Source: https://docs.justia.com/cases/federal/district-courts/arizona/azdce/2:2011cv01965/647058/71
Timestamp: 2016-10-24 03:38:03
Document Index: 779814229

Matched Legal Cases: ['§ 1125', '§ 102', '§102', '§ 102', '§102', '§102', '§ 271', '§ 271', '§ 271', '§ 271', '§ 271', '§ 271', '§271', '§102', '§ 2201', '§102', '§102', '§102', '§102', '§102', '§102', '§102', '§ 24']

ORDER - The Court rules as follows: ORDERED that 53 Creatives Motion for Summary Judgment asking this Court to declare the 533 Patent invalid is DENIED; 53 Creatives Motion for Summary Judgment on Counts I and III is DENED for Kramer et al v. Creative Compounds LLC :: Justia Dockets & Filings Log In
Kramer et al v. Creative Compounds LLC
ORDER - The Court rules as follows: ORDERED that 53 Creatives Motion for Summary Judgment asking this Court to declare the 533 Patent invalid is DENIED; 53 Creatives Motion for Summary Judgment on Counts I and III is DENED. 53 Creatives Moti on for Summary Judgment on Count II only is GRANTED. FURTHER ORDERED that 51 ThermoLifes Motion for Summary Judgment is DENIED as to Count II. Consistent with this Order, Counts I and III are dismissed, without prejudice, because they are not rip e. FURTHER ORDERED that 57 ThermoLifes Cross-Motion for Summary Judgment on CV 11-2033-PHX-JAT (in CV 11-2033-PHX-JAT Creative seeks a declaration that the 533 Patent is invalid) is GRANTED. ThermoLife shall submit a proposed form of judgment for C V 11-2033-PHX-JAT within 17 days of the date of this order. Creative may file any objections to the judgment within 14 days of when it is filed. FINALLY ORDERED that because neither party moved for summary judgment on Count IV in CV 11-1965-PHX-JAT, the Court will proceed to trial on that claim. An Order setting Final Pretrial Conference will follow. Signed by Senior Judge James A Teilborg on 11/15/2013.(TLB)
Ron Kramer, an Arizona resident; Sal
Abraham, a Florida resident; ThermoLife
International LLC, an Arizona limited
No. CV-11-01965-PHX-JAT (Lead)
No. CV-11-02033-PHX-JAT (Con)
Creative Compounds LLC, a Nevada
Pending before the Court is Ron Kramer’s, Sal Abraham’s, and ThermoLife
International LLC’s (collectively, “ThermoLife”) Motion for Summary Judgment on
Defendant’s Declaratory Judgment Complaint and Plaintiff’s Claim for Patent
Infringement, Creative Compounds LLC’s (“Creative”) Motion for Summary Judgment,
and ThermoLife’s Cross-Motion for Summary Judgment on Creative’s Newly Asserted
Defense of Invalidity Pursuant to 102(a) and (b). Additionally, the Court examines the
ripeness of ThermoLife’s patent infringement claims sua sponte.
Ron Kramer and Sal Abraham are the sole inventors listed on U.S. Patent No.
7,919,533 (“the ’533 Patent”). (CV 11-1965, Doc. 52-1, Exhibit 2). The ’533 Patent
generally concerns the use of diiodothyroacetic acid (“DIAC”) as a dietary supplement to
promote lean body mass. See id. The claim at issue in this suit, Claim 11 of the ’533
Patent, reads “[a] dietary supplement comprising [DIAC].” Id.
On September 23, 2011, Creative filed a complaint in the Eastern District of
Missouri seeking a declaratory judgment that Creative did not infringe the ’533 Patent
and that the ’533 Patent is invalid. (CV 11-02033, Doc. 1). In response, ThermoLife
filed a complaint in this Court alleging that Creative infringes the ’533 Patent, induces
infringement of the ’533 Patent, contributes to infringement of the ’533 Patent, and
falsely advertises its products in violation 15 U.S.C. § 1125(a)(1)(B). (CV 11-1965, Doc.
1). These two actions were eventually consolidated and assigned to this Court. (CV 11-
1965, Doc. 12).
