infringement claim .

The court will decide, in the trial context, the

admissibility of evidence offered about the unenforceability of a

patent for purposes of opposing willful infringement . Because

the affirmative defense of unenforceability has been dismissed by

stipulation, however, it is unlikely that ATTC will be permitted

to attempt to prove that the patents-in-suit are unenforceable

for purposes of showing that it did not willfully infringe the

patents . Before introducing such evidence at trial, however,

ATTC shall make an offer of proof at sidebar, and the court will

rule on admissibility .

IV . Obviousness Standard

While this case has been pending, the Supreme Court decided

KSR Int'l Co . v . Teleflex Inc . , 550 U .S . 398, 127 S . Ct . 1727

(2007), which modified the standard for determining obviousness .

Hypertherm is concerned that because the patents-in-suit were

granted prior to KSR, when a somewhat different standard was used

for determining whether an invention was obvious based on prior

art, ATTC will argue at trial that the presumption of paten t

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validity should not apply in this case .

ATTC responds that it does not contest the rule that patents

are presumed to be valid and agrees that the presumption of

patent validity has not been changed by KSR . ATTC also suggests,

however, that the jury should be instructed that KSR changed the

obviousness standard .

The standard articulated in KSR governs this case . To the

extent the jury will address factual issues pertaining to

obviousness, jury instructions will be based on the KSR standard .

The jury will not hear evidence about or be instructed about any

change in the obviousness standard or about any inferences or

implications related to the changes in the law .

V . ATTC's Patents and Patent Application s

Hypertherm argues that ATTC should not be permitted to

present evidence about its own patents and patent applications

because only Hypertherm's patents are at issue in this case .

ATTC responds that Hypertherm is attempting to show that ATTC is

an inferior business based on copying the products invented and

patented by others . It contends that if Hypertherm pursues that

theory at trial, it should be permitted to introduce evidence of

its own patents and patent applications to show that its business

is not based on copying others' products .

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Whether evidence of ATTC's own patents and patent

applications would be relevant and admissible to rebut the

evidence ATTC anticipates from Hypertherm cannot be decided

outside of the trial context . Therefore, the motion is denied

without prejudice to renew during trial if the issue arises .

VI . Expert Opinions from Fact Witnesse s

Hypertherm has moved to strike the testimony of ATTC's

technical expert witness, James Sprague, and a hearing is

scheduled on that motion . Related to that motion, Hypertherm

also moves to preclude ATTC from offering opinion testimony

through fact witnesses . ATTC contends that in "appropriate

circumstances" lay opinions on infringement and patent invalidity

are admissible .

"Infringement occurs when a properly construed claim of an

issued patent covers an accused device ." DSW, Inc . v . Shoe

Pavilion, Inc ., 537 F .3d 1342, 1346 (Fed . Cir . 2008) . That

determination is made by comparing the claim terms to the accused

device . Cybor Corp . v . FAS Techs ., Inc . , 138 F .3d 1448, 1454

(Fed . Cir . 1998) . In infringement cases involving complex

technology, such as plasma arc torches, expert opinion testimony

is required to overcome expert opinion produced by the other

party . Centricut, LLC v . Esab Group, Inc . , 390 F .3d 1361, 1370

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(Fed . Cir . 2004) .

A witness may be permitted to testify as an expert on the

issues of noninfringement or invalidity only if the witness is

qualified as an expert in the pertinent art . Sundance, Inc . v .

DeMonte Fabricating Ltd . , 550 F .3d 1356, 1363 (Fed . Cir . 2008) .

In addition, a witness who has not been qualified as an expert

qualified in the pertinent art cannot give opinions about any of

the underlying factual issues pertaining to obviousness and

anticipation . Id . at 1384 . A lay witness is precluded from

providing opinions that are "based on scientific, technical, or

other specialized knowledge within the scope of Rule 702 ." Fed .

R . Evid . 701(c) .

Given the legal landscape, no lay opinion testimony will be

permitted on the issues of infringement and patent invalidity .

Whether any other lay opinion testimony would be relevant in this

case and admissible under Rule 701 must be addressed in the trial

context .

VII . Evidence Pertaining to Counterclai m

ATTC brought a counterclaim in this case, alleging claims

under the Sherman Act, the Lanham Act, 35 U .S .C . § 292, and state

law . The patent infringement claims and the counterclaim are

bifurcated for trial . In its motion, Hypertherm requests a n

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order precluding ATTC from making any reference to bifurcation

and from offering any testimony, argument, opinions, or evidence

related to its counterclaim or discovery directed to the

counterclaim . ATTC argues that evidence produced in discovery on

its counterclaim may be relevant to the infringement claims and

should be admissible at least for cross-examination and rebuttal .

