Opinion ID: 4542383
Heading Depth: 2
Heading Rank: 2

Heading: Graphic’s Patent-Infringement Suit

Text: Although Graphic’s patent-infringement claims against Inline are not part of the present case, the context of the patent dispute illuminates this appeal. In 2001, well before the patent litigation between Graphic and Inline ensued, Graphic and Chef America, Inc. (“Chef America”)—Nestlé’s predecessor—partnered “on two projects related to susceptor sleeve packaging: ‘Project Quantum’ involved increasing filling in Hot Pockets; ‘Project Roxanne’ was the packaging component of Project Quantum.” Appellant’s Br. at 7–8 (internal citations omitted). Graphic’s business development director, Jeff Voyzey, served as the primary sales contact for these two projects. Graphic and Chef America developed an original design for the susceptor sleeve in 2001. This design included a four-sided sleeve “with tear strips, pillow packs, and gussets.” Inline Packaging, 351 F. Supp. 3d at 1199. Graphic created drawings of Chef America’s concept and sold 500 sample sleeves to Chef America for just over $3,600. In particular, Graphic sold drawing sample sleeves 50019D and 50019F. -3- In 2005, Graphic and Nestlé entered into a Joint Development Agreement (JDA) to redesign the susceptor sleeve.2 Graphic’s intellectual property counsel—Barry Biddle—negotiated, drafted, and approved the JDA. The JDA required Nestlé to provide “packaging criteria and concepts, assist Graphic as requested, and . . . test concepts developed by Graphic.” Id. It also “provided for seven years of mutual exclusivity—Nestlé would purchase 100% of its requirements from Graphic and Graphic would not provide the same packaging to Nestlé’s competitors—for any designs that Nestlé ultimately selected.” Id. In the JDA, Graphic and Nestlé also contemplated securing their intellectual property with patents. “Inventions that were solely invented by one party were to remain the property of the originating party. Inventions that were jointly invented were to be owned jointly in accordance with the law governing such jointly owned patents.” Id. (cleaned up). Pursuant to the JDA and Project Roxanne, Graphic obtained several patents that claimed priority to a provisional patent application filed on December 8, 2005, and a non-provisional patent application filed on December 6, 2006. Four of the patents are at issue in the instant litigation (the “asserted patents”).3 Graphic asserted patent claims on the redesign of the susceptor sleeve for Nestlé’s frozen food products, including its Hot Pockets® brand. The patents “claim unique sleeves with a distinctive visual appearance that serve as containers for browning and/or crisping food products in microwaves and as carrying containers after heating.” Appellee’s Br. at 5. 2 At this point, Nestlé had acquired Chef America. 3 The relevant patents at issue are designated as United States design patents D694,106; D694,124; and D727,145. United States patent 8,872,078 (“’078 patent”)—designated as the main utility patent—has been declared unpatentable based on obviousness. See infra n.4. -4- On its patent applications, Graphic listed its employee—Kelly Fitzwater, a computer-aided design (CAD) drafter—as the first and sole inventor of the redesign claimed in the asserted patents. Fitzwater began the redesign process by modifying drawing sample 50019D. However, Fitzwater did not work alone. Graphic and Nestlé—through its former packaging engineer, Cory Brower—collaborated throughout the entire process. Brower provided Graphic with certain concepts and feedback while Fitzwater implemented those ideas into the ultimate redesign. During the redesign process, Brower and Voyzey requested that Fitzwater add or delete certain features from various drawings she created. After modifying the sleeve to include only one tear down panel in drawing 51616G, Fitzwater signed three new invention disclosures. That, in turn, triggered Graphic to seek full patent protection for the completely revised design. A few years later, in 2011, Inline secured Nestlé’s Kahiki susceptor-sleeve business for 2012 and 2013. Graphic noted Inline’s rise as a serious competitor in the susceptor-packaging market. This eventually prompted Graphic to “play the patent card.” Inline Packaging, 351 F. Supp. 3d at 1198 (internal quotation omitted). Upon renewal of its susceptor-sleeve business in 2014, Nestlé held a one-day auction to choose the companies that would supply susceptor sleeves for its Kahiki, Croissant Pockets, and Hot Pockets® product lines. The auction’s terms and conditions “provided that a two or three year contract would be awarded, that the lowest bid price does not guarantee a business award, and that a formal contract would be drafted after the auction that would take precedent over anything specified in the [request for proposal].” Id. at 1196. Using an online system, Nestlé initially informed Inline that it had been awarded Nestlé’s entire susceptor-sleeve business. But Nestlé later decided to split the business between Inline and Graphic after Graphic notified Nestlé “that it had -5- patents on [the] susceptor sleeves [requested in the proposal], and that a new supplier would likely be infringing those patents if Nestlé elected to steer its susceptor business away from Graphic.” Id. at 1197. As a result, Nestlé awarded Inline its Kahiki and Croissant Pockets product lines and awarded Graphic its Hot Pockets® line, which represented about 90 percent of Nestlé’s entire susceptor-sleeve business. In May 2015, Graphic sent a cease-and-desist letter to Inline asserting infringement of its patents. Graphic’s letter stated its intention to sue Inline for patent infringement if Inline failed to comply with its request. After Graphic notified Nestlé about the cease-and-desist letter, Nestlé awarded Graphic a three-year extension in which Nestlé had to purchase 85 percent or more of its 2016 susceptor-sleeve business from Graphic. In June 2015, Graphic filed its patent-infringement suit against Inline based on its asserted patents. See Graphic Packaging Int’l, LLC v. Inline Packaging, LLC, No. 15-CV-03476-ECT-LIB, 2019 WL 4786148 (D. Minn. Oct. 1, 2019).4 4 Graphic initially filed suit against Inline in the District of Delaware. The District of Delaware transferred the case to the District of Minnesota. Id. at . Inline successfully petitioned for inter partes review of Graphic’s ’078 patent. See id. The district court stayed Graphic’s patent-infringement case, and the United States Patent Trial and Appeal Board (“Board”) eventually invalidated the ’078 patent. Id. After the Federal Circuit affirmed the Board’s decision, the district court lifted the stay in the patent-infringement case. Id. Therefore, Graphic’s patent-infringement case only involves the three design patents. Id. In October 2019, the district court entered an order adopting Graphic’s claim construction for the asserted patents, see id. at , and at the filing of this opinion, the case remains pending. -6-