In the pending motions for summary judgment, ThermoLife now admits that
Creative has not sold any products containing DIAC. (CV 11-1965, Doc. 51 at 2 n.1).
Instead, ThermoLife now asserts that Creative infringed the ’533 Patent by offering
DIAC for sale through emails with attached advertisements. Id. at 4.
In response, Creative requests that the Court grant summary judgment that the
’533 Patent is invalid under 35 U.S.C. § 102(a) and (b) because the invention was both
publicly used and on sale before the patent was filed.1 (CV 11-1965, Doc. 53 at 6-10). In
particular, Creative alleges that, sometime in the year 2000, Derek Cornelius, currently a
consultant to Creative, received and used a sample of DIAC from Francisco Tabak as part
of an offer by Mr. Tabak to sell DIAC to Syntrax, Mr. Cornelius’s company. Id.
Creative contends that these actions invalidate the ’533 Patent because DIAC was used
by others and offered for sale more than one year before the ’533 Patent was filed on
October 20, 2004. Id.
In the motions before the Court, the parties seek summary judgment on
ThermoLife’s claims of direct, contributory, and induced patent infringement and
Although Creative has cited to 35 U.S.C. §102(a) and (b), 35 U.S.C. § 102 has
recently been amended. The two defenses to patent validity Creative alleges, however,
have been included in the new version of 35 U.S.C. §102, under subsection (a)(1). Thus,
the Court will refer to the new version of the statute from this point forward.
Creative’s claims that the ’533 Patent is invalid as anticipated under 35 U.S.C.
§102(a)(1). But, the Court is concerned that it lacks jurisdiction over ThermoLife’s
claims of direct, contributory, and induced infringement because ThermoLife has
admitted that Creative has not sold any DIAC. Thus, the Court will first examine the
ripeness of ThermoLife’s direct, contributory, and induced patent infringement claims
and then determine whether summary judgment is appropriate on any remaining issues.
“[I]nquiring whether the court has jurisdiction is a federal judge’s first duty in
every case.” Belleville Catering Co. v. Champaign Mkt. Place, L.L.C., 350 F.3d 691, 693
(7th Cir. 2003); see also Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1116 (9th Cir. 2004).
In order for a federal court to have jurisdiction, the action before it must meet the case or
controversy requirement of Article III of the Constitution. See Caraco Pharm. Labs.,
Ltd. v. Forest Labs., Inc., 527 F.3d 1278, 1290 (Fed. Cir. 2008).
justiciable under Article III only where . . . the issues presented are ripe for judicial
review.” Id. at 1291.
“[A]n action is
In the Federal Circuit,
[w]hether an action is “ripe” requires an evaluation of both
the fitness of the issues for judicial decision and the hardship
to the parties of withholding court consideration. As to the
first prong, an action is fit for judicial review where further
factual development would not significantly advance a court’s
ability to deal with the legal issues presented. As to the
second prong, withholding court consideration of an action
causes hardship to the plaintiff where the complained-of
conduct has an immediate and substantial impact on the
Id. at 1294-95 (internal citations and quotations omitted). Here, the Court is particularly
concerned with the second prong of the ripeness test because Creative has not actually
sold any DIAC.
The Ripeness of ThermoLife’s Direct and Contributory Patent
ThermoLife has alleged that Creative has infringed the ’533 Patent under 35
U.S.C. § 271(a). 35 U.S.C. § 271(a) provides that “whoever without authority makes,
uses, offers to sell, or sells any patented invention, within the United States or imports
into the United States any patented invention during the term of the patent therefor,
infringes the patent.” But, ThermoLife concedes that Creative has not made, used, or
sold any infringing product and that ThermoLife is not seeking any monetary damages.
(CV 11-1965, Doc. 51 at 2 n.1).