In support of its motion, Hypertherm relies on a statement

made by ATTC's counsel in a hearing before the magistrate judge

on December 4, 2008 . The hearing was held to consider ATTC's

motions to compel Hypertherm to answer interrogatories, to admit

certain facts, and to produce a witness for deposition pursuant

to Federal Rule of Civil Procedure 30(b)(6) . ATTC sought

discovery about Hypertherm's knowledge of the validity or

invalidity of the '988 patent, one of the patents-in-suit,

purportedly to support its contention in its counterclaim that

the infringement action was "objectively baseless . "

At the hearing, Hypertherm argued that the requested

discovery had been excluded for purposes of the patent

infringement claims, that it was not relevant to the

counterclaim, and that ATTC was attempting an "end run" around

the court's prior order striking the evidence . Counsel for ATTC

responded :

I can represent to the court that nothing that will b e

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permitted for discovery in the antitrust case would be

used in the patent case, categorically, without any

reservation, and we can give the court any assurance

necessary, including ethical screens or whatever else

would be satisfactory that this discovery from the

bifurcated case is only relevant and necessary for the

elements of the antitrust claim .

Hearing Transcript at 9 . The magistrate judge ordered the

depositions ATTC requested to go forward . After a telephonic

hearing on the parties' motions and objections, held on December

22, 2008, the court vacated the magistrate judge's order and

stayed discovery on patent invalidity, for purposes of the

counterclaim, pending the determination of patent invalidity in

the patent infringement claims . Therefore, ATTC was not

permitted to go forward with discovery of the invalidity matters

that it sought at the December 4, 2008, hearing . Counsel's

statements, although worded more broadly, are construed to be

limited to that discovery matter .

As has been made abundantly clear in the course of this

case, the parties are limited to evidence that was disclosed

during the discovery process . Because discovery and trial of the

patent claims are bifurcated from the counterclaim, evidence that

is to be introduced at the infringement trial must have been

disclosed through discovery related to the infringement claims,

and be otherwise admissible . Although ATTC generally agrees not

to introduce evidence obtained in counterclaim discovery, it als o

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argues that it should be allowed to refer to deposition testimony

by Hypertherm's witnesses who were deposed for purposes of the

counterclaim .

Whether ATTC can refer to deposition testimony of

Hypertherm's witnesses from counterclaim depositions will have to

be resolved in the context of trial . ATTC, however, will not be

permitted to augment discovery on the patent infringement claims

with discovery conducted exclusively for purposes of the

counterclaim . On the other hand, if the same topics were

addressed in discovery in both parts of the case, ATTC may be

able to establish a basis for using deposition transcripts from

counterclaim discovery in the patent infringement trial .

VIII . Evidence Related to Settlement and Mediation

Hypertherm contends that Federal Rule of Evidence 40 8

precludes ATTC from referring to or offering evidence at trial

that is related to the parties' settlement negotiations and

mediation . Rule 408(a) prohibits evidence of "furnishing or

offering or promising to furnish--or accepting or offering or

promising to accept--a valuable consideration" to settle a claim

and evidence of "conduct or statements made in compromise

negotiations regarding the claim" to be offered to prove

liability for, invalidity of, or the amount of a claim or t o

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impeach by a prior inconsistent statement . Settlement evidence

is permitted, however, if not prohibited by subsection (a), to

show bias or to counter a charge of undue delay . In addition, if

a party "opens the door" by introducing settlement evidence, the

opposing party may counter with evidence of settlement

negotiations . Nat'l Union Fire Ins . v . West Lake Academy, 548

F .3d 8, 21-22 (lst Cir . 2008) .

ATTC asserts that it intends to offer evidence at trial

about changes it made in its designs for some of the accused

products, after mediation in May of 2008, to support its defense

against Hypertherm's charge of willful infringement . It also

states that it will not reference the mediation discussions

directly but does intend to refer to its ongoing discussions with

Hypertherm related to design changes of its accused products to

counter willful infringement .

Rule 408(a) bars evidence about settlement discussions that

is offered to invalidate a claim in the case . ATTC argues that

its discussions with Hypertherm about designing around th e

patents would negate evidence that it willfully infringed the

patents, providing a defense to that claim . As described, the

discussion evidence appears to run directly afoul of Rule 408(a) .

In addition, even in the absence of Rule 408, ATTC has not shown

that its current negotiations with Hypertherm would be relevan t

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to the question of whether it willfully infringed Hypertherm's

patents in the past . See, e .g ., Bridgeport Music, Inc . v . Justin

Combs Publ'a, 507 F .3d 470, 480-81 (6th Cir . 2007) ; Century

Wrecker Corp . v . E .R . Buske Mfg . Co ., Inc . , 898 F . Supp . 1334,

1341 (N .D . Iowa 1995) .

A final evidentiary ruling, however, cannot be made without

the trial context where the evidence offered is considered in

light of its purpose and any other evidentiary considerations .

Therefore, the motion is denied without prejudice to make

appropriate objections at trial . Before introducing evidence

from settlement negotiations or mediation at trial, however, ATTC

shall make an offer of proof at sidebar, and the court will rule

on admissibility .

IX . Other Litigatio n

ATTC moves to preclude Hypertherm from presenting evidence

at trial about litigation between them in Hvpertherm, Inc . v .

