Control Laser Corporation v. Smith

Background

Control Laser Corporation obtained rights to U.S. Patent No. 7,271,012, which covers a laser-based method and apparatus for exposing structures enclosed in material. Smith designs, manufactures, and distributes laser decapsulation systems. He sold and promoted Baublys systems from 2015 to 2019, trained customers to use them, and provided after-sale service on one occasion. Smith held no patent licenses or other patent rights.

Control Laser alleged direct infringement under 35 U.S.C. § 271(a), induced infringement under § 271(b), and contributory infringement under § 271(c). The patent’s validity was undisputed, and the parties stipulated that Smith’s conduct infringed claims 1 and 12. Smith argued that Han’s Industry Group, a parent company in Control Laser’s corporate structure and Baublys’s parent company, had authorized him to sell the systems.

Direct Infringement and License Defense

The court held that Han’s Industry Group could not authorize Smith to practice the patent because Control Laser held the patent’s exclusive rights and Smith identified no written assignment transferring those rights to Han’s Industry Group. The court also rejected Smith’s argument that he had an implied license based on equitable estoppel. Smith identified no communication or conduct by Control Laser affirmatively indicating that his sales would not be challenged. To the contrary, Control Laser’s president emailed Smith in 2018 stating that Smith was dealing in an infringing product, and confronted him at a trade show in 2019.

The court therefore concluded that Smith held no express or implied license and granted summary judgment to Control Laser on direct patent infringement.

Induced and Contributory Infringement

The court denied summary judgment on induced infringement. Induced infringement requires proof that the defendant knowingly encouraged another person’s infringement with specific intent. The court found that Control Laser had not shown as a matter of law that Smith possessed that intent. The record indicated that Smith believed he had permission from Han’s Industry Group, and the court stated that Smith’s support services, after-sale service, and incorporation of the Baublys system into his PLASER system did not establish the required specific intent.

The court also denied summary judgment on contributory infringement. That claim requires, among other things, proof that the accused party knew both about the patent and that the relevant conduct was infringing. The court found that Control Laser’s evidence showed Smith knew the patent existed, but did not establish as a matter of law that Smith knew his activities were infringing. The communications identified by Control Laser were too nonspecific to establish that point when viewed in the light most favorable to Smith.

Affirmative Defenses

Control Laser moved for summary judgment on Smith’s eleven affirmative defenses. Smith addressed only five, and the court concluded that he had abandoned the six defenses he did not address.

The court granted summary judgment to Control Laser on the defenses Smith did address:

- Equitable estoppel: Smith did not identify evidence that Control Laser engaged in misleading conduct suggesting it would not enforce the patent. - Waiver: Smith did not show that Control Laser intentionally gave up its patent rights or committed an overt act indicating that intention. - Laches: Smith did not identify evidence supporting an unreasonable and inexcusable delay or show prejudice from any delay. The court noted that Control Laser’s evidence indicated it first learned of Smith’s conduct in 2018 and filed suit on March 17, 2021. - Unclean hands: Smith’s arguments about Control Laser’s awareness and delay did not, without more, establish misconduct related to the dispute. - Patent exhaustion: The first-sale doctrine did not apply because it requires an initial authorized sale. The record showed that Control Laser had granted no licenses to the patent, and Smith identified no evidence that Baublys was authorized to sell the systems. The court also noted that Smith’s promotion of the products at trade shows constituted offering to sell a patented invention.

Disposition

Judge Jon S. Tigar ordered that Control Laser’s motion for partial summary judgment was granted in part and denied in part. It was granted on Control Laser’s direct-infringement claim and on Smith’s affirmative defenses. It was denied on Control Laser’s induced-infringement and contributory-infringement claims.