Instead, the “complained-of conduct” ThermoLife points to is an email and
attached product sheet that Creative sent to approximately eleven potential customers. Id.
at 4. The full text of the email is presented below:
Creative Compounds is pleased to introduce DIACtive brand
of diiodothyroacetic acid (DIAC), one of the most exciting
dietary supplements of the decade.
extensively with this novel ingredient, Creative Compounds
knows all of the intricacies surrounding its pharmacology and
usage. We have the unique ability to help your company
properly formulate and integrate this ingredient into a top
selling product on the market.
diiodothyroacetic acid products on the market that are not
pure! Beware of other products on the market that are highly
diluted but sell for an extremely high price. DIACtive is the
most pure, highest quality DIAC in the industry and is
GUARANTEED to be the lowest price diiodothyroacetic acid
Please see attached product summary and contact Creative
Compounds for more info today.
(CV 11-1965, Doc. 51-1 at 13) (emphasis in original). The attached product summary
contained language similar to the above email. Id. at 14. It further included a brief
description of the effects of DIAC. Id. The product summary ended with a request to
“[c]ontact Creative Compounds and get the best quality at the lowest price.” Id.
As an initial matter, it is difficult to see how an advertisement which resulted in
zero actual sales has a “substantial and immediate harm” on ThermoLife, particularly
when the product was not advertised to the general market but only to eleven specific
potential customers. But, 35 U.S.C. § 271(a) does provide that a patent can be infringed
by “offers to sell.” Accordingly, the Court will examine whether the Creative email
constitutes an offer to sell.
In Rotec Industries, Inc. v. Mitsubishi Corp., 215 F.3d 1246 (Fed. Cir. 2000), the
Federal Circuit examined the meaning of the offer to sell language of 35 U.S.C. § 271(a).
After a thorough analysis, the Federal Circuit concluded that “the meaning of ‘offer to
sell’ is to be interpreted according to its ordinary meaning in contract law, as revealed by
traditional sources of authority.” Id. at 255. One such traditional source of authority, the
Restatement (Second) of Contracts, defines an offer as “the manifestation of willingness
to enter into a bargain, so made as to justify another person in understanding that his
assent to that bargain is invited and will conclude it.” Restatement (Second) of Contracts
Examining the Creative email under this standard, it is clear, as a matter of law,
that Creative did not make an offer to sell under the meaning of 35 U.S.C. § 271(a). An
important requirement for a communication to be an offer is that the reader understands
that assent by them will conclude the deal. In the present case, both the email and the
attached product summary instruct the recipient to contact Creative for more information.
Thus, a recipient of the email would understand that more than their assent is required to
conclude the deal, i.e. additional communication with Creative.
Next, the email is missing key information typically associated with an offer for
sale. In particular, price and quantity information, which typically accompany any offer,
are noticeably absent from the Creative email. These absent terms show that a reader of
the email could not believe that only his or her assent was required to create a binding
contract. Thus, the Creative email is not an offer and could not have produced the
substantial and immediate harm of direct patent infringement. Accordingly, the Court
will dismiss ThermoLife’s direct patent infringement claim without prejudice for failing
to meet the jurisdictional requirement of ripeness.2
ThermoLife’s contributory patent infringement claim similarly rests on the
Creative emails being offers for sale. See 35 U.S.C. § 271(b). Accordingly, the Court
It is worth noting that Creative appears to concede that it made an offer to sell
DIAC. (CV 11-1965, Doc. 56 at 4). Whether a communication is an offer, however, is a
question of law. Thus, Creative’s concession is not binding on this Court.
will dismiss ThermoLife’s contributory patent claim without prejudice for failing to meet
the jurisdictional requirement of ripeness.
The Ripeness of ThermoLife’s Induced Infringement Claim
ThermoLife also claims that Creative has induced infringement of the ’533 Patent.
35 U.S.C. §271(b) provides that “[w]hoever actively induces infringement of a patent
shall be liable as an infringer.” “To establish liability under section 271(b), a patent
holder must prove that once the defendants knew of the patent, they actively and
knowingly aided and abetted another’s direct infringement.” DSU Med. Corp. v. JMS
Co., Ltd., 471 F.3d 1293, 1305 (Fed. Cir. 2006) (emphasis in original) (internal citations
and quotations omitted). Notably, induced infringement does not require “offers to sell,”
distinguishing induced infringement from direct and contributory infringement.