American Torch Tip Co . , 92-cv-069-SDM (M .D . Fla . 1992) . ATTC

represents that the prior litigation involved Hypertherm's

patents that are not patents-in-suit in this case . In

particular, ATTC argues that evidence of its willful

infringement, found in the prior case, should be excluded from

this case . ATTC argues that the prior litigation is not relevan t

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and is likely to be unfairly prejudicial, particularly in light

of the intervening change in the standard for willfulness . See

Fed . R . Evid . 402 & 403 ; see also In re Seagate Tech ., LLC , 497

F .3d 1360, 1371 (Fed . Cir . 2007) .

In response, Hypertherm recites the litigious history

between the parties . Hypertherm argues that the finding in the

Florida case that ATTC willfully infringed the patents at issue

there is "highly probative regarding ATTC's willful infringement

in this case ." It further contends, relying on Applied Med . Res .

Corp . v . U .S . Surgical Corp . , 435 F .3d 1356, 1365-66 (Fed . Cir .

2006), that a finding of willfulness in prior litigation between

the same parties is admissible in subsequent litigation to show

willfulness .

Since the parties' Florida litigation, however, the Federal

Circuit "changed] the standard for a finding of willfulness from

one of an affirmative duty of care to one of objectiv e

unreasonableness ." Minks v . Polaris Indus . Inc ., 546 F .3d 1364,

1380 (Fed . Cir . 2008) . Even if the circumstances in Applied Med .

pertained here, which is not apparent, the intervening change in

the willfulness standard undermines any relevance the willfulness

finding in the Florida case might have had for purposes of this

case . See Voda v . Cordis Corp . , 536 F .3d 1311, 1328-39 (Fed .

Cir . 2008) (vacating a finding of willfulness due to th e

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intervening change in the standard) .

Therefore, the court will not allow Hypertherm to introduce

evidence of the outcomes in the parties' previous litigation, and

in particular, evidence of the willfulness finding in the Florida

litigation will not be admissible to support Hypertherm' s

willfulness claim in this case . As in all cases, however, to the

extent that witnesses' prior statements made in connection with

the parties' previous litigation meet the requirements of Federal

Rule of Evidence 613, they may be used for impeachment purposes .

ATTC's motion is granted .

Conclusion

To the extent the court reserved judgment on evidentiar y

issues for determination in the trial context, counsel for the

offering party shall make an offer of proof at sidebar, and the

court will rule on admissibility .

For the foregoing reasons, the parties' motions are decided

as follows :

Hypertherm's motion to exclude evidence that contradicts

the court's prior rulings (document no . 429) is granted as to the

evidence of Whitney electrode sales invoices and is otherwise

denied, subject to evidentiary ruling at trial .

Hypertherm's motion to exclude evidence pertaining to clai m

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construction (document no . 430) is granted .

Hypertherm's motion to preclude evidence pertaining to

unenforceability (document no . 431) is granted as to evidence

criticizing the patent office and is otherwise denied, as is more

fully explained in this order, subject to evidentiary rulings at

trial .

Hypertherm's motion to preclude ATTC from introducing

evidence or opinion about the obviousness standard (document no .

432) is granted .

Hypertherm's motion to preclude ATTC from introducing

evidence of its own patents and patent applications (document no .

433) is denied without prejudice to renew during trial if the

issue arises .

Hypertherm's motion to preclude ATTC from introducing lay

opinion testimony on expert issues (document no . 446) is granted,

as is more fully explained in this order .

Hypertherm's motion to exclude evidence, testimony, and

references to bifurcation and to the counterclaim (document no .

435) is granted in part and denied in part, without prejudice, as

is more fully explained in the order .

Hypertherm's motion to exclude evidence, argument, and

testimony regarding proposed settlement or compromise discussions

(document no . 436) is denied, subject to evidentiary ruling at

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trial .

ATTC's motion to exclude evidence of the outcomes in prio r

litigation between the parties (document no . 421) is granted .

SO ORDERED .

/s/ Joseph A . DiClerico, Jr .

Joseph A . DiClerico, Jr .

United States District Judge

February 19, 200 9

cc : Benjamin Stern, Esq .

Colin Cabral, Esq .

Jill Anderson, Esq .

Jacob Baron, Esq .

Steven Bauer, Esq .

Lucas Blower, Esq .

Seth Cannon, Esq .

Joseph Capraro, Jr ., Esq .

Christopher Carney, Esq .

Jeffery Cross, Esq .

Joseph Dattilo, Esq .

Ami Gandhi, Esq .

Maia Harris, Esq .

Marc Kallish, Esq .

Rhett Krulla, Esq .

Jonathan Lax, Esq .

Richard Nelson, Esq .

W . Scott O'Connell, Esq .

Jeremy Oczek, Esq .

Richard Rochford, Jr ., Esq .

David Ruoff, Esq .

John Shapiro, Esq .

John Skeriotis, Esq .

Wayne Tang, Esq .

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