Under this lesser standard, the Creative email could have produced the substantial
immediate harm of induced patent infringement simply by informing and encouraging the
public how to use DIAC in an infringing way. The Creative email explains that DIAC is
“one of the most exciting dietary supplements of the decade” and that Creative has “the
unique ability to help your company properly formulate and integrate this ingredient into
a top selling product on the market.” (CV 11-1965, Doc. 51-1 at 13). This arguably
induces others to infringe Claim 11 of the ’533 Patent. Thus, the Court concludes that
ThermoLife’s claim for induced infringement is ripe and will reach the merits of
Creative’s motion for summary judgment that there was no induced infringement
In summary, after the Court’s examination of jurisdiction, the remaining issues are
ThermoLife’s allegations of induced infringement and Creative’s defenses of patent
invalidity under 35 U.S.C. §102(a)(1). The Court will now examine whether either party
is entitled to summary judgment on these issues.
Fed.R.Civ.P. 56(c)(1)(A)&(B). Thus, summary judgment is mandated “against a party
the non-movant to establish the existence of material facts. Id. The non-movant “must
do more than simply show that there is some metaphysical doubt as to the material facts”
by “com[ing] forward with ‘specific facts showing that there is a genuine issue for trial.’”
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (quoting
Fed.R.Civ.P. 56(e) (1963) (amended 2010)). A dispute about a fact is “genuine” if the
motion for summary judgment. Id. at 247-48. However, in the summary judgment
moving party. OddzOn Products, Inc. v. Just Toys, Inc., 122 F.3d 1396, 1401 (Fed. Cir.
Induced Patent Infringement (Count II in CV 11-1965)
Creative argues that the Court should grant summary judgment to Creative that no
induced patent infringement occurred because ThermoLife has not shown evidence of
another direct infringer. (CV 11-1965, Doc. 56 at 4). ThermoLife has provided no
argument in response. As the Court has already stated, induced infringement requires
that “once the defendants knew of the patent, they actively and knowingly aided and
abetted another’s direct infringement.” DSU Med. Corp., 471 F.3d at 1305 (emphasis in
original) (internal citations and quotations omitted). Because ThermoLife has provided
no evidence of “another’s direct infringement,” the Court grants summary judgment to
Creative on Thermolife’s induced infringement claim.
Creative’s Declaratory Judgment Action (CV 11-2033)
Having considered ThermoLife’s claims for patent infringement, the Court now
turns to Creative’s request that the Court issue a declaratory judgment that the ’533
Patent is invalid.
In the context of patent law, a court has jurisdiction over a declaratory judgment
action under 28 U.S.C. § 2201 when “the facts alleged, under all the circumstances, show
that there is a substantial controversy, between parties having adverse legal interests, of
sufficient immediacy and reality to warrant the issuance of a declaratory judgment.”
MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007). Here, Creative has
actually been sued for patent infringement, despite the dismissal of some claims as
unripe. This suit for of patent infringement creates sufficient controversy to support an
examination of the ’533 Patent’s validity. See Benitec Australia, Ltd. v. Nucleonics, Inc.,
495 F.3d 1340, 1345 (Fed. Cir. 2007). Accordingly, the Court will now examine whether
either party is entitled to summary judgment on Creative’s defenses of patent invalidity.
Anticipation under 35 U.S.C. §102(a)(1) through Prior
Creative asserts that the ’533 Patent is invalid as anticipated under 35 U.S.C.
§102(a) through public use. (CV 11-1965, Doc. 53 at 6-9). 35 U.S.C. §102(a)(1)
provides that a patent is invalid if the invention “was . . . in public use . . . before the
effective filing date of the claimed invention.” In particular, Creative argues that the
claimed invention was in public use before the filing date of the invention because Mr.
Cornelius and Mr. Cornelius’s employee Brenda Nixon used DIAC as a nutritional
supplement before the patent was filed. (CV 11-1965, Doc. 53 at 8-9). Creative relies on
the deposition of testimony of Mr. Cornelius and Ms. Nixon for this argument. Id.
Creative has also produced three emails between Mr. Tabak and Mr. Cornelius discussing
the sale of DIAC to Syntrax, Mr. Cornelius’ company. See (CV 11-1965, Doc. 54-2);
(CV 11-1965, Doc. 54-3).
In response, ThermoLife asserts that Creative has failed to meet the clear and
convincing standard required to prove invalidity because Mr. Cornelius’ and Ms. Nixon’s
testimony is uncorroborated. (CV 11-1965, Doc. 57 at 12-14). Further, ThermoLife
contends that Mr. Cornelius and Ms. Nixon could not have used “the invention” because
Mr. Cornelius and Ms. Nixon did not know how DIAC would act a nutritional
supplement. Id. at 9-12.
In Juicy Whip, Inc. v. Orange Bang, Inc., 292 F.3d 728, 740-44 (Fed. Cir. 2002),
the Federal Circuit decided whether the testimony of six witnesses, without any
corresponding documentation, was sufficient evidence as a matter of law to invalidate a
defendants and the events the witnesses described happened eight to twelve years before
trial. Id. at 743. The Federal Circuit explained that the witness’s credibility must be
examined under the Reuter factors. Id. at 741. These factors include:
All of the witnesses were either defendants or business associates of the
(1) delay between event and trial, (2) interest of witness, (3)
contradiction or impeachment, (4) corroboration, (5)
witnesses’ familiarity with details of the alleged prior
structure, (6) improbability of prior use considering state of
the art, (7) impact of the invention on the industry, and (8)
relationship between the witness and alleged prior user.
Id. (citing In re Reuter, 670 F.2d 1015, 1021 n.9 (C.C.P.A. 1981)). Examining only the
delay between the event and trial and the interest of the witnesses, the Federal Circuit
concluded that the witnesses’ testimony “was insufficient as a matter of law to surmount
the clear and convincing evidence hurdle” required to invalidate a patent.
In the present case, Mr. Cornelius is employed as a consultant by defendant
Creative and Ms. Nixon was a previous employee of Mr. Cornelius. Thus, Mr. Cornelius
and Ms. Nixon are interested witness for the purpose of the Reuter factors. See id. at 743;
see also Oney v. Ratliff, 182 F.3d 893, 896 (Fed. Cir. 1999) (“The uncorroborated oral
testimony of [the accused infringer], as the inventor, and his close associates would be
insufficient to prove invalidity.”). Further, the events described by Mr. Cornelius and
Ms. Nixon occurred in the year 2000, approximately 13 years before any possible trial
date. Taken together, these two factors weigh heavily in favor of a finding that Creative
has not provided the necessary clear and convincing evidence to prove invalidity.
Next, the emails between Mr. Cornelius and Mr. Tabak do not corroborate any of
Mr. Cornelius’ or Ms. Nixon’s testimony. No email ever mentions that Mr. Cornelius or
Ms. Nixon used DIAC. The emails only contemplate the sale of DIAC. Thus, the emails
do not sufficiently corroborate Mr. Cornelius’s and Ms. Nixon’s testimony. See Finnigan
Corp. v. Int’l Trade Comm’n, 180 F.3d 1354, 1370 (Fed. Cir. 1999) (holding that an
article written by a witness describing the use of every claim limitation except one was
insufficient to corroborate that witness’ oral testimony that he had practiced the final
limitation). Accordingly, the Court finds that, as a matter of law, Creative has failed to
produce clear and convincing evidence of prior use.
Anticipation under 35 U.S.C. §102(a)(1) through the On
Alternatively, Creative asserts that the ’533 Patent is invalid as anticipated under
35 U.S.C. §102(a)(1) because the invention was on sale before the patent was filed. (CV
11-1965, Doc. 53 at 9-10). 35 U.S.C. §102(a)(1) provides that a patent is invalid if the
invention “was . . . on sale . . . before the effective filing date of the claimed invention.”
Creative particularly alleges that an email sent from Mr. Tabak to Mr. Cornelius was a
commercial offer to sell the invention before the filing date of the patent. (CV 11-1965,
Doc. 53 at 9-10).
In Pfaff v. Wells Electronics, 525 U.S. 55, 67 (1998), the Supreme Court
interpreted the “on sale” bar of the previous version of 35 U.S.C. §102. The Supreme
Court explained that the on sale bar requires that “the product must be a commercial offer
for sale” and the “invention must be ready for patenting.” Id. ThermoLife argues that
Creative has failed as a matter of law to meet the second prong of this test. (CV 11-1965,
Doc. 57 at 7-9). But, the Court must first consider, as a matter of law, whether the email
sent by Mr. Tabak is a commercial offer for sale.
The Federal Circuit, interpreting Pfaff, has explained that “the language used [in
Pfaff] strongly suggests that the offer must meet the level of an offer for sale in the
contract sense, one that would be understood as such in the commercial community.
Such a reading leaves no room for activity which does not rise to the level of a formal
offer under contract law principles.” Grp. One, Ltd. v. Hallmark Cards, Inc., 254 F.3d
1041, 1046-47 (Fed. Cir. 2001) (internal quotations omitted).
principles” expressed in the Restatement (Second) of Contracts, as already explained,
require an offer to be immediately acceptable by the person who receives it.
Restatement (Second) of Contracts § 24.
The “contract law
The email sent by Mr. Tabak purports to describe the “terms” for an “exclusive”
on the purchase of DIAC. The terms are expressed as follows:
1) As far as we can control end usage, it will be restricted to
[DIAC] used for nutritional purposes in the US.
2) An expiry date for the exclusive should be fixed, with a
way to extend it if necessary or convenient.
3) You will give me an idea of how much [DIAC] you
estimate you will be using after you launch your product with
it. Once your product is in the market, a minimum sale
amount should be agreed upon.
4) The exclusive arrangement will not be valid from the
moment another firm starts supplies of [DIAC] to the US
nutraceutical market. If this occurs you agree to buy only
from us if price and quality are comparable to those of any
5) You will advise us immediately if, for any reason, you
drop the [DIAC] project or do not need an exclusive any
6) If you have not yet launched your product, there should be
some compensation for [Mr. Tabak’s company] if we have to
reject eventual quotation requests or orders for [DIAC] during
the exclusive period. I have not thought about the way to
calculate such a compensation; probably the best [sic] will be
to discuss it when the moment comes.
(Doc. 54-3, Exhibit C). The email concludes with the statement: “Please let me have
your ideas on this. Once we reach an adequate agreement, I will have to ask the possible
future owner of 50% of the company to give his approval.” Id.
Examining the contents of the email, the Court determines, as a matter of law, that
the email is not a commercial offer for sale. The email specifically requests that Mr.
Cornelius provide Mr. Tabak with more information, and contemplates a discussion of
terms “when the moment comes.” Further, Mr. Tabak explains that any deal will require
the approval of the “future owner of 50% of the company.” Thus, the email specifically
contemplates additional discussion and approval before any contract is made.
Accordingly, the Tabak email is not an offer for sale and the ’533 Patent is not invalid as
IT IS ORDERED that Creative’s Motion for Summary Judgment (Doc. 53)
asking this Court to declare the ’533 Patent invalid is denied; Creative’s Motion for
Summary Judgment (Doc. 53) on Counts I and III is denied. Creative’s Motion for
Summary Judgment (Doc. 53) on Count II only is granted.
IT IS FURTHER ORDERED that ThermoLife’s Motion for Summary Judgment
(Doc. 51) is denied as to Count II. Consistent with this Order, Counts I and III are
dismissed, without prejudice, because they are not ripe.
IT IS FURTHER ORDERED that ThermoLife’s Cross-Motion for Summary
Judgment (Doc. 57) on CV 11-2033 (in CV 11-2033 Creative seeks a declaration that the
’533 Patent is invalid) is granted. ThermoLife shall submit a proposed form of judgment
for CV 11-2033 within 17 days of the date of this order. Creative may file any objections
to the judgment within 14 days of when it is filed.
IT IS FINALLY ORDERED that because neither party moved for summary
judgment on Count IV in CV 11-1965, the Court will proceed to trial on that claim. An
Order setting final pretrial conference will follow.